TMI Blog2024 (4) TMI 968X X X X Extracts X X X X X X X X Extracts X X X X ..... undertaken by the Corporate Debtor and Corporate Debtor was always ready to deposit the amount by 100% cash margin or by giving CBGs. The learned Senior Counsel for the Corporate Debtor has further submitted that after filing of the Appeal the Corporate Debtor has deposited amount of Rs.3.38 crores, which was required by the Bank for extension of two BGs, which were expiring and the amount of Rs.3.38 crores was deposited by the Corporate Debtor, reducing the amount of live BGs to the extent of Rs.4.27 crores only. In the facts of the present case, the ends of justice will be served in directing the Corporate Debtor to deposit the amount of Rs.3.68 crores with the Appellant, which will be kept in no lien account, to be utilized for clearing the liabilities pertaining to outstanding PBGs, if any. The SBI after adjusting all its liabilities towards live PBGs, may refund the balance amount to the Corporate Debtor. On deposit of the amount of Rs.3.68 crores by the Corporate Debtor, the SBI to release all securities over subject facilities. The impugned order of the Adjudicating Authority dated 18.07.2023 dismissing Section 7 Application filed by the Appellant, is upheld - The Corporate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... formance Bank Guarantees ( PBG ) aggregating to Rs.30.40 crores. Twenty five percent of the compromise amount, i.e. Rs.11.86 crores was to be paid within three working days of the Sanction Letter. Seventy five percent of compromise amount was to be paid within 90 days of the acceptance of the Sanction Letter. The Corporate Debtor also had to arrange for de-risking of all live bank guarantee outstanding with Counter Bank Guarantees ( CBG ) of other 1st Class Bank acceptable to the Appellant or 100% cash margin for the outstanding live bank guarantee within 90 days of the Sanction Letter. (iv) In pursuance of Sanction Letter dated 27.09.2021, the Corporate Debtor deposited the amount. After Adjudicating Authority granted extension of time for depositing of Rs.47.47 crores, on 01.06.2022 when the case was taken before the Adjudicating Authority, the Financial Creditor made a statement that Corporate Debtor has made the payment of balance amount of Rs.7.47 crores and additional interest of Rs.63 lakhs has also been made by cheque. The Adjudicating Authority vide order dated 01.06.2022, extended the time for replacement of the Bank Guarantees till 30.06.2022. (v) There were corresponden ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Corporate Debtor in de-risking by deposit of 100% cash margin and by recording the aforesaid findings, the Adjudicating Authority dismissed Section 7 Application. The Appellant aggrieved by the said order has filed this Appeal. 3. The Appeal was adjourned on several occasions on the request of the Appellant that it is taking steps to resolve the matter. An additional affidavit has also been filed by the Appellant, bringing on record subsequent letters and correspondences exchanged between the parties. In the additional affidavit, letter dated 13.12.2023, containing the fresh settlement between the parties with regard to live BGs amounting to Rs.7.85 crores was also brought on record. 4. We have heard Shri Krishnendu Datta, learned Senior Counsel appearing for the Appellant and Shri Abhijeet Sinha, learned Senior Counsel appearing for Respondent. 5. Learned Senior Counsel for the Appellant submits that Sanction Letter dated 27.09.2021 contained both the stipulation, i.e., payment of Rs.47.47 crores as well as de-risking of live BGs of Rs.30.40 crores. Although, the Corporate Debtor has made the payment of Rs.47.47 crores, but outstanding live BGs have not been de-risked withi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esh compromise by letter dated 13.12.2023 in response to which the Corporate Debtor made all efforts to submit CBG through the Kotak Mahindra Bank/ ICICI Bank, which was not accepted on the ground that period of one month allowed by letter dated 13.12.2023 has elapsed, whereas the Corporate Debtor has requested for time. It is further submitted that after the aforesaid letter cash margin amounting to Rs.3.38 crores was paid, thereby reducing the values of Bank Guarantees to be de - risked to Rs.4.27 crores. It is further submitted that two BGs have come to an end and expired on 11.04.2024 and as on date the live BGs are only of Rs.3.68 crores. The Corporate Debtor has always expressed its willingness to deposit 100% cash margin or by CBG, which due to one or other reason has not been accepted by the SBI. The Corporate Debtor has requested the SBI to issue No Due Certificate and also to release all charges, securities and guarantees with respect to the facilities sanctioned by handing over all original security documents, which was not accepted by the SBI. On 12.04.2024, the SBI again wrote to the Corporate Debtor that compromise has failed by referring to earlier letter sent by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irms that the payment of Rs.7.47 crore has been made by the Corporate Debtor to the Financial Creditor before 31.05.2022 in compliance of the orders of this Bench. However, additional interest of about Rs.63 lakh has been made by the Corporate Debtor today morning by way of current date cheques. The Corporate Debtor will ensure that cheques of Rs. 63 lakh (Approx.) are cleared on presentation by the Financial Creditor. As the time is allowed up to 30.06.2022 for replacement of the Bank Guarantees, post this matter for further consideration on 04.07.2022. 