TaxTMI 
TaxTMI 
TaxTMI 
2018 (7) TMI 512
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....with its registered office at Makum Pathar, A.T. Road, Margherita, Tinsukia, Assam and its date of incorporation was 26.08.1982. 4. It may be stated that in 1994, a loan to the tune of Rs. 500 lakhs was granted to the CD by the FC in order to felicitate the CD to run its business in a better way. A schedule of repayment was also prepared so that the loan can be repaid within a certain time frame. However, there was default in repayment of the loan. Ultimately, in 2008, a one-time settlement (OTS, in short) was arrived at between the parties. 5. Under such OTS, the CD was to pay Rs. 77.56 crores out of which Rs. 46.10 crores was to be paid in cash and balance part thereof was to be paid by way of 6% Cumulative Non-Convertible Debentures amounting to Rs. 31.55 crores, which would be redeemed in two equal yearly instalments in March, 2013 and March, 2014. 6. In compliance thereof, the CD had paid Rs. 46.10 crores in cash and also issued 6% Cumulative Non-Convertible Debentures amounting to Rs. 31.55 crores which could be redeemed in two equal yearly instalments, one in March, 2013 and other in March, 2014. However, the CD once again slipped into serious financial doldrums for which....
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.... debenture and the same can take place only in terms of the rehabilitation scheme to be worked out under the aegis of Hon'ble BIFR. In view of the aforesaid, we request you to kindly withdraw your erroneous letter dated February 29, 2016 based on wrong factual understanding and the threat made thereunder and bear and co-operate with us to overcome the situation by working out a rehabilitation scheme for the benefit of all stakeholders including IDBI before the Hon'ble BIFR. Thanking You, Your faithfully For Kitply Industries Limited Sd/- P.K. Goenka Chairman & Managing Director" 8. The CD further stated in the aforesaid letter that it is no longer possible on its part to repay the loan in pursuance to the demand, made by the FC stating that since it has already approached the concerned authority to declare it as a sick industry under the Sick Industrial Companies (Special Provisions) Act, 1985, it cannot legally be asked to repay the loan, if any, to the FC. 9. It may be stated here that Section 4(b) of the SICA, 2003 stood amended in the following manner vide Eighth Schedule to the IBC, 2016. For ready reference, the Eighth Schedule incorporated in the IBC, 2016 is....
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.... such loan, the FC has validly initiated the proceeding under Section 7 of the Code of 2016. 12. It has also been contended that the application has been filed in accordance with the prescription of law and the Rules framed thereunder. However, the Registry of this Authority had notified some defects therein which were duly rectified and the rectified application has also been filed with this Authority, copy of which was also served to the CD after presentation of the rectified application before this Authority. 13. Though the CD has raised some objections against the IRP, so named by the FC in the application, questioning his impartiality alleging that such IRP has a close nexus with the FC and, therefore, the CD apprehends that the IRP, so named by the FC, cannot be expected to act impartially in the dispute between the parties in the event the application under consideration is admitted. However, according to the FC, such apprehension was wholly unfounded and in trying to dispel such doubt in the mind of the CD, it also offered an explanation in its rejoinder. 14. It has also been submitted by the learned Advocate for the FC that the application is complete in all respects an....
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....ank's exposure is less than Rs. 100 crores, the authority to file claim has been delegated to the jurisdictional Deputy General Manager. 19. However, when the Bank's exposure is Rs. 100 crores or above, the power to file claim has been delegated to the concerned General Manager. In the present case, the total amount of claim to be in default including interest is calculated at Rs. 53,87,09,1011.75 (Fifty-Three Crores Eighty-Seven Lakhs, Nine Thousand and Eleven Rupees Seventy-Five Paisa). Being so, in terms of the arrangements, made in the aforesaid Board resolutions, the power to file present application was conferred only on the jurisdictional Deputy General Manager. 20. But surprisingly enough, the application under consideration was filed by Shri Dattaraya Bapurao Sawangikar who is the General Manager of the applicant bank. Since in terms of resolution dated 14-08-2017, Shri Sawangikar , General Manager, did not have requisite authority to present the application under Section 7 of the Code before this Authority , on this count also the application is liable to be rejected ---contended Ms. Mili Hazarika, learned Sr. Counsel appearing for the CD. 21. Referring to Rule 4(3) of....
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....ty. On coming to know about such apprehensions, expressed by the CD, the FC, in its rejoinder, stated that Sri Anup Kumar Singh had rescued himself from the proceeding and as such, he was replaced by one Sri Vijay Murmuria. 26. However, the replacement of Sri Anup Kr. Singh by Sri Vijay Murmuria was as worse as earlier one. This is because of the fact that now, FC, instead of naming a person to act as IRP as required under section 7(3)(b) of the Code, 2016, appointed such a person as the IRP, as is evident from Annexure-A of the rejoinder which is, however, not permissible under the law since law requires the FC only to name a person having the qualifications, specified in the Code, to act as IRP. According to the CD, this is another reason why the present application is required to be rejected. 27. The FC in its reply submitted that the allegations, advanced from the side of the CD, aimed at dislodging the proceeding under consideration, were structured more on fancy and fiction than on law, logic and facts and in support of such contention, it tries to address each of such allegation separately. In regard to the contention that the application under consideration is required to....
