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2022 (6) TMI 363 - Tri - Insolvency and BankruptcyMaintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - Existence of debt and dispute or not - time limitation - HELD THAT - The contention of the Corporate Debtor that the Financial Creditor is not entitled to file this present application against the Corporate Debtor as the loan/corporate facilities were sanctioned by the Financial Creditor with the consortium of SBI which is only entitled to file the proceeding before this Adjudicating Authority. Further, the contention of the Corporate Debtor that the S.B.I has already taken the possession the properties of the Corporate Debtor more than the sanctioned amount by both the Banks (Financial Creditor and S.B.I) of Rs. 93.61 Crores. The aforesaid both the contentions of the Corporate Debtor is baseless though the S.B.I is a lead Bank under the consortium of sanctioned credit facilities but Financial Creditor has independently sanctioned the loan/credit facilities to the Corporate Debtor and is entitled to initiate the proceeding under Section 7(1) of the IBC, 2016 and it is an admitted fact that the claim amount is still pending to be paid by the Corporate Debtor. It is also not a disputed fact that the loan was disbursed to the Corporate Debtor by the Financial Creditor. Though, S.B.I. has taken possession of the properties of the Corporate Debtor under the SARFAESI Act, 2002 but if any proceeding initiated either by the Financial Creditor or by the lead Bank i.e., S.B.I. under SARFAESI Act, 2002 does not bar to initiate the proceeding under 7 of the IBC, 2016 - It is also noted that the present petition is duly supported by the affidavit of the authorized person of the Financial Creditor and all the requisite information for initiating the CIRP against the Corporate Debtor under Section 7 of IBC, 2016 has been disclosed by the Financial Creditor. Hence, the contention of the Corporate Debtor that the present petition is defective is not valid. It is observed that the credit facilities were sanctioned to the Corporate Debtor by the Financial Creditor and due to nonpayment of the outstanding amount, the accounts of the Corporate Debtor was classified as N.P.A. on 11.12.2019 and thereafter recall notice dated 17.06.2020 of Rs. 17,46,77,948/- was issued to the Corporate Debtor as well as guarantors of the Corporate Debtor but the Corporate Debtor failed to pay the outstanding amount/regularised the N.P.A. account. Moreover, the Financial Creditor has also issued the notice under 13(2) of the SARFAESI Act, 2002 for the payment of the aforesaid outstanding amount on 31.07.2020 but the Corporate Debtor failed to pay the outstanding amount within the stipulated time under the aforesaid notice. There is a debt and default has been committed by the Corporate Debtor - This application is otherwise complete and defect-free and meets the threshold limit as prescribed under Section 4 of the IBC, 2016. The present petition is well within the limitation as the present petition was filed on 09.03.2021 and the date of default is stated to be 09.12.2019. Application admitted - moratorium declared.
Issues Involved:
1. Default in payment of financial debt. 2. Validity of the Corporate Insolvency Resolution Process (CIRP) initiation. 3. Authorization of the Financial Creditor to file the petition. 4. Pending proceedings before the Debt Recovery Tribunal (DRT) and the Gujarat High Court. 5. Alleged defects in the petition and affidavit. 6. Classification of the account as Non-Performing Asset (NPA). 7. Appointment of the Interim Resolution Professional (IRP). 8. Implementation of the Moratorium under Section 14 of the IBC, 2016. Issue-wise Detailed Analysis: 1. Default in Payment of Financial Debt: The Financial Creditor, Axis Bank Limited, filed a petition under Section 7 of the Insolvency and Bankruptcy Code, 2016 (IBC, 2016) against the Corporate Debtor, M/s. Cengres Tiles Limited, for initiating the Corporate Insolvency Resolution Process (CIRP) due to a default in paying the financial debt of Rs. 19,07,49,223/-. The date of default is stated to be 11.12.2019. 2. Validity of the CIRP Initiation: The Financial Creditor sanctioned a loan of Rs. 20 Crores under a consortium with State Bank of India (SBI) on 10.03.2014, which was later enhanced to Rs. 25 Crores. Due to non-payment, the account was classified as NPA on 11.12.2019, and a recall notice was issued on 17.06.2020. Despite this, the Corporate Debtor failed to pay the outstanding amount, justifying the initiation of CIRP. 3. Authorization of the Financial Creditor to File the Petition: The Corporate Debtor contended that only SBI, as the lead bank of the consortium, was entitled to file the petition. However, the tribunal held that the Financial Creditor independently sanctioned the loan and was entitled to initiate proceedings under Section 7(1) of the IBC, 2016. 4. Pending Proceedings Before the DRT and the Gujarat High Court: The Corporate Debtor argued that an original application was pending before the DRT and a Special Civil Application was filed before the Gujarat High Court, seeking to quash the DRT proceedings. The tribunal noted that no stay or directions were issued by the High Court to halt the CIRP proceedings, thus allowing the petition to proceed. 5. Alleged Defects in the Petition and Affidavit: The Corporate Debtor claimed the petition was defective as the estimated value of securities was not disclosed, and the supporting affidavit was not in the prescribed form. The tribunal found the petition complete and defect-free, with all requisite information disclosed, dismissing the Corporate Debtor's contention. 6. Classification of the Account as NPA: The tribunal observed that the account was classified as NPA on 11.12.2019 due to non-payment, and a recall notice was issued. The Corporate Debtor failed to regularize the account or pay the outstanding amount, establishing the debt and default. 7. Appointment of the Interim Resolution Professional (IRP): The Financial Creditor proposed the name of Navin Kanjwani as the IRP, who had no pending disciplinary proceedings. The tribunal appointed him as the IRP under Section 13(1)(c) of the IBC, 2016. 8. Implementation of the Moratorium under Section 14 of the IBC, 2016: The tribunal ordered the commencement of the Moratorium, prohibiting the institution or continuation of suits or proceedings against the Corporate Debtor, including actions under the SARFAESI Act, 2002. The tribunal directed the IRP to make a public announcement of the CIRP and perform functions as per Sections 17, 18, 20, and 21 of the IBC, 2016. Conclusion: The tribunal admitted the Corporate Debtor into the CIRP under Section 7 of the IBC, 2016, appointed Navin Kanjwani as the IRP, and implemented the Moratorium. The petition was found to be complete, within the limitation period, and the Financial Creditor was authorized to initiate the proceedings. The tribunal dismissed the Corporate Debtor's contentions and allowed the petition, effective from the date of the order.
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