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TMI Blog2022 (5) TMI 313X X X X Extracts X X X X X X X X Extracts X X X X ..... ate Debtor has been established and the application deserves to be admitted. Application admitted - moratorium declared. - CP (IB) No.68/MB-IV/2021 - - - Dated:- 4-5-2022 - Mr. Rajesh Sharma Hon ble Member (Technical) And Mr. Kishore Vemulapalli Hon ble Member (Judicial) For the Petitioner : Mr. Nausher Kohli, Advocate For the Respondent : Mr. Simil Purohit, Advocate ORDER Per: Rajesh Sharma, Member (Technical) 1. This is an application being C.P. (IB) No. 68/NCLT/MB/C-IV/2021 filed by Beacon Trusteeship Limited, the Financial Creditor/Applicant, under section 7 of Insolvency Bankruptcy Code, 2016 (I B Code) against Modella Textile Industries Limited, Corporate Debtor, for initiating Corporate Insolvency Resolution Process (CIRP). 2. The Application is filed by Ms. Nitiksha Porwal, Assistant Manager of Financial Creditor vide its Board Resolution dated 19.02.2020, claiming total default amount as under: Principal Outstanding Rs.3,10,00,00,000/- Interest TDS Dues Rs.71,57,25,314/- Default Interest Amount Rs.16,01,21,723/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Petition; vi. Monitoring Agent Agreement dated 23.11.2017 executed between Financial Creditor, Corporate Debtor, Edelweiss Finevest Private Limited and ECL Finance Limited, at pp 297-322 of the Petition; vii. Escrow Agreement dated 21.03.2018, at pp 324-372 of the Petition; viii. Demand Promissory Note dated 20.11.2017, at p.373 of the Petition; ix. Guarantee Agreement (Corporate Guarantee) dated 17.11.2017, at pp 374-402 of the Petition; x. Guarantee Agreement (Personal Guarantee) dated 17.11.2017, at pp 374-402 of the Petition; xi. Agreement for Pledge of Shares dated 17.11.2017, at pp 432-502 of the Petition; xii. Indenture of Mortgage dated 17.11.2017 executed by Corporate Debtor in favour of ECL Finance Limited, at pp 503-630 of the Petition; xiii. Security Sharing Agreement dated 20.11.2017, at pp631-638 of the Petition. 5. The Financial Creditor has filed NeSL Report showing the total outstanding of Rs.502,91,64,495/- (Rupees five hundred two crore ninety-one lakh sixty-four thousand four hundred ninety-five only) as on 21.05.2020 which is at pp 20-21 of the Petition. The Financial Creditor has also filed CIBIL Report dated 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y documents, have already reached a complete understanding about the consequences of any default in repayment. d) The Petition is not maintainable on the ground that the Financial Creditor is adequately secured against claims that it may have against the Corporate Debtor, which is envisaged by the following clauses of the DTD; i) Clause 4-Grant and Transfer: The Corporate Debtor has conveyed, assigned, granted, transferred and mortgaged all its right, title and interest in certain immovable property as more particularly defined therein and including all buildings and structures standing thereon, all movable property including machinery, appliances, fittings etc. and all receivables therefrom in favour of the Financial Creditor. Moreover, the Corporate Debtor also agreed to deposit the original papers regarding its immovable properties with the Financial Creditor; ii) Clause 6-Event of Default and Remedies: If an event of default occurs, the security interest shall become enforceable and, in that regard,, the Corporate Debtor may take a number of steps at its discretion, including to enter upon the mortgaged properties and taking possession thereof, to trans ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 7 Petition was not maintainable against the debtor. b. The Judicial disciplines warrants and mandates that a Judgment of Co-ordinate Bench is to be applied and followed by another Co-ordinate Bench. The said principle has been most recently followed by the NCLAT in the matter of DLF Phase-IV Commercial Developers Limited, Company Appeal (AT) No. 180 of 2019 wherein it was held as under: 8. Keeping in view the foregoing and all relevant considerations as also the settled law on the subject, the impugned order falling within the purview of per incuriam cannot be supported. The Tribunal should have applied its mind in the light of judicial precedents brought to its notice by way of an affidavit, and in the event of the views expressed by the Co-ordinate or Larger Benches being squarely applicable, followed the same. Such application of mind being abysmally absent, the impugned order is unsustainable and has to be set aside to the extent it relates to directions for convening of the meetings of Unsecured Creditors of Appellant No.4 and the meetings of the Equity Shareholders, Secured and Unsecured Creditors of Applicant No.5 c. Under DTD, the Financial Creditor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Financial Creditor has claimed a total default of Rs.502,91,64,495/- (Rupees five hundred two crore ninety-one lakh sixty-four thousand four hundred ninety-five only). The Corporate Debtor does not accept the validity of the aforesaid claim as the interest claimed is excessive and usurious. 