2021 (6) TMI 741 - Tri - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not - HELD THAT - Notice of this petition was issued to the corporate debtor on 31.05.2019 to show cause as to why this petition be not admitted. The Financial Creditor has filed affidavit of service vide Diary No. 5595 dated 15.10.2019 wherein it has been stated that notices were sent vide speed post, Email and by hand to the corporate debtor - The Notice of hearing was also published in two newspapers (English) on 16.10.2019. Newspaper clipping of both newspapers are attached as Annexure-P1 of Diary No. 6986 dated 10.12.2019. Accordingly, several opportunities were afforded to the corporate debtor to file its reply but there has been no representation from the respondent so far. In the present case, the occurrence of default is evidenced by the details furnished by petitioner including Loan-cum-Hypothecation agreement, no lien letter along with Demand Promissory Note executed between both parties and same are placed at Annexures A-6 A-7 respectively. Demand Notice dated 06.01.2017 under Section 13(2) of SARFEASI Act (Annexure A-9), possession notice dated 22.03.2017 (Annexure A-10) were issued by financial creditor and copy of order dated 16.02.2019 (Annexure A-11) passed by Debt Recovery Tribunal, Chandigarh wherein recovery certificate was issued shows that the corporate debtor had made default in payment of financial debt. The present petition being complete and having established the default in payment of the Financial Debt for the default amount being above ₹ 1,00,000/-, the petition is admitted in terms of Section 7(5) of the IBC and accordingly, moratorium is declared in terms of Section 14 of the Code - Application allowed.

Summary

Issues:
1. Jurisdiction of the Adjudicating Authority
2. Default in payment of financial debt
3. Appointment of Interim Resolution Professional
4. Declaration of moratorium and its implications

Jurisdiction of the Adjudicating Authority:
The petition under Section 7 of the Insolvency and Bankruptcy Code, 2016 was filed by the State Bank of India seeking to initiate Corporate Insolvency Resolution Process against the Corporate Debtor, M/s. Vij Agro Exports Private Ltd. The Corporate Debtor was incorporated under the Companies Act, 1956, with its registered office falling within the jurisdiction of the Adjudicating Authority. The financial assistance provided by the Financial Creditor to the Corporate Debtor, along with the details of default and outstanding amount, were duly presented in the petition, establishing the jurisdiction of the Adjudicating Authority.

Default in Payment of Financial Debt:
The Financial Creditor submitted evidence of default, including the loan agreements, demand notices, and possession orders issued to the Corporate Debtor. The total outstanding amount, as of a specific date, was highlighted along with the classification of the Corporate Debtor's account as Non-Performing Asset. Various legal documents, such as the recovery suit filed before the Debt Recovery Tribunal and the valuation report of mortgaged properties, were provided as evidence of default. Despite multiple opportunities given to the Corporate Debtor to respond, no representation was made, leading to the admission of the petition based on established default in payment of the financial debt.

Appointment of Interim Resolution Professional:
The Financial Creditor proposed Mr. Rajender Kumar Jain as the Interim Resolution Professional, who consented to the appointment and confirmed no pending disciplinary proceedings against him. The Tribunal appointed Mr. Rajender Kumar Jain as the Interim Resolution Professional, subject to compliance with necessary disclosures and requirements under the Insolvency and Bankruptcy Code, 2016. The Interim Resolution Professional was directed to initiate necessary steps mandated under the IBC, including the constitution of the Committee of Creditors and regular reporting to the Tribunal.

Declaration of Moratorium and Its Implications:
The Tribunal admitted the petition, declared a moratorium under Section 14 of the Code, and imposed various prohibitions, including the institution of suits, transfer of assets, enforcement of security interests, and recovery actions against the Corporate Debtor. The order of moratorium was to remain in effect until the completion of the corporate insolvency resolution process or a decision for liquidation. Essential supplies to the Corporate Debtor were to be maintained during the moratorium period, with exceptions as notified by the Central Government. The implications of the moratorium were detailed, emphasizing the restrictions and obligations imposed on all parties involved in the resolution process.

The Tribunal instructed the Interim Resolution Professional to collate claims, constitute a Committee of Creditors, and provide regular progress reports. The order was communicated to the parties, with copies sent to the Interim Resolution Professional for compliance. The appointment of the Interim Resolution Professional marked the initiation of the corporate insolvency resolution process, with specific directives outlined for the resolution proceedings.