Successful Application under Insolvency Code: Financial Creditor Status Recognized

The application under Section 7 of the Insolvency and Bankruptcy Code, 2016 was found maintainable by the tribunal. The applicant was recognized as a financial creditor due to the demand for financial debt, supported by evidence of default and debt existence. The tribunal asserted jurisdiction, admitted the application, appointed an Interim Resolution Professional, and imposed a moratorium on the corporate debtor. The decision was grounded on established debt and default, the applicant's financial creditor status, and compliance with procedural requirements.

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Issues Involved:
1. Maintainability of the application under Section 7 of the Insolvency and Bankruptcy Code, 2016.
2. Status of the applicant as a financial creditor.
3. Existence of default and financial debt.
4. Jurisdiction and admissibility of the application.
5. Compliance with procedural requirements under the Insolvency and Bankruptcy Code, 2016.

Detailed Analysis:

1. Maintainability of the application under Section 7 of the Insolvency and Bankruptcy Code, 2016:
The corporate debtor argued that the application is not maintainable as the applicant does not fall under the purview of Section 5(7) of the I&B Code and the debt due is not a financial debt within the meaning of Section 3(11) of the Code. They also contended that the applicant is not a decree holder as per Section 3(10) of the Code. However, the tribunal noted that the applicant had acted beyond merely holding a decree by executing the decree before UP-RERA, which confirmed the payment of debt due. The tribunal found the application maintainable as the applicant sought resolution of the corporate debtor's inability to pay its debt, not merely execution of a decree.

2. Status of the applicant as a financial creditor:
The applicant argued that the default of the corporate debtor is evident from the final order dated 29.06.2018 and the recovery certificate dated 18.06.2019. The tribunal observed that the applicant, originally a decree holder, had not filed the application solely for decree execution but to demand the financial debt due, thus qualifying as a financial creditor. The tribunal referenced the judgment in Pioneer Urban Land & Infrastructure Ltd. Vs. Govindan Raghavan, which supports the applicant's status as a financial creditor.

3. Existence of default and financial debt:
The tribunal examined the documents and submissions, finding that the debt had crystallized concerning the refund of the allotment money as ordered by UP-RERA and confirmed by the Allahabad High Court. The corporate debtor's failure to comply with these orders led to a default in payment of the financial debt. The tribunal noted that the corporate debtor had admitted the financial debt by depositing a sum of Rs. 9,54,910/-. The tribunal concluded that the applicant had established the existence of debt and default.

4. Jurisdiction and admissibility of the application:
The corporate debtor's registered office is situated in Delhi, giving the tribunal jurisdiction to entertain the application. The tribunal confirmed that the application was filed in the prescribed proforma under Rule 4 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016, and was complete. The tribunal was satisfied that a default had occurred, making the application admissible.

5. Compliance with procedural requirements under the Insolvency and Bankruptcy Code, 2016:
The tribunal appointed Mr. Amarpal as the Interim Resolution Professional (IRP) and directed the applicant to deposit Rs. 2 lakhs with the IRP for expenses. The tribunal also imposed a moratorium as per Section 14(1) of the Code, prohibiting certain actions against the corporate debtor during the insolvency resolution process. The tribunal ensured that the procedural requirements were met and directed the applicant to provide necessary documents to the IRP and other relevant authorities.

Conclusion:
The application was admitted under Section 7 of the Insolvency and Bankruptcy Code, 2016. The tribunal directed the applicant to deposit the required sum with the IRP and imposed a moratorium on the corporate debtor. The tribunal's decision was based on the established existence of debt and default, the applicant's status as a financial creditor, and compliance with procedural requirements.

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