9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2018 (8) TMI 1866 - Tri - Insolvency and BankruptcyAdmissibility of petition - initiation of Corporate Insolvency Resolution Process - Corporate debtor - default in payment of debt - contention raised by the SBI is that this petition is a mala fide petition to prevent the proceedings under the SARFAESI Act - whether the special resolution passed by the shareholders of the corporate debtor as required by section 10(3)(c) of the Code, which came into force with effect from June 6, 2018 is applicable to this petition, filed on May 9, 2018 by the corporate applicant under section 10 or not? HELD THAT - It is settled that the pendency of any other proceeding for recovery of amount in default from the corporate debtor is no bar for initiation of corporate insolvency resolution process - The proceedings under the IB Code are having overriding effect over all other proceedings under other Acts in view of section 238 of the I and B Code, more so, when there is no repugnancy between the I and B Code and the SARFAESI Act. The date of initiation of the arbitration proceedings is not taken as criteria to give effect to the amended section 36 of the Arbitration and Conciliation Act - In the instant case, there is no provision in the Code prior to June 6, 2018 that require a special resolution passed by the shareholders of the corporate debtor to trigger corporate insolvency resolution process by a corporate applicant under section 10 of the I and B Code. Such a condition precedent is for the first time introduced by way of ordinance by replacing the earlier section 10(3) and by substituting section 10(3)(a), (b) and (c) which came into force with effect from June 6, 2018. It is not a case where an existing right has been taken away. It is a case where a special condition is made applicable for filing of, applications by the corporate applicants under section 10 of the I and B Code - therefore, a new condition was brought into the Code by way of amendment, such conditions cannot be given retrospective effect in my view. In the case on hand, the petition is filed on May 9, 2018 much prior to coming into force of amended section 10(3)(c), which came into force on June 6, 2018 - it is not just and proper to direct the corporate applicant to take the approval of the shareholders by applying the amended section 10(3)(c) of the Code. There are no grounds to reject this petition - petition deserves to be admitted - petition admitted.
Issues Involved:
1. Initiation of Corporate Insolvency Resolution Process (CIRP) under Section 10 of the Insolvency and Bankruptcy Code (IB Code). 2. Existence of debt and default by the corporate debtor. 3. Requirement of a special resolution by shareholders under amended Section 10(3)(c) of the IB Code. 4. Allegations of mala fide intention in filing the petition to stall proceedings under the SARFAESI Act. 5. Objections raised by a significant shareholder regarding prior consent and financial irregularities. Issue-wise Detailed Analysis: 1. Initiation of CIRP under Section 10 of the IB Code: The corporate debtor, Supraja Textiles P. Ltd., filed a petition under Section 10 of the IB Code to initiate the CIRP. The Board of Directors approved this decision in a meeting held on May 7, 2018, and authorized the managing director to file the petition. The petition was presented on May 9, 2018, seeking to trigger the CIRP for the corporate debtor. 2. Existence of Debt and Default: The corporate debtor defaulted on payments amounting to ?16,13,67,283, with the date of default being December 28, 2016. The corporate applicant provided various documents, including certificates of registration of charge and notices from the State Bank of India (SBI), to substantiate the existence of debt and default. The SBI classified the loan as a non-performing asset (NPA) on December 28, 2015, and issued several notices under the SARFAESI Act, which were not complied with by the corporate debtor. 3. Requirement of Special Resolution by Shareholders: A significant issue was whether the special resolution requirement under the amended Section 10(3)(c) of the IB Code, effective from June 6, 2018, applied retrospectively to the petition filed on May 9, 2018. The Tribunal concluded that the amendment could not be given retrospective effect as it introduced a new condition not previously required. The Tribunal emphasized that the amendment was not clarificatory but procedural, imposing a new obligation on the corporate debtor. 4. Allegations of Mala Fide Intention: The SBI contended that the petition was filed with mala fide intentions to prevent proceedings under the SARFAESI Act. However, the Tribunal highlighted that the pendency of other recovery proceedings does not bar the initiation of CIRP under the IB Code, which has overriding effect over other Acts, as per Section 238 of the IB Code. The Tribunal referenced the Supreme Court's decision in Innoventive Industries Ltd. v. ICICI Bank to support this point. 5. Objections by Significant Shareholder: Mr. Guntupalli Srinivasa Rao, holding 48% voting rights, objected to the petition on grounds of lack of prior written consent from all parties to a memorandum of understanding and alleged financial irregularities by the current management. He argued that a special resolution by shareholders was necessary under the amended Section 10(3)(c). The Tribunal, however, found that the amendment could not be applied retrospectively to the petition filed before the amendment came into force. Conclusion: The Tribunal admitted the petition for initiating the CIRP and appointed Mr. Manivannan J as the Interim Resolution Professional (IRP). The Tribunal declared a moratorium under Section 13(1)(a) of the IB Code, prohibiting the institution or continuation of suits, transferring of assets, and recovery actions against the corporate debtor. The Tribunal ordered the applicant to make a public announcement about the initiation of the CIRP and communicated the order to the relevant parties.
|
