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TMI Blog2024 (6) TMI 1425X X X X Extracts X X X X X X X X Extracts X X X X ..... the Supreme Court in case of Chitra Sharma [ 2018 (8) TMI 661 - SUPREME COURT ], is legally maintainable and accordingly , CA 120/2019 has been dismissed . Therefore, the present Application under consideration is held to be legally maintainable. Whether there is Debt and Default? - HELD THAT:- In the present case, default has occurred and ICICI Bank s Section 7 Petition is complete providing all the details of debts and default as required in Part IV of the Application and attaching all the necessary supporting documents including ROD from NeSL along with CIBIL Report and CIRLC Report from RBI portal as required in Part V of the Application and there is no disciplinary proceeding against the proposed IRP. Considering that all the elements are fulfilled as required under IBC, it is found that this Application deserves to be admitted u/s 7 for starting CIRP against the Corporate Debtor. Applicability of the decision of the Ho ble Supreme Court in Vidarbha Industries Power Ltd. vs. Axis Bank Ltd. [ 2022 (7) TMI 581 - SUPREME COURT ] - HELD THAT:- If the Corporate Debtor feels about its viability, feasibility and financial health , it would be more beneficial for it after its resolut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2016 (hereinafter referred as IBC ) seeking initiation of the Corporate Insolvency Resolution Process ( herein after referred as CIRP ) against M/s Jaiprakash Associates Limited (hereinafter referred as Respondent/Corporate Debtor/JAL ) read with Rule 4 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules 2016 in Form 1 containing all the information as required in Part I, II, III, IV and V of the Form showing a total financial debt of Rs. 1269,10,26,803.06/- (Rupees One Thousand Two Hundred and Sixty Nine Crores Ten Lacs Twenty Six Thousand eight Hundred and three and Six paise only) under default with dates of default being mentioned as 30.04.2016 and 15.05.2016 in respect of various loans under six different facilities for which details have been provided in Annexure A-6 attached with Vol. IV (Pg 787-788) of the Application. 2. The Applicant is a company incorporated under the Companies Act, 2013 and a Banking company within the meaning of the Banking Regulation Act, 1949. The Applicant has appointed Mr. Abhinav Prakash (Manager) as the Authorized Representative in the present case vide Board Resolution dated 27 October 2017 annexed as Annexure A- 1 (Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te Debtor and JSIL and their respective shareholders and creditors ( JSIL Scheme of Arrangement ). Facility 6 was granted under the Rupee Term Loan Facility Agreement dated June 30, 2012 read with the General Conditions dated June 30, 2012 (collectively Facility Agreement 6 ). Pursuant to the aforesaid Order sanctioning the JSIL Scheme of Arrangement, the debts of JSIL were transferred to the Corporate Debtor. The copy of the Order of Hon'ble High Court of Judicature at Allahabad dated September 14, 2015, is annexed as Annexure-3 to the petition. 5 . Details of the loans under the six facilities in respect of which the Corporate Debtor has defaulted in repayment and the default amount as mentioned in the Application are provided at Sl. No. 1 of Part IV of the Application. In support of his contentions showing that the Corporate Debtor has defaulted on repayment of loans under these six facilities, the Financial Creditor has also annexed the computation relating to default amount, dates of default and days of default as Annexure 6 in Vol IV (pg 787-788) to the Application. The same has been reproduced hereunder: Total amount of default and days of default Sr. No. Facility Total ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ). Relevant excerpts of the same have been produced hereunder: 2. It is humbly submitted that the Hon ble National Company Law Tribunal vide Order dated May 12, 2020 had directed all concerned parties to file default records from the Information Utility ( IU ) for all new petitions which are filed under Section 7 of IBC, as well as all cases which are pending for admission. Copy of Order dated May 12, 2020 passed by the Hon ble National Company Law Tribunal with respect to Record of default from Information Utility is annexed herewith as ANNEXURE-1. Date of Submission 23-01-2020 14:15:12 Type of Submission Default Submission Submission ID 8 Submitted by (CREDITOR) M/s ICICI BANK LTD. Debtor M/s JAIPRAKASH ASSOCIATES LTD. (JAYPEE INDUSTRIES LTD) Default Amount 590298047.20 Status of Authentication by Debtor DEEMED TO BE AUTHENTICATED In case Authentication is Performed by the Debtor, date of completion of authentication Not Applicable Date of Submission 23-01-2020 14:15:12 Type of Submission Default Submission Submission ID 8 Submitted by (CREDITOR) M/s ICICI BANK LTD. Debtor M/s JAIPRAKASH ASSOCIATES LTD. (JAYPEE INDUSTRIES LTD) Default Amount 886160175.20 Status of Authentication ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... showing date of default as 30.04.2016 and status of loan as Moved to Default . This report has been mentioned at Sl. No. 8 of Part V of the Application under the head List of Other Documents Attached to This Application In Order to Prove The Existence of Financial Debt , the Amount And Date of Default 12. After reliance having been placed on all the details and documents in the Application as discussed above, the Applicant/Financial Creditor has pleaded that the Corporate Debtor has defaulted in making payment in excess of Rs. 1,00,000/- to the Financial Creditor, hence this Application to be admitted and order for initiating the CIRP under section 7 of IBC read with Rule 4 of the Insolvency and Bankruptcy (Application to Adjudicating Authority Rules 2016 may be passed. Reply on Behalf of The Corporate Debtor 13. Against the Application filed by the ICICI Bank Ltd. as discussed above, the Respondent/Corporate Debtor filed the Reply/Counter Affidavit dated 16.09.2018, contending that there is no default as defined in section 3(12) of IBC, on part of the Corporate Debtor with respect to the alleged dues of the Applicant Bank, which may justify the filing of the present Application an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ply as under: -. a. The operations of the Corporate Debtor are financed by various lenders including the Applicant Bank. The following Table shows the credit facilities sanctioned by each lender and their respective outstanding dues as on 31.03.2017 31.03.2018: (INR in Cr.) Sr. No. BANK Sanctioned Amount 31.03.17 Outstanding Amount as at 31.03.17 Sanctioned Amount 31.03.18 Outstanding Amount as at 31.03. 18 1 ICICI BANK LTD. 7,163.37 6,151.07 3,427.39 3,651.54 2 ALLAHABAD BANK 125.00 122.48 104.88 121.97 3 ANDHRA BANK - - 68.13 68.31 4 AXIS BANK 2,149.00 1,398.68 845.89 725.19 5 BANK OF BARODA 39.72 42.73 92.65 95.19 6 BANK OF INDIA 190.98 166.14 94.15 101.07 7 BANK OF MAHARASHTRA 880.71 990.48 578.45 636.71 8 CANARA BANK 1,078.80 963.32 645.45 622.25 9 CENTRAL BANK OF INDIA 30.00 33.50 27.73 29.09 10 CORPORATION BANK 132.00 114.34 48.14 66.22 11 DENA BANK - - 4.65 11.23 12 EXPORT IMPORT BANK OF INDIA 213.00 145.31 150.20 149.28 13 IDBI BANK LIMITED 4,021.00 3,108.69 2,023.26 2,132.76 14 IFCI LIMITED 800.00 654.99 533.76 476.36 15 INDIAN BANK - - 8.74 64.74 16 INDUSIND BANK LIMITED 540.00 551.87 77.15 78.12 17 L T INFRASTRUCTURE FIN CO LTD 340.00 184.88 140.05 147.26 18 LAKSHMI VIL ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... porate Debtor started deteriorating from FY 2014-15 due to various reasons , beyond the control of management , such as general economic slowdown , change in Government Policy towards Hydro Power Projects , lower price realisation for cement due to excessive capacity in the market , time over run leading to cost overrun in project implemented by the Corporate Debtor due to time taken by various Regulators /Government Departments in giving various clearances /approvals , Coal Block cancellation by the Government for no fault of the Corporate Debtor on development of which it had invested large sums; prolonged litigation hampering the work relating to land acquisition for Yamuna Expressway and Real Estate development /being developed by the Corporate Debtor including various restrictions imposed by National Green Tribunal in respect of Real Estate Projects in Noida where the Corporate Debtor is developing township leading to time and cost overrun etc. Due to these factors and constraints came in the business of the Corporate Debtor, it suffered losses from FY 2014-15 onwards resulting into pressure on liquidity which resulted in delays in meeting the obligations towards the lenders a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... osition of Applicant as well as the Respondent that the present application has been filed 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 Bucker 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d recorded in the minutes of JLF held on 18.10.2018 as recorded in the minutes that Shri Sharad Agarwal, Joint General Manager of ICICI Bank informed that ICICI Bank as the lead Bank had written to RBI regarding finalisation of DRP and successful implementation of the same 18. After explaining in the Reply that there is no default on the part of the Corporate Debtor in repaying the debt in Bucket 2B due to Scheme of Arrangement in this respect, has already been devised within the time limit provided by the RBI, the Corporate Debtor referred to a Writ Petition (Civil) No. 744 of 2017 in case of Chitra Sharma and Ors. Vs. Union of India and Ors filed to Hon ble Supreme Court in which RBI moved an application dated 18.01.2018 praying that they should be allowed to follow the recommendation of the Internal Advisory Committee (hereinafter referred as IEC ) in accordance with the Ordinance dated 04.05.2017 as regards the Jaiprakash Associates Ltd. On disposal of this Writ Petition, vide order dated 09.8.2018, the Hon ble SC allowed the above mentioned application of the RBI. A copy of this order dated 09.08.2018 has been annexed as Annexure-6 with the Reply. After referring to this order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... resolve such stressed accounts within six months (i.e. by 13.12.2017), failing which insolvency resolution proceedings under IBC should be initiated by 31.12.2017. It is contended by the Corporate Debtor that the lending Banks/Fls have finalized a resolution plan for the stressed accounts of the Corporate Debtor well before the timeline of 13.12.2017, as notified by the RBI. All the required steps were taken by the lenders and the Corporate Debtor well within the specified timeline of 13.12.2017. Thus, Resolution plan of the Corporate Debtor was implemented way before 13.12.2017. 