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2018 (2) TMI 1718
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....d, State Bank of Mysore, State of Patiala and State Bank of Travancore. As a result of merger, the combination has become the first Indian lender bank to rank amongst the world's top 50 banks. A document with regard to merger has been placed on record of this petition. The merger has taken place w.e.f. 01.04.2017 vide notification dated 22.02.2017. The gazette Notification to this effect has been placed on record (Annexure P/1). 2. Sometimes in the history of a nation evolutionary processes are perfected so as to usher in financial stability by striking at the elements of uncertainty To achieve the object Insolvency and Bankruptcy Code, 2016 has been enacted (for brevity 'IBC'). The problems of ever increasing Non-performing assets is attempted to be resolved in a time bound manner for maximisation of value of assets, inter alia, in respect of Corporate persons and also to promote entrepreneurship, availability of credit and balancing the interests of, and alteration in, the order of priority of Government dues. 3. Taking advantage of the IBC, the present petition has been filed by the State Bank of India under Section 7 thereof in the matter of Bhushan Steel Limited (for bre....
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....0,00,000 27/08/2014 33,25,00,000 30/08/2014 800,00,000 29/11/2014 875,00,000 27/12/2014 50,00,00,000 28/01/2015 30,00,00,000 23/03/2015 20,00,00,000 6/05/2015 25,00,00,000 6/06/2015 10,00,00,000 31/07/2015 15,00,00,000 TOTAL 500,00,00,000 Account No. - 62344427009 (State Bank of Hyderabad) Date of Disbursement Amount of Disbursement (Rs.) 30/05/2014 40,00,00,000 9/07/2014 7,00,00,000 22/10/2014 12,00,00,000 24/11/2014 5,00,00,000 22/12/2014 7,00,00,000 17/01/2015 4,00,00,000 TOTAL 75,00,00,000 Account No. - 67271238142 (State Bank of Travancore) Date of Disbursement Amount of Disbursement (Rs.) 31/03/2014 58,00,00,000 25/06/2014 75,00,00,000 28/11/2014 2,71,00,000 18/12/2014 14,00,00,000 Total 149,71,00,000 Loan Account No. - 65192556441 (State Bank of Patiala) Date of Disbursement Amount of Disbursement (Rs.) 24/03/2014 20,00,00,000 25/03/2014 19,00,00,000 31/03/2014 55,00,00,000 28/07/2014 9,00,00,000 28/07/2014 8,75,00,000 28/08/2014 59,10,00,000 2/09/2014 8,00,00,000 18/11/2014....
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....1/2016 3,50,00,000 22/02/2016 63,00,00,000 28/04/2016 8,50,00,000 TOTAL 75,00,00,000 Account No. - 65237788306 Corporate loan (State Bank of Patiala) Date of Disbursement Amount of Disbursement (Rs.) 26/08/2015 10,00,00,000 27/08/2015 15,00,00,000 30/09/2015 4,00,00,000 4/12/2015 17,50,00,000 31/12/2015 16,50,00,000 TOTAL 63,00,00,000 Account No. - 64181459039 GMC (State Bank of Mysore) Date of Disbursement Amount of Disbursement (Rs.) 8/09/2015 19,50,00,000 27/10/2015 7,50,00,000 13/11/2015 7,00,00,000 8/12/2015 17,00,00,000 30/01/2016 10,60,00,000 24/02/2016 14,25,00,000 16/05/2016 22,25,00,000 17/06/2016 3,00,00,000 28/06/2016 3,25,00,000 31/08/2016 3,00,00,000 4/11/2016 3,83,808 TOTAL 107,38,83,808 Account No. - 61273525921 (State Bank of Bikaner and Jaipur) Date of Disbursement Amount of Disbursement (Rs.) 30/05/2015 4,00,00,000 05/06/2015 5,05,000 28/10/2015 3,94,95,000 TOTAL 8,00,00,000 TERM LOAN OF Rs. 13,245 CRORES PURSUANT TO FLEXIBLE STRUCTURING SCHEME GRANTED BY STATE BANK OF INDIA Accou....
