Union Bank Of India vs M/s. R.K. Infratel Limited

[Per: Ms. Manorama Kumari, Member (Judicial)]

Mr. Praveen Kumar Gupta, Chief Manager, being authorised signatory of the petitioner, filed this petition under section 7 of The Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as "the Code") read with Rule 4 of The Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 (hereinafter referred to as "the Rules") seeking reliefs under Section 7(5)(a) and Section 13(1)(a)(b)(c) of the Code.

That the applicant Bank, incorporated on 11th November, 1919, having its head office at Nariman Point, Mumbai 400 021, having corporate identity number U99999MH1919PTC000615, is in the banking business of providing various types of financial facilities including business loans, personal loans, consumer loans, loan against property, home equity loans, term loan etc.

M/s. R.K. Infratel Limited is a company incorporated under the Companies Act, 1956 on (8^{\text{th}}) December, 2011, having identification No. U74999GJ20000PLC038720 and having its registered office at Rander Road, Surat, Gujarat State. That Authorised share capital of the respondent company is Rs. 20,00,00,000.00 and paid up share capital is Rs. 9,12,00,000.00.

That, the applicant/financial creditor has submitted that the respondent has defaulted in payment towards principal and interest against the working capital, letter of credit, term loan etc., sanctioned/disbursed to the respondent as per the details annexed to the application at page 3.

The applicant has submitted copy of the following documents in support of their claim: -

That, the petitioner being financial creditor has to recover an amount of Rs. 24,62,98,391/- (Rupees twenty-four crores sixty-two lacs ninety-eight thousand three hundred ninety-one only) as on 31.03.2019. That, the above amount include principal amount of loans sanctioned under different schemes, accrued interest and penal interest as applicable as per the calculation in tabular form annexed to the application at page No. 3.

That, the respondent filed affidavit in reply inter alia raising various objections. The first and foremost objection raised by the respondent is that the present application filed in 29th April, 2019 is time barred as the petition is filed on the basis of the documents which pertain to the period from 2000 to 2014. It is alleged that the applicant has suppressed material facts with regard to the action already taken under the provisions of RDDB Act, 1993. That, the counter claim application filed under the relevant provisions of RDDB Act which has the same effect as of the claim application filed by the applicant and having filed the said application (O.A.) before DRT for recovery of its dues, the present action of the applicant bank u/s 7 of the IBC 2016 is redundant. That, since the alleged default in the instant case is not crystallized as on date and as such the instant petition is legally untenable. That, the applicant has not relied upon any recall notice in the entire application to establish that the account of perpetual nature was ever recalled. It is further alleged that the entire set of papers enclosed with the application does not disclose the account of the respondent was classified as NPA as on 30.09.2014. That, no amount is due and payable to the applicant for which the instant petition has been filed.

Heard the learned counsel appearing for the applicant at length as also perused the documents annexed with application/reply. On perusal of the records it is observed that despite repeated calls none appeared on behalf of the respondent and, therefore, final hearing of the application is made in absence of the representative of respondent.

On perusal of the records prima facie it appears that the objections/allegations raised by the respondent are illusory and not supported by any valid document, whereas, the applicant bank has filed volumes of papers documenting sanction, disbursement, recall/demand notice, reply of corporate debtor to the demand notice etc. to substantiate its claim.

On perusal of the records it is found that the applicant has placed on record (page No. 18 to 41) documents like sanction advice dated 11.05.2009, renewal of limit and sanction of fresh term loan dated 06.03.2010, sanction advice dated 12.10.2011, and sanction letter dated 06.03.2013 wherein it is categorically stated that the credit facilities offered to the corporate debtor are subject to the broad terms and conditions laid down in the sanction advice issued from time to time.

On perusal of the records it is found that the first and foremost objection raised by the respondent is that the application is barred by limitation. On perusal of the records it is found that the applicant bank has placed on record simple debit balance confirmation letter dated 07.04.2016 (Annexure A/34 of petition at page No. 653-657) issued by the respondent and addressed to the applicant acknowledging the debt. Moreover, the account statements show that there are regular credit entries after 7th April, 2016 till May, 2018. The corporate debtor by its letter dated 17.11.2018 has also given the details of amount repaid till 30.09.2018 and also acknowledged the amount outstanding in the respective account as on 30.09.2018. Moreover, the corporate debtor in para 29(a) of its reply, has admitted that it has paid Rs. 16.17 lacs during the financial year 2019-20. Further, the records reveal that from time to time the respondent has executed/entered into various documents acknowledging the debt. This itself shows that the respondent company has acknowledged the debt in the financial year 2019-20. Since the application is filed on 29.04.2019, it is well within time.

