AI Drafter 
TaxTMI 
TaxTMI 
2018 (12) TMI 1815
X X X X Extracts X X X X
X X X X Extracts X X X X
....d for, was incorporated on 23.03.1995 having its registered office at 5/24, Ramesh Nagar, New Delhi - 110015. Since the registered office of the respondent corporate debtor is in New Delhi, this Tribunal having territorial jurisdiction over the NCT of Delhi is the Adjudicating Authority in relation to the prayer for initiation of Corporate Insolvency Resolution Process in respect of respondent corporate debtor under sub-section (1) of Section 60 of the Code. 3. It is appropriate to mention that the applicant Indian Overseas Bank (hereinafter referred as IOB), is a body corporate constituted under the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 having its Registered Office at 763, Anna Salai, Chennai 600002, India. 4. Mr. M. Ravindran Menon authorized representative and working as Assistant General Manager of the applicant, has preferred the present application on behalf of the applicant for initiation of corporate insolvency resolution process against the respondent corporate debtor in terms of the provisions of the Code. 5. The applicant has proposed the name of Mr. Sandeep Kumar Gupta, for appointment as Interim Resolution Professional having r....
X X X X Extracts X X X X
X X X X Extracts X X X X
....5 IOB Dena Bank PNB SBI CBI UBI 792.35 203.43 115.42 236.20 146.00 43.30 48.00 10. It is the case of the applicant that the corporate debtor availed and utilized various financial facilities granted by the consortium but failed to maintain financial discipline and was irregular in servicing the said debt. Consequently, the consortium banks declared the account of corporate debtor as NPA in the year 2015 as per the extant guidelines of the Reserve Bank of India and notices under Section 13(2) of SARFAESI Act were issued seeking repayment of respective outstanding loans. The loan accounts of the corporate debtor maintained with consortium banks were declared NPA as per details captured in the following table: Name of Bank Date of NPA Date of Notice under Section 13(2) SARFAESI Act IOB 01.01.2015 23.09.2015 SBI 27.02.2015 24.09.2015 Dena Bank 02.03.2015 21.09.2015 UBI 31.03.2015 21.09.2015 PNB 17.04.2015 21.09.2015 CBI 28.09.2015 29.09.2015 11. The applicant has relied upon the following securities and other loan related documents executed between the parties in respect to the f....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... ♦ Copy of Consent-cum-Authorization Letter dated 28.06.2014 for disclosure of names in case of default. ♦ Copy of Confirmation Letter dated 30.06.2014 regarding deposit of title deeds. ♦ Copy of Confirmation Letter dated 30.06.2014 regarding deposit of title deeds. ♦ Copy of Confirmation Letter dated 30.06.2014 regarding deposit of title deeds. ♦ Copy of Confirmation Letter dated 30.06.2014 regarding deposit of title deeds. ♦ Copy of Confirmation Letter dated 30.06.2014 regarding deposit of title deeds. ♦ Copy of Deed of Guarantee for Loans, cash credit etc. dated 05.09.2014. ♦ Copy of Confirmation letter dated 30.06.2014 regarding deposit of title deeds. ♦ Copy of Consent-cum-authorization letter dated. 05.09.2014 for disclosure of names in case of default. ♦ Copy of the undertakings ♦ Copy of the inter se agreement for working capital dated 28.09.2013. ♦ Copy of the Supplemental Working Capital Consortium Agreement dated 28.09.2013. ♦ Copy of Board Resolution dated 26.09.2013 passed by the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d Promissory Note dated 31.03.2014 for Rs. 10 crores executed by Corporate Debtor. ♦ Copy of Letter of confirmation of Guarantee dated 31.03.2014 executed by Defendant Nos. 4, 5, 6 and 7. ♦ Copy of Letter of Confirmation of Guarantee dated 31.03.2014. ♦ Copy of Acknowledgment of debt and security dated 31.03.2014 executed by Defendant Nos. 1, 2, 3, 4, 5, 6, 7 and 10. ♦ Copy of Letter of Guarantee for ad hoc cash credit facilities dated 31.03.2014 executed by Defendant Nos. 2, 3 and 10. ♦ Copy of Letter of Guarantee for ad hoc cash credit facilities dated 31.03.2014 ♦ Copy of Letter of General Lien and set off for the borrowing arrangement dated 31.03.2014 executed by Corporate Debtor. ♦ Copy of Consent Clause dated 31.03.2014 executed by Corporate Debtor. ♦ Copy of Declaration in respect of pending court cases as on 31.03.2014 executed by Corporate Debtor. ♦ Copy of General Undertaking dated 31.03.2014 executed by Corporate Debtor. ♦ Copy of Letter of Continuity dated 31.03.2014 executed by Corporate Debtor. ♦ Copy of P....
