Tribunal upholds insolvency petition by ARCIL, declares moratorium, appoints IRP for Corporate Debtor.

Asset Reconstruction Company (India) Ltd. Versus Dhar Textile Mills Ltd.

Asset Reconstruction Company (India) Ltd. Versus Dhar Textile Mills Ltd. - TMI Issues Involved:
1. Validity of Debt Assignment
2. Admissibility of the Insolvency Petition
3. Authorization of the Signatory
4. Calculation of Debt Amount
5. Allegations of Suppression and Concealment
6. Appointment of Interim Resolution Professional (IRP)

Issue-wise Detailed Analysis:

1. Validity of Debt Assignment:
The Corporate Debtor challenged the validity of the debt assignment from State Bank of India (SBI) to Standard Chartered Bank (SCB) and subsequently to Asset Reconstruction Company (India) Limited (ARCIL), arguing that SCB was not registered as an Asset Reconstruction Company (ARC) under the SARFAESI Act at the time of assignment. The Tribunal referred to the Supreme Court's decision in ICICI Bank Ltd. v. Official Liquidator of APS Star Industries, which held that debts are assets in the hands of the lender and can be assigned to another bank. The Tribunal concluded that the assignment was valid and legally enforceable, even if SCB was not registered under SARFAESI, as the Banking Regulation Act permits such inter-se assignments between banks.

2. Admissibility of the Insolvency Petition:
The Corporate Debtor admitted to defaulting on the debt and issued cheques for Rs. 2.65 crores, which were dishonored. The Tribunal noted that the default amount exceeded Rs. 1 lakh, the threshold for triggering the Corporate Insolvency Resolution Process (CIRP) under Section 7 of the Insolvency and Bankruptcy Code (IBC). The Tribunal found that the debt was admitted, and the default was established, thus making the petition maintainable.

3. Authorization of the Signatory:
The Corporate Debtor argued that the person signing the insolvency petition was not properly authorized. The Tribunal issued a notice under Section 7(5) of the IBC, seeking clarification. ARCIL provided an affidavit from Mr. Nishith Doshi, along with a letter of authority and Board Resolution, confirming the authorization of the signatory. The Tribunal was satisfied with the clarification and found that the petition was properly authorized.

4. Calculation of Debt Amount:
The Corporate Debtor raised concerns about discrepancies in the debt amount claimed by ARCIL. The Tribunal noted the mismatch in figures but referred to the NCLAT decision in Starlog Enterprises Ltd. v. ICICI Bank Limited, which held that such discrepancies do not invalidate the petition if the default amount exceeds Rs. 1 lakh. The Tribunal found that the debt amount was more than Rs. 1 lakh and the default was established, thus the petition was admissible.

5. Allegations of Suppression and Concealment:
The Corporate Debtor alleged that ARCIL suppressed material information and did not disclose a settlement letter. The Tribunal found that the Corporate Debtor had admitted the debt and issued cheques for settlement, which were dishonored. The Tribunal held that the Corporate Debtor could not approbate and reprobate by taking contradictory stands and that the objections were not legally sustainable.

6. Appointment of Interim Resolution Professional (IRP):
The Tribunal appointed Mr. Sudip Bhattacharya as the Interim Resolution Professional (IRP) and directed him to make a public announcement of the moratorium and follow the provisions of Sections 13 and 14 of the IBC. The IRP was tasked with acting as per the Tribunal's directions and the relevant provisions of the IBC.

Conclusion:
The Tribunal admitted the insolvency petition filed by ARCIL, finding that the debt assignment was valid, the petition was properly authorized, the default amount exceeded the threshold, and the objections raised by the Corporate Debtor were not legally sustainable. The Tribunal declared a moratorium and appointed an IRP to commence the CIRP for the Corporate Debtor.