Sunil Amarlal Chawla vs Union Bank Of India

[Arising out of Order dated 28.11.2019 passed by National Company Law Tribunal, Mumbai Bench in CP No.4260/IB/NCLT/MB/MAH/2018]

IN THE M ATTER OF: Before NCLT Before NCLAT

Sunil Amarlal Chawla ... Appellant S/o Amarlal, Ex-Promoter, Spark Green Energy (Satara) Ltd. 1201, Everest Co-operative Housing Society Ltd., 164 (Part B) Hill Road, Bandra (West) Mumbai - 400 050

Versus

1. Union Bank of India Financial Creditor/ Respondent No.1

LA-Avanti, Jn. of, Petitioner/Applicant S.V.Road & Main Avenue, Santacruz (W), Mumbai - 400054

2. Spark Green Energy Corporate Debtor/ Respondent No.2 (Satara Limited) Respondent Through its Interim Resolution Professional Shri Anil Rajkotia 501, Balkrishna Co-op Housing Society, Tilak Road, Next to Asha Parekh Hospital, Santacruz (West) Mumbai - 400 054 2

For Appellant: Shri Vikram Nankani, Sr. Advocate with Shri Ashish Rao, Advocate

For Respondents: Shri Purusharth Bisht, Advocate (R-1) Ms. Savita Nangare, Advocate (R-2)

ORAL JUDGEMENT (Virtual Mode)

24.08.2020 This Appeal has been filed by the Appellant

against Impugned Order dated 28.112019 passed by the

Adjudicating Authority (National Company Law Tribunal, Mumbai Bench) in

CP No.4260/IB/NCLT/MB/MAH/2018. The Application under Section 7 of

Insolvency and Bankruptcy Code, 2016 (IBC - in short) was filed by

Respondent - Union Bank of India - Financial Creditor. The Application was

admitted and hence this Appeal.

2. The Respondents have not filed Replies. Counsel for Appellant

requested that if the Replies have not be en filed in spite of opportunity, the

Appeal should be heard. Accordingly, we have heard the learned Counsel for

the Appellant.

3. The learned Counsel for the Appellant submits that the Financial

Creditor had granted term loan of Rs.30 Crores. It was sanctioned on 23rd

August, 2011 for Rs.30 Crores but the disbursement took place only on 26 th

July, 2013. According to the learned Counsel, there was delay in laying the

power lines which were to be set up by MSETCL. There was resistance from

the villagers to the land acquisition and hence the Corporate Debtor could not

start the operations. The loan was taken from the Financial Creditor with an

understanding that the repayment will be linked to commercial operations. It

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is stated that as commercial operations did not start, the loan could not be

repaid and it is stated that there may be debt but default is not there because

the commercial operations did not start. It is the case of the Appellant that

there was consortium of banks which included the Bank of India, Bank of

Baroda and Union Bank of India. It is stated that the consortium did not act

as required under the arrangement between the parties. The Financial

Creditor - Union Bank of India had sanctioned two term loans. The learned

Counsel pointed out document at Annexure A-10 to point out the consortium

arrangement where for additional term loan and term extension of DCCO

(Date of Commencement of Commercial Operations) from 31.07.2016 to 30th

November, 2016 was shifted to 31st August, 2016 to 31st December, 2016. The

learned Counsel referred to Page - 232 of the Appeal Paper Book where

Annexure A-10 refers that project must achieve COD as projected and that

COD was 30th November, 2016 (which means Date of Commercial

Operations). The learned Counsel accepts that this target was not achieved.

The reason given is as mentioned of opposition by the villagers to land

acquisition and although by 2016, land was handed over but there was delay

in construction of transmission line, which was to be done by MSETCL. For

all such reasons, the learned Counsel states that it cannot be said that there

was default.

4. It is also stated that the date of repayment was 31 st December, 2016

but the Bank recalled loan on 5th December, 2016 and thus the Recall Notice

of Bank was also premature.

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5. We have heard the learned Counsel for the Appellant and we have gone

through the matter. There is debt due is not in dispute but the dispute is

whether there is default. It is clear from the document pointed out by the

learned Counsel for the Appellant that the project was to achieve COD as

projected by 30th November, 2016. In any case, the time has lapsed much

beyond 2016 and the Application under Section 7 was filed in 2018. For the

purpose of processing Application under Section 7 of IBC, the scope for

Adjudicating Authority is very limited as has been pointed out by the

Adjudicating Authority in Para - 16 of its Judgement relying on the

Judgement of "Innoventive Industries Ltd. V. ICICI Bank & Anr." [Civil

Appeal Nos.8337-8338 of 2017]. In Para - 17 of the Impugned Order, the

Adjudicating Authority observed as under:-

"17. In this case, all the three pre-requisites for admission of this petition have been met. The debt is supported by substantive evidences and the evidences corroborate to the amount claimed. Moreover, the Corporate Debtor has acknowledged its liability by sending a reply as confirmation to the letter dated 05.12.2016. the Corporate Debtor has further acknowledged the debt including the same in its financial statements for the three consecutive financial years i.e. FY 2013-14, FY 2014-15 and FY 2015-16. The Balance Sheet of the Corporate Debtor as at 31.03.2016 and 30.03.2015 clearly reflect the Long Term Borrowings from Union Bank of India to the tune of ₹48,18,73,388/- and ₹37,22,33,333/- respectively. Hence, the debt reflected in the Financial statements of the Corporate Debtor is a clear cut acknowledgement of debt and there is no doubt about establishment of 'debt' and 'default' in the present case."

5. Adjudicating Authority recorded that loan amount was not sanctioned

as agreed by consortium is not a valid defence. It appears to us that putting

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blame on others, cannot help the Appellant or the Corporate Debtor to say

that the default has not taken place. It was for the Corporate Debtor to pursue

the concerned authorities and the Banks cannot be blamed for the same. If

date fixed for commencing commercial operations is not met and payments

are not made, default is there. We find ourselves in agreement with the

Adjudicating Authority for admitting the Application under Section 7. There

is no reason to interfere in the Appeal.

The Appeal is dismissed. No Orders as to costs.

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

(Justice A.B. Singh) Member (Judicial)

[Kanthi Narahari] Member (Technical) /rs/md

Company Appeal (AT) (Ins) No.137 of 2020