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TMI Blog2021 (2) TMI 1196X X X X Extracts X X X X X X X X Extracts X X X X ..... vency & Bankruptcy Code (hereinafter called "Code") read with Rule 4 Insolvency & Bankruptcy (Application to Adjudicating Authority) Rules, 2016. Facts of the case: 2. The Petitioner is a Non-Banking Financial Company which extended loan amount of Rs.3,00,00,000/- against securities facilities to the Premier Limited along with the co-borrower namely Corporate Debtor herein, under the Loan cum Pledge Agreement dated 29.06.2015 for a period of 6 months from the date of disbursement. The amount was disbursed to the Corporate Debtor on 29.06.2015. Thereafter, the tenure of the Loan cum Pledge Agreement dated 29.06.2015 was extended by a period of 6 months up to 28.06.2016 through an addendum dated 28.12.2015 and the same was further extended by a period of 24 months up to 28.06.2018 through an addendum dated 31.03.2016 (Facility 1). 3. The Petitioner granted a loan of Rs.2,00,00,000/- to Premier Limited and Corporate Debtor under another Loan cum Pledge Agreement dated 04.05.2016 for a term of 6 months from the date of disbursement. The amount was disbursed to Premier Limited on 05.05.2016. Thereafter, the tenure of the Loan cum Pledge Agreement dated 04.05.2016 was extended by a p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... However, the security as shares is not realizable at present and/or cannot be liquidated inasmuch as there are no buyers for buying a large stake (17.45% of the share capital) of the said shares on the stock exchange/s. Therefore, the estimated value of the security as per the Petitioner is NIL. Hence, the Petitioner filed the present Petition on 18.09.2020. 10. The Petitioner has enclosed the copy of following documents along with the Petition: i. Copy of Sanction Letter dated 27.06.2015 ii. Copy of Loan cum Pledge Agreement dated 29.06.2015 iii. Copy of Addendum to the Loan cum Pledge Agreement dated 28.12.2015 iv. Copy of Addendum to the Loan cum Pledge Agreement dated 31.03.2016 v. Copy of Sanction Letter dated 04.05.2016 vi. Copy of Loan cum Pledge Agreement dated 04.05.2016 vii. Copy of Addendum to the Loan cum Pledge Agreement dated 06.10.2016 viii. Copy of Sanction Letter dated 05.10.2016 ix. Copy of Loan cum Pledge Agreement dated 05.10.2016 x. Bank Account statements of the Petitioner showing debits in favor of the Corporate Debtor xi. Copies of the correspondences between the Petitioner and the Corporate Debtor xii. Copy of the cheque bearing No. 064101 date ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... outstanding and that the said debt amount stood reduced on account of invocation of pledge of the shares of Premier Limited. Having invoked he pledge, the Petitioner has illegally and wrongfully chosen not to sell/ transfer the shares of the Premier with malafide intent on the frivolous ground that there are no buyers for buying a large stake. Here, the Petitioner has sought to reduce the Corporate Debtor's shareholding in Premier Limited and additionally recover an amount of Rs.8,35,25,398 illegally. Therefore, the alleged debt stands reduced to the extent of the valuation of the shares of Premier Limited and thus, the question of debt of Rs.8,35,25,398/- as on the date of the Petition cannot arise. 15. The Counsel for the Corporate Debtor then submits that in terms of the Loan Agreements, the debtor-creditor relationship existed only between Premier Limited and the Petitioner. A reading of the Loan Agreements reveal that only the party that has borrowed amounts was liable to repay the required amounts to the Petitioner. Therefore, in terms of the Agreements and understanding between the parties, the Corporate Debtor is not liable to pay any amounts that may be owed by the Premi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is as follows: "Para 19: It is clear that in the matter of guarantee, CIRP can proceed against Principal Borrower as well as Guarantor. The law as laid down by the Hon'ble High Courts for the respective jurisdictions, and law as laid down by the Hon'ble Supreme Court for the whole country is binding. In the matter of C.P. (IB) 1220/MB/2020 Piramal, the Bench of this Appellate Tribunal "interpreted" the law. Ordinarily, we would respect and adopt the interpretation but for the reasons discussed above, we are unable to interpret the law in the manner it was interpreted in the matter of Piramal. For such reasons, we are unable to uphold the Judgement as passed by the Adjudicating Authority. Para 20: It is not shown that the application was otherwise incomplete. We thus, proceed to pass the following Order:- ORDER The Appeal is allowed. Impugned Order passed by the Adjudicating Authority dated 4th March, 2020 is quashed and set aside. CP(IB)No. 466/7/HDB/2019 filed by the Appellant before Adjudicating Authority is restored to the file of the Adjudicating Authority. The Adjudicating Authority is directed to admit the Application CP(IB)No.466/7/HDB/2019 and pass further necessary ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the principal borrower (M/s. Premier Limitedand the Corporate Debtor / co-borrower/guarantor under the loan cum pledgeagreement dated 04.05.2016 for a term of 6 months from the date of disbursement. The recital of the Loan cum Pledge Agreement expressly declares the Corporate Debtor to be a borrower/ pledgor. The recital of the Agreement is reproduced below: Upon perusal of the categorical declaration, it can be said that the Corporate Debtor and Premier Limited are commonly/collectively called as Borrowers and individually as borrower or pledgor. C.P. (IB) 1220/MB/2020. Therefore, once the CIRP against the Premier Limited is initiated, CIRP against this Corporate Debtor in the capacity of Borrower/Pledgor who defaulted in repayment of debt due to the Petitioner. Infact, it can be said that the Corporate Debtor has accepted the additional liability of being a Borrower and a Pledgor. 24. The tenure of Loan cum Pledge Agreement dated 04.05.2016 was extended by a period of 18 months up to 04.05.2018 through an addendum dated 06.10.2016. Under the Loan Agreement, the Corporate Debtor being the Co-borrower had pledged 53,01,000 shares of Corporate Debtor in favour of the Petitioner. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orporate Debtor in respect of its property including any action under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act); (d) the recovery of any property by an owner or lessor where such property is occupied by or in the possession of the Corporate Debtor. (II) That the supply of essential goods or services to the Corporate Debtor, if continuing, shall not be terminated or suspended or interrupted during moratorium period. C.P. (IB) 1220/MB/2020 (III) That the provisions of sub-section (1) of Section 14 shall not apply to such transactions as may be notified by the Central Government in consultation with any financial sector regulator. (IV) That the order of moratorium shall have effect from the date of pronouncement of this order till the completion of the corporate insolvency resolution process or until this Bench approves the resolution plan under sub-section (1) of Section 31 or passes an order for liquidation of Corporate Debtor under Section 33, as the case may be. (V) That the public announcement of the corporate insolvency resolution process shall be made immediately as specified under Section 13 of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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