Tribunal Admits Bank's Insolvency Application, Appoints Resolution Professional

The tribunal admitted the application under Section 7 of the Insolvency and Bankruptcy Code, 2016, finding the applicant bank to be a Financial Creditor with a due debt and default. An Interim Resolution Professional was appointed, and a moratorium was declared to prevent actions against the corporate debtor. The tribunal addressed objections raised by the respondent, including a limitation claim and excess interest dispute, emphasizing the importance of determining default occurrence. The order highlighted the need for cooperation and protection of the corporate debtor's assets by the Interim Resolution Professional.

---

---

Issues Involved:
1. Triggering of Corporate Insolvency Resolution Process (CIRP) under Section 7 of the Insolvency and Bankruptcy Code, 2016.
2. Determination of the status of the applicant as a Financial Creditor.
3. Examination of the debt and default status.
4. Consideration of objections raised by the respondent, including the claim of limitation and excess interest.
5. Appointment of an Interim Resolution Professional (IRP) and declaration of moratorium.

Issue-wise Detailed Analysis:

1. Triggering of Corporate Insolvency Resolution Process (CIRP):
The Jammu & Kashmir Bank Limited filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016, seeking to initiate the Corporate Insolvency Resolution Process against Integrated Livestock Village Farm Private Limited. The application was filed due to the respondent's failure to repay the credit facilities availed from the applicant bank, resulting in a default.

2. Determination of the Status of the Applicant as a Financial Creditor:
The applicant bank sanctioned and disbursed various loan amounts to the corporate debtor, recoverable with applicable interest. The loans were disbursed against the consideration for time value of money, meeting the definition of "Financial Debt" under Section 5(8) of the Code. Consequently, the applicant bank qualifies as a "Financial Creditor" as per Section 5(7) of the Code.

3. Examination of Debt and Default Status:
The applicant bank provided substantial evidence, including loan agreements, security documents, and statements of accounts, confirming the disbursement and utilization of loan facilities by the corporate debtor. The debt claimed amounted to Rs. 22,93,41,381.24, with further interest from 01.05.2019. The tribunal found that the debt was due and there was a clear occurrence of default, satisfying the conditions under Section 7(5)(a) of the Code.

4. Consideration of Objections Raised by the Respondent:
- Limitation Claim: The respondent argued that the application was time-barred as the default occurred on 27.09.2015, and the application was filed in May 2019. However, the tribunal noted that the respondent acknowledged the debt and made partial payments as recently as 02.04.2019, thus extending the limitation period.
- Excess Interest Claim: The respondent alleged that the applicant bank charged excess interest. The tribunal clarified that disputes over the quantum of default do not affect the maintainability of an application under Section 7, as the tribunal's role is to ascertain the occurrence of default, not to determine the exact amount due.
- NPA Declaration: The respondent contended that the account was wrongly declared as NPA. The tribunal stated that the NPA status under the SARFAESI Act, 2002, is irrelevant to the proceedings under the Insolvency and Bankruptcy Code, 2016.

5. Appointment of Interim Resolution Professional (IRP) and Declaration of Moratorium:
The tribunal appointed Mr. Neeraj Bhatia as the Interim Resolution Professional, as proposed by the applicant. A moratorium was declared under Section 14 of the Code, prohibiting suits, asset transfers, enforcement actions, and recovery of property by owners or lessors against the corporate debtor. The IRP was directed to make a public announcement and perform his duties as per the Code, Rules, and Regulations.

Conclusion:
The tribunal admitted the application under Section 7 of the Insolvency and Bankruptcy Code, 2016, satisfied that the applicant bank is a Financial Creditor, the debt is due, and default has occurred. The tribunal appointed an Interim Resolution Professional and declared a moratorium, directing the applicant to deposit Rs. 2 Lakhs with the IRP for expenses. The order emphasized the necessity for cooperation from the corporate debtor's personnel and the IRP's duty to protect the corporate debtor's property.

---