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TMI Blog2020 (8) TMI 644X X X X Extracts X X X X X X X X Extracts X X X X ..... et aside. The Order(s) passed by the Ld. Adjudicating Authority appointing Interim Resolution Professional / Resolution Professional , declaring moratorium, freezing of account, and all other order(s) passed by the Ld. Adjudicating Authority pursuant to impugned order and action taken by the Interim Resolution Professional / Resolution Professional , including the advertisement published in the newspaper calling for applications, all such orders and actions are declared illegal and are set aside - application dismissed - appeal allowed. - Company Appeal (AT) (Insolvency) No. 270 of 2020 - - - Dated:- 24-8-2020 - [Justice Bansi Lal Bhat] Acting Chairperson , [Justice Anant Bijay Singh] Member (Judicial) And [Dr. Ashok Kumar Mishra] Member (Technical) For the Appellant : Mr. Ramji Srinivasan, Senior Advocate with Mr. Puneet Singh Bindra, Mr. Gaurav Ray, Mr. Akash Singh and Ms. Simran Jeet, Advocates. For the Respondents: Mr. Adarsh B Dial, Senior Advocate with Mr. T. Ravichandran and Mr. K.V. Balakrishnan, Advocates for R-1. Mr. P.V. Dinesh, Advocate for RP Ms. Jayshree S. Iyer, RP JUDGMENT Justice Anant Bijay Singh, The instant Appeal has been file ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3.48 142.51 1996.54 iii. The Corporate Debtor completed the setting up of the Power Plant, in spite of the various delays and difficulties and the Power Plant began commercial operations from January 30, 2016 onwards. The delays were with respect to obtaining environment clearance, statutory clearance, aggregation of land, permission to obtain government lands, delay in set up by the State Transmission Utility and various cantankerous litigations. In order to part finance the cost overrun incurred by the Corporate Debtor, there was an additional infusion of capital by the Promoters of the Corporate Debtor to the tune of ₹ 94.01 Crores. iv) In order to meet the working capital requirement of the project, the Corporate Debtor entered into a Working Capital Consortium Agreement dated December 17, 2015 (the WCCA ) with Punjab National Bank (as the lead Bank), Indian Bank, Vijaya Bank, State bank of Hyderabad and Syndicate Bank (Respondent No. 1). v) It is submitted that Respondent No. 1 has only 1.64% stake of the total value of debt owed by the Corporate Debtor to all the Financial Creditors that constitute the Consortiu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve financial difficulties and led to the classification of its account as Non-Performing Asset on June 30, 2018. xi) The Appellant submits that there were several meetings of PNB Consortium lenders as well as all the Lenders. Both the PNB Consortium Lenders and Term Lenders requested Respondent No. 1 to permit the Corporate Debtor to utilize the non-fund based limits sanctioned by it. Perusal of the minutes of meetings held on May 04, 2018, July 12, 2018 will clearly show that the lenders including the LC limits to the extent of frozen limits of ₹ 46.50 Crores and thereafter, PNB will allow to pay the outstanding liability to Respondent No. 1 from TRA. It is pertinent to note that Respondent No. 1 has authorized PNB to do all acts and deeds on behalf of the bankers, as PNB may deem appropriate as the lead bank of the consortium. They also agreed to rectify and confirm all such acts and deeds done by PNB. xii) During a meeting on September 6, 2018, PNB being the lead bank, requested Respondent No. 1 to allow the Corporate Debtor to utilize the LC limits to the extent of frozen limit of ₹ 46.50 Crores. PNB further requested Respondent No. 1 that they will allow th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erred to their Branch, they will secure permission from their Head Office to renew and allow the Corporate Debtor to use working capital limits as per sanction. 3. That the Respondent No.1 Syndicate Bank (Financial Creditor) has claimed the total amount of ₹ 32,22,50,6660.16 as outstanding against the Appellant (Corporate Debtor) as on 29.07.2019. The Respondent No.1 Syndicate Bank (Financial Creditor) has filed an application under Section 7 on 30.07.2019 and the Ld. Adjudicating Authority passed an order dated 27th January, 2020 which is impugned in this Appeal. Submissions on behalf of the Appellant 4. The learned counsel for the Appellant during the course of argument and in his written submissions have stated that the Ld. Adjudicating Authority has failed to appreciate that Bhadreshwar Vidyut Pvt. Ltd. (for short BVPL) had entered into certain financing arrangements (both Working Capital and Term Loan) with a consortium of lenders. The Respondent No. 1 Syndicate Bank was a part of the Working Capital consortium in which Punjab National Bank was the lead Bank and the duly constituted attorney of all the lenders, including Respondent No. 1- Syndicate Ba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Appeal Paper Book) and 23.04.2019 (at page 488, Para-5.1 Vol.- III of the Appeal Paper Book). 10. Learned counsel for the Appellant submits that the Ld. Adjudicating Authority overlooking the facts and also Judgment of the Hon ble Supreme Court in the case of Innoventive Industries Ltd. Vs. ICICI Bank Anr. (2018) 1 SCC 407 where in the Hon ble Supreme Court held that the law requires that there must be a debt owed by a Corporate Debtor over ₹ 1 lakh and default has been committed by the Corporate Debtor in the payment of that debt has passed the impugned order. 