TaxTMI 
TaxTMI 
2021 (10) TMI 1472
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....sed power of attorney holder of the applicant and also the Vice President of DBS Bank Limited through its Board Resolution/Power of Attorney dated 09/01/2020 (hereinafter referred to as the Financial Creditor) seeking initiation of corporate insolvency resolution process in respect of the Hindusthan National Glass & Industries Limited, CIN L26109WB1946PLC013294, another corporate entity, having its Registered office at 2 Red Cross Place Kolkata, West Bengal-700001 (hereinafter referred as the Corporate Debtor). 3. It is submitted in the application that the Corporate Debtor has an authorised share capital of Rs. 511, 50, 00,000 and paid-up share capital of Rs. 17,91,07,130 (Rupees Seventeen Crore Ninety-One Lakh Seven Thousand One Hundred Thirty Only). It is further submitted that the financials of financial year 2019 of the Corporate Debtor mentioned the following details about the Corporate Debtor;- (i) Assets: INR 3,178.75 crore (ii) Income: INR 2403.52 crore (iii) Amount of Debt: INR 2609.79 crore (iv) Category of Corporate persons: manufacturing Company. 4. It is submitted in the Part IV of the application as particulars of Financial Debt that Total amount ....
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....accessories 4. It is further submitted that the financial creditor has placed on record the following documents:- i. A copy of Facility Offer Letter dated 17th August, 2011 is annexed as Annexure-A ii. A copy of Facility Offer Letter dated 21st March 2012 is annexed as Annexure-B. iii. Facility amendment letter dated 8th June 2015 is annexed as Annexure -C iv. Facility amendment letter dated 9th June 2015 is annexed as Annexure-D. v. Facility Agreement dated September 28, 2011 is annexed as Annexure- E. vi. Facility Agreement dated 7th May 2012 is annexed as Annexure-F. vii. Deed of Hypothecation dated 3rd October 2012 is annexed as Annexure-G. viii. Memorandum of Entry dated 9th July 2014 is annexed as Annexure - H. ix. Amendment and Restatement Agreement dated 13th October, 2015 along with Borrowers' Certificate is annexed as Annexure-I. x. Personal Guarantee by Mr. Sanjay Somany dated 11th August, 2015 is annexed as Annexure-J. xi. Personal Guarantee dated 13th October, 2015 by Mr. Mukul Somany is annexed as Annexure-K. xii. A Copy of the Memorandum of understanding for settlement dated 27th August 2018 is annexed as Annexure-L. xiii. Sanction Letter f....
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....ower both present and future. With an asset cover of 1.25x and the creation of charge to be completed within 6 months from drawdown date and the facility was provided with a period of 7 years from drawdown date and the availability period mentioned therein 180 days from the Facility Agreement and it was further specifically mentioned therein that any portion of the facility that remains un-drawn at the expiry of the availability period would be deemed cancelled and become unavailable for drawing. It was further mentioned in the said letter that the Facility shall be drawn in a minimum amount of US Dollar 5 million or in any multiple of US dollar 1 million in excess thereof and the applicable LIBOR plus 2.45% p.a. It was made clear that all interest payments shall be made in arrears at the end of each interest period (Interest Payment Date) and calculated on the basis of the actual number of days elapsed in a year of 360 days and all interest payments shall be made in arrears at the end of each interest and calculated on the basis of actual number of days elapsed in a year of 360 days. With regard to the repayment, it was mentioned that door to door maturity of 7 years, with a morat....
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.... dated 8th June, 2015 the Financial Creditor wrote to the Corporate Debtor as under:- Ref. : CDT/ADMIN/431/2015 : 8th June 2015 Hindusthan National Glass & Industries Ltd. 2, Red Cross Place Kolkata- 700001 Kind Attn: Mr. Mukul Somany, Vice Chairman & MD Dear Sir, Re: Amendment in ECB Loan Facility of USD 40 Million BORROWER : Hindusthan National Glass & Industries Ltd. LENDER: DBS Bank Ltd., Singapore ("DBS") ARRANGER : DBS Bank Ltd., Kolkata Branch (DBS Kolkata/ Arranger) FACILITY Bilateral Loan Facility of USD 40,000,000(Facility) Further to our offer letter CDT/ADMIN/396/2011 dated 17th August 2011 for sanctioning ECB Loan Facility duly accepted by the company, we are pleased to offer the following amendment in existing terms and conditions: Clause being Amended Existing Clause/ Condition Amended /Proposed Clause/Condition Tenor of ECB Loan Facility 7 years 10 years Security 1. 1st pari passu charge on all fixed assets 2. 2nd pari passu charge on all current assets 1. 1st pari passu charge on all fixed assets 2. 2nd pari passu charge on all current assets 3. Pledge of promoters shares (51.0% stake) 4. Personal Guarantee of Mr....
