2022 (8) TMI 473 - Tri - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors or not - Company Petition has been filed by the Debenture Trustee - default in redemption of debentures - Section 10A of the IBC - HELD THAT - It is important to mention here that the Corporate Debtor did not choose to file any reply even after taking number of adjournments. On the other hand, the counsel appearing for the Corporate Debtor, on 5th May 2022, mentioned before this Bench as if the Corporate Debtor is admitting the liability which was recorded in the daily order dated 5th May 2022. Thereafter, the matter was reserved for orders. Since the order could not be passed by this Bench due to demitting office by one of the Member, the matter was reopened and relisted for de novo arguments. On hearing the counsel for the Petitioner and upon going through Form-1 filed by the Petitioner and the related materials, this Bench is of the view that the Corporate Debtor has committed default in repayment of a financial debt. The above CP being filed on 11.11.2021 is within 3 years from the date of default. Thus the CP satisfies all the legal requirements for admission. The initiation of Corporate Insolvency Resolution Process (CIRP) is ordered against Gagan I-Land Township Private Limited - petition admitted - moratorium declared.

Issues Involved:
1. Whether the Petitioner is a Financial Creditor.
2. Whether the default in redemption of debentures is hit by Section 10A of the IBC.
3. Maintainability of the Company Petition.
4. Admission of the Company Petition and initiation of Corporate Insolvency Resolution Process (CIRP).

Detailed Analysis:

1. Whether the Petitioner is a Financial Creditor:
The Corporate Debtor contended that the Company Petition was filed by the Debenture Trustee without consent from the majority debenture holders, as required under the debenture trust deed (DTD). However, the Tribunal found this argument incorrect for several reasons:
- The Company Petition was filed by the Financial Creditor (ICICI Prudential Real Estate AIF - I) through its Investment Manager, not by the Debenture Trustee.
- The Financial Creditor was a party to the Debenture Subscription Agreement (DSA) and had subscribed to approximately 80% of the debentures.
- The Investment Manager was authorized to file the Petition on behalf of the Financial Creditor under the Investment Management Agreement.
Thus, the Tribunal concluded that the Financial Creditor was sufficiently authorized to present the Company Petition.

2. Whether the default in redemption of debentures is hit by Section 10A of the IBC:
The Corporate Debtor argued that the default in redemption of debentures was protected by Section 10A of the IBC, which provides a moratorium on defaults occurring during the COVID-19 pandemic period. However, the Tribunal rejected this argument for the following reasons:
- The default in payment of interest occurred on September 30, 2019, and December 31, 2019, which was before the COVID-19 pandemic period covered under Section 10A (March 25, 2020, to March 25, 2021).
- The DSA explicitly stated that any default in payment obligations, including interest, qualifies as an event of default.
Therefore, the Tribunal determined that the default did not fall within the period prescribed under Section 10A and was not protected by it.

3. Maintainability of the Company Petition:
The Corporate Debtor filed an application (IA 1896 of 2022) challenging the maintainability of the Company Petition. The Tribunal noted that the contentions raised in the application had already been dealt with in the main Petition. The application was filed belatedly and was deemed infructuous and disposed of.

4. Admission of the Company Petition and initiation of CIRP:
After hearing the counsel for the Petitioner and reviewing the materials, the Tribunal concluded that the Corporate Debtor had committed a default in repayment of a financial debt. The Petition was filed within three years from the date of default, satisfying all legal requirements for admission.
- The Tribunal admitted the Company Petition and ordered the initiation of CIRP against the Corporate Debtor.
- Mr. Manish Motilal Jaju was appointed as the Interim Resolution Professional (IRP).
- The Petitioner was directed to deposit Rs. 10 Lakhs towards initial CIRP costs.
- A moratorium was imposed prohibiting suits, transferring assets, and other actions against the Corporate Debtor.
- Essential goods or services to the Corporate Debtor were not to be terminated during the moratorium period.
- The order of moratorium would be in effect until the completion of the CIRP or until a resolution plan is approved or liquidation is ordered.
- Public announcement of the CIRP was to be made immediately.
- The management of the Corporate Debtor would vest in the IRP/RP during the CIRP period.
- The Registry was directed to update the Master Data of the Corporate Debtor and communicate the order to both parties and the IRP.

Conclusion:
The Tribunal allowed the Company Petition, initiating CIRP against the Corporate Debtor and appointing an IRP to manage the process. The objections raised by the Corporate Debtor regarding the authorization of the Petitioner and the applicability of Section 10A of the IBC were rejected.

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