TaxTMI 
TaxTMI 
2022 (11) TMI 1236
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.... / Company' for `opening of LCs', with the `Appellant / Bank', subsequent to the `Board Resolution dated 25.06.2014', on the ground that these documents are very vital documents for arriving at a just and proper decision of the `Appeal', with a view to find out the truth. 2. According to the Respondent / Appellant / Bank / Financial Creditor, the two additional documents, sought to be produced by the `Petitioner / Respondent / Corporate Debtor', are only a ruse to delay and derail the proceedings of the instant `Appeal'. Further, the documents sought to be produced, in any event, does not save the `Petitioner / Respondent / Corporate Debtor', from the only conclusion that there is a `Default' of a `Financial Debt' and the `Corporate Insolvency Resolution Process', ought to be initiated `qua' the `Petitioner / Respondent / Corporate Debtor'. 3. In view of the fact that the Petitioner / Respondent / Corporate Debtor, has come out with a plea that the two additional documents sought to be produced in IA No.1284 of 2021 in Comp. APP (AT) (INS) No.80 of 2021 are very much vital and of great relevance to the matter at hand, to find out the truth and for arriving a just and proper d....
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....ities, with the entries appearing in the Corporate Debtor's CC account maintained in the Bank. It will also have to be ascertained whether all the bills raised are undisputed as regards the payments released by the bank, amounts repaid by the Corporate Debtor, calculation of LC charges and interest levied etc. This position clearly needs to be reconciled through a process of entry by entry scrutiny of the accounts of the Corporate Debtor from 2012 to 2016 as against the LC and other charges levied and payments made / adjusted. This would also require comprehensive scrutiny and reconciliation with the Bank records, available correspondence and decisions taken with regard to the settlement / golden handshake etc. 34. The above gap could be either on account of the Corporate Debtor's perception that when it cleared the loan in 2012 and paid Rs.10.63 crore and adjusted its FDRs in 2016, its entire Working Capital Account got liquidated. Alternatively, the charges levied by the Financial Credit towards LC charges etc. were incorrectly charged as against the facilities actually availed and full credit was not given for the same. But it does appear strange to us that when the loa....
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....es to RS.157.22 crores, out of which Rs.45 crore was cash credit and Rs.112.22 crores was letter of credit (LC Limits), on 23.03.2015 if at that point of time, there was a huge outstanding debt and if there was a default in clearing the same by the Corporate Debtor. Subsequently also the AGM in his letter dated 14.10.2016 stated "...... look forward to your continued patronage...", as mentioned by the Corporate Debtor in his objections, indicating that the debt had been cleared or that the FC had no further issues of recovery with the Corporate Debtor with regard to recovery of debt. 37. On the other hand, we also find that during the hearing on 19.06.2019 the MD of the Respondent Corporate Debtor stated that if any dues were payable in spite of all the payments made, then he can settle the dues, provided the correct amount is worked out after proper reconciliation. 38. We also find from the objections filed by the Corporate Debtor that the Corporate Debtor is not an insolvent company that has lost its substratum, cannot engage in business and earn revenue, or pay its debts. As mentioned by the Corporate Debtor, it had stocks and receivables of around Rs.138 crore....
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....imant whose claim has not been settled so far. It is not in dispute that the resolution of disputes relating to claims, more particularly Allottees in Housing Projects, has to be given primacy and pushing the Corporate Debtor into liquidation would only be the last option." The Corporate Debtor in the instant case is also into business related to Infrastructure Development on which the hard earned income of hundreds / thousands of home buyers stands invested and is at stake. 41. In view of the foregoing, we are not satisfied that a case has been made out by the Financial Creditor for initiating CIRP against the Corporate Debtor, as of now. The disputes raised, the lack of clarity of the actual figures of debt, if any, and whether after the settlements offered by the Corporate Debtor and the payments made since 2012, and its belief that its entire CC account of Rs.45 crore had been liquidated after the payment of Rs.10.63 crore and adjustment of its FDs, require a detailed scrutiny and audit of the demand raised on account of both Fund based and Non-Fund based facilities and the amounts paid / settled, which cannot be conducted in these summary proceedings. We may ....
