TaxTMI 
TaxTMI 
2019 (9) TMI 1109
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.... application under Section 7 of the I&B code on the ground that the 'Circular' issued by the Reserve Bank of India dated 12^th February, 2018 to file 'Corporate Insolvency Resolution Process' has been declared to be ultra vires and illegal by Hon'ble Supreme Court in Dharani Sugars and Chemicals Ltd. vs. Union of India and Ors. [Transfer Case (Civil) 66 of 2018], wherein the Apex Court held that: - "For these reasons also, the impugned circular will have to be declared as ultra vires as a whole, and be declared to be of no effect in law. Consequently, all actions taken under the said circular, including actions by which the insolvency Code has been triggered must fall along with the said circular. As a result, all cases in which debtors have been proceeded against by financial creditors under section 7 of the Insolvency Code, only because of the operation of the impugned circular will be proceedings which, being faulted at the very inception, are declared to be non-est." 2. The Adjudicating Authority has accepted that there is no dispute that debt is payable by the 'Corporate Debtor' and the 'Corporate Debtor' has defaulted, as evident from paragraph 2 of the impugned o....
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.... of stressed assets in the economy, including introduction of certain specific schemes at different points of time. In view of the enactment of the Insolvency and Bankruptcy Code, 2016 (IBC), it has been decided to substitute the existing guidelines with a harmonized and simplified generic framework for resolution of stressed assets. The details of the revised framework are elaborated in the following paragraphs. I. Revised Framework A. Early identification and reporting of stress 2. Lenders shall identify incipient stress in loan accounts, immediately on default, by classifying stressed assets as special mention accounts (SMA) as per the following categories: SMA Sub-categories Basis for classification - Principal or interest payment or any other amount wholly or partly overdue between SMA-0 1-30 days SMA-1 31-60 days SMA-2 61-90 days 3. As provided in terms of the circular DBS. OSMOS.No. 14703 / 33.01.001 / 2013-14 dated May 22, 2014 and subsequent amendments thereto, lenders shall report credit information, including classification of an account as SMA to Central Repository of Information on Large Credits (CRILC) on all....
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....th aggregate exposure of Rs. 5 billion and above shall require two such ICEs, others shall require one ICE. Only such RPs which receive a credit opinion of RP4 or better for the residual debt from one or two CRAs, as the case may be, shall be considered for implementation. Further, ICEs shall be subject to the following: (a) The CRAs shall be directly engaged by the lenders and the payment of fee for such assignments shall be made by the lenders. (b) If lenders obtain ICE from more than the required number of CRAs, all such ICE opinions shall be RP4 or better for the RP to be considered for implementation. 7. The above requirement of ICE shall be applicable to restructuring of all large accounts implemented from the date of this circular, even if the restructuring is carried out before the 'reference date' stipulated in paragraph 8 below. D. Timelines for Large Accounts to be Referred under IBC 8. In respect of accounts with aggregate exposure of the lenders at Rs. 20 billion and above, on or after March 1, 2018 ('reference date'), including accounts where resolution may have been initiated under any of the existing schemes as well....
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....f the I&B Code was not filed by the State Bank of India pursuant to 'Circular' dated 12th February, 2018 issued by the Reserve Bank of India. 6. In the present case, the 'Corporate Debtor' has not made any request for 'Restructuring' of its loan as per guidelines of the Reserve Bank of India 'Circular'. According to learned Counsel for the Appellant, as the 'Restructuring' was not permissible, there was no other option, but to file application under Section 7 for 'Resolution'. 7. It was submitted that the aforesaid fact has not been noticed nor dealt with by the Adjudicating Authority though it noticed that there is default committed by the 'Corporate Debtor'. 8. We have heard learned Counsel for the parties and perused the record. 9. In "Innoventive Industries Ltd. Vs. ICICI Bank and Anr. - (2018) 1 SCC 407", the Hon'ble Supreme Court observed and held: - "27. The scheme of the Code is to ensure that when a default takes place, in the sense that a debt becomes due and is not paid, the insolvency resolution process begins. Default is defined in Section 3(12) in very wide terms as meaning non-payment of a debt once it becomes due and payable, which includes non-....
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....ity or on the basis of evidence furnished by the financial creditor, is important. This it must do within 14 days of the receipt of the application. It is at the stage of Section 7(5), where the adjudicating authority is to be satisfied that a default has occurred, that the corporate debtor is entitled to point out that a default has not occurred in the sense that the "debt", which may also include a disputed claim, is not due. A debt may not be due if it is not payable in law or in fact. The moment the adjudicating authority is satisfied that a default has occurred, the application must be admitted unless it is incomplete, in which case it may give notice to the applicant to rectify the defect within 7 days of receipt of a notice from the adjudicating authority. Under sub-section (7), the adjudicating authority shall then communicate the order passed to the financial creditor and corporate debtor within 7 days of admission or rejection of such application, as the case may be." 10. In view of the aforesaid decision of the Hon'ble Supreme Court and there being debt payable by the 'Corporate Debtor' and having committed default, we hold that the Appellant has made out a case for i....