2019 (6) TMI 23 - Tri - Insolvency and Bankruptcy

Tribunal Admits Insolvency Petition, Declares Moratorium

L And T Infrastructure Finance Company Limited Versus Maharashtra Vidyut Nigam Private Limited

The Tribunal admitted the petition under Section 7 of the Insolvency & Bankruptcy Code, finding a valid debt and default, complete application, and ... Initiation of Corporate Insolvency Resolution Process against the corporate debtor - default in repayment of amount - declaration of Corporate Debtor’s account as a nonperforming asset - HELD THAT:- The Corporate Debtor is a guarantor vide a Deed of Guarantee dated 5.1.2015 regarding the loans given to Gupta Global Resources Private Limited (GGRPL). A guarantee is covered by the definition of financial debt provided in Section 5(8), IBC - The contention of the Corporate Debtor that the present petition is barred by the law of limitation does not survive as the guarantee was invoked by the Financial Creditor on 27th April 2017 and the Financial Creditor filed the present petition on 9.4.2018. Stamp Duty - HELD THAT:- The proceedings before this Adjudicating Authority are summary in nature. It is pertinent to mention that stamp duty payable and paid on letter of guarantee is ₹ 100 and it has been purchased by the Corporate Debtor. Therefore, the Corporate Debtor has no right to raise the objection of insufficient stamp duty. Mismatch in the principal amount and the interest rate chargeable - HELD THAT:- It is to be clarified that the Adjudicating Authority does not have to ascertain the exact due amount as held by the Hon’ble NCLAT in the matter of The Dhar Textile Mills Ltd. vs. Asset Reconstruction Company (India) Limited, Company Appeal (AT) (Insolvency) No. 11 of 2019. The Adjudicating Authority has to satisfy itself that a debt of minimum ₹ 1,00,000/- exists. So the contention of the Corporate Debtor regarding the principal amount and interest rate charged is untenable. As per Section 7 of IBC, a petition has to be admitted if a default has occurred, debt is due, and application is complete, and no disciplinary proceedings are pending against the proposed resolution professional - This Petition reveals that there is a debt as defined in Section 3(11) of IBC. Also, there is a default in this case within the meaning of Section 3(12) of IBC. Though the Corporate Debtor has raised a dispute regarding his liability to pay the debt. However, the dispute is irrelevant for admitting a petition U/S 7 of the Code. The application of the Financial Creditor is complete, amount of more than Rs one lac is a due and application is complete. No disciplinary proceedings are pending against the proposed resolution professional. Therefore, this petition deserves to be admitted. Petition admitted - Moratorium declared. Issues Involved:1. Initiation of Corporate Insolvency Resolution Process (CIRP) under Section 7 of the Insolvency & Bankruptcy Code, 2016 (IBC).2. Validity of the debt and default.3. Bar of limitation.4. Adequacy of stamping on the Deed of Guarantee.5. Mismatch in the principal amount and interest rate claimed.6. Completeness of the application and the proposed Interim Resolution Professional (IRP).Issue-wise Detailed Analysis:1. Initiation of CIRP under Section 7 of IBC:The Financial Creditor filed a Company Petition under Section 7 of the IBC to initiate CIRP against the Corporate Debtor for a default amounting to Rs. 94,95,68,366/- as of 21.3.2018. The default date was stated as 31.1.2015, and the Corporate Debtor's account was declared a non-performing asset on 31.3.2016.2. Validity of the Debt and Default:The Financial Creditor argued that the Corporate Debtor had guaranteed the loans given to Gupta Global Resources Private Limited (GGRPL) under a Deed of Guarantee dated 5.1.2015. Despite several notices, the Corporate Debtor failed to pay the dues. The Tribunal noted that the guarantee is covered under the definition of 'financial debt' as per Section 5(8) of IBC, and the debt amount claimed is supported by the statement of accounts certified by the Banker’s Books of Evidence Act, 1891, and the I.T. Act 2000.3. Bar of Limitation:The Corporate Debtor contended that the petition was barred by limitation, as the default occurred on 31.1.2015, and the petition was filed on 9.4.2018. The Financial Creditor rebutted this by stating that the limitation period began from the date of invocation of the guarantee on 27.4.2017. The Tribunal agreed with the Financial Creditor, citing the Supreme Court’s decision in Syndicate Bank vs. Channaveerappa Beleri, which held that limitation runs from the date the guarantee is invoked.4. Adequacy of Stamping on the Deed of Guarantee:The Corporate Debtor argued that the Deed of Guarantee was not duly stamped as per the Maharashtra Stamp Act, 1958. The Financial Creditor countered this by stating that the stamp duty of Rs. 100 was paid in Delhi, which is the required amount for a letter of guarantee under Article 57 of the Maharashtra Stamp Act. The Tribunal agreed with the Financial Creditor, noting that the document was sufficiently stamped and the Corporate Debtor had acted upon it, thus cannot now object to its sufficiency.5. Mismatch in the Principal Amount and Interest Rate Claimed:The Corporate Debtor highlighted discrepancies in the principal amount and interest rate claimed by the Financial Creditor. The Tribunal clarified that the Adjudicating Authority’s role is to ascertain whether a debt of more than Rs. 1,00,000/- exists, not to determine the exact amount due. Therefore, the contention regarding the mismatch in the principal amount and interest rate was deemed untenable.6. Completeness of the Application and the Proposed IRP:The Corporate Debtor raised issues regarding the proposed IRP’s details in Form 1 and Form 2. The Financial Creditor subsequently submitted the correct Form 2 of Mr. Vinod Kothari, whose name was mentioned in the application. The Tribunal found the application complete and noted that no disciplinary proceedings were pending against the proposed IRP.Conclusion:The Tribunal concluded that a debt and default existed, the application was complete, and the petition was within the limitation period. The objections raised by the Corporate Debtor were dismissed, and the petition under Section 7 of IBC was admitted. The Tribunal declared a moratorium and appointed Mr. Vinod Kumar Kothari as the Interim Resolution Professional to carry out the functions as per IBC.Order:1. The Tribunal prohibited the institution or continuation of suits or proceedings against the Corporate Debtor.2. It prohibited the transfer or disposal of any assets by the Corporate Debtor.3. It ensured the supply of essential goods or services to the Corporate Debtor would not be interrupted.4. The moratorium would be effective until the completion of the CIRP or approval of a resolution plan.5. A public announcement of the CIRP was to be made immediately.6. Mr. Vinod Kumar Kothari was appointed as the Interim Resolution Professional.The Registry was directed to communicate the order to the Operational Creditor, the Corporate Debtor, and the Interim Resolution Professional immediately.