Tribunal Admits IBC Petition, Initiates CIRP Against Corporate Debtor

The Tribunal admitted the petition under Section 7 of the IBC, initiating CIRP against the Corporate Debtor. It ordered a moratorium under Section 14 of the IBC, appointed an Interim Resolution Professional (IRP), and directed the Financial Creditor to deposit Rs. 2,00,000/- for CIRP expenses. The Tribunal emphasized that the debt and default were clearly established, and there was no valid reason to deny the petition.

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Issues Involved:
1. Whether the petition under Section 7 of the Insolvency and Bankruptcy Code, 2016 (IBC) is maintainable.
2. Whether the Corporate Debtor's debt and default are established.
3. Whether the amendments to Section 7 of the IBC affect the maintainability of the petition.
4. Whether the advance payment converted into a loan qualifies as a financial debt.
5. Whether the Corporate Debtor's defenses and counterclaims are valid.
6. Whether the Corporate Debtor's plea of the petition being filed for oblique purposes holds merit.

Issue-wise Detailed Analysis:

1. Maintainability of the Petition under Section 7 of the IBC:
The petition was filed by Abhigyan Developers Pvt. Ltd. (Financial Creditor) to initiate Corporate Insolvency Resolution Process (CIRP) against Shreepati Build Infra Investment Ltd. (Corporate Debtor) under Section 7 of the IBC. The Financial Creditor provided evidence of payments totaling Rs. 3,50,00,000/- and subsequent agreements converting the advance payment for flats into a loan. The Corporate Debtor’s failure to repay this loan with interest led to the filing of the petition.

2. Establishment of Debt and Default:
The Financial Creditor presented multiple letters from the Corporate Debtor confirming the receipt of Rs. 3,50,00,000/- and acknowledging the conversion of this amount into a loan repayable with interest. The Corporate Debtor admitted the debt in letters dated 31.03.2015, 08.07.2016, 30.09.2017, and 31.03.2018, with the last letter confirming a 15% cumulative interest compounded quarterly. The Tribunal found that the existence of debt and default was clearly established through these admissions.

3. Impact of Amendments to Section 7 of the IBC:
The Corporate Debtor argued that the petition was not maintainable due to amendments to Section 7 of the IBC, which require applications by not less than 100 allottees or 10% of the total allottees in a real estate project. The Tribunal noted that the Financial Creditor had consistently maintained its status as a financial creditor due to the conversion of the advance into a loan. The Tribunal found that the amendments did not affect the maintainability of the petition as the Financial Creditor was not merely an allottee but a creditor owed a financial debt.

4. Qualification of Advance Payment as Financial Debt:
The Financial Creditor relied on judgments from the Hon’ble NCLAT and Supreme Court, which held that advances for flats converted into loans qualify as financial debt. The Tribunal agreed, noting that the Corporate Debtor’s own admissions and the conversion of the advance into a loan with interest fulfilled the criteria of financial debt under Section 5(8) of the IBC.

5. Validity of Corporate Debtor's Defenses and Counterclaims:
The Corporate Debtor argued that the agreement for sale continued to hold, and the Financial Creditor was bound to pay the balance consideration. They also contended that the interest rate was not crystallized and that the Financial Creditor had not treated the amount as a loan in its books. The Tribunal dismissed these defenses, emphasizing the clear admissions of debt and default by the Corporate Debtor and the lack of any substantial dispute.

6. Allegation of Petition Filed for Oblique Purposes:
The Corporate Debtor claimed that the petition was filed with malicious intent to avoid obligations under the agreement. The Tribunal found no merit in this argument, noting that the Financial Creditor’s claim was based on admitted debt and default, and there was no evidence of fraudulent intent.

Conclusion:
The Tribunal admitted the petition under Section 7 of the IBC, initiating CIRP against the Corporate Debtor. It ordered a moratorium under Section 14 of the IBC, appointed an Interim Resolution Professional (IRP), and directed the Financial Creditor to deposit Rs. 2,00,000/- for CIRP expenses. The Tribunal emphasized that the debt and default were clearly established, and there was no valid reason to deny the petition.

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