National Company Law Appellate Tribunal
M/S Indian Mega Agro Anaj Limited vs Axis Bank Limited & Others on 2 January, 2024
NATIONAL COMPANY LAW APPELLATE TRIBUNAL
PRINCIPAL BENCH, NEW DELHI
COMPANY APPEAL (AT) (Insolvency) No. 1461 of 2022
& I.A. No. 4584, 4585, 4586 of 2022
(Arising out of the Order dated 16.11.2022 passed by the National
Company Law Tribunal, Mumbai Bench, Mumbai, Court - V in C.P. (IB)/
585 (MB) 2021)
IN THE MATTER OF:
Shri Ajay Kumar Baheti Erstwhile Director
of M/s. India Mega Agro-Anaj Limited
D-9, Vishnu Complex, V.I.P. Road,
Nanded- 431 602, Maharashtra ...Appellant
Versus
1. Axis Bank Limited
A Company incorporated under,
The Companies Act, 1956,
Having its Registered Office
at Trishul, 3rd Floor, Opposite Samartheshwar
Temple, Law Garden, Ellis Bridge,
Ahmedabad- 380 006, Gujarat.
Email id: [email protected] ...Respondent No. 1
2. Mr. Krishna Chamadia,
Insolvency Professional,
M/s. India Mega Agro-Anaj Limited
U01110MH2010PLC204475
Registration No. IBBI/IPA-001
IP-P00694/2017-2018/1220
Having Registered Address at
B-1804, Raheja Heights, Off General
A K Viadya Marg, Malad East,
Mumbai 400 097, Maharashtra.
Email- [email protected] ...Respondent No. 2
3. Bank of Baroda
Through branch manager,
Having its Branch at Parbhani Branch
At Daulat, Shivaji Chowak,
District-Parbhani, Maharashtra-431401
Email id: [email protected] ...Respondent No. 3
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Comp. App. (AT) (Ins.) No. 1461 of 2022
Present
For Appellants: Mr. Akash Kadade, Adv.
For Respondents: Mr. Obhirup Ghosh, Mr. Sonal Kumar Singh, Ms.
Sidhika Dewidi, for R-1.
Ms. Vishrutyi Sahni, for R-2.
JUDGEMENT
(02.01.2024) NARESH SALECHA, MEMBER (TECHNICAL)
1. The present Appeal i.e., Company Appeal (AT) (Insolvency) No. 1461 of 2022 has been preferred against the order of the National Company Law Tribunal, Mumbai Bench, Mumbai, Court-V (in short 'Adjudicating Authority') in C.P. (IB)/ 585 (MB) 2021 against the order dated 16.11.2022, whereby, the application under Section 7 of the Insolvency & Bankruptcy Code, 2016 (in short 'Code') was accepted.
2. The Appellant herein is Shri Ajay Kumar Baheti Erstwhile Director of India Mega Agro-Anaj Limited. The Respondent No. 2 herein is the Corporate Debtor i.e. M/s India Mega Agro-Anaj Limited being represented by Mr. Krishna Chamadia. The Appellant stated that the Corporate Debtor was declared as 'Designated Food Park' by the Government of India and 'Mega Project' by the State Government. The Appellant submitted that the Corporate Debtor was entitled to get subsidy and incentives based on the investments made in the Corporate Debtor. Admittedly, the Corporate Debtor had taken the financial assistance and credit facilities from various Financial Creditors, inter-alia from the Respondent No. 1-Axis Bank Limited and the Respondent No. 3 - Bank of Baroda.
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Comp. App. (AT) (Ins.) No. 1461 of 2022
3. The Appellant submitted that the Corporate Debtor was having and operating various flour mill, cattle and poultry feed factory, rise mill, oil mill and biscuit unit, milk processing plant etc., and the projects were developed with an investment of about Rs. 127 Crores.
