Handbook IBC Orders - Compiled by CA Mukesh Mohan-January To December 2017 PDF

ABOUT THE COMPILATION
The world ranking of India in Ease of Doing Business has been improved very significantly this
year. India jumped up 30 notches into the top 100 rankings on the World Bank’s ‘Ease of doing
business’ index. One of the major indicators is Resolving Insolvency. India got the 103 rank in
Resolving Insolvency as compare 136 last year, i.e. after enforcing Insolvency and Bankruptcy
Code, 2016.
The Insolvency and Bankruptcy Code, 2016 provides a legislative framework for the Resolution
of the Stressed Assets, Insolvency and Liquidation proceedings of Corporate, Firm and
Individuals.
Insolvency and Bankruptcy Code 2016 provides an exit route to address genuine business
failures and provides the space for the genuine business players. This code provides a time bound
resolution of the stressed assets within 180 days which can be extended further by 90 days.
Financial Creditor, Operational Creditor and Corporate Debtor itself can opt for this code.
The National Company Law Tribunal (NCLT) and National Company Law Appellate Tribunal
(NCLAT) are adjudicating Insolvency and Liquidation cases and bringing numbers of
judgments, resulting in admission or rejection of Insolvency applications.
Since this code is new, therefore I made a sincere attempt to compile the orders of Hon'ble
Supreme Court, Hon'ble High Court, Hon’ble National Company Law Appellate Tribunal
(NCLAT), Hon’ble National Company Law Tribunal (NCLT) passed under Insolvency and
Bankruptcy Matters in the one file. In this issue I have compiled the orders passed from
01.01.2017 to 31.12.2017.
I believe that this compilation will act as a handy reference for Regulators, Resolution
Professionals, Financial Creditors, Operational Creditors, Corporate Debtors, Academics,
Researchers and other stakeholders in understanding the adjudication matters and interpretation
of Insolvency and Bankruptcy matters. The USP of this compilation is the ease of searching the
case laws by using the KEYWORD as per the need of the case while preparing the Application,
Appeal, and Referring Judgments / case law at the time of arguing the case etc.
This compilation will provide learning to the practitioners on various aspects of the code
including the grounds of admission or rejection of cases with interpretation of various sections
and clauses of the Insolvency & Bankruptcy Code, 2016.
We are also compiling various useful formats like Applications for filing before the Hon’ble
NCLT, Appeal to be filed before Hon’ble NCLAT, various reports to be filed by IRP/RP at
Adjudicating Authority, IBBI, IPA etc., Various Agreements to be executed by IRP/ RP like E-
voting Agreements, Various letters to be sent by IRP / RP while discharging their duties etc. at
our proposed website www.IBCorders.com very soon.
I am thankful to Mr. Sandeep Bisht, Mr. Ashutosh Sharma and Ms. Shweta Shristava, who have
worked day and nights, for assisting me in preparing this compilation.
Even though, Due care and diligence have been taken in compiling the orders, we do not hold
any responsibility for any mistake that may have inadvertently crept in.
I shall appreciate the valuable suggestions of the readers of this compilation, for improving the
contents, quality and readability of the future additions of the compilation.
CA Mukesh Mohan
Resolution Professional
Gyan Shree Insolvency Professionals LLP
Order Passed in February 2017
by Hon’ble Supreme Court
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IN THE SUPREME COURT OF INDIA
Civil Appeal No. 3055 of 2017 (Arising out of S.L.P. (C) No. 1587 of 2015)
Decided On: 21.02.2017
Appellants: Bank of New York Mellon, London Branch

Vs.
Respondent: Zenith Infotech Limited
Judges/Coram:
Hon’ble Sh. Ranjan Gogoi and Sh. Abhay Manohar Sapre, JJ.
Counsels:
For Appellant/Petitioner/Plaintiff: C.A. Sundaram, Sr. Adv., Anindita Roy Chowdhury, Vatsala Rai,
Rohini Musa, Abhishek Gupta and Liz Mathew, Advs.
For Respondents/Defendant: Jayant Bhushan, Sr. Adv., Ajay Kumar Jain, Akshat Kumar, Atanu
Mukherjee and Abhishek Agarwal, Advs.
JUDGMENT
Hon’ble Sh. Ranjan Gogoi, J.
1. Leave granted.
2. At the very outset, it will be necessary to take note of the relevant statutory enactments and changes
that have come about after hearing of the case had been concluded. The said enactments and the changes
in the existing enactments give rise to a somewhat altered scenario, as will be noticed hereinafter, though
essentially the core of the question that has arisen remains substantially unaffected.
3. The Sick Industrial Companies (Special Provisions) Act, 1985 (hereinafter referred to as "the SICA")
had been repealed by the SICA Repeal Act, 2003. However, it is only by Notification dated 25.11.2016
that the repeal has been given effect to on and from 1.12.2016. Under Section 4(b) of the repeal Act, all
proceedings before the B.I.F.R. or the Appellate Authority, as the case may be, stood abated and in
respect of such abated proceedings provisions have been made to enable the company to seek a reference
as per provisions of Part VI-A of the Companies Act, 1956 within 180 days from the date of the repeal
Act. Interestingly, the provisions of Part VI-A of the Companies Act, 1956 which, though brought about
by the Companies (Second Amendment) Act of 2002 had/have not been made effective. In fact, effective
1.11.2016 Section 4(b) of the Repeal Act has been amended by Section 252 of the Insolvency and
Bankruptcy Code of 2016 (hereinafter referred to as "the Code") and provisions have been made therein
akin to those in repealed Section 4(b) except that reference by a company in respect of an abated
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proceeding is to be made to the National Company Law Tribunal within 180 days of the Code coming
into force. Such a reference is required to be dealt with in accordance with the provisions of the Code.
The code has been enacted and given effect to w.e.f. 1.12.2016. Relevant details thereof will be noticed
hereinafter.
4. At this stage, it will also be necessary to take note of the fact that the National Company Law Tribunal
envisaged under the Companies (Second Amendment) Act of 2002 has been authorized to exercise and
discharge its powers and functions with effect from 1.6.2016 and, in fact, the Tribunals with Benches
throughout the country have since been constituted and are presently functioning.
5. Having noticed the above position, we may now turn to the provisions of the Insolvency and
Bankruptcy Code, 2016. It is a comprehensive Code enacted as the Preamble states, to
consolidate and amend the laws relating to reorganisation and insolvency resolution of corporate persons,
partnership firms and individuals in a time bound manner for maximisation of value of assets of such
persons, to promote entrepreneurship, availability of credit and balance the interests of all the
stakeholders including alteration in the order of priority of payment of Government dues and to establish
an Insolvency and Bankruptcy Board of India, and for matters connected therewith or incidental thereto.
6. Section 3(8) defines a 'Corporate Debtor' to mean "a corporate person who owes a debt to any person."
Section 5(1) of the Code defines "Adjudicating Authority" to means the National Company Law Tribunal
constituted Under Section 408 of the Companies Act, 2013. The definition of "corporate applicant" in
Section 5(5) includes a "corporate debtor." Under Section 6, amongst others, a "corporate debtor" who
has committed a default may file an application with the Adjudicating Authority for initiating a corporate
insolvency resolution process. Such a process may also be initiated by others, including a financial
creditor, against the corporate debtor in respect of default committed by the corporate debtor. Under
Section 7 (Explanation-1), default includes "a default in respect of a financial debt owed not only to the
applicant financial creditor but to any other financial creditor of the corporate debtor. Under Section 13
once the Adjudicating Authority admits the application of the corporate applicant [defined by Section
5(5)] filed Under Section 10, the said Authority may proceed to declare a moratorium for the purposes
referred to in Section 14. Section 14 is in the following terms:
(1). Subject to provisions of Sub-sections (2) and (3), on the insolvency commencement date, the
Adjudicating Authority shall by order declare moratorium for prohibiting all of the following, namely:
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(a) the institution of suits or continuation of pending suits or proceedings against the corporate debtor
including execution of any judgment, decree or order in any court of law, tribunal, arbitration panel or
other authority;
(b) transferring, encumbering, alienating or disposing of by the corporate debtor any of its assets or any
legal right or beneficial interest therein;
(c) any action to foreclose, recover or enforce any security interest created by the corporate debtor in
respect of its property including any action under the Securitisation and Reconstruction of Financial
Assets and Enforcement of Security Interest Act, 2002;
(d) the recovery of any property by an owner or lessor where such property is occupied by or in the
possession of the corporate debtor.
(2) The supply of essential goods or services to the corporate debtor as may be specified shall not be
terminated or suspended or interrupted during moratorium period.
(3) The provisions of Sub-section (1) shall not apply to such transactions as may be notified by the
Central Government in consultation with any financial sector regulator.
(4) The order of moratorium shall have effect from the date of such order till the completion of the
corporate insolvency resolution process:
Provided that where at any time during the corporate insolvency resolution process period, if the
Adjudicating Authority approves the resolution plan under Sub-section (1) of Section 31 or passes an
order for liquidation of corporate debtor Under Section 33, the moratorium shall cease to have effect from
the date of such approval or liquidation order, as the case may be.
Section 16 of the Code visualizes the appointment of an interim resolution professional to manage the
affairs of the corporate debtor. Such appointment is to be made by the Adjudicating Authority.
Under Section 20 of the Code, the interim resolution professional appointed Under Section 16 is to
manage the operations of the corporate debtor as a going concern and make every endeavour to protect
and preserve the value of the property. Section 25 which enumerates the duty of the resolution
professional is in the following terms:
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(1). It shall be the duty of the resolution professional to preserve and protect the assets of the corporate
debtor, including the continued business operations of the corporate debtor.
(2) For the purposes of Sub-section (1), the resolution professional shall undertake the following actions,
namely:
(a) take immediate custody and control of all the assets of the corporate debtor, including the business
records of the corporate debtor;
(b) represent and act on behalf of the corporate debtor with third parties, exercise rights for the benefit of
the corporate debtor in judicial, quasi-judicial or arbitration proceedings;
(c) raise interim finances subject to the approval of the committee of creditors Under Section 28;
(d) appoint accountants, legal or other professionals in the manner as specified by Board;
(e) maintain an updated list of claims;
(f) convene and attend all meetings of the committee of creditors;
(g) prepare the information memorandum in accordance with Section 29;
(h) invite prospective lenders, investors, and any other persons to put forward resolution plans;
(i) present all resolution plans at the meetings of the committee of creditors;
(j) file application for avoidance of transactions in accordance with Chapter III, if any; and
(k) such other actions as may be specified by the Board.
Section 30 of the Code contemplates submission of a resolution plan and approval thereof by the
Adjudicating Authority failing which the liquidation process of the corporate debtor as contemplated in
Chapter III of the Code would be required to be initiated.
7. The above provisions of the Code have been noticed in some detail and the provisions thereof, so far as
the same are material for the purposes of the present case, have also been extracted and highlighted. We
may now proceed to examine and see what has happened in the present case.
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8. Briefly the facts relevant are as follows.
On 23.07.2013 the Respondent No. 1 company-Zenith Infotech Ltd. filed a Reference before the Board
for Industrial and Financial Reconstruction (hereinafter for short "the Board") Under Section 15 of the
SICA. The said application was refused registration by the Registrar of the Board on 12.08.2013 on the
ground that Respondent No. 1 company is not an industrial company within the meaning of Section 3(e)
and 3(f) of the SICA. An appeal was filed by the Respondent No. 1 company before the Secretary of the
Board against the order of Registrar which was dismissed on 13.09.2013. There was a further appeal to
the Chairman of the Board against the order of the Secretary. Though the maintainability of the second
appeal before the Chairman of the Board would be in serious doubt in view of the provisions of
Regulation 19(4) read with Sub-Regulation 8(1) and (2) of Regulation 19 of the Board for Industrial and
Financial Reconstruction Regulations, 1987 (hereinafter for short "the Regulations") it will not be
necessary to deal with the said question in the present proceedings except to state that the Chairman of the
Board also dismissed the second appeal filed by the Respondent No. 1 company by order dated
03.04.2014.
9. What would be of significance is the events that had transpired while the matter was before the
authorities of the Board, namely, the Secretary and Chairman of the Board. It appears that on 30.07.2013
a petition for winding up of the Respondent No. 1 company was admitted by the High Court of Bombay
and the order of admission was affirmed by the Division Bench in appeal. The approach to this Court also
was not successful with the Special Leave Petition filed by the Respondent No. 1 company having been
dismissed on 30.09.2013. Thereafter, it appears that on 13.12.2013 the High Court of Bombay passed
orders for winding up of the Respondent No. 1 which was upheld in appeal by the Division Bench of the
High Court on 23.04.2014. Though, a stay was ordered by the High Court of its winding up order till
31.08.2014, it would appear that the High Court understood the said interim order to have been vacated
by efflux of time, in the absence of any specific order of extension. Thereafter the Official Liquidator
came to be appointed by the High Court on 02.09.2014.
10. The orders of the Secretary and Chairman of the Board rejecting the application for Reference filed by
the Respondent No. 1 company were subjected to a challenge in a writ petition filed by the Respondent-
company before the Delhi High Court out of which the present proceedings have arisen.
11. Two questions arose before the High Court of Delhi in the writ petition.
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The first was whether the dismissal of the application for Reference by the Registrar, Secretary and
Chairman of the Board was within the jurisdiction of the said authorities. The second question, which was
implicit if there was to be a positive answer to the first, is whether in view of the order of winding up
passed by the Company Court, and affirmed by the Division Bench of the Bombay High Court, there is
any further scope for registration of the Reference sought for by the Respondent No. 1 company under the
provisions of the SICA if the order declining registration by the aforesaid authorities is to be understood
to be non est.
12. The High Court, by the impugned order, took the view that under the provisions of the SICA read
with the Regulations, the Registrar and the other authorities like the Secretary and the Chairman of the
Board have not been conferred any power of adjudication which would necessarily be involved in
determining the question as to whether the Respondent No. 1 company is an industrial company within
the meaning of Section 3(e) and 3(f) of the SICA. Since an adjudicatory function and role has been
performed by the Registrar, whose order has been affirmed by the Secretary and the Chairman of the
Board and as registration of the Reference sought for by the Respondent No. 1 company was refused on
that basis the said orders are non est in law. Regarding the second question, the High Court of Delhi
relying on the decisions of this Court in Real Value Appliances Ltd. v. Canara Bank and Ors.
MANU/SC/0344/1998 : (1998) 5 SCC 554 and Rishabh Agro Industries Ltd. v. P.N.B. Capital Services
Ltd. MANU/SC/0381/2000 : (2000) 5 SCC 515 came to the conclusion that the winding up order passed
by the Company Court would not foreclose the proceedings under the SICA and registration of a
Reference Under Section 15 and the inquiry Under Section 16 can still be made. The question that was
agitated in the present appeal is consequential to the above determination and revolve around the
application of Section 22 of SICA to bar further steps in the winding up proceeding before the High
Court. The above question would no longer survive in the context of the provisions of the now repealed
Act but would still require an answer from the stand point of the provisions of the Insolvency and
Bankruptcy Code in force with effect from 1.12.2016.
13. The first question, namely, the one with regard to the power and jurisdiction of the Registrar and
Secretary to refuse registration of the application for reference made by the Respondent company on the
grounds mentioned above may now be taken up. To answer the aforesaid question, the following
provisions of SICA may be noticed:
3. Definitions.--
(1) In this Act, unless the context otherwise requires,--
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(e) "industrial company" means a company which owns one or more industrial undertakings;
(f) "industrial undertaking" means any undertaking pertaining to a scheduled industry carried on in one or
more factories by any company but does not include-
(i) any ancillary industrial undertaking as defined in Clause (aa) of Section 3 of the Industries
(Development and Regulation) Act, 1951 (65 of 1951); and
(ii) a small scale industrial undertaking as defined in Clause (j) of the aforesaid Section 3;
(n) "scheduled industry" means any of the industries specified for the time being in the First Schedule to
the Industries (Development and Regulation) Act, 1951 (65 of 1951);
12. Constitution of Benches of Board or Appellate Authority.--
(1) The jurisdiction, powers and authority of the Board or the Appellate Authority may be exercised by
Benches thereof.
(2) The Benches shall be constituted by the Chairman and each Bench shall consist of not less than two
Members.
(3) If the Members of a Bench differ in opinion on any point, the point shall be decided according to the
opinion of the majority, if there is a majority, but if the Members are equally divided, they shall state the
point or points on which they differ, and make a reference to the Chairman of the Board or, as the case
may be, the Appellate Authority who shall either hear the point or points himself or refer the case for
hearing on such point or points by one or more of the other Members and such point or points shall be
decided according to the opinion of the majority of the Members who have heard the case including those
who first heard it.
13. Procedure of Board and Appellate Authority.--
(1) Subject to the provisions of this Act, the Board or, as the case may be, the Appellate Authority, shall
have powers to regulate--
(a) the procedure and conduct of the business;
(b) the procedure of the Benches, including the places at which the sittings of the Benches shall be held;
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(c) the delegation to one or more Members of such powers or functions as the Board or, as the case may
be, the Appellate Authority may specify.
(2) In particular and without prejudice to the generality of the foregoing provisions, the powers of the
Board or, as the case may be, the Appellate Authority, shall include the power to determine the extent to
which persons interested or claiming to be interested in the subject-matter of any proceeding before it
may be allowed to be present or to be heard, either by themselves or by their representatives or to cross-
examine witnesses or otherwise to take part in the proceedings.
(3) The Board or the Appellate Authority shall, for the purposes of any inquiry or for any other purpose
under this Act, have the same powers as are vested in a civil court under the Code of Civil Procedure,
1908 (5 of 1908) while trying suits in respect of the following matters, namely:
(a) the summoning and enforcing the attendance of any witness and examining him on oath;
(b) the discovery and production of document or other material object producible as evidence;
(c) the reception of evidence on affidavit;
(d) the requisitioning of any public record from any court or office;
(e) the issuing of any commission for the examination of witnesses;
(f) any other matter which may be prescribed.
14. Proceedings before Board or Appellate Authority to be judicial proceedings.--
The Board or the Appellate Authority shall be deemed to be a civil court for the purposes of Section 195
and Chapter XXVI of the Code of Criminal Procedure, 1973 (2 of 1974) and every proceeding before the
Board or the Appellate Authority shall be deemed to be a judicial proceeding within the meaning of
Sections 193 and 228 and for the purposes of Section 196 of the Indian Penal Code (45 of 1860).
15. Reference to Board.--
(1) When an industrial company has become a sick industrial company, the Board of Directors of the
company, shall, within sixty days from the date of finalisation of the duly audited accounts of the
company for the financial year as at the end of which the company has become a sick industrial company,
make a reference to the Board for determination of the measures which shall be adopted with respect to
the company: Provided that...............
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14. In addition, Section 16 deals with the inquiry to be made by the Board for determining whether an
industrial company has become sick, whereas Section 17 deals with the power of the Board to make
suitable orders on completion of inquiry.
15. Under Section 13 of the SICA the Board has enacted a set of Regulations, namely, the Board for
Industrial and Financial Reconstruction Regulations, 1987. Chapter II of the Regulations deals with
References sought Under Section 15 of the Act (SICA) and contains provisions as to how such
References are required to be made and dealt with. Regulation 19 would need to be extracted to show
what is contemplated to be the role of the Registrar and the Secretary on receipt of a Reference. The said
provision therefore is extracted below.
19.(1) Every reference to the Board under Sub-section (1) of Section 15 shall be made--
(i) in Form A in respect of an industrial company other than a Government Company;
(ii) in Form AA in respect of a Government Company,]
and shall be accompanied by five further copies thereof alongwith four copies each of all the enclosures
thereto.
[(2) Every reference to the Board under Sub-section (2) of Section 15 shall be made--
(i) in Form B in respect of an industrial company other than a Government Company;
(ii) in Form BB in respect of a Government Company,]
and shall be accompanied by five further copies thereof alongwith four copies each of all the enclosures
thereto.
(3) A reference may be filed either by delivering it at the office of the Board or by sending it by registered
post.
[(4) On receipt of a reference, the Secretary, or as the case may be, the Registrar shall cause to be
endorsed on each reference, the date on which it is filed or received in the office of the Board.
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(5) If on scrutiny, the reference is found to be in order, it shall be registered, assigned a serial number and
submitted to the Chairman or assigning it to a Bench. Simultaneously, remaining information/documents
required, if any, shall be called for from the informant.
(6) If on scrutiny, the reference is not found to be in order, the Secretary or, as the case may be, the
Registrar may, by order, decline to register the reference and shall communicate the same to the
informant.
(7) A reference declined to be registered shall be deemed not to have been made.]
(8) (1) An appeal against the order of the Registrar declining to register a reference shall be made by the
aggrieved person to the Secretary within fifteen days of communication to him of such an order.
(2) An appeal against the order of the Secretary declining to register a reference shall be made by the
aggrieved person to the Chairman within fifteen days of communication to him of such an order and the
Chairman's decision thereon shall be final.
16. From the provisions of Regulation 19(5) it would appear that on receipt of a Reference under
Regulation 19(4) the Secretary or the Registrar, as may be, after making an endorsement of the date on
which the same has been received in the office of the Board is required to make a scrutiny and, thereafter,
if found to be in order, to register the same; assign a serial number thereto and place the same before the
Chairman for being assigned to a Bench. After completion of the aforesaid exercise under Regulation
19(5) the later part of the said Regulation contemplates that simultaneously, remaining
information/documents required, if any, may be called for from the applicant. Regulation 20 contained in
Chapter III and Regulation 21 contained in Chapter IV deal with the manner in which the proceedings of
inquiry after registration of the Reference is to be made.
17. Regulation 19(5) extracted above, requires the Registrar or the Secretary, as may be, to make an
endorsement of the date of receipt of the Reference [Regulation 19(4)] and thereafter on scrutiny thereof
to register the same and place before the Chairman for being referred to the Bench. When the Regulations
framed under the statute vests in the Registrar or the Secretary of the Board the power to "scrutinize" an
application prior to registration thereof and thereafter to register and place the same before the Bench, we
do not see how such power of scrutiny can be understood to be vesting in any of the said authorities the
power to adjudicate the question as to whether a company is an industrial company within the meaning of
Section 3(e) read with 3(f) and 3(n) of the SICA. A claim to come within the ambit of the aforesaid
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provisions of the SICA i.e. to be an industrial company, more often than not, would be a contentious
issue. In the present case, it certainly was. The specific stand of the Respondent No. 1 company in this
regard need not detain the Court save and except to state that by a detailed description of the
manufacturing process the Respondent No. 1 company had sought to contend that it is an industrial
company. Surely, the rejection of the above stand could have been made only by a process of adjudication
which power and jurisdiction clearly and undoubtedly is vested by the SICA and the Regulations framed
thereunder in a Bench of the Board and not in authorities like the Registrar and the Secretary. In this
regard, one can only be reminded of the observations made by this Court in paras 13 and 14 in the case of
Jamal Uddin Ahmad v. Abu Saleh Najmuddin and Anr. MANU/SC/0171/2003 : (2003) 4 SCC 257 which
may be extracted below.
13. The functions discharged by a High Court can be divided broadly into judicial and administrative
functions. The judicial functions are to be discharged essentially by the Judges as per the Rules of the
Court and cannot be delegated. However, administrative functions need not necessarily be discharged by
the Judges by themselves, whether individually or collectively or in a group of two or more, and may be
delegated or entrusted by authorization to subordinates unless there be some Rule of law restraining such
delegation or authorization. Every High Court consists of some administrative and ministerial staff which
is as much a part of the High Court as an institution and is meant to be entrusted with the responsibility of
discharging administrative and ministerial functions. There can be "delegation" as also there can be
"authorization" in favour of the Registry and the officials therein by empowering or entrusting them with
authority or by permitting a few things to be done by them for and on behalf of the Court so as to aid the
Judges in discharge of their judicial functioning. Authorization may take the form of formal conferral or
sanction or may be by way of approval or countenance. Such delegation or authorization is not a matter of
mere convenience but a necessity at times. The Judges are already overburdened with the task of
performing judicial functions and the constraints on their time and energy are so demanding that it is in
public interest to allow them to devote time and energy as much as possible in discharging their judicial
functions, relieving them of the need for diverting their limited resources of time and energy to such
administrative or ministerial functions, which, on any principle of propriety, logic, or necessity are not
required necessarily to be performed by the Judges. Receiving a cause or a document and making it
presentable to a Judge for the purpose of hearing or trial and many a functions post-decision, which
functions are administrative and ministerial in nature, can be and are generally entrusted or made over to
be discharged by the staff of the High Court, often by making a provision in the Rules or under the orders
of the Chief Justice or by issuing practice directions, and at times, in the absence of rules, by sheer
practice. The practice gathers the strength of law and the older the practice the greater is the strength. The
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Judges rarely receive personally any document required to be presented to the Court. Plaints, petitions,
memoranda or other documents required to be presented to the Court are invariably received by the
administrative or ministerial staff, who would also carry out a preliminary scrutiny of such documents so
as to find that they are in order and then make the documents presentable to the Judge, so that the
valuable time of the Judge is not wasted over such matters as do not need to be dealt with personally by
the Judge.
14. The judicial function entrusted to a Judge is inalienable and differs from an administrative or
ministerial function which can be delegated or performance whereof may be secured through
authorization.
The judicial function consists in the interpretation of the law and its application by Rule or discretion to
the facts of particular cases. This involves the ascertainment of facts in dispute according to the law of
evidence. The organs which the State sets up to exercise the judicial function are called courts of law or
courts of justice. Administration consists of the operations, whatever their intrinsic nature may be, which
are performed by administrators; and administrators are all State officials who are neither legislators
nor judges.
(See Constitutional and Administrative Law, Phillips and Jackson, 6th Edn., p. 13.) P. Ramanatha Aiyar's
Law Lexicon defines judicial function as the doing of something in the nature of or in the course of an
action in court. (p. 1015) The distinction between "judicial" and "ministerial acts" is:
If a Judge dealing with a particular matter has to exercise his discretion in arriving at a decision, he is
acting judicially; if on the other hand, he is merely required to do a particular act and is precluded from
entering into the merits of the matter, he is said to be acting ministerially. (pp. 1013-14)
Judicial function is exercised under legal authority to decide on the disputes, after hearing the parties,
maybe after making an enquiry, and the decision affects the rights and obligations of the parties. There is
a duty to act judicially. The Judge may construe the law and apply it to a particular state of facts
presented for the determination of the controversy. A ministerial act, on the other hand, may be defined to
be one which a person performs in a given state of facts, in a prescribed manner, in obedience to the
mandate of a legal authority, without regard to, or the exercise of, his own judgment upon the propriety
of the act done. (Law Lexicon, ibid., p. 1234). In ministerial duty nothing is left to discretion; it is a
simple, definite duty. Presentation of election petition to the High Court within the meaning of Section 81
of the Act without anything more would mean delivery of election petition to the High Court through one
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of its officers competent or authorized to receive the same on behalf of and for the High Court. Receiving
an election petition presented Under Section 81 of the Act is certainly not a judicial function which needs
to be performed by a Judge alone. There is no discretion in receiving an election petition. An election
petition, when presented, has to be received. It is a simple, definite duty. The date and time of
presentation and the name of the person who presented (with such other particulars as may be
prescribed) are to be endorsed truly and mechanically on the document presented. It is a ministerial
function simpliciter. It can safely be left to be performed by one of the administrative or ministerial staff
of the High Court which is as much a part of the High Court. It may be delegated or be performed
through someone authorized. The manner of authorization is not prescribed.
18. The High Court, in view of what has been discussed above, was correct in coming to the conclusion
that the refusal of registration of the reference sought by the Respondent Company by the Registrar,
Secretary/Chairman of the Board was non-est in law. The reference must, therefore, understood to be
pending before the Board on the relevant date attracting the provisions of Section 252 of the Insolvency
and Bankruptcy Code.
19. The second question arising before the High Court, namely, whether the reference before the Board
stood foreclosed by the order of winding up of the Respondent Company and the appointment of
liquidator was answered in the negative relying on Real Value Appliances Ltd. (supra) and Rishab Agro
Industries Ltd. (supra). The core principles laid down in the said decisions of the Court, namely, that
immediately on registration of a reference Under Section 15 of the erstwhile SICA, the enquiry Under
Section 16 is deemed to have commenced and that the winding up proceedings against a company stood
terminated only after orders Under Section 481 of the Companies Act, 1956, are passed, will have to be
noticed to adjudge the correctness of the said view of the High Court. In any event, the aforesaid question
becomes redundant in view of our conclusion that the reference sought by the Respondent Company must
be deemed to have been pending on the date of commencement of the Insolvency and Bankruptcy Code,
particularly, Section 252 thereof (effective 1.11.2016).
20. We, therefore, dispose of the appeal by holding that it would still be open to the Respondent Company
to seek its remedies under the provisions of Section 252 of the Code read with what is laid down in
Sections 13, 14, 20 and 25. We make it clear that we should not be understood to have expressed any
opinion on the scope and meaning of the said or any other provisions of the Code and the adjudicating
authority i.e. National Company Law Tribunal would be free and, in fact, required to decide on the said
questions in such manner as may be considered appropriate.
15
Civil Appeal No. 16486/2017
Appellants: Falcon Tyres Ltd.

Vs.
Respondent: Edelweiss Asset
Judges/Coram:
Hon’ble Justice Sh. A.S. Bopanna
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Vikram Trivedi & Ms. Anuparna Bordoioi, Learned Advocates
For Respondents/Defendant: Mr. Rahul Jain, Learned Advocate
ORDER
Hon’ble Justice Sh. A.S. Bopanna

Though the issue of maintainability is raised in the instant petition, considering that a detailed
consideration on merits is not required herein, the said question is left open to be considered in an
appropriate petition if the question of law in that regard arises for consideration.
2. The petitioner is before this Court assailing the order at Annexure -A' to the petition. The
grievance of the petitioner is that the order admitting the petition is passed without providing opportunity
to the petitioner and without hearing the petitioner herein in that regard.
3. The respondents have filed their additional counter/objections. Though the contentions as put
forth is referred to therein the respondents in the light of having a consideration of the matter including
the question relating to admission of the petition before the National Company Law Tribunal (for short
`NCLT') have conceded that the order impugned at Annexure -A' be set-aside and the NCLT be directed
to reconsider the matter afresh by hearing the learned counsel for both the parties before considering the
admission of the petition before it.
3. Apart from the fact that the respondents have conceded to it, since it would also resolve the issue
that is raised in the instant petition, without affecting the right of the parties, and would also avoid
protraction of the litigation at this stage itself, the order at Annexure 'A' is set-aside.
The NCLT is directed to provide opportunity of hearing to the learned counsel for all the parties
before it and thereafter consider the petition in accordance with law including on the issue relating to the
admission of the petition before it.
All contentions are left open to be considered therein which shall be considered in an expeditious
manner.
16
Order Passed in June 2017
Petition is accordingly disposed of.
17
Order Passed in July 2017
Appellants: Lokhandwala Kataria Construction Private Limited

Vs.
Respondent: Nisus Finance And Investment Managers LLP
Judges/Coram:
Hon’ble Justice Sh. Rohinton Fali Nariman & Sh. Sanjay Kishan Kaul
Counsels:
For Appellant/Petitioner/Plaintiff:
For Respondents/Defendant:
ORDER
1) Heard the learned Senior Counsel appearing for the parties.
2) The present appeal raises an interesting question as to whether, in view of Rule 8 of the I&B
(Application to Adjudicating Authority) Rules, 2016, the National Company Law Appellate Tribunal
could utilize the inherent power recognized by Rule 11 of the National Company Law Appellate Tribunal
Rules, 2016 to allow a compromise before it by the parties after admission of the matter.
3) By the impugned order dated 13.07.2017, the National Company Law Appellate Tribunal was of
the view that the inherent power could not be so utilized. According to us, prima facie this appears to be
the correct position in law.
4) However, since all the parties are before us today, we utilize our powers under Article 142 of the
Constitution of India to put a quietus to the matter before us. We take the Consent Terms dated
28.06.2017 and 12.07.2017 entered into between the parties on record and also record the undertaking of
the appellant before us to abide by the Consent Terms in toto. The appellant also undertakes to pay the
sums due on or before the dates mentioned in the aforesaid Consent Terms.
5) With this, the present appeal is disposed of.

6) In view of our order made today, nothing further survives in the aforesaid appeal.
18
Appellants: Mothers Pride Dairy India Private Limited

Vs.
Respondent: Portrait Advertising and Marketing Private Limited
Judges/Coram:
Hon’ble Justice Sh. Dipak Misra & Sh. A.M. Khanwilkar
Counsels:
ORDER
Heard Mr. Mukul Rohatgi, learned senior counsel for the appellant and Mr. Archit Upadhyay,
learned counsel for the respondent.
Though we find that the order passed by the National Company Law Appellate Tribunal is
correct, yet we think it is a fit case to exercise power under Article 142 of the Constitution and accept the
settlement that has been entered into between the parties. As we are accepting the settlement, the
proceeding pending before the National Company Law Tribunal, stands disposed of.
The appeal is disposed of accordingly. There shall be no order as to costs.
COURT NO. 2
Appellants: Mothers Pride Dairy India Private Limited

Vs.
Respondent: Portrait Advertising and Marketing Private Limited
19
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Mukul Rohatgi, Senior Advocate & Mr. Deepak Biswas, Learned
Advocate & Ms. Sonam Gupta, AOR
For Respondents/Defendant: Mr. Archit Upadhyay, Learned Advocate
ORDER
The appeal is disposed of in terms of the signed order.
20
Order Passed in August 2017
Appellants: Neelkanth Township And Construction Pvt. Ltd.

Vs.
Respondent: Urban Infrastructure Trustee Ltd.
Judges/Coram:
Counsels:
ORDER
Heard the learned Senior Counsel appearing for the parties.
We do not find any reason to interfere with the order dated 11.08.2017 passed by the National
Company Law Appellate Tribunal, New Delhi.
In view of this, we find no merit in the appeal.
Accordingly, the appeal is dismissed keeping the question of law viz. whether the Limitation Act
would apply to this proceeding, open.
COURT NO. 13
Appellants: Neelkanth Township And Construction Pvt. Ltd.

Vs.
21
Judges/Coram:
Counsels:
ORDER
The appeal is dismissed keeping the question of law viz. whether the Limitation Act would apply
to this proceeding, open in terms of the signed order.
22
Civil Appeal Nos. 8337-8338 of 2017
Appellants: Innoventive Industries Ltd.

