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TMI Blog2022 (3) TMI 235X X X X Extracts X X X X X X X X Extracts X X X X ..... 0.2019, as the date of submission of Form-D, in the counter, might be due to the fact that the Form-D was dated as such. When there is no scope found to be existing for ante-dating it, the only conclusion would be that it is due to the reason of the date, on the Form being 17.10.2019. There is no evidence to show that the Liquidator had any reason to conspire with Respondent No. 1 and allow him to ante date the Form - it can be accepted that Form-D is filed by Respondent No. 1 within time. Section 12 of the Limitation Act does not come into play, hence, the objection raised by the Applicant's Counsel in that regard is found as not merited. Whether the Applicant has locus standi to file this Application? - HELD THAT:- The Respondents contend that the Applicant does not have locus standi to file this application. But the said point was not reiterated in the arguments. However, the Applicant is an Ex-Director of the Corporate Debtor, hence, if the asset forms the part of the liquidation estate he would be benefited. Hence, he would have locus standi to file the application. Whether Regulation 21-A IBBI (Liquidation Process) Regulations, 2016 is applicable? - HELD THAT:- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es into a debtor or a corporate debtor if it happens to be a corporate person, within the meaning of Section 3(8) of the Code - It was categorically held that there is no reason to limit the width of Section 7 of the Code despite law permitting initiation of CIRP against the corporate debtor, if and when default is committed by the principal borrower. There need not be any further demur to hold that the CIRP can be initiated in respect of the guarantee given by the Corporate Debtor to the principal Borrower which is a Joint Venture Company. Petition dismissed. - I.A. No. 54 of 2020 in CP (IB) No. 33/7/AMR/2019 - - - Dated:- 23-2-2022 - Telaprolu Rajani , J. Member (J) For the Appellant : D. V. A. S. Ravi Prasad , Advocate For the Respondents : Srinivas Chitturu and Abhishek Dash , Advocates ORDER Telaprolu Rajani, J. (Member (J)) 1. This application is filed under Section 60(5) read with Section 52 of Insolvency and Bankruptcy Code of 21 21A Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016 seeking to declare the action of Respondent No. 1 in issuing possession notice dated 24.02.2020 in respect of plots in Guttala Be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in respect of schedule property is part of the liquidation estate. Respondent No. 1 did not follow the time line provided in Regulation 21A(1) of IBBI (Liquidation Process) Regulations, 2016. f) As per the stipulation in the consortium documents for working capital limits dated 14.03.2014, first charge was created on the schedule property in favour of 14 different lenders. In the event of any specific asset is to be charged exclusively in favour of particular lender, out of the pool of such charged assets. It needs approval and No Objection Certificate (NOC) or clearance from all other co-lenders. In this case neither Respondent No. 1 has intimated to the other co-borrowers nor has obtained any such clearance from any other lenders in this regard. The authorities of Respondent No. 1 bank, having knowledge that a charge has already been created on the schedule property, insisted upon the Applicant to create equitable mortgage in respect of schedule property as a collateral security for the Bank Guarantees (BGs) given to Transstroy JSC EC UES JV. The schedule property has not been encumbered by the Respondent No. 2 as security interest to the Respondent No. 1 Bank. Hence, Respon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enture of the Corporate Debtor. The Respondent No. 1 filed Form-D on 17.10.2019, claiming its security interest over the schedule property within the stipulated period of 30 days from the liquidation commencement date of 18.09.2019. In furtherance of realising the security interest, Respondent No. 1 has initiated the auction process. The contention of the Applicant is that the working capital limits sanctioned by the different lenders under the consortium documents dated 14.03.2014 are secured by way of first charge on the schedule property is a frivolous statement. The Working Capital Consortium Agreement clearly states that the said working capital facilities will be secured by a first charge, by way of hypothecation. The consortium of the lenders of the working capital limits have first charge only on the current assets and not on any immovable properties of the Corporate Debtor. The Corporate Debtor has acquired the schedule property by way of registered sale deeds in the year 2016 and was not in existence as on 14.03.2014 when the consortium of lenders have extended the working capital facilities. After the acquisition of the schedule property by the Corporate Debtor the same ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6, which enjoins upon Respondent No. 1 to file Form-D within 30 days from the liquidation commencement date which is 18.09.2019 admittedly. Form-D has to be filed on or before 17.10.2019. Form-D is not filed along with the counter and it was only filed later. There is no endorsement of Liquidator on Form-D indicating on which date it was filed before the Liquidator. After the said fact was brought to the notice of the Tribunal, the Liquidator filed a memo along with the trailing e-mails, which clearly shows that Form-D was filed with the Liquidator on 18.10.2019. But the Liquidator in his counter swear to the fact that Form-D was filed on 17.10.2019 and further stated that the last date for filing of Form-D was 17.10.2019. But now Respondent No. 1 and Respondent No. 2 are contending that the last date is 18.10.2019. The contention of Respondents No. 1 2 is that 30 days period has to be computed from 19.09.2019. But Respondent No. 1 is not entitled to claim the benefit of Section 12 of the Limitation Act, since, the filing of proof of claim (Form-D) is not an Application seeking leave to file an Appeal or Revision or Review. Further the timeline provided in Regulation 47 of the IB ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... benefited by the security deposit. The Applicant having failed to raise the objection at the relevant time after filing of the list of Stakeholders has filed this Application without any merits, after Respondent No. 1 Bank proceeded to realise its security interest. Regulation 21-A(2) was introduced on 06.01.2020 i.e., 110 days after LCD. Hence, Respondent No. 1 Bank cannot be expected to comply it within 90 days from the LCD. c) Respondent No. 2 contends that Respondent No. 1 has submitted its Form-D dated 17.10.2019 on 18.10.2019 by way of e-mails. The report dated 14.01.2020 filed by the Liquidator clearly intimated about the last date of submission of claims, which is 18.10.2019. He reiterates the contents of his counter and seeks this court to dismiss the Application. 6. From the above contentions made by the Counsel the following points would arise for consideration. i. Whether Form-D is filed in time. ii. Whether the Applicant has locus standi to file this Application. iii. Whether Regulation 21-A IBBI (Liquidation Process) Regulations, 2016 is applicable. iv. Whether the joint consortium executed on 14.03.2014 has any relevance to this case. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lear that the Form- D is sent on 18.10.2019 which is on the 30th day as reckoned with the help of the timeline mentioned in regulation 47 of IBBI Regulations. But the attack of the Form-D yet remains, since, the date on the Form-D is mentioned as 17.10.2019 and in the counter of Respondent No. 1 Respondent No. 2 it is contended that the Form-D was submitted on 17.10.2019. On the basis of the contentions made in the counter the argument is that the Form-D is fabricated with an ante-date. But the fact remains that the mail is sent on 18.10.2019 on which date the contentions of the Applicant are not known to either Respondent No. 1 or Liquidator/Respondent No. 2. Hence, the question of ante-dating Form-D may not arise. Apart from that, the argument wanes into insignificance, since, the last date for submission of the claim form stands to be on 18.10.2019. The date mentioned as 17.10.2019, as the date of submission of Form-D, in the counter, might be due to the fact that the Form-D was dated as such. When there is no scope found to be existing for ante-dating it, the only conclusion would be that it is due to the reason of the date, on the Form being 17.10.2019. There is no evidence ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... paid in full. He contends that it is obligatory on the part of the secured creditor to deposit the liquidation costs and workmen's dues for 24 months preceding the liquidation commencement date with the Liquidator, since, Section 53(1)(b)(i) deals with workmen's dues for a period of 24 months preceding the liquidation commencement date. The emphasis is on the words liquidation commencement date. He contends that irrespective of Section 21-A of IBBI (Liquidation Process) Regulations, 2016, the obligation to deposit the workmen's dues for a period of 24 months preceding the liquidation commencement date is still on the secured creditor. The Counsel for the Respondent contends that Section 529-A of the Old Companies Act, 1956 does not specify that the workmen's dues are to be paid for a period of 24 months prior to the liquidation commencement date. What Section 53(1) (a) (b) specify is that the workmen's dues and debts owed to the Secured Creditor, should be paid. The words liquidation commencement date is not mentioned therein. Be that as it may. Section 53(1)(b)(i) cannot be read to mean that the said amounts have to be deposited before the liquidation c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a) or