Tribunal Initiates CIRP Against Corporate Debtor, Appoints IRP: Moratorium in Effect

The Tribunal admitted the Financial Creditor's application, initiating Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor. Mr. Niraj Agrawal was appointed as the Interim Resolution Professional (IRP) to manage the process. A moratorium was declared under Section 14 of the Insolvency & Bankruptcy Code, 2016, prohibiting legal actions against the Corporate Debtor. The Tribunal directed the IRP to convene a meeting of the Committee of Creditors and communicate the order to relevant parties for further proceedings.

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Issues Involved:
1. Admissibility of documents and bank statements under the Bankers Books Evidence Act, 1891.
2. Existence and default of financial debt.
3. Appointment of Interim Resolution Professional (IRP).
4. Declaration of moratorium under Section 14 of the Insolvency & Bankruptcy Code, 2016.

Issue-wise Detailed Analysis:

1. Admissibility of Documents and Bank Statements:
The Corporate Debtor contended that the application was defective due to non-compliance with the Bankers Books Evidence Act, 1891, specifically the omission of certification of the bank statements. The Tribunal examined the arguments and referred to the case of Ishwar Dass Jain vs. Sohan Lal, where it was held that entries in account books are admissible if kept in the regular course of business but cannot alone create liability. The Tribunal concluded that the Financial Creditor's reliance on the balance sheet filed with the MCA and the absence of dispute over the statement of accounts by the Corporate Debtor negated the need for such certification.

2. Existence and Default of Financial Debt:
The Financial Creditor provided evidence of the Corporate Debtor's financial debt through various documents, including the sanction letter, demand promissory notes, letters of undertaking, and hypothecation agreements. The Corporate Debtor acknowledged the debt in its balance sheet, showing an outstanding amount borrowed from the Financial Creditor. The Tribunal found that the existence of financial debt under Section 5(8) of the Insolvency & Bankruptcy Code, 2016, was not disputed, and the default in repayment was evident. The Tribunal dismissed the Corporate Debtor's objections regarding the mismatch in figures and non-production of the Information Utility Certificate, citing other sufficient evidence like the CIBIL report.

3. Appointment of Interim Resolution Professional (IRP):
The Financial Creditor proposed Mr. Niraj Agrawal as the IRP, who provided written consent and declared no conflict of interest with the Corporate Debtor. The Tribunal accepted the proposal and appointed Mr. Agrawal as the IRP, directing him to ascertain the particulars of creditors and convene a meeting of the Committee of Creditors within 105 days from the insolvency commencement date.

4. Declaration of Moratorium:
The Tribunal declared a moratorium under Section 14 of the Insolvency & Bankruptcy Code, 2016, prohibiting:
a) Institution or continuation of suits or proceedings against the Corporate Debtor.
b) Transfer, encumbrance, or disposal of the Corporate Debtor's assets.
c) Actions to foreclose or enforce any security interest.
d) Recovery of property by owners or lessors.

The moratorium was to remain effective from the date of admission until the completion of the Corporate Insolvency Resolution Process (CIRP) or until an order of liquidation or approval of a resolution plan was passed.

Final Order:
The Tribunal admitted the application filed by the Financial Creditor, initiating the CIRP against the Corporate Debtor. The Tribunal directed the IRP to make a public announcement, call for claims, and convene a meeting of the Committee of Creditors. The Registry was instructed to communicate the order to the relevant parties and list the matter for filing of the progress report on 13th August 2019.

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