2022 (7) TMI 878 - 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 - It is observed from the records that Corporate Debtor has been given multiple opportunities to appear before this Tribunal and plead his case. The Financial Creditor intimated the next date of hearing and filed his Affidavit of service on record on 22.11.2019. However, The Corporate Debtor chose not to appear and plead the case or file reply on record. Therefore, the Corporate Debtor was set ex-parte vide order dated 26.11.2021. Hence, the matter is taken on merits as is to be decided ex-parte. The Hon ble Supreme Court in SWISS RIBBONS PVT. LTD. AND ANR. VERSUS UNION OF INDIA AND ORS. 2019 (1) TMI 1508 - SUPREME COURT upholding the Constitutional validity of IBC, the position is very clear that unlike Section 9, there is no scope of raising a dispute as far as Section 7 petition is concerned. As soon as a debt and default is proved, the adjudicating authority is bound to admit the petition. Upon perusal of records, this Bench is of the considered opinion that there is no dispute regarding the Corporate Debtor owes money to the Financial Creditor. The application made by the Financial Creditor is complete in all respects as required by law. It clearly shows that the Corporate Debtor is in default of a debt due and payable, and the default is in excess of minimum amount stipulated under section 4(1) of the IBC. Therefore, the debt and default stands established and there is no reason to deny the admission of the Petition. In view of this, this Adjudicating Authority admits this Petition and orders initiation of CIRP against the Corporate Debtor. Petition admitted - moratorium declared.

Issues:
- Initiation of Corporate Insolvency Resolution Process (CIRP) under section 7 of the Insolvency and Bankruptcy Code, 2016 (IBC).
- Jurisdiction of the Tribunal to deal with the petition.
- Default in repayment by the Corporate Debtor.
- Details of the loan advanced and default amount.
- Submissions made by the Financial Creditor.
- Invocation of pledge and outstanding balance.
- Cause of action and limitation period.
- Repayment received by the Financial Creditor.
- Admittance of the petition and appointment of Interim Resolution Professional (IRP).
- Moratorium under section 14 of the IBC and related orders.

Analysis:
- The Company Petition was filed under section 7 of the IBC by the Financial Creditor seeking to initiate CIRP against the Corporate Debtor based on default in repayment of a loan.
- The Tribunal established its jurisdiction to hear the petition as the Corporate Debtor is a private company incorporated under the Companies Act, 1956 in Maharashtra.
- The Financial Creditor provided detailed submissions regarding the loan agreement, pledge of shares, and default in repayment by the Corporate Debtor.
- The Financial Creditor invoked the pledge, notified the outstanding balance, and established the cause of action for the debt default.
- Despite partial repayments received by the Financial Creditor, the total default amount remained unpaid by the Corporate Debtor.
- The Tribunal, in line with Supreme Court precedent, admitted the petition as there was no dispute regarding the debt owed by the Corporate Debtor to the Financial Creditor.
- An Interim Resolution Professional was appointed, and a moratorium was imposed under section 14 of the IBC to protect the assets and interests of the Corporate Debtor during the CIRP.
- Detailed orders were issued regarding the moratorium, management during CIRP, deposit for expenses, communication of the order to relevant parties, and updating of records with the Registrar of Companies.

This detailed analysis covers the legal judgment comprehensively, highlighting the key issues, submissions made, findings, and orders issued by the Tribunal in the matter of initiating CIRP against the Corporate Debtor.

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