Tax Management India. Com
                        Law and Practice: A Digital eBook ...

Category of Documents

TMI - Tax Management India. Com
Case Laws Acts Notifications Circulars Classification Forms Manuals SMS News Articles
Highlights
D. Forum
What's New

Share:      

        Home        
 

TMI Blog

Home List
← Previous Next →

2020 (2) TMI 636

..... of "Appropriate Regulator" has submitted this Application against the 'Financial Service Provider' Dewan Housing Finance Corporation Limited on account of the fact that the default in repayment of the ECB Loan to SBI was committed, therefore, after following the due procedure as discussed prayed for "Admission" of the Petition u/s 7 to be read with Section 227 of the Insolvency Code. On due examination of the evidences annexed with this Application we hereby hold that the Debt in question is to be qualified as "Financial Debt" as defined u/s. 5(8) to be read with Section 3(11) of The Code. Further, on the basis of the correspondence and the Letters issued it has also been established that the FSP has committed Default of repayment as defined u/s. 3(12) of The Code. Application admitted - moratorium declared. - CP (IB) NO. 4258/MB/2019 - 3-12-2019 - M.K. Shrawat, Judicial Member And Chandra Bhan Singh, Technical Member Ravi Kadam, Ashish Kamat, Suharsh Sinha, Vivek Shetty, Anpazhakan and Majid Mohammed, (RBI Bank Official) for the Petitioner. Rohan Rajadhyaksha for the Respondent. ORDER M.K. Shrawat, This Petition is submitted by General Manager .....

X X X X X X X

Full Text of the Document

X X X X X X X

..... u/s.227 of The Code to formulate the manner of conducting Insolvency & Liquidation Proceedings. 2.4 Exercising the powers as enshrined in the Insolvency Code supra the Ministry of Corporate Affairs/Central Government has issued "Notification" on 15.11.2019 by formulating the Rules called as "Insolvency and Bankruptcy (Insolvency and Liquidation Proceedings of Financial Service Providers and Application to Adjudicating Authority) Rules, 2019)". These Rules shall apply to such "Financial Service Providers" (in short FSP) or "Categories of Financial Service Providers" as notified by Central Government u/s. 227 of the Insolvency Code for the purpose of their Insolvency and Liquidation proceedings under these Rules. For the purpose of conducting Insolvency process an "Administrator" is to be appointed as defined U/r 3 means an Individual appointed by the Adjudicating Authority under Rule 5 (a)(iii) to exercise the powers and functions of the Insolvency Professional/Interim Resolution Professional/Resolution Professional/Liquidator in respect of a Financial Service Provider undergoing Insolvency Proceedings as per the I&B Code. T .....

X X X X X X X

Full Text of the Document

X X X X X X X

..... cial services shall not be suspended or cancelled during the interim-moratorium and the corporate insolvency resolution process. Explanation.- For the purposes of this clause, "interim moratorium" shall have the effect of the provisions of sub-sections (1), (2) and (3) of section 14. (c) Advisory Committee.- (i) the appropriate regulator may, where deemed necessary, constitute an Advisory Committee, within 45 days of the insolvency commencement date, to advise the Administrator in the operations of the financial service provider during the corporate insolvency resolution process; (ii) the Advisory Committee shall consist of three or more Members, who shall be persons of ability, integrity and standing, and who have expertise or experience in finance, economics, accountancy, law, public policy or any other profession in the area of financial services or risk management, administration, supervision or resolution of a financial service provider; (iii) the terms and conditions of the Members of the Advisory Committee and the manner of conducting meetings and observance of rules of procedure shall be such as may be determined by the appropriate regulator; (iv) the compensation .....

X X X X X X X

Full Text of the Document

X X X X X X X

..... s made available by the Adjudicating Authority, however, till such facility is made available, the Applicant may submit the documents in a legible portable format in a data storage device such as Compact Disc or a USB Flash Drive acceptable to the Adjudicating Authority. 3. Most importantly, our attention is drawn on a Notification dated 18.11.2019 which was issued in exercise of the powers conferred u/s.227 of The Code in consultation with RBI, reproduced below for ready reference.- "MINISTRY OF CORPORATE AFFAIRS NOTIFICATION New Delhi, the 18th November, 2019 SO. 4139(E).-In exercise of the powers conferred by section 227 of the Insolvency and Bankruptcy Code, 2016 31 OF 2016), the Central Government in consultation with the Reserve Bank of India hereby notifies as under: The insolvency resolution and liquidation proceedings of the following categories of financial service providers shall be undertaken in accordance with the provisions of the Insolvency and Bankruptcy Code 2016 read with the Insolvency and Bankruptcy (Insolvency and Liquidation Proceedings of Financial Service Providers and Application to Adjudicating Authority) Rules, 2019 (in this notification referred to .....

