AI Drafter 
TaxTMI 
TaxTMI 
2019 (7) TMI 637
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.... Corporate Debtor to move this IB Petition before this Bench, under Section 10 of the Code, seeking C.I.R.P for itself. 2. The Corporate Applicant/Debtor, i.e. M/s. Ace Worldwide Tours Ltd., is a Company, incorporated on 13th September, 2011 and registered under the Companies Act, 1956, bearing CIN: U63040GJ2007PLC051318. The registered office of the company is situated at F-22-23-24, Jolly Arcade, Ghod Dod Road, Surat-395 007, Gujarat. The Nominal Share Capital of the Company is Rs. 16,00,00,000/- (Rupees Sixteen Crores only) and Paid-Up Share Capital of the Company is Rs. 12,67,04,560/- (Rupees Twelve Crores Sixty Seven Lacs Four Thousand Five Hundred Sixty only). 3. The present application is filed and signed by Mr.Raju J. Choksi, being the Managing Director of the corporate of the applicant company. A perusal of the Company's Board Resolution, dated 10th February, 2018, shows that by such resolution Mr. Raju J Choksi, Managing Director, or Mr. Bharat Choksi, Director, are duly authorized to file the present IB Petition seeking initiation of the Corporate Insolvency Resolution Process for the Corporate Applicant/Debtor in terms of Section 10 of the Insolvency and Bankruptc....
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....ed default in making payment of its financial debts to one of the Financial Creditors, i.e. IDBI Bank Ltd., hence, it has been issued Demand Notices on 03.11.2015 and on 03.12.2015 by insisting for making repayment of dues. 9. It is further reported that the above stated Financial Creditor - IDBI has also initiated a proceeding, under Sections 13(2) and 13(4) of the SARFAESI Act, against the Corporate Applicant and issued notices. 10. That apart, some of the operational creditors have also issued letter/ notice to the corporate applicant/ corporate debtor seeking repayment of their dues. It is stated that United Credit Solutions Pvt. Ltd. as well as the Bombay Stock Exchange (BSE) have issued Demand Notices to the present Corporate Debtor company. A copy thereof is annexed with the present IB petition. 11. The corporate applicant/debtor has also enclosed a copy of its audited financial statements for the years 2015-16 and 2016-17 and the provisioned financial statements for period from 01.04.2017 to 09.03.2018, as Annexure 11A, 11B and 11C, respectively. 12. In the present application, the Corporate Applicant has proposed the name of Mr.Narayan Gajanan Vidvans, as an In....
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....t of Rs. 10,08,93,785/- as due against the assessee-company." 16. Notwithstanding the above, one of the objectors-Financial Creditors, i.e. IDBI, has opposed the present IB Petition by filing its objections, contending such:- 16.1 the present application filed by the applicant is not maintainable before this Adjudicating Authority. It is alleged that the applicant intends to thwart the recovery action initiated by it under Section 13 of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act,2002 (SARFAESI Act), then it has been contended that if the applicant feels aggrieved with the action initiated under the SARFAESI Act. It has an alternative efficacious remedy under the said Act to raise its grievance against the respondent. In support of its objection, the IDBI has placed reliance, on a decision of the Hon'ble Supreme Court in the matter of United Bank of India v. Satyawati Tandon wherein it has been pleased to observe as such:- "In our view while dealing with the applications involving challenge to the action for recovery of the public dues etc., the High Court must keep in mind that the legislations enacted by ....
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....ntee of Rs. 30.00 lakhs] against hypothecation of movable assets and mortgage of immovable properties. Shri Raju Jashwantlal Choksi, Shri Bharat Jashwantlal Choksi, Shri Anil Jashwantlal Choksi, Shri Jayesh Jashwantlal Choksi, Shri Mayank Anilbhai Choksi, Smt. Nileshaben Bharatbhai Choksi, Smt. Rekhaben Anilbhai Choksi, Smt. Suhangini Jayesh Choksi and Smt. Mala Raju Choski stood as personal guarantors of the credit facilities sanctioned by it. 16.5 It is contended that the borrowers as well as guarantors have executed various security documents for obtaining the credit facilities, i.e., Loan Facility Agreement, Deed of Hypothecation, Undertaking to Create Supplementary Deed of Hypothecation, Deed of Guarantee / Guarantee Agreement, Undertaking of Borrower and Undertaking of Guarantors, Undertaking to Create Mortgage, Demand Promissory Note, Registered Memorandum of Deposit of Title Deeds. 16.6 It is further alleged that the corporate applicant never paid actual amount of instalments and whatever was paid, was irregular and due to the non-payment of monthly instalments, the account of corporate applicant company has been classified as Non-Performing Assets (NPA) o....
