TaxTMI 
TaxTMI 
TaxTMI 
2019 (3) TMI 1634
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....levant to the issue in question, are as follows: I) Oriental Bank of Comrnerce (herein after referred to as Petitioner/ Financial Creditor) was incorporated on 1980. The Financial Creditor is a Banking Company registered under the Companies Act, 1956 having CIN No. U65191DL1901PLC002036. 2) M/S. IDEB Projects Pvt. Ltd (herein after referred to as Respondent/ Corporate Debtor) was incorporated on 17.04.1997, CIN No. U85110KA1997FTC022128. Authorised share capital is Rs. 27,70,OO,OOO/- (Rupees Twenty Seven Crore Seventy Lakhs Only) and Paid up Capital is Rs. 20,70,67,130/- (Rupees Twenty Crore Seventy Lakhs Sixty Seven Thousand One Hundred and Thirty Only). 3) The Corporate Debtor had approached the Financial Creditor and other Banks for procuring financial assistance for the purpose of working capital. In pursuant to the request of the Corporate Debtor, the Financial Creditor had sanctioned the credit facility vide Sanctioned the credit facility vide Letter dated 04.07.2007. Subsequently, the parties have entered into a Working Capital Consortium Agreement dated 11.07.2007. The working Capital Consortium includes State Bank of India(SBI), State Bank of Hyderabad (SBH), Stat....
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.... year 1998 as Construction/ Contracting Company. The 1st Defendant Company is involved in all aspects of infrastructure projects such as roads, bridges, metro-rails, industrial park, residential and commercial building including IT parks. During 2007, the 1st Defendant Company was banking with ICICI Bank and Lord Krishna Bank under multiple banking arrangements. The 1st Defendant Company desired to broad base their banking arrangement and therefore approached the State Bank of India (SBI), Oriental Bank of Commerce (OBC), State Bank of Patiala (SBOP), State Bank of Travancore (SBT) and ICICI Bank (ICICI). The said Banks agreed to provide working capital facilities to a total extent of Rs. 380 Crores under a Consortium Lending Arrangement. Under the Arrangement, the following facilities were provided by Applicant No. I to 5 Banks: a) Working Capital Credit limit of Rs. 75 Crores b) LC Limit of Rs. 50 Crores c) Bank Guarantee Limit of Rs. 255 Crores and the limits sanctioned by each of the above said Banks are as hereunder: a. State Bank of India (SBI) Rs. 95 Crores b. Oriental Bank of Commerce Rs. 38 Crores c. State Bank of Patiala Rs. 76 Crores d. State Bank of....
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....covery Officer DRT-I at Bangalore had issued Demand Notice on 25.04.2016, on behalf of all Banks, to the respondents in the case, basing on above Recovery Certification, by calling upon the Respondents ( which includes the Petitioner herein) to deposit total amount of including interest as on 31.10.2010 along with future interest and cost till realisation is due against them, within 15 days from the date of receipt of the notice, failing which recovery proceedings shall be initiated as per rules. Therefore, as on 30.11.2018 the Corporate Debtor is liable to pay an amount of Rs. (Rupees One Hundred and Six Crores Eighty Seven Lakhs Fifty Thousand Only). However, the Corporate Debtor failed to pay said outstanding till today by forcing the Financial Creditor to initiate the instant CIRP against the Corporate Debtor under the Code. 3. The Respondent/Corporate Debtor has opposed the petition, by filing a Statement of Objection dated 05.02.2019 by inter alia contending as follows: 1) At the outset it is submitted that the instant Petition filed by the Financial Creditor is not maintainable, and it liable to be dismissed in limine for the following reasons: i. According to the Fi....
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....eding, any action intended to be taken under this clause due notice of such intention and of the action intended to be taken shall be communicated in writing by the Lead Bank to the other Banks and the other Banks Shall immediately or as soon as possible after receipt of such notice demand repayment of the moneys due under the relative Cash Credit Account(s) or other Account(s) of the Borrower with it and notify its intention in writing either to act jointly in such action then the said Banks shall act jointly and in case of failure, neglect or refusal by the Other Banks to join in any action, the Lead Bank taking action shall make the Banks so refusing a defendant/ respondent in any action which it may take against the Borrower". It is contended that there is an irrevocable letter of authority was executed by the Financial Creditor to State Bank of India (Lead Bank). iii. Subsequently, the Corporate Debtor and Financial Creditor along with the other members of the Consortium reached a Settlement on 30.10.2014 in OA 862/2010 before the Hon'ble Debts Recovery Tribunal. iv. The aforesaid Settlement was approved by the Hon'ble Debt Recovery Tribunal on 30.10.201....
