2021 (3) TMI 62 - Tri - Insolvency and Bankruptcy

Tribunal Accepts Insolvency Application, Imposes Moratorium, and Appoints IRP under Insolvency and Bankruptcy Code

DEEPRAJ INVESTMENTS PVT. LTD. Versus SAI PRECIOUS TRAEXIM PVT. LTD.

DEEPRAJ INVESTMENTS PVT. LTD. Versus SAI PRECIOUS TRAEXIM PVT. LTD. - [2021] 13 Comp Cas - OL 102 (NCLT - Del) Issues Involved:1. Financial Creditor's Claim under Section 7 of the Insolvency and Bankruptcy Code, 20162. Disbursement and Default of Loan3. Corporate Debtor's Defense and Allegations4. Admissibility of the Application under Section 7 of the Insolvency and Bankruptcy Code, 20165. Appointment of Interim Resolution Professional (IRP) and MoratoriumIssue-wise Detailed Analysis:1. Financial Creditor's Claim under Section 7 of the Insolvency and Bankruptcy Code, 2016:The applicant, claiming to be a financial creditor, filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016. The financial creditor is a non-banking finance company (NBFC) registered with the RBI, engaged in providing loans and advances to business entities and individuals.2. Disbursement and Default of Loan:The corporate debtor sought a loan of Rs. 1 crore to meet short-term capital requirements. The financial creditor sanctioned the loan on January 23, 2019, with a tenure of six months and bullet repayment at the end of the term. The corporate debtor received Rs. 65 lakhs directly and Rs. 35 lakhs were paid to creditors on the corporate debtor’s instruction. The corporate debtor issued post-dated cheques for interest and principal repayment, which were dishonored. The financial creditor initiated criminal proceedings under Section 138 read with Section 141 of the Negotiable Instruments Act, 1881, due to cheque dishonor.3. Corporate Debtor's Defense and Allegations:The corporate debtor contended that:- No default was committed.- The interest rate charged violated RBI and Ministry of Finance guidelines.- The accounts provided by the financial creditor were not certified under the Bankers' Books Evidence Act.- There were personal dealings and assurances involving Rajeev Aggarwal, which influenced the loan agreement.- Only Rs. 65 lakhs were disbursed, not the full Rs. 1 crore.- The financial creditor and associates coerced the corporate debtor into signing blank and semi-blank documents.- The corporate debtor filed complaints against Rajeev Aggarwal and the financial creditor for coercion and fraud.4. Admissibility of the Application under Section 7 of the Insolvency and Bankruptcy Code, 2016:The Tribunal found that the corporate debtor admitted to executing the loan agreement and receiving Rs. 65 lakhs. Despite the debtor's claims of incomplete disbursement, the Tribunal noted the existence of a financial debt and default. Referring to Section 7 of the Insolvency and Bankruptcy Code, 2016, and the decision in Innoventive Industries Ltd. v. ICICI Bank, the Tribunal emphasized that it only needs to ascertain the existence of a financial debt and default, not the disputes raised by the corporate debtor.5. Appointment of Interim Resolution Professional (IRP) and Moratorium:The Tribunal admitted the application under Section 7(5)(a) of the Insolvency and Bankruptcy Code, 2016, as the financial debt and default were established, and no disciplinary proceedings were pending against the proposed IRP. A moratorium under Section 14 of the Insolvency and Bankruptcy Code, 2016, was imposed, staying various actions against the corporate debtor. The Tribunal appointed Mr. Atul Kumar Jain as the IRP and directed the financial creditor to deposit Rs. 2,00,000 to cover immediate IRP expenses, to be reimbursed by the Committee of Creditors (CoC).Conclusion:The Tribunal admitted the insolvency application filed by the financial creditor, imposed a moratorium, and appointed an IRP, directing further actions as mandated under the Insolvency and Bankruptcy Code, 2016. The corporate debtor's defenses and allegations were not sufficient to prevent the admission of the application.