AI Structured Summary
Not yet generated for this judgment
Judgment
ORDER
The present Application has been filed by IFCI Venture Capital Funds Ltd (“Financial Creditor”), under Section 7 of the Insolvency and Bankruptcy Code, 2016 (“IBC”) read with Rule 4 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016, filed on 08.03.2025 to initiate Corporate Insolvency Resolution Process (“CIRP”) of M/s. Green Belt Industry Private Limited (“Corporate Debtor”) for an unresolved Financial Debt of Rs. 7,03,39,308 /-
As per the Petitioner, the brief facts of the case are as follows: -2.1. The Corporate Debtor is a Public Limited Company under the Companies Act, 2013 and incorporated on 20.12.2012.
That the Petitioner act as the Investment Manager of a dedicated fund known as the Venture Capital Fund for Scheduled Castes (VCF-SC). This fund was constituted as a determinate trust by IFCI Ltd (Settlor) with IL&FS Trust Company Ltd acting as the Trustee, vide Investment Management Agreement dated 29.12.2014.
Pursuant to the Corporate Debtor's request, the Financial Creditor and the Corporate Debtor herein entered into an Investment agreement dated 04.01.2017 to grant the Corporate Debtor part finance of Rs. 5,00,00,000/- including:
Rs. 4,99,00,000/- in the form of 4,99,000 Optionally Convertible Debentures (OCDs) of Rs. 100 each, and
Rs. 1,00,000/- in the form of 10,000 equity shares of Rs. 10 each.
Subsequently, in consideration of the financial assistance granted by the Financial Creditor, the Corporate Debtor and its Guarantors executed the following documents as per the terms of the Agreement including: i. Hypothecation Deed;
Mortgage by Deposit of Title Deeds by Mrs Lal Ramsein;
Personal Guarantee Deed;
Declaration and Undertaking;
First charge on 61,059 sq. ft, hypothecation of plant and machinery;
Post-dated cheques.
As per the Investment Agreement, the OCDs carried an annual coupon rate of 10% payable quarterly to VCFSC from first date of Disbursement, with a default interest rate of 12% in case of delay. The redemption/buyback by CD of 3,99,200/- OCDs of Rs 100 each aggregating to Rs.3,99,20,000 was scheduled to commence after 31.12.2017 and to be completed by 30.09.2021 in a phased manner.
Further, as per Article XI (a) of the Investment Agreement provided that default would be deemed to occur in the event to fail to make a payment of coupon for two consecutive defaults. The Corporate Debtor defaulted in coupon payments from March 2019 onwards and continued to remain in default thereafter.
That the Petitioner submitted that CD had defaulted in repaying in terms of the repayment schedule and the accordingly the date of default is 31.03.2019 furthermore, the corporate debtor continued to default thereafter.
Furthermore, the petitioner submitted that the Hon’ble Supreme Court’s Suo Motu order excluded the period from 15.03.2020 to 28.02.2022 (715 days), which is to be counted from 01.03.2022, thereby extending limitation till 14.02.2024. Further, the Corporate Debtor has remained in continuous default since 31.03.2019, with each missed payment constituting a separate and continuing default under Section 22 of the Limitation Act, 1963.
Furthermore, the petitioner relied upon the following rulings of the Hon’ble National Company Law Appellate Tribunal (NCLAT):
M/s. Speculum Plast Pvt. Ltd. v. PTC Techno Pvt. Ltd., Company Appeal (AT) (Insolvency) No. 47 of 2017, wherein the Appellate Tribunal held that, “if there is a delay of more than three years from the date of cause of action and no laches on the part of the Applicant, the Applicant can explain the delay. Where there is a continuing cause of action, the question of rejecting any application on the ground of delay does not arise”.
Mack Soft Tech Pvt. Ltd. v. Quinn Logistics India Ltd, Company Appeal (AT)(Insolvency) No. 143 of 2017, wherein the Appellate Tribunal held that that, “There is a continuous cause of action which will be evident from the books of account of the ‘Corporate Debtor’, wherein it is accepted the liability of loan payable to the Respondent- (‘Financial Creditor’). There being a continuous cause of action, the application under Section 7 of the ‘I&B Code’ cannot be held to be barred by limitation”.
Furthermore, the petitioner submitted that the present application under Section 7 of IBC is within the period of Limitation and apart from limitation point, there is no challenge of the Financial Debt or the default.
The Corporate Debtor acknowledged the liability vide letter dated 03.04.2024, wherein the Petitioner was informed that the properties mortgaged to the Petitioner were being auctioned by NEDFI through DRT, Guwahati in OA No. 152 of 2018. The Applicant craves leave to make appropriate submissions as regards the same at the time of hearing which was duly recorded by the DRT in its order dated 12.04.2024.
Despite several reminders, the Corporate Debtor failed to make any payment resulting a total outstanding amount of Rs. 7,03,39,308/- as on 31.03.2024. Subsequently, a Default Notice dated 03.06.2024 was served. However, the Corporate Debtor did not cure the default or discharge the outstanding dues.
