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TMI Blog2019 (9) TMI 960X X X X Extracts X X X X X X X X Extracts X X X X ..... MANORAMA KUMARI, JUDICIAL MEMBER For The Financial creditor : Mr Mayank R Chavda, Advocate for the Financial Creditor For The Respondent : Mr Om Parkash Verma, Director, And Mr Ravish Bhatt, And Ms Ruchika Sharma Advocate ORDER Ms. Manorama Kumari, Member (Judicial) 1. Asset Reconstruction Company (India) Limited, acting in the capacity as Trustee of Arcil AST 002 - I and Arcil AST 002 - II Trust, has filed this Application under Section 7 of the Insolvency and Bankruptcy Code, 2016 [ IB Code for short] read with Rule 4 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016, ( IB Rules for short) styling itself as 'Financial Creditor' for initiation of Corporate Insolvency Resolution Process in respect of Neesa Leisure Limited, treating it as 'Corporate Debtor'. 2. Respondent Company was originally incorporated as a Private Limited Company under the Companies Act, 1956 on 29.11.1998 and thereafter converted into Limited Company on 15.12.2005 with its Registered Office at Cambay Square, X-22, 23 24, G.I.D.C Electronic Estate, S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oup approved restructuring package at their meeting held on 25.09.2012 and issued Letter of Approval (LOA) No. CDR(PMJ) No. 838/2012-13 dated 25.10.2012 and pursuant to such restructuring, the ICICI Bank Limited issued Credit Arrangement No. 23/CBG Ahm/48950 dated 27.09.2012 containing various terms and conditions as mentioned therein for Rupee Term Loan of ₹ 133.00 crore and Working Capital Term Loan of ₹ 83.20 Crores aggregating to ₹ 141.32 crores. The Respondent Company accepted the terms and conditions as contained in LOA dated 25.10.2012 and countersigned the same in token of acceptance. In support of restructuring, the Respondent Company executed Master Restructuring Agreement dated 27.12.2012 containing various terms and conditions. The Respondent Company also executed Agreement of Guarantee, Promoter's Undertaking and Non-Compete Undertaking. It is stated that the Term Loan granted by the ICICI Bank Limited is secured by Hypothecation of entire movable assets more particularly described in Part A of Schedule of O.A. and mortgage of immovable properties more particularly described in Part B of the Schedule of O.A filed with DRT and pledge of shares owne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... jections raised by the Respondent Company: (a) The Applicant Company has not disclosed the winding up petition pending against the Respondent Company in the High Court of Gujarat. Thus, on one hand, the Applicant Company is interested in liquidation of the Respondent Company/the Corporate Debtor, on the other hand, the Applicant Company has filed the instant application for commencement of the CIRP knowing the fact IB Code is for resolution and not liquidation. (b) The Applicant Company is simultaneously pursuing winding up proceedings, SARFAESI Act proceedings, DRT and now a proceeding purportedly for insolvency resolution. (c) Respondent Company has filed writ petition being SCA No. 20569 of 2017 regarding jurisdiction of this Bench of NCLT. (d) The Power of Attorney holder of the Applicant Company Shri Jigar Dalai, is not authorised to give any further authority to any person to do the acts specified in Power of Attorney on behalf of the Financial Creditor. While the Power of Attorney is specifically in favour of Mr. Jigar Dalal and while the application also shows the name of Mr. Jigar Dalai, Vice president and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Hon'ble NCLAT that any fact unrelated or beyond the requirements of IB Code or Forms prescribed under IB Rules, are not required to be stated or pleaded. Non-disclosure of any such fact cannot be termed as suppression of fact. As such, these objections are wholly unsustainable. Further Company Petition No.346 of 2016 filed by Financial Creditor against the Corporate Debtor has already been withdrawn by order dated 8.12.2017 in view of the fact that the petitioner Financial Creditor has filed the present proceedings under the IB Code before this Bench. Accordingly, the objections as mentioned in Paras 9(a) and (b) are not sustainable. 11. (c) The third objection relates to a writ petition being SCA No.20569 of 2017 filed by the Corporate Debtor regarding jurisdiction of this Bench. Since this petition has already been disposed of as withdrawn by order dated 29.1.2018, the objection is not maintainable. 11. (d) The fourth objection is on the authorization of the officer who has filed this petition. The Financial Creditor has filed an additional affidavit dated 21.11.2017 and thereafter 28.2.2019. The Financial Creditor has explained in its first affi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its application states that it is acting in its capacity as a Trustee of ARCIL Trust. The respondent alleges that the present petition is without power and authority as it is signed by the Representative of the ARCIL Company and not the representative of the ARCIL Trust and the same is not supported by any duly executed Trust Resolution.... .... .... .... 13. As per Section 5 (7) of IBC, 2016, Financial Creditor means any person to whom a financial debt is owed and includes a person to whom such a debt is legally assigned or transferred. On perusal of Assignment Agreement dated 28.3.2014, the Agreement legally assigns the impugned debt to ARCIL Company as Trustee of ARCIL Trust. Therefore, ARCIL Company is a Financial Creditor in the meaning of Section 5(7) and we do not find any force in the argument of the Respondent that the ARCIL Company is not a Financial Creditor in terms of provisions of IBC, 2016. 