Tribunal Admits Insolvency Petition, Appoints Resolution Professional

The tribunal admitted the petition under Section 7 of the Insolvency and Bankruptcy Code, 2016, finding the application valid and complete. Mr. Naveen Jain was deemed authorized to file the application despite challenges to his authority. The tribunal upheld the admissibility of evidence under the Bankers' Books Evidence Act, 1891. It dismissed objections related to ongoing arbitration and claims, emphasizing the Code's objective to maximize asset value. Mr. Rajiv Chakraborty was appointed as the Interim Resolution Professional, and a moratorium was declared. The tribunal directed cooperation with the Interim Resolution Professional and rejected all objections raised by the Corporate Debtor.

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Issues Involved:
1. Validity of the application under Section 7 of the Insolvency and Bankruptcy Code, 2016.
2. Authority of Mr. Naveen Jain to file the application.
3. Admissibility of evidence under the Bankers’ Books Evidence Act, 1891.
4. Impact of ongoing arbitration and other claims on the initiation of the Corporate Insolvency Resolution Process (CIRP).

Issue-wise Detailed Analysis:

1. Validity of the application under Section 7 of the Insolvency and Bankruptcy Code, 2016:
The Financial Creditor, Union Bank of India, filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016 to initiate the Insolvency Resolution Process against the Corporate Debtor. The application was filed in the prescribed form and manner under Rule 4 (2) of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016. The tribunal found that a default had occurred, the application was complete, and there were no disciplinary proceedings pending against the proposed Interim Resolution Professional. Consequently, the application warranted admission.

2. Authority of Mr. Naveen Jain to file the application:
The Corporate Debtor challenged the authority of Mr. Naveen Jain to file the application, arguing that the Power of Attorney was executed before the Code came into force and was not on a stamp paper. The tribunal rejected this objection, noting that a certificate dated 26-03-2018 and a Board Resolution dated 06-12-2008, along with a special power of attorney dated 11-08-2017 in favor of Mr. Naveen Jain, were placed on record. These documents demonstrated that Mr. Naveen Jain was authorized to file the application, rendering the objection frivolous and devoid of merit.

3. Admissibility of evidence under the Bankers’ Books Evidence Act, 1891:
The Corporate Debtor argued that the statement of account was not filed in accordance with the Bankers’ Books Evidence Act, 1891, and contained handwritten entries. The tribunal cited Section 4 of the Bankers’ Books Evidence Act, 1891, which states that a certified copy of any entry in a banker’s books is prima facie evidence of the existence of such entry. The tribunal found that a certificate of entries in a banker’s books was placed on record, and there was a record of default available with the Central Repository of Information on Large Credits (CRILC). Therefore, the tribunal rejected the objection.

4. Impact of ongoing arbitration and other claims on the initiation of the CIRP:
The Corporate Debtor contended that the initiation of the CIRP would jeopardize ongoing infrastructure projects and that it had substantial claims in arbitration proceedings. The tribunal held that pending claim petitions could not be a basis for rejecting the initiation of the CIRP, as there was no provision in the Code to create such a bar. The tribunal emphasized that the object of the Code is to maximize the value of the assets of an entity, and the initiation of the CIRP would serve this purpose.

Conclusion:
The tribunal admitted the petition, appointed Mr. Rajiv Chakraborty as the Interim Resolution Professional, and declared a moratorium in terms of Section 14 of the Code. The tribunal directed the Interim Resolution Professional to make a public announcement of the admission and perform his functions in accordance with the Code. The personnel connected with the Corporate Debtor were legally obligated to extend cooperation to the Interim Resolution Professional. The tribunal rejected all objections raised by the Corporate Debtor, emphasizing the need to follow best practices and principles of fairness during the CIRP.

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