M/s Ambition Indo Steel LLP vs Kotak Mahindra Bank Ltd & Ors.

Per: Shri Deep Chandra Joshi, Judicial Member

The instant Application is filed under Section 10 of the Insolvency and Bankruptcy Code, 2016 ('Code') read with Rule 7(1) of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 ('Rules') for initiation of Corporate Insolvency Resolution Process in respect of M/s Ambition Indo Steel LLP, ('Corporate Debtor'/ 'LLP') by the Corporate Debtor being the Applicant Company itself. The instant Application is filed through its Partner, Mr. Rohit Kasliwal, who has been authorised vide Board Resolution dated 17.11.2022.

The Applicant, M/s Ambition Indo Steel LLP, is an LLP incorporated under the provisions of the Limited Liability Partnership Act, 2008 on 01.09.2015 bearing LLP Identification No. AAE-6767. The registered office of the Applicant Company is situated at 7/197 Malviya Nagar, Jaipur, Rajasthan. The LLP has fixed capital of Rs. 10,00,000/- (Rupees Ten Lakh Only) and the main object of the LLP is manufacturing of basic metals.

The Applicant has stated that the LLP was operating as a going concern; however, due to business cycles and unprecedented surges in steel prices, the LLP was unable to meet its repayment obligations to financial and operational creditors, leading to defaults. A copy of the Audited Financial Statements for the financial years 2020 and 2021 is attached as Annexure-A6 (Colly) to the Application.

The Partners of the Corporate Debtor in the meeting of partners dated 17.11.2022, after considering the financial position of the Corporate Debtor and defaults committed by the Applicant, sought to initiate CIRP and preferred the present Application under Section 10 of the Code, 2016.

The Applicant has annexed particulars of Financial Creditors and Operational Creditors in Part III of Form-6 and Annexure A9 of the Application. The Company has defaulted in repayment of its debt due to the following Financial Creditor and other creditors: -

Respondent No. 7 Poonawalla Fincorp Ltd. has filed its Reply vide Diary No. 869/2023 dated 05.04.2023 stated that the Applicant availed the loan from the answering Respondent for Rs. 20,15,456/- at the interest of 18.25% p.a. After taking the loan facilities, Applicant started committing default in payment of the due instalments and cheques given by the Applicant as against instalments were dishonoured. It is further submitted that the answering Respondent has filed compliant against the Applicant regarding the ACH which have bounced in furtherance of payment of monthly instalments of Rs. 73,117/- each through ACH Debit Transactions under Section 25 r/w Section 27 of the Payment And Settlement Systems Act. 2007 before the Court of Hon'ble Chief Metropolitan Magistrate at Calcutta.

Respondent No. 11 Yes Bank Ltd. has filed its Reply vide Diary No. 871/2023 dated 05.04.2023 stated that the Applicant availed the loan from the answering Respondent for Rs. 15,00,000/- at the interest of 18% p.a. After taking the loan facilities, Applicant started committing default in payment of the due instalments and cheques given by the Applicant as against instalments were dishonoured. The Applicant owes a total amount of Rs. 14,70,331.43/- to the answering Respondent. Additionally, answering Respondent has filed arbitration proceedings before the tribunal of Shiv Singh Chauhan (Sole Arbitrator) vide case no. A019454 at Jaipur and got the award in favor on 14.02.2023. The answering Respondent is allowed to claim the amount of Rs. 14,70,331.43/- with 12% simple interest till the realisation of the dues. Further, if the insolvency application is allowed, then the answering Respondent will face difficulty and irreparable loss.

Respondent No. 9 FedBank Financial Ltd. has filed its Reply vide Diary No. 943/2023 dated 12.04.2023 stated that the Applicant availed the loan from the answering Respondent for Rs. 20,00,000/- at the interest of 17.50% p.a. After taking the loan facilities, Applicant started committing default in payment of the due instalments and cheques given by the Applicant as against instalments were dishonoured. The Applicant owes a total amount of Rs. 21,50,612/- to the answering Respondent.