22. In Para 6 of RBI's Press Release dated 13.06.2017, it was stated that the details of the resolution framework in regard to the other non- performing accounts will be released in the coming days. Accordingly, RBI has issued circular dated 12.02.2018 - Resolution of Stressed Assets - Revised Framework. Para 18 of the said circular provides as under: I. Withdrawal of extant instructions: 18. The extant instructions on resolution of stressed assets such as framework for revitalizing distressed assets, corporate debt restructuring scheme, flexible structuring of existing long term project loans, strate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cation is that the debt restructured to be put under the Bucket 2B , which has been accepted by the Applicant Bank i.e. ICICI Bank Ltd. as per its sanction letter dated 19.05.2017, is to be transferred to an SPV under the Scheme of Arrangement. The said scheme though finalised but pending for final approval before this Tribunal, is effective from 01.7.2017. Such restructuring of the loan facility was done in compliance of RBI Press Release dated 13.06.2017 under which the stressed accounts for which no resolution plan was finalised, the RBI advised the banks to resolve such stressed accounts within six months (i.e. by 13.12.2017), failing which CIRP under IBC should be initiated. All necessary steps were taken by the lenders and Corporate Debtors well within the specified time limit of 13.12.2017 and therefore, as per the criteria laid down by the IAC, the resolution plan for the stressed account of the Corporate Debtor was not only finalised and agreed upon but also acted upon and implemented well before 13.12.2017. In order to show that there is no default and resolution plan under CRRP has been successfully implemented , the Corporate Debtor has also relied upon certain internal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... defaulters on August 28, 2017, which included the Corporate Debtor. A copy of the defaulters' list circulated by RBI on August 28, 2017, is attached herewith and marked as Annexure 1 from pages 22 to 26 of the rejoinder . In this letter, the Corporate Debtor i.e. M/s Jaiprakash Associates Limited has been shown as borrower of the Applicant Bank i.e. ICICI Bank Ltd. in which it is lead bank, with more than 60 percent of total outstanding having been NPA since 30.06.2016 and SDR time lines also exceeded and it has been advised to complete the resolution process and implement a viable resolution plan for these accounts before 13.12.2017 failing which , insolvency proceeding in respect of the concerned account may be initiated under the provision of the IBC before 31.12.2017, unless already initiated . It is also further advised in the said letter of the RBI that any resolution plan finalised in respect of the said accounts outside the IBC will be subject to a rating requirement i.e. in all resolution plans where the lenders continue to hold a portion of the debt, the residual debt must be rated as investment grade by two external credit rating agencies (CRAs) accredited by the RB ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted against Jaypee Infratech Limited, a company promoted by the Corporate Debtor. The lead case was Chitra Sharma and Ors. v. Union of India and Ors., W.P.(C) 744 of 2017 ( Chitra Sharma ). In this case, the Hon'ble Supreme Court directed the Corporate Debtor to deposit Rs. 2,000 crores and issued specific orders regarding the non-alienation of assets and the creation of third-party security interests by JAL. In the meantime, as submitted by the Applicant, by December 31, 2017, the RBI had not recognized the DRP as the same could not completely meet the requirements as mentioned in its directions as issued earlier discussed above. Subsequently, during the hearing on January 8, 2018, the RBI filed an application for directions before the Hon'ble Supreme Court, requesting permission to initiate the CIRP against the Corporate Debtor. The RBI highlighted that the Banking Regulation (Amendment) Ordinance, 2017 had introduced Section 35AA to the Banking Regulation Act, 1949, empowering the Central Government to authorize the RBI to direct banks to commence CIRP in cases of default. Following this, the Central Government authorized the RBI to issue such directives to banking compa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... please note that while we have accorded our in principle approval on the SPV Scheme through postal ballot Form dated January 19, 2018, pursuant to your notice, we request you to (i)approach the Hon ble Supreme Court for seeking necessary orders for permitting JAL TO (a) fulfill its obligations including creation of security Interest for the benefit of Its lenders under and in relation to the MRA, WCTL, FA and (b) proceed with the SPV Scheme, pursuant to the Debt Realignment Plan and (iii) produce this letter before the NCLT prior to NCLT Issuing Its order sanctioning the SPV Scheme. It is also specifically pointed out that since the Supreme Court, by its order (during the pendency of the case of Chitra Sharma ( supra )), did not permit the transfer of assets as envisaged, the DRP could not be implemented within the timeline stipulated by the RBI i.e. 13.12.2017. 37. The Applicant has also pointed out that the Master Restructuring Agreement (MRA) covers only two facilities of the Applicant i.e Bucket 1 and Bucket 2B. However, the Applicant i.e. ICICI Bank herein, has granted several other facilities to the Corporate Debtor. It has been explained that the Application has been filed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... liance on the Sanction Letter is misplaced. Furthermore, the Master Restructuring Agreement (MRA) executed by the Lenders and the Corporate Debtor pertains only to the Bucket 2A facility, which is not part of the Application; therefore, the MRA is neither relevant nor material to this Application. 42. Additionally, the Applicant explained that it did not refer to the Minutes of the Independent Evaluation Committee dated June 12, 2017, and June 19, 2017, or the Minutes of the Joint Lenders Forum Meeting dated June 22, 2017, as these relate to the Draft Plan, which has not yet been fully implemented and is therefore irrelevant for the purpose of this Application. 