9. The Financial Creditor has filed the Written Submissions dated 09.03.2022 and submits as under: a. The Financial Creditor is Debenture Trustee acting for the benefit of sole Debenture viz. Edelweiss Asset Restriction Company Limited under the Debenture Trust Deed dated 17.11.2017. The debt is payable under 3100 Non-Convertible Debentures, each having a value of Rs.10 lakh issued via private placement currently held by the Debenture Holder aggregating to an amount of Rs.310 crore. ECL Finance Limited was the original Debenture Holder and late on, assigned its debt to EARC under the registered Assignment Deed dated 28.06.2019. b. The NCDs were issued for the purpose of development and construction of the Project called Sports City and meeting the Project related expenses, being constructed on 14.3 acres of land bearing Survey Nos. 464 (A), 465 466 at Thane i.e. the Project L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Insolvency and Bankruptcy Board of India. c. The Statement of Accounts filed by the Financial Creditor is not certified as per Bankers Books Evidence Act, 1891. d. The amounts advanced under the DTD are adequately secured against claims that it may have against the Corporate Debtor which is given under Clauses 4, 6, 7A 19 of DTD. As per these clauses the Financial Creditor is entitled to enforce its Security Interest by several means, appropriate the Security Interest for realization any amount payable to it without the intervention of the court. e. In English Mortgage, there is no default until the property which has been transferred in favour of the mortgagee is sold. In the present, the value of the security is far greater than the amount of default claimed by the Financial Creditor. f. The Co-ordinate Bench of this Tribunal in Beacon Trusteeship Limited V. Neptune Ventures and Developers Private Limited, CP (IB) No. 993 of 2020 while interpreting the term of an English Mortgage has held as under: 26. Therefore, in terms of the English Mortgage, the Mortgagor has a recourse to repay the mortgaged debt and has the right to seek reconveyance of the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . There can be no doubt that registered mortgage is instrument which shall also be overridden by Section 238 which specifically provides for overriding of provisions of I B Code to a contrary provisions of law as well as an instrument made under any other law. The Tribunal while deciding Beacon Trusteeship Limited did not advert to Section 238 of the I B Code which had overriding effect on any clause of any Debenture of Trust Deed cum Indenture of Mortgage. In paragraphs 26 and 27 of Beacon Trusteeship Limited , following was observed: - 26. Therefore, in terms of the English Mortgage, the Mortgagor has a recourse to repay the mortgaged debt and has the right to seek reconveyance of the properties to the mortgagor upon complete satisfaction of Debt. 27. The Petitioner has absolute rights in the mortgaged property and cannot initiate any action under section 7 upon non-payment of dues under the Debenture Trust Deed, the petitioner has agreed to recourse and sell the mortgaged assets and recover the money due . 21. We are of the view that the above view taken by the Tribunal in Beacon Trusteeship Limited is not inconsonance with Section 7 read with Section 238 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n panel 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; d) the recovery of any property by an owner or lessor where such property is occupied by or in possession of the corporate debtor. II. That the supply of essential goods or services to the corporate debtor, if continuing, shall not be terminated or suspended or interrupted during the moratorium period. III. That the provisions of sub-section (1) of Section 14 of I B Code shall not apply to a. such transactions as may be notified by the Central Government in consultation with any financial sector regulator; b. a surety in a contract of guarantee to a Corporate Debtor. IV. That the order of moratorium shall have effect from the date of this order till the completion of the corporate insolvency resolution process or until this Ben ..... X X X X Extracts X X X X X X X X Extracts X X X X
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