Trilok Chand Agarwal vs Punjab National Bank & Anr

Trilok Chand Agarwal Suspended Director, M/s Megha Granules R/o BE-223, Sec 1, Salt Lake City, West Bengal - 700 064. ...Appellant

Versus

Punjab National Bank [United Bank of India Amalgamated with Punjab National Bank W.E.F. 01.04.2020] Through Chief Manager, Punjab National Bank, Fancy Bazar Branch, Fancy Bazar, Guwahati - 781 001. ...Respondent No. 1

Mr. Sandep Khaitan Resolution Professional M/s Megha Granules 2nd Floor, Sanmati Plaza, G. S. Road, ABC, Guwahati - 5. ...Respondent No. 2

For Appellant: Mr. Abhijeet Sinha, Mr. Kumarjit Banerjee, Mr. Gaurav Gupta, Ms. Sanchari Chakraborty and Mr. Samyak Goyal, Advocates. For Respondents: Mr. Ankit Raj, Advocate for R-1. Mr. Anand Varma, Mr. Abhishek Prasad and Mr. Sandeep Khaitan, Advocates for R-2.

With

Cont'd..../ 2

Company Appeal (AT) (Insolvency) No. .... of 2021 E-filling No. 9910122/01921/2021

IN THE MATTER OF:

Megha Granules Pvt. Ltd. Industrial Growth Centre (AIIDC) Chaygaon, Village - Chatabari, District - Kamrup, Assam - 781 124. ...Appellant

Versus

Punjab National Bank Zonal Sastra Centre Guwahati Zone Hem Baruah Road Panbazar, Guwahati - 781001. ...Respondent No. 1

United Bank of India Guwahati Branch, Hem Baruah Road, Panbazar, Guwahati - 781001. ...Respondent No. 2

For Appellant: Mr. Abhijeet Sinha, Mr. Kumarjit Banerjee, Mr. Gaurav Gupta, Ms. Sanchari Chakraborty and Mr. Samyak Goyal, Advocates. For Respondents: Mr. Ankit Raj, Advocate for R-1.

ORDER

[29.06.2021]

This appeal has been filed by the Suspended Director of the Corporate Debtor

'M/s Megha Granules Pvt. Ltd.' against impugned order dated 5th May, 2021 vide

which the Adjudicating Authority (National Company Law Tribunal) Guwahati

Bench, Guwahati admitted application under Section 7 of Insolvency and

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Bankruptcy Code, 2016 (for short 'I&B Code') having no. C.P. (IB) No. 08/GB/2020.

The application under Section 7 was initially filed by United Bank of India on 9th

March, 2020 and after United Bank of India merged with the Punjab National Bank,

Punjab National Bank sought to file amended petition so as to add the claim of

Punjab National Bank also which was outstanding against the same Corporate

Debtor and as United Bank of India and Punjab National Bank had been part of

same consortium in which the financial facilities had been extended to the

Corporate Debtor. The amended petition under Section 7 of I&B Code was filed on

30th November, 2020.

2. The Appeal claims and it is argued that the Corporate Debtor had

approached four Banks for financial assistance namely State Bank of India, Central

Bank of India, United Bank of India and Punjab National Bank, as the Corporate

Debtor wanted to establish integrated plastic packaging unit in Kamrup, Assam.

The Appeal refers to the financial facilities extended which started from June, 2014

and the necessity to restructure the facilities with fresh repayment schedule

commenced on and from 30th June, 2016. The Appeal refers to Strategic Debt

Restructuring Scheme between the parties. According to the Appeal, the accounts

of the Corporate Debtor stood overdue initially on 30th June, 2014 and

subsequently on execution of the Master Restructuring Agreement which was

dated 27th April, 2015 with new repayment schedule on and from 30th June, 2016.

