2021 (2) TMI 51 - Tri - Insolvency and Bankruptcy

Insolvency Application Admitted: Moratorium Declared, Resolution Professional Appointed

The application under Section 7 of the Insolvency and Bankruptcy Code, 2016 was admitted, and a moratorium was declared. The Interim Resolution ... Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors or not - existence of debt and dispute or not - HELD THAT:- The respondent itself has admitted having taken a term loan of ₹ 4.00 crores and having repaid the entire loan as per the schedule agreed upon between the parties. The respondent has also admitted having taken additional loan of ₹ 2.50 crores subsequently. Thus, the respondent has admitted the debt. The only objection raised by the respondent is that in absence of repayment schedule, penal interest/charges or interest calculation are without any basis and/or justification are disputed between the parties. On perusal of records it is found that no document is produced by the respondent fortifying such claim. On the other hand, the petitioner has put on record (pages 25-30 of rebuttal documents) the repayment schedule duly sealed/signed and acknowledged/accepted by the respondent. That, the application is filed on 9th July, 2019. On perusal of the records it is found that from time to time the corporate debtor has made payments towards the outstanding loan and thus acknowledged the debt. That, the application filed by the financial creditor is well within limitation. That, the documents filed along with the application is sufficient to prove that there exists financial debt. The Adjudicating Authority is of the considered view that there is a debt due to 'financial creditor' and there is default on the part of the corporate debtor - the application is found to be complete in all respect. Hence it does not warrant any rejection or dismissal. That, the records available shows that the applicant had sanctioned term loans to the respondent company, to be repaid within the stipulated period as per the terms and conditions agreed between the parties. Records available shows that the respondent has not cared to reply the notice issued by the applicant - In the instant application, from the material placed on record by the Applicant, this Authority is satisfied that the application is complete in all respect and the Corporate Debtor committed default in paying the financial debt to the Applicant and the respondent company has acknowledged the debt - In the instant case, the documents produced by the Financial Creditor clearly establish the 'debt' and there is default on the part of the Corporate Debtor in payment of the 'financial debt'. The application under section 7 (2) of the IB Code is complete in all respects and there is debt due to the 'financial Creditor' and there is default on the part of the 'corporate debtor'. Hence, there is no alternative but to admit the application in absence of any infirmity - Petition admitted - moratorium declared. Issues Involved:1. Validity of the financial debt claimed by the petitioner.2. Existence of default on the part of the corporate debtor.3. Completeness and admissibility of the application under Section 7 of the Insolvency and Bankruptcy Code, 2016.4. Appointment of the Interim Resolution Professional (IRP).5. Declaration of moratorium under Section 14 of the Insolvency and Bankruptcy Code, 2016.Issue-wise Detailed Analysis:1. Validity of the Financial Debt Claimed by the Petitioner:The petitioner, a non-banking finance company, sanctioned multiple loans to the respondent, an unlisted public limited company engaged in waste management. The loans include:- A working capital loan of Rs. 4 crores on 26-12-2014.- An additional loan of Rs. 1.5 crores on 27-05-2015.- A loan of Rs. 80 lakhs and another Rs. 20 lakhs on 17-06-2016.The petitioner provided evidence such as facility agreements, deeds of personal guarantee, and promissory notes. The respondent admitted to taking these loans but disputed the calculations and the absence of a repayment schedule. However, the petitioner presented a duly signed repayment schedule, confirming the validity of the financial debt.2. Existence of Default on the Part of the Corporate Debtor:The petitioner issued a notice on 17-10-2018 demanding payment of the unpaid financial debt. The respondent failed to make the payment, leading to a default amounting to Rs. 2,24,74,685 as of 20-05-2019. The respondent's objection regarding the absence of a repayment schedule was dismissed as the petitioner provided sufficient documentation, including a signed repayment schedule, proving the existence of default.3. Completeness and Admissibility of the Application under Section 7 of the Insolvency and Bankruptcy Code, 2016:The application was found to be complete in all respects, including the prescribed Form 1 and necessary documents. The adjudicating authority confirmed that the application was filed within the limitation period and that the financial debt and default were established. The application met the requirements under Section 7(2) of the Insolvency and Bankruptcy Code, 2016, and was deemed admissible.4. Appointment of the Interim Resolution Professional (IRP):The petitioner proposed the name of Mr. Manish Shah as the Interim Resolution Professional. The adjudicating authority appointed Mr. Manish Shah, confirming that no disciplinary proceedings were pending against him. His appointment was in accordance with the prescribed rules and regulations.5. Declaration of Moratorium under Section 14 of the Insolvency and Bankruptcy Code, 2016:The adjudicating authority 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 moratorium ensures that the supply of goods and essential services to the corporate debtor continues without interruption during the resolution process.Conclusion:The application under Section 7 of the Insolvency and Bankruptcy Code, 2016, was admitted, and a moratorium was declared. The Interim Resolution Professional was appointed, and the corporate insolvency resolution process was initiated, confirming the existence of financial debt and default by the corporate debtor. The petition was disposed of with no order as to costs.