Bank of India vs Krishna Oils & Proteins Pvt. Ltd.

[Per: Mr. Prasanta Kumar Mohanty, Member (T)]

The present I.B. Petition is filed by the Financial Creditor (FC), Bank of India under Section 7 of the Insolvency and Bankruptcy Code, 2016 (herein after referred to as a “Code”), seeking initiation of Corporate Insolvency Resolution Process (“CIRP” in Short) against the Corporate Debtor Company namely, Krishna Oils & Proteins Private Limited for the default committed by the Corporate Debtor in making repayment of the Term Loans, EPC & CC facility availed from the Bank. The Applicant (FC), Bank of India (BOI) is a Bank, incorporated under the provisions of the Banking Companies (Acquisition & Transfer of Undertakings) Act, 1970. The application has been filed by the duly authorised officer, Shri Sunil Kumar Dhaka, Chief Manager, Bank of India, Saket Nagar Branch, 202, Saket, Indore - 452001.

The Respondent Corporate Debtor (CD) Company, namely, Krishna Oils & Proteins Private Limited was incorporated on 04/10/2006 with CIN: U01405MP2006PTC018996.

The nominal share capital of the Respondent (CD) Company is INR. 1,00,00,000/- (Rupees One Crores Only) divided into 10,00,000/- (Ten Lakhs Only) equity shares of INR.10/- (Ten) each and the paid-up capital of the company is INR.95,29,100/- (Rupees Ninety Five Lakhs Twenty Nine Thousand One Hundred Only) divided into 9,52,910/- (Nine Lakhs Fifty Two Thousand Nine Hundred Ten Only) equity shares of INR.10/- (Ten) each. The Registered Office of the Corporate Debtor Company is situated at: Survey No.331, 332, Village Jawasia Kumhar, P.O. Undasa (Narwar), Near Nagziri Ujjain, Madhya Pradesh – 456010.

The main objects of the company, by which the Respondent (CD) Company is incorporated, are mentioned in the Memorandum of Association which are briefly mentioned as:

The Corporate Debtor availed the Loans by executing various documents and some documents executed by the mortgagors/guarantors in favour of the Applicant Bank binding themselves as liable to repay the loan facilities availed by the Corporate Debtor. Various loans/credit facilities granted by the applicant Bank are narrated as under;

Aggregate Term Loans Rs.365 Lakhs

Against Stock – Rs.500 Lakhs

Against Book debt – Rs.100 Lakhs

Maximum Fund Based Working Capital Limits: Rs.500 Lakhs

Total Aggregate Limits: Rs.865 Lakhs

Aggregate Term Loans Rs.7.22 Crore

Against Stock – Rs.5 Crore

Against Book Debt – Rs.1.25 Crore

Maximum Fund Based Working Capital Limits: Rs.5 Crore

Total Aggregate Limits: Rs.12.22 Crore

Date of Disbursement: 02.02.2011

Aggregate Term Loans Rs.3.55 Crores

Against Stock – Rs.15 Crore

Against Book Debt – Rs.5 Crore

Maximum Fund Based Working Capital Limits: Rs.15 Crores

Total Aggregate Fund Based Limits: Rs.18.55 Crores

Total Non-Fund Based Limits: Rs.0.50 Crores

Total Aggregate Limits: Rs.19.05 Crores

Date of Disbursement: 04.04.2013

The total aggregate limit of Rs.19.05 Crores was sanctioned by the Applicant Bank vide sanction letter dated 04/04/2013 with certain terms and conditions including hypothecation of plant and machineries, stocks and book debt and other moveable assets to secure multiple facilities which were duly accepted/acknowledged by the Corporate Debtor. Charge was created on the properties on 25.09.2007 which were subsequently modified on 24.02.2011 and 22.05.2013. Thereafter, first supplemental memorandum of entry for additional security was created on 24.02.2011(Page no. 154 to 204 of paper book)

The Corporate Debtor defaulted in payment and the date of default is 02/08/2014 as stated by the Petitioner Bank (page no. 5 to 11 of paper book). CIBIL Report (page no.346 to 348 of the paper book) filed by the Petitioner Bank confirms that the Account is in default.

