TMI Blog2018 (11) TMI 1047X X X X Extracts X X X X X X X X Extracts X X X X ..... ransaction. Be that as it may, even if it is accepted that PNB had released additional working capital based on the assessment of the petitioner's requirement for such capital in terms of the projections set out in the D&B TEV Report, it is difficult to accept that the same was part of its obligations under the JLRA. Even if it is accepted (which this Court does not) that the respondent banks were obliged to provide additional working capital as claimed by the petitioner and have defaulted in their obligation, the relief as sought for by the petitioner cannot be granted. The petitioner seeks enforcement of the Circulars dated 26.02.2014 and 05.05.2017. This is in the context of the JLRA and, essentially, the petitioner seeks specific enforcement of the JLRA, which entails (i) restraining ICICI Bank from proceeding under the IBC; and (ii) direction to provide additional working capital. This Court is unable to accept that any such directions for providing additional working capital to the respondent banks can be issued by this Court or the RBI. As noticed above, in terms of the Circular dated 26.02.2014, the respondent banks were obliged to form the JLF for exploring the CAP. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r that any such notice of default had been issued and, therefore, the contention that the respondent banks ought not to be permitted to raise any such issue in these proceedings appears merited. This Court is not called upon to adjudicate any of the aforesaid contentions. These are plainly disputed questions of facts and it is also apposite to examine the same in these proceedings. In this view, this Court is refraining from commenting upon the same and has considered this matter on the assumption that there is no default on the part of the petitioner in complying with its obligations under the JLRA. The relief as sought for by the petitioner cannot be granted. First of all, for the reason that this Court finds it difficult to accept that the respondent banks were obliged to provide additional working capital in terms of the JLRA. The respondent banks cannot be compelled to provide additional funds, as the decision whether to do so rests exclusively with them. Secondly, it is not possible to grant specific performance of the JLRA - which, essentially, is the nature of the relief sought by the petitioner, albeit couched as seeking a direction to the RBI for implementing its ci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , Chandigarh, it is directed that the period from 22.05.2018 till date be excluded from considering the time lines set for proceedings under the IBC. It is also clarified that the NCLT shall consider the application before it independently and uninfluenced by any observations or findings of this Court in the petition. Thus, all contentions of the parties are reserved and the petitioner is not precluded from raising any contention including the ones considered in this petition before the NCLT. - W.P.(C) 5555/2018 and C.M. Nos. 21660/2018, 27625-27626/2018, 28418/2018, 32776-32778/2018 & 32780/2018 - - - Dated:- 24-9-2018 - MR VIBHU BAKHRU, J. For The Petitioner : Mr Kapil Sibal, Sr Adv with Mr Vivek Chib, Mr Vikramaditya and Mr Asif Ahmed, Mr Amrendra Mehta and Mr Himesh Thakur and Ms Pracheta Kar For The Respondents : Mr H.S. Parihar and Mr Kuldeep S. Parihar for R-1/RBI. Mr Rajesh Kumar Gautam and Mr Aakash Sehrawat for R-2/PNB. Mr Ramji Srinivasan, Senior Advocate with Mr Diwakar Maheshwar, Mr Aditya Vikram Singh, Mr Naveen Hegde and Mr Bunmeet Singh for R-3/ICICI Bank.Mr R.S. Raju, Mr M. Chandra Sekhar and Ms Megha for R-5/Syndicate Bank. Mr Sumit Nagpal for Ax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... necessary corollary to the same, the petitioner seeks that the respondent banks be restrained from pursuing their remedies to recover their dues and be compelled to consider an appropriate re-structuring scheme. Factual Context 4. In the year 2010, the petitioner entered into an agreement with the respondent banks in terms of which they extended financial assistance to the petitioner. The said financial assistance was in the form of fund based facilities (term loan and working capital limits) as well as non-fund based facilities. The petitioner s performance was not as per projections and it was finding it difficult to service of facilities availed from the consortium of the respondent banks. 5. The petitioner also reported that there was a steep fall in the price of paddy and this had eroded its ability to draw further credit from the respondent banks. Thus, in effect, it also denuded the value of the collateral security against which the working capital was provided to the petitioner. It was reported that the shortfall in the drawing power was to the extent of ₹436 crores. 