Asian Natural Resources (India) ... vs Idbi Bank Limited

(Ahmedabad Bench) (hereinafter referred to as cnaj:). inC.P.

(IB) No. 18/7/NCLT/Ahm/2017 C.P. (TB) No.

19/7/NCLT/Ahm/20 17, wherel whereunder the

applications preferred by Respondent! 'Financial Creditor'

under ection 7 e insolvency & Bankruptcy Code, 2016

(hereina: B Code) for initiation of insolvency

resolution process agai Appellant (s) / 'Corporate Debtors'

have been admitted, Insolvency Resolution Professionals have

been appointed and moratorium have been declared with

certain directions in terms of the I&B Code.

3. The Appellants have challenged the impugned orders

both dated 23.5.2017 on the ground that both the orders have

been passed in violation of rules of natural justice, without 3

giving any notice to any of the Appellant (s) / 'Corporate

Debtors'.

4. According to Respondent, the aforesaid submission

made on behalf of the Appellants is misleading and contrary to

the record. Notices in terms of sub-rule (3) of Rule 4 of the

Insolvency & Bankruptcy (Application to Adjudicating

Authority) Rules, 2016 (hereinafter referred to as Adjudicating

Authority Rules) were sent to Appellant"'- Bhatia Global Trading

Limited and Appellant - Asian Natural Resources (India)

Limited by Speed Post letter (s) both dated 8t1 May 2017 which

was duly served on th

Bhatia Global Trading Limited on 12th May :20 7. Copies of the

receipts of the Speed Post(s) and 'delivery receipt (s)' have been

annexed with the reply. el for the Respondent also

brought to Our notice the order(s) both dated 12th May 2017

passed by the Ld Adjudicating Authority wherein the Ld

Adjudicating Authority having noticed that nobody appeared on

behalf of the 'Corporate Debtors' and date of hearing had not

been informed to 'Corporate Debtors', directed to issue notice (s)

of hearing to the respective 'Corporate Debtors', and the

Respondent was directed to file 'proof of service'. The

Respondent, thereafter, sent notices to the Appellants by Speed 4

Post (s) both on 12th May 2017 (Annexure R-3 to the respective

Appellants) intimating the Corporate Debtor (s) order passed by

Ld. Adjudicating Authority, Ahmedabad Bench with further

intimation that the case has been fixed. The report enclosed

shows that the said notice (s) were received by the Appellants

on 15th May 2017.

5. In view of the records enclosed by the Respondent, we

hold that the rules of natural justice was followed before

admitting the applications.

6. Next it was contended by Ld. Counsel for the Appellants'

that the 'financial cre being a e consortium of

bankers and havingsigned Inter-sc Agreement on 21.2.2009,

Respondent- 'financial cre aived its right in favour of

the 'lead ban Stat( Bank of India (hereinafter

referred to aSI:SBI). Reliàbe has been placed on Inter-se

Agreements dated 21 2 2009 [Annexure A-3 - CA (AT) (Ins)

60/20171 and 17.3.2011 [Annexure A2 - CA (AT) (Ins) 62 / 20171

respectively reached between SBI and 15,11, other banks,

including Respondent- IDBI Bank, recognising one of the bank

as 'Lead Bank' and other bank as second 'lead bank', relevant

portion of one of which reads as follows: -

5

1. The Member Banks hereby recognise A bank as the Lead Bank and B Bank as the second Lead Bank of the A Bank Consortium.

2. The Member Banks/ Trustee hereby agree to abide by the directions, instructions and clarifications, as may be given from time to time by the Lead Bank in consultation with second lead Bank in respect of any matters arising out of or in relation to the Cash Credit Account (s) or other Account (s) opened by the Borrower with the A Bank Consortium.

However, in respect of share in the enhancement of the/additional/ad- hoc limit, the members' banks would be entitled/free to use their discretion.

3. Notwithstanding anything to the contrary contained in or arising out of or implied by the said consortium Agreement mid/or the Deed of Hypothecation and/or the Second Char,q ii is hereby agreed and declared by and between the said Banks/Trustee as follows:

(a) A Bank shall act as the Lead Bank of the"A I3ank Consortium and B Bank as the second lead banks and all the Members shall act in the spirit of the consortium and all decisions should, as far as possible, be arrived at unanimously including those relating to sharingi,of ancillary business and drawings under th/ferent Facilities sanctioned to the Borrower.

(b) The Members of the'Consortfil-mmdo hereby agree to execute in favour of the Lead Bankand the second lead bank a power of attorney or other authorisation as may be deemed appropriate for constituting the Lead Bank and the Second Lead Bank as their true and lawful attorneys for them, in their name and on their be half to do, execute and perform all acts, deeds arid things as to the Lead Bank and the Second lead Bank may deem appropriate, necessary or expedient in the given circumstances as "',.-the'leaders of the A Bank Consortium and to take decisions jbr an on behalf of the Consortium to communicate the same in the general interest of the A Bank Consortium. The Member Banks do hereby agree to ratify and confirm whatever all acts, deeds and things lawfully and bonafide clone, taken or effected by the Lead Bank and second Lead"Bank as such attorney in exercise of the . powers, authorities and liberties hereby conferred upon, under and by virtue of this Agreement."

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 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: -

Initiation of corporate insolvency resolution process by financial creditor - 7. (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 o this,gi n. a default includes a default in respect ofafiriancial debt ou'ed not only to the applicant financial creditor but to any other financial creditor of the corporate debtor.

(2) xi000c"

8 For the reasons bresaid, while we reject the submission

made on behalf of the a in absence of any merit,

dismiss both the Ap However, in the facts and

circumstances of the case, there shall be no order as to cost.

(Mr. Balvinder Singh) (Justice S.J. Mukhopadhaya) Member (Technical) Chairperson

NEW DELHI 11th August, 2017