2019 (8) TMI 1734 - Tri - Insolvency and Bankruptcy

Tribunal rules in favor of financial creditor in loan default case

The Tribunal found in favor of the financial creditor, Shree Barkha Synthetics Limited, in a case against the corporate debtor, Global Syntex (Bhilwara) ... Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not - Time limitation - HELD THAT:-This Tribunal perused all the relevant papers and found them to be in order. The Registered Office of Corporate Debtor is situated in Bhilwara and therefore this Tribunal has jurisdiction to entertain and try this Application. The matter is within the limitation period as enunciated under the Law of Limitation - It is apparent from the reply of the Respondent that the payment of claim amount has been defaulted by the Corporate Debtor to the Applicant. The claim stands established and prima facie presumption raised that there is default in payment of the amount due to the Applicant and in view of the reply of the Respondent the debt is admitted by the Respondent - this Tribunal is inclined to initiate the Corporate Insolvency Resolution Process (CIRP) as against the Corporate Debtor as envisaged under the provisions of IBC, 2016. Issues:1. Claim of financial creditor for default in repayment of loan amount by corporate debtor.2. Jurisdiction of the Tribunal.3. Appointment of Interim Resolution Professional.4. Initiation of Corporate Insolvency Resolution Process (CIRP).5. Consequences of initiating CIRP.Issue 1: Claim of Financial Creditor:The application was filed by a financial creditor, Shree Barkha Synthetics Limited, claiming default in repayment of a loan by the corporate debtor, Global Syntex (Bhilwara) Limited. The financial creditor alleged that the corporate debtor had availed a short-term loan and failed to repay it despite multiple extensions. The outstanding amount, as per the financial creditor, was &8377; 1,05,40,702/- as of 31.03.2019. The corporate debtor admitted to the loan but claimed oral agreements for interest relaxation, which it failed to prove. The Tribunal found the claim established and initiated the Corporate Insolvency Resolution Process (CIRP) against the corporate debtor.Issue 2: Jurisdiction of the Tribunal:The Tribunal confirmed its jurisdiction to entertain the application as the registered office of the corporate debtor was in Bhilwara. It also noted that the matter was within the limitation period as prescribed by the Law of Limitation, allowing the Tribunal to proceed with the case.Issue 3: Appointment of Interim Resolution Professional:The financial creditor named Mr. Prashant Agrawal as the Interim Resolution Professional (IRP) to be appointed by the Tribunal. Mr. Agrawal, a registered Insolvency Professional, was approved by the Tribunal to take over the affairs of the corporate debtor and perform duties as per the Insolvency and Bankruptcy Code, 2016. The financial creditor was directed to deposit a sum of &8377; 2,00,000/- to the account of the IRP for expenses, and the IRP was tasked with filing progress reports to the Tribunal.Issue 4: Initiation of CIRP:The Tribunal, based on the established default and admission by the corporate debtor, decided to initiate the Corporate Insolvency Resolution Process (CIRP) against the corporate debtor. This decision invoked moratorium under Section 14 of the IBC, 2016, and appointed the IRP to oversee the resolution process strictly adhering to the specified timelines.Issue 5: Consequences of Initiating CIRP:Upon initiating the CIRP, various consequences were outlined by the Tribunal. These included the appointment of the IRP, invocation of moratorium, directions for depositing funds for IRP's expenses, suspension of powers of personnel of the corporate debtor, and communication of the order to all relevant parties within a specified timeline.This comprehensive analysis of the judgment highlights the key issues involved in the case and the Tribunal's decision regarding each issue, ensuring a detailed understanding of the legal aspects and implications of the judgment.