Hari Shankar Paper Products Pvt Ltd Vs

Under consideration is an Application filed by Financial Creditor for initiation Corporate Insolvency Resolution Process under Section 7 of the Insolvency and Bankruptcy Code, 2016 read with Rule 4 of the Insolvency and Bankruptcy Rules, 2016.

Brief facts of the case as stated by the Applicant are as follows:-

a.  That the Corporate Debtor, approached the Financial Creditor for availing business loan for a sum for Rs.34,00,000/- to meet the business related requirements. Subsequently, upon acceptance  of the  offer of the  aforesaid  Loan  facility,  Loan Agreement bearing Loan Account No. S000310216 was executed by and between  the Corporate Debtor  and the Financial  Creditor for an amount of Rs. 34,00,000/ - (hereinafter referred to as the "Loan Agreement"). As per the Loan Agreement, loan facilities was repayable in 35 Equated Monthly Instalments.

b.  The  Corporate Debtor committed breach of the Loan Agreement inter alia by making defaults in payment of the monthly instalments due and payable by the Corporate Debtor to  the  Financial  Creditor on  various  dates including 05.10.2018 till date. That the Corporate Debtor has failed to pay its outstanding dues, till date.

c.  This application is filed before this Adjudicating Authority to initiate a  Corporate Resolution  Process  in  respect  of  the Corporate Debtor namely M/s. Hari Shankar Paper Products Private Limited.

d.  The instant Application is filed for an amount of Rs. 35,92,190.01/- and the date of default is 05.10.2018.

It is seen from the record that notice was duly served on  15.11.2021, however, the Corporate Debtor failed to appear before this Adjudicating Authority. Hence, the Corporate Debtor was set Ex-pare-on-29-.11.2021 and the matter was adjourned to 11.01.2022, 31.01.2022, 22.02.2022, 08.03.2023 and then on 28.03.2022 on which  also the Respondent for remained absent, and the Counsel for Financial Creditor alone could be heard and the matter was reserved for orders.  Since the Respondent has neither filed its Counter nor availed the opportunity of being heard in the manner provided in accordance with principles of natural justice, we have no other option but to dispose of the instant application without the Respondent's assistance.

Heard. Perused the record.

After hearing the Petitioner and perusing record, we are of the view that in the instant case there is financial debt and there has been a default in repayment of the same and that this Adjudicating Authority is satisfied that the Financial Creditor has proved its case by placing evidence that default has occurred for which the Corporate Debtor was liable to pay. The instant case is also well within limitation. Further, it is pertinent herein to note that the Hon'ble Supreme Court, while deciding the matter in the case of INNOVENTIVE INDUSTRIES LTD Vs. ICICI BANK & ANR., in Civil Appeal Nos. 8337-8338 of 2017, held as under:

“………..The  moment the  adjudicating  authority  is  satisfied  that  a default has occurred,  the application  must be admitted unless  it is incomplete, in which case it may give notice to the applicant to rectify the defect within 7 days of receipt of a notice from the adjudicating authority. Under subsection (7), the adjudicating authority shall then communicate the order passed to the financial creditor and corporate debtor within 7 days of admission or rejection of such application, as the case may be."

The Financial Creditor has also fulfilled all the stipulations as required under the provisions of the IB Code, 2016 for the purpose of initiating Corporate Insolvency Resolution Process. In these circumstances, having satisfied with the submissions made by the Petitioner/Financial Creditor,  this Adjudicating Authority is inclined to admit the instant Application.

Accordingly, the instant application is  hereby admitted and this Adjudicating Authority  orders  the  commencement  of  the  Corporate Insolvency Resolution Process (CIRP) which shall ordinarily be completed within  the  timelines  stipulated  in  the IB Code,  2016 (as  amended), reckoning from the day of this order is passed.

The Financial Creditor filed a memo dated  15.03.2022, proposing the name of Mr. Sunit Jagdishchandra Shah as Interim Resolution Professional and he has filed his written consent in Form 2. Accordingly, this  Tribunal  appoints  Mr.  Sunit Jagdishchandra  Shah,  as  Interim Resolution Professional, having Registration No. IBBI/IPA-001/IP- P00471/2017-2018/10814,  e-mail id:  Sunit78@gmall.com  as  Interim Resolution Professional. He is directed to file  Authorization for Assignment within three days from the date of this order.

The IRP is directed to take charge of the Respondent/Corporate Debtor's management immediately. He is also directed to cause public announcement as prescribed under section  15 of the  IB  Code,  2016 within three days from the date the copy of this order is received, and call for submissions of claim in the manner as prescribed.

We direct the Financial Creditor/Petitioner to pay sum of Rs.2,00,000/- towards the advance fee of IRP and expenses towards CIRP, which shall be ratified later on by CoC.

The moratorium is hereby declared which shall have effect from the date of this order till the completion of CIRP. For the purposes referred to in section 14 of the IB Code, 2016. It is hereby ordered to prohibit all of the following namely:-

i. institution of suits or continuation of pending suits or proceedingsagainst the Corporate Debtor including execution of any judgment, decree or order in any court or law, tribunal arbitration panel or other authority;

ii.Transferring, encumbering, alienating or disposing of  by the Corporate Debtor any of its assets or any legal rights or beneficial interest therein;

iii. Any  action  to foreclose, recover or enforce  any  security  interest created bythe 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 (54 of 2002);

iv. The recovery of any property by an owner or lessor where such property is occupied by or in the possession of the corporate debtor.

v.  Notwithstanding anything contained in any other law for the time being  in force, a  license, permit,  registration,  quota,  concession, clearances or a similar  grant or right  given by the Central Government, State Government, local authority, sectoral regulator or any other authority constituted under any other law for the time being in force, shall not be suspended or terminated on the grounds of insolvency, subject to the condition that there is no default in payment of current dues arising for the use or continuation of the license, permit, registration, quota, concessions, clearances or a similar grant or right during the moratorium period.

The supply of essential goods or services of the Corporate Debtor shall  not  be  terminated  or  suspended  or  interrupted  during  moratorium period.  Further,  if the IRP considers supply of any goods or services critical to protect and preserve the value of the corporate debtor and manage the operations of such corporate debtor as a going concern, then the supply of such goods or services shall not be terminated, suspended or interrupted  during the period of moratorium,  except where  such corporate debtor has not paid dues arising from such supply during the moratorium period.  Furthermore, the provisions of Sub-section (1)  of Section  14 shall not apply to such transactions, agreements or other arrangement as may be notified by the Central Government in consultation with any financial sector regulator or any other authority.

The IRP shall comply with the provisions of Sections 13(2), 15, 17 86 18  of the Code. The Directors, Promoters or any other person associated  with the management of Corporate Debtor are directed to extend all. assistance and co-operation to the IRP as stipulated under Section 19 and for discharging is functions under Section 20 of the I&B Code, 2016.

The Petitioner/Financial Creditor as well as the Registry is directed to send the copy of this Order to IRP so that he could take charge of the Corporate Debtor's assets etc. and make compliance with this Order as per the provisions of I&B Code, 2016.

The  Registry is directed  to communicate  this  Order to  the  Financial Creditor and the Corporate Debtor.

The Registry shall also communicate this Order to the ROC, Hyderabad for updating the status of the Corporate Debtor in the MCA website.

Accordingly, this Petition is admitted.