2019 (4) TMI 921 - Tri - Insolvency and Bankruptcy

Initiation of Corporate Insolvency Resolution Process - statutory form No. 6 as prescribed by sub-rule (1) of Rule 7 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 - HELD THAT - Admittedly, M/S. Hardik Industrial Corporation Private Limited is liable to pay financial debt to its financial creditors State Bank of India. No other objection has been raised by the financial creditor(s). The material on record clearly establish the financial debt is due from the corporate debtor to financial creditor and occurrence of debt by the corporate debtor in payment of financial debt. Under Section 10 of the Code the Adjudicating Authority is not empowered to go beyond the record as prescribed under section 10 and the information is required to be submitted in form 6 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 subject to ineligibility prescribed under Section 11 and if all the information is provided by the corporate debtor as also the mandatory requirements under Section 10 and form No. 6 are complete then it is to be admitted if otherwise not ineligible under Section 11. It is well settled that pendency of proceedings and initiation of action under SARFAESI Act cannot be an impediment or bar to initiate the Corporate Insolvency Resolution Process under Section 7 of the Code nor it can be a ground to reject the Resolution Petition - A perusal of the petition goes to show that it is complete in all respects. Further, admittedly, M/S. Hardik Industrial Corporation Private Limited is liable to pay financial debts to its Financial Creditors. No other objection has been raised by the Financial Creditors or by any other person. The materials on record clearly establish that financial debt is due from the Corporate Debtor to the Financial Creditors and there is occurrence of debt by the Corporate Debtor in repayment of financial debt. This Adjudicating Authority is of the considered view that this is a fit case to admit the petition triggering Corporate Insolvency Resolution Process and accordingly this petition is admitted under Section 10(4)(a) of the Code.

Issues Involved:
1. Initiation of Corporate Insolvency Resolution Process (CIRP) under Section 10 of the Insolvency and Bankruptcy Code, 2016.
2. Objections raised by the financial creditor (State Bank of India).
3. Compliance with procedural requirements and completeness of the petition.
4. Appointment of Interim Insolvency Resolution Professional (IRP).
5. Declaration of moratorium.

Detailed Analysis:

1. Initiation of Corporate Insolvency Resolution Process (CIRP):
M/S. Hardik Industrial Corporation Private Limited, through its Authorized Representative, filed a petition under Section 10 of the Insolvency and Bankruptcy Code, 2016, to initiate the Corporate Insolvency Resolution Process. The Board of Directors resolved on 22nd January 2018 to authorize the filing of this petition. The petition was filed in the prescribed statutory form No. 6 as per Rule 7 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016.

2. Objections Raised by the Financial Creditor (State Bank of India):
The State Bank of India (SBI), a financial creditor, raised objections through an affidavit, arguing that the application was misconceived, suffered from various infirmities, and was filed with unclean hands. SBI contended that the corporate applicant was not functional and that the application was an attempt to frustrate lawful recovery actions. SBI also highlighted that multiple interconnected applications were filed simultaneously by related companies to obstruct recovery processes.

3. Compliance with Procedural Requirements and Completeness of the Petition:
The Tribunal examined the petition and the accompanying documents, including the Board resolution, details of financial and operational creditors, ledger accounts, statutory liabilities, and financial statements. The Tribunal found that the petition was complete in all respects and that the corporate debtor had provided all necessary information as required under Section 10 and Form 6 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016. The Tribunal noted that the financial debt was due, and there was a default in payment.

4. Appointment of Interim Insolvency Resolution Professional (IRP):
The Tribunal appointed Mr. Kiran C. Shah as the Interim Insolvency Resolution Professional (IRP) under Section 13(1)(c) of the Code. The IRP was directed to make a public announcement of the initiation of the CIRP and call for submission of claims as per the relevant provisions of the Code and regulations.

5. Declaration of Moratorium:
The Tribunal declared a moratorium under Section 13(1)(a) of the Code, prohibiting:
(a) Institution or continuation of suits or proceedings against the corporate debtor.
(b) Transferring, encumbering, or disposing of any assets or legal rights of the corporate debtor.
(c) Actions to foreclose or enforce security interests.
(d) Recovery of property by owners or lessors in possession of the corporate debtor.
The moratorium ensures uninterrupted supply of essential goods and services and remains in force until the completion of the CIRP, subject to specific exceptions.

Conclusion:
The Tribunal found the petition to be complete and in compliance with the requirements of the Insolvency and Bankruptcy Code, 2016. The objections raised by SBI were overruled, and the petition was admitted, initiating the Corporate Insolvency Resolution Process. The Tribunal appointed an Interim Insolvency Resolution Professional and declared a moratorium to facilitate the resolution process. The application was disposed of accordingly, with no order as to costs.

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