TMI Blog2019 (9) TMI 1144X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the debt is not payable in the eyes of law. In absence of any specific order of taking over the Management in terms of Section 13(4)(b) of the SARAFAESI Act, which includes the right to transfer by way of lease, assignment or sale for realizing of the secured asset, we hold that the Management of the Corporate Debtor continued with the Promoter. Therefore, if there is any default on the part of the Corporate Debtor to pay the debt amount, the Appellant cannot pass the blame on the Bank. Appeal dismissed. - Company Appeal (AT) (Insolvency) No. 68 of 2019 - - - Dated:- 26-9-2019 - Mr. S. J. Mukhopadhaya, Chairperson, Mr. A.I.S. Cheema, Member (Judicial) and Kanthi Narahari, Member (Technical) For Appellant : Mr. Sanjay R Hegde, Senior Advocate with Mr. Pranjal Kishore and Mr. Anmol Stephen, Advocates. For Respondent: Mr. Lakshman R.S., Advocate for Respondent No.1. Mr. Mukund P. Unny, Advocate for Respondent No.2. JUDGMENT M/s State Bank of India on behalf of Consortium Banks Assets Management Branch, Bangalore filed application under Section 7 of the Insolvency and Bankruptcy Code, 2016 (hereinafter re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orate Debtor had been making regular payments of the principal amount as well as interest to the Consortium and thereby a total sum of ₹ 101.14 crores was paid to the Consortium between 2010 to 2015. 6. Further, case of the Appellant is that on 21st June, 2014 the Consortium entered into a Master Joint Lenders Forum Agreement to deal with the subject account. In the meantime, it was decided that a Concurrent Auditor be appointed. 7. The Corporate Debtor was declared to be a NPA by the State Bank of India on 28th May, 2014 and the Punjab National Bank also declared the account of Corporate Debtor as NPA on 30th June, 2014. The Deputy General Manager, State Bank of India, in view of the failure of re-structuring, requested that the date of NPA of the Corporate Debtor be changed to 31st January, 2010. Such suggestion was approved on 10th July, 2014. 8. Learned Counsel appearing on behalf of the Appellant relied on the aforesaid decision to change the date of NPA to 31st January, 2010 to contend that default, if any, occurred prior to 31st January, 2010. According to the learned Counsel, more than three years were passed since 31st January, 2010, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to cheating and fraud by the Company s CFO Mr. Mahesh Hegde and others against the Corporate Debtor at Ashok Nagar Police Station. The State Bank of India filed OA No.21/2016 seeking recovery of a sum of ₹ 200,07,06,237.21/- before the Debts Recovery Tribunal (hereinafter referred to as the DRT ). In the original application, the Corporate Debtor had also filed its claim seeking payment of ₹ 1299 crores. 15. Against the application of the State Bank of India, the Corporate Debtor moved in appeal under Section 17 of the SARAFAESI Act on 28th January, 2016 seeking to quash the taking over possession of the Plants of the Corporate Debtor and appointment of Concurrent Auditor. 16. It is informed that OA filed by the State Bank of India and the SARAFAESI Act proceedings filed by the Corporate Debtor are still pending before the DRT, Bangalore. On account of the repeated adjournments, the Bank ultimately moved an application under Section 7 of the I B Code. 17. It appears that a FIR was lodged by the Corporate Debtor and the same was registered against the employees of the Bank and other accused. The charge-sheet in the above case was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CONCURRENT AUDIT With reference to the above, we appoint you as concurrent auditor for the captioned unit financed by a consortium, with immediate effect. The scope of audit would be as under. I. Verification of Cash Flows: - a) Inflows Monitoring all the cash inflows to the company on an ongoing basis so as to ensure that all inflows are properly accounted for and are credited only to their escrow account maintained with us. (b) Outflows:- Monitoring of all payments made to from the company s accounts in order to ensure that no funds are diverted and are used only for the purpose of working capital i.e. raw materials, stores, consumables etc and statutory payments. No payments are to be made to NBFCs, unsecured creditors, unsecured loans and on account of capital goods. II. Inventory Monitoring purchase of all raw materials and their accounting in the company s books. III. Compliance and Verification (i) Compliance with regard to irregularities pointed out by Stock Auditors. (ii) Verification of statement being provided to the consortium banks, to ensure th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... M-2 / MCPL/ 05.08.2014 Dear Sir, Metal Closures Pvt. Limited (MCPL) Deployment of security With reference to the above, we authorize you to deploy security guard at the premises of MCIL, at the addresses given below: a. No.39/4B, Dodda Kallasandra, Kanakapura Raod, Bangalore 560 062. Tel-2632 0501 b. Plot no.37 38, KIADB Industrial Area, Kunigal, Tumkur.-572 130, Tel-0813 222 0349 2. The terms and conditions of deployment are as under: a. The security guards should monitor the movement of good in out of the factory and details viz. Particulars of goods, invoice no, date etc should be noted. b. While manufactured products can be permitted to be transported out of the factory, no machinery should be permitted to be shifted without our permission in writing. In case of any attempt to shift machinery, the undersigned should be informed immediately by the guards. c. 3 guards will be deployed at each of the premises, @ one guard in a shift of 8 hrs. d. The rate per security guard deployed at Kunigal plan will be ₹ 12,350.00 per month + Service Tax e. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n Express and Samyuktha Karnatka on 21st February, 2015. The borrower/ Guarantors in particular and the public in general were cautioned not to deal with the properties of the Corporate Debtor as referred to therein. The copies of Possession Notice were also issued in the newspaper on 21st February, 2015. 27. We have already noticed that the State Bank of India filed one OA No.21/2016 on 28th December, 2015 for recovery of sum of ₹ 200,07,06,237.21 before the DRT. In the same way, the Corporate Debtor has also filed counter claim, seeking payment of ₹ 1299 crores. Against the action of the Bank, the Corporate Debtor also filed an appeal under Section 17 of the SARAFAESI Act on 28th January, 2016. Both, the aforesaid OA and application under Section 17 filed by the Corporate Debtor are pending before the DRT. 28. The records also suggest that the properties of the Corporate Debtor were mortgaged, its Possession Notice was given, followed by possession taken by the State Bank of India and other Banks. 29. In the aforesaid background, it is to be determined, as to whether the application under Section 7 of the I B Code was barred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... When the mortgagor re-enters on the mortgaged property. 62. To enforce payment of money secured by a mortgage or otherwise charged upon immovable property. Twelve years When the money sued for becomes due. 33. Apart from the fact that the Bank had taken action under Section 13(4) of the SARAFAESI Act and the matter is pending before the DRT since 2015-16, there being 12 years of limitation prescribed for enforcement of payment of money secured by a mortgage, we hold that the claim of the none of the Consortium Banks are barred by limitation and, therefore, the Corporate Debtor cannot claim that the debt is not payable in the eyes of law. 34. Learned Counsel for the Appellant gave an idea that the Management of the Corporate Debtor was taken over by the State Bank of India and, therefore, if there was any default, the Promoters cannot be blamed. However, from the record we find that though, the possession of the one or the other Unit of the Corporate Debtor were taken over by the Bank, they only deployed their Se ..... X X X X Extracts X X X X X X X X Extracts X X X X
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