2020 (10) TMI 593 - Tri - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence of debt and dispute or not - HELD THAT - The mention of incorrect address in the Form, payment of fees by Oriental Bank of Commerce instead of Dena Bank does not have any bearing on the merits of the Petition. Any how the Corporate Debtor is before us now through a counsel and mention of old address in the Form 1 is a rectifiable defect. Since the Petition is signed by the Petitioner Bank s officer, the contention that the person who signed the Petition does not have sufficient authority does not hold water. The statement of account produced by the Petitioner clearly shows that the interest due as on 31/01/2016 was paid only on 16/07/2016. The principal due of 31/03/2016 was paid on 23/08/2016. Even assuming, without accepting the contention of the Corporate Debtor, that the date of default of interest was on 03/03/2016, the payment having been made much later i.e. on 16/07/2016, the commission of default is clear - it cannot be accepted that the Corporate Debtor that there was no default. The default committed by the Corporate Debtor thus squarely falls within the definition of default as provided under Section 3(12) of the Code. There is debt as claimed in the Petition and the Corporate Debtor defaulted in making the payment. Hence petition deserves admission - Petition admitted - moratorium declared.

Issues Involved:
1. Default in payment of financial debt.
2. Incorrect details in Form-1.
3. Authority to initiate CIRP.
4. Force majeure and NPA declaration.
5. Calculation and claim of defaulted amount.

Issue-Wise Detailed Analysis:

1. Default in payment of financial debt:
The Petitioner, Bank of Baroda, filed the petition under Section 7 of the Insolvency and Bankruptcy Code, 2016, alleging a default in payment of a financial debt amounting to ?50,90,50,092 by the Corporate Debtor. The term loan of ?45 Crores was sanctioned on 13/12/2010, and the Corporate Debtor availed ?34,90,53,689. The Petitioner produced the statement of accounts showing defaults in interest payment on 31/01/2016 and principal instalment on 31/03/2016. The Tribunal found that the Corporate Debtor defaulted as per Section 3(12) of the Code, with payments made much later than the due dates, confirming the occurrence of default.

2. Incorrect details in Form-1:
The Corporate Debtor contended that the registered office address and the name of the Petitioner were incorrectly stated in Form-1. The Tribunal held that these were rectifiable defects and did not affect the merits of the petition. The Petitioner's amendment to rectify the defects was allowed by an earlier order, and the objection regarding the name of the bank did not survive.

3. Authority to initiate CIRP:
The Corporate Debtor argued that the person initiating the CIRP lacked sufficient authority. The Tribunal referred to the judgment in Palogix Infrastructure Pvt. Ltd. Vs. ICICI Bank Ltd., stating that an authorized officer of the bank has the power to initiate CIRP. The Tribunal found that the petition was signed by the Petitioner's officer, and thus, the contention lacked merit.

4. Force majeure and NPA declaration:
The Corporate Debtor claimed that the suspension of toll collection during the "Simhastha Parv" in 2016, a force majeure event, impacted its earnings and led to the default. The Tribunal held that the force majeure argument did not stand in a Section 7 petition. The Tribunal found that the Corporate Debtor's account was correctly declared as NPA due to the clear default in payments.

5. Calculation and claim of defaulted amount:
The Corporate Debtor contended that the amount claimed in the petition was incorrect, arguing that only the defaulted interest and principal should be claimed, not the entire amount. The Tribunal referred to the acceleration clause in the Common Loan Agreement, which allows the lender to claim the entire amount upon default. The Tribunal also cited the judgment in Innoventive Industries Ltd. Vs. ICICI Bank and Anr., stating that the Code gets triggered upon default of ?1 lakh or more, and the entire debt becomes due and payable.

Conclusion:
The Tribunal found that the petition was complete under Section 7(2) of the Code, with the financial debt due and payable, and the default proved. The petition was admitted, and the Corporate Insolvency Resolution Process (CIRP) was initiated against the Corporate Debtor. Mr. Anuj Bajpai was appointed as the Interim Resolution Professional (IRP), and a moratorium was declared under Section 14 of the Code. The Tribunal directed the Directors, Promoters, and other associated persons to cooperate with the IRP, and the Registry was instructed to communicate the order to all relevant parties.

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