2018 (11) TMI 608 - Tri - Insolvency and Bankruptcy

Corporate Insolvency Resolution Process - Initiation of corporate insolvency resolution process by financial creditor - form and manner of the application - Held that - A conjoint reading of the aforesaid provision would show that form and manner of the application has to be the one as prescribed. It is evident from the record that the application has been filed on the proforma prescribed under Rule 4 (2) of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 read with Section 7 of the Code. We are satisfied that a default amounting to lacs of rupees has occurred within the meaning of Section 4 of the Code and the application under sub-section (2) of Section 7 is complete; and no disciplinary proceedings are pending against the proposed Interim Resolution Professional. Thus, the application warrant admission as it is complete in all respects. We direct that Interim Insolvency Resolution Professional to make public announcement immediately with regard to admission of this application under Section 7 of the Code.

Issues Involved:

1. Application under Section 7 of the Insolvency and Bankruptcy Code, 2016.
2. Default by Corporate Debtor.
3. Appointment of Interim Resolution Professional.
4. Declaration of Moratorium.
5. Duties and Obligations of the Interim Resolution Professional.

Issue-wise Detailed Analysis:

1. Application under Section 7 of the Insolvency and Bankruptcy Code, 2016:

The Financial Creditor, State Bank of India, filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016, to initiate the Corporate Insolvency Resolution Process (CIRP) against M/s. Surya Pharmaceutical Limited. The application was signed and submitted by Mr. V.K. Karwal, Assistant General Manager, empowered under General Regulations No. 76 & 77 of the State Bank of India General Regulations 1955.

2. Default by Corporate Debtor:

The Corporate Debtor, M/s. Surya Pharmaceutical Limited, availed financial facilities from the Financial Creditor and other consortium banks amounting to ?430.06 crores. The total amount in default as of 10.07.2018 was ?1571.09 crores along with uncharged interest. The account of the Corporate Debtor was declared as Non-Performing Asset (NPA) on 18.04.2012. Despite recall notices issued on 07.08.2013 and 15.02.2017, the Corporate Debtor failed to clear the unpaid debt.

3. Appointment of Interim Resolution Professional:

The Financial Creditor proposed the name of Shri Harvinder Kumar Jatana as the Interim Resolution Professional (IRP). He met the requirements of Section 7(3)(b) of the Code, and no disciplinary proceedings were pending against him. The Tribunal appointed Mr. Jatana as the IRP.

4. Declaration of Moratorium:

Upon admission of the application, the Tribunal declared a moratorium under Section 14 of the Code. The moratorium imposed prohibitions on:
- Institution or continuation of suits or proceedings against the Corporate Debtor.
- Transferring, encumbering, or disposing of any assets of the Corporate Debtor.
- Actions to foreclose, recover, or enforce any security interest.
- Recovery of any property by an owner or lessor.

The moratorium did not apply to transactions notified by the Central Government or a surety in a contract of guarantor to the Corporate Debtor. Essential goods and services to the Corporate Debtor were to continue during the moratorium period.

5. Duties and Obligations of the Interim Resolution Professional:

The IRP was directed to make a public announcement regarding the admission of the application within three days. The IRP was to perform functions as per Sections 15, 17, 18, 19, 20 & 21 of the Code, ensuring fairness, integrity, and independence. The personnel connected with the Corporate Debtor were legally obligated to assist the IRP. The IRP was to protect and preserve the value of the Corporate Debtor's property and manage its affairs in accordance with the Code.

Conclusion:

The Tribunal admitted the application for initiating CIRP against M/s. Surya Pharmaceutical Limited, appointed Mr. Harvinder Kumar Jatana as the IRP, declared a moratorium, and outlined the duties and obligations of the IRP, emphasizing the need for cooperation from the Corporate Debtor's personnel and the IRP's adherence to the Code.

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