Tribunal Admits Insolvency Application, Appoints Interim Resolution Professional: Financial Debt Default Case

The tribunal admitted the application under Section 7 of the Insolvency and Bankruptcy Code, appointed Shri Manoj Gangwal as the Interim Resolution Professional, and issued a Moratorium order. The case involved financial debt default by M/s. Bhagya Diamond Jewellery Pvt. Ltd., with the total default amount claimed to be Rs. 13,45,47,855.02. The primary security assets had no realizable value, while collateral included properties with an estimated value of Rs. 884.00 Lakhs. The IRP was tasked with managing the Corporate Debtor's operations and preserving property value during the Corporate Insolvency Resolution Process.

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Issues Involved:
1. Initiation of Insolvency Resolution Process
2. Financial Debt and Default
3. Security and Collateral
4. Appointment of Interim Resolution Professional (IRP)
5. Order of Moratorium
6. Duties and Obligations of IRP

Issue-wise Detailed Analysis:

1. Initiation of Insolvency Resolution Process:
The application was filed by Dena Bank under Section 7 of the Insolvency and Bankruptcy Code, 2016, to initiate an 'Insolvency Resolution Process' against M/s. Bhagya Diamond Jewellery Pvt. Ltd. The application was complete and in conformity with the provisions of Section 7 of the I & B Code and Rules Applicable.

2. Financial Debt and Default:
The Financial Creditor, Dena Bank, had sanctioned credit facilities to the Corporate Debtor during 2014-2015, which were not repaid as per the terms and conditions. The total amount of debt granted was Rs. 9,00,00,000/- plus a TOD of Rs. 90,00,000/-. The default occurred on 31.10.2015 when the account was classified as "Non-Performing Asset" (NPA). The total amount claimed to be in default was Rs. 13,45,47,855.02, including interest and penal interest.

3. Security and Collateral:
The primary security included goods, book-debts, and other movable assets, which had no realizable value. The collateral security included properties owned by M/s. Bhagya Infrastructure Pvt. Ltd. and Shri Anantbhai Ashokbhai Shah, with an estimated total value of Rs. 884.00 Lakhs. Various security documents were executed, including a Hypothecation Agreement, Deed of Guarantee, and others.

4. Appointment of Interim Resolution Professional (IRP):
The Financial Creditor proposed the name of Shri Manoj Gangwal as the Interim Resolution Professional (IRP). The proposed IRP provided written consent and there were no disciplinary proceedings pending against him. The tribunal appointed Shri Manoj Gangwal as the IRP under Section 13(1)(c) of the Code.

5. Order of Moratorium:
The tribunal ordered a Moratorium under Section 14 of the Code, effective from 25.04.2019 until the completion of the Corporate Insolvency Resolution Process or until the bench approves the Resolution Plan or passes an order for Liquidation. The order prohibited the institution or continuation of suits, transferring or encumbering assets, and actions to foreclose or enforce security interests.

6. Duties and Obligations of IRP:
The IRP was directed to make a public announcement of the Corporate Insolvency Resolution Process and call for submissions of claims. The IRP was required to perform functions as contemplated by Sections 17, 18, 20, and 21 of the Code, and all personnel connected with the Corporate Debtor were under a legal obligation to assist and cooperate with the IRP. The IRP was also tasked with protecting and preserving the value of the property and managing the operations of the Corporate Debtor as a going concern.

Conclusion:
The tribunal admitted the application under Section 7 of the I & B Code, appointed Shri Manoj Gangwal as the IRP, and issued an order of Moratorium. The CP (IB) No.22/7/NCLT/AHM/2018 was admitted with no order as to costs. The registry was directed to communicate the order to all relevant parties.

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