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TMI Blog2023 (1) TMI 302X X X X Extracts X X X X X X X X Extracts X X X X ..... o pass necessary orders or issue such directions, to meet the ends of Justice or to prevent, an abuse of process, as the case may be. Viewed in that perspective and also keeping in mind the primordial fact that because of the Default, in payment of the amount, under the One Time Settlement, the act of the 1st Respondent / Bank, in filing application and the Logical Corollary Order, passed by the Adjudicating Authority (Tribunal) in allowing the said Application, and the Order of Restoration, by no stretch of imagination, cannot be found fault with, in the considered opinion of this Tribunal, and hence, the Plea of the Appellant, that there is / was a negation of Rules of Natural Justice, has no legs to stand and the same is not acceded to, by this Tribunal. Dealing with the Plea of the Appellant that the initiation of Corporate Insolvency Resolution Process, by the 1st Respondent / Bank, in regard to the shadow period, i.e., 25.03.2020 to 25.03.2021, when the restrictions imposed, by the ingredients of Section 10A of the I B Code, 2016, were in force, is bad in Law, this Tribunal, relevantly points out that the Parliament, had intended to impose a prohibition, as regards the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dent / Corporate Debtor, and in as much as he is an Investor, is not an Aggrieved Person, to prefer the instant Appeal, before this Tribunal, notwithstanding the fact that Section 61 (1) of the I B Code, 2016, employs the words, any person aggrieved by the order of the Adjudicating Authority, under this Part (Chapter VI) of the I B Code, 2016, may prefer an Appeal, in respect of the Order, passed by the Adjudicating Authority, as opined by this Tribunal. Hence, the instant Appeal, filed by the Appellant, before this Tribunal, is not per se maintainable, and answered accordingly. In regard to an Existence of Debt, due and payable in Fact and in Law, and Default was committed by the 2nd Respondent / Corporate Debtor, and the Default took place, well before the Covid-19 Pandemic, and that the Application, filed by the 1st Respondent / Bank / Financial Creditor, is complete in all respects. Looking at from any point of view, the impugned order dated 04.02.2022 in IBA/757/2019, passed by the Adjudicating Authority (National Company Law Tribunal, Division Bench I, Chennai), exercising its subjective judicial discretion, in admitting the Application (Filed under Section 7 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fied the accounts of the Corporate Debtor as NPA on 31.03.2017 and thus under the provisions of IBC, taking into consideration the decision of the Hon ble Supreme Court in Gaurav Hargovindbhai Dave vs. Asset Reconstruction Company (India) Ltd. Anr. in Civil Appeal No.4952 of 2019 and B.K. Educational Services Private Limited -Vs- Parag Gupta and Associates; (2018) SCC Online SC 1921, the right to sue across for the Financial Creditor to sue the Corporate Debtor on 31.03.2017, the date on which the account of the Corporate Debtor was declared as NPA and from the records it is evident that the Financial Creditor has filed the present petition on 03.10.2018 which is well within the 3 years period of limitation. 14. Further, we are also satisfied that there is a debt and default on the part of the Corporate Debtor and the Corporate Debtor is unable to repay its dues to the Consortium of Bankers and in the instant case to the Applicant Financial Creditor. It has also been consistently held by the Hon ble Supreme Court both in Innoventive Industries Ltd. -vs- ICICI Bank and another (2018) 1 SCC 407 as well as Mobilox Innovations Pvt. Ltd. -vs- Kirusa Software Pvt. Ltd. (2018) 1 SC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase as well as the position of Law, we are of the view that this Application as filed by the Applicant Financial Creditor is required to be admitted under Section 7 (5) of the IBC, 2016. 17. The Financial Creditor has proposed the name of Mr. Radhakrishnan Dharmarajan, with Registration Number: IBBI / IPA 001 / IP - P00508 / 2017 18 / 10909 (email id:- [email protected]), whose Authorization for Assignment (AFA) as per IBBI site is valid till 30.11.2022, as the Interim Resolution Professional (IRP) who has also filed his written consent in Form 2 of the Insolvency and Bankruptcy Board of India (Application to Adjudicating Authority) Rules, 2016. The proposed IRP who is appointed shall take forward the process of Corporate Insolvency Resolution of the Corporate Debtor. The IRP appointed shall take in this regard such other and further steps as are required under the Statute, more specifically in terms of Section 15, 17, 18 of the Code and file his report within 30 days before this Bench. The powers of the Board of Directors of the Corporate Debtor shall stand superseded as a consequence of the initiation of the CIRP in relation to the Corporate Debtor in terms of the pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e precise amount of Debt payable and the Date of Default , if any, after accepting Rs.1765.34 Crores. 7. The Learned Counsel for the Appellant takes a plea that the Adjudicating Authority ( Tribunal ), had failed to take notice that after payment of Rs.1765.34 Crores, out of Rs.3100 Crores, on the date of filing of an Application for re-instatement , there was neither any Default nor remained any Cause of Action , for such re-instatement . 8. The Learned Counsel for the Appellant advances an argument that the Ex-parte Order of Re-instatement , dated 05.11.2020, passed by the Adjudicating Authority, without Notice , to the Corporate Debtor , the said Order , is unsustainable in Law , being violative of the rules of natural justice and Section 420 of the Companies Act, 2013 . 