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TMI Blog2018 (8) TMI 2066X X X X Extracts X X X X X X X X Extracts X X X X ..... d by State Bank of India and its associate Banks viz. State Bank of Hyderabad (SBH), State Bank of Mysore (SBM), State Bank of Travancore (SBT), State Bank of Bikaner & Jaipur (SBBJ) and State Bank of Patiala (SBP), which were all merged with the State Bank of India, the Petitioner herein. The Petitioner submitted that the Corporate Debtor committed default on 31.01.2017 to the extent of Rs. 456.90 crores due to which the entire outstanding of Rs. 3171.37 crores becomes payable immediately. 2. The Petitioner submits that the Petitioners along with its associate banks and other banks entered into a Rupee Facility Agreement on 31.05.2010 as amended by the Agreement of Modification dated 30.08.2010 with Videocon Telecommunications Limited (referred as "VTL") and the following table reveals the facilities granted by the SBI and its associate banks under the said facility Agreement; Bank Rupee Term Loan (In INR Crores) Letter of Credit Facilities (INR Crores) Total SBI 1400 840 2240 SBBJ 100 -- 100 SBM 100 50 150 SBP 100 60 160 Total 1700 950 2650 3. The Petitioner further submits that on 08.08.2012, a Rupee Term Loan agreement ("RTL") was entered between conso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shall perform all duties and obligations of a Co-Obligor under the Rupee Term Loan Agreement as if VTL had been an original party to the Rupee Term Loan Agreement as a Co-Obligor and be bound by and comply with all the obligations expressed to be assumed by it as a Co-Obligor under the Rupee Term Loan Agreement." The Petition discloses the following details in respect of default committed by the co-obligors including the Corporate Debtor herein; Facility Total Overdue as on December 31, 2017 (In INR Crores) Initial Date of Default Days of Default till December 31, 2017 Principal Interest Penal Interest Total Defaulted Debt SBI RTL facility 51.80 260.46 3.03 315.29 31.01.2017 334 SBBJ RTL facility 2.50 13.85 0.16 16.51 31.01.2017 334 SBH RTL facility 7.50 40.99 0.46 48.95 31.01.2017 334 SBM RTL facility 6.25 31.62 0:35 38.22 31.01.2017 334 SBP RTL facility 1.14 5.83 0.06 7.03 31.01.2017 334 SBT RTL facility 5.00 25.59 0.31 30.90 31.01.2017 334 Total 74.19 378.34 4,37 456.90 5. The Petition discloses the following details in respect of total dues payable by the Corporate Debtor on the occurrence ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pal + interest) as on 31.12.2017 have been disclosed in the table mentioned above, for the sake of avoiding repetition, it has not been mentioned again. 13. The argument on behalf of the Financial Creditor is that the present petition is filed u/s 7 of the Insolvency and Bankruptcy Code, 2016 against the Respondent who is a co-obligor under the Rupee Term Loan agreement dated 08.08.2012. This Tribunal had already passed orders dated 06.06.2018 against Videocon Industries Limited and against Videocon Telecommunications Limited dated 11.06.2018 for the defaults committed therein. By virtue of the fact that all Videocon group companies are co-obligors to the Rupee Term Loan agreement, the liability on the part of the parties therein is joint and several. As per clause 2.3 of the Rupee Term Loan agreement: "each obligor/co-obligor shall be liable to the secured parties on joint and several basis for all the obligations and liabilities of all other obligors/co-obligors. The liability of the obligors to the Secured parties shall not be discharged until and unless the Obligors have paid in or discharged the Outstanding's owed to the Facility Agents, the Lenders or the Onshore Security ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Company for the same set of secured assets pursuant to Sec.18(f) of Insolvency and Bankruptcy Code, 2016 and due to consolidated balance sheet, the very same assets are already in control and custody of RP appointed for CIRP against Videocon Industries Ltd in CP(IB) No.2/2018; iv. Pursuant to initiation of CIRP against VIL and the same set Of assets are shown to be secured for the purpose of each application, the rigour of Section 14(c) shall apply for all subsequent proceedings in relation to the very same assets; v. Since a CIRP is already initiated against Videocon Industries Ltd.