Federal Bank Limited vs M/s Feedback Infra Private Limited

PER: SH. ASHOK KUMAR BHARDWAJ, MEMBER (J)

As can be gathered from the contents of the application filed on behalf of the applicant, the applicant (hereinafter referred to as FC) provided various credit facilities to the Corporate Debtor including term loan and cash credit facilities. The Corporate Debtor had executed the Corporate Guarantee in favour of the applicant to facilitate the principal barrower viz., MS feedback energy distribution Company Ltd. to secure loan from the applicant. As per Board Resolution/power attorney dated 07.09.2009, issued by the Board of Director of the FC, all officials of the FC are authorised to file necessary application/affidavit etc. before this Tribunal, and Hon’ble NCLAT qua the proceedings under the provisions of IBC 2016.

The present application has been preferred by Mr. Vineeth PP, currently posted as Deputy Vice-I, loan collection & Recovery Department, located at New Delhi who was duly authorised by the applicant to prefer the same. The copy of the Board Resolution/power of attorney dated 07.09.2009 is enclosed as Annexure A-1 to the application.

The Corporate Debtor was incorporated on 27.06.1990, in terms of provisions of Companies Act and registered with Registrar of Company Delhi. It provided multiple Corporate Guarantees to the Financial Creditor agreeing to take responsibility for the obligation of the principal barrower (Debtor) viz. M/S feedback energy distribution Company Ltd. obligation for re-paying the loan taken by it.

The present application is preferred under Section 7 of IBC 2016 (hereinafter referred to IBC) seeking initiation of CIRP qua the Corporate Debtor i.e., M/s Feeback Infra Private Limited. The CD defaulted in repayment of the Credit facilities availed by it from the FC. It also defaulted in repaying the credit facilities availed by M/s. Feeback Energy Distribution Company Limited, for which it stood as Corporate Guarantor.

The Corporate Debtor approached the Financial Creditor to avail financial assistance in the shape of Term Loan of Rs. 40,00,00,000/-. The FC sanctioned the loan amount in terms of sanction letter dated 22.08.2019, in terms of the conditions contained in the letter, which were duly accepted by the Corporate Debtor. Copy of sanction letter is available on record as Annexure A-4 to the application. The Corporate Debtor through its Director, duly authorised in terms of the Resolution passed by it on 20.08.2019 executed the various loan and security documents in favour of the Financial Creditor to avail the loan facility on 26.08.2019. Copies of Board Resolution dated 20.08.2019 and Term Loan Agreement, Security Delivery Letter, Demand Promissory Note, Undertaking, Letter of Set-Off and Letter for Disbursement, all dated 26.08.2019 are enclosed as Annexures A-5 to A-11 to the application. Copy of agreement for pledge of shares held in dematerialised form, dated 26.08.2019 is enclosed as Annexure A-12 to application.

To secure the loan and advance availed by the CD, its Directors agreed to stand and stood as Personal Guarantor and executed Guarantee Agreement dated 26.08.2019 in favour of the Financial Creditor. A copy of Guarantee Agreement dated 26.08.2019 is on record as Annexure A-13 to the application. M/s. Mission Holdings Pvt. Ltd. having its registered office at 311, 3^rd Floor, Vardhman Plaza, Pocket No. 7, Plot No. 6, Sector 12, Dwarka, New Delhi-110078 through its directors authorised in terms of the resolution passed by it, agreed to stand and stood as Guarantor in favour of the FC for the loan sanctioned by it to the Corporate Debtor. The Corporate Guarantee executed and signed by the said Corporate Guarantor on 26.08.2019 is enclosed as Annexure A-14 to the application.

The aforementioned loan amount disbursed by the Financial Creditor was credited in the term loan account no. 15287100001375 and was utilised by the CD as for its need and requirement.

Yet again, the CD through its director requested the FC to accord another loan facility i.e. Working Capital/Term Loan for a sum of Rs. 10 Crores and the Financial Creditor considered the demand and sanctioned the said Working Loan Limit/demand loan for a sum of Rs. 10,00,00,000/-(Rupees Ten Crores Only) vide sanction letter dated 18.02.2020 on the terms and condition as stipulated therein which were duly accepted by the Corporate Debtor. A copy of sanction letter dated 18.02.2020 is placed on record as Annexure A-15 to the application. Through its Director, duly authorised in terms of the resolution dated 19.02.2020, the Corporate Debtor executed various loan and security documents in favour of the Financial Creditor on 19.02.2020 to avail the aforementioned loan facility. A copy of the Board Resolution is on record as Annexure A-16 to the application. The copies of Agreement for Clean Demand Loan, Letter to DPN, Demand Promissory Note, Undertaking Letter and Letter of Set-Off, all dated 19.02.2020 are on record as Annexure A-17 to A-21 to the application. The Directors qua the CD as also M/s. Mission Holding Pvt. Ltd., stood as Personal and Corporate Guarantor in favour of the Financial Creditor and accepted obligation to repay the loan sanctioned to the Corporate Debtor. Copies of Guarantee Agreement dated 19.02.2020 are enclosed as Annexures A-22 and A-23 to the application.

