M/S Indian Mega Agro Anaj Limited vs Axis Bank Limited & Others

(Arising out of the Order dated 16.11.2022 passed by the National Company Law Tribunal, Mumbai Bench, Mumbai, Court - V in C.P. (IB)/ 585 (MB) 2021)

IN THE MATTER OF:

Shri Ajay Kumar Baheti Erstwhile Director of M/s. India Mega Agro-Anaj Limited D-9, Vishnu Complex, V.I.P. Road, Nanded- 431 602, Maharashtra ...Appellant

Versus

1. Axis Bank Limited A Company incorporated under, The Companies Act, 1956, Having its Registered Office at Trishul, 3rd Floor, Opposite Samartheshwar Temple, Law Garden, Ellis Bridge, Ahmedabad- 380 006, Gujarat. Email id: piyushl.deora@axisbank.com ...Respondent No. 1

2. Mr. Krishna Chamadia, Insolvency Professional, M/s. India Mega Agro-Anaj Limited U01110MH2010PLC204475 Registration No. IBBI/IPA-001 IP-P00694/2017-2018/1220 Having Registered Address at B-1804, Raheja Heights, Off General A K Viadya Marg, Malad East, Mumbai 400 097, Maharashtra. Email- krishna@sphereadvisory.com ...Respondent No. 2

3. Bank of Baroda Through branch manager, Having its Branch at Parbhani Branch At Daulat, Shivaji Chowak, District-Parbhani, Maharashtra-431401 Email id: armpun@bankofbaroda.com ...Respondent No. 3 -2- Comp. App. (AT) (Ins.) No. 1461 of 2022

Present

For Appellants: Mr. Akash Kadade, Adv.

For Respondents: Mr. Obhirup Ghosh, Mr. Sonal Kumar Singh, Ms. Sidhika Dewidi, for R-1. Ms. Vishrutyi Sahni, for R-2.

JUDGEMENT

(02.01.2024) NARESH SALECHA, MEMBER (TECHNICAL)

1. The present Appeal i.e., Company Appeal (AT) (Insolvency) No. 1461 of

2022 has been preferred against the order of the National Company Law

Tribunal, Mumbai Bench, Mumbai, Court-V (in short 'Adjudicating

Authority') in C.P. (IB)/ 585 (MB) 2021 against the order dated 16.11.2022,

whereby, the application under Section 7 of the Insolvency & Bankruptcy

Code, 2016 (in short 'Code') was accepted.

2. The Appellant herein is Shri Ajay Kumar Baheti Erstwhile Director of

India Mega Agro-Anaj Limited. The Respondent No. 2 herein is the

Corporate Debtor i.e. M/s India Mega Agro-Anaj Limited being represented

by Mr. Krishna Chamadia. The Appellant stated that the Corporate Debtor

was declared as 'Designated Food Park' by the Government of India and

'Mega Project' by the State Government. The Appellant submitted that the

Corporate Debtor was entitled to get subsidy and incentives based on the

investments made in the Corporate Debtor. Admittedly, the Corporate

Debtor had taken the financial assistance and credit facilities from various

Financial Creditors, inter-alia from the Respondent No. 1-Axis Bank Limited

and the Respondent No. 3 - Bank of Baroda.

-3-

Comp. App. (AT) (Ins.) No. 1461 of 2022

3. The Appellant submitted that the Corporate Debtor was having and

operating various flour mill, cattle and poultry feed factory, rise mill, oil mill

and biscuit unit, milk processing plant etc., and the projects were developed

with an investment of about Rs. 127 Crores.

4. The Appellant stated that on the basis of one baseless F.I.R., he was

arrested under 'Essential Goods Act' and was behind bars for considerably

long period which affected the working of various units of the Corporate

Debtor causing problems for the Corporate Debtor. It is the case of the

Appellant that during this intervening period of his arrest and release from

the jail, the Corporate Debtor could not function properly and therefore, it

could not generate revenues. Consequently, the repayments to the

Financial Creditors were affected and as a result the loan accounts of the

Corporate Debtors were classified as Non-Performing Assets (in short 'NPA').