43. It has been further averred by the Applicant that the Corporate Debtor has also attempted to argue that the Applicant did not act under the RBI Press Release dated June 13, 2017, which mandated that a resolution plan be finalized and approved within six months, failing which proceedings under the IBC should commence by December 31, 2017. The Applicant submits that the insolvency application was not filed by December 31, 2017, because the RBI, through a letter dated December 28, 2017, advised lenders to await further inst ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g authority has merely to see the records of the information utility or other evidence produced by the financial creditor to satisfy itself that a default has occurred . It is of no matter that the debt is disputed so long as the debt is due .. (Emphasis supplied) After relying upon the above decision of the Hon ble Supreme Court, It has been submitted that the Corporate Debtor s contentions that for admission of an application filed u/s 7 of the IBC, a case of insolvency has to be made out is an incorrect interpretation of law as there is no such requirement under the IBC and therefore, this Application deserves to be admitted in view of the fact that default in the present case has been established. 46. As regards the information about alleged default as available with Credit Information Company, CIBIL not having been attached with the application, it is explained that such report could not be submitted earlier due to error in processing from CBIL for which correspondence with CIBIL was enclosed with the Application. Now, as the CIBIL Report dated 19.08.2018 has already been received and the same has been annexed with the Rejoinder in Annexure-2 from pg 27 to 548 . It is also poi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entation and acknowledged the remaining tasks concerning the restructuring plan to be pending. It was clearly discussed that the Hon'ble Supreme Court's order, which restrained JAL or its promoters from creating any third-party interest in the assets, was preventing the lenders of the Corporate Debtor from participating in any security documents as it could lead to contempt of court. 50. The Applicant also submitted that the Respondent's claim of a 23-day delay in filing the Application was incorrect. The 15- day deadline given by the RBI in its letter dated August 14, 2018, expired on August 29, 2018. The Applicant filed its Application on September 6, 2018, which is only an 8-day delay. This delay is justified by the fact that after the RBI directive on August 14, 2018, the Applicant began preparing the Application (Form-1) according to the IBC requirements. Due to the numerous facilities in default and the substantial amount of documentation needed, it took time to gather all necessary documents. Additionally, time was required to finalize the proposed Interim Resolution Professional, with discussions held in core committee meetings on August 27 and August 30, 2018, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e decided in respect of the present Application u/s 7 are: (a) Maintainability of the Application, (especially in the light of the decision of the Hon ble Supreme Court in case of Dharni Sugar And Chemicals Ltd. vs. Union of India 2019 (5) SCC 480 ) (b) Whether there is default within the meaning of IBC and whether Application can be admitted after restructuring of loans, especially when approval for the Scheme of Arrangement for restructuring of the loans is pending in NCLT (c) Applicability of the decision of the Ho ble Supreme Court in Vidarbha Industries Power Ltd. vs. Axis Bank Ltd. (Civil Appeal No. 4633 of 2021) dated 12.07.2022 57. Before adverting to above issues, some basic facts of the case have been considered by us. It is an admitted fact that the Corporate Debtor has availed the Financial Facilities in form of taking various loans and other working capital facilities from the Financial Creditor by entering into loan agreements. The loans were sanctioned through 6 different facility agreements, the details of which have already been discussed in para 4 of this order. The total amount of default as stated in Part-IV of the application is Rs. 12,691,026,803.06/- and date ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the present Petition/Application being not maintainable. However, issues raised regarding non-maintainability of the present Petition/Application has been countered by the Ld. Counsel of the Financial Creditor arguing that the present application has been filed in view of the direction of the Hon ble Supreme Court in the case of Chitra Sharma (supra) and validity of filing of this application has also been upheld by the Hon ble Allahabad High Court in a writ petition bearing no. 31329 of 2018 filed by the Corporate Debtor in the matter of Jaiprakash Associates Ltd. vs Reserve Bank of India Ors., challenging filing of this Petition/Application on the direction of RBI vide its letter dated 14.08.2018 ; and later SLP filed in Hon ble Supreme Court against the order of the Hon ble Allahabad High Court has also been dismissed. Therefore, it is forcefully argued by the Ld. Counsel for the Applicant that filing of the present application is legally maintainable, however, the issue relating to existence of debt and default in terms of the provision of the IBC can be adjudicated on the merit of the case after considering all the facts and supporting documents as presented and argued during ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with the submission of the RBI that any further viable delay in resolution would adversely impact a resolution being found for JAL and JIL. The facts which have emerged before the Court from the application filed by the RBI clearly indicate the financial distress of JAL and JIL .. 