2018 (8) TMI 2056 - Tri - Insolvency and Bankruptcy

Bank of Baroda's Insolvency Application Approved for Doshion Water Solutions

The application under the Insolvency and Bankruptcy Code filed by Bank of Baroda against M/s. Doshion Water Solutions Private Limited for defaulting on a ... Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - Winding-up against the Debtor Company was ordered or not - HELD THAT:- Initially the Hon’ble Bombay High Court had ordered for Winding-up of the Debtor Company and the said Order has been set aside by the Appellate Court. Hence, consequently the conclusion can be drawn that at present there is no Winding-up order is operative against the Debtor Company and therefore there is no legal hurdle to proceed in this matter in its own merits. While going through the submissions it is noticed that admittedly the Debtor has availed the Loan Facilities from the Financial Creditor however, the Debtor has defaulted in making the payment - admittedly the modalities for the restructuring of Debt had been agreed between the consortium of Banks and the Debtor Company. However there is nothing on record which will prove that the modalities agreements were acted upon / implemented by the Financial Creditors. Consequently any of one from the Consortium had not enhanced the facilities of the Debtor. As the agreements were not acted upon the amount of Debt has never been restructured and therefore there is an existence of debt and the Debtor Company is liable to make the payment to the Financial Creditor - there is no dispute about the existence of default and the default is also evident from the order of DRT, Ahmedabad. On the basis of the evidences on record the Financial Creditor has established that the loan was sanctioned and duly disbursed to the Corporate Debtor but there is non-payment of the Balance Debt on the part of the Corporate Debtor - keeping admitted facts in mind that the Financial Creditor had not received the outstanding Debt from the Corporate Debtor and that the formalities as prescribed under the Code have been completed by the Financial Creditor this Petition deserves ‘Admission’. Petition admitted - moratorium declared. Issues:1. Maintainability of the application under the Insolvency and Bankruptcy Code.2. Default in repayment by the Corporate Debtor.3. Existence of debt and liability of the Corporate Debtor.4. Appointment of Interim Resolution Professional.5. Implementation of Moratorium under Section 14 of the Code.6. Public Announcement of the Insolvency Resolution Process.7. Duties of the Interim Resolution Professional.Analysis:Issue 1: Maintainability of the application under the Insolvency and Bankruptcy CodeThe Financial Creditor, Bank of Baroda, filed an application under Section 7 of the Code against the Corporate Debtor, M/s. Doshion Water Solutions Private Limited, for defaulting on a significant debt. The Financial Creditor invoked the provisions of the Code to initiate Corporate Insolvency Resolution Process (CIRP).Issue 2: Default in repayment by the Corporate DebtorThe Corporate Debtor had availed loan facilities from the Financial Creditor but defaulted on repayment, leading to the account being classified as a Non-Performing Asset (NPA) since 31.08.2015. Despite demand notices and attempts at restructuring, the Debtor failed to make payments, prompting the Financial Creditor to file the application under Section 7 of the Code.Issue 3: Existence of debt and liability of the Corporate DebtorThe Tribunal found that the Debt restructuring agreements between the consortium of Banks and the Debtor were not implemented, resulting in the debt remaining unpaid. The Debtor's default was established, and the Tribunal concluded that the Corporate Debtor was liable to make payments to the Financial Creditor as per the provisions of the Code.Issue 4: Appointment of Interim Resolution ProfessionalThe Tribunal admitted the Petition/Application, appointing an Insolvency Professional, Mr. Ketul Bhai Patel, as the Interim Resolution Professional to initiate the Insolvency Resolution Process. The provisions of Moratorium under Section 14 of the Code were implemented, prohibiting certain actions against the Corporate Debtor during the resolution process.Issue 5: Implementation of Moratorium under Section 14 of the CodeThe Moratorium prescribed under Section 14 of the Code was enforced, preventing legal actions and asset transfers against the Corporate Debtor. Essential supplies to the Debtor were to continue, and the Moratorium would remain in effect until the completion of the Insolvency Resolution Process or approval of the Resolution Plan.Issue 6: Public Announcement of the Insolvency Resolution ProcessUpon the declaration of Moratorium, the Interim Resolution Professional was tasked with making a Public Announcement of the Initiation of Corporate Insolvency Resolution Process as per the Code's provisions. This step was to be carried out promptly after the IRP's appointment.Issue 7: Duties of the Interim Resolution ProfessionalThe Interim Resolution Professional was directed to perform duties under Sections 18 and 15 of the Code, updating the Tribunal on the Progress of the Resolution Plan and compliance with the Order within 30 days. The IRP was granted liberty to provide updates earlier if necessary.The Petition was admitted, and the Corporate Insolvency Resolution Process was set in motion effective from the date of the Order, with specific directions and actions outlined for the Interim Resolution Professional to follow.