Tribunal admits insolvency petition by Reliance ARC against Morakhia Copper. Valid agreement, debt confirmed, IRP appointed.

The Tribunal admitted the petition filed by Reliance Asset Reconstruction Company Limited under Section 7 of the Insolvency and Bankruptcy Code, 2016, against Morakhia Copper and Alloys Private Limited. The Tribunal found the Assignment Agreement valid and enforceable, confirmed the existence of debt, noted the petition was filed within the limitation period, appointed an Interim Resolution Professional, declared a moratorium, and outlined the IRP's duties. The Tribunal emphasized the need for a viable Insolvency Resolution Plan and suggested interest rates for the resolution plan.

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Issues Involved:
1. Initiation of Corporate Insolvency Resolution Process (CIRP) under Section 7 of the Insolvency and Bankruptcy Code, 2016.
2. Validity and enforceability of the Assignment Agreement.
3. Existence of debt and default.
4. Limitation period for filing the petition.
5. Appointment of Interim Resolution Professional (IRP).
6. Declaration of moratorium under Sections 13 and 14 of the Insolvency and Bankruptcy Code, 2016.
7. Duties and obligations of the Interim Resolution Professional.

Issue-wise Detailed Analysis:

1. Initiation of Corporate Insolvency Resolution Process (CIRP):
The Financial Creditor, Reliance Asset Reconstruction Company Limited, filed the petition under Section 7 of the Insolvency and Bankruptcy Code, 2016, seeking initiation of CIRP against Morakhia Copper and Alloys Private Limited due to default in repayment of various credit facilities availed from Dena Bank.

2. Validity and Enforceability of the Assignment Agreement:
The Financial Creditor submitted that Dena Bank assigned the financial assets/debts to them via an Assignment Agreement dated 9-12-2016. The Corporate Debtor argued that the Financial Creditor lacked locus standi as the Assignment Deed was allegedly not validly executed. However, the Tribunal found the Assignment Agreement valid and enforceable, thus recognizing the Financial Creditor’s right to initiate insolvency proceedings.

3. Existence of Debt and Default:
The Financial Creditor provided evidence of the debt through various documents, including sanction letters, promissory notes, and statements of accounts. The Tribunal confirmed the existence of debt amounting to INR 55,63,11,030.38 as on 21-5-2019, with the default occurring on 28-8-2014.

4. Limitation Period for Filing the Petition:
The Tribunal noted that the petition was filed within the limitation period. The last payment made by the Corporate Debtor was on 25-1-2018, and the petition was filed on 1-7-2019, thus within the three-year limitation period.

5. Appointment of Interim Resolution Professional (IRP):
The Tribunal appointed Mr. Jitender Kumar Jain as the Interim Resolution Professional, as proposed by the Financial Creditor. The IRP was directed to make a public announcement of the moratorium and follow the provisions of the Insolvency and Bankruptcy Code, 2016.

6. Declaration of Moratorium:
The Tribunal declared a moratorium under Sections 13 and 14 of the Insolvency and Bankruptcy Code, 2016, prohibiting:
- Institution or continuation of suits or proceedings against the Corporate Debtor.
- Transfer, encumbrance, or disposal of any assets of the Corporate Debtor.
- Recovery or enforcement of any security interest created by the Corporate Debtor.
- Recovery of any property by an owner or lessor in possession of the Corporate Debtor.

7. Duties and Obligations of the Interim Resolution Professional:
The IRP was instructed to adhere to the time limits for completing the CIRP and perform duties as specified under Sections 17, 18, 20, and 21 of the Insolvency and Bankruptcy Code. The IRP must manage the Corporate Debtor’s affairs with honesty and dedication, ensuring cooperation from all personnel connected with the Corporate Debtor.

Observations:
The Tribunal observed that the Financial Creditor had substantiated their claim with adequate documentation, confirming the debt and default. The Tribunal emphasized the need for a viable Insolvency Resolution Plan and suggested that the Committee of Creditors explore interest rates linked to the MCLR or Base Rate +1% for the resolution plan.

Order:
The Tribunal admitted the petition and directed the IRP to proceed with the CIRP, declaring a moratorium and outlining the IRP’s responsibilities. The Registry was instructed to communicate the order to all relevant parties. The petition filed under Section 7 of the Insolvency and Bankruptcy Code, 2016, was thus admitted with the specified directions and observations.

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