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....(IB) No.112/BB/2019, had failed to appreciate that an `Application', under Section 7 of the I & B Code, 2016, was to be admitted in a time bound manner, for the purpose of initiating `Corporate Insolvency Resolution Process' of the Corporate Debtor, all the more, when the `Default' of a `Financial Debt' is `more than Rs. 1 Lakh, which exists, in the instant case, on hand'. 7. It is represented on behalf of the Appellant, that the `Adjudicating Authority', had passed an `erroneous order', in directing an `Audit', of the `Amounts Due', and `liable to be paid', by the `Respondent', which is clearly outside the ambit of the ingredients of Section 7 of the I & B Code, 2016. 8. The Learned Counsel for the Appellant points out that the `Adjudicating Authority', is not empowered at the `pre-admission stage', to venture into matters, in respect of the `Value of the Assets of the Corporate Debtor', or its `Business', or the possibility of attracting a `Viable Resolution Plan', under the Code. 9. Advancing his argument, the Learned Counsel for the Appellant takes a stand that, while dealing with an `Application', under Section 7 of the I & B Code, 2016, an `Adjudicating Authority', c....
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.... some law or has not yet become due in the sense that it is payable at some future date. It is only when this is proved to the satisfaction of the Adjudicating Authority that the Adjudicating Authority may reject an application and not otherwise." 15. The Learned Counsel for the Appellant refers to the decision of the Hon'ble Supreme Court of India in E.S. Krishnamurthy v. Bharath Hi-Tech Builders (P) Ltd., reported in (2022) 3 SCC at Page 161, Spl Pgs : 177 & 179, wherein at Paragraphs 31 & 34, it is observed as under: 31. "On a bare reading of the provision, it is clear that both, clauses (a) and (b) of sub-section (5) of Section 7, use the expression "it may, by order" while referring to the power of the Adjudicating Authority. In clause (a) of sub-section (5), the Adjudicating Authority may, by order, admit the application or in clause (b) it may, by order, reject such an application. Thus, two courses of action are available to the Adjudicating Authority in a petition under Section 7. The Adjudicating Authority must either admit the application under clause (a) of sub-section (5) or it must reject the application under clause (b) of sub-section (5). The statute doe....
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....are simply pressurising only for the payments of devolved LCs and you are pressurising for the payment of devolved LCs dated 20/10/16, 26/10/16, 3/11/16, which is impractical and further on 14.11.2016, stating that "The non-payment of LCs from 20/10/16 to till date is only due to banks arbitrary decisions in increasing LC margins from 10% to 15%" 18. The submission of the Appellant / Bank is that the Respondent, is in `Default' of the `Debt', arising out of the `Devolvement of Letters of Credit', and the aforesaid document clearly exhibit the same. In this regard, the stand of the `Appellant / Bank' is that, the `Adjudicating Authority', does not have any jurisdiction, to enter into the merits of the matter i.e., the `Adjudicating Authority', is not to examine the each and every aspect of `Default'. 19. The Learned Counsel for the Appellant refers to the decision of the Hon'ble Supreme Court of India in M/s. Tarapore & Co. Madras v. V.O. Tractors Export, Moscow & Another, reported in (1969) SC Page 233 at Spl Pg: 239, wherein at paragraph 12, it is observed as under: "It is often made a condition of a mercantile contract that the buyer shall pay for the goods by mean....
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....the Company Seal' of the Respondent. 22. The Learned Counsel for the Appellant submits that Mr. D.C. Mohan, was authorised by the Respondent, to sign the `Documents', related to `Letters of Credit' and he had signed on the subject `Ten Letters of Credits Document'. The other `Seven Letters of Credits', which were opened between the period from 17.01.2015 to 03.02.2015, were duly signed by the authorised signatory, Mr. D.C. Mohan and which were honoured and paid by the `Respondent / Corporate Debtor', `without any objections'. 23. The Learned Counsel for the Appellant proceeds to point out that the instant `Section 7 Application', under the I & B Code, 2016, was filed before the `pandemic' and there is no prohibition for initiating `Corporate Insolvency Resolution Process', against the `Respondent'. 24. The Learned Counsel for the Appellant contends that the facts of the instant case, are completely different from the decision of the Hon'ble Supreme Court of India in Vidarbha Industries Power Ltd. v. Axis Bank Ltd. (vide Judgment dated 12.07.2022 in Civil Appeal No. 4633 of 2021), because of the fact, in the present case, the `Appellant / Bank', by means of numerous documen....
