M/s. Orix Leasing and Financial Services India Ltd vs M/s. Solar Semiconductor Energy Systems (India) Private Limited

Per: K. Anantha Padmanabha Swamy, Member Judicial.

Under consideration is Company Application filed by M/s. Orix Leasing and Financial Services India Ltd (in short, “Petitioner/Financial Creditor”) against M/s. Solar Semiconductor Energy Systems (India) Private Limited (in short, “Respondent/Corporate Debtor”) under section 7 of the Insolvency and Bankruptcy Code, 2016 (in short, IB Code, 2016) read with Rule 4 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 (for brevity, IB Rules, 2016).

The brief facts as stated by the Applicant are as under:-

The Financial Creditor i.e., M/s. Orix Leasing & Financial Services India Limited is a Public Limited Company bearing; CIN U74900MH2006PLC163937; incorporated under the provisions of Companies Act, 1956 on 21.08.2006. It is classified as Non-government Company and is registered at Registrar of Companies, Mumbai. Its authorized share capital is Rs.1,500,000,000 and its paid-up capital is Rs.1,009,359,040; and having its registered office situated at Plot N.94, Marol Cooperative Industrial Estate, Andheri-Kurla Road, Andheri(East), Mumbai 400059. It is in the business of providing finance to various corporate customers, inter alia, by way of lease, loan, hire purchase, deferred payment scheme etc.

The Corporate Debtor i.e., M/s Solar Semiconductor Energy Systems (India) Private Limited is a Private Limited Company, incorporated on 23.08.2010 and is registered at Registrar of Companies, Hyderabad. It’s a private unlisted company and is classified as company limited by shares. Company’s authorized capital stands at Rs.5.0 lakhs and has 20.0% paid-up capital which is Rs.1.0 lakhs. The Corporate Debtor is involved in the generation of electricity from wind energy / energy from waves etc., and generation of electricity from other non-conventional sources.

That the Corporate Debtor approached the Financial Creditor for availing the financial assistance of Rs.1,07,76,815/- (Rupees One Crore Seven Lakhs Seventy-Six Thousand, eight hundred and Fifteen only) to carry out the interior works for its business purpose. After several rounds of discussions and negotiations on 03.04.2017 both the parties agreed upon a Lease Agreement wherein the Financial Creditor has offered to provide lease finance assistance to the Corporate Debtor in respect of Furniture and Fixtures (Asset) which the Corporate Debtor was desirous to take for its business purpose on lease basis from the Financial Creditor. It further submitted that the Corporate Debtor had resolved by the Board Resolution dated 24.03.2017, to take on lease basis computers, Networking, IT and office equipment from the Applicant Company and accordingly to make the rental payment to it.

That in accordance to the aforesaid agreements and the “Leasing of Office Furniture, Fittings and Fixtures – Request for Disbursement” letter dated 30.03.2017 given by the Corporate Debtor. The Financial Creditor has disbursed Rs.64,95,569/- on 5.04.2017 and Rs.42,81,245/- on 28.11.2017 to the Corporate Debtor's Architects, M/s. Interio and Architecture Bangalore. The amount transferred has been received by M/s Interio and Architecture, Bangalore. Thus, the entire amount of Rs.1,07,76,815/- (Rupees One Crore Seven Lakhs Seventy-Six Thousand, eight hundred and Fifteen only) has been received by the Corporate Debtor from the Petitioner Company.

That the Corporate Debtor was irregular in repaying the monthly rentals due by them and from February 2018, totally stopped making the payments. The Applicant Company time and again requested the Corporate Debtor to make its payment vide various emails and letters. The Corporate Debtor has time and again admitted the liability and requested to bear with them as their payments were getting delayed. The same was considered and time was granted again and again. However, the Corporate Debtor failed to discharge its liability as agreed.

That the Financial Creditor thereafter got issued legal notices dated 26.06.2018, 27.07.2018 and 30.07.2018 demanding from the Corporate Debtor the payments due. It is submitted that the Financial Creditor sent the demand notices even to the guarantors calling upon them to make payment.

That the Corporate Debtor, on 10.08.2018, represented by its counsel replied to the notice dated 27.07.2018, whereby it admitted by having entered into the Lease Deed Agreement TAM F/EAM 02432 Annexure F/DISB011373 dated 03.04.2017 with the Financial Creditor to avail financial assistance. The Corporate Debtor also admitted that the Financial Creditor provided Lease Financial Assistance of Rs.1,07,76,815.36; but with moonshine defence has stated that they have not received entire agreed amount.

That as on the date of filing of this application, the amount due is Rs.1,16,98,242.60/- (Rupees One Crore, Sixteen lakhs, Ninety-eight thousand, two hundred and forty-two and paise Sixty only). The said amount included the arrears of lease rentals amounting to Rs.62,11,059.72/- along with the late payment charges of Rs.11,84,007.07/-, the premature termination of lease agreement due to the default caused by the Corporate Debtor of Rs.49,13,677.27 plus taxes.

