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TMI Blog2021 (11) TMI 843X X X X Extracts X X X X X X X X Extracts X X X X ..... '-'Dehradun Highway Projects Limited' (DHPL) under Section 61 of the 'Insolvency and Bankruptcy Code, 2016' (in short 'Code') against the impugned order dated 18.09.2020 passed by the 'Adjudicating Authority' (National Company Law Tribunal), New Delhi Bench-V in CP(IB) 725(ND)/2020. 2. The Appellant has sought the relief of setting aside of the above order and for directing to form a consolidated 'Committee of Creditor' (CoC) of the Corporate Debtor alongwith 'parent company' and the Corporate Debtor etc. 3. The Adjudicating Authority has elaborately discussed on the issue of 'financial debt' and its 'default' in respect of corporate debtor and initiated the 'Corporate Insolvency Resolution Process' (CIRP). The Adjudicating Authority has also elaborately explained 'Section 7 of the Code' vide para 22 of the impugned order and 'issue of limitation in para 23, 24, 25 & 26 of the impugned order'. The Adjudicating Authority has also explained the issue emerging on the claim filed by the financial creditor in other CIRP and withdrawing the same claim from in other CIRP proceedings which was against the parent company of the Appellant - 'Era Infra Engineering Limited' (EIEL) and initi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Parent Company, a resolution plan for the Parent Company on standalone basis would hardly ascribe any value for the stakeholders. The CoC of the Parent Company also acknowledged that there has been no precedent in this regard wherein the CoCs of a parent company undergoing an insolvency process had voted upon a resolution plan which provides for the resolution of the Parent company including the assets of the SPV's of the Parent Company. Therefore, the CoC of the parent company was apprehensive to deliberate and vote on the two resolution plans. In view of the apprehension of the CoC of the parent company to consider and vote upon the Resolution Plans and the Section 12A proposal, the Appellant filed the mentioned consolidation Application on 04.11.2019 number CA No. 2448/2019 in the present matter "Union Bank of India Vs. Era Infra Engineering limited" requesting for consolidation of all the SPVs with the CIRP of the Parent company, which remains pending for adjudicating since then. e. It is submitted that the Resolution Professional of the parent company at the suggestion of the Bench after hearing the abovementioned application filed by the Promoter of the parent compan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case of "State Bank of India Vs. Videocon Industries Limited" in MA No. 1306 of 2018 in CP No. 02/2018 vide decision dated 08.08.2019 the bench while allowing the consolidation application moved by SBI has laid down certain parameters while ordering for consolidation of 13 Videocon group companies that : (i) common control (ii) common directors (iii) common assets (iv) common liabilities (v) inter-dependence (vi) interlacing of finance (vii) pooling of resources (viii) co-existence of survival (ix) intricate link of subsidiaries (x) inter winded accounts (xi) inter-looping of debts (xii) singleness of economics of units (xiii) common financial creditors (xiv) cross holding. And further vide the said consolidation order directed to complete the resolution process within 180 days from the date of the order. That in furtherance to the above set of parameters, the NCLT Mumbai Bench on 08.06.2021 approved the Resolution Plan submitted by Twin star technologies limited in "SBI Vs. Videocon Industries Limited", consolidating the 13 Videocon group companies vide the application bearing IA No.196 of 2021 in CP No. 02/2018 fled by the RP (Mr.Abhijit Ghathakurta). In the case of "Arcelomi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... P admission order as the Appellant himself has admitted the 'Debt' and 'Default' and has sought initiation of CIRP. 6. The Respondent No.2 has made the submissions as given below: a. The Respondent No.2 - ICICI Bank Ltd., has submitted that it is the largest financial creditor of the corporate debtor. It has granted facility of term loan aggregating to Rs. 2,700 million with external commercial borrowing facilities of USD 60 million as a sub-limit facility of the main facility to part finance the cost of projects. The project was four lanes on BOT on annuity basis for Haridwar -Dehradun route covering NH-58 and NH-72. The above said facility was further extended with the consortium of lenders including Bank of India and other banks. It has also stated that it has assisted the Corporate Debtor to meet costs overrun as and when required as per the agreement executed between them. It has also been brought to our notice that on 23.05.2016, owing to the Corporate Debtor's failure to adhere to timelines and milestones, NHAI issued an intention to terminate the Concession Agreement. Pursuant thereto, the Senior Lenders in principal agreed that the Corporate Debtor would avail