2020 (7) TMI 204 - Tri - Insolvency and Bankruptcy

Tribunal admits application under Insolvency and Bankruptcy Code, appoints Interim Resolution Professional

IBM India (P.) Ltd. Versus Global Infonet Distribution (P.) Ltd.

The Tribunal found in favor of the applicant, admitting the application under Section 7 of the Insolvency and Bankruptcy Code, 2016. It validated the ... Maintainability of application - initiation of CIRP - Dishonor of Cheque - Corporate Debtor failed to make repayment of its dues - existence of debt and dispute or not - main objection raised by the respondent is that the said Consent Terms could not be acted upon by respondent because the applicant intentionally suppressed the fact that it had already initiated complaints under section 138 of N.I. Act - HELD THAT:- The requirement of sub-section 5(a) of Section 7 of the code stands satisfied as default has occurred, the present application filed under Section 7 is complete, and as no disciplinary proceeding against the proposed IRP is pending - It is pertinent to mention here that the Code requires the adjudicating authority to only ascertain and record satisfaction in a summary adjudication as to the occurrence of default before admitting the application. The material on record clearly goes to show that respondent had availed the credit facilities and has committed default in repayment of the outstanding loan amount. The present application is complete in all respect and the applicant financial creditor is entitled to claim its outstanding financial debt from the corporate debtor and that there has been default in payment of the financial debt - Application admitted - moratorium declared. Issues Involved:1. Jurisdiction of the Tribunal.2. Validity of the Credit Agreement and the debt owed.3. Compliance with Consent Terms.4. Classification of the debt as financial or operational.5. Admissibility of the application under Section 7 of the Insolvency and Bankruptcy Code, 2016.6. Appointment of Interim Resolution Professional (IRP).7. Declaration of moratorium.Issue-wise Detailed Analysis:1. Jurisdiction of the Tribunal:The Tribunal noted that the respondent's registered office is situated in New Delhi, thus falling under its territorial jurisdiction as per Section 60(1) of the Insolvency and Bankruptcy Code, 2016.2. Validity of the Credit Agreement and the Debt Owed:The Financial Creditor and the Corporate Debtor entered into a Wholesale Financial-Credit Agreement on March 19, 2014, under which the Financial Creditor financed the Corporate Debtor's purchase of IT products. The Corporate Debtor failed to repay the debt amounting to INR 10,21,29,922.74, including late payment fees and interest. The Tribunal found the Credit Agreement valid and acknowledged the debt owed by the Corporate Debtor.3. Compliance with Consent Terms:The parties had previously settled the matter with Consent Terms dated July 20, 2018. The Corporate Debtor failed to comply with these terms by not negotiating a payment plan or making the balance payment by February 15, 2019. The Tribunal noted the breach of Consent Terms by the Corporate Debtor and held it liable for the outstanding amount.4. Classification of the Debt as Financial or Operational:The respondent argued that the debt was operational, not financial. However, the Tribunal found that the applicant provided financial aid for purchasing inventories, which classifies the debt as financial. The Tribunal dismissed the respondent's claim by referencing the Wholesale Finance (Credit) Agreement and the lack of evidence that the debt was related to goods or services.5. Admissibility of the Application under Section 7:The Tribunal confirmed that the application was complete and met the requirements of Section 7 of the Code. The applicant provided all necessary documents, evidence of default, and proposed an Interim Resolution Professional (IRP). The Tribunal was satisfied with the occurrence of default and the completeness of the application.6. Appointment of Interim Resolution Professional (IRP):The Tribunal appointed Mr. Yogender Pal Singhal as the IRP, noting that he met all necessary qualifications and no disciplinary proceedings were pending against him. The applicant was directed to deposit INR 2 Lakhs with the IRP to cover initial expenses.7. Declaration of Moratorium:The Tribunal declared a moratorium as per Section 14 of the Code, prohibiting the institution or continuation of suits, transferring or disposing of assets, and recovery actions against the Corporate Debtor. The moratorium does not apply to transactions notified by the Central Government or essential goods/services to the Corporate Debtor.Conclusion:The Tribunal admitted the application under Section 7 of the Insolvency and Bankruptcy Code, 2016, appointed an IRP, and declared a moratorium. The Tribunal directed the office to communicate the order to relevant parties and update the status of the Corporate Debtor with the Registrar of Companies, NCT of Delhi & Haryana.