Rajeev Anand vs Srei Equipment Finance Ltd & Anr

[Arising out of Judgment dated 23th August 2019 passed by NCLT, New Delhi (Principal Bench) in C.P. No. IB-271(PB)/2017]

IN THE MATTER OF:

Rajeev Anand ...Appellant Versus Srei Equipment Finance Limited & Anr. ...Respondents Present: For Appellant: Mr Muneesh Malhotra, Mr Rajat Bhardwaj, Ms Manpreet Kaur and Ms Vanya Khanna, Advocates. For Respondent: Mr Arijit Mazumdar, Ms Akanksha Kaushik and Mr Devesh Ajmani, Advocates for Respondent No. 1 Shri Hasmad Nabi, Shri Puneet Pankaj, Advocates for Financial Creditor. Ms. Aditi Sharma, Mr. Aman Khan, Advocates and Mr. Harshal Madan (CS) for IRP.

JUDGMENT

[Per; V. P. Singh, Member (T) ]

That the Appellant / Respondent has preferred this appeal against the

order of Admission under Section 7 of the 'Insolvency and Bankruptcy Code

2016 passed by the National Company Law Tribunal, New Delhi (Principal

Bench). The present proceeding has been initiated on account of the default

committed by the 'Corporate Debtor' in repayment of its dues under the loan

Agreement dated 1st April 2016 bearing Contract No. 105996. As per the

Appellant/Respondent, the repayment under the Loan Agreement was to

commence from September 2016. The Appellant / Respondent has realised

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the instalments for September 2016 till February 2017. However, the

instalments for March 2017 to July 2017 amounting to Rs. 5,13,47,660/-

has not been paid by the Respondent.

2. The total amount claimed to be in default, and the details of default

have been given in sub-para 2 of Part-IV of Form 1. Thus, the case of the

Petitioner is that on 29th July 2017, a sum of Rs. 214,168,423/- is

outstanding, and the petition has been filed on 4th August 2017. The

'Corporate Debtor' filed Supplementary Affidavit dated 6th June 2018

showing disbursement of Rs. 18,86,00,000/- on 1st April 2016 to the

'Corporate Debtor'.

3. The 'Corporate Debtor' in its reply stated that sum of Rs.

25,73,96,034/- was rescheduled by the Appellant into 3 Loan Accounts of

the equal amount, the total amount due was Rs. 35,66,61,986/-, which was

again rescheduled by the Appellant into the loan Accounts, including the

penal charges and other charges with the understanding that for one year

the 'Corporate Debtor' is not liable to pay the instalment. Accordingly, it was

agreed between the parties that first six months there would be moratorium

of interest and balance six months interest shall be added to the loan

amount. After adding the interest portion of one year (inclusive of

moratorium of six months) in loan amount of Rs. 35,66,61,986/-, the total

outstanding amount became Rs. 38,39,00,000/- which was financed in the

present two loan accounts, and the instalment for the 1st loan account was

due to be paid on 22nd March, 2017 and for the 2nd loan account was due to

be paid on 22nd June, 2017.

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4. The 'Corporate Debtor' contends that on the date of filing of the

petition, there was no default as contemplated in Section 7 of the Insolvency

and Bankruptcy Code 2016. The 'Corporate Debtor' /Respondent further

contends that the petition is pre-mature, and filed after the suppression of

facts. The alleged amount is not due and payable at the time of filing of the

petition.

5. The Adjudicating Authority admitted the petition on the ground that

the 'Corporate Debtor' in the previous round of litigation had candidly

admitted the restructuring of total loan amount of Rs. 35,66,61,986/- by

way of executing two contracts, firstly by Agreement No. 105996 dated 1st

April 2016 for facility of Rs. 18,86,00,000/- and secondly being Agreement

No. 111305 dated 24th June 2016 for facility of Rs. 19,53,00,000/-. The

Adjudicating Authority has also observed that on perusal of Supplementary

Affidavit dated 3rd August 2018 read with a copy of confirmation of

transaction that a sum of Rs. 18,86,00,000/- was further disbursed by the

petitioner on 13th April 2016 to the 'Corporate Debtor'. Relying on the

admission in connection with the previous round litigation, the Adjudicating

Authority has held that the Rs. 18,86,00,000/- was further disbursed by the

petitioner on 13th April 2016 to the 'Corporate Debtor', which is an

independent transaction and having no relevancy with the previous one. It

does not lie in the mouth of the 'Corporate debtor' to take a contrary stand

and principles like estoppel would come into play.

