Union Bank of India vs M/S. Greendiamz Biotech Limited

ORDER

ORDER

Part-IV

Particulars of Financial Debt

1.

Total amount of debt granted Date(s) of disbursement Date of last Sanction/Renewal : 28.03.2013 vide Sanction letter No.VAD/ADV/549/13 CC Hyp.

Account No.	Nature of Loan & Amount	Ledger Balance [Rs.]	Unpaid Interest + Penalty	Other Expenses	Date of Default	Total days of Default	Total Amount Claimed to be in Default
313505010077425	CC Hyp	327435305.54	269377492.14	226554	24.07.2013	1894	597039351.68
313507030002711	LC Devolved	17362495.98	15370580.00	0.00	17.12.2013	1748	32733075.98
313506110000879	Term Loan-I	63977243.95	54292575.00	924490	24.09.2013	1832	119194308.95
313506110000887	Term Loan-II	9708409.00	7632539.00	0.00	31.10.2013	1795	17340948.00
313506310000004	Term Loan-III	50293835.67	40552745.00	0.00	24.09.2013	1832	90846580.67
Total:		468777298.14	387225931.14	1151044			857154265.28

LC/LG

Account No.	Nature of Loan & Amount	Ledger Balance [Rs.]	Unpaid Interest + Penalty	Other Expenses	Date of Default	Total days of Default	Total Amount Claimed to be in Default
313505010077425	CC Hyp	327435305.54	269377492.14	226554	24.07.2013	1894	597039351.68
313507030002711	LC Devolved	17362495.98	15370580.00	0.00	17.12.2013	1748	32733075.98
313506110000879	Term Loan-I	63977243.95	54292575.00	924490	24.09.2013	1832	119194308.95
313506110000887	Term Loan-II	9708409.00	7632539.00	0.00	31.10.2013	1795	17340948.00
313506310000004	Term Loan-III	50293835.67	40552745.00	0.00	24.09.2013	1832	90846580.67
Total:		468777298.14	387225931.14	1151044			857154265.28

Term Loan-I

Account No.	Nature of Loan & Amount	Ledger Balance [Rs.]	Unpaid Interest + Penalty	Other Expenses	Date of Default	Total days of Default	Total Amount Claimed to be in Default
313505010077425	CC Hyp	327435305.54	269377492.14	226554	24.07.2013	1894	597039351.68
313507030002711	LC Devolved	17362495.98	15370580.00	0.00	17.12.2013	1748	32733075.98
313506110000879	Term Loan-I	63977243.95	54292575.00	924490	24.09.2013	1832	119194308.95
313506110000887	Term Loan-II	9708409.00	7632539.00	0.00	31.10.2013	1795	17340948.00
313506310000004	Term Loan-III	50293835.67	40552745.00	0.00	24.09.2013	1832	90846580.67
Total:		468777298.14	387225931.14	1151044			857154265.28

Term Loan-II

Account No.	Nature of Loan & Amount	Ledger Balance [Rs.]	Unpaid Interest + Penalty	Other Expenses	Date of Default	Total days of Default	Total Amount Claimed to be in Default
313505010077425	CC Hyp	327435305.54	269377492.14	226554	24.07.2013	1894	597039351.68
313507030002711	LC Devolved	17362495.98	15370580.00	0.00	17.12.2013	1748	32733075.98
313506110000879	Term Loan-I	63977243.95	54292575.00	924490	24.09.2013	1832	119194308.95
313506110000887	Term Loan-II	9708409.00	7632539.00	0.00	31.10.2013	1795	17340948.00
313506310000004	Term Loan-III	50293835.67	40552745.00	0.00	24.09.2013	1832	90846580.67
Total:		468777298.14	387225931.14	1151044			857154265.28

Term Loan-III

Account No.	Nature of Loan & Amount	Ledger Balance [Rs.]	Unpaid Interest + Penalty	Other Expenses	Date of Default	Total days of Default	Total Amount Claimed to be in Default
313505010077425	CC Hyp	327435305.54	269377492.14	226554	24.07.2013	1894	597039351.68
313507030002711	LC Devolved	17362495.98	15370580.00	0.00	17.12.2013	1748	32733075.98
313506110000879	Term Loan-I	63977243.95	54292575.00	924490	24.09.2013	1832	119194308.95
313506110000887	Term Loan-II	9708409.00	7632539.00	0.00	31.10.2013	1795	17340948.00
313506310000004	Term Loan-III	50293835.67	40552745.00	0.00	24.09.2013	1832	90846580.67
Total:		468777298.14	387225931.14	1151044			857154265.28

Total Rs. 48,46,00,000/-

2.

