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TMI Blog2017 (9) TMI 1199X X X X Extracts X X X X X X X X Extracts X X X X ..... n question basing on baseless allegations, apprehension etc. Therefore, we hereby summarily rejected the contentions/allegations of the Applicant with regard to documents in question. In the result, we hereby declare that both SCL and MFL are eligible to execute the assignment agreements in question and all rights flow those agreements to MFL. After getting assignment of rights, the MFL is fully competent to participate in CoC in question and it cannot be called a related party as explained. Whether the above documents were executed without making reference to BIFR is valid or not? - Held that:- Admittedly, the applicant herein and the respondent No.3 are assignees of original lenders to SDAL. It is not the case of the Applicant that Assignors have no right to the rights in question to transfer their rights/interest to the assignee. It is the case of the Applicant that the Respondent No. 3 was assigned the rights/interest in question in order to deprive/reduce the interest of the applicant herein in the CoC. As long as the assignment agreement deeds are valid and legally enforceable, the applicant has no locus standi to question its object, modus operandi behind its execution. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, which are relevant to issue raised in present case, are as follows: (1) The Applicant (is an asset reconstruction company), incorporated and constituted under the Companies Act, 1956 and having its registered office at Edelweiss House, Off CST Road, Kalina, Mumbai, Maharashtra 400 098. The Applicant has become one of the largest secured financial creditors of the Respondent No. 1 -Corporate Debtor, i.e. Synergies-Dooray Automotive Limited (Corporate Debtor) vide an Assignment Agreement dated January 6, 2014, executed with Exim Bank which was one of the original lenders of the Corporate Debtor. The total amount claimed by the Applicant against the Corporate Debtor as on January 23, 2017 as per the revised proof of claims submitted by the Applicant on February 20, 2017 to the Respondent No.1/the Interim Resolution Professional (IRP) is ₹ 88,20,28,260.97 (Rupees Eighty Eight Crores Twenty Lakhs Twenty Eight Thousand Two Hundred and Sixty and Ninety Seven Paise Only). (2) The Respondent No. 1 is the Corporate Debtor in respect of which the Corporate Insolvency Resolution Process (CIRP) is ongoing under the IBC pursuant to the order dated January 23, 2017 passed by this Hon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t Agreements by which the Respondent No.2 has assigned nearly 92.93% (as per Form A filed in BIFR) of its share in the total debt of the Corporate Debtor to the Respondent No.3. Assignment Agreements in question were entered with the mala fide and ulterior motive of fraudulently abusing provisions of the IBC to the detriment of the Applicant as and when the Corporate Debtor initiates proceedings under the IBC after the abatement of the BIFR reference. (7) The Applicant states that public announcement of initiation of CIRP and call for submissions of claims under section 15 of the IBC read with regulation 6 of the Insolvency and Bankruptcy Board of India (Insolvency Resolution for Corporate Persons) Regulations, 2016 (CIRP Regulations) was made by the IRP on January 28, 2017 in Deccan Chronicle, wherein the insolvency commencement date was mentioned as January 25, 2017 with the estimated date of closure of IRP as July 23, 2017. Accordingly, the Applicant electronically submitted its proof of claim dated February 6, 2017 in the format provided in Form C of the CIRP Regulations along with the supporting documents vide its email dated February 7, 2017 in accordance with Regulation 8 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat M/s. Synergies Dooray Automotive Ltd., (SDAL) who is the Petitioner/Corporate Debtor had 7 creditors namely :EXIM Bank, HSBC, Indian Overseas Bank, Andhra Bank, State Bank of India, IDBI and ICICI. Out of these 7 creditors, ICICI assigned its debt to ARCIL and HSBC assigned its debt to J.P. Morgan Chase Bank, Indian Overseas Bank, Andhra Bank, State Bank of India, IDBI and ARCIL assigned their debt to SCL, and J.P. Morgan Chase Bank assigned its debt to a Securitization Company called Alchemist Asset Reconstruction Company Ltd. (AARC) (2) Thereafter, EXIM Bank assigned its debt to Edelweiss Asset Reconstruction Company (EARC), who is the Applicant herein. Subsequent to the assignment of EXIM Bank's debt to EARC, SCL assigned the debt of ICICI, SBI and IDBI to Millennium Finance Ltd. (MFL) vide three Deeds of Assignment dated 24.11.2016. Therefore, the List of Creditors as on date are: EARC: AARC: MFL & SCL. (3) That as per the Master Restructuring Agreement, EARC represented less than 9% of the creditors of SDAL. Even now as per the List of Creditors prepared by the Resolution Professional in accordance with the provisions of the IBC, 2016, EARC represents less than 10% ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... emonstrate that the assignee of SCL is a related party to the Corporate Debtor. EARC is only raising frivolous allegations, which are wholly unsubstantiated. In the absence of any proof to establish that the assignee of SCL is a related party as defined under Section 5(24) of the Code, the allegation that MFL ought not to have any voting