4. The Appellant stated that on the basis of one baseless F.I.R., he was arrested under 'Essential Goods Act' and was behind bars for considerably long period which affected the working of various units of the Corporate Debtor causing problems for the Corporate Debtor. It is the case of the Appellant that during this intervening period of his arrest and release from the jail, the Corporate Debtor could not function properly and therefore, it could not generate revenues. Consequently, the repayments to the Financial Creditors were affected and as a result the loan accounts of the Corporate Debtors were classified as Non-Performing Assets (in short 'NPA').
5. The Appellant castigated the Respondent No. 1 who was well aware about difficult circumstances of the Corporate Debtor and despite this the Respondent No. 1 went ahead to issue loan recall notice on 13.03.2019 for Rs. 48,96,58,946.26/- and later also issued a demand notice under Section 13(2) of SARFAESI Act on 22.05.2016.
6. The Appellant stated that on 05.02.2020, the Financial Creditors again called upon the Corporate Debtor to make payment of Rs. 53,31,65,106.64/- due as on 31.01.2020 within 15 days from the receipt of the Notice.
7. It is the case of the Appellant that due to financial stress of the Corporate Debtor, he could not make the timely payments and the -4- Comp. App. (AT) (Ins.) No. 1461 of 2022 Respondent No. 1 filed an application under Section 7 of the Code for a resolution of unresolved financial debt Rs. 62,21,30,534.65/-, despite knowing that the Corporate Debtor was on verge of revival as going concern.
8. The Appellant also claimed that he was illegally arrested and detained in case Registered by Director of Enforcement, sub-zonal Office, Nagpur for alleged offence under Section 3 and 4 of the Prevention of Money Laundering Act, 2009 (in short 'PMLA'). The Appellant submitted that due to his detentions, various food processing units of the Corporate Debtor came to standstill and which led to accumulating of debts.
9. The Appellant stated that a forensic audit of the account of the Corporate Debtor was conducted independently by both the banks and came to conclusion that the account did not fall under the category of fraud as per the RBI master Circular dated 01.07.2015 and therefore, the account be classified as "non-fraud" in the Joint Lenders' meeting held on 03.03.2022.
10. The Appellants assailed Adjudicating Authority in considering that the Appellant did not have funds for upfront payments to Axis bank ignoring the fact that the Appellant was willing to submit fresh resolution plan showing financial figure that company can repay 100% amount within 5-7 year.
11. The Appellant submitted that the Corporate Debtor has started operation with Bank of Baroda's current account under cutback arrangement @2.50% of turnover and from 16.12.2022 to 02.01.2023, company's turnover was Rs. 1.79 Crores, which ought to increase gradually and reach optimum level in due course.
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Comp. App. (AT) (Ins.) No. 1461 of 2022
12. It is the case of the Appellant that the Corporate Debtor entered into Joint Venture cum Job Work agreement with Shree Shyam traders for Solvent Extraction unit. Also, company has received offer letters for Dairy Unit, Dall Mill and Bakery Unit. It is further the case of the Appellant that they appointed one of the reputed consultancy firms in India 'BOBCAPS' (Subsidiary company of Bank of Baroda) for preparation of Resolution plan and also to bring Investor to invest in the company.
13. The Appellant stated that Company needs at least 2 months' time to prepare and submit concrete resolution plan.
14. The Appellant submitted that as on 2019, total outstanding was Rs. 153 crores. against this, the Company is eligible for state subsidy/ incentives of Rs. 120 crores and Central subsidy. Apart from this, operating profit of the company will ensure the repayment of liabilities.
15. The Appellant submitted that he got bail from the Hon'ble Bombay High Court and successfully resumed operation of five food processing units and was in process of receiving considerable subsidies from the Government of India and from the State Government which could have been utilised for repayment of the Financial Debts of the Respondents.
16. The Appellant submitted that he had prepared short Resolution Plan on 21.10.2022 seeking five months time for repayment of Rs. 2.5 Crores as cut-back and Rs. 4.5 Crores to be paid on receipt of subsidy from Government of India.
