In the matter of Priknit Retails Limited

IN T. H .C I H N A A N T D IO IG N A A R L H C OMPANY LAW TRIBUNAL - BENCH, CHANDIGAi--;"- (Exercising powers of Adjudicating Arii;.i,v the lnsolvency and Bankruptcy Co-de, ZO16:i, CP (lB) No Under Section 7 the lnsolvency & Code,2016 ln the matter of: State Bank of lndia having its registered office at Madame Cama Road Nariman point, Mumbai -400021, Maharashtra Also: Branch at Stress Asset Management, Fountain Chownk, Civil Lines, Zonal Business office, Ludhiana, Punjab Through Kailash Chander, Assistant General Manager C reditor Versus Priknit Retails Limited, Having its registered office at B-XXXV/s39-A/10 Jalandhar Byepass Road, Karabara, Near Shiv puri, Ludhiana - 14'1008, punjab

CoTam: HON,BLE MR. AJ,AY KUMAR VATSAVAYI, MEMBER (J HON,BLE MR. PRADEEP R. SETHI, MEMBER (TEcHI\iI( For the Petitioner Mr. Saurav Goyal, Advocate the Respondent 1. Mr. Harsh Garg, Advocate 2. Mr. Pulkit Jain, Advocate

CP (lB) No.398/Chd/Pb/2018

Per: Aiav Kumar Vatsavavi, Member (Judiciall

JUDGEMENT

The application in the prescribed Form No.1 is by State Bank of lndia (hereinafter referred to as Bank) for initiation Corporate lnsolvency Resolution process (ClRp) in the case of priknit Limited. (hereinafter referred to as Corporate Debtor). The application is under Section 7 of the lnsolvency and Bankruptcy Code, 2016 (Code read with Rule 4 of the lnsolvency and Bankruptcy (Application to Authority) Rutes, 2016 (Rules). The apptication is signed by Kailash Chander, Assistant General Manager, Stress Asset Management at Fountain Chownk, Civil Lines, Zonal Business office, Ludhiana. affidavit verifying the contents of the application is at pages 2Z to B. The authorization in favour of Shri Kailash Chander as constituted for the Bank is at page 29 of the petition. Regulation 76 & 77 of the Bank of lndia General Regulations, 1g55 and The Gazette of lndia No.44, ing the order dated 31.08.2005 of the Executive Committee of the Board, under which he derives power to sign the petition are at page Nos. to 35. 2. The copy of certificate of incorporation is at Annexure A-3 and Memorandum and A(icles of Association of Corporate Debtor are to be filed at Annexure A-4 of the petition. The Corporate Debtor is to be incorporated on 23.1Q.2007 and the registered address is stated to be at B- XXXV/S39-A/10, Jalandhar Byepass Road, Karabara, Near iv Puri, Ludhiana - 141008, Punjab. Therefore, the jurisdiction lies with this Tribu nal. l/

CP (18) No 398/Chd/Pb/2018

3. lt is stated in part-lV of Form No.1 that the Debtor was sanctioned credit facilities on 20.09.200g and 30.01 and the respective dates of disbursement are indicated in the statement accounts thereof. The credit facilities sanctioned are as under:- Facility by State Aant of lndia Limit ({ in Crores} Casn CreOit 1t-typotnecationJ 45.00 i\^-;\r-; -G (6 - o .- o K ueDt) 325 Term Loan I I 0.58 -- I Term Loan ll 0.44 I Term Loan lll 095 TermToan M 1.90 -ermToan Fresh 8.00 Total Term Loan 11 .87 Total FB Limit 56.87 ILC/FLC 7.00 BG 0.25 FLC 1.70 Total NFB Limit 7.00 SLC 5.00 Total FB & NFB 68.87

Facility by State Limit (t in crores) Bank of Patiala CC 12.00 SLC 180 Total 13.80

