TMI Blog2021 (3) TMI 166X X X X Extracts X X X X X X X X Extracts X X X X ..... der Form A. R2 to R7 have also not been able to show that they furnished their claims as provided under Regulation 8 of the CIRP Regulations in Form C of the Schedule. Item 5 of the Form C mandates the Financial Creditor(s) to furnish the details of the documents by reference to which the debt can be substantiated. It was contended by the Applicant that the so called Corporate Guarantees attracted stamp duty in the State of Maharashtra. But in the absence of the documents itself either in the electronic form or physical form, it would not be appropriate for this Authority to comment whether the documents could attract stamp duty under the Maharashtra Stamp Act, 1958 (Bombay Act No. LX of 1957) - thus, the the irresistible conclusion would be that R1 without proper submission of documents before him and without proper verification admitted R2 to R7 as Financial Creditors of the Corporate Debtor - answered in the negative. Whether, the Corporate Guarantees dated 03/03/2017 executed by the Corporate Debtor in favour of R2 to R7 and other members of the Consortium are preferential transactions? - HELD THAT:- In order to come under the preferential transactions, the transaction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent Nos. 2 to 7 and consequential directions thereupon. 2. The facts leading to the Application can be depicted as under. Corporate Insolvency Resolution Process (CIRP) of the Corporate Debtor was initiated by this Bench by an order dated 15.05.2018 (Admission Order) and Manish Dhirajlal Kaneria was appointed as Interim Resolution Professional (IRP) on 18.05.2018. The IRP published a public announcement on 21.05.2018 inviting claims from the creditors of the Corporate Debtor. Certain shareholders of the Corporate Debtor challenged the Admission Order before the Hon ble National Company Law Appellate Tribunal (NCLAT) in CA (AT) (Insolvency) Nos. 255-256 257-258 259-260 of 2018. The Hon ble NCLAT by an order dated 30.05.2018 inter alia stayed the Admission Order. However, in view of the subsequent developments, the Appellants withdrew the Appeal. The Hon ble NCLAT by order dated 30.04.2019, permitted the withdrawal of the Appeal and directed this Tribunal to proceed with the matter in accordance with law. 3. Accordingly, the CIRP of the Corporate Debtor was resumed and by order dated 07.05.2019 this Tribunal directed the IRP to further proceed in the matter. The IRP issued ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6.68 276.68 - 3% 13. Indian Overseas Bank 184.70 184.70 - 2% Total 12687.65 9,665.07 3,022.58 100% 4. The IRP by email dated 24/05/2019 sent notices to the Financial Creditors and members of the suspended Board of Directors to attend the first meeting of the CoC to be held on 30/05/2019 at 2.00 pm in Mumbai enclosing an agenda for discussion. The agenda 4 inter alia indicated that the IRP had received 26 claims from Financial Creditors till 21/05/2019. Of them 13 had been fully/partially verified who constituted the CoC. The other claims were still under verification and the claimants had been asked to furnish materials in support of their claims. The following were the summary of the claims received by the IRP from various Creditors. (INR in Crore) Sr. No. Creditors Claim Amount by Creditor Claim Amou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assets (NPA). On 01/02/2019 the Security Trustee under two separate letters by invoking the Corporate Guarantees called upon the Corporate Debtor to pay ₹ 7229,45,02,245.06/- in respect of the RCOM Facility ₹ 810,32,47,830.65/- in respect of the RTL Facility. By email dated 08/02/2019 the Corporate Debtor informed the Applicant of the Letters/Notices dated 01/02/2019 by the Security Trustee invoking the Corporate Guarantees. The Applicant under its letters dated 28/02/2019 08/03/2019 objected to the invocation of the Guarantees and intimated the Consortium Lenders through the Security Trustee that the Corporate Guarantees were created in breach of the terms of the Facility Agreement dated 19/03/2010 and subsequent amendments and restatements thereto. Despite requests made to that effect neither Respondent Nos. 2 to 7 nor the Corporate Debtor provided the copies of the said Guarantees to the Applicant. Respondent Nos. 2 to 7 by letter dated 18/03/2019 and the Corporate Debtor by its letter dated 19/03/2019 responded to the aforesaid letters dated 28/02/2019 08/03/2019 without providing any specifics. The Applicant by letter dated 26/03/2019 responded to the said c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as defined under Section(s) 43 and 66 of the IB Code respectively and that the Purported Guarantees are nonest in law, not binding on the Applicant and voidable at the instance of the Applicant; (b) To direct the directors and the promoters of the Corporate Debtor to make such contributions to the assets of the Corporate Debtor as it may deem fit, including directions under Section 67 of the IB Code; (c) To de-recognize / declassify / delete the Respondent no. 2 to Respondent no. 7, who are claiming to be the financial creditors of the Corporate Debtor on the basis of the Purported Guarantees and claiming to form part of the committee of creditors of the Corporate Debtor; (d) to prepare a reconstituted committee of the creditors comprising of financial creditors of the Corporate