4. It is made clear that no further extension on any account will be allowed to the Corporate Debtor for replacement of the Bank Guarantees and in case the Corporate Debtor fails in replacement of the Bank Guarantees to the satisfaction of the Financial Creditor, the Corporate Debtor will be admitted into CIRP. 11. By order dated 01.06.2022, the Adjudicating Authority granted time to the Corporate Debtor till 30.06.2022 to de-risk the live BGs. The Adjudicating Authority in the impugned order noted that the Corporate Debtor had provided 13 CBGs issued by ICICI Bank, amounting to Rs.7.26 crores as against total outstanding of Rs.15. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... attention to Order dated 31.03.2022 26.05.2022 to contend that the said order(s) had categorically stated that, in the event of Corporate Debtor failing to de-risk the outstanding PBGs by 30.6.2022, it shall be admitted to CIRP as there exists debt, which is in default. 6.3.3. This Bench finds that, as on 30.6.2022, the whole of settlement amount was paid with the settlement period, as extended by this Tribunal from time to time, as well as the additional interest of Rs. 64 lacs in accordance with the terms of settlement sanction clause IX of the other conditions directions of this Tribunal to compensate the Financial Creditor for loss of interest because of extended period. 6.3.4. In relation to de-risking of outstanding PBGs as on 30.6.2022, which were also required to de-risked by that date to make the settlement effective, this Bench finds that the Corporate Debtor had offered to provide counter-guarantee from ICICI Bank Kotak Mahindra Bank, subject to the Financial Creditor clarifying whether it would release its security upon submission thereof. This Bench finds that the Financial Creditor, though dis-satisfied with the extension order(s) passed by this Bench, did not file a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... when the Creditor is using Insolvency as an inappropriate substitute for Debt Recovery Procedures. If IBC is purely used for the purpose of Debt Recovery, particularly when the amounts due are small, and the Company is a solvent entity and is a going concern, the question of Reorganising or Resolution of the Company does not arise. This Tribunal in Binani Industries Limited Vs. Bank of Baroda Anr. , Company Appeal (AT) (Ins.) No. 82 of 2018, has differentiated between Recovery and Resolution and has observed that IBC is not a Recovery Proceeding. Recovery dispossesses the Corporate Debtor of its assets while a Resolution is an effort to keep it afloat . 13. The Adjudicating Authority noticed that entire settlement amount having been paid, has rightly taken the view that there is no debt due on which Section 7 Application can be admitted. The Adjudicating Authority found that the live BGs of Rs.30.40 crores, which was required to be derisked as per settlement dated 27.09.2021, had reduced to Rs.8.63 crores at the time of consideration of the Application and the Adjudicating Authority has noted that the Corporate Debtor had offered to provide counter-guarantee from ICICI Bank, which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of Rs.3.38 crores, which was required by the Bank for extension of two BGs, which were expiring and the amount of Rs.3.38 crores was deposited by the Corporate Debtor, reducing the amount of live BGs to the extent of Rs.4.27 crores only. Further, the case of the Corporate Debtor is that after expiry of two BGs on 11.04.2024, today, the live BGs, which need to be de-risked are only to the extent of Rs.3.68 crores. 15. In the facts of the present case, we are of the view that ends of justice will be served in directing the Corporate Debtor to deposit the amount of Rs.3.68 crores with the Appellant, which will be kept in no lien account, to be utilized for clearing the liabilities pertaining to outstanding PBGs, if any. The SBI after adjusting all its liabilities towards live PBGs, may refund the balance amount to the Corporate Debtor. On deposit of the amount of Rs.3.68 crores by the Corporate Debtor, the SBI to release all securities over subject facilities. 16. In view of the foregoing discussions, we dispose of this Appeal in following manner: (I) The impugned order of the Adjudicating Authority dated 18.07.2023 dismissing Section 7 Application filed by the Appellant, is up held ..... X X X X Extracts X X X X X X X X Extracts X X X X
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