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2022 (9) TMI 136 - Tri - Insolvency and BankruptcyMaintainability 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 Petition under section 7 of the Code is barred by limitation or not? - HELD THAT - Upon perusal of the record it is apparent that transaction between the parties was purely financial in nature and there is an existence of Financial Debt. From the above records it is apparent that the Financial Creditor under SARAL KARJ BHUGTAN YOJNA extended One Time Settlement offer to the Corporate Debtor and the same was accepted by the Corporate Debtor - Balance sheet for year ending as on 2017 - 2018 of the Corporate debtor reflects that Corporate Debtor has certain short term borrowings which is showing that there exists cash credit facilities from the Bank. Further, as per the Auditors Report of the Corporate Debtor for financial year ending as on 2017 2018 (page 104 of the Supplementary Affidavit), it states that the Corporate Debtor has defaulted in the repayment of loans or borrowings to financial institutions, banks. The present petition filed by the Financial Creditor is complete in all respects as required by law. The Petition establishes that the Corporate Debtor is in default of a debt due and payable and that the default is more than the minimum amount stipulated under section 4 (1) of the Code, stipulated at the relevant point of time. Petition admitted - moratorium declared.
Issues Involved:
1. Non-repayment of credit facilities by the Corporate Debtor. 2. Declaration of accounts as Non-Performing Assets (NPA). 3. Execution and breach of One Time Settlement (OTS) under SARAL KARJ BHUGTAN YOJNA. 4. Alleged violations of the Banking Regulation Act and RBI guidelines. 5. Application of the Limitation Act, 1963 concerning the period of limitation for filing the petition. 6. Acknowledgment of debt and its impact on the limitation period. Issue-wise Detailed Analysis: 1. Non-repayment of credit facilities by the Corporate Debtor: The Financial Creditor, IDBI Bank, advanced several cash and credit facilities to the Corporate Debtor, Saraju Flour Mills Private Limited. The Corporate Debtor defaulted in repaying these facilities, leading to the declaration of their accounts as NPA on 31 March 2014. The total amount claimed in default by the Financial Creditor was Rs.15,22,21,838.58 including interest as of 01 August 2019. 2. Declaration of accounts as Non-Performing Assets (NPA): The Corporate Debtor's accounts were declared as NPA by the Financial Creditor on 31 March 2014. This declaration was a key factor in the initiation of the Corporate Insolvency Resolution Process (CIRP) under section 7 of the Insolvency and Bankruptcy Code, 2016. 3. Execution and breach of One Time Settlement (OTS) under SARAL KARJ BHUGTAN YOJNA: The Financial Creditor offered an OTS under SARAL KARJ BHUGTAN YOJNA to the Corporate Debtor on 23 October 2018, which was accepted by the Corporate Debtor on 29 December 2018. However, the Corporate Debtor failed to honor the terms of repayment under the OTS, leading to the revocation of the settlement. 4. Alleged violations of the Banking Regulation Act and RBI guidelines: The Corporate Debtor argued that the Financial Creditor violated provisions of the Banking Regulation Act, 1949, and guidelines issued by the Reserve Bank of India under sections 21, 35, 35A, 35AA, and 35AB of the RBI Act. However, the judgment did not find these arguments sufficient to dismiss the petition. 5. Application of the Limitation Act, 1963 concerning the period of limitation for filing the petition: The Corporate Debtor contended that the petition was barred by limitation as the default occurred in 2014, and the application was filed beyond the three-year limitation period prescribed under Article 137 of the Limitation Act, 1963. However, the Financial Creditor argued that the acknowledgment of debt by the Corporate Debtor extended the limitation period. 6. Acknowledgment of debt and its impact on the limitation period: The Tribunal found that the acknowledgment of debt by the Corporate Debtor, including part payments under the OTS, extended the limitation period. This acknowledgment fell within the ambit of 'acknowledgment of debt due and payable,' thereby renewing the limitation period as per Section 18 of the Limitation Act. Judgment: The Tribunal concluded that the petition filed by the Financial Creditor was complete and admitted the application under section 7 of the Insolvency and Bankruptcy Code, 2016. A moratorium under section 14 of the Code was imposed, prohibiting various actions against the Corporate Debtor, including the institution of suits, transferring of assets, and recovery of property. An Interim Resolution Professional (IRP) was appointed to carry out the functions as per the Code. The Financial Creditor was directed to deposit Rs.5,00,000 with the IRP to meet expenses arising from issuing public notices and inviting claims. The Tribunal ordered the Financial Creditor to serve a copy of the order on the IRP and the Registrar of Companies, West Bengal, Kolkata, and submit a compliance report. The order was pronounced on 26th August 2022, and the case was scheduled to come up on 31st October 2022 for filing the periodical report.
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