TaxTMI 
TaxTMI 
TaxTMI 
2018 (3) TMI 1319
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....r in respect of the financial debt was Canara Bank which has assigned the debt in favour of the petitioner vide Registered Assignment Agreement dated 26.06.2014 Annexure-6. The petitioner thus claims to be financial creditor as an assignee falling within the scope of the definition given in Section 5(7) of the Code. 3. The Board of Directors of the 'financial creditor' passed resolution dated 20.09.2017 Annexure-1, authorising various officials of the company (13 in number) including Mr.K.B.Ajit, authorising them severally to represent the Company or the Trust, in any Court of Law (civil and/or criminal), Consumer Courts any Commissions, Forums & Tribunals including but not limited to Debt Recovery Tribunal, Debt Recovery Appellate Tribunal, Arbitration Tribunal, National Company Law Tribunal, National Company Law Appellate Tribunal, in connection with all legal proceedings including filing application or petition under the provisions of the Insolvency and Bankruptcy Code, 2016 and to do all the necessary acts in the progress of the matter. The instant petition has been filed in Form No.1 as prescribed in Rule 4(1) of the Rules. The contents of the application are supported by the....
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.... letter dated 13.04.2007 with regard to the deposit of title deeds and the consequent documents to secure the loans are from Annexures 29 to 44. The respondent-corporate debtor also created hypothecation of entire stock of raw materials etc., and hypothecation of Plant & Machinery. The last letter of deposit of title deed of equitable mortgage is dated 30.03.2011. The certificate of charge issued by the Registrar of Companies has also been relied upon as at Annexure-42 and Annexure-43 is the Form 8 under Companies Act, 1956 in this regard. 7. In addition thereto, Canara Bank granted further sanction of various loan facilities dated 11.06.2008 as under:- a. OCC / ODBD facility of Rs.3.35 crores (fund based) b. PC / FDB / FBE facility of Rs.2.00 crores (fund based) c. Bank Guarantee of Rs.1.00 crore (non-fund based) To secure the said credit facilities, various security documents including the Promissory Note for the enhancement of facility which are from Annexures 45 to 51 (colly) and also relating to the creation of mortgage of immovable properties. The loan facility was enhanced from time to time which was sanctioned and Board resolutions were passed and the documents r....
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....complaint No.324 of 2012 claiming an amount of more than Rs.9 crores with interest of Rs.3 crores under the fire insurance policy and another amount of more than Rs.6 crores with interest of more than Rs.2 crores under LOP (Fire) policy apart from other claims. The claim has been made for deficiency in service and against repudiation of claim of loss caused by major and devastating fire which broke out in the cotton godown of the corporate debtor on the intervening night of 20/21.12.2010. Before the NCDRC, the petitioner has also filed an application for being impleaded as a necessary party. Copy of the application dated 16.09.2010 is at Annexure-9. The complaint before the NCDRC is stated to be still pending. 13. In Part IV of the application in Form No.1 it is stated against column 2 that the total amount of outstanding against the respondent as on 31.08.2017 is Rs.80,20,77,741/- along with the pendent-lite and future interest as per the loan documents. The petitioner has also annexed copies of statements of account of the respondent duly maintained under the Bankers Books Evidence Act, 1891 along with summary of outstanding amount as on 31.08.2017 which is at Annexure-110. 14.....
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....Supreme Court does not give any finding, the so called assignment deed has no relevance in the eyes of the of law. 17. Further, the order of Debt Recovery Tribunal dated 21.03.2017 passed in OA No.224/2017 whereby the petitioner was substituted in place of Canara Bank on the basis of the assignment deed has been challenged in Appeal No.523/2017 filed before Debt Recovery Appellate Tribunal (DRAT), Delhi in which the notice has been issued vide order dated 08.12.2017. Similar order of substitution dated 02.03.2017 passed in S.A.No.55/2017 has also been challenged by the corporate debtor before the DRAT in which the notice has been issued. 18. The petitioner even filed an application before the NCDRC to be substituted in place of Canara Bank on the basis of assignment deed which has still pending. The corporate debtor has also challenged the assignment deed in Additional Civil Suit filed before the Civil Judge (Senior Division) Samana in the state of Punjab in Suit No.6792/2017. Annexure R-4 is copy of the civil suit filed by the respondent which is attached with the application CA No.22 of 2018. 19. The other preliminary objection is that assignment deed dated 26.06.2014 which cr....
