2017 (9) TMI 494 - Tri - Insolvency and Bankruptcy

Insolvency & Bankruptcy procedure - default by Corporate-Debtor - Held that - We are of the view that as per paragraph 7 Part-V of Form No.1 the bank is required to file copies of the Entries in the Banker s Books maintained in accordance with the Bankers Books Evidence Act, 1891 which the Financial-Creditor had furnished but to make the said statements admissible per se necessary certificate was appended on the statements of account furnished with the affidavit dated 19.07.2017 of the Authorised Signatory of the bank as noticed in the order dated 11.07.2017. The requirement of the Paragraph 7 Part-V of Form No. 1 precisely isthat the bank has to file copies of the account statements which should be maintained as per the Bankers Books Evidence Act, 1891 and to attach copies thereof. The same were accordingly attached with the application originally. The Corporate-Debtor being in default in depositing the financial debt was not in fact disputed rather attempt was made for restructuring of the loan by offering to deposit an amount of ₹ 125 lacs which is not permissible as already observed. The Financial-Creditor has proved by overwhelming evidence that default has occurred, which meets the requirement of Section 3(11) & 12 read with Section 7(3)(a) and Section 7(5) of the Code. The Corporate-Debtor in fact has not disputed that it is in default of making repayments. We further find that the application is complete in all respects as the Insolvency Professional, Mr. Navneet Gupta, CA has also been proposed. This petition is admitted and Mr. Navneet Gupta, CA, #1598, Level-I, Sector 22-B, Chandigarh whose name also figures in the latest list of Insolvency Professionals issued by the Insolvency & Bankruptcy Board of India is appointed as an Interim Resolution Professional. In pursuance of Section 13 (2) of Code, we direct that public announcement shall be immediately made by the Interim Resolution Professional with regard to admission of this application under Section 7 of the Code, We also declare moratorium in terms of Section 14 of the Code

Summary

Issues Involved:
1. Impleading of directors and guarantors.
2. Initiation of insolvency resolution process.
3. Jurisdiction of the Tribunal.
4. Proposal of Interim Resolution Professional.
5. Loan details and default by the Corporate Debtor.
6. Objections by the Corporate Debtor.
7. Compliance with Bankers' Books Evidence Act.
8. Maintainability of application without consortium approval.
9. Restructuring proposal by the Corporate Debtor.
10. Admission of the petition and declaration of moratorium.

Issue-wise Detailed Analysis:

1. Impleading of Directors and Guarantors:
The Tribunal ordered that the directors and guarantors, listed as respondents No. 2 to 9, are not necessary parties and their names were struck off from the array of respondents.

2. Initiation of Insolvency Resolution Process:
Punjab National Bank, the Financial Creditor, filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016, to initiate the insolvency resolution process against the Corporate Debtor, M/s Concord Hospitality Pvt. Ltd. The application was filed in Form No.1 as prescribed under the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016.

3. Jurisdiction of the Tribunal:
The Corporate Debtor was incorporated with its registered office at Amritsar, which falls within the territorial jurisdiction of the National Company Law Tribunal, Chandigarh.

4. Proposal of Interim Resolution Professional:
The Financial Creditor proposed the name of C.A. Navneet Gupta as the Interim Resolution Professional, who filed the necessary written communication in Form No.2, which was found in order by the Tribunal.

5. Loan Details and Default by the Corporate Debtor:
The total loan granted to the Corporate Debtor was ?25 crores, comprising different term loans and working capital facilities. The Corporate Debtor mortgaged various properties to secure the loans. Due to continuous default, the account was declared a Non-Performing Asset (NPA) on 14.07.2016, with a default amount of ?13,34,38,741.78 as of 01.07.2016, which increased to ?14,76,36,740.34 by 30.04.2017.

6. Objections by the Corporate Debtor:
The Corporate Debtor argued that the petition should be dismissed due to non-compliance with the Bankers' Books Evidence Act. They also contended that the application was incomplete and that approval from the consortium banks (State Bank of India and IDBI Bank) was not obtained. However, the Tribunal found no substance in these contentions, stating that the Financial Creditor is entitled to file the application independently.

7. Compliance with Bankers' Books Evidence Act:
The Tribunal noted that the Financial Creditor initially failed to certify the statements of account under the Bankers' Books Evidence Act. However, the defect was rectified within the granted time frame, and the Tribunal accepted the explanation for the delay due to the hospitalization of the petitioner's counsel.

8. Maintainability of Application without Consortium Approval:
The Tribunal dismissed the contention that the application was not maintainable without the approval of the consortium banks. It was held that the Financial Creditor could independently file an application for initiating the corporate insolvency process.

9. Restructuring Proposal by the Corporate Debtor:
The Corporate Debtor's proposal to restructure the loan by depositing ?1.25 crores was not accepted, as the account had already been declared NPA, and preferential treatment could not be given over other Financial Creditors.

10. Admission of the Petition and Declaration of Moratorium:
The Tribunal admitted the petition, appointed C.A. Navneet Gupta as the Interim Resolution Professional, and declared a moratorium under Section 14 of the Code. The moratorium prohibits the institution or continuation of suits, transferring or disposing of assets, and recovery of property by owners or lessors. The Interim Resolution Professional was directed to make a public announcement and perform duties as per the Code.

Conclusion:
The petition was disposed of with the admission of the insolvency application, appointment of the Interim Resolution Professional, and declaration of a moratorium. The Corporate Debtor and associated personnel were directed to cooperate with the Interim Resolution Professional in managing the affairs of the Corporate Debtor.