Respondent No. 6, Hero Fincorp Ltd. has filed its Reply vide Diary No. 1636/2023 dated 03.07.2023 stated that the Applicant availed the business loan from the answering Respondent for Rs. 25,29,500/- (Rupees Twenty-Five Lakhs Twenty-Nine Thousand and Five Hundred Only). It is contended that the Board Resolution so passed by the Corporate Debtor was not in accordance with the law. The Respondent further submitted that criminal proceedings have already been initiated against the Applicant in a cheque bouncing case under Sections 138 and 141 of the Negotiable Instruments Act, 1881, read with Section 200 of the CrPC, 1973. Therefore, the present Application has been filed by the Applicant to avoid the consequences of these proceedings. Moreover, the Applicant has failed to submit the financial statement for the year 2021–2022 and the provisional statement for the period from April 2022 to November 2022. The total actual default is Rs. 26,93,225.59/- (Rupees Twenty-Six Lakhs Ninety-Three Thousand Two-Hundred and Twenty-Five).

Respondent No. 14, Axis Finance Ltd. has filed its Reply vide Diary No. 1831/2023 dated 28.07.2023 stated that the Applicant availed the loan from the answering Respondent for Rs. 25,08,413/- (Rupees Twenty-Five Lakhs Eight Thousand Four Hundred and Thirteen) at the interest of 17% p.a. In furtherance of non-payment of dues, the legal proceedings have been initiated under the Negotiable Instruments Act 1881 and the same is pending adjudication.

It is important to mention that this Adjudicating Authority vide its Order dated 17.11.2023 has forfeited a right to file reply in respect to the Respondents who not have filed their responses. Further, directions were given to the Applicant to file the recent financial statements of the Applicant Company. In compliance of the Order dated 17.11.2023 and of 10.05.2024, the Applicant filed copy of financial statement of FY 2021-22 and FY 2022-23 vide Diary No. 1357/2024 dated 29.05.2024.

There is no dispute that the Company has admittedly defaulted in payment of its debt which is over the threshold prescribed under Section 4 of the Code and therefore, is entitled to file the present Application in terms of subsection (1) of Section 10 of the Code.

In compliance of the requirements of Section 10(3)(a) of the Code read with Annex-V of Form 6 of the Rules, the Applicant Company has filed copies of Financial Statements of the Corporate Debtor for the Financial Years ending on 31.03.2022 and 31.03.2023.

Additionally, in compliance with Section 10(3)(b) of the Code, the Applicant has proposed the name of Mr. Sumit Rajnikant Mehta as the Interim Resolution Professional ('IRP'). The Applicant Company has obtained written communication in Form-2 from the Insolvency Professional for appointment as an IRP. In Form-2 filed along with the Application, it has been affirmed by the proposed IRP that he is a registered Insolvency Professional and qualified to practice as an Insolvency Professional. Further, it has been affirmed/ confirmed that no disciplinary proceedings are pending against the proposed IRP.

In view of the above, it is clear that a default has occurred, the present Application under Section 10 is complete and that the Applicant is not ineligible under Section 11 of the Code. Further, it is evident that the requirements prescribed under sub-section 3(a) and (b) of Section 10 of the Code have also been complied with.

The Insolvency and Bankruptcy Code, 2016 is a complete Code in itself. The provisions of the Code are to be mandatorily followed. Adherence to the statutory requirements has to be in toto. Section 10(4)(a) of the Code mandates the Adjudicating Authority to admit the Application if it is complete.

In view of the foregoing, we are satisfied that the present Application is complete and that the Corporate Debtor has committed a default. Therefore, since, the Application is complete, we are hereby admitting the same under section 10(4)(a) of the Code. The CIRP shall commence from the date of this order under sub-section 5 of Section 10 of the Code.

A moratorium in terms of Section 14 of the Code is being issued prohibiting the following:

It is further directed that:

Mr. Sumit Rajnikant Mehta holding IP Registration No. IBBI/IPA-001/IP-P01886-C01/2016-17/10032 is appointed as Interim Resolution Professional, who shall take statutorily prescribed steps inter-alia as envisaged under Section 15, 17 and 18 of the Code. Further, the IRP is directed to submit his report at the earliest. The Applicant shall deposit a sum of Rs. 1,00,000/- (Rupees One Lakh Only) to the bank account of the abovementioned IRP within 10 days from the pronouncement of this order.

The order of moratorium shall have effect from the date of this order till the completion of the CIRP as per sub-section (4) of Section 14 of the Code.

Let a copy of this order be supplied to the Applicant as well as the Interim Resolution Professional to carry out the CIRP at the earliest. A copy of this order shall also be communicated to IBBI for its records.

Therefore CP No. 09/10/JPR/2023 stands admitted.