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TMI Blog2017 (10) TMI 293X X X X Extracts X X X X X X X X Extracts X X X X ..... t of Rs. 65.50 Crores vide Sanction Letter dated July 28, 2009 from the State Bank of India (herein after referred to as Respondent/Financial Creditor) and the necessary loan documentation was executed. Again the Overall Limit was enhanced to Rs. 197.50 Crore vide sanction letter dated 12th November, 2010 and necessary loan documentation was executed. (2) The loan account of the Corporate Debtor was classified as a Non-Performing Asset ("NPA") on September 26, 2013 for consecutive defaults in the payment of loan amount. The Financial Creditor had issued numerous default notices demanding the Corporate Debtor to make payment, and also had numerous meetings with the Corporate Debtor to discuss on the affairs of the Corporate Debtor, so as to find out any solution to the issue in question and the last meeting on this account took place in July 2017. However, the Corporate Debtor failed to come for settlement of the issue in question. (3) Subsequently, the Loan Account of the Corporate Debtor has been classified as Non-Performing Asset ("NPA") on December 26, 2013 due to non-repayment of outstanding liabilities. The Bank had issued number of Default Notices to the Corporate Debtor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly news papers respectively. (9) On May 3, 2017, the Financial Creditor got issued Notice Prior to Sale under Rule 8(5) and 8(6) of the Security Interest (Enforcement) Rules, 2002 to the Corporate Debtor, by intimating that the secured assets mortgaged/charged to Bank, in question, would be sold by public e-auction at any date after expiry of thirty (30) days from the date of the said notice. (10) On the expiry of thirty (30) day period from the issuance of said Notice Prior to Sale, the Bank got published E-Auction Sale Notice in The Indian Express, English daily, and Andhra Jyothi Telugu daily newspapers on 18th July, 2017. Accordingly, the Bank issued a letter dated 21st July, 2017 to Corporate Debtor intimating it about the proposal of Bank to conduct E-AUCTION on 28.08.2017 for sale of some of properties in question as mentioned in the notices issued earlier. (11) In the above circumstances, the Company petition is filed by seeking a direction to initiate Corporate Insolvency Resolution Process respect of Neeta Chemicals (I) Pvt. Ltd. 3. We have heard Mr A.S. Prashanth along with Mr. Amir Ali Bavani Learned Counsels for the petitioner/Corporate Debtor and Mr. G. Durga B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... properties of the Corporate Debtor to be carried out on 28.08.2017. * The above facts goes on establishing that there is a Financial debt due and payable by the Corporate Debtor and the Corporate Debtor has admittedly defaulted in making the payments of the same. 5. The Learned counsel for the petitioner has relied upon the following judgments/decisions, in support of his case: * The decision/observation of the Co-ordinate Adjudicating Authority, Mumbai Bench, in the matter of Indus Financial Ltd. v. Quantum Ltd. Company Petition No. 1043/i&BP/NCLT/MAH/2017. * The decision of Hon'ble Adjudicating Authority, Principal Bench, New Delhi in the matter of Amit Spinning Industries LtdCompany Petition No. (IB)-131(PB)/2017. * Further, in the matter of Alpha & Omega Diagnostics (India) Ltd. v. Asset Reconstruction Company of India Ltd. being Company Appeal (AT) (Insol) No. 116 of 2017, the Hon'ble National Company Law Appellate Tribunal upheld the observations made by the Hon'ble Adjudicating Authority, Mumbai, wherein the Hon'ble Adjudicating Authority was of the following view:- "7. There are recognised canons of interpretation. Language of the Statute should ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ri G. Durga Bose, the learned Counsel for the Financial Creditor/SBI, on the other hand, has strongly opposed the application itself, by filing a reply dated 3rd August, 2017. The following are his main contentions: (a) The application/petition is fraught with mala fides, and the Corporate Debtor has not approached this Tribunal with clean hands, and has suppressed several material facts of the issue in question. Therefore, it is liable to be dismissed in-limine without going into other contentions of applicant. (b) The petition is filed only to circumvent the process already initiated by the Financial Creditor under the SARFAESI Act, 2002, and e-auction is scheduled to be held on 28th August, 2017, which is after following due process of law. After knowing everything about the issue, the Corporate Debtor has filed the petition, that too eleventh hour with malafide intention. (c) It is stated that as on date, an amount of Rs. 374,97,50,710/- is due from the Corporate Debtor, which includes the principal amount of Rs. 180,56,93,546/- and the interest amount of Rs. 194,40,57,164/-.The loan Account of the applicant/Corporate Debtor was already classified as a Non-Performing Asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... here are fundamental judicial principle(s) for coming to such decision(s) viz principle of natural justice; party has to come to court/Tribunal with clean hands by disclosing all material issues in question, Courts/Tribunal should not allow a party to misuse/abuse the judicial process. 10. It is true that bare reading of section 10(4) of IBC, 2016 says that Adjudicating Authority shall, within a period of fourteen days of the receipt of application, by an order, either to admit the application, if it is complete or reject it, if it is incomplete. If we, go further of the same provision, it is stated' where a corporate debtor has committed a default........... In order to understand as what is default as mentioned under section 10(1), it is relevant to refer to related /connected terms namely debt and claim. The Code has defined those terms under section 3(12) default; 3(11) debt 3(6) claim of IBC, 2016. According to the definition, default means 'non-payment of debt when whole or any part or instalment of the amount of debt has become due and payable, and is not repaid by the debtor or the corporate debtor as case may be. Debt means a liability or obligation in respect of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly B. Ganapathi Rao and O. Syam Sunder Rao. Finally tries to put the Bank under defense as if the Bank has committed sin/all fraudulent action in sanction of loans and mortgaging property on behalf of Company as collateral security. These un-tenable and illegal contentions on behalf of Corporate Debtor is liable be rejected out rightly, since large amount of public money is involved, and these contentions are totally reprehensible and not all tenable on any ground whatsoever. 13. The Bank /Corporate Creditor, subsequently issued a notice dated 01st December, 2016 to the Corporate Debtor, under Section 13(2) of SARFAESI, Act, 2002, again calling upon the Corporate Debtor to discharge liabilities in question, within 60 days from date of receipt of notice. In pursuance to this notice, the Corporate Debtor represented by its Managing Director issued a reply dated 3rd January, 2017(Annexure 8(vi) page 93-101 of material papers) to the Bank/Corporate Debtor by reiterating all un-tenable pleas as raised in their earlier reply dated 14th December 16. This reply starts with the following paragraph. "(1) At the very outset, we hereby deny all the averments and allegations in the above not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deeds/registered mortgage. And loans in question are classified as NPA as early as on 26.12.2013. Subsequently SARFAESI proceedings as detailed supra are initiated, which are in advanced stage of E-auction. As pointed out by the Learned Counsel for the Respondent/Bank, the instant application is filed only to scuttle the proceedings of SARFAESI. The Corporate Debtor has not taken any steps to clear even a part of loan and surprisingly and mischievously trying to deny the loans in question. It is un-heard that such a stand of denial is taken where in public sector Banks and public money is involved. Financial discipline demands that there should not be denial simply for the sake of denial in case where money is taken. It is very surprising to note the attitude of the Corporate Debtor before the Bank by way of replies as stated supra and filing the instant application to misuse and abuse the process of law under IBC. This Bench will not be a party to permit the Corporate Debtor to misuse provisions of IBC for its selfish ends, and that too against public interest. It is relevant to point out here that Courts/Tribunal is ultimate custodian of public funds. 17. As stated supra, all th ..... 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