2024 (6) TMI 670

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.... of the present case. 4. Dr. Abhishek Manu Singhvi, learned Senior Counsel appearing for the petitioners, submits that the company is undergoing Corporate Insolvency Resolution Process ("CIRP") under the provisions of the Insolvency and Bankruptcy Code, 2016 ("IBC"). It is submitted that the impugned SCN has been issued by the respondent-bank, which is one of the members of the consortium banks, who have advanced loan to the company, which has a mere 2.47% stake in the consortium. The said action of the respondent-bank is merely to create deliberate hurdles, and scuttle the process of resolution/assignment in the loan account of the company. 5. It is submitted that the entire consortium of eleven banks, including the respondent-bank, had agreed for assignment of debt of the company to National Asset Reconstruction Company Limited ("NARCL"), which is an asset reconstruction company, owned and controlled by the Government of India. Further, the formalities, pertaining to assignment of debt to NARCL, are already in final stages. 6. Learned Senior Counsel for the petitioners draws the attention of this Court to the Minutes of the Meeting of the consortium held on 24th March, 2....

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....so acknowledged/accounted by stock auditors in their report of May 2023 (Ram Vijay and co)" Company was already doing a lot of R&D since last 1-2 years to minimize the loss and found that Linoleic Acid which can be used as input for CIS production can be extracted from Almond oil and can effectively be utilized/value can be recovered in chemical division of the Company. Accordingly, out of the total damaged Almond stock of Rs. 1500Cr. App. which was certified not edible and not fit for human consumption was mostly recovered in the form of CIS-3 WIP approximately Rs. 1300 Cr. and hence the loss was minimized. The same is also computed in the DP calculation sheet of stock audit report of May 2023. xxx xxx xxx" 9. Learned Senior Counsel has also relied upon the Techno Economic Viability Study Report dated 24th August, 2023, pertaining to the Restructuring Proposal of the company, relevant portion of which, reads as under: "xxx xxx xxx Economic Viability Thus Techno-economic viability of the project will majorly depend on, ⎯ Company's ability to store the CIS-WIP in suitable form so that it can be used in the futur....

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....closure of forensic audit Under consideration 7 SBI 56.30 3.10% Not Agreeable Not Applicable (member bank has expressed unwillingness for restructuring) 8 Central Bank 47.35 2.60% Agreed for re-structuring in line with the Lead Bank Under consideration 9 BOB 78.61 4.32% Agreed for re-structuring in line with the Lead Bank Under consideration 10 Indian Bank 44.95 2.47% Not Agreeable Not Applicable (member bank has expressed unwillingness for restructuring) 11 IDBI Bank 12.36 0.68% Not Agreeable Not Applicable (member bank has expressed unwillingness for restructuring)   Total 1,818.85 100.00%     xxx xxx xxx" 11. Learned Senior Counsel also relies upon the Forensic Audit Report with respect to account of the company, wherein, it has been held as follows: "xxx xxx xxx Hence, no case of diversion or siphoning of bank funds has been observed. THEREFORE, THE INSTANT CASE IS NOT A CASE OF FRAUD. xxx xxx xxx" 12. Learned Senior Counsel also relies upon the Joint Lenders Meeting ("JLM") held on 29th January, 2024, wherein, a....

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.... consent and they have been opposing restructuring. The Corporate Debtor is a going concern. xxx xxx xxx 8. Both the Learned Counsel for the parties have made respective submissions in support of their claim. From the facts which have been brought on record, it does appear that the majority of lenders having more than 90% share in the lending have expressed their agreement on for restructuring of the debt which could not be accomplished due to credit rating of the Corporate Debtor which is R5. We also notice that the High Court of Delhi on 16.01.2024 has already passed an order to the credit rating agency to have a relook at CRA Rating of RPF in view of inputs given by the lead bank which process is still on way. The minutes of meeting dated 29.01.2024 of joint lenders clearly minutes following decision:- "all the member banks unanimously give their mandate to lead bank for in-principle transferring the account to NARCL." xxx xxx xxx" (Emphasis Supplied) 15. Learned Senior Counsel for the petitioners also relies upon the E-mail dated 17th May, 2024, issued by NARCL to the lead bank, which reads as under: "xxx xxx xxx ....

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....tive that all the underlying documents, which form the basis of a SCN, are supplied to the noticee. Thus, Supreme Court in the case of State Bank of India and Ors. versus Rajesh Agarwal and Ors., (2023) 6 SCC 1, has held as follows: "xxx xxx xxx 36. We need to bear in mind that the principles of natural justice are not mere legal formalities. They constitute substantive obligations that need to be followed by decision-making and adjudicating authorities. The principles of natural justice act as a guarantee against arbitrary action, both in terms of procedure and substance, by judicial, quasi-judicial, and administrative authorities. Two fundamental principles of natural justice are entrenched in Indian jurisprudence : (i) nemo judex in causa sua, which means that no person should be a Judge in their own cause; and (ii) audi alteram partem, which means that a person affected by administrative, judicial or quasi-judicial action must be heard before a decision is taken. The courts generally favour interpretation of a statutory provision consistent with the principles of natural justice because it is presumed that the statutory authorities do not intend to contravene ....

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....8 : 1985 SCC (L&S) 672] , this Court explained the wide amplitude of audi alteram partem : (SCC p. 476, para 96) "96. The rule of natural justice with which we are concerned in these appeals and writ petitions, namely, the audi alteram partem rule, in its fullest amplitude means that a person against whom an order to his prejudice may be passed should be informed of the allegations and charges against him, be given an opportunity of submitting his explanation thereto, have the right to know the evidence, both oral or documentary, by which the matter is proposed to be decided against him, and to inspect the documents which are relied upon for the purpose of being used against him, to have the witnesses who are to give evidence against him examined in his presence and have the right to cross-examine them, and to lead his own evidence, both oral and documentary, in his defence. The process of a fair hearing need not, however, conform to the judicial process in a court of law, because judicial adjudication of causes involves a number of technical rules of procedure and evidence which are unnecessary and not required for the purpose of a fair hearing within the meaning of audi ....