17. The Appellant stated that he was involved in major agriculture and dairy related industries, giving employment to thousands of people. The -6- Comp. App. (AT) (Ins.) No. 1461 of 2022 Appellant submitted that during financial year 2017-2018 the Corporate Debtor was generating turnover of almost Rs. 450 Crores and was solvent going concern.
18. The Appellant submitted that the Corporate Debtor has paid Rs. 17 Crores to consortium bankers even after his accounts were declared as NPA, which shows his clean intentions for settling the financial debts in due course.
19. It is the case of Appellant that only due to unreasonable attitude of the Respondent No. 1 and lack of proper appreciation by the Adjudicating Authority of reasonable chances of revival of the Corporate Debtor, the Impugned Order dated 16.11.2022 was wrongly passed by the Adjudicating Authority.
20. It is also the case of the Appellant that the whole purpose of the IBC is for revival of the Corporate Debtor and not putting a death nail on the Corporate Debtor and therefore, the Adjudicating Authority failed to appreciate the whole case.
21. The Appellant submitted that in March, 2019 subsidy of 1.66 Lakh was transferred to the Respondent No. 1 and in the financial year 2020 Rs. 5.14 Crores was paid to the Bank of Baroda who is Respondent No. 3 herein as cut-back arrangement. It is the case of the Appellant that considering positive attitude of the Corporate Debtor and the chances of revival, the Respondent No. 3 always supported the Corporate Debtor unlike the Respondent No. 1 who has been putting all hurdles in revival of the Corporate Debtor.
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Comp. App. (AT) (Ins.) No. 1461 of 2022
22. The Appellant submitted that the Corporate Debtor is eligible for subsidy and incentives of entire investment of Rs. 120 Crores provided that all the units are in operation. The Appellant submitted that if the Corporate Debtor is allowed to continue operation without putting the Corporate Debtor under the CIRP, he would have been entitled to receiving such huge subsidies. In this connection, the Appellant stated that the Respondent No. 3 i.e., Bank of Baroda was willing to resolve the outstanding financial debts through OTS.
23. The Appellant also submitted that after obtaining the stay order from this Appellate Tribunal on 06.12.2022, he has repaid Rs. 4.41 Crores and has been in active discussion with Financial Creditors with OTS proposal to resolve the issue.
24. Concluding his arguments, the Appellant requested this Appellate Tribunal to set aside the Impugned Order.
25. Per-contra, the Respondent No. 1 i.e., Axis Bank denied all the averments made by the Appellant treating these as misleading and without any substances.
26. The Respondent No. 1 also opposed the averments of another Financial Creditors/ Bank of Baroda, the Respondent No. 3 herein.
27. It is the case of the Respondent No. 1 that the Appellant was permitted for meetings in order to find resolution , where it was held that the Corporate Debtor shall submit proper Resolution Plan at the earliest. However, pursuant to the said meetings, the Corporate Debtor failed to submit an appropriate resolution plan to Respondent No. 1 and on multiple -8- Comp. App. (AT) (Ins.) No. 1461 of 2022 occasions submitted deficient resolution plans which were merely excel sheet-based projections and were devoid of any documentary support and lacked any sort of accountability.
28. The Respondent No. 1 mentioned that the Corporate Debtor has not filed balance sheet or financial statements for the Financial Year 2017-18 and the subsequent years till date. Therefore, the Respondent No. 1 denied the request for the restructuring made by the Corporate Debtor. It is the case of the Respondent No. 1 that Resolution Plan of the Corporate Debtor is based on alleged subsidies that may be received from the Government in future, to be used to repay the amounts owed to the Respondent No. 1, which are all deemed assumption and presumptions of the Corporate Debtor without any factual contents. The Respondent No. 1 highlighted that the Corporate Debtor has not made any repayments to the Respondent No. 1 till date even upon being classified as an NPA on 29.01.2019. Furthermore, the unviability of the proposed resolution plan is apparent from the fact that the Corporate Debtor, till date, has not paid any amount as per the proposed plan itself. It is also the case of Respondent No. 1 that the bank cannot accept any resolution plan which is based on contingent receipt of subsidies from the government by the Corporate Debtor and therefore, the resolution plan of Corporate Debtor was finally rejected by the Respondent No. 1 vide letter dated 06.12.2022.
