TaxTMI 
TaxTMI 
2019 (9) TMI 1566
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.... Office at 10th Floor, The Ruby, 29 Senapati Bapat Marg, Dadar (West) Mumbai- 400 028 (Hereinafter referred as 'Financial Creditor/ARCIL/Assignee'). The Corporate Debtor Company is a Company registered under the Companies Act having its Registered Office in Vellimon West, P.O. Perinad Village, Kollam- 691 511, Kerala. The Paid-up Share Capital of the Corporate Debtor Company is Rs. 1,20,00,000.00. The Main Object of the Corporate Debtor Company is to organise, plan, construct and run and manage Lodging Houses, Hotels, Motels, Holiday and Health Resorts, community Halls and Homes. It also carries out a business of tourists' agents and contractors and to facilitate travelling and provide facilities for tourists and travellers in liaison with foreign tour operators etc (Hereinafter referred as ''Corporate Guarantor/Corporate Debtor'). Brief Facts 3. The case of the Financial Creditor is that Corporate Debtor Company stood as a Corporate Guarantor to Nessa Leisure Limited (Hereinafter referred as 'Principal Borrower') who is due to pay an amount of Rs. 18,61,90,181.00 to United Bank of India, Ahmedabad Branch (Hereinafter referred as the 'Bank/....
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....borrower under any existing contracts, assignments, security documents. Etc. Thereof the Financial Creditor acquired all the legal rights to continue with all the pending proceedings initiated by the Principal borrower. Submissions by the Financial Creditor 7. The counsel for the Financial Creditor through his petition submitted that the Assignor Bank, i.e., United Bank of India, through its branch office at Ahmedabad had sanctioned term loan facilities to the tune of Rs. 14.50 crores in favour of M/s. Nessa Leisure limited ('Principal Borrower') against various primary and collateral securities. The said loan has now been assigned by the Bank to the Financial Creditor who has consequently stepped in the shoes of the Bank, as its assignee, and the creditor of the principal borrower as per the assignment agreement. 8. It was further submitted that as per the sanction letter dated 30.09.2009 the request for execution of security documents in favour of the Bank was duly considered. Accordingly, the Corporate Debtor herein have executed a Deed of Unconditional and Irrevocable Guarantee dated 10.10.2009 guaranteeing the payment, repayment or reimbursement of the amount ....
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....inary objection opposes the admission of the application for insolvency resolution. It is submitted that the status claimed by the Financial Creditor upon one purported assignment agreement executed between United Bank of India ( 'Bank') and Assets Reconstruction company (India) Ltd. ('ARCIL') for assignment of loan account of M/s. Neesa Leisure Limited ('Principal Borrower') is not a Financial Creditor of Palm Lagoon ('Corporate Debtor'). After the purported assignment of NLL's loan to ARCIL, neither the latter nor the Bank have sent an intimation to Palm Lagoon. The counsel for Corporate Debtor states that in the 'ROC Certificate of Registration of Mortgage, etc..', name of the Bank is appearing and the ARCIL has wrongly assumed for itself the status of Financial Creditor. 15. The counsel further stated that the Palm Lagoon's assets have charge registered in the favour of the Bank and not in favour of ARCIL. Therefore, ARCIL is not the beneficiary of charge holder. The counsel defended that ARCIL should have made application in relevant forms to ROC for substituting the Bank's name and may be registered as per the provisions ....
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....ments raised by the Corporate Debtor are made with a deliberate intention to avoid payment and to defraud the Financial Creditor. It is stated that the Bank and the principal borrower had entered into various loan and security agreement, wherein the Bank had granted two term loans to the tune of Rs. 11.31 Crores and the same was admitted by the principal borrower vide acknowledgements of debt dated 16.08.2012 and 02.09.2014. The Corporate Debtor provided a guarantee in favour of the Bank, for securing the obligations of the principal borrower by executing a Corporate Guarantee Agreement dated 10.10.2009 and was ratified by the Board Resolution dated 09.10.2009 of the Corporate Debtor. The Corporate Debtor in its Annual Report of the year 2012-13 had already admitted that they are given a corporate guarantee to the Bank for the dues on behalf of the principal borrower. 21. In defence to the definition of 'Corporate Debtor', the learned counsel for the Financial Creditor stated that a 'Corporate Debtor' must be a 'corporate person', [section 3(7)] who owes a 'debt' [Section 3(11)], to any person [Section 3(23)]. The 'debt' as used in Section....
