2021 (12) TMI 8 - Tri - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not - HELD THAT - It is seen from the petition that the Corporate Debtor has admitted its liability towards Financial Creditor in its Ledger account annexed as Annexure-5 and further in declaration Annexed as Annexure-3 with Supplementary Affidavit, the corporate debtor has given declaration regarding the loan from Mr. Vikash Kumar, Director (Financial Creditor). It is, also important to take note that the notification regarding the enhancement of minimum amount of default to Rs. One crore for the purpose of section 4 was issued by the Ministry of Corporate Affairs on 24th March, 2020 and the amount defaulted by the corporate debtor as well as filing of captioned petition is much before the coming into effect of notification dated 24th March, 2020. Since any notification issued by the Government is generally prospective in nature unless specifically expressed, hence, the said notification is not applicable to the present matter. The evidence placed by the financial creditor is sufficient to establish the existence of debt as well as default in payment on the part of the Corporate Debtor. The Hon'ble Apex Court has clearly stated in case of Innoventive Industries M/S. INNOVENTIVE INDUSTRIES LTD. VERSUS ICICI BANK ANR. 2017 (9) TMI 58 - SUPREME COURT that the moment it is established that there is a default in payment of financial debt by the corporate debtor, which is due and payable and the application is complete and no disciplinary proceedings is pending against the proposed RP then the adjudicating authority has no option but to admit the application. The Financial Creditor has fulfilled all the requirements of law. Accordingly, this Adjudicating Authority admits this application and initiate the process of CIRP of the Corporate Debtor. Application admitted - moratorium declared.

Summary

Issues:
- Application under section 7 of IBC, 2016 for initiating CIRP against Corporate Debtor
- Ex-parte proceedings due to non-appearance of Corporate Debtor
- Compliance with adjudicating authority's directions by Financial Creditor
- Admission of application and initiation of CIRP
- Appointment of Interim Resolution Professional (IRP)
- Declaration of moratorium and its implications
- Compliance requirements for IRP and cooperation from Corporate Debtor
- Communication and compliance directives to Financial Creditor and IRP
- Registrar of Companies notification for updating Corporate Debtor status

Detailed Analysis:

1. The application was filed by the Financial Creditor against the Corporate Debtor under section 7 of the IBC, 2016, citing non-repayment of the loan granted. The Financial Creditor provided evidence of default, including bank statements and ledger entries, leading to the initiation of the Corporate Insolvency Resolution Process (CIRP).

2. Despite multiple opportunities provided to the Corporate Debtor for appearance and objection, no representation was made on its behalf, resulting in ex-parte proceedings. The adjudicating authority issued fresh notices, ensuring due process was followed before proceeding ex-parte against the Corporate Debtor.

3. The Financial Creditor complied with the adjudicating authority's directions by submitting credible evidence, affidavits, and declarations supporting the claim. The Financial Creditor also referenced relevant legal precedents to strengthen the case, demonstrating adherence to procedural requirements.

4. The Adjudicating Authority thoroughly reviewed the petition, written submissions, and arguments presented by the Financial Creditor's Authorized Representative. The Authority found the evidence provided by the Financial Creditor sufficient to establish the debt's existence and the default in payment by the Corporate Debtor, leading to the admission of the application for initiating CIRP.

5. An Interim Resolution Professional (IRP) was appointed as proposed by the Financial Creditor, with no pending disciplinary proceedings against the IRP. The IRP was directed to take immediate charge of the Corporate Debtor's management and initiate the public announcement process as prescribed by the IBC.

6. A moratorium was declared from the date of the order until the completion of CIRP, prohibiting various actions against the Corporate Debtor, including legal proceedings, asset transfers, and property recovery. Essential goods or services supply to the Corporate Debtor was protected during this period.

7. The IRP was mandated to comply with specific sections of the IBC, and the Corporate Debtor's Directors and related parties were instructed to cooperate with the IRP. Communication directives were issued to the Financial Creditor and IRP for immediate compliance and action.

8. The Registry was directed to inform the Registrar of Companies for updating the Corporate Debtor's status, ensuring transparency and information dissemination. The entire process and order were conducted through a Virtual Hearing, emphasizing procedural efficiency and adherence to legal requirements.