It is stated that the loan accounts of the Corporate declared NPA on 31.03.2009 due to the default in repayment of ln Part-V of Form No.1, the particulars of security held g iven. that the credit facilities are primarily secured by way of of lands. lt is further stated that the sanction letters dated .i g. .200B and 27.08.2008 are filed at Annexure A-S & A_6 of the petition and the terms and conditions of the sanction letters were duly by the Corporate Debtor through its authorised Director(s)/signatories vide Board Resolutions of Corporate Debtor dated 19.04.200g and 11.09 008. Also, copy of a charge verification report is attached as Annexure 20 of the petition. Annexure A-23 are the Valuation reports, Annexure A_1 is a list of various properties mortgage and Annexure A-1.1 is the copy of Deeds. The copy of the report of Credit lnformation Bureau lndia Ltd.( dated 19.07.2018 is stated to be attached as Annexure A_22 of the. The statement of account pertaining to the credit facilities duly certi under the Bankers Books Evldence Act, 1g91 along with the calculation rIS are stated to be attached as Annexures A-14 to A_19 of the petition. is stated that the debts and securities stand acknowledged vide Board dated 19.04.2008 and 11.09.2008. 5 lt is also stated in part-V of Form No. lthat original OA No.157 of 2012 has been filed against the Corporate Debtor other obligants with the Debt Recovery Tribunal (DRT-|) Chandigarh the recovery certificate dated 21 .07.2016 was issued. The recovery (RC No.457 of 2017) is stiil pending adjudication before the Officer, Debt Recovery Tribunal, Chandigarh. 6. Due to the default in repayment of loan instalments, Bank issued a notice dated 12.10.2011 (Annexure A-12) under Section 13(2) of. the SARFAESI Ac|,2002.In this notice, it is informed to the debtor : that the operation and conduct of the financial assista nce/credit facilities ,ri --' . . --,_.\., have become irregular and the debt has been classified as Non-p< r\,. ')" .. CP (lB) No 398/Chd/Pb/2018

Asset (NpA) in accordance with the directives/gu iderines of Reserve Bank of lndia. The outstanding amount as on 08..10.20.1 1 was <113,37,34,402/_ incrusive of interest as per this notice. The amount outstanding incruded the facirities offered by sBr, sBop as we, as Arahabad Bank. Further, another notice under Section 13(4) of the I SARFAES Acl, 2002 was issued on .09.2017 to the 1 1 respondent_corporate debtor for undertaking the possession of the two properties as it has faired to repay the defaurt amount. copies of these notices are found to be attached as Annexures A-12 and A- 1 3 with the petition. 7. ln part-llt of Form No.1 Mr. Sanjay Kumar Aggarwal, Regn. No. rB'r/rpA-002/tp-Noo126/2017-2o1,r1o2g5 has been proposed as rnterim Resorution professionar (rRp), Form No. 2 submitted by the proposed rRp is stated to be attached as Annexure A_24 of lhe petition. B. Vide order dated 24.12.20i 8, notice of the petition was directed to be issued to respondent_corporate debtor. Reply has been filed by the corporate Debtor by Diary No. 1514 dated 26.03.2019. rt is stated that the petitioner bank is onry one of the member of consortium of banks which had sanctioned varous credit facirities to the corporate Debtor. rt is arso stated that a "one Time Setrement" proposar is under way before the competent authority and same is rikery to be accepted by the petitioner-financiar creditor.

9. lt is further submrtted that the Corporate Debtor is ready to pay the outstandrng amount of the petitioner-finan cral creditor as suggested in the latest ors retter and proposar which is rying with the petitioner-bank for I consideration. rt has arso been averred that the roan account of the corporate l debtor was setfled by the financiar creditor for a sum of {30 crores and a \ ., u-f r l l consent decree for the same has been fired, for which the corporate debtor has already paid {15 crores as part payment of the One Settlement amount. The consent decree was rejected by the creditor unilaterally and corporate debtor was not informed about the. lt is submitted that the corporate debtor is willing to make the payment as per the consent decree for One Time Settlement, which is active consideration of the petitioner_bank. 10. The Corporate Debtor in its reply has raised issue of limitation by stating that the debt by the financiar creditor was granted in 2008 and exceeds the limitation of 3 years, making the debt time-barred. 11. During the course of the hearing, the learned for the Bank relied on the petition filed and stated that the requirements Section 7 of the Code are satisfied and the petition be admitted.