The statements of accounts of the Corporate Debtor have been filed and the Petitioner Bank has submitted a Certificate to this effect under Banker's Book of Evidence Act, 1891. (Page no. 97 to 111 of paper book). The Petitioner Bank has claimed their dues of Rs.15,56,82,404.36 (Rupees Fifteen Crores Fifty Six Lakhs Eighty Two Thousand Four Hundred Four and Thirty Six Paisa Only) as on 01.03.2019 as computed in the page no. 7 to 11 of the paper book which is given below:

The Petitioner Bank, in support of its contentions has annexed the details of Financial Debt, records and evidences of default including copies of all the sanction letters, the workings showing the amount claimed to be in default and its calculation in tabular form as on 02/08/2014 along with ROC search report and Valuation reports.

The present application has been filed by the Financial Creditor under Section 7 of the Insolvency and Bankruptcy Code, 2016 read with Rule 4 of the Insolvency and Bankruptcy before this Adjudicating Authority to initiate the Corporate Insolvency Resolution Process.

The Financial Creditor, to substantiate its claim, has annexed following documents with the petition:-

In the present matter, this Tribunal, vide its order dated 03/04/2019 directed the Petitioner Bank to serve the notice of date of hearing to the Corporate Debtor and file the proof of service of notice before this Tribunal. Thereafter, the Respondent, Corporate Debtor appeared before this Tribunal on 19/06/2019 and sought time to file objections within two weeks.

In response to the present I.B. Petition, filed by the Petitioner Bank, the Respondent filed its reply on 07/11/2019. In the replies filed by the Respondent, the Respondent has made complaints against the Petitioner Bank alleging excessive interest and other charges levied by the bank and providing inadequate cash credit limit. It is further stated by the Respondent that during the year 2011-12, the Unit suffered setback resulting into huge loss due to slow down in Indian and Global economy coupled with widening disparity prevailing in Soya Processing Industry and in the subsequent years, did not allow the Unit to come out of financial crisis. Under these circumstances, the Corporate Debtor is not left with other option but to wait for new season to open with hope that operation of industry remains viable. Under these circumstances, the Corporate Debtor is not a defaulter but has sustained losses. Besides, it is alleged by the Corporate Debtor that the claim of the Financial Creditor is time barred; this Adjudicating Authority has no jurisdiction to deal with this matter; Mr. Sunil Kumar Dhaka, Chief Manager, Bank of India is not an authorised person to file the present application and the copy of relevant account from the Bank is not as per the Bankers’ Books Evidence Act, 1891. In addition, many feeble objections have been raised by the Corporate Debtor and the same are not narrated herein.

The Learned Lawyer of the Petitioner Bank (FC) clarified the position and put forth their arguments relying on the documents submitted by them, which were executed by the Corporate Debtor and the Mortgagors/Guarantors. The Petitioner Bank has also referred the CIBIL report filed with their application which confirms the debt is in default. The Petitioner Bank has also filed RoC report alongwith the petition in support file charge created by the Corporate Debtor in favour of the Petitioner Bank.

The matter was taken up and this Bench heard both sides on 03/04/2019, 26/04/2019, 19/06/2019, 13/08/2019, 03/09/2019, 10/10/2019, 23/10/2019, 21/11/2019, 14/11/2019, 29/11/2019, 20/12/2019, 03/01/2020 & 30/01/2020. The Learned Counsels of the Petitioner Bank and the Respondent were present and put forth their submissions before the Bench.

It is a settled legal position that pendency of SARFAESI proceeding or other dispute does not prevent a Financial Creditor to trigger the C.I.R.P. because the nature of remedy being sought for under the provisions of the I.B. Code is "Remedy in Rem" in respect of the Corporate Debtor.

The Petitioner Bank has suggested the name of Insolvency Professional to be appointed, if this petition is allowed and the proposed I.R.P. has also given his affirmation/consent in writing, which is annexed with the present I.B. Petition.

It is observed that the Petitioner Bank has submitted the documents duly executed by the Corporate Debtor and guarantors along with a Certificate under the Banker's Book of Evidence Act, 1891, in support of their IB Petition for initiation of C.I.R.P.