62. As a huge amount of loans taken by the Corporate Debtor from a consortium of banks were outstanding as on 31.03.2017 to the tune of Rs. 28,229.27 crores turning into NPA, a JLF was constituted by these banks with ICICI Bank Ltd., the present Applicant being lead bank and a DRP was approved on 22.06.2017 in terms of the RBI Circular dated 26.02.2014 after discussions and deliberations and holding series of meetings among them since the date when the loans taken by the Corporate Debtor started turning into NPA from the year 2015-16 onwards so as to resolve the stressed loans of the Corporate Debtor to facilitate their repayments after restructuring of the business of the Corporate Debtor. 63. Under DRP, the entire debt and business of JAL was divided into 3 buckets, namely Bucket 1, Bucket 2A and Bucket 2B. It has already been discussed that the present Petition/Application u/s 7 undisputedly has been f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ility of the said application by raising the contention that there is no default committed by the Corporate Debtor. In this regard, the Corporate Debtor contends that subsequent to the date of default mentioned in the Petition/Application u/s 7, a Comprehensive Reorganisation Restructuring Plan (CRRP) as a part of Debt Realignment Plan (DRP) was approved by the JLF on 22.06.2017 to resolve NPAs pertaining to various loan facilities taken from consortium of Banks. As per the Corporate Debtor, upon resolution of NPAs as on 22.06.2017 under the CRRP, the earlier dates of defaults mentioned in the Petition/Application became irrelevant and ceased to exist. 67. Under the approved CRRP, the entire debts of all lenders (including ICICI Bank Ltd.) were trifurcated in three buckets i.e. Bucket 1, Bucket2A and Bucket2B and there is no dispute that the present Petition/Application pertains to that part of the debt of ICICI Bank, which has been put in Bucket 2B. In this regard, it has been contended by the Corporate Debtor that a new sanction letter dated 19.05.2017 was issued by the ICICI Bank Ltd. confirming the trifurcation of debts in three buckets as mentioned above and cessation of inter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndable nor any interest thereon is payable by the Corporate Debtor , hence the question of any default in respect of this part of loan ( which is the subject matter of present petition) does not arise. In this regard, it is also argued by the Ld. Counsel that the Sanction Letter dated 19.05.2017 was duly accepted by Corporate Debtor and hence, it became a binding contract. Consequently, obligations of the parties are to be decided in terms of the new contracts and not the old contracts. In support of his arguments, he relied upon a decision in case of Union of India vs. Kishorilal Gupta AIR 1959 SC 1362 wherein it is held that once the old agreement is substituted by new agreement, the old agreement ceases to exist and obligations of parties have to be decided by referring to the new agreement and not the old agreement. 70. In respect of the Letter dated 19.05.2017 of the Applicant relied upon by the Corporate Debtor as being a new sanction of the loan under Bucket 2B substituting all the old facilities agreements as discussed in para 4 of this order, the Applicant Bank has stated that a reading of this letter in its entirety shows that this Sanction Letter was only with respect to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onsent given earlier by a creditor to Scheme, cannot act as estoppel against a statutory right. 73. It is also argued by the Ld. Sr. Counsel for the Applicant that pendency of the proceeding for sanction of the Scheme of Arrangement will not have an impact on the admission of the Section 7 petition which is an independent proceeding initiated by a lender under IBC. Furthermore, it is argued that it is a settled position of law that IBC is a complete code in itself and IBC is a special statute enacted in a later point in time than the Companies Act, 2013, which is a general statute. Section 238 of the IBC makes it clear that the provisions of the IBC will prevail over the provisions of the Companies Act, 2013 in case of conflict. In support of this contention, the Ld. Sr Counsel relied upon the decision of the Hon ble Supreme Court in case of Navinchandra Steels Pvt. Ltd. vs. SREI Equipment Finance Ltd, (2021) 4 SCC 435 in which it is held that the IBC is a special statute that must prevail in the event of conflict over Companies Act, which is a general statute. Furthermore, the Supreme Court also held that Section 7 is an independent proceeding unaffected by other proceedings inclu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd there is no disciplinary proceeding against the proposed IRP. Considering that all the above elements are fulfilled as required under IBC, this Hon ble Tribunal ought to admit the Section 7 Petition. 76. In order to show that there is no default , apart from relying upon the sanction letter dated 19.05.2017 of the Applicant Bank , the Corporate Debtor has relied on two internal Correspondences between RBI and the Applicant Bank one dated 07.12.2017 in which RBI has been informed that the loan account of the Corporate Debtor after CRRP, may be considered to have been resolved and the second dated 13.08.2018 written by the Applicant Bank to RBI just after the decision of the Hon ble Supreme Court in the case of Chitra Sharma on 09.08.2017 , suggesting that the debt of the Corporate Debtor need not to be referred to NCLT under IBC. 77. Against the letter dated 07.12.2017 written to RBI as mentioned above, it is argued by the Ld. Sr. Counsel for the Applicant that the internal correspondences and previous deliberations between ICICI Bank and RBI or any other authority are irrelevant factors for the purpose of Section 7 Petition and the same cannot act as an estoppel against ICICI Ba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the restructuring of the loan under