TMI Blog2018 (9) TMI 1527X X X X Extracts X X X X X X X X Extracts X X X X ..... he claim as well as to prove the default. Moreover, the application of the financial creditor is complete and there is no disciplinary proceeding pending against the proposed IRP. We are satisfied that the present application is complete and the applicant financial creditor is entitled to claim its outstanding financial debt from the corporate debtor and that there has been a default in payment of the financial debt. As a sequel to the above discussion and in terms of Section 7(5)(a) of the Code, the present application is admitted. - COMPANY PETITION (IB) NO. (IB)-31(PB)/2018 - - - Dated:- 7-8-2018 - MR M. M. KUMAR, PRESIDENT AND S.K. MOHAPATRA, MEMBER (TECHNICAL) For The Applicant : S.K. Sharma, Adv. For The Respondent Company : Arun Kathpalia, Sr. Adv., Puneet Singh Bindra and Ms. Akshita Gupta, Advocates ORDER S. K. Mohapatra, Member 1. Oriental Bank of Commerce, claiming as the financial creditor, has filed the instant application under Section 7 of the Insolvency and Bankruptcy Code, 2016 (for brevity 'the Code') read with rule 4 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 (for brevity 'th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sciplinary proceedings are pending against him in Insolvency and Bankruptcy Board of India or elsewhere. In addition, further necessary disclosures have been made by Shri Ashok Kumar Gulla as per the requirement of the IBBI Regulations. Accordingly, he satisfies the requirement of Section 7(3)(b) of the Code. 6. It is the case of the applicant bank that on the request of the respondent company Term Loan for ₹ 175 Crores was granted on 21.07.2011. In support of the term loan facility extended to the corporate debtor the applicant financial creditor has relied upon the following documents. 1. Copy of sanction letter dated 21.07.2011. 2. Resolution of Board of Directors of corporate debtor dated 29.09.2011. 3. Agreement of Term Loan for immovable property dated 29.09.2011. 4. Common Agreement dated 29.09.2011. 7. Subsequently on 18.09.2015 a Master Joint Lenders Forum Agreement was executed among Oriental Bank of Commerce, Central Bank of India and the Sarawat Co-operative Bank Ltd. who formed a joint lenders forum to explore the possibility of the borrower setting right the irregularities/weaknesses in the account. Copy of the Master Joint Lenders Forum Agreem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble terms and conditions of the loan agreements executed from time to time in relation to the credit facilities. As the respondent failed to maintain financial discipline and committed default in repayment of the loan, the credit facilities were declared as Non-Performing Asset on 30.09.2016. 13. Thereafter, Applicant sent a recall notice dated 31.12.2016 to the respondent under Section 13(2) of the SARFAESI Act, 2002 demanding payment of the credit facility as outstanding in favour of the Applicant. However, it is stated that the corporate debtor has defaulted in payment of the outstanding dues in its account and failed to discharge its liability towards the financial creditor. 14. It is contended that the Respondent company had approached the petitioner bank and submitted proposal for restructuring of loan vide letter dated 01.02.2017. Subsequently a joint lenders meeting was held on 21.02.2017. However, in the absence of any restructuring of the loan or settlement and as default continues, applicant bank insisted for admission of the petition for triggering Corporate Insolvency Resolution Process in respect of respondent corporate debtor. 15. Respondent corporate debtor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isions of the Code nor can take away the right of any creditor to file application under Section 7 of the Code. Accordingly Oriental bank of Commerce individually has a clear right to file application under the Code in order to recover its dues. Besides in view of the overriding effect given to the provisions of Section 238 of the Code, anything inconsistent therewith contained in any instrument cannot take away the right of the applicant as financial creditor to file application under Section 7 of the Code. 18. It is also the case of respondent that despite order dated 15.05.2018 the applicant has failed to file fresh Form 2 within the time granted and that the new form filed is also defective. It is further contended that as the defect was not cured within the time granted as well as beyond the period prescribed under the Code, the petition is liable to be dismissed. Admittedly applicant had placed Form 2 of Mr. Ashok Kumar Gulla as proposed IRP vide diary No. 3215 on 24.05.2018 along with a prayer for condonation of delay of 2 days. Subsequently as there was some technical defect in Clause VI of Form 2, another application was preferred by the applicant to withdraw Form 2 fil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ution Process against the corporate debtor. 21. It is pertinent to note that in financial transactions, adjustments and compromise should be left to the parties to settle the matter in their best interest or exigencies of the business. However, in the absence of any binding compromise agreement/debt restructuring approval, it is beyond the powers of the adjudicating authority to extend time indefinitely or to decline consideration of the prayer for admission of Section 7 petition. It is also seen that the present application was filed long before on 22.12.2017 and till now neither there has been any compromise/settlement between the parties nor the proposed debt restructuring proposal has been finalised. Time is the essence of the Code. A far strict time frame is expected to be followed by the Adjudicating Authority at every stage of the proceedings. Accordingly, further time cannot be allowed on the pretext that the debt restructure proposal of the corporate debtor is still pending consideration of the applicant bank. 22. The CA 532 (PB)/2018 is dismissed accordingly. 23. Needless to say, that in case debt restructuring or any settlement is arrived at, appropriate applica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lete and no disciplinary proceedings are pending against the proposed resolution professional, it shall admit the application. The adjudicating authority/Tribunal is not required to look into any other criteria for admission of the application. (Emphasis given) 29. As regards occurrence of default, it is the case of applicant that the authorized signatory of the respondent had admitted, acknowledged and confirmed the outstanding balance due to the applicant from time to time. In support thereof, Balance Confirmation Letter dated 31.12.2015 signed and executed by the respondent confirming balance outstanding as on 30.12.2015 has been placed on record. Besides several letters of the corporate debtor are on record, where corporate debtor itself offered that the available restructure fund will be utilised for clearing the bank's outstanding as per the proposed restructure plan. 30. The material on record clearly goes to show that respondent has availed the loan facilities and has committed default in repayment of the loan amount. An application under Section 7 of the Code is acceptable so long as the debt is proved to be due and there has been occurrence of existence of d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 003/IP-N00024/2017-18/10174 resident of 9C, Hansalaya Building, 15 Barakhamba Road, Connaught Place, New Delhi-110001, email ashok.gulla@rbsa.in is appointed as an Interim Resolution Professional. 36. In pursuance of Section 13(2) of the Code, we direct that public announcement shall be made by the Interim Resolution Professional immediately (3 days as prescribed by Regulations) with regard to admission of this application under Section 7 of the Code. 37. We also declare moratorium in terms of Section 14 of the Code. The necessary consequences of imposing the moratorium flows from the provisions of Section 14(1)(a), (b), (c) (d). Thus, the following prohibitions are imposed: (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 o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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