AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2020 (5) TMI 8
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....r and perused the documents filed by the parties. 3. The Financial Creditor has claimed the total amount of Rs. 492,53,00,849.74p as outstanding against the Corporate Debtor as on 30-6-2019. Clause 2 of Part-IV of the Application discloses the details of the loan amount due to the Financial Creditor by the Corporate Debtor. Submissions of Financial Creditor 4. The case of the Financial Creditor is that the Corporate Debtor namely Kamachi Industries Limited (formerly known as Kamachi Sponge and Power Corporate Limited) is engaged in the business of manufacture of iron and steel and other allied industries. The Corporate Debtor was enjoying credit facilities from the Industrial Finance Branch of the Financial Creditor from 2005 onwards. As the Corporate Debtor set for an expansion, during July 2010, the Corporate Debtor approached the Financial Creditor and other Banks for consortium lending arrangement. Considering the same, the Financial Creditor and the other Consortium Banks sanctioned credit facilities to the tune of Rs. 145 Crores in August, 2010 to the Corporate Debtor. In consideration of the said facility, the Corporate Debtor executed various loan documents in favo....
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....acilities. Considering the same, the Financial Creditor and other consortium members renewed the existing credit facilities and had also sanctioned further credit facilities subject to various terms and conditions. In order to secure the said credit facilities, the Corporate Debtor executed the following documents, on 27-5-2013 :- i. Consortium Term Loan cum Hypothecation Agreement and ii. Consortium Working Capital Loan cum Hypothecation Agreement, Copies of the above documents dated 27-5-2013 are placed at pages 206 to 294 of the typed set filed with the Application. 9. The Corporate Debtor further approached the Financial Creditor and the other consortium members during February-March, 2015 and submitted a proposal seeking for enhancement of credit facilities. The Financial Creditor and the other consortium members enhanced the existing credit facilities. In consideration of the said credit facilities, the Corporate Debtor executed the following documents, on 19-3-2015:- (i) Supplementary Consortium Working Capital cum Hypothecation Agreement and (ii) Supplementary Inter Se Agreement Copies of the above documents dated 19-3-2015....
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....16, copy of which is placed at pages 536 to 566 of the typed set filed with the Application. 13. In addition, the Corporate Debtor deposited the title deeds in respect of its properties with intention to create an equitable mortgage over the same by executing Memorandum/Letter relating to deposit of title deeds on 24-8-2016, 6-9-2013, 23-4-2005, 22-6-2005, 5-10-2006, 6-6-2008, 28-5-2011, 13-8-2013, 4-6-2013, 5-9-2013 and 27-08-2015, copies of which are placed at pages 567 to 657 of the typed set filed with the Application. 14. The Financial Creditor states that initially the operation of the facility by the Corporate Debtor was satisfactory, however, subsequently it became sluggish and has not shown any significant progress in spite the restructuring package and therefore, made a request to the lender of the consortium to recall the loan. As such, the Financial Creditor opted itself out of the consortium, the account was classified as NPA again on 29-12-2016 proceeded to take recovery action against the Corporate Debtor. 15. Subsequently, the Lead Bank viz., Punjab National Bank has initiated action under SARFAESI Act, 2002 and issued Demand Notice dated 10-8-2018 under se....
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....or 18. The Corporate Debtor has filed a detailed Counter Affidavit along with typed set of documents wherein it is stated that the Corporate Debtor is primarily engaged in the business of manufacturing Sponge Iron, Billets, TMT Bars and generation of power at Pappan Kuppam in Gummidipoondi in the State of Tamilnadu. With a view to expand its business, the Corporate Debtor undertook a project for setting up an integrated Steel Plant including power plant for captive use. In this regard, the Financial Creditor had sanctioned a term loan of Rs. 120 Crores on 19-3-2009 and in CDR Restructuring Working Capital Term Loan of Rs. 64.49 Crores on 18-3-2013. Further, the Corporate Debtor was enjoying CC limit of Rs. 59 Crores and LC limit of Rs. 106.80 Crores as on 18-3-2018. 19. It is stated by the Corporate Debtor that the Corporate Debtor was making timely repayments as agreed. However, from the year 2012, the economy in India took a hit by global recession and ultimately there was a sever downfall in the Steel Industry which resulted in the deterioration of the Corporate Debtor's cash flow. It is further stated by the Corporate Debtor that the general slowdown in the economy al....
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....er abuse of process of law. Therefore, the Corporate Debtor has prayed to dismiss the Application with exemplary costs. Analysis 23. We have carefully considered the rival submissions as well as the pleadings and the documents as filed by both the parties before this Tribunal. During the course of arguments, the Learned Counsel for the Financial Creditor has brought to the notice of this Authority para-wise admission made by the Corporate Debtor in its Counter Affidavit for having availed the various credit facilities from the Financial Creditor and other consortium of Bank and the default made in repayment by the Corporate Debtor. 24. It is seen from the record that the Corporate Debtor was sanctioned various credit facilities besides CDR Package by way of renewal with enhancement and approval of Reschedulement of Term Loans with special conditions stipulated therein with liberty to charge penal interest by the Financial Creditor on account of irregularities in the Cash Credit Account and delayed submissions of renewal data/non-submission, vide Sanction Letter dated 22-3-2013 and further the availing of the CDR package was admitted by the Corporate Debtor in its Counter A....
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....ion has been filed within the period of limitation as stated above. Hence, the objection taken by the Learned Senior Counsel for the Corporate Debtor stands rejected. 27. The second objection that has been raised by the Learned Senior Counsel for the Corporate Debtor is that the CC limit which was revised from Rs. 56 Crores to Rs. 105 Crores as per Supplementary Inter Se Agreement dated 5-8-2015, was never disbursed by the Financial Creditor and due to which the capital got eroded and the Corporate Debtor suffered the liquidity crunch, and hence a huge loss has caused to the Corporate Debtor. 28. In reply, the Learned Counsel for the Financial Creditor has submitted that it is true that the CC Limit was revised from Rs. 56 Crores to Rs. 105 Crores vide Supplementary Inter Se Agreement dated 5-8-2015 however, the said sanction was based on certain terms and conditions such as equity infusion of Rs. 78.79 Crores by the Corporate Debtor and funding of cash losses etc., which the Corporate Debtor failed to comply with and hence, the CC limit was not disbursed. The reason given by the Learned Counsel for the Financial Creditor is plausible and accordingly, the issue stands decided....
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....lvency Resolution Process (CIRP). The plea of the Corporate Debtor that the Company is a solvent and going concern, cannot be made a ground for delaying the initiation of CIR Process or to keep in abeyance the instant Application as sought for as this Tribunal is required in case of a 'financial debt' which is due and in the event of 'default' as defined under I&B Code, 2016 is perforce required to admit the Application and the parties including the Corporate Debtor can have recourse during CIR process to submit a plan for restructuring if otherwise not disqualified. 32. Thus taking into consideration the facts and circumstances of the case as well as the position of law, we are of the view that the Application, as filed by the Financial Creditor is required to be admitted under section 7 (5) of the I&B Code, 2016. 33. The Financial Creditor has proposed the name of Mr. Vikas Gupta, having Registration Number IBBI/IPA-007/IP-P00501/2017-2018/10889, as Interim Resolution Professional (IRP) and a written communication in the format prescribed under Form 2 of the Insolvency & Bankruptcy Board of India (Application to Adjudicating Authority) Rules, 2016 has been f....