NCLT Admits CIRP Petition Against Corporate Debtor for Debt Default: Moratorium Declared

The NCLT admitted the petition for initiating CIRP against the Corporate Debtor Company due to default in debt repayment. The application was deemed complete and valid, resulting in the declaration of a moratorium. An IRP was appointed to oversee the resolution process, ensuring creditor protection and adherence to the I.B. Code provisions.

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Issues Involved:
1. Default in payment of debt by the Corporate Debtor Company.
2. Validity and completeness of the application filed by the Financial Creditor.
3. Authorization of the signatory filing the application.
4. Declaration of moratorium under Section 13 and 14 of the I.B. Code.
5. Appointment of Interim Resolution Professional (IRP).

Issue-wise Detailed Analysis:

1. Default in Payment of Debt by the Corporate Debtor Company:
The Bank of India, as the financial creditor, filed the petition under Section 7 of the I.B. Code, 2016, against the Corporate Debtor Company for defaulting on a debt amounting to Rs. 485.42 Crores. The debt default was reported on January 9, 2015. The bank disbursed a loan totaling Rs. 661.88 Crores to the Corporate Debtor Company in several intervals between 2008 and March 30, 2015. The necessary loan documents and securities were provided to support the claim.

2. Validity and Completeness of the Application Filed by the Financial Creditor:
The application was filed in the prescribed Form No. I, as required under the I.B. Code. The bank provided particulars about the financial debts, loan documents, securities, and guarantees. The application included a power of attorney dated August 16, 2007, authorizing the Assistant General Manager to file the petition. The petition was filed on March 26, 2018, which is within the limitation period.

3. Authorization of the Signatory Filing the Application:
The Assistant General Manager of the bank, Mr. Mohan Haripant Zingade, filed the application based on a general power of attorney. The NCLT referenced the decision in Palogix Infrastructure Private Limited Vs. ICICI Bank Limited, which clarified that a financial creditor must act through an authorized representative. The NCLT concluded that the application was valid as it was signed by the authorized signatory of the bank.

4. Declaration of Moratorium under Section 13 and 14 of the I.B. Code:
Upon admitting the petition, the NCLT declared a moratorium under Sections 13 and 14 of the I.B. Code. This moratorium included:
- Suspension of all suits or proceedings against the corporate debtor.
- Prohibition on transferring, encumbering, or disposing of the corporate debtor’s assets.
- Suspension of any action to foreclose or enforce any security interest.
- Continuation of supply of essential goods or services to the corporate debtor.

5. Appointment of Interim Resolution Professional (IRP):
Mr. Ramchandra Dallaram Choudhary was appointed as the Interim Resolution Professional (IRP). He was directed to make a public announcement of the Corporate Insolvency Resolution Process (CIRP) and to take necessary actions under Sections 16 to 21 of the I.B. Code. The applicant bank was instructed to communicate the order to the IRP and the Corporate Debtor Company.

Conclusion:
The NCLT admitted the petition for initiating CIRP against the Corporate Debtor Company due to the default in debt repayment. The application was found to be complete and valid, and a moratorium was declared. An IRP was appointed to oversee the resolution process. The judgment ensures that the interests of the creditors are protected and the insolvency process is carried out as per the provisions of the I.B. Code.

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