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TMI Blog2021 (6) TMI 190X X X X Extracts X X X X X X X X Extracts X X X X ..... ancial creditor to sue the corporate debtor on March 31, 2018 the date on which the account of the corporate debtor was declared as NPA and from the records it is evident that the financial creditor has filed the present petition on July 24, 2020 which is well within the 3 years period of limitation. Thus, there is a debt and default on the part of the corporate debtor and the corporate debtor is unable to repay its dues to the consortium of bankers and in the instant case to the financial creditor - Also the default arising in the present application is much prior to the advent of the Covid-19 pandemic and hence the corporate debtor cannot seek shelter also under section 10A of the IBC, 2016. The application as filed by the applicant-financial creditor is required to be admitted under section 7(5) of the I and B Code, 2016 - application admitted - moratorium declared. - I. B. A. No. 483 of 2020. - - - Dated:- 20-4-2021 - R. Varadharajan (Judicial Member) And B. Anil Kumar (Technical Member) For the Financial Creditor : B. Dhanaraj For the Corporate Debtor : Karthikei Balan ORDER R. VARADHARAJAN (JUDICIAL MEMBER). - 1. Under adjudica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ies dated February 19, 2004, June 13, 2004, December 16, 2004, August 17, 2005, September 5, 2006, February 7, 2008, May 28, 2009, October 15, 2010, December 3, 2010, April 2, 2011, December 14, 2011, November 23, 2012, May 22, 2013, May 15, 2014, June 26, 2015, September 1, 2015, January 25, 2016 and January 13, 2017. (iv) Letter of sanction/renewal of credit facilities dated May 3, 2017 for an amount of INR 848 crores under RBI Scheme of Sustainable Structuring of Stressed Assets and Renewal of Credit Facilities duly accepted and endorsed by authorised signatory of the corporate debtor/borrower and the guarantors. (v) Master restructuring agreement (MRA) dated May 9, 2017 executed between the lenders (State Bank of India, Bank of Baroda, ICICI Bank Ltd., IDBI Bank Ltd., and Tata Capital Financial Services Ltd.) and corporate debtor. (vi) Lenders agent agreement dated May 9, 2017 executed between the lenders (State Bank of India, Bank of Baroda, ICICI Bank Ltd., IDBI Bank Ltd., and Tata Capital Financial Services Ltd.) and the corporate debtor and the financial creditor State Bank of India for appointment of SBI as the agent to represent the lenders. (vii) Lett ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tructure Ltd., in favour of IDBI Trusteeship Services Ltd. (Security Trustee), as per MRA terms. (xix) Deed of hypothecation executed on July 28, 2017 by M/s. CCCL Infrastructure Ltd., to and in favour of IDBI Trusteeship Services Ltd. (Security Trustee), as per MRA terms. (xx) Amended and restated agreement for pledge of shares dated August 17, 2017 executed between the promoters and security trustee towards pledge of 4,71,13,476 shares held by promoters in the share capital of the corporate debtor. (xxi) Irrevocable power of attorney executed by the promoters in favour of security trustee dated August 17, 2017 to accomplish the purpose of the pledge. (xxii) Memorandum of deposit of title deeds dated October 17, 2017 executed by the corporate debtor to and in favour of the security trustee and registered as Doc. No. 1065 of 2018 with the Sub-Registrar of Guduvanchery. (xxiii) Memorandum of entry dated November 15, 2017 executed by the managing director of corporate debtor to and in favour of the Security Trustee to hold and retain title deeds as and by way of mortgage by deposit of title deeds. (xxiv) Letter dated June 28, 2018 submitted by the corpor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d a current account with the financial creditor and availed a bank guarantee facility from the financial creditor and thereafter, on the basis of the corporate debtor's request since September 2003, the financial creditor sanctioned various credit facilities/enhanced facilities/additional facilities by issuing sanction letters on various dates and released the facilities to the corporate debtor upon confirmation of the due compliance of the term/conditions stipulated in the sanction letters including execution of necessary loan documents. 6. The summary of the various sanction letter, date of release of facilities to the corporate debtor and the documents executed by the corporate debtor in favour of the financial creditor is extracted hereunder : Sl. No. Date of sanction Particulars of documents executed 1. Sanction letter dated 1-10-2003 for INR 15 crores. (i) Board resolution dated 9-10-2003 in favour of obtaining the advance of INR 15 crores by way of various credit facilities with necessary securities. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (v) Supplemental agreement of hypothecation of goods and assets for increase in the overall limit dated 23-6-2004. (vi) Supplemental deed of personal guarantee for increase in the overall limit by the promoters dated 22-3-2004. (vii) Agreement of pledge of goods and assets dated 23-6-2004. (viii) 3 agreements to mortgage dated 23-6-2004. (ix) 2 letters of undertaking dated 23-6-2004 by the guarantors. (x) NOC dated 16-8-2004 issued by Bank of Baroda in favour of corporate debtor. (xi) Letter dated 16-9-2004 issued by the corporate debtor enclosing forms 17 and 13, all dated 10-9-2004, issued by the Registrar of Companies w.r.t. satisfaction of charges of Bank of Baroda. 4. Sanction letter dated 16-12-2004 for INR 50 crores. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sanction letter dated 5-9-2006 for INR 204.24 crores. (i) Board resolution dated 28-9-2006 in favour of availing of enhanced/additional limits for INR 204.24 crores by way of various credit facilities with necessary securities. (ii) Supplemental agreement of loan for increase in the overall limited dated 29-9-2006. (iii) Letter regarding grant of individual limits within the overall limit dated 29-9-2006. (iv) Supplemental agreement of hypothecation of goods and assets for increase in the overall limit dated 29-9-2006. (v) Letter giving consent for disclosure of information and undertaking dated 29-9-2006. (vi) Revival letter dated 29-9-2006 issued in favour of the financial creditor, acknowledging liability and reviving all loan documents, guarantees, supplemental documents, supplemental guarantees and letters executed by the corporate debtor and its ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... crores by way of various credit facilities with necessary securities. 