TaxTMI 
TaxTMI 
2021 (9) TMI 337
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....er Section 7 of Insolvency and Bankruptcy Code, 2016 ('IBC' in short) being C.P. (IB) No. 1220/MB/2020 against the Corporate Debtor before the Adjudicating Authority (National Company Law Tribunal), Court No. 5, Mumbai Bench. The Adjudicating Authority after hearing the parties admitted the application under Section 7 of IBC and CIRP was initiated, by impugned order dated 19th February, 2021. Thus, the present Appeal. 2. The Appeal claims and it has been argued on behalf of the Appellant that Respondent No. 1 an NBFC disbursed loan to the tune of Rs. 6 Crore to M/s Premier Ltd. under three separate Loan cum Pledge Agreements dated 29.06.2015, 04.05.2016 and 05.10.2016. The terms of the said loans were extended by way of various addendums. According to Appellant, in the amounts disbursed to M/s Premier Ltd., the Corporate Debtor - Doshi Holdings had pledged shares held by the Corporate Debtor in M/s Premier Ltd in favour of the Respondent No. 1 - Financial Creditor. According to the Appellant, under the Loan cum Pledge Agreement, the amounts were disbursed by the Respondent No. 1 - Financial Creditor solely to M/s Premier Ltd. as can be seen from the Bank Statement of the Financi....
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....argued that if the Adjudicating Authority which had heard both the Applications pending against M/s Premier Ltd. and M/s Doshi Holdings had made such observations by now in the earlier order of admission with regard to Premier Ltd., the Adjudicating Authority while passing present impugned order went back from those observations relying on judgment of this Tribunal in the matter of 'State Bank of India vs. Athena Energy Ventures Pvt. Ltd.', (2020) SCC Online NCLAT 774. Thus, according to the Appellant, this was breach of judicial discipline. The Appellant claims that there is no financial debt in existence against Doshi Holdings as the disbursement was to Premier Ltd. and no amount was disbursed to Doshi Holdings. According to the Appellant, liability of Doshi Holdings was only as a Pledgor of the shares and that Hon'ble Supreme Court held in the matter of 'Phoenix ARC Pvt. Ltd. vs. Ketulbhai Ramubhai Patel', (2021) SCC Online SC 54, relying on judgment in the matter of 'Anuj Jain vs. Axis Bank Ltd., (2020) 8 SCC 401, "where a Corporate Debtor has only extended a security by pledging shares, the Applicant will "at best be secured debtor qua above security but shall not be a fina....
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....he Respondent No. 1 thus claims that if these two companies as sister concerns under the agreements as Co-borrowers took loan and let the money be deposited in account of one of the companies, the consideration was clearly there as both entities were acting in tandem due to their intimate connection. Corporate Debtor joined the Agreements to loan as Co-borrower for consideration of time value for the money to get the same deposited in account of M/s Premier Ltd. That, Doshi Holdings additionally pledged shares also. 7. Counsel for Respondent No.1 submits that judgment in the matter of 'Dr. Vishnu Kumar Agarwal Vs. M/s Piramal Enterprises Ltd.' (Supra) is not good law considering the judgment of this Tribunal in the matter of 'State Bank of India vs. Athena Energy Ventures Pvt. Ltd.' and recent judgment of Hon'ble Supreme Court in the matter of 'Lalit Kumar Jain vs. Union of India & Ors'- Civil Original Jurisdiction, Transferred Case (Civil) No.245/2020, where it has been held that approval of the Resolution Plan in relation to Corporate Debtor does not discharge Guarantor of the Corporate Debtor. The argument is that there is no bar in IBC to file separate applications against t....
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....Banking Finance Company registered with Reserve Bank of India and incorporated under the Companies Act, 1956, having its registered office at 4th Floor, Silver Metropolis, Jnl Conch Compound, Opp. Bimbisar Nagar, Goregaon (East), Mumbai- 400 063 (hereinafter called the "Lender" or "Pledgee" which expression shall unless repugnant to the meaning or context thereof, shall be deemed to mean and include its successors in title and permitted assigns) of the ONE PART; and Premier Limited, a company incorporated under Companies Act 1956, having its registered office at- Mumbai- Pune Road, Chinchwad, Pune, Maharashtra 411019 (hereinafter referred to as the "Borrower 1" which expression shall, unless it be repugnant to the meaning or context thereof, mean and include its successor in title and permitted assign appointed or co-opted of the SECOND PART: and Doshi Holdings Pvt. Ltd., a company incorporated under Companies Act 1956, having its registered office at 58, Nariman Bhavan Nariman Point, Mumbai, Maharashtra- 400021 (hereinafter referred to as the Borrower(s) 2" or "Pledgor" which expression shall, unless it be repugnant to the meaning or context the....
