NCLT admits IB petition by the Corporate Debtor/Corporate Applicant Company for initiating CIRP for itself, finds that the IB petition is complete in accordance with section 10 of the Insolvency and Bankruptcy Code read with Form 6 of the Rules.
In the present matter, application under section 10 of the Insolvency and Bankruptcy Code (the Code) read with Rule 7 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 (the Rule) seeking for initiation of the Corporate Insolvency Resolution Process (CIRP) is filed by M/s Ace Worldwide Tours Ltd (Corporate Debtor/Corporate Applicant) for itself. NCLT finds that Corporate Debtor is eligible for file IB petition for itself under section 10 of the Code as the definition of Corporate Applicant also includes a Corporate Debtor for the initiation of C.I.R.P. The application details the financial debts owed by the Corporate Debtor and the Corporate Debtor has defaulted in the payment of such debts. The Corporate Debtor has failed to repay financial debts of the Financial Creditor (IDBI Bank Ltd.) and has been issued Demand notices for repayment of the same by the Financial Creditor. The Financial Creditor/IDBI has also issued proceeding against the Corporate Debtor under Sections 13(2) and 13(4) of the SARFAESI ACT. The Financial Creditor has filed it s objection against the IB petition filed by the Corporate Debtor contending that the Corporate Applicant is intending to thwart the proceedings against it under section 13 of the SARFAESI Act, 2002 and placed reliance on the Supreme Court decision in the matter of United Bank of India v Stayawati Tandon & Ors. The Financial Creditor further contends that NCLT does not have the jurisdiction to pass any interim relief against the recovery actions being initiated by secured creditor – IDBI.
It is submitted that the Adjudicating Authority has impleaded M/s Ifco Tokio as a respondent in the present matter. The Income Tax officer, Ward -1(1)(1) Surat has also provided a letter to the NCLT informing of the outstanding Income Tax Demand against the Corporate Applicant company.
NCLT observes that the Corporate Debtor has outstanding debts due to its Financial and Operational creditors but is unable to pay the same which amounts approximately to Rs. 4,25,17,532.01 to the Financial Creditors. There are also some disputed dues of newly impleaded respondent/objector IFCO TOKIO to the extent of Rs. 23,27,535/- and hence the Corporate Debtor has moved for initiation of CIRP for itself.
NCLT examined the provisions of section 19 of the Code and further relies on the decision of NCLAT in the matter of Unigreen Global (P) Ltd. V Punjab National Bank where the NCLAT has interpreted the meaning of Section 10 as “Section 10 does not empower the Adjudicating Authority to go beyond the records as prescribed under section 10 and the information as required to be submitted in Form 6 of the Insolvency & Bankruptcy (Application to the Adjudicating Authority), Rules 2016 subject to ineligibility prescribed under section 11. If all information are provided by an applicant as required under section 10 and Form 6 and if the Corporate Application is otherwise not ineligible under section 11, the Adjudicating Authority is bound to admit the application and cannot reject the application on any other ground. Any fact unrelated or beyond the requirement under the I&B code or Forms prescribed under Adjudicating Authority Rules (Form 6 in the present case) are not required to be states or pleased.”
NCLT further places reliance on the Supreme Court ruling in the matter of M/s Innoventive Industries Ltd. V ICICI Bank Ltd. [Civil Appeal Nos, 8337-8338 of 2017]by observing such that –
“27. ……………. The corporate insolvency resolution process may be triggered by the corporate debtor itself or a financial creditor or operational creditor…..
- ……………… The moment the adjudicating authority is satisfied that a default has occurred, the application must be admitted unless it is incomplete……”
NCLT further placed reliance on the NCLAT decision in the matter of Neeta Chemicals (I) Pvt. Ltd. V State Bank of India where NCLAT clarified and held as under –
“8. It is not the case of the Financial Creditor (State Bank of India) that a winding up proceeding under the Companies Act or liquidation proceeding under the “ I&B Code” has been initiated against the ‘Corporate Debtor’. Therefore the Corporate Applicant is eligible to file application under section 10 of the ‘I&B Code,’ if there is a debt and default.”
NCLT observes that on the basis of the aforementioned Judicial precedents the Adjudicating Authority is bound to admit an application, if it is found to be complete by providing the requisite information under section 10 of the Code read with Form 6 of the Rules and it does not suffer from any ineligibility prescribed under section 11 of the Code, thus, once the IB Petition is found to be complete the Adjudicating Authority cannot reject the application on other grounds as agitated by the IDBI and other objectors. Further, NCLT observes that there can be no serious prejudice to their claim when the petition is admitted and CIRP is triggered, as they can still lodge their claim before the IRP/RP which shall be dealt with as per the Code.
NCLT finds that the present IB petition is complete and hence it deserves admission so as to trigger CIRP under section 10 of the Code. Thus, NCLT admits the present IB petition under section 10 of the Code and the Moratorium under section 14 of the Code is declared in respect of the Corporate Debtor/Applicant Company and directions are issued accordingly.