2019 (7) TMI 1021 - Tri - Insolvency and Bankruptcy

Tribunal approves CIRP, dismisses debtor objections, appoints IRP.

RELIANCE COMMERCIAL FINANCE LTD. Versus MAXIMUM SYNTHETIC P. LTD.

The Tribunal admitted the application, initiated the Corporate Insolvency Resolution Process (CIRP), and appointed Mr. Rajeev Sharma as the Interim ... Admissibility of petition - initiation of Corporate Insolvency Resolution Process (CIRP) - default in repayment of loan amount by the corporate debtor to the applicant - section 7 of the Insolvency and Bankruptcy Code, 2016 read with rule 4 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 - HELD THAT:- The corporate debtor has neither denied nor disputed the loan facilities given by the Reliance Capital Ltd. The corporate debtor has not brought forward any record with respect to the payment being made of the 'debt' as claimed in the application. The only defence raised by the corporate debtor is with respect to two technical points : (i) the status of applicant is disputed as the financial creditor, (ii) the authority to file the present application is defective. Jurisdiction - HELD THAT:- The registered office of the corporate debtor is situated within the territorial jurisdiction of this Tribunal. Hence this Tribunal has jurisdiction to entertain and try this application. This application is complete and is admitted. Issues Involved:1. Status of the applicant as a financial creditor.2. Authority to file the application.3. Jurisdiction of the Tribunal.4. Admission of the application and commencement of the Corporate Insolvency Resolution Process (CIRP).Issue-wise Detailed Analysis:1. Status of the Applicant as a Financial Creditor:The corporate debtor contended that the applicant, Reliance Commercial Finance Ltd., cannot be considered a financial creditor since the loan was originally sanctioned by Reliance Capital Ltd. and not transferred as per RBI guidelines. However, the applicant argued that pursuant to the Bombay High Court's order dated December 9, 2016, in Company Scheme Petition No. 781 of 2016, all rights and liabilities of Reliance Capital Ltd. were transferred to Reliance Commercial Finance Ltd. This scheme of arrangement effectively positioned the applicant as the financial creditor, inheriting all rights and liabilities of the original lender. The Tribunal accepted this argument, stating that the present applicant has legally taken the position of the original lender and is thereby a financial creditor under section 7 of the Insolvency and Bankruptcy Code, 2016 (IBC, 2016).2. Authority to File the Application:The corporate debtor also challenged the authority of Mr. Vijay Sharma to file the application, arguing that the power of attorney granted by Mr. Amrish Shah, who resigned before the application was filed, was invalid. The applicant countered that the power of attorney was valid until March 31, 2019, and the resignation of the officer who executed it does not terminate its validity. The Tribunal agreed with the applicant, noting that the power of attorney was executed for a specific period and remains effective until its expiration date or the death of the executant. The Tribunal found that the application was filed within the validity period of the power of attorney, making it legally sound.3. Jurisdiction of the Tribunal:The Tribunal confirmed its jurisdiction to entertain and try the application since the registered office of the corporate debtor is situated within its territorial jurisdiction.4. Admission of the Application and Commencement of CIRP:The Tribunal found the application to be complete and admitted it. Consequently, it appointed Mr. Rajeev Sharma as the Interim Resolution Professional (IRP) and initiated the Corporate Insolvency Resolution Process (CIRP). The moratorium under section 14 of the IBC, 2016 commenced, prohibiting certain actions against the corporate debtor until the completion of the CIRP. The IRP was directed to perform duties as per the IBC, 2016 and file a status report on the progress of the CIRP.Conclusion:The Tribunal admitted the application, initiated the CIRP, and appointed Mr. Rajeev Sharma as the IRP. The objections raised by the corporate debtor regarding the status of the applicant as a financial creditor and the authority to file the application were dismissed. The Tribunal confirmed its jurisdiction and directed the IRP to proceed as per the IBC, 2016 regulations.