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Judgment
Per: V.P. Singh, Member (Judicial)
ORDER
This is a petition being CP 2851(IB)/MB/2018 filed by Indian Renewable Energy Development Agency Limited, a company incorporated under the Companies Act, 1956 and a Public Financial Institution, the Financial Creditor or Petitioner, under section 7 of Insolvency & Bankruptcy Code, 2016 (I&B Code) against Shree Kedarnath Sugar and Agro Products Limited, Corporate Debtor, for initiating Corporate Insolvency Resolution Process (CIRP).
The Petition is filed by Mr Sushanth Kumar Dey, the Assistant General Manager of the Financial Creditor, claiming a total default of ₹57,38,92,106/- (Rupees Fifty Seven Crore Thirty Eight Lakh Ninety Two Thousand, One Hundred and Six only) as on 31.03.2018. The amount claimed is as provided below:
| Sl No. | Particulars | As on 31.03.2018 (in ₹) |
| 1. | Principal Amount | 22,66,21,494/- |
| 2. | Interest Amount | 30,49,38,562/- |
| 3. | LD Amount | 3,98,72,341/- |
| 4. | IC Amount | 24,59,609/- |
| TOTAL | 57,38,92,106/- |
The Petitioner originally sanctioned a term loan of ₹24,50,00,000/- (Rupees Twenty Four Crores Fifty Lakh only) in favour of the Respondent vide sanction letter dated 16.03.2007 for setting up 15 MW (increased to 18MW) Bagasse Co-generation plant in 2500 TCD new sugar mill near village Kerkalmatti, Badami Taluk, Bagalkot, Karnataka. The Respondent accepted the terms and conditions of the Sanction Letter vide Board Resolution dated 20.03.2007. Copies of the Sanction Letter dated 16.03.2007 and Board Resolution dated 20.03.2007 is annexed to the Petition.
The Petitioner and the Respondent entered into various deeds under the sanction letter. The documents related to the loan facility availed by the Respondent are annexed to the Petition and are listed hereunder:
Loan Agreement dated 20.04.2007 along with the amendments to the Agreement;
Deed of Hypothecation dated 20.04.2007 along with general declarations/undertakings dated 20.04.2007;
Deed of Corporate Guarantee of VH Aparadh Hotels Private Limited dated 20.04.2007 along with other documents;
Deed of Guarantee of Mr Vikramsinh H Aparadh dated 20.04.2007;
Trust and Retention Agreement dated 22.08.2007;
Simple Mortgage Deed dated 22.06.2007 along with Rectification Deed dated 20.09.2007;
Memorandum of Entry dated 03.04.2008;
Memorandum of Entry along with Declaration and Undertaking dated 09.08.2007;
Memorandum of Entry along with Declaration and Undertaking dated 13.01.2010;
Deed of Guarantee of Sri Ranjeetsinh Vikramsinh dated 22.03.2010;
The Petitioner submits that the Respondent has also availed credit facilities from various other financial institutions forming a consortium, of which Syndicate Bank is the lead bank. Copies of the letters issued for ceding pari-passu charge or the No Objection Certificate issued for ceding paripassu charge issued by the Syndicate Bank is annexed to the Petition.
The Petitioner has disbursed a sum of ₹24,49,96,494/- in 8 disbursements from 03.09.2007 to 31.03.2010.
It is submitted by the Petitioner that the Respondent has failed to implement the project successfully for which the loan was granted and has also defaulted in making payments to the consortium Bankers. The lead Banker has issued a notice under section 13(2) of the SARFAESI Act, 2002 to the Respondent and the copy of the same is annexed to the Petition.
It is submitted by the Petitioner that the Respondent has acknowledged its inability to pay the outstanding and offered for a one-time settlement to the Petitioner. However, the Petitioner has not conceded to the same, since the one-time settlement conditions are unfavourable to the Petitioner. Copies of the communications in this regard, as available upfront, are annexed to the Petition.
The Petitioner issued Notice dated 11.03.2013 for invoking the guarantee and demanding the guarantor to pay all the amount payable and due by the Respondent. The copy of the Notice dated 11.03.2013 is annexed to the Petition.
The Petitioner issued another notice under section 13(2) of the SARFAESI Act, 2002 dated 24.03.2014 as the Respondent’s dues were secured by two collateral securities. Copy of the notice dated 24.03.2014 is annexed to the Petition.
