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TMI Blog2022 (1) TMI 263X X X X Extracts X X X X X X X X Extracts X X X X ..... y as Additional Security , hence the Bank has no right over these Fixed Deposits even when loan is recalled by the Bank. No such charge was registered by the Corporate Debtor or even by the Appellant in terms of Section 77 of the Companies Act, 2013. Appeal dismissed. - Company Appeal (AT) (Insolvency) No. 132 of 2021 - - - Dated:- 7-1-2022 - [Justice Anant Bijay Singh] Member (Judicial) And [Ms. Shreesha Merla] Member (Technical) For the Appellant : Mr. Ravi Gupta, Sr. Advocate with Mr. Mahip Datta Parashar, Mr. Dhruv Gupta, Mr. Sachin Jain, Advocates. For the Respondent : Ms. Anjali Sharma, Ms. Ashly Cherian, Advocates for R1 and R-2(RP). Mr. Sumant Batra, Advocate for R-1. Mr. Ravindra Loonkar, for R-1 (in person). Ms. Ruchi Goyal, Advocate for R-1. JUDGMENT Justice Anant Bijay Singh; This Appeal has been preferred by the Appellant being aggrieved and dissatisfied by the order dated 04.01.2021 passed by the Ld. Adjudicating Authority (National Company Law Tribunal), New Delhi, Principal Bench, in IA-2069(PB)/2020 in Company Petition (IB)-170(PB)/2018 whereby and where under the Application filed by the Resolution Professional (Respondent No. 1 herei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iv) Further case is that the Respondent No. 1 herein, filed an Additional Affidavit bringing on record the Form G and the Information Memorandum of the Respondent No. 2 Corporate Debtor Company. v) The Respondent No. 2/Corporate Debtor being ACIL Limited had banking relationship with the Vysya Bank since 2001 which later on changed its name to ING Vysya Bank Limited in 2003 and the same was amalgamated with the Appellant Bank i.e. Kotak Mahindra Bank Limited w.e.f. 01.04.2015, therefore, all rights arising out of the said credit facility fell upon the Appellant Bank. vi) The Corporate Debtor was formerly known as M/s. Amtek Siccardi India Limited in 2001, the name of the same was later on changed to M/s Amtek Crankshaft India Ltd. and the same is presently known as M/s ACIL Limited since 2013. vii) Further case is that the Appellant Bank provided various financial facilities to the Corporate Debtor being ACIL Limited, which were renewed from time to time on such terms and conditions as agreed between the parties since the very inception of grant of loan in the year 2001. viii) In the year 2009 on the request made by the Corporate Debtor, a fixed deposit of ₹ 75, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r this Agreement, the Bank may ask the Borrower to furnish or arrange such additional security as the Bank may determine/stipulate from time to time. xiii) That according to clause 18 of the Facility Agreement, the Appellant Bank has the right of set off. That as per the clause, the borrower agrees without prejudice to all of the Bank's rights and remedies as bankers or otherwise against the Borrower, the Bank shall be entitled to set Bank under any transaction/agreement at any time in satisfaction of payment of any indebtedness or liability of the Borrower under or pursuant of this Agreement . xiv) That the Appellant Bank started observing acts of misconduct on part of the Corporate Debtor including breach of term and conditions of the sanction. The Appellant Bank also observed acts of misappropriation of funds and falsification of accounts by the Corporate Debtor with a view of deceive and induce Appellant Bank in order to continue to avail credit facilities. xv) The Corporate Debtor in terms of the Sanction Letters and loan documents was required to repay the loan amount on such terms and conditions as duly agreed between the parties, however, the Corporate Debtor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... total voting right of approx. 14.81% in the CoC formed by the Resolution Professional to govern the CIRP of the Corporate Debtor herein and the Appellant Bank had assented for the Resolution Plan being submitted by M/s Ramkrisha Forgings Ltd. and thus the Resolution Plan was approved by the CoC through its commercial wisdom. xxi) The Respondent No. 1 vide its letter dated 03.10.2019 requested the Appellant Bank to close the Fixed Deposit Account No. 7511874557 and transfer the amount payable on closure to TRA A/c No. 0127103000016223 held by ACIL Limited with IDBI Bank. Thereafter, the Appellant Bank replied to the said letter vide letter dated 11.11.2019 wherein it was stated that the Fixed Deposits are exclusively charged to the Appellant Bank and the same was also mentioned in the FORM-C submitted by the Appellant Bank. The Appellant Bank laid emphasis on the clause of Additional Security and the right of the Appellant Bank to exercise set-off as per the terms and conditions of the Facility Agreement duly signed and executed by Corporate Debtor in favour of the Appellant Bank. Thereafter, the request made by the Respondent No. 1 was rejected and communicated vide