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TMI Blog2018 (12) TMI 1815X X X X Extracts X X X X X X X X Extracts X X X X ..... its registered office at 5/24, Ramesh Nagar, New Delhi - 110015. Since the registered office of the respondent corporate debtor is in New Delhi, this Tribunal having territorial jurisdiction over the NCT of Delhi is the Adjudicating Authority in relation to the prayer for initiation of Corporate Insolvency Resolution Process in respect of respondent corporate debtor under sub-section (1) of Section 60 of the Code. 3. It is appropriate to mention that the applicant Indian Overseas Bank (hereinafter referred as IOB), is a body corporate constituted under the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 having its Registered Office at 763, Anna Salai, Chennai 600002, India. 4. Mr. M. Ravindran Menon authorized representative and working as Assistant General Manager of the applicant, has preferred the present application on behalf of the applicant for initiation of corporate insolvency resolution process against the respondent corporate debtor in terms of the provisions of the Code. 5. The applicant has proposed the name of Mr. Sandeep Kumar Gupta, for appointment as Interim Resolution Professional having registration number IBBI / IPA-002 / IP-N00115/ 201 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It is the case of the applicant that the corporate debtor availed and utilized various financial facilities granted by the consortium but failed to maintain financial discipline and was irregular in servicing the said debt. Consequently, the consortium banks declared the account of corporate debtor as NPA in the year 2015 as per the extant guidelines of the Reserve Bank of India and notices under Section 13(2) of SARFAESI Act were issued seeking repayment of respective outstanding loans. The loan accounts of the corporate debtor maintained with consortium banks were declared NPA as per details captured in the following table: Name of Bank Date of NPA Date of Notice under Section 13(2) SARFAESI Act IOB 01.01.2015 23.09.2015 SBI 27.02.2015 24.09.2015 Dena Bank 02.03.2015 21.09.2015 UBI 31.03.2015 21.09.2015 PNB 17.04.2015 21.09.2015 CBI 28.09.2015 29.09.2015 11. The applicant has relied upon the following securities and other loan related documents executed between the parties in respect to the financial facilities sanctioned to the respondent corporate debtor: ♦ Copy of the Sanction Letter dated 28.06.2014. ♦ Copy of the Board Resolution dated 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Confirmation Letter dated 30.06.2014 regarding deposit of title deeds. ♦ Copy of Confirmation Letter dated 30.06.2014 regarding deposit of title deeds. ♦ Copy of Confirmation Letter dated 30.06.2014 regarding deposit of title deeds. ♦ Copy of Deed of Guarantee for Loans, cash credit etc. dated 05.09.2014. ♦ Copy of Confirmation letter dated 30.06.2014 regarding deposit of title deeds. ♦ Copy of Consent-cum-authorization letter dated. 05.09.2014 for disclosure of names in case of default. ♦ Copy of the undertakings ♦ Copy of the inter se agreement for working capital dated 28.09.2013. ♦ Copy of the Supplemental Working Capital Consortium Agreement dated 28.09.2013. ♦ Copy of Board Resolution dated 26.09.2013 passed by the Corporate Debtor for availing the aforesaid facilities was also supplied at the time of request by the Corporate Debtor. ♦ Copy of the supplemental joint deed of hypothecation for working capital dated 28.09.2013. ♦ Copy of the Deed of Guarantee dated 28.09.2013. ♦ Copy of the undertaking executed by the Corporate Debtor. ♦ Copy of the Deed of Omnibus Counter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Letter of Guarantee for ad hoc cash credit facilities dated 31.03.2014 ♦ Copy of Letter of General Lien and set off for the borrowing arrangement dated 31.03.2014 executed by Corporate Debtor. ♦ Copy of Consent Clause dated 31.03.2014 executed by Corporate Debtor. ♦ Copy of Declaration in respect of pending court cases as on 31.03.2014 executed by Corporate Debtor. ♦ Copy of General Undertaking dated 31.03.2014 executed by Corporate Debtor. ♦ Copy of Letter of Continuity dated 31.03.2014 executed by Corporate Debtor. ♦ Copy of Power of attorney dated 31.03.2014 executed by Corporate Debtor in favour of Dena Bank. ♦ Copy of Agreement of hypothecation of current assets dated 06.02.2013 executed by Corporate Debtor. ♦ Copy of Agreement for hypothecation of movable assets forming part of fixed/block assets dated 06.02.2013 executed by Corporate Debtor. ♦ Copy of Agreement of Hypothecation of goods and book debts to secure cash credit facility dated 06.02.2013 executed by Corporate Debtor. ♦ Copy of the sanction letter for renewal dated 25.09.2014. ♦ Copy of Agreement of hypothecation of goods and b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r review dated 11.03.2015. ♦ Copy of Recall Notice under Section 13(2) dated 23.09.2015 issued by IOB. ♦ Copy of Recall Notice under Section 13(2) dated :21.09.2015 issued by UBI ♦ Copy of Recall Notice under Section 13(2) dated 21.09.2015 issued by Dena Bank. ♦ Copy of Recall Notice under Section 13(2) dated 24.09.2015 issued by SBI. ♦ Copy of Recall Notice under Section 13(2) dated 29.09.2015 issued by CBL ♦ Copy of Recall Notice under Section 13(2) dated 29.09.2015 issued by PNB. ♦ Copy of the Response letter dated 21.11.2015 of SBI. ♦ Copy of the Response letter dated 21.11.2015 by CBL ♦ Copy of the Response letter dated 21.11.2015 by PNB. ♦ Copy of the Response letter dated 21.11.2015 by UBI. ♦ Copy of the Response letter dated 21.11.2015 by IOB. ♦ Copy of the Response letter dated 21.11.2015 by Dena Bank. ♦ Copy of the Reply letter dated 11.12.2015 by SBI. ♦ Copy of the Reply letter dated 09.12.2015 by CBL ♦ Copy of the Reply letter dated 14.112015 by PNB. ♦ Copy of the Reply letter dated 10,12.2015 by IOB. ♦ Copy of the Reply letter dated 08 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y depict that the loan was sanctioned, disbursed and the loan agreements were properly executed. Respondent company utilized and enjoyed the loan facility. The applicant has placed on record several balance and security confirmation letters duly signed by the respondent in acknowledgement of the debt. Additionally, the applicant has also placed on record demand promissory notes and indemnity bonds executed by the respondent company. That apart the