14. The Respondent has nowhere disputed the existence of debt to SBI and neither has it raised any question on default in repayment of debt. Hence, the debt and default is admitted. The only contention of the respondent is regarding the assignment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her the Assignment Agreement dated 17th April 2015 is genuine or not cannot be looked into by the Adjudicating Authority while deciding the application under Section 7 or by this Appellate Tribunal, till the Corporate Debtor alleges the same and raise the objection under Section 65 of the Code. No such plea has been taken by the Corporate Debtor before the Adjudicating Authority alleging fraud on the part of the Financial Creditor for initiation of proceedings under Section 65 of the Code. Therefore, this Appellate Tribunal cannot look into such question of fraud. 12.3 In view of the above judgments, it is clear that any issue governing Deed of Assignment/Assignment Agreement cannot be gone into by this Adjudicating Authority in an application u/s. 7 of IB Code; hence the objection raised by the Corporate Debtor cannot be sustained. 13. The abovesaid documents clearly establish that the Respondent Company borrowed monies from the ICICI Bank Limited with an agreement to pay interest and therefore the amount due to ICICI Bank from the Respondent Company is a 'financial debt' within the meaning of Clause (a) of sub-section (8) of Section 5 of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ventive Industries Ltd. v. ICICI Bank Ltd. and ORS (2018) 1 SCC 407. Para 28 of the said judgment reads thus: - 28 .. ... It is at the stage of Section 7(5), where the Adjudicating Authority is to be satisfied that a default has occurred, that the Corporate Debtor is entitled to point out that a default has not occurred in the sense that the debt which may also include a disputed claim, is not due. A debt may not be due if it is not payable in law or in fact. The moment the adjudicating authority is satisfied that a default has occurred, the application must be admitted unless it is incomplete, in which case it may give notice to the applicant to rectify the defect within seven days or receipt of a notice from the adjudicating authority. Under sub-section (7), the Adjudicating Authority shall then communicate the order passed to the Financial Creditor and corporate debtor within seven days of admission or rejection of such application, as the case may be. This Adjudicating Authority has also considered the judgment of Hon'ble NCLAT in the matter of Axis Bank Ltd. v. Lotus Three Developments Ltd. and others (Company Appeal (AT) (Ins) No. 246 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . No other person including a shareholder, an operational creditor, an employee, guarantor or even a director of the Corporate Debtor is separately required to be heard. 20. We, the Adjudicating Authority, now take the IAs filed by the Corporate Debtor: 20.1 IA 377 of 2017 The Corporate Debtor has alleged in this IA that application suffers from multiple defects and illegalities, misstatement regarding meeting of JLF on 08.06.2017 and institution of insolvency proceedings by Mr. Piyush Kumar Gupta, Chief General Manager of the Financial Creditor. It is observed by this Adjudicating Authority that the averments made by the Corporate Debtor in IA 377 of 2017 are nothing new but a carbon copy of the objections made by the Corporate Debtor in response to the directions made by this Bench. Accordingly, IA 377 of 2017 is dismissed . 20. 2 IA 368 of 2018 The Corporate Debtor has prayed for directions to the Applicant Company to produce all the original documents, copies whereof have been produced on record of the proceedings of C.P.(I.B.) No. 127 of 2017 for inspection by the Cor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IB Code. In view of the above decision, the instant IA is dismissed. 20.4 IA 35 of 2019 The Corporate Debtor has prayed for imposition of exemplary penalty of ₹ 1.00 crore upon the Financial Creditor as the Corporate Debtor alleges that CP(IB) 127 of 2017 is nothing but sheer abuse of process of law and the same is initiated fraudulently as well as with malicious intent for a purpose other than resolution of insolvency. This IA is rejected in view of the settled principle of law that while considering an application u/s. 7 of the IB Code that only facts those are relevant which concern the existence of debt, default and completion of Form -1 application. The averments regarding non-disclosure of filing of a winding petition, initiation of IBC proceedings against one Palm Lagoon Backwaters Resorts Private Limited, disposal of pledged shares by ICICI Bank Limited etc do not restrain this Adjudicating Authority from initiating CIRP proceedings against the Corporate Debtor. 20.5 IA 47 of 2019 The instant IA is filed by the Corporate Debtor against invocation of pledged 64,13,365 Equity ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n ICICI Bank Limited as a necessary party to the proceedings of CP(IB) 127 of 2017 in compliance with provisions contained in Order I Rule 9 of the Code of Civil Procedure, 1908. Heard the submissions made by the Financial Creditor. The main petition is filed by the Financial Creditor. It is the right of the petitioner to decide the parties it chooses to implead as party respondent. Application under section 7 of the IB Code stipulates a brief hearing of the Corporate Debtor and no one else. This law is settled by various decisions rendered by Hon'ble Supreme Court as also by NCLAT. Further, in the case of Axis Bank Ltd.(supra) it is held that the third party (being an entity other than the Financial Creditor/Corporate Debtor) is not offered the right to be heard and/or to intervene in the proceedings initiated under Section 7 of the IB Code including the applicant. Accordingly, this Adjudicating Authority holds that there is no substance in the instant IA and the same is rejected. 21. Now, the judgment in the main petition CP(IB) 127/7/NCLT/AHM of 2017. 21.1. In view of the above discussions, the application deserves ..... X X X X Extracts X X X X X X X X Extracts X X X X
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