6. The appeal has been filed mainly on the ground that no amount has

been disbursed to the Appellant on 1st April 2016. The Respondent

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/Financial Creditor has not filed any document to show the disbursement of

Rs 18,86,00,000 on 1st April 2016. The Respondent /Financial creditor was

granted liberty by the Adjudicating Authority to cure the defects in the

application, Form 1, vide order dated 11th July 2018. The respondent was

directed to file the certificate admissible under the Banker's Book Evidence

Act, 1891 within a week. Despite opportunity, the Appellant / Respondent

didn't file a certificate or any other document evidencing the disbursement

on 1st April. 2016.

7. The Appellant has also contended that the Applicant / Respondent

has failed to establish the existence of the financial debt as there is no

evidence on record evidencing disbursement of the amount of Rs.

18,86,00,000/- on 1st April, 2016.

8. The Appellant further contended that there is no debt payable in law

or fact, and the impugned order has been passed by the Adjudicating

Authority based on presumed debt. It is further contended that the

Adjudicating Authority has committed a serious error in law by placing

reliance on the frivolous claims of the Applicant / Respondent which does

not even find mention in Form 1.

9. That the Appellant further contended that the Adjudicating Authority

in the impugned order had placed reliance on the Supplementary Affidavit

filed by the Respondent with dairy No. 3737 dated 6th June 2018, whereas

the Adjudicating Authority already rejected the said affidavit on 11th July

2018.

Company Appeal (AT) (Insolvency) No. 989 of 2019 5

10. The Appellant further contends that the impugned order has been

passed on averments, which do not find mention in Form 1, and the

Adjudicating Authority has presumed the debt on account of previous

litigation. The Appellant has also stated that the impugned order has been

passed by the Adjudicating Authority without providing any opportunity to

the 'Corporate Debtor' to file an objection, which is against the principle of

natural justice.

11. On perusal of the record, it is clear that Respondent has not filed any

document to prove the contents of part 4 of Form 1. The applicant has

mentioned that the amount of Rs. 18,86,00,000/- was disbursed on 1st April

2016. Whereas, in the Colum, about the total amount disbursed and debt

granted and Date of Form 1, it is specifically stated by the Applicant /

Respondent that total amount of Rs. 18,86,00,000/- was disbursed on 1st

April, 2016. Further in Part 5 of Form 1 it is also mentioned that charges

were also created on 1st April, 2016 for the loan amount of Rs.

18,86,00,000/-.

12. It is pertinent to mention that the 'Corporate Debtor' / Applicant has

filed an Affidavit dated 28th March 2019 along with letter issued by YES

Bank, dated 10th August 2018, to substantiate that the amount of Rs. 18.86

crores under the loan agreement dated 1st April, 2016 was credited in its

account, and it immediately paid back the entire amount to the Applicant

/Respondent in two tranches, firstly on 13th April, 2016 a sum of Rs. 17

Crores and secondly on 16th April, 2016 a sum of Rs. 1.86 crores. It is also

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asserted that the said amount has not been paid towards any previous

outstanding.

13. It is important to point out that the Appellant has filed a copy of the

order sheet of (IB)-271(PB)/2017 dated 29th November, 2018 with the appeal

which is given below for ready reference: -

"During the course of arguments Mr. Malhotra, Ld.

Counsel for the corporate debtor has pointed out that the

amount disbursed in pursuance of loan agreement or on

any other count dated 01-04-2016 (18,86,00,000/-) has

been paid back on 13-04-2016 and 16-04-2016 itself, and

as on date no payment is due to the financial creditor

under the said agreement. Mr Malhotra, Ld. Counsel for

the respondent states that an affidavit of the corporate

debtor to that effect shall be filed within one week with a

copy in advance to the counsel for the financial creditor-

applicant. Reply to the affidavit be filed within five days

thereafter with a copy in advance to the counsel opposite."

14. On perusal of the above order sheet, it appears that the 'Corporate

Debtor' pleaded before the Adjudicating Authority that amount disbursed

under the Loan Agreement dated 1st April, 2016, Rs. 18,86,00,000/- has

been paid back on 13th April 2016 and 16th April 2016 itself, and as on date,

no payment is due to the 'Financial Creditor' under the said Agreement.

Company Appeal (AT) (Insolvency) No. 989 of 2019 7

15. It also appears that the Adjudicating Authority passed an order on the

plea of the corporate debtor, that the 'Corporate Debtor' may file Affidavit in

support of its contention and after that Applicant to file Affidavit in reply

within 5 days.

16. In compliance of the said order the corporate debtor filed its Affidavit,

which is also annexed with the appeal, reiterating that amount disbursed

under the Loan Account dated 1st April, 2016, was paid back in two tranches

on 13th April 2016 and 16th April 2016 to the UTI Bank in the name of the

Applicant / Respondent. The 'Corporate Debtor' has also stated in the

Affidavit that this amount has not been paid towards any previous

outstanding. The 'Corporate Debtor' / Applicant has also annexed the copy

of the certificate of Bank statements of YES Bank evidencing RTGS transfer

of Rs 17 crores on 13th April, 2016 and Rs. 1,86,00,000/- on 16th April,

2016 in the Account of M/s Wianxx Impex Ltd., the Financial Creditor.

