2020 (9) TMI 1114 - Tri - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence of debt ad dispute or not - HELD THAT - The Corporate Debtor, has admitted its liability to repay the debt amount and is willing to pay the same. However, it sought for additional time for clearing the financial dues of the Petitioner - On perusal of the records, there is no doubt that there is an admitted debt and a default as per the agreed terms between the two parties. The Petitioner admits that the present loan was renewed as the Corporate Debtor had been repaying the earlier debts. Thus there is a running account between the two and the Corporate Debtor has given an undertaking that it has made arrangements for paying the debt and only requires some more time to settle the debt. The Corporate Debtor's plea that it be given some more time to repay the debt needs to be accepted, and the Respondent/Corporate Debtor be directed to settle the debt at the earliest in consultation with the Petitioner/Financial Creditor - Petition disposed off.

Summary

Issues Involved:
- Initiation of Corporate Insolvency Resolution Process (CIRP) under IBC, 2016 due to default in loan repayment.
- Admitted liability of the Corporate Debtor to repay the debt and request for additional time for settlement.
- Impact of the global pandemic on financial distress and insolvency proceedings.

Analysis:
1. The case involved the filing of CP (IB) No. 412/BB/2019 by the Petitioner, a Financial Creditor, seeking to initiate the Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor for defaulting on a loan amount, including interest, as per the provisions of the IBC, 2016.

2. The Petitioner provided details of the loan granted to the Respondent via an Inter Corporate Deposit (ICD) and subsequent defaults in repayment, leading to a substantial outstanding debt. The Respondent confirmed the receipt of the loan and acknowledged the default in repayment, seeking additional time for settlement.

3. The Respondent, a leading renewable energy developer, presented its financial position and efforts made to settle debts with other creditors, demonstrating a commitment to repay the outstanding dues to the Petitioner. The Respondent requested time for repayment and highlighted arrangements with major creditors for financial support.

4. The Tribunal considered the admitted debt, the history of repayment between the parties, and the Respondent's financial standing, emphasizing the need to balance debt recovery with the financial stability of the Corporate Debtor. Reference was made to the Supreme Court's decision emphasizing that the IBC should not be misused to harm solvent companies.

5. The Tribunal acknowledged the impact of the global pandemic on businesses and the economy, leading to modifications in the IBC to prevent unnecessary insolvency proceedings. Considering the economic challenges and the specific circumstances of the case, the Tribunal directed the Corporate Debtor to settle the debt within 90 days, allowing for a reasonable timeframe for repayment.

6. In conclusion, the Tribunal disposed of the petition by granting the Corporate Debtor additional time to settle the debt, emphasizing the need for cooperation between the parties for a resolution. The decision reflected a balanced approach considering the financial distress caused by the pandemic and the aim to support businesses in challenging times while upholding the principles of the IBC.