2017 (10) TMI 515 - Tri - Insolvency and Bankruptcy

Corporate insolvency procedure - Held that - Form and manner of the application has to be the one prescribed by the authorities. It is required to be accompanied by the prescribed fee. It is further evident that if the application is incomplete as per the requirement of Section 7(2) of the Code then this Tribunal being the Adjudicating Authority may reject it. However, proviso to Section 7(5) of the Code postulates that before rejecting the application on the ground that it is incomplete in terms of Section 7(2) of the Code the Tribunal is obliged to give notice to the applicant to rectify the defect in his application. The defect in the application needs to be removed within seven days from the date of receipt of notice. For the reasons, aforementioned this petition is admitted. Shri Rajesh Samson who is duly registered with Insolvency and Bankruptcy Board of India (IBBI/IPA-001/IP-P00240/2017-18/10469) has been proposed as an Interim Resolution Professional. He is hereby appointed as an Interim Resolution Professional. He has filed his certificate of registration with Insolvency and Bankruptcy Board of India. He has also filed his written communication dated 04.08.2017 in connection with the application to initiate Corporate Insolvency Resolution Process. The disclosure has been made in the letter dated 04.08.2017. 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

Summary

Issues Involved:
1. Application under Section 7 of the Insolvency and Bankruptcy Code, 2016.
2. Authorization and completeness of the application.
3. Default amount and supporting evidence.
4. Objections by the Corporate Debtor.
5. Intervention by New Okhla Industrial Development Authority.
6. Satisfaction of requirements under Section 7 of the Code.
7. Appointment of Interim Resolution Professional.
8. Declaration of moratorium and its implications.

Detailed Analysis:

1. Application under Section 7 of the Insolvency and Bankruptcy Code, 2016:
The application was filed by the 'Financial Creditor'-Bank of Baroda under Section 7 of the Insolvency and Bankruptcy Code, 2016, to initiate the Corporate Insolvency Resolution Process (CIRP) against Amrapali Silicon City Private Limited. The financial creditor is a corporate body constituted under the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970.

2. Authorization and completeness of the application:
Ms. Archana Mishra was authorized by a letter dated 03.02.2017 to present the application. The Corporate Debtor opposed the application, arguing it was incomplete and questioned the authority of Ms. Mishra. However, the Tribunal found that the power of attorney executed in favor of Ms. Mishra was valid and included the necessary powers to file the application. Therefore, the application was considered complete.

3. Default amount and supporting evidence:
The financial creditor provided extensive evidence of the default, including a term loan agreement dated 25.02.2012, showing a sanctioned term loan of ?100 Crores, with Bank of Baroda contributing ?96.88 Crores. The principal amount in default was ?59.38 Crores, with additional overdue interest and penal interest totaling ?11.77 Crores. Various exhibits were provided to support these claims, including certificates of registration of charges, hypothecation deeds, and corporate and personal guarantee agreements.

4. Objections by the Corporate Debtor:
The Corporate Debtor argued that the demand of ?71.15 Crores was arbitrary and that the Bank of Baroda, as part of a consortium, could not individually enforce the term loan agreement. They also raised issues regarding the mismatch of default amounts in different documents and the necessity of consent from other consortium members. The Tribunal dismissed these objections, stating the lead bank was competent to file the application, and any mismatches in default amounts could be addressed before the Committee of Creditors.

5. Intervention by New Okhla Industrial Development Authority:
The New Okhla Industrial Development Authority filed an application for intervention, providing a copy of the lease deed executed with the Corporate Debtor. The Tribunal allowed the intervener to file any claims before the Insolvency Professional in accordance with the law.

6. Satisfaction of requirements under Section 7 of the Code:
The Tribunal examined whether the petitioner satisfied the requirements of Section 7 of the Code. It was found that the application was complete, and the default had occurred as per Section 3(12) of the Code. The Tribunal noted that the default had occurred multiple times, with the initial default date being 31.03.2016.

7. Appointment of Interim Resolution Professional:
Mr. Rajesh Samson, a registered Insolvency Professional, was proposed and appointed as the Interim Resolution Professional. He provided the necessary declarations and there were no disciplinary proceedings pending against him.

8. Declaration of moratorium and its implications:
The Tribunal declared a moratorium under Section 14 of the Code, which included prohibitions on the institution or continuation of suits, transferring or disposing of assets, and actions to foreclose or recover any security interest. The moratorium did not apply to transactions notified by the Central Government or the supply of essential goods or services to the Corporate Debtor.

Conclusion:
The petition was admitted, and the Interim Resolution Professional was directed to make a public announcement and perform his duties as per the Code. The Tribunal emphasized the legal obligation of the Corporate Debtor's personnel to assist the Interim Resolution Professional and allowed the intervener to file claims as per the law. The petition was disposed of accordingly.