9911796707
TMI Blog2024 (12) TMI 410X X X X Extracts X X X X X X X X Extracts X X X X ..... a Mathew, Advocates for R-1/ ICICI Bank. Mr. Sunil Fernandes, Sr. Advocate with Mr. Vaijyant Paliwal, Mr. Anoop Rawat, Mr. Sagar Dhawan, Mr. Aditya Marwah, Ms. Kirti Gupta, Mr. Ahkam Khan, Ms. Rajshree Chaudhary and Ms. Anushree, Advocates for R-2/ RP. Mr. Gopal Jain, Sr. Advocate with Mr. Ankur Mittal, Ms. Yashika Sharma and Ms. Muskan Jain, Advocates for SBI JUDGMENT ASHOK BHUSHAN , J. These Appeals have been filed by a Suspended Director of the Corporate Debtor, challenging the Orders dated 03.06.2024 passed by the Learned Adjudicating Authority (National Company Law Tribunal, Allahabad Bench, Prayagraj) in C.P. (IB) No.330/ALD/2018 and different IAs therein. By the Impugned Order dated 03.06.2024, the Adjudicating Authority has admitted Section 7 Application filed by the ICICI Bank Limited by commencing Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor, Jaiprakash Associates Limited (JAL). 2. The Appeals also challenges Order passed by the Adjudicating Authority dated 03.06.2024 in CA 120/2019, IA 406/2023, IA 263/2024, IA 291/2024. IA 120/2019 was filed by the Corporate Debtor for dismissal of Company Petition which has been dismissed by separat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a Notification dated 05.05.2017 in exercise of power under Section 35AA of the Banking Regulation Act, 1949, Central Government authorised the RBI to issue such directions to any Banking Company to initiate Insolvency Resolution Process in respect of default under the provisions of IBC. ix. A draft CRRP was approved in the JLF Meeting on 18.05.2017. x. A sanction letter dated 19.05.2017 was issued by ICICI Bank. xi. On 13.06.2017, RBI issued a press release recommending that for those account where 60% or more had been classified as NPA as on 30.06.2017, Banks may be directed to implement a viable Resolution Plan within 6 months, failing which the accounts may be treated for a reference under the IBC by 31.12.2017. xii. On 22.06.2017, DRP was approved by Lenders in JLF. xiii. RBI sent a letter dated 28.08.2017 to the ICICI Bank, directing that ICICI Bank may finalise a Resolution Plan for the JAL. It further directed that in the event that viable Resolution Plan is not finalised and implemented before the said date, Insolvency Proceeding under the provisions of IBC, may be initiated before 31.12.2017. xiv. ICICI Bank sent a letter dated 07.12.2017 to the RBI that accoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... habad High Court vide Order dated 24.09.2018. xxv. A Special Leave Petition challenging the Order of the Allahabad High Court also came to be dismissed filed by JAL on 12.10.2018. xxvi. As noted above, the CRRP, which was approved on 22.06.2017, envisaged bifurcation of entire debt of Corporate Debtor into 3 Buckets to the following effect : "i. Bucket 1 Debt of Rs.11,689 Crores - being part of the "Other Debt" is to be discharged against sale of identified Cement Plants of the Corporate Debtor & JCCL to Ultra Tech Cement Limited for which a define agreement has been executed between the parties. ii. Bucket 2A Debt of Rs.6367 Crores - being "sustainable debt" will continue as debt of the Corporate Debtor. iii. Bucket 2B Debt of Rs.13,590 Crores - which is part of "Other Debt" to be transferred to a Special Purpose Vehicle (SPV) along with identified land of the Corporate Debtor of the equivalent value." xxvii. With regard to implementation of Bucket 1 sale of identified Cements Plan to UltraTech Cement was implemented through Scheme of Arrangement. The debt of Bucket 2A which was restructured in terms mentioned in the Master Restructuring Agreement (MRA) dated 31.10.20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Appellant before this Tribunal on 04.06.2024. These Appeals were heard on 10.06.2024 by this Tribunal on which date Notices were issued in the Appeal. Matter was directed to be listed on 24.06.2024, within which period the Bank was given time to file a Reply and may consider the proposal /OTS submitted by the Appellant by the said date. xxxviii. On 12.06.2024, all Lenders Meeting was held where Lenders decided that CIRP of JAL is to continue and any proposal from JAL may be considered under the ambit of IBC. xxxix. On 23.06.2024, Appellant submitted a revised OTS Proposal along with clarification. xl. On 24.06.2024, this Tribunal granted additional time to the ICICI Bank to consider the revised OTS Proposal. xli. On 28.06.2024, Committee of Creditors (CoC) of JAL was constituted as per provisions of the IBC. xlii. On 01.07.2024, Lenders discussed the revised