12. We have carefully considered the submissions learned counsel for the bank and the Corporate Debtor and have also the record. 13. The learned counsel for the petitioner Bank stated that OTS is pending at present. He also stated that the present due is after adj inq the {15 crores, paid by the appricant. obtaining a consent decree on earlier occasion from DRT, joinfly along with Allahabad Bank, ts not a bar file the instant C.P. under the Code, by the petitioner Bank, individually, long as the corporate debtor failed to pay the debt due to the petitioner. 14. ln Form No.1 and accompanying Annexures, the brought out that credit facilities were sanctioned to the debtor on 20.09.200A and 30.01,2009 and that in respect of these facilities, acknowledgement of debt was furnished by the Debtor CP (18) N0.398/Chd/pb/2018 vide Board Resolutions dated 19.04.2008 and 1i.09.2008 A-7 and A-9 of the petition). The copies of the statement of account to the credit facilities duly certified under the Bankers Books E Act 1891 have been filed as Annexures A_14 to A-19 of the petition. The due along with the calculation sheets along with due interest up to including 30.09.2018 is given as under:_

3 0.09.2018 {5865631 1 3.30 <2025101139J9 <tz1oqtzz1.oa ?3227187 55.s2 tf,. It has been stated by the Bank that original OA No.157 of 2012 tiled against the respondent-corporate debtor other obligants with the DRT-|, Chandigarh whereln the recovery dated 21 .07.2016 was issued. The OA is filed by the Bank against the Debtor and five others being Director/Guarantor/Mortgagor. ln 4 of the order dated 21 .07.2016, it was held by the DRT_|, Chandigarh since the defendants have failed to comply with the terms and cond as per Annexure C-l of the Consent Decree dated 22.01.2015 based on the OTS dated 09.04.20'14, MA RR 5005 of 2016 in OA No.157 of 2O12. F vide MA 89 of 2016, a recovery certificate was issued, wherein the were ordered to pay 11 ,22,66,93,975/- with interest, till the along with t"1,50,000/- as costs. The recovery certificate is still pending adjudication before the Recovery Officer, DRT, Chandigarh. 1 Section 7(5)(a) of the Code is as follows:_ .,] "(5) Where the Adjudicating Authority is satisfied that_

CP (lB) No.398/Chdi Pb/2018 (a) a default has occurred and the application section (2) is complete, anA tneie is ii progeedlngs. pending against the proposed protessrcnal, it may, by order, admit such aoo 17. ln the present case, the occurrence of default is by the details furnished by the bank including report of ClBlL, copies of statement of accounts duly certified under the Bankers Books Act 1891, Balance Confirmation letters dated 14.e2.2009 by the corporate debtor in form of Revival Letter and Recovery 21 .07.2016 of the DRT-|, Chandigarh. 18. It is a proven fact that the Corporate Debtor has not the loan facilities granted by the petitioner-financiar creditor. This could also be seen in the balance sheet for the year ending 31.03. 12 of the respondenlcorporate debtor wherein the loan facilities by the are being shown under the term loan head under the secured of the corporate debtor's balance sheet (page 509). Copy of the sheet is attached as Annexure A-21 of the petition. '19. The application filed in the prescribed Form No. lis complete. 20. The proposed lnterim Resolution professional, Sanjay Kumar Aggarwal has filed Form No.2 (Annexure A_24 of petltion) certifying that there are no disciplinary proceedings pending him with the Board so far or lnsolvency professional Agency (lCSl). 21. The conditions provided for by Section 7(5)(a) of the being '.-.: . : satisfied in the present case, we direct that the application for of i. crRp against priknit Retairs Limited be admitted. The directrons llI rium and appointment of lRp are given below. i CP (lB) No 398/Chd/Pb/2018

