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TMI Blog2018 (11) TMI 1781X X X X Extracts X X X X X X X X Extracts X X X X ..... ment of a sum of Rs. 273,09,68,793/- as on 31.03.2018, including interest and the date of default being 11.02.2010. 2. Before going into the Petition filed by PNB, let us discuss about the Intervention Applications filed by the Promoters (hereinafter collectively referred to as "Interveners") in M.A. No. 1156 of 2018 and I.A. No. 1277 of 2018. Since the prayer in both these applications is similar a common order is passed in both these applications. i. The Interveners in the above applications are the promoters of the Corporate Debtor and submits that; in the year 2005 owing to various factors the Corporate Debtor had suffered losses and consequent erosion of working capital, triggered Corporate Debt Restructuring, there were some labour problems in the year 2008, reference under section 15 of Sick Industrial Companies Act (SICA) was made in the year 2008 and declared as Sick Industrial company in the year 2009, etc. Now the Interveners in M.A 1156/MB/2018 herein have filed a writ petition no. 3430/2018 on the file of Hon'ble Bombay High Court with a grievance that the Petitioner had not strictly followed the RBI circular dated 12.02.2018 for revival plan cum OTS proposal and th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... djudicating 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 the corporate debtor is entitled to point out that a default 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 sub-section (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." 4. From the aforesaid decision, it is clear that the Adjudicating Authority is only to be satisfied t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 03.2005 and 02.02.2006. v. Copy of Short Term Loan Agreement dated 17.10.2005 and 08.05.2006. vi. Copy of Demand Promissory Note dated 28.03.2005 for Rs. 20,00,00,000/-. vii. Copy of Agreement of Funded Interest Term Loan dated 25.03.2008. viii. Copy of Working Capital Term Loan Agreement dated 25.03.2008. ix. Copy of Agreement of Pledge dated 28.03.2008. x. Copy of Indenture of Mortgage dated 29.04.2009 and copies of Agreement of Guarantee dated 05.05.2006, 25.03.2008, 30.12.2008 and 31.12.2008. xi. Certificate of registration of modification of mortgage dated 24.09.2008. 9. PNB had issued notice u/s 13(2) of SARFAESI Act, 2002 on 31.12.2016 claiming a sum of Rs. 78,31,57,403/- as on 11.02.2010, 12.02.2010 and 20.05.2010 with further interest at contractual rate until full payment is made. 10. The Petition further reveals that the following is the outstanding as on 31.03.2018: Sr. No. Nature of Facility Outstanding as on 31.03.2018 (in Rupees) 1. Bank Guarantee (A/c No. 217500PC00003188) 35,01,43,319 2. Working Capital Term Loan (A/c. No.217500IC00001035) 55,30,50,365 3. Inland Letter of Credit/ Foreign Letter Credit (A/c. No.217500IC00001822) 1,61,4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e NCLAT in the case of "Mr. Satyaprakash Aggarwal & Ors. V. Vistar Metal Industries Pvt. Ltd." [2018 SCC OnLine NCLAT 264] at para 4 of the judgement which reads as below: "4. Further, in a petition under Section 7 of the 'I&B Code', the Adjudicating Authority is required to decide whether the Form 1 along with documents is complete or not. The Adjudicating Authority is not required to decide as to what is the actual amount of claim and other details, which is required to be determined by the 'Resolution Professional' after initiation of 'Corporate Insolvency Resolution Process'." f. The Corporate Debtor contends that Particulars in Part 4 of Form 1 are incorrect, insufficient and devoid of merit and therefore the Petition is not maintainable. Since the Petitioner has provided the details of loan sanctioned, statement of Accounts, Interest debited and charges debited etc., this Bench is satisfied with the Particulars provided in Part 4 of Form 1, hence the contentions of the Corporate Debtor fails. Further it was contended that the Exhibit-G and G1 is not drawn up in accordance with the requirement of Bankers Book of Evidence Act, 1891. PNB has filed the certificate u/s. 2A (a) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ner is trying to mislead this Bench as if default is approved by the BIFR. The common parlance is that when a company files a reference with BIFR then debt and default is accepted by the concerned company. In view of this, the contention of the Corporate Debtor that default is not proved just because an order is passed by BIFR admitting a company as a sick industrial unit is totally incomprehensible and this contention need not be given any credence in view of our observation that debt and default is writ large in this case. k. The Corporate Debtor submits that CIBIL report annexed to the Petition categorised the accounts of Corporate Debtor as standard and there is no record of default. However, an ordinary scanning of the CIBIL report shows that it is not reflecting the whole borrowings of the Corporate Debtor and in fact only one loan of Rs. 9,70,784/- sanctioned on 22.06.2005 is reflected in the report and hence not much reliance can be made on this CIBIL report when there are sufficient documents are available in proof of debt and default. l. The Corporate Debtor further contended that the demand promissory note dated 08.05.2006, the balance confirmation letter dated 14.08 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the Corporate Debtor on 04.08.2018 and has filed this proceedings under Section 7 of Insolvency and Bankruptcy Code. There is nothing on record to suggest that the OTS proposal was accepted by the Petitioner and in fact the OTS proposal was rejected by the Petitioner on 31.10.2018 as disclosed by the counsel for the Petitioner during the hearing of this petition. Further, as mentioned supra this Bench had permitted the Corporate Debtor to submit the OTS proposal as requested by the promoters but the promoters failed to submit the OTS proposal as per the existing guidelines applicable for submission of OTS proposal. Hence the Corporate Debtor cannot raise this objection regarding the OTS proposal. 13.The contentions raised by the Corporate Debtor in the written submissions filed on 09.10.2018 were considered by this Bench, but in view of the failure of OTS proposal, those contentions don't have legs to stand. 14.The Corporate Debtor filed 'further written submissions' on 15.11.2018 with the following contentions. a. The applicant has failed to appoint an IRP in accordance with the Code. b. The application is not signed by the person duly authorised. c. The existence of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m-I, namely: (I) (a) the institution of suits or continuation of pending suits or proceedings against the Corporate Debtor including execution of any judgment, decree or order in any court of law, tribunal, arbitration panel or other authority; (b) transferring, encumbering, alienating or disposing of by the Corporate Debtor any of its assets or any legal right or beneficial interest therein; (c) any action to foreclose, recover or enforce any security interest created by the Corporate Debtor in respect of its property including any action under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act); (d) the recovery of any property by an owner or lessor where such property is occupied by or in the possession of the Corporate Debtor. (II) That the supply of essential goods or services to the Corporate Debtor, if continuing, shall not be terminated or suspended or interrupted during moratorium period. (III) That the provisions of sub-section (1) of Section 14 shall not apply to such transactions as may be notified by the Central Government in consultation with any financial sector regulator. (IV) That the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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