TMI Blog2017 (9) TMI 1199X X X X Extracts X X X X X X X X Extracts X X X X ..... . In the result, we hereby declare that both SCL and MFL are eligible to execute the assignment agreements in question and all rights flow those agreements to MFL. After getting assignment of rights, the MFL is fully competent to participate in CoC in question and it cannot be called a related party as explained. Whether the above documents were executed without making reference to BIFR is valid or not? - Held that:- Admittedly, the applicant herein and the respondent No.3 are assignees of original lenders to SDAL. It is not the case of the Applicant that Assignors have no right to the rights in question to transfer their rights/interest to the assignee. It is the case of the Applicant that the Respondent No. 3 was assigned the rights/interest in question in order to deprive/reduce the interest of the applicant herein in the CoC. As long as the assignment agreement deeds are valid and legally enforceable, the applicant has no locus standi to question its object, modus operandi behind its execution. The contentions of the Applicant that the Respondent No.3 would become an admitted party by virtue of Section 5(24) is not at all tenable. . The Assignment deeds of various Banks/F ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plicant (is an asset reconstruction company), incorporated and constituted under the Companies Act, 1956 and having its registered office at Edelweiss House, Off CST Road, Kalina, Mumbai, Maharashtra 400 098. The Applicant has become one of the largest secured financial creditors of the Respondent No. 1 -Corporate Debtor, i.e. Synergies-Dooray Automotive Limited (Corporate Debtor) vide an Assignment Agreement dated January 6, 2014, executed with Exim Bank which was one of the original lenders of the Corporate Debtor. The total amount claimed by the Applicant against the Corporate Debtor as on January 23, 2017 as per the revised proof of claims submitted by the Applicant on February 20, 2017 to the Respondent No.1/the Interim Resolution Professional (IRP) is ₹ 88,20,28,260.97 (Rupees Eighty Eight Crores Twenty Lakhs Twenty Eight Thousand Two Hundred and Sixty and Ninety Seven Paise Only). (2) The Respondent No. 1 is the Corporate Debtor in respect of which the Corporate Insolvency Resolution Process (CIRP) is ongoing under the IBC pursuant to the order dated January 23, 2017 passed by this Hon'ble Tribunal. (3) The Respondent No.2 is a related party of the Corporate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orm A filed in BIFR) of its share in the total debt of the Corporate Debtor to the Respondent No.3. Assignment Agreements in question were entered with the mala fide and ulterior motive of fraudulently abusing provisions of the IBC to the detriment of the Applicant as and when the Corporate Debtor initiates proceedings under the IBC after the abatement of the BIFR reference. (7) The Applicant states that public announcement of initiation of CIRP and call for submissions of claims under section 15 of the IBC read with regulation 6 of the Insolvency and Bankruptcy Board of India (Insolvency Resolution for Corporate Persons) Regulations, 2016 (CIRP Regulations) was made by the IRP on January 28, 2017 in Deccan Chronicle, wherein the insolvency commencement date was mentioned as January 25, 2017 with the estimated date of closure of IRP as July 23, 2017. Accordingly, the Applicant electronically submitted its proof of claim dated February 6, 2017 in the format provided in Form C of the CIRP Regulations along with the supporting documents vide its email dated February 7, 2017 in accordance with Regulation 8 of the CIRP Regulations to the IRP. However, the Applicant thereafter noticed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r/Corporate Debtor had 7 creditors namely :EXIM Bank, HSBC, Indian Overseas Bank, Andhra Bank, State Bank of India, IDBI and ICICI. Out of these 7 creditors, ICICI assigned its debt to ARCIL and HSBC assigned its debt to J.P. Morgan Chase Bank, Indian Overseas Bank, Andhra Bank, State Bank of India, IDBI and ARCIL assigned their debt to SCL, and J.P. Morgan Chase Bank assigned its debt to a Securitization Company called Alchemist Asset Reconstruction Company Ltd. (AARC) (2) Thereafter, EXIM Bank assigned its debt to Edelweiss Asset Reconstruction Company (EARC), who is the Applicant herein. Subsequent to the assignment of EXIM Bank's debt to EARC, SCL assigned the debt of ICICI, SBI and IDBI to Millennium Finance Ltd. (MFL) vide three Deeds of Assignment dated 24.11.2016. Therefore, the List of Creditors as on date are: EARC: AARC: MFL SCL. (3) That as per the Master Restructuring Agreement, EARC represented less than 9% of the creditors of SDAL. Even now as per the List of Creditors prepared by the Resolution Professional in accordance with the provisions of the IBC, 2016, EARC represents less than 10% of the creditors of SDAL Admittedly, in the Master Restructuring Ag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rporate Debtor. EARC is only raising frivolous allegations, which are wholly unsubstantiated. In the absence of any proof to establish that the assignee of SCL is a related party as defined