M/s. Sunstar Hotels and Estates Private Limited vs M/s McDowell Holdings Limited

Ajay Kumar Vatsavayi, Member (J)

The present Petition is filed, under Section 7 of the Insolvency and Bankruptcy  Code, 2016 (hereinafter referred to as 'IBC/Code') by M/s.  Sunstar Hotels and Estates Private Limited (hereinafter referred to as Applicant/Financial Creditor') to  initiate  the  Corporate  Insolvency  Resolution  Process (`CIRP')  against  M/s. McDowell Holdings  Limited  (hereinafter referred  to  as  'Respondent/Corporate Debtor).

The  Corporate  Debtor namely M/s.  McDowell Holdings Limited is a Company  incorporated on 01.03.2004 under the provisions of the Companies Act,  1956 with CIN:L05190KA2004PLC033485 having its registered office at UB Towers, Levels 12, UB City, 24, Vittal Mallaya Road, Bangalore 560 001, which falls within the territorial jurisdiction of this Adjudicating Authority. The Nominal Capital of the Respondent/Corporate Debtor is Rs.15,00,00,000/- and the Paid-Up Share Capital  is  Rs. 13,99,22,580/-  as  per  the  Company  Master  Data  attached  at Annexure-1 (1) of this application.

The  present application has been  filed  by the  Financial  Creditor against the Corporate Debtor in respect of the default amount of Rs.16,80,66,348/- (Rupees Sixteen Crore Eighty Lakhs Sixty Six Thousand and Three Hundred and Forty Eight only) as on 30.11.2021.

It is  submitted that the Corporate Debtor had availed Inter-Corporate Deposit (ICD)  from an entity named Zuari Fertilisers  and Chemicals  Limited  ("ZFCL") which thereafter merged with Zuari Agro Chemicals Limited ("ZACL"). In order to facilitate a timely repayment of the outstanding sum of ICD, the corporate debtor entered into a Settlement Agreement dated 17.06.2019 with ZACL and Mangalore Chemicals   and   Fertilizers   Limited ("MCFL").   As   per   the   arrangement contemplated  in  the  said  settlement  agreement,  a  sum  of Rs.10,60,56,810/- along with  the  interest,  being the  outstanding ICD,  was to be  repaid in  two tranches:  (i) By way of sale and transfer to ZACL,  11,85,151  shares of MHL in MCFL; and (ii) by procuring release of shares of United Breweries Limited and amounts realized from the sale of shares of United Breweries Limited.

It  is  further  submitted  that  the  interest  outstanding  as  on  the  date  of the agreement  was Rs.8,36,59,986/-.  The  repayment  of  borrowings,  was  to  be completed, within a period of 18 months, which expired on 16.12.2020. However, the Corporate Debtor was unable to comply with the terms of the said agreement, and  thus,  sought for an extension of the  agreement dated  17.06.2019,  by a further period of one year, vide communication dated 15.12.2020.

It is stated that pursuant to the request of the corporate debtor, ZACL extended the  time  period  of the  agreement  dated  17.06.2019,  such  that the  term  for repayment of the remaining outstanding ICD was modified as 24 months and obligations therein were to be complied with, by 16.09.2021. As per the modified terms of the agreement, the corporate debtor, was required to make payment towards (i) the remaining sum due consisted of Rs.5,68,13,785.95/-, (ii) interest of Rs.7,38,11,381.19/- and (iii) interest accrued on the sum outstanding from completion of payment of tranche 1. However, despite the extended timelines, the corporate debtor was unable to meet the repayment obligations towards ZACL and requests for such further extension of time by the Corporate Debtor, were rejected by ZACL.

It is further stated that the financial creditor had entered into discussions with ZACL and the corporate debtor, to restructure the repayment obligations and to take over the rights of ZACL. As per the arrangement the financial creditor was to discharge the entire liability of the corporate debtor and step into the shoes of ZACL and claim repayment from the corporate debtor.  The terms of the said arrangement were crystallised into a formal agreement dated 19.11.2021. As per the said agreement, the financial creditor was required to remit the outstanding sum within 7 calendar days from 19.11.2021 and upon receipt of the said sum, ZACL had agreed to discharge corporate debtor of its obligations under the earlier agreement dated  17.06.2019.  However,  upon  clearing the  sums  owed by the corporate debtor, the applicant herein, would be subrogated to all of the rights of ZACL for recovery of the dues from the corporate debtor.

