TMI Blog2018 (3) TMI 1319X X X X Extracts X X X X X X X X Extracts X X X X ..... Section (3) of Section 7 of the code is that the financial creditor is to propose the name of the Resolution Professional to act as Interim Resolution Professional. In this case, the financial creditor has proposed the name of Mr.Manoj Sehgal, registered Resolution Professional with the IBBI to act as Interim Resolution Professional and filed written communication in Form No.2 Annexure-116 which is found in order. He has furnished his registration number also. The application being complete and it is made out that the corporate debtor has committed default, the petition deserves to be admitted. - CP (IB) No.123/Chd/CHD/2017 With C.A No. 19/2018 - - - Dated:- 15-2-2018 - MR. R. P. Nagrath, J. For The Petitioner : Mr. Suresh Dutt Dobhal, Advocate, Mr.Manish Jain, Ms.Divya Sharma, Advocate And Ms.Sonakshi Dhiman, Advocate For The Respondent : Mr.Sangram Patnaik, Advocate And Mr.Rajiv Gupta, Advocate ORDER This petition has been filed by the financial creditor under Section 7 of the Insolvency and Bankruptcy Code, 2016 (for short to be referred hereinafter as the Code ) read with Rule 4 of the Insolvency and Bankruptcy (Application to Adjudicating Authori ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wing moneys from Canara Bank to the tune of ₹35 crores. The Bank granted term loan of ₹22 crores vide sanction letter dated 31.03.2007 Annexure-13. Annexure-15 is the resolution of Board of Directors of the respondent-corporate debtor authorising the Managing Director to execute documents for availing loan facilities to the tune of ₹22 crores. Various documents executed by the corporate debtor viz. copy of term loan agreement; copy of hypothecation agreement; copy of subordination agreement; copy of letter of undertaking; copy of undertaking/consent; another undertaking not to divert funds; undertaking to operate projects in a sound manner; documents containing stipulation to give guarantee by the corporate debtor; copy of undertaking not to pay fee/commission; copy of undertaking to meet cost overrun; various other documents; copy of guarantee agreement executed by the respondent and Mr.Bhupinder Singh, all dated 13.04.2007 are from Annexures 16 to 28. 6. By way of security, the corporate debtor also created equitable mortgage of immovable properties situate at Tehsil Samana, District Patiala by way of First Charge, details of which are given against Colomn.1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... luding the respondent-corporate debtor were assigned. This assignment deed was got registered with the Sub-Registrar, Kanpur in the state of Uttar Pradesh for which Form CHG-1 for modification of charge was filed with the Ministry of Corporate Affairs. 10. The financial creditor has also furnished information relating to certain other documents which emanated from the Canara Bank. Canara Bank had issued legal notice Annexure-4 dated 16.11.2012 to the corporate debtor recalling the loan. It is stated in this notice that the corporate debtor did not adhere to the repayment schedule of both the credit facilities granted to the corporate debtor and the account was not kept regular. At the time of issuance of the notice, the outstanding amount was ₹23,31,00,227.37 in cash credit limit and ₹12,11,30,673.90 in term loan, totalling ₹35,42,30,901.27 with interest calculated upto 03.11.2012. The bank also claimed that it was entitled to penal interest @2% per annum. 11. The Canara Bank also filed original application (OA) before the Debt Recovery Tribunal, Chandigarh against the corporate debtor and its Directors. Copy of this OA No.665/2013 is at Annexure-5. The peti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be not admitted. The affidavit of service was filed by the petitioner. 16. In the reply filed by corporate debtor, preliminary objections have been raised that the petitioner failed to disclose the fact that assignment deed dated 26.06.2014, on the strength of which the instant petition is filed, has been impounded vide order dated 28.07.2017 (Annexure R-1) of Additional Collector (VIR), Kanpur City with a direction to petitioner to deposit ₹9.65 crores towards the deficient stamp duty, with a further penalty of ₹5 lacs and simple interest @1.5% per month from the date of execution till its payment, to be recovered as land revenue. This order of Additional Collector has been challenged by the petitioner before the Hon ble High Court of Allahabad in writ petition WP (C) No.50075/2017 titled Phoenix ARC Private Limited Vs. State of U.P Ors. Copy of the Writ Petition attached with the reply is at Annexure R-2. Hon ble Allahabad High Court, vide order dated 01.11.2017 has directed that the effect/operation/execution of the order dated 28.07.2017 shall remain stayed provided the petitioner deposits ₹25% of the deficiency within 6 weeks from the date of productio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... would thus be inadmissible. In view of the above, it is alleged that the petitioner does not fall within the definition of the term Financial Creditor . 