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2019 (7) TMI 283 - Tri - Insolvency and BankruptcyInitiation of Corporate Insolvency Resolution Process - Corporate Debtor - financial creditor - Section 7 of the Insolvency and Bankruptcy Code, 2016 - default of debt - HELD THAT - 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 letters dated 21.08.2017 are at Annexure I/31 (colly). There is no denial of the balance confirmation letters in the reply. The balance outstanding amount as on 08.10.2018 has also been stated in the tabulated information in the synopsis of the case - No discrepancy in the calculation has been pointed out but in any event if there is any such discrepancy it is for the Interim Resolution Professional or Resolution Professional as the case may be to look into the same after the insolvency resolution process is initiated. There is a presumption of correctness attached to the entries in the books of accounts. The petitioner bank has thus, shown that the corporate debtor was in default in making payment of the outstanding balance at the time, the petition was filed. The petitioner bank has been able to prove the requirement of clause (a) of Subsection (3) of Section 7 of the Code - 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. Petition admitted - moratorium declared in terms of sub-section (1) of Section 14 of the code.
Issues Involved:
1. Initiation of Insolvency Resolution Process. 2. Default in loan repayment and classification as Non-Performing Asset (NPA). 3. Evidence of default and compliance with Section 7 of the Insolvency and Bankruptcy Code, 2016. 4. Appointment of Interim Resolution Professional (IRP). 5. Declaration of moratorium. Detailed Analysis: 1. Initiation of Insolvency Resolution Process: Punjab National Bank (PNB) filed a petition under Section 7 of the Insolvency and Bankruptcy Code, 2016, to initiate the Insolvency Resolution Process against Vallabh Textiles Company Limited (Corporate Debtor). The petition was filed by Mr. Vishal Kumar Prasad, authorized by PNB's competent authority, with necessary documents such as the authority letter dated 04.10.2018 and Power of Attorney dated 06.02.2017. 2. Default in Loan Repayment and Classification as Non-Performing Asset (NPA): The corporate debtor was granted various credit facilities by PNB, with the last sanction on 22.02.2017, totaling ?179.83 crores. The corporate debtor defaulted on repayment, leading to the account being classified as NPA on 31.03.2018. PNB issued a notice under Section 13(2) of the SARFAESI Act, 2002, demanding the outstanding amount of ?157,52,69,715/- inclusive of interest and other charges up to 31.03.2018. 3. Evidence of Default and Compliance with Section 7 of the Insolvency and Bankruptcy Code, 2016: The Tribunal noted that the corporate debtor admitted to the sanctioned credit limit and the classification of the account as NPA. The corporate debtor's reply acknowledged the outstanding amount but contested the inclusion of interest and claimed a payment of ?4.99 crores not accounted for by PNB. The Tribunal found that PNB had satisfied the requirements of Sub-section (1) and (2) of Section 7 of the Code by providing abundant evidence of default, including balance confirmation letters and CIBIL records. 4. Appointment of Interim Resolution Professional (IRP): PNB proposed Mr. Sumat Kumar Gupta as the Interim Resolution Professional (IRP), whose credentials were found to be in order. The Tribunal appointed Mr. Gupta as the IRP, directing him to perform duties as per Section 18 and other relevant provisions of the Code, including taking control and custody of the corporate debtor's assets. 5. Declaration of Moratorium: The Tribunal declared a moratorium under Section 14 of the Code, prohibiting: (a) Institution or continuation of suits or proceedings against the corporate debtor. (b) Transferring, encumbering, or disposing of any assets or legal rights by the corporate debtor. (c) Actions to foreclose, recover, or enforce any security interest. (d) Recovery of any property by an owner or lessor. The moratorium will remain effective until the completion of the Corporate Insolvency Resolution Process (CIRP) or approval of the resolution plan or liquidation order. Conclusion: The petition was admitted, and the Tribunal issued directions for the IRP's appointment and responsibilities, emphasizing the need for cooperation from the corporate debtor's management. The Tribunal also mandated regular progress reports from the IRP to ensure proper management and resolution of the corporate debtor's insolvency.
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