9. The Learned Counsel for the Appellant contends that the Ex-parte Order dated 05.11.2020, re-instating the Application , is not a Speaking Order , and reasons for Re-instatement , were not discussed. 10. The Learned Counsel for the Appellant forcefully points out that the Adjudicating Authority , had failed to appreciate the fact that after the payment of Rs.1765.34 Crore ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der dated 04.02.2022, in IBA/757/2019, passed by the Adjudicating Authority , that it was based on the Order in IA/827/2020 dated 05.11.2020. Hence, the impugned order dated 04.02.2022 in IBA/757/2019, passed by the Adjudicating Authority , during the shadow period, under Section 10A of the Code, is liable to be set aside . 16. The Learned Counsel for the Appellant submits that an Application , under Section 7 of the I B Code, 2016, is not to be Admitted , based on the existence of Debt and Default . 17. In this connection, the Learned Counsel for the Appellant points out that the Hon ble Supreme Court of India in Vidarbha Industries Power Limited v. Axis Bank Limited, reported in (2002) 8 SCC at Page 352, has clarified that the power to, admit an Application , under Section 7 vested with the NCLT, under Sec. 7 (5) (a) is discretionary and not mandatory . Also that, the Hon ble Supreme Court had observed that various factors will have to be taken into account, before the initiation of Corporate Insolvency Resolution Process , including the first objective , to revive the company , and not spell its death knell, feasibility of the Corporate Insolvency ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs.150 Crores , on or before 15.06.2019. Resting upon the request made by the Lender Consortium , the OTS Consortium , made plurality of payments on 16.05.2019, 06.06.2019 and 14.06.2019 cumulatively, amounting to Rs.150 Crores. Also that, it was clarified to the 1st Respondent / Bank , by the OTS Consortium , that the payments were against the One Time Settlement . 22. The Learned Counsel for the Appellant brings it to the notice of this Tribunal , that the consideration, payable under the One Time Settlement , was later revised to Rs.3100 Crores and Additional Equity of 15% , was offered to the Lender Consortium ( OTS ). In this connection, it is pointed out on behalf of the Appellant that the 1st Respondent / Bank , had invited Bids , based on Swiss Challenge , and the Respondents , were not happy with the Bids , received so that they offered Swiss Challenge , to the existing Promoters , to give H1 Bid , (vide Letter of 1st Respondent / Bank SARG/INFRA/CEPL/19-20/46 dated 01.06.2019 ), addressed to the Appellant and Another with a copy marked to the Corporate Debtor . 23. The Learned Counsel for the Appellant points out that resting upon the One Ti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Appellant contends that when the request for Withdrawal , was made by the 1st Respondent / Bank , on behalf of the Lender Consortium , for the Application , filed under Section 7 by the 1st Respondent / Bank / Financial Creditor , a wrong statement , was made, by way of an Affidavit, by the 1st Respondent / Bank , which was recorded by the Adjudicating Authority ( Tribunal ) in the Order dated 19.12.2019 in IBA/757/2019, wherein, it is observed as under: It is respectfully submitted that the Corporate Debtor has submitted OTS Proposal to the Consortium led by Financial Creditor which is approved by the Financial Creditor and other consortium member banks. The Proposal is before Committees of 15 banks for taking decision and it will take 4 weeks time to have a final decision in the matter. 28. The Learned Counsel for the Appellant comes out with a plea that No Man can take an advantage of his own wrong , and that the 1st Respondent / Bank , cannot question the Validity of the One Time Settlement Proposal , by its undermentioned failures: (a) Failure to get 100% approval from Consortium of Banks. (b) Failure to issue Final Letter of Intent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... behind the doctrine of election is inbuilt in the concept of approbate and reprobate. Once again, it is a principle of equity coming under the contours of common law. Therefore, he who knows that if he objects to an instrument, he will not get the benefit he wants cannot be allowed to do so while enjoying the fruits. One cannot take advantage of one part while rejecting the rest. A person cannot be allowed to have the benefit of an instrument while questioning the same. Such a party either has to affirm or disaffirm the transaction. This principle has to be applied with more vigour as a common law principle, if such a party actually enjoys the one part fully and on near completion of the said enjoyment, thereafter questions the other part. An element of fair play is inbuilt in this principle. It is also a species of estoppel dealing with the conduct of a party. We have already dealt with the provisions of the Contract Act concerning the conduct of a party, and his presumption of knowledge while confirming an offer through his acceptance unconditionally. 