Tribunal Admits Insolvency Application, Appoints Interim Professional, Declares Moratorium

The tribunal admitted the application under Section 7 of the Insolvency and Bankruptcy Code, finding a debt due to the financial creditor and a default by the corporate debtor. An Interim Resolution Professional was appointed, and a moratorium was declared under Section 14 of the Code, prohibiting actions against the debtor. The tribunal directed the continuation of essential services to the debtor during the moratorium. The petition was disposed of without costs, citing relevant Supreme Court judgments emphasizing the need for evidence of default for admission under the Code.

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Issues Involved:
1. Authorization of the officer filing the application.
2. Compliance with prescribed form and rules.
3. Specific date of default.
4. Completeness of statements of accounts.
5. Calculation of the claimed default amount.
6. Invocation of bank guarantee and breach of contract.
7. Alleged material suppression by the applicant.
8. Alleged unlawful cut-backs by the applicant.

Issue-wise Detailed Analysis:

1. Authorization of the Officer Filing the Application:
The respondent company objected that the application was not preferred by an authorized officer. However, the tribunal found that the letter of authority dated 29.09.2018 issued by the Assistant General Manager of the applicant bank authorizing Mr. Ashik P. Shah was proper and valid.

2. Compliance with Prescribed Form and Rules:
The respondent contended that the application was not in the form prescribed by the provisions of the Insolvency and Bankruptcy Code (IB Code) and the rules framed thereunder. The tribunal reviewed the application and found it to be complete in all respects, furnished in the prescribed Form 1, and accompanied by the necessary documents and prescribed fee.

3. Specific Date of Default:
The respondent argued that the specific date of default was not stated in the application. The tribunal, upon examining the records, determined that the documents provided were sufficient to prove the existence of financial debt and default by the corporate debtor.

4. Completeness of Statements of Accounts:
The respondent claimed that incomplete statements of accounts were produced by the applicant. The tribunal found that the account statement issued by the financial creditor, showing the account position of the corporate debtor as of 09.10.2018, was annexed to the application and was adequate.

5. Calculation of the Claimed Default Amount:
The respondent alleged wrongful and erroneous calculation of the amount claimed to be in default. The tribunal found that the documents submitted by the financial creditor clearly established the debt and default on the part of the corporate debtor.

6. Invocation of Bank Guarantee and Breach of Contract:
The respondent claimed wrongful invocation of the bank guarantee and breach of contract. The tribunal did not find any merit in these objections, deeming them illusory and unsupported by any document.

7. Alleged Material Suppression by the Applicant:
The respondent accused the applicant of material suppression. The tribunal, after reviewing the records, found no evidence to support this claim.

8. Alleged Unlawful Cut-backs by the Applicant:
The respondent alleged unlawful cut-backs by the applicant. The tribunal found these objections to be without merit and unsupported by any evidence.

Findings and Order:
The tribunal concluded that there was a debt due to the financial creditor and a default on the part of the corporate debtor. The application was found to be complete in all respects. The tribunal cited the Supreme Court's judgments in "Innoventive Industries Ltd. v. ICICI Bank Ltd." and "Mobilox Innovations (P.) Ltd. v. Kirusa Software (P.) Ltd." to support its findings that the adjudicating authority needs to be satisfied that a default has occurred based on the records and evidence provided.

The tribunal admitted the application under Section 7 of the IB Code, appointed Mr. Pravin Charan Dwary as the Interim Resolution Professional, and declared a moratorium prohibiting various actions against the corporate debtor as specified under Section 14 of the Code.

The tribunal directed that the supply of goods and essential services to the corporate debtor should not be terminated during the moratorium period. The order of moratorium would remain effective until the completion of the corporate insolvency resolution process or until further orders.

The petition was disposed of with no order as to costs, and a copy of the order was to be communicated to the applicant/financial creditor, respondent/corporate debtor, and the Interim Resolution Professional.

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