2022 (1) TMI 1267 - Tri - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - assignment of debts - existence of debt and dispute or not - HELD THAT - There are no substance in the contentions of the Ld. Counsel for the applicant so far as the present facts are concerned. The Financial Creditor has filed the petition under section 7 of the IBC, 2016 having been duly assigned the debt by four banks. The objection of the applicant in I.A.(IB) 1069/KB/2021, that the debt of the Banks could not have been validly assigned to the present Financial Creditor does not stand to any reason. There cannot be any bar if a Lender/Bank assigns the debt to any other legal person. It will not make any difference or invalidate the assignment of debt transaction, even if the debt is assigned by a registered or an unregistered deed or if a deed is registered at a later date as has been done in the case of Allahabad Bank - Even if the liquidation proceedings are not transferred to the NCLT by the Hon ble High Court, it will not be a bar for a Financial Creditor to approach the NCLT under section 7 of the Code independent of that proceedings. Since the Corporate Debtor had already committed default in making the payment of the outstanding financial debt to the Banks, and the Financial Creditor has validly initiated the proceedings before this Adjudicating Authority against the Corporate Debtor which is presently in the hands of the Official Liquidator appointed by the Hon ble High Court of Calcutta, whatever decision in this matter is taken, the same would be binding on the Official Liquidator as well, who is in possession of all the properties, assets etc. of the Corporate Debtor. The petition of the Financial Creditor is very much maintainable and the Financial Creditor is entitled to the relief sought in the petition - On the basis of the submissions made by the Financial Creditor and the documents placed on record since the Corporate Debtor has failed to make any payment of the financial debt due to the Financial Creditor, it is opined that there is a default on the part of the Corporate Debtor by not repaying the debt owed to the Financial Creditor and in view of the fact that the application is otherwise complete and there is no other hindrance in the admission of the petition, this petition ought to be admitted and Corporate Insolvency Resolution Process ought to be initiated against the Corporate Debtor. Application admitted - Moratorium declared.

Summary

Issues Involved:
1. Validity of the assignment of debt to the Financial Creditor.
2. Maintainability of the petition under Section 7 of the Insolvency and Bankruptcy Code, 2016.
3. Jurisdiction of the NCLT in light of the ongoing winding-up proceedings.
4. Appointment of Interim Resolution Professional (IRP).

Detailed Analysis:

1. Validity of the Assignment of Debt to the Financial Creditor:
The Financial Creditor, M/s Ashray Vyapaar Limited, claimed to have acquired the debt from various banks through multiple deeds of assignment. The applicant, Dolphin Vintrade Pvt. Ltd., challenged the validity of these assignments, arguing that they were unregistered and executed without proper legal standing. The Tribunal, however, found no merit in these objections, stating that the assignment of debt by banks to any legal person is permissible and valid, regardless of the registration status of the deeds. The Tribunal emphasized that the Financial Creditor had legally stepped into the shoes of the assignor banks and was competent to pursue the proceedings against the Corporate Debtor.

2. Maintainability of the Petition under Section 7 of the Insolvency and Bankruptcy Code, 2016:
The Tribunal reiterated that a petition under Section 7 of the IBC is an independent proceeding and can be initiated by a Financial Creditor when a default has occurred. The Financial Creditor established that the Corporate Debtor had defaulted on a financial debt amounting to Rs. 2486,44,80,162.85. The Tribunal referred to the Supreme Court judgment in A. Navinchandra Steels Private Limited vs. SREI Equipment Finance Limited, which clarified that Section 7 proceedings are independent and unaffected by any winding-up proceedings. The Tribunal concluded that the petition was maintainable as the Financial Creditor had met all the necessary parameters under Section 7.

3. Jurisdiction of the NCLT in Light of the Ongoing Winding-Up Proceedings:
The applicant contended that the NCLT could not take up the matter suo motu as the Corporate Debtor was already under liquidation by the High Court. The Tribunal, however, cited the Supreme Court's observation that the IBC proceedings have an overriding effect over the winding-up proceedings under the Companies Act. The Tribunal held that the Financial Creditor could approach the NCLT under Section 7 of the IBC, independent of the ongoing liquidation proceedings. It emphasized that the primary objective of the IBC is the revival of companies, and the NCLT has the jurisdiction to initiate the Corporate Insolvency Resolution Process (CIRP) even if the liquidation proceedings are not transferred by the High Court.

4. Appointment of Interim Resolution Professional (IRP):
The Financial Creditor proposed the name of Mr. Suresh Chandra Pattanayak as the IRP, who consented to the appointment and confirmed that no disciplinary proceedings were pending against him. The Tribunal appointed Mr. Pattanayak as the IRP and directed him to convene a meeting of the Committee of Creditors within 105 days from the insolvency commencement date. The Financial Creditor was also directed to deposit Rs. 5,00,000/- with the IRP for preliminary expenses and fees.

Orders:
1. The application under Section 7 of the IBC for initiating CIRP against the Corporate Debtor was admitted.
2. A moratorium was declared in accordance with Sections 13 and 15 of the IBC.
3. The IRP was directed to make a public announcement and call for the submission of claims.
4. The IRP was tasked with convening a meeting of the Committee of Creditors and identifying a prospective Resolution Applicant within 105 days.
5. The Financial Creditor was directed to deposit Rs. 5,00,000/- with the IRP.
6. The Registry was instructed to communicate the order to all concerned parties and list the matter for filing the progress report on 04/04/2022.

The Tribunal dismissed the application by Dolphin Vintrade Pvt. Ltd., finding no merit in the contentions raised and upheld the maintainability of the petition under Section 7 of the IBC.