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TMI Blog2019 (4) TMI 799X X X X Extracts X X X X X X X X Extracts X X X X ..... An application of financial creditor under Section 7 of the Code is acceptable so long as the debt is proved to be due and there has been occurrence of existence of default. It is reiterated that the material on record clearly goes to show that respondent had availed the loan facilities and has committed default in repayment of the huge outstanding financial debt. Thus, in terms of Section 7(5)(a) of the Code, the present application is admitted - moratorium in terms of Section 14 of the Code declared. - COMPANY PETITION No. (IB)-409 (PB)/2017 - - - Dated:- 8-3-2019 - MR M. M. KUMAR, PRESIDENT AND MR S.K. MOHAPATRA, MEMBER (TECHNICAL) For The Petitioner : Mr. Sanjay Bhatt, Advocate For The Respondent : Gaurav Malik, Gurkamal Hora Arora and Arjun Sehgal, Advs. ORDER S.K. Mohapatra, Member. 1. M/s. Edelweiss Asset Reconstruction 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the IBBI Regulations. Accordingly, he satisfies the requirement of Section 7 (3) (b) of the Code. 5. It is the case of the applicant that the Respondent Corporate Debtor had approached State Bank of India seeking financial assistance. At the request of the Corporate Debtor, State Bank of India had sanctioned financial assistance to the respondent company vide sanction letter dated 6th August, 2002. 6. Thereafter on 31.10.2002 the Respondent Corporate Debtor executed the loan and security documents in accordance with the terms of sanction and created security interest in favour of the State Bank of India. Subsequently on 01.04.2003 the respondent Corporate Debtor executed supplemental Loan Agreement for increase in the overall limit. 7. It is also the case of applicant that the respondent Corporate Debtor again approached State Bank of India on various occasion from 09.05.2005 to 10.09.2012 seeking further financial assistance for increase in the overall limit. At the request of the Corporate Debtor, State Bank of India had sanctioned additional financial assistance. Further, loan agreements and supplemental loan agreements were executed in terms of sanction from time t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ompany by admitting the present application. 16. The respondent corporate debtor has filed its reply on 01.12.2017. Rejoinder to the reply was filed by the applicant on 20.12.2017. 17. We have heard the learned counsels for the parties and have perused the case records. 18. The various objections raised by the respondent corporate debtor are discussed below. 19. The respondent has submitted that the present petition is defective and is not in compliance of the requirements of the Code. It is contended that the petitioner has not filed the relevant statement of account duly certified under Banker's Books Evidence Act. 20. In this regard applicant has responded in its rejoinder that the applicant is an Asset Reconstruction Company duly registered with the Reserve Bank of India and is not a bank and therefore the applicant has filed the statement of accounts duly certified in terms of Section 65B of the Indian Evidence Act. It is emphasized that the application is complete and is in full compliance with the requirements of the provisions of the Code. 21. The present application under Section 7 of the Code for initiative Corporate Resolution Insolvency Process has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ovisions 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. 26. Hon'ble NCLAT in the matter of Ksheeraabd Constructions (P.) Ltd. v. Vijay Nirman Co. (P.) Ltd in Company Appeal (AT) (Insolvency) No. 167 of 2017 has observed that: has observed that: The I B Code being a complete code will prevail over other Acts. ..No person can take advantage of pendency of a case to stall Corporate Insolvency Resolution Process under the I B Code . 27. Similarly in the case of Innoventive Industries Ltd. v. ICICI Bank Ltd. and Ors. reported in AIR 2017 SC 4084, Hon'ble Supreme Court has also held at para 56 that: The non-obstante clause, in the widest terms possible, is contained in Section 238 of the Code, so that any right of the corporate debtor under any other law cannot come in the way of the Code . 28. In view of the above discussion, 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 unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... debtor has also alleged that excess interest has been charged by the banks and the amount claimed is incorrect. It is pertinent to mention in this regard that dispute over the quantum of default, cannot be a ground for rejection of an application under Section 7 of Code as the determination of quantum of financial debt is not within the domain of the Adjudicating Authority. In the present proceeding the Tribunal is not supposed to ascertain the quantum of amount of default or to pass a decree as to how much is actually due to the applicant financial creditor. The Code requires the adjudicating authority to only ascertain and record satisfaction in a summary adjudication as to the occurrence of default before admitting the application. 35. Needless to say, that an application under Section 7 of the Code is acceptable so long as the debt is proved to be due and there has been occurrence or existence of default. What is material is that the default is for 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. The corporate debtor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n written communication, the proposed IRP has filed an additional affidavit on 17.10.2017 giving detailed information as required under the Regulations. He has also enclosed the certificate of registration issued in his favour by IBBI. The nomination of IRP cannot also be challenged on the ground that he is serving as RP in two proceedings. In the facts the objection of respondent company has no merit and cannot stand. 40. It is also the case of respondent that two winding up petitions against respondent company are pending before Hon'ble High Court of Delhi and vide order dated 23.04.2015 a provisional liquidator has already been appointed in respect of respondent company and therefore the present application is not maintainable. 41. In this regard it is pertinent to refer to the order passed by Hon'ble Supreme Court in the matter of Jaipur Metals Electricals Employees Organization v. Jaipur Metals Electricals Ltd. and Ors. reported in 2018 (15) SCALE 836 in which Hon'ble Supreme Court has observed that: 17. ..This proceeding is an independent proceeding which has nothing to do with the transfer of pending winding up proceedings before the High Court. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plicant financial creditor under sub-section 5 (a) of Section 7 of the code, has to be admitted on satisfaction that: i. Default has occurred. ii. Application is complete, and iii. No disciplinary proceeding against the proposed IRP is pending. 48. Hon'ble Supreme Court in the case of Mobilox Innovations (P.) Ltd. v. Kirusa Software (P.) Ltd. /144 SCL 37 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 no disciplinary proceedings are pending against the proposed resolution professional, it shall admit the application. The adjudicating authority/Tribunal is not required to look into any other criteria for admission of the application. (Emphasis Given) 49. An application of financial creditor under Section 7 of the Code is acceptable so long as the debt is proved to be due and there has been occurrence of existence of default. It is reiterated that the material on record clearly goes to show that respondent had availed the loan facilities and has committed default in repayment of the huge outstanding financial debt. 50. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y interest created by the corporate debtor in respect of its property including any action under the Securitization 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. 55. 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. 56. 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 C ..... X X X X Extracts X X X X X X X X Extracts X X X X
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