TaxTMI 
TaxTMI 
2017 (9) TMI 1199
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....t Nos. 2 & 3 as invalid and un-reliable for the purpose of determining claims against Corporate Debtor under CIRP admitted as CP (IB) No. 01/HDB/2017; inclusion of respondent No. 3 as financial creditor etc. 2. Brief facts as stated by the applicant, which are relevant to issue raised in present case, are as follows: (1) The Applicant (is an asset reconstruction company), incorporated and constituted under the Companies Act, 1956 and having its registered office at Edelweiss House, Off CST Road, Kalina, Mumbai, Maharashtra 400 098. The Applicant has become one of the largest secured financial creditors of the Respondent No. 1 -Corporate Debtor, i.e. Synergies-Dooray Automotive Limited (Corporate Debtor) vide an Assignment Agreement dated January 6, 2014, executed with Exim Bank which was one of the original lenders of the Corporate Debtor. The total amount claimed by the Applicant against the Corporate Debtor as on January 23, 2017 as per the revised proof of claims submitted by the Applicant on February 20, 2017 to the Respondent No.1/the Interim Resolution Professional (IRP) is Rs. 88,20,28,260.97 (Rupees Eighty Eight Crores Twenty Lakhs Twenty Eight Thousand Two Hund....
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.... rely upon documents pertaining to the aforementioned purported assignment of debts as and when produced. (6) The Applicant states that on November 24, 2016, i.e. immediately prior to the reference of the Corporate Debtor the Respondent No.2 & No.3 entered into the said Assignment Agreements by which the Respondent No.2 has assigned nearly 92.93% (as per Form A filed in BIFR) of its share in the total debt of the Corporate Debtor to the Respondent No.3. Assignment Agreements in question were entered with the mala fide and ulterior motive of fraudulently abusing provisions of the IBC to the detriment of the Applicant as and when the Corporate Debtor initiates proceedings under the IBC after the abatement of the BIFR reference. (7) The Applicant states that public announcement of initiation of CIRP and call for submissions of claims under section 15 of the IBC read with regulation 6 of the Insolvency and Bankruptcy Board of India (Insolvency Resolution for Corporate Persons) Regulations, 2016 (CIRP Regulations) was made by the IRP on January 28, 2017 in Deccan Chronicle, wherein the insolvency commencement date was mentioned as January 25, 2017 with the estimated da....
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.... (11) BIFR was also not informed when the alleged assignments Agreement were executed. 3. Sri Chidambaram, the learned PCS for SCL, Respondent No. 2, on the other hand, has strongly opposed the application and also filed a reply dated 3rd June, 2016. The following are his main contentions: (1) It is stated that M/s. Synergies Dooray Automotive Ltd., (SDAL) who is the Petitioner/Corporate Debtor had 7 creditors namely :EXIM Bank, HSBC, Indian Overseas Bank, Andhra Bank, State Bank of India, IDBI and ICICI. Out of these 7 creditors, ICICI assigned its debt to ARCIL and HSBC assigned its debt to J.P. Morgan Chase Bank, Indian Overseas Bank, Andhra Bank, State Bank of India, IDBI and ARCIL assigned their debt to SCL, and J.P. Morgan Chase Bank assigned its debt to a Securitization Company called Alchemist Asset Reconstruction Company Ltd. (AARC) (2) Thereafter, EXIM Bank assigned its debt to Edelweiss Asset Reconstruction Company (EARC), who is the Applicant herein. Subsequent to the assignment of EXIM Bank's debt to EARC, SCL assigned the debt of ICICI, SBI and IDBI to Millennium Finance Ltd. (MFL) vide three Deeds of Assignment dated 24.11.2016. There....
