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TMI Blog2021 (6) TMI 186X X X X Extracts X X X X X X X X Extracts X X X X ..... s filed under Section 7 of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as "I & B Code"), R/w Rule 4 of the Insolvency & Bankruptcy (Application to the Adjudicating Authority) Rules, 2016, seeking admission of the petition and initiation of Corporate Insolvency Resolution Process against the Corporate Debtor, M/s. Genesys Biologies Private Limited granting moratorium and appointment of Interim Resolution Professional as prescribed under the Code and Rules thereon. 1. The averments made by the Financial Creditor in the Company Petition in brief are described hereunder: i. M/s. Zydus Healthcare Limited/Financial Creditor is one of India's leading pharmaceutical company incorporated under the provisions of the Companies Act, 1956 with CIN: U24230GJ2016PLC085929, having its Registered Office at Zydus Corporate Park, Nr. Vaishnodevi Circle, S.G. Highway, Ahmedabad - 382 481. M/s. Genesys Biologies Private Limited/Corporate Debtor is a Private Limited Company incorporated on 18.11.2014 under the provisions of the Companies Act, 2013 with CIN No. 24232TG2014PTC096432. The Corporate Debtor is engaged in the business of manufacturing insulin biosimilars and falls ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the application. The Corporate Debtor through e-mail dated 20.07.2020 and 21.07.2020 requested the Financial Creditor for accommodation in repayment of loan amount. Copies of the same are marked as Annexure-A-8 (Colly.). In all the communication, Corporate Debtor admitted the repayment liability of loan amount along with interest as per the terms of BLA. vii. It is also averred that there is no dispute of financial debt pending between the Financial Creditor and the Corporate Debtor. viii. It is averred that the Corporate Debtor did not make any repayment of principal and the interest amount towards the discharge of financial debt of Rs. 12,41,50,950.96 till the date of filing the application. Therefore, the Financial Creditor has left with no choice except filing this petition under Section 7 of Insolvency 85 Bankruptcy Code, 2016. 2. The averments in the Counter Affidavit filed on behalf of the Respondent are briefly described hereunder: i. The Respondent denies all the averments made by the Petitioner except those which are specifically admitted herein and submits that the application filed under Section 7 of the I&B Code ought to be rejected in limine as the same is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion filed on or after 24.09.2020, the Financial Creditor is required to serve a copy of the petition to Insolvency and Bankruptcy Board of India and enclose the proof of service but it does not appear to have been therefore the present petition is not maintainable. vi. It is averred that the petitioner herein has filed an application for initiating insolvency proceedings against the Corporate Debtor/M/s. Amicus Formulations India Private Limited bearing CP(IB) 362/7/HDB/2020 and the same is pending before the NCLT, Hyderabad Bench-II. It is also averred that the parallel proceedings of the Corporate Debtor and Corporate Guarantor before two different adjudicating authorities for the same debt is not acceptable under law. vii. It is averred that the subject company petition is misleading and is filed by suppressing material information and no default of loan as alleged in the subject company petition. viii. It is averred that the Respondent and the parent company of the Petitioner, M/s. Cadila Healthcare Limited had discussions for a proposed investment and a letter of intent being exchanged on 24.03.2017, which ultimately culminated into a term sheet dated 02.07.2018 containi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were undertaken only as a consequence and with an understanding that the amount along with interest will get adjusted against the Equity Investment in the future. xiii. It is also averred that there is no default in the loan as the expense undertaken by the Respondent is at the instance of the Petitioner and the BLA was entered with an intention to set off against the investment of Rs. 230 crores in Respondent and when there was no further interest shown by the Petitioner in investment, it was agreed that the loan is not required to be paid for a reasonable time until an alternate suitable investor invests in Respondent. Due to Covid-19 pandemic, it has taken a longer time for the Respondent to find a suitable alternative investor. It is averred that presently no debt is due. xiv. It is averred that the Business Loan Agreements and Deed of Guarantee cannot be relied upon as the same are insufficiently stamped. xv. It is averred that the Petitioner has by its own admission extended the due date for repayment of the loan amount to 07.07.2020. Pursuant to the said extension of the due date, for the first time a demand notice for repayment of loan was sent to Respondent