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2019 (6) TMI 368 - Tri - Insolvency and BankruptcyInitiation of Corporate Insolvency Resolution Process against Corporate Debtor - default in making the payment despite issuance of the demand notice under Section 13(2) of the SARFAESI Act, 2002 - HELD THAT - On occurrence of the default, the financial creditor has to move an application in the prescribed form which has been done in this case in Form 1 as prescribed in Rule 4(1) of the Rules. The petitioner has thus, been able to satisfy the requirement of Sub-section (1) and (2) of Section 7 of the Code. In the instant case, the petitioner-financial creditor adduced abundant evidence to show the default which has been committed by the respondent-corporate debtor and the same has not been disputed. The respondent-corporate debtor is also stated to have executed the balance confirmation letter dated 13.02.2015 whereunder the loan facilities were renewed - The evidence of default is also borne out from the CIBIL record relied upon by the petitioner bank as Annexure A/31 dated 21.06.2018. As per clause (b) of Section 7(3) of the Code, the financial creditor is bound to propose the name of the Resolution Professional to be appointed as Interim Resolution Professional - In Part III of the application Form No.1, the petitioner has proposed the name of Mr. Rajender Kumar Jain a registered Resolution Professional proposed to be appointed as Interim Resolution Professional. The written communication in Form 2 furnished by Mr. Rajender Kumar Jain is at Annexure A/5 dated 14.06.2018 furnishing the required particulars. He is not serving as a Resolution Professional in any proceedings under the Code so far. It is further certified that there are no disciplinary proceedings pending against Mr. Jain with the Board or Indian Institute of Insolvency Professional of ICAI. We have perused Form No.2, the written communication furnished by the Resolution Professional which is found to be in order. The certificate of registration issued by the IBBI is at Page 53 of the paper book. The petition is admitted and the moratorium declared.
Issues Involved:
1. Jurisdiction and Authorization 2. Loan and Default Details 3. Evidence of Default 4. Appointment of Interim Resolution Professional 5. Declaration of Moratorium Issue-wise Detailed Analysis: 1. Jurisdiction and Authorization: The petition was filed by Punjab National Bank, a financial creditor, under Section 7 of the Insolvency and Bankruptcy Code, 2016, for initiating the Insolvency Resolution Process against the corporate debtor. The petition was filed through Mr. Vishal Kumar Prasad, Chief Manager, authorized by the competent authority. The respondent company, incorporated on 15.02.2007, has its registered office in Ludhiana, falling within the territorial jurisdiction of the Tribunal. 2. Loan and Default Details: The respondent was initially granted a loan on 02.08.2010, amounting to ?44.50 crores, which was later enhanced to ?136.34 crores by March 2015. The respondent executed various documents of loan, including agreements and mortgage deeds, and created equitable mortgages of various properties. The account was classified as NPA on 31.03.2016 due to non-payment of interest and installments, and a notice under Section 13(2) of the SARFAESI Act, 2002, was issued, claiming a default amount of ?113,79,89,477.06 as on 31.03.2016. 3. Evidence of Default: The financial creditor provided abundant evidence of default, including balance confirmation letters, CIBIL records, and statements of account maintained under the Banker’s Book Evidence Act, 1891. The respondent did not deny the execution of loan documents or default in payment. The evidence of default was also corroborated by the CIBIL record dated 21.06.2018 and the statements of account with attached certificates. 4. Appointment of Interim Resolution Professional: The petitioner proposed Mr. Rajender Kumar Jain as the Interim Resolution Professional (IRP), who furnished the required particulars and confirmed no pending disciplinary proceedings. The Tribunal found the written communication in Form 2 to be in order and appointed Mr. Jain as the IRP, directing him to take control and custody of the corporate debtor's assets and manage its affairs. 5. Declaration of Moratorium: The Tribunal declared a moratorium under Section 14 of the Code, prohibiting the institution or continuation of suits, transferring or disposing of assets, and recovering properties by owners or lessors. The supply of essential goods or services to the corporate debtor was directed to continue uninterrupted during the moratorium period. The moratorium will remain effective until the completion of the corporate insolvency resolution process or further orders. Final Directions: The Tribunal issued several directions, including the appointment of Mr. Rajender Kumar Jain as IRP, suspension of the Board of Directors' powers, and cooperation from the corporate debtor's management. The IRP was directed to make a public announcement, constitute a committee of creditors, and submit regular progress reports to the Tribunal. The petition was admitted, and the moratorium was declared, with the order communicated to both parties and the IRP.
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