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....el for the Appellant / Bank cites the decision of the Hon'ble Punjab & Haryana High Court in Indo Swiss Time Ltd. v Umrao & Ors., reported in AIR (1981) Punjab 213, to urge his plea that `if there is a direct conflict between the decisions of the Hon'ble Supreme Court of India, rendered by two equal benches, the `Court', must follow the Judgment which appears to lay down the Law more elaborately and more accurately and that mere incidence of time - whether Judgment is earlier or later could hardly be relevant'. 27. The Learned Counsel for the Appellant / Bank seeks in aid of the decision of the Hon'ble Supreme Court of India in Sesh Nath Singh & Anr. V. Baidya Bati Sheoraphuli Co-operative Bank Ltd. & Anr. (2021) 7 SCC at Page 313 at Spl Pg: 345, wherein at paragraphs 86 & 87, it is observed as under: 86. "An Adjudicating Authority under the IBC is not a substitute forum for a collection of debt in the sense it cannot reopen debts which are barred by law, or debts, recovery whereof have become time-barred. The adjudicating authority does not resolve disputes, in the manner of suits, arbitrations and similar proceedings. However, the ultimate object of an application und....
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....pex Court is loud and clear. The Adjudicating Authority cannot travel beyond the letter of law and the dictum of the Hon'ble Apex Court. The satisfaction in regard to occurrence of default has to be drawn by the Adjudicating Authority either from the records of the information utility or other evidence provided by the 'Financial Creditor'. The Adjudicating Authority cannot direct a forensic audit and engage in a long drawn pre-admission exercise which will have the effect of defeating the object of the 'I&B Code'. If the 'Financial Creditor' fails to provide evidence as required, the Adjudicating Authority shall be at liberty to take an appropriate decision. If the application is incomplete, it can return the same to the 'Financial Creditor' for rectifying the defect. This has to be done within 7 days of the receipt of notice from the Adjudicating Authority. However, the 'I&B Code' does not envisage a pre-admission enquiry in regard to proof of default by directing a forensic audit of the accounts of the 'Financial Creditor', 'Corporate Debtor' or any 'financial institution'. Viewed thus, the impugned order cannot be supported. Application under Section 75 of the 'I&B Code' on beha....
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....rtant. This it must do within 14 days of the receipt of the application. It is at the stage of Section 7(5), where the adjudicating authority is to be satisfied that a default has occurred, that the corporate debtor is entitled to point out that a default has not occurred in the sense that the "debt", which may also include a disputed claim, is not due. A debt may not be due if it is not payable in law or in fact. The moment the adjudicating authority is satisfied that a default has occurred, the application must be admitted unless it is incomplete, in which case it may give notice to the applicant to rectify the defect within 7 days of receipt of a notice from the adjudicating authority. Under subsection (7), the adjudicating Company Appeal (AT) (Ins) No.441 of 2019 authority shall then communicate the order passed to the financial creditor and corporate debtor within 7 days of admission or rejection of such application, as the case may be." 15. From the above, it is clear that at the stage of admission of Application under Section 7, the requirement is to give limited Notice and the considerations would be to see whether or not satisfaction by Adjudicating Authority coul....
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....upreme Court of India in Sesh Nath Singh v. Baidyabati Sheoraphuli Co-operative Bank Ltd., which runs as under: 92. "In other words, the provisions of the Limitation Act would apply mutatis mutandis to proceedings under the IBC in the NCLT/NCLAT. To quote Shah J. in New India Sugar Mill Limited v. Commissioner of Sales Tax, Bihar, "It is a recognised rule of interpretation of statutes that expression used therein should ordinarily be understood in a sense in which they best harmonise with the object of the statute, and which effectuate the object of the Legislature." Respondent's Submissions: 33. The Learned Counsel for the Respondent submits that in Vidarbha Industries case, the Hon'ble Supreme Court of India, had noted that the Existence of a `Financial Debt' and `Default', in payment thereof, only gave the `Financial Creditor', the right to `Apply' for an initiation of `Corporate Insolvency Resolution Process' and that the `I & B Code, 2016', intended on conferring a `Discretion', with the `Tribunal', to `Admit' or `Reject' an `Application', filed under Section 7 of the Code, 2016, by a `Financial Creditor', thereafter. Also, according to the Respondent, the Hon'b....
