TMI Blog2017 (5) TMI 317X X X X Extracts X X X X X X X X Extracts X X X X ..... ed counsel for the respondent whether the respondent would be in a position to infuse any funds to revive the company, learned counsel for the respondent, on instructions, states that in view of the fact that the shareholding of the promoters is now reduced to 2%, there is no possibility of the promoters infusing any further funds. A perusal of the record clearly indicates that neither the promoters nor the investors are now agreeable to infuse any funds in the respondent for its revival. None of these parties have made any offer before this Court also though repeatedly asked to infuse any funds even at this stage. The ONGC Limited has already terminated the major contract awarded to the respondent. In these circumstances, do not find any scope of any revival of the respondent company in the facts and circumstances of this case highlighted aforesaid. The respondent in this case has not only admitted the liability of the petitioner but of large number of other creditors. Though there was an attempt made by the intervenors by holding large number of meetings from time to time during the period between 18th April, 2014 and February, 2017, the members of the JLF could not revive ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of ₹ 75.00 crores towards part financing amongst others to the respondent. The parties accordingly executed Dual Currency Loan Agreement on 12th January, 2010 on the terms and conditions set out therein. Great Offshore (International) Limited, Cayman Islands, wholly owned subsidiary of the GOL Offshire Limited sought sanctioned of a foreign currency term loan of US $ 46.40 million. The petitioner sanctioned the said loan. On 24th September, 2010, the petitioner and the said Great Offshore (International) Limited entered into a Facility Agreement whereby the petitioner agreed to lend and advance the said loan on the terms and conditions set out therein. 3. On 24th September, 2010, the said loan granted by the petitioner to the Great Offshore (International) Limited was guaranteed by Great Offshore Limited vide Deed of Guarantee dated 24th September, 2010 on various terms and conditions mentioned therein. 4. GOL Offshore Limited requested the petitioner for a Foreign Currency Term Loan / Standby Letter of Credit of US $ 24.00 million. The petitioner sanctioned the said loan. On 26th July, 2011, the petitioner and the respondent herein executed a Dollar Loan Agreement wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7. The petitioner accordingly issued a statutory notice upon the respondent at its registered office address on 11th June, 2014 and called upon to pay an amount of US $ 79,903,524.81 within twenty days from the date of the said notice. 8. The respondent vide their letter dated 5th August, 2014, responded to the said statutory notice admitted that according to the respondent total outstanding amount was approximately US $ 80.00 million, including interest as on July, 2014 against a total debt sanctioned of US $ 131.80 million. It was alleged that the respondent had been discussing with the bank at various times about position of the respondent and the fact that the respondent was facing up temporary liquidated mismatch. The respondent recorded various reasons in the said letter, which according to the respondent created liquidated mismatch of the respondent temporarily. The respondent made various proposals to the petitioner. It was mentioned that some of the properties of the respondent could not be sold due to various reasons and that the respondent was taking all requisite steps to solve those critical outstanding issues in best possible manner. 9. Some time in the year A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rein has admitted its liability and had expressed the difficulty to pay the amount. The respondent though assured to pay the dues of the petitioner in future, the respondent did not make any payment. Insofar as the Company Petition No.119 of 2015 is concerned, it is submitted by the learned senior counsel that the respondent did denied the liability of the petitioner vaguely and did not send any detailed reply. 12. During the pendency of these two company petitions, eight banks and/or financial companies filed a company application interalia praying for intervention and impleadment in the Company Petition No.756 of 2014. Along with the said company application for seeking intervention and impleadment, the applicant also tendered a compilation of minutes of various meeting held by the Joint Lenders' Forum (for short JLF ) held between 18th April, 2014 and 3rd February, 2017. Learned senior counsel for the petitioner thus invited my attention to some of these minutes of meeting of the JLF. In the JLF meeting held on 16th April, 2014, the petitioner in Company Petition No.756 of 2014 brought to the notice of the JLF that the petitioner and DBS had declared the facilities exten ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at company shall pass an enabling resolution in the upcoming Board meeting for undertaking SDR. 19. In the JLF meeting held on 27th January, 2016, the promoters informed the JLF members that due to outstanding statutory and other critical payments, the operations of the respondent had become very difficult and accordingly the respondent requested the lenders to support by extending the facilities. The lenders however did not consider the said request favorably and reiterated that the company needs to quickly implement SDR. The Bank of India, Union Bank of India and Central Bank of India had declared the accounts of the company as NPA. 20. In the JLF meeting held on 18th March, 2016, it was recorded that the respondent had at the board meeting held on 29th