National Company Law Appellate Tribunal
Edelweiss Asset Reconstruction ... vs V Mahesh Irp Of Vasan Health Care Private ... on 13 December, 2021
NATIONAL COMPANY LAW APPELLATE TRIBUNAL AT CHENNAI
(APPELLATE JURISDICTION)
Company Appeal (AT) (CH) (INS) No. 226 of 2021
(Under Section 61 of Insolvency & Bankruptcy Code, 2016)
(Against the Impugned Order dated 22.02.2021 in IA/156/2020 in CA/1/(IB)
2017 passed by the 'Adjudicating Authority', National Company Law
Tribunal, Division Bench - I, Chennai)
In the matter of:
M/s Edelweiss Asset Reconstruction Company Limited
Acting in its capacity as Trustee of EARC Trust SC 256
And SC 348, having registered office at Edelweiss House,
Off CST Road, Kalina,
Mumbai - 400 098 ...Appellant
V
1.V Mahesh
Interim Resolution Professional (IRP)
M/s Vasan Health Care private Limited NO. 39/19,
ASPEN Court, 3rd Floor, 5th Main road, R.A. Puram,
Chennai 600028 ...Respondent No.1
2.Mr. Rajendran Shanmugam
(Impleaded through IA/479/2021 vide
order dated 17.11.2021) ...Respondent No.2
Present:
For Appellant : Mr. P.S. Raman, Sr. Advocate
For Mr. Pranava G, Advocate
Mr. T. K. Bhaskar, Advocate
Mr. Srinath Sridevan, Advocate
Mr. K. Harishankar, Advocate
Comp App (AT) (CH) (INS) No. 226 of 2021
Page 1 of 19
For Respondent No.1 : Mrs. Priyanka Varma, Advocate
Ms. Poornima Devi, Advocate
For Respondent No.2/
Resolution Professional : Ms. R. V. Yajura Devi, Advocate
Ms. Savitha Devi, Advocate
Coram : Mr. Justice M. Venugopal Member (J)
Mr. Kanthi Narahari Member (T)
JUDGMENT
(VIRTUAL MODE) Per: Kanthi Narahari Member (T)
1. The present appeal is filed aggrieved by part of the order of the Adjudicating Authority dated 22.02.2021 passed in IA/156/2020 in CA/1/(IB) 2017, whereby the Adjudicating Authority rejected the claim of Rs.54,97,35,793/- of the Appellant in respect of Corporate Guarantee issued by M/s. Vasan Healthcare Pvt. Ltd. for the amounts borrowed by the Vasan Dental Hospitals Pvt. Ltd.
Appellant's Submissions:
2. Shri P.S. Raman, Learned Senior Counsel appeared for the Appellant submitted that the Appellant filed Form 'C' for a sum of Rs.507,88,68,502/-as under:
Comp App (AT) (CH) (INS) No. 226 of 2021 Page 2 of 19 Sl. No. Assignor Bank Acquired by the Claims (in Rs.) Appellant under
1. ECL Finance-Loan 1 Assignment Agreement 116,52,51,225 dated 26.09.2018
2. ECL Finance Loan 2 Assignment Agreement 155,46,59,320 dated 26.09.2018
3. IndusInd Bank Assignment Agreement 180,92,22,164 dated 29.03.2017
4. IndusInd Bank Assignment Agreement 54,97,35,793 dated 29.03.2017 Total 507,88,68,502 The claim of the Appellant was verified by the IRP. The CoC was constituted and the Appellant voting share percentage worked out to around 40.03%. The Respondent No.1 raised various queries vide multiple E-mails dated 07.01.2020, 22.01.2020, 02.02.2020 and 06.02.2020 and the Appellant duly responded to the same and provided all necessary clarifications to all the queries raised by the Respondent vide e-mail and letter dated 24.01.2020. The Respondent vide E-mail dated 06.02.2020 informed the Appellant that the claims worth approximately Rs.206 Crores have been rejected and Rs.180.92 Crores have been kept in abeyance, and claims worth approximately Rs.119.72 Crores have only been admitted thereby reducing the appellants admitted claims from approximately Rs.507 Crores to Rs.119.72 Crores. As per the above admitted claim, the voting share of the Appellant has been reduced unilaterally from 40% to a mere 13%.
