TMI Blog2019 (4) TMI 1903X X X X Extracts X X X X X X X X Extracts X X X X ..... of the 'I B Code'. Whether the debt amount payable by 'M/s. Ind- Barath Energy (Utkal) Limited' is deemed to have been repaid in view of invocation of pledge shares and the conversion of 'CCDs' into equity shares? - HELD THAT:- The Promoters confused the Adjudicating Authority by co-relating the two independent agreements i.e. one Subscription Agreement dated 23rd December, 2016 and the separate agreement which the Appellant and its sister entity, 'MAIF-II' has entered into for subscription to certain 'NCD' and 'CCD' in the holding company of the 'Corporate Debtor' which are unrelated to the agreement dated 23rd December, 2016 - The Adjudicating Authority failed to consider the same and thereby, wrongly held that the debt has been paid and there was no default on conversion of the 'CCD'. It also failed to consider that the interest to which the Appellant was entitled for different debt for which notice was given and, as discussed above, had not been paid by the 'Corporate Debtor' and there was a default of more than ₹ 1 Lakh on the part of the 'Corporate Debtor'. The Appellant- 'MAIF ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed'- ('Corporate Debtor') is a Public Limited Company engaged in the business of developing, constructing, operating power generation and related transmission and distribution facilities and is a subsidiary of 'Ind- Barath Thermotek Private Limited' ( IBTPL for short). The 'IBTPL' is, in turn, a subsidiary of 'Ind-Barath Power Infra Limited' ( IBPIL for short). 3. The case of the Appellant is that 'MAIF Investments India Pte. Ltd.' and one 'MAIF Investments India 2 Pte. Ltd. ( MAIF-II or 2 for short) are promoters and 'IBTPL', 'IBPIL' and 'M/s. Ind-Barath Energy (Utkal) Limited'- ('Corporate Debtor') along with one 'Arkay Energy Rameswaran Limited' entered into a Subscription Agreement on 23rd December. 2016 in terms of which the Appellant provided a bridge loan for a sum of ₹ 102 Crores by subscribing to 10,200,000 'Optionally Convertible Debentures' ( OCD for short) of the 'Corporate Debtor' at ₹ 100/- per 'OCD' (in February 2017) for an aggregate consideration of ₹ 102 Crores. 4. Further, the case of the Appellant is that separately and inde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... comes within the meaning of 'Financial Creditor' or not for the purpose of constitution of the 'Committee of Creditors' and determining its claim. 11. Reliance has been placed on the Investment Agreement dated 25th June, 2015 and the Subscription Agreement dated 23rd December, 2016, pursuant to which, the investments were made in the 'Corporate Debtor' and its holding Company. According to the Appellant, both the Agreements are inter-connected so much so that event of default is common to both agreements, relevant of which as detailed below: AGREEMENT DT NATURE OF APPEALLANT MAIF-2 INVESTMENT 23/12/2016 OCD 102 Crore Investment made in holding company of corporate debtor AGREEMENT DT NATURE OF APPEALLANT MAIF-2 INVESTMENT 25/06/2015 CCD 9,06,559 NCD 699 Crore Additional NCD 80 Crore 12. According to the Promoters, on 29th August, 2017, demand notice was issued jointly by the Appellant and 'MAIF-2' under both the agreements to 'Corporate Debtor', its holding company and step up holding company asking to redeem 'NCD' and convert 'CCD'. They also informed about their entitlement to vote based on the securities pledged. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lant in compliance of Clause 9.2 never issued notice for put option because debt was satisfied by invocation of pledge and the Appellant issued notice on 15th April, 2018 for redemption contrary to Clause 9.2 of the Subscription Agreement and hence neither debt was owed nor due. 17. According to learned counsel for the 'Resolution Professional', the Appellant has made a total claim of about ₹ 143.02 Crores and 'MAIF-2' has made a total claim of about ₹ 1439.34 Crores. The basis of the Appellant's claim is stated to be on account of a Subscription Agreement dated 23rd December, 2016 entered into by the Investors with 'IBTPL' and the 'Corporate Debtor', amongst others, for subscribing to 102,00,000 'OCDs' issued by the 'Corporate Debtor'. 18. According to the 'Resolution Professional', upon review of the claims, it was seen that the claims of the Investors primarily arise out of the Investment Agreement. From the documents submitted by the Investors along with the claim form, it was noted that: a. Pursuant to the Investment Agreement, the Investors had made investments in the Respondent and 'IBTPL ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onversion of 'CCDs' into equity shares. 20. The questions arise for consideration in this appeal is: (i) Whether the Appellant is a 'Financial Creditor' of the 'Corporate Debtor'? and; (ii) Whether the debt of the Appellant stands paid as held by the Adjudicating Authority? 21. Section 3(11) defines 'debt' means: 3. Definition.─ (11) debt means a liability or obligation in respect of a claim which is due from any person and includes a financial debt and operational debt; 22. Section 5(7) defines 'Financial Creditor' whereas Section 5(8) defines 'Financial Debt', which reads as follows: 5. Definitions.─ (7) financial creditor means any person to whom a financial debt is owed and includes a person to whom such debt has been legally assigned or transferred to 5 (8) financial debt means a debt along with interest, if any, which is disbursed against the consideration for the time value of money and includes-- (a) money borrowed against the payment of interest; (b) any amount raised by acceptance under any acceptance credit facility or its de- materialised equivalent; (c) any amount rai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Utkal) Limited'- ('Corporate Debtor') is deemed to have been repaid in view of invocation of pledge shares and the conversion of 'CCDs' into equity shares? 25. Admittedly, by Subscription Agreement dated 23rd December, 2016, the Appellant provided a bridge loan for a sum of ₹ 102 Crores by subscribing to 10,200,000 'Optionally Convertible Debentures' ( OCD for short) of the 'Corporate Debtor' at ₹ 100/- per 'OCD' (in February 2017). The interest payments on the 10,200,000 'OCDs' held by the Appellant were required to be made by the 'Corporate Debtor' in terms of Clause 10.1 of the Subscription Agreement of 2016. The Appellant's agent 'SBI-SG Global Securities Pvt. Ltd.' demanded interest payments on the 'OCDs' falling due on 21st May, 2017, 21st August, 2017 and thereafter on 21st November, 2017, 21st February, 2018, 21st May, 2018 and 16th August, 2018. However, such interest payments on the 'OCDs' as were due have not been paid by the 'Corporate Debtor'. 26. Admittedly, the Appellant and 'MAIF-II' also addressed a letter on 15th April, 2018 to the 'Corpor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in favour of the Appellant. 30. Such a finding given on a petition under Section 59 of the Companies Act, 2013 by the National Company Law Tribunal, the same National Company Law Tribunal being the Adjudicating Authority in the application under Section 7 filed by the Appellant was wrong to hold that by invocation of pledge of shares and conversion of 'CCD' into equity shares the debt amount stands paid. Under the law, there is no presumption of payment of debt merely on the invocation of the pledge till conversion of the debenture into share is accepted under the law. Further, the 'OCD' being the subject matter for disbursement of amount of ₹ 102 Crores, it cannot be linked with 'NCD' and 'CCD', which were subscribed pursuant to an agreement which is independent to Subscription Agreement dated 23rd December, 2016. 31. The Promoters confused the Adjudicating Authority by co-relating the two independent agreements i.e. one Subscription Agreement dated 23rd December, 2016 and the separate agreement which the Appellant and its sister entity, 'MAIF-II' has entered into for subscription to certain 'NCD' and 'CCD' in th ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
