2017 (8) TMI 1371 - Tri - Companies Law

Financial creditor's petition under Insolvency and Bankruptcy Code admitted, moratorium declared, IRP appointed

The petition filed by the financial creditor under Section 7 of the Insolvency and Bankruptcy Code, 2016 was admitted. The Tribunal declared a moratorium, ... Corporate insolvency process - corporate debtor has filed objection mainly on the ground that the application does not contain any signature of the authorized person to act on behalf of the financial creditor - Held that:- If a person has already given notice under SARFAESI Act, then there will be no bar for initiating corporate insolvency resolution process under I & B Code, 2016. It is also pertinent to mention that I & B Code, 2016 has the overriding effect over other laws and after the admission of the proceeding under I & B Code, 2016 other proceeding anywhere shall be stayed as per the provision of moratorium u/ s Sec. 13 and 14 of the I & B Code. Therefore, by issuing a notice under Sec. 13(2) of the SARFAESI Act, will not have any adverse effect on the competency of a petition filed by the applicant for initiation of corporate insolvency resolution process. The financial creditor has proposed the name of Mr. Arun Kumar Gupta, who is competent to work as IRP. No disciplinary proceeding is pending against him. Therefore, he also deserves to be appointed as Interim Resolution Professional. The petition filed by the financial creditor under Sec. 7 of the Insolvency & Bankruptcy Code, 2016 is hereby admitted for initiating the Corporate Resolution Process and declare a moratorium and public announcement as stated in Sec. 13 of the IBC, 2016. The moratorium is declared for the purposes referred to in Sec. 14 of the Insolvency & Bankruptcy Code, 2016. Issues Involved:1. Authorization of the petitioner to file the application.2. Default and non-performing asset (NPA) status.3. Adequacy of documents supporting the claim.4. Objections raised by the corporate debtor.5. Jurisdiction under Insolvency and Bankruptcy Code (I & B Code), 2016.6. Appointment of Interim Resolution Professional (IRP).7. Declaration of moratorium.Issue-wise Detailed Analysis:1. Authorization of the Petitioner to File the Application:The corporate debtor objected to the application on the grounds that it did not contain the signature of an authorized person and lacked authentic documentation proving the petitioner's eligibility. The Tribunal found that the application was filed by Shri Achyut Banerjee, Chief Manager of Punjab National Bank (PNB), who was duly authorized by the bank's Board of Directors through a general power of attorney and an inter-office letter dated 24/5/2017. This authorization was certified by the bank, and the Tribunal concluded that Shri Achyut Banerjee was fully authorized to initiate the corporate insolvency process.2. Default and Non-Performing Asset (NPA) Status:The petitioner provided evidence that the corporate debtor defaulted on a sum of Rs. 29,33,65,793.94, and the account was declared as a non-performing asset by PNB on 30/6/2012. The Tribunal verified the default through certified bank statements and other supporting documents, confirming the default amount and the NPA status.3. Adequacy of Documents Supporting the Claim:The petitioner submitted various documents, including the loan sanction letter, resolutions of the corporate debtor, bank statements certified under the Banker Book Evidence Act, and correspondence between the financial creditor and the corporate debtor. The Tribunal found these documents sufficient to support the petitioner's claim of default.4. Objections Raised by the Corporate Debtor:The corporate debtor argued that the financial creditor did not apply due diligence in selecting the resolution professional and that the claim of default was misleading. Additionally, the corporate debtor contended that the financial creditor's actions during the moratorium period were arbitrary and contrary to the Reserve Bank of India guidelines. The Tribunal dismissed these objections, stating that the financial creditor had followed due process and the objections lacked merit.5. Jurisdiction under Insolvency and Bankruptcy Code (I & B Code), 2016:The corporate debtor argued that the financial creditor could not invoke the jurisdiction under the I & B Code, 2016, as a proceeding under Section 13(2) of the SARFAESI Act had already been initiated. The Tribunal clarified that the I & B Code, 2016, has an overriding effect over other laws, and initiating proceedings under the SARFAESI Act does not bar the initiation of corporate insolvency resolution under the I & B Code, 2016.6. Appointment of Interim Resolution Professional (IRP):The petitioner proposed the name of Mr. Arun Kumar Gupta as the Interim Resolution Professional (IRP). The Tribunal found that no disciplinary proceedings were pending against him, and he was competent to be appointed as the IRP. Consequently, Mr. Arun Kumar Gupta was appointed as the IRP to ascertain the particulars of creditors and convene a Committee of Creditors for evolving a resolution plan.7. Declaration of Moratorium:The Tribunal declared a moratorium as per Section 13 and 14 of the I & B Code, 2016. The moratorium prohibits the institution or continuation of suits against the corporate debtor, transferring or disposing of assets, and actions to recover any property occupied by the corporate debtor. The IRP was directed to make a public announcement of the initiation of the Corporate Insolvency Resolution Process and call for the submission of claims.Conclusion:The petition filed by the financial creditor under Section 7 of the Insolvency and Bankruptcy Code, 2016, was admitted. The Tribunal declared a moratorium and appointed Mr. Arun Kumar Gupta as the Interim Resolution Professional. The IRP was instructed to convene a meeting of the Committee of Creditors and submit the resolution passed by the Committee. The matter was listed for further proceedings on 13/09/2017.