2022 (10) TMI 205 - 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 Financial Creditor has granted vide various Sanction Letters, Financial Facilities from time to time to the Corporate Debtor. For this purpose, various Loan Agreements were entered into between the Financial Creditor and the Corporate Debtor - It is observed by the Bench that despite sufficient service upon the Corporate Debtor, the Corporate Debtor has not appeared in the matter. Further, the Corporate Debtor has admitted its liability in its reply dated 11.11.2019 to the Loan Recall Notice issued by the Financial Creditor. The said reply is attached as Exhibit JJ at p.253 of the Petition. considering this date of 11.11.2019, the limitation criteria is fulfilled. 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, we do not have any objection on record against the application filed for initiation of CIRP against the Corporate Debtor - this Bench is of view that the Corporate Debtor failed to make payment to the Financial Creditor and the debt is due and payable to the Financial Creditor by the Corporate Debtor. 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 and the application deserves to be admitted - Application admitted - moratorium declared.

Summary

Issues Involved:
1. Application under section 7 of Insolvency & Bankruptcy Code, 2016 (I&B Code) by HDFC Bank Limited against Ritu Automobiles Private Limited for initiating Corporate Insolvency Resolution Process (CIRP).

Detailed Analysis:

1. Application under Section 7 of I&B Code:
The application (CP(IB)No.924/MB-IV/2021) was filed by HDFC Bank Limited, the Financial Creditor, against Ritu Automobiles Private Limited, the Corporate Debtor, seeking initiation of CIRP. The total default amount claimed was detailed, including principal outstanding, interest, and total outstanding. The date of default, NPA date, and various financial facilities provided to the Corporate Debtor were mentioned.

2. Financial Creditor's Case:
The Financial Creditor had provided financial facilities through sanction letters and loan agreements. Additionally, various agreements related to charge of fixed deposit, mortgage, and hypothecation of stocks were entered into. Demand promissory notes and loan recall notices were issued, with the Corporate Debtor admitting liability and promising payment. The Financial Creditor submitted the Statement of Account and a Certificate under the Banker's Book of Evidence Act.

3. Corporate Debtor's Non-Response:
The Corporate Debtor did not file a reply despite being served notices and publication in newspapers. The matter proceeded ex-parte, and the Corporate Debtor failed to appear or respond, leading to the final hearing and reserved orders date.

4. Tribunal's Findings:
After hearing arguments and examining records, the Tribunal noted the Financial Creditor's granting of financial facilities and the Corporate Debtor's admission of liability. The Tribunal observed the Corporate Debtor's failure to make payments, confirming the debt due to the Financial Creditor. The documents showed a debt exceeding Rs.1 crore, with a default in payment, justifying the admission of the application for CIRP.

5. Tribunal's Order:
The Tribunal admitted the application for initiating CIRP against the Corporate Debtor. A moratorium was declared under section 14 of I&B Code, prohibiting certain actions against the Corporate Debtor. An Interim Resolution Professional was appointed, and specific directions were issued regarding the moratorium period, supply of essential goods/services, exceptions to moratorium provisions, and the public announcement of insolvency resolution process.

This detailed analysis covers the issues involved in the legal judgment delivered by the National Company Law Tribunal, Mumbai Bench, regarding the application under section 7 of the Insolvency & Bankruptcy Code, 2016.