Insolvency Petition Admitted, Moratorium Declared, Resolution Professional Appointed

The Tribunal admitted the Insolvency Petition under section 7 of the Insolvency & Bankruptcy Code, 2016, declaring a moratorium and appointing an Interim Resolution Professional. The Corporate Debtor's request for mediation was rejected, emphasizing the completion of the application and the focus on default occurrence. A separate judgment highlighted the possibility of post-admission settlement with CoC consent. The Corporate Insolvency Resolution Process commenced on 5-2-2020.

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Issues Involved:
1. Initiation of Corporate Insolvency Resolution Process (CIRP)
2. Default in repayment of credit facilities
3. Classification of account as Non-Performing Asset (NPA)
4. Maintainability of the application under section 7 of the Insolvency & Bankruptcy Code, 2016
5. Request for mediation and conciliation

Detailed Analysis:

1. Initiation of Corporate Insolvency Resolution Process (CIRP):
The Financial Creditor (Bank of India) filed an application under section 7 of the Insolvency & Bankruptcy Code, 2016, seeking initiation of CIRP against the Corporate Debtor (Jyoti Power Corporation Private Limited) due to default in repayment of various credit facilities. The application was filed by a duly authorized officer of the Bank.

2. Default in Repayment of Credit Facilities:
The Corporate Debtor initially availed working capital credit facilities with limits of Rs. 140 crores from Bank of India and Rs. 71.75 crores from IDBI Bank Ltd. The credit facilities were later enhanced to an aggregate limit of Rs. 398 crores. The Corporate Debtor hypothecated its movable assets and executed a memorandum of entry over immovable property to secure these facilities. Despite restructuring and renewal of credit facilities, the Corporate Debtor failed to repay the secured debts, resulting in the account being classified as NPA with effect from 28-10-2013.

3. Classification of Account as Non-Performing Asset (NPA):
The Corporate Debtor's accounts were classified as NPA on 28-10-2013, and subsequently, on 30-5-2015, various credit facilities were classified as NPA in the Financial Creditor's books. The Petitioner Bank claimed dues of Rs. 310,21,71,498.38 as on 7-7-2018. The classification was in accordance with RBI policies and directives applicable to restructured facilities.

4. Maintainability of the Application under Section 7 of the Insolvency & Bankruptcy Code, 2016:
The Respondent raised preliminary objections regarding the maintainability of the application, arguing that there was no specific power of attorney granted for initiating CIRP and incomplete statements of accounts were provided. The Tribunal found the application complete and within the limitation period, as the last payment was made on 20-8-2015, and the application was filed on 13-7-2018. The Tribunal also noted that the pendency of SARFAESI proceedings or other disputes does not prevent a Financial Creditor from triggering CIRP.

5. Request for Mediation and Conciliation:
The Corporate Debtor filed IA 620 of 2019, seeking permission to refer the matter to a mediation and conciliation panel. The Tribunal rejected this request, noting that the application under section 7 of IBC was complete and the question of mediation did not arise at this stage. The Tribunal emphasized that the primary focus should be on whether the default had occurred and if the application was complete. The Tribunal also highlighted that the Corporate Debtor's proposal for a one-time settlement (OTS) of Rs. 77 crores was not accepted by the Financial Creditor.

Order:
The Tribunal admitted the IB Petition under section 7 of the IBC, 2016, and declared a moratorium prohibiting the institution or continuation of suits, transferring or disposing of assets, and recovery actions against the Corporate Debtor. Mr. Chandra Prakash Jain was appointed as the Interim Resolution Professional (IRP) to manage the CIRP. The Tribunal directed the IRP to adhere to the time limits stipulated for the CIRP and perform duties as specified under the IBC.

Separate Judgment:
One judge expressed agreement with the conclusion to admit the petition under section 7 of the IBC but provided additional observations on the disposal of IA 620 of 2019, emphasizing that mediation was not appropriate at this stage due to the lack of willingness from the Financial Creditor and the rigid stance taken by the bank. The judge noted that post-admission settlement is permissible under section 12A of the IBC with the consent of 90% of the Committee of Creditors (CoC).

The petition was admitted on 5-2-2020, and the Corporate Insolvency Resolution Process commenced from that date.

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