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2022 (6) TMI 870 - Tri - Insolvency and BankruptcyMaintainability 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 - Although from the petition, pleadings made and arguments extended by the Counsel of both the sides, it is observed that the defaults in Loan account under Contract No.179643 at Serial No 1 and 2 are dated 05.02.2020 and 05.03.2020 and the remaining defaults were on or after 05.04.2020 which comes under section 10A of the IBC 2016 which cannot be considered as default. Hence, the bench is of considered view that the actual default made by the Corporate Debtor is Rs.1,12,73,387 along with interest.Therefore, it is a fit case for Admission of the Corporate Debtor into Insolvency, because Debt and Default is established and the amount of Debt is more than threshold limit i.e. Rupees One Crore. The application is complete and has been filed under the proper form. Hence, the Application filed by the Financial Creditor is hereby deserves to be admitted. Petition admitted - moratorium declared.
Issues Involved:
1. Initiation of Corporate Insolvency Resolution Process (CIRP) under Section 7 of the Insolvency and Bankruptcy Code, 2016. 2. Determination of the date of default and the amount in default. 3. Application of Section 10A of the Insolvency and Bankruptcy Code, 2016. 4. Validity and sufficiency of the documents and securities provided. 5. Allegations of exorbitant interest rates and insufficient stamp duty. 6. Applicability of Section 11(a) and Section 25(2)(b) of the Insolvency and Bankruptcy Code, 2016. 7. Appointment of Interim Resolution Professional (IRP). Detailed Analysis: 1. Initiation of Corporate Insolvency Resolution Process (CIRP): The application was filed by the Financial Creditor, SREI Equipment Finance Limited, under Section 7 of the Insolvency and Bankruptcy Code, 2016, against the Corporate Debtor, Nirmal Lifestyle (Kalyan) Private Limited, to initiate the Corporate Insolvency Resolution Process (CIRP). The petition was filed on 30.11.2020, claiming an amount of Rs. 7,87,50,000 as on 07.09.2020. 2. Determination of the Date of Default and the Amount in Default: The Financial Creditor stated that the date of default was 05.02.2020, with the first instalment due under the Loan Agreement dated 05.08.2019. The Corporate Debtor acknowledged the debt, and the Financial Creditor provided a detailed account of the default amounts, which included several instalments due from 05.02.2020 to 05.09.2020. 3. Application of Section 10A of the Insolvency and Bankruptcy Code, 2016: The Corporate Debtor argued that the petition should be dismissed under Section 10A of the Insolvency and Bankruptcy Code, 2016, which bars the initiation of CIRP for defaults occurring during the COVID-19 pandemic period starting from 25 March 2020. However, the Tribunal observed that the initial defaults occurred on 05.02.2020 and 05.03.2020, which were before the cut-off date, and thus Section 10A did not apply to these defaults. 4. Validity and Sufficiency of the Documents and Securities Provided: The Corporate Debtor contended that the documents were insufficiently stamped and that multiple mortgages, collaterals, and securities were provided. The Tribunal noted that the Financial Creditor had registered the charges with the Registrar of Companies and executed a Registered Mortgage Deed, along with a Demand Promissory Note and a Personal Guarantee by the Corporate Debtor's Director. 5. Allegations of Exorbitant Interest Rates and Insufficient Stamp Duty: The Corporate Debtor claimed that the Financial Creditor charged unreasonably high interest rates and failed to pay adequate stamp duty on the Loan Agreement. The Tribunal did not find these arguments sufficient to dismiss the petition, as the primary focus was on the existence of debt and default. 6. Applicability of Section 11(a) and Section 25(2)(b) of the Insolvency and Bankruptcy Code, 2016: The Corporate Debtor argued that the petition was barred under Section 11(a) and Section 25(2)(b) of the Insolvency and Bankruptcy Code, 2016. However, the Tribunal did not find these sections applicable to the present case, as the Financial Creditor had established the debt and default. 7. Appointment of Interim Resolution Professional (IRP): The Tribunal appointed Mr. Dilip Kumar Natvarlal Jagad as the Interim Resolution Professional (IRP) to carry out the functions under the Insolvency and Bankruptcy Code. The Financial Creditor was directed to deposit Rs. 5,00,000 with the IRP for expenses arising out of issuing public notices and inviting claims. Conclusion: The Tribunal admitted the application filed by the Financial Creditor for initiating the Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor. The moratorium under Section 14 of the Insolvency and Bankruptcy Code was declared, prohibiting the institution of suits, transferring of assets, and recovery actions against the Corporate Debtor. The Tribunal directed the Financial Creditor to deposit the required amount with the IRP and ordered the public announcement of the CIRP. The order was to be communicated immediately to the relevant parties.
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