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TMI Blog2021 (9) TMI 433X X X X Extracts X X X X X X X X Extracts X X X X ..... eferred to as the corporate debtor. 2. The Respondent Company M/s. McLeod Russel India Limited (CIN No. L51109WB1998PLC087076) against whom initiation of Corporate Insolvency Resolution Process has been prayed for, was incorporated on 28.01.2005 having its registered office situated at 4, Mangoe Lane, Surendra Mohan Ghosh Sarani, Hare Street, Kolkata-700001 (West Bengal). The matter was transferred from Kolkata Bench to this Bench vide order dated 10.09.2020 3. The case of the applicant precisely is that the applicant and the Corporate Debtor entered into a Loan Agreement dated 28.09.2018 to provide an inter-corporate deposit of Rs. 100 crores to the Corporate Debtor subject to the condition that the same would be utilized by the Corporate Debtor for the purpose of repayment of all loans relating to the four tea estates namely, Addabarie Tea Estate, Mahakali Tea Estate, Dirai Tea Estate and Rajmai Tea Estate due to banks and financial institutions to ensure that all encumbrances created on the four tea estates are released by the banks and financial institutions. The said amount was remitted on the same date. Thereafter, in order to secure repayment of the aforesaid loan amount t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is no default occurred under the Loan Agreement. It is claimed that as per clause 16 and 17 of the Loan Agreement the amount has yet not become due because the said clause says that recovery is first supposed to be done from secured assets and if anything remains then from borrower. The respondent argued that securities are sufficient to clear the liability and there will be no arrears left to be recovered from the respondent. Clause 17 is reproduced below: "17. The Parties further agree that in case the Lender is not able to recover the entire Loan Amount and all other amounts due and payable to the Lender under this Agreement even after enforcing all securities extended by the Borrower as mentioned in clause 5 of this Agreement including sale of mortgaged properties, then under the said circumstances, the Lender shall have a right to recover the remaining amount from the Borrower." 10. The applicant in its rejoinder argument has submitted that there is violation of the clause 9 and other clauses of the agreement and hence the default has taken place. Clause 17's pre-requisite is default committed by the respondent and it does not affect the present proceeding under Sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ding. 14. 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 Rs. 100 lakhs. In view of Section 4 of the Code, the moment default is of Rupees one hundred lakhs or more, the application to trigger Corporate Insolvency Resolution Process under the Code is maintainable. 15. In the present matter the applicant has produced loan agreement executed between the parties, according to which the respondent has failed to repay the loan within stipulated time. The respondent has not denied the same. The objections raised by respondent regarding sufficient security is not sustainable as proceeding under this Code is not money recovery proceeding. The other objection raised about removal of loan amount from Balance Sheet will also not help respondent. 16. It is seen that in order dated 30.04.2019 passed by Hon'ble High Court of Calcutta, the court has observed that: "this court is, prima facie, satisfied that Respondent having taken inter corporate deposit of Rs. 100 Crores admits to not to have repaid. Petitioner is entitled to interim me ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... larger family. The alleged arrangement regarding loan of respondent is an internal arrangement of applicant which will not affect liability of the respondent to clear the dues of Applicant Company. Fact still remains that the respondent has enjoyed the loan amount and failed to clear the dues on time. It is clear that the family member of applicant put forth their money in the company against the loan of the respondent company, however no assignment is made and admittedly the applicant is still a financial creditor of the respondent. The same fact has not been denied by the respondent itself. 19. Hon'ble Supreme Court in the matter of M/s. Innoventive Industries Ltd. Vs. ICICI Bank and Anr. (2018) 1 SCC 407, has held as follows: "27. The scheme of the Code is to ensure that when a default takes place, in the sense that a debt becomes due and is not paid, the insolvency resolution process begins. Default is defined in Section 3(12) in very wide terms as meaning non-payment of a debt once it becomes due and payable, which includes non-payment of even part thereof or an instalment amount......... 30. On the other hand, as we have seen, in the case of a corporate debtor who c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct and in law it is not so. Despite writing-off the debt is still recoverable by the Bank. The affidavit filed by the Bank also discloses the steps which are being taken to realise the dues from the debtor. Some amounts have been recovered over the years though the figure does not appear very impressive. Even so, steps are being taken to recover the dues whenever possible and Respondent Bank has furnished particulars of the various proceedings pending for recovery of such debts. The write-off is only an internal accounting procedure to clean up the balance sheet, and it does not affect the right of the creditor to proceed against the borrower to realise his dues. Moreover, it does give some benefit to the Bank under the income tax laws because after write-off tax is payable only on the amount recovered as and when recovery is made............." 22. Therefore, applying the aforesaid ratio to the present case, the objections raised by respondent are not sustainable. It is reiterated that the respondent itself has admitted the loan amount and non-payment of loan amount. The respondent by giving option to realise the securities made/given clear that the loan amount has not been repaid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0202/2017-18/10391, email id. [email protected], is hereby appointed as Interim Resolution Professional (IRP) of the Respondent Corporate Debtor. 28. In pursuance of Section 13(2) of the Code, we direct that public announcement shall be made by the IRP immediately (within 3 days) with regard to admission of this application under Section 7 of the Code. 29. We also declare moratorium in terms of Section 14 of the Code. The necessary consequences of imposing the moratorium flow from the provisions of Section 14(1)(a), (b), (c) & (d) of the Code. Thus, the following prohibitions are imposed: * the institution of suits or continuation of pending suits or proceedings against the respondent including execution of any judgment, decree or order in any court of law, tribunal, arbitration panel or other authority; * transferring, encumbering, alienating or disposing of by the respondent any of its assets or any legal right or beneficial interest therein; * any action to foreclose, recover or enforce any security interest created by the respondent in respect of its property including any action under the Securitization and Reconstruction of Financial Assets and Enforcement of Security I ..... X X X X Extracts X X X X X X X X Extracts X X X X
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