In the matter of Nuway Organic Naturals (India) Ltd.

CP(IB) No. 517/Chd/Pb/2019 Oriental Bank of Commerce Vs. M/s Nuway Organic Naturals (India) Ltd.

Judgement

PER: SH. L. N. GUPTA, M(T) & SH. HARNAM SINGH THAKUR, M(J)

Oriental Bank of Commerce (for brevity, the “Applicant”) has filed the present application under Section 7 of the Insolvency and Bankruptcy Code, 2016 read with Rule 4 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 with a prayer to initiate the Corporate Insolvency process against M/s Nuway Organic Naturals (India) Ltd. (for brevity, the “Respondent”).

2. The Respondent namely, M/s. Nuway Organic Naturals (India) Limited is a Company incorporated on 10.07.1995 under the provisions of the Companies Act, 1956 with CIN L22012PB1995PLC016755 having its registered office at N.H. 1, Mile Stone 232, Delhi-Amritsar, Village Devi Nagar, Rajpura, Punjab- 140401, which is within the jurisdiction of this Tribunal. The Authorized Share Capital of the Respondent Company is Rs.20,00,00,000/-, and the Paid-up Share Capital is Rs.16,15,46,750/-, as per the master data annexed with the application.

3. In the application, it is averred by the Applicant that it had sanctioned various Credit Facilities for an aggregate amount of Rs. 4 Crores, Term Loan I of Rs. 13.92 crores, Term Loan II of Rs. 2.48 crores, and Term Loan III of Rs. 3.89 crores to the Respondent. Thus, the total credit limit sanctioned by the Applicant bank in favour of the respondent are to the tune of Rs. 24.29 crore as per the last Sanction Letter dated 14.03.2016.

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4. The detailed particulars of the unpaid Financial Debt including the total amount of default and the date of default as claimed by the applicant in Part IV of the application reads thus:

5. As per Part IV of the application (ibid), the Applicant has claimed an outstanding “financial debt” of Rs. 20,13,72,347.81. It has been added that the Account of the Respondent Company was classified as NPA on account of default on 30.06.2017. It is further submitted that on 01.07.2017, the Applicant Bank issued the Loan Recall Notice-cum-Invocation of Guarantees u/s 13(2) of SARFAESI Act, 2002, calling upon the Respondent and other obligors to pay the defaulted amount.

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6. In support of its case, the Applicant has relied on the following documents:

(i) Copy of order CP (IB) NO. 265/Chd/Pb/2018 of NCLT Chd Bench dated 28.02.2019; (ii) Copy of Original Application against CD before DRT-III, Chd bearing OA no. 2185 of 2018. (iii) Copy of CIBIL Report of the CD. (iv) Copy of sanction letters dated 02.01.2010, 01.10.2011, 11.03.2013 & ad-hoc Sanction dated 18.03.2013, 12.05.2013, 14.03.2016; (v) Loan Recall Notice u/s 13(2) of SARFAESI Act, 2002 dated 01.07.2017; Possession Notices dated 29.09.2017 & 19.02.2018 and Sale notice dated 30.06.2018. (vi) Copies of Balance and Security Confirmation Letters; (vii) Copy of OTS Proposal (viii) Copy of the OTS Cancellation Letter dated 10.06.2019.

7. Based on the abovementioned facts and the documents, the Applicant has prayed for the initiation of CIRP against the Respondent.

8. On issuance of the notice, the Respondent has filed its reply stating mainly the following:

8.1 The present Application is filed without proper Authorization and is prima facie liable be dismissed. The Power of Attorney dated 20-09-2003 is signed by Mr. Tejendra Mohan Basin, named to be General Manager of the Financial Creditor and the Authorization Letter for filing reference under IBC,

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2016 is executed by Mr. Sunil Chug stated again to be the General Manger of the Financial Creditor.

8.2 One Time Settlement Scheme ("OTS") was executed between the parties on December 24, 2018 which is annexed along with the Application. The Respondent/CD in compliance to the same and to show its bona fide paid a substantial amount of Rs. 800 Lakhs approximately which shows that the CD is more than willing to pay the dues. But, the Financial Creditor is adamant in grabbing the big chunk of Land of the CD at a much lower value. The estimated Value of the Secured Properties as stated by the Financial Creditor in their Application is stated Rs. 24.64 Crore which is a lot lower than the value of Secured Properties. If a chance is given by reviving the OTS, the Respondent is ready to adhere to and to continue as a going concern.

8.3 The Respondent Company has time and again requesting for the OTS but the Petitioner is pressurizing it to pay the entire amount which incorporates the interest part in the most.

9. We have heard the submissions of both parties and perused the pleadings on record, including the Written Submissions filed by the Applicant. Since no specific date of default has been mentioned by the Applicant, even by taking the date of NPA i.e., 30.06.2017 as date of default, the application having been filed on 16.09.2019 is well within the limitation.

