Promoters' Intervention Applications Dismissed in CIRP Case

The Tribunal dismissed the intervention applications by the promoters of the Corporate Debtor, ruling that the Corporate Debtor's attempts to delay the Corporate Insolvency Resolution Process (CIRP) were unfounded. It held that the promoters cannot stall the CIRP if the debt and default are proven. The Tribunal addressed and rejected objections raised by the Corporate Debtor, appointed an Interim Resolution Professional, Mr. Vikas Prakash Gupta, and issued a moratorium effective from 27.11.2018 until the completion of the CIRP or approval of a resolution plan or liquidation order.

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Issues Involved:
1. Validity of Intervention Applications by Promoters.
2. Admissibility of the Corporate Insolvency Resolution Process (CIRP) petition under Section 7 of the Insolvency & Bankruptcy Code, 2016.
3. Objections raised by the Corporate Debtor regarding the CIRP petition.
4. Appointment of Interim Resolution Professional (IRP).
5. Issuance of Moratorium.

Issue-wise Detailed Analysis:

1. Validity of Intervention Applications by Promoters:
The promoters of the Corporate Debtor filed intervention applications (M.A. No. 1156 of 2018 and I.A. No. 1277 of 2018) arguing that the Corporate Debtor had suffered losses due to various factors and was declared a sick industrial company. They contended that the petitioner did not follow the RBI circular dated 12.02.2018 for a revival plan cum OTS proposal and requested adjournment of the petition until the disposal of their writ petition in the Bombay High Court. However, the Tribunal noted that no stay was issued by the High Court, and the Corporate Debtor failed to submit the OTS proposal despite assurances. The Tribunal concluded that the Corporate Debtor was attempting to delay the CIRP and dismissed the intervention applications.

2. Admissibility of the CIRP Petition under Section 7:
The Tribunal referred to the Supreme Court's decision in "Innoventive Industries Ltd. Vs. ICICI Bank and Ors." which clarified that the adjudicating authority must be satisfied that a default has occurred. The Tribunal emphasized that no other person, including promoters, has the right to be heard at the stage of admission of the application under Section 7 and 9 of the I&B Code. The Tribunal also cited the NCLAT ruling in "Brijesh Kumar Agarwal v. Punjab National Bank" which reinforced that admitted default cannot be rejected based on non-compliance with RBI guidelines. Consequently, the Tribunal held that the promoters cannot stall the initiation of CIRP if the debt and default are proved.

3. Objections Raised by the Corporate Debtor:
The Corporate Debtor raised multiple objections, including:
- Failure to appoint IRP as per Section 7 of the Code.
- Debt being time-barred.
- Application not signed by an authorized person.
- Incorrect and insufficient particulars in the petition.
- Suppression of sale proceeds and failure to appropriate the same.
- Incorrect calculation of the default amount and interest.

The Tribunal systematically addressed and rejected each objection:
- The appointment of IRP was valid as per Form-2 filed by the Petitioner.
- The debt was not time-barred, and the Corporate Debtor did not press this issue.
- The application was signed by the Chief Manager of PNB, an authorized person.
- The details provided in the petition were sufficient, and any calculation errors could be addressed by the Insolvency Resolution Professional during the CIRP.
- The sale of pledged shares and the interest claimed could be reviewed by the Insolvency Resolution Professional.

4. Appointment of Interim Resolution Professional (IRP):
The Tribunal appointed Mr. Vikas Prakash Gupta as the Interim Resolution Professional, noting that there were no disciplinary proceedings pending against him. The Tribunal was satisfied with the documents filed by the Petitioner, proving the Corporate Debtor's default in repaying the loan.

5. Issuance of Moratorium:
The Tribunal issued a moratorium prohibiting:
- Institution or continuation of suits or proceedings against the Corporate Debtor.
- Transfer or disposal of Corporate Debtor's assets.
- Actions to foreclose or enforce security interests.
- Recovery of property by owners or lessors.

The moratorium would be effective from 27.11.2018 until the completion of the CIRP or approval of a resolution plan or liquidation order. The Tribunal directed the public announcement of the CIRP and immediate communication of the order to the Petitioner, Corporate Debtor, and IRP.

Conclusion:
The Tribunal admitted the petition under Section 7 of the Insolvency & Bankruptcy Code, 2016, initiating the Corporate Insolvency Resolution Process against the Corporate Debtor and appointed Mr. Vikas Prakash Gupta as the Interim Resolution Professional. The order included the issuance of a moratorium to facilitate the CIRP.

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