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TMI Blog2020 (9) TMI 1079X X X X Extracts X X X X X X X X Extracts X X X X ..... amount claimed to be in default is Rs. 194,36,71,151/- as on 05.10.2019. The date of default is stated to be 31.12.2018. BRIEF HISTORY OF THE CASE 3. The Petitioner is acting for and on behalf of the debenture holder being Piramal Capital and Housing Finance Ltd. (Piramal Finance). 4. The Corporate Debtor holds development rights in respect of all that piece and parcel of land admeasuring 6,629.18 sq.mtrs, bearing Plot No. H-27, H-28, H-29, H-30 and H-31(part), CTS No.1(part), 2A(part),3(part) and 6(part) of village Oshiwara, Taluka Andheri, Mumbai, suburban district. 5. The Corporate Debtor created a English Mortgage under a Debenture Trust Deed dated 29.06.2016 (Debenture Trust Deed) in favour of the Petitioner to secure the due repayment of principal amount of non-convertible debentures aggregating to Rs. 245,00,00,000/- of Corporate Debtor along with all outstanding amounts on the terms and conditions contained therein. Out of the said 24,500 NCD's, Corporate Debtor only issue 23,923 NCD's and the same were subscribed by Piramal Enterprises Limited. Corporate Debtor redeemed 1,990 NCDs on 02.02.2018 and presently the balance 21,943 NCDs are held by Piramal Finance. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 05.10.2019 on the NCDs for the aforesaid quarters. 10. As on 5.10.2019, the total amount claimed in default was Rs. 194,36,71,151/- was due and payable. 11. The Petitioner has filed Commercial Suit (L) No. 968 of 2019 in the Hon'ble Bombay High Court, inter-alia, seeking a direction against Corporate Debtor and the Guarantors to jointly and severally pay to the Petitioners an aggregate sum of Rs. 214,63,07,617/- with further interest and further default interest and fixation of a decree of foreclosure of the Mortgaged Property and sale of the Mortgaged Property and sale of the Hypothecated Properties and the Pledged Shares and payment of the net sale-proceeds thereof, after deducting the costs, charges and expenses of such sale, in the event Corporate Debtor and the Guarantors fail to pay to the Financial Creditor the detrital amounts. 12. By an ad-interim order dated 23.09.2019 passed by an Hon'ble Bombay High Court, Corporate Debtor and the Guarantors, their officers, agents, employees and servants and/or any person/entity claiming through and/or under them were restrained from in any manner selling, transferring, alienating, disposing of, encumbering, mortgaging, hyp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has also filed Commercial Suit (L) No. 968 of 2019 in the Hon'ble Bombay High Court. A perusal of the same would show that an identical issue has been raised in the said Suit. iv. A perusal of the Debenture Trust Deed dated 29.06.2016 would show that the second and third tranches of the loan/disbursements were towards project related expenses. The project as planned under the said Deed is still under progress and the Corporate Debtor has been duly following up and complying with the same. v. Subsequent to the Debenture Trust Deed, the Corporate Debtor has entered into a Loan Agreement cum Mortgage deed dated 25.01.2019 with PNB Housing Finance Limited. A Pari Passu Agreement dated 31.01.2018 was also executed between PNB Housing Finance Limited, Piramal Finance Limited, Piramal Housing Finance Limited, Petitioner and the Corporate Debtor. However, despite the express knowledge of the Petitioner, these material and relevant agreements and facts have not been disclosed or produced with the Petition. vi. Under the Loan Agreement cum Mortgage Deed dated 25.01.2018 it is expressly agreed that PNB Housing Finance Limited would make payments of the earlier existing loans subject ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itioner denies that the Petition is not maintainable. The Petitioner say that by a Notification dated 27.02.2019 issued by the Central Government, trustees have been authorized to file application seeking the initiation of Corporate Insolvency Resolution Process against Corporate Debtor on behalf of the Petitioner. Therefore, the present Petition is maintainable in law and fact. FINDINGS: QUESTIONS OF LAW: 1. Whether there was novation of Contract? 2. Whether this Petition under Section 7 of the Code is barred by law in view of the pending civil suit for recoveries of the amount dues before the Hon'ble Bombay High Court? 