STCI Finance Limited vs Aditya Ramniwas Dhoot

ORDER Per: Bench

“The RP most humbly submits before this Hon’ble Tribunal that the present application meets the necessary requirements of the Code for its approval by this Hon’ble Tribunal and the reason for the same have been submitted in the preceding part(s) of this report and therefore, this Hon’ble Tribunal may kindly pass appropriate orders under section 100 of the Code, “Admitting” the present application filed by State Bank of India through the RP in C.P. (1B)-70(AHM)2024 and declare “Moratorium” under section 101 of the Code and issue “Public Notice” for inviting the claims under section 102 of the Code and may pass such further orders as this Hon’ble Tribunal deems necessary.”

a)

At the outset, it is submitted that the Resolution Professional has failed to apply his mind and has acted mechanically in recommending that the captioned petition must be admitted by this Adjudicating Authority. There is an apparent violation of sub-sections (6), (7) and (9) of Section 99 of the Code as elaborated hereunder.

b)

It is stated that the Resolution Professional has at pg. C9 of the report, averred/stated against the compliance requirement under Section 99(6) that the application satisfies the requirements of Section 95 of the Code. Under Section 95(4)(c), the application filed for initiation of insolvency resolution process against a personal guarantor requires to be accompanied with details and documents inter alia relating to (i) the debts owed by the debtor to the creditor or creditors submitting the application for insolvency resolution process as on the date of application and (ii) relevant evidence of such default or non- repayment of debt.

c)

Further, the break-up of total amount claimed to be in default i.e. INR 39,75,63,897/- is given at Part III @ pg. 15 @ Vol. 1 as well as pg. 184 @ Vol. II of the petition. A perusal of the same indicates that the total amount claimed to be in default contains five heads viz. - principal outstanding, interest, management fee, unpaid TDS and legal charges. Although the Financial Creditor seems to have provided the ledger evidencing disbursement of loan amount, repayments and charging of interest (Annexure H), no evidence is provided in support of management fee, unpaid TDS and legal charges and the resolution professional seems to have believed and approved the same at face value. No computation of each of the respective heads has ever been shared with me.

d)

Even the ledger statements cannot be relied upon to fasten liability upon the Respondent in view of Section 34 of the Indian Evidence Act, 1872 which is reproduced as under:

Entries in the books of account, including those maintained in an electronic form, regularly kept in the course of business, are relevant whenever they refer to a matter into which the Court has to inquire, but such statements shall not alone be sufficient evidence to charge any person with liability.

e)

It is stated that without prejudice to the above, the ledger produced by the Financial Creditor does not meet the pre- conditions required for the printout in accordance with the Bankers Books Evidence Act, 1891 and also that the Financial Creditor authorised officer has not given a further certificate in accordance with Section 2-A (c) and hence the ledger produced is defective and cannot be relied upon by the Financial Creditor. (Annexure H @ Vol. II@ pg. I65-I84 of the Petition).

f)

It is further stated that the Financial Creditor has failed to prove from the documents or otherwise and from corroborative evidence that the amount claimed to be in default was actually due and payable or that default had occurred at all. Thus, no liability can be fastened on to the Respondent much less admission of the captioned company petition. (Chandradhar Goswami & Ors. vs. Gauhati bank Ltd. AIR 1967 SC I 058 - paragraph no. 6)

g)

Further, the Financial Creditor has provided a record of default being the NeSL Report dated April 1, 2021 (Annexure G @ Vol. II @ pg. I48 of the petition). It is humbly submitted that the debt and default information submitted therein does not seem to have been verified by NeSL as per Regulation 21 of the Insolvency and Bankruptcy Board of India (Information Utilities) Regulations, 2017. In fact, the status of authentication as apparent from the said NeSL report is stated to be 'To be presented' rather than 'Authenticated', 'Disputed' or 'Deemed to be Authenticated'.

h)

It is stated that there is a clear mismatch I discrepancy in the date of default which can be gathered from the record and the date of default (Vol. I @ pg. nos. I5 and I6 of the petition) mentioned by the Financial Creditor in Part III of the petition. The date of default as mentioned in the record of default with the information utility (Annexure G @ Vol II @ pg. I5 2 of the petition) is stated to be February 29, 2020, whereas at Part III, it is stated to be May 30, 2021.

i)

The Section 3(12) of the Code states default means non-payment of debt when it becomes due and payable in whole or in part. It is settled legal position that the date of default must necessarily be ascertained from contractual terms and conditions and such date cannot be pushed or changed to a later merely by virtue of issuing a notice I correspondence to the debtor. (Order dated 27th September 2023 passed by the NCLT Bengaluru Bench in C.P (IB) No. 125/BB/2022 in the matter of Mls. Asset Reconstruction Company (India) Ltd. versus MIS. Manyata Developers Pvt. Ltd. - paragraph nos. 6, 32 and 35).

