2022 (9) TMI 540 - 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 - acceptance of OTS proposal - time limitation - HELD THAT - The corporate Debtor has admitted the liability and also the default committed by them in the affidavit in reply as well as through various letters addressed to the Bank requesting them for considering their OTS proposal. The Corporate Debtor did not raise any substantial legal pleas in opposing the Company Petition. Similarly, this Bench has no power to issue any directions to the Financial Creditor to accept the OTS proposal submitted by the Corporate Debtor. Since, the Corporate Debtor is admitting the liability and the default, this Bench has no option except to admit the Petition. The Financial Creditor has also suggested the name of the proposed Interim Resolution Professional in part-3 of the Petition along with his consent letter in Form-2. The Company Petition is also within limitation and thus satisfies all the necessary requirement for admission. Petition admitted - moratorium declared.

Issues Involved:
1. Initiation of Corporate Insolvency Resolution Process (CIRP).
2. Admission of liability and default by the Corporate Debtor.
3. Appointment of Interim Resolution Professional (IRP).
4. Prohibition of suits and actions against the Corporate Debtor.
5. Continuation of essential goods and services.
6. Public announcement of CIRP.
7. Management of the Corporate Debtor during CIRP.

Detailed Analysis:

1. Initiation of Corporate Insolvency Resolution Process (CIRP):
The Union Bank of India Limited, referred to as the Financial Creditor, filed a petition under Section 7 of the Insolvency and Bankruptcy Code, 2016, against Peri Nitrates Private Limited, referred to as the Corporate Debtor, for initiating CIRP. The petition was filed due to the Corporate Debtor's default in repaying a financial debt amounting to Rs. 26,94,51,864.44/- along with interest.

2. Admission of Liability and Default by the Corporate Debtor:
The Corporate Debtor acknowledged the debt and default through various communications and its audited financial statements for multiple financial years. The Corporate Debtor had also requested a one-time settlement (OTS) and offered restructuring proposals, which were not accepted by the Financial Creditor. The tribunal noted that the Corporate Debtor admitted the liability and default, leaving no substantial legal grounds to oppose the petition.

3. Appointment of Interim Resolution Professional (IRP):
The tribunal appointed Mr. Mahesh G. Bagla as the Interim Resolution Professional (IRP) to carry out the functions as per the Insolvency and Bankruptcy Code, 2016. The Financial Creditor was directed to deposit Rs. 5 Lakh towards the initial CIRP cost, which the IRP would use for expenses, not fees, until decided by the Committee of Creditors (COC).

4. Prohibition of Suits and Actions Against the Corporate Debtor:
The tribunal ordered a moratorium prohibiting the institution or continuation of suits or proceedings against the Corporate Debtor. This included the execution of any judgment, decree, or order, and actions to foreclose, recover or enforce any security interest. The moratorium also prohibited the transfer, encumbrance, alienation, or disposal of any assets or legal rights of the Corporate Debtor.

5. Continuation of Essential Goods and Services:
The tribunal ordered that the supply of essential goods or services to the Corporate Debtor should not be terminated, suspended, or interrupted during the moratorium period.

6. Public Announcement of CIRP:
The tribunal mandated an immediate public announcement of the CIRP as specified under Section 13 of the Insolvency and Bankruptcy Code, 2016.

7. Management of the Corporate Debtor During CIRP:
During the CIRP period, the management of the Corporate Debtor would vest in the IRP/RP. The suspended directors and employees of the Corporate Debtor were instructed to provide all necessary documents and information to the IRP/RP.

Order:
The tribunal admitted the petition, initiating the CIRP against Peri Nitrates Private Limited. The registry was directed to communicate the order to both parties and the IRP immediately, and to update the Master Data of the Corporate Debtor with the Registrar of Companies, Mumbai.

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