TMI Blog2023 (5) TMI 141X X X X Extracts X X X X X X X X Extracts X X X X ..... that it lays down the procedure for initiation of the CIRP by a Financial Creditor who can file an application before the Adjudicating Authority along with proof of default and name of Resolution Professional proposed to act as Interim Resolution Professional. The Adjudicating Authority is required to ascertain the existence of default within 14 days from the date of receipt of the application. It is further noted that once the Adjudicating Authority is satisfied regarding existence of default and that the application is complete and no disciplinary proceeding is pending against the proposed Interim Resolution Professional, the Adjudicating Authority is required to admit the application and is not required to look into any other criteria for the admission of the application. It is nobody s case to cause delay in admission of CIRP on miscellaneous grounds. This Appellate Tribunal also notes that the Hon ble Supreme Court of India as well as this Appellate Tribunal itself has, held in catena of judgments that there is no scope for judicial interventions and over reach by the Adjudicating Authority or the Appellate Tribunal to interpret any further, if the existence of due and sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d / Corporate Debtor , Mr. Manas Sarkar, Suspended Director of the Corporate Debtor has filed the present appeal. 3. Heard the Counsel for the Parties and perused the records made available including cited judgments of the Hon ble Supreme Court of India and earlier orders of this Appellate Tribunal . 4. The Appellant submitted that he was engaged in the business of storing and preservation of potatoes, developing a cold storage etc., and to start the business a project report was prepared estimating fixed cost of Rs. 10.56 crores, in order to estimate the viability of the project including the funding required which was estimated after discussion and on assurance of the Respondent No. 1 herein. The Appellant further submitted that the project report specified term loan requirement of Rs. 6.98 crores and working capital requirement of Rs. 18.79 lakhs. The Appellant stated that the Respondent No. 1 herein orally gave the go by and thereafter on this assurance, the Appellant borrowed from the market anticipating sanction of loan quickly. The Appellant mentioned that against the assurance given by the Respondent No. 1 , sanction of the loan was badly delayed and wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is business was in stressed situation and therefore requested for renewal of existing limits to avoid getting his account as NPA which was sanctioned much later on 10.09.2013, however the Respondent No. 1 started sending several matters to regularise the account immediately. The Appellant further submitted that he was shocked to know that on 28.04.2014, the Respondent No. 1 has classified his account as NPA w.e.f. 31.03.2014 and demanded payment of Rs. 94.35 lakhs to operate account to standard account. The Appellant submitted that on 02.06.2014, the Respondent No. 1 issued a notice under Section 13(2) of the SARFAESI Act, 2002 and claimed Rs. 7,54,82,000/- which was denied by the Appellant and the Appellant also challenged the same under Section 17 of SARFAESI Act, 2002 before DRT (Debt Recovery Tribunal). In the meanwhile, the Respondent No. 1 filed an attachment application before the DRT-II, Kolkata. The Appellant submitted that the recovery suit before DRT is pending adjudication under the SARFAESI Act, 2002. During course of events the Respondent No. 1 also filed application under Section 7 of the Code claiming an alleged debt of Rs. 15,68,12,389.14/- as o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al instalment of Rs. 16 lakhs each, commencing from 24 months from the date of first availment. II. Margin of 40% on land civil construction cost and 29% on plant and machinery. III. Monthly interest @13%. IV. Respondent No. 1 was entitled to charge penal interest @2% over and above the interest rate in case of delay or default in submission of stock statements and renewal papers. V. Primary and collateral security as detailed therein. 15. The Respondent No. 1 stated that Shri Manas Sarkar- Appellant and Smt. Jayasree Sarkar executed guarantee agreements to pay Respondent No. 1 of the said amount in case of default by the Corporate Debtor . The Respondent No. 1 further stated that the Corporate Debtor filed with Registrar of Company on 14.01.2009 for creation of first charge of Rs. 4.48 crores regarding Hypothecation of property and assets in favour of the Respondent No. 1 which was deposited with Respondent No. 1 by the Appellant on 17.03.2009. 16. The Respondent No. 1 stated that at the request of the Appellant , they agreed to renew original term loan of Rs. 4.48 crores and sanctioned fresh credit limit of Rs. 45 lakhs, thus total amount becoming ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iately regularize the overdues in the accounts over and above the sanctioned limits. 