It is further submitted that as per the said arrangement, the financial creditor had remitted all the sums outstanding, to the account of the corporate debtor on 20.11.2021, which has also been acknowledged by ZACL,  vide communication dated 26.11.2021. Therefore,  by virtue of clearing the outstanding sums, the financial creditor, has automatically stepped into the shoes of ZACL and has acquired the rights to enforce recovery of the borrowings of the corporate debtor and it had agreed to repay the sums due, by 30.11.2021.

Further,  in addition to the outstanding ICD  granted by the  Zuari  group,  the financial creditor had also advanced a sum of Rs.1,50,00,000/- (Rupees One Crore  and Fifty Lakhs Only)  as an Inter -Corporate Deposit,  vide  Agreement dated 20.10.2021, at an interest rate of 18% p.a., with repayment of 4 weeks. However,  the Corporate Debtor, not only failed to repay the sums due to the Financial Creditor pursuant to the  Agreement  dated 19.11.2021 but also defaulted in repayment of the Inter -Corporate Deposit made  vide Agreement dated 20.10.2021.

The financial creditor issued a demand notice dated  10.12.2021, through its  counsel, demanding the repayment of sums at the earliest. In response thereto, the  corporate debtor  addressed  a  reply  dated  15.12.2021 to  the Financial Creditor,  seeking further  time  to  remit the  sums  due,  citing  the  reasons  of operational difficulty and the pandemic related restrictions. Pertinently, there is no dispute on the sums claimed to be due in as much as the corporate debtor has admitted to the outstanding obligations towards the financial creditor in its communication dated 15.12.2021.

11.0n  17.02.2022, after hearing the learned Counsel appearing for the Petitioner, notices were  directed to  be issued to the  Respondent/Corporate Debtor.  The learned Counsel who appeared for the Respondent/Corporate Debtor, on receipt of the advance notice, accepts notice in the C.P.  On the same day,  since the Respondent/Corporate Debtor admitted the debt and default thereon, in order to examine the financial position of the Corporate Debtor and its obligations towards any other Creditors, it was directed to file a short affidavit with regard to the various litigations pending including the claims from the cases, if any, filed by any Secured and Unsecured Creditors against the Corporate Debtor. The Respondent/Corporate Debtor was also directed to file its latest financials and also the copy of the order of NCLT in CP (IB) No. 57/BB/2019.

12.Accordingly, the Respondent/Corporate Debtor filed the compliance affidavit vide Diary No.  771  dated 25.02.2022. The relevant paragraphs of the said affidavit reads as under:

"a) Pending action against the Corporate Debtor from secured and/or unsecured creditors.

The Corporate Debtor has two other creditors apart from the Applicant to this petition  —  Pixie  Enterprises  Private  Limited  and UB  Infrastructure  Projects Limited. Both Creditors were unsecured creditors.  While the former is owned INR 99.49 Lakhs as on 17th February 2022, the latter is owed INR 19.54 Lakhs as on 17th February 2022. That said none of these creditors have initiated any action against the Corporate Debtor.

b)  Status  of proceedings  initiated  by  the  Enforcement  Directorate  against  the Corporate Debtor.

Proceedings before the Enforcement Directorate is below:

A. Case  No.  F. No  ECIR/ 03/ MZO/ 2016  in  the  matter of Kingfisher Airlines Limited and Vijay Mallya.

i.  In the aforesaid  case,  the Enforcement Directorate  (RD')  issued  letters/ orders dated 12 May 2016 to United Breweries Limited. (UBL) and United Breweries  (Holdings)  Limited  ("UBHL")  directing  them  not  to  allow  the Corporate Debtor to sell/ alienate/ create third party mortgage rights in any manner on the shares of such investee companies.  I state that the Corporate Debtor is an unconnected and independent company, and it is the Corporate Debtor's stand that the ED has no case against the Corporate Debtor. The ED has also issued letter dated 12 September 2016 to Yes Bank Limited with similar directions.  I under8tand that ECL Finance Limited has also received similar instructions from the ED. As a result, by virtue of these proceedings, 63, 45, 011 shares of UBL held by the Respondent have been attached by the ED in the following manner:

a) 45,51,000 shares of UBL, lying in the Respondent's Demat account, were pledged in favour of erstwhile lenders being Yes Bank Limited and ECL Finance Limited.  Based on the Respondent's records, currently no dues are outstanding to these lenders. However, the lenders have not released the pledge on these shares pursuant to the directions of the ED, despite Respondent's follow up.

