2017 (8) TMI 139 - Tri - Insolvency and Bankruptcy

Initiating corporate insolvency resolution process - Held that - The figures extracted indicate the losses with continued fall in revenue, therefore, it seems that the applicant has fallen into debt trap and is competent to set in motion the insolvency resolution process as contemplated under the Code . On the basis of the aforesaid statements of the affairs of the company, the outstanding amount as per the books of the company towards financial creditors is ₹ 114.20 crores and the amount in default towards financial creditors is ₹ 117.22 crores. It is represented that the total amount of operational creditors (Raw Material Suppliers) is ₹ 12.18 crores and the amount in default is ₹ 02.15 crores. The total amount of operational creditors (Government dues) is ₹ 00.17 crores and the amount in default is ₹ 00.10 crores. The total amount of operational creditors (Worker Employees) is ₹ 00.24 crores and the amount in default is nil. The total amount of operational creditors (Service providers) is ₹ 00.24 crores and the amount in default is ₹ 0.11 crores. In view of the above, the instant petition deserves to be admitted. It is, however, observed that the applicant company save some sketchy particulars has not given any road map as to how it is going to keep itself afloat as a going concern. However, keeping in perspective the objects for which the Code has been brought into force and to balance the interest of all stakeholders, the instant application warrants to be admitted to prevent further erosion of capital and to safeguard the assets of the Applicant Company/Corporate Debtor. Also declare a moratorium in relation to the matters as contemplated under Section 14 of the Code .

Issues Involved:
1. Jurisdiction and Territorial Authority
2. Financial and Operational Creditors
3. Defaults and Notices under SARFAESI Act, 2002
4. Appointment of Interim Resolution Professional
5. Financial Status and Liabilities
6. Admission of Petition and Directions
7. Declaration of Moratorium

Detailed Analysis:

1. Jurisdiction and Territorial Authority:
The application was filed by Shivek Labs Limited, a Corporate Debtor, under Section 10, 13, and 14 of the Insolvency and Bankruptcy Code, 2016. The applicant company was incorporated on 10.02.2003 and is registered with the Registrar of Companies, Punjab, Himachal Pradesh, and Chandigarh at Jalandhar. The registered office of the Corporate Debtor is situated in Chandigarh, granting this Bench territorial jurisdiction to entertain and dispose of the petition.

2. Financial and Operational Creditors:
The Corporate Debtor has provided a detailed list of its financial and operational creditors. The financial creditors include Punjab National Bank, Canara Bank, and IDBI Bank, with a total debt raised amounting to ?114.20 crores and an outstanding amount of ?117.22 crores. Operational creditors include government departments, raw material suppliers, workers/employees, and service providers with a total debt raised of ?12.71 crores and an amount in default of ?2.28 crores.

3. Defaults and Notices under SARFAESI Act, 2002:
Due to defaults in payment, notices under Section 13(2) of SARFAESI Act, 2002 were issued by Punjab National Bank, Canara Bank, and IDBI Bank for amounts of ?69.78 crores, ?39.03 crores, and ?8.40 crores, respectively. A combined notice under Section 13(4) of SARFAESI Act, 2002 dated 10.01.2017 was issued by Punjab National Bank for an amount of ?117.22 crores.

4. Appointment of Interim Resolution Professional:
The Corporate Debtor proposed Mr. Arora Vivek Kumar as the Interim Resolution Professional. His credentials, including a valid registration certificate and a declaration of eligibility, were submitted. He has no pending disciplinary proceedings and is not currently serving as an Interim Resolution Professional in any proceedings.

5. Financial Status and Liabilities:
The financial statements indicate significant losses and a continued fall in revenue. The outstanding amount towards financial creditors is ?114.20 crores, and the amount in default is ?117.22 crores. The total amount of operational creditors (raw material suppliers) is ?12.18 crores, and the amount in default is ?2.15 crores. The total amount of operational creditors (government dues) is ?0.17 crores, and the amount in default is ?0.10 crores. The total amount of operational creditors (workers/employees) is ?0.24 crores, and the amount in default is nil. The total amount of operational creditors (service providers) is ?0.24 crores, and the amount in default is ?0.11 crores.

6. Admission of Petition and Directions:
The petition was admitted based on the detailed information provided, including financial statements, lists of creditors, and defaults. The Tribunal issued several directions:
- Appointment of Mr. Vivek Kumar Arora as the Interim Resolution Professional for a period of thirty days or as determined by the Committee of Creditors.
- Suspension of the powers of the Board of Directors, with management vested in the Interim Resolution Professional.
- The Interim Resolution Professional to prepare a complete inventory of assets and act in accordance with the Code and relevant regulations.
- Constitution of the Committee of Creditors within three weeks.
- Cooperation from the Corporate Debtor and associated personnel in managing the affairs and accessing books and records.

7. Declaration of Moratorium:
A moratorium was declared concerning:
- Institution or continuation of suits or proceedings against the Corporate Debtor.
- Transferring, encumbering, alienating, or disposing of assets.
- Any action to foreclose, recover, or enforce any security interest.
- Recovery of any property by any owner or lessor.
The supply of essential goods or services to the Corporate Debtor shall not be terminated or suspended during the moratorium period.

The Interim Resolution Professional was directed to make a public announcement within three days and file a weekly report on the Corporate Debtor's status. A copy of the order was to be supplied to the Authorized Representative of the Corporate Debtor for immediate delivery to the Interim Resolution Professional.

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