In the matter of Trident Tools Ltd.
- CitationC.P. IB)-82/(MB)/2019
Ratio decidendi
The rule this decision rests on
The debt claimed here was held to qualify as a "financial debt" within the meaning of section 5(8) of the Insolvency and Bankruptcy Code, 2016, on the documents annexed to the petition, so that the financial creditor was entitled to initiate the corporate insolvency resolution process under section 7 of the Code. Where the default is established by the financial creditor's records and the corporate debtor's own acknowledgment of liability, and the corporate debtor's reply does not dispute the debt but relies on hardship and on pending proceedings against its secured assets, the Adjudicating Authority may admit an application under section 7 and, upon admission, the moratorium under section 14 comes into operation, prohibiting the institution of suits or parallel proceedings and the liquidation of the debtor's assets, while the supply of essential goods or services to the corporate debtor is not to be suspended.
Written by Miss Lucy from the judgment below, not taken from a headnote.
Judgment
As delivered
In the matter of Punjab National Bank : Petitioner/ Financial Creditor V/s Trident Tool Ltd. : Respondent/ Corporate Debtor
Order delivered on : 18.09.2019
Coram: Hon’ble Shri M.K. Shrawat, Member (Judicial)
For the Petitioner(s): : 1. Ms. Bhagyashri Ranade, Advocate, i/b. Intralegal. For the Respondent(s): : 1. Ms. Sarita Yadav, i/b. Udaya Samudrala.
Per M.K. Shrawat, Member (Judicial). ORDER 1. A Petition in Form No.1 was filed on 30.11.2018 by the Financial Creditor (Punjab National Bank, hereinafter “PNB”) u/s.7 of the Insolvency & Bankruptcy Code, 2016 read with Rule 4 of the Insolvency and Bankruptcy Application to Adjudicating Authority Rules, 2016 for initiating Corporate Insolvency Resolution Process against the Corporate Debtor M/s. Trident Tool Ltd. (hereinafter “TTL”), Mumbai 400 101, for an outstanding Financial Debt amount of ₹97,49,15,115/- (Rupees Ninety Seven Crores, Forty Nine Lakhs, Fifteen Thousand, One Hundred and Fifteen only). As per Letter No. SM/C/94/2005 dated 04.07.2005, the erstwhile name of the Trident Tools Ltd. was M/s. Singarg Manufacturers up to 30.06.2005.
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Brief background of the case:-
2. It is informed by the Financial Creditor (PNB) that vide Sanction Letter dated 10.02.2000, the Corporate Debtor (TTL) was originally granted limits amounting to ₹58 Lakhs. The said limits were allegedly enhanced from time to time. Vide Sanction Letter dated 21.01.2013, it was stated to be enhanced to ₹19 Crores; thereafter, it was further enhanced to ₹26.60 Crores vide Sanction Letter dated 06.05.2013. The limits were last enhanced on 06.07.2015 to ₹67.10 Crores vide Sanction Letter dated 06.07.2015. Copy of sanction letters are annexed with the Petition and are at Annexure-B to Annexure M of the Petition.
2.1. Statement of Accounts of the Corporate Debtor for the period from 28.08.2010 to 31.03.2016 is on record.
2.2. The limits were allegedly secured by registered mortgage by the Corporate Debtor and Vimal Textiles.
3. The account was stated to be defaulted and became NPA on 31.03.2016 as per the Reserve Bank of India’s guidelines. The Financial Creditor initiated action under SARFAESI Act and issued Sec.13(2) Notice on 02.04.2016. The Financial Creditor also filed an OA before DRT-1, Mumbai which is still pending before it.
4. The total amount of default is allegedly to be Rs.97,49,15,115/- as on 31.10.2018.
5. The Financial Creditor has annexed the List of Dates and Events giving details of various facilities sanctioned/ enhanced, reproduced below:-
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6. The Petitioner/ Financial Creditor has furnished the following Particulars of Claim as on 31.10.2018 amounting to Rs.97,49,15,115.57, reproduced below:-
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7. The Petitioner Creditor has claimed that the Respondent Debtor had accepted the outstanding liability by executing Balance Confirmation Letters, all dated 01.03.2016.