Debtor as mandated under Section 21 of the IB Code, 2016; (e) To perform his duties in accordance with the relevant provisions and regulation of the Insolvency and Bankruptcy Code, 2016; (f) To defer any meeting of committee of creditors of the Corporate Debtor till the exercise as set out in terms of prayer(s) c) and d) above is accomplished; (g) In the event, any meetin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing not been brought by the RP. The facility agreement is governed by the English laws and hence could not be enforced on the Indian soil. The Corporate Debtor executed the Guarantees of its free will. The Consortium of lenders, in their commercial wisdom, accepted the Guarantees. The Applicant thus cannot question the said decision and the rights ensuing there from. It is further submitted that the Advocates of the Corporate Debtor in their letter dated 19/03/2019 have clearly stated that the Annual reports and financials of RCOM include the disclosure of the existence of the Corporate Guarantees. 14. The plea that the Guarantees were in violation of Section 186 of the Act is misconceived and is inapplicable. The Applicant and other lenders were aware about the issuance of the Corporate Guarantees, the same having been discussed in the meeting of Joint Lenders Forum (JLF). The execution of the Corporate Guarantees could not be construed as fraudulent. The claims of the Respondents have been duly admitted by the IRP under the Code and the same accordingly cannot be questioned by the Applicant at this stage. It would be appropriate to indicate that one of the ECB lenders namely E ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble National Company Law Appellate Tribunal (NCLAT) in CA (AT) Insolvency No. 255 260 of 2018 stayed the order dated 15/05/2018. The stay continued till 30/04/2019 when the Hon ble Appellate Authority permitted the withdrawal of the Appeals. Upon the receipt of the order this Tribunal by order dated 07/05/2019 directed the R1 to proceed with the matter in accordance with the law. R1 thereupon issued fresh public announcement on 07/05/2019 and constituted the CoC on 24/05/2019 after the receipt of the claims. 18. There is no material on record to indicate that R2 to R7 as Financial Creditors submitted their claims along with the proof to the IRP (R1) electronically on or before 21/05/2019. There is also no material on record to indicate which claims, as proof, the R1 perused to form an opinion that R2 to R7 would come within the parameters of Financial Creditors of the Corporate Debtor. There is also no material on record to find that the R2 to R7 submitted the Corporate Guarantees dated 03/03/2017 as proof of their financial debt which the Corporate Debtor owed to them on the basis of the said Corporate Guarantees. There is also no material on record to indicate the place wher ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... em 5 of the Form C mandates the Financial Creditor(s) to furnish the details of the documents by reference to which the debt can be substantiated. It was contended by the Applicant that the so called Corporate Guarantees attracted stamp duty in the State of Maharashtra. But in the absence of the documents itself either in the electronic form or physical form, it would not be appropriate for this Authority to comment whether the documents could attract stamp duty under the Maharashtra Stamp Act, 1958 (Bombay Act No. LX of 1957). Therefore, the decisions in that regard viz. - Garware Wall Ropes Ltd. v. Coastal Marine Constructions Engineering Ltd.: (2019) SCC Online SC 515; Avinash Kumar Chauhan v. Vijay Krishna Mishra: (2009) 2 SCC 532, New Central Jute Mills Co. Ltd. Others v. State of West Bengal Others: (1964) 1 SCR 535; Indian Hume Pipe Co. Ltd. v. State of Maharashtra: (2018) SCC Online Bom 452, relied on by the Applicant need not be discussed in detail. 21. From the aforesaid discussions the irresistible conclusion would be that R1 without proper submission of documents before him and without proper verification admitted R2 to R7 as Financial Creditors of the Corpor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... means money or its worth in goods, services, or new credit, or release by the transferee of property previously transferred to such transferee in a transaction that is neither void nor voidable by the liquidator or the resolution professional under this Code, including proceeds of such property, but does not include a financial debt or operational debt substituted for existing financial debt or operational debt. 4. A preference shall be deemed to be given at a relevant time, if- a. it is given to a related party (other than by reason only of being an employee), during the period of two years preceding the insolvency commencement date; or b. a preference is given to a person other than a related party during the period of one year preceding the insolvency commencement date. 23. In order to come under the preferential transactions, the transaction must satisfy the requirements of Section 43(2) of the Code. The execution of the so called Corporate Guarantees dated 03/03/2017 could not be a transfer of property or an interest of the Corporate Debtor for the benefit of one of its Creditors or a body of Creditors. Admittedly on the date of execution of the docum ..... X X X X Extracts X X X X X X X X Extracts X X X X
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