2018 (6) TMI 349 - Tri - Insolvency and Bankruptcy

Corporate insolvency process - Held that - In the case in hand the respondent company has committed default in repayment of the outstanding amount. Moreover, the application of the financial creditor is complete and there is no disciplinary proceeding pending against the proposed IRP. We are satisfied that the present application is complete and the applicant financial creditor is entitled to claim its outstanding financial debt from the corporate debtor and that there has been a default in payment of the financial debt. As a sequel to the above discussion and in terms of Section 7(5)(a) of the Code, the present application is admitted. In pursuance of Section 13(2) of the Code we direct that public announcement shall be made by the Interim Resolution Professional immediately (3 days as prescribed by Regulations) with regard to admission of this application under Section 7 of the Code.

Summary

Issues Involved:
1. Jurisdiction of the Tribunal
2. Status of the Applicant as Financial Creditor
3. Evidence of Financial Debt and Default
4. Dispute over Assignment Deed
5. Pendency of Proceedings before DRT
6. Compliance with Section 7 of the Insolvency and Bankruptcy Code, 2016
7. Appointment of Interim Resolution Professional (IRP)
8. Declaration of Moratorium

Issue-wise Detailed Analysis:

1. Jurisdiction of the Tribunal:
The Tribunal has territorial jurisdiction over the NCT of Delhi, as the registered office of the respondent corporate debtor, M/s. Rustagi Impex Private Limited, is located in New Delhi. This is in accordance with sub-section (1) of Section 60 of the Insolvency and Bankruptcy Code, 2016.

2. Status of the Applicant as Financial Creditor:
M/s. Asset and Reconstruction Company (India) Limited, the applicant, qualifies as a financial creditor under sub-section (7) of Section 5 of the Code. This status is supported by the assignment agreement dated 14.03.2013, through which Karnataka Bank Limited transferred its financial debt to the applicant.

3. Evidence of Financial Debt and Default:
The applicant provided comprehensive evidence of the financial debt, including loan agreements, hypothecation deeds, guarantee deeds, and acknowledgements of debt by the respondent dated 14.01.2011 and 12.10.2011. The financial debt includes various facilities such as overdraft, import/inland LC, and term loans, amounting to significant sums. The respondent's account was declared NPA on 03.10.2010, and the evidence supports the occurrence of default.

4. Dispute over Assignment Deed:
The respondent contested the validity of the assignment deed dated 14.03.2013, arguing it was not properly stamped or registered. However, the applicant clarified that the assignment agreement was registered on 28.05.2013 and produced relevant documents to support this. The Tribunal found that the financial debt was legally assigned and transferred to the applicant, making them a financial creditor under the Code.

5. Pendency of Proceedings before DRT:
The Tribunal noted that the pendency of proceedings before the Debts Recovery Tribunal (DRT) does not preclude the initiation of corporate insolvency resolution process under Section 7 of the Code. Section 238 of the Code provides overriding effect, allowing insolvency proceedings to proceed despite ongoing DRT cases.

6. Compliance with Section 7 of the Insolvency and Bankruptcy Code, 2016:
The Tribunal verified that the application met the requirements of Section 7(5)(a) of the Code:
1. Default had occurred.
2. The application was complete.
3. No disciplinary proceedings were pending against the proposed IRP.

7. Appointment of Interim Resolution Professional (IRP):
Shri Ram Ratan Kanoongo, having registration number IBBI/IPA-001/IP-P00070/2017-18/10156, was appointed as the Interim Resolution Professional. The Tribunal directed that a public announcement be made immediately regarding the admission of the application under Section 7 of the Code.

8. Declaration of Moratorium:
A moratorium was declared in terms of Section 14 of the Code, imposing prohibitions on:
- Institution or continuation of suits or proceedings against the corporate debtor.
- Transferring or disposing of any assets or legal rights of the corporate debtor.
- Foreclosure or enforcement of security interests.
- Recovery of property by owners or lessors.

The Tribunal specified that the moratorium does not apply to transactions notified by the Central Government or the supply of essential goods or services to the corporate debtor.

Conclusion:
The application filed by the financial creditor was admitted, and the corporate insolvency resolution process was initiated. The Tribunal directed the Interim Resolution Professional to perform his duties with utmost dedication and in accordance with the provisions of the Code, Rules, and Regulations. The office was instructed to communicate the order to all relevant parties within seven days.