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TMI Blog2021 (12) TMI 1341X X X X Extracts X X X X X X X X Extracts X X X X ..... d adopt the interpretation but for the reasons discussed above, we are unable to interpret the law in the manner it was interpreted in the matter of Piramal . The present petition against the Corporate Debtor herein which is a Guarantor as well, is admitted - the petition is admitted and CIRP in respect of the Guarantor is initiated - moratorium declared. - C.P. (IB) No. 346/KB/2018 - - - Dated:- 14-12-2021 - Rohit Kapoor, Member (J) And Harish Chander Suri, Member (T) For Appellant: Joy Saha, Sr. Adv., Kuldip Mallik and Joydip Mukherjee, Advs. For Respondents: D.N. Sharma and Swati Agarwal, Advs. ORDER Harish Chander Suri, Member (T) 1. The Court is convened by video conference today. 2. This petition under section 7 of the Insolvency and Bankruptcy Code, 2016 read with Rule 4 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 has been filed by State Bank of India, Stressed Assets Management Branch, having its registered office at Samriddhi Bhawan, Block-B, 1 Strand Road, Kolkata 700001, West Bengal praying for initiation of CIRP against the Corporate Debtor herein who stood guarantor for the Principal Borrower ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gly issued on 18.09.2008. Various Supplemental agreement of Loan, Hypothecation of Goods and Assets for increase in the overall limit were executed by the Principal Borrower. Similarly, a Supplemental Deed of Guarantee dated 19.09.2008 was executed by the aforesaid six Guarantors. The Supplemental of Guarantee for increase in overall limit was therefore executed by the Corporate Debtor herein. On 27th July, 2009, the Principal Borrower issued a letter to the State Bank of India/Financial Creditor requesting for renewal cum enhancement of OCC and vide order dated 30th September 2009 sanction of credit facilities was issued by the Financial Creditor in favour of Principal Borrower. It is further submitted that on 5th October 2009, the Principal Borrower issued a letter regarding grant of individual limits within the overall limit and vide Supplemental Agreement of loan for increase in the overall limit was executed between the Principal Borrower and the Financial Creditor. On the same day a Supplemental agreement of Hypothecation of goods and assets for increase in the overall limit was executed by and between the Principal Borrower and the Financial Creditor and accordingly on the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also been annexed as Ext. E colly. The Copies of the certificate of registration of charge issued by RoC is annexed as Ext. F colly. It is submitted that copy of the sanction letter dated 25th March, 2006 issued by the Financial Creditor to the Principal borrower is annexed Ext. G. Similarly along with the sanction letters issued by the Financial Creditor to the Principal Borrower, similar agreements have been signed by the Guarantors including Corporate Debtor herein. The Financial creditor has annexed enumerable documents in support of its claim against the Principal Borrower and the Guarantors, the present petition, is against the present Corporate Debtor/Guarantor in the present petition i.e. Infar Tie Up Pvt. Ltd. 7. In reply to the present petition one Bijay Kumar Agarwal, one of the Directors of the Corporate Debtor submitted that the present petition under section 7 is not maintainable because there is no debt due or payable by the Corporate Debtor to the Financial Creditor and that the application has no merit and deserves to be dismissed as not maintainable. It is submitted that section 35A was amended by a Banking Regulation (Amendment) Ordinance, 2017 dated 4th May ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t limited to, higher provisioning on such accounts and monetary penalties. 12. It is denied by the Corporate Debtor that a sum of Rs. 81,92,38,508.50 or any part thereof is due on account of principal or otherwise as on 31st January, 2018 or on any other date as alleged or at all. It is denied that a sum of Rs. 162,62,23,609.63 or any part thereof is due or payable or outstanding as on 31st January, 2018 or any other date as alleged or at all. By reasons of the facts stated hereinabove, the said application is premature as the financial creditor had no right to initiate the Corporate Insolvency Resolution Process against the corporate debtor herein. 