2020 (6) TMI 523 - Tri - Insolvency and Bankruptcy

Tribunal Admits Insolvency Application; Moratorium Declared to Protect Corporate Debtor

JM Financial Asset Reconstruction Company Ltd. Versus Raipur Treasure Island (P.) Ltd.

The Tribunal admitted the application under Section 7 of the Insolvency & Bankruptcy Code, 2016, filed by a Financial Creditor against the Corporate ... Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence of debt and dispute or not - time limitation - HELD THAT:- The Application is filed on the basis of Order dated 22.10.2016 passed by the Ld. DRT, Jabalpur in O.A No. 225/2013. It is pertinent to mention that the order passed is a final order and the same concludes that the Corporate Debtor is liable to pay a sum of ₹ 85,94,62,955/- together with interest pendente lite and future interest at 12% per annum from the date of filing the OA. i.e 30.09.2013 till its realisation. The said order is passed after considering the documents in relation to the Credit facilities availed by the Corporate Debtor - This Application being filed on the basis of order dated 22.10.2016 is well within the period of limitation. The Application under Section 7 of I&B Code, 2016 filed by the financial creditor for initiation of CIRP in prescribed Form No.1, as per the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 is complete. The existence of financial debt of more than Rupees One Lakh against the Corporate Debtor and its default is also proved. Accordingly, the petition filed under section 7 of the Insolvency and Bankruptcy Code for initiation of corporate insolvency resolution process against the corporate debtor deserves to be admitted. Application admitted - moratorium declared. Issues:1. Application under section 7 of Insolvency & Bankruptcy Code, 2016 for initiating Corporate Insolvency Resolution Process (CIRP) against Corporate Debtor.2. Barred by limitation claim by Corporate Debtor.3. Appointment of Interim Resolution Professional.4. Admission of the petition and declaration of moratorium.Analysis:1. The application (CP 429/2019) was filed by JM Financial Asset Reconstruction Company Limited, a Financial Creditor, against a Corporate Debtor for defaulting on a substantial loan amount. The Applicant, as the assignee of the Original Lender, had legal grounds for the claim based on the Order dated 22.10.2016 passed by the Debt Recovery Tribunal, Jabalpur, which established the liability of the Corporate Debtor to pay a significant sum along with interest. The application was found to be within the period of limitation, and the default by the Corporate Debtor was well-documented.2. The Corporate Debtor argued that the application was barred by limitation as the default occurred in 2013, while the order forming the basis of the application was from 2016. However, it was clarified that the date of default was considered as 22.10.2016, aligning with the order date, and the Corporate Debtor was in due and default of more than the specified amount, rendering the application valid and complete in Form 1.3. The Applicant proposed the appointment of an Interim Resolution Professional, Mr. Rajesh Jhunjhunwala, who was a registered insolvency resolution professional with no pending disciplinary proceedings against him. The application under Section 7 of the Insolvency & Bankruptcy Code, 2016, was found to be complete, demonstrating the existence of financial debt against the Corporate Debtor, leading to the admission of the petition for initiating the corporate insolvency resolution process.4. The Tribunal admitted the petition and declared a moratorium under Section 14 of the Insolvency & Bankruptcy Code, prohibiting various actions against the Corporate Debtor, ensuring the continuity of essential goods or services supply, and specifying the effect of the moratorium until the completion of the resolution process or liquidation. An Interim Resolution Professional was appointed to oversee the proceedings, with directions for immediate communication of the order and compliance reporting by the Registry.This comprehensive analysis of the judgment highlights the key legal aspects and decisions made by the Tribunal regarding the application for initiating the Corporate Insolvency Resolution Process against the Corporate Debtor.