TMI Blog2018 (9) TMI 205X X X X Extracts X X X X X X X X Extracts X X X X ..... he Code, we direct that Interim Insolvency Resolution Professional shall immediately make public announcement with regard to admission of this application under Section 7 of the Code. The expression ‘immediately’ means within three days as clarified by Explanation to Regulation 6 (1) of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016. - C.P. No. (IB)-50(PB)/2018 - - - Dated:- 20-7-2018 - MRE. M. M. KUMAR, PRESIDENT AND MR. S. K. MOHAPATRA, MEMBER (T) For The Petitioner : Mr. Tushar Mehta (ASG), Mr Ankur Mittal And Mr Abhay Gupta, Advocates For The Respondent : Mr. Parag Tripathi, Senior Advocate Mr. Virendra Ganda, Senior Advocate With Mr. Tanmay Mehta, Mr. Aaditya Vijay Kumar, Mr. Ajay Kumar, Rajeev Aggarwal, Akshita Kotoch, Mamta Rajput JUDGMENT M.M. KUMAR, PRESIDENT The Financial Creditor -State Bank of India has filed the instant application under Section 7 of the Insolvency and Bankruptcy Code, 2016 (for brevity the Code ) with a prayer to trigger the Corporate Insolvency Resolution Process in the matter of Asian Colour Coated Ispat Limited. It is appropriate to mention that the financial creditor is a B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Code. 5. As per pleaded case of the Financial Creditor, the Corporate Debtor has been availing various term loan facilities and working capital facilities for its two units situated at Bawal, Haryana and Khopoli, Maharashtra from the Financial Creditor those are as under:- 1. Working Capital Facilities Working capital facilities to the extent of INR 2995.50 crores have been sanctioned lastly by a consortium of lenders with erstwhile State Bank of Patiala being the lead bank (since merged with State Bank of India). The share of State Bank of India (group) in the consortium is INR 1133.50 Crores forming 36.8% of the total sanctioned working capital limits. 2. Bawal-II (Term Loan-1) Term loan facility of INR 338.00 Crores have been sanctioned lastly by a consortium of lenders. The share of State Bank of India (group) in the consortium is INR 122.00 Crores forming 34.61% of the term loan facility. 3. Khopoli-I (Term Loan-2) Term loan facility of INR 453.00 Crores have been sanctioned lastly by a consortium of lenders. The share of State Bank of India (group) in the consortium is INR 120,00 Crores forming 25.95% of the term loan facility. 4 . Khopoli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e on lien of Bank deposit of ₹ 2.00 crs 2nd pari-passu charge over current assets of the Corporate Debtor Pledge of 51% shares of the Corporate Debtor Guarantors :- Mr Vikas Aggarwal -Guarantor AAHPA0815G Mr Pradeep Aggarwal Guarantor AAGPA9350D Mrs. Kamlesh Devi Guarantor AHFPA4111Q Mrs Sapna Aggarwal Guarantor AAPPA3797B Mrs Archana Aggarwal AAMPA2956K Guarantor AGR Steel Strips Pvt Ltd -Corporate Guarantor AABCA3495R 10. There are various documents placed on record establishing authority to file the application which include authorization dated 16.06.2017 issued by the Chairman of the State Bank of India. It clearly states that in pursuance of powers conferred under Section 27 of the State Bank of India Act, 1955 the Chairman authorized all the officers on whom signing powers have been conferred vide gazette Notification dated 27.03.1987 to sign applications, reply, affidavit, counter affidavit, sur r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ₹ 4790,45,00,000/- in total which includes the outstanding payment to be made by the Corporate Debtor to the Financial Creditor amounting to ₹ 1283,46,00,000/- and to the consortium ₹ 3506,99,00,000/-. However, the Financial Creditor individually does not have the legal authority to raise the claim in respect of the dues belonging to entire consortium. The Financial Creditor individually has no right to recover any monies, whatsoever unless there has been a consensus reached among all the lenders for such action. He has further argued that even if for the sake of argument, it is considered that the Financial Creditor is duly authorized to file the present petition, same cannot be admitted as the Financial Creditor has not attached authority letters from the other lender banks. In the event the Financial Creditor sought to claim monies, on behalf of the rest of the banks forming part of the consortium, it was incumbent on the Financial Creditor to implead the said banks. According to Explanation appended to Section 7 (1) of the Code an application by the Financial Creditor either on its own behalf or jointly with the other financial creditor would be competen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... engaged by a potential investor who was seeking to invest money into the Corporate Debtor as part of restructuring of the loan account of the Corporate Debtor and consequent repayment