February, 2016 had approved SDR subject to approval of the shareholders, for conversion of debt upto 51% of the post issue share capital. The respondent also made various proposals. The lenders discussed the said request of the respondent and considering the present financial situation, rejected those proposals and advised the respondent to explore the alternate option. It was opined by the JLF that the company needs to conv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es which comprised majority of TDS of ₹ 27.00 crores, corporate tax of ₹ 20.00 crores. Besides this, unpaid wages since December, 2015 were to the tune of ₹ 78.00 crores. It was recorded that as on 31st July, 2016, there were 14 lenders to the company with overall debt of ₹ 1795.00 crores. Out of 14 lenders, 6 lenders have declared the account as NPA. The petitioner herein as well as DVB have already filed the proceedings against the respondent before this Court. 25. In the JLF meeting held on 23rd January, 2017, it was recorded that the Bank of Baroda has filed recovery proceedings in the Debt Recovery Tribunal at Ahmedabad against the respondent. The Punjab National Bank also has filed a winding up proceedings against the respondent in this Court. It was decided that the lenders shall file an intervention application before this Court. In the JLF meeting held on 23rd January, 2017, the promoters of the respondent suggested that the respondent was exploring to file an application under the provisions of the Insolvency and Bankruptcy Code. It was also recorded that the ONGC may take advantage and cancel the existing contract under the insolvency clause ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt that the contract has not got any further extension from ONGC. Mr.Dubash, learned counsel for the applicant tendered a copy of the said proposal dated 25th January, 2017 made by the said investor, letter dated 7th March, 2017 withdrawing the said proposal and the letter dated 24th March, 2017 issued by ONGC terminating the contract for charter hire of drilling unit, Badrinath on 10th April, 2017. 29. Mr.Setalvad, learned senior counsel for the petitioner invited my attention to the above referred documents, including various minutes of meeting of JLF and would submit that the respondent has admitted its liabilities not only towards the petitioner but also towards other large number of creditors. He submits that there is no scope of any restructuring or revival of the respondent which is demonstrated by the petitioner. The respondent has not met the milestone and thus the recovery proceedings have been initiated and pursued. He submits that the respondent has not met with the requirement of the circular dated 8th June, 2015, which is invoked by the respondent for restructuring of the respondent. He invited my attention to the circular issued by the Reserve Bank of India on 26t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cular resolution. He submits that there is no possibility of any revival of the respondent. 33. Leaned senior counsel for the petitioner placed reliance on the judgment of this Court in the matter of Advent Corporation Private Limited, decided by this Court on 19th September, 1968 in Company Petition No.80 of 1968 and in particular paragraphs 7, 8, 11, 12 and 14. He submits that since the respondent is unable to pay its debts, this Court has to pass appropriate orders of winding up against the respondent under section 434(1)(e) of the Companies Act, 1956. 34. Learned senior counsel placed reliance on the judgment of the Supreme Court in case of IBA Health (I) Pvt. Ltd. vs. Info-Drive Systems Sdn.Bhd. (2010) 10 SCC 553 and in particular paragraphs 21, 22, 26 to 28. He submits that since the respondent has admitted the liability of the petitioner and is unable to pay its debts and if the application for liquidation is filed under section 439, law should take its own course and appropriate order of winding up has to be passed. 35. Learned senior counsel placed reliance on an unreported judgment of this Court in case of Life Insurance Corporation of India vs. Varun Global Limi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e submits that the company proceeding is not a recovery proceeding. 38. Learned counsel for the respondent invited my attention to the various allegations made in the affidavit in reply. He submits that all the JLF meetings were regularly attended by the petitioner and in view of the fact that the time for taking appropriate decisions by the JLF has not expired, no order can be passed by this Court in these company petitions at this stage. Learned counsel for the respondent placed reliance on the judgment of the Madras High Court in case of Karnatak Vegetable Oils Refineries Ltd. vs. Madras Industrial Investment Corporation Limited, XXIV Company Cases 249 (Madras) and on the relevant paragraphs on pages 251 to 253 and would submit that the petitioner being secured creditor, cannot be granted prayer for winding up. He submits that large number of other lenders have opposed these winding up petitions and thus this Court has to take into consideration the wishes of the majority of the creditors. 39. Learned counsel for the respondent placed reliance on the judgment of this Court in case of Tata Capital Financial Services Limited vs. Unity Infraprojects Limited Ors., 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his Court in case of IDFC Bank Limited vs. M/s.Ruchi Soya Industries Limited (supra) and in particular on paragraphs 100, 101 and 114. He does not dispute that the claims of both the petitioners cumulatively is about 40% of the total debts of the respondent. He submits that eighteen months period provided to the intervenors for restructuring of the respondent would expire on 27th July, 2017 and thus at this stage no order can be passed by this Court even for admission of the company petitions. 