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....`Bank' had arbitrarily renewed the `Working Capital Facilities', as per Letter dated 05.10.2016 by irrationally increasing the `Letter of Credit Margin', from 10% to 15% and also illegally modified the `Terms of other Facilities', against the `Reserve Bank of India' norms. 39. The Learned Counsel for the Respondent points out that the Respondent /Company, had requested for a `Golden Hand Shake', through its Letter dated 06.10.2016 and payment of Rs.10,63,00,000/- to the Bank and after the said payment, the outstanding balance of the Respondent Account was only Rs.8,77,41,619/- which is evident from the True Copy of the Ledger Account dated 07.10.2016 of the Respondent / Corporate Debtor in State Bank of India (Appellant / Bank) - vide Page 45 of the objection dated 08.04.2021 of the Respondent (Diary No. 26690 dated 09.04.2021), the Respondent further requested the appellant vide its letter dated 07.10.2016 to adjust the said outstanding CC balance of Rs.8,77,41,619/- from the Respondent's FD a/c of Rs.11,19,53,633/- in order to clear the `entire outstanding payment', and to transfer Rs.110 Crores LC facilities to `South Indian Bank'. 40. It is the version of the Respondent /....
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....ed on the side of the Respondent / Company that it had not at all authorised `any other person', other than the said Mr. B. Nageswara Rao to operate the said `Letters of Credits' in the `Appellant / Bank', subsequent to 25.06.2014, and the `LC documents', produced by the Appellant / Bank do not bear the signature of the said Rao, which clearly establishes that the said photocopies of `Letters of Credit', are `Forged' and `Fabricated'. In short, the `Appellant / Bank', is claiming the whole `Debt' and `Default', based on the aforesaid photocopies of the created / concocted / forged and purported `Letters of Credit'. 46. The Learned Counsel for the Respondent / Company points out that a `Forensic Audit Report', submitted by `Ernst and Young' was a `biased' and an `arbitrary' one, because the `Forensic Audit Company', itself mentions in its `Report', that the accuracy and authenticity of all the information, furnished by the `Appellant / Bank' could not be confirmed, since it had solely relied upon the documents and informations submitted by the `Appellant / Bank'. Therefore, it is the contention of the Respondent / Company that `CIBIL Report', prepared on the footing of such a `Fo....
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....lant / Bank and the Respondent before the other Courts and in fact, it is clear case of `Forgery', `Manipulation' of alleged `Letter of Credits', in question. 52. The submission of the Learned Counsel for the Respondent is that, the facts and circumstances of the instant case, clearly prove that there exists a serious `Dispute' in regard to the alleged `Debt' and `Default' and on the footing that `Multiple Cases', are pending before the `Courts' / `Tribunals', for an `Adjudication'. Therefore, on the side of the Appellant / Bank, a request is made before this `Tribunal', to dismiss the instant `Appeal', filed by the Appellant with heavy costs in the interest of `Justice' and `Equity'. Respondent's Citations: 53. The Learned Counsel for the Respondent refers to the Judgment of the Hon'ble Supreme Court of India in Vidarbha Industries Power Ltd. v. Axis Bank Limited (vide Civil Appeal No. 4633 of 2021 dated 12.07.2022), wherein at paragraphs 75 to 77 & 88, it is observed as under: 75. "Significantly, Legislature has in its wisdom used the word 'may' in Section 7(5)(a) of the IBC in respect of an application for CIRP initiated by a financial creditor against a Corpor....
