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TMI Blog2020 (10) TMI 65X X X X Extracts X X X X X X X X Extracts X X X X ..... Vedanta and Hindalco and payment was directly made to the Vedanta and Hindalco in lieu of goods supplied to the respondent. Therefore, the contention of the respondent that payment has not been made directly to him is not liable to be accepted rather direction was given in Channel Finance Agreement - Ld. Counsel for applicant submitted that legal notice as well as recall of loan notice was also sent to the respondent, under such circumstances, we have no option but to reject the contention of the respondent and we accept the contention of the applicant that loan was duly sanctioned and disbursed but Debt has not be repaid and since there is default and application filed by the applicant is complete, Application is liable to be admitted. Petition admitted - moratorium declared. - (IB) 1808 (ND)/2019 - - - Dated:- 4-6-2020 - Abni Ranjan Kumar Sinha, Member (J) And Kapal Kumar Vohra, Member (T) For the Appellant/Respondent: Savyasachi K. Saha and Gaurav Srivastava, Advs. ORDER ABNI RANJAN KUMAR SINHA, MEMBER (J) 1. The present petition has been filed under Section 7 of the Insolvency Bankruptcy Code, 2016, (hereinafter referred to as the Code ), praying ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Debtor. g. The Corporate Debtor also executed a letter of undertaking cum indemnity dated 06.03.2018 in favour of the Applicant indemnifying the Applicant. iv. Vedanta Limited vide letter dated 09.03.2018 assured the Applicant about the sound condition of the Corporate Debtor and undertook to stop supplying material to the Corporate Debtor immediately without any demur on receiving any information of such default from the Applicant and shall continue such stop supply until it receives any information otherwise from the Applicant. v. On the request of the Corporate Debtor, the Applicant issued an addendum communication dated 06.07.2018 modifying the terms of the Facility and permitted the facility to be utilised for purchasing raw material from Vedanta Limited as well as Hindalco Industries Limited. Consequently, the security/collateral was modified to the first and exclusive charge by way of hypothecation on inventory purchased from Vedanta Limited and Hindalco Industries Limited funded by the Applicant, both present and future. Therefore, parties executed the following documents: a. Amended sanction letter dated 06.07.2018 issued by the Applicant and accepted by the co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment is made in one tranche to the borrower and same is serviced by payment of periodic EMIs. On the Contrary, the CF facility remains regular till the money is overdrawn by the limit sanctioned. iv. The financial debt which is claimed by the Applicant is the outcome of incorrect and mala fide keeping books of account that within a span of almost 40 days from 17.05.2019 till 27.06.2019 that a sum of ₹ 31 Lakhs has become overdue whereas from 09.03.2019 till 17.05.2019 for a period of almost 70 days approximately 13 lakhs has become overdue. v. The Applicant in its pleading stated that Pursuant to the above documentation in relation to the Facility, the Applicant has made disbursements to the Corporate debtor . It is submitted that no disbursement has been made to the Answering Respondent and the alleged statement pertaining to disbursement does not carry any debit or credit entries nor does it carry any RTGS details, cheque details or any other details by way of which said amounts have been credited in the account of Respondent. vi. The Applicant has alleged a disbursement by way of reliance of falsified statement of disbursement to the tune of ₹ 7.99 crores ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ime period as the rates of interest are fluctuating and the interest is calculated according to the outstanding amount as on any given day. iv. The Applicant has submitted an affidavit under section 65B of the Indian Evidence Act, 1872 hereto in regard to the statement referred to by the Respondent. v. The disbursements mentioned under Annexure P of the Application have been made in accordance to the terms and during the tenure of the Sanction Letter and the Channel Finance Agreement. All disbursements have occurred prior to the expiration of tenure and despite the same, no repayments have been undertaken by the Respondent. vi. A bare perusal of Section 2 of the Bankers Book of Evidence Act makes it clear that the same exclusively deals with 'banks' and the Appellant Company, being a NBFC, does not fall within the ambit of term 'banks' as NBFCs have not yet been notified under the Bankers Book Evidence Act. vii. The terms of the Sanction Letter on Page 34 of the Application clearly provides that the interest type is to be floating. viii. It is clarified that the figures of 50.35 and 74.05 are the amount of interest in Rupees and not the rate of intere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... charge was created over the stocks of the respondent for an amount of INR 4,50,00,000/- which is the amount of the Channel Finance Facility on 06.03.2018 and the same was modified on 07.07.2018, which would be evident from the Annexure O of the paper book. He further submitted that applicant has duly disbursed the amount as requested by the respondent as per the statement, set out in Annexure P at page 164 in relation to Vedanta and in relation to Hindalco at page 165. He further submitted respondent is in default on 03.03.2019 and subsequently a recovery letter was issued by the applicant directly and a loan recall notice was also issued by the legal counsel on 01.06.2019. He further submitted that as per the statement of accounts set out in Annexure S is at page 171 for Vedanta INR 3,79,07,469.89 is due and at page 185 in respect of Hindalco INR 21,71,369..74 for an amount of INR 4,00,78,839.63 is pending as on 27.06.2019, which the respondent is liable to repay. 