Tribunal Admits Insolvency Application; Moratorium Declared to Protect Corporate Debtor

The Tribunal admitted the application under Section 7 of the Insolvency & Bankruptcy Code, 2016, filed by a Financial Creditor against the Corporate Debtor for defaulting on a substantial loan amount. The application was found to be within the limitation period, with the default date aligned with the order date. An Interim Resolution Professional was appointed, and a moratorium was declared under Section 14 of the Code to protect the Corporate Debtor from certain actions, ensuring the continuity of essential goods or services supply until the resolution process or liquidation is completed.

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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.

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