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TMI Blog2020 (9) TMI 1072X X X X Extracts X X X X X X X X Extracts X X X X ..... ng with further interest. 2. Brief facts of the case, as mentioned in the Company Petition, which are relevant to the issue in question, are as follows: (1) Sir M. Visvesvaraya Co-operative Bank Limited (hereinafter referred to as 'Petitioner/Financial Creditor') is a Co-operative Bank incorporated on 15.04.1979 with Regn. No. JRB/REGN: 3:4880/78-79-25.09.1978, having its registered office situated at No.109, Shankarmutt Road, Shankarpuram, Bengaluru-560004. It has obtained banking license from Reserve Bank of India with Registration No.UBD:BC:BL:O.A.310-05.11.1978 and is carrying on operations since 1979. The Financial Creditor is one of the leading co-operative urban banks in Karnataka. (2) M/s. Ind-Lab Equipments Private Limited (hereinafter referred to as 'Respondent/Corporate Debtor') is a Private Limited Company incorporated on 05.11.2012 under the Companies Act, 1956 with CIN: U29248KA2012PTC066590 and having its registered office situated at No.561, 7th Main 'A' Sector, Yelahanka New Town, Bengaluru-560064. Its Nominal Share Capital is Rs. 5,00,000/- (Rupees Five Lakhs only) and Paid-up Capital is Rs. 1,00,000/- (Rupees One Lakh only). Its main ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 33,45,994 4,85,770 31.07.2018 Total 2,40,06,843 63,76,110 Hence, the Corporate Debtor defaulted in repayment of loan to the Financial Creditor as per the agreed terms. (7) The Financial Creditor has issued notices calling for repayment of agreed instalment amounts from time to time for which the Corporate Debtor has not responded. The Corporate Debtor neither responded nor regularised the loan and interest. The Financial Creditor has also issued a notice on 20.08.2018 to the Corporate Debtor to repay the loan immediately on account of this default. The Corporate Debtor replied on 15.09.2018 to the Financial Creditor stating that it needs some more time to regularise the default, as it is recovering from the adverse effects of Demonetization and Goods and Services Tax. In view of the above, the Financial Creditor filed the instant Petition U/s 7 of the Code for initiating CIRP, appointing IRP, imposing moratorium etc. 3. Subsequently, the Petitioner has filed a Memo dated 19.02.2020 by inter alia stating that the Bank has lent Rs. 1040.96 crores as Advances as on 31.03.2019. Out of which Rs. 140.96 crores is gross non-performing assets (NPA) works out of 13. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rate Debtors) Regulations, 2019 ,the Directors of the Company, who are personal Guarantors to this financial debt also may be included for CIRP. Therefore, it is prayed to include Corporate Guarantors also in this CIRP. 4. The Respondent/Corporate Debtor has filed a Statement of objections dated 18.02.2020 by inter alia contending as follows: (1) The Respondent denies that there is a debt and default and the Petition is liable to be dismissed on preliminary grounds as well as on merits. There is no debt/default owed by/ committed by the Respondent so as to attract the provisions of the Code and the instant Application is incomplete and the Respondent is not in a situation of financial insolvency. Therefore, the Petition is liable to be dismissed. (2) It is contended that the Petitioner has failed to provide a complete Form 1, including failure to provide all the particulars in Part II and Part V of the Form 1. Further, the Petitioner has failed to provide particulars of amount claimed to be in default and the date on which the default occurred through workings containing the computation of amount and days of default as required in Part IV of Form 1. The Respondent has paid mor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... settlement of total claim in question for a full and final settlement of all claims by the Petitioner vide email dated 07.02.2020. The Petitioner has not responded to the said offer as on today, despite there being an email dated 07.02.2020 that the Petitioner would revert to the said proposal. Such an act of not showing any interest in amicably resolving the dispute and aiding the Respondent in continuing with the business as a going concern, sufficiently establishes that the Petitioner has initiated the above proceedings fraudulently and with a malicious intent for a purpose other than insolvency resolution. The said proceedings are initiated by the Petitioner to avoid payment of court fee which the Petitioner would have out to pay in case of initiating civil proceedings. Further, the aim of the IBC is to promote companies as a going concern and not to use provisions of Code to coercive proceedings to recover alleged debts, as observed by the Hon'ble Supreme Court in the case of Swiss Ribbons v. Union of India in WP (Civil) No.99 of 2018 vide judgment dated 25.09.2019. It is a case of misuse of provisions of Code fit to be taken U/s 65 of the Code by imposing maximum penalty. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Application is filed in accordance with law by suggesting suitable IRP or not. It is relevant to refer the judgement of Hon'ble Supreme Court in "Innoventive Industries Ltd. Vs. ICICI Bank and Anr. - (2018) 1 SCC 407" is extracted below: "27. 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 is made by the Code between debts owed to financial creditor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ive notice to the applicant to rectify the defect within 7 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 7 days of admission or rejection of such application, as the case may be." 9. In the light of the above ratio as laid down by the Hon'ble Supreme Court and as per the provisions of the Code, It is necessary to examine whether the Debt in question is established; the Application is filed in accordance with Law or not; a qualified Resolution Professional is suggested as IRP etc. As stated supra, the Petitioner has addressed a letter dated 25.09.2014 to Respondent by informing that the Central Loan Committee in its meeting held on 25.09.2014, has sanctioned a Term Loan of Rs. 227.00 lakhs (Rupees Two Hundred Twenty Seven Lakhs only) for the purpose of purchase of KIADB Industrial land at Doddaballapur and construction of industrial building, purchase of machinery & DG set subject to Security towards Primary Security and Collateral Security, Personal Guarantee of all the three Directors of the Company. Accordingly, the pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9,28,638/- as at 31.03.2019 and its other Current Liabilities have also increased from Rs. 54,67,389/- as at 31.03.2018 to Rs. 1,36,38,012/- as at 31.03.2019. Further, the Profit and Loss Account Statement also shows that as against the Profit of Rs. 3,82,956/- declared for the year ended 31.03.2018, the Respondent has earned a loss of Rs.(89,97,077)/- for the year ended 31.03.2019. It is thus seen that the Respondent has been showing inactive results as far as its business financials are concerned. Therefore, the contention of the Respondent that it is solvent Company is not born out of record. 12. The Petitioner has filed a Memo dated 19.02.2020 by enclosing a copy of the RBI letter vide Ref:DCBS(BG)No.458/13.03.142/2019-20 dated 17.09.2019 addressed to the Chief Executive Officer, Sir M. Visvesvaraya Co-operative Bank Limited in respect of Supervisory Action Framework (SAF) for Urban Co-operative Banks - Continuation of Regulatory Action, which reads as under: "Please refer to the correspondent resting with our letter DCBS (BG) NoA19/12.07.142/2019-20 dated September 12, 2019 in terms of which a copy of the report on the inspection of your bank conducted with reference to its ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sional in respect of the Corporate Debtor, and certified that there are no disciplinary proceedings pending against him with the Board or ICAI Insolvency Professionals Agency along with Affidavit dated 10.08.2019 in this regard. Thus, it is a fit case to initiate CIRP by appointing IRP and imposing moratorium, etc. 15. For the aforesaid facts and circumstances of the case, and following the settled position of law on the issue, by exercising powers conferred on this Adjudicating Authority, under Section 7(5)(a) and other extant provisions of the Code, Company Petition bearing C.P. (IB) No. 319/BB/2019 is hereby admitted with the following consequential directions: (1) We hereby appointed Mr. Addanki Haresh having Regn. No. IBBI/IPA-001/IP-P-01064/2017-18/11757 as the Interim Resolution Professional (IRP) to conduct the Corporate Insolvency Resolution Process (CIRP) in respect of Corporate Debtor namely M/s. Ind-Lab Equipments Private Limited and to carry out the functions as mentioned under the I&B Code, 2016 and the Rules framed by the IBBI from time to time. (2) The following moratorium is declared prohibiting all of the following, namely: a. the institution of suits or cont ..... X X X X Extracts X X X X X X X X Extracts X X X X
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