2017 (10) TMI 464 - Tri - Insolvency and Bankruptcy

Corporate Insolvency Resolution Process - Held that - We accept the prayer made in the application as no serious objection has been raised against the substituted Interim Insolvency Professional. In pursuance of Section 13 (2) of the Code we direct that public announcement shall be made by the Interim Resolution Professional within the statutory period 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. Some necessary consequences of imposing the moratorium flows from the provisions of Section 14 (1) (a), (b), (c) & (d).

Issues Involved:
1. Validity of the application under Section 7 of the Insolvency and Bankruptcy Code, 2016.
2. Authority of the person filing the application on behalf of the financial creditor.
3. Existence and proof of financial debt and default.
4. Objections raised by the corporate debtor regarding the application.
5. Appointment and substitution of the Interim Resolution Professional.
6. Declaration of moratorium and its implications.

Detailed Analysis:

1. Validity of the application under Section 7 of the Insolvency and Bankruptcy Code, 2016:
The financial creditor, Bank of Baroda, filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016, to initiate the Corporate Insolvency Resolution Process (CIRP) against Ultra Home Construction Private Limited. The Tribunal examined the application and found that it was complete and met the requirements of Section 7(2) and 7(5) of the Code. The Tribunal noted that the application was in the prescribed form, manner, and accompanied by the necessary fee.

2. Authority of the person filing the application on behalf of the financial creditor:
The application was presented by Ms. Archana Mishra, who was authorized by a letter dated 03.02.2017. The corporate debtor challenged her authority, arguing that the power of attorney had not been placed on record. However, the Tribunal found that the power of attorney dated 16.12.2015 executed in favor of Shri Ravi Kant Thakral, who subsequently authorized Ms. Mishra, was valid. Therefore, the objection regarding the authority did not survive.

3. Existence and proof of financial debt and default:
The financial creditor provided overwhelming documentary evidence to prove the financial debt and default. A common loan agreement dated 06.01.2010 was executed between the corporate debtor and consortium banks, including Bank of Baroda, which sanctioned a term loan of ?75,00,00,000, of which ?65,84,00,000 was disbursed. The principal amount in default as of 30.04.2017 was ?31,92,31,627, with additional overdue and penal interest amounting to ?4,96,62,526. The default occurred on 30.06.2016, and a notice of acceleration-cum-demand was issued on 02.03.2017.

4. Objections raised by the corporate debtor regarding the application:
The corporate debtor opposed the application, arguing that the demand was arbitrary, the application was incomplete, and consent from other consortium members was not obtained. The Tribunal dismissed these objections, stating that the lead bank could file the application on behalf of the consortium, and the application was complete. The Tribunal also noted that any mismatching in the default amount could be addressed before the Committee of Creditors.

5. Appointment and substitution of the Interim Resolution Professional:
The financial creditor initially proposed Mr. Rajesh Samson as the Interim Resolution Professional (IRP). However, an application was later filed to substitute Mr. Samson with Mr. Sanjay Gupta, who was duly registered with the Insolvency and Bankruptcy Board of India. The Tribunal accepted the substitution as no serious objections were raised against the new IRP.

6. Declaration of moratorium and its implications:
The Tribunal declared a moratorium in terms of Section 14 of the Code, imposing prohibitions on the institution or continuation of suits, transferring or disposing of assets, foreclosing or enforcing security interests, and recovering property occupied by the corporate debtor. The IRP was directed to make a public announcement and perform all functions as per the Code. The Tribunal emphasized the legal obligation of the corporate debtor's personnel to cooperate with the IRP.

Conclusion:
The Tribunal admitted the petition, appointed Mr. Sanjay Gupta as the Interim Resolution Professional, declared a moratorium, and disposed of the petition in the specified terms.

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