Piramal Capital & Housing Finance Limited vs Camel Shelters Private Limited

Per: SAMEER KAKAR, MEMBER (TECHNICAL)

This Application has been filed by one PIRAMAL CAPITAL & HOUSING FINANCE LIMITED (FORMERLY DEWAN HOUSING FINANCE CORPORATION LIMITED) (hereinafter referred to as 'Financial Creditor') on 26.05.2022 under Section 7 of the Insolvency and Bankruptcy Code, 2016 (I&B Code) r/w Rule 4 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016, against CAMEL SHELTERS PRIVATE LIMITED(hereinafter referred to as 'Corporate Debtor'). The prayer made is to admit the Application, to initiate the Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor, declare moratorium and appoint Interim Resolution Professional (IRP).

From Part-I of the Application, it is seen that the Financial Creditor is a Non-Banking Financial Company. The registered office address of the Financial Creditor as per the Application is stated to be situated at No.601, 6^th floor, Amiti Building, Agastya Corporate Park Kamani Junction, Opp. Fire Station, LBS Marg, Kurla (W) Mumbai – 400 070. Further, Part-I lays down the Authorized Signatory of the Financial Creditor to be one Mr. Sathanbabu Mathankumar, Authorised Signatory of the Financial Creditor by virtue of a verifying Affidavit dated 24.05.2022 which is placed at Page Nos.21 to 22 of the Application typeset.

Part II of the Application lays down the details of the Corporate Debtor. It can be seen that the Corporate Debtor is a Private limited company incorporated under the Companies Act, 1956 on 26.12.2007 with CIN: U70101TZ2007PTC014100. The registered office of the Corporate Debtor as per the MCA master data is situated at III Floor, Selva Towers, 320/4, Avinashi Road, Coimbatore – 641 004.

From Part-III of the Application, it is seen that the Financial Creditor has proposed the name of the Interim Resolution Professional (IRP) viz., N.Veerapandian, Reg. No. IBBI/IPA-001/IP-P-02148/2020-2021/13301.

From Part-IV of the Application, it is seen that the Financial Creditor has claimed a debt amount of Rs.75,00,52,572/- (Rupees Seventy Five Crores Fifty Two Thousand Five Hundred and Seventy Two Only)which is due and payable by the Corporate Debtor. The date of default as averred in Part-IV of the Application is 09.08.2017.

Part V of the application describes the particulars of Financial Debt, documents and the list of documents between the Financial Creditor and the Corporate Debtor is reproduced hereunder:

It is significant to point out here that the one M/s.Jeffson Universal Logistics Private Limited along with 19 other Associate Companies including the Corporate Debtor herein (as co-borrowers) have requested the Financial Creditor to grant financial assistance towards Mortgage Loan. Subsequently, there was a debt and default by the said M/s.Jeffson Universal Logistics Private Limited with 19 other Associate Companies and hence this Tribunal vide its order dated 16.03.2023 in an Application filed by the Applicant herein against M/s.Jeffson Universal Logistics Private Limited in CP(IB)/122(CHE)/2022 initiated the Corporate Insolvency Resolution Process as against M/s.Jeffson Universal Logistics Private Limited. The extract of the same is reproduced hereunder;

From the perusal of the sanction letter, it is evident that the Corporate Debtor and the Co-Borrowers have jointly signed the sanction letter affirming their acceptance to the terms and conditions stipulated in the sanction letter. The key terms of the sanction letter are tabulated hereunder:

The Sanction letter dated 26.09.2014 issued by the Financial Creditor and acknowledged by the Corporate Debtor and the Co-Borrowers is annexed as Annexure IX of the application typeset.

Consequently, the Corporate Debtor along with the Co-Borrowers have jointly executed a Loan Agreement dated 26.09.2014 in favour of the Financial Creditor, wherein the terms and conditions of the Facility has been detailed thereto. From the perusal of the loan agreement, the following are the terms agreed to:

The Common Loan Agreement was executed by the Corporate Debtor and Co-Borrowers in favour of the Financial Creditor on 26.09.2014. Thus, from a review of the Loan Agreement, it is evident that the Corporate Debtor and the Co-Borrowers are jointly and severally liable for the due repayment of the entire Facility along with the interest accrued thereon.

