Meenesh Irrigation India Pvt Ltd

The applicant is a private limited MSME company incorporated on 25.04.2012. The applicant is engaged in the business of manufacturing and trading of irrigations system and pipes. The applicant diversified into manufacturing of varieties of irrigation system and agricultural equipment since its incorporation.

The applicant was constantly growing and the same is evident from the fact that the first loan amounting to Rs. 315 lacs for expansion was taken by the applicant after 4 years of its incorporation i.e. in May, 2016 from Madhya Pradesh Financial Corporation (MPFC). However, the company suffered its first hurdle in November, 2016 due to demonetisation as there was breakdown in regular cycle of financial creditor of company and the applicant experienced liquidity crunch as most of its clients were farmers.

The applicant availed cash credit facility of Rs. 90 lacs from IDBI bank in the Financial Year 2017-18. Further, the applicant availed loan of Rs. 105 lacs from MPFC in Financial Year 2018-19, out of which is only Rs. 28.5 lacs were disbursed.

The applicant also created charge on the following properties against the said loan:

However, due to Covid-19 the operations of the applicant were on standstill during first lockdown in March-June, 2020. Thus, the entire chain of buyers and suppliers was disrupted, manufacturing units were completely shut down, the company had no funds to work for even a single day. The applicant tried very hard to revive the operations of the company by borrowing funds from family, friends. However, during the second wave of Covid-19 leading to lockdown during April-June, 2021, the debts kept on increasing rendering the directors to unable to manage the affairs of the applicant. Thus, the applicant was unable to pay of its debts and the account was declared as NPA.

The applicant made attempts to settle its debts with creditors and on multiple occasions paid lump-sum amount. The applicant repaid more than 50 lacs in the year 2021 to MPFC. The applicant sent various letters dated 30.09.2021, 02.11.2021 & 17.12.2021 to MPFC for settlement of loan account due to difficulties cause by Covid-19, for restructuring of loan accounts and revision of rate of interest & for settlement of loan account respectively. Moreover, out of total loan of MPFC, the applicant has already paid Rs.200 lacs. The applicant paid interest at 15.25% to its creditors.

Further, the last AGM of the company was conducted on 30.09.2022 and the last balance sheet as available on the portal of Ministry of Corporate Affairs is for the Financial Year 2021-22.

The name and address of the financial creditors and operational creditors of the corporate person along with amount due to them are as under:

The name and address of debtors of the applicant along with the amount due from them are as under:

The applicant has not repaid the instalment of Rs.90 lacs advanced by the bank as cash credit facility. A sum of Rs. 57,40,579/- as on 29.08.2023 (along with interest up to 01.10.2022) is due and payable by the applicant to the bank.

The bank has also filed an application before Hon’ble Debt Recovery Tribunal, Jabalpur on 29.03.2023 for recovery of the outstanding amount of cash credit facility as advanced to the applicant.

The present application is not maintainable under Section 10 of the Code as no material information relating to the end use of the funds so disbursed by the bank along with its books of accounts have been furnished in this petition. Thus, the present application being incomplete is liable to be rejected under Section 10(4)(b) of the Code. The bank sanctioned the cash credit facility of Rs. 90 lacs on 25.05.2017, thereafter no material information with regards to post disbursal of cash credit facility was ever given to the bank by the applicant. The reason of demonetization, Covid-19 etc., as claimed by the applicant for failure of the business are all excuses and there is much more than meets the eye.

This Adjudicating Authority may direct the applicant to place on record statutory records including financial statements, audit report of last six or more years, GST returns, income tax returns, affidavit declaring assets of its directors, guarantors etc., in accordance with Section 10(3)(a) of the Code.

The applicant has availed loan facility of Rs. 315 lacs from MPFC in the year 2016 for expansion of its business. The applicant took further loan of Rs. 105 lacs out of which only Rs. 28.5 lacs were disbursed by the MPFC to pay off debts, liabilities and to expand the business of the applicant. The applicant has defaulted in making payment of Rs. 5,05,16,346/- including interest to MPFC till 10.07.2023. The applicant has failed to pay its debt and therefore, has filed the present application under Section 10 of the Code.

The MPFC has sent one recovery notice dated 12.10.2022 under Section 32-G of the State Financial Corporation Act, 1951 to the applicant for recovery of an outstanding amount. Moreover, even as per the present application, MPFC will be having more than 88% voting rights if the applicant is admitted into CIRP. That MPFC has no objection if the present application is admitted against the applicant, however, the only objection is with respect to the appointment of Insolvency Resolution Professional (IRP) as suggested by the applicant in the present application.

That the amount disbursed by the IDBI Bank was used in furtherance of business transactions of the company. Moreover, the applicant has paid Rs.95 lacs to IDBI Bank against CC limit of Rs.90 lacs. Further, the applicant has already filed the statement of affairs etc as required. Furthermore, the special resolution for filling the present application was passed on 15.04.2023 and the present application was filed on 16.05.2023; however, the notices from Hon’ble DRT were issued on 28.06.2023. Thus the present application was filed much prior to the knowledge of the proceedings before Hon’ble DRT.

That MPFC has stated that it has no objection if CIRP is initiated against the applicant. However, MPFC has proposed different name of IRP even though the same has been proposed by the applicant as mandated by section 10 of the Code and no adverse inferences can be drawn against the applicant or the Insolvency Professional registered with IBBI as proposed by the applicant.

The application CP(IB) 43 of 2023 is allowed.

The corporate person M/s Meenesh Irrigation India Private Limited is admitted in the Corporate Insolvency Resolution Process under section 10 of the Code.

The moratorium under section 14 of the Code is declared for prohibiting all of the following in terms of section 14(1) of the Code.

The order of moratorium shall have effect from the date of this order till the completion of the Corporate Insolvency Resolution Process until this Adjudicating Authority approves the Resolution Plan under sub-section (1) of section 31 or passes an order for liquidation of corporate person under section 33 of the Insolvency & Bankruptcy Code, 2016, as the case may be.

As proposed by the corporate person, we appoint Mr. Amresh Shukla having registration No. IBBI/IPA-001/IP-P00120/2017-18/10255, having address at: F-05, Jaideep Complex, 112, Zone-II, MP Nagar, Bhopal-462011, Email: insolvencyprofessionalsindia@gmail .com to act as an Interim Resolution Professional (IRP) under section 13(1)(c) of the Code. He shall conduct the Corporate Insolvency Resolution Process as per the provisions of the Code r.w. Regulations made thereunder.

The IRP so appointed shall make a public announcement of initiation of the Corporate Insolvency Resolution Process (CIRP) and call for submission of claims under section 15 as required by section 13(1)(b) of the Code.

The supply of essential goods or services to the corporate person, if continuing, shall not be terminated or suspended, or interrupted during the moratorium period. The corporate person to provide effective assistance to the IRP as and when he takes charge of the assets and management of the corporate person.

The IRP shall be under duty to protect and preserve the value of the property of the corporate person and manage the operations of the corporate person as a going concern as a part of obligation imposed by section 20 of the Code.

The Registry is directed to communicate a copy of this order to the applicant, IRP and the concerned Registrar of Companies, within seven working days and upload the same on website immediately after pronouncement of the order.