2020 (9) TMI 471 - Tri - Companies Law

Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence of debt and default or not - HELD THAT - Section 7(5) of the Code provides for admission of the application where the Adjudicating Authority is satisfied that (a) a default has occurred; (b) the application under sub-section (2) of Section 7 is complete; (c) there is no disciplinary proceedings pending against the proposed Resolution Professional. The first condition is that a default has occurred. From the facts narrated above, we find that the default has occurred - The second condition is that the application under Section 7(2) is complete. No objections in this regard, were raised during the hearing of the petition. We have discussed the contents of the application above and we conclude that the application is complete - The third condition is that there are no disciplinary proceedings pending against the proposed Resolution Professional. In the present case, Mr. Ajay Kumar Jain, IBBI/IPA-002/IP-N00415/2017-2018/11188, has been proposed as Interim Resolution Professional. Form 2 filed by the proposed Interim Resolution Professional is at Page 212 of the petition. Mr. Ajay Kumar Jain has certified that there are no disciplinary proceedings pending against him with the Board or Indian Institute of Insolvency Professional of ICAI. He has also affirmed that he is eligible to be appointed as a Resolution Professional in respect of the corporate debtor in accordance with the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporation Persons) Regulations, 2016. In view of the satisfaction of the conditions provided for in Sections 7(5) of the Code, the petition for initiation of CIRP in the case of M/s Maruti Kesari Nandan Agro Foods Pvt. Ltd., is admitted - Petition admitted - moratorium declared.

Issues Involved:
1. Jurisdiction and Territorial Authority
2. Financial Creditor's Claim
3. Default by Corporate Debtor
4. Application Completeness
5. Appointment of Interim Resolution Professional
6. Declaration of Moratorium

Issue-wise Detailed Analysis:

1. Jurisdiction and Territorial Authority:
The respondent-corporate debtor, M/s Maruti Kesri Nandan Agrofoods Private Limited, is incorporated under the Companies Act, 2013, with its registered office in Gurugram, Haryana. Thus, the matter falls within the territorial jurisdiction of the National Company Law Tribunal (NCLT), Chandigarh Bench.

2. Financial Creditor's Claim:
The petitioner, Punjab National Bank, filed the application under Section 7 of the Insolvency and Bankruptcy Code, 2016, seeking initiation of Corporate Insolvency Resolution Process (CIRP) against the respondent. The application was supported by an affidavit from the Senior Manager (Credit) of Punjab National Bank. The financial creditor had sanctioned various credit facilities to the corporate debtor, including a Cash Credit Limit of ?201 Lacs, a Term Loan of ?148 Lacs, and a Car Loan of ?11,18,389/-. The loans were secured by hypothecation of assets and mortgage of properties.

3. Default by Corporate Debtor:
The corporate debtor failed to adhere to the terms and conditions of the agreements and did not pay the dues as scheduled. Consequently, the account was classified as a Non-Performing Asset (NPA) on 31.12.2015. Despite repeated requests by the financial creditor, the corporate debtor did not regularize the account. Demand notices under Section 13(2) of the SARFAESI Act were issued, and possession notices under Section 13(4) were also served. The financial creditor took possession of the hypothecated plant and machinery and sold it through e-auction.

4. Application Completeness:
The application was filed in the prescribed Form 1, and the General Power of Attorney authorized the Senior Manager to file the petition. The application was deemed complete as per the requirements of Section 7(2) of the Code, and no objections were raised regarding its completeness during the hearing.

5. Appointment of Interim Resolution Professional:
Mr. Ajay Kumar Jain was proposed as the Interim Resolution Professional (IRP). He certified that no disciplinary proceedings were pending against him, and he was eligible for appointment. The Tribunal appointed Mr. Ajay Kumar Jain as the IRP and directed him to take control and custody of the corporate debtor's assets, prepare an inventory, and manage the affairs as a going concern. He was also instructed to make a public announcement, constitute a Committee of Creditors, and submit regular progress reports.

6. Declaration of Moratorium:
The Tribunal declared a moratorium under Section 14 of the Code, prohibiting:
a) Institution or continuation of suits or proceedings against the corporate debtor.
b) Transfer, encumbrance, alienation, or disposal of any assets of the corporate debtor.
c) Foreclosure, recovery, or enforcement of any security interest.
d) Recovery of any property occupied by the corporate debtor.

The moratorium would remain effective until the completion of the CIRP or until the Tribunal approves a resolution plan or orders liquidation.

Conclusion:
The Tribunal, satisfied with the conditions under Section 7(5) of the Code, admitted the petition for initiation of CIRP against M/s Maruti Kesri Nandan Agrofoods Pvt. Ltd. and appointed Mr. Ajay Kumar Jain as the Interim Resolution Professional. The moratorium was declared, and directions were issued for the management of the corporate debtor's affairs during the resolution process.

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