29. The Respondent No. 1 denied the averments of the Appellant that the Corporate Debtor has repaid certain amount of debt, after the account of the CD being held as NPA. The Respondent No. 1 stated that the Corporate -9- Comp. App. (AT) (Ins.) No. 1461 of 2022 Debtor till date has not paid any amount to the Respondent No. 1 under the purported cut back arrangement with Respondent No. 3, although the Respondent No. 1 has about 35% share in the consortium.
30. The Respondent No. 1 emphasised that the Impugned Order was correctly passed by the Adjudicating Authority based on acknowledgement of debt by the Corporate Debtor dated 13.10.2017. The Respondent No. 1 submitted that the Appellant herein has not disputed the said acknowledgement of debt in the present Appeal. The Respondent No. 1 also submitted that Respondent No. 1 filed the Statement of Accounts before the Adjudicating Authority and the Corporate Debtor had not disputed the same. Therefore, the debt is admitted by the Corporate Debtor and not appealed against by the Appellant in the present Appeal. The Respondent No. 1 submitted that the mere intention to repay the debt amount is not sufficient and the Corporate Debtor must have taken appropriate steps to repay the amount to Respondent No. 1 before the Impugned Order was passed by the Adjudicating Authority.
31. The Respondent denied the averment of the Appellant that his arrest by the Enforcement Directorate in ECIR/NGSZO/13/21 under the provisions of the Prevention of Money Laundering Act, 2002 ("PMLA") halted the functioning of the Corporate Debtor, until the Appellant was released on bail by the Hon'ble Bombay High Court vide order dated 07.07.2022 passed in Criminal Application (BA) No. 1149/2021. The Respondent No. 1 stated that the Appellant has only been granted bail and the Criminal Case under PMLA is admittedly pending adjudication.
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Comp. App. (AT) (Ins.) No. 1461 of 2022
32. The Respondent No. 1 that the Corporate Debtor has two other erstwhile Directors apart from the Appellant and even upon the arrest of the Appellant, the Corporate Debtor was not bereft of management at the relevant time. The same is evident from the master data of the Corporate Debtor as available on the website of the Ministry of Corporate Affairs.
33. The Respondent No. 1 castigated the Appellant in wrongly relying on the factum of COVID-19 induced lockdown in the Country to contend that it halted the functioning of the Corporate Debtor. The Respondent No. 1 submitted that as per the record itself, the loan account of the Corporate Debtor was classified as NPA on 29.01.2019 itself which is much prior to the first lockdown imposed by the Government of India on 25.03.2020. It is also submitted that as on 29.01.2019, there wasn't even any threat from the COVID-19 pandemic. It is the case of the Respondent No. 1 that that the Appellant is trying to mislead this Appellate Tribunal with respect to the reason of the Corporate Debtor's inability to repay the Respondent No. 1 of the amounts owed to it and the subsequent classification of the accounts of the Corporate Debtor as NPA on account of pandemic, which is absolutely false averments.
34. The Respondent No. 1 submitted that the Corporate Debtor being eligible under any subsidy does not translate to that the subsidy shall be released to the Corporate Debtor ultimately and such excuse is an attempt on behalf of the Corporate Debtor to stall the CIRP proceedings as the Corporate Debtor had on an earlier occasion as well, claimed that it will receive subsidy in March 2021, however, nothing has materialized till date -11- Comp. App. (AT) (Ins.) No. 1461 of 2022 and neither has the Respondent No. l Bank has received any funds from the Corporate Debtor.
