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Judgment
Per: Justice V. G Bisht, Hon’ble Member (Judicial)
This Company Petition is filed under Section 10 of the Insolvency and Bankruptcy Code, 2016 (“Code”) r/w Rule 7 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 (“IBC Rules”) by Viaromanaa Fashions (India) Private Limited (“Corporate Applicant”), seeking to initiate its Corporate Insolvency Resolution Process (“CIRP”). The said application is being preferred by the Corporate Applicant owing to financial stress faced by it, consequent to which it is not in a position to repay the debts due to its creditors.
Brief Facts of the case
The Corporate Applicant, is a Private Limited company incorporated on 11.10.2011 under Companies Act, 1956. Its Corporate Identity Number ("CIN") is U19115MH2011PTC222895. Its registered office is at 321, 322, A-2, Shah & Nabar Industrial Estate, Sitaram Jadhav Marg, Lower Parel, Mumbai- 400013. Therefore, this Bench has jurisdiction to entertain and decide the Petition. The Corporate Applicant is engaged in the business of trading of leather products such as shoes, handbags and wallets.
The Corporate Applicant submits that the Company has been incurring losses and is not in a position to pay off its creditors. There are no Financial Creditors in the Corporate Applicant and the total debt payable to the Operational creditors amounts to Rs. 26,99,90,610.25/- (Rupees Twenty-Six Crores Ninety-Nine Lakhs Ninety Thousand Six Hundred and Ten Rupees and Twenty-Five Paisa Only).
The Corporate Applicant submits that it has secured various credits facilities in the form of loan payables and Trade payables, as agreed from time to time from the Operational Creditors majorly from the years ranging from 2017 to 2023.
It is submitted by the Corporate Applicant that due to the hostile business environment and economic circumstances, the Corporate Applicant was unable to repay the outstanding amounts to the Operational creditors. As stated in Schedule A to Part IV of this petition, the debt amount towards Loan payable, amounts to Rs. 25,74,22,978.04/- (Twenty Five Crores Seventy Four Lakhs Twenty Two Thousand Nine Hundred and Seventy Eight Rupees and Four Paisa) and towards the Trade payables amounts to Rs. 1,25,67,632.21/- (One Crore Twenty Five Lakhs Sixty Seven Thousand Six Hundred and Thirty Two Rupees and Twenty One Paisa) making a default in repayment of debt over years. The Corporate Applicant further submits that the total debt due to the Operational Creditors, as per details given in this petition, is as follows:
| Sr. No. | Type of Debt in Operational Creditor of the Corporate Applicant | Debt Amount (In Rupees) |
|---|---|---|
| 1. | Loan Payable | 25,74,22,978.04 |
| 2. | Trade Payable | 1,25,67,632.21 |
| Total | 26,99,90,610.25 |
The debt fell due on various occasions and default occurred. The Corporate Applicant has produced Provisional Balance Sheet and Statement of Profit and Loss for year ending as on 31.03.2024. It is seen that revenue from operations of the Corporate Applicant is NIL as on 31.03.2024 and there are outstanding liabilities which the Corporate Applicant is unable to pay the debt.
Statutory Compliances
The Corporate Applicant has enclosed a copy of Resolutions passed by the Board of Directors at the meeting held on 13.03.2024 and 28.03.2024 for initiating Corporate Insolvency Resolution Process u/s 10 of the Code.
"RESOLVED THAT consent of the shareholders of the Company be and is hereby accorded to initiate and make filings for initiating Corporate Insolvency Resolution Process of the Company in accordance with the provisions of Section 10 of the Insolvency and Bankruptcy Code, 2016, the Companies Act, 1956 and, or, the Companies Act, 2013 (as applicable) and rules and, or, regulations framed thereunder, and the provisions of its constitutional documents, including but not limited to, filing of applications, affidavits, petitions submissions, representations, objections, cross objections and other related documents before the National Company Law Tribunal and, or, any other Authority and to take necessary actions to initiate and complete the corporate insolvency resolution process and, or, liquidation process…”
The Board of Directors of the Corporate Applicant in the meeting dated 06.03.2024 had also authorized Mr. Shivam Khanna (DIN: 0355435), Director of the Company, to file necessary application under the Code before the Tribunal and take necessary actions in matters connected with this petition.
Further, this Bench has noted that the Corporate Applicant has enclosed the Audited Financial Statements for the years, 2021-22, 2022-2023 and the Provisional Financial Statement for Financial year 2023-2024. It is also noted that the Corporate Applicant has submitted the accounts statements for the GST payments, TDS payments, Employee Contribution to the Provident Fund accounts, ESIC Contributions from 01.04.2017 onwards.
The Tribunal observes that the Corporate Applicant is in default of debt which is also evidenced by the Books of account placed on record. It is also seen from the Audited Financial Statements for the year ended 2023-2024 that the Corporate Applicant has no income and is also having substantial losses. There are no pending litigations against the Corporate Applicant.
Upon perusal of the records the Corporate Applicant has submitted the Bank statements of ICICI Bank Limited for the period of 01.04.2017 to 31.03.2018, invoices issued by various Operational creditors on multiple dates and email communications from Operational creditors for the repayment of the pending dues as on 29.05.2020, 17.06.2020 and 07.07.2020. It is observed from the aforesaid documents that there is a debt as well as default on the part of the Corporate Applicant.