b) Further 1,22,667 shares of UBL pledged to the above lenders are still lying  in  the  demat  accounts  of the  said  lenders.  The  Respondent understands from these lenders that pursuant to the directions of ED, these shares will not be released by the lenders.

c) Additionally, the ED unilaterally transferred 16,71,344 shares to its own demat account from the demat account of the Respondent in May 2018.

To the best of the Respondent's  knowledge,  these shares were later transferred to the Hon'ble Debt Recovery Tribunal by the ED pursuant to the order of the PMLA court dated 31 December 2019 (mentioned as 04 January  2020  in the  ED'S letter  dated  2 September  2021 to  the Respondent) in Cri. Misc. Appl 58/2019 involving the lending banks of Kingfisher Airlines and Dr. Vijay Mallya.

B. Cri. Misc. Appl. 854/2018

i. The Respondent had received a Show Cause Notice dated 3 July 2018 under the Fugitive Economic Offenders Act 2018 (FEOA) as an interest person (and not as an Accused) to show cause as to why the Respondent's investments in UBL and UBHL should not be confiscated under the FEOA. The Respondent has filed its objections in the designated court for FEOA, Mumbai stating that the Respondent is in no way connected to Dr.  Vijay Mallya - the Accused under the FEOA proceedings.  The Respondent specifically  contended that Accused is  neither a majority  shareholders (given  that  he  holds  2  shares  only)  nor a  director or key Managerial Personnel of the Respondent. The matter is still pending.

C.  Cri.   Misc.   Appl  19/2016   in   Cri   Misc.  8/2016   in   ECIR   NO. ECIR/ 03/ MBZO/ 2016

i.  In a separate proceeding before the court of Special Judge for Prevention of Money Laundering Act, 2002 (PMLA) an individual promoter (Dr. Vijay Mallya) of the Respondent has been declared as a proclaimed offender. Pursuant to this declaration, the Respondent's investments in UBL and UBHL have attached under the PMLA by the order dated 10 November 2016.

c)   Latest financial statements.

As directed by this Hon'ble Tribunal,  the unaudited financial results of the Respondents for the quarter ended 30 September 2021 and the Limited Review Report of the Statutory Auditors for the quarter ended 30 September 2021 as filed with Bombay Stock exchange Limited and the National Stock Exchange of India Limited on 2% January 2U22 under Regulation 33 of the SEB1 (Listing Obligations and Disclosure Requirements) Regulation 2015 are annexed as Annexure A.

d) Order of this Hon'ble Tribunal in CP (IB) No. 57/ BB/ 2019

The Order dated 23 July 2019 passed by this Hon'ble Tribunal in CP (IB) No. 57 of 2019 (M/ s. Zuari Agro Chemicals Limited v. M/ s. McDowell Holdings Limited) whereby this Hon'ble Tribunal disposed of the petition by recording the settlement agreement dated 17th June 2019 is annexed as Annexure B.

e) Any other information.

The Respondent's demat account maintained with Stock Holding Corporation of India was suspended for debit on the instructions of the ED since 29 July 2019. The Respondent has filed submissions with the ED seeking removal of this attachment.   The ED issued summons thereafter,  and, pursuant to the summons,  the Respondent made submissions.  The matter is pending.  That apart,  with effect from  18 February 2022,  the trading in securities of the Respondent has been suspended by the National Stock Exchange of India for non-compliance with SEBI (Listing Obligations and Disclosure Requirement) Regulations, 2015. A copy of the circular dated 18 January 2022 issued by the National Stock Exchange of India is annexed as Annexure C.

