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TMI Blog2020 (5) TMI 248X X X X Extracts X X X X X X X X Extracts X X X X ..... h identification number 069375 c1/GBL and having registered office at GFin Corporate Services Ltd., Level 6, GFin Tower, 42 Hotel Street, Cybercity, Ebene 72201, Mauritius. 3. As per Part II of the application, the Corporate Debtor is a Private Limited Company with Corporate Identification Number U18101TN1988PTC015427 and having registered office at Phase II, Plot No. A11 to A14, MEPZ SEZ, Chennai 600 045. As per Part III of the application, the Financial Creditor has nominated Interim Resolution Professional with the following particulars: A R Ramasubramania Raja No.3, Sundaram Brothers Layout, Opp. to All India Radio, Trichy Road, Ramanathapuram, Coimbatore 641 045 Regn.No. IBBI/IPA-002/IP/N00635/2018-19/11982 4. Part IV of the application signifies the amount of remittance in foreign exchange (US$ dollar) to the tune of US$ 37,15,000 equivalent amount of Rs. 15 Crores for the purpose of Project Finance by way of issuance of fully convertible debentures by the Corporate Debtor; 40 debentures of Rs. 25 lakhs each, for an amount of Rs. 10 Crores on 20th August, 2007 and 20 debentures of Rs. 25 lakhs each, totalling Rs. 5 Crores on 20th November, 2007; total value of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fault, such as on default of payment, the Financial Creditor can initiate the proceeding against the Corporate Debtor for the appointment of receiver, liquidator or make an application for winding up. Therefore in exercise of the right, Financial Creditor seeks to appoint Insolvency Professional for the company and start of Corporate Insolvency Resolution Process. 10. It is further stated that on the failure of Corporate Debtor, the Financial Creditor had moved Madras High Court for the recovery of interest and restraining corporate debtor from alienating the assets of the Corporate Debtor. Application filed by Corporate Debtor for opposing the suit had been dismissed by Madras High Court on the ground that suit is continuing breach of tort and every act of breach giving rise to fresh cause of action. [Appeal No. 5071 of 2011 in C.S. No. 405 of 2011] 11. On 18th April, 2017 a Memorandum of Agreement was executed by and between the Financial Creditors and Corporate Debtor, which is stated to have been confirmed and made binding by Madras High Court on 14th July, 2017, to which Corporate Debtor did not co-operate with Financial Creditor to monetize the assets and to make the paymen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ence of the Applicant, the Applicant filed C.S. No. 424 of 2009 on the file of the Hon'ble High Court of Judicature at Madras for recovery of a sum of Rs. 4,04,26,095 (Rupees Four Crores Four Lakh Twenty Six Thousand and ninety five only) together with interest and also filed C.S. No. 405 of 2011 on the file of the Hon'ble High Court of Judicature at Madras for recovery of a sum of Rs. 5,40,00,000 (Rupees Five Crores and Forty Lakhs only) together with interest. 14. The Corporate Debtor admitted that Memorandum of Agreement on 18.04.2017 was entered into for a compromise which provided for resolving the disputes amicably but not to admit or determine the quantum of liability by the Respondent Company to the Applicant. The Corporate Debtor stated that it was done in a spirit of goodwill and compromise and to put a quietus to the litigation the Respondent Company entered into the Memorandum of Agreement, agreeing to share 50% of the net assets after deducting/adjusting certain statutory dues etc. which was higher than the maximum of 37.5% equity entitlement of the Applicant. The Corporate Debtor stated that the claims were sought to be settled on the basis of assets availabl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... agreement and until the date on which Fully Convertible Debentures are converted into Equity Shares, the Fully Convertible Debentures shall earn interest quarterly at a rate of 12% p.a. and in event of delay in the payment of amounts due, a penal interest of 6% per annum would be levied in addition to the interest payable on such due amounts. The Applicant has all along been a debenture holder and the debentures were never converted into equity shares at any point of time and reproduced the definition of "Financial Debt" as defined under section 5(8) of IBC, 2016 is herewith reproduced: "Section 5(8): 'financial debt' means a debt along with interest, if any, which is disbursed against the consideration for the time value of money. It includes: c) Any amount raised pursuant to any note purchase facility or the issue of bonds, notes, debentures, loan stock or any similar instrument." A mere perusal of the aforesaid definition makes it very clear that any amount raised pursuant to issuance of debentures falls within the ambit of "Financial Debt" and therefore the principal and interest amount that is liable to be paid by the Respondent to the Applicant in pursuance to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Debenture remains as debenture. It is also seen from the documents that a Simple Mortgage is seen to have been created in favour of the Financial Creditor which shows that there is debt which is a financial debt based on the principle that "once a mortgage; always mortgage". It postulates that unless and until a mortgage is discharged it remains as a mortgage and as such the financial debt. 23. On a perusal of clause 8.1.2 of the Master Facility agreement, a "default" is said to have occurred when there is non-payment in full, any of the interest amount that becomes due within a period of 30 days on which such amounts become payable. Therefore, it cannot be contented by the Respondent that no sum was liable to be returned or repaid. Apart from payment of a sum of Rs. 39,86,371.36 for the quarter ending September, 2007, interest amount was not paid for the remaining period by the Respondent and there is a clear default on part of the Respondent. 24. The Applicant being a debenture holder and further in order to secure the amounts due and payable under the Master Facility Agreement and Debenture Subscription Agreement dated 21.05.2007, a Simple Mortgage Deed dated 25.02.2010 was ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 14(3) as extracted hereunder: "(2) The supply of essential goods or services to the Corporate Debtor as may be specified shall not be terminated or suspended or interrupted during moratorium period. (3) The provisions of sub-section (1) shall not apply to such transactions as may be notified by the Central Government in consultation with any financial sector regulator." 29. The duration of period of moratorium shall be as provided in section 14(4) of the Code which is reproduced below for ready reference: "(4) The order of moratorium shall have effect from the date of such order till the completion of the Corporate Insolvency Resolution Process: Provided that where at any time during the Corporate Insolvency Resolution Process period, if the Adjudicating Authority approves the Resolution Plan under sub-section (1) of section 31 or passes an order for liquidation of Corporate Debtor under section 33, the moratorium shall cease to have effect from the date of such approval or liquidation order, as the case may be." 30. Based on the above terms, the Petition stands admitted in terms of section 7 of the Code and the Moratorium shall come into effect as of this date. A copy ..... X X X X Extracts X X X X X X X X Extracts X X X X
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