5. The Appellant castigated the Respondent No. 1 who was well aware

about difficult circumstances of the Corporate Debtor and despite this the

Respondent No. 1 went ahead to issue loan recall notice on 13.03.2019 for

Rs. 48,96,58,946.26/- and later also issued a demand notice under Section

13(2) of SARFAESI Act on 22.05.2016.

6. The Appellant stated that on 05.02.2020, the Financial Creditors

again called upon the Corporate Debtor to make payment of

Rs. 53,31,65,106.64/- due as on 31.01.2020 within 15 days from the

receipt of the Notice.

7. It is the case of the Appellant that due to financial stress of the

Corporate Debtor, he could not make the timely payments and the -4- Comp. App. (AT) (Ins.) No. 1461 of 2022

Respondent No. 1 filed an application under Section 7 of the Code for a

resolution of unresolved financial debt Rs. 62,21,30,534.65/-, despite

knowing that the Corporate Debtor was on verge of revival as going concern.

8. The Appellant also claimed that he was illegally arrested and detained

in case Registered by Director of Enforcement, sub-zonal Office, Nagpur for

alleged offence under Section 3 and 4 of the Prevention of Money Laundering

Act, 2009 (in short 'PMLA'). The Appellant submitted that due to his

detentions, various food processing units of the Corporate Debtor came to

standstill and which led to accumulating of debts.

9. The Appellant stated that a forensic audit of the account of the

Corporate Debtor was conducted independently by both the banks and came

to conclusion that the account did not fall under the category of fraud as per

the RBI master Circular dated 01.07.2015 and therefore, the account be

classified as "non-fraud" in the Joint Lenders' meeting held on 03.03.2022.

10. The Appellants assailed Adjudicating Authority in considering that the

Appellant did not have funds for upfront payments to Axis bank ignoring the

fact that the Appellant was willing to submit fresh resolution plan showing

financial figure that company can repay 100% amount within 5-7 year.

11. The Appellant submitted that the Corporate Debtor has started

operation with Bank of Baroda's current account under cutback

arrangement @2.50% of turnover and from 16.12.2022 to 02.01.2023,

company's turnover was Rs. 1.79 Crores, which ought to increase gradually

and reach optimum level in due course.

-5-

Comp. App. (AT) (Ins.) No. 1461 of 2022

12. It is the case of the Appellant that the Corporate Debtor entered into

Joint Venture cum Job Work agreement with Shree Shyam traders for

Solvent Extraction unit. Also, company has received offer letters for Dairy

Unit, Dall Mill and Bakery Unit. It is further the case of the Appellant that

they appointed one of the reputed consultancy firms in India 'BOBCAPS'

(Subsidiary company of Bank of Baroda) for preparation of Resolution plan

and also to bring Investor to invest in the company.

13. The Appellant stated that Company needs at least 2 months' time to

prepare and submit concrete resolution plan.

14. The Appellant submitted that as on 2019, total outstanding was Rs.

153 crores. against this, the Company is eligible for state subsidy/

incentives of Rs. 120 crores and Central subsidy. Apart from this, operating

profit of the company will ensure the repayment of liabilities.

15. The Appellant submitted that he got bail from the Hon'ble Bombay

High Court and successfully resumed operation of five food processing units

and was in process of receiving considerable subsidies from the Government

of India and from the State Government which could have been utilised for

repayment of the Financial Debts of the Respondents.

16. The Appellant submitted that he had prepared short Resolution Plan

on 21.10.2022 seeking five months time for repayment of Rs. 2.5 Crores as

cut-back and Rs. 4.5 Crores to be paid on receipt of subsidy from

Government of India.

17. The Appellant stated that he was involved in major agriculture and

dairy related industries, giving employment to thousands of people. The -6- Comp. App. (AT) (Ins.) No. 1461 of 2022

Appellant submitted that during financial year 2017-2018 the Corporate

Debtor was generating turnover of almost Rs. 450 Crores and was solvent

going concern.

