AI Drafter 
TaxTMI 
TaxTMI 
2020 (1) TMI 347
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....Interim Resolution Professional as prescribed under the Code and Rules thereon. 2. The averments made in Petition are: A. State Bank of India and its associate banks, State Bank of Patiala and State Bank of Bikaner and Jaipur have granted the following Facilities to the Corporate Debtor: - Rupee term loan for an aggregate amount up to Rs. 173,40,00,000 (Rupees One Hundred Seventy Three Crores and Forty Lakhs Only) which included a sub-limit of Rs. 156,06,00,000 (Rupees One Hundred Fifty Six Crores and Six Lakhs Only) for letter of credit facility which could be availed of by the Corporate Debtor pursuant Phase I RTL Agreement ("Phase I RTL Facility"); - Rupee term loan for an aggregate amount up to INR 421,00,00,000 (Rupees Four Hundred and Twenty One Crores Only) which included a sub-limit of Rs. 156,00,00,000 (Rupees One Hundred Fifty Six Crores Only) for letter of credit facility which could be availed of by the Corporate Debtor pursuant to the Phase II RTL Agreement ("Phase II RTL Facility"); - Rupee term loan for an aggregate amount up to Rs. 52,20,00,000 (Rupees Fifty Two Crores and Twenty Lakhs Only) pursuant to Phase II Additional Faci....
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....ety Nine Thousand Seven Hundred and Seven Only). 3. The Petitioner on 26.04.2019 filed an Affidavit stating that Hon'ble Supreme Court dated April 2, 2019 in the case titled Dharani Sugars & Chemicals Ltd. v. Union of India [2019] 104 taxmann.com 44/153 SCL 224, has held that the Reserve Bank of Inida (RBI) Circular No. RBI/2017-18/131 DBR No. BP.BC.101/21.04.048/2017-18 dated February 12, 2018 ("RBI Circular") is ultra vires Section 35AA of the Banking Regulation Act, 1949. The Hon'ble Supreme Court held as follows: "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." 4. The Affidavit is filed to inform that the case has not been filed p....
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.... "i. The 180 days time limit implement a resolution plan in this account as per the RBI circular on revised Framework for Resolution of Stressed Assets dated February 12, 2018 has elapsed on August 27, 2018. It is now mandatory for lenders to refer the account to NCLT for commencement of CRP within the next 15 days since no resolution plan could be implemented till date. ii. The Company had to be referred to the NCLT before the deadline of 11th September, 2018. SBI shall file an Application in NCLT Hyderabad for initiating corporate insolvency resolution proceedings in SEL." IV. Thus, from the extracted paragraphs of Minutes of Meeting it is clear that the entire consortium Banks have treated the RBI circular as mandatory and deadline for filing NCLT application is 11.09.2018. Hence, the present case is filed by the Financial Creditor alone, on 11.09.2018 as per the minutes of meeting, in pursuance of RBI circular dated 12.02.2018. as the lenders had no time due to RBI Circular, it was also decided in the meeting dated 06.09.2018 to postpone the resolution plan submitted by the Respondent. V. It is stated by the Respondent that there was no prior not....
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.... IX. But RBI circular dated 12.02.2018, allowed the individual banks to file cases against the borrowers by withdrawing and discontinuing its then prevailing instructions. X. It is stated that the Corporate Debtor is not a wilful defaulter, whereas it has even serviced its debt obligations to all its lenders till June, 2016 since inception, but under a force majeure was curtailed by factors beyond its control. Corporate Debtor would be in position to come out of the Financial Stress by virtue of the orders passed by the Hon'ble APERC dated 14.08.2018, approving tariff for long term PPA (12Years), with the continued support and encouragement of all the stakeholders including the Financial Creditor. But due to the RBI circular dated 12.02.2018, the present case is filed, without considering the resolution plans submitted by the Corporate Debtor. 8. We have heard the Counsel for Financial Creditor and Counsel for Corporate Debtor. The Learned Counsel for Financial Creditor would contend that the Financial Creditor and its Associate Banks namely State Bank of Patiala and State Bank of Bikaner & Jaipur granted loan facilities to the Corporate Debtor. The Learned Coun....
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....impugned circular, then such proceedings are declared to be non-est. The Hon'ble Apex Court has declared in the judgment that only if proceedings are initiated solely because of operation of RBI Circular, then they cannot be proceeded with. The Learned Counsel for Financial Creditor contended that proceedings are initiated by the Financial Creditor against Corporate Debtor in exercising its right under Section 7 of IBC, 2016 and not only in pursuant to RBI circular. Counsel further contended that Financial Creditors who are pursuing their rights under the IBC can nevertheless proceed with the case. The Financial Creditor's right to voluntarily initiate proceedings under the Code continued to exist even after the RBI circular was issued. In this connection, the Learned Counsel has relied on the decision of Hon'ble High Court of Gujarat in the matter of Essar Steel India Ltd. v. Reserve Bank of India [2017] SCC Online Guj. 995 and relied on para 24 of the judgment. Similarly, Counsel also relied on the judgment of Hon'ble NCLAT in the matter of State Bank of India v. Bhushan Energy Ltd. [2018] 89 taxmann.com 315/145 SCL 563 (NCLT - New Delhi) and also the decision of ....
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....ated 12.02.2018. The Learned Counsel would contend that the proceedings against the Corporate Debtor are initiated solely on the basis of the circular of RBI dated 12.02.2018. Thus, Learned Counsel contended that the Affidavit filed by AGM cannot be given any credence in the light of the minutes of JLF. Counsel contended there is a clear reference to the RBI circular which is the only ground for initiating action against the Corporate Debtor. 14. The Learned Counsel contended that on 06.09.2018, the consortium meeting of lenders of both Phases-I & II of the Project and representatives of the Corporate Debtor was convened at SBI, SAM Branch, Kachiguda, Hyderabad to consider the resolution proposals submitted by Corporate Debtor herein. The deliberations and decisions taken by all the lenders including the Financial Creditor herein has been incorporated in the minutes of the meeting and circulated to the Consortium of Lenders by way of letter dated 06.10.2018. The Learned Counsel has relied on the relevant paragraphs of the JLF meeting held on 06.09.2018, which is as follows:- (i) The 180 days time limit implement a resolution plan in this account as per the RBI curcular ....
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....to Section 35AA of Banking Regulation Act, 1949. Hon'ble Apex Court has held so in the decision and the relevant paragraph 3 is produced herein for proper appreciation. "There is nothing to show that the provisions of Section 45L(3) have been satisfied in issuing the impugned circular. The impugned circular nowhere says that the RBI has had due regard to the conditions in which and the objects for which such institutions have been established, their statutory responsibilities, and the effect the business of such financial institutions is likely to have on trends in the money and capital markets. Further, it is clear that the impugned circular applies to banking and non-banking institutions alike, as banking and non-banking institutions are often in a joint lenders' forum which jointly lend sums of money to debtors. Such non-banking financial institutions are, therefore, inseparable from banking institutions insofar as the application of the impugned circular is concerned. It is very difficult to segregate the non-banking financial institutions from banks so as to make the circular applicable to them even if it is ultra vires insofar as banks are concerned. For thes....