2022 (10) TMI 637 - Tri - Insolvency and Bankruptcy

Application for Corporate Insolvency Rejected: Premature Filing and Incomplete Documentation

Alchemist Township India Limited Versus Technology Parks Limited

The Tribunal dismissed the application for initiating Corporate Insolvency Resolution Process (CIRP) against Technology Parks Limited due to prematurity, ... Maintainability of petition - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not - Pre-mature application - HELD THAT:- It is observed that the present application is premature because as per the agreement dated 31.12.2014, the tenure of the loan is for a period of ten years starting from 31.03.2015 to 31.03.2025, which has not met the maturity till date. Also, it is further observed that there is no agreement between the parties regarding interest payment became due. Therefore, there is no 'Default' of the loan agreement dated 31.12.2014. It is further observed that the Resolution Professional of the Financial Creditor has only furnished the proof of 'Record of Financial Information' from National E-Governance Services Limited but not the 'Status of Authentication' which implies the debt and its default not yet reflected on National E-Governance Services Limited. Petition dismissed. Issues:1. Initiation of Corporate Insolvency Resolution Process (CIRP) under Section 7 of the Insolvency and Bankruptcy Code, 2016.2. Dispute regarding default in repayment of financial debt by the Corporate Debtor.3. Interpretation of loan agreement clauses and timelines for repayment.Analysis:1. The Financial Creditor filed an application for initiating CIRP against the Corporate Debtor, Technology Parks Limited, citing non-repayment of a significant loan amount. The Corporate Debtor had engaged in projects related to Electronic City/Technology Parks and had outstanding liabilities towards the Financial Creditor amounting to Rs. 803,98,00,000 as of 31.03.2014. The loan agreement included provisions for conversion of the loan into equity shares and specified timelines for such actions.2. The Corporate Debtor contested the application, arguing that the debt had not yet become due and payable as per the terms of the loan agreement, which had a tenure of ten years from 31.03.2015 to 31.03.2025. They highlighted the absence of agreed-upon due dates for interest payments and emphasized that no communication regarding repayment schedules had been received from the Financial Creditor. The Corporate Debtor also mentioned steps taken to recover loans from other entities to facilitate repayment.3. The Financial Creditor, in response, asserted that the Corporate Debtor had defaulted in repayment, especially regarding interest payments since 30.04.2018. They argued that the Corporate Debtor's continuous default justified the initiation of CIRP. The Financial Creditor claimed that the Corporate Debtor had waived the option to convert the loan into equity shares and was entitled to monthly interest as per the agreement terms.4. Upon hearing both parties, the Tribunal concluded that the application for CIRP was premature. The Tribunal noted that the loan agreement's tenure had not expired, and there was no agreement on when interest payments became due. Additionally, the Tribunal highlighted the lack of authentication regarding the debt status, leading to the dismissal of the petition based on these observations.5. The Tribunal's decision to dismiss the petition was based on the premature nature of the application, the absence of agreed-upon timelines for interest payments, and the incomplete proof of debt authentication. The order was communicated to both parties for their information.This detailed analysis of the judgment provides insights into the legal complexities surrounding the initiation of CIRP, disputes over repayment defaults, and the interpretation of loan agreement clauses and timelines for repayment in the context of the Insolvency and Bankruptcy proceedings.