TaxTMI 
TaxTMI 
2018 (8) TMI 1876
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....No. 1399/I&BP/2017 and is represented by the Resolution Professional, Ms. Charu Desai, is a private limited company incorporated under the provisions of the Companies Act, 1956 having CIN L17120MH1984PLC033553 3. The Company is having registered office at plot no. C-3, MIDC, Tarapur Industrial Area, Boisar, Thane-401506. 4. The Applicant Company is engaged in the manufacturing and sales of textiles and garments. 5. It is further submitted that from 29.09.2017. Mrs. Charu Desai (for brevity the Applicant) initially appointed as the Interim Resolution Professional and subsequently confirmed as the Resolution Professional of the Operational Creditor, M/s Mandhana Industries limited, in conducting the affairs and management of the Company and has filed the present application. 6. The corporate debtor, M/s Instyle Exports Private Limited, is private limited company incorporated under the provisions of the Companies Act, 1956 on 01.04.1981 having CIN U18109DL1981PTC011531 as per Master Data at Annexure II(B). 7. The Corporate Debtor is having its registered office at D- 6/8, Okhla Industrial Area, Phase-II, New Dlehi-110020. 8. The Corporate Debtor is engaged in the manufactu....
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....GS payments were also not fulfilled. 14. The corporate debtor has submitted that debt is disputed and not payable as the goods delivered by the Applicant were defective but has not substantially proved or placed any supportive documents with regard to the defect in the goods as stated to show the existence of pre-existing dispute. However, there is strict onus placed on the 'Corporate Debtor' in present case while raising the plea of dispute and that it must be genuine and bona fide and not sham in order to avoid the debt, which is claimed by the 'Operational Creditor' as due from the 'Corporate Debtor' which is an admitted amount. However, in the instant case there is no merit in the contention of the 'Corporate Debtor' and hence it is not palatable to accede to the claim of the 'Corporate Debtor' that there is a pre-existing dispute as between the 'Operational Creditor' and the 'Corporate Debtor' as contemplated under the provisions of Code, 2016. 15. Considering the submission of both parties, the defense of the 'Corporate Debtor' to stave off the Insolvency Resolution Process as sought to be unleashed by the Applicant, which primarily rests on the ground of a preexisting di....
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....l institutions maintaining accounts of the corporate debtor shall act on the instructions of the interim resolution professional in relation to such accounts and furnish all information relating to the corporate debtor available with them to the interim resolution professional. (2) The interim resolution professional vested with the management of the corporate debtor shall- (a) act and execute in the name and on behalf of the corporate debtor all deeds, receipts, and other documents, if any; (b) take such actions, in the manner and subject to such restrictions, as may be specified by the Board; (c) have the authority to access the electronic records of corporate debtor from information utility having financial information of the corporate debtor; (d) have the authority to access the books of account, records and other relevant documents of corporate debtor available with government authorities, statutory auditors, accountants and such other persons as may be specified. Section 25. Duties of resolution professional (1) It shall be the duty of the resolution professional to preserve and protect the assets of the corporate debtor, including the continued business ....
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.... section 5(5) of IBC, 2016 which are reproduced as under: Section 5 (20) "operational creditor" means a person to whom an operational debt is owed and includes any person to whom such debt has been legally assigned or transferred; Section 5(5) "corporate applicant" means- (a) corporate debtor; or (b) a member or partner of the corporate debtor who is authorized to make an application for the corporate insolvency resolution process under the constitutional document of the corporate debtor; or (c) an individual who is in charge of managing the operations and resources of the corporate debtor; or (d) a person who has the control and supervision over the financial affairs of the corporate debtor; Further as per section 6 of IBC, 2016 following persons may initiate corporate insolvency resolution process, where any corporate debtor commits a default, a "financial creditor", an "operational creditor" or the "corporate debtor" itself may initiate corporate insolvency resolution process in respect of such corporate debtor in the manner as provided under this Chapter. Section 3(8) of the IBC, 2016, provides that "corporate debtor" means a corporate person who owes a de....
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....t payable in law or in fact. Although, they may oppose admission on the ground that the corporate applicant is not eligible to make application in view of ineligibility under section 11." 20. The corporate debtor has submitted that the prohibition enshrined in Section 11 of IBC, 2016 is clear and unambiguous and does not warrant any clarification. It is a trite law that when the language of statute is clear, the plain words should be strictly relied. The applicant has relied on the order of NCLT, Mumbai in the case of Jai Ambe Enterprise vs. S. N. Plumbing Private Limited wherein it is expressed prima facie that "para 4. The action of the resolution professional against on of the Debtor of the SN plumbing appears to be a correct legal action. It is one of the duties of resolution professional to recover the outstanding debts of a corporate debtor against whom already CIRP is in progress. Further, in para 5. it is opined that, the language of section 60(2) and other allied provisions under the Code has no ambiguity that no two parallel insolvency proceedings must run against the same corporate debtor. Hence a clarification is needed in this case that SN plumbing has not submitted ....