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....LE TO BANKING FACILITIES and confirm that the documents and the information submitted/ to be submitted and the documents that are executed/ to be executed by me/us in your favour to secure the banking facilities are/ shall be true, accurate, complete and correct. For Hindusthan National Glass & Industries Limited Vice- Chairman & Managing Director ________________ Name : Designation: Date: (to be signed by Authorised Signatory of the Borrower with affixing Borrower's stamp and date) Vide another letter dated 9th June 2015, the Financial Creditor informed the Corporate Debtor as under:- Ref. : CDT/ADMIN/431/2015 : 9th June 2015 Hindusthan National Glass & Industries Ltd. 2, Red Cross Place Kolkata- 700001 Kind Attn: Mr. Mukul Somany, Vice Chairman & MD Dear Sir, Re: Amendment in ECB Loan Facility of USD 20 Million BORROWER : Hindusthan National Glass & Industries Ltd. LENDER : DBS Bank Ltd., Singapore ("DBS") ARRANGER : DBS Bank Ltd., Kolkata Branch (DBS Kolkata/ Arranger) FACILITY Bilateral Loan Facility of USD 20,000,000(Facility) Further to our offer letter CDT/ADMIN/155/2012 dated 21st March 2012 for sanctioning ECB Loan Fac....
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..../7/15 (to be signed by Authorised Signatory of the Borrower with affixing Borrower's stamp and date) 10. The Financial Creditor has placed on record agreement September 28,2011 between (1) HINDUSTHAN NATIONAL GLASS & INDUSTRIES LIMITED as borrower (the Borrower) (2) DBS BANK LTD, KOLKATA BRANCH as arranger ( the Arranger) (3) THE FINANCIAL INSTITUTIONS listed in Schedule 1 (The Original Lenders) as lenders ( the Original Lenders); (4) DBS BANK LTD, SINGAPORE as agent of the Finance Parties (other than itself) (the Agent); and (5) DBS BANK LTD, KOLKATA BRANCH as security trustee for and on behalf of the Finance Parties ( the Security Trustee), Inter alia, containing inter alia, all the definitions, terms and conditions as regards and cancellation. 11. The Financial Creditor has further placed on record agreement dated 7th May, 2012 which contains all the terms and conditions in details between: (i) HINDUSTHAN NATIONAL GLASS & INDUSTRIES LIMITED as borrower (the Borrower) (ii) DBS BANK LTD, KOLKATA BRANCH as arranger (the Arranger) (iii) THE FINANCIAL INSTITUTIONS listed in Schedule 1 (The Original Lenders) as lenders (the Original Lenders); (iv) DBS BANK LTD, ....
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....ss both commercially and financially for last few years and could not service its debt obligation towards its lenders, as a result of which gradually its loan accounts with all the lenders became irregular and were hence declared and/or categorized as "Non-Performing Asset" (NPA). The Corporate Debtor, however with bona fide intention negotiated with the said lenders for settlement of their outstanding dues and to regularize its loan accounts from time to time. Discussions and negotiations took place in this regard between the Corporate Debtor and the said, lenders in order to formulate an effective resolution plan to pay off the outstanding dues phase-wise, the said settlement plans were in accordance with the schemes promulgated by Reserve Bank of India, from time to time. It is further submitted that the RBI in exercise of its statutory powers, had issued a plan for Resolution of Stressed Assets-Revised Framework Circular on 12/02/2018 and it provided that all lenders must put in place Board- approved polices for resolution of stressed assets under this framework, including the timelines for resolution. As soon as there is a default in the borrower entity's account with any lend....
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.... of India to give effect to its investment in the Corporate Debtor. No copy of the Minutes of the Meeting dated November 13,2018 has been handed over to the Corporate Debtor till date. 17. It is further submitted that a majority of the lenders already issued their letters of approval as mentioned hereinabove, in consonance with the terms of MOU dated August 27, 2018. However, the LIC issued its letter dated November 5, 2018, thereby confirming and approving the said Resolution Plan, only on November 13, 2018, in course of the meeting narrated hereinabove. 18. It is submitted that in such circumstances, SBI, in its capacity as Lead Bank of the Consortium, purported to issue an email dated November 23, 2018 to the Corporate Debtor, purporting to state that if the Corporate Debtor failed to meet its payment obligations as contained in the MOU and the Compromise and Settlement Agreement, within the deadlines stipulated therein, the Consortium would be within its rights to appropriate the amounts already deposited by the Corporate Debtor under such Resolution Plan. 19. It is submitted that despite the above, the BOB by its letter dated November 26, 2018 confirmed and approved the sai....
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....ance Private Limited an SSG Capital Management (Singapore) Pte Ltd. along with other consequential formalities. 22. It is further submitted that the Corporate Debtor at all material time had acted bona fide and due diligence. It is submitted that the Corporate Debtor was ready willing and prepared to proceed by performing its obligation to implement said resolution plan with the legitimate expectation of the lenders. 23. It is further submitted that the Corporate Debtor had instituted Civil Suit being C.S. No. 52/2019 before the Hon'ble High at Calcutta seeking the following reliefs:- (a) Decree for declaration that the Resolution Plan to pay off the debts of the plaintiff as extended from time to time pursuant to an in terms of and/or in continuation of the said MOU dated August 27, 2018 and the Compromise & Settlement Agreement dated September 25, 2018 are lawful, valid and still is in effect and binding upon the plaintiff and the defendant Nos. 1 to 12. (b) Declaration that the Minutes of the meeting dated February 26, 2019 and the recordings thereunder and/or terms and conditions thereof and/or portion thereof which are contrary to the said Resolution Plan as e....
