TMI Blog2019 (11) TMI 1476X X X X Extracts X X X X X X X X Extracts X X X X ..... ner at the stage of admission. There is an urgent need to find a resolution to the long pending saga of Hindustan Newsprint Limited. - the application filed on behalf of financial creditor/ Applicant is complete. Therefore, the application filed under Section 7(5)(a) of the I B Code, 2016 deserves to be Admitted. Application admitted - moratorium declared. - TIBA/3/KOB/19 (IBA/174/2019) - - - Dated:- 28-11-2019 - Ashok Kumar Borah, Member (J) And Veera Brahma Rao Arekapudi, Member (T) For the Appellant : Vinod P.V., Advocate For the Respondents : V. Krishna Menon, Advocate ORDER 1. The Financial Creditor/Applicant viz. 'RBL Bank Limited' (hereinafter as 'Financial Creditor/ the Bank' ) 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 Financial Creditor on 20.09.2018 by invoking the provisions of Section 7 of the Insolvency and Bankruptcy Code (hereinafter as Code) against 'M/s. Hindustan Newsprint Limited' (hereinafter as 'Corporate Debtor'). The registered office of the Corporate Debtor is stated to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted that the corporate Debtor had also executed Omnibus Indemnity in the event for Irrevocable Documentary Letter of Credit in favour of the Bank to provide indemnity in the event of non-payment of the bills after discounting the same (Annexure I (8) of the application). The Corporate Debtor further executed a Letter of Lien dated 26.08.2016 confirming that the Bank will have a lien on any amount kept by the Corporate Debtor from time to time with the Bank (Annexure I (9) of the application). 8. The Counsel for the Bank submitted that the Corporate Debtor had executed a Demand Promissory Note dated 26.08.2016 for a sum of ₹ 10,00,00,000/-promising to repay a sum of ₹ 10,00,00,000/- on demand by the Bank together with agreed rate of interest (annexure I (10) of the application). The Corporate Debtor further executed a letter of continuity for Demand Promissory Note on 26.08.2016 agreeing and confirming that the Demand Promissory Note for ₹ 10,00,00,000/- shall operate as a continuing security in favour of the Bank and will be enforceable for the repayment of any amount(s) now due or which may hereafter become due by Corporate Debtor to the Bank under the Credit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r Reserve Bank of India Circular. The Bank further issued a recall letter dated 15.05.2018 calling upon the Corporate Debtor to pay the outstanding dues of ₹ 9,26,41,745.37/- but they have failed to repay the same (Annexure I (19) of the application). The said outstanding amount as on 02.07.2018 including interest and penal interest the total amount due as on 24.07.2018 is ₹ 9,33,30,086.48/-. 15. The Financial Creditor has appended a certificate under Section 2(A) (B) (C) of the Banker's Books of Evidence Act, 1891 has also been appended as Annexure I (21) to the application, which was duly certified and signed by, for and on behalf of the applicant Bank. The counsel also submitted that an Original Application has been filed before the Debt Recovery Tribunal, Chennai for recovery of money. 16. Hence the Financial Creditor filed this petition and prayed for admission and initiating Corporate Insolvency Resolution Process under section 7 of IBC. Submissions by the Corporate Debtor 17. The Ld. Counsel for the Corporate Debtor in the counter affidavit stated that the parent company, HPCL is under liquidation as per Order passed by the NCLT, New Delhi on 02 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Corporate Debtor. In case No. 418/2018 of NCLT, New Delhi, by Order dated 13.06.2018, appointed Shri. Kuldeep Verma, as IRP and ordered the commencement of CIRP against Hindustan Paper Corporation Ltd. As the CIRP was not successful, the parent company (HPCL) was admitted for liquidation vide Order dated 02.05.2019 by National Company Law Tribunal, New Delhi. Therefore, the Board power is now vested with CoC/ Liquidator. 23. It is further submitted that the Corporate Debtor had submitted a detailed proposal on 28.04.2019 to Government of Kerala for term loan of ₹ 200 Crores for restructuring of debt and working capital. It was stated that the Additional Secretary, Government of Kerala requested to seek clear direction/permission from NCLT, New Delhi regarding the mortgage of land for raising of term loan of ₹ 200 Crore. 