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2018 (10) TMI 1653 - Tri - Insolvency and BankruptcyAdmission of petition under I& B Code - initiation of Corporate Insolvency Resolution Process - Held that - During the course of hearing it has been brought to my notice that a view has been taken in the cases of subsidiaries of M/s Gitanjali Gems Limited by respected NCLT Mumbai Benches that no separate Admission Order is required due to the reason that the assets have already been seized byEnforcement Directorate and other StatutoryAuthorities. So, it has beenheld that the documents and related evidences, as also accounts of the Debtor Company,since already under the control of SFIO, hence no purpose shall be served if IRP/ Resolution Professional is appointed to independently commence the insolvency proceedings in respect of each case. However respected co-ordinate benches of NCLT have granted liberty to the Petitioner in those cases to file fresh insolvency Petition on completion of Investigation within three months. It is true that various Government agencies have taken action against the Debtor Company but there is no harm,rather it shall facilitate, in my humble opinion, if the appointed IRP/ Resolution Professional shall also join with them in ascertaining the exact magnitude of default committed by this Debtor Company. It is worthwhile to express that all the agencies are expected to co-operate in investigation by exchanging the information gathered respectively by them. In that process the presence of the Resolution Professional is going to be very useful. One more aspect supporting the Admission of the Petition has been conveyed, prima-facie convincing, that the Government Agencies who have seized the assets of the Defaulters are being only protected from further damage. But ultimately those seized assets have to be distributed among the creditors, either Financial Creditor or Operational Creditor. That process of disbursement can only be possible under the newly enacted I&B Code 2016 - in a situation when Financial Debt has been ascertained and undisputedly the Debtor Company had defaulted in repayment of loan, therefore this is fit case for Admission‟ under I& B Code. This CP (IB)-3585 (MB)/2018 stood Admitted - this CP (IB)-3585 (MB)/2018 stood Admitted
Issues Involved:
1. Filing of the Petition under Section 7 of the I&B Code 2016. 2. Description and liabilities of the Corporate Debtor. 3. Details of the financial facilities and securities created. 4. Criminal proceedings against the Corporate Debtor. 5. Default and recall notices issued. 6. Application before Debt Recovery Tribunal. 7. Evidence of debt and default. 8. Admission of the Petition and appointment of Interim Resolution Professional (IRP). 9. Declaration of Moratorium and commencement of Corporate Insolvency Resolution Process (CIRP). Detailed Analysis: 1. Filing of the Petition under Section 7 of the I&B Code 2016: A Petition was filed by the Financial Creditor, ICICI Bank Ltd., on 10th September 2018 under Section 7 of the I&B Code 2016, read with Rule 4 of the I&B Code (Application to Adjudicating Authority) Rule 2016, for a total debt amount in default of ?608,64,41,361, including the debt related to the External Commercial Borrowing (ECB) facility. 2. Description and liabilities of the Corporate Debtor: The Corporate Debtor, M/s Gitanjali Gems Limited (GGL), is a public limited company engaged in manufacturing, importing, and exporting gold jewelry. Pursuant to an order of the Hon'ble High Court dated 17th June 2016, Gitanjali Exports Corporation Ltd (GECL) merged into GGL, transferring all debts and liabilities to GGL. 3. Details of the financial facilities and securities created: ICICI Bank, as part of a consortium led by Allahabad Bank, sanctioned a working capital loan aggregating up to ?791.82 crores, which was enhanced to ?3610 crores through various supplemental agreements. The Corporate Debtor created several securities, including movable fixed assets, current assets, residential flats, leasehold rights, and intellectual properties. Various deeds of hypothecation and powers of attorney were executed to secure these loans. 4. Criminal proceedings against the Corporate Debtor: Criminal proceedings were initiated by Punjab National Bank through an FIR dated 15th February 2018 against Mehul C. Choksi, Director of Gitanjali Groups. The Enforcement Directorate and other statutory authorities were also involved, initiating proceedings under the Prevention of Money Laundering Act, 2002, and the Fugitive Economic Offenders Ordinance, 2018. 5. Default and recall notices issued: Due to continuing defaults, recall notices were issued on 19th February 2018 and 21st February 2018, calling upon the Corporate Debtor to pay the outstanding debt under the GGL Facility and GECL Facility aggregating to ?471,62,150 as of 31st January 2015, along with interest. The Corporate Debtor failed to fulfill its obligations. 6. Application before Debt Recovery Tribunal: The Petitioner filed an application before the Debt Recovery Tribunal, Mumbai, under Section 19 for a claim of ?486,44,20,22.10 and USD 12,053,170.39. Simultaneously, the Petitioner moved this application under the I&B Code for the rehabilitation or liquidation of the Debtor Company. 7. Evidence of debt and default: The Petitioner provided evidence, including a certificate declaring the Corporate Debtor as NPA and recall notices dated 21st February 2018. The ECB facility was also withdrawn by recall notice dated 21st February 2018. A statutory notice under the SARFAESI Act was issued on 7th May 2018, and another notice on 17th May 2018. The CRILC report declared the status of GECL and GGL as "Moved to Default." A certificate under the Banker's Books Evidence Act was annexed, certifying the correctness of statements of accounts and other documents. 8. Admission of the Petition and appointment of IRP: The Tribunal admitted the Petition, finding that the existence of "Debt" and "Default" as defined under Sections 3(11) and 3(12) of the Code was established. The Financial Creditor proposed Mr. Vijay Garg as the Interim Resolution Professional (IRP), who provided the requisite certificate confirming no pending disciplinary proceedings. The Tribunal confirmed the appointment of the IRP. 9. Declaration of Moratorium and commencement of CIRP: Upon admission of the application, the Tribunal declared a "Moratorium" as mandated in Section 14 of the Code. The declaration of the Insolvency Process and commencement of the "Moratorium" was to be made by public announcement immediately as prescribed under Sections 13 and 15 of the Code. The IRP was directed to perform duties as defined under Section 18 of the Code and submit the "Resolution Plan" for approval as prescribed under Section 31 of the Code. The Moratorium prohibited the institution of any suit or parallel proceedings before any court of law and ensured the supply of essential goods or services to the Corporate Debtor was not suspended during the Moratorium period. Conclusion: The Tribunal concluded that the Petition was fit for admission under the I&B Code, as the Financial Debt was ascertained, and the Corporate Debtor defaulted in repayment. The Corporate Insolvency Resolution Process (CIRP) commenced from the date of the Order, with the Moratorium coming into immediate effect.
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