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2019 (9) TMI 796 - Tri - Insolvency and BankruptcyAdmissibility of petition - Initiation of CIRP - Corporate Debtor - Section 7 of the Insolvency and Bankruptcy Code, 2016 r/w Rule 4 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 - unpaid amount claimed by the Applicant/Financial Creditor from the Corporate Debtor - Financial Debt or not - time limitation. HELD THAT - The evidence placed on record is sufficient to ascertain the default on the part of the Corporate Debtor, which the Corporate Debtor could not rebut. The Financial Creditor has fulfilled all the requirements of law including the name proposed for appointment of IRP after obtaining consent in Form-2. Therefore, the Application stands admitted. The commencement of the Corporate Insolvency Resolution Process is ordered which ordinarily shall get completed within 180 days, reckoning from the day this order is passed. Application admitted - moratorium declared.
Issues Involved:
1. Whether the unpaid amount claimed by the Financial Creditor from the Corporate Debtor falls within the definition of "Financial Debt". 2. Whether the "Financial Debt" is time-barred. Issue-wise Detailed Analysis: 1. Definition of Financial Debt: The Financial Creditor, M/s. Val-Met Engineering Pvt. Ltd., filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016 (I&B Code) against the Corporate Debtor, M/s. Trusted Aerospace Engineering Pvt. Ltd., to initiate the Corporate Insolvency Resolution Process (CIRP). The Financial Creditor claimed an outstanding amount of ?2,13,61,067/- as of 05.09.2014. The Corporate Debtor had entered into a Memorandum of Understanding (MoU) with the Financial Creditor on 20.08.2013, where the Financial Creditor agreed to invest ?48.00 Crores and manage the company's liabilities and working capital. The Financial Creditor argued that the amounts disbursed to the Corporate Debtor for working capital, salaries, and statutory dues were loans or extensions of credit. This was supported by statements from the Bank of Maharashtra and acknowledgments from the Corporate Debtor. The Corporate Debtor, however, contended that the MoU did not indicate a loan but was an arrangement for the Financial Creditor to take over the company, and thus, there was no "Financial Debt" as defined under Section 5(8) of the I&B Code. Upon review, the tribunal concluded that the money infused by the Financial Creditor into the Corporate Debtor was part of a purchase agreement, carrying the commercial effect of borrowing. This transaction fell within the purview of Section 5(8)(f) of the I&B Code, 2016, which includes any transaction having the commercial effect of a borrowing. Therefore, the unpaid amount claimed by the Financial Creditor was deemed to be a "Financial Debt." 2. Time-barred Debt: The Corporate Debtor argued that the debt was time-barred since the last payment was made on 04.09.2014, and the application was filed on 22.06.2018, beyond the three-year limitation period. The Financial Creditor countered this by presenting WhatsApp messages exchanged between the parties from 07.07.2015 to 28.01.2016, where the Corporate Debtor acknowledged the debt and assured repayment. The tribunal considered these WhatsApp messages as admissible evidence under Section 65B of the Indian Evidence Act, 1872, and concluded that the acknowledgment of debt within these messages extended the limitation period. Since the application was filed within three years from the last acknowledgment of debt, it was not time-barred. Conclusion: The tribunal found that the Financial Creditor had established the existence of a financial debt and that the debt was not time-barred. Consequently, the application to initiate the CIRP against the Corporate Debtor was admitted. Mr. V. Senthil Kumar was appointed as the Interim Resolution Professional (IRP), and a moratorium was declared, prohibiting suits, asset transfers, and recovery actions against the Corporate Debtor during the CIRP period. The IRP was directed to take charge of the Corporate Debtor's management and comply with the necessary provisions of the I&B Code.
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