2018 (9) TMI 1528 - Tri - Insolvency and Bankruptcy

Corporate Insolvency Resolution Process - Initiation of corporate insolvency resolution process by financial creditor - completion of application - Held that - From the form and manner of the application has to be the one as prescribed. It is evident from the record that the application has been filed on the proforma prescribed under Rule 4(2) of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 read with Section 7 of IBC. We are satisfied that a default has occurred and the application under sub-section 2 of Section 7 is complete; and no disciplinary proceedings are pending against the proposed Interim Resolution Professional. Even Punjab National Bank appears to be supporting the cause of the Financial Creditor . Thus, the application warrant admission. This petition is admitted and Mr. Manoj Sehgal, Flat No. 304, Tower 5, Ansal Valley View Estate, Gwal Pahadi, Gurgaon, Haryana-122003, Registration No. IBBI/IPA-002/IP-N00108/2017-18/10256 is appointed as an Interim Resolution Professional.

Issues Involved:
1. Initiation of Corporate Insolvency Resolution Process (CIRP) under Section 7 of the Insolvency and Bankruptcy Code, 2016.
2. Validity and sufficiency of the application filed by the Financial Creditor.
3. Objections raised by the Corporate Debtor.
4. Role and appointment of the Interim Resolution Professional (IRP).
5. Declaration of moratorium.
6. Impleadment application by Punjab National Bank (PNB).

Detailed Analysis:

1. Initiation of Corporate Insolvency Resolution Process (CIRP) under Section 7 of the Insolvency and Bankruptcy Code, 2016:
The Financial Creditor, Pankhuri Investments and Securities Limited, filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016, seeking to initiate the Corporate Insolvency Resolution Process (CIRP) against Shreedhar Milk Foods Limited. The Financial Creditor is a company incorporated on 11.12.1992, and the Corporate Debtor was incorporated on 17.11.2005. The Financial Creditor provided a loan of INR 2,03,60,000/- to the Corporate Debtor on 11.09.2015 with an interest rate of 12% per annum.

2. Validity and sufficiency of the application filed by the Financial Creditor:
The application included details of the financial debt, dates of disbursement, and the amount claimed to be in default as of 01.04.2018. The Financial Creditor also attached relevant documents, including the loan agreement, a letter recalling the loan, and an email from the Corporate Debtor acknowledging the debt. The Tribunal found that the application was complete as per the requirements of Section 7(2) of the Code and Rule 4(1) of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016.

3. Objections raised by the Corporate Debtor:
The Corporate Debtor raised several objections:
- Arbitration Clause: The Corporate Debtor argued that the presence of an arbitration clause in the loan agreement should bar the initiation of CIRP. The Tribunal rejected this argument, stating that under Section 7 of the Code, the presence of an arbitration agreement is no bar to the admission of the petition.
- Computation of Default: The Corporate Debtor claimed that the Financial Creditor did not provide a computation of the amount and days of default. The Tribunal found that the email from the Corporate Debtor acknowledging the debt and other evidence provided by the Financial Creditor were sufficient to establish default.
- Financial Constraints: The Corporate Debtor argued that it was facing financial constraints and was willing to pay the outstanding amounts in a structured manner. The Tribunal dismissed this argument, noting that mere expression of good intention without a concrete proposal does not suffice.
- Bankers' Book Evidence Act: The Corporate Debtor contended that the Financial Creditor did not produce copies of entries in the Bankers' Book as required. The Tribunal found that the evidence provided, including the loan agreement and security cheques, was sufficient to prove the default.

4. Role and appointment of the Interim Resolution Professional (IRP):
The Financial Creditor proposed the name of Mr. Manoj Sehgal as the Interim Resolution Professional (IRP), and the Tribunal found that he met all the requirements under Section 7(3)(b) of the Code. The IRP was directed to make a public announcement regarding the admission of the application and to perform his duties as per Sections 15, 17, 18, 19, 20, and 21 of the Code.

5. Declaration of moratorium:
The Tribunal declared a moratorium under Section 14 of the Code, imposing prohibitions on:
- The institution or continuation of suits or proceedings against the Corporate Debtor.
- Transferring, encumbering, or disposing of any assets of the Corporate Debtor.
- Actions to foreclose, recover, or enforce any security interest created by the Corporate Debtor.
- Recovery of any property by an owner or lessor.

The moratorium does not apply to transactions notified by the Central Government, and the supply of essential goods or services to the Corporate Debtor must not be terminated during the moratorium period.

6. Impleadment application by Punjab National Bank (PNB):
PNB filed an application for impleadment, stating that it is the Lead Bank of the PNB Consortium, which provided credit facilities of INR 272.27 crores to the Corporate Debtor. PNB supported the cause of the Financial Creditor and detailed the secured assets and the Corporate Debtor's failure to repay the dues.

Conclusion:
The Tribunal admitted the petition for initiating CIRP against Shreedhar Milk Foods Limited, appointed Mr. Manoj Sehgal as the IRP, declared a moratorium, and directed the IRP to make a public announcement and perform his duties as per the Code. The objections raised by the Corporate Debtor were found to be without merit, and the application by PNB for impleadment was acknowledged.

← Previous Next →