TaxTMI 
TaxTMI 
2024 (6) TMI 1425
X X X X Extracts X X X X
X X X X Extracts X X X X
....hereinafter referred as "Respondent/Corporate Debtor/JAL") read with Rule 4 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules 2016 in Form 1 containing all the information as required in Part I, II, III, IV and V of the Form showing a total financial debt of Rs. 1269,10,26,803.06/- (Rupees One Thousand Two Hundred and Sixty Nine Crores Ten Lacs Twenty Six Thousand eight Hundred and three and Six paise only) under default with dates of default being mentioned as 30.04.2016 and 15.05.2016 in respect of various loans under six different facilities for which details have been provided in Annexure A-6 attached with Vol. IV (Pg 787-788) of the Application. 2. The Applicant is a company incorporated under the Companies Act, 2013 and a Banking company within the meaning of the Banking Regulation Act, 1949. The Applicant has appointed Mr. Abhinav Prakash (Manager) as the Authorized Representative in the present case vide Board Resolution dated 27 October 2017 annexed as Annexure A- 1 (Colly) of the instant petition, who has signed the instant petition. 3. The Corporate Debtor i.e. Jaiprakash Associates Limited (JAL) has been incorporated on 15th Novem....
X X X X Extracts X X X X
X X X X Extracts X X X X
....eme of Arrangement"). Facility 6 was granted under the Rupee Term Loan Facility Agreement dated June 30, 2012 read with the General Conditions dated June 30, 2012 (collectively "Facility Agreement 6"). Pursuant to the aforesaid Order sanctioning the JSIL Scheme of Arrangement, the debts of JSIL were transferred to the Corporate Debtor. The copy of the Order of Hon'ble High Court of Judicature at Allahabad dated September 14, 2015, is annexed as Annexure-3 to the petition. 5. Details of the loans under the six facilities in respect of which the Corporate Debtor has defaulted in repayment and the default amount as mentioned in the Application are provided at Sl. No. 1 of Part IV of the Application. In support of his contentions showing that the Corporate Debtor has defaulted on repayment of loans under these six facilities, the Financial Creditor has also annexed the computation relating to default amount, dates of default and days of default as Annexure 6 in Vol IV (pg 787-788) to the Application. The same has been reproduced hereunder: Total amount of default and days of default Sr. No. Facility Total Overdue (as on August 31, 2018) (INR) ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....a miscellaneous application dated 19.06.2020, to bring on record the "Record of Default (ROD)" of the Corporate Debtor from Information Utility i.e. National E-Governance Services Limited (NeSL). Relevant excerpts of the same have been produced hereunder: "2. It is humbly submitted that the Hon'ble National Company Law Tribunal vide Order dated May 12, 2020 had directed all concerned parties to file default records from the Information Utility ("IU") for all new petitions which are filed under Section 7 of IBC, as well as all cases which are pending for admission. Copy of Order dated May 12, 2020 passed by the Hon'ble National Company Law Tribunal with respect to Record of default from Information Utility is annexed herewith as ANNEXURE-1." Date of Submission 23-01-2020 14:15:12 Type of Submission Default Submission Submission ID 8 Submitted by (CREDITOR) M/s ICICI BANK LTD. Debtor M/s JAIPRAKASH ASSOCIATES LTD. (JAYPEE INDUSTRIES LTD) Default Amount 590298047.20 Status of Authentication by Debtor DEEMED TO BE AUTHENTICATED In case Authentication is Performed by the Debtor, date of completion of authentication Not Applicable ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t of all the loans of the Corporate Debtor on repayment of which it has defaulted. In Annexure-41, a report generated on 03.09.2018 on Repayment History of the Corporate Debtor by Central Repository on Information on Large Credits ('CRILC') has been provided by the RBI giving status as on 09.03.2018. In this report, the Applicant Bank i.e. ICICI Bank Ltd. has been mentioned at Sl. No. 15 showing date of default as 30.04.2016 and status of loan as "Moved to Default". This report has been mentioned at Sl. No. 8 of Part V of the Application under the head "List of Other Documents Attached to This Application In Order to Prove The Existence of Financial Debt , the Amount And Date of Default" 12. After reliance having been placed on all the details and documents in the Application as discussed above, the Applicant/Financial Creditor has pleaded that the Corporate Debtor has defaulted in making payment in excess of Rs. 1,00,000/- to the Financial Creditor, hence this Application to be admitted and order for initiating the CIRP under section 7 of IBC read with Rule 4 of the Insolvency and Bankruptcy (Application to Adjudicating Authority Rules 2016 may be passed. Repl....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... with a view to get a favourable order from this Tribunal. 14. The facts and documents which are considered material by the Corporate Debtor for deciding this case, have been thereafter, submitted in the Reply in support of its contention of there being no default on repayment of loan as alleged in the Application. These facts supported with relevant documents as attached with the Reply, have been stated in Part-III of the Reply as under: -. a. The operations of the Corporate Debtor are financed by various lenders including the Applicant Bank. The following Table shows the credit facilities sanctioned by each lender and their respective outstanding dues as on 31.03.2017 & 31.03.2018: (INR in Cr.) Sr. No. BANK Sanctioned Amount 31.03.17 Outstanding Amount as at 31.03.17 Sanctioned Amount 31.03.18 Outstanding Amount as at 31.03. 18 1 ICICI BANK LTD. 7,163.37 6,151.07 3,427.39 3,651.54 2 ALLAHABAD BANK 125.00 122.48 104.88 121.97 3 ANDHRA BANK - - 68.13 68.31 4 AXIS BANK 2,149.00 1,398.68 845.89 725.19 5 BANK OF BARODA 39.72 42.73 92.65 95.19 6 BANK OF INDIA....
