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TMI Blog2019 (9) TMI 1690X X X X Extracts X X X X X X X X Extracts X X X X ..... pondent was liable to pay assured return. The loan was disbursed against the consideration for time value of money with a clear commercial effect of borrowing - Respondent has defaulted in paying the assured returns nor has handed over the possession of the units to the applicant. Moreover, the winding up order passed against the respondent company itself, is a record of default by the respondent corporate debtor. As per the Explanation to sub-section (1) of Section 7 the default can be to any financial creditor to the entity and not restricted to the creditor who triggers the insolvency resolution process. It is thus seen that the applicant 'financial creditor' has placed on record sufficient evidence in support of the claim as well as to prove the default. The spirit of the Code encourages resolution as against liquidation. Resolution is the rule; whereas liquidation is to be an exception. The object of the Code is to promote resolution over liquidation. Until option of resolution is exhausted, liquidation ought not to follow and therefore every effort must be made to try and see that resolution is made possible. Liquidation can only be allowed upon failure of resol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ested in the project ABW Gateway Tower . The return on investments were to occur by way of monthly assured returns and thereafter, lease rent arising out of the proposed office space to be allotted and delivered and transferred in the name of the investor by the corporate debtor. 4. Both the parties signed Memorandum of Understanding dated July 12, 2011 for an investment in the project ABW Gateway Tower and against the investment respondent agreed to provide an assured monthly return @ Rs. 50/- per sq. ft. per month for the Super area purchased by the applicant till the allotments are not leased out. 5. It is the case of the Petitioner that the petitioner financial creditor had invested in the project an amount of Rs. 91,54,819/- through four RTGS transactions as follows: 05.07.2011 Rs. 30,00,000/ 07.07.2011 Rs. 30,00,000/- 08.07.2011 Rs. 29,25,000/- 12.07.2011 Rs. 2,29,819/- Total Rs. 91,54,819/- 6. In furtherance of the same, the respondent corporate debtor issued provis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r that in the event the payments as directed in the order were not made within a period of four weeks, the order appointing the Official Liquidator, was to become operational. Thereafter respondent company failed to comply with the directions of the Hon'ble High Court and the order appointing the Official Liquidator as the provisional Liquidator became operational since 29.06.2018. 14. The Official Liquidator of the respondent company (in liquidation) has filed the status report on 02.04.2019. 15. It is thus seen that during pendency of the present Section 7 application filed under the Code, winding up order has been passed by the Hon'ble High Court and Official Liquidator has been appointed in respect of the respondent company (in liquidation). 16. It is pertinent to refer here the order passed by the Hon'ble Supreme Court in the matter of Jaipur Metals and Electricals Employees Organization vs. Jaipur Metals and Electricals Ltd. and Ors. reported in 2018 (15) SCALE 836 in which Hon'ble Supreme Court has observed that: 17. .......................This proceeding is an independent proceeding which has nothing to do with the transfer of pending winding up ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... claimed in the present application includes both the component of outstanding principal and interest. In that view of the matter not only the present claim comes within the purview of 'Financial Debt' but also the applicant bank can clearly be termed as Financial Creditor' so as to prefer the present application under Section 7 of the Code. Respondent has defaulted in paying the assured returns nor has handed over the possession of the units to the applicant. Moreover, the winding up order passed against the respondent company itself, is a record of default by the respondent corporate debtor. As per the Explanation to sub-section (1) of Section 7 the default can be to any financial creditor to the entity and not restricted to the creditor who triggers the insolvency resolution process. 21. It is thus seen that the applicant 'financial creditor' has placed on record sufficient evidence in support of the claim as well as to prove the default. 22. One of the important objectives of the insolvency resolution is to ensure that if a particular management is not in a position to run a company, then instead of the company closing down, a more liquid and a professi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Form-1 filed in the present case under Section 7 of the Code read with Rule 4 of the Rules, shows that the Form is complete in all respect and there is no infirmity in the same. 29. In the present case financial debt is outstanding since December 2014. Neither the possession of the flats has been given to the petitioners nor has the Corporate Debtor returned even the amounts collected from the petitioners since the year 2011. There is sufficient material on record to conclude that respondent corporate debtor has committed default in repayment of the financial debt. The amount of default exceeds much more than Rupees 1 lakh. The threshold limit to trigger the Code is purposely kept low at only one lakh rupees, making it clear that even small individuals may also trigger the Code as financial creditors. In view of Section 4 of the Code, the moment default is Rupees one lakh or more, the application to trigger Corporate Insolvency Resolution Process under the Code is maintainable. Once there is a debt and default and the application is complete the Adjudicating Authority is bound to admit the application preferred under Section 7 of the Code. 30. As a sequel to the aforesai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 34. In pursuance of Section 13(2) of the Code, we direct that public announcement shall be made by the Interim Resolution Professional immediately (3 days as prescribed by Explanation to Regulation 6(1) of the IBBI Regulations, 2016) with regard to admission of this application under Section 7 of the Insolvency Bankruptcy Code, 2016. 35. We also declare moratorium in terms of Section 14 of the Code. The necessary consequences of imposing the moratorium flows from the provisions of Section 14(1) (a), (b), (c) (d) of the Code. Thus, the following prohibitions are imposed: (a) the institution of suits or continuation of pending suits or proceedings against the corporate debtor including execution of any judgment, decree or order in any court of law, tribunal, arbitration panel or other authority; (b) transferring, encumbering, alienating or disposing of by the corporate debtor any of its assets or any legal right or beneficial interest therein; (c) any action to foreclose, recover or enforce any security interest created by the corporate debtor in respect of its property including any action under the Securitization and Reconstruction of Financial Assets and Enfor ..... X X X X Extracts X X X X X X X X Extracts X X X X
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