10. The Respondent in its defence has contended that it had entered a One Time Settlement Scheme (OTS) with the Applicant Bank on 24.12.2018 and to show its bona fide, it paid an amount of Rs. 800 Lakhs approximately. If a chance is given by reviving the OTS, the Respondent is ready to adhere to and CP(IB) No. 517/Chd/Pb/2019 to continue as a going concern. Further, it has stated that the present Application, being filed without proper Authorization, is liable be dismissed. Per Contra, the Applicant has annexed various documents to prove the existence of debt and default as mentioned in Para 6 of this order. During the hearing, in support of its contentions, the Ld. Counsel for the Applicant referred to the Bank sanction letters, Loan Recall Notice-cum-invocation of Guarantees dated 01.07.2017 issued on behalf of the Applicant Bank, OTS Proposal by the Respondent, and OTS Cancellation Letter dated 10.06.2019.

11. The Corporate Debtor in its Reply has admitted that it had made earnest attempts to settle the matter by submitting one-time settlement proposal and to show its bona fide, paid an amount of Rs. 800 Lakhs approximately. Per contra, bank has contended that the said OTS was cancelled vide Letter dated 10.06.2019. Be that as it may, a one-time settlement (OTS) proposal in terms of the judgment of the Hon’ble Supreme Court in “Dena Bank (now Bank of Baroda) vs. C. Shivakumar Reddy and Anr.” is an acknowledgment of debt. The relevant para of the judgment dated 04.08.2021 reads thus:

“141. Section 18 of the Limitation Act cannot also be construed with pedantic rigidity in relation to proceedings under the IBC. This Court sees no reason why an offer of One Time Settlement of a live claim, made within the period of limitation, should not also be construed as an acknowledgment to attract Section 18 of the Limitation Act. In Gaurav Hargovindbhai Dave (supra) cited by Mr. Shivshankar, this Court had no occasion to consider any proposal for one time settlement. Be that as it may, the Balance Sheets and Financial Statements of the Corporate Debtor for 2016- 2017, as observed above, constitute acknowledgement of liability which extended the limitation by three years, apart from the fact

CP(IB) No. 517/Chd/Pb/2019 that a Certificate of Recovery was issued in favour of the Appellant Bank in May 2017. The NCLT rightly admitted the application by its order dated 21st March, 2019”. (Emphasis placed) 12. To examine the next contention of the Respondent that the present Application is filed without proper Authorization, we refer to the Authority Letter & Power of Attorney (Pages 31A -37 of the application), which reads thus:

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On perusal of the abovesaid documents, we observe that the Authority Letter & Power of Attorney are complete for filing the present application. It is further observed that this Application has been filed by the duly authorized person Sh. Krishan Lal Gulati. Thus, we reject the contention raised by the respondent on account of proper authorization.

13. In view of the abovementioned discussion, the debt and default of the Respondent has been established by the Applicant Bank beyond doubt.

14. In the sequel to the above and the given facts and circumstances, the present Application being complete and the Applicant having established the default on the part of the Respondent in payment of the Financial Debt for an amount being above the minimum threshold limit, the present Application is admitted in terms of Section 7(5) of the IBC and accordingly, the Moratorium is declared in terms of Section 14 of the Code. As a necessary consequence of the Moratorium in terms of Section 14(1) (a), (b), (c) & (d), the following prohibitions are imposed, which must be followed:

“(a) The institution of suits or continuation of pending suits or proceedings against the Respondent including execution of any judgment, decree or order in any court of law, tribunal, arbitration panel or other authority;

(b) Transferring, encumbering, alienating, or disposing of by the Respondent any of its assets or any legal right or beneficial interest therein;

CP(IB) No. 517/Chd/Pb/2019 (c) Any action to foreclose, recover or enforce any security interest created by the Respondent in respect of its property including any action under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002;

(d) The recovery of any property by an owner or lessor, where such property is occupied by or in the possession of the Respondent.”

15. As proposed by the Applicant, this Bench appoints Mr. Ankit Goel as IRP having Registration IBBI/IPA-001/IP- P00200/2017-2018/10390 Email ID: jk.grover27@gmail.com subject to the condition that no disciplinary proceedings is pending against the IRP so named and disclosures as required under IBBI Regulations, 2016 are made by him within a period of one week of this Order. This Adjudicating Authority further orders that:

Mr. Jalesh Kumar Grover, as an IRP having Registration No. IBBI/IPA- 001/IP- P00200/2017-2018/10390, Email ID: jk.grover27@gmail.com is directed to take charge of the CIRP of the Respondent with immediate effect. The IRP is further directed to take the steps as mandated under the IBC specifically under Sections 15, 17, 18, 20, and 21 of IBC, 2016.

16. The Applicant is directed to deposit Rs.5,00,000/- (Five Lakhs) only with the IRP to meet the immediate expenses. The amount, however, will be subject to adjustment by the Committee of Creditors as to be duly accounted for by IRP and shall be paid back to the Applicant.

17. A copy of this Order shall immediately be communicated to the Applicant Bank, the Respondent Company, the IRP named above, and the IBBI by the Court Officer/Registry of this Tribunal.

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18. The Application stand admitted and disposed of accordingly.

Sd/- Sd/- (L. N. GUPTA) (HARNAM SINGH THAKUR) MEMBER (T) MEMBER (J)

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