TaxTMI 
TaxTMI 
2017 (8) TMI 1600
X X X X Extracts X X X X
X X X X Extracts X X X X
....nterim resolution professional in terms of section 16 of the Code; to declare a moratorium in terms of Sections 13 and 14 of the Code; to cause public announcement of the Corporate Insolvency Resolution Process be made in terms of Sections 13 and 15 of the Code; with other consequential reliefs. 2. Brief facts, which are stated in the application/petition and relevant to adjudicate the issue in question, are as follows. (a) IDBI Bank Limited (Financial Creditor) was incorporated on September 2004, and thus it is a Company within meaning of the Companies Act 2013, and also a Banking company within the meaning of Banking Regulation Act, 1949. Its registered office is situated at IDBI Tower, WTC Complex, Cuffe Parade, Colaba, Mumbai-400005, Maharashtra, India. (b) Lanco Infratech Limited (Respondent/Corporate Debtor) is an existing Company incorporated on March 26, 1993, and its registered office is situated at Plot No.4, Software Units Layout, Hitech City, Madhapur, Hyderabad - 500081, in the State of Telangana, India. The authorized share capital of the Corporate Debtor is Rs. 12000,00,00,000/- (Rupees Twelve Thousand Crores Only), having a paid-up share capital....
X X X X Extracts X X X X
X X X X Extracts X X X X
....h are set out in Part C of Schedule IIA to the MRA (hereinafter referred to as the "Restructured Term Loan"); (vi) Funded Interest Term Loan Facility of Rs. 49,80,00,000/- (Rupees Forty Crores and Eighty Lakhs Only), details of which are set out in Part D of Schedule IIA to the MRA (hereinafter referred to as the "FITL Facility"); and (vii) Priority Loan of Rs. 277,83,00,000/- (Rupees Two Hundred Seventy Seven Crores and Eighty Three Lakhs Only), details of which are set out in Schedule V to the MRA (hereinafter referred to as the "Priority Loan"). (g) The total debt sanctioned by IDBI Bank Limited to the Corporate Debtor under the MRA Facilities is Rs. 1234,20,00,000 (Rupees One Thousand Two Hundred Thirty Four Crores Twenty Lakhs Only) and the total debt disbursed in relation to the MRA Facilities is Rs. 1234,13,00,000/- (Rupees One Thousand Two Hundred Thirty Four Crores Thirteen Lakhs Only). (h) In addition to the aforesaid, IDBI has also granted the Corporate Debtor, a long-term working capital term loan of Rs. 170,30,00,000 (Rupees One Hundred Seventy Crores and Thirty Lakhs Only) had vide loan agreement dated November 07, 2015 ("LTWC Term ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Five Thousand Fifty Nine) unencumbered equity shares of the Company/ Corporate Debtor held by Mr. L. Madhusudhan Rao and Lanco Group Limited, created on June 27, 2014; (b) Pledge over 11,67,81,798 (Eleven Crores Sixty Seven Lakhs Eighty One Thousand Seven Hundred Ninety Eight) unencumbered equity shares of the Diwakar Solar Projects Limited held by the Company/Corporate Debtor, created on November 24, 2014; (c) Pledge over 3,19,33,200 (Three Crores Nineteen Lakhs Thirty Three Thousand Two Hundred) unencumbered equity shares of Lanco Mandakini Hydro Energy Private Limited held by the Company/ Corporate Debtor and Lanco Hydro Power Limited, created on November 24, 2014; (d) Pledge over 35,31,00,000 (Thirty Five Crores Thirty One Lakhs) unencumbered preference shares and 42,10,16,000 (Forty Two Crores Ten Lakhs Sixteen Thousand) unencumbered equity shares of Lanco Anpara Power Limited held by Lanco Thermal Power Limited, created on November 24, 2014; (e) Pledge over 34,53,10,301 (Thirty Four Crores Fifty Three lakhs Ten Thousand Three Hundred and One) unencumbered preference shares and 53,39,124 (Fifty Three Lakhs Thirty Nine Thousand One Hundred a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tion of the Corporate Debtor's movables except assets under exclusive charge but including movable plant, machinery, machinery spares, tools and accessories, present and future created on November 07, 2015; (ii) Pledge over 1,25,79,000 (One Crore Twenty Five Lakhs Seventy Nine Thousand) unencumbered equity shares of the Company/Corporate Debtor held by Mr. L. Rajagopal and Lanco Group Limited, created on November 10, 2015; (iii) Pledge over 31,17,000 (Thirty One Lakhs Seventeen Thousand) unencumbered equity shares of Lanco Thermal Power Limited held by Lanco Kondapalli Power Limited, created on November 17, 2015; (iv) Unconditional, absolute and irrevocable corporate guarantee of Lanco Group Limited inter alia, to pay the amounts payable by Company, in the event of default on part of Company to repay/discharge the amounts payable under the LTWC Term Loan, dated November 07, 2015; (v) Unconditional, absolute and irrevocable corporate guarantee of Lanco Thermal Power Limited inter alia, to pay the amounts payable by Company, in the event of default on part of Company to repay/discharge the amounts payable under the LTWC Term Loan, created on No....