11. It was further submitted by the counsel for the Appellant that the failure by PNB and other consortium lenders refusing to release or disburse sufficient amounts lying in the TRA account to Syndicate Bank (now Canara Bank) can be said to be default by the Corporate Debtor. 12. While referring to Section 7 of the IBC and also which has been interpreted by the Hon ble Supreme Court in Innoventive Case (Supra) where it has been categorically held that default on the part of the Corporate Debtor sine qua non of an application under Section 7. Default is defined in section 3 (12) as non-payment of debt wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd not because of default committed by Corporate Debtor. 18. It was further submitted by the Appellant that the Respondent No. 1 has incorrectly stated on affidavit in Section 7 application at Page 86 Vl.- 1 in paragraphs 11 12 of the Appeal Paper Book that there was no response from the Appellant. 19. It is further submitted by the Appellant referring to letter dated 27.12.2018 which was filed before this Tribunal at Page No. 17 vide Diary No. 18698 dated 06.02.2020 bringing on record. The aforesaid letter written by Chief Manager, Punjab National Bank address to Chief Manager, Syndicate Bank (Respondent No. 1) wherein referring to letter dated 05.12.2018 is as under: - we refer to your letter dated 05.12.2018 on the above company, high lighting various issues with respect to the above account. In this regard, please refer to the minutes of the consortium meeting dated 18th Sept. 2018, wherein in response to your bank observations that LC devolvement is not paid by the company, company officials replied that they are ready to pay LC bill payment immediately, if Syndicate bank agrees to open further LCs, as the company is going through cash crunch and with great ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gs Company informed that Syndicate Bank has referred the Project Company to NCLT to initiate IBC proceedings. Petition is yet to be admitted by NCLT. Consortium lenders told the Syndicate Bank representative that currently, consortium is exploring the options outside the IBC. Referring the Project Company to NCLT may jeopardize the interest of other lenders of stakeholders. Consortium requested Syndicate Bank to review their decision. Syndicate Bank agreed that they shall take up with higher authorities to reconsider their decision regarding NCLT petition. 26. Learned counsel for the Appellant submits that the Ld. Adjudicating Authority overlooking the aforesaid facts and also in teeth of the Judgment of the Hon ble Supreme Court in the case of Innoventive Industries Ltd. Vs. ICICI Bank Anr. (2018) 1 SCC 407 have passed the impugned order. Submissions of Respondent No. 1 27. The learned counsel for the Respondent No. 1 during the course of argument and in his written submissions have stated that the Ld. Adjudicating Authority in its summary jurisdiction cannot go into disputed questions of fact and further it was submitted that Ld. Adjudicating Authority ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Financial Creditors. The Ld. Adjudicating Authority failed to consider the certificate issued by S.K. Gulecha Associates, Chartered Accountants dated 05.02.2020 Annexure- 37 at page 18 of the Additional Documents which has not been denied by the Respondent No. 1. The relevant portion of certificate of Chartered Accountants is as under: - we also certify that the collection amount of ₹ 962.92 crores credited to the account of Punjab national Bank TRA- 0343002100540705 for the period from 1st July, 2018 to 30th June, 2019. Month wise collection details are herewith. The Ld. Adjudicating Authority also failed to consider the letter dated 27.12.2018 written by the Chief Manager, Punjab National Bank to the Syndicate Bank (Respondent No. 1) whereby refer to the minutes of the consortium meeting dated 18th September, 2018 the Syndicate Bank (Respondent No. 1) agreed to open further LCs. On 06.09.2018 Punjab National Bank (lead bank) made request to the Respondent No. 1 to permit the Appellant to utilize the LC limits to the extent of frozen limit of ₹ 46.50 Crores and it was also agreed that the amount of Syndicate Bank will be paid from TRA accou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nveyed to Respondent No.1 that it shall have to issue a Letter of Credit before release of payment by the Corporate Debtor but Respondent No. 1 Syndicate Bank (Financial Creditor) did not comply. It further appears from record that the stake of Respondent No. 1 Syndicate Bank (Financial Creditor) barely extends to 1.64% of the total debt. Viewed in this context, the only conclusion deducible from record is that the default cannot be attributed to the Corporate Debtor as the money deposited with the TRA Account was already available for release but its release was regulated in terms of the Punjab National Bank Consortium Inter-se Agreement r/w Trust Retention Account (TRA) Agreement . May be the Lead Bank was not justified in insisting upon issue of Letter of Credit as a precondition for release of payment in favour of Respondent No.1, but that does not in any manner be read as an act of default on the part of Corporate Debtor who has, in compliance of the terms of the aforesaid agreements made over its entire collection in the TRA Account as per terms of the Agreement. It would therefore be difficult to hold that a default has occurred on the part of the Corporate Debtor. No ..... X X X X Extracts X X X X X X X X Extracts X X X X
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