of the creditor banks. It also prepared a due diligence report for the consumption of potential investor. Therefore, there is conflict of interest because the firm had access to all books of account and other material information. It is hence privy to confidential and price sensitive information of the Corporate Debtor. According to the learned Senior counsel having acted for a potential investor, allowing a person belonging Deloitte to function as an IRP would tantamount to a serious conflict of interest which would adversely impact resolution prospects for the Corporate Debtor. The Financial Creditor vide Diary No. 3403 dated 31.05.2018 proposed the name of replaced Interim Resolution Professional, Mr. Kuldeep Kumar Bassi, 410, Level IV, Centrum Plaza, Golf Course Road, Sector 53, Gurgaon, Haryana-122011, Mobile No. 9417027233, e mail id kkbassi@gmail.com. A copy of the application along with the written communication and certificate of registration of the Interim Resolution Professional has bee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is a candid admission in para 5 that there is no person in-charge of computer system and therefore it clearly violates the provisions of Section 2A(b) (c) which required that a print out of entry or of a copy of print out refer to in sub-section (8) of Section 2 must be accompanied by a certificate of in-charge of computer system containing a brief description of the computer system with the particulars of various safeguards adopted to ensure that data is entered or any operation is performed by an authorised person and that there are adequate safeguards adopted to prevent the unauthorised use of data; and that safeguard are available to retrieve the data that is lost due to system failure or any other reason etc. It has further been argued that there is no mention regarding accuracy of transaction. In that regard our attention has been invited to para 10 of the additional affidavit filed on 08.05.2018 (Diary No. 2704). Learned counsel has also pointed out that the deponent in the affidavit has failed to depose that the data produce before this Tribunal has been retrieved from computer system operated properly. In that regard our attention has been drawn to paras 9-10 of the aff ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ages of special mention accounts i.e. SMA-0, SMA-1, SMA-2. Accordingly, this circular prescribed SMA-0 stage to classify that principal or interest not overdue for more than 30 days, although the account showed the signs of incipient stress. The next classified stage as SMA-1 which reflects overdue payment of principal or interest between 31-60 days and for SMA-2 stage overdue payment of principal or interest is required between 61-90 days. The account is declared NPA after the period of 90 days is over. Referring to statement of account dated 21.04.2018 in respect of the period from 01.11.2014 to 21.04.2018, learned counsel has argued that the account have been certified to be standard and therefore, it cannot be presumed that default has occurred. Placing reliance on an interlocutory order dated 01.05.2018 passed by the Chandigarh Bench of NCLT, it has been argued that merely because account has been declared NPA would not be sufficient to become default. 19. Mr. Ganda has also submitted that there is a debt restructuring agreement signed on dated 28.06.2016 as is evident from its perusal at page 421 volume IV. According to the learned counsel, interest has been added up to 30 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n argument is spacious. 22. In reply to the argument of Mr. Tripathi, Mr. Mittal has argued that the certificate filed by the officer disclosed sufficient compliance with the provisions of Section 2A of the Bankers Book Evidence Act. In that regard our attention has been invited to the affidavit dated 26.04.2018 wherein it has been certified that 14 accounts concerning the corporate debtor are maintained by the State Bank of India in its computers in due course of its business and those computers with safeguard are still in its possession. It is deposed by the officer that the statement of accounts filed by the financial creditor are true and correct copies of the bank records maintained by the Financial Creditor in its computer. It has further been deposed that the accounts are being duly maintained by the Financial Creditor in its computer in the software known as Core Banking Solution . According to the learned counsel all the substantial requirement of Section 2A of the Bankers Book Evidence Act stand complied with, in addition to the additional evidence on record showing that the corporate debtor has defaulted in making payment of the huge loan amount. It has been maintai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hecks are in place. 