AI Structured Summary
Not yet generated for this judgment
Judgment
ORDER
In the present application, the Applicant has prayed for the following reliefs:
(a)Order and direct Respondent No. 1 to reject and/or modify and/or reverse Respondent Nos. 2 to 8's claim for exorbitant and usurious interest and update the list of creditors and voting share of the committee of creditors of the Corporate Debtor to reflect the same;
(b)Order and direct Respondent No. 1 to furnish all documents relating to Respondent Nos. 2 to 8's claims against and transactions with the Corporate Debtor to BDO or any other forensic auditor that this Hon'ble Tribunal may deem appropriate to verify if the same are contrary to the provisions of the Code or any other law;
(c)pending hearing and final disposal of the present Application, this Hon'ble Tribunal be pleased to restrain Respondent No. 1 from placing any resolution plan before the Committee of Creditors of the Corporate Debtor which considers Respondent Nos. 2 to 8's claim for interest;
(d)urgent interim and ad-interim reliefs in terms of prayer clause (b);
(e)costs of this Application;
(f)such other and further reliefs as this Hon'ble Tribunal may deem fit and proper in the facts and circumstances of the present case.
At this stage of urgent hearing, the Ld. Counsel for the Applicant has submitted that he wishes to press for grant of interim relief restraining the Respondent No. 1 from placing any Resolution Plan before the Committee of Creditors of Corporate Debtor.
Adv. Nausher Kohli accepts notice on behalf of the Respondent No. 1/RP and Counsels accepted notice on behalf of Respondent Nos. 2 to 8.
The case of the Applicant primarily is that in view of the fact that the claims of Respondent Nos. 2 to 8 have been admitted with exorbitant/extortionate interest rates which is prejudicial to the interest of the Applicant as it has in turn reduced the voting share of the Applicant. The Ld. Counsel drew our attention to the minutes of meeting of COC dated 09.02.2023 wherein the voting share of the Applicant is at 17.59% and that of Respondent No. 2 is 40.31%. The voting share of the other respondents is also reflected in the proceedings at Annexure-A. The primary concern of the Applicant is qua the voting share of Respondent No. 2. The list of Financial Creditors whose claims were admitted by Respondent No. 1/RP has also been placed on record.
Ld. Counsel contended that even though the principal claimed amount of all the Financial Creditors stands admitted fully but it is the admission/grant of the exorbitant interest admitted by the RP which is detrimental to the interest of the Applicant. The exorbitant interest rate on the claims admitted by the RP has substantially increased the voting share of the other Financial Creditors to the detriment of the voting share of the applicant.
To further elaborate his contention, the Ld. Counsel drew our attention to RP’s mail to the Applicant dated 01.05.2023 in response to the communication of the applicant dated 15.04.2023, wherein the RP has provided the Financial Creditors claim status in a tabulated form. The perusal of the table shows that on the principal amount of Rs. 88 Crores of Respondent No. 2, interest and charges have been calculated as Rs. 54,82,16,304/- and the total amount admitted is Rs. 1,42,82,16,304/-. The percentage of interest and charges have been stated to be 38.38%. The Ld. Counsel laid emphasis on this one entry as an instance so as to substantiate his contention of the alleged irregularity having been committed by the RP. The contention of the Ld. Counsel further is that, calculation of interest on the full payable amount by the RP is an attempt to eyewash the exorbitant interest being admitted by the RP because the RP ought to have calculated the interest on the principal amount and not on the total admitted claim. Calculating the interest on the principal amount would in fact show that the interest @62.30% is being admitted by the RP in respect of Respondent No. 2 which is much more than the stated 38.38% interest.
The Ld. Counsel further submitted that it is evident from the response of the Respondent No. 1/RP that RP has not verified the claim documents as he stated that “……..the records of the Corporate Debtor are not updated/maintained with the periodical balance confirmation from the financial creditors and reconciliation thereof………” From the communication of the RP, it is evident that RP has abdicated his duty to the COC as he has stated that “determination of the claims falls within the ambit of COC if they deem fit to revisit determination of claims of any claimant.”
To this mail of the RP, a detailed response was sent by the Applicant Bank on 15.05.2023. In their response the Applicant calculated the percentage of interest and charges on the principal amount and tabulated the same wherein the interest being paid to the Respondent No. 2 is reflected at 62.30%. The RP has failed to respond to this communication.
The Ld. Counsel also drew our attention to the interest being paid to Respondent No. 3 whose admitted claim of Rs. 7,21,24,126/- bears interest of Rs. 10,39,93,978/- Crores taking the rate of interest to 144.18%. It is contended by the Ld. Counsel that such an excessive percentage of interest rate going upto 144% is extortionate and the RP should have verified all the claims with due diligence before granting such an excessive interest rate.
