TMI Blog2021 (12) TMI 244X X X X Extracts X X X X X X X X Extracts X X X X ..... find out the existence of the default within 14 days of receipt of the application, as mentioned in Section 7(4). On being satisfied that such a default took place, then, an Adjudicating Authority may admit such application, subject to rectification of defect, which the proviso in Section 7(5) of the Code enjoins that it must be done within 7 days of receipt of such notice from the Adjudicating Authority by the Applicant - As per Section 7(6) of the Code, the CIRP starts from the date of admission of the application. The Adjudicating Authority as per Section 7(7) is to communicate the order either or accepting or rejecting the application of the financial creditor or the Corporate Debtor within 7 days of such admission or rejection. Debt and default or not - HELD THAT:- Ordinarily, an Adjudicating Authority is not required to go into the claim or counter claim made by the parties except to ascertain whether or not the record is complete and whether or not there is a debt and default committed by the Corporate Debtor . Always a Corporate Debtor has the option to point out that a default had not occurred in the sense that debt including a disputed claim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Mr. AS Sathish Kumar, Advocate for Mr. S. Sathiyanarayanan, Advocate (PCS) Advocates for Appellant Mr. Satish Parasaran, Sr. Advocate for Mr. Raj Jhabakh, Advocate, Mr. Raj Kumar, Advocate for 2nd and 3rd Respondent JUDGEMENT VIRTUAL MODE M. VENUGOPAL, J BACKGROUND: The Appellant/Shareholder (Member of the Suspended Board of Director of M/s Green Valley Sheltors Pvt Ltd (Corporate Debtor) has filed the instant Comp App (AT)(CH)(Ins) No.217/2021 being dissatisfied with the Order dated 12.08.2021 in IB/149/2020 (Filed by the Financial Creditors under Section 7 of the I B Code, 2016 r/w Rule 4 of the Insolvency Bankruptcy (Application to the Adjudicating Authority) Rules, 2016), passed by the Adjudicating Authority (National Company Law Tribunal, Division Bench II, Chennai). APPELLANT S SUBMISSIONS 2. According to the Learned Practising Company Secretary for the Appellant, the impugned order dated 12.08.2021 in IB/149/2020 was passed by the Adjudicating Authority without providing an opportunity to the Appellant to file the Additional Written Submissions and by countermanding its own order dated 29.07.2021 whereby the Authority had granted time ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /Banks (Other Financial Creditors) or Operational Creditors of one project initiated Corporate Insolvency Resolution Process against the Corporate Debtor (real estate company), it is confined to the particular project, it cannot affect any other project(s) of the same real estate company (Corporate Debtor) in other places where separate plan(s) are approved by different authorities, land and its owner may be different and mainly the allottees (financial creditors), financial institutions (financial creditors, operational creditors are different for such separate project. Therefore, all the asset of the company (Corporate Debtor) are not to be maximized. The asset of the company (Corporate Debtor real estate) of that particular project is to be maximized for balancing the creditors such as allottees, financial institutions and operational creditors of that particular project. Corporate Insolvency Resolution Process should be project basis, as per approved plan by the Competent Authority. Any other allottees (financial creditors) or financial institutions/ banks (other financial creditors) or operational creditors of other project cannot file a claim before the Interim Resolution P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 7 of the I B Code. 8. The Learned Practising Company Secretary for the Appellant points out that the amended application is surrounded with serious defects which cannot be ignored and the same was brought to the Notice of the Adjudicating Authority . Apart from this the change in the name of both the Financial Creditors, change of ownership and the composition of the Board of Directors in respect of Financial Creditor No.1 which requires a proper authorisation of the newly constituted Board of Directors, there being no such authorisation to file the amended application were suppressed by the Applicant before the Adjudicating Authority . 9. It is represented on behalf of the Appellant that during the hearing on 29.07.2021, the Learned Counsel for the Corporate Debtor before the Adjudicating Authority had highlighted the defects in the application and explained the serious nature of the defects and made a request to permit him to file Additional Written Submissions and that the Adjudicating Authority had agreed to the said request and allowed the Corporate Debtor to furnish the Additional Written Submissions on or before 13.08.2021 and reserved the Order . ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of all the guarantors by serving demand notices dated 03.03.2020 addressed to all the Guarantors. 13. In fact, the Debenture Trustee has preferred an application on 12.11.2020 for initiating CIRP against the Guarantors under Rule 7(2) of the Insolvency Bankruptcy (Application to Adjudicating Authority for Insolvency Resolution Process for personal Guarantors) 2019, before the Adjudicating Authority. 14. The Learned PCS points out that the Debenture Trustee is alone empowered to initiate the Section 7 application of the I B Code, 2016 and that the applicants before the Adjudicating Authority has no locus standi to file the said application and as such, the said application is not maintainable and cannot be proceeded with. 1ST RESPONDENT S SUBMISSIONS 15. According to the 1st Respondent/Resolution Professional the claims were received from the Financial Creditors and were collated, pursuant to Section 18(1)(b) of the I B Code, 2016 and the same is as follows:- Name of Financial Creditor Amount claimed Amount admitted Voting share 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te Insolvency Resolution should be -32- Company Appeal (AT) (Insolvency) No. 926 of 2019 deposited in the account of the Company (Corporate Debtor) to keep the Company a going concern. The amount can be utilized only by issuance of cheque signed by the authorised person of the Company (Corporate Debtor) with counter signature by the Interim Resolution Professional. The Bank in which the Corporate Debtor (Company) has account the amount should be deposited only for the purpose of completion of the Winter Hill 77 Gurgaon Project. Banks will allow the cheques for encashment only with the counter signature of the Interim Resolution Professional. 