6. In addition, the petitioner submitted that there were other reasons for drop in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onths. The interest on cash credit facility was also proposed to be converted into a term loan. 10. On 11.05.2015, the Independent Evaluation Committee (hereafter IEC ) submitted a report observing that the petitioner had made good profits earlier and, therefore, promoters of the petitioner should also bring in additional funds. It was suggested that the financial re-structuring be done with additional working capital limit of only ₹75 crores. 11. On 23.06.2015, the JLF at its meeting approved the restructuring proposal. Thereafter, on 27.06.2015, a Joint Lenders Restructuring Agreement (hereafter JLRA ) was entered into between the consortium of the respondent banks and the petitioner. On the same date, the consortium of the respondent banks also entered into an Inter Credit Agreement (ICA). Prior to that, each of the members of the consortium issued sanction letters for sanctioning the restructuring package in terms of the CAP. 12. On 22.09.2015, the petitioner requested PNB Bank to sanction additional working capital of ₹130 crores. This was in addition to ₹75 crores already provided to the petitioner in terms of the JLRA. The petitioner claims that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to conduct a forensic audit. 20. On 01.12.2017, PNB appointed M/s Haribhakti LLP to conduct a forensic audit. The petitioner claims that the same was highly delayed. 21. PNBISL submitted a report in December, 2017 (hereafter PNBISL TEV Report ), which indicated that the debt to the extent of ₹642.10 crores was unsustainable. 22. Thereafter, a draft of the Forensic Audit Report was submitted by M/s Haribhakti LLP, which was circulated and discussed at the meeting held on 09.02.2018. The petitioner was not represented at the said meeting. However, the lenders considered the same and Axis Bank and ICICI Bank withdrew their consent to proceed with the S4A Scheme. 23. On 16.02.2018, ICICI Bank filed an application under Section 7 of the IBC before the NCLT, Chandigarh. 24. Aggrieved by the aforesaid, the petitioner filed the present petition. Submissions 25. Mr Sibal, learned Senior Counsel appearing for the petitioner contended that the banks have a public duty to support private enterprises and to act fairly in respect of such obligations. He submitted that the obligations of the banks could not be viewed through the prism of a private contract , a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dated 26.02.2014 required the respondent banks to identity the stress in accounts. In the present case, the value of stocks had fallen and, therefore, the petitioner faced difficulty in servicing its debts. He submitted that this was identified as the reason for the stress and was, accordingly, addressed by restructuring the existing facilities funding the outstanding interest and providing a moratorium of two years for repayment of the dues. He submitted that there was no obligation on the part of the respondent banks to furnish additional loan. 30. In addition he also submitted that the petitioner had defaulted in its obligations and, therefore, was not entitled to insist that the respondent banks support the restructuring package. He submitted that the petitioner had failed to bring in the upfront Promoter s contribution of ₹18.44 crores and had brought in only ₹12,49,50,000/- and that too in three tranches. The petitioner had also failed to make regular payments of monthly interests on the due dates. 31. He further contended that the Forensic Audit Report, a draft of which was circulated at the JLF meeting held on 09.02.2018, indicated diversion of funds ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Economy inviting comments from various stakeholders. The comments were considered and incorporated in the Framework for Revitalizing Distressed Assets in the Economy released by the RBI. One of the salient features of the said framework was an early formation of lenders committee with timelines to agree to a plan for resolution of accounts under stress. 37. Thereafter, on 26.02.2014, the RBI issued a Circular captioned Framework for Revitalizing Distressed Assets in the Economy Guidelines on Joint Lenders Forum (JLF) and Corrective Action Plan (CAP) . The said Circular provided for the banks to identify incipient stress in the accounts by creating three sub-categories referred to as Special Mention Accounts (SMA): SMA-0 (Where principal or interest payment is not overdue for more than 30 days); SMA-1 (principal or interest payment is overdue between 31-60 days); and SMA-2 (principal or interest payment overdue between 61-90 days). Any amount overdue beyond 90 days is required to be classified as a Non Performing Asset (NPA). The banks were directed to report credit information including classification of accounts as SMAs to the Central Repository of Information on Large ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. The ICA may also stipulate that both secured and unsecured creditors need to agree to the final resolution. 