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TMI Blog2018 (10) TMI 1215X X X X Extracts X X X X X X X X Extracts X X X X ..... editor is entitled to claim its outstanding financial debt from the corporate debtor and that there has been a default in payment of the financial debt. As a sequel to the above discussion and in terms of Section 7(5)(a) of the Code, the present application is admitted. - Company Petition No. (IB)-706-(PB)/2018 - - - Dated:- 20-9-2018 - MR M. M. KUMAR, PRESIDENT AND MR S.K. MOHAPATRA, MEMBER (TECHNICAL) For The Applicant : Krishnendu Datta, Ms. Padmaya Kaul and Ms. Aishwarya Chaudhary, Advocates For The Respondent : Samridhi Gogia, Anshuman Gupta and Ms. Ankita Saha, Advocates ORDER S.K. Mohapatra, Member 1. ICICI Bank Limited, claiming as the financial creditor, has filed the instant application under Section 7 of the Insolvency and Bankruptcy Code, 2016 (for brevity the Code ) read with rule 4 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 (for brevity the Rules ) with a prayer to trigger Corporate Insolvency Resolution Process in respect of respondent company M/s Apex Buildsys Ltd., referred to as the corporate debtor. 2. The Respondent Company M/s Apex Buildsys Limited (CIN No. L 45400 DL 1993 P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lted in making payments of the amounts due to the Applicant Bank. 7. The case of the applicant as contained in the application is that on 11th November, 2011 loan of INR 100, 00, 00,000 (Rupees Hundred Crores Only) was extended to the Corporate Debtor through a rupee term loan facility (RTL-I) which was disbursed in two tranches i.e. on 22.11.2011 and on 12.12.2011. In order to secure RTL-I, the Corporate Debtor hypothecated the whole of its movable fixed assets on first ranking pari passu charge and all of its current assets on second ranking pari passu charge, in favour of the Applicant, by way of a deed of hypothecation dated 11 November 2011. The charge on the assets of the Corporate Debtor as created by the deed of hypothecation dated 11 November 2011 was filed with the Registrar of Companies (ROC) under Form-8 and a certificate of registration of charge dated 15 November 2011 was issued by the ROC. A copy of the rupee facility agreement for RTL - I, copy of the deed of hypothecation dated 11 November 2011 and copy of the Form 8 along with the certificate of registration of charge have been placed on record. 8. In addition a corporate guarantee and a personal guarantee w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fied charge on the WC Facility was filed with the ROC under Form-8 and a certificate of registration of charge was issued on 22 April 2013. Further, the Corporate Guarantor and the Personal Guarantor also extended a corporate and a personal guarantee, respectively in favour of the Applicant for the WC Loan Facility both dated 13 December 2011. By way of its letters dated 23 March 2013, the Corporate Guarantor and the Personal Guarantor undertook that their guarantees dated 13 December 2011 would continue against the WC Loan Facility post the amendment dated 23 March 2013, which included the OD Facility. 11. Additionally, to further secure RTL-I in full and the WC Loan Facility up to INR 10 crores (i.e. the CC Facility under the WC Loan Facility), a declaration of mortgage was executed by the Corporate Debtor on 22 November 2012, depositing with the Applicant the title documents for two specific immovable properties as described in the application. 12. It is submitted in the application that in order to secure the OD Facility under the WC Loan Facility, a deed of hypothecation was executed on 23 March 2013, hypothecating all movable properties and equipment (as described there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2013. Further, the Corporate Guarantor and the Personal Guarantor also executed their respective deeds of guarantees on 19 November 2013 against RTL-II, in favour of the Applicant. Additionally, by way of a declaration of mortgage dated 25 September 2014, a first ranking pari passu charge on the Immovable Properties was extended to secure RTL-II. The charge so created by way of the declaration of mortgage was filed with the ROC and a certificate of registration of charge dated 30 September 2014 was issued by the ROC. The rupee term facility agreement for RTL-II, the deed of hypothecation for RTL-II, the deed of corporate guarantee, the deed of personal guarantee and the certificate of registration of charge dated 30 September 2014 have also been placed on record. 15. The details of various credit facilities extended by the Applicant to the Corporate Debtor, along with the securities and contractual comforts have been enumerated in the table below: Credit Facilities Amount (in crores) Security Contractual Comforts RTL-I 100 A. Following charges on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecuted by Personal Guarantor on 19 November 2013. 2. Deed of corporate guarantee executed by Corporate Guarantor on 19 November 2013. 16. It is stated in the application that the Corporate Debtor defaulted in its obligations of repayment under the various credit facilities extended by the Applicant as well as the SBI Consortium. Pursuant thereto, discussions on restructuring of the debt of the Corporate Debtor were conducted in the meetings of the Joint Lender Forum (JLF) on 26 September 2014 and on 30 December 2014. Pursuant to the JLF, the Applicant entered into bilateral restructuring agreement with the Corporate Debtor. Accordingly, the debt of the Corporate Debtor was restructured by way of a restructuring agreement dated 31 December 2014, as follows: Original Facilities Amount (in crores) Restructured Facilities Amount (in crores) RTL-I 100 RTL-I 57.9 CC Facility 10 Restructured Facilities 7.62 OD Facility ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ereto, the Corporate Debtor executed a deed of hypothecation in favour of the Applicant on 6 July 2015, creating a first ranking pari passu charge on current assets, account assets and receivables, and a second ranking pari passu charge on movable fixed assets including DPG machinery and equipment of the Corporate Debtor. Additionally, by way of a declaration of mortgage dated 7 July 2015, a second ranking pari passu charge was created on the Immovable Properties against the Fresh BG Facility, in favour of the Applicant. The charges created by the deed of hypothecation dated 6 July 2015 and declaration of mortgage dated 7 July 2015 to secure the Fresh BG Facility were filed with the ROC under Form CHG-1 and a certificate of registration of charge was issued on 14 July 2015. The Master Facility Agreement, the deed of guarantee executed by the Personal Guarantor against the Fresh BG Facility, the deed of hypothecation for Fresh BG Facility, the declaration of mortgage dated 7 July 2015 with respect to the Fresh BG Facility and the certificate of registration of charge dated 14 July 2015 have been placed on record. 