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2020 (6) TMI 351 - Tri - Insolvency and BankruptcyMaintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence of debt and dispute or not - HELD THAT - The plea of the Corporate Debtor that the Company is a solvent and going concern cannot be made a ground for delaying the initiation of CIR Process or to keep in abeyance the instant Application as sought for as this Tribunal is required in case of a financial debt which is due and in the event of default as defined under I B Code 2016 is perforce required to admit the Application and the parties including the Corporate Debtor can have recourse during CIR Process to submit a Plan for restructuring if otherwise not disqualified. It is evident from the documents filed by the individual Financial Creditor in their respective petitions the debt is also not time barred in view of acknowledgments given by the Corporate Debtor to each of the Petitioner banks as contemplated under Section 18 of the Limitation Act 1963. In any case there is no denial of liability owed to the individual Financial Creditor by the Corporate Debtor. The Applications as filed by the Financial Creditors are required to be admitted under Section 7 (5) of the I B Code 2016. Application admitted - moratorium declared.
Issues Involved:
1. Admissibility of Applications under Section 7 of the Insolvency and Bankruptcy Code, 2016. 2. Existence of financial debt and default by the Corporate Debtor. 3. Appointment of Interim Resolution Professional (IRP). 4. Declaration of moratorium. Issue-wise Detailed Analysis: 1. Admissibility of Applications under Section 7 of the Insolvency and Bankruptcy Code, 2016: The Financial Creditors filed Applications under Section 7 of the Insolvency and Bankruptcy Code, 2016 ("I&B Code-2016") read with Rule 4 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 against the Corporate Debtor, M/S. Easun Reyrolle Limited. The Applications sought to initiate the Corporate Insolvency Resolution Process (CIRP), declare a moratorium, and appoint an Interim Resolution Professional (IRP). The Tribunal decided to dispose of both Applications together through a common order as they pertained to the same Corporate Debtor. 2. Existence of financial debt and default by the Corporate Debtor: - Canara Bank's Claim: The Financial Creditor, Canara Bank, claimed an outstanding amount of ?59,31,10,589.42 with interest against the Corporate Debtor for an overdraft cash credit facility sanctioned on 08.03.2013 and renewed on 24.09.2014. The Corporate Debtor acknowledged the debt multiple times, but failed to repay, leading to the account being classified as a Non-Performing Asset (NPA) on 29.09.2017. - State Bank of India's Claim: The Financial Creditor, State Bank of India, claimed an outstanding amount of ?204,89,03,878.20 as on 31.08.2019. The Corporate Debtor availed various credit facilities since 2000, renewed and revised multiple times, and acknowledged the debt through revival letters. The account was classified as NPA on 28.10.2015. The Corporate Debtor did not deny availing the credit facilities and their renewals but argued that the company had potential for revival and was exploring options to settle debts. However, the Tribunal noted that the Corporate Debtor's acknowledgment of debt and failure to repay justified the initiation of CIRP. 3. Appointment of Interim Resolution Professional (IRP): Both Financial Creditors proposed names for the IRP. Considering the higher debt due to State Bank of India, the Tribunal appointed Mr. B. Parameshwara-Udpa as the IRP. The IRP was directed to take necessary steps under Sections 15, 17, and 18 of the I&B Code, 2016, and file a report within 20 days. 4. Declaration of Moratorium: Upon admitting the Applications, the Tribunal declared a moratorium under Section 14(1) of the I&B Code, 2016, which included: (a) Suspension of suits or proceedings against the Corporate Debtor. (b) Prohibition on transferring or disposing of the Corporate Debtor's assets. (c) Prohibition on actions to recover or enforce security interests. (d) Prohibition on recovery of property occupied by the Corporate Debtor. The moratorium would remain effective until the completion of the CIRP or until the Tribunal approved a resolution plan or passed a liquidation order. Conclusion: The Tribunal admitted the Applications under Section 7 of the I&B Code, 2016, declared a moratorium, and appointed an IRP as proposed by the State Bank of India. The order emphasized that the existence of financial debt and default warranted the initiation of CIRP, regardless of the Corporate Debtor's claims of solvency and revival potential.
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