Vs.
Respondent: ICICI Bank and Ors.
Judges/Coram:
Hon’ble Sh. Rohinton Fali Nariman and Sh. Sanjay Kishan Kaul, JJ.
Counsels:
JUDGMENT
Hon’ble Sh. Rohinton Fali Nariman, J.
1. The present case raises interesting questions which arise under the Insolvency and Bankruptcy Code of
2016 (hereinafter referred to as the Code), which received the Presidential assent on 28th May, 2016, but
which provisions were brought into force only in November-December, 2016.
2. The Appellant before us is a multi-product company catering to applications in diverse sectors. From
August, 2012, owing to labour problems, the Appellant began to suffer losses. Since the Appellant was
not able to service the financial assistance given to it by 19 banking entities, which had extended credit to
the Appellant, the Appellant itself proposed corporate debt restructuring. The 19 entities formed a
consortium, led by the Central Bank of India, and by a joint meeting dated 22nd February, 2014, it was
decided that a CDR resolution plan would be approved. The details of this plan are not immediately
relevant to the issues to be decided in the present case. The lenders, upon perusing the terms of the CDR
proposal given by the Appellant and a techno-economic viability study, (which was done at the instance
of the lenders), a CDR empowered group admitted the restructuring proposal vide minutes of a meeting
dated 23rd May, 2014. The Joint Lenders Forum at a meeting of 24th June, 2014 finally approved the
restructuring plan.
3. In terms of the restructuring plan, a master restructuring agreement was entered into on 9th September,
2014 (hereinafter referred to as the MRA), by which funds were to be infused by the creditors, and certain
23
obligations were to be met by the debtors. The aforesaid restructuring plan was implementable over a
period of 2 years.
4. Suffice it to say that both sides have copiously referred to various letters which passed between the
parties and various minutes of meetings. Ultimately, an application was made on 7th December, 2016 by
ICICI Bank Ltd., in which it was stated that the Appellant being a defaulter within the meaning of the
Code, the insolvency resolution process ought to be set in motion. To this application, a reply was filed by
means of an interim application on behalf of the Appellant dated 17th December, 2016, in which the
Appellant claimed that there was no debt legally due inasmuch as vide two notifications dated 22nd July,
2015 and 18th July, 2016, both under the Maharashtra Relief Undertakings (Special Provisions Act), 1958
(hereinafter referred to as the Maharashtra Act), all liabilities of the Appellant, except certain liabilities
with which we are not concerned, and remedies for enforcement thereof were temporarily suspended for a
period of one year in the first instance under the first notification of 22nd July, 2015 and Anr. period of
one year under the second notification of 18th July, 2016. It may be added that this was the only point
raised on behalf of the Appellant in order to stave off the admission of the ICICI Bank application made
before the NCLT. We are informed that hearings took place in the matter on 22nd and 23rd December,
2016, after which the NCLT adjourned the case to 16th January, 2017.
5. On this date, a second application was filed by the Appellant in which a different plea was taken. This
time, the Appellant pleaded that owing to non-release of funds under the MRA, the Appellant was unable
to pay back its debts as envisaged. Further, it repaid only some amounts to five lenders, who, according to
the Appellant, complied with their obligations under the MRA. In the aforesaid circumstances, it was
pleaded that no default was committed by it.
6. By an order dated 17th January, 2017, the NCLT held that the Code would prevail against the
Maharashtra Act in view of the non-obstante Clause in Section 238 of the Code. It, therefore, held that the
Parliamentary statute would prevail over the State statute and this being so, it is obvious that the corporate
debtor had defaulted in making payments, as per the evidence placed by the financial creditors. Hence,
the application was admitted and a moratorium was declared.
7. By a separate order dated 23rd January, 2017 passed by the NCLT, in which a clarification application
was dismissed, it was held that the second application of 16th January, 2017 was raised belatedly and
would not be maintainable for two reasons - (1) because no audience has been given to the corporate
debtor in the Tribunal by the Code; and (2) the corporate debtor has not taken the plea contained in the
24
second application in the earlier application. This was because a limited timeframe of only 14 days was
available under the Code from the date of filing of the creditors' petition, to decide the application.
8. From the aforesaid order, an appeal was carried to the NCLAT, which met with the same fate. The
NCLAT, however, held that the Code and the Maharashtra Act operate in different fields and, therefore,
are not repugnant to each other. Having recorded this, however, the NCLAT went on to hold that the
Appellant cannot derive any advantage from the Maharashtra Act to stall the insolvency resolution
process Under Section 7 of the Code. It was further held as under:
80. Insofar as Master Restructuring Agreement dated 8th September 2014 is concerned the
Appellant cannot take advantage of the same. Even if it is presumed that fresh agreement came
into existence, it does not absolve the Appellant from paying the previous debts which are due to
the financial creditor.
81. The Tribunal has noticed that there is a failure on the part of Appellant to pay debts. The
Financial Creditor has attached different records in support of default of payment. Apart from that
it is not supposed to go beyond the question to see whether there is a failure on fulfilment of
obligation by the financial creditor under one or other agreement, including the Master
Restructuring Agreement. In that view of the matter, the Appellant cannot derive any advantage
of the Master Restructuring Agreement dated 8th September, 2014.
9. Dr. A.M. Singhvi, learned Senior Advocate, who appeared on behalf of the Appellants, has argued
before us that the Appellate Tribunal, in fact, decided in his favour by holding the two Acts to be not
repugnant to each other, but then went on to say that the Maharashtra Act will not apply. According to
him, the Maharashtra Act would apply for the reason that the moratorium imposed by the two
notifications under the Maharashtra Act continued in force at the time when the insolvency application
was made by ICICI and that, therefore, the Code would not apply. According to him, the debt was kept in
temporary abeyance, after which the Code would apply. He argued that he had a vested right under the
Maharashtra Act and that the debt was only suspended temporarily. According to him, no repugnancy
exists between the two statutes Under Article 254 of the Constitution and each operates in its own field.
The Maharashtra Act provides for relief against unemployment, whereas the Code is a liquidation
process. Further, the Code is made under Entry 9, List III of the Seventh Schedule to the Constitution,
whereas the Maharashtra Act, which is a measure for unemployment relief, is made under Entry 23, List
III of the Seventh Schedule. This being so, as correctly held by the Appellate Tribunal, the two Acts
operated in different spheres and, therefore, do not clash. Dr. Singhvi mounted a severe attack on the
25
Appellate Tribunal by stating that the Tribunal ought to have gone into the MRA, in which case it would
have discovered that there was no debt due by the Appellant, inasmuch as the funds that were to be
disbursed by the creditors to the Appellant were never disbursed, as a result of which the corporate
restructuring package never took off from the ground. He further argued that amounts due under the MRA
had not yet fructified and for that reason also the application was premature.
10. Shri H.N. Salve, learned Senior Advocate, appearing on behalf of the Respondents, took us through
the Code in some detail and argued before us that the object of this Code is that the interests of all
stakeholders, namely shareholders, creditors and workmen, are to be balanced and the old notion of a sick
management which cannot pay its financial debts continuing nevertheless in the management seat has
been debunked by the Code. The entire object of the Code would be stultified if we were to heed Dr.
Singhvi's submission, as according to Shri Salve, when an application is made Under Section 7 of the
Code, the only limited scope of argument before the NCLT by a corporate debtor is that the debt is not
due for any reason. According to Shri Salve, the first application in reply to the corporate debtor was, in
fact, the only arguable point in the case which has been concurrently turned down. According to Shri
Salve, after an interim resolution professional has been appointed and a moratorium declared, the
directors of the company are no longer in management and could not, therefore, maintain the appeal
before us. Also, according to Shri Salve, the NCLT and NCLAT were both right in refusing to go into the
plea that, since the financial creditors had not pumped in funds, the corporate debtor could not pay back
its debts in accordance with the MRA, as this plea was an after-thought which could easily have been
taken in the first reply. Further, in order to satisfy our conscience, he has taken us through the MRA to
some detail to show us that the Appellant would emerge as a defaulter under the MRA in any case. He has
also argued that it is obvious that the two Acts are repugnant to each other, inasmuch as they cannot stand
together. Under the Maharashtra Act, a limited moratorium is imposed after which the State Government
may take over management of the company. Under the Code, however, a full moratorium is to
automatically attach the moment an application is admitted by the NCLT, and management of the
company is then taken over by an interim resolution professional. Obviously, the moratorium under the
Maharashtra Act and the management taken over by the State Government cannot stand together with the
moratorium imposed under the Central Act and takeover of the management by the interim resolution
professional. According to him, therefore, no case whatsoever is made out and the appeal should be
dismissed, both on grounds of maintainability and on merits.
11. Having heard learned Counsel for both the parties, we find substance in the plea taken by Shri Salve
that the present appeal at the behest of the erstwhile directors of the Appellant is not maintainable. Dr.
26
Singhvi stated that this is a technical point and he could move an application to amend the cause title
stating that the erstwhile directors do not represent the company, but are filing the appeal as persons
aggrieved by the impugned order as their management right of the company has been taken away and as
they are otherwise affected as shareholders of the company. According to us, once an insolvency
professional is appointed to manage the company, the erstwhile directors who are no longer in
management, obviously cannot maintain an appeal on behalf of the company. In the present case, the
company is the sole Appellant. This being the case, the present appeal is obviously not maintainable.
However, we are not inclined to dismiss the appeal on this score alone. Having heard both the learned
Counsel at some length, and because this is the very first application that has been moved under the Code,
we thought it necessary to deliver a detailed judgment so that all Courts and Tribunals may take notice of
a paradigm shift in the law. Entrenched managements are no longer allowed to continue in management if
they cannot pay their debts.
12. The Insolvency and Bankruptcy Code, 2016 has been passed after great deliberation and pursuant to
various committee reports, the most important of which is the report of the Bankruptcy Law Reforms
Committee of November, 2015. The Statement of Objects and Reasons of the Code reads as under:
STATEMENT OF OBJECTS AND REASONS
There is no single law in India that deals with insolvency and bankruptcy. Provisions relating to
insolvency and bankruptcy for companies can be found in the Sick Industrial Companies (Special
Provisions) Act, 1985, the Recovery of Debt Due to Banks and Financial Institutions Act, 1993, the
Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 and
the Companies Act, 2013. These statutes provide for creation of multiple fora such as Board of Industrial
and Financial Reconstruction (BIFR), Debt Recovery Tribunal (DRT) and National Company Law
Tribunal (NCLT) and their respective Appellate Tribunals. Liquidation of companies is handled by the
High Courts. Individual bankruptcy and insolvency is dealt with under the Presidency Towns Insolvency
Act, 1909, and the Provincial Insolvency Act, 1920 and is dealt with by the Courts. The existing
framework for insolvency and bankruptcy is inadequate, ineffective and results in undue delays in
resolution, therefore, the proposed legislation.
2. The objective of the Insolvency and Bankruptcy Code, 2015 is to consolidate and amend the
laws relating to reorganization and insolvency resolution of corporate persons, partnership firms
and individuals in a time bound manner for maximization of value of assets of such persons, to
promote entrepreneurship, availability of credit and balance the interests of all the stakeholders
27
including alteration in the priority of payment of government dues and to establish an Insolvency
and Bankruptcy Fund, and matters connected therewith or incidental thereto. An effective legal
framework for timely resolution of insolvency and bankruptcy would support development of
credit markets and encourage entrepreneurship. It would also improve Ease of Doing Business,
and facilitate more investments leading to higher economic growth and development.
3. The Code seeks to provide for designating the NCLT and DRT as the Adjudicating Authorities
for corporate persons and firms and individuals, respectively, for resolution of insolvency,
liquidation and bankruptcy. The Code separates commercial aspects of insolvency and
bankruptcy proceedings from judicial aspects. The Code also seeks to provide for establishment
of the Insolvency and Bankruptcy Board of India (Board) for Regulation of insolvency
professionals, insolvency professional agencies and information utilities. Till the Board is
established, the Central Government shall exercise all powers of the Board or designate any
financial sector regulator to exercise the powers and functions of the Board. Insolvency
professionals will assist in completion of insolvency resolution, liquidation and bankruptcy
proceedings envisaged in the Code. Information Utilities would collect, collate, authenticate and
disseminate financial information to facilitate such proceedings. The Code also proposes to
establish a fund to be called the Insolvency and Bankruptcy Fund of India for the purposes
specified in the Code.
4. The Code seeks to provide for amendments in the Indian Partnership Act, 1932, the Central
Excise Act, 1944, Customs Act, 1962, Income-Tax Act, 1961, the Recovery of Debts Due to
Banks and Financial Institutions Act, 1993, the Finance Act, 1994, the Securitisation and
Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, the Sick
Industrial Companies (Special Provisions) Repeal Act, 2003, the Payment and Settlement
Systems Act, 2007, the Limited Liability Partnership Act, 2008, and the Companies Act, 2013.
5. The Code seeks to achieve the above objectives.
(Emphasis Supplied)
13. One of the important objectives of the Code is to bring the insolvency law in India under a single
unified umbrella with the object of speeding up of the insolvency process. As per the data available with
the World Bank in 2016, insolvency resolution in India took 4.3 years on an average, which was much
higher when compared with the United Kingdom (1 year), USA (1.5 years) and South Africa (2 years).
28
The World Bank's Ease of Doing Business Index, 2015, ranked India as country number 135 out of 190
countries on the ease of resolving insolvency based on various indicia.
14. Other nations are have marched ahead much before us. For example, the USA has adopted the
Bankruptcy Reform Act of 1978, which has since been codified in Title XI of the United States Code. The
US Code continues to favour the debtor. In a reorganization case under Chapter 11, the debtor and its
existing management ordinarily continue to operate the business as a "debtor in possession" - See USC
11, Section 1107-1108. The Court can appoint a trustee to take over management of the debtor's affairs
only for "cause" which includes fraud, dishonesty or gross mismanagement of the affairs of the debtor -
See USC 11, Section 1104. Having regard to the aforesaid grounds, such appointments are rare. Creditors
are not permitted a direct role in operating the on-going business operations of the debtor. However, the
United States Trustee is to appoint a committee of creditors to monitor the debtor's ongoing operations. A
moratorium is provided, which gives the debtor a breathing spell in which he is to seek to reorganize his
business. While a Chapter 11 case is pending, the debtor only needs to pay post petition wages, expenses
etc. In the meanwhile, the debtor can work on permanent financial resolution of its pre-petition debts. It is
only when this does not work that the bankruptcy process is then put into effect.
15. The UK Law, on the other hand, is governed by the Insolvency Act of 1986 which has served as a
model for the present Code. While piloting the Code in Parliament, Shri Arun Jaitley, learned Finance
Minister, stated on the floor of the House:
SHRI ARUN JAITLEY: One of the differences between your Chapter 11 and this is that in Chapter 11,
the debtor continues to be in possession. Here the creditors will be in possession. Now, the SICA is being
phased out, and I will tell you one of the reasons why SICA didn't function. Under SICA, the predominant
experience has been this, and that is why a decision was taken way back in 2002 to repeal SICA when the
original Company Law amendments were passed. Now since they were challenged before the Supreme
Court, it didn't come into operation. Now, the object behind SICA was revival of sick companies. But not
too many revivals took place. But what happened in the process was that a protective wall was created
under SICA that once you enter the BIFR, nobody can recover money from you. So, that non-performing
investment became more non-performing because the companies were not being revived and the banks
were also unable to pursue any demand as far as those sick companies were concerned, and therefore,
SICA runs contrary to this whole concept of exit that if a particular management is not in a position to run
a company, then instead of the company closing down under this management, a more liquid and a
professional management must come and then save this company. That is the whole object. And if
29
nobody can save it, rather than allowing it to be squandered, the assets must be distributed -- as the Joint
Committee has decided -- in accordance with the waterfall mechanism which they have created.
(Emphasis Supplied)
16. At this stage, it is important to set out the important paragraphs contained in the report of the
Bankruptcy Law Reforms Committee of November, 2015, as these excerpts give us a good insight into
why the Code was enacted and the purpose for which it was enacted:
As Chairman of the Committee on bankruptcy law reforms, I have had the privilege of overseeing the
design and drafting of a new legal framework for resolving matters of insolvency and bankruptcy. This is
a matter of critical importance: India is one of the youngest republics in the world, with a high
concentration of the most dynamic entrepreneurs. Yet these game changers and growth drivers are
crippled by an environment that takes some of the longest times and highest costs by world standards to
resolve any problems that arise while repaying dues on debt. This problem leads to grave consequences:
India has some of the lowest credit compared to the size of the economy. This is a troublesome state to be
in, particularly for a young emerging economy with the entrepreneurial dynamism of India. Such
dynamism not only needs reforms, but reforms done urgently.
xxx xxx xxx xxx
The limited liability company is a contract between equity and debt. As long as debt obligations are met,
equity owners have complete control, and creditors have no say in how the business is run. When default
takes place, control is supposed to transfer to the creditors equity owners have no say.
This is not how companies in India work today. For many decades, creditors have had low power when
faced with default. Promoters stay in control of the company even after default. Only one element of a
bankruptcy framework has been put into place: to a limited extent, banks are able to repossess fixed assets
which were pledged with them.
While the existing framework for secured credit has given rights to banks, some of the most important
lenders in society are not banks. They are the dispersed mass of households and financial firms who buy
corporate bonds. The lack of power in the hands of a bondholder has been one (though not the only)
reason why the corporate bond market has not worked. This, in turn, has far reaching ramifications such
as the difficulties of infrastructure financing.
30
Under these conditions, the recovery rates obtained in India are among the lowest in the world. When
default takes place, broadly speaking, lenders seem to recover 20% of the value of debt, on an NPV basis.
When creditors know that they have weak rights resulting in a low recovery rate, they are averse to lend.
Hence, lending in India is concentrated in a few large companies that have a low probability of failure.
Further, secured credit dominates, as creditors rights are partially present only in this case. Lenders have
an emphasis on secured credit. In this case, credit analysis is relatively easy: It only requires taking a view
on the market value of the collateral. As a consequence, credit analysis as a sophisticated analysis of the
business prospects of a firm has shriveled.
Both these phenomena are unsatisfactory. In many settings, debt is an efficient tool for corporate finance
there needs to be much more debt in the financing of Indian firms. E.g. long-dated corporate bonds are
essential for most infrastructure projects. The lack of lending without collateral, and the lack of lending
based on the prospects of the firm, has emphasised debt financing of asset-heavy industries. However,
some of the most important industries for India's rapid growth are those which are more labour intensive.
These industries have been starved of credit.
xxx xxx xxx xxx
The key economic question in the bankruptcy process
When a firm (referred to as the corporate debtor in the draft law) defaults, the question arises about what
is to be done. Many possibilities can be envisioned. One possibility is to take the firm into liquidation.
Another possibility is to negotiate a debt restructuring, where the creditors accept a reduction of debt on
an NPV basis, and hope that the negotiated value exceeds the liquidation value. Another possibility is to
sell the firm as a going concern and use the proceeds to pay creditors. Many hybrid structures of these
broad categories can be envisioned.
The Committee believes that there is only one correct forum for evaluating such possibilities, and making
a decision: a creditors committee, where all financial creditors have votes in proportion to the magnitude
of debt that they hold. In the past, laws in India have brought arms of the government (legislature,
executive or judiciary) into this question. This has been strictly avoided by the Committee. The
appropriate disposition of a defaulting firm is a business decision, and only the creditors should make it.
xxx xxx xxx xxx
31
Speed is of essence
Speed is of essence for the working of the bankruptcy code, for two reasons. First, while the 'calm period'
can help keep an organisation afloat, without the full clarity of ownership and control, significant
decisions cannot be made. Without effective leadership, the firm will tend to atrophy and fail. The longer
the delay, the more likely it is that liquidation will be the only answer. Second, the liquidation value tends
to go down with time as many assets suffer from a high economic rate of depreciation.
From the viewpoint of creditors, a good realisation can generally be obtained if the firm is sold as a going
concern. Hence, when delays induce liquidation, there is value destruction. Further, even in liquidation,
the realisation is lower when there are delays. Hence, delays cause value destruction. Thus, achieving a
high recovery rate is primarily about identifying and combating the sources of delay.
xxx xxx xxx xxx
The role that insolvency and bankruptcy plays in debt financing
Creditors put money into debt investments today in return for the promise of fixed future cash flows. But
the returns expected on these investments are still uncertain because at the time of repayment, the seller
(debtor) may make repayments as promised, or he may default and does not make the payment. When this
happens, the debtor is considered insolvent. Other than cases of outright fraud, the debtor may be
insolvent because of
Financial failure - a persistent mismatch between payments by the enterprise and receivables into the
enterprise, even though the business model is generating revenues, or
Business failure - which is a breakdown in the business model of the enterprise, and it is unable to
generate sufficient revenues to meet payments.
Often, an enterprise may be a successful business model while still failing to repay its creditors. A sound
bankruptcy process is one that helps creditors and debtors realise and agree on whether the entity is facing
financial failure and business failure. This is important to allow both parties to realise the maximum value
of the business in the insolvency.
xxx xxx xxx xxx
32
Control of a company is not divine right. When a firm defaults on its debt, control of the company should
shift to the creditors. In the absence of swift and decisive mechanisms for achieving this, management
teams and shareholders retain control after default. Bankruptcy law must address this.
xxx xxx xxx xxx
Objectives
The Committee set the following as objectives desired from implementing a new Code to resolve
insolvency and bankruptcy:
1. Low time to resolution.
2. Low loss in recovery.
3. Higher levels of debt financing across a wide variety of debt instruments.
The performance of the new Code in implementation will be based on measures of the above outcomes.
Principles driving the design
The Committee chose the following principles to design the new insolvency and bankruptcy resolution
framework:
I. The Code will facilitate the assessment of viability of the enterprise at a very early stage.
1. The law must explicitly state that the viability of the enterprise is a matter of business, and that matters
of business can only be negotiated between creditors and debtor. While viability is assessed as a
negotiation between creditors and debtor, the final decision has to be an agreement among creditors who
are the financiers willing to bear the loss in the insolvency.
2. The legislature and the courts must control the process of resolution, but not be burdened to make
business decisions.
3. The law must set up a calm period for insolvency resolution where the debtor can negotiate in the
assessment of viability without fear of debt recovery enforcement by creditors.
33
4. The law must appoint a resolution professional as the manager of the resolution period, so that the
creditors can negotiate the assessment of viability with the confidence that the debtors will not take any
action to erode the value of the enterprise. The professional will have the power and responsibility to
monitor and manage the operations and assets of the enterprise. The professional will manage the
resolution process of negotiation to ensure balance of power between the creditors and debtor, and protect
the rights of all creditors. The professional will ensure the reduction of asymmetry of information
between creditors and debtor in the resolution process.
II. The Code will enable symmetry of information between creditors and debtors.
5. The law must ensure that information that is essential for the insolvency and the bankruptcy resolution
process is created and available when it is required.
6. The law must ensure that access to this information is made available to all creditors to the enterprise,
either directly or through the regulated professional.
7. The law must enable access to this information to third parties who can participate in the resolution
process, through the regulated professional.
III. The Code will ensure a time-bound process to better preserve economic value.
8. The law must ensure that time value of money is preserved, and that delaying tactics in these
negotiations will not extend the time set for negotiations at the start.
IV. The Code will ensure a collective process.
9. The law must ensure that all key stakeholders will participate to collectively assess viability. The law
must ensure that all creditors who have the capability and the willingness to restructure their liabilities
must be part of the negotiation process. The liabilities of all creditors who are not part of the negotiation
process must also be met in any negotiated solution.
V. The Code will respect the rights of all creditors equally.
10. The law must be impartial to the type of creditor in counting their weight in the vote on the final
solution in resolving insolvency.
34
VI. The Code must ensure that, when the negotiations fail to establish viability, the outcome of
bankruptcy must be binding.
11. The law must order the liquidation of an enterprise which has been found unviable. This outcome of
the negotiations should be protected against all appeals other than for very exceptional cases.
VII. The Code must ensure clarity of priority, and that the rights of all stakeholders are upheld in
resolving bankruptcy.
12. The law must clearly lay out the priority of distributions in bankruptcy to all stakeholders. The
priority must be designed so as to incentivise all stakeholders to participate in the cycle of building
enterprises with confidence.
13. While the law must incentivise collective action in resolving bankruptcy, there must be a greater
flexibility to allow individual action in resolution and recovery during bankruptcy compared with the
phase of insolvency resolution.
xxx xxx xxx xxx
An application from a creditor must have a record of the liability and evidence of the entity having
defaulted on payments. The Committee recommends different documentation requirements depending
upon the type of creditor, either financial or operational. A financial creditor must submit a record of
default by the entity as recorded in a registered Information Utility (referred to as the IU) as described in
Section 4.3 (or on the basis of other evidence). The default can be to any financial creditor to the entity,
and not restricted to the creditor who triggers the IRP. The Code requires that the financial creditor
propose a registered Insolvency Professional to manage the IRP. Operational creditors must present an
"undisputed bill" which may be filed at a registered information utility as requirement to trigger the IRP.
The Code does not require the operational creditor to propose a registered Insolvency Professional to
manage the IRP. If a professional is not proposed by the operational creditor, and the IRP is successfully
triggered, the Code requires the Adjudicator to approach the Regulator for a registered Insolvency
Professional for the case.
In case the financial creditor triggers the IRP, the Adjudicator verifies the default from the information
utility (if the default has been filed with an information utility, tit such be incontrovertible evidence of the
existence of a default) or otherwise confirms the existence of default through the additional evidence
adduced by the financial creditor, and puts forward the proposal for the RP to the Regulator for
35
validation. In case the operational creditor triggers the IRP, the Adjudicator verifies the documentation.
Simultaneously, the Adjudicator requests the Regulator for an RP. If either step cannot be verified, or the
process verification exceeds the specified amount of time, then the Adjudicator rejects the application,
with a reasoned order for the rejection. The order rejecting the application cannot be appealed against.
Instead, application has to be made afresh. Once the documents are verified within a specified amount of
time, the Adjudicator will trigger the IRP and register the IRP by issuing an order. The order will contain
a unique ID that will be issued for the case by which all reports and records that are generated during the
IRP will be stored, and accessed.
xxx xxx xxx xxx
Steps at the start of the IRP In order to ensure that the resolution can proceed in an orderly manner, it is
important for the Adjudicator to put in place an environment of a "calm period" with a definite time of
closure, that will assure both the debtor and creditors of a time-bound and level field in their negotiations
to assess viability. The first steps that the Adjudicator takes is put in place an order for a moratorium on
debt recovery actions and any existing or new law suits being filed in other courts, a public announcement
to collect claims of liabilities, the appointment of an interim RP and the creation of a creditor committee.
(Emphasis Supplied)
17. The stage is now set for an in-depth examination of Part II of the Code, with which we are
immediately concerned in this case.
18. There are two sets of definition sections. They are rather involved, the dovetailing of one definition
going into another. Section 3 defines various terms as follows:
Section 3(6) "claim" means--
(a) a right to payment, whether or not such right is reduced to judgment, fixed, disputed, undisputed,
legal, equitable, secured or unsecured;
(b) right to remedy for breach of contract under any law for the time being in force, if such breach gives
rise to a right to payment, whether or not such right is reduced to judgment, fixed, matured, unmatured,
disputed, undisputed, secured or unsecured;
36
Section 3(10) "creditor" means any person to whom a debt is owed and includes a financial creditor, an
operational creditor, a secured creditor, an unsecured creditor and a decree-holder;
Section 3(11) "debt" means a liability or obligation in respect of a claim which is due from any person
and includes a financial debt and operational debt;
Section 3(12) "default" means non-payment of debt when whole or any part or instalment of the amount
of debt has become due and payable and is not repaid by the debtor or the corporate debtor, as the case
may be;
Section 3(13) "financial information", in relation to a person, means one or more of the following
categories of information, namely:
(a) records of the debt of the person;
(b) records of liabilities when the person is solvent;
(c) records of assets of person over which security interest has been created;
(d) records, if any, of instances of default by the person against any debt;
(e) records of the balance sheet and cash-flow statements of the person
and
(f) such other information as may be specified.
Section 3(19) "insolvency professional" means a person enrolled Under Section 206 with an insolvency
professional agency as its member and registered with the Board as an insolvency professional Under
Section 207;
(Emphasis Supplied)
19. Certain definitions contained in Section 5 are also important from our point of view. Section 5(7), (8),
(12), (14), (20) and (27) read as under:
Section 5(7) "financial creditor" means any person to whom a financial debt is owed and includes a
person to whom such debt has been legally assigned or transferred to;
37
Section 5(8) "financial debt" means a debt along with interest, if any, which is disbursed against the
consideration for the time value of money and includes--
(a) money borrowed against the payment of interest;
(b) any amount raised by acceptance under any acceptance credit facility or its de-materialised equivalent;
(c) any amount raised pursuant to any note purchase facility or the issue of bonds, notes, debentures, loan
stock or any similar instrument;
(d) the amount of any liability in respect of any lease or hire purchase contract which is deemed as a
finance or capital lease under the Indian Accounting Standards or such other accounting standards as may
be prescribed;
(e) receivables sold or discounted other than any receivables sold on nonrecourse basis;
(f) any amount raised under any other transaction, including any forward sale or purchase agreement,
having the commercial effect of a borrowing;
(g) any derivative transaction entered into in connection with protection against or benefit from
fluctuation in any rate or price and for calculating the value of any derivative transaction, only the market
value of such transaction shall be taken into account;
(h) any counter-indemnity obligation in respect of a guarantee, indemnity, bond, documentary letter of
credit or any other instrument issued by a bank or financial institution;
(i) the amount of any liability in respect of any of the guarantee or indemnity for any of the items referred
to in Sub-clauses (a) to (h) of this clause;
Section 5(12) "insolvency commencement date" means the date of admission of an application for
initiating corporate insolvency resolution process by the Adjudicating Authority Under Sections 7, 9 or
Section 10, as the case may be;
Section 5(14) "insolvency resolution process period" means the period of one hundred and eighty days
beginning from the insolvency commencement date and ending on one hundred and eightieth day;
38
Section 5(20) "operational creditor" means a person to whom an operational debt is owed and includes
any person to whom such debt has been legally assigned or transferred;
Section 5(27) "resolution professional", for the purposes of this Part, means an insolvency professional
appointed to conduct the corporate insolvency resolution process and includes an interim resolution
professional;
20. Under Section 4 of the Code, Part II applies to matters relating to the insolvency and liquidation of
corporate debtors, where the minimum amount of default is rupees one lakh. Sections 6, 7 and 8 form part
of one scheme and are very important for the decision in the present case. They read as follows:
Section 6. Persons who may initiate corporate insolvency resolution process. - Where any corporate
debtor commits a default, a financial creditor, an operational creditor or the corporate debtor itself may
initiate corporate insolvency resolution process in respect of such corporate debtor in the manner as
provided under this Chapter.
Section 7. Initiation of corporate insolvency resolution process by financial creditor. - (1) A financial
creditor either by itself or jointly with other financial creditors may file an application for initiating
corporate insolvency resolution process against a corporate debtor before the Adjudicating Authority
when a default has occurred.
Explanation.--For the purposes of this Sub-section, a default includes a default in respect of a financial
debt owed not only to the applicant financial creditor but to any other financial creditor of the corporate
debtor.
(2) The financial creditor shall make an application Under Sub-section (1) in such form and manner and
accompanied with such fee as may be prescribed.
(3) The financial creditor shall, along with the application furnish--
(a) record of the default recorded with the information utility or such other record or evidence of default
as may be specified;
(b) the name of the resolution professional proposed to act as an interim resolution professional
and
39
(c) any other information as may be specified by the Board.
(4) The Adjudicating Authority shall, within fourteen days of the receipt of the application Under Sub-
section (2), ascertain the existence of a default from the records of an information utility or on the basis of
other evidence furnished by the financial creditor under Sub-section (3).
(5) Where the Adjudicating Authority is satisfied that--
(a) a default has occurred and the application Under Sub-section (2) is complete, and there is no
disciplinary proceedings pending against the proposed resolution professional, it may, by order, admit
such application
or
(b) default has not occurred or the application Under Sub-section (2) is incomplete or any disciplinary
proceeding is pending against the proposed resolution professional, it may, by order, reject such
application:
Provided that the Adjudicating Authority shall, before rejecting the application under Clause (b) of Sub-
section (5), give a notice to the applicant to rectify the defect in his application within seven days of
receipt of such notice from the Adjudicating Authority.
(6) The corporate insolvency resolution process shall commence from the date of admission of the
application Under Sub-section (5).
(7) The Adjudicating Authority shall communicate--
(a) the order under Clause (a) of Sub-section (5) to the financial creditor and the corporate debtor;
(b) the order under Clause (b) of Sub-section (5) to the financial creditor, within seven days of admission
or rejection of such application, as the case may be.
Section 8. Insolvency resolution by operational creditor.- (1) An operational creditor may, on the
occurrence of a default, deliver a demand notice of unpaid operational debtor copy of an invoice
demanding payment of the amount involved in the default to the corporate debtor in such form and
manner as may be prescribed.
40
(2) The corporate debtor shall, within a period of ten days of the receipt of the demand notice or copy of
the invoice mentioned in Sub-section (1) bring to the notice of the operational creditor--
(a) existence of a dispute, if any, and record of the pendency of the suit or arbitration proceedings filed
before the receipt of such notice or invoice in relation to such dispute;
(b) the repayment of unpaid operational debt--
(i) by sending an attested copy of the record of electronic transfer of the unpaid amount from the bank
account of the corporate debtor
or (ii) by sending an attested copy of record that the operational creditor has encashed a cheque issued by
the corporate debtor.
Explanation.--For the purposes of this section, a "demand notice" means a notice served by an operational
creditor to the corporate debtor demanding repayment of the operational debt in respect of which the
default has occurred.
21. Section 12 provides for a time limit for completion of the insolvency resolution process and reads as
follows:
Section 12. Time-limit for completion of insolvency resolution process.- (1) Subject to Sub-section (2),
the corporate insolvency resolution process shall be completed within a period of one hundred and eighty
days from the date of admission of the application to initiate such process.
(2) The resolution professional shall file an application to the Adjudicating Authority to extend the period
of the corporate insolvency resolution process beyond one hundred and eighty days, if instructed to do so
by a resolution passed at a meeting of the committee of creditors by a vote of seventy-five per cent of the
voting shares.
(3) On receipt of an application Under Sub-section (2), if the Adjudicating Authority is satisfied that the
subject matter of the case is such that corporate insolvency resolution process cannot be completed within
one hundred and eighty days, it may by order extend the duration of such process beyond one hundred
and eighty days by such further period as it thinks fit, but not exceeding ninety days:
41
Provided that any extension of the period of corporate insolvency resolution process under this Section
shall not be granted more than once.
22. Sections 13 and 14 deal with the declaration of moratorium and public announcements and read as
under:
Section 13. Declaration of moratorium and public announcement.- (1) The Adjudicating Authority, after
admission of the application Under Section 7 or Section 9 or Section 10, shall, by an order--
(a) declare a moratorium for the purposes referred to in Section 14;
(b) cause a public announcement of the initiation of corporate insolvency resolution process and call for
the submission of claims Under Section 15
and
(c) appoint an interim resolution professional in the manner as laid down in Section 16.
(2) The public announcement referred to in Clause (b) of Sub-section (1) shall be made immediately after
the appointment of the interim resolution professional.
Section 14 Moratorium.- (1) Subject to provisions of Sub-sections (2) and (3), on the insolvency
commencement date, the Adjudicating Authority shall by order declare moratorium for prohibiting all of
the following, namely:
other authority;
42
(3) The provisions of Sub-section (1) shall not apply to such transactions as may be notified by the
corporate insolvency resolution process:
Provided that where at any time during the corporate insolvency resolution process period, if the
Adjudicating Authority approves the resolution plan under Sub-section (1) of Section 31 or passes an
order for liquidation of corporate debtor Under Section 33, the moratorium shall cease to have effect from
the date of such approval or liquidation order, as the case may be.
23. Under Section 17, from the date of appointment of the interim resolution professional, the
management of the affairs of the corporate debtor vests with interim resolution professional. Section
17(1)(a) reads as under:
Section 17. Management of affairs of corporate debtor by interim resolution professional. - (1) From the
date of appointment of the interim resolution professional,--
(a) the management of the affairs of the corporate debtor shall vest in the interim resolution professional;
24. Under Section 20 of the Act, the interim resolution professional shall manage the operations of the
corporate debtor as a going concern. Section 21 is extremely important and provides for appointment of a
committee of creditors. Section 21 reads as follows:
21. Committee of creditors. - (1) The interim resolution professional shall after collation of all claims
received against the corporate debtor and determination of the financial position of the corporate debtor,
constitute a committee of creditors.
(2) The committee of creditors shall comprise all financial creditors of the corporate debtor:
43
Provided that a related party to whom a corporate debtor owes a financial debt shall not have any right of
representation, participation or voting in a meeting of the committee of creditors.
(3) Where the corporate debtor owes financial debts to two or more financial creditors as part of a
consortium or agreement, each such financial creditor shall be part of the committee of creditors and their
voting share shall be determined on the basis of the financial debts owed to them.
(4) Where any person is a financial creditor as well as an operational creditor,--
(a) such person shall be a financial creditor to the extent of the financial debt owed by the corporate
debtor, and shall be included in the committee of creditors, with voting share proportionate to the extent
of financial debts owed to such creditor;
(b) such person shall be considered to be an operational creditor to the extent of the operational debt owed
by the corporate debtor to such creditor.
(5) Where an operational creditor has assigned or legally transferred any operational debt to a financial
creditor, the assignee or transferee shall be considered as an operational creditor to the extent of such
assignment or legal transfer.
(6) Where the terms of the financial debt extended as part of a consortium arrangement or syndicated
facility or issued as securities provide for a single trustee or agent to act for all financial creditors, each
financial creditor may--
(a) authorise the trustee or agent to act on his behalf in the committee of creditors to the extent of his
voting share;
(b) represent himself in the committee of creditors to the extent of his voting share;
(c) appoint an insolvency professional (other than the resolution professional) at his own cost to represent
himself in the committee of creditors to the extent of his voting share
or
(d) exercise his right to vote to the extent of his voting share with one or more financial creditors jointly
or severally.
44
(7) The Board may specify the manner of determining the voting share in respect of financial debts issued
as securities Under Sub-section (6).
(8) All decisions of the committee of creditors shall be taken by a vote of not less than seventy-five per
cent of voting share of the financial creditors:
Provided that where a corporate debtor does not have any financial creditors, the committee of creditors
shall be constituted and comprise of such persons to exercise such functions in such manner as may be
specified by the Board.
(9) The committee of creditors shall have the right to require the resolution professional to furnish any
financial information in relation to the corporate debtor at any time during the corporate insolvency
resolution process.
(10) The resolution professional shall make available any financial information so required by the
committee of creditors Under Sub-section (9) within a period of seven days of such requisition.
25. Under Section 24, members of the committee of creditors may conduct meetings in order to protect
their interests. Under Section 28, a resolution professional appointed Under Section 25 cannot take certain
actions without the prior approval of the committee of creditors. Section 28 reads as under:
28. Approval of committee of creditors for certain actions. - (1) Notwithstanding anything contained in
any other law for the time being in force, the resolution professional, during the corporate insolvency
resolution process, shall not take any of the following actions without the prior approval of the committee
of creditors namely:
(a) raise any interim finance in excess of the amount as may be decided by the committee of creditors in
their meeting;
(b) create any security interest over the assets of the corporate debtor;
(c) change the capital structure of the corporate debtor, including by way of issuance of additional
securities, creating a new class of securities or buying back or redemption of issued securities in case the
corporate debtor is a company;
(d) record any change in the ownership interest of the corporate debtor;
45
(e) give instructions to financial institutions maintaining accounts of the corporate debtor for a debit
transaction from any such accounts in excess of the amount as may be decided by the committee of
creditors in their meeting;
(f) undertake any related party transaction;
(g) amend any constitutional documents of the corporate debtor;
(h) delegate its authority to any other person;
(i) dispose of or permit the disposal of shares of any shareholder of the corporate debtor or their nominees
to third parties;
(j) make any change in the management of the corporate debtor or its subsidiary;
(k) transfer rights or financial debts or operational debts under material contracts otherwise than in the
ordinary course of business;
(l) make changes in the appointment or terms of contract of such personnel as specified by the committee
of creditors
or
(m) make changes in the appointment or terms of contract of statutory auditors or internal auditors of the
corporate debtor.
(2) The resolution professional shall convene a meeting of the committee of creditors and seek the vote of
the creditors prior to taking any of the actions Under Sub-section (1).
(3) No action Under Sub-section (1) shall be approved by the committee of creditors unless approved by a
vote of seventy five per cent of the voting shares.
(4) Where any action Under Sub-section (1) is taken by the resolution professional without seeking the
approval of the committee of creditors in the manner as required in this section, such action shall be void.
(5) The committee of creditors may report the actions of the resolution professional Under Sub-section (4)
to the Board for taking necessary actions against him under this Code.
46
26. The most important Sections dealing with the restructuring of the corporate debtor are Sections 30 and
31, which read as under:
Section 30. Submission of resolution plan.- (1) A resolution applicant may submit a resolution plan to the
resolution professional prepared on the basis of the information memorandum.
(2) The resolution professional shall examine each resolution plan received by him to confirm that each
resolution plan--
(a) provides for the payment of insolvency resolution process costs in a manner specified by the Board in
priority to the repayment of other debts of the corporate debtor;
(b) provides for the repayment of the debts of operational creditors in such manner as may be specified by
the Board which shall not be less than the amount to be paid to the operational creditors in the event of a
liquidation of the corporate debtor Under Section 53;
(c) provides for the management of the affairs of the Corporate debtor after approval of the resolution
plan;
(d) the implementation and supervision of the resolution plan;
(e) does not contravene any of the provisions of the law for the time being in force;
(f) conforms to such other requirements as may be specified by the Board.
(3) The resolution professional shall present to the committee of creditors for its approval such resolution
plans which confirm the conditions referred to in Sub-section (2).
(4) The committee of creditors may approve a resolution plan by a vote of not less than seventy five per
cent of voting share of the financial creditors.
(5) The resolution applicant may attend the meeting of the committee of creditors in which the resolution
plan of the applicant is considered: Provided that the resolution applicant shall not have a right to vote at
the meeting of the committee of creditors unless such resolution applicant is also a financial creditor.
(6) The resolution professional shall submit the resolution plan as approved by the committee of creditors
to the Adjudicating Authority.
47
Section 31. Approval of resolution plan.- (1) If the Adjudicating Authority is satisfied that the resolution
plan as approved by the committee of creditors Under Sub-section (4) of Section 30 meets the
requirements as referred to in Sub-section (2) of Section 30, it shall by order approve the resolution plan
which shall be binding on the corporate debtor and its employees, members, creditors, guarantors and
other stakeholders involved in the resolution plan.
(2) Where the Adjudicating Authority is satisfied that the resolution plan does not confirm to the
requirements referred to in Sub-section (1), it may, by an order, reject the resolution plan.
(3) After the order of approval Under Sub-section (1),--
(a) the moratorium order passed by the Adjudicating Authority Under Section 14 shall cease to have
effect
and
(b) the resolution professional shall forward all records relating to the conduct of the corporate insolvency
resolution process and the resolution plan to the Board to be recorded on its database."
27. The scheme of the Code is to ensure that when a default takes place, in the sense that a debt becomes
due and is not paid, the insolvency resolution process begins. Default is defined in Section 3(12) in very
wide terms as meaning non-payment of a debt once it becomes due and payable, which includes non-
payment of even part thereof or an instalment amount. For the meaning of "debt", we have to go to
Section 3(11), which in turn tells us that a debt means a liability of obligation in respect of a "claim" and
for the meaning of "claim", we have to go back to Section 3(6) which defines "claim" to mean a right to
payment even if it is disputed. The Code gets triggered the moment default is of rupees one lakh or more
(Section 4). The corporate insolvency resolution process may be triggered by the corporate debtor itself or
a financial creditor or operational creditor. A distinction is made by the Code between debts owed to
financial creditors and operational creditors. A financial creditor has been defined Under Section 5(7) as a
person to whom a financial debt is owed and a financial debt is defined in Section 5(8) to mean a debt
which is disbursed against consideration for the time value of money. As opposed to this, an operational
creditor means a person to whom an operational debt is owed and an operational debt Under Section 5
(21) means a claim in respect of provision of goods or services.
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
48
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 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.
29. The scheme of Section 7 stands in contrast with the scheme Under Section 8 where an operational
creditor is, on the occurrence of a default, to first deliver a demand notice of the unpaid debt to the
operational debtor in the manner provided in Section 8(1) of the Code. Under Section 8(2), the corporate
debtor can, within a period of 10 days of receipt of the demand notice or copy of the invoice mentioned in
Sub-section (1), bring to the notice of the operational creditor the existence of a dispute or the record of
the pendency of a suit or arbitration proceedings, which is pre-existing - i.e. before such notice or invoice
was received by the corporate debtor. The moment there is existence of such a dispute, the operational
creditor gets out of the clutches of the Code.
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
49
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.
31. The rest of the insolvency resolution process is also very important. The entire process is to be
completed within a period of 180 days from the date of admission of the application Under Section 12 and
can only be extended beyond 180 days for a further period of not exceeding 90 days if the committee of
creditors by a voting of 75% of voting shares so decides. It can be seen that time is of essence in seeing
whether the corporate body can be put back on its feet, so as to stave off liquidation.
32. As soon as the application is admitted, a moratorium in terms of Section 14 of the Code is to be
declared by the adjudicating authority and a public announcement is made stating, inter alia, the last date
for submission of claims and the details of the interim resolution professional who shall be vested with
the management of the corporate debtor and be responsible for receiving claims. Under Section 17, the
erstwhile management of the corporate debtor is vested in an interim resolution professional who is a
trained person registered under Chapter IV of the Code. This interim resolution professional is now to
manage the operations of the corporate debtor as a going concern under the directions of a committee of
creditors appointed Under Section 21 of the Act. Decisions by this committee are to be taken by a vote of
not less than 75% of the voting share of the financial creditors. Under Section 28, a resolution
professional, who is none other than an interim resolution professional who is appointed to carry out the
resolution process, is then given wide powers to raise finances, create security interests, etc. subject to
prior approval of the committee of creditors.
33. Under Section 30, any person who is interested in putting the corporate body back on its feet may
submit a resolution plan to the resolution professional, which is prepared on the basis of an information
memorandum. This plan must provide for payment of insolvency resolution process costs, management of
the affairs of the corporate debtor after approval of the plan, and implementation and supervision of the
plan. It is only when such plan is approved by a vote of not less than 75% of the voting share of the
financial creditors and the adjudicating authority is satisfied that the plan, as approved, meets the statutory
requirements mentioned in Section 30, that it ultimately approves such plan, which is then binding on the
corporate debtor as well as its employees, members, creditors, guarantors and other stakeholders.
Importantly, and this is a major departure from previous legislation on the subject, the moment the
adjudicating authority approves the resolution plan, the moratorium order passed by the authority Under
Section 14 shall cease to have effect. The scheme of the Code, therefore, is to make an attempt, by
divesting the erstwhile management of its powers and vesting it in a professional agency, to continue the
50
business of the corporate body as a going concern until a resolution plan is drawn up, in which event the
management is handed over under the plan so that the corporate body is able to pay back its debts and get
back on its feet. All this is to be done within a period of 6 months with a maximum extension of another
90 days or else the chopper comes down and the liquidation process begins.
34. On the facts of the present case, we find that in answer to the application made Under Section 7 of the
Code, the Appellant only raised the plea of suspension of its debt under the Maharashtra Act, which,
therefore, was that no debt was due in law. The adjudicating authority correctly referred to the non-
obstante Clause in Section 238 and arrived at a conclusion that a notification under the Maharashtra Act
would not stand in the way of the corporate insolvency resolution process under the Code. However, the
Appellate Tribunal by the impugned judgment held thus:
78. Following the law laid down by Hon'ble Supreme Court in "Yogendra Krishnan Jaiswal" and "Madras
Petrochem Limited" we hold that there is no repugnancy between I & B Code, 2016 and the MRU Act as
they both operate in different fields. The Parliament has expressly stated that the provisions of the I & B
Code, 2016 (which is a later enactment to the MRU Act) shall have effect notwithstanding the provisions
of any other law for the time being in force. This stipulation does not mean that the provisions of MRU
Act or for that matter any other law are repugnant to the provisions of the Code.
79. In view of the finding as recorded above, we hold that the Appellant is not entitled to derive any
advantage from MRU Act, 1956 to stall the insolvency resolution process Under Section 7 of the
Insolvency & Bankruptcy Code, 2016.
This statement by the Appellate Tribunal has to be tested with reference to the constitutional position on
repugnancy.
35. Article 254 of the Constitution of India is substantially modeled on Section 107 of the Government of
India Act, 1935. Article 254 reads as under:
Article 254 - Inconsistency between laws made by Parliament and laws made by the Legislatures of States
(1) If any provision of a law made by the Legislature of a State is repugnant to any provision of a law
made by Parliament which Parliament is competent to enact, or to any provision of an existing law with
respect to one of the matters enumerated in the Concurrent List, then, subject to the provisions of Clause
(2), the law made by Parliament, whether passed before or after the law made by the Legislature of such
51
State, or, as the case may be, the existing law, shall prevail and the law made by the Legislature of the
State shall, to the extent of the repugnancy be void.
(2) Where a law made by the Legislature of a State [***] with respect to one of the matters enumerated in
the Concurrent List contains any provision repugnant to the provisions of an earlier law made by
Parliament or an existing law with respect to that matter, then, the law so made by the Legislature of such
State shall, if it has been reserved for the consideration of the President and has received his assent,
prevail in that State:
Provided that nothing in this Clause shall prevent Parliament from enacting at any time any law with
respect to the same matter including a law adding to, amending, varying or repealing the law so made by
the Legislature of the State.
Section 107 reads as follows:
Inconsistency between Federal Laws and Provincial or State Laws
(1) If any provision of a Provincial law is repugnant to any provision of a Federal law which the Federal
Legislature is competent to enact or to any provision of an existing Indian law with respect to one of the
matters enumerated in the Concurrent Legislative List, then, subject to the provisions of this section, the
Federal law, whether passed before or after the Provincial law, or as the case may be, the existing Indian
law, shall prevail and the Provincial law shall, to the extent of the repugnancy, be void.
(2) Where a Provincial law with respect to one of the matters enumerated in the Concurrent Legislative
List contains any provision repugnant to the provisions of an earlier Federal law or an existing Indian law
with respect to that matter, then, if the Provincial law, having been reserved for the consideration of the
Governor-General has received the assent of the Governor-General or for the signification of His
Majesty's pleasure has received the assent of the Governor-General or of His Majesty, the Provincial law
shall in that Province prevail, but nevertheless the Federal Legislature may at any time enact further
legislation with respect to the same matter. Provided that no Bill or amendment for making any provision
repugnant to any Provincial law, which, having been so reserved has received the assent of the Governor-
General or of His Majesty, shall be introduced or moved in either Chamber of the Federal Legislature
without the previous sanction of the Governor-General in his discretion.
52
(3) If any provision of a law of a Federated State is repugnant to a Federal law which extends to that
State, the Federal law, whether passed before or after the law of the State, shall prevail and the law of the
State shall, to the extent of the repugnancy be void."
36. The British North America Act, which is the oldest among the Constitutions framed by the British
Parliament for its colonies, had Under Sections 91 and 92 exclusive law making power for the different
subjects set out therein which is distributed between Parliament and the Provincial Legislatures. The only
concurrent subject was stated in Section 95 of the said Act, which reads as follows:
In each Province the Legislature may make laws in relation to agriculture in the Province, and to
immigration into the Province
and it is hereby declared that the Parliament of Canada may from time to time make laws in relation to
agriculture in all or any of the Provinces, and to immigration into all or any of the Provinces
and any law of the Legislature of a Province relative to agriculture or to immigration shall have effect in
and for the Province as long and as far only as it is not repugnant to any Act of the Parliament of Canada.
It is for this reason that the Canadian cases on repugnancy were said to be somewhat restricted and have
rarely been applied in construing Article 254.
37. In so far as the US Constitution is concerned, there again legislative powers are reserved completely
to the States and Congress is given the power to legislate only on enumerated subjects that are set out in
Article 1 Section 8 of the US Constitution. In this context, no questions of repugnancy can arise as the
States can legislate even with respect to matters laid down in Article 1 Section 8 so long as they do not
exceed the territorial boundary of the State. It is only when Congress actually enacts legislation Under
Article 1 Section 8 that State legislation, if any, on the same subject matter can be said to be ousted.
However, when Congress passed the Eighteenth Amendment to the US Constitution, by which it imposed
prohibition, Section 2 thereof stated that Congress and the several States shall have concurrent powers to
enforce this Article by appropriate legislation. The question that arose in State of Rhode Island v. Palmer
MANU/USSC/0212/1920 : 253 U.S. 350; , was as to the meaning of the expression "concurrent power".
It was argued that, unless both Congress and the State legislatures concurrently enact laws, laws Under
Section 2 of the Eighteenth Amendment could not be made. This argument was turned down by the
majority judgment of Van Devanter, J. which, strangely enough, merely announced conclusions on the
questions involved without any reasoning. Van Devanter, J.'s majority judgment held (at 387):
53
8. The words "concurrent power" in that Section do not mean joint power, or require that legislation
thereunder by Congress, to be effective, shall be approved or sanctioned by the several states or any of
them nor do they mean that the power to enforce is divided between Congress and the several states along
the lines which separate or distinguish foreign and interstate commerce from intrastate affairs.
9. The power confided to Congress by that section, while not exclusive, is territorially coextensive with
the prohibition of the first section, embraces manufacture and other intrastate transactions as well as
importation, exportation and interstate traffic, and is in no wise dependent on or affected by action or
inaction on the part of the several states or any of them.
Two dissents, on the other hand, held that unless the Congress and the States concurrently legislate,
Section 2 does not give them the power to enforce prohibition. The US cases also do not, therefore, assist
in this context.
38. On the other hand, the Commonwealth of Australia Constitution Act of 1900, also enacted by the
British Parliament, has a scheme by which Parliament, in Section 51, has power to make laws with
respect to 39 stated matters. Under Section 52, Parliament, subject to the Constitution, has exclusive
power to make laws only qua three subjects set out therein. Section 109 of the Australian Constitution
reads as under:
When a law of a State is inconsistent with a law of the Commonwealth, the latter shall prevail, and the
former shall, to the extent of the inconsistency, be invalid.
39. Since the Australian cases deal with repugnancy in great detail, they have been referred to by the early
judgments of this Court.
40. In Zaverbhai Amaidas v. State of Bombay MANU/SC/0040/1954 : (1955) 1 SCR 799, a question
arose as to the efficacy of a Bombay Act of 1947 vis-`-vis the Essential Supplies (Temporary Powers) Act
of 1946, as amended in 1950. This Court, after referring to Section 107 of the Government of India Act
and Article 254 of the Constitution, stated that Article 254, is in substance, a reproduction of Section 107
with one difference- that the power of Parliament Under Article 254(2) goes even to the extent of
repealing a State law. This Court then examined the subject matters of the two Acts and found that the
Parliamentary enactment as amended in 1950 prevailed over the Bombay Act in as much as the higher
punishment given for the same offence under the Bombay Act was repugnant to the lesser punishment
given by Section 7 of the Parliamentary enactment.
54
41. In Tika Ramji v. State of U.P. MANU/SC/0008/1956 : (1956) SCR 393, this Court, after setting out
Article 254 of the Constitution, referred in detail to a treatise on the Australian Constitution and to
various Australian judgments as follows:
Nicholas in his Australian Constitution, 2nd ed., p. 303, refers to three tests of inconsistency or
repugnancy:
(1) There may be inconsistency in the actual terms of the competing statutes (R. v. Brisbane Licensing
Court [1920] 28 CLR 23).
(2) Though there may be no direct conflict, a State law may be inoperative because the Commonwealth
law, or the award of the Commonwealth Court, is intended to be a complete exhaustive code (Clyde
Engineering Co. Ltd. v. Cowburn [1926] 37 CLR 466).
(3) Even in the absence of intention, a conflict may arise when both State and Commonwealth seek to
exercise their powers over the same subject-matter (Victoria v. Commonwealth [1937] 58 CLR 618
Wenn v. Attorney-General (Vict.) [1948] 77 CLR 84) Isaacs, J. in Clyde Engineering Co. Limited v.
Cowburn [(1926) 37 CLR 466, 489] laid down one test of inconsistency as conclusive: "If, however, a
competent legislature expressly or implicitly evinces its intention to cover the whole field, that is a
conclusive test of inconsistency where another Legislature assumes to enter to any extent upon the same
field".
Dixon, J. elaborated this theme in Ex parte McLean [(1930) 43 CLR 472, 483]:
When the Parliament of the Commonwealth and the Parliament of a State each legislate upon the same
subject and prescribe what the Rule of conduct shall be, they make laws which are inconsistent,
notwithstanding that the Rule of conduct is identical which each prescribes, and Section 109 applies. That
this is so is settled, at least when the sanctions they impose are diverse. But the reason is that, by
prescribing the Rule to be observed, the Federal statute shows an intention to cover the subject matter and
provide what the law upon it shall be. If it appeared that the Federal law was intended to be
supplementary to or cumulative upon State law, then no inconsistency would be exhibited in imposing the
same duties or in inflicting different penalties. The inconsistency does not lie in the mere co-existence of
two laws which are susceptible of simultaneous obedience. It depends upon the intention of the
paramount Legislature to express by its enactment, completely, exhaustively, or exclusively, what shall be
the law governing the particular conduct or matter to which its attention is directed. When a Federal
55
statute discloses such an intention, it is inconsistent with it for the law of a State to govern the same
conduct or matter.
To the same effect are the observations of Evatt, J. in Stock Motor Plough Ltd. v. Forsyth [(1932) 48 CLR
128, 147]:
It is now established, therefore, that State and Federal laws may be inconsistent, although obedience to
both laws is possible. There may even be inconsistency although each law imposes the very same duty of
obedience. These conclusions have, in the main, been reached, by ascribing "inconsistency" to a State
law, not because the Federal law directly invalidates or conflicts with it, but because the Federal law is
said to "cover the field". This is a very ambiguous phrase, because subject matters of legislation bear little
resemblance to geographical areas. It is no more than a cliche for expressing the fact that, by reason of the
subject matter dealt with, and the method of dealing with it, and the nature and multiplicity of the
Regulations prescribed, the Federal authority has adopted a plan or scheme which will be hindered and
obstructed if any additional Regulations whatever are prescribed upon the subject by any other authority
if, in other words, the subject is either touched or trenched upon by State authority.
The Calcutta High Court in G.P. Stewart v. B.K. Roy Chaudhury [MANU/WB/0202/1939 : AIR 1939 Cal
628] had occasion to consider the meaning of repugnancy and B.N. Rau, J. who delivered the judgment of
the Court observed at p. 632:
It is sometimes said that two laws cannot be said to be properly repugnant unless there is a direct conflict
between them, as when one says "do" and the other "don't", there is no true repugnancy, according to this
view, if it is possible to obey both the laws. For reasons which we shall set forth presently, we think that
this is too narrow a test: there may well be cases of repugnancy where both laws say "don't" but in
different ways. For example, one law may say, "No person shall sell liquor by retail, that is, in quantities
of less than five gallons at a time" and Anr. law may say, "No person shall sell liquor by retail, that is, in
quantities of less than ten gallons at a time". Here, it is obviously possible to obey both laws, by obeying
the more stringent of the two, namely the second one
yet it is equally obvious that the two laws are repugnant, for to the extent to which a citizen is compelled
to obey one of them, the other, though not actually disobeyed, is nullified.
The learned Judge then discussed the various authorities which laid down the test of repugnancy in
Australia, Canada, and England and concluded at p. 634:
56
The principle deducible from the English cases, as from the Canadian cases, seems therefore to be the
same as that enunciated by Isaacs, J. in the Australian 44 hour case (37 C.L.R. 466) if the dominant law
has expressly or impliedly evinced its intention to cover the whole field, then a subordinate law in the
same field is repugnant and therefore inoperative. Whether and to what extent in a given case, the
dominant law evinces such an intention must necessarily depend on the language of the particular law.
Sulaiman, J. in Shyamakant Lal v. Rambhajan Singh [MANU/FE/0003/1939 : (1939) FCR 188, 212] thus
laid down the principle of construction in regard to repugnancy:
When the question is whether a Provincial legislation is repugnant to an existing Indian law, the onus of
showing its repugnancy and the extent to which it is repugnant should be on the party attacking its
validity. There ought to be a presumption in favour of its validity, and every effort should be made to
reconcile them and construe both so as to avoid their being repugnant to each other
and care should be taken to see whether the two do not really operate in different fields without
encroachment. Further, repugnancy must exist in fact, and not depend merely on a possibility. Their
Lordships can discover no adequate grounds for holding that there exists repugnancy between the two
laws in districts of the Province of Ontario where the prohibitions of the Canadian Act are not and may
never be in force: (Attorney-General for Ontario v. Attorney-General for the Dominion) [(1896) AC 348,
369-70]...
(at pages 424-427)
(Emphasis Supplied)
This Court expressly held that the pith and substance doctrine has no application to repugnancy principles
for the reason that:
The pith and substance argument also cannot be imported here for the simple reason that, when both the
Centre as well as the State Legislatures were operating in the concurrent field, there was no question of
any trespass upon the exclusive jurisdiction vested in the Centre under Entry 52 of List I, the only
question which survived being whether, putting both the pieces of legislation enacted by the Centre and
the State Legislature together, there was any repugnancy, a contention which will be dealt with hereafter.
(at pages 420-421)
57
42. In Deep Chand v. State of U.P. 1959 Supp. (2) SCR 8, this Court referred to its earlier judgments in
Zaverbhai (supra) and Tika Ramji (supra) and held:
Repugnancy between two statutes may thus be ascertained on the basis of the following three principles:
(1) Whether there is direct conflict between the two provisions;
(2) Whether Parliament intended to lay down an exhaustive code in respect of the subject matter replacing
the Act of the State Legislature
and
(3) Whether the law made by Parliament and the law made by the State Legislature occupy the same field.
(at page 43)
43. In Pandit Ukha Kolhe v. State of Maharashtra MANU/SC/0059/1963 : (1964) 1 SCR 926, this Court
found that Sections 129A and 129B did not repeal in its entirety an existing law contained in Section 510
of the Code of Criminal Procedure in its application to offences Under Section 66 of the Bombay
Prohibition Act. It was held that Sections 129A and 129B must be regarded as enacted in exercise of
power conferred by Entries 2 and 12 in the Concurrent List. It was then held:
It is, difficult to regard Section 129B of the Act as so repugnant to Section 510 of the Code as to make the
latter provision wholly inapplicable to trials for offences under the Bombay Prohibition Act. Section 510
is a general provision dealing with proof of reports of the Chemical Examiner in respect of matters or
things duly submitted to him for examination or analysis and report. Section 129B deals with a special
class of reports and certificates. In the investigation of an offence under the Bombay Prohibition Act,
examination of a person suspected by a Police Officer or Prohibition Officer of having consumed an
intoxicant, or of his blood may be carried out only in the manner prescribed by Section 129A: and the
evidence to prove the facts disclosed thereby will be the certificate or the examination viva voce of the
registered Medical Practitioner, or the Chemical Examiner, for examination in the course of an
investigation of an offence under the Act of the person so suspected or of his blood has by the clearest
implication of the law to be carried out in the manner laid down or not at all. Report of the Chemical
Examiner in respect of blood collected in the course of investigation of an offence under the Bombay
Prohibition Act, otherwise than in the manner set out in Section 129A cannot therefore be used as
evidence in the case. To that extent Section 510 of the code is superseded by Section 129B. But the report
58
of the Chemical Examiner relating to the examination of blood of an Accused person collected at a time
when no investigation was pending, or at the instance not of a Police Officer or a Prohibition Officer
remains admissible Under Section 510 of the Code.
(at pages 953-954)
44. In M. Karunanidhi v. Union of India MANU/SC/0159/1979 : (1979) 3 SCR 254, this Court referred to
a number of Australian judgments and judgments of this Court and held:
It is well settled that the presumption is always in favour of the constitutionality of a statute and the onus
lies on the person assailing the Act to prove that it is unconstitutional. Prima facie, there does not appear
to us to be any inconsistency between the State Act and the Central Acts. Before any repugnancy can
arise, the following conditions must be satisfied:
1. That there is a clear and direct inconsistency between the Central Act and the State Act.
2. That such an inconsistency is absolutely irreconcilable.
3. That the inconsistency between the provisions of the two Acts is of such a nature as to bring the two
Acts into direct collision with each other and a situation is reached where it is impossible to obey the one
without disobeying the other.
In Colin Howard's Australian Federal Constitutional Law, 2nd Edition the author while describing the
nature of inconsistency between the two enactments observed as follows:
An obvious inconsistency arises when the two enactments produce different legal results when applied to
the same facts.
In the case of Hume v. Palmer (38 CLR 441) Knox, C.J. observed as follows:
The Rules prescribed by the Commonwealth Law and the State law respectively are for present purposes
substantially identical, but the penalties imposed for the contravention differ...
In these circumstances, it is I think, clear that the reasons given by my brothers Issacs and Starke for the
decisions of this Court in Union Steamship Co. of New Zealand v. Commonwealth (36 CLR 130) and
Clyde Engineering Co. v. Cowburn (37 CLR 466) establish that the provisions of the law of the State for
59
the breach of which the Appellant was convicted are inconsistent with the law of the Commonwealth
within the meaning of Section 109 of the Constitution and are therefore invalid.
Issacs, J. observed as follows:
There can be no question that the Commonwealth Navigation Act, by its own direct provisions and the
Regulations made under its authority, applies upon construction to the circumstances of the case. It is
inconsistent with the State Act in various ways, including (1) general supersession of the Regulations of
conduct, and so displacing the State Regulations, whatever those may be
(2) the jurisdiction to convict, the State law empowering the Court to convict summarily, the
Commonwealth Law making the contravention an indictable offence, and therefore bringing into
operation Section 80 of the Constitution, requiring a jury
(3) the penalty, the State providing a maximum of # 50 the Commonwealth Act prescribing a maximum
of 100, or imprisonment, or both
(4) the tribunal itself.
Starke, J. observed as follows:
It is not difficult to see that the Federal Code would be 'disturbed or deranged' if the State Code applied a
different sanction in respect of the same act. Consequently the State Regulations are, in my opinion,
inconsistent with the law of the Commonwealth and rendered invalid by force of Section 109 of the
Constitution.
In a later case of the Australian High Court in Ex. Parte Mclean (43 CLR 472) Issacs and Starke, JJ.
while dwelling on the question of repugnancy made the following observation:
In Cowburn's case (supra) is stated the reasoning for that conclusion and we will now refer to those
statements without repeating them. In short, the very same conduct by the same persons is dealt with in
conflicting terms by the Commonwealth and State Acts. A Court, seeing that, has no authority to inquire
further, or to seek to ascertain the scope or bearing of the State Act. It must simply apply Section 109 of
the Constitution, which declares the invalidity pro tanto of the State Act.
Similarly Dixon, J. observed thus:
60
When the Parliament of the Commonwealth and the Parliament of a State each legislate upon the same
subject and prescribe what the Rule of conduct shall be, they make laws which are inconsistent,
notwithstanding that the Rule of conduct is identical which each prescribes, and Section 109 applies. That
this is so is settled, at least when the sanctions they impose are diverse Hume v. Palmer (supra).
In the case of Zaverbhai Amaidas v. The State of Bombay [MANU/SC/0040/1954 : (1955) 1 SCR 799]
this Court laid down the various tests to determine the inconsistency between two enactments and
observed as follows-
The important thing to consider with reference to this provision is whether the legislation is 'in respect of
the same matter'. If the later legislation deals not with the matters which formed the subject of the earlier
legislation but with other and distinct matters though of a cognate and allied character, then Article 254
(2) will have no application. The principle embodied in Section 107 (2) and Article 254 (2) is that when
there is legislation covering the same ground both by the Centre and by the Province, both of them being
competent to enact the same, the law of the Centre should prevail over that of the State.
It is true, as already pointed out, that on a question Under Article 254 (1) whether an Act of Parliament
prevails against a law of the State, no question of repeal arises
but the principle on which the Rule of implied repeal rests, namely, that if subject-matter of the later
legislation is identical with that of the earlier, so that they cannot both stand together, then the earlier is
repealed by the later enactment, will be equally applicable to a question Under Article 254(2) whether the
further legislation by Parliament is in respect of the same matter as that of the State law.
In the case of Ch. Tika Ramji and Ors. etc. v. The State of Uttar Pradesh and Ors.
[MANU/SC/0008/1956 : (1956) SCR 393] while dealing with the question of repugnancy between a
Central and a State enactment, this Court relied on the observations of Nicholas in his Australian
Constitution, 2nd Ed. p. 303, where three tests of inconsistency or repugnancy have been laid down and
which are as follows:
(1) There may be inconsistency in the actual terms of the competing statutes (R. v. Brisbane Licensing
Court [1920] 28 CLR 23).
(2) Though there may be no direct conflict, a State law may be inoperative because the Commonwealth
law, or the award of the Commonwealth Court, is intended to be a complete exhaustive code (Clyde
Engineering Co. Ltd. v. Cowburn [1926] 37 CLR 466).
61
(3) Even in the absence of intention, a conflict may arise when both State and Commonwealth seek to
exercise their powers over the same subject-matter (Victoria v. Commonwealth [1937] 58 CLR 618
Wenn v. Attorney-General (Vict.) [1948] 77 CLR 84)
This Court also relied on the decisions in the case of Hume v. Palmer as also the case of Ex Parte Mclean
(supra) referred to above. This Court also endorsed the observations of Sulaiman, J. in the case of
Shyamakant Lal v. Rambhajan Singh [MANU/FE/0003/1939 : (1939) FCR 188] where Sulaiman, J.
observed as follows:
When the question is whether a Provincial legislation is repugnant to an existing Indian law, the onus of
showing its repugnancy and the extent to which it is repugnant should be on the party attacking its
validity. There ought to be a presumption in favour of its validity, and every effort should be made to
reconcile them and construe both so as to avoid their being repugnant to each other, and care should be
taken to see whether the two do not really operate in different fields without encroachment. Further,
repugnancy must exist in fact, and not depend merely on a possibility.
In the case of Om Prakash Gupta v. State of U.P. [MANU/SC/0130/1957 : (1957) SCR 423] where this
Court was considering the question of the inconsistency between the two Central enactments, namely, the
Indian Penal Code and the Prevention of Corruption Act held that there was no inconsistency and
observed as follows:
It seems to us, therefore, that the two offences are distinct and separate. This is the view taken in
Amarendra Nath Roy v. The State (MANU/WB/0061/1955 : AIR 1955 Cal 236) and we endorse the
opinion of the learned Judges, expressed therein. Our conclusion, therefore, is that the offence created
Under Section 5(1)(c) of the Corruption Act is distinct and separate from the one Under Section 405 of
the Indian Penal Code and, therefore, there can be no question of Section 5 (1) (c) repealing Section 405
of the Indian Penal Code. If that is so, then, Article 14 of the Constitution can be no bar.
Similarly in the case of Deep Chand v. The State of Uttar Pradesh & Ors. (MANU/SC/0023/1959 : 1959
Supp (2) SCR 8) this Court indicated the various tests to ascertain the question of repugnancy between the
two statutes and observed as follows:
Repugnancy between two statutes may thus be ascertained on the basis of the following three principles:
(1) Whether there is direct conflict between the two provisions;
62
(2) Whether Parliament intended to lay down an exhaustive code in respect of the subject matter replacing
the Act of the State Legislature
and
(3) Whether the law made by Parliament and the law made by the State Legislature occupy the same field.
In the case of Megh Raj and Ors. v. Allah Rakhia & Ors. (MANU/FE/0009/1942 : AIR 1942 FC 27)
where Varadachariar, J. speaking for the Court pointed out that where as in Australia a provision similar
to Section 107 of the Government of India Act, 1935 existed in the shape of Section 109 of the Australian
Constitution, there was no corresponding provision in the American Constitution. Similarly, the Canadian
cases have laid down a principle too narrow for application to Indian cases. According to the learned
Judge, the safe Rule to follow was that where the paramount legislation does not purport to be exhaustive
or unqualified there is no inconsistency and in this connection observed as follows:
The principle of that decision is that where the paramount legislation does not purport to be exhaustive or
unqualified, but itself permits or recognises other laws restricting or qualifying the general provision
made in it, it cannot be said that any qualification or restriction introduced by another law is repugnant to
the provision in the main or paramount law.
The position will be even more obvious, if another test of repugnancy which has been suggested in some
cases is applied, namely, whether there is such an inconsistency between the two provisions that one must
be taken to repeal the other by necessary implication.
In the case of State of Orissa v. M.A. Tulloch & Co. [MANU/SC/0021/1963 : (1964) 4 SCR 461]
Ayyangar J. speaking for the Court observed as follows:
Repugnancy arises when two enactments both within the competence of the two Legislatures collide and
when the Constitution expressly or by necessary implication provides that the enactment of one
Legislature has superiority over the other then to the extent of the repugnancy the one supersedes the
other. But two enactments may be repugnant to each other even though obedience to each of them is
possible without disobeying the other. The test of two legislations containing contradictory provisions is
not, however, the only criterion of repugnancy, for if a competent legislature with a superior efficacy
expressly or impliedly evinces by its legislation an intention to cover the whole field, the enactments of
the other legislature whether passed before or after would be overborne on the ground of repugnance.
63
Where such is the position, the inconsistency is demonstrated not by a detailed comparison of provisions
of the two statutes but by the mere existence of the two pieces of legislation.
In the case of T.S. Balliah v. T.S. Rangachari [MANU/SC/0238/1968 : (1969) 3 SCR 65] it was pointed
out by this Court that before coming to the conclusion that there is a repeal by implication, the Court must
be satisfied that the two enactments are so inconsistent that it becomes impossible for them to stand
together. In other words, this Court held that when there is a direct collision between the two enactments
which is irreconcilable then only repugnancy results. In this connection, the Court made the following
observations:
Before coming to the conclusion that there is a repeal by implication, the Court must be satisfied that the
two enactments are so inconsistent or repugnant that they cannot stand together and the repeal of the
express prior enactment must flow from necessary implication of the language of the later enactment. It is
therefore necessary in this connection to scrutinise the terms and consider the true meaning and effect of
the two enactments.
The provisions enacted in Section 52 of the 1922 Act do not alter the nature or quality of the offence
enacted in Section 177, Indian Penal Code but it merely provides a new course of procedure for what was
already an offence. In a case of this description the new statute is regarded not as superseding, nor
repealing by implication the previous law, but as cumulative.
A plain reading of the Section shows that there is no bar to the trial or conviction of the offender under
both enactments but there is only a bar to the punishment of the offender twice for the same offence. In
other words, the Section provides that where an act or omission constitutes an offence under two
enactments, the offender may be prosecuted and punished under either or both the enactments but shall
not be liable to be punished twice for the same offence.
On a careful consideration, therefore, of the authorities referred to above, the following propositions
emerge:
1. That in order to decide the question of repugnancy it must be shown that the two enactments contain
inconsistent and irreconcilable provisions, so that they cannot stand together or operate in the same field.
2. That there can be no repeal by implication unless the inconsistency appears on the face of the two
statutes.
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3. That where the two statutes occupy a particular field, there is room or possibility of both the statutes
operating in the same field without coming into collision with each other, no repugnancy results.
4. That where there is no inconsistency but a statute occupying the same field seeks to create distinct and
separate offences, no question of repugnancy arises and both the statutes continue to operate in the same
field.
(at pages 272-278)
(Emphasis Supplied)
45. In Hoechst Pharmaceuticals Ltd. v. State of Bihar MANU/SC/0392/1983 : (1983) 3 SCR 130, this
Court after referring to the earlier judgments held:
Article 254 of the Constitution makes provision first, as to what would happen in the case of conflict
between a Central and State law with regard to the subjects enumerated in the Concurrent List, and
secondly, for resolving such conflict. Article 254(1) enunciates the normal Rule that in the event of a
conflict between a Union and a State law in the concurrent field, the former prevails over the latter.
Clause (1) lays down that if a State law relating to a concurrent subject is 'repugnant' to a Union law
relating to that subject, then, whether the Union law is prior or later in time, the Union law will prevail
and the State law shall, to the extent of such repugnancy, be void. To the general Rule laid down in
Clause (1), Clause (2) engrafts an exception, viz., that if the President assents to a State law which has
been reserved for his consideration, it will prevail notwithstanding its repugnancy to an earlier law of the
Union, both laws dealing with a concurrent subject. In such a case, the Central Act will give way to the
State Act only to the extent of inconsistency between the two, and no more. In short, the result of
obtaining the assent of the President to a State Act which is inconsistent with a previous Union law
relating to a concurrent subject would be that the State Act will prevail in that State and override the
provisions of the Central Act in their applicability to that State only. The predominance of the State law
may however be taken away if Parliament legislates under the proviso to Clause (2). The proviso to
Article 254(2) empowers the Union Parliament to repeal or amend a repugnant State law, either directly,
or by itself enacting a law repugnant to the State law with respect to the 'same matter'. Even though the
subsequent law made by Parliament does not expressly repeal a State law, even then, the State law will
become void as soon as the subsequent law of Parliament creating repugnancy is made. A State law
would be repugnant to the Union law when there is direct conflict between the two laws. Such
repugnancy may also arise where both laws operate in the same field and the two cannot possibly stand
65
together. See: Zaverbhai Amaidas v. State of Bombay (MANU/SC/0040/1954 : 1955 1 SCR 799), M.
Karunanidhi v. Union of India (MANU/SC/0159/1979 : 1979 3 SCR 254) and T. Barai v. Henry Ah Hoe
and Anr. (MANU/SC/0123/1982 : 1983 1 SCC 177).
We may briefly refer to the three Australian decisions relied upon. As stated above, the decision in Clyde
Engineering Company's case (supra), lays down that inconsistency is also created when one statute takes
away rights conferred by the other. In Ex Parte McLean's case, supra, Dixon J. laid down another test
viz., two statutes could be said to be inconsistent if they, in respect of an identical subject-matter, imposed
identical duty upon the subject, but provided for different sanctions for enforcing those duties. In Stock
Motor Ploughs Limited's case, supra, Evatt, J. held that even in respect of cases where two laws impose
one and the same duty of obedience there may be inconsistency. As already stated the controversy in
these appeals falls to be determined by the true nature and character of the impugned enactment, its pith
and substance, as to whether it falls within the legislative competence of the State Legislature Under
Article 246(3) and does not involve any question of repugnancy Under Article 254(1).
We fail to comprehend the basis for the submission put forward on behalf of the Appellants that there is
repugnancy between Sub-section (3) of Section 5 of the Act which is relatable to Entry 54 of List II of the
Seventh Schedule and paragraph 21 of the Control order issued by the Central Government Under Sub-
section (1) of Section 3 of the Essential Commodities Act relatable to Entry 33 of List III and therefore
Sub-section (3) of Section 5 of the Act which is a law made by the State Legislature is void Under Article
254(1). The question of repugnancy Under Article 254(1) between a law made by Parliament and a law
made by the State Legislature arises only in case both the legislations occupy the same field with respect
to one of the matters enumerated in the Concurrent List, and there is direct conflict between the two laws.
It is only when both these requirements are fulfilled that the State law will, to the extent of repugnancy
become void. Article 254(1) has no application to cases of repugnancy due to overlapping found between
List II on the one hand and List I and List III on the other. If such overlapping exists in any particular
case, the State law will be ultra vires because of the non-obstante Clause in Article 246(1) read with the
opening words "Subject to" in Article 246(3). In such a case, the State law will fail not because of
repugnance to the Union law but due to want of legislative competence. It is no doubt true that the
expression "a law made by Parliament which Parliament is competent to enact" in Article 254(1) is
susceptible of a construction that repugnance between a State law and a law made by Parliament may take
place outside the concurrent sphere because Parliament is competent to enact law with respect to subjects
included in List III as well as "List I". But if Article 254(1) is read as a whole, it will be seen that it is
expressly made subject to Clause (2) which makes reference to repugnancy in the field of Concurrent
66
List-in other words, if Clause (2) is to be the guide in the determination of scope of Clause (1), the
repugnancy between Union and State law must be taken to refer only to the Concurrent field. Article
254(1) speaks of a State law being repugnant to (a) a law made by Parliament or (b) an existing law.
There was a controversy at one time as to whether the succeeding words "with respect to one of the
matters enumerated in the Concurrent List" govern both (a) and (b) or (b) alone. It is now settled that the
words "with respect to" qualify both the clauses in Article 254(1) viz. a law made by Parliament which
Parliament is competent to enact as well as any provision of an existing law. The under lying principle is
that the question of repugnancy arises only when both the Legislatures are competent to legislate in the
same field i.e. with respect to one of the matters enumerated in the Concurrent List. Hence, Article 254(1)
can not apply unless both the Union and the State laws relate to a subject specified in the Concurrent List,
and they occupy the same field.
This construction of ours is supported by the observations of Venkatarama Ayyar, J. speaking for the
Court in A.S. Krishna's case, supra, while dealing with Section 107(1) of the Government of India Act,
1935 to the effect:
For this Section to apply, two conditions must be fulfilled: (1) The provisions of the Provincial law and
those of the Central legislation must both be in respect of a matter which is enumerated in the Concurrent
List, and (2) they must be repugnant to each other. It is only when both these requirements are satisfied
that the Provincial law will, to the extent of the repugnancy, become void.
In Ch. Tika Ramji's case, supra, the Court observed that no question of repugnancy Under Article 254 of
the Constitution could arise where parliamentary legislation and State legislation occupy different fields
and deal with separate and distinct matters even though of a cognate and allied character and that where,
as in that case, there was no inconsistency in the actual terms of the Acts enacted by Parliament and the
State Legislature relatable to Entry 33 of List III, the test of repugnancy would be whether Parliament and
State Legislature, in legislating on an entry in the Concurrent List, exercised their powers over the same
subject-matter or whether the laws enacted by Parliament were intended to be exhausted as to cover the
entire field, and added:
The pith and substance argument cannot be imported here for the simple reason that, when both the
Centre as well as the State Legislatures were operating in the concurrent field, there was no question of
any trespass upon the exclusive jurisdiction of the Centre under Entry 52 of List I, the only question
67
which survived being whether put in both the pieces of legislation enacted by the Centre and the State
Legislature, there was any such repugnancy.
This observation lends support to the view that in cases of overlapping between List II on the one hand
and Lists I and III on the other, there is no question of repugnancy Under Article 254(1). Subba Rao. J.
speaking for the Court in Deep Chand's case, supra, interpreted Article 254(1) in these terms:
Article 254(1) lays down a general rule. Clause (2) is an exception to that Article and the proviso
qualified the said exception. If there is repugnancy between the law made by the State and that made by
the Parliament with respect to one of the matters enumerated in the Concurrent List, the law made by
Parliament shall prevail to the extent of the repugnancy and law made by the State shall, to the extent of
such repugnancy, be void.
(at pages 179-183)
(Emphasis Supplied)
46. In Vijay Kumar Sharma and Ors. Etc v. State of Karnataka, MANU/SC/0368/1990 : (1990) 2 SCC
562, this Court held that the Karnataka Contract Carriages (Acquisition) Act, 1976 enacted under Entry
42 of List III was not repugnant to the Motor Vehicles Act, 1988 enacted under Entry 35 of the same List.
In so holding, Sawant, J. laid down:
32. Thus the Karnataka Act and the MV Act, 1988 deal with two different subject matters. As stated
earlier the Karnataka Act is enacted by the State Legislature for acquisition of contract carriages under
Entry 42 of the Concurrent List read with Article 31 of the Constitution to give effect to the provisions of
Articles 39(b) and (c) thereof. The MV Act 1988 on the other hand is enacted by the Parliament under
Entry 35 of the Concurrent List to regulate the operation of the motor vehicles. The objects and the
subject matters of the two enactments are materially different. Hence the provisions of Article 254 do not
come into play in the present case and hence there is no question of repugnancy between the two
legislations.
(at page 581)
47. Ranganath Misra, J., in a concurring judgment, posed the question as to whether when the State law is
under one head of legislation in the Concurrent List and the Parliamentary legislation is under another
head in the same list, can there be repugnancy at all? The question was answered thus:
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13. In Clause (1) of Article 254 it has been clearly indicated that the competing legislations must be in
respect of one of the matters enumerated in the Concurrent List. The seven Judge Bench examining the
vires of the Karnataka Act did hold that the State Act was an Act for acquisition and came within Entry
42 of the Concurrent List. That position is not disputed before us. There is unanimity at the bar that the
Motor Vehicles Act is a legislation coming within Entry 35 of the Concurrent List. Therefore, the
Acquisition Act and the 1988 Act as such do not relate to one common head of legislation enumerated in
the Concurrent List and the State Act and the parliamentary statute deal with different matters of
legislation.
19. A number of precedents have been cited at the hearing and those have been examined and even some
which were not referred to at the bar. There is no clear authority in support of the stand of the Petitioners -
- where the State law is under one head of legislation in the Concurrent List, the subsequent Parliamentary
legislation is under another head of legislation in the same list and in the working of the two it is said to
give rise to a question of repugnancy.
(at pages 575 and 577)
48. In Rajiv Sarin v. State of Uttarakhand MANU/SC/0913/2011 : (2011) 8 SCC 708, this Court
examined the Kumaun and Uttarakhand Zamindari Abolition and Land Reforms Act, 1960 vis-`-vis the
Forest Act, 1927 and found that there was no repugnancy between the two. This Court held:
52. The aforesaid position makes it quite clear that even if both the legislations are relatable to List III of
the Seventh Schedule of the Constitution, the test for repugnancy is whether the two legislations "exercise
their power over the same subject-matter..." and secondly, whether the law of Parliament was intended "to
be exhaustive to cover the entire field". The answer to both these questions in the instant case is in the
negative, as the Indian Forest Act, 1927 deals with the law relating to forest transit, forest levy and forest
produce, whereas the KUZALR Act deals with the land and agrarian reforms.
53. In respect of the Concurrent List under Seventh Schedule to the Constitution, by definition both the
legislatures viz. the Parliament and the State legislatures are competent to enact a law. Thus, the only way
in which the doctrine of pith and substance can and is utilised in determining the question of repugnancy
is to find out whether in pith and substance the two laws operate and relate to the same matter or not. This
can be either in the context of the same Entry in List III or different Entries in List III of the Seventh
Schedule of the Constitution. In other words, what has to be examined is whether the two Acts deal with
the same field in the sense of the same subject matter or deal with different matters.
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(at page 727)
(Emphasis Supplied)
49. It will be noticed that the Constitution Bench judgment in Rajiv Sarin (supra) does not at all refer to
Tika Ramji (supra). Tika Ramji (supra) had clearly held that the doctrine of pith and substance cannot be
referred to in determining questions of repugnancy, once it is found that both the Parliamentary law and
State law are referable to the Concurrent List. Therefore, the statement in paragraph 53 in Rajiv Sarin
(supra), that the doctrine of pith and substance has utility in finding out whether, in substance, the two
laws operate and relate to the same matter, may not be a correct statement of the law in view of the
unequivocal statement made in Tika Ramji (supra) by an earlier Constitution Bench decision. However,
the following sentence is of great importance, which is, that the two laws, namely, the Parliamentary and
the State legislation, do not need to find their origin in the same entry in List III so long as they deal,
either as a whole or in part, with the same subject matter. This clarification of the law is important in that
Ranganath Misra, J.'s separate concurring opinion in Vijay Kumar Sharma (supra) seems to point to a
different direction. However, Hoechst Pharmaceuticals (supra), also does not agree with this view and
indicates that so long as the two laws are traceable to a matter in the Concurrent List and there is
repugnancy, the State law will have to be yield to the Central law except if the State law is covered by
Article 254(2).
50. The case law referred to above, therefore, yields the following propositions:
i) Repugnancy Under Article 254 arises only if both the Parliamentary (or existing law) and the State law
are referable to List III in the 7th Schedule to the Constitution of India.
ii) In order to determine whether the Parliamentary (or existing law) is referable to the Concurrent List
and whether the State law is also referable to the Concurrent List, the doctrine of pith and substance must
be applied in order to find out as to where in pith and substance the competing statutes as a whole fall. It
is only if both fall, as a whole, within the Concurrent List, that repugnancy can be applied to determine as
to whether one particular statute or part thereof has to give way to the other.
iii) The question is what is the subject matter of the statutes in question and not as to which entry in List
III the competing statutes are traceable, as the entries in List III are only fields of legislation; also, the
language of Article 254 speaks of repugnancy not merely of a statute as a whole but also "any provision"
thereof.
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iv) Since there is a presumption in favour of the validity of statutes generally, the onus of showing that a
statute is repugnant to another has to be on the party attacking its validity. It must not be forgotten that
that every effort should be made to reconcile the competing statutes and construe them both so as to avoid
repugnancy - care should be taken to see whether the two do not really operate in different fields qua
different subject matters.
v) Repugnancy must exist in fact and not depend upon a mere possibility.
vi) Repugnancy may be direct in the sense that there is inconsistency in the actual terms of the competing
statutes and there is, therefore, a direct conflict between two or more provisions of the competing statutes.
In this sense, the inconsistency must be clear and direct and be of such a nature as to bring the two Acts or
parts thereof into direct collision with each other, reaching a situation where it is impossible to obey the
one without disobeying the other. This happens when two enactments produce different legal results when
applied to the same facts.
vii) Though there may be no direct conflict, a State law may be inoperative because the Parliamentary law
is intended to be a complete, exhaustive or exclusive code. In such a case, the State law is inconsistent
and repugnant, even though obedience to both laws is possible, because so long as the State law is
referable to the same subject matter as the Parliamentary law to any extent, it must give way. One test of
seeing whether the subject matter of the Parliamentary law is encroached upon is to find out whether the
Parliamentary statute has adopted a plan or scheme which will be hindered and/or obstructed by giving
effect to the State law. It can then be said that the State law trenches upon the Parliamentary statute.
Negatively put, where Parliamentary legislation does not purport to be exhaustive or unqualified, but
itself permits or recognises other laws restricting or qualifying the general provisions made in it, there can
be said to be no repugnancy.
viii) A conflict may arise when Parliamentary law and State law seek to exercise their powers over the
same subject matter. This need not be in the form of a direct conflict, where one says "do" and the other
says "don't". Laws under this head are repugnant even if the Rule of conduct prescribed by both laws is
identical. The test that has been applied in such cases is based on the principle on which the Rule of
implied repeal rests, namely, that if the subject matter of the State legislation or part thereof is identical
with that of the Parliamentary legislation, so that they cannot both stand together, then the State
legislation will be said to be repugnant to the Parliamentary legislation. However, if the State legislation
or part thereof deals not with the matters which formed the subject matter of Parliamentary legislation but
with other and distinct matters though of a cognate and allied nature, there is no repugnancy.
71
ix) Repugnant legislation by the State is void only to the extent of the repugnancy. In other words, only
that portion of the State's statute which is found to be repugnant is to be declared void.
x) The only exception to the above is when it is found that a State legislation is repugnant to
Parliamentary legislation or an existing law if the case falls within Article 254(2), and Presidential assent
is received for State legislation, in which case State legislation prevails over Parliamentary legislation or
an existing law within that State. Here again, the State law must give way to any subsequent
Parliamentary law which adds to, amends, varies or repeals the law made by the legislature of the State,
by virtue of the operation of Article 254(2) proviso.
51. Applying the aforesaid Rules to the facts of the present case, we find that the State statute in question
is the Maharashtra Act. The Statement of Objects and Reasons for the aforesaid Act reads thus:
In order to mitigate the hardship that may be caused to the workers who may be thrown out of
employment by the closure of an undertaking, Government may take over such undertaking either on
lease or on such conditions as may be deemed suitable and run it as a measure of unemployment relief. In
such cases Government may have to fix revised terms of employment of the workers or to make other
changes which may not be in consonance with the existing labour laws or any agreements or awards
applicable to the undertaking. It may become necessary even to exempt the undertaking from certain legal
provisions. For these reasons it is proposed to obtain power to exclude an undertaking, run by or under
the authority of Government as a measure of unemployment relief, from the operation of certain labour
laws or any specified provisions thereof subject to such conditions and for such periods as may be
specified. It is also proposed to make a provision to secure that while the rights and liabilities of the
original employer and workmen may remain suspended during the period the undertaking is run by
Government, they would revive and become enforceable as soon as the undertaking ceases to be under the
control of Government.
There is no doubt that this Maharashtra Act is referable to Entry 23, List III in the 7th Schedule to the
Constitution, which reads as under:
23. Social security and social insurance; employment and unemployment.
Sections 3 and 4 of the Maharashtra Act are material and are set out herein:
3. Declaration of relief undertaking.
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(1) If at any time it appears to the State Government necessary to do so, the State Government may, by
notification in the Official Gazette, declare that an industrial undertaking specified in the notification,
whether started, acquired or otherwise taken over by the State Government, and carried on or proposed to
be carried on by itself or under its authority, or to which any loan, guarantee or financial assistance has
been provided by the State Government shall, with effect from the date specified for the purpose in the
notification, be conducted to serve as a measure of preventing unemployment or of unemployment relief
and the undertaking shall accordingly be deemed to be a relief undertaking for the purposes of this Act.
(2) A notification Under Sub-section (1) shall have effect for such period not exceeding twelve months as
may be specified in the notification
but it shall be renewable by like notifications from time to time for further periods not exceeding twelve
months at a time, so however that all the periods in the aggregate do not exceed fifteen years.
4. Power to prescribe industrial relations and other facilities temporarily for relief undertakings.
(1) Notwithstanding any law, usage, custom, contract, instrument, decree, order, award, submission,
settlement, standing order or other provision whatsoever, the State Government may, by notification in
the Official Gazette, direct that-
(a) in relation to any relief undertaking and in respect of the period for which the relief undertaking
continues as such Under Sub-section (2) of Section 3-
(i) all or any of the laws in the Schedule to this Act or any provisions thereof shall not apply (and such
relief undertaking shall be exempt therefrom), or shall, if so directed by the State Government, be applied
with such modifications (which do not however affect the policy of the said laws) as may be specified in
the notification;
(ii) all or any of the agreements, settlements, awards or standing orders made under any of the laws in the
Schedule to this Act, which may be applicable to the undertaking immediately before it was acquired or
taken over by the State Government or before any loan, guarantee or other financial assistance was
provided to it by, or with the approval of the State Government, for being run as a relief undertaking, shall
be suspended in operation or shall, if so directed by the State Government, be applied with such
modifications as may be specified in the notification;
73
(iii) rights, privileges, obligations and liabilities shall be determined and be enforceable in accordance
with Clauses (i) and (ii) and the notification;
(iv) any right, privilege, obligation on liability accrued or incurred before the undertaking was declared a
relief undertaking and any remedy for the enforcement thereof shall be suspended and all proceedings
relative thereto pending before any court, tribunal, officer or authority shall be stayed;
(b) the right, privilege, obligation and liability referred to in Clause (a) (iv) shall, on the notification
ceasing to have force, revive and be enforceable and the proceedings referred to therein shall be
continued:
Provided that in computing the period of limitation for the enforcement of such right, privilege, obligation
or liability, the period during which it was suspended under Clause (a) (iv) shall be excluded
notwithstanding anything contained in any law for the time being in force.
(2) A notification Under Sub-section (1) shall have effect from such date, not being earlier than the date
referred to in Sub-section (1) of Section 3, as may be specified therein, and the provisions of Section 21
of the Bombay General Clauses Act, 1904, shall apply to the power to issue such notification.
52. On the other hand, the Insolvency and Bankruptcy Code, 2016 is an Act to consolidate and amend the
laws relating to reorganization and insolvency resolution, inter alia, of corporate persons. Insofar as
corporate persons are concerned, amendments are made to the following enactments by Sections 249 to
252 and 255:
249. Amendments of Act 51 of 1993.
The Recovery of Debts due to Banks and Financial Institutions Act, 1993 shall be amended in the
manner specified in the Fifth Schedule.
The Finance Act, 1994 shall be amended in the manner specified in the Sixth Schedule.
The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest
Act, 2002 shall be amended in the manner specified in the Seventh Schedule.
74
The Sick Industrial Companies (Special Provisions) Repeal Act, 2003 shall be amended in the
manner specified in the Eighth Schedule.
(253) and (254) xxx xxx xxx
The Companies Act, 2013 shall be amended in the manner specified in the Eleventh Schedule.
53. It is settled law that a consolidating and amending act like the present Central enactment forms a code
complete in itself and is exhaustive of the matters dealt with therein. In Ravula Subba Rao and Anr. v.
The Commissioner of Income Tax, Madras MANU/SC/0042/1956 : (1956) S.C.R. 577, this Court held:
The Act is, as stated in the preamble, one to consolidate and amend the law relating to income-tax. The
Rule of construction to be applied to such a statute is thus stated by Lord Herschell in Bank of England v.
Vagliano [(1891) AC 107, 141]:
I think the proper course is in the first instance to examine the language of the statute, and to ask what is
its natural meaning, uninfluenced by any considerations derived from the previous state of the law, and
not to start with inquiring how the law previously stood, and then, assuming that it was probably
"intended to leave it unaltered...
We must therefore construe the provisions of the Indian Income-tax Act as forming a code complete in
itself and exhaustive of the matters dealt with therein, and ascertain what their true scope is."
(at page 585)
Similarly in Union of India v. Mohindra Supply Company MANU/SC/0004/1961 : [1962] 3 S.C.R. 497,
this Court held:
The Arbitration Act of 1940 is a consolidating and amending statute and is for all purposes a code relating
to arbitration. In dealing with the interpretation of the Indian Succession Act, 1865, the Privy Council in
Narendra Nath Sircar v. Kamlabasini Desai [MANU/PR/0021/1896 : (1896) LR 23, IA 18] observed that
a code must be construed according to the natural meaning of the language used and not on the
presumption that it was intended to leave the existing law unaltered. The Judicial Committee approved of
75
the observations of Lord Herschell in Bank of England v. Vagliano Brothers [(1891) AC 107, 144-145] to
the following effect:
I think the proper course is in the first instance to examine the language of the statute and to ask what is
its natural meaning uninfluenced by any considerations derived from the previous state of the law, and not
to start with enquiring how the law previously stood, and then, assuming that it was probably intended to
leave it unaltered, to see if the words of the enactment will bear an interpretation in conformity with this
view. If a statute, intended to embody in a code a particular branch of the law, is to be treated in this
fashion, it appears to me that its utility will be almost entirely destroyed, and the very object with which it
was enacted will be frustrated. The purpose of such a statute surely was that on any point specifically
dealt with by it the law should be ascertained by interpreting the language used instead of, as before, by
roaming over a vast number of authorities in order to discover what the law was, extracting it by a minute
critical examination of the prior decisions....
The court in interpreting a statute must therefore proceed without seeking to add words which are not to
be found in the statute, nor is it permissible in interpreting a statute which codifies a branch of the law to
start with the assumption that it was not intended to alter the pre-existing law
nor to add words which are not to be found in the statute, or "for which authority is not found in the
statute".
(at pages 506-508)
In Joseph Peter v. State of Goa, Daman and Diu MANU/SC/0097/1977 : (1977) 3 SCC 280, this Court
dealt with a Goa Regulation vis-`-vis the Code of Criminal Procedure. In that context, this Court
observed:
A Code is complete and that marks the distinction between a Code and an ordinary enactment. The Code
of Criminal Procedure, by that canon, is self-contained and complete.
(at page 282)
There can be no doubt, therefore, that the Code is a Parliamentary law that is an exhaustive code on the
subject matter of insolvency in relation to corporate entities, and is made under Entry 9, List III in the 7th
Schedule which reads as under:
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9. Bankruptcy and insolvency.
54. On reading its provisions, the moment initiation of the corporate insolvency resolution process takes
place, a moratorium is announced by the adjudicating authority vide Sections 13 and 14 of the Code, by
which institution of suits and pending proceedings etc. cannot be proceeded with. This continues until the
approval of a resolution plan Under Section 31 of the said Code. In the interim, an interim resolution
professional is appointed Under Section 16 to manage the affairs of corporate debtors Under Section 17.
55. It is clear, therefore, that the earlier State law is repugnant to the later Parliamentary enactment as
under the said State law, the State Government may take over the management of the relief undertaking,
after which a temporary moratorium in much the same manner as that contained in Sections 13 and 14 of
the Code takes place Under Section 4 of the Maharashtra Act. There is no doubt that by giving effect to
the State law, the aforesaid plan or scheme which may be adopted under the Parliamentary statute will
directly be hindered and/or obstructed to that extent in that the management of the relief undertaking,
which, if taken over by the State Government, would directly impede or come in the way of the taking
over of the management of the corporate body by the interim resolution professional. Also, the
moratorium imposed Under Section 4 of the Maharashtra Act would directly clash with the moratorium to
be issued Under Sections 13 and 14 of the Code. It will be noticed that whereas the moratorium imposed
under the Maharashtra Act is discretionary and may relate to one or more of the matters contained in
Section 4(1), the moratorium imposed under the Code relates to all matters listed in Section 14 and
follows as a matter of course. In the present case it is clear, therefore, that unless the Maharashtra Act is
out of the way, the Parliamentary enactment will be hindered and obstructed in such a manner that it will
not be possible to go ahead with the insolvency resolution process outlined in the Code. Further, the non-
obstante Clause contained in Section 4 of the Maharashtra Act cannot possibly be held to apply to the
Central enactment, inasmuch as a matter of constitutional law, the later Central enactment being
repugnant to the earlier State enactment by virtue of Article 254 (1), would operate to render the
Maharashtra Act void vis-`-vis action taken under the later Central enactment. Also, Section 238 of the
Code reads as under:
Section 238. Provisions of this Code to override other laws.-
The provisions of this Code shall have effect, notwithstanding anything inconsistent therewith contained
in any other law for the time being in force or any instrument having effect by virtue of any such law.
77
It is clear that the later non-obstante Clause of the Parliamentary enactment will also prevail over the
limited non-obstante Clause contained in Section 4 of the Maharashtra Act. For these reasons, we are of
the view that the Maharashtra Act cannot stand in the way of the corporate insolvency resolution process
under the Code.
56. Dr. Singhvi, however, argued that the notification under the Maharashtra Act only kept in temporary
abeyance the debt which would become due the moment the notification under the said Act ceases to have
effect. We are afraid that we cannot accede to this contention. The notification under the Maharashtra Act
continues for one year at a time and can go upto 15 years. Given the fact that the timeframe within which
the company is either to be put back on its feet or is to go into liquidation is only 6 months, it is obvious
that the period of one year or more of suspension of liability would completely unsettle the scheme of the
Code and the object with which it was enacted, namely, to bring defaulter companies back to the
commercial fold or otherwise face liquidation. If the moratorium imposed by the Maharashtra Act were to
continue from one year upto 15 years, the whole scheme and object of the Code would be set at naught.
Undeterred by this, Dr. Singhvi, however, argued that since the suspension of the debt took place from
July, 2015 onwards, the Appellant had a vested right which could not be interfered with by the Code. It is
precisely for this reason that the non-obstante clause, in the widest terms possible, is contained in Section
238 of the Code, so that any right of the corporate debtor under any other law cannot come in the way of
the Code. For all these reasons, we are of the view that the Tribunal was correct in appreciating that there
would be repugnancy between the provisions of the two enactments. The judgment of the Appellate
Tribunal is not correct on this score because repugnancy does exist in fact.
57. Both the Tribunal and the Appellate Tribunal refused to go into the other contentions of Dr. Singhvi,
viz. that under the MRA, it was because the creditors did not disburse the amounts thereunder that the
Appellant was not able to pay its dues. We are of the view that the Tribunal and the Appellate Tribunal
were right in not going into this contention for the very good reason that the period of 14 days within
which the application is to be decided was long over by the time the second application was made before
the Tribunal. Also, the second application clearly appears to be an after-thought for the reason that the
corporate debtor was fully aware of the fact that the MRA had failed and could easily have pointed out
these facts in the first application itself. However, for reasons best known to it, the Appellant chose to
take up only a law point before the Tribunal. The law point before the Tribunal was argued on 22nd and
23rd December, 2016, presumably with little success. It is only as an after-thought that the second
application was then filed to add an additional string to a bow which appeared to the Appellants to have
already been broken.
78
58. Even otherwise, Shri Salve took us through the MRA in great detail. Dr. Singhvi did likewise to
buttress his point of view that having promised to infuse funds into the Appellant, not a single naya paisa
was ever disbursed. According to us, one particular Clause in the MRA is determinative on the merits of
this case, even if we were to go into the same. Under Article V. entitled "Representations and
Warranties", Clause 20(t) states as follows:
(t) NATURE OF OBLIGATIONS.
The obligations under this Agreement and the other Restructuring Documents constitute direct,
unconditional and general obligations of the Borrower and the Reconstituted Facilities, rank at least pari
passu as to priority of payment to all other unsubordinated indebtedness of the Borrower other than any
priority established under applicable law.
59. The obligation of the corporate debtor was, therefore, unconditional and did not depend upon infusing
of funds by the creditors into the Appellant company. Also, the argument taken for the first time before us
that no debt was in fact due under the MRA as it has not fallen due (owing to the default of the secured
creditor) is not something that can be countenanced at this stage of the proceedings. In this view of the
matter, we are of the considered view that the Tribunal and the Appellate Tribunal were right in admitting
the application filed by the financial creditor ICICI Bank Ltd.
60. The appeals, accordingly, stand dismissed. There shall, however, be no order as to costs.
79
Order Passed in September 2017
Appellants: Chitra Sharma & Ors.

Vs.
Respondent: Union Of India & Ors.
Judges/Coram:
Hon’ble Justice Sh. A.M. Khawilkar & Dr. D.Y. Chandrachud
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Ajit Kumar Sinha, & Mr. K.V. Viswanathan, Senior Advocates &
Mr. Ashwarya Sinha, Mr. Fuzail Ahmad & Mr. Shuvodeep Roy, AOR & Mr. Fuzail Ahmad Ayyubi, Mrs.
Priyanka Sinha, Mr. Srijan Sinha, Mr. Srijan Sinha, Himanshu Chaubey, Ajita Tandon, Ms. Ameyvikrama
Thanvi, Ms. Alankrita Sinha, Mrs. Mohini Priya, Mr. Girik Bhalla, Mr. Mohana, Ms. Geetali Talukdar,
Ms. Sujeeya Srivastava, Mr. Manoj Goel, Mr. Naman Kamboj, Md. Izhar Alam, Mr. M.P. Singh, & Mr.
Varun K. Chopra, Learned Advocates
For Respondents/Defendant: Mr. K.K. Venugopal, AG & Mr.Tushar Mehta, ASG & Ms. Swarupama
Chaturvedi, Mr. Naveen Kumar, Mr. Ajit Sharma, Mr. Shwarya Sinha, Mr. Bijoy Kumar Jain, Mr.
Varinder Kumar Sharma, Ms. Anil Katiyar, Mr. Amit Sharma, & Ms. Taruna Singh Gohil, AOR & Mr.
D.K. Singh, AAG & Dr. Abhishek Manu Singhvi, Mr. P. Chidambaram, Mr. J.K. Das, Mr. P.S. Patwalia,
Mr. R.S. Suri, & Mr. Anand Grover, Senior Advocates & Ms. Madhvi Divan, Ms. Nidhi Khanna, Mr.
Ayush Puri, Mr. K.P. Singh, Mr. B.N. Dubey, Mr. L.Vishwanathan, Mr. Bishwajit Dubey, Ms. Srideepa
Bhattacharya, Mr. Aditya Marwah, Mr. Shankh Sengupta, Mr. Sandeep Devashish Das, Mr. Pallav
Shukla, Mr. Ramakant Rai, Mr. Pawan Upadhyay, Mrs. Anisha Upashyay, Mr. Nishant Kuamr, Mr.
Krishna Kanodia, Ms. Sharmila Upadhyay, Mr. Pawan Upadhyay, Ms. Sharmila Upadhyay, Mr. Ratik
Sharma, Mr. Akash Tyagi, Mr. Anvesh Verma, Mr. Rakshit Thakur, Mr. Vijayant Singh, Mr. Shovan
Mishra, Mr. Abhimanyu Bhandari, Ms. Nattasha Garg, Mr. Rajiv Virmani, Ms. Komal Mundhra, Mr.
Saurabh Agrawal, Ms. Parul Sharma, Mr. Nakul Dewan, Mr. Pradhuman Gohil, Mr. Dipesh Sinha & Ms.
Ayiala Imti, Learned Advocates
ORDER
Hon’ble Justice Sh. A.M. Khawikar & Dr. D.Y. Chandrachud
All the applications for intervention/impeadment are allowed.
I.A.No.87575 of 2017 in SLP(C)No.24001 & 24002/2017 (D.No.27277/2017, 27579/2017 &

27624/2017)
The present interlocutory application has been filed by the IDBI Bank Limited in the special
leave petitions which have been registered as SLP(C)Nos.24001 & 24002/2017.
80
This is an application for vacating/modification of the order dated 04.09.2017. On that day, this
Court while issuing notice, had passed the following order:
“In the meantime the impugned order(s) passed by the National

Company Law Tribunal, Allahabad shall remain stayed until further orders.
A copy of the special leave petition be served on the office of learned

Attorney General for India. All applications for impleadment/intervention stand
allowed.”
Mr.K.K.Venugopal, learned Attorney General for India appearing for respondent Nos.1 and 2 submitted
that the order passed by this Court on 04.09.2017 needs to be vacated or modified because the
consequence of the stay would be that the Management of respondent No.3 – Jaypee Infratech Ltd. would
stand restored. This was not a consequence intended by this Court. It is urged by him that if the erstwhile
Management of the said company continues, it will affect the rights of the creditors and the consumers as
well.
In the course of the hearing, we have been informed that after the order of stay was passed by this
Court, the Interim Resolution Professional (IRP) has handed over records to respondent No.3 – Jaypee
Infratech Ltd. (“JIL”). It is submitted by Mr.K.K.Venugopal, learned Attorney General that some time
should be granted to the IRP to formulate at least a preliminary scheme so that the interest of all
stakeholders is protected. He has also shown his concern for the interest of the home buyers.
Dr.Abhishek Manu Singhvi, learned Senior Counsel appearing for IDBI Bank Limited –
(respondent No.6 in the writ petition) submits that under the statutory scheme, the IRP has to take over
otherwise the letter and spirit of the Act is likely to be affected.
Learned counsel appearing for the home buyers, in contra, submits that they belong to the lower and
middle income group and have invested life savings with JIL and with its holding company, Jai Prakash
Associates Ltd.(”JAL”). It has been assiduously urged that the investments of flat purchasers are with JIL
and JAL and, therefore, the interest of the purchasers may be protected. It is also argued that if the IRP is
restored, there should be a representative from the home buyers or this Court may appoint someone on
this Committee of Creditors and espouse the interests of the home buyers.
Having heard learned counsel for the parties at length, in modification of the order dated 04.09.2017, we
issue the following directions:
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a) The IRP shall forthwith take over the Management of JIL. The IRP shall formulate and submit an
Interim Resolution Plan within 45 days before this Court. The Interim Resolution Plan shall make all
necessary provisions to protect the interests of the home buyers;
b) Mr.Shekhar Naphade, learned senior counsel along with Ms.Shubhangi Tuli, Advocate-on-
Record, shall participate in the meetings of the Committee of Creditors under Section 21 of the
Insolvency and Bankruptcy Code, 2016 to espouse the cause of the home buyers and protect their
interests;
c) The Managing Director and the Directors of JIL and JAL shall not leave India without the prior
permission of this Court;
d) JAL which is not a party to the insolvency proceedings, shall deposit a sum of Rs.2,000
crores(Rupees two thousand crores) before this Court on or before 27.10.2017. For the said purpose, if
any assets or property of JAL have to be sold, that should be done after obtaining prior approval of this
Court. Any person who was a Director or Managing Director of JIL or JAL on the date of the institution
of the insolvency proceedings against JIL as well as the present Directors/Managing Director shall also
not leave the country without prior permission of this Court. The foregoing restraint shall not apply to
nominee Directors of lending institutions (IDBI/ICICI/SBI);
e) All suits and proceeding instituted against JIL shall in terms of Section 14(1)(a) remain stayed as
we have directed the IRP to remain in Management.
Be it clarified that we have passed this order keeping in view the provisions of the Act and also
the interest of the home buyers.
I.A.stands disposed of accordingly.
The matter be listed at 2.00 P.M. on 13.11.2017.
The prior date given by this Court i.e. 10.10.2017 stands cancelled.
82
Civil Appeal No. 8400 of 2017 and Civil Appeal Nos. 15090-91 of 2017 (Arising out of Diary No. 22835
of 2017)
Appellants: Surendra Trading Company

