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TMI Blog2021 (12) TMI 1341X X X X Extracts X X X X X X X X Extracts X X X X ..... with interest to the aforesaid Financial Creditor namely State Bank of India. The Financial Creditor had invoked the bank guarantee against the Corporate Debtor herein to remit the defaulted amount. The Financial Creditor herein also withdrew the credit facilities granted to the Principal Borrower. Finally a Demand Notice dated 2nd August, 2014 was issued to the Corporate Debtor demanding the amount in default along with interest as the account was classified as NPA since the Corporate Debtor failed to repay the defaulted amount to the Financial Creditor, the present application has been filed by the Financial Creditor for initiating CIRP against the Corporate Debtor Infar Tie-Up Pvt. Ltd., having its Registered Office at 34/1Q Ballygunge Circular Road, Kolkata-700019, West Bengal under section 7 of the IBC, 2016. 3. It is submitted that in the petition that GEE PEE Infotech Private Limited had written letter to the Assistant General Manager, State Bank of India on 20.01.2006 seeking Credit Proposal for Working Capital Limit which was favourably responded to on 25.03.2006 when the sanction letter was issued by the State Bank of India in favour of GEE PEE Infotech Private Limited ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arantee for increase in overall limit was executed by the above said six Guarantors Ganpat Lal Agarwala, Kalpana Agarwala, Shanti Devi Agarwala, Sangita Agarwala, Pavan Kumar Agarwala and Bijay Kumar Agarwala on 5th October, 2009 Supplemental Deed of Guarantee for increase in overall limit was executed by the Corporate Debtor herein/Guarantor. 4. It is further submitted that even thereafter, whenever the Credit Facilities were issued by the Financial Creditor in favour of the Principal Borrower, the Corporate Debtor herein i.e. Guarantor also executed the Supplemental Deed of Guarantee from time to time in addition to other guarantors. The Financial Creditor has annexed with the petition all the relevant and necessary documents which are being relied upon by the Financial Creditor in the present petition. This petition has been filed by one Gurupada Chakraborty on behalf the Financial Creditor who has been duly authorised vide letter of authority dated 27th February 2018 (Annexure-A) to the present petition. 5. The Financial Creditor proposed the name of Mr. Binay Kumar Singhania, to act as an IRP having Registration No. IBBI/IPA-001/IP-P00041/2017-18/10102, who has consented vid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Ministry of Finance, the Central Government had authorized the RBI to issue such directions to Banking Companies which may be considered necessary to initiate Insolvency Resolution Process in respect of a default under the provisions of the IBC. The RBI in its circular dated 22nd May, 2017 outlined the action plan to implement the Banking Regulation (Amendment) Ordinance, 2017. 8. It is submitted on para 10 of the reply affidavit, para 'q' " Not only the provisions of the Press Release dated 13th June 2017 and the circular dated 12th February 2018 was not and/or could not be complied with by the Financial Creditor, the Financial Creditor on February, 2018 had filed the present proceeding under section 7 of the IBC". 9. It is further submitted that in the reply affidavit that in view of the enactment IBC, the RBI decided to substitute the existing guidelines with a harmonized and simplified generic framework for resolution of stressed asses and for such purpose issued a circular dated 12th February, 2018 indicating the details of the revised framework, a copy whereof is annexed as Annexure-5 to the reply affidavit. 10. It is submitted that in terms of the aforesai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which ahs been duly done in the present case. It is true that notification dated 27.03.1987 has no reference to delegate the powers under the Insolvency and Bankruptcy Code, yet it gives general power to sign petition which is wider than filing petition under Insolvency and Bankruptcy Code, 2016, the main source of power in any case is discernible from Section 27 of the Sate Bank of India Act. It gives Chairperson power to do all such acts which are to be done by the Bank itself subject to directions". 14. In view of what is stated above, it is denied that they are not authorized to file this Application. A Copy of the said Regulation of the State Bank of India General Regulations, 1955 is annexed and marked as Annexure 'A' to the Rejoinder. 