2019 (9) TMI 1109

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....ode on the ground that the 'Circular' issued by the Reserve Bank of India dated 12th 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 order dated 28th June, 2019. Therein the stand taken....

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.... 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 borrower entities having aggregate exposure of Rs. 50 million and above with them. The CRILC-Main Report will now be required to be submitted on a monthl....

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....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 as accounts classified as restructured standard assets which are currently in respective specified periods (as per the previous guidelines), RP shall be implemented as per the following timelines: i) If in default as on the reference date, then 180 ....

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....o 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-payment of even part thereof or an instalment amount. For the meaning of "debt", we have to go to Section 3(11), which in turn tells us that a debt means a liability of obligation in respect of a "claim" and for the meaning of "claim", we have to go back to Section 3(6) which defines "claim" to mean a right to payment even if it i....