TMI Blog2020 (1) TMI 1327X X X X Extracts X X X X X X X X Extracts X X X X ..... instant case, the Financial Creditor has complied with all the requirements with respect to initiating the CIRP process against the Corporate Debtor Company and produced all the applicable documents in support of initiating the CIRP process in the prescribed manner. Accordingly, this Adjudicating Authority is satisfied that default has occurred and the application under sub-section 2 of Section 7 of I B Code, 2016 is complete in all respects notwithstanding the fact that the Financial Creditor has acted against the interest of other lending institutions in violation of the Joint Lending Arrangements and stipulations contained in various agreement such as Joint Deed of Hypothecation, Master Inter Credit Agreement [MICA], necessary inter se agreements, Trust and Retention Agreement, etc. This Tribunal is required to adjudicate the matter within contours prescribed under Section 7 of the Insolvency and Bankruptcy Code without having regard to any other policy matter or guideline issued by the competent authority with respect to the Joint Lending Arrangement amongst the Bank or similar other documents. This Authority is duty bound to admit this application initiated under Section 7 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n namely Syndicate Bank, Indian Bank, Vijaya Bank (now Bank of Baroda) and State Bank of Hyderabad (now State Bank of India) for financial assistance. The Punjab National Bank was the lead Bank and it was referred to as 'PNB Consortium', for working capital needs. 5. It is averred that the Corporate Debtor sought financial assistance for the purpose of meeting working capital needs in relation to 2 x 150 MW coal based captive power plant of the Corporate Debtor situated at Bhadreshwar village, Mundra Taluk, Kutch, Bhuj District, Gujarat. Pursuant to the request made by the Corporate Debtor, the competent authority of the Financial Creditor has sanctioned Fund Based limit of ₹ 31 Crores and Non-Fund Based limit of ₹ 105.00 Crores, totaling ₹ 136 Crores to the Corporate Debtor. Copy of Sanction Letter dated 16.11.2015 is placed at pages 45 to 54 of the typed set filed with the Application. The Corporate Debtor accepted the conditions of the sanction in its Board Meeting held on 14.12.2015, copy of which is placed at page 55 of the typed set filed with the Application. 6. It is averred that in order to secure the loan sanctioned by the Financial Credito ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2 both present and future, pertaining to projects viz., Coal based Captive Power Plants Units 1 and 2 situated at Bhadreshwar Village, Mundra Taluk, Kutch-Bhuj District, Gujarat owned by the Corporate Debtor, b) the balance lying in Trust and Retention Account both ranking after the Charges created and/or to be created in favour of the Term lenders for Units 1 and 2 of the Corporate Debtor; iii) Second charge by way of Hypothecation/Creation of Security Interest of/on all rights, title, interest, benefits, claims and demands whatsoever of the Corporate Debtor viz., a) In the project documents/contracts, as amended, varied or supplemented from time to time, b) In the clearances relating to the project and c) in any letter of credit, guarantee, performance bond provided by any party to the project ranking after the charges creating and/or to be created in favour of the Term lenders for Units 1 and 2 of the Corporate Debtor. 8. Besides above, the Corporate Debtor had executed a Letter of Undertakings for compliance of pre release terms and conditions and post release terms and conditions. Copies of Undertakings dated 17.12.2015 are placed at pages 134 to 136 of the typed set filed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rural Electrification Corporation Limited) of ₹ 998.26 Crores, Punjab National Bank of ₹ 252.74 Crores and State Bank of India of ₹ 246.40 Crores. 14. The details of the project costs and its source have been given in a tabular form as under:- Particulars (Rs. Cr) Original Cost Cost Overrun-1 Cost Overrun-II Total Project Cost Debt 1215.41 175.11 106.88 1497.40 REC Limited 810.27 116.74 71.25 998.26 SBI 200.00 28.81 17.59 246.40 PNB 205.14 29.56 18.04 252.74 Promoter Equity 405.14 58.37 35.63 499.14 Total Project Cost 1620.55 233.48 142.51 1996.54 15. It is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 16 amongst themselves, copy of which is placed at pages 106 to 140 of the typed set filed with the Counter Affidavit. Similarly, all working capital and term lenders have entered into a Trust and Retention Account Agreement (TRA) on 26.07.2016 with the Corporate Debtor, copy of which is placed at pages 141 to 199 of the typed set filed with the Counter Affidavit. Both these Agreements form the basis of the understanding and agreement between the Consortium Lenders with regard to the accounts of the Corporate Debtor, the allocation of funds and the inter-se obligations between the Consortium Lenders. 18. Subsequently, post sanction and installation of working capital consortium, the Financial Creditor has reduced its Cash Credit (fund based facilities) from ₹ 31 Crores to ₹ 7.92 Crores and further the Financial Creditor was not releasing from sanctioned non-fund based limits and reduced the other limits such as LC limits from ₹ 70 Crores to Nil and BG limits to Nil and thereafter, on 05.12.2018, the Financial Creditor totally cancelled the non-fund based limits of ₹ 98 Crores. The said reduction was done in spite of the availability of non-fund based W ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ebtor states that in the Working Capital Lenders Meeting held on 07.02.2019, the Financial Creditor replied that since the account was transferred to their Branch, there requires permission from its Head Office to renew and allow the Corporate debtor to use working capital limits as per sanction and requested the Corporate Debtor to share the Power Purchase Agreements (PPAs) with all the lenders. It is stated that from the minutes of the various meetings of the Joint Lenders and Working Capital Lenders, there was no doubt about the viability and operational efficiency of the Plants of the Corporate Debtor and the Corporate Debtor have been enjoying fullest co-operation and confidence of the lenders. 