The Petitioner submits that notice dated 29.12.2014 was issued to the Respondent under section 271 of the Companies Act, 2013 invoking the guarantees, seeking repayment of the loan amounts due, however, the Respondent has not replied to the said Notice. The Petitioner further issued a Possession Notice dated 13.03.2015 under section 13(4) of the SARFAESI Act, 2002 and took symbolic possession of another property, exclusively charged in favour of the Petitioner and owned by Ms Rekha Devi Vikramsinh Aparadh. Copy of the Notice dated 29.12.2014 and Notice dated 13.03.2015 is annexed to the Petition.
The Petitioner submits that Recovery Application bearing O.A No.48/2015 has been filed by the Petitioner against the Respondent for recovery of a sum of ₹36,66,43,614/- (Rupees Thirty Six Crores Sixty Six Lakhs Forty-Three Thousand Six Hundred and Fourteen only) before the Ld. DRT, New Delhi on 08.01.2015. Copy of the Recovery Applications annexed to the Petition.
The Petitioner submits that the default occurred on 31.03.2012 and has been declared as NPA on 31.03.2012. The Commercial Credit Information Report issued by Trans Union CIBIL, the Statement of Accounts and Balance Sheets of the Respondent, has been annexed to the Petition.
The Respondent in its Affidavit in Reply submits at para 6.3 at page 10 of its Reply that the details pertaining the loan sanctioned and disbursed by the Financial Creditor to the Corporate Debtor is true and does not deny the loan.
It is the contention of the Respondent that the Petitioner had nominated Mr V. Balasubramanium as a nominee director on the Board of Directors of the Respondent company in the year 2007 to monitor the usage of the loan amounts, attending board meetings, participating in committee meetings, monitoring transfer of shares with a view to keep a control over the management and financial affairs of the Respondent. The Respondent further submits that the transfer of shares to the farmers were done during the period 2010, 2011, 2012 and the said transfers were made by Mr Vikramsinh H. Aparadh with the approval of the then board of directors and the nominee director of the Petitioner was in the board of directors. However, nothing was pointed out by the nominee director. The Petitioner withdrew its representation from the board of directors in the year 2013 when the functioning of the Corporate Debtor had come to a stand still due to various losses. The Respondent submits that after the disqualification of its erstwhile directors, the present board and the management came across various anomalies and irregularities in the day to day functioning of the then management on board.
The Respondent in its Reply has also contended that the Petition is barred by limitation since the default as per the Petition occurred on 01.04.2011 whereas the Petition is filed in the year 2018 after a lapse of 7 years and has relied on the Supreme Court decision in the case of B.K Educational Services Private Limited v. Parag Gupta and Associates, AIR (SC) 5601, 2018 DGLS (SC) 1037.
The Petitioner in its Rejoinder submits that the Petition is not barred by limitation as the claim is arising out of the loan sanctioned and disbursed to the Respondent. It is further submitted that as per the amortization schedule that stipulates the repayment of the loan facility initially commenced from 30.09.2010 and it closes on 30.06.2020. Therefore, at no stretch of the imagination, the claim is barred by limitation. The amortization schedule is annexed to the Petition.
The Petitioner submits that the petition is not barred by limitation and relied on the decision of the National Company Law Tribunal Principal Bench, New Delhi, in C.P No. IB-939(PB)/2018, Oriental Bank of Commerce v. Sikka Papers Ltd and Ors. Wherein it was observed at para 9 as below:
“When the case was heard on merit the only objection raised to the admission of the petition was that the debt is time-barred as the account of the corporate debtor was declared as NPA in the year 2009 and the present petition was filed in the year 2018. The argument raised would not sustain. The reason is that charge was registered on 06.09.2009. According to Article 62 of the Schedule appended to the Limitation Act, 1963, the period to enforce payment of money secured by a mortgage or otherwise charged upon immovable property is 12 (Twelve years). Even otherwise the petitioner – financial creditor has a decree in its favour by the Debt Recovery Tribunal dated 09.05.2014 and the same is covered by Article 136 of the Limitation Act where the period for computing the limitation is again 12 (Twelve Years). In the present case, default occurred in the year 2009, and the present petition has been filed on 23.07.2018 which is before the period of 12 years as provided by Article 62 and 136 of the Schedule appended to the Limitation Act. Therefore the argument raised is hereby rejected”.
