2022 (6) TMI 480 - 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 - whether the present application is filed within limitation? - HELD THAT - It can be seen from the records that the date of default is 20.08.2021 and the present petition is filed vide Diary No. 01139 dated 22.10.2021. Therefore, the present petition is filed within limitation. Whether there is default in payment or not? - HELD THAT - It is observed from the record that in the present case, the occurrence of default is evidenced by the copy of the acknowledgement by the corporate debtor and the account statement of the Petitioner/Applicant and the same are attached as Annexure-6 and Annexure-A-5 A-10 respectively of the petition. The respondent-corporate debtor has also filed a reply wherein it has been admitted that there is default in respect of financial debt and amount mentioned in the petition is due towards the petitioner and shown its incapacity to pay the liability. The application filed in the prescribed Form No.1 is found to be complete. The present petition being complete and having established the default in payment of the Financial Debt for the default amount being above threshold limit, the petition is admitted in terms of Section 7(5) of the IBC and accordingly, moratorium is declared in terms of Section 14 of the Code - Petition admitted - moratorium declared.

Issues:
1. Filing of petition under Section 7 of the Insolvency and Bankruptcy Code, 2016 for Corporate Insolvency Resolution Process.
2. Determining jurisdiction of the Tribunal based on the registered address of the Corporate Debtor.
3. Default in repayment of a loan by the Corporate Debtor.
4. Appointment of Interim Resolution Professional.
5. Examination of completeness of the application and absence of disciplinary proceedings against the proposed Resolution Professional.
6. Admittance of the petition within the limitation period.
7. Verification of default in payment as per Section 7 of the Insolvency and Bankruptcy Code.
8. Declaration of moratorium and imposition of prohibitions.
9. Constitution of Committee of Creditors and reporting requirements.
10. Direction for Financial Creditor to deposit a specific sum with the Interim Resolution Professional.

Analysis:

1. The petition was filed under Section 7 of the Insolvency and Bankruptcy Code, 2016 to initiate the Corporate Insolvency Resolution Process against the Corporate Debtor. The authorization by the Board in favor of the applicant was attached to the petition, along with the affidavit verifying the contents of the application.

2. The jurisdiction of the Tribunal was established based on the registered address of the Corporate Debtor, which fell within the jurisdiction of the Bench where the petition was filed.

3. The Corporate Debtor defaulted in repaying a loan, as evidenced by the loan agreement, acknowledgment of receiving the loan amount, and subsequent demand notices sent by the Petitioner. The default amount was clearly established, leading to the filing of the petition.

4. An Interim Resolution Professional was proposed in the petition, and after verifying the credentials and absence of adverse information, the Tribunal appointed the proposed professional to carry out the necessary steps under the Insolvency and Bankruptcy Code.

5. The completeness of the application and absence of disciplinary proceedings against the proposed Resolution Professional were confirmed, meeting the required conditions for further proceedings.

6. The petition was admitted within the limitation period, as it was filed within the prescribed timeline from the date of default, as per the records presented.

7. The default in payment was verified as per Section 7 of the Insolvency and Bankruptcy Code, with evidence provided by both parties, leading to the admission of the petition and declaration of moratorium.

8. The Tribunal declared a moratorium and imposed specific prohibitions to protect the interests of all stakeholders involved, in accordance with Section 14 of the Code.

9. The Interim Resolution Professional was directed to constitute a Committee of Creditors, file regular progress reports, and perform the necessary functions as mandated under the Code.

10. A direction was issued for the Financial Creditor to deposit a specified sum with the Interim Resolution Professional to cover expenses related to the insolvency resolution process, subject to adjustment by the Committee of Creditors at the conclusion of the process.

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