TMI Blog2020 (6) TMI 351X X X X Extracts X X X X X X X X Extracts X X X X ..... owed to the individual Financial Creditor by the Corporate Debtor. The Applications, as filed by the Financial Creditors are required to be admitted under Section 7 (5) of the I B Code, 2016. Application admitted - moratorium declared. - IBA/1045/2019 And IBA/1169/2019 - - - Dated:- 5-5-2020 - R. VARADHARAJAN, MEMBER (JUDICIAL) AND ANIL KUMAR B, MEMBER (TECHNICAL) For Financial Creditor: T.Ravichandran, Advocate And K. Chandrasekaran, Advocate For Corporate Debtor: T.K.Bhaskar, Advocate COMMON ORDER R. VAR.ADHARAJAN, MEMBER (JUDICIAL) 1. These Applications have been filed by the Financial Creditors invoking the provisions of Section 7 of the Insolvency and Bankruptcy Code, 2016 ( I B Code-2016 ) r/ w Rule 4 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 (hereinafter referred to as AAA Rules ) against M/S. Easun Reyrolle Limited (hereinafter referred to as 'Corporate Debtor). The prayers made in the Applications are to admit the Applications, to initiate the Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor, declare moratorium and appoint Interim Resolution Professional (I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oan. Copies of the documents dated 19.06.2013 are placed at pages 44 to 77 of the typed set filed with the Application. v. In addition, the Corporate Debtor executed the Memorandum Confirming the Extension of Equitable Mortgage in favour of the Financial Creditor on 16.09.2013, copy of which is placed at pages 78 to 91 of the typed set filed with the Application. Besides above, the Corporate Debtor deposited the title deeds with the Financial Creditor in respect of the property mentioned therein by executing memorandum relating to Deposit of Title Deeds, copy of the same is placed at pages 92 to 100 of the typed set filed with the Application. vi. The Corporate Debtor vide letter dated 17.02.2014 has requested the Financial Creditor to renew the Cash Credit Facility, copy of which is placed at page 101 of the typed set filed with the Application. The said request was considered and the Cash Credit Facility was renewed by the Financial Creditor vide Sanction Letter dated 24.09.2014, copy of which is placed at pages 102 to 112 of the typed set filed with the Application. vii The Corporate Debtor had executed various documents in favour of the Financial Creditor in view of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case of the Financial Creditor namely State Bank of India in CP/1169/2019 are as follows: i. The outstanding amounts claimed by the Financial Creditor namely State Bank of India in IBA/1169/1B/2019 against the Corporate Debtor is to the tune of ₹ 204,89,03,878.20p as on 31.08.2019 with further interest and other charges, less recoveries if any. ii. The Financial Creditor states that the Corporate Debtor namely M/s Easun Reyrolle Limited approached the Financial Creditor, Overseas Branch, Bangalore, for credit facilities for their business of manufacturing Relays and control panels. At the request of the Corporate Debtor, Financial Creditor sanctioned the Fund Based Cash Credit Limit of ₹ 13.25 Crores and Non-Fund Based Limits of ₹ 12.25 Crores, totalling to ₹ 25.50 Crores to the Corporate Debtor for their business. Copy of Sanction Letter dated 01.01.2000 is placed at pages 21 to 25 of the typed set filed with the Application. iii. The Financial Creditor has placed on record the Resolution dated 21.01.2000 passed by Board of Directors of the Corporate Debtor on accepting the terms and conditions of the sanction letter. Copy of Board Resolution d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .10.2006, 23.06.2007, 04.11.2008, 05.02.2009, 04.11.2009, 18.11.2010, 12.04.2013, 08.03.2014 and 28.2.2015 to the Corporate Debtor for their business. x. Besides executing the security documents such as Supplemental Agreement of Loan for increase in Overall Limit and Supplemental Agreement of Hypothecation of Goods and Assets for increase in Overall Limit from time to time in favour of the Financial Creditor, the Corporate Debtor has created equitable mortgage by deposit of title deeds in respect of various properties situated at Hosur on 14.11.2006 and also executed a Memorandum relating to Deposit of Title Deeds on 04.12.2008 and 22.4.2009 in favour of the Financial Creditor. Similarly, the charges over the property in respect of the Corporate Debtor have also been registered with Registrar of Companies. xi. In addition, the Corporate Debtor has acknowledged the liability in writing by executing Revival Letters in favour of the Financial Creditor now and then on 30.08.2004, 29.10.2005, 27.02.2006, 22.04.2009, 11.11.2009, 14.03.2012, 04.03.2015 and 10.02.2018. xii. After availing the above facilities and executing the security documents in favour of the Financial Creditor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... change. iii. The Corporate Debtor is engaged in the business of electrical power management, morefully concerning the manufacturing, importing, exporting and dealing with all kind of relays, protective devices, test kits and accessories thereof used in connection with power and control systems. iv. The Company has its manufacturing units located in SIPCOT Industrial Estate, Hosur, Krishnagiri District, Tamilnadu wherein the assembly, testing and packing unit has been set up for the products/ systems business namely Electrical Relays (Electro- Mechanical and Digital- Communicable / non- communicable) and control panel systems, and in Harohalli, Ramnagara District, Karnataka, the manufacturing unit at Harohalli has been set up primarily for the Enclosures that can be used for the ERL products / systems such as numeric relays, control panels, ring main units, etc. v. It is averred that taking into account the Company's viability in the industry, a need for restructuring was felt in the light of the charging market scenario. In that connection, a number of recommendations were made to effectively restructure the Company and several projections were made in relation to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s mentioned in the disclosure in the auditor's report for the year ended 31st March, 2018, stocks to the extent of ₹ 314.78 Lakhs are pending clearance from the customs warehouse for more than 3 years. Thus, these factors eventually crippled the working and thriving of the business of the Corporate Debtor. ix. Despite the same, the Corporate Debtor has certain key potentials which are distinct and highly imperative in the electrical power market. The Corporate Debtor is known for its distinct automation of the electrical grids. The Company has developed multiple products to suit the transmission and distribution segments, both in India and abroad and has substantially brought down the cost of the products, to achieve a higher EBITDA. Therefore, the Corporate Debtor has been taking substantial steps to improve its position over time. x. The Corporate Debtor also has a significant projected turnover as observed in the viability report. In fact, the following table depicts a substantial turnover achieved by the Corporate Debtor from the sale of its products for a period of five years from 2012 till 2016: DESCRIPTION 12 months ending M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . xiii. It is averred in the Counter Affidavit that the Corporate Debtor has also been taking substantial efforts to explore venues to settle and service the debt obligations to various bankers. Further, the Corporate Debtor has been in existence for over forty five years, with substantial public shareholding. The Corporate Debtor has a substantial potential of revival, and in relation to the same, the viability report specifically recommends a restructuring framework with a proposed repayment schedule in relation to various facilities obtained by the Corporate Debtor, with serviceability of the facilities being sourced by a combination of promoter's contribution and revenue inflows from business operations, with adequate monitoring systems in place for the restructuring scheme. The projections in relation to the profits sought to be achieved by the company are set out herein below, which are adequately sufficient to meet the repayment obligations of the Company in the forthcoming years: Description 2020 2021 2022 2023 2024 2025 2026 202 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the Counsel for the parties before this Tribunal. The Counter Affidavits filed by the Corporate Debtor in both the matters reveal that though the Corporate Debtor has filed separate Counter Affidavits on different dates, the contentions raised therein by the Corporate Debtor are the one and the same. A perusal of the Counter Affidavit shows that the Corporate Debtor has nowhere denied the availing of the Over Draft Cash Credit facility from Canara Bank and Fund Based and Non-Fund Based Credit facility from State Bank of India and the subsequent renewal thereto by them on various dates. 7. The Learned Counsel for the Financial Creditor has drawn the attention of this Tribunal to the submissions made by the Learned Counsel for the Corporate Debtor during the course of arguments in relation to the offer made by the Corporate Debtor to settle the outstanding amounts due to the Financial Creditor under OTS, and submits that in itself amounts to the admission of liability by the Corporate Debtor. 8. Be that as it may; it is pointed out by the Learned Counsel for the Financial Creditor that the Hon ble NCLAT in the matter of Dr. Esther Malini Victor -Vs- Oriental Bank of Comme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rd of India (Application to Adjudicating Authority) Rules, 2016 have been filed by the proposed IRPs. However, in relation to the appointment of IRP, upon perusal of Part - IV of the Application, it may be seen that the debt due to the State Bank of India, prima facie appears substantially to be more than that of the Canara Bank and in such a circumstance, it is just and necessary for this Tribunal to appoint the IRP as suggested by the State Bank of India in IBA/1169 2019. As a result thereof, Mr. B. PARAMESHWARA- UDPA, whose Registration No. IBBI/IPA-002/IP- N00480/2017-2018/11445, and Email: beepeeyou@gmail.com, Mobile No. +91-9483712078, is appointed as IRP. The IRP appointed shall take in this regard such other and further steps as are required under the Statute, more specifically in terms of Sections 15, 17, 18 of the I B Code, 2016 and file his report within 20 days before this Bench. The powers of the Board of Directors of the Corporate Debtor shall stand superseded as a consequence of the initiation of the CIR Process in relation to the Corporate Debtor in terms of the provisions of I B code, 2016. 12. As a consequence of the Applications being admitted in terms of Sect ..... X X X X Extracts X X X X X X X X Extracts X X X X
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