2019 (9) TMI 1324 - Tri - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate Debtor defaulted in repayment of instalments - existence of debt and default - HELD THAT - In the present case, the occurrence of default is evidenced by the details furnished by the bank including report of CIBIL, the copies of statement of accounts duly certified under the Bankers Books Evidence Act 1891, Balance Confirmation letters dated 14.02.2009 by the respondent-corporate debtor in form of Revival Letter and Recovery Certificate dated 21.07.2016 of the DRT-I, Chandigarh - It is a proven fact that the Corporate Debtor has not disputed the loan facilities granted by the petitioner-financial creditor. This fact could also be seen in the balance sheet for the year ending 31.03.2012 of the respondent-corporate debtor wherein the loan facilities by the petitioner-bank are being shown under the term loan head under the secured loans of the corporate debtor's balance sheet. The application filed in the prescribed Form No. I is found to be complete - The conditions provided for by Section 7(5)(a) of the Code being satisfied in the present case, the application for initiation of CIRP against Priknit Retails Limited is directed to be admitted. Application admitted - moratorium declared.

Summary

Issues Involved:
1. Initiation of Corporate Insolvency Resolution Process (CIRP) under Section 7 of the Insolvency and Bankruptcy Code, 2016.
2. Jurisdiction of the Tribunal.
3. Sanction and default of credit facilities.
4. Security of the credit facilities.
5. Pending proceedings before Debt Recovery Tribunal (DRT).
6. Notices under SARFAESI Act, 2002.
7. Proposal of Interim Resolution Professional (IRP).
8. One Time Settlement (OTS) proposal.
9. Issue of limitation.
10. Satisfaction of requirements under Section 7 of the Code.
11. Declaration of moratorium.
12. Appointment and duties of Interim Resolution Professional (IRP).

Detailed Analysis:

1. Initiation of CIRP under Section 7 of the Insolvency and Bankruptcy Code, 2016:
The application was filed by the State Bank of India for initiating CIRP against the Corporate Debtor 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. The application was duly signed and verified by the authorized representative of the Bank.

2. Jurisdiction of the Tribunal:
The Corporate Debtor was incorporated on 23.10.2007 with its registered address in Ludhiana, Punjab. Hence, the jurisdiction lies with the Chandigarh Bench of the National Company Law Tribunal.

3. Sanction and Default of Credit Facilities:
The Corporate Debtor was sanctioned various credit facilities by the State Bank of India and State Bank of Patiala. The loan accounts were declared Non-Performing Assets (NPA) on 31.03.2009 due to default in repayment of installments.

4. Security of the Credit Facilities:
The credit facilities were secured by a mortgage of lands. Sanction letters and terms and conditions were duly acknowledged by the Corporate Debtor. Various documents, including valuation reports and title deeds, were attached to the petition.

5. Pending Proceedings before Debt Recovery Tribunal (DRT):
An original application (OA No. 157 of 2012) was filed against the Corporate Debtor and other obligants with the DRT, Chandigarh. A recovery certificate dated 21.07.2016 was issued, which is still pending adjudication.

6. Notices under SARFAESI Act, 2002:
Due to default in repayment, the Bank issued notices under Section 13(2) and Section 13(4) of the SARFAESI Act, 2002, informing the Corporate Debtor about the irregularities and classification of debt as NPA. The outstanding amount was ?113,37,34,402/- as of 08.10.2011.

7. Proposal of Interim Resolution Professional (IRP):
Mr. Sanjay Kumar Aggarwal was proposed as the Interim Resolution Professional (IRP). Form No. 2 submitted by the proposed IRP was attached to the petition.

8. One Time Settlement (OTS) Proposal:
The Corporate Debtor mentioned that a One Time Settlement proposal was under consideration and claimed readiness to pay the outstanding amount as per the latest OTS letter. However, the Bank stated that no OTS was pending and adjusted the ?15 crores paid by the applicant.

9. Issue of Limitation:
The Corporate Debtor raised the issue of limitation, arguing that the debt granted in 2008 exceeded the three-year limitation period. However, the Bank provided acknowledgments of debt through Board Resolutions and other documents, establishing the continuity of the debt.

10. Satisfaction of Requirements under Section 7 of the Code:
The Tribunal found that the application met the requirements of Section 7 of the Code. The occurrence of default was evidenced by various documents, including the CIBIL report, certified statements of accounts, and the recovery certificate from DRT.

11. Declaration of Moratorium:
The Tribunal declared a moratorium in terms of Section 14 of the Code, prohibiting the institution or continuation of suits, transferring or disposing of assets, and actions to foreclose or recover any security interest during the moratorium period.

12. Appointment and Duties of Interim Resolution Professional (IRP):
Mr. Sanjay Kumar Aggarwal was appointed as the Interim Resolution Professional. His term of appointment and duties were specified, including taking control and custody of the Corporate Debtor's assets, making a public announcement, and constituting a committee of creditors.

The Tribunal directed the Corporate Debtor and its management to cooperate with the IRP and mandated the IRP to submit regular progress reports to the Tribunal. Copies of the order were to be communicated to the parties and the IRP.