Pratik Harish Patel vs Assets Care & Reconstruction ...

IN THE MATTER OF: Pratik Harish Patel ...Appellant Versus Assets Care & Reconstruction Enterprise Ltd. & Anr. ...Respondents

Present: For Appellant : Mr. Viraj Pariek, Mr. Abhinav Agrawal, Advocates. For Respondents :

ORDER

(Hybrid Mode)

13.11.2024: Heard learned counsel for the Appellant. This Appeal has

been filed against order dated 24.04.2024 by which order the application filed

by Assets Care & Reconstruction Enterprise Ltd., Section 7 application, has

been admitted against the Corporate Debtor. The Adjudicating Authority has

returned a finding of debt and default and therefore, proceeded to admit the

Section 7 application.

2. Learned counsel for the Appellant challenging the order contends that

fraud was committed by the Financial Creditor in so far as by Term Sheet

dated 01.03.2018, the Financial Creditor agreed to disburse Rs.1,135/-

Crores to the Group Companies, which promise was breached and after some

disbursement, disbursement was stopped. Learned counsel for the Appellant

has referred to email dated 16.08.2018 which was sent by the representative

of the Financial Creditor. Learned counsel for the Appellant further submits

that the Corporate Debtor has approached another investor -Avendus Capital,

Cont'd.../ 2

who agreed to extend the financial facility which was however subject to letter

from the existing lender to Borrower confirming their outstanding facility

amount and also confirming that they will release their charge on the project

assets directly in favour of the lenders upon being repaid in full. It is

submitted that the Financial Creditor having not issued any such letter,

Appellant could not get finance from the new investor.

3. We have considered the submissions of learned counsel for the

Appellant and perused the record.

4. There is no dispute that till 26.06.2019, the Financial Creditor

disbursed a total amount of Rs.297,21,82,000/- to the Respondent. The

submission of the Appellant is that the Financial Creditor executed a Term

Sheet on 01.03.2018 and agreed to extend financial facility to Group

Companies of Rs.1135 crore, in which the Financial Creditor defaulted and

stopped further disbursement, hence, a fraud was played on the Corporate

Debtor. Learned counsel for the Appellant himself has submitted that there

are RBI circular that amount not more than 20% has to be disbursed to the

Group Companies by a NBFC, which was the reason for non-disbursement to

the Corporate Debtor's Group. The non-disbursement of amount of Rs.1135

crore to Group Companies of Corporate Debtor is not the issue which need to

be gone into in this appeal.

5. The fact remains that there was disbursement to the Corporate Debtor

which is financial debt and default was committed by the Corporate Debtor.

Company Appeal (AT) (Insolvency) No.1241 of 2024 3

The Adjudicating Authority has also referred to acknowledgment letter dated

04.01.2019 about the outstanding amount which has been noticed in Para 40

of the order. When there is debt and default, we see no infirmity in the order

of the Adjudicating Authority admitting Section 7 application. We are not

impressed with the submission of the Appellant that fraud was played upon

the Corporate Debtor. We, thus, are of the view that there is no ground to

interfere with the impugned order dated 24.04.2024 admitting Section 7

application. Appeal is dismissed.

[Justice Ashok Bhushan] Chairperson

[Barun Mitra] Member (Technical)

[Arun Baroka] Member (Technical) Archana/nn

Company Appeal (AT) (Insolvency) No.1241 of 2024