TMI Blog2019 (4) TMI 798X X X X Extracts X X X X X X X X Extracts X X X X ..... d 5 (8) of the Code and precisely “Financial debt” is a debt along with interest, if any, which is disbursed against the consideration for time value of money. In the present case the applicant bank had sanctioned and disbursed the loan amount recoverable with applicable interest by entering into loan agreements with the corporate debtor. The corporate debtor had borrowed the credit facility against payment of interest as agreed between the parties. The loan was disbursed against the consideration for time value of money with a clear commercial effect of borrowing. Moreover the debt claimed in the present application includes both the component of outstanding principal and interest. In that view of the matter not only the present claim comes within the purview of ‘Financial Debt’ but also the applicant can clearly be termed as ‘Financial Creditor’ so as to prefer the present application under Section 7 of the Code. An application of financial creditor under Section 7 of the Code is acceptable so long as the debt is proved to be due and there has been occurrence of existence of default. It is reiterated that the material on record clearly goes to show that respondent had avail ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation number IBBI/IPA-001/IP-P00055/ 2017-18 / 10133 resident of JD 2C, 2nd Floor, Pitampura, New Delhi - 110034 with email-id vivek@vpgs.in. Mr. Vivek Raheja has agreed to accept the appointment as the interim resolution professional and has signed a communication dated 21.07.2018 in Form 2 in terms of Rule 9(1) of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016. There is a declaration made by him that no disciplinary proceedings are pending against him in Insolvency and Bankruptcy Board of India or elsewhere. He has enclosed the copy of Certificate of Registration dated 30th May, 2017 issued by IBBI. In addition, further necessary disclosures have been made by Mr. Vivek Raheja as per the requirement of the IBBI Regulations. Accordingly, he satisfies the requirement of Section 7 (3) (b) of the Code. 6. It is the case of the applicant that applicant bank had granted credit facilities to the Respondent company pursuant to the Working Capital Consortium Agreement dated 18.04.2009. Further the said credit facilities were extended by way of Second Supplemental Working Capital Consortium Agreement dated 05.06.2012. Thereafter the credit facilities we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of applicant that the last repayment by the Respondent corporate debtor was made on 30.08.2017. Thereafter the account of the Respondent Company became irregular and the Respondent failed to service the Debt in terms of the Loan Agreement. Consequently, the account of the Respondent was classified as Non-Performing Asset (NPA) on 26.09.2017. 11. The Petitioner had sent Recall Notice dated 19.05.2018 to the Respondent. However, despite the recall notice, it is alleged that the Respondent failed to regularize the account or repay the Debt. 12. The applicant has relied upon the following securities and other loan related documents executed between the parties in respect to the financial facilities sanctioned to the respondent corporate debtor: * Renewal Sanction Letter cum Reduction in existing credit facility dated 30.01.2017. * Balance Confirmation Certificate as on 30.06.2018. * Fourth supplemental Working Capital consortium agreement dated 06.09.2017. * Fourth Supplemental Joint Deed of Hypothecation dated 06.09.2017. * Inter se Agreement dated 06.09.2017. * Guarantee Agreement dated 06.09.2017. * Omnibus Courier Guarantee. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y from the Respondent. Respondent has emphasized that the applicant Bank alone cannot file the present application without specific consent of the other consortium banks and without impleading them in the proceedings. 18. In this connection applicant has replied in the rejoinder that through the present Application, the Applicant is seeking to recover the loan amount individually extended by it to the Respondent. It is claimed that there is no obligation to make other members of the consortium a party and consent of other members are not required under the Code. 19. It is pertinent to note here that Section 7 (1) of the Code provides that a financial creditor either by itself or jointly with other financial creditors may file an application for initiating Corporate Insolvency Resolution Process against a corporate debtor when a default has occurred. Therefore, there is no obligation on the part of applicant bank to join the consortium of Banks. Inter-se agreement between the financial creditors cannot override the express provisions of the Code nor can take away the right of any creditor to file application under Section 7 of the Code. Accordingly, applicant bank individually ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orrect. It is pertinent to mention in this regard that dispute over the quantum of default, cannot be a ground for rejection of an application under Section 7 of Code as the determination of quantum of financial debt is not within the domain of the Adjudicating Authority. In the present proceeding the Tribunal is not supposed to ascertain the quantum of amount of default or to pass a decree as to how much is actually due to the applicant financial creditor. The Code requires the adjudicating authority to only ascertain and record satisfaction in a summary adjudication as to the occurrence of default before admitting the application. 