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TMI Blog2019 (6) TMI 1563X X X X Extracts X X X X X X X X Extracts X X X X ..... as directed State Bank of India to initiate proceeding under Insolvency and Bankruptcy Code, against some of the defaulters including the Corporate Debtor - It appears from evidence on record that this proceeding is initiated by the State Bank of India against the Corporate Debtor as per instructions of the RBI. Hence, this proceeding Under Section 7 of IBC appears to be not maintainable. Petition dismissed. - IA No. 21/CTB/2019 in TP No. 40/CTB/2019 and CP(IB) No. 24/KB/2018 - - - Dated:- 25-6-2019 - M. B. Gosavi, Member (J) For the Appellant : Jishnu Choudhury, Sanhita D. Sensarma and Mityo Mallick, Advocates For the Respondents : Sabyasachi Choudhury, Gauram Mishara and V.V.V Santry, Advocates ORDER M. B. Gosavi, Member (J) 1. State Bank of India- has filed this application Under Section 7 of Insolvency and Bankruptcy Code, 2016 to start Corporate Insolvency Resolution Process of M/s. Visa Steel Limited the Corporate Debtor as the Corporate Debtor committed default in paying financial debt of more than ₹ 900,00,00,000/- (Nine Hundred Crore Only). 2. Upon service of notice the Corporate Debtor appeared in the matter. The Corporate Debtor did ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and further set-aside all the proceeding filed by the Financial Creditor under Insolvency and Bankruptcy Code, 2016 on the basis of said Circular. 5. The Corporate Debtor filed this application Under Section 60(5) of Insolvency and Bankruptcy Code, challenging the proceeding Under Section 7 of IBC, 2016 filed by the State Bank of India, on the ground that this proceeding is filed as per instructions of Reserve Bank of India, in contravention of provisions of Section 35AA of Banking Regulation Act, 1949. Hence, the proceeding is not maintainable. 6. The Applicant Bank filed affidavit-in-reply. It raised three contentions (1.) That this application is filed after dismissal of the Writ Petition by the Corporate Debtor. This application is filed only with an intention to cause further delay of this proceeding and the bank has not filed this proceeding on the basis of circular dated 12.02.2018. (2.) This proceeding is filed prior to the date of issuance of the above circular, hence, judgement of Hon'ble Apex Court in case of Dharni Sugar Chemicals Limited is not applicable (3.) The proceeding is initiated by SBI independently without reference to RBI hence, provisions of Sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efore recording finding on this factual controversy, it would be proper to get to know the exact legal position as involved and explained by the Apex Court while interpreting various provisions of Banking Resolution Act, 1949. 11. Hon'ble Apex Court after considering the provision 35A, 35AA, 35AB of the Banking Regulation Act, 1949, has held that, the Press Note dated 05.05.2017, set out supra, explained the new Sections 35AA and 35AB as the grant of two distinct and separate powers. Section 35AA has been inserted to resolve specific stressed assets by initiating insolvency resolution process where required . On the other hand, Section 35AB has been enacted so that the RBI has also been empowered to issue other directions for resolution.... It is significant that Section 35AA is enacted exactly as it is in the Ordinance. So is Section 35AB, except for a minor addition in sub-section (1) which adds the words any banking company or . Indeed, even the statement of Objects and Reasons introducing the same Sections by way of an Amendment Act makes it clear that the powers conferred for resolution of stressed assets, either by invoking the Insolvency Code, or by other means, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urther contended in Para 9 of the counter affidavit that, It is submitted that as per recent amendment in Banking Regulation Act, 2017 seek Section 35AA Reserve Bank of India has issued the directions as per Annexure 2 of the Writ Petition and direction of RBI are complied by the lenders as is evident from number of various joint lender meetings/correspondence. 15. It is seen from the perusal of the Order of Hon'ble Orissa High Court dated 25.03.2019 that the Hon'ble High Court on the basis of contentions of the bank observed that, Opposite party No. 2 (SBI) being public sector bank is obliged under law to adhere to the provisions and guidelines/ policies claimed by opposite party No. 1 (RBI) from time to time. In reply to the averments made by the petitioner in Paragraph No. 5 of the Writ Petitions, SBI has stated in its counter affidavit that RBI has issued directions as per annexure 2 of the Writ Petition and instructions of RBI are complied with 16. Above evidence is enough to hold that this proceeding Under Section 7 of the Insolvency and Bankruptcy Code, is filed against Corporate Debtor by SBI, is not filed independently but it is filed as per instructions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch is also directed by RBI circular dated 28.08.2017. All the representative of the other merger lenders presents in the meeting. 19. Above minutes make it abundantly clear that the SBI has initiated this proceeding under Insolvency and Bankruptcy Code, against the Corporate Debtor on the basis of RBI directions dated 28.08.2017. Circular date 28.08.2017 is also on record at Page 142. RBI has directed State Bank of India to initiate proceeding under Insolvency and Bankruptcy Code, against some of the defaulters including the Corporate Debtor. RBI now in view of the interpretation of Hon'ble Apex Court of section 35AA of Banking Regulation Act, 1949 in case of Dharni Sugar Chemicals Limited, cannot issue such instructions without concurrence of the Central Government. It appears to me from evidence on record that this proceeding is initiated by the State Bank of India against the Corporate Debtor as per instructions of the RBI. Hence, this proceeding Under Section 7 of IBC appears to be not maintainable. In view of the above evidence, the law and provisions of the application as explained by the Hon'ble Apex Court, is filed by the Corporate Debtor bearing IA No. 21/CTB ..... X X X X Extracts X X X X X X X X Extracts X X X X
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