National Company Law Tribunal, Kochi Bench Admits CIRP Application

The National Company Law Tribunal, Kochi Bench admitted the application for Corporate Insolvency Resolution Process (CIRP) under Section 7 of the Insolvency & Bankruptcy Code, 2016. The Tribunal found the debt due and timely, disregarding contentions on the Share Purchase Agreement's validity. The debt was classified as financial debt, allowing the appointment of an Interim Resolution Professional and initiating a moratorium under Section 14 to protect the Corporate Debtor.

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Issues Involved:
Application for Corporate Insolvency Resolution Process (CIRP) under Section 7 of the Insolvency & Bankruptcy Code, 2016 based on default in payment. Contentions regarding limitation period, validity of Share Purchase Agreement, and authority of signatory.

Detailed Analysis:

1. Alleged Default and Application for CIRP:
The Financial Creditor filed an application seeking CIRP against the Corporate Debtor for defaulting on a payment of &8377; 4,25,32,016.405/- as per a Share Purchase Agreement. The Financial Creditor argued that the debt became due as per the agreement, and the Corporate Debtor acknowledged the liability multiple times, making the application within limitation.

2. Contentions Raised by Corporate Debtor:
The Corporate Debtor contended that the application was time-barred and raised objections regarding the validity of the Share Purchase Agreement, including non-registration and lack of common seal. They also questioned the authority of the signatory of the application.

3. Tribunal's Findings:
The Tribunal examined the case records and documents. It noted that the Corporate Debtor acknowledged the debt lastly on 28.11.2018, making the application timely. The Tribunal clarified that issues like agreement validity fall outside the IBC's scope, focusing on debt due and defaults.

4. Classification of Debt as Financial Debt:
The Tribunal referred to Section 5(8) of the Code, defining financial debt, and concluded that the amount arising from the Share Purchase Agreement qualified as financial debt disbursed against advance payment, making the Financial Creditor eligible. The proposed Interim Resolution Professional was deemed suitable.

5. Decision and Moratorium Order:
The Tribunal admitted the application for CIRP under Section 7 of the I&B Code, initiating a moratorium under Section 14. The moratorium prohibited various actions against the Corporate Debtor, ensuring continuity of essential services. The appointment of the Interim Resolution Professional was confirmed, and necessary communication directives were issued.

This comprehensive analysis covers the key issues, arguments, findings, and decisions outlined in the judgment by the National Company Law Tribunal, Kochi Bench.

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