TaxTMI 
TaxTMI 
2020 (8) TMI 545
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....as "I&B Code") seeking initiation of 'Corporate Insolvency Resolution Process' against Respondent No.3- 'M/s. Earthcon Universal Infratech Pvt. Ltd.' ('Corporate Debtor') came to be admitted at the hands of the Adjudicating Authority (National Company Law Tribunal), Division Bench, Delhi, Bench-III, in terms of the impugned order dated 8th January, 2020 with consequential orders in the nature of slapping of Moratorium on the assets of the 'Corporate Debtor' and appointment of 'Interim Resolution Professional'. Appellant, shareholder of the 'Corporate Debtor' has assailed the impugned order of admission through the medium of instant appeal on several grounds which shall be adverted to as the narration proceeds. 2. The genesis of issues raised in this appeal may be traced to Debenture Trust Deed ("DTD" for short) dated 13th June, 2017 entered among 'Earthcon Infracon Pvt. Ltd.' (the issuer/ mortgager), 'Beacon Trusteeship Limited' (Trustee/ Respondent No.2), 'Earthcon Constructions Pvt. Ltd.' (Obligor-1), 'Mr. Shadab Khan' (Obligor-2/ Personal Guarantor-1), 'Earthcon Universal Infratech Pvt. Ltd.' (Obligor- 3/ 'Corporate Debtor'), 'Mr. Susheel Kumar Sharma' (Obligor-4/ Personal Guar....
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.... only limited to collateral in the form of 200 units/ flats owned by the issuer company which albeit developed by the 'Corporate Debtor'. The 'Corporate Debtor' further pleaded that it had invoked the arbitration clause in pursuance to the clause 51 of the Debenture Trust Deed and a notice in this regard was sent to 'Financial Creditors' on 24th June, 2019. The 'Corporate Debtor' also questioned the status of 'Financial Creditors' pleading that they are not covered under the definition of 'Financial Creditors' besides failing to establish existence of debt. It was lastly pleaded that alternate remedy was available to 'Financial Creditors' under other statutes. 3. The Adjudicating Authority overruled the objection of the 'Corporate Debtor' in regard to redemption of debentures by observing that while in fact the 'Corporate Debtor' had sought time for repayment, it had changed its stand by questioning the very status of the 'Financial Creditors'. It also noticed that in terms of the amended Debenture Trust Deed, the issuer company and the 'Corporate Debtor' were under legal obligation to repay the 1st instalment by 31st March, 2019. As regards liability of 'Corporate Debtor', it obs....
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....tly, Respondents- 'Financial Creditors' preferred an appeal before the Hon'ble Apex Court which set aside the order passed by this Appellate Tribunal and directed the 'Financial Creditors' to approach the Adjudicating Authority regarding any apprehension of collusion between the parties in Company Petition No. IB-1601/ND/2019. However, the Hon'ble Apex Court did not set aside order dated 23rd August, 2019 passed by the Adjudicating Authority. It is further submitted that since the order of the Adjudicating Authority admitting EIPL to 'Corporate Insolvency Resolution Process' has not been set aside and the 'Financial Creditors' have been granted four weeks' time from the date of order dated 18th February, 2020, the 'Financial Creditors' could not trigger 'Corporate Insolvency Resolution Process' against the 'Corporate Debtor' for the same and identical claims. Reliance has been placed on the judgment of this Appellate Tribunal rendered in "Dr. Vishnu Kumar Agarwal v. M/s. Piramal Enterprises Ltd.- Company Appeal (AT) (Insolvency) No. 346 of 2018" decided on 8th January, 2019. It is, therefore, contended that the case of the Appellant is squarely covered by the ratio of this Appellat....