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....0 12/05/2012 95,42,474 5/11/2012 9,50,00,000 16/12/2015 7,50,00,000 Total 36,22,99,089 Account No. - 61276184181 (State Bank of Bikaner and Jaipur) Date of Disbursement Amount of Disbursement (Rs.) 20/06/2015 31,22,00,000 Total 31,22,00,000 TERM LOAN FOR ADDITIONAL BALANCING CAPEX FOR AN AMOUNT OF RS. 960 CRORES GRANTED BY STATE BANK OF INDIA Account No. - 35197383601 (State Bank of India) Date of Disbursement Amount of Disbursement (Rs.) 17/12/2015 50,00,00,000 19/05/2016 44,59,96,644 28/06/2016 6,03,91,880 Total 100,63,88,524 Account No. - 2458530729 (State Bank of Hyderabad) Date of Disbursement Amount of Disbursement (Rs.) 9/03/2016 3,39,63,823 3/06/2016 91,03,161 25/07/2016 7,58,73,690 1/08/2016 4,07,84,375 5/08/2016 4,14,11,465 8/08/2016 26,90,010 12/08/2016 1,24,58,346 7/09/2016 62,29,173 23/09/2016 25,31,917 13/10/2016 28,08,543 TOTAL 22,78,54,503 Account No. - 64182838979 CAPEX (State Bank of Mysore) Date of Disbursement Amount of Disbursement (Rs.) 8/06/2016 7,60,05,000 23/08/2016 6,25,00,000 13....
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.... (STRUCTURED VIDE DEBT STRUCTURING AGREEMENT FOR FLEXIBLE STUCTURING SCHEME) Account No. - 64175772288 Date of Disbursement Amount of Disbursement (Rs.) 26/06/2015 44,44,00,000 NOTE: The working capital has been disbursed vide working capital consortium agreement dated 2 March 2015 entered into inter alia between the Corporate Debtor and State Bank of India (including the associate banks amalgamated w.e.f. 1 April 2017 in pursuance of the Gazette Notification dated 22 February 2017) for the purpose of providing working capital to the Corporate Debtor upto a total limit of Rs. 12,459 Crores. The accounts for the said facility are running accounts with disbursals on a regular basis and the details for the same are reflected in the statement of accounts for the accounts maintained with respect, to the working capital consortium agreement dated 2 March 2015 and enclosed separately with this Application." 5. A perusal of the aforesaid details of disbursement would show that the working capital has been disbursed vide the working capital consortium agreement dated 02.03.2015 entered into inter alia between the Corporate Debtor and the State Bank of India along ....
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....BI with respect to the Term Loan Facilities Agreement 15 March 2005 and revival letters dated 5 February 2008 and 11 January 2011 for a total limit of Rs. 2100 Crores. 5. Revival Letters dated 15 March 2016 in favour of SBI with respect to the Term Loan Facilities Agreement 15 March 2005 and revival letters dated 5 February 2008, 11 January 2011 and 27 April 2013 for a total limit of Rs. 2100 crores. 6. Revival Letters dated 15 March 2016 in favour of SBI with respect to the Term Loan Facilities Agreement dated 22 March 2013 for a total limit of Rs. 1000 crores. 7. Revised Letters dated 15 March 2016 in favour of SBI with respect to the Common Facility Agreement 27 February 2008 (as amended on 1 May 2010), revival letter dated 11 January 2011 and 27 April 2013 for a total limit of Rs. 2733 crores. 8. Revival Letter dated 1 August 2016 in favour of the erstwhile State Bank of Hyderabad with respect to the loan agreement for Rs. 200 crores. 9. Revival letter dated 9 December 2014 in favour of the erstwhile State Bank of Bikaner and Jaipur with respect to the Memorandum of Agreement dated 23 December 2011 for a corporate loan of Rs. 150 crores. 10. ....
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....have been issued to the State Bank of India and the associate Banks which have merged with it w.e.f. 01.04.2017. The petitioner have furnished the details of balance confirmation in the form of a table which for convenience is extracted and the same reads as under:- "Details of balance confirmation Entity Date of Balance Confirmation Amount confirmed (In Rupees) Page No. State Bank of India 31 March 2016 4011,67,48,711.23 Pg 7342 (Vol 39) Erstwhile State Bank of Bikaner and Jaipur 31 March 2016 926,40,52,394.00 Pgs. 7321-7334 (Vol 38) Erstwhile State Bank of Patiala 31 March 2015 916,94,31,879.70 Pg 7335 (Vol. 38) Erstwhile State Bank of Mysore 31 March 2017 670,07,92,810.70 Pgs. 7336-7338 (Vol 38) & Pgs. 7339 to 7341 (Vol. 39) Total 6525,10,25,795.63" 9. In addition to the amount confirmed as reflected in the column Total' the Corporate Debtor has also admitted accrued interest on this amount which could not be quantified at the time of balance confirmation. 10. It is also pertinent to mention that the Corporate Debtor in its balance sheet has acknowledged the following amounts as borrow....