OTS Proposal and agreed that revised proposal cannot be accepted at that stage. xliii. On 20.07.2024, Appellant submitted an alternate OTS Proposal proceeding to make total payment of Rs.18,460 Crores. xliv. Joint Lenders held a Meeting and communicated to the suspended Chairman of the JAL that Lenders have u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and is a binding contract between the Parties. Pursuance to sanction letter, various actions were taken including filing of First Motion and Second Motion for approval of the Scheme of Arrangement for transferring the debt to SPV relating to Bucket 2B. 6. Learned Counsel for the Appellant has also referred to the letter dated 07.12.2017 issued by the ICICI Bank, which was counter signed by SBI and IDBI to RBI stating that account of Corporate Debtor may be treated to be resolved, which letter clearly depicts the understanding of the Lenders themselves regarding resolution of entire debt. Reference to another letter dated 13.08.2018, written by the ICICI Bank to the RBI has also been made by Counsel for the Appellant. 7. Learned Counsel for the Appellant further submits that Judgment of the Hon'ble Supreme Court in the matter of `Chitra Sharma & Ors.' Vs. `Union of India & Ors.' in Writ Petition (Civil) No. 744/2017 dated 09.08.2018 at best permitted the RBI to issue direction for initiating the CIRP against the Corporate Debtor. The letter dated 14.08.2018, written by RBI to ICICI Bank to initiate CIRP cannot be treated to be establishment of the default on the part of the Corpo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the earlier financing documents. The claims which have been filed before IRP are inflated claims, ballooning of the claims is clearly not permissible. 9. Learned Counsel for the Appellant has referred to NARCEL's offer dated 07.03.2024 as on 30.09.2023 and submits that as compared to the amounts of default noticed in the said offer, the claims admitted by IRP are inflated and unduly enhanced. Lenders are pursuing the present proceeding to maximise their gains and are not interested in resolution of the Corporate Debtor. IBC is not designed as recovery mechanism. The Corporate Debtor is Asset Rich Company which is fully competent to resolve all its debts, OTS offer given to the lenders required to be accepted so as to wipe out the entire debt of the Corporate Debtor. The receivables of the Corporate Debtor are much more than the debt of the Corporate Debtor. In the facts of the present case, where Corporate Debtor has various running business, and several assets, discretion would have been exercised by the Tribunal in not admitting Section 7 Application. Promoters of the Corporate Debtor are not rogue Promoters/fly by night operators. Promoters have made effort to resolve the en ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nendu Datta, Learned Senior Counsel appearing for the Financial Creditor refuting the submissions of the Counsel for the Appellant submits that for admission of Section 7 application, Financial Creditor has to prove debt and default of the amount above the threshold. Both the conditions have been fully proved in Section 7 application resulting to admission of Section 7 application. The submission of the Appellant that there was no default committed by the corporate debtor is incorrect and false. It is submitted that the Central Government has notified the RBI as an authority to issue necessary direction to the Banks to initiate Insolvency Resolution Process against a Corporate Debtor. The RBI having found the Corporate Debtor committing default under IBC has issued direction to the ICICI Bank on 14.08.2018 for initiating CIRP against the Corporate Debtor which direction was issued in exercise of statutory function by the RBI. It is submitted that the Hon'ble Supreme Court in Writ Petition filed by Chitra Sharma has also delivered a judgment on 09.08.2018 where RBI was granted permission to follow the recommendations of the IAC to initiate a CIRP against the Corporate Debtor under t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elf has pleaded that for debt of Rs.11,833.55 Cr. a scheme of arrangement has been framed under which scheme the debt is to be transferred with equivalent security to an SPV. The scheme was never approved, hence, default of the debt which is Real Estate debt continues. It is submitted that the Corporate Debtor in the written submission before the Adjudicating Authority has itself admitted that the present petition under Section 7 does not pertain to Bucket 1 or Bucket 2A rather petition under Section 7 pertains to Bucket 2B debt. Adjudicating Authority