Adjudicating Authority Admits Creditor's Application for Insolvency Proceedings

The Adjudicating Authority admitted the application under Section 7 of the Insolvency & Bankruptcy Code, 2016, filed by the Financial Creditor against the Corporate Debtor, initiating the Corporate Insolvency Resolution Process (CIRP). A moratorium was declared, appointing an Interim Resolution Professional (IRP) to manage the process and prohibiting recovery actions against the Corporate Debtor. The moratorium would not impact pending writ petitions in the High Court of Madras.

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Issues Involved:
1. Application under Section 7 of the Insolvency & Bankruptcy Code, 2016.
2. Financial debt and default by the Corporate Debtor.
3. Demand notice and possession of mortgaged property under SARFAESI Act.
4. One-time settlement proposal and subsequent legal proceedings.
5. Counterclaims and orders from DRT and DRAT.
6. Adjudicating authority's decision on initiation of CIRP and moratorium.

Detailed Analysis:

1. Application under Section 7 of the Insolvency & Bankruptcy Code, 2016
The Financial Creditor, Indian Overseas Bank, filed an application under Section 7 of the Insolvency & Bankruptcy Code, 2016 (IBC, 2016) read with Rule 4 of the Insolvency & Bankruptcy (Application to Adjudicating Authority) Rules, 2016 against the Corporate Debtor, INMA International Limited. The application sought to admit the case, initiate the Corporate Insolvency Resolution Process (CIRP), declare a moratorium, and appoint an Interim Resolution Professional (IRP).

2. Financial Debt and Default by the Corporate Debtor
The Financial Creditor claimed a financial debt of Rs.14,08,75,444.17 as of 15.10.2018, along with future interest. The Corporate Debtor had availed MCC (Miscellaneous Cash Credit) facility amounting to Rs.13 crore, which included a clean cash credit of Rs.5 crore and a CCH limit of Rs.8 crore, based on a sanction letter dated 27.09.2013. The Corporate Debtor had to pay the outstanding amount with future interest at a contracted rate.

3. Demand Notice and Possession of Mortgaged Property under SARFAESI Act
The Financial Creditor issued a demand notice on 27.01.2015 under the SARFAESI Act, requesting the Corporate Debtor to pay Rs.16,51,98,135.20. As the Corporate Debtor did not respond, the Financial Creditor took possession of the mortgaged property on 28.07.2015 and issued a possession notice. The Corporate Debtor did not take any action against this, indicating no grievance against the Financial Creditor's action.

4. One-Time Settlement Proposal and Subsequent Legal Proceedings
The Corporate Debtor requested to stop the e-auction process and proposed a one-time settlement (OTS). The Financial Creditor permitted the operation of the account within the existing limit of Rs.11.25 crore, subject to the payment of Rs.5.57 crore along with interest. However, the Financial Creditor did not accept the OTS proposal and advised immediate payment. The Corporate Debtor filed S.A.No.20 of 2016 before DRT-III, Chennai, obtaining a stay order on the sale notice, subject to certain payments, which the Corporate Debtor partially complied with.

5. Counterclaims and Orders from DRT and DRAT
The Corporate Debtor filed a counterclaim in C.C.No.6 of 2018 in OA No.633 of 2016 before DRT-II Chennai. The DRT held that the Financial Creditor was not entitled to any interest for the financial facilities sanctioned and directed the adjustment of payments towards the principal amount. The Financial Creditor appealed, and the DRAT, Chennai, ruled that the Financial Creditor was entitled to 9% interest on the due amount. The Corporate Debtor filed writ petitions before the High Court of Madras, obtaining interim injunctions.

6. Adjudicating Authority's Decision on Initiation of CIRP and Moratorium
The Adjudicating Authority noted that the Corporate Debtor admitted the default in payment, and the only dispute was the rate of interest. Referring to Section 7 of the IBC, 2016, and relevant case laws, the authority concluded that the debt and default were clear. The application was admitted, and the CIRP was initiated. The IRP, Mr. Mudappallur Varieth Gangadharan, was appointed to manage the process. A moratorium was declared, prohibiting suits, asset transfers, and recovery actions against the Corporate Debtor. The moratorium would remain in effect until the completion of the CIRP or an order for liquidation.

The order emphasized that the moratorium would not affect pending writ petitions in the High Court of Madras, allowing the Corporate Debtor to proceed with those cases. The Registry was directed to communicate the order to the relevant parties and authorities, including the IBBI and the Registrar of Companies.

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