2018 (5) TMI 172 - Tri - Insolvency and Bankruptcy

Corporate Insolvency Resolution Process - Held that - As provided in Rule 7(1) of the Rules, the Corporate Applicant has to make an application under Section 10 of the Code in Form 6 accompanied with documents and records required therein and as specified in IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016. The instant petition deserves to be admitted. It is further observed that the applicant-company save some sketchy particulars and has not given any road map as to how it is going to keep itself afloat as a going concern. However, keeping in perspective the objects for which the Code has been brought into force and to balance the interest of all stakeholders, we are satisfied that the instant application warrants to be admitted to prevent further erosion of capital and to safeguard the assets of the Applicant-Corporate Debtor. The petition is admitted.

Issues Involved:
1. Territorial Jurisdiction
2. Financial Status and Debt Details
3. Creditor's Objections and Allegations
4. Compliance with Insolvency and Bankruptcy Code (IBC)
5. Appointment of Interim Resolution Professional (IRP)
6. Declaration of Moratorium

Detailed Analysis:

1. Territorial Jurisdiction:
The corporate debtor, incorporated on 11.04.2012, has its registered office in Ludhiana, Punjab, thus falling within the territorial jurisdiction of the National Company Law Tribunal (NCLT), Chandigarh.

2. Financial Status and Debt Details:
The corporate debtor's authorized share capital is ?3 crores, with issued, subscribed, and paid-up share capital of ?2,86,00,000. The corporate debtor has one secured financial creditor, Allahabad Bank, with a debt default of ?14,40,06,724.22 as of 28.11.2017. Unsecured financial debts include ?2,49,97,541.79 towards promoters and associates and ?2,28,37,851 towards other unsecured creditors. Operational creditors' default amounts to ?8,38,55,864.06, totaling ?28,21,63,927.85 in default.

3. Creditor's Objections and Allegations:
Allahabad Bank objected to the petition, claiming the total outstanding amount as ?18,76,73,317 as of 26.02.2018. They alleged that the corporate debtor artificially inflated liabilities by showing loans from promoters and related parties. The bank also highlighted the corporate debtor's non-disclosure of credit facilities with IndusInd Bank, routing transactions through IndusInd Bank, and being declared a willful defaulter.

4. Compliance with Insolvency and Bankruptcy Code (IBC):
The tribunal examined the petition filed in Form No.6 under Section 10 of the IBC and found it complete. It referred to precedents like "BCL Homes Ltd. Vs. Canara Bank & Ors." and "M/s. Unigreen Global Private Ltd. Vs. Punjab National Bank & Ors." to emphasize that the adjudicating authority must admit the application if it is complete and the corporate debtor is not ineligible under Section 11. The tribunal concluded that the corporate debtor provided all necessary information and met the requirements under the Code.

5. Appointment of Interim Resolution Professional (IRP):
The corporate debtor proposed Mr. Alok Kaushik as the IRP, who provided a written communication in Form 2, confirming no pending disciplinary proceedings. The tribunal found the written communication in order and accepted the proposal.

6. Declaration of Moratorium:
The tribunal admitted the petition and declared a moratorium prohibiting:
(a) Institution or continuation of suits or proceedings against the corporate debtor.
(b) Transferring, encumbering, or disposing of any assets of the corporate debtor.
(c) Actions to foreclose or enforce any security interest.
(d) Recovery of property by owners or lessors.

The moratorium will remain effective until the completion of the corporate insolvency resolution process or until the tribunal approves a resolution plan or orders liquidation. The matter was listed for the formal appointment of the IRP on 27.03.2018.

Conclusion:
The NCLT, Chandigarh, admitted the insolvency petition filed by the corporate debtor, declared a moratorium, and directed the appointment of an IRP, ensuring compliance with the IBC provisions and safeguarding the interests of all stakeholders.

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