2020 (12) TMI 153 - 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 - it is pleaded by the learned senior counsel for Bourn Hall that all the requirements of the Code and the Rules, 2016 are complied with in the present case and since the Form-6 is complete, the Tribunal has no jurisdiction to entertain the intervention application - HELD THAT - Section 10(1) of the Code states that application for initiating CIRP by a corporate debtor can only be filed where the corporate debtor has committed a default. In the present case, Bourn Hall has stated that it is evident from the several e-mails, legal notice for repayment of operational debt due, and the recovery suit filed by an operational creditor for recovery of debts due to the said operational creditor that Bourn Hall has committed a default in repayment of its debt - The statement of affairs as on 20.10.2018 has been filed to show that as against capital account balance of ₹ 29,46,031.64, there is a debit balance in the P L Account of ₹ 109,085,467.13. The net worth is therefore, clearly negative. Therefore, Bourn Hall has satisfied the condition that default has been committed by it. The names and addresses of the members of Bourn Hall with details of their respective shareholding was not furnished in the petition and that notice of defect in this regard was given on 13.06.2019. The affidavit of compliance was filed by Diary No. 3052 dated 18.06.2019 and thereby, the defect was removed - In Part-II of Form-6, Shri Madan Gopal Jindal has been proposed as Interim Resolution Professional (IRP). His IBBI Registration No. is stated to be IBBI/IPA-002/IPN00137/2017-18/10352. The written consent of the IRP in Form 2 is stated to be attached at Annexure A-5 at Page No. 697. In the Form 2, the proposed IRP has certified that there are no disciplinary proceedings pending against with him with the Board or ICSI Institute of Insolvency Professionals. Therefore, the requirements of Section 10(3)(b) of the Code are also satisfied. Section 10(4)(a) of the Code provides for admitting the application, if it is complete and no disciplinary proceeding is pending against the proposed Resolution Professional - It is already discussed that the application is complete and that the proposed Resolution Professional has furnished Form No. 2 stating that there are no disciplinary proceedings pending against him with Board or ICSI Institute of Insolvency Professional. Application admitted - moratorium declared.

Summary

Issues Involved:
1. Initiation of Corporate Insolvency Resolution Process (CIRP) under Section 10 of the Insolvency and Bankruptcy Code, 2016.
2. Compliance with procedural requirements for filing the CIRP application.
3. Intervention application by RNY Healthcare Services Pvt. Ltd.
4. Admissibility and completeness of the CIRP application.
5. Appointment of Interim Resolution Professional (IRP).
6. Declaration of Moratorium.

Issue-wise Detailed Analysis:

1. Initiation of CIRP under Section 10 of the Code:
Bourn Hall International India Private Limited (Bourn Hall) filed CP (IB) No. 5/Chd/Hry/2019 to initiate CIRP under Section 10 of the Insolvency and Bankruptcy Code, 2016. The jurisdiction for the case lies with the Chandigarh Bench of the Tribunal.

2. Compliance with Procedural Requirements:
The prescribed Form-6 was filed, signed by the Director of Bourn Hall, and supported by an affidavit. A resolution dated 31.10.2018 from the Extraordinary General Meeting (EGM) authorized the filing of the CIRP application. The form included details of financial and operational creditors, with HDFC Bank Ltd. being the sole financial creditor. Bourn Hall submitted evidence of its dire financial situation and defaults in payments.

3. Intervention Application by RNY Healthcare Services Pvt. Ltd.:
RNY Healthcare Services Pvt. Ltd. filed an intervention application (CA No. 519/2019), claiming to be the landlord of Bourn Hall and alleging non-disclosure of true facts regarding Bourn Hall's financial backing. They referenced an arbitral award in their favor and claimed that no EGM took place on 31.10.2018. However, the Tribunal found no evidence supporting these claims and rejected the intervention application.

4. Admissibility and Completeness of the CIRP Application:
The Tribunal noted that Bourn Hall provided evidence of default, including emails, legal notices, and a recovery suit. The application included a special resolution from the EGM, although the attendance sheet was missing. The Tribunal admitted the application, subject to reconsideration if the EGM's compliance with the Companies Act, 2013, was questioned. The application was found complete, satisfying Section 10(2) and 10(3)(a) requirements, and the proposed IRP had no pending disciplinary proceedings.

5. Appointment of Interim Resolution Professional (IRP):
Mr. Madan Gopal Jindal was proposed and appointed as the IRP. His credentials were verified, and there were no adverse findings. The Tribunal directed the IRP to take over management, make a public announcement, and constitute a committee of creditors. The IRP was instructed to submit regular progress reports.

6. Declaration of Moratorium:
The Tribunal declared a moratorium under Section 14 of the Code, prohibiting suits, asset transfers, and recovery actions against Bourn Hall. Essential goods or services to Bourn Hall were to continue uninterrupted during the moratorium period. The moratorium would remain in effect until the completion of the CIRP or further orders from the Tribunal.

Conclusion:
The Tribunal admitted the CIRP application filed by Bourn Hall, appointed an IRP, and declared a moratorium. The intervention application by RNY Healthcare Services Pvt. Ltd. was rejected. The Tribunal's decision was based on the completeness of the CIRP application, compliance with procedural requirements, and absence of any disqualification under Section 11 of the Code.