Due  to  the  attachment  of the  assets  of the• Respondent  by  the  ED,  the Respondent is unable to meet its expenses and  generate  funds. The investments of the respondent are yet to be unfrozen by the Ed with no clear timelines in the horizon.  The financial substratum of the Respondent,  as a result, is not sufficient to pay off all its debts. The Respondent is not able to function with its complete capacity and it is not able to mobilize funds to pay off its liabilities.

The following are the details of the assets and liabilities as at 30 September 2021.

S. No.

Particulars

Amount

LIABILITIES

1.

Long Term Borrowings

2.

Short-Term Borrowings

1484.15

3.

Other Current Liabilities

106.67

4.

Long Term Provisions

5.

Short- Term Provisions

1.04

6.

Trade Payables

92.70

TOTAL

1684.53

ASSETS

Tangible Assets

0.06

Intangible Asset

Investment (free from attachment)

0.00

Cash and Bank Balance

3.31

Short term loans and advances

4.14

Trade Receivables

Other Non-Current Assets

189.30

Other Current Assts

TOTAL

196.81

Note: Attached investment Market Value is Rs.  100629.28 Lakhs (as on 30 September 2021)

To reiterate, the  assets  of the  Respondent  which  would  have  generated  revenue/ income have been attached by statutory authorities.  The Respondent is undergoing severe financial constraints due such attachments.  Further, the Respondent has also been incurring losses.

As a result, the Respondent does not have the required liquidity to meet the dues of the Applicant for the foreseeable future and repay the amount.  The Respondent has many non-statutory liabilities in existence,  which the Respondent is not in position to pay.  Further, there are no liquid assets to pay off the debts of the company.   Due to the absence of the liquid assets,  the Respondent will  not  be  able  to  honour any payments  with  respect to  the existing debts in the near future. In these circumstances, I am constrained to state that the Respondent cannot repay the sums owed to the Applicant.

Consequently, as  the  Company  has  been facing  many  difficulties  due  to financial stress it is under, this Hon'ble Tribunal may pass appropriate orders in the application filed by the Applicant."

13.At this stage Shri Nirej Vadakkedathu Paul and 8 Ors. filed I.A No. 86 of 2022 seeking to intervene in CP (TB) No.  11 of 2022 and to declare the C.P. amounts to fraudulent and malicious initiation of proceedings under the IBC. Similarly, Mr.  Kushal  Sengupta  and  8  Ors.  filed  I.A  No. 87  of 2022  also  seeking for intervention and dismissal of the C.P (TB) No.  11 of 2022.

14.Heard Shri Srinivasa Raghavan, learned Senior Counsel for the Applicants in I.A No. 86 of 2022 and Shri Joy Saha, learned Senior Counsel along with Ms. Urmila Chakraborthy, learned Counsel for the Applicants in I.A No.87 of 2022 and Shri Rahul Balaji, learned  Counsel  for  the  Petitioner  in  the  C.P. and  Shri  A  S Vishwajith, learned Counsel for the Respondent in the C.P.

15.The Applicants in the I.A No. 86 of 2022 and also the Applicants in I.A No. 87 of  2022  claiming  to  be  the  shareholders  of the  Respondent/Corporate  Debtor Company  raised  the  following  grounds  in  support  of the  Interlocutory Applications:

The  Deponent  of the  affidavit  filed  on  behalf of the  Corporate  Debtor Company has no authority to file the same.

The person authorised the learned Counsel who appeared for the Corporate Debtor, has no power or authority to authorise him as such.

The Corporate Debtor is not an insolvent Company and it has sufficient means to repay the debt of the Petitioner.

The C.P. has been filed due to fraud and collusion between the Petitioner and the Respondent/Corporate Debtor.

16.0n the other hand, the Petitioner/Financial Creditor opposed the I.As, on the ground that they are not maintainable.

