2019 (10) TMI 1358 - Tri - Insolvency and Bankruptcy

Tribunal Admits Insolvency Application, Emphasizes Validity of Debt

CFM Asset Reconstruction Private Limited Versus Core Indo Ispat Private Limited

The Tribunal admitted the Insolvency and Bankruptcy Application under section 7 of the Insolvency and Bankruptcy Code, 2016, against the Corporate Debtor. ... Maintainability of application - initiation of CIRP - Corporate Debtor defaulted in making repayment of dues - existenc eof debt and dispute or not - HELD THAT:- Applicant has already filed OA against the Guarantors and the Corporate Debtor before Debt Recovery Tribunal-II, Chennai for the same claim. Filing of such claim before DRT will not have any bearing on this proceeding initiated under Insolvency and Bankruptcy Code because this point has already been dealt with by Hon'ble Supreme Court of India in between State Bank of India vs. V. Ramakrishnan and Another [2018 (8) TMI 837 - SUPREME COURT]. The applicant having proved existence of debt as well as default, the application is admitted - moratorium declared. Issues:Insolvency and Bankruptcy Application (IBA) under section 7 of the Insolvency and Bankruptcy Code, 2016 for initiation of Corporate Insolvency Resolution Process (CIRP) against a Corporate Debtor due to default in repayment.Analysis:1. The Financial Creditor filed an IBA against the Corporate Debtor for defaulting on a substantial repayment amount. The Corporate Debtor had executed various agreements and guarantees with a bank, leading to the debt being assigned to the Applicant for recovery.2. The Corporate Debtor argued that the assignment deeds were invalid and the debt was barred by limitation. However, the Tribunal found that the assignment deeds were valid, and the debt was not time-barred based on the evidence of part-payments made by the Corporate Debtor.3. The Tribunal clarified that the date of default and classification as a Non-Performing Asset were crucial, and the Corporate Debtor's contentions were not valid as the historical facts of the case remained unchanged. The Tribunal emphasized that the key consideration was the default in repayment and whether the claim was within the limitation period.4. The Tribunal addressed the issue of a similar claim filed before the Debt Recovery Tribunal, stating that it would not affect the proceedings under the Insolvency and Bankruptcy Code based on a precedent set by the Supreme Court of India.5. After reviewing the submissions, the Tribunal admitted the application, appointed an Interim Resolution Professional, and declared a moratorium to protect the assets and interests of the Corporate Debtor during the insolvency resolution process. The order outlined specific directions and provisions to be followed during the moratorium period.This detailed analysis covers the key legal aspects and decisions made by the Tribunal in the judgment regarding the Insolvency and Bankruptcy Application filed against the Corporate Debtor.