2019 (11) TMI 1658 - Tri - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Account was classified as NPA - Financial Creditors - existence of debt and dispute or not - time limitation - HELD THAT - On perusal of the Sanction letters dated 07.05.2010, 28.09.2010 and 17.09.2011, Term Loan Facility Agreement dated 29.09.2010 and Bank statement of the Corporate Debtor s account annexed to the Application and it is established that the Corporate Debtor has received the debt amount - On perusal of letter dated 11.06.2017 issued by Corporate Debtor to Applicant seeking restructuring of the loan and Balance Security Confirmation Letter dated 17.06.2017, it is clear that the Corporate Debtor has admitted to its liability to repay the debt amount received from the Applicant. The present application is filed by the Applicant The debt amount of more than Rupees One Lakh and default by the Corporate Debtor has been established. The application is filed on proper Form 1 and is complete. The Application has been filed within the period of limitation. The Application under Section 7 of I B Code, 2016 is complete - the Application filed under section 7 of the Insolvency and Bankruptcy Code for initiation of corporate insolvency resolution process against the corporate debtor deserves to be admitted - application allowed.

Summary

Issues:
Application under Section 7 of I&B Code, 2016 by Punjab National Bank against Jailaxmi Sugar Products (Nitali) Private Limited for initiating corporate insolvency resolution process.

Analysis:
The application was filed by Punjab National Bank, the Financial Creditor, under section 7 of the Insolvency & Bankruptcy Code, 2016, against the Corporate Debtor, claiming a total default amount of Rupees One Hundred Eight Crore Thirty Four Lakh Thirty Three Thousand Three Hundred Sixty Four and Paise Nineteen. The Applicant provided financial assistance to the Corporate Debtor for setting up sugar mills, and the Corporate Debtor defaulted on payments, leading to the classification of its account as NPA. The Applicant issued a notice under the SARFAESI Act, 2002, and also initiated proceedings before the Debt Recovery Tribunal, which ruled in favor of the Applicant. Despite a winding-up order against the Corporate Debtor, the proceedings under the I&B Code, 2016, were deemed valid.

The Applicant submitted various documents, including Sanction Letters, Loan Agreements, Deeds of Hypothecation, and Bank Statements, to establish the debt and default by the Corporate Debtor. The Corporate Debtor failed to respond or tender an Affidavit in Reply, despite opportunities. The Tribunal found evidence of debt acknowledgment by the Corporate Debtor through restructuring requests and confirmation letters. The existence of financial debt exceeding one lakh rupees and default by the Corporate Debtor was established, leading to the admission of the application under Section 7 of the Insolvency and Bankruptcy Code.

The Tribunal admitted the petition and declared a moratorium under section 14 of the I&B Code, prohibiting various actions against the Corporate Debtor. An Interim Resolution Professional was appointed, and the Official Liquidator was directed to cooperate and hand over all records to the Interim Resolution Professional. The former directors of the Corporate Debtor were also instructed to cooperate in the resolution process. The Registry was directed to communicate the order to all relevant parties promptly for compliance.