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2017 (6) TMI 1089 - Tri - Insolvency and BankruptcyPetition under Insolvency & Bankruptcy Code - Held that - Certain conditions precedent for Admission of a Petition under I & B Code are required to be accomplished. On due consideration of the totality of the circumstances as well as the background of the case, this Bench is of the opinion that the Petition deserves Admission under the I & B Code. As a result the provisions of Section 7 and Section 8 of The Code shall come into operation, which prescribes that Financial Creditor and Operational Creditor are entitled to initiate Corporate Insolvency Resolution Process against the Corporate Debtor. Once the Petition is admitted the process of Moratorium as prescribed under Section 14 of The Code shall come into operation i.e. prohibition of institution of suit, transferring/alienating any asset of the Corporate Debtor, prohibition of foreclosure of recovery including any action under the Securitisation and Reconstruction of Financial Assets and Enforcement of any Security Interest Act. The appointment of proposed Interim Resolution Professional viz, Mr. Vipul K Choksi is confirmed, who shall perform the duties as assigned under Section 18 of The Code. He is directed to inform the progress of the Resolution Plan and the compliance of the direction such as Public Announcement to this Bench on or before 28th of June, 2017. The Petitioner shall also act upon under the provisions of Section 13 by making a public announcement to comply the provisions of Section 15 of The Code.
Issues involved:
1. Petition filed under Section 10 of Insolvency & Bankruptcy Code 2016 for Corporate Insolvency Resolution Process initiation. 2. Background of the petition related to the status of the Petitioner Company as a "Sick Industrial Company." 3. Components of debt - Financial Debt and Operational Debt, with details of creditors and outstanding amounts. 4. Legal provisions of Section 10 of The Code regarding the admission process and declaration of moratorium. 5. Clarification on the legality of parallel proceedings before BIFR and NCLT. 6. Conditions precedent for admission of the petition under I & B Code. 7. Appointment and duties of the Interim Resolution Professional. 8. Declaration of commencement of Corporate Insolvency Resolution Process. Detailed Analysis: 1. The petition was filed under Section 10 of the Insolvency & Bankruptcy Code 2016 to initiate the Corporate Insolvency Resolution Process. The urgency of the matter led to a hearing scheduled before the Vacation Bench. 2. The background of the petition related to the Petitioner Company being registered as a "Sick Industrial Company," which became relevant due to the abrogation of the Sick Industrial Companies Repeal Act 2003. 3. The petition detailed the components of debt, including Financial Debt and Operational Debt, with significant amounts owed to various creditors, notably banks as secured creditors and operational creditors supplying goods and services. 4. Legal provisions of Section 10 of The Code were discussed, outlining the process for initiating Corporate Insolvency Resolution, including the admission process and the subsequent declaration of a moratorium to protect the interests of all parties involved. 5. The judgment clarified the legality of running parallel proceedings before BIFR and NCLT, emphasizing that the moratorium invoked under The Code would abate other proceedings. 6. Certain conditions precedent for the admission of the petition under I & B Code were analyzed, leading to the decision to admit the petition and trigger the provisions of Sections 7 and 8 of The Code. 7. The appointment of the Interim Resolution Professional was confirmed, with specific duties assigned under Section 18 of The Code, including providing progress updates and compliance with directions. 8. The judgment concluded by declaring the commencement of the Corporate Insolvency Resolution Process, marking the initiation of the resolution proceedings to address the financial challenges faced by the Corporate Debtor.
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