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Judgment
ORAL ORDER
The details of debts and default are given in Part- IV of the application, the relevant excerpt of which reads thus: -
We issued notice to the Corporate Debtor on 03.12.2024 and granted it time to file reply to the application within one week from the date of receipt of the notice. The order dated 03.012.2024 reads thus: -
“Issue notice to the Respondent returnable on 02.01.2025. The Applicant undertakes to serve notice upon the Respondent through all modes viz. registered post, speed post, courier service and E-mail. Affidavit of service be filed within one week. Reply, if any, may be filed by the Respondent within one week from the date of receipt of the notice. Rejoinder, if any, may be filed before the next date of hearing. List the matter on 02.01.2025.”
As no one appeared on behalf of the Corporate Debtor, despite service of notice, we could pass an order dated 02.01.2025, setting the proceedings qua Corporate Debtor as ex-parte. The order dated 02.01.2025 reads thus: -
“There is no appearance on behalf of the corporate debtor despite service of notice. Though no affidavit/proof of service has been uploaded on DMS. However, the Ld. Counsel appearing for the creditor i.e. The Canara Bank Limited could produce before us the track consignment as also the receipt of speed post. Let affidavit of service be filed within one week from today. As there is no appearance on behalf of the corporate debtor despite service of notice the proceedings qua it is set ex parte. The petitioner/applicant is directed to send a copy of this order to corporate debtor today itself and make an averment to this effect in the affidavit to be filed. List on 17.01.2025.”
Today again, there is no appearance on behalf of the Corporate Debtor. In State Bank of India & Ors. vs. The Consortium of Mr. Murari Lal Jalan and Mr. Florian Fritsch & Anr. [Civil Appeal Nos. 5023-5024 of 2024], the Hon’ble Supreme Court ruled that this Tribunal and Hon’ble NCLAT should adhere to timelines. The para 182 of the judgment reads thus: -
“182.Moving on to certain efficiency issues within the NCLTs and NCLAT, it has been noticed over a period of time that there is a serious lack of timely admission and disposal of the applications filed as regards the initiation of CIRP, approval of the resolution plan and liquidation. This only adds to the uncertainty of the process and prolongs the dispute thereby jeopardizing the interest of all the stakeholders involved. Adjudication in a time-bound manner would help prevent any further deterioration of the value of the corporate entity. The integrity of the original timelines laid down by the Code and the Resolution Plan must not be allowed to be violated since it would dilute the objective of the Code in its entirety, erode investor confidence and hinder all corporate restructuring efforts.”
(Emphasis Supplied)
As can be seen from the provision of Section 7(4) of IBC, 2016, this Tribunal should within 14 days of the receipt of the application under sub-section (2) of Section 7 of the Code ascertain the existence of a default from the records of an information utility or on the basis of other evidence furnished by the Financial Creditor under sub- section (3).
Thus, we cannot defer hearing in the matter indefinitely more so when the Corporate Debtor has not cared to appear before this Tribunal, though the Hon’ble Supreme Court has ruled that before admitting a petition, this Tribunal should follow principle of natural justice and give an opportunity of hearing to the Corporate Debtor.
However, we can take benefit of such judgments of Hon’ble Supreme Court only in cases where it is not possible to adhere to timelines and it becomes necessary to adjourn the hearing.
In the present case, there is no such situation as the Corporate Debtor is not represented before us and there has never been a request on behalf of the Corporate Debtor for an adjournment.
Thus, having due deference the law declared by the Hon’ble Supreme Court in State Bank of India Vs. Murari Lal Jalan (supra), we proceed to take decision in terms of the provisions of Section 7(5) of IBC, 2016. The Section 7(5) of the Code reads thus: -
“7. Initiation of corporate insolvency resolution process by financial creditor.-
[…]
(5)Where the Adjudicating Authority is satisfied that—
(a)a default has occurred and the application under sub-section (2) is complete, and there is no disciplinary proceedings pending against the proposed resolution professional, it may, by order, admit such application; or
(b)default has not occurred or the application under sub-section (2) is incomplete or any disciplinary proceeding is pending against the proposed resolution professional, it may, by order, reject such application:
Provided that the Adjudicating Authority shall, before rejecting the application under clause (b) of sub-section (5), give a notice to the applicant to rectify the defect in his application within seven days of receipt of such notice from the Adjudicating Authority.”
It is seen from Section 7(3) of the Code that the Financial Creditor shall along with application furnish record of default recorded in the information utility or such other record of evidence of default as can be specified. Further, the Applicant is required to give the name of the Resolution Professional proposed to act as an Interim Resolution Professional. The Section 7(3) of the Code reads thus: -
“(3)The financial creditor shall, along with the application furnish—
(a)record of the default recorded with the information utility or such other record or evidence of default as may be specified;
(b)the name of the resolution professional proposed to act as an interim resolution professional; and
(c)any other information as may be specified by the Board.”
As can be seen from the record, the Creditor bank served recall notice dated 10.08.2021 upon the Corporate Debtor, recalling the financial facility. The recall notice reads thus: -
Additionally, Ms. Shankari Mishra, Ld. Counsel appearing for the Creditor, could draw our attention to the letter dated 25.08.2021 written on behalf of the Corporate Debtor to the Creditor, admitting the liability to repay the amount of debt. The letter reads thus: -
The aforementioned letter is CD’s response to the recall notice. The recall notice and the CD’s response are sufficient evidence to arrive at a conclusion that the Corporate Debtor has committed default in repayment of the amount of debt.
In view of the aforementioned, we are left with no option but to admit the petition. In the wake, moratorium as provided under Section 14 of IBC, 2016 is declared qua the CD and as a necessary consequence thereof, the following prohibitions are imposed, which must be followed by all and sundry:
The institution of suits or continuation of pending suits or proceedings against the Respondent 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 Respondent 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 Respondent in respect of its property including any action under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002;
The recovery of any property by an owner or lessor, where such property is occupied by or in the possession of the Respondent.
As proposed by the Petitioner, Mr. Sanjay Kumar Mishra, having Registration No. IBBI/IPA-001/IP-P01047/2017-18/11730 (Email: [email protected]) is appointed as IRP. In the Form 2, enclosed as Annexure A21 of the application, Mr. Sanjay Kumar Mishra has given a declaration that there are no disciplinary proceedings pending against him and that he is eligible to be appointed as resolution professional. Relevant excerpt of the same reads thus: -
“(iv)certify that there are no disciplinary proceedings pending against me with the Board or Insolvency Professionals of ICAI;
(v)affirm that I am eligible to be appointed as a resolution professional in respect of the corporate debtor in accordance with the provisions of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016;”
It is further ordered that Mr. Sanjay Kumar Mishra, having Registration No. IBBI/IPA-001/IP-P01047/2017-18/11730, shall take charge of the CIRP of the Corporate Debtor with immediate effect and would take steps as mandated under the IBC specifically under Section 15, 17, 18, 20 and 21 of IBC, 2016 read with extant provisions of IBBI (Insolvency Resolution of Corporate Persons) Regulations, 2016.
The Petitioner is directed to deposit Rs. 2,00,000/- only with the IRP to meet the immediate expenses. The amount, however, will be subject to adjustment by the Committee of Creditors as accounted for by Interim Resolution Professional and shall be paid back to the Financial Creditor.
A copy of this Order shall immediately be communicated by the Registry/Court Officer of this Tribunal to the Petitioner /Financial Creditor, the Respondent/Corporate Debtor and the IRP mentioned above.
In addition, a copy of this Order shall also be forwarded by the Registry/Court Officer of this Tribunal to the IBBI for their records.