Tribunal Admits Insolvency Application, Appoints Resolution Professional

The tribunal admitted the application under section 7 of the Insolvency and Bankruptcy Code, finding it complete and within the limitation period. Evidence of default by the corporate debtor was established, leading to the appointment of an Interim Resolution Professional to initiate the Corporate Insolvency Resolution Process. The registry was directed to inform the parties involved, with a progress report scheduled for October 23, 2019.

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Issues Involved:
1. Initiation of the corporate insolvency resolution process.
2. Existence of financial debt and default.
3. Limitation period for filing the application.
4. Appointment of Interim Resolution Professional (IRP).

Detailed Analysis:

1. Initiation of the corporate insolvency resolution process:
The petition was filed under section 7 of the Insolvency and Bankruptcy Code, 2016 (IBC) by the Bank of India, a financial creditor, against the corporate debtor, M/s. Amitech Textiles Ltd. The petition sought to initiate the corporate insolvency resolution process (CIRP) due to the debtor's default in repaying the financial debt.

2. Existence of financial debt and default:
The financial creditor provided evidence of the financial debt through various documents, including letters of acknowledgment, sanction letters, registration of charge, title deeds of mortgaged properties, and account statements. The corporate debtor had acknowledged its liability on several occasions, and the financial creditor had issued a demand notice under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002.

The corporate debtor's account turned into a non-performing asset on September 30, 2015, with a total claimed default amounting to Rs. 28,28,76,087.83 plus future interest and other charges. Despite the debtor's contention that the properties were in the financial creditor's possession and challenging the Debt Recovery Tribunal's order, the tribunal found that the debtor had failed to repay the dues despite repeated demands.

3. Limitation period for filing the application:
The financial creditor argued that the application was within the limitation period under section 19 of the Limitation Act, 1963, as the debtor had made payments on October 3, 2016, which restarted the limitation period. Additionally, the creditor contended that the application was within the limitation period prescribed under article 62 of the Limitation Act for enforcing payment of money secured by a mortgage.

However, the tribunal referred to the Supreme Court's decision in Gaurav Hargovindbhai Dave v. Asset Reconstruction Co. (India) Ltd., which held that article 62 applies only to suits and not to applications under section 7 of the IBC. Instead, such applications fall under the residuary article 137 of the Limitation Act. Consequently, the tribunal found the application to be within the limitation period under section 19 of the Limitation Act.

4. Appointment of Interim Resolution Professional (IRP):
The financial creditor proposed Mr. Aditya Agarwal as the IRP, and he filed a declaration affirming his registration and the absence of any disciplinary proceedings against him. The tribunal appointed Mr. Agarwal as the IRP and declared a moratorium under sections 13 and 14 of the IBC, prohibiting various actions against the corporate debtor, including the institution or continuation of suits, transferring or disposing of assets, and recovering property.

The IRP was directed to comply with sections 13(2), 15, 17, and 18 of the IBC, and the corporate debtor's directors, promoters, or associated persons were instructed to cooperate with the IRP as per section 19 and discharge their functions under section 20 of the IBC.

Conclusion:
The tribunal admitted the application under section 7 of the IBC, finding the petition complete and within the limitation period. There was sufficient evidence of default by the corporate debtor, and the IRP was duly appointed to initiate the CIRP. The registry was directed to communicate the order to the financial creditor, corporate debtor, and IRP, with the next progress report scheduled for October 23, 2019.

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