consideration in this Application due to the same becoming NPA in 2015 stating that . (v) Out of the total debt of Rs. 13,590 crores, the debt aggregating Rs. 2543.55 stands settled through Debt Assets Swap and for the balance debt of Rs. 11833.55 scheme of arrangement has been framed 80. Furthermore, the subsequent argument taken by the Corporate Debtor is that once a default will always not remain default either due to subsequent payments made or any restructuring of loan is done. In present case, as entire loans of the Corporate Debtor were restructured through CRRP under DRP trifurcating them into three buckets and the loan under consideration in this order was put in Bucket 2B . For resolution of the loan in Bucket 2B, as contended by the Corporate Debtor , a new sanction letter dated 19.05.2017 was issued by the Applicant Bank with new terms and condition and this loan was hived off to a SPV under a Scheme of Arrangement transferring a land to it from JAL as security this land . This CRRP was approved by the JLF in the meeting held on 22.06.2017. Therefore, as contended by the Corporate Debtor, with such CRRP arrangement, the outstanding lo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mitting the application for CIRP u/s 7. Accordingly, we don t find force in the argument of the Corporate Debtor placing reliance on the letter dated 19.05.2017 of the Applicant Bank to show that no default has occurred, hence this argument of the Corporate Debtor is rejected. 82. Another plea of the Corporate Debtor is that default on repayment of debt that occurred earlier in 2014-15, has ceased to exist after CRRP under DRP has been approved and an Scheme of Arrangement for Bucket 2B loan has been finalised. This Scheme has been made for the resolution of the debt in Bucket 2B keeping in view the direction of the RBI in its letter dated 22.08.2017 , as per which the JLF including ICICI as a lead Bank was required to finalise a resolution plan for JAL and it has also been provided that in the event that a viable resolution plan is not finalised and implemented before 13.12.2017, insolvency proceedings under the provisions of the IBC may be initiated before 31.12.2017. There is no dispute that the Scheme for the resolution of the Bucket 2B loan could not be implemented till 13.12.2017 as the same could not be approved by the NCLT. This Scheme is still pending for approval, hence r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n'ble Supreme Court in Innoventive Industries Ltd. v. ICICI Bank and Anr, (2018) 1 SCC 407 The Hon'ble Supreme Court in the case of Innoventive has held as follows: 28. When it comes to a financial creditor triggering the process, Section 7 becomes relevant. Under the Explanation to Section 7(1), a default is in respect of a financial debt owed to any financial creditor of the corporate debtor- it need not be a debt owed to the applicant financial creditor. Under Section 7(2), an application is to be made under sub-section (1) in such form and manner as is prescribed, which takes us to the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016. Under Rule 4, the application is made by a financial creditor in Form 1 accompanied by documents and records required therein. Form 1 is a detailed form in 5 parts, which requires particulars of the applicant in Part I, particulars of the corporate debtor in Part II, particulars of the proposed interim resolution professional in Part III, particulars of the financial debt in Part IV and documents, records and evidence of default in Part V. Under Rule 4(3), the applicant is to dispatch a copy of the application ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a default has not occurred. Based upon its decision, the adjudicating authority must then either admit or reject an application, respectively. These are the only two courses of action which are open to the adjudicating authority in accordance with Section 7(5). The adjudicating authority cannot compel a party to the proceedings before it to settle a dispute.... 5) Thus, the only aspect which this Hon'ble Tribunal needs to examine is as to whether: (a) default has occurred; (b) application is complete; and (c) whether any disciplinary proceedings is there against the proposed IRP. In the present case, default has occurred and ICICI Bank's Section 7 Petition is complete and there is no disciplinary proceeding against the proposed IRP. Considering that all the above elements are fulfilled as required under IBC, this Hon'ble Tribunal ought to admit the Section 7 Petition. .. 86. After considering the entire facts of the case so far discussed and taking into account the decision of the Apex Court in the above mentioned cases, we find that in the present case, default has occurred and ICICI Bank s Section 7 Petition is complete providing all the details of debts and default ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rd, it has been submitted that the Corporate Debtor is handling project of strategic importance both in India and abroad for various Government Departments/ Undertakings. Such strategically important projects requiring high technical expertise in execution will be seriously disrupted if CIRP is initiated against the CD. Details are such projects mainly relating to Hydro Power Projects have been provided in the Second Supplementary Affidavit filed by the Corporate Debtor. b. OVERALL FINANCIAL HEALTH OF THE CORPORATE DEBTOR It is submitted that the Corporate Debtor is asset rich company and even after sale of cement plants to resolve the loans under Bucket 1 and Bucket 2A, following assets will remain with the company o Real Estate Business Noida and Greater Noida about 11000 Units; o 5 Five Star Hotels/Resort - 2 at Delhi, 1 at Agra (300 Rooms with International Conference Centre, 1 at Mussorie 1 Resort at Greater Noida o Two Golf Courses at Noida and Greater Noida; o Formula One Sports Complex and Cricket Stadium with Real Estate; o Engineering Construction Division Assets, Heavy construction equipment Machinery; Land buildings, especially skilled and experienced work force, etc. