TaxTMI 
TaxTMI 
2020 (6) TMI 351
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....ofessional (IRP). Since both the Applications filed by the Financial Creditors are in relation to the same Corporate Debtor, both are taken up together to be disposed of by way of a common order, as the proceedings under IBC, 2016 in relation to CIRP being a proceeding in rem. 2. Heard the Learned Counsel for the Financial Creditors and the Learned Counsel for the Corporate Debtor and perused the pleadings including the documents placed on the case file. 3. The brief facts of the case of the Financial Creditor namely Canara Bank in IBA/1045/IB/2019 are as follows: i. The outstanding amounts claimed by the Financial Creditor in IBA/1045/1B/2019 against the Corporate Debtor is Rs. 59,31,10,589.42p with interest till 18.07.2019. The amount claimed to be in default is set out in a tabular column at page 26 of the typed set filed with the Application, a perusal of which shows that the default is said to have arisen in relation to the overdraft cash credit facility granted by the Financial Creditor to the Corporate Debtor. ii. The Financial Creditor states that the Corporate Debtor is engaged in the business of providing complete range of Power Management Products, Systems....
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....al of the facility. Besides that, the Corporate Debtor executed Acknowledgement of Debt and Security dated 15.10.2014 in favour of the Financial Creditor, copy of which is placed at page 113 of the typed set filed with the Application. viii. The Corporate Debtor after availing the loan and executing the loan documents in favour of the Financial Creditor had become irregular in repayment of both the principal and interest amounts due to the Financial Creditor. On account of the continued default committed by the Corporate Debtor, the Financial Creditor vide its communication dated 28.10.2015, requested the Corporate Debtor to clear the entire overdue immediately, copy of which is placed at page 114 of the typed set filed with the Application. Since no amount was forthcoming, the Financial Creditor issued a recall notice dated 31.10.2015 to clear the entire liability, copy of which is placed at pages 115 and 116 of the typed set filed with the Application. ix. On 02.03.2017, the Corporate Debtor executed Acknowledgement of Debt and Security in favour of the Financial Creditor acknowledging the outstanding amount due to the Financial Creditor, copy of which is placed at page 117....
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....ed at page 26 to 31 of the typed set filed with the Application. iv. After availing the loan, the Corporate Debtor executed the following documents in favour of the Financial Creditor on 19.02.2000 as security for due repayment:- (a) Agreement of Loan for Overall Limit, (b) Agreement of Hypothecation of Goods and Assets, (c) Deed of Guarantee for overall limit, (d) Letter Regarding the Grant of Individual Limits within the Overall Limit v. The Financial Creditor from time to time renewed/ revised Fund Based Working Capital, Non- Fund Based Limits to the Corporate Debtor vide Sanction Letters dated 13.11.2001, 29.01.2003, 19.02.2004 and 25.08.2004 for their business. Copies of Sanction Letters are placed at pages 128 to 146 of the typed set filed with the Application. vi. In order to secure the said renewed/ revised sanctions, the Corporate Debtor executed the following documents on 30.08.2004 in favour of the Financial Creditor as security for due repayment:- a. Letter regarding the grant of individual limits within the overall limit and b. Revival letter vii. Again, the Financial Creditor vide Sanction Letter dated ....
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....of the Financial Creditor, Corporate Debtor failed to regularize the account. Hence, the Financial Creditor issued Legal Notice dated 19.06.2018 calling upon the Corporate Debtor to repay the outstanding amount due to the Corporate Debtor, copy of which is placed at pages 716 to 718 of the typed set filed with the Application to which the Corporate Debtor has not sent any reply. xiii. Despite several reminders, the Corporate Debtor failed to repay the liability owed by it to the Financial Creditor. Therefore, the Financial Creditor was constrained to classify the account of the Corporate Debtor as Non-Performing Asset (NPA) on 28.10.2015. At this juncture, the Financial Creditor states that after the classification of the loan account of the Corporate Debtor as NPA, the Corporate Debtor executed two Revival Letters dated 10.02.2018, copies of which are placed at pages 705 to 708 of the typed set filed with the Application, acknowledging the outstanding balance amount due to the Financial Creditor. xiv. Further, the statement of accounts and the Certificate issued under the Banker's Books Evidence Act, 1876 are placed pages 748 to 751 of the typed set filed with the Applic....
