TaxTMI 
TaxTMI 
2018 (11) TMI 609
X X X X Extracts X X X X
X X X X Extracts X X X X
....ss has been prayed for, was incorporated on 28.11.2001 having its registered office at 1/5783, Balbir Nagar, Shahadara, Delhi - 110032. Since the registered office of the respondent corporate debtor is in Delhi, this Tribunal having territorial jurisdiction over the NCT of Delhi is the Adjudicating Authority in relation to the prayer for initiation of Corporate Insolvency Resolution Process in respect of respondent corporate debtor under sub-section (1) of Section 60 of the Code. 3. It is appropriate to mention that the applicant Indian Overseas Bank is a body corporate constituted under the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 having its registered office 763, Anna Salai, Chennai - 600002. 4. Mr. M. Ravindran Menon, authorized representative of the applicant and working as Asstt. General Manager has preferred the present application on behalf of the applicant Indian Overseas Bank for initiation of Corporate Insolvency Resolution Process against the respondent corporate debtor in terms of the provisions of the Code. 5. The applicant initially has proposed the name of Mr. Hemant Sharma, for appointment as interim resolution professional. Su....
X X X X Extracts X X X X
X X X X Extracts X X X X
....sortium I & II on 14.06.2010. The Consortium - III was reformed on 14.07.2010. Once again on the request of Corporate Debtor, the financial limits under Consortium - III were enhanced by the applicant bank from Rs. 21.50 Crore to Rs. 51.50 Crore on 01.07.2011 for which necessary documentation was executed by Corporate Debtor on 04.07.2011. 10. However, soon after the Joint documentation and renewal/enhancement of credit facilities/limits, the Corporate Debtor started committing default in servicing of the interest in violation of the terms of the loan agreements and thus the Account of the Corporate Debtor was declared as a Non Performing Asset on 02.03.2012. 11. The particulars of financial debt as mentioned by the applicant bank in part - IV of the application is furnished below for ready reference: Part IV PARTICULARS OF FINANCIAL DEBT Total Amount of Debt Granted Date(s) of Disbursement Date of Last Sanction :01.07.2011 Total amount of debt granted facility - wise:- Term Loan - I: Rs. 8.61 crores Term Loan - II: Rs. 16.04 Crores Cash Credit: Rs. 44.00 Crores Letter of Credit: Rs. 5.00 crores Letter of Guarantee: Rs. 2.50 crores Amount claimed to be in de....
X X X X Extracts X X X X
X X X X Extracts X X X X
....of Joint Deed of Hypothecation Dated 02.11.2007. xxxi. Copy of Working Capital Consortium Agreement Dated 02.11.2007. xxxii. Copy of Deed of Joint Guarantee Dated 02.11.2007 xxxiii. Copy of Sanction Letter Dated 18.12.2008. xxxiv. Copy of Demand Promissory Note Dated 19.01.2009. xxxv. Copy of Letter of Continuity Dated 19.01.2009. xxxvi. Copy of Letter of Hypothecation Dated 19.01.2009. xxxvii. Copy of Hypothecation of Book Debts Dated 19.01.2009. xxxviii. Copy of Letter of Hypothecation for Securing Machinery/Vehicles/Book Debts etc. Dated 19.01.2009. xxxix. Copy of Guarantee for Cash Credit etc. dated 19.01.2009. xl. Copy of Inter-Se Agreement Dated 02.12.2009 (Consortium - III). xli. Copy of Working Capital Consortium Agreement Dated 02.12.2009 (Consortium -III). xlii. Copy of Joint Deed of Hypothecation Dated 02.12.2009 (Consortium - III). xliii. Copy of Guarantee Agreement by both the Guarantors Dated 02.12.2009 (Consortium III). xliv. Copy of Confirmation Letter in respect of Mortgage Dated 03.12.2009 (Consortium-III). xlv. Copy of Confirmatio....
X X X X Extracts X X X X
X X X X Extracts X X X X
....dent corporate debtor failed to pay the amount despite the demand notice. The petitioner has placed on record the relevant statement of accounts duly certified as per Bankers' Books Evidence Act and has claimed that as on 31.03.2018 a sum of Rs. 188,08,68,115.93/- is due and payable by the Respondent Corporate Debtor. 14. On the ground that huge amounts are outstanding, it is claimed that the respondent has become commercially insolvent and accordingly it is prayed for initiation of corporate insolvency resolution process against the respondent company by admitting the present application. 15. Respondent has filed its reply on 28.05.2018 opposing the admission of the present application. One of the objections raised in the reply is that the credit facilities were granted by consortium of banks and therefore the applicant bank does not have the requisite legal authority to move against the corporate debtor without approval of other lenders. Respondent has submitted that the applicant Bank alone cannot file the present application without specific consent of the other consortium banks and without impleading them in the proceedings. In this regard it is pertinent to note that Se....
