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TMI Blog2021 (7) TMI 51X X X X Extracts X X X X X X X X Extracts X X X X ..... ication under Section 7 of Insolvency and Bankruptcy Code, 2016 (for short 'I&B Code') having no. C.P. (IB) No. 08/GB/2020. The application under Section 7 was initially filed by United Bank of India on 9th March, 2020 and after United Bank of India merged with the Punjab National Bank, Punjab National Bank sought to file amended petition so as to add the claim of Punjab National Bank also which was outstanding against the same Corporate Debtor and as United Bank of India and Punjab National Bank had been part of same consortium in which the financial facilities had been extended to the Corporate Debtor. The amended petition under Section 7 of I&B Code was filed on 30th November, 2020. 2. The Appeal claims and it is argued that the Corporate Debtor had approached four Banks for financial assistance namely State Bank of India, Central Bank of India, United Bank of India and Punjab National Bank, as the Corporate Debtor wanted to establish integrated plastic packaging unit in Kamrup, Assam. The Appeal refers to the financial facilities extended which started from June, 2014 and the necessity to restructure the facilities with fresh repayment schedule commenced on and from 30th June, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the orders giving liberty to file written submissions. According to the Appellant, the Financial Creditor had effected service earlier on incorrect address. The Appeal mentions that against the order dated 5th April, 2021, the Appellant filed appeal which is registered as Filing No. 9910122/01921/2021 dated 13th April, 2021 but the same has not been listed. It is claimed that the application under Section 7 was admitted denying natural justice as the contentions raised in the written submissions were not recorded or considered. According to the Appeal, against order dated 5th April, 2021 and order dated 5th May, 2021, the Appellant moved W.P. No. 2956/2021 before the Hon'ble Gauhati High Court to suspend the order dated 5th April, 2021 till the Appellant can move this Appellate Tribunal, of which, Appellant claims work was suspended. According to the Appeal, the Hon'ble High Court on 12th May, 2021 directed the Resolution Professional not to take coercive measures till 21st May, 2021 giving liberty to mention before this Tribunal. 3. The Learned Counsel for the Appellant made submissions on above lines. The Counsel referred to the various orders passed by the Adjudicating Authori ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Loan was approved. Reference is made to further grant of Term Loan, Cash Credit, LC and Working Capital Limits. Reference is made to Sanction Letter dated 29th December, 2014 to restructure cum renew loans. The application under Section 7 shows and the Adjudicating Authority noticed the inter se agreements of 2012 and 2015. It has also been noticed that United Bank of India had sanctioned Bank Guarantee Limit of Rs. 98,82,000/- on the basis of application dated 12th June, 2017 and issued Performance Bank Guarantee dated 16th June, 2017. There was a Counter Guarantee dated 12th June, 2017 signed and executed by the Corporate Debtor. This Guarantee stood invoked on 17th January, 2019 by the beneficiary and the United Bank of India released the amount to the beneficiary debiting the account of the Corporate Debtor. Reference has been made to various Board Resolutions which were passed between 2011 till 2016 also. Adjudicating Authority has noticed Letter of Acknowledgment of Debt cum Balance Confirmation dated 31st July, 2017 in favour of the Financial Creditor - United Bank of India. 6. There are similar averments and documents even with regard to Punjab National Bank and its claim. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... With regard to the averments made by the Corporate Debtor in the Debts Recovery Tribunal, the Adjudicating Authority noticed that the claim of the Financial Creditors in Para 38 as under:- "38. It is submitted that the Financial Creditor as Applicant had also filed an Original Application bearing O.A. No.491/2019 before the Debts Recovery Tribunal at Guwahati against the Corporate Debtor, Corporate Guarantors and Personal Guarantors as Defendants for recovery of Rs. 22,95,65,980.75 (Rupees Twenty Two Crores Ninety Five lacs Sixty Five thousand Nine hundred Eighty and paise Seventy Five) only and the said application is pending for disposal." 9. Further it was observed in Para 43 and 44:- "43. On 22.02.2021, when the case was taken up, Mr. S. Agarwal, Director of the Respondent/CD Company was present and he was directed to file reply if any, within Ten (10) days of receipt of the amended petition from the FC. However, no reply has been received by the Registry from the CD till 05.04.2021. 