Amount claimed to be in default and the date on which the default occurred (attach the workings for computation of amount and days of default in tabular form) Rs. 85,71,54,265=28 Tabular form given hereunder (as on 30.09.2018)

Account No.	Nature of Loan & Amount	Ledger Balance [Rs.]	Unpaid Interest + Penalty	Other Expenses	Date of Default	Total days of Default	Total Amount Claimed to be in Default
313505010077425	CC Hyp	327435305.54	269377492.14	226554	24.07.2013	1894	597039351.68
313507030002711	LC Devolved	17362495.98	15370580.00	0.00	17.12.2013	1748	32733075.98
313506110000879	Term Loan-I	63977243.95	54292575.00	924490	24.09.2013	1832	119194308.95
313506110000887	Term Loan-II	9708409.00	7632539.00	0.00	31.10.2013	1795	17340948.00
313506310000004	Term Loan-III	50293835.67	40552745.00	0.00	24.09.2013	1832	90846580.67
Total:		468777298.14	387225931.14	1151044			857154265.28

Statements of accounts (account wise) enclosed from Page No. 175 to 197 A/32 to A/36

Part-V

Particulars of financial debt [documents, records and evidence of default]

1.

Particulars of security held, if any, the date of its creation, its estimated value as per the creditor.

i)

Hypothecation Agreement of Goods & Debts (SD-06) was executed on 29.03.2013 to the extent of Rs.48,46,00,000/-. Total value of plant and machinery assessed at about Rs.60590000/- as per valuation report dated 30.12.2017, Annexure-A/24.

ii) Equitable Mortgage registered with Sub Registrar, Ahmedabad-3 (Memnagar) bearing No.9260 dated 30.09.2009 for Rs.31,10,00,000/- created on the immovable properties jointly belonging to(i) Mr. Champatbhai Rikhabhai Sanghvi and (ii) Mr. Deepak Champatbhai Sanghvias described in Schedule-A of this application, Annexure-A/18.

iii) Equitable Mortgage registered with Sub Registrar, Ahmedabad-3 (Memnagar) bearing No.8255 dated 14.06.2010 for Rs.31,10,00,000/- created on the immovable properties jointly belonging to the Corporate Debtor as described in Schedule-B and C of this application, Annexure-A/19. iv) Supplemental Equitable Mortgage registered with Sub Registrar, Ahmedabad-3 (Memnagar) bearing No.13210 dated 20.12.2011 for Rs.48,49,00,000/- (Enhanced from Rs.31,10,00,000/-) created on the immovable properties as described in Schedule- A B and C of this application, Annexure-A/20.

Estimated Market Value of three immovable properties Rs. 90026892/- assessed vide Valuation Report dated 21.08.2017 and 23.08.2017, Annexure-A/25 (Colly.)

v)

ROC Search Report dated 06.11.2009 given by Abhishek Kumar Associates showing charge of hypothecation over movables and mortgage over three immovable properties filed/created on 26.09.2009 on aggregate amount of Rs.31.10 Crores, Annexure-A/21. vi) ROC Certificate of charge dated 25.11.2012 showing mortgage/charge created on 28.09.2012 for an amount of Rs.6,40,00,000/-bearing charge ID No.10387591, Annexure-A/22. vii) ROC Certificate of charge dated 30.04.2013 with Form-8(Charge of Hypothecation) bearing charge ID No.10178083, Annexure-A/23. Charge/Mortgage created on 26.09.2009 and modified on 29.03.2013 for Rs.48,46,00,000/-

2.

