2019 (7) TMI 1356 - Tri - Insolvency and Bankruptcy

Admissibility of petition - Initiation of Corporate Insolvency Resolution process - Corporate Debtor - failure in repayment of loan - It is alleged by the Petitioner/Financial Creditor that the Corporate Debtor company was not regular in making repayment of its debts as per the terms and conditions of the loan agreement - Section 7 of the Insolvency and Bankruptcy Code, 2016 - HELD THAT - It is evident that the Corporate Debtor company has committed default in making repayment of its outstanding debts, which meets the requirement of Section 3(11) and (12) of the I B Code to trigger the CIRP in respect of the Corporate Debtor company - filing of present petition is found to be in order and, thus, it is evident that there is Debt, which has been defaulted by the Corporate Debtor. Hence, the present IB Petition can be considered for its admission. Application admitted - moratorium declared.

Summary

Issues Involved:
1. Non-payment of debt by the Corporate Debtor.
2. Classification of accounts as Non-Performing Assets (NPA).
3. Initiation of Corporate Insolvency Resolution Process (CIRP).
4. Appointment of Interim Resolution Professional (IRP).
5. Declaration of Moratorium.
6. Duties and obligations of the IRP and Corporate Debtor.

Detailed Analysis:

1. Non-payment of Debt by the Corporate Debtor:
The Financial Creditor, Bank of Baroda, filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016 (I&B Code) to initiate Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor, M/s. New Gujarat Polyplast Pvt. Ltd. The application provided requisite details of the loan granted, including a facility of ?4525 Lakhs, with specific dates of disbursement and outstanding amounts. The total amount claimed to be in default as of 19.04.2018 was ?63,00,20,965.41. The date of default was identified as 31.03.2016, when the Corporate Debtor failed to pay the interest/instalment due.

2. Classification of Accounts as Non-Performing Assets (NPA):
The Corporate Debtor's accounts were classified as Non-Performing Assets (NPA) on 31.03.2016, as per the norms and guidelines issued by the Reserve Bank of India (RBI). Despite repeated requests and reminders, the Corporate Debtor failed to make the necessary payments, leading to the classification of the accounts as NPA.

3. Initiation of Corporate Insolvency Resolution Process (CIRP):
The Tribunal reviewed the application and supporting documents, confirming that the application met the requirements of Section 7 of the I&B Code. The Tribunal referred to the Supreme Court's decision in Innoventive Industries Ltd. v. ICICI Bank Ltd., which clarified the process and conditions for initiating CIRP. The Tribunal found that the Corporate Debtor had defaulted on a debt of ?63,00,20,965.41, justifying the initiation of CIRP.

4. Appointment of Interim Resolution Professional (IRP):
The Financial Creditor proposed Mr. Ketulbhai Ramubhai Patel as the Interim Resolution Professional (IRP). The Tribunal confirmed that the proposed IRP met the requirements of Section 7(3)(b) of the I&B Code and had no disciplinary proceedings pending against him. The IRP was tasked with managing the CIRP and ensuring compliance with relevant sections of the Code.

5. Declaration of Moratorium:
The Tribunal declared a Moratorium under Section 14 of the I&B Code, effective from 17.05.2019 until the completion of the CIRP or approval of a Resolution Plan. The Moratorium prohibits the institution or continuation of suits or proceedings against the Corporate Debtor, the transfer of assets, and the recovery of property by owners or lessors.

6. Duties and Obligations of the IRP and Corporate Debtor:
The IRP was directed to make a public announcement of the CIRP and call for submissions of claims. The IRP is responsible for protecting and preserving the value of the Corporate Debtor's property and managing its operations as a going concern. The Corporate Debtor and its personnel are legally obligated to assist and cooperate with the IRP. Failure to do so would allow the IRP to seek appropriate orders from the Tribunal.

Conclusion:
The Tribunal admitted the application for initiating CIRP against the Corporate Debtor, appointed Mr. Ketulbhai Ramubhai Patel as the IRP, and declared a Moratorium. The Tribunal directed the Financial Creditor to communicate the order to relevant parties and emphasized the duties and obligations of the IRP and Corporate Debtor during the CIRP. The CP (IB) No. 188/7/NCLT/AHM/2018 was admitted with no order as to costs.