TaxTMI 
TaxTMI 
2020 (9) TMI 504
X X X X Extracts X X X X
X X X X Extracts X X X X
....ess ('CIRP') in the case of Mir Kings Industries Pvt. Ltd. (hereinafter referred to as 'respondent' 'corporate debtor'). The petition is submitted on behalf of the financial creditor, by Mr. Mohd. Hanief Kirmani, Assistant Vice President Law, Jammu & Kashmir Bank Ltd. A copy of Special Power of Attorney dated 30.03.1994, in favour of Mr. Mohd. Hanief Kirmani to be true and lawful attorney of the said bank is annexed as Annexure P1 of the petition. Vide CA No. 596/2018, the petitioner-financial creditor has placed on record Board Resolution dated 26.11.2018, wherein Mr. Mohd. Hanief Kirmani, has been authorized to do all acts necessary for filing Form-1, under Code. 3. The respondent-corporate debtor is a company incorporated under the Companies Act, 2013 with authorized share capital of Rs. 8,00,00,000/- and paid up capital of Rs. 1,00,000/-. The CIN of the respondent-corporate debtor is U28112JK2013PTC003924 and its registered office is situated in Pulwama, Jammu and Kashmir and therefore, the matter falls within the territorial jurisdiction of this Tribunal. 4. The facts of the case, briefly stated, are that the petitioner-financial creditor is a Banking Company incorporate....
X X X X Extracts X X X X
X X X X Extracts X X X X
....f security held are given. It is stated that the credit facilities are secured primarily by way of mortgage of leasehold right of 20 Kanals earmarked by J&K SIDCO Lassipora Pulwama for the unit, along with factory premises, other buildings, plant and machinery, movables and other misc. financial assets and also by hypothecation of stocks of all kinds including book debts and assignment of receivables. It is also stated that the credit facilities were collaterally secured by the mortgage of various land and hypothecation of commercial vehicles and third party guarantee of Mr. Haji Ghulam Mohudin and Mrs. Humaira Shafeeq. 8. The financial creditor issued a notice under Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Interest Act, 2002, (hereinafter referred to as 'SARFAESI Act') bearing Ref No. JKB/ZOKC/AMID/SRFS/2017 calling upon the corporate debtor to pay the outstanding amount. Copy of SARFAESI Notice dated 06.02.2017 is appended as Annexure P-5 of the petition. 9. In Part-III of Form No1. Mr. Neeraj Bhatia, Registration No.IBBI/IPA- 001/IP-P00824/2017-18/11400 has been proposed as Interim Resolution Professional ('IRP'). Form No.2 dated ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....7 has expired because the payment has not been released and therefore, the OTS stands cancelled. Copy of letter dated 27.10.2017 is also appended with the reply as Annexure R-7. 12. It is also submitted that a decree of mandatory injunction was sought to grant sanction to pending proposal submitted by the expected purchase of the property i.e. M/s Buildtech Industries so that OTS dated 05.08.2017 may be carried out successfully. Copy of the civil suit is at Annexure R-11 of the Reply. 13. Rejoinder was filed, vide Diary No.6094 dated 04.11.2019, wherein the contentions of the respondent-corporate debtor as filed in the reply has been denied. It is submitted that respondent-corporate debtor is wrongly trying to club all the group companies as mentioned in the table given in the reply and it is stated that all companies and individuals are in fact separate entities, containing own terms, have availed different credit facilities from the petitioner-financial creditor. It is also submitted that the averments made in Paragraph Nos. 4 and 5 of the reply, do not pertain to the instant petition which has been filed by the petitioner-financial creditor. It is also submitted that a workin....
X X X X Extracts X X X X
X X X X Extracts X X X X
....person to whom a financial debt is owed and a financial debt is defined in Section 5(8) to mean a debt which is disbursed against consideration for the time value of 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 res....
X X X X Extracts X X X X
X X X X Extracts X X X X
....red and the application under sub-section (2) is complete, and there is no disciplinary proceedings pending against the proposed resolution professional, it may, by order, admit such application; or (b) default has not occurred or the application under sub-section (2) is incomplete or any disciplinary proceeding is pending against the proposed resolution professional, it may, by order, reject such application: Provided that the Adjudicating Authority shall, before rejecting the application under clause (b) of sub-section (5), give a notice to the applicant to rectify the defect in his application within seven days of receipt of such notice from the Adjudicating Authority. (6) The corporate insolvency resolution process shall commence from the date of admission of the application under sub-section (5). (7) The Adjudicating Authority shall communicate- (a) the order under clause (a) of sub-section (5) to the financial creditor and the corporate debtor; (b) the order under clause (b) of sub-section (5) to the financial creditor, within seven days of admission or rejection of such application, as the case may be. 17. Section 7(5)....
X X X X Extracts X X X X
X X X X Extracts X X X X
....l Versus M/s Pashupati Jewellers and Another; CA (AT) (INS) No.1021/2019, dated 01.10.2019, the Hon'ble National Company Law Appellate Tribunal, held that "merely because a suit has been filed by the appellant and pending, cannot be a ground to reject the application under Section 7 of the I&B Code. Pre-existing dispute cannot be a subject matter of Section 7, though it may be relevant under Section 9 of the I&B Code. 21. Further, the other contention raised by the respondent-corporate debtor that the stay order dated 26.06.2018 passed in the above referred suit (Annexure R-12 Page 56 of the reply) is a bar to this adjudicating authority to entertain the instant CP, is also unacceptable. The Court of Principal District Judge, Pulwama, in the above suit, restrained the applicant-bank from taking any kind of action vis-à-vis recovery of the outstanding loan and not to take any coercive measures and to make any publication of the names of the plaintiffcompany, promoters, directors, guarantors and co-borrowers to their person and property in the print and electronic media. 22. As held by the Hon'ble NCLAT, in Binani Industries Limited Versus Bank of Baroda; CA No.82 of 201....
X X X X Extracts X X X X
X X X X Extracts X X X X
....y the corporate debtor any of its assets or any legal right or beneficial interest therein; c) any action to foreclose, recover or enforce any security interest created by the corporate debtor in respect of its property including any action under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002; d) the recovery of any property by an owner or lessor where such property is occupied by or in the possession of the corporate debtor. 28. It is further directed that the supply of essential goods or services to the corporate debtor as may be specified, shall not be terminated or suspended or interrupted during moratorium period. The provisions of Section 14(3) shall however, not apply to such transactions as may be notified by the Central Government in consultation with any financial sector regulator and to a surety in a contract of guarantee to a corporate debtor. 29. The order of moratorium shall have effect from the date of this order till completion of the corporate insolvency resolution process or until this Bench approves the resolution plan under sub-section (1) of Section 31 or passes an order for liqui....