Insolvency application granted, Corporate Debtor admitted to CIRP, Interim Resolution Professional appointed

The application filed under Section 7 of the Insolvency & Bankruptcy Code, 2016, was allowed, admitting the Corporate Debtor into Corporate Insolvency Resolution Process (CIRP). The moratorium was declared, and Mr. Umesh Ved was appointed as the Interim Resolution Professional (IRP). The IA No. 882 of 2020 was dismissed as infructuous.

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Issues Involved:
1. Time-barred Claim
2. Authority and Locus Standi
3. Jurisdiction
4. Acknowledgment of Debt and Limitation
5. Corporate Guarantee and Variance in Terms
6. Commencement of CIRP and Appointment of IRP

Detailed Analysis:

1. Time-barred Claim:
The Corporate Debtor contended that the Financial Creditor's claim was time-barred. The argument was based on the fact that the date of invocation of the corporate guarantee was the first written demand made by the Financial Creditor, thus starting the limitation period from that date. Several demand notices were issued between 2014 and 2015, and the winding-up notices under Sections 433 & 434 of the Companies Act, 1956, were issued on 16.03.2015 and withdrawn on 21.03.2017. Therefore, the period of limitation would have ended on 24.11.2017. The Tribunal found no merit in this contention, noting that the default occurred on different dates and amounts, with the final default on 08.02.2019. The application under Section 7 of the Insolvency & Bankruptcy Code, 2016, filed on 21.01.2020, was not barred by limitation.

2. Authority and Locus Standi:
The Corporate Debtor argued that the current applicant had no locus standi as it was not a 'Financial Creditor' within the meaning of the IBC 2016 because no assignment of debt documents had been made in favor of the current applicant by the Original Financial Creditor. The Tribunal rejected this claim, stating that the Original Financial Creditor had amalgamated with the Petitioner-Financial Creditor as per the law governing such amalgamation. Hence, the current applicant is the successor of the Original Financial Lender and not an assignee.

3. Jurisdiction:
The Corporate Debtor claimed that the NCLT Mumbai Bench had jurisdiction over this matter. The Tribunal referred to Section 60(2) of the IBC 2016, which gives jurisdiction in respect of Corporate Guarantee to the Bench handling the Corporate Insolvency Resolution Process or liquidation process. Since the CIRP had not commenced for the Principal Borrower, this ground was found devoid of merit and rejected.

4. Acknowledgment of Debt and Limitation:
The Corporate Debtor argued that the acknowledgment of liability should be specific and explicit. The letter dated 13.09.2019, signed almost two years after the expiry of limitation, could not extend the limitation. The Tribunal noted that the letter amounted to a promise to pay a debt barred by limitation under Section 25(3) of the Indian Contract Act, 1872. The Tribunal also mentioned that the provisions of the Limitation Act, 1963, do not affect Section 25 of the Indian Contract Act, 1872.

5. Corporate Guarantee and Variance in Terms:
The Corporate Debtor argued that any variance in the terms of the contract between the principal debtor and the creditor discharged the surety. The Tribunal examined the clauses of the Corporate Guarantee, noting that no concurrence of the Guarantor was required for modifications to the facility agreement or payment schedule. The Tribunal found that the Corporate Debtor had expressly admitted its liability in the letter dated 13.09.2019, and the terms and conditions of the guarantee were not affected by any settlement or modification of arrangement between the Financial Creditor and Principal Borrower.

6. Commencement of CIRP and Appointment of IRP:
The Tribunal found the application complete and defect-free, appointing Mr. Umesh Ved as the Interim Resolution Professional (IRP). The moratorium was declared, prohibiting the institution or continuation of suits or proceedings against the corporate debtor, transferring or disposing of assets, and recovery of property by owners or lessors. The IRP was directed to make a public announcement of the initiation of CIRP and call for submission of claims. The supply of goods/services to the Corporate Debtor was to continue uninterrupted during the moratorium period.

Conclusion:
The application filed under Section 7 of the Insolvency & Bankruptcy Code, 2016, was allowed, and the Corporate Debtor was admitted into Corporate Insolvency Resolution Process (CIRP). The moratorium was declared, and Mr. Umesh Ved was appointed as the IRP. The IA No. 882 of 2020 was dismissed as infructuous.

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