2022 (11) TMI 346 - Tri - Insolvency and Bankruptcy

Tribunal admits CIRP against Corporate Debtor, imposes moratorium, appoints Resolution Professional. Debtor's request dismissed.

The Tribunal admitted the application for initiating Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor, imposed a moratorium, ... Maintainability of petition - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - main defence raised by the Corporate Debtor is that the Financial Creditor has failed to failed to provide any certificate under section 65B(4) of the Evidence Act 1872 - HELD THAT:- The Financial Creditor has filed several documents to substantiate its contention that there is a debt which exists between the Financial Creditor and the Corporate Debtor. The Financial Creditor has filed a supplementary affidavit which is in substance is sufficient to corroborate the pleadings and the debt and default of the Corporate Debtor - The Corporate Debtor has only objected to the admission of the calculation sheet submitted by the Financial Creditor, but has not objected to the fact that the Corporate Debtor was not in default. From the Bank Statements filed in the Supplementary Affidavit, it is clear that the Corporate Debtor has defaulted in payment of the debt. The present petition made by the Financial Creditor is complete in all respects as required by law. The Petition establishes that the Corporate Debtor is in default of a debt due and payable and that the default is more than the minimum amount stipulated under section 4 (1) of the Code, stipulated at the relevant point of time. Petition admitted - moratorium declared. Issues Involved:1. Admissibility of supplementary affidavit by the Corporate Debtor.2. Initiation of Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor.3. Validity of evidence and documents submitted by the Financial Creditor.4. Objections by the Corporate Debtor regarding the maintainability and defects in the Company Petition.Issue-wise Detailed Analysis:1. Admissibility of Supplementary Affidavit by the Corporate Debtor:The Corporate Debtor filed I.A. (IB) No. 318/KB/2022 seeking directions to place a supplementary affidavit on record. The learned Counsel for the Corporate Debtor argued that there have been subsequent developments, including the IL&FS Group's severe liquidity crisis and misreporting of financial statements. The Tribunal, however, dismissed this I.A., noting that the burden of proof for due payment lies on the Corporate Debtor, and no benefit could come from addressing the Financial Creditor's issues at this stage.2. Initiation of Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor:The Company Petition (CP (IB) No. 347/KB/2020) was filed under section 7 of the Insolvency and Bankruptcy Code, 2016, by IL&FS Financial Services Limited, seeking to initiate CIRP against the Corporate Debtor for defaulting on payments amounting to Rs. 95,95,88,630 and Rs. 302,73,61,354 as of 22 November 2018. The Tribunal admitted the petition, established the existence of debt and default, and ordered the commencement of CIRP, including the appointment of an Interim Resolution Professional (IRP).3. Validity of Evidence and Documents Submitted by the Financial Creditor:The Financial Creditor submitted various documents to substantiate the debt and default, including loan agreements, demand notices, bank statements, and deeds of hypothecation. The Corporate Debtor contended that the Financial Creditor failed to provide a certificate under section 65B(4) of the Evidence Act, 1872, to validate computer-generated documents. However, the Tribunal found that the Financial Creditor had provided sufficient evidence, including supplementary affidavits and loan agreements, to establish the debt and default.4. Objections by the Corporate Debtor Regarding the Maintainability and Defects in the Company Petition:The Corporate Debtor argued that the petition was not maintainable due to incurable defects, vague facts, and lack of authentic documents. They also cited the absence of a certificate under section 65B(4) of the Evidence Act, 1872, as per RBI notification and section 7(3) of the Code. The Tribunal, relying on the Supreme Court's ruling in Asset Reconstruction Company (India) Limited v. Tulip Star Hotels Limited, noted that proceedings under IBC are summary in nature and the Financial Creditor had submitted all requisite documents to prove the existence of financial debt and default. Consequently, the Corporate Debtor's objections were dismissed.Conclusion:The Tribunal admitted the application for initiating CIRP against the Corporate Debtor, imposed a moratorium under section 14 of the IBC, and appointed Mr. Bimal Kanti Choudhury as the IRP. The Corporate Debtor's I.A. seeking to file a supplementary affidavit was dismissed. The Tribunal directed the Financial Creditor to deposit Rs. 3,00,000 with the IRP for public notice expenses and ordered the communication of this order to relevant parties. The case was scheduled for a periodical report on 15.11.2022.