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....cognize that a 'Financial Creditor' being a juristic person can only act through an "Authorized Representative". Entry 5 & 6 (Part I) of Form No. 1 mandates the 'Financial Creditor' to submit "name and address of the person authorized to submit application on its behalf. The authorization letter is to be enclosed. The signature block of the aforementioned Form 1 also provides for the authorized person's detail is to be inserted and also includes inter alia the position of the authorized person in relation to the 'Financial Creditor'. Thus, it is clear that only an "authorized person" as distinct from "Power of Attorney Holder" can make an application under section 7 and required to state his position in relation to "Financial Creditor". 32. The 'I & B Code' is a complete Code by itself. The provision of the Power of Attorney Act, 1882 cannot override the specific provision of a statute which requires that a particular act should be done by a person in the manner as prescribed thereunder. 33. Therefore, we hold that a 'Power of Attorney Holder' is not competent to file an application on behalf of a 'Financial Creditor' or 'Operational Creditor' or 'Corporate Applicant'. "34. A....
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...., if an officer, such as senior Manager of a Bank has been authorised to grant loan, for recovery of loan or to initiate a proceeding for 'Corporate Insolvency Resolution Process' against the person who have taken loan, in such case the 'Corporate Debtor' cannot plead that the officer has power to sanction loan, but such officer has no power to recover the loan amount or to initiate 'Corporate Insolvency Resolution Process', in spite of default of debt. 39. If a plea is taken by the authorised officer that he was authorised to sanction loan and had done so, the application under section 7 cannot be rejected on the ground that no separate specific authorization letter has been issued by the 'Financial Creditor' in favour of such officer designate. 40. In view of reasons as recorded above, while we hold that a 'Power of Attorney Holder' is not empowered to file application under section 7 of the 'I & B Code', we further hold that an authorised person has power to do so. 41. For the reasons aforesaid, we find no ground to interfere with the impugned order(s). All the appeals are dismissed, the order of admission of application under section 7 is affirmed. However, in the facts a....
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....ri Dattaraya Bapurao Sawangikar, General Manager IDBI Bank Ltd. Kolkata to file the application under consideration, it is found that the FC too admitted that the aforesaid power of attorney suffers from the defects, so pointed out by the learned counsel for the CD. 36. Since the power of attorney dated 29-11-2017 admittedly suffers from lapses, and since such lapses are found to be quite serious in nature, such lapses, in my considered view, reduce the aforesaid power of attorney to a piece of paper, which has no legal validity whatsoever. Therefore, I have no hesitation in concluding that the power of attorney dated 29-11-2017 could not give any authority whatsoever to Sri Dattaraya Bapurao Sawangikar to present before this Authority the application under consideration. 37. In such a scenario, it needs to be seen if the claim of the FC that it had brought on record more and more evidence to show that the applicant bank had duly authorised its officers, working in different positions to initiate proceedings under the IBC, 2016 before the Adjudicating Authority, has found favour from the materials available on record. On the perusal of the record, I have found that the FC has bro....
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.... Meeting of the Board of Directors of IDBI Ltd. held on 14.8.2017at Mumbai regarding the Revision in Delegation of Powers of the Bank to competent individuals. By the said resolution dated 14.08.2017 the Board of Directors of the IDBI Bank Limited had resolved to approve the revision in the Delegation of Powers (DOPs) with directions that Standard Operating Procedures (SOP) be devised for NCLT/JLF cases. Accordingly, it was specifically provided in therein that when the bank's exposure is less than Rs. 100 crore, the authority to file claim been delegated to Deputy General Manager and the when the bank's exposure is Rs. 100 crore and above the power to file claim has been delegated to the General Manager. In the present case the total amount claimed to be in default including interest is Rs. 53,87,09,011.75/- (Fifty three Crores Eighty Severn Lakhs, Nine Thousand and Eleven Rupees Seventy Five Paise). Hence, the exposure of the Bank being less than Rs. 100 crore, the power to file claim as per the Resolution was with the Deputy General Manager and not the General Manager. The Board having specifically delegated the power to the Deputy General Manager Shri Dattaraya Bapurao Sawangik....