22. We declare the Moratorium in terms of sub-section ( ) of Section 14 of the code as under:- (a) the institution of suits or continuation of pending suits or proceedings against the debtor including execution of any judgment, decree or order in any court of law, trjbunal, arbitration or other authority; (b) transferring, encumbering, alienating or by the corporate debtor any of its assets or legal right or beneficial interest therein. (c) any action to foreclose, recover or any security interest created by the corporate debtor in respect of its property including any action the Securitization and Reconstruction of Financial and Enforcement of Security lnterest Act,2OO2: (d) the recovery of any property by an or lessor where such property is occupied by or in the of the corporate debtor. 23. It js further directed that the supply of essential goods services to the corporate debtor as may be specified, shall not be or suspended or interrupted during moratorium period. The of Section 14(3) shall however, not apply to such transactions as may be notified by the Central Government in consultation with any sector regulator and to a surety in a contract of guarantee to a corporate The order of moratorium shall have effect from the of this till completion of the corporate insolvency resolution p or untrl CP (lB) No 398/Chd/Pb/2018 this Bench approves the resolution plan under sub-section (1) Section 3'l or pass an order for liquidation of corporate debtor under 33 as the case may be.

25. The following directions are also issued in appointment of the lnterim Resolution professional:- i) Appoint Mr. Sanjay Kumar Aggaruvat, of #14, New Punjab Mata Nagar, Main Street, Road, - Ludhiana 141013, having Registration No. IBBI/IPA- 002/lP-N00126t2012-2018t10295 and email address saniavaoqarwal.fcs@qmail.com, Mobile No. 105414 as an lnterim Resolution professional; The term of appointment of Mr. Sanjay Kumar shall be in accordance with the provisions 16(5) of the Code; iii) ln terms of Section 1 7 of the Code, from the of this appointment, the powers of the Board of s hall stand suspended and the management of affa irs shall vest with the lnterim Resolution and the officers and the managers of the Debtor shall report to the lnterim Resolution who shall be enjoined to exercise all the powers as are vested with lnterim Resolution professional strictly lnterim other control and custody of the assets over which Corporate Debtor has ownershlp rights recorded in balance sheet of the Corporate Debtor etc. as Section 18 (1) (f) of the Code. The lnterim Professional is directed to prepare a inventory of assets of the Corporate Debtor; iv) The lnterim Resolution professional shall act in accordance with the Code, all the framed thereunder by the Board or the Central Govern and rn accordance with the Code of Conduct ing his profession and as an lnsolvency professional high standards of ethics and morality; v) The lnterim Resolution professional shall a public announcement wrthin three days as under Regulation 6 of the lnsolvency and Bankruptcy of lndia (lnsolvency Resolution process for Persons) Regulations, 2016 of the initiation of the Corporate lnsolvency Resolution process in of Section 1 3 (1) (b) of the Code read with calling for the submission of claims against Debtor; It is vi) hereby directed that the Corporate, its Directors, personnel and the persons with the management shall extend all cooperation the No.398/Chd/Pb/2018 lnterim Resolution professional in managing affairs of the Corporate Debtor as a going concern extend all cooperation in accessing books and as well as assets of the Corporate Debtor; vii) The lnterim Resolution professional shall collation of all the claims received against the debtor and the determination of the financial of the corporate debtor constitute a committee of and shall file a report, certifying constitution of the to this Tribunal on or before the expiry of thirty from the date of his appointment, and shall first meeting of the committee within seven days of the report of constitution of the committee; and viii) The lnterim Resolution professional is directed regular progress report to this Tribunal every zo.

A copy of this order be communicated to both the. The learned counsel for the petitioner shall deliver copy of thls to the lnterim Resolution professional forthwith. The Registry is also to send copy of this order to the lnterim Resorution professionar at hi email address forthwith - 1''1 - - 3d- ,.,N (Pradeep R. Sethi) (Ajay Kumar Membe(Technical) Membe( 'a I Sept, 20i9 ,fl anchal

CP (lB) No.39O/Chd/pb/2o18 "*''5f'?rloou*5J[XicoPY