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2022 (5) TMI 655 - Tri - Insolvency and BankruptcyMaintainability of CIRP proceedings - stay on the CIRP proceedings by the order of the Hon'ble Allahabad High Court - security interest of the financial creditors had been made subservient to the farmers' interest - HELD THAT - This petition filed under Section 7 is pending from March 2020. Even during this process, the Applicant/proposed intervenor, being aware of this fact, could have approached the competent constitutional courts to obtain clear-cut directions on the fate of application was filed by the Financial Creditor. This has not been done. There is nothing in the intervention petition that inhibits us from hearing the present section 7 petition - CIRP proceedings need not be stayed - application dismissed. Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - NPA - charge created against the mortgage of properties of the Corporate Debtor - Financial Creditors - existence of debt and dispute or not - HELD THAT - Considering the agreement entered into between the parties, the statements annexed for payment due as well as the OTS proposal wherein the corporate debtor has placed for restructuring the loan amount, thus admitting the debt. Thus, there is a debt which is due and payable both in law and in fact and default has occurred within the meaning of provisions of section 7 of IBC, 2016. The application filed under section 7 of the Code, is, therefore, complete in all respects and meet all other procedural requirements of the Code and Regulations made thereunder. Application admitted - moratorium declared.
Issues:
1. Dismissal of Intervention Application under Section 7 of the Insolvency & Bankruptcy Code. 2. Admission of Corporate Insolvency Resolution Process (CIRP) under Section 7 of the Insolvency and Bankruptcy Code, 2016. Issue 1: Dismissal of Intervention Application under Section 7 of the Insolvency & Bankruptcy Code. The Tribunal dismissed the Intervention Application (IA) filed under Section 7 of the Insolvency & Bankruptcy Code. The Applicant argued that proceedings under Section 7 should be stayed due to a previous order by the Allahabad High Court, which prioritized farmers' interests over secured creditors. However, the Tribunal clarified that the High Court's order did not prevent proceedings under the Code. The Tribunal emphasized that the Code aims to resolve insolvency, not just recover debts. The Applicant failed to seek directions from higher courts regarding the fate of the application, leading to the dismissal of the IA for lacking merit. Issue 2: Admission of Corporate Insolvency Resolution Process (CIRP) under Section 7 of the Insolvency and Bankruptcy Code, 2016. The Tribunal admitted the Corporate Insolvency Resolution Process (CIRP) petition filed by Punjab National Bank against the Corporate Debtor. The Financial Creditor provided credit facilities to the Corporate Debtor, leading to a default and declaration of non-performing assets. The Tribunal reviewed the agreements, notices, and submissions, concluding that there was a debt due and payable, meeting the requirements of Section 7 of the IBC. The Tribunal approved the appointment of an Interim Resolution Professional (IRP) and imposed a moratorium under Section 14 of the IBC. The IRP was directed to manage the Corporate Debtor during the CIRP, with reporting obligations to the Tribunal. The Financial Creditor was instructed to deposit funds for expenses, and compliance measures were outlined for communication and reporting purposes. In conclusion, the Tribunal dismissed the Intervention Application and admitted the Corporate Insolvency Resolution Process, appointing an IRP and issuing necessary directives for the management and resolution of the Corporate Debtor's insolvency.
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