TMI Blog2020 (9) TMI 1079X X X X Extracts X X X X X X X X Extracts X X X X ..... ts and non-payment of monies by the Corporate Debtor or PNB demonstrates a clear liability and default, thus an action to initiate CIRP can be triggered. 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. Petition admitted. - CP No. 4469/IBC/MB/2019 - - - Dated:- 29-6-2020 - Suchitra Kanuparthi, Member (J) And Chandra Bhan Singh, Member (T) For the Appellant/Respondent : Parag Kabadi, Taruna Nagpal, Sachin Shankar, Advs., Ryan D'Souza i/b DSK Legal and Harshad Rajeshirke, Adv. ORDER SUCHITRA KANUPARTHI, MEMBER (J) 1. The Petitioner/Applicant viz. 'IDBI Trusteeship Services Limited' (hereinafter as Petitioner) has furnished Form No. 1 under Rule 4 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 (hereinafter as Rules) in the capacity of Petitioner on 11.12.2019 by invoking t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rust Deed and called upon them to repay the entire outstanding amount aggregating to ₹ 171,23,54,552/- together with further interest and default interest till the date of the payment. 7. Corporate Debtor by its letter dated 16.01.2019 responded to the Petitioner's said letter dated 04.01.2019 admitting it's liability to pay and the default committed under the Debenture Trust Deed. By the said letter, Corporate Debtor assured to comply with its obligations contained in the Debenture Trust Deed. 8. As Corporate Debtor and the Guarantors failed and neglected to comply with the requisitions made in the aforesaid letter dated 04.01.2019, the Petitioner by its advocate's letter 25.02.2019 called upon the Guarantors to jointly and/or severally pay to the Petitioner or to the Petitioner's advocate a sum aggregating to ₹ 173,58,10,707/- within 7 days from the date of receipt of the said notice. A copy of the said letter was endorsed to Corporate Debtor. The Guarantors have neither replied to the said letter nor paid the said amount. 9. Subsequent to the aforesaid correspondence, on 29.03.2019, Corporate Debtor paid the interest which was due and payable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 29.06.2016 in favour of the Petitioner promising to pay a sum up to ₹ 245,00,00,000/-. iv. An unconditional and irrevocable personal guarantee dated 29.06.2016 was executed by Mr. Vijay Sopan Machindar and Mrs. Komal Vijay Machindar in favour of the Petitioner guaranteeing payment of ₹ 245,00,00,000/- as well as the interest thereon. v. Share Pledge Agreement dated 29.06.2016 executed by the Guarantors. vi. Power of Attorney dated 29.06.2016 by which the Guarantors authorized the Petitioner as a Debenture Trustee to accomplish the purpose of the Share Pledge Agreement. REPLY OF THE CORPORATE DEBTOR 14. The Corporate Debtor filed two replies on 16.01.2020 and 06.02.2020 to the petition denying the liability and raising the following contentions: i. The Petitioner is not the Financial creditor and that no monies have been lent or advanced by the Petitioner and hence the Petition is liable to be dismissed. ii. The Petition is not maintainable since it has been filed in breach of Debenture Trust Deed dated 29.06.2016, which is very basis on which the Petitioner claims to be acting. The Debenture Trust Deed expressly provides that before initiating any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nancial debt or that financial debt was availed by them and now is due and payable, on this ground alone, the petition may be admitted. ii. The petitioner state that the reply of the Corporate Debtor is based on purported slowdown of real estate and various permissions granted is absolutely irrelevant to admission of the Petition. iii. The Petitioner denies that the Petition has been filed in breach of the Debenture Trust Deed. The Petitioner has received written instructions from Piramal Capital and housing Finance Limited, the sole debenture holder to file the present petition. The said provision in the Debenture Trust Deed is for the sole benefit of the debenture holder and not the Corporate Debtor. Therefore, the lack of instructions, if any, has no bearing on the rights and obligations of the Corporate Debtor under the Debenture Trust Deed and cannot be a ground for contesting the maintainability of the captioned Petition. iv. The filing of the Suit before the Hon'ble Bombay High Court does and cannot operate as a bar to the present Petition. The present Petition is independently filed under the insolvency and Bankruptcy Code, 2016 and cannot be obfuscated in such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated 4th January, 2019. b) The rights of the Petitioner cannot be linked to execution of the Pari Passu Agreement dated 31.01.2018 which was also executed between PNB Housing Finance Limited, Piramal Finance Limited, Piramal Housing Finance Limited, Petitioner and the Corporate Debtor. The said agreement confirms the original Debenture Trust Deed and stipulates certain events of payment by PNB Housing finance Limited. The payments which ought to be made in accordance to the Pari Passu Agreement were not adhered to and were defaulted to. The relevant recital of the Pari Passu Agreement is extracted below: The lenders desire to enter into this agreement in order to share the security on first pari-passu basis without any preference or priority of the said loans availed by the borrower from the Lenders under their respective loan agreements including sharing of proceeds on enforcing of security in the manner hereinafter appearing . Upon strict interpretation of the Pari-passu Agreement, it is evident that this agreement is a mere arrangement to share security on pari-passu basis and does not in any way substitute or Novate the original loan Agreements. c) Clause 3.4 of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plication for initiating corporate insolvency resolution process against a corporate debtor before the Adjudicating Authority when a default has occurred. c) Upon conjoint reading of Sec 7 and the recent notification of Central Government, we are of the opinion that rights of parties to seek CIRP by financial Creditor or Operational creditor cannot be subjected to technicalities and formalities. The Petitioner being Debenture Trustee has sought to file this petition with a power of attorney to enforce the rights of debenture holder under the Debenture Trust Deed. The Debenture Trustee is not a financial creditor and is acting on trust/security Trustee for the Debenture holder having requisite authorisation under the Debenture Trust Deed and power of attorney as well. d) The notification only clarifies that Debenture Trustee can file a petition under sec. 7 and the defect pointed out by the Corporate Debtor and since the default took place in December 19/January 2019, the petitioner cannot take advantage of the subsequent notification is absolutely untenable. The procedural formality regarding obtaining written consent from the Debenture holders does not take away the statuto ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ulars of the financial debt in part IV and documents, records and evidence of default in part V. Under Rule 4(3), the applicant is to dispatch a copy of the application filed with the adjudicating authority by registered post or speed post to the registered office of the Corporate Debtor. 22. In view of the above decision of Supreme Court, while admitting the petition under Sec. 7, the only aspect relevant is that there is a debt and default and in the instant case, we find an express provision and obligation of repayment under the Debenture Trust Deed and further that the Corporate Debtor defaulted in paying monies under the Debenture trust deed and also under the Pari Passu agreement executed by the parties to facilitate and secure payment of monies due to the Petitioner. The primary agreement of loan namely the Debenture Trust Deed executed by parties under which the Debentures were issued to the Debenture Holders was sought to be confirmed by execution of Pari Passu Agreement and therefore it can be said that two distinct Agreement ensures to the benefit of petitioner's right of receiving payments and non-payment of monies by the Corporate Debtor or PNB demonstrates a c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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