The loan amount (ibid) disbursed by the Financial Creditor was credited in Demand Loan Account No. 15287100001417 and was utilised by the CD as per its needs and requirements.

Further, again the Corporate Debtor through its Director requested the FC for another loan facility i.e. Working Capital/Cash Credit Limit for a sum of Rs. 5 Crores. The FC sanctioned the loan amount vide sanction letter dated 30.04.2020 on the terms of condition as stipulated therein, which were duly accepted by the Corporate Debtor. Copy of sanction letter is on record as Annexure A-24 to the application. All the necessary documents required to be executed for sanction of the loan amount were duly executed and signed on behalf of the CD. The Directors qua the CD and M/s. Mission Holdings Pvt. Ltd. stood as Personal and Corporate Guarantors for the loan amount. The amount disbursed by the Financial Creditor was disbursed in Demand Loan Account No. 15285300001104 and was utilised by the CD as per its need and requirement.

Even also thereafter, the Financial Creditor sanctioned further loan of Rs. 11,60,00,000/- to the CD under Emergency Guarantee Credit Line (GECL)/Term Loan introduced by the Government of India through Ministry of Finance, on 17.12.2020. All requisite formalities in this regard were completed by the CD and the required documents were executed.

The loan amount was disbursed by the Financial Creditor in GECL/Term Loan Account No.15286900000140 and was utilised by the CD as per its needs and requirements. The Corporate Debtor also maintained the Current Account No. 15280200003664 with the Financial Creditor which got overdue as the Corporate Debtor could not pay the interest in the Demand Loan Account, therefore interest had to be debited from the Current Account of the CD. The development was well within the knowledge of the Corporate Debtor.

M/s. Feedback Energy Distribution Company Limited (Principal Borrower) availed multiple loan facilities from the Financial Creditor. Several loan and security documents were executed by the Principal borrower in favour of the Financial Creditor. The Corporate Debtor executed multiple Corporate Guarantee in favour of the Financial Creditor. The details of multiple loans availed by the Principal borrower viz. M/s. Feedback Energy Distribution Limited are given in para 26 of the written synopsis filed by the Applicant. The number of total loans sanctioned by FC to the Principal borrower is eight. The details of disbursement of loan to the CD as given in para 55 of the written synopsis reads thus: -

The Financial Creditor had disbursed the funds to the Principal borrower on the dates mentioned in 2^nd table of para 56of the synopsis which reads thus: -

To secure the loan facility availed from the Financial Creditor, the Corporate Debtor created security interest of the Financial Creditor qua the assets mentioned in para 55 of the written synopsis (property schedules A, B and C). The schedules read thus: -

The Principal borrower, Corporate Debtor and Guarantors, to secure the loan facilities availed by the Principal borrower from the Financial Creditor also created security interest on the assets mentioned in para 58 of the synopsis. The details of the assets reads thus :-

Besides the above, to secure the loan facilities availed by the Principal borrower, following Bank Guarantee Agreements were executed: -

As the Corporate Debtor failed to maintain the financial discipline, its loan account was classified as Non-Performing Asset (NPA) by the Financial Creditor on 28.05.2021. The Financial Creditor has taken the plea that the date of NPA may be considered as date of default for the purpose of present application. Besides, since the Principal borrower also failed to maintain the Financial discipline, its loan amount was also classified as Non-Performing Asset (NPA) by the Financial Creditor on 19.11.2022. It is again the plea raised by the Applicant that the said date may also be perceived as date of default for the purpose of present proceedings.

Regarding the loan/credit facility availed by the CD, the Financial Creditor issued Demand Notice under Section 13(2) of the SARFAESI ACT, 2002, on 23.09.2021, but the CD failed to repay the loan amount. A copy of SARFAESI Notice (ibid) is on record as Annexure A-136 of the application.

As a result, the Financial Creditor filed O.A. No. 386 of 2022/TA No. 400/2022 for the recovery of dues from the Principal borrower and the Corporate Debtor.

The Financial Creditor recalled the entire loan facilities granted to the Principal borrower vide recall notice dated 31.01.2023. The Principal borrower failed to make payment in terms of the recall notice. As despite service of the recall notice, the Principal borrower did not give any heed to the notices and did not act upon the same, the Financial Creditor filed an application viz. O.A. Diary No. 609 of 2023 for the recovery of dues from Principal borrower and the Corporate Debtor on 30.04.2023. The Corporate Debtor acknowledged the debt by signing the letter of acknowledgement of debt dated 12.05.2020. A copy of the letter of acknowledgement of debt is on record as Annexure A-138 to the application. The Principal borrower also acknowledge the debt by signing the letter of Acknowledgement of Debt dated 25.02.2021. The letter is enclosed as Annexure A-139 to the application. The Principal borrower also signed a letter of acknowledgement dated 17.11.2021. Neither the account of CD nor that of Principal borrower are regularised as yet. Para 70 and 71 of the synopsis filed by the FC reads thus: -