bridge-fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ately pay the outstanding amount of INR 493.43 Crore as on 30.11.2018, to the Answering Respondent. The Corporate Debtor failed to pay the outstanding amount mentioned above. the Respondent No.2 approached the Adjudicating Authority way of CP (IB) No. 725/ND/2020 under Section 7 of the Code seeking initiation of CIRP against the CD. The amount in default was Rs. 5,654,726,003.96/- including interest as on 27.02.2020. d. It is relevant to note that the Corporate Debtor had filed CP(IB) No. 665/ND/2020 before the Adjudicating Authority under Section 10 of the Code for voluntary initiation of insolvency proceedings against itself. One could reasonably infer from such an application being filed that the financial condition of the corporate debtor had deteriorated beyond repair and warranted immediate resolution under the aegis of the Code. The Appellant's claim of filing the application under Section 10 of the Code in pursuance of an alleged scheme of consolidation is factually and legally untenable as in terms of the Section 10 (1) of the Code, a Company Petition can be under Section 10 only if a "Default" has been committed by the Corporate Debtor. It is an inescapable fact that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s also pertinent to note that in the Company Appeal, the Appellant has not specifically denied the existence of debt owed to the Respondent No.2 or the occurrence of the default thereon. In fact, the Appellant has not only admitted the sanction of loan to the Corporate Debtor but also its availment as well as default made by the Corporate Debtor in repayment of the loan. In view thereof, it is most humbly submitted this is a fit case for commencement of CIRP and consequently, the Impugned Order warrants no interference by this Appellate Tribunal. 7. The Respondent No.3, has made the submissions as given below: a. It is stated that the Appellant conceals email dated 19.03.2020 issued by RP of parent company acknowledging withdrawal of claim by the R2 from that CIRP. The Appellant alleges that claim of Respondent No.2 in the CIRP of the parent company is to be withdrawn under Section 12A and no other withdrawal of claim is permitted. However, Section12A deals with withdrawal of claim to end CIRP and deals with claim of creditor at whose behest insolvency is initiated. In case of the parent company insolvency was initiated at the behest of Union Bank of India and R2 (ICICI Bank Ltd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ategorically mentioned that the voting in the COC of the parent company was only qua the parent company and not its SPVs. The representative of PNB had stated that he has no mandate to vote for SPVs. The lenders of parent company conveyed apprehensions that the view of lenders of the SPVs will be diluted and the RP reassured that the prayer was only for permission of Adjudicating Authority to consider resolution plans. Without initiation of insolvency against Corporate Debtor, there is no question of consolidation of proceedings. Appellant on ground of consolidation cannot object to admission of Corporate Debtor into insolvency. The Adjudicating Authority in the case of IFCI Vs. HI-Point Investment Finance Pvt Ltd, C.A. No. 1792 (PB)/2019 in C.P. (IB)-478 (ND)/2017 vide order dated 22.10.2019 has already held that application filed by the ex-management seeking consolidation of CIRP of group companies are not maintainable as ex-promoter/directors have no locus. In all cases of consolidation quoted by Appellant such as IL&FS, Adel Landmark, Videocon, the facts were such that the lending was done considering group of companies as one unit. In the present case, each subsidiary company ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nowledges debt and Section 18 of Limitation Act, 1963 is applicable to the proceedings under the Code. Hence, the Appellant cannot be given advantage of the limitation also. c. On 08.05.2018 CIRP proceedings of the parent company was initiated and the same has expired on 01.12.2019. Hence, merging the CIRP of the subsidiary with the holding of the parent company is running into rough weather. The Petition on the same is pending at the Adjudicating Authority level only and this is an independent fact to be examined independently and to be accordingly decided also. Hence, this is not the stage for the Appellate Authority to consider consolidation based on the simple inputs of list of Directors as on date of incorporation and as on 31.12.2019 of various SPVs Projects which is in the form of the subsidiary companies. Even the summary of financial linkage between the parent company and the SPVs cannot be examined on standalone mode. Even value of awards won by SPVs and 'Financial Debt' and other input cannot be examined as these are not the subject matter of the Appeal even remotely. The Code is silent on the issue of 'Group Insolvency' and only when input is available in respect of a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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