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2018 (7) TMI 2133 - Tri - Insolvency and BankruptcyMaintainability of application - initiation of CIRP - Default in the payment of interest and principal amount - account of the corporate debtor was classified as NPA - Section 13(2) of the SARFAESI Act 2002 - Section 7 of I B Code - HELD THAT - The evidence of default has been furnished in Part IV of Form 1 and the account is stated to be classified as NPA on 30.08.2017. The bank account statements maintained as per the provisions of Bankers Books Evidence Act 1891 are stated to be attached as Annexure 1/6 of the petition. The computation chart as required in Col.2 of Part IV of Form 1 has been filed by diary No.710 dated 12.03.2018 as discussed above. Therefore this defect was also removed. The name of the resolution professional proposed to act as Interim Resolution Professional has been proposed in Part III of Form 1 and Form 2 has also been filed - the requirement of Rule 4(3) of the Rules regarding forwarding copy of the petition to the corporate debtor has also been met in the present case. The contention of the corporate debtor that the present petition is not maintainable and the re-structuring proposal is required to be first considered cannot be accepted - the application submitted by the operational creditor is complete in all respects and there is no defect pointed out by the corporate debtor. It is also proved that payment of the unpaid operational debt has not been made. Application admitted - moratorium declared.
Issues Involved:
1. Jurisdiction and authorization of the petitioner. 2. Financial facilities and default by the corporate debtor. 3. Appointment of Interim Resolution Professional. 4. Objections by the corporate debtor regarding restructuring proposal. 5. Compliance with RBI guidelines and procedural requirements. 6. Admissibility of the petition under Section 7 of the Insolvency and Bankruptcy Code, 2016. 7. Declaration of moratorium. Issue-wise Detailed Analysis: 1. Jurisdiction and Authorization of the Petitioner: The petition was filed by Oriental Bank of Commerce 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 petition was signed and verified by an authorized official of the petitioner bank, as evidenced by the authority letter and power of attorney. The corporate debtor, M/s J.R. Agrotech Private Limited, falls within the territorial jurisdiction of the Chandigarh Bench of the Tribunal. 2. Financial Facilities and Default by the Corporate Debtor: The corporate debtor had availed financial facilities from a consortium of six banks, including the petitioner, with a cash credit limit of ?20 crores disbursed on 31.03.2016. The corporate debtor defaulted in payment, leading to the account being classified as NPA on 30.08.2017. A common notice under Section 13(2) of the SARFAESI Act, 2002, was issued by the lead bank demanding ?283,62,49,468.73. The outstanding amount towards the petitioner was ?21,16,32,118 as of 31.10.2017. 3. Appointment of Interim Resolution Professional: Shri Dinesh Kumar Seth was proposed as the Interim Resolution Professional (IRP) in Part III of Form 1, and his consent was provided in Form 2. He affirmed his eligibility and confirmed that no disciplinary proceedings were pending against him. 4. Objections by the Corporate Debtor Regarding Restructuring Proposal: The corporate debtor argued that the restructuring proposal should have been considered before filing the insolvency petition, citing RBI guidelines and consortium meeting minutes. The debtor referenced a restructuring proposal submitted on 02.12.2017 and a revised proposal on 11.01.2018, which were not considered due to the petitioner's approach to the Tribunal. 5. Compliance with RBI Guidelines and Procedural Requirements: The Tribunal noted that the RBI’s Master Circular dated 01.07.2015 does not mandate restructuring in all default cases. The circular dated 12.02.2018 was deemed inapplicable as the petition was filed before its issuance. The Tribunal emphasized that restructuring is contingent on financial viability and certainty of repayment, which was not established in this case. 6. Admissibility of the Petition Under Section 7 of the Insolvency and Bankruptcy Code, 2016: The Tribunal found that the petition met the requirements of Section 7(5)(a) of the Code: a default had occurred, the application was complete, and no disciplinary proceedings were pending against the proposed IRP. The corporate debtor’s objections regarding the necessity of considering the restructuring proposal were dismissed, as the restructuring proposal was not viable and was submitted late. 7. Declaration of Moratorium: The petition was admitted, and a moratorium was declared prohibiting: a) Institution or continuation of suits or proceedings against the corporate debtor. b) Transfer, encumbrance, or disposal of any assets by the corporate debtor. c) Actions to foreclose, recover, or enforce any security interest. d) Recovery of property by an owner or lessor. The supply of essential goods or services to the corporate debtor was directed to continue during the moratorium period. The moratorium would remain effective until the completion of the corporate insolvency resolution process or further orders by the Tribunal. Conclusion: The petition under Section 7 of the Insolvency and Bankruptcy Code, 2016, was admitted, and the moratorium was declared. The matter was listed for further orders to appoint the Interim Resolution Professional.
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