15. It is further submitted that a sum of Rs. 162,62,23,609.63/- (Rupees One Hundred Sixty Two Crores, Sixty Two Lacs, Twenty Three Thousand, Six Hundred Nine and Paisa Sixty Three only) as on 31st January, 2018 is due and payable by the Principal Borrower and the Corporate Debtor has executed Deed of Guarantee on 1st April, 2006 is annexed and marked as Exhibit "L" to the application. It is stated that the contention of the Corporat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is maintainable. It is submitted that reasonable and sufficient opportunities were provided to the Corporate Debtor for recovery of Financial Debt as payable by the Corporate Debtor and hence the contention of the Corporate Debtor in the paragraph under reference is denied in toto. 17. Financial Creditor further submitted that the Press Release dated 13th June 2017 is merely directory and no mandate has been issued to follow the said directions. Be it accepted that the said resolution framework has not been released by the RBI and subsequently no resolution plan has been finalized, does not disentitle the liability of the Corporate Debtor towards the Applicant. It is denied that the present proceedings initiated under the IBC Code are illegal or arbitrary is alleged or at all. Thus the contention of the Corporate Debtor is flawed and misconceived and the contentions of the Corporate Debtor under reply to the application are hereby denied. It is denied that the RBI has derogated any of the guidelines and/or the circulars and/or abused the provisions of the IBC and/or deprives the Corporate of its legitimate rights as alleged. It is denied that any alleged valuable rights of the Cor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... treme urgency in the matter in the interest of general public and greater and larger interest of the Society and that the urgent intervention of this Tribunal is necessary to ensure that the matter is not allowed to linger on. It is submitted any further delay in the hearing of the aforesaid matter shall affect adversely the interest of the public at large, who have deposited money with the applicant and the Union Government, which is a major stakeholder in the applicant bank. The applicant further submits that delay in admission of the case will seriously hamper the interest of the applicant as the entire funds will be diverted and siphoned away by the promoters of the Corporate Debtor. It is submitted that hundred crores of rupees are involved in the matter which is the public money and that the Corporate Debtor is a defaulter and have been deliberately trying to linger on the matter so as to escape its liabilities. In view of the above, all the necessary documents are submitted along with the present application filed before this Tribunal. It is most humbly submitted that this is a fit case for admission of the application and initiation of the Corporate Insolvency Resolution Pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rocess is arrested as on the date of filing. The date of filing of OA No. 493/2015 is 24th September, 2015, so from that day onwards, the limitation has been arrested. The Ld. Counsel submitted that since the date of NPA is 10th January, 2014 and so, just about a year thereafter, the O.A. was filed, and thus there is no issue of limitation involved. 21. Ld. Senior Counsel further submitted that Piramal (supra) says that when CIRP proceedings had been admitted in respect of same debt against the Corporate Debtor, the Main Principal Borrower, or any other Corporate Guarantor, then it can no longer proceed. It is submitted that the orders passed in M/s. Krishna Alex Pvt. Ltd. has discussed in details various judgments including Piramal judgment, followed by few other judgments but one of the those judgments has already been stayed by the Hon'ble Supreme Court. The Ld. Senior Counsel has placed reliance on M/s. Krishna Alex Pvt. Ltd. in which all these judgments have been elaborately discussed. He further submitted Para 23 of the judgment of M/s. Krishna Alex Pvt. Ltd. (supra), and the same is reproduced as under:- "23- According to the Ld. Counsel for the Corporate Debtor, in D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lowing the aforesaid principle laid down by the Hon'ble Supreme Court that has been followed by the Hon'ble High Court, we are of the considered view that the Hon'ble NCLAT's judgment in Athena Energy is the correct position of law. The present petition against the Corporate Debtor can be admitted despite the Corporate Debtor being under CIRP". 