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TMI Blog2019 (3) TMI 618X X X X Extracts X X X X X X X X Extracts X X X X ..... n effect to notwithstanding anything contrary contained in any other later laws - the objection in this regard will not sustain as initiation and pendency of proceedings in different forums is no bar for initiation of Corporate Insolvency Resolution Process under Section 7 of the Code in view of the overriding effect given to the provisions of Section 238 of the Code. Respondent has raised another objection that the present application is not maintainable as applicant bank can only act through its authorized representative - Held that:- In the present case Applicant bank has filed specific power of attorney in favour of Shri Rajesh Kumar dated 11th August, 2017 stating that pursuant to board resolution dated 27th July, 2017 passed by board of directors of applicant bank the specific power of attorney dated 27th August, 2017 has been executed in favour of Shri Rajesh Kumar. Admittedly Shri Rajesh Kumar is working in a senior post in Scale-V as Asst. General Manager of the applicant bank and has preferred the present application on behalf of the applicant bank. In the facts there is no doubt that Shri Rajesh Kumar not only has been authorized but is also competent to file the pres ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... financial creditor is complete and there is no disciplinary proceeding pending against the proposed IRP. We are satisfied that the present application is complete and the applicant financial creditor 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 - thus in terms of Section 7(5)(a) of the Code, the present application is admitted. Application allowed - public announcement shall be made by the Interim Resolution Professional immediately (3 days as prescribed by the IBBI Regulations) - moratorium in terms of Section 14 of the Code declared. - Company Petition No. (IB)-593(PB)/2018 - - - Dated:- 11-1-2019 - MR M.M. KUMAR, PRESIDENT AND MR S.K. MOHAPATRA, MEMBER (TECHNICAL) For The Petitioner : Mr. Brijesh Kumar, Advocate For The Respondent : Mr. Ashok Juneja And Mr. Mithlesh Kumar Singh, Advocates ORDER S.K. Mohapatra, Member 1. Union Bank of India, 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... application has been filed and the said credit facilities were guaranteed by the directors of the corporate debtor Sh. Arvind Agarwal, Smt. Vidhushi Agarwal, Sh. Ashok Kumar and Sh. Rajesh Bhardwaj. 6. The applicant bank had sanctioned first term loan for ₹ 20 crores to the respondent company on 05.12.2012. The detail particulars of Term Loan-1 are as under: Nature of Facility Rupee Term Loan Amount Rs.20.00 Crores Purpose For construction and development of the project Coral-Brio Margin Project Margin-33.33% Rate of Interest BR+5.75% Security - Hypothecation and Equitable Mortgage of fixed assets created out of term loan. - Personal Guarantee of Sh. Arvind Agarwal - Personal Guarantee of Smt. Vidhushi Agarwal - Personal Guarantee of Sh. Ashok Kumar - Personal Gurantee of Sh. Rajesh Kumar Bhardwaj Repayment Term Loan to be repaid in 36 equal monthly installments after a moratorium o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... C-5, Sector-18, Vasundhara, Ghaziabad in favour of the applicant. Copy of original title deeds deposited with the applicant financial creditor have been placed on record. 9. The respondent company also executed balance confirmation letter on 30.06.2014 confirming balance outstanding for a sum of ₹ 19,99,37,318/- (Rupees Nineteen Crores Ninety Nine Lakhs Thirty Seven Thousand Three Hundred and Eighteen Only) in term loan Account No. 513206390000151. A copy of balance confirmation letter dated 30.06.2014 has also been placed on record. 10. Subsequently, application bank had additionally sanctioned second term loan for a sum of ₹ 15 crores to the respondent company on 27.06.2014. The details of the Term Loan-2 are as follows: Nature of Facility Rupee Term Loan Amount ₹ 15.00 Crores Purpose Term Loan for construction of building and Machinery/MFA. Margin Project Margin-28.57% Rate of Interest BR+4% Security - 1st Charge on assets of the company including EM of Project land ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thecation of composite of Hypothecation Deed dated 05.07.2014. h. Letter of Guarantee (Term Loan-1 and Term Loan-2) executed by Sh. Arvind Agarwal in favour of the Financial Creditor dated 05.07.2014. i. Letter of Guarantee (Term Loan-1 and Term Loan-2) executed by Smt. Vidhushi Agarwal in favour of the Financial Creditor dated 05.07.2014. j. Letter of Guarantee (Term Loan-1 and