That an Application under Section 7 for the same cause was filed by the Financial Creditor inadvertently at NCLT, Bangalore and vide order dated 09.08.2019, the Adjudicating Authority, NCLT, Bangalore disposed the application as withdrawn by reserving liberty to the Petitioner to approach appropriate Bench of NCLT, as per law and the Registry was directed to return the case papers to the Applicant.

Respondent filed counter and written submissions, inter-alia stating that the averments made by the Financial Creditor are denied and not maintainable on the following grounds:

That this Adjudicating Authority has no jurisdiction to entertain this petition because the head office of the Financial Creditor is in Mumbai and all the transaction took place at Mumbai.

That the Financial Creditor produced an agreement and Corporate guarantee Agreement and such other documents as filled by the Financial Creditor. The said documents clearly shows that execution of the document was done at Mumbai and in the said agreement, para no. 26 clearly shows that any disputes arising between the parties, that the courts at Mumbai have jurisdiction to entertain this petition. When such being the situation the Financial Creditor filed this Application before this Adjudicating Authority having no jurisdiction to entertain this Application and on this ground alone, the petition is liable to be dismissed for want of jurisdiction.

That the Financial Creditor had issued demand notice to the Respondent. The Respondent have given a suitable reply to the said notice.

That the Corporate Debtor approached the Financial Creditor to grant certain credit facilities to an aggregate extent of ₹1,07,76815 (Rupees One Crore Seven Lakhs Seventy Six Thousand Eight Hundred Fifteen Only). It is not admitted that the Respondents fully availed the loan of ₹1,07,76,815 to the solar semi-conductors in respect of furniture and fixtures from the Financial Creditor.

That at the time of availing the alleged facilities, Respondents have executed the mortgage deed and guarantee agreement, personnel guarantee agreement for repayment of the alleged loan amount. At no point of time the Respondents have executed Corporate Guarantee Agreement and lease agreement, personnel guarantee agreement in favour of the Financial Creditor.

That in terms of clause No.2, 3(b) of the said lease agreements Respondents were supposed to pay the stipulated lease rentals regularly and punctually without any abetments and deductions, but it was false and not admitted that the Respondents have grossly neglected in the payment of the lease rentals during leased tenure thereby causing an event of default under the said lease agreement.

That they have not executed any agreement at any point of time for any amount as allegedly claimed by the Financial Creditor. Respondents have never received any notice from the Financial Creditor for claiming ₹94,81,209/-. Further the petitioner had not released the entire amount and what the petitioner claimed in the petition is totally against the law and petitioner has no right to proceed against the Respondents for insolvency under IB code or any other proceedings.

Reiterating the above, the counsel for the Respondent prayed to reject the instant Application.

The present petition was filed on 30.09.2019 and after scrutiny by the registry, the same was first listed on 23.10.2019 and the Petitioner was directed to issue notice of date of hearing to the Respondent and the matter was adjourned to 06.11.2019.

During the hearing held on 06.11.2019, Shri. Kalleshappa, Counsel appeared for the Respondent, filed vakalat and prayed time for filing counter. At his request, matter adjourned to 27.11.2019

During the hearing held on 27.11.2019, Respondent filed counter and further stated that they are intending to settle the matter. At request, matter was adjourned to 03.12.2019.

During the hearing held on 03.12.2019, there was no representation on behalf of Respondent/Corporate Debtor. In view of the above, Respondent was proceeded ex-parte and the matter was adjourned for hearing submission of petitioner to 11.12.2019.

During the hearing held on 11.12.2019, matter was heard and it was reserved for orders. Subsequently, the Respondent filed an application bearing IA No.112/2020 for re-calling the ex-parte order dated 03.12.2019 for which the said IA was allowed after hearing the submissions of applicant.

During the hearing held on 26.02.2020, the matter was heard at length and reserved for orders.

Heard both the sides and perused the record.

It is the case of the Applicant that the Corporate Debtor has availed lease Financial assistance from Financial Creditor on various occasions vide agreement dated 03.04.2017, and that an amount of Rs. 1,16,98,242.60/-is due and payable by the Corporate Debtor. The Corporate debtor in its counter has raised the following two grounds for rejection of the instant Application:

With regard to the contention of the Corporate Debtor regarding jurisdiction for Adjudication of the instant Application, it is observed that the registered office of the Applicant is situated in the state of 'Telangana', and the jurisdiction under the IB Code, 2016 is governed by section 60(1) of the Code, which is abstracted as under:-

On perusal of the above section, it is amply clear that under the IBC, 2016, the Adjudicating Authority has the territorial jurisdiction over the place where the registered office of the Corporate Debtor is located in relation to the Insolvency Resolution, which in the instant case, falls within jurisdiction of NCLT Hyderabad Bench. Thus, the Corporate Debtor's contentions challenging jurisdiction of this Adjudicating Authority on the basis of agreement between the parties does not form a valid ground for rejection of the instant Application.