X X X X Extracts X X X X
X X X X Extracts X X X X
....34,716.02 28,229.27 19,299.56 18,763.5 6 b. The credit limit and outstanding liability are secured against the assets of the Corporate Debtor details of which are given below: - Sr. No. Nature of security provided Fair Value Rs. Crores A Assets of the Corporate Debtor 1. Assets forming part of fixed assets 14,573.28 2. Assets forming part of current assets (Land inventory) 14,271.33 3. Investments 752.91 Total 29,597.52 B Assets of subsidiary companies of Corporate Debtor Co. 1. Assets forming part of fixed assets 919.25 2. Assets forming part of current assets (Land Inventory) 5,482.96 Total 6,402.21 Grand total (A+B) 35,999.73 c. The total outstanding liability of the Corporate Debtor including the outstanding dues of lenders shown in above table are as under:- TABLE SHOWING TOTAL OUTSTANDING LIABILITIES OF THE CORPORATE DEBTOR AS ON 31.03.2018 Sr. No. Nature of liability Amount Rs. Crores 1. Aggregate dues of Banks/Fis 18764 2. Other loan liabilities (including FCCB, YEID etc.) ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....draft CRRP was approved in the JLF meeting held on 18.05.2017 subject to final approval by the Independent Evaluation Committee (hereinafter referred as 'IEC'), which is appointed by the RBI under Clause 28.3.3 of Master Circular dated 01.07.2015. The draft CRRP was considered by the IEC in its meetings held on 12.06.2017 and 19.06.2017 and it was finally approved by the IEC in its meeting held on 19.06.2017 with certain recommendations. The draft CRRP as approved/recommended by IEC was considered and finally approved by JLF in their meeting held on 22.06.2017. f. The finally approved CRRP broadly envisaged bifurcation of the entire debt of the Corporate Debtor into 2 parts - "Sustainable Debt" and "Other Debt". While Sustainable Debt is to remain the liability of the Corporate Debtor, the Other Debt has been addressed through sale/transfer of assets of the Corporate Debtor. The CRRP has put the entire outstanding debt into three buckets and made provisions for settlement / continuance of each category of debt as under: i. Bucket 1 Debt of Rs. 11,689 crore - being part of the "Other Debt" is to be discharged against sale of identified Cement Plants of the Cor....
X X X X Extracts X X X X
X X X X Extracts X X X X
....by the Corporate Debtor in its Reply that consequent upon the approval of CRRP by JLF, the competent authorities of the respective Banks/Financial Institutions have also approved it and issued formal sanction letters. In this connection, the present Applicant i.e. ICICI Bank Ltd. has also issued letter dated 19.05.2017, 2, which has been annexed as Annexure-15 with the Reply. This sanction letter also gives details that loans of ICICI Bank Ltd. were put in these three different buckets. It is also pointed out that as per the Clause 6 of the letter makes it clear that in respect of debts put in Bucket 2B, the interest will cease with effect from 01.10.2016. By referring to terms of this sanction letter of ICICI, the Corporate Debtor further pointed out that the interest on this part of the loan i.e. Bucket 2B has ceased with effect from 01.10.2016 and no part of the debt is repayable as the entire amount is to be transferred to SPV in the terms of the approved Scheme of Arrangement, hence there is no question of any default in respect of this part of Loan. 17. In the Reply, the Corporate Debtor has further explained that from the facts as brought out in Part III of the Reply as d....
