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TMI Blog2023 (1) TMI 300X X X X Extracts X X X X X X X X Extracts X X X X ..... n 30.11.1994, Industrial Development Bank of India wrote to Respondent informing that it agreed to subscribe to the Respondent's secured non-convertible debentures aggregating to Rs. 500 Lakhs on private placement basis. ii. IDBI and the Respondent executed a non-convertible debentures subscription agreement on 01.02.1995 of aggregate nominal value of Rs. 500 Lakhs. On 23.12.1998, IDBI and the Respondent executed a Rupee Term Loan agreement aggregating to Rs. 750 Lakhs. On 04.03.2004, the IDBI wrote to the Respondent intimating the Respondent that amount of the IDBI in the Loan have become due with interest accrued aggregating to Rs. 24,69,59,120/-. The Respondent was called upon to pay the amount within 15 days. On 29.09.2004, Central Government executed a Turst Deed to create the Stressed Assets Stabilization Fund, the Appellant, which was declared on 29.09.2004 as financial institution. On 04.12.2008, the Appellant executed a negotiated settlement with the Respondent whereby it agreed to accept the amount of Rs. 850 Lakhs in full and final settlement of Respondent's dues. Amount of Rs. 850 Lakhs consisted cash portion of Rs. 750 Lakhs and 10 Lakhs equity shares with face valu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2014 is Rs. 1,92,679/-. It was further pleaded that amount of Rs. 4,88,66,626.92 was due and payable by Respondent as on the date of payment of cash component i.e. 30th April, 2014 upto 31st December, 2017 on buy back of share of Rs. 1 Crore and the Respondent was also ready and willing to pay the amount by way of installments and in the Application amount of Rs. 2,00,65,450/- has been wrongly claimed. Details of proceedings before the AAIFR with regard to the Company were also given in the Reply. It was pleaded that despite letter dated 03.10.2017 Appellant has chosen neither to accept the same nor any further communication was made. The Appellant has also filed O.A. No. 281 of 2017 before the Debt Recovery Tribunal. iv. The Adjudicating Authority noticed the submissions of the Corporate Debtor that Application is barred by limitation as well as principal of acquiescence and estoppel. The Adjudicating Authority however did not consider the plea of limitation. Adjudicating Authority returned a finding that out of total outstanding of Rs. 8.5 Crores, Rs. 7.5 Crores had already been paid and for remaining amount of Rs. 1 Crore shareholding was to be issued to the Financial Credit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s based on the rate of interest, penal interest and liquidated damages against its only claim to the tune of 10 lacs equity shares of Rs. 10 each, which according to the Financial Creditor, the Corporate Debtor could not buy back with minimum yield of 13% pa. This fact is also disputed by the Corpora Debtor because Ld. Counsel has submitted that the Corporate Debtor has always been ready and willing to pay the sum of Rs. 1 Crore along with interest totaling up to Rs. 5 Crore but the Financial Creditor refused to accept the amount and has filed this petition. 46. In the aforesaid facts and circumstance, we are not at all convinced that this is genuine claim of the financial creditor which could form the foundation of these proceedings under Section 7 of the Code. The Corporate Debtor has in straight forward manner proved that the amount of Rs. 750 lakhs had been paid in term of the settlement between the parties and for the remaining Rs. 1 Crore also towards equity buy back which was pledged with the Financial Creditor and was not lodged for transfer. The Corporate Debtor is still ready and willing to pay the amount of Rs. 1 Crore on accounts of equity long with accrued minimum y ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gement of debt in writing in the balance sheets which result in extending the limitation period for proceeding under IBC. 5. Learned Counsel for the Respondent-Mr. Sumesh Dhawan refuting the submissions of Learned Counsel for the Appellant submits that the Application was clearly barred by time. In the Application filed under Section 7, under Part-IV, the date of default has been mentioned as 04.03.2004 which is date of loan recall notice. It is submitted that as per negotiated settlement dated 04.12.2008 cash component of Rs. 7.5 Crores out of total amount of Rs. 8.5 Crores was admittedly paid within the time as was granted by the Appellant by different extensions and it was only default alleged was not buying back the share to the extent of Rs. 1 Crore. That the pledge of share of Rs. 1 Crore was also made in favour of the Appellant and allotment of 10 Lakhs equity shares to the Appellant was delayed due to some technical issues with respect to dematerialization of physical shares due to which pledge was created. On 28th May, 2014, the Appellant communicated that the total outstanding due is Rs. 1,92,769/- along with expenses amounting about to Rs. 37,905/-, hence there was no o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... loan recalled letter dated 04.03.2004 are enclosed as Annexure A-5 10. Section 7 Application was filed by the Appellant on 05th April, 2019. There was negotiated settlement between the parties dated 04.12.2008. It can safely be accepted that the period of limitation did not expire till the parties entered into negotiated settlement. Under the negotiated settlement, payments were made by the Respondent from time to time. Last payment was made on 30th April, 2014, the negotiated Settlement was cancelled by the Appellant by Letter