13. In the Rejoinder to the reply affidavit filed by the Financial Creditor, it is denied by the Financial Creditor that the application is not maintainable as alleged by the Corporate Debtor. It is further submitted that in the matter of SBI vs. Bhushan Energy Ltd. (C.P. No. (IB) 530(PB)/2017. The Hon'ble Bench in this matter has stated that: 16. A perusal of the aforesaid provisions would make it patent that the powers of the Chairperson are of widest amplitude. On the language of Section 27 read with Regulation 77, it c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on has no merit or that the same is deserved to be dismissed or is not maintainable as alleged at all. 16. The Financial Creditor has further submitted that with reference to the paragraph no(s). 6(1) to 6(y), the Corporate Debtor and Principal Borrower were provided sufficient opportunities to repay the outstanding dues in terms of the said Press Release. OTS scheme was also provided to them and the corporate debtor failed to provide a valid resolution plan and the same were rejected and/or not considered by the applicant Bank. It is submitted by the Financial Creditor that the Corporate Debtor do not fall under the said categories of companies and hence Financial Creditor denies all contentions of the Corporate Debtor in this regard. It is submitted that the Corporate Debtor was ever deprived from availing any resolution plan as alleged or at all. It is further submitted Financial Creditor has denies that the Applicant has not complied with the provisions of the Press Release dated 13th June, 2017 and/or the Circular dated 12th February, 2018 and/or the Financial Creditor has deprived the Corporate Debtor from availing any resolution plan as alleged or at all. It is submitted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Debtor on the basis of the Deed of Guarantee dated 1st April 2006 and subsequent deeds. 18. It is further submitted that with reference to paragraph no(s) 7 to 11 of the reply, the Financial Creditor submitted that a sum of Rs. 162,62,23,609.63/- as on 31st January, 2018 is due and payable by the Principal Borrower and the Corporate Debtor has executed Deed of Guarantee on 1st April 2006 and marked as Exhibit L to the application. It is submitted that on the basis of the Deed of Guarantee the Corporate Debtor has admitted the debt due to the Applicant and therefore, it is denied that the instant application in any way is premature application. It is submitted that under section 7, the existence of default has to be ascertained based on the records/documents filed by the Applicant and therefore, it is denied that the present application is a premature one and/or the same is liable to be dismissed without any order as alleged. The applicant submits that the Company intentionally and with ulterior motives is continuously lingering the matter with a malafide intention to fetch time to dispose of the pledged securities. The applicant submits that the Corporate Debtor is routing i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Guarantor would be maintainable when the Principal Debtor or another Corporate Debtor are already in CIRP, and the orders have been delivered on 14/09/2021, and it has been made clear that there is no bar whatsoever to two separate actions against the Corporate Debtor and the Guarantor. Under these circumstances, Mr. Saha submitted that this was perhaps the only defence that had been squarely taken care of. The Ld. Sr. Counsel further submitted that this is a claim of Rs. 162,62,23,609.63 which is an admitted debt as on 31st January, 2018. Ld. Senior Counsel further submitted that the NPA date mentioned in the application is 10th January, 2014. It is submitted that the CP was affirmed on 28th February 2018 and the petition was filed on 9th March, 2018. Ld. Senior Counsel further submitted that the Financial Creditor filed the O.A. proceedings in the D.R.T i.e. O.A. No. 493/2015 on 24th September 2015. Ld. Senior Counsel submitted that he is relying upon mainly on judgments i.e. Sesh Nath Singh and Anr. vs. Baidyabati Sheoraphuli Co-operative Bank Ltd. and Anr.) and recent judgment in the case of Dena Bank -vs- Shibakumar Reddy and Laxmi Pat Surana -vs- Union Bank of India Anr.). ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... han case has already been stayed by the Hon'ble Supreme Court of India. He argued that, in effect, Piramal is also stayed. It is further argued that Hon'ble NCLAT took a contrary view in State Bank of India vs. Athena Energy Ventures Private Limited, [2021] 164 SCL 293 (Athena Energy) case. It is further argued that Piramal case was not founded on the earlier decision of the Supreme Court in the case of State Bank of India vs. Ramakrishnan (2018) Vol 17 SCC 394 and another. Therefore, it can be said that Piramal was per incurium, so in Athena Energy case Hon'ble Justice A.I.S. Cheema, who was then presiding over the Bench held completely a contrary view and refused to tow the line which was being followed in Piramal's case. It is submitted that in paragraph 24 and 25 of the M/s. Krishna Alex Pvt. Ltd. judgment passed in Athena Energy case, Ramakrishnan case and Lalit Kumar Jain case have been discussed and after discussing all these judgments and following the aforesaid principle laid down by the Hon'ble Supreme Court that has been followed by Hon'ble High Court, in the matter of Punjab National Bank judgment where it was held that proceedings against the Gu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4th December, 2020. He further submitted that the other Corporate Guarantor by the name of Genegrow Commercial Pvt. Ltd. was also admitted to CIRP on 2nd August 2019 against which an appeal was preferred before the NCLAT. There was an order passed by NCLAT, by which the order of this Tribunal was set aside following Piramal view on 23rd January, 2020 but the order of the NCLAT has been stayed by the Hon'ble Supreme Court on 3rd November 2020. Ld. Counsel further submitted that for a long time in between, while the order of the NCLAT was holding the fort. Ld. Counsel submitted that the Financial Creditor prayed for an order of admission, submitting that there was no settlement and no proposal for settlement. 26. Ld. Counsel for the Corporate Debtor however, at the very outset submitted that the claim of the Financial Creditor is not maintainable. He submitted that the judgments cited by Ld. Senior Counsel arguing on behalf of the Financial Creditor citing various judgments wherein the principle of Athena Energy case has not been followed. He submitted that the Athena Energy followed the principle laid down by Piramal and that from the Piramal, the matter is pending before the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Corporate Debtor has submitted that the present application under section 7 of IBC filed against the Corporate Debtor is not maintainable because the Financial Creditor has already proceeded against Principal Borrower and one of the other Corporate Guarantor in respect of the self-same credit facility/amount which has been claimed against the present Corporate Debtor in the present proceedings. It is submitted that the application is not maintainable because the same amount has been claimed to be in default that there cannot be more than one CIRP in the instant case. It is an admitted fact that the CIRP of the Principal Borrower has gone into liquidation and finally dissolved. The Financial Creditor in the present case had also proceeded against the other Corporate Guarantor/Genegrow and such proceedings are pending. Therefore, in view of the principles laid down by the judicial pronouncements, the CIRP cannot be proceeded against the Corporate Guarantor when the Financial Creditor has already proceeded against Principal Borrower. Ld. Counsel for the Corporate Debtor has relied upon citation in support of this legal proposition which are mentioned hereinbelow. 31. Ld. Counsel r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch and hence the Athena Energy judgment will be considered as a per incuriam. 33. It is submitted that the date of default which has been mentioned in Section 7 application by the Financial Creditor in Part-IV at pages-5 is January 10, 2014. The section 7 application has been filed sometime in March, 2018. In the meantime, the Financial Creditor had already applied under section 19 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 against Principal Borrower/Gee Pee and also against all the individuals and corporate guarantors including the corporate debtor herein, as would appear from O.A. No. 493 of 2015 filed by the Financial Creditor before the Learned DRT-1, Kolkata on September 24, 2015. It has been held by the Hon'ble Supreme Court by a recent judgment (Re: Babulal Vadjarji Gurjar) that Article 137 of Limitation Act, 1963 will apply to all the applications filed under section 7 of IBC, 2016 to the extent as held by recent three judgments delivered by the Supreme Court on this issue relied upon by the Corporate Debtor in the matter of; (1) Laxmi Pat Surana Vs. Union Bank of India another, (2) Asset Reconstruction Company (India) Limited Vs. Bi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... February, 2018 and/or the Financial Creditor has deprived the Corporate Debtor from availing any resolution plan as alleged or at all. I say that after complying all the provisions of the Code, the Applicant has filed the present application in proper form and manner and hence the same is maintainable. 