vide an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ayable whereupon they shall become immediately due and payable; and/or (c) declare that the Loan Amount be payable on demand, whereupon it shall become immediately payable on demand by the Lender. The company is issuing a Demand Promissory Note to the Lender as attached at Schedule-B, which may be presented by the Lender at any time in the Event of Default. v. It is averred that in pursuance to Clause 7.18 of BLA, the Petitioner demanded vide letter dated 13.07.2020 to make the entire loan amount including interest on or before 20.07.2020. The extract of the relevant paragraph reads as under: "The conduct of Genesys thus amounts to an Event of Default under Clause 7 of the Loan Agreement and we hereby declare that the Loan Amount is due and payable immediately and demand Genesys to make the repayment of the entire Loan Amount, including interest payable thereon, on or before July 20, 2020 failing which Zydus would be constrained to proceed with legal enforcement of its rights under the Loan Agreement, Deed of Corporate Guarantee, deed of Personal Guarantee and the Demand Promissory Note, all dated 28th September, 2018 without any further notice". vi. It is averred that pursua ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an was advanced by Zydus Healthcare Ltd. having Corporate Identification No. U51900GJ1989PLC079501 and the same was accepted by the present Respondent. It is also averred that the Respondent had complete knowledge right from the inception that Zydus Healthcare Limited which is the Petitioner herein is the entity which extended the loan and extended BLA and there is no other entity named Zydus Healthcare Limited having registered office at Ahmedabad. There was no mistake of fact even at the time of execution of BLA nor at present between the parties with respect to Corporate entity which has extended loan under BLA. The objection is frivolous and without any basis. The petitioner has the locus standi to institute the present company petition which is liable to be allowed and the financial debt is due and payable by the Respondent to the Petitioner. iv. It is averred that para 5 and 6 are misconceived, incorrect and hence denied. The Respondent is trying to evade its liability of repayment of the loan amount by raising insignificant and trivial issues which are a result of the inadvertent mistake made by the counsel of the Petitioner while drafting the present petition. It is also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on and Shareholder's Agreement and the relationship between the Petitioner and the Respondent is governed by the BLA and there is no other understanding. ix. In reply to para 12 of the counter, the contents are incorrect and are denied as being irrelevant and false. The e-mails dated 03.08.2018 and 16.08.2018 is of no relevance for the present petition which are deliberately cited by the Respondent to mislead this Hon'ble Tribunal. x. In reply to para 13 and 14 of the counter, the contents are incorrect and denied. The e-mails dated 13.04.2019 and 17.04.2019 do not constitute any contract to form waiver against the liability under BLA. Therefore, these emails are liable to be rejected. The e-mail dated 28.05.2019 does not have any bearing on the present subject matter in the current proceedings before the Hon'ble Tribunal. xi. In reply to para 15 of the counter, it is averred that the Respondent has admitted the execution of BLA and receipt of Rs. 10 crores under the terms and conditions of BLA. The reference of Term Sheet by the Respondent and the discussions for prospective business between Cadila Healthcare Limited and the Respondent is of no consequence for th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and its subsequent amendments. There is no justification on its part to take the plea of lack of information when the BLA is admitted document by the Respondent. Even otherwise, in emails dated 09.06.2020 and 20.07.2020, the payment liability towards principal and interest up to the date has been unequivocally admitted as per the provisions of BLA. The repayment date remained as prescribed under BLA as amended from time to time and there was no extension of the same. The provisions of Clause 3 of BLA could be amended by way of duly executed written amendment agreement as per the contractual discipline of clause 9.9 of the BLA. No amendment was executed except 1st amendment dated 14.01.2019, 2nd amendment dated 01.04.2019 and 3rd amendment dated 01.06.2019 whereby the final repayment date was given under clause 3.1 as 30.09.2019. Therefore, the contentions raised are mala fide and only to defraud the Financial Creditor i.e., the Petitioner herein. xix. In reply to para 24 of the counter, it is averred that the present proceedings do not fall within the ambit of restriction under Section 10A. Therefore, the present petition is maintainable and is liable to be allowed. xx. In repl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to recovery of loan amount of Rs. 12,41,50,950.96 which includes the principal loan amount of Rs. 10,00,00,000/- and a compound interest of Rs. 2,41,50,950.96 calculated @ 12% per annum from 03.10.2018 to 20.08.2020. The petitioner is also submitted a tabular statement containing the details of the Ledger Account of the Corporate Debtor as Annexure A-9 of the application. 