44. The matter was finally heard. The counsels of the Petitioner and the Respondents were present on different dates and put forth their submissions before this Bench on all the above asp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... als made available by the Petitioner Bank, arguments of both parties and the facts mentioned in Para 46 to 46.VII, this Adjudicating Authority is satisfied that, a) The Corporate Debtor availed the loan / credit facilities from the Financial Creditor; b) Existence of debt is above Rupees One Lac; c) Debt is due, payable and defaulted; d) Default occurred on 31.03.2018 and 06.04.2019; e) Application has been filed within the limitation period, as the existence of the debt due, payable and defaulted on 31.03.2018 when the Application under Section 7 of the IBC has been filed by the United Bank of India 09.03.2020 and the amended one by Punjab National Bank on 30.12.2020; f) Further, the Corporate Debtor has acknowledged the debts / liabilities on 01.04.2017 and 25.02.2018 and the last one on 6/4/2019 g) Copy of the Application /Amended Application filed before this Bench has been sent to the Corporate Debtor and the application filed by the Petitioner Bank under Section 7 of the IBC is found to be complete for the purpose of initiation of Corporate Insolvency Resolution Process against the Corporate Debtor;" 12. The Adjudicating Authority with such observations ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of the Application. It is observed that the matter was taken up on 09.10.2020, 13.11.2020, 08.12.2020 and 05.01.2021. Neither the Respondent nor his Counsel was present. Since this Application is filed under Section 7 of IBC no more adjournment is possible. However, in the interest of justice to the stakeholder, the Learned Counsel of the Petitioner is advised to intimate once again to the Respondent through post/e-mail/ over phone about the next date of hearing. If the Respondent does not appear on the next date of hearing, the Application shall be disposed of on merit." Order of 22.02.2021 "Matter is taken up through video conferencing. The Learned Counsel for the petitioner Mr. S. Dutta is present. Mr. S. Agarwal, Director of the Respondent Company is also present in person. Heard both sides. Mr. Agarwal, Director of the Respondent Company has stated that he was never informed earlier about the filing of the application and he has not received copy of the same. On the other hand the Petitioner has stated that copy of the application has been sent to the Respondent. In the interest of justice, the Petitioner is directed to serve once again copy of the petition along with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce of default in part V. Under Rule 4(3), the applicant is to dispatch a copy of the application filed with the adjudicating authority by registered post or speed post to the registered office of the corporate debtor. The speed, within which the adjudicating authority is to ascertain the existence of a default from the records of the information utility or on the basis of evidence furnished by the financial creditor, is important. This it must do within 14 days of the receipt of the application. It is at the stage of Section 7(5), where the adjudicating authority is to be satisfied that a default has occurred, that the corporate debtor is entitled to point out that a default has not occurred in the sense that the "debt", which may also include a disputed claim, is not due. A debt may not be due if it is not payable in law or in fact. The moment the adjudicating authority is satisfied that a default has occurred, the application must be admitted unless it is incomplete, in which case it may give notice to the applicant to rectify the defect within 7 days of receipt of a notice from the adjudicating authority. Under sub-section (7), the adjudicating authority shall then communicate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate, as the accounts were in default since beginning. 19. Reliance can be placed on the judgments rendered by Hon'ble Supreme Court in the matters of "Asset Reconstruction Company (India) Ltd. vs. Bishal Jaiswal & Anr." Civil Appeal No. 323 of 2021 & Ors., "Sesh Nath Singh & Anr. vs. Bidyabati Sheoraphuli Co-operative Bank Ltd. & Anr.", Civil Appeal No. 9198 of 2019 and "Laxmi Pat Surana vs. Union Bank of India & Anr." Civil Appeal No. 2734 of 2020. 20. Keeping the said judgments in view, it cannot be said that the debt claimed was not due as payable, or that it was time barred. 21. The argument that because the Banks had invoked SDR and converted debt into equity, so as to have shareholding to the tune of 51% of the Company, application under Section 7 of the I&B Code is not maintainable, is not appealing. Although, the Learned Counsel for the Appellant submitted that having such shareholding amounts to taking over the management of Corporate Debtor, we are not convinced. There is no material to show that the Financial Creditor have taken over the running of the Corporate Debtor. 22. The Counsel for the Appellant mentioned that account of Corporate Debtor was irregular since b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2019. The said order vacating the stay was passed on 2nd September, 2019 and subsequently on 29th December, 2020 the Merged Application was filed under Section 7 of the I&B Code. The grievance raised in the appeal is that the Adjudicating Authority refused to give effect to the order dated 17th January, 2019 passed by the Gauhati High Court with regard to Respondent No. 1 - Punjab National Bank. 25. At Annexure 4 of the Appeal there is I.A. (Civil) 1739/2019, order passed by the Hon'ble Gauhati High Court on 2nd September, 2019 shows that Counsel for United Bank of India had taken up the matter with Hon'ble High Court on the basis of I.A. filed to vacate the interim order dated 7th January, 2019 passed in WP (Civil) 8855/2018. The Hon'ble High Court inter alia passed orders, as under:- "Be that as it may, since there is a remedy available to the petitioner under the statute against the notice issued under the SARFAESI Act, 2002 and considering the fact that the petitioner has failed to deposit any amount with the bank till today, I am of the view that the interim order dated 07/01/2019 should not be continued any further in its present form. The order dated 07/01/2019, therefore ..... X X X X Extracts X X X X X X X X Extracts X X X X
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