Term Loan-2) executed by Sh. Ashok Kumar in favour of the Financial Creditor dated 05.07.2014. k. Letter of Guarantee (Term Loan-1 and Term Loan-2) executed by Sh. Rajesh Kumar Bhardwaj in favour of the Financial Creditor dated 05.07.2014. l. Joint Letter of Guarantee (Term Loan-1 and Term Loan-2) executed by Sh. Arvind Agarwal and Smt. Vidhushi Agarwal in favour of the Financial Creditor dated 05.07.2014. m. Consent Letter (Term Loan-1 and Term Loan-2) executed by Sh. Arvind Agarwal in favour of the applicant bank. n. Consent Letter (Term Loan-1 and Term Loan-2) executed by Smt. Vidhushi Agarwal in favour of the Financial Creditor on 05.07.2014. o. Consent Letter (Term Loan-1 and Term Loan-2) executed by Sh. Ashok Kumar in favour of Financial Creditor dated 0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for further accommodation from the applicant bank and undertook to submit a viable restructuring proposal vide its letter dated 03.10.2016. However, it is stated that the respondent company failed to submit any viable proposal for restructuring acceptable to the applicant bank and accordingly the proposal for restructuring of the loan could not be finalized. 15. Consequently, applicant bank issued notice under Section 13(2) of the SARFAESI Act, 2002 to the respondent company calling for payment of the entire outstanding dues of the applicant bank. The financial creditor further issued separate notice recalling the above stated credit facilities on 22nd February, 2018. A copy of the notice under Section 13(2) of the SARFAESI Act, 2002 and loan recall notice have been placed on record. 16. Besides the applicant bank has filed a suit for recovery of the outstanding amount of ₹ 39,47,37,376.85/- (Rupees Thirty Nine Crore Forty Seven Lakhs Thirty Seven Thousand Three Hundred Seventy Six and paisa Eighty Five only) including interest and other charges calculated up to 28.02.2018, which is sub judice before the Debts Recovery Tribunal-II, Delhi. 17. The applicant bank has p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s.4,38,49,961.07 Total ₹ 17,20,60,294.43 Total amount due under both the above stated loan accounts is ₹ 39,47,37,376.85/- (Rupees Thirty Nine Crore Forty Seven Lakhs Thirty Seven Thousand Three Hundred Seventy Six and Paisa Eighty Five Only) as on 28.02.2018. 20. The applicant bank has filed the concerned statement on account of both the term loans maintained by the applicant bank in their regular course of banking business along with certificate of outstanding amount payable by the respondent company as on 30.04.2018. The certificate under Section 2 of Banker s Books Evidence Act, 1891, read with Section 65(B)(4) of the Indian Evidence Act, 1872, has been placed on record. 21. Since, the respondent company had committed default in repayment of the outstanding huge debt to the applicant financial creditor. A prayer has been made to initiate Corporate Insolvency Resolution Process against the respondent corporate debtor. 22. The respondent corporate debtor has filed its reply on 8th August, 2018 mainly with the contention that the applicant financial creditor did not grant NOC for registration of the ow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for issuance of NOC as laid down in the letter of sanction which envisages as follows: The company will open an escrow account for the project and whenever the builder issues booking advice to any prospective purchaser, they will obtain provisional NOC from the bank after ensuring receipt of money in its escrow account. Likewise the branch will issue final NOC with stipulation that all the payment will be made by Home Loan lending bank/ buyer in the name of Union Bank of India Escrow Account and to release the charge on the said property to enable the Company to execute the sale agreement in favour of the prospective buyer. Mortgage of the flats/properties to be released only after full sale consideration as per sale agreement has been received by the bank in the escrow account maintained by the company. Branch to ensure that the stipulated FACR is maintained during entire tenor of the loan . 31. In the rejoinder filed on 11.09.2018 applicant bank has stated that an escrow account bearing account no.5132010100663 was opened at the SSI branch of the applicant bank. It is the contention of the applicant that the corporate debtor has never complied with the aforesaid terms ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act and Debts Due to Banks and Financial Institutions Act, 1993 cannot be an impediment or bar to initiate the Corporate Insolvency Process against the corporate debtor under the provisions of Section 7 of the Code. Simply pendency of proceedings cannot be a ground to deny admission of an application under Section 7 of the Code, once the application is complete and there has been commission of default. 