With regard to the contention of the Corporate Debtor regarding quantum of amount, it is settled position of Law, that the quantum of amount is to be looked into by the IRP/RP, as the case may be and not by this Adjudicating Authority. This Adjudicating Authority has to mere look only, if there is a debt and default in repayment of the same. Thus the second contention also does not from any valid ground for rejection of the instant Application.

Further, the Hon'ble Supreme Court, while deciding the matter in the case of INNOVENTIVE INDUSTRIES LTD. Vs. ICICI BANK & ANR., in Civil Appeal Nos. 8337-8338 of 2017, held as under:

In the present case, this Adjudicating Authority is satisfied with the submissions put forth by the Petitioner/Financial Creditor regarding existence of 'financial debt' and occurrence of 'default'. Further, the Financial Creditor has fulfilled all the requirements as contemplated under IB Code in the present Company Petition and has also proposed the name of IRP after obtaining his written consent in Form-2. In view of the above, this Adjudicating Authority is inclined to admit the petition.

The instant petition is hereby admitted and this Adjudicating Authority Orders the commencement of the Corporate Insolvency Resolution Process which shall ordinarily get completed as per the time line stipulated in section 12 of the IB Code, 2016, reckoning from the day this order is passed.

This Adjudicating Authority hereby appoint Mr. Murali Prasad Nalam having Regn. No. IBBI/IPA-001/IP-P00933/2017-18/11537 (IRP) as the name proposed by the Financial Creditor and his name is reflected in IBBI website. He has also filed his written consent in Form - 2. Authorisation for Assignment (AoA) to be filed within three days. The IRP is directed to take charge of the Respondent/Corporate Debtor's management immediately. He is also directed to cause public announcement as prescribed under Section 15 of the I&B Code, 2016 within three days from the date of this order, and call for submissions of claim in the manner as prescribed.

This Adjudicating Authority hereby declares the moratorium which shall have effect from the date of this Order till the completion of corporate insolvency resolution process for the purposes referred to in Section 14 of the I&B Code, 2016. We order to prohibit all of the following, 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 Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (54 of 2002);

The recovery of any property by an owner or lessor where such property is occupied by or in the possession of the corporate debtor.

Notwithstanding anything contained in any other law for the time being in force, a license, permit, registration, quota, concession, clearances or a similar grant or right given by the Central Government, State Government, local authority, sectoral regulator or any other authority constituted under any other law for the time being in force, shall not be suspended or terminated on the grounds of insolvency, subject to the condition that there is no default in payment of current dues arising for the use or continuation of the license, permit, registration, quota, concessions, clearances or a similar grant or right during the moratorium period.

However, the supply of essential goods or services of the Corporate Debtor shall not be terminated or suspended or interrupted during moratorium period. Further, if the IRP considers supply of any goods or services critical to protect and preserve the value of the corporate debtor and manage the operations of such corporate debtor as a going concern, then the supply of such goods or services shall not be terminated, suspended or interrupted during the period of moratorium, except where such corporate debtor has not paid dues arising from such supply during the moratorium period. Furthermore, the provisions of Sub-section (1) of Section 14 shall not apply to such transactions, agreements or other arrangement as may be notified by the Central Government in consultation with any financial sector regulator or any other authority.

The IRP shall comply with the provisions of Sections 13(2), 15, 17 & 18 of the Code. The directors, Promoters or any other person associated with the management of Corporate Debtor are directed to extend all assistance and cooperation to the IRP as stipulated under Section 19 and for discharging his functions under Section 20 of the I&B Code, 2016.

The Petitioner/Financial Creditor as well as the Registry is directed to send the copy of this Order to IRP so that he could take charge of the Corporate Debtor's assets etc. and make compliance with this Order as per the provisions of I&B Code, 2016.

The Registry is directed to communicate this Order to the Financial Creditor and the Corporate Debtor.

The Registry shall also communicate this Order to the ROC, Hyderabad for updating the status of the Corporate Debtor in the MCA website.

The address details of the IRP are as follows:-Mr. Murali Prasad Nalam Reg. No: IBBI/IPA-001/IP-P00933/2017-18/11537. Flat 413, Block 2, RV Madhav Brindhavan Apartments, Adj Chandanagar Police Station, Chandanagar, Hyderabad – 500 050. Email ID: [email protected], Ph.No. +91 9849073076.

The present Petition bearing CP (IB) No.662/7/HDB/2019 is hereby admitted.