2018 (9) TMI 1527 - Tri - Insolvency and Bankruptcy

Corporate Insolvency Resolution Process - default due to be paid - Outstanding dues - Held that - As seen from the statement of account and loan documents that the loan was sanctioned loan agreements were executed charge and securities were created to secure the loan. Respondent company utilised and enjoyed the loan facility and due to non-payment and non-refund of the outstanding dues the account of the corporate debtor was declared NPA. The applicant bank has also placed CRILC report in order to show that accounts of corporate debtor was reported as loss and doubtful account. Additionally the applicant has also furnished a copy of the Balance sheet and Financial statements for the financial year 2016-2017 of the corporate debtor which inter alia reveals that the company has defaulted in repayment of the loan to the applicant and that huge debts are outstanding as reflected in the statement of accounts of the company. Thus seen that the applicant financial creditor has placed on record voluminous and overwhelming evidence in support of the claim as well as to prove the default. 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.

Summary

Issues Involved:
1. Jurisdiction of the Tribunal
2. Authorization of the Applicant
3. Right of a single financial creditor to file the application
4. Compliance with procedural requirements
5. Consideration of loan restructuring proposal
6. Existence of financial debt and default
7. Appointment of Interim Resolution Professional (IRP)
8. Declaration of moratorium

Detailed Analysis:

1. Jurisdiction of the Tribunal:
The Tribunal determined that it had territorial jurisdiction over the National Capital Territory (NCT) of Delhi as the registered office of the respondent corporate debtor is located in New Delhi.

2. Authorization of the Applicant:
The respondent objected that Mr. Gauranga Charan Behera was not appropriately authorized to file the petition. However, the Tribunal found that the General Manager of the applicant bank had the authority to issue the authorization letter for filing the application under Section 7 of the Insolvency and Bankruptcy Code (IBC), 2016, as per the Board Resolution dated 16.12.2017.

3. Right of a Single Financial Creditor to File the Application:
The respondent argued that the application could not be filed without the consent of other consortium banks. The Tribunal rejected this objection, stating that under Section 7(1) of the Code, a financial creditor can file an application either by itself or jointly with other financial creditors. The inter se agreement between financial creditors cannot override the provisions of the Code.

4. Compliance with Procedural Requirements:
The respondent contended that the applicant failed to file a fresh Form 2 within the prescribed time. The Tribunal noted that the delay in filing Form 2 was condoned and the form was taken on record. The Tribunal emphasized that technical objections should not prevent the advancement of justice.

5. Consideration of Loan Restructuring Proposal:
The respondent's main contention was that its loan restructuring proposal was under consideration. The Tribunal noted that no binding compromise agreement or debt restructuring approval existed, and the application was filed long before on 22.12.2017. The Tribunal emphasized the importance of adhering to the strict time frame of the Code and dismissed the respondent's application for a direction to consider the loan restructuring proposal.

6. Existence of Financial Debt and Default:
The Tribunal confirmed that the applicant bank had sanctioned and disbursed various loan amounts recoverable with interest, and the respondent had committed a default in repayment. The Tribunal found that the applicant had provided sufficient evidence, including balance confirmation letters, loan agreements, and certified statements of account, to prove the existence of financial debt and default.

7. Appointment of Interim Resolution Professional (IRP):
The Tribunal appointed Shri Ashok Kumar Gulla as the Interim Resolution Professional, noting that he satisfied the requirements of Section 7(3)(b) of the Code and no disciplinary proceedings were pending against him.

8. 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 any assets of the corporate debtor.
- Foreclosing or enforcing any security interest.
- Recovering any property occupied by the corporate debtor.

The Tribunal directed the Interim Resolution Professional to make a public announcement and perform all functions as per the Code, ensuring cooperation from all personnel associated with the corporate debtor.

Conclusion:
The Tribunal admitted the application under Section 7 of the Code, initiated the Corporate Insolvency Resolution Process against the respondent corporate debtor, and appointed Shri Ashok Kumar Gulla as the Interim Resolution Professional. The Tribunal emphasized adherence to the strict time frame of the Code and rejected technical objections and the pending loan restructuring proposal.