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TMI Blog2019 (10) TMI 1602X X X X Extracts X X X X X X X X Extracts X X X X ..... only because of the operation of the impugned circular were declared non-est - It may be noted that the Hon ble Supreme Court has held that all the cases in which debtor have been proceeded against by financial creditors under Section 7 of the I B Code, only because of the operation of the impugned circular will be proceedings which, being faulted at the very inception, are declared to be non-est. But no bar was imposed upon the financial creditors to file a section 7 application against the defaulting financial debtor. The reason for not executing the debt restructuring scheme as well as filing of an application under section 7 of I B Code is the debt and default committed by the Corporate Debtor and not the RBI Circular dated 12.02.2018. Therefore, the present application filed under section 7 of I B Code is nowhere affected by the judgment of the Hon ble Supreme Court in Dharani Sugars and Chemicals Ltd. as it is not filed under said RBI Circular dated 12.02.2018. Existence of debt due and payable - HELD THAT:- On perusal of the documents submitted by the applicant, it is clear that on 17.01.2019, debt amounting to 194,26,53,633/- is due and payable by the Corporate Debtor to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ral Security and Personal Guarantee of Promoter Directors. The said loan facilities were renewed several times and the latest deed sanctioning the renewed limits was executed on 28.09.2015. As per the said sanction letter dated 28.09.2015, the loan was to be repaid in 16 quarterly instalments after 12 months. 5. The Corporate Debtor is said to have defaulted in the repayment of all the Credit facilities, and its account was classified by the Applicant as Non-Performing Asset on 31.01.2017. The Applicant Bank also sent a loan recall notice, dated 10.09.2018, to the Corporate Debtor recalling an outstanding amount of ₹160,68,00,839.10 as on 31.08.2018. 6. The applicant has submitted on record, the Commercial Creditor Information Report issued by Trans Union CIBIL (CIBIL Report) of the Corporate Debtor dated 07.01.2019 that reflects an amount of ₹94,46,61,982/- against the working capital and term loan facilities being classified as Doubtful. 7. The Applicant has also submitted on record balance confirmation letter of the Corporate Debtor dated 24.08.2018, acknowledging and admitting the outstanding balance of its loan accounts and respective security interest created i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onsider taking fresh view on the recovery of dues to banks including referring to NCLT. It is pointed out that in the consortium meeting held on 28.08.2018 the members expressed their inability to extend additional funds to the Corporate Debtor as all the accounts of the Corporate Debtor have been classified as Non-Performing Asset and decided to consider referring the matter to the NCLT. 14. We have heard the arguments of both the parties and perused the records. 15. At the outset, it is pertinent to note that the decision of Hon'ble Supreme Court in Dharani Sugars and Chemicals Ltd. (supra.) dated 02.04.2019 wherein the circular issued by Reserve Bank of India on 12.02.2018 regarding the revised framework for the resolution of stressed assets was set aside, and all actions against the Corporate Debtor under the I&B Code initiated only because of the operation of the impugned circular were declared non-est. the relevant extract of the said judgment is reproduced below: "There is nothing to show that the provisions of Section 45L(3) have been satisfied in issuing the impugned circular. The impugned circular nowhere says that the RBI has had due regard to the conditions in which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as NPA. It is specifically recorded in the minutes that all consortium members have expressed their in-principal approval for referring the matter to NCLT. The relevant extract of the minutes of meetings is reproduced below for reference: LENDERS' DISCUSSION Mr. AK. Sharma again requested IDBI bank to honor the spirt of Consortium and refund the amount which has been wrongly credited to them. He requested the IDBI Bank officials to take up the matter with their higher ups for early resolution of the issue. With regard to the information submitted by the company in the meeting as to the cash flow of the company during the ensuing crushing season, Mr. AK. Sharma requested the member banks to express their views and comments on the business estimations/projections of the company. The members were of the collective opinion that the business projections of the company may be considered as realistic and reasonable. However, the lenders expressed their inability to provide any additional funding to the company at this juncture since all the accounts of the company has been classified as NPA. Me. A K. Sharma informed the member banks that UCO bank is preparing for referring t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... banks decided not to release any additional security which was taken for securing the restructured limits of the company. 18. Further, the minutes of the consortium meeting dated 15.12.2017 record that in light of the certain alleged irregularities, till the concerns of the banks are resolved the restructuring proposal was put in abeyance. 19. Given the above observations of the members to the consortium, it becomes clear that the reason for not executing the debt restructuring scheme as well as filing of an application under section 7 of I&B Code is the debt and default committed by the Corporate Debtor and not the RBI Circular dated 12.02.2018. Therefore, the present application filed under section 7 of I&B Code is nowhere affected by the judgment of the Hon'ble Supreme Court in Dharani Sugars and Chemicals Ltd. (supra.) as it is not filed under said RBI Circular dated 12.02.2018. 20. On perusal of the documents submitted by the applicant, it is clear that on 17.01.2019, debt amounting to ₹194,26,53,633/- is due and payable by the Corporate Debtor to the Applicant. The debt is established by the deed sanctioning the renewed limits executed on 28.09.2015. The Applicant h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s: a) the institution of suits or continuation of pending suits or proceedings against the corporate debtor including execution of any judgment, decree or order in any court of law, tribunal, arbitration panel or other authority; b) transferring, encumbering, alienating or disposing of by the corporate debtor any of its assets or any legal right or beneficial interest therein; c) any action to foreclose, recover or enforce any security interest created by the corporate debtor in respect of its property including any activity under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002; d) the recovery of any property by an owner or lessor where such property is occupied by or in possession of the corporate debtor. II. That the supply of essential goods or services to the corporate debtor, if continuing, shall not be terminated or suspended or interrupted during the moratorium period. III. That the provisions of sub-section (1) of Section 14 of I&B Code shall not apply to such transactions as may be notified by the Central Government in consultation with any financial sector regulator. IV. That the order of moratorium s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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