IDBI Bank Limited vs Archit Builders Private Limited

Per: SAMEER KAKAR, MEMBER (TECHNICAL)

This Application has been filed by one IDBI BANK LIMITED (hereinafter referred to as 'Financial Creditor') on 22.12.2020 under Section 7 of the Insolvency and Bankruptcy Code, 2016 (I&B Code) r/w Rule 4 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016, against ARCHIT BUILDERS PRIVATE LIMITED (hereinafter referred to as 'Corporate Debtor').

The prayer made is to admit the Application, to initiate the Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor, declare moratorium and appoint Interim Resolution Professional (IRP).

From Part-I of the Application, it is seen that the Financial Creditor is a Bank. The registered office address of the Financial Creditor as per the Application is stated to be situated at IDBI Tower, WTC Complex, Cuffe Parade, Mumbai - 400 005. Further, Part-I lays down the Authorized Representative of the Financial Creditor to be one Mr. Vijay Anand K.V.,Deputy General Manager and Branch Head of the Financial Creditor by virtue of a power of Attorney dated 30.09.2019 which is placed at Annexure No.IV in the Application typeset.

Part II of the Application lays down the details of the Corporate Debtor. It can be seen that the Corporate Debtor is a Private limited company incorporated under the Companies Act, 1956 on 10.06.1998 with CIN: U45201TN1998PTC040643. The registered office of the Corporate Debtor as per the MCA master data is situated at Thamarai No.43, School Street, Koyambedu, Chennai -600 107.

From Part-III of the Application, it is seen that the Financial Creditor has proposed the name of the Interim Resolution Professional (IRP) viz., Dr. Madurai Sundaram Sankar, Reg. No. IBBI/IPA-Q01/IP-P00770/2017-18/11315.

From Part-IV of the Application, it is seen that the Financial Creditor has claimed a debt amount of Rs.3,58,78,612.80/- as on 08.12.2020 which is due and payable by the Corporate Debtor. The date of default as averred in Part-IV of the Application is 23.02.2018.

Part V of the application describes the particulars of Financial Debt, documents and the same is placed at Annexure -I and the list of documents between the Financial Creditor and the Corporate Debtor is reproduced hereunder:

It was submitted by the Learned Counsel for the Financial Creditor that the Corporate Debtor approached the Financial Creditor assistance to the tune of Rs.300 lakhs. The Applicant at the request of the Corporate Debtor sanctioned the following facilities on 03.07.2009:

It was averred in the application that the Corporate Debtor executed loan and security documents for the sanctioned facilities on 06.07.2009, 21.06.2010, 04.09.2010, 20.09.2010, 27.10.2010 and 27.03.2012.

It was further averred in the application that the term loan was closed. The working capital limits were modified on various occasions and currently stands as a fund based limit of Rs.230 lakhs.

It was further averred in the application that as on 08.12.2020, Rs.3,58,78,612.80/- is due from the Corporate Debtor. Following is the break up amount for the amount claimed:

It was further averred in the application that the above said loan accounts were classified as NPA on 22.10.2017. Further the date of occurrence of default for the purpose of IBC is considered to be 23.02.2018, the date of issuance of notice recalling the loan.

It was submitted by the learned counsel for the Financial Creditor that the interest calculation from the date of default is attached as Annexure -B of the typed set filed along with the application.

It was further averred in the application that the assets of the Guarantors were offered as security to the Applicant Financial Creditor. The details of the mortgaged assets is attached as Annexure A and the estimated value of the Mortgaged security is Rs.1,49,54,000/-.

The Learned Counsel for the Respondent had filed a counter wherein it was stated that the respondent has decided to go for one time settlement with the applicant bank. Despite the difficult situation, respondent offered one time settlement and made upfront payment of Rs.15 lakhs on 25.01.2021 and Rs.10 lakhs on 12.7.2021. Even in the representation forwarded to the applicant bank, the respondent has categorically stated its willingness to sell all the properties mortgaged with the bank for setting the existing liabilities. Thereafter the OTS proposal was failed.

Heard the submissions made by the Learned Counsel for both the parties and perused the records including the pleadings placed on record. At the outset, it is relevant to point out the proceedings of this Tribunal dated 24.06.2022 wherein it was recorded that there was no representation for the Respondent on 10.03.2022 and 11.04.2022. Since the Respondent has not appeared before this Tribunal, the Respondent is called absent and set ex-parte.

Despite being given ample and adequate opportunity to the Respondent, the Respondent failed to turned up and hence in the interest of justice, we are decided to hear the matter on merits. This Tribunal after comprehensively hearing the said matter is of the view that, the debt and default had been proven beyond reasonable doubt.

