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TMI Blog2020 (8) TMI 545X X X X Extracts X X X X X X X X Extracts X X X X ..... hat where a Financial Creditor , whether singly or jointly with other Financial Creditors seeks initiation of Corporate Insolvency Resolution Process against the principal borrower or one or the other corporate guarantors in respect of a claim, it cannot file second application for the same set of claim against the other Corporate Debtor , be it the principal borrower or one or other Corporate Guarantor. Since the order passed by this Appellate Tribunal in appeal arising out of triggering of Corporate Insolvency Resolution Process initiated at the instance of an Operational Creditor against the principal borrower has been set aside by the Hon ble Apex Court and the dismissal of appeal by this Appellate Tribunal against the order of admission dated 28th August, 2019 stands quashed by the Hon ble Apex Court, interim protection granted in terms of order dated 30th September, 2019 which had been extended by the Hon ble Apex Court in terms of order dated 18th February, 2020 while dismissing the appeal and the Adjudicating Authority having extended the interim protection till further orders while being ceased of application under Section 65 of the I B Code , in essence ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the nature of slapping of Moratorium on the assets of the Corporate Debtor and appointment of Interim Resolution Professional . Appellant, shareholder of the Corporate Debtor has assailed the impugned order of admission through the medium of instant appeal on several grounds which shall be adverted to as the narration proceeds. 2. The genesis of issues raised in this appeal may be traced to Debenture Trust Deed ( DTD for short) dated 13th June, 2017 entered among Earthcon Infracon Pvt. Ltd. (the issuer/ mortgager), Beacon Trusteeship Limited (Trustee/ Respondent No.2), Earthcon Constructions Pvt. Ltd. (Obligor-1), Mr. Shadab Khan (Obligor-2/ Personal Guarantor-1), Earthcon Universal Infratech Pvt. Ltd. (Obligor- 3/ Corporate Debtor ), Mr. Susheel Kumar Sharma (Obligor-4/ Personal Guarantor-2), Mr. Pramod Choudhary (Obligor-5/ Personal Guarantor-3) and Nisus Finance and Investment Management LLP (Facility Agent/ Financial Creditor ) and subsequently amended on 20th December, 2017 and 24th December, 2018. The Corporate Debtor executed the necessary documents in favour of the Debenture Trustee individually as also along with the issuer company and other ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te Debtor also questioned the status of Financial Creditors pleading that they are not covered under the definition of Financial Creditors besides failing to establish existence of debt. It was lastly pleaded that alternate remedy was available to Financial Creditors under other statutes. 3. The Adjudicating Authority overruled the objection of the Corporate Debtor in regard to redemption of debentures by observing that while in fact the Corporate Debtor had sought time for repayment, it had changed its stand by questioning the very status of the Financial Creditors . It also noticed that in terms of the amended Debenture Trust Deed, the issuer company and the Corporate Debtor were under legal obligation to repay the 1st instalment by 31st March, 2019. As regards liability of Corporate Debtor , it observed that the Corporate Debtor had never offered the possession of 200 units/ flats to the Financial Creditors though it had contended that its liability was limited only to the extent of 200 units/ flats. On consideration of Debenture Trust Deed in its amended form, the Adjudicating Authority was of the view that in the event of failure of the issuer company to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... did not set aside order dated 23rd August, 2019 passed by the Adjudicating Authority. It is further submitted that since the order of the Adjudicating Authority admitting EIPL to Corporate Insolvency Resolution Process has not been set aside and the Financial Creditors have been granted four weeks time from the date of order dated 18th February, 2020, the Financial Creditors could not trigger Corporate Insolvency Resolution Process against the Corporate Debtor for the same and identical claims. Reliance has been placed on the judgment of this Appellate Tribunal rendered in Dr. Vishnu Kumar Agarwal v. M/s. Piramal Enterprises Ltd.- Company Appeal (AT) (Insolvency) No. 346 of 2018 decided on 8th January, 2019. It is, therefore, contended that the case of the Appellant is squarely covered by the ratio of this Appellate Tribunal in Dr. Vishnu Kumar Agarwal (Supra) in terms whereof two Corporate Insolvency Resolution Processes proceedings could not be triggered unless it is a joint venture company which is not the case in the instant matter. It is further submitted that the aforesaid judgment rendered in Dr. Vishnu Kumar s case (Supra) not having been stayed or quashed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ₹ 37,82,66,982.79/- 7. Heard learned counsel for the parties and perused the record. 