2020 (1) TMI 901 - Tri - Insolvency and Bankruptcy

Tribunal Admits CIRP Application, Appoints IRP & Imposes Moratorium

Pashupati Jewellers Versus Marigold Overseas Ltd.

The Tribunal admitted the application for initiation of Corporate Insolvency Resolution Process (CIRP) under Section 7 of IBC, 2016, confirming the ... Maintainability of application - initiation of CIRP - Corporate debtor failed to make repayment of debt - existence of debt and dispute or not - HELD THAT:- The corporate debtor has not put on record any document evidencing that corporate guarantee agreement was not executed between the corporate debtor and the applicant. The corporate debtor has tried to challenge the genuinely of the corporate guarantee agreement but the same is a lame excuse. It seems that corporate debtor anticipating the triggering of I & B Code against it, had filed a suit challenging the authority of executant of corporate guarantee agreement and endeavored to defeat the claim of the applicant - The application is complete as per the requirements of section 7 of the code. Further the default occurred on 07.04.2018, hence the debt is not time-barred and the application is filed within the period of limitation. The registered office of corporate debtor is situated in Delhi and therefore this Tribunal has jurisdiction to entertain and try this application - The present application is complete and perusing the documents on records it goes beyond doubt that the Applicant is entitled to claim its dues, from the Corporate Debtor, who is liable to pay, being the guarantor of the principal borrower. The default in payment of the financial debt is established beyond doubt. The present application is admitted - moratorium declared. Issues Involved:1. Initiation of Corporate Insolvency Resolution Process (CIRP) under Section 7 of IBC, 2016.2. Validity and execution of the Corporate Guarantee Agreement.3. Default in repayment of the loan.4. Jurisdiction of the Tribunal.5. Appointment of Interim Resolution Professional (IRP).6. Moratorium under Section 14 of IBC, 2016.Detailed Analysis:1. Initiation of Corporate Insolvency Resolution Process (CIRP) under Section 7 of IBC, 2016:The application was filed under Section 7 of the Insolvency and Bankruptcy Code, 2016 (IBC, 2016) by Mr. Rajesh Kumar on behalf of M/s. Pashupati Jewellers, seeking to initiate the Corporate Insolvency process against Marigold Overseas Limited. The Applicant asserted that a loan of Rs. 2,60,00,000/- was given to the Principal Borrower, who is a majority shareholder and director of the Corporate Debtor, and the loan was secured by a corporate guarantee.2. Validity and execution of the Corporate Guarantee Agreement:The Applicant submitted that the loan was secured by a Corporate Guarantee and Undertaking dated 07.04.2017. The Corporate Debtor stood as the guarantor and handed over original title deeds and share certificates as security. However, the Corporate Debtor denied the execution of the corporate guarantee and challenged the authority of the person who executed it. The Tribunal observed that the Corporate Debtor failed to provide evidence disproving the execution of the corporate guarantee agreement.3. Default in repayment of the loan:The Applicant issued legal notices demanding repayment, which were not honored by the Principal Borrower or the Corporate Debtor. The Tribunal noted that the Corporate Debtor had not repaid the loan amount, thus establishing a default in payment of the financial debt. The Tribunal referenced Section 5(8)(i) of the IBC, which includes guarantees within the definition of financial debt, thereby confirming the default.4. Jurisdiction of the Tribunal:The registered office of the Corporate Debtor is situated in Delhi, granting the Tribunal jurisdiction to entertain and try the application. The Tribunal confirmed that the application was complete and filed within the period of limitation.5. Appointment of Interim Resolution Professional (IRP):The Applicant proposed Mr. Ashok Kriplani as the Interim Resolution Professional (IRP). The Tribunal directed the Financial Creditor to deposit Rs. 2 lakhs with the IRP to cover expenses and stipulated that the IRP must file specific consent and disclosures as required under the regulations.6. Moratorium under Section 14 of IBC, 2016:Upon admitting the application, the Tribunal imposed a moratorium as per Section 14(1) of IBC, prohibiting certain actions against the Corporate Debtor during the insolvency process. The Tribunal also directed that the terms of Sections 14(2) to 14(4) of the Code shall come into force during the moratorium period.Conclusion:The Tribunal admitted the application, confirming the default in payment of the financial debt by the Corporate Debtor. The Tribunal appointed Mr. Ashok Kriplani as the IRP and imposed a moratorium. The order was to be communicated to the relevant parties and authorities for compliance and record-keeping.