Tribunal rules in favor of Financial Creditor, declares debt & appoints Resolution Professional.

The Tribunal found in favor of the Financial Creditor (FC), determining a debt of Rs. 595,60,65,355.00 as of 11.08.2017 with a default in repayment. The application was deemed complete, leading to the admission of the application, declaration of a moratorium, and appointment of an Interim Resolution Professional. Despite delays attributed to adjournments requested by the Corporate Debtor (CD), the application was ultimately admitted and disposed of.

---

---

Issues Involved:
1. Authorization of the person filing the application.
2. Classification and calculation of financial debt.
3. Contradictory figures regarding the debt.
4. Parallel proceedings in different fora.
5. Inclusion of penal charges in the debt claim.

Issue-wise Detailed Analysis:

1. Authorization of the Person Filing the Application:
The Corporate Debtor (CD) claimed that the person who submitted the application on behalf of the Financial Creditor (FC) lacked proper authorization. The FC countered this by referring to a power of attorney dated 20.03.2017, which authorized Mr. Somraj Mukherjee to file the application. The Tribunal found that the power of attorney, executed based on a board resolution, was valid and empowered Mr. Mukherjee to initiate the proceedings. The Tribunal also referenced the NCLAT decision in Palogix Infrastructure Pvt. Ltd. vs. ICICI Bank Ltd., which supported the validity of such authorizations.

2. Classification and Calculation of Financial Debt:
The CD argued that the amount claimed by the FC included penal charges, which should not be considered financial debt under Section 5(8) of the Insolvency & Bankruptcy Code, 2016. The FC contended that the definition of financial debt is inclusive and that penal interest is a form of interest. The Tribunal agreed with the FC, citing the RBI Master Circular on Interest Rates on Advances and the Supreme Court decision in Central Bank of India vs. Ravindra & Ors., which recognized penal interest as a form of interest. Therefore, the inclusion of penal charges in the debt claim was deemed valid.

3. Contradictory Figures Regarding the Debt:
The CD pointed out discrepancies in the debt amounts stated in various documents. The FC explained that the differences were due to the updating of dues over time and provided a detailed reconciliation of the amounts. The Tribunal found the FC's explanation satisfactory and concluded that the discrepancies did not undermine the validity of the debt claim.

4. Parallel Proceedings in Different Fora:
The CD argued that the FC's initiation of proceedings before both the Debt Recovery Tribunal (DRT) and the National Company Law Tribunal (NCLT) jeopardized its rights. The FC responded that the proceedings under the Insolvency & Bankruptcy Code are independent and that the moratorium under Section 14 would protect the CD from parallel proceedings. The Tribunal agreed, referencing the Allahabad High Court decision in Sanjeev Shriya vs. State Bank of India, which supported the application of a moratorium to ongoing proceedings in other fora.

5. Inclusion of Penal Charges in the Debt Claim:
The CD contended that the FC could not claim penal charges from the CD when it had not claimed them from the principal debtor in the DRT proceedings. The Tribunal found that the loan agreement between the FC and the principal debtor, as well as the guarantee agreement with the CD, included provisions for penal charges. Therefore, the claim for penal charges from the CD was valid.

Conclusion:
The Tribunal found that the FC had established a debt of Rs. 595,60,65,355.00 as of 11.08.2017 and a default in repayment. The application was complete in all respects, and the Tribunal admitted the application, declaring a moratorium and appointing an Interim Resolution Professional. The Tribunal also addressed the issue of delays in the proceedings, attributing them to adjournments requested by the CD. The application was thus admitted and disposed of accordingly.

---