Particulars of an order of a court, tribunal or arbitral panel adjudicating on the default, if any.

i)

Applicant has filed an Original Application bearing No. 123 of 2015 on 02.03.2015 in Debts Recovery Tribunal-I, Ahmedabad against the Corporate Debtor which is pending for adjudication. Presently the matter is listed on 10.12.2018 for final hearing.

ii) The Corporate Debtor has filed a Securitization Application bearing No. 161 of 2018 before the Debts Recovery Tribunal-I, Ahmedabad on 30.08.2018 against the measure taken by the Applicant which is pending for adjudication and presently listed on 22.11.2018.

3 List of other documents attached to this application in order to prove the existence of financial debt, the amount and date of default :

1)

Corporate Debtor's Board Resolution dated 29.03.2013 accepting the terms and conditions of sanction and authorizing its Director Mr. Champat R. Sanghvi to execute various security documents as stated in the resolution.

2)

Letter dated 29.03.2013 from the Corporate Debtor regarding various undertakings to the applicant.

3)

Letter to be obtained from the Directors in cases where advances have been permitted to Private Limited/Limited Companies (AD-10)

4)

Demand Promissory Note dated 29.03.2013 for Rs.28,50,00,000/-

5)

Demand Promissory Note dated 29.03.2013 for Rs.8,00,00,000/-

6)

Demand Promissory Note dated 29.03.2013 for Rs.1,11,00,000/-

7)

Demand Promissory Note dated 29.03.2013 for Rs.6,40,00,000/-

8)

Demand Promissory Note dated 29.03.2013 for Rs.14,45,00,000/-

9)

Composite Deed of Hypothecation (SD-20) dated 29.03.2013 for Rs.48,46,00,000/- executed by the Corporate Debtor

10)

Hypothecation Agreement of Goods & Debts (SD-06) dated 29.03.2013 for Rs.48,46,00,000/- executed by the Corporate Debtor.

11)

Letter of Undertaking not to alienate Hypothecated Gods (AD-12) dated 29.03.2013 for Rs.48,46,00,000/-

12)

Letter of Continuity (AD-09) dated 29.03.2013 for Rs.28,50,00,000/-

13)

Text of the Consent Clause executed by Corporate Debtor

14)

Agreement on Rate of Interest (For Base Rate) dated 29.03.2013

15)

Memorandum of Entry for Deposit of Title Deeds for Rs.31.10 Crores registered with Sub Registrar, Ahmedabad-3 (Memnagar) at serial No.9260 dated 30.09.2009.

16)

Supplemental Memorandum of Deposit of Title Deeds for Rs.31.10 Crores registered with Sub Registrar, Ahmedabad-3 (Memnagar) at serial No.8255 dated 14.06.2010.

17)

Supplemental Equitable Mortgage to secure the credit facility aggregating to Rs.48.49 Crores enhanced from Rs.31.10 Crores registered with Sub Registrar, Ahmedabad-3 (Memnagar) at serial No.13210 dated 20.12.2011.

18)

Recall Notice dated 01.01.2014 issued by the applicant to Corporate Debtor.

19)

Notice dated 04.02.2014 by the applicant u/s 13(2) of the SARFAESI Act 2002 issued to Corporate Debtor.

20)

Company's Master Data of Corporate Debtor

21)

Balance Sheet of the Corporate Debtor for the year. Ending 31.03.2012.

22)

Schedule of Properties Mortgaged by Corporate Debtor

23)

List of Related Parties

5 I say that the Corporate Debtor, vide letter dated 05.08.2015, requested the Applicant for allowing operations on cut back basis. The applicant has approved provision of cutback facility of 20% on credit turnover in the month of September 2015 subject to the terms & conditions conveyed vide letter dated 12.08.2015 (acknowledged by the Corporate Debtor on 13.08.2015). As per the said terms accepted by Corporate Debtor, Corporate Debtor has opened a new CD account in Vadaj Branch of the applicant and started the operations and agreed by the Corporate Debtor, 20% of the credits received in the CD account was to be appropriated as cut back towards the recovery in the NPA accounts of the Corporate Debtor. The applicant opened the said current account on 24.09.2015 in the name of Corporate Debtor and regular credits payments were arranged by the Corporate Debtor through their Current Account towards repayment of dues in their loan account. Corporate Debtor has arranged the repayment of dues in its loan account on various dates starting from 11/02/2016 and the last such payment received from Corporate Debtor is on 31/05/2017. Thereafter Corporate Debtor vide their letter dated 07/12/2017 submitted One Time Settlement offer of Rs.16.00 crores to the Applicant towards settlement of dues in their loan account. Regular repayments arranged by Corporate Debtor and OTS-cum acknowledgement letter dated 07/12/2017 signed by the Corporate Debtor, fresh period of limitation started for recovery of dues from the Corporate Debtor. Hence the default of the Corporate Debtor in payment of debts stood revived from time to time and is still continuing as on the date of the present application. Thus, the present application has been filed within the limitation under section 238-A of the Code (inserted by the Insolvency and Bankruptcy Code (Second Amendment) Act,2018 with effect from 06.06.2018 read with article 137 of the Limitation Act.