Comp App (AT) (CH) (INS) No. 226 of 2021 Page 3 of 19
3. The Learned Counsel for the Appellant submitted that the main grounds for rejection of the claim of the Appellant by the 1st Respondent is that the Corporate Guarantee was not produced in Claim Form and Corporate Guarantee was not reflected in the Books of Accounts of Corporate Debtor as a contingent liability and the Corporate Guarantee has not been invoked till date. In response to the rejection of the claim of the Appellant by the 1 st Respondent, it is submitted that the Appellant vide its E-mail dated 22.01.2020 shared a copy of the Corporate Guarantee dated 11.11.2015 with the Respondent and the Appellant had also adequately submitted and relied upon the Board Resolutions from both the Corporate Debtor and the borrower which were passed while sanctioning the subject loan to the Corporate Debtor. It is submitted that the Corporate Guarantee was also filed before the Hon'ble Adjudicating Authority (NCLT) through convenience volume.
4. Being aggrieved by the said action of the 1st Respondent the Appellant filed an application being No. IA/156/2020 in CA/1/IB/2017 seeking a direction from the Hon'ble Adjudicating Authority to reinstate the claims of the Appellant in full to the extent of Rs.507 Crores. The Respondent filed a detailed Counter Affidavit to the above application. After hearing the Application, the learned Comp App (AT) (CH) (INS) No. 226 of 2021 Page 4 of 19 Adjudicating Authority passed the Impugned Order dated 22.02.2021 admitting the following claims as under:
Sl. Assignor Bank Acquired by the Claims (in Order of Ld. No. Appellant under Rs.) Adjudicating Authority
1. ECL Finance- Assignment 116,52,51,225 Admitted Loan 1 Agreement dated 26.09.2018
2. ECL Finance Assignment 155,46,59,320 Admitted Loan 2 Agreement dated 26.09.2018
3. IndusInd Bank Assignment 180,92,22,164 Admitted Agreement dated 29.03.2017
5. However, the Learned Adjudicating Authority vide impugned Order rejected the claim of Appellant to the extent of Rs.54,97,35,793/- in relation to the Corporate Guarantee issued by M/s. Vasan Health Care Pvt. Ltd. i.e. the Corporate Debtor for the amount borrowed by M/s. Vasan Dental Care Pvt. Ltd. The Learned Counsel submitted that the Learned Adjudicating Authority taken the same stand as taken by the 1st Respondent while rejecting the claim of the Appellant in Paras- 51, 52 of the Impugned Order. He further submitted that the Learned Adjudicating Authority failed to appreciate the fact that the Corporate Guarantee having been executed cannot be denied and cannot be called into question. He submitted that without admitting the fact that the Corporate Guarantee is not reflected in the Comp App (AT) (CH) (INS) No. 226 of 2021 Page 5 of 19 Books of the Corporate Debtor, the said lapse of the Corporate Debtor by itself will not invalidate the Guarantee. The Assignor Bank had obtained requisite Board Resolutions from both the Corporate Debtor and the Borrower while sanctioning the subject loan to the Borrower. The same has also been furnished before the Learned Adjudicating Authority on 19.08.2020 by way of an additional typed set of Papers.
6. The Learned Counsel reiterated its stand that the Appellant vide E- mail dated 22.01.2020 shared a copy of the Corporate Guarantee dated 11.11.2015 with the Respondent subsequent to filing of Form-C. The Corporate Guarantee were shared with the 1st Respondent much before passing of order dated 06.02.2020, rejecting the claim of the Appellant. However, the Learned Adjudicating Authority failed to take note of the same before rejecting the claim of the Appellant.
7. The Learned Counsel submitted that it is a settled law that the term 'claim' which is independent of debt and default would only include a 'matured claim'. The right of the Creditor to file a claim would be as per the definition of claim. The IRP/RP cannot examine as to whether there has been a default in respect of the claim being made by the Creditor. It is submitted that the Appellant filed claim on 04.05.2017 after initiation of CIRP against the Corporate Debtor i.e. M/s. Comp App (AT) (CH) (INS) No. 226 of 2021 Page 6 of 19 Vasan Health Care Pvt. Ltd. Thereafter in view of Stay of the Proceedings by the Hon'ble Courts, the CIRP could not continue. After revival of CIRP Proceedings, the Appellant filed claim on 17.10.2019.