seek permission of the liquidator under Section 52(3) of the IBC. It is further stated that M/s. Transstroy JSC EC UES JV by its letter dated 11.11.2017 addressed to Assistant General Manager, Bank of Baroda, CFS Branch, Hyderabad clearly stated that Corporate Debtor created mortgage in respect of schedule property as part compliance of sanction terms and conditions of Bank Guarantee limits of ₹ 218 Crores to M/s. Transstroy JSC EC UES JV. Further, the Memorandum of Entry dated 12.01.2018 entered into by the then Managing Director of the Corporate Debtor and Chief Manager of Respondent No. 1 clearly disclose that the Corporate Debtor created security by way of mortgage by deposit of title deeds to secure due repayment by the Corporate Debtor to Respondent No. 1 towards the credit facility sanctioned to M/s. Transstroy JSC EC UES JV. In the counter, the answer of Respondent No. 1 to the said contention is that the Corporate Debtor stood as a Corporate Guarantor for the credit facilities availed by its partnership and also secured said credit facilities by way of equitable mortgage of the schedule property. Respondent No. 1 Bank is a Secured Creditor by virtue of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d an 'operational debt'. It held that the debts in question are in the form of 3rd party security, said to have been given by the Corporate Debtor (JIL) so as to secure loans/advances/facilities obtained by JAL from the Respondent lenders. Such a debt is not and cannot be a financial debt within the meaning of Section 5(8)of IBC and hence, the Respondent lenders, the mortgagees, are not the Financial Creditors of the Corporate Debtor (JIL). The Counsel for the Respondent No. 1 while arguing for the non-application of the ratio laid down in the said judgment to this case submits that there are certain factual dissimilarities between the cases dealt with by the Supreme Court in the above cited judgment and this case. He submits that in the said case it was simple mortgage without any guarantee. Undisputed fact in this case is that, apart from creating a security by way of mortgage, the Corporate Debtor gave a guarantee. On that premise, the counsel distinguishes the facts of the case dealt with by the Supreme Court and this case. He further, draws the attention of this Tribunal to Section 5(8)(i) of IBC which is as under: Section 5(8)(i): the amount of any li ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... During the pendency of the stated action initiated by the Financial Creditor, the Principal Borrower had repeatedly assured to pay the outstanding amount, but as that commitment remained unfulfilled, the Financial Creditor eventually wrote to the Corporate Debtor on 3.12.2018 in the form of a purported notice of payment under Section 4(1) of the Code. The Corporate Debtor replied to the said notice of demand vide letter dated 8.12.2018, inter alia, clarifying that it was not the Principal Borrower nor owed any financial debt to the financial creditor and had not committed any default in repayment of the stated outstanding amount. The Financial Creditor then proceeded to file an application under Section 7 of the Code on 13.2.2019 for initiating Corporate Insolvency Resolution Proceeding against the Corporate Debtor. This application came to be resisted on two grounds one of which is that the Principal Borrower was not a corporate person . The Adjudicating Authority therein held that the action had been initiated against the Corporate Debtor, being coextensively liable to repay the debt of the Principal Borrower and having failed to do so despite the recall notice, be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... defined separately in the Code in Section 3(11) to mean a liability or obligation in respect of a claim which is due from any person and includes a financial debt and operational debt. The expression claim would certainly cover the right of the financial creditor to proceed against the corporate person being a guarantor due to the default committed by the principal borrower. The expression claim has been defined in Section 3(6), which means a right to payment, whether or not such right is reduced to judgment, fixed, disputed, undisputed, legal, equitable, secured or unsecured. It also means a right to remedy for breach of contract under any law for the time being in force, if such breach gives rise to a right to payment in respect of specified matters. Indubitably, a right or cause of action would enure to the lender (financial creditor) to proceed against the principal borrower, as well as the guarantor in equal measure in case they commit default in repayment of the amount of debt acting jointly and severally. It would still be a case of default committed by the guarantor itself, if and when the principal borrower fails to discharge his obligation in respect of amount ..... X X X X Extracts X X X X X X X X Extracts X X X X
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