TaxTMI 
TaxTMI 
2020 (10) TMI 67
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.... Registered Office as well as its Corporate Office at M.A. Road, Srinagar, Kashmir - 190001 with one of its branch office at 17-A, Ring Road, Lajpat Nagar-IV, New Delhi - 110024. The respondent/CD is a company incorporated under the Companies Act, 1956 having its registered office at Z-196, Loha Mandi, Naraina, New Delhi - 110028. 3. Brief Facts of the Application filed by Financial Creditor in short are as follows: i. That the Financial Creditor is a banking company incorporated under the then J&K Companies Act, No. XI of, 1977 (1920 AD) governed by the provisions of the Banking Regulation Act, 1949, having its Registered Office as well as its Corporate Office at M.A. Road, Srinagar, Kashmir- 190001 with one of its branch office at 17-A, Ring Road, Lajpat Nagar-IV, New Delhi - 110024. ii. That the Respondent, Vinayak Rathi Steels Rolling Mills Private Limited (hereinafter referred to as the "Corporate Debtor") is a company incorporate under the Companies Act, 1956 having its registered office at Z-196, Loha Mandi, Naraina, New Delhi - 110028. The Master Data from the website of the Ministry of Corporate Affairs in relation to the Corporate Debtor has been alre....
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....14.05.2013. The said security documents have been enclosed alongside the Application and are collectively marked as Annexure P-6(Colly). vii. That yet again in the year 2015, the Corporate Debtor requested for enhancement in the existing Cash Credit Facility from 22.5 Crore to 30 Crore, which was duly sanctioned by the Corporate Debtor vide Sanction letter dated 20.03.2015 after executing a Loan Agreement dated 06.05.2015. The said Sanction letter dated 20.03.2015 and Loan Agreement dated 06.05.2015 has been enclosed alongside the Application and are marked as Annexure P-7(Colly). viii. That in terms of the aforesaid Cash Credit Facility, security documents were executed by the Corporate Debtor which include Letter of waiver of Notice, Letter of Continuity, Letter of Undertaking, Deed of Personal Guarantee, Hypothecation Deed, Hypothecation of Book Debts, Affidavit of Rajiv Rathi, Affidavit of Ram Chander Rathi and Extension of Charge all dated 06.05.2015. Copies of the said documents have been enclosed alongside the Application and are collectively marked as Annexure P-8(Colly). ix. That in the year 2015, at the request of the Corporate Debtor, the Finan....
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....romissory Note of Rs. 39 Crore dated 23.12.2016, Demand Promissory Note of Rs. 4 Crore dated 23.12.2016, Deed of Personal Guarantee dated 21.12.2016, Letter of Mortgagor confirming the Equity Mortgage and its extension both dated 21.12.2016. The aforesaid Sanction letter, Loan Agreement and Security documents have been enclosed alongside the Application and are collectively marked as Annexure P-12(Colly). xiii. That after availing the aforesaid Credit Facilities from the Financial Creditor, the accounts of the Corporate Debtor become irregular and despite repeated requests and demands, the Corporate Debtor failed and neglected to either to regularize its Credit Facilities or make payments of the outstanding amounts due and payable. xiv. That the last payment was made by the Corporate Debtor in its Credit Facility Account on 15.07.2017, thereafter, the Corporate Debtor has continuously failed and neglected to pay the credit facilities availed by it from the Financial Creditor. As a consequence thereof, the account of the Corporate Debtor was declared NPA on 30.09.2017 as per the prudential norms issued by the Reserve Bank of India. xv. That as a result of ....
