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TMI Blog2024 (2) TMI 677X X X X Extracts X X X X X X X X Extracts X X X X ..... No. 1 could not treated on part of any debt and default. It is opined that permission by the Respondent No. 1 such Holding on Operations are being conducted as normal baking practices and does not give any right to the Corporate Debtor in denying the repayment of debt and default on such account have to be factored into consideration by the Adjudicating Authority. It is found from the Impugned Order that the Adjudicating Authority has gone into these aspects and thereafter correctly came to the conclusion of debt and default. The total outstanding principals amount was Rs. 8.77 Crores and outstanding interest component were Rs. 3.61 Crores thus the total outstanding dues payable by the Corporate Debtor to the Respondent No. 1 was Rs. 12.38 Crores, which is more than the threshold limit of Rs. 1 Crore as provided in the Code for accepting the application filed under Section 7 of the Code - the Corporate Debtor has indeed acknowledged and confirmed the loans credit facilities availed by it from the Respondent No. 1. There are no error in the Impugned Order - appeal dismissed. Approval of the Resolution Plan which was favourably considered by the CoC and approved by the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ade available including the cited judgements. 3. It is the case of the Appellant that the Corporate Debtor was established on 12.12.1996 as MSME company and was engaged in the business of fish processing and exporting to various countries. The Corporate Debtor obtained cash credit facilities from time to time from the Respondent No. 1 and also repaid part amount to the Respondent No. 1. However, during financial year 2017-18, the Corporate Debtor faced financial problem due to notice by the Maharashtra Pollution Control Board, hence, the processing plant of the Corporate Debtor was stopped. 4. It is the case of the Appellant that during the financial stress of the Corporate Debtor, the Respondent No. 1 approved Holding of Operation with 15% cutback from 31.10.2018 to 28.02.2019 further approved the Holding of Operation with 25% cut back from 23.04.2019 to 30.06.2019 and in continuation, the Respondent No. 1 finally approved Holding of Operation with 30% cutback from 20.07.2019 to 30.09.2019. It has been brought out that the Respondent No. 1 issued a Recall Notice dated 03.07.2019 seeking to recall facilities granted to the Corporate Debtor and also declared the account ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... payments, the Respondent No. 1 was compelled to initiate under SARFAESI Act, 2002 on 19.06.2018 and issued notice to the Corporate Debtor for outstanding amount of Rs. 13,26,33,585.12/- . 14. The Respondent No. 1 refuted the charge of the Appellant that the Respondent No. 1 is trying to drag the Corporate Debtor into unnecessary CIRP and subsequently into liquidation and mentioned that on the contrary he was trying to facilitate the revival of the Corporate Debtor and extended permission for Holding on Operations with 25% cut-back on 23.04.2019, however, there was not much improvement in situation and therefore, the Respondent No. 1 issued a Recall Notice on 03.07.2019 to the Corporate Debtor for failure of Holding on Operations and took symbolic position of the Secured assets on 06.01.2020 under Section 13(4) of the SARFAESI Act, 2002 and finally, to protect his financial interest, the Respondent No. 1 moved an application under Section 7 of the Code before the Adjudicating Authority on 03.08.2021. 15. The Respondent No. 1 categorically refuted the allegations of the Appellant regarding non compliance of RBI Circular on Prudential Norms dated 01.07.2015 as amended from t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rity after due consideration of all facts and the law and taking into account that there was clear debt of more that Rs. 1 Crore which resulted into default and therefore the Adjudicating Authority through well reasoned speaking order, admitted his application filed under Section 7 of the Code. 22. The main issue before this Appellate Tribunal is whether the Adjudicating authority was right in admitting the application under Section 7 of the Code of the Respondent No. 1 or the application should have been rejected on the ground that there was no debt and default by the Corporate Debtor. 23. From the averments made before us, we have noted that the Corporate Debtor has been availing the credit facilities from the Respondent No. 1 since 2008 and there has been instances of default by the Corporate Debtor to the extent of Rs. 12,38,92,192/- for which the Respondent No. 1 filed the application under Section 7 of the Code before the Adjudicating Authority. We have also noted that for various credit facilities/ loans, the Corporate Debtor had executed several security documents in favour of the Respondent No. 1 including various letters of guarantee, hypothecation agreement of good ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ovided in the Code for accepting the application filed under Section 7 of the Code. 28. We also note that the Corporate Debtor has indeed acknowledged and confirmed the loans credit facilities availed by it from the Respondent No. 1. 29. After careful consideration of the averments made before us by both the parties and after going through the record made available including the Impugned Order, we do not find any error in the Impugned Order. 