2018 (11) TMI 893 - Tri - Insolvency and Bankruptcy

Financial Creditor's Insolvency Application Accepted, Corporate Debtor's Objections Dismissed

The Tribunal admitted the application for the initiation of the Insolvency Resolution Process under Section 7 of the Insolvency and Bankruptcy Code, 2016, ... Initiation of Insolvency Resolution Process - Acknowledgement of liability - Held that:- In the present case the acknowledgement of liability dated 31.08.2015 in the form of letter (Annexure-5) is sufficient to fulfil the requirement of Section 18 of Limitation Act. The present application was filed on 09.05.2018 which is much prior to three years. Therefore, the objection concerning the limitation period is wholly without substance and the same is hereby rejected. The objection with regard to calculation of amount would also not require any serious consideration. Section 4 of the Code, 2016 provides that if an amount of ₹ 1,00,000/- or more is due then that can be sufficient to initiate CIR Process. In the present case the default is in crores and objection regarding calculation is left open. It may be decided by CoC. The office is directed to communicate a copy of the order to the Financial Creditor, the Corporate Debtor, the Interim Resolution Professional and the Registrar of Companies, NCR, New Delhi at the earliest but not later than seven days from today. The Registrar of Companies shall update his website by updating the status of 'Corporate Debtor' and specific mention regarding admission of this petition must be notified. Issues Involved:1. Initiation of Insolvency Resolution Process.2. Compliance with Section 7 of the Insolvency and Bankruptcy Code, 2016.3. Objection on the grounds of limitation.4. Objection regarding the calculation of the default amount.5. Appointment of Interim Resolution Professional.6. Declaration of moratorium.Issue-wise Detailed Analysis:1. Initiation of Insolvency Resolution Process:The Financial Creditor, Macro Leafin Private Limited, filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016, seeking the initiation of the Insolvency Resolution Process against the Corporate Debtor, Pack Tech Systems Private Limited. The Financial Creditor granted a loan of Rs. 3,30,00,000 to the Corporate Debtor on 01.03.2008, which was to be repaid by 31.03.2010. Despite partial repayment, a substantial amount remained unpaid, leading to the application.2. Compliance with Section 7 of the Insolvency and Bankruptcy Code, 2016:The application was duly verified, signed, and filed by an authorized director of the Financial Creditor. The Financial Creditor proposed Shri Tarun Jain as the Interim Resolution Professional, who satisfied the requirements of Section 7(3)(b) of the Code. The Tribunal examined the provisions of Sections 7(2) and 7(5) and concluded that the application was complete and met all necessary criteria, warranting its admission.3. Objection on the Grounds of Limitation:The Corporate Debtor argued that the claim was barred by the law of limitation, as the loan was disbursed on 20.02.2008, and the application was filed on 09.05.2018, beyond the three-year limitation period. However, the Tribunal noted that the Corporate Debtor acknowledged the outstanding amount through balance confirmation letters dated 31.03.2010, 22.03.2013, and 31.08.2015. These acknowledgments extended the limitation period under Section 18 of the Limitation Act, 1963, making the application timely.4. Objection Regarding the Calculation of the Default Amount:The Corporate Debtor denied the claimed default amount of Rs. 3,76,33,150. The Tribunal, however, noted that Section 4 of the Code allows for the initiation of the Corporate Insolvency Resolution Process if the default amount is Rs. 1,00,000 or more. Given that the default amount was in crores, the Tribunal found the objection regarding calculation to be insubstantial and left it open for the Committee of Creditors (CoC) to decide.5. Appointment of Interim Resolution Professional:The Tribunal appointed Mr. Tarun Jain as the Interim Resolution Professional, directing him to make a public announcement regarding the admission of the application within three days, as per Section 13(2) of the Code and Regulation 6(1) of the IBBI Regulations.6. Declaration of Moratorium:The Tribunal declared a moratorium under Section 14 of the Code, imposing prohibitions on suits, asset transfers, foreclosure actions, and recovery of property by owners or lessors. The moratorium ensures the Corporate Debtor's assets are preserved during the resolution process. The Tribunal clarified that the moratorium does not apply to transactions notified by the Central Government or to sureties in a contract of guarantor to the Corporate Debtor. Essential goods and services must continue to be supplied to the Corporate Debtor during the moratorium period.Conclusion:The Tribunal concluded that the Financial Creditor successfully made out a case for triggering the Corporate Insolvency Resolution Process. The petition was admitted, and the Interim Resolution Professional was directed to perform his duties as per the Code, ensuring fairness and integrity throughout the process. The Tribunal also directed communication of the order to relevant parties and the Registrar of Companies for updating the status of the Corporate Debtor.