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... harge its debts. Other reasons of feasibility, financial health , viability and expediency have not been found by us being of any relevance to have any bearing on admission of the Application for initiating CIRP against the Corporate Debtor , once the default has occurred. In this regard , the object of the IBC as evident from its Preamble is to be referred. While holding the constitutional validity of the IBC , the Hon ble Supreme Court has analysed the Preamble of the IBC in the case of Swiss Ribbons Pvt. Ltd. vs. Union of India ( Writ (Civil) No. 99 of 2018) dated 25.01.2018 holding that the Code is first and foremost , a Code to reorganise and insolvency resolution of corporate debtors . Unless such reorganisation is effected in a time bound manner , the value of the assets of such persons will deplete. In this judgment , the purpose of IBC is further elaborated stating that the Code is thus a beneficial legislation which puts the corporate debtor back on its feet, not being a mere recovery legislation for creditors. The interests of the corporate debtor have, therefore, been bifurcated and separated from that of its promoters / those who are in management. The relevant part of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that of its promoters / those who are in management. Thus, the resolution process is not adversarial to the corporate debtor but, in fact, protective of its interests. The moratorium imposed by Section 14 is in the interest of the corporate debtor itself, thereby preserving the assets of the corporate debtor during the resolution process. The timelines within which the resolution process is to take place again protects the corporate debtor s assets from further dilution, and also protects all its creditors and workers by seeing that the resolution process goes through as fast as possible so that another management can, through 40 its entrepreneurial skills, resuscitate the corporate debtor to achieve all these ends. [Emphasis Supplied] 90. In the above judgment of Swiss Ribbons , it has been further held that in IBC the Legislative policy now is to move away from the concept of ―inability to pay debts to ―determination of default. So, now examining the default has become necessary rather than to go in the reasons of not paying the debts and assess whether the corporate debtor has capacity, viability, feasibility or is able to attain a financial health to be able to pay ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,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. RBI has carried out this exercise as a matter of economic policy in its capacity as the prime banking institution in the country, entrusted with a supervisory role, and the power to issue binding directions. The position of the RBI as an expert regulatory body particularly in matters of economic and financial policy has been reiterated in several decisions of this Court: [R.K.Garg 44 v Union of India11, Peerless General Finance and Investment Co.Ltd. v RBI12 , TN Generation and Distribution Corpn. Ltd. v CSEPDI-Trishe C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing in Bucket 2B. Such amount to be received from arbitration is a meagre amount to pay off the entire debt. The amount of about Rs. 300 crores have already been paid back out of Rs. 750 crores deposited by the Corporate Debtor on the direction of the Hon ble Supreme Court in case of Chitra Sharma but no payment to Financial Creditor out of this money is reported to have been made. So, we don t find any force in the plea taken before us to apply our discretion in not admitting the present Application for initiating CIRP against the Corporate Debtor following the judgment in case of Vidarbha Industries Power Ltd. in which the receivables were determined and it was three times the amount of the debt and was due for being received, which is not the case in the present Application, hence in our considered opinion the judgment of the Vidarbha Industries Power Ltd. has not been found to be applicable on the facts of the present Application under consideration in this order. 95. We have also examined the applicability of the decision of Hon ble Supreme Court in the case of Vidarbha Industries Power Ltd. and further, review petition filed in this case. On the review petition in case of Vid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is to dispatch a copy of the application filed with the adjudicating authority by registered post or speed post to the registered office of the corporate debtor. The speed, within which the adjudicating authority is to ascertain the existence of a default from the records of the information utility or on the basis of evidence furnished by the financial creditor, is important. This it must do within 14 days of the receipt of the application. It is at the stage of Section 7(5), where the adjudicating authority is to be satisfied that a default has occurred, that the corporate debtor is entitled to point out that a default has not occurred in the sense that the debt , which may also include a disputed claim, is not due. A debt may not be due if it is not payable in law or in fact. The moment the adjudicating authority is satisfied that a default has occurred, the application must be admitted unless it is incomplete, in which case it may give notice to the applicant to rectify the defect within 7 days of receipt of a notice from the adjudicating authority. Under sub-section (7), the