18. The Appellant submitted that the Corporate Debtor has paid Rs. 17

Crores to consortium bankers even after his accounts were declared as NPA,

which shows his clean intentions for settling the financial debts in due

course.

19. It is the case of Appellant that only due to unreasonable attitude of

the Respondent No. 1 and lack of proper appreciation by the Adjudicating

Authority of reasonable chances of revival of the Corporate Debtor, the

Impugned Order dated 16.11.2022 was wrongly passed by the Adjudicating

Authority.

20. It is also the case of the Appellant that the whole purpose of the IBC is

for revival of the Corporate Debtor and not putting a death nail on the

Corporate Debtor and therefore, the Adjudicating Authority failed to

appreciate the whole case.

21. The Appellant submitted that in March, 2019 subsidy of 1.66 Lakh

was transferred to the Respondent No. 1 and in the financial year 2020 Rs.

5.14 Crores was paid to the Bank of Baroda who is Respondent No. 3 herein

as cut-back arrangement. It is the case of the Appellant that considering

positive attitude of the Corporate Debtor and the chances of revival, the

Respondent No. 3 always supported the Corporate Debtor unlike the

Respondent No. 1 who has been putting all hurdles in revival of the

Corporate Debtor.

-7-

Comp. App. (AT) (Ins.) No. 1461 of 2022

22. The Appellant submitted that the Corporate Debtor is eligible for

subsidy and incentives of entire investment of Rs. 120 Crores provided that

all the units are in operation. The Appellant submitted that if the Corporate

Debtor is allowed to continue operation without putting the Corporate

Debtor under the CIRP, he would have been entitled to receiving such huge

subsidies. In this connection, the Appellant stated that the Respondent No.

3 i.e., Bank of Baroda was willing to resolve the outstanding financial debts

through OTS.

23. The Appellant also submitted that after obtaining the stay order from

this Appellate Tribunal on 06.12.2022, he has repaid Rs. 4.41 Crores and

has been in active discussion with Financial Creditors with OTS proposal to

resolve the issue.

24. Concluding his arguments, the Appellant requested this Appellate

Tribunal to set aside the Impugned Order.

25. Per-contra, the Respondent No. 1 i.e., Axis Bank denied all the

averments made by the Appellant treating these as misleading and without

any substances.

26. The Respondent No. 1 also opposed the averments of another

Financial Creditors/ Bank of Baroda, the Respondent No. 3 herein.

27. It is the case of the Respondent No. 1 that the Appellant was

permitted for meetings in order to find resolution , where it was held that

the Corporate Debtor shall submit proper Resolution Plan at the earliest.

However, pursuant to the said meetings, the Corporate Debtor failed to

submit an appropriate resolution plan to Respondent No. 1 and on multiple -8- Comp. App. (AT) (Ins.) No. 1461 of 2022

occasions submitted deficient resolution plans which were merely excel

sheet-based projections and were devoid of any documentary support and

lacked any sort of accountability.

28. The Respondent No. 1 mentioned that the Corporate Debtor has not

filed balance sheet or financial statements for the Financial Year 2017-18

and the subsequent years till date. Therefore, the Respondent No. 1 denied

the request for the restructuring made by the Corporate Debtor. It is the

case of the Respondent No. 1 that Resolution Plan of the Corporate Debtor is

based on alleged subsidies that may be received from the Government in

future, to be used to repay the amounts owed to the Respondent No. 1,

which are all deemed assumption and presumptions of the Corporate Debtor

without any factual contents. The Respondent No. 1 highlighted that the

Corporate Debtor has not made any repayments to the Respondent No. 1 till

date even upon being classified as an NPA on 29.01.2019. Furthermore, the

unviability of the proposed resolution plan is apparent from the fact that the

Corporate Debtor, till date, has not paid any amount as per the proposed

plan itself. It is also the case of Respondent No. 1 that the bank cannot

accept any resolution plan which is based on contingent receipt of subsidies

from the government by the Corporate Debtor and therefore, the resolution

plan of Corporate Debtor was finally rejected by the Respondent No. 1 vide

letter dated 06.12.2022.

