Text: Textile company petition admitted for CIRP, special resolution requirement not retrospective. Interim Resolution Professional appointed, moratorium declared.

In Re : Supraja Textiles Private Limited

In Re : Supraja Textiles Private Limited - TMI Issues Involved:
1. Initiation of Corporate Insolvency Resolution Process (CIRP) under Section 10 of the Insolvency and Bankruptcy Code (IB Code).
2. Existence of debt and default.
3. Requirement of a special resolution by shareholders under amended Section 10(3)(c) of the IB Code.
4. Allegations of mala fide intention in filing the petition.
5. Applicability of amendments to procedural laws retrospectively.

Issue-wise Detailed Analysis:

1. Initiation of Corporate Insolvency Resolution Process (CIRP) under Section 10 of the IB Code:
The petition was filed by Supraja Textiles Private Limited (Corporate Debtor) under Section 10 of the IB Code to initiate CIRP. The Board of Directors authorized the Managing Director to file the petition. The petition included the necessary documents to prove the existence of default and the amount in default.

2. Existence of Debt and Default:
The Corporate Debtor committed a default in payment amounting to Rs. 16,13,67,283/-. The date of default was 28.12.2016. The Corporate Debtor provided various documents, including Form No. 8 and Certificates of Registration of Charge, to substantiate the existence of debt and default. The State Bank of India (SBI), a Financial Creditor, confirmed the default and classified the loan as a Non-Performing Asset (NPA) on 28.12.2015. Despite several notices, the Corporate Debtor failed to make the necessary payments.

3. Requirement of a Special Resolution by Shareholders under Amended Section 10(3)(c) of the IB Code:
The primary issue was whether the special resolution requirement, introduced by the amendment to Section 10(3)(c) effective from 06.06.2018, applied retrospectively to this petition filed on 09.05.2018. The tribunal concluded that the amendment is not clarificatory but introduces a new condition. Therefore, it cannot be given retrospective effect. The special resolution requirement was not applicable to petitions filed before the amendment date.

4. Allegations of Mala Fide Intention in Filing the Petition:
SBI alleged that the petition was filed with mala fide intentions to stall proceedings under the SARFAESI Act. However, the tribunal noted that pending recovery proceedings do not bar the initiation of CIRP under the IB Code, which has an overriding effect over other acts, including the SARFAESI Act.

5. Applicability of Amendments to Procedural Laws Retrospectively:
The tribunal analyzed precedents, including Supreme Court judgments, to determine the retrospective application of procedural amendments. It was concluded that the amendment to Section 10(3)(c) of the IB Code, which introduced a new requirement (special resolution), could not be applied retrospectively as it imposed a new duty on petitions filed before the amendment date. The tribunal differentiated between procedural amendments that affect existing rights and those that introduce new obligations.

Conclusion:
The tribunal admitted the petition for initiating CIRP against Supraja Textiles Private Limited. The petition was found to be complete in all respects, except for the special resolution requirement, which was deemed inapplicable retrospectively. The tribunal appointed Mr. Manivannan J as the Interim Resolution Professional and declared a moratorium under Section 13(1)(a) of the IB Code, prohibiting certain actions against the Corporate Debtor as laid down in Section 14 of the Code.