27. We would like to quote the following judgments for better appreciation and understanding of the said principle: 27.1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... void for the purpose of securing some other advantage. That is to approbate and reprobate the transaction . It is clear from the above observations that the maxim that a person cannot approbate and reprobate is only one application of the doctrine of election, and that its operation must be confined to reliefs claimed in respect of the same transaction and to the persons who are parties thereto. The law is thus stated in Halsbury s Laws of England, Vol. XIII, p. 464, para 512: On the principle that a person may not approbate and reprobate, a species of estoppel has arisen which seems to be intermediate between estoppel by record and estoppel in pais, and may conveniently be referred to here. Thus a party cannot, after taking advantage under an order (e.g. payment of costs), be heard to say that it is invalid and ask to set it aside, or to set up to the prejudice of persons who have relied upon it a case inconsistent with that upon which it was founded; nor will he be allowed to go behind an order made in ignorance of the true facts to the prejudice of third parties who have acted on it . 27.2. State of Punjab v. Dhanjit Singh Sandhu, (2014) 15 SCC 144 (SCC pp. 153 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ial Development Investment Corpn. v. Diamond Gem Development Corpn. Ltd., (2013) 5 SCC 470: (SCC pp. 480-81, paras 15-16) I. Approbate and reprobate 15. A party cannot be permitted to blow hot-blow cold , fast and loose or approbate and reprobate . Where one knowingly accepts the benefits of a contract, or conveyance, or of an order, he is estopped from denying the validity of, or the binding effect of such contract, or conveyance, or order upon himself. This rule is applied to ensure equity, however, it must not be applied in such a manner so as to violate the principles of what is right and of good conscience. [Vide Nagubai Ammal v. B. Shama Rao [AIR 1956 SC 593] , CIT v. V. MR. P. Firm Muar [AIR 1965 SC 1216], Ramesh Chandra Sankla v. Vikram Cement [(2008) 14 SCC 58], Pradeep Oil Corpn. v. MCD [(2011) 5 SCC 270], Cauvery Coffee Traders v. Hornor Resources (International) Co. Ltd. [(2011) 10 SCC 420] and V. Chandrasekaran v. Administrative Officer [(2012) 12 SCC 133] 16. Thus, it is evident that the doctrine of election is based on the rule of estoppel-the principle that one cannot approbate and reprobate is inherent in it. The doctrine of estoppel by elec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tarama Aiyar. J. (as he then was) in the Full Bench decision of the Madras High Court in Garimella Suryanarayana vs. Gada Venkataramana Rao (AIR 1953 Mad. 458). His Lordship stated: (AIR pp. 459 -60, para 5) 5. The principles governing appropriation of payments made by a debtor are under the general law well settled. When a debtor makes a payment, he has a right to have it appropriated in such manner as he decides and if the creditor accepts the payment, he is bound to make the appropriation in accordance with the directions of the debtor. This is what is known in England as the rule in 'Clayton case (1816) 1 Mer.572: 35E.R. 781, and it is embodied in Section 59, Contract Act. But when the debtor has not himself made any appropriation, the right devolves on the creditor who can exercise it at any time, vide 'Cory Bros. Co. vs. Owners of the Turkish Steamship 'Mecca', (1897) A.C. 286; and even at the time of the trial : Vide 'Seymour v. Pickett', (1905) 1 KB 715. That is Section 60, Contract Act. It is only when there is no appropriation either by the debtor or the creditor that the Court appropriates the payments as provided in Section 61, Contract ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he fact whether the defendant could have, or has, engaged a pleader. (4) Whenever a judgment is pronounced under this rule, a decree shall be drawn up in accordance with such judgment and such decree shall bear the date on which the judgment was pronounced. 13. Thus, if a plea which was relevant for the purpose of maintaining a suit had not been specifically traversed, the Court was entitled to draw an inference that the same had been admitted. A fact admitted in terms of Section 58 of the Evidence Act need not be proved. 37. The Learned Counsel for the Appellant points out that I B Code, 2016, is a Beneficial Legislation , designed to enable , the Corporate Debtor , to get back on its feet , as per decision of the Hon ble Supreme Court of India, in Innoventive Industries Ltd. v. ICICI Bank, reported in (2018) 1 SCC at Page 407 (vide Paragraph 12). 38. The Learned Counsel for the Appellant, refers to the decision of Hon ble Supreme Court of India in Dena Bank v. C. Shivakumar Reddy, reported in (2021) 10 SCC at Page 330 at Spl Pgs. 370-374, wherein at Paragraphs 77 to 87, it is observed as under: 77. The IBC is not just another statute for recovery of d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (emphasis in original) 79. In Innoventive Industries Ltd vs. ICICI Bank (supra) this Court noted the objectives set by the Bankruptcy Law Reforms Committee in recommending the IBC: (SCC pp. 426-28, para 16) 16. ... The Committee set the following as objectives desired from implementing a new Code to resolve insolvency and bankruptcy: (1) Low time to resolution. (2) Low loss in recovery. (3) Higher levels of debt financing across a wide variety of debt instruments. Principles driving the design The Committee chose the following principles to design the new insolvency and bankruptcy resolution framework: I. The Code will facilitate the assessment of viability of the enterprise at a very early stage. (1) The law must explicitly state that the viability of the enterprise is a matter of business, and that matters of business can only be negotiated between creditors and debtor. While viability is assessed as a negotiation between creditors and debtor, the final decision has to be an agreement among creditors who are the financiers willing to bear the loss in the insolvency. (2) The legislature and the courts must control the pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in resolving insolvency. VI. The Code must ensure that, when the negotiations fail to establish viability, the outcome of bankruptcy must be binding. (11) The