9. I say that for all the data suitable back up is available at the Central Server. Adequate and elaborate system is in place in keeping with the Information Technology (IT) policy of the Bank, and commitment of bank to adopt the best security measures. 10. I further say that the applicant Bank has an elaborate and multidimensional set up to ensure data accuracy/prevent tampering of data etc. A close scrutiny of the statement made by the deponent in the affidavit would not leave any iota of doubt that all the requirements of Section 2 and 2(A) of the Bankers Books Evidence Act have been fulfilled. This has to be viewed in the light other pieces of evidence available on record in the form of written statement/additional affidavit filed by the Corporate Debtor itself. 23. A rejoinder to the reply/written statement has been filed by the Financial Creditor reiterating the submissions made in the application and controverting the assertions in the reply/written statement. 24. Vide Diary No. 2159 dated 17.04.2018 the Corporate Debtor filed C.A. No. 309(PB)/2018 seeking leave of this Tribunal to file additional affidavit. Through this applicati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aid letters applicant sought confirmation from the Banks to that effect. 28. C.A. No. 389(PB)/2018 dated 09.05.2018 has been filed by the Andhra Bank with the assertion that being a lead bank, it along with other consortium banks had extended a term loan facility of ₹ 100 crores, cash credit facility of ₹ 40.50 crores fund based and ₹ 24.90 crores as non fund based facility to the sister concern of the Corporate Debtor namely M/s. ACCIL Auto Steels Private Limited. The promoters of the Corporate Debtor and the aforesaid firm are the same person. In order to secure the aforesaid facility extended to the firm, the Corporate Debtor had executed a guarantee deed in favour of the Consortium Members and mortgaged its property situated at Plot Nos. 6 11 admeasuring 18900 sq.mtrs., Industrial Estate, Bawal, Haryana. Plant, Building and Machinery situated on the said property are also hypothecated in favour of the Consortium Members. In essence the applicant-Andhra Bank has not opposed the admission of the petition but present application has been filed seeking protection of the interest of the applicant-Andhra Bank and its Consortium lenders in respect of the secured ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Authority) Rules, 2016. He has further submitted that the details of default along with its dates have been clearly stated in part IV along with all the minute details. There is overwhelming evidence to prove default and name of the resolution professional has also been clearly specified. 32. Having heard learned counsels for the parties and having perused the paper book with their able assistance we may first examine the provisions of Section 7(2) and Section 7(5) of IBC which read as under:- Initiation of corporate insolvency resolution process by financial creditor . 7(1) ...................... 7 (2) The financial creditor shall make an application under sub-section (1) in such form and manner and accompanied with such fee as may be prescribed. 7(3) ..................... 7(4) ..................... 7 (5) Where the Adjudicating Authority is satisfied that- ( a) a default has occurred and the application under sub-section (2) is complete, and there is no disciplinary proceedings pending against the proposed resolution professional, it may, by order, admit such application; or ( b) .. 33. A conjoint reading of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r. 37. It is made clear that the provisions of moratorium shall not apply to transactions which might be notified by the Central Government. Additionally, the supply of essential goods or services to the Corporate Debtor as may be specified is not to be terminated or suspended or interrupted during the moratorium period. These would include supply of water, electricity and similar other supplies of goods or services as provided by Regulation 32 of IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016. 38. The Interim Resolution Professional shall perform all his functions religiously and strictly which are contemplated, inter alia, by Sections 15, 17, 18, 19, 20 21 of the Code. He must follow best practices and principles of fairness which are to apply at various stages of Corporate Insolvency Resolution Process. His conduct should be above board independent; and he should work with utmost integrity and honesty. It is further made clear that all the personnel connected with the Corporate Debtor, erstwhile directors, promoters or any other person associated with the Management of the Corporate Debtor are under legal obligation under Section 19 of t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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