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TMI Blog2025 (5) TMI 166X X X X Extracts X X X X X X X X Extracts X X X X ..... vision Bench, Court-II, Kolkata) in CP (IB) No.308/KB/2022, admitting Section 7 application filed by the financial creditor, Pegasus Asset Reconstruction Company Private Ltd. (hereinafter referred to as 'Pegasus'). Aggrieved by the order admitting Section 7 application, the appellant suspended director of the corporate debtor has come up in this appeal. 2. Brief facts necessary to be noticed for deciding this appeal are: i. The corporate debtor M/s. Fairdeal Supplies Limited had obtained financial facilities from Allahabad Bank in the year 2010 for an amount of Rs.34.50 crore to purchase a property at Coimbatore through auction sale conducted in the High Court of Judicature at Madras through official liquidator. ii. Sanction letter dated 05.03.2010 was issued by the Allahabad Bank sanctioning the loan. Under the sanction letter, corporate debtor was to repay the loan amount to 16 equal instalments at Rs.2.16 crore. iii. On request of the corporate debtor by letter dated 30.03.2011, repayment schedule was restructured. iv. The bank declared account NPA on 30.09.2011. v. On 27.09.2013, Allahabad Bank assigned its debt to the Pegasus by a registered assignment deed. vi. A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the financial creditor with revised and enhanced offer and interim order was passed on 08.04.2024, directing the Resolution Professional (RP) not to constitute the Committee of Creditors (CoC), however, RP was to continue to verify the claim received. Appeal came for consideration on 28.05.2024, on which date, the appellant offered to deposit the total principal amount of Rs.22,02,51,721/- as reflected in Part IV of Section 7 application. Appellant was permitted to deposit the amount before 10.07.2024. Interim order was continued. It was noticed by this Court on 10.07.2024, that appellant has deposited the amount as directed. Interim order was passed, directing the IRP not to take any further steps in the Corporate Insolvency Resolution Process (CIRP). 3. We have heard learned sr. counsels, Mr. Krishnendu Dutta and Mr. Abhijeet Sinha appearing for the appellants. Learned senior counsel Mr. Amar Dave and learned counsel Mr. Dinkar Singh has appeared for the Respondent No. 1. Learned counsel, Mr. Gaurav H. Sethi has appeared for the IRP. We have also heard learned counsel for the interveners Punjab and Sind Bank. 4. Learned senior counsel for the appellants, submit that assignment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icient reason for admitting Section 7 application. Learned counsel for the respondent has also relied on the record of default issued by NeSL. It is submitted that debt is acknowledged in the balance sheets of the corporate debtor from financial year 2013-14 till financial year 2019-20, application was well within limitation. By assignment deed dated 27.09.2013 executed at Kolkata, the assignment transfer multiple debt on defaulting borrowers to the assignee for consideration along with the underlying security detailed in schedules attached to the deed of assignment. Dominant purpose of assignment agreement was to transfer/ assign the financial assets along with the underlying security, entitling the assignee to demand receive and recover the debt with its own name and right. The debt is purely an intangible property. 6. Learned counsel for the respondent submits that even if it is accepted that any document relating to the immovable assets situated at Coimbatore was required to be registered at the office of sub-registrar within whose sub-district the whole or some portion of property is situate, that itself shall not make entire assignment, void or inoperative and at best assign ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to the extent of Rs.80 crore. The Punjab and Sind Bank have filed their claim in the CIRP to the IRP amounting to Rs.605,80,89,017/-. 9. We have considered the submissions of the counsel for the parties and perused the records. 10. From the submissions of learned counsel for the parties and the materials on record, following three questions, arise for consideration : I. Whether assignment agreement dated 27.09.2023, executed by Allahabad Bank in favour of Pegasus is void on the strength of Section 28 of the Registration Act, 1908 as substituted by state of Tamil Nadu by Act No.19/1997? II. Whether the application filed by Pegasus under Section 7 on 18.08.2022 was barred by limitation? III. Whether by depositing the principal amount as mentioned in Part IV of Section 7 application by the appellant in the order of this Tribunal dated 28.05.2024, it can be said that debt of financial creditor stand discharged? Question No. I 11. The assignment agreement dated 27.09.2013 is a registered document registered in state of West Bengal. Copy of registered assignment agreement has been filed along with Section 7 application C.P. (IB) No.308/2022, which is registered on 30.04.2014, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d not as a representative or agent of the Assignor and to exercise all other rights of the Assignor in relation thereto. 