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Judgment
[Per: Mr. Prasanta Kumar Mohanty, Member (T)]
The present I.B. Petition is filed by the Financial Creditor AU SMALL FINANCE BANK LIMITED under Section 7 of the Insolvency and Bankruptcy Code, 2016 (herein after referred to as a “Code”), seeking initiation of Corporate Insolvency Resolution Process (“CIRP” in Short) against the Corporate Debtor Company namely, SRK DEVBUILD PRIVATE LIMITED for the default committed by the Corporate Debtor in making repayment of the Term Loan facility availed from the Financial Creditor. The Applicant(FC), AU SMALL FINANCE BANK LIMITED is a Financial Creditor, a banking company within the meaning of the Banking Regulation Act, 1949. The application has been filed by the duly authorised officer, Shri Mr. Vishal Gori, authorised Person of the Petitioner, 4th Floor, B-405, Shivalik Corporate Park, Above D’mart, Shivranjini Cross Road, Ahmedabad, Gujarat-380015.
The Respondent Corporate Debtor (CD) Company, namely, SRK DEVBUILD PRIVATE LIMITED was incorporated on 25/08/2011 with CIN: U45200MP2011PTC026631.
The nominal share capital of the Respondent (CD) Company is Rs.4,25,00,000/- (Rupees Four Crores Twenty Five Lakhs Only) and the paid-up share capital of the Corporate Debtor Company is Rs.4,25,00,000/- (Four Crores Twenty Five Lakhs Only). The Registered Office of the Corporate Debtor Company is situated at: 18/2, Lasudia Mori, Dewas Naka A. B. Road Indore, Madhya Pradesh-452010. The Corporate Debtor Company is engaged in the business of Construction.
It is submitted that the Petitioner Bank sanctioned a Term Loan Facility of Rs.4,00,00,000/- to the Respondent Company as per the terms of sanctions letter dated 09.02.2015 and upon execution of the Loan Agreement dated 11.02.2015.
It is stated that the petitioner respectfully submits that at the time of availing the said Rupees Term Loan Facility amount, the Respondent company assured the Petitioner Bank that the amount of the said loan facilities will be paid with moratorium period of 12 Months and thereafter by way of 84 Equal Monthly Instalments (EMIs) as per the terms and conditions of the sanction and Schedule-C of the Loan Agreement.
It is submitted that the Respondent Company created Security Interest by way of Equitable Mortgage by deposit of titles deeds of the immovable property being Plot No. Survey No. 239/2/1, 239/2/1, & 239/2/2 situated at village Peer Karadiya, Tehsil; Sanwer, Dist. Indore, Madhya Pradesh.
It is submitted that the Respondent Company failed and neglected to pay the pending instalments and interest accrued thereon and thereby committed a default and consequent to such the loan account of the Respondent company was classified as NPA on 31.05.2016.
It is submitted that on 30.08.2016 petitioner issued a Demand Notice under Section 13(2) of the SARFAESI Act, to the Respondent and to the Mortgagors/Guarantors and called upon them to pay an amount of Rs.4,70,34,931/- due as on 30.08.2016 within 60 days which was duly served upon them. However, the Respondent Company failed to make payment of the said amount within 60 days, therefore, the Petitioner Bank took symbolic possession of the aforesaid secured asset on 10.12.2016 and issued a sale notice dated 10.02.2017. Thereafter, being aggrieved by the said measures, the Borrowers and Co-Borrowers filed Securitization Application before the Hon'ble DRT Jabalpur bearing SA. No. 71/2017.
It is submitted that the Respondent Company/Guarantors approached the Petitioner Bank for settlement of the dues and agreed to pay an amount of Rs.4.00 Crores against the total outstanding amount of Rs.5.50 Crores due as on 20.05.2017 and accordingly Terms of Settlement were executed on 26.05.2017. However, the Respondent Company failed to make payment as per the terms of settlement, and therefore, it was cancelled.
It is submitted that the Petitioner Company regularly maintains the accounts of the Respondent Company. Since, the Respondent Company failed to pay the overdue amount, the Petitioner Company had right to foreclose the loan account and as per the foreclosure statement, an amount of Rs.3,34,96,299/- is due and payable to the Petitioner as on 25.07.2018 which includes the principal amount, interest and other charges, more particularly mentioned in the said statement annexed with ledger account.
It is submitted that the Financial Creditor has to recover an amount of Rs.3,34,96,299/- which is a financial debt still remaining unpaid by the Respondent as on 25.07.2018.
The Corporate Debtor has defaulted payment and the date of default is 31/05/2016 as stated by the Petitioner Bank.
