TaxTMI 
TaxTMI 
2020 (10) TMI 327
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....hand the action was taken on account of default committed as identified in the impugned RBI Guidelines and now on the other hand saying that the said RBI Guidelines should not be made the basis for quashing of the proceedings because only those cases are to be covered which are having exposure Rs. 20 Billion or above and since in the present case the debt as per Bank of India Petition under section 7 of the I&B Code in the capacity of Financial Creditor is much below therefore, legally not to be quashed. This plea of the Bank is not sustainable in the eyes of law because if it was so, then why the Banks have asked for a Resolution of the debt under the compliance of impugned guidelines of the RBI. The evidences on record have explicitly demonstrated that the Consortium of Banks have taken the due steps following the RBI Guidelines. 11. We hereby conclude that since the proceedings under section 7 of the Insolvency Code were the consequence of the impugned RBI Guidelines, which stood quashed by the Hon'ble Supreme Court, hence as a result, this Petition is non-est hence dismissed.' 2. Learned Counsel appearing for the Appellant submitted that the total outstanding debt a....
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....udicating Authority wrongly relied on the same. 5. Learned Counsel further contended that as per the Circular dated 12.02.2018, the timelines for large accounts to be referred under IBC was with respect to accounts with an aggregate exposure of Rs. 20/- billion on or after March 1st, 2018 and that for other accounts with aggregate exposure of the lenders below Rs. 20/- billion and above Rs. 1/-billion, RBI intended to announce over a two-year period, reference date for implementing the RP to ensure calibrated, time bound resolution of all such accounts to default. He submitted that the last offer was received on 22.02.2018, after RBI Circular dated 12.02.2018 and vehemently denied that the Application was pursuant to the RBI Circular. 6. Learned Counsel appearing for the Respondent submitted that the Circular of RBI dated 12.02.2018, has been declared as non-est in the eyes of law by the Hon'ble Supreme Court in Dharani Sugars (Supra) that the consortium of lenders approved the restructuring package on 30.03.2015, two-year moratorium was given for payment of the term loan installments; the Company incurred losses and faced several cash flow issues which was discussed in the J....
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.... the Respondent Company was disposed of vide Order dated 19.04.2019 with the following observations; '7.2 The National Company Law Tribunal is free to consider as to whether insolvency proceedings were initiated pursuant to the Reserve Bank of India-respondent No. 1's Circular dated 12/02/2018. With these observations, the writ petitions stand disposed of.' 10. The Minutes of the Meeting held on a) 26.02.2018 and on b) 13.03.2018, relied upon by the Respondent Counsel to prove his case, is being re-produced as hereunder; a) 'Minutes of the Core Committee Meeting held on February 26, 2018 at Oriental Bank of Commerce, 14th Floor, Maker Tower F, Cuffe Parade, Mumbai-05 Representatives of Oriental Bank of Commerce, Punjab National Bank. Canara Bank Central Bank of India, Allahabad Bank, Bank of Maharashtra, Exim Bank, Corporation Bank and Indian Bank were present Representative of IDBI Bank and United Bank of India were present through conference call. Attendance sheet is enclosed in Annexure - III. Mr. Sunil Chugh, Deputy General Manager, Oriental Bank of Commerce welcomed the participants in the meeting. Summary of discussions is as....
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....ishakti and decided to examine the proposal in light with new guidelines issued by RBI on 12.02.2018 and take views of respective competent authorities. 2) Mr. Chugh informed the house that last hearing in regard to liquidation petition filed by three applicants viz. Morgardshammar AB, Nordea Bank and Banco Di Brescia SPA was held on 20.02.2018 before the Hon'ble High Court of Bombay and order of that hearing has been received on Friday evening (23.02.2018). Next date of hearing is scheduled on 27.02.2018. The Hon'ble High Court has desired to have concrete instructions as to how the petitioners interest will be taken care. The Committer discussed the order of the Hon'ble High Court. The committee was of the view that since RBI has recently issued a Circular on 12.02.2018 and lenders have to re-examine the proposal under new guidelines after putting up Board approved policies by every Bank, a request can be made to Hon'ble High Court for seeking some time to arrive at any decision resolution for the company. The meeting ended with vote of thanks to the chair.' b) 'Minutes of the Lenders Meeting held on March 13, 2018 at the Oriental Bank of Comme....
