TaxTMI 
TaxTMI 
2021 (1) TMI 108
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.... 2. The averments apropos to the Application in brief are:- 2.1 That SREI Infrastructure Finance Limited / Respondent No.2 herein is a public Limited Company incorporated under the Companies Act, 1956 and a public financial institution notified under Section 4A of the Companies Act, having its registered office in Kolkata, West Bengal. 2.2 That the Applicant/ M/s. Palm Products Private Limited is a Company registered under the Companies Act, 1956, having its registered office in Koltaka, West Bengal. 2.3 It is averred, the M/s. Amrit Jal Ventures Private Limited / Corporate Debtor a Company registered under Companies Act, 1956, having its registered office in Telangana, approached the Assignor i.e. Respondent No.2 herein for financial assistance and executed documents in respect of the loan. The Assignor sanctioned term loan facility of Rs. 80.00 crores and disbursed an amount of Rs. 30.00 crores. 2.5 It is alleged the borrower / M/s. Amrit Jal Ventures Private Limited committed default and breached the loan agreement. In the meantime a Petition under Section 7 of IBC, 2016 was preferred by SEW Infrastructure Limited, which was admitted by this Tribunal. It is submit....
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.... explain to the queries raised by the Resolution Professional. (viii) Point Nos (k) and (l) : Payment of consideration from an old account or a new bank account is irrelevant on the transaction. Similarly whether the cheque issued was the first leaf of the cheque book or not too has no relevance and bearing on the transaction. (ix) Point No. (m): It is not mandatory to have company stamp because the bank has duly honoured the cheque. 2.8 With regard to various observations made by Resolution Professional to Issue No.2, the Applicant has clarified as follows:- (i) Point Nos (a) to (e): That the Applicant does not hold any shares in the Corporate Debtor as such it is not a related party. More so, because the shares of the Corporate Debtor which were pledged with Respondent No.2 as security for the loan facility availed by the Corporate Debtor have not been assigned with the loan facility to the Assignee. There is a clear mention in the Assignment Agreement that in the year 2015, Respondent No.2 had invoked the shares worth Rs. 52,61,767/- of the Corporate Debtor which was valued by LSI Financial Services Private Limited as at March 31, 2015 and the same ....
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....med Assignee more particularly at the stage of consideration of Resolution Plan. The claimed Assignor i.e. Respondent No.2 had submitted its Form "C" on 31.05.2019 for Rs. 61,00,29,089/-, out of which Respondent No. 1 admitted the claim to the tune of Rs. 43,24,16,082/-. Rs. 17,76,13,007/- was not admitted pending reconciliation of the account between Respondent No.2 and the Corporate Debtor. Despite several reminders by Respondent No.1 for reconciliation, Respondent No.2 chose to assign Rs. 60,47,67,322/-. It is submitted, by virtue of certain legal deficiencies, the claimed assignment between R-2 and the Applicant was not considered by the Resolution professional. 3.5 It is contended, attributing non-registration of Assignment Agreement to lockdown and "Amphan" cyclone in Kolkata city on 20.05.2020 before its submission to RP on 03.06.2020 is untenable. The Resolution Professional submits that he had diligently exercised his functions within the objectives of IBC and cannot be termed as overreaching on the part of RP. 3.6 It is further submitted, the Resolution Professional found the documents of transaction from the side of Applicant to be different from those from the sid....
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.... Proviso to Section 21 of the Code which mandates debt to be converted into equity before Insolvency commencement date i.e 07.05.2019 and not after. The Resolution Professional reiterates that he has acted within the purview of IBBI (CIRP) Regulations, 2016. Respondent NO.1 referred to Hon'ble NCLAT, Delhi order passed in Company Appeal No. 28/2018 in the matter of Pankaj Yadav & Anr vs. SBI and Fortune Pharma Pvt Ltd where in it was held that when the claimed Assignor is Financial Creditor (Related Party), then the claimed Assignee is FC (Related party). 3.11 It is submitted, as per Article 23 of Schedule-IA of Stamp Act on Certain Instruments under the Bengal Stamp (Amendment) Act, 1922, the stamp duty payable on the AA is ad valorem at 6%/7% on the market valuation of the securities. As such in the absence of supported valuations, the Resolution Professional is unable to determine the adequacy of stamp duty paid by the Applicant / Respondent No.2 on the AA. 3.12 It is submitted, the Resolution Professional took note of the purchase consideration to the tune of Rs. 10 lakhs claimed to have been paid by the Applicant against the assigned debt of Rs. 60,47,67,322/- from R....