It is thus claimed that the debts of United Bank of India and Punjab National Bank

were barred by limitation. According to the appeal the classification of accounts of

Company Appeal (AT) (Insolvency) No. 406 of 2021 & E-filling No. 9910122/01921/2021 4

Corporate Debtor as NPA with the date of default, is in contravention of the

definition of default within the meaning of I&B Code. It is further claimed that the

consortium lenders including the Financial Creditors were majority shareholders

of the Corporate Debtor holding 51% of the issued and paid up equity share capital,

issued on conversion of debt into equity under Strategic Debt Restructuring

Scheme sanctioned by the Joint Lenders Forum. Thus, according to the Appeal,

the Financial Creditors should not have filed application under Section 7 and

should have initiated proceeding under Section 10 of I&B Code. The Appeal also

questions the calculation made by the Financial Creditors for calculating the debt

due and outstanding. According to the Appeal the application was filed on the

basis of classification of accounts of Corporate Debtor as defaulted and NPA on 31st

March, 2018, immediately on withdrawal of the SDR Scheme by RBI. According to

the Appeal the accounts were irregular since beginning and should have been

treated as defaulted from 30th June, 2016. At the same time, it is claimed that

there was no debt due or in default and the consortium was in breach of Term Loan

Agreement, Restructuring Plan and SDR. The Appeal also claims that when the

Corporate Debtor had come to know of application under Section 7 of I&B Code, it

entered appearance on 22nd February, 2021 and the Adjudicating Authority

granted time of 10 days to file the Reply. However, the Amended Application of

30th December, 2020 was received by the Corporate Debtor from Advocate of the

Financial Creditor on 5th March, 2021. Referring to the COVID-19 situation the

Appellant claims that the Corporate Debtor required more time to file Reply.

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However, (one month after 5th March, 2021) on 5th April, 2021, the Adjudicating

Authority closed the right of the Corporate Debtor and reserved the orders giving

liberty to file written submissions. According to the Appellant, the Financial

Creditor had effected service earlier on incorrect address. The Appeal mentions

that against the order dated 5th April, 2021, the Appellant filed appeal which is

registered as Filing No. 9910122/01921/2021 dated 13th April, 2021 but the same

has not been listed. It is claimed that the application under Section 7 was admitted

denying natural justice as the contentions raised in the written submissions were

not recorded or considered. According to the Appeal, against order dated 5th April,

2021 and order dated 5th May, 2021, the Appellant moved W.P. No. 2956/2021

before the Hon'ble Gauhati High Court to suspend the order dated 5th April, 2021

till the Appellant can move this Appellate Tribunal, of which, Appellant claims work

was suspended. According to the Appeal, the Hon'ble High Court on 12th May,

2021 directed the Resolution Professional not to take coercive measures till 21st

May, 2021 giving liberty to mention before this Tribunal.

3. The Learned Counsel for the Appellant made submissions on above lines.

The Counsel referred to the various orders passed by the Adjudicating Authority

between 9th October, 2020 till 5th April, 2021 to submit that initially the Financial

Creditor itself took time to file Amended Petition and the Corporate Debtor had

appeared only on 22nd February, 2021 and was granted time to file reply. It is

stated that on 22nd March, 2021, Corporate Debtor had engaged Advocate and time

was sought. Subsequently, according to the Learned Counsel the Adjudicating

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Authority did not grant sufficient time to file reply although the Petition was

voluminous. It is argued that full opportunity to defend against the application

was not given. The Corporate Debtor had defences to make which the Corporate

Debtor mentioned in the Written Submissions and which according to Learned

Counsel were not considered by the Adjudicating Authority while passing the

impugned order.