2.1.2 The Assignor hereby further assigns in favour of the Assignee, all its rights, title and interest in the Financing Documents, all agreements, deeds and documents related thereto and all collateral and underlying Security Interests and/or pledges created to secure, and/or guarantees issued in respect of, the repayment of the Loans, which the Assignor is entitled to. The Assignee shall have the right to enforce such Security Interests, pledges and/or guarantees and appropriate the amounts realized therefrom towards the repayment of the Loans and to exercise all other rights of the Assignor in relation to such Security Interests, pledges and/or guarantees. The Assignor shall transfer/deliver or cause to be transferred / delivered or hold for and on behalf of the Assignee, all such original documents, deeds and/or writings, including but not limited in the Financing Documents, and produce the same promptly upon any request by the Assignee." 14. Clause 2.3 deals with assets assigned. Clause 2.3.1 provides that nothing other than financial assets as defined in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the plant and machineries including scrape lying at the said property at Coimbatore. 3. 12 Vestas make Wind Energy Generators (WEGs with generating capacity of 500 KW each, 1) 4 WEG along with Land ad-measuring 16.075 Acres situates at land survey Nos. 196/2, 497/8,446/2A,496/2, DAI 487 (part), 450 (part), 368/2 (part)and 368/1A (part), 452 (part). 440art), 440/3,465 situated at village Tenkasi, Taluka Tenkasi, District Tirunelveli, State Tamil Nadu and land ad-measuring 0.50 Acres in Land survey no 60 situated in Pattakurechi Village, Taluk Tenkasi, District Tirunelvelli in the State of Tamil Nadu 2) 7 WEG along with Land ad-measuring of 8.095 Acres situated at Land survey Nos 100/4,102/4,102/5 (part), 101/1, 117/1,117/2, 78/2, 78/1, 102/6 situated at Village Ayikudi, Taluka Tenkasi, District Tirunelveli, State Tamil Nadu, and 3) 1 WEG along with a Land ad-measuring of 2.5 Acres at 664/4 (part) situated at Veeranam, Taluka Veerakeralampudur, District Tirunelveli in the State of Tamil Nadu." 16. The facts brought on the record clearly indicates that equitable mortgage is claimed with regard to land and building at Coimbatore. The submission as noted above on behalf of the app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e in the state of Tamil Nadu on the strength of presidential assent dated 27.03.2007 shall be applicable for the state of Tamil Nadu by virtue of Article 264 of the Constitution of India. Thus, place for registering any document relating to land situated in state of Tamil Nadu has to be registered in the office of sub registrar within whose sub-district, the whole or some portion of property is situated. 19. Learned counsel for the appellant has given emphasis on Section 28(b) as applicable in the state of Tamil Nadu, which provides that any document registered outside the state of Tamil Nadu in contravention of the provision of Clause (a) shall be deemed to be null and void. Learned counsel for the appellant has relied on the Division Bench judgment of Madras High Court reported in (2014) 5 CPC 2009 in the matter of 'Veena Textile Ltd. & Ors.' Vs. 'Authorised Officer, IFCI Ltd. & Anr.', which judgment is part of the appeal. In the above case, Division Bench of the High Court has noticed the Section 28(b) as amended by Tamil Nadu Act No. 19/1997 with effect from 29.03.1997, where Division Bench of Madras High Court has held that assigning debt along with underlying securities immo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tate of Tamil Nadu. 21. The question to be considered in the present case is as to whether on the basis of assignment agreement 27.09.2013 application under Section 7 could not have been filed, the said assignment being void by virtue of Section 28(b) of Indian Registration Act as applicable in the state of Tamil Nadu. We have noticed above that a suit has been filed by the appellant challenging the assignment in the year 2017, which is said to be pending. Challenge to assignment agreement could not have been directly raised in Section 7 application. However, in the present case, we need to consider the effect and consequence of Section 28(b) as applicable in the state of Tamil Nadu. Section 28 deals with the registering document relating to land, sub-Clause (a) mentions that every document affecting immovable property and sub-Clause (b) provides that any document registered outside the state of Tamil Nadu in contravention of provisions of Clause (a) shall be deemed to be null and void. The document thus has to be treated null on void in respect to the property situated in the state of Tamil Nadu, which document was required to be registered in state of Tamil Nadu. Thus, assignmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... preme Court in 'Mattapalli Chelamayya' Vs. 