Another objection raised by the respondent is that the power of attorney holder is not competent to file an application on behalf of financial creditor is not maintainable in as much as the application has been filed on the basis of Power of Attorney which does not permit the officer of the applicant to file such application under the provisions of the Act. It is a matter of record that the seal affixed at the foot of the said power of attorney is the seal of the said bank and the name of signatures of Shri P.Y. Nagar, Shri T.K. Sharma and Shri D.K. Jain thereto subscribed are as those of the General Managers of said Bank of Mumbai are of the proper respective handwriting of the said Shri P.Y. Nagar, Shri T.K. Sharma and Shri D.K. Jain and the power of attorney is granted as per resolution passed by the Board of Directors of the Bank.

The second objection raised by the respondent is that petitioner has failed to establish the default on the part of the respondent. It is a matter of record that the petition reveals that the corporate debtor had availed term loan, fund/non fund based limits, working capital limits etc. from the petitioner bank and the respondent has acknowledged the debt from time to time.

The debt recovery proceedings are initiated by the Financial Creditor to recover the amount. Simply because the Financial Creditor initiated proceedings before the Debt Recovery Tribunal, it does not lie in the mouth of the corporate debtor to say that no default occurred. As such there is no bar in filing IB application during the pendency of DRT proceedings. Moreover, Corporate Debtor did not disclose any bona fide defence based on substantial grounds for the claim made by the Financial Creditor before this Authority. The above said evidence is sufficient to substantiate the plea of the Applicant that a default has been committed by the Corporate Debtor in payment of amount due and payable to the Applicant.

It is also a matter of record that the Applicant had granted several facilities including Cash Credit Facility to the Corporate Debtor and the Corporate Debtor fully availed those facilities. Those facilities carry interest applicable from time to time as per the terms and conditions mentioned in the Sanction Letters. Therefore, the amount due to the Financial Creditor from the Corporate Debtor is a financial debt. In view of the Judgment of the Hon'ble Supreme Court, in case of M/s. Innoventive Industries Ltd. Vs. ICICI Bank & Anr., in Company Appeal (AT)(Insolvency) No. 1 & 2 of 2017, this Adjudicating Authority has to satisfy whether a default has occurred; whether the Application is complete; and whether any disciplinary proceeding is pending against the proposed Insolvency Resolution Professional.

In the instant application, from the material placed on record by the Applicant, this Authority is satisfied that the Corporate Debtor committed default in paying the financial debt to the Applicant. On perusal of record and as also discussed above, it is held that there is existence of default and that the application under Section 7(2) of the Code is also complete in all respect.

In the instant case, the documents produced by the Financial Creditor clearly establish the 'debt'. Section 13 (2) Notice issued by the Financial Creditor clearly indicates that entire debt was recalled. There is a default on the part of the Corporate Debtor in payment of the 'financial debt'.

There is no dispute in the case that the petitioner is the financial creditor. The application is also furnished in the prescribed form - 1 of the Rules and the prescribed fee has also been paid. Along with the application, the applicant has proposed the name of the Interim Resolution Professional namely Mr. Chandra Prakash Jain. Therefore, this Adjudicating Authority hereby appoint Mr. Chandra Prakash Jain of C.P. Jain & Co., Chartered Accountants, D-501, Ganesh Meridian, Opp. High Court, S.G. Road, Ahmedabad 380 060 having IBBI registration No. IBBI/IPA-001/IP-P00147/2017-18/10311. Form 2 along with the certificate of registration of the proposed interim resolution professional has been furnished by the applicant separately where declaration is made that no disciplinary proceedings are pending against him with the Board or Indian Institute of Insolvency Professionals of ICAI.

In view of the above, the petitioner/financial creditor having fulfilled all the requirements of Section 7 of the Code, the instant petition deserves to be admitted.

The petition is, therefore, admitted and the moratorium is declared for prohibiting all of the following in terms of sub-section (1) of Section 14 of the Code: -

It is further directed that the supply of goods and essential services to the Corporate Debtor, if continuing, shall not be terminated or suspended or interrupted during moratorium period. The provisions of sub-section (1) shall, however, not apply to such transaction as may be notified by the Central Government in consultation with any financial sector regulator.

The order of moratorium shall have effect from the date of receipt of authenticated copy of this order till the completion of the corporate insolvency resolution process or until this Bench approves the resolution plan under sub-section (1) of Section 31 or passes an order for liquidation of corporate debtor under Section 33 as the case may be.

This Petition stands disposed of accordingly with no order as to costs.

Communicate a copy of this order to the Applicant/Financial Creditor, Respondent/Corporate Debtor and to the Interim Resolution Professional.