2022 (7) TMI 198 - Tri - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate Applicant has committed a default in repayment of its dues - Financial Creditors - existence of debt and dispute or not - HELD THAT - It is noted that the Corporate Applicant is a wholly-owned subsidiary of EIDCL, which is a subsidiary of IL FS. The Corporate Applicant has committed the default in paying the debts, borrowed from the Financial Creditors and Operational Creditors to the tune of Rs. 271,62,98,645/-. The Corporate Application has also served a copy of this application to the IBBI in Form 1A. The name of the IRP has also been proposed as per Section 10(b) of the IBC, 2016 - The default amount meets the threshold limit as prescribed under Section 4 of the IBC, 2016. The default claimed in the application is well within the limitation period to initiate the CIRP proceeding. The application is otherwise complete and defect-free. Application admitted - moratorium declared.

Issues:
1. Application for initiation of Corporate Insolvency Resolution Process under Section 10 of the Insolvency and Bankruptcy Code, 2016.
2. Jurisdiction of the Adjudicating Authority.
3. Default committed by the Corporate Applicant.
4. Approval process for initiation of CIRP.
5. Appointment of Insolvency Professional.
6. Admission of the application and order of moratorium.
7. Duties and responsibilities of the Interim Resolution Professional.
8. Public announcement and submission of claims.
9. Protection and preservation of the Corporate Applicant's property.
10. Payment to the Interim Resolution Professional and filing of reports.

Analysis:
1. The application was filed by the Corporate Applicant under Section 10 of the IBC, 2016, citing a default of Rs. 271,62,98,645/-, seeking initiation of the Corporate Insolvency Resolution Process.
2. The Adjudicating Authority confirmed jurisdiction due to the location of the Corporate Applicant's registered office in Ahmedabad, Gujarat.
3. The Corporate Applicant, a subsidiary of IL & FS, had not commenced operations due to clearance issues, leading to the default in debt repayment to Financial and Operational Creditors.
4. Approval for CIRP initiation was obtained from the Board of Directors, IEDCL, IL & FS, and Hon'ble Justice (Retd.) Mr. D.K. Jain, following the recommendation of the Resolution Consultant.
5. Insolvency Professional Ms. Prajakta Menezes was proposed and appointed as the Interim Resolution Professional, with no pending disciplinary proceedings against her.
6. The application was admitted, and a moratorium was declared under Section 14 of the IBC, 2016, prohibiting certain actions against the Corporate Applicant.
7. The Interim Resolution Professional was tasked with conducting the CIRP, making public announcements, and managing the operations of the Corporate Applicant.
8. Instructions were given for submission of claims, continuation of goods/services supply, and protection of the Corporate Applicant's property value.
9. The Corporate Applicant was directed to make an advance payment to the Interim Resolution Professional for the CIRP's smooth conduct.
10. The Registry was instructed to communicate the order to relevant parties and upload it on the website, concluding the judgment's approval and implementation.

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