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2019 (5) TMI 1925 - Tri - Insolvency and BankruptcyMaintainability of application - initiation of CIRP - Initiation of CIRP of the Corporate Debtor by IDBI Bank (Financial Creditor) or not - the controversy about the title of the Pipe Line is still to be resolved in between the Corporate Debtor and ESIL - default of debt of the Financial Creditor more than ₹ 1,00,000/- or not - HELD THAT - The defence as appears from pleadings is that the amount is not due because issue of title of Pipe Line is still sub judices. I hold that such defence is not acceptable at all. The Corporate Debtor having availed the financial assistance/loan from the Corporate Debtor cannot deny to repay the same on the ground that the assets which were mortgage to the Bank are not belong to them etc. It is true that the Officers of the IDBI Bank ought not to have granted such a huge loan on the basis of such disputed assets which may be or may not belong to the Corporate Debtor. But the Bank (i.e. Financial Creditor) being a trusty of public money and only due to some incorrect decisions of top Officers, the Bank as a whole cannot be made to suffer. It is brought to notice that the Financial Creditor's claim is now being considered by the RP/CoC in the proceeding against the ESIL pending before the Adjudicating Authority at Ahmedabad. Be that as it may one fact is certain that IDBI Bank cannot file the same claim before the different Authorities but as on today there is nothing on record to show that IDBI's claims has been considered by the RP in that proceeding. Be that as it may in this case IDBI Bank has proved both crucial facts i.e. they owned financial debt against the Corporate Debtor and the Corporate Debtor committed default in paying the debt. The application filed by the Financial Creditor under Section 7 of the Insolvency Bankruptcy Code, 2016 for initiating Corporate Insolvency Resolution Process against the Corporate Debtor, M/s. Odisha Slurry Pipeline Infrastructure Limited is hereby admitted - moratorium declared.
Issues:
1. Application under Section 7 of Insolvency and Bankruptcy Code, 2016 filed by IDBI Bank against Corporate Debtor for default in payment. 2. Dispute regarding ownership of pipeline affecting loan repayment. 3. Claim by State Bank of India against ESIL and pending civil suit regarding pipeline ownership. 4. Intervention by SREI Infrastructure Finance Limited. 5. Consideration of Financial Creditor's claim by RP in another proceeding. 6. Appointment of Resolution Professional and initiation of Corporate Insolvency Resolution Process. Issue 1: Application under Section 7 of Insolvency and Bankruptcy Code The Financial Creditor, IDBI Bank, filed an application under Section 7 of the Insolvency and Bankruptcy Code against the Corporate Debtor for defaulting on a financial debt of over &8377; 471 crore. The loan was granted to the Corporate Debtor based on certain conditions, which were not met, leading to the default and initiation of the Corporate Insolvency Resolution Process. Issue 2: Dispute over Pipeline Ownership The Corporate Debtor argued that the loan was granted on the condition of transferring ownership of a pipeline, which remains disputed between the Corporate Debtor and ESIL. The Corporate Debtor claimed that without possession of the pipeline and rental income, they should not be held liable to repay the loan. However, the Tribunal held that the Corporate Debtor cannot deny repayment based on the disputed ownership of assets mortgaged to the Bank. Issue 3: Claims by Other Creditors The involvement of other creditors, such as State Bank of India and SREI Infrastructure Finance Limited, raised concerns about multiple claims and pending legal proceedings regarding the ownership of the pipeline. The Tribunal emphasized that objections by interveners must be based on valid grounds and that claims should be appropriately filed before the Resolution Professional. Issue 4: Consideration of Financial Creditor's Claim The Tribunal noted that the Financial Creditor's claim was being considered in another proceeding against ESIL. However, it clarified that the Financial Creditor cannot file the same claim before different authorities. The Tribunal emphasized the importance of proving the debt and default, which were established in this case, following the legal precedent set by the Apex Court. Issue 5: Appointment of Resolution Professional The Tribunal admitted the application by the Financial Creditor, declared a moratorium, and appointed a Resolution Professional to oversee the Corporate Insolvency Resolution Process. The Tribunal outlined the restrictions during the moratorium period and directed the Resolution Professional to convene a meeting of the Committee of Creditors within a specified timeline. In conclusion, the Tribunal admitted the application, initiated the Corporate Insolvency Resolution Process, and appointed a Resolution Professional to manage the proceedings, emphasizing the importance of proving the debt and default despite the ownership dispute over the pipeline. The Tribunal directed the Resolution Professional to follow the necessary procedures and timelines to facilitate the resolution of the insolvency matter effectively.
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