9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2022 (7) TMI 1034 - 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 - Whether the Corporate Applicant is able to prove that it is unable pay the Debt claimed in the Application, hence the present Application is filed for initiation of Corporate Insolvency Resolution Process against it? - HELD THAT - This Application is filed by the Corporate Applicant namely M/s. Enaar Steel and Alloy Private Limited under Section 10 of the IBC, 2016 for initiation of Corporate Insolvency Resolution Process, as the Corporate Applicant is not in the position to meet its obligations and has further committed default in meeting its obligations. The Corporate Applicant has filed along with its application its financial statements for the year ending on 31st March, 2020 which is showing loss, and has long term borrowings to the tune of Rs. 1,05,61,504 and other liabilities including short term provisions to the tune of Rs. 2,04,82,836. The Financial Statements further reflects that the asset base of the Corporate Applicant is so low as on 31.03.2020. The current assets show only Rs. 30,508.85 and non-current assets show Rs. 6,31,597. The Corporate Applicant has also enclosed along with its application the notice of Extra Ordinary General Meeting of the Company dated 10.10.2021 for approval of filing application under Section 10 of the IBC, 2016 which was held on 01.11.2021 and 05.11.2021, wherein the resolution was approved in the Extra Ordinary General Meeting authorising Mr. Devesh Kumar Agarwal/Mr. Jitesh Kumar Agarwal, Directors of the Company, to make, file an application before Adjudicating Authority for initiation of Corporate Insolvency Resolution Process and further proposed to appoint Mr. Pavan Kankani, Insolvency Professional to act as Interim Resolution Professional at a remuneration of 1,50,000/- per month plus applicable taxes and reimbursements. One of the important Operational Creditors of Corporate Applicant, the Southern Power Distribution Company of Telangana Limited (TSSPDCL) have also filed their Affidavit conveying their No objection for initiation of Corporate Insolvency Resolution Process as pleaded - On going through the Resolutions passed by Corporate Applicant and latest Financial Statements filed by Corporate Applicant, it is clear that the poor financial health of the Corporate Applicant. Application admitted - moratorium declared.
Issues Involved:
1. Whether the Corporate Applicant is able to prove that it is unable to pay the debt claimed in the application and thus justify the initiation of Corporate Insolvency Resolution Process (CIRP). Detailed Analysis: Issue 1: Inability to Pay Debt and Justification for CIRP Initiation 1. Corporate Applicant's Contentions: - The Corporate Applicant, M/s. Enaar Steel and Alloy Private Limited, filed the application under Section 10 of the Insolvency and Bankruptcy Code (IBC), 2016, citing default in payment of Rs. 15,25,46,280/- to Southern Power Distribution Company of Telangana Limited (Operational Creditor). - The Corporate Applicant is a private limited company engaged in manufacturing and processing activities with an authorized share capital of Rs. 50,00,000/- and paid-up capital of Rs. 38,10,500/-. - Financial statements for the preceding two years (2019-2020 and 2020-2021) and a provisional balance sheet for the current year were submitted. - The name of Mr. Pavan Kankani was proposed as the Interim Resolution Professional (IRP), and his consent was enclosed. - A Special Resolution was passed by the shareholders in an Extraordinary General Meeting on 01.11.2021 to initiate CIRP under Section 10 of IBC, 2016. - Due to acute financial constraints, the Corporate Applicant could not maintain accounts regularly, leading to the default amount of Rs. 15,25,46,280/-. 2. Operational Creditor's Contentions: - The Operational Creditor provided a detailed history of the electricity service connection, agreements, and subsequent defaults by the Corporate Applicant. - The service was disconnected due to non-payment of dues, and multiple notices were issued for recovery of outstanding amounts. - Despite several notices and attempts to resolve the dues, the Corporate Applicant failed to make the necessary payments. - The Operational Creditor does not object to the initiation of CIRP as the Corporate Applicant itself sought to resolve the outstanding dues through this process. 3. Tribunal's Analysis: - The Tribunal reviewed the financial statements of the Corporate Applicant, which showed significant losses and liabilities, with minimal asset base as of 31.03.2020. - The resolutions passed by the Corporate Applicant's shareholders and the no-objection affidavit from the Operational Creditor were considered. - The Tribunal found that the Corporate Applicant's financial health was poor, and a quick resolution was necessary. 4. Judgment: - The Tribunal admitted the application under Section 10 of IBC, 2016, and ordered the initiation of CIRP. - A moratorium was declared as per Section 14 of IBC, 2016, prohibiting the institution or continuation of suits, transferring or disposing of assets, and recovery actions against the Corporate Applicant. - The supply of essential goods or services to the Corporate Applicant, if continuing, shall not be terminated or suspended during the moratorium period. - Mr. Pavan Kankani was appointed as the Interim Resolution Professional. - The Registry was directed to send a copy of the order to the Registrar of Companies, Hyderabad, for updating the status of the Corporate Applicant on the MCA-21 site of the Ministry of Corporate Affairs. Conclusion: The Tribunal concluded that the Corporate Applicant was unable to meet its financial obligations and justified the initiation of CIRP. The application was admitted, and a moratorium was declared to facilitate the resolution process.
|
