AI Drafter 
TaxTMI 
TaxTMI 
2020 (4) TMI 604
X X X X Extracts X X X X
X X X X Extracts X X X X
....aulted in repaying a sum of Rs. 327,03,72,501.81. 2. The Financial Creditor filed Form-1. The averments in Form-1 in brief are as follows: 2.1 It is the case of financial creditor/State Bank of India that the corporate debtor had availed the following financial facilities from the petitioner/financial creditor. S.No. Nature of Facility Account No. Amount claimed to be in default SBI 1. Cash Credit 31725043394 144,27,85,322.14 2. Corporate Loan 31710363445 46,15,07,456.38 3. Term Loan 1 31829601852 5,80,00,404.15 4. Term Loan 2 31810754741 30,25,74,813.06 5. Working Capital Term Loan 33334205427 34,17,28,402.90 6. Priority Debt 33334614702 34,58,90,831.56 7. FITL 33334493275 31,78,85,271.62 8. EPCG BG - - TOTAL (A) 327,03,72,501.81 2.2 The financial creditor sanctioned working capital and term loan facility of Rs. 519.72 crore, vide letter No. CAGHYD/AMT-1/2010-11/707, dated 26th March, 2011. The fund based working capital limits were valid for a period of twelve months from 19-3-2011. (Rupees in crore) Description Existing Proposed SBI %....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... through its highly productive hybrids, excellent seed grower network of over 65,000 farmers had become one of the leading seed producers and suppliers of seeds to over 35 million farmers enhancing their economic returns. It has largest seed processing unit in Asia Pacific by investing over Rs. 300 crore in Mahabubnagar District of Telangana State. 3.4 It is averred in para 6 of the Counter that the respondent/corporate debtor had been supplying seeds of international standards to farmers in India and abroad and providing direct and indirect employment to more than 25,00,000 persons. 3.5 It is averred in para 7 of the Counter that in 2012-13, the Corporate Debtor offered its cotton Seed Production in Gujarat through organizers with specified contract terms & conditions to ensure stringent quality, quantity, time of delivery and payment norms. 3.6 It is averred in para 8 of the Counter some unforeseen circumstances led to delayed payments to seed organisers, which are primarily natural calamities like deficient monsoon, drought in some states, etc. 3.7 In para 9 of the Counter the respondent/corporate debtor delved deep into the financial aspects due to which it had sust....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... was in dire need of funds to get back on its business and to service all the debts as projected and promised but the Corporate Debtor could not secure the required funds due to inaction of the banks. (vii) The Corporate Debtor even after suffering the dents due to the deliberate and mala fide breaches committed by the banks, submitted two corrective action plans in July 2014 and September, 2014 requesting the banks to give a long restructuring time of 10 years, and options to convert debt into equity and permission to sell non-core assets so that some money can be infused into the Corporate Debtor to enable it re-establish its business in the market. (ix) Banks withdrew from CDR without giving any solution and resorted to legal action. 3.8 In para 10 of the Counter the respondent/corporate debtor articulated how the wrong decisions and breach of promises by the banks including the petitioner/financial creditor impacted the respondent/corporate debtor: (i) Loss of seeds inventory resulted significant losses to the Corporate Debtor which eroded complete net worth of the Corporate Debtor; employment loss of 2200 regular employees and 3000 temporary jobs.....
X X X X Extracts X X X X
X X X X Extracts X X X X
....erm loans close to Rs. 762 crore and convert a part of principal debt into equity and stop all legal actions. 3.13 In para 16 of the Counter the respondent/Corporate Debtor submitted that the Financial Creditor herein had already moved the Debts Recovery Tribunal to recover the debt alleged even in this application and in view of the serious disputed facts, the claims vis-a-vis the counter claims, the matter and the issue has to be adjudicated after an elaborate trial and cannot be adjudicated in a summary proceedings under I & B Code. It is also averred that the parallel proceedings initiated by the Financial Creditor is an absolute abuse of process of law and also a deliberate, intentional, mala fide action to throw out the promoters from the management of the Corporate Debtor. The application filed by the Financial Creditor not only hampers future prospects of the Corporate Debtor but also curtails the request that are made by the Corporate Debtor through its promoters to the Central government and to the Government of Gujarat. 3.14 In para 19 of the Counter the respondent/corporate debtor submitted that the instant application has been filed with absolute mala fide intent....
