2020 (9) TMI 1072 - Tri - Insolvency and Bankruptcy

Tribunal admits CIRP petition, appoints IRP, imposes moratorium. Debt and default confirmed. Case set for IRP report.

Sir M. Visvesvaraya Co-Operative Bank Ltd. Versus Ind-Lab Equipments Pvt. Ltd.

The Tribunal admitted the petition to initiate Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor, appointed an Interim ... Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence of debt and dispute or not - HELD THAT:- For an application filed U/s 7 of the Code, the parameters/requisite conditions to be considered by the Adjudicating Authority is whether the default is committed for the debt or not, and whether the Application is filed in accordance with law by suggesting suitable IRP or not. There is no dispute with regard to sanction of loans in question by the Bank. Moreover, it is not the case of Respondent that the Loans in question were not sanctioned and has committed its defaults. Payment of some part of instalments of loan, not accepting its proposal of settlement by the Bank etc. are not tenable grounds in a Petition filed U/s 7 of Code. And requesting the Bank for settlement of claim in question itself show that the Debt in question is established and default of Account of Respondent is not in dispute - Petition admitted - moratorium declared. Issues Involved:1. Initiation of Corporate Insolvency Resolution Process (CIRP) under Section 7 of the IBC, 2016.2. Default and debt owed by the Corporate Debtor.3. Compliance with procedural requirements under the IBC.4. Respondent’s objections regarding debt and default.5. Settlement proposals and their acceptance.6. Appointment of Interim Resolution Professional (IRP) and imposition of moratorium.Issue-wise Detailed Analysis:1. Initiation of Corporate Insolvency Resolution Process (CIRP) under Section 7 of the IBC, 2016:The Petitioner, Sir M. Visvesvaraya Co-operative Bank Limited, filed a petition under Section 7 of the IBC, 2016, seeking to initiate CIRP against M/s. Ind-Lab Equipments Private Limited due to a default amounting to Rs. 3,03,82,953/- as of 30.06.2019. The petition was filed in compliance with Rule 4 of the I&B (Application to Adjudicating Authority) Rules, 2016.2. Default and Debt Owed by the Corporate Debtor:The Corporate Debtor had taken two term loans from the Financial Creditor, amounting to Rs. 2,27,00,000/- and Rs. 48,00,000/- respectively. The Corporate Debtor defaulted on these loans, with outstanding amounts of Rs. 2,40,06,843/- in principal and Rs. 63,76,110/- in interest as of 30.06.2019. The Financial Creditor issued multiple notices for repayment, which went unheeded by the Corporate Debtor.3. Compliance with Procedural Requirements under the IBC:The Financial Creditor provided evidence of the debt and default, including loan agreements, hypothecation agreements, and personal guarantees from the Directors of the Corporate Debtor. The petition was filed with all requisite documents and a qualified IRP was proposed.4. Respondent’s Objections Regarding Debt and Default:The Respondent denied the existence of debt and default, claiming that the petition was incomplete and that they had made significant payments towards the loan. They argued that the Financial Creditor failed to provide a complete Form 1 and did not account for all payments made. The Respondent also cited adverse effects of Demonetization and GST as reasons for delayed payments and claimed that the Financial Creditor initiated the proceedings with malicious intent.5. Settlement Proposals and Their Acceptance:The Respondent proposed a settlement, which was rejected by the Financial Creditor as it was deemed insufficient to regularize the default. The Financial Creditor argued that the value of the Corporate Debtor was deteriorating, necessitating an early resolution process.6. Appointment of Interim Resolution Professional (IRP) and Imposition of Moratorium:The Tribunal appointed Mr. Addanki Haresh as the IRP and imposed a moratorium prohibiting suits, asset transfers, and recovery actions against the Corporate Debtor. The IRP's fees were fixed at Rs. 1,00,000/- per month, and the Board of Directors and staff of the Corporate Debtor were directed to cooperate with the IRP.Conclusion:The Tribunal admitted the petition for initiating CIRP against the Corporate Debtor, appointed an IRP, and imposed a moratorium, following the provisions of the IBC, 2016. The Respondent's objections were found to be unsubstantiated, and the debt and default were established beyond doubt. The case was posted for the IRP’s report on 23rd March, 2020.