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2022 (4) TMI 1255 - Tri - Insolvency and BankruptcyMaintainability pf application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not - extension of loan facility by the petitioner bank to the respondent corporate debtor or not - petition has been filed by duly Authorised officer of DHFL or not - HELD THAT - Admittedly, the Insolvency proceedings were ordered to be initiated on 03.12.2019 against the Petitioner/Financial Creditor herein. Therefore, the Authorization Letter based on Power of Attorney dated 26.09.2017/31.10.2017, issued on the basis of Resolution dated 21.07.2017/23.08.2017 stand terminated on triggering of insolvency proceedings against the Financial Creditors, as Board of Financial Creditor i.e. DHFL was no more in existence after 03.12.2019. On appointment Resolution Professional, it has to be represented by RP only. Further the Administrator was appointed on 24.12.2019, thus, the present petition was required to be filed on behalf of DHFL either through its Administrator or Resolution Professional only and none else. Any such subsequent ratification of the acts deeds of Authorised Officer Mr. Amit Kumar Dubey, does not made him as duly Authorised Officer, as he was also no more in existence due to lack of value valid power of attorney Mr. Vivek Jaigadkar. Had, the petition would have filed before the appointment of Resolution Professional Administrator, the situation would have been different and his acts could have ratified and proceedings would have been taken over by either of these financial creditors. In the absence of any such valid power of attorney, the authorized officer had no legal and valid right authority to file and pursue the present petition. Thus, it is established the ratification of the Power of Attorney/Authorisation Letter both Mr. Mr. Vivek Jaigadkar Mr. Amit Kumar Dubey respectively by the erstwhile Administrator, Dewan Housing Finance Corporation Limited and subsequently by M/s. Piramal Capital Housing Finance Ltd. being Successful Resultant Applicant cannot be held legally valid for the purpose of filing continuation of the present petition under Section 7 of the Code - the present petition has not been filed by Authorised officer of Bank, hence, the same is not maintainable. Whether the petitioner bank actually extended the loan facility to the respondent corporate debtor? - Whether the petitioner bank is entitled to trigger the CIR proceedings on the basis of default in repayment of the amount involved herein? - HELD THAT - No doubt, lacking of security while extending facility of loan may not be ground for not considering the above said amount as financial debt, but in the matter in hand, Apparently that there are number of above said irregularities qua the transactions made by the petitioner, which leads to the conclusion that the same does not come under the purview of 'financial debt' and falls in the category of avoidance transactions being made with malicious intent. It is established that once the party consciously elected to take one plea, it cannot be permitted to say something inconsistent contradictory to that at the same juncture. In the matter in hand, the petitioner consciously took decision to file an application IA No. 257/2021 under Section 60(5), 66 of Code saying that the transaction to the Corporate Debtor as well as other companies were fraudulent collusive in nature. Thus, now, by virtue of this petition under section 7 of code, it cannot be allowed to say that the said transaction was valid being loan in nature. The petitioner cannot be allowed to blow hot cold by taking contradictory inconsistent stands with a malafide intention to take undue advantage to secure an order of initiation of CLR proceedings against the corporate debtor herein. The expression debt due would obviously refers to debts that are due payable under law and not the amount, which was disbursed fraudulently collusively with ulterior motive. Thus, an amount may not be due, if it is not payable in law or in fact and the moment it does not satisfy basic conclusion that a default has actually occurred, the petition cannot be admitted. The respondent clearly pointed and proved that there is no dispute qua the claimed amount of ₹ 187 crores, but and it was in fact not a 'financial debt'. This Tribunal is of affirm view that neither the present petition under section 7 of code has been filed by duly Authorised Officer nor the petitioner herein succeeded to establish that the amount involved in the transaction was actually a 'financial debt' under section 5(8) of code - petition dismissed.
Issues Involved:
1. Whether the present petition has been filed by a duly authorized officer of DHFL and if he is entitled to pursue the same on behalf of PCHFL. 2. Whether the petitioner bank actually extended the loan facility to the respondent corporate debtor. 3. Whether the petitioner bank is entitled to trigger the CIR proceedings based on default in repayment of the amount involved. 4. Relief. Detailed Analysis: Issue 1: Authorization of the Petition The tribunal examined whether the petition was filed by a duly authorized officer or power of attorney holder. The Financial Creditor, Dewan Housing Finance Corporation Ltd. (DHFL), appointed Mr. Vivek Jaigadkar as an attorney who further appointed Mr. Amit Kumar Dubey. However, DHFL underwent insolvency proceedings, and an Administrator was appointed. According to Section 201 of the Indian Contract Act, an agency is terminated if the principal becomes insolvent. Thus, the power of attorney dated 31st October 2017 stood terminated upon the initiation of CIR proceedings against DHFL on 3rd December 2019. The tribunal cited the case of "Palogix Infrastructure Private Limited Vs. ICICI Bank Limited" where it was held that a power of attorney holder is not competent to file an application under Section 7 of the Code. The tribunal concluded that the authorization letter and power of attorney were invalid post-insolvency proceedings, and the petition was not maintainable as it was not filed by a duly authorized officer. Issue 2 & 3: Loan Facility and Default These issues were discussed together. The tribunal noted that the insolvency proceedings against DHFL were initiated on 3rd December 2019, and an Administrator was appointed. The petitioner filed an application alleging that the transactions with the corporate debtor were fraudulent and collusive, based on a forensic audit report. The tribunal observed that the petitioner took contradictory stands by alleging fraud in one application and claiming a valid loan in another. The tribunal referred to the case of "Phoenix Arc Private Limited v. Spade Financial Services Limited & Ors." where it was held that sham transactions do not constitute a financial debt. The tribunal found that the transactions were fraudulent and collusive, and thus, did not satisfy the conditions of a financial debt under Section 5(8) of the Code. The tribunal emphasized that the petitioner cannot approbate and reprobate by taking inconsistent stands in different applications. Issue 4: Relief The tribunal concluded that the petition under Section 7 of the Code was not filed by a duly authorized officer and that the amount involved was not a financial debt. Consequently, the petition was dismissed with no orders to costs. The tribunal also declared that the related interim applications became infructuous and consigned the file to records. Conclusion: The tribunal dismissed the petition under Section 7 of the Insolvency and Bankruptcy Code, 2016, due to the lack of proper authorization and the fraudulent nature of the transactions, which did not qualify as a financial debt.
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