Tribunal admits Bank of India's petition under Insolvency and Bankruptcy Code for CIRP initiation

The tribunal admitted the petition filed by Bank of India under Section 7 of the Insolvency and Bankruptcy Code, initiating Corporate Insolvency Resolution Process (CIRP) against Pacific Pipe Systems Private Limited for default in loan repayment. The tribunal appointed an Interim Resolution Professional (IRP), Mr. Chandra Prakash Jain, declared a moratorium, and directed compliance with the Insolvency and Bankruptcy Code provisions. The petition was found complete, filed within the limitation period, and supported by evidence of debt acknowledgment. The order aimed to facilitate the CIRP process while protecting the Corporate Debtor's interests.

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Issues Involved:
1. Initiation of Corporate Insolvency Resolution Process (CIRP)
2. Default in repayment of loans
3. Limitation period for filing the petition
4. Validity and completeness of the application
5. Acknowledgment of debt by the Corporate Debtor
6. Appointment of Interim Resolution Professional (IRP)
7. Declaration of moratorium

Issue-wise Detailed Analysis:

1. Initiation of Corporate Insolvency Resolution Process (CIRP):
The Financial Creditor, Bank of India, filed a petition under Section 7 of the Insolvency and Bankruptcy Code, 2016, seeking initiation of CIRP against the Corporate Debtor, Pacific Pipe Systems Private Limited, for default in repayment of term loans, FITL, and CC facility. The petition was filed by an authorized officer of the bank.

2. Default in repayment of loans:
The Corporate Debtor availed various loan facilities from a consortium of banks, including Bank of India, with an aggregate limit of Rs. 61.85 Crores. The Corporate Debtor defaulted on the payment, with the date of default being 31/03/2014. The total dues claimed by the petitioner bank as on 14/06/2018 amounted to Rs. 49,35,84,364.77.

3. Limitation period for filing the petition:
The Corporate Debtor argued that the petition was barred by the limitation period of three years from the date of default (31/03/2014). However, the petitioner bank contended that the claim did not attract Section 137 of the Limitation Act, 1963, as there were acknowledgments of debt by the Corporate Debtor through various documents and revival letters executed on 07/12/2010, 04/05/2012, and 09/01/2014. The petition was filed within the limitation period, considering these acknowledgments.

4. Validity and completeness of the application:
The Corporate Debtor objected to the application, stating it was not in the prescribed form and lacked the necessary statement of account as per the Bankers Book Evidence Act, 1891. However, the petitioner bank submitted all required documents, including sanction letters, statements of accounts, and a certificate under the Bankers Book Evidence Act, 1891, confirming the existence of debt and default.

5. Acknowledgment of debt by the Corporate Debtor:
The Corporate Debtor acknowledged the debt through various documents, including the creation of charges with the ROC, revival letters, and balance sheets filed with the ROC. Additionally, the Corporate Debtor offered One Time Settlement (OTS) proposals, further acknowledging the debt.

6. Appointment of Interim Resolution Professional (IRP):
The petitioner bank proposed the name of an Insolvency Professional to be appointed as the IRP, who consented in writing. The tribunal appointed Mr. Chandra Prakash Jain as the IRP, directing him to make a public announcement of the moratorium and follow the provisions of the Insolvency and Bankruptcy Code.

7. Declaration of moratorium:
The tribunal declared a moratorium effective from the date of the order (18/12/2019), prohibiting the institution or continuation of suits, transferring or disposing of assets, and recovery actions against the Corporate Debtor. The supply of essential goods or services to the Corporate Debtor was to continue uninterrupted during the moratorium period.

Observations:
The tribunal observed that the petitioner bank provided sufficient evidence of the debt and default, including executed documents and a certificate under the Bankers Book Evidence Act, 1891. The tribunal found the petition to be complete and filed within the limitation period. The Corporate Debtor's acknowledgment of debt through various documents and OTS proposals was also noted.

Order:
The tribunal admitted the petition, initiating the CIRP against the Corporate Debtor and appointing Mr. Chandra Prakash Jain as the IRP. The tribunal declared a moratorium and directed the IRP to adhere to the time limits for completing the CIRP and perform duties as specified under the Insolvency and Bankruptcy Code. The registry was directed to communicate the order to all relevant parties.

Conclusion:
The petition filed under Section 7 of the Insolvency and Bankruptcy Code was admitted, and the CIRP was initiated against the Corporate Debtor. The tribunal appointed an IRP and declared a moratorium, ensuring the continuation of essential services and prohibiting legal actions against the Corporate Debtor during the CIRP.

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