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2019 (12) TMI 1243 - Tri - Insolvency and BankruptcyMaintainability of application - initiation of CIRP - Corporate debtor failed to make repayment - whether a default has occurred or not? - HELD THAT - The default in the repayment of the loans/cash credit facility is stated to have occurred from 30.11.2016 onwards when quarterly instalments and monthly interest became due. The computation of the overdues and default is given in Annexure V (colly). A letter dated 02.02.2017 is stated to have been issued by the financial creditor informing the corporate debtor that its account maintained with the financial creditor was declared as a Non-Performing Asset as on 31.12.2016 in terms of the guidelines of the RBI. A loan recall notice is stated to be issued on 05.01.2018 and notice under Section 13(2) of SARFAESI Act, 2002 on 18.01.2018. The facts sufficiently evidence the occurrence of the default. t has been held by the Hon'ble Supreme Court in M/S. INNOVENTIVE INDUSTRIES LTD. VERSUS ICICI BANK ANR. 2017 (9) TMI 58 - SUPREME COURT that 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 and it is of no matter that the debt is disputed so long as the debt is due that is payable unless interdicted by some law or has not yet become due in the sense that it is payable at some future date - In the present case, the evidence produced by the financial creditor has been discussed above and it has been concluded that a default has occurred. The debt is also due since it is not interdicted by any law. The occurrence of default is proved in the present case - application filed in the prescribed Form No.I is found to be complete - Application admitted - moratorium declared.
Issues Involved:
1. Initiation of Corporate Insolvency Resolution Process (CIRP) under Section 7 of the Insolvency and Bankruptcy Code, 2016. 2. Determination of default by the Corporate Debtor. 3. Impact of RBI Circulars and restructuring schemes on the insolvency process. 4. Jurisdiction and procedural compliance. 5. Appointment and role of the Interim Resolution Professional (IRP). 6. Declaration of moratorium and its implications. Detailed Analysis: 1. Initiation of Corporate Insolvency Resolution Process (CIRP): The application for initiating CIRP was filed by ICICI Bank Limited under Section 7 of the Insolvency and Bankruptcy Code, 2016, against Lakshmi Energy and Foods Limited (Corporate Debtor). The application was duly signed and verified by Ms. Shilpi Garg, Chief Manager of the Bank, with necessary authorizations and supporting documents, including the Power of Attorney. 2. Determination of Default by the Corporate Debtor: The Corporate Debtor was granted various credit facilities by ICICI Bank, detailed in multiple agreements and letters from 2010 to 2015. The account was classified as a Non-Performing Asset (NPA) on 31.12.2016. The default in repayment was evidenced through statements of account and certificates under the Bankers Book Evidence Act, 1891. The Tribunal found sufficient evidence of default, as the Corporate Debtor failed to repay the loans and cash credit facilities from 30.11.2016 onwards. 3. Impact of RBI Circulars and Restructuring Schemes: The Corporate Debtor argued that the loan accounts were under restructuring by a joint lenders forum according to various RBI guidelines, which were discontinued by an RBI Circular dated 12.02.2018. The Tribunal referred to the Supreme Court's judgment in Innoventive Industries Ltd. v. ICICI Bank, which stated that the adjudicating authority only needs to verify the occurrence of default, irrespective of any ongoing restructuring schemes. The Tribunal also noted that the Hon'ble Delhi High Court had dismissed the writ petition and appeal filed by the Corporate Debtor, reinforcing the financial creditor's right to seek remedies under the Insolvency and Bankruptcy Code. 4. Jurisdiction and Procedural Compliance: The Tribunal confirmed its jurisdiction over the matter as the registered address of the Corporate Debtor was within its territorial limits. The application was found to be complete in the prescribed Form No.1, and all procedural requirements, including the issuance of notices and opportunities for the Corporate Debtor to file replies, were duly followed. 5. Appointment and Role of the Interim Resolution Professional (IRP): Mr. Ravinder Agarwal was proposed and appointed as the Interim Resolution Professional (IRP). The IRP's role includes taking control of the Corporate Debtor's assets, managing its affairs, and constituting a committee of creditors. The IRP is required to act in accordance with the Code and relevant regulations, ensuring high standards of ethics and morality. 6. Declaration of Moratorium and Its Implications: The Tribunal declared a moratorium in terms of Section 14 of the Code, which includes: - Suspension of all suits or proceedings against the Corporate Debtor. - Prohibition on transferring or disposing of the Corporate Debtor's assets. - Prevention of any action to foreclose or enforce security interests. - Continuation of essential goods or services to the Corporate Debtor. The moratorium will remain in effect until the completion of the CIRP or until the Tribunal approves a resolution plan or orders liquidation. Conclusion: The Tribunal admitted the application for CIRP against the Corporate Debtor, declared a moratorium, and appointed Mr. Ravinder Agarwal as the IRP. The Tribunal directed the IRP to carry out his duties as per the Code and submit regular progress reports. The judgment highlights the adherence to procedural norms and the Tribunal's focus on ensuring that the insolvency process is conducted in a fair and transparent manner.
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