38. The aforementioned Circular also provided for different processes of restructuring. The banks could either adopt to proceed under the CDR mechanism or the JLF could proceed to do so independent of the same. The said Circular further provided that if the JLF decided to restructure an account independent of the CDR (Corporate Debt Restructuring) mechanism, it was required to carry out a detailed TEV Study and if the same was found viable, the JLF was required to finalize the restructuring package within 30 days from the date of signing of the final CAP. 39. The RBI issued another Circular dated 13.06.2016 captioned Scheme for Sustainable Structuring of Stressed Assets (referred to as S4A ) in various documents which was directed towards facilitating resolution of large accounts which satisfied three conditions: (i) the project had commenced operations; (ii) the aggregate exposure of all incidental lenders in the account exceeds 500 crores; and (iii) the sustainable debt should not be less than 50% of the current funded liabilities. The S4A Scheme under th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o comply with the obligations under the Circular dated 26.02.2014. As noticed above, in terms of the said Circular, the respondent banks were required to explore various options to resolve the stress in the accounts and adopt a CAP. In the present case, the JLF was formed and it did explore the possibilities of addressing the stress in the accounts pertaining to the petitioner. The JLF approved a restructuring scheme, which translated into an Inter- Credit Agreement and Debtor-Credit Agreement (hereafter the JLRA ) that were exempted on 27.06.2015. A plain reading of the Circular dated 26.02.2014 indicates that the JLF was required to do so in order to provide the legal basis for any restructuring process . 45. The case set up by the petitioner, essentially, is that the respondent banks have acted in gross violation of the JLRA inasmuch as they have failed to disburse additional Working Capital Limits, which the petitioner claims was an integral part of the restructuring scheme referred to as the approved JLF package in the JLRA. The petitioner further contends that the action of ICICI Bank in instituting proceedings under the IBC is contrary to the Circular dated 05.05.20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... greements. The RBI s Circular dated 12.02.2018 cannot be read as terminating the JLRA entered into between the parties. The question whether the petitioner would be entitled to relief on merits is a separate issue. However, the petitioner s relief which, in effect, seeks enforcement of the JLRA and the approved JLF Package cannot be rejected on the ground that the subsequent Circular dated 12.02.2018 issued by the RBI has repealed the earlier Circulars. Clearly, the Circular dated 12.02.2018 has no effect on the restructuring packages that have already been reduced to binding contracts. 49. The next question to be examined is whether the respondent banks had defaulted in performance of their obligations under the JLRA. According to the petitioner, the CAP (the approved JLF Package) as agreed to between the petitioner and the respondent banks entail an obligation for the respondent banks to provide additional working capital of ₹ 75 crores in the initial year and further working capital (as projected under the D B TEV Report) for the subsequent periods. 50. As noticed above, at the meeting held on 19.03.2015, the JLF accepted the petitioner s request to implement a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proposing reduction in term loan Interest rate to 10.75/o. (INR Millions) Particulars Mar -15 Mar -16 Mar -17 Mar -18 Mar -19 Mar -20 Mar -21 Mar -22 Mar -23 Mar -24 Mar -25 Opening Balance Addition/ Disbursement 320.00 320.00 320.00 312.00 296.00 272.00 240.00 208.00 160.00 96.00 32.00 Repayment 0.00 8.00 16.00 24.00 32.00 32.00 48.00 64.00 64.00 32.00 Closing Balance 320.00 320.00 312.00 296.00 272.00 240.00 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .00 3,270.00 2,834.00 2,180.00 1,308.0 Addition /Disbursement 0 Repayment 0.00 109.00 218.00 327.00 436.00 436.00 654.00 872.00 872.00 Closing Balance 4,360. 