TaxTMI 
TaxTMI 
2022 (11) TMI 1401
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....ture Limited (for brevity 'Corporate Debtor') for default in repaying an amount of Rs.646,38,06,271.00 (Indian Rupees Six Hundred Forty Six Crores Thirty Eight Lakhs Six Thousand Two Hundred Seventy One only), as on 01.07.2011. Simultaneously, the Respondent filed IA/677/2020 on 21.02.2020, seeking to dismiss the CP(IB)/4541(MB)/2019 for lack of authorisation in favour of the authorised signatory of the Petitioner. 2. On perusal of the IA/677/2020 and CP(IB)-4541(MB)/2019, it reveals that the amount outstanding pertains to loans sanctioned and disbursed to two entities namely GTL Infrastructure Limited and Chennai Network Infrastructure Limited. Further, by way of a scheme of amalgamation sanctioned by this Tribunal on 22.12.2017, Chennai Network Infrastructure Limited was merged into GTL Infrastructure Limited and all its debts, liabilities and obligations are now transferred to the Corporate Debtor. Further, the Corporate Debtor failed to pay the dues. The Lenders of the Corporate Debtor decided to refer the debt of Corporate Debtor to the CDR Cell for Corporate Debt Restructuring (CDR) in 2011. During CDR, the Corporate Debtor repaid INR 6,469 crores to the Lenders but on ....
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....was dismissed by this Tribunal in view of the Hon'ble Supreme Court judgement dated 02.04.2019 in Dharani sugars & Chemicals Ltd. Vs Union of India (2019) 5 SCC 480. Furthermore, the Petitioner filed another Petition under Section 7 of IBC, 2016, which is before us for our perusal wherein the Petitioner prays for initiation CIRP against the Corporate Debtor. The Financial Creditor has submitted that the Corporate Debtor has been availing financial facilities from the Financial creditor since around past ten years. At the request of the Corporate Debtor, various financial facilities were sanctioned to the Corporate Debtor. The said facilities were secured by Mortgage and hypothecation of assets and the charge was duly filed with the concerned Registrar of Companies. The Corporate Debtor has mortgaged its properties by way of Indenture of Mortgage. Further, the Corporate Debtor has acknowledged that such financial facilities were availed and confirms the execution of Documents and liabilities from time to time. The Corporate Debtor by its Acknowledgement of Debt and security dated 02.07.2016 has confirmed the availing of facilities, execution of security documents and balance outs....
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....presentative". Entry 5 8b 6 (Part I) of Form No. 1 mandates the 'Financial Creditor' to submit "name and address of the person authorised to submit application on its behalf. The authorization letter is to be enclosed. The signature block of the aforementioned Form 1 also provides for the authorised person's detail is to be inserted and also includes inter alia the position of the authorised person in relation to the 'Financial Creditor'. Thus, it is clear that only an "authorised person" as distinct from "Power of Attorney Holder" can make an application under section 7 and required to state his position in relation to "Financial Creditor". 37. The 'I&B Code' is a complete Code by itself. The provision of the Power of Attorney Act, 1882 cannot override the specific provision of a statute which requires that a particular act should be done by a person in the manner as prescribed thereunder. 38. Therefore, we hold that a 'Power of Attorney Holder' is not competent to file an application on behalf of a 'Financial Creditor' or 'Operational Creditor' or 'Corporate Applicant'." Further in view of the above judicial precedent, the Respondent submits that it is unequi....
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....ation of value; and (b) resolution of the Corporate Debtor. In the peculiar facts of the present case, maximization of value and resolution is possible only outside IBC. In light of the Hon'ble Supreme Court's judgment in Vidarbha Industries Power Ltd. v. Axis Bank [2022 SCC Online SC 841] this Hon'ble Tribunal is bound to exercise its discretion to consider these relevant factors while admitting or rejecting a petition. Further, the Corporate Debtor has submitted that the obligation to sell the equity to new promoter was of the lenders / banks and not Corporate Debtor (clause No. 3 (xiii) of SDR Guidelines). The Corporate Debtor never prevented the lenders from finding a new investor - and on the contrary, the Corporate Debtor provided every possible assistance. The Corporate Debtor has further submitted that the failure of lenders to sell the shares held by them in the Corporate Debtor before the expiry of the standstill period cannot and does not amount to a default/EOD or a breach by Corporate Debtor under any law or contractual provision between the Petitioner and the Corporate Debt. Moreover, the Petitioner has incorrectly equated a requirement of RBI to retrospect....
