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2023 (4) TMI 507 - AT - Insolvency and BankruptcyMaintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - loan facility granted to one of subsidiary of ILFS Group - Financial Creditors - existence of debt and dispute or not - HELD THAT - The Adjudicating Authority after noticing the submissions of the parties has also relied on letters issued by ITNL which has issued an awareness letter to loan given by MP Border i.e. subsidiary of the ILFS dated 29th March, 2018 and further has referred to another Letter dated 07th October, 2022 which was sent to the Corporate Debtor by IFLS Transportation Networks Limited. The Financial Facility extended by Corporate Debtor was to one of the subsidiary of the ILFS and it is not far to seek that since under RBI Directives ILFS could not directly lend the amount to its subsidiary the said mechanism was adopted which has been found so by the Adjudicating Authority. The Adjudicating Authority in the facts of the present case has rightly exercised its discretion in not admitting Section 7 Application. It is also to be noticed that under the order passed by this Tribunal in Order dated 15.10.2018, the actions against ILFS was prohibited - there are no error in the Order impugned - appeal dismissed.
Issues Involved:
- Rejection of Section 7 Application by the Adjudicating Authority - Interpretation of loan agreement and default by the Corporate Debtor - Applicability of RBI Directives and restructuring of ILFS group companies Summary: The Appellate Tribunal heard the appeal against the rejection of a Section 7 Application by the Adjudicating Authority. The case revolved around a Loan Agreement granting a Term Loan Facility to a Corporate Debtor, with a default occurring when the ILFS subsidiary failed to make payments. The Corporate Debtor claimed to have acted as a facilitator due to RBI Directives preventing direct lending to subsidiaries. The Adjudicating Authority rejected the Section 7 Application, citing the interconnected nature of the ILFS group entities and the moratorium imposed by the NCLAT. The Tribunal upheld the decision, stating that the Adjudicating Authority correctly exercised its discretion and that actions against ILFS were prohibited by a previous order. The appeal was dismissed.
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