17.The compliance affidavit filed by the Corporate Debtor vide Diary No. 771 dated 25.02.2022 was accompanied with the affidavit dated 24.02.2022 of one Shri G Sreenivas  claiming  to  be  the  Deputy  General  Manager  of  the Respondent/Corporate Debtor. The said Deponent filed the certified extract of the resolution passed by the Board of Directors of the Respondent/Corporate Debtor  at their meeting held on 27.01.2022,  where under it was resolved to authorise the said Shri G Sreenivas, Deputy General Manager of the Respondent Company to execute/sign/file pleadings, petitions,  affidavits before all Courts and Tribunals in the Country any action brought against the Company, including before the National Company Law Tribunal. The said compliance affidavit was also enclosed with the authorisation in favour of Shri A S Vishwajith, learned Counsel appearing for the Respondent/Corporate Debtor, duly signed by Shri G Sreenivas who was authorised to do so by the Board of the Respondent/Corporate Debtor, under the seal of the Respondent Company. The Applicants in these I.As, except  contending  that  the  Deponent  of the  affidavit  filed  on  behalf of the Respondent/Corporate Debtor and the learned Counsel appearing for the Respondent/Corporate Debtor have no valid authorisation to act as such, failed to show any other valid document in support of their submissions. In the absence of the same, the certified extract of the Resolution of the Board of Directors of the Corporate Debtor dated 27.01.2022 in favour of Shri G Sreenivas i.e. Deponent of the  affidavit  filed  on  behalf of the  Respondent/Corporate  Debtor  and  the authorisation given by the said Shri G Sreenivas in favour of Shri A S Vishwajith, learned Counsel appearing for the Respondent/Corporate Debtor shall have to be treated as valid and sufficient documents to enable them to represent the Corporate Debtor. Accordingly, the ground nos. 1 and 2 raised by the Intervening Applicants are rejected.

18.The Hon'ble Supreme Court of India in M/ s. Innoventive Industries Ltd. vs. ICICI  Bank & Anr. in Civil Appeal Nos.8337-8338 of 2017 observed as under:

"27. The scheme of the Code is to ensure that when a default takes place, in the sense that a debt becomes due and is not paid, the insolvency resolution process begins.  Default is defined in Section 3(12) in  very wide terms as meaning non-payment of a debt once it becomes due and payable,  which includes non-payment of even part thereof or an instalment amount. For the meaning of "debt", we have to go to Section 3(11), which in turn tells us that a debt means  a liability of obligation in respect of a  "claim" and for the meaning of "claim", we have to go back to Section 3(6) which defines "claim" to mean a right to payment even if it is disputed. The Code gets triggered the moment default is  of rupees  one  lakh or more  (Section  4).  The corporate insolvency resolution process may be triggered by the corporate debtor itself or a financial creditor or operational creditor. A distinction is made by the Code between  debts  owed  to financial  creditors  and. operational  creditors.  A financial creditor has been defined under Section 5(7) as a person to whom a financial debt is owed and a financial debt is defined in Section 5(8) to mean a debt which is disbursed against consideration for the time value of money. As  opposed  to  this,  an operational creditor means  a person to whom an operational debt is owed and an operational debt under Section 5 (21) means a claim in respect of provision of goods or services.

When it comes to a financial creditor triggering the process,  Section  7 becomes relevant. Under the explanation to Section 7(1), a default is in respect of a financial debt owed to any financial creditor of the corporate debtor - it need not be a debt owed to the applicant financial creditor. Under Section 7(2), an application is to be made under sub-section (1) in such form and manner as is  prescribed, which takes us to the  Insolvency and  Bankruptcy (Application to  Adjudicating  Authority)  Rules, 2016. Under  Rule 4, the application  is  made  by  a financial  creditor  in  Form  I  accompanied  by documents and records required therein. Form 1 is a detailed form in 5 parts, which  requires particulars  of the  applicant  in  Part  I,  particulars  of the corporate  debtor in Part II, particulars  of the proposed  interim  resolution professional  in part III,  particulars  of the financial  debt  in part IV and documents,  records and evidence of default in part V.  Under Rule 4(3), the applicant is to dispatch a copy of the application filed with the adjudicating authority  by  registered post or speed post  to  the  registered  office  of the corporate debtor.  The speed,  within which the adjudicating authority is to ascertain the existence of a default from the records of the information utility or on the basis of evidence furnished by the financial creditor, is important.

This it must do within 14 days of the receipt of the application. It is at the stage of Section 7(5), where the adjudicating authority is to be satisfied that a default has occurred, that the corporate debtor is entitled to point out that a default has not occurred in the sense that the "debt", which may also include a disputed claim, is not due. A debt may not be due if it is not payable in law or in fact.  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 sub-section (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."