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....lation to the Company of its future capabilities. vi. The Corporate Debtor, though has been a pioneer in the industry and the relevant product market it deals in, there were certain setbacks which brought down the performance of the Company. The company had to face loss for the past few years which is mainly on account of its working capital that had been affected. Further, the trends of the industry shifted to offering turn key projects leaving the independent equipment manufacturing entities to a back stage. As a result, the Company's main focus has shifted to undertaking turn key projects. Some of the projects were delayed for over a period of five years and some other had to come to a standstill because of certain extraneous factors like security issues, issues with right of way clearances for lines, etc. As a result of the same, the sub-contractors also suffered substantially leading to minimal bids in the subsequent projects. In fact, as on date a sum of Rs. 103,88,77,875/- is due to be received from various state utilities like Andhra Pradesh Power Utility Corporation, Assam Power Distribution Company, Bangalore Electricity Supply Corporation Limited, Eastern Power Di....
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....hs ending March 31, 2013 (In Lakhs) 12 months ending March 31, 2014 (In Lakhs) 12 months ending March 31, 2015 (In Lakhs) 12 months ending March 31, 2016 (In Lakhs) Sale of Products 28,448.53 22,780.47 18,715.34 6265.30 3,456.31 Relays and Control Panels 16,222.36 10,971.08 6562.69 3392.51 2913.19 Substation Automation/ Meters 2,606.64 143.08 50.87 -- -- RMU -- -- -- 461.86 20.76 Switchgear 3044.01 2250.18 1079.68 41.17 102.51 Projects 1291.27 8093.77 10,009.95 2,081.12 278.11 xi. In addition, the Corporate Debtor has been receiving and executing various orders from time to time. The Corporate Debtor has current orders worth Rs. 34.29 Crores in relation to its protection system business and orders worth Rs. 5.93 Crores in relation to protection products business, in addition to orders worth Rs. 1.75 Crores in the switch gear business. As estimated and recorded in the viability report of the Corporate Debtor, the Company has a projected total possible market opportunity of Rs. 242 Crores for the year 2020-21 with up to Rs. 337.9 Crores in the year 2026-27. xii. ....
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....tor at this point would substantially affect the ability of the Company to effectively continue as a 'going concern'. The Corporate Debtor is also examining methods to recover various dues to the extent of 103.88 Crores, recoverable from various state utilities, so that the same can be utilized for settling the creditors of the Corporate Debtor. xv. It is pleaded that the Corporate Debtor is not a fit Company to be subject to CIR Process, and the Company ought to be allowed to function in its current framework, especially in the light of the fact that various industries are dependent on the Corporate Debtor, the workforce, both in direct and indirect employment and the substantial public shareholding involved in the Company and especially on account of the fact that the Corporate Debtor is one of the largest suppliers for various state electricity projects. Therefore, if the company is subject to CIR Process, its growth potential and the interest of the stakeholders will be substantially crippled and prejudiced. Hence, the Corporate Debtor has prayed to dismiss the Application. 6. We have carefully considered the rival submissions as well as the pleadings and the docu....
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....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. It is evident from the documents filed by the individual Financial Creditor in their respective petitions the debt is also not time barred in view of acknowledgments given by the Corporate Debtor to each of the Petitioner banks as contemplated under Section 18 of the Limitation Act, 1963. In any case, there is no denial of liability owed to the individual Financial Creditor by the Corporate Debtor. 10. 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 Applications, as filed by the Financial Creditors are required to be admitted under Section 7 (5) of the I&B Code, 2016. 11. Both the Financial Creditors have proposed the names of Interim Resolution Professional (IRP) and written communications in the format prescribed under Form 2 of the Insolvency and Bankru....