29. The Respondent No. 1 denied the averments of the Appellant that the

Corporate Debtor has repaid certain amount of debt, after the account of the

CD being held as NPA. The Respondent No. 1 stated that the Corporate -9- Comp. App. (AT) (Ins.) No. 1461 of 2022

Debtor till date has not paid any amount to the Respondent No. 1 under the

purported cut back arrangement with Respondent No. 3, although the

Respondent No. 1 has about 35% share in the consortium.

30. The Respondent No. 1 emphasised that the Impugned Order was

correctly passed by the Adjudicating Authority based on acknowledgement

of debt by the Corporate Debtor dated 13.10.2017. The Respondent No. 1

submitted that the Appellant herein has not disputed the said

acknowledgement of debt in the present Appeal. The Respondent No. 1 also

submitted that Respondent No. 1 filed the Statement of Accounts before the

Adjudicating Authority and the Corporate Debtor had not disputed the

same. Therefore, the debt is admitted by the Corporate Debtor and not

appealed against by the Appellant in the present Appeal. The Respondent

No. 1 submitted that the mere intention to repay the debt amount is not

sufficient and the Corporate Debtor must have taken appropriate steps to

repay the amount to Respondent No. 1 before the Impugned Order was

passed by the Adjudicating Authority.

31. The Respondent denied the averment of the Appellant that his arrest

by the Enforcement Directorate in ECIR/NGSZO/13/21 under the

provisions of the Prevention of Money Laundering Act, 2002 ("PMLA") halted

the functioning of the Corporate Debtor, until the Appellant was released on

bail by the Hon'ble Bombay High Court vide order dated 07.07.2022 passed

in Criminal Application (BA) No. 1149/2021. The Respondent No. 1 stated

that the Appellant has only been granted bail and the Criminal Case under

PMLA is admittedly pending adjudication.

-10-

Comp. App. (AT) (Ins.) No. 1461 of 2022

32. The Respondent No. 1 that the Corporate Debtor has two other

erstwhile Directors apart from the Appellant and even upon the arrest of the

Appellant, the Corporate Debtor was not bereft of management at the

relevant time. The same is evident from the master data of the Corporate

Debtor as available on the website of the Ministry of Corporate Affairs.

33. The Respondent No. 1 castigated the Appellant in wrongly relying on

the factum of COVID-19 induced lockdown in the Country to contend that it

halted the functioning of the Corporate Debtor. The Respondent No. 1

submitted that as per the record itself, the loan account of the Corporate

Debtor was classified as NPA on 29.01.2019 itself which is much prior to the

first lockdown imposed by the Government of India on 25.03.2020. It is also

submitted that as on 29.01.2019, there wasn't even any threat from the

COVID-19 pandemic. It is the case of the Respondent No. 1 that that the

Appellant is trying to mislead this Appellate Tribunal with respect to the

reason of the Corporate Debtor's inability to repay the Respondent No. 1 of

the amounts owed to it and the subsequent classification of the accounts of

the Corporate Debtor as NPA on account of pandemic, which is absolutely

false averments.

34. The Respondent No. 1 submitted that the Corporate Debtor being

eligible under any subsidy does not translate to that the subsidy shall be

released to the Corporate Debtor ultimately and such excuse is an attempt

on behalf of the Corporate Debtor to stall the CIRP proceedings as the

Corporate Debtor had on an earlier occasion as well, claimed that it will

receive subsidy in March 2021, however, nothing has materialized till date -11- Comp. App. (AT) (Ins.) No. 1461 of 2022

and neither has the Respondent No. l Bank has received any funds from the

Corporate Debtor.

