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TMI Blog2021 (6) TMI 186X X X X Extracts X X X X X X X X Extracts X X X X ..... loan amount on 30.09.2019. The Financial Creditor was assured during the month of October and November, 2019 by the Corporate Debtor for repayment of the outstanding along with interest - the Corporate Debtor did not make any repayment of principal and interest amount towards the discharge of financial debt of ₹ 12,41,50,950.96 claimed by the Financial Creditor till the date of the application. Hence, this application was filed. There is a Business Loan Agreement entered into between both the parties and whereby the Financial Creditor advanced a loan of ₹ 10 crores on the basis of the terms and conditions of BLA. The BLA was amended several times in view of the governing circumstances and finally by way of final amendment dated 01.06.2019, the date of repayment of the loan amount was extended upto 30.09.2019 by mutually agreed terms by both the parties. However, the Corporate Debtor committed default in repayment of loan amount on 30.09.2019 under the provisions of Clause 7 of BLA - the contention raised by the Corporate Debtor regarding the insufficient stamp duty and raising a contention that this is an investment not as a loan is not tenable in the light of the BL ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... C096432. The Corporate Debtor is engaged in the business of manufacturing insulin biosimilars and falls under the jurisdiction of this Hon'ble Tribunal. ii. It is averred on 28.09.2018, a Business Loan Agreement ( BLA ) was entered into between the parties i.e., Zydus Healthcare Limited/Financial Creditor/Applicant herein, Genesys Biologies Private Limited/Corporate Debtor/Respondent herein, Personal Guarantors, and Corporate Guarantor, M/s. Amicus Formulations (India) Private Limited. A copy of the BLA is marked as Annexure A-4 of the application. On the basis of the terms and conditions set out in the BLA, the Financial Creditor advanced a loan of ₹ 10.00 crores @ 12% interest compounded annually from the date of disbursement of the loan amount until the actual date of full recovery including all liability towards interest, which was to be repaid in full by 15.01.2019. A copy of Bank Statement evidencing the remittance of ₹ 10.00 crores as Financial Debit is marked as Annexure A-5. iii. It is averred for the purpose of securing the loan amount, a Deed of Corporate Guarantee was executed in favour of the Financial Creditor by Amicus Formulation (India) Pv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fically admitted herein and submits that the application filed under Section 7 of the I B Code ought to be rejected in limine as the same is filed by misrepresenting and suppressing facts and is not maintainable under law. ii. It is averred that the Company Petition is filed by an unrelated Corporate Entity. In the Company petition, all the documents of lender, M/s. Zydus Healthcare Limited/Financial Creditor is represented by Mr. Anil Matai in the capacity of Managing Director and Mr. Sanjay Kumar Gupta in the capacity of Company Secretary having CIN:U51900GJ1989PLC079501 whereas the subject Company Petition is filed by a Corporate Entity having CIN U24230GJ2016PLC085929 as evident from the Form-I filed to initiate Corporate Insolvency Resolution Process against the Respondent and where Mr. Anil Matai is not a Managing Director. It is averred that on perusal of the Master Data of the Petitioner, it is revealed that the Petitioner Company is presently is not in existence and it is amalgamated. A copy of the Master Data of lender, M/s. Zydus Healthcare Limited having CIN: U51900GJ1989PLC079501 and a copy of Master Data of the Petitioner from Ministry of Corporate Affairs websit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iscussions for a proposed investment and a letter of intent being exchanged on 24.03.2017, which ultimately culminated into a term sheet dated 02.07.2018 containing the principal terms for investment into Respondent. A copy of the term sheet is shown as Annexure-R4. As per the Term Sheet, the Respondent is valued at ₹ 475 crores and the Petitioner herein has agreed to invest ₹ 203.57 crores by subscribing 30% of the equity stake in Respondent. The conditions precedent for the investment is that a Subscription Agreement and Shareholder's Agreement is executed between Respondent and parent company of the petitioner and the said investment would be used for operational expenses and for construction of insulin biosimilar manufacturing facilities and conduct clinical trials to get approval of the Company's products in different markets. ix. It is averred that vide emails dated 03.08.2018 and 16.08.2018, the parent company of the petitioner has shared the Subscription Agreement and Shareholders Agreement establishing the intention to go forward with the investment promised by the parent company of the petitioner. Based on the