21. According to the respondent, there was an outbreak of fire in the premises of corporate debtor on the intervening night of 20/21.12.2010 resulting into colossal financial loss, but still it had deposited an amount of ₹4.73 crores to Canara Bank towards interest and repayment towards the term loan instalments. 22. It is further stated that the amount in default claimed by the petitioner is ₹80,20,77,741/- which is a fictitious figure, wrongly computed and is in contravention of the contractual rate of interest. 23. The Canara Bank had issued notice dated 27.02.2012 under Section 13(2) of SARFAESI Act claiming the then outstanding amount of ₹31,59,77,461.27. While calculating the said amount Canara Bank has charged 2% per month as interest over and above the contractual rate of interest. The interest has also been illegally compounded in contravention of the judgement of the Hon ble Supreme Court in Central Bank of India Vs. Ravindra 2002(1) SCC 367. 24. It is also averred that the petitioner ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e debtor in the year 2010. This resulted in the burning of the entire stock into ashes within no time. Similar allegations have been made as taken in the preliminary objections to answer other columns of the application form. The petition was, therefore, prayed to be dismissed. 29. The petitioner-financial creditor has filed a rejoinder. It is admitted that the Additional Collector, Kanpur directed the petitioner to deposit deficient stamp duty of ₹9.65 crores vide order dated 28.07.2017 which was challenged in the writ petition before the Hon ble Allahabad High Court which stayed the effect/operation/execution of the order of the Additional Collector dated 28.07.2017 subject to deposit of 25% of the awarded deficiency within 6 weeks. Copy of the order dated 01.11.2017 of Hon ble Allahabad High Court is attached at Annexure A-4 of rejoinder. Aggrieved by this order of the Hon ble High Court, the petitioner filed Special Leave Petition (being SLP(C) No.50075 of 2017) (now Civil Appeal / C.A.No.021823/2017) before Hon ble Supreme Court of India. Vide order dated 08.12.2017, the Hon ble Supreme Court has been pleased to stay the operation of the order dated 28.07.2017 passed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vable property remains unchanged. Therefore, the assignment cannot be any violation of any provision of law or to the provisions of the Registration Act, 1908. The petitioner has also filed affidavit along with the necessary certificates required under Bankers Books Evidence Act, 1891 on 18.12.2017 copy of which was supplied to the corporate debtor and its counsel. The financial creditor is said to have charged interest as per the contractual terms. 32. It is averred that the facts relating to the incident of fire in factory premises have no bearing on the adjudication of this petition. With regard to the claim pending before the NCDRC and the plea that on acceptance of the consumer case, the compensation that may be awarded would be sufficient to satisfy the demand of the petitioner the same is stated to be a baseless assumption. In fact, the corporate debtor is intentionally delaying the claim before NCDRC for years. The claim before the Hon ble Commission is pending for more than 6 years. 33. When the matter was listed on 11.12.2017, it was noticed that the certificates attached with each of the statement of account of the corporate debtor do not bear the name and designat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .B.Ajit, the person authorised in the resolution is same through whom the petition has been filed. I do not find any force in this argument as in the relevant column of Part I of the application Mr.Ajit Kewin has mentioned as Head Resolution of the petitioner against Column 5 and 6 and he has filed his affidavit stating that he has been authorised by the company to file the petition under the Code. There is no anomaly at all in the name of the authorised person to substantiate the contention by the respondent and the above seems to be too technical an objection to be given any undue weight. From this discussion, the issue is held in favour of the petitioner-financial creditor. Whether the petitioner can be considered as Financial Creditor on the basis of the Assignment Deed. 38. The term Financial Creditor is defined in sub-section (7) of Section 5 of the Code as meaning any person to whom a financial debt is owed and includes a person to whom such debt has been legally assigned or transferred to. So, the dispute would revolve around the effect of the Assignment Deed dated 26.06.2014 relied upon by the petitioner. 