2018 (11) TMI 609 - Tri - Insolvency and Bankruptcy

Corporate Insolvency Resolution Process - Respondent corporate debtor failed to clear the outstanding dues - 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. It is pertinent to mention here that the Code requires the adjudicating authority to only ascertain and record satisfaction in a summary adjudication as to the occurrence of default before admitting the application. 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. As a sequel to the aforesaid discussion it is seen that the applicant bank clearly comes within the definition of Financial Creditor. The material placed on record further confirms that applicant financial creditor had disbursed various loan facilities to the respondent corporate debtor and the respondent has availed the loan and committed default in repayment of the outstanding financial debt. On a bare perusal of Form -I filed under Section 7 of the Code read with Rule 4 of the Rules shows that the form is complete and there is no infirmity in the same. It is also seen that there is no disciplinary proceeding pending against the proposed IRP. We are satisfied that the present application is complete in all respect and the applicant financial creditor is entitled to claim its outstanding financial debt from the corporate debtor and that there has been default in payment of the financial debt. Thus in terms of Section 7(5)(a) of the Code, the present application is admitted.

Issues Involved:
1. Jurisdiction of the Tribunal
2. Authorization to File the Application
3. Appointment of Interim Resolution Professional (IRP)
4. Validity of Loan Agreements and Documentation
5. Existence of Financial Debt and Default
6. Objections by Respondent
7. Pendency of Other Proceedings
8. Admissibility of the Application and Declaration of Moratorium

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, Pearl Vision Private Limited, is located in Delhi. This is in accordance with sub-section (1) of Section 60 of the Insolvency and Bankruptcy Code, 2016.

2. Authorization to File the Application:
The applicant, Indian Overseas Bank, filed the application through Mr. M. Ravindran Menon, Asstt. General Manager, who was duly authorized by a letter of authority dated 02.06.2018. The Tribunal referenced the NCLAT ruling in Palogix Infrastructure (P.) Ltd. v. ICICI Bank Ltd., which established that officers authorized to grant loans also have the power to initiate insolvency proceedings.

3. Appointment of Interim Resolution Professional (IRP):
Initially, Mr. Hemant Sharma was proposed as IRP, but due to objections, the applicant proposed Mr. Anil Kumar, who satisfied the requirements of Section 7(3)(b) of the Code. Mr. Kumar agreed to the appointment and made necessary disclosures as per IBBI Regulations.

4. Validity of Loan Agreements and Documentation:
The applicant bank provided extensive documentation to support the loan agreements, including sanction letters, term loan agreements, guarantee agreements, and hypothecation documents. The Tribunal noted that these documents were duly executed and binding.

5. Existence of Financial Debt and Default:
The applicant bank claimed that the respondent defaulted on loans amounting to ?188,08,68,115.93 as of 31.03.2018. The Tribunal found sufficient evidence, including certified statements of accounts and various loan documents, to establish the existence of financial debt and default.

6. Objections by Respondent:
The respondent raised several objections, including the lack of consortium approval, unauthorized filing of the application, and disputes over the quantum of debt. The Tribunal dismissed these objections, citing that a financial creditor can file an application individually under Section 7 of the Code and that disputes over the quantum of debt do not preclude the initiation of insolvency proceedings.

7. Pendency of Other Proceedings:
The Tribunal clarified that the pendency of proceedings under the SARFAESI Act and the Recovery of Debts Due to Banks and Financial Institutions Act does not bar the initiation of Corporate Insolvency Resolution Process under Section 7 of the Code.

8. Admissibility of the Application and Declaration of Moratorium:
The Tribunal found the application complete and observed no disciplinary proceedings against the proposed IRP. Consequently, the application was admitted, and a moratorium was declared under Section 14 of the Code, prohibiting suits, asset transfers, foreclosure actions, and recovery of property by owners or lessors.

Conclusion:
The Tribunal admitted the application for Corporate Insolvency Resolution Process against the respondent corporate debtor and appointed Mr. Anil Kumar as the Interim Resolution Professional. A moratorium was declared, and public announcement instructions were issued as per the Code. The Tribunal emphasized the need for cooperation from all personnel associated with the corporate debtor and the duty of the IRP to protect and preserve the value of the debtor's property.

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