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...., the loan Balance or the Facility Balance(s) shall become payable in accordance with the provisions of Article 2.12." "2.8 Demand Promissory note: The Borrower(s) shall execute Demand Promissory note and/or continuity note for the respective Facility and/ or individual or aggregate amount, for which facility is extended before availing any facility granted by the Lender which shall be treated as part & parcel of the agreement entered into between Borrower(s) and the Lender." 13. Going through the recitals it is clear to us that in addition to Premier Ltd. the present Corporate Debtor also had undertaken to repay the lender i.e. Respondent No.1. The Loan cum Pledge Agreements have various clauses binding Premier Ltd. and Doshi Holdings to repay the loan and the Appellant signed this Agreement on behalf of Premier Ltd. as well as separately for Doshi Holdings as Authorized Signatory. There is loan receipt (at page 188 of Dy. No. 28041) where the endorsement is: "Received with thanks a Loan of Rs. 3,00,00,000/- (Rupees Three Crores) from M/s Anand Rathi Global Finance Ltd. vide RTGS drawn on HDFC Bank, as loan @16% p.a. for _______ days from _______ 2015....
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....'Resolution Professional' appointed pursuant to 'Corporate Insolvency Resolution Process' initiated against 'Sunsystem Institute of Information Technology Pvt. Ltd.'- ("Corporate Guarantor No.2")? Admittedly, for same set of debt, claim cannot be filed by same 'Financial Creditor' in two separate 'Corporate Insolvency Resolution Processes'. If same claim cannot be claimed from 'Resolution Professionals' of separate 'Corporate Insolvency Resolution Processes', for same claim amount and default, two applications under Section 7 cannot be admitted simultaneously. Once for same claim the 'Corporate Insolvency Resolution Process' is initiated against one of the 'Corporate Debtor' after such initiation, the 'Financial Creditor' cannot trigger 'Corporate Insolvency Resolution Process' against the other 'Corporate Debtor(s)', for the same claim amount (debt). 32. There is no bar in the 'I&B Code' for filing simultaneously two applications under Section 7 against the 'Principal Borrower' as well as the 'Corporate Guarantor(s)' or against both the 'Guarantors'. However, once for same set of claim application under Section 7 filed by the 'Financial Creditor' is admitted against one o....
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.... matter of 'Lalit kumar Jain vs. Union of India' held that Resolution Plan in relation to a Corporate Debtor does not ipso facto discharge Guarantor of a Corporate Debtor. We have made this brief reference to these judgments with regard to matters where Principal Borrower and Guarantor are involved for the limited purpose to observe that IBC does not have any aversion to more than one proceeding against different Debtors even if they are arising out of one debt and one default. The Appellant has heavily relied on judgment in the matter of 'Dr. Vishnu Kumar Agarwal Vs. M/s Piramal Enterprises Ltd.', to say that for same claim amount and default two applications cannot be maintained. However, as we have already seen and which law has now become quite clear there can be separate proceedings for the same debt and default against Principal Borrower as well as Guarantor, when we peruse Section 60(2) and (3), which reads as under: "60. (1) The Adjudicating Authority, in relation to insolvency resolution and liquidation for corporate persons including corporate debtors and personal guarantors thereof shall be the National Company Law Tribunal having territorial jurisdiction over t....
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....nts and promises made. 23. It is stated that in the present matter proceedings were before the same Adjudicating Authority with regard to Premier Ltd. and Doshi Holdings. As such, the requirement to have both the proceedings before the same Adjudicating Authority is already there. Recovery of debt in one of the proceedings can always be taken note of and set off in the other proceeding so that the Co-borrowers are not put to disadvantage. 24. The Learned Counsel for the Appellant argued that the Adjudicating Authority has wrongly used the terms 'Co-borrower/Guarantor' interchangeably. It is argued that considering the documents it cannot be said to be a case of a Principal Borrower and Guarantor of the Borrower. The Learned Counsel referred to judgments in the matter of 'R.M.M.S.T. Vyravan Chettiar vs The Official Assignee of Madras', 1932 SCC Online Mad 54 and 'M. Venkataramanaiah vs Margadarsi Chit Fund Limited and Ors.' 2009(4) ALD 300. It does appear that this is not a case of Borrower and its Guarantor. This is a case of Co-borrowers for the amount received by them in joint documents executed, as have been referred. It additionally happens that the Corporate Debtor - Dos....
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....itor' by virtue of collateral security extended by the corporate debtor, would not be covered by the financial creditors as per definitions contained in sub-section (7) and (8) of Section 5. What has been held by this Court as noted above is fully attracted in the present case where corporate debtor has only extended a security by pledging 40,160 shares of GEL. The appellant at best will be secured debtor qua above security but shall not be a financial creditor within the meaning of Section 5 sub-sections (7) and (8)." [Emphasis supplied] 26. In judgment in the matter of 'Anuj Jain vs. Axis Bank Ltd.' (supra), the issue before the Hon'ble Supreme Court was whether the Respondents (Lenders of Jai Prakash Associate Ltd. - JAL) could be recognized as Financial Creditors of the Corporate Debtor - Jaypee Infratech Limited (JIL) on the strength of the mortgage created by the Corporate Debtor, as collateral security of the debt of its holding company JAL. In Para 33.2 of the judgment, Hon'ble Supreme Court referred to Para 13 and 14 of the judgment of NCLT in that matter where Resolution Professional had pointed out contents of the mortgage deed concerned to submit that Co....