2020 (5) TMI 37 - Tri - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence of debt and dispute or not - HELD THAT - In order to comply with the requirement of clause (a) of section10(3) of the Code the petitioner has placed on record all the necessary documents to prove the existence of financial/operational debt and the amount as required in column 3 of Part-III of the Application Form. The details of the operational debt in default have also been provided - there is no revenue from operations from the financial year 2015-16 till 2018-19. It could also be observed that the petitioner company went into a loss making concern from financial year 2017-18 to 2018-19. It is clear from the above that the corporate applicant has failed to pay its debt and has thus committed default. It is thus competent to set in motion the insolvency resolution process under the Code to ensure maximum value of assets which is in the interest of all the stakeholders. Petition admitted - moratorium declared.

Issues Involved:

1. Jurisdiction and Territorial Authority.
2. Corporate Debtor's Financial Status and Debt Obligations.
3. Compliance with Section 10 of the Insolvency and Bankruptcy Code, 2016.
4. Appointment of Interim Resolution Professional.
5. Declaration of Moratorium.
6. Directions to Interim Resolution Professional.

Issue-wise Detailed Analysis:

1. Jurisdiction and Territorial Authority:

The Corporate Debtor, Modi Telecommunications Limited, has its registered office in Gurugram, Haryana, which places the matter within the territorial jurisdiction of the National Company Law Tribunal (NCLT), Chandigarh Bench. The certificate of incorporation confirming this jurisdiction is provided in the petition.

2. Corporate Debtor's Financial Status and Debt Obligations:

The Corporate Debtor's authorized and paid-up share capital is ?34,00,00,000/-. The company has no revenue from operations to meet its obligations towards creditors. The list of financial creditors and operational creditors is attached, indicating significant debts owed to YKM Holdings Pvt. Ltd., Mr. Yogendra Kumar Modi, and the Department of Telecommunications, among others. The detailed financial statements and the list of debts are annexed in the petition.

3. Compliance with Section 10 of the Insolvency and Bankruptcy Code, 2016:

The petition is filed under Section 10 of the Insolvency and Bankruptcy Code, 2016, by the Corporate Debtor itself. The application includes all necessary documents to prove the existence of financial/operational debt and the amount in default. The petitioner has filed audited financial statements for the years 2016-2017 and 2017-2018, provisional financial statements as of 31.03.2019, and the Statement of Affairs as of 27.04.2019. The petition also includes the special resolution passed by the shareholders approving the filing of the application.

4. Appointment of Interim Resolution Professional:

The Corporate Debtor proposed Mr. Atul Mittal as the Interim Resolution Professional (IRP). His credentials, including his registration number and written consent, are verified and found to be in order. There are no disciplinary proceedings pending against him. The Tribunal appoints Mr. Atul Mittal as the IRP with specific directions to manage the affairs of the Corporate Debtor, prepare an inventory of assets, and constitute a committee of creditors.

5. Declaration of Moratorium:

The Tribunal declares a moratorium in terms of Section 14 of the Code, which includes:
- Suspension of all suits or proceedings against the Corporate Debtor.
- Prohibition on transferring, encumbering, or disposing of any assets of the Corporate Debtor.
- Suspension of any action to foreclose or recover any security interest.
- Prohibition on recovery of any property by an owner or lessor.

The moratorium will remain in effect until the completion of the corporate insolvency resolution process or until the Tribunal approves a resolution plan or passes an order for liquidation.

6. Directions to Interim Resolution Professional:

The IRP is directed to:
- Act in accordance with the Code and the rules framed thereunder.
- Make a public announcement of the initiation of the Corporate Insolvency Resolution Process within three days.
- Extend all cooperation to the Corporate Debtor in managing its affairs.
- Constitute a committee of creditors and file a report certifying the constitution of the committee within thirty days.
- Convene the first meeting of the committee within seven days of filing the report.
- Send regular progress reports to the Tribunal every fortnight.

Conclusion:

The petition is admitted, and the Corporate Insolvency Resolution Process is initiated against Modi Telecommunications Limited. The Tribunal appoints Mr. Atul Mittal as the Interim Resolution Professional and declares a moratorium to protect the assets of the Corporate Debtor and ensure the resolution process is conducted smoothly.

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