2018 (5) TMI 694 - Tri - Insolvency and Bankruptcy

Corporate insolvency process - existence of eligible outstanding debt - Held that - The revenue as well as the accumulated loss and liability of the corporate debtor as compared to revenue receipts is much more for which there is need for initiation of resolution process. So this is a fit case for setting in motion the insolvency resolution process as contemplated under the Code. The applicant-corporate debtor has proposed the name of Mr. Ashutosh Mishra to act as Interim Resolution Professional which the corporate debtor is mandatorily required to propose in accordance with clause (b) of Section 10 (3) of the Code. On perusal of the written communication in Form 2 at page 18 of the paper book, furnished by the proposed Interim Resolution Professional, the same is found to be in order. The applicant-company save some sketchy particulars and has not given any road map as to how it is going to keep itself afloat as a going concern. However, keeping in perspective the objects for which the Code has been brought into force and to balance the interest of all stakeholders, we are satisfied that the instant application warrants to be admitted to prevent further erosion of capital and to safeguard the assets of the Applicant Company/Corporate Debtor. Instant petition is admitted. Moratorium declared accordingly.

Summary

Issues Involved:
1. Jurisdiction and Territorial Authority
2. Financial and Operational Creditors
3. Default and Debt Amounts
4. Mortgage and Security Details
5. Previous Petitions and Procedural Completeness
6. Objections by Financial Creditor
7. Application Completeness under Section 10 of IBC
8. Appointment of Interim Resolution Professional
9. Declaration of Moratorium

Issue-wise Detailed Analysis:

1. Jurisdiction and Territorial Authority:
The corporate debtor, incorporated on 05.06.1987, has its registered office in Gurdaspur, Punjab, thus falling within the territorial jurisdiction of the National Company Law Tribunal, Chandigarh.

2. Financial and Operational Creditors:
Punjab National Bank (PNB) is the only secured financial creditor. There are also unsecured financial creditors, including one related party and one unrelated party, along with 21 trade creditors and statutory dues to Punjab State Power Corporation Limited (PSPCL) and the Income Tax Department. The corporate debtor has provided a list of all financial creditors.

3. Default and Debt Amounts:
The debt in default to PNB as of 30.09.2017 was ?5,24,51,244/-. The amounts in default to other unsecured financial creditors were ?4,87,889.61/- and ?1,15,85,974/-. For operational creditors, the total default was ?43,55,451.10, with statutory dues of ?21,18,543/- and ?4,531/- to the Income Tax Department. PNB initially sanctioned a loan of ?75 lacs on 10.10.1998, which was later enhanced.

4. Mortgage and Security Details:
The corporate debtor mortgaged land and buildings, valued at ?5,76,96,154/-, and other properties including a Sortex Plant and Rice Mill, totaling ?9,65,59,068/-. Additionally, stocks and book debts were hypothecated, valued at ?6,01,526/- and ?87,19,009.83 respectively.

5. Previous Petitions and Procedural Completeness:
The corporate debtor had previously filed petitions under Section 10 of the Code, which were withdrawn due to incomplete particulars and technical defects, with liberty to file fresh petitions on the same cause of action.

6. Objections by Financial Creditor:
PNB objected to the petition due to the inclusion of a housing loan amount of ?60,09,721/- taken by the Managing Director, for which the corporate debtor was a guarantor. However, this amount was cleared, and the outstanding amount in the housing loan account was confirmed as Nil by PNB.

7. Application Completeness under Section 10 of IBC:
The application filed in Form No.6 was found complete in all respects as per Section 10 of the Code. The Tribunal referred to the judgment in M/s Unigreen Global Private Ltd. Vs. Punjab National Bank & Ors., emphasizing that the Adjudicating Authority must admit the application if it is complete and the corporate applicant is not ineligible under Section 11 of the Code.

8. Appointment of Interim Resolution Professional:
The corporate debtor proposed the name of Mr. Ashutosh Mishra as the Interim Resolution Professional, who provided the requisite particulars and declaration that no proceedings were pending against him.

9. Declaration of Moratorium:
The Tribunal admitted the petition and declared a moratorium prohibiting:
(a) Institution or continuation of suits or proceedings against the corporate debtor.
(b) Transferring, encumbering, or disposing of any assets of the corporate debtor.
(c) Actions to foreclose or enforce any security interest.
(d) Recovery of any property by an owner or lessor.

The supply of essential goods or services to the corporate debtor shall not be terminated during the moratorium period. The order of admission is without prejudice to the financial creditor's rights against other guarantors.

Conclusion:
The petition was admitted, and the moratorium was declared. The matter was listed for the formal appointment of the Interim Resolution Professional, with copies of the order to be communicated to the corporate debtor and PNB.