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TMI Blog2019 (1) TMI 84X X X X Extracts X X X X X X X X Extracts X X X X ..... er for deciding any disputed question whether claim is bonafide or malafide. For the reasons aforesaid, we set aside the impugned order dated 15th April, 2018 passed by the Adjudicating Authority in the case of ‘Himatsingka Auto Enterprises’ and remit the matter to the Adjudicating Authority for deciding the matter fresh after notice to the parties.The parties are not given liberty to raise any question or dispute, all matters having already heard and decided in the present appeal. If there is debt and default, the Adjudicating Authority will admit the case. If the application under Section 7 filed by ‘Neha Himatsingka & Anr.’ is admitted in that case the question of admission of the Second application under Section 7 by ‘Himatsingka Auto Enterprises’ against the same ‘Corporate Debtor’ will not arise. ‘Himatsingka Auto Enterprises’ in such case may file claim before the ‘Interim Resolution Professional’ as may be appointed while dealing with the case of ‘Neha Himatsingka & Anr. Vs. Himatsingka Resorts Private Limited’. - Company Appeal (AT) (Insolvency) No. 201 of 2018 - - - Dated:- 30-11-2018 - Mr S.J. Mukhopadhaya, Chairperson And Mr Bansi Lal Bhat, Member (Judicial) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the tune of ₹ 51,50,000/- (Rupees Fifty-One Lac Fifty Thousand only) from Ms. Neha Himatsingka- ( Financial Creditor ) in six installments during the period from 30th April, 2013 to 24th April, 2014. They alleged that there was a default in repayment of the principal amount as well as the interest accrued thereon for which an amount to the tune of ₹ 83,30,499.00/- (Rupees Eighty-Three Lacs Thirty Thousand Four Hundred Ninety-Nine Only) had fallen due for payment to Ms. Neha Himatsingka as on 15th November, 2017. 8. It was also brought to the notice of the Adjudicating Authority that Mr. Kanishka Himatsingka disbursed an unsecured loan to the tune of ₹ 25,00,000.00 (Rupees Twenty-Five Lac Only) to the Corporate Debtor on 27th February, 2013 and there was a default in repayment of the principal amount as well as the interest accrued therein to the tune of ₹ 38,52,630.00 (Rupees Thirty-Eight Lac Fifty-Two Thousand Six Hundred Thirty Only) which became due to the said Mr. Kanishka Himatsingka as on 15th November, 2017. 9. The parties placed reliance on the agreement and earlier agreement relating to complete management of the HOTEL with effect from 15t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ors as defined under Section 5(7) read with Section 5(8) of the I B Code . 14. The objection was also raised that the claim was barred by limitation. However, the Adjudicating Authority has not accepted the aforesaid objections and proceeded on merit relating to agreement and the so-called dispute and documents relating to restructured term loan . 15. At this stage, it is desirable to notice that after conclusion of the hearing of the application under Section 7 and before the impugned order was passed, the Corporate Debtor filed affidavit requesting the Adjudicating Authority to allow the Corporate Debtor to bring on record two post-dated cheques in favour of each of the Financial Creditors without prejudice to its rights and contentions. 16. The Adjudicating Authority without waiting for those cheques, rejected the application on the ground that BK Group which is presently managing the Corporate Debtor has brought on record the agreement dated 30th July, 2013, wherein one of the clause no.3 (i) stipulates that the Company will furnish undertaking that the unsecured loans will not be withdrawn during the currency of the Bank Loan and that these unsecured l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e CD to fulfill all the requirements, specified in the said agreement. 53. In the face of such revelations, it would appear clear that all the unsecured creditors are bound by all the conditions, incorporated in the agreement including conditions incorporated in clause No.3 thereof. Therefore, there can be no escape from the conclusion that the unsecured creditors of the CD including the FCs herein cannot claim re-claim loans, they have granted to the CD before the liquidation of the entire loan which the bank had made available to the CD. What is equally important to note is that the unsecured creditors of the CD are also not entitled to claim any interest on the loans since such loans are found to be non-interest bearing. 20. According to learned counsel for the Appellant- Neha Himatsingka Anr. , the Adjudicating Authority failed to consider the fact that during the pendency of the application under Section 7, the Corporate Debtor had paid the principal amount of ₹ 51,50,000/- and ₹ 25,00,000/- to the 1st and 2nd Appellants and also issued postdated cheques of ₹ 29,75,415/- and ₹ 12,46,808/- towards interest thereof, after deducting TDS to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f a financial debt owed to any financial creditor of the corporate debtor- it need not be a debt owed to the applicant financial creditor. Under Section 7(2), an application is to be made under sub-section (1) in such form and manner as is prescribed, which takes us to the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016. Under Rule 4, the application is made by a financial creditor in Form 1 accompanied by documents and records required therein. Form 1 is a detailed form in 5 parts, which requires particulars of the applicant in Part I, particulars