TMI Blog2018 (12) TMI 1648X X X X Extracts X X X X X X X X Extracts X X X X ..... the I B Code as civil proceedings akin to a trial which is not the legislative intent. The objective of the I B Code is to ensure re-organization and insolvency resolution of the corporate persons, partnership firms and individuals, in a time bound manner for maximisation of value of assets of such persons to promote entrepreneurship, availability of credit and balance of interest of all stakeholders. The assignment cannot be challenged in the petition under Section 7 and that too by a party who had the knowledge of Assignment Deed as back as in the year 2012, as noted above, the DRT, Chandigarh, when it requested and never challenged the same before a court of competent jurisdiction. Appeal dismissed. - Company Appeal (AT) (Insolvency) No. 485 of 2018 - - - Dated:- 20-12-2018 - Mr S. J. Mukhopadhaya, Chairperson And Mr Bansi Lal Bhat, Member (Judicial) For The Appellant : Ms. Pooja Mahajan, Ms. Mahima Singh, Mr. Gaurav Arora, Advocates Mr. Sanjeev Deora, CA And Mohd. Nazim Khan, PCS Mr. Mohtashim Kibriya, Advocate for IRP For The Respondent : Mr. Manish Jain, Mr. Sanjay Bhatt and Ms. Divya Sharma, Advocates, Mr. Sanyam G ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t could have been NPA on 1st March, 2012, the assignment was fraudulent and illegal, in clear breach of RBI Guidelines and, hence non-est. 5. Further, according to the learned counsel for the appellant, Para B of Article V of the loan agreement provides for 7 business days cure period before declaring an event of default and before acceleration. There is no notice of demand or notice of default or notice of acceleration or notice of cure issued by HSBC India. It is also submitted that the impugned Assignment also contravenes the Securitization and Reconstruction of Financial Assets and Enforcement of Securities Interest Act, 2002 ( SARFAESI Act ). Section 5(3) of SARFAESI Act provides for assignment of the loan with all underlying security and guarantees etc. HSBC Loan was assigned under the SARFAESI Act but without assigning the most important and liquid security of HSBC SBLC/Guarantee, which was backed by lien and security over cash fixed deposit by the largest shareholder of GPI and formed the very backbone of financing arrangements between HSBC India , GPI and GLAM . Further, Clause 2(1)(j) of SARFAESI Act defines default only upon classification of NPA. D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... c) HSBC India and Phoenix have enjoyed the benefit of drawdown of more than 81 Crores made on HSBC SBLC/Guarantee (which is reflecting in the bank account statement of GPI on 22nd March, 2012 (i.e. one day after assignment), and also the credit of ₹ 50 crores on 22nd March, 2012 reflecting in the bank account statement of GPI . No benefit of both the aforesaid amounts has been allowed to GPI , whose debt admitting assignment stands fully satisfied. If HSBC SBLC/Guarantee was released between 20th March, 2012 and 21st March, 2012 (as stated in Assignment Deed), the draw down of ₹ 81 Crores from HSBC SBLC/Guarantee made on 22nd March, 2012 and the credit of balance of ₹ 50 Crores reflecting in the HSBC Bank account of GPI on 22nd March, 2012 can only be for satisfaction of debt of GPI . The aforesaid facts explain the outcome of release of HSBC SBLC/Guarantee, which encashment reflects in the bank account of GPI in HSBC, and that non-transfer of SBLC/Guarantee with the assignment of loan and encashed subsequently can cause no prejudice to the satisfaction of amount recoverable from GPI . 8. Therefore, according to the learned counsel for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spondent No. 1 has also filed OA No. 919/2016. Both the matters are pending in DRT-I, Chandigarh. 13. Thereafter, Phoenix filed petition u/s 7 of the I B Code before the Adjudicating Authority, Chandigarh Bench which satisfied the following three requirements as laid down u/s 7(5)(a): i. Existence of Default ii. Application under Form 1 being complete, and iii. No disciplinary proceedings against the IP proposed as IP. 14. Apart from the above, the Corporate Debtor had executed balance-cum-security confirmation letter dated 15th March, 2012 admitting the debt due to the Financial Creditor . 15. The loan agreement contains a covenant that the loan can be assigned in part or in whole without permission of the borrower. 16. The appellant has challenged the Deed of Assignment executed between the HSBC Phoenix , but while filing reply to the notice issued during the admission of application u/s 7 of the I B Code, such issue cannot be raised as it cannot be decided by the Adjudicating Authority on objection. 17. In ICICI Bank Ltd. Vs. Of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efault has not occurred in the sense that the debt , which may also include a disputed claim, is not due. A debt may not be due if it is not payable in law or in fact. The moment the adjudicating authority is satisfied that a default has occurred, the application must be admitted unless it is incomplete, in which case it may give notice to the applicant to rectify the defect within 7 days of receipt of a notice from the adjudicating authority. Under subsection (7), the adjudicating authority shall then communicate the order passed to the financial creditor and corporate debtor within 7 days of admission or rejection of such application, as the case may be. 30. On the other hand, as we have seen, in the case of a corporate debtor who commits a default of a financial debt, the adjudicating authority has merely to see the records of the information utility or other evidence produced by the financial creditor to satisfy itself that a default has occurred. It is of no matter that the debt is disputed so long as the debt is due i.e. payable unless interdicted by some law or has not yet become due in the sense that it is payable at some future date. It is only when ..... X X X X Extracts X X X X X X X X Extracts X X X X
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