IDBI Trusteeship Services' Petition Accepted; Allegations of Fraudulent Intent Dismissed
The National Company Law Tribunal (NCLT), Chennai, has admitted the Corporate Insolvency Resolution Process (CIRP) against Ozone Projects Private Limited. The petition was filed by IDBI Trusteeship Services Limited under Section 7 of the Insolvency and Bankruptcy Code (IBC), 2016, acting as the Debenture Trustee on behalf of debenture holders. The tribunal found sufficient evidence of financial debt and default, dismissing allegations by Ozone Projects of fraudulent initiation of insolvency proceedings.
The case revolved around a debt of Rs. 126.30 crore owed by Ozone Projects to debenture holders, including Indiabulls Real Estate Fund and Patni Healthcare Limited. Despite multiple extensions of the redemption date, Ozone Projects failed to meet its payment obligations, resulting in the initiation of the CIRP by IDBI Trusteeship Services.
In its defense, Ozone Projects had filed an application under Section 65 of the IBC, alleging that the insolvency proceedings were initiated with fraudulent intent, primarily to serve Indiabulls' interests. The tribunal, however, found no substantial evidence to support these claims, noting that the petition was not filed with malice or intent other than the resolution of insolvency.
The NCLT also addressed several objections raised by Ozone Projects, including alleged violations of SEBI guidelines, lack of a record of default from an information utility, and improper authorization. These objections were dismissed, with the tribunal emphasizing that the statutory remedy under Section 7 was validly invoked by IDBI Trusteeship Services.
The tribunal's decision paves the way for the commencement of CIRP against Ozone Projects, with Mr. Ashok Mittal appointed as the Interim Resolution Professional. The order includes a moratorium on suits, asset transfers, and recovery actions against Ozone Projects, providing a structured framework for resolving the company's financial distress.
Bottom Line :
Insolvency and Bankruptcy Code (IBC), Section 7 - Admission of Corporate Insolvency Resolution Process (CIRP) against a Corporate Debtor based on financial debt and default established through Debenture Trust Deed and other supporting evidences. Section 65 application alleging fraudulent intent dismissed for lack of explicit proof.
Statutory provision(s):
Insolvency and Bankruptcy Code, 2016 - Sections 7, 65, 14; SEBI (Issue and Listing of Debt Securities) Regulations, 2008; Transfer of Property Act, 1882 - Section 69.