27. The flats/apartments should be completed in all aspect by 30th June, 2020. All internal fit outs for electricity, water connection should be completed by 30th July, 2020. The Financial Institutions/ Banks should be paid simultaneously. The allottees are directed to deposit their balance amount and pay 90% without penal interest, if not deposited, by 15th March, 2020. The Allottees in whose favour possession has been offered and clearance has been given by the competent authority are bound to pay the cost for registration and directed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Business and development of properties) had approached the 2nd and 3rd Respondents for financial assistance to repay the existing indebtedness and to fund the construction and development of its housing projects. 20. According to the Learned Counsel for the 2nd and 3rd Respondents, based on the execution of Mortgage cum Trust Deed dated 1.8.2016 with the Corporate Debtor , the 2nd and 3rd Respondents had invested a sum of ₹ 31,75,00,000/- by subscribing through private placement to senior, secured, unrated, unlisted, fully redeemable, non-convertible debentures in multiple tranches. 21. It is represented on behalf of the 2nd and 3rd Respondents that to secure the repayment of the aforesaid amount, the Corporate Debtor created various securities in favour of the 2nd and 3ard Respondent, including promissory notes, purchase option agreement, mortgage of freehold lands, mortgage of residential flats on an exclusive charge basis etc. which was also contractually financed by the Corporate Guarantee and Personal Guarantees from its promoters. 22. The Learned Counsel for 2nd and 3rd Respondents points out that because of the breach of several terms and conditions of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... peal before this Tribunal filed by the Appellant is to be dismissed. 27. The Learned Counsel for the 2nd and 3rd Respondent places reliance upon the decision of the Hon ble Supreme Court in State of Uttar Pradesh V. Sudhir Kumar Singh Ors reported in 2020 SCC OnLine SC 847 wherein it is held that in cases where infraction of justice has been contended, the question any purpose would be served in giving opportunity to the said party have to be addressed. 28. The Learned Counsel for the 2nd and 3rd Respondent comes out with a plea that the negation audi alteram partem cannot by itself, without more, lead to the conclusion that the prejudice is caused and in view of the Hon ble Supreme Court decision in State of Uttar Pradesh V. Sudhir Kumar Singh and Ors 20020 SCC OnLine SC 847 the present Appeal has no legs to stand. 29. The Learned Counsel for 2nd and 3rd Respondent contends that the Debenture Trustee is alone entitled to file an application under Section 7 of the I B Code against the Corporate Debtor and that the 2nd and 3rd Respondent being the debenture holder are clearly the Financial Creditors. Moreover, the right to invoke the CIRP under I B Code is ves ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs/Reliance AIF Management Company Ltd, Reliance Nippon Life Asset Management Ltd, Mumbai seeking to initiate CIRP against the M/s Green Valley Sheltors Pvt Ltd (Corporate Debtor). 34. In the Section 7 application the Financial Creditors/Applicants under Part IV particulars of financial debts at Sl. No.3, the details of the amount lent by the Applicants to Corporate Debtor/GVSPL is described as under:- Date of disbursement Amount disbursed Disbursed by 31/08/2016 ₹ 10,00,00,000/- Financial Creditor No.1 31/08/2016 ₹ 16,00,00,000/- Financial Creditor No.1 31/08/2016 Rs,3,00,00,000/- Financial Creditor No.2 20/10/2016 ₹ 1,50,00,000/- Financial Creditor No.1 03/11/2016 ₹ 75,00,000/- Financial Creditor No.1 30/12/2016 ₹ 50,22,000/- Financial Credit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en submissions on 08.12.2020 before the Adjudicating Authority . 38. In the instant case, the Appellant had confirmed the default and the same is undisputed. Indisputably, to secure the repayment of ₹ 31,75,00,000/- invested by the 2nd and 3rd Respondents, the Corporate Debtor had created numerous securities to and in favour of 2nd and 3rd Respondents like that of promissory notes, purchase option agreement, mortgage of freehold lands, mortgage of residential flats on an exclusive charge basis, which was contractually financed by corporate guarantee and first personal guarantees from it promoters. TIME FRAME FOR ADMISSION 39. It is relevantly pointed out that before an admission of an application filed under Section 7 of the I B Code, by a financial creditor , an Adjudicating Authority as per Section 7(4) of the Code is to find out the existence of the default within 14 days of receipt of the application, as mentioned in Section 7(4). On being satisfied that such a default took place, then, an Adjudicating Authority may admit such application, subject to rectification of defect, which the proviso in Section 7(5) of the Code enjoins that it must be do ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2nd and 3rd Respondents from acting, in the absence of Debenture Trustee . To put it precisely, the Debenture Trust Deed gives right to the 2nd and 3rd Respondents to act. 45. Continuing further, in the present case, 100% of the Debenture Holders had preferred the application under Section 7 of the Code and they are the Financial Creditors and they do have a right to file an application seeking to invoke the provisions of the I B Code. As such, the contra stand taken on behalf of the Appellant is not acceded to by this Tribunal . 46. In the present case, after the filing of the Application under Section 7 of the Code by the Financial Creditor / Applicant the name change took place and in reality IA No.72/2021 was filed by the 2nd and 3rd Respondents in regard to the amendment in Cause Title and the same was allowed by the Adjudicating Authority on 15.04.2021. 47. Be it noted, that when there is any change in the Directors or ownership , the Power of Attorney , Authorisation letter need not be executed once again and that the subsisting authorisation is good enough in Law, all the more when the said authorisation was not revoked. Also that, in any event, n ..... X X X X Extracts X X X X X X X X Extracts X X X X
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