Mr. Sagar Sharma & Anr vs Assets Care & Reconstructions ...

IN THE MATTER OF: Sagar Sharma & Anr. ...Appellant

Versus

Assets Care & Reconstruction Enterprise Ltd. & Ors. ...Respondents

Present: For Appellant : Mr. Rahul Chitnis, Ms. Shwetal Shepal, Mr. Aditya Khnna and Mr. Viraj Dattar, Sr. Advocate.

For Respondent : Mr. Amit Singh Chadha, Sr. Advocate with Mr. Suresh Dabhal and Mr. Shikhar Kumar, Advocates for Intervenor (Phoenix ARC). Mr. Arun Kathpalia, Sr. Advocate with Mr. Udit Mendiratta, Mr. Shivkrit Rai, Mr. Deniyal Quereshi and Mr. Aditya Dhupar, Advocates for R-1. Mr. Saurav Panda, Mr. Gaurav Arora, Mr. Anoop Rawat, Mr. Aditya Marwah and Ms. Snigdha Saraff, Advocates

ORDER

(Hybrid Mode)

17.02.2025 Heard Learned Counsel for the Appellant.

2. This Appeal has been filed against the order dated 19.11.2024 by which

National Company Law Tribunal, Mumbai Bench has admitted a Section 7

Application filed by Asset Care & Reconstruction Enterprise Limited. It was

held by Adjudicating Authority that financial debt exceeds the threshold of

Rs.1,00,00,000/- (One Crore Rupees), hence the application was admitted,

the order has been challenged by the Appellant in this Appeal. The order sheet

of this appeal indicates that the appeal was first taken for consideration on

02.12.2024 Appellant took time to file additional affidavit and thereafter there

has been several adjournments at the instance of the Appellant and the

appeal could be argued by the Appellant today.

3. Learned Counsel for the Appellant challenging the order submits that

Financial Creditor is assignee from the HDFC Bank Ltd. and there are no

material on the record to indicate that any amount was disbursed to the

Corporate Debtor. It is submitted that the OTS which were given by the

promoters could not be treated to be acknowledgment of any debt by the

Corporate Debtor. Learned Counsel for the Appellant submits that the loan

account statement of HDFCL which is brought on record does not contain any

stamp nor is a document which can be relied. It is further submitted that

statement of account which were part of Section 7 application are also not

reliable. There was no information utility certificate annexed along with the

application which was filed only subsequently.

4. Learned Sr. Counsel Mr. Arun Kathpalia appearing for the Respondent

submits that the present is a case where there were four types of loan

disbursed to the Appellant by the HDFC and HDFC Ltd. and the certificate

issued by the Chartered Accountant dated 14.08.2019 which is a part of the

convenience compilation itself indicate that Appellant has accepted the

principal amount of Rs. 81.72 crores which is reflected in the Chartered

Account Certificate.

5. Learned Counsel for the Respondent submits that the numerous OTS

proposals were submitted by the promoters which clearly admits the

disbursement and amount due and has offer to pay the amount. Reference

has been made to the OTS dated 14.08.2019 which is part of the convenience

Company Appeal (AT) (Insolvency) No. 2221 of 2024 2 of 7 compilation where proposals were submitted for one-time settlement to HDFC

Bank, the total principal was referred as Rs. 81.72 crores and 8.5% interest

and 26.14 crores total 107.86 was stated in the OTS that the Appellant

propose to make the payment. It is submitted that OTS given by the Appellant

itself is sufficient evidence to accept the liability of the Appellant. It is

submitted that HDFC Bank on subsequent OTS given on 10.03.2021 had

accepted by letter dated 17.03.2021 which however was not honoured.

Learned Counsel for the Appellant submitted that they did not accept the

OTS.

6. Learned Sr. Counsel Mr. Chadha appearing for the Intervener submits

that the order impugned was passed in November, 2024 and the CIRP period

has been elapsing but Appellant has chosen not to argue the appeal except

for today when the appeal was heard. It is submitted that Appellants are not

entitled for any indulgence.

7. We have considered submission of Counsel for the parties and perused

the record.

8. The Adjudicating Authority in the impugned order has returned

following findings. After considering the submissions of both the parties, in

paragraph 6.2 and 6.3 following findings have been returned:

"....

6.2 With regard to the dispute concerning Disbursement of Loans to the extent claimed in the Application, it is noticed from the record that HDFCL sanctioned a total loan amount of Company Appeal (AT) (Insolvency) No. 2221 of 2024 3 of 7 Rs.170,28,00,000/- to the Corporate Debtor, comprising Term Loan-l of Rs. 12,00,00,000/- vide Sanction Letter dated 22.12.2011; Term Loan-II of Rs.45,00,00,000/- vide Sanction Letter dated 05.05.2012; Term Loan-III of Rs. 13,28,00,000/- vide Sanction Letter dated 19.03.2014 and Lease Rental Discounting Facility (LRD) of Rs.100,00,00,000/- vide Sanction Letter dated 28.09.2015. The Financial Creditor asserts that out of the total sanctioned amount, Rs. 169,84,42,994/- was disbursed to the Corporate Debtor from time to time and the same is supported by statements of accounts maintained by HDFCL. However, the Corporate Debtor disputes these statements and contends that a far lesser amount was disbursed by HDFCL. In this connection, the contention raised by the Corporate Debtor that the statements of accounts. are not compliant with the Bankers' Books Evidence Act, 1891 is not sustainable, since HDFCL as an NBFC fell outside the purview of the said Act.