X X X X Extracts X X X X
X X X X Extracts X X X X
....AA of the Banking Regulation Act , 1949, gave the impugned direction on 14.08.2018 to initiate CIRP against the Corporate Debtor within the period of 15 days from the date of such direction and the Applicant Bank , being statutorily bound to follow the directions of RBI , has filed the instant Application under section 7 of IBC before this Tribunal on 07.09.2018. 20. It is stated that Section 35AA and 35AB have been inserted in the Banking Regulation Act, 1949 vide Banking Regulation (Amendment) Ordinance 2017, No. 1 of 2017 dated 04.05.2017, Reserve Bank of India formed Independent Advisory Committee (IAC) comprising of Independent Directors of RBI. IAC recommended that accounts with fund and non-fund based outstanding with greater than Rs. 5000 crores, with 60% or more shall be classified as Non- Performing Asset by the bank as on 31.03.2017. Accordingly, RBI issued a direction to initiate CIRP against the 12 stressed accounts. Now, Respondent contends here that Petitioner's Account is not covered in the criteria stated by the IAC. Copy of the Press release dated 13.06.2017 has been annexed as Annexure-8 with the Reply. Para 4 of the Press release dated 13.06.2017 st....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Release dated 12.02.2018, is not covered under the revised framework as the resolution plan for the Company had already been approved and implemented before the timeframe fixed by RBI, i.e. before 13.12.2017. 24. The Corporate Debtor pointed out that the Minutes of JLF dated 18.01.2018, show that sometime in December, 2017, members of the Core Committee of Lenders of the Petitioner/Applicant, i.e. ICICI Bank and other two banks i.e. SBI and IDBI Bank had approached Reserve Bank of India, inter-alia, confirming that the Resolution Plan in the case of Corporate Debtor has already been agreed upon and implemented and, therefore, the Corporate Debtor should not be referred to National Company Law Tribunal under IBC. 25. Respondent submits that RBI has given direction dated 14.08.2018 to ICICI Bank to initiate CIRP against the Corporate Debtor i.e. JAL. However, the copy of the impugned direction dated 14.08.2018 has been received by the Corporate Debtor only after the filing of the Application by the ICICI Bank under section 7 of IBC. 26. Respondent further contends that the impugned direction dated 14.08.2018 given by the RBI is against the interest of all the stakeholders o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n amount shall be transferred to SPV as per the Scheme of Arrangement after being approved by the NCLT , hence there is no question of any default and accordingly, this application filed on the direction of the RBI vide its letter dated 14.08.2018 is liable to be dismissed. Rejoinder Filed by the Financial Creditor (Applicant) 28. In response to above Reply, a Rejoinder has been filed by the Applicant on 24.09.2018 countering all the contentions raised in the Reply of the Corporate Debtor about there being no default on repayment of the loan after it is restructured and put in Bucket 2B. In the rejoinder, it has been specifically stated that the Applicant has not misrepresented or presented distorted facts before this Tribunal to prove default on part of the Corporate Debtor. Any averment made to that effect by the Corporate Debtor in the reply should be rejected. 29. It is submitted that the lenders of the Corporate Debtor had been providing loans to the Corporate Debtor periodically. However, the Corporate Debtor defaulted on these loans, causing the Applicant and several other banks to declare the Corporate Debtor as a Non-Performing Asset (NPA). Due to liquidity stress....
X X X X Extracts X X X X
X X X X Extracts X X X X
....bsp;10,689 crores of debt liabilities were assumed by UTCL, while the remaining Rs. 1,000 crores are pending due to certain approvals. b) Bucket 2A: The residual JAL, with an overall debt of Rs. 6,367 crores, which included Rs. 5,072 crores owed to the lenders, was classified under Bucket 2A. The Master Restructuring Agreement (MRA) for JAL's sustainable debt was signed by all 32 relevant lenders before December 13, 2017. c) Bucket 2B: Transfer of assets and liabilities pertaining to a debt of Rs. 11,833.55 crores to be completed through a Scheme of Arrangement. This would involve transferring the remaining debt and land to a 100% real estate Special Purpose Vehicle (SPV) of JAL, namely Jaypee Infrastructure Development Limited ( herein after referred as 'JIDL'). The Scheme is pending for approval before this Adjudicating Authority. 32. Although the DRP was approved as it was considered commercially reasonable at the relevant time, but for various reasons it could not be implemented completely within the timeframe stipulated by the RBI. Then it is also pointed out that before the DRP could be fully implemented, the RBI communicated the s....