2017 (10) TMI 757 - Tri - Insolvency and Bankruptcy

Corporate Insolvency Resolution Process - Held that - Application deserves to be admitted and it is accordingly admitted under Section 7(5)(a) of the IB Code. This Adjudicating Authority is hereby appoint Shri Anil Kohli, as Interim Insolvency Resolution Professional having address at 1011, Kirti Shikhar, District Centre Janak Puri, New Delhi-110058 and having Registration No. IBBI/IPA-001/IP-POO 112/2017-18/10219 under Section 13 (1)(c) of the Code. The Interim Insolvency Resolution Professional is hereby directed to cause a public announcement of the initiation of Corporate Insolvency Resolution Process and call for submission of claims under Section 13(l)(b) read with Section 15 of the Code and Regulation 6 of Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016. This Adjudicating Authority hereby order moratorium under Section 13(l)(a) of the IB Code prohibiting the following as referred to in Section 14

Summary

Issues:
1. Application under Section 7 of the Insolvency and Bankruptcy Code, 2016 for initiation of Corporate Insolvency Resolution Process.
2. Default in repayment by the Respondent Company.
3. Applicability of Limitation Act.
4. Privity of contract between the Applicant and the Respondent.
5. Appointment of Interim Resolution Professional.
6. Moratorium under Section 13 of the IB Code.

Analysis:
1. The Application was filed by Edelweiss Asset Reconstruction Co. Ltd. as a 'Financial Creditor' seeking initiation of Corporate Insolvency Resolution Process against the Respondent, treating it as the 'Corporate Debtor'. The Respondent, a Private Limited Company engaged in manufacturing, had outstanding debts owed to Indian Overseas Bank (IOB) for credit facilities granted for business purposes.

2. Despite repeated demands and execution of various loan documents, the Respondent failed to make payments. IOB assigned the debt to the Applicant, and the Respondent was liable to pay an unpaid debt of a substantial amount. The Respondent's financial situation indicated its inability to clear outstanding liabilities.

3. The Respondent raised objections related to the applicability of the Limitation Act, claiming the proceedings were time-barred. However, the Adjudicating Authority found that the debt was within the limitation period based on balance confirmation letters and revival letters signed by the Respondent.

4. The Respondent disputed the lack of privity of contract between the Applicant and itself, arguing against the validity of the Assignment Agreement. The Authority determined that the Applicant, as the Assignee of the debt, had the right to file the Application, as the Respondent had agreed to repay the outstanding amounts to the Assignee as per the loan agreements.

5. The Adjudicating Authority admitted the Application under Section 7(5)(a) of the IB Code and appointed an Interim Insolvency Resolution Professional to oversee the Corporate Insolvency Resolution Process. The Professional was directed to announce the initiation of the process and call for claims as per the regulations.

6. A moratorium was ordered under Section 13(1)(a) of the IB Code, prohibiting certain actions against the Corporate Debtor, with exceptions for essential goods/services supply. The moratorium was to remain in force until the completion of the Corporate Insolvency Resolution Process, subject to specified provisions.

This detailed analysis covers the key issues addressed in the judgment, providing a comprehensive overview of the legal proceedings and decisions made by the Adjudicating Authority in the case.