2018 (11) TMI 110 - Tri - Insolvency and Bankruptcy

Initiation of corporate insolvency resolution process by financial creditor - Held that - Financial Creditor has succeeded to make out a case for triggering the Corporate Insolvency Resolution Process. To succeed a Financial Creditor must satisfy the requirements of Section 7 (2) and Section 7 (5) of the Code and the Adjudicating Authority-NCLT has to record a finding to that effect. It would be imperative to examine the provisions of Section 7 (2) and Section 7 (5) of IBC. A conjoint reading of the aforesaid provision would show that 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 the Code. We are satisfied that a default amounting to lacs of rupees has occurred within the meaning of Section 4 of the Code and the application under sub-section 2 of Section 7 is complete; and no disciplinary proceedings are pending against the proposed Interim Resolution Professional. Thus, the application warrant admission. Thus the petition is complete from all angles. This petition is admitted and Mr. Manoj Kulshrestha, F4-CC-14, Ansal Plaza, (Opp. Dabur), Vaishali, Ghaziabad, Registration No. IBBI/IPA-033/IP-N0005/2016-17/10024 is appointed as an Interim Resolution Professional. In pursuance of Section 13 (2) of the Code, we direct that Interim Insolvency Resolution Professional to make public announcement immediately with regard to admission of this application under Section 7 of the Code. The expression immediately means within three days as clarified by Explanation to Regulation 6 (1) of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016. We also declare moratorium in terms of Section 14 of the Code.

Issues Involved:
1. Initiation of Corporate Insolvency Resolution Process (CIRP)
2. Compliance with Section 7 of the Insolvency and Bankruptcy Code, 2016
3. Financial Creditor's claim and evidence of default
4. Corporate Debtor's opposition and arguments against the petition
5. Appointment of Interim Resolution Professional (IRP)
6. Declaration of Moratorium

Detailed Analysis:

1. Initiation of Corporate Insolvency Resolution Process (CIRP):
Reliance Commercial Finance Limited petitioned for the initiation of CIRP against Noble Resourcing Business and Solutions Private Limited under Section 7 of the Insolvency and Bankruptcy Code, 2016. The petitioner, as a 'Financial Creditor', claimed entitlement to realize the default amount from the 'Corporate Debtor' due to the transfer of debt from Reliance Capital Finance Limited, sanctioned by the Bombay High Court.

2. Compliance with Section 7 of the Insolvency and Bankruptcy Code, 2016:
The Tribunal examined the requirements of Section 7 (2) and Section 7 (5) of the Code. The petition was filed in the prescribed form and manner, accompanied by the necessary fee. The Tribunal confirmed that the application was complete, and no disciplinary proceedings were pending against the proposed Interim Resolution Professional (IRP).

3. Financial Creditor's Claim and Evidence of Default:
The Financial Creditor provided evidence of the loan disbursal and the Corporate Debtor's failure to repay the EMIs as per the repayment schedule. The loan agreement, demand promissory note, and other relevant documents were submitted. The Financial Creditor claimed a default amount of ?64,90,927 as of 10.07.2017, supported by a CIBIL report.

4. Corporate Debtor's Opposition and Arguments Against the Petition:
The Corporate Debtor opposed the petition, arguing that the Financial Creditor had made errors in disbursing the loan amount, which led to non-delivery of one of the machines and subsequent business losses. They contended that the Financial Creditor overpaid one supplier and underpaid another, causing disruptions in their operations. Despite these issues, the Corporate Debtor continued to make EMI payments. They also argued that the Financial Creditor did not restructure the loan despite repeated requests.

5. Appointment of Interim Resolution Professional (IRP):
The Tribunal appointed Mr. Manoj Kulshrestha as the IRP, confirming that he met 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 & 21 of the Code.

6. Declaration of Moratorium:
A moratorium was declared in terms of Section 14 of the Code, prohibiting the institution or continuation of suits or proceedings against the Corporate Debtor, transferring or disposing of assets, foreclosing or enforcing security interests, and recovering property occupied by the Corporate Debtor. The moratorium would not apply to transactions notified by the Central Government or sureties in a contract of guarantor to the Corporate Debtor. Essential goods or services to the Corporate Debtor were to continue without interruption.

Conclusion:
The Tribunal admitted the petition for CIRP, finding that the Financial Creditor had successfully demonstrated a default and complied with the necessary legal requirements. The Corporate Debtor's arguments were rejected, as the evidence of default was clear, and no settlement was reached despite ample time. The Tribunal directed the office to communicate the order to relevant parties and update the status of the Corporate Debtor on the Registrar of Companies' website.

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