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.... demonstrates that IBC was the sole and only objective of the Petitioner. iv. The Petitioner participated in the process of assignment of the Corporate Debtor's debt to the ARC Consortium right from January, 2018 until June 2018. It was as per the request of the Petitioner that the cash component of the sale consideration in the said transaction was increased from 50% to 51%. On June 27 2018, the Petitioner suddenly and arbitrarily sought to recover the so-called dues on the basis of a totally concocted default. However, even at this stage the Petitioner never objected to the assignment of debt to the EARC Consortium. Even on July 13, 2018 when the lenders accepted the bid offer of the EARC Consortium, the Petitioner did not object. It is only on August 3, 2018 that the Petitioner suddenly and arbitrarily objected to the assignment in the guise of seeking clarifications from Union Bank of India on the assignment of debt to the EARC Consortium. v. Even though more than 79% (by value of debt) of the lenders of the Corporate Debtor not only agreed but actually transferred the debt of the Corporate Debtor to EARC Consortium, the Petitioner which had participated a....
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....at between 2011 and August 2018, the Corporate Debtor has repaid an amount of INR 16,915 Crores. Further submitted that the bank balance of the Corporate Debtor as on July 31, 2022 was INR 394.14 Crores and the EBITDA of the Corporate Debtor as on March 31, 2022 was INR 233.49 Crores. The Counsel for the Corporate Debtor has also submitted that the petitioner has claimed an amount of approx. INR 646.38 crores in the present petition. But, as per the Corporate Debtor, the debt of the Petitioner stands at INR 212,50,78,149 (Rupees Two Hundred and Twelve Crores Fifty Lakhs Seventy-Eight Thousand One Hundred and Forty-Nine Only) amounting to 6.56% of the total debt of the Corporate Debtor. After relying on this, the Counsel further argued that the current financial position which reflects healthy cash flows of the Corporate Debtor's business as on March 31, 2022. The Petitioner's debt can be repaid without undergoing the CIRP. Moreover, the Counsel for the Corporate Debtor has submitted that the Corporate Debtor is in the business of providing passive telecom infrastructure (like mobile towers and associated infrastructure) to the telecom operators like Reliance Jio, Airtel, BSNL etc. ....
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.... lenders converted debt into equity as part of the CDR and SDR schemes on the assumption that the haircuts availed during these restructurings could be recovered through equity upside. This has been expressly acknowledged by the lenders themselves and in fact was the basis of the assignment of the debt to the EARC Consortium. Therefore, these are not ordinary equity holders who can be made to forsake all amounts as per the provisions of the IBC. Further, the closing price of share of the Corporate Debtor on October 10, 2022 on BSE and NSE is INR 1.41 and INR 1.40 respectively and the lenders would receive approximately INR 760 - 765 Crores in case of sale in open market as on date. Further, the Corporate Debtor has claims aggregating to INR 13393.83 crores against Aircel entities. INR 800 Cr. to INR 900 Cr. has been directed to be paid to the Corporate Debtor by this Tribunal towards payment of ground rent and security charges for the CIRP. The matter is currently in appeal pending before the NCLAT / SC. The ratio of Vidarbha Industries is squarely applicable to the present case. Further, Corporate Debtor has to recover following amounts in pending arbitrations against: Tata Tel....
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....unt all relevant facts and circumstances, including the overall financial health and viability of the Corporate Debtor. The Adjudicating Authority may in its discretion not admit the application of a Financial Creditor. "80. ...In the case of a financial debt, there is a little more flexibility. The Adjudicating Authority (NCLT) has been conferred the discretion to admit the application of the Financial Creditor. If facts and circumstances so warrant, the Adjudicating Authority can keep the admission in abeyance or even reject the application. Of course, in case of rejection of an application, the Financial Creditor is not denuded of the right to apply afresh for initiation of CIRP, if its dues continue to remain unpaid." "82. The title "Insolvency and Bankruptcy Code" makes it amply clear that the statute deals with and/or tackles insolvency and bankruptcy. It is certainly not the object of the IBC to penalize solvent companies, temporarily defaulting in repayment of its financial debts, by initiation of CIRP. Section 7(5) (a) of the IBC, therefore, confers discretionary power on the Adjudicating Authority (NCLT) to admit an application of a Financial Creditor un....
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....ble to the present case. 10. From a plain reading of the Judgement in Vidarbha Industries Power Limited Vs. Axis Bank Limited, we are of the opinion that it can be concluded that - (a) existence of debt and default are not the only criteria in deciding an Application under Section 7 of the IBC; (b) this Tribunal has the discretion to reject an Application under Section 7 of the IBC even if the existence of debt and default is established; (c) such discretion has to be exercised taking into consideration the circumstances like viability of the corporate debtor under the existing management, feasibility of initiation of the CIRP and overall financial health of the Corporate Debtor. Further, if the outstanding receivables under the pending or concluded litigations are more than the debt claimed in the application under Section 7 of the IBC, such an application can also be rejected. 11. After hearing both the parties and on perusal of the IA/677/2020 and CP(IB)4541(MB)/2019 including other material on record and the Judgement of Hon'ble Supreme Court in Vidarbha Industries (Supra), we are of the view that the Corporate Debtor has monthly revenues of INR....