2019 (5) TMI 1917 - AT - Insolvency and Bankruptcy

Financial Creditor's Voting Share Upheld Based on Disbursed Amounts

The Tribunal upheld the Adjudicating Authority's decision that the Appellant, a Financial Creditor, could claim its voting share in the Committee of ... Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - allocation of voting share to the CoC - HELD THAT:- Admittedly, Value Infracon India Pvt. Ltd.'- (Corporate Debtor) defaulted in repayment of outstanding dues of the Appellant, the Appellant has issued notice under Section 13(2) of the 'SARFAESI Act, 2002' on 25th February, 2017. The liability of the Appellant qua the 'Corporate Debtor' admittedly cannot be jointly calculated with two other entities namely Value Infratech India Pvt. Ltd.' and Value Infrabuild India Pvt. Ltd.', they not being the 'Corporate Debtor' in the present case. The Corporate Debtor (Value Infracon India Pvt. Ltd.) facing separately triggered application under Section 7, the Appellant cannot claim the dues which is payable by other Co-borrowers, the other 'Corporate Debtor' in the 'Resolution Process' against the present 'Corporate Debtor' - the amount having been separately disbursed as per request of three different entities who signed jointly, it is clear that individual entities like Value Infrabuild India Pvt. Ltd.' received a sum of ₹ 29,55,00,000/-; Value Infracon India Pvt. Ltd.' received a sum of ₹ 1,00,00,000/- and Value Infratech India Pvt. Ltd.' received a sum of ₹ 6,65,00,000/- in their respective Bank Accounts. Having received such amounts separately, the Appellant cannot claim all the payments from the 'Corporate Debtor' pursuant to the Loan Agreement dated 17th September, 2014 where in after 19th September, 2014 letter was issued. In view of the fact that the three entities were provided amounts separately in their respective Bank Accounts, the Adjudicating Authority rightly held that the Appellant as a 'Financial Creditor' can claim its voting shares based on the amount actually disbursed in favour of Value Infracon India Pvt. Ltd. Appeal dismissed. Issues:Challenge to order passed by Adjudicating Authority regarding allocation of voting share in Committee of Creditors based on loan amount disbursed to Corporate Debtor and co-borrowers.Analysis:1. The Appellant, a Financial Creditor, challenged an order passed by the Adjudicating Authority regarding the allocation of voting share in the Committee of Creditors. The order directed the Resolution Professional to allocate the voting share to the Committee of Creditors in accordance with the loan agreement. The Appellant raised concerns about the reallocation of voting share based only on the amount disbursed to the Corporate Debtor, excluding amounts disbursed to co-borrowers.2. The Appellant contended that a loan agreement dated 17th September, 2014 involved multiple entities as co-borrowers, jointly and severally liable for repayment. The Appellant argued that the total loan amount due and payable by the Corporate Debtor should include amounts disbursed to all co-borrowers, not just the Corporate Debtor.3. The Appellant was aggrieved by the reduction of their claim amount in the Committee of Creditors, resulting in a significant decrease in their voting share. The Appellant emphasized the joint and several liability of all co-borrowers as per the loan agreement, which should impact the voting share allocation.4. The Adjudicating Authority found that the loan amounts were separately disbursed to each entity as per their request, with distinct amounts credited to individual bank accounts. Based on this separate disbursement, the Authority concluded that the Appellant's voting share should be based on the amount disbursed to the Corporate Debtor specifically.5. The Tribunal upheld the decision of the Adjudicating Authority, stating that the Appellant, as a Financial Creditor, could claim its voting share based on the amount actually disbursed to the Corporate Debtor alone. The Tribunal dismissed the appeal, finding no merit in the Appellant's arguments and ruled in favor of the Adjudicating Authority's order.