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2022 (4) TMI 1108 - Tri - Insolvency and BankruptcyMaintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - petition filed under section 9 against Corporate Debtor, already admitted - HELD THAT - This Tribunal in petition filed under Section 9 of Insolvency and Bankruptcy Code 2016, by M/s. Sulpa International, admitted the matter vide order dated 11.03.2022 and initiated Corporate Insolvency Resolution Process against M/s. Savute Textiles Private Limited, which company is the Corporate Debtor in this matter. When a similar situation came up before the NCLT Chennai Bench in STATE BANK OF INDIA VERSUS MERCHEM LTD 2018 (1) TMI 1681 - NATIONAL COMPANY LAW TRIBUNAL, CHENNAI , the Bench directed the applicant therein to file their claim before the IRP appointed on 15.01.2018 pursuant to the admission of Section 9 Application filed by Mr. Pradeep M.R (Operational Creditor) against M/s. Merchem Limited (Corporate Debtor), with liberty to revive the petition, in case the CIRP order in the case of Merchem Ltd. is challenged/set aside by the higher courts. Since Corporate Insolvency Resolution Process against the Corporate Debtor vide order dated 11.03.2022 is already initiated, and the Interim Resolution Professional has directed to initiate the proceedings immediately through paper publication to invite claims of all stakeholders, this application is disposed off with a direction to the applicant herein to file his claims before the IRP in the matter of M/s. Savute Textiles Private Limited, without any delay. In the event wherein, the admission order dated 11.03.2022 is set aside by any higher courts, the applicant herein is at liberty to revive this Company Petition. Application admitted.
Issues:
1. Application under Section 7 of IBC for recovery of defaulted payment against Corporate Debtor. 2. Allegations of fraud, misrepresentation, and default on loans given under MoUs. 3. Default on interest payments leading to financial debt default. 4. Argument by Corporate Debtor on repayment terms and absence of default. 5. Reference to legal precedents regarding default and initiation of insolvency process. 6. Claim of default being barred under Section 10A of the Code. 7. Dispute over the nature of loans and repayment terms. 8. Corporate Debtor's assertion of not being a recovery forum. 9. Allegation of malicious proceedings by the Applicant. 10. Admission of the application and initiation of Corporate Insolvency Resolution Process. 11. Appointment of Interim Resolution Professional and deposit for initial expenses. Analysis: 1. The application under Section 7 of the Insolvency and Bankruptcy Code (IBC) was filed by the Financial Creditor against the Corporate Debtor for the recovery of a defaulted payment amounting to a significant sum. The loans were given under various MoUs, and the Financial Creditor alleged fraud, misrepresentation, and default on the part of the Corporate Debtor. 2. The Financial Creditor detailed how the Corporate Debtor, through alleged misrepresentation and undue influence, persuaded them to invest in the share capital of the company and provide loans. Despite promises of growth and revival, the Corporate Debtor failed to repay the loans and interest, leading to a clear default situation. 3. The Corporate Debtor, in response, argued that the loans were not yet due as per the agreements and highlighted repayment terms agreed upon in the MoUs. They also referenced legal precedents regarding the occurrence of default as a prerequisite for initiating the insolvency resolution process. 4. A key point of contention was the default on interest payments, which the Financial Creditor argued constituted a default on the financial debt. The Corporate Debtor, however, disputed this claim and raised issues regarding the nature of the loans and the alleged default. 5. Legal arguments were presented by both parties, citing relevant judgments to support their positions on default, repayment terms, and the applicability of Section 10A of the Code, which the Corporate Debtor claimed barred the alleged default from being considered. 6. The Respondent also contested the characterization of the proceedings as a mere recovery mechanism, emphasizing efforts towards settlement and restructuring with other financial institutions. They accused the Financial Creditor of maliciously initiating proceedings not in the best interest of the Corporate Debtor. 7. Ultimately, the Tribunal admitted the application and initiated the Corporate Insolvency Resolution Process against the Corporate Debtor. An Interim Resolution Professional was appointed, and directions were given regarding the deposit for initial expenses to facilitate the resolution process. 8. The Tribunal's decision was based on the merits of the case and the admission of a similar matter involving the same Corporate Debtor, leading to the initiation of insolvency proceedings and the appointment of an Interim Resolution Professional to oversee the resolution process.
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