assurance, the Respondent has investe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... extended the due date for repayment of the loan amount to 07.07.2020. Pursuant to the said extension of the due date, for the first time a demand notice for repayment of loan was sent to Respondent vide an email dated 13.07.2020, which reads as follows: In your last Email of June 9, 2020, you had sought Zydus' help and understanding in giving Genesys the time needed to be able to repay the loan amount. Even though the loan amount was long overdue, keeping in mind the relationship between Zydus and Genesys, in our Email of June 26, 2020 we agreed to the said request and sought a committed timeline for repayment of the loan amount, but not beyond July 7, 2020. It is also averred that the due date for loan repayment is treated as 07.07.2020, it is evident that the present application is barred under Section 10A of the Insolvency and Bankruptcy Code (Amendment) Ordinance (No. 9 of 2020) dated 5 June 2020 (Ordinance) and subsequently vide Act No. 17 of 2020, Sec. 2 (w.e.f. 05-06-2020). xvi. It is averred that the present application appears to have been filed with malicious intent rather than as a genuine case of insolvency resolution and hence it is submitted that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with legal enforcement of its rights under the Loan Agreement, Deed of Corporate Guarantee, deed of Personal Guarantee and the Demand Promissory Note, all dated 28th September, 2018 without any further notice . vi. It is averred that pursuant to the demand notice dated 13.07.2020, the present Company Petition has been instituted and it is evident that the declaration as contemplated and mandated as per the BLA dated 28.09.2018 of the debt to be due and payable happened only on 13.07.2020 and hence this Company Petition is barred as per Section 10A of the Insolvency and Bankruptcy Code (Amendment) Ordinance (No. 9 of 2020) dated 5 June 2020 (Ordinance) and subsequently vide Act No. 17 of 2020, Sec. 2 (w.e.f. 05-06-2020). 4. The averments of the Rejoinder filed by the Financial Creditor are briefly described hereunder: i. It is averred that the present petition is maintainable and is entitled to be allowed as the Respondent on its own stance admitted the contents of BLA and the receipt of loan amount of ₹ 10.00 crores on the terms and conditions of BLA. ii. In reply to para 3 of the counter, it is averred that on 02.02.2016, M/s. Zydus Healthcare Limited was i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enied. The Respondent is trying to evade its liability of repayment of the loan amount by raising insignificant and trivial issues which are a result of the inadvertent mistake made by the counsel of the Petitioner while drafting the present petition. It is also averred that there is no factual dispute in the present petition and the Respondent cannot be allowed to dodge its liability to make repayment of all sums of money due to the Petitioner in terms of BLA by raising such inconsequential objections. A copy of the PAN Card of Petitioner is annexed as Annexure-4 of the Rejoinder. v. It is averred that the contents of para 9 of the counter are incorrect and hence denied and also averred that Section 60(2) and 60(3) of the I B Code, 2016 permits simultaneous proceedings against the Corporate Debtor/Principal Borrower and the surety. It is relied on the Order issued by the Hon'ble NCLAT in the matter of State Bank of India vs. Athena Energy Ventures Pvt. Ltd. Company Appeal (AT) (Ins) No. 633 of 2020 held that whilst setting aside the Order dated 04.03.2020 passed by Hon'ble NCLT, Hyderabad in Athena Energy Ventures Pvt. Ltd. vs. State Bank of India BEARING cp(ib) No. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Respondent has admitted the execution of BLA and receipt of ₹ 10 crores under the terms and conditions of BLA. The reference of Term Sheet by the Respondent and the discussions for prospective business between Cadila Healthcare Limited and the Respondent is of no consequence for the purpose of present matter. xii. In reply to para 16 of the counter, it is averred that the Respondent admits the receipt of loan and the execution of BLA and the other contents are misconceived. xiii. In reply to para 17 of the counter, it is averred that the contents are incorrect and are denied. There was no verbal agreement between the Petitioner and the Respondent as alleged. The Petitioner never executed any agreement for the proposed investment of ₹ 203.57 crores against the 30% stake as alleged and such admissions are misconceived and incorrect. xiv. In reply to para 18 of the counter, it is averred that the contents are incorrect and are denied. The allegation with regard to various process optimization and establishing the 'Titler' and other equity investments are false because Petitioner never executed any agreement other than BLA. xv. In reply to pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed are mala fide and only to defraud the Financial Creditor i.e., the Petitioner herein. xix. In reply to para 24 of the counter, it is averred that the present proceedings do not fall within the ambit of restriction under Section 10A. Therefore, the present petition is maintainable and is liable to be allowed. xx. In reply to para 25, 26, 27 28 of the counter, it is averred that the contents are incorrect, false and are denied as the present petition is legally maintainable and the allegations and objections raised by the respondent are actuated by mala fide and the present petition is liable to be allowed with the cost of legal proceedings. 