TaxTMI 
TaxTMI 
2020 (10) TMI 539
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....ted 27.08.2018. Thus, liquidation process of corporate debtor has commenced. 2.2 It is averred in paras 4 and 5 of the application that the corporate debtor has availed Rs. 63,50,00,000/- from the applicant vide Facility Letter dated 24.05.2010 (ANNEXURE-A-2) read with loan agreement dated 04.08.2010 (ANNEXURE-2) executed between the applicant and the corporate debtor. For availing the said facility advanced by the applicant, the corporate debtor in terms of loan agreement, has an exclusive charge by way of (i) hypothecation of movable fixed assets and current assets, including receivables (present and future) pertaining to a 5 MW grid connected solar photovoltaic power generating plant situated at Bhadrada Village, Sami Tehsil, Patan District, Gujarat and (ii) mortgage of land and immovable assets (present and future) pertaining to Bhadrada 2.3 It is averred in paras 6 and 7 of the application that pursuant to liquidation order dated 27.08.2018, the applicant vide its e-mail dated 26.09.2018 (ANNEXURE- A-3) apprised the Liquidator to realize its secured asset under section 52(l)(b) and section 52(2) of the IBC. The applicant/ Bank initiated proceeding and took possession of ....
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....are of the interests of all the stakeholders with equity as reiterated in Legislative Guide on Insolvency Law of UN Commission on International Trade Law. The learned counsel relied on decision of the Hon'ble Supreme Court in the case of DHARANI SUGARS AND CHEMICALS LTD. Vs. UNION OF INDIA. 2.9 It is averred in para 19 of the application that the applicant is an exclusive secured creditor to the secured asset and has exercised its right to realize its security in terms of section 52(l)(b) of the Code. The applicant bank has a symbolic possession of secured asset as described in Possession Notice dated 09.01.2019. 3. COUNTER DATED 15.10.2019 FILED ON BEHALF OF RESPONDENT No. 1- GUJARAT URJA NIGAM LIMITED. 3.1 By way of preliminary objections and as reiterated in para 24 of the Counter respondent No. 1raised the question of jurisdiction and contended that under Clauses 6.6 and 10.4 of PPA dated 29.04.2010, the Gujarat Electricity Commission is the appropriate forum to adjudicate the present lis between the parties. Jurisdiction under I&B Code is restricted to matters specified in section 14 of the I&B Code. As such this application under section 60(5) or under section 52....
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....unter respondent No. 1has relied on decision (ANNEXURE-1) [paras 36 and 37] rendered by the Hon'ble NCLT, Mumbai on 02.04.2018 in MA 96/ 2018 in CP No. 1061/ I&BC/ 2017 by the NCLT, Mumbai Bench in the case of RAJENDRA K. BHUTIA Vs. MHADA, wherein it is held that there is no prohibition to the termination of an agreement during moratorium period. Even the Hon'ble Appellate Tribunal did not modify the aspect of termination of contract during moratorium. It is held in the above judgment that when a party exercises its right to termination, it will not fall within the ambit of section 14(1)(a). Even I&B Code cannot prevent respondent No. 1from exercising its rights under the contract or compel respondent No. 1 to continue the agreement. The object of the Code is insolvency resolution and not liquidation process. 3.9 In para 33 of the Counter respondent No. 1contended that the decision of the Hon'ble Supreme Court in the case of DHARANI SUGARS AND CHEMICALS LTD. Vs. UNION OF INDIA (supra) as relied on by the applicant in para 18 of its application, is not applicable to the facts of this case. Reference made by the applicant to the High Level Committee's Report dated ....
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.... Power Ltd, (2008) 4 SCC 755. (ii) Nathi Devi Vs. Radha Devi, AIR (2005) SC 648. (iii) Decision in Saregama India Limited Vs. Home Makers Private Limited, Company Appeal (AT) (I) No. 359 of 2019 rendered by the Hon'ble NCLAT, New Delhi. (iv) Jindal steel and Power Limited Vs. SAP India Pvt Ltd. [221 (2015) DLT 708. (v) MIC Electronics Limited and others Vs. Municipal Corporation of Delhi and others. (2011 II AD (Delhi) rendered by the Hon'ble High Court of Delhi. (vi) V.B. Prasad Vs. Manager, AIR 2007 SC 2053. (vii) Rashmi Rekha Vs. State of Orissa, 2012 (2) ACR 1766 SC. (viii) LIC of India and another Vs. Sindhu (2006) 5 SCC 258. (ix) Orissa State Financial Corporation Vs. Narsingh Ch. Nayak and others, (2003) 10 SCC 261. (x) Rajendra K. Bhutia Vs. MHADA dated 04.04.2018 in MA 96/ 2018 in CP No. 1061/ I&BC/ 2017 rendered by the NCLT, Mumbai Bench. 6. The applicant is secured creditor. The present application is filed under section 60(5)(c) of the I&B Code. The applicant is seeking relief to quash and set aside the termination notice dated 30.08.2019 (hereinafter referred to as 'the impu....
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....of the Insolvency and Bankruptcy Code, 2016 protects the interest of the secured creditor till realisation of the secured asset. GUVNL cannot interfere with the right of the applicant to exercise the security interest over the power plant. Thus, the learned counsel challenges termination order under the provisions of section 52(5) of the I&B Code. 12. The learned counsel further contended that this Tribunal has jurisdiction to entertain this application under section 60(5) (c) of the I&B Code as the Tribunal is empowered to decide any question of priorities or any question of law or facts arising out of or in relation to the insolvency resolution or liquidation proceedings of the Corporate Debtor or corporate person under the I&B Code. The learned counsel contended that the Electricity Regulatory Commission has no jurisdiction to entertain the application. Since the Corporate Debtor is under liquidation, the course open to the applicant is to approach the Adjudicating Authority under section 60(5) of the I&B Code as termination of the PPA of the Corporate Debtor was issued during the liquidation, hence the issue is to be resolved by the Adjudicating Authority. Further the learne....
