2019 (9) TMI 1359 - Tri - Insolvency and Bankruptcy

Tribunal rules on financial debt claim, appoints IRP, and enforces moratorium.

Dinesh Khetan Versus Bigmoon Buildcon (P.) Ltd.

The Tribunal established jurisdiction over the case based on the respondent's location. It determined the claim as a financial debt due to an investment ... Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - main contention of the respondent is that the alleged claim is not in the nature of financial debt - existence of debt and dispute or not - HELD THAT:- The application filed by the applicant financial creditor under sub-section 5 (a) of Section 7 of the code, has to be admitted on satisfaction that: I. Default has occurred. II. Application is complete, and III. No disciplinary proceeding against the proposed IRP is pending. The present application is complete in all respect and that no disciplinary proceeding against the proposed IRP is pending. We are also satisfied that the applicant financial creditor is entitled to claim its outstanding financial debt from the corporate debtor and that there has been default in payment of the financial debt - in terms of section 7 (5) (a) of the Code, the present application is admitted. Application admitted - moratorium declared. Issues Involved:1. Jurisdiction of the Tribunal.2. Nature of the claim as financial debt.3. Existence of default.4. Completeness of the application.5. Appointment of Interim Resolution Professional (IRP).6. Declaration of moratorium.Issue-wise Detailed Analysis:1. Jurisdiction of the Tribunal:The Tribunal established its jurisdiction over the case as the registered office of the respondent corporate debtor is located in Delhi. This is in accordance with sub-section (1) of section 60 of the Insolvency and Bankruptcy Code, 2016 (the Code).2. Nature of the Claim as Financial Debt:The respondent argued that the claim was not a financial debt but a service charge for arranging funds. However, the Tribunal noted that the claim involved two transactions: a service charge of Rs. 11 lakhs and an actual cash investment of Rs. 20 lakhs. The Tribunal emphasized that the latter qualifies as a financial debt as it involved disbursement of money against the consideration for time value, making the applicant a financial creditor under the Code.3. Existence of Default:The Tribunal observed that the respondent had defaulted on the repayment of Rs. 31 lakhs (inclusive of the Rs. 20 lakhs investment and Rs. 11 lakhs service charge). The dishonored cheques and the Investment Agreement Cum Memorandum of Understanding dated 30-10-2018 were cited as evidence of the default. The Tribunal concluded that the respondent had committed a default in repayment, thus meeting the criteria for initiating the Corporate Insolvency Resolution Process (CIRP).4. Completeness of the Application:The Tribunal confirmed that the application filed by the financial creditor was complete, containing all necessary details, documents, and evidence of default as required under sub-section 3(a) of section 7 of the Code. The proposed name of the Interim Resolution Professional (IRP) was also provided, fulfilling the requirement under sub-section 3(b) of section 7.5. Appointment of Interim Resolution Professional (IRP):The Tribunal appointed Mr. Ajay Goyal as the IRP, noting that he had agreed to the appointment and no disciplinary proceedings were pending against him. The financial creditor was directed to deposit Rs. 2 lakhs with the IRP to cover initial expenses.6. Declaration of Moratorium:The Tribunal declared a moratorium under section 14 of the Code, prohibiting the institution or continuation of suits, transferring or disposing of assets, foreclosing security interests, and recovering property from the corporate debtor. The moratorium ensures that the corporate debtor's assets are protected during the CIRP.Conclusion:The Tribunal admitted the application for initiating the CIRP against the corporate debtor, satisfied that the default had occurred, the application was complete, and no disciplinary proceedings were pending against the proposed IRP. The Tribunal directed the IRP to make a public announcement and perform his duties as per the Code, and declared a moratorium to protect the corporate debtor's assets.