TMI Blog2020 (3) TMI 1131X X X X Extracts X X X X X X X X Extracts X X X X ..... k. It is stated by the petitioner-bank that no payment has been made towards the settled amount and the bank has revocated such proposal accordingly. Thus, we do not see any merit in the contention of the respondent-corporate debtor and pendency of any one time settlement cannot be an embargo in triggering the provisions under the Code - It is the settled principle of law that CIRP is not a proceeding for recovery of money nor a suit or litigation. Hence, the interim order dated June 26, 2018 cannot come in the way of this Adjudicating Authority in initiation of CIRP against the respondent-corporate debtor, if all other requirements of the Code are satisfied. The second condition is that the application under section 7(2) is complete - it is already established that the application is complete. The third condition is that there are no disciplinary proceedings pending against the proposed resolution professional. In the present case, Shri Neeraj Bhatia, IBBI/IPA-001/IP-P00824/2017-18/11400, has been proposed as interim resolution professional. Form 2 filed by the proposed interim resolution professional is at page 374A of the petition. Shri Neeraj Bhatia has certified that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orporate debtor is U27141JK2009PTC002973 and its registered office is situated Srinagar, 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 incorporated under the Jammu and Kashmir Companies Act, Svt. 1977 and governed by the provisions of the Banking Regulation Act, 1949. The respondent-corporate debtor is a company incorporated and registered under the Companies Act, 1956. The certificate of incorporation of the respondent-corporate debtor is at annexure P2 of the petition. 5. In Part IV of Form 1, it is stated that the respondent-corporate debtor approached the petitioner-financial creditor for availing the working capital facility to the tune of ₹ 3.20 crores for the purposes of meeting its working capital requirements. The said working capital facility was sanctioned in favour of the respondent-corporate debtor, vide sanction letter dated May 8, 2009, annexure P3 (colly). Thereafter, in terms of the sanction letter dated May 8, 2009 a working capital and security agreement dated May 14, 2008 was executed betw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... til recovery of the aforesaid outstanding dues amounting to ₹ 18.73 crores. 7. In Part IV of Form 1, the particulars of security held are given. It is stated that the credit facilities are secured primarily by hypothecation of stocks in trade, godown/in transit, movables and book debts and collaterally by mortgage of houses and lands in Jammu and Kashmir. 8. The loan accounts of the respondent-corporate debtor became irregular and the respondent-corporate debtor, in spite of repeated requests and demands, failed to regularize its credit facility accounts. On failing to receive any payment against the outstanding demand from the respondent-corporate debtor, the petitioner-financial creditor declared the account of the respondent-corporate debtor as non-performing asset on March 31, 2016 as per the norms and guidelines issued by the Reserve Bank of India. 9. It is further stated that on failing to repay its outstanding dues, the petitioner-financial creditor issued a recall notice dated April 27, 2016, annexure P6 (colly) to the respondent-corporate debtor and recall notice dated May 25, 2016 annexure P5 (colly) to its managing director. Further, a demand notice dated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntion of the respondent that the petitioner-bank was aware of the agreement to sell and never raised any objection with regard to the execution or the sanctity of the said agreement, while considering the proposal submitted by M/s. Buildtech Industries for take over and purchase of the company. It is also submitted that one time settlement proposal from the side of the respondent was moved before the petitioner-bank and ₹ 84 crores was finalized as full and final settlement of Mir Groups and Associate Accounts. Copy of the one-time settlement proposal letter dated August 5, 2017 is at annexure R4 of the reply. It is also informed that during the pendency of the one-time settlement proposal, on October 27, 2017 a letter by the petitioner-bank was received by the respondent, stating that one-time settlement made with the group on August 5, 2017 has expired because the payment has not been released and therefore, the one-time settlement stands cancelled. Copy of letter dated October 27, 2017 is also appended with the reply as annexure R7. 13. It is also submitted that a decree of mandatory injunction was sought to grant sanction to pending proposal submitted by the expected p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l for the petitioner and learned counsel for the respondent and have carefully perused the records. 