9. It is also observed that the Corporate Debtor did not make any repayment of principal and interest amount towards the discharge of financial debt of Rs. 12,41,50,950.96 claimed by the Financial Creditor till the date of the application. Hence, this application was filed. 10. It is the case of the Corporate Debtor that the Company Petition is filed by an unrelated Corporate Entity and demanding repayment of the loan based on the Business Loan Agreement dated 28.09.2018. The Counsel for Corporate Debtor contended that the original documents were signed by M/s. Zydus Healthcare Limited/Financial Creditor represented by Mr. Anil Matai in the capacity of Managing Director and Mr. Sanjay Kumar Gupta in the capacity of Company Secretary having CIN: U51900GJ1989PLC079501. However, the Company Petition is filed by a C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... investment is that a Subscription Agreement and Shareholder's Agreement is executed between Respondent and parent company of the petitioner and the said investment would be used for operational expenses and for construction of insulin biosimilar manufacturing facilities and conduct clinical trials to get approval of the Company's products in different markets. 16. The counsel for Corporate Debtor would contend that vide emails dated 03.08.2018 and 16.08.2018, the parent company of the petitioner has shared the Subscription Agreement and Shareholders Agreement establishing the intention to go forward with the investment promised by the parent company of the petitioner. The Corporate Debtor has submitted the proof of e-mails to that extent. 17. The counsel for Corporate Debtor would contend that even the Business Loan Agreement specified by the end uses which would demonstrate the efficacy of the respondent's operations. 18. The counsel for Corporate Debtor contended that the parties never intended for the BLA to be enforced as a plain loan. Respondent required the said sum of Rs. 10 crores and sought from Petitioner to finance the same, notwithstanding the fact that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by mutually agreed terms by both the parties. However, the Corporate Debtor committed default in repayment of loan amount on 30.09.2019 under the provisions of Clause 7 of BLA. 23. Further, we observed that the contention raised by the Corporate Debtor regarding the insufficient stamp duty and raising a contention that this is an investment not as a loan is not tenable in the light of the BLA entered into between both the parties as regards the amount given to the Corporate Debtor. Accordingly, we are of the view that the Financial Creditor is entitled to a total sum of Rs. 12,41,50,950.96 (Rupees Twelve Crores Forty-One Lakhs Fifty Thousand Nine Hundred Fifty and paise ninety-six only) which includes principal loan amount of Rs. 10,00,00,000/- (Rupees Ten Crores only) and a compound interest of Rs. 2,41,50,950.96 calculated @ 12% per annum from 03.10.2018 to 20.08.2020 and the interest accrued thereafter. Accordingly, we hereby admit this petition. 24. It is clearly observed that there is a financial debt which was given by the Financial Creditor and the Corporate Debtor has defaulted in making repayment as per the BLA amended several times in this regard. Accordingly, we are o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... As his Authorization for Assignment (AFA) is valid upto 22.01.2021, we will not be in a position to allot this case to the proposed IRP, Mr. Kranti Kumar Kedari as requested by the Financial Creditor. vii. The Insolvency and Bankruptcy Board of India (IBBI) has recommended a panel of Insolvency Professionals for appointment as Insolvency Resolution Professional for the period from 1st January, 2021 to 30th June, 2021 in compliance with Section 16(3)(a) of the Code in order to avoid delay. Accordingly, this Tribunal appoints Mr. Kasa Venkata Ramanaiah having Registration No. IBBI/IPA-003/IP-N00066/2017-2018/10552, e-mail: [email protected] as Interim Resolution Professional and his AFA as per the Insolvency and Bankruptcy Board of India (IBBI) Website is valid upto 28.11.2021. The aforesaid interim resolution professional has no disciplinary proceedings pending against him. He shall file his written communication and all relevant papers immediately before Registrar of this Tribunal but not later than two days. viii. The Petitioner is directed to pay a sum of Rs. 2,00,000/- (Rupees Two Lakhs Only) to the Interim Resolution Professional to meet out the expenses to perform th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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