36. Now coming to para (q) of the reply of the Corporate Debtor at page 10, it is mentioned as under:- (q) Not only the provisions of Press Release dated 13th June 2017 and the circular dated 12 February 2018 was not and/or could not be complied with by the financial creditor, the financial creditor on February 2018 had filed the present proceeding under section 7 of the IBC. 37. It has been argued by the Ld. Counsel for the Financial Creditor that it is not the case of Corporate Debtor that the Financial Creditor has while filing an application under section 7 of the IBC has relied upon Press Release dated 13th June, 2017 and the Circular dated 12th February, 2018 rather the Corporate Debtor has stated that these two documents were not and could not be complied with by the Financial Creditor. 38. He further argued, a perusal of application filed by the applicant i.e. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as alleged admission. Reference is also made to the judgment of the Hon'ble NCLAT on this proposition para-9 (dated September 23, 2020 at page-14 of compilation-II). In the case of Saurabh Bharathushan Jain Shareholder and Director of Sysco Industries Ltd. Vs. Excel Tubes Cones and Another. 44. The Ld. Counsel for the Corporate Debtor Finally submitted that the judgments passed by the Hon'ble Supreme Court of India relied upon by the Financial Creditor are distinguishable and do not apply to the facts of the present case. The Ld. Counsel further submitted that in the case of Laxmi Pat Surana -vs- Union Bank of India Anr.) SCC Online SC 267, the issue which was involved has been mentioned in para 1 of the judgment. In para 32, the Hon'ble Supreme Court decided the second issue, as framed, as to whether an application under section 7 of the Code filed after three years from the date of NPA is not barred by limitation. From para 46, it will appear that the letter dated December 8, 2018 issued by the Corporate Guarantor (corporate debtor) was without prejudice but still in para 48, the Hon'ble Supreme Court construed the said letter to be a written acknowledgeme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed upon the Balance Sheets of either the corporate debtor (corporate guarantor) or the Principal Borrower in C.P.(IB) No. 346/KB/2018. The Financial Creditor has made no attempt to either place reliance upon the Balance Sheet to take benefit under section 18 of the Limitation Act, 1963 nor has the Financial Creditor made any effort to explain the delay or the reason for condonation of delay, if any. Therefore, the ratio of the judgment of the Supreme Court in Bishal Jaiswal matter does not help the cause of the Financial Creditor. 46. In view of the judgments of Hon'ble Supreme Court in Ramakrishnan case and Lalit Kumar Jain's case, the proceedings can continue against the Guarantors. Therefore, it is no longer necessary to have discussions between the Athena Energy case and Piramal Case. 47. We have considered all the pleadings filed on behalf of both the parties and the judgments cited by them. 48. We have considered the recent order passed by this Adjudicating Authority in CP No. 1128/KB/2019, Punjab National Bank- vs- M/s. Krishna Alex Private Limited, in which all the relevant judgments of the Hon'ble NCLAT and the Hon'ble Supreme Court were discussed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... el or other authority; b) Transferring, encumbering, alienating or disposing of by the Corporate Debtor any of its assets or any legal right or beneficial interest therein; c) Any action to foreclose, recover or enforce any security interest created by the Corporate Debtor in respect of its property including any action under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (54 of 2002); d) The recovery of any property by an owner or lessor where such property is occupied by or in the possession of the corporate debtor. v) The supply of essential goods or services rendered to the corporate debtor as may be specified shall not be terminated, suspended, or interrupted during the moratorium period. vi) The provisions of sub-section (1) shall not apply to such transactions as may be notified by the Central Government in consultation with any financial sector regulator. vii) The order of moratorium shall have effect from the date of admission till the completion of the corporate insolvency resolution process. viii) Provided that where at any time during the Corporate Insolvency Resolution Process period, if the ..... 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