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TMI Blog2021 (9) TMI 1429X X X X Extracts X X X X X X X X Extracts X X X X ..... itiate Corporate Insolvency Resolution Process (CIRP) against M/s. Mack Star Marketing Private Limited (hereinafter called "Corporate Debtor") alleging that the Corporate Debtor committed default in making payment to the Financial Creditor. This petition has been filed by invoking the provisions of Section 7 Insolvency and Bankruptcy Code, 2016 (hereinafter called "Code") read with rule 4 of Insolvency & Bankruptcy (Application to Adjudicating Authority) Rules, 2016. 2. The present Petition is preferred under section 7 of the Insolvency and Bankruptcy Code, 2016. The genesis of the debts are Six loan transactions (Term Loans I to VI) that came to be executed between the Corporate Debtor and Yes Bank Limited (YBL). Out of the six term loans ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y case, the Reply of the Corporate Debtor does not dispute the factum of default. Brief submissions of the corporate debtor as follows: 1. The Corporate Debtor denies that there is any valid financial debt in respect of these, what it calls as bogus term loans, and, therefore, submits that there can't be any financial default in respect of these sham credit facilities. The Corporate Debtor further disputes the amount claimed as the alleged financial debt and submits that the calculations presented in the Petition are erroneous. 2. The captioned insolvency application relates to four terms loans. The Corporate Debtor in its submission mentions the following: a) Loans were not only fraudulently sanctioned in the CD& ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he fraud perpetrated on the CD pursuant to these loans was filed with the Economic Offences Wing, Mumbai Police (EOW). Although, these loans had been in "default" since 2017, on 20 March 2019--barely two weeks after the criminal complaint was lodged--SARL issued a demand notice under the IBC to the CD. The Corporate Debtor mentions that the present proceedings are a desperate attempt to: (a) wrest the control of the CD from its management and vest the control of the CD in a resolution professional chosen by YBL and SARL; and (b) thwart the ongoing attempts by the CD's management to affix civil and criminal liability on YBL and SARL for fraud, dishonest misappropriation, and other wrongful acts. FINDINGS 4. The Financial Creditor is M/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... paid. Since the Corporate Debtor had borrowed the money, it cannot take a plea of intra shareholders dispute or allegation of internal wrong doings by the constituent shareholders as a reason for not meeting its repayment obligation. 8. Further, the alleged misuse on unauthorised use of the term loans by the constitutes of the Corporate Debtor does not in any way negate the existence of Financial Debt and the right of the Financial Creditor to recover the loans even assuming that the Corporate Debtor had diverted the money and misused the term loans. It does not discharge the Corporate Debtor of it is indebtedness in respect of loans and does not absolve the Corporate Debtor from repaying the same. 9. In any case, the term loans have been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any judgment, decree or order in any court of law, tribunal, arbitration panel or other authority; transferring, encumbering, alienating or disposing of by the corporate debtor 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 corporate debtor 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 Corporate Debtor. e. That the supply of essential goods or services to the Corporate Debtor, if continuing, sha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g a reply in the main Company Petition has also filed an Interim Application No. 1740/2020. This Interim Application has been filed under section 60(5) & 65(1) of the IBC 2016 against the Petitioner for filing the petition with fraudulent and malicious intent which as per the Applicant (Corporate Debtor) is unrelated to the Corporate Insolvency Resolution Process (CIRP). The main contention of the Applicant in the I.A. 1740/2020 is that the term loans extended by the Petitioner (Yes Bank Limited) is vitiated with fraud and that Yes Bank Limited has perpetuated fraud on the Corporate Debtor. The submissions made in the Interim Application are similar to what has been made by the Corporate Debtor in its reply to the main CP 1621/2019. The r ..... X X X X Extracts X X X X X X X X Extracts X X X X
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