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.... Award/Decretal amount is incapable of realisation. The example is only illustrative." 54. The Learned Counsel for the Respondent cites the decision of this `Tribunal' in Park Energy Pvt. Ltd. v. Syndicate Bank & Anr. 2020 SCC Online NCLAT 637, wherein at Paragraphs 12 & 29, it is observed as under: 12. "While referring to Section 7 of the IBC and also which has been interpreted by the Hon'ble Supreme Court in Innoventive Case (Supra) where it has been categorically held that default on the part of the Corporate Debtor sine qua non of an application under Section 7. 'Default' is defined in section 3 (12) as non-payment of debt when whole or any part of instalment of the amount of debt has become due and payable and is not paid by the debtor or the Corporate Debtor as the case may be. 29. We have carefully perused the record of the case, argument advanced on behalf of the parties and gone through the written submissions. Taking aforesaid facts and circumstances, we are of the view that Ld. Adjudicating Authority have failed to consider the letter dated 27.12.2018 filed before this Tribunal at Page No. 17 vide Diary No. 18698 dated 06.02.2020 whereby ....
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....ally allowed by the Ld. Adjudicating Authority. The Ld. Adjudicating Authority overlooked the facts and also Judgment of the Hon'ble Supreme Court in the case of Innoventive Industries Ltd. Vs. ICICI Bank & Anr. (2018) 1 SCC 407. In the face of ample and weighty evidence on record, it cannot be said that the Corporate Debtor is under no obligation to discharge its liability in respect of the 'Financial Debt' payable to the 'Financial Creditor' but the mere fact of debt being due and payable in law is not enough to justify initiation of Corporate Insolvency Resolution Process at the instance of Financial Creditor unless it establishes default on the part of the Corporate Debtor in regard to the debt. The onus of proof of default on the part of Corporate Debtor lies on the Financial Creditor and it has to demonstrate that default has occurred on account of failure on the part of Corporate Debtor to discharge its liability. In the instant case, Corporate Debtor has been subjected to restructuring of credit facilities and the operations of the bank account of the Corporate Debtor are regulated by the 'Punjab National Bank Consortium In....
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....accountable for default. In these circumstances, triggering of Corporate Insolvency Resolution Process at the instance of Respondent No. 1 is unwarranted. This is not the case where the Corporate Debtor is invoking Inter Creditor Agreement to wriggle out of its liability. The Corporate Debtor having performed his part of the contract by placing its entire collection in the Trust Retention Account (TRA) in accordance with the terms of the agreement cannot be said to be in default. Release of the amount due to Respondent No. 1 in terms of the 'Punjab National Bank Consortium Inter-se Agreement' read together with Trust Retention Account (TRA) Agreement is an in house contractual arrangement inter-se the Creditors for which the Corporate Debtor cannot be blamed. Initiation of Corporate Insolvency Resolution Process in the facts and circumstances, as noticed, cannot be appreciated as the same falls foul of the mandate of Section 7 of the I & B Code. Viewed thus, the impugned order cannot be supported. The Appeal, therefore, needs to be allowed." 55. The Learned Counsel for the Respondent, refers to the Judgment of this Tribunal, in Export Import Bank of India v. CHL....
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....sis at the instance of a party that real transaction is different. Such exercise may be possible in a suit when there is dispute regarding the real nature of transaction. This however, is not possible in summary proceeding under Insolvency and Bankruptcy Code, 2016, the main object of which is not recovery of money but to see if Resolution of a Corporate Debtor is necessary." 57. The Learned Counsel for the Respondent falls back upon the decision of the Hon'ble Supreme Court of India, in Radha Exports (India) Pvt. Ltd. V. K.P. Jayaram, reported in 2020 (10) SCC at Page 538, wherein at Paragraph 39, it is observed as under: 39. "There are, as observed above cogent records including letters signed by the Respondents 1 and 2 which evince that on 6-10-2007, Respondent2 resigned from the Board of the Appellant Company and at that time the Respondent2 requested the Appellant Company to treat the share application money of Rs.90,00,000 as share application money of Mr. M. Krishnan and to issue shares for aforesaid value to Mr. M. Krishnan. The amount was to be treated as a personal loan from Respondent2 to Mr. M. Krishnan. A personal Loan to a Promoter or a Director of a compa....