23. It is stated by the Ld. Counsel that the Athena Energy judgment principally relied upon section 60(2) of the Code which is reproduced as under:- "60(2)- Without prejudice to sub-section (1) and notwithstanding anything to the contrary contained in this Code, where a corporate insolvency resolution process or liquidation proceeding of a corporate debtor is pending before a National Company Law Tribunal, an application relating to the insolvency resolution or [liquidation or bankruptcy of a corporate guarantor or personal guarantor, as the case may be, of such corporate debtor] shall be filed before such National Company Law Tribunal". 24. Ld. Counsel further submitted that there is no attempt in the Insolvency and Bankruptcy Code to exclude the Guarantor. The language of Section 60(2) by itself demonstrates that simult ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gment of NCLAT passed by Justice A.I.S. Cheema in the Athena Energy matter. Ld. Counsel relied upon order passed in CP No. 353/KB/2018 by this Adjudicating Authority on 2nd August, 2019. He further submitted that by order dated 8th August 2019, this Adjudicating Authority had passed an order of admission in respect of Genegrow Commercial Pvt. Ltd. and the Principal Shareholder of Genegrow Commercial Pvt. Ltd. had preferred an appeal before the NCLAT, which was allowed by the Hon'ble NCLAT by order dated 23rd January, 2020. 27. He further submitted that pursuant to the said order passed by the Hon'ble NCLAT, this Adjudicating Authority passed order on 27th January, 2020 closing the proceedings in C.P. No. 353/KB/2018, which was instituted by the Financial Creditor against the other Guarantor Genegrow. It is submitted by the Ld. Counsel for the Corporate Debtor that in the meantime, the Financial Creditor preferred a Civil Appeal before the Hon'ble Supreme Court claiming to be aggrieved from the order dated 23rd January, 2020 passed by NCLAT. The Supreme Court in that Civil Appeal No. 2715 of 2020 passed an order on November 3, 2020 staying the order dated January 27, 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Principal Borrower has already been initiated. However, another Coordinate Bench of the Hon'ble NCLAT in the judgment dated November 24, 2020 (State Bank of India-vs-Athena Energy) has taken a contrary view to the view of the Hon'ble NCLAT in the Piramal Judgment dated January 8, 2019. In the Athena Energy matter, the NCLAT has held that the CIRP against the corporate guarantor is maintainable even if the CIRP has been initiated against the Principal Borrower thereby not following the ratio of the earlier Coordinate Bench judgment of NCLAT in Piramal matter dated January 8, 2019. 32. It is further submitted that the subsequent judgment of the NCLAT in the Athena Energy matter is a good law and is per incuriam in view of the established principles laid down by the Hon'ble Supreme Court in the judgment reported as National Insurance Company Limited vs. Pranay Sethi and others- in 2017 (16) SCC 680 Pr-16-20 on the proposition that even if an earlier decision may be seen to be incorrect to a Bench of Coordinate jurisdiction considering the question later, yet it will have the binding effect on the latter Bench of Coordinate jurisdiction and that it was necessary for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dicial pronouncements on the issue of the application being barred by limitation, which will appear from the judgment cited by the Corporate Debtor, which are as under:- i. Gaurav Hargovindbhai Dave- vs- Asset Reconstruction Company (India) Limited & Anr. (2019) 10 SCC 572; ii. Jignesh Shah & Anr.-vs- Union of India & Anr. (2019) 10 SCC 750; iii. B.K. Educational Services Pvt. Ltd. - vs- Parag Gupta and Associates (2019) 11 SCC 633; iv. Babulal Vardharji Gujar -vs- Veer Gujar Aluminium Industries Pvt. Ltd. & Anr.; v. UCO Bank-vs-Xenitis Infotech Ltd. In C.P.(IB) No. 1233/KB/2018 and vi. Sagar Sharma & Anr.- vs- Phoenix Arc Pvt. Ltd. & Anr. (2019) 10 SCC 353; vii. Invent Assets Securitization and Reconstruction Pvt. Ltd. -vs-Xylon Electrotechnic Pvt. Ltd. NCLAT order dated 11.08.20 IN CA(AT)(INS)677 OF 2020; viii. Invent Assets Securitization and Reconstruction Pvt. Ltd. -vs-Xylon Electrotechnic Pvt. Ltd. SC order dated 07.01.2021 in Civil Appeal No. 3783 of 2020; ix. Sri Kaustav Roy-vs- SBI & Anr. NCLAT order dated 20.02.2021 (Three member Bench); x. Rajendra Narottamdas Sheth and Anr.