Canara Bank vs M/s. GJS Infratech Private Limited

It is brought to the notice of this Tribunal that certain inadvertent error has crept in order dated 01.03.2024, viz. nomenclature of the document filed by the proposed IRP in acceptance of his appointment as IRP.

Since the error occurred through inadvertence, in exercise of` power under Rule 154 of NCLT Rules, the same requires correction.

The error is corrected as under:

Rest of the contents of the order remain the same.

This corrigendum be read along with the original order dated 01.03.2024.

PER BENCH:

This application is filed under Section 7 of Insolvency and Bankruptcy Code (hereinafter to be referred as “Code”), read with Rule 4 of Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016, for initiation of Corporate Insolvency Resolution Process (CIRP) against Respondent, alleging that the respondent committed default in payment of the financial debt of a sum exceeding rupees one crore due and payable to the Petitioner.

Averments as made by the financial creditor in brief:

The Petitioner submits that at the request of the respondent/ corporate debtor which is a Private Limited Company sanctioned the following credit and ECLGS Facilities, to the respondent asper the terms and conditions mentioned in the Working Capital Facility Agreement dated 11.10.2023 which was amended from time to time, for its business needs.

It is stated that the total amount due under the above facilities per statement of account dated 10.11.2023 is as follows :

It is submitted as the corporate debtor has committed default in discharging the above debt, hence the account of the corporate debtor was classified as non-performing assets on 29.05.2022 in accordance with the applicable guidelines/ regulations of the Reserve Bank of India.

It is further averred that the financial creditor has made repeated requests for the payment, but the corporate debtor had not discharged the debt. Hence, the Applicant Bank issued Demand Notice to the corporate debtor on 06.10.2022 to clear entire outstanding liability of the sum of Rs.117,17,14,260.34/-(One Hundred and Seventeen Crore seventeen Lakhs Fourteen thousand Two hundred and Sixty rupees and thirty-four paise only), said to be outstanding as on 10.11.2023. As there was no response to the same the financial creditor filed this Petition.

In the light of the above the point that emerges for our consideration is:

Whether a financial debt of a sum exceeding rupees one crore due and payable by the respondent to the petitioner exists? If so, whether the respondent has defaulted in repayment of the same?

We have heard Mr. Dishit Bhattacharjee, learned advocate for the petitioner/ Financial Creditor. Perused the record and the case laws presented before us.

Whether a financial debt of a sum exceeding rupees one crore due and payable by the respondent to the petitioner exists? If so, whether the respondent has defaulted in repayment of the same?

At the outset we wish to state that the pre-admission notice ordered to be served on the respondent/ Corporate Debtor, by the respondent through Registered Speed Post, returned unserved with an endorsement, “addressee left”. Therefore, at the request of the learned counsel for the Financial Creditor, this Tribunal has ordered notice to the respondent by way of substituted service by publishing the notice in two leading newspapers, (one of which should be a vernacular language newspaper) having wide circulation in the area where office of the Corporate Debtor is situated. Accordingly, notice by way of newspaper publication has been effected as per the proof of service filed on 29.12.2023. The respondent was called absent. Service held sufficient. Hence the respondent was set ex parte. Therefore, the averments and allegations made in the Company Petition remained unrebutted.

We have carefully perused the petition and the documents relied on by the petitioner in support of its claim that financial debt of a sum exceeding Rupees one crore, due and payable by the respondent to the petitioner exists.

According to the petitioner, the respondent had availed working capital and ECLGS Facilities vide Working Capital Facility Agreement dated 11.10.2023, in all to the tune of Rs. 125,40,00,000/-, by executing the following documents:

The petitioner also filed the statement of account of the respondent, along with Certificate under section 2A (a) of the Banker’s Book of Evidence Act, 1891 (as amended). As already stated, execution of these documents and availing of credit facilities from the petitioner by the respondent remained unrebutted.

Having carefully perused the record, we are satisfied that the Petitioner has established that the respondent had availed credit facilities as mentioned above of a sum exceeding rupees one crore from the petitioner/Bank. And in the absence of evidence of compliance of the terms of the Demand Notice dated 06.10.2022, besides the declaration of the account of the respondent as ‘Non-Performing Asset’ on 29.05.2022, the default also stood established.

The point is answered accordingly.

We, therefore, for the reasons afore stated and as we found that the petition is in order, admit this Petition under Section 7 of I&B Code, 2016, declare moratorium for the purposes referred to in Section 14 of the Code, with following directions:

Corporate Debtor, M/s GJS Infratech Private Limited is admitted in Corporate Insolvency Resolution Process under section 7 of the Insolvency & Bankruptcy Code, 2016.

The Bench hereby prohibits institution of suits or continuation of pending suits or proceedings against the Corporate Debtor including execution of any judgment, decree or order in any court of law, Tribunal, arbitration panel or other authority; transferring, encumbering, alienating or disposing of by the Corporate Debtor any of its assets or any legal right or beneficial interest therein; any action to foreclose, recover or enforce any security interest created by the Corporate Debtor in respect of its property including any action under Securitization and Reconstruction of Financial Assets and Enforcement of Security interest Act, 2002 (54 of 2002); the recovery of any property by an owner or lessor where such property is occupied by or in possession of the corporate Debtor;

That the supply of essential goods or services to the Corporate Debtor, if continuing, shall not be terminated or suspended or interrupted during moratorium period.

Notwithstanding anything contained in any other law for the time being in force, a license, permit, registration, quota, concession, clearances or a similar grant or right given by the Central Government, State Government, local authority, sectoral regulator or any other authority constituted under any other law for the time being in force, shall not be suspended or terminated on the grounds of insolvency, subject to the condition that there is no default in payment of current dues arising for the use or continuation of the license, permit, registration, quota, concessions, clearances or a similar grant or right during the moratorium period.

That the provisions of sub-section (1) of Section 14 shall not apply to such transactions as may be notified by the Central Government in consultation with any financial sector regulator.

That the order of moratorium shall have effect from the date of this order till 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, whichever is earlier.

That public announcement of the initiation of Corporate Insolvency Resolution Process shall be made immediately as prescribed under section 13 of Insolvency and Bankruptcy Code, 2016.

This Bench hereby appoints Mr. Dommeti Surya Rama Krishna Saibaba, having IBBI /IPA-003/IP-N00165/2018-2019/12106, address: Flat No. A-105, Mahindra Ashvita, Hafeejpet Road, Near Hi-Tech City MMTS Railway Station, KPHB Colony, Hyderabad, Telangana, 500085, e-mail: dsrk39[at]yahoo[dot]com as Interim Resolution Professional, to carry on the functions as mentioned under the Insolvency & Bankruptcy Code, 2016.

Proposed IRP has filed Form AA (Written consent) dated 22.11.2023 at pages 67 to 70 of the Company Petition. His Authorization for Assignment is valid upto 17.10.2024.

The Registry is directed to furnish certified copy of this order to the parties as per Rule 50 of the NCLT Rules, 2016.

The petitioner is directed to communicate this order to the proposed Interim Resolution Professional.

Registry of this Tribunal is directed to send a copy of this order to the Registrar of Companies, Hyderabad for making appropriate remarks against the Corporate Debtor on website of Ministry of Corporate Affairs as being under Corporate Insolvency Resolution Process.

Accordingly, this Petition is admitted.