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ld not be fully implemented due to inter alia for the following reasons a) Security creation for restructured facilities (Bucket 2A) and hiving off of the RE-SPV (Bucket 2B) could not be completed due to the Supreme Court directions in respect of proceeding of Jaypee Infratech Ltd. (JIL) directing JAL not to create any third-party interests nor alienate any assets. b) The condition regarding obtaining two investment-grade rating could not be completed because of the Supreme Court's direction of depositing Rs. 2,000 crores by JAL as the promoter of JIL. This created uncertainty about JAL's total obligations, including payment of Rs. 2000 crores for JIL or any further amount that could have been demanded by the Supreme Court from JAL. 35. Thus, as submitted by the Applicant, the Current Status of the DRP is as follows: a) Bucket 1: Payment of INR 1,000 crores is pending due to certain approvals that are still awaited. b) Bucket 2A: The Master Restructuring Agreement (MRA) has been signed by all 32 relevant lenders as planned under the DRP before December 13, 2017. However, while the MRA has been executed, the creation of securi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nd this pending approval has delayed the implementation of the DRP for Bucket 2B. Consequently, the default concerning these facilities continues. 39. The Applicant reiterates that the DRP for the facilities covered under Bucket 2B, which is the subject of the Application filed under section 7 of the IBC, has not been implemented in the banking system due to the pending approval from this Tribunal. As a result, these Facilities remain in default. Furthermore, the Respondent Corporate Debtor does not dispute that the Facilities under the Loan Agreements constitute to be financial debt under the IBC. Thus, it is evident that the only mandatory requirement for the admission of an application under section 7 of the IBC, namely the existence of a default of financial debt, has been met. 40. The Applicant further states that it has not withheld any information, as evidenced by the fact that the Application clearly states that, in addition to the mentioned facilities, the Applicant has provided other Rupee Term Loans and Working Capital Facilities. It is also claimed by the Applicant that the Application pertains only to the Bucket 2B facilities, which are currently pending approval....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s mentioned in the Application pertain solely to the Bucket 2B facility, which has not yet been implemented due to pending approval by this Tribunal. Therefore, the facilities covered in the Application remain in default and the Respondent Corporate Debtor's averment that there is no amount in default is factually incorrect. It is reiterated that default under the Loan Agreement as on 31.08.2018 is Rs. 1269,10,26,803/- and it includes the defaulted amounts of principal, interest and overdue interest for which computation has been given Annexure-6 to the Application. Accordingly, it has been stressed in the Rejoinder that the Applicant firmly stands by its submission that there is default and there is no false averment to that effect. 45. After explaining the entire facts and circumstances of the case and showing that due to non-implementation of the resolution plan for Bucket 2b loan as the Scheme of Arrangement made for its implementation is still pending having not been approved by the NCLT , default of this loan facility covered under the present application is still continuing , hence the only pre-requisite for filing an Application u/s 7 of the IBC that there must be a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....mmendations to initiate a CIRP against JAL under the IBC. As mentioned earlier, it was following this order that the RBI issued directions to the Applicant, which were statutory in nature. Since the DRP regarding Bucket 2B Facilities was not fully implemented for the reasons stated in this Rejoinder, the amount due under the Facilities, covered under the Section 7 Application under IBC, continued to be in default and The default amount exceeded the threshold of Rs. 1 lakh, prompting the Applicant to file this Application. It has also been pointed out that pursuant to the said order of the Hon'ble Supreme Court, the RBI had given directions to the Applicant on August 14, 2018, under Section 35AA of the Banking Regulation Act, 1949, which were statutory in nature. 48. The Applicant further states that it had internally deliberated and corresponded with the Regulating Body i.e. RBI about whether to initiate insolvency proceeding in NCLT against the respondent Corporate Debtor. However, after these deliberations, the Applicant decided to exercise its rights under the IBC and file this Application due to the default on the Facilities that were part of the Bucket 2B facilities. M....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... such order as this Tribunal deem fit. Supplementary Affidavit filed by Respondent 52. This tribunal v.o.d 06.01.2022 stated that the minutes of the meetings of the Joint Lenders Forum be placed on record for consideration by the Adjudicating Authority by way of a supplementary affidavit within ten days with copies served on the counsel on record for the respondent/ financial creditor. 53. In compliance with the said order the Respondent has filed Supplementary affidavit on 09.02.2022 to place on record minutes of Meeting of the Joint Lenders Forum from January 2020 onwards. 54. The Respondent also filed another supplementary affidavit vide diary no. 478 dated 23.01.2023 wherein it relied on the Judgement in Vidarbha Industries Power Limited v. Axis Bank Limited (2022) 8 SCC 352 in which it was held that the word "may" in Section 7(5) of IBC makes it clear that even if default is assumed, the Tribunal may refuse to admit the Application, if the facts and circumstances of the case so warrant. This judgment has been annexed as Annexure 1 to the affidavit. 55. The Petitioner in response to this affidavit has filed a rejoinder affidavit vide diary no. 1300 dated 27.04.20....