also in the impugned order has observed that it is admitted position that Section 7 application has been filed with regard to debt under Bucket 2B. It is submitted that the letter dated 19.05.2017 issued by the ICICI Bank has no relevance. Sanction letter stipulated that unless JAL executed an agreement/ documents in connection with the aforesaid facilities within a period of 90 days, no binding obligation shall arise. It is submitted that no documents were executed in relation to facility 2B, hence, default continues and sanction letter dated 19.05.2017 has no consequence with regard to default covered by Bucket 2B. The letter dated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... C is the only solution to resolve the Corporate Debtor. The Corporate Debtor has acknowledged its debt time and again. Adjudicating Authority has returned finding of debt and default by a reasoned judgment which need no interference by this Appellate Tribunal in exercise of appellate jurisdiction. The Appeal deserves to be dismissed. 12. Shri Gopal Jain, Learned Senior Counsel appearing for the State Bank of India- Intervenor submits that the outstanding dues of the State Bank of India against the Corporate Debtor as on 02.06.2024 are Rs.15,456 Cr. The State Bank of India itself has filed Section 7 application being CP (IB) No.108/ALD/2022 before the NCLT, Allahabad for initiating CIRP against JAL which was dismissed vide order dated 04.06.2024. In view of initiation of the CIRP by impugned order dated 03.06.2024, Section 7 petition have not been admitted. The CoC having been formed pursuant to admission order, the present proceedings are proceedings in rem and the State Bank of India is fully entitled to point out default committed by JAL. The restructuring i.e. overall debt realignment plan of the Corporate Debtor has failed. Counsel for the State Bank of India has referred to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ticed by the Hon'ble Supreme Court in its judgment dated 09.08.2018. It is submitted that the CoC having been constituted, Appellant needs to follow the process as set out under Section 12A for its endeavour to settle the debt of Financial Creditors. 14. From the submissions of Counsel for the parties and materials on record, following are the questions which arise for consideration in these Appeals:- (I) Whether the direction issued by the Reserve Bank of India dated 14.08.2018 to ICICI Bank to initiate CIRP process against the Corporate Debtor is not relevant for determining default by Corporate Debtor within meaning of Section 3(12) of the IBC? (II) Whether under the Resolution approved in JLF meeting held on 22.06.2017 for debt of Rs.11833.55 Crore (including interest) a scheme of arrangement was framed to transfer the above debt along with land parcel of equivalent value to an SPV, namely Jaypee Infrastructure Development Ltd., which debt was referable to Bucket 2B, and the Section 7 application filed by the ICICI Bank related to debt of Bucket 2B only? (III) Whether Master Restructuring Agreement entered on 31.10.2017 between JAL and lenders also covered the facilities ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as follows : - "35AA. The Central Government may by order authorise the Reserve Bank to issue directions to any banking company or banking companies to initiate insolvency resolution process in respect of a default, under the provisions of the Insolvency and Bankruptcy Code, 2016. Explanation--For the purposes of this section, "default" has the same meaning assigned to it in clause (12) of section 3 of the Insolvency and Bankruptcy Code, 2016." 18. A notification dated 05.05.2017 was issued by the Central Government which is as follows:- "MINISTRY OF FINANCE (Department of Financial Services) ORDER New Delhi, the 5th May, 2017 S.O. 1435(E). In exercise of the powers conferred by Section 35AA of the Banking Regulation Act, 1949 (10 of 1949), the Central Government hereby authorises the Reserve Bank of India to issue such directions to any banking company or banking companies which may be considered necessary to initiate insolvency resolution process in respect of a default, under the provisions of the Insolvency and Bankruptcy Code, 2016. [F. No. 7/32/2017-BOA (pt)] MOHAMMAD MUSTAFA, Jt. Secy." 19. The above provision indicates that there was a statutory authorisa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ied as NPA on CRILC, will be given time till December 13, 2017 for resolution outside IBC. In the event that a viable resolution plan is not finalised and implemented before the said date, insolvency proceedings under the provisions of the IBC may be initiated before December 31, 2017, unless already initiated." 