TaxTMI 
TaxTMI 
2017 (10) TMI 293
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.... (1) The Corporate Debtor obtained a loan amount of Rs. 65.50 Crores vide Sanction Letter dated July 28, 2009 from the State Bank of India (herein after referred to as Respondent/Financial Creditor) and the necessary loan documentation was executed. Again the Overall Limit was enhanced to Rs. 197.50 Crore vide sanction letter dated 12th November, 2010 and necessary loan documentation was executed. (2) The loan account of the Corporate Debtor was classified as a Non-Performing Asset ("NPA") on September 26, 2013 for consecutive defaults in the payment of loan amount. The Financial Creditor had issued numerous default notices demanding the Corporate Debtor to make payment, and also had numerous meetings with the Corporate Debtor to discuss on the affairs of the Corporate Debtor, so as to find out any solution to the issue in question and the last meeting on this account took place in July 2017. However, the Corporate Debtor failed to come for settlement of the issue in question. (3) Subsequently, the Loan Account of the Corporate Debtor has been classified as Non-Performing Asset ("NPA") on December 26, 2013 due to non-repayment of outstanding liabilities. The B....
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.... was further published in Indian Express and Andhra Jyothy on April 20, 2017, English and Telugu daily news papers respectively. (9) On May 3, 2017, the Financial Creditor got issued Notice Prior to Sale under Rule 8(5) and 8(6) of the Security Interest (Enforcement) Rules, 2002 to the Corporate Debtor, by intimating that the secured assets mortgaged/charged to Bank, in question, would be sold by public e-auction at any date after expiry of thirty (30) days from the date of the said notice. (10) On the expiry of thirty (30) day period from the issuance of said Notice Prior to Sale, the Bank got published E-Auction Sale Notice in The Indian Express, English daily, and Andhra Jyothi Telugu daily newspapers on 18th July, 2017. Accordingly, the Bank issued a letter dated 21st July, 2017 to Corporate Debtor intimating it about the proposal of Bank to conduct E-AUCTION on 28.08.2017 for sale of some of properties in question as mentioned in the notices issued earlier. (11) In the above circumstances, the Company petition is filed by seeking a direction to initiate Corporate Insolvency Resolution Process respect of Neeta Chemicals (I) Pvt. Ltd. 3. We have hea....
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.... * SBI has further issued Possession Notices dated 17.04.2017 and 18.04.2017, followed by notice prior to sale dated 03.05.2017. * During the pendency of present Application (Application was filed on 28.06.2017), on 21.07.2017, SBI issued e-auction notices for sale of properties of the Corporate Debtor to be carried out on 28.08.2017. * The above facts goes on establishing that there is a Financial debt due and payable by the Corporate Debtor and the Corporate Debtor has admittedly defaulted in making the payments of the same. 5. The Learned counsel for the petitioner has relied upon the following judgments/decisions, in support of his case: * The decision/observation of the Co-ordinate Adjudicating Authority, Mumbai Bench, in the matter of Indus Financial Ltd. v. Quantum Ltd. Company Petition No. 1043/i&BP/NCLT/MAH/2017. * The decision of Hon'ble Adjudicating Authority, Principal Bench, New Delhi in the matter of Amit Spinning Industries LtdCompany Petition No. (IB)-131(PB)/2017. * Further, in the matter of Alpha & Omega Diagnostics (India) Ltd. v. Asset Reconstruction Company of India Ltd. being Company Appeal (AT) (Insol) No.....
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.... as carved out supra ...." 6. In the light of above facts, provisions of IBC and decisions on the issue, the learned counsel for petitioner has strenuously contended that the Adjudicating Authority has no other option except to admit the case, and pass all other consequential orders as per extant provisions of IBC, 2016. 7. Shri G. Durga Bose, the learned Counsel for the Financial Creditor/SBI, on the other hand, has strongly opposed the application itself, by filing a reply dated 3rd August, 2017. The following are his main contentions: (a) The application/petition is fraught with mala fides, and the Corporate Debtor has not approached this Tribunal with clean hands, and has suppressed several material facts of the issue in question. Therefore, it is liable to be dismissed in-limine without going into other contentions of applicant. (b) The petition is filed only to circumvent the process already initiated by the Financial Creditor under the SARFAESI Act, 2002, and e-auction is scheduled to be held on 28th August, 2017, which is after following due process of law. After knowing everything about the issue, the Corporate Debtor has filed the petition, that to....
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....ase. 8. In the light of above facts and circumstances of the case, the fundamental issue arise for consideration is what are the criteria for admission of a case filed under Section 10 of IBC, 2016. 9. In order to adjudicate any issue legally, it is necessary to read the concerned Act as a whole, and not a particular provision in isolation, in order to arrive at a judicious decision. There are fundamental judicial principle(s) for coming to such decision(s) viz principle of natural justice; party has to come to court/Tribunal with clean hands by disclosing all material issues in question, Courts/Tribunal should not allow a party to misuse/abuse the judicial process. 10. It is true that bare reading of section 10(4) of IBC, 2016 says that Adjudicating Authority shall, within a period of fourteen days of the receipt of application, by an order, either to admit the application, if it is complete or reject it, if it is incomplete. If we, go further of the same provision, it is stated' where a corporate debtor has committed a default........... In order to understand as what is default as mentioned under section 10(1), it is relevant to refer to related /connected terms nam....
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....s by furnishing all relevant documents with regard to sanction of loans, mortgages etc made with them etc. It is further alleged that the Bank itself has collected title documents in question, from them, by assuring that they would provide FB+ NFB limited to the tune of Rs. 226.60 crores but they have failed to do so. They have further denies the execution of any loan document by deceased persons namely B. Ganapathi Rao and O. Syam Sunder Rao. Finally tries to put the Bank under defense as if the Bank has committed sin/all fraudulent action in sanction of loans and mortgaging property on behalf of Company as collateral security. These un-tenable and illegal contentions on behalf of Corporate Debtor is liable be rejected out rightly, since large amount of public money is involved, and these contentions are totally reprehensible and not all tenable on any ground whatsoever. 13. The Bank /Corporate Creditor, subsequently issued a notice dated 01st December, 2016 to the Corporate Debtor, under Section 13(2) of SARFAESI, Act, 2002, again calling upon the Corporate Debtor to discharge liabilities in question, within 60 days from date of receipt of notice. In pursuance to this notice, ....
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....priety prevails even in Insolvency process proposed to be initiated by Corporate Debtor. As stated supra, the Financial Creditor/Bank has legally initiated action under SARFAESI Act and e-action is scheduled to be held on 28.08.2017. 16. It is to be mentioned here that the loans in question were availed by the Corporate Debtor in the year 2009-10, which are collaterally secured by way of equitable mortgage by deposit of title deeds/registered mortgage. And loans in question are classified as NPA as early as on 26.12.2013. Subsequently SARFAESI proceedings as detailed supra are initiated, which are in advanced stage of E-auction. As pointed out by the Learned Counsel for the Respondent/Bank, the instant application is filed only to scuttle the proceedings of SARFAESI. The Corporate Debtor has not taken any steps to clear even a part of loan and surprisingly and mischievously trying to deny the loans in question. It is un-heard that such a stand of denial is taken where in public sector Banks and public money is involved. Financial discipline demands that there should not be denial simply for the sake of denial in case where money is taken. It is very surprising to note the attitu....