22. The Respondent No. 1 stated that the Corporate Debtor wilfully and intentionally failed and neglected to regularize the accounts and acted contrary to the mandatory terms and conditions of the Credit Sanction Advice Letter dated 25.02.2014. The Respondent No. 1 bank vide its letter dated 03.03.2014 requested the Corporate Debtor to regularize the accounts to avoid the account slipping to NPA in March 2014 vide letter dated 03.03.2014. 23. The Respondent No. 1 emphasised that the Corporate Debtor thereafter vide letter dated 10.03.2014 assured the respondent No. 1 to regularize the said accounts. The Respondent No. 1 further emphasised that the in spite of repeated requests of the Respondent No. 1, the Corporate Debtor failed and neglected to maintain the aforesaid account regularly. The date of default in the loan account of the Corporate Debtor is 31.12.2013 and the loan account was classified as NPA on 31.03.2014 as stated in the supplementary affidavit dated 17.12.2021. 24. The Respondent No. 1 submitted that he was constrained to issue Notice dated 02.06.2014 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tory guidelines of RBI the Respondent No. 1 failed to meet the statutory requirements and therefore is not entitled for proceeding under Section 7 of the Code. 28. The Appellant also alleged that there was no default in terms of Section 2(12) of the Code and this fact can be corroborated by taking into consideration that in the original application filed by the Respondent No. 1 before the Adjudicating Authority under section 7 of the Code, no date of default was indicated and the Respondent No. 1 had to seek permission from the Adjudicating Authority to file the supplementary affidavit wherein he indicated the date of default as 31.03.2013. According to the Appellant , the Adjudicating Authority erred in admitting the Corporate Insolvency Resolution Process against the Corporate Debtor . 29. The Appellant stated that he never acknowledged the debt as outstanding as claimed by the Respondent No. 1 and in the various Balance-Sheets from 2012-13 to 2017-18, the Corporate Debtor merely stipulated the credit facilities obtained by the Appellant and which cannot be treated as acknowledgment of debt. 30. It is further the case of the Appellant that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... same class, whichever is less: Provided further that for financial creditors who are allottees under a real estate project, an application for initiating corporate insolvency resolution process against the corporate debtor shall be filed jointly by not less than one hundred of such allottees under the same real estate project or not less than ten per cent. of the total number of such allottees under the same real estate project, whichever is less: Provided also that where an application for initiating the corporate insolvency resolution process against a corporate debtor has been filed by a financial creditor referred to in the first or second provisos and has not been admitted by the Adjudicating Authority before the commencement of the Insolvency and Bankruptcy Code (Amendment) Act, 2020, such application shall be modified to comply with the requirements of the first or second provisos within thirty days of the commencement of the said Act, failing which the application shall be deemed to be withdrawn before its admission.] Explanation. - For the purposes of this sub-section, a default includes a default in respect of a financial debt owed not only to the applican ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 34. From reading the above Section 7 of the Code, it is therefore clear that it lays down the procedure for initiation of the CIRP by a Financial Creditor who can file an application before the Adjudicating Authority along with proof of default and name of Resolution Professional proposed to act as Interim Resolution Professional . The Adjudicating Authority is required to ascertain the existence of default within 14 days from the date of receipt of the application. It is further noted that once the Adjudicating Authority is satisfied regarding existence of default and that the application is complete and no disciplinary proceeding is pending against the proposed Interim Resolution Professional , the Adjudicating Authority is required to admit the application and is not required to look into any other criteria for the admission of the application. It is nobody s case to cause delay in admission of CIRP on miscellaneous grounds. 35. This Appellate Tribunal also notes that the Hon ble Supreme Court of India as well as this Appellate Tribunal itself has, held in catena of judgments that there is no scope for judicial interventions and over reach by the Adjudicating ..... X X X X Extracts X X X X X X X X Extracts X X X X
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