Tribunal Admits Petition, Initiates Insolvency Process, Imposes Moratorium

The tribunal admitted the petition under Section 7 of the Insolvency and Bankruptcy Code, initiated the Corporate Insolvency Resolution Process, and imposed a moratorium. It found the Financial Creditor had established the financial debt and default within the limitation period, rejecting the Corporate Debtor's arguments on counter claims, obligations fulfillment, and suppression of facts. The tribunal appointed an Interim Resolution Professional and directed a deposit for immediate expenses.

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Issues Involved:
1. Maintainability of the petition under Section 7 of the Insolvency and Bankruptcy Code (IBC), 2016.
2. Alleged default and financial debt.
3. Limitation period for filing the petition.
4. Counter claims and set-off by the Corporate Debtor.
5. Fulfillment of obligations by the Financial Creditor.
6. Suppression of material facts and mala fide proceedings.
7. Appointment of Interim Resolution Professional (IRP).

Detailed Analysis:

1. Maintainability of the Petition under Section 7 of IBC:
The petition was filed under Section 7 of the IBC, 2016, for initiating the Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor on the grounds of its inability to liquidate its financial debt. The Corporate Debtor contended that the petition was not maintainable as no prima facie case was made out under Section 7, arguing that the company was solvent and net worth positive.

2. Alleged Default and Financial Debt:
The Financial Creditor sanctioned a term loan of Rs. 12,80,45,000 to the Corporate Debtor, repayable in 87 monthly installments. The Corporate Debtor defaulted on the repayment, leading to the account being classified as a Non-Performing Asset (NPA) on 31-12-2014. The Financial Creditor claimed an outstanding amount of Rs. 2,83,49,880.36, including principal and interest. The Corporate Debtor admitted the loan but argued that the bank failed to disburse the entire sanctioned amount, resulting in project failure and losses.

3. Limitation Period for Filing the Petition:
The Corporate Debtor argued that the petition was barred by limitation as the default occurred in 2014. The Financial Creditor contended that the limitation period should exclude the time spent in proceedings before the DRT, DRAT, and the Delhi High Court. The tribunal referred to Section 14 of the Limitation Act, which allows exclusion of time spent in bona fide proceedings in a court without jurisdiction. The tribunal concluded that the petition was within the limitation period after excluding the time spent in previous proceedings.

4. Counter Claims and Set-Off by the Corporate Debtor:
The Corporate Debtor asserted a counter claim of Rs. 33,47,58,000 against the Financial Creditor for failing to disburse the full loan amount. The Financial Creditor argued that the counter claim was dismissed by the DRT and DRAT, and thus, could not be considered a dispute under Section 7 of the IBC. The tribunal held that the existence of a counter claim does not negate the default on the financial debt.

5. Fulfillment of Obligations by the Financial Creditor:
The Corporate Debtor claimed that the Financial Creditor's failure to disburse the full loan amount led to project failure and financial losses. The tribunal, however, focused on the default in repayment of the sanctioned loan amount and held that the Financial Creditor had established the existence of financial debt and default.

6. Suppression of Material Facts and Mala Fide Proceedings:
The Corporate Debtor alleged that the Financial Creditor suppressed material facts and initiated mala fide proceedings, barred under Section 65 of the IBC. The tribunal found no merit in these allegations, emphasizing that the Financial Creditor had established the default and financial debt as required under Section 7 of the IBC.

7. Appointment of Interim Resolution Professional (IRP):
The tribunal appointed Mr. Pankaj Khetan as the Interim Resolution Professional (IRP) and directed the Financial Creditor to deposit Rs. 2 lakh to meet the immediate expenses of the IRP. The tribunal confirmed that no disciplinary proceedings were pending against the proposed IRP.

Conclusion:
The tribunal admitted the petition, initiated the CIRP, and imposed a moratorium as per Section 14 of the IBC. The tribunal held that the Financial Creditor had successfully established the existence of financial debt and default, and the petition was within the limitation period. The tribunal dismissed the Corporate Debtor's contentions regarding counter claims, fulfillment of obligations, and suppression of material facts.

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