9911796707
TMI Blog2021 (8) TMI 798X X X X Extracts X X X X X X X X Extracts X X X X ..... , therefore, even if we assume that cause of action arose on 28.06.2012, even then the Petition, if filed beyond three years, is time barred - Evidently, there has been restructuring of loan on 07.11.2014 and 30.06.2017, contrary to the terms and conditions of the restructuring package, the Petitioner has revoked the restructuring package on 01.06.2018. The said letter of revocation of restructuring immediately objected/rebutted by the Corporate Debtor. In strict interpretation of law of Contracts, it seems that there was no consensus ad idem and the unilateral revocation was strongly objected by the Corporate Debtor who pointed out that there is no default and payments will have to be made only from operational cash flows. This Bench is of the considered view that the cause of action arose as on 31.03.2009/ 28.06.2012. However, the Petitioner was filed on 08.08.2020 which is beyond three years as contemplated in judgment of Hon ble Supreme Court in B.K. EDUCATIONAL SERVICES PRIVATE LIMITED VERSUS PARAG GUPTA AND ASSOCIATES [ 2018 (10) TMI 777 - SUPREME COURT] wherein it is categorically held that the Article 137 of the Limitation Act, 1963 mentioned that the right to sue accru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee Agreement dated 15.12.2008 Guarantee Agreement dated 30.05.2009 Guarantee Agreement dated 23.03.2010 Guarantee Agreement dated 31.03.2011 4. The Counsel for the Petitioner submits that the Corporate Debtor entered into the following Agreements for Hypothecation of Goods and Assets with the Original Lender in relation to the above mentioned credit facilities extended: Agreement of Hypothecation of Goods and Assets dated 11.12.2008 Supplemental Agreement of Hypothecation of Goods and Assets for increase in overall limit dated 30.05.2009 Supplemental Agreement of Hypothecation of Goods and Assets for increase in overall limit dated 23.03.2010 Supplemental Agreement of Hypothecation of Goods and Assets for increase in overall limit dated 31.03.2011 5. The Counsel for the Petitioner further submits that the Corporate Debtor also created mortgage of various immovable properties in favor of the Original Lender vide the following Deeds of Mortgage: Registered Mortgage Deed dated 24.12.2008 Registered Mortgage Deed dated 13.08.2010 Registered Mortgage Deed dated 08.08.2011 6. The Counsel for the Petitioner further submits that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... EARC and the Promoter shall assist in sale of the property. The estimated value of the Thane property is ₹ 60 crores. c. The possession of Land Parcel admeasuring 14,100 sq. mtrs. at Chikalse, Pune has been taken by EARC and EARC may sell the property under SARFAESI and adjust the proceeds against the dues of PEPL. The promoter shall assist in scouting buyers for the property. The estimated value of the property is ₹ 2.48 crores. d. Equity shares for 13.5% stake in equity in Perfect Engineering Products Limited (48,88,841 nos. of Face Value ₹ 10/- each) and Perfect Engine Components Private Limited (40,578 nos. of Face Value ₹ 10/- each) allotted to EARC. At present, the shares allotted have been valued at ₹ 26.50 crores. Such stake of 13.5% will be maintained at all points in time. EARC may get further equity stake of upto 6.5% post September 30, 2017 depending on achievement of projected EBITDA (provided in Annexure 11) in FY17 by the Companies (PEPL and PECL). Equity stake shall be computed on basis of EV/EBIDTA multiple of 30 times on 12 months EBIDTA for the period April 2016-March 2017. e. If the combined EBITDA of PEPL and PECL for FY-2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the said package. b. The Corporate Debtor along with another group concern namely Perfect Engineering Private Limited (PEPL) were granted credit facilities by State Bank of India (Original Lender) against several common securities including the security of Thane Land. SARFAESI Notice u/s. 13(2) dated 13 February 2013 issued by State Bank of India was addressed to PEPL and another guarantor company namely Perfect Infrastructure Private Limited (PIPL). The said Thane Property was a common collateral security for the facilities of PEPL. c. All the statement of accounts also date back to 2012 as annexed in Volume 4 of the Petition at the time when the Corporate Debtor was declared as NPA and hence, from the documents placed on record by the Petitioner itself, it again proves that the present Petition is barred by Limitation. The date of NPA as per Part IV of Form-1 of the present Petition is 30.06.2009 and the State Bank of India had classified the said credit facilities as NPA in its books on 28.06.2012. The Petitioner and SBI themselves are not sure when the account of the Corporate Debtor was declared as NPA. d. The financial debt was assigned by State Bank of India to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t 22nd November, 2016, the Petitioner went on to secure a recovery certificate from DRT, Pune for entire amount of claim without any reference to the said restructuring package. It is thus evident that the said recovery certificate was obtained pursuant to the original liability in default and the restructuring package made no impact on the default status of the account. In any event, it is a settled law that once recovery proceedings are filed in DRT on the basis of a default, it is not permissible to recompute limitation for the purpose of the proceedings before this Tribunal from a subsequent date. g. The assignment Agreement between the State Bank of India and the present Petitioner dated 19.03.2014 was entered into after the Corporate Debtor was declared as NPA on 30.06.2009 by the State Bank of India as per RBI guidelines. The said date of NPA is way beyond the three year limitation period since the present Petition is filed in 2020 after a lapse of over a decade. In fact, SBI had already started the proceedings under SARFAESI Act, 2002 before the said assignment and action under the said proceedings continued even after the assignment and approval of the restructuring pac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... associates or its management that any part of the EBIDTA or the operating cash flow has been diverted for any purpose other than what was stipulated in the above OTS package and the revised OTS package. There is no insinuation in any contemporaneous correspondence or in the present application, and rightly so, that there was any obligation on the promoters of the Corporate Debtor to induct any funds. There is no allegation that there was any delay or demur on the part of the Corporate Debtor, its associates or its management from complying with the other terms and conditions of the OTS package. On the contrary, there