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.... b) Guarantee invocation notice may be issued individually by lenders. c) OA shall be filed jointly by the Lead Bank on behalf of all the lenders. It was decided that all the lenders will submit the required papers/information in a time bound manner to enable filing of Joint OA. Lenders who will not provide required information in prescribed time will be made respondent and may file separate OA. It was discussed that draft of above notices shall be prepared by M/s MDP & Partners and draft shall be circulated to lenders. The legal cost shall be met from cutback proceeds in TRA. 3. In response to red flagging of account, IDBI Bank informed that they have done RFA mainly due to following reasons; a) ESW MB - delay in payment of outstanding dues. b) The change in management of MCL could not be completed within the standstill period, SDR package failed and account was downgraded to NPA category. Corporation Bank informed that they are also in process of red flagging the account. In last consortium meeting held on 01.03.2018, lenders deliberated on the need to conduct Investigate audit/forensic audit. It was decided ....
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....red cases and petitions are disposed of accordingly.' (Emphasis Supplied) 12. It is the main case of the Appellant that the total outstanding amount due and payable by the Corporate Debtor to the consortium is around Rs. 1,077/- Crs, out of which the Appellant's claim is Rs. 2,44,85,29,569.79/-. It is seen from the material on record that though the Appellant forms part of the Joint Lenders Forum (JLF), only the Appellant had filed the Application under Section 7 qua the debts owed by the Respondent Company to the Appellant and not on behalf of the JLF. The relevant portion of the RBI Circular dated 12.02.2018 is reproduced as hereunder to ascertain whether the instant case is covered by the said Circular, which was declared non-est by the Hon'ble Supreme Court in Dharani Sugars (Supra); 'Guidelines dated 12.02.2018 (RBI/2017-18/131 DBR. No. BP.BC.101/21.04.048/2017-18) :- "D. Timelines for Large Accounts to be Referred under IBC 8. In respect of accounts with aggregate exposure of the lenders at Rs. 20 Billion and above, on or after March 1, 2018 ('reference date'), including accounts where resolution may have been initiated under any of the ....
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....forenoted provisions it is clear that the pre-requisite for the invocation of the said Circular is that there should be an aggregate exposure of the lender above Rs. 2,000 Crs. and in the instant case the total outstanding claimed debt amounts to Rs. 1,007/- Crs. out of which the amount claimed by the Appellant Bank is to the tune of Rs. 2,44,85,29,569.79/- Crs;. Additionally, it is seen, that for other accounts with aggregate exposure of the lender below Rs. 2,000/- Crs. and at or above Rs. 100/- Crs., the Reserve Bank intended to announce over a two-year period, reference date for implementing the RP to ensure time-bound resolution of all such accounts in default. Further, the documentary evidence filed before us does not evidence any such announcement made with respect to the subject matter. We are of the considered view that there is force in the contention of the Learned Counsel appearing for the Appellant that the said Circular is not applicable to the instant case and as a consequence the decision of Dharani Sugars (Supra) is also not applicable, more so taking into consideration what the Hon'ble Supreme Court has observed in Para 2 of the Judgment; '2. It will be n....
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....ebt due and payable is less than Rs. 2,000/- Crs. and the process was initiated by JLF prior to the issuance of the Circular. Merely because the JLF Committee discussed the various offers and also the revised Plan from 'Tri Shakti' and decided to examine the Proposals in light of the new guidelines issued by the RBI on 12.02.2018 and found that finalization of any 'Resolution Plan' prior to 06.04.2018, as directed by the Hon'ble High Court, would be difficult and decided to file an Application under Section 7 of IBC 2016, it cannot be construed that the decision to file the Application was initiated only pursuant to the RBI Circular. Additionally, a mere discussion in the Minutes of the Meetings cannot be construed as substantial evidence to establish that the decision to file Section 7 Application was pursuant to the RBI Circular. A perusal of the Order of the Hon'ble High Court dated 05.03.2018 shows that time was given till 06.04.2018 to the JLF to complete the process and the same was discussed by the JLF in their Meeting dated 13.03.2018 and appreciating the concern of the Hon'ble High Court and taking into consideration that a time-bound resolution could not be achieved withi....