Corporate Insolvency Resolution Process Initiated, Moratorium Declared, Interim Resolution Professional Appointed

The application for initiating Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor was admitted by the Tribunal. A moratorium was declared, prohibiting various actions against the Corporate Debtor. The Tribunal appointed an Interim Resolution Professional (IRP) to oversee the proceedings. The application was found valid, and the debt was categorized as a "Financial Debt." Guarantors were impleaded, with their assets deemed outside the moratorium's scope. The Corporate Debtor's contentions were dismissed, and the Financial Creditor's evidence of default was upheld.

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Issues Involved:
1. Default in repayment of financial debt by the Corporate Debtor.
2. Nature of the debt as a "Financial Debt."
3. Impleadment of guarantors.
4. Validity of the application filed by the Financial Creditor.
5. Moratorium and its implications.

Detailed Analysis:

1. Default in Repayment of Financial Debt by the Corporate Debtor:
The Financial Creditor, M/s. Union Bank of India, filed an application seeking to initiate the Corporate Insolvency Resolution Process (CIRP) against M/s. Green Gateway Leisure Ltd., alleging a default in repayment of Rs. 32,39,45,078/-. The Financial Creditor provided evidence of the term loan granted and subsequent renewals and restructuring. The Corporate Debtor acknowledged the debt but raised several contentions, including delays in additional loan sanctions and cost escalations due to design changes recommended by Starwood Asia Pacific Hotels and Resorts Pvt Ltd.

2. Nature of the Debt as a "Financial Debt":
The Tribunal examined whether the debt qualifies as a "Financial Debt" under Section 5(8) of the Insolvency and Bankruptcy Code (IBC). The Corporate Debtor did not deny the debt amount but argued for dismissal based on various grounds. The Tribunal, referencing the Supreme Court's ruling in "Innoventive Industries Ltd. Vs. ICICI Bank and Ors.," concluded that the debt is indeed a financial debt, and there was a default as defined under Section 3(12) of the Code.

3. Impleadment of Guarantors:
The Financial Creditor sought to implead the guarantors of the Corporate Debtor, which the Tribunal allowed. The Tribunal referred to case laws, including "Axis Bank Ltd. V Lotus Three Developments Ltd. & Ors." and "State Bank of India V. Ramakrishnan & anr.," to clarify that the guarantors' assets are outside the scope of the moratorium as per Section 14(3)(b) of the Code. The Tribunal emphasized that the Adjudicating Authority's role is to ascertain the occurrence of default and not to entertain objections from guarantors at the admission stage.

4. Validity of the Application Filed by the Financial Creditor:
The Corporate Debtor argued that the Financial Creditor's application was invalid due to suppression of material facts and malafide intentions. However, the Tribunal found the application complete and in compliance with Section 7(5)(a) of the IBC. The Tribunal noted that the Corporate Debtor did not provide any documents to refute the claim of default, and the Financial Creditor had furnished sufficient evidence of the debt and default.

5. Moratorium and its Implications:
Upon admitting the application, the Tribunal declared a moratorium prohibiting:
- Institution or continuation of suits or proceedings against the Corporate Debtor.
- Transferring, encumbering, or disposing of any assets of the Corporate Debtor.
- Actions to foreclose, recover, or enforce any security interest.
- Recovery of any property by an owner or lessor.

The Tribunal also mandated the continuation of essential goods or services to the Corporate Debtor during the moratorium and appointed Mr. Raju Palanikunnathil Kesavan as the Interim Resolution Professional (IRP).

Order:
The application for initiating CIRP against the Corporate Debtor was admitted, and a moratorium was declared. The IRP was appointed to carry out the functions under the Code, and the Registry was directed to communicate the order to all relevant parties. No order as to costs was made.

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