The Petitioner has also relied on the decision of this Tribunal in C.P No.1095/IBC/2017, Punjab National Bank v. Anand Distilleries Pvt Ltd, wherein it is observed at para 10 and 11 that
“..by showing all these documents filed with additional affidavit, the Petitioner Counsel submits that though the Corporate Debtor defaulted in making repayment on 31.05.2011, the Petitioner having filed application u/s 19 of the Recovery of Debts and Bankruptcy Act, 1933 before Debt Recovery Tribunal within limitation, it has to be construed that limitation against this claim has been arrested, because lis over the claim is pending before a competent forum, thereby this case has to be entertained under IBC treating cause of action arose in respect to this claim is within limitation
It goes without saying when lis is pending before any court of law; limitation will not run against the claim pending before a competent forum. Therefore, the claim filed under section 7 of this Code shall not be treated as barred by limitation”.
We have heard the parties and perused the records.
The Petition is filed by Mr Sushanth Kumar Dey, the Assistant General Manager of the Financial Creditor. The petition was filed on 27th July 2018. Copy of the Circular dated 21.05.2004 along with Letter of Authority dated 12.06.2018 authorising Mr Sushanth Kumar Dey to file this Petition is on record.
The Petitioner has annexed copies of the documents relating to the grant of loan to the Respondent. The Sanction Letter dated 16.03.2007, the Board Resolution dated 20.03.2007 of the Respondent accepting the terms and conditions of the Sanction Letter, the Loan Agreement dated 20.04.2007, the Guarantees executed in favour of the Petitioner and other loan-related documents. The Respondent has not denied the fact that the Petitioner provided the loan as per the Sanction Letter.
The Petitioner has annexed the Commercial Credit Information Report issued by TransUnion CIBIL, the Statement of Accounts and Balance Sheets of the Respondent for the period 2014-15 establishing the debt and default.
As the debt and default are established, the question that arises at this point is whether the Petition is filed within the period of limitation.
The Respondent’s contention that the petition is not maintainable as it is barred by limitation is unsustainable as rightly pointed out by the Petitioner and on account of proceedings bearing O.A No.48 of 2015 before the Ld. DRT, New Delhi already being initiated on 08.01.2015. The Petitioner has proposed the name of Mr Bhuvnesh Maheshwari, a registered insolvency resolution professional having Registration Number [IBBI/IPA-001/IP-POO493/2017-18/10881] as Interim Resolution Professional, to carry out the functions as mentioned under I&B Code, and given his declaration; no disciplinary proceedings are pending against him.
The Application under sub-section (2) of Section 7 of I&B Code, 2016 is complete. The existing financial debt of more than rupees one lakh against the corporate debtor and its default is also proved. Accordingly, the petition filed under section 7 of the Insolvency and Bankruptcy Code for initiation of corporate insolvency resolution process against the corporate debtor deserves to be admitted.
ORDER
This petition filed under Section 7 of I&B Code, 2016, filed by Indian Renewable Energy Development Agency Limited, Financial Creditor / Petitioner, against Shree Kedarnath Sugar and Agro Products Limited, Corporate Debtor for initiating corporate insolvency resolution process is at this moment admitted. We further declare moratorium u/s 14 of I&B Code with consequential directions as mentioned below:
I. That this Bench as a result of this prohibits:
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 Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002;
the recovery of any property by an owner or lessor where such property is occupied by or in possession of the corporate debtor.
II. That the supply of essential goods or services to the corporate debtor, if continuing, shall not be terminated or suspended or interrupted during the moratorium period.
III. That the provisions of sub-section (1) of Section 14 of I&B Code shall not apply to such transactions as may be notified by the Central Government in consultation with any financial sector regulator.
IV. That the order of moratorium shall have effect from the date of this order till the completion of the corporate insolvency resolution process or until this Bench approves the resolution plan under sub-section (1) of section 31 of I&B Code or passes an order for the liquidation of the corporate debtor under section 33 of I&B Code, as the case may be.
V. That the public announcement of the corporate insolvency resolution process shall be made immediately as specified under section 13 of I&B Code.
VI. That this Bench at this moment appoints Mr.Bhuvnesh Maheshwari, a registered insolvency resolution professional having Registration Number [IBBI/IPA-001/IP-POO493/2017-18/10881] as Interim Resolution Professional to carry out the functions as mentioned under I&B Code, the fee payable to IRP/RP shall comply with the IBBI Regulations/Circulars/Directions issued in this regard.
The Registry is at this moment directed to immediately communicate this order to the Financial Creditor, the Corporate Debtor and the Interim Resolution Professional even by way of email or WhatsApp. Compliance report of the order by Designated registrar is to be submitted today.