9911796707
TMI Blog2020 (10) TMI 588X X X X Extracts X X X X X X X X Extracts X X X X ..... its name to 'Handum Industries Limited' from 'Handum Iron & Steel Enterprises Limited' on 19.02.1999. Further, the Company has shifted its registered office from the State of West Bengal to the erstwhile State of Andhra Pradesh vide CLB Order dated 14.06.2002 and further a Certificate to this effect was issued by the Registrar of Companies, Hyderabad on 17.09.2002. 2. Brief facts of the instant petition are as follows: a. That in the year 2004, the Corporate Applicant diversified its activity into trading of Steel Products with the credit facilities extended by the National Agricultural Cooperative Marketing Federation of India Ltd (NAFED), New Delhi. NAFED has extended Non Fund based credit facility to the extent of Rs. 150 Crores for trading of steel items/products. b. That subsequently NAFED had changed their policy and decided not to fund the companies who trade in Steel items/products. In result, NAFED has stopped renewing the credit facilities to the Corporate Applicant herein. Further, there was a recession in the steel business across the Globe which resulted in piling up of stocks. This in turn resulted in stress on the working capital of the Corporate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Companies Act, 2013; iii. The Corporate Applicant has not dealt with any specified bank notes at all during the specified period of demonetization; iv. The Corporate Applicant has not filed any Application under section 230 to 232 of the Companies Act, 2013 for any Compromise, Arrangement and or Amalgamation; v. The Corporate Applicant has not filed any Petition/Application for initiation of Corporate Insolvency Resolution Process before any Court of Law; vi. At present, the Corporate Applicant is not undergoing any Corporate Insolvency Resolution Process; vii. The Corporate Applicant has neither completed Corporate Insolvency Resolution Process twelve month (12) preceding the date of making of this petition; nor violated any of the terms of resolution plan which was approved 12 months before the date of making of this petition under Chapter-II of IBC, 2016; viii. No liquidation order has been made against the Corporate Applicant. ix. The Corporate Applicant has no other alternative remedy except to approach this Tribunal for invoking the provisions under section 10 of the Insolvency and Bankruptcy Code, 2016. Reiterating the above averments, the Corporate Applican ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n qualified to be an incomplete petition under section 10 of Insolvency and Bankruptcy Code, 2016. 7. That the Corporate Applicant in its Application mentioned that it has hived off its division consisting of business of manufacturing rerolled steel products, situated IDA, Bollaram, Medak Dist., TS, along with the movable & immovable assets, intellectual property and also the liability pertaining to that division i.e., the Corporate Applicant's business of rerolled steel products to Splendid Metal Products Limited (then known as Sujana Metal Products Limited) 8. That NAFED in its Additional Counter further stated that the Corporate Applicant herein approached this Adjudicating Authority with unclean hands. 9. It is stated that the following are few of the statements made by the Corporate Applicant in their Application which would expose the Corporate Applicant that the entire exercise is only to prevent the objectors herein from realising their debts:- a. IDBI bank debt was transferred to another group company being Splendid Metal Products Limited, Respondent No.4 in their Application. However, the liability of IDBI continues to be shown as a debt payable by the Corporate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nst SMPL, counsel for the R3 prayed to pass appropriate orders in the present Application in the interest of justice. 11. The Corporate Applicant filed rejoinder reiterating the averments made in the Petition and further stated as under: a. That the allegations made against the Corporate Applicant are baseless and incorrect. b. That the outstanding dues to the Respondent No.1, as per the books of account of the Corporate Debtor as on the date of filing of the Application is less than 3% of the total financial debt of the Corporate Applicant and further the debt of the Respondent No.1 is fully secured by way of creation of the first charge/second charge/exclusive charge of the properties offered by the Corporate Applicant. c. With regard to the defective Application and non-compliance of section 10 of the code, it is stated that the Corporate Applicant has taken the required approval at the Annual General Meetings held on 16.07.2018 by passing a special resolution. In fact, the resolution carried unanimously and required form (Form No.MGT-14) is filed with Registrar of Companies as per the provisions of the Companies Act, 2013. Therefore, the contention of the Respondent No.1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate Tribunal (NCLAT) in Unigreen Global Private Limited vs. Punjab National Bank and Ors. (2017 SCC Online NCLAT 566) has compared sections 7 and 10 of the Code and held that the test laid down by the Supreme Court with regard to applications by Financial Creditors under section 7 in M/s. Innoventive Industries Ltd vs. ICICI Bank &Anr (2018 1 SCC 407) is applicable to section 10 i.e., the moment the adjudica ting a uthority is satisfied that a default is occurred, the Application must be admitted, unless it is incomplete, in which case it must give notice to the Applicant to rectify the defect within 7 days of receipt of a notice from the adjudicating authority. Reiterating the above, counsel for the Corporate Applicant prayed to admit the instant petition. 16. During the hearing held on 22.02.2019, Counsel for R2 was present and reported no objection in allowing the instant petition. 17. R4/Splendid Metal Products Limited filed memo conveying no objection to initiate CIRP against the Corporate Applicant. 18. R5/Sujana Universal Industries Limited filed memo conveying no objection to initiate CIRP against the Corporate Applicant. 19. R6/Neueon Towers Limited filed memo conveyi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Resolution Professional, and c. The application must not be barred under Section 11 of the Insolvency and Bankruptcy Code, 2016. 24. Explaining these essential conditions for admission of application by the Adjudicating Authority, Hon'ble NCLAT in Unigreen Global Private Limited vs. Punjab National Bank and Ors. (2017 SSC Online NCLA T 566) has compared sections 7 and 10 of the Code and held that the test laid down by the Supreme Court with regard to applications by financial creditors under section 7 in M/s. Innoventive Industries Ltd. versus ICICI Bank & Anr. (2018 1 SSC 407) will be applicable to Section 10 i.e. the moment the adjudicating authority is satisfied that there exists a debt and a default has occurred, the application must be admitted unless it is incomplete, in which case it must give notice to the applicant to rectify the defect within 7 days of receipt of a notice from the adjudicating authority. 25. As a corollary to the above principle, a creditor of the debtor company can raise a defence that there is no default or debt is not due or payable in fact or law as is the case in applications under section 7. The main objector in the instant case is NAFED, w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... narily get completed within 180 days reckoning from the day this order is passed. 31. We hereby appoint Shri. Ramachander Rao Bikumalla as an Interim Resolution Professional (IRP) having Regn. No. (IBB1/IPA-001/IP-P00740/2017-2018/11261) as proposed by the Corporate Applicant. There is no disciplinary proceedings pending against the IRP and his name is reflected in IBBI website. He is directed to file his AoA in the registry within 3 days from receipt of copy of this order. The IRP is directed to take charge of the Corporate Applicant's management immediately. He is also directed to cause public announcement as prescribed under section 15 of the I&B Code, 2016 within three days from the date the copy of this order is received, and call for submissions of claims in the manner as prescribed. 32. This Adjudicating Authority hereby declares the moratorium which shall have effect from the date of this Order till the completion of Corporate Insolvency Resolution Process for the purposes referred to in Section 14 of the I&B Code, 2016. We order to prohibit all of the following, namely: a) The institution of suits or continuation of pending suits or proceedings against the corporat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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