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TMI Blog2023 (7) TMI 887X X X X Extracts X X X X X X X X Extracts X X X X ..... venor For Appellant : Mr. R. Balasubramani, Sr. Advocate with Mr. Akhilesh Shrivastava, CMA Sumit P. Sunita Yadav, Abhigya Kushwaha, Advocates For the Respondents : Malvika Trivedi, Sr. Advocate with Ashish Choudhury, Akash Tandon, Advocates for UCO Bank. Madhumita Bhattacharjee, Srija Choudhury, Advocates for State of WB Mr. Akash Agarwal, For IRP ORDER ASHOK BHUSHAN , J. This Appeal by a Suspended Director of the Corporate Debtor - M/s Darjeeling Organic Tea Estates Pvt. Ltd. has been filed challenging the order dated 28.10.2022 passed by National Company Law Tribunal, Kolkata bench (Court-II) admitting Section 7 Application filed by the UCO Bank and appointing Respondent No.2 - Mr. Santanu Brahma as Interim Resolution Professional ("IRP"). 2. Brief facts of the case, giving rise to this Appeal are: (i) The Corporate Debtor is a Company, which is running several Tea Gardens. In the year 2017, UCO Bank issued sanction letter to the Corporate Debtor, granting approval to the Corporate Debtor for renewal/ review of various credit facilities. The Corporate Debtor requested the Financial Creditors including the UCO bank for approval of change of Management. (ii) The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orate Debtor. The letter further mentioned that Company has decided to sell six Gardens to protect the livelihood of 7000 workers and their dependents living in these Gardens. The Corporate Debtor was facing difficulty in running the Gardens and hence accepted the offer made by the Lemongrass to invest. (viii) The Adjudicating Authority on 28.10.2022 admitted the Section 7 Application and appointed Respondent No.2 as IRP. 3. This Appeal was filed challenging the order dated 28.10.2022 in this Tribunal and was heard on 04.11.2022, on which date the Appeal was adjourned to 07.11.2022 to give opportunity to the Bank and a direction was issued to IRP to not constitute the Committee of Creditors ("CoC"). The Appeal was heard on 07.11.2022, on which date this Tribunal recorded a statement of UCO Bank that OTS proposal has already been received and is under consideration and time of few weeks is required. Noticing the said statement, this Tribunal on 07.11.2022 stayed the impugned order. Indian Bank has also filed an IA No.4221 of 2022 for impleadment. IA No.4291 of 2022 was filed by the Appellant, praying for certain interim directions. The IA Nos.4291, 4221 and 4340 of 2022 were hear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hearing before this Tribunal and has expressed its agreement. By letter 18.04.2023, the Corporate Debtor communicated to the Bank that offer of the Corporate Debtor was 91% of the OLB. By letter dated 18.04.2023, the Corporate Debtor has informed that Rs.46 crores is the best offer, but during hearing in the Tribunal the Appellant has expressed their agreement to pay the entire amount of Rs.50.79 Crores as asked by the Bank. However, the Bank has not issued any letter accepting the OTS. The Bank has obtained several Valuation Reports in respect of the Tea Gardens, which valuation Reports were below the OTS offer, which was made. In pursuance of OTS proposal, M/s Lemongrass has already deposited an amount of approximately Rs.04.10 Crores in the "No Lien" account/ Escrow account. It is submitted by learned Counsel for the Appellant that on 03.05.2023 the Appellant has communicated their acceptance to pay Rs.50.79 Crores. It is submitted that Bank has offered the amount of Rs.50.79 Crores, which the Appellant is ready to pay with the assistance of M/s Lemongrass. The Bank cannot go back from its offer and after the letter dated 03.05.2023 sent by the Corporate Debtor to the Bank, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .39.45 Crores. Again on 24.02.2023, another valuer namely M/s. Biplob Nandy and Associates was engaged by the Bank, who gave value of seven Tea Estates approximately Rs.49.81 Crores. It is submitted that the valuation by the Valuers were on the lower side, hence, the Bank had not accepted the Valuation Reports, nor has accepted the OTS offer. Default in payment of the debt of the Bank being an admitted fact, the Adjudicating Authority rightly admitted the Section 7 Application, which does not warrant any interference in this Appeal. 8. The learned Counsel for the IRP has referred to its Reports, which have been filed on 23.01.2023 and 07.07.2023. It is submitted that subsequent to the orders of this Tribunal on 21.11.2022 the IRP placed the details of the expenditure. It is stated that the Corporate Debtor has been transferring resources and assets, being tea stock, inventory, warehousing facilities etc. to different companies. The Corporate Debtor has taken several actions without obtaining any permission or leave of the Tribunal and there is an attempt to alienate, transfer and assign of the assets of the Corporate Debtor being its leasehold rights vested in Ambootia Tea Garden ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated 17/06/2022 from the borrower company wherein they have requested for allowing time up to 30/06/2022 to submit OTS proposal from the company/ new investors. However, it was informed to the lenders that the branch has replied vie letter no. FCC/IEP/CR/525/2022-23 dated 17/06/2022 copy enclosed as annexure - I. It was further informed that the letter was just an EOI from the company and no detailed OTS plan or upfront amount has been received. Hence the bank has stated that the letter has been treated just for information purpose and Bank is free to take strict