(VIL) in CP No.2 of 2018 by Order dated 6% June 2018, for the same alleged default amount hence, a separate and independent initiation of CIRP through separate IRP/RP against each of Obligor/Co-obligor Company will frustrate the Resolution Process: vi. If separate CIRP against each of the 12 Companies is permitted through different IRP/RP for the same Debt then each Resolution Plan will be for same amount due against each Obligor/Co-obligor Company, and making it virtually impossible to implement as total due become multi-fold. 16. In response to the arguments of the Ld. Counsel for the Corporat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... claim which is due from any person and includes a financial debt and an operational debt. Further, definition of 'financial debt' under section 5(8) of the Code is illustrative, and hence should be treated with a wide import: "financial debt" means a debt alongwith interest, if any, which is disbursed against the consideration for the time value of money and includes- (a) money borrowed against the payment of interest; ... (g) the amount of any liability in respect of any guarantee or indemnity for any of the items referred to in sub-clause (a) to (h) of this clause, g. The Petitioner has relied upon the following documents in order to prove the existence of debt and default: (i) Letter dated August 28, 2017, issued by the Reserve Bank of India to the Petitioner (Annexed as Exhibit 16, page. 679, Vol. IV of the Application). (ii) Order dated June 06, 2018 of the NCLT, wherein the application under Section 7 of the Code by the Petitioner against VIL was admitted ("VIL Order"); (iii) Order dated June 11, 2018 of the NCLT, wherein the application under Section 7 of the Code by the Petitioner against VTL was admitted ("VTL Order"); (iv) Order dated June 08, 2018 of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in order to satisfy the requirement under Item 22 of the Code of Conduct for Insolvency Professionals, provided under the First Schedule of the Insolvency and Bankruptcy Board of India (Insolvency Professionals) Regulations, 2016: "Occupation, employability and restrictions. 22. An insolvency professional must refrain from accepting too many assignments, if he is unlikely to be able to devote adequate time to each of his assignments." (iii) It was also submitted by the Senior Counsel that in the event that all the applications filed by the Petitioner against the specified Companies of the Videocon Group are admitted, then the resolution professionals of each such company may either consolidate the resolution processes of all the companies, or may choose to have standalone resolution process as he deems fit and is required for maximum recovery and resolution. Either of these options may be approved by the committee of creditors as well as the Hon'ble NCLT at a later stage. (iv) It is also stated that under Section 18 of the Code, the resolution professional only has the power to take control and custody of the assets over which the corporate debtor has "ownership" rights ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... here is no disbursement of loan to the Corporate Debtor in the present petition. Therefore, we hold that the obligor and co-obligors to the debt are a single unit and disbursement to one obligor amounts to disbursement to all of them put together and hence the Videocon group companies are jointly and severally liable. c. Another contention on the part of the Respondent is that a separate and independent resolution plan/s cannot be made by different Insolvency Resolution Professional/RP against each of the co-obligor company for the same set of secured assets as per Section 18(f) of the Insolvency and Bankruptcy Code and due to consolidated balance sheet as the very same assets are already under the control and custody of RP appointed for CIRP against Videocon Industries Limited in C.P (IB) 2 OF 2018. The Ld. Senior Counsel, Shri Gaurav Joshi replied to the said contention that as per the rules a single IRP cannot take up many assignments and further that the co-obligors are separate juristic entities with their own set of assets and liabilities and hence appointment of different IRP's each for different Corporate Debtors is justified and is perfectly legal. We completely agree wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gor" and "co-obligor" is used for the entities which means, in so far as the loan agreement, there is no distinction between an obligor and a co-obligor as far as the liability is concerned and legally all of them must be considered as "Debtors" for the purpose of this Code. Therefore, we hold that the arrangement and the manner in which the documentation was done for the purpose of advancing loans is perfectly legal and the Corporate Debtor herein is liable to pay the debt and is bound by the proceedings as projected in Form 1 and since there is a default in the repayment of the same, the application is hereby admitted. 18. In view of the reasons aforementioned, on looking at the agreements and other documents, we are hereby satisfied that a debt and default is in existence, therefore this Company Petition is hereby admitted with reliefs as follows, prohibiting all of the following items- (I) (a) 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; (b) transferring, encumbering, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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