TaxTMI 
TaxTMI 
TaxTMI 
2025 (1) TMI 1772
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....2 in Company Petition No. (IB)-529/MB/2021. 2. M/s Pegasus Assets Reconstruction Private Limited, the Financial Creditor, is the Respondent No. 1 herein. 3. M/s Pegasus Assets Reconstruction Private Limited ("Financial Creditor" and Respondent No. 1 herein) filed an application being CP (IB) No.529/MB/2021 under Section 7 of the Code for initiating Corporate Insolvency Resolution Process ('CIRP') against the Corporate Debtor/Respondent No. 2 herein, claiming financial debt and default of Rs.35,90,56,629/-. 4. The Appellant stated that the Adjudicating Authority while passing the Impugned Order has erred in admitting the application by not appreciating the fact that there was no proper ground for admission. The Appellant contented that the application ought not to have been entertained and was liable for dismissal on the ground of Maintainability as the Corporate Debtor was not the Borrower or Co-Borrower and Corporate Debtor was also not the Corporate Guarantor of the Principal Borrower M/s Universal Textile Waterproof Co. India ('UTWC'). 5. It is the case of the Appellant that the Respondent No. 1 has failed to demonstrate the existence of any legally enforceable debt ....
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....availed financial facilities. The Appellant stated that the Respondent No. 1 has failed to substantiate the claim that either entity was a member of the bank, making the purported financial transactions legally untenable. 11. The Appellant contended that the Adjudicating Authority violated the principles of natural justice by admitting the Section 7 Application as the Respondent No. 1 introduced crucial documents, including a ledger copy of SVC Bank, through written submissions, depriving the appellant of the opportunity to contest their validity. 12. The Appellant submitted that the deed of assignment executed between SVC Bank and Respondent No. 1 did not fulfil the statutory requirements under the SARFAESI Act, 2002. The assigned financial assets do not qualify as "financial assistance" under the Act, rendering the assignment void. The Appellant further submitted that Respondent No. 2 did not request or receive any financial facilities from SVC Bank. The Appellant alleged that blank documents were signed by them in good faith which were subsequently manipulated by SVC Bank and/or Respondent No. 1 and further underscore the absence of any genuine financial transaction involv....
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....orate Debtor, nor was any charge registered with the Registrar of Companies, as required under the Companies Act, 2013. 18. The Appellant submitted that fresh financial facilities extended in 2018 were contrary to RBI guidelines prohibiting evergreening of loans. The Appellant pleaded that since the root and basis of the loan are illegal, Sections 142 and 143 of the Indian Contract Act, 1872, are attracted, rendering the contract of guarantee invalid and unenforceable. 19. The Appellant submitted that no debt had been adjudicated as due and payable by the Corporate Debtor or the principal borrower/UTWC to Respondent No. 1 or its predecessor, SVC Bank. The Appellant stated that the proceedings are premature and not maintainable. The Appellant elaborated that Respondent No. 1 had suppressed material facts, including a reply dated 06.02.2020 to the SARFAESI notice, wherein the claims of SVC Bank were disputed. 20. The Appellant contended that no notice invoking the corporate guarantee had been served on the Corporate Debtor. The statement of accounts and certificates annexed to the petition are uncertified as per the Bankers' Book Evidence Act and cannot be relied upon. Furth....