X X X X Extracts X X X X
X X X X Extracts X X X X
....law of limitation has been pressed into service. The Code is enacted on 28-5-2017, whereas the alleged default occurred on 30-4-2013, viz. three years prior to the enactment of the Code. 4.6 In para 9 of the Additional Counter it is submitted that the Corporate Debtor submitted that it is mandatory for a financial creditor to file Insolvency Application in Form-1 (as per Rule 4(1) of the Insolvency and Bankruptcy (AAA) Rules, 2016. However, the present application is not filed in the prescribed Form-1. The petitioner/financial creditor has not provided computation of amount of default and days of default. Thus, the application under sub-section (2) of section 7 is incomplete. 4.7 In paras 11 and 12 of the Additional Counter it is submitted that the Applicant Bank has stated that it has produced authorization or letter of authority at Annexure-I dated 31-8-2018 to the Application mentioning the name of Mr. B. Sudhakar. It is submitted that there ought to be some independent document or source of power which authorizes the signatory. In the absence of any such independent document giving such powers to Mr. B. Sudhakar, the certificate produced at Annexure-1 to the Application h....
X X X X Extracts X X X X
X X X X Extracts X X X X
....is not tenable. The petitioner/financial creditor has ridiculed the interpretation advanced by the respondent/corporate debtor in paras 2 to 7 of its Counter. It is averred that neither any Tribunal nor the Hon'ble Supreme Court of India has struck down any application under section 7 of the Code on the ground that the Code is prospective in nature, not retrospective. Even this Tribunal admitted several applications under section 7 of the Code, the transactions of which relate to pre-inception of the Code. 5.2 In para 7(B) of the written submissions the petitioner/financial creditor submitted that the contention of law of limitation raised by the respondent/corporate debtor in para 8 of its Additional Counter is not tenable. The petitioner/financial creditor relied on para 6 of the decision of the Hon'ble Supreme Court in the case of Gaurav Hargovindbhai Dave v. Asset Reconstruction Co. India Ltd. [2019] 109 taxmann.com 395/156 SCL 397, which reads as under: "So far as Mr. Banerjee's reliance on para No. 7 of B.K. Educational Services Pvt. Ltd. (supra) suffice it to say that the report of the Insolvency Law Committee itself stated that the intent of the Code....
X X X X Extracts X X X X
X X X X Extracts X X X X
....application at pages 71 to 535 of the Paper Booklets filed on behalf of the financial creditor. The learned counsel would contend that an amount of Rs. 231.21 crore was disbursed to the corporate debtor under various heads as stated above. The corporate debtor was irregular in servicing the debt and best efforts made for restructuring of the debt were not materialized. The loan account of the corporate debtor was ultimately treated as non-performing asset (NPA) with effect from 30-4-2013. 7. The learned counsel contended that the corporate debtor committed default. Hence the present application is filed under section 7 of the I&B Code to trigger Corporate Insolvency Resolution Process (CIRP) against the corporate debtor. 8. The learned counsel contended that the corporate debtor has taken strange defence as if the applicant cannot file the present application under section 7 of the I&B Code against the corporate debtor for the default occurred prior to commencement of the I&B Code. The learned counsel contended that the corporate debtor had taken a strange plea that the provisions of the I&B Code are prospective in nature and that for a default which occurred prior to commenc....