30. The Appeal is therefore found to be devoid of any merit and is hereby dismissed. Company Appeal (AT) (Insolvency) No. 233 of 2023 31. Mr. Rosario D Souza, the Appellant herein, is the Suspended Board of the Corporate Debtor and Mr. Mahesh Chand Gupta is the Respondent No. 1 who is formerly the Resolution Professional of the Corporate Debtor, Union Bank of India is the Respondent No. 2, Mrs. Lalita S Powle in consortium with Suyog Agro Poultry Products Pvt. Ltd. is the Respondent No. 3 who is the Successful Resolution Application (in short SRA ) and Dolphin Marin Foods and Processors (India) Pvt. Ltd. is the Corporate Debtor as the Respondent No. 4. 32. This Appeal has been filed by the Appellant challenging the app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case of the Appellant that there is no provision in the Code for such additional provision of interest over and above the admitted claims. The Appellant submitted that even during process of the CIRP, Rs. 55 Lakhs was available in current account of the Corporate Debtor which could have been used for making the payment of CIRP cost and statutory dues and remaining money could have been used to pay to the Shareholders of the Corporate Debtor, whereas in the present case after the Resolution Plan was approved, the Respondent No. 2 is getting more than its admitted claim and Shareholder are not getting anything out of Resolution Plan which is not fair. 41. It is the case of the Appellant that the purpose of the Code is the Resolution of the Corporate Debtor and not for recovery mechanism for the banks. 42. Per contra, the Contesting Respondent No. 2 i.e., Union Bank of India denied of the averments made by the Appellant. 43. The Respondent No. 2 pointed out that the Appellant always tried to derail the CIRP proceedings and did not render any cooperation to the Resolution Professional. The Respondent No. 2 also submitted that there is no violation of any law while making t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith Suyog Agro Poultry Products Pvt. Ltd. is the SRA of the Corporate Debtor, also countered all averments of the Appellant and opposed the Appeal. 51. The Respondent No. 3 specifically countered the averments of the Appellant regarding non consideration of the claims of the other Creditors i.e., other then the Financial Creditor and stated that the Form F of the Schedule of the CIRP Regulation, 2016 need to be filed by any other Creditors with Resolution Professional with proof and may also submit supplementary documents of clarification in support of such claims. The Respondent No. 3 submitted that the Appellant has not filed any such claim to the Resolution Professional in accordance with the Regulation 9A of Insolvency Bankruptcy Bord of India (CIRP) Regulations 2016. 52. The Respondent No. 3 stated that the Resolution Plan submitted by her was approved by the CoC with 100% voting rights which was also approved by the Adjudicating Authority in I.A. No. 1736 of 2022 in C.P. No. 1352 of 2020 dated 19.01.2023. 53. The Respondent No. 3 also cited judgment delivered by the Hon ble Supreme Court of India in case of India Resurgence Arc Private Limited Vs. Amit Metaliks Lim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d its claim in accordance with the provisions of the Code and IBBI Regulations, 2016 at the relevant period of filing of Form C but the intent of the Financial Creditor is always to realise full outstanding dues along with interest on the original debt. 63. It is up to the Resolution Applicant who tries to revive the Corporate Debtor as per his own scheme and provide the amount in the Resolution Plan which should be sufficient to meet the CIRP costs, the payment to the Financial Creditors, Operational Creditors, Statutory dues, workmen dues employees dues and payment towards dues of the other creditors to the extent possible. Such Resolution Plan is submitted for consideration of the CoC which applies its commercial wisdom and send the same through the Resolution Professional for approval of the Adjudicating Authority. 64. This Appellate Tribunal in the matter of Sabine Hospital and Research Centre Pvt. Ltd. Ors. [Company Appeal (AT) (CH) (Insolvency) No. 320 of 2022], decided on 19.10.2022, discussed issues regarding commercial wisdom of the CoC. The relevant portion of the said judgment is reproduced as under :- 23. This Appellate Tribunal is conscious of catena of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of commercial wisdom of the financial creditors be it for approving, rejecting or abstaining, As the case may be. Even the inquiry before the Appellate Authority (NCLAT) is limited to the grounds under Section 61(3) of the I B Code. It does not postulate jurisdiction to undertake scrutiny of the justness of the opinion expressed by financial creditors at the time of voting [ emphasis supplied ] 65. The relevant portion of the judgement passed by the Hon ble Supreme Court of India in the matter of India Resurgence Arc Private Limited (Supra) is reproduced herein under :- the process of judicial review cannot be stretched if all the above-mentioned requirements have been duly complied with and that dissenting financial creditor, expressing dissent over the value of security interest held by it, cannot seek to challenge an approved Resolution Plan. Lastly, it was held that Section 30 of the IBC, 2016 only amplified the considerations for the CoC while exercising its commercial wisdom so as to take an informed decision in regard to the viability and feasibility of the resolution plan, with fairness of distribution amongst similarly situated creditors; and that th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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