TMI Blog2021 (9) TMI 433X X X X Extracts X X X X X X X X Extracts X X X X ..... removal of loan amount from Balance Sheet will also not help respondent - Fact still remains that the respondent has enjoyed the loan amount and failed to clear the dues on time. It is clear that the family member of applicant put forth their money in the company against the loan of the respondent company, however no assignment is made and admittedly the applicant is still a financial creditor of the respondent. The same fact has not been denied by the respondent itself. If a debt become due and payable and not paid by-Corporate Debtor, it will be said that the Corporate Debtor has committed default. When we apply the aforesaid judgment in the present matter it is seen that the debt become due and payable on 31.03.2019 as per the loan agreement and the respondent itself has admitted that the payment has not been made to the applicant. Therefore, existence of debt and default cannot be ruled out in the present matter. The respondent also placed reliance of Arbitration Clause, i.e., Clause 25 of the loan agreement. However, it is a settled preposition that the pendency of arbitration proceeding is not a defense in case of Section 7 application. In fact, no evidence is placed to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ensure that all encumbrances created on the four tea estates are released by the banks and financial institutions. The said amount was remitted on the same date. Thereafter, in order to secure repayment of the aforesaid loan amount the Corporate Debtor, inter alia, agreed that the original title deeds of the said four tea estates which were in possession of ICICI Bank would be handed over to the applicant upon repayment of loans availed by the Corporate Debtor from the concerned banks and financial institution. In addition to the aforesaid, the Corporate Debtor also caused mortgaged of a property situated at 4, Sunny Park, Kolkata-700019 in favour of the Financial Creditor by deposit of title deeds. 4. The loan amount carried interest @ 14 % per annum which would be payable by the corporate debtor on a monthly basis and in the event any payment of interest remained outstanding beyond the stipulated due date, the rate of interest would further increase by 5 %. The entire loan amount together with interest was to be fully repaid on or before March 31, 2019. 5. However, the Corporate Debtor failed and neglected to hand over the original title deeds relating to the four tea esta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rgument has submitted that there is violation of the clause 9 and other clauses of the agreement and hence the default has taken place. Clause 17's pre-requisite is default committed by the respondent and it does not affect the present proceeding under Section 7. The applicant further argued that the said clause has been misinterpreted and only protects respondent until and unless the applicant failed to recover default amount from secured assets and the applicant has not opted for selling of secured assets. 11. The respondent further argued that Balance Sheet of applicant for the F.Y. 2018-19 shows that there was a loan of 100 crores which is not reflected thereafter which means a refund is done of 100 crores or the debt has been assigned to someone else. This argument has no strength as respondent itself agreed that no repayment has been made. Applicant in its rejoinder submitted that on the basis of opinion received, the Financial Creditor has re-classified and disclosed the loan of ₹ 100 crores, which was disclosed under loans' in the financial statements for the year ended 31 March 2019, under 'other financial assets' and other 'assets' in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 16. It is seen that in order dated 30.04.2019 passed by Hon'ble High Court of Calcutta, the court has observed that: this court is, prima facie, satisfied that Respondent having taken inter corporate deposit of ₹ 100 Crores admits to not to have repaid. Petitioner is entitled to interim measures. From perusal of the above observation of High Court it is clear that it is an undisputed fact that the loan amount has not been repaid to applicant. That apart, a Demand Promissory Note dated 28.09.2018 was also executed by Respondent in favour of applicant, which prima facie proves the liability of Respondent to pay its dues with interest. In addition to this charge id 100208820 has been created in favour of applicant on the property of Respondent, this also proves that the applicant is still a secured creditor of Respondent. 17. The respondent argued that a perusal of Techno Electric Engineering Q2 FY2020 Earnings Conference Call , dated 14/11/2019, shows that Applicant's CMD was questioned about the issues in respect of Applicant's exposure to the Respondent. To this Applicant's CMD categorically stated that the Applicant was out of the alleged deb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lvency resolution process begins. Default is defined in Section 3(12) in very wide terms as meaning non-payment of a debt once it becomes due and payable, which includes non-payment of even part thereof or an instalment amount......... 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 adjudicating authority that the adjudicating authority may reject an application and not otherwise. 20. On perusal of the aforementioned judgment it is clear that if a debt become due and payable and not paid by-Corporate Debtor, it will be said that the Corporate Debtor has committed default. When we apply the aforesaid judgment in the present matter it is seen that the debt become due and paya ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fore, applying the aforesaid ratio to the present case, the objections raised by respondent are not sustainable. It is reiterated that the respondent itself has admitted the loan amount and non-payment of loan amount. The respondent by giving option to realise the securities made/given clear that the loan amount has not been repaid and thus default has been committed. 23. The applicant has filed the certificate of record of default with Information Utility (Report as on 27.06.2019) which shows the amount as ₹ 100 crore with interest of ₹ 4,47,67,123; this Report is deemed to be authenticated. The respondent has raised objection against the report of Information Utility. It is alleged that the email seeking confirmation and verification of default/reminders from the Respondent has been addressed to persons who are no longer associated with the Corporate Debtor [(a) Mr. K.K. Baheti (b) Mr. BK Singh (C) D. Mukherjee (d) A. Guha Sarkar] and no email has ever been addressed to the Corporate Debtor on its registered email id. It is claimed that the deemed authorization is without any basis and the document is in violation of Regulation 21 of IBBI (Information Utilities) Re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... encumbering, alienating or disposing of by the respondent any of its assets or any legal right or beneficial interest therein; any action to foreclose, recover or enforce any security interest created by the respondent in respect of its property including any action under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002; the recovery of any property by an owner or lessor where such property is occupied by or in the possession of the respondent. 30. The supply of the essential goods or services to the respondent as may be specified, are not to be terminated or suspended or interrupted during the moratorium period [Sec 14(2) of the Code]. It is made clear that the provisions of moratorium shall not apply to transactions which might be notified by the Central Government in consultation with any financial regulator. In addition, as per the Insolvency and Bankruptcy Code (Amendment) Act, 2018, the provisions of moratorium shall not apply to the surety in a contract of guarantee to the respondent in terms of Section 14(3)(b) of the Code. 31. The IRP shall perform all his functions contemplated, inter-alia, by S ..... X X X X Extracts X X X X X X X X Extracts X X X X
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