35. The Respondent No. 1 also submitted that the account of Corporate

Debtor was classified as NPA in March 2019 itself with effect from

29.01.2019 and the Respondent No. 1 Bank has not received any significant

payment since April, 2019. The Respondent No. 1 mentioned that a

miniscule amount of Rs. 70,000 was received by the Respondent No. 1

under the cutback arrangement in December, 2022 which does not secure

the Respondent No. 1 in any manner as against the huge amount owed by

the Corporate Debtor of more than Rs. 62,21,30,534.65/- to the Respondent

No. 1 on the date of filing his application under Section 7 of the Code.

36. The Respondent No. 1 submitted that the Appellant as the Erstwhile

Director was released on bail in September 2022, i.e., more than 1 year back

still the Corporate Debtor failed to submit any cogent Resolution Plan and

also the alleged Joint-Venture cum Job Work agreement with Shree Shyam

traders for Solvent Extraction unit is merely an agreement for job-work and

not an investment made by any investor.

37. The Respondent No. 1 submitted that the Appellant as had appointed

BOBCAPS earlier also to rope in potential investors, but, without any

success and the Corporate Debtor has again appointed BOBCAPS for

preparation of Resolution Plan, however, BOBCAPS has not provided any

resolution proposal or brought out any investors. Further, mere

appointment of BOBCAPS does not entail that Appellant will be successful

in finding investors.

-12-

Comp. App. (AT) (Ins.) No. 1461 of 2022

38. It is the case of the Respondent No.1 that he has given all the

opportunities to the Corporate Debtor to make the payments. The

Respondent No. 1 stated that it was the Appellant who approached the

Respondent No. 1 for various credit facilities and loans and based on their

request, credit facilities and loans were granted to the Corporate Debtor.

However, the Appellant failed to repay the outstanding financial dues on

time, despite several reminders to the Corporate Debtor from the

Respondent No.1, therefore, the Respondent No.1 was left with no choice

but to classify the accounts of the Corporate Debtor as NPA on 31.01.2019.

39. The Respondent No. 1 stated that he issued a loan recall notice on

13.03.2019 to the Corporate Debtor requesting the Corporate Debtor to

repay Rs. 48,96,58,946.26 as on 13.03.2019 along with interest. The

Respondent No. 1 submitted that even after loan recall notice, the Appellant

failed to make the payments and in order to protect his financial interest,

the Respondent No. 1 moved an application under Section 13(2) of

SARFAESI Act and issued a demand notice dated 22.05.2019 calling upon

the Appellant to make the outstanding payments within 60 days from the

date of the notice.

40. It is the case of the Respondent No. 1 that they continued to give

many opportunities to the Appellant to settle the account and as a last

opportunity to the Corporate Debtor, a notice was issued on 05.01.2020 to

the Corporate Debtor to make the payment of Rs. 53,31,65,106.64/- as on

31.01.2020 within 15 days from the receipt of the notice. -13-

Comp. App. (AT) (Ins.) No. 1461 of 2022

41. The Respondent No. 1 submitted that despite lot of persuasion and

notices including legal notices, the Appellant miserably failed to meet his

commitments and therefore, the Respondent No. 1 was constrained to file

the application under Section 7 of the Code before the Adjudicating

Authority, which was admitted after detailed examination by the

Adjudicating Authority.

42. Concluding his arguments, the Respondent No. 1 submitted that the

appeal devoid of any merit deserves to be dismissed.

43. The Respondent No. 3 is another Financial Creditor i.e. Bank of

Baroda who requested that the Impugned Order be set aside in view of the

viability and overall financial health of the Corporate Debtor. The

Respondent No. 3 stated that the Corporate Debtor has majority of its

financial indebtedness to two lenders namely, Respondent No. 1 & 3 who

would constitute approximately 30% and 70% of the Committee of Creditors

of the Corporate Debtor.

44. The Respondent No. 3 stated that the Corporate Debtor has ability to

revive and maximise its own value by the revenue generated by its ongoing

operations and the financial health of the Corporate Debtor was temporarily

hampered due to the certain exigencies faced by the promoter like his arrest.

45. It is the case of the Respondent No. 3 that the Corporate Debtor has

assured Respondent No.3 of the repayment of its outstanding dues from the

Corporate Debtor under the revised timelines / debt restructuring proposed

under the Resolution Plan.