law must order the liquidation of an enterprise which has been found unviable. This outcome of the negotiations should be protected against all appeals other than for very exceptional cases. VII. The Code must ensure clarity of priority, and that the rights of all stakeholders are upheld in resolving bankruptcy. (12) The law must clearly lay out the priority of distributions in bankruptcy to all stakeholders. The priority must be designed so as to incentivise all stakeholders to participate in the cycle of building enterprises with confidence. (13) While the law must incentivise collective action in resolving bankruptcy, there must be a greater flexibility to allow individual action in resolution and recovery during bankruptcy compared with the phase of insolvency resolution. [Emphasis in Original] 80. As observed by this Court, speaking through Nariman, J in P. Mohanraj v. Shah Bros. Ispat (P) Limited (2021) 6 SCC 258: (SCC p. 287, paras 15-16) 15. A cursory look at Section 14(1) mak ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 238 of the IBC provides that the provisions of the IBC shall have effect, notwithstanding anything inconsistent therewith contained in any other law, for the time being in force, or any other instrument, having effect by virtue of such law. 83. Unlike coercive recovery litigation, the Corporate Insolvency Resolution Process under the IBC is not adversarial to the interests of the Corporate Debtor, as observed by this Court in Swiss Ribbons Private Limited v. Union of India [(2019) 4 SCC 17]. 84. On the other hand, the IBC is a beneficial legislation for equal treatment of all creditors of the Corporate Debtor, as also the protection of the livelihoods of its employees/workers, by revival of the Corporate Debtor through the entrepreneurial skills of persons other than those in its management, who failed to clear the dues of the Corporate Debtor to its creditors. It only segregates the interests of the Corporate Debtor from those of its promoters/persons in management. 85. Relegation of creditors to the remedy of Coercive litigation against the Corporate Debtors could be detrimental to the interests of the Corporate Debtor and its creditors alike. While multiple coer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fact, protective of its interests. The moratorium imposed by Section 14 is in the interest of the corporate debtor itself, thereby preserving the assets of the corporate debtor during the resolution process. The timelines within which the resolution process is to take place again protects the corporate debtor s assets from further dilution, and also protects all its creditors and workers by seeing that the resolution process goes through as fast as possible so that another management can, through its entrepreneurial skills, resuscitate the corporate debtor to achieve all these ends. 40. The Learned Counsel for the Appellant, in support of his contentions that the 1st Respondent / Bank , being an instrumentality of the State , is required to, act in a Fair and Non-Arbitrary Manner , is legally bound to, act in a Fair and Reasonable manner, and demonstrate Good Faith , in its operations , as a Lender , refers to the Judgment of the Hon ble Supreme Court of India in Mardia Chemicals Ltd. v. Union of India, reported in (2004) 4 SCC at Page 311; Spl Pg.: 358, wherein at Paragraph 71, it is observed as under: 71. Arguments have been advanced as to how far principles ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... All that we have to see at the very outset is what does that provision say? If the provision is unambiguous and if from that provision, the legislative intent is clear, we need not call into aid the other rules of construction of statutes. The other rules of construction of statutes are called into aid only when the legislative intention is not clear. 67. In B. Premanand v. Mohan Koikal, this Court held:- [Sec P. 270, Para 9] 9. It may be mentioned in this connection that the first and foremost principle of interpretation of a statute in every system of interpretation is the literal rule of interpretation. The other rules of interpretation e.g. the mischief rule, purposive interpretation, etc. can only be resorted to when the plain words of a statute are ambiguous or lead to no intelligible results or if read literally would nullify the very object of the statute. Where the words of a statute are absolutely clear and unambiguous, recourse cannot be had to the principles of interpretation other than the literal rule, vide Swedish Match AB v. SEBI [(2004) 11 SCC 641]. 68. In Lalita Kumari v. State of Uttar Pradesh (supra), this Court construed the use of the word s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y a Financial Creditor who might even initiate proceedings in a representative capacity on behalf of all financial creditors, the Adjudicating Authority might examine the expedience of initiation of CIRP, taking into account all relevant facts and circumstances, including the overall financial health and viability of the Corporate Debtor. The Adjudicating Authority may in its discretion not admit the application of a Financial Creditor. 