24. The Ld. Senior counsel representing Government of Kerala (hereinafter referred as 'State/ applicant') filed an impleading petition (IA/38/KOB/2019) on 15.10.2019 and an Interlocutory Application to accept additional documents (IA/59/KOB/2019) on 08.11.2019. The counsel submitted that in October 1974, HPCL contracted with them for e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inancial Creditor filed the petition under section 7 of Insolvency and Bankruptcy Code 2016. According to the Financial Creditor, the applicant in this Impleading Petition is an intervener/third party to the proceedings initiated by the Financial Creditor against the Corporate Debtor. The Financial Creditor points out that an application by a third party or intervener is not maintainable at the stage of hearing of an application filed under Section 7 of the Code and the Impleading Petition is liable to be dismissed at its threshold. The Hon'ble NCLAT in the matter of IDBI Bank Limited Vs. Odisha Slurry Pipeline Infrastructure Ltd (CA (AT) (Insolvency) No. 51 of 2019 by referring the decision of the Hon'ble Supreme Court in the matter of Innovative Industries Ltd Vs. ICICI Bank Ltd - (2018) 1 SCC 407 has held that if there is a 'debt' and 'default' and the record is otherwise complete, the application is to be admitted. The adjudicating authority has merely to see the records of information utility or other evidence produced by the financial creditor to satisfy itself that a default has occurred. The Court further held that except the financial creditor and c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... L in the Corporate Debtor. However, no order has been passed in the said application. The right to sell the shares of HPCL held with the liquidator and it can exercise such function only following the due process prescribed under the Code. It was further submitted that if the State purchases such shares, the consideration shall form part of the liquidation assets of the HPCL and shall not reduce the debt of the Financial Creditor. 33. The Financial Creditor has also pointed out that in the year 2002, Government of India decided to privatise the Corporate Debtor, however due to employee's agitation, it did not happen. Later in the year 2017, the Central Government invited global tender for disinvestment of the Corporate Debtor, against the said tender, the workers moved before the Hon'ble High Court of Kerala and the Hon'ble High Court of Kerala held that it cannot interfere with the policy decision of the Central Government. 34. Under these circumstances, the Financial Creditor prayed for dismissing the Impleading Petition and admitting the application to initiate Corporate Insolvency Resolution Process. National company Law Tribunal, New Delhi Order 35. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 19. the representative of the State also submitted a media coverage on this subject and requested to postpone the pronouncement of this Order. In our view, the Order of NCLT, New Delhi only reflected the change in ownership and this does not invalidate the right of the Financial Creditor to recover the debt. In any event, if State of Kerala purchases such shares, the consideration for such shares shall form part of the liquidation assets of the HPCL and shall not address the default of the Financial Creditor. Therefore, Ld. Counsel for the Financial Creditor has pleaded for immediate admission of the application without any further delay as sufficient time was already given to the Corporate Debtor to sort out the matter. 40. We have also perused the copy of the Order of the NCLT, New Delhi regarding sale of HPCL's holding in HNL to Government of Kerala. We are of the view that the Order of the NCLT, New Delhi is in the matter of HPCL's Liquidation proceedings. It only reflects change of ownership. The Order speaks of Government of Kerala has assured to repay the dues and pump in more funds to revive the company without giving any clear plan of action. In this regard, we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... services to the Corporate Debtor shall not be terminated during Moratorium period. It shall be effective till completion of the Insolvency Resolution Process or until the approval of the Resolution Plan prescribed under Section 31 of the Code. 47. That as prescribed under Section 13 of the Code on declaration of Moratorium the next step of Public Announcement of the Initiation of Corporate Insolvency Resolution Process shall be carried out by the IRP immediately on appointment, as per the provisions of the Code. 48. That the Interim Resolution Professional shall perform the duties as assigned under Section 15 and Section 18 of the Code and inform the progress of the Resolution Plan and the compliance of the directions of this Order within 30 days to this Bench. A liberty is granted to intimate even at an early date, if need be. 49. The commencement of the Corporate Insolvency Resolution Process shall be effective from the date of the Order of admission. 50. IA/38/KOB/2019- Impleading petition is dismissed and IA/59/KOB/2019 in IA/38/KOB/2019 in TIBA/3/KOB/2019 is also disposed of. 51. Accordingly, TIBA/3/KOB/2019 is disposed of as Admitted. Dated this the 28th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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