8. The Financial Creditor further stated that the limits were secured by registered mortgage by the Corporate Debtor and Vimal Textiles.
9. The Petitioner Creditor has informed that it had entered into a ‘Supplementary Agreement for Restructuring of Limits’ on 22.07.2015 with the Corporate Debtor as per Schedule-I & II, reproduced below:-
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10. The Petitioner further submitted that the Accounts of the Corporate Debtor became NPA on 31.03.2016 as per RBI guidelines. As a consequence, Notice under Page | 8
No. C.P.(IB)-82/(MB)/2019 section 13(2) of the SARFAESI Act 2002 was initiated by the Financial Creditor on 02.04.2016.
Submissions from the side of the Respondent:-
11. The Respondent Debtor in its Affidavit in Reply dated 10.07.2019 has pleaded that the business of the Corporate Debtor was adversely affected after the year 2015 due to rise in input costs, increase in Customs Duty, Grey market/ Smuggling from China, Competition from European Countries, which were allegedly beyond the control of the management of the Corporate Debtor.
12. The Corporate Debtor also submitted that it had substantial assets which were exclusively secured to the Financial Creditor. The Financial Creditor initiated action under SARFAESI Act, 2002 and thereafter took possession of the factory premises which all equipments and machineries along with raw materials and finished products lying therein.
13. The Respondent Debtor further pleaded that the Financial Creditor filed Proceedings before the Debt Recovery Tribunal by way of O.A. No.52 of 2018 which is still pending before the DRT-I, Mumbai.
FINDINGS:-
14. Heard the submissions of both the sides, perused the contents of the Petition as well as the reply of the Respondent in the light of the annexed evidences.
15. It is pleaded by the Petitioner/ Creditor that the Corporate Debtor had defaulted to make repayments of the loan in accordance with the terms of the Loan Agreement.
16. In the light of the above discussion and on due perusal of the documents annexed, the Debt is to be qualified as “Financial Debt” as defined under section 5(8) of Insolvency & Bankruptcy Code, 2016. As a result, the Financial Creditor has filed this Application for initiating Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor.
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17. Since this is a Petition of “Financial Creditor”, therefore, the Insolvency Process shall commence as prescribed under Section 7 of I&BC, 2016.
18. The Petitioner / Financial Creditor has proposed the name of the IRP Mr. Nitin Vishwanath Panchal, Address: A-203, Suraj Eleganza-1CHS, Pitambar Lane, Near Dena Bank, Mahim West, Mumbai 400016, email id: waterfall0421@gmail.com. The proposed IRP has furnished the requisite Certificate on Form No.2 that no Disciplinary Proceeding is pending. On due consideration, the proposal of appointment of the IRP is hereby confirmed.
19. Upon Admission of the Application and Declaration of “Moratorium” the Insolvency Process such as Public Announcement etc. shall be made immediately as prescribed under section 13 read with section 15 of The Code. The appointed IRP shall perform the duties as an Interim Resolution professional as defined under section 18 of The Code and inform the progress of the Resolution process and the compliance of the directions of this Order within 30 days to this Bench. A liberty is granted to intimate even at an early date, if need be.
20. It is hereby pronounced that the “Moratorium” as prescribed under Section 14 of the Code 2016 shall come into operation. As a result, institution of any suit or parallel Proceedings before any Court of Law are prohibited. The assets of the Debtor must not be liquidated until the Insolvency Process is completed. However, the supply of essential goods or services to the Corporate Debtor shall not be suspended or interrupted during “Moratorium Period”. This direction shall have effect from the date of this Order till the completion of Insolvency Resolution process.
21. Accordingly, this C.P.(IB)-82/(MB)/2019 stood “Admitted”.
22. The Corporate Insolvency Resolution Process is commenced from the date of this Order. Sd/- M.K. SHRAWAT Member (Judicial) Date : 18.09.2019 ug
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