78. The legislature has consciously differentiated between Financial Creditors and Operational Creditors, as there is an innate difference between Financial Creditors, in the business of investment and financing, and Operational Creditors in the business of supply of goods and services. Financial credit is usually secured and of much longer duration. Such credits, which are often long term credits, on which the operation of the Corporate Debtor depends, cannot be equated to operational debts which are usually unsecured, of a shorter duration and of lesser amount. The financial strength and nature of business of a Financial Creditor cannot be compared with that of an Operational Creditor, engaged in supply of goods and services. The impact of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t to choose between more than one possible course of action upon which there is room for reasonable people to hold differing opinions as to which is to be preferred . [As per Lord Diplock in Secretary of State for Education and Science v. Metropolitan Borough Counsel of Tameside (1977 AC 1014)]. The Court cannot substitute its judgment for the judgment of administrative authorities in such cases. Only when the action of the administrative authority is so unfair or unreasonable that no reasonable person would have taken that action, can the Court intervene. To quote the classic passage from the judgment of Lord Greene M.R. in Associated Provincial Picture Houses Ltd. v. Wednesbury Corporation [1947 (2) ALL ER 680]: It is true the discretion must be exercised reasonably. Now what does that mean? Lawyers familiar with the phraseology commonly used in relation to exercise of statutory discretions often use the word 'unreasonable' in a rather comprehensive sense. It has frequently been used and is frequently used as a general description of the things that must not be done. For instance, a person entrusted with the discretion must, so to speak, direct himself properly in l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... easonable or such rejection is in public interest for valid and good reasons. Broadly stated, the courts would not interfere with the matter of administrative action or changes made therein unless the Government's action is arbitrary or discriminatory or the policy adopted has no nexus with the object it seeks to achieve or is mala fide. 44. The Learned Counsel for the Appellant refers to the Order of this Tribunal , dated 19.09.2022 in Comp. App (AT) (INS) No. 1005 of 2022, between Reliance Commercial Finance Limited v. Darode Jog Builder Pvt. Ltd., wherein the Corporate Debtor expressed its willingness to settle the matter, and repay the entire Debt Sum , totalling Rs.15.79 Crores, and the Adjudicating Authority ( Tribunal ), permitted the Corporate Debtor , to make the payments, within 45 days. 45. It is brought to the notice of this Tribunal , by the Appellant side, that the Financial Creditor , while challenging the Order of the Adjudicating Authority , in Appeal , took a ground that the Adjudicating Authority , was only concerned, whether any Debt existed, and whether there was a Default , in payment, and this Appellate Tribunal , by placi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... / Bank , contends that the Appellant , is not a Party , to the Proceedings, before the Adjudicating Authority ( Tribunal ), and in fact, the instant Appeal , preferred by the Appellant , is not maintainable , either in Law or in Facts , and further that the Appellant , has no Locus , to prefer , the present Appeal , before this Tribunal . 50. Added further, the Learned Counsel for the 1st Respondent /Bank points out that the Appellant , as an Investor , has promoted the Corporate Debtor , and further he has not satisfied as to how, he is an Aggrieved Party , to file the instant Appeal . 51. The Learned Counsel for the 1st Respondent / Bank cites the Order of this Tribunal in the matter of Amod Amladi v. M/s. Sayali Rane Anr., in Comp. AT INS No. 295 of 2017 dated 30.11.2017, reported in (2017) SCC Online NCLAT 430, wherein, at Paragraphs 4 to 7, it is observed as under: 4. Heard learned counsel for the Appellant. Admittedly, the Appellant is an Investor therefore, the Appellant cannot claim to be an aggrieved person for preferring appeal against the order dated 2nd May, 2017 passed by Adjudicating Authority whereby the application under Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . M/s. Bharathi Hi Tech Builders Pvt. Ltd., (vide Civil Appeal No. 3325 of 2020 dated 14.12.2021), reported in India Kanoon, wherein, at Paragraph 50, it is observed as under: 50. Hence, once the requirements of the IBC have been fulfilled, the Adjudicating Authority and the Appellate Authority are duty bound to abide by the discipline of the statutory provisions. It needs no emphasis that neither the Adjudicating Authority nor the Appellate Authority have an uncharted jurisdiction in equity. The jurisdiction arises within and as a product of a statutory framework. 56. The Learned Counsel for the 1st Respondent / Bank adverts to the Judgment of this Tribunal , (vide Comp. App (AT) (INS.) No. 99 of 2020 dated 16.07.2020) in Monotrone Leasing Private Limited v. PM Cold Storage Pvt. Ltd., reported in India Kanoon, wherein at Paragraphs 19, it is observed as under: 19. It is relevant to note that Hon'ble the Supreme Court of India in case of Innoventive Industries Ltd. v. ICICI Bank, (2018) 1 SCC 407, has laid down the guiding principles to admit or reject an application filed under Section 7 of the IBC. In the above case, Hon'ble the Supreme Court has held ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ments, records and evidence of default in Part V. Under Rule 4(3), the applicant is to dispatch a copy of the Application filed with the adjudicating authority by registered post or speed post to the registered office of the corporate debtor. The speed, within which the adjudicating authority is to ascertain the existence of a default from the records of the information utility or on the basis of evidence furnished by the financial Creditor, is important. This it must do within 14 days of the receipt of the Application. It is at the stage of Section 7(5), where the adjudicating authority is to be satisfied that a default has occurred, that the corporate debtor is entitled to point out that a default has not occurred in the sense