-14-

Comp. App. (AT) (Ins.) No. 1461 of 2022

46. It is the case of the Respondent No. 3 that being a custodian of public

funds, is concerned with maximum recovery and in the present case, if a

Corporate Debtor is assuring the Financial Creditors of the repayment of its

dues without any haircut, there remains no reason whatsoever for the

Financial Creditors seek recovery of its dues under the CIRP, which will no

doubt entail a haircut.

47. Concluding his arguments, the Respondent No. 3 stated that

balancing the interests of all stakeholders concerned, the captioned appeal

may be allowed and the Impugned Order admitting the Corporate Debtor

into CIRP may be set aside.

Findings

48. We note that the Application was filed by the Respondent No 1 under

Section 7 of the Code for unresolved financial debt of Rs. 62,21,30,534.65/-.

As per the scheme of the Code, the Financial Creditor can file an application

before the Adjudicating Authority along with the proof of default and name

of the IRP.

49. From the various averments we have noted that the default was

clearly established amounting more than the prescribed threshold limit of

minimum Rs. 1 Crore. As per the Code, in such eventuality, the

Adjudicating Authority, within 14 days form the date of receipt of such

application, need to ascertain the existence of a default and once the

Adjudicating Authority is satisfied regarding existence of the default, the

application is complete and no disciplinary proceedings are pending against -15- Comp. App. (AT) (Ins.) No. 1461 of 2022

the proposed Resolution Professional, the Adjudicating Authority is required

to admit the application.

50. We have noted the pleadings made by the Appellant that the

Corporate Debtor was solvent going concern company, which was having

turnover of more than Rs. 450 Crores during financial year 2017-2018 and

it is only due to his arrest under PMLA and Essential Goods Act, which

affected the working of the Company. The Appellant also brought to our

notice that based on investments the Corporate Debtor is eligible to receive

subsidies and incentives of almost Rs. 120 Crores from the Government of

India as well as from the concerned State Governments, during course of

time which may range over few years, which would be adequate to repay the

outstanding financial debts. We have noted the submissions bringing out

that he has received suitable communications from the respective

governments and further the Corporate Debtor has engaged BOBCAPS as a

consultant for submission of fresh Resolution Plan.

51. The Respondent No. 3 i.e. Bank of Baroda is one of the major

Financial Creditor who has supported the Corporate Debtor on these

reasons and has given detailed averments in order to support the Appeal

made by the Appellant with a request to set aside the Impugned Order in

order for the Bank to recovery the money.

52. In contrast, the averments made by the Appellant and the Respondent

No. 3, the Axis Bank, the Respondent No. 1 herein, who initiated the original

application under Section 7 of the code before the Adjudicating Authority,

made out the case that there has been clear case of default over Rs. 1 Crore -16- Comp. App. (AT) (Ins.) No. 1461 of 2022

which has not been paid and after taking all the steps his application for

initiating of CIRP was admitted by the Adjudicating Authority.

53. It is further the case of the Respondent No. 1 that the Corporate

Debtor has not been able to pay any amount and paid merely Rs. 70,000/-

against the outstanding dues of Rs. Rs. 62,21,30,534.65/-.

54. He has denied all the alleged claims of the Appellant regarding

BOBCAPS as consultant stating that no such Resolution Plan has been

received till date. He has also denied so-called agreement with M/s India

Mega Agro Anaj Limited which is merely a paper exercise and at the best an

agreement based on which no activity has happened and whole purpose of

the Corporate Debtor seems to avoid the liability of making payments to the

Financial Creditors.

55. We also note from the averments of all concerns that the entire appeal

lies on the factum that the Corporate Debtor is entitled to receive the

subsidies and incentives from the Government of India and other concerned

State Governments which may tantamount to almost Rs. 120 Crores in

coming several years.

