2019 (2) TMI 1847 - Tri - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence of debt and dispute or not - proper authority to Institute an application. Whether Mr. B. Parvateeswara Rao, the applicant has proper authority to Institute an application of this nature? - HELD THAT - The power of attorney though was executed in the year 1990, it, inter alia specific powers given to move an application to file insolvency proceedings. In this regard, the Hon'ble Supreme Court in MACQUARIE BANK LIMITED VERSUS SHILPI CABLE TECHNOLOGIES LTD. 2017 (12) TMI 850 - SUPREME COURT , has cleared the position by holding that, authorized agent of the Financial Creditor or Operational Creditor can file application to start CIRP against the Corporate Debtor. Hence, the applicant has succeeds in proving his authority in moving an application of this nature, there are no justifiable reason to hold that the aforesaid authority given to Mr. Parvateeswara Rao is invalid and in- operative as per the provisions of the Code. The objection in this regard found devoid of any merit. Whether the application is maintainable in view of the Interim order passed by the Hon'ble High Court of Chattisgarh, Bilaspur in Writ Petition (C) No. 1686 of 2017? - HELD THAT - The applicant herein this case is not bared in filing the application under section 7 of the 18B Code. Though the proceedings initiated by the applicant before DRT is under challenge in civil court as well as before the High Court, the applicant being not prevented from exercising its option to file proceedings under the Code, the passing an order of admission in this case not at all amount to conflict of judgement as submitted on the side of CD. So it appears to me that ordering admission of this application does not violate any of the directions passed by the Hon'ble High Court Of Chattisgarh, Bilaspur - the objections raised on the side of the Corporate Debtor is found unsustainable under law. Necessary Relief - HELD THAT - As per Section 7(3) of the Code the Financial Creditor shall, along with the application furnish record of the default recorded with the information utility or such other record or evidence of default. It is one among the requirement which would be meted out by the Financial Creditor and that requirement has been meted out though a Certificate from Information Utility Organization has not been produced. Application admitted - moratorium declared.

Summary

Issues Involved:
1. Authority of the applicant to initiate the Corporate Insolvency Resolution Process (CIRP).
2. Maintainability of the application in view of the interim order passed by the Hon'ble High Court.
3. Reliefs and costs.

Issue-wise Detailed Analysis:

1. Authority of the Applicant to Initiate CIRP:
The Financial Creditor, Punjab National Bank, filed the application under Section 7 of the Insolvency and Bankruptcy Code, 2016, for initiating CIRP against the Corporate Debtor. The Corporate Debtor challenged the authority of Mr. B. Parvateeswara Rao, the signatory of the application, arguing that he lacked special authority to file the application. The Financial Creditor produced a General Power of Attorney dated 13.12.1990 and a Letter of Authority dated 15.02.2018, which authorized Mr. Rao to file the CIRP application. The Tribunal referred to the Supreme Court's ruling in Macquarie Bank Limited v. Shilpi Cable Technologies Ltd, which clarified that an authorized agent of the Financial Creditor can file such applications. The Tribunal found that the applicant had proper authority and dismissed the challenge.

2. Maintainability of the Application in View of the Interim Order:
The Corporate Debtor argued that the interim order passed by the Hon'ble High Court of Chhattisgarh, Bilaspur, in Writ Petition (C) No. 1686 of 2017, barred the initiation of CIRP. The Tribunal examined the interim order and concluded that it did not expressly restrict the applicant from initiating CIRP under Section 7 of the Insolvency and Bankruptcy Code, 2016. The Tribunal noted that the order dealt with the handling of the Corporate Debtor's assets under SARFAESI Act provisions but did not prevent the filing of the CIRP application. Thus, the Tribunal held that the application was maintainable and did not violate any directions of the High Court.

3. Reliefs and Costs:
The Tribunal examined whether the Financial Creditor had established the existence of default in repayment of the loan and compliance with Section 7(3) of the Code. The Financial Creditor provided evidence, including the CIBIL Report and ledger accounts, showing that the Corporate Debtor defaulted on repayments, with an outstanding balance of ?21,87,30,089.00 as of 07.12.2016. The Tribunal found that the Financial Creditor met the requirements of Section 7(3) by proposing the name of a Resolution Professional and providing necessary documentation. The Tribunal admitted the application, declared a moratorium, and appointed Mr. Amresh Shukla as the Interim Resolution Professional. The Tribunal directed the Interim Resolution Professional to convene a meeting of the Committee of Creditors and submit a resolution plan within 105 days from the insolvency commencement date. The matter was listed for a progress report on 28/03/2019.

Order:
The application filed by the Financial Creditor under Section 7 of the Insolvency and Bankruptcy Code, 2016, was admitted. A moratorium was declared, and a public announcement was ordered in accordance with Sections 13 and 15 of the IBC, 2016. The Tribunal appointed Mr. Amresh Shukla as the Interim Resolution Professional and directed him to convene a meeting of the Committee of Creditors and submit a resolution plan within 105 days. The registry was directed to communicate the order to all concerned parties by Speed Post and email. The matter was listed for a progress report on 28/03/2019.