4. Learned Counsel for the Appellant referred to page 511 of the Appeal to refer

to Letter dated 21st December, 2017 sent by Central Bank of India (another

consortium member) with regard to "Approval for invocation of SDR along with

conversion of debt into equity with reference date as 27th June, 2017". The letter

states that the authorities had approved invocation of SDR with reference dated

27th June, 2017 with conversion of debt into equity at Rs.10 per share and by

acquiring shareholding to the tune of 51% in the Company by the Consortium

Lenders wherein shareholding of the Central Bank of India will be 22.01% by

acquiring 2861492 shares @ Rs.10 each. Referring to this document, the Learned

Counsel submits that the application should not have been under Section 7 of the

I&B Code as the Consortium had resorted to acquiring shareholding to the tune of

51% of the Corporate Debtor. It is claimed that this amounts to taking over

management and therefore Section 7 of I&B Code could not be relied on.

5. We have gone through the appeal and record. The impugned order passed

by the Adjudicating Authority is also seen. The Adjudicating Authority

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painstakingly referred to the pleadings of the Financial Creditor, which are in

minute details. The claims of United Bank of India are separately put and those of

Punjab National Bank are separately stated. Adjudicating Authority considered

the application under Section 7 of I&B Code.

The Adjudicating Authority noted the relationship of United Bank of India

with the Corporate Debtor since Sanction Letter in 2011 and how Term Loan was

approved. Reference is made to further grant of Term Loan, Cash Credit, LC and

Working Capital Limits. Reference is made to Sanction Letter dated 29th December,

2014 to restructure cum renew loans. The application under Section 7 shows and

the Adjudicating Authority noticed the inter se agreements of 2012 and 2015. It

has also been noticed that United Bank of India had sanctioned Bank Guarantee

Limit of Rs.98,82,000/- on the basis of application dated 12th June, 2017 and

issued Performance Bank Guarantee dated 16th June, 2017. There was a Counter

Guarantee dated 12th June, 2017 signed and executed by the Corporate Debtor.

This Guarantee stood invoked on 17th January, 2019 by the beneficiary and the

United Bank of India released the amount to the beneficiary debiting the account

of the Corporate Debtor. Reference has been made to various Board Resolutions

which were passed between 2011 till 2016 also. Adjudicating Authority has noticed

Letter of Acknowledgment of Debt cum Balance Confirmation dated 31st July, 2017

in favour of the Financial Creditor - United Bank of India.

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6. There are similar averments and documents even with regard to Punjab

National Bank and its claim. The Adjudicating Authority after referring to the

contents of the application and the various documents and default claimed by the

Financial Creditor observed in Para 36-37 as under:-

"36. In view of the above statements and submissions, the total

outstanding debt by merging the outstanding debt of the erstwhile

United Bank of India and the Punjab National Bank (present

Financial Creditor) comes to

United Bank of India = Rs.23,57,23,005.33 (PART-A)

Punjab National Bank = Rs. 9,02,76,850.92 (PART-B)

Total Debt (A+B) = Rs.32,59,99,856.25

(Rupees Thirty Two crores Fifty Nine lacs Ninety Nine thousand

Eight hundred Fifty Six and paise Twenty Five only) and the FC

having proved the loans, debts and defaults of the CD along with

the issues pertaining to Limitation and Jurisdiction through more

than sufficient documents annexed with the petition / amended

petition / additional affidavit cum amendment and taking into

consideration of the facts and records of the case, it is respectfully

prayed by the Petitioner that this Hon'ble Tribunal may be pleased

Company Appeal (AT) (Insolvency) No. 406 of 2021 & E-filling No. 9910122/01921/2021 9

to admit the petition and pass such other order / orders as to this

Hon'ble Tribunal may deem fit and proper.

37. Further, it is submitted that the FC do not admit the statements,

allegation and submissions made in the written submission filed by

the CD which are not consistent with the records with the case and

it is further submitted that the debt has been established and proven

beyond any reasonable doubt and the same had backed by

irrefutable documentary evidence. Further, the vary admission and

insistence on the part of the CD itself goes on to prove the existence

of debt. So far the technicality raised in the written submission the

same is not at all maintainable in a proceeding under Section 7 of

the IB Code, 2016."

