2020 (1) TMI 1253 - Tri - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence of debt and dispute or not - Time Limitation - HELD THAT - On perusal of the records it is also found that no dispute has been raised by the corporate debtor. That, the application is filed on 29th October, 2018. On perusal of the records it is found that from time to time the corporate debtor has made payments towards the outstanding loan and thus acknowledged the debt. That, the application filed by the financial creditor is well within limitation. That, the documents filed along with the application is sufficient to prove that there exists financial debt - On perusal of the records it is found that the letter of authority dated 12.09.2018 issued by General Manager of the applicant bank authorising Mr. S.K. Misra is proper and valid. The Adjudicating Authority is of the considered view that there is a debt due to financial creditor and there is default on the part of the corporate debtor - the application is found to be complete in all respect. Hence it does not warrant any rejection or dismissal. In the instant application, from the material placed on record by the Applicant, this Authority is satisfied that the application is complete in all respect and the Corporate Debtor committed default in paying the financial debt to the Applicant and the respondent company has acknowledged the debt - In the instant case, the documents produced by the Financial Creditor clearly establish the 'debt' and there is default on the part of the Corporate Debtor in payment of the 'financial debt' - the petitioner/financial creditor having fulfilled all the requirements of Section 7 of the Code, the instant petition deserves to be admitted. Application admitted - moratorium declared.

Issues Involved:
1. Application under Section 7 of the Insolvency and Bankruptcy Code, 2016
2. Existence of financial debt and default
3. Validity of the application and supporting documents
4. Appointment of Interim Resolution Professional
5. Declaration of moratorium

Detailed Analysis:

1. Application under Section 7 of the Insolvency and Bankruptcy Code, 2016
The petition was filed by the Assistant General Manager of Bank of Baroda under Section 7 of the Insolvency and Bankruptcy Code, 2016, seeking reliefs under Section 7(5)(a) and Section 13(1)(a)(b)(c) of the Code. The application was made in compliance with Rule 4 of The Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016.

2. Existence of financial debt and default
The financial creditor, Bank of Baroda, had granted various financial credit facilities to the corporate debtor, including a cash credit facility of ?6,50,00,000 and a term loan of ?1,84,58,000. The corporate debtor defaulted on repayments, with an outstanding amount of ?8,78,45,010.73 as of 29.10.2018. The default date was identified as 31.03.2017. The financial creditor held first and exclusive charge on hypothecated assets and mortgaged properties of the corporate debtor.

3. Validity of the application and supporting documents
The applicant bank submitted various supporting documents, including Form 1, affidavit, power of attorney, hypothecation agreement, and demand promissory note, among others. The corporate debtor did not raise any substantial dispute against the application, except for an objection regarding excess interest charged by the bank. The tribunal found that the application was filed within the limitation period and that the documents provided were sufficient to establish the existence of financial debt and default.

4. Appointment of Interim Resolution Professional
The application proposed the name of Mr. Prawin Charan Dwary as the Interim Resolution Professional (IRP), which was accepted by the tribunal. The tribunal verified that no disciplinary proceedings were pending against the proposed IRP.

5. Declaration of moratorium
The tribunal admitted the application and declared a moratorium as per Section 14 of the Code, prohibiting the institution or continuation of suits or proceedings against the corporate debtor, transferring or disposing of any assets, and recovery of property by owners or lessors. The moratorium would remain effective until the completion of the corporate insolvency resolution process or until the tribunal approves a resolution plan or orders liquidation.

Conclusion:
The tribunal found that the application under Section 7 of the Insolvency and Bankruptcy Code, 2016, was complete and that there was a debt due to the financial creditor with a default on the part of the corporate debtor. The petition was admitted, and a moratorium was declared, with Mr. Prawin Charan Dwary appointed as the Interim Resolution Professional. The tribunal directed the supply of essential services to the corporate debtor to continue during the moratorium period. The petition was disposed of with no order as to costs, and copies of the order were to be communicated to all relevant parties.

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