35. The Respondent No. 1 also submitted that the account of Corporate Debtor was classified as NPA in March 2019 itself with effect from 29.01.2019 and the Respondent No. 1 Bank has not received any significant payment since April, 2019. The Respondent No. 1 mentioned that a miniscule amount of Rs. 70,000 was received by the Respondent No. 1 under the cutback arrangement in December, 2022 which does not secure the Respondent No. 1 in any manner as against the huge amount owed by the Corporate Debtor of more than Rs. 62,21,30,534.65/- to the Respondent No. 1 on the date of filing his application under Section 7 of the Code.
36. The Respondent No. 1 submitted that the Appellant as the Erstwhile Director was released on bail in September 2022, i.e., more than 1 year back still the Corporate Debtor failed to submit any cogent Resolution Plan and also the alleged Joint-Venture cum Job Work agreement with Shree Shyam traders for Solvent Extraction unit is merely an agreement for job-work and not an investment made by any investor.
37. The Respondent No. 1 submitted that the Appellant as had appointed BOBCAPS earlier also to rope in potential investors, but, without any success and the Corporate Debtor has again appointed BOBCAPS for preparation of Resolution Plan, however, BOBCAPS has not provided any resolution proposal or brought out any investors. Further, mere appointment of BOBCAPS does not entail that Appellant will be successful in finding investors.
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Comp. App. (AT) (Ins.) No. 1461 of 2022
38. It is the case of the Respondent No.1 that he has given all the opportunities to the Corporate Debtor to make the payments. The Respondent No. 1 stated that it was the Appellant who approached the Respondent No. 1 for various credit facilities and loans and based on their request, credit facilities and loans were granted to the Corporate Debtor. However, the Appellant failed to repay the outstanding financial dues on time, despite several reminders to the Corporate Debtor from the Respondent No.1, therefore, the Respondent No.1 was left with no choice but to classify the accounts of the Corporate Debtor as NPA on 31.01.2019.
39. The Respondent No. 1 stated that he issued a loan recall notice on 13.03.2019 to the Corporate Debtor requesting the Corporate Debtor to repay Rs. 48,96,58,946.26 as on 13.03.2019 along with interest. The Respondent No. 1 submitted that even after loan recall notice, the Appellant failed to make the payments and in order to protect his financial interest, the Respondent No. 1 moved an application under Section 13(2) of SARFAESI Act and issued a demand notice dated 22.05.2019 calling upon the Appellant to make the outstanding payments within 60 days from the date of the notice.
40. It is the case of the Respondent No. 1 that they continued to give many opportunities to the Appellant to settle the account and as a last opportunity to the Corporate Debtor, a notice was issued on 05.01.2020 to the Corporate Debtor to make the payment of Rs. 53,31,65,106.64/- as on 31.01.2020 within 15 days from the receipt of the notice. -13-
Comp. App. (AT) (Ins.) No. 1461 of 2022
41. The Respondent No. 1 submitted that despite lot of persuasion and notices including legal notices, the Appellant miserably failed to meet his commitments and therefore, the Respondent No. 1 was constrained to file the application under Section 7 of the Code before the Adjudicating Authority, which was admitted after detailed examination by the Adjudicating Authority.
42. Concluding his arguments, the Respondent No. 1 submitted that the appeal devoid of any merit deserves to be dismissed.
43. The Respondent No. 3 is another Financial Creditor i.e. Bank of Baroda who requested that the Impugned Order be set aside in view of the viability and overall financial health of the Corporate Debtor. The Respondent No. 3 stated that the Corporate Debtor has majority of its financial indebtedness to two lenders namely, Respondent No. 1 & 3 who would constitute approximately 30% and 70% of the Committee of Creditors of the Corporate Debtor.
44. The Respondent No. 3 stated that the Corporate Debtor has ability to revive and maximise its own value by the revenue generated by its ongoing operations and the financial health of the Corporate Debtor was temporarily hampered due to the certain exigencies faced by the promoter like his arrest.
45. It is the case of the Respondent No. 3 that the Corporate Debtor has assured Respondent No.3 of the repayment of its outstanding dues from the Corporate Debtor under the revised timelines / debt restructuring proposed under the Resolution Plan.
