2017 (4) TMI 1244 - Tri - Insolvency and Bankruptcy

Corporate insolvency Resolution Process - Held that - The corporate debtor has complied with provision of Section 10 of the Code, for declaration of moratorium under section 14 of the Code. The Petition deserved to be allowed Hence, we admit the petition for declaring Moratorium with Consequential Directions given. The public announcement of corporate insolvency resolution process be made immediately as specified under Section 13 of the code and calling for submissions of claim under Section 15 of the Code.

Summary

Issues:
- Application filed under Section 10 of Insolvency and Bankruptcy Code, 2016
- Default in payment of debt by Corporate Debtor
- Allegations of breach of trust by Bank
- Initiation of proceedings under SARFASEI Act, 2002
- Compliance with provisions of Section 10 for declaration of moratorium

Analysis:
- The application was filed by the Corporate Debtor under Section 10 of the Insolvency and Bankruptcy Code, 2016, stating a debt of 7.50 lacs raised from Union Bank of India, leading to a default of 948 lacs. A demand notice was issued by the Bank, alleging breach of trust due to non-payment of loan liabilities (para 2-3).
- The Bank initiated proceedings under the SARFASEI Act, 2002, issuing a notice to enforce securities interest and take possession of secured assets. The Corporate Debtor sought Insolvency Resolution Process, complying with Section 10 provisions (para 4-5).
- Registry pointed out defects in the application initially, which were rectified by the Corporate Debtor. The matter was heard, and the Corporate Debtor submitted a communication from the proposed interim resolution professional (para 6-7).
- The Corporate Debtor's balance sheets showed liabilities exceeding assets. The Tribunal examined the application, finding compliance with Section 10 for declaring a moratorium under Section 14 of the Code (para 8-9).
- The Tribunal allowed the petition, declaring a moratorium effective from a specified date, prohibiting suits against the Corporate Debtor, asset transfers, and enforcing security interests. An interim resolution professional was appointed, and public announcement of insolvency resolution process was ordered (para 10-11).
- The order's admission was delayed, subject to the legal position settled by the National Company Law Appellate Tribunal. The present application was admitted, subject to the final outcome of the pending appeal (para 12).