TaxTMI 
TaxTMI 
2021 (12) TMI 156
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....nded on September 7, 1906, having its Registered Head Office at Plot No. C-5, G Block, Bandra Kurla Complex, Bandra east, Mumbai-400051, Maharashtra and carrying on its Banking business through diverse branches and in particular a branch named, Guwahati SME Branch, Killa Building 1st Floor, Christian Basti, G.S. Road, Guwahati, P.O- Dispur and District- Kamrup (M), PIN- 781005, Assam and is represented by the Assistant General Manager, Zonal Office, bank of India, Saikia Commercial Complex, Sreenagar, Christian Basti, Guwahati-781005. TAN of the Guwahati SME Branch is SHLB02711C. 3. The Corporate Debtor/Guarantor namely AKJ Fincap Limited was incorporated on 08.08.1995 under the provisions of the Companies Act, 1956 vide CIN: U67190DL1995PLC071546 having its Registered Office at C-8, Greater Kailash-I, South Delhi Area, New Delhi, Pin- 110048. 4. It is submitted by the Petitioner that the Total defaulted amount in the Term Loan account including uncharged interest calculated up to 27.12.2019 stands at Rs. 11,34,30,136.00 (Rupees Eleven Crores Thirty-Four Lakhs Thirty Thousand One Hundred Thirty-Six Only) as on 27.12.2019. 5. It is also submitted that the loan account becam....
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....996) and also confirmed the same by signing and executing the Attendance Register for oral Assent on 25.03.2013 and Memorandum of Deposit dated 25.03.2013, as security for repayment of the loan facilities. However, the said property had since been sold by the Financial Creditor under the provisions of the SARFAESI Act, 2002 on 12.02.2019 for an amount of Rs. 1,91,00,000.00 (Rupees One Crores Ninety-One Lakhs Only) and the said amount stood adjusted in the Term Loan account of the Agnipa Energo Pvt. Ltd. Agnipa Energo Pvt. Ltd (Borrower) had also registered the charge over the secured properties (hypothecated and mortgaged properties) with the Registrar of Companies and relevant document have been filed therein. 11. Further, the Agnipa Energo Pvt. Ltd (Borrower), Corporate Guarantor and the personal guarantors had also signed and executed Acknowledgment of Debt dated 24.03.2016 for the Term Loan in favor of the Financial Creditor, thereby confirming that all the security documents executed by them in favor of the Financial Creditor besides the Balance Sheets for the years 2017 and 2018 reflecting the dues and the guarantee respectively and also covered by creation of Equitable Mo....
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....age- Laugoan, District-Baksa, Assam vide Registered Lease Agreement No. 139/11 dated 28.06.2011. (Annexures I-V and I-V.1) c. Equitable Mortgage created by Corporate Guarantor (AKJ FINCAP LTD.) over the entire 2nd Floor with one servant room and WC on the terrace and roof rights, part of property bearing No. E-320, Greater Kailash, Part-I, New Delhi-110048 for a measuring area 208 sq. yards, along with 1/3rd undivided proportionate share in the land underneath and use of common passage, common staircase etc. by deposit of Registered Title Deed (Being Deed No. 10519, Book No. 1, Volume No. 948 of 1996 dated 29.10.1996) (Annexure I-X). However, the said property had since been sold by the Financial Creditor under the provisions of the SARFAESI Act, 2002 on 12.02.2019 for an amount of Rs. 1,91,00,000.00 (Rupees One Crore Ninety-One Lakhs Only) and the said amount stood adjusted in the Term loan account of the M/s Agnipa Energo Pvt. Ltd. d. The Corporate Guarantor and the Personal Guarantors have executed security documents including Deed of Guarantee dated 25.03.2013 (Annexure I-U) and the M/s Agnipa Energo Pvt. Ltd and the Corporate Guarantor has also created equita....
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.... b. Sanction Letter No. GMCB/GD/12-13/047 dated 04.03.2013 issued by the Financial Creditor to the Agnipa Energo Pvt. Ltd (Borrower) (Annexure I-J). c. Letter No. GMCB/GD/12-13 dated 23.03.2013 for revision of the rate of interest of the credit facilities issued by the Financial Creditor to the Agnipa Energo Pvt. Ltd (Borrower) (Annexure I-K). v. Record of Default as Available with any Credit Information Company: Credit Information reports as generated from Trans Union CIBIL (Annexures I-AA and I-AA.a). vi. Entries in a Bankers Book in accordance with the Bankers Book Evidence Act, 1891 (18 of 1891) (Annexure I-D). vii. List of documents attached to the application in order to prove the Existence of Financial Debt, the amount and date of default: a. Demand Promissory Notes both dated 25.03.2013 for Rs. 10.00 Crores and Rs. 65.00 Lacs executed by the Agnipa Energo Pvt. Ltd. (Borrower) in favor of the Financial Creditor. (Annexures I-N and I-O). b. Hypothecation cum Loan Agreement dated 25.03.2013 executed by the Agnipa Energo Pvt. Ltd (Borrower) in favor of the Financial Creditor. (Annexure I-T). c. Loan Bearer Let....
