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TMI Blog2020 (10) TMI 588X X X X Extracts X X X X X X X X Extracts X X X X ..... orrect figure of debt owed to the Objector, the same cannot be termed as complete and therefore the same should be rejected. It is clear the NAFED has not raised any defence to say that there is no debt or no default, rather they have contended that the amount of debt and default is much higher than reported by the Corporate Applicant. The Corporate Applicant does not fall within the prohibitions stipulated in Section 11 of the Code - this Adjudicating Authority is inclined to admit the instant application filed under section 10 of the Code - Application admitted - moratorium declared. - CP (IB) No. 504/10/HDB/2018 - - - Dated:- 4-3-2020 - K. Anantha Padmanabha Swamy, Member (J) And Dr. Binod Kumar Sinha, Member (T) For the Appellant : L. Purnachandra Rao, B. Arjun Reddy, A. Laxminarayana, Raju, M. Kanthaiah, K. Ramesh Babu For the Respondent : Kalayana Chakravarthy Jarathi, CMA, S.M. Subhan and P.G. Issac Raj, PCS ORDER K. Anantha Padmanabha Swamy, Member (J) 1. Under consideration is a petition filed under Section 10 of IB Code, 2016 by Corporate Applicant i.e., M/s. Handum Industries Limited bearing CIN: L27109TG1986PLC039625. It was incorporate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 21 Crores including interest, and other charges. c. That to settle the dues to IDBI and others, the Corporate Applicant has entered into Slump Sale Agreement on 29.02.2012 with Splendid Metal Products Ltd (SMPL). In terms of the Slump Sale Agreement between SMPL and the Corporate Applicant, SMPL has taken over the outstanding liability of the Corporate Applicant due to Stressed Asset Stabilization Fund (SASF). d. That to improve its business relation further, the Corporate Applicant has also extended Corporate Guarantee on 13.02.2015 to consortium of banks led by Punjab National Bank (PNB) on behalf of SMPL for securing repayment of credit facilities proposed to be utilised by SMPL from PNB to the extent of ₹ 2163.35 Crores. Out of the consortium, SBI vide its letter dated 11.06.2018, LVB vide its letter dated 29.05.2018, PNB vide its letter dated 25.05.2018 and OBC vide its letter dated 12.07.2018 have issued Legal Notice, Recall Notice, under section 13(2) of SARFAESI Act, 2002, invoking respectively for repayment of the liability arising out of the guarantee extended by the Corporate Applicant to consortium of banks led by PNB on behalf of SMPL. e. That the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ruptcy (Application to Adjudicating Authority) Rules, 2016, in Form 6, specify that the petition has to be attached, inter alia, with, in case of operational debt, (i) Copy of invoice/demand notice served by an operational creditor on the Corporate Debtor and (ii) Record of default obtained through the information utility or all documents listed in serial number 8 of part-Ill of this Application. 4. That the Corporate Applicant has merely appended a statement of Accounts of Operational Creditors in the Books of Corporate Debtor as on 08.08.2018 as documents providing the Operational debts obtained from R4, R5, R6 R7 and the same are completely vague and being single liners, doesn't contain any proper information pertaining to the Operational debts obtained from R4, R5, R6 R7. 5. That petition filed by the Corporate Applicant is incomplete as it understates the debt owed to the objector herein. The Corporate Applicant has failed to disclose the entire debt owed by it to the Objector herein. The consent arbitral order made by the Hon'ble Supreme Court Justice R.C. Lahoti (Retd) vide his award dated 02.02.2012 has recorded the terms of the settlement enter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under the IBC it would require a special resolution. c. The debt owed to the Objector/Financial Creditor has not been disclosed accurately, thereby making the Application inaccurate and incomplete and this Application may be dismissed on this ground alone. This despite the order passed by the Commercial Court cum XXIV Addl. Chief Judge, City Civil Court in C.E.P. No. 8/2-17 dated November 28, 2018 which permitted the Objector herein to attach and sell the property of the Corporate Debtor to satisfy the ₹ 191,01,07,654.28 owed to the Objector herein. d. The objector would also like to point that the Corporate Applicant herein seems to have created fictitious debt which it owes to its own group companies as a matter of convenience in order to avoid paying monies owed to other genuine creditors as all the debt is created on the same day being August 8, 2018. Further, one of the Operational Creditor is also the company to which it had allegedly transferred the debt vide a slump sale of one of the units of its business. Reiterating the above, the Financial Creditor/NAFED prayed to dismiss the present petition. 