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....hat Sri Sawangikar could not have presented the application u/s 7 of the Code is found to be wholly without any substance. 46. In regard to the allegation that since in presenting the application u/s 7 of the Code, Sri Dattaraya Bapurao Sawangikar, GM of the applicant bank, paid no regard whatsoever to the pecuniary qualifications, specified in the resolution, dated 14-08-2017, thereby requiring this Authority to reject the application under consideration, I have found that such contention too carries no conviction. It is true that as per aforesaid resolution, GM is authorised to initiate the proceeding before the Adjudicating Authority when the value of the claim is Rs. 100 crores or more. 47. It is also true that when the amount in default is less than Rs. 100 cores, in terms of aforesaid resolution, the necessary proceeding before the Adjudicating Authority is required to be initiated by the DGM of the bank having territorial jurisdiction over the matter. However, here in this proceeding, the amount, said to be in default is Rs. 53,87,09,1011.75 (Fifty-Three Crores Eighty-Seven Lakhs, Nine Thousand and Eleven Rupees Seventy-Five Paisa) as on 31-11-2017. 48. Being so, as per a....
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....al approach qua defect in authority/power may not advance the cause of justice. 53. On considering the present controversy in the light of what has been decided in Palogix Infrastructure (P.) Ltd.'s case (supra), I have found that this authority must take into consideration the Board resolution dated 23-06-2017 as well as the resolution dated 14-08-2017 in ascertaining if Sri Dattaraya Bapurao Sawangikar had valid authority to present the application under consideration before this authority. This is more so, when such resolutions are already brought on record when the application was taken up for consideration. 54. It needs to be stated here that I have already scrutinised the aforesaid resolutions and have found that such resolutions very clearly show that under those resolutions, the applicant bank had authorised some of its high ranking officers including the GM of such bank to do various acts and deeds for and on behalf of the bank which included the authority to present application u/s 7 of the Code. In that view of the matter, the last allegation too, employed to discredit the proceeding under consideration, in my opinion, fades into total insignificance. 55. Coming to th....
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....lation of Rule 4(3) of the Rules, 2016. 59. But then, even if one assumes for the sake of argument that the copy of the application was despatched only to the corporate office of the CD, as alleged by the learned Sr. counsel appearing for the CD -- yet then--- there are enough materials on record to show that the CD received the copy of the application in time , filed with Adjudicating Authority and having been so furnished with copy of the application, the CD duly participated in the proceeding under consideration and also challenged the application on grounds more than one. 60. Here, it needs to be stated that the CD has informed that it had already filed an application against the FC seeking initiation of appropriate proceeding against the FC. According to the CD, it had to file said application seeking initiation of proceeding against the applicant since in its rejoinder; the FC falsely claimed that in presenting the application u/s 7 of the Code, it had faithfully carried out the prescriptions, rendered in Rule 4(3) of the Rules of 2016. 61. Initiation of such a proceeding became obligatory on the part of the CD since such false representation from the side of the FC shows ....
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....the newly enacted Insolvency and Bankruptcy Code, 2016 by a junior Advocate at the office of the advocate-on-record of the Financial Creditor. I say that the alleged forwarding letter of IRP does not bear his signature either. It cannot be said that such a letter was issued by him or the service of the said application was effected by the IRP. I deny that there is any occasion of raising a question mark on the independence of the proposed IRP. In any event, upon such unfounded allegation being made the IRP has sought to excuse himself from the present proceedings and has withdrawn his name by a letter dated 9.03.2018 issued to the Financial Creditor. I say that in view of the fact that Mr. Anup Kumar Singh, the erstwhile IRP has excused himself from the present proceedings and has been replaced by Mr. Bijay Murmuria, the objection raised in paragraph 5 no longer survives." 65. In regard to the allegation that in naming the second IRP, the FC committed equal blunder which, in turn, requires this Authority to reject the present application, I have found that in naming the IRP second time, the FC had done something which has no approval of section 7(3)(b) of the Code, 2016. Section 7....
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....urred in naming the IRP by the FC cannot be allowed to have size larger than their lives to overthrow the entire proceeding U/s 7 of the Code. 70. Coming back to our case, it is found that Sri Bijoy Murmuria who was appointed as IRP by the FC---off course in an unauthorized way----possessed enough qualification to be appointed as IRP in the event of admission of application under consideration. The documentation of his qualifications in the Annexure B and C to the rejoinder makes such position clear. The fact that he has already worked as IRP as well as the liquidator and that no proceeding said to have been pending against him are testimonies to such a conclusion. Being so, the lapses on the part of the FC in naming the IRP seems to be of no consequences. 71. Our foregoing discussion now makes it clear that all the allegations levelled against the proceeding u/s 7 of the Code could cause no serious impediment in the way of acceptance of such an application. Consequently, all those allegations are rejected. 72. Our foregoing discussion further reveals that as on 31.10.2017, the CD owed an amount to the tune of Rs. 53,87,09,011.75 to the FC and that there was a clear default in r....