2017 (2) TMI 1466 - AT - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence of debt and dispute or not - HELD THAT - In the case on hand it is held that petitioner is financial creditor. It is also held that the amount due to the petitioner from the respondent is financial debt. There is also occurrence of default in repayment of financial debt. The petition filed by the petitioner is complete in all respects. Hence this application is admitted. Application admitted - moratorium declared.

Summary

Issues Involved:
1. Authorization of the petitioner to file the petition.
2. Status of the petitioner as a financial creditor.
3. Nature of the debt as financial debt.
4. Validity of the Assignment Deed.
5. Alleged settlement of dues by the respondent.
6. Bar of limitation on the petition.
7. Commencement of Corporate Insolvency Resolution Process (CIRP).

Detailed Analysis:

1. Authorization of the Petitioner to File the Petition:
The respondent challenged the authorization of Mr. Anil Chunilal Varma to file the petition. The petitioner, a sole proprietary concern, had conferred General Power of Attorney (GPA) to Mr. Varma, specifically authorizing him to file insolvency proceedings. The tribunal held that the objection was not valid as the GPA explicitly authorized Mr. Varma.

2. Status of the Petitioner as a Financial Creditor:
The respondent contended that the petitioner is not a financial creditor as defined under Section 5(7) of the Insolvency and Bankruptcy Code (IBC). The tribunal examined the agreement dated 05.09.2012, which indicated that the petitioner and Navis Multitrade Private Limited were lenders, and the respondent was a borrower. The tribunal concluded that the petitioner is indeed a financial creditor.

3. Nature of the Debt as Financial Debt:
The respondent argued that the claimed amount is not financial debt under Section 5(8) of the Code. The tribunal referred to the Pledge Agreement, which included clauses for interest and commission on the borrowed amount, making the transaction commercial in nature. Hence, the debt was classified as financial debt under Section 5(8)(a) and (f).

4. Validity of the Assignment Deed:
The respondent questioned the validity of the Assignment Deed executed by Navis Multitrade Private Limited in favor of the petitioner, especially since the company was struck off by the Registrar of Companies. The tribunal cited Section 250 of the Companies Act, 2013, which allows a struck-off company to enforce payment due to it. Thus, the Assignment Deed was deemed valid, and the petitioner was recognized as a financial creditor.

5. Alleged Settlement of Dues by the Respondent:
The respondent claimed that it had settled all dues with Navis Multitrade Private Limited and produced a ledger account as evidence. The tribunal noted discrepancies in the ledger and emphasized that the respondent had acknowledged the loan in the Pledge Agreement. The tribunal found that there was still an outstanding amount due to the petitioner.

6. Bar of Limitation on the Petition:
The respondent contended that the petition was barred by limitation. The tribunal referred to judgments of the NCLAT, which held that the Limitation Act does not apply to insolvency proceedings. Therefore, the petition was not barred by limitation.

7. Commencement of Corporate Insolvency Resolution Process (CIRP):
The tribunal found that the petitioner is a financial creditor, the debt is financial debt, and there was a default in repayment. The petition was complete in all respects. Consequently, the tribunal admitted the application and appointed Mr. Dharmendra Dhelaria as the Interim Insolvency Resolution Professional (IRP). A moratorium under Section 13(1)(a) of the IBC was ordered, prohibiting certain actions against the corporate debtor, including the institution of suits, transfer of assets, and recovery of property.

Conclusion:
The application was admitted, and the tribunal ordered the commencement of the Corporate Insolvency Resolution Process (CIRP) against the respondent company. The IRP was directed to make a public announcement and call for claims. A moratorium was imposed, effective from the date of the order until the completion of the CIRP. The application was disposed of with no order as to cost, and copies of the order were to be communicated to the petitioner, respondent, and the IRP.