Tribunal admits Bank of Baroda's petition for Corporate Insolvency Resolution Process

The Tribunal admitted the petition filed by Bank of Baroda under Section 7 of the Insolvency and Bankruptcy Code, 2016, initiating the Corporate Insolvency Resolution Process against M/s. Barnala Steel Industries Private Limited. Mr. Satyendra Prasad Khorania was appointed as the Interim Resolution Professional, and a moratorium was declared in accordance with Section 14 of the Code, prohibiting certain actions against the Corporate Debtor.

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Issues Involved:
1. Application under Section 7 of the Insolvency and Bankruptcy Code, 2016.
2. Authorization to file the application.
3. Financial debt and default.
4. Objections raised by the Corporate Debtor.
5. Appointment of Interim Resolution Professional.
6. Declaration of moratorium.

Issue-wise Detailed Analysis:

1. Application under Section 7 of the Insolvency and Bankruptcy Code, 2016:
The Financial Creditor, Bank of Baroda, filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016 (the Code) to initiate the Corporate Insolvency Resolution Process (CIRP) against M/s. Barnala Steel Industries Private Limited. The application was deemed complete and in accordance with the prescribed form and manner under Rule 4(1) of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 read with Section 7(2) of the Code.

2. Authorization to file the application:
The Financial Creditor authorized Mr. Baru Singh Chauhan, through a power of attorney dated 24.01.2014, to submit and sign the petition. The Tribunal examined the power of attorney and other authorizations, including a Board Circular Resolution dated 14.11.2017, which authorized Chief Managers and above to initiate legal actions, including proceedings under the Code. The Tribunal found that the petition was filed by a duly authorized person.

3. Financial debt and default:
The Financial Creditor provided details of the financial debt, including a Cash Credit Facility initially sanctioned on 16.03.2001 and enhanced to Rs. 75 Crores on 27.03.2015. The Corporate Debtor's account was declared a Non-Performing Asset (NPA) on 25.05.2016, with a total amount in default of Rs. 80,46,50,066.57, and interest of Rs. 11,26,95,099.73 till 30.09.2017. The Tribunal confirmed the occurrence of default based on the statement of accounts and other documentary evidence.

4. Objections raised by the Corporate Debtor:
The Corporate Debtor opposed the application on several grounds:
- Business losses due to increased power tariff, entry tax, recession in the steel industry, reduced steel prices, and lower demand.
- Defects in the application, such as the general nature of the power of attorney, missing board resolution, and lack of valuation of assets and latest balance sheet.
- The application signed by a General Power of Attorney Holder without specific authorization.
- Discrepancies in the principal amounts shown in the application and account statements.
The Tribunal dismissed these objections, emphasizing that the application met all legal requirements, and the discrepancies did not materially affect the admission of the application.

5. Appointment of Interim Resolution Professional:
The Financial Creditor proposed Mr. Satyendra Prasad Khorania as the Interim Resolution Professional (IRP), who was found to have no disciplinary proceedings against him and satisfied the requirements of Section 7(3)(b) of the Code. The Tribunal appointed him as the IRP and directed him to make a public announcement regarding the admission of the application.

6. Declaration of moratorium:
Upon admitting the application, the Tribunal declared a moratorium under Section 14 of the Code, prohibiting:
- Institution or continuation of suits or proceedings against the Corporate Debtor.
- Transfer, encumbrance, alienation, or disposal of any assets of the Corporate Debtor.
- Actions to foreclose, recover, or enforce any security interest created by the Corporate Debtor.
- Recovery of any property by an owner or lessor where such property is occupied by or in possession of the Corporate Debtor.
The Tribunal clarified that the moratorium does not apply to transactions notified by the Central Government and ensured the supply of essential goods and services to the Corporate Debtor during the moratorium period.

Conclusion:
The Tribunal admitted the petition filed by the Financial Creditor, Bank of Baroda, under Section 7 of the Insolvency and Bankruptcy Code, 2016, and initiated the Corporate Insolvency Resolution Process against M/s. Barnala Steel Industries Private Limited. Mr. Satyendra Prasad Khorania was appointed as the Interim Resolution Professional, and a moratorium was declared in accordance with Section 14 of the Code.

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