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....ntor and which was admitted by the Adjudicating Authority vide Impugned Order dated 20.04.2022. 27. The Respondent No. 1 submitted that SVC Co-operative Bank had sanctioned various credit facilities to UTWC a partnership firm, which were duly guaranteed by the Corporate Debtor and the Corporate Debtor was also co-borrower. As of 30.04.2021, the total outstanding debt amounted to Rs. 35,90,56,629/-, comprising Rs. 30,51,73,950/- (principal) and Rs. 5,38,82,679/- (interest). The Respondent No. 1 elaborated that UTWC was the principal borrower, while the Corporate Debtor served as co-borrower and as the corporate guarantor for the loans. Initially, SVC Co-operative Bank sanctioned a Term Loan of Rs. 2037.87 Lakhs and an overdraft limit of Rs. 423.29 Lakhs against property per the sanction letter dated 18.06.2011. Subsequently, on 19.07.2018, the Bank sanctioned an LRD (Lease Rental Discounting) Term Loan, whereby the original term loan facility was replaced by Rs. 2456 Crores, bringing the total sanctioned amount to Rs. 2879.29 Crores. The Respondent No. 1 further stated that UTWC provided its mortgaged property on lease, with repayments routed through lease rental receivables. Nec....
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....ebtor with respect to the petition being incomplete and defective and has correctly admitted the process of Insolvency against the Corporate Debtor. 33. Concluding his arguments, the Respondent No.1 submitted that the Appeal being frivolous is liable to be dismissed with cost. Findings 34. We have already noted facts of the case and background of financial facilities while recording pleadings of the parties, hence, we shall not repeat the same for the purpose of brevity. Suffice to note that certain financial facilities in terms of Term Loan as well as working capital facilities were granted to UTWC by SVC Corporative Bank. It is noted that the Corporate Debtor gave its corporate guarantee as well as became co-borrower of the said financial facilities. The Principal Borrower i.e., UTWC could not repay the loan and service interest liability, therefore, an application was filed under Section 7 of the Code for a default amount of Rs. 35,90,56,629/- as on 30.04.2021, which was admitted by the Adjudicating Authority after passing the Impugned Order dated 20.04.2022. 35. The Appellant had challenged the Impugned Order primarily on the following grounds :- (I) The Pr....
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....No. 1 brough out that sanction letters dated 18.06.2011 and 19.07.2018 clearly refers Shri Balaji Entertainment Private Ltd., (Corporate Debtor) as corporate guarantor as well as co-borrower and various representative of Corporate Debtor had signed these documents under both heading i.e., as co-borrower and corporate guarantor. (d)At this stage, we would like to look into the first sanction letter of SVC Bank dated 18.06.2011 which reads as under :- (e) From above letter dated 18.06.2011, it is noted that the letter was addressed to "Universal Textile Waterproof Co. India (Co-borrower : Whiz Enterprises Private Limited and Shri Balaji Entertainment Private Limited), B/12, Veera Industrial Estate, Link Road, Andheri (West), Mumbai - 400058.. (f) We further note that under the heading of corporate guarantee in the said letter, following is recorded "Corporate Guarantee : Whiz Enterprises Private Limited and Shri Balaji Entertainment Private Limited". (g)We further note that on general terms and conditions at Serial No. 3, it is stipulated that "Corporate Guarantee : Whiz Enterprises Private Limited and Shri Balaji Entertainment Private Limited". ....
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.... (b)On the other hand, we have noted from the pleadings of the Respondent No. 1 that ledger copies of SVC Bank clearly reveal that the Corporate debtor was a member of the SVC Bank and was receiving dividend to the extent of 100 shares (bearing distinct No. 14603192 to 14603291). (c) In this connection, we would like to factor in the account statement of SVC Bank Limited from 02.08.2018 to 24.02.2020 in connection with term loans which clearly indicate that under account detail, loan was sanctioned to UTWC and the Corporate Debtor jointly as co-borrowers. The said ledger account is reproduced as under :- (d)There are several similar documents which has been submitted by the Respondent No. 1, however, we are referring to only one document for ready reference to indicate that the Corporate Debtor was indeed reflected as co-borrower in the ledger account of SVC Bank. (e) We also note that the Corporate Debtor in its board of director meeting held on 24.07.2018 clearly recorded that the company (the Corporate Debtor) is already a member of the SVC Bank. The said letter is reproduced as under : (f) Thus, it is clear that the Corporate Debtor was mem....
