Home Case Index All Cases Insolvency and Bankruptcy Insolvency and Bankruptcy + Tri Insolvency and Bankruptcy - 2021 (9) TMI Tri This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2021 (9) TMI 433 - Tri - Insolvency and BankruptcyMaintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existing dispute or not - quantum of default - pendency of arbitration proceeding - HELD THAT:- An application under Section 7 of the Code is acceptable so long as the debt is proved to be due and there has been occurrence of existence of default. What is material is that the default is at least ₹ 100 lakhs. In view of Section 4 of the Code, the moment default is of Rupees one hundred lakhs or more, the application to trigger Corporate Insolvency Resolution Process under the Code is maintainable. In the present matter the applicant has produced loan agreement executed between the parties, according to which the respondent has failed to repay the loan within stipulated time. The respondent has not denied the same. The objections raised by respondent regarding sufficient security is not sustainable as proceeding under this Code is not money recovery proceeding. The other objection raised about removal of loan amount from Balance Sheet will also not help respondent - Fact still remains that the respondent has enjoyed the loan amount and failed to clear the dues on time. It is clear that the family member of applicant put forth their money in the company against the loan of the respondent company, however no assignment is made and admittedly the applicant is still a financial creditor of the respondent. The same fact has not been denied by the respondent itself. If a debt become due and payable and not paid by-Corporate Debtor, it will be said that the Corporate Debtor has committed default. When we apply the aforesaid judgment in the present matter it is seen that the debt become due and payable on 31.03.2019 as per the loan agreement and the respondent itself has admitted that the payment has not been made to the applicant. Therefore, existence of debt and default cannot be ruled out in the present matter. The respondent also placed reliance of Arbitration Clause, i.e., Clause 25 of the loan agreement. However, it is a settled preposition that the pendency of arbitration proceeding is not a defense in case of Section 7 application. In fact, no evidence is placed to show that any arbitration proceeding is pending in the present matter. The respondent has not raised any dispute over quantum of default or existence of loan amount. Therefore, this objection is also not sustainable. The present application is complete in all respects and the applicant is entitled to claim outstanding financial debts from the respondent and that there has been default in payment of the financial debt - Application admitted - moratorium declared.
|