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....ure. The respondent-corporate debtor has filed a complaint CC/No/324 of 2012 against the National Insurance Company Limited & Ors. which is already pending before the NCDRC, New Delhi with next date of hearing fixed on 04.04.2018. 25. Further, the Canara Bank has also been over-charging the interest from the corporate debtor as evident from the contents of the notice under Section 13(2) of the SARFAESI Act. 2% of the additional interest claimed as penal interest cannot be added without any proper adjudication by appropriate Court of law under Section 74 of the Indian Contract Act. By declaring the account of the Corporate Debtor as NPA by the Canara Bank on 09.01.2012, the corporate debtor has also become ineligible for the interest subsidy of 5% under the TUF scheme of the Ministry of Textiles, Government of India. 26. On merits, the contents of various paragraphs of the application in Form No.1 are simply denied. The authority of Mr.Ajit Kewin to file the petition on behalf of the financial creditor is also challenged on the ground that his name does not find mention in the resolution dated 20.09.2017. 27. It is otherwise admitted that the corporate debtor was granted term loa....
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....pensation, to be impleaded as a party to the complaint pending before the NCDRC vide order dated 17.10.2017 on the basis of assignment in place of Canara Bank. The copy of the order of NCDRC dated 17.10.2017 is at Annexure A-5 which reveals that Canara Bank was originally the party but the name of Canara Bank had been deleted from the case vide order dated 06.11.2015. The petitioner later on applied for being impleaded in place of Canara Bank on the basis of this assignment which was permitted by the NCDRC. Regarding pendency of appeal before DRAT against the order of DRT impleading the petitioner as a party or filing Civil Suit by the corporate debtor in the Court at Samana do not have any bearing in the present proceeding. It is averred that in any case the petitioner has not received any notice of the aforesaid Civil Suit. According to the petitioner the U.P Government, vide notification dated 15.03.2005 restricted maximum amount payable on an instrument of assignment of debt to Rs.1.00 lakh and relied upon the notification Annexure A-1 and copy of the subsequent notification dated 29.03.2005 in modification of the earlier notification is at Annexure A-2 with the rejoinder. 31.....
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....20 of the additional documents filed by the respondent with C.A No.22/2018, which is clearly after this petition was filed with the Registry of this Tribunal. The record of the petition shows that copy of this petition along with entire paper book was dispatched to the corporate debtor by the petitioner Bank on 23.11.2017. 35. The respondent also filed C.A.No.19/2018 with the prayer of staying the proceedings of this petition during pendency of the said application raising almost similar issues with regard to the maintainability of the petition filed through Mr.Ajit Kewin and challenging the legality of the assignment deed. No need to reiterate the facts of the said application. 36. I have heard learned counsel for the parties at length and also extensively gone through the record with their assistance. I would take controversy issue-wise hereunder: Whether this petition has been filed through a competent person. 37. The resolution of the petitioner to trigger the insolvency resolution process is at Annexure-1 dated 20.09.2017. One of the persons authorised is Mr.K.B.Ajit for initiating proceedings under various loans on behalf of the petitioner including filing of application....