that the debt , which may also include a disputed claim, is not Company Appeal (AT) (Insolvency) No. 99 of 2020 14 of 24 due. A debt may not be due if it is not payable in law or in fact. The moment the adjudicating authority is satisfied that a default has occurred, the Application must be admitted unless it is incomplete, in which case it may give notice to the applicant to rectify the defect within 7 days of receipt of a notice from the adjudicating aut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... receipt of the application, ascertain the existence of a default from the records of a regulated information utility. A default may also be proved in such manner as may be specified by the Insolvency and Bankruptcy Board of India. Once the adjudicating authority/Tribunal is satisfied as to the existence of the default and has ensured that the application is complete and no disciplinary proceedings are pending against the proposed resolution professional, it shall admit the application. The adjudicating authority/Tribunal is not required to look into any other criteria for admission of the application. It is important that parties are not allowed to abuse the legal process by using delaying tactics at the admissions stage. 58. The Learned Counsel for the 1st Respondent / Bank points out the ingredients of I B Code, 2016, Suspension of initiation of Corporate Insolvency Resolution Process , are not applicable to the facts of the present case, and in this connection, refers to the Judgment of the Hon ble Supreme Court of India, in the matter of Mr. Ramesh Kymal v. M/s. Siemens Gamesa Renewable Power Pvt. Ltd. (vide Civil Appeal No. 4050 of 2020 dated 09.02.2021), reported in I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with admission of insolvency proceeding under IBC. However, default has nothing to do with acceptance of claim after admission of insolvency proceeding. Any person who has right to claim payment, under the IBC, is supposed to file the claim, whether matured or immature. The question as to whether there is a default or not is not relevant. 60. The Learned Counsel for the 1st Respondent / Bank refers to the Judgment of this Tribunal, in Anantha Charan Nayak v. State Bank of India Ors., (vide Comp. App (AT) (INS.) No. 870 of 2021 dated 10.11.2021), wherein at Paragraphs 7 to 11, it is observed as under: 7. The Learned Counsel for Appellant has stated that the Appellant had intimated its desire to settle the matter by offering a one-time settlement (OTS) to the financial creditor. Pending decision on the OTS, the Adjudicating Authority has passed the Impugned Order to the detriment of the Corporate Debtor. He has also argued that vide order dated 26.7.2021, the petitioner State Bank of India was granted seven days time to file an affidavit for deletion of the names of personal guarantors from the section 7 application. Such an affidavit was not filed and thus requirements ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ission of an application under section 7 if the defects as pointed out to the petitioner have been cured. 11. On the basis of the above discussion, we are of very clear view that the Impugned Order does not require any intervention. The appeal is, therefore, dismissed at the stage of admission. No order as to the cost. 61. The Learned Counsel for the 1st Respondent /Bank contends that the Promoters had not paid any Sum, under the One Time Settlement , and they had arranged Rs.150 Crores, from three different Companies / Individuals, and the Sum is parked in a No Lien Account , with the Respondent . Also that, the Amount , was not distributed to or appropriated by the Lenders . Hence, the part payment paid , as per OTS , is denied , by the Bank , that they were not able to arrange the required funds, inspite of multiple opportunities . 62. According to the 1st Respondent / Bank, even if it is assumed without admitting the OTS Proposal , was considered and part , was payment and there is a Default , in the One Time Settlement , as well. Also that, the allegation that only Part of Payment only, is pending itself, is an Admission of Default , and th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cision of Hon ble Supreme Court of India in Bijnor Urban Co-operative Bank Limited v. Meenal Agarwal, AIR 2022 SC 56, wherein at Paragraphs 9 and 11, it is observed as under: 9. Even otherwise, as observed hereinabove, no borrower can, as a matter of right, pray for grant of benefit of One Time Settlement Scheme. In a given case, it may happen that a person would borrow a huge amount, for example Rs. 100 crores. After availing the loan, he may deliberately not pay any amount towards installments, though able to make the payment. He would wait for the OTS Scheme and then pray for grant of benefit under the OTS Scheme under which, always a lesser amount than the amount due and payable under the loan account will have to be paid. This, despite there being all possibility for recovery of the entire loan amount which can be realised by selling the mortgaged/secured properties. If it is held that the borrower can still, as a matter of right, pray for benefit under the OTS Scheme, in that case, it would be giving a premium to a dishonest borrower, who, despite the fact that he is able to make the payment and the fact that the bank is able to recover the entire loan amount even by sel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fically mentioned in Clause (iv) that the entire payment under the OTS Scheme was to be made by 21.05.2018, otherwise OTS would be rendered infructuous. Therefore, borrowers were bound to make the payment as per the sanctioned OTS Scheme. Therefore, the High Court ought not to have granted further extension de hors the sanctioned OTS Scheme while exercising the powers under Article 226 of the Constitution of India. 