TaxTMI 
TaxTMI 
2022 (2) TMI 465
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....ir Buildcon Private Limited (Respondent No. 2) against the order dated 17.12.2020 (hereafter called "Impugned Order") passed by the National Company Law Tribunal, New Delhi (the Adjudicating Authority) in CP (IB) 581/ND/2020 qua which the Adjudicating Authority has admitted application under Section 7 of IBC filed by Tourism Finance Corporation of India (in short called "TFCI', Respondent No. 1) and thereby initiated Corporate Insolvency Resolution Process (in short "CIRP")against the Corporate Debtor. 2. The Appellant has assailed the Impugned Order in the appeal memo on the ground that TFCI is only interested in enforcing a security interest over the assets of CD and has no interest in the growth and survival of the CD and thus it does not satisfy the test of being a "financial creditor' under the IBC. Furthermore, he has averred that the Adjudicating Authority did not consider the averments made in IA No. 4701 of 2020, which was for production of minutes to see whether the TFCI was actually a financial creditor or not and this IA No. 4701 of 2020 was dismissed in limine without proper consideration. The Appellant has also claimed that the Adjudicating Authority has failed to ap....
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....offer to make repayment by29.2.2020, which was rejected by TFCI on 29.6.2020. Again, another proposal for restructuring of the loan was made by the corporate debtor which was again rejected on 3.7.2020. 5. We heard arguments on behalf of the Appellant and the Respondents and also perused the record. 6. The Learned Senior Counsel for Appellant has stated that the date of default mentioned in column 2 of Part IV of the application under Section 7 (attached at page 214 of the Appeal Paperbook Vol.I) mentions the date of default as 15.2.2020 and the total amount outstanding as Rs. 50,78,74,188.00 along with further interest at contractual rates with effect from 15.2.2020 till realization with all costs and charges. He has further argued that in the loan agreement dated 28th March 2018 between TFCI and the corporate debtor(attached at pp. 64-88 of Appeal Paperbook Vol. I) the event of default is included in clause 2.6(1)(a) and (b)which is as follows: - 2.6(i)(a) If the Borrower commits as default in payment or repayment of three consecutive instalments of principal amounts of the Loan or Interest thereon or any combination thereof; or (b) the affairs of the borrower pertaining t....
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....TFCI in the year 2018. In short, the argument of the Learned Senior Counsel of Appellant is that the Respondent No. 1 is not a financial creditor and in the light of the fact that there was no default, the recall of the loan by the purported financial creditor TFCI was not in order, and hence the appeal should be allowed. 8. The Learned Senior Counsel for Respondent No. 1 has argued that the Adjudicating Authority has very clearly held in Paragraphs 11 and 12 of the Impugned Order that the loan agreement entered into between the financial creditor/TFCI and the corporate debtor dated 28.3.2018 very clearly provides that if there is a breach in the payment of EMI and interest, then the financial creditor has the authority to recall the total loan. Furthermore, he has argued that the Impugned Order very clearly states that the right to convert the loan to shares in case of default in repayment is only an option available to the financial creditor, which the financial creditor has decided not to exercise. He has argued that the resolution plan approved by the Adjudicating Authority amounts to Rs. 67.50 crore and even Hon'ble Supreme Court has not accepted the argument that the amount ....
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....(iii) Sundry Debtors - Rs. 16,20,698 Total Rs. 50,78,74,188 Thus, the total amount claimed in default is Rs. 50,78,74,188 due on 15.2.2020 along with further interest at contractual rates w.e.f 15.2.2020 till payment or realization together with all costs and charges. The financial creditor has also attached a statement of account/ledger from the Applicant along with supporting affidavit as annexure. The Section 7 application has the copy of the loan sanction letter dated 17.3.2018 and loan agreement dated 28.3.2018 along with hypothecation deed, personal guarantee deed and pledge of shares as security to the loan attached with it. Copy of the notice under Section 13(2) of SARFAESI Act, 2002 is also annexed with the Section 7 application. Schedule V of the Loan Agreement (attached at pp. 82-83 of Appeal Papebook, Vol. I) contains the repayment amortization schedule starting from 15th April 2019 to 15th January 2031. Thus it is clear that a loan of Rs. 50 crores was taken by the corporate debtor Aryavir Buildcon Private Limited from the financial creditor TFCI. 12. The repayment schedule, as mentioned is at pp. 82 - 83 of Appeal Paperbook Volume 1, along with the "General Co....
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....rate debtor/Aryavir Buildcon Private Limited, the figure of debt in default is stated as follows - " 5. Accordingly, in exercise of the powers conferred in terms of Section 13(2) of the securitization and reconstruction of financial assets and enforcement of security interest at, 2002 (hereinafter referred to as "the said Act"),TFCI hereby declares that the aggregate amount of Rs. 50,78,74,188 ( Rupees Fifty Crores Seventy Eight Lacs Seventy Four Thousand and One Hundred Eighty Eight only) in particulars whereof argue in Annexure III(due as on15.2.2020)being the record date is immediately due and in favour of TFCI." 14. In the light of aforementioned, it is clear that a total debt amount of Rs. 50,78,74,188 is the debt that is in default on 15.2.2018 and payable to Corporate Debtor. 15. We now look at the contention of the Learned Senior Counsel for Appellant that there was no default in repayment and hence, there was no need for recalling of a loan. In cases of default the applicable provision is Clause 2.6 of the loan agreement dated 28.3.2018 which has been reproduced earlier in paragraph 6 of this judgment. According to this Clause 2.6(i)(b) if a default has occurred, then....
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....re is no provision in the law that alleged default should be greater than the market value of the assets of the Corporate Debtor for admission of a Section 7 application. It could very well be that the Corporate Debtor is not very well managed, which has led to a default in debt repayment and even if the Corporate Debtor is a going concern, improved management as a result of insolvency resolution could certainly result in better and more robust functioning of the corporate Debtor from the financial and management angles. 18. The Appellant has also alleged that the application under Section 7 has been filed by a person who has a mere power of attorney, but not proper authorization by the Board of Directors of the Corporate Debtor. In this regard, he has referred to the judgment of NCLAT in the case titled Palogix Infrastructure Private Limited versus ICICI Bank limited [2017 SCC Online NCLAT 266] to claim that if the applicant who presents the section 7 application is not properly authorized, the insolvency application under sections 7, 9 or 10 of the IBC will be considered defective. On perusing the extract of the minutes of the Board of Directors meeting of Tourism Finance Corpor....