TaxTMI 
TaxTMI 
2017 (8) TMI 1600
X X X X Extracts X X X X
X X X X Extracts X X X X
....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 of Rs. 331,40,63,857/- (Rupees Three Hundred Thirty one....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nded 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 Loan"). (The WCTL I, the WC Fund Based Facility, the WCTL II, the WC Non-Fund Based Facility, the Restructured Term Loan, the FITL Facility and the....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ores 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 and Twenty Four) unencumbered equity shares of Lanco Vidharbha Thermal Power Limited held by Lanco Thermal Power Limited, Charon Trading Private Limited, Phoebe Trading Power Limited and Regulus Power Private Limited, created on November 2....
X X X X Extracts X X X X
X X X X Extracts X X X X
....quity 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 November 17,2015; (vi) Unconditional, absolute and irrevocable personal guarantee of Mr. L. Madhusudhana Rao and Smt. L. Ramalaksamamma to repay the amounts due with respect to LTWC Term Loan in the event of failure on part of Company to pay the amounts due thereunder, dated November 07, 2015. (l) It is stated that the securities mo....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 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 the applicant/financial creditor, while reiterating various Contentions/averments made in the application, has submitted that IDBI is eligible to file the present application as it qualifies as a Financial Creditor of the Corporate Debtor under IBC 2016 R/w rule 4 of I&B (application to Adjudicating Authority) Rules, 2016. 5. He further stated that default has occurred in respect of IDBI facilities as detailed in the instant application. The application is complete and Shri Vijay Kumar Iyer, is fully qualified to be appointed as an Interim Ins....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 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 (c) As per the Master Circular - Prudential norms on Income Recognition, Asset Classification and Provisioning pertaining to Advances issued by the RBI dated July 01, 2015 (bearing number RBI/2015-16/101 DBR.No.BP.BC.2/21.04.048/2015-16, as amended from time to time, "RBI Master Circular"), a loan account becomes an NPA where the interest and/ or installment of principal remains overdue for a period of more than 90 days in respect of that loan. Any amount due to a bank under any credit facility is 'overdue' if it is not paid on the due date fixed by the bank. Further, cash credit facilities advanced wil....
X X X X Extracts X X X X
X X X X Extracts X X X X
....umar 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 Bankruptcy Board of India (Insolvency Professionals) Regulations, 2016. (iii) It is disputed the certificate provided by the applicant in respect of entries in its books as same is not in accordance with the Bankers' Book Evidence Act 1891 (BBE Act.) As per Section 4 of the BBE Act, "Certified Copy" of any entry in a banker's books shall in all legal proceedings be received as Prima Facie evidence of the existence of such entry, and shall be admitted as evidence of the matters, transactions and accounts therein. Certificate is required to be provided by principal accountant or bank manager of the Bank. (iv) That LITL (Lanco lnfratech Limited) is the flag....
X X X X Extracts X X X X
X X X X Extracts X X X X
...., 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); (Collectively, "Under construction SPVs"). (ix) LITL is therefore essentially a holding company with EPC assets (whose value is very low compared to the value of its holdings and investments in SPVs) and which derives majority of its consolidated revenue from the SPVs and from the contracts given by these SPVs. It is further stated that in order to reserve the issues placed by LITL and SPVs a steering committee of Lanco group considered a re-organization scheme for Lanco group in March 2016. However, there was no considerable progress in implementation of scheme due to various reasons. They have explained various problems being faced by Lanco groups. While the issue was pending consideration, the RBI has issued directions to initiate instant Corporate Insolvency Resolution Proces....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e. 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 together with the instant petition by adjourning the instant case till other cases are filed The learned Senior Advocate has also submitted that applicant may be directed to remove the Corporate Guarantees in question under total debt due and to direct to recommend another IRP other than the proposed IRP. 11. We have carefully considered all the pleadings of both the parties with in the ambit of powers conferred on this Adjudicating Authority under various provisions made under IBC, 2016.As stated supra, the instant Company application/petition is filed by Financial Creditor under section 7 of IBC 2016 read with Rule 4 of Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules 2016. As per section 7, a financial Creditor either by itself or jointly with other financial creditor can file an application for initiat....
X X X X Extracts X X X X
X X X X Extracts X X X X
....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 initiation of action under IBC 2016, in addition to existing delegation of powers, in favour of all the Executive Directors, all Chief General Managers (Grade 'F') , All General Managers (Grade 'E'). The following officers are singly and severally authorized on behalf of IDBI Bank Limited; Shri Mahesh Kumar Jain ; Managing Director & Chief Executive Officer, Shri Gurudeo Madhukar Yadwadkar; Deputy Managing Director, Shri Krishna Prasad Nair ; Deputy Managing Director. In pursuant of above delegation of powers, Mr. Gurudeo Madhukar Yadwadkar authorized Mr. V. Vijayadheer, General Manager (Legal) to represent the Bank at Hyderabad or any other place in India, and to make statements for and on behalf of the bank ,and in the name of the Bank, before the National Company Law Tribunal, Hyderabad bench, in company petition titled &#....
X X X X Extracts X X X X
X X X X Extracts X X X X
....k 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, run LITL as a going concern etc. especially in context of the Respondent Company, whose debt structure and operations are very complicated and complex. In this regard, attention of this Hon'ble Tribunal is drawn to Paragraph 22 of the Code of Conduct for Insolvency Professionals as provided in the First Schedule of the Insolvency and Bankruptcy Board of India (Insolvency Professionals) Regulations, 2016, which reads as under:- "22. An insolvency professional must refrain from accepting too many assignments, if he is unlikely to be able to devote adequate time to each of his assignments" We have also verified from the website and confirmed that the said IRP has been very recently appointed as IRP to the aforesaid two large companies only in the last week of July, 2017. Therefore, we agreed with the submissions of the respondents considering his....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 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 papers by the Registry of NCLT, and after hearing the case, the Bench was of prima facie opinion that it is a fit case for admission. However, Shri Avinash Desai representing respondents has requested two days time to get instruction from his client, after accepting notice for the respondents. Accordingly, the case was again listed on 27th July 2017, and on this day, Shri C.V. Mohan Reddy, learned senior Advocate requested a week's time further to get necessary instructions/papers. Accordingly, the Bench has accommodated by granting time till 4th August 2017. The respondent, therefore have availed sufficient time to put forward their defense/contentions. Hence, we are not inclined to grant any further time, and moreover no purpose would be served by granting any further time. As stated supra, the respondents have placed their version the case in detail and ever....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 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 detailed supra, the respondent is pleading several issues, which are hardly have any relevancy to the issue in question as the IDBI has extended Loans and facilities in question independently to the respondent and they would not depend on other projects of Respondent Company. The circumstances in the case indicate that all remedies available to the Respondent stated to have been exhausted. Any way, we are not concerned with other issues of Respondent, and it is for the Concerned Authorities and Financial Creditors to take a call on those issues. 25. In the aforesaid facts and circumstances as available in the instant case, we, being Competent Adjudicating Authority, as defined under Section 5(1) of IBC, 2016, are satisfied that there is a default occurred, the instant application is complete and the IRP is to be appointed in accordance with law. Therefore, by exercising pow....