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2020 (4) TMI 701 - Tri - Insolvency and BankruptcyMaintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its debt - existence of debt and dispute or not - HELD THAT - The CD has defaulted in making repayment of loan/credit facilities to the Petitioner Bank and the date of default is 30/09/2015 - The Petitioner Bank has filed the petition within the period of limitation, as the last payment into the Account has come on 26/02/2016. The present LB. Petition is filed by the duly authorised official of the Applicant Bank in a prescribed format under section 7 of the LB. 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 The Corporate Debtor availed credit facilities from the Financial Creditor; Existence of debt is above Rs. One Lakh; Debt is due; Default has occurred on 30/09/2015; Petition has been filed within the limitation period as the last payment into the account has come on 26/02/2016, when the petition has been filed on 30/11/2018 and 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. The present IB Petition is admitted. The date of admission of this petition is 13/01/2020 - Application admitted - moratorium declared.
Issues Involved:
1. Initiation of Corporate Insolvency Resolution Process (CIRP) 2. Default in repayment of Cash Credit facility 3. Pendency of SARFAESI and DRT proceedings 4. Law of Limitation applicability 5. Appointment of Interim Resolution Professional (IRP) 6. Declaration of Moratorium 7. Compliance with Insolvency and Bankruptcy Code (IBC) provisions Issue-wise Detailed Analysis: 1. Initiation of Corporate Insolvency Resolution Process (CIRP): The Financial Creditor, Bank of Baroda (erstwhile Dena Bank), filed an Insolvency and Bankruptcy (I.B.) Petition under Section 7 of the Insolvency and Bankruptcy Code, 2016, seeking the initiation of CIRP against the Corporate Debtor, Riddhi Siddhi Cotton Ginning and Pressing Private Limited, for defaulting on the repayment of the Cash Credit (CC) facility availed from the bank. 2. Default in repayment of Cash Credit facility: The Corporate Debtor had applied for a Cash Credit Limit, which was sanctioned and subsequently enhanced by the Financial Creditor. The Corporate Debtor defaulted on repayment, with the default date being 30/09/2015. The Financial Creditor claimed dues amounting to ?27,56,18,408.00 as of 25/10/2018, supported by statements of accounts and a certificate under the Banker’s Book of Evidence Act, 1891. 3. Pendency of SARFAESI and DRT proceedings: Despite the ongoing proceedings under the SARFAESI Act and before the Debts Recovery Tribunal (DRT), the tribunal clarified that the pendency of these proceedings does not prevent the Financial Creditor from initiating CIRP. The nature of the remedy sought under the IBC is "Remedy in Rem" concerning the Corporate Debtor. 4. Law of Limitation applicability: The petition was deemed not barred by the Law of Limitation, as the last payment into the account was made on 26/02/2016, and the petition was filed on 30/11/2018, within the limitation period. 5. Appointment of Interim Resolution Professional (IRP): The Financial Creditor proposed the name of an Insolvency Professional, Mr. Atul Mittal, to be appointed as the Interim Resolution Professional (IRP). The IRP's appointment was confirmed, and he was directed to make a public announcement of the moratorium and perform his duties as per the IBC provisions. 6. Declaration of Moratorium: Upon admission of the petition, a moratorium was declared, prohibiting: - The institution or continuation of suits or proceedings against the Corporate Debtor. - Transferring, encumbering, or disposing of any assets or legal rights of the Corporate Debtor. - Any action to foreclose or enforce any security interest created by the Corporate Debtor. - Recovery of any property by an owner or lessor occupied by the Corporate Debtor. The supply of essential goods or services to the Corporate Debtor was not to be terminated or suspended during the moratorium period. 7. Compliance with Insolvency and Bankruptcy Code (IBC) provisions: The tribunal found that the petition met all requirements under Section 7 of the IBC, including the existence of debt above ?1 lakh, the occurrence of default, and filing within the limitation period. The IRP was directed to adhere to the time limits for completing the CIRP and perform his duties with utmost dedication and honesty, strictly following the IBC provisions, rules, and regulations. Order: The tribunal admitted the I.B. Petition on 13/01/2020, appointing Mr. Atul Mittal as the Interim Resolution Professional and declaring a moratorium. The tribunal directed all concerned parties to extend full cooperation to the IRP and adhere to the IBC provisions. The Registry was instructed to communicate the order to all relevant parties immediately.
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