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2020 (3) TMI 704 - Tri - Insolvency and BankruptcyMaintainability of petition - initiation of CIRP - Corporate Debtor failed to make repayment of its debt - time limitation as applicable to Right to Sue - HELD THAT - While going through the documents Tribunal observed that based on the balance sheet of corporate debtor as on 31.12.2006 filed an application under section 15(1) of Sick Industrial Companies Act, 1985 before BIFR in January 2007 which was admitted as case no. 09/2007 and was pending before BIFR till the SICA Act,1985, was repealed and in view of this the applicant could not take any steps against the corporate debtor for recovery. Further SICA has been repealed by way of a notification dated 25.11.2016 published by the Government of India with effect from 01.12.2016 and thus the BIFR established under the provisions of the SICA was also abolished. As per section 22(5) of SICA (since repealed), period from 15.01.2007 to 30.11.2016 is to be excluded for the purpose of limitation. Between 2004 to 2007 it is also seen that dispute settlement was arrived, however the same stood withdrawn subsequently. Thus Right to Sue Survives and the present petition being filed in December 2018 is within limitation, being within three years from the date, the cause of action for recovery proceedings arose. This Tribunal is inclined to admit this petition and initiate CIRP of the Respondent - application admitted - moratorium is declared.
Issues:
Application under Insolvency and Bankruptcy Code, 2016 for financial creditor claim against the corporate debtor. Detailed Analysis: 1. Financial Assistance and Restructuring: The application was filed under the Insolvency and Bankruptcy Code, 2016 by the Applicant, claiming to be the Financial Creditor of the Respondent Company, termed as the Corporate Debtor. The financial assistance was sanctioned by IDBI in 1995 to set up a plant for manufacturing color picture tubes. Subsequent financial restructuring agreements were entered into, including the conversion of a foreign currency loan and the creation of mortgages by the corporate debtor. 2. Contentions of the Respondent: The Respondent raised several contentions in their reply, challenging the locus standi of the petitioner and the validity of the claims made. They argued that the petitioner had no right to file the petition as they were not a party to the loan agreements or security documents. The Respondent also questioned the delay in seeking recovery and the alleged inconsistency in the claimed amounts. 3. Rejoinder by the Petitioner: The Petitioner submitted a detailed rejoinder, emphasizing the transfer of financial assistance from IDBI to SASF and highlighting the limitations imposed by the Sick Industrial Companies Act, 1985. They mentioned a settlement proposal accepted and subsequently withdrawn due to non-compliance by the Corporate Debtor. The repeal of SICA in 2016 was also brought up, along with the recall of the loan and initiation of recovery proceedings. 4. Judgment: After hearing oral arguments and reviewing submissions, the Tribunal observed that the petition was filed within the limitation period, considering the survival of the right to sue. The Tribunal admitted the petition and initiated Corporate Insolvency Resolution Process (CIRP) for the Respondent. A moratorium was imposed, and an interim resolution professional was appointed to oversee the resolution process, with specific instructions to file a report within 30 days. The order was communicated to the parties and relevant authorities for compliance. This detailed analysis encapsulates the key aspects of the judgment, including the background of financial transactions, legal contentions raised by both parties, and the Tribunal's decision to admit the petition and initiate the insolvency resolution process.
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