6 I say that as per my utmost knowledge there are no other financial creditors except the applicant. 7 I say that the Corporate Debtor is carrying on the business of manufacturing and trading of bio-degradable material. 8 I say that vide FGMO Note No.GM (FGMO) 1615 dated 18.09.2009, the applicant sanctioned to Corporate Debtor initially (i) an Import L.C. of Rs.725.00 lakhs (ii) L.G.of Rs.100.00 lakhs (iii) C.C.-Hyp. of Rs.700.00 lakhs (iv) PC/FDBP of Rs.300.00 lakhs and (v) Term Loan of Rs.1285.00 lakhs aggregating total credit facilities for Rs.31.10 Crores for which the Corporate Debtor has executed required security documents in favour of the applicant. (hereinafter referred to as the credit facilities) 9 I say that the credit facilities were renewed vide FGMO Note No.FGMO/ADV/160 dated 30.11.2011 where the credit facilities were enhanced by increasing Import LC from Rs.725.00 lakhs to Rs.1685.00 lakhs along with interchangeability of Rs.500.00 lakhs to CC(H) limit, LG at existing level of Rs.100.00 lakhs, CC(H) limit was enhanced from Rs.700.00 lakhs to Rs.1550.00 lakhs, PC/PDBP limit of Rs.300.00 lakhs, Term Loan at outstanding level 1064.00 lakhs and sanction of fresh Term Loan of Rs.250.00 lakhs. 10 I say that subsequently, the Corporate Debtor faced trouble in production activities and liquidity crunch resulting into excess/overdue in the accounts. Hence, the Import L/C of Rs.240.00 lakhs was devolved and paid by opening Devolved L/C loan account.

11 I say that in September 2012, at the request of the Corporate Debtor vide FGMO Note No.FGMO/ADV/262/(B) dated 28.09.2012, the credit facilities of the Corporate Debtor were restructured by sanctioning WCTL of Rs.640.00 lakhs comprising of irregular portion of Rs.205.00 lakhs from CC account, overdue (Instalment +Interest) of Rs.180.00 lakhs of Term Loan I & II and LC devolved of Rs.240.00 lakhs.

12 I say that despite restructuring of limits, the Corporate Debtor failed to serve the interest to the desired extent and overdue instalments of Term Loans and hence, the account of the Corporate Debtor was classified as Non Performing Asset (NPA) on 31.12.2013.

29.

That the Corporate Debtor is trying everything in its power to settle the liability of the petitioner bank before the admission of this insolvency petition in this Hon'ble Tribunal.

35.

That the corporate debtor requests for grant of some time to come up with a onetime settlement proposal that would be feasible to the corporate debtor and acceptable to the petitioner bank.

36.

In view of the above mentioned circumstances we would request the Hon'ble Authority to not admit the Insolvency Resolution petition filed against us by Union Bank of India and give us some time to come up with an acceptable onetime settlement proposal for the applicant bank.

7. Initiation of Corporate Insolvency Resolution Process by Financial Creditor.

(1)

A financial creditor either by itself or jointly with other financial creditors may file an application for initiating corporate insolvency resolution process against a corporate debtor before the Adjudicating Authority when a default has occurred.

Explanation.—For the purposes of this sub-section, a default includes a default in respect of a financial debt owed not only to the applicant financial creditor but to any other financial creditor of the corporate debtor.

(2)

The financial creditor shall make an application under sub-section (1) in such form and manner and accompanied with such fee as may be prescribed.

