D.R. Balakrishna Raja vs Indian Bank & Anr

Indian Bank & Anr. ...Respondents

Present:

For Appellant : Mr. Nesar Ahmad, PCS Mr. Rohit Chaudhary, Advocate

For 1st Respondent: Mr. Chitranshul Sinha and Ms. Sonali Khanna, Advocates

ORDER

03.10.2018 This appeal has been preferred by the Director of M/s. B.K.R.

Hotels and Resorts Private Limited (Corporate Debtor) against the order dated

14th August, 2018 passed by the Adjudicating Authority (National Company Law

Tribunal), Single Bench, Chennai whereby an application under Section 7 of the

Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as 'the I&B

Code') preferred by the Indian Bank (Financial Creditor) has been admitted,

order of moratorium has been passed and Interim Resolution Professional has

been appointed.

2. Learned counsel appearing on behalf of the appellant submitted that one

of the infirmity is that the application was not signed by the authorised

representative. The Banker's record was not filed, which is mandatory to be

enclosed in terms of proviso to Section 7(5)(b). It is also submitted that in terms 2

of Rule 9 (1) and (2) of the Insolvency and Bankruptcy (Application to

Adjudicating Authority) Rules, 2016, the consent letter of the Interim Resolution

Professional was also not filed.

3. However, such submission cannot be accepted in view of the decision of

the Hon'ble Supreme Court in "Innoventive Industries Ltd. v. ICICI Bank

[ Innoventive Industries Ltd. v. ICICI Bank, (2018) 1 SCC 407] (Civil Appeals Nos.

8337-38 of 2017)" wherein the Hon'ble Supreme Court observed as follows :

"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

Company Appeal (AT) (Insolvency) No. 611 of 2018 3

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 sub-section (7), the

adjudicating authority shall then communicate the

order passed to the financial creditor and corporate

Company Appeal (AT) (Insolvency) No. 611 of 2018 4

debtor within 7 days of admission or rejection of

such application, as the case may be."

From the aforesaid provision, it is clear that the 'Financial Creditor' is required to

enclose any record of 'debt' and record relating to 'default' once such record are

brought on record, the application under Section 7 cannot be rejected

4. So far as the 'Interim Resolution Professional' (IRP) is concerned, even if

the consent letter has not been enclosed, in absence of any objection by the IRP,

after his appointment, such ground cannot be entertained for setting aside the

order of the admission.

5. It was next contended that the original amount due was shown to be

Rs. 43 Crores but subsequently it has been claimed that Rs. 59 Crores is payable.

However, on such ground the order of admission cannot be set aside there being

'debt' is payable to the bank by the 'Corporate Debtor' and there being 'default'.

For the reasons aforesaid, we are not inclined to interfere with the impugned

order. In absence of any merit, the appeal is dismissed. No cost.

[Justice S.J. Mukhopadhaya] Chairperson

[ Justice Bansi Lal Bhat ] Member (Judicial)

/ns/gc/

Company Appeal (AT) (Insolvency) No. 611 of 2018