Arunkant Rai vs Allahabad Bank & Anr

Arunkant Rai S/o Mr. Chandrahas Rai, R/o 121, Bapji nagar, Near Soumya Vehilces Showroom Indore - 452010. ...Appellant Versus 1. Allahabad Bank Office at: Palasia Main Branch, Janjeerwala Square, Indore - 452001. 2. Suman Agritech Limited Through Interim Resolution Professional Mr. Navin Khandelwal [Registration No. IBBI/IPA-001/IP-P00703/2017-18/11301] 302, Devkrupa Building, 28, Raichur Street, Mumbai - 400009. ...Respondents

Present:

For Appellant: Mr. Siddhartha Jain, Advocate.

For Respondent: Ms. Anjali Sharma and Ms. Ragini Vinaik, Advocates for Respondent No.2. 2

ORDER

11.02.2020 Heard learned counsel for the Appellant Mr. Siddhartha Jain

and Ms. Anjali Sharma, Advocate on behalf of Respondent No. 2 - 'Interim

Resolution Professional'

2. The Appellant has filed Appeal against the impugned order dated 27th

August, 2019 passed in CP 1003 (IB) / MB / 2019 by the Adjudicating Authority,

National Company Law Tribunal, Mumbai Bench.

3. The Adjudicating Authority admitted the application under Section 7 of

the 'Insolvency and Bankruptcy Code, 2016' filed by the Respondent No. 1

Allahabad Bank and 'Corporate Insolvency Resolution Process' (CIRP) was

initiated.

4. The present Appeal has been filed raising grievances that the Allahabad

Bank was part of Consortium in which the leading Bank was IDBI and Allahabad

Bank. Reference is made to Inter-se Agreement between these Banks as at

Annexure A-9 page 240 dated 15th November, 2010 and Consortium Agreement

which is also of the same date and copy of which is at page no. 255.

5. The learned counsel for the Appellant is submitting that as per these

documents entered in to by the Allahabad Bank and IDBI, if Allahabad Bank

wanted to take action, permission of IDBI Bank should have been taken giving

15 days notice to IDBI Bank.

6. It is stated that it was necessary that Respondent No. 1 Allahabad Bank

should have given notice and only thereafter it could have filed the application

under Section 7 of the 'I&B Code, 2016'.

Company Appeal (AT) (Insolvency) No. 1251 of 2019 3

7. Learned counsel for the Respondent No. 2 states that Allahabad Bank had

declared 'NPA' with regard to debt on 30th September, 2016 and filed application

under Section 7 of the 'I&B Code, 2016' on 11th March, 2019, which it was

bound to.

8. Learned counsel for the Respondent is relying on the Judgment of this

Tribunal in the matter of Oriental Bank of Commerce Vs. M/s Ruchi Global

Limited in Company Appeal (AT) (Insolvency) No. 387 of 2019 passed on

31.01.2020 :

........

" 7. Heard Counsel for both sides. The Inter-se Agreement

between the Banks was restricted to the Banks and Corporate

Debtor was not part of the Inter-se Agreement. This fact is not

in dispute. Learned Counsel for the Appellant has pointed out

para 7 (xxii) of the Appeal to submit that the account of the

Respondent Corporate Debtor remained out of order in the

books of Appellant Bank who was regular in the books of other

member Banks. Appellant states that as per the guidelines of

the Reserve Bank of India, It was the Appellant only who

classified the account of the Respondent as NPA as on 31st

August, 2017. The Learned Counsel has referred to notice

dated 05th September, 2017 sent by the Appellant in this

regard to the Corporate Debtor (Page 404). According to the

Learned Counsel when the account of the Appellant Bank

became NPA, it was bound to take action against Corporate

Debtor.

Company Appeal (AT) (Insolvency) No. 1251 of 2019 4

8. In our view the Agreement being Inter-se between the

Banks the Corporate Debtor cannot take benefit of the Clauses

in that agreement, which are binding only the Banks. If there

is a default by any member of the Consortium, it would be a

matter for the other banks to be aggrieved with and Corporate

Debtor cannot take benefit of the same to raise grievance. If

the Appellant Bank did not act in tune with the Consortium

Agreement it may be matter of consideration for the other

Bank/s of the Consortium and/or Reserve Bank of India.

However, there is nothing which Bars filing of Section 7 of IBC

Application by the Appellant. Even if there was Clause that the

Bank which wants to take action should give notice of 30

days, if notice was not given that would be a matter for the

Lead bank to look into. That does not create Bar for the

Appellant Bank to move Application under Section 7 of IBC. In

judgement in the matter of "Asian Natural Resources (India)

Ltd. & Anr. Vs. IDBI Bank Ltd." this Tribunal has held in

para 7 of the Judgment as under:

"7. Apart from that the Inter-se Agreement

between different Banks is not binding in nature,

the 'Corporate Debtors' not being signatories

cannot derive advantage of such Inter se

Agreement. This apart, the 'financial creditors'

having right to file application under Section 7 of

the I&B Code, individually or jointly on behalf of

Company Appeal (AT) (Insolvency) No. 1251 of 2019 5

other 'financial creditors' as quoted below, the Inter

se Agreement between the 'financial creditors'

cannot override the said provision, nor can take

away the right of any Financial Institution to file

application under Section 7 of the I&B Code."

9. We are in Agreement with the observations made by the

Hon'ble Bench of this Tribunal as above. We find that the

judgement of the Adjudicating Authority in dismissing the

Application under Section 7 because of the Consortium

Agreement cannot be maintained.

9. For the reasons mentioned above, we do not find any reason here also in

the present Appeal to interfere. Here also there is Consortium Agreement

between the Banks to which the 'Corporate Debtor' was not party.

There is no bar in law for the Bank which has declared 'NPA' to proceed

and file proceedings under Section 7 of the 'I&B Code, 2016', notwithstanding

consortium agreement between Banks. There is no substance in the Appeal. The

Appeal is dismissed. No order as to costs.

[Justice A.I.S. Cheema] Member (Judicial)

[Justice A.B. Singh] Member (Judicial)

[Kanthi Narahari] Member (Technical) R N/md /

Company Appeal (AT) (Insolvency) No. 1251 of 2019