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TMI Blog2019 (7) TMI 1723X X X X Extracts X X X X X X X X Extracts X X X X ..... with a clear commercial effect of borrowing. Moreover, the debt claimed in the present application includes both the component of outstanding principal and interest. In that view of the matter not only the present claim comes within the purview of 'Financial Debt but also the applicant bank can clearly be termed as 'Financial Creditor' of the respondent corporate debtor so as to prefer the present application under Section 7 of the Code. An application under Section 7 of the Code is acceptable so long as the debt is proved to be due and there has been occurrence of existence of default. What is material is that the default is at least 1 lakh. In view of Section 4 of the Code, the moment default is of Rupees one lakh or more, the application to trigger Corporate Insolvency Resolution Process under the Code is maintainable - In the present case the respondent corporate debtor has admitted in its letter dated 19.11.2018 that it owes ₹ 21.55 Crores to the applicant Central Bank of India. In addition, applicant bank has filed the relevant statement of accounts duly certified in accordance with Bankers' Books Evidence Act, 1891 as per the requirement of Form 1-pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 (for brevity 'the Rules') with a prayer to trigger Corporate Insolvency Resolution Process in respect of respondent Company M/s. RS Ingot and Billet Private Limited, referred to as the corporate debtor. 2. The Respondent Company M/s. RS Ingot and Billet Private Limited. (CIN No. U27100 DL2012 PTC 240299) against whom initiation of Corporate Insolvency Resolution Process has been prayed for, was incorporated on 16.08.2012 having its registered office situated at 401, Mahavir Ji Complex, LSC, Rishabh Vihar, New Delhi - 110092. Since the registered office of the respondent corporate debtor is in New Delhi, this Tribunal having territorial jurisdiction over the NCT of Delhi is the Adjudicating Authority in relation to the prayer for initiation of Corporate Insolvency Resolution Process in respect of respondent corporate debtor under sub-section (1) of Section 60 of the Code. 3. It is appropriate to mention that the applicant Central Bank of India is a body corporate incorporated under the Banking Companies (Acquisition and Transfer of Undertakings) Act 1970 and has its Registered Office at Chander Mukhi, N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot transferred to the respondent corporate debtor. 10. It is further contended that by means of the present application, the applicant bank is claiming only that part of default arising from the credit facilities sanctioned for 'Furnace Rolling Division 1', which has since stood transferred to the respondent Corporate Debtor pursuant to the sanction of the Scheme of Demerger. 11. As per part IV of the application it is claimed that a sum of ₹ 21,60,57,478/- (Rupees Twenty-One Crores Sixty Lacs Fifty-Seven Thousand Four Hundred Seventy-Eight Only) is due from the respondent company as on 30.11.2018. 12. In support of the financial debt, it is submitted that the applicant bank had entered into a consortium Agreement dated 21.11.2009 with the original borrower, M/s. Abhinav Steel and Power Limited for an overall limit of ₹ 125,00,00,000/-, where the share of the applicant Financial Creditor was ₹ 31 Crores. The Consortium (referred to as PNB Consortium) consisted of Punjab National Bank, Oriental Bank of Commerce and Central Bank of India. 13. Subsequently applicant financial creditor approved enhanced sanction of Fund Based and Non-Fund Based L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,00,000/- ₹ 6,50,00,000/- ₹ 1,51,00,000/- ₹ 4,05,00,000/- 18. As huge default persisted, demand notice dated 12.10.2018 was given to the Corporate Debtor for repayment of the debt but the respondent Corporate Debtor failed to make any payment to the Applicant financial creditor. 19. Applicant has submitted that the Corporate Debtor has defaulted in fulfilling his obligations under the order dated 27.11.2017 passed by this Hon'ble Tribunal sanctioning the Scheme of Demerger, and has defaulted to make any payments to the Financial Creditors. It is alleged that the Corporate Debtor has committed a default in repayment of amount aggregating to ₹ 21,60,57,478/- (Rupees Twenty-One Crores Sixty Lac Fifty-Seven Thousand Four Hundred Seventy-Eight Only) as on 30.11. 2018. 20. Accordingly the applicant has prayed for initiation of Corporate Insolvency Resolution Process against the Corporate Debtor for its default in repayment of credit facilities granted for 'Furnace and Rolling Division V of M/s. Abhinav Steels and Power Limited, liability of which stands transferred to the Corporate Debtor pursuant to order dated 27.11.2017 passed by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... debtor. 26. In fact, the respondent company has admitted the liability in its letter dated 19.11.2018 (Annexure 19) which is reproduced below. Sub: Request for Loan Documentation as per Demerger Scheme of ASPL. Sir, In continuation of our various letters and meeting, we again request you do the necessary documentation as per demerger order dated 27.11.2017 of the National Company Law Tribunal, Principal Bench, New Delhi through a company's petition No. 100(PB)/201. As per the said order, the Furnance Rolling - I situated at plot no. A 18-19-21-22-25-26-27 SIDA Industrial Are, Satharia, Distt. Jaunpur, UP (eartwhile unit name of demerged company ie. Abhinav Steels and Power Limited) is transferred to RS Ingot and Billet Private Limited (RSIBPL). The necessary ROC Formalities of said NCLT order are already done and required form no. SH-7, PASS, and Dir-12 filed. We are submitting you the Audited BS alongwith notes and accounts of RSIBPL for the FY 2017-18. The assets and liability of Furnace Rolling -I are transferred as on 31.03.2018 which are as per order of NCLT dated 27.11.2017. Your Following loans are transferred to the RSIBPL: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ditors. 