8. The Learned Counsel further submitted that the Financial Creditor is allowed to file its claim and allowed to file supplementary documents or clarifications in support of the Claim before the constitution of the Committee, which was clearly done in the case of the Appellant. The entire claim of the Appellant was accepted including the Corporate Guarantee.
9. The Learned Counsel submitted that the Corporate Guarantee was filed as stated above, before the Learned Adjudicating Authority, however, the Learned Adjudicating Authority failed to appreciate the same and proceeded to reject the claim of the Appellant.
10. In view of the reasons, the Learned Counsel prayed this Bench to allow the claim of the Appellant in relation to the Corporate Guarantee availed by the Corporate Debtor for the Loans borrowed by M/s. Vasan Dental Pvt. Ltd. by setting aside the said part of the Impugned Order.
Respondent's Submission:
11. Heard the Counsel appeared for the 1st Respondent. Comp App (AT) (CH) (INS) No. 226 of 2021 Page 7 of 19
12. Heard the Counsel appeared for the 2nd Respondent. It is submitted that the 2nd Respondent taken over as IRP/RP of the Corporate Debtor and he was impleaded as 2nd Respondent to the main Petition and the same was allowed by this Tribunal on 17.11.2021. The 2nd Respondent filed Status Report of the Corporate Debtor giving out the details of the CIRP Proceedings. Analysis/Appraisal
13. Heard the Learned Counsel appeared for the respective parties, perused the pleadings/documents and citations relied upon by them.
14. The points for consideration is whether
(a) Corporate Guarantee was made available to the Respondent No.1 and also before the Adjudicating Authority?
(b) Not reflecting Corporate Guarantee in Books of Accounts, invalidates the claim?
(c) Not invoking Corporate Guarantee and not crystalizing into debt in the Books of Corporate Debtor invalidates the claim.
15. Before adverting to the above points, we would like to emphasize the order passed by the Adjudicating Authority in rejecting the claim of the Appellant to the extent of Rs.54,97,35,793/- at paras 51, 52 and 56, thus read as under. Comp App (AT) (CH) (INS) No. 226 of 2021 Page 8 of 19
51. "However, in so far as the amount claimed of Rs.54,97,35,793/- in relation to the Corporate Guarantee alleged to have been given by the Corporate Debtor VHPCL to the amount borrowed by Vasan Dental Hospital Private Limited, we are not in a position to direct the IRP to admit the claim for the reason that the Applicant nor the IPR has produced the document, namely the agreement evidencing the furnishing of the corporate guarantee by the Corporate Debtor in relation to debt availed by VDHPL. Hence in the absence of the production of the primary document or even a copy thereof by the Applicant ascribing the original document, if any to be in the custody of the IPR, we are unable to accept the claim made in relation to the Corporate Guarantee. Further, as rightly pointed out by the IRP, neither the accounts of the Corporate Debtor nor the accounts of VDPHL reflects as on 31.03.2016, the availment of the loan not even the amounts as a contingent liability in the financial statements of the Corporate Debtor. Additionally, it is also required to be seen that during the first round soon after the initiation of the CIRP by this Tribunal in the month of April 2017, the applicant herein had chosen to file a claim statement before the IPR, wherein the claim in relation to the corporate guarantee presently made in relation to IndusInd Bank facilities had Comp App (AT) (CH) (INS) No. 226 of 2021 Page 9 of 19 been omitted. A comparative chart brings forth the difference in relation to the claims submitted as follows:-
COMPARATIVE CHART OF THE CLAIM STATEMENT FILED BY THE APPLICANT ON 17.10.2019 (After the vacation of the stay of the CIRP by the High Court and 04.05.2017 (prior to stay order passed by the High Court) BEFORE THE IRP.
Page 165 of Vol I Petitioner Page 132 - Respondent Consolidated Type set Claim Form dated 17.10.2019 Claim Form dated 04.05.2017 Sl. No.1 Assignment of both Sl. Assignment of only p.165 - Indsind Bank Limited No.1 IndusInd Bank Ltd.
