Punjab National Bank vs. Shri Vishnu Eatables: Corporate Insolvency Process Initiated

The Punjab National Bank filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016 against Shri Vishnu Eatables (India) Ltd. for Corporate Insolvency Resolution Process due to default on repayment obligations. The Tribunal found in favor of the financial creditor, establishing default by the corporate debtor and addressing the issue of limitation. An Interim Resolution Professional was appointed, procedural requirements were met, and a moratorium was imposed under Section 14, empowering the Interim Resolution Professional to manage the debtor's affairs while directing the financial creditor to deposit funds for expenses.

---

---

Issues:
1. Application under Section 7 of the Insolvency and Bankruptcy Code, 2016 for Corporate Insolvency Resolution Process.
2. Establishment of default by the Corporate Debtor.
3. Consideration of the issue of limitation.
4. Appointment of Interim Resolution Professional.
5. Compliance with procedural requirements under the Code.
6. Imposition of moratorium and related consequences.

Issue 1: Application under Section 7 of the Insolvency and Bankruptcy Code, 2016 for Corporate Insolvency Resolution Process:
The Punjab National Bank filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016 seeking initiation of Corporate Insolvency Resolution Process against the respondent company, Shri Vishnu Eatables (India) Ltd. The application detailed the financial creditor's relationship with the corporate debtor, including the sanctioning of working capital limits and subsequent default by the corporate debtor. The Tribunal noted the jurisdictional aspect and the appointment of an Interim Resolution Professional as per the requirements of the Code.

Issue 2: Establishment of default by the Corporate Debtor:
The Tribunal found that the corporate debtor had approached the financial creditor for a loan facility, which was granted but subsequently defaulted on repayment obligations. The financial creditor declared the account as Non-Performing Asset (NPA) and initiated recovery proceedings. Documentary evidence supported the financial creditor's claim for outstanding dues, further confirmed by the Debt Recovery Tribunal's order. The corporate debtor's failure to appear and defend strengthened the case for default.

Issue 3: Consideration of the issue of limitation:
The Tribunal addressed the issue of limitation by examining the timeline of events leading to the application under Section 7. Despite the account being declared NPA in 2017, a recovery certificate issued in 2020 provided a fresh cause of action within the statutory limitation period. Citing a relevant Supreme Court judgment, the Tribunal concluded that the application was not time-barred, considering the acknowledgment of debt and subsequent legal actions.

Issue 4: Appointment of Interim Resolution Professional:
In compliance with Section 7 requirements, the financial creditor proposed the appointment of Mr. Himanshu Jaitely as the Interim Resolution Professional. The professional's acceptance, declaration of no pending disciplinary proceedings, and necessary disclosures ensured compliance with the Code's provisions. The Tribunal appointed Mr. Jaitely as the Interim Resolution Professional for the corporate debtor.

Issue 5: Compliance with procedural requirements under the Code:
The Tribunal reviewed the completeness of the application under Section 7 and found no deficiencies. The absence of pending disciplinary proceedings against the proposed Interim Resolution Professional further validated the application's procedural compliance. The financial creditor's entitlement to move the application was affirmed based on the admitted financial debt and default by the corporate debtor.

Issue 6: Imposition of moratorium and related consequences:
In line with the Code's provisions, the Tribunal declared a moratorium under Section 14, imposing restrictions on certain transactions while empowering the Interim Resolution Professional to manage the corporate debtor's affairs. Prohibitions during the moratorium period were outlined, emphasizing the professional's duties and obligations. Additionally, the Tribunal directed the financial creditor to deposit a specified sum with the Interim Resolution Professional for process-related expenses.

This comprehensive analysis of the judgment by the National Company Law Tribunal, New Delhi Bench, highlights the key legal issues addressed, procedural compliance, and the Tribunal's decisions regarding the application under the Insolvency and Bankruptcy Code, 2016.

---