9911796707
TMI Blog2018 (10) TMI 339X X X X Extracts X X X X X X X X Extracts X X X X ..... rm Loan Agreement dt. 13.12.2010 for a sum of Rs. 60 Crores. * Agreement for Hypothecation of Moveable Assets forming Part of Fixed Assets dt. 13.12.2010 for Rs. 60 crores. * Letter of Undertakings dt. 13.12.2010. 3. Subsequently, the Petitioner Bank further sanctioned the following credit Facilities to the respondent company. * Cash Credit under consortium arrangement to the tune of Rs. 70.00 crores. * Inland/Foreign LC(DA) Facility of Rs. 20.00 Crores. 4. It is submitted that in order to secure, the due repayment of the aforesaid credit facilities, the respondent company executed the following security/loaning documents in favour of the Petitioner Bank on 16.11.2011. * Demand Promissory Note Dt. 16.11.2011 for a sum of Rs. 90 Crores. * Letter of Continuity dt. 16.11.2011 for a sum of Rs. 90 crores. * Letter of Hypothecation dt. 16.11.2011 for Rs. 90 crores. * Deed of Hypothecation to Secure LC dt 16.11.2011 for Rs. 20 crores. * Agreement for Hypothecation of Moveable Assets forming part of fixed Assets dt 16.11.2011 for Rs. 90 crores. * Agreement for Hypothecation of Current Assets dt. 16.11.2011 fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n interest free loans and advances to its group companies, whereas it was paying interest to the banks for the money borrowed thereby stressing the profits. Instead of taking steps to recover the advance to revive the cash flows and stability; the company had made diversion of funds. 12. It is further stated that during the year ended 2010-11 and 2011-12, the operating statement of the company is as follows:- Particulars 2011 2012 Sales 1600.72 1622.95 Other income 2.67 4.63 Total Revenue 1603.25 1627.58 Raw Material Consumed (A) 1504.25 1597.58 Expenses 107.80 114.25 Depreciation 26.55 34.62 Increase/(Decrease) in WIP (C) -222.68 21.25 Cost of production (A+B+C) 1389.38 1732.65 Add:- Increase (Decrease) in Finished goods -50.58 36.11 Cost of goods sold 1338.38 1732.65 Increase in cost of goods Sold 429.97 PBT in 2012 -393.22 13. It is pointed out by the petitioner that for similar levels of sales/production and scale of operation in FY 2012 as compared to FY 2011, the company had shown raw materials cost at high amount of raw materials, whereas all other expenses are almost maintained at same level and the same has contribu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... products with the same party. Products were purchased and sold to vendors back and vise - versa in huge amounts at different prices for purchase and sale. The same has impacted on the operational profitability and shows a deliberate attempt to inflate the revenue/purchase which may have been used to mislead the lenders for availing limits. The above fact shows without any iota of doubt that the affairs of the company are being conducted with a view to defraud the creditors which include the present applicant. The entire course of conduct points towards evading financial obligations, disregarding contracts and closing commercial operations. Moreover, there is no attempt to preserve any security to repay the dues. 18. The premises numbering 911, 9th Floor Surya Kiran Building, K. G. Marg, New Delhi and 1596 Bhgirath Place, Chandni Chowk, New Delhi were inspected by the petitioner bank on 27.01.2015. It has been alleged that earlier these premises were used/owned by Surya Pharmaceuticals and since 2012 these premises are locked and no one was found working there. Besides the following premises of Surya Pharmaceuticals were also inspected on 23.06.2015 by Petitioner Bank:- * 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nded the already stressed financial health of the Respondent Company. Denial of sanction of fresh loan or enhancement of working capital limit by the consortium of banks led by State Bank of India, of which the Petitioner was also a party, dried up the working capital required for the growing business of the Respondent Company. It is contended that the shortage of funds arising from the action and inaction of the consortium banks and other lenders caused significant adverse effect on the Respondent Company, which forced the Respondent Company to scale down its business operations, which ultimately led to closure of the operations of the Respondent Company by the end of year 2012. 23. It is stated in the reply that the Respondent Company approached the lead banker, State Bank of India ("SBI"), in December, 2011 for restructuring of its debts under Corporate Debt Restructuring ("CDR") mechanism and sanction of fresh working capital loan to re-start the business operation of the Respondent Company. SBI referred the case of the Respondent Company to CDR Empowered Group "(CDR-EG") on 10.03.2012 and it was taken up in the CDR-EG meeting held on 16.03.2012. Proposal of the Respondent Com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Respondent Company to adhere to the terms and conditions of the said CDR package. It is submitted that the Respondent Company failed to comply with the terms and conditions of the CDR package due to reasons which were beyond the power and control of the Respondent Company. Some of the said reasons, which were also within the knowledge of the lenders including the Petitioner are as below: a. Initiation of winding up proceedings by some of the creditors of the Respondent Company; b. Attachment of assets of the Respondent Company by the Income Tax Department. The said attachment was subsequently vacated, however, by then the lenders had already revoked the CDR package; c. Huge number of receivables of the Respondent Company was stuck in litigation and are pending adjudication before various courts. 