30. The expressions Financial Creditor and Financial debt have been defined in Section 5 (7) and 5 (8) of the Code and precisely Financial debt is a debt along with interest, if any, which is disbursed against the consideration for time value of money. 31. In the present case applicant Central Bank of India had sanctioned and disbursed several loan facilities by entering in to loan agreements with the original borrower, which are recoverable with applicable interest. The corporate debtor had undertaken the liability of the borrower in respect of the demerged undertaking including the liability to pay relevant interest. The loan was clearly disbursed against the consideration for time value of money with a clear commercial effect of borrowing. Moreover, the debt claimed in the present application includes both the component of outstanding principal and interest. In that view of the matter not only the present claim comes within the purview of 'Financial Debt but also the applicant bank can clearly be termed as 'Financial Creditor' of the respondent corporate debtor so as to prefer the present application under Section 7 of the Code. 32. The applica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uel to the aforesaid discussion the objection of respondent that applicant is not a financial creditor and that there has been no default on their part cannot sustain. Respondent has raised another objection that the application preferred in Form-1 is defective. 40. There is no dispute that the applicant has given brief facts of the case at Part-V of Form-1 inter alia to throw light on the Scheme of Demerger where by though respondent was not the borrower, part loan liability pertaining to the demerged unit has been transferred to it and therefore recoverable from the respondent. Additional relevant facts have been incorporated at Part-V of the application Form for proper appreciation of the matter. Such insignificant technical objections are only to be iron out and cannot be a ground to reject the application filed under Section 7 of the Code. 41. Hon'ble Supreme Court in the case of Mobilox Innovations Private Limited V. Kirusa Software Private Limited reported in AIR 2017 SC 4532 at Para 19 has observed that: Once the adjudicating authority / Tribunal is satisfied as to the existence of the default and has ensured that the application is complete and no disciplina ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hnoi as per the requirement of the IBBI Regulations. Accordingly, the requirement of Section 7 (3) (b) of the Code has been satisfied. 45. In the aforesaid background it is seen that the applicant bank clearly comes within the definition of Financial Creditor. The material placed on record including the letter of respondent showing transfer of liability confirms that the respondent corporate debtor committed default in repayment of the financial debt. On a bare perusal of Form - I filed under Section 7 of the Code read with Rule 4 of the Rules shows that the form is complete and there is no infirmity in the same. It is also seen that there is no disciplinary proceeding pending against the proposed IRP. We are satisfied that the present application is complete in all respect and the applicant financial creditor is entitled to claim its outstanding financial debt from the corporate debtor and that there has been default in payment of the financial debt. 46. As a sequel to the above discussion and in terms of Section 7 (5) (a) of the Code, the present application is admitted. 47. Mr. Shravan Kumar Vishnoi having registration number IBBI / IPA-002 / IP-P00040/ 2016-17 / 10079 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecified, are not to be terminated or suspended or interrupted during the moratorium period. In addition, as per the Insolvency and Bankruptcy Code (Amendment) Act, 2018 which has come into force w.e.f. 06.06.2018, the provisions of moratorium shall not apply to the surety in a contract of guarantee to the corporate debtor in terms of Section 14(3) (b) of the Code. 52. The Interim Resolution Professional shall perform all his functions contemplated, inter-alia, by Sections 15, 17, 18, 19, 20 21 of the Code and transact proceedings with utmost dedication, honesty and strictly in accordance with the provisions of the Code, Rules and Regulations. It is further made clear that all the personnel connected with the Corporate Debtor, its promoters or any other person associated with the Management of the Corporate Debtor are under legal obligation under Section 19 of the Code to extend every assistance and cooperation to the Interim Resolution Professional as may be required by him in managing the day to day affairs of the 'Corporate Debtor'. In case there is any violation committed by the ex-management or any tainted/illegal transaction by ex-directors or anyone else, the Int ..... X X X X Extracts X X X X X X X X Extracts X X X X
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