Mintri Tea Company Limited vs Punjab National Bank

4. Shiwaani Mintri, D/o Krishna Kumar Mintri, R/o Mintri Complex, Sevoke Road, Siliguri- 734 001 .. Appellants

Versus

1. Punjab National Bank, Having its registered and Corporate Office at 7, Bhikhaji Cama Place, New Delhi - 110 607 .. Respondent

Present:

For Appellants: Ms. Aanchal Tikmani, Advocate

For Respondent: Shri Rajesh Kumar Gautam and Ms. Khushboo Agarwal, Advocates

COMPANY APPEAL (AT)(INSOLVENCY) NO. 237 OF 2017 1 Judgement

Sudhansu Jyoti Mukhopadhaya, J:

The Appellant(s) Mintri Tea Company Limited (Corporate Debtor) along

with others (shareholders) have preferred this appeal against the order dated

20th September, 2017 passed by the Adjudicating Authority (National

Company Law Tribunal, Kolkata Bench, Kolkata) whereby and whereunder

the application preferred by Respondent- Punjab National Bank (Operational

Creditor) under Section 7 of the Insolvency & Bankruptcy Code, 2016

(hereinafter referred to as I&B Code) r/w Rule 4 of Insolvency and Bankruptcy

Code, (Application to Adjudicating Authority) Rules, 2016, has been admitted,

order of Moratorium has been passed, Interim Resolution Professional has

been appointed with directions as mentioned therein.

2. The case of the Appellant(s) is that the 'Corporate Debtor' having failed

to pay the debt amount, 'Financial Creditor' initiated notice under sub Section

(2) of Section 3 of SARFAESI Act, 2002 demanding payment of Rs.

8,92,68,513.80 (Rupees Eight Crores, Ninety-two Lakhs, Sixty-eight

Thousand Five Hundred Thirteen and paise Eighty only) within 60 days.

3. In reply to the notice, the Appellant(s) while pointing out the illegality

being contrary to the provisions of Section 31 of SARFAESI Act, approached

the 'Financial Creditor', who informed that the notice was issued by mistake

and were ready to restructure the loan account of the 1st Applicant.

COMPANY APPEAL (AT)(INSOLVENCY) NO. 237 OF 2017 2 Accordingly, on 25th September, 2013 restructuring of the loan amount of the

1st Appellant took place.

4. Learned Counsel for the Appellant(s) submitted that in spite of same,

'Financial Creditor' suddenly moved an application under Section 7 of I & B

Code, 2016 alleging default of Rs. 10,37,69,840.06 (Rupees Ten Crores,

Thirty-seven Lakhs, Sixty-nine Thousands, Eight Hundreds Forty and paise

six only) on the 1st Appellant. No explanation has been provided in the said

application for arriving at such figure.

5. It was submitted that 5 (five) months earlier the amount was shown to

be Rs. 7,62,64,904.80 (Rupees Seven Crores, Sixty-two Lakhs, Sixty-four

thousands Nine hundreds four paise eighty only) as on 6th February, 2017

and merely after five months, higher amount of Rs. 10,37,69,840.06 (Rupees

Ten Crores, Thirty-seven Lakhs, Sixty-nine Thousands, Eight Hundreds Forty

and paise six only) have been shown to be due.

6. It was submitted that there was a mismatch between amounts

demanded and shown in the petition under Section 7 of I & B Code, 2016 and

thereby as mismatching statements have been given, the application was fit

to be rejected.

7. Learned Counsel for the Respondent have disputed the aforesaid plea

taken by the Appellant(s). Learned Counsel for the 'Financial Creditor'

submitted that the Term Loan and other loans were properly calculated after

COMPANY APPEAL (AT)(INSOLVENCY) NO. 237 OF 2017 3 calculating the interest upto the date of filing of the application under Section

7 of the I&B Code.

8. Learned Counsel for the Appellant(s) provided the break-up of the

amount claimed to suggest that there was a mismatching of amount but were

not inclined to decide such question whether there was mismatch in the

amount or not for the reasons stated below.

Section 7 of I & B Code fell for consideration of Hon'ble Supreme Court

in "Innovative Industries Ltd. Vs. ICICI Bank" - 2017 SCC online SC 1025.

In the said case, the Hon'ble Supreme Court held:

1. .....

"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

COMPANY APPEAL (AT)(INSOLVENCY) NO. 237 OF 2017 4 III, particulars of the financial debt in part IV and documents,

records and 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 debtor within 7 days of admission or rejection of such

application, as the case may be." ...

The Hon'ble Supreme Court further held:

COMPANY APPEAL (AT)(INSOLVENCY) NO. 237 OF 2017 5 "30. On the other hand, as we have seen, in the case of a

corporate debtor who commits a default of a financial debt, the

adjudicating authority has merely to see the records of the

information utility or other evidence produced by the financial

creditor to satisfy itself that a default has occurred. It is of no

matter that the debt is disputed so long as the debt is "due" i.e

payable unless interdicted by some law or has not yet become

due in the sense that it is payable at some future date. It is only

when this is proved to the satisfaction of the adjudicating

authority that the adjudicating authority may reject an application

and not otherwise." ....

9. In the present case, it is not disputed that there is a debt due and

default has accrued. The Appellant(s), including the Corporate Debtor, has

not claimed that default has not occurred in the sense that the "debt" includes

disputed claim but not due. It is also not the case of the Appellant(s) that the

debt is not due nor payable in law or in fact. The amount of debt, which is the

claim amount will always vary with the default of debt amount which may be

part of the claim and total amount and may include interest.

10. In the present case as we find that the Respondent on calculation of

interest have shown the amount due and default taken place, such records

placed before the Adjudicating Authority and record being complete if the

application under Section 7 of the I & B Code has been entertained as

admitted, no interference is called for. We find no merit in this appeal. It is

COMPANY APPEAL (AT)(INSOLVENCY) NO. 237 OF 2017 6 accordingly dismissed. However, in the facts and circumstances of the case,

there shall be no orders to cost.

[Justice S.J. Mukhopadhaya] Chairperson

[Justice Bansi Lal Bhat] Member (Judicial)

Dated: 22nd December, 2017

/akc/

COMPANY APPEAL (AT)(INSOLVENCY) NO. 237 OF 2017 7