00 4,360.00 4,251.0 0 4,033.00 3,706.00 3,270.00 2834.002,180.00 1,308.00 436.00 Interest Charged to P L 469.99 464.33 442.35 414.55 370.11 322.28 266.67 175.86 82. Interest Converted to FITL - I 469.99 234.99 iii. Workin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion. * The rate of interest on working capital post restructuring is proposed to be 10.75%. * Assessment of Fund Based Requirement for the restructuring period is as given in table below: (INR Million) Particulars Mar -15 Mar -16 Mar -17 Mar -18 Mar -19 Mar -20 Mar -21 Mar -22 Mar -23 Mar -24 Mar -25 Opening Balance Addition/ Disbursement 3,869.2 0 3,869.20 3,869.2 0 3,869.20 3,869.20 3,869.20 3,869.20 3,869.20 3,869.20 3,869.2 0 3,869.2 0 Repayment Interest Rate 10.75% 10.75% 10.75% 10.75% 10.75% 10.75% 10.75% 10.75% 10.75% ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 49.12 93.30 95.92 89.90 80.28 69.92 57.86 38.20 17.92 1.29 The detailed repayment schedule of FITL - II (on Working Capital) is as under - (INR Million) Particulars Mar -15 Mar -16 Mar -17 Mar -18 Mar -19 Mar -20 Mar -21 Mar -22 Mar -23 Mar -24 Mar -25 Opening Balance 213.28 213.28 629.22 816.26 774.41 711.62 627.90 544.19 418.61 251.18 83.75 Addition/Disbursement 415.94 207.97 Repayment 0.00 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1.85 0.31 The detailed repayment schedule of FITL - IV (on WCTL - II) is as under - (INR Million) Particulars Mar -15 Mar -16 Mar -17 Mar -18 Mar -19 Mar -20 Mar -21 Mar -22 Mar -23 Mar -24 Mar -25 Opening Balance 24.50 24.50 36.76 34.87 32.05 28.28 24.51 18.85 11.31 3.77 Addition/Disbursement 13.20 Disbursement Repayment 0.00 0.00 0.94 1.89 2.83 3.77 3.77 5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 15.45% 13.94% 14.28% 14.41% 14.31% 14.15% 13.92% 13.68% Net Profit (3,390.52) (352.00) (228.15) 295.26 389.62 759.50 1,266.48 1,442.54 1,626.37 1,708.96 1,767.27 Net Profit Margin -47.36% -3.29% -1.91% 2.20% 2.45% 4.16% 6.32% 6.85% 7.35% 7.71% 7.96% Break-Even Sales -1,739.91 16,512.72 15,549.41 11,003.7 1 12,138.67 10,978.15 7,277.59 6,413.62 5,510.33 4,436.25 3,546.94 Break-Even Capacity -7% 89% 83% 57% 64% 58 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .27 3.84 3.49 2.86 2.21 1.70 1.30 0.97 0.78 Cash/Bank Balance 93.50 245.07 384.57 624.43 698.21 1,093.03 1,429.04 1,619.99 1,639.75 1,938.43 3,044.13 53. The D B TEV Report was submitted on 27.03.2015. Thereafter, the respondent banks (other than Axis Bank) issued sanction letters for restructuring of the existing facilities. PNB and Syndicate Bank issued their respective sanction letters on 30.03.2015; ICICI Bank issued its sanction letter dated 10.04.2015 and Axis Bank issued its sanction letter on 25.06.2015. The sanction letter issued by PNB also indicated a reference to ₹ 75 crores as additional working capital limit. The same was in reference to the condition requiring the petitioner to secure a working capital limit of ₹ 461.93 crores the breakup of which was indicated as Current DP of ₹ 386.93 C + ₹ 75.00 Cr as additional propose ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tructured as per approved package by respective lenders on 31.03.2015 barring the release of additional working capital limit of ₹ 75 Cr (PNB share ₹ 36.83 Cr.) which is stipulated to be released only after the package is vetted by the IEC against the company's request to release before 31.03.2015. 56. The aforesaid letter also supports the view that the agreed restructuring did not include provision of any additional working capital other than ₹ 75 crores, which was subject to the approval of the IEC. 57. In terms of Paragraph 4.3.3 of the RBI's Circular dated 26.02.2014, the restructuring package was evaluated by an IEC. The IEC approved the restructuring with additional working capital limit of ₹ 75 crores. The relevant extract of the Minutes of the Meeting of the IEC held on 11.05.2015 is set out below:- IEC members also laid emphasis on the fact that the present situation where company is in a difficult position and has taken recourse to restructuring can at best be a one off situation and all steps need to be taken that such situation does not arise again. After detailed deliberations and justification given by the Company, Restruct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9;F' of the JLRA reads as under:- F. At the request of the Borrower and in consideration of the Borrower's commitment to improve its operations, the request of the Borrower was referred to the joint lenders forum (hereinafter referred to as the JLF ), a non-statutory voluntary mechanism for the efficient restructuring of corporate debt. Pursuant thereto, the Lenders at their meeting held on March 19, 2015 agreed for restructuring of Existing Loans as corrective action plain. Pursuant thereto Dun Bradstreet (D B) was requested to draw a Techno Economic Viability Report (the TEV Report ) on the restructuring of Existing Loans and it submitted its TEV Report on March 27, 2015 along with the final restructuring package and after perusal of the said report, the Lenders/Lead Bank have agreed to restructure the Existing Loan subject to the terms and conditions as decided by the JLF, in its meeting dated March 27, 2015 and finally approved in JLF dated June 23, 2015 (hereinafter referred to as the Approved JLF Package. 