of the corporate debtor in Part II, particulars of the proposed interim resolution professional in part III, particulars of the financial debt in part IV and documents, records and evidence of default in part V. Under Rule 4(3), the applicant is to dispatch a copy of the application filed with the adjudicating authority by registered post or speed post to the registered office of the corporate debtor. The speed, within which the adjudicating authority is to ascertain the existence of a default from the records of the information utility or on the basis of evidence furnished by the financial creditor, is impo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reement relating to loan between the Corporate Debtor and Bank, till specific agreement is reached between the Financial Creditor and the Corporate Debtor referring to a third party agreement. 25. In the present case, we find that the Adjudicating Authority has exceeded its jurisdiction and exercised its inherent powers under Rule 11 of the National Company Law Tribunal Rules, 2016, which is actually not applicable in the cases under Sections 7 or 9 or 10 of the I B Code . 26. In absence of inherent powers of the Adjudicating Authority, we have no other option but to set aside the impugned order dated 19th March, 2018. 27. In Binani Industries Limited Vs. Bank of Baroda Anr. Company Appeal (AT) (Insolvency) No. 82 of 2018 etc. , this Appellate Tribunal by its judgment dated 14th November, 2018 held as follows: 17. To decide the issue, it will be desirable to notice the object of the I B Code , object of Resolution and what is expected from the Committee of Creditors , as summarized below: - 1 . The objective of the I B Code As evident from the long title of the I B Code , it is for reorganisation and insolvency resolution of corporate p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt, the I B Code will provide that the creditors committee should be restricted to only the Financial Creditors . ii. In Para 3.4.2 dealing with Principles driving design , the principle IV reads as under: IV. The I B Code will ensure a collective process. 9. The law must ensure that all key stakeholders will participate to collectively assess viability. The law must ensure that all creditors who have the capability and the willingness to restructure their liabilities must be part of the negotiation process. The liabilities of all creditors who are not part of the negotiation process must also be met in any negotiated solution. b. The I B Code aims at promoting availability of credit. Credit comes from the Financial Creditors and the Operational Creditors . Either creditor is not enough for business. Both kinds of credits need to be on a level playing field. Operational Creditors need to provide goods and services. If they are not treated well or discriminated, they will not provide goods and services on credit. The objective of promoting availability of credit will be defeated. c. The I B Code is for reorganisation and insolvency reso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n . It is resolution of the Corporate Debtor as a going concern. One does not need a Resolution Plan for selling the Corporate Debtor . If it were a sale, one can put it on a trading platform. Whosoever pays the highest price would get it. There is no need for voting or application of mind for approving a Resolution Plan , as it will be sold at the highest price. One would not need Corporate Insolvency Resolution Process , Interim Resolution Professional , Resolution Professional , interim finance, calm period, essential services, Committee of Creditors or Resolution Applicant and detailed, regulated process for the purpose of sale. It is possible that under a Resolution Plan , certain rights in the Corporate Debtor , or assets and liabilities of the Corporate Debtor are exchanged, but that is incidental. It is not an auction . Depending on the facts and circumstances of the Corporate Debtor , Resolution Applicant may propose a Resolution Plan that entails change of management, technology, product portfolio or marketing strategy; acquisition or disposal of assets, undertaking or business; modification of capital structure or leverage; infusion of additi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ejected. The Adjudicating Authority has rightly not accepted such plea. 31. As we find that there is a debt payable by the Corporate Debtor to the Financial Creditors and the Corporate Debtor has defaulted to pay the same amount, we hold that it is fit case for admission. 32. For the reasons aforesaid, we set aside the impugned order dated 19th March, 2018 and remit the matter to the Adjudicating Authority for admission of the application under Section 7 of the I B Code after notice to the parties. The Respondents cannot take any plea other than the plea already taken and decided in this appeal. However, it will be open to the Respondents to pay all the dues including the interest, if any, before admission of the application under Section 7. The appeal preferred by Neha Himatsingka Anr. being Company Appeal (AT) (Insolvency) No. 201 of 2018 is allowed. 33. So far as the case of Himatsingka Auto Enterprises - ( Financial Creditor ) is concerned, it is brought on record that the Corporate Debtor had obtained unsecured loan to the tune of ₹ 2,50,73,525.00 (Rupees Two Crore Fifty Lac Seventy-Three Thousand Five Hundred Twenty-Five Only) during the period f ..... X X X X Extracts X X X X X X X X Extracts X X X X
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