Reliance Commercial Finance Limited vs Rutika Creations Private Limited

Reliance Commercial Finance Limited, through authorised signatory Mr. Hitesh Joshi, filed this petition on 2^nd July, 2018 under section 7 of The Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as "the Code") read with Rule 4 of The Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 (hereinafter referred to as "the Rules") seeking reliefs under Section 7(5)(a) and Section 13(1)(a)(b)(c) of the Code.

That the applicant Reliance Commercial Finance Limited, incorporated on 17.08.2000, having its corporate office at Santacruz (East), Mumbai 400 055 and having Branch at Reliance House, Navrangpura, Ahmedabad 380 009, Gujarat State, is in the banking business of providing various types of financial facilities including business loans, personal loans, consumer loans, loan against property, home equity loans, term loan etc.

M/s. Rutika Creations Private Limited is a company incorporated under the Companies Act, 1956 on 07.10.2010 having Identification No. U17120GJ2010 and having its registered office at Udhna, Surat, Gujarat State. That Authorised share capital of the respondent company is Rs. 15,00,000.00 and paid up share capital is Rs. 15,00,000.00.

That, the applicant/financial creditor has submitted that the respondent had approached and applied to the petitioner company to avail credit facility/term loan facility for purchasing embroidery machines from BKN Enterprise Private Limited for its business. The petitioner company sanctioned term loan of Rs. 2,02,20,800/- to the respondent company as per the proforma Invoices issued by BKN Enterprises P. Ltd. In terms of sanction letter and upon execution of various security documents viz. facility cum hypothecation agreement, demand promissory note, irrevocable power of attorney etc. In favour of petitioner company by the respondent company for security of repayment of the said facility and thereafter petitioner company disbursed the amount as per the details given below: -

The applicant has submitted that at the time of availing the said term loan facility, the respondent company assured the petitioner company that the amount of the said loan facilities will be repaid by way of 48 equal monthly instalments from 10.08.2017 to 10.07.2021 as per the terms and conditions and repayment schedule of the respective loan agreements and there will be no default in making payment of the instalments and repayment of the loan facility amount. However, after availing the aforesaid facility amount, respondent company did not care to make payment of the instalments regularly as per agreed terms and conditions and made default in payment of the instalments.

It is further submitted by the applicant that despite repeated requests, reminders and personal follow-up over telephone and in person to pay and clear up the outstanding instalments due, the respondent company failed and neglected to pay the pending instalments of Rs. 8,91,468/- in agreement No. RLSRSUR000340294 and Rs. 8,33,889/- in agreement No. RLSRSUR000340300, more particularly mentioned in the account statements annexed to the instant petition. That, this conduct on the part of the respondent clearly suggest inability to repay the outstanding dues of the company which is public money. That, the petitioner being financial creditor has to recover an amount of Rs. 2,04,45,995/- (Rupees two crores four lacs forty-five thousand nine hundred ninety-five only) which is still remaining unpaid by the respondent herein as on 15.06.2018 being corporate debtor, more particularly as per the ledger accounts annexed to the application.

In support of its claim, the applicant has submitted copy of the following documents: -

Mr. Mr. SanjaybhaiKanani, authorised representative of the respondent company filed reply in affidavit inter alia stating that the respondent company has availed the financial facilities, but has failed to pay the instalments as agreed with the petitioner. That, due to worst market condition, the respondent company is facing financial difficulties and hence is not in a position to pay the outstanding amount at this stage. That, the Adjudicating Authority may pass appropriate orders as may be necessary in the interest of justice.

Heard both sides at length as also perused the documents annexed with application and the reply filed by the respondent.

On perusal of the record it is found that in the reply filed by the respondent, the debt has been acknowledged and no dispute has been raised about the payment due to the applicant. Moreover, during the course of proceedings also learned lawyer appearing on behalf of the respondent fairly admitted the amount due to the petitioner.

In the instant application, from the material placed on record by the Applicant, this Authority is satisfied that the application is complete in all respect and the Corporate Debtor committed default in paying the financial debt to the Applicant and the respondent company has acknowledged the debt.

In the instant case, the documents produced by the Financial Creditor clearly establish the 'debt' and there is default on the part of the Corporate Debtor in payment of the 'financial debt'.

There is no dispute in the case that the petitioner is the financial creditor. The application is also furnished in the prescribed form - 1 of the Rules and the prescribed fee has also been paid. Along with the application, the applicant proposed the name of the Resolution Professional namely CA BhaviShreyans Shah. The Adjudicating Authority hereby appoint CA BhaviShreyans Shah, C-201, Embassy Apartment, Nr. Ketav Petrol Pump, Dr. V.S. Road, Ahmedabad 380 015 having registration No. IBBI/IPA-001/IP-P00915/2017-18/11521 to act as an interim resolution professional. Form 2 of the proposed interim resolution professional has been annexed and placed at page No. 48-49 to the application where declaration is made that no disciplinary proceeding is pending against him with the Board or Indian Institute of Insolvency Professionals of ICAI.

In the aforesaid background and as also discussed above, the application under Section 7 (2) of the IB Code is complete in all respects and there is debt due to the "financial Creditor" and there is default on the part of the "corporate debtor". Hence, there is no alternative but to admit the application in absence of any infirmity.

The petition is, therefore, admitted and the moratorium is declared for prohibiting all of the following in terms of sub-section (1) of Section 14 of the Code: -

It is further directed that the supply of goods and essential services to the Corporate Debtor, if continuing, shall not be terminated or suspended or interrupted during moratorium period. The provisions of sub-section (1) shall, however, not apply to such transaction as may be notified by the Central Government in consultation with any financial sector regulator.

The order of moratorium shall have effect from the date of receipt of authenticated copy of this order till the 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 as the case may be.

This Petition stands disposed of accordingly with no order as to costs.

Communicate a copy of this order to the Applicant, Financial Creditor, Corporate Debtor and to the Interim Insolvency Resolution Professional.