TaxTMI 
TaxTMI 
2024 (8) TMI 1745
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....and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 for a Resolution of an unresolved Financial Debt of Rs. 87,43,17,925.37/-inclusive of contractual interest, penal interest, costs and expenses. 2. The Petitioner is a Company incorporated on 01.10.1938 under Jammu and Kashmir Companies Act XI of 1977(Samvat) (1920 A.D) with its registered office at corporate headquarters, Maulana Azad Road, Srinagar Kashmir (J&K). 3. The Respondent was incorporated on 07.07.1987 under the Companies Act 1956 having CIN U74999MH1987PLC044006. Its registered office is at513/A, 5th Floor, Kohinoor City, Kirol Road, L.B.S. Marg, Kurla (West), Mumbai-400070 98/2, K.R. Therefore, this Bench has jurisdiction to entertain and decide the Petition. 4. The Nominal share capital of the Corporate debtor is l- Rs. 750,00,00,000 Paid up share capital as on June 30, 2020 is Rs. 405,87,45,340. 5. This is a Restored Company Petition connected to CP (IB)/361 of 2022. FACTS AND SUBMISSION OF THE PETITIONER 6. The present Petition was filed before this Adjudicating Authority on the ground that Total amount of debt granted by Jammu Kashmir Bank Limited vide sanction letter bearing no.JKB....
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....tition CP No. 543 of 2021, filed by State Bank of India against the Corporate Debtor, where the corporate debtor had issued a corporate guarantee, was admitted into CIRP vide order dated 01.03.2023 of Hon'ble NCLT Mumbai. Subsequently, the present Petitioner also filed Petition No. CP (IB) 361 (MB) 2019 under Section 7 of the IBC against the corporate debtor. However, this petition was dismissed vide order dated 01.03.2023, as the corporate debtor was already admitted into CIRP under CP 543 of 2021. Subsequently the Petitioner Bank filed a Restoration Application No. 34/2023 under Rule 11 of the NCLT Rules, 2016, seeking to restore CP (IB) 361 (MB) 2019. This Restoration Application was allowed by the Hon'ble Tribunal, in its order dated 02.11.2023. The admission of the Corporate Debtor into CIRP was set aside by Hon'ble NCLAT dated 28.04.2023. 12. The financial creditor submits that the Corporate Debtor has not disputed the existence of the debt or the fact that it is in default. However, it claims that its liabilities have been transferred to another company due to a Scheme of Demerger and a subsequent Scheme of Amalgamation. First, the Corporate Debtor entered into a Scheme o....
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....did not affect the number of guarantees required. Instead, the demand for an additional guarantee arose from the Renewed Sanctioned Letter dated November 18, 2017, issued three years after the Scheme. 16. This additional guarantee was sought because the asset base backing the original guarantee, specifically the Gorai Land valued at INR 796 crores, was transferred to another entity, reducing the security available for the loan. To maintain equivalent security, the Petitioner requested an additional guarantee from PIIPL, to whom the Gorai Land was transferred. 17. The assertion that the Petitioner gained an unfair commercial advantage is unfounded since PIIPL never provided the second guarantee, merely acknowledging the transfer of the Gorai Land. The loan had already been disbursed before this second guarantee was requested. Consequently, these issues are irrelevant to the Section 7 Petition, which solely focuses on whether the Corporate Debtor has a debt and whether a default has occurred. The Corporate Debtor's arguments about PIIPL's guarantee and the timing of the loan disbursement are distractions from the core issue of debt and default. 18. The Corporate Debtor's arg....
