TMI Blog2020 (5) TMI 563X X X X Extracts X X X X X X X X Extracts X X X X ..... r various objects sought to be achieved by the statute as specified in the preamble. Section 7 of the I B Code deals with initiation of Corporate Insolvency Resolution Process by the Financial Creditor . The plain language of sub-section (4) of Section 7 leaves no room for doubt that the Adjudicating Authority is required to ascertain existence of default from records of an information utility. The Adjudicating Authority can also ascertain the same from other evidence furnished by the Financial Creditor . This has to be done within 14 days of the receipt of application. The I B Code has specified time frame for conclusion of Corporate Insolvency Resolution Process within 180 days and the extended period prescribed is 270 days. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y has, apart from giving a go by to the provisions of the Insolvency and Bankruptcy Code, 2016 ( I B Code for short), also failed to follow the dictum of law laid down by the Hon ble Apex Court in Innoventive Industries Limited v. ICICI Bank and Anr.- (2018) 1 SCC 407 . 2. Company Petition(IB)-3631(MB)/2018 and Company Petition(IB)-3621(MB)/2018 are the applications filed under Section 7 by the Appellant- Financial Creditor against Respondents- Corporate Debtors in the two appeals praying for initiation of Corporate Insolvency Resolution Process on the ground that the Corporate Debtors had committed default qua the financial debt that was payable in law and in fact to the Financial Creditor . As some objections were raised ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ignoring the time frame prescribed under Section 7 of the I B Code and embarking upon an enquiry to determine whether the applications filed under Section 7 contained false information, when the matters were at the very threshold stage. 6. I B Code inter alia, consolidates and amends the law relating to insolvency resolution of corporate persons in a time bound manner for various objects sought to be achieved by the statute as specified in the preamble. Section 7 of the I B Code deals with initiation of Corporate Insolvency Resolution Process by the Financial Creditor . Sub section (4) thereof provides as under: 7. Initiation of corporate insolvency resolution process by financial creditor.─ (4) The Adju ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tries Limited v. ICICI Bank and Anr.- (2018) 1 SCC 407 :- 28. When it comes to a financial creditor triggering the process, Section 7 becomes relevant. 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 re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rate debtor within 7 days of admission or rejection of such application, as the case may be. xxx xxx xxx 30. On the other hand, as we have seen , in the case of a corporate debtor who commits a default of a financial debt, the adjudicating authority has merely to see the records of the information utility or other evidence produced by the financial creditor to satisfy itself that a default has occurred. It is of no matter that the debt is disputed so long as the debt is due i.e. payable unless interdicted by some law or has not yet become due in the sense that it is payable at some future date. It is only when this is proved to the satisfaction of the adjudicating authority that the adjudicating authority may reject an applicat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y and recording of finding in respect of culpability of the Applicant regarding commission of an offence. The same cannot be allowed to thwart the initiation of Corporate Insolvency Resolution Process unless in a given case forgery or falsification of documents is patent and prima facie established. 9. The common written submissions filed on behalf of the Corporate Debtors clearly admits liability to the extent of ₹ 44,60,09,790/- as regards Poonam Resorts Limited and ₹ 6,52,03,922/- as regards Link House Industries Limited . Therefore, it is futile on the part of Corporate Debtors to contend that the applications under Section 7 filed by the Financial Creditor must pass the muster of Section 65 of the I B Code ..... X X X X Extracts X X X X X X X X Extracts X X X X
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