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2023 (12) TMI 1172 - AT - Insolvency and BankruptcyInitiation of CIRP - authentication of default as contemplated in Regulation 21, not taken - information of default not filed with the information utility - HELD THAT - In the present case no authentication of the default having been obtained by the Financial Creditor, application under Section 7 was not liable to be admitted. The Adjudicating Authority committed error in admitting Section 7 application without there being any authentication of default as per Regulations 2017. Whether application filed by the Financial Creditor deserves to be rejected on account of non-filing of record of default with information utility? - HELD THAT - Regulation 20(1A) cannot be read to mean that after the said amendment brought in regulation w.e.f 14.06.2022 an application filed under Section 7 which is not supported by information of default from an information utility is to be rejected and if the Financial Creditor has filed other evidence to prove default which is contemplated by the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 and the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, the said application has not to be considered - even after amendment of Regulation 20 by insertion of Regulation 20(1A) w.e.f 14.06.2022, Financial Creditor is entitled to file evidence of record of default as contemplated by Regulation 2A of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 r/w Rule 4 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 - there are no substance in the submission of the Appellant that since Financial Creditor has not filed the record of default from an information utility, Section 7 deserves to be rejected - the Adjudicating Authority has correctly repelled the contention of the Appellant that in absence of a record of default recorded by information utility, the application filed under Section 7 may not be admitted. Nidhi Kumar was fully empowered to nominate, constitute and appoint any one as lawful attorney of the bank at New Delhi. Pawan Sharma himself was Senior Manager, Zonal Stressed Assets Recovery Branch - there are no error in filing the application duly signed by Pawan Sharma supported by Affidavit of Pawan Sharma and submission of the Appellant that NCLT has no jurisdiction to entertain application filed by Pawan Sharma is to be rejected. There are no substance in any of the submissions raised by the Counsel for the Appellant to interfere with the impugned order of the Adjudicating Authority - There is no merit in the Appeal - appeal dismissed.
Issues Involved:
1. Jurisdiction and Compliance with Insolvency and Bankruptcy Code (IBC) 2. Existence of Debt and Default 3. Malicious Initiation of IBC Proceedings 4. Pre-existing Dispute 5. Fraud and Suppression Allegations 6. Limitation Period 7. Power of Attorney and Authorization Summary: 1. Jurisdiction and Compliance with IBC: The Appellant argued that the Bank of Baroda did not comply with the Insolvency and Bankruptcy Board of India (Information Utilities) Regulation, 2017, specifically Regulation 20(1A), which mandates filing information of default with the Information Utilities before initiating a Corporate Insolvency Resolution Process (CIRP). The Tribunal held that the Financial Creditor can furnish other records or evidence of default as specified under Section 7(3) of the IBC and Regulation 2A of the CIRP Regulations, 2016. Thus, the absence of a record from the Information Utility does not invalidate the application. 2. Existence of Debt and Default: The Appellant contended that there was no debt and that the Bank owed money to the Corporate Debtor, citing a counter-claim of Rs. 45 crores filed with the Debt Recovery Tribunal (DRT) and a pending money suit. The Tribunal rejected this argument, noting that the existence of a counter-claim does not negate the debt and default. The Tribunal emphasized that debt and default were sufficiently proven by the Financial Creditor through bank statements and other documentation. 3. Malicious Initiation of IBC Proceedings: The Appellant claimed that the Bank's initiation of proceedings under Section 7 of the IBC was malicious, as it did not file similar proceedings against two other sister companies. The Tribunal found no merit in this argument, stating that the Financial Creditor is within its rights to initiate proceedings against the Corporate Debtor for default. 4. Pre-existing Dispute: The Appellant argued that there was a pre-existing dispute, citing the counter-claim and money suit. The Tribunal held that the concept of a pre-existing dispute is relevant only for operational debts, not financial debts. The Tribunal referred to the Supreme Court's ruling in "Innoventive Industries Ltd. vs. ICICI Bank and Anr," which stated that the existence of a dispute does not preclude the Adjudicating Authority from deciding on debt and default. 5. Fraud and Suppression Allegations: The Appellant alleged that the Bank committed fraud by not disclosing the counter-claim and money suit in its IBC petition. The Tribunal dismissed these allegations, stating that the mere existence of a counter-claim or money suit does not absolve the Corporate Debtor from its liability to discharge its debt. 6. Limitation Period: The Appellant contended that the application was barred by limitation, as the date of default was 13.03.2017, and the application was filed on 12.01.2023. The Tribunal noted that the Corporate Debtor had acknowledged its liability through various One Time Settlement (OTS) proposals, which extended the limitation period under Section 18 of the Limitation Act. The Tribunal cited the Supreme Court's ruling in "Dena Bank (Now Bank of Baroda) vs. C. Shivakumar Reddy and Anr," which held that an acknowledgment of debt extends the limitation period. 7. Power of Attorney and Authorization: The Appellant argued that the Section 7 application was not maintainable as it was filed by an unauthorized person. The Tribunal found that the Power of Attorney granted to Nidhi Kumar allowed her to appoint Pawan Sharma as the lawful attorney, thereby validating the application filed by Pawan Sharma. Conclusion: The Tribunal dismissed the appeal, finding no merit in any of the Appellant's arguments. The Tribunal upheld the Adjudicating Authority's order admitting the Section 7 application, imposing a moratorium, and appointing an Interim Resolution Professional (IRP).
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