21. The RBI issued directions dated 14.08.2018 to the ICICI Bank directing the ICICI Bank to initiate the insolvency resolution process in respect to the default committed by JAL. Letter dated 14.08.2018 reads as follows:- "DBR.No.BP ** August 14, 2018 The Managing Director & Chief Executive Officer ICICI Bank Ltd. Corporate Office ICICI Bank Towers. Bandra-Kurls Complex, Mumbai 400 081 Madam, Resolution of stressed assets Please refer to our letter **dated December 27, 2017 wherein we had advised the bank, inter alia, to await further instructions on filing the insolvency application against M/s. Jaiprakash Associates Limited. 2 In this context, it is noted that Hon'ble Supreme Court has placed the final order dated August 6, 2018 on the Writ Petition (s) (Civil) No(s) 744/2017 Chitra Sharma & Ors. Vs. Union of India & Ors. Accordingly, the ICICI Bank ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich was found not to have been implemented before the deadline, cannot be taken cognizance of. The statement that the 'company is meeting debt obligations as per the restructured terms with NIL arrears as on date to all the lenders' is misleading and invalid since the restructuring was itself rendered null and void. Further, multiple banks, including ICICI Bank, have since reported the borrower as being in default in the weekly reporting of borrowers in default, and the borrower continues to be in default in most of these banks. 5. Accordingly, your request for additional time for implementation of the resolution plan in respect of JAL cannot be acceded to. 6. We believe that as already advised vide our letter dated August 14, 2018, the bank would have taken suitable steps for filing the application for insolvency resolution in respect of the default committed by JAL within the required timeline. Yours faithfully, (Saurav Sinha) Chief General Manager-in-Charge" 23. As noted above, in pursuance of the direction issued by the RBI letters dated 14.08.2018 and 30.08.2018, ICICI Bank filed Section 7 application before the NCLT, Allahabad Bench, Prayagraj on 07.09.201 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (IAC) consisting primarily of its independent directors. The IAC took up for consideration accounts which were classified either partly or wholly non- performing from amongst the top 500 exposures in the banking system as on 31 March 2017. As a first step, the IAC recommended all such non-performing asset accounts with fund and non-fund based outstanding exceeding Rs 5,000 crores. The IAC has initially taken up twelve accounts involving total exposure of Rs1,79,769 crores. JIL was one of the twelve accounts in respect of which directions have been issued to banks for initiating insolvency resolution. Subsequently, the IAC recommended that in respect of those accounts where 60% or more had been classified as NPAs as on 30 June 2017, banks may be directed to implement a viable resolution plan within six months failing which the accounts may be directed for a reference under the IBC by 31 December 2017. JAL was one such entity. No viable resolution plan could be found as a result of which it is also required to be referred for CIRP. 49. ... JAL was classified under the SMA-II category (demands overdue for more than 60 days) by banks as early as on 3 October 2014 and as an NPA since ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terest of the home buyers the request of the RBI to allow it to initiate CIRP against the petitioner under IBC is acceded to and the RBI is allowed to direct the Banks to initiate corporate insolvency resolution proceedings (CIRP) against the petitioner under IBC. In view of the above conclusion drawn by the Supreme Court, the directions issued the Letter of Consortium of Lenders dated 7.12.2017 has no sanctity and pales into insignificance. The aforesaid decision of the Supreme Court in clear and unequivocal terms allows the RBI to initiate corporate insolvency resolution process against the petitioner. No Forum not even this Court in exercise of its inherent power can sit over the above decision or direction of the Apex court. Accordingly, the directions issued by the RBI vide letter dated 14th August 2018 in purported exercise of powers under Section 35 AA of the Banking Regulation Act is neither without jurisdiction nor otherwise illegal." 27. The direction of the RBI dated 14.08.2018 was thus, also upheld by the Allahabad High Court in the aforesaid judgment. It was further held that the ICICI Bank independent of the above direction was not precluded from initiating CIRP ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y be initiated before December 31, 2017, unless already initiated. 