Nivedan Fin-Invest Lease Limited vs Fusible Metals Private Limited

Dr. V.K. Subburaj, Member (T)

This is a petition filed by M/s. Nivedan Fin-Invest Lease Limited/financial creditor seeking to initiate CIRP on M/s. Fusible Metals Private Limited, the respondent/corporate debtor for the alleged default on the part of the corporate debtor in settling an amount of Rs. 34,41,085.42/- including the interest component towards the amount lent by the petitioner for the business operations of the corporate debtor. The details of the transactions leading to the filing of this petition as averred by the petitioner are as follows:

i. The financial creditor herein is a Non-Banking Financial Corporation successfully operating since 02.02.1994, the corporate debtor approached the financial creditor sometime in June 2015, seeking a loan for financing its operations.

ii. Thereafter, having detailed discussion and negotiation of terms, the financial creditor and the corporate debtor entered into a Loan Agreement dated 01.07.2015.

iii. The First Tranche of the Loan Agreement i.e. First Disbursement of the Loan was on 18.08.2015 for a sum of Rs. 20,00,000/-, the Second Tranche of the Loan Agreement i.e. Second Disbursement of the Loan was on 02.01.2016 for a sum of Rs. 50,000/-, the Third Tranche of the Loan Agreement i.e. Third Disbursement of the Loan amount was on 14.03.2016 for a sum of Rs. 2,00,000/- and the Fourth Tranche of the Loan Agreement i.e. Fourth Disbursement of the Loan amount on 25.04.2016 for a sum of Rs. 1,00,000/-.

iv. As per Article 6 of the said Loan Agreement, the Term of the Loan was for a period of 2 years and renewable for consecutive period of 2 years unless terminated by either Party by providing to the other Party such notice of termination 3 months prior to the end of the term and therefore on 23.01.2018, the financial creditor issued a demand notice seeking the repayment of the loan amount along with the accrued interest at the rate of 12.50% p.a.

v. The corporate debtor, vide its reply dated 10.05.2018, sought further time towards repayment of the entire loan amount along with the accrued interest till the end of the term, and in view thereof, on 01.06.2018 the corporate debtor made a repayment of Rs. 2,35,000/-, however, failed to make any payment thereafter towards the principal loan amount or the accrued interest at the rate of 14.50% p.a. (inclusive of penal interest) till 01.07.2019.

vi. Having received certain amount towards repayment of the loan, the financial creditor was hopeful that the corporate debtor, would repay the entire amount along with the accrued interest. However, on the failure of the corporate debtor to make any further payments, the financial creditor issued another notice dated 13.05.2019, to which the corporate debtor has made no reply and, hence the financial creditor is moving the present application before the Adjudicating Authority under Section 7 of the Insolvency and Bankruptcy Code, 2016 read with Rule 4 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016.

Consequent to the issuing of notice by this Tribunal Ms. Apurva Kumar, counsel appeared on 19.11.2019 on behalf of the corporate debtor and offered to file Vakalatnama within three days and reply within a week. However, she was absent to the subsequent hearings. Despite several opportunities the corporate debtor was absent continuously and as a result the corporate debtor was proceeded ex-parte in the hearing on 24.01.2020. We heard the arguments made by the counsel for the financial creditor on 13.02.2020.

We have perused the documents filed by the financial creditor and heard the arguments of the counsel for the financial creditor. The financial creditor has established the existence of debt and default on the part of the corporate debtor in clear terms.

Despite several opportunities the corporate debtor failed to avail them and rebut the arguments of the financial creditor. In view of the existence of debt and default on the part of the corporate debtor, this Tribunal initiates CIRP on the corporate debtor with immediate effect.

A moratorium in terms of Section 14 of the Code is imposed forthwith in following terms:

"(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 Enforcement of Security Interest Act, 2002;

(d) the recovery of any property by an owner or lessor where such property is occupied by or in the possession of the corporate debtor.

(2) The supply of essential goods or services to the corporate debtor as may be specified shall not be terminated or suspended or interrupted during moratorium period.

(3) The provisions of sub-section (1) shall not apply to such transactions as may be notified by the Central Government in consultation with any financial sector regulator.

(4) The order of moratorium shall have effect from the date of such order till the completion of the corporate insolvency resolution process."

The interim resolution professional ("IRP") proposed by the Applicant is Mr. Brahm Datt Verma (Email: bdverma.rp@gmail.com, Reg No. : IBBI/IPA-003/IP-N00056/2017-18/10496 and is being confirmed by this Bench. He shall take such other and further steps as are required under the statute, more specifically in terms of Section 15, 17 and 18 of the Code and file his report within 30 days before this Bench.