2019 (6) TMI 130 - Tri - Insolvency and Bankruptcy

Tribunal Admits Petition for Corporate Insolvency Resolution Process under Insolvency and Bankruptcy Code

M/s. International Asset Reconstruction Company Private Limited, New Delhi Versus M/s. Shri Maruthi Textiles Limited

The Tribunal admitted the petition under Section 7 of the Insolvency and Bankruptcy Code, 2016, declaring a moratorium as per Section 14 of the Code. The ... Initiation of Corporate Insolvency Resolution Process - appointment of Interim Resolution Professional - Default in repayment of amount by Corporate Debtor - Section 7 of Insolvency and Bankruptcy Code, 2016 - HELD THAT:- Financial Creditor is able to establish through voluminous documentary evidence that Corporate Debtor availed loans and Corporate Debtor further committed default. The Petitioner/Financial Creditor has proved the existence of financial debt and also default. DRT also vide order dated 10.05.2018 held that Corporate Debtor is liable to pay the outstanding dues. The amount claimed by the Financial Creditor in the petition is ₹ 26,60,58,116 (after the claim was amended). The Financial Creditor/Petitioner suggested the name of IRP who has given consent. The Petition is complete. There are no disciplinary proceedings pending against the proposed Interim Resolution Professional. Therefore, Petition is to be admitted. Petition admitted - Moratorium declared. Issues Involved:1. Default in repayment of loans by the Corporate Debtor.2. Assignment of loans and security interests.3. Classification of the account as Non-Performing Asset (NPA).4. Proceedings before the Debt Recovery Tribunal (DRT).5. Bar of limitation for filing the petition.6. Compliance with the requirements under the Insolvency and Bankruptcy Code (IBC), 2016.7. Appointment of Interim Resolution Professional (IRP).Issue-wise Detailed Analysis:1. Default in repayment of loans by the Corporate Debtor:The Financial Creditor filed a petition under Section 7 of the Insolvency and Bankruptcy Code, 2016, stating that the Corporate Debtor defaulted in repaying a sum of Rs. 26,60,58,116 as of 13.12.2000, along with interest at 7.5% per annum from 14.12.2000 till the date of realization. The Corporate Debtor had availed various loans from ICICI Ltd., which were later assigned to Standard Chartered Bank and subsequently to the Financial Creditor.2. Assignment of loans and security interests:The loans and underlying security interests were assigned by ICICI Ltd. to Standard Chartered Bank on 18.02.2006, and thereafter by Standard Chartered Bank to the Financial Creditor on 31.07.2012. The Corporate Debtor did not dispute the assignment of loans and the execution of necessary loan documents, including hypothecation agreements.3. Classification of the account as Non-Performing Asset (NPA):The Corporate Debtor's account was classified as an NPA on 07.08.2000 by ICICI Ltd. due to the failure to make payments. The Financial Creditor issued a demand notice under Section 13(2) of the SARFAESI Act, 2002, on 13.11.2014, and took physical possession of the property on 17.01.2015.4. Proceedings before the Debt Recovery Tribunal (DRT):ICICI Ltd. filed an Original Application under Section 9(1) of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993, before the DRT-II Chennai, which was later renumbered as OA No. 427/2015. The DRT passed a decree in favor of the Financial Creditor, allowing a claim amount of Rs. 26,60,58,116 along with interest at 7.5% per annum from 14.12.2000 till the date of realization.5. Bar of limitation for filing the petition:The Corporate Debtor contended that the petition was barred by limitation as the date of default was 07.08.2000. However, the Financial Creditor argued that the time spent before the DRT should be excluded from the computation of the limitation period. The Tribunal accepted this argument, citing precedents from the NCLT Chennai Bench, and held that the petition was filed within the period of limitation.6. Compliance with the requirements under the Insolvency and Bankruptcy Code (IBC), 2016:The Financial Creditor established the debt and default through documentary evidence, including the order from the DRT-II Chennai. The Financial Creditor also suggested the name of the IRP and submitted consent in Form-2, complying with the requirements under the IBC, 2016.7. Appointment of Interim Resolution Professional (IRP):The Tribunal appointed Mr. Narendra Gandhari as the Interim Resolution Professional to carry out the functions as mentioned under the Insolvency and Bankruptcy Code, with effect from 07.02.2019.Conclusion:The Tribunal admitted the petition under Section 7 of the IBC, 2016, declaring a moratorium as per Section 14 of the Code. The moratorium prohibits the institution or continuation of suits or proceedings against the Corporate Debtor, transferring or disposing of assets, and other actions specified under the Code. The public announcement of the initiation of the Corporate Insolvency Resolution Process was directed to be made immediately, and the petition was admitted accordingly.