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.... Hundred Ninety Nine Only) to the Consortium. As per Memorandum of Understanding (MOU) with the Consortium signed on 06.10.2017 and which is pursuant to the earlier Agreement dated 09.05.2012 and agreement dated 10.09.2014, the parties have agreed as per Clause No.35 in Agreement dated 09.05.2012 that no Recovery Proceedings shall be commenced or continued under the terms of the said Agreement are fulfilled. Clause 35 reads as follows: "Clause 35However the working capital lenders may proceed with legal proceedings already initiated against the Borrowers/ Guarantors and others and mortgaged properties before the DRT Bangalore in OA 862 of 2010 and obtain decrees against the Borrower/ Guarantor and the mortgaged properties but shall not execute the said decrees during the pendency of this MOU". The Consortium including the Financial Creditor has vide aforesaid MoU's dated 06.10.2017 has admitted that there has been good progress to date in recovery of loans and extended the term of the MOU till 31.03.2020. 6) The Corporate Borrower has filed Writ Petition vide W.P No.56059 of 2017 challenging the continuation of the proceedings before the Recovery Officer of the D....
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....le under the Recovery Certificate". c) In pursuance of OA decreed the Debt Recovery Tribunal , Bangalore, the Corporate Debtor is liable to pay an amount of Rs. 36, (Rupees Thirty Six Crores Eighteen Lakhs Fifty Two thousand Nine Hundred and Ninety Four Only) towards the facility granted by the Financial Creditor. Later on 25.04.2016 the Recovery officer DRT-I at Bangalore had issued Dernand Notice in respect of the same. Therefore, as on 30.11.2018 the Corporate Debtor is liable to pay an amount of d) The understanding as per paragraph 35 of the MOU was confirmed to the said immoveable properties and cannot be extended to state or mean that all the recovery proceedings have been agreed to be stalled during the pendency of the said MoU. It is further submitted that the subject matter of OA 862 of 2010 are charged exclusively to the Consortium Banks and L&T has nothing to do with it. This has been further clarified by Paragraph 38 of the MOU, which is extracted herein below: "In this regard, it is to be expressly noted by the Borrower (Corporate Debtor) that the Lenders (Consortium Bankers) are entering into the MOU without prejudice to their rights/continue with the leg....
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....o had been awarded damages for negligence had taken the judgment sum out of a larger sum paid into Court and have been appealed against the quantum of damages, and was met by a similar objection to his appeal. Greer, L.J, in overruling the objection, pointedly said, at p. 321. " the plaintiff said: " I am not going to blow hot and cold. I am going to blow hotter." Here the Applicant is not faced with a choice between the alternative rights. He has exercised an undisputed right to compensation, and claims to have a right to more. One has not lost one's right to a second help because one has taken the first." When secured creditors like the Respondent are driven from pillar to post to recovery what is legitimately due to them, in attempting to avail of more than one remedy at the same time, they do not "blow hot and cold", but they blow hot and hotter. The appeals are accordingly dismkissed with no order as to costs. 5. Subsequently to the filing of the instant petition, I.A No. 75 of 2019 is filed by State Bank of India (Petitioner) U/ R 1 1 of the NCLT Rules, 2016 by inter alia seeking to permit them to join as petitioner/ Financial Creditor to the main petition. ....
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....s together have filed O.A No. 862 of 2010 before Debt Recovery Tribunal (DRT) at Bangalore. Subsequently, DRT decreed the amount and also issued a recovery certificate to all the consortium Banks including the present petitioner/ financial Creditor. Subsequently, the Recovery Officer issued a demand notice dated 25.04.2016 to all the Respondents of OA , which includes the Respondents herein, by demanding to pay the outstanding amount to all the Banks including the Petitioner. Since, the Petitioner failed to pay the outstanding amount in question, it is aggregated to 106, 87,500,000/-(Rupees Hundred and Six Crore Eighty Seven Lac Fifty Thousand Only) which includes principal and interest. Therefore, the impugned outstanding amount is calculated in accordance with terms of decreed passed by the Debt Recovery Tribunal and there is no deviation/ discrepancy in the claim as alleged by the Respondent/Corporate Debtor. The decree and Recovery certificate in question confers rights to all Banks jointly and severally to recover their dues from the Corporate Debtor. Section 7 of Code too permit Financial Creditor, to file an application/petition either jointly or singly. Therefore, it ....