56. This Appellate Tribunal raised a pointed query to the Appellant as to

whether any such claimed subsidies have been received recently and if so,

whether any payments have been made to the Respondent No. 1. The

Appellant could not give any specific reply and on the contrary, the

Respondent No. 1 Axis Bank denied such averments and stated that the Bak

has not receive any payment based on so-called incentives. -17-

Comp. App. (AT) (Ins.) No. 1461 of 2022

57. We find force in the logic of the Respondent No. 1 as discussed in pre-

pages.

58. At this stage, we note that the Adjudicating Authority examined

various issues raised by the Appellant and gave detailed speaking order.

The relevant portion of the Impugned Order dated 16.11.2022 reads as

under :-

"Findings

13. The contention of the Corporate Debtor is twofold:

a) The Financial Creditor lacks the authority to file the present Petition. It is his contention that the Financial Creditor being the member bank of the consortium should have initiated present Petition in consultation or with the approval from the lead bank of the consortium i.e. Bank of Baroda or added Bank of Baroda as a necessary party;

b) The Working Capital Consortium Agreement is unregistered and insufficiently stamped.

14. Let us deal with the first contention. In order to deal with the above issues, it is important to read Section 7 (1) of the Code, that reads as under:

"Section 7. (1) A financial creditor either by itself or jointly with other financial creditors may file an application for an application for initiating corporate insolvency resolution process against a corporate debtor before the Adjudicating Authority when a default has occurred. "

In addition to the above, it is also important to look at Article V of the Working Capital Consortium Agreement dated 15.09.2014, that reads as hereunder:

"Article V Clause 4 (i) For all or any purposes aforesaid the Borrower irrevocably constitutes and appoints each of the said -18- Comp. App. (AT) (Ins.) No. 1461 of 2022

Banks to be the Borrower's true and lawful attorney to do and execute for and in the name and on behalf of the· Borrower all or any of the following acts, deeds and things that is to say:

... Clause 4 (i) (d) To demand and receive all debts, sums of money, principal money, dividends, interest and dues of whatever nature."

Therefore, it is very clear from the above two that the Financial Creditor can file an Application under Section 7 either individually or jointly. Even otherwise, lack of consent from a member of consortium and non-joinder of Bank of Baroda as a necessary party has to be raised by the other member of the consortium and not the Corporate Debtor. Therefore, the above objection raised by the Corporate Debtor with regard to non-competence of the Financial Creditor has no legal substance and is liable to be rejected.·

15. The next contention raised by the Corporate Debtor is with regard to insufficient Stamp Duty paid on the documents. It is the contention of the Corporate Debtor:

"The Working Capital Consortium Agreement is unregistered, insufficiently stamped. The said agreement appears to have been executed on a stamp duty of Rs. 400/-. In view of the provisions of the Maharashtra Stamp Act, 1958 the said agreements cannot be read and relied upon particularly for the purpose of admitting an Application under Section 7 of the Insolvency and Bankruptcy Code, 2016 for establishing debt and default "

In this regard it is important to mention here that, the Financial Creditor has filed an Acknowledgement of Debt dated 13.10.2017 which is annexed to the Company Petition at page no. 707, wherein the Corporate Debtor has -19- Comp. App. (AT) (Ins.) No. 1461 of 2022

·acknowledged the outstanding liability towards the ·Financial Creditor. Apart from that, the Financial Creditor also filed the Statement of Accounts of the Corporate Debtor duly certified as per Bankers' Books Evidence Act, 1891 and the Information Technology Act, 2000 . The Corporate Debtor did not dispute the above 2 documents nor the execution of all the loan documents by them at the time of sanctioning of the loan. Therefore, the debt of the Financial Creditor stands proved through all the above documents even without looking into the Working Capital Consortium Agreement dated 15.09.2014. Hence, the contention of the Corporate Debtor in this regard has to be rejected as per the law laid down by the Hon'ble N CLAT in Praful nanji Satra V/s Vistra ITCL (India) Limited and Others (2022 SCC OnLine NCLAT 336).