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....pplicant and is marked as Annexure P-14. S. No. Credit Facility Outstanding as on 30.04.2019 Rate of Interest Debt fell due (Development Date) 1 Cash Credit Facility Rs. 49,38,67,683.52/- 12.45% 01.07.2017 2 Term Loan Rs. 1,10,89,856.00/- 13% 01.07.2017 3 Total Rs. 50,49,57,539.52/- -- 4. That on receipt of summons, CD appeared and filed reply. The facts mentioned in the reply in short is that originally the CD was incorporated as Good Luck Sales Pvt. Ltd in 1979 but the same was subsequently changed in the year 2008. The company commenced commercial operations in December 2011 and is engaged in the business of manufacturing Thermo Mechanically Treated (TMT) products and the manufacturing plant is situated at Sikandrabad, Uttar Pradesh, with its head office located at New Delhi. 5. That the CD was sanctioned credit facilities from the J&K Bank and operated its account satisfactorily for many years and the loan was repaid by the CD in timely instalment over a period of time. 6. That the CD has made regular payment which are given below:- Details of the payments made to the Bank Financial Year ....
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....athi. iv. Without prejudice to the above contentions, it is submitted that the Financial Creditor itself had alleged in the Notice dated 17.10.2017 that there are two immovable properties which were allegedly mortgaged in its favour by the Corporate Debtor. v. It is submitted that one of the Directors of the Corporate Debtor had approached the Financial Creditor with respect to the property situated at Plot No. 24/4, Block-A, Mohan Co-operative Industrial Estate, Mathura Road, New Delhi and informed the Financial Creditor that the said property was leased out vide registered Lease Deed dated 18.09.2017 in favour of Concorde Motors India Limited for a monthly rent of Rs. 8,00,000/- (Rupees Eight Lakh Only). It is further submitted that the Corporate Debtor had duly apprised the Financial Creditor about the proposal of leasing out the said property situated at Mohan Cooperative Industrial Estate, Mathura Road. New Delhi and that the Corporate Debtor would deposit the rent realized from said property with the Financial Creditor which can be adjusted towards the alleged outstanding dues of the Corporate Debtor. vi. Subsequently, the Financial Creditor had got....
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....tor, the Corporate Debtor submitted a detailed restructuring proposal with the Financial Creditor vide a restructuring proposal dated 07.02.2018. ix. That it is relevant to point out that the Corporate Debtor is a running concern which is employing more than 300 workers whose families are totally dependent on the running of the said factory. However, the Financial Creditor is bent upon to close down the factory and auction the same thereby ruining the business of the Corporate Debtor herein. It is submitted that in case the factory of the Corporate Debtor is closed, it would have a cascading effect in as much as the families of more than 300 workers would not only suffer but the workers would become totally jobless and would lose their employment. x. That pursuant to the said coercive action initiated by the Financial Creditor, the Corporate Debtor was constrained to file a Securitization Application under Section 17 of the Securitization Act, 2002 being SA No. 88 of 2018 before the learned Debt Recovery Tribunal, New Delhi. The said S.A. is pending disposal before the Ld. Debt Recovery Tribunal, New Delhi. xi. That it is the submission of the Corporate D....
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....cility and also admit that there is default in payment of debt. He further submitted that of course the CD claimed in his reply that he has mortgaged several immovable properties in favour of FC and the sale proceed of those properties will satisfy the loan amount of the FC and in its reply, the contention of the FC is that the FC is unable to sell the mortgaged properties at the valued price to pay off its debt and as a result of which the present case is filed. He also placed reliance upon the Following decisions:- 1. Innoventive Industries Ltd. v. ICICI Bank and Anr., (2018) 1 SCC 407 2. Swiss Ribbons Pvt. Ltd. and Ors. vs. Union of India (UOI) and Ors. (25.01.2019 - SC) MANU/SC/0079/2019 : , 3. Naveen Luthra and Ors. vs. Bell Finvest (India) Ltd. and Ors. Company Appeal (AT) (Insolvency) No. 336 of 2017 4. V.R. Hemantraj vs. Stanbic Bank Ghana Ltd. and Ors. -Company Appeal (AT) (Insolvency) No. 213 of 2018 12. He further submitted that "Mere pendency of the case before the DRT for adjudicating of such disputed amount cannot be a ground to reject the application u/s. 7 of the I&B Code, if the Adjudicating Authority is satisfied that there i....
