TaxTMI 
TaxTMI 
2022 (6) TMI 312
X X X X Extracts X X X X
X X X X Extracts X X X X
....ainst the Corporate Debtor was admitted by this Tribunal vide its Order dated 30.08.2019. However, the Hon'ble NCLAT vide its order dated 11.02.2022 has set aside the admission order as the same was passed ex-parte and has remanded back the matter to this Hon'ble Tribunal for the matter to be heard afresh. 3. Learned Counsel appearing for the Petitioner argued that the facts and the transactions leading to the filing of instant application as per the Financial Creditor is as follow:- (a). IL & FS Financial Services Limited had provided Financial assistance to Wind World Wind Farm (MP) Private Limited. (Borrower) of Rs. 100 Crores and 110 crores vide facility agreement dated 27.06.2014 and 24.09.2014 respectively. (b) The Corporate Debtor herein as stood corporate guarantor to these loans and executed irrevocable and unconditional letters of guarantee dated 27.06.2014 and 24.09.2014 respectively. (c) The facilities provided by IL & FS were assigned to the Financial Creditor (Applicant) herein vide assignment dated 30.12.2005. (d) There were several defaults, and the Financial Creditor sent a demand notice dated 10.01.2018 to the borrower and th....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... phases between 2010 and 2014. 1.3 Phase1, Phase 2 and Phase 3 comprised of capacity of 325.60 Mega Watt (MW) out of the total capacity of 1004 MW. Purchased orders were placed by following IEDCL SPVs on WWIL and fully executed by WWIL. 1.4 Phase 4 and 5 comprised of a capacity of 678.4 MW. Out of this 678.4 MW, capacity, project totalling 449.6 MW were fully executed, 124.8 MW capacity was cancelled abruptly by the IEDCL SPVs in 2015-16 and 104 MW remains un commissioned as on date for which part material has been manufactured and supplied by WWIL. 1.5 Significant commercial aspects of this entire capacity totalling to 1004 MW are :- (a) Turnkey price of various contract placed on WWIL and WWRDPL for the supply installation, testing and commissioning of 0.80 MW wind turbine generators (WTGs) ranged between Rs. 4.36 cr to Rs. 4.39 cr per WTG. (b) Payment by IEDCL SPVs was to be made as per following milestone under the purchase order placed by the IEDCL SPVs on WWIL:- 25%-payment interest free advanced against advance bank guarantees 65% - payment against supply of material 5%- payment against commissioning of the wind turbines ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....would there be default on the advance payments (loans) as there will always be enough projects progress to justify pre-payment of the advanced payment by way of loan by using the proceeds payable by the IEDCL SPVs to WWIL for squaring of the advanced amount (loans) against the supply made by WWIL to the IEDCL SPVs as detailed above:- Loan No. INR Crores Borrower Guarantor Date of Disbursement Tenure Date of adjustment of the loan (advance payment) 1 100 WWIL Vish Wind 27.11.2012 9 Yrs. 30.9.2014 2 20 WWIL Vish Wind 14.62013 12 28.3.2014 3 50 WWIL Vish Wind 26.8.2014 6 28.3.2014 4 28 WWIL Vaayu India 21.3.2014 3 17.4.2014 5 32 WWWFCPL- Wind World Wind Farm Chitradurga Pvt Ltd- 100% subsidiary of WWIL Vish Wind 21.3.2014 3 Months 17.4.2014 6 45 WWWFMPPL- Wind World Wind Farm MP Pvt Ltd- 100% subsidiary of WWIL Vish Wind 25.3.2014 6 Months 27.9.2014 7 50 WWWFCPL Vish Wind/ Vaayu 28.5.2014 6 Months 30.5.2014 8 100 WWWFMPPL- Wind World Wind Farm MP Pvt Ltd- 100% subsidiary of WWIL Vish Wind/ Vaayu ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ect progress and asked WWIL to commissioned residual capacity of 104.4 MW for which too the material had been partially supplied by WWIL. Notwithstanding an agreement between the IEDCL SPVs and WWIL to complete the 104.4 MW projects in an agreed time frame, IEDCL SPVs further precipitated matters by unilaterally invoking bank guarantees amounting to Rs. 256 cr given by WWIL in favour of the IEDCL SPVs in Q3 and Q4 of 2016-17 without any discussion with WWIL. Importantly, had WWIL been allowed to commission the balance capacity under 678.4 MW or an invoicing of Rs. 1255.54 cr, the advance payment by way of (residual) loan of Rs. 210 cr given by IFIN to WWWFMPPL could have been paid/squared in a similar manner as were the advance payment by way of loans amounting to Rs. 348 cr were paid off by WWIL and its subsidiaries. Consequently, the 104 MW capacity remains uncommissioned as on date which could not be completed. For the orders of the total capacity of 130.4 MW placed by RWPPL on WWIL, WWIL received Rs. 675.69 cr directly from RWPPL and Rs. 34.71 cr was paid by IEDCL SPVs to IFIN to square the advance payment by way of loan given by IFIN to WWIL directly to IFIN. Similar docume....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Jogi Halli, Karnataka and Mahidad, Gujarat by October 2016 when the decision to curtail the capacity to 104 MW from 228.80 MW was taken by IL & FS SPVs. 1.17 Thus, from an order value of Rs. 1255 cr IEDCL SPVs cancelled Rs. 685 cr worth of orders from where the Rs. 210 cr was to be earned and paid back. 1.18 WWIL accordingly re-aligned all its resources to complete the balance project of 104 MW within the stipulated time and started supplying WTGs and its related material to the project sites. However, WWIL's surprise, the IEDCL SPVs started incashing bank guarantees of an agreegate amount of Rs. 2256 cr from 03rd October, 2016 furnished by WWIL to the IEDCL SPVs without any intimation or discussion with WWIL. 1.19 Meanwhile, post October, 2016 and upto February 2018 due to changes in Government policies for installation of Wind Power projects and the indecisions of IEDCL SPVs to shift either the sites or opt for alternate power sale arrangements like third party sale, even the 104 MW capacity remains uninstalled. 1.20 On the other hand, the grievance of the respondent is that by delaying decisions than cancelling Rs. 685 cr of orders and then even invoking Rs. 256 cr ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....FS did not want to pay in WWIL in absence of NoC by lenders, therefore, ILFS came up with an idea for borrowing and complete the project. Hence, wrote to WWIL to nominate and entity to whom IFIN can lend and take NoC from that other lender. These events follow an email dated 08.07.2015 [Akshay Sharma] (ILFS) was requesting for conformation. There were 9 loans and 7 were repaid back by WWIL, and instead to SPV's paying to WWIL they paid directly to IFIN and those loans were squared off. (pg. 713- reconciliation by WWIL). The emails clearly described the transactions as MWEPL is the SPV which paid to IFIN a sum of Rs. 110 cr, which was seen as on account advance in the book of SPV IFIN gave a fresh loan of Rs. 110 cr to WWIL, which sub parked this amount with MWEPL, show the advance which was shown in book of SPV got squared off by an evergreening done by ILFS as it was a circular kind of situation. c. The respondent argued that in the emails shown, no where there was reference to the original borrower which is WWWFMP Private Limited and ILFS clearly described this transaction between WWIL and the rest of the ILFS group. There is not a whisper of any financial debt, any lend....