Vs.
Respondent: Juggilal Kamlapat Jute Mills Company Ltd. and Ors.
Judges/Coram:
Hon’ble Sh. A.K. Sikri and Sh. Ashok Bhushan, JJ.
Counsels:
For Appellant/Petitioner/Plaintiff: Krishnan Venugopal, Sr. Adv., Sunil Fernandes, Astha Sharma, Nupur
Kumar, Gaurav Kejriwal, Pradeep Agarwal and Sujit Keshri, Advs.
For Respondents/Defendant: Neeraj Kishan Kaul, Sr. Adv., Arunabh Chaudhary, Ankur Chawla, Kanika
Singh, Sangram Singh, R.K. Mohit Gupta, Akshay Sahani, Vaibhav Tomar, COAC, Kailash Chand, Satish
Vig and Akshat Kumar, Advs.
JUDGMENT
Hon’ble Sh. A.K. Sikri, J.
1. Permission to file the appeal is granted and delay condoned in Diary No. 22835 of 2017.
2. Though this case has a past history as well, in the instant appeal, we are concerned with the correctness
of the order dated May 01, 2017 passed by the National Company Law Appellate Tribunal (hereinafter
referred to as, the 'NCLAT') whereby it is held that the time of seven days prescribed in proviso to Sub-
section (5) of Section 9 of the Insolvency and Bankruptcy Code, 2016 (for short, the 'Code') is mandatory
in nature and if the defects contained in the application filed by the 'operational creditor' for initiating
corporate insolvency resolution against a corporate debtor are not removed within seven days of the
receipt of notice given by the adjudicating authority for removal of such objections, then such an
application filed Under Section 9 of the Code is liable to be rejected. The precise question of law which
was framed by the NCLAT for its decision is to the following effect:
Whether the time limit prescribed in Insolvency & Bankruptcy Code, 2016 (hereinafter referred to as
Code 2016) for admitting or rejecting a petition or initiation of insolvency resolution process is
mandatory?
83
3. Chapter II of Part II of the Code deals with corporate insolvency resolution process. Under Section 7 of
the Code, financial creditor (as per the definition contained in Section 5(7)) can initiate corporate
insolvency resolution process. Section 8, on the other hand, deals with insolvency resolution by
operational creditor. Operational creditor is defined in Section 5(2) of the Code to mean a person to whom
an operational debt is owed and includes any person to whom such debt has been legally assigned or
transferred. This Section provides that if 'default' has occurred in payment of the said debt within the
meaning of Section 2(12), such an operational creditor may send a demand notice to the corporate debtor
demanding payment of the amount involved in the default, in the prescribed manner, giving ten days
notice in this behalf. The corporate debtor is given ten days time to bring to the notice of the operational
creditor about the existence of a dispute, if any, however, send requisite proof for repayment of unpaid
operational debt. However, in case the payment is not received or notice of dispute is not received,
operational creditor can file an application Under Section 9 for initiation of corporate insolvency
resolution process. Since we are concerned with this provision, the same is reproduced below in its
entirety:
9. Application for initiation of corporate insolvency resolution process by operational creditor. - (1)
After the expiry of the period of ten days from the date of delivery of the notice or invoice demanding
payment Under Sub-section (1) of Section 8, if the operational creditor does not receive payment from the
corporate debtor or notice of the dispute under Sub-section (2) of Section 8, the operational creditor may
file an application before the Adjudicating Authority for initiating a corporate insolvency resolution
process.
(2) The application Under Sub-section (1) shall be filed in such form and manner and accompanied with
such fee as may be prescribed.
(3) The operational creditor shall, along with the application furnish --
"(a) a copy of the invoice demanding payment or demand notice delivered by the operational creditor to
the corporate debtor;
(b) an affidavit to the effect that there is no notice given by the corporate debtor relating to a dispute of
the unpaid operational debt;
(c) a copy of the certificate from the financial institutions maintaining accounts of the operational creditor
confirming that there is no payment of an unpaid operational debt by the corporate debtor; and
84
(d) such other information as may be specified.
(4) An operational creditor initiating a corporate insolvency resolution process under this section, may
propose a resolution professional to act as an interim resolution professional.
section (2), by an order--
(i) admit the application and communicate such decision to the operational creditor and the corporate
debtor if,--
"(a) the application made Under Sub-section (2) is complete;
(b) there is no repayment of the unpaid operational debt; (c) the invoice or notice for payment to the
corporate debtor has been delivered by the operational creditor;
(d) no notice of dispute has been received by the operational creditor or there is no record of dispute in the
information utility; and
(e) there is no disciplinary proceeding pending against any resolution professional proposed Under Sub-
section (4), if any.
(ii) reject the application and communicate such decision to the operational creditor and the corporate
debtor, if--
"(a) the application made Under Sub-section (2) is incomplete;
(b) there has been repayment of the unpaid operational debt;
(c) the creditor has not delivered the invoice or notice for payment to the corporate debtor;
(d) notice of dispute has been received by the operational creditor or there is a record of dispute in the
information utility; or
(e) any disciplinary proceeding is pending against any proposed resolution professional:
85
Provided that Adjudicating Authority, shall before rejecting an application under Sub-clause (a) of Clause
(ii) give a notice to the applicant to rectify the defect in his application within seven days of the date of
receipt of such notice from the adjudicating Authority.
application under Sub-section (5) of this section.
4. A reading of the aforesaid provision would reflect that time limits for taking certain actions by either
the operational creditor or adjudicating authority are mentioned therein. As per Sub-section (1) of Section
9, application can be filed after the expiry of period of ten days from the delivery of notice or invoice
demanding payment, which is in tune with the provisions contained in Section 8 that gives ten days time
to the corporate debtor to take any of the steps mentioned in Sub-section (2) of Section 8. As per Sub-
section (2) of Section 9, the operational creditor is supposed to file an application in the prescribed form
and manner which needs to be accompanied by requisite/prescribed fee as well. Sub-section (3) puts an
obligation on the part of the operational creditor to furnish the information stipulated therein. Once such
an application is filed and received by the adjudicating authority, fourteen days time is granted to the
adjudicating authority to ascertain from the records of an information utility or on the basis of other
evidence furnished by the operational creditor, whether default on the part of corporate debtor exists or
not. This exercise, as per Sub-section (5), is to be accomplished by the adjudicating authority within
fourteen days. Sub-section (5) provides two alternatives to the adjudicating authority while dealing with
such an application. In case it is satisfied that conditions mentioned in Clause (i) of Section 9(5) are
satisfied, the adjudicating authority may pass an order admitting such an application. On the other hand, if
the adjudicating authority finds existence of any eventuality stated in Sub-section (2), it may order
rejection of such an application.
5. One of the conditions, with which we are concerned, is that application Under Sub-section (2) has to be
complete in all respects. In other words, the adjudicating authority has to satisfy that it is not defective. In
case the adjudicating authority, after the scrutiny of the application, finds that there are certain defects
therein and it is not complete as per the provisions of Sub-section (2), in that eventuality, the proviso to
Sub-section (5) mandates that before rejecting the application, the adjudicating authority has to give a
notice to the applicant to rectify the defect in his application within seven days of receipt of such notice.
6. Sub-section (5) of Section 9, thus, stipulates two time periods. Insofar as the adjudicating authority is
concerned, it has to take a decision to either admit or reject the application with the period of fourteen
days. Insofar as defects in the application are concerned, the adjudicating authority has to give a notice to
86
the applicant to rectify the defects before rejecting the application on that ground and seven days period is
given to the applicant to remove the defects.
7. The question before the NCLAT was as to whether time of fourteen days given to the adjudicating
authority for ascertaining the existence of default and admitting or rejecting the application is mandatory
or directory. Further question (with which this Court is concerned) was as to whether the period of seven
days for rectifying the defects is mandatory or directory.
8. The NCLAT has held that period of fourteen days prescribed for the adjudicating authority to pass such
an order is directory in nature, whereas period of seven days given to the applicant/operational creditor
for rectifying the defects is mandatory in nature. Conclusion in this behalf is stated in paragraphs 43 and 4
of the impugned order and these paragraphs read as under:
43. Thus, in view of the aforementioned unambiguous position of law laid down by the Hon'ble Apex
Court and discussion as made above, we hold that the mandate of Sub-section (5) of Section 7 or Sub-
section (5) of Section 9 or Sub-section (4) of Section 10 is procedural in nature, a tool of aid in
expeditious dispensation of justice and is directory.
44. However, the 7 days' period for the rectification of defects as stipulated under proviso to the relevant
provisions as noticed above is required to be complied with by the corporate debtor whose application,
otherwise, being incomplete is fit to be rejected, in this background we hold that the proviso to Sub-
section (5) of Section 7 or proviso to Sub-section (5) of Section 9 or proviso to Sub-section (4) of Section
10 to remove the defect within 7 days are mandatory, and on failure applications are fit to be rejected.
On the basis of the aforesaid findings, the NCLAT directed rejection of the application filed by the
operational creditor in the following manner:
51. Further, we find that the application was defective, and for the said reason the application was not
admitted within the specified time. Even if it is presumed that 7 additional days time was to be granted to
the operational creditor, the defects having pointed out on 16th February 2017 and having not taken care
within time, we hold that the petition Under Section 9 filed by Respondent/operational creditor being
incomplete was fit to be rejected.
52. For the reasons aforesaid, we direct the Adjudicating Authority to reject and close the Petition
preferred by Respondents. After we reserved the judgment if any order has been passed by the
Adjudicating Authority, except order of dismissal, if any, are also declared illegal.
87
9. Before we pronounce as to whether the aforesaid rendition by the NCLAT is justified or not, it would
be apposite to take stock of certain essential facts.
10. Before the enactment of the Code, the relevant legislation dealing with such subject matters was the
Sick Industrial Companies (Special Provisions) Act, 1985 (hereinafter referred to as 'SICA'). Under this
Act, an industrial undertaking, on becoming sick (i.e. where its net worth got eroded), could file a
reference Under Section 15(1) of SICA, before the Board for Industrial and Financial Reconstruction (for
short, 'BIFR') constituted under SICA. BIFR, on admitting such a reference, was supposed to undertake
the exercise whether such a sick company can be revived or not. For this purpose, BIFR would appoint an
Operating Agency (OA) which was supposed to explore the possibility of revival plan in consultation
with the other stakeholders, particularly the creditors. If such reconstruction/revival scheme prepared by
the OA was found to be feasible by the BIFR, after ascertaining the views/objections of the concerned
parties, BIFR would sanction such a scheme. If that was not possible, BIFR would recommend winding
up of sick company by making reference in this behalf to the jurisdictional High Court. There was a
provision of appeal before the Appellate Authority for Industrial and Financial Reconstruction (AAIFR).
This scheme is stated in brief for the purposes of clarity of the matter though we are not concerned with
any of the provisions of SICA. Another aspect which needs to be mentioned is that on admitting the
reference, all other legal proceedings by creditors or other persons initiated against the said sick industrial
company had to be put on hold by virtue of the protection granted Under Section 22(1) of SICA.
11. Respondent No. 1 herein, namely, Juggilal Kamlapat Jute Mills Company Limited, became a sick
industrial company in the year 1994 and because of this reason it filed its reference Under Section 15(1)
of SICA. It was declared as a sick industrial company by the BIFR on December 16, 1994 as a result
whereof it came under the protective umbrella of Section 22(1) of SICA. According to the Appellant
(who is the operational creditor in this case), which is a jute trader, it had supplied raw jute to Respondent
No. 1 (the corporate debtor) in the years 2001, 2002 and 2003 in respect of which the corporate debtor
owned a sum of Rs. 17,06,766.95 p. Further, according to the operational creditor, the corporate debtor
had issued Certificate dated October 24, 2004 acknowledging the aforesaid debt. However, it was not in a
position to recover this debt because of the pendency of proceedings which resulted in stay of proceedings
in view of Section 22(1) of SICA. In the year 2007, one Kolkata based company, known as Rainey Park
Suppliers Private Limited (hereinafter referred to as 'Rainey Park'), invested in corporate debtor and took
over its management from its erstwhile promoters, i.e. J.K. Singhania Group. The operational creditor had
sent notices to Rainey Park to pay the aforesaid amount. However, it was not paid. Legal notices were
also sent and applications were also filed before the BIFR in this behalf. It led to various events which are
88
not required to be mentioned for the sake of brevity. Fact remains that the aforesaid debt was not
honoured or liquidated by the corporate debtor or Rainey Park. While the matter was pending with BIFR,
Sick Industrial Companies Repeal Act was passed on the enactment of the Code with effect from May 28,
2016. Resultantly, all proceedings before BIFR and AAIFR stood abated. With this embargo, Section
22(1) of SICA also vanished.
12. In these changed circumstances, the operational creditor served another demand notice dated January
06, 2017, in the statutory format prescribed under the Code, upon the corporate debtor calling up it to pay
the outstanding dues. As it was not paid, the operational creditor filed application for initiation of
corporate insolvency resolution process Under Section 9 of the Act. The chronology of events which took
place from the date of filing of the said application till the passing of the impugned order by the NCLAT
are mentioned herein below:
10.02.2017 The Appellant filed the application Under Section 9(2) of the Code,
being CP No. 10/ALD/2017, before the adjudicating authority under
the Code.
14.02.2017 The registry of the adjudicating authority pointed out some
procedural defects on the basis of the check list prepared for
scrutiny of the petition/application/appeal/reply as per Order No.
25/2/2016-NCLT dated 28.07.2016 and listed the application for
hearing before the adjudicating authority on 16.02.2017.
16.02.2017 The adjudicating authority granted time to the Appellant for
removal of the said procedural defects on 28.02.2017 and also
wanted to know about the stage of the proceedings before BIFR
when the proceedings stood abated.
28.02.2017 The Appellant removed the procedural defects. As inquired by the
adjudicating authority, the Appellant's counsel sought for some
more time for filing formal memo by providing/furnishing the latest
order passed by BIFR before the Code came into force.
03.03.2017 The Appellant filed its formal memo/additional documents/orders
arising in/out of the pending BIFR's proceedings which stood
abated. On 03.03.2017, the Respondent No. 1 debtor appeared
before the Adjudicating Authority and sought liberty to raise its
objections qua the maintainability of the application.
89
09.03.2017 The Corporate debtor/Respondent No. 1 company filed its written

objections before the Adjudicating Authority disputing the
maintainability of the application filed on various grounds like time
barred debt; the defective demand notice; civil suit filed against the
Appellant being Civil Suit No. 225 of 2017 before the District Court
and embargo created by Section 252 of the IB Code, 2016 the
proceedings cannot be initiated for a period of six months after
abatement of SICA.
One JK Jute Mill Mazdoor Morcha, Kanpur i.e. Respondent No. 2
herein moved an application seeking intervention in the matter and
brought on record various orders including the judgment dated
13.11.2014 passed by this Court in the matter of Ghanshyam Sarda
v. Shiv Shankar Trading Company & Ors., reported in
MANU/SC/1029/2014 : (2015) 1 SCC 298 wherein this Court has
found that the sale of assets without BIFR's permission as
questionable before the BIFR and also an order dated 18.11.2016
passed by this Court in the case of Ghanshyam Sarda v. Sashikant
Jha (i.e. contempt petition (civil) No. 338 of 2014), wherein the
Director(s) of the corporate debtor i.e. Respondent No. 1 have been
held guilty of contempt. It is also said that the corporate debtor i.e.
Respondent No. 1 also failed to clear the legitimate dues of the
workmen of jute mill which are worth more than 100crores in
rupees.
09.03.2017 In light of the foregoing scenario, the Adjudicating Authority for
providing substantial justice inter alia directed the Respondent No.
1/Corporate Debtor to maintain status quo in respect of its
immovable property until further orders.
21.03.2017 The interim order passed by the Adjudicating Authority, Allahabad
Bench on 09.03.2017 was challenged by the Respondent No.
1/Corporate Debtor Under Section 61 of the IB Code, 2016 before
the National Company Law Appellate Tribunal (NCLAT) being
Company Appeal No. 9 of 2017. The NCLAT on 21.03.2017 issued
notice in the said appeal inter alia observing that question of law is
90
involved in this case and directing the Adjudicating Authority not to

admit the application filed under the IB Code, 2016 by the
Appellant.
01.05.2017 The NCLAT has allowed the AT No. 09/2017 on the ground that the
application and Section 9 petition filed by Appellant herein was
incomplete, defected and was fit to be rejected. Hence, the NCLAT
was pleased to direct NCLT to reject and close the application filed
by the Appellant Under Section 9 of the IB Code, 2016 passed in the
impugned order inter alia rejecting the application filed by the
Appellant Under Section 9 of the IB Code, 2016 read with IB
(Application to Adjudicating Authority) Rules, 2016 being CP No.
(IB)10/ALD/2017.
13. We may point out at the outset that the learned senior Counsel appearing for the Appellant had
submitted that in the instant case the defects which were pointed out were not of the nature mentioned in
the Code but were in terms of the Companies Act, 2013. For this purpose, he had referred to the
Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 (hereinafter referred to
as 'Rules 2016') and on that basis it was argued that Section 9(5) of the Code did not apply in the instant
case inasmuch as there has to be difference between 'defective' application and 'incomplete' application.
He also submitted that the Respondent had been violating interim orders passed by BIFR in the
proceedings pending before it under SICA. However, we make it clear at the outset that since we are
dealing with the substantial issue as to whether seven days period provided for removing the defects is
mandatory or not, it is not necessary to touch upon these mundane aspects. Instead, it would be better to
concentrate on the substance of the matter.
14. As mentioned above, insofar as prescription of fourteen days within which the adjudicating authority
has to pass an order Under Sub-section (5) of Section 9 for admitting or rejecting the application is
concerned, the NCLAT has held that the same cannot be treated as mandatory. Though this view is not
under challenge (and rightly so), discussion in the impugned order on this aspect has definite bearing on
the other question, with which this Court is concerned. Therefore, we deem it apposite to discuss the
rationale which is provided by the NCLAT itself in arriving at the aforesaid conclusion insofar as first
aspect is concerned.
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15. It is pointed out by the NCLAT that where an application is not disposed of or an order is not passed
within a period specified in the Code, in such cases the adjudicating authority may record the reasons for
not doing so within the period so specified and may request the President of the NCLAT for extension of
time, who may, after taking into account the reasons so recorded, extend the period specified in the Code,
but not exceeding ten days, as provided in Section 64(1) of the Code. The NCLAT has thereafter scanned
through the scheme of the Code by pointing out various steps of the insolvency resolution process and the
time limits prescribed therefor. It is of relevance to mention here that the corporate insolvency resolution
process can be initiated by the financial creditor Under Section 7 of the Code, by the operational creditor
Under Section 9 of the Code and by a corporate applicant Under Section 10 of the Code. There is a slight
difference in these provisions insofar as criteria for admission or rejection of the applications filed under
respective provisions is concerned. However, it is pertinent to note that after the admission of the
insolvency resolution process, the procedure to deal with these applications, whether filed by the financial
creditor or operational creditor or corporate applicant, is the same. It would be relevant to glance through
this procedure.
16. On admission of the application, the adjudicating authority is required to appoint an Interim
Resolution Professional (for short, 'IRP') in terms of Section 16(1) of the Code. This exercise is to be
done by the adjudicating authority within fourteen days from the commencement of the insolvency date.
This commencement date is to reckon from the date of the admission of the application. Under Sub-
section (5) of Section 16, the term of IRP cannot exceed thirty days. Certain functions which are to be
performed by the IRP are mentioned in subsequent provisions of the Code, including management of
affairs of corporate debtor by IRP as well as duties of IRP so appointed. One of the important functions of
the IRP is to invite all claims against the corporate debtor, collate all those claims and determine the
financial position of the corporate debtor. After doing that, IRP is to constitute a committee of creditors
which shall comprise of financial creditors of the corporate debtor. The first meeting of such a committee
of creditors is to be held within seven days of the constitution of the said committee, as provided in
Section 22 of the Code. In the said first meeting, the committee of creditors has to take a decision to either
appoint IRP as Resolution Professional (RP) or to replace the IRP by another RP. Since term of IRP is
thirty days, all the aforesaid steps are to be accomplished within this thirty days period. Thereafter, when
RP is appointed, he is to conduct the entire corporate insolvency resolution process and manage the
operations of the corporate debtor during the said period. If is not necessary to state the further steps
which are to be taken by the RP in this behalf. What is important is that the entire corporate insolvency
resolution process is to be completed within the period of 180 days from the date of admission of the
applicant. This time limit is provided in Section 12 of the Act. This period of 180 days can be extended,
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but such extension is capped as extension cannot exceed 90 days. Even such an extension would be given
by the adjudicating authority only after recording a satisfaction that the corporate insolvency resolution
process cannot be completed within the original stipulated period of 180 days. If the resolution process
does not get completed within the aforesaid time limit, serious consequences thereof are provided Under
Section 33 of the Code. As per that provision, in such a situation, the adjudicating authority is required to
pass an order requiring the corporate debtor to be liquidated in the manner as laid down in the said
Chapter.
17. The aforesaid statutory scheme laying down time limits sends a clear message, as rightly held by the
NCLAT also, that time is the essence of the Code. Notwithstanding this salutary theme and spirit behind
the Code, the NCLAT has concluded that as far as fourteen days time provided to the adjudicating
authority for admitting or rejecting the application for initiation of insolvency resolution process is
concerned, this period is not mandatory.
For arriving at such a conclusion, the NCLAT has discussed the law laid down by this Court in some
judgments. Therefore, we deem it proper to reproduce the discussion of the NCLAT itself in this behalf:
32. In P.T. Rajan v. T.P.M. Sahir and Ors. MANU/SC/0768/2003 : (2003) 8 SCC 498, the Hon'ble
Supreme Court observed that where Adjudicating Authority has to perform a statutory function like
admitting or rejecting an application within a time period prescribed, the time period would have to held
to be directory and not mandatory. In the said case, Hon'ble Apex Court observed:
48. It is well-settled principle of law that where a statutory functionary is asked to perform a statutory
duty within the time prescribed therefor, the same would be directory and not mandatory. (See
Shiveshwar Prasad Sinha v. The District Magistrate of Monghur and Anr. MANU/BH/0030/1966 : AIR
(1966) Patna 144, Nomita Chowdhury v. The State of West Bengal and Ors. (1999) CLJ 21 and Garbari
Union Co-operative Agricultural Credit Society Limited and Anr. v. Swapan Kumar Jana and Ors. (1997)
1 CHN 189).
49. Furthermore, a provision in a statute which is procedural in nature although employs the word "shall"
may not be held to be mandatory if thereby no prejudice is caused.
33. That the Hon'ble Apex Court has on numerous occasions interpreted the word 'shall' to mean 'may'.
An analogous position can be found in the context of the time prescribed for filing Written Statements by
Defendants to a suit, wherein the Hon'ble Apex Court was faced with the question of a Court's power to
93
take on record Written Statements that were filed beyond the period of 90 days, as prescribed Under
Order VIII Rule 1 of the Code of Civil Procedure, 1908. In this regard, the Hon'ble Supreme Court in
Kailash v. Nanhku and Ors. MANU/SC/0264/2005 : (2005) 4 SCC 480 held as under:
"27. Three things are clear. Firstly, a careful reading of the language in which Order 8 Rule 1 has been
drafted, shows that it casts an obligation on the Defendant to file the written statement within 30 days
from the date of service of summons on him and within the extended time falling within 90 days. The
provision does not deal with the power of the court and also does not specifically take away the power of
the court to take the written statement on record though filed beyond the time as provided for. Secondly,
the nature of the provision contained in Order 8 Rule 1 is procedural. It is not a part of the substantive
law. Thirdly, the object behind substituting Order 8 Rule 1 in the present shape is to curb the mischief of
unscrupulous Defendants adopting dilatory tactics, delaying the disposal of cases much to the chagrin of
the Plaintiffs and Petitioners approaching the court for quick relief and also to the serious inconvenience
of the court faced with frequent prayers for adjournments. The object is to expedite the hearing and not to
scuttle the same. The process of justice may be speeded up and hurried but the fairness which is a basic
element of justice cannot be permitted to be buried."
34. Further, Hon'ble Supreme Court in the matter of Smt. Rani Kusum v. Smt. Kanchan Devi
MANU/SC/0489/2005 : (2005) 6 SCC 705, concurring with the ratio laid down in Kailash v. Nanhku
(supra) held that:
"10. All the Rules of procedure are the handmaid of justice. The language employed by the draftsman of
processual law may be liberal or stringent, but the fact remains that the object of prescribing procedure is
to advance the cause of justice. In an adversarial system, no party should ordinarily be denied the
opportunity of participating in the process of justice dispensation. Unless compelled by express and
specific language of the statute, the provisions of Code of Civil Procedure or any other procedural
enactment ought not to be construed in a manner which would leave the court helpless to meet
extraordinary situations in the ends of justice.
11. The mortality of justice at the hands of law troubles a judge's conscience and points an angry
interrogation at the law reformer.
12. The processual law so dominates in certain systems as to overpower substantive rights and substantial
justice. The humanist Rule that procedure should be the handmaid, not the mistress, of legal justice
compels consideration of vesting a residuary power in the judges to act ex debito justitiae where the tragic
94
sequel otherwise would be wholly inequitable. Justice is the goal of jurisprudence, processual, as much as
substantive. (See Sushil Kumar Sen v. State of Bihar [MANU/SC/0028/1975 : (1975) 1 SCC 774].)
13. No person has a vested right in any course of procedure. He has only the right of prosecution or
defence in the manner for the time being by or for the court in which the case is pending, and if, by an Act
of Parliament the mode of procedure is altered, he has no other right than to proceed according to the
altered mode. (See Blyth v. Blyth [(1966) 1 All ER 524 : 1966 AC 643 : (1966) 2 WLR 634 (HL)].) A
procedural law should not ordinarily be construed as mandatory; the procedural law is always subservient
to and is in aid to justice. Any interpretation which eludes or frustrates the recipient of justice is not to be
followed. (See Shreenath v. Rajesh [MANU/SC/0286/1998 : (1998) 4 SCC 543: AIR 1998 SC 1827].)
14. Processual law is not to be a tyrant but a servant, not an obstruction but an aid to justice. Procedural
prescriptions are the handmaid and not the mistress, a lubricant, not a resistant in the administration of
justice."
XX XX XX
41. Further, nature of the provisions contained in Sub-section (5) of Section 7 or Sub-section (5) of
Section 9 and Sub-section (4) of Section 10 of the 'Code' like Order VIII Rule 1 being procedural in
nature cannot be treated to be a mandate of law.
42. The object behind the time period prescribed Under Sub-section (5) of Section 7, Sub-section (5) of
Section 9 and Sub-section (4) of Section 10, like Order VIII, Rule 1 of Code of Civil Procedure is to
prevent the delay in hearing the disposal of the cases. The Adjudicating Authority cannot ignore the
provisions. But in appropriate cases, for the reasons to be recorded in writing, it can admit or reject the
petition after the period prescribed Under Section 7 or Section 9 or Section 10.
18. The NCLAT has also held that fourteen days period is to be calculated 'from the date of receipt of
application'. The NCLAT has clarified that date of receipt of application cannot be treated to be the date
of filing of the application. Since the Registry is required to find out whether the application is in proper
form and accompanied with such fee as may be prescribed, it will take some time in examining the
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application and, therefore, fourteen days period granted to the adjudicating authority under the aforesaid
provisions would be from the date when such an application is presented before the adjudicating
authority, i.e. the date on which it is listed for admission/order.
19. After analysing the provision of fourteen days time within which the adjudicating authority is to pass
the order, the NCLAT immediately jumped to another conclusion, viz., the period of seven days
mentioned in proviso to Sub-section (5) of Section 9 for removing the defect is mandatory, with the
following discussion:
otherwise, being incomplete is fit to be rejected. In this background we hold that the proviso to Sub-
There is no further discussion on this aspect.
20. We are not able to decipher any valid reason given while coming to the conclusion that the period
mentioned in proviso is mandatory. The order of the NCLAT, thereafter, proceeds to take note of the
provisions of Section 12 of the Code and points out the time limit for completion of insolvency resolution
process is 180 days, which period can be extended by another 90 days.
However, that can hardly provide any justification to construe the provisions of proviso to Sub-section (5)
of Section 9 in the manner in which it is done. It is to be borne in mind that limit of 180 days mentioned
in Section 12 also starts from the date of admission of the application. Period prior thereto which is
consumed, after the filing of the application Under Section 9 (or for that matter Under Section 7 or
Section 10), whether by the Registry of the adjudicating authority in scrutinising the application or by the
applicant in removing the defects or by the adjudicating authority in admitting the application is not to be
taken into account. In fact, till the objections are removed it is not to be treated as application validly filed
inasmuch as only after the application is complete in every respect it is required to be entertained. In this
scenario, making the period of seven days contained in the proviso as mandatory does not commend to us.
No purpose is going to be served by treating this period as mandatory. In a given case there may be
weighty, valid and justifiable reasons for not able to remove the defects within seven days.
Notwithstanding the same, the effect would be to reject the application.
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21. Let us examine the question from another lens. The moot question would be as to whether such a
rejection would be treated as rejecting the application on merits thereby debarring the application from
filing fresh application or it is to be treated as an administrative order since the rejection was because of
the reason that defects were not removed and application was not examined on merits. In the former case
it would be travesty of justice that even if the case of the applicant on merits is very strong, the applicant
is shown the door without adjudication of his application on merits. If the latter alternative is accepted,
then rejection of the application in the first instance is not going to serve any purpose as the applicant
would be permitted to file fresh application, complete in all aspects, which would have to be entertained.
Thus, in either case, no purpose is served by treating the aforesaid provision as mandatory.
22. Various provisions of the Code would indicate that there are three stages:
(i) First stage is the filing of the application. When the application is filed, the Registry of the adjudicating
authority is supposed to scrutinise the same to find out as to whether it is complete in all respects or there
are certain defects. If it is complete, the same shall be posted for preliminary hearing before the
adjudicating authority. If there are defects, the applicant would be notified about those defects so that
these are removed. For this purpose, seven days time is given. Once the defects are removed then the
application would be posted before the adjudicating authority.
(ii) When the application is listed before the adjudicating authority, it has to take a decision to either
admit or reject the application. For this purpose, fourteen days time is granted to the adjudicating
authority. If the application is rejected, the matter is given a quietus at that level itself. However, if it is
admitted, we enter the third stage.
(iii) After admission of the application, insolvency resolution process commences. Relevant provisions
thereof have been mentioned above. This resolution process is to be completed within 180 days, which is
extendable, in certain cases, up to 90 days. Insofar as the first stage is concerned, it has no bearing on the
insolvency resolution process at all, inasmuch as, unless the application is complete in every respect, the
adjudicating authority is not supposed to deal with the same. It is at the second stage that the adjudicating
authority is to apply its mind and decide as to whether the application should be admitted or rejected.
Here adjudication process starts. However, in spite thereof, when this period of fourteen days given by the
statute to the adjudicating authority to take a decision to admit or reject the application is directory, there
is no reason to make it mandatory in respect of the first stage, which is pre-adjudication stage.
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23. Further, we are of the view that the judgments cited by the NCLAT and the principle contained
therein applied while deciding that period of fourteen days within which the adjudicating authority has to
pass the order is not mandatory but directory in nature would equally apply while interpreting proviso to
Sub-section (5) of Section 7, Section 9 or Sub-section (4) of Section 10 as well. After all, the applicant
does not gain anything by not removing the objections inasmuch as till the objections are removed, such
an application would not be entertained. Therefore, it is in the interest of the applicant to remove the
defects as early as possible.
24. Thus, we hold that the aforesaid provision of removing the defects within seven days is directory and
not mandatory in nature. However, we would like to enter a caveat.
25. We are also conscious of the fact that sometimes applicants or their counsel may show laxity by not
removing the objections within the time given and make take it for granted that they would be given
unlimited time for such a purpose. There may also be cases where such applications are frivolous in
nature which would be filed for some oblique motives and the applicants may want those applications to
remain pending and, therefore, would not remove the defects. In order to take care of such cases, a
balanced approach is needed. Thus, while interpreting the provisions to be directory in nature, at the same
time, it can be laid down that if the objections are not removed within seven days, the applicant while
refilling the application after removing the objections, file an application in writing showing sufficient
case as to why the applicant could not remove the objections within seven days. When such an application
comes up for admission/order before the adjudicating authority, it would be for the adjudicating authority
to decide as to whether sufficient cause is shown in not removing the defects beyond the period of seven
days. Once the adjudicating authority is satisfied that such a case is shown, only then it would entertain
the application on merits, otherwise it will have right to dismiss the application. The aforesaid process
indicated by us can find support from the judgment of this Court in Kailash v. Nanhku and Ors.,
MANU/SC/0264/2005 : (2005) 4 SCC 480, wherein the Court held as under:
46. (iv) The purpose of providing the time Schedule for filing the written statement Under Order 8 Rule 1
Code of Civil Procedure is to expedite and not to scuttle the hearing. The provision spells out a disability
on the Defendant. It does not impose an embargo on the power of the court to extend the time. Though the
language of the proviso to Rule 1 Order 8 Code of Civil Procedure is couched in negative form, it does
not specify any penal consequences flowing from the non-compliance. The provision being in the domain
of the procedural law, it has to be held directory and not mandatory. The power of the court to extend
time for filing the written statement beyond the time Schedule provided by Order 8 Rule 1 Code of Civil
Procedure is not completely taken away.
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(v) Though Order 8 Rule 1 Code of Civil Procedure is a part of procedural law and hence directory,
keeping in view the need for expeditious trial of civil causes which persuaded Parliament to enact the
provision in its present form, it is held that ordinarily the time Schedule contained in the provision is to be
followed as a Rule and departure therefrom would be by way of exception. A prayer for extension of time
made by the Defendant shall not be granted just as a matter of routine and merely for the asking, more so
when the period of 90 days has expired. Extension of time may be allowed by way of an exception, for
reasons to be assigned by the Defendant and also be placed on record in writing, howsoever briefly, by
the court on its being satisfied. Extension of time may be allowed if it is needed to be given for
circumstances which are exceptional, occasioned by reasons beyond the control of the Defendant and
grave injustice would be occasioned if the time was not extended. Costs may be imposed and affidavit or
documents in support of the grounds pleaded by the Defendant for extension of time may be demanded,
depending on the facts and circumstances of a given case.
26. In fine, these appeals are allowed and that part of the impugned judgment of NCLAT which holds
proviso to Sub-section (5) of Section 7 or proviso to Sub-section (5) of Section 9 or proviso to Sub-
section (4) of Section 10 to remove the defects within seven days as mandatory and on failure
applications to be rejected, is set aside.
No costs.
99
C.A. No. 8400 of 2017 and C.A. Nos. 15091-15091 of 2017 (Arising out of Diary No. 22835 of 2017)
Appellants: Surendra Trading Company

Vs.
Respondent: Juggilal Kamlapat Jute Mills Company Ltd. and Ors.
Judges/Coram:
Hon’ble Sh. A.K. Sikri and Sh. Ashok Bhushan, JJ.
Counsels:
JUDGMENT
Hon’ble Sh. A.K. Sikri, J.
1. Permission to file the appeal is granted and delay condoned in Diary No. 22835 of 2017. Though this
case has a past history as well, in the instant appeal, we are concerned with the correctness of the order
dated May 01, 2017 passed by the National Company Law Appellate Tribunal (hereinafter referred to as,
the 'NCLAT') whereby it is held that the time of seven days prescribed in proviso to Sub-section (5) of
Section 9 of the Insolvency and Bankruptcy Code, 2016 (for short, the 'Code') is mandatory in nature and
if the defects contained in the application filed by the 'operational creditor' for initiating corporate
insolvency resolution against a corporate debtor are not removed within seven days of the receipt of
notice given by the adjudicating authority for removal of such objections, then such an application filed
Under Section 9 of the Code is liable to be rejected. The precise question of law which was framed by the
NCLAT for its decision is to the following effect:
Whether the time limit prescribed in Insolvency & Bankruptcy Code, 2016 (hereinafter referred to as
Code 2016) for admitting or rejecting a petition or initiation of insolvency resolution process is m
mandatory?
2. Chapter II of Part 11 of the Code deals with corporate insolvency resolution process. Under Section 7
of the Code, financial creditor (as per the definition contained in Section 5(7)) can initiate corporate
insolvency resolution process. Section 8, on the other hand, deals with insolvency resolution by
operational creditor. Operational creditor is defined in Section 5(2) of the Code to mean a person to whom
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an operational debt is owed and includes any person to whom such debt has been legally assigned or
transferred. This Section provides that if 'default' has occurred in payment of the said debt within the
meaning of Section 2(12), such an operational creditor may send a demand notice to the corporate debtor
demanding payment of the amount involved in the default, in the prescribed manner, giving ten days
notice in this behalf. The corporate debtor is given ten days time to bring to the notice of the operational
creditor about the existence of a dispute, if any, however, send requisite proof for repayment of unpaid
operational debt. However, in case the payment is not received or notice of dispute is not received,
operational creditor can file an application Under Section 9 for initiation of corporate insolvency
resolution process. Since we are concerned with this provision, the same is reproduced below in its
entirety:
9. Application for initiation of corporate insolvency resolution process by operational creditor. - (1) After
the expiry of the period often days from the date of delivery of the notice or invoice demanding payment
Under Sub-section (1) of Section 8, if the operational creditor does not receive payment from the
corporate debtor or notice of the dispute Under Sub-section (2) of Section 8, the operational creditor may
process.
(2) The application under Sub-section (1) shall be filed in such form and manner and accompanied with
(3) The operational creditor shall, along with the application furnish--
(a) a copy of the invoice demanding payment or demand notice delivered by the operational creditor to
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(5) The Adjudicating Authority shall, within fourteen days of the receipt of the application under Sub-
section (2), by an order--
debtor if,--
(a) the application made under Sub-section (2) is complete;
(b) there is no repayment of the unpaid operational debt;
(c) the invoice or notice for payment to the corporate debtor has been delivered by the operational
creditor;
(e) there is no disciplinary proceeding pending against any resolution professional proposed under Sub-
debtor, if--
(a) the application made under Sub-section (2) is incomplete;
Provided that Adjudicating Authority, shall before rejecting an application under Sub-clause (a) of Clause
(ii) give a notice to the applicant to rectify the defect in his application within seven days of the date of
receipt of such notice from the adjudicating Authority.
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application under Sub-section (5) of this section.
3. A reading of the aforesaid provision would reflect that time limits for taking certain actions by either
the operational creditor or adjudicating authority are mentioned therein. As per Sub-section (1) of Section
9, application can be filed after the expiry of period of ten days from the delivery of notice or invoice
demanding payment, which is in tune with the provisions contained in Section 8 that gives ten days time
to the corporate debtor to take any of the steps mentioned in Sub-section (2) of Section 8. As per Sub-
section (2) of Section 9, the operational creditor is supposed to file an application in the prescribed form
and manner which needs to be accompanied by requisite/prescribed fee as well. Sub-section (3) puts an
obligation on the part of the operational creditor to furnish the information stipulated therein. Once such
an application is filed and received by the adjudicating authority, fourteen days time is granted to the
adjudicating authority to ascertain from the records of an information utility or on the basis of other
evidence furnished by the operational creditor, whether default on the part of corporate debtor exists or
not. This exercise, as per Sub-section (5), is to be accomplished by the adjudicating authority within
fourteen days. Sub-section (5) provides two alternatives to the adjudicating authority while dealing with
such an application. In case it is satisfied that conditions mentioned in Clause (i) of Section 9(5) are
satisfied, the adjudicating authority may pass an order admitting such an application. On the other hand, if
the adjudicating authority finds existence of any eventuality stated in Sub-section (2), it may order
rejection of such an application.
4. One of the conditions, with which we are concerned, is that application under Sub-section (2) has to be
complete in all respects. In other words, the adjudicating authority has to satisfy that it is not defective. In
case the adjudicating authority, after the scrutiny of the application, finds that there are certain defects
therein and it is not complete as per the provisions of Sub-section (2), in that eventuality, the proviso to
Sub-section (5) mandates that before rejecting the application, the adjudicating authority has to give a
notice to the applicant to rectify the defect in his application within seven days of receipt of such notice.
5. Sub-section (5) of Section 9, thus, stipulates two time periods. Insofar as the adjudicating authority is
concerned, it has to take a decision to either admit or reject the application with the period of fourteen
days. Insofar as defects in the application are concerned, the adjudicating authority has to give a notice to
the applicant to rectify the defects before rejecting the application on that ground and seven days period is
given to the applicant to remove the defects.
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6. The question before the NCLAT was as to whether time of fourteen days given to the adjudicating
authority for ascertaining the existence of default and admitting or rejecting the application is mandatory
or directory. Further question (with which this Court is concerned) was as to whether the period of seven
days for rectifying the defects is mandatory or directory.
7. The NCLAT has held that period of fourteen days prescribed for the adjudicating authority to pass such
an order is directory in nature, whereas period of seven days given to the applicant/operational creditor
for rectifying the defects is mandatory in nature. Conclusion in this behalf is stated in paragraphs 43 and 4
of the impugned order and these paragraphs read as under:
43. Thus, in view of the aforementioned unambiguous position of law hid down by the Hon'ble Apex
On the basis of the aforesaid findings, the NCLAT directed rejection of the application filed by the
operational creditor in the following manner:
admitted within the specified time. Even if it is presumed that 7 additional days time was to be granted to
the operational creditor, the defects having pointed out on 16th February 2017 and having not taken care
Within time, we hold that the petition Under Section 9 filed by Respondent/operational creditor being
incomplete was fit to be rejected.
8. Before we pronounce as to whether the aforesaid rendition by the NCLAT is justified or not, it would
be apposite to take stock of certain essential facts.
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9. Before the enactment of the Code, the relevant legislation dealing with such subject matters was the
Sick Industrial Companies (Special Provisions) Act, 1985 (hereinafter referred to as 'SICA'). Under this
Act, an industrial undertaking, on becoming sick (i.e. where its net worth got eroded), could file a
reference Under Section 15(1) of SICA, before the Board for Industrial and Financial Reconstruction (for
short, 'BIFR') constituted under SICA. BIFR, on admitting such a reference, was supposed to undertake
the exercise whether such a sick company can be revived or not. For this purpose, BIFR would appoint an
Operating Agency (OA) which was supposed to explore the possibility of revival plan in consultation
with the other stakeholders, particularly the creditors. If such reconstruction/revival scheme prepared by
the OA was found to be feasible by the BIFR, after ascertaining the views/objections of the concerned
parties, BIFR would sanction such a scheme. If that was not possible, BIFR would recommend winding
up of sick company by making reference in this behalf to the jurisdictional High Court. There was a
provision of appeal before the Appellate Authority for Industrial and Financial Reconstruction (AAIFR).
This scheme is stated in brief for the purposes of clarity of the matter though we are not concerned with
any of the provisions of SICA. Another aspect which needs to be mentioned is that on admitting the
reference, all other legal proceedings by creditors or other persons Initiated against the said sick industrial
company had to be put on hold by virtue of the protection granted Under Section 22(1) of SICA,
10. Respondent No. 1 herein, namely, Juggilal Kamlapat Jute Mills Company Limited, became a sick
industrial company in the year 1994 and because of this reason it filed its reference Under Section 15(1)
of SIGA. It was declared as a sick industrial company by the BIFR on December 16, 1994 as a result
whereof it came under the protective umbrella of Section 22(1) of SICA. According to the Appellant
(who is the operational creditor in this case), which is a jute trader, it had supplied raw jute to Respondent
No. 1 (the corporate debtor) in the years 2001, 2002 and 2003 in respect of which the corporate debtor
owned a sum of ` 17,06,766.95 p. Further, according to the operational creditor, the corporate debtor had
issued Certificate dated October 24, 2004 acknowledging the aforesaid debt. However, it was not in a
position to recover this debt because of the pendency of proceedings which resulted in stay of proceedings
in view of Section 22(1) of SICA. In the year 2007, one Kolkata based company, known as Rainey Park
Suppliers Private Limited (hereinafter referred to as 'Rainey Park'), invested in corporate debtor and took
over its management from its erstwhile promoters, i.e. J.K. Singhania Group. The operational creditor had
sent notices to Rainey Park to pay the aforesaid amount. However, it was not paid. Legal notices were
also sent an*d applications were also filed before the BIFR in this behalf. It led to various events which
are not required to be mentioned for the sake of brevity. Fact remains that the aforesaid debt was not
honoured or liquidated by the corporate debtor or Rainey Park. While the matter was pending with BIFR,
Sick Industrial Companies Repeal Act was passed on the enactment of the Code with effect from May 28,
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2016. Resultantly, all proceedings before BIFR and AAIFR stood abated. With this embargo, Section
22(1) of SICA also vanished.
11. In these changed circumstances, the operational creditor served another demand notice dated January
06, 2017, in the statutory format prescribed under the Code, upon the corporate debtor calling up it to pay
the outstanding dues. As it was not paid, the operational creditor filed application for initiation of
corporate insolvency resolution process Under Section 9 of the Act. The chronology of events which took
place from the date of filing of the said application till the passing of the impugned order by the NCLAT
are mentioned herein below:
10.02.2017 → The appellant filed the application under Section 9(2) of the Code, being CP No.
10/ALD/2017, before the adjudicating authority under the Code.
14.02.2017 → The registry of the adjudicating authority pointed out some procedural defects on the basis
of the check list prepared for scrutiny of the petition/application/appeal/reply as per Order No. 25/2/2016-
NCLT dated 28.07.2016 and listed the application for hearing before the adjudicating authority on
16.02.2017.
16.02.2017 → The adjudicating authority granted time to the appellant for removal of the said procedural
defects on 28.02.2017 and also wanted to know about the stage of the proceedings before BIFR when the
proceedings stood abated.
28.02.2017 → The appellant removed the procedural defects. As inquired by the adjudicating authority,
the appellant's counsel sought for some more time for filing formal memo. by providing/furnishing the
latest order passed by BIFR before the Code came into force.
03.03.2017 → The appellant filed its formal memo/additional documents/orders arising in/out of the
pending BIFR's proceedings which stood abated. On 03.03.2017, the respondent No. 1 debtor appeared
before the Adjudicating Authority and sought liberty to raise its objections qua the maintainability of the
application.
09.03.2017 → The Corporate debtor/respondent No. 1 company filed its written objections before the
Adjudicating Authority disputing the maintainability of the application filed on various grounds like time
barred debt; the defective demand notice; civil suit filed against the appellant being Civil Suit No. 225 Of
2017 before the District Court and embargo created by Section 252 of the IB Code, 2016 the proceedings
cannot be initiated for a period of six months after abatement of SICA.
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One JK Jute Mill Mazdoor Morcha, Kanpur i.e. respondent No. 2 herein moved an application seeking
intervention in the matter and brought on record various orders including the judgment dated 13.11.2014
passed by this Court in the matter of Ghanshyam Sarda v. Shiv Shankar Trading Company & Ors.,
reported in MANU/SC/1029/2014 : (2015) 1 SCC 298 wherein this Court has found that the sale of assets
without BIFR's permission as questionable before the BIFR and also an order dated 18.11.2016 passed by
this Court in the case of Ghanshyam Sarda v. Sashikant Jha (i.e. contempt petition (civil) No. 338 of
2014), wherein the Director(s) of the corporate debtor i.e. respondent No. 1 have been held guilty of
contempt. It is also said that the corporate debtor i.e. respondent No. 1 also failed to clear the legitimate
dues of the workmen of jute mill which are worth more than 100 crores in rupees.
09.03.2017 → In light of the foregoing scenario, the Adjudicating Authority for providing substantial
justice inter alia directed the respondent No. 1/Corporate Debtor to maintain status quo in respect of its
immovable property until further orders.
21.03.2017 → The interim order passed by the Adjudicating Authority, Allahabad Bench on 09.03.2017
was challenged by the respondent No. 1/Corporate Debtor under Section 61 of the IB Code, 2016 before
the National Company Law Appellate Tribunal (NCLAT) being Company Appeal No. 9 of 2017. The
NCLAT on 21.03.2017 issued notice in the said appeal inter alia observing that question of law is
involved in this case and directing the Adjudicating Authority not to admit the application filed under the
IB Code, 2016 by the appellant.
01.05.2017 → The NCLAT has allowed the AT No. 09/2017 on the ground that the application and
Section 9 petition filed by appellant herein was incomplete, defected and was fit to be rejected. Hence, the
NCLAT was pleased to direct NCLT to reject and close the application filed by the appellant under
Section 9 of the IB Code, 2016 passed in the impugned order inter alia rejecting the application filed by
the appellant under Section 9 of the IB Code, 2016 read with IB (Application to Adjudicating Authority)
Rules, 2016 being CP No. (IB)10/ALD/2017.
12. We may point out at the outset that the learned Senior Counsel appearing for the Appellant had
submitted that in the instant case the defects which were pointed out were not of the nature mentioned in
the Code but were in terms of the Companies Act, 2013. For this purpose, he had referred to the
as 'Rules 2016') and on that basis it was argued that Section 9(5) of the Code did not apply in the instant
case inasmuch as there has to be difference between 'defective' application and 'incomplete' application.
He also submitted that the Respondent had been violating interim orders passed by BIFR in the
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proceedings pending before it under SICA. However, we make it clear at the outset that since we are
dealing with the substantial issue as to whether seven days period provided for removing the defects is
mandatory or not, it is not necessary to touch upon these mundane aspects. Instead, it would be better to
concentrate on the substance of the matter.
13. As mentioned above, insofar as prescription of fourteen days within which the adjudicating authority
has to pass an order under Sub-section (5) of Section 9 for admitting or rejecting the application is
concerned, the NCLAT has held that the same cannot be treated as mandatory. Though this view is not
under challenge (and rightly so), discussion in the impugned order on this aspect has definite bearing on
the other question, with which this Court is concerned.. Therefore, we deem it apposite to discuss the
rationale which is provided by the NCLAT itself in arriving at the aforesaid conclusion insofar as first
aspect is concerned.
14. It is pointed out by the NCLAT that where an application is not disposed of or an order is not passed
within a period specified in the Code, in such cases the adjudicating authority may record the reasons for
not doing so within the period so specified and may request the President of the NCLAT for extension of
time, who may, after taking into account the reasons so recorded, extend the period specified in the Code,
but not exceeding ten days, as provided in Section 64(1) of the Code. The NCLAT has thereafter scanned
through the scheme of the Code by pointing out various steps of the insolvency resolution process and the
time limits prescribed therefore. It is of relevance to mention here that the corporate insolvency resolution
process can be initiated by the financial creditor Under Section 7 of the Code, by the operational creditor
Under Section 9 of the Code and by a corporate applicant Under Section 10 of the Code. There is a slight
difference in these provisions insofar as criteria for admission or rejection of the applications filed under
respective provisions is concerned. However, it is pertinent to note that after the admission of the
insolvency resolution process, the procedure to deal with these applications, whether filed by the financial
creditor or operational creditor or corporate applicant, is the same. It would be relevant to glance through
this procedure.
15. On admission of the application, the adjudicating authority is required to appoint an Interim
Resolution Professional (for short, 'IRP') in terms of Section 16(1) of the Code. This exercise is to be
done by the adjudicating authority within fourteen days from the commencement of the insolvency date.
This commencement date is to reckon from the date of the admission of the application. Under Sub-
section (5) of Section 16, the term of IRP cannot exceed thirty days. Certain functions which are to be
performed by the IRP are mentioned in subsequent provisions of the Code, including management of
affairs of corporate debtor by IRP as well as duties of IRP so appointed. One of the important functions of
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the IRP is to invite all claims against the corporate debtor, collate all those claims and determine the
financial position of the corporate debtor. After doing that, IRP is to constitute a committee of creditors
which shall comprise of financial creditors of the corporate debtor. The first meeting of such a committee
of creditors is to be held within seven days of the constitution of the said committee, as provided in
Section 22 of the Code. In the said first meeting, the committee of creditors has to take a decision to either
appoint IRP as Resolution Professional (RP) or to replace the IRP by another RP. Since term of IRP is
thirty days, all the aforesaid steps are to be accomplished within this thirty days period. Thereafter, when
RP is appointed, he is to conduct the entire corporate insolvency resolution process and manage the
operations of the corporate debtor during the said period. It is not necessary to state the further steps
which are to be taken by the RP in this behalf. What is important is that the entire corporate insolvency
resolution process is to be completed within the period of 180 days from the date of admission of the
applicant. This time limit is provided in Section 12 of the Act. This period of 180 days can be extended,
but such extension is capped as extension cannot exceed 90 days. Even such an extension would be given
by the adjudicating authority only after recording a satisfaction that the corporate insolvency resolution
process cannot be completed within the original stipulated period of 180 days. If the resolution process
does not get completed within the aforesaid time limit, serious consequences thereof are provided Under
Section 33 of the Code. As per that provision, in such a situation, the adjudicating authority is required to
pass an order requiring the corporate debtor to be liquidated in the manner as laid down in the said
Chapter.
16. The aforesaid statutory scheme laying down time limits sends a clear message, as rightly held by the
NCLAT also, that time is the essence of the Code. Notwithstanding this salutary theme and spirit behind
the Code, the NCLAT has concluded that as far as fourteen days time provided to the adjudicating
authority for admitting or rejecting the application for initiation of insolvency resolution process is
concerned, this period is not mandatory. For arriving at such a conclusion, the NCLAT has discussed the
law laid down by this Court in some judgments. Therefore, we deem it proper to reproduce the discussion
of the NCLAT itself in this behalf:
32. In P.T. Rajan v. T.P.M. Sahir and Ors. MANU/SC/0768/2003 : (2003) 8 SCC 498, the Hon'ble
Supreme Court observed that where Adjudicating Authority has to perform a statutory function like
admitting or rejecting an application within a time period prescribed, the time period would have to held
to be directory and not mandatory. In the said case, Hon'ble Apex Court observed:
48. It is well-settled principle of law that where a statutory functionary is asked to perform a statutory
duty within the time prescribed therefore, the same would be directory and not mandatory. (See
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Shiveshwar Prasad Sinha v. The District Magistrate of Monghur & Anr. AIR (1966) Patna 144, Nomita
Chowdhury v. The State of West Bengal and Ors. (1999) CLJ 21 and Garbari Union Co-operative
Agricultural Credit Society Limited and Anr. v. Swapan Kumar Jana and Ors. (1997) 1 CHN 189).
49. Furthermore, a provision in a statute which is procedural in nature although employs the word "shall"
may not be held to be mandatory if thereby no prejudice is caused.
33. That the Hon'ble Apex Court has on numerous occasions interpreted the word 'shall' to mean 'may'.
An analogous position can be found in the context of the time prescribed for filing Written Statements by
Defendants to a suit, wherein the Hon'ble Apex Court was faced with the question of a Court's power to
take on record Written Statements that were filed beyond the period of 90 days, as prescribed under Order
VIII Rule 1 of the Code of Civil Procedure, 1908. In this regard, the Hon'ble Supreme Court in Kailash v.
Nanhku and Ors. MANU/SC/0264/2005 : (2005) 4 SCC 480 held as under:
27. Three things are clear. Firstly, a careful reading of the language in which Order 8 Rule 1 has, been
drafted, shows that it casts an obligation on the Defendant to file the written statement within 30 days
from the date of service of summons on him and within the extended time falling within 90 days. The
provision does not deal with the power of the court and also does not specifically take away the power of
the court to take the written statement on record though filed beyond the time as provided for. Secondly,
the nature of ... the provision contained in Order 8 Rule 1 is procedural. It is not a part of the substantive
law. Thirdly, the object behind substituting Order 8 Rule 1 in the present shape is to curb the mischief of
unscrupulous Defendants adopting dilatory tactics, delaying the disposal of cases much to the chagrin of
the Plaintiffs and Petitioners approaching the court for quick relief and also to the serious inconvenience
of the court faced with frequent prayers for adjournments. The object is to expedite, the hearing and not to
scuttle the same. The process of justice may be speeded up and hurried but the fairness which is a basic
element of justice cannot be permitted to be buried.
34. Further, Hon'ble Supreme Court in the matter of Smt. Rani Kusum v. Smt. Kanchan Devi
MANU/SC/0489/2005 : (2005) 6 SCC 705, concurring with the ratio laid down in Kailash v. Nanhku
(supra) held that:
10. All the rules of procedure are the handmaid of justice. The language employed by the draftsman of
processual law may be liberal or stringent, but the fact remains that the object of prescribing procedure is
to advance the cause of justice. In an adversarial system, no party should ordinarily be denied the
opportunity of participating in the process of justice dispensation. Unless compelled by express and
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specific language of the statute, the provisions of Code of Civil Procedure or any other procedural
enactment ought not to be construed in a manner which would leave the court helpless to meet
extraordinary situations in the ends of justice.
11. The mortality of justice at the hands of law troubles a judge's conscience and points an angry
interrogation at the law reformer.
12. The processual law so dominates in certain systems as to overpower substantive rights and substantial
justice. The humanist rule that procedure should be the handmaid, not the mistress, of legal justice
compels consideration of vesting a residuary power in the judges to act ex debito justitiae where the tragic
sequel otherwise would be wholly inequitable. Justice is the goal of jurisprudence, processual, as much as
substantive. (See Sushil Kumar Sen v. State of Bihar MANU/SC/0028/1975 : (1975) 1 SCC 774.)
13. No person has a vested right in any course of procedure. He has only the right of prosecution or
defence in the manner for the time being by or for the court in which the case is pending, and if, by an Act
of Parliament the mode of procedure is altered, he has no other right than to proceed according to the
altered mode. (See Blyth v. Blyth (1966) 1 All ER 524 : 1966 AC 643 : (1966) 2 WLR 634 (HL)) A
procedural law should not ordinarily be construed as mandatory; the procedural law is always subservient
to and is in aid to justice. Any interpretation which eludes or frustrates the recipient of justice is not to be
followed. (See Shreenath v. Rajesh MANU/SC/0286/1998 : (1998) 4 SCC 543 : AIR 1998 SC 1827)
14. Processual law is not to be a tyrant but a servant, not an obstruction but an aid to justice. Procedural
prescriptions are the handmaid and not the mistress, a lubricant, not a resistant in the administration of
justice.
xx xx xx
41. Further, nature of the provisions contained in Sub-section (5) of Section 7 or Sub-section (5) of
Section 9 and Sub-section (4) of Section 10 of the 'Code' like Order VIII Rule 1 being procedural in
nature cannot be treated to be a mandate of law.
42. The object behind the time period prescribed Under Sub-section (5) of Section 7, Sub-section (5) of
Section 9 and Sub-section (4) of Section 10, like Order VIII, Rule 1 of Code of Civil Procedure is to
prevent the delay in hearing the disposal of the cases. The Adjudicating Authority cannot ignore the
provisions. But in appropriate cases, for the reasons to be recorded in writing, it can admit or reject the
petition after the period prescribed Under Section 7 or Section 9 or Section 10.
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17. The NCLAT has also held that fourteen days period is to be calculated 'from the date of receipt of
application'. The NCLAT has clarified that date of receipt of application cannot be treated to be the date
of filing of the application. Since the Registry is required to find out whether the application is in proper
form and accompanied with such fee as may be prescribed, it will take some time in examining the
application and, therefore, fourteen days period granted to the adjudicating authority under the aforesaid
provisions would be from the date when such an application is presented before the adjudicating
authority, i.e. the date on which it is listed for admission/order.
18. After analysing the provision of fourteen days time within which the adjudicating authority is to pass
the order, the NCLAT immediately jumped to another conclusion, viz. the period of seven days
mentioned in proviso to Sub-section (5) of Section 9 for removing the defect is mandatory, with the
following discussion:
There is no further discussion on this aspect.
19. We are not able to decipher any valid reason given while coming to the conclusion that the period
mentioned in proviso is mandatory. The order of the NCLAT, thereafter, proceeds to take note of the
provisions of Section 12 of the Code and points out the time limit for completion of insolvency resolution
process is 180 days, which period can be extended by another 90 days. However, that can hardly provide
any justification to construe the provisions of proviso to Sub-section (5) of Section 9 in the manner in
which it is done. It is to be borne in mind that limit of 180 days mentioned in Section 12 also starts from
the date of admission of the application. Period prior thereto which is consumed, after the filing of the
application Under Section 9 (or for that matter Under Section 7 or Section 10), whether by the Registry of
the adjudicating authority in scrutinising the application or by the applicant in removing the defects or by
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the adjudicating authority in admitting the application is not to be taken into account. In fact, till the
objections are removed it is not to be treated as application validly filed inasmuch as only after the
application is complete in every respect it is required to be entertained. In this scenario, making the period
of seven days contained in the proviso as mandatory does not commend to us. No purpose is going to be
served by treating this period as mandatory. In a given case there may be weighty, valid and justifiable
reasons for not able to remove the defects within seven days. Notwithstanding the same, the effect would
be to reject the application.
20. Let us examine the question from another lens. The moot question would be as to whether such a
rejection would be treated as rejecting the application on merits thereby debarring the application from
filing fresh application or it is to be treated as an administrative order since the rejection was because of
the reason that defects were not removed and application was not examined on merits. In the former case
it would be travesty of justice that even if the case of the applicant on merits is very strong, the applicant
is shown the door without adjudication of his application on merits. If the latter alternative is accepted,
then rejection of the application in the first instance is not going to serve any purpose as the applicant
would be permitted to file fresh application, complete in all aspects, which would have to be entertained.
Thus, in either case, no purpose is served by treating the aforesaid provision as mandatory.
21. Various provisions of the Code would indicate that there are three stages:
(i) First stage is the filing of the application. When the application is filed, the Registry of the adjudicating
authority is supposed to scrutinise the same to find out as to whether it is complete in all respects or there
are certain defects. If it is complete, the same shall be posted for preliminary hearing before the
adjudicating authority. If there are defects, the applicant would be notified about those defects so that
these are removed. For this purpose, seven days time is given. Once the defects are removed then the
application would be posted before the adjudicating authority.
(ii) When the application is listed before the adjudicating authority, it has to take a decision to either
admit or reject the application. For this purpose, fourteen days time is granted to the adjudicating
authority. If the application is rejected, the matter is given a quietus at that level itself. However, if it is
admitted, we enter the third stage.
(iii) After admission of the application, insolvency resolution process commences. Relevant provisions
thereof have been mentioned above. This resolution process is to be completed within 180 days, which is
extendable, in certain cases, up to 90 days. Insofar as the first stage is concerned, it has no bearing on the
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insolvency resolution process at all, inasmuch as, unless the application is complete in every respect, the
adjudicating authority is not supposed to deal with the same. It is at the second stage that the adjudicating
authority is to apply its mind and decide as to whether the application should be admitted or rejected.
Here adjudication process starts. However, in spite thereof, when this period of fourteen days given by the
statute to the adjudicating authority to take a decision to admit or reject the application is directory, there
is no reason to make it mandatory in respect of the first stage, which is pre-adjudication stage.
22. Further, we are of the view that the judgments cited by the NCLAT and the principle contained
therein applied while deciding that period of fourteen days within which the adjudicating authority has to
pass the order is not mandatory but directory in nature would equally apply while interpreting proviso to
Sub-section (5) of Section 7, Section 9 or Sub-section (4) of Section 10 as well. After all, the applicant
does not gain anything by not removing the objections inasmuch as till the objections are removed, such
an application would not be entertained. Therefore, it is in the interest of the applicant to remove the
defects as early as possible.
23. Thus, we hold that the aforesaid provision of removing the defects within seven days is directory and
not mandatory in nature. However, we would like to enter a caveat.
24. We are also conscious of the fact that sometimes applicants or their counsel may show laxity by not
removing the objections within the time given and make take it for granted that they would be given
unlimited time for such a purpose. There may also be cases where such applications are frivolous in
nature which would be filed for some oblique motives and the applicants may want those applications to
remain pending and, therefore, would not remove the defects. In order to take care of such cases, a
balanced approach is needed. Thus, while interpreting the provisions to be directory in nature, at the same
time, it can be laid down that if the objections are not removed within seven days, the applicant while
refilling the application after removing the objections, file an application in writing showing sufficient
case as to why the applicant could not remove the objections within seven days. When such an application
comes up for admission/order before the adjudicating authority, it would be for the adjudicating authority
to decide as to whether sufficient cause is shown in not removing the defects beyond the period of seven
days. Once the adjudicating authority is satisfied that such a case is shown, only then it would entertain
the application on merits, otherwise it will have right to dismiss the application. The aforesaid process
indicated by us can find support from the judgment of this Court in Kailash v. Nanhku and Ors.
MANU/SC/0264/2005 : (2005) 4 SCC 480, wherein the Court held as under:
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46.(iv) The purpose of providing the time schedule for filing the written statement under Order 8 Rule 1
Code of Civil Procedure is to expedite and not to scuttle the hearing. The provision spells out a disability
on the Defendant. It does not impose an embargo on the power of the court to extend the time. Though the
language of the proviso to Rule 1 Order 8 Code of Civil Procedure is couched in negative form, it does
not specify any penal consequences flowing from the non-compliance. The provision being in the domain
of the procedural law, it has to be held directory and not mandatory. The power of the court to extend
time for filing the written statement beyond the time schedule provided by Order 8 Rule 1 Code of Civil
Procedure is not completely taken away.
(v) Though Order 8 Rule 1 Code of Civil Procedure is a part of procedural law and hence directory,
keeping in view the need for expeditious trial of civil causes which persuaded Parliament to enact the
provision in its present form, it is held that Ordinarily the time schedule contained in the provision is to be
followed as a rule and departure therefrom would be by way of exception. A prayer for extension of time
made by the Defendant shall not be granted just as a matter of routine and merely for the asking, more so
when the period of 90 days has expired. Extension of time may be allowed by way of an exception, for
reasons to be assigned by the Defendant and also be placed on record in writing, howsoever briefly, by
the court on its being satisfied. Extension of time may be allowed if it is needed to be given for
circumstances which are exceptional, occasioned by reasons beyond the control of the Defendant and
grave injustice would be occasioned if the time was not extended. Costs may be imposed and affidavit or
documents in support of the grounds pleaded by the Defendant for extension of time may be demanded,
depending on the facts and circumstances of a given case.
In fine, these appeals are allowed and that part of the impugned judgment of NCLAT which holds proviso
to Sub-section (5) of Section 7 or proviso to Sub-section (5) of Section 9 or proviso to Sub-section (4) of
Section 10 to remove the defects within seven days as mandatory and on failure applications to be
rejected, is set aside.
No costs.
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Civil Appeal No. 9405 of 2017
Appellants: Mobilox Innovations Private Limited

