TMI Blog2018 (4) TMI 1441X X X X Extracts X X X X X X X X Extracts X X X X ..... n is complete as per sub-section 2 and there is no disciplinary proceedings pending against the proposed resolution professional so as to admit the case under section 7(5)(a) of IBC,2016. The proposed Interim professional has also filed Form No.2 on 16-09-2017. By invoking powers conferred on the Adjudicating Authority u/ss 7,10,12,13,14,15,16, 17, 18, 19, 20, 21, 22 and 25 and other applicable provisions of the Insolvency and Bankruptcy Code, 2016, the Company Petition is hereby admitted - CP(IB) No. 248/7/HDB/2017 - - - Dated:- 27-2-2018 - MR. RAJESWARA RAO VITTANALA AND MR. RAVIKUMAR DURAISAMY, JJ. For The Petitioner : Ms. Varalakshmi Tadepalli, Advocate For The Respondent : Vikramjit Banarjee, Sr. Adv. and P. Vikram, Advocate ORDER Per : Rajeshwara Rao Vittanala, Member (Judicial) 1. The present Company Petitioner bearing CP(IB) No.248/7/HDB/2017 is filed by Bank of Baroda (Financial Creditor herein) under Section 7 of Insolvency and Bankruptcy Code, 2016, R/w Rule 4 of Insolvency Bankruptcy (Application to Adjudicating) Rules, 2016, by inter alia seeking to initiate Corporate Insolvency Resolution Process (CIRP) in respect M/s Golden Jub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n Jubilee Hotels Limited) was incorporated under the Companies Act, 1956 on 18-12-1996 for the purpose of completing the Hotel Project hereinafter referred to as the Company/Corporate Debtor ). The Authorized Capital is ₹ 350,00,00,000/- and the Paid-Up Share Capital is ₹ 261,61,57,000/- (4) Thereafter, the Company obtained Lease for 33 years for the purpose of Hotel Project (defined hereunder), from Department of YATC under the Lease Agreement dated May 9, 2007 (the Principal Lease Agreement ) and the Development and Management Agreement dated May 9, 2007 for the development, construction, operation and management of the Hotel Project( Development Agreement ) on the land admeasuring Acres 04-33.7 (equivalent to 17, 551 square metres) forming part of Survey No. 64 of Madhapur Village, Serilingampally Mandal, Ranga Reddy District. (5) The Hotel Project as originally conceived was for setting up a five star hotel project branded as The Trident Hyderabad on the land admeasuring Acres 04-33.7 (equivalent to 17,551 square metres) forming part of Survey No. 64 of Madhapur Village, Serilingampally Mandal, Ranga Reddy and a License Agreement dated August 05, 2016 was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on and management of the Company and certain matters related thereto. (9) Subsequently, in view of the Hotel Project requirement the then Government of Andhra Pradesh through the Shilparamam Arts, Crafts and Culture Society executed an Agreement of Lease dated June 11, 2009 in favour of the Company granting on lease an additional extent of land admeasuring Acres 0-21.67 Guntas (equivalent to 2,913 square meters) forming part of Survey No. 64 of Madhapur Village, Serilingampally Mandal, Ranga Reddy District to the Companies Consortium to be part and parcel of the Lease Agreement on similar terms and conditions for similar term. (10) Thus, the Company acquired leasehold rights over the land admeasuring Acres 05-5.37 Guntas or 20,464 square meters (comprising of 17, 551 square meters and 2,913 square meters) forming part of Survey No. 64 of Madhapur Village, Serilingampally Mandal, Ranga Reddy District (the Project Land ). (11) To meet the cost for implementing the Hotel Project, which was estimated at ₹ 583,49,00,000 (Rupees Five Hundred Eighty-Three Crores and Forty-Nine Lakhs Only), the Company approached the Banks which formed a consortium for granting the loan fac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rtium, the Trust and Retention Account (the TRA Account ) bearing No. 25210200000109 was opened with Bank of Baroda, the Lead Lender, of the Lenders Consortium Corporate Financial services branch, Himayatnagar on May 06, 2014 for insulating the cash flows/receipts of the Company, which was expected to become operational from January 2015. (13) Later, on account of revision of the cost of the Hotel Project from ₹ 583,49,00,000 (Rupees Five Hundred Eighty-Three Crores and Forty-Nine Lakhs only) to ₹ 827,96,00,000 (Rupees Eight Hundred Twenty-Seven Crores and Ninety-Six Lakhs only), the Company had approached the aforementioned Lenders Consortium. It is pertinent to mention here that Bank of Maharashtra joined the Lenders Consortium for grant of additional credit facilities. An Additional credit facility of ₹ 145,00,00,000/- (Rupees