2019 (4) TMI 920 - Tri - Insolvency and Bankruptcy

Initiation of Corporate Insolvency Resolution Process - statutory form No. 6 as prescribed by sub-rule (1) of Rule 7 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 - HELD THAT - On perusal of the petition goes to show that it is complete in all respect. Further, admittedly, M/S. UIC Corporation Private Limited is liable to pay financial debt to its financial creditors including State Bank of India and Union Bank of India. No other objection has been raised by the financial creditors. The material on record clearly establish the financial debt is due from the corporate debtor to financial creditor and occurrence of debt by the corporate debtor in payment of financial debt. Under Section 10 of the Code the Adjudicating Authority is not empowered to go beyond the record as prescribed under section 10 and the information is required to be submitted in form 6 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 subject to ineligibility prescribed under Section Il and if all the information is provided by the corporate debtor as also the mandatory requirements under Section 10 and form No. 6 are complete then it is to be admitted if otherwise not ineligible under Section Il. Admittedly, M/S. UIC Corporation Private Limited is liable to pay financial debts to its Financial Creditors including the Union Bank of India. No other objection has been raised by the Financial Creditors or by any other person. The materials on record clearly establish that financial debt is due from the Corporate Debtor to the Financial Creditors and there is occurrence of debt by the Corporate Debtor in repayment of financial debt - this Adjudicating Authority is of the considered view that this is a fit case to be admitted for triggering Corporate Insolvency Resolution Process and accordingly this petition is admitted under Section IO(4)(a) of the Code. The Interim Insolvency Resolution Professional is hereby directed to cause a public announcement of the initiation of 'Corporate Insolvency Resolution Process' and call for submission of claims under Section 13(I)(b) read with Section 15 of the Code and Regulation 6 of Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 - application disposed off.

Summary

Issues Involved:
1. Filing of the Petition under Section 10 of the Insolvency and Bankruptcy Code, 2016.
2. Authorization and submission of the petition.
3. Financial and operational creditors.
4. Statutory and contingent liabilities.
5. Response from financial creditors.
6. Existence and proof of default.
7. Judicial precedents and legal principles.
8. Admission of the petition and appointment of Interim Insolvency Resolution Professional (IRP).
9. Moratorium under Section 13(1)(a) of the Code.

Issue-wise Detailed Analysis:

1. Filing of the Petition under Section 10 of the Insolvency and Bankruptcy Code, 2016:
UIC Corporation Private Limited, through its Authorized Representative, filed a petition under Section 10 of the Insolvency and Bankruptcy Code, 2016 for initiating the Corporate Insolvency Resolution Process (CIRP). The petition was submitted in statutory form No. 6 as per the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016.

2. Authorization and Submission of the Petition:
The Board of Directors of UIC Corporation Private Limited authorized Mr. Bhushan Chandrakant Vayeda to file the petition. The authorization was resolved in a meeting held on 23rd January 2018. The petition was subsequently filed before the Tribunal by the authorized representative.

3. Financial and Operational Creditors:
The company provided the names and addresses of financial creditors, unsecured financial creditors, and operational creditors. The list included major financial creditors such as Union Bank of India and State Bank of India. The company also disclosed its financial liabilities, including statutory and contingent liabilities.

4. Statutory and Contingent Liabilities:
The corporate debtor disclosed statutory liabilities and contingent liabilities, including a notice issued under Section 13(2) of the SARFAESI Act, 2002 by the Department of Value Added Tax, Dadra & Nagar Haveli.

5. Response from Financial Creditors:
Union Bank of India and State Bank of India responded to the notices issued by the Tribunal. Union Bank of India declared the corporate debtor's account as a Non-Performing Asset (NPA) and reported fraud to the RBI, which led to a complaint being filed before the CBI. State Bank of India claimed that the corporate debtor had not approached the Tribunal with clean hands and had been non-operative since 2014.

6. Existence and Proof of Default:
The petitioner provided ledger accounts and financial statements to evidence the default. The Tribunal found the petition complete and confirmed the existence of financial debt and default. The material on record established that the corporate debtor owed financial debts to its creditors, including Union Bank of India and State Bank of India.

7. Judicial Precedents and Legal Principles:
The Tribunal referred to the judgment passed by NCLAT in the case of M/S. Unigreen Global Private Limited Vs Punjab National Bank & Others. It was held that the adjudicating authority must admit the application if it is complete and the corporate applicant is not ineligible under Section 11. The pendency of proceedings under SARFAESI Act or DRT Act cannot be a ground to reject the application under Section 10.

8. Admission of the Petition and Appointment of Interim Insolvency Resolution Professional (IRP):
The Tribunal admitted the petition under Section 10(4)(a) of the Code and appointed Mr. Kiran C. Shah as the Interim Insolvency Resolution Professional (IRP). The IRP was directed to make a public announcement and call for the submission of claims.

9. Moratorium under Section 13(1)(a) of the Code:
The Tribunal ordered a moratorium prohibiting the institution or continuation of suits or proceedings against the corporate debtor, transferring or disposing of assets, and actions to foreclose or recover security interests. The moratorium also ensured the uninterrupted supply of essential goods or services to the corporate debtor during the moratorium period. The order of moratorium came into force from the date of receipt of the authenticated copy of the order until the completion of the CIRP.

Conclusion:
The Tribunal admitted the petition for initiating the Corporate Insolvency Resolution Process and appointed an Interim Insolvency Resolution Professional. A moratorium was ordered to protect the assets and interests of the corporate debtor during the insolvency process. The application was found to be complete, and the Tribunal followed the legal principles and judicial precedents in its decision.