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....eady observed while narrating the facts of the instant case. 6 weeks' time w.e.f. 01.11.2017 would have expired by 10/11.12.2017, but before the expiry of the said period, Hon'ble Supreme Court of India in the order dated 08.12.2017 passed in the SLP stayed operation of the order of the Collector Stamps until further orders. In view of the aforesaid order of Hon'ble Supreme Court which has admittedly not been varied so far, the instrument of assignment relied upon by the petitioner cannot be said to be insufficiently stamped. 40. The assignment deed Annexure-6 was executed at Kanpur and the stamp duty leviable would have been as per the laws applicable in the state of Uttar Pradesh. The notification dated 15.03.2005 issued by Government of Uttar Pradesh is Annexure A-1 attached to the rejoinder. The notification says that Governor of Uttar Pradesh was pleased to reduce, from the date of publication in the Gazette, the stamp duty on instruments of assignment of debt by Financial Institutions chargeable as Conveyance under clause (a) of Article 23 of Schedule 1 B of the Indian Stamps Act executed in favour of an Asset Reconstruction Company constituted under Section 3 of the SAFAESI....
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.... mandatory in order to comply with the principles of natural justice. The respondent has appeared, filed reply and brought these facts before the Tribunal for which there is a rejoinder filed by the petitioner and the merits of the controversy has to be decided on the basis of available facts. I, however, find that in case the document of assignment relied upon by the petitioner was found to be insufficiently stamped on the basis of the order of Collector Stamps and the said was not assailed either in appeal or in the Writ Petition and not taken upto the Hon'ble Supreme Court, the consequences were that the petitioner would have faced drastic consequences of playing fraud with the Tribunal or coming up to the Tribunal based on unsustainable documents. 43. It would be significant at this stage to refer to judgement of Hon'ble National Company Law Appellate Tribunal in Unigreen Global (P) Ltd Vs. Punjab National Bank and Others CA (AT) (Insolvency) No.81 of 2017 decided on 01.12.2017. The Hon'ble Appellate Tribunal held as under:- "23. Any fact unrelated or beyond the requirement under I&B Code or Forms prescribed under Adjudicating Authority Rules (form 6 in the present case) are....
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....ation is complete. 26. Any proceeding under section 13(4) of the SARFAESI Act, 2002 or suit under section 19 of the DRT Act, 1993 pending before Debts Recovery Tribunal or appeal pending before Debts Recovery Appellate Tribunal cannot proceed in view of the order of moratorium as may be passed. 27. It is also desirable to refer to section 238 of the I&B Code as quoted below: "238. Provisions of this Code to override other laws - The provisions of this code shall have effect, notwithstanding anything inconsistent therewith contained in any other law for the time being in force or any instrument having effect by virtue of any such law." 44. The learned counsel for respondent, however, submitted that in case the petitioner's contention is accepted and ultimately the Hon'ble Supreme Court dismiss the SLP, there would be serious consequences if the instant petition is entertained. Learned counsel for petitioner, however, submitted and rightly so, that in case the petitioner is bound to pay the penalty and the deficient stamp duty ultimately, the result would be that the petitioner would be found to pay the amount which is recoverable as land revenue, but document on that very....
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....to the petitioner. In the said case, the document was a sale deed and registered at a place by including a property which was non-existent merely conferring jurisdiction on the Sub Registrar where it was registered and therefore, such document was held to be invalid. In the said case it was held that a property which does not belong to the mortgagor and was not intended by the parties to be mortgaged but was merely included to get the document registered, such document was also held to be invalid. Similarly, where the property which was included in a sale deed exists, but to which the vendor had no title and yet included the same in the document merely for enabling the document to be registered in the district where the said property situates, it was held that the registration of document was invalid. The above principles were deduced from various judgements on the subject as discussed in para 8 of the Judgement of Hon'ble Orissa High Court. 50. The other judgement referred to is Mohammad Khaja Vs. Monappa AIR 1953 Hyd 280 by the learned counsel for respondent but the same would also be not applicable to the facts of this case as that was a civil suit for possession of the land ba....
