2022 (11) TMI 157 - Tri - Insolvency and Bankruptcy

Corporate Insolvency Resolution Process Initiated by NCLT: Moratorium and IRP Appointed

The petition was admitted, and the Corporate Insolvency Resolution Process (CIRP) was initiated by the Chandigarh Bench of the National Company Law ... Maintainability of petition - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not - whether the present application is filed within limitation? - HELD THAT:- It can be seen from the records that the date of default is 06.11.2015 i.e., the date on which the account of the corporate debtor was classified as Non-Performing Asset. Further, the CD gave OTS of Rs. 12.25 crore on 12.03.2018 along with an upfront payment of Rs. 61,25,000/- through cheque no. 829701 dated 12.03.2018. Therefore, OTS offer will amount to acknowledgment under section 18 of the Limitation act, 1963, and the present petition is re-filed vide Diary No.82 dated 06.01.2020. Therefore, the present petition is filed within limitation. Whether there is a default in payment or not? - HELD THAT:- It is observed from the record that in the present case, the occurrence of default is evidenced by the fact that the CD in need of financial assistance requested the Boha Branch of the petitioner/financial creditor for the grant of financial facilities. Subsequently, on the request of the CD, an overall financial facility to the tune of Rs.33.08 crores were sanctioned by the consortium of the bank including the present petitioner i.e. State bank of India and Punjab National Bank on 17.01.2014 out of which share of the petitioner/SBI was Rs.18.27 crores. An inter-se agreement was executed between the financial creditor and the other member of the consortium for the overall financial facilities granted by way of consortium finance to settle inter-se rights and liabilities. A copy of the same is attached as the consortium executed the letter of authority in favour of the Financial Creditor on 17.01.2014 (Annexure-1/15). The CD failed to maintain financial discipline and in spite of repeated requests, the CD did not regularize their account, and as such the accounts of the CD were classified as Non-Performing Assets as per RBI guidelines on 6.11.2015. Consequently, a demand notice under Section 13(2) of the SARFAESI Act dated 14.12.2015 (Annexure-I/16, Page No.231-243) was served on the FC within a period of 60 days. Since the CD failed to repay the amount as claimed by the petitioner, after a statutory period of 60 days, issued symbolic possession notice Section 1394) of the SARFAESI Act read with Rule 8(1) of the Security Interest (Enforcement) Rules, 2002. The present petition being complete and having established the default in payment of the Financial Debt for the default amount being above the threshold limit, the petition is admitted in terms of Section 7(5) of the IBC - Moratorium declared. Issues Involved:1. Jurisdiction and incorporation details of the Corporate Debtor.2. Financial facilities availed by the Corporate Debtor.3. Default in repayment and classification as Non-Performing Asset (NPA).4. Initiation of Corporate Insolvency Resolution Process (CIRP) under Section 7 of the Insolvency and Bankruptcy Code (IBC), 2016.5. Compliance with the limitation period.6. Appointment of Interim Resolution Professional (IRP).7. Directions for moratorium and IRP duties.Issue-wise Detailed Analysis:1. Jurisdiction and Incorporation Details:The Corporate Debtor was incorporated on 17.08.2012 with its registered address at Ratia Road, Village Boha, Teh Budhlada, Budhlada PB 151503 IN. The jurisdiction for this case lies with the Chandigarh Bench of the National Company Law Tribunal (NCLT).2. Financial Facilities Availed:The Corporate Debtor, engaged in the textile business, requested financial facilities from a consortium of banks including the State Bank of India (SBI) and Punjab National Bank (PNB). On 17.01.2014, a total of Rs. 33.08 crores was sanctioned, with SBI's share being Rs. 18.27 crores, which included a term loan of Rs. 18.10 crores and bank guarantees of Rs. 17.00 lakhs. The terms were accepted by the Corporate Debtor, and various security documents were executed.3. Default in Repayment and Classification as NPA:The Corporate Debtor failed to maintain financial discipline and did not regularize their account despite repeated requests. Consequently, their account was classified as a Non-Performing Asset (NPA) on 06.11.2015. A notice under Section 13(2) of the SARFAESI Act was served on 14.12.2015, followed by a symbolic possession notice under Section 13(4) on 01.07.2016. Despite these measures, the Corporate Debtor failed to repay the outstanding dues.4. Initiation of CIRP under Section 7 of IBC:The petition was filed by SBI under Section 7 of the IBC, 2016, to initiate the CIRP against the Corporate Debtor. The petition included necessary documents such as the Consortium Term Loan Agreement, Joint Deed of Hypothecation, Trust and Retention Account Agreement, and others. The petition was deemed complete, and the default was established.5. Compliance with the Limitation Period:The date of default was 06.11.2015. The Corporate Debtor made a One-Time Settlement (OTS) offer on 12.03.2018, which was considered an acknowledgment under Section 18 of the Limitation Act, 1963. The petition was re-filed on 06.01.2020, thus falling within the limitation period.6. Appointment of Interim Resolution Professional (IRP):Mr. Mohit Chawla was proposed as the IRP. His credentials were verified, and there was nothing adverse against him. He was appointed with specific directions to manage the affairs of the Corporate Debtor, take control of its assets, and perform duties as per the IBC provisions.7. Directions for Moratorium and IRP Duties:A moratorium was declared as per Section 14 of the IBC, prohibiting:a) Institution or continuation of suits or proceedings against the Corporate Debtor.b) Transferring or disposing of any assets.c) Actions to enforce any security interest.d) Recovery of property by owners or lessors.The supply of essential goods or services to the Corporate Debtor was to continue uninterrupted. The IRP was directed to make a public announcement, constitute a Committee of Creditors, and submit regular progress reports. The Financial Creditor was instructed to deposit Rs. 2,00,000 with the IRP for expenses.Conclusion:The petition was admitted, and the CIRP was initiated. The order included specific instructions for the IRP and the moratorium, ensuring compliance with the IBC and safeguarding the interests of all stakeholders involved.