7. The submissions on behalf of the borrower that in case of some other borrowers the time was extended is concerned, the same is neither here nor there. The Bank mutually can agree to extend the time which is permissible under Section 62 of the Indian Contract Act. The borrower as a matter of right cannot claim that though it has not made the payment as per the sanctioned OTS Scheme still it be granted further extension as a matter of right. There cannot be any negative discrimination claimed. The borrower has to establish any right in their favour to claim the extension as a matter of right. 7.1 Now so far as the reliance placed upon the decision of Punjab and Haryana High Court in the case of Anu Bhalla (supra) is concerned, in view of the direct decision of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l times. But without making payments they proceeded to sell the assets of the Corporate Debtor, which is a clear case of fraud and cheating' and ultimately passed an order allowing IA/02/KOB/2021 and restored IBA/13/KOB/2020 to its file. 68. Besides the above, the 'Adjudicating Authority' at paragraph 6(5) of the 'Impugned Order' dated 30.03.2021 in IBA/13/KOB/2020 had among other things observed that......... 'The question is only the date of removal of disqualification, which have no much relevance in this matter, as the question here is only whether the Corporate Debtor has complied with the conditions stipulated in the settlement agreement produced before this Tribunal. It is true that the IBA has been disposed of on the basis of settlement arrived between the parties stating that they have settled the matter stating that on 26.08.2020 settlement has been arrived for a total sum of Rs.2,25,00,000/- (Rupees two crores twenty five lakhs only) as full and final settlement of the entire claim between the Corporate Debtor M/s. Sree Bhadra Parks and Resorts Limited on the terms mentioned in the settlement agreement. When a settlement has been arrived betw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had instructed the 'Respondent'/'Applicant' to pay the part consideration to its other 'Creditors' directly as made mention of in the 'Agreement' and in view of the fact that the 'instant debt' arises out of the 'Share Purchase Agreement' dated 21.11.2012, coupled with an 'Addendum' to the said 'Agreement' dated 27.11.2012, the said sum is a 'debt' disbursed against the consideration for 'Advance Payment' in terms of the 'Agreement' and further that in the present 'Appeal' before this 'Tribunal', it is brought forth that the 'Appellant' had promised to repay/refund the amount paid by the 'Respondent'/'Applicant' together with interest, and therefore, this 'Tribunal' comes to an inevitable and inescapable cocksure conclusion that the aforesaid promise comes squarely within the ambit of definition of 'Financial Debt' and that the 'Respondent'/'Applicant' is without any haziness is a 'Financial Creditor' in the eye of Law. 72. Suffice it for this 'Tribunal' to pertinently point out that the 'Appellant&# ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s proposal where the 'debt' is acknowledged to be 'due and payable'. Therefore, we are of the view that the ratio of the Hon'ble Supreme Court in 'Dena Bank (now Bank of Baroda)' Vs. 'C. Shivkumar Reddy and Anr.', MANU/SC/0502/2021, 10 SCC 330, is squarely applicable to the facts of this case as there is a jural relationship between the 'Corporate Debtor' and the Respondent Bank and there is an 'acknowledgement of debt' vide the OTS dated 27.03.2018, which falls within the ambit of Section 18 of the Limitation Act, 1963. 13. The Resolution Professional filed the Status Report stating that on 11.08.2020 a third CoC Meeting was held whereby it was taken into consideration that the 180 days CIRP period was coming to an end and having deliberated upon this issue, it was suggested that the RP should apply for liquidation under Section 33 of the Code. On 05.09.2020 an Application for initiation of the 'liquidation of Corporate Debtor' was filed and is pending before the Adjudicating Authority. 14. Keeping in view the aforenoted ratio laid down by the Hon'ble Apex Court in 'Dena Bank (now Bank of Baroda)' (S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... full capacity, including those under Insolvency Process , and further that the Power Plants , shall be allowed pass through of High Coal Cost (not allowed, as per the existing Power Purchase Agreement), incurred by them. 76. Moreover, a Committee , constituted by Ministry of Power , has also issued Bench Mark Rate , for Companies , including Corporate Debtor , though the same is low, as compared to Actual Cost , incurred by the Corporate Debtor, thereby resulting in loss. 77. In reality, the Corporate Debtor, had wrote to the Ministry of Power , and the TANGEDCO , to reconsider the Bench Mark Rate , and is also in the process of filing an Appropriate Petition , before the Central Electricity Regulatory Commission for Revision , in Bench Mark Rates . 78. On behalf of the 2nd Respondent / IRP that it is brought to the notice of this Tribunal that Central Transmission Utility of India Ltd. (earlier known as Power Grid Corporation India Ltd.) invoked a bank Guarantee given by the Corporate Debtor amounting to Rs.55,00,00,000/- (Rupees Fifty Five Crore Only). IRP filed the appropriate petition before Appellate Tribunal for Electricity ( APTEL ) and got the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aised by acceptance under any acceptance credit facility or its de-materialised equivalent; etc. Adjudicating Authority : 81. An Adjudicating Authority ( National Company Law Tribunal ), in respect of an Application , preferred under Section 7 of the I B Code, 2016, has to determine the same, on its own individual merits , by taking into account of the available materials on record . Undoubtedly, the Existence of Default , is to be looked into by an Adjudicating Authority . It cannot be gainsaid, that whether, there is Debt and Default , can be looked into by an Adjudicating Authority , only, if a Corporate Debtor , disputes the Debt or takes a Plea , that there is no Default , although, there is Debt . 