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TMI Blog2018 (8) TMI 1541X X X X Extracts X X X X X X X X Extracts X X X X ..... nal. The presence of an arbitration clause in the share purchase agreement would not cause any impediment with regard to initiation of Corporate Insolvency Resolution Process because under Section 7 of the Code the mentioning of an arbitration clause in the disputed agreement is no bar to the admission of the petition and initiation of Corporate Insolvency Resolution Process unlike Section 8 & 9 of the Code. In accordance with the provisions of Section 8 and 9 of the Code if a dispute in a civil suit or a dispute in arbitration proceeding is pending then a bar has been created by Section 8(2)(a) of the Code and it is deemed to be an existence of dispute therefore, no Corporate Insolvency Resolution Process could be triggered. There is however no such provision in Section 7 of the Code. Accordingly, this argument is also rejected as unfounded. X X X X Extracts X X X X X X X X Extracts X X X X ..... he law. Since the Corporate Debtor was in need for funds for a Hotel Project undertaken by it the Petitioner No. 1 & 2 along with Petitioner No. 3, of which both of them are Directors, had, on various dates, lent various amounts to the Corporate Debtor the principal amounting to the tune of ₹ 18,67,11,000/- (Rupees Eighteen Crores Sixty-Seven Lakhs and Eleven Thousand Only), after adjusting the amount returned to the Financial Creditors and at an interest @ 18% per annum. The details of the payments made and received between 2007-2014 and the amount due and payable together with details of the calculation are given in the Schedule-A, B, C & D (at pgs. 44 to 48). 5. In column 2 of part IV the principal amount claimed to be in default is stated to be ₹ 18,67,11,000/- (altogether in the case of all three financial creditors) and figure of interest calculated till 30th November, 2017 has also been clearly mentioned in the said column. 6. It is the pleaded case of the Petitioners that the petitioner No. 1 & 2 were once Directors of the Corporate Debtor and in order to finance a project of the Corporate Debtor, both of them having resigned on 02.02.2015, advanced loans to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with said application a copy of the receipt of the fee paid in connection with the filing of said Form 11, a copy of letter dated 02.02.2015 acknowledging the receipt of resignation letter by the Respondent Company, a copy of the extract of the resolution passed in the meeting of the Board of Directors of Respondent Company held on 02.02.2015 accepting the resignation with immediate effect and a copy of letter dated 02.02.2015 sent by Respondent Company communicating the decision of the Board and the acceptance of the resignation of Mr. Dinesh Jain, have been placed on record. 10. Learned Counsel for the Corporate Debtor has opposed admission of the petition by raising the following arguments:- A. The applicants have wrongly claimed themselves to be a Financial Creditors and no financial debt as specified under Section 5 (8) of the Code is due against the Respondent No. 1 Company. B. Admittedly applicants acting as promoters in the Respondent Company were holding substantial shareholding and had also signed the Balance Sheet for the years ending 31st March, 2011 to 31st March, 2014 of the Respondent Company and nowhere in the balance sheets was there any mention of payment of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... olvency resolution process by financial creditor. 7(1)…………………. 7(2) The financial creditor shall make an application under sub-section (1) in such form and manner and accompanied with such fee as may be prescribed. 7(3) ………………….. 7(4)…………………. 7(5) Where the Adjudicating Authority is satisfied that- (a) a default has occurred and the application under sub-section (2) is complete, and there is no disciplinary proceedings pending against the proposed resolution professional, it may, by order, admit such application; or (b………………" 14. A conjoint reading of the aforesaid provision would show that form and manner of the application has to be the one as prescribed. It is evident from the record that the application has been filed on the proforma prescribed under Rule 4 (2) of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 read with Section 7 of IBC. We are satisfied that a default has occurred and the application under sub section 2 of Section 7 is comple ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions, 2016. 19. The Interim Resolution Professional shall perform all his functions religiously and strictly which are contemplated, interalia, by sections 15, 17, 18, 19, 20 & 21 of the Code. He must follow best practices and principles of fairness which are to apply at various stages of Corporate Insolvency Resolution Process. His conduct should be above board & independent; and he should work with utmost integrity and honesty. It is further made clear that all the personnel connected with the Corporate Debtor, erstwhile directors, promoters or any other person associated with the Management of the Corporate Debtor are under legal obligation under Section 19 of the Code to extend every assistance and cooperation to the Interim Resolution Professional as may be required by him in managing the affairs of the Corporate Debtor. In case there is any violation committed by the ex-management or any tainted/illegal transaction by ex-directors or anyone else the Interim Resolution Professional would be at liberty to make appropriate application to this Tribunal with a prayer for passing an appropriate order. The Interim Resolution Professional shall be under a duty to protect and preserv ..... X X X X Extracts X X X X X X X X Extracts X X X X
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