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.... "We have heard counsel for the parties and perused the record. The documents Annexure R/1 (a to d) are the ledger account of M/s Shri Balaji Entertainment Pvt. Ltd. whereas another document Annexure R/2 is the writ petition filed by six entities including Shri Balaji Entertainment Pvt. Ltd. before the Hon'ble Supreme Court. In so far as the writ petition is concerned, it is a part of the judicial record and the ledger account is a part of the accounts maintained by the SVC Cooperative Bank Ltd.; therefore, these documents are required to be taken on record in order to reach to a conclusion as to whether the application filed under Section 7 of the Code, should have been allowed or not. Accordingly, the application is allowed and these documents R/1 (a to d) and R/2 appended with the application are taken on record..." (Emphasis Supplied) (d)As such, we do not find any merit in the contention of the Appellant regarding issue of additional documents filed by Respondent No. 1 to be non-admissible. We observe that the same plea was taken by the Appellant before the Adjudicating Authority and the same was not considered favourably by the Adjudicating Authority. ....
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.... bulit up situated on the second floor of the building known as Ghanshyam Chamber, at Plot No. ambal - 400 053, owned by Universal Textile Waterproof Co India. Andheri (West), Mumbal - 400 053, owned by Universal Existing security of ground and of ground and first floor mortgaged as security for the existing torm rst floor mortga loan no. BL/S with Dadar Branch to be released. 1223 00. Collateral security : Not applicable Personal guarantee : Poo mrit Rajani, Ms. Pooja Rajani and Mr. Narendra Rajani Corporate quarantee : Whiz Enterprises Private Limited and Shri Balaji Entertainment Private Pooja A. Rajane TRUE COPY 303 2 Re : Sanction Letter daled 18.06.2011 - A/c Universal Textile Waterproof Co india Schedule B : Schedule Month Proposed EM July-11 to Dec-13 2097600 Jan-14 to Dec-16 2412240/ Jan-17 to Doc-19 27740801- Jan-20 3910725/ -- Feb-20 to June-21 96230451 -* Schedule Month * Agreement for assignment of fres rentals to be receivable from Sahara during the period January, 2020 to June, 2021 should be executed prior to disbursement. Subject to : Disbursement modalities : 1. Proposed term loan of Rs....
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....t and on an annual basis prior to renewal of the limit. marcel Roga A . Rajane 304 Re : Sanstion Letter dated 18.08.2011 - Ale Universal Textile Waterproof Co Intdlia 7. Once the limit is sanctioned and mortgage is created the account shall be opened at the branch and the limit setup. The account shall be operated like a normal overdraft account. 8. Interest will be dobited and serviced on a monthly basis. 9, Renewal of the account shall be done annually. 10. Drawing Power for the limit shall be calculaled only on the basis of value of property. 11. ROI to be charged shall be competitive and market driven. The same shall be intimated to the branches by the Retal Asset Coll as and when changes are affected. 12. Borrower to bank exclusively with us. GENERAL TERMS AND CONDITIONS: 1. Upfront Processing charges of Rs.3.35 les plus applicable service tax thereon should be paid to the Bank Personal guarantee of Mr. Amrit Rajani, Mis. Pooja Rajani and Mr. Narendra Rajani. NO 4 Corporate guarantee of Whiz Enterprises Private Limited and Shri Balall Entertain Private Limited . In case of personal guarantees the guarantors should submit declarat....
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.... the ratio of interest to Base rate, If desired, based on the prevailing cost of funds to the Bank at that time plus the applicable risk, premium to the account. 17. The Bank reserves the right to discontinue the facilitiesfadvanons/loans Saa werdey or she any disbursements without giving any notice, in case of non-compliance/breach of any of the terms and conditions stipulated herein from time to time, as also in the relevant docum y information/particulars furnished to us being found to be Incorrect or in case of any developments ar situation, where in the opinion the opinion of the Banik, its Interest anik, its Interest will befor is ilkaly to be prejudicialy effected by such continuation or disbursements. 18. Non-compilance of any covenants of sanction for any reason whatsoever will attract penal charge @2.00% p.a. (exclusive of service taxi cess if applicable) on the sanctioned imte or outstanding balance whichever is higher. Rajan Pooja A . R Page 3 of 5 305 4 Re : Sanction Lottor daled 18.08.2011 - A/c Universal Texti'e Waturpreot Co India 19. In the event of the company committing default in the repayment of instalments of the loan or es, the Bank....
