2021 (12) TMI 965 - Tri - Insolvency and Bankruptcy

Corporation Bank granted petition for insolvency against NDT Trade House Pvt Ltd

The court granted the petition filed by Corporation Bank under Section 7 of the Insolvency and Bankruptcy Code to initiate the Corporate Insolvency ... Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial creditors - existence of debt and dispute or not - time limitation - HELD THAT:- In the present case, the occurrence of default of debt is evidenced by the copy of the agreement of term loan, General Power of Attorney, letter of undertaking cum declaration, common deed of hypothecation and sanction letter dated 06.01.2015. The corporate debtor has defaulted in making the regular payments of the credit facilities sanctioned by the petitioner and a demand notice under Section 13(2) of the Sarfeasi Act, 2002 recalling debt. Whether the present application is filed within limitation? - HELD THAT:- The corporate debtor has acknowledged the debt for the cash credit as well as for the term loan on 05.12.2017 and the present petition has been filed for 15.01.2019. Therefore, the petition has been filed within the period of limitation. The application filed in the prescribed Form No. 1 is found to be complete - The present petition being complete and having established the default in payment of the Financial Debt for the default amount being above the threshold limit, the petition is admitted in terms of Section 7(5) of the IBC. Petition admitted - moratorium declared. Issues:1. Initiation of Corporate Insolvency Resolution Process under Section 7 of the Insolvency and Bankruptcy Code, 2016.2. Default in payment of debt by the Corporate Debtor.3. Filing of the application within the limitation period.4. Completeness of the application filed in prescribed Form No. 1.5. Appointment of Interim Resolution Professional.6. Declaration of moratorium under Section 14 of the Code.Issue 1: Initiation of Corporate Insolvency Resolution Process under Section 7 of the Insolvency and Bankruptcy Code, 2016:The petition was filed by Corporation Bank under Section 7 of the IBC to initiate the Corporate Insolvency Resolution Process against M/s NDT Trade House Pvt Ltd. The petition detailed the debt acknowledgment by the Corporate Debtor and the credit facilities provided by the Petitioner, along with the default in payments. The petition also included relevant documents such as financial contracts, sanction letters, and demand promissory notes to support the claim.Issue 2: Default in payment of debt by the Corporate Debtor:The Corporate Debtor acknowledged the debt/liability to the Petitioner, and default in payment was established through various agreements and documents, including a notice issued under the Sarfaesi Act demanding payment. The total default amount was specified, and the date of default was identified as the date of NPA, leading to the admission of the application under Section 7(5) of the IBC.Issue 3: Filing of the application within the limitation period:The petition was filed within the limitation period as the debt acknowledgment by the Corporate Debtor was on 05.12.2017, and the petition was filed on 15.01.2019. Therefore, the application was deemed to be within the prescribed period of limitation.Issue 4: Completeness of the application filed in prescribed Form No. 1:The application filed in the prescribed Form No. 1 was found to be complete, meeting the requirements for admission under the IBC. The details of the default amount, security held by the Petitioner, and other necessary information were provided in the application.Issue 5: Appointment of Interim Resolution Professional:Mr. Arun Gajwani was proposed as the Interim Resolution Professional (IRP) in the petition. The credentials of the proposed IRP were verified, and no adverse information was found. Consequently, Mr. Arun Gajwani was appointed as the IRP to oversee the resolution process and take necessary steps as mandated under the IBC.Issue 6: Declaration of moratorium under Section 14 of the Code:Upon admission of the petition and establishment of default, the Tribunal declared a moratorium under Section 14 of the IBC. Various prohibitions were imposed during the moratorium period, including restrictions on legal proceedings against the Corporate Debtor, disposal of assets, and enforcement of security interests. The appointment of the IRP and the constitution of the Committee of Creditors were also directed to proceed as per the provisions of the IBC.The judgment comprehensively addressed the issues related to the initiation of the Corporate Insolvency Resolution Process, default in debt payment, filing within the limitation period, completeness of the application, appointment of the Interim Resolution Professional, and the declaration of moratorium under the Insolvency and Bankruptcy Code, 2016. The decision highlighted the legal requirements, documentation, and procedural steps necessary for the resolution process, ensuring adherence to the statutory framework and protection of the interests of the parties involved.