TMI Blog2020 (2) TMI 911X X X X Extracts X X X X X X X X Extracts X X X X ..... cation admitted - moratorium declared. - CP (IB) NO. 90/CHD/2018 - - - Dated:- 21-11-2019 - Ajay Kumar Vatsavayi, Judicial Member And Pradeep R. Sethi, Technical Member Aditya Grover, Advocate and Ms. Ritika Garg, Authorised Representative for the Petitioner. Anand Chhibbar, Sr. Adovcate, Gaurav Mankotia, Advocate. Pulkit Jain, Advocate and Sahil Sharma, Advocate for the Respondent. JUDGMENT Ajay Kumar Vatsavayi, The application in the prescribed Form No.1 is filed by V.I.R. Foods Limited (hereinafter referred to as 'Financial Creditor') for initiation of Corporate Insolvency Resolution Process (CIRP) in the case of M/s White Water Hospitality Private Limited (hereinafter referred to as Corporate Debtor). The application is filed under Section 7 of the Insolvency and Bankruptcy Code, 2016 (Code) read with Rule 4 of Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016. The Financial Creditor is a company with its registered office at Chandigarh and its CIN No. is U15310CH2005PLC02846. The application is signed by Ritika Garg, Company Secretary/Authorized Representative of M/s V.I.R. Foods Ltd. Her affidavit verifying ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4. It is further stated that total amount unpaid financial debt is ₹ 52,64,161.64/- (Rupees Fifty Two Lakhs Sixty Four Thousand One Hundred Sixty One and Sixty Four Paisa only) as on 31.12.2017. Out of which ₹ 18 Lacs fell due as on 28.02.2015, as the last payment of ₹ 10 Lac in the running account maintained with the application was made by the corporate debtor on 27.02.2015. Further, ₹ 34,64,161.64/- (Rupees Thirty Four Lacs Sixty Four Thousand One Hundred Sixty One and Sixty Four Paisa Only) stands payable by the corporate debtor on account of interest levied @18% p.a. (daily simple interest) on the total advanced loan alongwith outstanding principal due and payable to the applicant as on 31.12.2017. Thus, financial debt of ₹ 52,64,161.64/- (Rupees Fifty Two Lacs Sixty Four Thousand One Hundred Sixty One and Sixty Four Paisa only) stands payable by the corporate debtor to the applicant as on 31.12.2017. The calculation sheet is filed as Annexure A-6 at Page 44 of the paper book. 5. The respondent-corporate debtor while denying the CP averments, raised various grounds and submitted that the instant petition is liable to be dismissed in view of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2015, the corporate debtor shall repay the financial assistance from the financial creditor as and when recalled by the financial creditor. The petitioner filed CP(IB) No.101/Chd/CHD/2017 on 11.07.2017. Therefore, we can say that the financial assistance was recalled on 11.07.2017. Since, the instant CP(IB) No.90/Chd/Chd/2018 was filed on 16.03.2018, it can't be said that the same is barred by limitation. (iii) A Memorandum of Understanding (MOU) is stated to be executed between the parties on 02.05.2012. It is contended by the petitioner that as per Clause 1 of the said Memorandum of Understanding, the respondent-corporate debtor is under obligation to pay interest @ 18% per annum to the petitioner on the loan amount and hence, the same satisfies the requirement of time value of money. The respondent-corporate debtor contended that the said MOU was not filed along with the first petition i.e. CP(IB) No.101/Chd/CHD/2017 and hence the same is an afterthought and a fabricated document. It is further stated on behalf of the corporate debtor that its books of accounts have not shown any interest as alleged to have been provided under the MOU. But once the MOU executed between th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ector or a Shareholder of the Corporate Debtor as a stakeholder to improve financial health of the Company and boost its economic prospects, would have the commercial effect of borrowing on the part of Corporate Debtor notwithstanding the fact that no provision is made for interest thereon. Due to fluctuations in market and the risks to which it is exposed, a Company may at times feel the heat of resource crunch and the stakeholders like Promoter, Director or a Shareholder may, in order to protect their legitimate interests be called upon to respond to the crisis and in order to save the company they may infuse funds without claiming interest. In such situation such funds may be treated as long term borrowings. Once it is so, it cannot be said that the debt has not been disbursed against the consideration for the time value of the money. The interests of such stakeholders cannot be said to be in conflict with the interests of the Company. Enhancement of assets, increase in production and the growth in profits, share value or equity enures to the benefit of such stakeholders and that is the time value of the money constituting the consideration for disbursement of such amount raised ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt. Under the Explanation to section 7(1), a default is in respect of a financial debt owed to any financial creditor of the corporate debtor - it need not be a debt owed to the applicant financial creditor. Under section 7(2), an application is to be made under sub-section (1) in such form and manner as is prescribed, which takes us to the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016. Under Rule 4, the application is made by a financial creditor in Form 1 accompanied by documents and records required therein. Form 1 is a detailed form in 5 parts, which requires particulars of the applicant in Part I, particulars of the corporate debtor in Part II, particulars of the proposed interim resolution professional in Part III, particulars of the financial debt in Part IV and documents, records and evidence of default in Part V. Under Rule 4(3), the applicant is to dispatch a copy of the application filed with the adjudicating authority by registered post or speed post to the registered office of the corporate debtor. The speed, within which the adjudicating authority is to ascertain the existence of a default from the records of the information utility or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Board so far or ICSI Insolvency Professional Agency (CSI). The Law Research Associate of this Tribunal has checked the credentials of Mr. Madan Gopal Jindal and there is nothing adverse against him. (iv) The conditions provided for in section 7(5)(a) of the Code being satisfied in the present case, we direct that the application for initiation of CIRP against White Water Hospitality Private Limited be admitted. The directions regarding moratorium and appointment of IRP are given below. (v) We declare the Moratorium in terms of sub-section (1) of section 14 of the Code as under:- (a) the institution of suits or continuation of pending suits or proceedings against the corporate debtor including execution of any judgment, decree or order in any court of law, tribunal, arbitration panel or other authority; (b) transferring, encumbering, alienating or disposing of by the corporate debtor any of its assets or any legal right or beneficial interest therein; (c) any action to foreclose, recover or enforce any security interest created by the corporate debtor in respect of its property including any action under the Securitization and Reconstruction of Financial Assets and ..... 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(iv) The Interim Resolution Professional shall strictly act in accordance with the Code, all the rules framed thereunder by the Board or the Central Government and in accordance with the Code of Conduct governing his profession and as an Insolvency Professional with high standards of ethics and moral; (v) The Interim Resolution Professional shall cause a public announcement within three days as contemplated under Regulation 6 of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 of the initiation of the Corporate Insolvency Resolution Process in terms of section 13 (1) (b) of the Code read with section 15 calling for the submission of claims against 'Corporate Debtor'; (vi) It is hereby directed that the Corporate Debtor, its Directors, personnel and the persons associated with the management shall extend all cooperation to the Interim Resolution Professional in managing the affairs of the Corporate Debtor as a going concern and extend all cooperation in accessing books and records as well as assets of the Corporate Debtor; (vii) The Interim Resolution Professional shall after collation of all the c ..... 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