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....ay be prescribed in uture by the Bank from time to time. The Bank shall have right to change both the base rate La. PLR and mark up percentage. At present the PLR of the Bank is 16.50% p.a. which is subject to change depending on the conditions in the money market. Changes in PLR and effective date of its application will be displayed on the Notice Board of the Bank/ Branch from time to time. The Bank shall be entitled to change, at its discretion, enhance the rates of interest on the accounts either on the entire outstanding or on a portion Thereof. It may also be noted that the rate of interest charged to the credit limits is also linked to the credit rating of your account which wil be undertaken on annual basis based on the last auditod accounts submitted and overall conduct of the account. Interest should be paid within 10 days from the date of debit to the account. No moratorium wil be available for payment of interest. If all the aforesaid terms and conditions are acceptable to you, kindly sign duplicate copy of this Sanction Letter as a token of acceptance and return for our record Yours Pooja . A . Rajani Vinodkumar Sont str visional Manager Z....
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....eriod of 180 months. 2. Release of the Commercial property at unit 502, situated on part portion of 5th floor of Ghanshyam chambers; Plot no B-12, Link Rd, Andhetl W] Mumbai-53. We are pleased to inform you that the above mentioned requests has been sanctioned in board meeling daled 17.07.2018 os follows, subject to the terms and conditions menlloned below: (Rs. In Laes) Facilily Security Margin Exist Addn/ (Redn) Total ROI/. Remarks Overdraft facilily/624 Registered Mortgage of. Commercial Premises on 501 on sin floor of Ghanshyam Chamber, PTot NO 8-12"" Soleable Area 2652 square feet New Link Road Ared Andheri West Mumbai-53 owned by UTW 25% 423.29 0.00 423.29 PLR less 4.25% f.e. 13.50% p.a. Renewal due in Feb 2019. Term loan BL/1535 Registered Mortgage of Commercial property of unit 502 (adms 5307 sqfi Super built up & adjoining area of 3530 sq fl super built up ) situated on part portion of 5th floor of Ghanshyam Chambers, Ploi no 8-12, Link Rd, Andhert Andheri W) Mumbol-53. Owned by UTW 40% 1,223.00 [1223.00] 0.00 Closed Term loan BL/1537 Registered Mortgage of commercial premises, 2nd floor, ghanshyam Chambers, Plot B-12, Linkrd, ondheri (W], M....
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....mpleted in consultation with our Legal Dept, for The poposed LRD term loan of Rs.2456 lac. 2, Term ban nos. BL/1535 and BL/1537 shall be liquidated out of proceed of the proposed ferm ban of Rs. 2456 lacs. the lim shall then execute "Deed of Modification" duy drafted br our Legal Dept coverg Unit No.501 adm. 2700 sq.ft. (presently used as Office premises by UTW) as security for ODAP limit of Rs. 423.29 Lacs simultaneously with the "Reease Deed" duly drafted by our Legal Dept for proposed release of Commercial properly at unlt 502. situated on part portion of 5th floor of Ghanshyam chambers; Plot no B-12, Link Rd, Andheri (W) Mumbai - 53 for ODAP limit of Rs. 423.29 Lacs. Thus, securiy perfection shall be established. Poje & Rajane" Special Tem & Conditions 1. Copy of Registered Leave & License Agreement doled 07.06.2018 between Seya Industries Limitecand Universal Textile Valemproof Co. (India) to be obtained prior todisbursement. Letter of confirmation to the LOI dated 01.06.2018 between UTW & Seyafor extending the fenure of the lease for another 3 terms of 5 years each on the same termsand conditions as shall alo be submitted on record prier lo-disbursement 3. ....
