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2017 (12) TMI 1766 - Tri - IBCMaintainability of application - initiation of CIRP - Corporate Debtor defaulted in making repayment in respect to ECB facility - existence of debt and default or not - Whether there is any defect in the Power of Attorney as stated by the Debtor or not? - HELD THAT - The ground reality is, debt and default are not in dispute, that means the creditor proved its case; law cannot become an impediment to achieve justice basing on this reality. In the section of law or in the Rules, it has nowhere been mentioned that power of attorney should not file a case on behalf of the company, it only says that financial creditor can file. The terminology of authorised person is generic in nature, whereas, power of attorney is specific in nature. The phrase authorised person is a caption in general, encompassing the caption of power of attorney , because power of attorney is also nothing but authorisation with more rigours. Moreover, the word Authorised Person is loosely used without defining it, therefore, the usage of this word Authorised Person in the form annexed to Rules cannot invalidate the power of attorney. Power of Attorney defines principal and agent relationship. When an agent is chosen to deal with certain subjects, it need not be seen in which form that subject is, the point to be seen whether subject matter authority is given to him or not - this power of attorney is binding on the creditor bank, therefore, this power of attorney shall be held as valid authorization to proceed against the debtor. Whether pending of appeal over the order dismissing winding up petition against the Corporate Debtor, will have any bearing over adjudication of this case or not? - HELD THAT - If the proposition of law does not stop the decree upon which appeal is filed, it is far fetching to say that IBC proceedings shall not be initiated looking at an appeal pending over some other proceedings filed against this Corporate Debtor. For the sake of clarity, we reiterate that winding up petition was dismissed against this very corporate debtor. Therefore, this argument of the corporate Debtor counsel saying this case shall not proceed because of pendency of an appeal over the dismissal order over the winding up petition does not hold any merit. Whether this case has to be postponed or not on the ground that on reference (in the matter of Union Bank of India vs. Era Infra Engineering Ltd. 2017 (9) TMI 1078 - NATIONAL COMPANY LAW TRIBUNAL, NEW DELHI to the larger Bench on the issue of as to that whether proceeding under IBC can be triggered while winding up petition pending before the respective High Courts against the same Corporate Debtor? - HELD THAT - Since no winding up petition is pending before High Court as of now against this corporate debtor, except an appeal on dismissal order, this petition cannot be kept under suspension by looking at a fight this very corporate debtor fighting before Appellate Authority for confirmation of the original order. In view of the same the ratio decided in those cases is not applicable to the present case. Whether Reserve Bank of India directives pursuant to the Banking Regulations (Amendment) Act, 2017 has any bearing on adjudication of this case or not? - HELD THAT - Any circular that is in recommendatory in nature and suggesting IBC proceedings in 12 accounts will not amount to depriving other accounts to be filed before this Adjudicating Authority under IBC provided they fall within the ambit of IBC. Henceforth, we have not found any merit in this argument canvassed by the corporate debtor. Whether Facility Agreements have been inadequately stamped as stated by the Corporate Debtor, if so, whether this petition can be admitted basing on such inadequately stamped Agreement? - HELD THAT - The corporate debtor counsel has nowhere mentioned how much stamp duty is to be paid, how much is not paid by the Petitioner, his hypothetical argument will not be relevant to decide any case because duty is cast upon the person raising objection. Moreover, facility agreement alone is not the document to prove this case, there is surplus material to prove that debt and default are in existence whereby, this argument is not sufficient enough to deny the claim of Petitioner herein, henceforth, the argument of the corporate debtor is hereby dismissed. Whether formation of Joint Lender Forum will have any bearing over filing of this case or not? - HELD THAT - It has already been held by the Hon'ble NCLAT Innoventive Industries Ltd. v. ICICI Bank Ltd. 2017 (6) TMI 959 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, MUMBAI that JLF proceedings pending against the corporate debtor will not have any bearing on the cases initiated under IBC, therefore, this plea is hereby dismissed without having any further consideration on this point. Whether the Statement of Account filed by DBS is in compliance with Part V Serial No. 7 of Form No. 1 or not? - HELD THAT - The inconsistency is the benchmark to invoke non-obstante clause of this Code upon other enactments. I must also say that when there is a categoric admission falling under Indian Evidence Act, that admission need not be put to proof as envisaged under Section 58 of Indian Evidence Act. Here, when a specific case has been put to the Corporate Debtor saying that the Corporate Debtor borrowed money and failed to repay the same, this Corporate Debtor has nowhere denied about existence of debt and occurrence of default. The Petitioner herein has furnished all the material to prove the existence of debt and occurrence of default. Petition admitted - moratorium declared.