under Section 5(24) of the Code, the allegation that MFL ought not to have any voting share in the committee of creditors deserves to be rejected in totality. (8) EARC has also sought to project that the Assignment of Debt to SCL from the assignors, i.e. SBI, IDBI and ARCIL (formerly ICICI) is unregistered. This is a self-defeating and frivolous argument which also deserves to be rejected in totality. For the sake of arguments, if it is considered that the assignment from the original creditors of the Corporate Debtor to SCL is invalid, that would revert back the position to as existed in the Master Restructuring Agreement, which included ICICI, SBI, IDBI, IOB, Andhra Bank, HSBC and EXIM Bank. Even in such a scenario, the assignors of SCL and MFL, all being Banks would be unrelated parties permitting them to have voting share in any meeting of the Committee of Creditors. Even in such a scenario, EARC as an alleged Lender would continue to be a minority having less than 9% voting share. Theref ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rom any judicial or quasi-judicial body or any Tribunal, unless such judicial/quasi-judicial body or Tribunal has expressly restrained such party from assigning its debts. In view of the same, there is no question of seeking the permission of BIFR for assigning the debt. Therefore, it is prayed that the application under question should be dismissed with exemplary costs. 5. Shree Deepak Bhattcharjee, learned senior counsel for the respondent No. 3( MFL) also strongly opposed the application under question, and filed a comprehensive reply dated 5th June, 2017 by adverting each and every averments and allegations/assertions made by the applicant in the application. The following are his main contentions urged before us. 6. It is stated that MFL is the single largest Financial Creditor of the Corporate Debtor as on date having an admitted outstanding dues of ₹ 673.91 crores on account of the Corporate Debtor i.e. M/s. Synergies Dooray Automotive Limited. The instant application is filed with sole intent of frustrating the cause of the other Financial Creditors of the Corporate Debtor, and derive illegal and unjust claims out of the Corporate Debtor. The prayers as sought b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... equently also passed an order dated 25.06.2013, wherein also the BIFR returned a finding as to the exposure of the dues of the Applicant in the Corporate Debtor under the provisions of the SARFAESI Act. The BIFR vide its order dated 25.06.2013, specifically stated that between the Applicant and Alchemist Asset Reconstruction Company Ltd. (AARC), it is apparent that the exposure of Applicant is in the ratio of 34.15%: 65.85%. Therefore, the Applicant in the present case is a minority creditor of the Corporate Debtor and thus single handedly not entitled under law to interject and interfere in an appropriate resolution plan having the consent of the majority Financial Creditors of the Corporate Debtor. 10. It is stated that all the Financial Creditors of the Corporate Debtor has been duly agreed and admitted in terms of Master Restructuring Agreement dated 06.03.2007 (referred to as MRA ) and the following are the details of the dues of the various Financial Creditors along with their percentage exposure in the Corporate Debtor: Lenders Outstanding (Rs. in crores) Percentage IDBI 65.66 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent Agreement dated 24.11.2016. There is neither any mechanism nor any manner by which MFL can be attributed with any mala-fide intent of entering into an agreement immediately prior to coming into force of SICA Repeal Act. The submissions and averments made by the Applicant on the proximity of the Assignment Deed with the coming into force of the SICA Repeal Act are mere surmises, which have no legal basis and thus liable to be rejected by this Hon'ble Tribunal. (3) It is contented that even in absence of any voting right in the meeting of Committee of Creditors, the Financial Creditor whether it is SCL or MFL will continue to be equitably treated for the purpose of settlement of its dues. Thus, in no eventuality, the Applicant can steal a march and seek better dispensation than either SCL or MFL, which appears to be sole vested interest of the Applicant herein. (4) The allegation that MFL becoming a related party by virtue of assignment from a related party the same is frivolous and unsubstantiated. MFL does not fall within any of the definitions of related party as mentioned from 5(24)(a) to 5(24)(m). Edelweiss ARC is put to strict proof of establishing the same. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under reply to be dismissed with exemplary costs. 13. Heard Shri S. Niranjan Reddy, Senior Advocate, Shri Jyoti Singh, Advocate, Ms. Rubaina Khatoon, Advocate, Shri P. Mohith Reddy, Advocate for the Petitioner and Shri A.D. Gupta, Advocate Shri S. Chidambaram, PCS, Shri Deepak Bhattacharjee, Senior Advocate alongwith Shri Dishit Bhattacharjee, Mrs. Mamta Binani, Resolution Professional along with Shri Krishnendu Datta, Shri P. Vikram, Advocate Shri Nitish Bandary, Advocate for the Respondents , and have also carefully perused all the pleadings made by the respective parties along with material papers filed in their support. 