4. Accordingly, enclosed are two separate lists of accounts, one, where the ICICI Bank Limited is the lead bank (Annex 1), and, two, where the ICICI Bank Limited is a member of the Joint Lenders Forum (JLF) (Annex 2) The JLF process should already have been initiated in respect of these accounts. We advise that the ICICI Bank Limited. along with other lenders that are part of the JLF/consortium, make every effort to complete the resolution process and implement a viable resolution plan for these accounts before December 13, 2017, failing which, the JLF/consortium may initiate insolvency proceedings in respect of the account/s under the provisions of the IBC, before December 31, 2017, unless already initiated The resolution plan, wherever feasible, may involve restructuring under any of the existing guidelines or sale of the stressed debt to an interested buyer/investor, including any other viable and legal restructuring plan." 31. We have also noticed the judgment of the Hon'ble Supreme Court in "Chitra Sharma & Ors. vs. Union of India & Ors." dated 09.08.2018 in which proceedings, RBI has filed an application pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Debtor in proceeding under Section 7. In this context, we may refer to the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules 2016. Rule 4(1) provides as follows:- "4. Application by financial creditor.-(1) A financial creditor, either by itself or jointly, shall make an application for initiating the corporate insolvency resolution process against a corporate debtor under section 7 of the Code in Form 1, accompanied with documents and records required therein and as specified in the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016." 34. Application by Financial Creditor has to be filed in Form-1. Part V of Form-1 refers to financial debt documents, records and evidence of default. Thus, Financial Creditor is fully entitled to file documents, records and evidence of default. When direction has been issued by the RBI which is a regulator of banking companies directing for initiation of the CIRP against the Corporate Debtor, the said direction cannot be disregarded or ignored while determining application under Section 7 filed by the Financial Creditor against the Corporate Debtor. We, thus, are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the entire debt of the Corporate Debtor into 2 parts - "sustainable debt" and "other debt". While "sustainable debt" is to remain the liability of the Corporate Debtor, the "other debt" had been addressed through sale/transfer of assets of the Corporate Debtor. The CRRP put the entire outstanding debt into three buckets and made provision for settlement/ continuance of each category of debt as under- i. Bucket 1 Debt of Rs.11,689 Crores -which is part of the "Other debt", is to be discharged against sale of identified Cement Plants of the Company & JCCL to UltraTech Cement Limited for which a definite agreement has been executed between the parties. ii. Bucket 2a Debt of Rs.6367 Crores -which is "sustainable debt", will continue as debt of the Corporate Debtor. iii. Bucket 2b Debt of Rs.13,590 Crores - which is part of "Other debt" to be transferred to a Special Purpose Vehicle (SPV) along with identified land of the Corporate Debtor of the equivalent value. 14. The finally approved CRRP, as aforesaid, has been implemented as per details given below: i. Implementation of Bucket 1: Sale of identified Cement Plants to UltraTech Cement Limited has been completed through a Sc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8. The finally approved CRRP broadly envisages bifurcation of the entire debt of the Corporate Debtor into 2 parts - "sustainable debt" and "other debt". While "sustainable debt" is to remain the liability of the Corporate Debtor, the "other debt" has been addressed through sale/transfer of assets of the Corporate Debtor. The CRRP has put the entire outstanding debt into three buckets and made provision for settlement/ continuance of each category of debt as under - (i) Bucket 1 Debt of Rs.11.689 Crores - which is part of the "Other debt", is to be discharged against sale of identified Cement Plants of the Company & JCCL to UltraTech Cement Limited. (ii) Bucket 2a Debt of Rs.6367 Crores - which is "sustainable debt", will continue as debt of the Corporate Debtor. (iii) Bucket 2b Debt of Rs.13,590 Crores - which is part of "Other debt" is to be transferred to a Special Purpose Vehicle (SPV) along with identified land of the Corporate Debtor of the equivalent value. 