TaxTMI 
TaxTMI 
TaxTMI 
2020 (8) TMI 644
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....hereunder the Ld. Adjudicating Authority admitted the application filed under Section 7 of the IBC and appointed Interim Resolution Professional. 2. Brief facts of the case is as under: - i) The Corporate Debtor namely Bhadreshwar Vidyut Pvt. Ltd. (formerly known as OPGS Power Gujrat Pvt. Ltd.), is a company incorporated on April 26, 2007 under the provisions of the Companies Act, 1956, operates and develops power generation assets in India. The Corporate Debtor has set up a 2 x 150 MW Thermal Power Plant, at Bhadreshwar Kutch, Gujrat at a total project cost of Rs. 1996.54 Crores (hereinafter referred to as the "Power Plant"). For the purposes of setting up the Power Plant, the Corporate Debtor had obtained a term loan aggregating to Rs. 1497.40 Crores, which included Rs. 998.26 Crores from REC Limited; Rs. 252.74 Crores from Punjab National Bank and Rs. 246.40 Crores from State Bank of India. The promotors of the Corporate Debtor had invested towards equity an amount of Rs. 499.14 Crores towards the Power Plant. ii) The details of the Power Plant costs and its source have been given in a tabular from as under: Particulars (Rs. Cr.) Original Cost Cost Overrun-1 Cost Over....
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.... even the sanctioned limits and reduced the non-fund based limits from Rs. 105 Crores to 98 Crores vide their sanction letter dated July 29, 2017, and thereafter with effect from December 05, 2018, Respondent No. 1 had reduced its cash credit (fund based facilities) from Rs. 31 Crores to Rs. 7.92 Crores. Furthermore, Respondent No. 1 did not release funds from sanctioned nonfund based limits. Furthermore, the Letter of Credit ("LC") Limit was reduced to nil from Rs. 74 crores, so as the Bank Guarantee limit. ix) This unilateral change effected by Respondent No. 1 caused enormous financial difficulty to the Corporate Debtor, in their day to day management of the business. The Appellant submits that this reduction by Respondent No. 1 was done, despite availability of non-fund based working capital limit and specific request made by the consortium members to open Letter of Credits for the Corporate Debtor. It is pertinent to note that the Corporate Debtor has regularly serviced the interest of the working capital facilities to the PNB Consortium till May 31, 2019. x) On May 2, 2018, the Corporate Debtor requested Respondent No. 1 to open a letter of Credit for a sum of Rs. 21,25,36,....
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....arrangements are pooled with one Bank and or/where the bank receiving the remittances is not parting with the share of the member banks' and therefore be treated as NPA. The banks participating in the consortium should therefore arrange to their share of recovery transferred from the lead bank or get an express consent from the lead bank or get an express consent from the Lead Bank for the transfer of their share of recovery, to ensure proper asset classification in their respective books" xv) The pitiable situation in which the Corporate Debtor was placed at one point of time was that it was unable even to understand the exact quantum of working capital facilities available and whether the sanctioned facilities would be made available or not. The consequence of this was that the Corporate Debtor could not plan its operations, sourcing of raw materials, statutory and other payments etc., adversely affecting the entire production and generation. Enormous issues were faced by Corporate Debtor on account of lack of working capital facilities including financial difficulties for sourcing raw materials, and delays in paying dues to coal suppliers and procuring coal from traders at a m....
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....s a 'Waterfall mechanism' for payment to the lenders. The waterfall mechanism provides that the first priority of payments is for new material procured under letters of credit established by working capital lenders, including the Respondent No. 1, which was always honoured by the lenders and after meeting other operational expenses, the balance was used to first pay the other dues to the working capital lenders and thereafter to the term lenders. 8. It is further submitted by the Appellant that contrary to the understanding with the other lenders, Respondent No. 1- Syndicate Bank decided to unilaterally reduce the Letters of Credit facility being provided to BVPL. This adversely impacted BVPL's functioning and also jeopardised the ability of all other lenders to continue to receive moneys for servicing their debt obligations through revenues form continued generation / operations of BVPL's. 9. It is further submitted by the Appellant that all the lenders (including PNB) requested to Respondent No. 1 - Syndicate Bank to continue providing the Letters of Credit facility to BVPL in accordance with their contractual obligations as recorded in the consortium meetings on 04.05.2018 (at....
