Union Bank Of India vs M/S Ansal Api Infrastructure Ltd & Ors

Comp. App. (AT) (Ins) No. 384 of 2023 & I.A. No. 1288, 1289 of 2023 IN THE MATTER OF: Union Bank of India ...Appellant

Versus

Ansal API Infrastructure Ltd. & Ors. ...Respondents

Present: For Appellants : Mr. Rajeev Sagar, Adv. For Respondent : Mr. Malak Bhatt, Neeha Nagpal, Nitya Prabhakar, Adv.

ORDER

(Hybrid Mode)

Per: Justice Rakesh Kumar Jain: (Oral)

13.05.2025: This appeal is directed against the order dated

19.12.2022, passed by the National Company Law Tribunal, New Delhi (in

short 'the Tribunal') by which an application filed under Section 7 of the

Insolvency and Bankruptcy Code, 2016 (in short 'Code') by the present

Appellant (Union Bank Of India) has been dismissed on the ground that

though the debt and default has been proved but the Appellant has failed to

show the direct disbursal of the loan by the Appellant to the Corporate Debtor.

2. Shorn of unnecessary details, the brief facts of this case are that the

Corporate Debtor approached PMDO Lenders (Pooled Municipal Debt

Obligation) for loan and the PMDO sanctioned a term loan to the CD

aggregating to Rs. 393.40 Cr. by a sanction letter dated 23.06.2011.

3. Besides the sanction letter, the agreements with their amendments

were executed between the parties on 05.07.2011, namely, Common Loan

agreement dated 05.07.2011 which was executed between the CD and the PMDO Lenders (Consortium of Banks) and IL&FS Urban Infrastructure

Managers Ltd. was appointed as the Asset Manager for the said term loan. A

Security Trustee Agreement dated 05.07.2011 was executed between the CD,

the PMDO Lenders, the Asset Manager and Vistara ITCL in which Vistara ITCL

was appointed as Security Trustee to the said term loan. A Trust and

Retention Account Agreement was executed on 05.07.2011 between the CD,

the PMDO Lenders, the Asset Manager, the Security Trustee and the

designated Bank/Escrow Agent (Oriental Bank of Commerce Now PNB) in

terms of which Vistara ITCL was appointed as the TRA Agent to the said term

loan facility.

4. Subsequently, at the request of the CD in the year 2017, the repayment

obligations were rescheduled by the PMDO Lenders under the flexible

structuring scheme and the Asset Manager, vide sanction letter dated

17.03.2017, communicated the terms of sanction for restructuring of the term

loan to the CD.

5. It so happened that the CD failed to follow the contractual obligations

and the loan account of CD was classified as Non-Performing Asset (NPA) on

29.05.2017 as per the prudential norms of the Reserve Bank of India.

6. Thereupon, a demand notice under Section 13(2) of SARFAESI Act,

2002 was issued to the CD by the PMDO Lenders on 01.03.2018 and also the

present petition was filed on 31.10.2018.

7. The CD, during the proceedings, submitted various OTS proposals

dated 18.11.2019, 09.12.2019, 29.12.2020 and 02.04.2022 but all were

rejected.

8. The Tribunal while rejecting the application of the Appellant has though

referred to all the agreements entered into between the parties in para 7.3 and also holding that debt is due on the part of the CD but since the Tribunal was

of the view that the Appellant has failed to prove direct disbursal of the loan

to the CD, therefore, it does not fall within the definition of financial creditor

as provided under Section 5(7) o the Code.

9. Ld. Counsel for the Appellant has argued that the Tribunal has

committed an error in passing the impugned order when it had though

referred to all the agreements which were pointed out in the pleading as well

as during the course of hearing but was of the view that since there was no

direct disbursal of loan by the Appellant to the CD, therefore, the application

under Section 7 was not maintainable.

10. It is submitted that the Tribunal should have referred to the terms and

conditions of the agreements and not only to the agreements as it is because

the intention between the parties can be gathered only on the basis of the

contents of the agreements and not from the nomenclature. In this regard, he

has referred to various provisions of the agreements in court.

11. Counsel for the Respondent has though argued vehemently to defend

the impugned order but at the end of the day he could not justify the

impugned order on the ground that the discussion by the Tribunal on various

aspects of the agreements entered into between the parties form time to time

are conspicuous by its absence in the impugned order.

12. We have heard Counsel for the parties and after perusal of the entire

records, are of the considered opinion that this appeal deserves to be allowed

simply for the reason that the Tribunal has failed to consider to various

provisions of all the agreements which were referred to by Counsel for the

Appellant during the course of hearing to arrive at a conclusion that as to

whether the Appellant was not the Financial Creditor, therefore, we find it a fit case to set aside the impugned order and remand the matter back to the

Tribunal to decide again after referring to the contents of all the agreements

and other documents which have been brought on record by both the parties

and then pass a speaking order to hold as to whether the application filed by

the appellant under Section 7 is to be admitted or not.

13. In such circumstances, the present appeal is allowed and the impugned

order is set aside. CP No. IB - 1641(PB)/2018 is hereby restored to its original

number. The matter is remanded back to the Tribunal to decide the

application of the Appellant filed under Section 7 in accordance with law.

14. We make it clear to counsel for the parties as well as the Tribunal that

we have not touched any part of the merit of the case while passing this order.

16. The parties are directed to appear before the Tribunal on 28th May,

2025.

[Justice Rakesh Kumar Jain] Member (Judicial)

[Mr. Naresh Salecha] Member (Technical)

[Mr. Indevar Pandey] Member (Technical) SC/RR