The Part-IV (2) of the application which contains the total amount of disbursed loan and dates of default reads thus: -

In the reply filed on behalf of the Corporate Debtor, the salient plea raised on behalf of the CD are: - (i) there is no default committed by the CD in repayment of loan; (ii) there is no debt due and payable within the meaning of Section 3(12) of the Code; (iii) the Application is barred by Section 10A of the Code, as there was a moratorium period of 6 months on repayment of the term loans facility. As the moratorium, expired only on 27.02.2020, the repayment was to be made quarterly w.e.f. 31.05.2020. Thus, if there was default, in repayment of the loan, it was committed on 31.05.2020. According to the CD, the Application is not maintainable, as the date of default falls during the period covered by Section 10A of IBC, 2016. According to it, regarding the default in payment of interest for emergency credit loan facility, the default was dated 28.02.2021 i.e. again covered by the period mentioned in Section 10A of IBC, 2016. (iv) Corporate Guarantee for the loan taken by FEDCO was invoked by the Applicant vide loan recall notice 31.01.2023 which remains unpaid. Since the Applicant could club the recall notice with the loan amount defaulted to be paid during the period covered by Section 10A of IBC, 2016, the Application is not maintainable.

As can be seen from the Reply filed by it, the CD has taken self-contradictory stand. On the one hand, it has taken the plea that the CD has not committed any default, as there was no debt due and payable by it and on the other hand, it has pleaded that the default was committed during the period mentioned in Section 10A of IBC, 2016, thus no application under Section 7 could be filed by the Applicant in this regard. As can be seen from Part IV (2) of the Application, the dates of default mentioned by the Applicant are 28.05.2021 and 19.11.2022, when the account of the CD and Principal Borrower were declared as NPA. As far as the present Application is concerned, the account of Principal Borrower was classified as NPA on 19.09.2023 and the Corporate Guarantee given by the CD was invoked only on 31.01.2023. Thus, the Date of Default qua the amount of Rs 16,13,49,069.81/- is the date of invocation of Bank Guarantee i.e. 31.01.2023. Till the declaration of the account of Principal Borrower as NPA, the Corporate Guarantee could not have been invoked. It is not the case of the CD that the Corporate Guarantee was not invoked prior to 30.01.2023. The CD has also not raised the plea that the account of Principal Borrower is not declared as NPA. The plea regarding filing of the joint application qua default in payment of different amounts of debt is noted only to be rejected. As can be seen from Section 7 of the Code, a Financial Creditor may either itself or jointly with other Financial Creditors or any other person on behalf of the Financial Creditor may file an Application under Section 7 of IBC, 2016. It is also clear from the Explanation given below Third Proviso to Section 7(1), a default includes not only the default in respect of a financial debt qua the Applicant Financial Creditor but also regarding any other Financial Creditor of the CD. Thus, while considering an application under Section 7 of IBC, 2016, what we need to see is only that a debt of Rs. 1 crore was disbursed to the CD and it defaulted in payment of the same. Such conditions are satisfied in the present case. It is also seen from Part-V (3) that the FC had reported the debt and default to NeSL on 09.05.2023 and the Corporate Debtor had authenticated the same on 11.06.2023. The Part-V (3) of the Application reads thus: -

In view of the aforementioned, we are left with no option but to admit the present Application. Ordered accordingly. Ergo, the CIRP commences qua the CD.

In the wake, moratorium as provided under Section 14 of IBC, 2016 is declared qua the CD and as a necessary consequence thereof the following prohibitions are imposed, which must be followed by all and sundry:

As proposed by the Petitioner, Mr. Rajneesh Kumar Aggarwal, having Registration No. IBBI/IPA-001/IP-P00886/2017-18/11483 (e-mail id: [email protected]) is appointed as IRP, subject to the condition that no disciplinary proceeding is pending against him and disclosures as required under IBBI Regulations, 2016 are made by him within a period of one week from this Order. It is further ordered that Mr. Rajneesh Kumar Aggarwal, having Registration No. IBBI/IPA-001/IP-P00886/2017-18/11483 (e-mail id: [email protected]) shall take charge of the CIRP of the Corporate Debtor with immediate effect and would take steps as mandated under the IBC specifically under Section 15, 17, 18, 20 and 21 of IBC, 2016 read with extend provisions of IBBI (Insolvency Resolution of Corporate Persons) Regulations, 2016.

The Petitioner is directed to deposit Rs. 2,00,000/- only with the IRP to meet the immediate expenses. The amount, however, will be subject to adjustment by the Committee of Creditors as accounted for by Interim Resolution Professional and shall be paid back to the Financial Creditor.

A copy of this Order shall immediately be communicated by the Registry/Court Officer of this Tribunal to the Petitioner /Financial Creditor, the Respondent/Corporate Debtor and the IRP mentioned above.

In addition, a copy of this Order shall also be forwarded by the Registry/Court Officer of this Tribunal to the IBBI for their records.