2018 (10) TMI 231 - Tri - Insolvency and Bankruptcy

Corporate Insolvency Resolution Process - default in repayment of the outstanding loan amount - Held that - The applicant financial creditor has placed on record voluminous and overwhelming evidence in support of the claim as well as to prove the default. The material on record clearly goes to show that respondent had availed the loan facilities and has committed default in repayment of the outstanding loan amount. Moreover it is seen that 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. Thus in terms of Section 7(5)(a) of the Code the present application is admitted.

Summary

Issues Involved:
1. Jurisdiction of the Tribunal
2. Authorization of the applicant's representative
3. Appointment of Interim Resolution Professional (IRP)
4. Existence of financial debt and default
5. Admissibility of the application under Section 7 of the Insolvency and Bankruptcy Code, 2016
6. Declaration of moratorium

Detailed Analysis:

1. Jurisdiction of the Tribunal:
The respondent company, M/s. Interlink Petroleum Limited, has its registered office in New Delhi. Therefore, the Tribunal, having territorial jurisdiction over the NCT of Delhi, is the Adjudicating Authority for the initiation of Corporate Insolvency Resolution Process (CIRP) under Section 60(1) of the Insolvency and Bankruptcy Code, 2016.

2. Authorization of the Applicant's Representative:
The applicant, Loyz Oil PTE Limited, a company incorporated in Singapore, authorized Mr. Pang Kee Chai through a Board Resolution dated 26.03.2018 to file the application for initiation of CIRP on its behalf. The authorization was deemed valid and sufficient for the proceedings.

3. Appointment of Interim Resolution Professional (IRP):
The applicant proposed Shri Atul Mittal as the Interim Resolution Professional (IRP), who consented to the appointment and declared that no disciplinary proceedings were pending against him. The Tribunal found that he satisfied the requirements under Section 7(3)(b) of the Code.

4. Existence of Financial Debt and Default:
The applicant extended loans totalling USD 1,02,50,000 to the respondent as 'External Commercial Borrowings' (ECB) with necessary approvals from the Reserve Bank of India. The respondent admitted receiving the loan amounts but failed to repay, leading to a default. The applicant provided evidence, including loan agreements and audited financial statements, confirming the disbursement and default.

5. Admissibility of the Application under Section 7 of the Insolvency and Bankruptcy Code, 2016:
The Tribunal examined whether the application met the criteria under Section 7:
- Default: The respondent defaulted on repaying the loan amount.
- Completeness of Application: The application was complete with all necessary documents.
- Disciplinary Proceedings: No disciplinary proceedings were pending against the proposed IRP.

The Tribunal referred to the Supreme Court's judgment in Mobilox Innovations (P.) Ltd. v. Kirusa Software Private Limited, which emphasized that the adjudicating authority must admit the application if satisfied with the existence of default, completeness of the application, and absence of disciplinary proceedings against the IRP.

6. Declaration of Moratorium:
Upon admitting the application, the Tribunal declared a moratorium under Section 14 of the Code, imposing prohibitions on:
- 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 or enforce any security interest created by the corporate debtor.
- Recovery of any property by an owner or lessor occupied by the corporate debtor.

The moratorium does not apply to transactions notified by the Central Government or the supply of essential goods and services to the corporate debtor. Additionally, it does not apply to sureties in a contract of guarantee to the corporate debtor.

Conclusion:
The Tribunal admitted the application under Section 7 of the Insolvency and Bankruptcy Code, 2016, appointed Shri Atul Mittal as the Interim Resolution Professional, and declared a moratorium. The Tribunal directed the IRP to make a public announcement and perform his duties in accordance with the Code, Rules, and Regulations. The office was instructed to communicate the order to the Financial Creditor, the Corporate Debtor, and the IRP within seven days.