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TMI Blog2021 (12) TMI 156X X X X Extracts X X X X X X X X Extracts X X X X ..... otification dated 18.11.2021) and it is also seen from the Rule framed by the Central Government that any one cannot initiate proceedings seeking for Corporate Insolvency Resolution Process (CIRP) of the Financial Service Provider and it is only the Regulators who have been given the power to initiate the proceedings before the Adjudicating Authority namely this Tribunal. The Corporate Debtors before this Hon ble Tribunal is a Financial Service Provider Company as per the above sections, rules etc., and we don t find any merit in the arguments of the Counsel for the FC and the submissions of the FC that the Application filed by it under Section 7 of IBC is admitted and CIRP initiated even though it has admitted that the Total Assets of the CD is ₹ 15.63 Crores only which is well below the stipulated limit amount of ₹ 500.00 crores - Applicant FC has not followed the Guidelines and filed this Application under Section 7 of IBC in respect of a Financial Service Provider without following the due process of law. Application dismissed. - CP. (IB) No. 04/GB/2020 - - - Dated:- 30-11-2021 - PRASANTA KUMAR MOHANTY MEMBER (T) And (H.V SUBBA RAO) MEMBER (J) NONE AD ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the Financial Creditor (Bank of India) and the Financial Creditor has agreed in principle to sanction an aggregate loan amount of ₹ 10.65 Crores (Rupees Ten Crores and Sixty-Five Lakhs Only) in the form of Term Loan (₹ 10.00 Crores) and Cash Credit (₹ 65.00 Lakhs). The Bank of India as the Financial Creditor had sought to lodge this application for resolution of the loan account under the Code of 2016 with respect to its sanction in the form of Term Loan. 7. Again, it is submitted that The Agnipa Energo Pvt. Ltd through its Director has signed Hypothecation cum Loan Agreement dated 25.03.2013, thereby hypothecating plant and machineries, fixtures and fittings, current and fixed assets etc. in favor of the Financial Creditor. 8. It is submitted that the Corporate guarantor AKJ Fincap Ltd offered its Corporate Guarantee and was represented by its Director Shri Ashok Kumar Jain, and who upon duly authorized by virtue of a Board resolution dated 06.01.2013 had signed and executed the Deed of Guarantee dated 25.03.2013 along with personal guarantees of Sri Ashok Kumar Jain, Sri Anil Jaina and Sri Gaurav Jaina in favor of the Financial Creditor, covering the loa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... burse the Working Capital of ₹ 65.00 Lacs due to the said non completion of project. 13. Again Agnipa Energo Pvt. Ltd. (Borrower) failed to maintain the Term Loan account (A/C No. 505565410000001) maintained by the Financial Creditor as it failed to pay the installments as per terms and conditions. The Term loan account was classified as NPA on 30.04.2018. Thereafter, having no other alternative, the Financial Creditor had issued a reminder Letter dated 14.03.2018 to the Agnipa Energo Pvt. Ltd (Borrower), to pay the interest and the loan instalments. Moreover, the Agnipa Energo Pvt. Ltd (Borrower) while admitting its liability had submitted a One Time Settlement proposal dated 17.05.2019, but the same could not be accepted by the Financial Creditor as the OTS amount was not only too meagre but also the fact that the account was declared Fraud and was reported to the RBI and criminal action followed. The required Statements of Account and Certified Entries in a Bankers Book in accordance with the Bankers Book Evidence Act, 1891 (18 of 1891) also prove the claim of the Financial Creditor against the AKJ Fincap Ltd. (Corporate Guarantor) besides the borrower Agnipa Energo P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y Agnipa Energo Pvt. Ltd and Corporate Guarantor respectively. e. The estimated value of the hypothecated and mortgage properties standing in the name of the Agnipa Energo Pvt. Ltd as per Valuation Report dated 10.12.2018 prepared by the registered and empaneled Valuer Sri Rabi Sankar Dutta is ₹ 2,15,42,260.00 (Annexure I-AI). f. Certificate of Registration of Charge along with list of index of registered charges created by the Agnipa Energo Pvt. Ltd in favor of the