7. In Para 41 of the impugned order, Adjudicating Authority has referred to

the various documents relied on by the Financial Creditors and has enlisted the

same which includes Letter of Acknowledgement dated 31st July, 2017, Balance

Sheets for the year 2015-16. Reference has been made to application for renewal

cum enhancement of CC Limit dated 16th December, 2015. Reference is also

made to application for restricting of dues filed by the Corporate Debtor on 21st

March, 2018 and Balance and Security Confirmation letters of all the Lender

Banks filed by the Corporate Debtor.

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8. With regard to the averments made by the Corporate Debtor in the Debts

Recovery Tribunal, the Adjudicating Authority noticed that the claim of the

Financial Creditors in Para 38 as under:-

"38. It is submitted that the Financial Creditor as Applicant had also

filed an Original Application bearing O.A. No.491/2019 before the

Debts Recovery Tribunal at Guwahati against the Corporate Debtor,

Corporate Guarantors and Personal Guarantors as Defendants for

recovery of Rs.22,95,65,980.75 (Rupees Twenty Two Crores Ninety

Five lacs Sixty Five thousand Nine hundred Eighty and paise

Seventy Five) only and the said application is pending for disposal."

9. Further it was observed in Para 43 and 44:-

"43. On 22.02.2021, when the case was taken up, Mr. S. Agarwal,

Director of the Respondent/CD Company was present and he was

directed to file reply if any, within Ten (10) days of receipt of the

amended petition from the FC. However, no reply has been received

by the Registry from the CD till 05.04.2021.

44. The matter was finally heard. The counsels of the Petitioner and

the Respondents were present on different dates and put forth their

submissions before this Bench on all the above aspects."

10. Adjudicating Authority recorded observations in Para 46 as follows:-

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"46. It is found that the Petitioner Bank has submitted the documents

duly executed by the Corporate Debtors and guarantors along with

the Statement of Accounts with Certificate under the Banker's Book

of Evidence Act, 1891 CRILIC Report in support of their IB Petition for

initiation of CIRP.

46.I The credit facilities were sanctioned and released by the

Petitioner Bank along with other consortium lenders and the same

were availed by the CD, M/s. Megha Granules Pvt. Ltd. and the

Charges have been registered by the CD with the ROC in favour of

the Petitioner Bank.

46.II The CD has defaulted in making repayment of the credit

facilities to the Petitioner Bank due on 31.03.2018 and 06.04.2019.

The Total Debt as per the Statement of Accounts and the Affidavit

filed on behalf of the Petitioner Bank confirms the defaulted amount

of Rs.32,59,99,856.25 (Rupees Thirty Two Crores Fifty Nine Lacs

Ninety Nine thousand Eight hundred Fifty Six and paise Twenty Five)

only.

46.III Further, the CIBIL/CRILIC Reports submitted by the Petitioner

Bank confirm the existence of liability to the Financial Creditor and

default committed by the Corporate Debtor.

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46.V The Petitioner Bank has filed the petition within the period of

limitation, as the last payment into the account has come on

04.03.2019 and the amended petition has been filed on 30.12.2020.

46.VI It is a settled legal position that the pendency of SARFAESI

proceeding or other dispute does not prevent a Financial Creditor to

trigger the CIRP because the nature of remedy being sought for under

the provisions of the IB Code is "Remedy in Rem" in respect of the

CD.

46.VII The present IB Petition is filed by the duly authorised official

of the Petitioner Bank in a prescribed format under Section 7 of the

IB Code annexing copies of loan documents confirming the existence

of debt due, payable and defaulted Page 17 of 20 and proposed a

name of a Resolution Professional to act as an Interim Resolution

Professional (IRP).

46.VIII: The matter was taken up by this Bench on 08.10.2020,

09.10.2020, 13.11.2020, 08.12.2020, 05.01.2021, 09.02.2021

22.03.2021 and 05.04.2021."

