TMI Blog2018 (3) TMI 1778X X X X Extracts X X X X X X X X Extracts X X X X ..... he Code. The statutory rights of the applicant bank satisfying the requirements of Section 7 of the Code to trigger Corporate Insolvency Resolution Process cannot be defeated on the ground of pendency of adjudication pertaining to misappropriation of funds. Once there is a debt and default, the Adjudicating Authority has no option but to admit the application filed under Section 7 of the Code, when it is complete. It is also settled law that facts which are not required to be disclosed as per the prescribed format, cannot be treated as suppression of facts. Application is admitted - moratorium in terms of Section 14 of the Code declared. - COMPANY PETITION NO. (IB)-867(PB)/2018 - - - Dated:- 25-3-2018 - MR (RTD.) M.M. KUMAR, PRESIDENT AND Mr S.K. MOHAPATRA, MEMBER (TECHNICAL) For The Applicant : Davesh Bhatia, Neeraj Yadav and Saurabh Kumar, Advs. For The Respondent : Manik Dougra, Nikhil Singhvi, Arjun Syal, Mohit Seth, Ms. Nikita Pandey and Shreyan Das, Advs ORDER S. K. Mohapatra, Member 1. Yes Bank has filed the instant application under Section 7 of the Insolvency and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dia or elsewhere. He has enclosed the copy of Certificate of Registration dated 15th September, 2017 issued by IBBI. In addition, further necessary disclosures have been made by Mr. Ashok Kumar Dewan 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 in the year 2016, the Corporate Debtor approached the Financial Creditor to avail certain credit facilities and entered into several agreements, deeds of hypothecation, deeds of guarantee and supplemental deeds for availing the credit facilities. 7. It is stated that the Corporate Debtor also availed the facilities with respect to Invoice Discounting, which allowed the Corporate Debtor to obtain credit from the Bank on its outstanding invoices, issued by it to its customers, and upon payment of such invoices by its customer the amount would be routed through the Corporate Debtor's bank account maintained with the applicant bank and would be repaid to the bank. 8. It is alleged that the applicant bank discounted several invoices and credited the amounts to the bank account of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... copy of invoices. * Copy of letter dated 05.03.2018 issued by the corporate debtor seeking discounting of sale invoices from 14.02.2018 till 20.02.2018 along with copy of invoices. * Copies of four (4) letters dated 06.03.2018 issued by the corporate debtor seeking discounting of sale invoices from 16.02.2018 till 25.02.2018 along with copy of invoices. * Copies of four (4) letters dated 09.03.2018 issued by the corporate debtor seeking discounting of sale invoices from 26.03.2018 till 04.03.2018 along with copy of invoices. * Copies of two (2) letters dated 12.03.2018 issued by the corporate debtor seeking discounting of sale invoices from 08.03.2018 till 10.03.2018 along with copy of invoices. * Copies of two (2) letters dated 21.03.2018 issued by the corporate debtor seeking discounting of sale invoices from 13.03.2018 till 14.03.2018 along with copy of invoices. * Letter dated 03.05.2018 bearing Ref No. YBL/0016/030518/001 issued to Mr. Neeraj Kumar Jain and Mr. Naresh Kumar Jain demanding payment of the outstanding amount of ₹ 215,640,515.50 along with postal receipts. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that no board resolution granting authority to Mr. Gaurav Sarkar has been filed in the present proceedings, and the delegated power of attorney filed in the present proceedings is insufficient to establish authority on part of the Applicant Bank's signatory. The power to sub delegate has been challenged with the contention that there is no valid authority. 20. In this regard applicant bank in its rejoinder filed on 05.09.2018 has affirmed that Mr. Gaurav Sarkar was duly authorized to file the present application under the Code on behalf of the applicant company. In this regard applicant has relied upon the power of attorney dated 21.06.2018, wherein Mr. Gaurav Sarkar, Vice President of applicant banking company inter alia was nominated and appointed to act on behalf of the bank and in the name of the bank for filing application under the Code. 21. Hon'ble NCLAT in the case of Palogix Infrastructure (P.) Ltd. v. ICICI Bank Ltd. 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 initi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spondent and not to the credit facilities availed by the respondent company. It is further submitted that the alleged withdrawals were made by the CFO of the respondent company through duly signed original cheques. It is also stated that any outflow from the current account of respondent company whether authorized or allegedly unauthorized has no bearing on the respondent's liability to pay its loan amount availed from the applicant bank. 27. Section 7 application filed under the Code is an independent proceeding, which has nothing to do with the pendency of criminal or civil proceedings. Misappropriation of funds by CFO of the respondent company and by employees of bank, if any, has to be dealt with separately. Pendency of investigation and civil suit, in the absence of specific stay order, cannot be construed as a valid defense against triggering of Corporate Insolvency Resolution Process under the provisions of the Code. Insolvency and Bankruptcy Code, 2016 is a special law having an overriding effect on any other law as mandated under Section 238 of the Code. The statutory rights of the applicant bank satisfying the requirements of Section 7 of the Code to tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt further has admitted in its reply that it had opened bank account with the applicant bank. 34. Applicant has relied upon CRILIC report dated 15th June, 2018 and various loan agreements including Charge certificates, which have not been disputed. In support of claim of default applicant bank has filed copy of relevant statement of accounts of the corporate debtor along with Certificate under Section 2A of Bankers' Books Evidence Act, 1891. Applicant has also annexed the detail working for computation of the amount and days of default in support of its claim. 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 financial debt. 35. It is thus seen that the applicant 'financial creditor' has placed on record voluminous and overwhelming evidence in support of the financial debt as well as to prove the default. 36. The material on record clearly goes to show that respondent has availed the loan facilities and has committed default in repayment of the loan amount. An application under Section 7 of the Code is acceptable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... RP is pending. 42. Hon'ble Supreme Court in the case of Mobilox Innovations (P.) Ltd. v. Kirusa Software (P.) Ltd. [2017] 85 taxmann.com 292/144 SCL 37 at Para 19 has observed that: Once the adjudicating authority/Tribunal is satisfied as to the existence of the default and has ensured that the application is complete and no disciplinary proceedings are pending against the proposed resolution professional, it shall admit the application. The adjudicating authority/Tribunal is not required to look into any other criteria for admission of the application. (Emphasis given) 43. In the facts it is reiterated 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 financial debt. Moreover, 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... riod. 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. 49. 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 Professional would be at liberty to make appropriate applic ..... X X X X Extracts X X X X X X X X Extracts X X X X
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