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2020 (4) TMI 642 - Tri - Insolvency and BankruptcyMaintainability of application - initiation of CIRP - Corporate Debtor failed in making repayment of the Cash Credit, Term Loan, BP, Devolved LC facility availed from the Bank - existence of debt and dispute or not - HELD THAT - The CD has defaulted in making repayment of credit facilities to the Petitioner Bank and the date of default is 28-8-2014. The Statement of accounts submitted by the applicant confirms the default committed by the Corporate Debtor - The Petitioner Bank has filed the petition within the period of limitation, as the date of payment of INR. 3,75,00,000.00 as on 25-1-2018 whereas this petition has been filed by the Financial Creditor on 1-7-2019 - The present I.B. Petition is filed by the duly authorised official of the Financial Creditor in a prescribed format under section 7 of the I.B. Code annexing copies of loan documents confirming the existence of debt due and defaulted and proposed a name of Resolution Professional to act as an Interim Resolution Professional (IRP). This Adjudicating Authority is satisfied that (a) The Corporate Debtor availed the credit facilities from the Financial Creditor; (b) Existence of debt is above Rs. One Lakh; (c) Debt is due; (d) Default has occurred on 28-8-2014; (e) Petition has been filed within the limitation period as the Corporate Debtor has paid INR. 4,73,50,000.00 on various dates between 4-11-2016 to 25-1-2018 wherein this petition has been filed on 1-7-2019. (f) Copy of the Application filed before the Tribunal has been sent to the Corporate Debtor and the application filed by the Financial Creditor under section 7 of IBC is found to be complete for the purpose of initiation of Corporate Insolvency Resolution Process in respect of the Corporate Debtor. Petition is admitted - moratorium declared.
Issues Involved:
1. Initiation of Corporate Insolvency Resolution Process (CIRP) under Section 7 of the Insolvency and Bankruptcy Code, 2016. 2. Validity and enforceability of the Assignment Agreement. 3. Existence of debt and default. 4. Limitation period for filing the petition. 5. Appointment of Interim Resolution Professional (IRP). 6. Declaration of moratorium under Sections 13 and 14 of the Insolvency and Bankruptcy Code, 2016. 7. Duties and obligations of the Interim Resolution Professional. Issue-wise Detailed Analysis: 1. Initiation of Corporate Insolvency Resolution Process (CIRP): The Financial Creditor, Reliance Asset Reconstruction Company Limited, filed the petition under Section 7 of the Insolvency and Bankruptcy Code, 2016, seeking initiation of CIRP against Morakhia Copper and Alloys Private Limited due to default in repayment of various credit facilities availed from Dena Bank. 2. Validity and Enforceability of the Assignment Agreement: The Financial Creditor submitted that Dena Bank assigned the financial assets/debts to them via an Assignment Agreement dated 9-12-2016. The Corporate Debtor argued that the Financial Creditor lacked locus standi as the Assignment Deed was allegedly not validly executed. However, the Tribunal found the Assignment Agreement valid and enforceable, thus recognizing the Financial Creditor’s right to initiate insolvency proceedings. 3. Existence of Debt and Default: The Financial Creditor provided evidence of the debt through various documents, including sanction letters, promissory notes, and statements of accounts. The Tribunal confirmed the existence of debt amounting to INR 55,63,11,030.38 as on 21-5-2019, with the default occurring on 28-8-2014. 4. Limitation Period for Filing the Petition: The Tribunal noted that the petition was filed within the limitation period. The last payment made by the Corporate Debtor was on 25-1-2018, and the petition was filed on 1-7-2019, thus within the three-year limitation period. 5. Appointment of Interim Resolution Professional (IRP): The Tribunal appointed Mr. Jitender Kumar Jain as the Interim Resolution Professional, as proposed by the Financial Creditor. The IRP was directed to make a public announcement of the moratorium and follow the provisions of the Insolvency and Bankruptcy Code, 2016. 6. Declaration of Moratorium: The Tribunal declared a moratorium under Sections 13 and 14 of the Insolvency and Bankruptcy Code, 2016, prohibiting: - Institution or continuation of suits or proceedings against the Corporate Debtor. - Transfer, encumbrance, or disposal of any assets of the Corporate Debtor. - Recovery or enforcement of any security interest created by the Corporate Debtor. - Recovery of any property by an owner or lessor in possession of the Corporate Debtor. 7. Duties and Obligations of the Interim Resolution Professional: The IRP was instructed to adhere to the time limits for completing the CIRP and perform duties as specified under Sections 17, 18, 20, and 21 of the Insolvency and Bankruptcy Code. The IRP must manage the Corporate Debtor’s affairs with honesty and dedication, ensuring cooperation from all personnel connected with the Corporate Debtor. Observations: The Tribunal observed that the Financial Creditor had substantiated their claim with adequate documentation, confirming the debt and default. The Tribunal emphasized the need for a viable Insolvency Resolution Plan and suggested that the Committee of Creditors explore interest rates linked to the MCLR or Base Rate +1% for the resolution plan. Order: The Tribunal admitted the petition and directed the IRP to proceed with the CIRP, declaring a moratorium and outlining the IRP’s responsibilities. The Registry was instructed to communicate the order to all relevant parties. The petition filed under Section 7 of the Insolvency and Bankruptcy Code, 2016, was thus admitted with the specified directions and observations.
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