10. He further submitted that Adjudicating Authority is not required to determine the actual amount of claim which is held by the Hon'ble NCLAT in Mr. Satyaprakash Aggarwal and Ors. Vs. Vistar Metal Industries Lim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ransfers through RTGS, Electronic Fund Transfer, remittance through internal transfer between the bankers or in such other manner as Lender may deem fit by adoption of nay of the following procedures. 13. He further submitted that applicant has not annexed single draw down request in order to prove the disbursement. He further submitted that applicant refers to the statement of disbursement is neither on the letter head of the applicant nor bears any seal and signature of the institution and or person is maintaining the book of accounts. He further submitted that applicant has placed reliance upon the sanction letter, the said letter expires after 12 months after the sanctioning orders. He has raised all the averments made in the reply. 14. Now, in the light of the submissions made on behalf of parties, we have gone through the application, reply, rejoinder and the documents filed by the respective parties and on perusal of the same, we find that Annexure C, which is at page 28 of the main application shows that respondent has applied for the Channel Finance Facility on 06.02.2018 and that was sanctioned by the applicant vide sanctioned letter dated 22.02.2018, which is at p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e are the reasons Corporate Debtor mentioned in the reply and same was also taken in course of arguments. Ld. Counsel for respondent submitted that no direct payment has been made to respondent, in our considered view, since the respondent has applied for Channel Finance Facility, therefore, respondent agreed to pay the amount to the seller whose name appears in the Channel Finance Agreement and the Modified Channel Finance Agreement i.e. Vedanta and Hindalco, therefore, the contention of the respondent that no direct payment shall be made to them in our opinion, is not liable to be accepted. 16. Since the present application is filed under Section 7 of the IBC, therefore, we would like to refer Section 7 of the IBC quoted below:- Section 7 of IB Code:- 1. A financial creditor either by itself or jointly with 1[other financial creditors, or any other person on behalf of the financial creditor, as may be notified by the Central Government] may file an application for initiating corporate insolvency resolution process against a corporate debtor before the Adjudicating Authority when a default has occurred. Provided that for the financial creditors, referred to in clauses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... creditor under sub-section (3): 1[Provided that if the Adjudicating Authority has not ascertained the existence of default and passed an order under sub-section (5) within such time, it shall record its reasons in writing for the same.] (5) Where the Adjudicating Authority is satisfied that - (a) a default has occurred and the application under subsection (2) is complete, and there is no disciplinary proceedings pending against the proposed resolution professional, it may, by order, admit such application; or (b) default has not occurred or the application under subsection (2) is incomplete or any disciplinary proceeding is pending against the proposed resolution professional, it may, by order, reject such application: Provided that the Adjudicating Authority shall, before rejecting the application under clause (b) of sub-section (5), give a notice to the applicant to rectify the defect in his application within seven days of receipt of such notice from the Adjudicating Authority. (6) The corporate insolvency resolution process shall commence from the date of admission of the application under sub-section (5). (7) The Adjudicating Authority shall communicate- ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it may give notice to the applicant to rectify the defect within 7 days of receipt of a notice from the adjudicating authority. Under subsection (7), the adjudicating authority shall then communicate the order passed to the financial creditor and corporate debtor within 7 days of admission or rejection of such application, as the case may be. 29. The scheme of Section 7 stands in contrast with the scheme under Section 8 where an operational creditor is, on the occurrence of a. default, to first deliver a demand notice of the unpaid debt to the operational debtor in the manner provided in Section 8(1) of the Code. Under Section 8(2), the corporate debtor can, within a period of 10 days of receipt of the demand notice or copy of the invoice mentioned in subsection (1), bring to the notice of the operational creditor the existence of a dispute or the record of the pendency of a suit or arbitration proceedings, which is pre-existing - i.e. before such notice or invoice was received by the corporate debtor. The moment there is existence of such a dispute, the operational creditor gets out of the clutches of the Code. 30. On the other hand, as we have seen, in the case of a corpora ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pted rather direction was given in Channel Finance Agreement. Ld. Counsel for applicant submitted that legal notice as well as recall of loan notice was also sent to the respondent, under such circumstances, we have no option but to reject the contention of the respondent and we accept the contention of the applicant that loan was duly sanctioned and disbursed but Debt has not be repaid and since there is default and application filed by the applicant is complete and applicant also proposed the name of the IRP and consent of the IRP is also enclosed at page 198-199 and there is no disciplinary proceeding is pending against him and the defaulted amount is more than ₹ 1,00,000/- is being the minimum threshold limit fixed under U/S 4 of IBC, 2016. Under such circumstances this Adjudicating Authority is inclined to admit this petition and initiate CIRP against the respondent. Accordingly, this petition is admitted. A moratorium in terms of Section 14 of the IBC, 2016 shall come into effect forthwith staying:- (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 cou ..... X X X X Extracts X X X X X X X X Extracts X X X X
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