Tribunal admits insolvency petition against E and G Global Estates Ltd. Intervention application dismissed. Corporate insolvency resolution process initiated.

The tribunal admitted the insolvency petition filed by Small Industries Development Bank of India against E and G Global Estates Ltd. for defaulting on a loan amount. An intervention application filed by M/s. G. S. Consto and Infra P. Ltd. seeking to recall the order and settle the dues was dismissed for lack of legal basis. Despite settlement attempts, the tribunal initiated the corporate insolvency resolution process, appointing an interim resolution professional and imposing a moratorium as per the Insolvency and Bankruptcy Code.

---

---

Issues Involved:
1. Admission of the insolvency petition under Section 7 of the Insolvency and Bankruptcy Code, 2016.
2. Intervention application (M.A. No. 3182 of 2019) filed by M/s. G. S. Consto and Infra P. Ltd.
3. Settlement attempts between the financial creditor and the corporate debtor.

Issue-wise Detailed Analysis:

1. Admission of the Insolvency Petition:
The petitioner, Small Industries Development Bank of India (SIDBI), filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016, against the corporate debtor, E and G Global Estates Ltd., for a default amount of Rs. 3,85,15,033. The corporate debtor's loan account was declared a non-performing asset on November 8, 2018. The loan was secured by hypothecation of machinery and equipment and personal guarantees from the corporate debtor's directors. The financial creditor submitted all necessary documents, including financial statements, master ledger, NPA certificate, and CIBIL report, to support the claim. The tribunal found that the corporate debtor had defaulted in repayment, and the debt qualified as a "financial debt" under Section 5(8) of the Code. Consequently, the petition was deemed complete, and the corporate insolvency resolution process (CIRP) was initiated.

2. Intervention Application (M.A. No. 3182 of 2019):
M/s. G. S. Consto and Infra P. Ltd. and its promoters filed an intervention application seeking to recall the order dated September 6, 2019, and to be heard before the admission of the insolvency petition. The applicants claimed to have acquired 44% shares in the corporate debtor and were in possession of its property, managing its day-to-day expenses. They argued that a memorandum of understanding (MoU) dated December 10, 2018, allowed them to repay the corporate debtor's outstanding loan and liabilities. However, the tribunal found that the MoU was not legally binding as it required written consent from SIDBI, which was never obtained. The tribunal noted that the applicants, being in control of the corporate debtor, had ample opportunity to settle the dues but failed to do so, using the intervention application to delay the admission of the insolvency petition. Consequently, the intervention application was dismissed.

3. Settlement Attempts:
Throughout the proceedings, there were multiple attempts at settlement between the financial creditor (SIDBI) and the corporate debtor. The tribunal adjourned hearings several times to allow the parties to negotiate and finalize consent terms. Despite draft consent terms being prepared, the applicants failed to honor the settlement agreements. The tribunal observed that the applicants used the settlement discussions to delay the admission of the insolvency petition. Ultimately, the tribunal concluded that the applicants had no intention of settling the dues and were merely stalling the process.

Judgment:
The tribunal dismissed M.A. No. 3182 of 2019, finding that the applicants had ample time to settle the dues but failed to do so. The tribunal admitted the insolvency petition C.P. (IB) No. 2995(MB) of 2019 and appointed Mr. Gajesh Labhchand Jain as the interim resolution professional. The tribunal ordered the commencement of the CIRP and imposed a moratorium as prescribed under Section 14 of the Code. The interim resolution professional was directed to carry out the public announcement of the initiation of CIRP and report the progress within 30 days.

---