Vs.
Respondent: Kirusa Software Private Limited
Judges/Coram:
Hon’ble Sh. Rohinton Fali Nariman and Sh. Sanjay Kishan Kaul, JJ.
Counsels:
JUDGMENT
Hon’ble Sh. Rohinton Fali Nariman, J.
1. The present appeal raises questions as to the triggering of the Insolvency and Bankruptcy Code, 2016
when it comes to operational debts owed to operational creditors. The Appellant was engaged by Star TV
for conducting tele-voting for the "Nach Baliye" program on Star TV. The Appellant in turn
subcontracted the work to the Respondent and issued purchase orders between October and December,
2013 in favour of the Respondent. In the "Nach Baliye" program, the successful dancer was to be selected
on various bases, including viewers' votes. For this purpose, the Respondent was to provide toll free
telephone numbers across India, through which the viewers of the program could cast their votes in
favour of one or more participants. For this purpose, a software was customized by the Respondent, who
then coordinated the results and provided them to the Appellant. Since the Respondent obtained toll free
numbers from telephone operators in terms of the purchase orders, the Appellant was liable to make
payment of rentals for the toll free numbers, as well as primary rate interface rental to the telecom
operators. The Respondent provided the requisite services and raised monthly invoices between
December, 2013 and November, 2014 - the invoices were payable within 30 days from the date on which
they were received. The Respondent followed up with the Appellant for payment of pending invoices
through e-mails sent between April and October, 2014. It is also important to note that a non-disclosure
agreement (hereinafter referred to as the NDA) was executed between the parties on 26th December, 2014
with effect from 1st November, 2013.
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2. More than a month after execution of the aforesaid agreement, the Appellant, on 30th January, 2015,
wrote to the Respondent that they were withholding payments against invoices raised by the Respondent,
as the Respondent had disclosed on their webpage that they had worked for the "Nach Baliye" program
run by Star TV, and had thus breached the NDA. The correspondence between the parties finally
culminated in a notice dated 12th December, 2016 sent Under Section 271 of the Companies Act, 2013.
Presumably because winding up on the ground of being unable to pay one's debts was no longer a ground
to wind up a company under the said Act, a demand notice dated 23rd December, 2016 was sent for a
total of Rs. 20,08,202.55 Under Section 8 of the new Insolvency and Bankruptcy Code, 2016 (hereinafter
referred to as the Code). By an e-mail dated 27th December, 2016, the Appellant responded to the
aforesaid notice stating that there exists serious and bona fide disputes between the parties, that the notice
issued was a pressure tactic, and that nothing was payable inasmuch as the Respondent had been told way
back on 30th January, 2015 that no amount will be paid to the Respondent since it had breached the NDA.
3. An application was then filed on 30th December, 2016 before the National Company Law Tribunal
Under Sections 8 and 9 of the new Code stating that an operational debt of Rs. 20,08,202.55 was owed to
the Respondent.
4. On 19th January, 2017, the Respondent was orally intimated to remove a defect in the application, in
that it did not contain the Appellant's notice of dispute. This was rectified by an affidavit in compliance
dated 24th January, 2017, by which various other documents were also supplied by the Respondent to the
Tribunal. On 27th January, 2017, the Tribunal dismissed the aforesaid application in the following terms:
On perusal of this notice dated 27.12.2016 disputing the debt allegedly owed to the Petitioner, this Bench,
looking at the Corporate Debtor disputing the claim raised by the Petitioner in this CP, hereby holds that
the default payment being disputed by the Corporate Debtor, for the Petitioner has admitted that the
notice of dispute dated 27th December 2016 has been received by the operational creditor, the claim made
by the Petitioner is hit by Section (9)(5)(ii)(d) of The Insolvency and Bankruptcy Code, hence this
Petition is hereby rejected.
5. An appeal was then filed before the National Company Law Appellate Tribunal which was decided on
24th May, 2017. This appeal was allowed in the following terms:
39. In the present case the adjudicating authority has acted mechanically and rejected the application
Under Sub-section (5)(ii)(d) of Section 9 without examining and discussing the aforesaid issue. If the
adjudicating authority would have noticed the provisions as discussed above and what constitutes 'dispute'
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in relation to services provided by operational creditors then it would have come to a conclusion that
condition of demand notice Under Sub-section (2) of Section 8 has not been fulfilled by the corporate
debtor and the defence claiming dispute was not only vague, got up and motivated to evade the liability.
40. For the reasons aforesaid we set aside the impugned order dated 27.1.2017 passed by adjudicating
authority in CP No. 01/I & BP/NCLT/MAH/2017 and remit the case to adjudicating authority for
consideration of the application of the Appellant for admission if the application is otherwise complete.
41. The appeal is allowed with the aforesaid observations. However, in the facts and circumstances there
shall be no order as to cost.
6. Shri Mohta, learned Counsel on behalf of the Appellant, raised various contentions before us.
According to learned Counsel, the application should have been dismissed on the ground that the
operational creditor did not furnish a copy of the certificate from a financial institution, viz. IDBI in the
present case, that maintained accounts of the operational creditor, which confirmed that there is no
payment of any unpaid operational debt by the corporate debtor Under Section 9(3)(c) of the Code. This
being so, the application ought to have been dismissed at the very threshold. Apart from this, the learned
Counsel took us through various committee reports and the provisions of the Code and argued that Under
Section 8 of the Code, the moment a corporate debtor, within 10 days of the receipt of a demand notice or
copy of invoice, brings to the notice of the operational creditor the existence of a dispute between the
parties, the Tribunal is obliged to dismiss the application. According to him, Under Section (8)(2)(a), the
expression "existence of a dispute, if any, and record of the pendency of the suit or arbitration
proceedings filed ..." must be read as existence of a dispute "or" record of the pendency of the suit or
arbitration proceedings filed, i.e. disjunctively. According to the learned Counsel, the definition of
"dispute" Under Section 5(6) of the Code is an inclusive one and the original draft bill not only had the
word "means" instead of the word "includes", but also the word "bona fide" before the words "suit or
arbitral proceedings", which is missing in the present Code. Therefore, learned Counsel argued that the
moment there is existence of a dispute, meaning thereby that there is a real dispute to be tried, and not a
sham, frivolous or vexatious dispute, the Tribunal is bound to dismiss the application. Learned Counsel
went on to argue that there is a fundamental difference between applications filed by financial creditors
and operational creditors. A financial creditor's application is dealt with Under Section 7 of the Code, in
which the adjudicating authority has to ascertain the existence of a default on the basis of the records of
an information utility or other evidence furnished by the financial creditor. In contrast to this scheme, all
that a corporate debtor needs to do is to file a reply within a period of 10 days of the receipt of demand
notice or copy of invoice from an operational creditor, showing the existence of a dispute, which then
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does not need to be "ascertained" by the adjudicating authority. He was at pains to point out that the
application itself must contain all the documents that are required by the statute and that the timelines
indicated in the statute are mandatory. For this purpose, he referred us to Sections 61, 62 and 64 in
addition to Sections 7 to 9 of the Code. Finally, on facts, according to learned Counsel, the Tribunal was
wholly incorrect in remanding the matter on both counts - first, to find out whether the application is
otherwise complete and, second, because the Tribunal found that the dispute in the present case was
vague, got up and motivated to evade the liability, which, according to learned Counsel, was a perverse
conclusion reached on the facts of this case.
7. Shri Jawaharlal, learned Counsel appearing on behalf of the Respondent, has argued in reply that the
only notice given to rectify the defects by the Tribunal was an oral notice of 19th January, 2017 and that
too only to supply the notice of dispute by the Appellant. This was done within time and the Tribunal,
therefore, dismissed the application only on non-fulfillment of the conditions laid down in Section 9. No
plea was ever taken before the Tribunal that the IDBI certificate was not furnished. This plea was taken
for the first time only in appeal, and since the Tribunal did not think it fit to dismiss the application on a
technical ground, this ground does not avail the Appellants. The counsel then submitted that the
expression "dispute" Under Section 5(6) covers only three things, namely, existence of the amount of
debt, quality of goods or services or breach of a representation or warranty and since what was sought to
be brought as a defense was that the NDA was breached, it would not come within the definition of
"dispute" Under Section 5(6). He further went on to state that, at best, the breach of the NDA is a claim
for unliquidated damages which does not become crystallized until legal proceedings are filed, and none
have been filed so far. Therefore, there is no real dispute on the facts of the present case and the Tribunal
was correct in its finding that the dispute was a sham one.
8. Before going into the contentions of fact and law argued by both counsel, it is a little important to trace
the background of this path-breaking legislation viz. the Insolvency and Bankruptcy Code, 2016. The
starting point is a Resolution of the UN General Assembly, Resolution No. 59/40, passed on 2nd
December, 2004, by which it was stated:
Legislative Guide on Insolvency Law of the United Nations Commission on International Trade Law
The General Assembly,
Recognizing the importance to all countries of strong, effective and efficient insolvency regimes as a
means of encouraging economic development and investment,
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Noting the growing realization that reorganization regimes are critical to corporate and economic
recovery, the development of entrepreneurial activity, the preservation of employment and the availability
of finance in the capital market,
Noting also the importance of social policy issues to the design of an insolvency regime,
Noting with satisfaction the completion and adoption of the Legislative Guide on Insolvency Law of the
United Nations Commission on International Trade Law by the Commission at its thirty-seventh session,
on 25 June 2004,
Believing that the Legislative Guide, which includes the text of the Model Law on Cross-Border
Insolvency and Guide to Enactment recommended by the General Assembly in its resolution 52/158 of 15
December 1997, contributes significantly to the establishment of a harmonized legal framework for
insolvency and will be useful both to States that do not have an effective and efficient insolvency regime
and to States that are undertaking a process of review and modernization of their insolvency regimes,
Recognizing the need for cooperation and coordination between international organizations active in the
field of insolvency law reform to ensure consistency and alignment of that work and to facilitate the
development of international standards,
Noting that the preparation of the Legislative Guide was the subject of due deliberations and extensive
consultations with Governments and international intergovernmental and nongovernmental organizations
active in the field of insolvency law reform,
1. Expresses its appreciation to the United Nations Commission on International Trade Law for the
completion and adoption of its Legislative Guide on Insolvency Law;
2. Requests the Secretary-General to publish the Legislative Guide and to make all efforts to ensure that it
becomes generally known and available;
3. Recommends that all States give due consideration to the Legislative Guide when assessing the
economic efficiency of their insolvency regimes and when revising or adopting legislation relevant to
insolvency;
4. Recommends also that all States continue to consider implementation of the Model Law on Cross-
Border Insolvency of the United Nations Commission on International Trade Law.
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9. The purpose of the Legislative Guide for various nations was stated as follows:
The purpose of the Legislative Guide on Insolvency Law is to assist the establishment of an efficient and
effective legal framework to address the financial difficulty of debtors. It is intended to be used as a
reference by national authorities and legislative bodies when preparing new laws and Regulations or
reviewing the adequacy of existing laws and Regulations. The advice provided in the Guide aims at
achieving a balance between the need to address the debtor's financial difficulty as quickly and efficiently
as possible and the interests of the various parties directly concerned with that financial difficulty,
principally creditors and other parties with a stake in the debtor's business, as well as with public policy
concerns. The Guide discusses issues central to the design of an effective and efficient insolvency law,
which, despite numerous differences in policy and legislative treatment, are recognized in many legal
systems. It focuses on insolvency proceedings commenced under the insolvency law and conducted in
accordance with that law, with an emphasis on reorganization, against a debtor, whether a legal or natural
person, that is engaged in economic activity. Issues specific to the insolvency of individuals not so
engaged, such as consumers, are not addressed.
In stating some of the key objectives of effective and efficient insolvency law, the Legislative Guide goes
on to state:
When a debtor is unable to pay its debts and other liabilities as they become due, most legal systems
provide a legal mechanism to address the collective satisfaction of the outstanding claims from assets
(whether tangible or intangible) of the debtor. A range of interests needs to be accommodated by that
legal mechanism: those of the parties affected by the proceedings including the debtor, the owners and
management of the debtor, the creditors who may be secured to varying degrees (including tax agencies
and other government creditors), employees, guarantors of debt and suppliers of goods and services, as
well as the legal, commercial and social institutions and practices that are relevant to the design of the
insolvency law and required for its operation. Generally, the mechanism must strike a balance not only
between the different interests of these stakeholders, but also between these interests and the relevant
social, political and other policy considerations that have an impact on the economic and legal goals of
insolvency proceedings.
xxx xxx xxx
An insolvency law should be transparent and predictable. This will enable potential lenders and creditors
to understand how insolvency proceedings operate and to assess the risk associated with their position as
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a creditor in the event of insolvency. This will promote stability in commercial relations and foster
lending and investment at lower risk premiums. Transparency and predictability will also enable creditors
to clarify priorities, prevent disputes by providing a backdrop against which relative rights and risks can
be assessed and help define the limits of any discretion. Unpredictable application of the insolvency law
has the potential to undermine not only the confidence of all participants in insolvency proceedings, but
also their willingness to make credit and other investment decisions prior to insolvency. As far as
possible, an insolvency law should clearly indicate all provisions of other laws that may affect the
conduct of the insolvency proceedings (e.g. labour law; commercial and contract law; tax law; laws
affecting foreign exchange, netting and set-off and debt for equity swaps; and even family and
matrimonial law).
An insolvency law should ensure that adequate information is available in respect of the debtor's
situation, providing incentives to encourage the debtor to reveal its positions and, where appropriate,
sanctions for failure to do so. The availability of this information will enable those responsible for
administering and supervising insolvency proceedings (courts or administrative agencies, the insolvency
representative) and creditors to assess the financial situation of the debtor and determine the most
appropriate solution.
While referring to the commencement of insolvency proceedings, the Legislative Guide states:
The standard to be met for commencement of insolvency proceedings is central to the design of an
insolvency law. As the basis upon which insolvency proceedings can be commenced, this standard is
instrumental to identifying the debtors that can be brought within the protective and disciplinary
mechanisms of the insolvency law and determining who may make an application for commencement,
whether the debtor, creditors or other parties.
As a general principle it is desirable that the commencement standard be transparent and certain,
facilitating access to insolvency proceedings conveniently, cost-effectively and quickly to encourage
financially distressed or insolvent businesses to voluntarily commence proceedings. It is also desirable
that access be flexible in terms of the types of insolvency proceedings available (reorganization and
liquidation), and the ease with which the proceedings most relevant to a particular debtor can be accessed,
and that conversion between the different types of proceeding can be achieved. Restrictive access can
deter both debtors and creditors from commencing proceedings, while the effects of delay can be harmful
to the value of assets and the successful completion of insolvency proceedings, in particular in cases of
reorganization. Ease of access needs to be balanced with proper and adequate safeguards to prevent
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improper use of proceedings. Examples of improper use may include application by a debtor that is not in
financial difficulty in order to take advantage of the protections provided by the insolvency law, such as
the automatic stay, or to avoid or delay payment to creditors and application by creditors who are
competitors of the debtor, where the purpose of the application is to take advantage of insolvency
proceedings to disrupt the debtor's business and thus gain a competitive edge.
10. On the fixation of time limits and denial of an application to commence proceedings, the Legislative
Guide states:
Where a court is required to make a decision as to commencement, it is desirable that that decision be
made in a timely manner to ensure both certainty and predictability of the decision-making and the
efficient conduct of the proceedings without delay. This will be particularly important in the case of
reorganization to avoid further diminution of the value of assets and to improve the chances of a
successful reorganization. Some insolvency laws prescribe set time periods after the application within
which the decision to commence must be made. These laws often distinguish between applications by
debtors and by creditors, with applications by debtors tending to be determined more quickly. Any
additional period for creditor applications is designed to allow prompt notice to be given to the debtor and
provide the debtor with an opportunity to respond to the application.
Although the approach of fixing time limits may serve the objectives of providing certainty and
transparency for both the debtor and creditors, the achievement of those objectives may need to be
balanced against possible disadvantages. For example, a fixed time period may be insufficiently flexible
to take account of the circumstances of the particular case. More generally, such time periods may be set
without regard to the resources available to the body responsible for supervising insolvency proceedings
or of the local priorities of that body (especially where insolvency is only one of the matters for which it
has responsibility). It may also prove difficult to ensure that the decision-making body adheres to the
established limit and to provide appropriate consequences where there is no compliance. The time period
between application and the decision to commence proceedings should also reflect the type of proceeding
applied for, the application procedure and the consequences of commencement in any particular regime.
For example, the extent to which notification of parties in interest and information gathering must be
completed prior to commencement will vary between regimes, requiring different periods of time. For
these reasons, it is desirable that an insolvency law adopt a flexible approach that emphasizes the
advantages of quick decision-making and provides guidance as to what is reasonable, but at the same time
also recognizes local constraints and priorities.
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(d) Denial of an application to commence proceedings
The preceding paragraphs refer to a number of instances where it will be desirable, in those cases where
the court is required to make the commencement decision, for the court to have the power to deny the
application for commencement, either because of questions of improper use of the insolvency law or for
technical reasons relating to satisfaction of the commencement standard. The cases referred to include
examples of both debtor and creditor applications. Principal among the grounds for denial of the
application for technical reasons might be those cases where the debtor is found not to satisfy the
commencement standard; where the debt is subject to a legitimate dispute or off-set in an amount equal to
or greater than the amount of the debt; where the proceedings will serve no purpose because, for example,
secured debt exceeds the value of assets; and where the debtor has insufficient assets to pay for the
insolvency administration and the law makes no other provision for funding the administration of such
estates.
Examples of improper use might include those cases where the debtor uses an application for insolvency
as a means of prevaricating and unjustifiably depriving creditors of prompt payment of debts or of
obtaining relief from onerous obligations, such as labour contracts. In the case of a creditor application, it
might include those cases where a creditor uses insolvency as an inappropriate substitute for debt
enforcement procedures (which may not be well developed); to attempt to force a viable business out of
the market place; or to attempt to obtain preferential payments by coercing the debtor (where such
preferential payments have been made and the debtor is insolvent, investigation would be a key function
of insolvency proceedings).
As noted above, where there is evidence of improper use of the insolvency proceedings by either the
debtor or creditors, the insolvency law may provide, in addition to denial of the application, that sanctions
can be imposed on the party improperly using the proceedings or that that party should pay costs and
possibly damages to the other party for any harm caused. Remedies may also be available under non-
insolvency law. Where an application is denied, any provisional measures of relief ordered by the court
after the time of the application for commencement should terminate (see chap. II, para. 53).
(Emphasis supplied)
Ultimately, recommendation 19 of the Legislative Guide reads as under:
Commencement on creditor application (paras. 57 and 67)
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19. The law generally should specify that, where a creditor makes the application for commencement:
(a) Notice of the application promptly is given to the debtor;
(b) The debtor be given the opportunity to respond to the application, by contesting the application,
consenting to the application or, where the application seeks liquidation, requesting the commencement of
reorganization proceedings; and
(c) The court will promptly determine its jurisdiction and whether the debtor is eligible and the
commencement standard has been met and, if so, commence insolvency proceedings.1
11. The legislative history of legislation relating to indebtedness goes back to the year 1964 when the 24th
Law Commission recommended amendments to the Provincial Insolvency Act of 1920. This was
followed by the Tiwari Committee of 1981, which introduced the Sick Industrial Companies Act, 1985.
Following economic liberalization in the 1990s, two Narsimham Committee reports led to the Recovery
of Debts and Bankruptcy Act, 1993 and the SARFAESI Act, 2002. Meanwhile, the Goswami Committee
Report, submitted in 1993, condemned the liquidation procedure prescribed by the Companies Act, 1956
as unworkable and being beset with delays at all levels - delaying tactics employed by the management,
delays at the level of the Courts, delays in making auction sales etc. This then led to the Eradi Committee
Report of 1999, which proposed amendments to the Companies Act and proposed the repeal of SICA.
This Committee echoed the findings of the Goswami Committee and recommended an overhaul of the
liquidation procedure under the Companies Act.
12. It was for the first time, in 2001, that the L.N. Mitra Committee of the RBI proposed a comprehensive
Bankruptcy Code. This was followed by the Irani Committee Report, also of the RBI in 2005, which
noted that the liquidation procedure in India is costly, inordinately lengthy and results in almost complete
erosion of asset value. The Committee also noted that the insolvency framework did not balance
stakeholders' interests adequately. It proposed a number of changes including changes for increased
protection of creditors' rights, maximization of asset value and better management of the company in
liquidation. In 2008, the Raghuram Rajan Committee of the Planning Commission proposed improvement
to the credit infrastructure in the country, and finally a Committee of Financial Sector Legislative
Reforms in 2013 submitted a draft Indian Financial Code, which included a "resolution corporation" for
resolving distressed financial firms.
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13. All this then led to the Bankruptcy Law Reforms Committee, set up by the Department of Economic
Affairs, Ministry of Finance, under the Chairmanship of Shri T.K. Viswanathan. This Committee
submitted an interim report in February 2015 and a final report in November of the same year. It was, as a
result of the deliberations of this Committee, that the present Insolvency and Bankruptcy Code of 2016
was finally born.
14. The interim report went into the existing law on indebtedness in some detail and discussed the tests
laid down in Madhusudan Gordhandas v. Madhu Woollen Industries Pvt. Ltd. MANU/SC/0033/1971 :
(1972) 2 SCR 201, by which a petition presented under the Companies Act on the ground that the
company is "unable to pay its debts" can only be dismissed if the debt is bona fide disputed, i.e. that the
defense of the debtor is genuine, substantial and is likely to succeed on a point of law. The interim report
also adverted to an amendment made in the Companies Act, 2003, by which the threshold requirement of
Rs. 500 was replaced by Rs. 1 lakh.
15. The interim report found:
Once the petitioning creditor has proved the inability of the debtor company to pay debts, van Zwieten
states that courts in India have recognised a wide discretion that enabled it to give time to the debtor to
make payment or even dismiss the petition. This is in stark contrast with the position in the UK (from
where the law was transplanted) where once the company's inability to pay debts has been proven, the
petitioning creditor is ordinarily held to be entitled to a winding up order (although it should be noted that
there is an alternative corporate rescue procedure, 'administration', which a debtor may be entitled to
enter).
The effect of these abovementioned judicial developments has been to add significant delays in the
liquidation process under CA 1956 and to add uncertainty regarding the rights of the creditors in the event
of the company's insolvency. Consequently, this has made creditor recourse to the liquidation procedure
as a means of debt enforcement rather difficult, and secondly, rendered the liquidation procedure
ineffective as a disciplinary mechanism for creditors against insolvent debtors.
The interim report then recommended:
Recommendations:
In order to re-instate the debt enforcement function of the statutory demand test for winding up, if a
company fails to pay an undisputed debt of a prescribed value as per Section 271(2) (a), the creditor
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should be entitled to a winding up order irrespective of whether it is insolvent (in commercial or balance
sheet terms) or not. Further, the NCLT should have the discretion to refer the company for rehabilitation
under Chapter XIX before making a winding up order on such ground, if the company appears to be
prima facie viable. Further, in order to prevent abuse of the provision by creditors and ensure that it is not
used to force debtor companies to settle disputed debts, the provision should specify the factors that the
NCLT may take into account to determine whether the debt under consideration is disputed or not. As laid
down by the courts, a petition may be dismissed if the debt in question is bona fide disputed, i.e., where
the following conditions are satisfied: (i) the defence of the debtor company is genuine, substantial and in
good faith; (ii) the defence is likely to succeed on a point of law; and (iii) the debtor company adduces
prima facie proof of the facts on which the defence depends. Further, as with initiation of rescue
proceedings, the NCLT should also have the power to impose sanctions/costs/damages on a petitioning
creditor and disallow reapplications on the same grounds if it finds that a petition has been filed to abuse
the process of law.
The Government may also consider revising the present value for triggering the statutory demand test
Under Section 271 (2) (a) from 'one lakh rupees' to a higher amount or revise the provision to state 'one
lakh rupees or such amount as may be prescribed'.
'Balance sheet insolvency' and 'commercial insolvency' should be identified as separate grounds
indicating a company's 'inability to pay debt' in order to avoid conflicts/confusion with the statutory
demand test (as is the case of the IA 1986 where the statutory demand test, the commercial insolvency
test and the balance sheet insolvency test are alternate grounds for determining a company's inability to
pay debts Under Sections 123(1) (a),123 (1) (e) and 123(2), respectively).
16. By the final report dated November 2015, the recommendation of the interim report was shelved. The
Committee made a distinction between financial contracts and operational contracts. It stated:
4.3.3 Information about the liabilities of a solvent entity
Operational contracts typically involve an exchange of goods and services for cash. For an enterprise, the
latter includes payables for purchase of raw-materials, other inputs or services, taxation and statutory
liabilities, and wages and benefits to employees.
xxx xxx xxx
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The Code specifies that if the Adjudicator is able to locate the record of the liability and of default with
the registered IUs, a financial creditor needs no other proof to establish that a default has taken place.
xxx xxx xxx
The second set of liabilities are operational liabilities, which are more difficult to centrally capture given
that the counterparties are a wide and heterogeneous set. In the state of insolvency, the record of all
liabilities in the IUs become critical to creditors in assessing the complexity of the resolution required.
Various private players, including potential strategic acquirers or distressed asset funds, would constantly
monitor entities that are facing stress, and prepare to make proposals to the committee of creditors in the
event that an insolvency is triggered. Easy access to this information is vital in ensuring that there is
adequate interest by various kinds of financial firms in coming up to the committee of creditors with
proposals. It is not easy to set up mandates for the holders of operational liabilities to file the records of
their liabilities, unlike the case of financial creditors. However, their incentives to file liabilities are even
stronger when the entity approaches insolvency.
4.3.4 Information about operational creditors
Once the invoice or notice is served, the debtor should be given a certain period of time in which to
respond either by disputing it in a court, or pay up the amount of the invoice or notice. The debtor will
have the responsibility to file the information about the court case, or the repayment record in response to
the invoice or notice within the specified amount of time. If the debtor does not file either response within
the specified period, and the creditor files for insolvency resolution, the debtor may be charged a
monetary penalty by the Adjudicator. However, if the debtor disputes the claim in court, until the
outcome of this case is decided, the creditor may not be able to trigger insolvency on the entity. This
process will act as a deterrent for frivolous claims from creditors, as well as act as a barrier for some types
of creditors to initiate insolvency resolution.
The Committee then went on to consider as to who can trigger the insolvency process. In paragraph 5.2.1
the Committee stated:
Box 5.2 - Trigger for IRP
1. The IRP can be triggered by either the debtor or the creditors by submitting documentation specified in
the Code to the adjudicating authority.
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2. For the debtor to trigger the IRP, she must be able to submit all the documentation that is defined in the
Code, and may be specified by the Regulator above this.
3. The Code differentiates two categories of creditors: financial creditors where the liability to the debtor
arises from a solely financial transaction, and operational creditors where the liability to the debtor arises
in the form of future payments in exchange for goods or services already delivered. In cases where a
creditor has both a solely financial transaction as well as an operational transaction with the entity, the
creditor will be considered a financial creditor to the extent of the financial debt and an operational
creditor to the extent of the operational debt is more than half the full liability it has with the debtor.
4. The Code will require different documentation for a debtor, a financial creditor, and an operational
creditor to trigger the IRP. These are listed in Box 5.3 under what the Adjudicator will accept as
requirements to trigger the IRP.
5.2.1 Who can trigger the IRP?
Here, the Code differentiates between financial creditors and operational creditors. Financial creditors are
those whose relationship with the entity is a pure financial contract, such as a loan or a debt security.
Operational creditors are those whose liability from the entity comes from a transaction on operations.
Thus, the wholesale vendor of spare parts whose spark plugs are kept in inventory by the car mechanic
and who gets paid only after the spark plugs are sold is an operational creditor. Similarly, the lessor that
the entity rents out space from is an operational creditor to whom the entity owes monthly rent on a three-
year lease. The Code also provides for cases where a creditor has both a solely financial transaction as
well as an operational transaction with the entity. In such a case, the creditor can be considered a financial
creditor to the extent of the financial debt and an operational creditor to the extent of the operational debt.
5.2.2 How can the IRP be triggered?
An application from a creditor must have a record of the liability and evidence of the entity having
defaulted on payments. The Committee recommends different documentation requirements depending
upon the type of creditor, either financial or operational. A financial creditor must submit a record of
default by the entity as recorded in a registered Information Utility (referred to as the IU) as described in
Section 4.3 (or on the basis of other evidence). The default can be to any financial creditor to the entity,
and not restricted to the creditor who triggers the IRP. The Code requires that the financial creditor
propose a registered Insolvency Professional to manage the IRP. Operational creditors must present an
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"undisputed bill" which may be filed at a registered information utility as requirement to trigger the IRP.
The Code does not require the operational creditor to propose a registered Insolvency Professional to
manage the IRP. If a professional is not proposed by the operational creditor, and the IRP is successfully
triggered, the Code requires the Adjudicator to approach the Regulator for a registered Insolvency
Professional for the case.
When the Adjudicator receives the application, she confirms the validity of the documents before the case
can be registered by confirming the documentation in the information utility if applicable. In case the
debtor triggers the IRP, the list of documentation provided by the debtor is checked against the required
list. The proposal for the RP is forwarded to the Regulator for validation. If both the documentation and
the proposed RP checks out as required within the time specified in Regulations, the Adjudicator registers
the IRP.
In case the financial creditor triggers the IRP, the Adjudicator verifies the default from the information
utility (if the default has been filed with an information utility, it shall be incontrovertible evidence of the
existence of a default) or otherwise confirms the existence of default through the additional evidence
adduced by the financial creditor, and puts forward the proposal for the RP to the Regulator for
validation. In case the operational creditor triggers the IRP, the Adjudicator verifies the documentation.
Simultaneously, the Adjudicator requests the Regulator for an RP. If either step cannot be verified, or the
process verification exceeds the specified amount of time, then the Adjudicator rejects the application,
with a reasoned order for the rejection. The order rejecting the application cannot be appealed against.
Instead, application has to be made afresh. Once the documents are verified within a specified amount of
time, the Adjudicator will trigger the IRP and register the IRP by issuing an order. The order will contain
a unique ID that will be issued for the case by which all reports and records that are generated during the
IRP will be stored, and accessed.
17. Annexed to this Committee Report is the Insolvency and Bankruptcy Bill, 2015. Interestingly, Section
5(4) defined "dispute" as:
5. Definitions
In this Part, unless the context otherwise requires-
(4) "dispute" means a bona fide suit or arbitration proceeding regarding (a) the existence or the amount of
a debt; (b) the quality of a good or service; or (c) the breach of a representation or warranty;
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Sections 8 and 9 in the said Bill read as under:
8. Insolvency resolution by operational creditor.
(1) An operational creditor shall, on the occurrence of a default, deliver a demand notice or copy of an
invoice demanding payment of the amount involved in the default to the corporate debtor in such form as
may be prescribed, through an information utility, wherever applicable, or by registered post or courier or
by any electronic communication.
the invoice mentioned in Sub-section (1) bring to the notice of the operational creditor -
(a) the existence of a dispute, if any, and record of the pendency of the suit or arbitration proceedings
filed at least sixty days prior to the receipt of such invoice or notice in relation to such dispute through an
information utility or by registered post or courier or by any electronic communication;
(b) the repayment of unpaid operational debt- (i) by sending an attested copy of electronic transfer of the
unpaid amount from the bank account of the corporate debtor; or (ii) by sending an attested copy of proof
that the operational creditor having encashed a cheque issued by the corporate debtor.
Explanation. - For the purpose of this Section a "demand notice" means a notice served by an operational
creditor to the corporate debtor demanding repayment of the debt in respect of which the default has
occurred.
9. Application for initiation of corporate insolvency resolution process by operational creditor.
(1) After the expiry of the period of ten days from the date of delivery of the invoice or notice demanding
file an application with the Adjudicating Authority in the prescribed form for initiating a corporate
insolvency resolution process.
(3) The operational creditor shall, along with the application furnish-
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(a) the invoice demanding payment or notice delivered by the operational creditor to the corporate debtor;
(b) affidavit to the effect that there is no notice given by the corporate debtor relating to a dispute of the
unpaid operational debt;
(c) a confirmation from the financial institutions maintaining accounts of the operational creditor that
there is no payment of an unpaid operational debt by the corporate debtor; and
(d) such other information or as may be specified.
(4) The Adjudicating Authority shall, within two days of the receipt of the application Under Sub-section
(2), admit the application and communicate such decision to the operational creditor and the corporate
debtor if, -
(a) the application is complete;
creditor; and
information utility.
(5) The Adjudicating Authority shall reject the application and communicate such decision to the
operational creditor and the corporate debtor if -
(a) the application made under this Section is incomplete;
(c) the creditor has not delivered the invoice or notice for payment to the corporate debtor; and
(d) notice of dispute has been received by the operational creditor and there is no record of dispute in the
information utility.
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(6) Without prejudice to the conditions mentioned in Sub-section (3), an operational creditor initiating a
corporate insolvency resolution process under this section, may also propose a resolution professional to
act as an interim resolution professional.
application Under Sub-section (4) of this section.
18. Meanwhile, the Insolvency and Bankruptcy Bill that was annexed to the Bankruptcy Law Reforms
Committee Report underwent a further change before it was submitted to a Joint Committee of the Lok
Sabha. In this Bill, the definition of "dispute" now read as follows:
5. Definitions.
In this Part unless the context otherwise requires,-
(6) "dispute" includes a suit or arbitration proceedings relating to-
(a) the existence or the amount of debt;
(b) the quality of goods or service; or
(c) the breach of a representation or warranty;
Sections 8 and 9 read as follows:
(1) An operational creditor may, on the occurrence of a default, deliver a demand notice of unpaid
operational debt or copy of an invoice demanding payment of the amount involved in the default to the
corporate debtor in such form as may be prescribed, through an information utility, wherever applicable,
or by registered post or courier or by such electronic mode of communication, as may be specified.
the invoice mentioned in Sub-section (1), bring to the notice of the operational creditor-
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(a) the existence of a dispute, if any, and record of the pendency of the suit or arbitration proceedings
filed prior to the receipt of such notice or invoice in relation to such dispute through an information utility
or by registered post or courier or by such electronic mode of communication as may be specified;
(b) the repayment of unpaid operational debt-
account of the corporate debtor; or
(ii) by sending an attested copy of record that the operational creditor has encashed a cheque issued by the
corporate debtor.
Explanation.- For the purposes of this section, a "demand notice" means a notice served by an operational
(1) After the expiry of the period of ten days from the date of delivery of the notice or invoice demanding
process.
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(d) such other information or as may be specified.
section (2), by an order-
debtor if,-
(a) the application made Under Sub-section (2) is complete;
creditor;
debtor, if-
(a) the application made Under Sub-section (2) is incomplete;
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Provided that Adjudicating Authority, prior to rejecting an application Under Sub-clause (a) of Clause (ii)
of this subsection, shall give a notice to the applicant to rectify the defect in his application within three
days of the date of receipt of such notice from the Adjudicating Authority.
application Under Sub-section (5).
19. The notes on clauses annexed to the Bill are extremely important and read as follows:
Notes on Clauses
Clause 6 provides that where a corporate debtor has defaulted in paying a debt that has become due and
payable but not repaid, the corporate insolvency resolution process under Part II may be initiated in
respect of such corporate debtor by a financial creditor, an operational creditor or the corporate debtor
itself.
Early recognition of financial distress is very important for timely resolution of insolvency. A default
based test for entry into the insolvency resolution process permits early intervention such that insolvency
resolution proceedings can be initiated at an early stage when the corporate debtor shows early signs of
financial distress rather than at the point where it would be difficult to revive it effectively. It also
provides a simple test to initiate resolution process.
This Clause permits any financial creditor to initiate the corporate insolvency resolution process where
the corporate debtor has defaulted in paying a debt that has become due and payable but not repaid.
Financial creditors are those creditors to whom a financial debt (i.e., a debt where the creditor is
compensated for the time value of the money lent) is owed.
Further, the Code also permits the corporate debtor itself to initiate the insolvency resolution process once
it has defaulted on a debt. Additionally, operational creditors (i.e., creditors to whom a sum of money is
owed for the provision of goods or services or the Central/State Government or local authorities in respect
of payments due to them) are also permitted to initiate the insolvency resolution process. This will bring
the law in line with international practices, which permit unsecured creditors (including employees,
suppliers etc. who fall under the definition of operational creditors) to file for the initiation of insolvency
resolution proceedings.
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Clause 7 lays down the procedure for the initiation of the corporate insolvency resolution process by a
financial creditor or two or more financial creditors jointly. The financial creditor can file an application
before the National Company Law Tribunal along with proof of default and the name of a resolution
professional proposed to act as the interim resolution professional in respect of the corporate debtor. The
requirement to provide proof of default ensures that financial creditors do not file frivolous applications
or applications which prematurely put the corporate debtor into insolvency resolution proceedings for
extraneous considerations. The adjudicating authority/Tribunal can, within fourteen days from the date of
receipt of the application, ascertain the existence of a default from the records of a regulated information
utility. A default may also be proved in such manner as may be specified by the Insolvency and
Bankruptcy Board of India.
Once the adjudicating authority/Tribunal is satisfied as to the existence of the default and has ensured that
the application is complete and no disciplinary proceedings are pending against the proposed resolution
professional, it shall admit the application. The adjudicating authority/Tribunal is not required to look into
any other criteria for admission of the application. It is important that parties are not allowed to abuse the
legal process by using delaying tactics at the admissions stage.
Clause 8 lays down the procedure for the initiation of the corporate insolvency resolution process by an
operational creditor. This procedure differs from the procedure applicable to financial creditors as
operational debts (such as trade debts, salary or wage claims) tend to be small amounts (in comparison to
financial debts) or are recurring in nature and may not be accurately reflected on the records of
information utilities at all times. The possibility of disputed debts in relation to operational creditors is
also higher in comparison to financial creditors such as banks and financial institutions. Accordingly, the
process for initiation of the insolvency resolution process differs for an operational creditor.
Once a default has occurred, the operational creditor has to deliver a demand notice or a copy of an
invoice demanding payment of the debt in default to the corporate debtor. The corporate debtor has a
period of ten days from the receipt of the demand notice or invoice to inform the operational creditor of
the existence of a dispute regarding the debt claim or of the repayment of the debt. This ensures that
operational creditors, whose debt claims are usually smaller, are not able to put the corporate debtor into
the insolvency resolution process prematurely or initiate the process for extraneous considerations. It may
also facilitate informal negotiations between such creditors and the corporate debtor, which may result in
a restructuring of the debt outside the formal proceedings.
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Clause 9 On the expiry of the period of ten days from the date of receipt of the invoice or demand notice
under Clause 8, if the operational creditor does not receive either the payment of the debt or a notice of
existence of dispute in relation to the debt claim from the corporate debtor, he can file an application with
the adjudicating authority for initiating the insolvency resolution process in respect of such debtor. He
also has to furnish proof of default and proof of non-payment of the debt along with an affidavit verifying
that there has been no notice regarding the existence of a dispute in relation to the debt claim. Within
fourteen days from the receipt of the application, if the adjudicating authority/Tribunal is satisfied as to
(a) the existence of a default, and (b) the other criteria laid down in Clause 9(5) being met, it shall admit
the application. The adjudicating authority/Tribunal is not required to look into any other criteria for
admission of the application. It is important that parties are not allowed to abuse the legal process by
using delaying tactics at the admissions stage.
(Emphasis supplied)
20. The Joint Committee in April, 2016 made certain small changes in the said Bill, by which the
Committee stated:
17. Mode of delivery of demand notice of unpaid operational debt - Clause 8
The Committee find that Clause 8(1) of the Code provides that an operational creditor may, on the
occurrence of a default, deliver a demand notice of unpaid operational debt or copy of an invoice
demanding payment of the amount involved in the default to the corporate debtor in such form as may be
prescribed, through an information utility, wherever applicable, or by registered post or courier or by such
electronic mode of communication, as may be specified.
The Committee are of the view that the details of the mode of delivery of demand notice can be provided
in the rules. The Committee, therefore, decide to substitute words "in such form as may be prescribed,
through an information utility, wherever applicable, or by registered post or courier or by such electronic
mode of communication, as may be specified" as appearing in Clause 8(1) with the words "in such form
and manner, as may be prescribed". Besides as a consequential amendment words "through an
information utility or by registered post or courier or by such electronic mode of communication as may
be specified" as appearing in Clause 8(2) may also be omitted.
The Committee also revised the time limits set out in various Sections of the Code from 2, 3 and 5 days to
a longer uniform period of 7 days.
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21. The stage is now set for setting out the relevant provisions of the Code insofar as operational creditors
and their corporate debtors are concerned.
3. Definitions.
In this Code, unless the context otherwise requires,-
xxx xxx xxx
(12) "default" means non-payment of debt when whole or any part or instalment of the amount of debt has
become due and payable and is not repaid by the debtor or the corporate debtor, as the case may be;
5. Definitions.
In this Part, unless the context otherwise requires,-
(6) "dispute" includes a suit or arbitration proceedings relating to-
(a) the existence of the amount of debt;
(c) the breach of a representation or warranty;
xxx xxx xxx
(20) "operational creditor" means a person to whom an operational debt is owed and includes any person
to whom such debt has been legally assigned or transferred;
(21) "operational debt" means a claim in respect of the provision of goods or services including
employment or a debt in respect of the repayment of dues arising under any law for the time being in
force and payable to the Central Government, any State Government or any local authority;
(1) An operational creditor may, on the occurrence of a default, deliver a demand notice of unpaid
operational debt or copy of an invoice demanding payment of the amount involved in the default to the
corporate debtor in such form and manner as may be prescribed.
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the invoice mentioned in Sub-section (1) bring to the notice of the operational creditor-
before the receipt of such notice or invoice in relation to such dispute;
account of the corporate debtor; or
(ii) by sending an attested copy of record that the operational creditor has encashed a cheque issued by the
corporate debtor.
Explanation.-For the purposes of this section, a "demand notice" means a notice served by an operational
(1) After the expiry of the period of ten days from the date of delivery of the notice or invoice demanding
process.
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section (2), by an order-
debtor if,-
creditor;
debtor, if-
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Provided that Adjudicating Authority, shall before rejecting an application Under Sub-clause (a) of
Clause (ii) give a notice to the applicant to rectify the defect in his application within seven days of the
date of receipt of such notice from the Adjudicating Authority.
application Under Sub-section (5) of this section.
22. Together with Section 8(1), the Insolvency and Bankruptcy (Application to Adjudicating Authority)
Rules, 2016, speak of demand notices by the operational creditor and applications by the operational
creditor in the following terms:
5. Demand notice by operational creditor.
(1) An operational creditor shall deliver to the corporate debtor, the following documents, namely.-
(a) a demand notice in Form 3; or
(b) a copy of an invoice attached with a notice in Form 4.
(2) The demand notice or the copy of the invoice demanding payment referred to in Sub-section (2) of
Section 8 of the Code, may be delivered to the corporate debtor,
(a) at the registered office by hand, registered post or speed post with acknowledgement due; or
(b) by electronic mail service to a whole time director or designated partner or key managerial personnel,
if any, of the corporate debtor.
(3) A copy of demand notice or invoice demanding payment served under this Rule by an operational
creditor shall also be filed with an information utility, if any.
6. Application by operational creditor.
(1) An operational creditor, shall make an application for initiating the corporate insolvency resolution
process against a corporate debtor Under Section 9 of the Code in Form 5, accompanied with documents
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and records required therein and as specified in the Insolvency and Bankruptcy Board of India
(Insolvency Resolution Process for Corporate Persons) Regulations, 2016.
(2) The applicant Under Sub-rule (1) shall dispatch forthwith, a copy of the application filed with the
Adjudicating Authority, by registered post or speed post to the registered office of the corporate debtor.
FORM 3
(See Clause (a) of Sub-rule (1) of Rule 5)
FORM OF DEMAND NOTICE/INVOICE DEMANDING PAYMENT UNDER THE

INSOLVENCY AND BANKRUPTCY CODE, 2016
(Under Rule 5 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016)
[Date]
[Name and address of the registered office of the corporate debtor]
From,
[Name and address of the registered office of the operational creditor]
Subject: Demand notice/invoice demanding payment in respect of unpaid operational debt due
from [corporate debtor] under the Code.
Madam/Sir,
1. This letter is a demand notice/invoice demanding payment of an unpaid operational debt due from
[name of corporate debtor].
2. Please find particulars of the unpaid operational debt below:
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3. If you dispute the existence or amount of unpaid operational debt (in default) please provide the
undersigned, within ten days of the receipt of this letter, of the pendency of the suit or arbitration
proceedings in relation to such dispute filed before the receipt of this letter/notice.
4. If you believe that the debt has been repaid before the receipt of this letter, please demonstrate such
repayment by sending to us, within ten days of receipt of this letter, the following:
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(a) an attested copy of the record of electronic transfer of the unpaid amount from the bank account of the
corporate debtor; or
(b) an attested copy of any record that [name of the operational creditor] has received the payment.
5. The undersigned, hereby, attaches a certificate from an information utility confirming that no record of
a dispute raised in relation to the relevant operational debt has been filed by any person at any information
utility, (if applicable)
6. The undersigned request you to unconditionally repay the unpaid operational debt (in default) in full
within ten days from the receipt of this letter failing which we shall initiate a corporate insolvency
resolution process in respect of [c].
Yours sincerely,
Instructions
1. Please serve a copy of this form on the corporate debtor, ten days in advance of filing an application
Under Section 9 of the Code.
2. Please append a copy of such served notice to the application made by the operational creditor to the
Adjudicating Authority.
Form 4
(See Clause (b) of Sub-rule (1) of Rule 5)
FORM OF NOTICE WITH WHICH INVOICE DEMANDING PAYMENT IS TO BE

ATTACHED
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[Date]
To,
[Name and address of registered office of the corporate debtor]
From,
[Name and address of the operational creditor]
Subject: Notice attached to invoice demanding payment
Madam/Sir,
[Name of operational creditor], hereby provides notice for repayment of the unpaid amount of INR
[insert amount] that is in default as reflected in the invoice attached to this notice.
In the event you do not repay the debt due to us within ten days of receipt of this notice, we may file an
application before the Adjudicating Authority for initiating a corporate insolvency resolution process
Under Section 9 of the Code.
Yours sincerely,
Form 5
(See Sub-rule (1) of Rule 6)
APPLICATION BY OPERATIONAL CREDITOR TO INITIATE CORPORATE INSOLVENCY

RESOLUTION PROCESS UNDER THE CODE.
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[Date]
To,
The National Company Law Tribunal
[Address]
From,
[Name and address for correspondence of the operational creditor]
In the matter of [name of the corporate debtor]
Subject: Application to initiate corporate insolvency resolution process in respect of [name of the
corporate debtor] under the Insolvency and Bankruptcy Code, 2016.
Madam/Sir,
[Name of the operational creditor], hereby submits this application to initiate a corporate insolvency
resolution process in the case of [name of corporate debtor]. The details for the purpose of this
application are set out below:
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148
149
I, [Name of the operational creditor/person authorised to act on behalf of the operational creditor]
hereby certify that, to the best of my knowledge, [name of proposed insolvency professional], is fully
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qualified and permitted to act as an insolvency professional in accordance with the Code and the Rules
and Regulations made thereunder. [WHERE APPLICABLE]
[Name of the operational creditor] has paid the requisite fee for this application through [state means of
payment] on [date].
Yours sincerely,
Instructions -
Please attach the following to this application:
Annex I Copy of the invoice/demand notice as in Form 3 of the Insolvency and Bankruptcy (Application
to Adjudicating Authority) Rules, 2016 served on the corporate debtor.
Annex II Copies of all documents referred to in this application.
Annex III Copy of the relevant accounts from the banks/financial institutions maintaining accounts of the
operational creditor confirming that there is no payment of the relevant unpaid operational debt by the
operational debtor, if available.
Annex IV Affidavit in support of the application in accordance with the Insolvency and Bankruptcy
(Application to Adjudicating Authority) Rules, 2016.
Annex V Written communication by the proposed interim resolution professional as set out in Form 2 of
the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016. [WHERE
APPLICABLE]
Annex VI Proof that the specified application fee has been paid.
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Note: Where workmen/employees are operational creditors, the application may be made either in an
individual capacity or in a joint capacity by one of them who is duly authorised for the purpose.
Regulation 7 of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for
Corporate Persons) Regulations, 2016 is also relevant and reads as under:
7. Claims by operational creditors.-
(1) A person claiming to be an operational creditor, other than workman or employee of the corporate
debtor, shall submit proof of claim to the interim resolution professional in person, by post or by
electronic means in Form B of the Schedule:
Provided that such person may submit supplementary documents or clarifications in support of the claim
before the constitution of the committee.
(2) The existence of debt due to the operational creditor under this Regulation may be proved on the basis
of-
(a) the records available with an information utility, if any; or
(b) other relevant documents, including -
(i) a contract for the supply of goods and services with corporate debtor;
(ii) an invoice demanding payment for the goods and services supplied to the corporate debtor;
(iii) an order of a court or tribunal that has adjudicated upon the non-payment of a debt, if any; or
(iv) financial accounts.
FORM B
PROOF OF CLAIM BY OPERATIONAL CREDITORS EXCEPT WORKMEN AND

EMPLOYEES
[Under Regulation 7 of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for
Corporate Persons) Regulations, 2016]
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[Date]
To
The Interim Resolution Professional/Resolution
Professional
[Name of the Insolvency Resolution Professional/Resolution Professional]
[Address as set out in public announcement]
From
[Name and address of the operational creditor]
Subject: Submission of proof of claim.
Madam/Sir,
[Name of the operational creditor], hereby submits this proof of claim in respect of the corporate
insolvency resolution process in the case of [name of corporate debtor]. The details for the same are set
out below:
153
154
*PAN number, passport, AADHAAR Card or the identity card issued by the Election Commission of
India.
(Emphasis supplied)
23. In the passage of the Bills which ultimately became the Code, various important changes have taken
place. The original definition of "dispute" has now become an inclusive definition, the word "bona fide"
before "suit or arbitration proceedings" being deleted. In Section 8(1), the words "through an information
utility, wherever applicable, or by registered post or courier or by any electronic communication" have
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been deleted. Likewise, in Section 8(2), the period of "at least 60 days ... through an information utility or
by registered post or courier or by any electronic communication" has also been deleted. In Section 9(5),
the absence of a proviso similar to the proviso occurring in Section 7(5) was also rectified. Further, the
time periods of 2 and 3 days were uniformly substituted, as has been seen above, by 7 days, so that a
sufficiently long period is given to do the needful.
24. The scheme Under Sections 8 and 9 of the Code, appears to be that an operational creditor, as defined,
may, on the occurrence of a default (i.e., on non-payment of a debt, any part whereof has become due and
payable and has not been repaid), deliver a demand notice of such unpaid operational debt or deliver the
copy of an invoice demanding payment of such amount to the corporate debtor in the form set out in Rule
5 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 read with Form
3 or 4, as the case may be (Section 8(1)). Within a period of 10 days of the receipt of such demand notice
or copy of invoice, the corporate debtor must bring to the notice of the operational creditor the existence
of a dispute and/or the record of the pendency of a suit or arbitration proceeding filed before the receipt of
such notice or invoice in relation to such dispute (Section 8(2)(a)). What is important is that the existence
of the dispute and/or the suit or arbitration proceeding must be pre-existing - i.e. it must exist before the
receipt of the demand notice or invoice, as the case may be. In case the unpaid operational debt has been
repaid, the corporate debtor shall within a period of the self-same 10 days send an attested copy of the
record of the electronic transfer of the unpaid amount from the bank account of the corporate debtor or
send an attested copy of the record that the operational creditor has encashed a cheque or otherwise
received payment from the corporate debtor (Section 8(2)(b)). It is only if, after the expiry of the period of
the said 10 days, the operational creditor does not either receive payment from the corporate debtor or
notice of dispute, that the operational creditor may trigger the insolvency process by filing an application
before the adjudicating authority Under Sections 9(1) and 9(2). This application is to be filed Under Rule
6 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 in Form 5,
accompanied with documents and records that are required under the said form. Under Rule 6(2), the
applicant is to dispatch by registered post or speed post, a copy of the application to the registered office
of the corporate debtor. Under Section 9(3), along with the application, the statutory requirement is to
furnish a copy of the invoice or demand notice, an affidavit to the effect that there is no notice given by
the corporate debtor relating to a dispute of the unpaid operational debt and a copy of the certificate from
the financial institution maintaining accounts of the operational creditor confirming that there is no
payment of an unpaid operational debt by the corporate debtor. Apart from this information, the other
information required under Form 5 is also to be given. Once this is done, the adjudicating authority may
either admit the application or reject it. If the application made Under Sub-section (2) is incomplete, the
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adjudicating authority, under the proviso to Sub-Section 5, may give a notice to the applicant to rectify
defects within 7 days of the receipt of the notice from the adjudicating authority to make the application
complete. Once this is done, and the adjudicating authority finds that either there is no repayment of the
unpaid operational debt after the invoice (Section 9(5)(i)(b)) or the invoice or notice of payment to the
corporate debtor has been delivered by the operational creditor (Section 9(5)(i)(c)), or that no notice of
dispute has been received by the operational creditor from the corporate debtor or that there is no record
of such dispute in the information utility (Section 9(5)(i)(d)), or that there is no disciplinary proceeding
pending against any resolution professional proposed by the operational creditor (Section 9(5)(i)(e)), it
shall admit the application within 14 days of the receipt of the application, after which the corporate
insolvency resolution process gets triggered. On the other hand, the adjudicating authority shall, within 14
days of the receipt of an application by the operational creditor, reject such application if the application
is incomplete and has not been completed within the period of 7 days granted by the proviso (Section
9(5)(ii)(a)). It may also reject the application where there has been repayment of the operational debt
(Section 9(5)(ii)(b)), or the creditor has not delivered the invoice or notice for payment to the corporate
debtor (Section 9(5)(ii)(c)). It may also reject the application if the notice of dispute has been received by
the operational creditor or there is a record of dispute in the information utility (Section 9(5)(ii)(d)).
Section 9(5)(ii)(d) refers to the notice of an existing dispute that has so been received, as it must be read
with Section 8(2)(a). Also, if any disciplinary proceeding is pending against any proposed resolution
professional, the application may be rejected (Section 9(5)(ii)(e)).
25. Therefore, the adjudicating authority, when examining an application Under Section 9 of the Act will
have to determine:
(i) Whether there is an "operational debt" as defined exceeding Rs. 1 lakh? (See Section 4 of the Act)
(ii) Whether the documentary evidence furnished with the application shows that the aforesaid debt is due
and payable and has not yet been paid? and
(iii) Whether there is existence of a dispute between the parties or the record of the pendency of a suit or
arbitration proceeding filed before the receipt of the demand notice of the unpaid operational debt in
relation to such dispute?
If any one of the aforesaid conditions is lacking, the application would have to be rejected.
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Apart from the above, the adjudicating authority must follow the mandate of Section 9, as outlined above,
and in particular the mandate of Section 9(5) of the Act, and admit or reject the application, as the case
may be, depending upon the factors mentioned in Section 9(5) of the Act.
26. Another thing of importance is the timelines within which the insolvency resolution process is to be
triggered. The corporate debtor is given 10 days from the date of receipt of demand notice or copy of
invoice to either point out that a dispute exists between the parties or that he has since repaid the unpaid
operational debt. If neither exists, then an application once filed has to be disposed of by the adjudicating
authority within 14 days of its receipt, either by admitting it or rejecting it. An appeal can then be filed to
the Appellate Tribunal Under Section 61 of the Act within 30 days of the order of the Adjudicating
Authority with an extension of 15 further days and no more.
27. Section 64 of the Code mandates that where these timelines are not adhered to, either by the Tribunal
or by the Appellate Tribunal, they shall record reasons for not doing so within the period so specified and
extend the period so specified for another period not exceeding 10 days. Even in appeals to the Supreme
Court from the Appellate Tribunal Under Section 62, 45 days time is given from the date of receipt of the
order of the Appellate Tribunal in which an appeal to the Supreme Court is to be made, with a further
grace period not exceeding 15 days. The strict adherence of these timelines is of essence to both the
triggering process and the insolvency resolution process. As we have seen, one of the principal reasons
why the Code was enacted was because liquidation proceedings went on interminably, thereby damaging
the interests of all stakeholders, except a recalcitrant management which would continue to hold on to the
company without paying its debts. Both the Tribunal and the Appellate Tribunal will do well to keep in
mind this principal objective sought to be achieved by the Code and will strictly adhere to the time frame
within which they are to decide matters under the Code.
28. It is now important to construe Section 8 of the Code. The operational creditors are those creditors to
whom an operational debt is owed, and an operational debt, in turn, means a claim in respect of the
provision of goods or services, including employment, or a debt in respect of repayment of dues arising
under any law for the time being in force and payable to the Government or to a local authority. This has
to be contrasted with financial debts that may be owed to financial creditors, which was the subject matter
of the judgment delivered by this Court on 31.8.2017 in Innoventive Industries Ltd. v. ICICI Bank and
Anr. (Civil Appeal Nos. 8337-8338 of 2017). In this judgment, we had held that the adjudicating
authority Under Section 7 of the Code has 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 within 14 days. The
corporate debtor is entitled to point out to the adjudicating authority that a default has not occurred; in the
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sense that a debt, which may also include a disputed claim, is not due i.e. it is not payable in law or in
fact. This Court then went on to state:
29. The scheme of Section 7 stands in contrast with the scheme Under Section 8 where an operational
creditor is, on the occurrence of a default, to first deliver a demand notice of the unpaid debt to the
operational debtor in the manner provided in Section 8(1) of the Code. Under Section 8(2), the corporate
debtor can, within a period of 10 days of receipt of the demand notice or copy of the invoice mentioned in
Sub-section (1), bring to the notice of the operational creditor the existence of a dispute or the record of
the pendency of a suit or arbitration proceedings, which is preexisting - i.e. before such notice or invoice
was received by the corporate debtor. The moment there is existence of such a dispute, the operational
creditor gets out of the clutches of the Code.
30. On the other hand, as we have seen, in the case of a corporate debtor who commits a default of a
otherwise.
29. It is, thus, clear that so far as an operational creditor is concerned, a demand notice of an unpaid
operational debt or copy of an invoice demanding payment of the amount involved must be delivered in
the prescribed form. The corporate debtor is then given a period of 10 days from the receipt of the
demand notice or copy of the invoice to bring to the notice of the operational creditor the existence of a
dispute, if any. We have also seen the notes on clauses annexed to the Insolvency and Bankruptcy Bill of
2015, in which "the existence of a dispute" alone is mentioned. Even otherwise, the word "and" occurring
in Section 8(2)(a) must be read as "or" keeping in mind the legislative intent and the fact that an
anomalous situation would arise if it is not read as "or". If read as "and", disputes would only stave off the
bankruptcy process if they are already pending in a suit or arbitration proceedings and not otherwise. This
would lead to great hardship; in that a dispute may arise a few days before triggering of the insolvency
process, in which case, though a dispute may exist, there is no time to approach either an arbitral tribunal
or a court. Further, given the fact that long limitation periods are allowed, where disputes may arise and
do not reach an arbitral tribunal or a court for upto three years, such persons would be outside the purview
of Section 8(2) leading to bankruptcy proceedings commencing against them. Such an anomaly cannot
possibly have been intended by the legislature nor has it so been intended. We have also seen that one of
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the objects of the Code qua operational debts is to ensure that the amount of such debts, which is usually
smaller than that of financial debts, does not enable operational creditors to put the corporate debtor into
the insolvency resolution process prematurely or initiate the process for extraneous considerations. It is
for this reason that it is enough that a dispute exists between the parties.
30. It is settled law that the expression "and" may be read as "or" in order to further the object of the
statute and/or to avoid an anomalous situation. Thus, in Samee Khan v. Bindu Khan
MANU/SC/0564/1998 : (1998) 7 SCC 59 at 64, this Court held:
14. Since the word "also" can have meanings such as "as well" or "likewise", cannot those meanings be
used for understanding the scope of the trio words "and may also"? Those words cannot altogether be
detached from the other words in the sub-rule. Here again the word "and" need not necessarily be
understood as denoting a conjunctive sense. In Stroud's Judicial Dictionary, it is stated that the word
"and" has generally a cumulative sense, but sometimes it is by force of a context read as "or". Maxwell on
Interpretation of Statutes has recognised the above use to carry out the interpretation of the legislature.
This has been approved by this Court in Ishwar Singh Bindra v. State of U.P. [MANU/SC/0344/1968 :
AIR 1968 SC 1450: 1969 Cri. LJ 19]. The principle of noscitur a sociis can profitably be used to construct
the words "and may also" in the sub-rule.
31. In Gujarat Urja Vikas Nigam Ltd. v. Essar Power Ltd. MANU/SC/1055/2008 : (2008) 4 SCC 755 at
765, this Court held:
26. It may be noted that Section 86(1)(f) of the Act of 2003 is a special provision for adjudication of
disputes between the licensee and the generating companies. Such disputes can be adjudicated upon either
by the State Commission or the person or persons to whom it is referred for arbitration. In our opinion the
word "and" in Section 86(1)(f) between the words "generating companies" and "to refer any dispute for
arbitration" means "or". It is well settled that sometimes "and" can mean "or" and sometimes "or" can
mean "and" (vide G.P. Singh's Principles of Statutory Interpretation, 9th Edn., 2004, p. 404).
27. In our opinion in Section 86(1)(f) of the Electricity Act, 2003 the word "and" between the words
"generating companies" and the words "refer any dispute" means "or", otherwise it will lead to an
anomalous situation because obviously the State Commission cannot both decide a dispute itself and also
refer it to some arbitrator. Hence the word "and" in Section 86(1)(f) means "or".
160
32. In a recent judgment in Maharishi Mahesh Yogi Vedic Vishwavidyalaya v. State of M.P.
MANU/SC/0644/2013 : (2013) 15 SCC 677 at 718, this Court held:
93. Besides the above two decisions, which discuss about the methodology of interpretation of a statute,
we also refer to the following decisions rendered by this Court in Ishwar Singh Bindra [Ishwar Singh
Bindra v. State of U.P. MANU/SC/0344/1968 : AIR 1968 SC 1450: 1969 Cri. LJ 19], wherein in para 11
it has been held as under: (AIR p. 1454)
11. ... It would be much more appropriate in the context to read it disconjunctively. In Stroud's Judicial
Dictionary, 3rd Edn., it is stated at p. 135 that 'and' has generally a cumulative sense, requiring the
fulfilment of all the conditions that it joins together, and herein it is the antithesis of 'or' Sometimes,
however, even in such a connection, it is, by force of a context, read as 'or'. Similarly in Maxwell on
Interpretation of Statutes, 11th Edn., it has been accepted that 'to carry out the intention of the legislature
it is occasionally found necessary to read the conjunctions "or" and "and" one for the other'.
94. We may also refer to para 4 of the decision rendered by this Court in Director of Mines Safety v.
Tandur and Nayandgi Stone Quarries (P) Ltd. [MANU/SC/0064/1987 : (1987) 3 SCC 208]: (SCC p. 211,
para 4)
4. According to the plain meaning, the exclusionary Clause in Sub-section (1) of Section 3 of the Act read
with the two provisos beneath Clauses (a) and (b), the word 'and' at the end of para (b) of Sub-clause (ii)
of the proviso to Clause (a) of Section 3(1) must in the context in which it appears, be construed as 'or';
and if so construed, the existence of any one of the three conditions stipulated in paras (a), (b) and (c)
would at once attract the proviso to Clauses (a) and (b) of Sub-section (1) of Section 3 and thereby make
the mine subject to the provisions of the Act. The High Court overlooked the fact that the use of the
negative language in each of the three clauses implied that the word 'and' used at the end of Clause (b)
had to be read disjunctively. That construction of ours is in keeping with the legislative intent manifested
by the scheme of the Act which is primarily meant for ensuring the safety of workmen employed in the
mines.
33. This being the case, is it not open to the adjudicating authority to then go into whether a dispute does
or does not exist?
34. It is important to notice that Section 255 read with the Eleventh Schedule of the Code has amended
Section 271 of the Companies Act, 2013 so that a company being unable to pay its debts is no longer a
161
ground for winding up a company. The old law contained in Madhusudan (supra) has, therefore,
disappeared with the disappearance of this ground in Section 271 of the Companies Act.
35. We have already noticed that in the first Insolvency and Bankruptcy Bill, 2015 that was annexed to
the Bankruptcy Law Reforms Committee Report, Section 5(4) defined "dispute" as meaning a "bona fide
suit or arbitration proceedings...". In its present avatar, Section 5(6) excludes the expression "bona fide"
which is of significance. Therefore, it is difficult to import the expression "bona fide" into Section 8(2)(a)
in order to judge whether a dispute exists or not.
36. The expression "existence" has been understood as follows:
The Shorter Oxford English Dictionary gives the following meaning of the word "existence":
a) Reality, as opp to appearance.
b) The fact or state of existing; actual possession of being. Continued being as a living creature, life, esp.
under adverse conditions.
Something that exists; an entity, a being. All that exists. (Page 894 - Oxford English Dictionary)
37. Two extremely instructive judgments, one of the Australian High Court, and the other of the Chancery
Division in the UK, throw a great deal of light on the expression "existence of a dispute" contained in
Section 8(2)(a) of the Code. The Australian judgment is reported as Spencer Constructions Pty. Ltd. v. G
& M Aldridge Pty Ltd. [1997] FCA 681. The Australian High Court had to construe Section 459H of the
Corporations Law, which read as under:
(1).......
(a) that there is a genuine dispute between the company and the Respondent about the existence or
amount of a debt to which the demand relates;
(b)........
The expression "genuine dispute" was then held to mean the following:
Finn J was content to adopt the explanation of "genuine dispute" given by McLelland CJ in Eq in Eyota
Pty. Ltd. v. Hanave Pty. Ltd. (1994) 12 ACSR 785 at 787 where his Honour said:
In my opinion [the] expression connotes a plausible contention requiring investigation, and raises much
the same sort of considerations as the 'serious question to be tried' criterion which arises on an application
for an interlocutory injunction or for the extension or removal of a caveat. This does not mean that the
162
court must accept uncritically as giving rise to a genuine dispute, every statement in an affidavit 'however
equivocal, lacking in precision, inconsistent with undisputed contemporary documents or other statements
by the same deponent, or inherently and probable in itself, it may be not having 'sufficient prima facie
plausibility to merit further investigation as to [its] truth' (cf Eng Mee Yong v. Letchumanan [1980] AC
331 at 341), or 'a patently feeble legal argument or an assertion of facts unsupported by evidence': cf
South Australia v. Wall (1980) 24 SASR 189 at 194.
His Honour also referred to the judgment of Lindgren J in Rohala Pharmaceutical Pty. Ltd. (supra) where,
at 353, his Honour said:
The provisions [of Section 459H(1) and (5)] assume that the dispute and offsetting claim have an
'objective' existence the genuineness of which is capable of being assessed. The word 'genuine' is included
[in 'genuine dispute'] to sound a note of warning that the propounding of serious disputes and claims is to
be expected but must be excluded from consideration.
There have been numerous decisions of single judges in this Court and in State Supreme Courts which
have analysed, in different ways, the approach a court should take in determining whether there is "a
genuine dispute" for the purposes of Section 459H of the Corporations Law. What is clear is that in
considering applications to set aside a statutory demand, a court will not determine contested issues of
fact or law which have a significant or substantial basis. One finds formulations such as:
... at least in most cases, it is not expected that the court will embark upon any extended enquiry in order
to determine whether there is a genuine dispute between the parties and certainly will not attempt to
weigh the merits of that dispute. All that the legislation requires is that the court conclude that there is a
dispute and that it is a genuine dispute.
See Mibor Investments Pty. Ltd. v. Commonwealth Bank of Australia (1993) 11 ACSR 362 at 366-7,
followed by Ryan J in Moyall Investments Services Pty. Ltd. v. White (1993) 12 ACSR 320 at 324.
Another formulation has been expressed as follows:
It is clear that what is required in all cases is something between mere assertion and the proof that would
be necessary in a court of law. Something more than mere assertion is required because if that were not so
then anyone could merely say it did not owe a debt...
163
See John Holland Construction and Engineering Pty. Ltd. v. Kilpatrick Green Pty. Ltd. (1994) 12 ACLC
716 at 718, followed by Northrop J in Aquatown Pty. Ltd. v. Holder Stroud Pty. Ltd. (Federal Court of
Australia, 25 June 1996, unreported).
In Re Morris Catering (Australia) Pty. Ltd. (1993) 11 ACSR 601 at 605, Thomas J said:
There is little doubt that Div 3 is intended to be a complete code which prescribes a formula that requires
the court to assess the position between the parties, and preserve demands where it can be seen that there
is no genuine dispute and no sufficient genuine offsetting claim. That is not to say that the court will
examine the merits or settle the dispute. The specified limits of the court's examination are the
ascertainment of whether there is a 'genuine dispute' and whether there is a 'genuine claim'.
It is often possible to discern the spurious, and to identify mere bluster or assertion. But beyond a
perception of genuineness (or the lack of it) the court has no function. It is not helpful to perceive that one
party is more likely than the other to succeed, or that the eventual state of the account between the parties
is more likely to be one result than another.
The essential task is relatively simple-to identify the genuine level of a claim (not the likely result of it)
and to identify the genuine level of an offsetting claim (not the likely result of it).
In Scanhill Pty. Ltd. v. Century 21 Australasia Pty. Ltd. (1993) 12 ACSR 341 at 357 Beazley J said:
... the test to be applied for the purposes of Section 459H is whether the court is satisfied that there is a
serious question to be tried that the applicant has an offsetting claim.
In Chadwick Industries (South Coast) Pty. Ltd. v. Condensing Vaporisers Pty. Ltd. (1994) 13 ACSR 37 at
39, Lockhart J said:
... what appears clearly enough from all the judgments is that a standard of satisfaction which a court
requires is not a particularly high one. I am for present purposes content to adopt any of the standards that
are referred to in the cases... The highest of the thresholds is probably the test enunciated by Beazley J,
though for myself I discern no inconsistency between that test and the statements in the other cases to
which I have referred. However, the application of Beazley J's test will vary according to the
circumstances of the case.
164
Certainly the court will not examine the merits of the dispute other than to see if there is in fact a genuine
dispute. The notion of a 'genuine dispute' in this context suggests to me that the court must be satisfied
that there is a dispute that is not plainly vexatious or frivolous. It must be satisfied that there is a claim
that may have some substance.
In Greenwood Manor Pty. Ltd. v. Woodlock (1994) 48 FCR 229 Northrop J referred to the formulations
of Thomas J in Re Morris Catering (Australia) Pty. Ltd. (1993) 11 ACLC 919, 922 and Hayne J in Mibor
Investments Pty. Ltd. v. Commonwealth Bank of Australia (supra), where he noted the dictionary
definition of "genuine" as being in this context "not spurious... real or true" and concluded (at 234):
Although it is true that the Court, on an application Under Sections 459G and 459H is not entitled to
decide a question as to whether a claim will succeed or not, it must be satisfied that there is a genuine
dispute between the company and the Respondent about the existence of the debt. If it can be shown that
the argument in support of the existence of a genuine dispute can have no possible basis whatsoever, in
my view, it cannot be said that there is a genuine dispute. This does not involve, in itself, a determination
of whether the claim will succeed or not, but it does go to the reality of the dispute, to show that it is real
or true and not merely spurious.
In our view a "genuine" dispute requires that:
the dispute be bona fide and truly exist in fact;
the grounds for alleging the existence of a dispute are real and not spurious, hypothetical, illusory or
misconceived.
We consider that the various formulations referred to above can be helpful in determining whether there is
a genuine dispute in a particular case, so long as the formulation used does not become a substitute for the
words of the statute.
38. To similar effect is the judgment of the Chancery Division in Hayes v. Hayes (2014) EWHC 2694
(Ch) under the U.K. Insolvency Rules. The Chancery Division held:
I do not think it necessary, for the purposes of this appeal, to embark on a survey of the authorities as to
precisely what is involved in a genuine and substantial cross-claim. It is clear that on the one hand, the
court does not need to be satisfied that there is a good claim or even that it is a claim which is prima facie
likely to succeed. In In re Bayoil SA [1999] 1 WLR 147 itself, Nourse LJ referred, at p. 153, to what
165
Harman LJ had said in In Re: LHF Wools Ltd. [1970] Ch 27, 36 where Harman LJ, having referred to a
previous case, said:
The majority decided in that case that, shadowy as the cross-claim was and improbable as the events said
to support it seemed to be, there was just enough to make the principle work, namely, that it was right to
have the matter tried out before the axe fell.
On the other hand, the court should be alert to detect wholly spurious claims merely being put forward by
an unwilling debtor to raise what has been called "a cloud of objections" as I referred to earlier.
39. Interestingly enough in In Re: Portman Provincial Cinemas Ltd. (1999) 1 WLR 157, a sharply divided
Court of Appeal had to decide whether a winding up petition should be dismissed on the ground that a
cross-claim had to be tried. Lord Denning, the minority Judge put it thus:
It comes to this: Mr. Hymanson has put forward a most astonishing claim for an indemnity against losses
in perpetuity-based on an oral agreement eight years ago-in a railway carriage or a solicitor's office-with
nothing to support it at all: against a man now dead. If there was substance in it fit for the court to
consider, he should have condescended to a great deal more particularity. At all events, he should have
done so if he wished to convince me. I do not think this cross-claim has any substance at all. I would
reject it as an answer to this creditor's debt and I would allow the appeal accordingly.
On the other hand, Justice Harman in agreeing with the Chancery Division judgment, held:
I do not think that on this proceeding we are entitled to adjudicate upon that matter. I do not think we
ought to reject out of hand statements on oath by Mr. Hymanson and Mr. Waller which, unsatisfactory as
they may be, do yet set up affirmatively this story. There is nobody, of course, to contradict them. I think
we must take it that there is at least a chance that the judge will believe that story and will agree that there
was such a bargain made, and, moreover, that it was an inherent part of the sale agreement.
xxx xxx xxx
Therefore, I have had grave doubts about this matter but I have come to the conclusion on the whole that
it cannot be said that the story was so vague and the likelihood of success so slight that we can say there
was no substance in the cross-claim. I think the judge was right to say that the matter ought to go to trial,
and therefore according to the modern practice the petition should be dismissed, and I would so hold.
Similarly, Russell L.J. held:
166
Lord Denning M.R. has taken the view that the deponents of the company really have made up this story,
so strong are the circumstances which seem to point in the opposite direction. As I have said, I agree it is
a most extraordinary story, but I am not prepared, merely on the basis of affidavits and circumstances
appearing in the Companies Court, to hold that really not only is their story strange, but palpably untrue.
40. It is clear, therefore, that once the operational creditor has filed an application, which is otherwise
complete, the adjudicating authority must reject the application Under Section 9(5)(2)(d) if notice of
dispute has been received by the operational creditor or there is a record of dispute in the information
utility. It is clear that such notice must bring to the notice of the operational creditor the "existence" of a
dispute or the fact that a suit or arbitration proceeding relating to a dispute is pending between the parties.
Therefore, all that the adjudicating authority is to see at this stage is whether there is a plausible
contention which requires further investigation and that the "dispute" is not a patently feeble legal
argument or an assertion of fact unsupported by evidence. It is important to separate the grain from the
chaff and to reject a spurious defence which is mere bluster. However, in doing so, the Court does not
need to be satisfied that the defence is likely to succeed. The Court does not at this stage examine the
merits of the dispute except to the extent indicated above. So long as a dispute truly exists in fact and is
not spurious, hypothetical or illusory, the adjudicating authority has to reject the application.
41. Coming to the facts of the present case, it is clear that the argument of Shri Mohta that the requisite
certificate by IDBI was not given in time will have to be rejected, inasmuch as neither the Appellant nor
the Tribunal raised any objection to the application on this score. The confirmation from a financial
institution that there is no payment of an unpaid operational debt by the corporate debtor is an important
piece of information that needs to be placed before the adjudicating authority, Under Section 9 of the
Code, but given the fact that the adjudicating authority has not dismissed the application on this ground
and that the Appellant has raised this ground only at the appellate stage, we are of the view that the
application cannot be dismissed at the threshold for want of this certificate alone.
42. On the other hand, Shri Mohta is on firmer ground when he argues that a dispute certainly exists on
the facts of the present case and that, therefore, the application ought to have been dismissed on this
ground.
43. According to learned Counsel for the Respondent, the definition of "dispute" would indicate that since
the NDA does not fall within any of the three sub-clauses of Section 5(6), no "dispute" is there on the
facts of this case. We are afraid that we cannot accede to such a contention. First and foremost, the
definition is an inclusive one, and we have seen that the word "includes" substituted the word "means"
167
which occurred in the first Insolvency and Bankruptcy Bill. Secondly, the present is not a case of a suit or
arbitration proceeding filed before receipt of notice - Section 5(6) only deals with suits or arbitration
proceedings which must "relate to" one of the three sub-clauses, either directly or indirectly. We have
seen that a "dispute" is said to exist, so long as there is a real dispute as to payment between the parties
that would fall within the inclusive definition contained in Section 5(6). The correspondence between the
parties would show that on 30th January, 2015, the Appellant clearly informed the Respondent that they
had displayed the Appellant's confidential client information and client campaign information on a public
platform which constituted a breach of trust and a breach of the NDA between the parties. They were
further told that all amounts that were due to them were withheld till the time the matter is resolved. On
10th February, 2015, the Respondent referred to the NDA of 26th December, 2014 and denied that there
was a breach of the NDA. The Respondent went on to state that the Appellant's claim is unfounded and
untenable, and that the Appellant is trying to avoid its financial obligations, and that a sum of Rs.
19,08,202.57 should be paid within one week, failing which the Respondent would be forced to explore
legal options and initiate legal process for recovery of the said amount. This email was refuted by the
Appellant by an e-mail dated 26th February, 2015 and the Appellant went on to state that it had lost
business from various clients as a result of the Respondent's breaches. Curiously, after this date, the
Respondent remained silent, and thereafter, by an e-mail dated 20th June, 2016, the Respondent wished to
revive business relations and stated that it would like to follow up for payments which are long stuck up.
This was followed by an e-mail dated 25th June, 2016 to finalize the time and place for a meeting. On
28th June, 2016, the Appellant wrote to the Respondent again to finalize the time and place. Apparently,
nothing came of the aforesaid e-mails and the Appellant then fired the last shot on 19th September, 2016,
reiterating that no payments are due as the NDA was breached.
44. The demand notice sent by the Respondent was disputed in detail by the Appellant in its reply dated
27th December, 2016, which set out the e-mail of 30th January, 2015. The Appellant then went on to
state:
Sometime during June and September 2016, an officer of your Client, one Mr. Jasmeet Singh wrote to our
Client that he wanted to meet and revive business relationship and exploring common interest points to
work together. In fact, in his email, he admits that there should be resolution to the impending payments
thereby implying that there was (a) a dispute (as defined under the Code) and (b) there was a breach of the
NDA which needed to be resolved. Mr. Singh's emails to our client were sent after 1 year and 6 months
had elapsed from the date of our Client's email of 30 January 2015. This clearly shows that your Client
was silent during this period and had not bothered to answer the questions raised by our Client. Hence,
168
once again in September, our Client called upon your Client to explain its breach of the NDA. Your
Client instead of explaining its breach of the NDA remained silent for about 3 months and thereafter
chooses to issue the Notice as a form of pressure tactic and extort monies from our Client for your Client's
breach of the NDA. All the conduct of your Client explicitly shows laches on its part.
Your Clients should note that under the NDA, it has agreed that a breach of the NDA will cause
irreparable damage to our Client and our Client is entitled to all remedies under law or equity against your
Client for the enforcement of the NDA. Accordingly, given the severity of the breaches of the NDA
committed by your Client, the delay and laches committed by your Client and the conduct of your Client,
our Client is not liable to make payments to your Client against the breaches of the NDA and the delay
and laches committed by your Client. In fact, at this stage, our Client is contemplating initiating necessary
legal actions against your Client and its parent company for the breach of the NDA to seek further
compensations and damages and other legal and equitable remedies against your Client and its parent
company.
45. Going by the aforesaid test of "existence of a dispute", it is clear that without going into the merits of
the dispute, the Appellant has raised a plausible contention requiring further investigation which is not a
patently feeble legal argument or an assertion of facts unsupported by evidence. The defense is not
spurious, mere bluster, plainly frivolous or vexatious. A dispute does truly exist in fact between the
parties, which may or may not ultimately succeed, and the Appellate Tribunal was wholly incorrect in
characterizing the defense as vague, got-up and motivated to evade liability.
46. Learned Counsel for the Respondent, however, argued that the breach of the NDA is a claim for
unliquidated damages which does not become crystallized until legal proceedings are filed, and none have
been filed so far. The period of limitation for filing such proceedings has admittedly not yet elapsed.
Further, the Appellant has withheld amounts that were due to the Respondent under the NDA till the
matter is resolved. Admittedly, the matter has never been resolved. Also, the Respondent itself has not
commenced any legal proceedings after the e-mail dated 30th January, 2015 except for the present
insolvency application, which was filed almost 2 years after the said e-mail. All these circumstances go to
show that it is right to have the matter tried out in the present case before the axe falls.
47. We, therefore, allow the present appeal and set aside the judgment of the Appellate Tribunal. There
shall, however, be no order as to costs.
1
A determination that the commencement standard has been met may involve consideration of whether the debt is subject to a legitimate dispute
or offset in an amount equal to or greater than the amount of the debt. The existence of such a set-off may be a ground for dismissal of the
application (see above, paras. 61-63).
169
Order Passed in October 2017

Vs.
Respondent: Union of India & Ors.
Judges/Coram:
Hon’ble Justice Sh. A.M. Khawilkar & Dr. D.Y. Chandrachud
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. K.V. Vishwanathan, Mr. Ajit Kumar Sinha, & Mr. Anand Grover,
Senior Advocates & Ms. Mohna, Ms. Geetali Talukdar, Ms. Sujeeta Srivastava, Ms. Rakhi Ray, Mr.
Ashwarya Sinha, Mrs. Priyanka Singh, Mr. Srijan Sinha, Mrs. Himanshu Chaubey, Mr. Thanvi, Ms. Ajita
Tandon, Ms. Alankrita Sinha, Ms. Mohini Priya, Mr. Girik Bhalla, Dr. R.R. Kishore, Mr. Karunakar
Mahalik, Mr. N.K. Verma, Mr. C.P. Singh, Ms. Anindra PAndey, Mr. Onkar Prasad, Mr. Anvesh Verma,
Mr. Rakshit Thakur, Mr. Shovan Mishra, Mr. Manoj Goel, Mr. Naman Kamboj, Mr. Shuvodeep Roy, Mr.
Varinder Kumar Sharma, Ms. Parul Sharma, Mr. Varun K. Chopra, Mr. Pawan Shree Agarwal, Mr.
Devvrat, Ms. Aditya Dubey, Mr. Abhimanyu Bhandari, Ms. Nattasha Garg, & Mr. Naveen Kumar,
Learned Advocates
For Respondents/Defendant: Mr. Ajit Sharma, AOR
For Impleadment: Mr. Fuzail Ahmad Ayyubi, Mr. Pushkar Sharma & Mr. Abdul Qadir, Learned
Advocates
For IBBI: Ms. Swarupama Chaturvedi, Learned Advocate
ORDER
Hon’ble Justice Sh. A.M. Khawikar & Dr. DY. Chandrachud
W.P.(C)No.744/2017, W.P.(C) No.782/2017, W.P.(C) No.783/2017 W.P.(C) No.805/2017 & W.P.(C)

No.803 of 2017
Issue notice returnable within four weeks.
List on 10th October, 2017.
As Mr.D.K.Singh, learned Additional Advocate General accepts notice on behalf of State of U.P.,
no further notice need be issued.
All applications for impleadment/intervention stand allowed. The Registry is directed to rectify the cause
title. The parties shall be added as newly impleaded parties.
170
Diary No.27277/2017, Diary No.27579/2017 & Diary No.27624/2017
Permission to file SLP is granted.
Issue notice fixing a returnable date within four weeks.
In the meantime the impugned order(s) passed by the National Company Law Tribunal,
Allahabad shall remain stayed until further orders.
A copy of the special leave petition be served on the office of learned Attorney General for India.
All applications for impleadment/intervention stand allowed.
List on 10th October, 2017.
171
C.A. No.
Appellants: Shahla Naved & Anr.

