In the matter of K.Y Tobacco Works Private Limited

ORAL ORDER As can be seen from Part-IV of the application, the corporate debtor defaulted to pay an amount of INR 6,62,98,195/- to the operational creditor. The dates of default as mentioned in Part-IV (2) of the application are 29.01.2022, 19.05.2023, 21.09.2023 & 03.10.2023. Part-IV of the application reads thus:-

CP(IB)-20/(ND)/2024 Kanodia Technoplast Ltd. vs. K.Y. Tobacco Works Pvt. Ltd.

CP(IB)-20/(ND)/2024 Kanodia Technoplast Ltd. vs. K.Y. Tobacco Works Pvt. Ltd.

CP(IB)-20/(ND)/2024 Kanodia Technoplast Ltd. vs. K.Y. Tobacco Works Pvt. Ltd.

CP(IB)-20/(ND)/2024 Kanodia Technoplast Ltd. vs. K.Y. Tobacco Works Pvt. Ltd.

CP(IB)-20/(ND)/2024 Kanodia Technoplast Ltd. vs. K.Y. Tobacco Works Pvt. Ltd.

CP(IB)-20/(ND)/2024 Kanodia Technoplast Ltd. vs. K.Y. Tobacco Works Pvt. Ltd.

CP(IB)-20/(ND)/2024 Kanodia Technoplast Ltd. vs. K.Y. Tobacco Works Pvt. Ltd.

2. In reply filed by the corporate debtor the liability to pay the defaulted amount has been accepted. Para 4 of the reply reads thus:- “4. That PART-IV of the application is the details of the debts and defaulted debts, payments and default amount which are long-standing old debts. The details given thereunder clearly states that the Corporate debtor is regular in payment of invoices for the period 2021-22, 2022-23 and 2023-24. The following tables summarises the payments made against the debts:

The above table clearly states that in the financial year 2022-23, the Corporate Debtor has paid Rs. 10,50,00,000/- against the supplies (from Sonipat Unit) of Rs. 4,54,73,548/-, the full amount of Rs. CP(IB)-20/(ND)/2024 Kanodia Technoplast Ltd. vs. K.Y. Tobacco Works Pvt. Ltd.

69,30,789/- against the supplies (from Delhi Unit) of Rs. 69,30,789/- and paid full amount of Rs 71,25,507/- against the supplies (from Sambalpur Unit) of Rs. 71,25,507/-. In addition, for the Operational year 2023-24, the Corporate Debtor has paid the full amount of Rs 4,77,900/- against the supplies (from Delhi Unit) of Rs. 4,77,900/- on 11.05.2023. The above details are drawn from the applicant's submissions which shows that the corporate debtor has made complete payments for the year 2021-22, 2022- 23 and 23-24. In addition, Corporate Debtor paid an additional sum of Rs. 5.95 crore in the financial year 2022-23 against the supplies during this period. The above details show the intention of the corporate debtor to pay off the debts of the Operational Creditor but presently, the financial status of the corporate debtor doesn't permit to pay the debts. Therefore, the debts in question pertainto prior to the COVID- 19 period. After COVID-19, the business of the corporate debtor collapsed and could not be revived adequately to its pre-covid level. The corporate debtor and its management are trying to raise funds through strategic investors and to streamline the Operational of the corporate debtor.”

3. As can be seen from Sec. 9(5) of the IBC, 2016, the Adjudicating Authority shall within 14 days of the receipt of the application under Sec. 9 pass an order of admitting the application filed under Sec. 9(2) of the Code if:- a) the application made under sub-section (2) of Section 9 is complete; b) there is no payment of unpaid operational debt; c) the invoice or notice for repayment to the corporate debtor has been delivered by the operational creditor; d) no notice of dispute has been received by the operational creditor or there is no record of dispute in the information utility; and CP(IB)-20/(ND)/2024 Kanodia Technoplast Ltd. vs. K.Y. Tobacco Works Pvt. Ltd.

e) there is no disciplinary proceedings pending against any Resolution Professional proposed under sub-section (4) of Section 9 of IBC, 2016.

4. The notice issued by the Applicant to CD under Section 8(1) of IBC, 2016 is placed on record as Annexure-9 to the application. The corporate debtor did not give any reply to the notice. Apparently, he has not alleged any dispute qua the amount defaulted to be paid far less any pre-existing dispute. Though the corporate debtor has specifically admitted the liability to repay the amount, but for our satisfaction, we called upon the Ld. Counsel for the Applicant to substantiate the plea of default, with reference to Section 3(12) of IBC, 2016 which reads thus:- “3. Definitions.— ….. (12) “default” means non-payment of debt when whole or any part or instalment of the amount of debt has become due and payable and is not paid by the debtor or the corporate debtor, as the case may be;”

5. Thus, the Ld. Counsel could draw our attention to the copies of the invoice issued by the Applicant demanding the payment, enclosed with the application as annexure with the demand notice, which is placed on record as Annexure-A9 to the application (Page Nos. 76-285). The affidavit in terms of the provisions of Section 9(3)(b) is placed on record at Page-29 of the application. To espouse the satisfaction of requirement of Section 9(3)(c) of IBC, 2016 i.e. the certificate from the financial institution maintaining the account of the operational creditor confirming that there is no payment of unpaid operational debt by the corporate debtor, Ms. Vatsala Kak, the Ld. Counsel for the CP(IB)-20/(ND)/2024 Kanodia Technoplast Ltd. vs. K.Y. Tobacco Works Pvt. Ltd.

