2019 (10) TMI 543 - Tri - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate Debtor defaulted in repayment of loan - Section 7 of the Insolvency and Bankruptcy Code, 2016 read with Rule 4 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 - HELD THAT - The default of debts is well established which meets the requirement of Section 3(11) and (12) of the I Code to trigger the CIRP in respect of the Corporate Debtor company. It is well established that there is default of debts which comes to ₹ 7,93,88,633/- Principle amount ₹ 6,55,00,000 Interest ₹ 1,38,79,633/- , which is in excess of ₹ 1,00,000/. Hence, the present application is found complete as per the provisions of the I B Code. Application admitted - moratorium declared.

Summary

Issues Involved:
1. Rectification of typographical errors in previous court proceedings.
2. Admission of the Insolvency Petition under Section 7 of the Insolvency and Bankruptcy Code, 2016.
3. Appointment of Interim Resolution Professional (IRP).
4. Order of Moratorium under Section 14 of the Insolvency and Bankruptcy Code, 2016.
5. Directions for Corporate Insolvency Resolution Process (CIRP).

Detailed Analysis:

1. Rectification of Typographical Errors:
The Tribunal identified typographical errors in the proceedings dated 26.06.2019. Specifically, the name of Mr. Haresh Babulal Shah was incorrectly noted as the Interim Resolution Professional (IRP). The correct name, Ms. Anjali Nirav Choksi, was proposed but not reflected in the records. The Tribunal rectified the error to read: “The petitioner has submitted the fresh consent letter of the new IRP namely Ms. Anjali Nirav Choksi having registration no. IBBI/IPA-001/IP-P00820/2017-2018/11382, as the name of the IRP whose willingness has been furnished in the application filed under section 7 of the IBC has withdrawn his consent.”

2. Admission of the Insolvency Petition:
The application was filed by a Financial Creditor under Section 7 of the Insolvency and Bankruptcy Code, 2016, to trigger the Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor. The petitioner advanced multiple credit facilities to the Corporate Debtor amounting to ?6,55,00,000/-, which the Corporate Debtor failed to repay. The Tribunal found the application complete and the default of debts well established, meeting the requirements of Section 3(11) and (12) of the Insolvency and Bankruptcy Code.

3. Appointment of Interim Resolution Professional (IRP):
Initially, Mr. Haresh Babulal Shah was proposed as the IRP but withdrew his consent. The petitioner then proposed Ms. Anjali Nirav Choksi, who provided her consent and confirmed no disciplinary proceedings were pending against her. The Tribunal appointed Ms. Anjali Nirav Choksi as the IRP, satisfying the requirement of Section 7 (3) (b) of the Insolvency and Bankruptcy Code.

4. Order of Moratorium:
The Tribunal ordered a Moratorium under Section 14 of the Insolvency and Bankruptcy Code, effective from 12.07.2019 until the completion of the CIRP or approval of the Resolution Plan or passing of a liquidation order. The Moratorium prohibits:
- Institution or continuation of suits or proceedings against the Corporate Debtor.
- Execution of any judgment, decree, or order against the Corporate Debtor.
- Transferring, encumbering, alienating, or disposing of any assets or legal rights of the Corporate Debtor.
- Actions to foreclose, recover, or enforce any security interest created by the Corporate Debtor.
- Recovery of any property by an owner or lessor where such property is occupied by the Corporate Debtor.

5. Directions for Corporate Insolvency Resolution Process (CIRP):
The Tribunal directed the IRP to:
- Make a public announcement of the CIRP.
- Perform functions as per Sections 17, 18, 20, and 21 of the Insolvency and Bankruptcy Code.
- Ensure all personnel connected with the Corporate Debtor extend cooperation under Section 19 of the Code.
- Protect and preserve the value of the Corporate Debtor’s property and manage its operations as a going concern.
- The Financial Creditor was directed to communicate the order to the IRP, Corporate Debtor, and Registrar of Companies, Gujarat.

The Registry was instructed to communicate the order to all relevant parties and the Corporate Insolvency Resolution Process commenced from the date of the order.