2019 (9) TMI 1443 - Tri - Insolvency and Bankruptcy

Adjudicating Authority Orders Corporate Insolvency Resolution Process

Pashupati Merchandise Private Limited Versus RCI Cash Management Services Private Limited

The Adjudicating Authority admitted the Company Petition under section 7 of the Insolvency and Bankruptcy Code, 2016, finding the Corporate Debtor unable ... Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors or not - existence of debt and dispute or not - HELD THAT:- It is on record that the Corporate Debtor has availed unsecured loan from the financial creditor and it is also confirmed by the responding director. It is also on record that the company is not doing any business and it is unable to pay its debts. The responding director has also prayed only for time to settle the matter with the Financial Creditor. Therefore, it is proved that the Corporate Debtor is unable to pay its debts and has failed to make the payments to the Financial Creditor. In the instant Petition, the Petitioner has proved its case by placing documentary evidence viz., copy of the ledger Account of Corporate Debtor as maintained by Vantage Vinimay Private Limited for the Financial Year 2013-14, 2014-15, 2015-16 and 2016-17 are enclosed as Annexure 7, copy of the Ledger Account of the Corporate Debtor as maintained by the Financial Creditor for the year 2017-18, 2018-19 are enclosed as Annexure 8, and Letter of confirmation issued by the Corporate Debtor to the Vantage Vinimay Private Limited confirming the outstanding balance dated 01.04.2016 is enclosed as Annexure 9, which prove that a default has occurred for which the present Corporate Debtor was liable to pay. In their counter affidavit, the Respondents have not denied the facts regarding the existence of 'financial debt' and 'default' committed by the Corporate Debtor. In the present case, this Adjudicating Authority is satisfied with the submissions put forth by the Petitioner/Financial Creditor regarding existence of 'financial debt' and occurrence of 'default'. Further, the Financial Creditor has fulfilled all the requirements as contemplated under IB Code in the present Company Petition and has also proposed the name of IRP after obtaining his written consent in Form-2 - In view of the above, this Adjudicating Authority is inclined to admit the petition. Petition admitted - moratorium declared. Issues:Company Petition under section 7 of the Insolvency and Bankruptcy Code, 2016 against Corporate Debtor for non-payment of loan.Detailed Analysis:Issue 1 - Unpaid Loan and Default:The Company Petition was filed by a Financial Creditor against a Corporate Debtor for non-payment of an unsecured loan of Rs. 1,79,50,000 disbursed in tranches. Despite agreements for repayment, the Corporate Debtor failed to make payments, resulting in an outstanding amount of Rs. 1,35,50,108 as of a specific date. The Corporate Debtor confirmed the outstanding amount but failed to settle the debt, indicating its inability to pay.Issue 2 - Counter by Corporate Debtor's Director:One of the Corporate Debtor's directors, holding 50% shares, filed a counter stating his role as an Investor Director and the operational responsibilities of another director. The counter highlighted financial constraints, criminal cases, and the company's closure due to fraud and legal issues. The responding director sought time to negotiate a settlement with the Financial Creditor.Issue 3 - Legal Proceedings and Adjudication:Multiple adjournments were granted for the Respondent to file a counter and attempt settlement, but talks failed. The Adjudicating Authority found the Corporate Debtor unable to pay its debts, leading to the admission of the petition. The Petitioner provided documentary evidence of the debt and default, meeting the requirements under the Insolvency and Bankruptcy Code.Issue 4 - Adjudication and Order:Citing the Supreme Court's precedent, the Adjudicating Authority admitted the petition, ordering the commencement of Corporate Insolvency Resolution Process. Dr. K. Lakshmi Narasimha was appointed as the Insolvency Resolution Professional (IRP) to manage the Corporate Debtor's affairs. A moratorium was declared, prohibiting legal actions against the Corporate Debtor and asset transfers, with exceptions for essential services.Issue 5 - Compliance and Assistance:The IRP was directed to follow specific provisions of the Insolvency and Bankruptcy Code, and the Corporate Debtor's management was instructed to cooperate with the IRP. Further directives were issued to the Financial Creditor, Registry, and concerned parties to ensure compliance with the order and communication of the decision.This detailed analysis of the judgment outlines the legal proceedings, evidence, adjudication, and orders issued by the Adjudicating Authority in response to the Company Petition under the Insolvency and Bankruptcy Code, 2016.