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....on 04.06.2011. However the account of the Borrower/ Corporate Debtor was. declared non-performing asset ("NPA") by Respondent No.2 in the year 2016, following default committed by the Borrower/ Corporate Debtor in repayment of the Loan Facility as per the terms of the financing documents. 4.2 That Respondent No.2 in the year 2015, invoked the shares of the Borrower/ Corporate Debtor as a security for the Loan Facility aggregating to 44.30% shares of the Borrower/ Corporate Debtor and pledged it with the Respondent No. 2. Subsequently, Respondent No. 2 invoked the shares of the Borrower/ Corporate Debtor worth Rs. 52,61,767/- (Rs. 0.08 per share) as on March 31, 2015, by converting the debt into equity as per the valuation made by LSI Financial Services Pvt Ltd. 4.3 That, in the meantime, this Tribunal admitted the petition filed by SEW Infrastructure Ltd. under section 7 of the Insolvency and Bankruptcy Code, 2016 on May 07, 2019 and Corporate Insolvency Resolution Process started against the Borrower/ Corporate Debtor. That, subsequently Respondent No.2 had filed its claim amounting to Rs. 61 crores before the Resolution Professional, the Respondent no.1 herein. However, Res....
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.... or transfer and the identity of the assignee or transferee. (2) The resolution professional shall notify each participant and the Adjudicating Authority of any resultant change in the committee within two days of such change." Moreover, under Section 5(7) of the Code, the assignee is also accepted as financial Creditor. 4.6 Pursuant to execution of the Assignment Agreement on 18.05.2020, the Applicant vide its email dated June 3, 2020 had filed its claim as a financial creditor of the Corporate debtor with the resolution professional in Form C along with the supporting documents. However Resolution Professional vide letter dated 11.06.2020 informed the Applicant and Respondent No.2 that the claim of the Applicant has been rejected without any justification and further rejected the assignment of the Loan Facility vide the Assignment Agreement on several untenable grounds and held the Applicant as a related party of the Borrower/Corporate Debtor. 4.7 Respondent No.2 has clarified at para 9 (a) to (b) at page No.s 6 -8 of its counter to the various observations made by the Respondent No.1 about Issue No. 1 in his letter dated 11.06.2020, which is submitted in brief ....
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....olvency and Bankruptcy Code 2016 and the rules made thereunder to adjudicate an issue which does not fall within his purview and relied on the decision of Hon'ble Supreme Court of India in the matter of Swiss Ribbons Pvt. Ltd. & Anr. Vs. Union of India & Ors. [WP (Civil) Nos. 99, 100, 115, 459, 598, 775, 822, 849, and 1221 of 2018, SLP (Civil) No. 28623 of 2018 and WP (Civil) 37 of 2019] which has held that (a) Resolution Professional has no adjudicatory powers. He has administrative powers as opposed to quasi-judicial powers; (b) The Resolution Professional is a facilitator of the resolution process, whose administrative functions are overseen by the CoC and by the Adjudicating Authority. iii) Respondent No.2 submits that assigning the Loan Facility together with the underlying securities to the Applicant pursuant to execution of Assignment agreement between the parties on 18.05.2020, is a valid transaction under regulation 28 of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016. 4.8. Respondent No.2 has clarified at para 10 (a) at page No 10-12 of its counter to the various observations made by the....
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....porate Debtor. The reasoning given by the Respondent no. 1 is bad in law and devoid of merits. 4.9 Respondent No.2 has relied on various judgements as mentioned below to strengthen its claim that the Assignment Agreement is a valid instrument as per law. - a) The Hon'ble Supreme court in ICICI Bank Lt. V. APS Star Industries Ltd., (2010) 10 SCC 1', has held that an assignment of a debt will not be contrary to public policy on the grounds that the assignee has purchased the debt for a considerably discounted price or because that price is only payable after a period of credit. (Para 49). Respondent No.2 relied on the judgement supra for disregarding the Assignment Agreement by Respondent No. 1. b) Respondent No.2 relied on Hon'ble Supreme court in "Gurbax Singh V. Kartar Singh & ors., SLP (Civil) No. 1969 of 2002" and in "Principal Secretary Gov. of Karnataka and Anr. V. Ragini Narayan and Anr., Civil Appeal No. 8895 of 2012" where in it was held that "In terms of Section 47 of the 'Indian Registration Act, 1908', once a document is registered, the operation of the said relates to the date of execution of the document." Further, the Indian Re....