22. The operational and financial performance of the project since its Commercial Operation Date distinguishes the Corporate Debtor from other contemporaries in the power sector the Corporate Debtor's Plant is fully commissioned, technically capable to run on full capacity and it has been operating continuously since Commercial Operation Date. It is stated that in this situation, the Corporate Debtor is capable of continuing its operations without any interruptions and continues ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Consortium Lenders are bound by the TRA and the disbursement of funds to all the creditors are outlined in the TRA. The Financial Creditor having agreed to the terms of the TRA will have to make its claims with the other Consortium Lenders. The obligations of the Corporate Debtor have been outlined clearly in the TRA, particularly, the disbursal of funds to the creditors including the Financial Creditor will have to be within the terms of the TRA and further the lenders including the Financial Creditor have agreed to equal treatment and pro-rata allocations of funds. Having agreed to these terms, the contention of the Financial Creditor that the Corporate Debtor is in default is incorrect; the Authorized Representative expatiated. 26. The Corporate Debtor has referred to the Clause 2.1 and 2.2 (b) (i) of the Master Inter-Creditor Agreement (MICA) dated 26.07.2016 and stated that the Financial Creditor is bound by the provisions of MICA and more particularly, Clause 2.2 (b) states that no enforcement action shall be initiated except after complying with the procedure and requirement set out therein and any lender intended to take any Enforcement action ( Enforcement Intending ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ortium Lenders, has filed the present Application contrary to the RBI direction and hence, the Financial Creditor is estopped by law to proceed/decide otherwise as against the decisions taken by the majority of the lenders in the correct legal forum of lenders i.e. the Consortium Meeting. 30. It is further stated that on the basis of request of all the lenders, the Corporate Debtor had submitted a resolution plan to the lenders on 29.07.2019 and in the consortium meeting held on 17.08.2019, all the lenders have requested the Corporate Debtor to re-submit a revised proposal including OTS and also requested the Financial Creditor to withdraw the Application filed before the NCLT and accordingly, the Corporate Debtor submitted the revised OTS on 17.09.2019, which is pending consideration by the Joint Lenders. 31. It is stated that the Promoters of the project have an unblemished track record and they are not willful defaulters. Further, the Corporate Debtor has reiterated its contention that when the overwhelming majority of the consortium of bank and lenders request the Financial Creditor not to pursue this Application, it is not fair on the part of the Financial Creditor whose ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the Corporate Debtor who had accepted the conditions of the sanction in its Board Meeting held on 14.12.2015. The Applicant/Financial Creditor, the Syndicate Bank had entered into necessary agreements including Joint Deed of Hypothecation, Master Inter Credit Agreement [MICA], necessary inter se agreements, Trust and Retention Agreement, etc; as a part of the prescriptions contained in the Consortium Arrangements amongst the participating banks. According to the Financial Creditor the account has fallen as NPA on 30.06.2018 with an amount claimed in default being ₹ 32,22,50,660.16. 35. On a perusal of CRILCFGMO which is a Return of defaulted borrowers placed as Annexure 1 in page No. 146 and 147 this Authority is satisfied that on 20.07.2018 Syndicate Bank, the Financial Creditor has reported to have moved the borrower into the Moved to Default Status' on 16.07.2018 along with 10 various other lending Banks. Also, the Financial Creditor has issued a recall notice on 05.12.2018 (Copy produced at Page No. 143 to 145 of the typed set) to the Corporate Debtor instructing them to clear the dues, failing which recovery action will be initiated including filing before N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment amongst the Bank or similar other documents. This Authority is duty bound to admit this application initiated under Section 7 by a Financial Creditor if a default has occurred and the application is complete in all respect and there is no disciplinary proceeding is pending against the proposed Resolution Professional. Eventhough the stake of the Financial Creditor is only a meagre 1.64% of the total value of debt as against the Corporate Debtor, the claim amount as made in the petition is in excess of ₹ 1,00,000/- being the statutory minimum amount fixed under Section 4 of the IBC, 2016 for approaching this Tribunal by the creditors, in the instant case by Financial Creditor, this Authority has no hesitation in admitting this Petition and initiating the Corporate Insolvency Resolution Process (CIRP) as against the Corporate Debtor. Thus taking into consideration the facts and circumstances of the case as well as the position of Law, we are of the view that this Application as filed by the Applicant -Financial Creditor is required to be admitted under Section 7(5) of the I B Code, 2016. 40. The Financial Creditor has proposed the name of one JAYASHREE S IYER having Reg ..... X X X X Extracts X X X X X X X X Extracts X X X X
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