X X X X Extracts X X X X
X X X X Extracts X X X X
....f of the Wind World Private (India) Limited as on 31.03.2017 to whom we have assigned the above project advance as on 31.12.2016". g. Thus, both in respect of locus as well as that there is no financial debt, the application under Section 7 is not maintainable. Hence, same should be dismissed. This entire case has been based on transactions between WWIL and IL & FS in the broader sense and then they have used different corporate structure to see how the funds flow can be made so that the supply of wind turbine is not affected. h. He further argued that there is no rejoinder to the reply. Respondent and the Bench did not labour hard on the principle of pleadings and in the affidavit, the respondent has taken a position that these documents which are created are vogues and the real transaction is the supply of wind turbine generators. It is because of the failure of ILFS, Vaayu was forced to take the money from IFIN and circulate within the system and the stand of the respondent remains unchallenged as it has not been denied in the rejoinder and should be considered to be true. i. In the balance sheet of the applicant (volume 5, pg.720) we are concerned wit....
X X X X Extracts X X X X
X X X X Extracts X X X X
....has a business of production, collection and distribution of electricity and lending is not object of the said company. Thus, it is being contended that in the instance case that there is no disbursal of any financial debt and section 7 application is liable to be dismissed. As between the IFIN who was shown to be the assigner which is a part of IL & FS group, that cannot hold any water or cannot give them any locus to maintain this application because the real nature of the transaction is what is recorded in their own financial statements. 1.25 Without prejudice to above, in any event the assignment agreement cannot be admissible in law for the very fact that as per Section 33 and 35 of Maharashtra Stamp Act,1958 assignment deed cannot be taken in evidence, because the assignment is of Rs. 210 cr and Stamp Duty payable under article 5(4) (h) is 0.2% and Stamp Duty which should have been payable shall be approximately INR 44 lacs as against which they have only paid a stamp duty of Rs. 1 lakh (pg. 194), so this is an under stamped document and therefore it is inadmissible, and it cannot be a basis of Section 7. This is knocked out and it conflict with balance sheet that....
X X X X Extracts X X X X
X X X X Extracts X X X X
....o 01 October, agreement dealing with rescheduling of these repayment because there is a delay and WWIL will give additional security for it. d. It is merely a blame game and all defaults are indeed admitted. Further, a bare perusal of the first reply (para-RR page-28) makes its clear that this is a transactional structure, and it cannot be read into mean that loan in fact was not given or there was not amount due or there is no default. e. In addition to these arguments, the petitioner has relied on State Bank of India Vs. Ramakrishnan wherein Hon'ble Supreme Court has held that Creditor has remedy with regard to his debt against both the principal debtor as well as the surety. Further relied on Grasim Industries Vs. Agarwal steel wherein Hon'ble Supreme Court has held that when a person signs a document properly and understood it and only then affixed his signature, unless there is proof of force or fraud. 6. We have heard counsel for both parties one should notice the background (reason) for disbursement by IFIN in favour of WWIL and thereafter in favour of WWWFMPPL (the so-called principle borrower). 7. IL &FS energy development corporation limit....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ns amounting to Rs. 348 cr which were disbursed by IFIN to WWIL and its subsidiaries in lieu of project payments under the purchase orders placed by the IEDCL SPVs on WWIL via issuance of letters of adjustments to the IEDCL SPVs who in turn paid IFIN in line with the understanding between WWIL and IEDCL. From the record, we found that in total 7 advance payment for completion of the project by way of loan amounting to Rs. 348 cr were pre-dominantly squared between March 2014 to September 2014 by WWIL and its subsidiary due to the increased pace of project activities. Documentations brought on record for all other IEDCL SPVs whereby part of the project proceed were used to clear the advance payment loans paid to WWIL and its subsidiaries. 12. The correspondence, emails and documents shows that the amount disbursed by IFIN to the WWIL and WWWMPPL (subsidiary of WWIL) is by way of advance payment/payment against supply of materials commissioning of the wind turbines and on completion hand over of the wind energy project, though shown as loan. 'Vaayu Infrastructure LLP' and Vishwind Infrastructure LLP are merely the corporate guarantor. 13. The essence of loan agreement is advanc....