Tribunal Allows Insolvency Petition, Financial Creditor Initiated Process

The Tribunal found the petition under Section 7 of the Insolvency and Bankruptcy Code maintainable during the pendency of a winding-up petition. The petitioner was classified as a 'Financial Creditor' entitled to initiate Corporate Insolvency Resolution Process against the respondent. The petition met procedural requirements under Section 7 of the IBC, resulting in the appointment of an Interim Resolution Professional and declaration of a moratorium. Mr. Arun Jain was appointed as the IRP, and the Financial Creditor was directed to deposit funds for expenses. The Tribunal ordered the Registrar of Companies to update the 'Corporate Debtor' status on its website.

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Issues Involved:
1. Maintainability of the petition under Section 7 of the Insolvency and Bankruptcy Code during the pendency of a winding-up petition.
2. Classification of the petitioner as a 'Financial Creditor'.
3. Compliance with the procedural requirements under Section 7 of the Insolvency and Bankruptcy Code.
4. Appointment of Interim Resolution Professional and declaration of moratorium.

Issue-wise Detailed Analysis:

1. Maintainability of the petition under Section 7 of the Insolvency and Bankruptcy Code during the pendency of a winding-up petition:

The Tribunal addressed the issue of whether a petition under Section 7 of the Insolvency and Bankruptcy Code (IBC) is maintainable during the pendency of a winding-up petition before the High Court. The Tribunal referred to the Supreme Court's decision in M/s. Forech India Limited v. Edelweiss Assets Reconstruction Company Limited, which clarified that the IBC would prevail over the Companies Act, 1956, in such scenarios. The Tribunal concluded that the appointment of an Official Liquidator does not bar the maintainability of a petition under Section 7 of the IBC, as the Code would prevail, and the Official Liquidator would answer all queries of the Resolution Professional.

2. Classification of the petitioner as a 'Financial Creditor':

The petitioner entered into an Assured Return Agreement with the respondent for the purchase of IT Space, paying a total amount of Rs. 40,00,000/-. The Tribunal noted that the respondent honored its commitment towards assured returns until November 2015 but failed to continue payments thereafter. The Tribunal referred to the amended definition of 'Financial Debt' under Section 5(8) of the IBC, which includes dues of home buyers and recognizes them as 'Financial Creditors'. The Tribunal concluded that the petitioner, being an allottee under a real estate project, is covered by the definition of 'Financial Creditor' and is entitled to initiate the Corporate Insolvency Resolution Process (CIRP) against the respondent.

3. Compliance with the procedural requirements under Section 7 of the Insolvency and Bankruptcy Code:

The Tribunal examined whether the petition met the procedural requirements under Section 7 of the IBC. The petitioner argued that the petition was complete in all respects, as prescribed by Rule 4(1) of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016. The Tribunal was satisfied that the default had occurred, the application was complete, and no disciplinary proceedings were pending against the proposed Interim Resolution Professional (IRP). Consequently, the Tribunal found that the petition fulfilled all requirements under Section 7 of the IBC.

4. Appointment of Interim Resolution Professional and declaration of moratorium:

The Tribunal appointed Mr. Arun Jain as the Interim Resolution Professional (IRP) and declared a moratorium in terms of Section 14 of the IBC. The moratorium would not apply to transactions notified by the Central Government and would ensure the continuation of essential supplies such as water and electricity. The Tribunal directed the IRP to make a public announcement regarding the admission of the petition under Section 7 of the IBC within three days. Additionally, the Financial Creditor was instructed to deposit Rs. 2 lacs with the IRP to cover expenses, subject to adjustment by the Committee of Creditors.

Conclusion:

The Tribunal admitted the petition, appointed Mr. Arun Jain as the IRP, and declared a moratorium. The Tribunal directed the IRP to make a public announcement and the Financial Creditor to deposit Rs. 2 lacs for expenses. The Tribunal also instructed the Registrar of Companies to update the status of the 'Corporate Debtor' on its website.

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