9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2020 (10) TMI 327 - AT - IBCMaintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - existence of dispute or not - whether Section 7 Application is maintainable, whether it is pursuant to the RBI Circular dated 12.02.2018, and if the ratio of Dharani Sugars 2019 (4) TMI 230 - SUPREME COURT is applicable? - HELD THAT - On 07.02.2019, the Respondent Company filed WP (Civil) 169 of 2019 Mittal Corp. Ltd. V/s. Reserve Bank of India Or. and the Hon ble Apex Court on 13.02.2019 ordered the parties to maintain status quo . Thereafter, 02.04.2019 in Dharani Sugars (Supra), the Hon ble Supreme Court held that the Circular dated 12.02.2018 issued by the RBI was ultra vires to Section 35AA of the Banking Regulation Act, 1949. It is the main case of the Appellant that the total outstanding amount due and payable by the Corporate Debtor to the consortium is around ₹ 1,077/- Crs, out of which the Appellant s claim is ₹ 2,44,85,29,569.79/-. It is seen from the material on record that though the Appellant forms part of the Joint Lenders Forum (JLF), only the Appellant had filed the Application under Section 7 qua the debts owed by the Respondent Company to the Appellant and not on behalf of the JLF - the pre-requisite for the invocation of the said Circular is that there should be an aggregate exposure of the lender above ₹ 2,000 Crs. and in the instant case the total outstanding claimed debt amounts to ₹ 1,007/- Crs. out of which the amount claimed by the Appellant Bank is to the tune of ₹ 2,44,85,29,569.79/- Crs;. Additionally, it is seen, that for other accounts with aggregate exposure of the lender below ₹ 2,000/- Crs. and at or above ₹ 100/- Crs., the Reserve Bank intended to announce over a two-year period, reference date for implementing the RP to ensure time-bound resolution of all such accounts in default. Further, the documentary evidence filed before us does not evidence any such announcement made with respect to the subject matter. There is force in the contention of the Learned Counsel appearing for the Appellant that the said Circular is not applicable to the instant case and as a consequence the decision of Dharani Sugars (Supra) is also not applicable. The subject matter of the Circular was with respect to debts greater than ₹ 2,000/- Crs. and over on or after 01.03.2018, therefore, the contention of the Learned Counsel for the Respondent Company that the Minutes of the Meeting on 26.02.2018 read together with the Minutes dated 13.03.2018 establishes that Application under Section 7 is not maintainable as it is pursuant to the RBI Circular dated 12.02.2018, is untenable as we are of the considered opinion that the Circular itself is not applicable since the amount claimed as debt due and payable is less than ₹ 2,000/- Crs. and the process was initiated by JLF prior to the issuance of the Circular. Merely because the JLF Committee discussed the various offers and also the revised Plan from Tri Shakti and decided to examine the Proposals in light of the new guidelines issued by the RBI on 12.02.2018 and found that finalization of any Resolution Plan prior to 06.04.2018, as directed by the Hon ble High Court, would be difficult and decided to file an Application under Section 7 of IBC 2016, it cannot be construed that the decision to file the Application was initiated only pursuant to the RBI Circular - Further, it is an admitted fact that the subject account was declared as NPA in December 2017, with effect from June 2016, after the expiry of 18 months-time period under Strategic Debt Restructuring and Section 7 Application was filed before the lapse of the time-period of 180 days, for a default in existence much before the reference date i.e. 01.03.2018. It is an admitted fact that the Appellant filed an Application under Section 7, on 20.03.2018, much before the deadline of 180 days. Thus, in the absence of any cogent evidence to show that the Appellant has filed the Application only pursuant to the Circular issued by Reserve Bank of India, which we hold at the outset, was not applicable to the facts of the instant case, it was not open to the Adjudicating Authority to reject the Application on this ground - The Petition under Section 7 of the I B Code is to be considered by the Adjudicating Authority on its own merits taking into consideration the records - case remitted to the Adjudicating Authority (National Company Law Tribunal), Mumbai Bench, with a direction to decide the Admission of the Application on merits as expeditiously as practicable.
Issues Involved:
1. Whether Section 7 Application is maintainable. 2. Whether the Application was filed pursuant to the RBI Circular dated 12.02.2018. 3. Applicability of the ratio in Dharani Sugars (Supra). Issue-wise Detailed Analysis: 1. Whether Section 7 Application is maintainable: The Financial Creditor, Punjab National Bank, filed an appeal under Section 61 of the Insolvency and Bankruptcy Code, 2016 (IBC), against the dismissal of its Section 7 Application by the Adjudicating Authority (NCLT), Mumbai Bench-II. The NCLT dismissed the application on the grounds that the proceedings were a consequence of the RBI Guidelines, which had been quashed by the Supreme Court, rendering the petition non-est. 2. Whether the Application was filed pursuant to the RBI Circular dated 12.02.2018: The Appellant argued that the total outstanding debt owed by the Respondent was ?2,44,85,29,569.79/-, and there was no denial of the existence of the debt or default. The Joint Lenders Forum (JLF) had classified the account as 'Special Mention Account' (SMA) and sanctioned a Restructuring Package, which the Corporate Debtor failed to adhere to, leading to the invocation of the Strategic Debt Restructuring Scheme (SDR). The account was classified as NPA on 30.06.2016, and the Section 7 Application was filed on 20.03.2018. The Appellant contended that the application was not filed pursuant to the RBI Circular dated 12.02.2018, as the JLF had discussed various offers and the High Court's directions in their meetings. The Respondent argued that the application was indeed filed pursuant to the RBI Circular, as evidenced by the JLF meetings on 26.02.2018 and 13.03.2018, where the new RBI guidelines were discussed. The Respondent also highlighted that the Supreme Court in Dharani Sugars declared the RBI Circular dated 12.02.2018 as ultra vires, and all actions taken under it, including the initiation of insolvency proceedings, were non-est. 3. Applicability of the ratio in Dharani Sugars (Supra): The Tribunal noted that the RBI Circular dated 12.02.2018 required an aggregate exposure of the lender above ?2,000 Crores, which was not the case here, as the total outstanding debt was ?1,007 Crores, with the Appellant's claim being ?2,44,85,29,569.79/-. The Tribunal found that the Circular was not applicable to the instant case, as the amount claimed was less than ?2,000 Crores, and the process was initiated by the JLF before the issuance of the Circular. The Tribunal also observed that the decision to file the Section 7 Application was not solely based on the RBI Circular but was influenced by the High Court's directions and the need for a time-bound resolution. Conclusion: The Tribunal concluded that the Adjudicating Authority erred in dismissing the Section 7 Application based on the RBI Circular, which was not applicable to the case. The Tribunal set aside the Impugned Order dated 20.12.2019 and remitted the case to the Adjudicating Authority (NCLT), Mumbai Bench, with a direction to decide the admission of the application on its merits as expeditiously as practicable.
|