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....he firm will tend to atrophy and fail. The longer the delay, the more likely it is that liquidation will be the only answer. Second, the liquidation value tends to go down with time as many assets suffer from a high economic rate of depreciation. From the viewpoint of creditors, a good realization can generally be obtained if the firm is sold as a going concern. Hence, when delays induce liquidation, there is value destruction. Further, even in liquidation, the realization is lower when there are delays. Hence, delays cause value destruction. Thus, achieving a high recovery rate is primarily about identifying and combating the sources of delay. The role that insolvency and bankruptcy plays in debt financing Creditors put money into debt investments today in return for the promise of fixed future cash flows. But the returns expected on these investments are still uncertain because at the time of repayment, the seller (debtor) may make repayments as promised, or he may default and does not make the payment. When this happens, the debtor is considered insolvent. Other than cases of outright fraud, the debtor may be insolvent because of * Financial failure - a persistent misma....
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....that is essential for the insolvency and the bankruptcy resolution process is created and available when it is required. 6. The law must ensure that access to this information is made available to all creditors to the enterprise, either directly or through the regulated professional. 7. The law must enable access to this information to third parties who can participate in the resolution process, through the regulated professional. III. The Code will ensure a time-bound process to better preserve economic value. 8. The law must ensure that time value of money is preserved, and that delaying tactics in these negotiations will not extend the time set for negotiations at the start. 22. The learned counsel for the Applicant submitted that legislative intent and rationale under section 11 in relation to the present application as per Committee report on the Insolvency and Bankruptcy Bill, 2015 which is enumerated as follows: a. To prevent the misuse of the provisions of the Code by corporate debtors who have already availed the benefits of the Code; b. To prevent misuse by corporate debtors and financial debtors who have violated the resolution plans made for the corp....
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....application in the capacity of "operational creditor" or as "corporate debtor". The learned Counsel for corporate debtor further relied on the order of Hon'ble NCLT, Allahabad Bench under section 7 of IBC, 2016 wherein it was held that- "This petition has been filed under section 7 of IBC, 2016, by JEKPL Pvt. Ltd. To initiate CIRP under this Code. The same Applicant has earlier filed a petition under section 10 of IBC, 2016 disentitles the corporate debtor to move a fresh application under this Code if it has been subject to corporate insolvency process within 12 months. Given the specific bar of section 11 of the IBC, 2016 present petition filed under section 7 of IBC, 2016 is not maintainable and deserves to be dismissed at the verythreshold. Further the Hon'ble Supreme of India in Mobilox Innovations Private Limited vs. Kirusa Sortware Private limited has observed that- "The adjudicating authority, when examining an application under Section 9 of the Act will have to determine: (i) Whether there is an "operational debt" as defined exceeding Rs. 1 lakh? (See Section 4 of the Act) (ii) Whether the documentary evidence furnished with the application shows that the a....
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....subject to section 52, to sell the immovable and movable property and actionable claims of the corporate debtor in liquidation by public auction or private contract, with power to transfer such property to any person or body corporate, or to sell the same in parcels in such manner as may be specified; (g) to draw, accept, make and endorse any negotiable instruments including bill of exchange, hundi or promissory note in the name and on behalf of the corporate debtor, with the same effect with respect to the liability as if such instruments were drawn, accepted, made or endorsed by or on behalf of the corporate debtor in the ordinary course of its business; (h) to take out, in his official name, letter of administration to any deceased contributory and to do in his official name any other act necessary for obtaining payment of any money due and payable from a contributory or his estate which cannot be ordinarily done in the name of the corporate debtor, and in all such cases, the money due and payable shall, for the purpose of enabling the liquidator to take out the letter of administration or recover the money, be deemed to be due to the liquidator himself; (i) to obtain any profes....
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....ord consent form of the Interim Resolution Professional (IRP), to be appointed by the order of Tribunal, of Mr. Vivek Parti, having registration number IBBI/IPA-001/IP-P00813/2017-18/11376, duly registered with Insolvency and Bankruptcy Board of India, as the Interim Resolution Professional subject to the condition that no disciplinary proceedings are pending against such an IRP named who may act as an IRP in relation to the CIRP of the Corporate Debtor and specific consent is filed in Form 2 of Insolvency and Bankruptcy Board of India (Application to Adjudicating Authority) Rule, 2016 in relation to specifically the Corporate Debtor and the Applicant herein and make disclosures as required under IBBI (insolvency Resolution Process for Corporate Persons) Regulations, 2016 within a period of one week from the date of this order. Written Communication, dated 11.05.2018, by Mr. Vivek Parti in Form 2 is annexed to the present application. 30. The registered office of corporate debtor is situated in New Delhi and therefore this Tribunal has jurisdiction to entertain and try this application. 31. The amount of default exceeds Rs. 1,00,000/- as per the requirement under section 4 of t....