82. An Adjudicating Authority ( Tribunal ) and an Appellate Tribunal , are not to act as Courts of Equity . 83. A Debt , may take within its fold a Disputed Claim , is not Due . A Corporate Debtor , is permitted in Law , to point out that a Default , had not occurred . More importantly, a Debt , may not be Due , if it is not payable in Fact or Law . 84. Even, if the Debt is controverted / repudiated / disputed , if the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... / Bank, the Corporate Debtor was liable, to pay Contractual Interest Rate , as per the Terms of the Loan Agreement . In fact, the Accounts , were classified as Non Performing Asset , as on 31.03.2017. 89. According to the 1st Respondent / Bank / Financial Creditor , the Principle Outstanding Sum is Rs.2442,83,68,006.34, the Regular Interest Sum due is Rs. 440,90,26,287.15, the Penal Interest is Rs. 48,95,59,623.13 and the Total Outstanding Amount , as on 06.09.2018 is Rs.2932,69,53,916.62. 90. Furthermore, in the Section 7 Application, the 1st Respondent / Bank / Financial Creditor , under Part V ( Particulars of Financial Debt - Documents , Records and Evidence of Default ), it is observed as under:- Securities were held by the Financial Creditor jointly with other Consortium Lenders. Financial Creditors has charge on such Securities as per the Loan Agreements. Details of such Securities held by the Financial Creditor are described in Schedule A hereto. The estimated value of the properties and assets in which the security interest created jointly in favour of the Financial Creditor and other members of the Consortium were approximately Rs.8 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in IA/827/2020 in IBA/757/2019 (Filed under Section 60 (5) of the I B Code, 2016), is of the earnest opinion that the Adjudicating Authority , in Paragraph 2 (vide Page No. 627 Volume V of the Appellant s Appeal Paperbook), had clearly observed the following: Vide Order dated 19.12.2019, this Adjudicating Authority had dismissed the Petition (IBA/757/2019) with the liberty to reinstate this Petition in case the Respondent fails to honour the commitment. 97. In view of the crystalline fact that a Liberty , was granted by the Adjudicating Authority ( Tribunal ) as mentioned in Supra, in its Order dated 05.11.2020, obviously based on the Memo , filed by the 1st Respondent / Bank to resurrect / revive the IBA/757/2019, to its file, in the event of failure of OTS Proposal , the Appellant at this distant point of time, cannot have a grievance to say that the Order , passed on 05.11.2020, was an Ex-parte one, because of the latent and patent fact that as per Rule 11 of the NCLT Rules, 2016, under the caption Inherent Powers , the Adjudicating Authority ( Tribunal ), has an inbuilt power , is empowered, to pass necessary orders or issue such directions, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tions, the OTS Consortium , consistently and unequivocally communicated that the Sums , were being remitted as per the Terms of the OTS , and further that a Debtor , while making a Payment , has a Right , to have it appropriated , in the way he determines, and if the Creditor accepts the payment , he / it, is required to make the appropriation , in tune with the directions of the Debtor , it is significantly pointed out by this Tribunal , that the payments received by the 1st Respondent / Bank , were not as an integral part of the OTS Proposal , but were charge on the Security , and indeed, the 2nd Respondent / Corporate Debtor , had agreed to the Agreements Terms , and obtained the Credit Facilities , and in fact, the Receivables of the Borrower are only charge of the Financial Creditors , in the teeth of: (i). Third Amended And Restated Common Loan Agreement dated 05.07.2016, Article VI Security (Clause 6.1 - Security for Senior Facility; Clause 9.2, under the caption Consequences of Default ), executed by the Corporate Debtor ( Coastal Energen Private Limited ), to and in favour of the Consortium Lenders , (ii) The Working Capital Facility ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of threshold limit of Rupees One Crore vide Section 4 of the Code ), and it cannot be brushed aside that the Application , under Section 7 of the I B Code, 2016, was filed by the 1st Respondent / Bank , prior to the raising of the threshold limit. 105. It is to be remembered that an Application , under Section 7 of the I B Code, 2016, can be preferred by a Financial Creditor, on the basis of Debt and Default . Even the non-payment of Debt , even in entirety or in part or instalment of the Sum of Debt , by a Debtor / Person , will clothe a Right , on a Financial Creditor , to prefer an Application , when the Debt , become due and payable , either in Law or in Fact . No wonder, the Plea of the Appellant that only a portion / part payment only, remains to be paid , by the 2nd Respondent / Corporate Debtor , is a candid tacit admission of Default , and this is a clear adverse circumstance in favour of the Appellant . OTS An Acknowledgement of Debt: 106. In the present case, this Tribunal , points out that the OTS is a clear cut admission of the Corporate Debtor (between the Parties ), and it is an Acknowledgement ..... X X X X Extracts X X X X X X X X Extracts X X X X
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