TaxTMI 
TaxTMI 
2024 (10) TMI 462
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....nal, Mumbai Bench, Court-III ('Adjudicating Authority') in C.P. (IB) No. 3650/MB/2018 whereby Section 7 application initiated by the Bank of Maharashtra ('Financial Creditor') for Rs. 24,24,42,995/- has been admitted. 2. Mr. Harshad Shamkant Deshpande was appointed as Resolution Professional vide Impugned Order dated 02.03.2022 who is Respondent No. 1 herein, Bank of Maharashtra the Financial Creditor is the Respondent No. 2 and Transport Solution Private Limited ('Corporate Debtor') is Respondent No. 3 herein. 3. Heard the Counsel for the Parties and perused the records made available including the cited judgements. 4. It is the case of the Appellant that in March, 2013 the Corporate Debtor availed cash credit facility of Rs. 20 Crores from the Respondent No. 2 and Corporate Debtor was servicing regular financial debt till March, 2015. The Appellant alleged that on 01.04.2015, the Respondent No. 2, made drawing power of the Corporate Debtor as 'zero' without giving any reason. The Appellant further alleged that the Respondent No. 2 did not follow RBI Guidelines with only intention to put the Corporate Debtor into CIRP. 5. The Appellant brought out that on 01.07.2015, f....
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....ent No. 2. The Corporate Debtor submitted that the account was illegally declared as NPA by the Respondent No. 2 without following RBI Guidelines. 10. The Appellant brought out that on 23.02.2019, the Respondent No. 2 issued the OTS approval letter under Mahariyayat OTS Scheme but unilaterally increased the amount of OTS from Rs. 12 to Rs. 14 Crores which was opposed by the Corporate Debtor and wanted the Respondent No. 2 to refund money paid by the Corporate Debtor. However, no action was taken by the Respondent No. 2. 11. The Appellant assailed the Impugned Order which ignored vital facts of the case, genuine intentions of the Corporate Debtor and initiated CIRP proceedings against the Corporate Debtor vide Impugned Order dated 02.03.2022. The Appellant pointed out that no date of default has been mentioned in part IV of the application filed under Section 7 and as such on this account only, the Impugned Order need to be rejected. 12. The Appellant brought out that the NPA date has been shown as 18.05.2015, however, on this date, the account was standard account. The Appellant reiterated that his sanction limit was Rs. 20 Crores and stated that the account could have bee....
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.... account of Rs. 20 Crores sanctioned on 15.03.2013 has already become over due for review/ renewal for which despite official communication by the Respondent No. 2 to the Corporate Debtor no request has been received from the Corporate Debtor. 20. The Respondent No. 2 also brought to the notice of this Appellate Tribunal that in the letter dated 21.08.2014, major irregularities noticed by the Respondent No. 2 were brought to the notice of the Corporate Debtor namely, 1.) Non-Execution of registered mortgage of the Properties. i.e. property comprising Land, Building, Plant & Machinery at S. No. 170, Plot NO. D-1, Chakan-Telegaon Highway, Khalunmber, Chakan-MIDC, Pune, 2.) Non - Registering charge of mortgage with ROC and 3.) Non-Submission of Tripartite agreement with MIDC. 21. The Respondent No. 2 bank brought out that despite their best efforts, the Corporate Debtor failed to adhere to the terms and conditions of financial facilities and did not pay the interest on time which became over due and therefore, the Respondent No. 2 had to declare the account of Corporate Debtor as NPA in accordance with then prevalent RBI Guidelines dated 18.05.2015 and subsequent to which the Re....
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....time asked by the Corporate Debtor as the OTS Scheme expired at the end of the financial year i.e., 31.03.2018. 26. The Respondent No. 2 bank submitted that despite filing the Section 7 Application before the Adjudicating Authority, the Respondent No. 2, in order to provide one last opportunity to the Corporate Debtor, approached the Corporate Debtor and sent letter dated 29.10.2018 to the Corporate Debtor stating that once the Appellant conveys his willingness along with a deposit of 10% of the OTS amount, the sanction letter will be issued and the OTS amount was to be paid before the end of the financial year i.e., 31.03. 2019, which the Corporate Debtor failed to do with regard. 27. The Respondent No. 2 concluded his pleadings with request to this Appellate Tribunal to dismiss the appeal with exemplary costs. Findings 28. We note that cash credit facilities were sanctioned in favour of to the Corporate Debtor in 2013 and loan documents were executed by the Corporate Debtor through its erstwhile directors in order to secure those facilities which proves of the financial debt. The said financial facilities were required to be renewed yearly as per sanction letter. We a....
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....RBPF Base Rate+3.50% at present 13.75%p.a with monthly rest Within a year Review Within a year Interchangeability In additional to the sub limit of Rs.7.50crore (mentioned below), there would be interchangeability (One way) of Rs.5.00crore by Working Capital limit, which may allow Company to avail LC/BG facility of Rs.12.50 crore within the CC limit of Rs.20.00crore Facility Letter of Credit cum Bank Guarantee (Inland/Import) (Sub limit) Limit Rs.7.50crore from total CC limit of Rs.20.00crore Purpose Procurement of raw materials Terms DA/DP basis (90days) Margin Cash margin at 10% in the form of Term deposits Security Primary: Hypothecation of goods purchased under LC-Counter Guarantee by the Company Processing Fees & Other charges As per HO guidelines with 75% concession in applicable fee Commission As per HO guidelines to be recovered upfront Review Within a year Concession in ROI & LC/BG commission subject to approval from H.O. (Total drawing under CC including sub limit proposed for LC/BG sublimit and interchangeability as above not to exceed Rs.20.00crore at any time including the ....