In view of the above enunciation of law, it is sufficient for this adjudication Authority in order to accept or reject the Application filed U/s. 7 of the IBC, 2016, if the debt and default are proved. In the instant case, when the learned Counsel appearing  for  the  Respondent/Corporate  Debtor,  on  the  first  instance  itself, admitted the debt and default and not opposed the admission of the C.P. and initiation of  CIRP  proceedings against  it, to find out  the bonafides of  the Respondent/Corporate Debtor in stating so  and  also to find out whether the Petitioner and the  Respondent/Corporate  Debtor colluded in  any manner,  to avoid  the  legitimate  dues to  any other  Secured  or  Unsecured  Creditors,  this Adjudicating Authority  directed  the  Respondent/Corporate  Debtor  to  file  an affidavit with regard to the various litigations pending including the claims from the cases filed by any Secured and Unsecured Creditors against the Corporate Debtor. For the same purpose, the Corporate Debtor was also directed to file its latest financials and a copy of the order of the NCLT in CP (IB) No. 57/BB/2019. In response thereto, the Corporate Debtor filed an affidavit and the contents of the same were already extracted as above. A careful examination of the same reveals that  there  was no reason  to disbelieve  the contents  of  the same. Admittedly, no Secured or Unsecured Creditor initiated any proceedings against the Corporate Debtor for recovery of its debts. The pendency of the proceedings initiated by the Enforcement Directorate against certain other Companies, or any order passed thereon,  doesn't preclude the Financial Creditor from genuinely seeking initiation of CIRP against the Corporate Debtor, if its debt was under default by the Corporate Debtor. The intervenors have not disputed the debt and default in  any manner.  It is also not in dispute that all the properties of the Corporate Debtor are under orders of attachment. Even otherwise, it is the settled principle of law that once the debt and default are proved, the solvency of the Corporate Debtor, will not come in the way of the admission of an Application under Section 7 of the I&B Code, 2016.  In view of the same, we reject the ground nos. 3 &, 4 of the Intervening Applicants.

It is the case of the Intervening Applicants that they are holding certain shares in the Respondent/Corporate Debtor Company and if the C.P. is admitted and the Insolvency Resolution Process is initiated against the Corporate Debtor, their right as shareholders will be severely affected and their interest will be prejudiced. It is the settled principle of law that in an Application U/s. 7 of the Code, there is no place for any third party other than the Financial Creditor and the  Corporate  Debtor.  The  Shareholders  of the  Financial  Creditor  or  of the Corporate Debtor in their capacity as a shareholder have no locus standi to get themselves impleaded in the C.P. filed U/s.7 of the IBC, 2016. If any Shareholder of the Financial Creditor or the Corporate Debtor have any grievances with regard to the representation of the Company in the C.P., they can agitate their rights as Shareholders under the applicable provisions of the Companies Act, 2013 but cannot be allowed to be impleaded or intervened in the C.P. This Adjudicating Authority, while exercising summary jurisdiction such as Section 7 of the IBC, 2016, cannot adjudicate the disputes, if any, inter se, between the Shareholders or Directors of  the Corporate Debtor. Accordingly, both the Interlocutory Applications are dismissed.

21.However,  we  are  conscious  of the  settled principle  of law that fraud vitiates everything. That is why we have heard the submissions made on behalf of the Applicants in the I.As to examine whether there was any element of fraud, either in filing the C.P or in admitting the debt and default by the Respondent. Similarly, for the same purpose, though the Respondent/Corporate Debtor admitted the debt  and  default,  we  have  directed  it  to  file  the  affidavit  indicating various litigations including  the claims  from the  cases filed  by  any  Secured  and Unsecured Creditors of the Corporate Debtor. Again for the same purpose, we have directed the Corporate Debtor to file the latest financials and also the copy of the order of the NCLT in CP (IB) No. 02/BB/2017 dated 09.08.2019. Nothing is coming out of the same or from any document filed by any of the intervenors, which can be termed as fraud or collusion in either filing the C.P. or in admitting the debt or default by the Corporate Debtor.

