Application Admitted: Moratorium Declared, Interim Resolution Professional Appointed

The Tribunal admitted the application under Section 7 of the Insolvency and Bankruptcy Code, declaring a moratorium and appointing an Interim Resolution Professional. The application was deemed within the limitation period, complete, and the Financial Creditor successfully proved the default, leading to the initiation of Corporate Insolvency Resolution Process against the Corporate Debtor.

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Issues Involved:

1. Application under Section 7 of the Insolvency and Bankruptcy Code, 2016.
2. Grounds of limitation.
3. Completeness of the application under Section 7(3) of the I&B Code.
4. Validity of the guarantee agreement and invocation.
5. Existence of default and evidence required.

Detailed Analysis:

1. Application under Section 7 of the Insolvency and Bankruptcy Code, 2016:
The South Indian Bank Limited filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016, read with Rule 4 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016, against M/s. Atlas Gold Township Pvt. Ltd., treating it as a 'Corporate Guarantor/Corporate Debtor' to initiate the Corporate Insolvency Resolution Process (CIRP).

2. Grounds of Limitation:
The Corporate Debtor opposed the application, claiming it was barred by limitation. The Financial Creditor had invoked the guarantee on 01.01.2016, and the application was filed in April 2019, beyond the three-year limitation period prescribed under Article 137 of the Limitation Act. The Corporate Debtor relied on the Supreme Court judgment in Gauravindhbai Dave v. Asset Reconstruction Company India Ltd. to support their claim.

3. Completeness of the Application under Section 7(3) of the I&B Code:
The Corporate Debtor argued that the application was incomplete as it did not include any record of default from the information utility, as mandated by Section 7(3)(a) of the I&B Code. The Corporate Debtor contended that only records authenticated by the National E-Governance Service Limited (NeSL) were acceptable, and no alternative records/evidence were specified by the Insolvency and Bankruptcy Board of India (IBBI).

4. Validity of the Guarantee Agreement and Invocation:
The Corporate Debtor claimed that the guarantee agreement became void as the Bank had sold all securities without serving notice to the guarantor. The Financial Creditor, however, argued that the guarantee agreement was valid, and the invocation of the guarantee was proper. The Financial Creditor also pointed out that the principal borrower had acknowledged the debt in a writ petition filed before the Hon'ble High Court of Kerala, which should bind the guarantor.

5. Existence of Default and Evidence Required:
The Tribunal referred to the Supreme Court judgment in Innoventive Industries Ltd. v. ICICI Bank & Anr., which stated that the adjudicating authority only needs to see the records of the information utility or other evidence produced by the Financial Creditor to satisfy itself that a default has occurred. The Financial Creditor provided various documents, including the guarantee agreement, notice of invocation, and statements of accounts, to prove the existence of default. The Tribunal found these documents sufficient to establish the default.

Findings:

Limitation:
The Tribunal considered the writ petition filed by the principal borrower in August 2018, which acknowledged the debt, thereby extending the limitation period. The Tribunal also referred to clause 6 of the guarantee agreement, which stated that any acknowledgment of debt by the borrower would bind the guarantor. Thus, the application was deemed within the limitation period.

Completeness of Application:
The Tribunal held that the documents provided by the Financial Creditor, including statements of accounts and computation statements, were sufficient to prove the default. The Tribunal stated that the application was complete in all respects.

Existence of Default:
The Tribunal found that the Financial Creditor had successfully proved the existence of default through the provided documents. The Tribunal also noted that the Financial Creditor's claim was a financial debt as defined under Section 5(8) of the I&B Code, and the guarantee agreement entitled the Financial Creditor to claim the due amount from the guarantor.

Order:
The Tribunal admitted the application under Section 7 of the I&B Code, declaring a moratorium as per Section 14 of the I&B Code. The Tribunal appointed Shri Manivannan J. as the Interim Resolution Professional (IRP) and directed necessary public announcements as per Section 15 of the I&B Code. The Tribunal disposed of the application with no order as to costs.

Conclusion:
The Tribunal admitted the application for initiating CIRP against the Corporate Debtor, finding that the application was within the limitation period, complete in all respects, and that the Financial Creditor had successfully proved the existence of default.

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