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....nd mala-fide parties like EARC. (7) Admittedly, SCL is a related party to the Corporate Debtor. However, the debt of the Corporate Debtor held by SCL has been assigned to a complete third party, which is a Non-Banking Financial Company (NBFC), registered with the Reserve Bank of India and also with SEBI. EARC has failed to bring on record any evidence to demonstrate that the assignee of SCL is a related party to the Corporate Debtor. EARC is only raising frivolous allegations, which are wholly unsubstantiated. In the absence of any proof to establish that the assignee of SCL is a related party as defined under Section 5(24) of the Code, the allegation that MFL ought not to have any voting share in the committee of creditors deserves to be rejected in totality. (8) EARC has also sought to project that the Assignment of Debt to SCL from the assignors, i.e. SBI, IDBI and ARCIL (formerly ICICI) is unregistered. This is a self-defeating and frivolous argument which also deserves to be rejected in totality. For the sake of arguments, if it is considered that the assignment from the original creditors of the Corporate Debtor to SCL is invalid, that would revert back the ....
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....nner in the works by disagreeing with every proposal put forth therein. 4. It is stated that, Regulation 28 of Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 would not applicable in the instant case, the assignment in question were executed much prior to the commencement of the CIR In any event, the assignment of debt is a contractual right for which no permission is required from any judicial or quasi-judicial body or any Tribunal, unless such judicial/quasi-judicial body or Tribunal has expressly restrained such party from assigning its debts. In view of the same, there is no question of seeking the permission of BIFR for assigning the debt. Therefore, it is prayed that the application under question should be dismissed with exemplary costs. 5. Shree Deepak Bhattcharjee, learned senior counsel for the respondent No. 3( MFL) also strongly opposed the application under question, and filed a comprehensive reply dated 5th June, 2017 by adverting each and every averments and allegations/assertions made by the applicant in the application. The following are his main contentions urged before us. 6. It is stated t....
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....orporate Debtor in terms of the order dated 29.05.2012 passed by the BIFR and the orders dated 01.02.2013 & 20.06.2013 passed by the DRT, Visakhapatnam. However, despite the same, the Applicant acquired the debts of the Corporate Debtor and thereafter in the proceedings not only before the BIFR but before this Hon'ble Tribunal making systemized efforts to derail and delay the revival prospects of the Corporate Debtor. 9. BIFR has subsequently also passed an order dated 25.06.2013, wherein also the BIFR returned a finding as to the exposure of the dues of the Applicant in the Corporate Debtor under the provisions of the SARFAESI Act. The BIFR vide its order dated 25.06.2013, specifically stated that between the Applicant and Alchemist Asset Reconstruction Company Ltd. (AARC), it is apparent that the exposure of Applicant is in the ratio of 34.15%: 65.85%. Therefore, the Applicant in the present case is a minority creditor of the Corporate Debtor and thus single handedly not entitled under law to interject and interfere in an appropriate resolution plan having the consent of the majority Financial Creditors of the Corporate Debtor. 10. It is stated that all the Financial Cr....
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....signment Agreement dated 24.11.2016. There is neither any mechanism nor any manner by which MFL can be attributed with any mala-fide intent of entering into an agreement immediately prior to coming into force of SICA Repeal Act. The submissions and averments made by the Applicant on the proximity of the Assignment Deed with the coming into force of the SICA Repeal Act are mere surmises, which have no legal basis and thus liable to be rejected by this Hon'ble Tribunal. (3) It is contented that even in absence of any voting right in the meeting of Committee of Creditors, the Financial Creditor whether it is SCL or MFL will continue to be equitably treated for the purpose of settlement of its dues. Thus, in no eventuality, the Applicant can steal a march and seek better dispensation than either SCL or MFL, which appears to be sole vested interest of the Applicant herein. (4) The allegation that MFL becoming a related party by virtue of assignment from a related party the same is frivolous and unsubstantiated. MFL does not fall within any of the definitions of related party as mentioned from 5(24)(a) to 5(24)(m). Edelweiss ARC is put to strict proof of establishin....
