NATIOANL COMPANY LAW TRIBUNAL (I.B.C.) LANDMARK CASE

NATIOANL COMPANY LAW TRIBUNAL, PRINCIPAL BENCH

C.P. (IB) No.156 (PB) of 2017

IN THE MATTER OF:

Reliance Commercial Finance Limited                                …Petitioner

Vs.

Ved Cellulose Limited                                                      …Respondent

Order dated 30.06.2017

Facts of the Case:

1.   Petitioner approached to the NCLT against the Respondent by invoking the provision of Section 7 of IBC, 2016 for a debt. The debt was originally payable to Reliance capital Finance Limited(“RCFL”) by virtue of an order dated 09.12.2016 passed by Hon’ble Bombay High Court duly sanctioning a scheme of C&A  RCFL merged into Petitioner Company.

2.   The Loan was advanced after Respondent entered into the Secured Lending Loan Agreement.

Question Asked by NCLT:

1. Whether the arbitration proceeding were pending and in the face of arbitration proceeding how the CIRP can be initiated?

Ans. Petitioner stated that under section 7 there is no bar to initiate CIRP even if arbitration proceeding is pending while this bar is exit in Section 9 Application.

Order of NCLT:

1. The Petition is admitted and the default has also been established on accounts of dishonor of cheque.

2.   The pendency of arbitration proceeding is also not a hindrance under Section 7 of the Code for initiating CIRP.

3.   The petition is disposed of in the above term.

NATIOANL COMPANY LAW TRIBUNAL, PRINCIPAL BENCH, DELHI

C.P. (IB) No.201(PB) of 2017

IN THE MATTER OF:

State Bank of India                                                      …Petitioner

Vs.

Bhushan Steel Ltd.                                                       …Respondent

 

Order dated 26.07.2017

Case Note:

Banking - Corporate Insolvency Resolution Process - Sections 7 and 7 (2) of Insolvency and Bankruptcy Code, 2016 and Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 - Petition filed by Petitioner for initiation of Corporate Insolvency Resolution - Whether Petitioner entitled for relief on ground that all requirements of Section 7 of Code for initiation of Corporate Insolvency Resolution Process by Financial Creditor stand fulfilled - Held, it was evident from record that application had been filed on Proforma prescribed under Rule 4 (2) of Insolvency Rules read with Section 7 of Code - There was overwhelming evidence available in shape of default -Adjudicating Authority was satisfied that default had occurred and application under sub-section 2 of Section 7 was complete - No disciplinary proceedings were pending against proposed Interim Resolution Professional - All requirement had been completed - Petition liable to be admitted - Petition disposed of

Facts of the Case:

1.   According to the particulars of the debt disclosed in part IV of Form-1 prescribed under sub-rule 1 of Rule 4 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 the total amount of debt granted to the Corporate Debtor is 9227,15,79,856 (Rupees Nine Thousand Two Hundred and Twenty Seven Crores Fifteen Lakhs Seventy Nine Thousand Eight Hundred and Fifty Six Only) as Indian Rupee Loan and US$ 527,434,877 (United States Dollars Five Hundred and Twenty Seven Million Four Hundred and Thirty Four Thousand Eight Hundred Seventy Seven Only) as Foreign Currency Loan.

2.   According to the averments made by the Financial Creditor-State Bank of India the facility availed by the Corporate Debtor are overdue and total amount in default is Rs. 4390,75,41,611 (Indian Rupees Four Thousand Three Hundred Ninety Crores Seventy Five Lakhs Forty One Thousand Six Hundred and Eleven Only) for the Indian Rupee Loans and US$ 49,684,877 (United States Dollars Forty Nine Million Six Hundred Eighty Four Thousand Eight Hundred and Seventy Seven Only) towards the Foreign Currency Loan. The details with regard to the date, amount and the days of default with respect to the facility granted by the Financial Creditor to the Corporate Debtor have also been placed on record.

3.   The State Bank of India and the associate Banks which have merged with it w.e.f. 01.04.2017 have issued default notice to the Corporate Debtor from time to time.

4.   When the matter came up for consideration on the first date of hearing on 13.07.2017 learned counsel for the respondent sought time to file objection.

5. Objection:

(i) The first objection is with regard to specific authorization of Mr. Akhilesh Kumar alleging that the officer did not have authority to initiate and file the application on behalf of the Financial Creditor.

(ii) Likewise, another objection has been raised that the present application has been filed which is contrary to the decision of the Reserve Bank of India issued on 13.06.2017.

6.   It is claimed that the Corporate Debtor does not fall within the parameters fixed by the RBI for initiation of Insolvency and Bankruptcy process. The reason disclosed is that on 31.03.2016 the outstanding amount of the Corporate Debtor classified as non-performing was less than 60%. The respondents have also referred to circular dated 26.02.2014 issued by the RBI which required the banks to identify any incipient stress in the account by creating three sub categories under the Special Mention Account ("SMA") which are as follows:

Sr. No.	Category	Basis of Classification
1	SMA-0	Principal or Interest payment not overdue  for more than 30 days but  account showing signs of incipient stress
2	SMA-1	Principal or Interest payment  overdue between 31-60days
3	SMA-2	Principal or Interest payment  overdue between 61-90 days

Order of Adjudicating Authority:

1.   After hearing learned counsel for both sides on the application C.A. No. 203(PB)/2017, we are of the view that the application for amendments deserves to be accepted for the reason that the application was signed on 15.07.2017 and a copy of the same was supplied to the respondent. Objection by the respondent were filed on 18.07.2017 and such objection would not have survived in view of the amendment sought in the various pages. Therefore, the objection having being raised at least three days later cannot be taken into account and the request for amendment made in CA No. 203(PB)/2017 warrants acceptance.

2.   In view of the aforesaid we allow the application and take the amendments on record.

3.   In pursuance of Section 13(2) of IBC we direct that public announcement shall be immediately made by the Interim Resolution Professional with regard to admission of this application under Section 7 of IBC. We also declare moratorium in terms of Section 14 of IBC. A necessary consequence of the moratorium flows from the provisions of Section 14(1) (a), (b), (c) & (d).

4.   It is made clear that the provisions of moratorium shall not apply to transactions which might be notified by the Central Government or the supply of the essential goods or services to the Corporate Debtor as may be specified is not to be terminated or suspended or interrupted during the moratorium period.

5.   The Interim Resolution Professional shall perform all his functions religiously and strictly which are contemplated, inter alia, by Sections 15, 17, 18, 19, 20 & 21 of IBC. 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 IBC to extend every assistance and cooperation to the Interim Resolution Professional as may be required by him in managing the affairs of the Corporate Debtor. In case there is any violation the Interim Resolution Professional would be at liberty to make appropriate application to this Tribunal with a prayer for passing an appropriate order. The Interim Resolution Professional shall be under duty to protect and preserve the value of the property of the 'Corporate Debtor' as a part of its obligation imposed by Section 20 of IBC and perform all his functions strictly in accordance with the provisions of IBC.

The Petition is disposed of in the above terms.

DISCLAIMER: The information given in this document has been made on the basis of the judicial order by adjudication authority. It is based on the analysis and interpretation of order. Under no circumstances whatsoever, the blogger shall be responsible for any loss, claim, liability, damage(s) resulting from the use, omission or inability to use the information provided in the document. 

CS Diwakar Agrawal

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