X X X X Extracts X X X X
X X X X Extracts X X X X
.....) Ltd. v. ICICI Bank Ltd. in Company Appeal (AT) (Insolvency) Nos. 30, 37 & 54 of 2017 at para 38 has held that: " If an officer, such as senior Manager of a Bank has been authorised to grant loan, far 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 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." 20. In the present case Applicant bank has filed a copy of letter of authority in favour of M. Ravindran Menon dated 02.06.2018 stating that the board of directors of applicant bank have decided in the meeting held on 29.01.2018 to empower all the chief managers and officers above rank of Scale IV to act as authorized representative on behalf of the applicant bank within the meaning of rule 2(6) of NCLT Rules, 2016, and Rule 10 of the Rules. Admittedly Mr. M. Ravindran Menon is working in a senior post in Scale-V as Asstt. General Manager of the applicant bank and has preferred the present application on behalf ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ate debtor has also denied and disputed the claim of the applicant bank. It is alleged that necessary information including the statement of account, rates of interest debited from time to time, rates of penal interest charged etc. were never furnished. Respondent has additionally disputed the claim of interest and the declaration of the account as NPA. 24. In this regard the applicant bank in its rejoinder has submitted that "the liability of the defendant is not only evident from the document of loan and the account statement but also from various admissions made by the defendant itself which leaves no scope for any doubt." Applicant has further submitted that there are enough documents placed on record to prove the liability of the corporate debtor. Besides it is contented that the outstanding dues as claimed are supported by the statement of accounts of the corporate debtor which has been duly certified under Section 2A of the Banker's Books of Evidence Act, 1891. 25. It is pertinent to mention here that dispute over the quantum of default, cannot be a ground for rejection of an application under Section 7 of the Code as the determination of quantum of financial debt is n....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... far strict time frame is expected to be followed by the Adjudicating Authority at every stage of the proceedings. When despite demand there is default in repayment of the loan amount, the applicant gets right to move under the Code. The application under Section 7 is maintainable once the default is more than one lakh, in view of Section 4 of the Code. 31. It is pertinent to mention here that the scheme of the Code provides for triggering the insolvency resolution process by three categories of persons namely, (a) Financial creditor (b) Operational creditor, and (c) Corporate debtor itself. 32. The procedure in relation to the Initiation of Corporate Insolvency Resolution Process by the "Financial Creditor" is delineated under Section 7 of the Code, wherein only "Financial Creditor"/"Financial Creditors" can file an application. As per Section 7(1) of the Code an application could be maintained by a Financial Creditor either by itself or jointly with other Financial Creditors. 33. The expressions "Financial Creditor" and "Financial debt" have been defined in Section 5(7) and 5(8) of the Code and precisely "Financial debt" is a debt along with in....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the loan agreements were properly executed. Respondent company utilized and enjoyed the loan facility. The applicant bank has placed on record several balance and security confirmation letters duly signed by the respondent. Additionally, the applicant has also placed on record demand promissory note for Rs. 44 Crores dated 04.07.2011. That apart the applicant has relied upon the letter of respondent company confirming creation of mortgage by deposit of title deeds in order to secure the loan. 39. In addition the applicant bank has filed the statement of accounts duly certified in accordance with Bankers' Books Evidence Act, 1891 as per requirement of Form 1 part V column 7 of the application. Certified copy of statement of account pertaining to various loan facilities, kept during the course of banking business basing on which the claim has been raised can be termed as sufficient evidence of the financial debt. 40. It is thus seen that the applicant 'financial creditor' has placed on record voluminous and overwhelming evidence in support of the claim as well as to prove the default. 41. It is pertinent to mention here that the Code requires the adjudicating authority to o....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... transferring, encumbering, alienating or disposing of by the corporate debtor any of its assets or any legal right or beneficiai interest therein; (c) any action to foreclose, recover or enforce any security interest created by the corporate debtor in respect of its property including any action under the Securitization and Reconstruction of Financial Assets and Enforcement of Securìty 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. " 47. It is made clear that the provisions of moratorium shall not apply to transactions which might be notified by the Central Government or the supply of the essential goods or services to the Corporate Debtor as may be specified, are not to be terminated or suspended or interrupted during the moratorium period. In addition, as per the Insolvency and Bankruptcy Code (Amendment) Act, 2018 which has come into force w.e.f. 06.06.2018, the provisions of moratorium shall not apply to the surety in a contract of guarantee to the corporate debtor in terms of Section 14(3)(b) of the Code. 48. The Interim Resolution Profes....