2020 (12) TMI 1247

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.... initiation of CIR Process. This Adjudicating Authority vide order dated 05.08.2019 admitted the CP and initiated the CIR Process against the Corporate Debtor. In terms of the said order, the Interim Resolution Professional constituted the CoC comprising of the applicant and the respondent No. 2-STCI Finance Limited and the respondent No.3-Phosphate India Pvt. Ltd. The voting percentage of each of the members of the CoC is determined, based on the claims received which is as under:- 9M Corporation (Applicant herein) 6.11% STCI Finance Ltd. (Respondent No.2) 75.90% Phosphate India Pvt. Ltd. (Respondent No.3) : 17.99% 3. It is further submitted that the basis for filing the claim by the respondent No.2-STCI Finance Ltd. was the debtor-creditor relationship accrued out of the guarantee tendered by Corporate Debtor (Bohra Pratisthan Private Limited) for the loan issued to Bohra Industries Ltd. It is also stated that as per the claim of the respondent No.2, Bohra Industries Ltd. is the principal borrower and the Corporate Debtor i.e. Bohra Pratisthan Private Limited is merely a guarantor to the said facility. 4. It is also submitted that the respondent No.1-Resolution Pro....

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....ion, in detail, to the decision in Anuj Jain (supra), it is necessary to note down the relevant paragraphs of Anuj Jain (supra), for better understanding of the facts and law enunciated therein. The relevant paragraphs of Anuj Jain (supra) are as under:- "2.4. As regards the second issue, noticeable it is that during CIRP, two of the Respondent banks namely, ICICI Bank Limited and Axis Bank Limited, sought inclusion in the category of financial creditors of JIL but IRP did not agree and declined to recognize them as such. Being aggrieved by the decisions so taken by IRP, the said banks preferred separate applications Under Section 60(5) of the Code before NCLT while asserting their claim to be recognized as financial creditors of the corporate debtor JIL, on account of the securities provided by JIL for the facilities granted to JAL. The NCLT rejected the applications so filed by the said banks, by way of its orders dated 09.05.2018 and 15.05.2018 respectively, while concluding that on the strength of the mortgage created by the corporate debtor JIL, as collateral security of the debt of its holding company JAL, the lenders of JAL could not be categorised as finan....

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....t of the matter remains that nothing has been discussed by NCLAT in the impugned order dated 01.08.2019 as regards the subject-matter of these two appeals i.e., as to whether the said lenders of JAL could be categorised as financial creditors of JIL or not; and the entire discussion in the impugned order and the final conclusion therein had only been in relation to the order dated 16.05.2018 that was passed by NCLT on the application for avoidance filed by IRP. 31.2. The Appellant of Civil Appeal D. No. 32881 of 2019, IIFCL, apart from raising other contentions, has also questioned this aspect of the order impugned that the aforesaid two appeals, involving the issue as to whether the mortgagees of the corporate debtor could be taken as financial creditors, have been allowed by NCLAT without recording any findings and without any discussion in that regard. 31.3. Though, ordinarily, such omission in the impugned order dated 01.08.2019 might have resulted in the matter being remitted to the Appellate Tribunal for appropriate consideration and finding but, as aforesaid, in the entire process, adherence to the time limit is also of significance; and in view of the fact....

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....reating collateral security for the debt of its holding company JAL. The Corporate debtor is not a borrower, it has created a mortgage in favour of financial institutions for creating collateral security for the money borrowed by its holding company JAL. In the said transaction time value of money is not involved. The corporate debtor's liability is not regarding the debt owed by its holding company JAL. In case of default in making payment by the principal borrower, for which security interest has been created by the corporate debtor by mortgaging its property in favour of Applicant bank, the debt amount can be realized from the sale of the mortgaged property but not from the corporate debtor, i.e. Jay pee Infratech Ltd. *** *** *** 9.2 In this case, the applicant has not disbursed the debt along with interest against the consideration for the time value of money. It is also not the case of the applicant that the corporate debtor has borrowed money against payment of interest from the applicant. It is also not the case that the corporate debtor has raised any amount from the applicant under any credit facility. It is not the case of the applicant that there i....

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....ore, the same does not fall within the definition of the financial debt in terms of Section 5(8) of IBC. It is stated that the corporate debtor has neither issued any guarantee nor has provided an indemnity to the applicant in respect of the financial assistance granted to JAL. 14. The Resolution Professional further submitted that the mortgage deed shows that the corporate debtor has only agreed to create a mortgage in favour of the applicant towards the financial assistance granted to its holding company, i.e. JAL. On perusal of mortgage it is clear that the corporate debtor has neither given any guarantee to repay or any indemnity qua the repayment of the loans granted by the applicant to JAL. The definition of Mortgage Debt as per the mortgage deed dated 7th March 2017 is as under:" xx xx xx xx "47.1. Keeping the objectives of the Code in view, the position and role of a person having only security interest over the assets of the corporate debtor could easily be contrasted with the role of a financial creditor because the former shall have only the interest of realising the value of its security (there being no other stakes involved and least any stak....

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....gth of the mortgages in question, may fall in the category of secured creditors, but such mortgages being neither towards any loan, facility or advance to the corporate debtor nor towards protecting any facility or security of the corporate debtor, it cannot be said that the corporate debtor owes them any 'financial debt' within the meaning of Section 5 of the Code; and hence, such lenders of JAL do not fall in the category of the 'financial creditors' of the corporate debtor JIL." 9. In Ascot Reality Private Limited vs. Ajay Kumar Agarwal and Ors. the Hon'ble NCLAT after noting the relevant paragraphs in Anuj Jain (supra) categorically distinguished the decision in Anuj Jain (supra) and held that "there was disbursal of debt by the bank to the third parties and the Corporate Debtor gave guarantee for repayment of the said debt when it became outstanding and clearly the loan advanced carried the element of consideration for time value of money and when such disbursal was guarantee, it has to be treated as a financial debt under Section 5(8)(9) read with (i) of IBC. The relevant paragraphs of Ascot Reality Private Limited (supra) are as under:- "26. I....