On 26.09.2014, in pursuance to the Loan Agreement, the Corporate Debtor and the Co-Borrowers jointly executed a Demand Promissory Note, promising to pay jointly and severally to the Financial Creditor the facility together with the interest accrued thereon and the said Demand Promissory Note is placed at Annexure XI of the application typeset.

It is further submitted that in consideration of the Facility extended by the Financial Creditor to the Corporate Debtor and the Co-Borrowers and as a security for such Facility, the Directors of all the Co-Borrowers (including the Corporate Debtor) namely: (a) T.Johnson, (b) J Samuel Jeffson, (c) Anny Johnson, (d) G.Ponraj, (e) N.Thivagaran, (f) G. Selvaraj Moses, (g) K. Ilango, (h) N.Palanikumar and (i) A.D. Selvakumar Samvel, executed a deed of Personal Guarantee dated 26.09.2014 in favour of the Financial Creditor, and thereby guaranteed the performance of the obligations of the Co-Borrowers in accordance with Sanction Letter and Agreement. Such guarantee was unconditional, continuing and irrevocable and the said Deed of Personal Guarantee is placed at Annexure XII of the Application typeset.

Thereafter, it is seen from the application that the Corporate Debtor along with the Co-Borrowers jointly deposited the original title deeds of immovable properties owned by them with an intention to create equitable mortgage and executed a Memorandum of Deposit of Title Deed dated 29.09.2014, registered as document number 4342 of 2014 in the Office of Sub-Registrar at Pudukottai and thereby confirming the creation of equitable mortgage of the property admeasuring comprised within the villages of Mudivaithanenthal village, Varthagareddipatti village, Aniyaparanallur village, Aniyabaranallur village, Thimmaraja Puram, Umarikottai, Thalavaipuram, Vadakku Karasseri village, Ellainaickenpatti village, Sekkarakudi village and Singathakurichi village ("Mortgaged Property"). All the aforementioned documents have been signed and attested jointly by all the 20 borrowers. For ease of reference, the following table details the properties mortgaged with the Financial Creditor, for the total loan amount availed:

Further, the charge created over the immovable properties of the Corporate Debtor and the Co-Borrowers is also captured in the ROC Charge Forms dated 29.09.2016.

Thereafter, the Financial Creditor disbursed an amount of Rs. 19,00,00,000/- (Rupees Nineteen Crores Only) to the Co-Borrowers on 30.09.2014 and further disbursed a sum of Rs.80,00,000/- (Rupees Eighty Lakhs Only) on the same date. Thus, in total, a sum of Rs. 19,80,00,000/- (Rupees Nineteen Crores Eighty Lakhs Only) (hereinafter referred to as "Loan Amount") was disbursed as against the sanctioned limit of Rs.20,00,00,000/-, which is evident from the Loan Account Statement and the said Loan Account Statement is placed at Annexure XIV of the application typeset.

The details of the default, as on 31.03.2022 is provided below: Total Outstanding dues : Rs.75,00,52,572/- (Rupees Seventy-Five Crores Fifty Two Thousand Five Hundred and Seventy Two Only) Principal: Rs.17,79,06,000/- (Rupees Seventeen Crores Seventy-Nine Lakhs and Six Thousand Only) Interest: Rs.57,21,26,472/- (Rupees Fifty- Seven Crores Twenty-One Lakhs Twenty Six Thousand Four Hundred and Seventy-Two Only). Cheque Return/other charges: Rs.20,100/- (Rupees Twenty Thousand One Hundred Only)

It is averred that the Loan Account Statement ending on 31.03.2022, reflects the dues and failure to repay the debt as per the contractual obligations and the account was classified as Non-Performing Asset (NPA) on 30.06.2015. Post such classification there had been part payments and acknowledgement of debt by letters dated 16.06.2017 and 12.03.2018 and the total outstanding dues remain unpaid till date.

It is further averred that the Loan Account Statement showing the amount due, jointly and severally payable by the Corporate Debtor and the Co-Borrowers to the Financial Creditor.

It is seen from the application that Statutory Notice under Section 13(2) of the SARFAESI Act dated 13.08.2015 was issued to the Corporate Debtor and to the Co-Borrowers.