166 and ECL Finance Ltd. mentioned
mentioned
Sl. No.3 E-mail ID (8 Nos. E mail ID 6 Nos. given
p.166 given) of claimant -
completely different as
given in Claim -
4.5.2019
Sl. No.4 Loan from IndusInd As on 21.04.2017 -
p.166 - Bank - Rs.1,17,09,58,458/-
167 Rs.2,35,89,57,957/-
Loan from ECL
Finance Ltd. -
Rs.2,71,99,10,545/-
Sl.No.5 Debt 1 - Credit facility In support of claim made in
of Rs.148 Crores from Serial No.4 as above
IndusInd Bank documents annexed
(Assignor) Documents Annexure 1 to Annexure 12
annexed in support
thereof Annexure 1 to
Annexure 13
Debt assigned to the (Annexure 12 repeated
claimant by the twice ; Hence in both the
Comp App (AT) (CH) (INS) No. 226 of 2021
Page 10 of 19
Assignor vide claim forms annexure
Assignment tallies)
Agreement dated
29.03.2017.
Debt II - Credit facility Assigned vide Assignment of Rs.105 Crore by Agreement dated ECL Finance Ltd. 29.03.2017.
(Assignor) comprising of Rs.50 Crore disbursed on 21.01.2015 and Rs.55 Crore disbursed on 12.10.2015.
- Both assigned vide Assignment Agreement dated 26.09.2018 to the claimant Sl.No.6 Details about the Gives details only about transaction classified debt transaction pertaining as Debt 1 and Debt II as to IndusInd Bank disbursal.
above given in Sl. No.5
Debt II - confirmation
of balance -
28.02.2018
Rs.100,40,43,084/-
(principal Rs.55 Crore)
Rs.76,41,24,648/-
(principal Rs.50 Crore)
Sl.No.8 Details of Security Only in relation to loan
documents given in availed from IndusInd Bank
relation to Debt I and Ltd. and subsequently
Debt II assigned.
Comp App (AT) (CH) (INS) No. 226 of 2021
Page 11 of 19
52. From the above comparative chart, it is clearly identifiable that in relation to IndusInd Bank facilities only the term loan amount had been reflected whereas in relation to the Corporate Guarantee there had been no murmur on the part of the Applicant while the claim statement was filed initially on 04.05.2017. Thus, in the absence of any primary document/evidence being produced in relation to the Corporate Guarantee as given by the Corporate Debtor in relation to the loan availed by VDHPL, this Tribunal is constrained to uphold the decision of the IRP in rejecting the claim made in a sum of Rs.54,97,35,793/- by the Applicant.
56. In the result the IRP is directed to admit the claim of Rs.180,92,22,164/- pertaining to assignment agreement dated 29.03.2017 between the IndusInd Bank and the Applicant in the capacity as an Assignee having been 'kept in abeyance' vide his communication dated 06.02.2020, however the decision of the IRP in relation to Corporate Guarantee alleged to have been given by the Corporate Debtor in relation to the loan availed by Vasan Dental Hospital Private Limited and amounting to a sum of Rs.54,97,35,793/- being the amount claimed stands rejected.
16. The reason as stated for rejecting the claim of the Appellant by the Adjudicating Authority is that the Appellant has not produced the documents Comp App (AT) (CH) (INS) No. 226 of 2021 Page 12 of 19 namely the Agreement evidencing the furnishing of the Corporate Guarantee issued by the Corporate Debtor in relation to the debt availed by M/s. Vasan Dental Health Pvt. Ltd. Further the Learned Adjudicating Authority taken a stand that at the time of initiation of CIRP the Appellant filed the claim, however, the Corporate Guarantee made in relation to the Assignor Bank i.e. Indu Sind Bank had been omitted.
17. The stand of the Appellant is that the Corporate Guarantee furnished to the IRP vide E-mail dated 22.01.2020 subsequent to filing of Form-C and the Claims were admitted in entirety i.e. 507.89 Crores including the Corporate Guarantee. However, claim of Rs.54.97 Crores have been rejected by the RP vide E-mail dated 06.02.2020. From the perusal of documents, it is evident that there is no dispute with regard to the Corporate Guarantee issued by the Corporate Debtor for the loans borrowed by the VDHL a subsidiary of Corporate Debtor.
