Tribunal Orders Corporate Insolvency Resolution Process Initiation

The Tribunal admitted the petition and ordered the initiation of the Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor. The Tribunal found that the Financial Creditor's application was complete, and the Corporate Debtor was in default of a debt due and payable. An Interim Resolution Professional (IRP) was appointed, and a moratorium under Section 14 of the IBC was imposed. The Financial Creditor was directed to deposit Rs.5,00,000/- with the IRP for expenses, and the IRP was instructed to update the Corporate Debtor's master data with the Registrar of Companies.

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Issues Involved:
1. Incorrect date of default.
2. Amount claimed not due and payable.
3. Debt barred by limitation.

Issue-wise Detailed Analysis:

1. Incorrect Date of Default:
The Respondent contended that the Section 7 Application was defective as it was based on an incorrect date of default. The Applicant cited multiple dates of default in its documents, leading to contradictions. Specifically, the Applicant's notice dated 16.01.2017 under Section 13(2) of SARFAESI Act and a show-cause notice dated 03.11.2018 indicated an NPA date of 01.12.2014, while a letter dated 23.02.2016 stated an NPA date of 27.03.2015. The Respondent argued that the default date should be one of these earlier dates, making the Section 7 Application defective.

The Tribunal observed that the Financial Creditor had restructured the loans through a Master Restructuring Agreement (MRA) dated 30.03.2015, which included a repayment schedule until 2024-25. Despite the restructuring, the Corporate Debtor defaulted on the MRA. The Tribunal found that the default dates stated by the Applicant were correct and that the Corporate Debtor failed to comply with the MRA.

2. Amount Claimed Not Due and Payable:
The Respondent argued that the amount claimed was not due and payable because the MRA had been revoked by the Applicant's letter dated 01.02.2016, which demanded payment of Rs.174.61 crores as of 31.12.2015. The Respondent contended that upon revocation of the MRA, the rights and liabilities reverted to the original facility agreements, which had already been declared NPA.

The Tribunal noted that there was no record of terminating the MRA and that the Corporate Debtor failed to comply with the MRA. The Tribunal rejected the Respondent's argument, stating that the amount claimed was due and payable under the MRA. The Tribunal also dismissed the Respondent's reliance on the Innoventive Industries Ltd. v. ICICI Bank case, emphasizing that the MRA was intended to facilitate restructuring, not defraud the creditor.

3. Debt Barred by Limitation:
The Respondent claimed that the debt was not due as it was barred by limitation. The Respondent argued that the Section 7 Application should have been filed based on the date of NPA, which was either 01.12.2014 or 27.03.2015. Since the application was filed on 17.05.2018, it was beyond the three-year limitation period.

The Tribunal found that the Financial Creditor had restructured the loans through the MRA, and the Corporate Debtor defaulted on the MRA. The Tribunal held that the debt and default were established and that the Section 7 Application was not barred by limitation. The Tribunal also noted that the Corporate Debtor's financial statements acknowledged the debt, which extended the limitation period under Section 18 of the Limitation Act, 1963.

Conclusion:
The Tribunal admitted the petition and ordered the initiation of the Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor. The Tribunal found that the Financial Creditor's application was complete, and the Corporate Debtor was in default of a debt due and payable. The Tribunal appointed an Interim Resolution Professional (IRP) and imposed a moratorium under Section 14 of the IBC. The Tribunal directed the Financial Creditor to deposit Rs.5,00,000/- with the IRP for expenses and instructed the IRP to send a copy of the order to the Registrar of Companies for updating the Corporate Debtor's master data.

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