3. Whether technicalities make a material change in summary proceedings under IBC? 16. a) On going through the submissions made by the Learned Counsel for both the sides and on perusing the documents produced on record, we necessarily need to consider the rights of the Petitioner to recover the amount due under the Debenture Trust Deeds and the events of defaults as contemplated there under. The Debenture Trust Deed executed by and between the Corporate Debtor and the Petitioner entailed the powers/duties conferred upon the Debenture Trustee to represen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... common security and amounts due to each of them from the borrower". Therefore this bench concludes that statutory rights of enforcement of contract cannot be taken away by any contractual arrangement. 17. However, PNB having filed the Intervention Application MA 247 of 2020 and later chose to withdraw the said Application. 18. a) The Corporate Debtor's objection that the petitioner is not a financial creditor and that the petitioner sought to rely on the notification of Central Government which came into effect on 27/02/2019. The Corporate Debtor stated that this petition was filed on the basis of purported power of attorney of Debenture holder and no specific instructions were notified by the debenture holders. The notification of Ministry of Corporate Affairs is extracted below: MINISTRY OF CORPORATE AFFAIRS NOTIFICATION New Delhi, the 27th February, 2019 S.O. 1091(E) : - In exercise of the powers conferred by sub-section (1) of section 7 of the Insolvency and Bankruptcy Code, 2016 (31 of 2016), the Central Government hereby notifies following persons who may file an application for initiating corporate insolvency resolution process against a Corporate Debtor before ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so file a suit for recovery of outstanding sum. The Hon'ble NCLAT in "Karan Goel Vs. M/s. Pashupati Jewellers [Comp. App. (AT) (Ins) No. 1021/2019]" dated 01.10.2019 at para 7 held that, "Merely because a suit has been filed by the Appellant and is pending, cannot be a ground to reject the application under Section 7 of the I &B Code. " 20. The Adjudicating Authority in summary proceedings under I & B Code is not bound by civil procedure code and technicalities prescribed therein and thus a petition under sec 7 by the financial creditor can be admitted if there is a debt and default. In the instant case, the bench is of the opinion that the petitioner has sought to enforce the rights of the Debenture holder under the Debenture Trust deed dated 29th June, 2016, the Corporate Debtor has defaulted in payment of the said sum due there under. Hence the objection about material defects is untenable. 21. In "Innoventive Industries Ltd. Vs. ICICI Bank and Anr. - MANU/SC/1063/2017 : (2018) 1 SCC 407", the Hon'ble Supreme Court observed: - "28 When it comes to a financial creditor triggering the process, Section 7 becomes relevant. Under the explanation to Section 7(1), a defau ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lusion that the nature of Debt is a "Financial Debt" as defined under section 5(8) of the Code. It has also been established that there is a "Default" as defined under section 3(12) of the Code on the part of the Debtor. The two essential requirements, i.e. existence of 'debt' and 'default', for admission of a petition under section 7 of the I&B Code, have been met in this case. 25. Further that, we have also perused the Form - 2 i.e. written consent of the proposed Interim Resolution Professional submitted along with this application/petition by the Petitioner and there is nothing on record which proves that any disciplinary action is pending against the said proposed Interim Resolution Professional. The Petitioner has proposed the name of Insolvency Professional. The IRP proposed by the Petitioner, Mr. Jayesh Sanghrajka, having registration No. IBBI/IPA-001/IP-P00216/2017-18/10416, is hereby appointed as Interim Resolution Professional to conduct the Insolvency Resolution Process. 26. Having admitted the Petition/Application, the provisions of Moratorium as prescribed under Section 14 of the Code shall be operative henceforth with effect from the date of order, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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