9911796707
TMI Blog2022 (2) TMI 465X X X X Extracts X X X X X X X X Extracts X X X X ..... f Director has provided authorization in favour of Shri N. Ramachandran, Manager (law) to file suits/claims or initiating legal proceedings against defaulting assisted concerns and/are all guarantors of loans and/or against any such person/persons, body corporate, firms for recovery of dues of the company and/or otherwise inappropriate courts or tribunal. The power of attorney has been issued on the basis of such an authorization by the Board of Directors of the TFCI. Hence there are no strength in this argument of the Appellant that the application under Section 7 is defective on account of improper authorization of the person filing the application. In the light of loan agreement dated 28.3.2018, Respondent No. 1/TFCI is clearly a financial creditor who had provided loan of ₹ 50 crores to the Corporate Debtor/Aryavir Buildcon Private Limited. The repayment of this loan was in default, and consequently the financial creditor sent a notice dated 18.02.2020 to the corporate debtor informing him about the default in repayment as per agreed terms and conditions. As the debt is in default and due for payment to the financial creditor, the Section 7 application has been correct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Debtor is not a failing business but it is a new and a profit making hotel and CIRP will put the entire business in jeopardy. Lastly, the Appellant has claimed that Mr. N. Ramachandran, who filed the Section 7 application, did not have the necessary authorization to file the Section 7 application and hence it was not maintainable. 3. In brief, the facts of the case, as presented and argued by the Appellant, are that an operating agreement was executed between Marriott Hotel and the Corporate Debtor on 17.2.2012 and accordingly the Corporate Debtor constructed a 134-room hotel in Amritsar and the said hotel started functioning from mid-2017. The Corporate Debtor took a loan of ₹ 50 crore from Infrastructure Leasing and Financial Services Limited ( ILFS in short) and in 2018 the loan was assigned to TFCI. Thereafter, on 7.3.2018 a sanction letter was issued by TFCI to the Corporate Debtor for refinancing the entire loan of ₹ 50 crore and terms and conditions of this loan were accepted by the Corporate Debtor. It is stated by the Appellant that, later on 28.3.2018, a loan agreement was executed between the Corporate Debtor had TFCI regarding repayment of loan till 15 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reinafter referred IV as the conversion right at its option the whole of the outstanding amount of the Loan or a part not exceeding 20% of the Loan, whichever is lower, into fully paid-up equity shares of the Borrower, at par, in the manner specified in a notice of not less than 30 days in writing to be given by the Lenders to the Borrower (which notice is hereinafter referred to as notice of conversion ) prior to the date on which the conversion is to take effect which date shall be specified in the said notice of conversion (hereinafter referred to as the date of conversion ). 7. The Ld. Senior Counsel for Appellant has argued that since an explicit express provision has been made about right of lender to get the debt in default converted to equity shares, the financial creditor could not have taken recourse to the General Terms and Conditions - Applicable to Assistance Provided by Financial Institutions (attached at pp. 89 111of Appeal Paperbook vol. 1)and filed a section 9 application. He has also argued that since there was no default as of 15.1.2020 there was no reason or event for the financial creditor to recall the loan. Further, his argument is that in view of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tter dated 6.10.2020, had promised to deposit ₹ 60 crore in one month, but he retracted later. He has further argued that the resolution plan for the corporate debtor was approved by the Adjudicating Authority on 21.6.2021, whereafter an appeal was preferred by the suspended director of the Corporate Debtor in NCLAT which was dismissed. He has also argued that the resolution plan has been implemented and the hotel in question is now running properly. 10. The Learned Counsel for Respondent No. 2(Resolution Professional) has urged that the Corporate Debtor has shown that there is a default in payment of interest of the principal loan which is evident from the Interest Commitment and other charges account sheet (attached at page 243of the Appeal Paperbook Volume II)meaning that repayment of interest amount was overdue and therefore in default of payment. Furthermore, he has argued that the repayment in loan account was heavily irregular, as is clear from the account statement attached at pp. 238 243 of the Appeal Paperbook Volume II. He has reiterated the argument that the right of conversion of the loan amount in default into equity shares is only a right and there is no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons - GC 1 91 Applicable to Assistance Provided by Financial Institutions of the Tourism Finance Corporation of India Limited states the Events of Default in Article X at page 112 of Appeal Paperbook volume I. The relevant Events of Default are extracted below: Article X EVENTS OF DEFAULT AND REMEDIES Section 10.1- If one or more of the events specified in this section (hereinafter called events of default) happen(s), the Lead Institution or the Landers or any of them may, by notice in writing to the Borrower, declare the principal of and all accrued interest on the Loans to be due and payable forthwith and the security created in terms of Article(III) of the Loan Agreement shall become enforceable and the Landers shall have the following rights (anything in these General Conditions to the contrary notwithstanding) namely:- (i) To enter upon and take possession of the assets of the Borrower; and (ii) To transfer the assets of the Borrower by way of lease or leave and license or sale. EVENTS OF DEFAULT (a) DEFAULT IN PAYMENT OF PRINCIPAL SUMS OF THE LOANS Default has occurred in the payments of principal sums of the Loans on the due d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is Clause 2.6(i)(b) if a default has occurred, then the lenders shall have the right to convert at its option the whole of the outstanding amount of the loan or part not exceeding 20% of the loan, whichever is lower, into fully paid up equity shares of the borrower at par. His contention, that since an express provision on an event of default is included in the loan agreement the is no need to look at the General Conditions No. GC-1-91 (supra) which are applicable to assistance provided by financial institutions. The consequences of default are contained in section 10.2 of the General Conditions (supra). Furthermore, Section 10.3 of the General Conditions (supra) provides that notice to the lender on the happening of an event of default has to be given in writing specifying the nature of such event of default. 16. Looking at the provisions in the loan agreement dated 28.3.2018 regarding conversion right in the case of default, we note that the lenders shall have the right to convert the outstanding amount into fully paid equity shares, but it is a right which is provided to the lender. Certainly, Section 10.1 events of default define default in payment of principal sums of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nutes of the Board of Directors meeting of Tourism Finance Corporation of India Limited held on 17.5.2004 (attached at pg. 225 of Appeal Paperbook Vol. I) we find that Board of Director has provided authorization in favour of Shri N. Ramachandran, Manager (law) to file suits/claims or initiating legal proceedings against defaulting assisted concerns and/are all guarantors of loans and/or against any such person/persons, body corporate, firms for recovery of dues of the company and/or otherwise inappropriate courts or tribunal. The power of attorney has been issued on the basis of such an authorization by the Board of Directors of the TFCI. Hence we do not find strength in this argument of the Appellant that the application under Section 7 is defective on account of improper authorization of the person filing the application. 19. The Learned Counsel for Appellant has also referred to the judgment of Hon ble Supreme Court in Anuj Jain (supra) to contend that Respondent No. 1TFCI does not satisfy the test of being a financial creditor under the IBC and its application IA No. 4701/2020 was not considered by the Adjudicating Authority for establishing that TFCI was not a financial cr ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
