2026 (4) TMI 1672

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.... by the order has come up in this Appeal. 2. Brief facts of the case necessary to be noticed for deciding the Appeal are: (i) The CD was incorporated in the year 1982 and is in business of manufacturing and exporting plastic coloring additives, known as Masterbatches. The CD has availed various credit facilities from Canara Bank since 15.10.2011. Facilities were renewed from time to time. Total amount of facilities granted by the Bank was to the extent of Rs. 157 crores. In addition, ad-hoc credit facilities were also granted in the year 2016-17 to the CD. Various security documents and Hypothecation Agreements were executed. Charges were registered with regard to various assets of the CD. (ii) The account of the CD slipped into Non-Performing Asset ("NPA") on 03.10.2019, the Bank filed an OA No.609 of 2023 before the Debts Recovery Tribunal ("DRT"), New Delhi for recovery of the amount from the CD, which OA is pending consideration. In the OA filed by the Bank, the CD has also filed counter claim. (iii) An application under Section 7 of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as the "IBC") was filed by the Canara Bank on 09.0....

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....ank. In the NeSL Certificate, default was only for Rs. 96,99,057.55 paisa. In the affidavit filed by the Appellant in compliance of order dated 12.02.2026, the Appellant has given details of credit facilities and date of NOCs issued, which clearly proved that there was no outstanding debt existing against the Appellant. Learned Counsel for the Appellant has also referred to and relied on an order passed by NCLT on 13.02.2020 in Sections 241 and 242 petition with respect to CD and another Company M/s Agroha Colourtech Pvt. Ltd. The Lenders were directed to bifurcate securities and assets of both the Companies to run. There is no compliance of the said order by the Canara Bank. All credit facilities stood fully repaid and discharged, which has been acknowledged by the Bank by issuing No Dues Certificates/NOCs as well as Memorandum of Satisfaction of charge in respect of facilities. The Respondent has illegally retained a sum of Rs. 30,91,60,044/-, which has neither been duly reflected nor reconciled in the books of CD and no explanation has been given. The amounts remitted by overseas buyers of the Company were not credited to the OCC account of the CD totaling to Rs. 7,25,98,131/-. ....

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....ellant that the amount of Rs. 31,18,17,044/- has been illegally retained, the said statement is incorrect. The CD has already filed its counter claim in proceedings under Section 19 before the DRT relying on the said allegations, which shall be examined in DRT proceedings. The Bank has explained all remittances in his account. In Section 7 application, the Adjudicating Authority has to look into the debt and default and Financial Creditor having proved debt and default by bringing ample material on record, no error has been committed by the Adjudicating Authority in admitting Section 7 application. 6. We have considered the submissions of learned Counsel for the parties and have perused the records. 7. Challenge to the admission of Section 7 application has been made by the Appellant on various grounds as noted above. We need to proceed to examine the said grounds of challenge in seriatim. (1) Canara Bank having issued No Dues Certificates/ NOCs dated 29.06.2017, 30.12.2017, 22.02.2018 and 07.08.2018, there exist no outstanding amount to be paid. 8. We need to first look into the No Dues Certificates relied by the Appellant. The copies of the aforesaid No Dues Cer....

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....ered on 17.01.2018 (Id-100147217). Thanking you Your faithfully Sd/-" 11. When we look into the above letters, the above letters were written to the Registrar of Companies to record satisfaction for the charges created with the ROC. The said letters cannot be read to mean that the Bank has communicated that it has no outstanding dues against the CD. When we look into Section 7 application and particulars of financial debt and evidence on record, apart from hypothecation and charges on various residential properties, hypothecated stock in trade and other details of charges available with the MCA were all mentioned. Learned Counsel for the Respondent Bank replying to the said submission has relied on details available with the MCA as on 09.08.2024, where in Index of Charges, several charges in favour of Canara Bank are shown to not have been discharged. Date of satisfaction regarding various charges in favour of Canara Bank are not mentioned, whereas satisfaction of charges with respect to several charges have been mentioned. The above details are in the Appeal at page 1007 Vol.-4 of the Appeal. When we look into the Index of Charges at Item No.10, 11, 1....

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....id NeSL Certificate was with respect to only one account of the CD, whereas there was outstanding debt as per NeSL record in other two accounts of the CD, i.e. 2009773010930 and 2009256010152. In reply filed on behalf of Respondent Bank, NeSL record of the above two accounts have been brought on record at Pages 78 and 92 of the reply. NeSL record at Page 78 is with respect to Account No. 2009773010930, which was last authenticated, mentions default amount of Rs. 18,63,346.72. Further at Page-91 of the reply, default with respect to Account No. 2009256010152 has been brought on record, which was authenticated, wherein as per last authentication dated 23.08.2023 default of Rs. 27,74,72,734.18 has been mentioned. NeSL certificate, which is authenticated, clearly proves the default in other two accounts. Hence, the submission of the Appellant that the default is only Rs. 96,99,057.55 paisa, is incorrect. The said NeSL certificate relied by the Appellant relates to only one account. It is relevant to notice that in Section 7 application, the account with respect to which NeSL Certificate has been relied by the Appellant was not even mentioned. We, thus, are satisfied that NeSL Certifica....

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....e also filed petitions with Hon'ble Debt Recovery Tribunal for recovery of their dues, detail of the same are as follows-: "Case Type/ Case No/ Year Status Original Application/ 16/2020 filed on 14/08/2019 by Andhra Bank Limited 'Proposal for restructuring under consideration Original Application/ 490/2020 filed on 18/08/2020 by State Bank of India 'OTS done subsequently and the application will be withdrawn by the bank after all payments as per schedule is made by the Company. However, as on date of signing of the financial statements, after settlement of the management disputes with the intervention of Hon'ble NCLT, Jaipur, the current management has applied for restructuring / reclassification of its debts. Restructuring with Siemens Financial Services Private Limited (NBFC) has already been agreed and onetime settlement (OTS) has been reached with State Bank of India. However restructuring proposals with Canara Bank, Andhra Bank and SIDBI are still pending for lender's approval. The management is confident and hopeful that restructuring proposals of the Company shall be approved." 17. The above statement in the Financial Statement clearly records that the....