j)

It is stated that without prejudice to the other grounds stated in the present reply, I humbly submit that the Petition filed by the Financial Creditor is barred by limitation as the limitation period for filing the captioned Petition has already expired on March 01, 2023, whereas the Petition has been filed on e-filed on January 24, 2024. The Financial Creditor has failed to apply or approach this Hon'ble Tribunal within the period of 3 years from the date of default i.e., when the right to apply accrued.

k)

It is humbly submitted that the sale of the Corporate Debtor as a going concern for Rs.78,00,00,000/- and order dated April 22, 2024, passed in Mis. A/1(AHM)2024 in CP(IB) 203 of 2020 have a material bearing on the present petition. In the event the sale certificate is allowed to be issued and proceeds are allowed to be distributed, the Financial Creditor may receive the entire amount which it is claiming to be in default and the alleged debt qua the Respondent may stand extinguished discharged. Thus, in the interest of justice and fairness, it is humbly submitted that the hearing in the captioned petition be deferred until the issue of sale certificate and distribution of sale proceeds is complete.

l)

Thus, as demonstrated above, the Resolution Professional has ignored the discrepancies as apparent from the record and also failed to call for any information or explanation in relation to the computation of amount claimed to be in default and proof of default from the Financial Creditor. It is rather surprising to note that the Resolution Professional has failed to mention or accord any reason in support of his recommendation of admission of the petition other than "after examining the petition and other available documents on record, the RP is of the considered view that the debt guaranteed by the personal guarantor has not been repaid as claimed by the creditor and that the Respondent has not given a satisfactory response"

m)

It is pertinent to point out that none of the lenders including the Financial Creditor herein have extended benefits arising from RBI Circular(s) pertaining to MSMEs and SSIs as ought to have been applicable in the case of loan accounts of the Corporate Debtor.

n)

As per Section 99(1) of the Code, the Resolution Professional is required to examine the application under Section 95 of the Code within 10 days and submit a report to the Adjudicating Authority. This Adjudicating Authority had by way of an order dated February 9, 2024, appointed the Resolution Professional and directed him to submit his report under Section 99 within 10 days from the said date. The Resolution Professional has mentioned in his report that the copy of the said order was made available to him only on February 13, 2024. No proof in support of this belated receipt of order has been annexed by the Resolution Professional to the LA. Even assuming without admitting that he had received the order on February 13, 2024, the Resolution Professional ought to have filed the report by February 23, 2024. However, the report has been filed on February 27, 2024, i.e. after a delay of 4 days in contravention of Section 99(1) and the order passed by this Adjudicating Authority on February 9, 2024. No averment or submission for condoning the delay in filing the report by the Resolution Professional has been made in the application.

o)

It is stated that the Board Resolution and the Power of Attorney annexed to the petition at Annexure A (pg. no. 33 onwards) date back to 2017. There is no averment that these authority documents have not been superseded by any other authority until the date of filing the petition.

p)

The electronic evidence produced by the Financial Creditor viz. Annexures C and D- Master Data of the Corporate Debtor and my director Master Data, Annexure G- NeSL Report, Annexure H Ledger account and Annexure N- Email dated 02.11.2020 sent by Corporate Debtor to the Financial Creditor are not supported by a valid certificate under Section 65(B) of The Indian Evidence Act, 1872 and conditions mentioned thereunder. Sub-section (2) of Section 65-B which stipulates the conditions for admissibility of evidence are reproduced as under:

a)

the computer output containing the information was produced by the computer during the period over which the computer was used regularly to store or process information for the purposes of any activities regularly carried on over that period by the person having lawful control over the use of the computer;

b)

during the said period, information of the kind contained in the electronic record or of the kind from which the information so contained is derived was regularly fed into the computer in the ordinary course of the said activities;

c)

throughout the material part of the said period, the computer was operating properly or, if not, then in respect of any period in which it was not operating properly or was out of operation during that part of the period, was not such as to affect the electronic record or the accuracy of its contents; and

d)

the information contained in the electronic record reproduces or is derived from such information fed into the computer in the ordinary course of the said activities.

a)

It is submitted that IDBI Bank Ltd had also extended working capital credit limits to the said corporate debtor viz., IMP Powers Ltd under consortium banking arrangement led by SBI. The last such sanction, communicating renewal of existing credit limits, took place in the year 2020 and in this respect IDBI Bank Ltd had issued its sanction letter bearing reference no IDBI/NPT/MCG/20-21/335 dated 19.11.2020. As per the said renewal sanction letter the corporate debtor was enjoying aggregate credit limits of Rs. 39.43 crores including Covid-FITL of Rs1.19 crores. The repayment of these credit limits was secured by personal guarantee of Mr Ramnivas Dhoot, Mr Aditya R Dhoot and Mr Ajay R. Dhoot in addition to primary and collateral securities as stipulated in the sanction letter on Pari passu basis along with other lenders. A copy of the said sanction letter and a copy of the guarantee deed executed by Mr Aditya Dhoot as one of the personal guarantors to the corporate debtor is annexed and marked as Annexure -1 colly.

