TaxTMI 
TaxTMI 
2017 (9) TMI 1534
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....d to take place on February 22, 2017 at 2.00 p.m. at Hotel Park Inn by Radisson, 1 & 2, Ring Road, Vikram Vihar, Lajpat Nagar-4, Near Moolchand Metro Station, New Delhi 110 024; (b) to direct the IRP to consider the objections and submissions of the Applicant in its e-mail of February 20, 2017 and to (c) re-constitute the committee of creditors in accordance with law before calling for the First meeting of committee of creditors etc. 2. Brief contents, as contended in the application and are relevant to decide the application, are as follows: 1) The Applicant is the 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 is one of the largest secured financial creditor of Synergies-Dooray Automative Limited (Corporate Debtor) of the financial debt by virtue of Assignment Agreement dated January 6, 2014 executed with Exim Bank, 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 (i.e. the date of submission of proof of claim (revi....
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....strial Companies (Special Provisions) Act, 1985 (SICA) (now repealed) and was enjoying the protection of a moratorium granted under SICA until the repeal of the SICA on December 1, 2016. Accordingly, the main Company petition bearing CP (IB) No. 01/HDB/2017 is filed by the Corporate Debtor. 5) In pursuant to admission and appointment of IRP by the Tribunal, a public announcement of initiation of CIRP and call for submissions of claims under section 15 of the IBC read with regulation 6 of CIRP Regulations was made by the IRP on January 28, 2017 in Deccan Chronicle. Accordingly, the Applicant submitted its proof of claim dated February 6, 2017 in the format provided in form C of CIRP Regulations along with the supporting documents electronically vide its email dated February 7, 2017 in accordance with regulation 8 of the CIRP Regulations to IRP. However, the Applicant subsequently revised its claim amounting to Rs. 88,20,28,260.97 and requested the IRP to revise the amount claimed in accordance with Regulation 14(2) of the CIRP Regulations. 6) The Applicant states that in pursuant to receipt of proof of claim from the Applicant on February 7, 2017, the IRP by her em....
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....nal. 7. To appoint and fix the fees of professional advisor (s), which shall constitute Corporate Insolvency Resolution Process costs. 8. To fix a limit upto which the Insolvency Professional, without the permission of the Committee, is entitled to initiate a debit transaction with the financial institutions maintaining accounts of the Corp orate Debtor. 9. To take note and approve the possession, control and custody of the assets of Corporate Debtor and necessary delegation of authority to Synergies Casting Limited (SCL) under an existing lease agreement. Any other matter with the permission of the Chair Hereto annexed and marked as Exhibits '3' and '4' are copies of the notice along with agenda for meeting of the CoC and information memorandum prepared by IRP respectively. 8) The Applicant has objected to the proposed delegation of authority to SCL for the reasons that SCL is both a related party as well as a secured creditor of the Corporate Debtor as is also recorded in the Initial Information Memorandum. Therefore, the agenda for the proposed meeting of the CoC is far reaching especially in view of the fact that ....
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.... are entitled to receive proceeds as part of any resolution plan/liquidation of the Corporate Debtor. 12) It is alleged that assignment of debt by SCL to MFL vide the Assignment Agreements raises serious questions on the intentions of the Corporate Debtor as well as its related party SCL. 13) The applicant has expressed apprehension that IRP chosen by Corporate Debtor or may not act bona fidely especially with regard to its interests. 14) The applicant has further filed additional affidavit by inter-alia contending as follows: 15) The applicant has given detailed agenda wise objections to first meeting of COC. The first meeting was attended by Ms. Nivedita Shetty, on behalf of the Applicant (Authorised Representative of the Applicant), who raised her concerns agenda wise. However, despite the receipt of the aforesaid objections of the Applicant and without taking cognizance of concerns raised by the Authorized Representative of the Applicant in the meeting, the Respondent No. 1 proceeded with the said First meeting of CoC and approved all the agenda(s) of the meeting. The minutes of the First Meeting CoC (Minutes) were received by the Applicant v....
