Tribunal appoints Interim Resolution Professional, declares moratorium under Insolvency and Bankruptcy Code

Yes Bank Ltd. Versus M/s. Namo Alloys Pvt. Ltd.

Yes Bank Ltd. Versus M/s. Namo Alloys Pvt. Ltd. - TMI Issues Involved:
1. Authority of the Applicant's Representative
2. Allegations of Fraud and Pending Proceedings
3. Existence of Financial Debt and Default
4. Admissibility of the Application under Section 7 of the Insolvency and Bankruptcy Code

Issue-wise Detailed Analysis:

1. Authority of the Applicant's Representative:
The respondent challenged the authority of Mr. Gaurav Sarkar, the Vice President of the applicant bank, to file the application, arguing that no board resolution or sufficient power of attorney was provided. The applicant bank countered this by presenting a power of attorney dated 21.06.2018, authorizing Mr. Sarkar to act on behalf of the bank. The Tribunal referenced the NCLAT decision in Palogix Infrastructure (P.) Ltd. v. ICICI Bank Ltd., affirming that a senior officer authorized to grant loans also has the authority to initiate insolvency proceedings. Therefore, the Tribunal concluded that Mr. Sarkar was duly authorized and competent to file the application.

2. Allegations of Fraud and Pending Proceedings:
The respondent alleged suppression of material facts and claimed that no amount was due because of fraud by the applicant bank. They cited an FIR and a pending civil suit. The applicant bank argued that these allegations were irrelevant to the insolvency proceedings, which are independent and unaffected by other pending criminal or civil cases. The Tribunal supported this view, citing the overriding effect of the Insolvency and Bankruptcy Code (IBC) under Section 238, and decisions from the NCLAT and Supreme Court, emphasizing that the pendency of other proceedings cannot bar the initiation of Corporate Insolvency Resolution Process (CIRP).

3. Existence of Financial Debt and Default:
The applicant bank provided extensive documentation, including facility letters, agreements, deeds of hypothecation, promissory notes, and statements of account, to prove the existence of financial debt and default. The respondent admitted to availing the loan but contested the default due to alleged fraudulent transactions. The Tribunal noted that the applicant had provided overwhelming evidence of the financial debt and default, including a CRILIC report and certificates of charge registration. The Tribunal emphasized that its role was to ascertain the existence of a default, not to determine the exact amount due.

4. Admissibility of the Application under Section 7 of the Insolvency and Bankruptcy Code:
The Tribunal examined whether the application met the criteria under Section 7 of the IBC: existence of default, completeness of the application, and no pending disciplinary proceedings against the proposed Interim Resolution Professional (IRP). The Tribunal found that the applicant met all these conditions. The applicant bank was deemed a financial creditor, the debt was established as a financial debt, and the default was proven. The application was complete, and there were no disciplinary proceedings against the proposed IRP, Mr. Ashok Kumar Dewan.

Conclusion:
The Tribunal admitted the application under Section 7 of the IBC, appointing Mr. Ashok Kumar Dewan as the IRP. A moratorium was declared under Section 14 of the IBC, prohibiting suits, asset transfers, and recovery actions against the corporate debtor. The IRP was directed to make a public announcement and manage the corporate debtor's affairs in accordance with the IBC provisions. The Registrar of Companies was instructed to update the status of the corporate debtor on its website.