AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2017 (7) TMI 1018
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.... meaning of the provisions of the Code. 2. Brief facts necessary for disposal of the controversy raised in this application are that Bank of India is a body corporate constituted under the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 with its head office at Mumbai. The 'Corporate Debtor'-Tirupati Infraprojects Pvt. Ltd. was incorporated under the Companies Act, 1956 on 05.01.2007 and is duly registered with the Registrar of Companies, NCT of Delhi and Haryana. A certificate of its Incorporation alongwith Memorandum of Association and Articles of Association has been placed on record (Annexure A/1). 3. The 'Corporate Debtor' approached the 'Financial Creditor' for grant of term loan facility of Rs. 70 Crores out of its total term loan requirement of Rs. 300 Crores under multiple banking arrangement with a view to set up a five star hotel cum retail space at Plot No. D, Commercial District Centre, Paschim Vihar, New Delhi in area measuring 13158.71 sq. mtrs. It was represented that the 'Corporate Debtor' was a part of group of companies with diverse interest in real estate, public schools, shopping malls and hospitality town....
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....onsortium to avail the term loan. A copy of the resolution dated 21.01.2009 has been placed on record (Annexure A-4). On 16.02.2009 the 'Corporate Debtor' executed various loan and security documents in pursuance of the terms and conditions incorporated in the sanction letter in favour of the Bank of India Consortium, including, the 'Financial Creditor'. It is appropriate to mention the details of the deed of hypothecation executed by the 'Corporate Debtor' which are as under:- "a. On 16.02.2009, the 'Corporate Debtor' executed the term loan facility agreement in favour of the Bank of India Consortium for due repayment of the term loan to the member Banks in accordance with the terms specified. The term loan of Rs. 50 Crores disbursed by the 'Financial Creditor' was to be repaid within a period of 10 years and 3 months in 31 equal quarterly instalments of Rs. 160 lakhs each and the last instalment of Rs. 40 lakhs being 32nd. The term loan repayment was to commence from March 2011 with interest @ 0.75% over BPLR minimum 13.25% per annum with monthly rests (Annexure A-5). b. The 'Corporate Debtor' also executed on 16.02.2009 a joint....
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....reditor' in utter disregard and breach of the contractual obligations assumed under the agreement. 9. In para 3 of the reply dated 26.05.2017 filed by the respondent-'Corporate Debtor' has accepted the amount of term loan facility was availed by it for setting up a hotel cum retail space at a plot allotted by the DDA. It has also conceded that term loan of Rs. 50 Crores was sanctioned in January 2009 by the 'Financial Creditor'. The other material facts have not been controverted. It has been stated in the reply that for the reasons beyond the control of the 'Corporate Debtor' the hotel business did not pick up and the loan amount could not be repaid. 10. We have heard learned counsel for the parties. 11. The question which arises for consideration is whether the petitioner has been able to satisfy the requirement of Section 7 of the Code. According to Section 7 (1) of the Code an application by the 'Financial Creditor' either on its own behalf or jointly with the other financial creditor would be competent for initiating Corporate Insolvency Resolution Process against a Corporate Debtor before the present Tribunal when a default has occurred.....
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.... "IT WAS RESOLVED THAT APPROVAL be and is hereby accorded for granting Comprehensive General Manager's Power of Attorney in favour of: (i) Shri Nikhilesh Bhargava; (ii) Shri Bhalchandra Vasudeo Upadhye; (iii) Shri Prakash Kashinath Vartak; (iv) Shri Ram Krishna Sinha; (v) Shri Mrityunjay Kumar Gupta for the reasons and as per the details as brought out in the memorandum." Accordingly, the power of attorney dated 05.01.2017 (pages 761-762 Annexure A-44) duly shows that Shri Ram Krishna Sinha and Mrityunjay Kumar Gupta, the General Manager of the Bank of India have duly authorized and appointed Shri Rahulendu Singh to act as Senior Manager and in para 10 of the power of attorney he has been authorized to do all those acts mentioned therein. Para 10 of the Power of Attorney reads as under:- "10. In respect of any person, firm, society, company, corporation, association, syndicate or body corporate to apply or petition for adjudication as insolvent or bankrupt or for winding up and prove any debt or claim in the bankruptcy or insolvency or winding up and to take any proceedings and appear or cause an appearance to be entered for the Bank in any proceeding for or i....
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....Corporate Debtor' still another objection has been raised which is based on a judgment of the National Company Law Appellate Tribunal rendered in the case of JK Jute Mills Co. Ltd. v. Surendra Trading Co., Company Appeal (AT) (Insolvency) No. 09 of 2017 decided on 01.05.2017. Placing reliance on para 51 of the judgment learned counsel has argued that seven additional days' time could be granted to the 'Financial Creditor' for removing the defects and it is mandatory. On the aforesaid principles, it has been submitted that the defects were pointed out on 30.05.2017 and the affidavit removing the defect was filed on 07.06.2017. According to the learned counsel there is delay of one day in filing the objection whereas learned counsel for the petitioner has argued that the there is no delay if language of Section 7 of the Code is considered. 16. We have thoughtfully considered the rival submissions advanced by the learned counsel for the parties and are of the view that in order to arrive at the correct conclusion it would be necessary to examine the provisions of Section 7 (2) and 7 (5) of the Code which read as under: "Initiation of corporate insolvency resolution ....
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....Firstly, the order dated 30.05.2017 may not by itself be regarded as notice within the meaning of proviso to Section 7 (5) of the Code. Secondly it is highly doubtful whether the defect concerning power of attorney would be the one covered by Section 7 (2) of the Code. Section 7 (2) of the Code only provides that application has to be in the form and manner as may be prescribed. By virtue of Section 7 of the Code read with Rule 4 of the Adjudicating Authority Rules' Form-1 has been prescribed as performa for presentation of the application by a 'Financial Creditor'. A perusal of Form-1 would reveal that there is no requirement specified in any part of that performa with regard to power of attorney. It would thus mean that there is no defect in terms of Section 7 (2) read with Section 7 (5) of the Code. It does not however lead to the conclusion that there is no requirement of filing a power of attorney. But then it is a different matter and would not be hit by the defect in the performa prescribed by Rule 4 of Adjudicating Authority Rules. It is not that every defect is hit by Section 7 (2) of the Code. Therefore, no notice by the registry was issued. This is a hyper te....