2022 (5) TMI 1204 - Tri - Insolvency and Bankruptcy

Maintainability of CIRP - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not - HELD THAT - An application under Section 7 of the Code is maintainable if the debt is proved to be due and there is default. In view of the Section 4 of the Code, the moment a default is of Rupees One Crore or more, an application to trigger Corporate Insolvency Resolution Process under the Code is maintainable. The applicant clearly comes within the definition of Financial Creditor. The material placed on record as stated in the paras above further confirms that respondent has debt due and has committed default in repayment of the outstanding financial debt. On a perusal of Form - I filed under Section 7 of the Code read with Rule 4 of the Rules shows that the form is complete and there is no infirmity in the same. It is also seen that there is no disciplinary proceeding pending against the proposed Interim Resolution Professional. The present application is complete in all respect. The applicant financial creditor is entitled to move the application against the corporate debtor in view of outstanding financial debt and default of the same by the corporate debtor. The default in repayment of the financial debt is not refuted by the Corporate Debtor - Application admitted - moratorium declared.

Issues:
1. Application under Section 7 of the Insolvency and Bankruptcy Code, 2016 for Corporate Insolvency Resolution Process.
2. Jurisdiction of the National Company Law Tribunal over the matter.
3. Default in repayment of financial debt by the corporate debtor.
4. Appointment of Interim Resolution Professional.
5. Documents submitted to prove the claim.
6. Maintenance of application under Section 7 of the Code.
7. Admission of the application and appointment of Interim Resolution Professional.
8. Direction for public announcement and deposit by the Financial Creditor.
9. Declaration of moratorium and its implications.
10. Functions and obligations of the Interim Resolution Professional.

Analysis:

1. The applicant, Omkara Assets Reconstruction Private Limited, filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016, seeking the initiation of Corporate Insolvency Resolution Process against the respondent company, M/s. K.S.N. Buildwell Private Limited, due to default in repayment of a loan amount.

2. The jurisdiction of the National Company Law Tribunal was established as the respondent company's registered office was in New Delhi, falling under the territorial jurisdiction of the Tribunal for matters related to the Insolvency and Bankruptcy Code.

3. The applicant claimed that the respondent company defaulted in repaying a significant loan amount, and the total due amount was specified in the application, leading to the initiation of insolvency proceedings.

4. An Interim Resolution Professional, Mr. Anil Matta, was proposed and appointed in compliance with the requirements of Section 7(3)(b) of the Code, with necessary disclosures made to meet regulatory standards.

5. Various documents, including loan agreements, escrow agreements, and statements of account, were submitted by the applicant to substantiate the claim of default and outstanding debt by the respondent company.

6. The Tribunal found the application maintainable under Section 7 of the Code, as the debt was proven due, and default was established, meeting the threshold for initiating Corporate Insolvency Resolution Process.

7. The application was admitted, and Mr. Anil Matta was officially appointed as the Interim Resolution Professional for the corporate debtor, with directions for public announcement and deposit by the Financial Creditor.

8. A moratorium was declared under Section 14 of the Code, imposing restrictions on certain transactions, with exceptions specified by law, and outlining the obligations and functions of the Interim Resolution Professional.

9. The Interim Resolution Professional was tasked with managing the affairs of the corporate debtor diligently and in compliance with the Code, with obligations on the ex-management to cooperate, and the Tribunal directed the communication of the order to relevant parties promptly.

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