2018 (9) TMI 120 - Tri - Insolvency and Bankruptcy

Corporate Insolvency Resolution Process - default committed by the respondent company - non repayment of loan - Held that - The material on record clearly goes to show that respondent had availed the loan facilities and has committed default in repayment of the loan amount. There is no dispute that the applicant bank has filed the relevant statement of accounts duly certified in accordance with Banker Books Evidence Act, 1891 as per requirement of Form 1 part V column 7 of the application. Certified copy of statement of account kept during the course of banking business basing on which the claim has been raised can be termed as sufficient evidence of financial debt. In the case in hand there is no dispute that the respondent company has committed default in repayment of the outstanding amount. Moreover, the application of the financial creditor is complete and there is no disciplinary proceeding pending against the proposed IRP. We are satisfied that the present application is complete and the applicant financial creditor is entitled to claim its outstanding financial debt from the corporate debtor and that there has been a default in payment of the financial debt. As a sequel to the above discussion and in terms of Section 7(5)(a) of the Code, the present application is admitted.

Issues Involved:
1. Territorial jurisdiction of the Tribunal.
2. Authorization to file the application.
3. Financial debt and default by the Corporate Debtor.
4. Objections raised by the Corporate Debtor.
5. Maintainability of the application under Section 7 of the Insolvency and Bankruptcy Code, 2016.
6. Appointment of Interim Resolution Professional (IRP).
7. Declaration of moratorium.

Detailed Analysis:

1. Territorial Jurisdiction of the Tribunal:
The Tribunal confirmed its territorial jurisdiction over the case as the registered office of the respondent corporate debtor is in Delhi. This is in accordance with sub-section (1) of Section 60 of the Insolvency and Bankruptcy Code, 2016.

2. Authorization to File the Application:
The applicant, Oriental Bank of Commerce, authorized Ms. Poonam Kanwar, Assistant General Manager (Law), through an Authority letter dated 01.01.2018, to file the application. The Tribunal found that the application was duly authorized by competent authority, dismissing the respondent's challenge to the authorization.

3. Financial Debt and Default by the Corporate Debtor:
The applicant bank provided extensive evidence of the financial debt and default. The corporate debtor had availed various financial facilities from the applicant bank and other consortium banks, totaling ?25.47 Crore. As of 31.01.2018, the outstanding amount was ?48,58,98,930/-. The Tribunal noted that the loan agreements were executed, charges and securities were created, and the account of the corporate debtor was declared NPA due to non-payment.

4. Objections Raised by the Corporate Debtor:
The corporate debtor raised several objections:
- Service of Application: The respondent claimed no advance copy was served, but the Tribunal found proof of service and participation by the respondent in hearings, dismissing this objection.
- Authority of Ms. Poonam Kanwar: The respondent challenged the sub-delegation of authority, but the Tribunal found the authorization valid.
- Unfilled Documents: The respondent alleged misuse of unfilled documents, but the Tribunal held that the loan agreements were mutually executed and binding.
- Quantum of Claim: The respondent disputed the amount claimed, but the Tribunal stated that the exact quantum of default is not required to be ascertained at this stage.
- One-Time Settlement: The respondent claimed an approved one-time settlement plan, but the Tribunal noted that the applicant was not bound to accept it.
- Consortium of Banks: The respondent argued that consent from other consortium banks was needed, but the Tribunal clarified that a financial creditor can file the application individually.

5. Maintainability of the Application Under Section 7:
The Tribunal found the application maintainable as the applicant proved the occurrence of default, the application was complete, and there were no disciplinary proceedings against the proposed IRP. The Tribunal emphasized that the default amount exceeded ?1 Lakh, triggering the Code.

6. Appointment of Interim Resolution Professional (IRP):
The Tribunal appointed Shri Kishan Gopal Somani as the Interim Resolution Professional, confirming that he met all requirements and there were no pending disciplinary proceedings against him.

7. Declaration of Moratorium:
The Tribunal declared a moratorium under Section 14 of the Code, imposing prohibitions on:
- Institution or continuation of suits or proceedings against the corporate debtor.
- Transferring or disposing of the corporate debtor's assets.
- Actions to enforce security interests.
- Recovery of property by owners or lessors.

The moratorium does not apply to transactions notified by the Central Government or essential goods/services to the corporate debtor.

Conclusion:
The Tribunal admitted the application under Section 7 of the Insolvency and Bankruptcy Code, 2016, satisfied that the corporate debtor defaulted on the financial debt. The Tribunal directed the IRP to make a public announcement and declared a moratorium, ensuring the IRP's duties are performed in accordance with the Code. The office was instructed to communicate the order to all relevant parties within seven days.

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