X X X X Extracts X X X X
X X X X Extracts X X X X
....executed by Corporate Debtor. ♦ Copy of Demand Promissory Note for a sum of Rs. 2.50 crores along with letter for rate of interest on the letter of guarantee facility and letter of waiver, all dated 09.02.2013 executed by Corporate Debtor. ♦ Copy of Demand Promissory Note for a sum of Rs. 25.90 crores along with letter of waiver, both dated 09.02.2013 executed by Corporate Debtor. ♦ Copy of Agreement of Personal Guarantee dated 09.02.2013 executed by Defendant No. 5. ♦ Copy of Agreement of Personal Guarantees dated 09.02.2013. ♦ Copy of the sanction letter for modification dated 20.11.2012. ♦ Copy of the sanction letter for enhancement dated 26.09.2013. ♦ Copy of the sanction letter for review dated 11.03.2015. ♦ Copy of Recall Notice under Section 13(2) dated 23.09.2015 issued by IOB. ♦ Copy of Recall Notice under Section 13(2) dated :21.09.2015 issued by UBI ♦ Copy of Recall Notice under Section 13(2) dated 21.09.2015 issued by Dena Bank. ♦ Copy of Recall Notice under Section 13(2) dated 24.09.2015 issued by SBI. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....92.35 crores was sanctioned to the corporate debtor by consortium banks. There is a claim that Rs. 1046,80,76,395.30/- is outstanding from the corporate debtor as on 31.03.2016 along with future interest @ 16.5% p.a. The outstanding amount due in respect of each bank is detailed below: (Amount in crores) Total Amount due IOB Dena Bank PNB SBI CBI UBI 1046.80 290.11 147.81 263.86 168.28 44.33 55.23 13. The respondent corporate debtor has filed its reply on 25.07.2018. Rejoinder to the reply was filed by applicant on 06.08.2018. 14. We have heard the parties and have perused the case records. 15. The various objections raised by the respondent corporate debtor are discussed below. 16. The corporate debtor has alleged that excess interest has been charged by the banks and the amount claimed by various banks are incorrect. In this regard the applicant has placed various documents in relation to the disbursement of the loan to the respondent company. The materials on record and the loan documents clearly depict that the loan was sanctioned, disbursed and the loan agreements were properly executed. Respondent company utilized and e....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ration of the account as a Non-Performing Asset account, continuously violated the terms of the sanction letter in relation to maintaining the account within the drawing limit/ sanctioned limit and by non-submission of stock statement. It is submitted that the amount claimed in Part-IV of the petition is based on the statement of Account maintained by the Bank in its ordinary and usual course of business and in accordance with the banking systems. 22. Needless to say that an application under Section 7 of the Code is acceptable so long as the debt is proved to be due and there has been occurrence or existence of default. What is material is that the default is for at least Rs. 1 Lakh. In view of Section 4 of the Code, the moment default is of Rupees one lakh or more, the application to trigger Corporate Insolvency Resolution Process under the Code is maintainable. The corporate debtor has failed to show that there is no debt or default in existence so as to avoid the provisions of the Code. 23. Another objection raised by the respondent is that the credit facilities were granted by consortium of banks and therefore the applicant bank does not have the requisite legal authorit....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s such attorneys in exercise of the powers, authorities and liberties hereby conferred upon, under and by virtue of this Agreement. 