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TMI Blog2020 (2) TMI 1448X X X X Extracts X X X X X X X X Extracts X X X X ..... almost ₹ 31 crores over 31.03.2017, being ₹ 526.75 crores as on 31.3.2018 as against ₹ 474.93 crores, over 31.03.2017, thus the Company liabilities have been increased over immediately after proceedings here indicating that the Company is losing its ability to repay its debts and hence prima facie indicating its Insolvency. As stated supra, the Bank also offered several opportunities to the Respondent so as to regularize its accounts but it failed to do so and there is no proposal for OTS/settlement of issue is pending with Bank. The debt and default in question as mentioned in the Petition is proved beyond doubt and it was not being controverted by the Respondent. All the pre-requisite conditions as per extant provisions of Code and the law stand fulfilled in the instant case. The instant Company Petition/Application is filed in accordance with extant provisions of Code and the Rules made thereunder, a qualified Insolvency Professional namely Shri Ramanahalli Shivanna DoddaByregowda, is proposed to appoint him as Interim Resolution Professional, who has filed Written Communication and affidavit dated 04.09.2019, in a prescribed forum, who is prima facie eligib ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n banking with Financial Creditor for nearly 30 years. And they are also under multiple banking arrangements with Union Bank of India, Dhanalakshmi Bank and Allahabad Bank as Members. The existing securities are held by the lenders under paripassu charge. The Corporate Debtor could not arrange funds for payment under LCs and BG commitments resulting in Devolvement of LCs and BG. (4) It is stated that the Financial Creditor has sanctioned the following credit facilities to the Corporate Debtor; 1 Nature/Type of Loan Working capital Term Loan 2. Date of Sanction 14.02.2008, 1.12.2009, 08.01.2010, 14.07.2010,17.03.2012, 21.05.2014, 28.05.2014, 05.11.2015, 20.11.2015, 14.07.2017- Sanction Letter Renewal Letters 3. Loan Amount (in Rs.) Facility Limit (Rs. In Crores) Rate of Interest Working capital Cash credit Letter of credit bank guarantee Term Loan Total 90 35 5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... b) Fourth Supplementary of general letter of Hypothecation dated 28.07.2016 c) Guarantee Agreement dated 28.07.2016 executed by R. Radhakrishnan d) Guarantee Agreement dated 28.07.2016 executed by R. Sreenivasan e) Guarantee Agreement dated 28.07.2016 executed by R. Sudarshan f) Demand Promissory Note, Letter waiving Presentment of Pronote and letter of continuing Security dated 28.07.2016 issued by the Company. g) General Counter Indemnity dated 28.07.2016 h) Undertaking dated 28.07.2016 for credit facilities i) Undertaking dated 28.07.2016 for term Loan 11 of ₹ 22.81 crore III. Sanction Letter dated 14.07.2017 loan documents for Working Capital and Term Loan are - a) Term Loan Agreement dated 30.08.2017 executed by the Company in favour of the Bank for Term Loan 11 b) Fifty Supplementary of General Letter of Hypothecation dated 30.08.2017 c) Guarantee Agreement dated 30.08.2017 executed by B. Radhakrishnan d) Guarantee Agreement dated 30.08.2017 executed by R. Sreenivasan e) Guarantee Agreement dated 30.08.2017 executed by R. Sudarshan f) Demand Promissory Note dated 30.08.2017 issued by the Company g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earned Counsel for the Petitioner and Mr. S. Ramakrishnan, Learned Counsel for the Respondent. We have carefully perused the pleadings of the Parties, and the extant provisions of the Code. 4. Shri H.R. Katti, the Learned Counsel for the Petitioner, while reiterating averments made in the main Company Petition, has further submitted that the Petitioner initially has served several notices and also served notice by hand to the Respondents and the same was duly acknowledged by the Respondent on 18.01.2020. The instant Petition is filed in accordance with law, and there is an admitted debt and default, and a qualified Resolution Professional namely Shri Ramanahalli Shivanna DoddaByregowda, bearing Registration No. IBBI/IPA-002/IP-N00583/2017-18/11775 is proposed to appoint him as Interim Resolution Professional, who has filed Written Communication and affidavit dated 04.09.2019, in a prescribed forum by interalia declaring that he is qualified Resolution Professional and not undergoing any disciplinary proceedings etc. Therefore, he has urged the Adjudicating Authority to admit the instant Company Petition by initiating CIRP as prayed for. 5. The instant Petition case was filed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dated 31.08.2019 issued by FGMO, Hyderabad. 4. Wilful Defaulter status: Bank has issued showcase notice for declaring as Wilful Defaulter vide letter dated 25.09.2019 and company has replied vide letter dated 14.10.2019 and the same is pending at Head office, for decision. 7. As stated supra, the Respondent not availed the opportunity given by the Adjudicating Authority. Meanwhile the Respondent failed to file statement of objections except stating before the Tribunal on 29.01.2019 by stating they are seriously pursuing the remedy available to get necessary funds to clear the debt, since more than 1200 employees future is at stake . As stated in the memo dated 18.02.2020, the proposal submitted by the Company for restructuring has been already rejected by the Bank vide letter dated 31.08.2019 issued by Petitioner Allahabad Bank. Therefore, the efforts made by the Respondent to resolve the issue failed, resulting the debt in question is established beyond doubt. It is also seen in the financial statement i.e., Balance Sheet and Profit and Loss Account for the year 31.03.2018 that the Companies liabilities, apart from the share capital have increased by almost ₹ 31 c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion to Section 7(1), a default is in respect of a financial debt owed to any financial creditor of the corporate debtor--it need not be a debt owed to the applicant financial creditor. Under Section 7(2), an application is to be made under sub-section (1) in such form and manner as is prescribed, which takes us to the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016. Under Rule 4, the application is made by a financial creditor in Form 1 accompanied by documents and records required therein. Form 1 is a detailed form in 5 parts, which requires particulars of the applicant in Part I, particulars of the corporate debtor in Part II, particulars of the proposed interim resolution professional in Part III, particulars of the financial debt in Part IV and documents, records and evidence of default in Part V. Under Rule 4(3), the applicant is to dispatch a copy of the application filed with the adjudicating authority by registered post or speed post to the registered office of the corporate debtor. The speed, within which the adjudicating authority is to ascertain the existence of a default from the records of the information utility or on the basis of eviden ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of by separate orders by permitting those Petitioners to make its claim before the IRP appointed in the case. 11. So far as the contention of Respondent that there are more than 1200 employees are working in the Company and they are still trying to resolve the issue in question and thus by initiating CIRP against the Corporate Debtor, it not only affect those employees but also effects the efforts being by the Management of Company is concerned, it is to be stated initiating CIRP is not closing the operations of Company. And it is the process to find solution to the issue so as to make every effort to revive operation of Company by keeping the Company as a going concern. It is also permissible under law, that in case, any settlement of the issue takes place between the Parties, the Parties can also file Appropriate Application to conclude CIRP proceedings. 12. In the result, by exercising powers conferred on this Adjudicating Authority, under Section 7(5)(a) and other extant provisions of the Code, Company Petition bearing C.P. (IB) No. 357/BB/2019 is hereby admitted with the following consequential directions: (1) We hereby appointed Shri Ramanahalli Shivanna DoddaByrego ..... X X X X Extracts X X X X X X X X Extracts X X X X
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