Vs.
Respondent: Union Of India & Ors.
Judges/Coram:
Hon'ble The Chief Justice, Hon'ble Mr. Justice A. M. Khanwilkar, Hon'ble Dr. Justice D. Y. Chandrachud
Counsels:
For Appellant/Petitioner/Plaintiff: Ms. Nitya Ramakrishnan, Mr. Shadan Farasat, AOR, Ms. Rudrakshi
Deo, Mr. Ajit Kumar Sinha, Sr. , Mr. Ashwarya Sinha, Ms. Ajita Tandon, Mr. Shwetabh Sinha
JUDGMENT
Issue notice fixing a returnable date within two weeks. Tag with W.P.(C)No.940 of 2017.
As an interim measure it is directed that Mr. Shekhar Naphade, learned senior counsel along with Ms.
Shubhangi Tuli, Advocate on Record shall participate in the meetings of the Committee of &./2
W.P.(C)No.947/17 etc. &. (contd.) - 2 - Creditors under Section 21 of the Insolvency and Bankruptcy
Code, 2016 to ensure the cause of the home buyers and protect their interest. The home buyers are granted
liberty to supply their details to Ms. Shubhangi Tuli, learned counsel assisting Mr. Shekhar Naphade,
learned senior counsel, who shall project the case and cause of the home buyers before the appropriate
authority. In the meantime the respondent-promoters shall not leave the country.
172
Order Passed in November 2017
Appellants: Uttara Foods And Feeds Private Limited

Vs.
Respondent: Mona Pharachem
Judges/Coram:
Counsels:
ORDER
Leave granted.
Mr. Shyam Divan, learned senior counsel appearing on behalf of the appellant and the learned
counsel appearing on behalf of the respondent both agree that the matter has since been settled amicably
between the parties.
In an earlier order dated 24.07.2017, this Bench had observed that in view of Rule 8 of the I & B
(Application to Adjudicating Authority) Rules, 2016, the National Company Law Appellate Tribunal
prima facie could not avail of the inherent powers recognised by Rule 11 of the National Law Appellate
Tribunal Rules, d2016 to allow a compromise to take effect after admission of the insolvency petition. We
are of the view that instead of all such orders coming to the Supreme Court as only the Supreme Court
may utilise its powers under Article 142 of the Constitution of India, the relevant Rules be amended by
the competent authority so as to include such inherent powers. This will
obviate unnecessary appeals being filed before this Court in matters where such agreement has been
reached.
On the facts of the present case, we take on record the settlement between the parties and set aside the
NCLAT order.
As a result, the appeal is allowed in the aforesaid terms.
A copy of this order be sent to the Ministry of Law & Justice immediately.
173

Vs.
Respondent: Union Of Indian & Ors.
Judges/Coram:
Hon’ble Justice Sh. A.M. Khanwilkar & Sh. D.Y. Chandrachud
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Rana Mukherjee, Ms. Kasturika Kaumudi, Ms. Daisy Hannah, Mr.
Ramakant Rai, Mr. Anurag Misra, Ms. Ekta Pradhan, Ms. Sreoshi Chatterjee, Mr. Syed Jafar Alam, Mr.
Anvesh Verma, Mr. Rakshit Thakur, Mr. Shrinidhi Rao, Mr. Wajeem Shafiq, Mr. Manoj Goel, Mr. Naman
Kamboj, Ms. Mohna, Ms. Geetali Talukdar, Ms. Meenakshi Arora, Mr. Arjun Garg, Mr. Abhinav
Shrivastava, Mr. Manish Yadav, Ms. Priyanka, Mr. Aakash Nandalia, Dr. R.R. Kishore, Mr. Karunakar
Mahalik, AOR & Ms. Rumi Chanda, Mr. Ajit Kumar Sinha, Mr. Ashwarya Sinha, Ms. Priyanka Sinha,
Mr. Srijan Sinha, Ms. Ajita Tandon, Ms. Ameya Vikrama, Ms. Alankrita Sinha,, Ms. Mohini Priya, Mr.
Giriki Bhalla, Mr. Rajeev Kumar Bansal, Mr. Anil Nag, Mr. Arjun Singh, Mr. Abhilash Nag, Mr.
Prashant Kumar, Mr. Akshay K. Ghai, Mr. Arun Monga, Ms. Divya Sharma, Mr. Gopal Jha, Mr.
Varinder Kumar Sharma, Ms. Parul Sharma, Mr. Yugal K. Prasad, Mr. Suvesh Kumar, Ms. Tajinder
Virudi, Mr. Syed Jafar Husain, Mr. Praveen Swarup, Ms. Sumit P.S., Ms. Aanchal Tikmani, Ms. Liz
Mathew, Mr. Shiv Sagar Tiwari, Mr. Shuvodeep Roy, Fuzail Ahmad Ayyubi, Mr. Pukhrambam Ramesh
Kumar, Mr. Ambhoj Kumar Sinha, MS. Praveena Gautam, Ms. Aparna Bhat, Mr. Tishampati Sen, Mr.
Alok Shukla, Mr. Neeraj Kumar Gupta, Dr. Kailash Chand, Ms. Anne Mathew, Mr. Himanshu Shekhar,
Mr. Amit Pawan, Ms. Rashmi Nandakumar, Ms. Anannya Ghosh, Mr. Shantanu Sagar, Mr. R. P. Gupta,
Mr. Shovan Mishra, Ms. Sujeeta Srivastava, AOR & Mr. Pawanshree Agrawal, AC
For Respondents/Defendant: Mr. K.K. Venugopal, AG & Mrs. V. Mohana, Mr. Harish V. Shanker, Adv.
& Mrs. Anil Katiyar, AOR & Mr. Ajay Sharma, Mr. Sanjay Kumar Pathak, Mr. Asha G. Nair, Mr. R.K.
Rathor, Adv & Mr. G.S. Makker, AOR & Mrs. Madhavi Divan, Ms. Nidhi Khanna, Mr. Ayush Puri, Mr.
Kapil Sibal, Mr. Mukul Rohatgi, Adv & Mr. Anupam Lal Das, AOR & Mr. Vishal Gupta, Mr. Kumar
Mihir, Mr. Anirudh Singh, Mr. Ranjit Kumar, Mr. Pawan Upashyay, Mr. Sarvjit Pratap Singh, Mr.
Krishna Kanodia, Mr. Kamal Singh, Mr. Shashank Sekhar Singh, Mr. Abhay Kumar, Mr. Himanshu, Ms.
C.B. Shetty, Mr. Ajay Jain, Mr. Jinendra Jain, Mr. Chiraj Aneja, Mr. L. Vishwanathan, Mr. Bishwajit
Dubey, Ms. Srideepa Bhattacharayya, Mr. Aditya Marwah, Mr. Avishkar Singhvi, Mr. Vishnu Sharma,
Anupama Sharma, Ms. Sonali Negi, Ms. Gautami Budhapriya, Mr. Yadav Narender Singh, Mr. Vijay
Kumar Sharma, Mr. Sumant Batra, Mr. Sanjay Bhatt, Ms. Swarupama Chaturvedi, Mr. B.N. Dubey, Mr.
Robin Khakhar, Mr. Kumar Gaurav, Adv & Mr. Ravindra Kumar, AOR & Mr. Sourav Kumar, Mr.
Neelesh Singh Rao, Mr. A. Babu, Mr. P.V. Dinesh, Ms. Sindhu T.P., Mr. Bineesh K., Mr. Abhisekh
Thakur, Ms. Arushi Singh, Mr. R. Beniwal, Adv & Ms. Hemantika, AOR & Ms. Jesal Wahi, Ms. Puja
Singh, Ms. Shodhika Sharma, Mr. C.S. Gupta, Mr. Shekhar Kumar, Mr. Ashok Kumar Jain, Mr. Pankaj
Jain, Mr. Bijoy Kumar Jain, Ms. Praveena Gautam, Mr. Jitesh P. Gupta, Mr. Raja Ram, Mr. K.K.
Gautam, Mr. Nakul Dewan, Ms. Akriti Chaubey, Ms. Tanya Shree, Mr. Ejaz Maqbool, Mr. R. Sudhinder,
Ms. Amrita Sarkar, Ms. Nidhi Agarwal, Mr. Kavita Jha, Mr. Vaibhav Kulkarni, Mr. Udit Naresh, Ms.
Manjeet Chawla, Adv & Mr. Partha Sil, AOR & Mr. Tavish B. Prasad, Mr. Subhoshree Sil, Ms. Anne
Mathew, Mr. Nishant Anand, Adv & Mr. Sandeep Devashish Das, AOR & Mr. Anand Prasad, Mr. Rajiv
174
Virmani, Mr. Atul Malhotra, Mr. Gaurav Jain, Mr. Yadav Narender Singh, Mr. Ratish Kumar, Dr.
Sarvam Ritam Khare, Ms. Urvi Kuthitata Malik, Mr. Rahul Tomar, Mrs. K.Enatoli Sema, Mr. Edward
Belho, Mr. Amit Kumar Singh, Mr. K. Luikang Michael, Mr. Raghavendra M. Bajaj, Adv & Ms. Garima
Bajaj, AOR & Mr. Tishampati Sen, Ms. Riddhi Sancheti, Adv & Mr. Rajesh P., AOR & Mr. Prasanth
Jain, Adv & Mr. Ranjan Kumar Pandey, AOR & Mr. Sandeep Bisht, Mr. V. Sudeer, Mr. M.B.R.S. Raju,
Ms. Megha Khanna, Adv & Mr. Balaji Srinivasan, AOR & Ms. Sujeeta Srivastava, Mr. Abhimanyu
Bhandari, Ms. Nattasha Garg, Mr. Naveen Kumar, Mr. C.U. Singh, Ms. Anannya Ghosh, Mr. Priyank
Ladoia, Mr. Talha Abdul Rahman, Ms. Seema Rao, Mr. Wajeem Shafiq, Mr. Vidur Kamra, Mr. Avinesh
Bhardwaj, Adv & Mr. C.S. Ashri, AOR & Mr. Mangaljit Mukherjee, Mrs. Debarpita Basu Mukherjee, Mr.
Sagnik Basu, Mrs. Sarla Chandra, Mr. Sidharth Luthra, Adv & Ms. Supriya Juneja, AOR & Mr. Bharat
Monga, Mr. Sahil Sethi, Mr. Shivam Sharma, Mr. Puneeth G., Adv & Ms. Astha Sharma, Mr. Praveen
Swarup, AOR & Mr. Suvesh Kumar, Mr. Sahil Chaudhary, Mr. Shashi Kiran, Mr. Sujit Kumar Jha, Mr.
Shatish Chandra, Ms. Ranny, Mr. P.V. Raghunandan, Ms. Poonam Raswat, Mr. Anbhoj Kumar Sinha,
Mr. Gaurav Sharma, Mr. Pradhuman Gohil, Adv & Ms. Taruna Singh Gohil, AOR & Mr. Himanshu
Chaubey, Mr. Zain Maqbool, Ms. Neelu Mohan, Adv & Ms. Prerna Mehta, AOR & Mr. Rohit Singh, Adv
& Mr. Alok Shukla, Mr. Neeraj Kumar Gupta, AOR & Mr. Anil Kumar, Mr. Nitin Singh, Mr. Anjani
Kumar, Mr. Ranjeet Kumar Singh, Mr. Shyam Divan, Ms. Sonal Gupta, Ms. Raveen Rai, Ms. Aishwarya
Dash, Adv & Mr. Amit Sharma, Mr. Arun K. Sinha, Mr. Sachin Patil, Mr. M.A. Krishna Moorthy, Mr.
K.K. Mohan, Mr. Raj Kishor Choudhary, Mr. Ashok Mathur, Mr. Rabin Majumder, Mr. Anup Jain, Mr.
Kedar Nath Tripathy, Mr. T. Harish Kumar, Mr. Abhijat P. Medh, Mr. Pradeep Kumar Bakshi, Mr.
Mukesh Kumar Maroria, Ms. Sharmila Upashyay, Ms. Madhusmita Bora, Ms. Supriya Juneja, Mr. Balaji
Srinivasan, Mr. Rajeev Kumar Bansal, Mr. Abhishek Yadav, Mr. Amarjit Singh Bedi, Mr. Mudit Sharma,
Mr. Syed Jafar Alam, Mr. Arjun Garg, & Mr. Md. Rashid Saeed, AOR
ORDER
Hon’ble Justice Sh. A.M. Khanwilkar & Sh. D.Y. Chandrachud
Though these matters were to be taken up at 2.00 p.m., learned counsel for the petitioners, Mr.
K.K. Venugopal, learned Attorney General and learned senior counsel for the respondents agreed to have
it taken in the first hour. In pursuance of earlier order, eight independent directors and five promoter
directors are present.
It is submitted by learned senior counsel appearing for Jaiprakash Associates Limited (JAL) that
the company is ready with 275 crores. The home buyers raised their concern about the realization of the
amount. This Court appreciates the grievance and the concern of the home buyers.
We think it would be appropriate to direct as follows:-
(a) A Demand Draft of Rs.275 crores be deposited by Mr. Anupam Lal Das, learned counsel
appearing for the company, before the Registry of this Court, today.
(b) A sum of Rs.150 crores be deposited by 13.12.2017.
(c) A further sum of Rs.125 crores be deposited by 31.12.2017.
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(d) Neither the independent directors nor the promoter directors shall alienate their personal
properties or assets in any manner, and if they do so, they will not only be liable for criminal
prosecution but contempt of the Court.
(e) That apart, we also direct that the properties and assets of their immediate and dependent
family members should also not be transferred in any manner, whatsoever.
Needless to say that direction for deposit of Rs.2,000 crores shall remain as it is. The only
indulgence is to pay the same in installments.
Mr. Pawan Shree Agrawal, who had been appointed as Amicus Curiae on an earlier date, shall
create a portal within a week and do the needful as he has done in similar matters. Mr. Anupam Lal Das,
learned counsel shall provide all the details as required by Mr. Pawan Shree Agrawal. Mr. Anupam Lal
Das shall provide a sum of Rs.5 lakhs to Mr. Pawan Shree Agrawal for creation of the portal and to carry
on the consequential activities.
Matters be listed on 10.1.2018.
On that day, all the independent directors and promoter directors of Jaiprakash Associates
Limited, shall remain present.
Copies of the affidavits deposed by all the five promoter directors, shall be served on the Central
Agency, so that the learned Attorney General can be made aware of that.
Call on the date fixed.
176
Order Passed in December 2017
Appellants: Impex Ferro Tech Limited

Vs.
Respondent: Agarwal Coal Corporation Private Limited
Judges/Coram:
Hon’ble Justice Sh. Rohinton Fali Nariman & Sh. Navin Sinha
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Vikramjit Banerjee, Mr. Samrat Sengupta, & Mr. Soumyyjit Nath,
Adv & Mr. Soumya Dutta, AOR
For Respondents/Defendant: Mr. Udayaditya Banerjee, AOR
ORDER
Having heard the learned counsel appearing for the parties, we utilize our powers under Article
142 of the Constitution of India to put a quietus to the matter before us. We take the Terms of Settlement
dated 17.11.2017 entered into between the parties on record and also record the undertaking of both the
parties to abide by the Consent Terms.
With this, the present Special Leave Petition is disposed of. The judgment of the National
Company Law Tribunal will accordingly be substituted by the present order.
COURT NO. 12
ORDER
The Special Leave Petition is disposed of and the judgment of the National Company Law Tribunal will
accordingly be substituted by the present order in terms of the signed order.
177
Appellants: Macquarie Bank Limited

Vs.
Respondent: Shilpi Cable Technologies Ltd.
Judges/Coram:
Counsels:
ORDER
1. The present appeals raise two important questions which arise under the Insolvency and
Bankruptcy Code, 2016 (hereinafter referred to as the "Code"). The first question is whether, in relation to
an operational debt, the provision contained in Section 9(3)(c) of the Code is mandatory; and secondly,
whether a demand notice of an unpaid operational debt can be issued by a lawyer on behalf of the
operational creditor.
2. The facts contained in the three appeals are similar. For the purpose of this judgment, the facts
contained in Civil Appeal No. 15481 of 2017 will now be set out. Hamera International Private Limited
executed an agreement with the Appellant, Macquarie Bank Limited, Singapore, on 27.7.2015, by which
the Appellant purchased the original supplier's right, title and interest in a supply agreement in favour of
the Respondent. The Respondent entered into an agreement dated 2.12.2015 for supply of goods worth
US$ 6,321,337.11 in accordance with the terms and conditions contained in the said sales contract. The
supplier issued two invoices dated 21.12.2015 and 31.12.2015. Payment terms under the said invoices
were 150 days from the date of bill of ladings dated 17.12.2015/19.12.2015. Since amounts under the said
bills of lading were due for payment, the Appellant sent an email dated 3.5.2016 to the contesting
Respondent for payment of the outstanding amounts. Several such emails by way of reminders were sent,
and it is alleged that the contesting Respondent stated that it will sort out pending matters. Ultimately, the
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Appellant issued a statutory notice Under Sections 433 and 434 of the Companies Act, 1956. A reply
dated 5.10.2016 denied the fact that there was any outstanding amount.
3. After the enactment of the Code, the Appellant issued a demand notice Under Section 8 of the
Code on 14.2.2017 at the registered office of the contesting Respondent, calling upon it to pay the
outstanding amount of US$ 6,321,337.11. By a reply dated 22.2.2017, the contesting Respondent stated
that nothing was owed by them to the Appellant. They further went on to question the validity of the
purchase agreement dated 27.7.2015 in favour of the Appellant. On 7.3.2017, the Appellant initiated the
insolvency proceedings by filing a petition Under Section 9 of the Code. On 1.6.2017, the NCLT rejected
the petition holding that Section 9(3)(c) of the Code was not complied with, inasmuch as no certificate, as
required by the said provision, accompanied the application filed Under Section 9. It, therefore, held that
there being non-compliance of the mandatory provision of Section 9(3)(c) of the Code, the application
would have to be dismissed at the threshold. However, the NCLT also went into the question as to
whether a dispute has been raised in relation to the operational debt and found that such dispute was in
fact raised by the reply to the statutory notice sent Under Sections 433 and 434 of the Companies Act,
1956 and that, therefore, Under Section 9(5)(ii)
(d), the application would have to be dismissed.
4. By the impugned judgment dated 17.7.2017, the NCLAT agreed with the NCLT holding that the
application would have to be dismissed for non compliance of the mandatory provision contained in
Section 9(3)(c) of the Code. It further went on to hold that an advocate/lawyer cannot issue a notice
Under Section 8 on behalf of the operational creditor in the following terms:
In the present case, as the notice has been given by an advocate/lawyer and there
is nothing on the record to suggest that the lawyer was authorized by the
Appellant, and as there is nothing on the record to suggest that the said
lawyer/advocate hold any position with or in relation to the Appellant company,
we hold that the notice issued by the advocate/lawyer on behalf of the Appellant
cannot be treated as notice Under Section 8 of the 'I & B Code'. And for the said
reason also the petition Under Section 9 at the instance of the Appellant against
the Respondent was not maintainable.
5. Shri Mukul Rohatgi, learned senior advocate appearing on behalf of the Appellant, referred us to
various provisions of the Code. According to learned senior Counsel, on a conjoint reading of Section
9(3)(c), Rule 6 and Form 5 of the Insolvency and Bankruptcy (Application to Adjudicating Authority)
Rules, 2016 ("Adjudicating Authority Rules"), it is clear that Section 9(3)(c) is not mandatory, but only
179
directory and that, in the said section, "shall" should be read as "may". He cited a number of judgments
for the proposition that when serious general inconvenience is caused to innocent persons or the general
public without really furthering the object of the particular Act, the said provision should not be read as
mandatory, but as directory only. Further, according to learned senior Counsel, Section 9(3)(c) is a
procedural section, which is not a condition precedent to the allowing of an application filed Under
Section 9(1). This is further clear from the fact that Under Section 9(5), if there is no such certificate, the
application does not need to be rejected. He also stressed the fact that at the end of Form 5, what has to be
attached to the application, by way of Annexure III, is a copy of the relevant accounts from
banks/financial institutions maintaining accounts of the operational creditor confirming that there is no
payment of the operational debt only "if available". Also, according to learned Counsel, this is only an
additional document, which along with other documents that are mentioned in Item 8 of Part V, would go
to prove the existence of the operational debt. The word "confirming" in Section 9(3)(c) would also show
that this is only one more document that can be relied upon by the operational creditor, apart from other
documents, which may well prove the existence of the operational debt. According to learned senior
Counsel, on the second ground as well it is clear, on a perusal of Form 5, that a "person authorised to act
on behalf of the operational creditor" is a person who can sign Form 5 on behalf of the operational
creditor. Also, the expression "position with or in relation to the operational creditor" shows that a lawyer,
who is authorized by the operational creditor, is certainly within the said expression. He also referred us
to Section 30 of the Advocates Act, 1961 and judgments on the effect of the expression "practise" when it
applies to lawyers, vis-`-vis Tribunals such as the NCLT and NCLAT.
6. Shri Arvind Datar, learned senior advocate, supported the arguments of Shri Rohatgi and went on
to add that the definition of "person" contained in Section 2(23) of the Code includes a person resident
outside India, and when read with the definition of "operational creditor" in Section 5(20) of the Code
would make it clear that persons, such as the Appellant, are certainly operational creditors within the
meaning of the Code. He stressed the fact that if a copy of the certificate Under Section 9(3)(c) can only
be from a "financial institution" as defined Under Section 3(14) of the Code, and if a non resident bank or
financial institution, such as the Appellant, may not be included either as a scheduled bank Under Section
3(14)(a) or as such other institution as the Central Government may by notification specify as a financial
institution Under Section 3(14) (d), it is clear that Section 9(3)(c) cannot operate to non suit the
Appellant, as it would be impossible to get a certificate from a financial institution as defined. This being
the case, he argued that the Court should add words into the expression "financial institution", as it would
otherwise lead to absurdity and that if Section 9(3)(c) is held to be mandatory, then a certificate from a
foreign bank, who is not a "financial institution" as defined under the Code, should be read into Section
9(3)(c). Otherwise, the learned senior Counsel supported Shri Rohatgi's argument that Section 9(3)(c) is a
180
directory provision which need not mandatorily be complied with. A further argument was made that the
definition in Section 3(14), though exhaustive, is subject to context to the contrary and that, therefore, it is
clear that a financial institution would include a bank outside the categories mentioned in Section 3(14)
when it comes to an operational creditor who is a resident outside India.
7. All these arguments were countered by Dr. A.M. Singhvi, learned senior Counsel appearing on
behalf of the Respondent. First and foremost, according to learned senior Counsel, the object of the Code
is not that persons may use the Code as a means of recovering debts. The Code is an extremely draconian
piece of legislation and must, therefore, be construed strictly. If this is kept in mind, it is clear that Section
9(3)(c) is mandatory and requires to be complied with strictly or else the application should be dismissed
at the threshold. He stated that in the context of it being recognized by our judgments that a financial
creditor and operational creditor are completely, differently and separately dealt with in the Code, and
that so far as an operational creditor is concerned, it is important to bear in mind that a very low threshold
is required in order that an operational creditor's application be rejected, namely, there being a pre-
existing dispute between the parties. According to learned senior Counsel Section 9(3)(c) is a
jurisdictional condition precedent, which is clear from the expression "initiation" and the expression
"shall", both showing that the Section is a mandatory condition precedent which has to be satisfied before
the adjudicating authority can proceed further. According to learned senior Counsel, a copy of the
certificate from a financial institution is a very important document which makes it clear, almost
conclusively, that there is an unpaid operational debt. According to him, the principle contained in Taylor
v. Taylor (1875) 1 Ch. D. 426, has been followed by a number of judgments and is applicable inasmuch
as when a statute requires a particular thing to be done in a particular manner, it must be done in that
manner or not at all. He also referred us to various Sections of the Code, the Insolvency and the
Adjudicating Authority Rules, Form 5 in particular, together with the Viswanathan Committee and report
Joint Committee report of the Parliament. According to the learned senior Counsel, it is clear from the
definition of "financial institution" contained in Section 3(14) that certain foreign banks are included
within the expression "scheduled banks" Under Section 3(14)(a) and that, Under Section 3(14)(d), the
Central Government may, by notification, specify other foreign banks as financial institutions. It is only
where operational creditors have dealings with banks which fall within Section 3(14), that they can avail
the opportunity of declaring a corporate debtor as insolvent Under Sections 8 and 9 of the Code. Persons
who may be residents outside India and who bank with entities that are not contained within the definition
of Section 3 (14) would, therefore, be outside the Code.
8. According to the learned senior Counsel, the consequence of not furnishing a copy of the
certificate Under Section 9(3)(c) is that, Under Section 9(5)(ii)(a), the application that is made would be
181
incomplete and, subject to the proviso, would have to be dismissed on that score. Also, according to the
learned senior Counsel, the NCLAT was right in following the judgment contained in Smart Timing Steel
Ltd. v. National Steel and Agro Industries Ltd. decided on 19.5.2017, which, according to the learned
senior Counsel, has merged in an order of this Court dismissing an appeal from the said judgment.
9. According to the learned senior Counsel, a lawyer's notice cannot be given Under Section 8, read
with the Adjudicating Authority Rules and Form 5 therein. Either the operational creditor himself must
send the requisite notice, or a duly authorized agent on his behalf should do so, and such authorized agent
can only be an "insider", namely, a person who is authorized by the operational creditor, being an
employee, director or other person from within who alone can send the notice Under Section 8 and sign
the application Under Section 9. Dr. Singhvi also stated that it is clear, from Forms 3 and 5, that only a
person authorized to act on behalf of the operational creditor can send the notice and/or sign the
application. He stressed the word "position" with or in relation to the operational creditor and stated that
this would also indicate that it is only an insider who can be so authorized by the operational creditor and
not a lawyer. According to learned senior Counsel, the provisions contained in certain statutes such as
Section 434(2) of the Companies Act, 1956 and Rule 4 of the Debts Recovery Tribunal (Procedure)
Rules, 1993 under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 ("Debts
Recovery Rules") would also make it clear that where a lawyer can do things on behalf of a party, it is
expressly so mentioned unlike the present case.
10. Having heard learned Counsel for the parties, it is necessary to set out the relevant Sections of the
Code and the Adjudicating Authority Rules.
3. In this Code, unless the context otherwise requires,-
(10) "creditor" means any person to whom a debt is owed and includes a
financial creditor, an operational creditor, a secured creditor, an unsecured
creditor and a decree-holder;
(14) "financial institution" means-
(a) a scheduled bank;
(b) financial institution as defined in Section 45-I of the Reserve Bank of India
Act, 1934;
(c) public financial institution as defined in Clause (72) of Section 2 of the

Companies Act, 2013; and
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(d) such other institution as the Central Government may by notification specify
as a financial institution;
(23) "person" includes-
(a) an individual;
(b) a Hindu Undivided Family;
(c) a company;
(d) a trust;
(e) a partnership;
(f) a limited liability partnership; and (g) any other entity established under a
statute, and includes a person resident outside India;
(25) "person resident outside India" means a person other than a person resident
in India;
xxx xxx xxx
5. In this Part, unless the context otherwise requires,-
(20) "operational creditor" means a person to whom an operational debt is owed

and includes any person to whom such debt has been legally assigned or
transferred;
(21) "operational debt" means a claim in respect of the provision of goods or

services including employment or a debt in respect of the repayment of dues
arising under any law for the time being in force and payable to the Central
Government, any State Government or any local authority;
xxx xxx xxx
8. Insolvency resolution by operational creditor-
(1) An operational creditor may, on the occurrence of a default, deliver a demand

notice of unpaid operational debtor copy of an invoice demanding payment of the
amount involved in the default to the corporate debtor in such form and manner
as may be prescribed.
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(2) The corporate debtor shall, within a period of ten days of the receipt of the
demand notice or copy of the invoice mentioned in Sub-section (1) bring to the
notice of the operational creditor-
(a) existence of a dispute, if any, and record of the pendency of the suit or
arbitration proceedings filed before the receipt of such notice or invoice in
relation to such dispute;
(i) by sending an attested copy of the record of electronic transfer of the unpaid
amount from the bank account of the corporate debtor; or (ii) by sending an
attested copy of record that the operational creditor has encashed a cheque issued
by the corporate debtor.
Explanation.-For the purposes of this section, a "demand notice" means a notice

served by an operational creditor to the corporate debtor demanding repayment
of the operational debt in respect of which the default has occurred.
xxx xxx xxx
9. Application for initiation of corporate insolvency resolution process by

operational creditor-
(1) After the expiry of the period of ten days from the date of delivery of the
notice or invoice demanding payment Under Sub-section (1) of Section 8, if the
operational creditor does not receive payment from the corporate debtor or notice
of the dispute Under Sub-section (2) of Section 8, the operational creditor may
file an application before the Adjudicating Authority for initiating a corporate
(2) The application Under Sub-section (1) shall be filed in such form and manner
and accompanied with such fee as may be prescribed.
(a) a copy of the invoice demanding payment or demand notice delivered by the
operational creditor to the corporate debtor;
(b) an affidavit to the effect that there is no notice given by the corporate debtor
relating to a dispute of the unpaid operational debt;
184
(c) a copy of the certificate from the financial institutions maintaining accounts
of the operational creditor confirming that there is no payment of an unpaid
operational debt by the corporate debtor; and (d) such other information as may
be specified.
(4) An operational creditor initiating a corporate insolvency resolution process

under this section, may propose a resolution professional to act as an interim
resolution professional.
(5) The Adjudicating Authority shall, within fourteen days of the receipt of the
application Under Sub-section (2), by an order-
(i) admit the application and communicate such decision to the operational
creditor and the corporate debtor if,-
(c) the invoice or notice for payment to the corporate debtor has been delivered
by the operational creditor;
(d) no notice of dispute has been received by the operational creditor or there is
no record of dispute in the information utility; and
(e) there is no disciplinary proceeding pending against any resolution

professional proposed Under Sub-section (4), if any.
(ii) reject the application and communicate such decision to the operational
creditor and the corporate debtor, if-
(c) the creditor has not delivered the invoice or notice for payment to the
corporate debtor;
(d) notice of dispute has been received by the operational creditor or there is a
record of dispute in the information utility; or
(e) any disciplinary proceeding is pending against any proposed resolution

professional:
185
Provided that Adjudicating Authority, shall before rejecting an application Under
Sub-clause (a) of Clause (ii) give a notice to the applicant to rectify the defect in
his application within seven days of the date of receipt of such notice from the
adjudicating Authority.
(6) The corporate insolvency resolution process shall commence from the date of
admission of the application Under Sub-section (5) of this section.
xxx xxx xxx
The Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules,

2016
5. Demand notice by operational creditor.-
(1) An operational creditor shall deliver to the corporate debtor, the following
documents, namely.-
(2) The demand notice or the copy of the invoice demanding payment referred to
in Sub-section (2) of Section 8 of the Code, may be delivered to the corporate
debtor,
(a) at the registered office by hand, registered post or speed post with
acknowledgement due; or
(b) by electronic mail service to a whole time director or designated partner or

key managerial personnel, if any, of the corporate debtor.
(3) A copy of demand notice or invoice demanding payment served under this
Rule by an operational creditor shall also be filed with an information utility, if
any.
6. Application by operational creditor.-
(1) An operational creditor, shall make an application for initiating the corporate
insolvency resolution process against a corporate debtor Under Section 9 of the
Code in Form 5, accompanied with documents and records required therein and
as specified in the Insolvency and Bankruptcy Board of India (Insolvency
Resolution Process for Corporate Persons) Regulations, 2016.
186
(2) The applicant Under Sub-rule (1) shall dispatch forthwith, a copy of the
application filed with the Adjudicating Authority, by registered post or speed
post to the registered office of the corporate debtor.
FORM 3
(See Clause (a) of Sub-rule (1) of Rule 5)
FORM OF DEMAND NOTICE/INVOICE DEMANDING PAYMENT

UNDER THE INSOLVENCY AND BANKRUPTCY CODE, 2016 (Under
Rule 5 of the Insolvency and Bankruptcy (Application to Adjudicating Authority)
Rules, 2016) [Date]
To,
[Name and address of the registered office of the corporate debtor]
From,
[Name and address of the registered office of the operational creditor]
Subject: Demand notice/invoice demanding payment in respect of unpaid

operational debt due from [corporate debtor] under the Code.
Madam/Sir,
1. This letter is a demand notice/invoice demanding payment of an unpaid

operational debt due from [name of corporate debtor].
2. Please find particulars of the unpaid operational debt below:
PARTICULARS OF OPERATIONAL DEBT
1. TOTAL AMOUNT OF DEBT, DETAILS OF

TRANSACTIONS ON ACCOUNT OF WHICH DEBT
FELL DUE, AND THE DATE FROM WHICH SUCH
DEBT FELL DUE
2. AMOUNT CLAIMED TO BE IN DEFAULT AND THE

DATE ON WHICH THE DEFAULT OCCURED
(ATTACH THE WORKINGS FOR COMPUTATION OF
DEFAULT IN TABULAR FORM)
3. PARTICULARS OF SECURITY HELD, IF ANY, THE
187
DATE OF ITS CREATION, ITS ESTIMATED VALUE AS

PER THE CREDITOR. ATTACH A COPY OF A
CERTIFICATE OF REGISTRATION OF CHARGE
ISSUED BY THE REGISTRAR OF COMPANIES (IF THE
CORPORATE DEBTOR IS A COMPANY)
4. DETAILS OF RETENTION OF TITLE

ARRANGEMENTS (IF ANY) IN RESPECT OF GOODS
TO WHICH THE OPERATIONAL DEBT REFERS
5. RECORD OF DEFAULT WITH THE INFORMATION

UTILITY (IF ANY)
6. PROVISION OF LAW, CONTRACT OR OTHER

DOCUMENT UNDER WHICH DEBT HAS BECOME
DUE
7. LIST OF DOCUMENTS ATTACHED TO THIS

APPLICATION IN ORDER TO PROVE THE
EXISTENCE OF OPERATIONAL DEBT AND THE
AMOUNT IN DEFAULT
3. If you dispute the existence or amount of unpaid operational debt (in default)
please provide the undersigned, within ten days of the receipt of this letter, of the
pendency of the suit or arbitration proceedings in relation to such dispute filed
before the receipt of this letter/notice.
4. If you believe that the debt has been repaid before the receipt of this letter,
please demonstrate such repayment by sending to us, within ten days of receipt of
this letter, the following:
(a) an attested copy of the record of electronic transfer of the unpaid amount from
the bank account of the corporate debtor; or
(b) an attested copy of any record that [name of the operational creditor] has
received the payment.
5. The undersigned, hereby, attaches a certificate from an information utility

confirming that no record of a dispute raised in relation to the relevant
188
operational debt has been filed by any person at any information utility. (if
applicable)
6. The undersigned request you to unconditionally repay the unpaid operational

debt (in default) in full within ten days from the receipt of this letter failing
which we shall initiate a corporate insolvency resolution process in respect of
[name of corporate debtor].
Yours sincerely,
Signature of person authorised to act on behalf of the

operational creditor
Name in block letters
Position with or in relation to the operational creditor
Address of person signing
Instructions
1. Please serve a copy of this form on the corporate debtor, ten days in advance
of filing an application Under Section 9 of the Code.
2. Please append a copy of such served notice to the application made by the
operational creditor to the Adjudicating Authority.
Form 5
(See Sub-rule (1) of Rule 6)
APPLICATION BY OPERATIONAL CREDITOR TO
INITIATE CORPORATE INSOLVENCY
RESOLUTION PROCESS UNDER THE CODE.
(Under Rule 6 of the Insolvency and Bankruptcy (Application to Adjudicating

Authority) Rules, 2016)
[Date]
To,
The National Company Law Tribunal
189
[Address]
From,
[Name and address for correspondence of the operational creditor]
In the matter of [name of the corporate debtor]
Subject: Application to initiate corporate insolvency resolution process in

respect of [name of the corporate debtor] under the Insolvency and
Bankruptcy Code, 2016.
Madam/Sir,
[Name of the operational creditor], hereby submits this application to initiate a

corporate insolvency resolution process in the case of [name of corporate debtor].
The details for the purpose of this application are set out below:
Part-I
PARTICULARS OF APPLICANT
1. NAME OF OPERATIONAL CREDITOR
2. IDENTIFICATION NUMBER OF OPERATIONAL

CREDITOR (IF ANY)
3. ADDRESS FOR CORREPONDENCE OF THE

OPERATIONAL CREDITOR
Part-II
PARTICULARS OF CORPORATE DEBTOR
1. NAME OF THE CORPORATE DEBTOR
2. IDENTIFICATION NUMBER OF CORPORATE

DEBTOR
3. DATE OF INCORPORATION OF CORPORATE

DEBTOR
4. NOMINAL SHARE CAPITAL AND THE PAID-UP

SHARE CAPITAL OF THE CORPORATE DEBTOR
AND/OR DETAILS OF GUARANTEE CLAUSE AS
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PER MEMORANDUM OF ASSOCIATION (AS
APPLICABLE)
5. ADDRESS OF THE REGISTERED OFFICE OF THE

CORPORATE DEBTOR
6. NAME, ADDRESS AND AUTHORITY OF PERSON

SUBMITTING APPLICATION ON BEHALF OF
OPERATIONAL CREDITOR (ENCLOSE
AUTHORISATION)
7. NAME AND ADDRESS OF PERSON RESIDENT IN

INDIA AUTHORISED TO ACCEPT THE SERVICE OF
PROCESS ON ITS BEHALF (ENCLOSE
AUTHORISATION)
Part-III
PARTICULRS OF THE PROPOSED INTERIM

RESOLUTION PROFESSIONAL [IF PROPOSED]
1. NAME, ADDRESS, EMAIL ADDRESS AND THE

REGISTRATION NUMBER OF THE PROPOSED
INDOLVENCY PROFESSIONAL
Part-IV
1. TOTAL AMOUNT OF DEBT, DETAILS OF

TRASACTIONS ON ACCOUNT OF WHICH DEBT
FELL DUE, AND THE DATE FROM WHICH SUCH
DEBT FELL DUE
2. AMOUNT CLAIMED TO BE IN DEFAULT AND THE

DATE ON WHICH THE DEFAULT OCCURRED
(ATTACH THE WORKINGS FOR COUMPUTATION
OF AMOUNT AND DATES OF DEFAULT IN
TABULAR FORM)
Part-V
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PARTICULARS OF OPERATIONAL DEBT [DOCUMENTS, RECORS

AND EVIDENCE OF DEFAULT]
1. PARTICULARS OF SECURITY HELD, IF ANY, THE DATE OF ITS

CREATION, ITS ESTIMATED VALUE AS PER THE CREDITOR.
ATTACH A COPY OF A CERTIFICATE OF REGISTRATION OF CHARGE

ISSUED BY THE REGISTRAR OF COMPANIES (IF THE CORPORATE
DEBTOR IS A COMPANY)
2. DETAILS OF RESERVATION / RETENTION OF TITLE ARRANGEMENTS

(IF ANY) IN RESPECT OF GOODS TO WHICH THE OPERATIONAL DEBT
REFERS
3. PARTICULARS OF AN ORDER OF A COURT, TRIBUNAL OR ARBITRAL

PANEL ADJUDICATING ON THE DEFAULT, IF ANY
(ATTACH A COPY OF THE ORDER)
4. RECORD OF DEFAULT WITH THE INFORMATION UTILITY, IF ANY
(ATTACH A COPY OF SUCH RECORD)
5. DETAILS OF SUCCESSION CERTIFICATE, OR PROBATE OF A WILL, OR

LETTER OF ADMINISTRATION, OR COURT DECREE (AS MAY BE
APPLICABLE) UNDER THE INDIAN SUCCESSION ACT, 1925 (10 OF 1925)
(ATTACH A COPY)
6. PROVISION OF LAW, CONTRACT OR OTHER DOCUMENT UNDER

WHICH OPERATIONAL DEBT HAS BECOME DUE
7. A STATEMENT OF BANK ACCOUNT WHERE DEPOSITS ARE MADE OR

CREDIT RECEIVED NORMALLY BY THE OPERATIONAL CREDITOR IN
RESPECT OF THE DEBT OF THE CORPORATE DEBTOR (ATTACH A
COPY)
8. LIST OF OTHER DOCUMENTS ATTACHED TO THIS APPLICATION IN

ORDER TO PROVE THE EXISTENCE OF OPERATIONAL DEBT AND THE
AMOUNT IN DEFAULT.
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I, [Name of the operational creditor/person authorised to act on behalf of the
operational creditor] hereby certify that, to the best of my knowledge, [name of
proposed insolvency professional], is fully qualified and permitted to act as an
insolvency professional in accordance with the Code and the Rules and
Regulations made thereunder. [WHERE APPLICABLE]
[Name of the operational creditor] has paid the requisite fee for this application
through [state means of payment] on [date].
Yours sincerely,

Instructions-
Please attach the following to this application:
Annex I Copy of the invoice/demand notice as in Form 3 of the Insolvency and

Bankruptcy (Application to Adjudicating Authority) Rules, 2016 served on the
corporate debtor.
Annex III Copy of the relevant accounts from the banks/financial institutions
maintaining accounts of the operational creditor confirming that there is no
payment of the relevant unpaid operational debt by the operational debtor, if
available.
Annex IV Affidavit in support of the application in accordance with the

Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016.
Annex V Written communication by the proposed interim resolution professional

as set out in Form 2 of the Insolvency and Bankruptcy (Application to
Adjudicating Authority) Rules, 2016. [WHERE APPLICABLE]
Annex VI Proof that the specified application fee has been paid.
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Note: Where workmen/employees are operational creditors, the application may
be made either in an individual capacity or in a joint capacity by one of them who
is duly authorised for the purpose.
11. The first thing to be noticed on a conjoint reading of Sections 8 and 9 of the Code, as explained in
Mobilox Innovations Private Limited v. Kirusa Software Private Limited, Civil Appeal No. 9405 of 2017
decided on 21.9.2017, at paragraphs 33 to 36, is that Section 9(1) contains the conditions precedent for
triggering the Code insofar as an operational creditor is concerned. The requisite elements necessary to
trigger the Code are:
i. occurrence of a default;
ii. delivery of a demand notice of an unpaid operational debt or invoice demanding payment of the
amount involved; and
iii. the fact that the operational creditor has not received payment from the corporate debtor within a
period of 10 days of receipt of the demand notice or copy of invoice demanding payment, or received a
reply from the corporate debtor which does not indicate the existence of a pre-existing dispute or
repayment of the unpaid operational debt.
12. It is only when these conditions are met that an application may then be filed Under Section 9(2)
of the Code in the prescribed manner, accompanied with such fee as has been prescribed. Under Section
9(3), what is clear is that, along with the application, certain other information is also to be furnished.
Obviously, Under Section 9(3)(a), a copy of the invoice demanding payment or demand notice delivered
by the operational creditor to the corporate debtor is to be furnished. We may only indicate that Under
Rules 5 and 6 of the Adjudicating Authority Rules, read with Forms 3 and 5, it is clear that, as Annexure I
thereto, the application in any case must have a copy of the invoice/demand notice attached to the
application. That this is a mandatory condition precedent to the filing of an application is clear from a
conjoint reading of Sections 8 and 9(1) of the Code.
13. When we come to Section 9(3)(b), it is obvious that an affidavit to the effect that there is no
notice given by the corporate debtor relating to a dispute of the unpaid operational debt can only be in a
situation where the corporate debtor has not, within the period of 10 days, sent the requisite notice by way
of reply to the operational creditor. In a case where such notice has, in fact, been sent in reply by the
corporate debtor, obviously an affidavit to that effect cannot be given.
14. When we come to Sub-clause (c) of Section 9(3), it is equally clear that a copy of the certificate
from the financial institution maintaining accounts of the operational creditor confirming that there is no
payment of an unpaid operational debt by the corporate debtor is certainly not a condition precedent to
194
triggering the insolvency process under the Code. The expression "confirming" makes it clear that this is
only a piece of evidence, albeit a very important piece of evidence, which only "confirms" that there is no
payment of an unpaid operational debt. This becomes clearer when we go to Sub-clause (d) of Section
9(3) which requires such other information as may be specified has also to be furnished along with the
application.
15. When Form 5 Under Rule 6 is perused, it becomes clear that Part V thereof speaks of particulars
of the operational debt. There are 8 entries in Part V dealing with documents, records and evidence of
default. Item 7 of Part V is only one of such documents and has to be read along with Item 8, which
speaks of other documents in order to prove the existence of an operational debt and the amount in
default. Further, annexure III in the Form also speaks of copies of relevant accounts kept by
banks/financial institutions maintaining accounts of the operational creditor, confirming that there is no
payment of the unpaid operational debt, only "if available". This would show that such accounts are not a
pre-condition to trigger the Code, and that if such accounts are not available, a certificate based on such
accounts cannot be given, if Section 9 is to be read the Adjudicating Authority Rules and the Forms
therein, all of which set out the statutory conditions necessary to invoke the Code.
16. In State of U.P. v. Babu Ram MANU/SC/0312/1960 : 1961 2 SCR 679 at 701-702, this Court
dealt with the position of Rules made under a statute as follows:
What then is the effect of the said propositions in their application to the
provisions of the Police Act and the Rules made thereunder? The Police Act of
1861 continues to be good law under the Constitution. Para 477 of the Police
Regulations shows that the Rules in Chapter XXXII thereof have been framed
Under Section 7 of the Police Act. Presumably, they were also made by the
Government in exercise of its power Under Section 46(2) of the Police Act.
Under para 479(a) the Governor's power of punishment with reference to all
officers is preserved; that is to say, this provision expressly saves the power of
the Governor Under Article 310 of the Constitution. "Rules made under a statute
must be treated for all purposes of construction or obligation exactly as if they
were in the Act and are to be of the same effect as if contained in the Act, and are
to be judicially noticed for all purposes of construction or obligation": see
Maxwell "On the Interpretation of Statutes", 10th edn., pp. 50-51. The statutory
Rules cannot be described as, or equated with, administrative directions. If so, the
Police Act and the Rules made thereunder constitute a self-contained code
195
providing for the appointment of police officers and prescribing the procedure for
their removal.
Equally, in Desh Bandhu Gupta v. Delhi Stock Exchange MANU/SC/0040/1979 : (1979) 4 SCC 565 at
572, this Court laid down the principle of contemporanea expositio as under:
The principle of contemporanea expositio (interpreting a statute or any other

document by reference to the exposition it has received from contemporary
authority) can be invoked though the same will not always be decisive of the
question of construction (Maxwell 12th ed. p. 268). In Crawford on Statutory
Construction (1940 ed.) in para 219 (at pp. 393-395) it has been stated that
administrative construction (i.e. contemporaneous construction placed by
administrative or executive officers charged with executing a statute) generally
should be clearly wrong before it is overturned; such a construction, commonly
referred to as practical construction, although not controlling, is nevertheless
entitled to considerable weight; it is highly persuasive. In Baleshwar Bagarti v.
Bhagirathi Dass [ILR 35 Cal 701 at 713] the principle, which was reiterated in
Mathura Mohan Saha v. Ram Kumar Saha [MANU/WB/0080/1915 : ILR 43 Cal
790 : AIR 1916 Cal 136] has been stated by Mukerjee, J., thus:
It is a well settled principle of interpretation that courts in

construing a statute will give much weight to the interpretation
put upon it, at the time of its enactment and since, by those
whose duty it has been to construe, execute and apply it. I do not
suggest for a moment that such interpretation has by any means a
controlling effect upon the Courts; such interpretation may, if
occasion arises, have to be disregarded for cogent and persuasive
reasons, and in a clear case of error, a court would without
hesitation refuse to follow such construction.
However, Dr. Singhvi referred to the following three judgments for the proposition that Rules cannot
override the substantive provisions of an Act: D.T.U. v. B.B.L. Hajelay MANU/SC/0605/1972 : (1972) 2
SCC 744 (para 13); ADM (Rev.) Delhi Admn. v. Siri Ram MANU/SC/0369/2000 : (2000) 5 SCC 451
(para 16); and Ispat Industries Ltd. v. Commissioner of Customs MANU/SC/4125/2006 : (2006) 12 SCC
583 (para 21). The aforesaid judgments only have application when Rules are ultra vires the parent
statute. In the present case, the Rules merely flesh out what is already contained in the statute and must,
therefore, be construed along with the statute. Read with the Code, they form a self-contained code being
196
contemporanea expositio by the Executive which is charged with carrying out the provisions of the Code.
The true construction of Section 9(3)(c) is that it is a procedural provision, which is directory in nature, as
the Adjudicatory Authority Rules read with the Code clearly demonstrate.
17. There may be situations of operational creditors who may have dealings with a financial
institution as defined in Section 3(14) of the Code. There may also be situations where an operational
creditor may have as his banker a non-scheduled bank, for example, in which case, it would be impossible
for him to fulfill the aforesaid condition. A foreign supplier or assignee of such supplier may have a
foreign banker who is not within Section 3(14) of the Code. The fact that such foreign supplier is an
operational creditor is established from a reading of the definition of "person" contained in Section 3(23),
as including persons resident outside India, together with the definition of "operational creditor"
contained in Section 5(20), which in turn is defined as "a person to whom an operational debt is owed and
includes any person to whom such debt has been legally assigned or transferred". That such person may
have a bank/financial institution with whom it deals and which is not contained within the definition of
Section 3(14) of the Code would show that Section 9(3)(c) in such a case would, if Dr. Singhvi is right
about the Sub-section being a condition precedent, amount to a threshold bar to proceeding further under
the Code. The Code cannot be construed in a discriminatory fashion so as to include only those
operational creditors who are residents outside India who happen to bank with financial institutions which
may be included Under Section 3(14) of the Code. It is no answer to state that such person can approach
the Central Government to include its foreign banker Under Section 3(14) of the Code, for the Central
Government may never do so. Equally, Dr. Singhvi's other argument that such persons ought to be left out
of the triggering of the Code against their corporate debtor, despite being operational creditors as defined,
would not sound well with Article 14 of the Constitution, which applies to all persons including
foreigners. Therefore, as the facts of these cases show, a so called condition precedent impossible of
compliance cannot be put as a threshold bar to the processing of an application Under Section 9 of the
Code.
18. However, it was argued that there are various other categories of creditors who cannot file
insolvency petitions, such as government authorities who have pending tax dues. Such authorities have
ample powers under taxation statutes to coercively collect outstanding tax arrears. Besides they form a
class, as a whole, who are kept out of the Code, unlike persons who are resident outside India who,
though being operational creditors, are artificially divided, if we are to accept Dr. Singhvi's argument, into
two sub-classes, namely, those who bank with an institution that is recognized by Section 3(14) of the
Code and those who do not. This argument also does not commend itself to us.
197
19. It is true that the expression "initiation" contained in the marginal note to Section 9 does indicate
the drift of the provision, but from such drift, to build an argument that the expression "initiation" would
lead to the conclusion that Section 9(3) contains mandatory conditions precedent before which the Code
can be triggered is a long shot. Equally, the expression "shall" in Section 9(3) does not take us much
further when it is clear that Section 9(3)(c) becomes impossible of compliance in cases like the present. It
would amount to a situation wherein serious general inconvenience would be caused to innocent persons,
such as the Appellant, without very much furthering the object of the Act, as has been held in the State of
Haryana v. Raghubir Dayal MANU/SC/0518/1995 : (1995) 1 SCC 133 at paragraph 5 and obviously,
therefore, Section 9(3)(c) would have to be construed as being directory in nature.
20. Even otherwise, the important condition precedent is an occurrence of a default, which can be
proved, as has been stated hereinabove, by means of other documentary evidence. Take for example the
case of an earlier letter written by the corporate debtor to the operational creditor confirming that a
particular operational debt is due and payable. This piece of evidence would be sufficient to demonstrate
that such debt is due and that default has taken place, as may have been admitted by the corporate debtor.
If Dr. Singhvi's submissions were to be accepted, despite the availability of such documentary evidence
contained in the Section 9 application as other information as may be specified, such application filed
Under Section 9 would yet have to be rejected because there is no copy of the requisite certificate Under
Section 9(3)(c). Obviously, such an absurd result militates against such a provision being construed as
mandatory.
21. It is unnecessary to further refer to arguments made on the footing that Section 7 qua financial
creditors has a process which is different from that of operational creditors Under Sections 8 and 9 of the
Code. The fact that there is no requirement of a bank certificate Under Section 7 of the Code, as
compared to Section 9, does not take us very much further. The difference between Sections 7 and 9 has
already been noticed by this Court in Innoventive Industries Ltd. v. ICICI Bank and Anr., Civil Appeal
Nos. 8337-8338 of 2017 decided on August 31, 2017, as follows:
29. The scheme of Section 7 stands in contrast with the scheme Under Section 8
where an operational creditor is, on the occurrence of a default, to first deliver a
demand notice of the unpaid debt to the operational debtor in the manner
provided in Section 8(1) of the Code. Under Section 8(2), the corporate debtor
can, within a period of 10 days of receipt of the demand notice or copy of the
invoice mentioned in Sub-section (1), bring to the notice of the operational
creditor the existence of a dispute or the record of the pendency of a suit or
arbitration proceedings, which is pre-existing-i.e. before such notice or invoice
198
was received by the corporate debtor. The moment there is existence of such a
dispute, the operational creditor gets out of the clutches of the Code.
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.
The fact that these differences obtain under the Code would have no direct bearing on whether Section
9(3)(c) ought to be construed in the manner indicated by Dr. Singhvi.
22. It was also submitted that Sections 65 and 76 of the Code provide for criminal prosecution against
banks issuing false bank certificates and that a foreign bank issuing such a certificate may not be
amenable to the jurisdiction of the Code. It is unnecessary to answer this submission in view of the fact
that the necessity for such a certificate has itself been held by this judgment to be directory in nature.
23. Equally, Dr. Singhvi's argument that the Code leads to very drastic action being taken once an
application for insolvency is filed and admitted and that, therefore, all conditions precedent must be
strictly construed is also not in sync with the recent trend of authorities as has been noticed by a
concurring judgment in Ms. Eera through Dr. Manjula Krippendorf v. State (Govt. of NCT of Delhi) and
Anr., Criminal Appeal Nos. 1217-1219 of 2017 decided on July 21, 2017. In this judgment, the correct
interpretation of Section 2(1)(d) of the Protection of Children from Sexual Offences Act, 2012 arose.
After referring to the celebrated Heydon's case, 76 E.R. 637 [1584] and to the judgments in which the
golden Rule of interpretation of statutes was set out, the concurring judgment of R.F. Nariman, J., after an
exhaustive survey of the relevant case law, came to the conclusion that the modern trend of case law is
that creative interpretation is within the Lakshman Rekha of the Judiciary. Creative interpretation is when
the Court looks at both the literal language as well as the purpose or object of the statute, in order to better
determine what the words used by the draftsman of the legislation mean. The concurring judgment then
concluded:
It is thus clear on a reading of English, U.S., Australian and our own Supreme
Court judgments that the 'Lakshman Rekha' has in fact been extended to move
away from the strictly literal Rule of interpretation back to the Rule of the old
199
English case of Heydon, where the Court must have recourse to the purpose,
object, text, and context of a particular provision before arriving at a judicial
result. In fact, the wheel has turned full circle. It started out by the Rule as stated
in 1584 in Heydon's case, which was then waylaid by the literal interpretation
Rule laid down by the Privy Council and the House of Lords in the mid 1800s,
and has come back to restate the Rule somewhat in terms of what was most
felicitously put over 400 years ago in Heydon's case.
In dealing with penal statutes, the Court was confronted with a body of case law which stated that as
penal consequences ensue, the provisions of such statutes should be strictly construed. Here again, the
modern trend in construing penal statutes has moved away from a mechanical incantation of strict
construction. Several judgments were referred to and it was held that a purposive interpretation of such
statutes is not ruled out. Ultimately, it was held that a fair construction of penal statutes based on
purposive as well as literal interpretation is the correct modern day approach.
24. However, Dr. Singhvi cited Raghunath Rai Bareja v. Punjab National Bank,
MANU/SC/5456/2006 : (2007) 2 SCC 230 and relied upon paragraphs 39 to 47 for the proposition that
the literal construction of a statute is the only mode of interpretation when the statute is clear and
unambiguous. Paragraph 43 of the said judgment was relied upon strongly by the learned Counsel, which
states:
In other words, once we depart from the literal rule, then any number of
interpretations can be put to a statutory provision, each judge having a free play
to put his own interpretation as he likes. This would be destructive of judicial
discipline, and also the basic principle in a democracy that it is not for the Judge
to legislate as that is the task of the elected representatives of the people. Even if
the literal interpretation results in hardship or inconvenience, it has to be
followed (see G.P. Singh's Principles of Statutory Interpretations, 9th Edn., pp.
45-49). Hence departure from the literal Rule should only be done in very rare
cases, and ordinarily there should be judicial restraint in this connection.
Regard being had to the modern trend of authorities referred to in the concurring judgment in Ms. Eera
through Dr. Manjula Krippendorf (supra), we need not be afraid of each Judge having a free play to put
forth his own interpretation as he likes. Any arbitrary interpretation, as opposed to fair interpretation, of a
statute, keeping the object of the legislature in mind, would be outside the judicial ken. The task of a
Judge, when he looks at the literal language of the statute as well as the object and purpose of the statute,
is not to interpret the provision as he likes but is to interpret the provision keeping in mind Parliament's
200
language and the object that Parliament had in mind. With this caveat, it is clear that judges are not
knight-errants free to roam around in the interpretative world doing as each Judge likes. They are bound
by the text of the statute, together with the context in which the statute is enacted; and both text and
context are Parliaments', and not what the Judge thinks the statute has been enacted for. Also, it is clear
that for the reasons stated by us above, a fair construction of Section 9(3)(c), in consonance with the
object sought to be achieved by the Code, would lead to the conclusion that it cannot be construed as a
threshold bar or a condition precedent as has been contended by Dr. Singhvi.
25. Dr. Singhvi then argued that the application of the principle in Taylor (supra) should be followed
when it comes to the correct interpretation of Section 9(3)(c) of the Code. The principle of Taylor (supra),
namely that where a statute states that a particular act is to be done in a particular manner; it must be done
in that manner or not at all, was followed by the Privy Council in Nazir Ahmad v. King Emperor,
MANU/PR/0111/1936 : 63 IA 372 (1936). In that case, the Privy Council held that Sections 164 and 364
of the Code of Criminal Procedure, 1898 prescribed the mode in which confessions are to be recorded by
Magistrates, when made during investigation, and a confession before a Magistrate not recorded in the
manner provided was inadmissible. In Ukha Kolhe v. State of Maharashtra MANU/SC/0059/1963 :
(1964) 1 SCR 926 at 948-949, a Constitution Bench of this Court held that the principle contained in
Taylor (supra) would not apply when proof of a specified fact could be obtained by means other than that
statutorily specified. The argument in that case was that Sections 129A and 129B prescribed the mode of
taking blood in the course of investigation of an offence under the Bombay Prohibition Act, 1949, and
that, therefore, production or examination of a person before a registered medical practitioner during the
course of such investigation is the only method by which consumption of an intoxicant may be proved.
After setting out Sections 129A and 129B and the judgment of the Privy Council in Nazir Ahmad (supra),
this Court held:
The Rule in Taylor v. Taylor [(1875) I Ch D 426] on which the Judicial

Committee relied has, in our judgment, no application to this case. Section 66(2),
as we have already observed, does not prescribe any particular method of proof
of concentration of alcohol in the blood of a person charged with consumption or
use of an intoxicant. Section 129-A is enacted primarily with the object of
providing when the conditions prescribed are fulfilled, that a person shall submit
himself to be produced before a registered medical practitioner for examination
and for collection of blood. Undoubtedly, Section 129-A(1) confers power upon
a Police or a Prohibition Officer in the conditions set out to compel a person
suspected by him of having consumed illicit liquor, to be produced for
201
examination and for collection of blood before a registered medical practitioner.
But proof of concentration of alcohol may be obtained in the manner described in
Section 129-A(1) and (2), or otherwise; that is expressly provided by Sub-section
(8) of Section 129-A, The power of a Police Officer to secure examination of a
person suspected of having consumed an intoxicant in the course of investigation
for an offence under the Act is undoubtedly restricted by Section 129-A. But in
the present case the Police Officer investigating the offence had not produced the
Accused before a medical officer; it was in the course of his examination that Dr
Kulkarni, before any investigation was commenced, came to suspect that the
Appellant had consumed liquor, and he directed that specimen of blood of the
Appellant be collected. This step may have been taken for deciding upon the line
of treatment, but certainly not for collecting evidence to be used against the
Appellant in any possible trial for a charge of an offence of consuming liquor
contrary to the provisions of the Act. If unlawful consumption of an intoxicant by
a person Accused, may be proved otherwise than by a report obtained in the
conditions mentioned in Section 129-A(1) and (2), there would be no reason to
suppose that other evidence about excessive concentration of alcohol probative of
consumption is inadmissible. Admissibility of evidence about concentration of
alcohol in blood does not depend upon the exercise of any power of the Police or
Prohibition Officer. Considerations which were present in Nazir Ahmad case
[MANU/PR/0111/1936 : (1936) LR 63 IA 372] regarding the inappropriateness
of Magistrates being placed in the same position as ordinary citizens and being
required to transgress statutory provisions relating to the method of recording
confessions also do not arise in the present case.
26. This judgment applies on all fours to the facts of the present case inasmuch as, like Section
129A(8) of the aforesaid Act, proof of the existence of a debt and a default in relation to such debt can be
proved by other documentary evidence, as is specifically contemplated by Section 9(3)(d) of the Code.
Like Section 66(2) of the aforesaid Act in Ukha Kolhe (supra), Section 8 of the Code does not prescribe
any particular method of proof of occurrence of default. Consequently, we are of the opinion that the
principle contained in Taylor (supra) does not apply in the present situation.
27. Also, in Madan & Co. v. Wazir Jaivir Chand MANU/SC/0313/1988 : (1989) 1 SCC 264 at 268-
270, the interpretation of Section 11 of the Jammu and Kashmir Houses and Shops Rent Control Act,
1966 was under consideration of this Court. As stated in paragraph 4 of the judgment, the controversy in
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that case turned on the question whether the notice sent by the Respondent by registered post can be said
to have been served and the Petitioner can be said to have been in receipt of the said notice. In the words
of the judgment:
4. On the terms of the above sections, the controversy in this case turned on the
question whether the notice sent by the Respondent by registered post on 26-11-
1976 can be said to have been served and the Petitioner can be said to have been
in receipt of the said notice. If the answer to this question is in the affirmative, as
held by all the courts concurrently, there is nothing further to be said. The
contention of the Appellant tenant however, is that the statute postulates a factual
service of the notice on, and the actual receipt of it by, the tenant and that this
admittedly not being the position in the present case, no eviction could have been
decreed.
5. Shri Soli J. Sorabjee, learned Counsel appearing for the tenant submitted that
the safeguards in Sections 11 and 12 of the Act are intended for the benefit and
protection of the tenant and that, therefore, where the Act provides for the service
of the notice, by post, this requirement has to be strictly complied with. He
referred to the decisions in Hare Krishna Das v. Hahnemann Publishing Co.
Ltd.[MANU/WB/0288/1964 : (1965-66) 70 Cal WN 262] and Surajmull
Ghanshyamdas v. Samadarshan Sur [MANU/WB/0020/1969 : AIR 1969 Cal
109: ILR (1969) 1 Cal 379] to contend that such postal service can neither be
presumed nor considered to be good service where the letter is returned to the
sender due to the non-availability of the addressee. He urges that, in the absence
of any enabling provision such as the one provided for in Section 106 of the
Transfer of Property Act, service by some other mode, such as affixture, cannot
be treated as sufficient compliance with the statute. In this context, he referred to
the frequently applied Rule in Taylor v. Taylor [(1875) 1 Ch D 426] that where a
power is given to do a certain thing in a certain way, the thing must be done in
that way or not at all and that other methods of performance are necessarily
forbidden. He urged that even if service by affixture can be considered to be
permissible, there are stringent prerequisites for service by affixture, such as
those outlined in Order V Rules 17 to 19, of the Code of Civil Procedure (CPC)
and that these prerequisites were not fulfilled in the present case. He pointed out
that even under the Code of Civil Procedure, service by such affixture can be
203
recognised as valid only if sincere and vigilant attempts to serve the notice on the
addressee personally are unsuccessful. In the present case, it is submitted, the
evidence shows that the postman made no serious efforts to ascertain the
whereabouts of the addressee even though the evidence showed that a servant of
the Petitioner firm was known to the postman and was present in the
neighbourhood. He, therefore, submitted that the High Court should have
dismissed the suit for eviction filed by the landlord on the ground that the
requirements of Sections 11 and 12 of the Act were not satisfied.
The Court turned down the contention based on Taylor (supra) in the following terms:
We are of opinion that the conclusion arrived at by the courts below is correct
and should be upheld. It is true that the proviso to Clause (i) of Section 11(1) and
the proviso to Section 12(3) are intended for the protection of the tenant.
Nevertheless it will be easy to see that too strict and literal a compliance of their
language would be impractical and unworkable.
xxx xxx xxx
In this situation, we have to choose the more reasonable, effective, equitable and
practical interpretation and that would be to read the word "served" as "sent by
post", correctly and properly addressed to the tenant, and the word "receipt" as
the tender of the letter by the postal peon at the address mentioned in the letter.
No other interpretation, we think, will fit the situation as it is simply not possible
for a landlord to ensure that a registered letter sent by him gets served on, or is
received by, the tenant.
This judgment is also supportive of the proposition that when the principle in Taylor (supra) leads to
impractical, unworkable and inequitable results, it cannot be applied out of context in situations which are
predominantly procedural in nature.
28. The decision in Smart Timing (supra) by the NCLAT, which was relied upon by the impugned
judgment, was then pressed into service by Dr Singhvi stating that an appeal from this judgment has been
dismissed by this Court and that, therefore, following the principle in Kunhayammed v. State of Kerala
MANU/SC/0432/2000 : (2000) 6 SCC 359, the NCLAT's judgment has merged with the Supreme Court's
order dated August 18, 2017, which reads as follows:
Heard the learned Counsel appearing for the Appellant. We do not find any
reason to interfere with the order dated 19.05.2017 passed by the National
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Company Law Appellate Tribunal, New Delhi. In view of this, we find no merit
in the appeal.
Accordingly, the appeal is dismissed.
Whether or not there is a merger, it is clear that the order dated August 18, 2017 is not "law declared"
within the meaning of Article 141 of the Constitution and is of no precedential value. Suffice it to state
that the said order was also a threshold dismissal by the Supreme Court, having heard only the learned
Counsel appearing for the Appellant.
29. Dr. Singhvi then relied upon the Viswanathan Report dated November 2015, in particular Box
5.2, which reads as follows:
Box 5.2 - Trigger for IRP
1. The IRP can be triggered by either the debtor or the creditors by submitting
documentation specified in the Code to the adjudicating authority.
2. For the debtor to trigger the IRP, she must be able to submit all the
documentation that is defined in the Code, and may be specified by the Regulator
above this.
3. The Code differentiates two categories of creditors: financial creditors

where the liability to the debtor arises from a solely financial transaction, and
operational creditors where the liability to the debtor arises in the form of future
payments in exchange for goods or services already delivered. In cases where a
creditor has both a solely financial transaction as well as an operational
transaction with the entity, the creditor will be considered a financial creditor to
the extent of the financial debt and an operational creditor to the extent of the
operational debt is more than half the full liability it has with the debtor.
4. The Code will require different documentation for a debtor, a financial

creditor, and an operational creditor to trigger the IRP. These are listed Box 5.3
under what the Adjudicator will accept as requirements to trigger the IRP.
30. Item 2 in Box 5.2 does show that for the corporate debtor to trigger the IRP, it must be able to
submit all the documentation that is defined in the Code and that different documentation is required
insofar as financial creditors and operational creditors are concerned, as is evident from Item 4 in Box 5.2.
The sentence which is after Box 5.2 is significant. It reads, "therefore, the Code requires that the creditor
205
can only trigger the IRP on clear evidence of default." Nowhere does the report state that such "clear
evidence" can only be in the shape of the certificate, referred to in Section 9(3)(c), as a condition
precedent to triggering the Code. In fact, in Item 2(c) in Box 5.3, the Committee, by way of drafting
instructions for how the IRP can be triggered, states:
If an operational creditor has applied, the application contains:
i. Record of an undisputed bill against the entity, and where applicable,

information of such undisputed as filed at a registered information utility.
31. When it comes to the Joint Committee report dated April 2016, the draft Section contained
therein, namely the definition of financial institution contained in Section 3(14) of the Code, has added
into it a Sub-clause (c) which is a public financial institution as defined in Section 2(72) of the Companies
Act, 2013. Apart from this, the draft statute that was placed before the Joint Committee contains Section
9(3)(c) exactly as it is in the present Code. This report again does not throw much light on the point at
issue before us.
32. Shri Mukul Rohatgi strongly relied upon a recent judgment delivered by this Court in Surendra
Trading Co. v. Juggilal Kamlapat Jute Mills Co. Limited and Ors. Civil Appeal No. 8400 of 2017 decided
on September 19, 2017. In this case, the question of law framed by the NCLAT for its decision was
whether the time limit prescribed for admitting or rejecting a petition for initiation of the insolvency
resolution process is mandatory. The precise question was whether, under the proviso to Section 9(5), the
rectification of defects in an application within 7 days of the date of receipt of notice from the
adjudicating authority was a hard and fast time limit which could never be altered. The NCLAT had held
that the 7 day period was sacrosanct and could not be extended, whereas, insofar as the adjudicating
authority is concerned, the decision to either admit or reject the application within the period of 14 days
was held to be directory. This Court, in disagreeing with the NCLAT on the 7 day period being
mandatory, held:
We are not able to decipher any valid reason given while coming to the
conclusion that the period mentioned in proviso is mandatory. The order of the
NCLAT, thereafter, proceeds to take note of the provisions of Section 12 of the
Code and points out the time limit for completion of insolvency resolution
process is 180 days, which period can be extended by another 90 days. However,
that can hardly provide any justification to construe the provisions of proviso to
Sub-section (5) of Section 9 in the manner in which it is done. It is to be borne in
mind that limit of 180 days mentioned in Section 12 also starts from the date of
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admission of the application. Period prior thereto which is consumed, after the
filing of the application Under Section 9 (or for that matter Under Section 7 or
Section 10), whether by the Registry of the adjudicating authority in scrutinising
the application or by the applicant in removing the defects or by the adjudicating
authority in admitting the application is not to be taken into account. In fact, till
the objections are removed it is not to be treated as application validly filed
inasmuch as only after the application is complete in every respect it is required
to be entertained. In this scenario, making the period of seven days contained in
the proviso as mandatory does not commend to us. No purpose is going to be
served by treating this period as mandatory. In a given case there may be
weighty, valid and justifiable reasons for not able to remove the defects within
seven days. Notwithstanding the same, the effect would be to reject the
application.
The court further went on to hold:
Further, we are of the view that the judgments cited by the NCLAT and the
principle contained therein applied while deciding that period of fourteen days
within which the adjudicating authority has to pass the order is not mandatory but
directory in nature would equally apply while interpreting proviso to Sub-section
(5) of Section 7, Section 9 or Sub-section (4) of Section 10 as well. After all, the
applicant does not gain anything by not removing the objections inasmuch as till
the objections are removed, such an application would not be entertained.
Therefore, it is in the interest of the applicant to remove the defects as early as
possible.
Thus, we hold that the aforesaid provision of removing the defects within seven
days is directory and not mandatory in nature. However, we would like to enter a
caveat.
We are also conscious of the fact that sometimes applicants or their counsel may
show laxity by not removing the objections within the time given and make take
it for granted that they would be given unlimited time for such a purpose. There
may also be cases where such applications are frivolous in nature which would
be filed for some oblique motives and the applicants may want those applications
to remain pending and, therefore, would not remove the defects. In order to take
care of such cases, a balanced approach is needed. Thus, while interpreting the
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provisions to be directory in nature, at the same time, it can be laid down that if
the objections are not removed within seven days, the applicant while refilling
the application after removing the objections, file an application in writing
showing sufficient case as to why the applicant could not remove the objections
within seven days. When such an application comes up for admission/order
before the adjudicating authority, it would be for the adjudicating authority to
decide as to whether sufficient cause is shown in not removing the defects
beyond the period of seven days. Once the adjudicating authority is satisfied that
such a case is shown, only then it would entertain the application on merits,
otherwise it will have right to dismiss the application.
This judgment also lends support to the argument for the Appellant in that it is well settled that procedure
is the handmaid of justice and a procedural provision cannot be stretched and considered as mandatory,
when it causes serious general inconvenience. As has been held in Mahanth Ram Das v. Ganga Das
MANU/SC/0027/1961 : (1961) 3 SCR 763 at 767-768, we have traveled far from the days of the laws of
the Medes and the Persians wherein, once a decree was promulgated, it was cast in stone and could not be
varied or extended later:
Such procedural orders, though peremptory (conditional decrees apart) are, in

essence, in terrorem, so that dilatory litigants might put themselves in order and
avoid delay. They do not, however, completely estop a court from taking note of
events and circumstances which happen within the time fixed. For example, it
cannot be said that, if the Appellant had started with the full money ordered to be
paid and came well in time but was set upon and robbed by thieves the day
previous, he could not ask for extension of time, or that the Court was powerless
to extend it. Such orders are not like the law of the Medes and the Persians. Cases
are known in which Courts have moulded their practice to meet a situation such
as this and to have restored a suit or proceeding, even though a final order had
been passed.
33. Insofar as the second point is concerned, the first thing that is to be noticed is that Section 8 of the
Code speaks of an operational creditor delivering a demand notice. It is clear that had the legislature
wished to restrict such demand notice being sent by the operational creditor himself, the expression used
would perhaps have been "issued" and not "delivered". Delivery, therefore, would postulate that such
notice could be made by an authorized agent. In fact, in Forms 3 and 5 extracted hereinabove, it is clear
that this is the understanding of the draftsman of the Adjudicatory Authority Rules, because the signature
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of the person "authorized to act" on behalf of the operational creditor must be appended to both the
demand notice as well as the application Under Section 9 of the Code. The position further becomes clear
that both forms require such authorized agent to state his position with or in relation to the operational
creditor. A position with the operational creditor would perhaps be a position in the company or firm of
the operational creditor, but the expression "in relation to" is significant. It is a very wide expression, as
has been held in Renusagar Power Co. Ltd. v. General Electric Co., MANU/SC/0001/1984 : (1984) 4
SCC 679 at 704 and State of Karnataka v. Azad Coach Builders (P) Ltd. MANU/SC/0700/2010 : (2010) 9
SCC 524 at 535, which specifically includes a position which is outside or indirectly related to the
operational creditor. It is clear, therefore, that both the expression "authorized to act" and "position in
relation to the operational creditor" go to show that an authorized agent or a lawyer acting on behalf of his
client is included within the aforesaid expression.
34. Quite apart from the above, Section 30 of the Advocates Act states as follows:
Right of advocates to practise.-Subject to provisions of this Act, every advocate

whose name is entered in the State roll shall be entitled as of right to practise
throughout the territories to which this Act extends,-
(i) in all courts including the Supreme Court;
(ii) before any tribunal or person legally authorised to take evidence; and
(iii) before any other authority or person before whom such advocate is by or
under any law for the time being in force entitled to practise.
That the expression "practise" is an expression of extremely wide import, and would include all
preparatory steps leading to the filing of an application before a Tribunal. This is clear from a
Constitution Bench judgment of this Court in Harish Uppal (Ex-Capt.) v. Union of India,
MANU/SC/1141/2002 : (2003) 2 SCC 45 at 72, which states:
The right of the advocate to practise envelopes a lot of acts to be performed by

him in discharge of his professional duties. Apart from appearing in the courts he
can be consulted by his clients, he can give his legal opinion whenever sought
for, he can draft instruments, pleadings, affidavits or any other documents, he can
participate in any conference involving legal discussions, he can work in any
office or firm as a legal officer, he can appear for clients before an arbitrator or
arbitrators etc.
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35. The doctrine of harmonious construction of a statute extends also to a harmonious construction of
all statutes made by Parliament. In Harshad S. Mehta v. State of Maharashtra MANU/SC/0540/2001 :
(2001) 8 SCC 257 at 280-81, the Special Court (Trial of Offences Relating to Transactions in Securities)
Act, 1992 was held, insofar as the criminal jurisdiction of the Special Court was concerned, to be
harmoniously construed with the Code of Criminal Procedure, 1973 in the following terms:
48. To our mind, the Special Court has all the powers of a Court of Session
and/or Magistrate, as the case may be, after the prosecution is instituted or
transferred before that Court. The width of the power of the Special Court will be
same whether trying such cases as are instituted before it or transferred to it. The
use of different words in Sections 6 and 7 of the Act as already noticed earlier
also shows that the words in Section 7 that the prosecution for any offence shall
be instituted only in the Special Court deserve a liberal and wider construction.
They confer on the Special Court all powers of the Magistrate including the one
at the stage of investigation or inquiry. Here, the institution of the prosecution
means taking any steps in respect thereof before the Special Court. The scheme
of the Act nowhere contemplates that it was intended that steps at pre-cognizance
stage shall be taken before a court other than a Special Court. We may note an
illustration given by Mr. Salve referring to Section 157 of the Code. Learned
Counsel submitted that the report under that Section is required to be sent to a
Magistrate empowered to take cognizance of offence. In relation to offence under
the Act, the Magistrate has no power to take cognizance. That power is
exclusively with the Special Court and thus report Under Section 157 of the Code
will have to be sent to the Special Court though the Section requires it to be sent
to the Magistrate. It is clear that for the expression "Magistrate" in Section 157,
so far as the Act is concerned, it is required to be read as "Special Court" and
likewise in respect of other provisions of the Code. If the expression "Special
Court" is read for the expression "Magistrate", everything will fall in line. This
harmonious construction of the provisions of the Act and the Code makes the Act
work. That is what is required by principles of statutory interpretation. Section
9(1) of the Act provides that the Special Court shall in the trial of such cases
follow the procedure prescribed by the Code for the trial of warrant cases before
the Magistrate. The expression "trial" is not defined in the Act or the Code. For
the purpose of the Act, it has a wider connotation and also includes in it the pre-
trial stage as well. Section 9(2) makes the Special Court, a Court of Session by a
210
fiction by providing that the Special Court shall be deemed to be a Court of
Session and shall have all the powers of a Court of Session. In case, the Special
Court is held not to have the dual capacity and powers both of the Magistrate and
the Court of Session, depending upon the stage of the case, there will be a
complete hiatus. It is also to be kept in view that the Special Court under the Act
comprises of a High Court Judge and it is a court of exclusive jurisdiction in
respect of any offence as provided in Section 3(2) which will include offences
under the Indian Penal Code, the Prevention of Corruption Act and other penal
laws. It is only in the event of inconsistency that the provisions of the Act would
prevail as provided in Section 13 thereof. Any other interpretation will make the
provision of the Act unworkable which could not be the intention of the
legislature. Section 9(2) does not exclude Sections 306 to 308 of the Code from
the purview of the Act. This Section rather provides that the provisions of the
Code shall apply to the proceedings before the Special Court. The inconsistency
seems to be only imaginary. There is nothing in the Act to show that Sections
306 to 308 were intended to be excluded from the purview of the Act.
Similarly, in CTO v. Binani Cements Ltd. MANU/SC/0121/2014 : (2014) 8 SCC 319 at 332, the Rule of
construction of two Parliamentary statutes being harmoniously construed was laid down as follows:
35. Generally, the principle has found vast application in cases of there being two
statutes: general or specific with the latter treating the common subject-matter
more specifically or minutely than the former. Corpus Juris Secundum, 82 C.J.S.
Statutes ' 482 states that when construing a general and a specific statute
pertaining to the same topic, it is necessary to consider the statutes as consistent
with one another and such statutes therefore should be harmonised, if possible,
with the objective of giving effect to a consistent legislative policy. On the other
hand, where a general statute and a specific statute relating to the same subject-
matter cannot be reconciled, the special or specific statute ordinarily will control.
The provision more specifically directed to the matter at issue prevails as an
exception to or qualification of the provision which is more general in nature,
provided that the specific or special statute clearly includes the matter in
controversy (Edmond v. United States [MANU/USSC/0045/1997 : 137 L Ed 2d
917 : 520 US 651 (1997)], Warden v. Marrero [MANU/USSC/0099/1974 : 41 L
Ed 2d 383 : 417 US 653 (1974)]).
211
More recently, in Binoy Viswam v. Union of India MANU/SC/0693/2017 : (2017) 7 SCC 59 at 132, this
Court construed the Income Tax Act, 1961 and the Aadhaar (Targeted Delivery of Financial and Other
Subsidies, Benefits and Services) Act, 2016 harmoniously in the following manner:
98. In view of the above, we are not impressed by the contention of the
Petitioners that the two enactments are contradictory with each other. A
harmonious reading of the two enactments would clearly suggest that whereas
enrolment of Aadhaar is voluntary when it comes to taking benefits of various
welfare schemes even if it is presumed that requirement of Section 7 of the
Aadhaar Act that it is necessary to provide Aadhaar number to avail the benefits
of schemes and services, it is up to a person to avail those benefits or not. On the
other hand, purpose behind enacting Section 139-AA of the Act is to check a
menace of black money as well as money laundering and also to widen the
income tax net so as to cover those persons who are evading the payment of tax.
36. The non-obstante Clause contained in Section 238 of the Code will not override the Advocates
Act as there is no inconsistency between Section 9, read with the Adjudicating Authority Rules and
Forms referred to hereinabove, and the Advocates Act. In Balchand Jain v. State of M.P.
MANU/SC/0172/1976 : (1976) 4 SCC 572 at 585-86, the anticipatory bail provision contained in Section
438 of the Code of Criminal Procedure was held not to be wiped out by the non-obstante Clause
contained in Rule 184 of the Defence and Internal Security of India Rules, 1971. Fazal Ali, J. concurring
with the main judgment, held:
16. Having regard to the principles enunciated above, we feel that there does not
appear to be any direct conflict between the provisions of Rule 184 of the Rules
and Section 438 of the Code. However, we hold that the conditions required by
Rule 184 of the Rules must be impliedly imported in Section 438 of the Code so
as to form the main guidelines which have to be followed while the court
exercises its power Under Section 438 of the Code in offences contemplated by
Rule 184 of the Rules. Such an interpretation would meet the ends of justice,
avoid all possible anomalies and would at the same time ensure and protect the
liberty of the subject which appears to be the real intention of the legislature in
enshrining Section 438 as a new provision for the first time in the Code. We
think that there is no real inconsistency between Section 438 of the Code and
Rule 184 of the Rules and, therefore, the non obstante Clause cannot be
212
interpreted in a manner so as to repeal or override the provisions of Section 438
of the Code in respect of cases where Rule 184 of the Rules applies.
Similarly, in R.S. Raghunath v. State of Karnataka MANU/SC/0012/1992 : (1992) 1 SCC 335 at 348, the
non-obstante Clause contained in Rule 3(2) of the Karnataka Civil Services (General Recruitment) Rules,
1977 was held not to override the Karnataka General Service (Motor Vehicles Branch) (Recruitment)
Rules, 1976. It was held:
As already noted, there should be a clear inconsistency between the two

enactments before giving an overriding effect to the non-obstante Clause but
when the scope of the provisions of an earlier enactment is clear the same cannot
be cut down by resort to non-obstante clause. In the instant case we have noticed
that even the General Rules of which Rule 3(2) forms a part provide for
promotion by selection. As a matter of fact Rules 1(3)(a) and 3(1) and 4 also
provide for the enforceability of the Special Rules. The very Rule 3 of the
General Rules which provides for recruitment also provides for promotion by
selection and further lays down that the methods of recruitment shall be as
specified in the Special Rules, if any. In this background if we examine the
General Rules it becomes clear that the object of these Rules only is to provide
broadly for recruitment to services of all the departments and they are framed
generally to cover situations that are not covered by the Special Rules of any
particular department. In such a situation both the Rules including Rules 1(3)(a),
3(1) and 4 of General Rules should be read together. If so read it becomes plain
that there is no inconsistency and that amendment by inserting Rule 3(2) is only
an amendment to the General Rules and it cannot be interpreted as to supersede
the Special Rules. The amendment also must be read as being subject to Rules
1(3)(a), 3(1) and 4(2) of the General Rules themselves. The amendment cannot
be read as abrogating all other Special Rules in respect of all departments. In a
given case where there are no Special Rules then naturally the General Rules
would be applicable. Just because there is a non-obstante clause, in Rule 3(2) it
cannot be interpreted that the said amendment to the General Rules though later
in point of time would abrogate the special Rule the scope of which is very clear
and which co-exists particularly when no patent conflict or inconsistency can be
spelt out. As already noted Rules 1(3)(a), 3(1) and 4 of the General Rules
themselves provide for promotion by selection and for enforceability of the
213
Special Rules in that regard. Therefore there is no patent conflict or inconsistency
at all between the General and the Special Rules.
In Central Bank of India v. State of Kerala MANU/SC/0306/2009 : (2009) 4 SCC 94 at 141-42, the non-
obstante clauses contained in Section 34(1) of Recovery of Debts Due to Banks and Financial Institutions
Act, 1993 and Section 35 of the Securitisation and Reconstruction of Financial Assets and Enforcement of
Security Interest Act, 2002 were held not to override specific provisions contained in the Bombay Sales
Tax Act, 1959 and the Kerala Sales Tax Act 1963 dealing with a declaration of a first charge in the
following terms:
130. Undisputedly, the two enactments do not contain provision similar to the
Workmen's Compensation Act, etc. In the absence of any specific provision to
that effect, it is not possible to read any conflict or inconsistency or overlapping
between the provisions of the DRT Act and the Securitisation Act on the one
hand and Section 38-C of the Bombay Act and Section 26-B of the Kerala Act on
the other and the non obstante clauses contained in Section 34(1) of the DRT Act
and Section 35 of the Securitisation Act cannot be invoked for declaring that the
first charge created under the State legislation will not operate qua or affect the
proceedings initiated by banks, financial institutions and other secured creditors
for recovery of their dues or enforcement of security interest, as the case may be.
131. The Court could have given effect to the non obstante clauses contained in
Section 34(1) of the DRT Act and Section 35 of the Securitisation Act vis-`-vis
Section 38-C of the Bombay Act and Section 26-B of the Kerala Act and similar
other State legislations only if there was a specific provision in the two
enactments creating first charge in favour of the banks, financial institutions and
other secured creditors but as Parliament has not made any such provision in
either of the enactments, the first charge created by the State legislations on the
property of the dealer or any other person, liable to pay sales tax, etc., cannot be
destroyed by implication or inference, notwithstanding the fact that banks, etc.
fall in the category of secured creditors.
Since there is no clear disharmony between the two Parliamentary statutes in the present case which
cannot be resolved by harmonious interpretation, it is clear that both statutes must be read together. Also,
we must not forget that Section 30 of the Advocates Act deals with the fundamental right Under Article
19(1)(g) of the Constitution to practice one's profession. Therefore, a conjoint reading of Section 30 of the
Advocates Act and Sections 8 and 9 of the Code together with the Adjudicatory Authority Rules and
214
Forms thereunder would yield the result that a notice sent on behalf of an operational creditor by a lawyer
would be in order.
37. However, Dr. Singhvi referred to Rule 4 of the Debts Recovery Rules and Section 434(2) of the
Companies Act, 1956, which state as follows:
4. Procedure for filing applications.-
(1) The application Under Section 19 or Section 31A, or Under Section 30(1) of
the Act may be presented as nearly as possible in Form-I, Form-II and Form-III
respectively annexed to these Rules by the applicant in person or by his agent or
by a duly authorised legal practitioner to the Registrar of the Bench within whose
jurisdiction his case falls or shall be sent by registered post addressed to the
Registrar.
(2) An application sent by post Under Sub-rule (1) shall be deemed to have been
presented to the Registrar the day on which it was received in the office of the
Registrar.
(3) The application Under Sub-rule (1) shall be presented in two sets, in a paper
book along with an empty file size envelope bearing full address of the
Defendant and where the number of Defendants is more than one, then sufficient
number of extra paper-books together with empty file size envelopes bearing full
address of each of the Defendant shall be furnished by the applicant.
xxx xxx xxx
434. COMPANY WHEN DEEMED UNABLE TO PAY ITS DEBTS-
(2) The demand referred to in Clause (a) of Sub-section (1) shall be deemed to
have been duly given under the hand of the creditor if it is signed by any agent or
legal adviser duly authorised on his behalf, or in the case of a firm, if it is signed
by any such agent or legal adviser or by any member of the firm.
The argument then made was that when Parliament wishes to include a lawyer for the purposes of
litigation or to a pre-litigation stage, it expressly so provides, and this not being so in the Code, it must be
inferred that lawyers are excluded when it comes to issuing notices Under Section 8 of the Code. We are
afraid that this argument must be rejected, not only in view of what has been held by us on a reading of
the Code and on the harmonious construction of Section 30 of the Advocates Act read with the Code, but
also on the basis of a judgment of this Court in Byram Pestonji Gariwala v. Union Bank of India,
215
MANU/SC/0485/1991 : (1992) 1 SCC 31 at 47-48. In this judgment, what fell for consideration was
Order XXIII Rule 3 of the Code of Civil Procedure, 1908 after its amendment in 1976. It was argued in
that case that a compromise in a suit had, Under Order XXIII Rule 3, to be in writing and "signed by the
parties". It was, therefore, argued that a compromise effected by counsel on behalf of his client would not
be effective in law, unless the party himself signed the compromise. This was turned down stating that
Courts in India have consistently recognized the traditional role of lawyers and the extent and nature of
the implied authority to act on behalf of their clients, which included compromising matters on behalf of
their clients. The Court held there is no reason to assume that the legislature intended to curtail such
implied authority of counsel. It then went on to hold:
38. Considering the traditionally recognised role of counsel in the common law
system, and the evil sought to be remedied by Parliament by the Code of Civil
Procedure (Amendment) Act, 1976, namely, attainment of certainty and
expeditious disposal of cases by reducing the terms of compromise to writing
signed by the parties, and allowing the compromise decree to comprehend even
matters falling outside the subject matter of the suit, but relating to the parties,
the legislature cannot, in the absence of express words to such effect, be
presumed to have disallowed the parties to enter into a compromise by counsel in
their cause or by their duly authorised agents. Any such presumption would be
inconsistent with the legislative object of attaining quick reduction of arrears in
court by elimination of uncertainties and enlargement of the scope of
compromise.
39. To insist upon the party himself personally signing the agreement or
compromise would often cause undue delay, loss and inconvenience, especially
in the case of non-resident persons. It has always been universally understood
that a party can always act by his duly authorised representative. If a power-of-
attorney holder can enter into an agreement or compromise on behalf of his
principal, so can counsel, possessed of the requisite authorisation by
vakalatnama, act on behalf of his client. Not to recognise such capacity is not
only to cause much inconvenience and loss to the parties personally, but also to
delay the progress of proceedings in court. If the legislature had intended to make
such a fundamental change, even at the risk of delay, inconvenience and needless
expenditure, it would have expressly so stated.
216
40. Accordingly, we are of the view that the words 'in writing and signed by the
parties', inserted by the Code of Civil Procedure (Amendment) Act, 1976, must
necessarily mean, to borrow the language of Order III Rule 1 Code of Civil
Procedure:
any appearance, application or act in or to any court, required or authorized by

law to be made or done by a party in such court, may except where otherwise
expressly provided by any law for the time being in force, be made or done by
the party in person, or by his recognized agent, or by a pleader, appearing,
applying or acting as the case may be, on his behalf:
Provided that any such appearance shall, if the court so directs, be made by the
party in person.
38. Just as has been held in Gariwala (supra), the expression "an operational creditor may on the
occurrence of a default deliver a demand notice....." Under Section 8 of the Code must be read as
including an operational creditor's authorized agent and lawyer, as has been fleshed out in Forms 3 and 5
appended to the Adjudicatory Authority Rules.
39. For all these reasons, we are of the view that the NCLAT judgment has to be set aside on both
counts. Inasmuch as the two threshold bars to the applications filed Under Section 9 have now been
removed by us, the NCLAT will proceed further with these matters under the Code on a remand of these
matters to it. The appeals are allowed in the aforesaid terms.
217
by Hon’ble High Court
219
IN THE HIGH COURT OF BOMBAY
Writ Petition (Ldg.) No. 143 of 2017
Appellants: Innovative Industries Limited

Vs.
Respondent: Union of India and Ors.
Judges/Coram:
Hon'ble Chief Justice Dr. Manjula Chellur, C.J. and G.S. Kulkarni, J.
Counsels:
For Appellant/Petitioner/Plaintiff: Ravi Kadam, Senior Advocate, Chetan Kapadia, Ashish Kamat and
Manik Joshi i/b Crawford Bayley & Co.
For Respondents/Defendant: A.C. Singh, Addl. Solicitor General, A.A. Thakkar, D.P. Singh and Yash
Momaya
Subject: Civil
Disposition:
Disposed off
JUDGMENT
Hon'ble Chief Justice Dr. Manjula Chellur, C.J. and G.S. Kulkarni, J.
The petitioner has placed on record an additional affidavit of its Chairman and Managing Director
dated 21st February 2017. On 30th January 2017, while challenging the vires of the Act in question, the
petitioner had also sought for ad-interim relief of stay which was rejected opining that there was no need
to stay the operation of the appointment of the IRP as no prejudice would be caused to the petitioner's
establishment. We make it clear that this observation will not have any persuasive value before any other
forum.
2. Since the main order has become subject matter of challenge before the statutory appellate
authority, challenge to the vires becomes academic. It is also brought to our notice that the ground of fair
opportunity of being heard is also one of the contentions or challenges raised before the appellate
authority as violation of principles of natural justice. In that view of the matter, we are of the opinion that
in a better case the vires of the enactment could be decided.
3. Accordingly, this petition is disposed of keeping all the contentions open to be agitated before the
appellate authority.
220
Order Passed in April 2017
IN THE HIGH COURT OF CALCUTTA
W.P. 7144 (W) of 2017
Appellants: Sree Metaliks Limited and Ors.

