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TMI Blog2019 (6) TMI 1563X X X X Extracts X X X X X X X X Extracts X X X X ..... nitiated this proceeding without following instructions of RBI, as per press release dated 13.06.2017 and has filed this proceeding which is bad in law. According, to the Corporate Debtor as per that press release it was necessary for the bank to follow the instructions of the RBI, as stated in Para 4, 5 & 6 of the circular, " i.e. as records the other non-performing accounts which do not have qualified in the above criteria, the IAC recommended that bank should finalized a Resolution Plan within 6 months. In cases viable resolution plan is not agreed upon within 6 months, bank should require for Insolvency proceeding under IBC, "The Reserve Bank, based on the recommendation of I AC, will accordingly, be issue directions to banks to file for Insolvency proceeding under the IBC in respect of identified accounts. Such cases will be accorded priority by National Company Law Tribunal". 3. The Hon'ble High Court by Order dated 25.03.2019 dismissed the Writ Petition (2511 of 2018) observing that, "the lender bank's have examined and taken all efforts to find out acceptable and viable resolution plan in compliance with RBI guidelines. The SBI pleads that several joint lenders mee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Corporate Debtor Under Section 7 of IBC 2016. 7. I heard Ld. Counsel Sabyasachi Chaudhury for the Corporate Debtor and Ld. Counsel Mr. Jishnu Chaudhury for Financial Creditor/Bank at length. I have gone through the relevant provisions of law and Judgment of Hon'ble Apex Court in case of Dharni Sugar & Chemicals Limited. 8. At the outset it has to be noted that this proceeding Under Section 7 IBC is filed by the State Bank of India against the Corporate Debtor on 21.12.2017 when the circular of RBI dated 12.02.2018 was not at all in existence. In short, this proceeding is not initiated on the basis of the circular of RBI, which has been cancelled and set-aside by the Hon'ble Apex Court. But the point of contention as raised by the Corporate Debtor is that this proceeding is initiated by the State Bank of India in consultation with the RBI Under Section 35AA of the Banking Regulation Act, 1949. Hence, it is bad in law. It is not an independent proceeding. As against this the State Bank of India contends that the proceeding Under Section 7 IBC is filed independently without consultation with the RBI hence, it is maintainable. 9. In the case of Dharni Sugar & Chemicals Limi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ections to initiate the insolvency resolution process under the Insolvency Code, Section 35AA is the only source of power. b. When it comes to issuing directions in respect of stressed assets, which directions are directions other than resolving this problem under the Insolvency Code, such power falls within Section 35A read with Section 35AB. This also becomes clear from the fact that Section 35AB (2) enables the RBI to specify one or more authorities or committees to advise any banking company on resolution of stressed assets. This advice is obviously de hors the Insolvency Code, as once an application is made under the Insolvency Code provisions would then take over and have to be allowed. 12. It has been held by the Hon'ble Apex Court that, "A conceptuals of all these provisions shows that the Banking Regulations Act, specifies that the Central Government is either to exercise powers along with the RBI or by itself. The role assigned, therefore, by Section 35AA, when it comes to initiating the insolvency Resolution Process under the Insolvency Code, is thus, important. Without authorization of the Central Government, obviously, no such directions can be issued". 13. Kee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dently which is reflecting in minutes and joint lender forum's meeting dated 4th August, 2017. As against this Ld. Counsel for the Corporate Debtor pointed out that in fact initiation of proceeding Under Section 7 of IBC against Corporate Debtor was taken by the bank in meeting dated 28.11.2017 on the basis of RBI circular dated 28.07.2017 as appears from the minutes of joint lenders meeting dated 25.11.2017. 18. I have gone through both minutes of meetings. In meeting dated 4th August, 2017 there were subject about filling application in National Company Law Tribunal, under Insolvency and Bankruptcy Code 2016. But it is seen from the minutes that one Mr. Gurupada Chakravorty Assistant General Manager SBI apprised the member of lenders about the Bank's stand for referring the matter to National Company Law Tribunal, under IBC 2016 as per instructions their competent authority has approved the proposal for referring the Company to National Company Law Tribunal. But officer of PNB inquired about resolution plan. Sh. Gurupada Chakravorty stated that resolution plan submitted by the company has been circulated amongst the lenders. To this the lenders have opined that the plan ..... X X X X Extracts X X X X X X X X Extracts X X X X
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