39. The first objection to the legality of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uction company is liable to pay stamp duty not more than ₹1 lakh instead of words assignment of debt by Financial Institutions . 41. There is no need to discuss the merit of the aforesaid contention raised by the learned counsel for both the parties for holding that the instrument of assignment is either insufficiently stamped or otherwise because the matter is now pending before the Hon ble Supreme Court of India. In view of the above, the instrument of assignment which has been relied upon by the petitioner cannot be ignored to say that the petitioner is not an assignor. Therefore, the contention based on the judgement of Hon ble Bombay High Court in Santosh Anant Raut Vs. Pukharaj Chogmal Rathod and Anr. 2010(4) Mh.L.J.22 that whenever a document is insufficiently stamped should be impounded, cannot be sustained. 42. Learned counsel for respondent, however, vehemently contended that the petitioner which has relied upon the assignment deed which is the subject matter of challenge before various authorities including the order of the Collector Stamps should have been disclosed in the petition itself. Learned counsel for petitioner, however, submitted that the pet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hs preceding the date of making of the application; or that the corporate debtor has violated any of the terms of resolution plan which was approved twelve months before the date of making of an application under the said Chapter; or that the corporate debtor is one in respect of whom a liquidation order has already been made can be a ground to reject the application under section 10 on the ground of suppression of fact/not come with clean hand. 24. Ist respondent-financial creditor has referred to pendency of a civil suit between Mayank Maheshwari v. Anurag Garg and another suit between Sh.Jagar Nath Mehto v. Vedika Overseas Tradex Ltd. Pendency of such suits cannot be a ground to deny admission of an application under section 10, if all the information in terms of section 10 of the I B Code and Form 6 has been supplied by a corporate applicant/corporate debtor and the application is otherwise complete. Nonmentioning of suit(s) pending between the parties cannot termed to be suppression of facts nor can be a ground to reject the application. In fact, once the application under section 10 is admitted, all such related proceedings, including suits for recovery of movable or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... instant petition on the ground of being insufficiently stamped though the petitioner would be bound by the consequences if any adverse order on changing of stamp duty comes into play. 46. The other aspect to be discussed on this issue is that as to whether the document was required to be compulsorily registered at Samana, in Distt. Patiala, Punjab, where the mortgaged properties of the corporate debtor are situated. 47. Learned counsel for petitioner vehemently contended that the assignment deed basically amounts to transfer of mortgaged property of the corporate debtor situated at Samana, Distt. Patiala in the State of Punjab of the value of more than ₹100/- and was required to be registered at Samana before the Sub-Registrar at Samana. Learned counsel refers to Section 49 of the Registration Act, 1908 which says that no document required by section 17 of the Registration Act or by any provision of the Transfer of Property Act, 1882 to be registered shall a) affect any immovable property comprised therein, or b) confer any power to adopt, or c) be received as evidence of any transaction affecting such property or conferring such power, unless it has b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... istered in the District where the properties are situated, but the instant is a case of assignment of debt and not creation of the mortgage. There is a marked difference between the original documents of loan and creation of mortgage for securing loan, from the assignment of debt by the Bank in favour of the petitioner. Learned counsel for the respondent has not been able to refer to any notification or the case law on the subject that the document of assignment of debt registered in the other State on the basis of some notification issued by that Government of U.P could be invalidated if the same is intended to be enforced in the State of Punjab. 52. Learned counsel for the petitioner-financial creditor has relied upon judgment of Hon ble Supreme Court in ICICI Bank Limited Vs. Official Liquidator of APS Star Industries Limited and Others (2010) 10, SCC 1. The Hon ble Supreme Court observed that NPA means an asset or account receivable of a borrower, which has been classified by banks or financial institutions in terms of the RBI Guidelines as substandard, doubtful etc. These guidelines are issued to improve quality of assets of the banks. 