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....ent ICICI Bank transfers the debt with underlying security, the borrower(s) ceases to be the borrower(s) of the ICICI Bank and becomes the borrower(s) of Kotak Mahindra Bank Ltd. (assignee). The Hon'ble Supreme Court emphasized that the debts are the assets of the assignor bank. The assignor bank is only transferring its rights under a contract and its own assets, namely the debt as also mortgagee's rights in the mortgaged properties without in any manner affecting the rights of the borrower(s)/mortgagor(s) in the contract or the assets. 54. Therefore, it is rightly contended by learned counsel for the petitioner-financial creditor that what has been assigned by the Canara Bank on the basis of assignment made in favour of petitioner is the debt, which is the asset of the Bank and in no way connected with the transfer of rights in immovable property by assignment deed compulsorily registerable at Samana in the District of Patiala, Punjab. Therefore, on this issue it is held that the petitioner-financial creditor is entitled to apply under Section 7 of the Code on the basis of assignment deed. 55. Having dealt with the controversial issues raised in the pleadings, I would now discu....
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....s dated 10.02.2011, the outstanding amount was Rs.20,85,75,370.37 with further interest @ 15.75% per annum w.e.f from 31.01.2011. 59. It is admitted by the respondent in the written reply that the Canara Bank sanctioned and granted a term loan of Rs.22 crores and FLC sub limit of Rs.18.50 crores on 31.03.2007 which were availed on 13.04.2007. All the other allegations are denied that the documents were executed by the corporate debtor or that creditor facilities were enhanced or even that the corporate debtor availed of CC Limit of Rs.6.35 crores. 60. The most important aspect of challenge is that the notice dated 27.02.2012 issued under Section 13(2) of SARFAESI Act, Canara Bank claimed the default amount of Rs.31,59,77,461.27 whereas the amount claimed to be in default is now stated to be Rs.80,20,00,000/- which the financial creditor could not justify as contended by learned counsel for the respondent. It was stated that the default has occurred because of huge fire which broke out in the factory premises on the intervening night of 20/21.12.2012 at about 2.00 a.m or 3 O'clock in the cotton godown of the corporate debtor. It took about 12 hours in bringing the fire under contr....
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.... 64. I do not think that this aspect should detain the Adjudicating Authority for an elaborate discussion as the role of Adjudicating Authority is only to ascertain the existence of a default and not the exact amount. In case of admission of the petition and consequent appointment of Insolvency Resolution Professional (IRP), the financial creditor has necessarily to file the claim which the IRP is to verify and the IRP or RP, as the case may be, shall obviously look into this aspect as to whether interest is being charged contrary to the principles laid down by the Hon'ble Supreme Court in the Central Bank of India case (Supra) and to determine the exact amount as per the binding law laid down by the Apex Court. In case any person is aggrieved by the view of the insolvency resolution professional, the remedy lies under clause (c) of Section 60(5) of the Code which reads as under :- "60(5) Notwithstanding anything to the contrary contained in any other law for the time being in force, the National Company Law Tribunal shall have jurisdiction to entertain or dispose of- (a) ---- (b) ---- (c) any question of priorities or any question of law or facts, arising out of or in r....
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....the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002; (d) the recovery of any property by an owner or lessor where such property is occupied by or in the possession of the corporate debtor. 69. It is further directed that the supply of essential goods or services to the Corporate Debtor, if continuing, shall not be terminated or suspended or interrupted during moratorium period. The provisions of sub-section (1) shall however not apply to such transactions as may be notified by the Central Government in consultation with any financial sector regulator. 70. That the order of moratorium shall have effect from the date of this order till completion of the corporate insolvency resolution process or until this Bench approves the resolution plan under sub-section (1) of Section 31 or passes an order for liquidation of Corporate Debtor under Section 33 as the case may be. 71. I further issue the following directions: - (i) Appoint Mr. Manoj Sehgal, Registration No. IBBI/IPA- 002/IP-N00108/2017-18/10256, resident of Flat No.304, Tower 5, Ansal Valley View Estate, Gwal Pahadi, Gurugram, Haryana - 122003; Mobile 9812010519; e-mail m....