Last Updated on April 30, 2020 by Legalseva.net
This post is a judgment digest of NCLT Chandigarh Insolvency case against SRS Ltd filed by SBI wherein application under Sec 7 of IBC Code, 2016 was admitted and IRP (Interim Resolution Professional Appointed). Similarly through this post one can grasp Insolvency Case Procedure Steps in NCLT Chandigarh Bench.
Now its better you read the judgment itself.
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Judgment digest of the case of SBI v SRS LTD
Court – NCLT Chandigarh
Name of parties- SBI v SRS Ltd
Case number- CP (IB) No.201/Chd/Hry/2018
Date of decision- 21.8.2018
Facts of the case-
The petitioner (financial creditor) advanced loans to the respondent from time to time with the last loan given on 30.3.2016, the loan given is a consortium arrangement whereby loan a are given the the SBI and its subsidiary banks such as the State Bank of Patiala, the State Bank of Travancore and the State Bank of Bikaner. The respondent (debtor) defaulted on the loans given by the petitioner, the proof of such a default was given by the latter by relying on documents such as the copies of statements of accounts of the corporate debtor and the copy of the CIBIL report. Due to the default, the loan facility was recalled by the petitioner and notice was issued by it to the respondent under section 13(2) of the SARFAESI Act, 2002 which informed the debtor that the financial assistance facilities had become irregular and the loan was classified as a NPA. The petitioner had field the insolvency application under section 7 of the IBC, 2016 and this the proceedings in relation to the application were pending before the Hon’ble Tribunal.
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Judgments quoted – No judgement quoted
Settled Law – The approval of insolvency resolution applicant by the court or tribunal or dependent on the compliance of the applicant- petitioner with the sanctioned process of filing for Insolvency resolution in the Insolvency and Bankruptcy Code, 2016.Section 7 gives power to financial creditor to file an application against corporate debtor. There are three important ingredients to attract section 7 of the Code:
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Default -This is the most important element for initiating corporate insolvency resolution process against corporate debtor. Once the default crosses the threshold limit, an application may be filed by financial creditor(s) under section 7. Default is explained under section 3(12) of the Code and it stipulates the following:- “default means non-payment of debt when whole or any part or installment of the amount of debt has become due and payable and is not repaid by the debtor or the corporate debtor, as the case may be”.
Application under section 7(2) is complete -It is important to file a complete application. Adjudicating authority may reject the application if the application is incomplete. An applicant needs to file the application in accordance with Form 1 of the Code. Under section 8, operational creditor needs to send notice to the other party before filing application for initiating insolvency process against corporate debtor.On the aforementioned lines, it can be said that statutory requirements are sine qua non for initiating insolvency process. Thus, for taking recourse under section 7, application must be complete.
There should not be any disciplinary proceedings pending against the proposed resolution professional.
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Order of Court – In view of the above, the petition is admitted and the moratorium is declared in terms of sub-section (1) of Section 14 of the Code, which is as under:-
(a) the institution of suits or continuation of pending suits or proceedings against the corporate debtor including execution of any judgment, decree or order in any court of law, tribunal, arbitration panel or other authority;
(b) transferring, encumbering, alienating or disposing of by 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.
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- 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.
- 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 pass an order for liquidation of corporate debtor under Section 33 as the case may be.
- We also appoint Mr. Ashok Kumar Gulla, C/o RBSA Restructuring Advisors LLP. 9th Floor, 9C, Hansalaya Building, 15 Barakhamba Road, Connaught Place, New Delhi- 110001, having Registration No.IBBI/IPA-003/IP-N00024/2017-18/10174 and email address as [email protected], as an Interim Resolution Profession with the following directions:
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(i) The term of appointment of Mr. Ashok Kumar Gulla, shall be in accordance with the provisions of Section 16(5) of the Code.
(ii) In terms of Section 17 of ‘the Code’, from the date of this appointment, the powers of the Board of Directors shall stand suspended and the management of the affairs shall vest with the Interim Resolution Professional and the officers and the managers of the ‘Corporate Debtor’ shall report to the Interim Resolution Professional, who shall be enjoined to exercise all the powers as are vested with Interim Resolution Professional and strictly perform all the duties as are enjoined on the Interim Resolution Professional under Section 18 and other relevant provisions of the ‘Code’, including taking control and custody of the assets over which the ‘Corporate Debtor’ has ownership rights recorded in the balance sheet of the ‘Corporate Debtor’ etc. as provided in Section 18 (1) (f) of the ‘Code’. The Interim Resolution Professional is directed to prepare a complete list of inventory of assets of the ‘Corporate Debtor’
(iii) The Interim Resolution Professional shall strictly act in accordance with the ‘Code’, all the rules framed thereunder by the Board or the Central Government and in accordance with the ‘Code of Conduct’ governing his profession and as an Insolvency Professional with high standards of ethics and moral;
(iv) The Interim Resolution Professional shall endeavour to constitute the Committee of Creditors after collation of all the claims received against the corporate debtor and the determination of the financial position of the corporate debtor constitute a committee of creditors and shall file a report, certifying constitution of the committee and this Tribunal on or before the expiry of thirty days from the date of his appointment , and shall hold first meeting of the committee within seven days of filing the report of constitution of the committee.
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(v) It is hereby directed that the ‘Corporate Debtor’, its Directors, personnel and the persons associated with the management shall extend all cooperation to the Interim Resolution Professional in managing the affairs of the ‘Corporate Debtor’ as a going concern and extend all co-operation in accessing books and records as well assets of the ‘Corporate Debtor’;
(vi) The Interim Resolution Professional shall cause a public announcement within three days as contemplated under Regulation 6 of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 of the initiation of the Corporate Insolvency Resolution Process in terms of Section 13 (1) (b) of the ‘Code’ read with Section 15 calling for the submission of claims against ‘Corporate Debtor’; and
(vii) The Interim Resolution Professional is directed to send regular progress report to this Tribunal every fortnight.
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Conclusion- The tribunal examined all the documents presented by the petitioner and came to a conclusion that all the requirements mentioned under Section 7 of the IBC were fulfilled. No defect was found in the application of the petitioner and therefore it was admitted under sub- section 5 of Section 7 of the Code.
Further, the tribunal declared a moratorium under section 14(1) of the Code and Mr. Ashok Kumar Gulla was appointed as the Interim Resolution Professional according to due process.
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For case specific advice, please contact top/best/expert NCLT Chandigarh Bench Lawyers Advocates in Panchkula Mohali Kharar Derabassi Zirakpur Baltana Mullanpur (Punjab & Haryana)
This post is written by Kaustubh Kulkarni.
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