IBC Application Admitted for CIRP with Moratorium - Interim Resolution Professional Appointed

The application under Section 7 of IBC, 2016 for initiating Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor was admitted by the Mumbai Bench of NCLT. The Tribunal declared a moratorium under Section 14 of IBC, prohibiting suits, asset transfers, and recovery actions against the Corporate Debtor. Mr. Saket Shantilal Jain was appointed as the Interim Resolution Professional, and the Financial Creditor was directed to deposit funds for public announcements and claims.

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Issues Involved:
1. Initiation of Corporate Insolvency Resolution Process (CIRP) under Section 7 of the Insolvency and Bankruptcy Code (IBC), 2016.
2. Default amount and interest rate.
3. Jurisdiction of the Tribunal.
4. Admission of debt by the Corporate Debtor.
5. Appointment of Interim Resolution Professional (IRP).
6. Declaration of moratorium under Section 14 of IBC.
7. Directions for public announcement and deposit by the Financial Creditor.

Detailed Analysis:

1. Initiation of Corporate Insolvency Resolution Process (CIRP):
The petition was filed u/s 7 of IBC, 2016 by the Financial Creditor, seeking to initiate CIRP against the Corporate Debtor. The Financial Creditor claimed a default amount of Rs. 1,85,19,027/- inclusive of interest at 17% p.a. as of 22.07.2021, with the date of default being 1st April 2021.

2. Default Amount and Interest Rate:
The Financial Creditor disbursed a loan of Rs. 1,20,25,000/- to the Corporate Debtor, with various payments detailed in a table. The Corporate Debtor refunded Rs. 24,00,000/- by way of cheques. The outstanding principal amount was Rs. 96,25,000/-, with loans lent at different interest rates (17% p.a. and 12% p.a.). The Corporate Debtor defaulted on payments post-14th February 2016.

3. Jurisdiction of the Tribunal:
The Corporate Debtor is a private limited company incorporated under the Companies Act, 1965, with its registered office in Mumbai. Therefore, the Mumbai Bench of NCLT has jurisdiction to deal with this petition.

4. Admission of Debt by the Corporate Debtor:
The Corporate Debtor admitted the default amount of Rs. 1,85,19,027/- inclusive of interest at 17% p.a. as on 22.07.2021 in its reply. The Corporate Debtor also acknowledged the financial difficulties due to a fire incident in 2016 and the impact of the COVID-19 pandemic on their ability to repay the loan.

5. Appointment of Interim Resolution Professional (IRP):
The Financial Creditor proposed Mr. Saket Shantilal Jain, an Insolvency Professional registered with the Indian Institute of Insolvency Professionals of ICAI, as the IRP for conducting the CIRP of the Corporate Debtor. The Tribunal accepted this proposal.

6. Declaration of Moratorium under Section 14 of IBC:
The Tribunal declared a moratorium u/s 14 of IBC, prohibiting:
a) Institution or continuation of suits or proceedings against the Corporate Debtor.
b) Transfer, encumbrance, alienation, or disposal of any assets of the Corporate Debtor.
c) Actions to foreclose, recover, or enforce any security interest created by the Corporate Debtor.
d) Recovery of any property by an owner or lessor where such property is occupied by the Corporate Debtor.

The supply of essential goods or services to the Corporate Debtor shall not be terminated or suspended during the moratorium period.

7. Directions for Public Announcement and Deposit by the Financial Creditor:
The Tribunal directed an immediate public announcement of the CIRP as specified under section 13 of IBC. The Financial Creditor was ordered to deposit Rs. 5,00,000/- with the IRP to meet expenses arising from issuing public notices and inviting claims, subject to approval by the Committee of Creditors (CoC).

Order:
The application C.P. (IB) No. 806/NCLT/MB/C-IV/2021 filed under Section 7 of IBC, 2016, by the Financial Creditor against the Corporate Debtor for initiating CIRP was admitted. The Tribunal declared a moratorium and issued consequential directions, including the appointment of Mr. Saket Shantilal Jain as IRP and immediate communication of the order to relevant parties.

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