11. Part of Para 47 which is speaking order may also be referred:-

"47. Heard both the sides and perused the records/documents/

filed. Considering the materials made available by the Petitioner

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Bank, arguments of both parties and the facts mentioned in Para 46

to 46.VII, this Adjudicating Authority is satisfied that,

a) The Corporate Debtor availed the loan / credit facilities from

the Financial Creditor;

b) Existence of debt is above Rupees One Lac;

c) Debt is due, payable and defaulted;

d) Default occurred on 31.03.2018 and 06.04.2019;

e) Application has been filed within the limitation period, as the

existence of the debt due, payable and defaulted on

31.03.2018 when the Application under Section 7 of the IBC

has been filed by the United Bank of India 09.03.2020 and the

amended one by Punjab National Bank on 30.12.2020;

f) Further, the Corporate Debtor has acknowledged the debts /

liabilities on 01.04.2017 and 25.02.2018 and the last one on

6/4/2019

g) Copy of the Application /Amended Application filed before

this Bench has been sent to the Corporate Debtor and the

application filed by the Petitioner Bank under Section 7 of the

IBC is found to be complete for the purpose of initiation of

Corporate Insolvency Resolution Process against the Corporate

Debtor;"

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12. The Adjudicating Authority with such observations and findings admitted

the application.

13. It appears that United Bank of India treated Loan Account of the Corporate

Debtor as NPA on 31st March, 2018 and the Punjab National Bank treated the

Loan Account of the Corporate Debtor as NPA on 6th April, 2019. There are

various documents which are in the nature of acknowledgment of the debt

outstanding. The Adjudicating Authority has already mentioned that the debt

due and outstanding is above Rs.1/- Lakh. The Appellant is making

contradictory submissions claiming that the account of Corporate Debtor stood

defaulted with effect from 30th June, 2016 and also claims that there was no

debt due and no default.

14. As regards the claim that the principles of natural justice are not followed,

we have gone through various orders passed by the Adjudicating Authority

between 9th October, 2020 till 5th April, 2021. It may be appropriate to reproduce

order dated 5th April, 2021, which also referred to the earlier developments:-

"ORDER Date of order: 05.04.2021

Matter is taken up through video conferencing. Mr. S. Dutta,

Learned Counsel is present on behalf of the Petitioner. Mr. Biksash

Sharma, Learned Counsel is present on behalf of the Respondent.

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2. The Learned Counsel for the Respondents submits that he has

prayed before this Bench for stay of the proceedings in CP(IB)

No.08/GB/2020 as per Order of the Hon'ble Gauhati High Court on

07.01.2019 passed in WP(C) No.8855/2018 filed by the

Respondents.

3. On the other hand, the Learned Counsel appearing for the

Applicant submits that there is no stay and it is a settled matter that

even a stay cannot be automatically extended.

4. More than two years from the date of the order have

already been passed. The Respondent could not produce any

order today. Further, the Learned Counsel for the Petitioner

submits that the prayer for admission of the Application

needs to be considered.

5. This Application has been taken up by this Bench on

09.10.2020, 13.11. 2020, 08.12.2020, 05.01.2021 and

22.02.2021. Part of the orders of this Bench dated

09.02.2021 and 22.02.2021 are reproduced below for clarity

in the matter.

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Order of 09.02.2021:

"3. In spite of service of Notice, the Respondent has not

appeared today. The Registry has also informed that the Notice

sent by the Registry has also comeback. The Learned Counsel

for the Petitioner is in favour of admission of the Application. It

is observed that the matter was taken up on 09.10.2020,

13.11.2020, 08.12.2020 and 05.01.2021. Neither the

Respondent nor his Counsel was present. Since this

Application is filed under Section 7 of IBC no more adjournment

is possible. However, in the interest of justice to the

stakeholder, the Learned Counsel of the Petitioner is advised to

intimate once again to the Respondent through post/e-mail/

over phone about the next date of hearing. If the Respondent

does not appear on the next date of hearing, the Application

shall be disposed of on merit."