X X X X Extracts X X X X
X X X X Extracts X X X X
....oned amounts of debt in default as stated in the application, taking the plea that these loans are already restructured under CRRP and put in the Bucket 2B created for this purpose, which have been proposed to be settled under a Scheme of Arrangement and this Scheme has already been finalized with the consent of all the creditors and an application of Second Motion for its approval is pending. This restructuring of outstanding loans of the Corporate Debtor has been done in compliance of the direction of the RBI issued through a press release dated 13.06.2017 for resolution of those loans, 60% of which were in default at that time and such resolution was required to be completed within six months i.e. by 13.12.2017 and in case, the scheme for resolution of such loans are not finalized and implemented, application for CIRP under IBC could have been moved. It is argued by the Corporate Debtor that as the schemes for resolution of its all outstanding loans were finalized within six months by putting these loans in three different buckets and Scheme for settlement of loans under Bucket 2B which covers the loans under the present application has also been finalized with the consent of al....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the Hon'ble Supreme Court in case of Dharani Sugars and Chemicals Limited vs. Union of India dated 02.04.2019 in Transferred Cases (Civi) No. 66 and 1399 of 2018 is not applicable in the present case and the present Application filed on the direction of the RBI issued vide its letter dated 14.08.2018 in compliance of the order of the Supreme Court in case of Chitra Sharma (supra), is legally maintainable and accordingly , CA 120/2019 has been dismissed . Therefore, the present Application under consideration is held to be legally maintainable. (b) Whether there is Debt and Default 59. The issue for consideration before this tribunal for the purpose of admission of application under Section 7 of the IBC is whether there is existence of "debt" and "default" committed by the Corporate Debtor. 60. It is not disputed that the Corporate Debtor availed the credit facility from the Financial Creditor taking loans under 06 facility agreements and other working capital loans. Total disbursement made under these facility agreements was Rs. 4750 crores. The total amount of debt under default as claimed by the Applicant in Part IV of the Application is Rs. 1269,10,26,80....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rtaining to the Applicant as shown in the Application filed u/s 7. 64. As per DRP, the assets and liabilities of the Corporate Debtor pertaining to entire debt of Bucket 2B was planned to be transferred through a Scheme of Arrangement by hiving of the debts along with certain identified land parcels having almost equivalent value to a 100% special purpose vehicle ( SPV) of JAL , namely Jaypee Infrastructure Development Ltd. Approval of this Scheme remained pending in this Tribunal after filing of second motion petition on 23.01.2018 due to pendency of the case of Chitra Sharma (supra) in Hon'ble Supreme Court in a matter involving default in non-delivery of flats to home buyers relating to stressed assets of Jaypee Infrastructure Limited (JIL) , a company promoted by JAL, the Corporate Debtor that was also party in that case and RBI also filed an application in that case seeking permission of the Hon'ble Supreme Court for initiation of proceeding under IBC against the JAL and consequent thereupon, JAL was ordered to deposit Rs. 2000 crore to protect the interest of home buyers and not to transfer any of its assets without the permission of Hon'ble Supreme Court. 65. As t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....of land parcels allotted to JAL in sector 25, SDZ, Yamuna Expressway Industrial Area , District Gautam Nagar by the Yamuna Expressway Industrial Development Authority (YEIDA) under a scheme of Arrangement (with appointed date being 01.07.2017). 69. It is then submitted that JAL and JIL filed First Motion Application for the said Scheme of Arrangement vide CP(CAA) No. 174/ALD/2017 before this Tribunal, which was approved vide order dated 08.12.2017 and then, after taking necessary approvals of all their unsecured and secured creditors, Second Motion Petition CP (CAA) No. 19/ALD/2018 was filed on 23.01.2018. It is admitted by the Ld. Counsel during the hearing that approval of this scheme could not be provided by this tribunal due to initially the matters relating JIL and JAL raised by the home buyers in Chitra Sharma Case (supra) was pending in Hon'ble Supreme Court and JAL was restrained by the Hon'ble Supreme Court from transferring of any of its assets without the permission of the Hon'ble Supreme Court. Then, after passing of order by the Hon'ble Supr6eme Court in Chitra Sharma case on 09.08.2018 and the present Petition/Application having been filed and an Applicat....
X X X X Extracts X X X X
X X X X Extracts X X X X