X X X X Extracts X X X X
X X X X Extracts X X X X
....eads the Stressed Assets Management Branch, Secunderabad is authorized to execute documents for the business of the Bank, who has given letter of authority to Shri B. Sudhakar, who is empowered to file the present application. Therefore, it can never be said that the person, who signed the application on behalf of the financial creditor is not authorized. The learned counsel contended that further defence taken by the corporate debtor that the documents filed on behalf of the financial creditor cannot be looked into as they are not certified as per the provisions of the Bankers' Book of Evidence. The learned counsel contended that the financial creditor has enclosed certificates as per the Bankers' Book of Evidence Act, 1891 (as amended) and these certificates would establish that the financial creditor has complied with the provisions of the Bankers' Book of Evidence Act and there is proper certification in respect of documents filed. 11. The learned counsel contended that the financial creditor is able to establish existence of debt and default and therefore, the petition is liable to be admitted. 12. On the other hand the learned counsel for the corporate debto....
X X X X Extracts X X X X
X X X X Extracts X X X X
....has filed application in Form-I. The particulars of the financial debt is shown in Part-IV of Form-I. It is the specific case of the petitioner that the accounts of the corporate debtor were classified as 'NPA' with effect from 30-4-2013. It is specifically stated in Part-IV that the accounts were classified as NPA due to failed restructuring as per the provisions of classification of IRAC issued by Reserve Bank of India. The date of default is from 30-4-2013. According to the petitioner the corporate debtor committed default with effect from 30-4-2013, the date on which the account was declared as NPA. 14. The financial creditor has filed all the documents referred to in the petition for the period from 2011 to 2013. 15. The question is whether the petition filed by the financial creditor is within the period of limitation under Article 137 of the Limitation Act. The Hon'ble Apex Court has held in the rendered in the case of B.K. Educational Services (P.) Ltd. v. Parag Gupta & Associates [2018] 98 taxmann.com 213/150 SCL 293, that Article 137 of the Limitation Act applies to the applications filed under sections 7 and 9 of the Insolvency and Bankruptcy Code, 2016....
X X X X Extracts X X X X
X X X X Extracts X X X X
....hat the corporate debtor has executed any other debt acknowledgment subsequent to the expiry of three years from the date of revival. Subsequent to execution of Revival Letter dated 6-2-2014, to constitute continuation of acknowledgment of debt there should have been one more execution of Revival Letter before expiry of three years from the date of execution of the first Revival Letter dated 6-2-2014. It is not the case of the petitioner/financial creditor that one more Revival Letter was executed as acknowledgment of debt subsequent to Revival Letter dated 6-2-2014. The financial creditor has also relied on Demand Notice dated 20-5-2015. The application is filed even three years beyond the date of the Demand Notice. 18. The next contention of the learned counsel for the petitioner/financial creditor is that there was acknowledgment of debt in the form of OTS Proposal. The learned counsel for the petitioner has relied on the documents filed by the corporate debtor, particularly, the document relating to the OTS Proposal. It is the contention of the learned counsel for the petitioner/financial creditor that the submission of OTS Proposal by the corporate debtor amounts to an ackn....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ceedings before the Debt Recovery Tribunal are not yet concluded. In the meantime the petitioner/financial creditor again filed the present application under section 7 of the Insolvency and Bankruptcy Code, 2016. Of course, there is no impediment for the petitioner/financial creditor to initiate proceedings under the Insolvency and Bankruptcy Code, 2016 simultaneously, along with initiation of proceedings before the Debt Recovery Tribunal. The question of exclusion of time on the ground that proceedings are pending before the Debt Recovery Tribunal, for computation of limitation under Article 137 of the Limitation Act does not arise, for the reason that the Debt Recovery Tribunal proceedings are still pending and the petitioner/financial creditor moved the present application under section 7 of the Insolvency and Bankruptcy Code, 2016 simultaneously. Therefore, there is no question of any exclusion of time under section 14 of the Limitation Act for initiation of proceedings under section 7 of the Insolvency and Bankruptcy Code, 2016 by the petitioner/financial creditor against the corporate debtor. 21. In the matter of C. Shivakumar Reddy v. Dena Bank [2020] 114 taxmann.com 219,....