2022 (5) TMI 801 - Tri - Insolvency and Bankruptcy

Admission of Insolvency Petition Triggers Corporate Resolution Process

The petition under Section 7 of the Insolvency and Bankruptcy Code, 2016 was admitted, initiating Corporate Insolvency Resolution Process against the ... 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:- It can be seen from the records that in the present case, the occurrence of default is evidenced by the copy of the undertaking by the corporate debtor and the account statement of the Petitioner/Applicant and the same are attached as Annexure-11 and Annexure-19 & 20 respectively of the petition. Therefore, the present petition is filed within limitation. It is observed from the record the name of the Applicant is also being reflected in the latest Balance Sheet of the Corporate Debtor for the year ending on 31.03.2019 under the head of Secured Loans i.e. at page 190 of the petition. Also, the Index of charges available on the MCA portal reflects the name of the Applicant as the charge holder which is at page 210 of the petition. The respondent-corporate debtor has also filed a reply wherein it has been admitted that the default mentioned in the petition is due towards the petitioner due to its incapacity to pay the liability. The application filed in the prescribed Form No. 1 is found to be complete. Another condition is that there are no disciplinary proceedings pending against proposed Resolution Professional. In the present case, in Part III of Form 1, Mr. Prem Kumar Garg has been proposed as Interim Resolution Professional. The petitioner proved the debt and the default, which is more than threshold limit of one crore - the present petition being complete and having established the default in payment of the Financial Debt for the default amount being above threshold limit, the petition is admitted in terms of Section 7(5) of the IBC and accordingly, moratorium is declared in terms of Section 14 of the Code. Petition admitted - moratorium declared. Issues:1. Filing of petition under Section 7 of the Insolvency and Bankruptcy Code, 2016 for Corporate Insolvency Resolution Process.2. Jurisdiction of the Tribunal based on the master data of the corporate debtor.3. Default in payment by the Corporate Debtor and actions taken by the Financial Creditor.4. Appointment of Interim Resolution Professional.5. Consideration of the petition for admission under Section 7(5)(a) of the Code.6. Examination of default occurrence and completeness of the application.7. Declaration of moratorium under Section 14 of the Code and its implications.8. Constitution of Committee of Creditors and reporting requirements.9. Direction for deposit of funds by the Financial Creditor with the Interim Resolution Professional.Detailed Analysis:1. The petition was filed under Section 7 of the Insolvency and Bankruptcy Code, 2016 to initiate Corporate Insolvency Resolution Process against the Corporate Debtor. The petition was signed by the Financial Creditor and supported by necessary documents, including guarantees provided and master data of the Corporate Debtor establishing jurisdiction.2. The Tribunal had jurisdiction based on the master data of the Corporate Debtor, which showed its incorporation details and registered address falling within the Tribunal's jurisdiction.3. The Corporate Debtor defaulted on its debt obligations to the Financial Creditor, leading to actions such as NPA declaration, issuance of demand and possession notices, and settlement attempts. The Financial Creditor provided evidence of default and the amount due, which the Corporate Debtor admitted in its reply.4. An Interim Resolution Professional was proposed and appointed to oversee the Corporate Insolvency Resolution Process. The professional's credentials were verified, and no adverse information was found, leading to the appointment.5. The petition was considered for admission under Section 7(5)(a) of the Code, ensuring completeness and timeliness. The default occurrence was evidenced, and the application was found to be within the limitation period.6. The completeness of the application, along with the establishment of default in payment, was crucial for admitting the petition under Section 7 of the Code. The Financial Creditor's details were reflected in the Corporate Debtor's records, supporting the claim.7. Moratorium was declared under Section 14 of the Code upon admission of the petition, imposing restrictions on legal actions against the Corporate Debtor and asset disposal. Essential supplies were to be maintained, and the Interim Resolution Professional was directed to manage the process.8. The Committee of Creditors was to be constituted, and regular progress reports were mandated to be submitted. The Financial Creditor was directed to deposit funds with the Interim Resolution Professional for process expenses.9. Directions were given for communication of the order to all parties involved, including the Interim Resolution Professional, and for the Financial Creditor to make the necessary deposit. The Tribunal ensured compliance with regulations and procedural requirements throughout the judgment.