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....efault and suffered a decree passed by the DRT and issued Recovery Certificate entitling all the consortium Banks to recover the their outstanding amount jointly and severally. Therefore, the instant Company Petition is maintainable singly. 12. So far as the allegations of Corporate Debtor with regard to the discrepancies in the outstanding amount is concerned, it is not in dispute that the Corporate Debtor/ Respondent has initially availed the loan amount of Crores from the Petitioner. When it committed default, the Consortium Banks lead by SBI has filed original application and obtained joint decree entitling the Banks to recover their respective outstanding amount jointly and severally from the Corporate Debtor. As per the Compromise Petition has filed before DRT under Regulation 88 of the Debts Recovery Tribunal Regulations of Practice as mentioned above, the settlement with regard to the Petitioner/ Financial Creditor (Oriental Bank of Commerce) is for sum of Rs. 48.42 Crores subject to terms and conditions mentioned therein. 13. Admittedly the Recovery certificate in question was issued by Debt Recovery Tribunal for total outstanding amount of Rs. (Rupees Three Hund....
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....her transaction, including any forward sale or purchase agreement, having the commercial effect of a borrowing; (g) any derivative transaction entered into in connection with protection against or benefit from fluctuation in any rate or price and for calculating the value of any derivative transaction, only the market value of such transaction shall be taken into account; (h) any counter-indemnity obligation in respect of a guarantee, indemnity, bond, documentary letter of credit or any other instrument issued by a bank or financial institution; (i) the amount of any liability in respect of any of the guarantee or indemnity for any of the items referred to in sub-clauses (a) to (h) of this clause; 3(10) CREDITOR means any person to whom a debt is owed and included a financial creditor, on operation creditor, a secured creditor, an unsecured editor and decree holder. 3(11) "DEBT means a liability or obligation in respect of a claim which is due from any person and includes a financial debt and operational debt: 3(12)"DEFAULT" means non-payment of debt when whole or any part or installment of the amount of debt has become due and payable and is not (paid) by t....
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....of the considered opinion that the instant Company petition is within limitation. 18. In order to find as to whether any solution to the issue in question is possible or not, the Tribunal granted several opportunities to the parties. However, there is no solution to the issue and Respondent has not come forward to pay even part amount and thus three is no other alternative for the Tribunal except to consider the question of admission. The Respondent committed default not only in respect of instant petitioner but also to the State Bank of India apart from other banks as per the Debt Recovery Tribunal Certificate mentioned above. Therefore, the Corporate Debtor is prima facie become insolvent and thus it is a fit case to admit. 19. So far as the impleading of State Bank of India is concerned, as stated supra, an Application/ Petition can be filed either jointly or singly by a financial Creditor. Therefore, the instant petition filed by Oriental Bank of Commerce is maintainable. State Bank of India can be permitted to make its claim to the IRP during the process of IRP. Therefore, it is not necessity to permit the State Bank of Indie to join as Petitioner/ Financial Creditor....
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....on of the financial creditor. In other words, the statute mandates the Adjudicating Authority to ascertain and record satisfaction as to the occurrence of default before admitting the application. Mere claim by the financial creditor that the default has occurred is not sufficient. The same is subject to the Adjudicating Authority's summary adjudication, though limited to 'ascertainment' and 'satisfaction'. " 21. The Hon'ble Supreme Court has also upheld the above judgement in Civil Appeal Nos. 8337-8338 Of 2017 vide judgement dated 31 st August, 2017. The Hon'ble Supreme Court has adverted to the Section 7, at para 28 , which reads as_under: "28 When it comes to financial Creditor triggering the process, Section 7 becomes relevant. Under the explanation to Section 7(1), a default is in respect of a financial debt owed to any financial creditor of the Corporate Debtor - it need not be a debt owed to the applicant financial creditor. Under Section 7(2), an application is to be made under sub- section (I) in such form and manner as is prescribed, which takes us to the Insolvency and Bankruptcy (Application to Adjudicating Authority), Rules, 2016. Unde....
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....terest cost, suggested name of Shri ValayudhamJayavel,79, Concorde Cupertino, Electronic City Phase 1, Bengaluru 560 100, Registration No.1BB1/1PA-001/1P- P01012/2017-2018/11663 as Interim Resolution Professional and he has filed written Communication dated 03.12.2018 under rule of I & B(AAA) Rules, 2016 by inter alia declaring that he is a qualified Insolvency Resolution Professional, he is not undergoing any disciplinary proceedings, he is willing to accept to appointment as such if the Tribunal appoints him etc. Therefore, we are satisfied that debt and default in question has occurred in the instant case, and thus it is a fit case for admission to initiate CIRP in respect of Corporate Debtor. 23. In the result, by exercising the powers conferred on this Adjudicating Authority, U/s 7(5)(i) and other extant provisions of IBC, 2016, the following orders are passed: 1) The Company Petition bearing CP (1B) 17/BB/2019 is hereby adrnitted initiating CIRP in respect of Corporate Debtor (M/s.IDEB Projects Pvt. Ltd.) 2) Shri Valayudham Jayavel, 79, Concorde Cupertino, Electronic City Phase I, Bengaluru 560 100, Registration No.IBBI/IPA- 001/1P-P01012/2017-2018/11663 is here....