applicant has relied upon the letter of respondent company confirming creation of mortgage by deposit of title deeds in order to secure the loan. 17. In addition, all the consortium banks have filed the relevant statement of accounts duly certified in accordance with Banker's Books Evidence Act, 1891 as per the requirement of Form 1 part V column 7 of the application. Certified copy of statement of account submitted by each of the consortium banks pertaining to various loan facilities, kept during the course of banking business, basing on which the claim has been raised, can be termed as sufficient evidence of the financial debt. 18. An affidavit has been filed by the consortium banks on 25.05.2018 placing certificates issued under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ties were granted by consortium of banks and therefore the applicant bank does not have the requisite legal authority to move against the corporate debtor without approval of other lenders. Respondent has submitted that the applicant Bank alone cannot file the present application without specific consent of the other consortium banks and without impleading them in the proceedings. In this connection applicant has replied in the rejoinder that IOB has been authorized pursuant to the inter se agreement dated 28.03.2013, who was termed as a lead bank for the consortium and the entire consortium consisting of Union Bank of India, Dena Bank, State Bank of India, Central Bank of India and Punjab National Bank have specifically authorized Indian Overseas Bank to file the present petition and to act in accordance with law. 24. The relevant clauses of the inter se agreement dated 28.09.2013 relied upon by the applicant is reproduced hereunder:- "Now therefore, it is recorded that the parties hereto have mutually agreed as follows: 1. The Member Banks hereby recognize IOB as the Lead Bank of the IOB Consortium. 2. The Member Banks hereby agree to abide by the directions, instructions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... other Accounts of the Borrower with it and notify its intention in writing either to act jointly in such action with the Lead Bank or otherwise in case the other Bank shall agree to act jointly in such action then the said Banks shall act jointly and in case of failure, neglect or refusal by the other Banks to joint in any such action, the Lead Bank taking action shall make the Banks so refusing, a defendant/ respondent in action which it may take against the Borrower." (emphasis given). 25. It is thus seen that the applicant IOB being the lead bank was duly authorized under the inter se agreement to present the petition on behalf of other consortium banks. It is also seen that through an affidavit filed on 25.05.2018, certificates under Banker's Book Evidence Act have been furnished by IOB, SBI, PNB, UBI, Dena Bank and CBI along with copies of the Statement of Accounts maintained by respective banks. Accordingly, the allegation of lack of authorization cannot sustain. 26. It has also been alleged that the petition is defective. In this connection it is appropriate to mention that the present application has been filed in 'Form-I under Section 7 of the Insolvency and Bank ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the figures will ipso facto not estop the admission of corporate insolvency resolution process under Section 7. of the Code. 31. It is pertinent to mention here that dispute over the quantum of default, cannot also 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 creditors. 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. 32. It is pertinent to mention here that the scheme of the Code provides for triggering the insolvency resolution process by three categories of persons namely:- (a) Financial creditor; (b) Operational creditor; and (c) Corporate debtor itself. 33. The procedure in relation to the Initiation of Corporate Insolvency Resolution Process by the "Financial Creditor" is delineated under Section 7 of the Code, wherein only "Financial ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ilities and has committed default in repayment of the huge outstanding loan amount. 39. From the facts it is seen that the consortium banks clearly come within the definition of Financial Creditors. The material placed on record further confirms that applicant financial creditors had disbursed various loan facilities to the respondent corporate debtor and the respondent has availed the loan and 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. It is also seen that there is no disciplinary proceeding pending against the proposed IRP. Applicant has placed on record voluminous and overwhelming evidence in support of the disbursement as well as to prove the default. We are satisfied that the present application is complete in all respect and the applicant financial creditors are entitled to claim their outstanding financial debts from the corporate debtor and that there has been default in payment of the financial debt. 40. As a sequel to the above discussion and in terms of Section 7 (5) (a) of the Code, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proceedings with utmost dedication, honesty and strictly in accordance with the provisions of the 'Code', Rules and Regulations. It is further made clear that all the personnel connected with the Corporate Debtor, its promoters or any other person associated with the Management of the Corporate Debtor are under legal obligation under Section 19 of the Code to extend every assistance and cooperation to the Interim Resolution Professional as maybe required by him in managing the day-to-day affairs of the 'Corporate Debtor'. In case there is any violation, the Interim Resolution Professional would be at liberty to make appropriate application to this Tribunal with a prayer for passing an appropriate order. The Interim Resolution Professional shall be under duty to protect and preserve the value of the property of the 'Corporate Debtor' as a part of its obligation imposed by Section 20 of the Code and perform all his functions strictly in accordance with the provisions of the Code, Rules and Regulations. 46. The office is directed to communicate a copy of the order to the Financial Creditor, the Corporate Debtor, the Interim Resolution Professional and the Regi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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