Financial Creditor and also of the Corporate Guarantor AKJ Fincap Ltd. as available on the website www.mca.gov.in (Annexure I-E and I-F). ii. Particulars of an order of Court, Tribunal or Arbitral Panel Adjudicating on the Default: a. The Financial Creditor as Applicant had filed an Original Application bearing O.A. No. 438/2018 before the Debts Recovery Tribunal at Guwahati against Agnipa Energo Pvt. Ltd., Corporate Guarantor and Personal Guarantor as Defendants for recovery of ₹ 11,3535,259.26 and the said Application in Pending disposal. The next day of hearing is 25.11.2021. b. The Financial Creditor as Applicant had initiated a resolution process against the Corporate Debtor (Borrower) i. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nergo Pvt. Ltd (Borrower) in favor of the Financial Creditor. (Annexure I-S). f. Extract of minutes of Board Resolution of Agnipa Energo Pvt. Ltd dated 05.03.2013 (Annexure I-L). g. Extract of minutes of Board Resolution of AKJ Fincap Ltd. (Corporate Guarantor) dated 06.01.2013 (Annexure I-M). h. Deed of Guarantee dated 25.03.2013 signed and executed by Sri Ashok Kumar Jain, Sri Anil Jaina, Sri Gaurav Jaina and Corporate Guarantee by AKJ Fincap Ltd (Corporate Guarantor and represented by its Director Shri Ashok Kumar Jain) in favor of the Financial Creditor (Annexure I-U). i. Extract of the Attendance Register for Oral Ascent on 25.03.2013 and Memorandum of Deposit dated 25.03.2013 (Annexures I-W and I-W.1 I-Y and I-Y.1). j. Demand Letter dated 14.03.2018 to Agnipa Energo Pvt. Ltd (Borrower) (Annexure I-AC). k. Demand Notices both dated 11.05.2018 to Agnipa Energo Pvt. Ltd and Corporate Guarantor/Personal Guarantors under Section 13(2) of the SARFAESI Act, 2002 (Annexure I-AD and I-AD.1) l. Representation dated 06.07.2018 by the Agnipa Energo Pvt. Ltd (Borrower) (Annexure I-AE) m. Reply dated 18.07.2018 by Financial Creditor. (Annexure I-AF) n. OTS prop ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2020 the matter was listed again for hearing on 25.11.2020 and the I.A. was dismissed without considering the provisions under Rule 49(2) of the NCLT Rules, 2016. 18. The Adjudicating Authority dismissed the said IA on the ground that the Tribunal has no power to review or set aside its own Company Petition Admission Order as per settled proposition of law. Learned Counsel for the Respondent strenuously argued that the Adjudicating Authority has the power to set aside this ex-parte Order, but has erroneously dismissed the I.A. on the ground that the Order dated 18.03.2020 dealt with Admission of the Application filed under Section 7. 19. Aggrieved by the impugned Order dated 09.12.2020, passed by this Adjudicating Authority in I.A. No. 45 of 2020 in CP (IB) No. 04/GB/2020, the Respondent i.e. M/s. AKJ Fincap Limited, filed an appeal with NCLAT against the impugned order dated 09.12.2020 of this bench. 20. On hearing the Appeal No. Company Appeal (AT)(Insolvency) No 178 of 2021 filed by the AKJ Fincap Ltd against the impugned order of this Bench passed in the IA No 45 of 2020 in Company Petition (IB) No 04/GB/2020, the Principal Bench of the Hon ble NCLAT has passed order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fore the next date of Hearing. 12. In the result, this Appeal is allowed and the Order of the Adjudicating Authority is set aside. Both parties are directed to appear before the Learned Adjudicating Authority on 26th April, 2021 and the Appellant shall pay to the Respondent the costs on or before 26th April, 2021. Keeping in view the timelines provided for in the Code, Learned Adjudicating Authority shall dispose of the Application as expeditiously as practicable. 13. Company Appeal (AT) (Insolvency) No. 179 of 2021 has been filed against the Impugned Order dated 18.03.2020 passed by the Adjudicating Authority in CP (IB) No. 04/GB/2020 with a delay of 334 days. For reasons cited in I.A. No. 412 of 2021, the Application seeking condonation of delay is allowed. As Company Appeal (AT) (Insolvency) No. 178 of 2021 is allowed and the Order of the Learned Adjudicating Authority in I.A. No. 45 of 2020 in CP (IB) No. 04/GB/2020 is set aside, this Appeal is disposed of as infructuous. 21. As per the Order of Hon ble NCLAT the Corporate Guarantor paid ₹ 25000.00 to the FC and the CP(IB) NO 04/GB/2020 is taken up by this Bench afresh. 