Section7(5)(a) of the Code is as follows:-

"5) Where the Adjudicating Authority is satisfied that-

(a)  a default has occurred and the application under sub-section (2) is complete, and there is no disciplinary proceedings pending against the proposed resolution professional, it may, by order, admit such application."

23.In  the  present  case, the  occurrence  of  default  is  evidenced  by  the  details furnished by the Petitioner including the record of financial information (Form -C) issued by NESL in respect of the debt of the Corporate Debtor. (enclosed at Page  175 of this Petition).

24.The other issue for consideration is whether present application is filed within limitation. The date of default of the debt is well within the 3 years period from the date of filing of the C.P. Therefore, the Petition has been filed within the period of limitation.

The respondent corporate debtor in his reply filed in the C.P, admitted the debt and its inability to pay the same to the applicant.

The application filed in the prescribed Form No.1 is found to be complete.

In the given facts and circumstances, the present petition being complete and having established that the  default in payment of the  Financial Debt for the default amount of above Rs.1,00,00,000/-, the petition is admitted in terms of Section  7(5)  of the  IBC  and  accordingly,  moratorium  is  declared in  terms  of Section 14 of the Code. As a necessary consequences of the moratorium in terms of Section 14, the following prohibitions are imposed, which must be followed by all and sundry:

(a) The  institution  of suits  or  continuation  of pending  suits  or  proceedings against the Corporate Debtor including execution of any judgment, decree or order in

(b) any court of law, tribunal, arbitration panel or other authority;

(c)  Transferring, encumbering, alienating  or disposing  of  by  the Corporate Debtor any of its assets or any legal right or beneficial interest therein;

(d) 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;

(e)  The recovery of any property by an owner or lessor, where such property is occupied by or in the possession of the Corporate Debtor;

(f)  It is further directed that the  supply of essential goods or services to the Corporate Debtor as may be specified, shall not be terminated or suspended or interrupted during the moratorium period;

(g)  The provisions of Section 14(3) shall however, not apply to such transactions as may  be  notified  by  the  Central  Government  in  consultation with  any financial  sector regulator and to a surety in a contract of guarantee to a Corporate Debtor;

(h)  The  order of moratorium shall have effect from the  date  of this order till completion of the Corporate Insolvency Resolution Process or until this Bench approves the Resolution Plan under sub-section (1) of Section 31 or passed an order for liquidation of Corporate Debtor under Section 33 as the case may be;

In Part-III of Form No.1, Mr. Konduru Prasanth Raju bearing Registration No. IBBI/IPA-002/IP-N00708/2018-2019/12200  has  been  proposed  as  Interim Resolution Professional (IRP). Form No.2 dated 01.02.2022 has been filed along with the C.P are found at Page Nos.166-169A of the Petition. The Law Research Associate of this Tribunal has checked the credentials of Mr. Konduru Prasanth Raju and there is nothing adverse against him. In view of the above, we appoint Mr.  Konduru Prasanth Raju bearing Registration No.  IBBI/IPA-002/IP-N00708/2018-2019/12200,  having  registered  address  at  B-804, Shriram Suhaana  Apartments, Harohalli, Nagenahalli  Gate,  Yelahanka, Bangalore 560064,  email-  ipkpraju@gmail.com  and  Contact  No.  9980591019,  as the Interim Resolution Professional. The IRP is directed to take the steps as mandated under the IBC, specially under Sections 15, 17, 18, 20 and 21 of IBC, 2016.

The Interim Resolution Professional shall after collation of all the claims received against Corporate Debtor and the determination of the financial position of the Corporate Debtor constitute a Committee of Creditors  and  shall file  a report, certifying constitution of the Committee to this Tribunal on or before the expiry of thirty days from the date of his appointment, and shall convene first meeting of the Committee within seven days for filing the report of Constitution of the Committee.  The  Interim  Resolution  Professional  is  further  directed  to send regular progress reports to this Tribunal every fortnight.

A copy of the  order shall be  communicated to both the parties.  The  learned Counsel for the Petitioner shall deliver copy of this order to the Interim Resolution Professional forthwith. The Registry is also directed to send the copy of this order to the Interim Resolution Professional at his e-mail address forthwith.