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Judgment
Per: B.S.V. Prakash Kumar, Member(J)
It is a Company Petition filed u/s 7 of IBC (“the Code”) by the Financial Creditor namely IDBI Bank Limited against the Corporate Debtor on the ground that this Corporate Debtor defaulted in paying ₹78.54 Crores, which the Principal Borrower, even after classified the account as NPA, defaulted in repaying towards the credit facilities availed by it from the Financial Creditor, despite the Financial Creditor gave several reminders to the Corporate Debtor (Corporate Guarantor) to clear the liability the Corporate Debtor agreed to discharge by executing Corporate Guarantee in favour of the Financial Creditor on the Principal Borrower behalf, therefore, the creditor Bank has sought for initiation of CIRP against the Corporate Debtor.
On perusal of the Petition it appears that on 29.01.2009, the creditor Bank has provided various credit facilities to the principal borrower namely M/s. Doshion Water Solution Private Limited to a tune of ₹72 Crores, in furtherance of it, the Principal Borrower executed several loan documents, in addition to it, this Corporate Debtor standing as Corporate Guarantor to the principal borrower, on 25.08.2011 executed Agreement of Guarantee in favour of the creditor Bank to the loan availed by the Principal Borrower, in continuation, as and when credit facility limits were revised, the Corporate Debtor kept on executing guarantees, in the process of it, it has executed guarantee deeds on 26.11.2013 and 27.06.2014 in favour of Security Trustee, namely IL&FS Trust Company Limited.
In the guarantee deeds, this Corporate Debtor executed guarantee stating that the guarantee shall be an irrevocable and continuing security and shall not be revoked or cancelled by the guarantor until the payment of the entire amount outstanding. This guarantee shall be a continuing one and shall remain in full force and effect till such time the borrower repays in full the loan together with all interest, liquidated damages, costs, charges and all other monies including any increase as a result of devaluation/revaluation/fluctuation in the rates of exchange of foreign currencies involved that may from time to time become due and payable and remain unpaid to the lenders under the loan agreement.
On reading the file, since this Bench has noticed that the Principal Borrower as well as the guarantor timely acknowledged the liability subsisting against them either by executing agreements time to time or by making acknowledgements; it is evident that the debt is not barred by limitation. Soon after execution of these documents, since the loan was classified as NPA on 30.04.2016 in accordance with Reserve Bank of India directives, recall notice was issued on 20.09.2016 to the Principal Borrower by the Financial Creditor, in furtherance of it, the Bank has issued a notice for invocation of guarantee on 04.11.2016 calling upon the Corporate Debtor to make payment for having the Principal Borrower defaulted in repaying the loan as agreed by the Principal Borrower. But in spite of notice of invocation of guarantee served upon the Corporate Debtor, the Corporate Debtor having failed to pay the same, the Bank on 20.03.2017 issued SARFAESI Notice u/s 13(2) of SARFAESI Act to the Principal Borrower including the present Corporate Debtor who stood as Guarantor to the loan availed by the Principal Borrower. For there being no progress to the efforts made by the Financial Creditor herein, finally the Bank has initiated this proceeding so as to start the CIRP against this Corporate Debtor. The Principal Borrower in its Balance Sheet as of 31.03.2018 has disclosed and acknowledged the amount due to the Financial Creditor by specifying that the Corporate Debtor has given Corporate Guarantee to the loan availed by the principal borrower.
On perusal of the file, we have noticed that the creditor bank annexed all the documents executed by the Principal Borrowers as well as this Corporate Debtor as annexures reflecting that the Principal Borrower and this Corporate Debtor failed to repay the same to the creditor bank.
As against this petition, the only objection the Corporate Debtor raised is the person namely Mr.T.K.Prasad is not authorized to represent the above Financial Creditor.
To substantiate the above allegation and objection, the creditor bank counsel has brought it to the notice of this Bench, the power of attorney has been given to Mr. T.K.Prasad authorising him to initiate legal action against the debtors on delegation of powers to the present signatory i.e. Mr. T.K. Prasad.
It need not be said separately that in Banking Industry that the Banking Authorities will delegate the powers to the Officers working in the respective branches so as to proceed with filing cases against defaulters, thereby unless it is self-evident that signatory is not authorised to proceed against the defaulters, this objection cannot be countenanced as sustainable. In view of the same, we have not found any merit in the objection raised by this Corporate Debtor. In addition to the documents placed, the Petitioner has also placed the Statement of Accounts reflecting the payments and also how this account has been classified as NPA and also notifying invocation of guarantee against the Corporate Debtor when the Principal Borrower failed to repay the loan.
In view of the reasons aforesaid mentioned, since this Bench has noticed that the Corporate Debtor as well as the Guarantor executed the documents binding this liability upon them and the same not being repaid either by the Principal Borrower or this Guarantor, we hereby, hold that it is a fit case for admission, henceforth declared Moratorium u/s 14 of the Code by appointing C S Satyadevi Alamuri as Interim Resolution Professional to carry the functions in CIRP period from hereof with directions as follows:
I. That Moratorium is hereby declared prohibiting all of the following actions, namely,
the institution of suits or continuation of pending suits or proceedings against the corporate debtor including execution of any judgment, decree or order in any court of law, tribunal, arbitration panel or other authority;
transferring, encumbering, alienating or disposing of by the corporate debtor any of its assets or any legal right or beneficial interest therein;
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 (SARFAESI Act);
the recovery of any property by an owner or lessor where such property is occupied by or in the possession of the corporate debtor.
That the supply of essential goods or services to the corporate debtor, if continuing, shall not be terminated or suspended or interrupted during moratorium period.
That the provisions of sub-section (1) of Section 14 shall not apply to such transactions as may be notified by the Central Government in consultation with any financial sector regulator.
That the order of moratorium shall have effect from 04.02.2019 till the completion of the corporate insolvency resolution process or until this Bench approves the resolution plan under sub-section (1) of section 31 or passes an order for liquidation of corporate debtor under section 33, as the case may be.
That the public announcement of the Corporate Insolvency Resolution Process shall be made immediately as specified under Section 13 of the Code.
That this Bench hereby appoints CS Satyadevi Alamuri as Interim Resolution Professional (Reg.No.IBBI/IPA/002/IP-N00071/2017-18/10205) to carry the functions as mentioned under Insolvency & Bankruptcy Code.
The Registry is hereby directed to immediately communicate this order to the Financial Creditor, the Corporate Debtor and the Interim Resolution Professional by way of e-mail.
The address details of the IRP are as follows:-
CS Satyadevi Alamuri, Reg.No. (Regn. No. IBBI/IPA-002/IP-N00071/2017-18/10205), 23, Lake Area, 3rd Cross Street, Rear Entrance, Opp. Corporation Zonal Office, Nungambakkam, Chennai – 600 034 Email: [email protected] Mobile No. 9444373373
Accordingly, this Company Petition is hereby admitted.