It was also submitted that the Transaction Audit Report submitted by BDO India LLP clearly states that “On review of PMC Agreement, it was noted that deposit granted by RBPL was interest free against YBL loan interest of 14.40% p.a. which appears to be questionable.” Thus, the contention of the Ld. Counsel is that when it is already available on record that YBL i.e. Respondent No. 2 was getting interest @ 14.40%, there is no reasonable and justiciable basis for Respondent No. 1/RP to admit their claims at much higher interest rate. Thus, it is contended that the admission of claims of Respondent Nos. 2 to 8 at an extremely high interest rate deserves to be revisited, as Respondent No. 1 has failed to verify the same. The Ld. Counsel for the Applicant has placed reliance on the judgment of Hon’ble NCLAT in Company Appeal (AT) (Insolvency) No. 100 of 2024 dated 13.02.2024 wherein the Hon’ble Court has held as under:
“The RP is required to prepare a list of creditors on the basis of the proofs of claim submitted before it. Basis these claims, it is the responsibility of the RP to publish the Information Memorandum so that a genuine resolution applicant gets an accurate idea about the amount that has to be settled in order to take over and revive the business of the Corporate Debtor.”
Verification exercise entails upon the “RP the responsibility to go through the supporting proof/documents to establish the truth and accuracy of information contained therein in support of the claim so filed. On verification, if the RP finds that the evidence given in support of a claim is weak and unconvincing, the RP can always ask for more proof to substantiate the claim.”
“By merely filing their claims, the creditor cannot rest on its oars and refrain from providing further evidence if it so sought by the RP by taking shelter on the ground that the RP lacks adjudicating powers. If such basic verification is not done, the logical corollary is that the Information Memorandum is likely to be defective and flawed thereby having D consequential adverse impact on the CIRP process.”
Thus, in view of the submission made, it is prayed that the ad-interim relief deserves to be granted by restraining the COC to consider resolution plans.
On the other hand, the Ld. Counsel for Respondent No. 1 has vehemently contested the submission made by the applicant. The Counsel submitted that two resolution plans have already been placed before the COC which is in the process of considering the same. In addition, while arguing against the prayer being sought by the Applicant, the Ld. Counsel submitted that the application deserves to be out rightly rejected on the ground of delay and laches particularly in view of the specific timelines stipulated under the IBC.
The Ld. Counsel drew our attention to the fact that in the month of January, 2023, the Respondent No. 1 published the list of financial creditors of Corporate Debtor. The Transaction Audit Report was presented to COC on 25.03.2023. It is on 15.04.2023 for the first time that the Applicant has raised certain queries relating to the admitted claims of the other financial creditors with respect to the interest and other charges. This mail of 15.04.2023 was duly responded on 01.05.2023 by the respondent.
It was further submitted that despite having received a detailed response from Respondent No. 1 on 01.05.2023, the Applicant chose to file the present I.A. in February, 2024 when the Resolution Plans have already been submitted for consideration by the COC. This itself proves that the Applicant was either not vigilant or had waived of his right to raise any objections. Thus, in view of the submission made, it is pleaded that the present petition deserves no consideration; least of all a consideration for grant of interim relief.
After having heard the Ld. Counsels for the parties and having perused the documents placed on record, we are of the considered opinion that the matter requires further consideration with respect to the exorbitantly high interest and charges admitted in the case of Respondent Nos. 2 to 8 by Respondent No. 1/RP. Particularly when the Transaction Audit Report clearly mentions the rate of interest in case of YBL @ 14.40%. At the moment we confine ourselves only to the consideration of grant of interim relief. On the one hand, we are conscious of the governing principles for grant of interim relief i.e. a) Prima facie case in favour of the party seeking the interim relief, b) the balance of convenience and c) the irreparable loss being caused to the party. On the other hand, we have to keep in mind the timelines of the IBC because of which interim relief of stay/restraint are not the norm. Now applying the principles of grant of ad-interim relief to the facts of the present case/case of the applicant, it is pertinent to note that the Applicant is a public sector bank which has agitated the issue in the month of April, 2023 and it is in the response of RP dated 01.05.2023 that the admitted interest rate of each of the financial creditors finds mention. In addition, the contention of the Respondent No.1/RP stating that the instant matter of ‘interest and charges’ falls within the ambit of COC is not legally tenable. It is pertinent to note that the COC has no role under the IBC and the Regulations regarding admission of claim/interest. The RP cannot be allowed to abdicate its responsibility of verifying the claims submitted by the parties before admitting the same.
Thus, we therefore deem it appropriate to intervene and grant the interim relief of restraining the COC from considering and approving the resolution plans during the pendency of the present I.A.
We are of the considered opinion that restraining the COC from further considering the resolution plans during the pendency of the present I.A. will not cause any irreparable loss or prejudice to the interest of the respondents but not granting the said relief is bound to cause prejudice to the interest of the applicant, as the voting rights of the applicant have been adversely affected. Thus, prayer (c) of the I.A. is allowed and the respondents are restrained from voting upon the resolution plans till the disposal of the present I.A.
The Ld. Counsels for the respondents have sought a weeks’ time to file their replies to the present I.A. In view of the request made, the I.A. is posted for 29.02.2024 for arguments.