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....d that an Application was filed under Section 7 of the Insolvency and Bankruptcy Code, 2016 (in Short the 'IBC') filed by M/s. Bank of India (the 'Financial Creditor') and an ex-parte Order was passed by this Adjudicating Authority on 18.03.2020 observing that Notice was served on the 'Corporate Debtor', but there was no appearance. 16. It is submitted by the Learned counsel of Respondent that the Section 7 Application came up for hearing for the very first time on 10.02.2020 and Notice was issued to the M/s AKJ Fincap Ltd. returnable on 25.02.2020; on 25.02.2020 the Adjudicating Authority observed that the Notice sent to the Respondent herein, had returned with an endorsement 'insufficient address' and directed issuance of fresh Notice and also directed the Petitioner herein to serve copy of the same upon the Respondent and the matter was posted for Hearing on 18.03.2020. While so, on 15.03.2020, the Adjudicating Authority had directed that apart from matters which require urgent Hearing, it would not take up matters listed from 16.03.2020 to 27.03.2020 on account of the Covid situation; the Respondent became aware of the pendency of the Section 7 Application only when the Coun....
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....was not duly served, or that he or they were prevented by any sufficient cause from appearing (when the petition or the application was called) for hearing, the Tribunal may make an order setting aside the ex-parte hearing as against him upon such terms as it thinks fit." 10. From the aforenoted Order dated 18.03.2020 reproduced in Para 7, it is evident that no Order of Admission has been passed and it was only an Order setting the Appellant herein ex-parte. 11. Having regard to the fact that 18.03.2020 falls during the Covid-19 period and the restrictions imposed by the Government read together with the Notice issued by the Learned Adjudicating Authority on 15.03.2020 that matters posted during the period 16.03.2020 to 27.03.2020 would be adjourned, except for urgent matters, keeping in view Principles of Natural Justice, we are of the considered opinion that an opportunity may be given to the Appellant herein to file his Reply and take part in the proceedings. Further, it is an admitted fact that the Appellant before the Adjudicating Authority is a guarantor of Agnipa Energo Private Limited whose Petition is already pending before the Adjudicating Authority. The....
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...., which may be conducted under this Code, in such manner as may ne prescribed." This Section thus prescribes that the Central Government in consultation with the "Financial Sector Regulator" can notify "Financial Service Provider" or "Categories of Financial Service Providers" for the purpose of their Insolvency proceedings to be conducted under Insolvency Code in the manner prescribed therein. ii. Under the Insolvency Code, there is an enabling Section 239 which enshrines "Power to make Rules" to the Central Government wherein it is specifically inserted Sub section (2)(zk) empowering the Central Government to make Rules in the matter of proceedings prescribed u/s. 227 of the Code to formulate the manner of conducting Insolvency & Liquidation Proceedings. iii. Exercising the powers as enshrined in the Insolvency Code 2016, the Ministry of Corporate Affairs/Central Government has issued "Notification" on 15.11.2019 by formulating the Rules called as "Insolvency and Bankruptcy (Insolvency and Liquidation Proceedings of Financial Service Providers and Application to Adjudicating Authority) Rules, 2019". These Rules shall apply to such "Financial Service Pro....
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....and (iii) on the admission of the application, the Adjudicating Authority shall appoint the individual proposed by the appropriate regulator in the application filed under sub-clause (i) of clause (a) of Rule 5, as the Administrator. (b) Moratium- Save as provided in Section 14- (i) an interim moratorium shall commence on and from the date of filing of the application under clause (a) till its admission or rejection; and (ii) the license and registration which authorizes the financial service provider to engage in the business of providing financial services shall not be suspended or cancelled during the interim-moratorium and the corporate insolvency resolution process. Explanation- For the purposes of this clause, "interim moratorium" shall have the effect of the provisions of sub-sections (1), (2) and (3) of Section 14. (c) Advisory Committee- (i) the appropriate regulator may, where deemed necessary, constitute an Advisory Committee, within 45 days of the insolvency commencement date, to advise the Administrator in the operations of the financial service provider during the corporate insolvency resolution process; ....
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....ts, and powers of an Insolvency Professional, etc. while acting in an Insolvency Resolution of a "Financial Service Provider". A replacement of the "Administrator" is possible on an Application made by the "Appropriate Regulator" before the Adjudicating Authority. vii. These Rules have also laid down the procedure for submission of requisite Form-I to be accompanied by a fee of Rs. 25,000.00 having enclosed a written consent and declaration of "Administrator" on Form-2, format is annexed. The Application is to be filed in electronic form as and when such facility is made available by the Adjudicating Authority, however, till such facility is made available, the Applicant may submit the documents in a legible portable format in a data storage device such as Compact Disc or a USB Flash Drive acceptable to the Adjudicating Authority. viii. Most importantly, the respondent would like to draw attention of this Hon'ble Tribunal on a Notification dated 18.11.2019 which was issued in exercise of the powers conferred u/s 227 of the Code in consultation with RBI, reproduced below for ready reference: "MINISTRY OF CORPORATE AFFAIRS NOTIFICATION, New Delhi, the 18th Nov....
