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Judgment
ORDER
As can be seen from the pleadings and materials available on record, the Corporate Debtor had availed various credit facilities such as (term loan), bank guarantee and Funded Interest Term Loan Facility (FITN) from the Financial Creditor. The total facility availed by the Corporate Debtor was to tune of Rs. 44,70,98,193.21/-. It is the case of the Applicant that the initial date of default qua the credit facilities extended by FC to CD was 02.10.2021. According to it, the loan account of the Corporate Debtor was declared as NPA on 24.11.2022. The Financial Creditor states that as on 18.09.2023 the total principal amount outstanding towards term loan facility was Rs. 15,65,08,059.97/-.
The loan facilities sanctioned and extended by the Financial Creditor to the Corporate Debtor was recalled vide Loan Recall cum Guarantee Invocation Notice dated 13.02.2023, in terms of which the Financial Creditor sought the repayment of outstanding amount of Rs. 14,64,65,299.41/- as on 13.02.2023 together with further interest to w.e.f. 13.02.2023 and other charges within 7 days from the receipt of the notice. It is the case of the Applicant that in the wake of defaults in payment despite the Recall Notice, the Financial Creditor issued demand notice under Section 13(2) of SARFAESI Act, 2022 on 25.08.2023 to the Corporate Debtor, thereby demanding payment of outstanding dues to the tune of INR 15,65,08,059.97 as on 21.08.2023 in respect of all the loan facilities availed by the Corporate Debtor, but the Corporate Debtor failed to honor the notice and continued committing the default in repayment of the loan amount/debt. The details of debt and the date of default has been mentioned in 2nd row of Part-IV of the Application, which reads thus:
Ld. Counsel for the Applicant could draw our attention to the Default Report.
The default report (Record of Default) issued by the NeSL in Form-D reads thus:
The Second Report of Default is on record. Page-102 to 108 of the Application reads thus:
As can be seen from the aforementioned report, the default committed by the Corporate Debtor in repayment of the loan was authenticated.
The only ground espoused by it is that the Respondent/CD is in the process of restructuring the loan amount and has made an application to Swami Fund for required financial assistance for the purpose. As far as this Tribunal is concerned, in terms of the provisions of Section 7(5) of IBC, 2016, we have limited jurisdiction. As can be seen from the said provision, once we are convinced that a default has occurred, an application under sub-section (2) of Section 7 is complete and there is no disciplinary proceeding pending against the Applicant, we have to order the admission of the Application. Section 7(5) of IBC, 2016 reads thus:
“(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.”
We may also be not oblivious of the fact that the statute i.e. IBC, 2016 make it incumbent upon us that within 14 days of receipt of application under sub-section (2), we need to ascertain the existence of default from records of an information utility or on the basis of other evidence furnished by the Financial Creditor under sub-section (3). Section 7(4) of IBC, 2016 reads thus:
“(4)The Adjudicating Authority shall, within fourteen days of the receipt of the application under sub-section (2), 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): [Provided that if the Adjudicating Authority has not ascertained the existence of default and passed an order under sub-section (5) within such time, it shall record its reasons in writing for the same.]”
Although, it is for the purpose of substantiating the claim staked before RP, but still the Regulation 8 of IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 provide that the existence of debt due to the Financial Creditor may be proved on the basis of the proof/evidence referred to therein. The Regulation 8 reads thus:
As has been noted herein above, the Applicant has placed on record the, the record available with the Information Utility (NeSL) to show that the default committed by the Corporate Debtor in repaying the debt has been authenticated by it.
In view of the aforementioned, we are left with no option but to admit the present application. Ordered accordingly. It is made clear that the present order would not stand in the wake of the Corporate Debtor in working out the steps it is proposing to take to avail the Financial Assistance from the Swami Fund or otherwise to settle the amount of loan defaulted to take with the Financial Creditor.
Mr. Krish Kalra, Ld. Counsel appearing for the Corporate Debtor would submit that the financial health of the Corporate Debtor is sound and it should not be pushed to the insolvency resolution process. To buttress his plea, he relied upon the Judgment of the Hon’ble Supreme Court in Civil Appeal No. 4633 of 2021 titled “Vidarbha Industries Power Limited Vs. Axis Bank Limited”.
As far as the plea is concerned, a reference has been made to the Judgment by Hon’ble Supreme Court in Civil Appeal No. 7121 of 2022 titled “M. Suresh Kumar Reddy vs. Canara Bank & Ors.” wherein after taking note of the said Judgment (in Vidarbha (Ibid), Hon’ble Supreme Court ruled that it is not for this Adjudicating Authority to issue directions to the parties regarding settlement of the defaulted amount. As it may, it is stare decisis that the limited scope available in the proceedings under Section 7 of IBC, 2016, is to see as to whether there is disbursement of debt by the Financial Creditor and the default in repayment of the same. The record available with Information Utility is perceived as sufficient evidence to substantiate such default. In the present case, such record has been enclosed with the application. The relevant excerpt of the judgment in M. Suresh Kumar Reddy vs. Canara Bank & Ors. reads thus:
In view of the aforementioned, we are left with no option but to admit the present application. Order accordingly. In the wake, moratorium 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. Vikram Bajaj, having Registration No. IBBI/IPA-002/IP-N00003/2016-2017/10003 is appointed as IRP, subject to the condition that no disciplinary proceeding is pending against him and disclosures as required under IBBI Regulations, 2016 are made by him within a period of one week from this Order. It is further ordered that:
“Mr. Vikram Bajaj 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 extend 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.