2022 (6) TMI 386 - Tri - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not - HELD THAT - The Financial Creditor had sanctioned credit facilities in the form of a Rupee Term Loan of Rs.10,00,00,000/- and a Working Capital Facility not exceeding of Rs.45,00,00,000- in favour of the Corporate Debtor - The Corporate Debtor has neither disputed the disbursement of credit facilities by the Financial Creditor nor denied the existence of financial debt and default by the Corporate Debtor. The Corporate Debtor has time and again acknowledged its liability as seen from the records. It is observed that the Corporate Debtor issued a letter to the Financial Creditor wherein the Corporate Debtor has admitted an amount of Rs.27,76,67,442.58/- as due and payable by the Corporate Debtor - the Financial Creditor has time and again extended the Credit Facility to which the Corporate Debtor duly acknowledged by admitting the debt as due and payable to the Financial Creditor by the Corporate Debtor. On perusal of the documents submitted by the Applicant, it is clear that financial debt amounting to more than Rs.1,00,00,000/- (Rupees One Crore Only) is due and payable by the Corporate Debtor to the Financial Creditor - The application is complete and has been filed under the proper form. The debt amount is more than Rupees One Crore and default of the Corporate Debtor has been established and the application deserves to be admitted. Application admitted - moratorium declared.

Issues Involved:
1. Application under Section 7 of the Insolvency & Bankruptcy Code, 2016 (I&B Code)
2. Financial Creditor's claim of default
3. Corporate Debtor's response and willingness to settle
4. Evaluation of debt and default
5. Admission of Corporate Insolvency Resolution Process (CIRP)
6. Appointment of Interim Resolution Professional (IRP)
7. Declaration of moratorium

Issue-wise Detailed Analysis:

1. Application under Section 7 of the Insolvency & Bankruptcy Code, 2016 (I&B Code):
The application was filed by ICICI Bank Limited, the Financial Creditor, against Rasiklal Sankalchand Private Limited, the Corporate Debtor, for initiating the Corporate Insolvency Resolution Process (CIRP). The application was filed by the Legal Manager of the Financial Creditor, claiming a total default amount of Rs. 40,74,40,000/-.

2. Financial Creditor's Claim of Default:
The Financial Creditor provided various credit facilities to the Corporate Debtor, including a Rupee Term Loan and a Working Capital Facility. Despite multiple requests and notices, the Corporate Debtor failed to clear the outstanding amounts. The Financial Creditor issued a Loan Recall Notice on 17.02.2020, demanding repayment of Rs. 37,19,60,000/- along with applicable interest and charges.

3. Corporate Debtor's Response and Willingness to Settle:
The Corporate Debtor denied the claimed amount and attributed its financial difficulties to the COVID-19 pandemic and misleading media reports. The Corporate Debtor expressed willingness to settle the claims by offering to pay Rs. 22 crore within three months as a full and final settlement, subject to the release of documents related to the directors, guarantors, and properties.

4. Evaluation of Debt and Default:
The Tribunal examined the credit facilities extended by the Financial Creditor and the acknowledgments of debt by the Corporate Debtor. The Corporate Debtor had acknowledged its liability on multiple occasions, and the Financial Creditor provided account statements and a Credit Information Report (CIBIL) to substantiate the claim of default.

5. Admission of Corporate Insolvency Resolution Process (CIRP):
The Tribunal found that the application was complete and filed in the proper form. The debt amount exceeded Rs. 1 crore, and the default by the Corporate Debtor was established. Consequently, the application for initiating CIRP was admitted.

6. Appointment of Interim Resolution Professional (IRP):
The Tribunal appointed Mr. Santanu T Ray, a registered insolvency resolution professional, as the Interim Resolution Professional (IRP) to carry out the functions under the I&B Code. The Financial Creditor was directed to deposit Rs. 5,00,000/- with the IRP to cover expenses related to issuing public notices and inviting claims.

7. Declaration of Moratorium:
The Tribunal declared a moratorium under Section 14 of the I&B Code, prohibiting:
a. The institution or continuation of suits or proceedings against the Corporate Debtor.
b. The transfer, encumbrance, or disposal of the Corporate Debtor's assets.
c. Actions to foreclose, recover, or enforce security interests created by the Corporate Debtor.
d. Recovery of property by an owner or lessor from the Corporate Debtor.

The supply of essential goods or services to the Corporate Debtor was to continue uninterrupted during the moratorium period. The moratorium would remain in effect until the completion of the CIRP or until a resolution plan was approved or an order for liquidation was passed.

Order:
The application for initiating CIRP was admitted, and the Tribunal directed immediate public announcement of the CIRP. The Registry was instructed to communicate the order to the Financial Creditor, the Corporate Debtor, and the IRP promptly.

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