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.... Resolution Professional' representing the 'Corporate Debtor' filed written submissions giving breakup of the claims received by it from different 'Financial Creditors': a. Punjab and Sind Bank's claim for Rs. 51,45,57,717.44/- b.Nissus Finance and Investment Managers LLP claim for Rs. 72,59,20,489/- c. Home Buyers/ allottees claims for Rs. 37,82,66,982.79/- 7. Heard learned counsel for the parties and perused the record. 8. The issue raised by the Appellant as a shareholder of the 'Corporate Debtor' is that the Respondent Nos.1 and 2 being 'Financial Creditors' could not be allowed to initiate and trigger three simultaneous 'Corporate Insolvency Resolution Processes' for one set of claim. Reliance has been placed on the judgment rendered by this Appellate Tribunal in Dr. Vishnu Kumar Agarwal's case (Supra), which is still occupying the field as the same has not been set aside by the Hon'ble Apex Court. In order to understand the ratio of aforesaid judgment in the peculiar facts and circumstances of the instant case, it would be appropriate to refer to para 32 of the said judgment which is reproduced hereunder: "32. There is no bar in the 'I&B Code' for filing simul....
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....iled CP (IB) No. 1348 of 2019 under Section 7 of the 'I&B Code' against the Respondent No.3- 'Corporate Debtor' who happens to be one of the corporate guarantors of principal borrower. It also appears that the Respondent No.2 filed an application under Section 7 against 'Earthcon Constructions Pvt. Ltd.' who happened to be the 'corporate guarantor' of the principal borrower in the Debenture Trust Deed executed inter se the principal borrower and Respondent No.2. The 'Operational Creditor'- 'M/s. Emperos Infrastructure Pvt. Ltd.' filed proceeding under Section 9 of the Arbitration & Conciliation Act, 1996. The Adjudicating Authority admitted application filed by the 'Financial Creditors' vide order dated 28th August, 2019. In appeal the order of admission came to be upheld by this Appellate Tribunal and the appeal was dismissed. The matter was taken to Hon'ble Apex Court in Civil Appeal No(s). 7641/2019 by the Respondent No.2. The Hon'ble Apex Court, vide order dated 18th February, 2020 set aside the order passed by this Appellate Tribunal keeping in view the fact that application under Section 65 of the 'I&B Code' alleging that the order of admission was passed on the basis of admi....
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.... each debenture in one or more tranche as per instructions of '1st Financial Creditor'. A registered legal mortgage was created by the principal borrower and the 'Corporate Debtor' on the assets detailed in the DTD as security. The 'Corporate Debtor' undertook to pay all secured obligations on redemption dates if principal borrower fails to pay. The 'Financial Creditors' issued demand notices to the principal borrower as a default occurred due to nonpayment in accordance with the arrangement agreed upon. Copies thereof were marked to the 'Corporate Debtor' and other guarantors who issued cheques in favour of debenture trustees which bounced for insufficiency of funds in their accounts. 12. The case set up by the 'Corporate Debtor' is that its liability is only limited to the collateral in the form of 200 units/ flats owned by the principal borrower and developed by the 'Corporate Debtor'. It claims to have invoked the arbitration clause in DTD with notice served on 'Financial Creditors' on 24th June, 2019. Taking note of the fact that the 'Corporate Debtor' had communicated to the 'Financial Creditors' seeking time for repayment and also having regard to the amendment introduced i....
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....ur weeks' w.e.f 18th February, 2020. Respondent Nos. 1 and 2 have filed additional written submissions supported by a copy of the order dated 17th March, 2020 passed by the Adjudicating Authority which reveals that the application as directed by the Hon'ble Apex Court has been filed and the Adjudicating Authority has directed that the interim protection granted by the Hon'ble Apex Court shall continue till further order. Presently the matter is pending consideration before the Adjudication Authority. 14. Having regard to the above noted developments, be it seen that the fate of instant appeal is essentially linked with the fate of application under Section 65 of the 'I&B Code' preferred by the 'Financial Creditors' before the Adjudicating Authority, as a sequel to the disposal of Civil Appeal No. 7641 of 2019 by the Hon'ble Apex Court, which is pending consideration. Since the order passed by this Appellate Tribunal in appeal arising out of triggering of 'Corporate Insolvency Resolution Process' initiated at the instance of an 'Operational Creditor' against the principal borrower has been set aside by the Hon'ble Apex Court and the dismissal of appeal by this Appellate Tribunal ag....