16. In the light of the above observations and findings, this Tribunal has no hesitation in holding that the 'Debt' and the 'Default' in this case are proved and also, the Financial Creditor suggested the name of the Interim Resolution Professional the above Company Petition being filed on 30.07.2021 is within time The Petitioner has proposed the name-of lnsolvency Professional. The IRP proposed by the Petitioner, Mr. Krishna Chamadia, having address at B- 1804, Raheja Heights, Off Gen A K Vaidya Marg, Malad East, Mumbai 400 097 Email IDkrishna@sphereadvisory.com and having registration No. IBBI/IPA-001/IP-P00694/2017-2018/ 1220, to be appointed as the Interim Resolution Professional to conduct the Insolvency Resolution Process.

17. For the aforesaid reasons, this Tribunal did not find any valid reason warranting dismissal of the above -20- Comp. App. (AT) (Ins.) No. 1461 of 2022

Company Petition. Accordingly, the above Petition is Admitted by passing the following:

(Emphasis Supplied)

59. Here we would like to refer to Section 7 of the Code which reads as

under :-

7. Initiation of corporate insolvency resolution process by financial creditor.

(1) A financial creditor either by itself or jointly with 2 [other financial creditors, or any other person on behalf of the financial creditor, as may be notified by the Central Government] may file an application for initiating corporate insolvency resolution process against a corporate debtor before the Adjudicating Authority when a default has occurred.

*** (2) The financial creditor shall make an application under sub-section (1) in such form and manner and accompanied with such fee as may be prescribed.

(3) The financial creditor shall, along with the application furnish -

(a) record of the default recorded with the information utility or such other record or evidence of default as may be specified;

(b)the name of the resolution professional proposed to act as an interim resolution professional; and

(c) any other information as may be specified by the Board. (4) The Adjudicating Authority shall, within fourteen days of the receipt of the application under sub-section (2), ascertain the existence of a default from the records of an -21- Comp. App. (AT) (Ins.) No. 1461 of 2022

information utility or on the basis of other evidence furnished by the financial creditor under sub-section (3):

[Provided that if the Adjudicating Authority has not ascertained the existence of default and passed an order under sub-section (5) within such time, it shall record its reasons in writing for the same.] (5) Where the Adjudicating Authority is satisfied that - (a) a default has occurred and the application under sub-

section (2) is complete, and there is no disciplinary proceedings pending against the proposed resolution professional, it may, by order, admit such application; or

(b) default has not occurred or the application under sub- section (2) is incomplete or any disciplinary proceeding is pending against the proposed resolution professional, it may, by order, reject such application: Provided that the Adjudicating Authority shall, before rejecting the application under clause (b) of sub-section (5), give a notice to the applicant to rectify the defect in his application within seven days of receipt of such notice from the Adjudicating Authority.

(6) The corporate insolvency resolution process shall commence from the date of admission of the application under sub-section (5).

(7) The Adjudicating Authority shall communicate-

(a) the order under clause (a) of sub-section (5) to the financial creditor and the corporate debtor;

(b) the order under clause (b) of sub-section (5) to the financial creditor, within seven days of admission or rejection of such application, as the case may be.

(Emphasis Supplied) -22- Comp. App. (AT) (Ins.) No. 1461 of 2022

60. As such, we find that the Adjudicating Authority has not committed

any error in the Impugned Order and the Adjudicating Authority was duty

bound to admit the application of the Respondent No. 1 and put the

Corporate Debtor under the CIRP. Admittedly, in the present case none of

the parties disputed the existence of default. The arrest of the Appellant

under PMLA for considerable period and alleged likelihood of the incentives

does not substantiate the grounds in the appeal which requires our

interference in the Impugned Order.

61. The claims of incentives and subsidies at the best, can be treated as

contingent future probable receipts which may or may not happen. Such

contingent presumptions cannot be basis for setting aside the well-reasoned

speaking Impugned Order.

62. In fine, the appeal, devoid of any merit stand dismissed. No Costs.

Interlocutory Application(s), if any are Closed.

[Justice Rakesh Kumar Jain] Member (Judicial)

[Mr. Naresh Salecha] Member (Technical)

Sim