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2020 (10) TMI 167 - Tri - Insolvency and BankruptcyMaintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - financial debt - existence of debt and dispute or not - time limitation - HELD THAT:- On the facts of the instant case, from a perusal of the copy of Certificate of Registration of the Financial Creditor NBFC, copy of Loan Agreement dated 20.03.2015, Bank statement of IIFL along with the certificate under Bankers' Book Evidence Act, 1891 it is more than clear that the Financial Creditor has provided financial assistance to the Corporate Debtor and there exists a financial debt within the meaning of Section 5(8) of the Code of 2016, having been disbursed against the consideration for the time value of money, as per the terms of the Loan agreement, i.e. money borrowed against the payment of interest. On a perusal of the Demand Promissory Note issued by the Corporate Debtor in favour of the Financial Creditor for ₹ 13 Crore and the Demand Notice dated 07.03.2019 demanding payment of loan amounts along with the reply filed by the Corporate Debtor, and the Independent Auditor's Report for year ending 31.03.2017 showing secured loan from the Financial Creditor, it is clear that there is default in the repayment of the debt, within the meaning of section 3(12) of the Code. It is not the case of the Corporate Debtor that there is no debt, or that the debt has been repaid. The only issue raised by the Corporate Debtor is merely that the amounts claimed by the Financial Creditor in the Petition are in excess. Neither the debt nor the default have been denied. Further, the Corporate Debtor has only raised the issue of limitation, but since we find that it is a case of continuing default, its argument fails. There is not only an existing debt and default, but that, as observed from the Corporate Debtor's Independent Auditor's Report, the Company has lost its substratum and its net worth is eroded, showing negative balances - It is seen that the Corporate Debtor has filed its Statement of Solvency in Form 8 along with the Independent Auditor's Report for year ending 31.03.2017 which records that the LLP has not made any profits and the Reserves and Surplus of the Corporate Debtor reflected in the Financial Statement shows negative balance. The Corporate Debtor has failed to file Audited Financial Statement for the year ending 2018 and 2019 to establish the fact that the Corporate Debtor is solvent. On perusal of the NeSL Report dated 18.07.2019 showing that the Corporate Debtor has defaulted in repayment of the financial debt. It is established that the Corporate Debtor is in default of an amount higher than the minimum required for the initiation of CIRP - present petition is an independent proceeding, initiated on account of the debt and default having occurred vis-a-vis the Loan Agreement dated 20.03.2015, entered into between the Financial Creditor and the Corporate Debtor, and initiated on account of the Petition filed by the Financial Creditor in the instant case. The instant application is filed strictly in accordance with the extant provisions of the Code and the debt and default are established by the Financial Creditor by submitting substantial evidence in support of the claim. It is therefore, a fit case for initiating CIRP - application admitted - moratorium declared.
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