2017 (12) TMI 1724 - Tri - Insolvency and Bankruptcy

Maintainability of petition - Initiation of CIRP - Corporate debtor - Default in making repayment of loan - HELD THAT - In the present case it appears from the evidence on record that the petition is complete as per requirements of the code. The petitioners has proved that corporate debtor has committed default in making repayment of the loan amount. Therefore, the petition filed by the Financial Creditor, Bank of Maharashtra deserves to be admitted. Petition admitted - moratorium declared.

Summary

Issues Involved:
1. Maintainability of the petition under Section 7 of the Insolvency and Bankruptcy Code, 2016.
2. Allegations of malafide intent and premature filing by the Financial Creditor.
3. Compliance with Joint Lenders Forum (JLF) decisions.
4. Default in repayment by the Corporate Debtor.
5. Appointment of Interim Resolution Professional (IRP).

Detailed Analysis:

1. Maintainability of the Petition:
The petition was filed by the Bank of Maharashtra under Section 7 of the Insolvency and Bankruptcy Code, 2016, for initiating the Corporate Insolvency Resolution Process (CIRP) against Visa Power Ltd., the Corporate Debtor. The Tribunal confirmed that the petition was filed in the proper format, Form No. 1, and was complete in all respects. The Financial Creditor also proposed the name of Shri Anil Goel as the Interim Resolution Professional (IRP), along with his consent letter in Form 2.

2. Allegations of Malafide Intent and Premature Filing:
The Corporate Debtor argued that the petition was not maintainable as it was premature and filed with malafide intent to gain an advantage over the majority of secured financial creditors who were working on restructuring the debt. The Tribunal noted that the Corporate Debtor did not deny the liability of the dues claimed by the Financial Creditor. The Tribunal referred to the Supreme Court ruling in the case of Innovative Industries Ltd., which stated that the Adjudicating Authority must admit an application if it is satisfied that a default has occurred, regardless of any disputes or restructuring efforts.

3. Compliance with Joint Lenders Forum (JLF) Decisions:
The Corporate Debtor contended that the petition was filed contrary to the JLF's decision, which advised avoiding individual actions and instead working on restructuring the debt. However, the Tribunal highlighted that in the JLF meeting dated 5th August 2017, it was decided to approach the NCLT. Therefore, the Tribunal found that the Financial Creditor's action was in line with the JLF's decision and could not be rejected based on this ground.

4. Default in Repayment by the Corporate Debtor:
The Tribunal examined the evidence provided by the Financial Creditor, which included various documents proving that the Corporate Debtor had defaulted on the repayment of ?94.08 crores, comprising ?76.71 crores as the principal amount and ?17.37 crores as unpaid interest. The Tribunal found that the Corporate Debtor had committed a default in making the payment and had failed to repay the amount despite issuing a recall notice.

5. Appointment of Interim Resolution Professional (IRP):
The Tribunal appointed Mr. Anil Goel as the Interim Resolution Professional (IRP) and directed him to convene a meeting of the Committee of Creditors and submit the resolution passed by the Committee. The Tribunal also declared a moratorium as per Section 14 of the Insolvency and Bankruptcy Code, 2016, prohibiting various actions against the Corporate Debtor, including the institution of suits, transferring or disposing of assets, and recovery actions.

Order:
The petition filed by the Financial Creditor under Section 7 of the Insolvency and Bankruptcy Code, 2016, was admitted for initiating the Corporate Insolvency Resolution Process. The Tribunal declared a moratorium and directed the IRP to make a public announcement and call for the submission of claims. The matter was listed for submission of the progress report by the IRP on 18.01.2018.