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....on value of the Corporate Debtor in terms of Regulation 27 of the IBBI Regulations. Accordingly, claims were received from Financial Creditors under Regulations 8 and 12 of the IBBI Regulations 2016. Accordingly, IRP substantiation of the their claims under Regulation 10 so that the said claims can be verified and adjudicated in accordance with Regulation 13(1). 6) That till the expiry of the last date of submission of claims (i.e. by 08.02.2017), she had received claims from four Financial Creditors, namely (i) the Applicant herein, (ii) Alchemist Asset Reconstruction Company Ltd., (iii) Millennium Finance Ltd. and (iv) Synergies Casting Ltd. Accordingly, a list of creditors in terms of Regulation 13(2) was prepared on 14.02.2017 and was intimated to the Tribunal on 15.02.2017. The Public Notice is dated 08.02.2017. That subsequent to the preparation of list of creditors, a Committee of Creditors was constituted by her on 15.02.2017 and a report to that effect was also filed before this Tribunal on 17.02.2017 in accordance with Regulation 17(1) of IBBI Regulations 2016. As per Regulation 17(2), first meeting of the Committee of Creditors should be convened within 7 days o....
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....documents and prima facie there was no evidence or reason to doubt the validity or otherwise of the said assignment and/or the motive behind such assignment. It was further informed that Millennium Finance Ltd. was an NBFC, who was currently holding a financial debt against the Corporate Debtor and was having a valid claim, which had been verified and accepted on the basis of documentary evidence on record. 11) It is contended that Regulation 28 of the IBBI Regulations 2016, permit transfer/assignment of debt due to creditors even during the pendency of the Insolvency Resolution Process. So the contention made contrary by the applicant is not tenable. The Master Restructuring Agreement dated 06.03.2007, wherein the original Banks (which also includes the Assignor of the Applicant herein) had specifically inter-se confirmed the status of their outstanding dues which confirmed that the Assignor of the Applicant held only 8.65% of the secured debts relating to the Corporate Debtor. 12) With respect to taking note and approving the possession, control and custody of the assets of the Corporate Debtor and necessary delegation of authority of Synergies Castings Ltd. und....
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....MFL on the assets of the Corporate Debtor has been duly registered and the same forms a part of the application as filed with Tribunal. So the Contention of applicant MFL can fall within the definition of related party qua the Corporate Debtor is not all tenable and liable to be rejected. Both EARC and MFL are Financial Creditors of the Corporate Debtor who have taken over the loans of the Corporate Debtor from the original lenders. 15) EARC, in the instant case took over the debts of EXIM Bank through an Assignment Deed dated 06.01.2014. By the time, EARC had taken over the debts from EXIM Bank, an order dated 29.05.2012 passed by the BIFR was already in force, which categorically provided that the dues of EXIM Bank are to be settled at 26.66% of its principal outstanding. On this basis, EXIM Bank (who is the predecessor in interest of EARC) would be entitled to receive only an amount of Rs. 4.89 Crores if the outstanding as per the MRA dated 06.03.2007 is taken as the principal amount. In fact, the principal amount due to EXIM Bank is much less than the amounts as mentioned in the MRA. The said order of the BIFR though under challenge before the Appellate Authority in Ap....
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....d. (Assignee of Debt of SCL, which SCL, had originally acquired from ARCIL, IDBI and SBI) 215.83 53.98% TOTAL 399.85 100% The above stated details of the Financial Creditors as on 25.01.2017, has been reworked by the IRP on the basis of the claims in Form 'C' filed by the respective Financial Creditors, in response to the Public Notice dated 27.01.2017 and 28.01.2017 issued by the Interim Resolution Professional and the IRP as on 14.02.2017 has determined the outstanding liability of the Corporate Debtor towards its Financial Creditors in the following manner:- Name of the Financial Lender Amount outstanding (Rs. in Crores) Percentage Alchemist Asset Reconstruction Company (Assignee of JP Morgan Chase) 122.07 16.47% EARC (Assignee of EXIM Bank) 65.01 8.77% Synergies Castings Ltd. (Assignee of Andhra Bank & Indian Overseas Bank) 63.87 8.61% Millennium Finance Ltd. (Assignee of Debt of SCL, which SCL, had originally acquired from ARCIL, IDBI and SBI) 490.39 66.15% TOTAL 741.33 100% 16) EXIM Bank/EARC is the sole party defeating the rehabilitation of the Corporate Debtor The present case is ....