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....ette Notification dated 27.03.1987 to sign applications, reply, affidavit, counter-affidavit, sur rejoinder and generally all pleadings and file applications for initiation of Corporate Insolvency Resolutions Process before the National Company Law Tribunal, under the provisions of IBC on behalf of the Bank or in connection with any proceedings before Tribunal for or against the Bank under IBC. A reference has then be made to Regulations 76 & 77 of the State Bank of India (General Regulations, 1955). Regulation 77 with regard to signing the pleadings clearly stipulates that plaints, written statements, petitions and applications may be signed and verified, affidavits may be sworn or affirmed, bonds may be signed, sealed and delivered, and generally all other documents connected with legal proceedings may be made and completed on behalf of the State Bank of India by the Chairman or by any officer or employee empowered by or under Regulation 76 to sign documents for and on behalf of the State Bank. According to Regulation 76 the managing directors (deputy managing director), the chief general manager and such other officers and employees of the State Bank as may be authorized in this....
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....f any action under the IBC. The lender banks were required to finalize a resolution plan within six months effective from 13.06.2017 in case the Corporate Debtor does not fall within the criteria mentioned. It is claimed that the Corporate Debtor does not fall within the parameters fixed by the RBI for initiation of Insolvency and Bankruptcy process. The reason disclosed is that on 31.03.2016 the outstanding amount of the Corporate Debtor classified as non-performing was less than 60%. The respondents have also referred to circular dated 26.02.2014 issued by the RBI which required the banks to identify any incipient stress in the account by creating three sub-categories under the Special Mention Account ("SMA") which are as follows: Sr. No. Category Basis of classification 1. SMA-0 Principal or interest payment not overdue for more than 30 days but account showing signs of incipient stress 2. SMA-1 Principal or interest payment overdue between 31-60 days 3. SMA-2 Principal or interest payment overdue between 61-90 days 17. A further reference has been made to the Master Circular dated 01.07.2015 which deals with classification of asset as NPA ....
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....t (Annexure 11) and detailed account statements (Annexure 12). Annexure-11 provides "Report on Exposure to a Borrower" with 31.03.2017 as the quarter in reference. The account statements provided in Annexure-12, on the other hand, do not refer to the period upto 30.06.2017. It is thus stated that the Applicant has failed to provide any evidence to support and corroborate its claims of purported default for the period up to 30.06.2017. Thus, in absence of the mandatory evidence, it cannot be deciphered as to on what basis a sum of Rs. 4390,75,41,611 and US$ 49,684,877 has been claimed in the present Application. (b) Calculations for the purported claims are incorrect and wrong: The amounts as claimed by the Applicant (as detailed in Annexure 7 to the Application/Form 1) are categorised as under: 1. Term Loan: a. Principal Amount b. Interest Amount 2. Working Capital Accounts: a. Principal Amount b. Interest Amount (i) Discrepancies in the alleged principal as well as interest amounts under Term Loan: In Part IV, Sr. No. 2 of the Application, an amount of Rs. 4390,75,41,611 and US$ 49,6....
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....plicant. Copy of the minutes of the meetings of the JLF dated 16.03.2016 and meeting of Steering Committee dated 08.06.2017 have been placed on record (Annexures CD-11 and CD-19 marked in paras 16 (f) and 16 (q) respectively below). 22. A tabular representation of the error in treatment i.e. clubbing of working capital accounts as default amount is provided hereunder: Sr. No Description of loan/working Capital Account Pg-Reference from Application Vol. I Disbursed Amount (In Rs.) Principal Amount wrongly claimed to be in default as on 30.06.2017 (In Rs.) 1. CC 10813608761 145 1956,12,64,801 1956,12,64,801 2. CC 30492200039 145 1,00,00,000 62,95,306 3. CC 30840862952 145 25,00,00,000 21,06,19,920 4. Working capital 51025568034 148 237,75,59,630 217,51,49,299 5. Working capital CC 62232959289 150 241,00,00,000 241,00,00,000 6. Working capital 67039641331 152 339,89,13,058 339,89,13,057 7. Cash Credit (A/c No. 64129591659 154 158,56,19,898 158,56,19,898 8. Cash Credit 65078405153 156 133,99,21,432 133,99,21,432 TOTAL 309....