The statements of accounts of the Corporate debtor have been filed and the Petitioner Bank has submitted a Certificate to this effect under Section 2A of the Banker's Book of Evidence Act, 1891. (Page no. 94 of paper book). The Petitioner Bank has claimed their dues of Rs.3,34,96,299/- as on 25.07.2018
The Financial Creditor, to substantiate their claim, has enclosed following documents: -
Details of the loan agreements has been annexed (Page no 70 to 92 of the paper book)
Copy of the sanction letter dated 09/02/2015 and Loan Agreement dated 11/02/2015 and other security Documents have been annexed (Page no. 15 to 62 of the paper book) iii. Copy of the statutory demand Notice dated 30/08/2016 issued under Section 13(2) of the SARFAESI Act. (Page no. 63 to 65 of paper book) iv. Copies of the Possession Notice dated 10/12/2016 and Sale Notice dated 10/02/2017 (Page no. 66 to 68 of the paper book)
Copies of the Terms of Settlement dated 26/05/2017 and Letter of Cancellation of settlement (Page no.69 to 76 of paper book) vi. Copy of the Ledger Account and Foreclosure Statement as on 25/07/2018 along with Certificate under Banker's Books of Evidence Act, 1891. vii. Copy of the letter of Acknowledgement debts and security dated 30/08/2016.
The Petitioner has filed Pursish regarding service of Petition dated 03/08/2018.
The matter was taken up and heard from both sides by this Bench on 08.08.2018, 19.09.2018, 26.10.2018, 07.12.2018, 08.01.2019, 08.02.2019, 09.04.2019, 01.05.2019, 19.07.2019, 23.08.2019, 12.09.2019, 27.09.2019, 23.10.2019 and 07.11.2019. The counsels of the petitioner and the Respondent were present and put forth their submissions before the Bench.
In response to the present I.B. Petition filed by the Petitioner Bank, the Respondent has filed its objections on 19/09/2018.
It is submitted that the application is not in the form Prescribed under the Insolvency and bankruptcy Code, 2016. The Statement of Account is not attached in accordance with the Banker's Book of 1 Evidence Act, 1891 and hence, the proceedings filed by the applicant before the Tribunal are not maintainable.
It is submitted that the Respondent No. 1 Company is not the sole borrower as there are two individual borrowers. Mr. Subhash Agarwal as well as Mrs. Gulab Agarwal are also the co-borrowers and therefore selected action against the corporate borrower is unjustified and unwarranted.
It is submitted that as on date, there is no security document executed in favour of the present petitioner for the alleged disputed claim and therefore, selected action against the company is bad in law.
It is submitted that the Financial Creditor has not initiated any action against the individual co-borrowers which creates a doubt about the alleged demand of the financial creditor.
It is submitted that the Respondent/Corporate Debtor is a going concern and owns a running school which is providing education to hundreds of students in addition to employment to more than hundred teaching and other staff.
It is submitted that the audited balance sheet of company dated 31.03.2017, Respondent Company has assets worth crores of rupees which are more than the alleged liability and, therefore, the Respondent Company cannot be said to be a company which is unable to pay.
It is submitted that the Petition filed by the petitioner is based on incomplete facts and documents and only some selected facts have been stated in the position. It is submitted that in a series of judgments, various decision of various Hon'ble High Courts and the Hon'ble Supreme Court of India has held that for want of an affidavit in accordance with law, the petition is liable to be dismissed.
It is stated that the loan agreement dated 11/02/2015 is not an admissible evidence because it is neither sufficiently stamped nor registered.
It is submitted that the Applicant has purposely not disclosed complete facts of the case and his claim is disputed.
It is stated that the Application is defective for want of certification and verification the averments in the application and the documents attached can be relied upon.
It is submitted that the subsequent affidavit dated 08/07/2019 cannot be looked into or considered.
It is also stated that the alleged claim is barred by limitation.
The Applicant Bank has filed a Written Arguments on 23/08/2019 (Page 1 to 8) addressed the issues in support of its claim. It is stated that it is an undisputed position in the matter and there is financial debt due by the Corporate Debtor to the petitioner for amount Rs.3,34,96,299/- still remaining unpaid by the Respondent as on 25/07/2018. Thus, it is evident that corporate Debtor has committed default in making payment of the financial debt as provided under clause (i) of sub section (8) if Section 5 of the Insolvency and Bankruptcy Code, 2016. Hence this Tribunal is required to only examine whether criteria made for triggering the C.I.R.P. process in respect of the Corporate Debtor are fulfilled so as to admit the present I.B. petition. In view of the above, the petitioner/financial creditor has fulfilled all the requirements of Section 7 of the Code, the instant petition deserves to be admitted.
