Sanjay Prakash Bansal vs Uco Bank & Anr

Sanjay Prakash Bansal ....Appellant

Vs.

UCO Bank & Anr. ...Respondents

For Appellant: Mr. Arpit Dwivedi, Mr. Vijay Nair, Advocates.

For Respondents: Ms. Malvika Trivedi, Senior Advocate with Mr. Ashish Choudhury, Ms. Rituparna Sanyal, Mr. Shivam Bajaj, Ms. Bhargavi Kannan, Ms. Akanksha Tripathi, Ms. Mansi Chaudhary, Mr. Akash Tandon, Mr. Santosh Kr. Ray, Advocates for R1.

ORDER

(Through Virtual Mode)

19.05.2022: Heard Learned Counsel for the Appellant and Learned

Counsel for the Respondents.

2. This Appeal has been filed against the order dated 05.04.2022 passed

by the Adjudicating Authority (National Company Law Tribunal), Kolkata

Bench, Kolkata, by which Application filed under Section 7 of the Insolvency

and Bankruptcy Code, 2016 ("Code" for short) by the Financial Creditor has

been admitted.

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

an OTS dated 28.05.2020 was entered between three Companies in which

Company- M/s. Bhumya Tea Co. Pvt. Ltd. (Corporate Debtor) was at Item No.2. 2

It is submitted that the debt of the Corporate Debtor was taken by the other

Company which is clear from the Terms and Conditions of the OTS, hence,

there was no debt and Application could not have been admitted. He submits

that the said plea with regard to OTS dated 28.05.2020 was taken in the Reply

of the Corporate Debtor. He has referred to paragraphs 19 and 20 of the

impugned order where this has been noticed.

4. Learned Counsel appearing for the Respondent- Financial Creditor does

not deny that OTS took place on 28.05.2020. It is however, submitted that the

payments which was scheduled to be made on 30.06.2020 i.e. first installment

was itself defaulted and no payments were made apart from payment of Rs.

20 Cr. which was on the communication of Sanction Order. It is submitted

that in view of the default clause, the Financial Creditor was fully entitled to

take proceedings and the effect of default is that OTS was stood breached and

the Financial Creditor was fully entitled to proceed. It is submitted that the

Application under Section 7 was filed on 25.09.2020 after default was

committed for installment on 30.06.2020.

5. We have considered the submissions of the Learned Counsel for the

parties and perused the record.

6. The copy of the OTS dated 28.05.2020 has been brought on the record

as Annexure-B along with Reply which is at Page 522 of the paper book. The

Revised Repayment Schedule as approved indicated that on communication

of sanction Rs.20 Cr. was to be paid and on 30.06.2020, Rs. 16.17 Cr. was to

be paid by the Companies- M/s. Darjeeling Organic Tea Estates Private

Comp. App. (AT) (Ins.) No. 561 of 2022 3

Limited and M/s. Bush Tea Company Private Limited. Clause 6 of the Terms

and Conditions of the OTS thus provides for 'Default Clause' which is to the

following effect:-

"6. Default Clause- Companies settlement is subject to the condition that the promoters have to disclose the source of money to the Bank and in the event of any failure to honor any of the terms of the compromise settlement, and/or in the event the amount of the compromise settlement is declared as "proceeds of crime" by "Enforcement Directorate"/ any other outside investing agency (ies), the bank reserve its right to cancel the compromise settlement and will be entitle to exercise against the borrowers/ guarantors all rights and remedies available prior to the compromise settlement as per applicable law. The entire amount due prior to the compromise settlement, together with interest thereon at the applicable rates and cost etc will become due for payment forthwith."

7. There being clear stipulation that on any of the default Bank reserve its

right to cancel the compromise settlement and will be entitle to exercise

against the borrowers/ guarantors all rights and remedies available prior to

the compromise settlement as per applicable law. The 'Default Clause' clothe

the Financial Creditor the right to file Application under Section 7 which was

done after 30.06.2020 when default was committed.

Comp. App. (AT) (Ins.) No. 561 of 2022 4

8. Learned Counsel for the Appellant submitted that there was no

cancellation of the compromise OTS dated 28.05.2020, hence, it cannot be

said that there was any debt due on the Corporate Debtor.

9. We do not accept the above submission in view of the clear stipulation

of Clause 6 'Default Clause', the Bank has every right to proceed and exercise

all its rights when default is committed.

10. It is not the case that no default was committed on 30.06.2020 nor there

is any material on record to indicate that payment as was required to be paid

on 30.06.2020 was paid.

11. Learned Counsel for the Respondents submission has substance that in

view of the default, the Bank was fully entitled to proceed under Section 7. We,

thus, do not find any error in the order of the Adjudicating Authority admitting

Section 7 Application. There is no merit in the Appeal. The Appeal is dismissed.

[Justice Ashok Bhushan] Chairperson

[Shreesha Merla] Member (Technical)

[Naresh Salecha] Member (Technical) Anjali/nn

Comp. App. (AT) (Ins.) No. 561 of 2022