2022 (9) TMI 1344 - 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 - The sale was confirmed and the Financial Creditor has released a sum of Rs. 6.32 crores by selling one of the mortgaged properties of the Corporate Debtor. Hence, the amount due and payable would come to a sum of Rs.1.02 Crore (Approx) after deducting the sale proceed amount from the default amount as mention in this application. It emerges that the Financial Creditor has filed its application only for the recovery of the interests and also that the Corporate Debtor is a going concern and in view of the recent judgment of Hon ble Supreme Court in VIDARBHA INDUSTRIES POWER LIMITED VERSUS AXIS BANK LIMITED 2022 (7) TMI 581 - SUPREME COURT , it is not satisfying that the present petition has been filed only for resolving the insolvency, as the Corporate Debtor had even tendered the balance amount, which the Financial Creditor did not accept. Petition dismissed.

Issues Involved:
1. Default in payment by the Corporate Debtor.
2. Classification of the account as Non-Performing Asset (NPA).
3. Sale of mortgaged properties under SARFAESI Act, 2002.
4. Discrepancies in the default amounts and dates.
5. Whether the petition was filed for insolvency resolution or recovery of interest.

Issue-wise Detailed Analysis:

1. Default in payment by the Corporate Debtor:
The Financial Creditor filed the petition under Section 7 of the Insolvency and Bankruptcy Code, 2016, claiming that the Corporate Debtor defaulted on a sum of Rs. 7,56,86,986.33 as of 31 January 2020, with interest accruing thereon. The date of default was stated to be 30 October 2017. The Corporate Debtor acknowledged the total debt of Rs. 7,11,18,426.66 as due and payable on 31 March 2016.

2. Classification of the account as Non-Performing Asset (NPA):
The account of the Corporate Debtor was classified as NPA on 19 February 2018. Notices under Section 13(2) of the SARFAESI Act, 2002, were issued on 30 March 2018 and 05 November 2019, calling for the repayment of the outstanding amount. The Corporate Debtor argued that the Financial Creditor miscalculated the default amount by including interests accruing after the date of NPA.

3. Sale of mortgaged properties under SARFAESI Act, 2002:
The Financial Creditor auctioned some of the mortgaged properties, resulting in the liability being reduced from approximately Rs. 7 crore to approximately Rs. 2 crore. The sale was confirmed, and the Financial Creditor realized Rs. 6.32 crores from the sale. The remaining outstanding amount was Rs. 1.02 crore, which the Corporate Debtor attempted to settle by issuing a cheque, but the Financial Creditor did not accept it.

4. Discrepancies in the default amounts and dates:
The Corporate Debtor pointed out discrepancies in the default amounts and dates mentioned in the petition. They highlighted two different default amounts: Rs. 5,99,44,914.41 as on 19 February 2018 and Rs. 7,56,86,986.33. The Corporate Debtor also argued that the Financial Creditor erred by including interests accruing after the account was declared NPA, contrary to the RBI guidelines.

5. Whether the petition was filed for insolvency resolution or recovery of interest:
The Tribunal noted that the Financial Creditor's application seemed to focus on recovering interest rather than resolving insolvency. The Corporate Debtor had tendered the balance amount, which the Financial Creditor did not accept. The Tribunal referenced the Supreme Court's judgment in Vidarbha Industries Power Limited v. Axis Bank Limited, concluding that the petition was not filed with the primary intent of resolving insolvency.

Conclusion:
The Tribunal dismissed the petition, stating that it was not satisfied that the petition was filed solely for resolving insolvency, as the Corporate Debtor had even tendered the balance amount. The Financial Creditor was granted the liberty to pursue other legal remedies. The Registry was directed to send e-mail copies of the order to all parties and their counsel, and a certified copy of the order was to be issued upon compliance with requisite formalities.

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