Order of 22.02.2021

"Matter is taken up through video conferencing. The Learned

Counsel for the petitioner Mr. S. Dutta is present. Mr. S.

Agarwal, Director of the Respondent Company is also present

in person. Heard both sides. Mr. Agarwal, Director of the

Respondent Company has stated that he was never informed

Company Appeal (AT) (Insolvency) No. 406 of 2021 & E-filling No. 9910122/01921/2021 17

earlier about the filing of the application and he has not

received copy of the same. On the other hand the Petitioner has

stated that copy of the application has been sent to the

Respondent. In the interest of justice, the Petitioner is directed

to serve once again copy of the petition along with its annexures

upon the Respondent within three (3) days. Since the

Registered Office of the Respondent Company at Guwahati is

reportedly closed as per the submission of the Ld. Counsel

representing the FC the Respondent is directed to collect the

copy of the application from the Learned Counsel of the

Petitioner personally and file its reply, if any, within Ten (10)

days thereafter. A copy of the reply to be submitted by the

Respondent needs to be served upon the Petitioner. Since this

is an application filed under Section 7 of IBC 2016, no further

time will be allowed."

6. This Application has been filed under Section 7 of the IBC and this matter has been taken up by this Bench six (6) times earlier. As per the sub-section 4 of Section 7 of the IBC, Application filed under Section 7 of the IBC needs to be admitted or rejected within 14 (fourteen) days of the receipt of the Application.

7. Heard both the sides. We do not find any reason to adjourn the matter further. However, liberty is given to both

Company Appeal (AT) (Insolvency) No. 406 of 2021 & E-filling No. 9910122/01921/2021 18

the sides to file their written submissions within 10 (ten) days from today, exchanging the copy thereof to each other as prayed for by the Learned Counsels of the Respondent and the Petitioner.

8. Matter is reserved for orders."

15. The Hon'ble Supreme Court in the matter of "Innoventive Industries Ltd.

Vs. ICICI Bank and Ors. reported in (2018)1 SCC 407", in judgment dated

31st August, 2017 in Para 28 of the order observed as under:-

"28. When it comes to a financial creditor triggering the

process, Section 7 becomes relevant. Under the explanation to

Section 7(1), a default is in respect of a financial debt owed to any

financial creditor of the corporate debtor - it need not be a debt owed

to the applicant financial creditor. Under Section 7(2), an application

is to be made under sub-section (1) in such form and manner as is

prescribed, which takes us to the Insolvency and Bankruptcy

(Application to Adjudicating Authority) Rules, 2016. Under Rule 4,

the application is made by a financial creditor in Form 1

accompanied by documents and records required therein. Form 1 is

a detailed form in 5 parts, which requires particulars of the applicant

in Part I, particulars of the corporate debtor in Part II, particulars of

the proposed interim resolution professional in part III, particulars of

the financial debt in part IV and documents, records and evidence

Company Appeal (AT) (Insolvency) No. 406 of 2021 & E-filling No. 9910122/01921/2021 19

of default in part V. Under Rule 4(3), the applicant is to dispatch a

copy of the application filed with the adjudicating authority by

registered post or speed post to the registered office of the corporate

debtor. The speed, within which the adjudicating authority is to

ascertain the existence of a default from the records of the

information utility or on the basis of evidence furnished by the

financial creditor, is important. This it must do within 14 days of the

receipt of the application. It is at the stage of Section 7(5), where

the adjudicating authority is to be satisfied that a default

has occurred, that the corporate debtor is entitled to point

out that a default has not occurred in the sense that the

"debt", which may also include a disputed claim, is not due.

A debt may not be due if it is not payable in law or in fact.

The moment the adjudicating authority is satisfied that a default

has occurred, the application must be admitted unless it is

incomplete, in which case it may give notice to the applicant to rectify

the defect within 7 days of receipt of a notice from the adjudicating

authority. Under sub-section (7), the adjudicating authority shall

then communicate the order passed to the financial creditor and

corporate debtor within 7 days of admission or rejection of such

application, as the case may be."