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Comp. App. (AT) (Ins.) No. 1461 of 2022
46. It is the case of the Respondent No. 3 that being a custodian of public funds, is concerned with maximum recovery and in the present case, if a Corporate Debtor is assuring the Financial Creditors of the repayment of its dues without any haircut, there remains no reason whatsoever for the Financial Creditors seek recovery of its dues under the CIRP, which will no doubt entail a haircut.
47. Concluding his arguments, the Respondent No. 3 stated that balancing the interests of all stakeholders concerned, the captioned appeal may be allowed and the Impugned Order admitting the Corporate Debtor into CIRP may be set aside.
Findings
48. We note that the Application was filed by the Respondent No 1 under Section 7 of the Code for unresolved financial debt of Rs. 62,21,30,534.65/-. As per the scheme of the Code, the Financial Creditor can file an application before the Adjudicating Authority along with the proof of default and name of the IRP.
49. From the various averments we have noted that the default was clearly established amounting more than the prescribed threshold limit of minimum Rs. 1 Crore. As per the Code, in such eventuality, the Adjudicating Authority, within 14 days form the date of receipt of such application, need to ascertain the existence of a default and once the Adjudicating Authority is satisfied regarding existence of the default, the application is complete and no disciplinary proceedings are pending against -15- Comp. App. (AT) (Ins.) No. 1461 of 2022 the proposed Resolution Professional, the Adjudicating Authority is required to admit the application.
50. We have noted the pleadings made by the Appellant that the Corporate Debtor was solvent going concern company, which was having turnover of more than Rs. 450 Crores during financial year 2017-2018 and it is only due to his arrest under PMLA and Essential Goods Act, which affected the working of the Company. The Appellant also brought to our notice that based on investments the Corporate Debtor is eligible to receive subsidies and incentives of almost Rs. 120 Crores from the Government of India as well as from the concerned State Governments, during course of time which may range over few years, which would be adequate to repay the outstanding financial debts. We have noted the submissions bringing out that he has received suitable communications from the respective governments and further the Corporate Debtor has engaged BOBCAPS as a consultant for submission of fresh Resolution Plan.
51. The Respondent No. 3 i.e. Bank of Baroda is one of the major Financial Creditor who has supported the Corporate Debtor on these reasons and has given detailed averments in order to support the Appeal made by the Appellant with a request to set aside the Impugned Order in order for the Bank to recovery the money.
52. In contrast, the averments made by the Appellant and the Respondent No. 3, the Axis Bank, the Respondent No. 1 herein, who initiated the original application under Section 7 of the code before the Adjudicating Authority, made out the case that there has been clear case of default over Rs. 1 Crore -16- Comp. App. (AT) (Ins.) No. 1461 of 2022 which has not been paid and after taking all the steps his application for initiating of CIRP was admitted by the Adjudicating Authority.
53. It is further the case of the Respondent No. 1 that the Corporate Debtor has not been able to pay any amount and paid merely Rs. 70,000/- against the outstanding dues of Rs. Rs. 62,21,30,534.65/-.
54. He has denied all the alleged claims of the Appellant regarding BOBCAPS as consultant stating that no such Resolution Plan has been received till date. He has also denied so-called agreement with M/s India Mega Agro Anaj Limited which is merely a paper exercise and at the best an agreement based on which no activity has happened and whole purpose of the Corporate Debtor seems to avoid the liability of making payments to the Financial Creditors.
55. We also note from the averments of all concerns that the entire appeal lies on the factum that the Corporate Debtor is entitled to receive the subsidies and incentives from the Government of India and other concerned State Governments which may tantamount to almost Rs. 120 Crores in coming several years.