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.... It is relevantly pointed out that filing of an `Application' under Section 7 of the I & B Code, 2016, it to be considered by an `Adjudicating Authority', on its own merits, taking into consideration of the relevant materials on record. 64. Under the I & B Code, 2016, the `Shift' is from `inability to pay', to an `existence of Default'. Although, a `Debt', is disputed, if the `Sum' is `more than Rupees One Lakh', an `Application' under Section 7 of the Code, is `per se maintainable'. 65. In reality, the period of 14 days, which is permitted to an `Adjudicating Authority', to render a `Decision', is only `Directory' and not a `Mandatory' one. 66. A `Corporate Debtor', is entitled to point out that a `Default', had not occurred Viz., that `Debt', which may also include a `Disputed Claim', is not `Due'. A `Debt', may not be due, if it is `not payable in Law or Fact'. The `Adjudicating Authority', is not enjoined with any duty, to determine the `Sum of Default'. 67. It is to be remembered that in `Law', an `Adjudicating Authority' need not go into detail of `Fabrication' and `Forgery' of `Documents', for the purpose of consideration of an `Admission' of an `Application'. A ....
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.... a `copy of confirmation of `Deposits of Title Deeds' dated 21.05.2009, 07.01.2011, 20.03.2012 and 04.06.2015 from the Respondent / Corporate Debtor. Also, the `Appellant / Bank', had obtained the `Copy of Memorandum' confirming the extension of `Deposit of Title Deed' dated 06.01.2011, 19.03.2012, 29.03.2012, 25.03.2015. 72. The Respondent / Corporate Debtor had executed an `Agreement of Hypothecation of Goods & Assets in Form C.2 dated 21.05.2009' and further that a `Supplemental Agreement for Hypothecation of Goods & Assets' for increase in the overall limit in Form C.2-A dated 06.01.2011, 19.03.2012 and 25.03.2015 was also secured from the Respondent and copy of these were filed as `Exhibits' by the `Appellant / Bank', mentioning the same in the `Application', filed under Section 7 of the Code. Apart from these, the copies of Certificate of Registration of Charge, issued by the Registrar of Companies (along with relevant forms for creation of charge before the `RoC') was also annexed, as an `Exhibit', and the copies of `Valuation Report' in respect of the properties, mentioned in the `Application', were annexed as an `Exhibit' in the `Application'. 73. The Appellant / Ban....
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....pplicable to `Bills' drawn under Branches own `Letter of Credits'. Furthermore, the `Appellant / Bank', had charged Rs.4,24,634/- towards the LC Opening of Rs.7,68,57,500/-. On 20.02.2016, the Bank had also charged Rs.2,90,148/- on 25.02.2016 towards LC Opening of Rs.7,50,82,500/-. These aspects, were raised in the Counter Claim in OA No. 725 of 2018, on the file of the `Debts Recovery Tribunal'. 77. It is the specific plea of the Respondent that the Appellant / Bank, had failed to produce the `Sanction Letter' for the `Debt' of Rs.130.26 Crores, proof of execution of documents and the date of Disbursement for the said Sanction Amount. Further, the `Disputed Entries' in regard to the `Statement of Account', in which, certain `Illegal Debits', were made by the `Bank's Officers', cannot be construed as `Financial Debt', as per `Law'. 78. The Respondent takes a stand that the `essential ingredients of Insolvency', do not attract the `Appellant / Bank', to file an `Application', under Section 7 of the Code, since, the `Valuation' of Corporate Debtor's Assets were adequate to discharge the `Alleged Debts' in the event of Appellant / Petitioner / Financial Creditor / Bank succeeded....
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....rocess', since it had indulged in misuse and abuse of different `Judicial Forums'. 83. The Appellant / Bank in its `Rejoinder' dated 13.04.2021 (in CA AT INS No. 80 of 2021 (TA No. 38 of 2021), had mentioned that the Respondent had addressed numerous communications pursuant to the `Sanction' / `Grant of Credit Facilities' dated 05.10.2016 and in fact, a `Letter of Credit' is an unconditional promise to pay the `Beneficiary' of the `Respondent'. Furthermore, the Respondent had availed the `Facilities / LC' to be honoured by the Appellant / Bank, on the due dates unconditionally, and therefore, it is not open to the Respondent to take a contra position that the said `Letter of Credits', were not availed by it. Moreover, the specific Counter Signature along with Company Seal of the Respondent on each of the covering `Schedule of the Bill Lodgement', was made by the Respondent', and as such, the plea of the Respondent that `Letter of Credits' were not countersigned by the `Authorised Person' of the `Respondent / Corporate Debtor', is an `incorrect' and `baseless' one. 84. To fortify the stand of the Appellant / Bank that LCs' availed by the Respondent before 07.10.2016 were all h....