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....refore asked PIIPL to extend the mortgage and provide a fresh guarantee. In line with this, Deeds of Declaration dated December 3, 2018, were executed by both PIIPL and the Respondent, confirming the scheme transactions. Copies of these Deeds are attached as Exhibit D. 25. It is clear that the Petitioner recognized PIIPL as both the mortgagor and guarantor. As a result, the Petitioner should not have filed this Petition against the Respondent, who is neither the mortgagor nor the guarantor for the loans taken by the Principal Borrower. 26. Additionally, the Petitioner had already filed a petition against the Principal Borrower, PIUDCL, which is currently undergoing liquidation as per the order dated August 11, 2020, by this Tribunal. The Petitioner also filed a petition against PIIPL, the Guarantor and Mortgagor, which is currently under CIRP as per the order dated April 15, 2019. Despite proceeding against both the Principal Borrower and the Guarantor/Mortgagor, the Petitioner is now attempting to proceed against the Respondent. This appears to be an attempt to deceive this Tribunal by making false statements under oath. Therefore, the Tribunal should take serious note of th....
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....r resolving the dispute. The claim made in the petition does not match the sanction letter, and important documents and letters exchanged between the parties have been concealed. The Petition does not mention the date of default, which is a critical element in a Section 7 application. The Petitioner has failed to provide complete information and evidence. The facts presented are distorted, lacking concrete proof to support the claim against the Respondent. The authorized officer who filed the Petition lacks the authority to do so. The Petition was filed under the instructions of Mr. Fayaz Ahmad Wani, who claims to be the authorized officer of the Petitioner based on a Power of Attorney dated October 21, 2015. However, on reviewing the Power of Attorney, it does not explicitly grant the authority to initiate a Corporate Insolvency Resolution Process (CIRP) against any company or its guarantor. 29. The circumstances surrounding the transfer of liability are as follows: After the execution of the guarantee and mortgage, a scheme of demerger was proposed between Essel Infra Project Limited (the demerged company) and Essel Urban Infrastructure Pvt. Ltd. (the resulting company). This ....
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....ects Pvt. Ltd. through another order of the Hon'ble High Court dated June 20, 2014. This merger resulted in the transfer of all assets and liabilities from Essel Urban Infrastructure Pvt. Ltd. to Pan India Infra Projects Pvt. Ltd., as referenced on pages 36 and 38 of the reply, with specific clauses detailed in Clause 2.1.3 on page 50Given these circumstances, the original liability under the guarantee was first transferred to Essel Urban Infrastructure Pvt. Ltd. and then to Pan India Infra Projects Pvt. Ltd. Importantly, it should be noted that the transfer of the guarantee liability was separate from the transfer of the mortgage liability. The two instruments were independent, and the transfer of one did not affect the other. The guarantee liability was transferred under the provisions of the scheme and the court's order from April 4, 2014. 34. Additionally, the guarantee document explicitly stated that it would not be affected by any absorption or amalgamation of the Guarantor Company with another company. However, this provision was overridden by the court-approved demerger scheme, which transferred the liability of the Corporate Debtor under the guarantee to the resulti....
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....ber 21, 2015, does not specifically authorize him to initiate CIRP proceedings against us, which is contrary to the NCLAT's decision in Palogix Infrastructure Ltd. (2019). Additionally, the Power of Attorney lacks the necessary Board Resolution as required by Notification S.O. 1091(E) dated January 27, 2019 b. Moreover, the Petition is invalid because the Financial Creditor did not file the Information Utility Report as mandated by Regulation 20(1)(A) of the IBBI (Information Utilities) Regulations, 2017. Section 7 of the IBC requires verification of the default from the Information Utility records or other evidence, and without this, the Petition should not be considered. 40. Therefore, due to these objections, the Petition is not maintainable and should be dismissed by this Hon'ble Tribunal FINDINGS: 41. We have heard the Counsel appearing for both the Parties and perused the material available on record. 42. The petition details an outstanding financial debt of Rs. 87,43,17,925.37, including interest and costs. This debt arises from a long-term working capital facility of INR 200 crores, which was extended to Pan India Utilities Distribution Company Ltd.....
