M/S. Syndicate Bank vs M/S. Visa Pharmaceuticals Private Limited

Per Shri Harish Chander Suri, Member (Technical).

This petition under Section 7 of the Insolvency & Bankruptcy Code read with Rule 4 of the Insolvency & Bankruptcy (Application to Adjudicating Authority) Rules, 2016 has been filed by M/s. Syndicate Bank, a body corporate, through One of its Chief Manager Mr. Bansi Gopal Pujari, Chief Manager, hereinafter referred to as the “Financial Creditor” for initiating Corporate Insolvency Resolution Process as against M/s. Visa Pharmaceuticals Private Limited, a Corporate entity having its registered office at Kolkata, hereinafter referred to as the “Corporate Debtor”.

It is submitted that the Financial Creditor was approached by the Corporate Debtor sometime in the year 2015 through its Directors Mr. Aditya Balasaria and Mr. Madhusudan Balasaria with a request to sanction an overdraft facility and had represented that they had great potential and business stability. Relying and believing upon their representation, the Financial Creditor agreed and sanctioned the aforesaid facility to the Corporate Debtor. The parties entered into various agreements on 21^st August, 2015 and executed the Demand Promissory Note, Composite Hypothecation Agreement, mortgage documents, Power of Attorney etc.

The Corporate Debtor passed Board Resolutions in its Board Meetings dated 20^th August, 2014 and executed the necessary documents in favour of the Financial Creditor. Thereafter the Corporate Debtor breached the fundamental provisions of the Agreement by not performing their obligation there under and failed to operate the account as agreed, leading to having outstanding dues which they chose not to repay. The Corporate Debtor duly acknowledged its liability and dues but failed to liquidate the same. The Corporate Debtor became liable to make payment to the tune of Rs.1922.06 lakhs with interest thereon with effect from 1^st August, 2018.

It is submitted that no part of claim is barred by the laws of limitation. The cause of action is stated to have arisen on 29^th May, 2017 when the account was declared as NPA. It is submitted that Exhibit 'C' Concise Statement of M/s. Visa Pharmaceuticals (P) Limited, filed by the Financial Creditor indicates that total over draft facility of Rs.1600.00 Lacs was sanctioned on 18th August, 2015 which was duly availed by the Corporate Debtor, to be repaid with interest @13% p.a. The statement shows that an amount of Rs. 419.06 lacs had accrued as interest as on 31st July, 2018 and the total sum of Rs.1922.06 Lakhs which became due and payable by the Corporate Debtor to the Financial Creditor. The Financial Creditor had got various documents executed by the Corporate Debtor and its Directors to secure its loan/facilities and has filed the same which are on record. The Financial Creditor has filed all the documents executed between the parties to prove its case which according to us makes the application complete in all respect.

We have also seen the reply filed by the Corporate Debtor. It is submitted in the reply that the application of the Financial Creditor is not maintainable in substance and in form for seeking relief prayed for as it suffers from incurable defects and deserves to be rejected. It is submitted that there is no default as stated in the application and that no specific power of attorney has been granted by the Financial Creditor for initiation of the Corporate Insolvency Resolution Process. It is further submitted that the Corporate Debtor has not received any notice under Section 13(2) of the SARFAESI Act 2002. It is submitted that the Financial Creditor has not issued any demand notice calling upon the Corporate Debtor to repay the amount allegedly defaulted by the Corporate Debtor.

Similarly in the rejoinder also the Financial Creditor has reiterated its facts and averments mentioned in the application. In reply to the objection of the Corporate Debtor, the Financial Creditor has filed a copy of the minutes of the Board of Directors of Syndicate Bank dated 28th May, 2019 which is reproduced as under:-

A copy of the Power of Attorney is also enclosed with the rejoinder.

The Financial Creditor has also filed a Supplementary Affidavit to the rejoinder and submitted that the Financial Creditor had issued notice under Section 4 (1) of the Code on 21st May, 2018 and despatched it under registered post to the registered office of the Corporate Debtor on 22nd May, 2018. A copy of the postal receipt dated 22nd May, 2018 showing dispatch of the notice dated 21st May, 2018 is also annexed thereto but, it is stated that the postal receipt could not be annexed with the application inadvertently, although a copy of the notice was annexed as Exhibit 'BE'.

We have gone through the application and all the Annexure filed with the application, reply, rejoinder, supplementary affidavit etc. After looking at the application and the supporting documents there is no scope left for any dispute or defence as being raised by the Corporate Debtor. The Corporate Debtor has availed the overdraft facility for which a specific request had been placed under the signatures of its Directors supported by Board Resolution duly acknowledged and accepted the terms of the sanction letter dated 28^th August, 2014 and various documents executed by the Corporate Debtor securing the loan of the Financial Creditor. The Financial Creditor has made out a perfect case for initiation of the Corporate Insolvency Resolution Process against the Corporate Debtor.

The Financial Creditor has proposed the name of Mr. Kannan Tiruvengadam, CA to appoint as Interim Resolution Professional, if the petition is admitted. The said IRP in his written communication dated 25.07.2018 certified that there are no disciplinary proceedings pending against him with the Board of Indian Institute of Insolvency Professionals of Institute of Chartered Accountants of India.

Arguments of the Corporate Debtor merely on two Technical grounds cannot stand before the infallible strength of the Financial Creditor's claim. The Corporate Debtor has not been able to defend its case because it has no valid defence against the Financial Creditor inasmuch as it has failed to perform its obligations in terms of the agreement between the parties which it was duty bound to. The law therefore must have its course. The Financial Creditor also succeeds in proving that all the requirements to be meted out under section 7(3) of the Code has been complied. Accordingly, we admit the application upon the following:-