2018 (6) TMI 730 - Tri - Insolvency and Bankruptcy

Tribunal Admits CIRP Application, Appoints IRP, Declares Moratorium

Alchemist Asst and Reconstruction Company Limited Versus Jaipur Metals And Electricalsw Limited

The Tribunal admitted the application for Corporate Insolvency Resolution Process (CIRP), appointed Mr. Anil Kumar as the Interim Resolution Professional ... Corporate insolvency process - Default in repayment of the outstanding amount - Admission of winding up petition - Held that:- Prior admission stage of pendency of winding up proceeding against corporate debtor under the Companies Act, 1956 cannot come in the way of the Code. In the present case the applicant vide affidavit dated 01.03.2018 has affirmed that till date no order of liquidation or admission of winding up petition has been passed by Hon’ble High Court of Rajasthan in the pending winding up petition and that no provisional liquidator or official liquidator has been appointed. In that view of the position there is no bar for initiation of Corporate Insolvency Resolution Process against the respondent corporate debtor under the provisions of the Code. There is no dispute that the respondent company has committed default in repayment of the outstanding amount. Moreover, the application of the financial creditor is complete and there is no disciplinary proceeding pending against the proposed IRP. We are satisfied that the present application is complete and the applicant financial creditor is entitled to claim its outstanding financial debt from the corporate debtor and that there has been a default in payment of the financial debt - in terms of Section 7 (5) (a) of the Code, the present application is admitted. Issues Involved:1. Jurisdiction and authority to initiate Corporate Insolvency Resolution Process (CIRP).2. Validity and completeness of the financial creditor's application.3. Evidence of financial debt and default.4. Impact of pending SARFAESI and DRT proceedings.5. Status of winding-up proceedings.6. Appointment of Interim Resolution Professional (IRP) and declaration of moratorium.Issue-wise Detailed Analysis:1. Jurisdiction and Authority to Initiate CIRP:The application was filed by M/s Alchemist Asset and Reconstruction Company Limited (AARCL) under Section 7 of the Insolvency and Bankruptcy Code, 2016. The respondent, M/s Jaipur Metals & Electricals Limited, is incorporated in Rajasthan, falling under the territorial jurisdiction of the National Company Law Tribunal (NCLT), New Delhi, as per Section 60(1) of the Code.2. Validity and Completeness of the Financial Creditor's Application:The application was authorized by a Board Resolution dated 15.12.2017. The proposed IRP, Mr. Anil Kumar, met the requirements of Section 7(3)(b) of the Code, with no disciplinary proceedings pending against him. The application included necessary disclosures and declarations as required by the Insolvency and Bankruptcy Board of India (IBBI) Regulations.3. Evidence of Financial Debt and Default:The financial debt details in Part-IV of the application included loans sanctioned by IDBI and SBBJ, which were later assigned to AARCL. The total debt claimed was Rs. 555,47,56,370/- as of 31.12.2017. The respondent's financial statements for the year ending 31.03.2013 confirmed the outstanding debt of Rs. 391,72,98,134/- to various creditors, including IDBI and SBBJ, now assigned to AARCL. The respondent admitted to taking loans and defaulting on repayments, acknowledging AARCL as a secured creditor.4. Impact of Pending SARFAESI and DRT Proceedings:The Tribunal noted that the pendency of SARFAESI proceedings and proceedings before the Debts Recovery Tribunal (DRT) does not preclude the initiation of CIRP under Section 7 of the Code, given the overriding effect of Section 238 of the Code.5. Status of Winding-up Proceedings:The Tribunal referred to precedents, including Unigreen Global Private Limited v. Punjab National Bank and Forech India (P.) Ltd. v. Edelweiss Assets Reconstruction (Co.) Ltd., to conclude that the mere pendency of a winding-up petition without an order of liquidation or admission does not bar the initiation of CIRP. An affidavit confirmed that no liquidation or admission order had been passed, and no provisional or official liquidator had been appointed.6. Appointment of IRP and Declaration of Moratorium:The application was admitted under Section 7(5)(a) of the Code, as the default had occurred, the application was complete, and no disciplinary proceedings were pending against the proposed IRP. Mr. Anil Kumar was appointed as the IRP. A public announcement was directed to be made, and a moratorium was declared under Section 14 of the Code, prohibiting:- Institution or continuation of suits or proceedings against the corporate debtor.- Transfer, encumbrance, or disposal of the corporate debtor's assets.- Actions to foreclose or enforce any security interest.- Recovery of property occupied by the corporate debtor.The moratorium does not apply to transactions notified by the Central Government or the supply of essential goods or services. The IRP was directed to perform duties under Sections 15, 17, 18, 19, 20, and 21 of the Code, with all personnel connected to the corporate debtor required to assist the IRP.Conclusion:The Tribunal admitted the application, appointed Mr. Anil Kumar as the IRP, and declared a moratorium, directing communication of the order to the financial creditor, corporate debtor, and IRP within seven days.