10. IDBI/SASF filed its counter inter-alia stating that Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... holding 50.13% of shares in the total paid-up equity share capital of the Corporate Debtor) out of the total 1980 members. In this connection, it is also stated that there was proper quorum as stipulated under section 103 of the Companies Act, 2013. 13. It is stated that all the members present (100%) supported the resolution to initiate Corporate Insolvency Resolution Process (CIRP) under section 10 of the IBC, 2016 and the resolution was declared passed unanimously. The Corporate Applicant has furnished a list of its shareholders as on the date of AGM i.e., 16.07.2018 in the Application filed under section 10 of IBC, 2016. This list of shareholders consisting of 47 top shareholders and also shares held by 'Other-General Public' at serial No.48 of the said list. In this connection, it is stated that the shares held by 'Other-General Public' constitute 40.40% out of the total paid-up share capital of the Corporate Debtor. 14. It is stated that the members have unanimously passed a special resolution to initiate CIRP under section 10 of the IBC, 2016. The Corporate Debtor has complied with all the required procedural formalities under Companies Act, 2013 by fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ied with such fee as may be prescribed. c) The corporate applicant shall, along with the application furnish the information relating to- (i) its books of account and such other documents relating to such period as may be specified; and (ii) the resolution professional proposed to be appointed as an interim resolution professional. (iii) the special resolution passed by shareholders of the corporate debtor or the resolution passed by at least three-fourth of the total number of partners of the corporate debtor, as the case may be, approving filing of the application. d) The Adjudicating Authority shall, within a period of fourteen days of the receipt of the application, by an order- (a) Admit the application, if it is complete', [and no disciplinary proceeding is pending against the proposed resolution professional]; or (b) Reject the application, if it is incomplete: [or any disciplinary I proceeding is pending against the proposed resolution professional] Provided that Adjudicating Authority shall, before rejecting an application, give a notice to the applicant to rectify the defects in his application within seven days from the date of receipt of such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the application under section 10 does not reflect the correct figure of debt owed to the Objector, the same cannot be termed as complete and therefore the same should be rejected. It is clear the NAFED has not raised any defence to say that there is no debt or no default, rather they have contended that the amount of debt and default is much higher than reported by the Corporate Applicant. As regards the quantum of claim, it is observed that it is the duty of IRP/RP to collate and notice the claim based on books of accounts and other relevant documents. Therefore, this is not a proper ground for rejection of the instant application. 26. The other argument taken by NAFED that the Corporate Applicant has not provided evidence of operational debt other than copies of accounts of the Operational Creditors, is also not a proper ground for rejection of instant application as all claims are to be verified by IRP/RP on the basis of documents/Books of Corporate Applicant. 27. Furthermore, the Corporate Applicant has filed certified copy of the Special Resolution dated 16.07.2018 along with copy of the relevant Form MGT - 14 submitted to MCA on 25.07.2018. The special resolution was un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch property is occupied by or in the possession of the Corporate Applicant. e) Notwithstanding anything contained in any other law for the time being in force, a license, permit, registration, quota, concession, clearances or a similar grant or right given by the Central Government, State Government, local authority, sectoral regulator or any other authority constituted under any other law for the time being in force, shall not be suspended or terminated on the grounds of insolvency, subject to the condition that there is no default in payment of current dues arising for the use or continuation of the license, permit, registration, quota, concessions, clearances or a similar grant or right during the moratorium period. 33. However, the supply of essential goods or services of the Corporate Applicant shall not be terminated or suspended or interrupted during moratorium period. Further, if the IRP considers supply of any goods or services critical to protect and preserve the value of the Corporate Applicant and manage the operations of such corporate debtor as a going concern, then the supply of such goods or services shall not be terminated, suspended or interrupted during the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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