Sunil Sanghavi vs State Bank Of India

Sunil Sanghavi ...Appellant

Vs.

State Bank of India ...Respondent

Present: For Appellant: - Mr. Osama Suhail and Mr. Bhanti Tyagi, Advocates.

O R D E R

22.05.2020─ Appellant, claiming to be a shareholder of the

'Corporate Debtor' - 'Ess Dee Aluminium Limited' has preferred the

instant appeal against order of admission of application under Section 7

of the Insolvency and Bankruptcy Code, 2016 ("I&B Code" for short)

filed by the 'Financial Creditor'- 'State Bank of India' in terms of

impugned order dated 14.02.2020 amended by virtue of order dated

19.02.2020 passed by the Adjudicating Authority (National Company

Law Tribunal), Kolkata Bench, Kolkata.

2. The 'Financial Creditor' claimed that it had extended cash credit

facility and disbursed term loan of Rs.21.89 Cr. to the 'Corporate

Debtor' in the year 2005 with the credit facility being increased from

time to time and repayment schedule being extended lastly on

24.09.2015. It reached the figure of Rs.424.80 Cr. Since the 'Corporate 2

Debtor' defaulted in payment, the loan account was declared NPA. The

'Corporate Debtor' acknowledged its liability to pay the financial debt on

31.03.2017 but did not pay. Proceedings have been filed before the Debt

Recovery Tribunal, Kolkata pursuant to notice served under Section

13(2) of the SARFAESI Act, 2002. The 'Financial Creditor' sought

initiation of 'Corporate Insolvency Resolution Process' on the ground of

default on the part of 'Corporate Debtor' to pay the financial debt. On

being satisfied that the financial debt was due and payable and default

has been committed by the 'Corporate Debtor', the Adjudicating

Authority proceeded to pass the impugned order admitting the

application under Section 7 of the 'I&B Code' with consequential orders

of appointment of 'Interim Resolution Professional' and slapping of

Moratorium on the assets of the 'Corporate Debtor' which has been

assailed in the instant appeal.

3. Heard learned counsel for the Appellant. It is submitted that the

Adjudicating Authority passed the impugned order without affording the

'Corporate Debtor' an opportunity of settling the accounts with the

'Financial Creditor'. It is further submitted that the 'Corporate Debtor'

was undergoing negotiation talks with the 'Financial Creditor' and in

view of the same, it did not feel the necessity of filing reply to the

application. It is also submitted that the settlement plea was made time

and again before the Adjudicating Authority but the same was not

recorded. Instead the Adjudicating Authority directed that the matter be

Company Appeal (AT) (Insolvency) No. 487 of 2020 3

preceded ex parte and the impugned order thus came to be passed

violating principles of natural justice.

4. After hearing learned counsel for the Appellant and wading

through the record, we find that ample and reasonable opportunity was

provided by the Adjudicating Authority to the 'Corporate Debtor' for

filing its reply but the 'Corporate Debtor', after putting in its appearance

in compliance to the notice served by the Adjudicating Authority, did

not file affidavit in reply thereby leaving the application of 'Financial

Creditor' to proceed uncontested. This factual position emerges from the

copies of minutes of proceedings recorded by the Adjudicating Authority

on 01.10.2019, 28.11.2019, 02.12.2019, 10.12.2019 and 03.01.2020

respectively forming Page Nos.37, 40, 43, 46 & 49 of the appeal paper

book. It emerges from these interim orders that ample opportunity was

provided to the 'Corporate Debtor' to file reply-affidavit and since the

'Corporate Debtor' did not comply with the orders in regard to filing of

affidavit in reply, the application was directed to be heard in ex parte

against the 'Corporate Debtor'. It further appears from order dated

03.02.2020 at Page No.52 of the appeal paper book that on that day the

Adjudicating Authority heard learned counsel for both the parties

notwithstanding the fact that the 'Corporate Debtor' had not filed its

affidavit in reply and the matter was reserved for orders. The sequence

of events unfolded by the judicial record demonstrates non-compliance

on the part of 'Corporate Debtor' qua direction for filing affidavit in

reply. It also does not record any proposal for settlement or

Company Appeal (AT) (Insolvency) No. 487 of 2020 4

restructuring of loan emanating from the 'Corporate Debtor' as sought

to be projected by the Appellant at the hearing today. The record stares

in the face of the Appellant and belies the ground projected in appeal

that Rules of Natural Justice were not observed. It is not the Appellant's

case that the 'Corporate Debtor' had settled the issues with the

'Financial Creditor' and the terms of settlement were reduced to writing

and filed before the Adjudicating Authority. That not being the case of

Appellant, it is repugnant to common sense that pursuant to notice

under Section 13(2) of the SARFAESI Act, 2002 proceedings having

been filed before the DRT, Kolkata and triggering of 'Corporate

Insolvency Resolution Process' by the 'Financial Creditor', it would have

proposed a settlement with the 'Corporate Debtor' as sought to be

projected in this appeal. The plea raised by the Appellant defies logic

and deserves to be rejected.

We find no merit in this appeal. It is accordingly dismissed.

[Justice Bansi Lal Bhat] Acting Chairperson

[V.P. Singh] Member(Technical)

[Shreesha Merla] Member(Technical)

Ar/nn

Company Appeal (AT) (Insolvency) No. 487 of 2020