TMI Blog2019 (4) TMI 820X X X X Extracts X X X X X X X X Extracts X X X X ..... default. In the present case the 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. In the facts, 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. In terms of Section 7(5)(a) of the Code, the pres ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6-17 / 10022 resident of VRSA Insolvency Professionals LLP Building No. 11, 3rd Floor, Hargovind Enclave, Vikas Marg, Delhi - 110092. Shri Vijender Sharma has agreed to accept appointment as the interim resolution professional and has signed a communication dated 01.10.2018 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. In addition, further necessary disclosures have been made by Shri Vijender Sharma as per the requirement of the IBBI Regulations. Accordingly, he satisfies the requirement of Section 7 (3) (b) of the Code. 5. The case of the applicant bank as stated in the application is that through credit arrangement letter dated 06.03.2008 working capital facility amounting to ₹ 250 million (Indian Rupees Two Hundred and Fifty Million) was sanctioned in favour of respondent Corporate Debtor for the purpose of working capital requirements. Subsequently, a bilateral master facility agreement was executed between the applicant and the respondent Corporate D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... #8377; 420 million. The working capital facilities for ₹ 420 million were renewed and amended by way of credit arrangement letters dated 19.12.2012, 13.01.2015, 28.07.2016, 16.08.2016, 02.09.2016, 19.10.2016 and 24.03.2017. 11. In order to secure the enhanced working facility of ₹ 420 million, a bilateral facility agreement dated 29.08.2011 was entered into between the applicant and the respondent corporate debtor. 12. Besides the respondent corporate debtor executed deed of hypothecation dated 21.12.2012 in favour of applicant, creating charge over the entire corporate debtor's stocks of raw materials, goods-in in process, consumable stores, semi-finished and finished goods, both present and future/for securing the enhanced working facility of ₹ 420 million. The applicant bank shared the charge on parri passu basis with Indian Overseas Bank. A copy of the deed of hypothecation dated 21.12.2012 has been placed on record. Besides the copy of Form 8 filed with the Registrar of Companies and Certificate of Registration dated 14.01.2013 issued by the Registrar of Companies have also been placed on record. 13. The enhanced working capital facility for S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat there is no requirement of restructuring are misfounded. Applicant has claimed that the corporate debtor is in default of a huge sum of over 29 crores as on 31.08.2018. It is argued that execution of alleged work orders and facilities sanctioned by the other financial institutions has no relevance in deciding admission of the present application, as there is no specific denial to the existence of default to the applicant bank. 23. If there is a debt and default and application by financial creditor under Section 7 of the Code is complete, Adjudicating Authority is bound to admit the application. Claim of respondent that it is a solvent company is of no ground, once there is default in repayment of the loan to the applicant financial creditor. 24. The corporate debtor has also alleged that excess interest has been charged by the banks and the amount claimed is incorrect. 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 the Code as the determination of quantum of financial debt is not within the domain of the Adjudicating Authority. In the present proceeding the Tribunal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lassification of assets i.e. declaration of NPA was done by the financial creditor as per the regulations issued by the RBI. It is further submitted that copy of statement of account along with certificate issued under Bankers Book Evidence Act has been filed with the present application which clearly demonstrates that the account of the corporate debtor has become NPA as on 31.03.2017 and the corporate debtor has failed to regularize its account till date. It has been affirmed that till the filing of the application, the corporate debtor has never denied or disputed classification of its account as NPA. 30. While dealing with application under Section 7 of the Code, it is immaterial to see as to when the account was declared as NPA. In Section 7 application, it is only to be considered as to whether there is a debt due in law and facts and whether there has been a default in paying the financial debt. 31. Hon'ble National Company Law Appellate Tribunal in the Case of Ranjit Kapoor v. Asset Reconstruction Co. (India) Ltd. [Company appeal (AT) (Insolvency) no. 410 of 2018] has held that the provision of NPA relates to SARFAESI Act, 2002 and has nothing to do with Code. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... harge created by respondent company under the provisions of Companies Act to secure the loan is also on record. Applicant financial creditor has also filed the relevant statement of account along with certificate under Bankers Book Evidence Act and computation chart detailing the amount of default. Certified copy of statement of account kept during the course of banking business basing on which the claim has been raised, can be termed as sufficient evidence of the financial debt. 36. It is thus seen that the applicant 'financial creditor' has placed on record voluminous and overwhelming evidence in support of the claim as well as to prove the default. Respondent corporate debtor has failed to show that there is no debt or default. 37. Hon'ble NCLAT in the matter of Naveen Luthra v. Bell Finvest (India)Private Limited Vs Bell Finvest (India) Limited, in its order dated 29th November, 2018 passed in Company Appeal (AT) (Insolvency) No. 336 2017 has observed that:: From the 'I B Code', it will be evident that the 'Corporate Insolvency Resolution Process' is not a litigation and are not decided by Court of Law. Now, the 'Adjudicating Authority ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... strict time frame is expected to be followed by the Adjudicating Authority at every stage of the proceedings. When despite demand there is default in repayment of the loan amount, the applicant gets right to move under the Code. The application under Section 7 is maintainable once the default is more than one lakh, in view of Section 4 of the Code. 43. It is pertinent to mention here that the scheme of the Code provides for triggering the insolvency resolution process by three categories of persons namely,- (a) Financial creditor (b) Operational creditor, and (c) Corporate debtor itself. 44. The procedure in relation to the Initiation of Corporate Insolvency Resolution Process by the Financial Creditor is delineated under Section 7 of the Code, wherein only Financial Creditor / Financial Creditors can file an application. As per Section 7(1) of the Code an application could be maintained by a Financial Creditor either by itself or jointly with other Financial Creditors. 45. The expressions Financial Creditor and Financial debt have been defined in Section 5 (7) and 5 (8) of the Code and precisely Financial debt is a debt along with interest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 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 Interim Resolution Professional. Applicant has placed on record voluminous and overwhelming evidence in support of the disbursement as well as to prove the default. We are satisfied that the present application is complete in all respect and the applicant financial creditor is entitled to claim its outstanding financial debts from the corporate debtor and that there has been default in payment of the financial debt. 51. As a sequel to the above discussion and in terms of Section 7(5)(a) of the Code, the present application is admitted. 52. Shri Vijender Sharma, having registration number IBBI / IPA - 003 / IP- N00003 / 2016-17 / 10022 resident of VRSA Insolvency Professionals LLP Building No. 11, 3rd Floor Hargovind Enclave Vikas Marg Delhi -110092 is appointed as the interim resolution professional. 53. In pursuance of Section 13 (2) of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ebtor 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 Professional would be at liberty to make appropriate application to this Tribunal with a prayer for passing an appropriate order. The Interim Resolution Professional shall be under duty to protect and preserve the value of the property of the 'Corporate Debtor' as a part of its obligation imposed by Section 20 of the Code and perform all his functions strictly in accordance with the provisions of the Code, Rules and Regulations. 57. The office is directed to communicate a copy of the order to the Financial Creditor, the Corporate Debtor, the Interim Resolution Professional and the Registrar of Companies, NCT of Delhi Haryana at the earliest possible but not later than seven days from today. The Registrar of Companies shall update its website by updating the status of 'Corporate De ..... X X X X Extracts X X X X X X X X Extracts X X X X
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