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....r. D.C. Mohan, `Bank Director' of the `Respondent / Corporate Debtor / Company' was authorised to sign and execute the following documents, in connection with the `utilisation of LC Limit sanctioned', by State Bank of India, Bangalore City Branch, J.C. Road, Bangalore - 560002: (a) Letter / Application / Bond paper for opening of LC in favour of Suppliers and Acceptance of B/E etc. (b) Periodical Stock / Receivables statements as required by the Bank. (c) Regular Correspondence with the bank to know the Balances, seek Clarification. 88. A perusal of the contents of Letter dated 07.10.2016, addressed by the `Respondent / Corporate Debtor', to the State Bank of India, Bangalore, on the subject `Statement of Hypothecated Assets as on 30.09.2016' (Ref: Our CC A/c No. 30770234121 - CIF 85442690612), indicates that the `Authorised Signatory' of the Respondent / Corporate Debtor, had mentioned that the following documents were enclosed: 1 Statement of Hypothecated Assets as on 30.09.2016 2 Closing Stock Statement as on 30.09.2016 3 Sundry Debtors Invoices Outstanding Statement as on 30.09.2016 4 Sundry Creditors Invoices Outstanding St....
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....it Facility, BIEIL Letter dated 05.03.2016 and your reply dated 5/10/2016 (ii) SBI Life BIEIL Letter dated 05.04.2016 (iii) Excess debit of LC charges BIEIL Letter dated 28.02.2014 (iv) Wrong debit on our account as OD penalty, letter dated 7.4.2016 and 1.6.2016, had among other things mentioned that `..... we are surprised to see the bank is demoralising our business by putting all new clauses as stated in your letter dated 5.10.2016, which makes it highly impossible for us to conduct the business. We understand that the bank may have had bitter experiences with a few clients, but by controlling good clients account with these kind of impractical conditions the business cannot run smooth. We finally try to bring to your notice that we have an extremely good track record in the bank and we have a self financial disciplines and the same is proved from the last 7-8 years. We proudly say there is not even a single day delay in the interest payments or the LC payments or any charges of the bank. After having around 500 crores of LC transactions and 850 + crore turnover, not even a single devolvement has occurred in the past 7-8 years, that is from the first date of operation. We reques....
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.... 21.05.2019, stating that the `Sanction Amount', was `Rs.20 Crores', `Principal Outstanding' is `ZERO' and `Interest Outstanding' is `ZERO', but the `Total Outstanding Amount' shows that Rs.113,37,61,348/- and the `Amount Overdue', was Rs.93,37,61,348/-. 96. In this connection, the plea of the Respondent / Corporate Debtor is that, the `Debt' of the `Appellant / Bank', is disputed, and in the objections of the Respondent dated 08.04.2021, it was mentioned that `the company has cleared the entire CC and LC facilities as on 07.10.2016 itself and requested the bank to transfer its account to SIB. Thereafter, the company has not obtained any CC or LC facilities from the bank'. Hence, there is `no debt or default exists in the company's account as alleged by the bank'. 97. In short, the stand of the Respondent /Corporate Debtor is that there is no `Legally Recoverable Debt', in the Account of the Respondent / Company. 98. The Respondent / Corporate Debtor in its `Objections', before this `Tribunal', in the instant CA (AT) (CH) (INS) No. 80 of 2021, had inter alia observed that the `Appellant / Bank', has not produced cogent, corroborative and substantial evidence as per `Law', ....
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....Letter' of the `Appellant / Bank', was issued to the Respondent / Corporate Debtor, in respect of the Credit Facilities, wherein, it was mentioned that the `Existing Limit Total (FB + NFB)' Existing as Rs.9000.00 Lakhs and the Proposed was Rs.15722.00 Lakhs. The Sanction of this `Credit Facility' is subject to the terms and conditions mentioned in the Letter dated 23.03.2015 of the Bank. A `Supplemental Agreement' dated 25.03.2015, was executed by the Respondent / Corporate Debtor and the Appellant / Bank for an increase in Overall Limit. 105. The Appellant / Bank through its Asst. General Manager, had addressed a Letter dated 05.10.2016, in which, it was mentioned that the `Competent Authority' had accorded `Sanction / Approval', as under: "(a) Continuation of fund based working capital limits (FBWC - CC) of Rs.20.00 crores and non fund based working capital limits (NFB LC) of Rs.110.00 crores at the existing levels till 31.10.2016; (b) Cancellation of existing FBWC (EPC/FBD) limits of Rs.20.00 crores; (c) Sanction of a FBWC (EPC/FBD) limits of Rs.3.00 crores as a sub limit of FBWC (CC) limit; (d) Continuation of NFBWC limit (Foreign LC) of R....
