2019 (5) TMI 1799 - Tri - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate debtor failed to make repayment of its dues - existence of debt and dispute or not - HELD THAT - The question arises whether the same claim could be made the basis for filing an application under Section 7 of the Code or it is prohibited. The question is no longer res inteara. In, Dr. Vishnu Kumar Agarwal v. M/S. Piramal Enterprises Ltd. 2019 (2) TMI 316 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI , Company Appeal (AT) (Insolvency) No. 346 of 2018 decided on 08.01.2019, the Learned Appellate Tribunal held that once for same set of claim application under Section 7 filed by the 'Financial Creditor' is admitted against one of the 'Corporate Debtor' ('Principal Borrower' or 'Corporate Guarantor(s)'), second application by the same 'Financial Creditor' for same set of claim and default cannot be admitted against the other 'Corporate Debtor'. A direction stand issued to the RP to admit the said claim as Financial Debt. This is again raised for admission in the present proceeding. Such a course obviously is not permissible in law as laid down in Dr. Vishnu Kumar Agarwal case - Petition dismissed.

Summary

Issues Involved:
1. Triggering of Corporate Insolvency Resolution Process (CIRP) under Section 7 of the Insolvency and Bankruptcy Code, 2016.
2. Default in repayment of loans and restructuring agreements.
3. Classification of the claim as a "Financial Debt."
4. Admissibility of the claim based on previous rejections and duplicacy.

Issue-wise Detailed Analysis:

1. Triggering of Corporate Insolvency Resolution Process (CIRP) under Section 7 of the Insolvency and Bankruptcy Code, 2016:
The ICICI Bank Limited (Financial Creditor) filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016, to initiate the Corporate Insolvency Resolution Process (CIRP) against Era Infrastructure (India) Limited (Corporate Debtor). The Corporate Debtor is a company registered under the Companies Act, 1956, and had defaulted on various credit facilities amounting to INR 200 crores. The Financial Creditor had provided these facilities to the Corporate Debtor and its related entities, secured by various guarantees and securities provided by the Parent Company, M/s. Era Infra Engineering Private Limited.

2. Default in repayment of loans and restructuring agreements:
The Financial Creditor sanctioned a rupee term loan facility of INR 300 crores to the Corporate Debtor, later reduced to INR 200 crores. The payment was secured through a loan purchase agreement and a non-disposal arrangement with the Parent Company. The Corporate Debtor defaulted on the payment obligations, leading to the restructuring of the loan to INR 150 crores and an additional funded interest term loan of INR 42 crores. Despite restructuring, the Corporate Debtor continued to default, leading to the classification of its account as a Non-Performing Asset (NPA) on 28.09.2017.

3. Classification of the claim as a "Financial Debt":
The Tribunal had previously determined that the agreements and arrangements involved constituted a "Contract of Guarantee" under Section 126 of the Contract Act, 1872. The Corporate Debtor was identified as the "Surety," and the Financial Creditor as the "Creditor," with the essential ingredients of a contract of guarantee being fulfilled. The Tribunal had directed the Resolution Professional to admit the claim of the Financial Creditor as a Financial Debt, amounting to INR 700.75 crores, and to include the Financial Creditor in the Committee of Creditors (COC) with the corresponding voting share.

4. Admissibility of the claim based on previous rejections and duplicacy:
The Tribunal addressed whether the same claim could be the basis for filing an application under Section 7 of the Code, considering the previous rejection by the Resolution Professional of the Parent Company. The Tribunal referred to the case of Dr. Vishnu Kumar Agarwal v. M/S. Piramal Enterprises Ltd., where it was held that once an application under Section 7 is admitted against one Corporate Debtor, a second application for the same claim cannot be admitted against another Corporate Debtor. Based on this precedent, the Tribunal concluded that the claim could not be entertained due to duplicacy.

Conclusion:
The petition filed by the Financial Creditor was dismissed on the grounds of duplicacy, as the same claim had already been admitted in the CIRP of the Parent Company. The Tribunal emphasized that such a course is not permissible under the law, as laid down in the Dr. Vishnu Kumar Agarwal case.