-vs- Chandra Prakash Jain & Anr. 34. The Corporate Debtor submits that the pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en filed in accordance with the form as prescribed under the Code only. 39. The Ld. Counsel for the Financial Creditor also stated, It can be seen from application that it was filed under section 7 of IBC only and even assuming there is some reference to Press Release and the Circular dated 12th June 2018 which has been found be non est, the application under section 7 can be proceed independently, as it can be seen from the application itself there was no reference to rely upon these two documents while filing the petition under section 7 IBC. Further, It was never the intent of the applicant bank to seek aid of any other statute or circular while filing the present application. Also, a perusal of the Circular dated 12th February, 2018 shows that the RBI had issued the circular or the resolution of the Stressed Assets. The IBC being an independent Code, this application under section 7 of IBC is independently maintainable. 40. It has been further submitted on behalf of the applicant that a mere passing reference to the Circular in the rejoinder by it cannot and will not change the original nature of the application which was filed only under section 7 of IBC. 41. We have consid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orporate Debtor/corporate guarantor on the merits of the purported claim of the Financial Creditor. Infact, letters which were issued were of all in relation to OTS prepared which was being considered amongst the Financial Creditor and the Principal Borrower (GEE PEE Infotech Pvt. Ltd.) and that too pursuant to the order passed by the learned DRT-I dated December 18, 2018 (annexed at page-17 of the supplementary affidavit of corporate debtor affirmed on January 22, 2019). Therefore, the letters exchanged between the borrower and bank were in relation to the settlement process which was initiated pursuant to the order of judicial forum and hence such letters are always exchanged without prejudice to the rights and contentions of the parties. The Ld. Counsel argued that in view of the principles laid down in section 23 of the Evidence Act, such letters do not construe as an admission It is also relevant to note that none of the letters which were exchanged between the borrower and bank were on the merits of the purported claim of the Bank unlike the letter dated December 8, 2012 which has been referred to in para 46 of the Supreme Court judgment in (Laxmi Pat Surana - vs- Union Bank ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it was clearly held that in the matter of guarantee, CIRP can proceed against the Principal Borrower as well as the Guarantor. The Hon'ble NCLAT had held in that matter that the law as laid down by the Hon'ble High Courts for the respective jurisdictions, and law as laid down by Hon'ble Supreme Court for the whole country is binding. The Hon'ble NCLAT further held that in the matter of Piramal, the Bench of this Appellate Tribunal "interpreted" the law. It was held that 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". 50. Following the ratio as deducted from Athena Energy (supra), we admit the present petition against the Corporate Debtor herein which is a Guarantor as well. In view of the aforesaid position of law, the petition is admitted and CIRP in respect f the Guarantor is initiated. 51. We are satisfied and have no option but to admit this petition under section 7 of IBC with the following orders:- ORDERS i) The application filed by the Financial Creditor under Section 7 of the Insolvency & Bankruptcy Code, 2016 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... idation order, as the case may be. ix) Mr. Binay Kumar Singhania registered with Insolvency and Bankruptcy Board of India, having Registration No. IBBI/IPA-001/IP-P00041/2017-18/10102, Email [email protected] hereby appointed as Interim Resolution Professional for ascertaining the particulars of creditors and convening a Committee of Creditors for evolving a resolution plan subject to production of written consent within one week from the date of receipt of this order. x) The Interim Resolution Professional should convene a meeting of the Committee of Creditors and submit the resolution passed by the Committee of Creditors and shall identify the prospective Resolution Applicant within 105 days from the insolvency commencement date. xi) The Financial Creditor/Applicant is directed to deposit Rs. 3,00,000./- (Rupees Three Lakh Only) with the IRP appointed hereinabove within three days from this order. IRP can claim the preliminary expenses and fees subject to the approval by the CoC and after constitution of CoC. xii) Registry is hereby directed to communicate the order to the Financial Creditor, the Corporate Debtor, the I.R.P. and the jurisdictional Registrar of Companies by ..... X X X X Extracts X X X X X X X X Extracts X X X X
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