TaxTMI 
TaxTMI 
2020 (10) TMI 821
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.... of the case, as mentioned in the Company Petition, are as follows: (1) Sir M. Visvesvaraya Co-operative Bank Limited (hereinafter referred to as 'Petitioner/Financial Creditor') is incorporated on 15.04.1979 with Regn. No. JRB/REGN:3:4880/78-79-25.09.1978 and having its registered office at No. 109, Shankaramutt Road, Shankarpuram, Bengaluru-560004. It has obtained banking license from the Reserve Bank of India and is carrying on operations since 1979, and is a leading Co-operative Urban Bank in Karnataka. (2) M/s. Golden Gate Properties Limited (hereinafter referred to as 'Respondent/Corporate Debtor) is a Public Limited Company incorporated on 28.09.1995 with CIN: U70102KA1995PLC018889 and having its registered office at Golden House, #820, 80 Feet Road, 8th Block, Koramangala, Bengaluru-560095. Its Nominal Share Capital is Rs. 85,00,00,000/- and Paid-up Share Capital is Rs. 54,46,41,140/-. Its main object is inter alia to carry on the business of real estate, property development and construction of all kinds of buildings in India and abroad. (3) It is stated that the Corporate Debtor approached the Financial Creditor asking for financial assistance for his bu....
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....ra Main Road, Bengaluru. c. Golden Homes Phase III at Attibele, off Sarjapur Road, Bengaluru, which is a Villa/Villa plot project. (2) It is contended that while the 1st project namely Golden Serenity ran into trouble, the other two projects namely, Golden Panorama and Golden Homes Phase III are under execution and more than 60% of the construction work has been completed. There are 324 units sold in Golden Panorama, 145 units sold in Golden Homes Phase III and 362 plots sold in Golden Serenity. (3) It is stated that as far as Golden Serenity is concerned which is the subject matter of the instant Petition, the Corporate Debtor proposed to develop a residential layout project and also obtained the necessary and preliminary sanctions on 03.10.2013 vide Ref. No. APA/LAO/74/2012-13. The Respondent has been developing the said scheduled land by forming residential layout by developing plots, roads, power, water, sanitary facilities along with Club House, park and play area, and it is its absolute owner. Subsequently, due to change in the CDP Master Plan 2031, it was proposed to have a 45 Meter MP Road passing through the middle of the aforesaid project. The Corporate Debtor was t....
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....is more than sufficiently covered towards the dues owed to it. (7) It is further contended that it has been trying to resolve the issue on its own account also and has recently entered into Term sheet with M/s. Shriram Properties Pvt. Ltd. for development of their prime land in Kasavanahalli measuring 20 acres which is not the subject matter of this Petition. Once the due diligence is completed and documentation is executed for development by M/s. Shriram Properties Pvt. Ltd. the repayment for Financial Creditor will be factored and taken care of by the Corporate Debtor. However, if any appointment of Resolution Professional takes place, these agreements would automatically not proceed and it will only result in the other two projects also getting stalled. (8) It is contended that the appointment of RP at this stage will not only paralyze the entire Company and it would also freeze the other ongoing 2 projects in which almost 500 customers have invested partially and construction is being carried out. (9) It is submitted that the Corporate Debtor is currently working on a plan as outlined above to settle the dues of the Financial Creditor and undertakes to file the repayment ....
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....ASA expenses of the Financial Creditor. The said interest calculation is made on principal outstanding amount of Rs. 12.27 Crores as per the claim made by the Financial Creditor made in the Company Petition. 7. Heard Mr. B.A. Sreedhara, Branch Manager representing the Petitioner-Bank and Mr. Shivaprasad M.K., learned Counsel for the Respondent. We have carefully perused the pleadings of both the parties and extant provisions of the Code and the Law on the issue. 8. It is seen that the Petitioner gave a loan of Rs. 13 Crores to the Respondent/Corporate Debtor as per Agreement dated 19.05.2016. The Corporate Debtor has taken the loan against a security of mortgaged land, almost 3 times higher in value than the value than the loans taken. The Respondent/Corporate Debtor repaid three instalments amounting to Rs. 2 Crores, but no payments were made thereafter, and hence there was a default in respect of the same. The Corporate Debtor sought more time to repay the same along with interest. In this background the present application was made by the Petitioner/Financial Creditor u/s 7 of the Code of 2016. 9. We find from the Synopsis forming part of the Petition that the term loan was g....
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....on'ble Supreme Court in the case of K. Kishan Vs. Vijay Nirman Company Pvt. Ltd. clarified that the Petitioners cannot use IBC either prematurely or for extraneous considerations or as substitute for debt enforcement procedures. In the instant case it is seen that the Respondent/Corporate Debtor has already repaid 3 instalments out of the initial debt of Rs. 13 Crores. Thus the Petitioner's recovery exercise had begun and is continuing when it has chosen to come prematurely before this Tribunal, although the Agreement itself provides other options for recovering its dues, such as by sale of the assets taken as security from the Respondent/Corporate Debtor. It is clear that the Petitioner intends to use this process for recovery alone, without making out a case for initiation of CIRP, which is not permissible. 12. In the Agreement dated 19.05.2016 it is mentioned that: "Whereas the First Party has availed loan facility of Rs. 13,00,00,000/- (Rupees Thirteen Crores only) upon the security of converted land bearing Sy. No. 38, Kasavanahalli Village, Varthur Hobli, Bangalore South Taluk, measuring 2 acres 35 guntas for development of............". It is also mentioned in th....
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.... a gap of only about Rs. 3 Crores to Rs. 4 Crores out of the initial calculation of the Financial Creditor at Rs. 21 Crores, including heavy interest. Even Post-dated Cheques were handed over. However, the Financial Creditor did not accept the final terms, and insisted on initiation of CIRP in respect of the Corporate Debtor. It stated that it was the custodian of public money and could not make any concessions. It has to be understood that if the Petitioner sells the secured assets and recovers the debt, the other assets and business of the Respondent will not be harmed. However, if CIRP is ordered, all assets of the Respondent will go into new hands, may lead to reduction of value of assets, hamper on-going projects, putting to inconvenience and financial loss hundreds of home buyers, and the business itself, and the Petitioner too may not get the entire amount owed to it. This can hardly be termed prudent considering the recessionary market scenario at present. 14. It is further seen from the submissions of both sides that the Respondent paid some of the initial instalments of repayment of the loan. Thereafter, some of its projects got delayed. Its plans sanctioned in 2013 had ....
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....2 plots/sites which have been fully sold, the Corporate Debtor is to receive a balance sale consideration of Rs. 49 Crores. In the coming months it is likely to have sufficient funds to repay its entire debt. Thus it is not a case which has lost its substratum or ability to generate revenue for all times to come, or that it has become insolvent, that would compel us to initiate CIRP in respect of the Respondent Corporate Debtor. 16. It was held by the Hon'ble Supreme Court in the case of Embassy Property Developments Pvt. Ltd. [SLP (C)/22596/2019] that the essence of the IBC 2016 is the revival of the Corporate Debtor and the resolution of its problems to enable it to survive as a going concern through the maximization of the value of its assets. We are of the view that initiation of CIRP in the above circumstances would be disastrous for the Respondent/Corporate Debtor as it is responsible to more than 700 of its customers and more than 400 employees and it has several ongoing projects for plot/apartments. Any such action may drive away prospective buyers, as also due payments from the present buyers. While sale of its secured assets would affect only those assets, CIRP would....