63. Paragraph 2.5 of Article II of the JLRA provides for restructuring and reads as under:- 2.5 RESTRUCTURING Each of the Lenders and the Bo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... E II Particulars of Existing Lenders and Existing Loan A. Existing Loans Secured term loans (Rs. in Crore) Lender O/s Principal Punjab National Bank 32.0 Total 32.0 Working capital dues (Rs. in Crore) Lenders Sanctioned Limits FB NFB Total Punjab National Bank 360.00 25.00 385.00 Syndicate Bank 240.00 - 240.00 ICICI Bank 125.00 - 125.00 Axis Bank 64.00 5.00 within FB 64.00 Total 789.00 25.00 814.00 SCHEDULE III PART A Details of Facilities Particulars of facility A - Term Loans (Rs. in Crore) Bank TL ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in Crore) Bank FITL - IV PNB 3.77 ICICI Bank - Syndicate Bank - Axis Bank - Total 3.77 Particulars of facility H- fund Based working Capital facilities Bank FBWC-I FBWC-II Total FBWC PNB 176.55 34.22 210.77 ICICI Bank 57.35 11.12 68.47 Syndicate Bank 117.70 22.80 140.52 Axis bank 31.39 6.08 37.47 Total 382.99 74.24 457.23 Particulars of facility I - Non-Fund Based Working Capital facilities (Workable within fund based) (Rupees in crores) Bank NFB PNB ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 37.47 Total 382.99 74.24 457.23 *ICIII ICICI Bank has sanctioned single limit with additional facilities. PART B Terms and Conditions of Facility H (a) Facility H shall carry an interest rate of Base Rate+ 0.50% payable monthly. Lenders shall have right to reset interest rate every year from the date of approval. Interest would be payable monthly, on the last date of each month or as and when levied. However interest on existing working capital facitielies for a period of two years from cut of date will be funded as FITL-2, (b) The repayment of the same shall be on demand. The Facility H shall be utilised for funding the working capital requirements of the Borrower without reference/restriction to any particular division of the Borrower. (c) Drawing power shall be calculated based on the stock statement received from the Borrower (d) Cover period for book debt is 90 days with margin of 25% and uniform margin of 25% against all components of inventory. (e) All other conditions as mentioned in Article XII All other terms and conditions (wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .1 of the JLRA, the respondent banks were required to reassess the working capital limits. However, that does not mean that they were obliged to provide additional funding. The decision whether to provide additional funding would depend on various factors including the confidence in the business and the management. Funding an ongoing business is a dynamic process and requires to be re-evaluated and reassessed. Whilst the respondent banks had agreed to reassess the same, they had also made it expressly clear that additional funding would be at their discretion. 74. It also evident from the Minutes of the Meeting of the JLF held on 22.12.2016 that the decision to process the petitioner's request for additional funding was delayed on account of ICICI bank red flagging the account. Concededly, this was not justified because the reasons for the same were already factored in at the time of approving the restructuring package. Thus, the contention that the respondent banks had unduly delayed the process is perhaps justified. But the same does not lead to the conclusion that the respondent banks were obliged to provide additional funding. As noticed above, the JLRA made it expressly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ₹ 59.68 crores. It had also disbursed ₹ 30 crores. However, it is contended on behalf of PNB that the same was a separate transaction. Be that as it may, even if it is accepted that PNB had released additional working capital based on the assessment of the petitioner's requirement for such capital in terms of the projections set out in the D B TEV Report, it is difficult to accept that the same was part of its obligations under the JLRA. 78. Even if it is accepted (which this Court does not) that the respondent banks were obliged to provide additional working capital as claimed by the petitioner and have defaulted in their obligation, the relief as sought for by the petitioner cannot be granted. The petitioner seeks enforcement of the Circulars dated 26.02.2014 and 05.05.2017. This is in the context of the JLRA and, essentially, the petitioner seeks specific enforcement of the JLRA, which entails (i) restraining ICICI Bank from proceeding under the IBC; and (ii) direction to provide additional working capital. 79. This Court is unable to accept that any such directions for providing additional working capital to the respondent banks can be issued by this Cour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the period of 180 days as required. 