TaxTMI 
TaxTMI 
2017 (6) TMI 1400
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....tion of repayment of due outstanding against the principal debtor, this financial creditor, by filing this Petition, sought for initiation of Insolvency Resolution process against this Corporate Debtor. The Applicant Bank claim against the corporate debtor as on 31.01.2017 is USD 17,122,179, this computation has been shown in Exhibits 17 & 18 of the Company Petition. Brief facts of the case: 2. This principal borrower (RPML) has been incorporated in the year 2008 as wholly owned subsidiary of this Corporate Debtor in Mauritius. At all points of time, the directors of its holding company i.e., Corporate Debtor, have remained as directors of this principal borrower. One Mr. Yudishthir D. Khataw and Mr. Sumegh Mody remained as directors of this principal borrower and this corporate debtor as well; this fact has not been disputed by this corporate debtor. This principal borrower, to acquire shares of its group Indian company namely Varun Shipping Company Limited (VSCL), availed USD 30 million loan from this Mauritius Bank situated in Mauritius Country by entering into Facility Agreement dated 2.12.2008. This Corporate Debtor Company, being holding company of RPML, executed corporate ....
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.... debtor), the holding company. By looking at the Annual Report of the Corporate Debtor for the period of 15 months ended 30th June 2009, it has been reflected under the head of contingent liabilities as follows: "Contingent Liabilities; Contingent liabilities are not provided for and are disclosed by way of notes. (a)................... (b)................... (c)................... (d) Since the net worth of subsidiary company (RPML) is eroded, the company has agreed to provide financial support to the subsidiary to meet its debts and liabilities as to continue it as a going concern." 4. When RPML again defaulted in repayment of its outstanding dues to the creditor, the creditor sent a demand notice dated 20.3.2015 to the RPML. On having RPML failed to honour its obligation in discharging its liability, the creditor this time issued notice to the debtor company on 27.5.2016 setting out that the debt has become crystallised against the guarantor/Corporate debtor for RPML defaulted in repayment of the debt. 5. As RPML defaulted in making repayment, the creditor filed a suit against RPML on 19.11.2015 before the Supreme Court of Mauritius, Commercial Division for a sum o....
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.... guarantee to around 60 crores which is four times to the net worth of the company, but not for USD 30 million (150 crores). iii. Upon the inquires of the debtor, for it has been learnt that its Dealer Bank i.e., Bank of Baroda has not forwarded the guarantee agreement copy to RBI as required under law, the approval for RBI not being granted, this Corporate Guarantee for FDI without intimation to RBI is invalid and not enforceable in the eye of law. iv. The debtor says that this petitioner instead of electing a forum to proceed against this debtor, it had first obtained decree against RPML, then a suit against this debtor on the same debt before Supreme Court of Mauritius, while the said suit pending there, this Petitioner now finally landed up before this forum, where consequences of its order are harsh with drastic implications. v. The Debtor says since this guarantee agreement is unstamped, according to Section 3(b) of Maharashtra Stamp Act (MSA), this instrument being chargeable, this court can't even look into this document for any purpose whatsoever (section 35 of Stamp Act 1899/section 34 of MSA) unless and until it fulfills impounding as required under Section 33 ....
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....s is secured by a guarantee provided by the Indian parent entity, the same is the thing happened here. 10. As to second objection that Corporate Guarantee is not valid for want of RBI approval is concerned, the Corporate Debtor submits even by assuming this Agreement has been executed by the Corporate Debtor, this agreement has to fail on two counts, one - no post facto approval in principle from RBI is not present, two - the guarantee given by the Corporate Debtor is for 150 crores which is more than 400% to the net worth of corporate debtor company as on the date of Corporate Guarantee given, which is not permissible under RBI circular, because RBI Circular envisages that no Indian company should give a guarantee to FDI investment exceeding four times to the net worth of the Guarantor company. Since this Corporate Debtor net worth as on the date of execution of agreement, it was only 15 crores therefore, this company could not give guarantee for more than 60 crores, but here the guarantee was given for a loan of USD 30 million equivalent to 150 crores in Indian Currency. 11. The basic thing that one should not get lost sight of the fact is that a wrong doer should not take adva....
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....ulation, mere irregularity per se will not make an act illegal. 12. Another objection raised by the Corporate Debtor is that since the applicant obtained decree against the principal borrower and filed a civil suit against this Corporate Debtor before Mauritius Supreme Court claiming recovery of the same debt for RPML failed to discharge its obligations, this Applicant should not now elect to proceed before this Bench after having already tried its luck before Mauritius Court against the principal borrower, thereafter against this Corporate Debtor. 13. As to this objection, if we look into Section 5 sub-Section 8 of the Insolvency & Bankruptcy Code, it is ascertainable that the clause (i) of Sub-Section 8 says that the amount of any liability in respect of the guarantee given for the credit facility availed by the principal borrower will fall within the definition of Financial Debt, therefore, this applicant is entitled to proceed against the guarantor because this Code mandated that the liability against the guarantee will also amount to financial debt. As to proceedings u/s. 7 of the Code, the dispute pending in relation to the claim amount before any other forum will not becom....
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....and notice dated 20.03.2015 to RPML informing the loan account has been in arrears from 30.8.2013, the total due outstanding as on 19th March 2015 was USD13, 730, 046.19 in principal and interests and to pay immediately or else legal action would follow. 16. To prove that the corporate debtor has also failed to discharge its obligation to clear the debt outstanding on default of repayment by the principal borrower, the applicant placed a notice dated 27.05.2016 to this corporate debtor informing RPML having failed to comply with its payment obligations, this debtor, being a guarantor, is liable and indebted towards the financial creditor for an amount of USD 15,686,146 outstanding, unless the above amount mentioned is paid within 30 days, the Creditor would have no alternative than to initiate legal proceedings against this Corporate Debtor, then a decree against RPML from Mauritius Court and pendency of suit against this Corporate debtor before Mauritius Court, and other documents supporting execution of corporate guarantee and the consent letter from the Insolvency Resolution Professional, by looking at this material, we are of the view that it is more than sufficient to believe....
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....Ltd. v. Deleep Construction Co. (1969) 1 SCC 597 to say that The Stamp Act is a fiscal measure enacted to secure revenue for the State on certain classes of instruments: it is not enacted to arm a litigant with a weapon of technicality to meet the case of the opponent. 21. The applicant counsel differentiated the case in between Avinash Kumar Chauhan v. Vijay Kumar Mishra 2009 (2) SCC 532 saying that under section 33 of Maharashtra Stamp Act, court is required to impound a bilateral document here the corporate debtor is a sole executant, unilateral execution, therefore even assuming this document requires to be stamped by the sole executant, i.e., the corporate debtor, not the creditor. 22. If at all this Bench has not admitted this company petition, then there is every likelihood diminution of the value of the corporate debtor company if initiation of Insolvency Resolution process is prevaricated. Since it is a known fact that unless and until the moratorium is declared, the corporate debtor company is at free to alienate the assets of the company or to dilute the assets of the company, since it is not in doubt that the corporate debtor executed guarantee agreement we don't ....