27. The promoters of the Respondent Company planned to restart the Company in September, 2012, but the lead bank i.e. SBI withheld all the working capital available thus, denying holding on operations as mandated by CDR terms to the Company and refused to pay advance amount of 10% to be paid to suppliers of key raw material which is Penicillin G (who had agreed to supply the raw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ections, which is pending adjudication. Raising the same allegation again before this Board by the Petitioner amounts to forum shopping, which cannot be permitted and thus the application deserves to be dismissed. 31. It is further pointed out by the respondent that the Petitioner has also filed an original application bearing OA No. 169 of 2014 before DRT-II, New Delhi for recovery of INR 129,02,05,412.00/-, which is pending adjudication. It is claimed that such forum shopping amounts to taking coercive action against a sick company which is prohibited in terms of Section 22 of SICA and thus the instant application deserves to be dismissed. 32. We have heard learned counsel for the parties and have perused the case records. 33. The power conferred on the Tribunal to direct an investigation in to the affairs of the company is provided in Section 237 (b) of the Companies Act, 1956 which is 'Pari materia' with sub-section (b) of Section 213 of the Companies Act, 2013. 34. Section 213 of the Companies Act, 2013 reads as follows: - "213. The Tribunal may, - (a) on an application made by - (i) not less than one hundred members or members holding not less than one-tenth of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... management of its affairs shall be punishable for fraud in the manner as provided in. section 447." 35. A perusal of Section 213 of the Companies Act, 2013 reveals that the Tribunal is empowered under Section 213 to investigate into the affairs of a company: (a) on an application made by the certain number of members of the company; and (b) on an application made by any other persons or otherwise. 36. Tribunal can therefore entertain an application under Section 213 to investigate into the affairs of a company preferred by 'any other person' such as a creditor. Accordingly, the present petition filed by the creditor, Central Bank of India, seeking issuance of direction on Central Government for appointment of an inspector for comprehensive enquiry of affairs of the respondent company, is maintainable. 37. Section 213(b) of the Companies Act, 2013 further provides that the Tribunal is required to be satisfied that the circumstances so suggest that offenses has been committed as mentioned at sub-clause (i), (ii) and/or (iii) of clause (b). The Tribunal is also required to pass order, after giving a reasonable opportunity of being heard to the parties concerned, that the affair ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tition is 20.07.2015 which is well within three years from the date of balance sheet of financial year ending 31.03.2013. Therefore, the objection of delay and laches in filing the present petition has no leg to stand. 42. It is further stated in the reply that the Respondent Company had filed a reference under section 15(1) of the Sick Industrial Companies (Special Provisions) Act, 1985 ("SICA") and BIFR had registered the reference of the Respondent Company as Case No. 85 of 2013 vide order dated 28.11.2013. 43. An objection has been raised that Section 22 of SICA bars/prohibits continuation of any proceeding with respect to a sick company for winding up or for execution or distress or the like against any properties of a sick company or for the appointment of a receiver or like except with the consent of BIFR. The Petitioner bank has already filed its objection before BIFR raising identical objections, which is pending adjudication. Raising the same allegation again before this Tribunal by the Petitioner amounts to forum shopping, which cannot be permitted and thus the application deserves to be dismissed. 44. It is further pointed out by the respondent that the Petitioner ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... teps to recover the advances in order to revive the cash flows and stability of the company. Balance sheets of the company itself depict that there had been diversion of funds. On this count alone, prima facie adverse opinion can be formed that the affairs of the company are being conducted with a view to defraud the creditors. 49. Applicant bank has also shown that there has been diversion of funds from short term sources to long term uses. That apart considerable reduction in stocks suggest that the recoveries from the stocks/receivables have been diverted. The petitioner also has pointed out that false sale and purchase transactions of goods have been made to defraud the creditors. 50. It was further revealed that though there was realisation of the stock receivables but there has not been any corresponding reduction in the working capital limits, which suggests mismanagement in the affairs of the company. 51. In addition, applicant bank has placed on record the details of adverse comments made in the audited balance sheets of the company to show the following violations: * The company is in default u/s. 252 and Sec. 383 of the Companies Act, 1956, regarding non-compl ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
