2019 (12) TMI 1121 - Tri - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment - default due and payable - HELD THAT - The provisions of Section 7 (2) and Section 7 (5) of IBC have been complied with and after a conjoint reading of the aforesaid provisions along with Rule 4 (2) of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016, we are satisfied that a default has occurred and the application under sub section 2 of Section 7 is complete. The name of the IRP has been proposed by the petitioner and there are no disciplinary proceedings pending against the proposed Interim Resolution Professional namely Ms. Maya Gupta and she is appointed as the Interim Resolution Professional - application admitted - moratorium declared.

Summary

Issues:
Claim of financial creditor under Section 7 of the Insolvency and Bankruptcy Code, 2016.

Analysis:
The petitioner, claiming to be a financial creditor, filed a petition under Section 7 of the Insolvency and Bankruptcy Code, 2016, seeking to trigger Corporate Insolvency Resolution Process against the respondent, a limited liability partnership. The petitioner alleged that it had advanced unsecured loans to the respondent-corporate debtor, with a significant outstanding amount. Various documents were submitted as evidence, including bank certificates, statements, and correspondence acknowledging the debt. The petitioner also proposed an Insolvency Professional for the process, providing all necessary details and certifications as required by the Rules.

The respondent raised objections to the petition, disputing the amount claimed to be in default and alleging that the petitioner owed money to them due to losses incurred. However, the Tribunal found no supporting documentation for the respondent's counterclaim. The respondent's Balance Sheet acknowledged the outstanding amount as a liability, further supporting the petitioner's claim. The Tribunal clarified that the relationship between the parties in another company was irrelevant to the current petition's adjudication.

After reviewing the evidence, the Tribunal concluded that the petitioner had indeed disbursed the claimed amount to the respondent, who defaulted on repayment exceeding the statutory limit. Therefore, the petition was admitted, meeting all requirements of Section 7 of the Code. The proposed Interim Resolution Professional was appointed, and necessary announcements and moratorium were declared in accordance with the Code. The Financial Creditor was directed to deposit a sum for expenses, and ex-management was instructed to provide all relevant documents to the Interim Resolution Professional.

Additionally, the Tribunal addressed concerns regarding inflated claims by financial entities and instructed Resolution Professionals to resolve any discrepancies to ensure fairness to the corporate debtors. Directions were issued for communication of the order to all parties involved, including updating relevant records with the Registrar of Companies.