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....and based on conjuncture and surmises cannot be accepted, particularly when they have been executed in accordance with law and accepted by the Registrar of Companies. The Appellant doesn't have any locus standi to question those documents in the insolvency proceedings initiated under 'I&B Code' on a farfetched argument that they are going to be effected if the rights of 'Synergies Castings Limited' and 'Millennium Finance Limited' are recognized basing on the Assignment Agreements in question and the Appellant cannot assume jurisdiction to question the documents in question basing on baseless allegations, apprehension etc. Therefore, the Adjudicating Authority summarily rejected the contentions/allegations of the Appellant with regard to documents in question. In the result, we hereby declare that both 'Synergies Castings Limited' and 'Millennium Finance Limited' were eligible to execute the assignment agreements in question and all rights flow those agreements to 'Millennium Finance Limited'. After getting assignment of rights, the 'Millennium Finance Limited' is fully competent to participate in 'Committee o....
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....itator is bound to accept the claim transferred in favour of Applicant, declaring him as Financial Creditor and include in the CoC for the Corporate Debtor. The Learned Counsel contended, the Resolution Professional has not admitted the claim raising unnecessary objections and acted as adjudicator, which he is not empowered to do so. The Learned Counsel contended, the Resolution Professional rejected the claim by adjudicating the claim filed by the Applicant, as if the same cannot be admitted. 6. The Learned Counsel for Applicant would contend that it has given detailed explanation for the points raised by the Resolution Professional and that Resolution Professional committed serious irregularities in not recognizing the Applicant as Financial Creditor by virtue of assignment of debt. The Counsel contended, the Resolution Professional raised various grounds which are not required as far as admission of the claim is concerned. 7. The Learned Counsel for Respondent No.2/Assignor supported the stand taken by the Applicant. The Learned Counsel also contended, the Resolution Professional ought not to have rejected the claim filed by the Applicant and ought to have admitted the cla....
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.....2/SREI Infrastructure Finance Ltd challenged his decision in treating Respondent No.2 as related party before Adjudicating Authority by filing IA 677/2019. This Tribunal dismissed the Application filed by Respondent No.2 vide order dated 20.11.2019. Resolution Professional would contend, the Applicant cannot be included in the CoC because this is a transferred debt from Assignor who is a related party. The Assignee is also a related party because the debt is transferred from a related party. In this connection, the Resolution Professional relied on the decision of Hon'ble NCLAT in Company Appeal No. 28/2018 in the matter of Pankaj Yadav & Anr vs. SBI and Fortune Pharma Pvt Ltd where in it was held that when the claimed Assignor is Financial Creditor (Related Party), then the claimed Assignee is FC (Related party). 10. The Resolution Professional further relied on the decision of Hon'ble NCLT Mumbai Bench in M.A No. 560 in CP No. 1148/2017 dated 13.11.2017 and contended, when Assignor is a related party, the Assignee is deemed to be a related party. Therefore, the Applicant cannot be included in the CoC. It is the contention of Resolution professional that Assignment Agr....
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....lution Professional, unless it is done with an oblique motive. 14. The Assignment Agreement was not registered as on date when it was filed before the Resolution Professional by the Applicant. The Learned Counsel for Applicant would contend that Registration Act permits registration within four months from the date of execution. Therefore, there was time for the Applicant to get it registered and when once it is registered it dates back to the date of execution of documents. In this connection, Learned Counsels for Applicant and Respondent No.2 relied on Section 23 of the Indian Registration Act 1908 which is state hereunder:- "Section 23 in The Registration Act, 1908 Time for presenting documents.-Subject to the provisions contained in sections 24, 25 and 26, no document other than a will shall he accepted for registration unless presented for that purpose to the proper officer within four months from the date of its execution: Provided that a copy a of a decree or order may be presented within four months from the day on which the decree or order was made, or, where it is appealable, within four months from the day on which it becomes final." 15. The quest....