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TMI Blog2023 (7) TMI 887X X X X Extracts X X X X X X X X Extracts X X X X ..... rd the matter and reserved the order, there was no OTS proposal under consideration before the UCO Bank, since according to the Appellant, the letter submitting OTS proposal of Rs.41 Crores was given on 26.10.2022, after it received the Expression of Interest from Lemongrass. Thus, no error can be found in the order of the Adjudicating Authority, admitting Section 7 Application by its order dated 28.10.2022. We, however, cannot be oblivious to the facts and sequence of events, which took place during the pendency of the Appeal. This Tribunal in its order dated 21.11.2022 noticed several difficulties in the running of the Corporate Debtor. This Tribunal noticed that a strategic investor namely M/s. Lemon Grass Organic Tea Limited has entered into an Agreement with the Corporate Debtor to take over three Tea Gardens, which are charged with the UCO Bank subject to entering into and funding the OTS. By the order dated 21.11.2022, certain interim arrangements were made to enable the Corporate Debtor to run as a going concern. The difficulty of payments of wages to the workers, ration to be distributed by the Company to the worker, electricity dues and other dues were taken note of an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which is running several Tea Gardens. In the year 2017, UCO Bank issued sanction letter to the Corporate Debtor, granting approval to the Corporate Debtor for renewal/ review of various credit facilities. The Corporate Debtor requested the Financial Creditors including the UCO bank for approval of change of Management. (ii) The UCO Bank filed a petition under Section 7 of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as the Code ) claiming an amount of Rs.115,41,78,101/- as due on 22.09.2020 inclusive of the interest from the date of NPA. The Corporate Debtor became NPA on 30.06.2017. (iii) In Section 7 Application, Corporate Debtor filed a reply. In its reply the Corporate Debtor has stated that the Corporate Debtor proposed a debt restructuring exercise to the Financial Creditor as per the Circular issued by the Reserve Bank of India ( RBI ) on 07.06.2019. All the erstwhile Directors of the Corporate Debtor had resigned since June 2020 onwards. Various foreign investors of the Corporate Debtor invested amount of Rs.189 crores since the date of NPA, which amount had been used by the Corporate Debtor to pay its workers, statutory liabilities etc. It was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under consideration and time of few weeks is required. Noticing the said statement, this Tribunal on 07.11.2022 stayed the impugned order. Indian Bank has also filed an IA No.4221 of 2022 for impleadment. IA No.4291 of 2022 was filed by the Appellant, praying for certain interim directions. The IA Nos.4291, 4221 and 4340 of 2022 were heard and this Tribunal by order dated 21.11.2022 issued certain directions to ease the difficulty in running the Corporate Debtor as a going concern. Subsequent to the order of this Tribunal, the Corporate Debtor has been running as a going concern. Several other IAs have been filed in the Appeal, which we shall notice hereinafter. 4. The appeal was taken up on 05.04.2023, on which date UCO Bank sought for some more time and informed that the settlement process of the Corporate Debtor with the Bank is likely to take some time. The Appeal was adjourned for 25.04.2023. On 25.04.2023, this Tribunal directed the UCO Bank to file an affidavit explaining sequence of events and various steps taken by the Bank. In pursuance of the order dated 25.04.2023, an affidavit dated 03.05.2023 has been filed on behalf of the UCO Bank. Subsequently, on 17.05.2023, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 05.2023 the Appellant has communicated their acceptance to pay Rs.50.79 Crores. It is submitted that Bank has offered the amount of Rs.50.79 Crores, which the Appellant is ready to pay with the assistance of M/s Lemongrass. The Bank cannot go back from its offer and after the letter dated 03.05.2023 sent by the Corporate Debtor to the Bank, the Bank has not yet issued any letter accepting the offer. It is submitted that the settlement with the UCO Bank is only with regard to those Tea Gardens which are mortgaged with the UCO Bank and after the liabilities of the UCO Bank are settled, the Corporate Debtor shall take steps with regard to other creditors, including the Indian Bank. It is submitted that the Indian Bank holds the mortgage of three Tea Estates, which are different from those, which are mortgaged with the UCO Bank. Hence, the Indian Bank has no authority to interfere with the settlement, which is proposed by the Appellant. It is submitted that there are more than 7000 workers in the Tea Gardens and the Corporate Debtor is being run as a going concern with the financial assistance of the M/s Lemongrass and initiation of Corporate Insolvency Resolution Process ( CIRP ) shal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s and assets, being tea stock, inventory, warehousing facilities etc. to different companies. The Corporate Debtor has taken several actions without obtaining any permission or leave of the Tribunal and there is an attempt to alienate, transfer and assign of the assets of the Corporate Debtor being its leasehold rights vested in Ambootia Tea Garden and Montevoit Tea Garden to one Lemongrass Organic Tea Estates Pvt. Ltd. 9. The learned Counsel appearing for Indian Bank submits that Indian Bank had filed a petition under Section 7 against the Corporate Debtor for non-payment of various credit and other facilities amounting to Rs.74.17 Crores, which petition could not be completed due to the impugned order dated 28.10.2022. The Indian Bank shall not be able to recover its dues in event the CIRP is not allowed to continue against the Corporate Debtor. The Corporate Debtor cannot settle dues with the UCO Bank without taking the steps for settlement of its dues with the Indian Bank. The intention of the Corporate Debtor is to sell its assets to the third parties, which shall cause prejudice to the rights of the Indian Bank. 10. An Intervention Application