2020 (4) TMI 154 - Tri - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its debt - existence of debt and dispute or not - HELD THAT - Considering the material papers filed by the Petitioner Bank and the facts mentioned this Adjudicating Authority is satisfied that - (a) The Corporate Debtor availed the loan/credit facilities from the Financial Creditor Bank(Andhra Bank). (b) Existence of debt is above Rs. One Lac; (c) Debt is due; (d) Default has occurred on 29-6-2012; (e) Petition had been filed within the limitation period as the existence of debt due is found in Balance Sheet of the Corporate Debtor as on 31-3-2017 and the last payment into the account has come on 25-9-2017 whereas this petition under section 7 has been filed on 21-5-2018; (f) Copy of the Application filed before the Tribunal has been sent to the Corporate Debtor and the application filed by the Petitioner Bank under section 7 of IBC is found to be complete for the purpose of initiation of Corporate Insolvency Resolution Process against the Corporate Debtor. Hence the present IB Petition is admitted with the following Directions/observations. The date of admission of this petition is 13-1-2020. Thus the present IB petition filed under section 7 of the IBC stands admitted on 13-1-2020 - Moratorium declared.

Summary

Issues Involved:
1. Initiation of Corporate Insolvency Resolution Process (CIRP) under Section 7 of the Insolvency & Bankruptcy Code, 2016.
2. Default by the Corporate Debtor in repayment of loan facilities.
3. Maintainability of the application in light of pending proceedings under other legal frameworks.
4. Objections raised by the Corporate Debtor regarding the classification of the account as Non-Performing Asset (NPA).
5. Limitation period for filing the application.
6. Appointment of an Interim Resolution Professional (IRP).
7. Moratorium declaration as per Sections 13 and 14 of the Insolvency & Bankruptcy Code, 2016.
8. Pending Interlocutory Applications (IAs) related to the maintainability and dismissal of the CIRP application.

Detailed Analysis:

1. Initiation of CIRP under Section 7 of IBC, 2016:
The Financial Creditor, Andhra Bank, filed an application under Section 7 of the Insolvency & Bankruptcy Code, 2016, seeking the initiation of the Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor, Krishna Knitwear Technology Limited, due to default in repayment of the OCC/FITL facility availed from the Bank.

2. Default by the Corporate Debtor:
The Corporate Debtor availed financial assistance from various banks and financial institutions since 2001. Despite the restructuring of credit facilities, the Corporate Debtor's account became irregular and was declared as NPA on 29-6-2012. The Petitioner Bank claimed dues of ?245.32 Crores as on 14-5-2018, supported by various financial documents and the CIBIL report confirming the default.

3. Maintainability of the Application:
The Corporate Debtor argued that the application was not maintainable due to pending recovery proceedings under the RDDBFI Act, 1993, and a counterclaim filed by the Corporate Debtor. However, the Tribunal observed that the pendency of other proceedings does not prevent the initiation of CIRP under the IBC, as it is a "Remedy in Rem."

4. Objections by the Corporate Debtor:
The Corporate Debtor contended that the account was not NPA as on 29-6-2012 and that the restructuring of credit facilities extended the repayment period up to FY 2019. They also disputed the interest rates applied and the absence of certain statements of accounts. The Tribunal found that the Petitioner Bank provided sufficient evidence of default and liability.

5. Limitation Period:
The application was filed within the limitation period, as the last payment into the account was on 25-9-2017, and the application was filed on 21-5-2018. The Tribunal confirmed the existence of debt due in the Balance Sheet of the Corporate Debtor as on 31-3-2017.

6. Appointment of an IRP:
The Tribunal appointed Mr. Brijendra Kumar Mishra as the Interim Resolution Professional (IRP), directing him to make a public announcement of the moratorium and perform duties as specified under the IBC.

7. Moratorium Declaration:
As per Sections 13 and 14 of the IBC, the Tribunal declared a moratorium prohibiting the institution or continuation of suits, transferring or disposing of assets, and recovery actions against the Corporate Debtor. The moratorium is effective from the date of the order till the completion of the CIRP.

8. Pending Interlocutory Applications:
IA 237 of 2019 and IA 571 of 2019 were filed by the Corporate Debtor challenging the maintainability of the CIRP application and seeking its dismissal. The Tribunal, after considering the arguments and documents, did not grant the reliefs sought and disposed of the IAs.

Order:
The Tribunal admitted the IB Petition filed under Section 7 of the IBC on 13-1-2020, initiating the CIRP against the Corporate Debtor. The Tribunal directed the IRP to adhere to the stipulated time limits and perform duties as per the IBC. The Registry was instructed to communicate the order to relevant parties, including the Income-Tax Department, for claim submission.