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....nce from 01.05.2005 for a period of four years. 18. It is stated that the Corporate Debtor on 01.04.2005 filed its reference with the BIFR, which was registered as BIFR Case No. 135 of 2005. The BIFR vide its order dated 14.02.2007 declared the Corporate Debtor as a Sick Industrial Company and appointed IDBI as the Operating Agency. It is relevant to state that at the time of declaration of the Corporate Debtor as a Sick Industrial Company, EXIM Bank from whom debts have been acquired by EARC had specifically stated no objection before the BIFR. In view of the fact that the reference of the Corporate Debtor was pending with the BIFR, the Corporate Debtor had filed an Application being MA No. 136 of 2012 with the BIFR on 29.03.2012 seeking permission to continue with the arrangement of lease till the sanction of the scheme. The BIFR vide its order dated 29.05.2012 permitted the Corporate Debtor to continue with the lease till sanction of the scheme or till 31.03.2013, whichever was earlier. However, as the scheme could not be sanctioned by the BIFR in view of the non-cooperative and adamant approach of EXIM Bank (now EARC), the Corporate Debtor filed MA No. 171 of ....
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....d out as an arrangement with the due consent of the majority of creditors to keep intact the nature of going concern of the Corporate Debtor. Thus, the alleged objection of EARC on the aspect of leasing which was initially with the due consent of EXIM Bank i.e. the original lender from whom EARC has acquired the debts, is legally untenable and liable to be rejected by this Hon'ble Tribunal. 20. That the present Application filed by the Applicant herein is thus, evidently gross abuse of the process of law and hence not maintainable. The Application deserves outright dismissal and rejection by this Hon'ble Tribunal. 21. Therefore, it is prayed to dismiss the application under reply as devoid of any merit with costs. 4. We have heard Mr. S. Niranjan Reddy, Senior Advocate with Ms. Jyoti Singh, Ms. Rubaina Khatoon and Mr. P. Mohith Reddy, Advocates, Mr. A.D. Gupta, Mr. Krishnendu Datta, Mr. P. Vikram, Mr. Nitish Bandary, Advocates for the Respondents. We have carefully considered various lengthy averments made by the parties along with material papers filed in their support. 5. By reading of various averments made by the parties as briefly state....
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.... made up to 12.12.2016, list of creditors etc. 7. It is not in dispute that the Applicant, vide its e-mail dated 17.02.2017 confirmed their attendance for the meeting scheduled to be held on 22.2.2017 in New Delhi. Accordingly, the applicant also attended the first meeting of CoC. The Applicant also filed a revised claim on 20.2.2017, by rectifying certain errors to its claim to the original claims. In the meeting held on 22.2.2017, it was agreed that the register of claims and inter-se voting rights would automatically stand revised on the basis of admission or rejection or modification of the revised claim so submitted. The issue has been considered by this Tribunal on 22.02.2017, and permitted to conduct the proposed meeting of the Committee of Creditors to be held on 22.02.2017 by granting liberty to the applicant to participate in the meeting and raise its objections/grievances. Accordingly, the Petitioner availed the said meeting by raising some other objections just before 10 minutes of the scheduled time and those objections are stated to be similar to the objections raised by the Applicant. 8. So far as the issue relating to allegation of related party, it is to b....
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.... was pending before it. However, BIFR proceedings have finally been concluded by passing final orders due to the reasons stated above. So, it is necessary to examine status of various orders and agreements made by the parties as both the parties are relying on the orders passed by the BIFR on several issues. It is not in dispute that parties are also parties in those proceedings and have raised their contentions before competent BIFR as was existing then. It is not in dispute that Master Restructuring Agreement 2007 was duly signed by all the parties including the Assignee (EXIM Bank) of the applicant and thus all parties bound by all covenants among themselves. The applicant cannot claim any special privilege in comparison to other similarly situated Financial Creditors. It is settled position of law that Assignee cannot get more rights than what its original Assignor has. Admittedly, the EXIM Bank was a party to all concerned proceedings for resolving dispute in question as stated supra. We have carefully examined various orders passed by the BIFR especially touching upon material allegations made by the applicant herein and are satisfied that all interim orders having a material....