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....nd subsequent amalgamation schemes approved by the Bombay High Court in 2014, the Tribunal found that the corporate guarantee provided by the Corporate Debtor remained valid despite the restructuring. Further the guarantee agreement dated 27.12.2013 is an independent document executed between the petitioner and respondent and it specifically mention page 394 & 395 of the Petition. This agreement was deemed not to be linked solely to the Gorai project, which was transferred to Essel Urban Infraprojects Ltd. the same is coated as under: "WHEREAS the BANK vide its sanction letter No, JKB/AND/PIUDCL/2013- 983 dtd, 17.12.2013 has approved and sanctioned a Line of Credit facility (SOD) facility of Rs. 200.00 Crores (Rupees Two Hundred Crores Only) on the terms and conditions mentioned therein and against the security, inter-alia that the Borrower will furnish a Corporate Guarantee of the Company "Essel Infra Projects Lt." to the BANK to ensure repayment of the above referred Line of Credit facility (SOD} facility availed/is be availed of by Borrower in accordance with the terms and conditions of the sanction letter and the documents executed by and between the Borrower and the B....
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..... v. Reliance Communications Ltd. (2021) 10 SCC 176 "The Court held that while the date of default is a relevant detail, its absence does not automatically invalidate an insolvency petition if the petition adequately establishes the occurrence of default and the debt due. The Court allowed flexibility in procedural aspects as long as the substantive requirements are fulfilled". Further it is well settled law that in case of Coporate Guarantee the date of invocation is taken as the date of default, which is established as 29.10.2019 in this case. 50. The Tribunal rejected the Corporate Debtor's claims regarding the invalidity of the petition based on the restructuring and the assertion that it is not liable for the debt. The Tribunal noted that the arguments presented by the Corporate Debtor were distractions from the core issue of the debt and default. 51. In response to the argument presented by the Corporate Debtor, which contends that the Petitioner has already taken action against the Principal Borrower and Pan India Infrastructure Pvt. Ltd. (PIIPL), currently undergoing CIRP, and further against the Respondent, this Tribunal finds the following: ....
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....emand notice issued by the Petitioner, stating that it was reasonable and complied with the necessary legal requirements. The objections raised by the Corporate Debtor regarding the notice were deemed irrelevant to the core issues of debt and default. 55. It is crucial to note that CP No. 361 of 2022 was dismissed as infructuous by this Hon'ble Bench vide order dated 01.03.2023, when the Corporate Debtor got admitted into CIRP based on CP No. 543 of 2021 filed by another financial creditor, (i.e. the State Bank of India). Subsequently, when the Hon'ble NCLAT, by its order dated 28.04.2023, set aside the admission of the Corporate Debtor into CIRP under Petition CP No. 543 of 2021, the Petition number CP (IB) 361 (MB) 2022 was allowed to be Restored by this Hon'ble Bench vide order dated 02.11.2023, and a new number, RCP/06/(IB)-MB-V/2023, was assigned to it. 56. In conclusion, the financial debt is due & payable by the Corporate Debtor as on the date of filing the present Company Petition. Further, there is Admission of default and outstanding liability by the Corporate Debtor in various correspondences annexed to the Company Petition. 57. From the set of docum....
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....rohibiting the institution of suits or continuation of pending suits or proceedings against the corporate debtor including execution of any judgment, decree or order in any court of law, tribunal, arbitration panel or other authority; transferring, encumbering, alienating or disposing of by the corporate debtor any of its assets or any legal right or beneficial interest therein; any action to foreclose, recover or enforce any security interest created by the corporate debtor in respect of its property including any action under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002; the recovery of any property by an owner or lessor where such property is occupied by or in the possession of the Corporate Debtor. e. That the order of moratorium shall have effect from the date of pronouncement of this order till the completion of the corporate insolvency resolution process or until this Bench approves the resolution plan under sub-section (1) of section 31 or passes an order for liquidation of corporate debtor under section 33, as the case may be. f. That the supply of essential goods or services to the Corporate Deb....