The Financial Creditor considering the uncertainties faced by the Corporate Debtor and the Co-Borrowers, genuinely believing their collective promise awaited repayment of the Loan Amount. In this regard, the Financial Creditor received Rs.20,00,000/- (Rupees Twenty Lakhs Only) on 09.08.2017 as part payment towards the outstanding dues, as admitted by the Corporate Debtor and the Co-Borrowers vide letter dated 16.06.2017.

After the above payment, the Corporate Debtor and the Co-Borrowers have not come forward for repayment of the EMI towards the said Loan Amount. In this regard, the Financial Creditor had several rounds of discussions regarding the repayment of the outstanding loan dues, more particularly the discussions held on 09.03.2018, wherein the Corporate Debtor and the Co-Borrowers described various plans and strategy for mobilizing the funds required for repayment of the said Loan Amount.

The above fact has been reiterated by the Corporate Debtor and the Co-Borrowers in their letter dated 12.03.2018. In the same letter, amongst various other things, the Corporate Debtor and the Co-Borrowers, acknowledging their joint liability for repayment, requested for a One-Time Settlement and indeed confirmed that an amount of Rs. 10,00,00,000/- (Rupees Ten Crores Only) will be remitted as upfront margin contribution towards the One- Time Settlement. In the same letter dated 12.03.2018, the Corporate Debtor informed that they are expecting a considerable amount of money by mid-2018 and that they are confident of adhering to the timelines agreed between the Financial Creditor and Corporate Debtor for the repayment of the outstanding Loan Amount. On the basis of the commitment jointly provided by the Corporate Debtor and the Co-Borrowers, the Financial Creditor was anticipating regular repayment of the Loan Amount. However, it was submitted that the Corporate Debtor and the Co-Borrowers have not paid any amount after 12.03.2018 in clear breach of their promises.

In view of the continuous breach of commitment and defaults committed by the Corporate Debtor and the Co-Borrowers from the year 2018 onwards, the Financial Creditor through its Counsel, issued a Legal Notice dated 10.02.2021 for invocation of the Deed of Guarantee dated 26.09.2014.

Subsequently, a Legal Notice dated 20.11.2021 was issued by the Counsel of the Financial Creditor reiterating the Legal Notice dated 10.02.2021 and calling upon the Corporate Debtor to repay the outstanding loan amount. Due to utter silence on part of the Corporate Debtor, the Financial Creditor was constrained to issue a yet another Notice dated 25.04.2022 to the Corporate Debtor and the Co-Borrowers and the Personal Guarantors demanding repayment of the loan amount.

It is further submitted that the Corporate Debtor and the Co-Borrowers have failed to discharge their obligations for repayment of the Loan Amount and the interest accrued thereon and an Event of Default had occurred and is continuing. The Corporate Debtor and the Co-Borrowers were called upon number of times to repay the dues but in spite of various meetings, reminders and discussions, they have time and again failed and willfully neglected to repay the dues to the Financial Creditor and therefore, it is just and necessary the CIRP proceedings be initiated against the Corporate Debtor.

The Learned Counsel for the Respondent had filed a counter wherein it was stated that the Date of Default provided in the application is incorrect and contrary to the settled position in law. It was further submitted that the alleged date of default as stated is factually incorrect as the alleged date of the Respondent being classified as a “Non-Performing Asset” was on the 30.06.2015 as per the Applicant filed before this Tribunal and the present application filed by the applicant is barred by limitation.

It was stated in para 4 of the counter that the total amount claimed by the Petitioner is Rs.75,00,52,572/- (Rupees Seventy-Five Crores Fifty-Two Thousand Five Hundred and Seventy-Two) which includes a significant interest portion amounting to Rs.57,21,26,472/- (Rupees Fifty-Seven Crores Twenty-One Lakh Twenty-Six Thousand Four Hundred Seventy- Two) The Respondent submits that the amount claimed is inaccurate and not in consonance with the guidelines issued by the Reserve Bank of India.

It was further stated that once an account is declared to be a “Non-Performing Asset” then the Bank or Financial Institution cannot treat the interest accrued thereon to be an income of the Bank or Financial Institution, as there is no interest is received under the circumstances.

