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TMI Blog2017 (10) TMI 1532X X X X Extracts X X X X X X X X Extracts X X X X ..... Authority (National Company Law Tribunal), Mumbai Bench, Mumbai by impugned order dated 6th June, 2017 admitted the application, declared the Moratorium, appointed qnterim Resolution Professional' and passed prohibitory orders in terms of 'I&B Code'. The said order is under challenge in this appeal. 2. Learned counsel appearing on behalf of the Appellant-'Corporate Debtor' submitted that the application under Section 7 was not maintainable as the Respondent-'Financial Creditor' failed to produce the record or evidence of default in terms of Clause (a) of sub-section (3) of Section 7 of the 'I&B Code'. 3. It was submitted by learned counsel for the Appellant-'Corporate Debtor' that by virtue of Notification dated 30th March, 2017, the provisions contained in Chapter-V of Part- IV of 'I&B Code' relating to information utility has been notified. The 'information utility' is to be registered under Section 210 of the 'I&B Code'. Under Section 215 of the 'I&B Code', a 'Financial Creditor' is required to submit in a prescribed form to the 'information utility', financial information and in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to the Adjudicating Authority under sub-section (3) of Section 7. The power is conferred only with the Board under Clause (f) of sub-section (2) of Section 240. Therefore, Regulation 8 of the Insolvency Regulations, which specify the records of default to be submitted to the 'Insolvency Resolution Process' at a later stage, cannot be made applicable in the preadmission stage of furnishing evidence before the Adjudicating Authority. 7. Furthermore, according to the learned counsel for the Appellant 'Corporate Debtor', sub-section (2) of Section 7 cannot be read in isolation with sub-section (3) of Section 7 of the 'I&B Code', Parliament has explicitly conferred separate powers, on one hand to the Central Government under clause (c) of sub-section (1) of Section 239 to frame Rules and to the Board under Section 240 to frame Regulations specifying the 'other record' or 'evidence of default'. 8. It was further contended that the details in terms of Form 1 prescribed under Rule 4 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 (hereinafter referred to as "Adjudicating Authority Rules") is required to be gi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esaid facts are to be considered from the procedure for initiation of corporate insolvency resolution process by 'financial creditor' as mandated under Section 7 of 'I & B Code', and quoted below: "7. (1) A financial creditor either by itself or jointly with other financial creditors may file an application for initiating corporate insolvency resolution process against a corporate debtor before the Adjudicating Authority when a default has occurred. Explanation. -For the purposes of this sub-section, a default includes a default in respect of a financial debt owed not only to the applicant financial creditor but to any otherfinancial creditor of the corporate debtor. (2) Thefinancial creditor shall make an application under sub-section (1) in such form and manner and accompanied with suchfee as may be prescribed. (3) The financial creditor shall, along with the application furnish- (a) record of the default recorded with the infonnation utility or such other record or evidence of default as may be specified; (b) the name of the resolution professional proposed to act as an interim resolution professional; and (c) any other information a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Board relating to record of default recorded with the information utility or other record of evidence of default specified, "the documents", 'record' and 'evidence of default' prescribed at Part V of Form-I, of the Adjudicatory Rules 2016 will hold good to decide the default of debt for the purpose of Section 7 of the 'I & B Code'. 21. We further hold that the 'Regulations framed by the Board' being subject to the provisions of 'I & B Code' and rules framed by the Central Government under Section 239, 'Part V of Forn - 1 ' ofAdjudicating Authority Rules, 2016 framed by Central Government relating to 'documents', 'record' and 'evidence of default', will override the regulations, if framed by the Board and if inconsistent with the Rule. However, it is always open to Board to prescribe additional records in support of default of debt, such as records of default recorded with the infonnation utility or such other record or evidence of default in addition to the records as mentioned in Part V of Form-I. 22. At this stage, it is pertinent to note that the Board has also framed Insolvency Resolution Process fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... created for the benefit of the 'Financial Creditor' 'mortgages', 'guarantees', 'share pledge' etc. has been shown. In support of record of default though nothing stated against Serial No.3- 'Record of default with the information utility, if any', but against Serial Nos. 7 and 8, the details of record of debt and default has been mentioned, as quoted below: 7. COPIES OF ENTRIES IN A BANKERS BOOK IN ACCORDANCE w1TH THE BANKERS BOOKS EVIDENCE ACT, 1891 (18 OF 1891) (ATTACH A COPY) Copies of entries in the bankers book in accordance with the Bankers Book Evidence Act, 1891 have been annexed at Exhibit- '13" 8. LIST OF OTHER DOCUMENTS ATTACHED TO THIS APPLICATION IN ORDER TO PROVE THE EXISTENCE OF FINANCIAL DEBT, THE AMOUNT AND DATE OF DEFAULT The other documents that prove the existence of financial debt have been listed below: 1) Letter dated August 21, 2014 issued by the Corporate Debt Restructuring ("CDR") cell mentioning the failure of CDR approved package (pursuant to which the MRA was executed and the MRA Facilities were granted) in r elation to the Company/ Respondent 2) Letter dated June 09, 2015 issued by IDBI Bank Limited ..... X X X X Extracts X X X X X X X X Extracts X X X X
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