share in the committee of creditors deserves to be rejected in totality. (8) EARC has also sought to project that the Assignment of Debt to SCL from the assignors, i.e. SBI, IDBI and ARCIL (formerly ICICI) is unregistered. This is a self-defeating and frivolous argument which also deserves to be rejected in totality. For the sake of arguments, if it is considered that the assignment from the original creditors of the Corporate Debtor to SCL is invalid, that would revert back the position to as existed in the Master Restructuring Agreement, which included ICICI, SBI, IDBI, IOB, Andhra Bank, HSBC and EXIM Bank. Even in such a scenario, the assignors of SCL and MFL, all being Banks would be unrelated parties permitting them to have voting share in any meeting of the Committee of Creditors. Even in such a scenario, EARC as an alleged Lender would con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s a contractual right for which no permission is required from any judicial or quasi-judicial body or any Tribunal, unless such judicial/quasi-judicial body or Tribunal has expressly restrained such party from assigning its debts. In view of the same, there is no question of seeking the permission of BIFR for assigning the debt. Therefore, it is prayed that the application under question should be dismissed with exemplary costs. 5. Shree Deepak Bhattcharjee, learned senior counsel for the respondent No. 3( MFL) also strongly opposed the application under question, and filed a comprehensive reply dated 5th June, 2017 by adverting each and every averments and allegations/assertions made by the applicant in the application. The following are his main contentions urged before us. 6. It is stated that MFL is the single largest Financial Creditor of the Corporate Debtor as on date having an admitted outstanding dues of ₹ 673.91 crores on account of the Corporate Debtor i.e. M/s. Synergies Dooray Automotive Limited. The instant application is filed with sole intent of frustrating the cause of the other Financial Creditors of the Corporate Debtor, and derive illegal and unjust clai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spects of the Corporate Debtor. 9. BIFR has subsequently also passed an order dated 25.06.2013, wherein also the BIFR returned a finding as to the exposure of the dues of the Applicant in the Corporate Debtor under the provisions of the SARFAESI Act. The BIFR vide its order dated 25.06.2013, specifically stated that between the Applicant and Alchemist Asset Reconstruction Company Ltd. (AARC), it is apparent that the exposure of Applicant is in the ratio of 34.15%: 65.85%. Therefore, the Applicant in the present case is a minority creditor of the Corporate Debtor and thus single handedly not entitled under law to interject and interfere in an appropriate resolution plan having the consent of the majority Financial Creditors of the Corporate Debtor. 10. It is stated that all the Financial Creditors of the Corporate Debtor has been duly agreed and admitted in terms of Master Restructuring Agreement dated 06.03.2007 (referred to as MRA ) and the following are the details of the dues of the various Financial Creditors along with their percentage exposure in the Corporate Debtor: Lenders Outstanding (Rs. in crores) Percentage IDBI 65.66 30.93% ICICI 66.30 31.23% EXIM Bank ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contented that even in absence of any voting right in the meeting of Committee of Creditors, the Financial Creditor whether it is SCL or MFL will continue to be equitably treated for the purpose of settlement of its dues. Thus, in no eventuality, the Applicant can steal a march and seek better dispensation than either SCL or MFL, which appears to be sole vested interest of the Applicant herein. (4) The allegation that MFL becoming a related party by virtue of assignment from a related party the same is frivolous and unsubstantiated. MFL does not fall within any of the definitions of related party as mentioned from 5(24)(a) to 5(24)(m). Edelweiss ARC is put to strict proof of establishing the same. (5) Therefore, the learned Senior Counsel prayed the Tribunal to dismiss the application under reply with exemplary costs. 12. Ms. Mamta Binani, the learned Resolution professional (Respondent No. 4 herein) has also strongly opposed the application under question by filing a reply dated 12th June, 2017 through her legal counsels Mr. P. Vikram and Nitish Bandary. The following are some of his/their main contentions: (1) It is prayed to read reply filed in C.A. No. 43 of 2017 as a pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so carefully perused all the pleadings made by the respective parties along with material papers filed in their support. 