State Bank of India v. Asian Colour Coated Ispat Ltd.

INSOLVENCY AND BANKRUPTCY CODE,

--Initiation of corporate insolvency resolution process by financial creditor --Non-repayment of debtsExistence of default--Whether application for initiation of insolvency resolution process admissible--Where application for initiation of insolvency resolution process was complete, and there was overwhelming evidence to prove default and all objections raised by company were satisfactorily answered, then, application under section 7 was to be admitted.--Company (corporate debtor) had availed various term loan facilities and working capital facilities from SBI. Company had defaulted in repayment of its debt. SBI filed an application for initiation of CIRP against the company. However, company raised various objections, viz., the requirements of section 2A of the Bankers Books Evidence Act as to certification by person in-charge of the computer system and authentication of entries had not been fulfilled by SBI. Further, Interim Resolution Professional (IRP) suggested by SBI was an interested party, which would lead to conflict of interest and adversely impact resolution prospects of the company. Further, company had taken steps towards stabilizing its financial position by initiating negotiation with a possible strategic investor. Further that, statements of account attached were incomplete and date of disbursement of loan was not disclosed. Held: SBI had placed entries related to the accounts of the company in which financial debt were transferred by SBI certifying the statement of accounts of the company comprising of printouts of data stored in various forms in accordance with section 2A of the Bankers Books Evidence Act, 1891. Further, SBI had proposed name of replaced IRP, thus, objection raised with regard to IRP would not require any consideration. Further, no concrete proposal was put forth by any strategic investor for stabilizing financial position of company. Further that, SBI had provided statement of account, which clearly showed that disbursement of loan was made in year 2006-07. Since application under section 7(2) was complete, and there was overwhelming evidence to prove default and all objections raised by company were satisfactorily answered. Therefore, application for initiation of CIRP against corporate debtor was admitted.