29. The finally approved CRRP, as aforesaid, has been implemented as per details given below: (i) Implementation of Bucket 1: Sale of identified Cement Plants to UltraTech Cement Limited has been completed throu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... settled through direct Debt Assets Swap. For the remaining debt of Rs.11,833.55 Crores (including Interest), a Scheme of Arrangement has been framed in consultation and with the approval of banks/FIs. Under this Scheme, the above debts is to be transferred with equivalent security to an SPV for which the Scheme of Arrangement is pending for final sanction before this Hon'ble Tribunal. The Scheme is effective from 01.07.2017 and upon sanction of the Scheme the entire loan and the land parcels of equivalent value will stand transferred to the SPV. It is noteworthy that as per terms of the sanction letter dated 19.05.2017 issued by the ICICI Bank Limited, interest on this part of the debt has ceased with effect from 01.10.2016 and no part of the debt is repayable as the entire amount is to be transferred to SPV in terms of the approved Scheme. Hence, in respect of this part of the loan also there is no question of any default. It is submitted that the reports/approvals of all the authorities have been received, all statutory formalities have been completed satisfactorily and there are no objectors to the Scheme. Since the Company Petition No. 19/ALD/2018, being second motion f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0 billion (i) J0051610 01 (ii) 0000008 57 (i) 390.30 (ii) 357.67 (i) Common Facility Agreement dated December 28, 2009 (ii) Facility Agreement (i) CAL 90/W12 MU M/2120 3 dated September 30, 2009 (ii) CAL 34/PFG MU (i) MSTA dated September 24, 2011 (ii) Deed of accession dated December 20, 2013 Properties secured by the MSTA and the relevant Deeds of Accession thereto 41. Thus, the MRA confined to only two facilities which were listed in Item No.13. Details of the facility agreement is also mentioned in Serial No.13. 42. Now we come to Section 7 filed by the ICICI Bank to find out as to for which facility Section 7 application filed by the ICICI Bank. Part IV of Section 7 application has given 'particulars of financial debt'. Part IV of the application is as follows:- "Part-IV PARTICULARS OF FINANCIAL DEBT 1. TOTAL AMOUNT OF DEBT GRANTED The Financial Creditor has, inter alia, granted the following financial debt to the Corporate Debtor: (i) Rupee term loan to the tune of INR 400,00,00,000 (Rupees Four Hundred Crore Only) ("Facility 1") under the Common Facility Agreement dated December 28, 2009 read with Amendment Agreement dated May 2, 2012, Amendment Agreement date ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Facility Agreement 6 are collectively referred to as the "Loan Agreements"). The total principal amount of debt disbursed under the aforementioned Facilities was INR 4750,00,00,000 (Rupees Four Thousand Seven Hundred and Fifty Crore Only). Copies of the Loan Agreements along with the relevant credit arrangement letters in relation to the Facilities have been annexed hereto and marked as Annexure- 4 (Colly). The Financial Creditor has filed this Application for initiating Corporate Insolvency Resolution Process against the Corporate Debtor based on the defaults committed by the Corporate Debtor in respect of the Facilities granted to it pursuant to the Loan Agreements. The Financial Creditor has also granted other Rupee term loan facilities as well as working capital facilities in the form of both fund- based and non-fund based facilities (including letters of credit and bank guarantees issued on behalf of the Corporate Debtor) (collectively "Other Facilities"). The Financial Creditor craves leave to produce the financial contracts in respect of the Other Facilities, if required by this Hon'ble Tribunal. This Application under Section 7 of the Insolvency and Bankruptcy Code, 201 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isted in Annexure 6 to Section 7 application, it is clear that the two facilities which are listed at Item No.13 of the Schedule II of the MRA are different from the facilities which are listed at Annexure-6 of the Section 7 application and details of which has been given in Part IV as noticed above. From the above, it is clear that the MRA does not relate to six facilities for which Section 7 application was filed by the Financial Creditor. 