TaxTMI 
TaxTMI 
2020 (1) TMI 1231
X X X X Extracts X X X X
X X X X Extracts X X X X
....e moratorium and appoint Interim Resolution Professional ('IRP'). 2. Heard the Ld. Counsels for the Financial Creditors ('PCs'), the Corporate Debtor ('CD') and perused the pleadings alongwith the documents placed on the case file. 3. The perusal of the record reveals that a Debenture Trust Deed dated, 13.06.2017, amended on 20.12.2017 and 24.12.2018, was entered among i.e., Earthcon Infracon Private Limited (the issuer/ mortgager), Beacon Trusteeship Limited (Trustee), Earthcon Constructions Private Limited (Obligor -1), Mr.Shadab Khan (Obliger-2/ Personal Guarantor -1), Earthcon Universal Infratech Private Limited (Obligor-3/ Corporate Debtor), Mr.Susheel Kumar Sharma (Obligor-4 / Personal Guarantor-2), Mr. Pramod Choudhary (Obligor-5/Personal Guarantor-3), and Nisus Finance and Investment Managers LLP (Facility Agent). 4. Before touching upon the recitals of the Debenture Trust deed, it is necessary to mention the details of the documents executed by the CD in favour of the Debenture Trustee. The CD individually or alongwith the issuer company and other Obligors has executed agreements/ documents in favour of the Debenture Trustee inter alia as follows....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t from the Obligor3's Escrow Account shall be swept in daily / weekly into the Escrow Account subject to a maximum of upto the amount of next payment milestone including any past dues, default amounts, Debt Service Reserve Account (DSRA), Statutory dues and other costs and charges due and payable by the issuer Company, under the terms of the Debenture Trust Deed. 7. Clause 9.13 (a) of the Trust Deed indicates that the issuer company agreed that if upon the occurrence of any event of default, it fails to pay to the Debenture Trustee, the secured obligations, or any part thereof in the manner provided therein or in the transaction documents, then the debenture trustee shall have the right to take all such necessary actions as authorized under the debenture trust deed and under other transaction documents. 8. Clause 13 of the trust deed provides for creation of security that states that the Obligors shall deposit in the Escrow Account all the receivables arising out of and from the units and the mortgaged premises and all monies so deposited in the Escrow Account shall be distributed, paid and utilized in accordance with the instructions of the Debenture Trustee (acting on the i....
X X X X Extracts X X X X
X X X X Extracts X X X X
....19 informed the issuer company about the consequences of non-payment and the actions that would be taken by the FC. The 2nd FC on 06.05.2019 sent a formal notice calling upon the issuer company to pay the outstanding within three days from the receipt of the notice and mentioned the actions that would follow. The issuer company replied on 14.05.2019, stating that the non-payment is not deliberate but due to economic conditions only and sought extension of time. 12. The record reveals that the FCS while sending the letters/ demand notices to the issuer company haf marked the copies to the CD and other Obligors. It is noted that the CD and other Obligors issued cheques in favour of the Debenture Trustee, on presentation to the bank they were returned with a remark 'Funds insufficient'. 13. The CD filed its reply on 06.08.2019 and submitted that over the years it has successfully developed various real estate projects around the country and has established an unimpeachable reputation in the real estate business. Further, it is stated that the CD availed financial facility pursuant to certain understanding between the FCS and the Company i.e., Earthcon Infracon Private Limite....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ion 5 (7) of the IBC, 2016 and the FC has failed to establish the existence of debt as provided under section 3(11) of the IBC, 2016. The CD also submits that there are alternative remedies available to the FCS under The Arbitration and Conciliation Act, 1996,' The Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Interest Act, 2002' (SARFAESI Act). 15. The issue raised by the CD with regard to the timeline for redemption of the debentures is taken at the first time in the reply, which is contrary to the communications made by the CD to the FCS, wherein the time has been sought for repayment. Further, as has been noted herein above, Clauses 7.1 & 7.2 in part-Il of the Debenture Trust deed were amended, which provide that the principle amount was to be repaid by the issuer company in four quarterly instalments i.e., 31 st March, 2019, 30th of June, 2019, 30th of September, 2019 and 31 st of December, 2019. In view of it, the issuer company and the CD were under legal obligation to repay the 1 st instalment by 31 st March, 2019. It appears that the CD is deliberately avoiding the reference to the amended clauses of the Debenture Trust Deed. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....8. The FC has fulfilled all the requirements for admission of the application and has proposed the name of the IRP viz., Mr. Jitender Arora, whose consent has been sought in Form-2, which is placed on record. There is no disciplinary proceeding pending against the IRP as is evidenced from Form-2. Therefore, the application is admitted. The commencement of CIR Process is initiated, which ordinarily shall be completed within 180 days, reckoning from the day this order is passed. 19. The moratorium is declared which shall have effect from the date of this Order till the completion of CIRP, for the purposes referred to in Section 14 of the IBC, 2016. It is ordered to prohibit all of the following, namely:- (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 debtor 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 ....