14. In the light of above facts and circumstances of the case, the following main points arise for our consideration:- (1) What is the status of the Applicant vis-a-vis Corporate Debtor and what rights it accrues by virtue of assignment from the Exim Bank and what is locus standi of it vis-a-vis other similar assignees like SCL and MFL ; (2) Whether three Assignment agreements commonly dated 24.11.2016 entered into between SCL and MFL are properly registered or not; (3) Whether the applicant has any locus standi to question the assigned agreements made between SCL and MFL since the applicant is not a party to these assignment deeds;. (4) What is the enforceability of various orders passed by BIFR before its abatement and DRT when they have not passed any final orders adjudicating the issues raised in those case; (5) Whether SCL and MFL are related parties: (6) If so, what are the reliefs the Applicant is entitled for? 15. It is to be noted that the applicant has not filed copies of three Assignment Agreements in question even though they have expres ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es to ICICI Bank. ICICI Bank Limited vide its assignment dated 28.09.2011 assigned the loans together with all its rights, title and interest in financing documents etc in favour of the assignor (SCL) herein. In turn, the assignee of ICICI Bank, SCL herein, assigned its rights accrued from ICICI Bank to MFL This document is duly registered with the District Registrar Anakapalli vide proceedings No. 197/G1/2017, dated, 28.04.2017 on payment of fine (5 times equal to registration fee) of ₹ 1,50,000/- for a delay of 1 month 1 day in presentation of the document under section 25, section 34 of the Registration Act, 1908. The purchase consideration for these rights is ₹ 16,50,00,000/-. 19. The Second assignment agreement dated 24.11.2016 was executed between SCL and MFL. This assignment originally relates to SBI Bank. SBI Bank Limited vide its assignment dated 30.05.2008 assigned the loans together with all its rights, title and interest in financing documents etc in favour of the assignor (SCL) herein. In turn, the assignee of SBI Bank, SCL herein, assigned its rights accrued from SBI Bank to MFL. This document was duly registered with the District Registrar, Anakapalli vi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o those documents. The applicant doesn't have any locus standi to question those documents in the insolvency proceedings initiated under IBC, 2016 on a far fetched argument that they are going to be effected if the rights of SCL and MFL are recognized basing on the Assignment Agreements in question. And the applicant cannot assume jurisdiction to question the documents in question basing on baseless allegations, apprehension etc. Therefore, we hereby summarily rejected the contentions/allegations of the Applicant with regard to documents in question. In the result, we hereby declare that both SCL and MFL are eligible to execute the assignment agreements in question and all rights flow those agreements to MFL. After getting assignment of rights, the MFL is fully competent to participate in CoC in question and it cannot be called a related party as explained. 22. The next question arises is whether the above documents were executed without making reference to BIFR is valid or not. Admittedly, the applicant herein and the respondent No.3 are assignees of original lenders to SDAL. It is not the case of the Applicant that Assignors have no right to the rights in question to transfe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (1) It is stated that various banks and financial institutions/ assets reconstruction companies in the year 2008-11 have assigned their debts in respect of the Corporate Debtor to Respondent No.2. However, it is alleged that these assignments took place prior to Applicant becoming Financial Creditor of the Corporate Debtor and these assignments in favour of Respondents No. 2 & 3 are defective and not legally enforceable. (2) By virtue of the assignments dated 24.11.2016, Respondent No. 2 has assigned nearly 92.93% of its share of debt in the Corporate Debtor to Respondent No.3. The Applicant has filed CA 43/2017 in CP l/HDB/2017 by inter alia seeking direction to IRP to cancel / to defer the first CoC scheduled to be held on 22.02.2017 consequently consider the objections of the Applicant and to reconstitute CoC in accordance with the law. This Tribunal, by an order dated 22/2/2017 permitted to go ahead with the scheduled meeting of CoC by observing that any decision taken in the meeting of CoC would be subject to further order of the this Tribunal. This CA No. 43/2017 is dismissed by way of separate order dated 02.08.2017. (3) The Applicant alleges that in the first meeting of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ancial Institutions/ARCs in favour of Respondent No.2 happened way back in the years 2008-2011 and that too from SBI, IDBI, ICICI (ARCIL). Therefore, we cannot find any fault with these assignment deeds. With respect to the allegation of SCL assigning its debt to MFL on 24.11.2016, we find no merit in this argument as well. As commonly known the promulgation of IBC Code, 2016 was widely discussed/debated/publicized in various media and not out of the blue. Therefore, the assignment deeds between the two entities also legal and permissible. At most it can be said to be similar to tax planning rather tax avoiding. Because of this assignment deed, not only the applicant's share in total debt is reduced, but other financial creditors/Assignees share also proportionately reduced and they did not object to the same but only the applicant agitates with oblique motive/reasons best known to it. Therefore, a fraudulent attempt made to reduce the Applicant's share in the total voting rights is not a plausible pleas by the Applicant. In the absence of any documentary proof/evidence to the claim of the Applicant, the same is liable to be rejected. Accordingly, the bench rejects the abov ..... X X X X Extracts X X X X X X X X Extracts X X X X
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