22. During the proceedings the Res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndergoing Insolvency Proceedings as per the I B Code. To facilitate the Insolvency proceedings an Advisory Committee is to be constituted by the Regulator in accordance with Rule 5(c) of these Rules. Vide Section 3 of Definitions , the definition of Appropriate Regulator means Financial Sector Regulator as notified by Central Government u/s 227 for a category of Financial Service Providers . iv. Through this Rule there are certain modifications such as wherever the expression Corporate Debtor is used in general in this Code, conversely, for the purpose of application of these Rules it shall mean Financial Service Provider and wherever the expression Insolvency Professional , Interim Resolution Professional Resolution Professional or Liquidator occur, now for the application of this Rule, shall mean Administrator . v. Under this newly introduced Rules 2019 the process of Insolvency is prescribed as per Rule 5 supra reads as under: 5. Corporate Insolvency Resolution Process of financial service providers The provisions of the Code relating to the Corporate Insolvency Resolution Process of the corporate debtor shall, mutatis mutandis applies, to the I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... all be part of the insolvency resolution process costs; (v) the Administrator shall chair the meetings of the Advisory Committee. (d) Resolution Plan: (i) the resolution plan shall include a statement explaining how the resolution applicant satisfies or intends to satisfy the requirements of engaging in the business of the financial service provider, as per laws for the time being in force; (ii) upon approval of the resolution plan by the committee of creditors under sub-section (4) of section 30, the Administrator shall seek no objection of the appropriate regulator to the effect that it has no objection to the persons, who would be in control or management of the financial service provider after approval of the resolution plan under section 31; (iii) the appropriate regulator shall without prejudice to the provisions contained in Section 29A, issue no objection on the basis of the fit and proper criteria applicable to the business of the financial service provider; (iv) where an appropriate regulator does not refuse no objection on an application made under clause (ii) within forty-five working days of receipt of such application, it shall be deemed that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Category of Financial Service Provider (rule 2 of the Rules) Appropriate Regulator [clause (a) of sub-rule (1) of rule 3 of the Rules] Dealing with third-party assets (rule 10 of the Rules) (1) (2) (3) (5) 1 Non-banking finance companies (which include housing finance companies) with assets size of ₹ 500 crores or more, as per last audited balance sheet Reserve Bank of India To be notified separately Thus vide this Notification Non-Banking Finance Companies including Housing Finance Companies with assets size of 500 Crores or more, the proceedings shall be undertaken in accordance with the provisions of IB Code 2016 to be read along with these Rules by the appropriate Regulator through Administrator and in this case Reserve Bank of India is designated. ix. That the above all guidelines are not followed in the application before this Hon ble Tribunal. x. The corporate debtors before this Hon ble Tribunal is Financial Service Provider company as per the abov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assent on 25.03.2013 and Memorandum of Deposit dated 25.03.2013, as security for repayment of the loan facilities. However, the said property had since been sold by the Financial Creditor under the provisions of the SARFAESI Act, 2002 on 12.02.2019 for an amount of ₹ 1,91,00,000.00 (Rs. One Crores Ninety-One Lakhs Only) and the said amount stood adjusted in the Term Loan account of the Agnipa Energo Pvt. Ltd. vi. Agnipa Energo Pvt. Ltd (Borrower) had also registered the charge over the secured properties (hypothecated and mortgaged properties) with the Registrar of Companies and relevant document have been filed therein. vii. Further, the Agnipa Energo Pvt. Ltd (Borrower), Corporate Guarantor