'Mattapalli Venkataratnam' reported in (1972) 3 SCC 799. In the above issue question arose with regard to award made by an arbitrator which award was required to be registered by Section 17(1)(b) of the Indian Registration Act and was not registered. Hon'ble Supreme Court noticed that award contained two parts; one part did not affect or relate to any immovable property and contained a personal liability. Hon'ble Supreme Court held two part; severable transaction and it was held that second transaction with regard to the charge being a severable transaction can be validly ignored. In paragraph 11 of the judgment on Hon'ble Supreme Court stated as follows: "11. The direction to pay a sum of money which has been held due and payable by the appellants to the respondents is a direction giving effect to a liability which already existed. It does not create the liability for the first time but merely works out the liability. But the same thing cannot be said about the charge. The charge is created for the first time. The case, therefore, involves two distinct matters - one is a personal liability to pay a certain amount, and the second is an a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to be in default and the date an which the default occurred (Working fur computation of amount and days of default in tabular form) 1. The account was declared as a Non Performing Asset (NPA) on As such the date of default is 30.09.2011. However, the corporate debtor has continuously admitted and acknowledged its default in its Financial statements for the financial year 2013-2014, 2015-2015, 2016-2017, 2015-2016, 2017-2018, 2018-2019, 2019-2020. 2. Allahabad Bank in the year 2012 preferred an application under Section 19 of The Recovery of Debts Due to Banks and Financial Institutions Act 1993 for recovery of money and advance with interest, cost and expenses and other reliefs valued at Rs.27,42,10,233 with interest @ 16.45% per annum with monthly rests from 10.09.2012. 3. The said account was thereafter assigned to the applicant/ Financial creditor and the principal outstanding amount as on September, 27 2013 was 30,31.02,000.00. applicant Rs. The entered appearance before the Debts Recovery Tribunal No.1 and filed application for substitution. The said substitution application was allowed and vide order dated 07.04.2015, the Original Application was amended with the name ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the balance sheet is reflected qua KBL, the original Financial Creditor and not to the Respondent No.1. Be that as it may, it is an undisputed fact that the OTS proposal had been sent by the Appellant not to KBL but to the Respondent No.1 on 21.10.2016. This constitutes sufficient evidence that they were very much aware that assignment of the debt in favour of Respondent No.1 was already in place. From this OTS proposal, it can be safely inferred that the Corporate Debtor had acknowledged their liability to pay to the Respondent No. 1. The acknowledgment of debt in the present facts of the case is therefore clear and unambiguous. 17. The balance sheets also reflect that debt is owed by the Corporate Debtor to the original Financial Creditor. Since the Appellant was well aware of the assignment of the debt, they cannot take advantage of the anomaly in the balance sheet with respect to the continuation of the name of KBL as the debtor. There is no material on record to show that this debt had been liquidated by the Corporate Debtor. That being so, the debt was continuing and there was a default in repayment and nothing on record controverts that position. The Corporate Debtor havin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come the financial creditor of the corporate debtor in terms of the said assignment. Merely, because the balance sheet does not record the name of the applicant herein as a financial creditor from the Financial Year 2013-2014 to 2019-2020 will not take away the fact that the applicant has become a financial creditor, by virtue of the assignment deed executed." 31. We, thus are satisfied that application filed by the financial creditor was not barred by time. Question No. III 32. Coming to Question No. III, Part IV of the application, column 2 (4) mentions the outstanding amount as Rs.145,74,059,265/- as on 04.08.2022. Part IV, Item No. 2, column 4 is as follows: "PART IV PARTICULARS OF THE FINANCIAL DEBT 2 Amount claimed to be in default and the date an which the default occurred (Working fur computation of amount and days of default in tabular form) 4. The present outstanding as on August 04, 2022 is Rs. 1,45,74,89,265.08 (Rupees One Hundred Forty Five Crores Seventy Four Lacs Eighty Nine Thousand Two Hundred Sixty Five and Eight Paisa only) the term loan granted to the corporate debtor. The copy of the Statement of accounts is annexed herewith and marked with the letter ..... X X X X Extracts X X X X X X X X Extracts X X X X
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