The Corporate Applicant has suggested the name of Mr. Arun Kishanlal Bagaria having Registration no. IBBI/IPA-002/IP-N00278/2017-18/10836 for appointment as the Interim Resolution Professional ("IRP"). The proposed IRP has also submitted his Consent in Form 2 confirming eligibility and that there are no disciplinary proceedings pending against him.
It has been noted that the authorized Director of the Corporate Applicant Mr. Shivam Khanna has placed on record an Affidavit on Behalf of the Corporate Applicant, "that no proceedings under the Securities and Reconstruction of Financial Assets and Enforcement of Security Interest, Act 2002 have been initiated and/or are pending against the Corporate Applicant." The Tribunal has taken note of the Affidavit in terms of Section 11 of the Insolvency and Bankruptcy Code, 2016 placed on record by the authorized Director of the Corporate Applicant Mr. Shivam Khanna stating that, "the Corporate Applicant is not barred from making the present Company Petition under Section 11 of the insolvency and Bankruptcy Code, 2016." This application is filed as per Rule 7 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rule, 2016 in Form-6. Required information is also furnished therein.
Furthermore, on 14.11.2024, the counsel for Corporate Applicant appeared before this Tribunal and submitted that the "there is no Financial Creditor and they have already served the present Company Petition to the IBBI." Upon perusal of the records it can be observed the Corporate Applicant has complied with serving the Company petition to IBBI as on 28.06.2024.
This application was filed on 30.10.2024 and there are multiple dates given as the date of debt incurred by the Corporate Applicant. However, the financial statement placed on record acknowledges the existence of debt and the default therein. Hence, the application falls within the limitation period of three years.
After hearing the submissions and upon perusing the supporting documents annexed with the Petition, this Bench is of the view that the application made by the Corporate Applicant is complete in all respects as required by law. It clearly shows that the Corporate Applicant is in default of a debt due and payable, and the default is in excess of minimum amount stipulated under section 4(1) of the IBC, at the relevant time. Therefore, the default stands established and there is no reason to deny the admission of the Petition. In view of this, this Adjudicating Authority admits this Petition and orders initiation of CIRP against the Corporate Applicant.
Hence, the above CP (IB) No. 897 of 2024 is hereby allowed and initiation of Corporate Insolvency Resolution Process (CIRP) is ordered against.
There shall be a moratorium under Section 14 of the IBC, in regard to 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; ii. Transferring, encumbering, alienating or disposing of by the Corporate Debtor any of its assets or any legal right or beneficial interest therein; iii. 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 Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act, 2002; iv. The recovery of any property by an owner or lessor where such property is occupied by or in possession of the Corporate Debtor. Notwithstanding the above, during the period of moratorium: -
The supply of essential goods or services to the corporate debtor, if continuing, shall not be terminated or suspended or interrupted during the moratorium period;
That the provisions of Sub-Section (1) of Section 14 of the IBC shall not apply to such transactions as may be notified by the Central Government in consultation with any sectoral regulator;
The moratorium shall have effect from the date of this order till the completion of the CIRP or until this Adjudicating Authority approves the resolution plan under sub-section (1) of section 31 of the IBC or passes an order for liquidation of Corporate Debtor under section 33 of the IBC, as the case may be.
Public announcement of the CIRP shall be made immediately as specified under section 13 of the IBC read with regulation 6 of the Insolvency & Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016.
Mr. Arun Kishanlal Bagaria having Registration no. IBBI/IPA-002/IP-N00278/2017-18/10836, and has registered address at 701 Stanford, Junction of S. V. Road & C. D. Burliwala Marg, Andheri (W), Mumbai – 400058, Email Id: [email protected] ; Phone number: 9820057389 is hereby appointed as the IRP of the Corporate Debtor to carry out the functions as mentioned under IBC. The IRP shall carry out functions as contemplated by sections 15, 17, 18, 19, 20 and 21 of the IBC. The fee payable to IRP/RP shall be compliant with Regulations, Circulars and Directions issued by the Insolvency & Bankruptcy Board of India (IBBI) as may be applicable.
During the CIRP Period, the management of the Corporate Debtor shall vest in the IRP or, as the case may be, the RP in terms of section 17 of the IBC. The officers and managers of the Corporate Debtor shall provide all documents in their possession and furnish every information in their knowledge to the IRP within a period of one week from the date of receipt of this Order, in default of which coercive steps will follow.
It is also directed by this Tribunal that the Directors of the Corporate Applicant shall vide this order pay all costs to the Creditors with regards to the Corporate Insolvency Resolution Process proceedings.
The Registry is directed to communicate this Order to the Corporate Applicant and the IRP by Speed Post and email immediately, and in any case, not later than two days from the date of this Order.
A copy of this Order be sent to the Registrar of Companies, Mumbai, Maharashtra, for updating the Master Data of the Corporate Debtor. The said Registrar of Companies shall send a compliance report in this regard to the Registry of this Court within seven days from the date of receipt of a copy of this order.