16. The hon'ble Supreme Court in the case of Innoventive Industries Ltd. v. ICICI Bank [2017] 205 Comp Cas 57 (SC) ; [2018] 1 SCC 407, held as under (page 87 of 205 Comp Cas) : The scheme of the Code is to ensure that when a default takes place, in the sense that a 'debt' becomes due and is not paid, the insolvency resolution process begins. Default is defined in section 3(12) in very wide terms as meaning non-payment of a debt once it becomes due and payable, which includes non-payment of even part thereof or an instalment amount. For the meaning of 'debt', we have to go to section 3(11) which in turn tells us that a debt means a liability of obligation in respect of a 'claim' and for the meaning of claim, we have to go back to section 3(6) which defines claim to mean a right to payment even if it is disputed. The Code gets triggered the moment default is of rupees one lakh or more (section 4). The corporate insolvency resolution process may be triggered by the corporate debtor itself or a financial creditor or operational creditor. A distinction i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ust be admitted unless it is complete, in which case it may give notice to the applicant to rectify the defect within seven days of receipt of a notice from the Adjudicating Authority. Under sub-section (7), the adjudicating authority shall then communicate the order passed to the financial creditor and corporate debtor within seven days of admission or rejection of such application, as the case may be. The scheme of section 7 stands in contrast with the scheme under section 8 where an operational creditor is, on the occurrence of a default, to first deliver a demand notice of the unpaid debt to the operational debtor in the manner provided in section 8(1) of the Code. Under section 8(2), the corporate debtor can, within a period of 10 days of receipt of the demand notice or copy of the invoice mentioned in sub-section (1), bring to the notice of the operational creditor the existence of a dispute or the record of the pendency of a suit or arbitration proceedings, which is pre-existing-i. e., before such notice or invoice was received by the corporate debtor. The moment there is existence of such a dispute, the operational creditor gets out of the clutches of the Code. 17. S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respondent-corporate debtor and pendency of any one time settlement cannot be an embargo in triggering the provisions under the Code. 20. The respondent-corporate debtor mainly contended that there was a pre-existing dispute between the parties, basing on two civil suits, pending against the applicant-bank. It was further contended that in view of the interim orders passed in the said suits, the petitioner cannot initiate the instant CIRP proceedings. The civil original suit filed by the respondent- corporate debtor (plaintiff No. 3 in the suit) along with Mir Steel Rolling Mills P. Ltd. and others (annexure R11 at page 45 of the reply) was filed seeking a declaration that the revocation of sanction of one time settlement proposal is null and void and for other consequential reliefs. Firstly, it is to be seen that the said suit was filed not for a declaration that respondent- corporate debtor is not liable to pay the debt due to the applicant-bank but on the other hand to compel the bank to accept its one-time settlement proposal, which is more than ₹ 1 lakh. Even by way of the said suit, the respondent-corporate debtor admitted its liability to pay the debt to the applica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cation is complete. 26. The third condition is that there are no disciplinary proceedings pending against the proposed resolution professional. In the present case, Shri Neeraj Bhatia, IBBI/IPA-001/IP-P00824/2017-18/11400, has been proposed as interim resolution professional. Form 2 filed by the proposed interim resolution professional is at page 374A of the petition. Shri Neeraj Bhatia has certified that there are no disciplinary proceedings pending against him with the Board or Indian Institute of Insolvency Professional of ICAI. He has also affirmed that he is eligible to be appointed as a resolution professional in respect of the corporate debtor in accordance with the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporation Persons) Regulations, 2016. 27. In view of the satisfaction of the conditions provided for in section 7(5) of the Code, the petition for initiation of CIRP in the case of M/s. S. A. Gold Ispat P. Ltd., is admitted. 28. We declare the moratorium in terms of sub-section (1) of section 14 of the Code, as under : (a) the institution of suits or continuation of pending suits or proceedings against the corporate debtor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... solution 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 ; (iv) 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 ; (v) 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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