Corporate Insolvency Process Initiated due to Financial Inability: Court Orders Compliance with Statutory Requirements

The court admitted the petition under Section 7 of the Insolvency & Bankruptcy Code, 2016, initiating Corporate Insolvency Resolution Process due to the Corporate Debtor's financial inability. The judgment highlighted non-compliance with SARFAESI Act, 2002, leading to actions being set aside. The one-time settlement offer was accepted within the limitation period, and the petition detailed the outstanding amount due. The court appointed an Interim Resolution Professional and imposed a moratorium under Section 14 of the Code, directing compliance with statutory requirements for the resolution process.

---

---

Issues:
1. Initiation of Corporate Insolvency Resolution Process under Section 7 of the Insolvency & Bankruptcy Code, 2016.
2. Compliance with statutory provisions of the SARFAESI Act, 2002.
3. Validity of the one-time settlement offer by the Corporate Debtor.
4. Claim amount and limitation period under the Insolvency & Bankruptcy Code, 2016.
5. Appointment of the Interim Resolution Professional (IRP).

Analysis:

1. The petition was filed under Section 7 of the Insolvency & Bankruptcy Code, 2016, seeking initiation of Corporate Insolvency Resolution Process due to the Corporate Debtor's inability to repay its financial debt. The account was declared NPA in 2015, and subsequent actions were taken by the Financial Creditor to recover the dues, leading to the present petition.

2. A judgment by the DRT Lucknow highlighted non-compliance by the respondent bank with statutory provisions of the SARFAESI Act, 2002, resulting in the setting aside of actions initiated under the Act. The possession of secured assets was directed to be handed over to the applicant, with the possibility for the Financial Institution to proceed afresh under the SARFAESI Act.

3. The Corporate Debtor made a one-time settlement offer in December 2018, admitting default and indicating a continuous cause of action. This offer was considered in the context of the total outstanding amount due, which was found to be within the limitation period for filing the petition under the Insolvency & Bankruptcy Code.

4. The petition detailed the outstanding amount due from the Corporate Debtor, with no payments made post-default. The petition was filed within the limitation period, and inconsistencies raised by the Corporate Debtor regarding claim amounts did not impact the minimum threshold limit fixed under the Insolvency & Bankruptcy Code. The Tribunal admitted the petition and initiated the Corporate Insolvency Resolution Process.

5. The Financial Creditor proposed the appointment of Mr. Ashwani Kumar Gupta as the Interim Resolution Professional (IRP), whose consent and details were provided. The Tribunal confirmed his appointment and directed him to take necessary steps under the statute, specifically in compliance with relevant sections of the Insolvency & Bankruptcy Code.

The judgment imposed a moratorium under Section 14 of the Code, listed the actions restricted during this period, and instructed the IRP to proceed with the resolution process. The case was renotified for the IRP's report, ensuring compliance with the statutory requirements for the Corporate Insolvency Resolution Process.

---