53. It was further held that an o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de reads as under:- ( 3) The financial creditor shall, along with the application furnish- ( a) record of the default recorded with the information utility or such other record or evidence of default as may be specified; ( b) the name of the resolution professional proposed to act as an interim resolution professional; and ( c) any other information as may be specified by the Board. 57. Since the information utility has not yet started functioning, the financial creditor would obviously rely upon such other record or evidence of default as specified by the Rules. This record comprises of various documents as prescribed in Form No.1 which include particulars of security held, if any, the date of its creation etc., all the documents of loan entered into between respondent-corporate debtor and Canara Bank which advanced loan to the respondent-corporate debtor. Copies of such documents have been annexed. Not only this, the Bank has also attached copies of statements of account of the respondent-corporate debtor being maintained under the Banker s Books Evidence Act, 1891. Apart from the voluminous record relied upon by the financial creditor, the petiti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inancial creditor also relied upon statement of account maintained by the petitioner itself i.e. Phoenix ARC Private Limited certified under the Bankers Books Evidence Act along with the summary of outstanding amount as on 31.08.2017 which is at Annexure-110 (colly). 62. The petitioner-financial creditor filed requisite statements of account with the supporting affidavit of the authorised representative dated 13.12.2017. Both these certificates with statement of accounts are exactly in accordance with Section 2A of the Bankers Books Evidence Act, 1891 and these are signed by the Principal Officer i.e. Head (Resolution) of the financial creditor and also the Computer In charge. 63. The question about the quantum of the amount due is to be ultimately found by the Interim Resolution Professional or the Resolution Professional, as the case may be and not to be exactly decided while disposing off the petition. It was contended by the learned counsel for respondent that the Bank-financial creditor capitalised penal interest and referred to judgement of Hon ble Supreme Court in Central Bank of India Vs.Ravindra 2002 (1) SCC 367 to contend that capitalisation of penal interest is a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y Appeal (AT) (Insol.) No.180 of 2017 decided on 13.12.2017, it was held by the Hon ble National Company Law Appellate Tribunal that mere mismatch of the figures will ipso facto not invalidate the order initiating corporate insolvency resolution process under Section 7 of the Code. 66. Otherwise there was no dispute of the respondent-corporate debtor to have borrowed the debt from the Bank and that the respondentcorporate debtor is in default as defined in Section 3(12) of the Code. The 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 the case may be. 67. The other requirement of sub-Section (3) of Section 7 of the code is that the financial creditor is to propose the name of the Resolution Professional to act as Interim Resolution Professional. In this case, the financial creditor has proposed the name of Mr.Manoj Sehgal, registered Resolution Professional with the IBBI to act as Interim Resolution Professional and filed written communication in Form No.2 Annexure-116 which is found in order. He has furnished his registration number also. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is appointment, the powers of the Board of Directors shall stand suspended and the management of the affairs shall vest with the Interim Resolution Professional and the officers and the managers of the Corporate Debtor shall report to the Interim Resolution Professional, who shall be enjoined to exercise all the powers as are vested with Interim Resolution Professional and strictly perform all the duties as are enjoined on the Interim Resolution Professional under Section 18 and other relevant provisions of the Code , including taking control and custody of the assets over which the Corporate Debtor has ownership rights recorded in the balance sheet of the Corporate Debtor etc. as provided in Section 18 (1) (f) of the Code . The Interim Resolution Professional is directed to prepare a complete list of inventory of assets of the Corporate Debtor ; (iv) The Interim Resolution Professional shall strictly act in accordance with the Code , all the rules framed thereunder by the Board or the Central Government and in accordance with the Code of Conduct governing his profession as an Insolvency Professional with high standards of ethics and moral; (v) The Interim Resolut ..... X X X X Extracts X X X X X X X X Extracts X X X X
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