2022 (9) TMI 950 - 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 - time limitation - HELD THAT - There is no reason to deny the Petition under section 7 filed by the Financial Creditor to initiate the CIRP against the Corporate Debtor as the Corporate Debtor himself has admitted its liability. 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 Applicant. There is default by the Corporate Debtor in payment of debt amount. Therefore, it is the fit case for initiation of CIRP against the corporate debtor. Hence, the Application filed by the Financial Creditor is liable to be admitted. 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. Application admitted - moratorium declared.

Issues Involved:
1. Initiation of Corporate Insolvency Resolution Process (CIRP)
2. Default and debt acknowledgment
3. Limitation period for filing the petition
4. Authority to file the petition
5. Payment of requisite stamp duty
6. Settlement attempts and rejection of One-Time Settlement (OTS) proposal
7. Appointment of Interim Resolution Professional (IRP)
8. Declaration of moratorium

Issue-wise Detailed Analysis:

1. Initiation of Corporate Insolvency Resolution Process (CIRP):
The application was filed by the Financial Creditor under Section 7 of the Insolvency & Bankruptcy Code, 2016, to initiate CIRP against the Corporate Debtor. The Financial Creditor claimed a total default of Rs.50,13,08,535.88, including principal, interest, and penal amounts.

2. Default and Debt Acknowledgment:
The Financial Creditor provided evidence of the credit facilities sanctioned to the Corporate Debtor and the subsequent defaults. The Corporate Debtor acknowledged the debt through balance confirmations and revival letters. The account turned Non-Performing Asset (NPA) on 27.06.2016, and the Financial Creditor issued a demand notice and legal notice, which went unresponded by the Corporate Debtor.

3. Limitation Period for Filing the Petition:
The Corporate Debtor contended that the petition was barred by limitation as it was filed after three years from the date of NPA. However, the Financial Creditor argued that the limitation period was extended due to acknowledgments in the balance sheets. The Tribunal found the petition to be within the limitation period, citing acknowledgments in the balance sheets as valid under Section 18 of the Limitation Act.

4. Authority to File the Petition:
The Corporate Debtor challenged the authority of the Assistant General Manager to file the petition, as the initial documents were signed by the Branch Manager. The Tribunal dismissed this contention, finding no merit in it.

5. Payment of Requisite Stamp Duty:
The Corporate Debtor alleged non-payment of requisite stamp duty on various documents. The Financial Creditor countered by stating that the requisite stamp duty had been paid. The Tribunal, referencing case law, determined that the presence of other materials proving the financial debt was sufficient, even if some documents were not stamped.

6. Settlement Attempts and Rejection of One-Time Settlement (OTS) Proposal:
The Corporate Debtor proposed a settlement of Rs.10,00,00,000, which was rejected by the Financial Creditor. The Tribunal noted that ample opportunity was given to the Corporate Debtor to settle the matter, but the Corporate Debtor failed to do so.

7. Appointment of Interim Resolution Professional (IRP):
The Tribunal appointed Mr. Anurag Kumar Sinha as the Interim Resolution Professional (IRP) to carry out the functions as mentioned under the I&B Code. The Financial Creditor was directed to deposit Rs.5,00,000 with the IRP to meet the initial expenses.

8. Declaration of Moratorium:
The Tribunal declared a moratorium under Section 14 of the I&B Code, prohibiting the institution or continuation of suits, transferring or disposing of assets, and recovery actions against the Corporate Debtor. The moratorium will remain effective until the completion of the CIRP or until a resolution plan is approved or liquidation is ordered.

Conclusion:
The Tribunal admitted the application filed by the Financial Creditor for initiating CIRP against the Corporate Debtor. The Tribunal found that the debt amount exceeded Rs.1,00,00,000 and the default was established. The petition was filed within the limitation period, and the requisite stamp duty issues were not sufficient to dismiss the petition. The Tribunal appointed an IRP and declared a moratorium, directing immediate communication of the order to relevant parties.

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