The Learned Counsel for the Applicant had filed the rejoinder wherein it was stated in para 4 that the Corporate Debtor's defence on the 'Date of Default is incorrect and that it is contrary to the settled position in law. The Corporate Debtor has not produced a single document neither to repudiate the Financial Creditor's claim nor to substantiate its averments. Therefore, the Corporate Debtor unequivocally admits its liability and is only attempting to raise mere technicalities. The position in law is in fact contrary to what the Corporate Debtor claims. The law on 'Date of Default' has been well settled by the Hon'ble Supreme Court in Dena Bank vs C.Shivakumar Reddy & Ors [Civil Appeal No. 1650 of 2020] wherein the Court relying on SeshNath Singh and Anr. v. Baidyabati Sheoraphili Cooperative Bank Ltd., held that the IBC does not exclude the application of Section 14 or 18 or any other provision of the Limitation Act and that Sections 14 or 18 of the Limitation Act apply to proceedings Under Section 7 or Section 9 of the IBC as well.

The Financial Creditor appraised this Tribunal to the following documents wherein the Corporate Debtor has clearly acknowledged its liability:

The Learned Counsel for the Applicant has placed heavy reliance on the decision of Hon'ble Supreme Court in the matter of Dena Bank (Now Bank of Baroda) vs C.Shivakumar Reddy and others [Civil Appeal No. 1650 of 2020] wherein it was held in para 142 of the Judgement as follows:

The Learned Counsel for the Applicant has further placed reliance on the decision of Hon'ble Supreme Court in the matter of Consolidated Construction Consortium Limited vs Hitro Energey Solution Private Limited (Civil Appeal No. 2839 of 2020) wherein the Hon'ble Supreme Court relying on B.K. Educational Services (P) Ltd. v. Parag Gupta & Associates (2019) 11 SCC 633] has observed that limitation does not commence when the debt becomes due but when a default occurs.

Heard the submissions made by the Learned Counsel for both the parties and perused the documents including the pleadings placed on record. The Financial Creditor has disbursed a sum of Rs.19,80,00,000/- to the Corporate Debtor and the Co-Borrowers jointly as against the sanctioned limit of Rs.20,00,00,000/-, which is evident from the Loan Account Statement annexed along with the Application. There is no denial of the said fact by the Respondent in the reply filed before this Tribunal.

In the present Application, the Financial Creditor has claimed a sum of Rs.75,00,52,572/- (Rupees Seventy-Five Crores Fifty Two Thousand Five Hundred and Seventy Two Only) which includes the Principal amount of Rs.17,79,06,000/- (Rupees Seventeen Crores Seventy-Nine Lakhs and Six Thousand Only) and Interest amount of Rs.57,21,26,472/- (Rupees Fifty- Seven Crores Twenty-One Lakhs Twenty Six Thousand Four Hundred and Seventy-Two Only) and cheque return charges of Rs.20,100/- (Rupees Twenty Thousand One Hundred Only). The Respondent in its reply has raised a ground that the amount claimed is inaccurate and not in consonance with the guidelines issued by the Reserve Bank of India, since the Financial Creditor has charged interest even after the account of the Corporate Debtor has been classified as NPA. The said ground taken by the Corporate Debtor can be countenanced by the Judgment of the Hon'ble Supreme Court in the matter of Innoventive Industries Limited v. ICICI Bank Limited, (2018) 1 SCC 407which is as follows;

Thus, the moment the Corporate Debtor has committed default in repayment of the ‘financial debt’ and the due is more than Rs.1 Crore then the Code gets triggered and it is of no matter that the debt is disputed so long the debt is “due” and payable.

The second ground raised by the Learned Counsel for the Respondent was that the debt is barred by limitation as the alleged date of the Respondent being classified as a “Non-Performing Asset” was on the 30.06.2015 as the present Application was filed before this Tribunal on 25.05.2022 and as such it is barred by limitation.

