2021 (3) TMI 871 - Tri - Insolvency and Bankruptcy

Edelweiss vs. Meeti Developers: IBC Petition Admitted, Moratorium Ordered

Edelweiss Asset Reconstruction Company Limited Versus Meeti Developers Private Limited

The Tribunal admitted the Petition filed by Edelweiss Asset Reconstruction Company Limited against Meeti Developers Private Limited for defaulting on a ... Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence of debt and dispute or not - HELD THAT:- It is understood that the Corporate Debtor has defaulted in repayment of debt. The Corporate Debtor has acknowledged the disbursement of credit facilities and its liability to repay the same. However, the Corporate Debtor failed to pay. Hence, owing to the inability of the Corporate Debtor to pay its dues, this is a fit case to be moved u/s 7 of the I&B Code. The Bench notes that the Petitioner is the Assignee of the financial debt which was originally disbursed on 20.11.2016 by ECL Finance Ltd. against a sanction letter dated 14.10.2016. The Bench notes that even though a further sanction of ₹ 30,00,00,000/- was proposed to the Corporate Debtor, however, because of noncompliance, this additional sanction was never disbursed and the total amount actually disbursed and in default is ₹ 55,00,00,000/- - This Bench further notes that money was given on secured nonconvertible debentures of an aggregate amount of ₹ 55,00,00,000/- by the Corporate Debtor. The Debenture Trustee has been placed on record by the Petitioner. Also the list of secured documents by way of which the credit facility was secured is placed on the record. The nature of Debt is a “Financial Debt” as defined under section 5 (8) of the Code. It has also been established that there is a “Default” as defined under section 3 (12) of the Code on the part of the Debtor. The two essential qualifications, i.e. existence of ‘debt’ and ‘default’, for admission of a petition under section 7 of the I&B Code, have been met in this case - it is found that the Petitioner has not received the outstanding Debt from the Respondent and that the formalities as prescribed under the Code have been completed by the Petitioner, we are of the conscientious view that this Petition deserves ‘Admission’. Petition admitted - moratorium declared. Issues Involved:1. Default in repayment of financial debt.2. Validity of the Petition under the Insolvency and Bankruptcy Code (IBC).3. Compliance with procedural requirements under IBC.4. Limitation period for filing the Petition.5. Appointment of Interim Resolution Professional (IRP).6. Implementation of Moratorium under Section 14 of the IBC.Issue-wise Detailed Analysis:1. Default in Repayment of Financial Debt:The Petitioner, Edelweiss Asset Reconstruction Company Limited, filed the Petition under Section 7 of the Insolvency and Bankruptcy Code (IBC) against Meeti Developers Private Limited, the Corporate Debtor, for defaulting on a financial debt. The total amount of debt granted was Rs. 55,00,00,000/-, and the amount claimed to be in default was Rs. 71,32,09,849/- including interest. The Corporate Debtor acknowledged the disbursement of credit facilities and its liability to repay the same but failed to make payments, leading to the account being declared as a non-performing asset (NPA) on 17.05.2019.2. Validity of the Petition under the Insolvency and Bankruptcy Code (IBC):The Tribunal found that the Petition was validly filed under Section 7 of the IBC. The Corporate Debtor's failure to repay the debt constituted a 'Default' as defined under Section 3(12) of the Code. The Tribunal concluded that the nature of the debt was a 'Financial Debt' as defined under Section 5(8) of the Code, and the essential qualifications for admission of a petition under Section 7 of the IBC, i.e., existence of ‘debt’ and ‘default,’ were met in this case.3. Compliance with Procedural Requirements under IBC:The Tribunal noted that the Petitioner complied with the procedural requirements prescribed under the IBC. The Petition included the necessary documents, such as the Assignment Agreement, Debenture Trust Deed, and the record of default available with the Information Utility, National E-Governance Services Limited (NeSL). The Tribunal also verified the written consent of the proposed Interim Resolution Professional (IRP) and found no disciplinary action pending against the proposed IRP.4. Limitation Period for Filing the Petition:The Corporate Debtor argued that the Petition was barred by limitation under Article 137 of the Limitation Act, 1963, read with Section 238A of the IBC. However, the Tribunal found that the Petition was filed within the limitation period. The last payment made by the Corporate Debtor was on 16.04.2019, and the Petition was filed on 02.03.2020. The Tribunal concluded that the Petition was well within the limitation period as per Section 19 of the Limitation Act.5. Appointment of Interim Resolution Professional (IRP):The Tribunal appointed Mr. Prashant Jain, having registration No. IBBI/IPA-001/IP-P01368/2018-2019/12131, as the Interim Resolution Professional (IRP) to conduct the Insolvency Resolution Process. The IRP was directed to perform the duties assigned under Section 18 and Section 15 of the IBC and inform the progress of the Resolution Process within 30 days to the Tribunal.6. Implementation of Moratorium under Section 14 of the IBC:Upon admitting the Petition, the Tribunal ordered the implementation of the Moratorium as prescribed under Section 14 of the IBC. The Moratorium prohibits the institution of any suit before a Court of Law, transferring/encumbering any of the assets of the Debtor, and ensures the supply of essential goods or services to the Corporate Debtor during the Moratorium period. The Moratorium shall be effective until the completion of the Insolvency Resolution Process or the approval of the Resolution Plan under Section 31 of the Code.Conclusion:The Tribunal concluded that the Petition deserved admission, and the Corporate Insolvency Resolution Process (CIRP) was to commence from the date of the Order. The Registry was directed to communicate the Order to both parties and the Interim Resolution Professional immediately. The Petition was thereby 'Admitted,' and the commencement of the CIRP was effective from the date of the Order.