2018 (1) TMI 1246 - Tri - Insolvency and Bankruptcy

Corporate Resolution Process - Corporate Debtor defaulted in making repayment of USD in respect to the external borrowing of USD 15,895,000 and working capital facilities of ₹ 335,50,00,000 availed by Ruchi Infrastructure Limited in the year 2012 - Whether the Power of Attorney given to Pallav Sangal is defective or not? - Held that - Considering the size of the company, the order passed by the Hon ble NCLAT is distinguishable from the facts of this case, for there being no objection from the bank s side and there being no material from the debtor side to disprove that this authorization given in favour of Pankaj Jain is not valid one, we hereby hold that 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 -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. 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 - 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 - Though IBC is definitely a new enactment, the subject dealt with by this enactment is not new to us, because in the past it was spread in 2-3 enactments. In view of the same, we are of the view that 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. We are of the view that the Petitioner herein has furnished all the material to prove the existence of debt and occurrence of default. In view of the same, this Bench hereby admits this Petition

Issues Involved:
1. Validity of Power of Attorney.
2. Certification of Statement of Accounts under Bankers’ Books of Evidence Act, 1891.
3. Defectiveness of Certificate of Registration of Charge.
4. Adequacy of Stamping on Facility Agreement.
5. Impact of Pending Appeal on Dismissal of Winding Up Petition.
6. Effect of Reserve Bank of India Directives.
7. Applicability of Insolvency & Bankruptcy Code to ECB Facility governed by English Law.

Issue-wise Detailed Analysis:

1. Validity of Power of Attorney:
The Corporate Debtor claimed the Power of Attorney (PoA) given to Pallav Sangal was defective, arguing that Zarin Daruwala, who issued the PoA, lacked the authority as her PoA predated the Insolvency & Bankruptcy Code (IBC). The Tribunal found that Zarin Daruwala had overarching authority to manage the bank's operations in India, including initiating court proceedings. The Tribunal held that the PoA was valid, as it was executed according to the bank's procedures and the Companies Act of Singapore.

2. Certification of Statement of Accounts under Bankers’ Books of Evidence Act, 1891:
The Corporate Debtor argued that the bank's statement of accounts was not properly certified. The Tribunal noted that the bank had filed the necessary certificate as required under Section 2(A) of the Bankers’ Books of Evidence Act, making the statement admissible.

3. Defectiveness of Certificate of Registration of Charge:
The Tribunal found no defect in the Certificate of Registration of Charge over the assets of the Corporate Debtor, dismissing the Corporate Debtor's objections on this ground.

4. Adequacy of Stamping on Facility Agreement:
The Corporate Debtor argued that the Facility Agreement was inadequately stamped. The Tribunal noted that the Corporate Debtor failed to specify the required stamp duty amount and stated that the agreement was stamped with ?100 as per Article 5(b) of the Maharashtra Stamp Act, 1958. The Tribunal held that the objection was without merit.

5. Impact of Pending Appeal on Dismissal of Winding Up Petition:
The Corporate Debtor claimed that the pending appeal on the dismissal of a winding-up petition should affect the current proceedings. The Tribunal held that the mere pendency of an appeal does not equate to a winding-up petition being pending and does not bar the initiation of insolvency proceedings under the IBC.

6. Effect of Reserve Bank of India Directives:
The Corporate Debtor argued that the RBI directives under the Banking Regulations (Amendment) Act, 2017, should impact the proceedings. The Tribunal dismissed this argument, stating that the RBI's directives did not preclude the filing of insolvency petitions under the IBC.

7. Applicability of Insolvency & Bankruptcy Code to ECB Facility governed by English Law:
The Corporate Debtor contended that the ECB facility governed by English Law should be adjudicated in England, not India. The Tribunal held that since the Corporate Debtor is located in India and governed by Indian laws, the IBC proceedings were applicable, dismissing the objection.

Conclusion:
The Tribunal found that the Corporate Debtor had availed loan facilities and defaulted on repayments. None of the objections raised by the Corporate Debtor were found to be sustainable. Consequently, the Tribunal admitted the petition under Section 7 of the IBC, initiating the Corporate Insolvency Resolution Process (CIRP) and appointing an Interim Resolution Professional. The Tribunal also imposed a moratorium on all suits, proceedings, and actions against the Corporate Debtor.

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