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....sought to lodge this application under the Code of 2016 with respect to its sanction in the form of Term Loan. ii. The Agnipa Energo Pvt. Ltd through its Director has signed Hypothecation cum Loan Agreement dated 25.03.2013, thereby hypothecating plant and machineries, fixtures and fittings, current and fixed assets etc. in favor of the Financial Creditor. iii. The Corporate guarantor AKJ Fincap Ltd has offered its Corporate Guarantee and was represented by its Director Shri Ashok Kumar Jain, and who upon duly authorized by virtue of a Board resolution dated 06.01.2013 had signed and executed the Deed of Guarantee dated 25.03.2013 along with personal guarantee of Sri Ashok Kumar Jain, Sri Anil Jaina and Sri Gaurav Jaina in favor of the Financial Creditor, covering the loan facilities. iv. Further, Corporate Debtor Agnipa Energo Pvt. Ltd had also created Equitable Mortgage over Leasehold right period (32 years) over a piece or parcel of land measuring 0.815 hectares at Pahumara Irrigation Scheme, Village-Laugaon, District-Baksa, Assam by deposit of Registered Lease Agreement No. 139/11 dated 28.06.2011 and also confirmed the same by signing and executing t....
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....or as Debtor in the Guwahati Bench of this Hon'ble Tribunal. Similarly, there is sufficient cause of action against the Corporate Guarantor as it is also a borrower within the meaning of Debtor as prescribed under the Code. x. It is pertinent to mention herein that since the Agnipa Energo Pvt. Ltd (Borrower) failed to complete the project for which loan facilities were sanctioned, the Financial Creditor had disbursed the Term loan of Rs. 8,51,67,362.75 out of the sanctioned amount of Rs. 10.00 Crores as per the demand of the Agnipa Energo Pvt. Ltd (Borrower) but could not disburse the Working Capital of Rs. 65.00 Lakhs due to the said non completion of project. It is worth mentioning herein that there were continuous deferments of Date of Commencement of Commercial Operation (DCCO) of the project and which resulted in modification of terms during internal review of the project for which loan facility was sanctioned. xi. The Agnipa Energo Pvt. Ltd. (Borrower) failed to maintain the Term Loan account (A/C No. 505565410000001) maintained by the Financial Creditor as it failed to pay the installments as per terms and conditions. The Term loan account was classified as....
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....aining to Limitation and Jurisdiction through more than sufficient documents annexed with the petition/amended petition/additional affidavit cum amendment and taking into consideration of the facts and records of the case, it is respectfully prayed that this Hon'ble Tribunal may be pleased to admit the petition and pass such other order/orders as to this Hon'ble Tribunal may deem fit and proper. xiii. The Financial Creditor does not admit the statements, allegations and submissions made in the Preliminary Affidavit filed by the CD. So far the provisions of Insolvency Code vis-a-vis Financial Service Provider Rules as mentioned in the Preliminary Objection/Affidavit filed by the CD, the submission of the FC in connection thereof is that even if the CD (Corporate Guarantor) falls under the category of financial Service Provider as defined under Section 227 of IBC, 2016 read with Section 239 of the Code and as per the MCA Notification dated 15.11.2019, however in terms of the MCA Notification dated 18.11.2019, the service provider has to have assets over Rs. 500.00 Crores and above and in the instant case, the CD (AKJ Fincap), as per last Balance Sheet for the Financial Year ....
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....The Central Government has notified the following and brought into effect the Insolvency and Bankruptcy (Insolvency and Liquidation Proceedings of a Financial Service Providers and Application to Adjudicating Authority) Rules, 2019 with effect from 01.12.2019 NOTIFICATION, New Delhi, the 18th November, 2019. 26.3 In exercise of the powers conferred by section 227 of the Insolvency and Bankruptcy Code, 2016 31 OF 2016, the Central Government in consultation with the Reserve Bank of India hereby notifies as under: 26.4 The insolvency resolution and liquidation proceedings of the following categories of financial service providers shall be undertaken in accordance with the provisions of the Insolvency and Bankruptcy Code 2016 read with the Insolvency and Bankruptcy (Insolvency and Liquidation Proceedings of Financial Service Providers and Application to Adjudicating Authority) Rules, 2019 (in this notification referred to as the 'Rules') and the applicable Regulations Sl. No. Category of Financial Service Provider (rule 2 of the Rules) Appropriate Regulator [clause (a) of sub-rule (1) of rule 3 of the Rules] Dealing with third-party assets (rule 10 of the....