Court Initiates Corporate Insolvency Resolution Process under Section 10

The court admitted the application under Section 10 of the Insolvency and Bankruptcy Code, initiating the Corporate Insolvency Resolution Process. The moratorium under Section 14 was triggered, applying only to properties owned by the corporate debtor. Mr. Rajendra Karanmal Bhuta was appointed as the Interim Resolution Professional, responsible for managing the debtor's affairs and submitting progress reports.

---

---

Issues Involved:
1. Initiation of Corporate Insolvency Resolution Process (CIRP) under Section 10 of the Insolvency and Bankruptcy Code, 2016.
2. Examination of the debtor's financial status and the inclusion of assets in the balance sheet.
3. Application of the moratorium under Section 14 of the Insolvency and Bankruptcy Code, 2016.
4. Role and responsibilities of the Interim Resolution Professional (IRP).

Issue-wise Detailed Analysis:

1. Initiation of Corporate Insolvency Resolution Process (CIRP) under Section 10 of the Insolvency and Bankruptcy Code, 2016:
The Corporate Debtor filed a petition on 19th June 2017, invoking Section 10 of the Insolvency and Bankruptcy Code, 2016, to initiate CIRP against itself. The application aimed at commencing the insolvency resolution process due to the debtor's inability to repay a financial debt amounting to Rs. 4,43,70,739/-. The debt was initially provided by the Oriental Bank of Commerce and later assigned to Asset Reconstruction Company of India Limited (ARCIL). The debtor argued that admitting the petition would trigger the moratorium under Section 14, halting all recovery actions under the SARFAESI Act.

2. Examination of the debtor's financial status and the inclusion of assets in the balance sheet:
The debtor's provisional balance sheet as of 5th June 2017 was examined, showing liabilities and assets. The assets did not include the immovable properties mortgaged to the bank. The balance sheet reflected liabilities under "Short Term Borrowings," "Trade Payable," and "Current Liabilities," but lacked detailed schedules. The debtor attempted to demonstrate ongoing business operations and potential for revival, supported by revenue generation and profit figures.

3. Application of the moratorium under Section 14 of the Insolvency and Bankruptcy Code, 2016:
The moratorium under Section 14 prohibits actions to recover or enforce security interest against the corporate debtor's property. However, the tribunal clarified that the moratorium applies only to properties owned by the corporate debtor, as indicated by the term "its" in Section 14(1)(c). Properties not owned by the corporate debtor, such as personal properties of promoters given as security, do not fall within the moratorium's ambit. The tribunal emphasized that the statutory language must be interpreted as it stands, without adding or substituting words.

4. Role and responsibilities of the Interim Resolution Professional (IRP):
The tribunal approved the appointment of Mr. Rajendra Karanmal Bhuta as the Interim Resolution Professional (IRP). The IRP is tasked with managing the corporate debtor's affairs, ensuring cooperation from the debtor's personnel, and maintaining the operations as a going concern. The IRP is also responsible for public announcements and submitting a progress report within one month of the commencement of the insolvency resolution process.

Conclusion:
The application under Section 10 was admitted, initiating the Corporate Insolvency Resolution Process. The moratorium under Section 14 came into effect, but only applied to properties owned by the corporate debtor. The IRP was directed to take necessary actions to expedite the insolvency resolution process and submit a progress report within one month.

---