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TMI Blog2018 (7) TMI 1335X X X X Extracts X X X X X X X X Extracts X X X X ..... resolution professional. Therefore, as the application is complete the present application is admitted under section 10(4)(a) of the Code. The Corporate Insolvency Resolution Process shall commence from the date of this order under sub-section 5 of Section 10 of the Code. - Company Petition No. (IB)-570 (PB)/2017 - - - Dated:- 13-6-2018 - MR. M. M. KUMAR AND MR. S. K. MOHAPATRA, JJ. For The Applicant Company : Mr. Rajendra K. Salecha, Advocate For The Respondent : Mr. Kuldeep, Advocate, Ms. Surabhi Limaye, Advocate, Rajendra Beniwal Advocate, Mr. Soumyajit Nath, Advocate And Mr. Abhijeet kumar, Advocate ORDER S. K. Mohapatra, Technical Member This is an application filed under Section 10 of the Insolvency and Bankruptcy Code, 2016 (for brevity the Code ) read with rule 7 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 (for brevity the Rules ) for initiation of Corporate Insolvency Resolution Process in respect of the applicant company itself. 2. The applicant, M/s. Seatel Electronics (India) Private Limited is a company incorporated on 10.06.2003 under the Companies Act, 1956 bearing CIN No. U72100R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and also to restructure the financial position by way of adopting the Corporate Insolvency Resolution Process under the Code. 6. The provisions of Insolvency Bankruptcy Code, 2016 have been notified by the Central Government on 01.12.2016 for the objects as can be gleaned from the Statement of Objects and Reasons as given below: An act to consolidate and amend the laws relating to reorganisation and insolvency resolution of corporate persons, partnership firms and individuals in a time bound manner for maximization of value of assets of such persons, to promote entrepreneurship, availability of credit and balance the interests of all the stakeholders including alteration in the order of priority of payment of Government dues and to establish an Insolvency and Bankruptcy Board of India, and for matters connected therewith of incidental thereto . 7. A perusal of the above object discloses that the provisions of IBC, 2016 have predominantly been brought into force for the re-organization and insolvency resolution of corporate persons and that too in a time bound manner for the maximization of value of assets of such persons to promote entrepreneurship and balance the int ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y under Section 10 of the Code for initiation of Corporate Insolvency Resolution Process in respect of itself on account of default in payment. In the present case the Authorised representative of the applicant company duly authorised to do so by board resolution of the company, has filed the instant application under Section 10 of the Code on behalf of the applicant company. 12. As per Insolvency and Bankruptcy Code (Amendment) Ordinance, 2018 which has come into force w.e.f. 06.06.2018, an additional requirement of special resolution of shareholders is mandated for filing of an application under Section 10 of the Code. The amended sub-section 3(c) of Section 10 of the Code is as follows: (3) The Corporate Applicant shall, along with the application furnish - (a) .. (b) .. (c) the special resolution passed by shareholders of the corporate debtor or the resolution passed by atleast three-fourth of the total number of partners of the corporate debtor, as the case may be, approving filing of the application . 13. In the present case all the five shareholders of the applicant corporate debtor have given their consent for preferring the present ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd maintain the present application under Section 10 of the Code. The affidavit further confirms that no CIRP has ever been initiated nor any liquidation order or winding up order has been made against the applicant company. 21. Besides, in compliance of Section 10(3)(a) of the Code read with Annex-V of Form 6 of the Rules, the applicant company has filed copies of audited financial statements of the Applicant Company for the last two financial years i.e. 2015-16 and 2016-17. In addition copy of provisional financial statement of the applicant company for the current financial year made up to a date not earlier than fourteen days from the date of the application, i.e. from 01.04.2017 to 20.11.2017 has also been filed. 22. Moreover in compliance of Section 10(3)(b) of the Code the applicant has proposed the name of Sh. Brij Kishore Sharma, Company Secretary, with Registration No. IBBI/IIPA-002/IP-N00036/2016/17/10075 as Interim Resolution Professional. The applicant company has obtained a written communication in Form-2 dated 20.11.2017 from the Insolvency Professional for appointment as an IRP. In the Form-2 filed along with the application it has been affirmed by the Propose ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 28.12.2017. The main allegation of the State Bank of India is that the corporate debtor had sufficient stocks and inventory as on 31.03.2017 valuing ₹ 11,20,22,771.70/-. However, subsequently on 20.11.2017 the value of the inventory has been shown as 33,56,268.36/-. It is alleged that the applicant has failed to disclose as to where the inventory of differential amount of ₹ 10,85,66,503.34/- had gone. It is further alleged that the present application has been filed by corporate debtor by misrepresenting the facts and the applicant has not come with clean hands. 27. In this regard the corporate debtor was afforded an opportunity to explain the reason for substantial decrease in the inventory vide order dated 11.04.2018. Applicant Corporate Debtor in its affidavit dated 17.04.2018 has explained the reasons for decrease in the stock of the inventory. In this regard it can only be said that in case there is any illegal diversion of inventory, it is open to the financial creditor with whom the inventory has been hypothecated, to take appropriate action in accordance with law, if the directors or promoters of the applicant company have acted in an unlawful, fraudulent a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t come with clean hand except the application where the Corporate Applicant has not disclosed disqualification, if any, under Section 11 31. In view of the precedent laid by the Hon ble Appellate Court, the stand of financial creditor (SBI) that the applicant has not come with clean hands and has suppressed facts, cannot be a ground to reject the application if it is otherwise complete. 32. The other two financial creditors have raised almost similar objections which cannot detain us from proceeding under Section 10 of the Code. The other objection that action under SARFAESI Act has since been initiated will also not come in the way of provisions of Section 10 of the Code. In view of the overriding effect given by the provisions of section 238 of the Code, the initiation and pendency of proceedings under SARFAESI Act is no bar for initiation of resolution and Insolvency proceedings under the Code. Hence, the objection raised by the financial creditors cannot sustain. 33. As a sequel to the aforesaid discussion, we are satisfied that the present application is complete, the applicant corporate debtor has committed a default and there is no disciplinary proceeding pen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... guarantee to the corporate debtor. 39. The Interim Resolution Professional shall perform all his functions contemplated, inter alia, by Sections 15, 17, 18, 19, 20 21 of the Code and transact proceedings with utmost dedication, honesty and strictly in accordance with the provisions of the Code , Rules and Regulations. It is further made clear that all the personnel connected with the Corporate Debtor, its promoters or any other person associated with the Management of the Corporate Debtor are under legal obligation under Section 19 of the Code to extend every assistance and cooperation to the Interim Resolution Professional as may be required by him in managing the day-to-day affairs of the Corporate Debtor . In case there is any violation, the Interim Resolution Professional would be at liberty to make appropriate application to this Tribunal with a prayer for passing an appropriate order. The Interim Resolution Professional shall be under duty to protect and preserve the value of the property of the Corporate Debtor as a part of its obligation imposed by Section 20 of the Code and perform all his functions strictly in accordance with the provisions of the Code, Rules an ..... X X X X Extracts X X X X X X X X Extracts X X X X
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