18. Further there is a correspondence between the Appellant and the IRP with regard to the exchange of documents. The IRP vide E-mail dated 02.02.2020 Page 203 Vol.2 addressed to the Appellant whereby it is stated as under:
"the claims of EARC (Appellant), the status of admission, abeyance and rejection of claim on account of Corporate Guarantee stated to have been Comp App (AT) (CH) (INS) No. 226 of 2021 Page 13 of 19 issued by the Corporate Debtor for Vasan Dental, are all enclosed in this word document."
From the above e-mail it is evident that the IRP received the Corporate Guarantee and the Corporate Guarantee also filed before the Adjudicating Authority. However, the RP/IRP stated that he is not in a position to admit the same. After receipt of the documents from the Appellant, the IRP addressed the above E-mail dated 02.02.2020 and subsequently rejected the claim on 06.02.2020. It is apparent that the documents have been furnished/submitted by the Appellant to the IRP before rejection of the claim of the Appellant. Therefore, the IRP ought to have considered the claim of the Appellant meticulously in accordance with law.
19. The Appellant addressed a detailed reply by letter dated 11.02.2020 in response to rejection of claim and clearly stated that while sanctioning the subject loan to VDHPL, the Assignor Bank i.e. Ind Sind Bank Ltd. had obtained requisite Board Resolutions from Vasan Health Care Pvt. Ltd. for the Corporate Guarantee provided by it. It is also stated that the non-recognition of Corporate Guarantee by the Vasan Healthcare Pvt. Ltd. in its annual report cannot be the basis of absolution of its obligations and the same cannot be rejected on the said reason. Comp App (AT) (CH) (INS) No. 226 of 2021 Page 14 of 19
20. We are of the view that the Appellant has provided all the information with the IRP/RP prior to rejection of claim. Further, after rejection of the claim the Appellant addressed a detailed reply to the objections raised by the IRP. It appears that the IRP has not considered the documents produced before it and without going into detail rejected the claim of the Appellant. Even the Adjudicating Authority merely affirmed the stand taken by the IRP/RP, without verifying the documents placed before it.
21. Now, we proceed with the points. With regard to Point (a) i.e. whether the Corporate Guarantee was made available to the Respondent No.1 and before the Adjudicating Authority. As discussed above, it is a fact that the Corporate Guarantee was shared with the 1st Respondent vide E-mail dated 22.01.2020 and the said Corporate Guarantee was also filed before the Adjudicating Authority along with convenience volume. Further it is also evident that before passing the rejection of the claim by the 1st Respondent vide order dated 06.02.2020 the Appellant submitted the Corporate Guarantee to the 1 st Respondent therefore the 1st Respondent ought to have meticulously considered the Corporate Guarantee and other documents made available before him. We are of the view that the observation made by the Learned Adjudicating Authority that the Corporate Guarantee was not produced before it is without any basis. Comp App (AT) (CH) (INS) No. 226 of 2021 Page 15 of 19
22. With regard to Point No. (b), not reflecting Corporate Guarantee in the Books of Accounts invalidates the claim. It is an admitted fact that the Corporate Guarantee having been executed cannot be denied and cannot unanimously decide by the 1st Respondent to the contrary and cannot be adjudicated upon. The Learned Counsel contended that assuming without admitting that the Corporate Guarantee is not reflected in the Books of the Corporate Debtor, this lapse in itself will not invalidate the Guarantee. The Learned Counsel also stated that the Assignor Bank had obtained requisite Board Resolutions both from Corporate Debtor and the Borrower and the same was also furnished to the Learned Adjudicating Authority on 19.08.2020 by way of additional typed set of documents. This Tribunal accepting the submissions as made by the Learned Counsel and this Tribunal is also of the view that the existence of Corporate Guarantee is not in question either by fact or in law. Therefore, the claim cannot be invalidated on the above ground.
