Tribunal admits insolvency petition under IBC, dismisses counterclaims. IRP appointed to start CIRP process.

The tribunal admitted the insolvency petition under Section 7 of the Insolvency and Bankruptcy Code (IBC) filed by the Financial Creditor against the Corporate Debtor. The petition was found complete, establishing the existence of financial debt and default. Counterclaims and fraud allegations by the Corporate Debtor were dismissed as invalid defenses. Serious concerns were raised regarding the conduct of bank authorities in granting loans based on questionable collateral. An Interim Resolution Professional (IRP) was appointed, and a moratorium was declared to initiate the Corporate Insolvency Resolution Process (CIRP).

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Issues Involved:
1. Admission of the insolvency petition under Section 7 of the Insolvency and Bankruptcy Code (IBC).
2. Existence of financial debt and default by the Corporate Debtor.
3. Counterclaims and allegations of fraud by the Corporate Debtor against the Financial Creditor.
4. Role and conduct of bank authorities in granting the loan.
5. Appointment of Interim Resolution Professional (IRP) and declaration of Moratorium.

Issue-wise Detailed Analysis:

1. Admission of the Insolvency Petition:
The petition was filed by the Financial Creditor under Section 7 of the Insolvency and Bankruptcy Code (IBC) against the Corporate Debtor. The Financial Creditor, being the lead bank of a consortium, claimed a default on a loan amount of Rs. 226,50,22,144/- as of 31.12.2017. The petition was found to be complete and all procedural formalities were complied with, leading to its admission.

2. Existence of Financial Debt and Default:
The Financial Creditor provided evidence of the debt, including sanction letters, consortium agreements, and various hypothecation and guarantee agreements. The Corporate Debtor did not deny the receipt of financial facilities or the existence of the debt. It was established that the loan was duly sanctioned and disbursed, but there was a default in repayment. The tribunal noted that the default was admitted by the Corporate Debtor in correspondence with ICICI Bank.

3. Counterclaims and Allegations of Fraud:
The Corporate Debtor alleged that the Financial Creditor and other consortium members were liable for the loss of stock (diamonds) due to fraud or gross negligence. The Corporate Debtor filed counterclaims for recovery of Rs. 1561.87 Crores and additional damages of Rs. 5000 Crores for loss of business and goodwill. However, the tribunal held that these counterclaims did not constitute a valid defense against the insolvency petition, as they were neither admitted sums nor adjudicated by any court. The tribunal cited precedents to support this view, emphasizing that a claim for unliquidated damages does not give rise to a debt until adjudicated.

4. Role and Conduct of Bank Authorities:
The tribunal expressed serious concerns about the conduct of bank authorities in granting substantial loan facilities based on allegedly fake diamonds. It highlighted the need for thorough verification of the stock pledged as security. The tribunal noted discrepancies in the valuation of the seized stock and suggested that the bank authorities might have been negligent in their duties. It called for an in-depth investigation into these allegations.

5. Appointment of Interim Resolution Professional (IRP) and Declaration of Moratorium:
The tribunal appointed Mr. Hiten Mukundbhai Parikh as the Interim Resolution Professional (IRP) to conduct the Corporate Insolvency Resolution Process (CIRP). A moratorium was declared, prohibiting the institution of any suits or transferring/encumbering the Corporate Debtor's assets. The IRP was directed to make a public announcement of the initiation of CIRP and to perform duties as assigned under Sections 18 and 15 of the Code. The tribunal also instructed the IRP to communicate the order to relevant authorities for further action.

Conclusion:
The tribunal concluded that the petition deserved admission as the Financial Creditor had established the existence of financial debt and default. The counterclaims by the Corporate Debtor were not considered a valid defense. The tribunal emphasized the need for an investigation into the conduct of bank authorities and the alleged fraud. The Corporate Insolvency Resolution Process was initiated, and the IRP was appointed to oversee the process.

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