One Hundred and Forty-Five Crores Only) and Non- fund based facility of ₹ 25,00,00,000/~ (Rupees Twenty-Five Crores only) in the form of Letter of Credit (Sub limit to Term Loans) and ₹ 15,00,00,000/- (Rupees Fifteen Crores only) in the form of Bank Guarantee was granted Additional Facilities Agreement executed on February ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... charge on the project assets. (16) The JLF decided the Corrective Action Plan on January 30, 2015 as rectification whereby the Hotel Project was classified as Infra Project and accordingly, the Lenders Consortium/JLF sanctioned an extension of DCCO to September 01, 2015 with subservient charge on the project assets. (17) The Company was converted from limited Company to private limited Company with effect from May 12, 2015 vide fresh certificate of incorporation dated May 12, 2015. (18) On account of Corrective Action Plan (Rectification Note with Viability Study, CAP), the cost of the Hotel Project got further revised from ₹ 1087,81,00,000 (Rupees One Thousand and Eighty-Seven Crores and Eighty-One Lakhs only) to ₹ 1148,59,00,000/- (Rupees One Thousand One Hundred Forty-Eight Crores and Fifty-Nine Lakhs only), the Company approached the Lenders Consortium for grant of additional credit facilities. An Additional funding towards IDC funding was approved by all the Lenders Consortium except Syndicate Bank and Punjab and Sind Bank. Thus, the Lenders Consortium excepting Punjab and Sind Bank and Syndicate bank sanctioned ₹ 28,79,00,000/- (Rupees Twenty- Eight ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d Bank of India without the consent of the Company whereby the entire sales turnover of the Company was being remitted to the said current account with United Bank of India from October 01, 2015. The Company had apparently challenged this action in the court of law and the matter is Sub judice. (24) As per the sanction, IDC funding was allowed in the account only up to September 01, 2015, however at the request of the Company to disburse IDC funding from September 2015 onwards due to their internal dispute, the Company was allowed to utilize Term Loan-4 for IDC funding up to December 2015. As the company failed to remit the Interest from January 2016 onwards, the loan account got classified as non-performing (NPA) with the Applicant Bank since May 02, 2016. However, the Auditors of the Reserve Bank of India classified the account as NPA with effect from December 31, 2015. (25) Pursuant thereto, the Company submitted One Time Settlement (OTS) proposal to all the Lenders in the JLF meeting held on September 03, 2016 for ₹ 500,00,00,000 (Rupees Five Hundred Crores) and upon in-principal approval sanctioned by Bank of Baroda the Lead Lender subject to negotiation, the Compa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecured debt of Rs,81 crores into equity within 3 months from implementation of the CAP; this proposal was subject to the outcome of the Special Audit and Techno Economic Viability (TEV); this however did not materialize leaving the JLF to look for alternative resolution. Bank of Baroda chose to invoke the provisions of IBC before this hon ble National Corporate Debtor Law Tribunal (NCLT) in view of the reasons of increasing debt and the litigation for liquidation initiated by the other creditors by way of Company Petitions and internal disputes; among others. (29) The petitioner has proved the Debt and the Default. The Respondent had not denied both. Invoking the Writ Jurisdiction vide W.P.No.36982 of 2017 and Dismissal of the same. Upon the Applicant Bank filing the present application, the Respondent filed W.P. No. 36982 of 2017 before the Hon ble High Court at Hyderabad and obtained an interim stay against the Applicant Bank in WP.MP. No. 45917 of 2017 from initiating any coercive steps subject to the Respondent depositing an amount of ₹ 100 crores to non-lien account of Punjab National Bank. No vested right of the Respondent has been infringed so as to invoke the writ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Indian Bank Ltd. Vs. Varun Resources Ltd. c) Bank of Baroda Vs. Rotomac Global Pvt. Ltd and Ord. [MANU/NC/1141/2017] d) IDBI Bank vs. Lanco Infratech Limited CP (IB)/111/7/HDB/2017 3. The Corporate Debtor/ vide their counter dated 17-01-2018, by inter-alia contending as follows:- (1) It is contended that the petitioner has suppressed the material facts that the Joint Lenders Forum is still in place and the petitioner has been participating in the same and the fact that the corrective