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.... TRA account". However, disbursement was withheld by PNB (and not by Corporate Debtor/BVPL) because of the refusal by Respondent No. 1 to restore sanctioned limits for BVPL. It is further submitted that during the consortium meeting on 06.09.2018, PNB also requested Syndicate Bank that they will allow to pay the outstanding LC liability of Syndicate Bank from TRA only after Syndicate Bank will allow opening further LCs for BVPL. 15. It is further submitted that these facts established that there was no default committed by Corporate Debtor/BVPL overlooking these facts. Application under Section 7 of the IBC was admitted. 16. It is further submitted that the declaration of the Corporate Debtor as an NPA by Syndicate Bank was made for the first time in its demand letter dated 05.12.2018 in which it was informed that having waited for the LC payment for 90 days till 31.10.2018, it was declared the amount due with Corporate Debtor as NPA retrospectively from 30.06.2018 completely ignoring that the Corporate Debtor had put in funds in the TRA account for disbursal to all the lenders and that on 06.09.2018 and PNB working as capital lead bank assured Syndicate Bank (Respondent No. 1) o....
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.... made by the PNB (lead bank) to reconsider the decision to initiate proceedings under Section 7 of the IBC before NCLT against the Appellant. 23. It was also submitted that the PNB further sent a letter dated 09.08.2019 (at page 522, Vol. -III of Appeal Paper Book) to the effect wherein mentioned that Respondent No. 1 minority share of 1.64%, unilateral action is jeopardizing the interests of other lenders who have a much higher stake in the account and further request was made to reconsider the decision taken by Respondent No. 1 to initiate proceedings under Section 7 of the IBC before the NCLT against the Appellant. 24. Learned counsel for the Appellant also referred to e-mail dated 09.08.2019 (Annexure- A/ 25) at page 523 of the Appeal Paper Book sent by Addl. G.M.(SAM), REC Limited addressed to Respondent No. 1 requested therein that lenders are still deliberating on the proposal to decide further way. The matter unilateral action by any of the consortium lender will not be in the interest of other stakeholders including lenders. 25. Learned counsel for the Appellant also referred to Annexure- A/26 at page 524 Vol. III of the Appeal Paper Book, the relevant portion is as und....
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....n documents executed by the Corporate Debtor and mechanism under TRA will not enable the Corporate Debtor from taking a plea that there is no default. FINDINGS 29. We have carefully perused the record of the case, argument advanced on behalf of the parties and gone through the written submissions. Taking aforesaid facts and circumstances, we are of the view that Ld. Adjudicating Authority have failed to consider the letter dated 27.12.2018 filed before this Tribunal at Page No. 17 vide Diary No. 18698 dated 06.02.2020 whereby refer to the minutes of the consortium meeting dated 18th September, 2018 the Syndicate Bank (Respondent No. 1) agreed to open further LCs in favour of the Appellant as the Appellant was going through cash difficulties and also agreed to restore the sanctioned limits of the Appellant. The LC limits to the extent of Rs. 46.50 Crores and further it was agreed that the amount which have been deposited in TRA, the amount will be paid to Respondent No. 1 after opening the TRA. * The Syndicate Bank (Respondent No. 1) constitutes a miniscule 1.64% of total outstanding debt of BVPL and PNB was a lead bank of consortium. * The Respondent No. 1 has only 1.64% sta....
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....gard to the debt. The onus of proof of default on the part of Corporate Debtor lies on the Financial Creditor and it has to demonstrate that default has occurred on account of failure on the part of Corporate Debtor to discharge its liability. * In the instant case, Corporate Debtor has been subjected to restructuring of credit facilities and the operations of the bank account of the Corporate Debtor are regulated by the 'Punjab National Bank Consortium Inter-se Agreement' dated 17th December, 2015, which has to be read in juxtaposition with 'Trust Retention Account (TRA) Agreement' dated 26th July, 2016. Under the arrangement of debt restructuring, the Corporate Debtor's deposit would go to the TRA account and it is not open to the Corporate Debtor to discharge its liability on account of financial debt to various lenders without the approval of the Lead Bank i.e. Punjab National Bank. It transpires from the record that information in this regard has already been given by the Corporate Debtor to the Lead Bank that the Financial Creditor - Syndicate Bank i.e. Respondent No. 1 has expressed its intention to trigger Corporate Insolvency Resolution Process against it unless payments....