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TMI Blog2018 (12) TMI 1648X X X X Extracts X X X X X X X X Extracts X X X X ..... order dated 6th July, 2018 having admitted the application, the appellant Mr. Lalan Kumar Singh, Executive Director and shareholder of 'Corporate Debtor' has preferred this appeal challenging the said order of admission. 2. Learned counsel appearing on behalf of the appellant submitted that loan was originally granted by HSBC India (HSBC) to GPI. The Phoenix's claim is based solely on an illegal assignment of a loan purported to have been granted by HSBC by way of an 'Assignment Deed' dated 21st March 2012. Therefore, according to the Appellant 'Phoenix' is not the 'Financial Creditor' of 'GPI' and has failed to establish 'debt' and 'default' or that the 'debt was legally assigned or transferred', within the meaning of 'I&B Code'. 3. According to the learned counsel for the appellant as per Section 5(7) of the 'I&B Code' the 'Financial Creditor' means any person to whom a financial debt is owed and includes a person to whom such debt has been legally assigned or transferred. Phoenix's claim is based on assignment of loan by HSBC, which is not legal. 4. It was submitted that assignment was against RBI Guidelines dated 23rd April, 2003, which have a statutory force. As per RBI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th March, 2012, thereby making it impossible for 'GPI' to pay such a huge amount prior to its due date. Therefore, according to the appellant, the act of HSBC India in illegally engineering default and illegally assigning the HSBC Loan without the HSBC SBLC/Guarantee amounts to fundamental variation of agreements between the parties. 7. Learned counsel for the appellant also submitted that a monumental fraud has been practiced by HSBC India and 'Phoenix' to illegally take-over and extract amounts from GPI and this fraud constitutes the basis of the Section 7 Application, leading to passing of the impugned order : (a) Even though the HSBC SBLC/Guarantee was drawn for the last time prior to alleged release on 15th February, 2012 (to clear outstanding interest), HSBC India declared NPA on 1st March, 2012 without informing GPI. The Assignment Deed states that Assignment Agreement is executed on 20th March, 2012 though the loan which was due on 20th April, 2014 i.e. after more than 2 years as on that day and no default existed as on that day, therefore, it was illegally made to be overdue (for more than Rs. 131 Crores). The sequence of events show that the assignment was pre-medita ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 'Corporate Debtor' was categorized as NPA on 1st March, 2012 by HSBC. Subsequently, the account of the 'Corporate Debtor' was assigned by HSBC to 'Phoenix' with the underlying securities, save and except stand by 'letter of credit' (SBLC) vide Deed of Assignment dated 21st March, 2012. 11. The 'Corporate Debtor' had full knowledge of such assignment without SBLC as is apparent from the following facts: The 'Corporate Debtor' by its letter dated 19th March, 2018 agreed for assignment by HSBC in favour of 'Phoenix', relevant portion of which is quoted below: xxx xxx xxx xxx xxx xxx The 'Corporate Debtor' had also conveyed its consent for substitution of "Phoenix' as the secured creditor in place of HSBC during the course of proceedings before the BIFR on 20th April, 2012. Admittedly, the 'Corporate Debtor' never challenged the said order dated 20th April, 2012. 12. 'Phoenix' issued the notice dated 15th May, 2012 u/s 13(2) of the SARFAESI Act, 2002 to the 'Corporate Debtor' demanding Rs. 131,21,11,929.50 as on 20th March, 2012 along with further interest and other charges thereon at the contractual rates starting from 21st March, 2012 till actual payment and/or realization. ' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ub-section (1) in such form and manner as is prescribed, which takes us to the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016. Under Rule 4, the application is made by a financial creditor in Form 1 accompanied by documents and records required therein. Form 1 is a detailed form in 5 parts, which requires particulars of the applicant in Part I, particulars of the corporate debtor in Part II, particulars of the proposed interim resolution professional in part III, particulars of the financial debt in part IV and documents, records and evidence of default in part V. Under Rule 4(3), the applicant is to dispatch a copy of the application filed with the adjudicating authority by registered post or speed post to the registered office of the corporate debtor. The speed, within which the adjudicating authority is to ascertain the existence of a default from the records of the information utility or on the basis of evidence furnished by the financial creditor, is important. This it must do within 14 days of the receipt of the application. It is at the stage of Section 7(5), where the adjudicating authority is to be satisfied that a default has occurred, that ..... X X X X Extracts X X X X X X X X Extracts X X X X
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