2018 (5) TMI 857 - Tri - Insolvency and Bankruptcy

Corporate insolvency process - Corporate Debtor has committed default in making payment - whether default occurred as alleged by the Financial Creditor? - Claim barred by limitation - authority to file the petition - Held that - The objections raised are vague and inconsistent with that of the documents admittedly executed by the corporate debtor. The petitioner produced Annexure- B proving the authority given to the Asstt. General Manager Mr. Bishwatosh Misra for signing a petition like this nature. The above said authorisation was issued by the Chairman, SBI as per notification dated 2nd May 1987. As per clause A in the notification all officers in the grade of SMGS IV and above are empowered to do business of the Bank in respect of all matters coming in discharge of functions of the posts held for the time being. Annexure -B proves special authority to file a petition before NCLT also. So the petitioner has got the authority to file a petition like the petition in hand. The contention of the corporate debtor that petitioner has no authority is therefore found devoid of any merit. Annexure- C is the calculation of the amount due from the corporate debtor. It shows that total outstanding due on the corporate debtor on 31/12/2017 is ₹ 469,29,69,983.63 /-. As per Annexure C the date of default in regards cash credit and term loan is on 31-03-2016. It is also clear that corporate debtor has committed default as alleged by the petitioner. The total outstanding as on 31-12-2017 is ₹ 469,29,69,983.63, which include interest, penal interest which the corporate debtor failed to pay. The contention that the calculation of the amount in default is wrong also found without any supporting data. The acknowledgment of liability evidently found executed by the corporate debtor i.e. Annexure LL dated 2nd April 2016, Annexure MM, dated 19th August 2017, Annexure NN date 2nd May, 2017 and Annexure OO dated 7th April, 2017 are evidently executed by the corporate debtor. Therefore, the corporate debtor being confirmed the balance amount outstanding as per the above referred documents the claim is not at all barred by limitation as alleged. The petition filed by the financial creditor under Sec.7 of the Insolvency & Bankruptcy Code, 2016 is hereby admitted for initiating the Corporate Resolution Process and declare a moratorium and public announcement in accordance with Sec.13 and 15 of the IBC, 2016.

Summary

Issues Involved:
1. Default in repayment by the Corporate Debtor.
2. Authority to initiate Corporate Insolvency Resolution Process (CIRP).
3. Validity and completeness of the petition under Section 7 of the Insolvency and Bankruptcy Code (I&B Code), 2016.
4. Objections raised by the Corporate Debtor.
5. Limitation period for the claim.

Issue-wise Detailed Analysis:

1. Default in repayment by the Corporate Debtor:
The Financial Creditor, State Bank of India, filed an application under Section 7 of the I&B Code, 2016, to initiate the Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor, Impex Metal & Ferro Alloys Ltd., for a default amount of ?469,29,69,983.63 as of 31-12-2017. The Financial Creditor provided various documents, including statements of accounts and financial contracts, to substantiate the claim of default.

2. Authority to initiate CIRP:
The Corporate Debtor contested the authority of the Financial Creditor to initiate CIRP, arguing that the authorization was general rather than specific. However, the tribunal found that the Assistant General Manager of the State Bank of India was duly authorized to file the petition, as evidenced by the Board Resolution dated 16th June 2017 and other supporting documents. Therefore, the tribunal dismissed this objection, confirming the Financial Creditor's authority to initiate the process.

3. Validity and completeness of the petition under Section 7 of the I&B Code, 2016:
The tribunal examined whether the petition was complete as per Section 7(3) of the I&B Code, 2016. The Financial Creditor provided the required documents, including records of default, the name of the proposed interim resolution professional, and other specified information. The tribunal found that the petition met all the requirements, including the submission of a certified copy of the statement of accounts and the consent of the proposed interim resolution professional, Mr. Subodh Kumar Agarwal.

4. Objections raised by the Corporate Debtor:
The Corporate Debtor raised several objections, including the absence of specific authorization, disputed amounts, and the claim being barred by the statute of limitations. The tribunal found these objections to be vague and inconsistent with the documents provided by the Financial Creditor. The tribunal noted that the Corporate Debtor had acknowledged the liability through various documents, including acknowledgments of liability dated 2nd April 2016, 19th August 2017, 2nd May 2017, and 7th April 2017. Therefore, the tribunal dismissed the objections raised by the Corporate Debtor.

5. Limitation period for the claim:
The Corporate Debtor argued that the claim was barred by the statute of limitations. However, the tribunal found that the acknowledgments of liability executed by the Corporate Debtor extended the limitation period. As a result, the claim was not barred by limitation.

Conclusion:
The tribunal admitted the petition filed by the Financial Creditor under Section 7 of the I&B Code, 2016, for initiating the CIRP against the Corporate Debtor. A moratorium was declared in accordance with Section 13 and 15 of the IBC, 2016, prohibiting certain actions against the Corporate Debtor. The tribunal appointed Mr. Subodh Kumar Agarwal as the Interim Resolution Professional (IRP) and directed him to convene a meeting of the Committee of Creditors and submit a progress report. The matter was listed for further proceedings on 25-4-2018.