Micro Forge (India) Ltd. v. State Bank of India

INSOLVENCY AND BANKRUPTCY CODE, 2016

--Initiation of corporate insolvency resolution process--Debter itself filed petition admiting of having committed default in repayment of loanNo proceedings pending before SARFAESI and DRT--Entitled to trigger insolvency resolution process--Where corporate debtor filed petition for initiation of corporate insolvency resolution process, and admitted that it had committed default in repayment of amount, further no liquidation order had been passed against corporate debtor, therefore, it was entitled to trigger insolvency resolution process.--Corporate debtor company filed petition under section 10 for initiation of corporate insolvency resolution process. Corporate debtor contended that it had taken loan from bank by mortgaging its immovable properties, but it had defaulted in repayment of loan, then bank had taken action under sections 13(2) and 13(4) SARFAESI Act, 2002. Corporate debtor further contended that proceedings pending before the Board for Industrial and Financial Reconstruction (BIFR) were abated not by virtue of section 4 of the Sick Industrial Companies (Special Provisions) Repeal Act, 2003, but it was on account of taking action against the company by the bank under the SICA. Held: Corporate debtor admitted that it had committed default in repayment of loan to the secured creditors as well as operational creditor and other Governmental authorities which included mortgage of properties. Further, proceedings under the SARFAESI Act abated because the bank had taken action against the company. Further that, no liquidation order had been passed in respect of the corporate debtor. Therefore, corporate debtor was entitled to trigger insolvency resolution process. Hence, the petition was admitted under section 10(4)(a) of the Code.