OBSERVATIONS
It is found, that the Petitioner Bank has submitted the documents duly executed by the Corporate Debtor and Guarantors along with a Certificate under the Banker's Book of Evidence Act, 1891, in support of their IB Petition for initiation of C.I.R.P. 19.1 The Term Loan was sanctioned and released by the Petitioner Bank and the same was availed by the Corporate Debtor, SRK Devbuild Private Limited. 19.2 The CD has defaulted in making repayment of the Term Loan to the Petitioner Bank and the date of default is 31/05/2016. The Statement of accounts submitted by the applicant Bank confirm the default committed by the Corporate Debtor. 19.3 The last payment to the loan was came on 31/05/2017. The OTS proposal was executed on 26/05/2017 but the same was not honoured by the Corporate Debtor. 19.4 The Petitioner Bank has filed the petition on 02/08/2018 which is within the period of limitation.
The charge has been created by the Corporate Debtor with ROC, Gwalior for Rs.4.00 Crores in favour of the Applicant Bank on 09/02/2015 and the said charge creation letter has been issued by the ROC in this regard. 19.6 The present I.B. Petition is filed by the duly authorised official of the Applicant Bank in a prescribed format under Section 7 of the I.B. Code annexing copies of loan documents confirming the existence of debt, debt due and defaulted and proposed a name of Resolution Professional to act as an Interim Resolution Professional (IRP)
ORDER
Considering the material, papers filed by the Petitioner and the facts mentioned in the Para No. 19, 19.1, 19.2, 19.3, 19.4, 19.5, and 19.6 this Adjudicating Authority is satisfied that,
The Corporate Debtor availed loan facilities from the Financial Creditor (AU SMALL FINANCE BANK LIMITED).
Existence of debt is above Rs. One Lac;
Debt is due;
Default has occurred on 31/05/2016
Petition has been filed within the limitation period;
Copy of the Application filed before the Tribunal has been sent to the Corporate Debtor and the application filed by the Petitioner Bank Under Section 7 of IBC is found to be complete for the purpose of initiation of Corporate Insolvency Resolution Process against the Corporate Debtor.
Hence, the present IB Petition is admitted with the following Directions/observations. The date of admission of this petition is 03/01/2020.
This Adjudicating Authority hereby appoints, as proposed, Mr. RAVI KAPOOR, having Insolvency Professional Registration No. IBBI/IPA-002/IP-N00121/2017- 18/10290, Email ID: [email protected], Address: 402, 4th Floor, Shaival Plaza, Near Gujarat College, Ellisbridge, Ahmedabad - 380006 as an Interim- Resolution Professional. The Interim Resolution Professional is further directed to make public announcement of moratorium in respect of Corporate Debtor soon after receipt of an authenticated copy of this order and to act further as per the order/direction issued by this Adjudicating-Authority and to follow the provisions Under Section 13 and 14 and other relevant provisions of the Insolvency and Bankruptcy Code.
As per the provisions of Section 13 and 14 of the I.B. Code on the date of commencement of insolvency, this Adjudicating Authority declares moratorium with effect from today for prohibiting all of the following, namely: -
I. (a) The institution of suits or continuation of pending suits or proceedings against the corporate debtor including execution of any judgement, 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 Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (54 of 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.
II. 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.
III. The provisions of sub-section (1) shall not apply to
(a)such transactions as may be notified by the Central Government in consultation with any financial sector regulator.
IV. The order of moratorium shall have effect from the date of this order till the completion of the Corporate Insolvency Resolution Process.
The IRP is hereby advised to adhere the time limit as stipulated for completion of the Corporate Insolvency Resolution Process ("CIRP" in short) and perform the duties as specified Under Section 17, 18, 20, 21 of I.B Code. Further the personnels of the Corporate Debtor are directed to extend co-operation to Interim Resolution Professional as required Under Section 19 of IB Code.
It is also observed that the Petitioner Bank has claimed total dues of Rs.3,34,96,299/- which includes the principal amount, undebited interest and penal interest, as of 25.07.2018. One of the prime objectives of the Insolvency and Bankruptcy Code, 2016 is to find out a viable Insolvency Resolution Plan in time for the Corporate Debtor and in order to have a Resolution Plan Viable, feasible and implementation successful, in the era of Minimum Cost of funds based Lending Rate ("MCLR" in short) and Competitive market condition, the Committee Of Creditor(s) (COC) may explore, while finalizing the Resolution Plan for the Corporate Debtor, the possibility of loading maximum interest at the Applicant Bank's Base Rate (BR) +1% from the date of default to the date of implementation of MCLR and further from the date of implementation of MCLR till the date of approval of the Resolution Plan at the rate of Petitioner Bank's One Year MCLR or One Year MCLR + 1% without any penal interest/overdue interest.
The Registry is hereby directed to communicate the authentic copy of this order to the Financial Creditor, Corporate Debtor Company, the I.R.P and also to the Registrar of Companies, Indore immediately through speed post/registered post. The Registrar of Companies shall update its website the status of Corporate Debtor for the information of the public at large.
Thus the present I.B petition filed Under Section 7 of the IBC stands admitted with the above observations and direction.