8. The issue raised by the Appellant as a shareholder of the Corporate Debtor is that the Respondent Nos.1 and 2 being Financial Creditors could not be allowed to initiate and trigger three simultaneous Corporate Insolvency Resolution Processes for one set of claim. Reliance has been placed on the judgment rendered by this Appellate Tribunal in Dr. Vishnu Kumar Agarwal s case (Supra), which is still occupying the field as the same has not been set aside by the Hon ble Apex Court. In order to understand the ratio of aforesaid judgment in the peculiar facts and circumstances of the instant case, it would be appropriate to refer to para 32 of the said judgment which is reproduced hereunder: 32. There is no bar in the I B Code for filing simultaneously two applications under Section 7 against the Principal Borrower as well as the Corporate Guarantor(s) or against both the Guarantors . However, once for same set of claim application under Section 7 filed by the Financial Creditor is admitted against one of the Corporate Debtor ( Principal Borrower or Corporate Gua ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rporate guarantor of the principal borrower in the Debenture Trust Deed executed inter se the principal borrower and Respondent No.2. The Operational Creditor - M/s. Emperos Infrastructure Pvt. Ltd. filed proceeding under Section 9 of the Arbitration Conciliation Act, 1996. The Adjudicating Authority admitted application filed by the Financial Creditors vide order dated 28th August, 2019. In appeal the order of admission came to be upheld by this Appellate Tribunal and the appeal was dismissed. The matter was taken to Hon ble Apex Court in Civil Appeal No(s). 7641/2019 by the Respondent No.2. The Hon ble Apex Court, vide order dated 18th February, 2020 set aside the order passed by this Appellate Tribunal keeping in view the fact that application under Section 65 of the I B Code alleging that the order of admission was passed on the basis of admission made by the principal borrower who was alleged to be in collusion with the Respondent No.2, relegated the matter before the Adjudicating Authority where the Respondent No.2 may seek remedy. The Hon ble Apex Court observed that the plea of collusion could not have been raised for the first time in appeal before this Appellate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orrower fails to pay. The Financial Creditors issued demand notices to the principal borrower as a default occurred due to nonpayment in accordance with the arrangement agreed upon. Copies thereof were marked to the Corporate Debtor and other guarantors who issued cheques in favour of debenture trustees which bounced for insufficiency of funds in their accounts. 12. The case set up by the Corporate Debtor is that its liability is only limited to the collateral in the form of 200 units/ flats owned by the principal borrower and developed by the Corporate Debtor . It claims to have invoked the arbitration clause in DTD with notice served on Financial Creditors on 24th June, 2019. Taking note of the fact that the Corporate Debtor had communicated to the Financial Creditors seeking time for repayment and also having regard to the amendment introduced in the DTD re-scheduling the repayment schedule, the Adjudicating Authority was of the view that the principal borrower and the Corporate Debtor were under legal obligation to repay the first instalment by 31st March, 2019. It also rejected the plea taken by the Corporate Debtor regarding its limited liability as the C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ected that the interim protection granted by the Hon ble Apex Court shall continue till further order. Presently the matter is pending consideration before the Adjudication Authority. 14. Having regard to the above noted developments, be it seen that the fate of instant appeal is essentially linked with the fate of application under Section 65 of the I B Code preferred by the Financial Creditors before the Adjudicating Authority, as a sequel to the disposal of Civil Appeal No. 7641 of 2019 by the Hon ble Apex Court, which is pending consideration. Since the order passed by this Appellate Tribunal in appeal arising out of triggering of Corporate Insolvency Resolution Process initiated at the instance of an Operational Creditor against the principal borrower has been set aside by the Hon ble Apex Court and the dismissal of appeal by this Appellate Tribunal against the order of admission dated 28th August, 2019 stands quashed by the Hon ble Apex Court, interim protection granted in terms of order dated 30th September, 2019 which had been extended by the Hon ble Apex Court in terms of order dated 18th February, 2020 while dismissing the appeal and the Adjudicating Authority ..... X X X X Extracts X X X X X X X X Extracts X X X X
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