23. With regard to the Point No. (c), not invoking Corporate Guarantee and not crystalizing into debt, whether it invalidates the claim. We would like to discuss the definition of the 'claim'.
Comp App (AT) (CH) (INS) No. 226 of 2021 Page 16 of 19
24. The claim defined in Section 3 (6) means 'a right to payment, whether or not such right is reduced to judgment, fixed, disputed, undisputed, legal, equitable, secured or unsecured.' In this regard, a beneficial reference is drawn from the decision of this Tribunal in the matter of Export Import Bank of India v Resolution Professional of JEKPL Pvt. Ltd. (NCLAT, Delhi) Company Appeal No.304 of 2017 dated 14.08.2018, whereby this Tribunal held at Para 54, 55 and 56 extracted as under:
54. "Therefore, stand taken by the respondents that the claim has not been matured cannot be ground to reject the claim.
55. Section 25 provides the duties of Resolution Professional. As per Section 25(2) (e), the Resolution Professional is required to maintain an updated list of all the claims. Aforesaid fact also suggests that the maturity of a claim or default of debt are not the guiding factors to be noticed for collating or updating the claims. The matter can be looked from another angle. It is only in case of 'debt' and 'default', a 'Financial Creditor' or 'Operational Creditor' may file applications under Section 7 or 9. The Corporate Applicant has also right to file application under Section 10 for initiation of Corporate Insolvency Resolution Process against itself, if it has defaulted to pay the debt. It does not mean that the persons whose debt has not been matured cannot file claim. The Financial Creditors or Operational Creditors or secured or unsecured creditors all are entitled to file claim.
56. Therefore, we hold that maturity of claim or default of claim or invocation of guarantee for claiming the amount has no nexus with filing of claim pursuant to public announcement made under Section 13(1)(b) r/w Comp App (AT) (CH) (INS) No. 226 of 2021 Page 17 of 19 Section 15(1)(c) or for collating the claim under Section 18(1)(b) or for updating claim under Section 25(2)(e). For the purpose of collating information relating to assets, finances and operations of Corporate Debtor or financial position of the Corporate Debtor, including the liabilities as on the date of initiation of the Resolution Process as per Section 18(1), it is the duty of the Resolution Professional to collate all the claims and to verify the same from the records of assets and liabilities maintained by the Corporate Debtor."
25. We are in-agreement with the above decision. The Resolution Professional is required to maintain an updated list of all claims. The maturity of a claim or default of debt, are not the guiding factors to be noticed for collating or updating the claims.
26. We have also perused the Letter of Continuing Guarantee (Corporate Guarantee) executed by Vasan Healthcare Pvt. Ltd. in favor of the Assignor Bank i.e. Indu Sind Bank Ltd. annexed at Pages 118 to 133 to the typed set of documents filed by the Appellant.
27. After analyzed the points as discussed above, in (a) (b) and (c), this Tribunal comes to a resultant conclusion that the Corporate Guarantee was made available with IRP and Adjudicating Authority. Thus, the IRP and the Adjudicating Authority cannot take the unsustainable and unsound technical stand as discussed Comp App (AT) (CH) (INS) No. 226 of 2021 Page 18 of 19 in Point 'b and 'c' above while rejecting the claim. We unequivocally negative the stand taken by the IRP and the Adjudicating Authority. Having satisfied the grounds as made by the Appellant, the following order is passed.
a. Paras 52 and 56 of the Impugned Order dated 22.02.2021 in IA/156/2020 in CA/1/2017 passed by the Adjudicating Authority with respect to rejecting the claim of the Appellant to the extent of Rs.54,97,35,793/- is hereby quashed and set aside.
b. We direct the 2nd Respondent (RP) to verify all the documents with regard to Corporate Guarantee issued by Vasan Healthcare Pvt. Ltd. in respect of above claim.
c. After due verification of the documents, the 2nd Respondent is hereby directed to consider and admit the claim of the Appellant with respect to its claim of Rs.54,97,35,793/-.
d. With the above directions, the Appeal is allowed. No orders as to costs.
[Kanthi Narahari] [Justice M. Venugopal]
Member (Technical) Member (Judicial)
13.12.2021
SE
Comp App (AT) (CH) (INS) No. 226 of 2021
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