has also been filed being ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atement of Counsel for the UCO Bank was recorded in the order dated 07.11.2022 that OTS proposal has been received and time of few weeks shall be required to consider the OTS proposal. The order dated 07.11.2022 is as follows: 07.11.2022: This Appeal has been filed against impugned order passed by the Adjudicating Authority on 28.10.2022 allowing Section 7 application filed by the UCO Bank. This Appeal was taken up on 04.11.2022 on which date following order was passed: ORDER 04.11.2022 : A request has been made on behalf of learned counsel for the UCO Bank to take the matter on 07.11.2022. Learned counsel for the Appellant submits that there is urgency in the matter. However, to give opportunity to the Respondent Bank we adjourn this Appeal to 07.11.2022. Till the next date the IRP may not constitute the COC. Indian Bank is permitted to file Intervention Application. Learned counsel for the UCO Bank submits that OTS proposal has already been received and it is under consideration and time of few weeks shall be required to consider the OTS proposal. Learned counsel appearing for the Indian Bank submits that Indian Bank has already filed applicati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9th Floor, 4A Abanindra Nath Thakur Sarani Kolkata 700016. Dear Sir, Sub: Decline of your OTS Proposal We refer to your letter dated 18-04-2023 wherein you stated that Rs.46.00 crores OTS offer as total outstanding dues is your best offer and further reiterated that seeing the situation of tea estates and total accumulated liabilities sum of Rs.46.00 crores is your best offer to the bank as an OTS of total outstanding dues. However, in order to honour the Bank s request, vide email dated 10.04.2023 and in view of the timeline imposed by Hon ble NCLAT, if the bank puts some additional terms at the time of sanction of ITS proposal, you shall be ready and willing to meet the same in order to complete the OTS process. In this context, we would like to state that your OTS offer dated 18.04.2023 as above has been declined by the Bank. Regards, Deputy General Manager FCC India Exchange Branch Kolkata 17. The letter dated 25.04.2023 itself indicates that in event Bank puts some additional terms at the time of sanction of OTS proposal, the Corporate Debtor would be ready and willing to meet the same. The letter also indicates that the of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aph 13 in following words; 13. Thus, it was clarified by the order in review that the decision in the case of Vidarbha Industries was in the setting of facts of the case before this Court. Hence, the decision in the case of Vidarbha Industries cannot be read and understood as taking a view which is contrary to the view taken in the cases of Innoventive Industries and E.S. Krishnamurthy. The view taken in the case of Innoventive Industries still holds good. 22. In the present case, the Adjudicating Authority has noticed in the impugned order that there was admission on behalf of the Corporate Debtor of the debt of Rs.50 Crores, which was noticed in paragraphs 8.9 and 8.10 of the order. The present is a case where, there is no denial to the debt and default. On the date when Adjudicating Authority heard the matter and reserved the order, there was no OTS proposal under consideration before the UCO Bank, since according to the Appellant, the letter submitting OTS proposal of Rs.41 Crores was given on 26.10.2022, after it received the Expression of Interest from Lemongrass. We, thus, are of the view that no error can be found in the order of the Adjudicating Authority, admit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al on 26.10.2022. The Bank in its correspondence with the Corporate Debtor has time and again advised to increase the offer. Hence, by letter dated 10.04.2023, the Bank has asked the Corporate Debtor to increase the amount to the Outstanding Ledger Balance, i.e. Rs.50.79 Crores. When offer is given by the Bank to increase the amount to Outstanding Ledger Balance, which has been accepted by the Corporate Debtor, it has to be given some sanctity. We, however, in the facts of the present case are inclined to direct the Bank to consider the response given by the Corporate Debtor by letter dated 03.05.2023 in reference to the offer made by the Bank on 10.04.2023. No material has been brought on record by the Bank in its affidavit that after 03.05.2023, that is after acceptance of offer of payment of Outstanding Ledger Balance by the Corporate Debtor, any communication has been given by the Bank. There has to be some consideration by the Bank, when Corporate Debtor accepts the offer made by the Bank itself. 24. We have noticed that in the Tea Gardens, there are 7000 workers and at present the Corporate Debtor is being run in pursuance of the interim order passed by this Tribunal on 21 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he order dated 28.10.2022 shall not be given effect to for a period of 60 days, to enable the UCO Bank to consider the OTS proposal lastly submitted by letter dated 03.05.2023 by the Corporate Debtor, accepting the offer of Outstanding Ledger Balance of Rs.50.79 Crores as given by the UCO Bank on 10.04.2023. It shall be open for the UCO Bank to obtain such other relevant information for considering the proposal as may be advised. The Corporate Debtor may also enter into dialogue with the UCO Bank in the above regard to arrive at a settlement. (III) After a period of 60 days, in event settlement is not arrived at, order dated 28.10.2022 of the Adjudicating Authority be implemented in accordance with law. The directions passed in this Appeal shall become inoperative after a period of 60 days. (IV) The Indian Bank in event the CIRP is terminated and settlement is arrived at, shall be entitled to revive its Section 7 Application and take such other steps as permissible in law and in event the CIRP continues after 60 days, the Indian Bank will be entitled to submit its claim in accordance with law. (V) All other Intervention/ Interlocutory Applications stand disposed of. Par ..... X X X X Extracts X X X X X X X X Extracts X X X X
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