Heard the learned counsel for Petitioner and perused the records. The present petition under Section 7 of IBC has been filed by the Financial Creditor seeking initiation of the CIRP against the Corporate Debtor on the ground of default in repayment of a purported financial debt.
The Financial Creditor has placed on record Investment Management Agreement between IFCI Venture Capital Funds Ltd. and IL & FS Trust, Investment Management Agreement between FC & CD, Trust Deeds of Guarantee and documents evidencing creation of equitable mortgage by deposit of title deeds over the immovable properties of the Corporate Debtor.
This Tribunal takes note of the Hon’ble Supreme Court’s Suo Motu order in SMWP(C) No. 3 of 2020, excluding the period from 15.03.2020 to 28.02.2022 for the purpose of limitation. Further, considering the continued nature of default since 31.03.2019 till 31.03.2024 and in light of Section 22 of the Limitation Act, each successive failure to repay forms a separate and continuing default. Further, this tribunal also relied upon the Judicial precedents of the Hon’ble NCLAT, including M/s. Speculum Plast Pvt. Ltd. Vs. PTC Techno Pvt. Ltd., Company Appeal (AT) (Insolvency) No. 47 of 2017 and Mack Soft Tech Pvt. Ltd. v. Quinn Logistics {Company Appeal (AT) (Insolvency) No. 143 of 2017} which supports the Petitioner’s contention that the present petition is well within limitation. In view of the above, this Tribunal is of the considered opinion that the present Petition is well within the period of limitation.
In Innoventive Industries Ltd. v. ICICI Bank, [(2018) 1 SCC 407], the Hon’ble Supreme Court held that once a default is established, the Adjudicating Authority is bound to admit the petition under Section 7 of the Code, unless there exists a bona fide dispute or the debt itself is not legally enforceable.
Thus, it is well settled that the Adjudicating Authority is not required to conduct a roving enquiry into disputes unless the debt is disputed with substantial grounds. In the present case, there exists ample documentary evidence showing the disbursal of financial facilities, creation of security, acknowledgment of debt, and occurrence of default.
The application under Section 7 is complete in terms of the requirements under the Code and the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016. The Financial Creditor has clearly established the existence of a financial debt under section 5(8) of IBC and the occurrence of default, which exceeds the threshold under Section 4 of the Code. Moreover, the pendency of proceedings before the DRT does not bar initiation of proceedings under Section 7 of the Code, as the remedies under IBC and recovery proceedings under The Recovery of Debts Due to Banks and Financial Institutions Act, 1993 are distinct.
In light of the above findings, this petition under Section 7, IBC is hereby admitted and initiation of CIRP is ordered against M/s. Green Belt Industry Private Limited under Section 7, IBC read with Rule 4 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rule, 2016, with the following order:
The order of moratorium under Section 14, IBC shall have effect from the date of pronouncement of this order till the completion of the CIRP 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 Bench hereby prohibits -
The 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 rights 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 the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act, 2002;
The recovery of any property by an owner or lessor where such property is occupied by or in the possession of the Corporate Debtor.
The supply of essential goods or services to the Corporate Debtor, if continuing, shall not be terminated or suspended or interrupted during moratorium period.
The Applicant has proposed the name of Neha Agarwal, bearing registration no. IBBI/IPA-001/IP-P-02873/2023-2024/14387, e-mail ID: [email protected], having Registered Office at 226, 2nd Floor, Bepin Behari Ganguly Street, Bowbazar, Near ICICI Bank, Kolkata, West Bengal, 700012 as the Interim Resolution Professional (“IRP”).
Accordingly, Neha Agarwal is appointed as IRP. The IRP is directed to take charge of the Corporate Debtor’s management and assets immediately and to perform duties as per the provisions of the IBC and the rules framed thereunder.
The IRP is directed to make a public announcement of the initiation of the CIRP as per the provisions of Section 13 of IBC and the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016. The IRP shall submit a report to this Tribunal within 30 days from the date of this order, detailing the steps taken in the CIRP.
During the CIRP period, the management of the Corporate Debtor will vest in the IRP/RP in terms of Section 17 of IBC. The suspended directors and employees of the Corporate Debtor shall provide all documents in their possession and furnish every information in their knowledge to the IRP/RP.
Registry shall send a copy of this order to the Registrar of Companies, Guwahati, for updating the Master Data of the Corporate Debtor.
The Financial Creditor shall deposit an amount of Rs. 3,00,000/- (Rupees Three Lakhs Only) towards the initial CIRP costs by way of a Demand Draft drawn in favour of the IRP appointed herein, immediately upon communication of this Order. The IRP shall spend the above amount only towards expenses and not towards the fee of the IRP fee till it is decided by CoC. The amount, however, will be subject to adjustment by the Committee of Creditors as accounted for by the Interim Resolution Professional and shall be paid back to the Financial Creditor.
Accordingly, the instant petition, i.e. CP (IB)/6/GB/2025 stands disposed of.
The Registry is directed to send e-mail copies of the order forthwith to all the parties inclusive of the Counsel and the Interim Resolution Professional.
Urgent certified copy of this order, if applied for, be issued upon compliance with all requisite formalities.
File be consigned to record.