2020 (3) TMI 760 - Tri - Insolvency and Bankruptcy

Bank of Baroda's Insolvency Petition Admitted under Section 7

Bank of Baroda Versus Pravin Exim P. Ltd.

The petition filed by Bank of Baroda under Section 7 of the Insolvency and Bankruptcy Code, 2016 was admitted. The corporate debtor defaulted on ... Maintainability of petition - initiation of CIRP - Corporate Debtor failed to make repayment of its debt - outstanding debt or not - time limitation - HELD THAT:- On perusal of the records it is found that the application filed by the financial creditor is well within limitation. That, the documents filed along with the application is sufficient to prove that there exists financial debt. That, the account statement issued by the financial creditor, is annexed to the application at page No. 301 showing the account position of the corporate debtor as on 26.09.2018 - On perusal of the records it is found that the letter of authority dated 29.08.2018 issued by General Manager of the applicant bank authorising Mr. Sunil Kumar Jha is proper and valid. The Adjudicating Authority is of the considered view that there is a debt due to 'financial creditor' and there is default on the part of the corporate debtor. In the instant application, from the material placed on record by the Applicant, this Authority is satisfied that the application is complete in all respect and the Corporate Debtor committed default in paying the financial debt to the Applicant and the respondent company has acknowledged the debt - In the instant case, the documents produced by the Financial Creditor clearly establish the 'debt' and there is default on the part of the Corporate Debtor in payment of the 'financial debt'. The application under section 7 (2) of the IB Code is complete in all respects and there is debt due to the 'financial Creditor' and there is default on the part of the 'corporate debtor'. Hence, there is no alternative but to admit the application in absence of any infirmity - the petitioner/financial creditor having fulfilled all the requirements of section 7 of the Code, the instant petition deserves to be admitted. Petition admitted - moratorium declared. Issues Involved:1. Filing of the petition under Section 7 of the Insolvency and Bankruptcy Code, 2016.2. Default in repayment of financial credit facilities.3. Submission and verification of supporting documents.4. Non-response and non-appearance of the corporate debtor.5. Admissibility of the insolvency resolution application.6. Appointment of the Interim Resolution Professional (IRP).7. Declaration and enforcement of moratorium.Issue-wise Detailed Analysis:1. Filing of the Petition under Section 7 of the Insolvency and Bankruptcy Code, 2016:The petition was filed by the authorized signatory of Bank of Baroda under Section 7 of the Insolvency and Bankruptcy Code, 2016, seeking relief under Section 7(5)(a) and Section 13(1)(a)(b)(c) of the Code. The applicant, Bank of Baroda, is a body corporate constituted under the Banking Companies (Acquisition and Transfer of Undertaking) Act, 1970.2. Default in Repayment of Financial Credit Facilities:The Bank of Baroda granted various financial credit facilities to the corporate debtor, including a credit facility of Rs. 14,50,00,000/-, PCH/PCFC limit of Rs. 12,50,00,000/-, CCH of Rs. 3,00,00,000/-, and forward cover exposure of Rs. 29,00,000/-. The corporate debtor defaulted on a total sum of Rs. 11,41,46,507.92 plus interest of Rs. 4,10,81,295.71, including penal interest of Rs. 41,29,990.17 up to 24.09.2018, aggregating to Rs. 15,52,27,803.63. The default occurred on 31.12.2016, when the account was classified as Non-Performing Asset (NPA).3. Submission and Verification of Supporting Documents:The applicant bank submitted various documents in support of their claim, including Form 1, loan sanction letters, agreements of hypothecation, certificates of charge, notices under the Securitization Act, mortgage deeds, demand promissory notes, and CIBIL reports. These documents were found sufficient to prove the existence of financial debt.4. Non-response and Non-appearance of the Corporate Debtor:Despite multiple opportunities, the corporate debtor did not file any reply or engage a lawyer. The respondent appeared through a lawyer on 13.12.2018 and was allowed two weeks to file a reply. On 01.05.2019, one of the directors requested time to engage a lawyer but took no further steps. Consequently, the matter was heard in the absence of the respondent.5. Admissibility of the Insolvency Resolution Application:The application filed by the financial creditor was found to be within limitation and complete in all respects. The records and documents submitted were sufficient to establish the existence of financial debt and default by the corporate debtor. The Adjudicating Authority referred to the Supreme Court judgment in 'Innoventive Industries Ltd. v. ICICI Bank Ltd.' and 'Mobilox Innovations (P.) Ltd. v. Kirusa Software (P.) Ltd.' to support the admissibility of the application.6. Appointment of the Interim Resolution Professional (IRP):The applicant proposed Mr. Sanjay Gupta as the Interim Resolution Professional (IRP). The Adjudicating Authority appointed Mr. Sanjay Gupta, having registration No. IBBI/IPA-001/IP-P00117/2017-18/10252, to act as the IRP. Form 2 of the proposed IRP was annexed, declaring no disciplinary proceedings pending against him.7. Declaration and Enforcement of Moratorium:The petition was admitted, and a moratorium was declared prohibiting the institution or continuation of suits, transferring or disposing of assets, foreclosing or enforcing security interests, and recovering property by owners or lessors. The supply of goods and essential services to the corporate debtor was directed not to be terminated during the moratorium period. The moratorium order would be effective from the date of receipt of the authenticated copy of the order until the completion of the corporate insolvency resolution process or until the resolution plan is approved or liquidation is ordered.Conclusion:The petition was admitted, and the moratorium was declared. The application was found to be complete, and the corporate debtor committed default in paying the financial debt. The Interim Resolution Professional was appointed, and the petition was disposed of with no order as to costs. Copies of the order were to be communicated to the applicant, financial creditor, corporate debtor, and the Interim Resolution Professional.