TMI Blog2019 (5) TMI 388X X X X Extracts X X X X X X X X Extracts X X X X ..... case it is reiterated that the applicant had sanctioned and disbursed the loan amount from time to time recoverable with applicable interest by entering into loan agreements with the corporate debtor. The corporate debtor had borrowed the credit facilities against payment of interest as agreed between the parties. The loan was disbursed against the consideration for time value of money with a clear commercial effect of borrowing. Moreover, the debt claimed in the present application includes both the component of outstanding principal and interest - In that view of the matter not only the present claim comes within the purview of Financial Debt but also the applicant can clearly be termed as Financial Creditor so as to prefer the present application under Section 7 of the Code. In terms of Section 7(5)(a) of the Code, the present application is admitted - moratorium in terms of Section 14 of the Code declared. - COMPANY PETITION No. (IB) 1581(PB)/2018 - - - Dated:- 19-3-2019 - MR M.M. KUMAR, PRESIDENT AND MR S.K. MOHAPATRA, MEMBER (TECHNICAL) For The Applicant : Mr. Anand Shankar and Arpit Gupta, Advocates For The Respondent : Mr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder Sharma has agreed to accept the appointment as the interim resolution professional and has signed a communication dated 16.10.2018 in Form 2 in terms of Rule 9(1) of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016. There is a declaration made by him that no disciplinary proceedings are pending against him in Insolvency and Bankruptcy Board of India or elsewhere. He has enclosed the copy of Certificate of Registration dated 20th March, 2018 issued by IBBI. In addition, further necessary disclosures have been made by Shri Vijender Sharma 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 that by way of a credit arrangement letter dated 29 June 2004, it has extended working capital facilities amounting to INR 80.0 million (Indian Rupees Eighty Million) to the Corporate Debtor. In order to secure the loan a credit facility agreement dated 23 July 2004 was entered into between the Corporate Debtor and the Applicant with respect to the WC Facility of INR 80.0 million. 7. Subsequently, the WC Facilities were enhanced ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... facility agreement dated 19 November 2007 was entered into between the Applicant and the Corporate Debtor with respect to the WC Facility of INR 410.0 million (Indian Rupees Four Hundred and Ten Million). 12. At the request of the Corporate Debtor, the WC Facility of INR 410.0 million (Indian Rupees Four Hundred and Ten Million) was again enhanced to INR 600.0 million (Indian Rupees Six Hundred Million) through a credit arrangement letter dated 4 April, 2008. Pursuant to the enhancement, a master facility agreement dated 30 April 2008 was executed between the Corporate Debtor and Applicant with respect to the WC Facility of INR 600.0 million (Indian Rupees Six Hundred Million) (Master Facility Agreement-V). The WC Facility of INR 600.0 million was renewed by way of a credit arrangement letter dated 31 March, 2009. 13. Further, by way of a credit arrangement letter dated 11 January 2010 and at the request of the Corporate Debtor, the WC Facility of INR 600.0 million was enhanced to INR 800.0 million (Indian Rupees Eight Hundred Million), which also included an overdraft facility of INR 10.0 million as a sub-limit of the bank guarantee facility of INR 8 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... applicable interest and charges. 20. The applicant has filed copies of all the relevant loan agreements, guarantee deeds, hypothecation deeds, and revival and confirmation letters executed by the respondent company from time to time including the registration as well as modification of charges created in order to secure the loan facilities sanctioned/ enhanced / revised from time to time. 21. In addition copies of the Bankers Book Certificates along with relevant bank statements have been placed on record. Applicant has also annexed the details of computation of the default amount along with days of default in support of its claim. 22. It is thus seen that the applicant financial creditor has placed on record voluminous and overwhelming evidence in support of the claim as well as to prove the default. 23. On the ground that huge amounts are outstanding, it is claimed that the respondent corporate debtor has become commercially insolvent and accordingly it is prayed for initiation of corporate insolvency resolution process against the respondent company by admitting the present application. 24. The responde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt to mention here that the Code requires the Adjudicating authority to only ascertain and record satisfaction in a summary adjudication as to the occurrence of default before admitting the application. The material on record clearly goes to show that respondent had availed the loan facilities which was duly disbursed and has committed default in repayment of the outstanding loan amount. 32. In respect to the allegation that the petition is defective, it is appropriate to mention that the present application has been filed in Form-I under Section 7 of the Insolvency and Bankruptcy Code, 2016 read with rule 4 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016. The form has been duly filled in along with required details and evidence of default. It is open to the Applicant to file Section 7 application either by itself or jointly. Similarly, Section 7 application can be allowed for occurrence of default in respect of a financial debt owed not only to the applicant but to any other financial creditor of the corporate debtor. There appears to be no infirmity in the application form, being complete in all respect. 33. It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 as sought for cannot be allowed in violation of the provisions of the Code. 37. Needless to say, that 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 or existence of default. What is material is that the default is for at least ₹ 1 Lakh. In view of Section 4 of the Code, the moment default is of Rupees one lakh or more, the application to trigger Corporate Insolvency Resolution Process under the Code is maintainable. The corporate debtor has failed to show that there is no debt or default in existence so as to avoid the provisions of the Code. 38. It is pertinent to mention here that the scheme of the Code provides for triggering the insolvency resolution process by three categories of persons namely,- a) Financial creditor b) Operational creditor, and c) Corporate debtor itself. 39. The procedure in relation to the Initiation of Corporate Insolvency R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... An application of financial creditor 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 default. It is reiterated that the material on record clearly goes to show that respondent had availed the loan facilities and has committed default in repayment of the huge outstanding loan amount. 45. In the facts it is seen that the applicant bank clearly comes within the definition of Financial Creditors. The material placed on record further confirms that applicant financial creditor had disbursed various loan facilities to the respondent corporate debtor and the respondent has availed the loan and committed default in repayment of the financial debt. On a bare perusal of Form - I filed under Section 7 of the Code read with Rule 4 of the Rules shows that the form is complete and there is no infirmity in the same. It is also seen that there is no disciplinary proceeding pending against the proposed IRP. Applicant has placed on record voluminous and overwhelming evidence in support of the disbursement as well as to prove the default. We are satisfied that the present application is complete in all resp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Insolvency and Bankruptcy Code (Amendment) Act, 2018 which has come into force w.e.f. 06.06.2018, the provisions of moratorium shall not apply to the surety in a contract of guarantee to the corporate debtor in terms of Section 14(3)(b) of the Code. 51. The Interim Resolution Professional shall perform all his functions contemplated, inter alia, by Sections 15, 17, 18, 19, 20 21 of the Code and transact proceedings with utmost dedication, honesty and strictly in accordance with the provisions of the Code, Rules and Regulations. It is further made clear that all the personnel connected with the Corporate Debtor, its promoters or any other person associated with the Management of the Corporate Debtor are under legal obligation under Section 19 of the Code to extend every assistance and cooperation to the Interim Resolution Professional as may be required by him in managing the day to day affairs of the Corporate Debtor . In case there is any violation committed by the ex-management or any tainted / illegal transaction by ex-directors or anyone else, the Interim Resolution Professional would be at liberty to make appropriate application to this Tribunal with a prayer ..... X X X X Extracts X X X X X X X X Extracts X X X X
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