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....m realizing its secured asset. 16. The learned counsel contended that event of default occurred once Corporate Debtor goes in liquidation. This event of default is a ground for termination of PPA by virtue of Article 9.2.1(e) of PPA. The learned counsel vehemently contended that the applicant cannot take any protection under Article 12.9 of the PPA. Article 9.2.1(e) of the PPA and Article 12.9 of PPA are independent and they operate in different circumstances. Therefore, the applicant cannot take any protection under Article 12.9 of PPA. The learned counsel contended that section 14 of the of the I&B Code as amended is not applicable to the present case. The contention of the learned counsel for respondent No. 1is that PPA is not security interest. The learned counsel heavily relied on section 41(e) read with section 14(l)(c) of the Specific Reliefs Act, 1963 and contended that when a contract is determinable in nature upon happening of an event, then such a contract cannot be enforced as the same is hit by section 41(e) read with section 14(1)(c) of the Specific Reliefs Act, 1963. 17. The first issue is whether the applicant has locus standi to file the application against G....
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....ucer/ Corporate Debtor thereafter arising under this Agreement. GUVNL further acknowledges that the Financing Parties, may, in addition to the exercise of their rights, cause the Power Producer to sell or lease the Project and cause any new lessee or purchaser of the Project to assume all of the interests, rights and obligations of the Corporate Debtor thereafter arising under this Agreement. 19. Thus, it is clear that Article 12.9 of the PPA, GUVNL recognises the right of financing creditors that in addition to exercising their rights, may further direct the Corporate Debtor either to sell or lease the power plant. Thus, in case of occurring an event of default, GUVNL recognises the right of financing creditor. Here the applicant claimed that it had advanced various loans to the Corporate Debtor on the security of Bhadrada power plant and an event of default, no doubt, occurred as the Corporate Debtor is under liquidation. The applicant being financial creditor can take shelter under Article 12.9 of PPA. The applicant is thus, having locus standi to file the present application. 20. The next contention of the learned counsel for GUVNL is that provisions of Article 9.2.1(e) o....
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.... PPA if the company goes under liquidation. In an appeal preferred against the said order to the Hon'ble NCLAT, as cited at serial No. (ii) above the Hon'ble Appellate Tribunal held that even during liquidation the PPA cannot be terminated. The Hon'ble Appellate Tribunal held as follows: "In view of such aforesaid finding, we rather delete the observations of the Adjudicating Authority at page 35, where it is observed that the Appellant may terminate the 'Power Purchase Agreement', if the 'Corporate Debtor' goes into liquidation, as during the liquidation process also, the liquidator is to ensure that the 'Corporate Debtor' remains a going concern." Therefore, the observations made by the Hon'ble NCLAT that GUVNL can order for termination during liquidation was deleted by the Hon'ble Appellate Tribunal and held that the Corporate Debtor be ensured as an ongoing concern even during liquidation. 23. The learned counsel for respondent No. 1would contend that an appeal was preferred to the Hon'ble Apex Court by GUVNL against the order of the Hon'ble NCLAT in the above matter and it is pending. The learned counsel for re....
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....an aggrieved party, then the applicant has to approach Gujarat Electricity Regulatory Commission by filing application under section 79 of the Electricity Act, but not before this Tribunal. In this connection the learned counsel for the applicant relied on decision rendered by the Central Electricity Regulatory Commission, New Delhi in the matter of Lanco Babandh Power Limited Vs. Uttar Pradesh Power Corporation Limited, MANU/CR/0039/2019 and contended that CERC established under the Electricity Regulatory Commission Act, 1998 has held that when moratorium was imposed under section 14 of the I&B Code, CERC would be divested of jurisdiction to adjudicate the dispute. Now the company is under liquidation. When CERC has categorically stated in para 10 of the order that when moratorium under section 14 of the IBC was pending no proceeding lies before CERC. Relying on the decision of the CERC since the Corporate Debtor is under liquidation and by virtue of Article 12.9 of the PPA, the applicant has to approach the Adjudicating Authority under section 60(5)(c) of the I&B Code and not before CERC to decide the dispute. 27. Section 52(5) provides if secured creditor faces resistance eit....
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....ed counsel contended that the applicant has not contended that Article 9.2.1 (e) of the PPA is against the public policy. Therefore, the applicant cannot be given relief under Article 12.9 of the PPA. The learned counsel contended that Article 12.9 of the PPA only prescribes for change, but does not provide the parties to keep PPA as subsisting. For the said purpose, the learned counsel has relied on the above two decisions. As we have already discussed at length right of the Financial Creditor is recognised under Article 12.9 of the PPA. Therefore, the applicant can make use of Article 12.9 of the PPA, though the CD is under liquidation. 30. The learned counsel for respondent No. 1 / GUVNL relied on decision of the Hon'ble Apex Court in the matter of LIC of India and another Vs. Sindhu, (2006) 5 SCC 258, wherein the Hon'ble Apex Court held that, "8. .. .. the courts and tribunals cannot rewrite contracts and direct payment contrary to the terms of the contract, that too to the defaulting party. " 31. Similarly, the learned counsel relied on the decision of the Hon'ble Apex Court in the matter of Orissa State Financial Corporation Vs. Narsingh Ch. Nayak a....