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....r sub-section (1) shall be filed in such form, containing such particulars and in such manner and accompanied with such fee as maybe prescribed. (3) The corporate applicant shall, along with the application, furnish the information relating to (a) its books of account and such other documents for such period as maybe specified; and (b) the resolution professional proposed to be appointed as an interim resolution professional; and of the corporate debtor, as the case maybe, approving filing of the application. (4) The Adjudicating Authority shall, within a period of fourteen days of the receipt of the application, by an order- (a) admit the application, if it is complete (b) reject the application, if it is incomplete Provided that Adjudicating Authority shall, before rejecting an application, give a notice to the applicant to rectify the defects in his application within seven days from the date of receipt of such notice from the Adjudicating Authority. 5 The corporate insolvency resolution process shall commence from the date of admission of the application under sub-section (4) of this section." 1....
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....money. As opposed to this, an operational creditor means a person to whom an operational debt is owed and an operational debt under Section 5 (21) means a claim in respect of provision of goods or services. 28. When it comes to a financial creditor triggering the process, Section 7 becomes relevant Under the explanation to Section 7(1), a default is in respect of a financial debt owed to any financial creditor of the corporate debtor - it need not be a debt owed to the applicant financial creditor. Under Section 7(2), an application is to be made under sub-section (1) in such form and manner as is prescribed, which takes us to the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016. Under Rule 4, the application is made by a financial creditor in Form 1 accompanied by documents and records required therein. Form 1 is a detailed form in 5 parts, which requires particulars of the applicant in Part I, particulars of the corporate debtor in Part II, particulars of the proposed interim resolution professional in part III, particulars of the financial debt in part IV and documents, records and evidence of default in part V. Under Rule 4(3), the applican....
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....other relevant provisions, observed and held as follows: "20. Under both Section 7 and Section 10, the two factors are common i.e. the debt is due and there is a default Sub-section (4) of Section 7 is similar to that of sub-section (4) of Section 10. Therefore we, hold that the law laid down by the Hon'ble Supreme Court in "Innoventive Industries Ltd." (supra) is applicable for Section 10 also, wherein the Hon'ble Supreme Court observed as "The moment the adjudicating authority is satisfied that a default has occurred, the application must be admitted unless it is incomplete, in which case it may give notice to the applicant to rectify the defect within 7 days of receipt of a notice from the adjudicating authority" 21. In an application under Section 10, the financial creditor' or 'operational creditor', may dispute that there is no default or that debt is not due and is not payable in law or in fact. They may also oppose admission on the ground that the Corporate Applicant is not eligible to make application in view of ineligibility under Section 11 of the I & B Code. The Adjudicating Authority on hearing the parties and on perusal of record, if satisfied that t....
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....on 10 of the I & B Code and Form 6 has been supplied by a Corporate Applicant/Corporate Debtor and the application is otherwise complete. Non-mentioning of suit(s) pending between the parties cannot termed to be suppression of facts nor can be a ground to reject the application. In fact, once the application under Section 10 is admitted, all such related proceedings, including suits for recovery of movable or immovable property of the Corporate Debtor and other proceeding cannot proceed further in any Court or Tribunal or Authority in view of order of 'moratorium' as maybe declared under Section 13 and prohibition that may be imposed under Section 14 of I & B Code. 25. Similarly, if any action has been taken by a 'Financial Creditor' under Section 13(4) of the SARFAESI Act, 2002 against the Corporate Debtor or a suit is pending against Corporate Debtor under Section 19 of DRT Act, 1993 before a Debt Recovery Tribunal or appeal pending before the Debt Recovery Appellate Tribunal cannot be a ground to reject an application under Section 10, if the application is complete. 26. Any proceeding under Section 13(4) of the SARFAESl Act, 2002 or suit under Section 19 of th....
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....hall commence from 10.05.2019 and shall have legal effect till completion of Corporate Insolvency Resolution Process or until this Adjudicating Authority approves the Resolution Plan under Sub- section (1) of Section 31 or to go an order for the Liquidation of Corporate Debtor under as per Section 33 of the I & B Code, as the case maybe. (ii) That this Adjudicating Authority hereby appoint Mr. Narayan Gajanan Vidvans, having IP Registration No. IBBI/IPA-002/IP-N00378/2017-2018/11121 (and residing at 604B, Shiv Kartik Enclave, VIP Road, Vesu, Surat-395007), Mobile Nos.919428409398/7506093966, appointed as "Interim Insolvency Resolution Professional" to carry the functions as mentioned under Insolvency and Bankruptcy Code, 2016. (iii) The IRP so appointed shall make public announcement of Corporate Insolvency Resolution Process be made immediately as specified under Section 13 of the Code and by calling for submissions of claim under Section 15 of the Code. (iv) That the Bench hereby prohibits the institution of suits or continuation of pending suit or proceedings against the corporate debtor including execution of any judgment, decree or order in any court....