action plan as per the RBI guidelines is being positively considered by the majority of the JLF/consortium members and the second largest lender i.e. Punjab National Bank had in-principal agreed for additional funding. This petitioner also in the month of July, 2017 had proposed the resolution plan to the JLF/consortium members and as such on this ground alone the present company petition is liable to be dismissed. (2) Golden Jubilee Hotels Private Limited /Corporate debtor is the owner of a Five Star Hotel situated at Madhapur, Ranga Reddy District. For the construction of the said Hotel, the respondent has availed various financial assistance and credit facility total amount ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so requested all members banks to discuss/deliberate this issue with their higher-ups and can come back if any member bank is interested in Priority Funding. (5) BOB circulated a proposal to all the lenders in July 2017 showing interest in the proposal given by the respondent. Even though as early as March 2017 the proposal was put in the JLF and the BOB being the lead banker was supposed to act quickly but it failed to do so and also circulated the MOM almost after few months. BOB handled the said proposal in a very casual and slow manner. The resolution proposal given by the Company circulated by BOB to all other lenders was based on the factual information and reports of agencies appointed by BOB and was under active consideration and all the lenders. (6) In the JFL meeting held on 27-09-2017, after discussion with the joint lenders, respondent offered ₹ 505 crores under the resolution which was positively being considered by the Consortium members i.e., Dena Bank, Syndicate Bank, Corporation Bank, Punjab National Bank, The Jammu and Kashmir Bank, Punjab and Sind Bank and Bank of Maharashtra except the petitioner Bank i.e., Bank of Baroda which wanted to approach NC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red as the basis for deciding the CAP, and will be binding on all lenders, subject to the exit (by substitution) option available in the Framework. Lenders shall ensure that their representatives in the JLF are equipped with appropriate mandates, and that decisions taken at the JLF are implemented by the lenders within the timelines. 5. It shall be noted that (i) the stand of the participating banks while voting on the final proposal before the JLF shall be unambiguous and unconditional; (ii) any bank which does not support the majority decision on the CAP may exit subject to substitution within the stipulated time line, failing which it shall abide the decision of the JLF; (iii) the bank shall implement the JLF decision without any additional conditionalities; and (iv) the Boards shall empower their executives to implement the JLF decision without requiring further approval from the Board (9) It is further submitted that the Reserve Bank of India has issued guidelines (Dt. 13-06-2016 bearing Reference number RBI/2015-16/422) even with respect to the assets which have turned into an NPA under the corrective action plan. The relevant portion of the same is extrac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... crores as per replacement cost approach. (15) Subsequently, in the JLF meeting held on 27-09-2012,wherein under the CAP a proposal was put forth for resolution of the debt under the CAP and all the banks except the Petitioner bank have agreed in, principal to the said proposal (Subject to Approval of the higher Authorities). The Petitioner expressed its opinion that it will be approaching NCLT. RBI mandates that once a JLF is formed all the members have to collectively take a decision (any decision taken by 60% of the creditors is binding on all the banks) and independently the banks cannot take any action against the creditor. As per the guidelines issued by the RBI if a company / bank want to withdraw the same can be done by substituting it self. Under the RBI guidelines, the JLF is free to examine deferent options for resolution of debts under CAP which includes rectification, restructuring recovery. The JLF under the CAP can consider the proposals including OTS which is a part of restructuring. Since the JLF is formed as per the RBI guidelines; the guidelines issued by the RBI are also binding on the Petitioner. Petitioner in violation of the guidelines passed by RBI and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of UBI current account. BOB without respondent or any of its officers being privy to such meeting met the officials of Company agents