2021 (7) TMI 240 - Tri - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - no document placed on record to substantiate the defense of the corporate debtor - Financial Creditors - existence of debt and dispute or not - time limitation - HELD THAT - The default has occurred with respect to financial debt. It is observed that ex facie there is no satisfactory evidence produced by the corporate debtor with respect to the payment made to the applicant of its debt. Further, there is no document placed on record to substantiate the defense of the corporate debtor, that the default has not occurred. As long as the extension was granted by the applicant, debt was allowed to be restructured, but after the 21.10.2019 there is no document produced to show that the debt is not due and payable. The date of default is 22.10.2019 and the application is filed on 07.11.2020, which is well within the period of limitation and not barred by law - the registered office of corporate debtor is situated in Delhi and therefore this Tribunal has jurisdiction to entertain and try this application - The application is complete which is filed on the proforma prescribed under Rule 4(2) of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 read with Section 7 of the Code. This bench is satisfied that a default has occurred, and debt has remained unpaid. Thus, the application warrants admission as it is complete in all aspects and is admitted initiating CIRP as prescribed under the Code. Application admitted - moratorium declared.

Summary

Issues:
- Application filed under section 7 of Insolvency and Bankruptcy Code, 2016 for initiation of Corporate Insolvency process against a company.
- Dispute regarding loan repayment and default by the Corporate Debtor.
- Objections raised by the Corporate Debtor against the admission of the application.
- Analysis of evidence and legal precedents to determine default and debt existence.
- Appointment of Insolvency Resolution Professional and initiation of Corporate Insolvency Resolution Process.
- Direction for moratorium and deposit for expenses.

Analysis:
1. The application was filed under section 7 of the Insolvency and Bankruptcy Code, 2016 by the Applicant seeking to initiate the Corporate Insolvency process against the Corporate Debtor. The Applicant provided details of loans given to the Corporate Debtor, along with the terms and conditions agreed upon, leading to the dispute over repayment.

2. The Corporate Debtor contested the admission of the application, citing various reasons such as the alleged payment of interest amounts and the acceptance of post-dated cheques by the Applicant. The Corporate Debtor argued that no default had occurred, presenting a different narrative regarding the repayment of the loan.

3. The Tribunal carefully analyzed the submissions from both parties and reviewed the documentary evidence provided. The Tribunal noted the lack of satisfactory evidence from the Corporate Debtor to substantiate its defense and prove that the debt was not due and payable. The Tribunal referred to legal precedents to establish the criteria for determining default and debt existence.

4. Based on the evidence and legal principles, the Tribunal concluded that a default had indeed occurred concerning the financial debt owed by the Corporate Debtor. The Tribunal found no merit in the objections raised by the Corporate Debtor and accepted the application for initiating the Corporate Insolvency Resolution Process.

5. Following the admission of the application, the Tribunal appointed an Insolvency Resolution Professional, Ms. Minni Katariya, to oversee the resolution process. The Tribunal directed the Interim Insolvency Resolution Professional to make a public announcement regarding the admission of the application, in compliance with the relevant regulations.

6. Additionally, the Tribunal imposed a moratorium on the Corporate Debtor as per the provisions of the Insolvency and Bankruptcy Code, 2016. The Tribunal also instructed the Applicant to deposit a specified amount with the Interim Resolution Professional to cover expenses related to the resolution process, subject to adjustment by the Committee of Creditors.

7. The Tribunal issued directions for communication of the order to all relevant parties, including the Applicant, Corporate Debtor, Interim Resolution Professional, and the Registrar of Companies. The Registrar of Companies was mandated to update the status of the Corporate Debtor on their website to reflect the admission of the petition.

This detailed analysis covers the key issues, arguments presented, evidentiary review, legal conclusions, and procedural directions outlined in the judgment delivered by the National Company Law Tribunal, New Delhi Bench.