and the personal guarantors had also signed and executed Acknowledgment of Debt dated 24.03.2016 for the Term Loan in favor of the Financial Creditor, thereby confirming that all the security documents executed by them in favor of the Financial Creditor besides the Balance Sheets for the years 2017 and 2018 reflecting the dues and the guarantees respectively and also covered by creation of Equitable Mortgages. Therefore, the instant petition has been filed well within the period of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nergo Pvt. Ltd (Borrower) submitted a Representation dated 06.07.2018 raising certain objections but admitting the liability and in response to the said Representation, the Financial Creditor through its Authorized Officer had replied to the same vide Reply dated 18.07.2018. But no payment had been received by the Financial Creditor towards liquidation of the outstanding dues. Moreover, the Agnipa Energo Pvt. Ltd (Borrower) while admitting its liability had submitted an One Time Settlement proposal dated 17.05.2019 but the same could not be accepted by the Financial Creditor as the OTS amount was not only too meager but also the fact the account was declared Fraud and was reported to the RBI and criminal action followed. The required Statements of Account and Certified Entries in a Bankers Book in accordance with the Bankers Book Evidence Act, 1891 (18 of 1891) also prove the claim of the Financial Creditor against the Agnipa Energo Pvt. Ltd (Borrower) (Annexure I-A, I-B, I-C I-D of the Section 7 Petition). xii. Considering the total outstanding dues in the Term Loan Account, there is no scope for the Financial Creditor to resolve the entire debt on resolution of the petitio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Guarantor/Corporate Debtor and pendency of CIRP proceedings is not a bar to initiate separate proceeding under the Code against the Corporate Guarantor/Corporate Debtor as Hon ble Apex Court has already laid down in this regard. xv. It is further submitted by the FC that the submissions made by the Respondent are completely false, fabulous, without any basis and it is prayed that the Section 7 petition filed by the FC may be admitted as that debt had been established beyond any reasonable doubt and the same had backed by irrefutable documentary evidence. ORDER 24. Heard both the sides at length and perused the documents, written submissions made available. 25. During the proceedings, it is clearly established with the documents submitted and agreed by both the Applicant as well as the CD/Respondent that: 25.1 The CD/Respondent is a NBFC/Financial Service Provider and Certificate issued to this effect by the RBI dated 18/03/1998 has been enclosed by the CD; 25.2 The Applicant/FC has also admitted in its submission in the affidavit dated 10/08/2021 filed by it enclosing the latest Balance Sheet of the CD for the Financial Year 2019-2020, downloaded from the MC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n accordance with the provisions of IB Code 2016 to be read along with these Rules by the appropriate Regulator through Administrator and in this case Reserve Bank of India is designated. 26.6 Hence, it is evident from the said Notification that the said Rules shall apply to such Financial Service Providers of categories as may be notified by the Central Government under Section 227 of the IB Code, 2016 from time to time and pursuant to the exercise of power contained in Section 227 of the IB code, 2016 the Central Government has chosen to notify NBFC with the assets of ₹ 500 crore or more as per last audited balance sheet (Notification dated 18.11.2021) and it is also seen from the Rule framed by the Central Government that any one cannot initiate proceedings seeking for Corporate Insolvency Resolution Process (CIRP) of the Financial Service Provider and it is only the Regulators who have been given the power to initiate the proceedings before the Adjudicating Authority namely this Tribunal. 27. The Corporate Debtors before this Hon ble Tribunal is a Financial Service Provider Company as per the above sections, rules etc., and we don t find any merit in the arguments o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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