2019 (6) TMI 1562 - 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 - HELD THAT - All the requirements to be meted out under Sub Section 3 of Section 7 of the Code have been complied with by the FC. The loan sanction letters (Annexure l-L and l-M) along with acknowledgement of liability/debt dated 03-02-2016 (Annexure l-AX and l-AY) prove that the amount claimed by the FC is still due. In order to prove that the CO has committed default, the FC has produced CIBIL report (Annexure l-AAB) and copies if statement of bank account (Annexure l-AZ-1 l-AZ-2). To prove that there is no disciplinary proceeding pending against the proposed Interim Resolution Professional, the applicant/FC has also produced Form -2 Annexure II and II (a) . Reference to Form-2 proves that there is no disciplinary proceeding pending against the proposed Interim Resolution Professional. All the information required for maintaining an application filed under Section 7 of the Code are meted out by the FC. Though, the FC is a member of the consortium banks lent money to the CD, consent of the joint lenders in filing an application of this nature by the members of the consortium banks is not at all a requirement to be meted out in a case of this nature. The FC being succeeded in proving all elements required to admit the application of this nature, this application deserves to be allowed. Petition admitted - moratorium declared.

Issues Involved:
1. Initiation of Corporate Insolvency Resolution Process (CIRP) under Section 7 of the Insolvency and Bankruptcy Code, 2016.
2. Default in loan repayment by the Corporate Debtor (CD).
3. Compliance with procedural requirements under Section 7 of the Code.
4. Declaration of moratorium under Section 14 of the Code.
5. Appointment of Interim Resolution Professional (IRP).

Detailed Analysis:

1. Initiation of Corporate Insolvency Resolution Process (CIRP):
The application was filed by the Financial Creditor (FC), Bank of India, 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 FC sought to initiate the CIRP against the Corporate Debtor (CD), M/s. RNB Cements Pvt. Ltd., due to an outstanding amount of ?22,59,77,397.10.

2. Default in Loan Repayment by the Corporate Debtor (CD):
The FC sanctioned and disbursed term loans aggregating ?14.80 crores to the CD. The CD executed deeds of hypothecation, created equitable mortgages, and committed defaults on multiple dates. The loan account became a non-performing asset (NPA) on 30-09-2014. Despite a demand notice under Section 13(2) of the SARFAESI Act on 19-11-2016, the CD failed to repay the debt. The FC, along with other consortium banks, filed an application before the Debt Recovery Tribunal (DRT) for recovery of ?91,41,59,592.94, which is pending.

3. Compliance with Procedural Requirements under Section 7 of the Code:
The Tribunal verified the application and supporting documents, including the loan sanction letters, acknowledgments of debt, CIBIL report, and statements of bank accounts. The FC also provided Form-2 to confirm no disciplinary proceedings against the proposed IRP. The Tribunal found that the FC complied with all requirements under Sub Section 3 of Section 7 of the Code.

4. Declaration of Moratorium under Section 14 of the Code:
The Tribunal declared a moratorium for the purposes referred to in Section 14 of the Insolvency and Bankruptcy Code, 2016. This moratorium prohibits:
- The institution or continuation of suits or proceedings against the CD.
- Transferring, encumbering, or disposing of the CD's assets.
- Actions to foreclose, recover, or enforce any security interest created by the CD.
- Recovery of any property by an owner or lessor occupied by the CD.
The moratorium will be in effect until the completion of the CIRP unless the Adjudicating Authority approves a resolution plan or orders liquidation.

5. Appointment of Interim Resolution Professional (IRP):
The Tribunal appointed Mr. Kamalesh Kumar Singhnia as the IRP to ascertain the particulars of creditors and convene a Committee of Creditors for evolving a resolution plan. The IRP is directed to convene a meeting of the Committee of Creditors and submit the resolution passed by them. The Tribunal ordered the registry to communicate the order to the FC, CD, and IRP.

Conclusion:
The application filed by the FC under Section 7 of the Insolvency & Bankruptcy Code, 2016, was admitted. The Tribunal declared a moratorium, appointed an IRP, and set the next hearing date for the submission of the progress report by the IRP. The application was disposed of accordingly.

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