b)

It is stated that the Corporate Debtor was not prompt in meeting the repayment obligations and payment of interest debited to the account. In addition to that the corporate debtor had also committed defaults in terms of the working capital agreement. Due to this, loan accounts of the corporate debtor were classified into NPA w.e.f. 01.04.2021. Thereafter, on March 24, 2022, the credit limits sanctioned to the corporate debtor were recalled by issuing a recall notice wherein the corporate debtor was asked to repay the entire outstanding as at 31.12.2021 amounting to Rs.41,94,61,369.80ps. within the next 15 days and substitution of Bank Guarantees already issued by IDBI Bank to the extent of Rs.12,95,06,032 with the Bank Guarantee of another Bank. As there was no positive response to the recall notice from the corporate debtor, the IDBI Bank Ltd issued a Demand Notice to the personal guarantors on September 22, 2022, calling upon each one of them to pay an aggregate sum of Rs.41,94,61,369.80ps. due from the corporate debtor outstanding as at 31.12.2021. A copy of the Recall Notice dated 24.03.2022 and Demand Notice dated 22.09.2022 are annexed and marked as Annexure-2 colly.

c)

It is further stated that both the corporate debtor and personal guarantors have failed and neglected to make any payment to IDBI Bank Ltd in response to its recall notice dated March 24, 2022, and demand notice dated September 22,2022 issued to them respectively. This has compelled IDBI Bank Ltd to move an OA bearing no OA(1 26/2023 before DRT I Mumbai by claiming a default amount of Rs.42,06,43,736.75 (Rupees Forty-Two Crores Six Lakh Forty-Three Thousand Seven Hundred Thirty-Six and Paise Seventy-Five only). It is petiinent to note that in the OA filed in ORT, all the personal guarantors to Corporate Debtor including Mr Aditya Dhoot were made as the Respondent in the present case. A copy of the OA No. 126-2023 filed before DRA 1 is annexed and marked as Annexure-3.

d)

It is pertinent to submit that in the CIBIL report generated in respect of Mr Aditya Dhoot, one of personal guarantors to the corporate debtor viz., Mis IMP Powers Ltd., evidences the defaults committed by him in respect of various transactions. A copy of the said CIBIL report is annexed and marked as Annexure -4.

e)

It is pertinent to submit that in the CIBIL report generated I submit that as of June 14, 2024, the total outstanding dues payable by the corporate debtor aggregates to Rs.50,52,64,505.35ps. A copy of Bank Statement drawn up to June 14, 2024, in respect of loan accounts held in the name of corporate debtor is annexed and marked as Annexure -5.n respect of Mr Aditya Dhoot, one of personal guarantors to the corporate debtor viz., M/s IMP Powers Ltd., evidences the defaults committed by him in respect of various transactions. A copy of the said CIBIL report is annexed and marked as Annexure -4.

f)

It is submitted that as of June 14, 2024, the total outstanding dues payable by the corporate debtor aggregates to Rs.50,52,64,505.35ps. A copy of Bank Statement drawn up to June 14, 2024, in respect of loan accounts held in the name of corporate debtor is annexed and marked as Annexure -5.

g)

It is stated that certain additional information on the personal guarantor Mr Aditya Dhoot as available with IDBI Bank Ltd is furnished in the form of a "Data Sheet" which may be useful to RP to continue with Personal Insolvency Resolution Process against Mr Aditya Dhoot as recommended now by IDBI Bank Ltd. A copy of the said "Data Sheet" is annexed and marked as Annexure -6. In addition to this, additional information on IDBI Bank Ltd, the financial creditor is furnished and annexed as Annexure-7.

a)

It is state and submit that, the outstanding dues of the bank are to the tune of Rs.63,26,01,537/- as on 31.07.2024 payable by the Personal Guarantor. Hence, we hereby put on record the following reply alongwith documents as per the directions of the Hon'ble Tribunal.

b)

It is submitted that the Bank had sanctioned financial assistance to M/s. IMP Powers Limited vide Sanction Letter dated 10.12.2018 by providing Cash Credit limit of Rs.15.00 Crores (Rupees Fifteen Crores Only) and NFB limit of Rs.25.00 Crore (Rupees Twenty Five Crores Only) under consortium banking. A Copy of the Sanction Letter dated 10.12.2018 is annexed hereto and marked as "Annexure A". That for the purpose of availing the abovementioned credit facilities, the Personal Guarantor had executed an Agreement of Guarantee dated 31.12.2018 in favour of the Bank.A Copy of Agreement of Guarantee dated 31.12.2018 is annexed hereto and marked as "Annexure-B".

