TMI Blog2020 (10) TMI 321X X X X Extracts X X X X X X X X Extracts X X X X ..... icted by some law. Although Section 7(5) of the Code says that the Adjudicating Authority may admit or may dismiss a petition, looking at the facts of the case we are of the view that the petition needs to be admitted. A perusal of the Financial Statements of the Corporate Debtor for the FYs 2015-16, 2016-17 and 2017-18 gives the following picture: i) Its Liabilities increased from ₹ 55,55,96,184 as on 31.03.2016 to ₹ 62,79,11.936 as on 31.03.2017. ii) It earned a meagre profit of ₹ 1,25,983 as on 31.03.2017 and a loss of ₹ 15,87,734 as on 31.03.2016, from its operations; iii) Its cash flow statement showed a decrease in cash/cash equivalent of ₹ 2,59,11,523 as on 31.03.2017 over the preceding FY; iv) Its interest liability on Debentures alone as on 31.03.2017 was ₹ 2,19,18,544; v) As on 31.03.2018 (as per the information available on the MCA website) it had a negative Net Worth of 2,99,55,490; and total debts of ₹ 63,34,80,737 including the debt on account of NCDs. It is clear therefore, that the financial status of the Corporate Debtor is not healthy and indicates that it is not in a position to repay its debts. Apparently for this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion to Non-Convertible Debentures (hereinafter referred to as NCD ). The purpose for issuance of the NCDs was to fund the Acquisition and development of Coffee Estate and Purchase and Development of land parcels into Residential Plots. As per the Term Sheet the total size of the NCD Issue was to be ₹ 17 Crores. As per the product note each NCD was worth ₹ 10,000/- (Rupees Ten Thousand only). Each Debenture Holder was entitled to payment of interest @ 20.5% per annum, to be paid quarterly. The term of the NCD was to be 48 months. The debenture holder was to be paid the principal amount in 11 quarterly instalments starting from the 18th Month. (4) It is stated that as per the said Product Note the Debenture Holder's Representative and Calculating Agent was to be M/s. Karvy Capital Ltd. Further, the Debenture Trustee and Escrow Agent was to be one M/s. Milestone Trusteeship Services Pvt. Ltd. On 24.12.2014 a Debenture Trust Deed was entered into between the Corporate Debtor and Milestone Trusteeship Services Private Ltd., whereby the latter was appointed the Debenture Trustee. As per the said Agreement Karvy Capital Limited was to be the Debenture Holders Represe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ule. However, post December 2016, the Respondent has been continuously defaulting in making the scheduled payment of the Interest or the Principal Amount. Even though as per the letter dated 03.01.2017, the repayment of the principal was to commence from December 2017, the repayment has not yet commenced. Further, on 22.11.2017 a letter came to be issued by the Respondent/Corporate Debtor in favour of M/s. Milestone Trustee Services; whereby it accepted that the repayment has not commenced yet and explanation was sought to be given for the delay in repayment. (9) It is further stated that on 03.05.2018, a letter came to be issued by M/s. Milestone Trustee Services, whereby the Debenture Holders were informed about the actions that could be taken against the Respondent for the Default as committed. Furthermore, the letter also communicated that a letter was received from the Respondent whereby it again requested for an extension for repayment of the Principal as well as payment of the Interest. M/s. Karvy Capital Limited were informing the Petitioner about the replies received from the Respondent and the assurances being given with respect to repayment of the dues. Since the pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , learned Counsel for the Respondent appeared and accepted the notice for the Respondent and requested time to file a reply. The case was posted for 20.11.2019. On this date Mr. Srijan Sinha, learned Counsel for the Petitioners appeared but none appeared for the Respondent even though the earlier Counsel had accepted the notice. The case was again posted for 03.12.2019, with the directions that no further adjournment shall be granted. On 03.12.2019 while Mr. Srijan Sinha, learned Counsel for the Petitioners appeared but again none appeared for the Respondent even though earlier they had appeared and submitted that they were going to file reply. No reply was also filed. In view of this position, we are constrained to take a view that the Respondent has no reply to offer on the default committed by it and has no objection to the admission of the Petition under the Code. The facts of the case, as presented in the Petition are therefore examined on merits, to see if this is a fit case for initiation of CIRP in respect of the Respondent/Corporate Debtor. 5. The undisputed facts of the case are that on 19.06.2015, Petitioner No.1 invested INR 25,19,658/- in the Non Convertible Debentu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7. The Hon'ble Supreme Court in the case of Innoventive Industries Ltd. Vs. ICICI Bank Ltd., reported in (2018) 1 SCC 407 held that the scope of enquiry of an Adjudicating Authority in an Application made under Section 7 is very limited. The moment the Adjudicating Authority is satisfied that a Default has occurred, the Application must be admitted. The Adjudicating Authority has to merely satisfy itself that a default has occurred, even if the default is disputed so long as it is due, unless interdicted by some law. Although Section 7(5) of the Code says that the Adjudicating Authority may admit or may dismiss a petition, looking at the facts of the case we are of the view that the petition needs to be admitted. 8. A perusal of the Financial Statements of the Corporate Debtor for the FYs 2015-16, 2016-17 and 2017-18 gives the following picture: i) Its Liabilities increased from ₹ 55,55,96,184 as on 31.03.2016 to ₹ 62,79,11.936 as on 31.03.2017. ii) It earned a meagre profit of ₹ 1,25,983 as on 31.03.2017 and a loss of ₹ 15,87,734 as on 31.03.2016, from its operations; iii) Its cash flow statement showed a decrease in cash/cash equivalent of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng 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; d. recovery of any property by an owner or lessor where such property is occupied by or in the possession of the corporate debtor; e. supply of essential goods or services to the corporate debtor as may be specified shall not be terminated or suspended or interrupted during moratorium period; f. The provisions of sub-section (1) shall not apply to such transactions as may be notified by the Central Government in consultation with any financial regulator, and a surety in a contract of guarantee to a corporate debtor. g. The order of moratorium shall have effect from the date of such order till the completion of the Corporate Insolvency Resolution Process. (3) The IRP is directed to follow all extant provisions of the IBC, 2016 and the Rules including fees rules as framed by the IBBI from time to tim ..... X X X X Extracts X X X X X X X X Extracts X X X X
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