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2022 (9) TMI 1290 - 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 - On perusal of records, it can be seen that while an amount of ₹2,00,00,000/- was disbursed by the Financial Creditor to the Corporate Debtor on 07.02.2014, there are no documents to prove whether the said amount was disbursed as a loan or ICD to the Corporate Debtor. However, in para 3(v) of the reply affidavit, the Corporate Debtor has admitted to the taking of the loan by the erstwhile director, albeit without the knowledge of the current directors cum promoters - The same has also been admitted by the Corporate Debtor in para 9 and 14 of its supplementary affidavit.. Further, repayments have been made by the Corporate Debtor to the bank account of the Financial Creditor. As such, it can be concluded that a financial debt does exist in favour of the Financial Creditor from the Corporate Debtor. Time Limitation - HELD THAT - The disputed payments were made in 15.10.2016, 23.02.2017 and 27.02.2017. According to section 19 of the Limitation Act, 1963, when payment on account of a debt or of interest on a legacy is made before the expiration of the prescribed period of limitation, by the person liable to pay the debt or legacy or by his agent duly authorised in this behalf, a fresh period of limitation shall be computed from the time when the payment was made. Therefore, taking into account the said dates, the petition is well within the period of limitation. This adjudicating Authority is satisfied that there exists a financial debt, due from the Corporate Debtor to the Financial Creditor and the Corporate Debtor has defaulted in the repayment of the same. Further, the petition is complete in all respects - Application admitted - moratorium declared.
Issues Involved:
1. Authorization of the Financial Creditor's director to initiate action. 2. Legality of the loan under the Companies Act, 2013. 3. Disclosure and suppression of facts by the Financial Creditor. 4. Acknowledgment and admission of debt by the Corporate Debtor. 5. Limitation period for filing the petition. 6. Payments made by the Corporate Debtor and their validity. 7. Fabrication of documents by the Financial Creditor. 8. Initiation of Corporate Insolvency Resolution Process (CIRP). Detailed Analysis: 1. Authorization of the Financial Creditor's Director: The Corporate Debtor argued that the director of the Financial Creditor was not properly authorized by a Board Resolution to initiate action. However, the tribunal did not find this argument sufficient to dismiss the petition. 2. Legality of the Loan: The Corporate Debtor contended that the loan provided by the Financial Creditor was contrary to the provisions of the Companies Act, 2013. The tribunal, however, focused on the existence of a financial debt rather than the legality under the Companies Act. 3. Disclosure and Suppression of Facts: The Corporate Debtor claimed that the Financial Creditor failed to disclose correct facts and suppressed relevant documents, particularly regarding payments made. The tribunal noted that the Financial Creditor provided bank statements and other documents to support its claims, which were not adequately refuted by the Corporate Debtor. 4. Acknowledgment and Admission of Debt: The Corporate Debtor argued that there was no acknowledgment or admission of the loan amount, and any part payment should not be construed as an admission of the entire loan. The tribunal found that the Corporate Debtor, through its previous directors, had acknowledged the debt, and repayments were made to the Financial Creditor's bank account. This acknowledgment was sufficient to establish the existence of a financial debt. 5. Limitation Period: The Corporate Debtor contended that the petition was barred by limitation. The tribunal noted that the last payment was made on 27.02.2017, and the petition was filed on 13.02.2020, within the three-year limitation period. Additionally, the acknowledgment of debt in the Balance Sheet of 2019 extended the limitation period under Section 18 of the Limitation Act. 6. Payments Made by the Corporate Debtor: The Corporate Debtor claimed to have repaid a total of Rs. 1,29,50,000/-, while the Financial Creditor acknowledged receiving only Rs. 70,00,000/-. The tribunal noted that even if the Corporate Debtor's contention was true, there was still a default in repaying Rs. 70,50,000/-, which was above the pecuniary threshold for initiating CIRP. 7. Fabrication of Documents: The Corporate Debtor alleged that the Financial Creditor fabricated documents, particularly Annexures J and K. The tribunal found that the Financial Creditor provided a certificate from its statutory auditors confirming the authenticity of the documents. The tribunal did not find the Corporate Debtor's allegations tenable. 8. Initiation of CIRP: The tribunal referred to the Supreme Court's decision in Innoventive Industries Ltd Vs. ICICI Bank, which mandates that once the adjudicating authority is satisfied that a default has occurred, the application must be admitted. The tribunal was satisfied that a financial debt existed, the Corporate Debtor defaulted in repayment, and the petition was complete in all respects. Consequently, the petition was admitted, and CIRP was initiated against the Corporate Debtor. Order: - The application under section 7 of the Insolvency and Bankruptcy Code, 2016, filed by the Financial Creditor, was admitted. - A moratorium under section 14 of the IBC was declared. - Public announcement of the CIRP was ordered. - An Interim Resolution Professional (IRP) was appointed to manage the Corporate Debtor's affairs. - The Financial Creditor was directed to deposit Rs. 3,00,000/- with the IRP for expenses related to public notice and claims. - The order was to be communicated to the relevant parties and authorities. The tribunal scheduled a follow-up for filing the progress report on 31.10.2022.
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