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2022 (11) TMI 804 - Tri - Insolvency and BankruptcyMaintainability of petition - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not - first defence of the Corporate Debtor regarding entering into a separate settlement sanction with the Financial Creditor cannot sustain since there is mention of certain pre-conditions for the agreement to come into effect - HELD THAT - The Corporate Debtor has failed to satisfy the compliance of the first condition precedent i.e. payment of 15% of the total settlement amount of Rs. 89 crore. Moreover, it is nowhere mentioned that the present sanction letter debars the Financial Creditor to approach this forum, considering that the Corporate Debtor has once previously breached the consent terms. This Bench concludes that there exists a valid Power of Attorney signed by the Financial Creditor in the favour of Mr. Akash Deep, the Applicant. In reference to Exhibit-I(B) as pointed out by the Corporate Debtor, claiming that a specific authorisation has not been given to the applicant to file the Petition on its behalf, we have in the contrary found a clear power of attorney executed by the financial creditor in favour of the Applicant in paragraph 2 of the Power of Attorney as annexed to the Petition - the claim of the Corporate Debtor that it is not the Corporate Debtor in the present petition is nothing but an attempt to shy away from its liability, considering that all the clauses were agreed between the Assignor Bank and the Corporate Debtor . The Corporate Debtor has potrayed the facts in a deranged manner and has tried to misguide this Bench. The application made by the Financial Creditor is complete in all respects as required by law. It clearly shows that the Corporate Debtor is in default of a debt due and payable, and the default is in excess of minimum amount stipulated under section 4(1) of the IBC. Therefore, the debt and default stands established and there is no reason to deny the admission of the Petition. Petition admitted - moratorium declared.
Issues Involved:
1. Settlement of Debt by Petitioner 2. Declaration of Corporate Debtor as Relief Undertaking 3. Authority to File Application 4. Nature of Debt as Financial Debt Issue-wise Detailed Analysis: 1. Settlement of Debt by Petitioner: The Corporate Debtor argued that the debt in default had been settled by a fresh settlement proposal sanctioned by the Petitioner on 18.05.2021, which provided a new repayment period and terms. The Tribunal found that the Corporate Debtor failed to satisfy the first condition precedent of the settlement, i.e., payment of 15% of the total settlement amount of Rs. 89 crore. Additionally, it was noted that the new sanction letter did not prohibit the Financial Creditor from approaching the Tribunal, especially given the Corporate Debtor's previous breach of consent terms. 2. Declaration of Corporate Debtor as Relief Undertaking: The Corporate Debtor claimed protection under the Maharashtra Relief Undertakings (Special Provisions) Act, 1958, which declared it a relief undertaking, thereby staying its obligations and liabilities. The Tribunal, however, emphasized that for initiating insolvency proceedings, the default must be proven as per Section 3(12) of the IBC, which defines default as non-payment of debt when it becomes due and payable. The Tribunal concluded that despite the relief undertaking status, the debt was due and payable, and the default was established. 3. Authority to File Application: The Corporate Debtor contended that the application was not filed by a properly authorized person, arguing that Mr. Akash Deep lacked specific authorization. The Tribunal referred to the Supreme Court's ruling in Rajendra Narottamdas Sheth & Anr Vs. Chandra Prakash Jain & Anr., which upheld that a general authorization by the Financial Creditor's board resolutions suffices. The Tribunal found a valid Power of Attorney in favor of Mr. Akash Deep, thereby dismissing the objection regarding the authority to file the application. 4. Nature of Debt as Financial Debt: The Corporate Debtor argued that the debt claimed was not a financial debt under Section 5(8) of the IBC, asserting that it acted merely as a guarantor for its subsidiary, Bilcare Packaging Ltd. The Tribunal noted that the Credit Facility Agreement was between the Assignor Bank and the Corporate Debtor, and the Corporate Debtor's attempt to distance itself from the liability was misleading. The Tribunal emphasized that the debt and default were established, and the Corporate Debtor's arguments were an attempt to evade liability. Findings: The Tribunal found the application by the Financial Creditor to be complete and in accordance with the law. It established that the Corporate Debtor was in default of a debt due and payable, exceeding the minimum amount stipulated under Section 4(1) of the IBC. Consequently, the Tribunal admitted the petition and ordered the initiation of the Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor. Order: The Tribunal ordered the following: a) Admission of the petition for initiating CIRP against the Corporate Debtor. b) Imposition of a moratorium under Section 14 of the IBC. c) Continuation of the supply of essential goods or services to the Corporate Debtor during the moratorium. d) Appointment of Mr. Ashutosh Agarwala as the Interim Resolution Professional (IRP). e) Deposit of Rs. 3,00,000/- by the Financial Creditor with the IRP for expenses. f) Communication of the order to relevant parties and the Registrar of Companies for updating records. The Tribunal concluded that the debt and default were established, and the CIRP was to be initiated accordingly.
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