TMI Blog2021 (7) TMI 51X X X X Extracts X X X X X X X X Extracts X X X X ..... ere was no debt due and no default. It is clear that in Application under Section 7 of I B Code what Adjudicating Authority has to consider is as observed above and defence available to Corporate Debtor is to show that default has not occurred in the sense that debt is not due. Debt may not be due if it is not payable in law (like a debt may be time barred, for example) as it is not due in fact. Even if debt is disputed, so long as it is due from Corporate Debtor and payable, the application must be admitted. The Adjudicating Authority is required to pass orders regarding to admission or otherwise of the application filed under Section 7 of the I B Code within 14 days. It appears that the Adjudicating Authority did not deny principles of natural justice. Many opportunities were given but the Appellant chose not to take benefit of the same and relied on technicalities. When the Adjudicating Authority was considering application under Section 7 of I B Code, the Appellant appears to have failed to show that the debt was not due or that the debt was not in default. When the debt due was more than ₹ 1/- Lakh and there was default, the Adjudicating Authority was bound to adm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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, 2016. The Appeal refers to Strategic Debt Restructuring Scheme between the parties. According to the Appeal, the accounts of the Corporate Debtor stood overdue initially on 30th June, 2014 and subsequently on execution of the Master Restructuring Agreement which was dated 27th April, 2015 with new repayment schedule on and from 30th June, 2016. It is thus claimed that the debts of United Bank of India and Punjab National Bank were barred by limitation. According to the appeal the classification of accounts of Corporate Debtor as NPA with the date of default, is in contravention of the definition of default within the meaning of I B Code. It is further claimed that the consortium lenders including the Financial Creditors were majority shareholders of the Corporate Debtor holding 51% of the issued and paid up equity share capital, issued on conversion of debt into equity under Strategic Debt Restructuring Scheme sanctioned by the Joint Lenders Forum. Thus, according to the Appeal, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1 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 Authority between 9th October, 2020 till 5th April, 2021 to submit that initially the Financial Creditor itself took time to file Amended Petition and the Corporate Debtor had appeared only on 22nd February, 2021 and was granted time to file reply. It is stated that on 22nd March, 2021, Corporate Debtor had engaged Advocate and time was sought. Subsequently, according to the Learned Counsel the Adjudicating Authority did not grant sufficient time to file reply although the Petition was voluminous. It is argued that full opportunity to defend against the application was not given. The Corporate Debtor had defences to make which the Corporate Debtor mentioned in the Written Submissions and which according to Learned Counsel were not considered by the Adjudicating Authority while passing the impugned order. 4. Learned Counsel for the Appellant referred to page 511 of the Appeal to refer to Letter dated 21st December, 2017 sent by Central Bank of India (another consortium member) with rega ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gment 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. The Adjudicating Authority after referring to the contents of the application and the various documents and default claimed by the Financial Creditor observed in Para 36-37 as under:- 36. In view of the above statements and submissions, the total outstanding debt by merging the outstanding debt of the erstwhile United Bank of India and the Punjab National Bank (present Financial Creditor) comes to United Bank of India = ₹ 23,57,23,005.33 (PART-A) Punjab National Bank = ₹ 9,02,76,850.92 (PART-B) Total Debt (A+B) = ₹ 32,59,99,856.25 (Rupees Thirty Two crores Fifty Nine lacs Ninety Nine thousand Eight hundred Fifty Six and paise Twenty Five only) and the FC having proved the loans, debts and defaults of the CD along with the issues pertaining to Limitation and Jurisdiction through more than sufficient documents annexed with the petition / amended petition / additional affidavit cum amendment and taking into considerat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wever, 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 aspects. 