[Emphasis supplied]

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16. Para 30 of the Judgment in the matter of "Innoventive" reads as under:-

"30. On the other hand, as we have seen, in the case of a

corporate debtor who commits a default of a financial debt, the

adjudicating authority has merely to see the records of the

information utility or other evidence produced by the financial

creditor to satisfy itself that a default has occurred. It is of no matter

that the debt is disputed so long as the debt is "due" i.e. payable

unless interdicted by some law or has not yet become due in the

sense that it is payable at some future date. It is only when this

is proved to the satisfaction of the adjudicating authority

that the adjudicating authority may reject an application

and not otherwise."

[Emphasis supplied]

17. It is clear that in Application under Section 7 of I&B Code what

Adjudicating Authority has to consider is as observed above and defence

available to Corporate Debtor is to show that default has not occurred in the

sense that debt is not due. Debt may not be due if it is not payable in law (like

a debt may be time barred, for example) as it is not due in fact. Even if debt is

disputed, so long as it is due from Corporate Debtor and payable, the application

must be admitted. The Adjudicating Authority is required to pass orders

regarding to admission or otherwise of the application filed under Section 7 of

Company Appeal (AT) (Insolvency) No. 406 of 2021 & E-filling No. 9910122/01921/2021 21

the I&B Code within 14 days. It appears to us that the Adjudicating Authority

did not deny principles of natural justice. Many opportunities were given but

the Appellant chose not to take benefit of the same and relied on technicalities.

Considering the limited defence available to the Corporate Debtor when the

Adjudicating Authority was considering application under Section 7 of I&B Code,

the Appellant appears to have failed to show that the debt was not due or that

the debt was not in default. When the debt due was more than Rs.1/- Lakh and

there was default, the Adjudicating Authority was bound to admit the

application.

18. There is no substance in the claim made in the appeal that the Banks

could have relied on when the account of Corporate Debtor was treated as NPA

and the period of limitation should be calculated from a different date, as the

accounts were in default since beginning.

19. Reliance can be placed on the judgments rendered by Hon'ble Supreme

Court in the matters of "Asset Reconstruction Company (India) Ltd. vs.

Bishal Jaiswal & Anr." Civil Appeal No. 323 of 2021 & Ors., "Sesh Nath

Singh & Anr. vs. Bidyabati Sheoraphuli Co-operative Bank Ltd. & Anr.",

Civil Appeal No. 9198 of 2019 and "Laxmi Pat Surana vs. Union Bank of

India & Anr." Civil Appeal No. 2734 of 2020.

20. Keeping the said judgments in view, it cannot be said that the debt claimed

was not due as payable, or that it was time barred.

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21. The argument that because the Banks had invoked SDR and converted

debt into equity, so as to have shareholding to the tune of 51% of the Company,

application under Section 7 of the I&B Code is not maintainable, is not

appealing. Although, the Learned Counsel for the Appellant submitted that

having such shareholding amounts to taking over the management of Corporate

Debtor, we are not convinced. There is no material to show that the Financial

Creditor have taken over the running of the Corporate Debtor.

22. The Counsel for the Appellant mentioned that account of Corporate Debtor

was irregular since beginning and time would start running from those dates.

In the present matter United Bank of India treated the account of Corporate

Debtor as NPA on 31st March, 2018 and Punjab National Bank treated the same

as NPA on 6th April, 2019. We do not accept the argument of Learned Counsel

for the Appellant that since beginning the account was irregular so default

should have been calculated from 30th June, 2014 and after new repayment

schedule from 30th June, 2016. Considering the documents including

Acknowledgements executed between parties from time to time, looking at

transactions, there are amounts due and in default within 3 years of filing

Application under Section 7 of I&B Code, which are much more than the

threshold under Section 4 of I&B Code. Impugned order para 13 read with para

31 shows Corporate Debtor even after account was declared NPA applying to the

Banks even in 2017 for issue of Performance Bank Guarantee and also giving

Company Appeal (AT) (Insolvency) No. 406 of 2021 & E-filling No. 9910122/01921/2021 23

Corporate Guarantee and when the Bank Guarantees were invoked beneficiaries

got the amount while dues were debited against the account of Corporate Debtor.

