9911796707
TMI Blog2022 (3) TMI 415X X X X Extracts X X X X X X X X Extracts X X X X ..... availed a financial assistance from SREI Infrastructure Finance Limited ("SREI") for a sum of Rs. 500,00,00,000/- on 26th July, 20211. The Facility Agreement was secured by a third-party mortgage by deposit of title deeds over the factory land of the Appellant at Elavur Village, Ponneri Taluk, Chingleput District, Tamil Nadu. On 27th July, 2011, Appellant had executed Deed of Undertaking, Warranty and Indemnity. (ii) The State Bank of India, one of the lenders of ESL filed an Application under Section 7 of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as the "Code"), on which Corporate Insolvency Resolution Process ("CIRP") was initiated against ESL vide order dated 21st July, 2017. In CIRP of ESL, a Resolution Plan was submitted by Vedanta Limited, which was approved on 17th April, 2018. In the Resolution Plan an amount of INR 5320 Crores was deposited in an escrow account, which was to be distributed to the Financial Creditors of the ESL. Simultaneously, with the deposit of the upfront payment, the unsustainable debt was converted into fully paid-up equity shares of ESL with a face value of INR 10/- each. (iii) SREI executed a Deed of Assignment in favour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 39 of 2021. Aggrieved against the order dated 3rd February, 2022, the present Appeal has been filed by the Appellant. 3. We have heard Shri Kapil Sibal, learned Senior Counsel and Shri Ramji Srinivasan, learned Senior Counsel of the Appellant; Shri Huzefa Ahmadi, learned Senior Counsel and Shri Krishnendu Datta, learned Senior Counsel for the Respondent. 4. Shri Kapil Sibal, learned Senior Counsel submits that Hon'ble Supreme Court vide judgment dated 26th November, 2021 having permitted the Appellant to file an Application before DRT under Section 17 of the SARFAESI Act to adjudicate whether or not any debt was due and payable by the Appellant to the Respondent, Section 7 Application ought to await the adjudication by the DRT. It is submitted that Adjudicating Authority committed error in rejecting IA No.139 of 2021 filed by the Appellant, which rejection in the teeth of judgment of the Hon'ble Supreme Court dated 26th November, 2021. It is submitted that before the DRT Chennai, one of the prayers made by the Appellant is Assignment Agreement executed in favour of Respondent be declared null, void and ab-initio. Shri Kapil Sibal, learned Senior Counsel further submits that Assig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The Hon'ble Supreme Court judgment cannot be read as taking away the statutory right of the Respondent to pursue the Section 7 Application. The jurisdiction of the Adjudicating Authority to determine whether there is a financial debt and default is plenary in nature and as provided under Section 238 of the Code, will override all other laws in the event of inconsistency. The pendency of action under SARFAESI Act does not create an obstruction for filing Application under Section 7 of the Code. It is further submitted that there is no complete discharge/ extinguishment of debt as erroneously contended by the Appellant. The Appellant is attempting to pre-empt such adjudication by Adjudicating Authority. The Resolution Plan contains clauses which preserve the right of Financial Creditor of ESL to proceed against any third party in relation to the portion of the unsustainable debt secured or guaranteed by third parties. The submission of learned Counsel for the Appellant that that preliminary issue framed before the Adjudicating Authority regarding the default in discharge is an attempt to truncate the hearing before the Adjudicating Authority. The Appellant having already filed reply ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cerned and therefore the assignment deed can be said to be 'fraudulent'. The aforesaid cannot be accepted. By that itself the assignment deed cannot be said to be 'fraudulent'. In any case, whether there shall be legally enforceable debt so far as the plaintiff - appellant herein is concerned even after the approved resolution plan against the corporate debtor still there shall be the liability of the plaintiff and/or the assignee can be said to be secured creditor and/or whether any amount is due and payable by the plaintiff, are all questions which are required to be dealt with and considered by the DRT in the proceedings initiated under the SARFAESI Act. It is required to be noted that as such in the present case the assignee has already initiated the proceedings under Section 13 which can be challenged by the plaintiff - appellant herein by way of application under Section 17 of the SARFAESI Act before the DRT on whatever the legally available defences which may be available to it. We are of the firm opinion that the suit filed by the plaintiff - appellant herein was absolutely not maintainable in view of the bar contained under Section 34 of the SARFAESI Act. Therefore, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e debt against the appellant. If such an application is filed within a period of two weeks from today the same be considered in accordance with law and on merits after complying with all other requirements which may be required while filing the application under Section 17 of the SARFAESI Act. However, it is made clear that we have not expressed anything on merits in favour of either of the parties on the aforesaid two issues. Present appeal is accordingly dismissed, however, in the facts and circumstances of the case there shall be no order as to costs." 11. From the perusal of the judgment of Hon'ble Supreme Court, it is clear that it was on the prayer of the Appellant that liberty was granted by the Hon'ble Supreme Court to file an Application under Section 17 of the SARFAESI Act before the DRT on the grounds as noted in paragraph 9. The Hon'ble Supreme Court has also noticed that in fact proceedings before DRT were initiated by the Appellant under Section 17, which fact has been noticed in paragraph 2.4 of the judgment. Before the Hon'ble Supreme Court, there was no issue regarding Application filed under Section 7 of the Code by the Respondent against the Appellant, which was ..... X X X X Extracts X X X X X X X X Extracts X X X X
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