TaxTMI 
TaxTMI 
2020 (10) TMI 65
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....on Form dated 06.02.2018. ii. The Applicant issued a Sanction Letter dated 22.02.2018 sanctioning the channel finance facility of INR 4,50,00,000/- to the Corporate debtor for the purpose of channel finance loan, in the terms and conditions set out therein, which was accepted by the Corporate Debtor. iii. Pursuant to the Sanction Letter, the following financing documents are executed: a. Channel Financing Agreement dated 06.03.2018 for a term of 12 months for INR 4,50,00,000/- by the Applicant and the Corporate Debtor. b. Pursuant to the CF Agreement executed above, the Corporate Debtor also executed a power of attorney dated 06.03.2018 in favour of the Applicant in order to enable the Applicant to enforce its rights therein, in the event of default by the Corporate debtor. c. Deed of hypothecation dated 06.03.2018 was executed by the Corporate Debtor in favour of the Applicant wherein the Corporate Debtor has granted the Applicant charge over all the assets of the Corporate Debtor. d. Irrevocable power of Attorney dated 06.03.2018 was executed by the Corporate debtor in favour of the Applicant in order to enable the Applicant t....
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....on in relation to the facility, the Applicant has made disbursements to the Corporate debtor. vii. The Applicant vide letter dated 09.03.2019 called upon the Corporate Debtor to make payment of INR 3,56,44,354/- which was outstanding and due as on 09.03.2019 apart from other charges. viii. The Applicant issued legal notice dated 22.05.2019 to make payments as per the financing documents constituted an Event of Default as per Clause VI of the CF Agreement and therefore, under Clause XV of the CF Agreement, the Applicant is entitled to recall the Facility and call upon the Corporate Debtor as well as Directors, who has provided unconditional personal guarantees in relation to the facility, to repay the outstanding Facility amount. ix. The Applicant, in its legal notice dated 22.05.2019, called upon the corporate Debtor and the Directors to jointly and severally repay the entire outstanding dues amounting to INR 3,69,13,981.59/- which was due as on 17.05.2019, along with further interest, additional interest and cost, charges and expenses till payment and realisation thereof, failing which the Applicant shall be constrained to take such measures without prej....
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....hereafter it has to be necessarily renewed and on non renewal limit will be blocked. In terms thereof, the tenure expires on 21.02.2019. viii. No conditions of Section 65-B of the Indian Evidence Act have been fulfilled and the random entries generated from computers cannot relied upon without the compliance of Section 65-B of Indian Evidence Act. ix. Also, the conditions of section 4 of Bankers Book of Evidence Act, 1891 have not been complied with. x. There is no averment made by the Applicant that interest has been levied by the Guidelines of RBI, or any particulars of debit entries haven been shown. xi. The rate of interest of 50.35% and 74.05% is contrary to all guidelines of RBI. xii. Foreclosure charges of Rs. 18,00,000/- and GST @18% of Rs. 3,24,000/- are levied only on closure of account, by way of prepayment. xiii. The Applicant has quoted four different amounts, none of which is tallying with the computation relied upon by the Applicant, which is uncertified and based on the whims of the Applicant. xiv. The Applicant has vide letter dated 22.05.2019 invoked arbitration clause and specifically mentioned and pr....
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....he total amount due to the Applicant in relation to Vedanta. x. It is clarified that as per the terms of the Sanction Letter on pg 35 of the Application, foreclosure charges are to be collected along with the applicable GST which will be payable by the Application in the future, the computation of the same has been shown by the Applicant on pg 185 of the Applicant. xi. The amount claimed by the Applicant is in accordance with the terms and conditions of the Sanction Letter and the Channel Finance Agreement. xii. The present proceedings under the IBC are not governed by the Arbitration Clause. xiii. Section 238 of IBC also gives it an overriding effect of the provisions of the Arbitration and Conciliation Act, 1996. 7. We have heard the Ld. Counsels for applicant as well as respondent. 8. Ld. Counsel for applicant in course of his arguments submitted that Corporate Debtor executed the following documents in relation to the Channel Finance Facility which have been referred by the applicant in the main application. He further submitted that in Channel Finance Facility, disbursements are not made directly to the respondent, but to a distributor....