is recognition of due discharge of the said obligations in so far as it was within the power of the Corporate Debtor and its management. j. Regardless of the above, the Petitioner purported to declare a default on the part of the Corporate Debtor and its associates and purported to cancel the OTS package by its letter dated 1st June, 2018. The unwanted, unmerited and arbitrary, capricious and high ended action of the Petitioner was promptly and vigorously countermanded by the Corporate Debtor promptly inter alia by letter dated 14th June 2018. The said letter cate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thers. n. The Corporate Debtor being the MSME protected by the rigours of the Code. Section 240 A of the Code incorporates the special provision of the code. The government has gone to the extent of saying that MSME may be exempted from the CIRP by prohibiting filing of an application against the MSME under Section 7 of the Code, MSME being bedrock of the Indian economy cannot be put to liquidation. o. The Corporate Debtor further contended that while the restructuring package was approved on 07.11.2014, the Petitioner continued with the recovery application filed by the predecessor SBI before Debt Recovery Tribunal (DRT). The Petitioner obtained the Recovery Certificate as on 26.11.2016, the Petitioner failed to inform about the OTS package before the Hon ble Debt Recovery Tribunal (DRT). p. Assuming while denying that the argument taken by the Petitioner is correct, it is stated that there is no incidence of default incidental to the restructuring package as alleged or at all. It is trite law that the provisions of the Code cannot be invoked unless there is a default as provided in the Court. It is reiterated that no cause has incurred to the Petitioner preferrin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8377; 226,77,83,051/-. The Petitioner has been assigned the debt from the Original Lender, i.e., SBI vide Deed of Assignment dated 19.03.2014. The Original Lender, i.e., SBI had extended the loan facility to the Corporate Debtor has vide sanction letters more particularly mentioned below; 17. The said credit facility was secured by execution of personal and corporate guarantees, agreement of hypothecation of goods, registered mortgaged deeds etc. The Petitioner declared the Date of Default as on 31.09.2009 and NPA as on 30.06.2009. The Corporate Debtor acknowledged the outstanding liabilities as balance confirmation letters in favor of the SBI on 31.03.2010, 31.03.2011 and 31.03.2012. The Original Lender invoked SARFAESI proceedings and filed the Application No. 01 of 2014. The Debt Recovery Tribunal (DRT) on 22.11.2016 allowed the Original Application and issued Recovery Certificate. 18. The Petitioner further granted restructuring as on 07.11.2014 and on 30.06.2017, the restructuring package which was extended to the Corporate Debtor included a fix scheduled of repayment and terms and conditions of charge of default interest etc., however, the Petitioner revoked the re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll of operating cash flow. The Petitioner revoked the restructuring package on 01.06.2018 and the Corporate Debtor immediately objected to the revocation of restructuring package and brought to the notice of the Petitioner that several critical steps being followed post the restructuring and that the company was in no element of willful default. No diversion of funds and the infusion of funds by the Investor commenced in the year 2015-16. 23. The Corporate Debtor further claimed that there was no fresh default on the part of the Corporate Debtor pursuant to the restructuring of the said loan as on 30.06.2017. The Letter dated 14.06.2018 further narrated the compliances made by the Corporate Debtor and there is no default as follows; a. Thane Land was surrendered as per the package. The agreed valuation was ₹ 60 crores. b. 13.5% equity of the Corporate Debtor PEPL, was given to the Applicant as per the package. The agreed valuation was ₹ 50 crores. c. The non-core assets had to be sold as per the package and a sum of ₹ 5 crores had to be paid to the Applicant. This condition was complied in so far as some assets were sold and amount paid to the Applica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thane has been taken over by the Petitioner. The estimate value of Thane property is ₹ 60 crores. The possession of land parcel at Chikalase, Pune was taken over by the Petitioner and the Petitioner may sell the property at SARFAESI. There will be a transfer of equity shares of 13.5 stakes in the company of Corporate Debtor. c) The restructured debt would not carry any interest but would carry an interest when there is a default. 27. The Petitioner however unilaterally invoked the restructuring package dated 30.06.2017. The Corporate Debtor strongly rebutted by Letter dated 14.06.2018, wherein the Petitioner was categorically informed that the restructuring package was acted upon and several steps were taken pursuant to the restructuring package was carried out. Further, it was also pointed out that there was a revenue short fall in the year 2016-17 and they were not able to achieve the targets for the year 2017-18 due to working capital challenges and loss of production of Tata Motors, still the performance had immeasurably increased as compared to the precedent years with regard to the repayment of loan secured by specified assets wherever the liquidation of assets a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 12) of the Code, which defines default as follows: Default means no-payment of debt when whole or any part or instalment of amount of debt has become due and payable and is not paid by the debtor or the corporate Debtor as the case may be Therefore, this Bench finds it difficult to construe that default has occurred in the present case. 30. This Bench is of the considered view that the cause of action arose as on 31.03.2009/ 28.06.2012. However, the Petitioner was filed on 08.08.2020 which is beyond three years as contemplated in judgment of Hon ble Supreme Court in B.K. Educational services Private Limited Vs Parag Gupta and Associates wherein it is categorically held that the Article 137 of the Limitation Act, 1963 mentioned that the right to sue accrues by the Default occurs, the default has occurred over three year prior to the filing of Petition and the Petition is barred by the Limitation under Limitation Act, 1963. In the instant case, it can be seen from the facts of the given case the default occurred as on 31.03.2009 or on 28.06.2012, a recovery certificate issued by the Debt Recovery Tribunal (DRT) on 22.11.2016, the restructuring package as on 07.11.2014, 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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