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.... made in CA No. 203(PB)/2017 warrants acceptance. 28. In view of the aforesaid we allow the application and take the amendments on record. 29. Mr. S.N. Mukherjee learned Senior counsel on behalf of the respondent has submitted that the default took place on 29.11.2015 and IBC was enforced w.e.f. 01.12.2016. There were various meetings held in accordance with the guidelines issued by the Reserve Bank of India which included the examination of Forensic Audit Report by Deloitte. According to the learned counsel it was the petitioner itself who informed the Joint Lender Forum with regard to the Forensic Audit Report prepared by the Deloitte which covers the period of 2012-14 and 2014-16. State Bank of India also informed the Committee no commission of malfeasance, fraud or siphoning of funds by the respondents could be established from the Forensic Audit Report. The Joint Lender Forum decided to send a suitable reply to the Reserve Bank of India. Mr. Mukherjee has also made reference to the meeting with regard to Corrective Action Plan including S4A i.e. Scheme for Sustainable Structuring of Stressed Assets and the efforts made in that direction. A reference has been invited to t....
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....crepancy in calculation then it does not materially affect the admission of the such application. We observed that the Adjudicating Authority is not entrusted with any function to determine the amount of default and once the default has occurred involving rupees one lac or more in terms of Section 4 of IBC then one of the requirements for initiating the insolvency process stand satisfied. The objection of this nature concerning discrepancy in calculation of the amount would surely be maintainable before the Committee of Creditors. It was further observed that once default in terms of Rule 3 (12) of IBC is established and all other requirements are fulfilled the Insolvency Resolution Process must be triggered. 33. Having heard the learned counsel for the parties and having perused the paper book with their able assistance it would be imperative to examine the provisions of Section 7 (2) and Section 7 (5) of IBC which read as under:- "Initiation of corporate insolvency resolution process by financial creditor. 7(1) ..................... 7 (2) The financial creditor shall make an application under sub-section (1) in such form and manner and accompanied wi....
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....oan. The date of default is disclosed at pgs. 143-156 as different amount of default has occurred on different dates in respect of different nature of loans. For example, in respect of Term loan (GMC) 125 cr. the date of default in repayment of principal is 30.06.2017 and in respect of Corporate Loan (1000 cr.) the default occurred on 30.09.2016 so on and so forth. The whole details are available from pgs. 143 to 156. We are satisfied that the default has occurred in repayment of loan. Hence, one more requirement stand fulfilled as per the provisions of Section 7 (5) (a) read with Section 3 (12) of IBC. We also satisfied that the Financial Creditor has given the facility of loan to the Financial Debtor and is covered by the provisions of Sections 5 (7) and 8 of IBC. Mr. Vijay Kumar V Iyer (IBBI/IPA-001/IP-P00261/2017-18/10490) has been proposed as in Interim Resolution Professional who has filed his consent with necessary disclosures made. 36. The objection raised by the learned counsel on behalf of respondent with regard to discrepancy in the amounts of the default claimed would not survive because we have accepted the application C.A. No. 203(PB)/2017 incorporating the correct....
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....anning and facilitation of evolving a resolution for the industry to survive. If the argument of Mr. Mukherjee is correct and the solution was well in sight than there would not be any difficulty for the Creditors Committee with the assistance of the Corporate Insolvency Resolution Professional to adopt a resolution plan in a time bound disciplined manner under a Parliamentary Act which may be acceptable to all the stakeholders. It is only on the failure of a resolution that the liquidation process may have to be initiated in accordance with the provisions of Section 33 of IBC. We may observe in the passing that issuance of direction by the RBI on 30.06.2017 cannot also be termed as illegal because there is adequate power conferred by the Banking Regulation Act by amendment of Section 35 to issue directions to Banks being a Regulator entitled to do so. Therefore, we are unable to persuade ourselves to accept the submission made by Mr. Mukherjee learned senior counsel for the respondent. 38. As a sequel to the above discussion this petition is admitted. Mr. Vijay Kumar V Iyer who is duly registered with the Insolvency and Bankruptcy Board of India is appointed as an Interim Resol....