3(f)(i) Any action for the enforcement of the said securities against the Borrower shall be taken by the Lead Bank, in consultation with the other Members of the IOB Consortium and the IOB as the Lead Bank shall be at liberty to take any steps to realize or enforce the said securities agreed to be created or close and cause to be closed the respective cash credit account(s) or other Account(s) opened in the Books of the said Banks but in the morning of the full working day immediately preceding, any action intended to be taken under this clause due notice of such intention and of the action intended to be taken shall be communicated in writing by the Lead Bank to the other banks and the other Banks shall immediately or as soon as possible after receipt of such notice demand repayment of the moneys due under the relative cash credit account(s) or other Account(s) and stop all further advances or accommodations to the Borrower on the relative Cash Credit Account(s) or other Accounts of the Borrower with it and notify its intention in writi....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... relates to SARFAESI Act, 2002 and has nothing to do with Code." Therefore, the objection of the respondent that consortium banks have not acted in terms of circular and guidelines of RBI and determined the account as NPA illegally; cannot be a ground to reject the application preferred by financial creditors under Section 7 of the Code, there being default in payment of financial debt. 29. In connection with the objection regarding pendency of proceedings, it is well settled that the pendency of DRT proceedings and initiation of action under SARFAESI Act cannot be an impediment or bar to initiate the Corporate Insolvency Resolution Process under Section 7 of the Code. 30. Similarly, the objection on the ground of discrepancies in the amount of claim cannot sustain. The variance in the amount of default is mainly on account of difference of dates. Be that as it may the corporate debtor would be entitled to raise objection of mismatching of dues before the resolution professional/ committee of creditors. Adjudicating Authority is only to ascertain the existence of a default and not the exact amount due. Mere mismatch of the figures will ipso facto not estop the admission of co....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ation under Section 7 of the Code. 36. The application filed by the applicant financial creditor under sub-section 5 (a) of Section 7 of the code, has to be admitted on satisfaction that: i. Default has occurred; ii. Application is complete, and iii. No disciplinary proceeding against the proposed IRP is pending. 37. Hon'ble Supreme Court in the case of Mobilox Innovations (P.) Ltd. v. Kirusa Software (P.) Ltd. [2017] 85 taxmann.com 292/144 SCL 37 has observed that: "Once the adjudicating authority /Tribunal is satisfied as to the existence of the default and has ensured that the application is complete and no disciplinary proceedings are pending against the proposed resolution professional, it shall admit the application. The adjudicating authority/Tribunal is not required to look, into any other criteria for admission of the application." (Emphasis given) 38. An application of financial creditor under Section 7 of the Code is acceptable so long as the debt is proved to be due and there has been occurrence of existence of default. It is reiterated that the material on record clearly goes to show that respondent had availed ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....porate debtor any of its assets or any legal right or beneficial interest therein; (c) any action to foreclose, recover or enforce any security interest created by the corporate debtor in respect of its property including any action under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002; (d) the recovery of any property by an owner or lessor where such property is occupied by or in the possession of the corporate debtor." 44. It is made clear that the provisions of moratorium shall not apply to transactions which might be notified by the Central Government or the supply of the essential goods or services to the Corporate Debtor as maybe specified, are not to be terminated or suspended or interrupted during the moratorium period. In addition, as per the Insolvency and Bankruptcy Code (Amendment) Act, 2018 which has come into force w.e.f. 06.06.2018, the provisions of moratorium shall not apply to the surety in a contract of guarantee to the corporate debtor in terms of Section 14 (3) (b) of the Code. 45. The Interim Resolution Professional shall perform all his functions contemplated, inter alia, by Sect....