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TMI Blog2019 (3) TMI 1780X X X X Extracts X X X X X X X X Extracts X X X X ..... Creditor is at liberty to apply under Section 7 of the Code to the Tribunal at any time before a winding up order is passed. It is patent that all requirements of Section 7 of the Code for initiation of Corporate Insolvency Resolution Process by a Financial Creditor stand fulfilled. In that regard, the application is complete as per the requirements of Section 7 (2) of the Code and other conditions prescribed by Rule 4 (1) of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016. There is overwhelming evidence to prove default and name of the resolution professional has also been clearly specified - petition admitted - moratorium declared. - CHIEF JUSTICE (RTD.) M.M. KUMAR, HON'BLE PRESIDENT, DR. DEEPTI MUKESH HON'BLE MEMBER (J) For the Financial Creditor: Mr. Ramji Srinivasan, Sr. Adv. with Ms. Sonal Gupta, Ms. Malvika Bhanot, Ms. Sylona Mohapatra, Advocates For the Corporate Debtor: Dr. U.K Chaudhary, Sr. Adv. with Mr. Manish Shekhari, Mr. Vivek Jain, Mr. Sumit, Advocates Ms. Anju Jain, Adv. JUDGMENT M.M. KUMAR, The ICICI Bank Limited (for brevity 'Financial Creditor') has filed the instant application under Section 7 of the Insolvenc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n Memorandum dated 29.09.2010 is annexed herewith and marked as Annexure P-3. A copy of the Debentures Trust Deed dated 21.01.2011 is annexed herewith and marked as Annexure P-4. ii. Working Capital Facility: Total Amount: INR. 443 Crs. Under Working Capital Consortium Agreement dated 21.05.2015comprising of the following: i. Fund based: INR (Rupees One Hundred and Twenty Two Crore) ii. Non-Fund based: INR (Rupees Three Hundred and Twenty One Crores) Date of Disbursement: 21.05.2015 A copy of the Working Capital Consortium Agreement dated 21.05.2015 is annexed herewith and marked as Annexure P-5. A copy of the Inter-se Agreement dated 21.05.2015 is annexed herewith and marked as Annexure iii. Term Loan Facility: Total amount: INR-57 Crs. Under Common Loan Agreement dated 21.05.2015. Disbursement Date: 25.06.2015 13.10.2015; 15.07.2015 A copy of the Common Loan Agreement dated 21.05.2015 is annexed herewith and marked as Annexure P-7. A copy of the Inter-Creditor Agreement dated 21.05.2015 is annexed herewith and marked as Annexure P-8. A copy of the Security Trustee Agreement dated 21.05.2015 is annexed herewith and marked as Annexure P-9. iv. Corporate Guarantee: Corporate Guarant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issued notices dated 03.03.2016 (Annexure P-23), dated 08.06.2016 (Annexure P-24), dated 21.05.2016 (Annexure P-25) and also notice of invocation dated 19.10.2017 (Annexure P-26) to the Corporate Debtor, its President, Personal Guarantor, Chief Financial Officer. However, all in vain; inspite of the notice they failed to clear the unpaid debt/ liability. 9. A record of default is available with the Central Repository of Information on Large Credits (CRILC) as per its asset classification report dated 16.04.2018 of the Corporate Debtor (at pgs. 849-856). Likewise, certificate authenticating the Entries in Bankers Book in accordance with the Bankers Books Evidence Act, 1891 (at pgs. 857-924) along with two certificates under Section 2A (a) of the Bankers Book Evidence Act with regard to three different bank accounts (at pgs. 857-858) of the Corporate Debtor have been placed on record. Two other certificates have also been filed disclosing sufficient compliance with the provisions of Section 2A(b) 2A(c) of the Bankers' Book Evidence Act. It is deposed by the officer that the statement of different accounts filed by the financial creditor are true and correct copies of the bank re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsidered as abdication of a Parliamentary statue like Insolvency and Bankruptcy Code. Mr. Srinivasan has maintained that the RBI circular has been issued as a piece of policy guidelines under Section 35AA of the Banking Regulations Act, 1949 and is necessarily a piece of subordinate legislation which cannot override the remedy provided by the Code. Our attention has also been drawn to the prayer made in the writ petition filed before Hon 'ble Delhi High Court which is for a declaration to declare Section 35AA and/or 35AB of the Banking Regulations Act, 1949 as ultra vires of the Constitution and the RBI Act, 1934. A similar prayer has been made for setting aside the circular dated 12.02.2018 on various grounds. There is no attempt made by the petitioner to seek injunction on present proceedings. 