10. Sanction letter dated 3-12-2010 for INR 50 crores. (i) Board resolution dated 10-1-2011 in favour of availing of enhanced/additional limits for INR 50 crores by way of various credit facilities with necessary securities. (ii) Letter dated 3-1-2011 issued on behalf of the corporate debtor accepting the sanction of enhanced facilities. (iii) Supplemental agreement of loan for increase in the overall limit up to INR 740.50 crores dated 1-2-2011. (iv) Letter regarding grant of individual limits within the overall limit dated 1-2-2011. (v) Supplemental agreement of hypothecation of goods and assets for increase in the overall limit dated 1-2-2011. (vi) Letter regarding consent for disclosure of information and undertaking dated Nil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7. Learned counsel for the financial creditor submitted that during the financial year 2013-14, the corporate debtor faced a huge setback in its commercial operations throughout India, which resulted in the loan accounts being rendered irregular and the corporate debtor had made an application seeking for restructuring its payments/repayments under the corporate debt restructuring (CDR) mechanism and in pursuance of the same, the corporate debt restructuring cell sanctioning the application of the corporate debtor and the debt was restructured under CDR mechanism during March, 2014 with cut-off dated October 1, 2013. It was submitted that the CDR package was approved by the CDR empowered group by its letter dated March 28, 2014 and the corporate debtor executed the master restructuring agreement dated March 29, 2014 and the trust and retention account agreement dated April 25, 2014 to and in favour of all the then lender banks of the corporate debtor including the financial creditor, who is a lead bank. Subsequently, by a letter of sanction dated May 15, 2014 the financial creditor renewed and sanctioned credit facilities aggregating to ₹ 983.92 crores to the corporate de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the corporate debtor and the directors/personal guarantors. Accordingly, it was submitted that as per the sanction letter dated May 3, 2017 and the guideline of RBI and SEBI relating to S4A, the loans and other facilities granted to the corporate debtor by the lenders', existing as on November 11, 2016 were bifurcated into sustainable debt and unsustainable debt and the outstanding of the corporate debtor to the extent of ₹ 579.55 crores forming part of unsustainable debt was converted into optional convertible debentures (OCD), out of which an amount to the tune of ₹ 317.75 crores formed part of the financial creditor's share. Further, it was submitted that in terms of the S4A, the consortium members retained M/s. IDBI Trusteeship Services Ltd. as their Trustee and thus, the S4A scheme was duly implemented by the lenders' on May 9, 2017 which implementation was duly accepted on behalf of the corporate debtor. 11. Learned counsel for the financial creditor submitted that despite the fact that the benefits of CDR and S4A was extended to the corporate debtor by way of restructuring of facilities, the performance of the corporate debtor deteriorat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the guarantors and taking possession of the secured assets in relation to the same. 14. It is also seen that the financial creditor has filed their information utility report dated June 16, 2020 in relation to the corporate debtor at page Nos. 1119 to 1205 of the typed set filed along with the application and a perusal of the same shows the status of authentication as deemed to be authenticated . Under the said circumstances, learned counsel for the financial creditor submitted that the inability of the corporate debtor to service its dues on time establishes the fact that the corporate debtor has become commercially insolvent rendering itself liable to be dealt with under the provisions of the IBC, 2016 and hence sought for initiation of the corporate insolvency resolution process against the corporate debtor. 15. In relation to the corporate debtor, it may be noted from the record of proceedings that the matter first came up for hearing on December 9, 2020 and this Tribunal had directed that notice be sent to the registered office address of the corporate debtor as reflected in the master data maintained with the MCA. Thereafter when the matter came up for hearing on J ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... v. Kirusa Software P. Ltd. [2017] 205 Comp Cas 324 (SC) ; [2018] 1 SCC 353 after going through the scheme of the I and B Code, 2016 in depth in relation to an application under section 7 filed by a financial creditor as compared to the one filed under section 9 by an operational creditor, in relation to a section 7 application where there is an existence of a financial debt and its default in excess of ₹ 1,00,000 (now increased to ₹ 1 crore on and from March 24, 2020) this Tribunal is bound to admit the application and as a consequence trigger the corporate insolvency resolution process (CIRP) and in relation to a section 7 application defence or set off or counter claim put forth by the corporate debtor cannot be considered as a dispute in relation to the financial debt and default in relation to it. In any case in the present matter, no counter has been filed before this Tribunal, leave alone such defence being put up. Thus, it is clear that there is a default on the part of the corporate debtor for a sum exceeding ₹ 1 lakh. 18. Also the default arising in the present application is much prior to the advent of the Covid-19 pandemic and hence the corporate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or the purposes of this sub-section, it is hereby clarified that notwithstanding anything contained in any other law for the time being in force, a licence, permit, registration, quota, concession, clearance 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 or a similar grant or right during moratorium period ; 22. However during the pendency of moratorium period in terms of section 14(2) and (3) as extracted hereunder : (2) The supply of essential goods or services to the corporate debtor as may be specified shall not be terminated or suspended or interrupted during moratorium period. (2A) Where the interim resolution professional or resolution professional, as the case may be, considers the supply of goods or ser vices critical to protect and preserve the value of the corporate debtor and mange the operations of such corporat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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