recovery action against the company to recover banks dues."" 14. As noted above, when the Appeal was taken up for hearing, learned Counsel for the Appellant has submitted that a proposal of One Time Settlement has already been given to the UCO Bank. The statement of Counsel for the UCO Bank was recorded in the order dated 07.11.2022 that OTS proposal has been received and time of few weeks shall be required to consider the OTS proposal. The order dated 07.11.2022 is as follows: "07.11.2022: This Appeal has been filed against impugned order passed by the Adjudicating Authority on 28.10.2022 allowing Section 7 applicatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re-negotiate with the borrower company to improve the OTS offer upto OLB. In view of the above, we request you to improve the OTS offer up to OLB which is Rs.50.79 Crore. Regards, FCC India Exchange Place UCO Bank Kolkata" 16. In the letter dated 18.04.2023 written on behalf of the Corporate Debtor to the Bank it was communicated that Rs.46 Crores is their best offer. The letter dated 18.04.2023 of the Corporate Debtor, was replied on 25.04.2023 by the Bank where the offer given on 18.04.2023 was declined by the Bank. The letter dated 25.04.2023 read as follows: "Ref : FCC/IEP/REC/149/2023023 Date: 25/04/2023 The Director(s) M/s Darjeeling Organic Tea Estates Pvt. Ltd. C/o Regus Grandeur Officers Pvt. Ltd. PS Arcadia, 9th Floor, 4A Abanindra Nath Thakur Sarani Kolkata 700016. Dear Sir, Sub: Decline of your OTS Proposal We refer to your letter dated 18-04-2023 wherein you stated that Rs.46.00 crores OTS offer as total outstanding dues is your best offer and further reiterated that seeing the situation of tea estates and total accumulated liabilities sum of Rs.46.00 crores is your best offer to the bank as an OTS of total outstanding dues. Howe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ught to have exercised its discretion in rejecting Section 7 Application. 21. The learned Counsel for the Bank in reply to the said submission contends that judgment of the Hon'ble Supreme Court in Innoventive Industries Ltd. vs. ICICI Bank and Anr. - (2018) 1 SCC 407 covers the issue. The judgment of the Hon'ble Supreme Court in E.S. Krishnamurthy v. Bharath Hi-Tecch Builders (P) Ltd. - (2022) 3 SCC 161 also covers the case. A recent judgment of the Hon'ble Supreme Court in Civil Appeal No.7121 of 2022 - M. Suresh Kumar Reddy vs. Canara Bank has also been relied. The Hon'ble Supreme Court in M. Suresh Kumar Reddy after referring to the judgment of Vidarbha Industries and E.S. Krishnamurthy, concluded in paragraph 13 in following words; "13. Thus, it was clarified by the order in review that the decision in the case of Vidarbha Industries was in the setting of facts of the case before this Court. Hence, the decision in the case of Vidarbha Industries cannot be read and understood as taking a view which is contrary to the view taken in the cases of Innoventive Industries and E.S. Krishnamurthy. The view taken in the case of Innoventive Industries still holds good." 22. In the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... another independent Valuer, who submitted the Valuation of seven Tea Estates as approximately Rs.49.81 Crores. The Bank in the affidavit has however pleaded that Valuation Reports were on the lower side and proper Valuation could not be conducted. Be that as it may, last of the Valuation Report obtained by the Bank was for Rs.49.81 Crores and the outstanding balance of the Corporate Debtor was Rs.50.79 Crores and the Corporate Debtor has accepted offer of the Bank as indicated in the oral submissions as well as by email dated 03.05.2023 sent to the Bank. It is further relevant to notice that a strategic investor Lemongrass has also invested certain amount in the Corporate Debtor after submission of proposal on 26.10.2022. The Bank in its correspondence with the Corporate Debtor has time and again advised to increase the offer. Hence, by letter dated 10.04.2023, the Bank has asked the Corporate Debtor to increase the amount to the Outstanding Ledger Balance, i.e. Rs.50.79 Crores. When offer is given by the Bank to increase the amount to Outstanding Ledger Balance, which has been accepted by the Corporate Debtor, it has to be given some sanctity. We, however, in the facts of the pres ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hts, either by reviving the Section 7 Application filed earlier or to take up any proceedings in accordance with law. 28. All other Intervention Applications filed in this Appeal stand disposed of. 29. The Company Appeal (AT) (Insolvency) No.1507 of 2022 filed by M/s Lemongrass Organic Tea Estates Private Limited, who has also challenged the order dated 28.10.2022 is also disposed of in terms of the order disposing of Company Appeal (AT) (Insolvency) No.1323 of 2022. 30. The Company Appeal (AT) (Insolvency) No.1323 of 2022 as well as The Company Appeal (AT) (Insolvency) No.1507 of 2022 are disposed of in following manner: (I) The order dated 28.10.2022 is not interfered with. (II) The order dated 28.10.2022 shall not be given effect to for a period of 60 days, to enable the UCO Bank to consider the OTS proposal lastly submitted by letter dated 03.05.2023 by the Corporate Debtor, accepting the offer of Outstanding Ledger Balance of Rs.50.79 Crores as given by the UCO Bank on 10.04.2023. It shall be open for the UCO Bank to obtain such other relevant information for considering the proposal as may be advised. The Corporate Debtor may also enter into dialogue with the UCO Bank ..... X X X X Extracts X X X X X X X X Extracts X X X X
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