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TMI Blog2020 (10) TMI 963X X X X Extracts X X X X X X X X Extracts X X X X ..... f the corporate debtor vis- -vis the moratorium on the assets of the corporate debtor, it is clarified by way of an explanation that all assets of such guarantors to the corporate debtor shall be outside the scope of moratorium as per Section 14(3) (b) of the Code. It appears from the records that the Corporate Debtor nowhere denied the debt amount nor filed any documents to show that the claim is false, but in reply by way of counter the Corporate Debtor simply prayed to dismiss the application without showing any commendable and acceptable reasons - Under Sub-Section (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. The applicant produced the statement of account for the loan account which shows that as on 30.11.2019 a sum of 32,39,45,078/-, is due from the Corporate Debtor. It has also been established that admittedly there is a Default as defined under Section 3 (12) of the Code on the part of the Corporate Debtor and the nature of debt is a financial debt as defined under Section 5(8) of the Code. The application on behalf of Fin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... set in accordance with the guidelines issued by Reserve Bank of India. 3. On 11.02.2020 the applicant/Financial Creditor filed an Interlocutory Application IA/46/KOB/2020 to permit the applicant to implead the guarantors of the Corporate Debtor as Respondents in this application. On 24.02.2020 this Tribunal allowed the application and ordered impleadment of the Corporate Guarantors M/s. Air Travel Enterprises India Ltd., 1st Floor, New Corporation Building, Palayam, Trivandrum 695 033, Sri. E.M Najeeb Ellias Mohammed, 6D, kowdiar Manor, JawaharNagar, Trivandrum 695 041, Dr. Sahadulla M.I, 69, Rastanura, RPD Marg, Kuravankonam,Kowdiar, Trivandrum 695 003, as Respondents 2 to 4. The applicant stated that M/s. Air Travel Enterprises India Ltd (R2) executed Corporate guarantee in favour of the Financial Creditor. Simultaneously personal guarantee was also executed with the same terms and conditions, for the repayment of the entire term loan and interest in the event of default. 4. The applicant has submitted the authorisation letter given by the Union Bank of India on 23.12.2019, in which the Regional Head authorised Ms. Kala Sivakumar, Chief Manager to file this application. 5. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es, out of which ₹ 65 crores will be loan and ₹ 43 crores as Equity. Based on the estimate, Corporate Debtor had obtained financial assistance in the year 2010 i.e. ₹ 20 crores from State Bank of India, ₹ 25 crores from Union Bank of India and ₹ 20 crores from State Bank of Travancore. The promoters had mobilized funds from investors including NRIs to promote tourism and hospitality business in Kerala and generate employment opportunities. As security for the loan, the Corporate Debtor mortgaged 55.33 Acres of leasehold land in Chittari and Keekan Village, Hosdurg Taluk, Kasaragod District in different survey numbers. As per the terms of loan agreement, the construction of the resort has to be completed and the repayment has to be started by September 2012 and the loan has to be repaid by September 2018. d. While the work was in progress, as part of marketing strategy, the 1st Respondent company had invited internationally reputed operators for operation and management tie-up and an agreement has been executed on 14.12.2012 with Starwood Asia Pacific Hotels and Resorts Pvt Ltd., Singapore, for their "Westin" brand e. As per the negotiatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... moter's contribution and the project incorporating "Westin Standard" will in all probability will be completed soon. The Corporate Debtor is in the process of handing over the 1st phase to "Westin" for management. j. On the request of the 1st Respondent, a Joint lenderers Forum (JLF) meeting was convened on 7.11.2016, which declared a corrective action plan as per R.B.I. guidelines. In the J.LF. meeting, the Banks decided to appoint M/s. Dun and Bradstreet (one of the most reputed agency approved by various financial institutions for conducting financial techno economic viability studies) for conducting Techno Economic Viability study of the project and converted Multiple Banking to consortium with S.B.T. as the lead Bank. Accordingly, Dun and Bradstreet submitted their report to S.B.T., the then lead Bank on 23.12.2016 with a revised project cost of ₹ 231 crores and shifting the Date of Commencement of Commercial Operations (DCCO) to 30.9.2017. The additional fund required for the completion of project was estimated to be ₹ 79 crores, out of which ₹ 50 crores is the loan amount to be shared by the Banks. Based on the report, the lead Bank S.B.T. had sancti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the time, Union Bank of India/applicant herein gave an offer letter dated10.10.2019 to settle the dispute for a sum of ₹ 20 crores. On getting the letter dated 10.10.2019 there was a negotiation with respect to the amount and Union Bank of India agreed to settle the monetary dispute for a sum of ₹ 17,05,00,000/- through letter dated 05.11.2019. r. The Respondents 1 to 3 further submit that as per the letter dated 05.11.2019 they have paid substantial amount as part of One Time Settlement and the applicant accepted the same towards One Time Settlement amount. The 1st Respondent submitted that as per Annexure R11 notice under Section 13(2) SARFESI Act, the respondent was required to pay the demanded amount in lumpsum. But subsequently the applicant agreed to settle the matter for a sum of ₹ 17,05,00,000/- vide letter dated 05.11.2019 being O.T.S, in instalments. s. The Respondents 1 to 3 further submitted that in the meantime the Dhanlaxmi Bank filed IBA/41/KOB/2019 before this Tribunal and the claim was settled by the Respondent No.1 paying ₹ 3.195 Crores as part payment of settlement amount. Hence, IBA/41/KOB/2019 was closed as withdrawn on 06.01.2020. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... original contract. Section 135 of the Contract Act reads: "Discharge of surety when creditor compounds with, gives time to, or agrees not to sue, principal debtor.--- A contract between the creditor and the principal debtor, by which the creditor makes a composition with, or promises to give time to, or not to Sue, the principal debtor, discharges the surety, unless the surety assents to such contract." The applicant settled the matter with the 1st Respondent by Annexure- R25. Respondents 2 and 3 are not parties to the settlement. Hence the applicant has no right or authority to demand any amount from the respondents 2 and 3 as they are exonerated from the original contract. y. In the decision reported in N.P. Gurudev vs. State Bank of Mysore and others, MANU/KA/0804/2011, the Hon'ble High Court of Karnataka considering the various Judgments of other High Courts and Hon'ble Supreme Court of India held, "granting of instalments by the decree holder to the principal debtor amounts to giving of time to the principal debtor", that amounts to a novation of contract. It is further held that if the principal borrower and creditor bank compromise a disput ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ist other financial creditors against the company the consortium can join together with those financial creditors without appearing as a single authority. 10. It is also stated that no reliefs sought against the 4th respondent in this IBA and the 4th respondent has only been impleaded which is not at all sufficient to get an order to recover money. So, the case against the 4th Respondent is only to be dismissed with costs. FINDINGS: - 11. I have heard the Learned counsel for both the parties through video conferencing and perused the whole case records including documents and photocopies appended with the case records. The following are the observations of this Bench: 12. In the present application, the applicant filed an Interlocutory Application IA/46/KOB/2020 on 11.02.2020 to permit the applicant, to implead the guarantors of the Corporate Debtor as additional Respondents 2 to 4. On 24.02.2020 and this Tribunal allowed the application. Consequently, at this juncture the Tribunal points out two case laws in this regard. In Axis Bank Ltd. V Lotus Three Developments Ltd.&Ors. Company Appeal (AT) (Insolvency) No. 246 of 2018, it is stated as under: - "Initiation of 'corporate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ayable in law or in fact. The moment the adjudicating authority is satisfied that a default has occurred, the application must be admitted unless it is incomplete, in which case it may give notice to the applicant to rectify the defect within 7 days of receipt of a notice from the adjudicating authority. Under sub-Section (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." 6. From the aforesaid decision, it is clear that the Adjudicating Authority is only to satisfy that the default has occurred and that the 'Corporate Debtor' is entitled to point out that the default has not been occurred in the sense that the debt is not due. No other person has a right to be heard at the stage of admission of the application under Section 7 and 9 of the I&B Code including the 'shareholders' or the 'personal guarantor' etc." In State Bank of India V. Ramakrishnan & anr. CIVIL APPEAL NO. 3595 OF 2018, it is stated as follows: - 27……… "We now come to the argument that the amendment of 2018, which makes it clear that Section 14 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unless it is incomplete, in which case it may give notice to the applicant to rectify the defect within 7 days of receipt of a notice from the adjudicating authority. Under Sub-Section (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. The applicant produced the statement of account for the loan account which shows that as on 30.11.2019 a sum of ₹ 32,39,45,078/- (Rupees Thirty-Two Crores Thirty-Nine Lakhs Forty-Five Thousand and Seventy-Eight Only), is due from the Corporate Debtor. It has also been established that admittedly there is a "Default" as defined under Section 3 (12) of the Code on the part of the Corporate Debtor and the nature of debt is a 'financial debt' as defined under Section 5(8) of the Code. 16. The application on behalf of Financial Creditor is complete and there is default in the payment of the financial debt. Therefore, as per Section 7(5)(a) of the code, the present application filed U/S 7 of the I&B Code deserves to be admitted against the Corporate Debtor ('M/s. Green Gateway Leisure Ltd'). 17. The Fi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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