dated 11th July, 2014. Letter dated 11th July, 2014 which is relevant is as follows: "Ref No 232/SASF/DIL July 11, 2014 WITHOUT PREJUDICE The Managing Director, Delta International Ltd, 4, Council House Street, Kolkata - 700001 Dear Sir, Negotiated Settlement (NS) of Dues-Revocation Please refer to our letter of approval (LoA) Ref No 198/SASF/DIL dated December 04, 200 regarding negotiated settlement (NS) of dues and subsequent modifications granted in the terms and conditions thereof vide our letters dated January 15, 2009, April 2,2009, December 23, 2009 and October 14, 2011. In terms of the settlement and as modified time t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . It is useful to extract the entire letter which is to the following effect: " 2nd July, 2015 The Deputy General Manager Stressed Assets Stabilization Fund (SASF) IDBI Tower, WTC Complex 5th Floor, Cuffe Parade, Colaba, Mumbai - 400005. Kind Attn: Shri Yatin A Mankad Dear Sir, Reg: Negotiated Settlement As directed by the Hon'ble AAIFR vide order dated 05/06/2015 our representative Sri Narayan Agarwal CA met with you to find a solution to the current impasse created by your wrongful cancellation of our negotiated settlement with you. During the discussion with you Mr. Narayan Agarwal came to know that negotiated settlement has been revoked due to a so called default in compliance of allotment of 10 Lacs equity shares of Rs. 10 each in DIL/MPL. We would like to record our discussions in this regard. 1) As regard to fresh issue of 10 lacs equity shares of Rs. 10/- each, this is already informed to you vide letter dtd. 05/01/2011 (copy annexure A) that as per sec 81(4) of the Companies Act, 1956, we have to take Central Govt. permission before preferential allotment which is practically not possible. Hence we have handed over 1-0 lac equity shares o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be restored. When we look into the loan recall notice dated 04.03.2004, the amount which was claimed in the loan recall notice, was Rs. 24,69,59,120/- with further interest with effect from 01st January, 2004. The letter dated 2nd July 2015 is neither any acknowledgement of amount referred to in recall notice nor can be treated to be acknowledgement of the amount as claimed by the Appellant in the Section 7 Application. 15. We come to the next letter which has been relied on by the Appellant is letter dated 03.10.2017. Letter dated 03.10.2017 was written by the Corporate Debtor to the Appellant with regard to buy back shares of Rs. 1 Crore which according to the Respondent was only default of the negotiated settlement. The Letter dated 03.10.2017 stated as follows: " 3rd October 2017 To Stressed Assets Stabilization Fund (SASF) IDBI Tower, WTC Complex 5th Floor, Cuffe Parade, Mumbai - 400005. Kind Attn: Mrs S.S. Abhyankar Respected Madam Without prejudice This refers to our iscussions for making an amicable out of Court settlement. As discussed we outline our proposal as follows:- 1) Buy back of shares of Rs. 1.00 crore within 60 days of our approv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red to Delta Ltd. & Meghdoot Projects Ltd on demerger as per Hon'ble High Court, Calcutta, payment of Rs. 7,50,00,000/ upto 31.12.2014 were accounted for in the books of these companies. SASF has s per their letter dated 11.07.2014 revoked the negotiated settlement mentioned above as according to them Company has failed to allot 10 lacs equity shares of Rs. 10/- each to SASF and buy back of the same later. It has reversed the waiver of dues and restored the original liabilities and interest dues although 10 lacs shares of the Company belonging to the promoters were pledged with them at the time of negotiated settlement." 19. The above note 30(c) refers to negotiated settlement between the parties and the revocation of the settlement on 11th July, 2014. It also noted that Company failed to allot 10 lacs equity shares of Rs. 10/- each to SASF and buy back of the same later. The above note only notices the details as per letter dated 11th July, 2014 of the Appellant. It also noted that revocation of negotiated settlement was made according to the Appellant due to reason that Company has failed to allot 10 lacs equity shares of Rs. 10/- each to SASF and buy back of the same later. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aim by the Financial Creditor. We fully endorse the view taken by the Adjudicating Authority that after negotiated settlement between the parties on 04.12.2008, cash component of Rs. 7.5 Crores was paid admittedly within time allowed and default was only of nonallotment of 10 lakhs equity shares of Rs. 10 each. The cancellation of negotiated settlement was only on the ground that Respondent failed to comply the allotment of equity shares and execution of buy back agreement. We have already extracted the letter dated 11th July, 2014 by which negotiated settlement was cancelled by the Appellant. When the cancellation of negotiated settlement was only on the ground that Respondent failed to allot 10 lakhs equity shares with face value of Rs. 10 each and failed to buy back the shares at price giving minimum yield of 13%p.a. the claim at best could have been confined to the above amount. Application having been filed for claiming amount of Rs. 265.02 Crores is clearly exorbitant and unconscionable and not genuine. The Appellant (SASF) has been constituted by a Trust Deed executed on 24.09.2004 with the object of trust as given in clause 4 which is to the following effect: "4. Objects ..... X X X X Extracts X X X X X X X X Extracts X X X X
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