2022 (1) TMI 1132 - Tri - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not - HELD THAT - Since the application filed by the Applicant fulfilled all the conditions required under Section 7 of the Code this Tribunal ordered issue of notice to the Respondent (Viraman Buildcon and Developers Pvt. Ltd.) by all modes. Except a few appearances no one represented on behalf of the respondent on most occasions. Consequently the Respondent was proceeded ex-parte by order dated 12.08.2021. The Corporate Debtor had not filed reply from 4.02.2021 to 12.08.2021. He has also not complied with the order dated 23.01.2020 in which he was directed to pay Rs. 20, 000/- for not filing the reply for so long. The Applicant has established the existence of debt and default on the part of the Respondent and the Respondent has not availed the opportunities provided by this Tribunal to defend the arguments made by the Applicant. Thus this Tribunal admits this petition and initiates CIRP on the Respondent with immediate effect. Petition admitted - moratorium declared.

Summary

Issues:
Initiation of corporate insolvency resolution process under Section 7 of the Insolvency and Bankruptcy Code 2016 against a defaulting party.

Analysis:
The application was filed by M/s. HBN Dairies and Allied Ltd. to initiate the corporate insolvency resolution process against M/s. Viraman Buildcon and Developers Private Limited for defaulting on an amount of Rs. 1,58,92,71,675. The financial debt accrued in favor of the Financial Creditor due to unsecured loans granted to the Corporate Debtor. The Corporate Debtor, a subsidiary of the Financial Creditor, is engaged in the business of real estate development. The applicant had collected money from depositors under unauthorized investment schemes, leading to regulatory action by SEBI. The Securities Appellate Tribunal directed the repayment of collected sums, and SEBI was instructed to sell properties to refund investors. Subsequently, frustrated investors filed an insolvency petition against the applicant. During the insolvency proceedings, it was revealed that the applicant had extended loans to the Corporate Debtor, which remained unpaid.

The Tribunal found that the application fulfilled the conditions under Section 7 of the Code, leading to the issuance of notice to the Respondent. Despite multiple opportunities, the Respondent failed to appear or file a reply, resulting in an ex-parte proceeding. The Applicant successfully proved the debt and default by the Respondent. Due to the Respondent's absence and failure to defend, the Tribunal admitted the petition and initiated the corporate insolvency resolution process against the Respondent.

A moratorium was imposed under Section 14 of the Code, restricting legal actions against the Respondent, asset disposal, security enforcement, and property recovery. Essential services to the Respondent were protected during the moratorium period. The order of moratorium was to remain in effect until the completion of the insolvency resolution process. The interim resolution professional proposed by the Applicant was confirmed by the Bench to carry out necessary steps under the Code and submit a report within 30 days.

In conclusion, the Tribunal admitted the application for corporate insolvency resolution against the defaulting party, imposed a moratorium, and appointed an interim resolution professional to oversee the resolution process in accordance with the Insolvency and Bankruptcy Code 2016.