17. It appears that in compliance with the order of the Adjudicating

Authority dated 29th November 2018 the 'Corporate Debtor' filed an Affidavit

along with Bank certificate. But in reply no evidence was submitted to prove

that the outstanding amount is due and payable.

18. It is also important to mention that on perusal of the order sheet dated

11th July 2018 it's evident that the Adjudicating Authority has rejected the

Supplementary Affidavit dated 6th June 2018 which was filed by the

Petitioner, but while passing the Order of Admission, in Para 14 of the

Impugned Judgment, the Adjudicating Authority mentioned that: -

Company Appeal (AT) (Insolvency) No. 989 of 2019 8

"Afterwards vide diary No. 3737 dated 06-06-2018

petitioner has filed a supplementary affidavit along with bank

transfer receipt (Annexure-A) showing disbursement of Rs.

18,86,00,000/- on 01-04-2016 to the Respondent and a

certificate under Section 2-A of the Bankers Books Evidence

Act, 1891 (Annexure-B). The petitioner has asserted that the

Respondent has made payment of Rs. 18,86,00,000/- on

13thApril, 2016 and 16th April, 2016 and thereafter of Rs.

16,80,62,000/- from 5th July, 2016 and 19th July 2016 as

would be evident from pgs. 11 & 12 of the counter affidavit filed

on behalf of the Respondent. Thus, the sum of Rs.

35,66,62,000/- which has been paid by the Respondent to the

Petitioner is on account of its previous outstanding of Rs.

35,66,61,986/- which was outstanding on the part of the

Respondent as on 31st March,2016 as was unconditionally and

unequiv9ocally admitted by the Respondent in page 24 of its

counter affidavit filed by it in the prior proceeding (I.B. No.

54(PB)/2017). A sum of Rs. 18,86,00,000/- was once again

disbursed to the Respondent by the petitioner on 1st April 2016,

which is still due and payable to it."

19. Thus, it is clear that document which was already rejected by the

Adjudicating Authority, has been made the basis for passing the Order of

Admission, which is not permissible under law.

Company Appeal (AT) (Insolvency) No. 989 of 2019 9

20. Based on loan Agreement dated 1st April 2016 the amount Rs.

18,86,00,000/- was disbursed bank certificate filed by 'Corporate Debtor'

shows that while amount has been returned back. But the finding of the

Adjudicating Authority that a sum of Rs. 18,86,00,000/- was again

disbursed to the 'Corporate Debtor' is not supported by any evidence. The

'Corporate Debtor' has filed the document to prove that he has repaid the

said amount through RTGS transfer to the account of the 'Financial

Creditor'.

21. During the argument, it is admitted by the parties that previous

petition filed by the 'Financial Creditor' was withdrawn. The document (s)

filed in the earlier petition, which was dismissed as withdrawn, could not

have been relied on by the Adjudicating Authority. Therefore, it is clear that

finding of the Adjudicating Authority that a sum of Rs. 18,86,00,000/- was

again disbursed to the 'Corporate Debtor' by the 'Financial Creditor' which is

still due and payable is erroneous, without any basis and un-sustainable.

22. In effect, order (s) passed by Ld. Adjudicating Authority appointing

'Interim Resolution Professional', declaring moratorium, freezing of account

and all other order (s) passed by Adjudicating Authority pursuant to

impugned order and action taken by the 'resolution Professional', including

the advertisement published in the newspaper calling for applications all

such orders and actions are declared illegal and are set aside. The

application preferred by the 1st Respondent under Section 7 of the I&B Code

is dismissed. The Adjudicating Authority will now close the proceeding. The

2nd Respondent Company is released from all the rigour of proceedings and

Company Appeal (AT) (Insolvency) No. 989 of 2019 10

is allowed to function independently through its Board of Directors from

immediate effect. 'Interim Resolution Professional'/'Resolution Professional'

will hand over the management and records of the 'Corporate Debtor'.

The Adjudicating Authority will fix the fee of 'Interim Resolution

Professional' for the period he has functioned which shall be paid by the

'Financial Creditor'. The appeal is allowed with aforesaid observation and

direction, there shall be no order as to cost.

[Justice A.I.S. Cheema] Member (Judicial)

[Kanthi Narahari] Member (Technical)

[V. P. Singh] Member (Technical)

NEW DELHI

5th December, 2019

RN

Company Appeal (AT) (Insolvency) No. 989 of 2019