AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2018 (7) TMI 2140
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....eventy Seven Lakhs, Ninety Nine Thousand and Nine Hundred and Sixteen ("Outstanding Amount") is the total outstanding due as on 31st May 2018, along with further interest, under the Facility Letter. The account of the Corporate Debtor was classified as non-performing asset in compliance with RBI Guidelines on 8th April 2016. The default is continuing in nature. 4. The Brief facts of the present case are stated as under: 4.1 The Corporate Debtor started its banking relationship with the Financial Creditor in the year 2007-2008. The Financial Creditor had made available to the Corporate Debtor various credit facilities (which were renewed, revised and amended from time to time under various facility letters) up to a total limit of INR 97,50,00,000/- (Indian Rupees Ninety-Seven Crores and Fifty Lakhs Only) under a facility letter dated 24th February 2015 ,which was accepted by the Corporate Debtor on 25th February 2015 . The credit facilities were further amended vide further facility letter Dt 4th May 2016, which was accepted by the Corporate Debtor on 24th May 2016. The Facility Letters were accompanied by Master Credit Terms, which contains standard terms and conditions for facil....
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....ued by Mr Satya Narayan Jhunjhunwala and Mr Adarsh Jhunjhunwala, both dated 30th June 2014 (as amended and supplemented from time to time). 4.5 The Corporate Debtor was time and again reminded of its payment obligations by the Financial Creditor vide e-mail dated 5th May 2017, 13th July 2017 and 5th January 2018. 4.6 The Corporate Debtor continued to be in default towards its payment obligations under the various facility letters owing to which the account of the Corporate Debtor maintained with the Applicant was declared as nonperforming asset on 8th April 2016 by the relevant guidelines of the Reserve Bank of India. 5. In response to the above Company Petition, the Corporate Debtor (CD) has filed a Company Application, being CA- (IB) 164/2018, raising certain preliminary objections and sought Leave of the court to serve a copy of the application to the Reserve Bank of India. Counsel for the Corporate Debtor stated that instant Petition filed by Standard Chartered Bank under section 7 of IBC is premature and violative of statutory and binding provisions of Circular dated 12.02.2018 and stated as under: I. Circular of RBI dated 12.2.2018 applies to large accounts, i.e. account....
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....VII. Learned Counsel for Corporate Debtor relied upon the Judgement of Hon'ble apex court in the matter of Sardar Associates and others V. Punjab, and Sind Bank reported in AIR 2010 SC 218 wherein it was held that the RBI Guidelines were binding on banks and can be enforced by the borrowers. Further, he prayed for RBI should be made a proper party and relied upon the Judgement of Hon'ble Apex Court Canara Bank V. PRN Upadhyaya reported in AIR 1998 SC 3000 wherein Apex Court was pleased to order impleadment of RBI as the question of interpretation of circular issued by RBI was involved. 6. In Reply to the Application filed by Corporate Debtor, counsel for Financial Creditor raised following arguments: I. It is submitted that the Press Release or the RBI Circular does not in any manner restrict any proceeding being filed by any financial creditor under the IB Code. It is submitted that the RBI Circular does not provide for any condition or restriction which may be read to mean that banks are required to finalise a resolution plan under the RBI Circular before initiating any proceeding under the IB Code. Such a reading of the circular is not only at odds with the intention with whi....
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.... management which would continue to hold on to the company without paying its debts. Both the Tribunal and the Appellate Tribunal will do well to keep in mind this principal objective sought to be achieved by the Code and will strictly adhere to the time frame within which they are to decide matters under the Code." As per objective of the code we are not expected to implead every regulatory authority for the interpretation of their circular. If we do so, the objective of the Code will itself get frustrated because observation of time line is essential in I B Code. Impugned Circular is addressed to banks, it is in the nature of "Guidelines" and does not in any manner restrict any proceeding being filed by any financial creditor under the IB Code. Further section 238 of the IB Code provides for overriding effect of the IB Code over all other laws (including the RBI circulars). Section 238 of the I& B Code will have overriding effect notwithstanding anything inconsistent therewith contained in any other law including the RBI circulars. According to Counsel of Corporate Debtor impugned RBI Circular and sections 35AA and 35AB of Banking Regulation Act, 1949, restrict the Bank accou....
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....e letters and e-mail from the Corporate Debtor to the Financial Creditor admitting their debt and default constitute the other evidences of debt and default filed along with the Section 7 Application. Letter dated 8th January 2018 which is a letter of acknowledgement of debt and securities issued by the Corporate Debtor to the Financial Creditor and e-mail dated 10th January 2018 by the Corporate Debtor to the Financial Creditor (in reply to the e-mail of the Financial Creditor dated 5th January 2018), constitutes the admission of debt and default by the Corporate Debtor; The statement of bank accounts of the Corporate Debtor maintained with the Financial Creditor along with the certificate under Section 2 (A) of the Bankers Books of Evidence Act, 1891 have also been filed. Hence, default has occurred, which meets the requirement of Section 3(11) & (12) of I & B Code. Financial Creditor also filed the Written Communication given by the proposed Interim Insolvency Resolution in Form No. II and there is no disciplinary proceeding pending against the proposed IRP. Thus, a total amount of default is stated as INR 63,77,99,916/- (Indian National Rupees Sixty Three Crores Seventy ....