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....refore, it is prayed that the application under reply to be dismissed with exemplary costs. 13. Heard Shri S. Niranjan Reddy, Senior Advocate, Shri Jyoti Singh, Advocate, Ms. Rubaina Khatoon, Advocate, Shri P. Mohith Reddy, Advocate for the Petitioner and Shri A.D. Gupta, Advocate Shri S. Chidambaram, PCS, Shri Deepak Bhattacharjee, Senior Advocate alongwith Shri Dishit Bhattacharjee, Mrs. Mamta Binani, Resolution Professional along with Shri Krishnendu Datta, Shri P. Vikram, Advocate Shri Nitish Bandary, Advocate for the Respondents , and have also carefully perused all the pleadings made by the respective parties along with material papers filed in their support. 14. In the light of above facts and circumstances of the case, the following main points arise for our consideration:- (1) What is the status of the Applicant vis-a-vis Corporate Debtor and what rights it accrues by virtue of assignment from the Exim Bank and what is locus standi of it vis-a-vis other similar assignees like SCL and MFL ; (2) Whether three Assignment agreements commonly dated 24.11.2016 entered into between SCL and MFL are properly registered or not; (3) Whether the applic....
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....Lenders Outstanding (Rs in millions) IDBI 656.6 ICICI BANK 663.0 EXIM BANK OF INDIA 183.6 STATE BANK OF INDIA 252.8 INDIAN OVERSEAS BANK 98.9 ANDHRABANK 83.5 JP MORGAN CHASE (HSBC SHARE) 95.2 INDBI BANK 89.1 TOTAL SECURED LOANS 89.1 TOTAL SECURED LOANS 2122.7 PART-B LIST OF EXISTING CDR LENDERS ICICI BANK IDBI BANK STATE BANK OF INDIA EXPORT IMPORT BANK OF INDIA INDIAN OVERSES BANK ANDHRA BANK PART C LIST OF EXISTING 'NON-CDR LENDERS JP MORGAN CHASE BANK 18. The first assignment agreement dated 24.11.2016 was executed between SCL and MFL. This assignment originally relates to ICICI Bank. ICICI Bank Limited vide its assignment dated 28.09.2011 assigned the loans together with all its rights, title and interest in financing documents etc in favour of the assignor (SCL) herein. In turn, the assignee of ICICI Bank, SCL herein, assigned its rights accrued from ICICI Bank to MFL This document is duly registered with the District Registrar Anakapalli vide proceedings No. 197/G1/2017, dated, 28.04.2017 on payment of fine (5 times equal to registration fee) of Rs. 1,50,000/- for a delay of....
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....r case, and it will not enter into roving enquiry into mere apprehensions, baseless allegations. As stated supra, whatever the rights the original assignor got it from the original lender will automatically accrues to subsequent assignees basing on executing appropriate legal documents in accordance with law.. Here, in this case, MFL has got all the rights as per the assignment agreements commonly dated 24.11.2016. Hence, the allegations/apprehensions made by the applicants herein are baseless and mere apprehensions, and they are deemed to have been executed in accordance with law especially in the absence of any challenge to those documents by a party to those documents. The applicant doesn't have any locus standi to question those documents in the insolvency proceedings initiated under IBC, 2016 on a far fetched argument that they are going to be effected if the rights of SCL and MFL are recognized basing on the Assignment Agreements in question. And the applicant cannot assume jurisdiction to question the documents in question basing on baseless allegations, apprehension etc. Therefore, we hereby summarily rejected the contentions/allegations of the Applicant with regard to ....
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....ation. 24. The BIFR recorded a finding on 26.05.2012 with regard to the settlement of the issue on the whole by recording that out of Seven Creditors, 5 already been settled and only the remaining two namely EXIM bank and another remains to be settled. Their percentage of dues also prescribed. 25. The Corporate Debtor had suppressed several material facts especially with regard to leasing out all its assets to Respondent No. 2 herein before BIFR. The Applicant and its Assignor viz. Export Import Bank of India (Exim Bank) has filed various applications before BIFR / AAIFR questioning the determination of the Corporate Debtor as a sick industrial company. (1) It is stated that various banks and financial institutions/ assets reconstruction companies in the year 2008-11 have assigned their debts in respect of the Corporate Debtor to Respondent No.2. However, it is alleged that these assignments took place prior to Applicant becoming Financial Creditor of the Corporate Debtor and these assignments in favour of Respondents No. 2 & 3 are defective and not legally enforceable. (2) By virtue of the assignments dated 24.11.2016, Respondent No. 2 has assigned nearly 9....