2020 (2) TMI 1555 - Tri - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Dishonor of cheque - Corporate Debtor failed to make repayment of its dues - Operational Creditors - HELD THAT - The respondent states that they are unable to meet the financial liability in the 44th Annual Report of the Corporate Debtor of the year 2018-2019. It has been stated that the possession of all the Assets of the Company, charged to the Financial Institutions/Bank to secure the financial assistance granted to the Company viz., Plant and Machinery, movable assets and Land and Building at Bilaspur and Shahadra had been taken over by Stressed Assets Stabilization Fund (IDBI) on 20.01.2006 and by Punjab National Bank on 24.01.2006 under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 . The respondent company categorically submitted that they are unable to meet the financial requirements of the company. The application is admitted - moratorium declared.

Summary

Issues Involved:
- Application filed under Section 9 of the Insolvency and Bankruptcy Code, 2016 for initiation of Corporate Insolvency Resolution Process against a Corporate Debtor.
- Admission of the application and appointment of an Interim Resolution Professional.
- Declaration of Moratorium Order and its implications.
- Direction for the Operational Creditor to deposit a sum with the Interim Resolution Professional.
- Instructions to the ex-management to provide documents and information.
- Convening a meeting of the Committee of Creditors and submission of resolution plan.
- Communication of the order to relevant parties.

Detailed Analysis:

1. Application under Section 9 of IBC:
The application was filed seeking initiation of Corporate Insolvency Resolution Process against the Corporate Debtor, Nova Steels (India) Limited, based on non-payment of dues for services rendered. The applicant had issued demand notices and legal notices, and the Corporate Debtor admitted the liability but expressed inability to settle the bill.

2. Admission of Application and Appointment of IRP:
After perusing the application, reply, and documents, the Tribunal admitted the application. The IRP proposed by the applicant was approved without any pending disciplinary proceedings, and the application was deemed defect-free. Consequently, the IRP was appointed to oversee the resolution process.

3. Moratorium Order and Implications:
A moratorium order was passed, prohibiting various actions against the Corporate Debtor, including legal proceedings, asset transfers, and recovery actions. Essential services were to be continued, and specific transactions exempt from the moratorium were outlined. The moratorium was to remain in effect until the completion of the Corporate Insolvency Resolution Process.

4. Deposit Requirement and Ex-Management Directions:
The Operational Creditor was directed to deposit a specified sum with the IRP to cover expenses. The ex-management was instructed to provide all documents and information within a week, failing which coercive measures would be taken.

5. Committee of Creditors and Resolution Plan:
The IRP was tasked with convening a meeting of the Committee of Creditors to discuss and approve a resolution plan. The resolution passed by the Committee of Creditors was to be submitted for further action.

6. Communication of Order and Future Proceedings:
The Registry was directed to communicate the order to the relevant parties via Speed Post and Email. The IRP was required to file a progress report by a specified date, and the matter was listed for further proceedings accordingly.

This comprehensive analysis summarizes the key aspects of the judgment, detailing the legal proceedings, implications of the orders issued, and the responsibilities assigned to the parties involved in the insolvency resolution process.