The Cash Credit/Term Loans/EPC Facility were sanctioned and released by the Petitioner Bank and the same were availed by the Corporate Debtor, Krishna Oils & Proteins Pvt. Ltd. The Charges have been filed by the Corporate Debtor with the ROC in favour of the Petitioner Bank as per the details mentioned in ROC Search Report dated on 06.02.2019 annexed at (Page no. 266 to 297 of the paper book)

The Corporate Debtor has defaulted in making repayment of loan/credit facilities to the Petitioner Bank and the date of default is 02.08.2014. The Statement of accounts and the CIBIL Reports submitted by the applicant Bank confirm the default committed by the Corporate Debtor.

The Petitioner Bank has filed the petition within the period of limitation, as the Credits have come into the loan accounts on 25.01.2017, when the application has been filed on 13.03.2019.

The present I.B. Petition is filed by the duly authorised official of the Applicant Bank in a prescribed format under Section 7 of the I.B. Code annexing copies of loan documents confirming the existence of debt due and defaulted and proposed name of the Resolution Professional to act as an Interim Resolution Professional (IRP)

Considering the material papers filed by the Petitioner Bank and the facts mentioned in Para No.17, 17.1, 17.2, 17.3 & 17.4 this Adjudicating Authority is satisfied that,

Hence, the present IB Petition is admitted with the following Directions/observations. The date of admission of this petition is 13.03.2020.

This Adjudicating Authority hereby appoints, as proposed, Mr. Nimit Kalsi, having Insolvency Professional Registration No. IBBI/IPA-002/IP-N00451/2017-18/11267, Email ID: [email protected], Mob. No. 7738386240, Address: A-402, Ravechi Heights, Plot No.25, Sector 7, Kharghar, Navi Mumbai - 410210, India as an Interim-Resolution Professional. The Interim Resolution Professional is directed to make public announcement of moratorium in respect of Corporate Debtor soon after receipt of an authenticated copy of this order and to act further as per the order/directions issued by this Adjudicating-Authority and to follow the provisions under Section 13 and 14 and other relevant provisions of the Insolvency and Bankruptcy Code.

As per the provisions of Section 13 and 14 of the Code on the date of commencement of insolvency, this Adjudicating Authority declares moratorium with effect from today for prohibiting all of the following, namely: -

The IRP is hereby advised to adhere the time limit as stipulated for completion of the Corporate Insolvency Resolution Process (“CIRP” in short) and perform the duties as specified under Section 17, 18, 20, & 21 of I.B Code. The Interim Resolution Professional shall perform all functions contemplated, inter-alia, in Sections 15, 17, 18, 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 persons 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, 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 the Code and perform all her functions strictly in accordance with the provisions of the Code, Rules and Regulations.

It is also observed that the Petitioner Bank has claimed total dues of INR.15,56,82,404.36/- which includes undebited interest, Penal interest and Other debts of INR.6,14,85,346.44. One of the prime objectives of the Insolvency and Bankruptcy Code, 2016 is to find out an Insolvency Resolution Plan in time for the Corporate Debtor and in order to have a Resolution Plan viable, feasible and implementation successful, in the era of Minimum Cost of funds based Lending Rate (“MCLR” in short) /Repo Linked Interest Rate/Interest Rate falling Regime and Competitive market condition, the Committee Of Creditor(s) (COC) may explore, while finalizing the Resolution Plan for the Corporate Debtor, the possibility of loading maximum interest at the Applicant Bank’s Base Rate (BR) +1% from the date of default to the date of implementation of MCLR and further from the date of implementation of MCLR till the date of approval of the Resolution Plan at the rate of Petitioner Bank’s One Year MCLR or One Year MCLR + 1% without any penal /overdue interest.

The Registry is hereby directed to communicate the authenticate copy of this order to the Financial Creditor, Corporate Debtor Company, the I.R.P and also to the Registrar of Companies, Madhya Pradesh immediately through speed post / registered post immediately.

Thus the present I.B petition filed Under Section 7 of the IBC stands admitted with the above directions and observations.