Financial Creditor's Petition Admitted for Corporate Insolvency Resolution Process

The Tribunal admitted the petition filed by the Financial Creditor, initiating the Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor. The Tribunal found the petition maintainable, with proper authorization, no requirement for consent from other lenders, not barred by parallel SARFAESI/DRT proceedings, not time-barred, and unaffected by the attachment of properties by the Enforcement Directorate. The Tribunal appointed an Interim Resolution Professional (IRP) and declared a moratorium under Section 14 of the IBC for the resolution process to proceed.

---

---

Issues Involved:

1. Maintainability of the petition.
2. Authorization for filing the petition.
3. Consent from other lenders.
4. Parallel proceedings under SARFAESI/DRT.
5. Limitation period for filing the petition.
6. Attachment of properties by the Enforcement Directorate (ED).

Issue-wise Detailed Analysis:

1. Maintainability of the Petition:

The Corporate Debtor argued that the petition was not maintainable due to defects not being removed within the stipulated time of 7 days. However, the Financial Creditor complied with the Adjudicating Authority's direction to rectify the defects by filing a neat copy of Form I on 10.08.2018. The Tribunal found this compliance satisfactory and did not dismiss the petition on this ground.

2. Authorization for Filing the Petition:

The Corporate Debtor contended that there was no proper authorization for filing the petition. The Financial Creditor, however, provided a letter of authorization dated 03.01.2018, issued to all officers of IFCI, except Private Secretaries, to execute documents for insolvency proceedings. This letter referenced a decision by the Board of Directors on 29.06.2017 and a delegation of power by the MD & CEO on 27.09.2017 to the Executive Director, who signed the authorization letter. The Tribunal accepted this as valid authorization.

3. Consent from Other Lenders:

The Corporate Debtor argued that the Financial Creditor did not obtain consent from other lenders of the Consortium as required by the inter-creditor agreement. The Tribunal noted that IDBI, the lead bank, had assigned its debt to Edelweiss ARC Ltd. which confirmed that no Joint Lenders Forum (JLF) existed and that they were independently pursuing recovery under DRT. The Tribunal held that under Section 7 of the IBC, a Financial Creditor can file an application individually, and the overriding effect of the IBC as per Section 238 negates the need for consent from other lenders.

4. Parallel Proceedings under SARFAESI/DRT:

The Corporate Debtor claimed that the petition was not maintainable due to ongoing proceedings under SARFAESI and DRT. The Tribunal cited precedents (Dena Bank Vs Om Shiv Hydro Power & Constructions and PNB vs Carnation Auto India Pvt. Ltd.) establishing that pendency of proceedings under SARFAESI does not bar a Section 7 application under the IBC. Thus, the Tribunal dismissed this objection.

5. Limitation Period for Filing the Petition:

The Corporate Debtor argued that the petition was barred by limitation, as the default occurred on 15.10.2013, and the petition was filed on 09.11.2017. The Tribunal found that the Corporate Debtor had acknowledged the debt in writing through various documents, including a balance confirmation certificate dated 28.03.2014 and multiple requests for restructuring and One Time Settlement (OTS). The last acknowledgment was on 20.03.2018, thereby extending the limitation period under Section 18 of the Limitation Act. Consequently, the Tribunal held that the petition was not barred by limitation.

6. Attachment of Properties by the Enforcement Directorate (ED):

The Tribunal noted that the Enforcement Directorate (ED) had provisionally attached 150 acres of land belonging to the Corporate Debtor under the Prevention of Money Laundering Act, 2002 (PMLA). This property was mortgaged as collateral security with the Financial Creditor. The attachment was confirmed by the Adjudicating Authority, PMLA, and an appeal was pending. The Tribunal considered this but did not find it a bar to admitting the insolvency petition.

Conclusion:

The Tribunal concluded that the Financial Creditor had established the existence of a financial debt and default by the Corporate Debtor. The petition met all requirements under the IBC, and the Tribunal admitted the petition, initiating the Corporate Insolvency Resolution Process (CIRP). Mr. S. V. Satyanarayana was appointed as the Interim Resolution Professional (IRP), and a moratorium was declared as per Section 14 of the IBC. The Tribunal directed the IRP to take charge of the Corporate Debtor's management and proceed with public announcements and claims submissions.

---