Tribunal admits application appoints IRP under Code

The tribunal admitted the application under Section 7(5)(a) of the Code, finding that the default had occurred, the application was complete, and there were no disciplinary proceedings against the proposed Interim Resolution Professional (IRP). Mr. Vivek Raheja was appointed as the IRP, and a moratorium was declared as per Section 14 of the Code. The IRP was instructed to carry out duties as per the Code, and all personnel associated with the corporate debtor were directed to cooperate with the IRP.

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Issues Involved:
1. Legal authority of the applicant bank to file the application individually.
2. Completeness and validity of the application and supporting documents.
3. Allegations of excess interest charged and incorrect amount claimed.
4. Validity of declaring the account as Non-Performing Asset (NPA).
5. Authorization of the representative to file the application.
6. Request for financial restructuring by the respondent.
7. Existence of debt and default.

Issue-wise Detailed Analysis:

1. Legal Authority of the Applicant Bank:
The respondent objected that the applicant bank, being part of a consortium, lacked the authority to file the application without the consent of other lenders. The tribunal clarified that under Section 7(1) of the Insolvency and Bankruptcy Code, 2016 (the Code), a financial creditor can file an application individually or jointly. The inter-se agreement among financial creditors cannot override the provisions of the Code. Therefore, the applicant bank had the right to file the application independently.

2. Completeness and Validity of the Application and Supporting Documents:
The respondent claimed that the application was defective and lacked necessary documents. The tribunal found that the application was filed in Form-1 as per Rule 4 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016, and was complete with all required information and evidence of default. The applicant provided sanction letters, loan agreements, security documents, and other relevant documents, confirming the application's completeness.

3. Allegations of Excess Interest Charged and Incorrect Amount Claimed:
The respondent alleged that excess interest was charged and the claimed amount was incorrect. The tribunal noted that disputes over the quantum of default do not justify rejecting an application under Section 7 of the Code. The tribunal's role is to ascertain the occurrence of default, not to determine the exact amount due. The applicant clarified that interest was charged as per the sanction letters and the claimed amount was based on the bank's statements.

4. Validity of Declaring the Account as Non-Performing Asset (NPA):
The respondent argued that the account was wrongly declared as NPA. The tribunal stated that the declaration of an account as NPA is immaterial for an application under Section 7 of the Code. The focus is on the existence of a debt and default. The tribunal cited a precedent where it was held that NPA status under the SARFAESI Act, 2002, does not affect proceedings under the Code.

5. Authorization of the Representative to File the Application:
The respondent questioned the authorization of Mr. Debraj Bag, the Assistant General Manager of the applicant bank, to file the application. The tribunal confirmed that Mr. Bag was duly authorized and competent to file the application on behalf of the applicant bank. The tribunal referenced a precedent where it was held that an officer authorized to grant loans also has the authority to recover them and initiate insolvency proceedings.

6. Request for Financial Restructuring by the Respondent:
The respondent claimed that it requested financial restructuring, which was denied by the applicant. The tribunal noted that financial adjustments and compromises are at the discretion of the parties involved. In the absence of a binding compromise agreement, the tribunal cannot defer the application under Section 7 of the Code.

7. Existence of Debt and Default:
The tribunal reviewed the evidence and found that the applicant bank had provided substantial proof of the loan facilities and the respondent's default in repayment. The tribunal emphasized that an application under Section 7 of the Code is maintainable if the debt is due and there is a default of at least Rs. 1 lakh. The tribunal was satisfied with the evidence provided by the applicant, including balance confirmations and statements of accounts.

Conclusion:
The tribunal admitted the application under Section 7(5)(a) of the Code, finding that the default had occurred, the application was complete, and there were no disciplinary proceedings against the proposed Interim Resolution Professional (IRP). The tribunal appointed Mr. Vivek Raheja as the IRP and directed a public announcement and declaration of a moratorium as per Section 14 of the Code. The tribunal also instructed the IRP to perform duties as per the Code and directed all personnel connected with the corporate debtor to cooperate with the IRP.

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