Vs.
Judges/Coram:
Hon'ble Justice Sh. Debangsu Basak, J.
Counsels:
For Appellant/Petitioner/Plaintiff: P.C. Sen, Sr. Advocate, Anirban Roy, Sanjib Dawn and Nupur Jalan,
Advocates
For Respondents/Defendant: Kausik Chandra, Ld. A.S.G. and Asit Kumar De, Advocate
Subject: Company
Subject: Insolvency
Acts/Rules/Orders:
 Indian Evidence Act, 1872 - Section 123,

 Indian Evidence Act, 1872 - Section 124;
 Indian Penal Code 1860, (IPC) - Section 193;
 Insolvency And Bankruptcy Code, 2016 - Section 31,
 Insolvency And Bankruptcy Code, 2016 - Section 5 (1),
 Insolvency And Bankruptcy Code, 2016 - Section 7(4)
Disposition:
Disposed off
JUDGMENT
Hon'ble Justice Sh. Debangsu Basak, J.
The petitioner assails the vires of Section 7 of the Insolvency and Bankruptcy Code, 2016 and the relevant
Rules under the Insolvency and Bankruptcy (Application to the Adjudicating Authority) Rules, 2016. The
221
challenge is premised upon and revolves around the contention that the Code of 2016 does not afford any
opportunity of hearing to a corporate debtor in a petition filed under Section 7 of the Code of 2016.
The learned senior advocate appearing for the petitioner submits that, the first petitioner had
received a notice from a firm of Company Secretaries dated January 21, 2017 intimating that, an
application under section 7 of the Code of 2016 read with Rule 4 of the Rules of 2016 had been filed
before the National Company Law Tribunal, (NCLT) Kolkata Bench. He submits that, the letter does not
inform the petitioners about the date when such application would be taken up for consideration by the
(NCLT). He submits that, the NCLT had registered such application as Company Petition No. 16 of 2017.
An order dated January 30, 2017 was passed on a hearing conducted on such Company Petition on
January 25, 2017. The order was passed ex-parte. The petitioner was not informed of the date of hearing.
The petitioner was not afforded an opportunity of hearing by the NCLT prior to the passing of such order
of administration of the petitioner and appointment of Interim Resolution Professional. The petitioner had
preferred an appeal from such order. Such appeal being Company Appeals (AT) (Insolvency) No. 3 of
2017 was disposed of by an order dated February 21, 2017. He submits that, pursuant to the disposal of
the appeal, proceedings have taken place in the Company Petition. At no stage has the petitioner been
heard by the NCLT. He submits that, the petitioner is entitled to a right of hearing under the principles of
natural justice. He submits that, the Code of 2016 is silent as to the grant of hearing by the NCLT. In such
circumstances, the right of hearing, on the principles of natural justice, has to be read into such Statute.
He submits that, the claim of the respondent under the Company Petition is not such that the Bankruptcy
Code of 2016 can be invoked. The NCLT has assumed jurisdiction under the Code of 2016 where none
exists.
The learned advocate appearing for the respondent No. 2 submits that, the respondent No. 2 is an
award holder. The award remains unsatisfied. The respondent No. 2 was advised to invoke the provisions
of Code of 2016. The respondent No. 2 had filed a petition being Company Petition No. 16, 2017 under
the provisions of Section 7 of the Code of 2016 read with Rule 4 of the Rules of 2016. An order dated
January 30, 2017 was passed by the NCLT. The petitioner being aggrieved had preferred an appeal
therefrom before the National Company Law Appellate Tribunal (NCLAT). In such appeal the first
petitioner had submitted that, the first petitioner had no objection to the admission of the insolvency
petition but objects to the appointment of the Interim Resolution Professional (IRP) under the Code of
2016. The first petitioner, therefore, cannot canvass, breach of principles of natural justice by NCLT.
Such appeal was disposed of by replacing the IRP appointed by the order dated January 30, 2017. He
submits that, the challenge to the vires of the Code of 2016 and the Rules of 2016 are misplaced as the
application under Section 7 of the Code of 2016 is required to be heard by the NCLT established under
222
the provisions of the Companies Act, 2013. He refers to Section 424 of the Act of 2013 and submits that,
NCLT is required to follow the principles of natural justice in deciding an application taken up for
consideration by it. Therefore, the challenge to the vires must fail. In the factual matrix of the present
case, in spite of notice, the first petitioner did not appear before the NCLT. The first petitioner had
preferred an appeal against the order dated January 30, 2017 before the NCLAT. Such appeal has since
been disposed of. It did not press such point in the appeal. Therefore, it cannot be said that there is a
breach of principles of natural justice.
The learned Additional Solicitor General appears in terms of the notice issued to the learned
Attorney General in view of the challenge to the vires to the Code of 2016 and the Rules 2016. He refers
to the Rules 2016, particularly Rule 4 thereof which contemplates a service of notice of the application by
the financial creditor on the financial debtor. He refers to Rule 10 of the Rules of 2016 and submits that,
such Rules contemplate that, the provisions of Rules 20 to 24 and 26 of Part III of the National Company
Law Tribunal Rules, 2016 will be applicable. He refers to Rule 24 of the National Company Law
Tribunal Rules, 2016 which contemplates service of notice of the application upon the respondent. He
submits that, the proceedings before the NCLT are to be conducted keeping in view the provisions of
Section 424 of the Companies Act, 2013. Section 424 of the Act of 2013 contemplates the NCLT
applying the principles of natural justice in the proceedings. He submits that, the NCLT is not bound by
the Code of Civil Procedure, 1908 and that, it can regulate its own procedure subject to the provisions of
the Act of 2013 and the Insolvency and the Bankruptcy Code of 2016. He submits that, the Code of 2016
does not debar the applicability of the principles of natural justice in proceedings under consideration by
the NCLT when it is considering an application under Section 7 of the Code of 2016. Therefore, the
challenge to the vires to the provisions of Section 7 of the Code of 2016 and Rule 4 of the Rules 2016
should fail.
I have considered the rival contentions of the petitioner and the materials made available on
record.
The respondent No. 2 had filed an application under section 7 of the Code of 2016 against the
first petitioner, before the NCLT Kolkata Bench, which was registered as Company Petition No. 16 of
2017. The first petitioner is the respondent therein. The first petitioner claims to have received a notice
from a firm of practicing company Secretaries with regard to the filing of such Company Petition by the
second respondent before the NCLT against the first petitioner. Such notice does not contain any
information as to the date of hearing of the company petition.
NCLT had passed an order dated January 30, 2017 in such Company Petition filed by the
respondent No. 2. The first petitioner was not heard by the NCLT before passing such order. NCLT had
223
proceeded to admit the company petition. It had done so without affording any opportunity of hearing to
the first petitioner. It had acted in breach of the principles of natural justice in do so. NCLT had
proceeded to appoint an IRP by such order. Such order was assailed by the first petitioner before the
NCLAT. In such appeal, the first petitioner did not press the point of breach of the principles of natural
justice. Rather, it had stated that, it had no objection to the admission of the company petition. The
NCLAT records in its order that, the first petitioner has no objection to the admission of the Insolvency
petition. Such appeal was disposed of by the order dated February 21, 2017. The personnel of the IRP
appointed by the order dated January 30, 2017 was replaced.
In the facts of the present case, Section 7 of the Code of 2016 is relevant. Section 7 is as follows:
"7. Initiation of corporate insolvency resolution process by financial creditor
(1) A financial creditor either by itself or jointly with other financial creditors
may file an application for initiating corporate insolvency resolution process
against a corporate debtor before the Adjudicating Authority when a default has
occurred.
Explanation.-For the purposes of this sub-section, a default includes a default in

respect of a financial debt owed not only to the applicant financial creditor but to
any other financial creditor of the corporate debtor.
(2) The financial creditor shall make an application under sub-section (1) in such
form and manner and accompanied with such fee as may be prescribed.
(3) The financial creditor shall, along with the application furnish -
(a) record of the default recorded with the information utility or such other record
or evidence of default as may be specified;
(b) the name of the resolution professional proposed to act as an interim

resolution professional; and
application under Sub-section (2), ascertain the existence of a default from the
records of an information utility or on the basis of other evidence furnished by
the financial creditor under sub-section (3).
(5) Where the Adjudicating Authority is satisfied that-
224
(a) a default has occurred and the application under sub-section (2) is complete,
and there is no disciplinary proceedings pending against the proposed resolution
professional, it may, by order, admit such application; or
(b) default has not occurred or the application under sub-section(2) is incomplete
or any disciplinary proceeding is pending against the proposed resolution
professional, it may, by order, reject such application:
PROVIDED that the Adjudicating Authority shall, before rejecting the

application under clause (b) of sub-section (5), give a notice to the applicant to
rectify the defect in his application within seven days of receipt of such notice
from the Adjudicating Authority.
admission of the application under sub-section (5).
(7) The Adjudicating Authority shall communicate-
(a) the order under clause (a) of sub-section (5) to the financial creditor
and the corporate debtor;
(b) the order under clause (b) of sub-section (5) to the financial creditor,
within seven days of admission or rejection of such application, as the case may
be."
Section 7 of the Code of 2016 contemplates filing of an application by a

financial creditor before an adjudicating authority. An adjudicating authority is
defined in Section 5 (1) of the Code of 2016. It is as follows:
"5. Definitions:
In this Part, unless the context otherwise requires,-(1) "Adjudicating

Authority", for the purpose of this Part, means National Company Law Tribunal
constituted under Section 408 of the Companies Act, 2013."
Section 7 of the Code of 2016 allows a financial creditor either by itself or jointly with other
financial creditors to file an application to initiate corporate insolvency resolution process against a
corporate debtor before the adjudicating authority when a default has occurred. Sub-section (2) of Section
7 states that, an application under Sub-section (1) will be made in such form and manner and
accompanied with such fee as may be prescribed. Sub-section (3) of Section 7 requires the financial
creditor to furnish the details as specified therein. Sub-section (4) of Section 7 mandates the adjudicating
225
authority to ascertain an existence of a default from the records of an information utility or on the basis of
other evidence furnished by the financial creditor under Sub-section (3) within 14 days from the receipt of
the application under Sub-section (2). Sub-section (5) of Section 7 allows the adjudicating authority to
admit an application under Sub-section (2) where a default has occurred and the application is complete
and there is no disciplinary proceedings pending against the proposed resolution professional. It also
allows the adjudicating authority to reject such an application if no default has occurred or the application
under Sub-section (2) is incomplete or where any disciplinary proceedings is pending against the
proposed resolution professional. However, if the adjudicating authority is proceeding to dismiss an
application, on the ground of defect in the application, then the adjudicating authority will give a notice of
such defect to the applicant to rectify such defect within 7 days from the date of receipt of the notice. Sub-
section (6) of Section 7 stipulates that, the corporate insolvency resolution process shall commence from
the date of admission of the application under Sub-section (5). Sub-section (7) of Section 7 mandates the
adjudicating authority to communicate its orders within 7 days of admission or rejection of the
application, as the case may be, to the financial creditor and the corporate debtor.
Section 61 of the Code of 2016 allows an appeal to be filed before the appellate authority. It is as
follows:-
"61. Appeals and Appellate Authority
(1) Notwithstanding anything to the contrary contained under the Companies

Act, 2013, any person aggrieved by the order of the Adjudicating Authority
under this part may prefer an appeal to the National Company Law Appellate
Tribunal.
(2) Every appeal under sub-section (1) shall be filed within thirty days before the
National Company Law Appellate Tribunal:
PROVIDED that the National Company Law Appellate Tribunal may allow an
appeal to be filed after the expiry of the said period of thirty days if it is satisfied
that there was sufficient cause for not filing the appeal but such period shall not
exceed fifteen days.
(3) An appeal against an order approving a resolution plan under section 31 may
be filed on the following grounds, namely:-
(i) the approved resolution plan is in contravention of the provisions of any law
for the time being in force;
226
(ii) there has been material irregularity in exercise of the powers by the resolution
professional during the corporate insolvency resolution period;
(iii) the debts owed to operational creditors of the corporate debtor have not been
provided for in the resolution plan in the manner specified by the Board;
(iv) the insolvency resolution process costs have not been provided for
repayment in priority to all other debts; or
(v) the resolution plan does not comply with any other criteria specified by the
Board.
(4) An appeal against a liquidation order passed under section 33 may be filed on
grounds of material irregularity or fraud committed in relation to such a
liquidation order."
Any person aggrieved by an order passed by the adjudicating authority under the Code of 2016 in
respect of an application under Section 7 of the Code of 2016 is entitled to prefer an appeal to the
National Company Law Appellate Tribunal (NCLAT). Sub-section (2) of Section 61 allows such an
appeal to be filed within 30 days with the provision that, an appeal may be filed later, if the appellants
show sufficient cause for not filing the appeal but such period of extension shall not exceed 15 days. Sub-
section (3) of Section 61 recognizes some of the grounds on which an appeal may be filed. Sub-section
(4) of Section 61 recognizes that, an appeal against an order of liquidation passed under Section 33 may
be filed on the grounds of material irregularity or fraud committed in relation to an order of liquidation.
In the scheme of the Code of 2016, therefore, an application under Section 7 of the Code of 2016
is to be first made before the NCLT. An appeal of the order of NCLT will lie before the NCLAT. NCLT
and NCLAT are constituted under the provisions of the Companies Act, 2013. The procedure before the
NCLT and the NCLAT is guided by Section 424 of the Companies Act, 2013. It is as follows:
"424. Procedure before Tribunal and Appellate Tribunal.-(1) The Tribunal and
the Appellate Tribunal shall not, while disposing of any proceeding before it or,
as the case may be, an appeal before it, be bound by the procedure laid down in
the Code of Civil Procedure, 1908(5 of 1908), but shall be guided by the
principles of natural justice, and, subject to the other provisions of the Act 1[or of
the Insolvency and Bankruptcy Code, 2016] and of any rules made thereunder,
the Tribunal and the Appellate Tribunal shall have power to regulate their own
procedure. (2) The Tribunal and the Appellate Tribunal shall have, for the
purposes of discharging their functions under this Act [or under the Insolvency
227
and bankruptcy Code, 2016] the same powers as are vested in a civil court under
the Code of Civil Procedure, 1908 (5 of 1908) while trying a suit in respect of the
following matters, namely:-
(a) summoning and enforcing the attendance of any person examining him on
oath;
(b) requiring the discovery and production of documents;
(c) receiving evidence on affidavits;
(d) subject to the provisions of sections 123 and 124 of the Indian Evidence Act,
1872 (1 of 1872), requisitioning any public record or document or a copy of such
record or document from any office;
(e) issuing commissions for the examination of witnesses or documents;
(f) dismissing a representation for default or deciding it ex parte;
(g) setting aside any order of dismissal of any representation for default or any
other passed by it ex parte; and
(h) any other matter which may be prescribed.
(3) Any order made by the Tribunal or the Appellate Tribunal may be enforced
by that Tribunal in the same manner as if it were a decree made by a court in a
suit pending therein, and it shall be lawful for the Tribunal or the Appellate
Tribunal to send for execution of its orders to the court within the local limits of
whose jurisdiction,-
(a) in the case of an order against a company, the registered office of the
company is situate; or
(b) in the case of an order against any other person, the person concerned
voluntarily resides or carries on business or personally works for gain.
(4) All proceedings before the Tribunal or the Appellate Tribunal shall be
deemed to be judicial proceedings within the meaning of sections 193 and 228,
and for the purposes of section 196 of the Indian Penal Code (45 of 1860), and
the Tribunal and the Appellate Tribunal shall be deemed to be civil court for the
purposes of section 195 and Chapter XXVI of the Code of Criminal Procedure,
1973 (2 of 1974)."
228
NCLT acting under the provisions of the Act, 2013 while disposing of any proceedings before it,
is not to bound by the procedure laid down under the Code of Civil Procedure, 1908. However, it is to
apply the principles of natural justice in the proceedings before it. It can regulate it own procedure,
however, subject to the other provisions of the Act of 2013 or the Insolvency and Bankruptcy Code of
2016 and any Rules made thereunder. The Code of 2016 read with the Rules 2016 is silent on the
procedure to be adopted at the hearing of an application under section 7 presented before the NCLT, that
is to say, it is silent whether a party respondent has a right of hearing before the adjudicating authority or
not.
Section 424 of the Companies Act, 2013 requires the NCLT and NCLAT to adhere to the
principles of the natural justice above anything else. It also allows the NCLT and NCLAT the power to
regulate their own procedure. Fretters of the Code of Civil Procedure, 1908 does not bind it. However, it
is required to apply its principles. Principles of natural justice require an authority to hear the other party.
In an application under Section 7 of the Code of 2016, the financial creditor is the applicant while the
corporate debtor is the respondent. A proceeding for declaration of insolvency of a company has drastic
consequences for a company. Such proceeding may end up in its liquidation. A person cannot be
condemned unheard. Where a statute is silent on the right of hearing and it does not in express terms, oust
the principles of natural justice, the same can and should be read into in. When the NCLT receives an
application under Section 7 of the Code of 2016, therefore, it must afford a reasonable opportunity of
hearing to the corporate debtor as Section 424 of the Companies Act, 2013 mandates it to ascertain the
existence of default as claimed by the financial creditor in the application. The NCLT is, therefore,
obliged to afford a reasonable opportunity to the financial debtor to contest such claim of default by filing
a written objection or any other written document as the NCLT may direct and provide a reasonable
opportunity of hearing to the corporate debtor prior to admitting the petition filed under Section 7 of the
Code of 2016. Section 7(4) of the Code of 2016 requires the NCLT to ascertain the default of the
corporate debtor. Such ascertainment of default must necessarily involve the consideration of the
documentary claim of the financial creditor. This statutory requirement of ascertainment of default brings
within its wake the extension of a reasonable opportunity to the corporate debtor to substantiate by
document or otherwise, that there does not exist a default as claimed against it. The proceedings before
the NCLT are adversarial in nature. Both the sides are, therefore, entitled to a reasonable opportunity of
hearing.
The requirement of NCLT and NCLAT to adhere to the principles of natural justice and the fact
that, the principles of natural justice are not ousted by the Code of 2016 can be found from Section 7(4) of
the Code of 2016 and Rule 4 of the Insolvency and Bankruptcy (Application to Adjudicating Authority)
229
Rules, 2016. Rule 4 deals with an application made by a financial creditor under Section 7 of the Code of
2016. Sub-rule (3) of Rule 4 requires such financial creditor to despatch a copy of the application filed
with the adjudicating authority, by registered post or speed post to the registered office of the corporate
debtor. Rule 10 of the Rules of 2016 states that, till such time the Rules of procedure for conduct of
proceedings under the Code of 2016 are notified, an application made under Sub-section (1) of Section 7
of the Code of 2017 is required to be filed before the adjudicating authority in accordance with Rules 20,
21, 22, 23, 24 and 26 or Part-III of the National Company Law Tribunal Rules, 2016.
Adherence to the principles of natural justice by NCLT or NCLAT would not mean that in every
situation, NCLT or NCLAT is required to afford a reasonable opportunity of hearing to the respondent
before passing its order.
In a given case, a situation may arise which may require NCLT to pass an ex-parte ad interim
order against a respondent. Therefore, in such situation NCLT, it may proceed to pass an ex-parte ad
interim order, however, after recording the reasons for grant of such an order and why it has chosen not to
adhere to the principles of natural justice at that stage. It must, thereafter proceed to afford the party
respondent an opportunity of hearing before confirming such ex-parte ad interim order.
In the facts of the present case, the learned senior advocate for the petitioner submits that, orders
have been passed by the NCLT without adherence to the principles of natural justice. The respondent was
not heard by the NCLT before passing the order.
It would be open to the parties to agitate their respective grievances with regard to any order of
NCLT or NCLAT as the case may be in accordance with law. It is also open to the parties to point out
that the NCLT and the NCLAT are bound to follow the principles of natural justice while disposing of
proceedings before them.
In such circumstances, the challenge to the vires to Section 7 of the Code of 2016 fails.
W.P. 7144 (W) of 2017 is disposed of without any order as to costs.
Urgent certified website copies of this order, if applied for, be made available to the parties upon
compliance of the requisite formalities.
230
IN THE HIGH COURT OF BOMBAY
Writ Petition (L) No. 1122 of 2017 and Notice of Motion (L) No. 243 of 2017 in Writ Petition (L) No.
1122 of 2017
Appellants: Uttam Galva Steels Ltd.

Vs.
Judges/Coram:
Hon'ble Sh. Shantanu Kemkar and Sh. B.P. Colabawalla, JJ.
Counsels:
For Appellant/Petitioner/Plaintiff: Janak Dwarkadas, Sr. Counsel, Amit Jamsandekar, Sharan Jagtiani,
Vishal Maheshwari, Dhiraj Mhetre and Smiti Tewari i/b Khaitan Legal Associates
For Respondents/Defendant: B.B. Sharma
Subject: Insolvency
Acts/Rules/Orders:
Insolvency And Bankruptcy Code, 2016 - Section 61
Disposition:
Petition Allowed
Industry: Metals
Hon'ble Sh. Shantanu Kemkar and Sh. B.P. Colabawalla, JJ.
JUDGMENT
After arguing for some time and having faced with the preliminary objection raised by
the learned Counsel for Respondent Nos. 2 and 3 that the Petitioner has alternative and efficacious
remedy available to challenge the impugned order by filing a Statutory Appeal, the learned Senior
Counsel for the Petitioner seeks leave to withdraw this Petition with liberty to the Petitioner to file the
Appeal provided under Section 61 of the Insolvency and Bankruptcy Code, 2016 ("the Code"). He,
however, submits that as the Petitioner will require some time to file an appeal and pray for interim order
before the Appellate Tribunal, therefore, in the interest of justice for two weeks interim protection be
given to the Petitioner to enable the Petitioner to file appeal and to apply for interim order before the
Appellate Tribunal.
231
2. Learned Counsel for Respondent Nos. 2 and 3 undertakes to file Vakalatnama, The submission is
accepted.
3. Learned counsel for Respondent Nos. 2 and 3 submits that no interim protection as prayed for be
granted, as the Petitioner could have immediately filed appeal before the Appellate Tribunal instead of
filing this Writ Petition and having not done so the prayer for interim protection be rejected.
4. Having considered the submissions made by the learned Counsel for the Petitioner, we are
permitting the Petitioner to withdraw this Petition enabling the Petitioner to file an appeal and apply for
interim order before the Appellate Tribunal.
5. Keeping in view the fact that for the present as stated by the learned Counsel for Respondent Nos.
2 and 3, the Interim Resolution professional (IRP) has not been appointed in pursuance of the impugned
order in the interest of justice and keeping in view the serious consequences if the IRP is appointed, we
direct that for a period of two weeks from today, the IRP shall not be appointed in pursuance of the
impugned order.
6. However, it is also made clear that this interim protection given by this Court shall not be
construed to be expression of our view either way by the Appellate Tribunal for deciding an application
for interim relief on merits. The Appellate Tribunal shall decide the application on its own merits,
uninfluenced by this interim protection.
7. With the aforesaid, we allow the Petitioner to withdraw the Petition. In view of disposal of Writ
Petition, nothing survives in the Notice of Motion. The same is also disposed of,
8. Parties to act on the copy of this order duly authenticated by the Associate of this Court.
232
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
Special Civil Application No. 12434 of 2017
Appellants: Essar Steel India Limited and Ors.

Vs.
Respondent: Reserve Bank of India and Ors.
Judges/Coram:
Hon'ble Justice Sh. S.G. Shah, J.
Counsels:
For Appellant/Petitioner/Plaintiff: Mihir Thakore, Saurabh Soparkar, Mihir Joshi, Senior Counsels,
Keyur Gandhi, Mahesh Agrawal, Nisarg Desai, Raheel Patel, Shriraj Khambete, Advocates for Nanavati
Associates
For Respondents/Defendant: Darius Khambhatta, Senior Counsel, Amar N. Bhatt, Rajendra Barot,
Nishanth Shashidharan, Advocates and Vivek Shetty
Subject: Insolvency
Subject: Company
Acts/Rules/Orders:
 Banking Regulation Act, 1949 - Section 2,

 Banking Regulation Act, 1949 - Section 3,
 Banking Regulation Act, 1949 - Section 35(AA),
 Banking Regulation Act, 1949 - Section 35(AB),
 Banking Regulation Act, 1949 - Section 35A,
 Banking Regulation Act, 1949 - Section 35AA,
 Banking Regulation Act, 1949 - Section 35AB,
 Banking Regulation Act, 1949 - Section 5(c),
 Banking Regulation Act, 1949 - Section 5(d),
 Banking Regulation Act, 1949 - Section AB;
 Constitution Of India - Article 12,
 Constitution Of India - Article 14,
 Constitution Of India - Article 19(1)(g),
 Constitution Of India - Article 226;
 Insolvency And Bankruptcy Code, 2016 - Section 17(1)(b),
233
 Insolvency And Bankruptcy Code, 2016 - Section 30(1),
 Insolvency And Bankruptcy Code, 2016 - Section 9
Cases Referred:
 The Barium Chemicals Ltd. and Anr. vs. The Company Law Board and Ors. MANU/SC/0037/1966;
 Bhikhubhai Vithlabhai Patel and Ors. vs. State of Gujarat and Anr. MANU/SC/7399/2008;
 Vinod Kumar vs. State of Haryana and Ors. MANU/SC/1097/2013;
 The State of West Bengal vs. Anwar Ali Sarkar MANU/SC/0033/1952;
 Union of India (UOI) and Ors. vs. N.S. Rathnam and Sons MANU/SC/0806/2015;
 Union of India and another vs. G. Ganayutham (Dead) by LRs. MANU/SC/0834/1997;
 Aashirwad Films vs. Union of India (UOI) and Ors. MANU/SC/2635/2007;
 R.K. Garg and Ors. vs. Union of India (UOI) and Ors. MANU/SC/0074/1981;
 Ionic Metalliks vs. Union of India MANU/GJ/0683/2014;
 Thirumala Tirupati Devasthanams and Anr. vs. Thallappaka Ananthacharyulu and Ors.
MANU/SC/0693/2003;
 Bhavesh D. Parish & Others vs. Union of India and Another MANU/SC/0392/2000;
 Hirabhai Ashabhai Patel vs. The State of Bombay MANU/MH/0108/1955;
 In Re: The Special Courts Bill, 1978 MANU/SC/0039/1978;
234
 Canara Bank vs. P.R.N. Upadhyaya & Ors. MANU/SC/0542/1998;

 Sudhir Shantilal Mehta vs. C.B.I. MANU/SC/1415/2009;
 Basheshar Nath vs. The Commissioner of Income Tax, Delhi & Rajasthan and Anr.
MANU/SC/0064/1958;
 Arunima Baruah vs. Union of India (UOI) and Ors. MANU/SC/7366/2007;
 S.J.S. Business Enterprises (P) Ltd. vs. State of Bihar and Ors. MANU/SC/0236/2004;
 Prestige Lights Ltd. vs. State Bank of India MANU/SC/3355/2007;
 S.P. Chengalvaraya Naidu (dead) by L.Rs. vs. Jagannath (dead) by L.Rs. and others
MANU/SC/0192/1994
Disposition:
Disposed off
Industry: Metals
ORDER
Hon'ble Justice Sh. S.G. Shah, J.
1. Heard learned Senior Counsel Mr. Mihir Thakore, with learned Senior Counsels Mr. Saurabh
Soparkar, and Mr. Mihir Joshi, with learned advocates Mr. Keyur Gandhi for M/s. Nanavati Associates,
Mr. Mahesh Agrawal, Mr. Nisarg Desai, Mr. Raheel Patel and Mr. Shriraj Khambete for the petitioner on
7.7.2017 and 12.7.2017.
2. Heard learned Senior Counsel Mr. Darius Khambhatta, with learned advocates Mr. Amar N
Bhatt, Mr. Rajendra Barot, Mr. Nishanth Shashidharan, and Mr. Vivek Shetty for the Respondent No. 1.
3. Heard learned Senior Counsel Mr. Ravi Kadam, with learned Senior Counsel Mr. Anshin Desai,
with learned advocate Mr. Nirag Pathak, Mr. Ameya Gokhle, and Ms. Grishma Ahuja for M/s. Shardul
Amarchand Mangaldas & Co., for the respondent No. 2.
4. Heard learned Senior Counsel and Advocate General Mr. Kamal B. Trivedi, with learned Senior
Counsel Mr. Rashesh Sanjanwala, with Mr. Sandeep Singhi with Mr. Siddharth Joshi for M/s. Singhi &
Co. for the respondent No. 3 opposing the petition on 12.7.2017 and 13.7.2017.
5. Heard learned Senior Counsels Mr. Mihir Thakore and Mr. Darius Khambhatta, in reply on
13.7.2017 & 14.7.2017. Perused the record including notes of submissions.
6. The petitioner Essar Steel India Limited has invoked jurisdiction of the Court under Article 14,
19(1)(g) and 226 of the Constitution of India in the matter of the provisions of Insolvency and Bankruptcy
Code, 2016 (in short 'IBC') by challenging the Decision of the Reserve Bank of India (in short 'RBI') vide
their Press Release dated 13.06.2017 directing banks to initiate proceedings against 12 Companies
235
including the Petitioner under the Provisions of IBC and the decision of Consortium of Lenders to initiate
Petition under Section 9 of The Insolvency and Bankruptcy Code, 2016 and failure of the Consortium of
Banks led By State Bank of India (in short 'SBI') to implement the package of debt restructuring approved
by the Board of Directors of the Petitioner - Company.
7. The Respondent No. 1 is RBI, Respondent No. 2 is SBI, respondent No. 3 is Standard and
Chartered Bank (in short 'SCB') and Respondent No. 4 is National Company Law Tribunal (in short
'NCLT').
8. The petitioner has prayed for following directions and order in form of a writ by the court:
a) Issue a writ, order or direction or any other writ, order or direction quashing/setting aside the
decision of the Reserve Bank of India contained in Press Release dated 13.06.2017 directing the lenders
to initiate proceedings under the Insolvency and Bankruptcy Code, 2016 in relation to the Petitioner.
b) Issue a writ, order or direction or any other writ, order or direction quashing/setting aside the
decision of the STATE BANK OF INDIA of filing proceedings under the Insolvency and Bankruptcy
Code, 2016 in relation to the Petitioner;
c) Issue a writ, order or direction or any other writ, order or direction quashing/setting aside the
decision of the Standard Chartered Bank of filing proceedings under the Insolvency and Bankruptcy
Code, 2016 in relation to the Petitioner;
d) Issue a writ, order or direction restraining the respondent No. 4 - adjudicating authority under
Bankruptcy Code, 2016 (National Company Law Tribunal, Ahmedabad) from proceeding further with
proceedings in the petition initiated under Section 7 of Bankruptcy Code by Respondent 2 and 3;
e) Issue a writ, order or directing Respondent to place the Petitioner in the category of companies
falling in para 4 of the Press Release dated 13.6.2017 directing the banks to finalise the resolution plan
within six months;
Pass such other or further orders, as this Hon'ble Court may deem fit and proper in the facts and
circumstances of the case.
9. Since the main challenge in the petition is decision of June 13, 2017 in the form of press release
by the RBI, it would be relevant to recollect its contents, as on 13.06.2017; because it has been
modified/corrected on July 08, 2017; after the order dated 4.7.2017 by this Court, calling upon RBI to
initially explain that what they mean by "Such cases will be accorded priority by the National Company
Law Tribunal", which is a statement in such Press release, which reads thus:
236
"Date : Jun 13, 2017
RBI identifies Accounts for Reference by Banks under the Insolvency and Bankruptcy Code (IBC)
The Reserve Bank of India had issued a Press Release on May 22, 2017 outlining the steps taken and
those on the anvil pursuant to the promulgation of the Banking Regulation (Amendment) Ordinance,
2017. The Press Release had mentioned inter alia that the RBI would be constituting a Committee
comprised majorly of its independent Board Members to advise it in regard to the cases that may be
considered for reference for resolution under the Insolvency and Bankruptcy Code, 2016 (IBC).
2. An Internal Advisory Committee (IAC) was accordingly constituted and it held its first meeting on
June 12, 2017. The IAC, in the meeting, agreed to focus on large stressed accounts at this stage and
accordingly took up for consideration the accounts which were classified partly or wholly as non-
performing from amongst the top 500 exposures in the baking system.
3. The IAC also arrived at an objective, non-discretionary criterion for referring accounts for
resolution under IBC. In particular, the IAC recommended for IBC reference all accounts with fund
and non-fund Crores, with 60% or more classified as non-performing by banks as of March 31,
2016. The IAC noted that under the recommended criterion, 13 accounts totaling about 25 per cent
of the current gross NPAs of the banking system would qualify for immediate reference under IBC.
4. As regards the other non-performing accounts which do not qualify under the above criteria, the
IAC recommended that banks should finalise a resolution plan within six months. In cases where a
viable resolution plan is not agreed upon within six months, banks should be required to file for
insolvency proceedings under the IBC.
5. The Reserve Bank, based on the recommendations of the IAC, will accordingly be issuing
directions to banks to file for insolvency proceedings under the IBC in respect of the identified
accounts. Such cases will be accorded priority by the National Company Law Tribunal (NCLT).
6. The details of the resolution framework in regard to the other non-performing accounts will be
released in the coming days.
7. The circular on revised provisioning norms for cases accepted for resolution under the IBC is being
issued separately.
Jose J. Kattor
Chief Generl Manager
Press Release : 2016-2017/3363"
237
10. Thus the intention which is disclosed by the RBI is clear that they will identify the accounts, will
issue directions to banks to file insolvency proceedings under the IBC and such cases will be accorded
priority by the NCLT; as if they are directive authority above NCLT, when para 5 of the press release
reads:
"5. The Reserve Bank, based on the recommendations of the IAC, will
accordingly be issuing directions to banks to file for insolvency proceedings
under the IBC in respect of the identified accounts. Such cases will be accorded
priority by the National Company Law Tribunal (NCLT)."
This mean NCLT has to give priority to cases filed by the directives of RBI against the cases, which are
filed by other creditors or petitioners before the NCLT.
11. Therefore, this Court has to call upon the RBI to explain their stand on returnable date 7.7.2017.
However no explanation has come forward on record on 7.7.2017 but learned counsel for the RBI has
admitted that there is mistake on the part of the RBI and seek apology and convey sorrow on behalf of
RBI for such drafting, submitting that there is improper drafting but not the intention as is visualized from
the para 5 of such press release dated 13.6.2017 and confirm that RBI will issue corrigendum to delete
such line. In turn RBI has issued corrigendum on July 8, 2017 (page 942 with petition), and disclosed
such fact on record by way of affidavit dated 13.7.2017 submitting that:
"2. Respondent No. 1 issued a corrigendum dated July 8, 2017 to its press release
dated June 13, 2017 bearing No. 2016-2017/3363 titled "RBI identifies Accounts
for Reference by Banks under the Insolvency and Bankruptcy Code (IBC)" (the
Press Release"), whereby the sentence "Such cases will be accorded priority by
the National Company Law Tribunal (NCLT)" in paragraph No. 5 of the Press
Release has been deleted. Hereto annexed and marked as Exhibit-1 is the copy of
corrigendum dated July 8, 2017."
The corrigendum reads as under:
Date : Jul 08, 2017
Corrigendum
The Reserve Bank of India had issued a Press Release on June 13, 2017 bearing reference number 2016-
2017/3363 ("Press Release") titled 'RBI identifies Accounts for Reference by Banks under the Insolvency
and Bankruptcy Code (IBC)'.
238
The third line of paragraph no. 5 of the Press Release, which reads as follows:
"5. ...Such Cases will be accorded priority by the National Company Law Tribunal (NCLT)." stands
deleted.
The remaining contents of the Press Release remain unchanged.
Jose J. Kattoor
Chief General Manager
Press Release : 2017-2018/78
12. Unfortunately though RBI has admitted through its counsel before the court that it was their
mistake in releasing press note with such statement, they failed to disclose their regret on record and
therefore they have to file another affidavit on 14.7.2013, submitting as under:
"3. Given the purpose of expeditious resolution of non-performing accounts for

which the Press Release was issued, the words "Such cases will be accorded
priority by the National Company Law Tribunal (NCLT)" ("the Sentence") were
included into the Press Release. The intention was to underline the time-bound
nature of the resolution process envisaged under the Insolvency and Bankruptcy
Code, 2016 and recommend to the Banks to make appropriate applications to the
Hon'ble National Company Law Tribunal for expeditious hearing. However, the
language used did not properly express that intention, was unfortunate and is
regretted.
4. However, Respondent No. 1 forthwith issued the corrigendum for deleting the
Sentence in deference to this Hon'ble Court immediately after the hearing before
the Hon'ble Court on July 7, 2017. Respondent No. 1 humbly submits that the
intention was not in any manner to show disrespect to the Hon'ble National
Company Law Tribunal."
13. Therefore, though such issue may be treated as resolved after corrigendum as above, two more
points needs discussion and consideration.
1) When the Court has specifically inquired about the decision in form of a document of RBI to
publish such press release, Mr. Darius Khambhatta, learned Senior Counsel with Mr. Amar N. Bhatt,
learned advocate appearing for respondent No. 1 has placed on record (page No. 948) the stand of RBI
that;
239
"pursuant to the recommendations of the Internal Advisory Committee (IAC)
(which held its meeting on June 12, 2017), RBI took the decision which is
contained in the Press Release dated June 13, 2017 (Annexure A, Pg. 30). There
is no other document in which the decision to issue the press release has been
recorded. There are subsequent specific directions issued to Banks, akin to the
one issued by the RBI to SBI which is produced by the Petitioner at Page 947 of
the Additional Affidavit dated July 14, 2017."
Therefore, it becomes clear and certain that the Reserve Bank of India is under the impression that now
when jurisdiction of matters pertaining to Company Law has been transferred to NCLT by enacting IBC,
the NCLT has to follow their advice and directions. This is a serious issue because irrespective of factual
details and merits against any borrower or any litigant, the basic Constitutional mandate is quite clear that
the adjudicating authorities; either judicial authorities, or even quasi-judicial authorities; are not supposed
to be guided by the advises or directions of the administrator in form of Government or its bodies or
Government institution like RBI. Therefore, as it is repeatedly conveyed to all concerned that the initial
concern of the Court is to verify that how and why RBI has published a press release, which discloses that
NCLT will act as per the directions of the RBI. In addition to expressing regret for such drafting, it is
repeatedly confirmed at bar by the respondents that they never intended to do so and that it is a result of
poor drafting only.
In view of such stand taken by RBI, the query of the Court is very much material and relevant to know
that based upon which office order or directions or decision such press release has been issued or
published. In response to such query, now, there is a categorical admission, which is recorded herein
above, whereby it is disclosed that there is no other document in which the decision to issue the press
release has been recorded and no other document on the basis of which such decision is taken. However,
there are subsequent specific directions issued to Bank. This also goes to show the manner in which RBI
is functioning, inasmuch as there is a press release even without a decision at certain level that press
release is to be published and what should be included in such press release. This is also an equally
serious issue. It has been conveyed to the respondents that on such disclosure that there is no other
document, pursuant to such disclosure, now, they would be debarred from relying upon any such
document, if any.
2) With reference to such practice, if we peruse the press release dated 13.6.2017, now, when it
becomes clear that there is one another press release dated 22.5.2017, (page 863 with the petition), which
is also touching the subject under reference. Whereas the impugned press release dated 13.6.2017 is in
fact based upon the previous press release of May 22, 2017; which reads as under:
240
Date : May 22, 2017
Reserve Bank of India Outlines the action plan to implement the Banking Regulation (Amendment)
Ordinance, 2017
In a Release today, the Reserve Bank of India Outlined the steps taken and those on the anvil post the
promulgation of the Banking Regulation (Amendment) Ordinance, 2017.
2. The amendments to the BR Act 1949, introduced through the Ordinance, and the notification issued
thereafter by the Central Government empower RBI to issue directions to any banking company or
banking companies to initiate insolvency resolution process in respect of a default, under the
provisions of the Insolvency and Bankruptcy Code, 2016 (IBC). It also enables the Reserve Bank to
issue directions with respect to stressed assets and specify one or more authorities or committees with
such members as the Bank may appoint or approve for appointment to advise banking companies on
resolution of stressed assets.
3. Immediately upon the promulgation of the Ordinance, the Reserve Bank issued a directive bringing
the following changes to the existing regulations on dealing with stressed assets.
i. It was clarified that a corrective action plan could include flexible restructuring, SDR and
S4A.
ii. With a view to facilitating decision making in the JLF, consent required for approval of a
proposal was changed to 60 percent by value instead of 75 percent earlier, while keeping that
by number at 50 percent.
iii. Banks who were in the minority on the proposal approved by the JLF are required to either
exit by complying with the substitution rules within the stipulated time or adhere to the
decision of the JLF.
iv. Participating banks have been mandated to implement the decision of JLF without any
additional conditionality.
v. The Boards of banks were advised to empower their executives to implement JLF decisions
without further reference to them
It was made clear to the banks that non-adherence would invite enforcement actions.
4. Currently, the Oversight Committee (OC) comprises of two Members. It has been constituted by the
IBA in consultation with RBI. It has been decided to reconstitute the OC under the aegis of the
Reserve Bank and also enlarge it to include more Members so that the OC can constitute requisite
241
benches to deal with the volume of cases referred to it. While the current Members will continue in
the reconstituted OC, names of a few more will be announced soon. The Reserve Bank is paining to
expand the scope of cases to be referred to the OC beyond those under S4A as required currently.
5. The Reserve Bank is working on a framework to facilities an objective and consistent decision
making process with regard to cases that may be determined for reference for resolution under the
IBC. Reserve Bank has already sought information on the current status of the large stressed assets
from the banks. The RBI would also be constituting a Committee comprised majorly of its
independent Board Members to advise it in this matter.
6. The current guidelines on restructuring are under examination for such modifications as may be
necessary to resolve the large stressed assets in the banking system in a value optimising manner. The
Reserve Bank envisages an important role for the credit rating agencies in the scheme of things and,
with a view to preventing rating-shopping or any conflict of interest, is exploring the feasibility of
rating assignments being determined by the Reserve Bank itself and paid for from a fund to b created
out of contribution from the banks and the Reserve Bank.
7. The Reserve Bank notes that the proper exercise of the enhanced empowerment would require
coordination with and cooperation from several stakeholders including banks, ARCs, rating agencies,
IBBI and PE firms, to which end the Reserve Bank would be holding meetings in the near future with
these stakeholders.
8. The Reserve Bank will issue further updates as may be deemed necessary at an appropriate time.
Jose J. Kattoor
Chief General Manager
Press Release : 2016-2017/3138
On perusal of such press release dated 22.5.2017 makes it clear that in fact a decision is taken to change
the percentage or value of Non-performing Accounts (in short 'NPA') from 75% to 60% on or before
22.5.2017, but at the same time, it is surprising to note that RBI has conveyed the Banks that the Boards
of Banks were advised to empower their executives to implement Joint Lenders' Forum (in short 'JLF')
decisions without further reference to them. Therefore, it seems that the RBI wants Bank's officers to act
upon the decision of JLF, and take steps for its implementation, without referring such decision to its own
Board of Directors. It may be an administrative issue, but it speaks for itself.
242
Similarly, there are some directions regarding restructuring so as to include flexible restructuring,
including Strategic Debt Restructuring (SDR) and Scheme for Sustainable Structuring of Stressed Assets
(S4A). Since its reference is there in impugned press release dated 13.6.2017, it cannot be ignored when
bare perusal of such press release gives above image about the functioning of RBI and, therefore, it is
relevant to record it here because ultimately, though whether petitioner is entitled to the relief's claimed in
this petition, may rest upon the overall facts and circumstances, such attitude gives a reason to observe in
conclusive part of the judgment that nobody is entitled or empowered to advise, guide or direct the
judicial or quasi-judicial authority in any manner whatsoever.
14. Irrespective of position as discussed herein above, the case of the petitioner is based upon
following amongst other submissions:
1) When the restructuring proposal was under active consideration by the Banks
under the mandatory circulars issued by the Reserve Bank of India, Reserve Bank of
India could not have issued a directive to the banks to take action to approach NCLT
under the Insolvency and Bankruptcy Code, 2016 for resolution of the debt. The
petitioners submit that the petitioner is not a willful defaulter and there is no allegation
against the petitioner of diversion of funds, fraud or malfeasance. There is no opinion that
the petitioner's industrial units are not viable if the debt is appropriately restructured. The
petitioner's debt has not been restructured pursuant to the huge losses suffered by the
petitioner in view of (i) steel industry getting out of being a priority core sector for supply
of gas, (ii) international market of steel and (iii) dumping of foreign steel into the country
and there is no failure on the part of the petitioner in not complying with the restructured
debt. The petitioner has in fact paid Rs. 3467 Crores in the last 15 months to the banks
and financial institutions. In the circumstances, there is a clear conflict between the
existing circulars issued under Section 35AA of the Banking Regulation Act, 1949 (in
short BRA) which are binding to the banks and under which restructuring proposal is
almost on the verge of being finalized and recent directive of Reserve Bank of India
issued on 13.06.2017 directing the banks to take action of filing insolvency petition even
in respect of companies where restructuring proposals are under consideration under the
existing circulars and direction issued by RBI is clearly discriminatory vis-`-vis the
Petitioner and is required to be struck down. Moreover, the direction is issued without
considering the relevant factors viz. the restructuring was underway in case of the
Petitioner and was at the stage of finalization as per existing mandatory circulars of RBI
243
and considering the irrelevant factors viz. the quantum of debt completely ignoring the
stress faced by the steel industry as a whole in India.
2) On a true and correct interpretation of Section 35AA of BRA, the Central

Government is required to authorize the Reserve Bank of India to issue directions to any
banking company or companies to initiate insolvency resolution process in respect of a
default, under the provisions of Insolvency and Bankruptcy Code. The above section
therefore implies that in each case of default, the RBI will have to come to a subjective
satisfaction based on objective facts to give such directions to the Banking Company and
the Central Government cannot give general direction to the Banking Company to initiate
insolvency proceedings in respect of various defaults. The RBI has not considered
specific cases of defaults before issuing authorization and consequently their
authorization, which is generic in nature, is bad. Without prejudice to the aforesaid, the
petitioner submits that each case of default will have to be considered on facts by the RBI
and only after it considers the objective facts relating to the defaulting company that it
can come to a subjective satisfaction entitling it to authorize the Reserve Bank of India to
initiate the insolvency resolution process in respect of the default. There is nothing on
record to show that the RBI has considered objective facts of each defaulting company
and in particular of the petitioner and reached a subjective satisfaction to issue directions
to initiate insolvency resolution process. The action of the RBI to direct the SBI to initiate
insolvency resolution process without considering the specific cases of default more
particularly objective facts of the defaulting company and reaching a subjective
satisfaction in respect of the same is clearly bad and is required to be quashed in view of
the following decisions of the Supreme Court as the exercise of powers is arbitrary,
unreasonable, manifestly unjust and outrageous:
(i) Barium Chemicals v. Company Law Board MANU/SC/0037/1966 : AIR 1967 SC 295
(ii) Bhikhubhai Vitthalbhai Patel v. State of Gujarat MANU/SC/7399/2008 : AIR 2008 Supreme Court
1771
(iii) Vinod kumar v. State of Haryana MANU/SC/1097/2013 : (2013) 16 SCC 293
3) Without prejudice to the aforesaid, the circular dated 13.06.2017 issued by

Respondent No. 1 Reserve Bank of India in so far as it has classified the defaulting
companies solely on the basis of outstanding amount greater than Rs. 5000 Crores with
60% or more classified as NPAs by banks as of 31.03.2016 and those not falling in the
244
above criteria is clearly violative of Article 14 of the Constitution of India. The object of
inserting Section 35AA of the Banking Regulation Act is to authorize the Reserve Bank
of India to issue directions in respect of default to initiate insolvency resolution process
considering each case of default and the steps otherwise taken to restructure the debt. The
decision of the Internal Advisory Committee to classify solely on the basis of quantum
has no rational nexus to the object sought to be achieved either by Section 35AA of the
Banking Regulation Act, 1949 or the relevant provisions of the Insolvency and
Bankruptcy Code, 2016. In fact, the Reserve Bank of India has not looked into any
material and relevant facts in creating two classes: one, where, direction is given to
commence resolution under IBC and other where resolution is to be finalized within 6
months. The Petitioner's case clearly is that a resolution process was underway and was
being finalized by the JLF. The Petitioner could never have been classified in category
falling under para 3 of the circular dated 13.06.2017 when as late as on 13.06.2017 itself,
the JLF was considering the finer details of the proposal for restructuring the debt of the
Petitioner. Classifying the petitioner in para 3 and not para 4 is clearly arbitrary,
discriminatory and violative of Article 14 of the Constitution of India as the classification
has no rational nexus to the object sought to be achieved viz. restructuring of debt.
4) The Petitioner further submits that the Petitioner's case is most eminently suited
to be classified under para 4 as the resolution plan was under process. To classify the
Petitioner in para 3 is to treat the Petitioner dissimilarly as compared to others who have
been given 6 months time to finalize the resolution process. The Petitioner submits that
there is no reasonable basis applied for classification into two classes. The only criteria
adopted is the quantum of debt which has no rational nexus to the object sought to be
achieved viz. restructuring of the debt and survival of the Company. For the purpose
reliance is placed on the following decisions
i. State of West Bengal v. Anwar Ali Sarkar MANU/SC/0033/1952 : AIR 1952 SC 75
ii. Union of India v. N.S. Ratnam and Sons MANU/SC/0806/2015 : (2015) 10 SCC 681
5) It is further submitted that without prejudice to the aforesaid, the Court is entitled
to test any decision of any authority on the basis of reasonableness of the process adopted
by the concerned authority. When Reserve Bank of India classified the defaulting
companies into two classes viz. those who have debts above Rs. 5000 Crores with 60% or
more classified as NPA as on 31.03.2016 and the others, it is evident that it has not taken
into consideration any relevant factors except focusing on the large stressed accounts.
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The various factors which have been highlighted both in the petition and in written
submission would indicate that the Petitioner's debt was in finalization stages of
restructuring have been completely ignored by the Reserve Bank of India in issuing the
directions. The relevant facts which ought to have been looked into before issuing the
directions have been completely ignored. The process adopted by Reserve Bank of India
is clearly unreasonable and deserves to be struck down. The Petitioner submits that the
Petitioner Company has vast operation with multi-location facilities, the impact of the
decision would be severe and may result in the Company going into serious problem
because of the change in management. In such circumstances, the Reserve Bank of India
ought to have considered all relevant facts other than the mere largeness of the stressed
account before making such a vital decision. In these circumstances, such decision is
clearly subject to judicial review. The Petitioner submits that the following factors would
clearly establish that the decision of Reserve Bank of India is not only discriminatory and
violative of Article 14 but the Reserve Bank of India has not taken into consideration
relevant and taken into consideration irrelevant factors in classifying the Petitioner in
Para 3 and not para 4 of press release dated 13.6.2017.
a) The initiation of proceedings under the Bankruptcy Code results in coercive steps including mandatory
suspension of the functioning of the Board of Directors and hands over of management to Insolvency
Resolution Professional (IRP). Such harsh consequences ought to be resorted to only when there is no
other resolution or reconstruction of the Company is possible. In the present case, the facts clearly show
that any reasonable person would come to a conclusion that the progress achieved by the Company
including in particular repayment of Rs. 3500 Crores would show that the resolution process between the
Banks and the Petitioner is eminently possible to be achieved.
b) The Petitioner has its operations in six locations i.e., Hazira (Gujarat), Vishakamatnam (Andhra
Pradesh), Kirundal (Chhattisgarh), Paradeep (Odisha), Dabuna (Odisha) and Pune (Maharashtra). All the
plants in these six locations spread over 5 states are operational. There are atleast 8 finished products
being manufactured by the Petitioner. Such as HRC, plates, pipes, pellets, etc. These manufacturing units
given direct employment to 4500 persons. Sudden change of management of these vast operations spread
all over India from the Board of Directors to a single individual i.e., the Insolvency Resolution
Professional is likely to disrupt the smooth functioning and operations of the Company. It is in the interest
of Bankers and all stakeholders that the Company continues to operate smoothly without any interruption.
c) The Petitioner also has long term contracts with various customers to supply its finished products. The
business and operations of these customers is also thus dependent upon assured supply of the final
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product produced by the Petitioner. The turnover of the Company has been at an average of Rs. 12,000
Crores per year in the last two years and as is estimated to be Rs. 21,700 Crores in the year 2018. With
such large turnover requiring skilled and experienced management for the operations, any disruption by
handing over management to a third party i.e., the IRP is bound to cause some disruption in production
and erosion in value. It is for this reason that even the Banks have been actively discussing and
negotiating a restructuring proposal for last over one year. A mutually acceptable restructuring proposal
between the Petitioner and the Banks would ensure smooth operations as also repayment of debt as per
the restructuring package, therefore RBI was not justified in categorizing the Petitioner with 11
companies headed for Bankruptcy proceedings or should have given an opportunity to restructure as has
been done in respect of companies under para 4. No prejudice will be caused to the Banks by giving an
opportunity to restructure the debt. The entire financial operations of the Company are already in the
control of the Bankers. The Bankers have their nominee on the Board of Directors and all payments are
made with the consent of the Bankers. The last one year's performance of the Company also shows that its
manufacturing operations are improving and the repayments to the Banks are taking place.
d) On the one hand there is serious likely hood of disruption or interference with the smooth operations of
the Company, as also erosion in value if the management is handed over to the IRP and on the other hand
if the period of six months is given to the Bankers for the Company to work out a mutually acceptable
restructuring proposal, no prejudice would be cause to the Bankers. If for any reason the restructuring
proposal is not finalized within six months, as is the case with the other Companies in para 4, it will be
open for the Banks to initiate Bankruptcy proceedings. Hence, at least in the case of the Petitioner it ought
to be categorised with other companies who have been given six month's time to have a restructuring
proposal. In this regard, reliance is placed upon Union of India v. G Ganayutham MANU/SC/0834/1997 :
(1997) 7 SCC 463.
6) The Petitioner further submits that Section 35AA and 35AB of BRA have been
inserted to enable the Government of India to authorize Reserve Bank of India to give
necessary directions in respect of specific default to initiate Insolvency Resolution
Process. From the language of above two Sections, it is evident that unless a Directive is
issued by Reserve Bank of India on a Bank, the Bank is not entitled to initiate Insolvency
Resolution Process. It is evident that no Directive is issued to the Standard Chartered
Bank to initiate Insolvency Resolution Process. This apart, if the Petitioner's contention is
accepted that it should be classified in para 4, then there should be specific Directive by
the Reserve Bank of India that the Banks should finalize the restructuring within six
months. This Directive should equally apply to the Standard Chartered Bank and would
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be binding on it. It would be mandatory for the Standard Charted Bank to consider the
restructuring proposal and cannot initiate any Insolvency Resolution Process under the
Insolvency and Bankruptcy Code, 2016 for a period of six months. Without prejudice to
the above, the Petitioner submits that Standard Chartered Bank was also in active
discussion and negotiations with the Company for over last one year. It has given a
proposal to the Company for settlement on 21.06.2017. Before the Petitioner could
respond, the Standard Chartered Bank has initiated the Insolvency Resolution Process
before the NCLT on 27.06.2017, in view of Directive issued by Reserve Bank of India on
State Bank of India and the Joint Lenders Forum and the JLF having taken decision on
22.06.2017 to initiate Insolvency Resolution Process as per the Directive of the Reserve
Bank of India.
15. As against that the Respondent No. 1 has submitted as under:
1) Despite the existence of several laws and statutory circulars issued by

Respondent No. 1 ("the RBI") for recovery/restructuring of Non Performing Accounts
("NPA"), the problem of NPAs in India remained staggering. As on March 31, 2017, the
gross NPAs in India aggregated more than Rs. 7,28,768 Crores, i.e., about 5% of the
GDP. About 12% of the total advances by public sector banks are NPAs. Consequently,
several banks, which should have been instruments for rejuvenating the economy, have
been bogged down leading to systemic crisis in the Banking sector. NPAs cause
economic loss to the country.
2) Even according to Petitioner, as on September 30, 2016, the total bank exposure
of the Petitioner was admittedly Rs. 45,655 Crores (Annexure C at page 32). As per the
data collected by Central Repository of Information on Large Credits, as on March 31,
2017, the total fund based outstanding of the Petitioner with banks was Rs. 33,842
Crores. As on 31st March 2016, an amount of Rs. 31,671 Crores (i.e., 94% of the
outstanding amount) was classified as NPA. As on 31st March 2017, this figure increased
to Rs. 32,864 Crores (i.e., 97% of the outstanding).
3) Without prejudice to the above, it is submitted that there existed several objective
facts that support the Order and the press release dated June 13, 2017 issued by the RBI
("the Press Release") and Directives to Banks as:
i. the Petitioner's account was in NPA even prior to March 31, 2016 (Rs. 31,671 Crores);
ii. on March 31, 2017, the Petitioner's account was in NPA to the extent of Rs. 32,864 crores;
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iii. the general position of NPAs country wide was drastic and required urgent action to be taken under
the IBC;
iv. on February 29, 2016, SBI had written to the Petitioner to declare its account NPA;
v. even according to the Petitioner its outstanding were about Rs. 45,695 Crores as on September 30,
2016; and
vi. the JLF restructuring of the Petitioner had proved ineffective and was nowhere near completion.
4) The directives of the RBI were thus, not on any "imaginary grounds" or "wishful
thinking". -what in law, the Petitioner would have to establish to have them quashed
(Bhikhubhai Patel v. State of Gujarat, MANU/SC/7399/2008 : (2008) 4 SCC 144 -
Paragraph 24 - cited by the Petitioner).
5) The law as to permissible classification is well settled and the judgments cited by
the Petitioners themselves lay down the following:
a) classification must be founded on an intelligible differentia which distinguishes persons grouped

together from others left out and that differentia must have a rational relation to the object sought to be
achieved by the statute (Union of India v. N.S. Rathnam & Sons, MANU/SC/0806/2015 : (2015) 10 SCC
681 - paragraph 14);
b) the person challenging the act of the State as violative of Article 14 has to show that there is no
reasonable basis for the differentiation between the two classes created. Article 14 prohibits class
legislation and not reasonable classification (Union of India v. N.S. Rathnam & Sons,
MANU/SC/0806/2015 : (2015) 10 SCC 681 - paragraph 13 @ page 695c);
c) the extent of reasonability of a statute has is in its efficiency to achieve the object sought to be achieve
by the statute (Union of India v. N.S. Rathnam & Sons, MANU/SC/0806/2015 : (2015) 10 SCC 681 -
paragraph 15 @ page 696 citing Aashirwad Films v. Union of India, MANU/SC/2635/2007 : (2007) 6
SCC 624); and
d) in making the classification, the legislature cannot certainly be expected to provide "abstract
symmetry". It can make and set apart the classes according to the needs and exigencies of the society and
as suggested by experience (MANU/SC/0033/1952 : AIR 1952 SC 75 - paragraph 44). [State of West
Bengal v. Anwar Ali Sarkar - An extreme case, unlike the present one, where the West Bengal Special
Courts Act, 1950 laid down substantially different rules for trial of offences and denied the procedure
under the Cr.P.C., imposed heavier liabilities, denied privileges, deprived the accused of the committal
procedure, deprived them of a de-novo trial in the case of transfer, deprived them of the right to call
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witness in defence and made them liable for conviction and punishment for major offences other than
those for which they had been charged or tried.]
6) The RBI Directives are reasonable and make a classification valid under Article
14, because the Press Release and the Directives to Banks issued by the RBI were for
giving effect to the economic policy contained in the IBC as well as the Ordinance and
the Order in the following rational manner:
a) the RBI constituted an Internal Advisory Committee ("IAC") to advise it in regard to the cases that may
be considered for reference under the IBC;
b) the IAC accessed information reported by the banks on Central Repository of Information on Large
Credits ("CRILC") as on March 31, 2017. From such information, out of the top 500 exposures of the
banking system the IAC segregated exposures which were wholly/partly classified as NPA ("List A");
c) from List A, the IAC identified the largest stressed cases (NPAs) using the objective filter of
companies where the banking exposure was more than Rs. 5000 Crores ("List B"); and
d) to ensure that the identification process does not include companies who have only recently faced
stress, the IAC identified the seasoned NPAs from List B, i.e., those companies which were classified as
NPA to the extent of more than 60% as on March 31, 2016 until March 31, 2017 ("List C").
Though there is reference of List "A", "B" and "C" in written submissions, no such list is found on record.
However facts are explained in above sub-paras.
7) Thus, contrary to the argument canvassed by the Petitioners, Respondent No. 1

has not arbitrarily identified 12 companies for action under the IBC by the Press Release.
The process adopted by the RBI for identifying the 12 entities was completely consistent
with the object of making quickest recovery of substantial economic value. The RBI
seeks to focus on the cases which have the twin criteria of being the largest and longest
standing NPAs. Such classification is based on an intelligible differentia, i.e., both
quantum (Rs. 5,000 Crores and 60% NPA) as well as length of outstanding (at least
fifteen months, i.e., from March 31, 2016) and has a nexus with the object of the IBC and
the Ordinance, viz., rapid recovery of the largest possible economic value for the country.
8) By the process of filtration adopted by IAC, Respondent No. 1 has shortlisted 12

companies for action under the IBC. These 12 companies constitute 25% of the total
NPAs of India. The combined value of their exposure is close to Rs. 1,78,032 Crores. The
classification of the largest and long standing NPAs is reasonable:
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a) it adopts scientific criteria selected by experts (the IAC) that seek to achieve the objects of the IBC and
the Ordinance;
b) it is based on the "needs and exigencies of the society", i.e., the need to attack the scourge of NPAs
urgently; and
c) it achieves targeting of 25% of the total NPAs - "abstract symmetry" is not required.
9) In any event, the Petitioner has not shown that there is no reasonable basis for the
classification (Union of India v. N.S. Rathnam & Sons, MANU/SC/0806/2015 : (2015)
10 SCC 681 - paragraph 13).
10) The Directive reflected in the Press Release is an economic measure by which
the RBI seeks to tackle the problem of NPAs. It is well settled that laws relating to
economic activities should be viewed with greater latitude and ought to be given some
play in the joints as they deal with complex problems that do not admit of strait-jacket
formula solutions. Every legislation, particularly in economic matters, is essentially
empiric and based on experimentation. Given the complexity of economic regulation
greater judicial restraint is shown when adjudging the validity of economic
legislation(R.K. Garg v. Union of India, MANU/SC/0074/1981 : (1981) 4 SCC 675 -
paragraphs 7 - 8 @ pages 690 and 691).
11) Banks have already initiated proceedings against Jyoti Structures, Electro steel
Steels Limited, Monet Ispat Limited and Amtek Auto Limited, some of the 12 companies
identified by the IAC. Any order would have serious and far reaching ramifications on
the entirety of proceedings to resolve, reconstruct and recover NPAs.
12) The RBI's decision has not been shown by the Petitioner to be either "so
outrageous as to be in total defiance of logic or moral standards" (Union of India v. G.
Ganayutham, MANU/SC/0834/1997 : (1997) 7 SCC 463 - paragraphs 14, 15, 27 and 31 -
cited by the Petitioner).
13) (i) It is only if a decision is "manifestly unjust or outrageous or directed to an