14. In the light of above facts and circumstances of the case, the following main points arise for our consideration:- (1) What is the status of the Applicant vis-a-vis Corporate Debtor and what rights it accrues by virtue of assignment from the Exim Bank and what is locus standi of it vis-a-vis other similar assignees like SCL and MFL ; (2) Whether three Assignment agreements commonly dated 24.11.2016 entered into between SCL and MFL are properly registered or not; (3) Whether the applicant has any locus standi to question the assigned agr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s in millions) IDBI 656.6 ICICI BANK 663.0 EXIM BANK OF INDIA 183.6 STATE BANK OF INDIA 252.8 INDIAN OVERSEAS BANK 98.9 ANDHRABANK 83.5 JP MORGAN CHASE (HSBC SHARE) 95.2 INDBI BANK 89.1 TOTAL SECURED LOANS 89.1 TOTAL SECURED LOANS 2122.7 PART-B LIST OF EXISTING CDR LENDERS ICICI BANK IDBI BANK STATE BANK OF INDIA EXPORT IMPORT BANK OF INDIA INDIAN OVERSES BANK ANDHRA BANK PART C LIST OF EXISTING 'NON-CDR LENDERS JP MORGAN CHASE BANK 18. The first assignment agreement dated 24.11.2016 was executed between SCL and MFL. This assignment originally relates to ICICI Bank. ICICI Bank Limited vide its assignment dated 28.09.2011 assigned the loans together with all its rights, title and interest in financing documents ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uated like that of SCL and MFL, do not have any locus standi to question the veracity of those documents on mere apprehensions, mala-fides, fraudulent etc. Admittedly, it is not a party to those Assignment agreements. It is not tenable to raise apprehensions before a court of law to adjudicate and courts usually adjudicate issues basing on cause of action arisen in a particular case, and it will not enter into roving enquiry into mere apprehensions, baseless allegations. As stated supra, whatever the rights the original assignor got it from the original lender will automatically accrues to subsequent assignees basing on executing appropriate legal documents in accordance with law.. Here, in this case, MFL has got all the rights as per the assignment agreements commonly dated 24.11.2016. Hence, the allegations/apprehensions made by the applicants herein are baseless and mere apprehensions, and they are deemed to have been executed in accordance with law especially in the absence of any challenge to those documents by a party to those documents. The applicant doesn't have any locus standi to question those documents in the insolvency proceedings initiated under IBC, 2016 on a far ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d all the orders passed required to be examined as we are finally deciding the case. We cannot go and examine each and every documents right from the grant of loans to the borrowers to the original lenders and subsequent assignments. The issue arising in this IBC is to resolve the issue and restore the company as far as possible and if not possible it should be sent for liquidation. 24. The BIFR recorded a finding on 26.05.2012 with regard to the settlement of the issue on the whole by recording that out of Seven Creditors, 5 already been settled and only the remaining two namely EXIM bank and another remains to be settled. Their percentage of dues also prescribed. 25. The Corporate Debtor had suppressed several material facts especially with regard to leasing out all its assets to Respondent No. 2 herein before BIFR. The Applicant and its Assignor viz. Export Import Bank of India (Exim Bank) has filed various applications before BIFR / AAIFR questioning the determination of the Corporate Debtor as a sick industrial company. (1) It is stated that various banks and financial institutions/ assets reconstruction companies in the year 2008-11 have assigned their debts in respe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Bankruptcy Rules 2016) to initiate Corporate Insolvency Resolution Plan (CIRP) in respect of SDAL. 27. The CP (IB) 01/HDB/2017 was heard by this Bench and admitted the case on 23.01.2017 on being satisfied that the Application filed by the Corporate Debtor is complete in all respects with respect to the committing a default by the Corporate Debtor / Corporate Applicant; basing on examination of book of account and other related documents with regard to the debt in question and on being found that Interim Resolution Professional fulfils all the extant rules. The only question arises is the procedure adopted by IRP/RP is in accordance with IBC or IBC Rules. 28. The other question whether the learned Resolution professional has duly followed procedure in accordance with law or not, after initiation of Resolution process by Corporate Debtor, we have duly considered all those allegations and found those allegations are found to be baseless and upheld the proceedings of the Resolution Professional. 29. The Assignment deeds of various Banks/Financial Institutions/ARCs in favour of Respondent No.2 happened way back in the years 2008-2011 and that too from SBI, IDBI, ICICI (ARCIL). ..... X X X X Extracts X X X X X X X X Extracts X X X X
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