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2017 (7) TMI 1018 - Tri - Insolvency and BankruptcyCorporate Insolvency Resolution Process - whether the petitioner has been able to satisfy the requirement of Section 7 of the Code? - Held that - Firstly, the order dated 30.05.2017 may not by itself be regarded as notice within the meaning of proviso to Section 7 (5) of the Code. Secondly it is highly doubtful whether the defect concerning power of attorney would be the one covered by Section 7 (2) of the Code. Section 7 (2) of the Code only provides that application has to be in the form and manner as may be prescribed. By virtue of Section 7 of the Code read with Rule 4 of the Adjudicating Authority Rules Form-1 has been prescribed as performa for presentation of the application by a Financial Creditor . A perusal of Form-1 would reveal that there is no requirement specified in any part of that performa with regard to power of attorney. It would thus mean that there is no defect in terms of Section 7 (2) read with Section 7 (5) of the Code. It does not however lead to the conclusion that there is no requirement of filing a power of attorney. But then it is a different matter and would not be hit by the defect in the performa prescribed by Rule 4 of Adjudicating Authority Rules. It is not that every defect is hit by Section 7 (2) of the Code. Therefore, no notice by the registry was issued. This is a hyper technical legal argument raised on the basis of order dated 30.05.2017. Taking clue from the order of that date this argument has been advanced. Therefore, we do not accept the submission. Going by that conclusion we find that affidavit has been filed on 07.06.2017 which has consumed seven days time. Therefore, we do not find any substance in the aforesaid submission and reject the same. For the reasons, aforementioned this petition is admitted. In pursuance of Section 13 (2) of the Code we direct that public announcement shall be immediately made by the Interim Resolution Professional with regard to admission of this application under Section 7 of the Code. We also declare moratorium in terms of Section 14 of the Code. A necessary consequence of the moratorium flows from the provisions of Section 14 (1) (a), (b), (c) & (d).
Issues Involved:
1. Competency of the Financial Creditor to initiate Corporate Insolvency Resolution Process (CIRP). 2. Occurrence of default by the Corporate Debtor. 3. Authorization of the petitioner to file the application. 4. Discrepancy in the defaulted amount. 5. Timeliness of defect rectification in the application. Issue-wise Detailed Analysis: 1. Competency of the Financial Creditor to initiate CIRP: The Tribunal examined whether the petitioner, Bank of India, as a lead Bank in a consortium, was competent to initiate CIRP under Section 7 of the Insolvency and Bankruptcy Code, 2016. The Tribunal concluded that the lead bank is competent to file the application on its own behalf and on behalf of other consortium members, fulfilling the requirement of Section 7 (1) of the Code. 2. Occurrence of default by the Corporate Debtor: The Tribunal considered the definition of 'default' under Section 3 (12) of the Code, which includes non-payment of debt when due. The Tribunal noted that the Corporate Debtor defaulted multiple times, including during restructuring attempts in 2011 and 2013, and was finally classified as Non-Performing Asset (NPA) on 30.09.2014. The defaulted amount was confirmed to be over ?1,09,32,72,312.86 as per the affidavit filed on 07.06.2017. 3. Authorization of the petitioner to file the application: The Tribunal addressed the objection regarding the authorization of Shri Rahulendu Singh, who filed the petition on behalf of the Financial Creditor. It was confirmed that he was duly authorized by the General Managers of Bank of India through a resolution passed on 27.05.2016, and the power of attorney dated 05.01.2017 supported his authorization. Thus, the Tribunal found the petition to be validly instituted. 4. Discrepancy in the defaulted amount: The Tribunal examined the objection raised by the Corporate Debtor about the mismatch in the defaulted amount mentioned in Form-1 and the affidavit. The Tribunal clarified that any discrepancy in the amount is not within its purview to determine but should be addressed by the Committee of Creditors. The Tribunal emphasized that the occurrence of default involving ?1 lakh or more is sufficient to trigger the Insolvency Resolution Process. 5. Timeliness of defect rectification in the application: The Tribunal considered the objection regarding the delay in rectifying defects in the application. The Tribunal noted that no formal notice was issued by the registry as required under the proviso to Section 7 (5) of the Code. It was concluded that the order dated 30.05.2017 could not be regarded as a formal notice, and the affidavit filed on 07.06.2017 was within the permissible timeframe. Thus, the Tribunal rejected the objection of delay. Conclusion: The Tribunal admitted the petition, appointed Shri Anil Kohli as the Interim Resolution Professional, and directed the public announcement of the CIRP. A moratorium was declared under Section 14 of the Code, prohibiting suits, asset transfers, and recovery actions against the Corporate Debtor. The personnel connected with the Corporate Debtor were instructed to cooperate with the Interim Resolution Professional, who is tasked with managing and preserving the Corporate Debtor's property. Disposition: The petition was disposed of in the above terms, with the CIRP initiated against the Corporate Debtor.
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