Tribunal admits petition for Corporate Insolvency Resolution Process, dismisses debtor's objections, appoints IRP

The Tribunal admitted the petition, initiating Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor based on substantial evidence of debt and default presented by the Financial Creditor. The objections raised by the Corporate Debtor regarding period of limitation, incorrect amount of default, and other issues were dismissed. An impleadment application by another party seeking to be included in the proceedings was rejected. The Tribunal appointed an Interim Resolution Professional (IRP), declared a moratorium, and directed compliance with the Insolvency and Bankruptcy Code, 2016.

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Issues Involved:
1. Initiation of Corporate Insolvency Resolution Process (CIRP) under Section 7 of the Insolvency and Bankruptcy Code, 2016.
2. Objections raised by the Corporate Debtor regarding the period of limitation, incorrect amount of default, and proceedings under Section 138 of the Negotiable Instruments Act, 1881.
3. Impleadment application by Reliance Capital AIF Trustee Company Private Limited.

Detailed Analysis:

1. Initiation of CIRP under Section 7 of the Insolvency and Bankruptcy Code, 2016:
The petition was filed by India Infoline Finance Limited (Financial Creditor) against Unishire Regency Park LLP (Corporate Debtor) for initiating CIRP, claiming a default of Rs. 15,22,13,219/- as on 07.03.2019 under a Loan Agreement dated 20.03.2015. The Financial Creditor provided financial assistance for the construction and sales activity of a residential project, and the Corporate Debtor defaulted in repayment starting from 30.06.2015. The Tribunal noted that the Financial Creditor submitted substantial evidence, including the Loan Agreement, Demand Promissory Note, and Demand Notice, establishing the debt and default. The Tribunal emphasized that the proceedings under Section 7 are summary proceedings to ascertain debt and default without detailed investigation.

2. Objections Raised by the Corporate Debtor:
The Corporate Debtor raised several objections:
a. Proceedings under Section 138 of Negotiable Instruments Act, 1881: The Corporate Debtor argued that since proceedings under Section 138 were pending, the present petition could not be filed. The Tribunal rejected this argument, stating that proceedings under Section 138 are criminal and do not preclude the Financial Creditor from initiating CIRP.
b. Period of Limitation: The Corporate Debtor contended that the petition was barred by limitation. The Tribunal found that the default was continuous from 30.06.2015 to 31.12.2016, and the petition was filed within the limitation period.
c. Incorrect Amount of Default: The Corporate Debtor argued that the amount mentioned in the petition was incorrect. The Tribunal noted that neither the debt nor the default was denied, and the issue of excess amount claimed did not negate the existence of debt and default.
d. RERA Compliance and Loan Restructuring: The Corporate Debtor argued that the Financial Creditor should comply with RERA provisions and restructure the loan. The Tribunal rejected this, stating that obligations under RERA are on the developer, not the lender.
e. Valuable Security: The Corporate Debtor claimed that the Financial Creditor had security over twice the debt amount. The Tribunal found this argument irrelevant to the proceedings under Section 7.

3. Impleadment Application by Reliance Capital AIF Trustee Company Private Limited:
Reliance Capital AIF Trustee Company Private Limited sought to be impleaded, claiming they had provided financial assistance of Rs. 126 Crore to the Corporate Debtor and had obtained a 'No Due Certificate' from all financial creditors, including the present Financial Creditor. The Tribunal found no merit in the application, stating that the present petition was an independent proceeding based on the debt and default under the Loan Agreement dated 20.03.2015. The Tribunal noted that any claims by other parties could be submitted to the Interim Resolution Professional (IRP) once CIRP is ordered.

Conclusion:
The Tribunal admitted the petition, initiating CIRP against the Corporate Debtor. Shri Vijayakumar Subramaniam Varun was appointed as the IRP. A moratorium was declared, prohibiting suits, asset transfers, and recovery actions against the Corporate Debtor. The Tribunal directed the IRP to follow all provisions of the Insolvency and Bankruptcy Code, 2016, and submit progress reports. The impleadment application was disposed of with remarks allowing claims to be submitted to the IRP.

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