c)

It is further submitted that the Bank further vide Sanction Letter dated 01.06.2020 sanctioned another credit facility namely Ind-Covid Emergency Credit Line (Term Loan) to the tune of Rs. 1.5 crore to M/s. IMP Powers Limited. A Copy of Sanction Letter dated 01.06.2020 is annexed hereto and marked as "Annexure-C". That for the purpose of availing the abovementioned credit facility, the Personal Guarantor had executed an agreement of Guarantee dated 06.06.2020 in favour of the Bank. A copy of agreement of Guarantee dated 06.06.2020 is annexed hereto and marked as “Annexure-D”.

d)

It is submitted that as on date, the total outstanding payable to the Bank is Rs.63,26,01,537/- as on 31.07.2024.

a)

It is stated and submitted that Mr. Aditya R. Dhoot stood as a personal guarantor to the various financial services which were provided by the answering Respondent in a consortium from time to time to IMP Powers Limited i.e. the borrower Company.

b)

It is stated that a deed of personal guarantee dated 16.02.2021 was also executed by and between the answering Respondent and Mr. Aditya R. Dhoot which in detail outlines about the rights and liabilities of the parties thereto. (A copy of the deed of personal guarantee is marked and annexed hereto as ANNEXURE - R2)

c)

It is further stated and submitted that the principal borrower i.e IMP powers Limited could not fulfil its legal obligation to repay the financial assistance which was disbursed from time to time and therefore the answering Respondent had declared the account of the principal borrower as a Non-performing Asset.

d)

It is further stated and submitted that litigations are filed against the personal guarantors before which are pending adjudication.

e)

It is further state that on 20.12.2023, the answering Respondent along with the State Bank of India and Karnataka Bank Ltd. were constrained to issue a recall notice to Mr. Aditya R. Dhoot seeking recovery of the outstanding amount more particularly mentioned in the recall notice, thereby invoking the personal guarantee of Mr. Aditya R. Dhoot. (A copy of the recall notice dated 20.12.2023 is marked and annexed hereto as ANNEXURE - R3)

f)

The said recall notice was replied by the Personal Guarantors vide reply dated 27.12.2023 denying the allegations made in the said recall notice.

g)

It is stated and submitted that the Bank of India has no objection if the report filed by the Learned Interim Resolution Professional is allowed and Personal Insolvency is initiated against the Personal Guarantor i.e. Mr. Aditya R. Dhoot by this Hon'ble Tribunal.

a)

It has come to the knowledge of the Financial Creditor that the Personal Guarantor herein, has, disposed of / created third-party rights over his properties (herein after collective referred to as “properties”), details of which are being mentioned herein below:

b)

It is stated that by gifting his entire 50% share in the said property namely Mrs. Smita Aditya Dhoot, vide a Gift Deed dated 30.12.2019 registered with office of Sub-Registrar as document no. 12118/2019. “Property at residential premises bearing Flat No. 2, Ground Floor, Shreeniketan Building, Shree Niwas, CHSL, Netaji Shubhash Road, Marine Drive, Mumbai-4002 admeasuring 1500 Sq. Ft. Carpet area.

c)

It is stated that the Mr. Pavan Godiawala, Adv. had 50% share in each of the Properties and had he not gifted, the same would have constituted as an assets of the Personal Guarantor and would have formed part of its estate. However, with a malafide and dishonest intent to deceive the lawful claim of his creditors and protecting the said properties from the rigours of law the said transfers have been affected.

d)

It is stated the transfer / gifting by the PG of his entire 50% share in the aforesaid Properties raises serious concerns regarding its validity. It is humbly submitted that the transfers have been executed with the sole intent to defraud creditors and to avoid the properties from being considered as a part of his estate that would have been otherwise available for distribution under the Insolvency proceedings.

e)

The Financial Creditor further submits that the continuation of insolvency proceedings of the without taking cognizance of this fact would be prejudicial to the rights of all the creditors, as this act on part of the Personal Guarantor constitutes an attempt to undermine and derail the present insolvency process and evade his liability.

f)

Thus, in view of the same, the Financial Creditor seeks to bring this recent development on record vide the present affidavit and prays that all steps be taken on cancel the fraudulent transfers and that the said properties be taken into account for the insolvency proceedings of the Personal Guarantor.

"Learned Counsel for the Respondent / PG raised three defences being there is a discrepancy in date of default, there is a mismatch/error in computation of outstanding dues as well as the Corporate Debtor has already been sold as a going concern which is under challenge before the Hon'ble NCLAT".

“This Part shall apply to matters relating to fresh start, insolvency and bankruptcy of individuals and partnership firms where the amount of the default is not less than one thousand rupees.”

“The liability of the surety is co-extensive with that of the principal debtor, unless it is otherwise provided by the contract.”