TMI Blog2017 (4) TMI 1267X X X X Extracts X X X X X X X X Extracts X X X X ..... ustody of the premises of the corporate debtor, it will seriously prejudice the respondent/corporate debtor in pursuing the criminal case already pending on a private complaint against the Bank official and others as they could tamper with the evidence. We find that the insolvency professional has an onerous duty not to act an agent of the applicant, but he has to abide by the Code of Conduct and follow the norms framed by the Board. He has to maintain the high ethical standards. While taking in custody the premises and the articles lying therein. we can direct the IRP to prepare an inventory of all the articles, which are lying there and to keep them in safe custody. wherever necessery and while preparing the inventory of articles, one of the authorised representative of the corporate debtor, can be permitted to associate himself in the said process but such a person would be duty bound to attest the inventory as a witness. The petition, therefore is admitted declaring the moratorium - CP (1B) No.15/Chd/CHD/2017 - - - Dated:- 27-4-2017 - HON'BLE MR. JUSTICE R.P.NAGRATH, MEMBER (JUDICIAL) AND HON BLE MS. DEEPA KRISHAN, MEMBER (TECHNICAL). Mr.R.S Bhatia, Advocate with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2017. 22.04.2017 and 23.04.2017 were the weekly holidays. These observations are being made in order to calculate the period of 14 days within which, the application filed by the Financial Creditor' is to be decided. Taking the actual working days into account, the application being disposed of within a period of 10 days from the date when It was listed before the Bench for the first time. 5. It is admitted fact that the 'Corporate Debtor' was incorporated on 25.08.1980 in the name of Mehfil Restaurants Hotels Limited. The name of the company was changed to James Hotels Limited in 1992 With fresh certificate of incorporation obtained on 20.03.1992. The certificate of incorporation of the Corporate Debtor' with changed name is at Annexure 3, with which the Memorandum and Articles of Association have been annexed. The CIN number of the Corporate Debtor is L55101980PLC004249. The Corporate Debtor has the authorised share capital of ₹ 14,00,00,000/- and its paid up capital is ₹ 8,00,05,000/-. 6. In Part Ill of Form No. l. the 'Financial Creditor' has proposed the Interim Resolution Professional as Mr. Vivek Goyal, House No. 5756, Duplex Compl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns made by the Board under this Code and the term specify shall be construed accordingly. Under regulation 8 (2) of the Regulations, the existence of debt due to the financial creditor may be proved on the basis of (a) the records available with the information utility, if any: (b) other relevant documents, including- (i) a financial contract supported by financial statements as evidence of the debt: (ii) a record evidencing that the amounts committed by the financial creditor to the corporate debtor under the facility has been drawn by the corporate debtor; (iii) financial statements showing that the debt has not been repaid, or (iv) an order of a court or tribunal that has adjudicated upon the non-payment of a debt, If any. 11. In part IV of the application in Form 1 against the relevant Columns, the applicant-financial creditor has mentioned the date of sanction of the term loan of ₹ 28 00 crores as per sanction letter dated 09.01.2010 and further amount of ₹ 3.40 crores sanctioned on 29..11.2012. The total amount in default is shown as ₹ 52,57,19,407/- along With interest upto 31.03.2017 for which the calculation sheets In respect of all t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 15. The petitioner Bank has also disclosed that in order to secure the loan, the corporate debtor mortgaged the Hotel constructed on the land situated on commercial plot measuring 9602 square yards in Block No 1 Sector 17-A Chandigarh in which the Corporate Debtor has lease hold right. In the list of events it is also pointed out that State Bank of India and United Bank of India also sanctioned the term loans to the Corporate Debtor, SBI has granted the term loan of ₹ 45 crores and United Bank of India gave term loan of ₹ 95 crores. The SBI has assigned the loan to ARCIL. The Financial Institutions have pari passu charge on the aforesaid property along with the ARCIL and United Bank of India. The Certificates of Registration of charges with the ROC are Annexure-8 and issued by ROC on 20.04.2010 and Annexure-9 in respect of the charge created on 30.11.2012 Annexure-9 was issued on 22.01.2013. 16. The question basically that falls for consideration is whether the Corporate Debtor has defaulted In making the payment. For that also, there was no dispute in the written objections filed by the Corporate Debtor, but the argument vehemently raised by learned Senior counsel w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 24 In respect of FITL loan of ₹ 3.38 crores. These statements would fortify the contention of learned counsel for the applicant that no instalment was deposited after the account was declared NPA in the year 2014. 19. The applicant-financial creditor has also made the calculation chart of outstanding amount upto 31.03-2017 Annexure 5 to 7 and as per default statements the total amount comes to be ₹ 52,57,19,407, though this calculation may not be accepted, as the exact amount of default to be ultimately determined, in case the IRP is appointed. But the fact remains that there is default committed by the Corporate Debtor in making the payments to the financial creditor. 20. In the statutory Form 1 at Sr.No. 6 of Part-V the applicant- corporate debtor' is to inform, If there is any record of default available with any credit information company. The applicant has relied upon Annexure 21 . the repot of Credit Information Bureau (India) Limited to be also evidencing the default committed by the corporate debtor. 21. The corporate debtor has stated in the objection petition that the Applicant/ Financial Creditor intends to thwart the working of the company whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... material facts by simply attaching copy of notice under Section 13 (2) of SARFAESI Act 2002 dated 09.08.2014, though the subsequent notice under Section 13 (4) dated 11.01.2016 was also issued. annexed with the objection petition at page 225 of the objections in which the financial creditor i.e. PNB claimed to be the Consortium Lenders Leader with the other financial creditors as United Bank of India and ARCIL. It was further contended that a petition before the Debt Recovery Tribunal can be filed only after obtaining consent of 60% of the creditors by Virtue of Section 13 (9) of the SARFAESI Act, 2002 and such a principle should have been followed. 