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....facility (ODAP limit of Rs423.29 lac and proposed term loan of Rs.2456 lac) is prepaid/taken over by any Bank/ Financial Institution any time curing the currency of the advance on the pulslandng balance In case of Term Loans & on the sanctioned limit or the outstanding balance whichever is higher In case of olher credit facilities. . Leose renials, existing and proposed, should be sufficient to cover the principal and interest of the term loan. Any shorifall in lease rentals vis-Ã -vis the EMI for the lerm loar should be. met by the company out of own sources. Undertaking lo this effect should be oblained from the borrower In this regard. 9. Undertaking to be obtained from borrower confirming that the funds will not be utilized for purchase of land and any other speculalive purposes. 10, Put Option: The Bank shall have the right lo call upon the Borrower any time after expiry of lease period to pre-pay the outstanding amount of the Facility or any part thereof within 90 days rom giving notice. Any such notice of prepayment once given shall be irrevocable, and the Borrower.shall.be bound to make the prepayment of the amount(s) specified the'ein. 11. The borrower ....
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....ed Signatory" P Authorised Guarantors: Mr. Amril Rajan! Ms. Pooja Rajani Shri Balaji Entertainment Private Limited P Peaje A Rajaini For Shri Balall Entertainment Pvt, Ltd. y Authorised Signatory p For Snri Balaji Entertainment Pvt. Ltd .- Poor A Rajani. Proja ARaffari" age +Ryan Partner Part Partner Entertainment Pyt .. Ltd. For Shri Balajl Entertainment AT Pooje A / Authorised Signatory" P Authorised For Shri Balaji Shri Balaji Entertainment Private Limited Authorised Signatory P Peaje A Rajaini For Shri Balall Entertainment Pvt, Ltd. y Authorised Signatory p For Snri Balaji Entertainment Pvt. Ltd .- Poor A Rajani. Authorised Signatory Document 5 17 SVC CO-OPERATIVE BANK LTD Account Statement From :- 02 Aug 2018 ToDate :- 24 Feb 2020 BranchName : Versova Print Date :+ 16-Nov-2024 Page Number 2 Account Detail :- TL/B-LOAN/1645-UNIVERSAL TEXTILE WATERPROOF CO. (INDIA) & SHRI BALAJI ENTERTAINMEN CBS Account No :- 101318900001645 Date Particulars CHONo Debit Credit Balance Linked Balance By Balance B/fd -240689509.00 16/Mar/2019 To Wrong Credit 15/Mar/2019 12174316 4371900.00 0.00 -245061409.00 ....
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....ice at SVC Tower, Nehru road, Vakola, Santacruz (cast), Mumbai- 400 055 has informed the company that the company's application for loan has been considered by the bank and at the request of the company has agreed to sanction credit facilities to the tune of Rs. 2456.00 lakhs being term loan facility .. The Board has agreed to avail the said facilities. . The company is already a member of the SVC Co-op, Bank Itd. V Since the Board has agreed to accept the terms and conditions of the sanction letter dated 19/07/2018 of the bank, for availing the aforesaid credit facilities, the following resolutions were passed: "resolved to accept the terms and conditions of the sanction letter dated 19/07/2018 and availing the credit facilitles to the extent of Rs, 2456.00 lakhs being terra loan facility with interest @ PLR-7.25% per annum. - 3 Me . Pagja A . Rajani Posje ·K Resolved further that Mr. Amrit Rajani the directos of the company, be and are hereby authorised to sign all the bank, documents, including demand promissory note, acknowledgement of debt, mortgage documents and all such other related documents in respect of the aforesaid facilities and to give corpora....