.....48 billion (aggregate of existing facilities retained in B2A as part of restructuring sanction to JAL by ICICI Bank Ltd. Therefore, the Applicant Bank contended that the present Section 7 petition is relating to only default under Bucket 2B Facilities, hence the Sanction Letter dated 19.05.2017, which is in relation to Bucket 2A Facilities is not applicable for the present Section 7 Petition. 71. It has also been argued by the Ld. Sr. Counsel for the Applicant that the Scheme of Arrangement cannot be said to be a binding agreement with respect to Bucket 2B Facilities , as the same has not been sanctioned by this Tribunal , and therefore, cannot be said to have any binding effect under law. As regards contention of the Corporate Debtor that the said Scheme having got approved by the boards of both JAL and JIDL after consent of the Applicant Bank resulting into the loan under Bucket 2B resolved and now, there is no default in respect of this loan, hence the Applicant now cannot file Application u/s 7 in respect of the same loan which is covered by the Scheme, is not a valid argument. It has been argued by the Ld. Sr. Counsel for the Applicant that consent to a scheme given by the....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Limited v. Supreme Infrastructure India Limited, IA 133 of 2023 in CA 653 of 2022 in CA(CAA) 153 of 2022, in which the Hon'ble NCLT Mumbai while noting the principle held in the case of Navinchandra (supra) held that the proceedings under the IBC, and more particularly under Section 7 of the IBC, cannot be scuttled or circumvented merely on account of pendency of any proceedings under the Companies Act, much less under Section 230 of the Companies Act. 74. By referring to the facts and position of law as discussed above, it has been argued by the Ld. Sr. Counsel for the Applicant that mere agreeing for a CRRP and Scheme of Arrangement for resolution of loan in Bucket 2B earlier transferred on trifurcation of entire loans of the Corporate Debtor, which could not be even implemented due to the same having not been approved by the NCLT, it cannot be said that default has ceased to exist. As there being no resolution of loan in Bucket 2B in absence of implementation of the Scheme which was finalised earlier, the default continued and hence, it is not correct on part of the Corporate Debtor to say that there is no default. 75. Ld. Sr. Counsel for the Applicant after arguing to sho....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... dated September 24, 2018 passed in the case of JAL itself in a Writ Petition challenging the validity of Application filed u/s 7 on the direction of RBI in its letter dated 14.08.2018 wherein it has been held that the letter dated December 07, 2017 sent to RBI pales into insignificance. The relevant portion of this decision is extracted as below:- "... The aforesaid decision of the Supreme Court clearly indicates that the proposals of the petitioner were not accepted and that on the interlocutory application of the RBI, it found that the petitioner is under financial distress and to safeguard the interest of the home buyers the request of the RBI to allow it to initiate CIRP against the petitioner under IBC is acceded to and the RBI is allowed to direct the Banks to initiate corporate insolvency resolution proceedings (CIRP) against the petitioner under IBC. In view of the above conclusion drawn by the Supreme Court, the directions issued the Letter of Consortium of Lenders dated 7.12.2017 has no sanctity and pales into insignificance..." (Emphasis Supplied) 78. Similarly for the internal correspondence with RBI in letter dated 13.08.2018, it has been argued t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....cation u/s 7 was filed on 07.09.2018 and hence, present application u/s 7 cannot be admitted for CIRP. These arguments of the Corporate Debtor has been considered by us. 81. Against the above arguments of the Corporate Debtor, the Applicant Bank has showed to us that the sanction letter 19.05.2017 was issued for the loan in Bucket 2A as against the plea of the Corporate Debtor that this letter was issued for both Bucker 2A as well as Bucket 2B. We have examined the said letter and find that in the second part of this letter it is written that "Accordingly, we write to inform you that Terms and Conditions for facilities previously sanctioned to the Company stands modified as detail.ed in Annexure I ." In Annexure I, starting from pg 368 to 382 of the Reply of the Corporate Debtor, though trifurcation of loans in three buckets were provided , the terms and conditions starting from pg no. 369 are for term loan of Rs. 7.48 billion only which pertains to Bucket 2A only, which might be because of the reason that the debt under Bucket 2A was categorised as "sustainable debt" to be continued as debt of the Corporate Debtor and hence , new terms and conditions of the Bucket 2A loan ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nsidering the Scheme of Arrangement in CP(CAA) No. 19/2018 and a CA No. 213/2018 connected with this petition , an order dated 03.06.2024 has been passed finding that after a gap of six year and now , the land of the Corporate Debtor to be transferred as security has been under litigation as its allotment has been cancelled by YEIDA and therefore, viability of the Scheme has become doubtful as it is now being opposed by the Applicant Bank also after becoming Party Intervener in CA No. 213/2019, who earlier had given consent for it. Therefore, in absence of any Scheme being implemented for resolution of loans in Bucket 2B, default of this loan covered in the present Application is still continuing leave aside the default being in existence on 07.09.2018 when Application u/s 7 was filed. As far as not filing of the Application by 31.12.2018 is concerned, the same has already been explained to have happened because of letter of RBI dated 27.12.2017 staying its direction to initiate proceedings under IBC against JAL in the light of the interim order in the Chitra Sharma Case. However, after passing of order in this case on 09.08.2018, a direction by RBI was issued vide l....
