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2022 (8) TMI 996 - 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 - Time limitation - HELD THAT - The applicant, has placed on record the balance sheet of financial year ending 31.03.2017, 31.03.2018 and 31.03.2019 which reflects the entries of the loans made to the Corporate Debtor by the applicant. Further, it is well settled principle that the entries made in the Balance sheet amounts to acknowledgement of debt as per section 18 of Limitation Act, 1963. It is evident from the entry in the balance sheet itself that the Corporate Debtor has acknowledged debt. Since the Corporate Debtor has acknowledge the debt in the balance sheet is as on 31.03.2019, the limitation commences from 31.03.2019 and the present application has been filed on 14.02.2020, so the present petition is well within the limitation period. The Loan agreements executed between the Financial Creditor and the Corporate Debtor clearly substantiate the Financial Creditor's claim that the Corporate Debtor has defaulted on repayment which is duly admitted by Corporate Debtor - Petition admitted - moratorium declared.
Issues Involved:
1. Initiation of Corporate Insolvency Resolution Process (CIRP) 2. Limitation Period and Acknowledgment of Debt 3. Appointment of Interim Resolution Professional (IRP) 4. Declaration of Moratorium Issue-wise Detailed Analysis: 1. Initiation of Corporate Insolvency Resolution Process (CIRP): The application was filed by the Bank of Baroda on 14.02.2020 to initiate CIRP against M/s. MB Malls Pvt. Ltd. under Section 7 of the Insolvency and Bankruptcy Code, 2016 (the Code) for a default amount of Rs. 43,41,25,983.25. The financial debt and default were established through loan agreements and subsequent defaults by the Corporate Debtor, which were acknowledged by the Corporate Debtor in their balance sheets and other documents. The Tribunal admitted the petition and initiated CIRP based on the substantiated claim of default. 2. Limitation Period and Acknowledgment of Debt: The Respondent contended that the petition was barred by the law of limitation, citing the default date as 29.10.2012 and arguing that the application was filed beyond the three-year limitation period. However, the Applicant provided balance sheets for the financial years ending 31.03.2017, 31.03.2018, and 31.03.2019, which reflected the acknowledgment of debt. The Tribunal referenced the Supreme Court judgment in Dena Bank vs. C. Shivakumar Reddy, which held that entries in balance sheets amount to acknowledgment of debt under Section 18 of the Limitation Act, 1963. Thus, the limitation period commenced from 31.03.2019, making the application filed on 14.02.2020 within the permissible period. 3. Appointment of Interim Resolution Professional (IRP): The Financial Creditor proposed Mr. Vikram Bajaj as the IRP, who consented to the appointment and provided necessary disclosures and declarations, including no pending disciplinary proceedings against him. The Tribunal found that the requirements under Section 7(3)(b) of the Code were satisfied, and Mr. Bajaj was appointed as the IRP. 4. Declaration of Moratorium: The Tribunal declared a moratorium under Section 14 of the Code, which imposed prohibitions on: - Institution or continuation of suits or proceedings against the Corporate Debtor. - Transferring, encumbering, alienating, or disposing of assets by the Corporate Debtor. - Actions to foreclose, recover, or enforce any security interest. - Recovery of property by an owner or lessor from the Corporate Debtor. The moratorium does not apply to transactions notified by the Central Government or the supply of essential goods or services to the Corporate Debtor, nor to the surety in a contract of guarantee to the Corporate Debtor. Conclusion: The Tribunal concluded that the application was complete and the Financial Creditor was entitled to claim the outstanding debt. The CIRP was initiated, and the IRP was directed to perform his functions as per the Code, with a report to be filed within 30 days.
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