M.K. Shrawat, Member - (1.) This Petition is filed on 23rd June 2017 invoking the provisions of Section 10 of Insolvency and Bankruptcy Code, 2016 (hereinafter The Code) by a "Corporate Debtor". This Application is filed by the Debtor to initiate Corporate Insolvency Resolution Process against itself.
(2.) Facts:- Facts in brief are that the Debtor had availed Credit Facilities from several Financial Creditors namely Citibank, SICOM Limited, Sidbi Limited and IFCI Factors Limited. Other Financial Creditors are Shamrao Vithal Co-operative Bank, Edelweiss Asset Reconstruction Company, Citibank Equity Loan an amount deposited by the Distributors. The major Creditors and the amount of default is as under, short listed from the long list annexed:- 2.1 There is one Long List of Operational Creditors and the Creditors for Goods. The Balance outstanding on 10th June, 2017 in respect of Creditor for Goods amounted to Rs. 15,60,50,386/-. The Debtor Company had also taken Trade Deposits from the Distributors total amount as per the Annexures is Rs. 23,89,637/-. Likewise, there is a long list of other current liabilities and the amount of default is Rs. 21,76,93,612/-. 2.2 One of the Reconstruction Company i.e. Edelweiss has issued a Possession Notice on 25th March, 2013 has made a Public Notice that Karur Vyasa Bank Limited under the SARFAESI Act, 2002 and in exercise of powers conferred under section 13(12) issued a Demand Notice calling upon the Borrower M/s. Raj Oil Mills Limited and Guarantors to pay debt of Rs. 67,84,25,091/-. The Borrower and the Mortgagor having failed to repay the amount due the Edelweiss being the Authorized Officer and being Assignee of the Karur Vyasa Bank had taken possession of the property as described in the said Notice. Public in general was cautioned not to deal with the said property which is subject to Charge, together with interest, of the Assignee. It is worth to place on record that the Karur Bank had assigned all the rights and title in respect of the Financial Assistance granted to M/s. Raj Oil Mills in favour of Edelweiss vide an Assignment Agreement executed on 28th June, 2012. 2.3 There is one more Possession Notice of 4th November, 2015 through which the Shamrao Co-operative Bank in exercise of power conferred under section 13(12) of Security Interest (Enforcement) Rule, 2002 issued Demand Notice dated 12.04.2012 calling upon Raj Oil Mills and its 4 Directors to repay outstanding due of Rs. 18,62,18,876/- together with interest. Out of the said amount it was also declared in the said possession notice that the Borrower had paid only a sum of Rs. 73,98,000/-. The Charge was created on the property by Shamrao Bank as on date of Rs. 31,33,40,824/-. 2.4 The debtor company had also availed Purchase Bill discounting facility from SICOM Limited amounting to Rs. 15 Crores discounted at discount rate of 13% per annum payable affront. It is pointed out that the facility was additionally secured by irrevocable personal guarantee of Mr. Shaukat, Promoter of the Company. There are evidences on record that SIDBI has also sanctioned finance under one Scheme for direct discounting of bills covering purchase of material with a limit of Rs. 5 Crores. Correspondence in this regard have demonstrated that there was a complaint of dishonour of cheques. There are number of such other examples of continuous defaults from the side of this Corporate Debtor. The Debtor had tried to demonstrate that it is not practically possible to satisfy the outstanding financial as well as operational liability hence the Debtor company be declared as Insolvent. 2.5. From the side of the Applicant Debtor it is pleaded that there is no scope of settlement because such efforts have failed in the past and there is a strong apprehension that after the incorporation of the Insolvency and Bankruptcy Code the Creditors may move before NCLT for declaration of Insolvency hence thought it proper to declare itself Insolvent so as to prevent multiple legal proceedings.
(3.) Heard the Learned Representative. Examined the Petition in question along with voluminous annexures. At this preliminary stage "Admission" in my humble opinion it is not obligatory to discuss exhaustively the nature of the debts, terms and conditions under which loans were granted, charge created against the immoveable properties, terms and conditions of assignment of debt etc. Under the provisions of I & BP Code it is required to examine whether prima facie such an Application deserves Admission within the parameters of Section 10 of I & BP Code. 3.1 The compilation contains a provisional Balance Sheet drawn as on 31.03.2017 according to which, the Long Term Borrowings and the liabilities are to the tune of Rs. 133,12,86,697/-. For ready reference relevant portion is reproduced below:- 3.2 On the other side of the said Balance Sheet assets are inadequate. The book value of the Tangible assets is only Rs. 52,00,26,933/- and Short Term Loans and Advances are to the tune of Rs. 11,53,28,286/-, as is apparent from the following details:- II. ASSETS 3.3 This Bench is of the opinion that the correct prevailing market value of the assets can only be ascertained if this work is assigned to a Competent Professional. Because of this reason it is deemed expedient to appoint an Insolvency Professional and for that purpose the first step is to admit this Petition. This is the first reason for granting "Admission" of the Petition. 3.4 The compilation consists a provisional statement of Profit and Loss Account drawn on 31st March, 2017 according to which revenue generated from operations amounted to Rs. 58,84,97,140/-. However, exorbitant expenses amounting to Rs. 79,09,44,200/- have been claimed which resulted into a loss of (-) Rs. 20,22,29,349/-. This is an area which requires methodical as also thorough examination. This examination can be well performed by a Professional i.e. Insolvency Professional. As a result, this is the second reason for granting admission of this Petition. 3.5 On preliminary examination it is noticed that there is a long list of outstanding public fixed deposit. As many as about 1,400 (approx.) persons have made deposit ranging from Rs. 10,000/- to Rs. 50,000/- and some times even 1 lakh rupee which according to the Petitioner is outstanding as on 10th June, 2017. Under the accounting head "Long Term Borrowings" the outstanding public fixed deposits are clubbed together totalling Rs. 125,45,31,656/-. Apparently there is no provision in the accounts of the Debtor to protect the interest of those depositors. This aspect shall also be examined by the IRP. This is the third reason for admission of this Application. 3.6 Likewise, there is a long list of shareholders having more than 20,000 shares prepared as on 31st March 2017 having about names of 640 persons. It is the duty of the IRP to protect the interest of all such stakeholders, which is possible only on admission of this Petition. This is the fourth reasons for pronouncing "Admission" of the Petition.;