TMI Blog2018 (5) TMI 172X X X X Extracts X X X X X X X X Extracts X X X X ..... h Jain, Advocate And Ms. Divya Sharma, Advocate JUDGEMENT (Oral) This petition has been filed by Kingfisher Industries Private Limited, a Corporate Debtor-Applicant itself in Form No.6 as prescribed under subrule (1) of Rule 7 of Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 (for brevity the Rules ) for initiating Corporate Insolvency Resolution Process under Section 10 of the Insolvency and Bankruptcy Code, 2016 (for short to be referred hereinafter as the Code ). The corporate debtor also falls within the definition of the term Corporate Applicant as defined in sub-section (5) of Section 5 of the Code. 2. The corporate debtor was incorporated as a company on 11.04.2012, having been allotted CIN U28113PB2012PTC036127, and its registered office is at Ludhiana, Punjab and, therefore, the matter falls within the territorial jurisdiction of this Tribunal. 3. The Authorised Share Capital of the corporate debtor is 3 crores with 30,00,000 equity shares of 10/- each and Issued, Subscribed and Paid-Up Share Capital is 2,86,00,000/- with 28,60,000 equity shares of 10/- each. The Certificate of Incorporation of the corporate debtor is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, details of which have been given in the instant petition as also in the notice issued under Section 13(2) of the SARFAESI Act, 2002 (Annexure IA-(1). Thereafter, the Bank also issued the Possession Notice dated 02.08.2016 in respect of various immovable properties which is at Annexure IA-(2) and the advertisement of the auction for taking possession in the newspapers are at Annexure IA-(3). 9. The corporate debtor has stated that sale of the properties by the Bank for recovery of amount has not been made so far. The e-auction was conducted twice but it did not mature. 10. It is also stated that the corporate-debtor created first charge by way of hypothecation of all the current assets of the company including stock of raw material, work in progress, finished goods etc. and exclusive charge on fixed deposits of the company both present and future. It is further stated that the corporate debtor also furnished securities to secure amount of loan. Mr. Sunil Kumar Singla, one of the Directors of the company created equitable mortgage deed of the plot measuring 771 square yards comprised in Khasra No. 85/22, 90/1-2/1,91/3-4-5-6-7-8- 15/1-16/2 Khata No. 215/226-413/426 as per Jam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m ordered. At the end, it is stated that Allahabad Bank has assigned the debt in question to ASREC (India) Ltd on 27.02.2018 and assignment deed has also been executed which is yet to be registered. It is averred that the assignment deed placed on record after its registration. Learned counsel for Allahabad Bank has also filed CA No. 69/2018 to implead ASREC (India) Ltd as the respondent instead of Allahabad Bank on the basis of assignment agreement dated 28.02.2018. But it is submitted during arguments that actual date of agreement is 27.02.2018. ASREC (India) Ltd has also stated that agreement is yet to be registered. 14. We have heard the learned counsel for both the parties and perused the record carefully. 15. The question of ASREC (India) Ltd to be impleaded as necessary party in this case would not arise unless the agreement is registered. However, in case the agreement is registered, Allahabad Bank and ASREC (India) Ltd can bring this fact to the notice of the Interim Resolution Professional or Resolution Professional, as the case may be, in case the petition is admitted. The Interim Resolution Professional/ Resolution Professional would then proceed according to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Section10 of the Code, by its judgement dated 01.12.2017 observed and held as under:- 20. Under both Section 7 and Section 10, the two factors are common i.e., the debt is due and there is a default. Subsection (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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ground to reject an application under Section 10, if the application is complete. 26. Any proceeding under Section 13(4) of the SARFAESI Act, 2002 or suit under Section 19 of the DRT Act, 1993 pending before Debt Recovery Tribunal or appeal pending before Debt Recovery Appellate Tribunal cannot proceed in view of the order of moratorium as may be passed. 27. It is also desirable to refer to Section 238 of the I B Code, as quoted below: 238. Provisions of this Code to override other laws - The provisions of this Code shall have effect, notwithstanding anything inconsistent therewith contained in any other law for the time being in force or any instrument having effect by virtue of any such law. In view of the aforesaid provision also, I B Code shall have the effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force including DRT Act, 1993; SARFAESI Act, 2002; money suit etc. 34. Further, as we find that the Adjudicating Authority has noticed the extraneous factors unrelated to the Resolution process not required to be disclosed in terms of Section 10 or Form 6 and as the suits referred to r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ating to books of accounts and other documents relating to such period as may be specified. (v) The Applicant to name the Resolution Professional proposed to be appointed as an Interim Resolution Professional. 22. Section 10 of the 'Code' confers a discretion on this Tribunal to either admit or reject the application and in case of rejection to give an opportunity to the applicant before such rejection to rectify the defects within seven days from the date of receipt of such notice from the Adjudicating Authority. The term 'Corporate Debtor has been defined under Section 3 (8) of Part-1 of the 'Code to mean a Corporate Person, who owes a debt to any person and 'default' is defined under Section 3 (12) of Part-I of the Code to mean 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. 23. As provided in Rule 7(1) of the Rules, the Corporate Applicant has to make an application under Section 10 of the 'Code' in Form 6 accompanied with documents and records required therein and as specified in IBBI (Insolvency Re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ution Professional. He has furnished written communication dated 02.12.2017 in Form 2 and certified that there are no disciplinary proceedings pending against him with the IBBI or ICSI Insolvency Professionals Agency. He has further disclosed all the information as per the requirement of the Form. He has also stated that he is not presently serving as IRP/RP/Liquidator in any proceedings. The written communication has been found in order. 28. In view of the aforesaid discussion, the instant petition deserves to be admitted. It is further observed that the applicant-company save some sketchy particulars and has not given any road map as to how it is going to keep itself afloat as a going concern. However, keeping in perspective the objects for which the Code has been brought into force and to balance the interest of all stakeholders, we are satisfied that the instant application warrants to be admitted to prevent further erosion of capital and to safeguard the assets of the Applicant-Corporate Debtor. 29. The petition is admitted. While admitting the application the moratorium is declared for prohibiting all of the following as provided in section 14(1) of the Code:- (a) th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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