45. When we look into the reply which was filed by the Corporate Debtor to Section 7 application, the above position is also reflected in the reply of the Corporate Debtor. In Part IV of the reply under the heading para-wise reply of the application, the Corporate Debtor has again reiterated the bifurcation of the debt in three buckets. Pleadings in paras (iv), (v), (vi) and (vii) in the reply of the Corporate Debtor is as follows:- "(iv) As already stated earlier, under the finally approved CRRP, the entire debt has been placed in three buckets Bucket 1, 2a and 2b as under- Bucket 1 Debt of Rs.11,689 Crores -which is part of the "Other debt", is to be discharged against sale of identified Cement Plants of the Company & JCCL to UltraTech C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d with respect to loan/debt remaining outstanding in Bucket 2B. Therefore, in this order, we have considered all the arguments put forward in respect of payment of loan/debt in Bucket 2B and to examine whether there is any default or otherwise in its repayment by the Corporate Debtor. In respect of the debt of Bucket 2b, the Corporate Debtor in its Reply has submitted that out of the debt of Rs. 13,590 crores placed in this Bucket, the debt aggregating to Rs. 2543.55 crores stand settled through direct Debt Assets Swap. For the remaining debt of Rs. 11,833.55 crores (including interest), a Scheme of Arrangement has been framed in consultation and with the approval of Banks/FIs. Under this Scheme, as per the Corporate Debtor, this debt is to be transferred with equivalent security to SPV for which the Scheme of Arrangement has been filed to this Tribunal and in this respect, a Company Petition No. 19/ALD/2018, being second motion for final sanction of the Scheme of Arrangement is pending before this Tribunal. It is also stressed in the Reply that delay in sanction of the Scheme is not due to any negligence or lack of due diligence on the part of the Corporate Debtor. As mentioned in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... approved by the lenders also and 1st motion petition was filed and admitted by the NCLT, no default can occur with respect to debt which was to be transferred to SPV under the scheme of arrangement. The scheme of arrangement which was filed before the NCLT by the Corporate Debtor after approval by lenders contemplated implementation of the scheme w.e.f. 01.07.2017. Scheme of arrangement also contemplated that in event the scheme is not implemented till 31.05.2018, it shall become void and in- operative. The question for consideration is as to whether debt which was bifurcated in Bucket 2B and was owed to the lenders by the corporate debtor was proposed to be transferred to SPV through scheme of arrangement. The scheme of arrangement has never fructified. We need to notice certain clauses of Scheme of Arrangement. 49. We may first notice Part-II of the Scheme containing the heading 'Definitions'. 'Appointed Date' is defined in 2.01 which is as follow:- ""Appointed Date" means the date from which the provisions of this Scheme shall become operational i.e. open of business on 01.07.2017 or such other date as fixed or approved by the Hon'ble National Company Law Tribunal;" 50. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) No. 19/2018 and a CA No. 213/2018 connected with this petition, an order dated 03.06.2024 has been passed finding that after a gap of six year and now the land of the Corporate Debtor to be transferred as security has been under litigation as its allotment has been cancelled by YEIDA and therefore, viability of the Scheme has become doubtful as it is now being opposed by the Applicant Bank also after becoming Party Intervener in CA No. 213/2019, who earlier had given consent for it. Therefore, in absence of any Scheme being implemented for resolution of loans in Bucket 2B, default of this loan covered in the present Application is still continuing leave aside the default being in existence on 07.09.2018 when Application u/s 7 was filed. As far as not filing of the Application by 31.12.2018 is concerned, the same has already been explained to have happened because of letter of RBI dated 27.12.2017 staying its direction to initiate proceedings under IBC against JAL in the light of the interim order in the Chitra Sharma Case. However, after passing of order in this case on 09.08.2018, a direction by RBI was issued vide letter dated 14.08.2018 in compliance of which the present Petit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt that given Section 446 of the Companies Act, 1956/Section 279 of the Companies Act, 2013, once a winding-up petition is admitted, the winding-up petition should trump any subsequent attempt at revival of the company through a Section 7 or Section 9 petition filed under the IBC. While it is true that Sections 391 to 393 of the Companies Act, 1956 may, in a given factual circumstance, be availed of to pull the company out of the red, Section 230(1) of the Companies Act, 2013 is instructive and provides as follows: "230. Power to compromise or make arrangements with creditors and members.