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2019 (2) TMI 1827 - Tri - Insolvency and BankruptcyMaintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its debt - existence of debt and dispute or not - petition challenged on the ground that OBC (Petitioner) had moved this petition under insolvency code without taking into confidence all other members of the consortium - HELD THAT - The question of maintainability as raised from the side of the Corporate Debtor revolves around the terms conditions enshrined in Third Supplemental Inter Se Agreement dated 27.01.2012. It is therefore necessary to examine the clauses of the said agreement with due care. It is undisputed that the Financial Creditor has entered into a Third Supplemental Inter Se Agreement dated 27.01.2012 with three other banks wherein Dena Bank is the Lead Bank in the Consortium of Lenders. It is also undisputed that the Financial Creditor is well aware of the terms of the said agreement and is legally bound by the same. The Financial Creditor has failed to produce 30 days notice to the Lead Bank intimating about the present proceedings against the Corporate Debtor as required by the provisions of the agreement. Nor the Financial Creditor s move of discontinuing/withdrawing the credit facility given to the Corporate Debtor without the consent or directions of the Lead Bank or other members of consortium was in consonance with the terms of the agreement. Hence prima facie it appears that the Financial Creditor has committed a breach of contract therefore it appears that the Financial Creditor is not entitled to file this petition. IBC nowhere says that irrespective of all the contractual obligations a financial creditor can file by itself without the knowledge/approval of other financial creditors. Rather on reading of several clauses of consortium agreement it is clear that all the members shall act in coherence with each other. In one of the clauses i.e. clause (n) it is provided that if a bank is desiring to opt out of the consortium or want to reduce its share has to offer his offer of quitting the consortium to other members of the agreement. In this case the OBC /Financial Creditor has not exercised this option. While OBC remained a member of consortium has taken this step which is prejudicial to the interest of rest of members. The Third Supplemental Inter Se Agreement is not in contravention in any of the provisions of IBC. So it will prevail over the decision of OBC and to be applied along with the provisions of IBC. Granting of various loan facilities is an intricate arrangement and the transactions are dove-tailed with each other therefore it is unethical to a member to keep in mind its own interest without taking due care of the interest of other parties to the consortium agreement. Hence this contention of the Financial Creditor is cliche for deciding the fate of the present case thus rejected. This petition is Dismissed on the ground of maintainability with liberty to file a fresh petition in accordance with law.
Issues Involved:
1. Maintainability of the petition under Section 7 of the Insolvency and Bankruptcy Code (IBC). 2. Compliance with the Third Supplemental Inter Se Agreement among consortium banks. 3. Classification of the Corporate Debtor's account as a Non-Performing Asset (NPA). 4. Alleged breach of contract by the Financial Creditor. Issue-wise Detailed Analysis: 1. Maintainability of the Petition: The primary issue revolves around whether the petition filed by the Financial Creditor under Section 7 of the IBC is maintainable. The Corporate Debtor challenged the maintainability on the grounds that the Financial Creditor did not adhere to the terms of the Third Supplemental Inter Se Agreement, which required prior notice to the Lead Bank (Dena Bank) before initiating any legal proceedings. The tribunal found that the Financial Creditor failed to provide the mandatory 30-day notice to the Lead Bank, thus breaching the contractual obligations. Consequently, the petition was deemed not maintainable. 2. Compliance with the Third Supplemental Inter Se Agreement: The tribunal examined the clauses of the Third Supplemental Inter Se Agreement dated 27.01.2012, which stipulated that any enforcement action against the Corporate Debtor must be taken in consultation with the Lead Bank and other consortium members. The Financial Creditor's unilateral action of filing the petition without notifying the Lead Bank was found to be in violation of the agreement. The tribunal emphasized that the Financial Creditor is legally bound by the terms of the consortium agreement and must act in coherence with the other members. 3. Classification of the Corporate Debtor's Account as NPA: The Financial Creditor classified the Corporate Debtor's account as an NPA on 31.08.2017 due to a default of Rs. 8,22,36,542/-. The tribunal noted that the classification of the account as NPA and the subsequent issuance of SARFAESI Notice u/s 13(2) dated 05.09.2017 were actions taken by the Financial Creditor independently. However, the tribunal highlighted that such actions should have been taken in consultation with the Lead Bank and other consortium members as per the agreement. 4. Alleged Breach of Contract by the Financial Creditor: The Corporate Debtor argued that the Financial Creditor committed a breach of contract by unilaterally withdrawing the credit facilities, which adversely affected the liquidity and performance of the Corporate Debtor. The tribunal found that the Financial Creditor's independent decision to discontinue the credit facility without the consent of the Lead Bank or other consortium members was not in consonance with the terms of the agreement. The tribunal held that the Financial Creditor's actions were prejudicial to the interests of the other consortium members and constituted a breach of contract. Findings and Conclusion: The tribunal concluded that the Financial Creditor's petition under Section 7 of the IBC was not maintainable due to the failure to comply with the Third Supplemental Inter Se Agreement. The tribunal emphasized that parties to a valid and lawful contract are obligated to abide by its terms, and merely initiating proceedings under the IBC does not discharge them from such obligations. The tribunal dismissed the petition on the ground of maintainability, granting the Financial Creditor the liberty to file a fresh petition in accordance with the law. Order: The petition is dismissed on the ground of maintainability, with liberty to file a fresh petition in accordance with the law. Ordered accordingly.
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