State Bank Of India vs Rohit Ferro Tech Limited

Per Shri M.B. Gosavi, Member (J):

State Bank of India, the Financial Creditor filed this application under Section 7 of Insolvency and Bankruptcy Code, 2016 against M/s Rohit Ferro Tech Limited (Corporate Debtor) to start Corporate Insolvency Resolution Process (in short "CIRP") of the Corporate Debtor as the Corporate Debtor committed default in paying Financial debt of Rs. 17,92,12,74,701/- (Rupees One Thousand Seven Hundred Ninety-Two Crore Twelve Lakh Seventy-Four Thousand Seven Hundred One).

This Adjudicating Authority by order dated 28.06.2019 had rejected the application holding that the proceeding was filed by the State Bank of India on the basis of Reserve Bank of India Circular dated 12.02.2018 and that Circular was declared to be bad in law by Hon'ble Supreme Court in case of Dharani Sugars & Chemicals Ltd. Vs. Union of India & Ors. (Transfer Case (Civil) 66 of 2018).

However, while rejecting application on above technical ground, this Authority has clearly held that the Corporate Debtor did not dispute two material facts: -

Order of rejection of the application was challenged by State Bank of India filling Appeal before Hon'ble NCLAT. Hon'ble NCLAT by order dated 20.09.2019 set aside the order of rejection of the application holding that, "for the reason aforesaid, we set aside the impugned order dated 28.06.2019 and remit the case to the Adjudicating Authority "NCLT Kolkata Bench, Kolkata" with direction to admit the application under Section 7 IBC, 2016 after the notice to the Corporate Debtor, so as to enable the Corporate Debtor to settle the matter if it so chooses to before admission."

From above order, it is clear that Hon'ble Appellate Tribunal directed this Adjudicating Authority to admit the Corporate Debtor in CIRP under Section 7 IBC, 2016 after giving opportunity to settle the dispute. Accordingly, this Authority vide order dated 18.12.2019 directed both State Bank of India and the Corporate Debtor to produce on record as to whether any steps are taken for settlement but no documents are produced.

Meantime, some of the shareholders of the Corporate Debtor filed application under Section 230-232 of the Companies Act, 2013 (CA(CAA)1683/KB/2019) proposing Scheme of Arrangement. In that application, we appointed Chairperson directing him to hold the meeting of the creditors and shareholders of the Corporate Debtor and file report. Chairperson filed report stating that for want of time, meeting could not be held. It is also seen from the record that one of the creditors filed appeal bearing no. Company Appeal (AT) (Insolvency) No. 65 of 2020 against our order of rejection of its prayer for postponement of the date of the meeting. That appeal is still pending.

Be that as it may. We hold that such meeting can be held and Scheme of Arrangement can be considered even after admission of the Corporate Debtor in CIRP and pending the CIRP process, we have already noted that Corporate Debtor did not dispute that it has committed default in paying the financial debt of more than Rs. 1 Lakh and hence, this application has to be admitted. In fact, this Authority and even the Hon'ble Appellate Tribunal has conclusively held that the Corporate Debtor has to be admitted in CIRP under Section 7 of IBC, 2016, hence, we admit the Corporate Debtor in CIRP with following orders: -

The application filed by the Financial Creditor under section 7 of the Insolvency & Bankruptcy Code, 2016 for initiating Corporate Insolvency Resolution Process against the Corporate Debtor, M/s Rohit Ferro Tech Limited is hereby admitted.

ii) We declare a moratorium and public announcement in accordance with Sections 13 and 15 of the IBC, 2016.

iii) Moratorium is declared for the purposes referred to in Section 14 of the Insolvency & Bankruptcy Code, 2016. The IRP shall cause a public announcement of the initiation of Corporate Insolvency Resolution Process and call for the submission of claims under Section 15. The public announcement referred to in clause (b) of sub-section (1) of Section 15 of Insolvency & Bankruptcy Code, 2016 shall be made immediately.

iv) Moratorium under Section 14 of the Insolvency & Bankruptcy Code, 2016 prohibits the following:

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 right 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 Act, 2002 (54 of 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 as may be specified shall not be terminated, suspended, or interrupted during moratorium period.

vi) The provisions of sub-section (1) shall not apply to such transactions as may be notified by the Central Government in consultation with any Financial sector regulator.

vii) The order of moratorium shall have effect from the date of admission till the completion of the corporate insolvency resolution process.

viii) Provided that where at any time during the corporate insolvency resolution process period, if the Adjudicating Authority approves the resolution plan under sub-section (1) of Section 31 or passes an order for liquidation of corporate debtor under Section 33, the moratorium shall cease to have effect from the date of such approval or liquidation order, as the case may be.

ix) Necessary public announcement as per Section 15 of the IBC, 2016 may be made.

Mr. Supriyo Kumar Chaudhuri, having registration no. IBBI/IPA-01/IP-P00644/2017-18/11098, email id. [email protected], is appointed as Interim Resolution Professional for ascertaining the particulars of creditors and convening a Committee of Creditors for evolving a resolution plan.

xi) The Financial Creditor to pay sum of Rs. 1,00,000/- (Rupees One Lakh Only) to IRP as advance fees as per Regulation 33(2) of IBBI (Insolvency Resolution Process for Corporate Persons) Regulation 2016 which shall be adjusted from final bill.

xii) The Resolution Professional shall conduct CIRP in time bound manner as per Regulation 40A of IBBI (Insolvency Resolution Process for Corporate Persons) Regulation, 2016.

xiii) Registry is hereby directed under section 9(5) of the I.B. Code, 2016 to communicate the order to the Financial Creditor, the Corporate Debtor and to the I.R.P. by Speed Post as well as through e-mail.

List the matter on 20.03.2020 for the filing of the progress report.

Certified copy of the order may be issued to all the concerned parties, if applied for, upon compliance with all requisite formalities.