unauthorized end" that a decision can be set aside as arbitrary and unreasonable. (Vinod
Kumar v. State of Haryana MANU/SC/1097/2013 : (2013) 16 SCC - paragraph 25 - cited
by the Petitioner) The RBI Press Release/Directives are just and required in the public
interest, cannot by any stretch of the imagination be called outrageous and are directed
towards the end authorized by Section 35AA and the Order.
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14) The review by the Court is a secondary review and not a primary one (Union of
India v. G. Ganayutham, MANU/SC/0834/1997 : (1997) 7 SCC 463 - paragraphs 27 and
31 - cited by the Petitioner).
15) It is the decision making process and not the decision that an Article 226 Court
can review. (Vinod Kumar v. State of Haryana MANU/SC/1097/2013 : (2013) 16 SCC -
paragraph 24 - cited by the Petitioner)
16) Petitioner's alternative relief - Priority for package; at paragraph 2(1) of the
Application, the Petitioner seeks the following: "In the alternative without prejudice to
the aforesaid the Petitioner seeks a direction of this Hon'ble Court to the NCLT to
consider at the first instance the revival package that has been under discussion with the
banks before proceeding further with the petition."
Thereby, it is submitted that the Petitioner accepts the Press Release and the validity of the NCLT
proceedings against it but seeks a priority for its revival package. Such priority is not permissible under
the IBC. However, the Petitioner can always submit its revival package as a resolution applicant to the RP
under Section 30(1) of the IBC.
17) Finally, at paragraph 12 of its Additional Affidavit dated July 7, 2017 (at page
799F) the Petitioner has prayed for a period of six months to continue efforts of
restructuring under the RBI Circulars and to place the Petitioner in the category under
Para 4 of the Press Release. It is respectfully submitted that a prayer to continue under an
ineffectual restructuring process rather than the overriding new statutory one, is not
worthy of relief apart from being contrary to law.
18) No prejudice caused to the Petitioner: from what is stated herein above, it is clear
that the very package which was under consideration of the JLF can be considered by the
RP under the IBC under Section 30(1). In fact, the process under the IBC will be
structured by statute and confined by strict time lines for the corporate insolvency
resolution process. The process is designed to ensure that where a company can be made
viable it will have the best chance of doing so by a statutory and balanced
reconstruction/resolution of its debt under the supervision and guidance of experts and
the NCLT. Thus, no prejudice whatsoever will be caused to the Petitioner if SBI and SCB
or either of them have initiated and proceed against it under the IBC.
19) It is also submitted by Ld. Sr. Counsel on behalf of Respondent No. 1 & 2, that
because of appointment of IRP, the working of company will not be adversely affected
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and confirmed that it is provided in IBC and ensured that keeping in mind the scheme of
IBC, though IRP will be appointed the management of company will not be changed
because company is run by its officer and not by board of directors and thereby existing
working of the company will not be disturbed till time limit provided under the code
which is maximum 180 days with provision to extent it for further 90 days. During this
period IRP will see that whether company is able to come out from its debt liability by
appropriate restructuring formula.
20) The Banking sector is one of the largest and most crucial sectors in India. It
involves heavy financial and economic stakes of not only the banks themselves but also
industry and commerce in India as a whole apart from the public. Any interference with
this process formulated by RBI will prejudice the very significant economic reform
formulated by Parliament and the Government of India which was to bring value back in
the system. It will also have wide ranging repercussions not only in economic and
commercial terms but also for the public. The reliefs sought by the Petitioner will cause
damage to public interest and have a long-term impact. These are significant factors to be
taken into account whilst deciding interim relief.
16. The Learned counsel for Respondent No. 2 has submitted as under:
1) Writ Petition cannot lie restraining the Respondent No. 2-SBI from exercising its
legitimate statutory right under Section-7 of IBC. The IBC is a complete code, which has
given a specific statutory right to the Respondent No. 2 (Financial Creditor) to initiate
insolvency resolution process against the Petitioner (Corporate Debtor). In the instant
case all three requirements of Section-7 of IBC are satisfied viz.:
(A) A Financial Creditor (Respondent No. 2-State Bank of India)
(B) A Corporate Debtor (Petitioner-Essar Steel)
(C) A default in respect of a financial debt by the (Corporate Debtor-Essar Steel).
2) Once the three requirements of Section-7 are satisfied, the Respondent No. 2
herein, is statutorily entitled to file an application under Section-7 against the Petitioner
herein. After an application is filed and NCLT being the Adjudicating Authority is
satisfied, that it complies with the requirement of Section-7, a non-discretionary statutory
process takes over. Under Section 7(4), the NCLT is to determine the existence of default
within 14 days and either admit or reject the Section-7 application. On admission of the
application under Section-7, consequences as contemplated Chapter-4 would follow as
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matter of law. Hence, under Section-14, there is a moratorium on institution of suits,
transfer of assets, etc.; under Section-15, there is a public announcement of corporate
insolvency resolution process, under Section-16, appointment of interim resolution
professional ("IRP") by the Adjudicating Authority and under Section-17, the IRP takes
over the management of affairs of the corporate debtor and the powers of Board of
Directors or the powers of the corporate debtors stand suspended. These consequences
are statutory in nature and there is no discretion with either the NCLT or the financial
creditors in this regard. It is submitted that the Petitioners have not challenged this
statutory scheme.
3) Since the Respondent No. 2-SBI, has a statutory right to apply under Section-7,
the same can be invoked irrespective of the Respondent No. 1-RBI Press
Release/directive. It is submitted that, an application filed by the Respondent No. 2 under
Section-7 before the NCLT is in exercise of its statutory right and this right can always be
exercised by the Respondent No. 2, independently of directions given by the Respondent
No. 1. Seen in this light, the challenge to the Press Release of the Respondent No. 1 dated
13.06.2017/or any other directive cannot and will not take away or affect the validity of
the proceedings already initiated by the Respondent No. 2 before the NCLT.
4) The Petitioners' submission that JLF (Respondent No. 2 being lead consortium
banker) has agreed to restructuring proposal is false and contrary to the material on
record. It is submitted that, the Petitioners have not approached this Hon'ble Court with
clean hands and have suppressed vital information from this Hon'ble Court. It is the case
of the Petitioners that, the Respondent No. 2 led JLF has accorded approval to the
restructuring scheme. However, the record shows that no such approval has been granted
by the JLF, till date. There are many open issues and critical conditions in relation to the
restructuring proposal, which remain unresolved and pending the same, there cannot be
any question of JLF even finalizing the proposal much less, granting "in-principle" or for
that matter any approval per se to the restructuring scheme. It is further pertinent to note
that, though there were series of written communications between the Petitioner and the
Respondent No. 2 in respect of boundary conditions and pending issues pertaining to
restructuring scheme dating, as far back as June 2016, till date, both the parties have not
been able to resolve the pending issues. Moreover, the restructuring proposal/scheme was
not as per Respondent No. 1/RBI's guidelines/circulars pertaining to the restructuring of
loans. The latest letter in this regard sent by the Respondent No. 2 was on 17th June,
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2017 ("17th June Letter") to the Petitioner wherein, the Respondent No. 2 in clear terms
recorded more than 25 pending issues, in relation to the restructuring proposal, which
remained unresolved. The Petitioners were in receipt of the said letter before filing of the
present Petition. The said letter belies the case in the Writ Petition and therefore, is
extremely relevant and material to the submissions being canvassed by the Petitioners
before this Hon'ble Court. The Petitioners deliberately did not disclose the Letter dated
17th June in the Petition and have sought to mislead this Hon'ble Court into believing
that, in-principle approval to the restructuring scheme has been granted and it is only due
to Respondent No. 1/RBI's Directive, that the Respondent No. 2 has derailed the
restructuring talks and initiated the insolvency proceedings against the Petitioner before
the NCLT. The Petitioners have consented, accepted and acquiesced in the proceedings
being initiated by the Respondent No. 2-SBI before the NCLT.
5) The following letters/documents demonstrate that, the Petitioners were aware and
have consented to and accepted the proceedings being adopted by the Respondent No. 2
before NCLT:
6) The Email Notice of the JLF meeting issued by the Respondent No. 2 on 15th
June, 2017 (which is at Annexure V of the Additional Affidavit dated 13.07.2017 filed by
the Petitioner in the present proceedings) which specifies that: "We propose to hold a
meeting of Top Management of the lenders, under JLF, of Essar Steel India Limited at
State Bank of India, Corporate Centre, Madame Cama Road, Nariman Point, Mumbai at
10.30 a.m. on 22nd June, 17 (Thursday) at Board Room (18th Floor)."
7) The Petitioner's presentation (Page-919 to 929) before the Joint Lenders meeting
held on 22.06.17. This acquiescence and in any event acceptance and consent can be
borne out from the Petitioners" statement. "We have been informed that the Reserve
Bank of India (RBI) has directed lenders to file an application under NCLT process"
(Page-926 of Writ Petition)
8) The Petitioners have accepted that insolvency resolution process will take place
before the NCLT by stating that "We therefore request the lenders to provide a standstill
on the dues being paid to the banks through tagging till such time the process under
NCLT mechanism is put in place." (Page-926 of Writ Petition)
9) In fact, the presentation shows that, the Petitioners were aware and had no
serious objection to the IRP being appointed. "Concern on the resolution professional to
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be appointed - Request 3: We wish to also request the lenders to ensure that the role of
the Resolution Professional (under the NCLT process) is proposed asunder:-
(a) Allow the management team to continue to operate on day-to-day basis with checks and balances
already in place so as to ensure continuity of operations in order to sustain value of the company.
(b) Work in a cohesive manner with the Lenders and the Promoters/Company to draw up a suitable
financial package, which is to be implemented in a time bound manner". (Page-928 of Writ Petition)
10) In fact it is pertinent to note that the top management of the Petitioner including
Mr. Prashant Ruia attended the said meeting on 22.06.2017 as its seen from the
attendance sheet of the said meeting which is at Annexure-D to the Affidavit dated
13.07.2017 filed by the Respondent No. 2 - SBI in the present proceedings.
11) Thereafter, by letter dated 23.06.17 to the Respondent No. 2, the Petitioners
acknowledged (decision of lenders to take Petitioners to NCLT)"In view of the decision
of the lenders to take ESIL to National Company Law Tribunal ("NCLT") as per
directions of the Reserve Bank of India("RBI") for corporate insolvency resolution
process ("CIRP") under the insolvency and Bankruptcy Code, 2016 (IBC), we have
submitted to the member banks of the JLF our key requests which are quite critical for
ESIL to continue its operations without any disruption, further enhance its performance
in the interim period and to protect the interest of all stakeholders." (Page-934 of Writ
Petition) ) In fact the Petitioners even made suggestions regarding the role of IRP when it
is stated that "Accordingly, we are addressing this letter to reiterate our request made
during the meeting Yesterday that the resolution professional to be appointed by the
lenders should (a) work seamlessly with the ESIL management team and allow it to
operate on a day to day basis with checks and balance already in place so as to ensure
continuity of operations; and (b) work in a cohesive manner with the lenders and
promoters/personnel of ESIL to draw a suitable financial package and to implement the
same in a time bound manner with a view to sustain and preserve the value of ESIL. We
look forward to continuing to work with the lenders to ensure speedy resolution of issues
faced by ESIL and its successful turnaround in a time-bound and effective manner."
(Page-935 of Writ Petition)
12) By another letter dated 27.06.2017, the Petitioners requested for an interim
standstill on tagging payments in following words:
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13) "Subject: RBI Press release dated June 13, 2017 & Meeting of JLF on 22nd June
2017 - Request for an interim standstill on tagging payments. (Page-936 of Writ Petition)
14) By the said letter, the Petitioners made suggestion for the same, which would,
according to them, assist the company in sustaining its operations, during the time the
resolution plan was implemented under the aegis of NCLT." which will assist the
company in sustaining its operations during the time the Resolution Plan is implemented
under the aegis of NCLT."(Page-937 of Writ Petition)
15) By letter dated 30.06.2017 to the Respondent No. 2, the Petitioners noted that the
Respondent No. 2 was filing an application before the NCLT against the Petitioners and
IRP was likely to be appointed. The Petitioners herein, sought certain concession on
tagging until the IRP was appointed. "We understand that SBI is filing the application in
the NCLT for ESIL and IRP is likely to be appointed in the next couple of weeks. (Page-
939 of Writ Petition) "We need your urgent and immediate assistance to waive the
tagging with immediate effect until such time as the IRP is appointed. We understand that
once the IRP is appointed, he would be deciding on the matters in consultation with the
Committee of Creditors."(Page-939 of Writ Petition)
16) Thus, the Petitioners were aware that the insolvency proceedings were being
initiated by the Respondent No. 2 and accepted and consented to the same. Having agreed
and consented to the initiation of the proceedings under the IBC by the Respondent No. 2
and having noted and accepted that, the IRP would be appointed, the Petitioners are not
entitled to turn around and object to the 7 10 same. It is submitted that by reason of
having accepted the aforesaid proceedings unconditionally, the Petitioners are dis-entitled
to challenge the initiation of the proceedings by the Respondent No. 2 before the NCLT
by filing the Petition.
17) Mr. Ravi Kadam, learned Senior Counsel for respondent No. 2 has also referred
the preamble and statement of objectives and reasons for the Insolvency and Bankruptcy
Code, 2016 emphasizing that the code is nothing but a provision to complete the
insolvency resolution process in time bound manner for maximization of value of assets
and debts for long term and for huge amount, considering that the existing frame work for
insolvency and bankruptcy is inadequate, ineffective and results in undue delays and
resolution of the dispute. Thereby, it becomes clear that the existing mechanism under the
Provincial Insolvency Act, 1920 and pursuant to the Presidency Towns Insolvency Act,
1909 are considered as inadequate, ineffective and resulting into undue delays. However,
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this does not allow the State to derogate the judicial system in any manner whatsoever
and to empower the RBI to direct the adjudicating authority to act in particular manner.
Therefore, even if aim of the Code may be proper, the reason for such aims so also the
provisions of the Code should be in concurrence of constitutional mandates. However,
when such Code is not under challenge, I do not have to opine on such issues.
18) It is submitted that, the right to management of a company is not an absolute

right but, is always subject to law. Even under the provisions of the Companies Act,
2013, Section 242 states that, if the NCLT is of the opinion that the company's affairs
have been or are being conducted in a manner, which is prejudicial or oppressive to any
member or members, or prejudicial to public interest or in a manner prejudicial to the
interests of the company, the Tribunal may pass an order for the removal of the managing
director, manager or any of the directors of the company.
19) It is submitted that, the Insolvency Code in Section-17 provides that, the
management of the company shall vest with the IRP from the date of such resolution
professional's appointment. Furthermore, Section-17(1)(b) of the IBC provides that, the
powers of the board of directors of the corporate debtor shall stand suspended and be
exercised by the IRP. Section-19 of the IBC provides that, the management of the
corporate debtor should extend co operation to the IRP, as may be required in managing
the affairs of the corporate debtor. Therefore, it is submitted that, there is no vested right
of management of the Company and any right to the management of the Company, is
subject to law and liable to be exercised in accordance with law.
20) Prohibition cannot be issued against the judicial authority, a writ of prohibition
against a judicial authority cannot be exercised unless the authority
a. proceeds to act without or in excess of jurisdiction;
b. proceeds to act in violation of the principles of natural justice;
c. proceeds to act under law which is itself ultra vires or unconstitutional;
d. proceeds to act in contravention of fundamental rights.
22) It is not the case of the Petitioners that, the Hon'ble NCLT has exceeded its
jurisdiction. Moreover, the IBC specifically designates "NCLT" as the "Adjudicating
Authority" for the purposes of the insolvency proceedings initiated under the provisions
of the IBC. The Petitioners have nowhere in their Writ Petition, even alleged that the
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Hon'ble NCLT lacks the jurisdiction or is exceeding its jurisdiction in hearing the
insolvency proceedings initiated against the Petitioners. Therefore, in light of the above
there is no question of issuing any Writ, much less Writ of Prohibition against the
Hon'ble NCLT, as they are the statutory body vested with the jurisdiction of hearing the
insolvency proceedings, initiated under the provisions of IBC.
17. Whereas respondent No. 3 has submitted as under:
1) The Respondent No. 3 is a bank which is incorporated in the United Kingdom

and is regulated and supervised by the Prudential Regulatory Authority, United Kingdom.
The Respondent No. 3 had provided a loan facility of US$413,000,000.00 to Essar Steel
Offshore Limited, which is a company incorporated under the laws of Mauritius and a
wholly owned subsidiary of the Petitioner No. 1, pursuant to Facility Agreement dated
03.01.2014, as amended by amendment letter dated 07.02.2014 (hereinafter referred to as
the "Facility Agreement"). As a part of the Facility Agreement, the Petitioner No. 1 had
provided a guarantee for the due repayment of the aforesaid loan. It is thus clear that the
aforesaid facility was provided to an offshore entity by an offshore bank and the
transaction was executed outside the territory of India.
2) The Respondent No. 1 regulates banking companies in India under the Banking
Regulation Act, 1949, as amended (the "BR Act"). Under the BR Act, a 'banking
company' is defined as a "company which transacts the business of banking in India". In
view of the aforesaid, the Respondent No. 3 cannot be said to be a 'banking company'
under the provisions of section 5(c) read with section 5(d) of the Banking Regulation Act,
1949, as amended from time to time (hereinafter referred to as the "BR Act") for the
purpose of the transactions carried out beyond the territory of India. It therefore follows
that the Respondent No. 3 is not bound by the directions of the Respondent No. 1, by way
of its circulars or otherwise. It is, therefore, categorically stated that the Respondent No. 1
cannot and has not issued any directives to the Respondent No. 3 for proceeding against
the Petitioner No. 1 under the Insolvency and Bankruptcy Code, 2016 (hereinafter
referred to as the "IBC"), as has been done in the case of the Respondent No. 2.
Therefore, the action of the Respondent No. 3 to proceed against the Petitioner No. 1
under the IBC cannot be said to have been initiated pursuant to any of the directions of
the Respondent No. 1.
3) Even otherwise, the Respondent No. 1 has not issued any directive to the
Respondent No. 3 nor has Respondent No. 3 acted on the basis of any directive issued for
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filing proceedings against the Petitioner No. 1 under IBC. The same is evident from the
following:
i. Written Submissions of the Petitioner No. 1, the relevant extract of which reads as follows: "... It is
evident that no Directive is issued to the Standard Chartered Bank to initiate Insolvency Resolution
Process." [Page 26 of the Written Submissions of the Petitioner No. 1]
ii. The directive dated 15.06.2017 (page 947) issued by the Respondent No. 1 to the Respondent No. 2,
the relevant extract of which reads as follows: "In exercise of the powers conferred by the provisions of
the Banking Regulation Act, 1949, and the Banking Regulation (Amendment) Ordinance, 2017, the
Reserve Bank of India hereby directs State Bank of India to initiate insolvency resolution process, singly
or jointly with other lenders, under the provisions of the Insolvency and Bankruptcy Code, 2016 in
respect of the default committed by Essar Steel India Limited."
In view of the aforesaid, it is clear that the directive in question is not issued to the Respondent No. 3. It
may be pertinent to note that that since the Petitioner No. 1 is only challenging the Press Release in
respect of the said directive, the action of the Respondent No. 3 to approach the Respondent No. 4 under
the IBC falls beyond the scope of challenge contained in the captioned petition.
4) The Respondent No. 3 is not a part/member of the Joint Lenders Forum, which is
led by the Respondent No. 2 in the present case. The same is evident from the following:
i. The statement of the Petitioner No. 1 in the captioned petition, which reads as follows: "... It is evident
that having noticed the directives of the Reserve Bank of India to filed the petition before NCLT,
Ahmedabad, even Standard Chartered Bank which is not part of the joint lenders forum led by STATE
BANK OF INDIA, has also filed an identical petition before the IBC..." [page 19, paragraph 20 of the
captioned petition]
ii. Letter dated 04.04.2017 addressed by the Petitioner No. 1 to the Respondent No. 3, the relevant extract
of which reads as follows: "... Please note that as per the applicable laws of India and RBI regulations, the
Joint Lenders Forum (JLF) has been mandatorily constituted by Indian (Onshore) lenders of ESIL to
consider options for restructuring the debt of ESIL. SCB is not a part of the JLF and discussions being
held at this forum..." [Page 771 of the captioned petition]
iii. Minutes of the Core Committee Meeting (JLF) held on 09.05.2017, the relevant extract of which reads
as follows: "... Further, SCB being an unsecured creditor, cannot be ranked at par with secured lenders
and therefore, the issue cannot be addressed in JLF. The Company was further advised to resolve the
matter bilaterally with SCB at the earliest..."[Page 88; at page 90 of the captioned petition]
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iv. Minutes of the Board Meeting of the Petitioner No. 1 dated 15.05.2017, the relevant extract of which
reads as follows: "... The Board members deliberated on legal suit filed by Standard Chartered Bank with
regard to the loan availed by Essar Steel Offshore Ltd., wholly owned subsidiary of the Company for
which Corporate Guarantee was given by the Company. It was informed that dues payable to Standard
Chartered Bank is not forming part of the Debt Structuring proposal. The Board members opined that the
Company to have a dialogue with Standard Chartered Bank to explore possibility of repaying the
unsecured debt at a discount or issue CRPS on the same terms as per the Debt Restructuring proposal or
such other measures which will resolve the matter amicably." [Page 102; at page 103/A of the captioned
petition]
v. Letter dated 09.06.2017 addressed by the Petitioner No. 1 to the Respondent No. 3, the relevant extract
of which reads as follows: "a. JLF has been constituted by the Lenders to ESIL under the RBI Guidelines
and SCB is not a Lender to ESIL under the RBI Guidelines." [Page 778; at page 779 of the captioned
petition].
5) In view of the aforesaid, it is evident that the Respondent No. 3 was never a part
of any Joint Lenders Forum or in any discussions/process for restructuring the debts of
the Petitioner No. 1. Therefore, the contention of the Petitioner No. 1 that it was in
advance stage of negotiation with the lenders of the Petitioner No. 1 and any other
contentions based thereupon do not apply to the Respondent No. 3. While the Petitioner
No. 1 has claimed payment of Rs. 3467 Crores to its lenders since April 2016, no such
payment has been made by the Petitioner No. 1 to Respondent No. 3.
6) The contention of the Petitioner No. 1 that it is in the process of negotiation with
the Respondent No. 3 and hence the proceedings cannot be initiated against it under the
IBC is also not true. The fact is that there is a default committed by the Petitioner No. 1
in respect of payment of dues to Respondent No. 3. The same may be evident from the
following:
i. The Respondent No. 3 invoked the guarantee given by the Petitioner No. 1 vide its notice dated
07.12.2015 calling upon them to make payment under the said guarantee. [Page 748 to 749 of the
captioned petition]
ii. The Respondent No. 3 issued a notice dated 18.04.2016 to the Petitioner No. 1 under section 433 of the
Companies Act, 1956, (the IBC was not in effect as this time). [Page 750 to 752 of the captioned petition]
iii. The Petitioner No. 1, vide letter dated 24.01.2017, had proposed to repay the dues of the Respondent
No. 3 at the end of 25 years and offered to pay interest @ 1% per annum on the outstanding loan till the
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repayment. [Page 757 of the captioned petition] The said proposal was rejected by the Respondent No. 3
vide its letter dated 28.01.2017 as the same was untenable and virtually destroyed the value of the debt
owed to the Respondent No. 3. [Page 758 of the captioned petition].
iv. The Respondent No. 3, vide various correspondences dated 28.01.2017 [Page 758; at page 759 of the
captioned petition], 21.02.2017 [Page 760; at page 764 of the captioned petition], 22.03.2017 [Page 768;
at page 769 of the captioned petition], and 21.06.2017 [Page 781; at page 783 of the captioned petition],
had informed the Petitioner No. 1 about its intention to initiate action under the IBC pursuant to the
default committed by the Petitioner No. 1.
v. Nothing in the IBC states that if there are ongoing negotiations between the borrower and the financial
creditor, proceedings under the IBC cannot be initiated.
It can also be observed from the aforesaid that the Respondent No. 3 had expressed its intention to initiate
action against the Petitioner No. 1 under the IBC much before the Press Release was issued by the
Respondent No. 1. In the circumstances, it is false to the knowledge of the Petitioner No. 1 that the
initiation of proceedings under the IBC by the Respondent No. 3 was pursuant to the directive of the
Respondent No. 1 or that the same was triggered in view of the directive of the Respondent No. 1.
7) The contention of the Petitioner No. 1 that a bank can initiate proceedings under
the IBC only upon a direction under Section 35AA of the BR Act issued by the
Respondent No. 1 cannot be sustained. Section 35AA of the BR Act is only an enabling
provision under which the Respondent No. 1 can direct those banks to initiate insolvency
proceedings who otherwise have not done so. The said section cannot be interpreted to
mean that a financial creditor cannot otherwise initiate proceedings under the IBC
independently. If such an interpretation is to be accepted, then the provisions of the IBC
would be rendered otiose. This is further evident from the following provisions:
i. Section 2 of the BR Act: "2. Application of other laws not barred. - The provisions of this Act shall be
in addition to, and not, save as hereinafter expressly provided, in derogation of the Companies Act, 1956
(1 of 1956), and any other law for the time being in force."
ii. Section 238 of the IBC: "238. Provisions of this Code to override other laws. - The provisions of this
Code shall have effect, notwithstanding anything inconsistent therewith contained in any other law for the
time being in force or any instrument having effect by virtue of any such law."
8) The Respondent No. 3 is not a state within the meaning of Article 12 of the
Constitution of India, and therefore, the reliefs sought by the Petitioner No. 1 against the
Respondent No. 3 in the captioned petition, being in the nature of a writ, cannot be
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granted. In this regard, reliance is placed on the following decision of the Hon'ble High
Court of Gujarat:
 Ionic Metalliks v. Union of India, reported in MANU/GJ/0683/2014 : 2015 (2) GLH 156
9) The Petitioner No. 1, by way of the captioned petition, has sought a writ of
Prohibition from this Hon'ble Court insofar as it seeks a direction to the Respondent No.
4 to restrain from proceeding with the matters filed before it under the IBC. It is a well
settled position of law that a writ of prohibition must be issued only in rarest of rare
cases, and is normally issued only when the inferior court or tribunal (i) proceeds to act
without or in excess of jurisdiction, (ii) proceeds to act in violation of the rules of natural
justice, (iii) proceeds to act under law which is itself ultra vires or unconstitutional, or
(iv) proceeds to act in contravention of fundamental rights. In this regard, reliance is
placed of the following decision of the Hon'ble Supreme Court:
 Thirumala Tirupati Devasthanams & Anr. V. Thallappaka Ananthacharyulu & Ors., reported in
MANU/SC/0693/2003 : (2003) 8 SCC 134
10) No such case is made out by the Petitioners in the captioned petition. The
Petitioner No. 1, while approaching this Hon'ble Court, has suppressed various facts and
correspondences in respect of its dues payable to Respondent No. 3. These
correspondences clearly show that the Petitioner No. 1 was made aware of the intention
of the Respondent No. 3 to initiate proceedings under the IBC well before the press
release issued by Respondent No. 1. The Respondent No. 3 has been purposely dragged
into the present proceedings before this Hon'ble Court, as otherwise it would not have
been possible for the Petitioner No. 1 to achieve its ulterior object. From the aforesaid, it
is evident that no case has been made out by the Petitioners against the Respondent No. 3
in the captioned petition. In light of the aforesaid, the captioned petition is required to be
dismissed qua the Respondent No. 3 with exemplary costs.
18. As against that, learned advocate for the petitioner has pointed out different provisions of the
Code which is also relied upon by the respondents but their proposition are different inasmuch as, it is the
case of the petitioner that pursuant to such provisions, the management of the company rests in the hands
of the insolvency professional who may not be capable to run the company and, therefore, it would result
into end of running company for no valid reason.
19. Whereas, learned Senior Counsel Mr. Darius Khambhatta for the RBI has submitted, relying upon
different provisions of the Act being Sections 6 to 31 emphasizing that initiation of insolvency
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proceedings would not mean to declaring the company insolvent immediately but the Code provides for
an elaborate mechanism to restructure the company but in a time bound frame which is 180 days with
possibility of further extension for further 90 days only and, thereby, decision is to be arrived at within
270 days that whether restructuring is possible or not and if restructuring is not possible within such time
frame, then and then, company is to be declared insolvent. It is also submitted that during this period,
Company would carry on its business through its officers but without the control of Board of Directors
under the supervision of Interim Resolution Professional.
20. All such issues can be dealt with only if the provision of law is under challenge but only because
of such provision at this stage, it cannot be said that RBI has no authority to advise SBI to initiate
insolvency proceedings, for the simple reason that irrespective of such advise or direction, SBI can on its
own, initiate such proceedings and in that case, the issue regarding genuineness of such proceedings is to
be decided only by the adjudicating authority and not by the Writ Court.
21. Petitioner has relied upon the frame work for Revitalizing Distressed Assets in the Economy -
Guidelines on Joint Lenders' Forum (JLF) and Corrective Action Plan (CAP) issued by RBI on 26.2.2014
(page 885). However, in view of what is discussed herein above, at this stage, when this Court has not
determined the merits of insolvency petition, there is no reason to enter into further discussion on points
referred in such frame work.
22. Instead of placing any initial decision regarding issuance of any such direction, the respondent
No. 1 has produced on record a communication dated 15.6.2017 addressed to the respondent No. 2 and
forwarding a direction of same date to initiate insolvency resolution process singly and jointly with other
lenders against the petitioner. This direction nowhere discloses any classification and, therefore, there is
no reason to comment upon such communication and direction in any manner whatsoever because
otherwise it is in accordance with law.
23. The respondent No. 1 is relying upon the minutes of High Level Joint Lenders Meet held on
22.6.2017 (page 930) contending that there is reference of insolvency proceedings and, thereby petitioner
was aware about initiation of insolvency proceedings and, therefore, there is material suppression by the
petitioner when it is stated in paragraph 18 of the petition that none of the meetings with the Bankers ever
discussed in decision or proposal by the Bankers to ignore the restructuring process and initiate
proceedings before the NCLT under the Code. On such issue, hot and detailed arguments are submitted
emphasizing that when petitioner has suppressed material facts, petition needs to be thrown out at
threshold and summarily without entering into merits and for the same reasons, petitioner is neither
entitled to any final relief nor any interim relief whatsoever. When I am already disposing this petition
without granting any relief in favour of the petitioner, I do not wish to enter into such discussion on such
264
issue except to make it clear that petition is not disposed of solely on such ground and to that extent let it
be made clear that practically both the sides have their own perception in considering particular
information in particular manner and, therefore, I do not think that there is any suppression of material
facts which may ultimately mislead the Court in any manner whatsoever as apprehended by the
respondents. It seems that the Press Release on 22.6.2017 is in confirmation of communication dated
5.5.2017 by RBI to all Scheduled Commercial Banks regarding large stressed assets resolution wherein in
paragraph 5, all those issues were disclosed in Press Release dated 22.5.2017. Therefore, generally, it is to
be believed that press release would always be issued after some internal documentation or
correspondence and may not be based upon any oral decision. To that effect, the disclosure by learned
counsel for respondent No. 1 that there is no documentation in support of press release dated 13.6.2014
seems to be improper.
24. It is submitted by the petitioner that though there is reference of proceedings before NCLT in
Minutes of Meeting dated 22.6.2017, in fact, till 17.6.2017, practically, initiation was going on and in fact
respondent No. 3 Bank has addressed a letter to the petitioner seeking clarification on 25 open issues.
Therefore, it is submitted that when till 17.6.2017, restructuring process was going on, there was no
reason and in fact there was no disclosure of decision by the SBI to initiate proceeding under the Code
though they are in receipt of direction to that effect and, therefore, there is reason to believe that SBI has
filed the petition only because of direction of RBI though they want to settle the restructuring proposal
pursuant to discussion held for couple of months.
25. However, all such issues are to be dealt by NCLT because as already admitted by the petitioner
that the present petition is mainly against the RBI so as to confirm that their direction dated 13.6.2016 is
illegal. In any case, as already observed, when SBI has not initiated proceedings independent of such
direction, as already issued herein above, now, it would be for the NCLT to determine that whether such
petition is to be entertained or not.
26. Few of the citations, of which reference is made herein above while recording their oral
submissions were relied upon by both the sides but considering the facts and circumstances as discussed
herein above, I do not think that any of the citations except which are discussed hereinafter needs any
further discussion herein since the principle laid down in such decision is well settled and it does not
change the conclusion which is based upon the facts and circumstances also as discussed herein above.
27. In case of Barium Chemicals Ltd. (Supra) though it is confirmed that an order passed in exercise
of powers under Statute is liable to be quashed on the ground of mala fide, dishonesty or corrupt purpose,
petitioner has failed to show any such ground except arbitrariness or discrimination. But as already
discussed, it is difficult to assign allegation of arbitrariness with impugned press release. The emphasis on
265
opinion or necessity can be looked into by NCLT because discussion on factual merits would otherwise
prejudice the either side and, therefore, I have avoided to discuss the factual details to ascertain that
whether there was actual necessity to initiate proceedings under the Code or not. Similar is the position so
far as case of Bhikhubhai Vithalabhai Patel (Supra) is concerned.
28. With reference to Vinod Kumar (Supra), petitioner has submitted that if any power is exercised
on the basis of facts which do not exist or which are patently erroneous or inadmissible purpose or on
irrelevant grounds or without regard to relevant considerations or with gross unreasonableness, such
exercise of power will stand vitiated. Thereby, if such decision is manifestly unjust or outrageous or
directed to an unauthorized end, then, it can be quashed by the judicial authority but otherwise the scope
of judicial review is limited and the Courts are not to go into the merits of the decision but are concerned
with the decision making process only and, therefore, interference with the order of the administrative
authority is not permissible in absence of irrational, unreasonable or improper procedure. In view of such
fact, this case will also not be helpful to the petitioner.
29. Decision of Anwar Ali Sarkar (Supra) is with reference to speedy trial. Though conceptually it is
affecting the provision of IB Code, it would be applicable only if constitutional validity of such Code is
under challenge.
30. In N.S. Rathnam and Sons (Supra), there is consideration regarding validity of classification but
reading of para Nos. 13 to 16 does not confirm anything in favour of the petitioner.
31. In G. Ganayutham (Supra), the issue regarding judicial review of exercise of administrative or
statutory discretion has been taken care of but therein also reading of Wednesbury case and para No. 27
does not tilt the position in favour of the petitioner.
32. In case of Ruchi Soya Industries Limited (Supra) while dismissing the insolvency petition, the
learned Single Judge of Bombay High Court has in-fact relied upon the factual details that 98% of the
creditors in value of the total debts of the respondents have agreed to oppose the petition for winding up
and have been participating in the JLF's meeting to take steps for rectification and restructuring of the
respondent and some decisions taken by the JLF are under implementation and, therefore, a petition for
winding up at the instance of petitioner who claims about 1% of the total debts of the respondent was not
entertained. Therefore, such judgment would not be helpful to the petitioner because the factual details
are different in the present case.
33. In case of Ionic Metaliks (Supra), Division Bench of this Court has already confirmed that the
Standard Chartered Bank being a private Bank is not amenable to the writ jurisdiction of this Court and,
therefore, learned Senior Counsel and Advocate General Mr. Kamal Trivedi for such Bank is right in
266
submitting that petition needs to be dismissed so far respondent No. 3 - Bank is concerned. Otherwise
also, when no relief is granted in favour of the petitioner disposing the petition, there is no need to discuss
furthermore on such issue.
34. In Tirumala Tirupati Devasthanams (Supra) and U.P. Sales Tax Service Association (Supra), it is
held that writ of prohibition cannot be issued when the Court or Tribunal proceeded to act within their
jurisdiction, however, it is also made clear that it can be issued when such authority proceeds to act in
violation of rules of natural justice or in contravention of fundamental rights. Therefore, this petition is to
be disposed of, with observation that mandate of Hon'ble Supreme Court is to be followed by the NCLT.
35. Petitioner is also relying upon the judgment dated 1.5.2017 in Company Appeal (AT) No. 09 of
2017 between J.K. Jute Mills Co. Ltd. v. M/s. Surendra Trading Company by the National Company Law
Tribunal, wherein, it has been held that after relying upon several judgments of Hon'ble Supreme Court
that the word 'shall' used in IB Code is not mandatory but directory in nature subject to condition that for
adjudicating the time schedule prescribed under the Code the adjudicating authority must record reasons,
though the time is essence of the Code. Thereby, the appellate tribunal under the Code has relied upon the
judgment of Hon'ble Supreme Court which confirms that a provision in a Statute which is procedural in
nature, that places the word 'shall' may not be held to be mandatory if thereby no prejudice is caused.
Similarly the view which is being taken by this Court is also endorsed by the appellate bench while
directing the adjudicating authority to reject the application though it seems to be on technical ground but
it confirms that the adjudicating authority i.e. NCLT is not bound to admit the petition as a matter of rule
but it has to be decided in accordance with law for which generally reasonable opportunity needs to be
extended to all concerned.
36. It is specifically decided by the Appellate Tribunal that the procedural part of Section 7 or Section
9 or Section 10 are directory in nature and not mandatory.
37. I do not wish to discuss following citations any more since I am relying upon these judgments
which are cited and referred by respondents.
(a) Bhavesh D. Parish v. Union of India reported in MANU/SC/0392/2000 : 2000(5) SCC 471
(b) Senior Scale Bedi v. Union of India, reported in 1981(4) SCC 676
(c) Hirabhai Ashabhai Patel v. State of Bombay, reported in MANU/MH/0108/1955
(d) In Re the Special Courts Bill, 1978 reported in MANU/SC/0039/1978 : 1979(1) SCC 380
(e) Union of India v. Cipla Limited reported in MANU/SC/1345/2016 : 2017 (5) SCC 262
(f) Canara Bank v. P.R.N. Upadhyaya reported in MANU/SC/0542/1998 : 1998(6) SCC 526
267
(g) Sudhir Shantilal Mehta v. Central Bureau of Investigation reported in MANU/SC/1415/2009 : 2009(8)
SCC 1
(h) Basheshwar Nath v. Commissioner of Income Tax, reported in MANU/SC/0064/1958 : AIR 1959 SC
149
(i) Higenlal Kapadia v. Thomas Chemicals Ltd. in Appeal No. 333 of 1991 dated 22.4.1991 delivered by
the learned Single Judge of Bombay High Court.
38. Similarly, I am not discussing following judgments in detail because considering the facts and
circumstances emerging from the record, I do not wish to enter into further scrutiny or discussion so far as
suppression of material facts is concerned, more particularly, for the reasons that petition is though
disposed of, not solely on the ground of suppression of material facts and, therefore such issue is not
much material at this stage.
(a) Arunima Baruah v. Union of India reported in MANU/SC/7366/2007 : 2007(6) SCC 120
(b) S.J.S. Business Enterprises (P) Ltd. v. State of Bihar, reported in MANU/SC/0236/2004 : 2004(7)
SCC 166
(c) Prestige Lights Ltd. v. State Bank of India, reported in MANU/SC/3355/2007 : 2007(8) SCC 449
(d) S.P. Chengalvaraya Naidu v. Jagannath reported in MANU/SC/0192/1994 : 1994 (1) SCC 1
39. However, even after considering all such submissions and perusing supporting documents and
materials in support of such submissions, so also considering the statutory provisions, which is not
declared ultra vires till date, I am of the opinion that:
1) Filing of insolvency proceedings would be a decision of the concerned person,

who is entitled to file such application and, therefore, to that extent, it cannot be said
either respondent No. 2 or 3 can be restrained from filing such application in accordance
with law.
2) It is undisputed fact that filing of such application itself cannot be questioned or

that action cannot be quashed, but it goes without saying that such filing would not
amount to admitting or allowing the petition for insolvency without offering reasonable
opportunity to the company, which is requested to be taken into insolvency by any such
person. Therefore, the adjudicating authority being NCLT herein, which is constituted in
place of the Company Court, needs to decide on its own based upon factual details that
whether the insolvency petition is required to be entertained as such or not.
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3) For the purpose, adjudicating authority, certainly requires to extend hearing and
reasonable opportunity to the company to explain that why such an application should not
be entertained. In other words, filing of an application may not result into mechanical
admission of application as seen and posed by RBI in impugned press release. It would
be a decision based on judicial discretion by the adjudicating authority to deal with such
application in accordance with law and based upon facts, evidence and circumstance
placed before it. To that extent, prayers 7(b) and (c) cannot be granted.
4) Then, remains the only issue that whether RBI is empowered to publish press
release dated 13.6.2017 or not. So far as directions to the Bank to initiate insolvency
proceedings against companies, which are in debt to certain level or extent, the amended
provisions of the Banking Regulation Act, 1949 in the form of Sections 35(AA) and
(AB), certainly makes it clear that, now, RBI has such powers to issue certain directions
to certain Banks and banking companies so as to see that there is proper recovery of
public money or for any other such purpose. Therefore, the issuance of press release
alone, cannot be quashed and set-aside.
5) The issue that remains is now limited to the scrutiny that whether such press
release is in accordance with law and whether it results into infringing any fundamental
right of anybody, more particularly, present petitioner and whether it is arbitrary,
discriminatory and without applying proper provisions of concerned law.
6) On such issue, it has been submitted by learned senior counsel Mr. Mihir
Thakore for the petitioner that the power of issuing such direction is available to the RBI
u/s. 35(AA) and (AB) and, therefore, such sections needs to be referred and scrutinized
properly, which reads as under:-
"35(AA) Power of Central Government to authorise Reserve Bank for issuing directions
to banking companies to initiate insolvency resolution process: The Central Government
may by order authorize the Reserve Bank to issue directions to any banking company or
banking companies to initiate insolvency resolution process in respect of a default, under
the provisions of the Insolvency and Bankruptcy Code, 2016.
35 (AB) Power of Reserve Bank to issue directions in respect of stressed assets:
(1) Without prejudice to the provisions of section 35A, the Reserve Bank may, from time
to time, issue directions to the banking companies for resolution of stressed assets.
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(2) The Reserve Bank may specify one or more authorities or committees with such
members as the Reserve Bank may appoint or approve for appointment to advise banking
companies on resolution of stressed assets."
7) The bare reading of Section 35(AA) makes it clear that the RBI is authorised to
issue directions to initiate insolvency resolution process in respect of a default, and
explanation makes it clear that the default has the same meaning as assigned to it in
Clause (12) of Section 3 of the Insolvency and Bankruptcy Code, which means non-
payment of debt when whole or any part or installment of the amount of debt has become
due and payable and is not repaid by the debtor or the corporate debtor as the case may
be. Therefore, when it is undisputed fact that the petitioner company has not paid its debt
to the tune of more than Rs. 32,000 Crores at the end of 31.3.2017 and when total debt is
more than Rs. 45,000 Crores, it is clear and obvious that RBI is authorised to direct any
banking company to initiate insolvency resolution process.
8) However, the petitioner has pressed and submitted that when Section 35(AB)
provides for direction for resolution of stress assets and when process of restructuring is
on-going with JLF since long, the decision of the RBI to initiate insolvency resolution
process against the petitioner is arbitrary. In support of such direction, petitioner has
submitted that by impugned press release when RBI has classified the companies in two
categories i.e. (1) with fund and non-fund based outstanding amount greater than Rs.
5,000/- Crores with 60% or more classified as non-performing accounts by Bank as of
March 31, 2016 and (2) rest of the companies; such classification is irrational,
discriminatory and arbitrary inasmuch as there is no consideration of any material
whatsoever for coming to such conclusion that why companies having outstanding
amount of more than Rs. 5,000 Crores with 60% or more non-performing accounts and
that too as on 31.3.2016, because petitioner company has deposited approximately Rs.
3,500/- Crores during last 15 months, more particularly, when for rest of the companies,
resolution plan is to be fixed within six months and not immediately.
9) In support of such submission, heavy reliance is placed on Central Government's

resolution through its Ministry of Finance dated 5.5.2017, which reads as under:-
"In exercise of the powers conferred by Section 35AA of the Banking Regulation Act, 1949 (10 of 1949),
the Central government hereby authorizes the Reserve Bank of India to issue such directions to any
banking companies which may be considered necessary to initiate insolvency resolution process in
respect of a default, under the provisions of the Insolvency and Bankruptcy Code, 2016"
270
10) It is emphasized that in fact the Central Government has authorised the RBI to
issue such direction, but while doing so the condition is that RBI has to consider
necessity to initiate insolvency resolution process in respect of a default and, therefore,
there must be a consideration of necessity of filing insolvency proceeding. Thereby, in
other words, it is submitted that only because of such directions by Central Government
or RBI, insolvency resolution process is not to be initiated mechanically, but before
initiating such process, the RBI must consider the necessity to do so and for such
consideration, there must be some substance and there must be speaking order after
affording reasonable opportunity to the concerned litigant.
11) Several Judgment are cited in support of all such submissions which are dealt
with separately and referred in paragraph while recording submissions of the concerned
litigants. However, none of such citation confirms that an administrative order requires
hearing and reasons may be disclosed for such decision. It may be recollected here that if
there is any representation against any company and if decision is taken based upon such
feedback, then, probably authority needs to call upon the company to explain against
such representation, but when RBI has categorically confirmed that their decision is
based upon the advise received from their Internal Advisory Committee, and more
particularly, when decision is to the effect that the companies which have outstanding
debt with more than 60% non-performing accounts for more than a year beyond Rs.
5,000 Crores, the concerned Bank should initiate insolvency proceeding at the earliest. It
cannot be said that there is classification of companies in any nature whatsoever. So far
as identifying disclosure in paragraphs 3 and 4 of press release dated 13.6.2017 as
classification is concerned, in fact there is no classification because in paragraph 4 also, it
is stated that for rest of the companies against whom advise is issued for initiating
insolvency resolution proceedings at the earliest, wherein petitioner No. 1 includes the
concerned Banks, which finalised a resolution plan within six months and if resolution
plan is not agreed upon by companies within six months, then in those cases also, Banks
are required to file insolvency proceedings. Therefore, practically, there is no
classification, but only time schedule is given that companies whose debt is more than
Rs. 5,000 Crores, which is totaling 25% of current gross NPA of the country, insolvency
proceedings need to be initiated at the earliest and in rest of the companies, if resolution
plan could not be finalised within six months, then, insolvency proceedings should be
initiated. Therefore, there is no direction that insolvency proceeding is to be initiated only
against particular company(ies) and not to be initiated against any particular
271
company(ies). It goes without saying that any action is to be started with someone and
may not lie against all at the time. It also goes without saying, as already recorded herein
above that for filing any such proceeding, none of the financial company or Bank
requires either the permission or direction from RBI for other agency or authority
because it is their independent and absolute right to initiate any such proceeding/s.
Therefore also, when respondents No. 2 and 3 can initiate insolvency proceedings
irrespective of any such directions, either by RBI or by any other authority, it cannot be
said that direction by RBI or filing of petition by respondents No. 2 and 3 is unwarranted
or arbitrary. However, as already discussed herein above, filing of petition is different
from admitting or allowing the petition and to that extent, this Court has issued notice to
ascertain, affirm and reconfirm the position that it would be solely at the discretion of the
adjudicating authority either to admit the petition and to proceed further in accordance
with law or to refuse to admit the petition. It is also clear that such decision of the
adjudicating authority, would be a judicial determination and, therefore, such authority
has to deal with the rival submissions and factual details on the subject before taking any
decision. Thereby, such adjudicating authority cannot be considered as mere rubber-
stamp authority at the hands of RBI or any other institution. In view of above facts, the
petition needs to be disposed of with certain observations when petitioner is not entitled
to any relief's as prayed in this petition.
12) However, before concluding the petition, one has to deal with the submission of
the petitioner that considering the provisions of Insolvency and Bankruptcy Code, 2016,
filing of petition would result into admitting the petition within 14 days being mandate of
the NCLT under the Act, and it would result into drastic impact on the day to day
functioning of the company and its process of restructuring the affairs of the company so
as to survive. It is contended that on admission of the petition under Insolvency and
Bankruptcy Code, 2016, if Interim Resolution Professionals are to be appointed
mechanically, without considering the facts and circumstances and without offering an
opportunity to finalise the restructuring plan, which is at the advance stage, and thereby,
if control of the Board of Director is withdrawn, then, suppliers would not continue to
supply raw-materials, which would result into closure of all units and thereby,
retrenchment of 4500 employees' for no valid reasons, more particularly when company
is functioning at its 80% capacity and doing well to cope-up with the competitive market
against non-availability of gas (fuel) from Government and against dumping of similar
product from foreign countries whereby there is imbalance in production because of final
272
profit. Though it may seem to be an attractive argument, in my humble opinion, at this
stage, in a petition under Article 226 of the Constitution of India, I do not wish to explore
all such issues and to determine anything precisely because, ultimately, all such issues
would be raised before NCLT, which has to ascertain that whether there is reason to
admit the insolvency resolution process immediately or not.
At this stage, though this Court has to decide the matter based upon the facts,
circumstance and evidence, so also applicable law, I could not resist to apprehend that
allowing foreign countries to dump similar goods, which is made by Indian companies,
would certainly result into an invitation to old colonial system because, ultimately, the
business groups, who are having huge turnover in particular manner, would have
impressive control over administration. But, when petitioner has not challenged the
provision of Insolvency and Bankruptcy Code, I have not to deal with such issue at this
stage except to dispose of this petition, more particularly, when there is no scope of
granting interim relief in favour of the present petitioner. Refusal of interim relief is
obvious because petitioner company is in debt of more than Rs. 45,000 Crores for couple
of years, its NPA was more than Rs. 32,000 Crores in last year and more than Rs. 31,000
Crores in previous year. It is also clear that when total debt is more than Rs. 45,000
Crores, there is no option, but to leave the issue at the discretion of the lenders to take
appropriate steps in accordance with law, thereby, without interference of this Court
under the constitutional mandate. However, at the cost of repetition, it is made clear that
factual details and on-going process of restructuring plan and other details would be
taken care of by NCLT before taking any decision on merits.
40. Conclusion:-
(A) The Respondent No. 1 RBI has to be careful while issuing press releases; it must be in consonance
with the Constitutional Mandates, based upon sound principles of Law, but in any case should not be in
the form of advise, guidelines or directions to judicial or quasi-judicial authorities in any manner what so
ever;
(B) Since the press release is referring the earlier press release dated May 22, 2017, and since in such
press release there is reference of S4A - Scheme for Sustainable Structuring of Stressed Assets, which is
also introduced on the same day i.e. 13.6.2017; it would be appropriate for RBI to see that benefit of all
its schemes is equally offered and extended to all without any discrimination. It is quite clear and obvious
that Court has to see that there is no arbitrariness or discrimination by State or its authorities.
273
(C) It cannot be held that directions under reference is in nature of classification or such classification is
irrational, unjust, arbitrary or discriminatory; but it would be appropriate for RBI to see that benefit of all
its schemes is equally offered and extended to all without any discrimination. Therefore relief in terms of
para 7(a) cannot be granted.
(D) It cannot be held that Banking Company is not entitled to initiate insolvency proceedings without the
directions of the RBI u/s. 35AA of BRA. Therefore relief in terms of para 7(b) cannot be granted.
(E) It cannot be held that directives of RBI under reference by impugned press release is binding upon
SCB and therefore SCB is bound to consider the restructuring proposal by the petitioner, wherein
petitioner has offered to start payment of dues only after 25 years and that too only with 1 % interest.
Therefore relief in terms of para 7(c) cannot be granted.
(F) Only because SCB has corresponded to SBI for its proposal with reference to JLF activities, it cannot
be held that SCB could not have initiated insolvency proceedings but it has done it only because of RBI
guidelines by way of press release. Therefore relief in terms of para 7(c) cannot be granted.
(G) Provisions of IBC may be drastic to some extent, but since it is part of statue which is yet not
declared unconstitutional and therefore they are to be followed, but in consonance with Constitutional
mandate by all concerned i.e.
(1) Not to act upon it mechanically and that all provisions may not be treated mandatory but it could be
treated directive only based upon facts, circumstances and evidence available before the authority
(judgment dated 1.5.2017 in Company Appeal (AT) No. 09 of 2017 between J.K. Jute Mills Co. Ltd. v.
M/s. Surendra Trading Company by the National Company Law Tribunal);
(2) Without being guided by any advice or directions in any form or nature viz: impugned press release.
There is reason to say so because RBI has tried to do so and changed its document when called upon to
explain their stand; and
(3) Thereby it is obvious that adjudicating authority may though proceed in accordance with Law, there
should not be undue pressure on it by administration and period of pendency of present petition can
certainly be considered as reasonable ground to count the time limit from the date of receipt of writ of this
order.
(H) So far factual details of Petitioner Company with reference to its activities and exercise of
restructuring through JLF is concerned, it would be appropriate not to enter into any determination on
such point since that would be the subject matter before the Adjudicating Authority under IBC (i.e.
NCLT) and therefore it is left open for it to consider it for its determination in accordance with Law, to
274
avoid any prejudice to either party by discussion and determination on any such issue at this stage by this
Court, where core issue is whether there is reasonable classification by the RBI and not that whether
insolvency proceedings should be admitted or continued or not. Therefore, relief in terms of para 7(d)
cannot be granted.
(I) For the same reason, issue of suppression of material facts or false statement is not much material at
this stage because to decide that information or fact if at all suppressed or false is whether material or not
would require same exercise and that may prejudice either side. Moreover, petition can be disposed of
even without determining such issue and therefore no determination is required on such issue.
(J) Pursuant to decision in Ionic Metaliks (supra), no writ can be issued against SCB and therefore
petition stands dismissed against Respondent No. 3 SCB. Factual details between the Petitioner and SCB
has been avoided to be discussed further because this Court has not to decide the validity or proprietary of
action by SCB against the petitioner when petition by SCB against petitioner is pending before the NCLT
and therefore discussion and determination on factual issues may prejudice either side.
41. In view of the above facts and circumstances, the present petition stands disposed of with above
observation/conclusions in para 40.
275
IN THE HIGH COURT OF ALLAHABAD
Writ - C Nos. 30285 and 30033 of 2017
Appellants: Sanjeev Shriya and Ors.

Vs.
Respondent: State Bank of India and Ors.
Judges/Coram:
Hon'ble Justice Sh. M. C. Tripathi, J.
Counsels:
For Appellant/Petitioner/Plaintiff: Aditya Singh, Navin Sinha and Rahul Agarwal
For Respondents/Defendant: A.S.G.I., Anadi Krishna Narayana, Satish Chaturvedi and Siddharth
Subject: Banking
Subject: Insolvency
Acts/Rules/Orders:
 Chartered Accountants Act, 1949 - Section 6;

 Constitution Of India - Article 226;
 Insolvency And Bankruptcy Code, 2016 - Section 2(e),
276

 Insolvency And Bankruptcy Code, 2016 - Section 9;
 Limited Liability Partnership Act 2008 - Section 2;
 Recovery Of Debts And Bankruptcy Insolvency Resolution And Bankruptcy Of Individuals And
Partnership Firms Act, 1993 - Section 19,
 Recovery Of Debts And Bankruptcy Insolvency Resolution And Bankruptcy Of Individuals And
Partnership Firms Act, 1993 - Section 19(3)
Cases Referred:
 alcutta Discount Company Limited vs. Income Tax Officer, Companies District, I and Anr.
MANU/SC/0113/1960;
 Punjab National Bank Ltd. vs. Shri Vikram Cotton Mills and Anr. MANU/SC/0032/1969;
 Oshi Foods Limited and Ors. vs. State Bank of India MANU/MP/0202/1997;
 Karnataka State Financial Corporation vs. N. Narasimahaiah and Ors. MANU/SC/1212/2008;
 Whirlpool Corporation vs. Registrar of Trade Marks, Mumbai & Ors. MANU/SC/0664/1998;
 Allahabad Bank vs. Canara Bank & Another MANU/SC/0262/2000;
 Kailash Nath Agarwal and Ors. vs. Pradeshiya Industrial & Investment Corporation of U.P. Ltd. and
Anr. MANU/SC/0114/2003;
 Eureka Forbes Limited vs. Allahabad Bank and Ors. MANU/SC/0322/2010;
 Commercial Tax Officer, Rajasthan vs. Binani Cements Ltd. and Anr. MANU/SC/0121/2014;
 Madras Petrochem Ltd. and Ors. vs. BIFR and Ors. MANU/SC/0088/2016;
 Pegasus Assets Reconstruction P. Ltd. vs. Haryana Concast Limited and Ors. MANU/SC/1489/2015
Disposition:
Disposed off
277
JUDGMENT
Hon'ble Justice Sh. M.C. Tripathi, J.
1. Heard Shri Navin Sinha, Senior Advocate assisted by Aditya Singh, Rahul Agarwal, K.K.
Wadhwa, Avirudh Wadhwa, Anandava Handa and Vipul Kumar for the petitioner in Writ C No. 30285 of
2017 and Shri M.L. Lahoti assisted by Shri Dinesh Kakker and Shri Akash Chandra Maurya for the
petitioners in the connected Writ C No. 30033 of 2017 and Shri Satish Chaturvedi & Shri Siddharth for
the respondents.
2. In both the writ petitions, the petitioners are assailing the orders dated 6.7.2017 passed by the
Debt Recovery Tribunal, Allahabad in Original Application No. 238/2017 (State Bank of India vs. LML
Limited and Ors.).
3. The facts of both the writ petitions, according to the petitioners, in brief are that the petitioners
are the guarantors of M/s. L.M.L. Limited, Kanpur, which was declared as 'Sick Industrial Company' by
the Board of Industrial and Financial Reconstruction on 8.5.2007. The State Bank of India (in brevity,
SBI) had filed the Original Application No. 238 of 2017 under Section 19(3) of the Recovery of Debts
Due to Banks and Financial Institutions Act, 1993 (in short, the Act of 1993) before the Debt Recovery
Tribunal (in brevity, DRT), Allahabad for recovery of Rs. 72,75,29,053.71 against the company (in
liquidation) as the principal borrower and Deepak Singhania, Sanjeev Shreya and Anurag Kumar
Singhania/the petitioners as the guarantors with following reliefs:-
"(a) That a recovery certificate be issued against all the defendant Nos. 1 to 4 to pay
jointly and severally to applicant the sum of Rs. 72,75,29,053.71 together with interest
from 28.03.2017 @ 6.5% average annual yield on annual compounding basis on the sum
of Rs. 72,75,29,053.71 till the actual realization with all cost, charges and expenses that
may be incurred from the date of filing of application till payment/realisation by the
applicant in respect of the said hypothecated goods and immovable properties mortgaged
as aforesaid and interest thereon as aforesaid and the costs of this application.
(b) That this Hon'ble Tribunal may be pleased to order for the sale of said hypothecated
assets and equitably mortgaged properties described in para (5.5) of the application and
appropriation of the net sale proceed in or towards satisfaction of said amount mentioned
in prayer (a) thereof.
278
(c) That in the event of the net sale proceeds realized from the said the immovable
properties as aforesaid being insufficient to cover the amounts mentioned in prayer (a)
hereof, remaining outstanding may be recovered from the sale of personal movable and
immovable properties of defendants Nos. 2 to 4.
(d) That such further and other relief may be granted to the applicant as the nature and
circumstances of the case may require and as this Hon'ble Court may deem fit."
4. The case was registered as I.A. No. 1013/17. The petitioners, who have been arrayed as
defendants Nos. 2 to 4 moved an application seeking stay of the proceeding before the DRT, Allahabad
against them. On 6.7.2017 the DRT heard both the parties and passed the impugned order, staying
proceeding against the first respondent i.e. M/s. L.M.L. Limited, a Public Limited Company/borrower on
the basis of an order passed by the National Company Law Tribunal (in brevity, NCLT), Allahabad dated
30.5.2017 in Company Petition No. IB (55) ALD/2017, imposing a Moratorium on legal proceedings
under Section 14 of the Insolvency and Bankruptcy Code, 2016 (in short, IBC, 2016) and directed the
petitioners to give the details of pending applications with foreign authorities for permanent immigration
or visa or travelling permits; details of properties they are having in foreign lands and in India; details of
business exclusively or under partnership in foreign lands and in India; details of all their movable and
immovable assets including bank accounts deposits on affidavits and they have been directed to file their
written statement. The order of the DRT dated 6.7.2017 reads as under:-
"Ld. Counsel Sri S.K. Srivastava is present on behalf of the applicant bank.
Ld. counsel Sri Dinesh Kakkar is present on behalf of the defendants.
Counsel for the bank submitted that he does not want to file any reply to I.A. No. 1013/17
without prejudice to his right to argue on legal issues.
With the concurrence of parties case is taken up for hearing on I.A. No. 1013/17.
Ld. counsel for the bank submitted that order produced by defendants is binding upon
only upon defendant No. 1 and bank has every right to proceed against guarantors and
their personal properties as such proceedings cannot be stayed even in the light of orders
passed by National Company Law Tribunal dt. 30.5.2017.
Counsel for the defendants to rebut said contentions referred Section 238 of Insolvency
and Bankruptcy Code, 2016 and submitted that this Act has overriding effect upon
Recovery of Debts Due to Banks & Financial Institutions Act, 1993 and further it is a
subsequent Act so even otherwise the provisions of Insolvency and Bankruptcy Code will
279
prevail upon the Act, 1993. It is argued on behalf of defendants that in case creditors
failed to adopt restructuring then company will go into litigation and bank will recover its
dues as per orders of NCLT.
He further submitted that as per Section 231 of Insolvency and Bankruptcy Code
jurisdiction of civil court is barred in respect of matters pending before NCLT.
He further referred proviso to Section 14 provides provision for restructuring and in view
of said proviso O.A. of the bank is liable to be stayed.
He further referred Section 3(10) of Insolvency and Bankruptcy Code, definition of

creditor of Insolvency and Bankruptcy and submitted that in the said provisions the bank
come within the ambit of creditor.
I have heard the Ld. Counsel for the parties.
At the outset this Tribunal is to say that DRT constituted under Recovery of Debts Due to
Banks & Financial Institutions Act, 1993 is not a civil court so provisions of Section 231
of Insolvency and Bankruptcy Code are not applicable and argument advanced is
misconceived one.
In fact by taking shelter of order dt. 30.5.2017 passed by Hon'ble NCLT the defendants
intends to stall proceeding initiated by the bank against borrower and guarantor
simultaneously, as it is argued on behalf of defendants that in case creditors failed to
adopt restructuring then company will go into liquidation and bank will recover its dues
as per orders of NCLT.
I have given thoughtful consideration to matter in issue. In this case applicant bank has
filed application under Section 19 of Recovery of Dues Due to Banks & Financial
Institutions Act, 1993 for recovery of Rs. Rs. 72,75,29,053.71 (Rs. Seventy two crores,
seventy five lacs, twenty nine thousand, fifty three and paise seventy one only) on
27.3.2017 and as per directions of this Tribunal took steps through registered post on
26.4.2017. The defendants received the summons so sent and put their appearance on
15.5.2017 i.e. the date fixed and thereafter bank supplied copy of O.A. and defendants
sought adjournment to file written statement and keeping in view facts and circumstances
of case 30 days time was granted to defendants for filing written statement. Further, in
order dated 19.5.2017 this Tribunal categorically observed and advised the parties to the
effect that this is a high value case and it is expected that parties to lis will assist this
Tribunal for day to day hearing.
280
The defendants instead of filing reply opted to prefer one petition under Insolvency and
Bankruptcy Code, 2016 after initiation of recovery proceedings by certain bank.
At this stage, counsel for the defendant No. 1 to 4 interrupted and stated that AGM of the
bank Miss Sujata Chandra was present before Hon'ble NCLT on 30.5.2017 and order was
passed in her presence.
It appears that defendant No. 1 has moved to Hon'ble NCLT as counter blast or to delay
the present proceedings, but this Tribunal is bound by the provisions of statute, but it is
apparent that just to delay the recovery proceedings defendants have opted to file petition
before Hon'ble NCLT taking advantage of provisions of said Act. I concur with the
arguments advanced on behalf of defendants that provisions of Insolvency and
Bankruptcy Code will prevail over. Recovery of Debts Due to Banks & Financial
Institutions Act, 1993 but as far as corporate entity is concerned and certainly against
other defendants there is neither any specific order by Hon'ble NCLT nor there is any
restriction by the said Court to proceed against individual guarantors/mortgagors. The Ld.
Counsel for defendants have referred various provisions of Insolvency and Bankruptcy
Code, but that pertains to company only. Ld. Counsel for defendants have failed to quote
and show any provision which may direct or suggest to discontinue proceedings against
individual guarantors/mortgagors.
I am of the considered opinion that order dt. 30.5.2017 passed by Hon'ble NCLT is qua
proceedings against defendant No. 1 only which is a corporate entity and there is no order
to restrain proceedings against individual guarantors/mortgagors who gave their personal
guarantees and offered their personal securities and present proceedings can continue
against them. The applicant bank in the interim prayer has prayed for restraining the
defendant No. 2 to 4 from transferring, alienating or otherwise dealing with the
hypothecated goods and mortgaged properties, so in the meantime I would like to direct
defendant No. 2 to 4 to disclose following information:-
(i) Details of pending applications with foreign authorities for permanent immigration or
visa or travelling permits.
(ii) Details of properties they are having in foreign lands and in India.
(iii) Details of business exclusively or under partnership in foreign lands and in India.
(iv) Details of all their movable and immovable assets including bank accounts deposits
on affidavits.
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(v) Further defendants are directed to submit copy of their Aadhar Cards.
Further defendant No. 2 to 4 are directed to file their written statement within 07 days
failing which they would be liable to pay cost of Rs. 50,000/- as it is a high value case
and this Tribunal has already advised parties to lis for day to day hearing.
However, proceedings against defendant No. 1 will be in abeyance till further orders of
Hon'ble NCLT.
Post the matter on 13.7.2017 for further proceedings."
5. The petitioners are directors of the company (in liquidation) and they had inter alia executed a
Deed of Guarantee dated 28.3.2005 in favour of the first respondent in pursuance of a Multi Partite
Agreement dated 28.3.2005. The petitioners were defendant Nos. 2 to 4 in the impugned proceedings
before the Tribunal. It has also been averred that the petitioners were not actively involved in the day-to-
day operation of the company (in liq.). The first respondent initiated proceedings being Original
Application No. 238 of 2017 (State Bank of India vs. M/s. LML Limited and orders) under the Act of
1993 before the DRT, Allahabad claiming that the second respondent failed to abide by the MPA dated
28.3.2005 and defaulted in the payments due to the SBI and prayed the reliefs, which have been quoted as
above. An interim order was passed by the Debt Recovery Tribunal in the said proceeding on 30.3.2017
requiring the defendants therein to disclose particulars/properties/assets specified by the first respondent.
In the aforesaid proceeding, it has also been prayed by the SBI that the defendants may be restrained from
disposing of the properties/assets while the proceeding is pending consideration.
6. Meanwhile, M/s. L.M.L. Limited approached to the NCLT, Allahabad by preferring a Company
Petition under Section 10 of the IBC, 2016 being Company Petition No. IB(55)/Ald/2017 (In Re: LML
Limited) seeking initiation of the Corporate Insolvency Resolution Procedure in terms of the IBC, 2016
and asked for following reliefs in terms of Section 13 of the IBC 2016:-
"1. To admit the Application filed by the Corporate Applicant Company and pass an
order for initiating the corporate insolvency resolution process under Section 10 of the
Insolvency and Bankruptcy Code, 2016.
2. To cause a public announcement of the initiation of corporate insolvency resolution

process and calling for submissions of claim under Section 15 of the Code, and
3. To declare a moratorium in terms of Section 14 of the Insolvency and Bankruptcy

Code, 2016."
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7. In the said proceeding, an order dated 30.5.2017 was passed by the NCLT in the Company
Petition in question. The relevant portion of the order reads as under:-
"6. In view of the above stated factual and legal position of the case, we find that the
corporate debtor has complied with requirement of Section 10 of the Code. In view of the
above the present Application deserved to be allowed hence is allowed. We admit the
petition for declaring Moratorium with Consequential Directions which are given as
under:-
i. That the order of moratorium u/s. 14 shall have effect from 30.05.2017 till the
completion of corporate insolvency resolution process or until this Bench approves the
resolution plan under sub-section (1) of Section 31 or passes an order for liquidation of
corporate debtor under Section 33 as the case may be.
ii. That the Bench hereby prohibits the institution of suits or continuation of pending suit
or proceedings against the corporate debtor including execution of any judgment, decree
or order in any court of law, tribunal, arbitration panel or other authority, transferring,
encumbering, alienating or disposing of by the corporate debtor any of its assets or any
legal right or beneficial interest therein, any action to foreclose, recover or enforce any
security interest created by the Corporate Debtor in respect of its property including any
action under the SARFESI Act, 2002, the recovery of any property by an owner or lessor
where such property is occupied by or in the possession of the corporate debtor.
iii. That the supply of essential goods or services to corporate debtor, if continuing, shall
not be terminated or suspended or interrupted during the Moratorium period.
iv. That the provisions of Section 14 sub-section (1) shall not apply in such transactions
as may be notified by the Central Government in consultation with any financial sector
regulator.
v. That this Bench hereby appoints Mr. Anil Goel, Registration No. IBBI/1PA-001/IP-
00020-2016-2017/1623, Address: AAA Insolvency Professional LLP, E-10A, Kailash
Colony, New Delhi-110048, email id:anilgoel@akgindia.in as Interim Resolution
Professional to carry the functions as mentioned under Insolvency and Bankruptcy Code,
2016.
vi. That the public announcement of corporate insolvency resolution process be made
immediately as specified under Section 13 of the Code and calling for submissions of
claim under Section 15 of the code.
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Vii. An authentic copy of this order be issued to parties including Interim Resolution
Professional after the completion necessary formalities.
In view of the above, the Application is admitted and accordingly stand disposed of."
8. Thereafter the Insolvency Professional appointed by the N.C.L.T. had issued a public
announcement dated 2.6.2017, inter alia inviting claims from the creditors of the company (in liq.) to be
submitted latest by 13.6.2017. The same was also published in daily newspapers "Financial Express" and
"Amar Ujala". It was also intimated to the Bombay Stock Exchange and the National Stock Exchange.
The Insolvency Professional had also issued notice for meeting of the creditors of the company inter alia
containing the agenda for the meeting of the Committee of Creditors of the first respondent. The said
notice alongwith the agenda was also sent to the first respondent. It is also relevant to indicate that the
Insolvency Professional in the said notice had acknowledged that as many as 1000 claims have been
received from various creditors of the second respondent. Even the first respondent had also filed claim
before the Insolvency Professional and had participated in the said meeting, which was held on 29.6.2017.
The DRT issued notice on the application being I.A. No. 1013/2017 on 29.6.2017 and passed the
impugned order dated 6.7.2017 whereby it has kept the proceedings against the first petitioner in
abeyance but simultaneously it has proceeded against the petitioners as guarantors.
9. In this backdrop, Shri Navin Sinha, Senior Advocate assisted by Ms. Anandava Handa appearing
for the petitioners in Writ C No. 30285 of 2017 submitted that the writ petition raises substantial question
of law, as to whether the SBI can be allowed to pursue proceedings under Section 19(3) of the Act of
1993 for recovery of loan amount taken by the company (in liquidation) before the Debt Recovery
Tribunal, Allahabad against the petitioners, who are guarantors when the National Company Law
Tribunal (NCLT) has already issued moratorium under Section 14 of the Insolvency and Bankruptcy
Code, 2016 and stayed proceedings in respect of the company (in liquidation). The DRT has failed to take
notice of Part-III of IBC, 2016 and the provisions of IBC 2016 will prevail over the provisions of the Act
of 1993. Since the petitioner is director of the company (in liquidation), he is statutorily bound to provide
his assistance to the resolution professional appointed under the IBC 2016 for the company (in
liquidation) by the NCLT. It has also been submitted that the entire proceeding before the DRT is
completely without jurisdiction precisely in the backdrop that once the proceeding has already been
commenced under the IBC 2016 and the Moratorium under Section 14 of IBC 2016 has already been
issued and even the parties have put their appearance before the Insolvency Professionals, then the
impugned proceedings only against the guarantors of a principal debtor are per se bad specially in the
present situation where there is a legal bar/moratorium against the principal debtor imposed by operation
of law IBC 2016. The NCLT has already ceased of the process of insolvency resolution against the
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company (in liq.) under IBC 2016. Moreover, the SBI has also put their appearance in the said
proceedings regarding its claim, and by no stretch of imagination the DRT could adjudicate any claims of
alleged debt of the second respondent and without determination of debt the DRT cannot proceed against
the guarantors. The SBI at no point of time had disassociated itself from the proceeding before the NCLT
but it is actively participating in the proceeding.
10. Shri Navin Sinha, Senior Advocate also submitted that the entire action so initiated by the DRT is
in teeth of aim and object of IBC 2016, which has been enacted to consolidate and amend the laws
relating to re-organisation and insolvency resolution of corporate persons, partnership firms and
individuals in a time-bound manner for maximisation of value of assets of such persons, to promote
entrepreneurship, availability of credit and balance the interest of all the stakeholders including alteration
in the order of priority of payment of Government dues and to establish an Insolvency and Bankruptcy
Board of India, and for matters connected therewith or incidental thereto. Much emphasis has been placed
on the provisions contained under Section 2(e), 3(2), 3(7), 3(8), 3(11), 3(12), 5(8) and on the basis of
aforesaid provisions he has tried to submit that the said provisions would also attract in the case of
guarantor.
11. It has been submitted that Section 6 in Chapter II (Corporate Insolvency Resolution Process) of
the IBC 2016 deals with persons who may initiate corporate insolvency resolution process. Section 7
deals with initiation of corporate insolvency resolution process by financial creditor and Section 8 deals
with insolvency resolution by operational creditor. Sections 10 deals with initiation of corporate
insolvency resolution process by corporate application. Section 12 relates to time limit for completion of
insolvency resolution process. Section 14 relates to Moratorium and provides that on the insolvency
the following namely the institution of suits or continuation of pending suits or proceedings against the
corporate debtor including execution of any judgment, decree or order in any court of law, tribunal,
arbitration panel or other authority.
12. In this backdrop, it has been submitted that so far as interest of the SBI and other creditors are
concerned, their interest are protected and even the property cannot be alienated. He has also placed
reliance on Section 30, which provides the manner in which a resolution plan may be submitted by a
resolution applicant. There are no restrictions on who can be a resolution applicant, subject to compliance
with all applicable laws. This may even include promoters of the corporate debtor. This provision would
facilitate proposals from persons interested in commercially viable but insolvent business to rescue such
entities, creating value for all stakeholders in the process. The resolution professional shall submit each
resolution plan, which conforms to be criteria provided under clauses (a) to (f) of Section 30(2) to the
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committee of creditors who shall approve a resolution plan by a 755 majority of voting shares. Only,
thereafter, the resolution professional may submit the resolution plan as approved by the committee of
creditors to the Adjudicating Authority as per provisions contained under Section 30(6) of the IBC 2016.
Section 31 deals with approval of resolution plan and provides that if the Adjudicating Authority is
satisfied that the resolution plan as approved by the committee of creditors under sub-section (4) of
section 30 meets the requirements as referred to in sub-section (2) of section 30, it shall by order approve
the resolution plan which shall be binding on the corporate debtor and its employees, members, creditors,
guarantors and other stakeholders involved in the resolution plan. Sufficient safeguards are provided in
favour of creditors. Even Section 31(2) provides that where the Adjudicating Authority is satisfied that
the resolution plan does not confirm to the requirements referred to in sub-section (1), it may, by an order,
reject the resolution plan.
13. Shri Navin Sinha, Senior Advocate has also apprised to the Court that Section 60 in Chapter VI
relates to Adjudicating Authority for corporate persons. Section 60(1) provides that the adjudicating
authority, in relation to insolvency resolution and liquidation for corporate persons including corporate
debtors and personal guarantors thereof shall be the National Company Law Tribunal having territorial
jurisdiction over the place where the registered office of the corporate person is located. There is great
deterrence provided under the IBC 2016 against the corporate debtors and even the punishment for
contravention of moratorium or the resolution plan has also been provided in Section 74 of the IBC 2016.
After giving a glance to the legislative provisions of the IBC, 2016 he has placed reliance on the array of
parties, which have been made by the SBI before the Debt Recovery Tribunal, Allahabad in Original
Application in question wherein M/s. L.M.L. Limited, a Public Limited Company (borrower) has been
arrayed as first respondent; Shri Sanjeev Shriya (the petitioner in Writ C No. 30285 of 2017) has been
arrayed as third respondent (director/guarantor) and Shri Deepak Singhania as well as Shri Anurag Kumar
Singhania (the petitioners in the connected Writ C No. 30033 of 2017) have been arrayed as second and
fourth respondents respectively.
14. It has been submitted that the first relief has been sought for issuance of recovery certificate
against all the defendants to pay jointly and severally to the SBI a sum of Rs. 727529053.71 together with
interest from 28.3.2017 and the third relief has been sought before the DRT to the extent that in the event
of the net sale proceeds realized from the said immovable properties as aforesaid being insufficient to
cover the amounts mentioned in prayer (a) hereof, remaining outstanding may be recovered from the sale
of personal movable and immovable properties of defendants Nos. 2 to 4. Once the application under IBC
2016 is pending consideration; the amount has not been quantified and moreover, proceeding has already
been stayed against the first respondent in the Company Law Tribunal, then by no stretch of imagination,
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the liability can be fastened on the guarantors and no final relief can be accorded in the matter. The entire
exercise is futile and nullity and as such, this Court should come for rescue and reprieve to the petitioners
otherwise the petitioners would suffer irreparable loss and injury. In support of his submission, he has
placed reliance on the judgments of Apex Court in Calcutta Discount Company Limited vs. Income Tax
Officer, Companies District, I and another MANU/SC/0113/1960 : AIR 1961 SC 372; Punjab National
Bank Ltd. vs. Shri Vikram Cotton Mills and another in Civil Appeal No. 1957 & 1958 of 1966 decided on
17.9.1969 reported in Punjab National Bank Ltd. vs. Shri Vikram Cotton Mills and another
MANU/SC/0032/1969 : AIR 1970 SC 1973; Oshi Foods Limited and Ors. vs. State Bank of India
MANU/MP/0202/1997 : 1997 (2) MPLJ 643; Karnataka State Financial Corporation vs. N.
Narasimahaiah and Ors. MANU/SC/1212/2008 : AIR 2008 SC 1797 and Whirlpool Corporation vs.
Registrar of Trade Marks, Mumbai and Ors. MANU/SC/0664/1998 : (1998) 8 SCC 1.
15. Shri M.L. Lahoti assisted by Shri Dinesh Kakker, appearing for the petitioners in the connected
writ petition, vehemently contended that while passing the order impugned dated 6.7.2017 learned Debt
Recovery Tribunal had made certain passing observations that the respondents had deliberately moved to
the NCLT as a counterblast or just to delay the present proceeding, only with this object the
defendants/respondents have opted to file petition before the NCLT taking advantage of the provisions of
IBC, 2016. At this stage, such view was unwarranted. He further made submissions that even though
learned DRT was of the view that the IBC, 2016 will prevail over the Act of 1993 as far as corporate
entity is concerned but contrarily, it has proceeded against the other guarantors/defendants. Learned DRT
has also erred in law while interpreting the order passed by the NCLT that there is neither any specific
order by the NCLT nor there is any restriction by the said Court not to proceed against individual
guarantors/mortgagors. He has also placed reliance on various provisions of IBC, 2016, which pertain not
only to the company but also to the individual guarantors/mortgagors. While making submission, learned
counsel for the petitioners has vehemently contended that learned DRT has failed to consider that there
are already various safeguards in the IBC, 2016 wherein the interest of creditors are protected. In this
backdrop, he submitted that there was no deliberate attempt by the respondents/petitioners to delay the
proceeding and once the amount/debt is not crystallized as yet, then there was no occasion for the
Tribunal to proceed in the matter.
16. On the other hand, Shri Satish Chaturvedi, learned counsel appearing for the respondent bank has
vehemently opposed the writ petitions by submitting that against the impugned order the petitioners have
got efficacious alternative remedy to assail the validity of the impugned order passed by the Debt
Recovery Tribunal before the Debt Recovery Appellate Tribunal. Admittedly, the petitioners are defaulter
guarantors and they cannot escape from the liabilities due to the bank. Under the IBC 2016 there is no
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restriction not to proceed against the guarantor independently. The rights of the respondent bank are
flowing from the deed of guarantee executed by the petitioners. The respondent bank has rightly
proceeded to enforce the rights available to it. The Debt Recovery Tribunal has jurisdiction to continue
with the proceeding against the guarantors of the principal debtor. The recovery proceedings were
initiated by the respondent bank before the DRT prior to the order of the NCLT dated 30.5.2017 and the
said order does not come in the way of the DRT in proceeding against the petitioners as guarantors. The
proceeding can be initiated against the guarantors for recovery of debt for the reasons mentioned in the
order under challenge. Learned NCLT has passed the injunction order relating to the Corporate Debtor
and there is no order in favour of the guarantors including the petitioners. There is no legal bar for the
DRT not to continue with the proceeding against the guarantors of the principal debtor and the deed of
guarantee makes it clear that the proceeding can very well continue in the DRT against the
petitioners/guarantors. The IBC 2016 pertains to insolvency resolution, whereas the Act of 1993 pertains
to recovery of dues, and as such there is no overlapping between them. The DRT has not committed any
error in proceeding against the petitioners/guarantors.
17. Much emphasis has been drawn on paragraphs 11, 14, 15, 16, 17, 18, 64 and 65 of the Deed of
Guarantee, which has been executed between the parties on 28.3.2005 (Annexure No. 2 to the writ
petition). In clause-2 of the deed of agreement it has been mentioned that in the event of any default on
the part of the borrower to comply with or perform any of the terms, conditions and covenants contained
in the said Multi-Partite Agreement, the guarantors shall, upon demand, forthwith pay to the lender
without demur all the amounts payable by the borrower to it under the said Multi-Partite Agreement.
Clause-4 of the deed of agreement provides that the guarantors shall also indemnify and keep the lender
indemnified against all losses, damages, costs, claims and expenses whatsoever, which the lender may
suffer, pay or incur by reason of or in connection with any such default on the part of the borrower
including legal proceedings taken against the borrower and/or the guarantors for recovery of the monies
referred to in Clause 1 above. The proceeding can go on simultaneously and the Tribunal cannot be
restrained not to proceed in the matter against the guarantors. He has placed reliance on the judgments of
Apex Court in Allahabad Bank vs. Canara Bank and another MANU/SC/0262/2000 : (2000) 4 SCC 406;
Kailash Nath Agarwal and Ors. vs. Pradeshiya Industrial & investment Corporation of U.P. Ltd. and
another MANU/SC/0114/2003 : (2003) 4 SCC 305; Eureka Forbes Limited vs. Allahabad Bank
MANU/SC/0322/2010 : 2010 LawSuit (SC) 261; Commercial Tax Officer, Rajasthan vs. M/s. Binani
Cements Ltd. & another MANU/SC/0121/2014 : JT 2014 (3) SC 378; Madras Petrochem Limited and
another vs. Board for Industrial and Financial Reconstruction and others MANU/SC/0088/2016 : (2016) 4
SCC 1; Pegasus Assets Reconstruction Private Limited vs. Haryana Concast Limited and another
MANU/SC/1489/2015 : (2016) 4 SCC 47 in support of his submission.
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18. In order to appreciate the controversy in hand, Sections 2, 3, 5, 6, 7, 8, 10, 12, 14, 31, 33 and 60
of the IBC 2016 are extracted below:-
"2. Application
The provisions of this Code shall apply to--
(a) any company incorporated under the Companies Act, 2013 or under any previous
company law;
(b) any other company governed by any special Act for the time being in force, except in
so far as the said provisions are inconsistent with the provisions of such special Act;
(c) any Limited Liability Partnership incorporated under the Limited Liability Partnership
Act, 2008;
(d) such other body incorporated under any law for the time being in force, as the Central
Government may, by notification, specify in this behalf; and
(e) partnership firms and individuals, in relation to their insolvency, liquidation,

