Tribunal Admits Insolvency Application, Appoints Interim Resolution Professional

The tribunal admitted the application under Section 7 of the Insolvency and Bankruptcy Code, 2016, against the corporate debtor, appointing Ms. Anju Agarwal as the Interim Resolution Professional. A moratorium was declared, and all personnel were directed to cooperate with the IRP in managing the company's affairs.

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Issues Involved:

1. Initiation of Corporate Insolvency Resolution Process (CIRP)
2. Authorization to file the application
3. Non-issuance of No Objection Certificate (NOC) by the financial creditor
4. Pendency of proceedings under SARFAESI Act and DRT
5. Viability of restructuring the loan
6. Admissibility of application under Section 7 of the Insolvency and Bankruptcy Code, 2016

Detailed Analysis:

1. Initiation of Corporate Insolvency Resolution Process (CIRP):
The Union Bank of India, as a financial creditor, filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016, to initiate the Corporate Insolvency Resolution Process (CIRP) against M/s IP Construction Pvt. Ltd., the corporate debtor. The application was duly filed by an authorized representative of the bank, and the proposed Interim Resolution Professional (IRP), Ms. Anju Agarwal, was found to meet the requirements of Section 7(3)(b) of the Code.

2. Authorization to file the application:
The respondent contended that the authorization was solely based on a specific power of attorney without a Board resolution. However, the tribunal found that a specific power of attorney dated 11th August 2017, executed by three General Managers of the applicant bank, authorized Shri Rajesh Kumar to file the application. This was pursuant to a Board Resolution dated 27th July 2017. The tribunal held that the authorization was valid and Shri Rajesh Kumar was competent to file the application.

3. Non-issuance of No Objection Certificate (NOC) by the financial creditor:
The respondent alleged that the financial creditor failed to provide NOC for the registration of ownership of commercial spaces, resulting in unsold properties. The tribunal noted that the procedure for issuing NOC was clearly laid out in the sanction letter, which required the deposit of sale proceeds in an escrow account. The corporate debtor failed to comply with these terms and did not request NOC as per the agreed procedure. Therefore, the objection regarding the non-issuance of NOC was not sustained.

4. Pendency of proceedings under SARFAESI Act and DRT:
The respondent argued that since proceedings under the SARFAESI Act and a recovery suit before the DRT were already initiated, the present application under the Insolvency and Bankruptcy Code was not maintainable. The tribunal clarified that the pendency of proceedings under other laws does not bar the initiation of CIRP under the Code. Section 238 of the Code provides an overriding effect, and the tribunal cited precedents affirming that the Code prevails over other laws.

5. Viability of restructuring the loan:
The respondent claimed that a viable restructuring plan could be achieved with the financial creditor's cooperation. The tribunal emphasized that financial transactions and compromises are to be settled by the parties themselves. In the absence of a binding restructuring agreement, the tribunal cannot indefinitely extend time or defer the application. The tribunal stressed that time is of the essence under the Code, and further time for restructuring could not be granted.

6. Admissibility of application under Section 7 of the Insolvency and Bankruptcy Code, 2016:
The tribunal examined whether the application met the requirements of Section 7(5)(a) of the Code, which includes the occurrence of default, completeness of the application, and no pending disciplinary proceedings against the proposed IRP. The tribunal found that the applicant bank had provided sufficient evidence of the financial debt and default. The application was complete, and no disciplinary proceedings were pending against the proposed IRP. Consequently, the tribunal admitted the application and initiated the CIRP against the corporate debtor.

Conclusion:
The tribunal admitted the application under Section 7 of the Insolvency and Bankruptcy Code, 2016, and appointed Ms. Anju Agarwal as the Interim Resolution Professional. A public announcement was directed to be made, and a moratorium was declared in terms of Section 14 of the Code. The tribunal also instructed all personnel connected with the corporate debtor to cooperate with the IRP in managing the company's affairs.

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