(3)

The financial creditor shall, along with the application furnish—

(a)

record of the default recorded with the information utility or such other record or evidence of default as may be specified;

(b)

the name of the resolution professional proposed to act as an interim resolution professional; and

(c)

any other information as may be specified by the Board.

(4)

The Adjudicating Authority shall, within fourteen days of the receipt of the application under sub-section (2), ascertain the existence of a default from the records of an information utility or on the basis of other evidence furnished by the financial creditor under sub-section (3).

(5)

Where the Adjudicating Authority is satisfied that—

(a)

a default has occurred and the application under sub-section (2) is complete, and there is no disciplinary proceedings pending against the proposed resolution professional, it may, by order, admit such application; or

(b)

default has not occurred or the application under sub-section (2) is incomplete or any disciplinary proceeding is pending against the proposed resolution professional, it may, by order, reject such application:

Provided that the Adjudicating Authority shall, before rejecting the application under clause (b) of sub-section (5), give a notice to the applicant to rectify the defect in his application within seven days of receipt of such notice from the Adjudicating Authority.

(6)

The corporate insolvency resolution process shall commence from the date of admission of the application under sub-section (5).

(7)

The Adjudicating Authority shall communicate—

(a)

the order under clause (a) of sub-section (5) to the financial creditor and the corporate debtor;

(b)

the order under clause (b) of sub-section (5) to the financial creditor, within seven days of admission or rejection of such application, as the case may be.

'27. The scheme of the Code is to ensure that when a default takes place, in the sense that a debt becomes due and is not paid, the insolvency resolution process begins. Default is defined in Section 3(12) in very wide terms as meaning non-payment of a debt once it becomes due and payable, which includes non-payment of even part thereof or an instalment amount. For the meaning of "debt", we have to go to Section 3(11), which in turn tells us that a debt means a liability of obligation in respect of a "claim" and for the meaning of "claim", we have to go back to Section 3(6) which defines "claim" to mean a right to payment even if it is disputed. The Code gets triggered the moment default is of rupees one lakh or more (Section 4). The corporate insolvency resolution process may be triggered by the corporate debtor itself or a financial creditor or operational creditor. A distinction is made by the Code between debts owed to financial creditors and operational creditors. A financial creditor has been defined under Section 5(7) as a person to whom a financial debt is owed and a financial debt is defined in Section 5(8) to mean a debt which is disbursed against consideration for the time value of money. As opposed to this, an operational creditor means a person to whom an operational debt is owed and an operational debt under Section 5 (21) means a claim in respect of provision of goods or services.

28.

When it comes to a financial creditor triggering the process, Section 7 becomes relevant. Under the explanation to Section 7(1), a default is in respect of a financial debt owed to any financial creditor of the corporate debtor – it need not be a debt owed to the applicant financial creditor. Under Section 7(2), an application is to be made under sub-section (1) in such form and manner as is prescribed, which takes us to the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016. Under Rule 4, the application is made by a financial creditor in Form 1 accompanied by documents and records required therein. Form 1 is a detailed form in 5 parts, which requires particulars of the applicant in Part I, particulars of the corporate debtor in Part II, particulars of the proposed interim resolution professional in part III, particulars of the financial debt in part IV and documents, records and evidence of default in part V. Under Rule 4(3), the applicant is to dispatch a copy of the application filed with the adjudicating authority by registered post or speed post to the registered office of the corporate debtor. The speed, within which the adjudicating authority is to ascertain the existence of a default from the records of the information utility or on the basis of evidence furnished by the financial creditor, is important. This it must do within 14 days of the receipt of the application. It is at the stage of Section 7(5), where the adjudicating authority is to be satisfied that a default has occurred, that the corporate debtor is entitled to point out that a default has not occurred in the sense that the "debt", which may also include a disputed claim, is not due. A debt may not be due if it is not payable in law or in fact. The moment the adjudicating authority is satisfied that a default has occurred, the application must be admitted unless it is incomplete, in which case it may give notice to the applicant to rectify the defect within 7 days of receipt of a notice from the adjudicating authority. Under subsection (7), the adjudicating authority shall then communicate the order passed to the financial creditor and corporate debtor within 7 days of admission or rejection of such application, as the case may be"