2018 (4) TMI 1441 - Tri - Insolvency and Bankruptcy

Corporate Insolvency Resolution Process - existence of dispute - Held that - It is un disputably proved beyond doubt that there is no dispute about default in question. The contentions of the respondent with regard to other lenders are not substantiated by other Banks by filing any supporting affidavits except participating in JLF meetings as averred by the respondents. The respondent has a right to bring to the notice of Reserve Bank of India about the alleged violations of petitioner in not adhering to its guidelines. The respondent did not appear to have taken such course of action. On the contrary, the petitioner has time and again reiterated that it has every mandate to initiate the instant CIRP, and it has initiated the instant proceedings strictly in accordance with law. As several contentions raised by the respondent hardly have any relevance to the issue in question, they are not being adverted here, and they are deemed to have rejected. We are of considered view that default in question has occurred and the instant petition/application is complete as per sub-section 2 and there is no disciplinary proceedings pending against the proposed resolution professional so as to admit the case under section 7(5)(a) of IBC,2016. The proposed Interim professional has also filed Form No.2 on 16-09-2017. By invoking powers conferred on the Adjudicating Authority u/ss 7,10,12,13,14,15,16, 17, 18, 19, 20, 21, 22 and 25 and other applicable provisions of the Insolvency and Bankruptcy Code, 2016, the Company Petition is hereby admitted

Issues Involved:
1. Initiation of Corporate Insolvency Resolution Process (CIRP)
2. Default and debt verification
3. Joint Lenders Forum (JLF) and Corrective Action Plan (CAP)
4. Reserve Bank of India (RBI) guidelines and compliance
5. One Time Settlement (OTS) proposals and negotiations
6. Appointment of Interim Resolution Professional (IRP)
7. Declaration of Moratorium

Issue-wise Detailed Analysis:

1. Initiation of Corporate Insolvency Resolution Process (CIRP):
The petition was filed by the Bank of Baroda under Section 7 of the Insolvency and Bankruptcy Code (IBC), 2016, seeking to initiate CIRP against M/s Golden Jubilee Hotels Private Limited. The petitioner argued that the Corporate Debtor defaulted on payments, and thus, CIRP should be initiated.

2. Default and Debt Verification:
The petitioner proved the debt and default, which the respondent did not deny. The respondent's account was classified as a Non-Performing Asset (NPA) as of December 31, 2015. The Tribunal noted that the debt and default were undisputed and thus met the criteria under Sections 2(11) & (12) of the IBC.

3. Joint Lenders Forum (JLF) and Corrective Action Plan (CAP):
The respondent contended that the JLF was still in place and considering a Corrective Action Plan (CAP) under RBI guidelines. The respondent argued that the petitioner, Bank of Baroda, was part of the JLF and had proposed a resolution plan in July 2017. However, the Tribunal found that other lenders did not substantiate these claims with supporting affidavits, and the petitioner had the legal right to initiate CIRP.

4. Reserve Bank of India (RBI) Guidelines and Compliance:
The respondent argued that RBI guidelines for CAP were binding and applicable even after the account became an NPA. The Tribunal, however, noted that the petitioner was within its rights to initiate CIRP under the IBC, which has a non-obstante clause under Section 238, giving it precedence over other laws.

5. One Time Settlement (OTS) Proposals and Negotiations:
The respondent submitted multiple OTS proposals, the last being for ?505 crores. The JLF considered these proposals, but the petitioner decided to proceed with CIRP, citing the inability of the respondent to settle dues and ongoing internal disputes. The Tribunal noted that the petitioner's decision to initiate CIRP was legal and in line with maximizing asset value.

6. Appointment of Interim Resolution Professional (IRP):
The Tribunal appointed Shri Subodh Kumar Agrawal as the Interim Resolution Professional (IRP) under Section 16 of the IBC, 2016. The IRP was directed to adhere to all provisions of the IBC and report actions promptly to the Tribunal.

7. Declaration of Moratorium:
The Tribunal declared a moratorium prohibiting:
- Institution or continuation of suits or proceedings against the Corporate Debtor.
- Transfer, encumbrance, or disposal of the Corporate Debtor's assets.
- Foreclosure or enforcement of security interests.
- Recovery of property occupied by the Corporate Debtor.
- Public announcement of CIRP initiation and call for claims submission.
- Constitution of a Committee of Creditors within seven days of claims collation.

In conclusion, the Tribunal admitted the petition, initiating CIRP against M/s Golden Jubilee Hotels Private Limited, and directed the IRP to proceed as per the IBC provisions. The case was posted for further proceedings on March 26, 2018.

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