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2017 (10) TMI 1580 - Tri - Insolvency and BankruptcyMaintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - pledge/mortgage of property - existence of debt and dispute or not - HELD THAT - It is not in dispute that the FC had initiated the proceeding under Section 19 (3) Of the ORT Act not only against the principal debtor-- but- also against the guarantors in respect Of loan sanctioned in favour of the principal debtor. It is also not in dispute that the CD herein being one of the guarantors was made a party to the aforesaid proceeding before the DRT Kolkata - There is also no quarrel over the fact that in the proceeding before the ORT Kolkata the FC has prayed for recovery certificate for an amount to the tune Rs. 121, 41, 39, 813.00 of and also for enforcement of such certificate in the event such a certificate is granted and that too by disposing the properties/assets Which the principal debtor pledged mortgaged with the FC and if necessary by also by disposing the property which the guarantors pledged mortgaged with the FC. Such revelations also show that the assets/properties of the Cd herein which were pledged / mortgaged with the FC in likely to disposed of in the event of the enforcement of the recovery certificate from the side of the DRT Kolkata. When such admitted or well evident positions are considered in the light Of laid down in section 14 of the Code of 2016 it would appear clearly that directions in the aforesaid section needs to be extended to proceeding in question now pending before the DRT Kolkata. Being so in my opinion in the event of admission Of the present application this Adjudicating Authority would be required to declare by order moratorium for the purposes so specified in Section 14 Of the Code Of 2016. In that event the moratorium declared would also cover the proceeding pending before the DRT Kolkata. The claim advanced from the side Of CD that the application in hand could not disclose even the claim as contemplated in sect on 3(6) much less its such application establishing the fact that the CD owed a debt to the FC as on 11 .08.2017 or that there was a default in repayment Of loan on same date same being 11.08.2017 are wholly without any element of truth. The petition is admitted - moratorium declared.
Issues Involved:
1. Authorization of the person filing the application. 2. Classification and calculation of financial debt. 3. Contradictory figures regarding the debt. 4. Parallel proceedings in different fora. 5. Inclusion of penal charges in the debt claim. Issue-wise Detailed Analysis: 1. Authorization of the Person Filing the Application: The Corporate Debtor (CD) claimed that the person who submitted the application on behalf of the Financial Creditor (FC) lacked proper authorization. The FC countered this by referring to a power of attorney dated 20.03.2017, which authorized Mr. Somraj Mukherjee to file the application. The Tribunal found that the power of attorney, executed based on a board resolution, was valid and empowered Mr. Mukherjee to initiate the proceedings. The Tribunal also referenced the NCLAT decision in Palogix Infrastructure Pvt. Ltd. vs. ICICI Bank Ltd., which supported the validity of such authorizations. 2. Classification and Calculation of Financial Debt: The CD argued that the amount claimed by the FC included penal charges, which should not be considered financial debt under Section 5(8) of the Insolvency & Bankruptcy Code, 2016. The FC contended that the definition of financial debt is inclusive and that penal interest is a form of interest. The Tribunal agreed with the FC, citing the RBI Master Circular on Interest Rates on Advances and the Supreme Court decision in Central Bank of India vs. Ravindra & Ors., which recognized penal interest as a form of interest. Therefore, the inclusion of penal charges in the debt claim was deemed valid. 3. Contradictory Figures Regarding the Debt: The CD pointed out discrepancies in the debt amounts stated in various documents. The FC explained that the differences were due to the updating of dues over time and provided a detailed reconciliation of the amounts. The Tribunal found the FC's explanation satisfactory and concluded that the discrepancies did not undermine the validity of the debt claim. 4. Parallel Proceedings in Different Fora: The CD argued that the FC's initiation of proceedings before both the Debt Recovery Tribunal (DRT) and the National Company Law Tribunal (NCLT) jeopardized its rights. The FC responded that the proceedings under the Insolvency & Bankruptcy Code are independent and that the moratorium under Section 14 would protect the CD from parallel proceedings. The Tribunal agreed, referencing the Allahabad High Court decision in Sanjeev Shriya vs. State Bank of India, which supported the application of a moratorium to ongoing proceedings in other fora. 5. Inclusion of Penal Charges in the Debt Claim: The CD contended that the FC could not claim penal charges from the CD when it had not claimed them from the principal debtor in the DRT proceedings. The Tribunal found that the loan agreement between the FC and the principal debtor, as well as the guarantee agreement with the CD, included provisions for penal charges. Therefore, the claim for penal charges from the CD was valid. Conclusion: The Tribunal found that the FC had established a debt of Rs. 595,60,65,355.00 as of 11.08.2017 and a default in repayment. The application was complete in all respects, and the Tribunal admitted the application, declaring a moratorium and appointing an Interim Resolution Professional. The Tribunal also addressed the issue of delays in the proceedings, attributing them to adjournments requested by the CD. The application was thus admitted and disposed of accordingly.
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