X X X X Extracts X X X X
X X X X Extracts X X X X
....al Rs. 3,73,50,000/- Interest Rs. 3,44,61,725/- Total Rs. 7,18,11,725/- (f) Priority Loan Principal Rs. 36,11,79,000/- Interest Rs. 17,59,85,297/- Total Rs. 53,71,64,297/- (g) Long-Term Working Capital Term Loan Principal Nil Interest Rs. 12,93,24,105/- Total Rs. 12,93,24,105/- Grand Total - Rs. 2,34,96,12,889/- (n) In the above circumstances, the applicant/financial creditor is praying the Adjudicating Authority to initiate Insolvency resolution process and pass necessary order as prayed for. 3. Heard Shri Animesh Bisht, Dhanunjay Kumar, Megha Sharma, Divya Datla, 1/b Cyril Amarchand Mangaldas the learned Advocate for the petitioners; and Shri C. V. Mohan Reddy, Senior Advocate with Avinash Desai, Pooja Mahajan, Satya Siva Darshan, Amaljeet Jaiswal, Counsels for the respondents. We have carefully perused all the pleadings made by both the parties along with material documents filed by the respective parties in support of their contentions. 4. Shri Animesh Bisht learned counsel for th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ot be rectified, or the record enclosed is misleading, the application has to be rejected." "84. Beyond the aforesaid practice, the 'adjudicating authority' is not required to look into any other factor, including the question whether permission or consent has been obtained from one or other authority, including the JLF."' The learned counsel has also relied upon the common order dated 2nd August, 2017 passed by NCLT, Ahmedabad Bench, in Standard Chartered Bank Ltd. v. Essar Steel India Ltd. [C.P. No. (I.B.) 40/7/NCLT/AHM/2017, dated 2-8-2017]. 7. The learned Counsel for the petitioner has also filed written submissions dated 27th July, 2017, by inter alia contending as follows: (a) The Reserve Bank of India directed the IDBI to file the instant company petition and it was also authorized by joint lenders forum of LITL ("JLF"), in their meeting held on June 19, 2017. (b) In the present case, the Corporate Debtor/ LITL has defaulted in payment of interest in relation to the facilities advanced by IDBI (as detailed in the CIRP Application) on November 30, 2016 as evident from the statement of accounts in relation to these facilities ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....dmit, and pass necessary consequential orders as prayed for. 9. Shri C.V. Mohan Reddy, the learned Senior Advocate for the respondent, has strongly opposed the instant application/petition by filing an elaborate reply dated 4th August,2017, by inter alia contending as follows: (i) The corporate guarantees that have been included in the para 1 of part IV of the application have not been enforced, and thus the liability of the respondent is only contingent in nature, and has not crystallized into a "debt", so inclusion of same in the total amount of debt is not correct. (ii) They have also objected the proposal of the petitioner to appoint Vijay Kumar V. Iyer, as IRP as he is currently engaged in one and subsequently appointed as IRP in two more companies namely: Binani Cement Limited (Bank of Baroda v. Binani Cement Limited, CP (IB) No. 359/KB/2017, Order dated 25 July 2017) and Bhushan Steel Limited (State Bank of India v. Bhushan Steel CP No. (IB) No.-201 (PB)/2017, Order dated 26 July 2017). In support of their contention, they relied upon paragraph 22 of the Code of Conduct for Insolvency Professionals as provided in the First Schedule of the Insolvency and ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... its SPV Lanco Anpara Power Limited; (iv) 1466 MW gas based plant by Lanco Kondapally Power Limited; (v) 120 MW gas based plant by Lanco Tanjore Power Limited; (vi) 70 MW hydro plant by Lanco Budhil (which was subsequently sold); (vii) 10 MW hydro plant by Lanco Thermal Power Limited; (viii) 10 MW hydro plant by Lanco Hydro Power Limited; (ix) 4 (four) solar projects; and (x) 1 (One) wind project. Therefore, so far, LITL has executed 13 power Projects, totaling a significant 4740 MW, which is only second to BHEL as a contractor in India. (viii) LITL has 5 (five) under construction projects in the power section ("Under construction Projects"). (i) 3 (three) large coal based power projects of 1320 MW each, which are being executed by LITL and developed through its SPVs Lanco Babandh Power Limited, Lanco Vidarbha Thermal Power Limited and Lanco Amarkantak Power Limited (Phase II); and (ii) 2 (two) Hydro Power Projects totaling 576 MW, which are being executed by LITL and developed through its SPVs Lanco Teesta Hydro Power Limited (500 MW) and Lanco Mandakini Hydro Energy Private Limited (76 MW); ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....at debt related issue of Lanco group can be resolved expeditiously and the same would be beneficial to the lenders also. Similar letter dated 27 June 2017 was also addressed to the Hon'ble Finance Minister, Govt. Of India, New Delhi. 10. Shri C.V. Mohan Reddy, the Learned Senior Advocate for the respondent, has strongly pleaded that IBC was enacted to facilitate a systematic and time bound resolution process for the companies. The intent of the Code is to push stakeholders towards formulation of a resolution plan that would enable the industry to survive but not push industries into liquidation. He further submits that the Adjudicating Authority should consider granting additional time to enable the lenders to decide whether resolution plan for the resolution of under construction SPVs can be undertaken outside the Code. It is also stated that if the lenders are unable to decide outside the code, the relevant SPVs/lenders may also be constrained to approach concerned adjudicating authorities. This Bench (Adjudicating Authority) is concerned authority for four out of five under construction SPVs. So, the applications/petitions if filed by other SPVs may also be admitted toget....
