2021 (2) TMI 1206 - Tri - Insolvency and Bankruptcy

Tribunal admits petition under IBC, appoints IRP for Corporate Debtor

The tribunal admitted the petition under Section 7 of the Insolvency and Bankruptcy Code (IBC) filed by the Financial Creditor against the Corporate ... Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Debt or not - Financial Creditors - existence of debt and dispute or not - Time Limitation - HELD THAT:- It can be seen that right from the date of default on 13.11.2013 to filing the Petition on 22.11.2019, the petition is well within the period of limitation as prescribed u/s.19 of the Limitation Act, 1963. The nature of Debt is a “Financial Debt” as defined under section 5 (8) of the Code. It has also been established that there is a “Default” as defined under section 3 (12) of the Code on the part of the Debtor. The two essential qualifications, i.e. existence of ‘debt’ and ‘default’, for admission of a petition under section 7 of the I&B Code, have been met in this case. Besides, the Company Petition is well within the period of limitation - it is found that the Petitioner has not received the outstanding Debt from the Respondent and that the formalities as prescribed under the Code have been completed by the Petitioner, this Petition deserves ‘Admission’. Application admitted - moratorium declared. Issues Involved:1. Filing of the application under Section 7 of the Insolvency and Bankruptcy Code (IBC) by the Financial Creditor.2. Default in repayment of the loan by the Corporate Debtor.3. Whether the petition is barred by the Limitation Act.4. Appointment of the Interim Resolution Professional (IRP).5. Declaration of Moratorium under Section 14 of the IBC.Detailed Analysis:1. Filing of the application under Section 7 of the Insolvency and Bankruptcy Code (IBC) by the Financial Creditor:The Petitioner, Samata Nagari Sahkari Patsanstha Maryadit, Kopargaon, filed Form No. 1 under Rule 4 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016, as a 'Financial Creditor' to initiate the Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor, Kalyani Education Private Limited, under Section 7 of the Insolvency and Bankruptcy Code (IBC).2. Default in repayment of the loan by the Corporate Debtor:The Corporate Debtor had obtained a Working Capital Term Loan aggregating Rs. 5,00,00,000/- for the expansion of its educational institution. Out of this, Rs. 2,25,00,000/- was disbursed by the Petitioner. The Corporate Debtor defaulted on an amount of Rs. 1,67,82,786/- as on 30.11.2013. Despite legal actions and issuance of certificates under Section 101 and 100 of the Maharashtra Co-operative Societies Act, 1960, the Corporate Debtor failed to repay the debt.3. Whether the petition is barred by the Limitation Act:The petition was filed on 22.11.2019. The date of default was 30.11.2013, but the Corporate Debtor made several payments between 2014 and 2018. According to Section 19 of the Limitation Act, 1963, a fresh period of limitation commences from the time when the last payment was made. The last payment was made on 08.06.2018, making the petition within the limitation period.4. Appointment of the Interim Resolution Professional (IRP):The Financial Creditor proposed the name of Mr. Vinit Gangwal as the IRP. The tribunal found no disciplinary action pending against the proposed IRP and appointed him to conduct the Insolvency Resolution Process.5. Declaration of Moratorium under Section 14 of the IBC:Upon admitting the petition, the tribunal declared a moratorium as prescribed under Section 14 of the IBC. This prohibits the institution of any suits, transferring or encumbering assets of the Corporate Debtor, and ensures the supply of essential goods or services is not terminated during the moratorium period. The IRP is directed to make a public announcement of the initiation of CIRP and perform duties under Sections 18 and 15 of the Code.Conclusion:The tribunal concluded that there was a 'debt' and a 'default' as defined under the IBC. The petition was within the limitation period, and the formalities prescribed under the Code were completed. Thus, the petition was admitted, and the CIRP was initiated with the appointment of an IRP and the declaration of a moratorium.