2017 (7) TMI 1223 - Tri - Companies Law

Initiating the insolvency resolution process against the Respondent company registered under the Companies Act, 1956 - Held that - As legislature itself has provided for procedure which the Interim Resolution Professional or Resolution Professional, as the case may be has to follow in accordance with the provisions of the Code , Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 and the Rules under which the Insolvency Professional has to be bound. His role as a Resolution Professional cannot be restricted or curtailed by the Adjudicating Authority by making such observations or issuing certain specific directions. The instant petition deserves to be admitted. Petitioner s contention that apart from the specific directions which can be issued under section 14 of the Code , it would be pertinent that a specific direction may also to be issued so that the value of shares and assets of the Corporate Debtor are not dissipated is of no force because the legislature itself provided for various directions with regard to the moratorium which the Adjudicating Authority has to declare. Petition admitted.

Issues Involved:
1. Jurisdiction and Admissibility of the Petition.
2. Compliance with Procedural Requirements.
3. Appointment of Interim Resolution Professional (IRP).
4. Response and Objections from the Corporate Debtor.
5. Default and Debt Verification.
6. Moratorium and Directions.

Issue-wise Detailed Analysis:

1. Jurisdiction and Admissibility of the Petition:
The petition was filed by Corporation Bank under Section 7 of the Insolvency and Bankruptcy Code, 2016, read with Rule 4 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016, to initiate insolvency resolution against the respondent company, which defaulted on financial debt. The matter falls within the territorial jurisdiction of the National Company Law Tribunal, Chandigarh.

2. Compliance with Procedural Requirements:
The application was filed through Mr. Raveesha Nayak B.C., Assistant General Manager of the Financial Creditor, authorized by a circular resolution dated 24.06.2017. The application was in Form No. 1, supported by an affidavit, and complied with Rule 4(1) of the Rules. The petitioner dispatched the application to the Corporate Debtor’s registered office by Speed Post, with delivery confirmed on 30.06.2017. Notice of a defect in Form No. 2 was issued and rectified by filing a fresh written communication of the proposed IRP.

3. Appointment of Interim Resolution Professional (IRP):
The petitioner proposed Mr. Dinkar Tiruvannadapuram Venkatasubramanian as the IRP, registered with the Insolvency and Bankruptcy Board of India. The respondent did not oppose the appointment of the IRP.

4. Response and Objections from the Corporate Debtor:
The Corporate Debtor, represented by Mr. Rajeev Raj Kumar, filed an affidavit and board resolution authorizing representatives to handle the case. The response highlighted that the Corporate Debtor was under the supervision of the Joint Lenders Forum and had appointed advisors for the sale of controlling equity stake. The respondent did not file objections on merits but provided information about ongoing restructuring efforts.

5. Default and Debt Verification:
The petitioner detailed the debt amounting to ?841.70 crores, supported by sanction letters, loan agreements, and certified account statements. The default notices were sent, and facilities recalled by the petitioner. The total default amount was ?824,00,38,486/-. The evidence included records from the Central Repository of Information on Large Credits, and the respondent did not dispute the default.

6. Moratorium and Directions:
The Tribunal admitted the petition and declared a moratorium prohibiting:
a) Institution or continuation of suits or proceedings against the Corporate Debtor.
b) Transfer, encumbrance, or disposal of the Corporate Debtor’s assets.
c) Foreclosure or enforcement of security interests.
d) Recovery of property occupied by the Corporate Debtor.

The supply of essential goods or services to the Corporate Debtor was not to be terminated during the moratorium. The matter was adjourned to 27.07.2017 for formal appointment of the IRP and further directions. The Tribunal emphasized that the IRP must follow the procedures outlined in the Code and related regulations without additional specific directions from the Adjudicating Authority.

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