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....C and he availed that facility. 14. Now, in the light of the submissions made on behalf of the FC and in the light of the facts mentioned in the written submissions of the CD, we have gone through the averments made in the application, reply and documents enclosed with application and reply as well as written synopsis filed on behalf of both the parties and we find that it is an admitted fact that the applicant had sanctioned a cash credit facility/term loan/BG/LC vide sanction letter dated 25.05.2010, which is evident from annexure P3 (Colly) at page no. 39 of the paper book and on the basis of that a loan agreement was executed between the FC and CD, which is evident from page 45 onwards of the paper book. We further find that from time to time, the loan facility had been enhanced on the request of the CD and that has not been denied by the CD by filing the reply. The only ground taken by the CD is that the FC has taken possession of the property situated at plot No. 24/4, Block-A, Mohan Co-operative Industrial Estate, Mathura Road, New Delhi and if that property is auctioned then the sale proceed of that property would be sufficient to liquidate the debt of the FC. 15. The....
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....or under sub-section (3). Provided that if the Adjudicating Authority has not ascertained the existence of default and passed an order under sub-section (5) within such time, it shall record its reasons in writing for the same. (5) Where the Adjudicating Authority is satisfied that-- (a) a default has occurred and the application under subsection (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 subsection (2) is incomplete or any disciplinary proceeding is pending against the proposed resolution professional, it may, by order, reject such application: Provided that the Adjudicating Authority shall, before rejecting the application under clause (b) of sub-section (5), give a notice to the applicant to rectify the defect in his application within seven days of receipt of such notice from the Adjudicating Authority. (6) The corporate insolvency resolution process shall commence from the date of admission of the application under sub-section (5). (7) The ....
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....of companies (if the corporate debtor is a company); iii. Order of a court, tribunal or arbitral panel adjudicating on the default; iv. Record of default with the information utility; v. Details of succession certificate, or probate of a will, or letter of administration, or court decree (as may be applicable), under the Indian Succession Act, 1925; vi. The latest and complete copy of the financial contract reflecting all amendments and waivers to date; vii. A record of default as available with any credit information company; viii. Copies of entries in a bankers book in accordance with the Bankers Books Evidence Act, 1891. B. In Innoventive Industries Limited Vs. ICICI Bank reported in 2018 (1) SCC 407 Hon'ble Supreme Court held:- "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 sub-section (1) in such form....
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....a dispute or the record of the pendency of a suit or arbitration proceedings, which is pre-existing -i.e. before such notice or invoice was received by the corporate debtor. The moment there is existence of such a dispute, the operational creditor gets out of the clutches of the Code. 30. On the other hand, as we have seen, in the case of a corporate debtor who commits a default of a financial debt, the adjudicating authority has merely to 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. When we shall consider the submissions of the CD in the light of the aforesaid provision and decisions then we are of the considered view that the Hon'ble Apex Court in the matter of Swiss Ribbons Pvt. Ltd. and Ors. vs. Union of India (U....
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....proceed would be sufficient to satisfy the debt is not liable to be accepted. 20. In the light of the aforesaid discussions, when we shall consider the case in hand, then we find that the application is complete and the loan has been disbursed and the same has not been repaid by the Corporate Debtor, therefore there is default in payment of debt, there is no disciplinary proceedings pending against the RP. Therefore, we have no option but to admit the application under Section 7(5)(a) of the IBC, 2016. 21. Accordingly, this petition is ADMITTED. A moratorium in terms of Section 14 of the IBC, 2016 shall come into effect forthwith staying:- (a) the institution of suits or continuation of pending suits or proceedings against the corporate debtor including execution of any judgment, decree or order in any court of law, tribunal, arbitration panel or other authority; (b) transferring, 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 ....