2019 (9) TMI 1564 - Tri - Insolvency and Bankruptcy

Tribunal grants insolvency petition against corporate debtor for loan default.

The Tribunal admitted the petition under Section 7 of The Insolvency and Bankruptcy Code, 2016, filed by operational creditors against the corporate ... Maintainability of application - initiation of CIRP - Corporate Debtor failed to make the repayment of its dues - Financial Creditors - application filed by two applicants without having any inter-se agreement in between them - debt due and payable or not - time limitation - HELD THAT:- It is found that duly sealed and signed promissory demand note was executed between the first applicant and respondent on 01.08.2012 for ₹ 35,00,00,000/-, placed at page No. 47 to the application, which clearly envisages that the loan amount along with interest @ 18% per annum shall be paid at the time of maturity by the corporate debtor on 30.09.2017. Copy of similar demand promissory note entered between the second applicant and the corporate debtor for a sum of ₹ 45,00,00,000/- dated 30.07.2012 is placed at page No. 52 to the application - the first and foremost objection raised by the corporate debtor that the application is barred by limitation is not sustainable. Maintainability of petition - petition is filed jointly without entering into any agreement between the first and second applicants - HELD THAT:- As per Section 7 (1), there is no bar in filing an application either by self or jointly with other. financial creditors. Thus, the second objection raised by the respondent is also not sustainable. Default in repayment of the financial debt has occurred or not - HELD THAT:- On perusal of record it is found that on one hand the respondent has stated that the amount in question has not become payable and on the other hand respondent denies having taken any loan from the applicant. Record also shows that the respondent has been making continuous efforts to resolve the issue and has written number of letters to the applicants for purchasing time to make part payment. While going through the documents so filed by the petitioner, it is found that, corporate debtor admitted and acknowledged liability by letters of acknowledgement of debt/balance confirmation letters from time to time in favour of the petitioner - In the instant case, the documents produced by the Financial Creditor clearly establish the ‘debt’ and there is default on the part of the Corporate Debtor in payment of the ‘financial debt’. The petitioner/financial creditor having fulfilled all the requirements of Section 7 of the Code, the instant petition deserves to be admitted - Petition admitted - moratorium declared. Issues:1. Application under section 7 of The Insolvency and Bankruptcy Code, 2016 seeking reliefs under Section 7(5)(a) and Section 13(1)(a)(b)(c) of the Code.2. Objection raised by the respondent on the grounds of limitation and maintainability of the joint petition.3. Existence of default in repayment of financial debt by the corporate debtor.4. Appointment of an interim resolution professional and declaration of moratorium.Issue 1: Application under section 7 of The Insolvency and Bankruptcy Code, 2016The petition was filed by operational creditors seeking reliefs under Section 7 of The Insolvency and Bankruptcy Code, 2016, for default in repayment of loans by the respondent corporate debtor. The loans had matured on 30.09.2017, with the corporate debtor being in default of a significant amount, including interest. The petitioners submitted various documents supporting their claim, including demand promissory notes and correspondence confirming the outstanding loans.Issue 2: Objection raised by the respondentThe respondent raised objections on the grounds of limitation and maintainability of the joint petition filed by the two operational creditors. The Tribunal found that the objection of limitation was not sustainable as the demand promissory notes clearly outlined the repayment terms, and the application was filed within the limitation period. The objection regarding the joint filing of the petition was also dismissed as Section 7 of the Code allows for joint applications by financial creditors.Issue 3: Existence of default in repayment of financial debtThe Tribunal examined the evidence presented by the petitioners, including acknowledgment of the debt by the corporate debtor in various correspondences. Despite promises and efforts by the respondent to resolve the issue, the loans remained unpaid. The Tribunal concluded that the corporate debtor had defaulted on the financial debt, as evidenced by the acknowledgment of liability and failure to repay the loans.Issue 4: Appointment of an interim resolution professional and declaration of moratoriumThe Tribunal appointed an interim resolution professional and declared a moratorium prohibiting various actions against the corporate debtor. The moratorium was to remain in effect until the completion of the corporate insolvency resolution process or until a resolution plan was approved. The order also directed the continuation of the supply of goods and essential services to the corporate debtor during the moratorium period.In conclusion, the Tribunal admitted the petition, finding that all requirements under Section 7 of the Code were fulfilled. The order included the appointment of an interim resolution professional, declaration of a moratorium, and directions for communication of the order to the relevant parties.