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2017 (8) TMI 1600 - Tri - Insolvency and BankruptcyMaintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its debt - existence of debt and dispute or not - HELD THAT - There are three ingredients/primary conditions to be fulfilled for an admission of CIRP viz., an application in a prescribed format with prescribed fees is to be filed by a concerned party; such party shall furnish a name of Interim Resolution Professional, who should free from any disciplinary proceedings; a default of debt in question has occurred - As per Section 3(12) of IBC 2016, Default means non-payment of debt when whole or any part or installment of the amount of debt has become due and payable and is not repaid by the debtor or the corporate debtor, as the case may be. Whereas debt has been defined under section 3(11) of the Code, which says Debt means a liability or obligation in respect of a claim which is due from any person and includes a financial debt and operational debt. The Hon'ble NCLAT in the case of M/S. INNOVENTIVE INDUSTRIES LTD. VERSUS ICICI BANK ANR 2017 (6) TMI 959 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, MUMBAI has held that once default. has occurred; application is complete; no disciplinary proceedings are pending against proposed IRP, Adjudicating Authority, on its satisfactions of above is required to admit the case. Adjudicating Authority for the purposes of Insolvency and resolution liquidation for corporate persons is National Company Law Tribunal, constituted under section 408 of the Companies Act, 2013. So the instant application/petition is properly instituted by duly authorized officer of IDBI and submitted application in a prescribed form with required fee along with all the relevant documents duly certified by the competent officer - It is not in dispute that various working capital term loans/working capital facilities/Restructured term loans/funded interest term loans/Priority Loans/Long Term working capital term loans, granted by the IDBI and availed by the respondent-LITL. The total overdue as on June 15th 2017 is ₹ 2,34,96,12,889/-. The default of the loans in question are also not in dispute as date of defaults in all the loans happens to be 28th /30th November 2016 with 197/199 days of default in each case. There is a default occurred, the instant application is complete and the IRP is to be appointed in accordance with law - Application admitted.
Issues Involved:
1. Eligibility of IDBI Bank Limited to file the application. 2. Occurrence of default by Lanco Infratech Limited. 3. Competence and appointment of Interim Resolution Professional (IRP). 4. Inclusion of corporate guarantees in the total debt. 5. Validity of the certificate under the Bankers' Book Evidence Act. 6. Request for additional time by the respondent. 7. Consequences of initiating Corporate Insolvency Resolution Process (CIRP). Issue-wise Detailed Analysis: 1. Eligibility of IDBI Bank Limited to file the application: The applicant, IDBI Bank Limited, qualifies as a Financial Creditor under the Insolvency and Bankruptcy Code (IBC) 2016 and is thus eligible to file the application. The application is complete, and IDBI has furnished the necessary documents and authorization letters, confirming its eligibility to initiate the CIRP against Lanco Infratech Limited (LITL). 2. Occurrence of default by Lanco Infratech Limited: The total overdue amount as on June 15, 2017, is ?2,34,96,12,889. The default dates back to November 28/30, 2016, with 197/199 days of default in each case. The respondent has not disputed the various loans and facilities availed but raised concerns about the inclusion of corporate guarantees in the total debt. The tribunal found that the respondent defaulted on the loans, fulfilling the criteria under Section 7(5)(a) of IBC for admitting the application. 3. Competence and appointment of Interim Resolution Professional (IRP): Initially, the petitioner proposed Mr. Vijay Kumar V. Iyer as IRP. However, due to his existing engagements with other companies, the tribunal suggested appointing a different IRP. Consequently, Mr. Savan Godiawala was proposed and confirmed as the IRP, with no disciplinary proceedings pending against him, ensuring compliance with the Code of Conduct for Insolvency Professionals. 4. Inclusion of corporate guarantees in the total debt: The respondent contended that the corporate guarantees included in the debt calculation were contingent and not crystallized into a "debt." The tribunal noted that the respondent could present these claims before the IRP during the CIRP process, and the IRP would consider them accordingly. 5. Validity of the certificate under the Bankers' Book Evidence Act: The respondent challenged the validity of the certificate provided by IDBI under the Bankers' Book Evidence Act. The tribunal confirmed that the certificate issued by Sushma Ramaraju, Deputy General Manager, IT-Division, IDBI, was valid and legally tenable, rejecting the respondent's contention. 6. Request for additional time by the respondent: The respondent requested additional time to resolve the issues of LITL and its Special Purpose Vehicles (SPVs) simultaneously. The tribunal noted that sufficient time had already been granted and that the respondent had availed the opportunity to present their defense. Therefore, no further time was granted, and the tribunal proceeded with the case based on the available records. 7. Consequences of initiating Corporate Insolvency Resolution Process (CIRP): The tribunal emphasized that the IBC aims to facilitate a systematic and time-bound resolution process for companies. The tribunal declared a moratorium prohibiting certain actions against the corporate debtor, including the institution of suits, transferring assets, and recovery actions. The IRP was directed to follow all extant rules and regulations, protect the value of the corporate debtor's property, and perform functions as per IBC provisions. The case was posted for further compliance updates on August 31, 2017. Conclusion: The tribunal admitted the application filed by IDBI Bank Limited for initiating CIRP against Lanco Infratech Limited, appointed Mr. Savan Godiawala as the IRP, and declared a moratorium as per IBC provisions. The tribunal directed the IRP to follow all necessary rules and regulations and report compliance in the next hearing.
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