TMI Blog2018 (7) TMI 2140X X X X Extracts X X X X X X X X Extracts X X X X ..... he IB Code provides for overriding effect of the IB Code over all other laws (including the RBI circulars) - As per IBC, before admission, we are required to look into completeness of the application in terms of Section 7 and rules made thereunder and minimum default of one lakh rupees has occurred. A perusal of the application filed by Financial creditor is in conformity with the provision of Section 7 of the Code and Rules applicable. Record of default for the Corporate Debtor, as on 11th July 2018, as available on the Credit Repository of Information on Large Credits (CRILC) (as set up by the Reserve Bank of India) has been filed.; the letters and e-mail from the Corporate Debtor to the Financial Creditor admitting their debt and default constitute the other evidences of debt and default filed along with the Section 7 Application - Hence, default has occurred, which meets the requirement of Section 3(11) (12) of I B Code. The present application filed by the Financial Creditor for initiation of Corporate Insolvency Resolution Process as per the I B Code, 2016 which is found complete therefore deserves admission - application admitted - moratorium declared. - CP(I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to limits and sub-limits as provided under the Facility Letter to the Corporate Debtor. The Facility Letter amended and restated all previous facility letters and the outstanding as on 31st March 2016 was recorded. 4.3 The credit facilities availed under the Facility Letters (mentioned above) was secured by the following securities (evidenced under the security documents mentioned hereunder): (i) A first, pari passu, charge on all current assets belonging to the Corporate Debtor including stocks lying at Haldia unit of the Corporate Debtor located at Mouza Debhog, J. L. No. 149, P.S Bhabanipur, Haldia, Midnapore, West Bengal ( Haldia Unit ) and second pari passu charge on all the moveable fixed assets of the Corporate Debtor including without limitation assets located at Haldia Unit, in favor of the Financial Creditor, under the Unattested Memorandum of Hypothecation dated 26th June 2014 (amended and supplemented from time to time) . A copy of the said Unattested Memorandum of Hypothecation along with all amendments to the same, the valuation report dated 12th December 2016 and stock statement for October 2017 and certificates of Registration of Charge dated 3rd March 2015 h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... having exposure of less than ₹ 20 billion but above ₹ 1 billion [Clauses 8 and 12]; Account of JVL Agro Industries Ltd falls in second category since its exposure is less than ₹ 20 billion. III. In respect of first category of borrowers, it has been provided that banks shall implement a resolution plan within 180 days from the reference date . Reference date in respect of defaults committed before 1.3.2018 is 1.3.2018 and for defaults committed after that, the reference date is the date of default. The word default has the same meaning as given in IBC as mentioned in Explanation to newly inserted section 35AA of Banking Regulation Act. If resolution plan is not so implemented, then the banks shall initiate insolvency proceedings under IBC within 15 days after that. IV. However, by footnote no. 8 appended to Clause 9 of the circular, RBI has given liberty to banks to file insolvency petitions even before the expiry of above timelines or even without attempting a resolution plan outside IBC. Since the account of JVL Agro Industries Ltd does not fall in first category, the above directions including the footnote 8 are not applicable. V. The cases of se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lvency and Bankruptcy Code, 2016, it has been decided to substitute the existing guidelines with a harmonised and simplified generic framework for resolution of stressed assets. The said extract of the RBI Circular makes it clear that the said circular has been passed to work in harmony with the IB Code and not make the IB Code subject to the process prescribed therein. II. It is further submitted that for borrowers with aggregate exposure of less than INR 20 Billion, no reference date has been provided yet. However the same does not mean that banks cannot initiate IB Code proceeding against the said borrowers. Once the reference date is provided for such accounts, proceeding under the IB Code if not already initiated would have to be initiated in a stipulated time frame. III. Section 238 of the IB Code provides for overriding effect of the IB Code over all other laws (including the RBI circulars) and relied upon Innoventive Industries Ltd Judgement passed by Hon ble Apex Court and the Gujarat High Court Judgment in Essar Steel India Limited Ors. v. Reserve Bank of India Ors., [2017]143SCL580(Guj), 7. Having heard both the parties main issue for our consideration is W ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tside the IB Code is finalized. If we go by the interpretation of Learned Counsel of Corporate Debtor, it will defeat the very purpose of the Insolvency and Bankruptcy Code. In IBC, time is essence of the code and resolution of stressed assets is to be done in time bound manner. RBI Circular is to be construed in such a manner so that it do not create inconsistency between RBI Circular and I B Code moreover in case of any inconsistency IBC shall prevail. Further RBI Circular clearly states that in view of the enactment of the Insolvency and Bankruptcy Code, 2016, it has been decided to substitute the existing guidelines with a harmonized and simplified generic framework for resolution of stressed assets. As per IBC, before admission, we are required to look into completeness of the application in terms of Section 7 and rules made thereunder and minimum default of one lakh rupees has occurred. Same has been held by the Supreme Court in the case of Innoventive Industries Ltd. v. ICICI Bank Ors., It is relevant to state that the Hon ble Supreme Court in the Innoventive Industries Judgment, in paragraph 30, state as follows: On the other hand, as we have seen, in the case o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... present application filed by the Financial Creditor for initiation of Corporate Insolvency Resolution Process as per the I B Code, 2016 which is found complete therefore deserves admission. ORDER Present petition filed under Section 7 of the I B Code and rules made thereunder is hereby admitted, with consequential directions given as under: I. Mr. Avishek Gupta, Email. ho@optimumresolution.net , Registration No. IBBI/IPA-003/IP-N000135/2017-2018/11499, Address: CK, 104, Sector 2, Salt Lake City, Kolkata, 700091 is appointed as Interim Resolution Professional to carry the functions as mentioned under the Code. II. That the order of moratorium u/s 14 shall have effect from the date of this order till the completion of corporate insolvency resolution process or until this Bench approves the resolution plan under subsection (1) of Section 31 or passes an order for liquidation of corporate debtor under section 33 as the case may be. III. That the Bench hereby prohibits the institution of suits or continuation of pending suit or proceedings against the corporate debtor including execution of any judgement, decree or order in any court of law, tribunal, arbitration ..... X X X X Extracts X X X X X X X X Extracts X X X X
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