TMI Blog2017 (6) TMI 1188X X X X Extracts X X X X X X X X Extracts X X X X ..... Bankruptcy Code, 2016 against a Corporate Debtor viz. Varun Resources Ltd. on the ground that this Corporate Debtor failed to repay ` 31,28,56,661 along with interest at the rate of 13% per annum and a monthly rest till the payment of the dues, claiming default date as 1.5.2014. In view thereof, this financial creditor filed this Financial Creditor application seeking initiation of Corporate Insolvency Resolution Process against the Corporate Debtor company. Brief facts of the case: 2. This applicant submits that Varun Shipping Company Ltd. (herein after called Varun Shipping) was primarily engaged in shipping business, in pursuance thereof, this company availed term loan of ` 50 crores, vide sanction letter dated 30.6.2010 from the applicant Bank by agreeing that Varun Shipping would repay the loan in 16 quarterly instalments of ` 3,12,50,000 commencing after a moratorium period of 12 months. Apart from the document executed for sanctioning of this loan, Varun Shipping had also executed a statutory mortgage of their vessel Maharishi Mahatreya creating a second charge on the said vessel in favour of the applicant bank. And then Varun Shipping acknowledged its indebtedness a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not feasible. 5. The applicant has also filed minutes of the meetings held from the year 2014 to 2017 by the Financial Creditors under the leadership of State Bank of India, the minutes of the meetings clearly establishes that the Debtor Company committed irregularities inter alia by not operating their transactions through Trust Retention Account (TRA) as agreed upon in the document for restructuring. As per the agreed terms and conditions of Restructured Plan envisaged, the Corporate Debtor company has to operate their transactions only through TRA Account which would enable the Financial Creditors to appropriate their outstanding as per the terms and conditions of the MRA, but whereas, since August, 2016, the Debtor Company has stopped operating TRA Account and routing their transactions through another account. 6. Looking at all those allegations against the debtor company by the Financial Creditor, the Corporate Debtor raised the following objections against prayer for admission of this Petition, which are as follows: 1. The Corporate Debtor submits that a large number of shipping companies in India have been critically affected, in the case of the Corporate Debtor, F ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xmi Rice Mills vs. State of UP (1988) 6 SCC 590. 4. The Debtor Counsel further submits that this Tribunal should also bear in mind that the provisions u/s. 433 of the Companies Act, 1956 also used the term may in respect of the company being wound up on inability to pay its debt leaving it open to the winding up court to apply its discretion while dealing with winding up petitions. To support this argument the Counsel relied upon Dewan Brothers vs. Central Bank of India (1976) 3 SCC 800 and Sakal Deep Sahai Srivastava vs. Union of India (1974) 1 SCC 338. 5. The Corporate Debtor Counsel further submits since this applicant has approached this Tribunal in contravention to RBI Circulars, this application is liable to be dismissed. Since it has been mentioned in RBI Circular dated 24.9.2015 that the dissenting lenders who do not want to participate in Corrective Action loan for revival of the company, such Bank has an option to exit by selling its exposure to a new or existing lenders within the prescribed timeline for implementation of the agreed CAP, if not such financial creditor is not able to exit by arranging a buyer within the above prescribed time, as per RBI Circular d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tiated this proceeding flouting the mandate envisaged in RBI guidelines directing dissenting Bank to exit from JLF by assigning its exposure to any of the Banks in Consortium or else to toe in the line of JLF set out by the majority of Consortium Banks. When RBI Guidelines armoured by statutory force, the same being reiterated in Ruchi Soya supra, this financial creditor has to either assign its exposure or to keep quiet and follow the majority who already supporting the company and when RBI says something to be done, it has statutory force, this Bank ought not to have proceeded before other forums transgressing the Laksmana Rekha drawn by RBI, last but not least, another objection is, in the case of financial creditor petition, it is not mandatory on this Adjudicating Authority to admit the petition just by seeing compliance made by the applicant as stated under sub-section 3 of section 7 of the Code, because the same direction when given in the case of operational creditor, it is made compulsory by using the word shall under section of the same Code, therefore when statute itself used different yardsticks in admitting the petitions u/s. 7 and u/s. 9, this Adjudicating Authority ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is required to admit the case but in case the application is incomplete application, the financial creditor is to be granted seven days' time to complete the application. However, in a case where there is no default or defects cannot be rectified, or the record enclosed is misleading, the application has to be rejected. 84. Beyond the aforesaid practice, the 'adjudicating authority' is not required to look into any other factor, including the question whether permission or consent has been obtained from one or other authority, including the JLF. Therefore, the contention of the petition that the Respondent has not obtained permission or consent of JLF to the present proceeding which will be adversely affect loan of other members cannot be accepted and fit to be rejected. 11. In view of the ratio laid down above, this Bench is of the view that the Adjudicating Authority is not required to look into any other scheme pending including JLF to proceed with Insolvency Proceedings therefore/the contention of the Corporate Debtor that this Financial Creditor has not obtained permission or consent of JLF will not have any bearing in respect to these proceedings therefore, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with. Therefore, this Bench is of the view that discretion is to be used to admit the Petition rather than to dismiss the petition especially when there is ample proof of admission of availing loan and defaulting thereof. It is an established fact that this Company is already reeling under debt burden of more than ` 2300 crores therefore this Bench does not find any merit to dismiss this petition by looking at the word may under in Sub-section 5 of Section 7 of the Insolvency Bankruptcy Code. 14. On perusal of the documents placed and the reasons given above/this Bench being satisfied that the debtor company defaulted in repaying its debt to the financial creditor, this Bench hereby admits this application prohibiting all of the following of item-I, namely:- I (a) the institution of suits or continuation of pending suits or proceedings against the corporate debtor including execution of any judgment, decree or order in any court of law, tribunal, arbitration panel or other authority; (b) transferring, encumbering, alienating or disposing of by the corporate debtor any of its assets or any legal right or beneficial interest therein; (c) any action to foreclose, rec ..... X X X X Extracts X X X X X X X X Extracts X X X X
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