X X X X Extracts X X X X
X X X X Extracts X X X X
....hority by registered post or speed post to the registered office of the corporate debtor. The speed, within which the adjudicating authority is to ascertain the existence of a default from the records of the information utility or on the basis of evidence furnished by the financial creditor, is important. 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 sub-section (7), the adjudicating 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 t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....and default as required in Part IV of the Application and attaching all the necessary supporting documents including ROD from NeSL along with CIBIL Report and CIRLC Report from RBI portal as required in Part V of the Application and there is no disciplinary proceeding against the proposed IRP. Considering that all the above elements are fulfilled as required under IBC, we find that this Application deserves to be admitted u/s 7 for starting CIRP against the Corporate Debtor. (c). Applicability of the decision of the Ho'ble Supreme Court in Vidarbha Industries Power Ltd. vs. Axis Bank Ltd. (Civil Appeal No. 4633 of 2021) dated 12.07.2022 87. Finally, the Ld. Counsel for the Corporate Debtor has argued in the light of the decision of the Hon'ble Supreme Court in the case of Vidarbha Industries Power Ltd. Vs. Axis Bank Ltd. (2022) 8 SCC 352, that the Hon'ble Adjudicating Authority has wide discretionary power, either to admit or reject the instant application on consideration of the whole factual matrix of the present case. It has been pleaded by the Ld. Counsel of the Corporate Debtor that there are good reasons to exercise discretion u/s 7(5)(a) and refuse admission of th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tate; o Engineering & Construction Division Assets, Heavy construction equipment & Machinery; Land & buildings, especially skilled and experienced work force, etc. It has been argued that sale of cement business will not only improve liquidity, but will also improve the financial performance of the Company. From perusal of the Division wise Performance Statement (Annexure- 3 to Sur-Rejoinder at Page 58), it can be noticed that upon disposal of Cement/Power divisions, the CD will be spared of the drain of resources due to negative results of these divisions. c. RECEIVABLES As per the details provided by the Corporate Debtor in the second affidavit and then further explained in sur rejoinder, following amounts are claimed to be receivables by the Corporate Debtor From sale of cement business to Dalmias Rs. 5,586 Crore. Aggregate amount receivable under Arb. Awards Rs. 1,097 Crore Amount receivable against the deposit of Rs. 750 crore on the direction of Hon'ble Supreme Court Rs. 559 Crore TOTAL Rs. 7242 Crore d. VIABILITY OF THE CORPORATE DEBTOR: In this regard various Techno Viability Study Report evaluating the assets of the Corp....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ts the corporate debtor back on its feet, not being a mere recovery legislation for creditors. The interests of the corporate debtor have, therefore, been bifurcated and separated from that of its promoters / those who are in management. The relevant part of this judgment is as under "11. As is discernible, the Preamble gives an insight into what is sought to be achieved by the Code. The Code is first and foremost, a Code for reorganization and insolvency resolution of corporate debtors. Unless such reorganization is effected in a timebound manner, the value of the assets of such persons will deplete. Therefore, maximization of value of the assets of such persons so that they are efficiently run as going concerns is another very important objective of the Code. This, in turn, will promote entrepreneurship as the persons in management of the corporate debtor are removed and replaced by entrepreneurs. When, therefore, a resolution plan takes off and the corporate debtor is brought back into the economic mainstream, it is able to repay its debts, which, in turn, enhances the viability of credit in the hands of banks and financial institutions. Above all, ultimately, the inter....
X X X X Extracts X X X X
X X X X Extracts X X X X
....debts to ―determination of default. So, now examining the default has become necessary rather than to go in the reasons of not paying the debts and assess whether the corporate debtor has capacity, viability, feasibility or is able to attain a financial health to be able to pay its debt. Now, in IBC examining of existence of default is only required to trigger its provisions as held by the Hon'ble Supreme Court in its many decisions including Innoventive and E Krishnamurthy as we have already discussed. The relevant portion of the decision of Swiss Ribbons in this regard is reproduced as under "37. The trigger for a financial creditor's application is non-payment of dues when they arise under loan agreements. It is for this reason that Section 433(e) of the Companies Act, 1956 has been repealed by the Code and a change in approach has been brought about. Legislative policy now is to move away from the concept of ―inability to pay debts‖ to ―determination of default‖. The said shift enables the financial creditor to prove, based upon solid documentary evidence, that there was an obligation to pay the debt and that the debtor has failed in such ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tion of the RBI as an expert regulatory body particularly in matters of economic and financial policy has been reiterated in several decisions of this Court: [R.K.Garg 44 v Union of India11, Peerless General Finance and Investment Co.Ltd. v RBI12 , TN Generation and Distribution Corpn. Ltd. v CSEPDI-Trishe Consortium13"]. 41 JAL was classified under the SMA - II category (demands overdue for more than 60 days) by banks as early as on 3 October 2014 and as an NPA since 31 March 2015. We agree with the submission of the RBI that any further delay in resolution would adversely impact a viable resolution being found for JAL and JIL. [ Emphasis Supplied] 92. Considering above judicial pronouncements, if the Corporate Debtor feels about its viability, feasibility and financial health , it would be more beneficial for it after its resolution under IBC is done expeditiously before its assets get depleted. Therefore , we are of the opinion that its fast resolution would be in its best of interest to put it back on feet to enable it to pay its debt fast and revive its business. Therefore , we are not inclined to accept the contention of Feasibility , Viability and Financial He....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Industries Power Ltd. has not been found to be applicable on the facts of the present Application under consideration in this order. 95. We have also examined the applicability of the decision of Hon'ble Supreme Court in the case of Vidarbha Industries Power Ltd. and further, review petition filed in this case. On the review petition in case of Vidarbha Industries Power Ltd. (Supra), the Hon'ble Supreme Court has held in order dated 22.09.2022 that it is well settled that the judgements and observations in judgments are not to be read as provisions of statute and judicial utterances and/or pronouncements are in the setting of the facts of a particular case. Therefore, after clarification by the Hon'ble Supreme Court in the review petition of its decision in the case of Vidarbha Industries Power Ltd. (Supra)., it has been made clear that the decision given by the Hon'ble Supreme Court in the case of Vidarbha Industries Power Ltd. was on the facts of that particular case and no ratio was laid down about Section 7(5) of the I & B Code, 2016 being mandatory or discretionary. Now, in another decision of the Hon'ble Supreme Court in case of M. Suresh Kumar Reddy vs. Canara Bank & Ors....