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....ts so received shall be proportionately reduced from the claim made in TIBA/9/KOB/2019 (CP/1312/2018). Findings 25. This is an application filed under section 7 of I&B Code. The question for determination in a case of this nature is entirely different than that of consideration of a petition filed under section 8 & 9 of I&B Code. The Corporate Debtor disputes the status of the Financial Creditor and dispute the validity of Assignment Agreement. 26. What are the factors to be considered in a case of this nature is noted by the Hon'ble Supreme Court in Innoventive Industries Ltd. v. ICICI Bank & Anr. (Civil Appeal Nos. 8337 - 8338 of 2017) SC. It is good to read Paragraph 29 and 30 in the said judgment. It read as follows: "29. The scheme of Section 7 stands in contrast with the scheme under Section 8 where an operational creditor is, on the occurrence of a default, to first deliver a demand notice of the unpaid debt to the operational debtor in the manner provided in Section 8(1) of the Code. Under Section 8(2), the Corporate Debtor can, within a period of 10 days of receipt of the demand notice or copy of the invoice mentioned in subsection (1), bring to the n....
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....letter issued by the Bank, the Corporate Debtor herein, had executed various documents and hypothecation agreement and thereafter defaulted the loan account. 30. The Financial Creditor claimed that it is a Financial Creditor on the strength of Annexure 5. So, let us see whether the Financial Creditor is a Financial Creditor as defined under section 5(7) of I&B code. Section 5(7) read as follows: - S. 5 (7) "Financial Creditor" means any person to whom a financial debt is owed and includes a person to whom such debt has been legally assigned or transferred to; It is also good to read what is financial debt. Financial debt is defined under section 5(8). It read as follows: - S.5 (8) "Financial Debt" means a debt along with interest if any, which is disbursed against the consideration for the time value of money and include-(a) money borrowed against the payment of interest; (b) any amount raised by acceptance under any acceptance credit facility or its de-materialised equivalent; (c) any amount raised pursuant to any note purchase facility or the issue of bonds, notes, debentures, loan stock or any similar instrument; (d) the a....
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.... "The assignment of a debt does not affect the right of the debtor". It is good to read para 43 in the above referred citation". It read as follows: - "43. It is no doubt true that a financial institution, as a lender, owes a duty to act fairly and in good faith with the borrower and there has to be a fair dealing between the financial institution and the borrower, but only with respect to such actions which affect the right of the borrower. Pertaining to the sale of a Non-Performing Asset by way of assignment, in Mardia Chemicals Ltd.'s case (supra), while upholding sale of Non-Performing Assets by way of assignments, the Supreme Court very categorically observed in para 46 of its opinion that 'Such transfer in no manner affects any right or interest of the borrower(s) (customer)'. In para 47 of its opinion, the Supreme Court in no uncertain words opined that when a debt is assigned by a financial institution it is only transferring its rights under a contract and its own asset, namely, the debt as also the mortgagee's rights in the mortgaged properties without in any manner affecting the rights the borrower(s)/mortgagor(s) in the contract or in the assets....
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....om the Corporate Debtor as on 31.07.2015. The existence of default is, therefore, stand proved by the Financial Creditor. 34. The Financial Creditor proposed the name of Resolution Professional, Shri R. VELU, who is competent to work as IRP. No disciplinary proceeding is pending against him. 35. The Financial Creditor succeeded in establishing that the application is complete in all respects. For the aforesaid reasons we are inclined to admit this petition, subject to any amount received from M/s. Nessa Leisure Ltd.(principal borrower) pertaining to CP(IB)/127/7/NCLT/AHM/2017, the amounts so received shall be proportionately reduced from the claim made in this TIBA/9/KOB/2019 (CP/1312/2018 of NCLT Chennai). 36. Accordingly, we admit this petition under section 7 of I&B Code, 2016 declaring a moratorium for the purpose referring to in section 14 of the I&B Code with following directions. (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 ....