56. This Appellate Tribunal raised a pointed query to the Appellant as to whether any such claimed subsidies have been received recently and if so, whether any payments have been made to the Respondent No. 1. The Appellant could not give any specific reply and on the contrary, the Respondent No. 1 Axis Bank denied such averments and stated that the Bak has not receive any payment based on so-called incentives. -17-
Comp. App. (AT) (Ins.) No. 1461 of 2022
57. We find force in the logic of the Respondent No. 1 as discussed in pre- pages.
58. At this stage, we note that the Adjudicating Authority examined various issues raised by the Appellant and gave detailed speaking order. The relevant portion of the Impugned Order dated 16.11.2022 reads as under :-
"Findings
13. The contention of the Corporate Debtor is twofold:
a) The Financial Creditor lacks the authority to file the present Petition. It is his contention that the Financial Creditor being the member bank of the consortium should have initiated present Petition in consultation or with the approval from the lead bank of the consortium i.e. Bank of Baroda or added Bank of Baroda as a necessary party;
b) The Working Capital Consortium Agreement is unregistered and insufficiently stamped.
14. Let us deal with the first contention. In order to deal with the above issues, it is important to read Section 7 (1) of the Code, that reads as under:
"Section 7. (1) A financial creditor either by itself or jointly with other financial creditors may file an application for an application for initiating corporate insolvency resolution process against a corporate debtor before the Adjudicating Authority when a default has occurred. "
In addition to the above, it is also important to look at Article V of the Working Capital Consortium Agreement dated 15.09.2014, that reads as hereunder:
"Article V Clause 4 (i) For all or any purposes aforesaid the Borrower irrevocably constitutes and appoints each of the said -18- Comp. App. (AT) (Ins.) No. 1461 of 2022 Banks to be the Borrower's true and lawful attorney to do and execute for and in the name and on behalf of the· Borrower all or any of the following acts, deeds and things that is to say:
... Clause 4 (i) (d) To demand and receive all debts, sums of money, principal money, dividends, interest and dues of whatever nature."
Therefore, it is very clear from the above two that the Financial Creditor can file an Application under Section 7 either individually or jointly. Even otherwise, lack of consent from a member of consortium and non-joinder of Bank of Baroda as a necessary party has to be raised by the other member of the consortium and not the Corporate Debtor. Therefore, the above objection raised by the Corporate Debtor with regard to non-competence of the Financial Creditor has no legal substance and is liable to be rejected.·
15. The next contention raised by the Corporate Debtor is with regard to insufficient Stamp Duty paid on the documents. It is the contention of the Corporate Debtor:
"The Working Capital Consortium Agreement is unregistered, insufficiently stamped. The said agreement appears to have been executed on a stamp duty of Rs. 400/-. In view of the provisions of the Maharashtra Stamp Act, 1958 the said agreements cannot be read and relied upon particularly for the purpose of admitting an Application under Section 7 of the Insolvency and Bankruptcy Code, 2016 for establishing debt and default "
In this regard it is important to mention here that, the Financial Creditor has filed an Acknowledgement of Debt dated 13.10.2017 which is annexed to the Company Petition at page no. 707, wherein the Corporate Debtor has -19- Comp. App. (AT) (Ins.) No. 1461 of 2022 ·acknowledged the outstanding liability towards the ·Financial Creditor. Apart from that, the Financial Creditor also filed the Statement of Accounts of the Corporate Debtor duly certified as per Bankers' Books Evidence Act, 1891 and the Information Technology Act, 2000 . The Corporate Debtor did not dispute the above 2 documents nor the execution of all the loan documents by them at the time of sanctioning of the loan. Therefore, the debt of the Financial Creditor stands proved through all the above documents even without looking into the Working Capital Consortium Agreement dated 15.09.2014. Hence, the contention of the Corporate Debtor in this regard has to be rejected as per the law laid down by the Hon'ble N CLAT in Praful nanji Satra V/s Vistra ITCL (India) Limited and Others (2022 SCC OnLine NCLAT 336).