5. We have heard the counsel for Financial Creditor/Petitioner and the Counsel for Corporate Debtor/Respondent herein and perused the whole case records as well as documents submitted by both the parties. It is a fact that the Business Loan Agreement (BLA) was entered into between the parties i.e., Zydus Healthcare Limited/Financial Creditor with Genesys Biologies Private Limited/Corporate Debtor on 28.09.2018 whereby the Financial Creditor advanced a loan of ₹ 10.00 crores to the Corporate Debtor on the basis of the ter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent dated 28.09.2018. The Counsel for Corporate Debtor contended that the original documents were signed by M/s. Zydus Healthcare Limited/Financial Creditor represented by Mr. Anil Matai in the capacity of Managing Director and Mr. Sanjay Kumar Gupta in the capacity of Company Secretary having CIN: U51900GJ1989PLC079501. However, the Company Petition is filed by a Corporate Entity having different CIN U24230GJ2016PLC085929 as evident from the Form-I filed to initiate Corporate Insolvency Resolution Process against the Respondent and where Mr. Anil Matai is not a Managing Director. As such, this company petition may not be maintainable. 11. The Counsel for Respondent would contend that the Respondent herein does not have relation with the petitioner herein and the present petition is instituted without any locus standi and is liable to be dismissed in limine with exorbitant costs. 12. The counsel for corporate debtor would also contend that the company petition is incomplete and filed on or after 03.10.2020 as evidenced from the notary stamp on the verification affidavits. He also contended that as per IB (AAA) (Amendment) Rules, 2020, any company petition filed on or after 24 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that even the Business Loan Agreement specified by the end uses which would demonstrate the efficacy of the respondent's operations. 18. The counsel for Corporate Debtor contended that the parties never intended for the BLA to be enforced as a plain loan. Respondent required the said sum of ₹ 10 crores and sought from Petitioner to finance the same, notwithstanding the fact that the requirement was in lieu of Petitioner's approach towards process optimization and establishing the titer. 19. The counsel for Corporate Debtor further contended that there is no default in the loan as the expense undertaken by the Respondent is at the instance of the Petitioner and the BLA was entered with an intention to set off against the investment of ₹ 230 crores in Respondent and when there was no further interest shown by the Petitioner in investment, it was agreed that the loan is not required to be paid for a reasonable time until an alternate suitable investor invests in Respondent. Due to Covid-19 pandemic, it has taken a longer time for the Respondent to find a suitable alternative investor. As such, he stated that there is no default and presently no debt is due. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly) and a compound interest of ₹ 2,41,50,950.96 calculated @ 12% per annum from 03.10.2018 to 20.08.2020 and the interest accrued thereafter. Accordingly, we hereby admit this petition. 24. It is clearly observed that there is a financial debt which was given by the Financial Creditor and the Corporate Debtor has defaulted in making repayment as per the BLA amended several times in this regard. Accordingly, we are of the view that there is no case for the Corporate Debtor and hence the application is hereby admitted. 25. In the light of the above observations, we are of the view that there is a financial debt which was due and not paid. Accordingly, the application has been admitted. 26. Hence, the Adjudicating Authority admits this Petition under Section 7 of IBC, 2016, declaring moratorium for the purposes referred to in Section 14 of the Code, with the following directions:- i. The Bench hereby prohibits the institution of suits or continuation of pending suits or proceedings against the Corporate Debtor including execution of any judgment, decree or order in any court of law, Tribunal, arbitration panel or other authority; Transferring, encumbering, alienatin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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