6.3 It is well-settled that at the admission stage, all that the Adjudicating Authority is required to see is whether the financial debt exceeds the pecuniary threshold of Rs.1,00,00,000/- (One Crore Rupees) under Section 4 of the Code and whether default has occurred in repayment thereof. Disputes regarding the exact quantum of the financial debt are irrelevant at this stage. It is immaterial that the debt is disputed so long as the debt is due and payable. It is observed from the record that the Corporate Debtor, in its OTS proposal dated 14.08.2019, furnished a certificate by a Chartered Accountant showing that only an amount of Rs.81.72 Crore was disbursed by HDFCL as the "true principal" as against Rs.169.84 Crore claimed by the Financial Creditor. On careful perusal of the

Company Appeal (AT) (Insolvency) No. 2221 of 2024 4 of 7 aforesaid certificate, we find that the total principal amount received by the Corporate Debtor has not been worked out correctly. For instance, the amount repaid by HDFCL to other lenders of the Corporate Debtor in discharge of debt obligations of the latter cannot be excluded or disregarded while working out the actual disbursals. The disbursements made by HDFCL to the Corporate Debtor would obviously include disbursements made on behalf of the latter towards repayment of loans availed by it from other lenders. Similarly, fees and expenses charged by lenders were payable under the loan documents and would accordingly be adjusted and recovered from the disbursals made to the Corporate Debtor. In view of this, the working of true principal amount disbursed (as provided by the Corporate Debtor) cannot be treated as correct or reliable and the same is accordingly rejected. Besides, as stated above, such working of "true principal" amount disputing the amount of financial debt claimed by the Financial Creditor in Part-IV of the Application is not relevant at the stage of consideration of the Application for admission under Section 7 of the Code. On the facts of the present case, we thus find that the Corporate Debtor has admitted having received total disbursement of loans to the tune of Rs.81.72 crore, which is more than one crore rupees, thereby acknowledging the financial debt and its disbursement."

9. Learned Counsel for the Respondent has referred to the Chartered

Accounts Certificate dated 14.08.2019 which is a certificate which was relied

by the Appellant itself and was addressed to the Appellant by his own

Chartered Accountant, the said certificate clearly mentioned that according

to the Chartered Accountant the principal amount due against the Company Company Appeal (AT) (Insolvency) No. 2221 of 2024 5 of 7 was 81.72 crores after deducting the other three items as mentioned in the

Chartered Accountant Certificate. Learned Counsel for the Respondent is

right in his submission that OTS proposals which were submitted by the

Promoter itself recognizes the amount due on the Corporate Debtor i.e., one

is given by the promoter and another is given by the Company. OTS proposal

dated 10.03.2021 has been referred to which was replied by letter dated

17.03.2021 of the HDFC Bank with certain conditions which letter is also part

at page 28 of the convenience compilation.

10. From the material which are on the record, we fail to see any substance

in submission of the appellant that there was no disbursal in favour of the

Corporate Debtor.

11. Learned Sr. Counsel Mr. Kathpalia has referred to several notices of

demand issued by HDFC Bank informing about the Appellant about the dues

and default. It is the case of the Respondent that no reply was given to the

said demand denying the disbursal. Learned Counsel for the Respondent has

referred to the letters issued by the HDFC Bank dated 19.03.2018 addressed

to the Corporate Debtor, where total outstanding amount was mentioned as

Rs.1.61 crore and another letter was issued on 15.11.2018 and thereafter on

10.01.2019.

12. Ample materials have been brought on record along with the

convenience compilation filed by Appellants themselves, which indicates the

existence of debt and continuous default on the part of Corporate Debtor. The Company Appeal (AT) (Insolvency) No. 2221 of 2024 6 of 7 submission which is sought to be advanced by the Appellant that there was

no disbursal to the Corporate Debtor does not inspire any confidence and we

may say that the said is completely dishonest plea taken by the Appellant in

this appeal.

13. There being own admission of the appellant which is reflected from the

OTS submitted by the Appellant offering to pay the dues, it does not lie in the

mouth of the Appellant to say that there was no disbursal to the company.

14. We thus are of the view that no error has been committed by

Adjudicating Authority in admitting Section 7 Application.

15. There is no merit in this Appeal. The Appeal is dismissed.

[Justice Ashok Bhushan] Chairperson

[Barun Mitra] Member (Technical)

[Arun Baroka] Member (Technical) pks/nn

Company Appeal (AT) (Insolvency) No. 2221 of 2024 7 of 7