20. At the request of the Corporate Debtor, the Fresh BG Facility a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Applicant. In view of the same, the Applicant filed an application bearing O.A. No. 86/2018 before the Debt Recovery Tribunal under section 19 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 on 30 December 2017. It is submitted that the Original Application is still pending before the Learned Debts Recovery Tribunal. 26. In view of continuing defaults of the Corporate Debtor under the Restructuring Agreement, it is stated that the Applicant was constrained to revoke the Restructuring Agreement in terms of clause 6(21) of the Restructuring Agreement vide letter dated 24 May 2018. It is contented that in terms of clause 8 read with clause 12 of the Restructuring Agreement, the original liabilities of the Corporate Debtor are reinstated, as were before the restructuring of the facilities. Accordingly, it is submitted that the payment obligations of the Corporate Debtor will be governed by the original facility agreements i.e. pre-restructuring facilities, i.e. RTL-I, RTL-II, CC Facility and the OD Facility. The letter of revocation of the Restructuring Agreement has been placed on record. 27. The applicant bank at Part - IV of the Application has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the prayer of applicant financial creditor for admission of Section 7 petition. Time is the essence of the Code. A far strict time frame is expected to be followed by the Adjudicating Authority at every stage of the proceedings. Accordingly, further time as sought for cannot be allowed in violation of the provisions of the Code. 33. The respondent corporate debtor has blamed lenders banks for failure in the restructuring of loans. It is also alleged that the inter se disagreement amongst the JLF lenders pertaining to sale of one Pant Nagar plant has resulted in delay of the proposed sale for a consideration of approximately 50 crores. It is also the case of the respondent that huge amount to the tune of 230 crores are receivable from certain arbitration proceedings, on receipt of which substantial portion of the total debts of the corporate debtor can be paid off. In this regard applicant has responded that the lender banks have cooperated with the corporate debtor in every way possible. Applicant even entered in to bilateral restructuring agreement giving the corporate debtor multiple opportunities to revive its business, but to no avail. It is further submitted that applicant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as to the occurrence of default before admitting the application. 37. Similarly, the objection on the ground of discrepancies in the amount of claim cannot sustain. The variance in the amount of default is mainly on account of difference of dates. Be that as it may the corporate debtor would be entitled to raise objection of mismatching of dues before the resolution professional/ committee of creditors. Adjudicating Authority is only to ascertain the existence of a default and not the exact amount due. Mere mismatch of the figures will ipso facto not estop the admission of corporate insolvency resolution process under section 7 of the Code. 38. In connection with the objection regarding pendency of proceedings, it is well settled that the pendency of DRT proceedings and initiation of action under SARFAESI Act by other secured creditors; cannot be an impediment or bar to initiate the Corporate Insolvency Resolution Process under Section 7 of the Code. 39. It is pertinent to mention here that the scheme of the Code provides for triggering the insolvency resolution process by three categories of persons namely, (a) Financial creditor (b) Operational creditor, and (c) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is that the default is at least 1 lakh. In view of Section 4 of the Code, the moment default is of Rupees one lakh or more, the application to trigger Corporate Insolvency Resolution Process under the Code is maintainable. 46. It is seen that the applicant has placed various documents in relation to the disbursement of the loan to the respondent company. The materials on record and the loan documents clearly depict that that the loan was sanctioned and the loan agreements were properly executed. Respondent company utilised and enjoyed the loan facility. Additionally, the applicant has also furnished a copy of the Balance sheet and financial statements for the financial year ending 2017 of the corporate debtor, which inter alia reveals that the company has defaulted in repayment of the loan to the applicant and that huge debts are outstanding as reflected in the statement of accounts of the company. 47. It is thus seen that the applicant financial creditor has placed on record voluminous and overwhelming evidence in support of the claim as well as to prove the default. 48. It is pertinent to mention here that the Code requires the adjudicating authority to only ascertain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... debtor in respect of its property including any action under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002; (d) the recovery of any property by an owner or lessor where such property is occupied by or in the possession of the corporate debtor. 54. It is made clear that the provisions of moratorium shall not apply to transactions which might be notified by the Central Government or the supply of the essential goods or services to the Corporate Debtor as may be specified, are not to be terminated or suspended or interrupted during the moratorium period. In addition, as per the Insolvency and Bankruptcy Code (Amendment) Act, 2018 which has come into force w.e.f. 06.06.2018, the provisions of moratorium shall not apply to the surety in a contract of guarantee to the corporate debtor in terms of Section 14(3)(b) of the Code. 55. The Interim Resolution Professional shall perform all his functions contemplated, inter alia, by Sections 15, 17, 18, 19, 20 21 of the Code and transact proceedings with utmost dedication, honesty and strictly in accordance with the provisions of the Code , Rules and Regulations. It is fu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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