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TMI Blog2024 (7) TMI 387X X X X Extracts X X X X X X X X Extracts X X X X ..... ctor of Arjun Industries Limited (in short Corporate Debtor) under Section 61(1) of the Insolvency & Bankruptcy Code, 2016 (in short 'Code') in Company Appeal (AT) (Insolvency) No. 886 of 2024 against the Impugned Order dated 22.02.2024 passed by the National Company Law Tribunal, New Delhi Bench (Court - II) (in short 'Adjudicating Authority') in IB-79/ND/2022, whereby an application was filed under Section 7 of the Code by the Respondent No. 1 was considered and Corporate Insolvency Resolution Process (in short CIRP) of the Corporate Debtor was initiated. Jumbo Chemicals and Allied Industries Private Limited is the Respondent No. 1 here who is Financial Creditor of the Corporate Debtor. 2. Heard the Counsel for the Parties and perused the records made available including the cited judgements. 3. It has been brought out that the Corporate Debtor availed a loan from Industrial Development Bank of India (in short IDBI) of Rs. 3.67 Crores and further entered into agreement for foreign currency loan for Rs. 1.83 Crores. It has been alleged by the Appellant that the entire problem of the Corporate Debtor began since the IDBI release only Rs. 3.29 Crores against sanction loan of Rs. 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this stage, we would like to take into account the settlement deed dated 27.08.2019 which reads as under : - 10. From above settlement agreement, it is seen that parties accepted that the Appellant defaulted repayment of both rupee as well as foreign currency loan. The settlement agreement also note that the original loan of IDBI was assigned through Kotak Mahindra Bank Ltd. vide assignment deed dated 31.03.2006 who in turn further assigned the loan to the Respondent No. 1 vide assignment deed dated 16.04.2008. 11. The Settlement Agreement dated 27.08.2019 also stated that the parties have seen several rounds of litigations at different fora and substantial period has elapsed and therefore in order to settle the issues and disputes, it was agreed to sell the property bearing No. SP3-11(B) 1 & 2, Khuskhera Industrial Area, Khuskhera, District Alwar, Rajasthan by executing proposed tripartite agreement with proposed buyers at mutually decided price and subsequently distribute the sale proceeds into equal proportion between the Appellant of the Respondent No. 1. 12. It has been alleged that the Appellant sent an e-mail on 26.07.2021 cancelling the settlement agreement which was rep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent No. 1 i.e., Jumbo Chemicals and Allied Industries Private Limited's name got struck off on 08.08.2018 by the Ministry of Corporate Affair. The Appellant submitted that subsequently an alleged agreement was executed between the Corporate Debtor and the Respondent No. 1 on 27.08.2019 which was void. The Appellant stated that the Corporate Debtor vide email dated 26.07.2021 cancelled the said agreement on account of the non existence of legal entity of the Respondent No. 1, being struck off its name and not remaining as a legal entity in the eyes of law at the time of execution of agreement 19. The Respondent No. 1 submitted that on 18.09.2023, this Appellate Tribunal in the earlier round of litigation between the parties had held that the acknowledgment of debt in the balance sheets from 1998-99 is continuous and dismissed the argument of the Corporate Debtor based on the judgment rendered by the single judge of the Hon'ble Delhi High Court dated 22.05.2015 wherein it was held that the Financial Creditor has confined its claim only to a sum of Rs. 250 Lacs and interest thereon. The relevant part of this Appellate Tribunal's earlier order dated 18.09.2023 reads as follows: "21. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be seen in the settlement agreement dated 27.08.2019. 25. We note that the requisites of a novation may include elements like an agreement of all the parties to a new contract, the extinguishment of the old obligations, and the validity in supersession of old contract by the new contract, however, in the present case no such specific clauses exist. We also note that the Settlement Agreement dated 27.08.2019 was only with regard to disposal of the mortgaged properties of the Corporate Debtor. 26. We will examine the pleading of the Appellant that since name of the Respondent No. 1 was struck off on the relevant date of signing of settlement agreement dated 27.08.2019, therefore there was no valid settlement agreement. We note that the name of Respondent no. 1 was struck off since the Respondent No. 1 could not furnish the financial statements to relevant authority on time, however, the same was restored by the National Company Law Tribunal, Bench-IV, New Delhi (in short 'Tribunal') vide its order dated 24.03.2021 passed in Appeal No. 533/252/ND/2019. The relevant portion of the order is reproduced as under :- "10. ***The name of the petitioner company shall then stand restored i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng rupee term loan as well as foreign currency loan assigned by registered assignment deeds remain valid which are relevant documents to establish debt and default. We also note that the amount of default was more than Rs. 1 Crore, thus it fulfils, all the criteria laid down by the Code as well as covered under several judgments of this Appellate Tribunal as well as the Hon'ble Supreme Court of India. The argument of the Appellant that there is no debt and default, is found not sustainable. We also note that this Appellate Tribunal in its earlier order dated 24.03.2021 has already noted the fact that there has been continuous acknowledgements of the debt by the Corporate Debtor in its various balance sheets. 32. As regard, the subject regarding the settlement agreement stand valid or not in view of the issue raised by the Appellant regarding struck off name of the Respondent No. 1 on the relevant date, we reiterate that since the Tribunal gave clear specific verdict that the restoration would have effect as if the name was never struck off would enable the Respondent No. 1 to enforce the agreements. 33. The pleadings of the Appellant that the original term loan/ foreign currency ..... X X X X Extracts X X X X X X X X Extracts X X X X
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