24. Having given our thoughtful consideration to the above contentions, we are of the View that on plan reading of sub-section (1) of Section 7 of the Code, the consent of other 'financial creditors to the extent of any percentage was never intended nor such an interpretation can be implied Section 7 (1) of the Code says that the financial creditor either by Itself or jointly with the other financial creditors may file an application for initiating corporate insolvency resolution process against the corporate debtor before the Ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e applicant, but all the creditors, financial creditors and others, while taking over the charge of corporate debtor as a going concern. There are various other safeguards with onerous duties cast upon the IRP as laid down in Section 21 of the Code with regard to the claim of creditors of the corporate debtor. 27. Otherwise the contention of leamed counsel for the Petitioner financial creditor that the corporate debtor has no right to be heard or that It cannot file the objections being not provided in the Code or rules framed thereunder cannot be sustained because the principles of natural Justice to the extent permissible within the time line prescribed under the Act should be complied. This principle can be implied from the provisions of Rule 4 of the Rules, Sub-section (3) of Section 4 says that the applicant shall despatch forthwith a copy of the application filed with the Adjudicating Authority by registered post or speed post to the registered office of the Corporate Debtor. The objective of the aforesaid rule is to alert the corporate debtor so as to enable it to deposit the amount of default or to raise objections though of course within the possible time frame as may b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he synopsis that besides the above information, the other litigation between the company and other co-shareholders is also pending. These cases include Civil Writ petitions filed in the High Court at the instance of the corporate debtor and its directors/promoters, apart from the litigation filed at the instance of ARCIL and also the petitioner/financial creditor. The learned senior counsel for corporate debtor vehemently contended that copies of those cases have not been filed to know the nature of controversy involved in different forums. It was further submitted that the Adjudicating Authority would not be able to know the nature of the dispute in these cases in the absence whereof the petition cannot be considered as complete nor the Adjudicating Authority would be able to satisfy itself about the default for the purpose of admitting the application. 29. As discussed already, we have found that there is default committed by the corporate debtor and the rest of the issues can be conveniently dealt With under various provisions of the Code. The only bar for a person, who is not eligible to make application is contained in Section 11 of the Code. which reads as under: The f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or inconsistency between the two remedies and therefore the doctrine of election has no application. In the Instant case rather the provisions of the 'Code' have overriding effect and takes care of the suits or proceedings against the Corporate Debtor already pending. 32. There is a clear difference in the intention of the legislature. in cases of application filed by 'Operational Creditors and 'Financial Creditors. An application for Corporate Insolvency Resolution Process by Operational Creditor can be filed under section 9 of the 'Code' One of the conditions for admitting the application is that no notice of the dispute has been received by the Operational Creditor or there is no record of dispute in the information utility. There is no such condition while taking up the application under section 7 of the Act about the existence of the dispute in relation to the default committed by the Corporate Debtor 33. In any case, the legslature has taken complete care with regard to the pending cases. Sub-section (1) of Section 14 of the Code says that subject to the provisions of sub-sections (2) and (3), on the insolvency commencement date, the Adjudicatin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contended that the present petition to declare the respondent/corporate debtor as insolvent would be setting up an inconsistent case. We have already discussed above that the provisions of the Code have overriding effect over other taws and being the latest law on the subject, the proceedings before the DRT will not debar the right of the financial creditor to file application under Section 7 of the Code. 36. The next contention was that by taking over of custody of the premises of the corporate debtor, it will seriously prejudice the respondent/corporate debtor in pursuing the criminal case already pending on a private complaint against the Bank official and others as they could tamper with the evidence. We find that the insolvency professional has an onerous duty not to act an agent of the applicant, but he has to abide by the Code of Conduct and follow the norms framed by the Board. He has to maintain the high ethical standards. While taking in custody the premises and the articles lying therein. we can direct the IRP to prepare an inventory of all the articles, which are lying there and to keep them in safe custody. wherever necessery and while preparing the inventory of art ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y Including any action under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Acts 2002; the recovery of any property by an owner or lessor where such property is occupied by or in the possession of the Corporate Debtor. (ii) That the supply of essential goods or services to the 'Corporate Debtor'. If continuing, shall not be terminated or suspended or Interrupted during moratorium period (iii) That the provisions of sub-section (1) shall not apply to such transactions as may be notified by the Central Government in consultation with any financial sector regulator. (iv) That the order of moratorium shall have effect from the date of this order till completion of the corporate Insolvency resolution process or until this Bench approves the resolution plan under sub-section (1) of Section 31 or passes an order for liquidation of Corporate Debtor under Section 33 as the case may be 40. As per the sub-section (I) of Section 16, the Adjudicating Authority is to appoint Insolvency Resolution Professional within 14 days of the Insolvency commencement date As per sub-section (6) of section 7. the Corporate Insolvency Resoluti ..... X X X X Extracts X X X X X X X X Extracts X X X X
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