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....of the Indian Evidence Act along with rejoinder. He further submitted that there is no requirement of the board resolution that it must have signed each and every document. He further submitted that applicant has already placed board resolution, therefore, the contention of respondent regarding the authorized representative is not liable to be accepted. He further submitted that even if arbitration proceedings have been initiated, the present application is maintainable in view of decision of the Hon'ble NCLAT held in Binani Industries Limited Vs. Bank of Baroda and Anr. (Company Appeal (AT) Insolvency No. 62/2018. 11. On the other hand, Ld. Counsel for respondent in course of his arguments submitted that no disbursement has been made to the answering respondent and the alleged statement of disbursement does not carry any debit or credit entries nor does it carry any RTGS details, cheque details or any other details by way of which the said amounts have been credited in the account of respondent or its suppliers. 12. He further submitted that under Channel Finance agreement the disbursement, as mechanized was not to be made in one tranche or in one go, rather it has to be....
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....n and we further find that the Schedule 1 of the agreement which would be entered between the parties, which is at page 75 of the main application shows the name and address of the seller as Vedanta Limited and details of sanctioned letter is also mentioned in that column and we further find that additional interest is also agreed to be paid in case of default, which is at page 76 of the main application. We further find that detail of Post Dated Cheques are also mentioned at page 77 of the paper book and we further find that Power of Attorney is also enclosed with the main application at page 85, which is executed by the Director, Baldeo Metals Pvt. Ltd.. We also find that deed of Hypothecation is also executed by the respondent, which is at page 90 of the paper book. We further find that the letter of Guarantee is also enclosed with the main application at page 131. We further find that Channel Finance Facility was also modified vide letter dated 06.07.2018, which would be evident from the Annexure M, which is at page 149 of the paper book and a fresh agreement was executed on 06.07.2018 by which said facility is modified and name of seller as Vedanta Limited and Hindalco Industr....
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....ch creditors in the same class or not less than ten per cent, of the total number of such creditors in the same class, whichever is less: Provided further that for financial creditors who are allottees under a real estate project, an application for initiating corporate insolvency resolution process against the corporate debtor shall be filed jointly by not less than one hundred of such allottees under the same real estate project or not less than ten per cent of the total number of such allottees under the same real estate project, whichever is less: Provided also that where an application for initialing the corporate insolvency resolution process against a corporate debtor has been filed by a financial creditor referred to in the first or second provisos and has not been admitted by the Adjudicating Authority before the commencement of the Insolvency and Bankruptcy Code (Amendment) Ordinance, 2019, such application shall be modified to comply with the requirements of the first or second provisos as the case may be within thirty days of the commencement of the said Ordinance, failing which the application shall be deemed to be withdrawn before its admission.} ....
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.... (b) the order under clause (b) of sub-section (5) to the financial creditor, within seven days of admission or rejection of such application, as the case may be". 17. At this juncture, we would also like to refer the decision in Innoventive Industries Limited Vs. ICICI Bank reported in 2018 (1) SCC 407 and the relevant portion of the decision is quote below: "28. When it comes to a financial creditor triggering the process, Section 7 becomes relevant. Under the explanation to Section 7(1), a default is in respect of a financial debt owed to any financial creditor of the corporate debtor - it need not be a debt owed to the applicant financial creditor. Under Section 7(2), an application is to be made under subsection (1) in such form and manner as is prescribed, which takes us to the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016. Under Rule 4, the application is made by a financial creditor in Form 1 accompanied by documents and records required therein. Form 1 is a detailed form in 5 parts, which requires particulars of the applicant in Part I, particulars of the corporate debtor in Part II, particulars of the proposed interim resolut....
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....see the records of the information utility or other evidence produced by the financial creditor to satisfy itself that a default has occurred. It is of no matter that the debt is disputed so long as the debt is "due" i.e. payable unless interdicted by some law or has not yet become due in the sense that it is payable at some future date. It is only when this is proved to the satisfaction of the adjudicating authority that the adjudicating authority may reject an application and not otherwise". 18. From the perusal of the provision and decision, which we have referred in the aforementioned paras, we find that in order to trigger under Section 7, the Adjudicating Authority is required to satisfy the following conditions: "(a) a default has occurred and the application under sub-section (2) is complete, and there is no disciplinary proceedings pending against the proposed resolution professional, it may, by order, admit such application; or (b) default has not occurred or the application under sub-section (2) is incomplete or any disciplinary proceeding is pending against the proposed resolution professional, it may, by order, reject such application:" If....
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....ansferring, encumbering, alienating or disposing of by the corporate debt or 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 Securitisation 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. Further: (2) The supply of essential goods or services to the corporate debtor as may be specified shall not be terminated or suspended or interrupted, during moratorium period. (3) The provisions of sub-section (1) shall not apply to such transactions as may be notified by the Central Government in consultation with any financial sector regulator. (4) The order of moratorium shall have effect from, the date of such order till the completion of the corporate insolvency resolution process: Provided that where at any time during the corporate insolvency resolution process period, if the A....