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2018 (2) TMI 38 - Tri - Insolvency and BankruptcyCorporate Insolvency Resolution Process - whether petition is premature - Held that - A perusal of letter dated 13.06.2017 issued by Reserve Bank of India have given period to resolve within six months. The resolution plan proposed at the meeting of the Joint Lender Forum stand rejected on 15.11.2017 and the present petition has been filed on 20.11.2017. In any case the period of six months as on today has expired. There is no approved proposal by any acceptable lender forum to suggest that resolution of stressed assets is possible. The possibility of resolution under the Insolvency and Bankruptcy Code widened up as a large number of players may apply with much more ambitious and varieties of resolution plans. It brings to fore the various shades of interplay of market forces. Therefore it is not possible to accept the aforesaid argument that the petition is in any way premature. Even otherwise there is no bar created by the Insolvency and Bankruptcy Code to proceed with adjudication of such petition merely because some process is pending at the Joint Lender Forum Another objection in respect of choice of the Interim Resolution Professional in view of the replacement of the Interim Resolution Professional the argument advanced by Mr. Chaudhary learned Senior counsel would also not require any further consideration and we accept the appointment of Mr. Navneet Kumar Gupta to act as Interim Resolution Professional. As a sequel to the above discussion this petition is admitted and Mr. Navneet Kumar Gupta 520 5th Floor Caddie Commercial Tower Aerocity New Delhi-110037 is appointed as an Interim Resolution Professional.
Issues Involved:
1. Competency of the authority filing the petition. 2. Default and triggering of the Insolvency Process. 3. Conflict of interest in the appointment of the Interim Resolution Professional. Detailed Analysis: 1. Competency of the Authority Filing the Petition: The petition was filed by the State Bank of India (SBI) under Section 7 of the Insolvency and Bankruptcy Code, 2016, to initiate the Corporate Insolvency Resolution Process (CIRP) against Bhushan Energy Limited. The respondent challenged the petition's maintainability, arguing that the petition was not filed by a competent authority. They contended that the authorization dated 16.06.2017, issued by the SBI Chairman, was invalid as it relied on a 1987 notification, which did not contemplate the Insolvency and Bankruptcy Code. The Tribunal rejected this argument, stating that Section 27 of the State Bank of India Act, 1955, and Regulation 77 of the State Bank of India (General) Regulations, 1955, provide the Chairman with the authority to delegate such powers. The Tribunal concluded that the petition was filed by an authorized person in accordance with the law. 2. Default and Triggering of the Insolvency Process: The Tribunal examined the particulars of the debt and the default. The financial creditor, SBI, had advanced a total of ?398,08,74,018 to the corporate debtor through multiple financial facilities. As of 31.10.2017, the total amount in default was ?494,09,47,034.76. The respondent argued that the debt was not due as the six-month period specified by the Reserve Bank of India (RBI) had not expired. However, the Tribunal found that the resolution plan proposed by the Joint Lender Forum was rejected on 15.11.2017, and the petition was filed on 20.11.2017. The Tribunal held that the petition was not premature and that there was no bar under the Insolvency and Bankruptcy Code to proceed with the adjudication of the petition, even if some process was pending at the Joint Lender Forum. 3. Conflict of Interest in the Appointment of the Interim Resolution Professional: The respondent raised an objection regarding the appointment of the Interim Resolution Professional (IRP), arguing that there was a conflict of interest as the proposed IRP was a partner at Deloitte Touche, and another partner from the same firm was acting as IRP for Bhushan Steel Limited. The Tribunal acknowledged the potential conflict of interest and allowed the financial creditor to propose a replacement. Subsequently, Mr. Navneet Kumar Gupta was appointed as the new IRP. The Tribunal accepted his appointment after verifying his declaration of no pecuniary or personal relationship with either SBI or Bhushan Energy Limited. Conclusion: The petition was admitted, and Mr. Navneet Kumar Gupta was appointed as the Interim Resolution Professional. The Tribunal directed a public announcement of the initiation of the CIRP and declared a moratorium under Section 14 of the Insolvency and Bankruptcy Code. The moratorium included prohibitions on the institution or continuation of suits, transferring assets, and recovery actions against the corporate debtor. The IRP was instructed to perform his duties in accordance with the provisions of the Insolvency and Bankruptcy Code, and all personnel associated with the corporate debtor were directed to cooperate with the IRP.
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