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TMI Blog2023 (5) TMI 141X X X X Extracts X X X X X X X X Extracts X X X X ..... 'Adjudicating Authority' admitted an Application of the Indian Overseas Bank (Respondent No. 1)/ 'Financial Creditor' under Section 7 of the Code. 2. Being aggrieved by the 'impugned order' for initiation of the 'Corporate Insolvency Resolution Process' (in short 'CIRP') of the Mahakal Agro Storage and Processing Unit Private Limited / 'Corporate Debtor', Mr. Manas Sarkar, Suspended Director of the Corporate Debtor has filed the present appeal. 3. Heard the Counsel for the Parties and perused the records made available including cited judgments of the Hon'ble Supreme Court of India and earlier orders of this 'Appellate Tribunal'. 4. The 'Appellant' submitted that he was engaged in the business of storing and preservation of potatoes, developing a cold storage etc., and to start the business a project report was prepared estimating fixed cost of Rs. 10.56 crores, in order to estimate the viability of the project including the funding required which was estimated after discussion and on assurance of the Respondent No. 1 herein. The 'Appellant' further submitted that the project report specified term loan requirement of Rs. 6.98 crores and working capital requirement of Rs. 18.79 l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ised. The 'Appellant' also stated that in order to develop business, he further requested for a loan of Rs. 4 crores as 'produced marketing loan' which was denied by the 'Respondent No. 1' on 01.12.2012, thereby, making difficult situation for the 'Appellant' to operate the business. 9. The 'Appellant' mentioned that his business was in stressed situation and therefore requested for renewal of existing limits to avoid getting his account as NPA which was sanctioned much later on 10.09.2013, however the 'Respondent No. 1' started sending several matters to regularise the account immediately. The 'Appellant' further submitted that he was shocked to know that on 28.04.2014, the 'Respondent No. 1' has classified his account as NPA w.e.f. 31.03.2014 and demanded payment of Rs. 94.35 lakhs to operate account to standard account. The 'Appellant' submitted that on 02.06.2014, the 'Respondent No. 1' issued a notice under Section 13(2) of the SARFAESI Act, 2002 and claimed Rs. 7,54,82,000/- which was denied by the 'Appellant' and the 'Appellant' also challenged the same under Section 17 of SARFAESI Act, 2002 before DRT (Debt Recovery Tribunal). In the meanwhile, the 'Respondent No. 1' filed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ilities in respect of term loan account of Rs. 6.98 crores and cash credit for working capital term loan of Rs. 18.79 lakhs and on 14.01.2009, the 'Respondent No. 1' sanctioned term loan of Rs. 4.48 crores on following broad terms and conditions :- I. Term loan of Rs. 4.48 crores were to be repaid in 28 total instalment of Rs. 16 lakhs each, commencing from 24 months from the date of first availment. II. Margin of 40% on land civil construction cost and 29% on plant and machinery. III. Monthly interest @13%. IV. Respondent No. 1 was entitled to charge penal interest @2% over and above the interest rate in case of delay or default in submission of stock statements and renewal papers. V. Primary and collateral security as detailed therein. 15. The 'Respondent No. 1' stated that Shri Manas Sarkar- Appellant and Smt. Jayasree Sarkar executed guarantee agreements to pay Respondent No. 1 of the said amount in case of default by the 'Corporate Debtor'. The 'Respondent No. 1' further stated that the 'Corporate Debtor' filed with Registrar of Company on 14.01.2009 for creation of first charge of Rs. 4.48 crores regarding Hypothecation of property and assets in favour of the 'Resp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... est made by the 'Corporate Debtor' for sanction/ renewal of the credit facilities, the Respondent No. 1 issued 'Credit Sanction Advice' letter dated 25.02.2014 and it was an explicit condition in the said 'Credit Sanction Advice' Letter dated 25.02.2014 that the 'Corporate Debtor' will immediately regularize the overdues in the accounts over and above the sanctioned limits. 22. The 'Respondent No. 1' stated that the 'Corporate Debtor' wilfully and intentionally failed and neglected to regularize the accounts and acted contrary to the mandatory terms and conditions of the 'Credit Sanction Advice' Letter dated 25.02.2014. The 'Respondent No. 1' bank vide its letter dated 03.03.2014 requested the 'Corporate Debtor' to regularize the accounts to avoid the account slipping to NPA in March 2014 vide letter dated 03.03.2014. 23. The 'Respondent No. 1' emphasised that the 'Corporate Debtor' thereafter vide letter dated 10.03.2014 assured the respondent No. 1 to regularize the said accounts. The 'Respondent No. 1' further emphasised that the in spite of repeated requests of the 'Respondent No. 1, the 'Corporate Debtor' failed and neglected to maintain the aforesaid account regularly. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rging exorbitant interest rate @13% against the stipulated rates of RBI, secondly, instead of charging interest on annual basis, the 'Respondent No. 1' charge interest on monthly basis and thirdly it kept huge margin money. The 'Appellant' submitted that due to violation of mandatory guidelines of RBI the 'Respondent No. 1' failed to meet the statutory requirements and therefore is not entitled for proceeding under Section 7 of the Code. 28. The 'Appellant' also alleged that there was no default in terms of Section 2(12) of the Code and this fact can be corroborated by taking into consideration that in the original application filed by the 'Respondent No. 1' before the 'Adjudicating Authority' under section 7 of the Code, no date of default was indicated and the 'Respondent No. 1' had to seek permission from the 'Adjudicating Authority' to file the supplementary affidavit wherein he indicated the date of default as 31.03.2013. According to the 'Appellant', the 'Adjudicating Authority' erred in admitting the 'Corporate Insolvency Resolution Process' against the 'Corporate Debtor'. 29. The 'Appellant' stated that he never acknowledged the debt as outstanding as claimed by the 'Resp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pplication for initiating corporate insolvency resolution process against the corporate debtor shall be filed jointly by not less than one hundred of such creditors in the same class or not less than ten per cent. of the total number of such creditors in the same class, whichever is less: Provided further that for financial creditors who are allottees under a real estate project, an application for initiating corporate insolvency resolution process against the corporate debtor shall be filed jointly by not less than one hundred of such allottees under the same real estate project or not less than ten per cent. of the total number of such allottees under the same real estate project, whichever is less: Provided also that where an application for initiating the corporate insolvency resolution process against a corporate debtor has been filed by a financial creditor referred to in the first or second provisos and has not been admitted by the Adjudicating Authority before the commencement of the Insolvency and Bankruptcy Code (Amendment) Act, 2020, such application shall be modified to comply with the requirements of the first or second provisos within thirty days of the commenceme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e debtor; (b) the order under clause (b) of sub-section (5) to the financial creditor, within seven days of admission or rejection of such application, as the case may be." (emphasis supplied) 34. From reading the above Section 7 of the Code, it is therefore clear that it lays down the procedure for initiation of the CIRP by a 'Financial Creditor' who can file an application before the 'Adjudicating Authority' along with proof of default and name of Resolution Professional proposed to act as 'Interim Resolution Professional'. The 'Adjudicating Authority' is required to ascertain the existence of default within 14 days from the date of receipt of the application. It is further noted that once the 'Adjudicating Authority' is satisfied regarding existence of default and that the application is complete and no disciplinary proceeding is pending against the proposed 'Interim Resolution Professional', the 'Adjudicating Authority' is required to admit the application and is not required to look into any other criteria for the admission of the application. It is nobody's case to cause delay in admission of CIRP on miscellaneous grounds. 35. This 'Appellate Tribunal' also notes that t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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