Further it can be seen from the additional affidavit filed by the Respondent that on 31.03.2017 the Corporate Debtor executed a Revival Letter acknowledging the debt and subsistence of the loan and security documents in favour of the Applicant Bank. It is an admitted and undisputed fact that the Corporate Debtor by acknowledging its liability, requested for One Time Settlement (OTS) vide its letter dated 25.01.2021 and further paid an upfront payment of Rs.15 lakhs for consideration of its OTS proposal and the said OTS proposal was accepted by the Bank vide Letter of Acceptance dated 08.03.2021.

Consequent to the failure of the Corporate Debtor to honour the terms of repayment of the OTS settlement, the Applicant Bank revoked the offer of settlement vide the OTS Revocation Letter dated 03.04.2021.

The Corporate Debtor had admitted the outstanding amount in the audited financial statements for financial year 2019-2020 which reflected the default made by the Corporate Debtor. Further it is also required to be noted that the Hon'ble Supreme Court in the matter of Asset Reconstruction Company (India) Limited -Vs- Bishal Jaiswal & Anr.in Civil Appeal No.323 OF 2021 has categorically held that the entries made in the balance sheet would amount to acknowledgment of debt. The date of default is 23.02.2018. Therefore, the Application is well within the period of limitation.

With regard to the limitation aspect it is pertinent to mention the Hon'ble Supreme Court Judgement in the matter of Dena Bank(now Bank of Baroda) vs C.Shivakumar Reddy and Anr. wherein it was held in para 141 of the Judgement as follows:

Apropos, the Hon'ble Supreme Court in the case of Innoventive Industries Limited v. ICICI Bank Limited, where it has discussed extensively the scope of the Adjudicating authority under section 7 of the IBC is limited to assessing the records provided by the financial creditor to satisfy itself that the default has occurred.

In view of the facts as stated supra and also in view of the 'financial debt' which is proved by the Financial Creditor and the 'default' being committed on the part of the Corporate Debtor, this Tribunal is left with no other option than to proceed with the present case and initiate the Corporate Insolvency Resolution Process in relation to the Corporate Debtor.

As a consequence of the Application being admitted in terms of Section 7 of the Code, moratorium as envisaged under provisions of Section 14(1) and as extracted hereunder shall follow in relation to the Corporate Debtor;

However during the pendency of moratorium period in terms of Section 14(2) and 14(3) as extracted hereunder;

The duration of period of moratorium shall be as provided in Section 14(4) of the Code which is reproduced below for ready reference;

The Financial Creditor has proposed the name of Dr.Madurai Sundaram Sankar (Email id:m.s.sankar@outlook.com), Reg. No. IBBI/IPA-001/IP-P00770/2017-18/11315 as the Interim Resolution Professional (IRP) who has also filed his consent in Form – 2 and also upon verification from the IBBI website, it is seen that the said person hold valid Authorization for Assignment till 13.12.2022.

Dr.Madurai Sundaram Sankar is appointed as the IRP is directed to take charge of the Corporate Debtor’s management immediately. The IRP is also directed to cause public announcement as prescribed under Section 15 of the IBC, 2016 within three days from the date the copy of this Order is received, and call for submissions of claim by the creditors in the manner as prescribed under Regulation 6 of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016.

The IRP appointed shall take in this regard such other and further steps as are required under the Statute, more specifically in terms of Section 15, 17, 18 of the IBC, 2016. The powers of the Board of Directors of the Corporate Debtor shall stand superseded as a consequence of the initiation of the CIRP in relation to the Corporate Debtor in terms of the provisions of IBC, 2016.

The IRP shall comply with the provisions of Sections 13 (2), 15, 17 & 18 of the Code. The Directors of the Corporate Debtor, its Promoters or any person associated with the management of the Corporate Debtor are directed to extend all assistance and cooperation to the IRP as stipulated under Section 19 of IBC, 2016 for the purpose of discharging his functions.

Based on the above terms, the Application stands admitted in terms of Section 7(5) of IBC, 2016 and the moratorium shall come in to effect as of this date. A copy of the Order shall be communicated to the Financial Creditor as well as to the Corporate Debtor above named by the Registry. In addition, a copy of the Order shall also be forwarded to IBBI for its records. Further, the Interim Resolution Professional above named who is figuring in the list of Resolution Professionals forwarded by IBBI be also furnished with copy of this Order forthwith by the Registry, who will also communicate the initiation of the CIRP in relation to the Corporate Debtor to the Registrar of Companies concerned.

The IRP is directed to file the 1^st Progress Report before this Tribunal on or before the 45^th day of initiation of CIRP by this Adjudicating Authority.

Post this CP/IB/9/CHE/2021 for hearing on 02.09.2022.