Tribunal Initiates Corporate Insolvency Resolution Process under Section 7

The Tribunal admitted the application under Section 7 of the Insolvency and Bankruptcy Code, appointed an Interim Resolution Professional, directed a public announcement, and declared a moratorium, initiating the Corporate Insolvency Resolution Process against the corporate debtor.

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Issues Involved:
1. Jurisdiction of the Tribunal.
2. Authorization of the application.
3. Appointment of Interim Resolution Professional (IRP).
4. Existence of financial debt and default.
5. Objections by the corporate debtor regarding solvency and interest charges.
6. Classification of the account as Non-Performing Asset (NPA).
7. Allegations of mala fide conduct by the applicant.
8. Willingness of the corporate debtor to settle disputes.
9. Admissibility of the application under Section 7 of the Insolvency and Bankruptcy Code.

Issue-wise Detailed Analysis:

1. Jurisdiction of the Tribunal:
The Tribunal confirmed its jurisdiction over the matter as the registered office of the respondent corporate debtor is located in New Delhi, thus falling within the territorial jurisdiction of the National Company Law Tribunal, Principal Bench, New Delhi, under Section 60(1) of the Insolvency and Bankruptcy Code, 2016.

2. Authorization of the Application:
The application was filed by Mr. Rishi Thakur, Legal Manager of ICICI Bank, authorized by a Board Resolution dated 27.10.2017. The Tribunal acknowledged the authorization and found it compliant with the requirements of the Code.

3. Appointment of Interim Resolution Professional (IRP):
The applicant proposed Shri Vijender Sharma as the IRP, who agreed to the appointment and provided necessary declarations, including that no disciplinary proceedings were pending against him. The Tribunal found the proposal satisfactory under Section 7(3)(b) of the Code and appointed him as the IRP.

4. Existence of Financial Debt and Default:
The applicant bank provided extensive documentation, including credit arrangement letters, master facility agreements, and deeds of guarantee, to establish the existence of a financial debt. The Tribunal noted that the corporate debtor defaulted on repayments, leading to the classification of the account as NPA on 31.03.2017. The total amount of default as of 31.08.2018 was Rs. 29,12,75,997.90. The Tribunal emphasized that the existence of a debt and default is sufficient for admitting the application under Section 7 of the Code.

5. Objections by the Corporate Debtor Regarding Solvency and Interest Charges:
The corporate debtor argued that it was solvent and capable of paying its debts, citing ongoing projects and credit facilities from other banks. However, the Tribunal held that solvency claims are irrelevant if there is a default in repayment. The corporate debtor also disputed the interest charges, but the Tribunal clarified that disputes over the quantum of default do not preclude the admission of an application under Section 7.

6. Classification of the Account as Non-Performing Asset (NPA):
The corporate debtor challenged the NPA classification, alleging non-compliance with RBI guidelines. The applicant bank countered that the classification was done per RBI regulations. The Tribunal stated that the timing of NPA classification is immaterial for Section 7 applications, which focus on the existence of debt and default.

7. Allegations of Mala Fide Conduct by the Applicant:
The corporate debtor accused the applicant of hampering its progress and causing losses. The applicant denied these allegations, stating that its role was limited to providing credit facilities. The Tribunal found these allegations vague and irrelevant to the admission of the application under the Code.

8. Willingness of the Corporate Debtor to Settle Disputes:
The corporate debtor expressed willingness to settle disputes and regularize accounts. The applicant denied any such efforts by the corporate debtor. The Tribunal noted that without a binding compromise agreement, it could not defer the application under Section 7.

9. Admissibility of the Application Under Section 7 of the Insolvency and Bankruptcy Code:
The Tribunal reiterated that an application under Section 7 is admissible if there is a debt of at least Rs. 1 lakh and a default. The Tribunal found the application complete, with no disciplinary proceedings against the proposed IRP, and voluminous evidence supporting the claim and default. The Tribunal admitted the application, appointed the IRP, directed a public announcement, and declared a moratorium as per Section 14 of the Code.

Conclusion:
The Tribunal admitted the application under Section 7 of the Insolvency and Bankruptcy Code, 2016, appointed Shri Vijender Sharma as the IRP, directed a public announcement, and declared a moratorium, thereby initiating the Corporate Insolvency Resolution Process against the corporate debtor.

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