2020 (10) TMI 217 - Tri - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence of debt and dispute or not - HELD THAT - The corporate debtor has complied with the provision of Section 10 of the Code, there is a debt and default has occurred, the application is complete, and the Corporate Applicant is not ineligible under Section 11. Petition admitted - Moratorium declared.

Summary

Issues:
Initiation of CIRP under Section 10 of the Insolvency and Bankruptcy Code, 2016 by a Corporate Applicant.

Analysis:
The Corporate Applicant, Benara Automotives Pvt. Ltd., filed an application for initiating Corporate Insolvency Resolution Process (CIRP) under Section 10 of the Insolvency and Bankruptcy Code, 2016. The application was based on the default committed by the Corporate Debtor in regularizing financial/creditor facilities from Kotak Mahindra Bank and Indusind Bank, leading to the classification of the account as a Non-Performing Asset (NPA). The Respondents were given an opportunity to be heard, but as no reply was filed, the matter proceeded Ex-Parte. The Corporate Applicant proposed Mr. Arun Chadha as the Interim Resolution Professional (IRP) and provided necessary documents to support the default claim, including notices and financial statements.

The Tribunal considered the provisions of Section 10 of the Insolvency and Bankruptcy Code, emphasizing the essential requirements of the existence of Debt and Default for initiating CIRP. Citing the case law of "Innoventive Industries," the Tribunal highlighted that once the default is proven, the application must be admitted unless incomplete. Additionally, the NCLAT decision in the matter of "M/s. Unigreen Global Private Limited vs. Punjab National Bank" was referenced to affirm that the Adjudicating Authority must admit the application if there is a debt and default, and the Corporate Applicant is not ineligible under Section 11.

The Tribunal concluded that the Corporate Debtor had complied with Section 10 requirements, confirming the existence of debt and default, completeness of the application, and the eligibility of the Corporate Applicant. Consequently, the Petition was admitted, and a Moratorium was declared with specific directions to ensure the protection of the Corporate Debtor's assets and interests during the insolvency resolution process. The appointment of Mr. Arun Chadha as the Interim Resolution Professional was approved, and necessary steps were outlined for the resolution process, including the communication of the order to relevant parties and the filing of a Progress Report on a specified date.