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2022 (1) TMI 14 - Tri - Insolvency and BankruptcyMaintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - amount claimed to be in default in relation to 9,870 secured non-convertible debentures (NCDs) - existence of debt and dispute or not - HELD THAT - Total amount of debt is ₹ 1417,80,51,298 and default occurred on 13.10.2019. This petition has proved the existence of debt and default to meet the requirements of section 7 of the Code. The total amount in default is in excess of limit prescribed under section 4 of the Code, which at present is Rupees one crore. This petition is filed on 02.12.2021 Thus, the present petition is not hit by limitation. This is a fit case for initiation proceedings under section 227 read with section 239(2)(zk) of the Insolvency and Bankruptcy Code, 2016 read with Rule 5 and 6 of the Insolvency and Bankruptcy (Insolvency and Liquidation Proceedings of Financial Service Providers and Application to Adjudication Authority) Rules, 2019 and the debt in question qualifies as financial debt under section 5(8)(c) read with section 3(11) of the Code - The Petition filed by the Reserve Bank of India is thus complete in all respects as required by law. It clearly shows that the Respondent/FSP is in default of a debt due and payable and the default is more than the minimum amount as stipulated under section 4(1) of the Code. The default stands established and there is no reason to deny the admission of the Petition. Petition admitted - moratorium declared.
Issues:
1. Application for initiation of Corporate Insolvency Resolution Process (CIRP) against a Financial Service Provider (FSP) filed by the Reserve Bank of India (RBI). 2. Jurisdiction of the Bench to deal with the petition. 3. Default by the FSP in meeting payment obligations to creditors. 4. Appointment of Administrator by RBI and constitution of Advisory Committee. 5. Compliance with rules for initiating CIRP against an FSP. 6. Debt and default requirements under the Insolvency and Bankruptcy Code, 2016. 7. Fit case for initiation of proceedings under relevant sections of the Code. 8. Admission of the Petition and orders passed by the Adjudicating Authority. Detailed Analysis: 1. The application filed by the RBI under the Insolvency and Bankruptcy Code, 2016, sought the initiation of Corporate Insolvency Resolution Process against the FSP, Reliance Capital Limited (RCL), due to defaults in meeting payment obligations to creditors. 2. The Bench established its jurisdiction to deal with the petition based on RCL being a company registered under the Companies Act, 1956, with jurisdiction in Mumbai. 3. The default by RCL was evidenced by the amount owed to financial creditors, particularly Yes Bank Limited, and the default date of 13.10.2019, meeting the requirements under the Code. 4. The RBI superseded the Board of Directors of RCL and appointed an Administrator, Mr Nageswara Rao Y, with the constitution of an Advisory Committee to assist in discharging duties. 5. The application complied with the Rules for initiating CIRP against an FSP, as mandated by the Insolvency and Bankruptcy (Insolvency and Liquidation Proceedings of Financial Service Providers and Application to Adjudicating Authority) Rules, 2019. 6. The debt and default requirements under the Code were met, with the total default amount exceeding the prescribed limit, justifying the initiation of proceedings under the relevant sections of the Code. 7. The Adjudicating Authority admitted the Petition, ordering a moratorium, public announcement of CIRP, and appointment of Mr Nageswara Rao Y as the Administrator to manage the FSP during the CIRP period. 8. Various directions were issued, including communication of the order to relevant parties, compliance reporting, and scheduling a progress report filing, ensuring procedural adherence and oversight during the resolution process.
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