X X X X Extracts X X X X
X X X X Extracts X X X X
....al debt. And the word 'Claim' is defined under Section 3(6), which reads as under: 'Claim' means_ a) a right to payment, whether or not such right is reduced to judgment, fixed, disputed, un-disputed, legal, equitable, secured or unsecured; b) right to remedy for breach of contract under any law for the time being in force, if such breach gives rise to a right to payment, whether or not such right is reduced to judgment, fixed, matured, un-matured, disputed, un-disputed, secured or un-secured." 13. As stated supra, the Hon'ble NCLAT in the case of Innoventive Industries Ltd. (supra) has reiterated the above requirements, and held that once default. has occurred; application is complete; no disciplinary proceedings are pending against proposed IRP, Adjudicating Authority, on its satisfactions of above is required to admit the case. Adjudicating Authority for the purposes of Insolvency and resolution liquidation for corporate persons is National Company Law Tribunal, constituted under section 408 of the Companies Act, 2013. 14. The IDBI Bank (the applicant herein) has passed a resolution by Board of Directors on 23rd June 2017, by delegation powers for initi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....contention that Corporate guarantees in question are not crystallized into a "debt" and it cannot be added in the total amount of debt in question. As stated supra, the instant petition is not opposed by the respondent in general, however, except on the question of hardship that would likely cause to respondent in initiating the instant CIRP that too in isolation leaving other SPVs connected with the Respondent Company. 19. The other questions whether Mr. Vijaykumar V Iyer is competent to act as an Interim Resolution Professional for the applicant company.The Respondents by reply dated 04.08.2017 submitted that Mr. Vijay Kumar V. Iyer has been appointed as Interim Resolution Professional for two more companies viz Binani Cement Ltd. (Bank of Baroda v. Binani Cement Ltd. [CP (IB) No. 359/KB/2017, dated 25-7-2017], and Bhushan Steel Ltd. (State Bank of India v. Bhushan Steel Ltd. [2018] 90 taxmann.com 194 (NCLT - New Delhi)). Therefore, not only does this vitiate Form 2 filed by him but the Respondent Company has serious concerns on the availability of the interim resolution professional to effectively perform his functions, verify numerous claims, prepare information memorandum, ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....by the respondent are not at all tenable and thus rejected. 21. Another contention raised by Mr. C.V. Mohan Reddy, the learned senior counsel for the respondents, with regard to inclusion of Corporate Guarantees in question in total amount of debt in question is concerned, it is to be mentioned here that after appointing IRP by this Adjudicating Authority, the respondent Company apart from other claimants against it, can submit their respective claims with supporting documents before the appointed Interim Resolution Professional, in pursuant to a public notification given by IRP. So the respondent is having every right to plead the same before IRP to consider its contentions. 22. The other contention made by Mr. C.V. Mohan Reddy, the learned senior counsel for respondent with regard to granting further time is concerned, it is to be stated that the instant case is filed by IDBI against Lanco Infratech Limited, in the Registry of NCLT, in the first week of July 2017, after duly serving copy of application along with all material papers to respondent Company. However, the case was listed for admission before the Bench on 25th July, 2017 for admission, after scrutiny of case pap....
X X X X Extracts X X X X
X X X X Extracts X X X X
....er the petition filed therein etc. The Hon'ble High Court, disposed of the petition by making several observations under para 40, by inter alia pointing out that it is for Adjudicating Authority, constituted, under IBC to consider core issues raised on behalf of the petitioner; there should not be undue pressure on the Adjudicating Authority by the administration, and finally left the issue to Adjudicating Authority to consider and determine all issues raised in according with law. As detailed in this order, we have duly considered all the pleadings of both the parties in a dispassionate manner and strictly in four corners of law. We have also afforded reasonable opportunity, by duly following principles of natural justice, to the respondent to put forth their views of the matter. 24. It is relevant to mention here that it is not the case of respondent that they have paid substantial amount of debt in question, while the case is pending. In the normal course, whenever an un-disputed debt remains to be paid to lender, borrowers are supposed to come forward to pay some amount, and then negotiate for some type of instalment(s) with lender(s). In the instant case, as detai....