23. One of the grounds raised in the appeal is that against the order dated 5th

April, 2021, the Appellant had filed appeal which is still kept in dairy number

and has not been listed. We have directed earlier and even this appeal was listed

with the dairy number and we have heard the Counsel for the Appellant. Learned

Counsel submitted grounds regarding impugned order dated 5th April, 2021

dispute has been taken in Company Appeal (AT) (Insolvency) No. 406 of 2021

also and thus according to him with the further developments the earlier appeal

filed with diary number 9910122/01921/2021 needs to be withdrawn.

24. We had directed the listing of the said appeal filed by 'M/s Megha Granules

Pvt. Ltd.', although it is in defects. Certified copy of Impugned Order in that

Appeal has not been filed till now and it could not be numbered. We have gone

through the said appeal also. This appeal was filed against the order dated 5th

April, 2021 which we reproduced above. This Appeal is on the ground that

Hon'ble Gauhati High Court had inter alia directed the Punjab National Bank

and United Bank of India not to take coercive measures against the Appellant

and that Respondent No. 2 - United Bank of India had obtained orders to vacate

stay granted by the Hon'ble High Court on 17th January, 2019. The said order

vacating the stay was passed on 2nd September, 2019 and subsequently on 29th

December, 2020 the Merged Application was filed under Section 7 of the I&B

Company Appeal (AT) (Insolvency) No. 406 of 2021 & E-filling No. 9910122/01921/2021 24

Code. The grievance raised in the appeal is that the Adjudicating Authority

refused to give effect to the order dated 17th January, 2019 passed by the

Gauhati High Court with regard to Respondent No. 1 - Punjab National Bank.

25. At Annexure 4 of the Appeal there is I.A. (Civil) 1739/2019, order passed

by the Hon'ble Gauhati High Court on 2nd September, 2019 shows that Counsel

for United Bank of India had taken up the matter with Hon'ble High Court on

the basis of I.A. filed to vacate the interim order dated 7th January, 2019 passed

in WP (Civil) 8855/2018. The Hon'ble High Court inter alia passed orders, as

under:-

"Be that as it may, since there is a remedy available to the petitioner

under the statute against the notice issued under the SARFAESI Act,

2002 and considering the fact that the petitioner has failed to

deposit any amount with the bank till today, I am of the view that

the interim order dated 07/01/2019 should not be continued any

further in its present form. The order dated 07/01/2019, therefore,

stands vacated."

26. There is no substance in claim of the Appellant in "M/s Megha Granules

Pvt. Ltd. vs. Punjab National Bank" that order to vacate stay dated 7th January,

2019 was obtained by Respondent No. 2 - United Bank of India and so benefit

cannot be taken by Respondent No. 1 - Punjab National Bank. The order was

not vacated specific to United Bank of India.

Company Appeal (AT) (Insolvency) No. 406 of 2021 & E-filling No. 9910122/01921/2021 25

27. Thus, there is no substance even in the Appeal filed with e-Filing No.

9910122/01921/2021.

28. (A) For reasons mentioned above, we do not find substance or any

reason to admit either of these appeals.

(B) We decline to admit Company Appeal (AT) (Insolvency) No. 406 of

2021.

(C) We decline to admit unnumbered Company Appeal (AT) (Insolvency)

filed with e-Filing No. 9910122/01921/2021.

[Justice A.I.S. Cheema] The Officiating Chairperson

[Dr. Alok Srivastava] Member (Technical) Archana/gc.

Company Appeal (AT) (Insolvency) No. 406 of 2021 & E-filling No. 9910122/01921/2021