36. Insolvency and Bankruptcy Code, 2016 being a complete Code and Union Law, will prevail over other later laws like the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 and SARFAESI Act, 2002. As per Section 238 of the Code, the provisions of the Code are to be given effect to notwithstanding anything contrary contained in any other later laws. 37. Section 238 of the Code envisages as follows: 238. Provisions of this Code to override other laws. The Provisions of this Code shall have effect, notwithstanding anything inconsistent therewith contained in any other law for the time being in force or any instrument having effect by virtue of any such law. 38. Hon ble NCLAT in the matter of M/s. Ksheeraabd Constructions Pvt. Ltd. v. M/s. Vijay Nirm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ency Resolution Process , in spite of default of debt. 44. In the present case Applicant bank has filed specific power of attorney in favour of Shri Rajesh Kumar dated 11th August, 2017 stating that pursuant to board resolution dated 27th July, 2017 passed by board of directors of applicant bank the specific power of attorney dated 27th August, 2017 has been executed in favour of Shri Rajesh Kumar. Admittedly Shri Rajesh Kumar is working in a senior post in Scale-V as Asst. General Manager of the applicant bank and has preferred the present application on behalf of the applicant bank. In the facts there is no doubt that Shri Rajesh Kumar not only has been authorized but is also competent to file the present application on behalf of the applicant bank. 45. Respondents have also taken a stand that the Corporate Debtor has valuable asset for future earnings and shall meet the default. Such contention has no force when respondent company has committed default and has failed to repay the dues as per the loan agreement. Mere contention that the corporate debtor will clear the dues in future would not help the corporate debtor as admittedly default continues. Once there is a defa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to loan agreements with the corporate debtor. The corporate debtor had borrowed the credit facilities against payment of interest as agreed between the parties. The loan was disbursed against the consideration of time value of money with a clear commercial effect of borrowing. Moreover the debt claimed in the present application includes both the component of outstanding principal and interest. In that view of the matter not only the present claim will come within the purview of Financial Debt but also the applicant bank can clearly be termed as Financial Creditor so as to prefer the present application under Section 7 of the Code. 52. Under sub-section 5 (a) of Section 7 of the code, the application filed by the applicant financial creditor has to be admitted on satisfaction that: 1. Default has occurred. 2. Application is complete, and 3. No disciplinary proceeding against the proposed IRP is pending 53. Hon ble Supreme Court in the case of Mobilox Innovations (P.) Ltd. (supra) at Para 19 has observed that: Once the adjudicating authority/Tribunal is satisfied as to the existence of the default and has ensured that the application is complete and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urrence of default before admitting the application. The material on record clearly goes to show that respondent had availed the loan facilities and has committed default in repayment of the outstanding loan amount. 60. In the case on hand, it is seen that respondent corporate debtor has committed default in repayment of the outstanding financial debt. On a bare perusal of Form - I filed under Section 7 of the Code read with Rule 4 of the Rules shows that the form is complete and there is no infirmity in the same. Accordingly, it is seen that the application of the financial creditor is complete and there is no disciplinary proceeding pending against the proposed IRP. We are satisfied that the present application is complete and the applicant financial creditor 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. 61. As a sequel to the above discussion and in terms of Section 7(5)(a) of the Code, the present application is admitted. 62. Ms. Anju Agarwal, having registration number number IBBI/IPA - 001/IP- P00106/2017-18/10213 resident of 166 SFS, DDA Flats, Hauz Khas, New Delhi 11 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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