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2020 (10) TMI 1071 - HC - Insolvency and BankruptcyScheme of the special Statute - Fraudulent / malicious petition - It is the case of the petitioner that simultaneously, there also an execution of Deferred Payment Facility Agreement dated 15.11.2010 between CD and respondent No.3 which is a financial company in the name of BMW India Financial Services Private Limited. - principles of natural justice - HELD THAT:-This Insolvency and Bankruptcy Code, 2016 is the Act to consolidate and amend laws relating to re- organization and insolvency resolution of corporate persons, partnership firms and individuals in a time bound manner for maximization of value of assets of such person, who promote entrepreneurship, availability of credit and balance, the interest of stake holders including alteration in the order of priority of payment of Government dues and to establish an insolvency and bankruptcy board of India and for matters connected therewith and incidental thereto. The scheme of the Code is to ensure that when a default takes place, in the sense that a debt becomes due and is not paid, the insolvency resolution process begins. Default is defined in Section 3(12) in a very wide terms as meaning non-payment of a debt once it becomes due and payable, which includes non- payment of even part thereof or an installment amount. The Code gets triggered the moment default is of ₹ 1 lakh or more in view of Section 4 of the Code. The corporate insolvency resolution process may be triggered even by the corporate debtor itself or a Financial Creditor or Operational Creditor. A clear distinction is made by the Code between debt owned to Financial Creditors and Operational Creditors. The Code has further prescribed that when it comes to Financial Creditor, triggering the process under Section 7 becomes relevant under the explanation to Section 7(1), a default is in respect of financial debt owned by any Financial Creditor of the Corporate Debtor, it needs to be a debt owned to the applicant Financial Creditor. A debt may not be due if it is not payable in law or in fact, but the moment the adjudicating authority is satisfied that a debt has occurred, the application must be admitted unless it is incomplete, in which case it may give notice to the applicant to rectify the default within seven days of the receipt of the notice from the adjudicating authority. In the instant case, the financial creditor, namely, BMW Indian Financial Services Private Limited has presented the petition being Company Petition (IB) No.161 of 2017, in which a clear opportunity of hearing is given to the petitioner and the corporate debtor, as well. The corporate debtor i.e. CD has filed detailed objection raising multiple contentions. Petition dismissed.
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