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2020 (1) TMI 1235 - Tri - Insolvency and BankruptcyMaintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of dues of petitioner - existence of debt and dispute or not - correct computation or not - privity of contract - stamp duty not paid - default in the petition - HELD THAT - There is a default on the part of the Corporate Debtor in making the payment towards the liability to the Petitioner. Despite repeated requests and reminders in the form of notices, the Corporate Debtor failed to repay the dues - the contention made by the Corporate Debtor that they are not bound to repay the amount because it was the Debenture Subscription Agreement that was entered into both the parties which cannot be called to be a loan but is merely an investment, does not stand - It is very clear that the Debenture Subscription Agreement is as good as a Loan Agreement and hence in the present matter, the Corporate Debtor is bound to pay the dues to the petitioner and cannot run away from his liability. Secondly, the documents submitted by the petitioner are enough to establish the debt as well as the default on the part of the Corporate Debtor. Computation of the amount, correct or not - HELD THAT - The amount due under the agreement were secured by the Corporate Debtor by way of Deed of Guarantee which is also admitted by them. The amount of ₹ 41,25,10,306/- which is claimed to be in default by the petitioner includes the outstanding principle amount, interest as per IRR and penal interest as per the particulars of claim which is annexed as Annexure K of the copy of petition. Absence of privity of contract - HELD THAT - This contention does not stand because clause 18.2.1 of the Debenture Subscription Agreement clearly entitles the petitioner to exercise rights upon the occurrence of an event of default, being, inter alia, accelerating the redemption of the debentures, enforcing the security documents. Consent from such debenture holders not taken - HELD THAT - After reading the Board Resolution annexed by the petitioner at Annexure A of the copy of petition, it is observed that it does contain and clearly mentions to institute an insolvency petition and therefore, there is no scope for any ambiguity in relation thereto. Whether the Stamp Duty is not duly paid on the Deed of Guarantee? - HELD THAT - According to Section 29 of The Indian Stamp Act, 1899 wherein it is mentioned that it is for the one executing the instrument to pay the stamp duty, and here, in this matter, it was the Corporate Debtor who was to pay the Stamp Duty because he had executed the said Deed of Guarantee which is in question before this Bench - It is also observed that the Corporate Debtor on one hand relies on the said Deed of Guarantee and on the other hand denies its evidentiary value and therefore, this contention raised has no credibility and therefore cannot be relied upon. Default in the petition or not - HELD THAT - After going through the documents it is observed that the date 30/09/2018 was the date of redemption for the repayment of the last 20% of the principle amount and not the date of which the Corporate Debtor could repay the entire amounts due under the Debenture Subscription Agreement and therefore, there was no moratorium time available to repay the debt as the entire moratorium period got expired on 31/03/2017.fter going through the documents it is observed that the date 30/09/2018 was the date of redemption for the repayment of the last 20% of the principle amount and not the date of which the Corporate Debtor could repay the entire amounts due under the Debenture Subscription Agreement and therefore, there was no moratorium time available to repay the debt as the entire moratorium period got expired on 31/03/2017. All the contentions of the Corporate Debtor do not stand because of the abovementioned reasons and due to the existence of debt and default being made on the part of the Corporate Debtor in making the payment to the petitioner. The amount in default is well above the minimum required amount of ₹ 1 Lakh. Thus, it is to be noted that this petition fulfils all the requisite conditions to admit a petition under Section 7 of the Insolvency and Bankruptcy Code, 2016 and therefore, the petition deserves to be admitted - on perusal of the documents filed by the Creditor, is of the view that the Corporate Debtor defaulted in repaying the loan availed. Application admitted - moratorium declared.
Issues Involved:
1. Default in repayment under the Debenture Subscription Agreement. 2. Nature of the Debenture Subscription Agreement (investment vs. loan). 3. Validity of the petition under Section 7 of the IBC. 4. Computation of the outstanding amount. 5. Authority to invoke the corporate guarantee. 6. Stamp duty on the Deed of Guarantee. 7. Moratorium period and redemption of debentures. 8. Admissibility of the petition under Section 7 of the IBC. Issue-wise Detailed Analysis: 1. Default in repayment under the Debenture Subscription Agreement: The petitioner, a finance company, disbursed ?20,00,00,000/- to the Corporate Debtor under a Debenture Subscription Agreement dated 27/03/2015. The Corporate Debtor committed default in repayment, with the outstanding amount totaling ?41,25,10,306/- as of 25/03/2019. Despite notices and reminders, the Corporate Debtor failed to repay the dues. 2. Nature of the Debenture Subscription Agreement (investment vs. loan): The Corporate Debtor contended that the Debenture Subscription Agreement was an investment, not a loan. However, the tribunal relied on the National Company Law Appellate Tribunal's decision in Neelkanth Township and Construction Pvt. Ltd. v. Urban Infrastructure Trustees Ltd., which held that a debenture qualifies as a 'financial debt' under Section 5(8) of the IBC, 2016 and Section 2(30) of the Companies Act, 2013. Therefore, the argument that the agreement was merely an investment does not stand. 3. Validity of the petition under Section 7 of the IBC: The Corporate Debtor argued that the petition was not maintainable under Section 7 of the IBC due to the Debenture Trust Deed and Deed of Guarantee, which authorized IL&FS to invoke the corporate guarantee. However, the tribunal found that clause 18.2.1 of the Debenture Subscription Agreement entitled the petitioner to enforce the security documents upon default. 4. Computation of the outstanding amount: The Corporate Debtor disputed the computation of the amount claimed in default. The tribunal observed that the outstanding amount included the principal, interest, redemption premium, and penal interest as per the Debenture Subscription Agreement. The amount due was secured by the Corporate Debtor through a Deed of Guarantee. 5. Authority to invoke the corporate guarantee: The Corporate Debtor claimed that the petition was filed without the consent of other debenture holders and that the Board Resolution did not authorize the initiation of the Corporate Insolvency Resolution Process. The tribunal found that the Board Resolution annexed by the petitioner did authorize the initiation of insolvency proceedings, and the petition was validly filed. 6. Stamp duty on the Deed of Guarantee: The Corporate Debtor argued that the Deed of Guarantee was not duly stamped and hence not enforceable. The tribunal noted that the Deed of Guarantee was executed in New Delhi with sufficient stamp duty paid. The obligation to pay stamp duty lay with the Corporate Debtor, who executed the Deed of Guarantee. The tribunal also distinguished the case from the Supreme Court judgment in Garware Walls Ropes Ltd. v. Coastal Marine Constructions & Engineering Ltd., as it pertained to arbitration proceedings, not IBC petitions. 7. Moratorium period and redemption of debentures: The Corporate Debtor contended that the principal moratorium period was still available. However, the tribunal found that the moratorium period expired on 31/03/2017, and the date 30/09/2018 was for the repayment of the last 20% of the principal amount, not the entire debt. 8. Admissibility of the petition under Section 7 of the IBC: The tribunal concluded that the petition fulfilled all requisite conditions under Section 7 of the IBC. The Corporate Debtor defaulted in repaying the loan, and the existence of debt and default was reasonably established by the Financial Creditor. The petition was admitted, and an Interim Resolution Professional was appointed to carry out the functions under the Insolvency & Bankruptcy Code. Order: The petition was admitted, and a moratorium was imposed prohibiting the institution or continuation of suits, transferring or disposing of assets, and other actions against the Corporate Debtor. The supply of essential goods or services to the Corporate Debtor was to continue during the moratorium period. Public announcement of the corporate insolvency resolution process was to be made immediately, and an Interim Resolution Professional was appointed.
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