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TMI Blog2020 (1) TMI 1231X X X X Extracts X X X X X X X X Extracts X X X X ..... nced from Form-2. Therefore, the application is admitted. The commencement of CIR Process is initiated, which ordinarily shall be completed within 180 days, reckoning from the day this order is passed Petition admitted - moratorium declared. - IB-1348/ND/2019 - - - Dated:- 8-1-2020 - Ch. Mohd sharief tariq, member (judicial) And K.K. Vohra, Member (Technical) For Financial Creditor. Mr. Shiv Kumar Suri/Mr. Shikhil Suri, Advocates For Corporate Debtor: Mr. Farrukh Khan, Mr. Shantala Sankrit Mr. Attendra Saumya Singh, Mr. Wasiq Khan, Advocates ORDER Ch. Mohd Sharief Tariq, 1. Under adjudication is an Application bearing No., IB-1348/ND/2019 filed under Section 7 of the Insolvency Bankruptcy Code, 2016 (IBC, 2016) by the Financial Creditors jointly through their Representatives. The Financial Creditors are seeking an order to initiate Corporate Insolvency Resolution Process ('CIRP') against the Corporate Debtor viz. 'Earthcon Universal Infratech Private Limited, which was originally incorporated on 19.10.2009 in the name and style of 'M/S Zayat Infratech Private Limited', declare moratorium and appoint Interim Resolution Professiona ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ity Agent). Accordingly, the issuer Company vide Board Resolution passed on 18.04.2017 authorised the issuance of the debentures with the approval of shareholders in terms of the special resolution passed under Companies (Prospectus and allotment of Securities) Rules, 2014 at the Extraordinary General Meeting held on 18.04.2017. The issuer Company proposed to constitute, issue, and secure the said debentures together with all the outstanding amounts payable in respect thereof by way of a registered legal mortgage created by the issuer Company and Obligor-3 on the assets detailed in the debenture trust deed. Obligor-3 undertook that if the issuer company failed to pay all the secured obligations on the redemption dates, it would pay the secured obligations to the debenture holders. 6. Obligor-3, who is Corporate Debtor in the matter on hand has availed of a facility of ₹ 100 crores from CF Lender and has opened the Escrow Account in terms of availing such facility. In addition, the parties agreed to create a first charge on Obligor-3's current accounts, such that 10% (Ten Percent) on the amount transferred to the Obligor-3's current account from the Obligor3's E ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nstalment was payable upon the expiry of 21 (twenty-one) months from Series-I Deemed date of allotment. 10. It is further noted that as per the Term Sheet dated 28.10.2017 the 1 st tranche of payment of ₹ 13.15 Crore was disbursed by the FCS, commencing from 30.06.2017 to 06.09.2017, and vide letter, dated 19.07.2017 the Issuer Company had allotted debentures to the FCS. 11. The 1 st FC has sent a letter dated 02.04.2019 to the issuer company intimating about the First Financial Event of Default, wherein it is stated that the Company failed to complete Principal Repayment instalment amounting to ₹ 13,12,50,000 for the Non-Convertible Debentures (NCDs) issued, which was due and payable on 31.03.2019. The FCS also mentioned that the issuer company failed to reply to the previous letter dated 14.03.2019 and no sufficient balance is maintained in the issuer Company's Escrow Account. It is also mentioned that the issuer company failed to maintain the Debt Service Reserve Account (DSRA), therefore the FC declared it as Event of Default. Thereafter, several letters were exchanged between the FCS and the issuer company. The 1st FC in its letter dated 24.04.2019 inform ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ms agreed in the Term Sheets by demanding the repayment of ₹ 13.15 Crore on 31.03.2019 i.e. in 19 months only instead of 30 months as agreed i.e., from the date of receipt of the amount. It is stated that the Applicant No. 1 and the Company had orally agreed that Mr. Amit Goenka would be inducted as Nominee Director of the CD and the Applicant No. 1 would infuse funds in the Company's project, which would enable early completion of the project. Therefore, in good faith and believing in the assurance, the Company accepted the demand and a mandate was signed and Mr. Amit Goenka furnished a purported sanction letter/ Term Sheet to win the confidence of the Company and the CD, however the Applicant No. 1 failed to perform its part. The CD in its reply states that its liability is only limited to the collateral in the form of 200 units/ flats owned by the issuer Company albert developed by the CD. It is also stated that the CD invoked the arbitration clause in pursuance to the clause 51 of the Debenture Trust Deed and a notice was sent on 24.06.2019 to the FCS. 14. The CD in its reply further raised objections that the FCS do not come under the definition as provided und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CD, which is an Obligor in terms of the Debenture Trust Deed and other documents. Otherwise, also, the facts and circumstances involved in the case on hand are distinguishable as compared to the facts and circumstances involved in the case of M/S. Piramal Enterprises Ltd. (supra). Moreover, the application on hand is not for recovery of money, but for initiation of CIR Process against the CD/ Obligor-3 which failed to pay the outstanding to the FCS. In these circumstances, the CD/ Obligor-3 needs to be put under CIR Process for seeking suitable and viable Resolution Plan, if any, in order to revive its business, which is the sole objective under the IBC. 17. On perusal of the documentary evidence placed on record and the record of default produced by the FCS obtained from the Information Utility, a clear default is ascertainable on the part of the CD viz., Earthcon Universal Infratech Private Limited. This Authority is satisfied that the CD failed to fulfil the obligation under the Debenture Trust Deed and other document executed to guarantee/ secure the repayment of the amount disbursed by the FCS towards the issuance of the NCDs. The defence raised by the CD is nothing but a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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