X X X X Extracts X X X X
X X X X Extracts X X X X
....g 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 sub-section (7), the adjudicating 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. 29. The scheme of Section 7 stands in contrast with the scheme under Section 8 where an operational creditor is, on the occurrence of a default, to first deliver a demand notice of the unpaid debt to the operational debtor in the manner provided in Section 8(1) of the Code. Under Section 8(2), the corporate debtor can, within a period of 10 days of receipt of the demand notice or copy of the invoice mentioned in subsection (1), bring to the notice of the operational creditor the existence of a dispute or the record of the pendency of a suit or arbitration proceedings, which is pre-existing-i.e. before such notice or invoice was received by the corporate debtor. The moment there is existence of such a dispute, ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s, which requires particulars of the applicant in Part I, particulars of the corporate debtor in Part II, particulars of the proposed interim resolution professional in Part III, particulars of the financial debt in Part IV and documents, records and evidence of default in Part V. Under Rule 4(3), the applicant is to dispatch a copy of the application filed with the adjudicating authority by registered post or speed post to the registered office of the corporate debtor. The speed, within which the adjudicating authority is to ascertain the existence of a default from the records of the information utility or on the basis of evidence furnished by the financial creditor, is important. 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 m....
X X X X Extracts X X X X
X X X X Extracts X X X X
....dispose of the petition by directing the respondent to settle all the remaining claims "seriously" within a definite time-frame. The petition was accordingly disposed of by directing the respondent to settle the remaining claims no later than within three months, and that if any of the remaining original petitioners were aggrieved by the settlement process, they would be at liberty to approach the adjudicating authority again in accordance with law. The adjudicating authority's decision was also upheld by the appellate authority, who supported its conclusions. 34. The adjudicating authority has clearly acted outside the terms of its jurisdiction under Section 7(5) IBC. The adjudicating authority is empowered only to verify whether a default has occurred or if a default has not occurred. Based upon its decision, the adjudicating authority must then either admit or reject an application, respectively. These are the only two courses of action which are open to the adjudicating authority in accordance with Section 7(5). The adjudicating authority cannot compel a party to the proceedings before it to settle a dispute." (Emphasis added) 10. Thus, once NCLT is sat....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t the application of the financial creditor, notwithstanding any award or decree, if the award/decretal amount is incapable of realisation. The example is only illustrative. 89. In this case, the adjudicating authority (NCLT) has simply brushed aside the case of the appellant that an amount of Rs 1730 crores was realisable by the appellant in terms of the order passed by APTEL in favour of the appellant, with the cursory observation that disputes if any between the appellant and the recipient of electricity or between the appellant and the Electricity Regulatory Commission were inconsequential." (Emphasis added) 12. A Review Petition was filed by the Axis Bank Limited seeking a review of the decision of Vidarbha Industries on the ground that the attention of the Court was not invited to the case of E.S. Krishnamurthy. While disposing of Review Petition by Order dated 22nd September 2022, this Court held thus: "The elucidation in paragraph 90 and other paragraphs were made in the context of the case at hand. It is well settled that judgments and observations in judgments are not to be read as provisions of statute. Judicial utterances and/or pronounceme....
X X X X Extracts X X X X
X X X X Extracts X X X X
....r above findings, we are satisfied that the Applicant/Financial Creditor has proved the debt and the default, which is more than the threshold limit of one lakh at the relevant time and even more than Rs. 1crore the limit applicable at present. The application is also filed within limitation period and complete in all respect and a resolution professional is also proposed as per section 7(3)(b). Accordingly, the present application under Section 7, has been found fit to be admitted as per Section 7(5) of the I & B Code, 2016. 98. The Applicant has filed the interim application bearing no. 263 of 2024 wherein the Financial Creditor has proposed the name of Mr. Bhuvan Madan as Interim Resolution Professional. His Registration Number is IBBI/IPA-IBBI/IPA- 001/IP-P01004/2017-2018/11655, R/o 204, A-103 Ashok Vihar Phase-3 (Behind Laxmi Bai College), New Delhi, ,110052, Email: [email protected] . He has duly given the consent in Form No. 2 at Page no. 12 of I.A 263 of 2024 annexed as Annexure -4. The Law Research Associate of this Tribunal, Ms. Aditi Kharbanda, has checked the credentials of Mr. Bhuvan Madan, and found that there are no disciplinary proceedings pending ....