Ananta Charan Nayak vs State Bank Of India & Ors

Ananta Charan Nayak ....Appellant Vs. State Bank of India & Ors. ....Respondents Present: For Appellant:- Mr. Sanjeev Kr. Sharma, Mr. Rajiv Dalal, Advocates

ORDER

(Date: 10.11.2021) (Through Virtual Mode)

The appeal was heard for admission on 28.10.2021.

2. This appeal is preferred by the Appellant (suspended

Director of the Corporate Debtor), who is aggrieved by the order

dated 26.8.2021 (hereinafter called Impugned Order) passed in CP

(IB) No. 10/2021 by the Adjudicating Authority (National Company

Law Tribunal, Gawahati Bench) qua which an application under

section 7 of the Insolvency and Bankruptcy Code, 2016 (in short

IBC) has been admitted against the Corporate Debtor M/s. Nayak

Infrastructure Private Limited. The Appellant is a shareholder,

promoter and suspended Director of the Respondent No. 2 -

Corporate Debtor.

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3. In brief, the facts of the case are that the Corporate Debtor is

a company engaged in the business of engineering, procurement

and construction in road/railway projects and bridges and also

undertakes turnkey projects encompassing a wide range of

services, designs, engineering, procurement, supplies,

construction, commissioning and project management etc. The

respondent - financial creditors have been doing business with the

Corporate Debtor for more than 30 years now.

4. It is stated and argued by the Appellant that the loan taken

by it from Respondent No. 1 State Bank of India was wrongly

declared as non-performing asset on 28.1.2020 but no alleged

default was stated in the notice dated 30.1.2020 issued by

Respondent No. 2 State Bank of India. The Appellant has further

stated that proceeding before the Debt Recovery Tribunal,

Guwahati was initiated against the Corporate Debtor in the year

2020, and the Appellant requested Respondent No. 1 to

restructure its loan at that time. Despite many meetings for

restructuring of the loan, it was finally not agreed to by

Respondent No. 2, and instead of responding to One Time

Settlement (OTS) proposal of the Appellant, Respondent No.2 filed

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Page 2 of 6 application under section 7 of the IBC against the Corporate

Debtor.

5. The Appellant has assailed the Impugned Order dated

26.8.2021 of the Adjudicating Authority (NCLT, Guwahati Bench)

qua which CP(IB) No. 10/2021 was admitted and Corporate

Insolvency Resolution Process (CIRP) was initiated against the

Corporate Debtor.

6. The Learned Counsel for the Appellant has argued that the

Corporate Debtor had raised objections relating to defect in the

application filed by the financial creditor State Bank of India

(Respondent No.1 in the appeal) challenging the maintainability of

section 7 application. The defect, as pointed out by the Appellant,

is that the Respondent No.1 had made all the directors and

guarantors parties in the section 7 application, and a defective

application could not have been adjudicated upon. He has, further

claimed that despite bringing on record the defects in the

application, the Respondent No. 1 did not file any application

before the Adjudicating Authority seeking to amend the application

for removal of defects, nor did the Adjudicating Authority issue any

direction to that effect.

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7. The Learned Counsel for Appellant has stated that the

Appellant had intimated its desire to settle the matter by offering a

one-time settlement (OTS) to the financial creditor. Pending

decision on the OTS, the Adjudicating Authority has passed the

Impugned Order to the detriment of the Corporate Debtor. He has

also argued that vide order dated 26.7.2021, the petitioner State

Bank of India was granted seven days' time to file an affidavit for

deletion of the names of personal guarantors from the section 7

application. Such an affidavit was not filed and thus requirements

under section 7 of IBC were not complied with strictly. He has

argued that in such a situation, and as laid down by the Hon'ble

Apex Court in the matter of Innoventive Industries Ltd. v. ICICI

Bank [MANU/SC/1063/2017], the order for admission of section 7

application should not have been given.

8. From perusal of the Impugned Order dated 26.8.2021

(attached at pp.54-88 in Appeal Paperbook) it is clear that in

response to the section 7 application, the Managing Director of

Corporate Debtor representing Respondent Nos. 1 to 5 filed reply

which was considered by the Adjudicating Authority. It is also

mentioned in the Impugned Order, paragraph 12 (attached at pgs.

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Page 4 of 6 77-78 of the Appeal Paperbook) that Mr. Tushar Ravi, Chief

Manager, State Bank of India, Khanapara Branch filed an affidavit

dated 4.8.2021 in which he stated that due to inadvertence names

of the personal guarantors were inserted as Respondent Nos. 2 to

7 and the names of Respondent Nos. 2 to 7 be deleted from the

instant application. Therefore, we do not agree with the contention

of the Appellant that the petitioner (financial creditor-State Bank of

India) did not comply with the order given by the Adjudicating

Authority on 26.7.2021, which was regarding filing of affidavit to

delete names of personal guarantors from the section 7

application. (attached at p. 149 of Appeal Paperbook).

9. The other contention of the Learned Counsel of the Appellant

is that the Appellant had submitted an OTS proposal to the

financial creditor (State Bank of India), which was pending

decision, and hence the Adjudicating Authority should not have

passed admission order on section 7 application. The acceptance

of the settlement proposal by the financial creditor is a matter

entirely in the ambit of the financial creditor (SBI) and we do not

think that the proceedings before the Adjudicating Authority

should have been held up and delayed, waiting for a response by

the State Bank of India. IBC does not provide for keeping the

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Page 5 of 6 proceedings in abeyance and the application for admission has to

be decided in a stipulated timeframe. If a settlement would have

been reached, the Appellant would have had recourse to Section

12A of the IBC. We, therefore, do not find this contention of the

Appellant sustainable.

10. The Innoventive Industries judgment (supra) of the

Hon'ble Supreme Court does not put any bar on the admission of

an application under section 7 if the defects as pointed out to the

petitioner have been cured.

11. On the basis of the above discussion, we are of very clear

view that the Impugned Order does not require any intervention.

The appeal is, therefore, dismissed at the stage of admission. No

order as to the cost.

(Justice Jarat Kumar Jain) Member (Judicial)

(Dr. Alok Srivastava) Member (Technical) New Delhi 10th November, 2021

/aks/

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