44. Upon raising a query by this Court, learned counsel for the intervenors fairly informed this Court that the expression of interest by Asmara Resources Private Limited dated 25th January, 2017 for infusing about ₹ 600.00 crores is withdrawn by the said investor vide letter dated 7th March, 2017. He also informed the Court that the ONGC Limited vide its letter dated 24th March, 2017 has terminated the contract for charter hire drilling unit Badrinath. Upon raising a further query by this Court, the learned counsel for the intervenors on instructions, states that his clients are not infusing any further funds in the respondent. The debts of the intervenors are already converted into ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any income from the ONGC contracts by the respondent also does not arise. REASONS AND CONCLUSIONS: 46. A perusal of the record, including the minutes of various meetings of the JLF clearly indicates that the respondent has admitted the liability of the petitioner from time to time. The respondent is heavily indebted not only to the petitioner in the aforesaid two petitions but large number of other creditors. The liabilities of the respondent are much more than the assets. A perusal of the minutes of the meeting of the JLF clearly indicates that the liabilities of the respondent, including the statutory liabilities and towards the arrears of wage is also substantial in addition to the liabilities of the other secured and unsecured creditors. The promoters of the respondent have admitted before this Court that the shareholding of the promoters is now reduced to 2%. Upon raising a query by this Court to the learned counsel for the respondent whether the respondent would be in a position to infuse any funds to revive the company, learned counsel for the respondent, on instructions, states that in view of the fact that the shareholding of the promoters is now reduced to 2%, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned counsel for the respondent as well as by the intervenors would not assist their case in any manner whatsoever. The petitioner before this Court in the said company petition was having about 2% of debts of total debts of other lenders and large number of debts of the total creditors. In this case, the debt of the petitioner in the aforesaid two petitions is about 40% of the total debts. In that matter, the petitioner had participated in the JLF meetings, whereas in this case the petitioner has been objecting to the said JLF proposals on the ground that the respondent was declared as NPA even before the date of circular issued by the Reserve Bank of India. This Court in the said judgment also has not considered the effect of section 6 of the Banking Regulation Act. The lenders, who were the members of the JLF were 98% of the creditors in value of the total debts of the respondent and were opposing the petition for winding up. The JLF before this Court in the said matter had agreed to take steps to revive the respondent company therein by taking corrective action plan. In this case, the intervenors have refused to infuse any amount to the respondent. The investor has withdrawn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se the additional funds, the promoters of the respondent have refused to infuse any funds. The liabilities of the respondent are mounting. In these circumstances, the lenders who are the members of the JLF also refused to infuse any funds. In my view, the respondent as well as the intervenors have not complied with the conditions of various circulars relied upon by the Reserve Bank of India and thus cannot avail any benefits / protection under those circulars. Though this Court called upon the respondent as well as the intervenors to infuse further funds if they propose to do so as to revive the respondent even at this stage, neither the respondent nor the intervenors agree to infuse any further funds. In my view, the petitioners have thus made out a case not only for admission of the petitions, but also for appointment of the Official Liquidator as pressed by the learned counsel for the petitioners. 54. This Court in the matter of Advent Corporation Private Limited (supra) has held that if a company petition for winding up is filed with a view to enforce the payment of the disputed debt, it would amount to abuse of process of Court and should be dismissed, unless it is shown th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relief in terms of prayer clause (d) of the said company petition, excluding the words dealing with till the Official Liquidator takes possession as Provisional Liquidator in terms of prayer clause (c). c). Company Petition No.756 of 2014 shall be advertised in two local newspapers, namely (i) Free Press Journal (in English) and Navshakti (in Marathi) as also in the Maharashtra Government Gazette. Any delay in publication of the advertisement in the Maharashtra Government Gazette, and any resultant inadequacy of notice shall not invalidate such advertisement or notice and shall not constitute non-compliance with this direction or with the Companies (Court) Rules, 1959. d). Both the company petitions are made returnable on 3rd July, 2017 and shall be heard together. The petitioner shall deposit ₹ 10,000/- towards publication charges with the Prothonotary Senior Master, under intimation to the Company Registrar, within three weeks from the date of admission, failing which the petition shall stand dismissed for the non-prosecution without further reference to the Court. After the advertisements are issued, the balance, if any, shall be refunded to the petitioner. ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
