2018 (2) TMI 1718 - Tri - Insolvency and Bankruptcy

Corporate Insolvency Resolution Process - Held that - This petition is admitted. Mr. Vijay Kumar V Iyer who is duly registered with the Insolvency and Bankruptcy Board of India is appointed as an Interim Resolution Professional. He has also filed his certificate of registration with the IBBI along with his written communication dated 29.06.2017. The disclosure has also been made in the letter dated 29.06.2017. We have also found his latest registration number from the IBBI website and the same has already been quoted in the preceding paras. In pursuance of Section 13 (2) of IBC 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 IBC. We also declare moratorium in terms of Section 14 of IBC. A necessary consequence of the moratorium flows from the provisions of Section 14 (1) (a), (b), (c) & (d).

Issues Involved:

1. Merger of Subsidiary Banks into State Bank of India (SBI)
2. Application under Section 7 of the Insolvency and Bankruptcy Code (IBC), 2016
3. Financial details and default by Bhushan Steel Limited
4. Objections raised by the Corporate Debtor
5. Authorization to file the application
6. Compliance with RBI guidelines and press releases
7. Calculation discrepancies and material particulars of the claim
8. Admission of the petition and appointment of Interim Resolution Professional (IRP)
9. Declaration of moratorium and duties of the IRP

Comprehensive, Issue-Wise Detailed Analysis:

1. Merger of Subsidiary Banks into State Bank of India (SBI):
The judgment begins by noting the merger of five subsidiary banks into SBI, effective from April 1, 2017, as per the notification dated February 22, 2017. This merger made SBI one of the world’s top 50 banks. The merger details were placed on record in the petition.

2. Application under Section 7 of the Insolvency and Bankruptcy Code (IBC), 2016:
SBI filed a petition under Section 7 of the IBC against Bhushan Steel Limited, seeking the initiation of Corporate Insolvency Resolution Process (CIRP). The petition included a proposal for the appointment of Mr. Vijay Kumar V Iyer as the Interim Resolution Professional (IRP).

3. Financial details and default by Bhushan Steel Limited:
The petition detailed the debt owed by Bhushan Steel Limited, amounting to ?9227.15 crores as Indian Rupee Loan and US$ 527,434,877 as Foreign Currency Loan. The working capital was disbursed under a consortium agreement dated March 2, 2015, with a total limit of ?12,459 crores. The total amount in default was ?4390.75 crores for Indian Rupee Loans and US$ 49,684,877 for Foreign Currency Loans. Revival letters and balance confirmation letters were issued by the Corporate Debtor, acknowledging the debt.

4. Objections raised by the Corporate Debtor:
The Corporate Debtor raised several objections, including:
- Lack of specific authorization for Mr. Akhilesh Kumar to file the application on behalf of SBI.
- The claim that the application was contrary to the RBI’s guidelines and press releases.
- Allegations of discrepancies in the claimed amounts and wrongful clubbing of working capital accounts under the heading of "Principal Amount in Default."

5. Authorization to file the application:
The Tribunal found that the application was properly authorized, as Mr. Akhilesh Kumar, an officer in the SMGS-IV grade, was duly authorized to sign and file the application. The objection regarding the lack of authorization was rejected.

6. Compliance with RBI guidelines and press releases:
The Corporate Debtor argued that the application did not comply with the RBI’s press release dated June 13, 2017, which required certain criteria to be met before initiating insolvency proceedings. The Tribunal held that these external processes were beyond the scope of the IBC and that insolvency involves restructuring and resolution, not necessarily liquidation.

7. Calculation discrepancies and material particulars of the claim:
The Tribunal addressed the discrepancies in the claimed amounts, allowing an amendment to correct the figures. It held that the discrepancy in calculation did not materially affect the admission of the application, as the default amount exceeded the threshold of ?1 lakh required under Section 4 of the IBC.

8. Admission of the petition and appointment of Interim Resolution Professional (IRP):
The Tribunal admitted the petition, satisfied that the default had occurred, and all requirements under Section 7(5)(a) of the IBC were met. Mr. Vijay Kumar V Iyer was appointed as the IRP, with instructions to make a public announcement and declare a moratorium.

9. Declaration of moratorium and duties of the IRP:
A moratorium was declared in terms of Section 14 of the IBC, prohibiting the institution or continuation of suits, transferring or disposing of assets, and recovery of property by owners or lessors. The IRP was directed to perform duties under Sections 15, 17, 18, 19, 20, and 21 of the IBC, with all personnel connected to the Corporate Debtor required to cooperate with the IRP.

Conclusion:
The petition was disposed of with the admission of the application, appointment of the IRP, and declaration of a moratorium, ensuring the commencement of the Corporate Insolvency Resolution Process for Bhushan Steel Limited.

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