It is seen from the records that after the amount was disbursed on 30.09.2014 and thereafter the Corporate Debtor and the Co-Borrowers have jointly repaid a sum of Rs.20,00,000/- (Rupees Twenty Lakhs Only) in the account of the Financial Creditor under the Head as "Loan (pre-payment)" on 09.08.2017. Further, it is also seen that on 12.03.2018, the Corporate Debtor has requested for a One Time Settlement and confirmed that an amount of Rs.10,00,00,000/- (Rupees Ten Crore only) will be paid as an upfront. Thus, as per Section 18 and 19 of the Limitation Act, 1963 the said letter dated 12.03.2018 would amount to an acknowledgment of debt. If the said date i.e. 12.03.2018 is reckoned for the purpose of limitation, then the present Application ought to have been filed on or before 11.03.2021. Admittedly the present Application was filed on 25.05.2022. In this context, it is apt to refer to the Judgment of the Hon'ble Supreme Court in Suo Motu Writ Petition (Civil) No. 3 of 2020 wherein by its order dated 10.01.2022, it has held as follows;

Thus, in the present case, the limitation has expired during the period between 15.03.2020 till 28.02.2022, then the limitation period is extended for a period of 90 days from 01.03.2022. Then the present Application is required to be filed on or before 30.05.2022. The Financial Creditor has filed the present Application on 25.05.2022 and thus the present Application has been filed well within the limitation period and survives.

The Record of Default from the 'Information Utility' which was authenticated on 31.01.2023 shows the Status of Authentication as "Deemed to be authenticated". Thus, in all respects the Application filed by the Financial Creditor is complete and as such in terms of Section 7(5) of IBC, 2016 the present Application filed by the Financial Creditor is required to be admitted.

In view of the facts as stated supra and also in view of the 'financial debt' which is proved by the Financial Creditor and the 'default' being committed on the part of the Corporate Debtor, this Tribunal is left with no other option than to proceed with the present case and initiate the Corporate Insolvency Resolution Process in relation to the Corporate Debtor.

In the present case, it is seen that the Corporate Debtor has filed its Reply and the grounds raised in the said reply has already been dealt with by this Tribunal in the CP(IB)/122(CHE)/2022 as extracted supra.

The Hon'ble Supreme Court of India in the matter of Laxmi Pat Surana v. Union Bank of India;(2021) 8 SCC 481 while dealing with the issue of initiation of CIRP as against the guarantor, has held in para 23 as follows;

Since the Corporate Debtor herein is a co-borrower in respect of the credit facilities availed by the principal borrower M/s.Jeffson Universal Logistics Private Limited, the 'debt' and 'default' on the part of the principal borrower is sufficient to admit the present case and initiate Corporate Insolvency Resolution Process in respect of the Corporate Debtor.

As a consequence of the Application being admitted in terms of Section 7 of the Code, moratorium as envisaged under provisions of Section 14(1) and as extracted hereunder shall follow in relation to the Corporate Debtor;

However during the pendency of moratorium period in terms of Section 14(2) and 14(3) as extracted hereunder;

The duration of period of moratorium shall be as provided in Section 14(4) of the Code which is reproduced below for ready reference;

The Financial Creditor has proposed the name of N.Veerapandian (Email id: [email protected]), Reg.No.IBBI/IPA-001/IP-P02148/2020-2021/13301 as the Interim Resolution Professional (IRP) who has also filed his consent in Form – 2 and also upon verification from the IBBI website, it is seen that the said person hold valid Authorization for Assignment till 11.11.2023.

Mr.N.Veerapandian is appointed as the IRP is directed to take charge of the Corporate Debtor's management immediately. The IRP is also directed to cause public announcement as prescribed under Section 15 of the IBC, 2016 within three days from the date the copy of this Order is received, and call for submissions of claim by the creditors in the manner as prescribed under Regulation 6 of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016.

The IRP appointed shall take in this regard such other and further steps as are required under the Statute, more specifically in terms of Section 15, 17, 18 of the IBC, 2016. The powers of the Board of Directors of the Corporate Debtor shall stand superseded as a consequence of the initiation of the CIRP in relation to the Corporate Debtor in terms of the provisions of IBC, 2016.

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

Based on the above terms, the Application stands admitted in terms of Section 7(5) of IBC, 2016 and the moratorium shall come in to effect as of this date. A copy of the Order shall be communicated to the Financial Creditor as well as to the Corporate Debtor above named by the Registry. In addition, a copy of the Order shall also be forwarded to IBBI for its records. Further, the Interim Resolution Professional above named who is figuring in the list of Resolution Professionals forwarded by IBBI be also furnished with copy of this Order forthwith by the Registry, who will also communicate the initiation of the CIRP in relation to the Corporate Debtor to the Registrar of Companies concerned.

Accordingly, the present petition stands admitted.