on 21-11-2015. Thereafter, the Petitioner Bank cancelled the meeting for Joint Lenders Forum scheduled for 23-11-2015. The petitioners again met with Respondent s agent on 15-12-2015 and scheduled Joint Lenders Forum on 23-12-2015. Wherein on the morning of 23-12-2015, officials of the Bank of Baroda once again held meeting with the Hotel Operator and without the consent of either Company or the other lenders, the BOB issued a NOC to the Hotel Operator to open a bank account outside the existing arrangement. Thereafter, the Bank of Baroda attended the Joint Lenders Forum meeting with the Company and other Lenders . In the Joint Lenders Forum, all the other lenders opposed the proposal to issue any NOC to the current account with UBI. BOB without informing Company and other consortium lenders issued NOC to the current account with UBI on 23-12-2015. Subsequently on 24-12-2015 BOB has withdrew its NOC but the same was marked solely to the Hotel Operator and was not marked/sent to other lenders, Company or UBI and the same was informed to Company a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... loans availed by it from the consortium of the bankers. However, due to certain operational difficulties which are experienced by Company and because of the interference of BOB in the operation of the Hotel and actions of BOB without the consent of JLF led to financial difficulties of the respondent. However, the respondent has been making its best efforts to adhere to the repayment schedule of the credit facilities/loans which were availed from the consortium of bankers and is making all efforts to restructure and repay all banks including BOB. The petition is liable to be rejected as not in accordance under the IBC Code. The respondent being a nationalized bank, as per law declared by Apex Court on many occasions, that the guidelines issued by RBI under Section 35A, Section 35AA Section 35AB of Banking Regulation Act 1949 are statutory in nature and are binding on the banks. They have relied upon the following judgments in support of their case: (i) ICICI Bank Limited v. Official Liquitor of APS Star Industries Limited (2010) SCC 1 (ii) Sardar Associations and Others v. Punjab Sind Bank and other (2009) 8 SCC 257 (iii) BOI Financial Ltd. v. custodian and Ot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by catena of judgments leading to a conclusion that once debt and default as defined under sections 2(11) (12) of Code are not in dispute, the Adjudicating Authority is bound to initiate C1RP The Respondent has already taken recourse to writ jurisdiction by raising all pleas, which have raised here, and the Hon ble High court of AP, after taking into consideration of all pleas of the petitioner, has ultimately dismissed the Writ petition No. 36982 of 2017 by a comprehensive order dated 21st December, 2017. It is relevant to quote one para of judgment hereunder: From the details given both the parties, this court is of the view that the invocation of statutory remedy by the 1st respondent is legal in the interest of 1st Respondent. The 1st respondent is taking steps for maximisation of value of assets of petitioner through statutory mode. On the other hand, if timely action at the instance of petitioner or any another intervention is taken, the first respondent is prevented from realizing the amount and ultimately the value of asset diminishes and the 1st respondent suffer financial hardship. 8. On perusal of various documents filed in support of the petitioner, it i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rofessional, by exercising powers under section 16 of IBC, 2016. (2) We hereby declare the following Moratorium by prohibiting the following actions:- (i) 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: (ii) Transferring, encumbering, alienating or disposing of by the Corporate Debtor any of its assets or any legal right or beneficial interest therein; (iii) Any action to foreclose, recover or enforce any security interest created by the Corporate Debtor in respect of its property including any action under Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (54 of 2002); (iv) The recovery of any property by an owner or lessor where such property is occupied by or in possession of the corporate Debtor; (v) Direct to cause a public announcement of the initiation of Corporate Insolvency Resolution Process immediately as prescribed under section 15 (1) and (2) of Insolvency and Bankruptcy Code, 2016 and on www.ibbi.gov.in (designate ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