Applicant could draw our attention to Annexure-A14, which are certificates issued by the State Bank of India. One of the certificates issued by the financial institution (SBI) reads thus:-

6. Ld. Counsel for the Applicant could also draw our attention to a declaration given by the RP in the prescribed form i.e. Form-2 to the Adjudicating Authority Rules, 2016.

7. As can be seen from the concerned Form, the IP whose name is proposed by the Applicant to be appointed as RP has given a specific declaration that no

CP(IB)-20/(ND)/2024 Kanodia Technoplast Ltd. vs. K.Y. Tobacco Works Pvt. Ltd.

disciplinary proceedings are pending against him. The relevant excerpt of the declaration reads thus:- “iv. Certify that there are no disciplinary proceedings pending against me with the Board or the Insolvency Professional Agency, “Indian Institute of Insolvency Professionals of ICAI” where I am a member;”

8. In view of the aforementioned, we are satisfied that the requirement of Section 9(3) & (5) of IBC, 2016 are satisfied. Thus, we are left with no option but to admit the captioned application. Ordered accordingly. Resultantly, a declaration with respect to moratorium is made under Section 13 for the purposes referred to in Section 14 of the IBC, 2016. As has been proposed by the Operational Creditor, Mr. Varun Vashisht is appointed as IRP, in terms of the provisions of Section 13(1)(c) read with Section 16(3)(a) of the IBC, 2016, having IBBI Registration No. IBBI/IPA-001/IP-P01919/2020- 2021/13141, email id: cavarunvashisht@gmail.com. The Court Officer/Registrar of this Adjudicating Authority is directed to inform the IRP about confirmation of his appointment forthwith. The term of the Interim Resolution Professional shall continue till the date of appointment of the Resolution Professional under Section 22 of the IBC, 2016 or the development if any under Section 12A of the Code or otherwise, whichever is earlier. The IRP is directed to act in terms of the provisions 13(1)(b) and Section 13(2) read with Section 15 of the IBC, 2016 immediately. In other words, the IRP shall cause a public announcement of initiation of Corporate Insolvency Process qua the Corporate Debtor and call for submission of claim under Section 15 immediately. The public announcement shall contain the information

CP(IB)-20/(ND)/2024 Kanodia Technoplast Ltd. vs. K.Y. Tobacco Works Pvt. Ltd.

stipulated in Section 15(1) of the IBC, 2016. We are sanguine that the IRP shall act in due deference to the provisions of IBC, 2016, particularly Section 12, 15, 17, 18, 20 & 21 thereof as also Regulation 6, 6A, 12A, 13, 14, 16A and 17 of the IBBI (Insolvency Resolution Process for Corporate Person) Regulations, 2016. It goes without saying that in the wake of the moratorium, there shall be prohibition of all the following: - (a) The institution of suits or continuation of pending suits or proceedings against the corporate debtor including execution of any judgement, decree or order in any court of law, tribunal, arbitration panel or other authority; (b) Transferring, encumbering, alienating or disposing off by the corporate debtor any of its assets or any legal right or beneficial interest therein; (c) 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 (d) The recovery of any property by an owner or lessor where such property is occupied by or in the possession of the corporate debtor.

9. Nevertheless, it is made clear that a license, permit, registration, quota, concession, clearance or similar grant or right (if any) given by the Central Government, State Government, Local Authority, Sectoral Regulator or any Authority constituted under any other law for the time being in force shall not be suspended or terminated qua the Corporate Debtor on the ground of Insolvency, subject to the conditions that there is no default in payment of CP(IB)-20/(ND)/2024 Kanodia Technoplast Ltd. vs. K.Y. Tobacco Works Pvt. Ltd.

current dues arising for the use of continuation of the license, permit, registration, quota, concession, clearance or similar grant or right during the moratorium period. Besides, the supply of essential goods or services to the Corporate Debtor shall not be terminated or suspended or interrupted during the moratorium period, except where the Corporate Debtor does not pay the dues arising from such supply during the moratorium period or any other explainable situation.

10. The Operational Creditor shall deposit an amount of Rs. 2,00,000/- with the IRP to enable him to meet the expenses to be incurred at the initial stage of the CIRP. The expenses shall be reimbursed by the Committee of Creditors, to the extent the same are ratified by it. The amount of expenses ratified by the Committee of Creditors shall be treated as CIRP cost. It goes without saying that in terms of Regulation 34 of IBBI (Insolvency Resolution Process for Corporate Person) Regulations, 2016, the CoC shall fix the expenses to be incurred by the IRP/ RP and the expenses shall constitute IRP cost.

11. A copy of this Order shall be communicated to the Operational Creditor, the Corporate Debtor and the IRP mentioned above by the Court Officer/Registry of this Adjudicating Authority. In addition, a copy of the Order shall also be forwarded by the Court Officer/Registry to the IBBI for their records.

Sd/- Sd/- (SUBRATA KUMAR DASH) (ASHOK KUMAR BHARDWAJ) MEMBER (T) MEMBER (J) Ashima/Ruchita CP(IB)-20/(ND)/2024 Kanodia Technoplast Ltd. vs. K.Y. Tobacco Works Pvt. Ltd.