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....ner company to the consortium of banks led by the State Bank of India. Mr. Mitra, Learned Senior Counsel points out that already approximately Rs. 500 crores have been paid by the petitioner to the respondents. From time to time meetings have been held between the petitioner and the respondents. Time to make repayment of the loans have been extended. In so far as State Bank is concerned, the time for repayment stands extended till 31st March, 2019. It is submitted that the petitioner has been able to arrange a foreign investor who has agreed to invest a sum of approximately Rs. 1400 Crores. Learned Counsel for the respondent no. 1 submits that the total outstanding is in the region of Rs. 2800 crores. This is disputed by Learned Senior Counsel for the petitioner. It is further stated that the State Bank of India has already filed an application before the National Company Law Tribunal (NCLT) against the petitioner. It is submitted that in view of section 231 of the Insolvency and Bankruptcy Code, 2016, the Civil Court has no jurisdiction to entertain any matter which falls within the domain of the NCLT. I have considered the submissions made on behalf of t....
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..... 27. It is submitted that the purported email dated October 25, 2019 was issued by the Lead Bank on behalf of all lenders in derogation of the promises and/or assurances made by them including the Financial Creditor. The Corporate Debtor had already deposited a substantial sum of Rs. 100 crores and thereby altered its position on the basis of the promises made by the Financial Creditor. The Corporate Debtor is now also liable before the said two investors. The Financial Creditor and the other said consortium lenders are therefore estopped from contending anything to the contrary. The said communication dated October 25, 2019 is therefore wholly illegal, wrongful and was issued in colourable and arbitrary exercise of power by the Financial Creditor taking advantage of its superior bargaining power and this the same is also contrary to the principles of equity. 28. It is submitted that the business of the Corporate Debtor, already suffering, was strained to breaking point due to lack of ready manpower and financial resources. The lockdown negatively impacted demand for the products manufactured by the Corporate Debtor, leading to massive stockpiling of finished products at it....
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....n 7 days of receipt of such notice from the Adjudicating Authority. It submitted that the date of default of payment of interest is 2nd October 2017 and the date of classifying the debt as a Non-Performing Asset is 31st December 2017, as per the Information Utility Record i.e. National E-Governance Services Limited. It is submitted that on the request of the Corporate Debtor, the consortium including the applicant had agreed to consider the request of the Corporate Debtor in line with the circular issued by the Reserve Bank of India on 12th February 2018 and the MOU had been entered into on 27th August 2018 whereby the applicant/ Financial Creditor along with other lenders had the right to cancel the compromise and Settlement Agreement and take actions permissible under the law if the Corporate Debtor would commit default or breach of the terms and conditions thereof. It is submitted that the parties entered into another Compromise Settlement Agreement dated 25th September 2018 but the Corporate Debtor failed to adhere to the repayment timelines accorded in line with MOU dated 27th August 2018 as well as the Compromise and Settlement Agreement 25th September, 2018. Accordingly, a J....
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.... not take place within the stipulated time due to delay in performance of obligations by the Lenders as alleged. The Applicant had performed its obligation required under the terms but the Corporate Debtor has been unable to perform its obligation under such extended time period as well. It is submitted that the Corporate Debtor had agreed to repay the settlement amount of Rs. 1710 Crore but it could only make payment of sum of Rs. 290 crore and defaulted in payment of the remainder amount despite having been granted two extensions. It is stated in the rejoinder by the Financial Creditor that a Civil Suit bearing CS No. 52/2019 filed by the Corporate Debtor seeking further extension of time till 30th April 2019 i.e. 3rd extension was declined by the Hon'ble Calcutta High Court and the Learned Bench was of the view that it was completely the Lenders prerogative to give extension in making payment of the settlement amount. It is stated that the Corporate Debtor had kept deposited a sum of Rs. 100 crore in a no lien account maintained by the SBI to show its bona fides that the Corporate Debtor will complete the entire process expeditiously. However, the settlement ....
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....t during the course of oral arguments they tend to support the Corporate Debtor, which is nothing but providing undeserving leverage to the Corporate Debtor by the Financial Creditor by their own Counsel, particularly when in the rejoinder it has been specifically and unambiguously submitted that the corporate debtor has not been able to adhere to the terms of the settlement deed in spite of repeated opportunities granted by the financial creditor. We do not wish to support such a tendency amongst the Bar members, a counsel when engaged by a particular Financial Creditor should stick to its pleadings. In the present matter, the pleadings specifically and loudly speak for admission of the application because the OTS proposal has failed due to the non-adherence of the terms and conditions fixed between the parties by way of Settlement Agreement. There cannot be any other plea by the Ld. Counsel for the Financial Creditor in such circumstances. However, the Ld. Counsel for the Financial Creditor had indicated that on or before reopening i.e. 20/10/2021, he will seek instructions either to withdraw the application, or else will accept whatever orders are passed by in the present applic....