10. Adjudicating Authority recorded observations in Para 46 as follows:- 46. It is found that the Petitioner Bank has submitted the documents duly executed by the Corporate Debtors and guarantors along with the Statement of Accounts with Certificate under the Banker s Book of Evidence Act, 1891 CRILIC Report in support of their IB Petition for initiation of CIRP. 46.I The credit facilities were sanctioned and released by the Petitioner Bank along with other consortium lenders and the same were availed by the CD, M/s. Megha Granules Pvt. Ltd. and the Charges have been registered by the CD with the ROC in favour of the Petitioner Bank. 46.II The CD has defaulted in making repayment of the credit facilities to the Petitioner Bank due on 31.03.2018 and 06.04.2019. The Total Debt as per the Statement of Accounts and the Affidavit filed on behalf of the Petitioner Bank confirms the defaulted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cation 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 and findings admitted the application. 13. It appears that United Bank of India treated Loan Account of the Corporate Debtor as NPA on 31st March, 2018 and the Punjab National Bank treated the Loan Account of the Corporate Debtor as NPA on 6th April, 2019. There are various documents which are in the nature of acknowledgment of the debt outstanding. The Adjudicating Authority has already mentioned that the debt due and outstanding is above ₹ 1/- Lakh. The Appellant is making contradictory submissions claiming that the account of Corporate Debtor stood defaulted with effect from 30th June, 2016 and also claims that there was no debt due and no default. 14. As regards the claim that the principles of natural justice are not followed, we have gone through various orders passed by the Adjudicating Authority between 9th October, 2020 till 5th April, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irector 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 its annexures upon the Respondent within three (3) days. Since the Registered Office of the Respondent Company at Guwahati is reportedly closed as per the submission of the Ld. Counsel representing the FC the Respondent is directed to collect the copy of the application from the Learned Counsel of the Petitioner personally and file its reply, if any, within Ten (10) days thereafter. A copy of the reply to be submitted by the Respondent needs to be served upon the Petitioner. Since this is an application filed under Section 7 of IBC 2016, no further time will be allowed. 6. This Application has been filed under Section 7 of the IBC and this matter has been taken up by this Bench six (6) times earlier. As per the sub-section 4 of Section 7 of the IBC, Application filed under Section 7 of the IBC needs to be admit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 the order passed to the financial creditor and corporate debtor within 7 days of admission or rejection of such application, as the case may be. [Emphasis supplied] 16. Para 30 of the Judgment in the matter of Innoventive reads as under:- 30. On the other hand, as we have seen, in the case of a corporate debtor who commits a default of a financial debt, the adjudicating authority has merely to see the records of the information utility or other evidence produced by the financial creditor to satisfy itself that a default has occurred. It is of no matter that the debt is disputed so long as the debt is due i.e. payable unless interdicted by some law or has not yet become due in the sense that it is payable at some future date. It is only when this is proved to the satisfaction of the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 beginning and time would start running from those dates. In the present matter United Bank of India treated the account of Corporate Debtor as NPA on 31st March, 2018 and Punjab National Bank treated the same as NPA on 6th April, 2019. We do not accept the argument of Learned Counsel for the Appellant that since beginning the account was irregular so default should have been calculated from 30th June, 2014 and after new repayment schedule from 30th June, 2016. Considering the documents including Acknowledgements executed between parties from time to time, looking at transactions, there are amounts due and in default within 3 years of filing Application under Section 7 of I B Code, which are much more than the threshold under Section 4 of I B Code. Impugned order para 13 read wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ders, 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, stands vacated. 26. There is no substance in claim of the Appellant in M/s Megha Granules Pvt. Ltd. vs. Punjab National Bank that order to vacate stay dated 7th January, 2019 was obtained by Respondent No. 2 United Bank of India and so benefit cannot be taken by Respondent No. 1 Punjab National Bank. The order was not vacated specific to United Bank of India. 27. Thus, there is no substance even in the Appeal filed with e-Filing No. 9910122/01921/2021. 28. (A) For reasons mentioned above, we do not find substance or any reason to admit either of these appeals. (B) We decline to admit Company Appeal (AT) (Insolvency) No. 406 of 2021. (C) We decline to admit unnumbered Company Appeal (AT) (Insolvency) filed with e-Filing No. 9910122/01921/2021. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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