Application for Corporate Insolvency Process Dismissed Due to Procedural Lapses and Non-Disclosure

The Tribunal dismissed the application for Corporate Insolvency Resolution Process (CIRP) under Section 10 of IBC, 2016, due to incomplete Form-VI and non-disclosure of the company's name change and address shift. The Tribunal highlighted procedural lapses, selective settlement with one creditor, and misuse of the insolvency process. It emphasized the need for transparency and compliance with statutory requirements. The connected applications were closed, and the order was communicated to the Insolvency and Bankruptcy Board of India (IBBI).

---

---

Issues Involved:
1. Initiation of Corporate Insolvency Resolution Process (CIRP) under Section 10 of IBC, 2016.
2. Non-disclosure of change of name and registered office address by the Corporate Applicant.
3. Settlement of dues with one creditor while ignoring others.
4. Filing of incomplete Form-VI.
5. Filing of additional applications by the Corporate Applicant.
6. Misuse of Section 10 of IBC, 2016.

Detailed Analysis:

1. Initiation of Corporate Insolvency Resolution Process (CIRP) under Section 10 of IBC, 2016:
This application was filed to initiate CIRP for the Corporate Debtor, M/s. Prithivraj Spinning Mill Private Limited, under Section 10 of IBC, 2016. The Tribunal observed procedural compliance issues, including the absence of representation from one of the Financial Creditors (State Bank of India) and the need for additional documentation such as the minutes of the EoGM and attendance sheets.

2. Non-disclosure of change of name and registered office address by the Corporate Applicant:
The Corporate Applicant changed its name to M/s. Marappar Textiles Private Limited and shifted its registered office address after filing the application but failed to disclose these changes in Form-VI. This was deemed a concealment and suppression of material facts, which could mislead creditors and affect the public announcement required under Section 15 of IBC, 2016.

3. Settlement of dues with one creditor while ignoring others:
The Corporate Applicant settled the dues with the 2nd Respondent (State Bank of India) but did not clarify how the payment was made or whether other creditors were aware of the pending application. This selective settlement raised questions about the Applicant's intentions and the potential misuse of the CIRP process to defraud other creditors.

4. Filing of incomplete Form-VI:
The application was incomplete as the amended Form-VI reflecting the change in the company's name and registered office was not filed, despite multiple opportunities provided by the Tribunal. The Tribunal emphasized that an incomplete application under Section 10 of IBC, 2016, could be rejected as per Section 10(4)(b).

5. Filing of additional applications by the Corporate Applicant:
The Corporate Applicant filed additional applications to avoid payment of dues to the Tamil Nadu Electricity Board and to restrain creditors from invoking the SARFAESI Act, 2002. The Tribunal noted that these applications were not disclosed during the hearings, indicating a lack of transparency.

6. Misuse of Section 10 of IBC, 2016:
The Tribunal concluded that the Corporate Applicant misused Section 10 of IBC, 2016, by altering its financial status, changing its name and address, and selectively settling dues. The Tribunal suggested tightening the provisions of Section 10 to prevent such misuse and emphasized the need for the Applicant to maintain the status quo after filing the application.

Conclusion:
The Tribunal dismissed the application filed under Section 10 of IBC, 2016, due to the incomplete Form-VI and the non-existence of the company name as per the records. The Tribunal also closed all connected applications and directed the Registry to communicate the order to the Insolvency and Bankruptcy Board of India (IBBI).

---