-(1) Where a compromise or arrangement is proposed- (a) between a company and its creditors or any class of them; or (b) between a company and its members or any class of them, the Tribunal may, on the application of the company or of any creditor or member of the company, or in the case of a company which is being wound up, of the liquidator, appointed under this Act or under the Insolvency and Bankruptcy Code, 2016, as the case may be, order a meeting of the creditors or class of creditors, or of the members or class of members, as the case may be, to be called, held and conducted in such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case has relied on the judgment of the Hon'ble Supreme Court in "A. Navinchandra Steels Pvt. Ltd. vs. SREI Equipment Finance Ltd. - (2021) 4 SCC 435" (supra). 56. We, thus, are satisfied that the pendency of proceedings before the NCLT for approval of the scheme of arrangement does in no manner either shall suspend the default which was committed by the Corporate Debtor or preclude the Financial Creditor to proceed with Section 7 application. 57. In view of the above discussions and conclusions, we answer Question Nos. (IV) and (V) in following manner:- (IV) The Scheme of Arrangement which was filed before the NCLT for approval having not been approved, there is default on part of the Corporate Debtor regarding not servicing the debt of Bucket 2B. (V) The fact that 1st motion petition was approved by the NCLT on 08.12.2017 and Second motion petition was filed on 23.01.2018 which remain pending cannot be a ground to hold that there shall be no default on part of the Corporate Debtor with regard to debt under Bucket 2B and Section 7 application filed by the ICICI Bank on 06.09.2018 did not deserve to be rejected on the above ground. QUESTION NOS. (VI) & (VII) 58. Both the abo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e order of the Hon'ble Supreme Court dated 09.08.2018 in Writ Petition- Chitra Sharma vs. Union of India (supra) as well as the direction of the RBI dated 14.08.2018. In paragraph 65 of the judgment, following has been observed by the Adjudicating Authority:- "65. As the Scheme of Arrangement could not be implemented, the debt under Bucket 2B remained under default and the Hon'ble Supreme Court in its order dated 09.08.2018 acceded to the request made on behalf of the RBI to allow it to follow the recommendations of the IAC to initiate a CIRP against JAL under the IBC and also ordered to allow the RBI in terms of its application filed in the Supreme Court to direct the banks to initiate corporate insolvency resolution proceedings against JAL under the IBC and consequent to that order, RBI issued a letter dated 14.08.2018 directing the ICICI Bank to initiate proceeding against JAL, the Applicant Bank i.e. ICICI Bank filed the present Petition/Application details of which have already been discussed in earlier part of this order." 61. After considering all materials on the record including the information received from the Information Utility and credit information report, fin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e transferred to SPV does not wipe off the debt. The debt, thus, continued on the Corporate Debtor in which default was committed which shall not be treated to be arrested or suspended by pendency of scheme of arrangement before the NCLT. Adjudicating Authority has also returned a finding that even if charging of interest from 01.10.2016 to 31.10.2018 is not taken into account, default is much more than the threshold limit. 63. Counsel for the Appellant has referred to paragraph 2.2 of the MRA which provided that all earlier events of default stand waived, hence, application could not have been filed for default between the period from 30.04.2016 to 15.05.2016. Clause 2.2 of the MRA is as follows:- "2.2. Waiver of Existing Events of Defaults Subject to Section 8.3 (Consequences of Revocation), each of the Lenders hereby waives any Existing Events of Default relating to such Lender and any and all rights, remedies and powers that may have arisen in connection therewith. For avoidance of doubt, it is hereby clarified that the Lenders do not hereby waive their right to recover their respective Facilities, in accordance with the terms of this Agreement. In the event any Lender had ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