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....lassification of book debts duly certified by Charted Accountant shall be submitted once in six months. 5.All the Current Assets of the unit will be verified and valued by an External Auditors to be appointed by the Bank on half yearly basis and the fees of such auditor/valuer shall be borne by the client. This is in addition to the verification that may be carried out by the Bank Officials from lime to lime. 6.The sanction for CC limit is valid for one year. The limit should be got reviewed before completion of one year. The sanctioning authority of existing facilities on being satisfied about the genuineness of the request may allow extension maximum 3 months from the duedate of review pending regular review/renewal with specific stipulation that the borrower shall submit proposal on full review based on audited financial statement before the expiry of this extension (else 1% extra interest will be charged). (Emphasis Supplied) 31. From the above sanctioned letter, we note that the sanction limit was Rs.20 Crores for cash credit facilities and it is significant to note that "review was to be done within a year". Similarly, letter of bank/ bank guaran....
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....2014 as per the terms of the sanction & this will be charged for the entire delayed period. We therefore once again request you to submit following financial statements. 1.Audited Balance Sheet dated 31.03.2014. 2.CMA Fata. 3.Net worth Certificate of Directors/partners. Please note that if you fall the submit above financial statements with request of review/renewal,D.P. of your Cash credit account will become zero and cheque presented by your not be honoured. This may please be noted. Thanking you, Sd/- Datta doke Asst. Gen. Manager Deccan Gyhmkhana Pune Branch, Pune From: Deccan Gyhmkhana [email protected] East: Thursday August 21,2014 4:17PM To: brmgr3mahabank.co.in Subject: FW: Your Various credit facilities with From: Deccan Gyhmkhana Br. ([email protected]) Sent: 21August 2014 16:17 To: [email protected] CC: [email protected]; ZM PCZ '[email protected]: '[email protected] Subject: Your various credit facilities with us BANK OF MAHARASHTRA ....
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....nt is due since March,2014. Interest review of the account is taken by the branch in August, 2014. The unit is running satisfactorily Shri Deshpande. Accounts Manager informed that the sales of the company increases normally in the second half of the financial. Sd/- Signature of Visiting Official 35. We also note that the Respondent No. 2 bank informed the Corporate Debtor to renew the credit facilities through its Advocate K. Ashar and company who vide letter dated 27.05.2015 who advised the Corporate Debtor to complete the formalities. 36. Thus, we come to conclusion that the sanction letter of Respondent No. 2 specifically contained clauses for review/ renewal before expiry of one year. This review/ renewal was to be done by Bank based on Annual Audited Financial Statements and other documentary evidence to be submitted by the Corporate Debtor along with request letter which the Corporate Debtor did not furnish. 37. It will be worthwhile to understand as to what is the need for such review/ renewal of cash credit facilities by banks at the request of the Corporate Debtor. It is noted that banks require such renewal regularly to ensure that the....
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.... as "zero". 43. We also observe that despite several attempts made by the bank i.e., writing letter, followed by reminder, letter by bank's advocate and team visit to the Corporate Debtor by bank to pursue Corporate Debtor to complete formalities of review/ renew, the Corporate Debtor failed to do so. Thus, one of material stipulated condition of sanction letter was breached by the Corporate Debtor and as intimated by bank to the Corporate Debtor in advance that drawing power would become zero, which bank did. We do not find any irregularities in it. There was also case of non payment of interest payment, thus the account of the Corporate Debtor became NPA. We find that the Corporate Debtor committed default and there is no error in the Impugned Order on this account. 44. As regard allegation of the Appellant about non disclosure of date of default in part IV of the Section 7 application by the Respondent No. 2, we note that in part IV the amount has been mentioned as Rs. 24,24,42,995/- and the detailed working for the same was attached as the enclosure marked as Appendix A given all the details. As such the allegation of the Appellant is not found to be true. 45. We will ....
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.... (ii) sanction limit or drawing power. (iii) Sanction limit and/or drawing power. 50. The Respondent No. 2 bank clarified that account of the Corporate Debtor remains in order till both the conditions i.e., sanction limit as well as drawing power are met. The Respondent No. 2 bank further clarified that it is possible to have sanction limit at higher value and to have the drawing power at a lower value which will depend upon several factors from time to time. 51. We also note that as per sanction letter, the drawing power was to become 'zero' in cases the terms and conditions of sanction are not met which included the application on the part of the Corporate Debtor to get it reviewed/renewed within the time before expiry of the cash credit facility approval. 52. We have already noted that the Respondent No. 2 bank has written two official letters to the Corporate Debtor to get it reviewed/ renewed which was followed by yet another letter by the banks advocate to Corporate Debtor and followed by personal visit by bank officials for the same. Despite these opportunities, the Corporate Debtor could not get its cash credit facilities account review/ renewal. ....