X X X X X X X

Full Text of the Document

X X X X X X X

..... website of the RBI) being the interest portion in relation to a facility of USD 11,00,00,000 (Eleven Crores US Dollars Only) (approximately INR 784,98,97,000 (Rupees Seven Hundred Eighty Four Crores Ninety Eight Lakhs Ninety Seven Thousand Only) at USD/INR reference rate of 1 USD/71.3627 INR on November 27, 2019 published on the website of the RBI) advanced to DHFL and the date(s) on which the default occurred is November 7, 2019; and b. Supporting documentation from SBI in this regard." 4.2 The Central Government in consultation with RBI had notified "NBFC" and "Housing Finance Companies" in the category of "FSP" on 18.02.2019 (reproduced supra) and thereafter on 22.11.2019 RBI issued Notification confirming that on 20.11.2019 in exercise of its powers u/s.45 IE 5(a) of the RBI Act 1934, the RBI superseded the board of directors of DHFL and appointed "Administrator" Mr. R. Subramaniakumar, vide Press Release 2019-2020/1230 dated 20.11.2019 reproduced below:- "Supersession of the Board of Directors and Appointment of Administrator - Dewan Housing Finance Corporation Limited In Exercise of the posers conferred under Section 45-IE (1 .....

X X X X X X X

Full Text of the Document

X X X X X X X

..... s. 3(11) of The Code as well as it is mandatory to establish "Default" as defined u/s. 3(12) of The Code. To fulfill this condition State Bank of India had issued an intimation dated 28.11.2019 to Chief General Manager, Department of Regulation (NBFC), Reserve Bank of India with the information of "Debt" owed to SBI from DHFL with sufficient basis to prove the existence of "Default" to initiate Corporate Insolvency Resolution Process against DHFL. In the said intimation it was communicated that SBI as a Financial Creditor had granted several facilities under various Loan Agreements. The details of "Debt" and "Default" had also been explained in the said communiqué, for ready reference, reproduced below:- "PARTICULARS OF FINANCIAL DEBT (DOCUMENTS, RECORDS AND EVIDENCE OF DEFAULT) 1. Amount of debt granted and date(s) of disbursement USD 240.00 million (Tranche I - USD 110 mio, Tranche II - USD 130 mio) Both disbursed on 27-07-2018 The above amount excludes facilities extended in INR by other branches of State Bank of India located in India and other ECB facilities sanctioned by subsidiaries of State Bank of India. 2. Amou .....

X X X X X X X

Full Text of the Document

X X X X X X X

..... .0 0 Total (F) 1,888,199.00 1,888,199.00" 4.7 This Petition also contains a Credit Information Report of all the borrowers having aggregate of fund based and non-fund based exposure submitted by Central Repository of Information on Large Credits (CRILC), along with Bankers' Books Evidence i.e. Customer Account Ledger Report; all demonstrating the evidence of huge Debt and Default of non-payment. 5. Learned Sr. Advocate Mr. Ravi Kadam has also drawn our attention on trail of emails, placed as an evidence, to demonstrate that the 'default' has duly been accepted by DHFL. In one of the emails dated 2nd December 2019, with a reference to a previous email wherein it was demanded to confirm the default amount and in response a Statement was attached giving exact amount of default i.e. 2.158090 Mn US$. It is therefore pleaded that this is a fit case which deserves 'Admission' because the existence of 'Debt' and 'Default' has duly been proved so that the Insolvency Proceedings in terms of Rule 6 of Financial Service Providers Rule to be read with Section 227 of IBC can be commenced. 6. At this juncture some of the individual investors and a Counsel .....

X X X X X X X

Full Text of the Document

X X X X X X X

..... orrespondence and the Letters issued it has also been established that the FSP has committed Default of repayment as defined u/s. 3(12) of The Code. 7.3 The name of Mr. R. Subramaniakumar, ex-MD and CEO of Indian Overseas Bank, Office Address at 10th Floor, TCG Financial Centre, G Block, BKC, Bandra Kurla Complex, Bandra (E), Mumbai - 400051, Maharashtra, Email Address: rskumar1512@gmail.com is proposed vide Press Release dated 20.11.2019 by RBI. The proposed Administrator has furnished written communication on Form 2 expressing his consent as well as eligibility to function as an Administrator. Considering the necessary compliance being made we hereby confirm the proposed name as an Administrator to perform all the functions of Resolution Professional to complete the Corporate Insolvency Resolution Process. 7.4 Upon Admission it is hereby pronounced that "Moratorium" as defined u/s.14 of the Insolvency Code shall commence with effect from the date of Application i.e. 29.11.2019 as prescribed under Rule 5(b)(i) of FSP Rules 2019. On commencement of "Moratorium" the institution of any Suit or continuation of proceedings or execution of any decree against the Fina .....

X X X X X X X

Full Text of the Document

X X X X X X X

 

 

← Previous Next →

 

 

|| Home || About us || Feedback || Contact us || Disclaimer || Terms of Use || Privacy Policy || Database || Members || Refer Us ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.
|| Blog || Site Map - Recent || Site Map ||