25. Needless to say, that an application under Section 7 of the Code is acceptable so long as the debt is proved to be due and there has been occurrence or existence of default. What is material is that the default is for at least ₹ 1 Lakh. In view of Section 4 of the Code, the moment default is of Rupees one lakh or more, the application to trigger Corporate Insolvency Resolution Process under the Code is maintainable. The corporate debtor has failed to show that there is no debt or default in existence so as to avoid the provisions of the Cod ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nnecessary objections. 32. Hon ble NCLAT in the case of Palogix Infrastructure (P.) Ltd. v. ICICI Bank Limited in Company Appeal (AT) (Insolvency) Nos. 30, 37 54 of 2017 at para 38 has held that : If an officer, such as senior Manager of a Bank has been authorised to grant loan, for recovery of loan or to initiate a proceeding for Corporate Insolvency Resolution Process against the person who have taken loan, in such case the Corporate Debtor cannot plead that officer has power to sanction loan, but such officer has no power to recover the loan amount or to initiate Corporate Insolvency Resolution Process , in spite of default of debt. 33. In the present case Applicant bank has filed the amended petition through Sh. Debraj Bag, authorized representative and Assistant General Manager of the applicant bank. Admittedly Sh. Debraj Bag is working in a senior post in Scale-V as Asst. General Manager of the applicant bank and has preferred the present application on behalf of the applicant bank. In the facts there is no doubt that Sh. Debraj Bag not only has been authorized but is also competent to file the present application on behalf of the applicant bank. 34. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ddition, the applicant bank has filed the statement of accounts duly certified in accordance with Banker s Books Evidence Act, 1891 as per the requirement of Form 1 part V column 7 of the application. Certified copy of statement of account submitted by applicant bank pertaining to various loan facilities, kept during the course of banking business, basing on which the claim has been raised, can be termed as sufficient evidence of default in repayment of the financial debt. 40. It is thus seen that the applicant bank has placed on record voluminous and overwhelming evidence in support of the loan facilities as well as to prove the default in its repayment. 41. It is pertinent to mention here that the Code requires the Adjudicating authority to only ascertain and record satisfaction in a summary adjudication as to the occurrence of default before admitting the application. The material on record clearly goes to show that respondent had availed the loan facilities which was duly disbursed and has committed default in repayment of the outstanding loan amount. 42. It is pertinent to mention here that the scheme of the Code provides for triggering the insolvency resolution proce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eria for admission of the application. (Emphasis given) 48. An application of financial creditor under Section 7 of the Code is acceptable so long as the debt is proved to be due and there has been occurrence of existence of default. It is reiterated that the material on record clearly goes to show that respondent had availed the loan facilities and has committed default in repayment of the huge outstanding loan amount. 49. In the aforesaid factual background, it is seen that the applicant bank clearly comes within the definition of Financial Creditor. The material placed on record further confirms that applicant financial creditor had disbursed various loan facilities to the respondent corporate debtor and the respondent has availed the loan and committed default in repayment of the outstanding financial debt. On a bare perusal of Form - I filed under Section 7 of the Code read with Rule 4 of the Rules shows that the form is complete and there is no infirmity in the same. It is also seen that there is no disciplinary proceeding pending against the proposed IRP. Applicant has placed on record voluminous and overwhelming evidence in support of the disbursement as wel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are not to be terminated or suspended or interrupted during the moratorium period. In addition, as per the Insolvency and Bankruptcy Code (Amendment) Act, 2018 which has come into force w.e.f. 06.06.2018, the provisions of moratorium shall not apply to the surety in a contract of guarantee to the corporate debtor in terms of Section 14 (3) (b) of the Code. 55. The Interim Resolution Professional shall perform all his functions contemplated, inter-alia, by Sections 15, 17, 18, 19, 20 21 of the Code and transact proceedings with utmost dedication, honesty and strictly in accordance with the provisions of the Code, Rules and Regulations. It is further made clear that all the personnel connected with the Corporate Debtor, its promoters or any other person associated with the Management of the Corporate Debtor are under legal obligation under Section 19 of the Code to extend every assistance and cooperation to the Interim Resolution Professional as may be required by him in managing the day to day affairs of the Corporate Debtor . In case there is any violation committed by the ex-management or any tainted/illegal transaction by ex-directors or anyone else, the Interim Resolution ..... X X X X Extracts X X X X X X X X Extracts X X X X
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