Issues Involved
1. Validity of the Power of Attorney given to Pallav Sangal. 2. Certification of Statement of Accounts under the Bankers' Books of Evidence Act, 1891. 3. Defectiveness of the Certificate of Registration of Charge over the assets of the Debtor Company. 4. Adequacy of stamping of the Facility Agreement. 5. Impact of an appeal over an order dismissing the winding-up petition. 6. Relevance of Reserve Bank of India directives under the Banking Regulations (Amendment) Act, 2017. 7. Applicability of Insolvency & Bankruptcy Code to the Agreement for ECB facility governed by English Law. Detailed Analysis a. Validity of the Power of Attorney given to Pallav Sangal The Corporate Debtor argued that the power of attorney given to Pallav Sangal was defective because it was issued by Zarin Daruwala, who herself was a power of attorney holder and could not delegate her authority. Additionally, the power of attorney dated 1.4.2016 was issued before the Insolvency & Bankruptcy Code (IBC) came into effect. The Tribunal found that the power of attorney dated 27.6.2017, which was annexed twice by oversight, was valid. The authority given to Zarin Daruwala was comprehensive and included the power to delegate. The Tribunal concluded that the power of attorney was valid and authorized Pallav Sangal to initiate proceedings under the IBC. b. Certification of Statement of Accounts under the Bankers' Books of Evidence Act, 1891 The Corporate Debtor contended that the statement of accounts was not properly certified as per the Bankers' Books of Evidence Act, 1891. The Tribunal noted that the bank had filed the certificate as required under Section 2(A) of the Act and found no merit in the Corporate Debtor's objection. c. Defectiveness of the Certificate of Registration of Charge over the assets of the Debtor Company The Tribunal verified the Certificate of Registration of Charge and found no defects. Thus, this objection was dismissed. d. Adequacy of stamping of the Facility Agreement The Corporate Debtor argued that the Facility Agreement was not adequately stamped. The Tribunal noted that the Corporate Debtor did not specify the amount of stamp duty payable or the deficit. The Tribunal found that the agreement was stamped with ?100 as required under Article 5(b) of the Maharashtra Stamp Act, 1958, and dismissed this objection. e. Impact of an appeal over an order dismissing the winding-up petition The Corporate Debtor argued that the pending appeal over the dismissal of a winding-up petition should impact the current proceedings. The Tribunal noted that no winding-up petition was pending and that the mere pendency of an appeal did not bar the initiation of insolvency proceedings under the IBC. f. Relevance of Reserve Bank of India directives under the Banking Regulations (Amendment) Act, 2017 The Corporate Debtor argued that RBI directives should influence the proceedings. The Tribunal found that the RBI directives did not preclude the initiation of insolvency proceedings under the IBC, as the IBC has a non-obstante clause that overrides other laws. g. Applicability of Insolvency & Bankruptcy Code to the Agreement for ECB facility governed by English Law The Corporate Debtor contended that the ECB facility was governed by English Law and should be adjudicated in English courts. The Tribunal held that since the Corporate Debtor was located in India and governed by Indian laws, the insolvency proceedings could be initiated in India. The Tribunal dismissed this objection. Conclusion The Tribunal found no merit in any of the objections raised by the Corporate Debtor. The Financial Creditor had adequately proved the existence of debt and the occurrence of default. Consequently, the Tribunal admitted the petition under Section 7 of the Insolvency & Bankruptcy Code, 2016, and directed the appointment of an Interim Resolution Professional.
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