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.... on 18.05.2018 was mentioned as Rs.134,06,06,749/- plus Interest and Expenses from 19.05.2018. 111. It transpires that the Appellant / Bank, had issued a Section 13 (4) Notice dated 05.11.2016, under the SARFAESI Act, 2002, seeking Possession of Properties, mortgaged to the Bank, detailed in the Schedule given. 112. A perusal of the Paragraph 33 of the `impugned order' dated 22.12.2020 in CP(IB) No. 112/BB/2019, passed by the `Adjudicating Authority', (`National Company Law Tribunal', Bengaluru Bench), indicates that because of the contra stand taken by the two sides, the `Adjudicating Authority', had opined that the `Determination of the nature of the Entries, would require matching of the Bills raised by the Financial Creditor (Appellant / Bank) on account of LCs Facilities, with the Entries appearing in the `Corporate Debtor's CC Account', maintained in the `Bank', etc.'. 113. The `Adjudicating Authority' at Paragraph 34 of the `impugned order', in CP (IB) No. 112/BB/2019, had proceeded to observe that the `Debt, claimed by the `Financial Creditor', itself, is more than the LC Limit' and this needs to be examined and reconciled. 114. Significantly, the `Adjudicating ....
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....etition No. 852 of 2019, Criminal Petition No.1573 of 2019, Criminal Petition No.3014 of 2019, CC 1863 of 2019, Crime No.185 of 2018, Counter Claim OA No. 725 of 2018, SA 444 of 2018, before the DRT, Bangalore, FIR No. CBI/BSFB BLR/10/2019, before the CBI Court, WP No.5711 of 2020 for determination concerning `alleged debt', `defaults', `wrong debits', `siphoning off money', `forgery' and `fraud', etc., against the concerned, the Section 7 Application of the I & B Code in CP(IB) No.112/BB/2019, on the file of the `Adjudicating Authority', cannot be dismissed on the ground there exists a `Dispute' in the amount of Debt, between the Parties, as opined by this `Tribunal'. 118. It is to be remembered that the `Right' to `Apply' under Section 7 of the I & B Code, 2016, accrues to the Bank when the I & B Code, 2016, came to force. The amounts borrowed by the Respondent / Corporate Debtor from the Appellant / Bank is a undoubtedly a `Debt' due and payable in fact and in `Law'. 119. The pendency of proceedings before the Debts Recovery Tribunal in `Law', is not a `Bar' for the `Petitioner / Financial Creditor / Bank to initiate Corporate Insolvency Resolution Process against the Resp....
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....ellant / Bank / Financial Creditor to reconcile `Entry by Entry', the Accounts maintained by it, with the `bills raised'/`transactions' undertaken, in respect of all the Working Capital Facilities, provided to the Corporate Debtor, etc., which are beyond the Power and Jurisdiction of the `Adjudicating Authority'. 125. On going through the `impugned order', passed by the `Adjudicating Authority' dated 12.02.2020, (NCLT, Bengaluru Bench) in CP (IB) No. 112 / BB/2019, this `Tribunal', is of the cocksure opinion that the `Adjudicating Authority', had committed an `error', in traversing upon the merits of the matter and he is not supposed to examine / go into the each and every aspects of the `Default', much less in issuing directions to the Parties to `Reconcile' / `Scrutinise' the `Default', with reference to `Entry by Entry' with the Accounts, maintained by the `Appellant / Bank', with the `Bills raised / Transaction undertaken, in respect of all the `Working Capital Facilities', provided to the `Respondent / Corporate Debtor'. 126. In so far as the plea of the Respondent / Corporate Debtor that `Letters of Credits' were not countersigned, this `Tribunal', points out that on ea....