Bank of India vs M/s. Khushbu Vinyl Private Limited

[Per: Ms. Manorama Kumari, Member (Judicial)]

Mr. Priyaranjan Kumar, Chief Manager, Bank of India, Ahmedabad filed this petition under section 7 of The Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as "the Code") read with Rule 4 of The Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 (hereinafter referred to as "the Rules") seeking reliefs under Section 7(5)(a) and Section 13(1)(a)(b)(c) of the Code.

That the applicant/financial creditor incorporated on 19.07.1969, having identification No. PAN No. AAACB0472C and having registered office at Bandra Kurla Complex, Star House, Bandra (E), Mumbai 400 051.

M/s. Khushbu Vinyl Private Limited is a company incorporated under the Companies Act, 1956 on (22^{\text{nd}}) May, 1996, having identification No. U51100GJ1996PTC029716, having its registered office at Block No. 28, Village Ujeti, Baska Ujeti Road, Halol, Dist. Panchmahal, Gujarat State. That, Authorised share capital of the respondent company is Rs. 3,00,00,000/- and paid up share capital is Rs. 2,50,32,000/-.

That, the applicant/financial creditor has submitted that in respect of various credit facilities sanctioned to the respondent by the applicant during the period from 21.08.2012 to 08.06.2015, a total aggregate amount of Rs. 38,39,36,295.78 (Rupees thirty-eight crores thirty-nine lacs thirty-six thousand two hundred ninety-five and paise seventy-eight only) is outstanding and to be paid by the respondent as on 13.11.2018 which includes interest up to 13.11.2018 and penalty up to 13.11.2018.

It is further submitted by the applicant bank that the respondent company has not complied with the terms and conditions of the sanction letter in respect of the said credit facilities despite having knowledge of its liability by executing acknowledgement of debt i.e. second supplementary agreement of loan & hypothecation of plant dated 08.05.2014 entered between the applicant bank and modification of sanction letter dated 27.02.2015. That, the respondent company has failed to operate the account satisfactorily as per the terms of the sanction and the respondent company has been classified as Non-Performing Asset with effect from 30.09.2016 in accordance with the directions/guidelines issued by the Reserve Bank of India.

It is further submitted by the applicant bank that despite frequent request, reminders and notices issued by the bank, respondent company failed to regularize its cash credit account and also to repay interest and instalments dues under various accounts. That, the applicant bank had issued notice under section 13 (2) read with 13 (13) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 on 11.05.2017 to the respondent company demanding an amount of Rs. 31,45,35,338.33 (Rupees thirty-one crores forty-five lacs thirty-five thousand three hundred thirty-eight and paise thirty-three only) with further interest with effect from 11.05.2017 @ 1% (simple) with monthly rests in cash credit account & @ 5.90% (including tenor premium) over base rate, presently 16.45% p.a. (including penal interest @ 1% simple) with monthly rests in term loans till date of payment within a period of 60 days from the date of notice. That, copy of said demand notice is placed with the application marked as Annexure I-142 at page No. 1076.

The applicant has submitted copy of the following documents in support of their claim: -

Director of the respondent company filed affidavit in reply inter alia stating that the dues of the petitioner bank are admitted and the respondent company do not have any objection if the Adjudicating Authority appoint any IRP as prayed by the petitioner by admitting the instant application.

Heard at length learned lawyers appearing for both the sides and also seen the documents on record.

On perusal of the record, it is evident that the applicant bank had sanctioned cash credit limit and term loans to the respondent company from time to time and during the period from 2012 to 20154, upon request of the respondent, the applicant bank had modified the terms and conditions of payment which is to be repaid within the stipulated period as per the terms and conditions agreed between the parties. That, the applicant bank had issued notice dated 11.05.2017 to the respondent demanding an amount of Rs. 31,45,35,338.33/- and informing about the initiation of insolvency proceedings under IB Code, 2016 but the corporate debtor failed to repay the same. Consequent upon which the petitioner had to file the instant application which is within time. The amount due to the Financial Creditor from the Corporate Debtor is a financial debt. In view of the Judgment of the Hon'ble National Company Law Appellate Tribunal, in case of M/s. Innoventive Industries Ltd. Vs. ICICI Bank & Anr., in Company Appeal (AT)(Insolvency) No. 1 & 2 of 2017, this Adjudicating Authority has to satisfy whether a default has occurred; whether the Application is complete; and whether any disciplinary proceeding is pending against the proposed Insolvency Resolution Professional.

In the instant application, from the material placed on record by the Applicant, this Authority is satisfied that the Corporate Debtor committed default in paying the financial debt to the Applicant and the respondent company has acknowledged the debt by way of affidavit.

In the instant case, the documents produced by the Financial Creditor clearly establish the 'debt' and there is default on the part of the Corporate Debtor in payment of the 'financial debt'.

There is no dispute in the case that the petitioner is the financial creditor. The application is also furnished in the prescribed form - 1 of the Rules and the prescribed fee has also been paid. Moreover, Director of the respondent company has filed affidavit in reply inter alia admitting the debt.

Along with the application, the applicant proposed the name of the Resolution Professional namely Shri Chandra Prakash Jain, D-501, Ganesh Meridian, Opp. Gujarat High Court, Ahmedabad 380 060 (Email ID [email protected] Mobile : 9824036127) having registration No. IBBI/IPA-001/IP-P00147/2017-18/10311 to act as an interim resolution professional. Form 2 of the proposed interim resolution professional has been annexed and placed at page No. 79-81 of the application where declaration is made that no disciplinary proceeding is pending against him with the Board or Indian Institute of Insolvency Professionals of ICAI. As can be seen from the Written Communication of the proposed Insolvency Resolution Professional, no disciplinary proceedings are pending against him.

On perusal of record and as also discussed above, it is held that there is existence of default and that the application under Section 7(2) of the Code is also complete in all respect.

In view of the above, the petitioner/financial creditor having fulfilled all the requirements of Section 7 of the Code, the instant petition deserves to be admitted.

The petition is, therefore, admitted and the moratorium is declared for prohibiting all of the following in terms of subsection (1) of Section 14 of the Code: -

It is further directed that the supply of goods and essential services to the Corporate Debtor, if continuing, shall not be terminated or suspended or interrupted during moratorium period. The provisions of sub-section (1) shall, however, not apply to such transaction as may be notified by the Central Government in consultation with any financial sector regulator.

The order of moratorium shall have effect from the date of receipt of authenticated copy of this order till the completion of the corporate insolvency resolution process or until this Bench approves the resolution plan under sub-section (1) of Section 31 or passes an order for liquidation of corporate debtor under Section 33 as the case may be.

This Petition stands disposed of accordingly with no order as to costs.

Communicate a copy of this order to the Applicant, Financial Creditor, Corporate Debtor and to the Interim Insolvency Resolution Professional.