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2019 (1) TMI 630 - Tri - Insolvency and BankruptcyInitiation of Corporate Insolvency Resolution Process - Corporate Debtor committed default along with pending TDS - Section 7 of Insolvency and Bankruptcy Code, 2016 - Held that - This Adjudicating Authority, on perusal of the documents filed by the Creditor, is of the view that the Corporate Debtor defaulted in repaying the loan availed and also placed the name of the Insolvency Resolution Professional to act as Interim Resolution Professional and there being no disciplinary proceedings pending against the proposed resolution professional, therefore the Application under sub-section (2) of Section 7 is taken as complete - this Bench hereby admits this Petition - petition admitted.
Issues Involved:
1. Default in loan repayment by the Corporate Debtor. 2. Classification of the Petitioner as a Financial Creditor. 3. Validity of the loan and its repayment terms. 4. Relevance of ongoing legal disputes and agreements affecting the loan. 5. Appropriateness of the Corporate Insolvency Resolution Process (CIRP) initiation. Detailed Analysis: 1. Default in Loan Repayment by the Corporate Debtor: The Petitioner, Indiabulls Housing Finance Limited, sought the initiation of the Corporate Insolvency Resolution Process (CIRP) against Hanumesh Realtors Private Limited, the Corporate Debtor, under Section 7 of the Insolvency and Bankruptcy Code, 2016. The Petitioner claimed that the Corporate Debtor defaulted on a loan amounting to ?92,64,45,369/- as of 24.10.2017, including pending TDS of ?9,04,999/-. The loan was initially sanctioned for ?60,00,00,000/- on 30.09.2013, with an interest rate of 18.10% p.a., repayable within 60 months. The Corporate Debtor failed to make EMI payments after 31.03.2016, leading to the loan account being declared a Non-Performing Asset (NPA) on 30.09.2017. A Loan Recall notice was issued on 24.10.2017, demanding the outstanding sum of ?79,87,36,518/- plus future interest and pending TDS. 2. Classification of the Petitioner as a Financial Creditor: The Corporate Debtor contested that the Petitioner was not a "financial creditor" as the funds were allegedly routed back to the Petitioner through other entities, thus not constituting a financial debt. However, the Tribunal concluded that the loan agreement, carrying an interest rate of 18.10% p.a., clearly defined it as a financial debt under Section 5(8)(a) of the Code, making the Petitioner a Financial Creditor. 3. Validity of the Loan and Its Repayment Terms: The Corporate Debtor raised multiple defenses, including the argument that the Petitioner could not return the pledged debentures of SRUIL, which was under liquidation. The Tribunal dismissed this argument, stating that the admission of a winding-up petition does not equate to liquidation and does not affect the Corporate Debtor's liability. The Tribunal also noted that the financial debt and default were established, making the defenses regarding the exact amount irrelevant, as per the Supreme Court's decision in Innoventive Industries Ltd v. ICICI Bank. 4. Relevance of Ongoing Legal Disputes and Agreements Affecting the Loan: The Corporate Debtor argued that ongoing legal disputes, including a PIL affecting the "Palais Royale" project, and an MOU with Adhita Realty Pvt. Ltd., impacted the loan's repayment. The Tribunal found these arguments unconvincing, stating that such disputes do not affect the admission of a Section 7 petition where debt and default are established. The Tribunal also dismissed the argument that the loans were part of a scheme to evergreen SRUIL’s accounts, stating that such matters fall outside the purview of the record and the Code. 5. Appropriateness of the CIRP Initiation: The Tribunal concluded that the debt and default were clearly established, and the petition deserved to be admitted. Consequently, the Tribunal admitted the petition under Section 7, initiating the CIRP against the Corporate Debtor. The Tribunal also appointed an Interim Resolution Professional and imposed a moratorium prohibiting suits, asset transfers, and recovery actions against the Corporate Debtor. Conclusion: The Tribunal found in favor of the Petitioner, establishing the debt and default by the Corporate Debtor. The petition for initiating the CIRP was admitted, and an Interim Resolution Professional was appointed to oversee the process. The Tribunal dismissed the defenses raised by the Corporate Debtor, emphasizing the clear establishment of financial debt and default.
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