letter dat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has already been approved by the commercial wisdom of the 88.56% of the CoC and is pending approval before the Ld. Adjudicating Authority. xxvii) The Ld. Adjudicating Authority passed the impugned order dated 04.01.2021 allowed the Application filed by the Respondent No. 1/Resolution Professional. Hence this instant Appeal. Submissions on behalf of the Appellant 3. The Learned Sr. Counsel for the Appellant during the course of argument and his memo of Appeal submitted that the Ld. Ld. Adjudicating Authority has failed to appreciate that the financial facilities availed by the Corporate Debtor, various loan documents were duly signed and executed in favour of Appellant Bank from the year 2001 and on each renewal separate loan documents were executed to that effect and Facility Agreements dated 02.07.2014 and 08.07.2014 are one amongst many such loan transection documents which were executed from time to time. 4. It is further submitted that the terms of the Facility Agreements relied upon by the Corporate Debtor and which are duly signed and executed by the Corporate Debtor in favour of the Appellant Bank, the Appellant Bank is at liberty to exercise its right over ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ten Thousand Seven Hundred Seventy-Three and Seventy paise only). 10. It is further submitted that the Ld. Adjudicating Authority passed an order commencing Corporate Insolvency Resolution Process (CIRP) of the Corporate Debtor on 08.08.2018 and appointed Mr. Ravinder Loonkar, the Respondent No. 1 herein, as the Interim Resolution Professional vide order dated 08.08.2018. 11. It is further submitted that the Respondent No. 1 vide letter dated 21.08.2018 requested the Appellant Bank for closure of fixed deposit placed by the Corporate Debtor with the Appellant Bank and transfer of funds to TRA A/c No. 0127103000016223 held by Corporate Debtor with the Appellant prior to 02.07.2014. 12. It is further submitted that the Appellant Bank submitted its financial claim i.e. FORM-C on 27.08.2018 to the Interim Resolution Professional wherein the Appellant Bank declared the details of any mutual credit, mutual debts, or other mutual dealings between the Corporate Debtor and the creditor which may be set off against the claim. The Appellant Bank clearly mentioned that as part of the Security over which the Appellant Bank has a right of general lien, Corporate Debtor fixed deposits w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to be created pursuant to any Security Document . 19. It is further submitted that the asset in question must therefore be charged to the Appellant. Since the Fixed Deposits were never charged to the Appellant neither originally as Charged Assets nor subsequently as Additional Security , the Bank has no right over these Fixed Deposits even when loan is recalled by the Bank. Further, no such charge was registered by the Corporate Debtor or even by the Appellant in terms of Section 77 of the Companies Act, 2013. 20. It is further submitted that the purported right of set off in terms of Clause 18 of Facility Agreements (at page 91 of the Appeal Paper Book) has never been invoked by the Appellant on default committed by the Corporate Debtor in failing to repay the loan. 21. It is further submitted that even if a right of set-off was available, it should have been exercised when the Loan Recall Notice was issued on 24.08.2017 (at page 49 to 53 of the Reply Affidavit) 22. It is further submitted that the right of set off was exercised by the Appellant only after initiation of CIRP and when the Resolution Professional, the Respondent No. 1 herein requested to transfer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Bank for closure of fixed deposit placed by the Corporate Debtor with the Appellant Bank and transfer of funds to TRA A/c No. 0127103000016223 held by Corporate Debtor with the Appellant prior to 02.07.2014. The Appellant Bank submitted its financial claim i.e. FORM-C on 27.08.2018 to the Interim Resolution Professional wherein the Appellant Bank declared the details of mutual credit, mutual debts, or other mutual dealings between the Corporate Debtor and the creditor which may be set off against the claim. The Appellant Bank clearly mentioned that as part of the Security over which the Appellant Bank has a right of general lien, Corporate Debtor fixed deposits with the Appellant Bank. From the perusal of Clause 10(c) of the Facility Agreements (at page 86 of the Appeal Paper Book), the Appellant Bank is required to first ask from the Corporate Debtor to furnish additional security. It is an admitted fact that the Appellant has failed to place on record any document to establish that a request was ever made for creating additional security in terms of Clause 10(c). From the perusal of the Clause 14 of the Facility Agreements (at page 90 of the Appeal Paper Book) whi ..... 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