81. There is much controversy with regard to the proceedings for a S4A Scheme. The petitioner claims that the respondent banks had no intention to adopt any S4A scheme and had intentionally delayed the implementation of the same. It was finally abandoned by them on grounds, which the petitioner claims are untrue. The respondent banks, on the other hand claim that the S4A scheme was subject to a forensic audit and the draft Forensic Audit Report contained adverse observations against the petitioner and, thus, the petitioner was disentitled for any such scheme. The petitioner company counters the same by challenging the observations made in the draft Forensic Audit Report. It is not necessary for this Court to examine this controversy. However, it is clear from the minutes of various meetings that it is conceded position that the existing indebtedness of the petitioner company cannot be serviced by the revenue being generated by the petitioner company. The approved JLF Package (the JLRA), which the petitioner now seeks enforcement of (albeit by issuance of directions to the RBI) was premised on restructuring the financial facilities by conver ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n that the respondent banks ought not to be permitted to raise any such issue in these proceedings appears merited. 85. However, this Court is not called upon to adjudicate any of the aforesaid contentions. These are plainly disputed questions of facts and it is also apposite to examine the same in these proceedings. In this view, this Court is refraining from commenting upon the same and has considered this matter on the assumption that there is no default on the part of the petitioner in complying with its obligations under the JLRA. 86. In view of the above, the relief as sought for by the petitioner cannot be granted. First of all, for the reason that this Court finds it difficult to accept that the respondent banks were obliged to provide additional working capital in terms of the JLRA. The respondent banks cannot be compelled to provide additional funds, as the decision whether to do so rests exclusively with them. Secondly, it is not possible to grant specific performance of the JLRA - which, essentially, is the nature of the relief sought by the petitioner, albeit couched as seeking a direction to the RBI for implementing its circulars vis- -vis the JLRA -by directing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orking capital, they should be restrained from proceeding under the SARFAESI Act or the IBC, is not merited. This is so because there is no dispute that the petitioner company owes substantial amount to the respondent banks and as financial creditors they are entitled to seek remedies under the IBC. 90. The Supreme Court in Innoventive Industries Ltd. (supra) had explained that the IBC is an exhaustive code on the subject matter of insolvency. It was also noticed that Section 238 of IBC contained an non-obstante provision and it was expressly provided that ..the provisions of IBC would have effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force or any instrument having effect by virtue of any such law . 91. It is relevant to note that in that case, the appellant (therein) had also raised a plea that the appellant had failed to pay the amount due because of the failure on the part of the creditors to disburse the amounts under the Master Reconstruction Agreement (MRA). The Supreme Court rejected the aforesaid contention by referring to Clause 20(t) of the MRA, which expressly provided that the obligations under the MRA con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion was rendered prior to the issuance of the Banking Regulations (Amendment) Ordinance, 2017, which expressly authorized the RBI to issue directions to banks regarding resolution of stressed assets. 94. The said contentions are unpersuasive. First of all, the question whether the petitioner can challenge the demand raised by the respondent banks on the ground that they had failed to disburse the amount due is required to be canvassed before the NCLT. The said contention cannot be a ground for this Court to interdict proceedings under the IBC. 95. Secondly, the decision in Innoventive Industries Ltd. (supra) rested on the interpretation of Clause 20(t) of the MRA, which is identically worded as Clause 5.1(t) of the JLRA. Therefore, the petitioner's obligation for repayment is unconditional. 96. Lastly, it is relevant to bear in mind the context in which the restructuring package was approved. The petitioner was finding it difficult to repay its debts. The cash credit facility accorded to the petitioner had already become irregular on account of reduction in the value of the underlying security. The restructuring package, as noticed above, was essentially to defer repay ..... X X X X Extracts X X X X X X X X Extracts X X X X
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