adjudicating authority shall then communicate the order passed to the financial creditor and corporate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ocess, Section 7 becomes relevant. Under the Explanation to Section 7(1), a default is in respect of a financial debt owed to [Ed.: The word between two asterisks has been emphasised in original.] any [Ed.: The word between two asterisks has been emphasised in original.] financial creditor of the corporate debtor it need not be a debt owed to the applicant financial creditor. Under Section 7(2), an application is to be made under sub-section (1) in such form and manner as is prescribed, which takes us to the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016. Under Rule 4, the application is made by a financial creditor in Form 1 accompanied by documents and records required therein. Form 1 is a detailed form in 5 parts, which requires particulars of the applicant in Part I, particulars of the corporate debtor in Part II, particulars of the proposed interim resolution professional in Part III, particulars of the financial debt in Part IV and documents, records and evidence of default in Part V. Under Rule 4(3), the applicant is to dispatch a copy of the application filed with the adjudicating authority by registered post or speed post to the registered of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thority was apprised of the fact that the claims of 140 investors had been fully settled by the respondent. The respondent also noted that of the claims of the original petitioners who have moved the adjudicating authority, only 13 have been settled while, according to it 40 are in the process of settlement and 39 are pending settlements . Eventually, the adjudicating authority did not entertain the petition on the ground that the procedure under IBC is summary, and it cannot manage or decide upon each and every claim of the individual homebuyers. The adjudicating authority also held that since the process of settlement was progressing in all seriousness , instead of examining all the individual claims, it would dispose of the petition by directing the respondent to settle all the remaining claims seriously within a definite time-frame. The petition was accordingly disposed of by directing the respondent to settle the remaining claims no later than within three months, and that if any of the remaining original petitioners were aggrieved by the settlement process, they would be at liberty to approach the adjudicating authority again in accordance with law. The adjudicating authority ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... there are good reasons not to admit the petition. 88. The adjudicating authority (NCLT) has to consider the grounds made out by the corporate debtor against admission, on its own merits. For example, when admission is opposed on the ground of existence of an award or a decree in favour of the corporate debtor, and the awarded/decretal amount exceeds the amount of the debt, the adjudicating authority would have to exercise its discretion under Section 7(5) (a) IBC to keep the admission of the application of the financial creditor in abeyance, unless there is good reason not to do so. The adjudicating authority may, for example, admit the application of the financial creditor, notwithstanding any award or decree, if the award/decretal amount is incapable of realisation. The example is only illustrative. 89. In this case, the adjudicating authority (NCLT) has simply brushed aside the case of the appellant that an amount of Rs 1730 crores was realisable by the appellant in terms of the order passed by APTEL in favour of the appellant, with the cursory observation that disputes if any between the appellant and the recipient of electricity or between the appellant and the Electricity Reg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sel of Corporate Debtor is liquidity crunch due to delays in government sanctions /approvals, prolong litigation with respect to land acquisition for Yamuna Express Way, economic slowdown, change in government policies, etc. which is always present when a business is carried out and that cannot have any bearing on initiation of proceeding under Section 7 of IBC, when there is a debt and default in repayment of such debt as provided under Section 7 of IBC and also, as held by the Hon ble Supreme Court in the case of Innoventive Industries Limited (Supra) . 97. In view of our above findings, we are satisfied that the Applicant/Financial Creditor has proved the debt and the default, which is more than the threshold limit of one lakh at the relevant time and even more than Rs. 1crore the limit applicable at present. The application is also filed within limitation period and complete in all respect and a resolution professional is also proposed as per section 7(3)(b). Accordingly, the present application under Section 7, has been found fit to be admitted as per Section 7(5) of the I B Code, 2016. 98. The Applicant has filed the interim application bearing no. 263 of 2024 wherein the Fin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erms of Section 14, the following prohibitions are imposed, which must be followed by all and sundry: (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 action 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 the possession of the corporate debtor. (e) It is further directed that the supply of essential goods or services to the corporate debtor as may be specified, shall not be terminated or suspended or interrupted during the moratorium period. (f) The provisions of Section 14(3) shall, however, not apply to such transactions as may be notified by the Central Go ..... X X X X Extracts X X X X X X X X Extracts X X X X
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