Tribunal denies Corporate Insolvency Resolution Process initiation against KSM Spinning Mills

The Tribunal denied the application for initiation of Corporate Insolvency Resolution Process (CIRP) by the Central Bank of India against M/s. KSM Spinning Mills Ltd. The respondent's objections regarding the completeness of the application and the ongoing OTS process, claiming no default existed, were considered. Despite requests for additional opportunities to present arguments effectively, the Tribunal dismissed the plea, upheld the denial, and rejected CA No. 1169/2019.

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Issues:
1. Application for initiation of Corporate Insolvency Resolution Process (CIRP) under Section 7 of the Insolvency & Bankruptcy Code, 2016.
2. Request for an opportunity to present arguments effectively due to counsel unavailability.
3. Allegation of incomplete application and ongoing OTS process leading to no default.
4. Discretionary power to reopen evidence and novation of contract in the case.

Issue 1: The Central Bank of India filed CP(IB) No. 250/Chd/Pb/2018 seeking initiation of CIRP in the case of M/s. KSM Spinning Mills Ltd. The respondent raised objections regarding the completeness of the application and the ongoing OTS process, arguing that no default existed. The respondent requested an opportunity to present its stand effectively and extend the time for order until 30.03.2020. The Tribunal considered arguments from both sides and examined the record.

Issue 2: CA No. 1169/2019 was filed by KSM Spinning Mills Ltd. under Rule 11 read with NCLT Rules, 2016, due to the unavailability of their arguing counsel during the hearing. The applicant sought a chance to present additional points effectively. However, the Tribunal noted the presence of the respondent's counsel during the hearing and considered the contentions raised in the reply to the main application.

Issue 3: The respondent argued that the application was incomplete and highlighted the ongoing OTS process, claiming no default existed. The respondent referred to specific dates and amounts, emphasizing compliance issues with the sanction letter for the OTS proposal. The Tribunal examined the arguments, including reliance on legal precedents, and concluded that the request for another opportunity to present arguments effectively was denied.

Issue 4: The respondent relied on legal precedents regarding the discretionary power to reopen evidence and novation of contract. However, the Tribunal found that the terms of the OTS proposal were not complied with, leading to the automatic cancellation of the sanction letter. Therefore, the plea for granting another opportunity was rejected, and CA No. 1169/2019 was dismissed.

The Tribunal pronounced the judgment in open court, upholding the denial of the request for further opportunities to present arguments effectively and rejecting CA No. 1169/2019.

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