2021 (8) TMI 1197 - Tri - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditor - financial contract or not - existence of debt and dispute or not - HELD THAT - It becomes clear that it is incumbent upon the Financial Creditor while filing this petition to place on record before this Authority, the 'Financial Contract' and demonstrate without any ambiguity from the financial contract, the amount disbursed as per the loan/debt, the tenure of the loan/debt, the interest payable and the conditions of repayment. In the present case, it is evident that the Financial Creditor has not placed on record any Financial Contract or any Financial Agreement, in pursuance of which the loan was disbursed to the Corporate Debtor. The Part V of the Petition also discloses the fact that the Financial Creditor has only attached the copy of the ledger of the Financial Creditor maintained in the books of accounts of the Corporate Debtor. Even the Financial Creditor has not placed on record any Promissory Note, in the present case, which can be construed as a 'Financial Contract' in order to prove the debt qualifies to be a 'financial debt' - In the present case, there is no financial contract which is seen on record in order to establish that the relationship between the Financial Creditor and the Corporate Debtor herein in order for the Applicant to qualify as a 'Financial Creditor' and in the absence of the same, the default as alleged by the Financial Creditor cannot be determined. In the absence of any 'Financial Contract' between the parties - Petition dismissed.

Summary

Issues:
Adjudication of Application under Section 7 of the Insolvency & Bankruptcy Code 2016 against a Private Limited Company for default in repayment of financial debt.

Analysis:
1. The Application filed by the Financial Creditor sought to initiate the Corporate Insolvency Resolution Process against the Corporate Debtor, a Private Limited Company. The Financial Creditor claimed a total sum of ?2,01,65,328/- as the financial debt, supported by various documents including bank statements, ledger accounts, and notices to the Corporate Debtor.

2. The Financial Creditor's Counsel argued that the Corporate Debtor had defaulted in making interest payments despite reminders, leading to the claim for the outstanding balance. It was highlighted that the Corporate Debtor had been paying TDS on interest amounts but failed to repay the principal sum, prompting the application for insolvency resolution.

3. The Corporate Debtor was set ex-parte by the Tribunal as no response was received to set aside the order. The Tribunal proceeded to hear the submissions made by the Financial Creditor's Counsel under Section 7 of the IBC 2016, emphasizing the requirements of Rule 4 of the IBBI Rules and Regulation 8 of the IBBI Regulations regarding claims by financial creditors.

4. The Tribunal noted that the Financial Creditor failed to produce a Financial Contract or Agreement to substantiate the loan disbursal terms, tenure, interest, and repayment conditions. The absence of a Financial Contract or Promissory Note raised doubts on the nature of the debt and the Financial Creditor's qualification as a 'Financial Creditor,' leading to the dismissal of the petition due to insufficient evidence.

5. In conclusion, the Tribunal dismissed the application due to the lack of a Financial Contract or Agreement between the parties, essential for establishing the debt as a 'financial debt.' The absence of such documentation hindered the determination of the alleged default, resulting in the dismissal of the petition without costs.