H.N Nagaraj vs Edelweiss Asset Reconstruction ...

For 1st Respondent: Mr. Avishkar Singhvi, Mr. Rahul Jain, Mr. Bharat Sangal and Ms. Babita Kushwaha, Advocates

ORDER

14.05.2018 The appellant, shareholder of M/s. Live 100 Hospital

Private Limited (2nd respondent) has preferred this appeal against order

dated 2nd April, 2018 passed by the Adjudicating Authority (National

Company Law Tribunal) Bengaluru Bench whereby and whereunder the

application preferred by M/s. Edelweiss Asset Reconstruction Company

Limited (Financial Creditor) under Section 7 of the Insolvency and

Bankruptcy Code, 2016 (hereinafter referred to as the 'I&B Code') has

been admitted, order of moratorium has been passed and Resolution

Professional has been admitted with certain directions.

2. Learned counsel appearing on behalf of the appellant submitted

that though there is 'debt' but there was no 'default'. This aspect has not

been properly considered by the Adjudicating Authority. She referred to a 'Restructured Agreement' dated 20th October, 2014 between the

'Financial Creditor' and the 'Corporate Debtor' whereunder the

'Restructured Liability' was laid down. She referred to Paragraph 5 of the

'Restructured Agreement' to suggest that the property of the hospital

including car parking located at place were sold by December, 2014 and

after selling number of properties payments were to be made. However,

the respondent obtained injunction order from a Court.

3. Mr. Avishkar Singhvi, learned counsel appearing on behalf of the

respondent submitted that even in terms of the restructuring, the

amount has not been paid and the 'Corporate Debtor' defaulted to pay

the instalment.

4. We have noticed the rival contentions and perused the record.

'Repayment of restructured liability' have been shown at paragraphs 4

and 5 of the 'Agreement' dated 20th October, 2014, which reads as

follows:

"4. Repayment of Restructured Liability as follows:

a. The Company undertake to repay the

principal amount of the Restructured Liability

in approx. 7 years with 16 unequal quarterly

instalments. Detailed repayment working is

given in Schedule I.

b. Interest will be charged @12.50% p.a.

compounded on quarterly rests. However

interest for the period July 2014 to March 205

will be on simple basis provided the same is 2 Company Appeal (AT) (Insolvency) No. 210 of 2018 paid by December 2014. From April 2015,

quarterly interest will be serviced regularly.

The detailed interest payment is indicted in

Schedule I.

c. Principal amount will be repaid after

adjusting interest, penalty and other charges

if any, either from Sale of Secured Assets,

Personal Property or internal cash accruals.

Detailed Restructured Amortization Schedule

is given in Schedule I.

5. Property of the hospital (Car Parking) located at

Singasandra, Village Begur Hobli, Hosur Road,

Bangalore will be sold by December, 2014. The

property is likely to fetch Rs. 15 Cr, out of which

Rs.12 cr. Will be paid to EARC towards interest

payment for the period July 1, 2014 to March 31,

2015 and residual towards principal repayment.

The balance Rs. 3 Cr. Will be utilised by the Hospital

for hospital's improvement, acquiring Plant &

Machinery and towards Capital Gain Tax."

5. The dates of payment of instalments and the amount of demand as

shown in the Schedule is as follows:

3

Company Appeal (AT) (Insolvency) No. 210 of 2018

6. Admittedly, the 'Corporate Debtor' failed to pay instalments in

terms of the schedule I annexed to the 'agreement'. What is the reason

for default of payment cannot be a ground to reject the application under

Section 7, as the Adjudicating Authority is only supposed to see whether

the application is complete or not and whether there is any 'debt' or

'default'. We find no merit in this appeal. It is accordingly dismissed.

No cost.

[Justice S.J. Mukhopadhaya] Chairperson

[ Justice Bansi Lal Bhat ] Member (Judicial) /ns/uk 4 Company Appeal (AT) (Insolvency) No. 210 of 2018