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TMI Blog2019 (9) TMI 1109X X X X Extracts X X X X X X X X Extracts X X X X ..... ase remitted back to the Adjudicating Authority (National Company Law Tribunal), Kolkata Bench, Kolkata with direction to admit the application under Section 7 after notice to the Corporate Debtor , so as to enable the Corporate Debtor to settle the matter, if it so choses before admission - appeal allowed. - Company Appeal (AT) (Insolvency) No. 671 of 2019 - - - Dated:- 20-9-2019 - Mr. S. J. Mukhopadhaya Chairperson, Mr. A.I.S. Cheema Member (Judicial) and (Kanthi Narahari) Member (Technical) For Appellant: Mr. Arun Kathpalia, Senior Advocate with Ms. Misha, Mr. Nikhil Mathur, Ms. Swati Lal, Ms. Bani Brar and Mr. Ekalavya Dwivedi, Advocates. For Respondent: Ms. Vanita Bhargava, Mr. Ajay Bhargava, Mr. Aseem Chaturvedi, Mr. Sabhyasachi Chaudhary, Mr. Tridip Bose and Ms. Maithili Mondra, Advocates. JUDGMENT The State Bank of India - Appellant filed application under Section 7 of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as the I B Code ) for initiation of Corporate Insolvency Resolution Process against M/s Rohit Ferro Tech Limited ( Corporate Debtor ). The Adjudicating Authority noted that there is debt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... India s circular dated 12.02.2018. Hon ble Supreme Court in case of Dharani Sugars and Chemicals Ltd.-vs-Union of India Ors. held the circular to be bad in law and declared that proceedings under I B Code on the basis of that circular are non-est. They are to be disposed off. (iii) Winding up petition of the corporate debtor is filed in the Hon ble High Court and hence this parallel proceeding cannot be entertained. (iv) Financial creditor did not produce certificate of default issued by Information Utility. 3. Learned Counsel for the Appellant submitted that the application under Section 7 was not filed pursuant to Reserve Bank of India Circular dated 12th February, 2018. The said application was filed on 23rd August, 2018 much before the deadline of 180 days as prescribed under the Circular . As per the Circular of Reserve Bank of India, an application under Section 7 can be filed only on completion of the period of 180 days after 31st August, 2018. 4. The Circular dated 12th February, 2018 issued by the Reserve Bank of India has been enclosed, the relevant portion of which is as follows: - Resolution of Stressed Asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orrower entity s account with any lender, all lenders singly or jointly shall initiate steps to cure the default. The resolution plan (RP) may involve any actions / plans/ reorganization including, but not limited to, regularization of the account by payment of all over dues by the borrower entity, sale of the exposures to other entities/ investors, change in ownership, or restructuring. The RP shall be clearly documented by all the lenders (even if there is no change in any terms and conditions). C. Implementation Conditions for RP 5. A RP in respect of borrower entities to whom the lenders continue to have credit exposure, shall be deemed to be implemented only if the following conditions are met: a. the borrower entity is no longer in default with any of the lenders; b if the resolution involves restructuring; then i. all related documentation, including execution of necessary agreements between lenders and borrower/ creation of security charge/ perfection of securities are completed by all lenders; and ii. the new capital structure and/or changes in the terms of conditions of the existing loans get duly r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lving restructuring/change in ownership is implemented within the 180-day period, the account should not be in default at any point of time during the specified period , failing which the lenders shall file an insolvency application, singly or jointly, under the IBC within 15 days from the date of such default. Specified period means the period from the date of implementation of RP up to the date by which at least 20 percent of the outstanding principal debt as per the RP and interest capitalization sanctioned as part of the restructuring, if any, is repaid. Provided that the specified period cannot end before one year from the commencement of the first payment of interest or principal (whichever is later) on the credit facility with longest period of moratorium under the terms of RP. 11. Any default in payment after the expiry of the specified period shall be reckoned as a fresh default for the purpose of this framework. 12. For other accounts with aggregate exposure of the lenders below ₹ 20 billion and, at or above ₹ 1 billion, the Reserve Bank intends to announce, over a two-year period, reference dates for implementing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l creditor has been defined under Section 5(7) as a person to whom a financial debt is owed and a financial debt is defined in Section 5(8) to mean a debt which is disbursed against consideration for the time value of money. As opposed to this, an operational creditor means a person to whom an operational debt is owed and an operational debt under Section 5(21) means a claim in respect of provision of goods or services. 28. When it comes to a financial creditor triggering the process, Section 7 becomes relevant. Under the Explanation to Section 7(1), a default is in respect of 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 debt ..... X X X X Extracts X X X X X X X X Extracts X X X X
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