16. In the light of the above observations and findings, this Tribunal has no hesitation in holding that the 'Debt' and the 'Default' in this case are proved and also, the Financial Creditor suggested the name of the Interim Resolution Professional the above Company Petition being filed on 30.07.2021 is within time The Petitioner has proposed the name-of lnsolvency Professional. The IRP proposed by the Petitioner, Mr. Krishna Chamadia, having address at B- 1804, Raheja Heights, Off Gen A K Vaidya Marg, Malad East, Mumbai 400 097 Email [email protected] and having registration No. IBBI/IPA-001/IP-P00694/2017-2018/ 1220, to be appointed as the Interim Resolution Professional to conduct the Insolvency Resolution Process.
17. For the aforesaid reasons, this Tribunal did not find any valid reason warranting dismissal of the above -20- Comp. App. (AT) (Ins.) No. 1461 of 2022 Company Petition. Accordingly, the above Petition is Admitted by passing the following:
(Emphasis Supplied)
59. Here we would like to refer to Section 7 of the Code which reads as under :-
7. Initiation of corporate insolvency resolution process by financial creditor.
(1) A financial creditor either by itself or jointly with 2 [other financial creditors, or any other person on behalf of the financial creditor, as may be notified by the Central Government] may file an application for initiating corporate insolvency resolution process against a corporate debtor before the Adjudicating Authority when a default has occurred.
*** (2) The financial creditor shall make an application under sub-section (1) in such form and manner and accompanied with such fee as may be prescribed.
(3) The financial creditor shall, along with the application furnish -
(a) record of the default recorded with the information utility or such other record or evidence of default as may be specified;
(b)the name of the resolution professional proposed to act as an interim resolution professional; and
(c) any other information as may be specified by the Board. (4) The Adjudicating Authority shall, within fourteen days of the receipt of the application under sub-section (2), ascertain the existence of a default from the records of an -21- Comp. App. (AT) (Ins.) No. 1461 of 2022 information utility or on the basis of other evidence furnished by the financial creditor under sub-section (3):
[Provided that if the Adjudicating Authority has not ascertained the existence of default and passed an order under sub-section (5) within such time, it shall record its reasons in writing for the same.] (5) Where the Adjudicating Authority is satisfied that - (a) a default has occurred and the application under sub-
section (2) is complete, and there is no disciplinary proceedings pending against the proposed resolution professional, it may, by order, admit such application; or
(b) default has not occurred or the application under sub- section (2) is incomplete or any disciplinary proceeding is pending against the proposed resolution professional, it may, by order, reject such application: Provided that the Adjudicating Authority shall, before rejecting the application under clause (b) of sub-section (5), give a notice to the applicant to rectify the defect in his application within seven days of receipt of such notice from the Adjudicating Authority.
(6) The corporate insolvency resolution process shall commence from the date of admission of the application under sub-section (5).
(7) The Adjudicating Authority shall communicate-
(a) the order under clause (a) of sub-section (5) to the financial creditor and the corporate debtor;
(b) the order under clause (b) of sub-section (5) to the financial creditor, within seven days of admission or rejection of such application, as the case may be.
(Emphasis Supplied) -22- Comp. App. (AT) (Ins.) No. 1461 of 2022
60. As such, we find that the Adjudicating Authority has not committed any error in the Impugned Order and the Adjudicating Authority was duty bound to admit the application of the Respondent No. 1 and put the Corporate Debtor under the CIRP. Admittedly, in the present case none of the parties disputed the existence of default. The arrest of the Appellant under PMLA for considerable period and alleged likelihood of the incentives does not substantiate the grounds in the appeal which requires our interference in the Impugned Order.
61. The claims of incentives and subsidies at the best, can be treated as contingent future probable receipts which may or may not happen. Such contingent presumptions cannot be basis for setting aside the well-reasoned speaking Impugned Order.
62. In fine, the appeal, devoid of any merit stand dismissed. No Costs. Interlocutory Application(s), if any are Closed.
[Justice Rakesh Kumar Jain] Member (Judicial) [Mr. Naresh Salecha] Member (Technical) Sim