13. Having bestowed our thoughtful consideration on the submissions made by learned counsel for the parties, we are of the considered view that the RBI Circular dated 12.02.2018 does not create any bar on the remedy provided for resolution of insolvency in accordance with the provisions of the Code. 14. It has been rightly contended by Mr. Srinivasan that the RBI had revised its guideli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... discussed as follows: vi. vii. .. viii. .. ix. Other Matters PLL's ongoing Resolution Plan Lenders enquired about the status of Resolution Plan considering the present day situation. Company submitted that during the intervening period after receiving RP-4 rating, some lenders have rejected the Plan and some have declined to provide NFB facilities beyond present outstanding. Therefore there is no headroom available to achieve projected revenues and service debt without considering fresh/ additional NFB facilities. Hence PLL has no resolution plan as on date. It is thus clear that there was no resolution plan till 16.01.2019. 15. The status quo order granted by Hon 'ble the Supreme Court and as followed by Hon 'ble Delhi High Court on 18.09.2018 in WP (C) 8825 of 2018 has no bearing on the present proceedings because the subject matter of those proceedings is constitution validity of Section 35AA and 35AB of Banking Regulation Act, 1949 and the circular dated 12.02.2018. Therefore, with utmost respect, we are not persuaded to accept that the present proceedings would be effected in any manner whatsoever by the interim order. Moreover, non-obstante clause in Section 238 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upreme Court is crystal clear. In paras 19 and 20 of the judgment it has been categorical held that the proceedings under the IBC is an independent proceeding which has nothing to do with the transfer of pending winding up proceedings before the High Court. It further clarifies that a Financial Creditor is at liberty to apply under Section 7 of the Code to the Tribunal at any time before a winding up order is passed. Para 19 and 20 of the judgment reads thus:- 19. However, this does not end the matter. It is clear that Respondent No. 3 has filed a Section 7 application under the Code on 11.01.2018, on which an order has been passed admitting such application by the NCLT on 13.04.2018. This proceeding is an independent proceeding which has nothing to do with the transfer of pending winding up proceedings before the High Court. It was open for Respondent No. 3 at any time before a winding up order is passed to apply under Section 7 of the Code. This is clear from a reading of Section 7 together with Section 238 of the Code which reads as follows: - 238. Provisions of this Code to override other laws. The provisions of this Code shall have effect, notwithstanding anything inconsistent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... their stage may be. xxx xxx xxx 98. Further more, this transitional provision cannot in any way affect the remedies available to a person under IBC, vis- vis the company against whom a winding up petition is filed and retained in the High Court, as the same would amount to treating IBC as if did not exist on the statute book and would deprive persons of the benefit of the new legislation. This is contrary to the plain language of IBC. If the contentions of petitioner were to be accepted, it would mean that in respect of companies, where a post notice winding up petition is admitted or a provisional liquidator appointed, provisions of IBC can never apply to such companies for all times to come. xxx xxx xxx 100. The mere fact that post notice winding up proceeding are to be dealt with in accordance with the provisions of the Companies Act, 1956, does not bar the applicability of the provisions of IBC in general to proceedings validly instituted under IBC, [nor] does it mean that such proceeding can be suspended. In view of the aforesaid discussion, the argument advanced by Dr. Chaudhary, would not be acceptable and the same is hereby rejected. 20. It is patent that all requirements o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... days as clarified by Explanation to Regulation 6 (1) of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016. 25. We also declare moratorium in terms of Section 14 of the Code. A necessary consequence of the moratorium flows from the provisions of Section 14 (1) (a), (b), (c) (d) and thus the following prohibitions are imposed which must be followed by all and sundry: (a) the institution of suits or continuation of pending suits or proceedings against the corporate debtor including execution of any judgment, decree or order in any court of law, tribunal, arbitration panel or other authority; (b) transferring, encumbering, alienating or disposing of by the corporate debtor any of its assets or any legal right or beneficial interest therein; (c) any action to foreclose, recover or enforce any security interest created by the corporate debtor in respect of its property including any action under the Securitisation 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. 26. It is made clear tha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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