Union Bank of India v. Era Infra Engineering Ltd.

INSOLVENCY AND BANKRUPTCY CODE, 2016

--Initiation of corporate insolvency resolution process by financial creditor--Non-repayment of outstanding dues Existence of debt and default --Whether application for initiation of CIRP admissible--Where evidences on record proved that corporate debtor had defaulted in repayment of outstanding debt and the application under section 7(2) filed by financial creditor was complete in all respects, then, application for initiation of CIRP was to be admitted. --Financial creditor bank sanctioned and disbursed working capital term loan to EIEL (corporate debtor). Despite repeated demands, EIEL failed to repay the loan amount. Therefore, Bank filed an application under section 7 for initiation of CIRP against EIEL through its authorized representative. EIEL raised objections mainly on three grounds – Firstly, the statement of account furnished for the purpose of ascertaining the existence of default comprised of hand written entries at several places, which was against the specific provisions of the Bankers' Book Evidence Act. Secondly, the power of attorney had been executed prior to the enactment of the Code and no specific authority or resolution passed by the Bank, thus, the authorized representative was ineligible to file section 7 application. Lastly, EIEL had various claims and litigations pending against the public sector undertakings, which were likely to result in payment of huge amounts, therefore, prayer for triggering CIRP was to be rejected. Held: A certified copy of entry in a banker's books is to be regarded as prima facie evidence in all legal proceedings with regard to the existence of such entry and it must be admitted as evidence of the matters, transactions and accounts therein recorded in every case. A certificate of entries in a banker's books in accordance with the Banker's Books Evidence Act, 1891 and a record of default available with the Central Repository of Information on Large Credits (CRILC) as per its asset classification report of EIEL were placed on record and thus, no substance was found in the objection relating to discrepancies in statement of account. Further that, a copy of board resolution along with special power of attorney had been placed on record by Bank, which proved that the authorized representative was eligible to file the application before any Court/Tribunal. Further that, objection of pending claim petition could not be accepted as there was no provision in the Code to create such a bar. Hence, application for initiation of CIRP was admitted.