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Tribunal Admits Corporate Debtor to CIRP Despite Assignment Deed Challenge The Tribunal admitted the Corporate Debtor in Corporate Insolvency Resolution Process (CIRP) under Section 7 of the Insolvency and Bankruptcy Code, 2016, ...
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Tribunal Admits Corporate Debtor to CIRP Despite Assignment Deed Challenge
The Tribunal admitted the Corporate Debtor in Corporate Insolvency Resolution Process (CIRP) under Section 7 of the Insolvency and Bankruptcy Code, 2016, despite the defense raised regarding the validity of the deed of assignment. The Tribunal emphasized that the key consideration is the due and payable nature of the debt, citing legal precedents. It appointed an Interim Resolution Professional (IRP), declared a moratorium, and initiated the resolution process, following the provisions of the Code. The Financial Creditor was directed to pay the IRP an advance fee, and the matter was listed for a progress report to ensure timely resolution.
Issues: - Application under Section 7 of Insolvency and Bankruptcy Code, 2016 for Corporate Insolvency Resolution Process (CIRP) due to default in payment of financial debt. - Validity of the deed of assignment and its impact on the application. - Admissibility of the Corporate Debtor in CIRP despite the defense raised. - Appointment of Interim Resolution Professional (IRP) and initiation of CIRP process.
Analysis: 1. The Financial Creditor filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016 against the Corporate Debtor for defaulting on a financial debt of Rupees 43,01,53,989. The debt was originally granted by The South Indian Bank Limited and later assigned to the Financial Creditor.
2. The Corporate Debtor raised a defense challenging the validity of the deed of assignment dated 17.03.2017, arguing that it was not properly stamped and lacked consideration. However, the Tribunal cited legal precedents to establish that such defenses are not permissible under the Insolvency and Bankruptcy Code, emphasizing that the key consideration is whether the debt is due and payable.
3. The Tribunal referenced the Supreme Court ruling in the case of Innoventive Industries Limited Vs. ICICI Bank and the NCLAT judgment in a similar case to support its decision. It clarified that the Tribunal's role is to verify the existence of a financial debt exceeding Rupees 1 Lakh and the default in payment by the Corporate Debtor, both of which were established in this case.
4. The Tribunal admitted the Corporate Debtor in CIRP, declared a moratorium, and appointed an Interim Resolution Professional (IRP) for the process. The orders included the initiation of the resolution process, public announcements, and the necessary steps to be taken during the moratorium period, as per the provisions of the Insolvency and Bankruptcy Code.
5. The Tribunal also directed the Financial Creditor to pay the IRP an advance fee, outlined the duties of the Resolution Professional, and instructed the Registry to communicate the order to all relevant parties. The matter was listed for a progress report, emphasizing the time-bound nature of the Corporate Insolvency Resolution Process.
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