2021 (5) TMI 612 - Tri - Insolvency and Bankruptcy

Tribunal Validates Loan Agreement, Initiates CIRP, and Declares Moratorium

The Tribunal found the petition maintainable, validated the Facility Loan Agreement despite stamping issues, disregarded the value of secured assets in ... Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not - HELD THAT:- From the Application it is noted that the outstanding debt amount is approximately ₹ 84.87 Crores and the account was classified as NPA/default on 10.04.2019. The Application was filed in the month of January 2019 and in spite of lapse of more than one and half years the Respondent did not pay even a single rupee to the Petitioner despite various assurances/submissions made during the course of the submissions - the debt and default under Section 7 of the IBC, 2016 is established. The Petition is complete in all respect and there is no reason to deny admission of this Petition held under Section 7 of IBC and to initiate CIRP proceedings against the Respondent. The outstanding debt amount is approximately ₹ 84.87 Crores and the account was classified as NPA/default on 10.04.2019. The Application was filed in the month of January 2019 and in spite of lapse of more than one and half years the Respondent did not pay even a single rupee to the Petitioner despite various assurances/submissions made during the course of the submissions. Finally, during the hearing held on 14.12.2020, Ld. Counsel for the Respondent submitted that settlement had failed. In view of the same, the debt and default under Section 7 of the IBC, 2016 is established. The Petition is complete in all respect and there is no reason to deny admission of this Petition held under Section 7 of IBC and to initiate CIRP proceedings against the Respondent. Under section 7(5) of IBC 'where the Adjudicating Authority is satisfied that a default has occurred and the application under sub-section (2) is complete, and there is no disciplinary proceedings pending against the proposed RP, it may, by order, admit such application;' It clearly shows that the Respondent is in default of a debt due and payable, and the default is in excess of minimum amount of one lakh rupees stipulated under section 4(1) of the IBC. In the facts and material made available on record, it is satisfying that debt and the default stands established and no disciplinary proceedings pending against the proposed IRP therefore the petition deserves to be admitted and there is no reason to deny the admission of the Petition. Petition admitted - moratorium declared. Issues Involved:1. Maintainability of the Petition.2. Validity of the Facility Loan Agreement.3. Secured Assets and their Value.4. Multiple Claims and Proceedings.5. Pending Commercial Summary Suit.6. Settlement Attempts and Default.7. Appointment of Interim Resolution Professional (IRP).8. Declaration of Moratorium.Detailed Analysis:1. Maintainability of the Petition:The Respondent argued that the petition is not maintainable, claiming the Petitioner has come with unclean hands and suppressed material facts. However, the Tribunal found no merit in this defense, stating that the debt and default are sufficiently proven by the Petitioner.2. Validity of the Facility Loan Agreement:The Respondent contended that the Facility Loan Agreement was not duly stamped as per Section 18 of the Maharashtra Stamps Act, 1958, and was executed outside Maharashtra. The Tribunal dismissed this objection, noting that the IBC does not concern itself with the stamp duty of such documents and that there is ample material to establish the debt and default.3. Secured Assets and their Value:The Respondent claimed that the assets mortgaged to the Petitioner are of high value, thus securing the dues. The Tribunal held that the value of the security does not negate the fact of default. Under Section 7 of the IBC, the focus is solely on the existence of debt and default, not the value of the security.4. Multiple Claims and Proceedings:The Respondent argued that the Petitioner had filed multiple claims, causing multiplicity of proceedings. The Tribunal noted that the Petitioner had filed a revised claim before the Resolution Professional for SK Wheels Private Limited, and the entire claim had been admitted. The Tribunal found no suppression of material facts by the Petitioner.5. Pending Commercial Summary Suit:The Respondent pointed out that the Petitioner had also filed a Commercial Summary Suit before the Bombay High Court against the guarantors of the Facility Agreement. The Tribunal clarified that this suit does not prohibit the initiation of CIRP against the Respondent.6. Settlement Attempts and Default:The Tribunal observed that despite several adjournments and assurances by the Respondent to settle the matter, no payment was made to the Petitioner. The Respondent's failure to settle or pay the outstanding dues confirmed the default.7. Appointment of Interim Resolution Professional (IRP):The Petitioner proposed Mr. Arun Kapoor as the IRP, and he filed his written communication in Form 2 as required. The Tribunal found no disciplinary proceedings pending against the proposed IRP and appointed him to carry out the functions as per the IBC.8. Declaration of Moratorium:The Tribunal ordered a moratorium under Section 14 of the IBC, prohibiting:- The institution or continuation of suits or proceedings against the Respondent.- Transferring or disposing of any assets by the Respondent.- Foreclosing or enforcing any security interest.- Recovering any property occupied by the Respondent.The moratorium will remain effective until the completion of the CIRP or until the Tribunal approves a Resolution Plan or orders liquidation.Conclusion:The Tribunal admitted the petition under Section 7 of the IBC, initiated CIRP against the Respondent, and declared a moratorium. Mr. Arun Kapoor was appointed as the IRP, and the Petitioner was directed to deposit Rs. 3,00,000 with the IRP for expenses. The Registry was instructed to communicate the order to the relevant parties and update the Master Data of the Respondent with the Registrar of Companies, Maharashtra, Mumbai.