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2023 (1) TMI 811 - AT - Insolvency and BankruptcyMaintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - application rejected by the Adjudicating Authority on the ground that the Corporate Debtor discharged the obligation as per the terms of the guarantee and therefore there was no debt due from the Corporate Debtor - HELD THAT - On perusing the valuable opinions of Hon ble Justice Bansi Lal Bhat, Member (Judicial) and Hon ble Mr. Balvinder Singh, Member (Technical) dated 25th September, 2019, I respectfully agree with the reason given by Hon ble Justice Bansi Lal Bhat, Member (Judicial) in his opinion. It was held that it can be safely stated that the Respondent Corporate Guarantor, in the face of provision in the approved scheme of amalgamation and consequent merger, justifiably pleaded that there was no debt payable in law or in fact as the condition of additional equity of Rs. 125 Crores had been fulfilled and the obligation stood discharged. There being no debt payable in law or in fact, question of default does not at all arise. The conclusions drawn by the Adjudicating Authority leading to rejection of the application under Section 7 of the I B Code cannot be termed erroneous. On consideration of the material on record we find no sufficient reasons to adopt a view different than the one taken by the Adjudicating Authority as such view and finding based on appreciation of the relevant material placed before it is the only probable view warranted in the circumstances of the case. Since, I agree with reason assigned by Hon ble Justice Bansi Lal Bhat, Member (Judicial) in his opinion dated 25th September, 2019 at paragraphs 10, 11 and 12 which are quoted above, no fresh reason is required to be assigned by me. The instant Appeal is devoid of merit - Appeal dismissed.
Issues Involved:
1. Whether the Corporate Debtor (Visa Infrastructure Ltd.) had discharged its obligation under the Deed of Corporate Guarantee. 2. Whether the infusion of additional equity of Rs. 125 crores was fulfilled as per the terms of the CDR Package. 3. Whether the default under Section 7 of the Insolvency and Bankruptcy Code, 2016 (IBC) was established. 4. Whether the initiation of Corporate Insolvency Resolution Process (CIRP) against another Corporate Guarantor precluded initiation against the Respondent. Detailed Analysis: 1. Discharge of Obligation under Deed of Corporate Guarantee: The Appellant (State Bank of India) argued that the Corporate Debtor had not discharged its obligation under the Deed of Corporate Guarantee, as the additional equity of Rs. 125 crores was not infused in the form of cash. The Respondent contended that the obligation was fulfilled through the merger of Visa Bao Limited (VBL) with Visa Steel Limited (VSL), which resulted in an infusion of equity exceeding Rs. 125 crores. The Tribunal found that the Deed of Guarantee did not specify that the additional equity had to be in cash and that the merger satisfied the condition of additional equity infusion. 2. Infusion of Additional Equity: The Appellant maintained that the additional equity of Rs. 125 crores had to be in cash, while the Respondent argued that the merger of VBL with VSL, which brought in assets valued at Rs. 460 crores, fulfilled the requirement. The Tribunal noted that the CDR Package did not explicitly mandate cash infusion and allowed for equity infusion through various means, including mergers. The Tribunal concluded that the merger met the requirement of additional equity infusion. 3. Establishment of Default under Section 7 of IBC: The Appellant claimed that there was a default in repayment, justifying the initiation of CIRP under Section 7 of the IBC. The Respondent argued that there was no default as the obligation under the guarantee was discharged through the merger. The Tribunal agreed with the Respondent, stating that there was no debt payable in law or fact, and thus, no default occurred. 4. Preclusion of CIRP Initiation against Respondent: The Respondent argued that the initiation of CIRP against another Corporate Guarantor (Visa International Ltd.) precluded the Appellant from initiating CIRP against it for the same debt. The Tribunal found merit in this argument, noting that the Appellant had already initiated CIRP against another guarantor for the same debt, which precluded further proceedings against the Respondent. Conclusion: The Tribunal dismissed the appeal, agreeing with the Respondent's arguments that the obligation under the Deed of Corporate Guarantee was discharged through the merger, which fulfilled the additional equity requirement. The Tribunal found no debt payable in law or fact, and thus, no default occurred. The initiation of CIRP against another Corporate Guarantor also precluded the initiation against the Respondent. The appeal was dismissed with no order as to costs.
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