voluntary liquidation or bankruptcy, as the case may be.
3. Definitions
In this Code, unless the context otherwise requires,--
(1) "Board" means the Insolvency and Bankruptcy Board of India established under sub-
section (1) of section 188;
(2) "bench" means a bench of the Adjudicating Authority;
(3) "bye-laws" mean the bye-laws made by the insolvency professional agency under
section 205;
(4) "charge" means an interest or lien created on the property or assets of any person or
any of its undertakings or both, as the case may be, as security and includes a mortgage;
(5) "Chairperson" means the Chairperson of the Board;
(6) "claim" means--
(a) a right to payment, whether or not such right is reduced to judgment, fixed, disputed,
undisputed, legal, equitable, secured or unsecured;
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(b) right to remedy for breach of contract under any law for the time being in force, if
such breach gives rise to a right to payment, whether or not such right is reduced to
judgment, fixed, matured, unmatured, disputed, undisputed, secured or unsecured;
(7) "corporate person" means a company as defined in clause (20) of section 2 of the
Companies Act, 2013, a limited liability partnership, as defined in clause (n) of sub-
section (1) of section 2 of the Limited Liability Partnership Act, 2008, or any other
person incorporated with limited liability under any law for the time being in force but
shall not include any financial service provider;
(8) "corporate debtor" means a corporate person who owes a debt to any person; (9) "core
services" means services rendered by an information utility for--
(a) accepting electronic submission of financial information in such form and manner as
may be specified;
(b) safe and accurate recording of financial information;
(c) authenticating and verifying the financial information submitted by a person; and
(d) providing access to information stored with the information utility to persons as may
be specified;
(10) "creditor" means any person to whom a debt is owed and includes a financial
creditor, an operational creditor, a secured creditor, an unsecured creditor and a decree
holder;
(11) "debt" means a liability or obligation in respect of a claim which is due from any
person and includes a financial debt and operational debt;
(12) "default" means non-payment of debt when whole or any part or instalment of the
amount of debt has become due and payable and is not repaid by the debtor or the
corporate debtor, as the case may be"
5. Definitions
In this Part, unless the context otherwise requires,--
(1) "Adjudicating Authority", for the purposes of this Part, means National Company
Law Tribunal constituted under section 408 of the Companies Act, 2013;
(2) "auditor" means a chartered accountant certified to practice as such by the Institute of
Chartered Accountants of India under section 6 of the Chartered Accountants Act, 1949;
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(3) "Chapter" means a Chapter under this Part;
(4) "constitutional document", in relation to a corporate person, includes articles of

association, memorandum of association of a company and incorporation document of a
Limited Liability Partnership;
(5) "corporate applicant" means--
(a) corporate debtor; or
(b) a member or partner of the corporate debtor who is authorised to make an application
for the corporate insolvency resolution process under the constitutional document of the
(c) an individual who is in charge of managing the operations and resources of the
(d) a person who has the control and supervision over the financial affairs of the
corporate debtor;
Chapter II
Corporate Insolvency Resolution Process
6. Persons who may initiate corporate insolvency resolution process.
Where any corporate debtor commits a default, a financial creditor, an operational

creditor or the corporate debtor itself may initiate corporate insolvency resolution process
in respect of such corporate debtor in the manner as provided under this Chapter.
7. Initiation of corporate insolvency resolution process by financial creditor
(1) A financial creditor either by itself or jointly with other financial creditors may file an
application for initiating corporate insolvency resolution process against a corporate
debtor before the Adjudicating Authority when a default has occurred.
Explanation.--For the purposes of this sub-section, a default includes a default in respect

of a financial debt owed not only to the applicant financial creditor but to any other
financial creditor of the corporate debtor.
(2) The financial creditor shall make an application under sub-section (1) in such form
and manner and accompanied with such fee as may be prescribed.
(3) The financial creditor shall, along with the application furnish
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(a) record of the default recorded with the information utility or such other record or
evidence of default as may be specified;
(b) the name of the resolution professional proposed to act as an interim resolution
professional; and
application under sub-section (2), ascertain the existence of a default from the records of
an information utility or on the basis of other evidence furnished by the financial creditor
under sub-section (3).
(a) a default has occurred and the application under sub-section (2) is complete, and there
is no disciplinary proceedings pending against the proposed resolution professional, it
may, by order, admit such application; or
(b) default has not occurred or the application under sub-section (2) is incomplete or any
disciplinary proceeding is pending against the proposed resolution professional, it may,
by order, reject such application:
Provided that the Adjudicating Authority shall, before rejecting the application under
clause (b) of sub-section (5), give a notice to the applicant to rectify the defect in his
application within seven days of receipt of such notice from the Adjudicating Authority.
(a) the order under clause (a) of sub-section (5) to the financial creditor and the corporate
debtor;
(b) the order under clause (b) of sub-section (5) to the financial creditor, within seven
days of admission or rejection of such application, as the case may be."
8. Insolvency resolution by operational creditor
(1) An operational creditor may, on the occurrence of a default, deliver a demand notice
of unpaid operational debtor copy of an invoice demanding payment of the amount
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involved in the default to the corporate debtor in such form and manner as may be
prescribed.
(2) The corporate debtor shall, within a period of ten days of the receipt of the demand
notice or copy of the invoice mentioned in sub-section (1) bring to the notice of the
operational creditor--
(a) existence of a dispute, if any, and record of the pendency of the suit or arbitration
proceedings filed before the receipt of such notice or invoice in relation to such dispute;
(b) the repayment of unpaid operational debt--
(i) by sending an attested copy of the record of electronic transfer of the unpaid amount
from the bank account of the corporate debtor; or
(ii) by sending an attested copy of record that the operational creditor has encashed a
cheque issued by the corporate debtor.
Explanation.-- For the purposes of this section, a "demand notice" means a notice served
by an operational creditor to the corporate debtor demanding repayment of the
operational debt in respect of which the default has occurred."
10. Initiation of corporate insolvency resolution process by corporate application.
(1) Where a corporate debtor has committed a default, a corporate applicant thereof may
file an application for initiating corporate insolvency resolution process with the
(2) The application under sub-section (1) shall be filed in such form, containing such
particulars and in such manner and accompanied with such fee as may be prescribed.
(3) The corporate applicant shall, along with the application furnish the information
relating to--
(a) its books of account and such other documents relating to such period as may be
specified; and
(b) the resolution professional proposed to be appointed as an interim resolution

professional.
(4) The Adjudicating Authority shall, within a period of fourteen days of the receipt of
the application, by an order--
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(a) admit the application, if it is complete; or (b) reject the application, if it is incomplete:
Provided that Adjudicating Authority shall, before rejecting an application, give a notice
to the applicant to rectify the defects in his application within seven days from the date of
admission of the application under sub-section (4) of this section.
12. Time-limit for completion of insolvency resolution process
(1) Subject to sub-section (2), the corporate insolvency resolution process shall be
completed within a period of one hundred and eighty days from the date of admission of
the application to initiate such process.
(2) The resolution professional shall file an application to the Adjudicating Authority to
extend the period of the corporate insolvency resolution process beyond one hundred and
eighty days, if instructed to do so by a resolution passed at a meeting of the committee of
creditors by a vote of seventy-five per cent of the voting shares.
(3) On receipt of an application under sub-section (2), if the Adjudicating Authority is

satisfied that the subject matter of the case is such that corporate insolvency resolution
process cannot be completed within one hundred and eighty days, it may by order extend
the duration of such process beyond one hundred and eighty days by such further period
as it thinks fit, but not exceeding ninety days:
Provided that any extension of the period of corporate insolvency resolution process
under this section shall not be granted more than once.
14. Moratorium
(1) Subject to provisions of sub-sections (2) and (3), on the insolvency commencement
date, the Adjudicating Authority shall by order declare moratorium for prohibiting all of
the following, namely:--
(a) the institution of suits or continuation of pending suits or proceedings against the
corporate debtor including execution of any judgment, decree or order in any court of
law, tribunal, arbitration panel or other authority;
(b) transferring, encumbering, alienating or disposing of by the corporate debtor any of

its assets or any legal right or beneficial interest therein;
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(c) any action to foreclose, recover or enforce any security interest created by the
corporate debtor in respect of its property including any action under the Securitisation
and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002;
(d) the recovery of any property by an owner or lessor where such property is occupied
by or in the possession of the corporate debtor.
(2) The supply of essential goods or services to the corporate debtor as may be specified
shall not be terminated or suspended or interrupted during moratorium period.
(3) The provisions of sub-section (1) shall not apply to such transactions as may be
notified by the Central Government in consultation with any financial sector regulator.
(4) The order of moratorium shall have effect from the date of such order till the
completion of the corporate insolvency resolution process:
Provided that where at any time during the corporate insolvency resolution process
period, if the Adjudicating Authority approves the resolution plan under sub-section (1)
of section 31 or passes an order for liquidation of corporate debtor under section 33, the
moratorium shall cease to have effect from the date of such approval or liquidation order,
as the case may be.
31. Approval of resolution plan
(1) If the Adjudicating Authority is satisfied that the resolution plan as approved by the
committee of creditors under sub-section (4) of section 30 meets the requirements as
referred to in sub-section (2) of section 30, it shall by order approve the resolution plan
which shall be binding on the corporate debtor and its employees, members, creditors,
guarantors and other stakeholders involved in the resolution plan.
(2) Where the Adjudicating Authority is satisfied that the resolution plan does not
confirm to the requirements referred to in sub-section (1), it may, by an order, reject the
resolution plan.
(3) After the order of approval under sub-section (1),--
(a) the moratorium order passed by the Adjudicating Authority under section 14 shall
cease to have effect; and
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(b) the resolution professional shall forward all records relating to the conduct of the
corporate insolvency resolution process and the resolution plan to the Board to be
recorded on its database.
33. Initiation of liquidation
(1) Where the Adjudicating Authority,--
(a) before the expiry of the insolvency resolution process period or the maximum period
permitted for completion of the corporate insolvency resolution process under section 12
or the fast track corporate insolvency resolution process under section 56, as the case may
be, does not receive a resolution plan under sub-section (6) of section 30; or
(b) rejects the resolution plan under section 31 for the non-compliance of the
requirements specified therein, it shall--
(i) pass an order requiring the corporate debtor to be liquidated in the manner as laid
down in this Chapter;
(ii) issue a public announcement stating that the corporate debtor is in liquidation; and
(iii) require such order to be sent to the authority with which the corporate debtor is
registered.
(2) Where the resolution professional, at any time during the corporate insolvency
resolution process but before confirmation of resolution plan, intimates the Adjudicating
Authority of the decision of the committee of creditors to liquidate the corporate debtor,
the Adjudicating Authority shall pass a liquidation order as referred to in sub-clauses (i),
(ii) and (iii) of clause (b) of sub-section (1).
(3) Where the resolution plan approved by the Adjudicating Authority is contravened by
the concerned corporate debtor, any person other than the corporate debtor, whose
interests are prejudicially affected by such contravention, may make an application to the
Adjudicating Authority for a liquidation order as referred to in sub-clauses (i), (ii) and
(iii) of clause (b) of sub-section (1).
(4) On receipt of an application under sub-section (3), if the Adjudicating Authority

determines that the corporate debtor has contravened the provisions of the resolution
plan, it shall pass a liquidation order as referred to in sub-clauses (i), (ii) and (iii) of
clause (b) of sub-section (1).
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(5) Subject to section 52, when a liquidation order has been passed, no suit or other legal
proceeding shall be instituted by or against the corporate debtor:
Provided that a suit or other legal proceeding may be instituted by the liquidator, on
behalf of the corporate debtor, with the prior approval of the Adjudicating Authority.
(6) The provisions of sub-section (5) shall not apply to legal proceedings in relation to
such transactions as may be notified by the Central Government in consultation with any
financial sector regulator.
(7) The order for liquidation under this section shall be deemed to be a notice of
discharge to the officers, employees and workmen of the corporate debtor, except when
the business of the corporate debtor is continued during the liquidation process by the
liquidator.
CHAPTER VI
ADJUDICATING AUTHORITY FOR CORPORATE PERSONS
60. Adjudicating Authority for corporate persons
(1) The Adjudicating Authority, in relation to insolvency resolution and liquidation for
corporate persons including corporate debtors and personal guarantors thereof shall be
the National Company Law Tribunal having territorial jurisdiction over the place where
the registered office of the corporate person is located.
(2) Without prejudice to sub-section (1) and notwithstanding anything to the contrary
contained in this Code, where a corporate insolvency resolution process or liquidation
proceeding of a corporate debtor is pending before a National Company Law Tribunal, an
application relating to the insolvency resolution or bankruptcy of a personal guarantor of
such corporate debtor shall be filed before such National Company Law Tribunal.
(3) An insolvency resolution process or bankruptcy proceeding of a personal guarantor of

the corporate debtor pending in any court or tribunal shall stand transferred to the
Adjudicating Authority dealing with insolvency resolution process or liquidation
proceeding of such corporate debtor.
(4) The National Company Law Tribunal shall be vested with all the powers of the Debt
Recovery Tribunal as contemplated under Part III of this Code for the purpose of sub-
section (2).
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(5) Notwithstanding anything to the contrary contained in any other law for the time
being in force, the National Company Law Tribunal shall have jurisdiction to entertain or
dispose of--
(a) any application or proceeding by or against the corporate debtor or corporate person;
(b) any claim made by or against the corporate debtor or corporate person, including
claims by or against any of its subsidiaries situated in India; and
(c) any question of priorities or any question of law or facts, arising out of or in relation
to the insolvency resolution or liquidation proceedings of the corporate debtor or
corporate person under this Code.
(6) Notwithstanding anything contained in the Limitation Act, 1963 or in any other law
for the time being in force, in computing the period of limitation specified for any suit or
application by or against a corporate debtor for which an order of moratorium has been
made under this Part, the period during which such moratorium is in place shall be
excluded."
19. Section 6 provides that where any corporate debtor commits a default, a financial creditor, an
operational creditor or the corporate debtor itself may initiate corporate insolvency resolution process in
respect of such corporate debtor in the manner as provided under this Chapter. Section 7 deals with
initiation of corporate insolvency resolution process by financial creditor and Section 8 deals with
insolvency resolution by operational creditor. Sections 10 provides for initiation of corporate insolvency
resolution process by corporate application. A corporate applicant may make an application to the
adjudicating authority alongwith the corporate debtor's books of accounts and such other documents. The
adjudicating authority shall admit the application within fourteen days from the date of receipt of the
application, if it is complete or reject the application, if it is incomplete. Section 10(5) clearly proceeds to
mention that the corporate insolvency resolution process shall commence from the date of admission of
the application under sub-section (4) of this Section. Section 12 relates to time limit for completion of
insolvency resolution process. This Section prescribes a time limit of 180 days, extendable by a further 90
days, for the completion of corporate insolvency resolution process. The application for the extension can
only be made by the resolution professional and has to be supported by a resolution passed at a meeting of
the committee of creditors by a majority of 75% of the voting shares. Section 14 provides that on the
insolvency commencement date, the Adjudicating Authority shall by order declare moratorium for
prohibiting all of the following namely the institution of suits or continuation of pending suits or
298
proceedings against the corporate debtor including execution of any judgment, decree or order in any
court of law, tribunal, arbitration panel or other authority.
20. Section 30 provides for the manner in which a resolution plan may be submitted by a resolution
applicant. There are no restrictions on who can be a resolution applicant, subject to compliance with all
applicable laws. This may even include promoters of the corporate debtor. This provision would facilitate
proposals from persons interested in commercially viable but insolvent business to rescue such entities,
creating value for all stakeholders in the process. The resolution professional shall submit each resolution
plan, which conforms to be criteria provided under clauses (a) to (f) of Section 30(2) to the committee of
creditors who shall approve a resolution plan by a 755 majority of voting shares. Only thereafter the
resolution professional may submit the resolution plan as approved by the committee of creditors to the
Adjudicating Authority as per provisions contained under Section 30(6) of the IBC 2016. Section 31 deals
with approval of resolution plan and provides that if the Adjudicating Authority is satisfied that the
resolution plan as approved by the committee of creditors under sub-section (4) of section 30 meets the
requirements as referred to in sub-section (2) of section 30, it shall by order approve the resolution plan
which shall be binding on the corporate debtor and its employees, members, creditors, guarantors and
other stakeholders involved in the resolution plan. Sufficient safeguards are provided in favour of
creditors. Even Section 31(2) provides that where the Adjudicating Authority is satisfied that the
resolution plan does not confirm to the requirements referred to in sub-section (1), it may, by an order,
reject the resolution plan. Section 33 provides for the liquidation of the corporate debtor.
21. Section 60 stipulates that the Adjudicating Authority, in relation to insolvency resolution and
liquidation for corporate persons including corporate debtors and personal guarantors thereof, shall be the
National Company Law Tribunal having territorial jurisdiction over the place where the registered office
of the corporate person is located. As per provisions contained under Section 60 of the IBC, 2016 the
National Company Law Tribunal shall be the Adjudicating Authority for insolvency resolution and
liquidation of corporate debtors and also lays down the criteria for establishing the territorial jurisdiction
of the Tribunal. The insolvency resolution or bankruptcy proceedings relating to a personal guarantor of a
corporate debtor shall also be filed before the National Company Law Tribunal.
22. It is relevant to indicate at this stage that in exercise of the powers conferred under Sections 5, 7,
9, 14, 15, 17, 18, 21, 24, 25, 29, 30, 196 and 208 read with Section 240 of the IBC, 2016 the Insolvency
and Bankruptcy Board of India has made 'Insolvency and Bankruptcy Board of India (Insolvency
Resolution Process for Corporate Persons) Regulations, 2016' (in short, Regulations of 2016) on 30th
November, 2016. Regulation 3 under Chapter-II provides the eligibility for resolution professional and
Regulation 10 under Chapter-IV deals with substantiation of claims. Regulation 35 under Chapter IX
299
(Insolvency Resolution Process Costs) deals with liquidation value. Regulation 36 provides the
information memorandum. Regulation 36(f) provides details of guarantees that have been given in
relation to the debts of the corporate debtor by other persons, specifying which of the guarantors is a
related party.
23. After respective arguments have been advanced, the factual situation, which is so emerging from
the record in question, is that the petitioners are the ex-directors of the company (in liq.). The SBI had
filed the Original Application in question before the DRT for recovery of Rs. 72,75,29,053.71 against the
company (in liq) as the principal borrower and the petitioners as the guarantors. The petitioners have
moved applications for stay of proceeding against them. By the impugned order dated 6.7.2017 the DRT
has stayed the proceeding against the company (in liq.) on the basis of an order passed by the National
Company Law Tribunal, Allahabad dated 30.5.2017 imposing a Moratorium on legal proceedings under
Section 14 of the IBC, 2016 and directed the petitioners to file written statement and give the details of
pending applications with foreign authorities for permanent immigration or visa or travelling permits;
details of properties they are having in foreign lands and in India; details of business exclusively or under
partnership in foreign lands and in India; details of all their movable and immovable assets including bank
accounts deposits on affidavits. No doubt the liability is co-extensive, but the entire proceeding is still in
fluid stage and for the same cause of action, two split proceedings cannot go simultaneously before the
DRT as well as NCLT.
24. The object of IBC, 2016 is categorical and as per provisions contained under Section 60(1) the
Adjudicating Authority, in relation to insolvency resolution and liquidation for corporate persons
including corporate debtors and personal guarantors thereof, shall be the National Company Law
Tribunal. In the present matter, admittedly the proceeding has been initiated under the IBC 2016 and the
Moratorium under Section 14 of IBC 2016 has already been issued by the NCLT. The NCLT is already
ceased with the process of insolvency resolution against the company (in liq.) under IBC 2016 and
moreover, the SBI has also put their appearance in the said proceedings regarding its claim. At no point of
time the SBI has disassociated itself from the proceeding before the NCLT and it is actively participating
in the proceeding.
25. Moreover, the NCLT in its order dated 30.5.2017 prohibited the institution of suits or
continuation of pending suit or proceedings against the corporate debtor including execution of any
judgment, decree or order in any court of law, tribunal, arbitration panel or other authority, transferring,
encumbering, alienating or disposing of by the corporate debtor any of its assets or any legal right or
beneficial interest therein, any action to foreclose, recover or enforce any security interest created by the
Corporate Debtor in respect of its property including any action under the SARFAESI Act, 2002, the
300
recovery of any property by an owner or lessor where such property is occupied by or in the possession of
26. In Whirlpool Corporation vs. Registrar of Trade Marks, Mumbai & Ors. MANU/SC/0664/1998 :
(1998) 8 SCC 1, Hon'ble Supreme Court has observed that the power to issue prerogative writs under
Section (sic Article) 226 of Constitution of India is plenary in nature and is not limited by any other
provision of the Constitution of India. Under Article 226 of Constitution of India, the High Court, having
regard to the facts of the case, has discretion to entertain or not to entertain a writ petition. But the High
Court has imposed upon itself certain restrictions, one of which is that if an effective and efficacious
remedy is available, the High Court would not normally exercise its jurisdiction.
27. In Punjab National Bank Ltd. vs. Shri Vikram Cotton Mills and another MANU/SC/0032/1969 :
AIR 1970 SC 1973 Hon'ble Supreme Court held as under:-
13. We are, however, unable to agree with the High Court that the suit filed was
premature. The Bank was under the terms of the bond executed by Ranjit Singh entitled
to, claim at any time the money due from the Company as well as Ranjit Singh under the
promissory note and the bond. The suit could not, therefore, be said to be premature. The
High Court instead of dismissing the suit should have stayed it till "the ultimate balance"
due to the Bank from the Company was determined. We deem it necessary to observe
that a binding obligation created under a composition under s. 391 of the Companies.
Act, 1956, between the; Company and its creditors does not affect the liability of the
surety unless the contract of suretyship otherwise provides. As observed in Halsbury's.
Laws of England, Vol. 6, 3rd Edn. Art. 1555, at p. 771:
"A scheme need not expressly reserve the rights of any creditors against sureties for
debts; of the company, as such rights are unaffected by a scheme". It was held in Re.
Garner's Motors Ltd. (1) that the scheme when sanctioned by the Court has a statutory
operation and the scheme does not release other persons not parties. to the scheme from
their obligations.'
14. The High Court, in our judgment, should have stayed the suit and after "the ultimate
balance" due by the Company was determined the Court should have proceeded to decree
the claim according to the provisions of cl. 4 of the bond.
15. We accordingly modify the decree passed by the Trial Court and declare that the
rights of the Bank against the Company are governed by the scheme: sanctioned by the
High Court of Allahabad in Company Case No. 16 of 1956 by their judgment dated May
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21, 1956. Liability of Ranjit Singh being only for payment the ultimate balance' which
remains due on the cash-credit account with the Bank in favour of the Company. The
Court will, when such ultimate balance is determined, proceed to pass a decree in favour
of the Bank."
28. In Oshi Foods Limited and Ors. vs. State Bank of India MANU/MP/0202/1997 : AIR 1997 (2)
MPLJ 643 learned Single Judge of the High Court of Madhya Pradesh (Gwalior Bench) held that unless
and until the liability of the company is determined the guarantors cannot be held liable. It may be
possible to proceed against the guarantors, if the decree is obtained against the company which is going to
be executed. Therefore, in such a situation when a composite suit has been filed and when leave of the
Company Court is required for proceeding against the company then the conclusion is inescapable that
the suit cannot proceed unless and until the leave of the Company Court is obtained.
29. In the present matter, it has been urged that while passing the impugned order the DRT has failed
to take notice of Part-III of IBC, 2016, which prevails over the provisions of the Act of 1993. It has also
been urged that the entire proceeding before the DRT is completely without jurisdiction precisely in the
backdrop that once the proceeding has already been commenced under IBC, 2016 and Moratorium under
Section 14 of IBC, 2016 has already been issued and even in the said proceeding the parties have put their
appearance before the insolvency professionals, then the impugned proceeding against the guarantors of
principal debtor is per se bad. The argument advanced by Shri Navin Sinah is also fortified on the ground
that once the liability is still in fluid situation and the same has not been crystallized, then in such
situation two parallel/split proceedings in different jurisdiction should be avoided, if possible. In the
aforementioned circumstances, the objection so raised by learned counsel for the respondent bank
regarding alternative remedy cannot sustain and is rejected.
30. The judgments, which have been relied upon by Shri Satish Chaturvedi, learned counsel
appearing for the respondent bank, are distinguishable and the same would not be attracted under the
present facts and circumstances, as indicated above.
31. This Court is of the considered opinion that in the aforementioned facts and circumstances once
the sufficient safeguards are provided in the IBC, 2016 & the regulations framed thereunder to the bank,
and even the liability has not been crystallized either against the principal debtor or
guarantors/mortgagors at present, then the proceeding, which is pending before the Debt Recovery
Tribunal, Allahabad cannot go on and the same is stayed till the finalisation of corporate insolvency
resolution process or till the NCLT approves the resolution plan under sub-section (1) of Section 31 or
passes an order for liquidation of corporate debtor under Section 33, as the case may be.
32. With the aforesaid directions/observations, both the writ petitions are disposed of.
302
303
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by Hon’ble NCLAT
IN THE NATIONAL COMPANY LAW APPELLATE TRIBUNAL

NEW DELHI
C.P. (I.B.) No. 3/NCLAT/2017
Applicant: Sree Metaliks Ltd.

Vs.
Respondent: M/s. Srei Equipment Finance Ltd.
Judges/Coram:
Hon'ble Sh. S.J. Mukhopadhaya, Member (J)
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Vivek Sibal & Mr. Ramesh Gopinathan, Learned Advocate
For Respondents/Defendant: Mr. Gopal Jain, Ms. Chinmayee Chandra, Mr. Dheeraj Kumar Sharma, Mr.
Aman Nijhawan & Ms. Nitu Poddar, Learned Advocates
ORDER
The appellant has challenged the order dated 30th January, 2017 passed by the National Company
Law Tribunal, Kolkata Bench, Kolkata in Company Petition No.16/2017.
Ld. Counsel for the appellant submits that he has no objection to the admission of the Insolvency
Petition but has objection with regard to appointment of "Interim Resolution Professional (IRP)" under
the "Insolvency and Bankruptcy Code 2016" for the reasons pleased in the appeal.
Learned counsel for Respondent on instructions submits that the "Interim Resolution
Professional" will step down today without prejudice to the rights and contentions of the Respondent. The
Respondent will provide another name of the "Interim Resolution Professional" who will function during
the rest of the period and as may be ordered by the NCLT. He further submits that in the meeting of
Committee of Creditors it will be decided as to who will be the "Interim Resolution
Professional/Insolvency Professional" whose name shall be placed before the National Company Law
Tribunal, Kolkata Bench for consideration for appointment as IRP/IP.
In view of the submissions made by the Learned Counsel for the Respondent, no further order
required to be passed. The appeal stands disposed of.
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by Hon’ble NCLAT

NEW DELHI
C.P. (I.B.) No. 11/NCLAT/2017
Applicant: Hind Motors India Ltd.

Vs.
Respondent: Adjudicating Authority NCLT, Chandigarh
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Ajay K. Jain & Mr. Atanu Mukherje, Learned Advocate
ORDER
The appellant is "Corporate Applicant" who filed application under section 10 of the Insolvency and
Bankruptcy code 2016 for initiating Corporate Insolvency Resolution Process with Adjudicating
Authority. The Adjudicating Authority (NCLT Bench) by impugned order dated 9th March 2017 in C.P.
No. 06(Chd)/2017 while admitted the appeal qua the debts of 'financial institution' and 'operational
creditor', has segregated the application in so far it relates to public depositors. The grievance of appellant
is that the Adjudicating Authority cannot exclude the 'public depositors' who also come within the
meaning of 'financial creditors'.
Having gone through the impugned order and the submission made on behalf of the appellant, we
left the question open for determination at appropriate stage for the following reasons:-
The application under section 10 having admitted and consequential orders having been passed
by the Adjudicating Authority, pursuant to notice under section 15 of the 'I and B Code' 2016 if any
'public depositor' applies showing due of debt claiming itself as 'operational creditor' and the Resolution
Professional or the Tribunal do not accept the claim on the ground that they are not 'financial creditor', we
allow the appellant to raise the question before the Tribunal and if any adverse decision is given by the
Tribunal, it will be open to the appellant to raise the issue before this Appellate Tribunal.
The appeal stands disposed of with the aforesaid observation. No cost.
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Order Passed in May 2017
by Hon’ble NCLAT
308
by Hon’ble NCLAT

NEW DELHI
C.P. (I.B.) No. 16/NCLAT/201 7
Applicant: Astra Offshore SDN BHD

Vs.
Respondent: Swiber offshore (India) Pvt. Ltd.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Sanjay Grover, Learned Advocate
ORDER
Learned counsel for the appellant submits that against corporate debtor M/s Swiber Offshore
(India) Pvt Ltd, another petition under Section 9 of the Insolvency & Bankruptcy Code, 2016 was filed by
one Mr. Ajay Joseph, Proprietor of M/s Global Marine Supply Company. The adjudicating authority,
National Company Law Tribunal, Mumbai Bench, vide its order dated 31.3.2017 in CP No.51/1 8s
BP/NCLT/MAH/2017 admitted the petition, declared moratorium and passed consequential directions, as
mentioned below:-
"i. That this Bench hereby prohibits the institution of suits or

continuation of pending suits or proceedings against the corporate
debtor including execution of any judgment, decree or order in any court
of law, tribunal, arbitration panel or other authority; transferring,
encumbering, alienating or disposing of by the corporate debtor any of
its assets or any legal right or beneficial interest therein; any action to
foreclose, recover or enforce any security interest created by the
corporate debtor in respect of its property including any action under the
Securitization and reconstruction of Financial Assets and Enforcement of
Security Interest Act, 2002; the recovery of any property by an owner or
lessor where such property is occupied by or in the possession of the
corporate debtor.
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by Hon’ble NCLAT
That the supply of essential goods or services to the corporate debtor, if

continuing, shall not be terminated or suspended or interrupted during
moratorium period.
That the provisions of sub-section (1) shall not apply to such

transactions as may be notified by the Central Government in
consultation with any financial sector regulator.
That the order of moratorium shall have effect from 31.03.2017 till the
completion of the corporate insolvency resolution process or until this
Bench approves the resolution plan under sub-section (1) of section 31
or passes an order for liquidation of corporate debtor under Section 33,
as the case may be.
That the public announcement of corporate insolvency resolution process

shall be made immediately as specified under section 13 of the Code..
that the Bench hereby appoints Mr. Rajeev Mannadiar, Registration

No.IBBI/ IPA-01/ IP00320/ 2016-17/ 1904 residing at Rustomjee
Azziani, Flat No.1501, 15th floor, A Wing, Near Saket Complex
Majiwada, Thana (West) -400601, Email: mannadiarrajeev@yahoo.com
as interim resolution professional to carry the functions as mentioned
under Insolvency & Bankruptcy Code.
8. Accordingly, this Petition is admitted."
In view of aforesaid direction of the Adjudicating Authority, National Company Law Tribunal,
Mumbai Bench against the corporate debtor, learned counsel for the appellant sought permission to
withdraw the appeal to enable the appellant to raise its claim before the 'Interim Resolution Professional'.
Inspite of notice to the respondent it has not turned up, nor appeared. In the circumstances we
allow the appellant to withdraw the appeal with liberty to move before Interim Resolution Professional
raising its claim. However, we make it clear that we have not decided the question as to whether the
appellant is entitled to any amount as per the provisions of Insolvency & Bankruptcy code, 2016 which
may be decided by the appropriate authority. The appeal stands disposed of as withdrawn with the
aforesaid observations.
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by Hon’ble NCLAT

NEW DELHI
C.P. (I.B.) No. 09/NCLAT/2017
Applicant: JK Jute Mills Company Limited

Vs.
Respondent: M/s. Surendra Trading Company
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Virendra Ganda, Mr. Arvind Kumar & Mr. Abhijeet Sinha,
Learned Advocate
For Respondents/Defendant: Mr. Krishnendu Dutta, Ms. Bhawna Chopra Rustogi, Ms. Prachi Ohri, Mr.
Ashok Kumar Jain, Mr. Sahil Dhawan, Mr. Shakti Ahmed & Mr. Atanu Mukherjee, Learned Advocates
ORDER
This appeal has been preferred by appellant - J.K. Jute Mills Company Limited against Order
dated 9th March 2017 passed by Adjudicating Authority (National Company Law Tribunal), Allahabad
Bench in C.P. No. 10/Ald/2017.
2. By the impugned order the Adjudicating Authority overruled the objection of the appellant -
corporate Debtor and directed the appellant to maintain status quo on immovable properties.
3. The question involved in this case is:
Whether the time limit prescribed in Insolvency & Bankruptcy Code, 2016 (hereinafter referred
to as Code 2016) for admitting or rejecting a petition or initiation of insolvency resolution process is
mandatory?
4. The brief fact of the case are as follows:-
The Respondent/ 'operational creditor' - Surendra Trading Company issued a Demand notice
under section 8 of the 'Code' on 6th January 2017 to the appellant/ 'Corporate Debtor' raising claim of
dues pertaining to the year 2001-2002.
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by Hon’ble NCLAT
5. The appellant/ 'Corporate Debtor' by letter dated 25th January 2017 objected the claim as 'time
barred'. Thereafter, the respondent/ 'Operational Creditor' filed a petition under section 9 of the 'Code',
before the Adjudicating Authority, Allahabad on 10th February 2017. In the said application the
adjudicating authority passed the interim order.
6. According to appellant, the petition under section 9 was filed without following the mandatory
provision of sub-rule (2) of Rule 6 of "Insolvency and Bankruptcy (Application to Adjudicating
Authority) Rules 2016" (hereinafter referred to as 'Adjudicating Authority Rules').
7. The case was listed before Adjudicating Authority on 16th February 2016 but there being defects,
learned counsel for the operational creditor sought time to rectify the defects as also to receive
instructions about the stage of proceedings pending before BIFR though such proceeding stood abated by
virtue of Companies Act 2013.
8. The 'Adjudicating Authority' noticed that the debt due for payment was defaulted in the year
2004. The 'operational creditor' was asked to clarify whether the claim is barred by law of limitation and
whether any recovery proceedings were earlier initiated by the operational creditor before any competent
court of Law or was deferred or stayed under the provisions of 'Sick Companies Rehabilitation Act 1985'.
The matter was ordered to be listed on 28th February 2017 for removal of objection and procedural
defects.
9. On 28th February 2017, counsel for the operational creditor sought more time for filing formal
memo by providing/furnishing of the latest order passed by BIFR. The appellant - corporate debtor was
instructed to clarify about the position of prescribed limitation for making recovery of his debt through its
memo. The case was ordered to be listed for further hearing on 3rd March 2017.
10. On 9th March 2017, a third party, J.K.Jute Mill Majdur Sabha filed a Misc. Application for
Intervention. The Adjudicating Authority after going through the petition for intervention observed that
its 'Locus standi' is to be decided first. Therefore, parties were granted time to file reply on maintainability
of the third party application/claims. Further, the operational creditor was also granted liberty to file
rejoinder to objection of the corporate debtor. Leaned counsel for the 'operational creditor' as also the
workers union requested the Adjudicating Authority to grant order of status quo, as the corporate debtor
may alienate its assets. When it was objected by learned counsel for the appellant/ corporate debtor, the
Adjudicating Authority held that under Rule 11 of NCLT Rules 2016, it is conferred with the powers to
provide substantial justice to the party concerned.
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by Hon’ble NCLAT
11. Learned counsel for the appellant submitted that the Adjudicating Authority became `functus
officio' after the time period specified under section 9 of the 'Code' and, therefore, it has no power to grant
stay of sale of assets or 'status quo' in regard to any assets.
12. It was further contended that no prayer having been made by the òperational creditor' to grant
stay, it was not open to the Adjudicating Authority to pass interim order of status quo.
13. It was further contended that the Adjudicating Authority has no inherent jurisdiction under the
'Code' to pass any ad interim order.
14. Learned counsel for the appellant highlighted the defects in the Demand notice dated 6th January
2017 as was sent by respondent/'operational creditor'. It was also contended that the petition under
Section 9 is barred by law of limitation.
15. On the other hand according to Learned counsel for the respondent/'operational creditor' 14 days'
time limit prescribed under section 9 of the 'Code' for passing orders of admission or rejection of
application is directory; it is not mandatory. It was also contended that the court should avoid any
construction of an enactment which will lead to an unworkable, inconsistent or impracticable results.
Reliance was placed on Hon'ble Supreme Court's decision in H.S. Vankani V. State of Gujarat, AIR 2010
SC 1714.
16. Referring to different situation, learned counsel for the respondent/'operational creditor' further
submitted that if 14 days' period prescribed under section sub-section (5) of section 9 is considered as
mandatory, it will result in numerous anomalous situations which is not the intention of the legislature in
drafting the Code.
17. Further, according to learned counsel for respondent/'operational creditor 7 days' period for
curing of defects is independent of the 14 days' period for prescribed under sub-section (5) of section 9
before admission or rejection of the application.
18. The case was heard on merit and judgement was reserved on 28th March 2017. The Adjudicating
Authority in the meantime was given liberty to decide the question of maintainability of the petition and
the contentions as raised in this appeal.
19. In the written submissions, it has been brought to the notice of this court that the Adjudicating
Authority fixed 5th April 2017 as the date for hearing the petition on the question of maintainability as
raised in this appeal. Therefore, the respondent requested the Appellate Tribunal to allow the
Adjudicating Authority to pass the order of maintainability as raised in this appeal with further prayer 'not
to deny' the right of appeal after final decision rendered by the Adjudicating Authority. It is informed that
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by Hon’ble NCLAT
subsequently the Tribunal taken up the matter on 10th April 2017, but on certain ground adjourned the
case.
20. We have also noticed that the Adjudicating Authority, Mumbai Bench in other cases under
section 9 of the 'Code' rejected some of the applications in view of mandatory time limit prescribed under
section 9 of the 'Code'.
21. As important question of law is involved and even after three weeks of reserved judgement,
Adjudicating Authority has nut passed any final order of admission or rejection on the petition under
section 9 and now more than 60 days have passed after filing of the petition and as important question of
law are involved, we decided to proceed with the matter.
22. To decide the question whether the time limit prescribed for initiation and completion of
Insolvency Resolution Process is mandatory, it is desirable to notice different time limit prescribed under
the Insolvency and Bankruptcy Code, 2016.
23. 'Corporate Insolvency Resolution Process' can be initiated under different provisions of the Code,
such as under section 7 by 'financial creditor', under section 9 by 'operational creditor' and under section
10 by the `Corporate applicant'. Though procedures after 'admission' of Insolvency Resolution Process is
almost common, the legislature prescribed different time limit for admission or rejection of the petitions.
24. For initiation of Insolvency Resolution Process by 'financial creditors' under section 7, the
Adjudicating Authority is allowed 14 days of the receipt of the application to ascertain the existence of a
default from the records with information utility or on the basis of other evidence furnished by the
financial creditors; under sub-section (5) of Section 7 before or after 14 days, if Adjudicating Authority is
satisfied that a default has occurred and the application under sub-section (2) of section 7 is complete and
there is no disciplinary proceedings pending against the proposed resolution professional, the
Adjudicating Authority is required to admit the application. On the contrary, if the default has not
occurred or the application is not complete then the Adjudicating Authority is required to dismiss the
petition.
However, in case of incomplete application the Adjudicating Authority is required to grant seven
days' time to the applicant/financial creditor to rectify the defect. The Section 7 reads as follows:-
"Section 7. Initiation of corporate insolvency resolution process by

financial creditor-
(1) A financial creditor either by itself or jointly with other financial

creditors may file an application for initiating corporate insolvency
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by Hon’ble NCLAT
resolution process against a corporate debtor before the Adjudicating

Authority when a default has occurred.
Explanation. —For the purposes of this sub-section, a default includes a

default in respect of a financial debt owed not only to the applicant
financial creditor but to any other financial creditor of the corporate
debtor.
(2) The financial creditor shall make an application under subsection (1)
in such form and manner and accompanied with such fee as may be
prescribed.
(3) The financial creditor shall, along with the application furnish-
(a) record of the default recorded with the information utility or

such other record or evidence of default as may be specified;
(b) the name of the resolution professional proposed to act as an

interim resolution professional; and
(4) The Adjudicating Authority shall, within fourteen days of the receipt
of the application under sub-section (2), ascertain the existence of a
default from the records of an information utility or on the basis of other
evidence furnished by the financial creditor under sub-section (3).
(a) a default has occurred and the application under subsection (2)
is complete, and there is no disciplinary proceedings pending against the
proposed resolution professional, it may, by order, admit such
application; or
(b) default has not occurred or the application under sub-section (2)
is incomplete or any disciplinary proceeding is pending against the
proposed resolution professional, it may, by order, reject such
application:
Provided that the Adjudicating Authority shall, before rejecting

the application under clause (b) of sub-section (5), give a notice to the
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by Hon’ble NCLAT
applicant to rectify the defect in his application within seven days of

(6) The corporate insolvency resolution process shall commence from

the date of admission of the application under subsection (5).
(7) The Adjudicating Authority shall communicate-
(a) the order under clause (a) of sub-section (5) to the financial
creditor and the corporate debtor;
(b) the order under clause (b) of sub-section (5) to the financial
creditor,
within seven days of admission or rejection of such application, as the

case may be."
25. On the contrary in the case of 'operational creditors' under sub-section (5) of section 9, within 14
days of the receipt of the application the Àdjudicating Authority' is required to either admit the
application, if complete or reject the application, if not complete or may grant 7 days' time from the date
of receipt of notice to the operational creditor to rectify the defect, as evident from section 9 and reads as
follows:-
"Section 9. Application for initiation of corporate insolvency resolution

process by operational creditor.-
(1) After the expiry of the period of ten days from the date of delivery of
the notice or invoice demanding payment under subsection (1) of section
8, if the operational creditor does not receive payment from the
corporate debtor or notice of the dispute under sub-section (2) of section
8, the operational creditor may file an application before the
Adjudicating Authority for initiating a corporate insolvency resolution
process.
(2) The application under sub-section ( I ) shall be filed in such form and
manner and accompanied with such fee as may be prescribed.
(a) a copy of the invoice demanding payment or demand notice

delivered by the operational creditor to the corporate debtor;
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by Hon’ble NCLAT
(b) an affidavit to the effect that there is no notice given by the

corporate debtor relating to a dispute of the unpaid operational debt;
(c) a copy of the certificate from the financial institutions

maintaining accounts of the operational creditor confirming that there is
no payment of an unpaid operational debt by the corporate debtor; and
(4) An operational creditor initiating a corporate insolvency resolution

process under this section, may propose a resolution professional to act
as an interim resolution professional.
of the application under sub-section (2), by an order-
(i) admit the application and communicate such decision to the

operational creditor and the corporate debtor if,—
(a) the application made under sub-section (2) is complete;
(c) the invoice or notice for payment to the corporate debtor has
been delivered by the operational creditor;
(d) no notice of dispute has been received by the operational

creditor or there is no record of dispute in the information utility; and
(e) there is no disciplinary proceeding pending against any

resolution professional proposed under sub-section (4), if any.
(ii) reject the application and communicate such decision to the

operational creditor and the corporate debtor, if-
(a) the application made under sub-section (2) is incomplete;
(c) the creditor has not delivered the invoice or notice for payment
to the corporate debtor;
(d) notice of dispute has been received by the operational creditor

or there is a record of dispute in the information utility; or
317
by Hon’ble NCLAT
(e) any disciplinary proceeding is pending against any proposed

resolution professional:
Provided that Adjudicating Authority, shall before rejecting an

application under sub clause (a) of clause (ii) give a notice to the
applicant to rectify the defect in his application within seven days of the
date of receipt of such notice from the adjudicating Authority.

the date of admission of the application under sub-section (5) of this
section."
26. Similarly in the case of initiation of Corporate Insolvency Resolution Process by 'corporate
applicant', like sub-section (5) of section 9, the Adjudicating Authority, within a period of 14 aays of the
receipt of the application, by an order required to admit the application, if it is complete or reject the
application if it is incomplete.
However, before rejecting the application it is required to give notice and "corporate applicant"
can be allowed 7 days' period to rectify the defects. This is evident from sub-section (4) of section 10, as
quoted below:
"Section 10. Initiation of corporate insolvency resolution process by

corporate applicant.
(1) Where a corporate debtor has committed a default, a corporate

applicant thereof may file an application for initiating corporate
insolvency resolution process with the Adjudicating Authority.
(2) The application under sub-section (1) shall be filed in such form,
containing such particulars and in such manner and accompanied with
(3) The corporate applicant shall, along with the application furnish the
information relating to-
(a) its books of account and such other documents relating to such
period as may be specified; and
(b) the resolution professional proposed to be appointed as an

interim resolution professional.
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by Hon’ble NCLAT
(4) The Adjudicating Authority shall, within a period of fourteen days of

the receipt of the application, by an order-
(a) admit the application, if it is complete; or
(b) reject the application, if it is incomplete: Provided that

Adjudicating Authority shall, before rejecting an application, give a
notice to the applicant to rectify the defects in his application within
seven days from the date of receipt of such notice from the Adjudicating
Authority.

the date of admission of the application under subsection (4) of this
section."
27. Where an application is not disposed of or an order is not passed within a period specified in the
Code, in such case the Adjudicating Authority may record the reasons for not doing so within the period
so specified and may request the Hon'ble President of National Company Law Tribunal for extension of
time, who may after taking into account the reasons so recorded can extend the period specified in the Act
but not exceeding 10 days, as apparent from sub-section (1) of Section 64, as quoted below:
"64. (I ) Where an application is not disposed of or an order is

not passed within the period specified in this Code, the National
Company Law Tribunal or the National Company Law Appellate
Tribunal, as the case may be, shall record the reasons for not doing so
within the period so specified; and the President of the National
Company Law Tribunal or the Chairperson of the National Company
Law Appellate Tribunal, as the case may be, may, after taking into
account the reasons so recorded, extend the period specified in the Act
but not exceeding ten days."
28. There are other time limit prescribed under the 'Code' such as section 16(1) in terms of which the
Adjudicating Authority is required to appoint an interim resolution professional within 14 days from the
insolvency commencement date (admission of the case). Under sub-section (5) of section 16, the term of
the interim resolution professional cannot exceed 30 days from the date of appointment, as evident from
relevant provisions, which reads as follows:-
"Section 16. Appointment and tenure of interim resolution

professional.
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by Hon’ble NCLAT
(1) The Adjudicating Authority shall appoint an interim resolution

professional within fourteen days from the insolvency commencement
date.
(2) Where the application for corporate insolvency resolution process is

made by a financial creditor or the corporate debtor, as the case may be,
the resolution professional, as proposed respectively in the application
under section 7 or section 10, shall be appointed as the interim
resolution professional, if no disciplinary proceedings are pending
against him.
(3) Where the application for corporate insolvency resolution process is

made by an operational creditor and-
(a) no proposal for an interim resolution professional is made, the

Adjudicating Authority shall make a reference to the Board for the
recommendation of an insolvency professional who may act as an
interim resolution professional;
(b) a proposal for an interim resolution professional is made under

sub-section (4) of section 9, the resolution professional as proposed,
shall be appointed as the interim resolution professional, if no
disciplinary proceedings are pending against him.
(4) The Board shall, within ten days of the receipt of a reference from the
Adjudicating Authority under sub-section (3), recommend the name of an
insolvency professional to the Adjudicating Authority against whom no
disciplinary proceedings are pending.
(5) The term of the interim resolution professional shall not exceed thirty
days from date of his appointment."
29. Time limit for completion of Insolvency Resolution Process is prescribed under section 12 as per
which the corporate insolvency resolution process required to be completed within a period of 180 days
from the date of admission of the application. If resolution professional for any reason not in a position to
complete this job within 180 days may file an application under sub-section (2) of section 12 before the
Adjudicating Authority to extend the period. Under sub-section (3) of section 12, the Adjudicating
Authority may extend the period, but not exceeding 90 days i.e. total 270 days has been allowed for
Insolvency Resolution Process. This is evidence from section 12 as quoted below:
320
by Hon’ble NCLAT
"Section 12. Time-limit for completion of insolvency resolution

process.
(1) Subject to sub-section (2), the corporate insolvency

resolution process shall be completed within a period of one hundred
and eighty days from the date of admission of the application to initiate
such process.
(2) The resolution professional shall file an application to

the Adjudicating Authority to extend the period of the corporate
insolvency resolution process beyond one hundred and eighty days, if
instructed to do so by a resolution passed at a meeting of the committee
of creditors by a vote of seventy-five per cent. of the voting shares.
(3) On receipt of an application under sub-section (2), if

the Adjudicating Authority is satisfied that the subject matter of the case
is such that corporate insolvency resolution process cannot be completed
within one hundred and eighty days, it may by order extend the duration
of such process beyond one hundred and eighty days by such further
period as it thinks fit, but not exceeding ninety days:
Provided that any extension of the period of corporate

insolvency resolution process under this section shall not be granted
more than once."
30. Before expiry of the insolvency resolution process of the maximum period permitted for
completion under section 12 if the Adjudicating Authority does not receive a resolution plan, under
section 33 the Adjudicating Authority is required to pass an order requiring the Corporate Debtor to be
liquidated in the manner as laid down in the said chapter. For proper appreciation, section 33 of the Code
is quoted below:
"33. Initiation of liquidation. - (1) Where the Adjudicating Authority, —
(a) before the expiry of the insolvency resolution process period or the
maximum period permitted for completion of the corporate insolvency
resolution process under section 12 or the fast track corporate
321
by Hon’ble NCLAT
insolvency resolution process under section 56, as the case may be, does
not receive a resolution plan under sub-section (6) of section 30; or
(b) rejects the resolution plan under section 31 for the noncompliance of
the requirements specified therein,
it shall-
(i) pass an order requiring the corporate debtor to be liquidated in

the manner as laid down in this Chapter;
issue a public announcement stating that the

corporate debtor is in liquidation; and
(ii) require such order to be sent to the authority with which the
corporate debtor is registered."
31. From the aforesaid provisions we find that time is the essence of the Insolvency and bankruptcy
Code 2016, but it is to be seen whether on failure to do so, the Adjudicating Authority is competent to
pass appropriate order. Further in case resolution process is not completed within the time prescribed as
per section 33 it will lead to initiation of liquidation proceedings, which may affect the corporate debtor,
which otherwise was not required to be initiated.
32. In P.T.Rajan Vs. T.P.M. Sahir and Ors.(2003) 8 SCC 498, the Honble Supreme Court
observed that where Adjudicating Authority has to perform a statutory function like admitting or rejecting
an application within a time period prescribed, the time period would have to held to be directory and not
mandatory. In the said case, Hon'ble Apex Court observed:
"48. It is well-settled principle of law that where a statutory functionary

is asked to perform a statutory duty within the time prescribed therefor,
the same would be directory and not mandatory. (See Shiveshwar
Prasad Sinha v. The District Magistrate of Monghyr & Anr., AIR (1966)
Patna 144, Nomita Chowdhury v. The State of West Bengal & Ors.,
(1999) CLJ 21 and Garbari Union Co-operative Agricultural Credit
Society Limited & Anr. V. Swapan Kumar Jana & Ors., (1997) 1 CHN
189.)
49. Furthermore, a provision in a statute which is procedural in nature

although employs the word "shall" may not be held to be mandatory if
thereby no prejudice is caused."
322
by Hon’ble NCLAT
33. That the Hon'ble Apex Court has on numerous occasions interpreted the word 'shall' to mean
'may'. An analogous position can be found in the context of the time period prescribed for filing Written
Statements by Defendants to a suit, wherein, the Hon'ble Apex Court was faced with the question of a
Court's power to take on record Written Statements that were filed beyond the period of 90 days, as
prescribed under Order VIII Rule 1 of the Code of Civil Procedure, 1908. In this regard, the Hon'ble
Supreme Court in Kailash Versus Nanhku and Ors (2005) 4 SCC 480 held as under:-
"27. Three things are clear. Firstly, a careful reading of the language in
which Order 8 Rule 1 has been drafted, shows that it casts an obligation
on the defendant to file the written statement within 30 days from the
date of service of summons on him and within the extended time falling
within 90 days. The provision does not deal with the power of the court
and also does not specifically take away the power of the court to take
the written statement on record though filed beyond the time as provided
for. Secondly, the nature of the provision contained in Order 8 Rule 1 is
procedural. It is not a part of the substantive law. Thirdly, the object
behind substituting Order 8 Rule 1 in the present shape is to curb the
mischief of unscrupulous defendants adopting dilatory tactics, delaying
the disposal of cases much to the chagrin of the plaintiffs and petitioners
approaching the court for quick relief and also to the serious
inconvenience of the court faced with frequent prayers for adjournments.
The object is to expedite the hearing and not to scuttle the same. The
process of justice may be speeded up and hurried but the fairness which
is a basic element of justice cannot be permitted to be buried."
34. Further, Hon'ble Supreme Court in the matter of Smt. Rani Kusum vs Smt Kanchan Devi and Ors
(2005) 6 SCC 705, concurring with the ratio laid down in Kailash Versus Nanhku (supra) held that:
"10. All the rules of procedure are the handmaid of justice. The
language employed by the draftsman of processual law may be liberal or
stringent, but the fact remains that the object of prescribing procedure is
to advance the cause of justice. In an adversarial system, no party should
ordinarily be denied the opportunity of participating in the process of
justice dispensation. Unless compelled by express and specific language
of the statute, the provisions of CPC or any other procedural enactment
323
by Hon’ble NCLAT
ought not to be construed in a manner which would leave the court

helpless to meet extraordinary situations in the ends of justice.
11. The mortality of justice at the hands of law troubles a judge's

conscience and points an angry interrogation at the law reformer.
12. The processual law so dominates in certain systems as to

overpower substantive rights and substantial justice. The humanist rule
that procedure should be the handmaid, not the mistress, of legal justice
compels consideration of vesting a residuary power in the judges to act
ex debito justitiae where the tragic sequel otherwise would be wholly
inequitable. Justice is the goal of jurisprudence, processual, as much as
substantive. (See Sushil Kumar Sen v. State of Bihar [(1975) 1 SCC
774].)
13. No person has a vested right in any course of procedure. He has

only the right of prosecution or defence in the manner for the time being
by or for the court in which the case is pending, and if, by an At of
Parliament the mode of procedure is altered, he has no other right than
to proceed according to the altered mode. (See Blyth v. Blyth [( I
966) 1 All ER 524: 1966 AC 643 : (1966) 2 WLR 634 (HL)] .) A
procedural law should not ordinarily be construed as mandatory; the
procedural law is always subservient to and is in aid to justice. Any
interpretation which eludes or frustrates the recipient of justice is not to
be followed. (See Shreenath v. Rajesh [(1998) 4 SCC 543 : AIR 1998 SC
1827] .)
14. Processual law is not to be a tyrant but a servant, not an

obstruction but an aid to justice. Procedural prescriptions are the
handmaid and not the mistress, a lubricant, not a resistant in the
administration of justice."
35. Sub-section (2) of section 7, sub-section (2) of section 9 and sub-section (2) of section 10 deals
with the form and manner in which respective applications under section 7, 9 and 10 ought to be filed
along with such process fee as may be prescribed. This is a procedural matter to be verified by the
Registry of the NCLT.
324
by Hon’ble NCLAT
36. Sub-section (1) of Section 5 defines "adjudicating authority" for the purpose of that part means
"National Company Law Tribunal", (NCLT) constituted under Section 408 of the Companies Act, 2013
(18 of 2013).
37. We have noticed that Code, empowers 'adjudicating authority' to pass orders under Section 7, 9
and 10 of the Code, 2016 and not the NCLT. It is by virtue of the definition under sub-Section (1) of
Section 5 of the Code, the NCLT plays its role as "adjudicating authority" and not that a Company Law
Tribunal. Therefore, in strict sense, mandate under Section 420 of the Companies Act, 2016 cannot be
transpose in Code 2016 by reading 'orders of Tribunal, as "Order of Adjudicating Authority".
38. The Adjudicating Authority has different roles to play at different stages. The one of such role is
somewhat administrative in nature when under subsection (4) of section 7 or sub-section (5) of section 9
and sub-section (4) of section 10, the adjudicated authority is required to find out whether (i) the case is
complete in terms of the provisions of sub-section (2) of section 7 or subsection (2) of section 9 or sub-
section (2) of section 10, as the case may be or (ii) whether there is a defect i.e. application is nor in order
and incomplete. Otherwise role of Adjudicating Authority is judicial in nature particularly when it decides
as to whether the 'Insolvency Resolution Process' to be initiated by admitting of the application or to
reject the application. As a judicial authority, in case the application is incomplete, it is also empowered
to decide whether to grant 7 days' time to rectify the defects. In case the applications are admitted and
resolution process starts, the Adjudicating Authority is required to pass judicial order under section 13
and 14 of the 'Code' and may order for public announcement in terms section 15 and then to oversee the
resolution process and finally, if so required, to pass order for liquidation.
39. The time period of 14 days prescribed under sub-section (4) of section 7, sub-section (5) of
section 9 and sub-section (4) of section 10 are to be counted from the date of receipt of application. The
word 'date of receipt of application' cannot be treated to be 'date of filing of the application'. We have
noticed that the Registry is required to find out whether the application is in proper form and
accompanied with such fees as may be prescribed. So, the Registry will take certain time and during such
period, the applications are not brought to the notice of the 'Adjudicating Authority'. Therefore, 14 days'
period granted to the Adjudicating Authority under the provisions of the Code cannot be counted from the
'date of filing of the application' but from the date when 'such application is presented before the
Adjudicating Authority i.e. the date on which it is listed for admission/ order.
40. In the present scenario, the Insolvency Bankruptcy Code do not bar or render the Adjudicating
Authority powerless to admit an application or rejecting the application.
325
by Hon’ble NCLAT
41. Further, nature of the provisions contained in sub-section (5) of section 7 or sub-section (5) of
section 9 and sub-section (4) of section 10 of the 'Code' like Order VIII, rule 1 being procedural in nature
cannot be treated to be a mandate of law.
42. The object behind the time period prescribed under sub-section (5) of section 7, sub-section (5) of
section 9 and sub-section (4) of section 10, like Order VIII, Rule 1 of CPC is to prevent the delay in
hearing the disposal of the cases. The Adjudicating Authority can not ignore the provisions. But in
appropriate cases, for the reasons to be recorded in writing, it can admit or reject the petition after the
period prescribed under section 7 or section 9 or section 10.
Court and discussion as made above, we hold that the mandate of sub-section (5) of section 7 or sub-
section (5) of section 9 or sub-section (4) of section 10 procedural in nature, a tool of aid in expeditious
dispensation of justice and is directory.
44. However, the 7 days' period for the rectification of defects as stipulated under proviso to the
relevant provisions as noticed above is required to be complied with by the corporate debtor whose
application, otherwise, being incomplete is fit to be rejected. In this background we hold that the proviso
to sub-section (5) of section 7 or proviso to sub-section (5) of section 9 or proviso to sub-section (4) of
section 10 to remove the defect within 7 days are mandatory, and on failure applications are fit to be
rejected.
45. Section 12 is a "time limit for completion of insolvency resolution process" which is to be
completed within 180 days from the date of admission of the application. An extension of the period of
corporate insolvency resolution process can be granted by the Adjudicating Authority but it cannot exceed
90 days and cannot be granted more than once.
46. The resultant effect of non-completion of insolvency resolution process within the time limit of
180 days + extended period of 90 days i.e. total 270 days will result in to initiation of liquidation
proceedings under section 33. As the end result of Resolution Process is approval of resolution plan or
initiation of liquidation of proceedings, we hold the time granted under section 12 of 'the Code' is
mandatory.
Similarly, term allowed to "Interim resolution professional" is 30 days. Thereby "Interim

resolution professional" cannot exceed 30 days from the date of his appointment as per sub-section (5) of
section 16. However, as the Regular resolution professional starts functioning on completion of period of
Interim resolution professional the performance of the duties of Interim resolution professional cannot be
held to be mandatory though the period is required to be counted for completion of the interim resolution
326
by Hon’ble NCLAT
process i.e, 180 days and in appropriate case another 90 days can be granted i.e. maximum 270 days
which is mandatory.
47. It is not mandatory for 'operational creditors' to propose the resolution professional to act as an
interim resolution professional. It may or may not propose. In such case, the Adjudicating Authority will
nominate insolvency resolution professional as recommended by the Board on reference from the
Adjudicating Authority. This process also may take some time after admission of the case and therefore, it
is clear that the procedural part of section 7 or section 9 or section 10 are directory in nature.
48. We have noticed the decision of Hon'ble Supreme Court in "Union of India Vs. Popular
Construction Co." (2001) 8 SCC 470. In the said case, Hon'ble Supreme Court was deciding the question
regarding extension of time period beyond the time prescribed in the statutes and held when the
legislatures prescribed a special limitation for the purpose of the appeal, the Court cannot entertain an
application beyond the extended period, if prescribed therein.
49. The aforesaid decision of the Hon'ble Supreme Court in Popular Construction Company cannot
be said to be applicable to procedural part of section 7 or section 9 or section 10, though it is applicable to
section 64 which mandates extension of period not beyond 10 days as also to sub-section (3) and (4) of
section 12 which relates to time limit prescribed for completion of insolvency resolution process.
50. In these cases, we are not happy with the manner by the Adjudicating Authority has passed one or
other order. The Adjudicating Authority, in spite of time frame scheme has taken the matter very leisurely
and lightly. The time is the essence of the Code and all the stakeholders, including the Adjudicating
Authority are required to perform its job within time prescribed under the Code except in exceptional
circumstances if the adjudicating authority for one or other good reason fail to do so. In the case in hand
we find that the Adjudicating Authority has unnecessarily adjourned the case from time to time which is
against the essence of the Code.
admitted within the specified time. Even if it is presumed that 7 days additional days time was to be
granted to the operational creditor, the defects having pointed out on 16th February 2017 and having not
taken care within time, we hold that the petition under section 9 filed by respondent/operational creditor
being incomplete was fit to be rejected.
53. The appeal is allowed. However, there shall be no order as to cost.
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by Hon’ble NCLAT

NEW DELHI
C.P. (I.B.) No. 31/NCLAT/2017
Applicant: Era Infra Engineering Ltd.

Vs.
Respondent: Prideco Commercial Projects Pvt. Ltd.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Manoj K. Singh, Mr. Vijaya Singh, Ms. Bornali Roy, Mr. Mahip
Singh, Mr. Gyanendra Kumar & Mr. Tanuka De, Learned Advocates
ORDER
The Appellant/ Corporate Debtor has challenged the order(s) dated 12th April, 2017, passed by
the Adjudicating Authority, Principal Bench, New Delhi in Insolvency Petition No. 26(ND) of 2017. By
one of the order the Adjudicating Authority held that the order is being passed, within 14 days, as per
Section 9 of Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as the '1&B Code' for short).
By the other order dated 12th April 2017, the Adjudicating Authority initiated Insolvency Resolution
Process by admitting the application, appointed interim resolution professional, ordered Moratorium and
passed the following directions:
"14. (1) Subject to provisions of sub-sections (2) and (3), on the

insolvency commencement date, the Adjudicating Authority shall by
order declare moratorium for prohibiting all of the following, namely:-
(a) the institution of suits or continuation of pending suits or

proceedings against the corporate debtor including execution of any
judgment, decree or order in any court of law, tribunal, arbitration panel
or other authority;
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by Hon’ble NCLAT
(b) transferring, encumbering, alienating or disposing of by the

corporate debtor any of its assets or any legal right or beneficial interest
therein;
(c) any action to foreclose, recover or enforce any security interest

created by the corporate debtor in respect of its property including any
action under the Securitisation and Reconstruction of Financial Assets
and Enforcement of Security Interest Act, 2002;
(d) the recovery of any property by an owner or lessor where such

property is occupied by or in the possession of the corporate debtor.
(2) The supply of essential goods or services to the corporate debtor as

may be specified shall not be terminated or suspended or interrupted
during moratorium period.
(3) The provisions of sub-section (1) shall not apply to such transactions
as may be notified by the Central Government in consultation with any
financial sector regulator.
(4) The order of moratorium shall have effect from the date of such order
till the completion of the corporate insolvency resolution process:
Provided that where at any time during the corporate insolvency

resolution process period, if the Adjudicating Authority approves the
resolution plan under sub-section (1) of section 31 or passes an order for
liquidation of corporate debtor under section 33, the moratorium shall
cease to have effect from the date of such approval or liquidation order,
as the case may be.
10. The insolvency resolution professional shall also take steps and
perform his duties in terms of Section 15, 17 & 18. All personnel of the
Corporate Debtor including its promoters are expected to extend full
cooperation to the interim resolution professional as is provided by
Section 19 and any other provisions of the Code. The insolvency
professional shall submit his report to us within four weeks.
11. The petition stands disposed of in above terms."
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by Hon’ble NCLAT
2. Counsel for the Appellant/Corporate Debtor submitted that the Adjudicating Authority initiated
the insolvency process under section 9 of the I & B Code, 2016, and admitted the case, though the
Application preferred by Operational Creditor was not complete. It is contended that the Appellant/
Corporate Debtor was not served any notice under section 8 of the I&B Code,2016, and the petition was
not filed in terms of (Form 3) Insolvency and Bankruptcy (Application to Adjudicating Authority)
Rules,2016.
3. On notice, the Respondent/ Operational Creditor has appeared and filed reply affidavit. Ld.
Counsel appearing on behalf of Operational Creditor while accepted that no notice under section 8 of I &
B Code,2016, was served on the Appellant/Corporate Debtor, it is submitted that the other formalities
were completed. It is further submitted that earlier a notice was issued to the Appellant/ Corporate Debtor
under section 271 of the Companies Act, 2013, for winding up which should be treated to be a notice for
the purpose of section 8 of the 1& B Code,2016. However, such submissions made on behalf of the
Operational Creditor cannot be accepted in view of the mandatory provision under section 8 of the I & B
Code read with Rule 5 of Insolvency and Bankruptcy, (Application to Adjudicating Authority) Rules,
2016 (hereinafter referred to as I&B 'Rules' for short).
4. Insolvency resolution by an Operational Creditor can be initiated only on the occurrence of a

default which is to be followed by a demand notice of unpaid Operational Debtor as stipulated sub-section
(1) of Section 8, as quoted below:
" 8(1) An operational creditor may, on the occurrence of a default,

deliver a demand notice of unpaid operational debtor copy of an invoice
demanding payment of the amount involved in the default to the
corporate debtor in such form and manner as may be prescribed."
5. Rule 5 of I & B Rules also mandates an Operational Creditor to deliver the Corporate Debtor a
demand notice in Form 3 or a copy of an invoice attached with a notice in Form 4, as quoted below:
"5. Demand notice by operational creditor.—(1) An operational

creditor shall deliver to the corporate debtor, the following documents,
namely.-
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by Hon’ble NCLAT
(2) The demand notice or the copy of the invoice demanding payment
referred to in sub-section (2) of section 8 of the Code, may be delivered
to the corporate debtor,
(a) at the registered office by hand, registered post or speed post

with acknowledgement due; or
(b) by electronic mail service to a whole time director or designated

partner or key managerial personnel, if any, of the corporate debtor.
(3) A copy of demand notice or invoice demanding payment served under

this rule by an operational creditor shall also be filed with an
information utility, if any."
6. The application for initiation of corporate insolvency resolution process, thereafter can be filed by
Operational Creditor after expiry of period of 10 days from the date of delivery of the notice or invoice
demanding payment, as provided under sub-section (1) of section 9.
7. Only thereafter, in terms of sub-section (5) of Section 9, the Adjudicating Authority, within 14
days of receipt of the application, by an order is required to either admit the application, if complete or to
reject the application if incomplete, provided seven days' time is granted for completion of the application
if incomplete. As per clause (ii) (c) & (d) of sub-section (5) of section 9, the adjudicating authority is
required to reject the application, in absence of affidavit that the Operational Creditor in absence of
delivery of demand of notice or invoice demanding payment to the Corporate Debtor. In this connection
we refer Section 9 of the I & B Code, as quoted below:
9. (1) After the expiry of the period of ten days from the date of delivery
of the notice or invoice demanding payment under subsection (1) of
section 8, if the operational creditor does not receive payment from the
process.
(2) The application under sub-section (1) shall be filed in such form and
(3) The operational creditor shall, along with the application furnish—
331
by Hon’ble NCLAT



(4) An operational creditor initiating a corporate insolvency resolution

process under this section, may propose a resolution professional to act
as an interim resolution professional.
of the application under sub-section (2), by an order-

operational creditor and the corporate debtor if-


resolution professional proposed under sub-section (4), if any

application under sub clause (a) of clause (ii) give a notice to the
applicant to rectify the defect in his application within seven days of the

section"
332
by Hon’ble NCLAT
Section 230 reads as follows:
"The Board may, by general or special order in writing delegate to any

member or officer of the Board subject to such conditions, if any, as may
be specified in the order, such of its powers and functions under this
Code (except the powers under section 240 as it may deem necessary"
8. Admittedly, no notice was issued by Operational Creditor under section 8 of the I &B Code,2016.
Demand notice by Operational Creditor stipulated under Rule 5 in Form 3 has not been served. Therefore,
in absence of any expiry period of tenure of 10 days there was no question of preferring an application
under section 9 of I & B Code,2016.
9. The Adjudicating Authority has failed to notice the aforesaid facts and the mandatory provisions
of law as discussed above. Though the application was not complete and there was no other way to cure
the defect, the impugned order cannot be upheld.
10. For the reasons aforesaid, we set aside the order dated 12th April 2014 passed by the
Adjudicating Authority. The application preferred by Operational Creditor under section 9 stands
dismissed being incomplete. All orders, interim arrangement etc as has been made are vacated,
moratorium as declared earlier is quashed, appointment of interim resolution professional also stands
quashed. All action taken by interim resolution profession is declared illegal. The appeal is allowed with
the aforesaid observations.
333
by Hon’ble NCLAT

NEW DELHI
C.P. (I.B.) No. 35/NCLAT/2017
Applicant: M/s. Della Constructions Pvt. Ltd.

Vs.
Respondent: M/s. Rei Agro Ltd. & Anr.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. T.S Joseph, Learned Advocate
For Respondents/Defendant: Mrs. Navneet S. Sehgal, Learned Advocate
ORDER
The Appellant as third party has challenged the order dated 27th February 2017 passed by the
'adjudicative authority' Kolkata Bench in C.P. No. 73 of 2017 under Section 9 of the Insolvency &
Bankruptcy Code, 2016 (hereinafter referred to as I&B Code, 2016) whereby the 'adjudicative authority'
being satisfied in terms of sub-section (5) of Section of the I&B Code, 2016, admitted the application and
ordered moratorium and appointed the Interim Resolution Professional.
The main grievance of the Appellant is that the proceeding which was initiated at the instance of
Appellant now stands stayed in view of moratorium order passed by the 'adjudicative authority'. The
resultant effect is that the Appellant may be adversely affected in recovering the amount.
In the present case as the 'adjudicative authority' admitted the application under Section 9 of the
I&B Code, 2016, we find no reason to interfere with the said order at the instance of the third party who
are affected by the said order of moratorium passed in terms of Section 14 of the I&B Code, 2016.
Further, as the Interim Resolution Professional (hereinafter referred to as IRP) is required to issue a public
notice on corporate insolvency resolution process under Section 15 of the I&B Code, 2016, all the
creditors, including the Appellant, may raise their claim before the IRP.
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For the reason aforesaid, we find no reason to interfere with the impugned order. In the absence
of any merit, the prayer is rejected. However, it will be open to the Appellant to apply and raise claim
pursuant to the advertisement as may be published by the IRP.
The appeal stands disposed off.
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NEW DELHI
C.P. (I.B.) No. 36/NCLAT/2017
Applicant: M/s. Madhur Engineers Pvt. Ltd. & Anr.

Vs.
Respondent: M/s. Facor Steels Ltd.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Ms. Purti Marwaha, Learned Advocate
ORDER
This appeal has been preferred by Appellant against order dated 8th March 2017 passed by the
'adjudicating authority', Mumbai Bench in C.P. No. 18/I&BP/NCLT/MAH/2017. By the impugned order
the 'adjudicating authority' admitted the application under Section 10 of the Insolvency & Bankruptcy
Code, 2016 (hereinafter referred to as I&B Code, 2016).
IA. Counsel for the Appellant submits that the Appellant is a financial creditor and a sum of Rs.
5.81 crores with interest is payable by corporate debtor to the Appellant. She further submits that a
winding up petition has been initiated at the instance of Appellant and is pending before the High Court.
In view of moratorium order under Section 14 of the I&B Code, 2016 passed by the 'adjudicating
authority' the winding up petition filed by the Appellant will be affected.
From the record, we find that the Appellant has already filed an application before the Insolvency
Resolution Professional making a claim of Rs.5.81 crores with interest. Further as we find that the
'adjudicating authority' has admitted application being satisfied that the petition under Section 10 of the
I&B Code, 2016 is complete in terms of sub-section (4) of Section 10, in the absence of any other
illegality, we are not inclined to interfere with the impugned order. The prayer is accordingly rejected.
However, this order will not come in the way of Appellant's claim as raised before the Insolvency
Resolution Professional. The appeal stand disposed off with aforesaid observation. No cost.
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NEW DELHI
C.P. (I.B.) No. 1&2/NCLAT/2017
Applicant: M/s. Innoventive Industries Ltd.

Vs.
Respondent: ICICI Bank & Anr.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Amarendra Saran, Mr. Makarand D. Adkar, Mr. Braj K. Mishra,
Mr. Vijay Kumar, Mr. Amit Tamhankar & Ms. Resham Sayyad, Learned Advocate
For Respondents/Defendant No.1: Mr. Ramji Srinivasan, Mr. L. Vishwanathan, Mr. Indranil Deshmukh,
Mr. Animesh Bsht, Mr. Karan Khanna, Ms. Aditi Tambi & Mr. Vivek O'riel, Learned Advocates.
For Respondents/Defendant No.2: Mr. Jaswinder Singh & Ms. Shipra Shukia, Learned Advocates
ORDER
These appeals have been preferred by the Appellant! Corporate Debtor - M/s. Innoventive
Industries Limited against order(s) dated 17th January, 2017 and 23rd January, 2017 passed by the
'adjudicating authority' (National Company Law Tribunal), Mumbai Bench, Mumbai (hereinafter referred
to as 'Adjudicating Authority') under Section 7 of the Insolvency & Bankruptcy Code, 2016 (hereinafter
referred to as I&B Code 2016) in C.P. No. 1/I&BP/NCLT/MB/MAH/20 16.
2. By the impugned order dated 17th January 2017, the 'adjudicating authority' rejected all the
contentions raised by the Appellant/ Corporate Debtor and held that the application preferred by the
financial creditor - M/s. ICICI Bank - (respondent herein) is complete under sub-section (2) of Section 7
of the Insolvency & Bankruptcy Code, 2016 and admitted the application declaring 'moratorium' in regard
to the affairs of the company; appointed 'Interim Resolution Professional' and passed interim order (s) in
terms of Section 7 of the Insolvency & Bankruptcy Code, 2016.
3. In the other impugned order dated 23rd January, 2017 the 'adjudicating authority' while admitted
that there was a rush of work, in deciding the IA No. 6/2017 which inadvertently based on the argument
of the Ld. Counsel for the Corporate Debtor, observed that delay in passing the order owing to the
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application filed by the Corporate Debtor in raising plea of no default, having raised in earlier C.A, the
matter stands adjudicated.
4. The impugned judgment has been challenged by Appellant on the following grounds.
First contention raised on behalf of the appellant is that the impugned order has been passed by
the Tribunal without notice to the Appellant against the principle of rules of natural justice, as stipulated
under Section 424 of the Companies Act, 2013.
5. Mr Amarendra Saran, Ld. Senior Counsel for the Appellant submitted that Serious civil
consequences ensue due to public announcement of the initiation of corporate insolvency resolution
process and appointment of an Interim Resolution Professional to manage the affairs of the corporate
debtor removing the Board of Directors. In such a case, notice prior to admission of a petition under
Section 7 of I&B Code, 2016 is required to be given. If notice is given prior to admission of a petition, it
will be open to the corporate debtor to bring to the notice of the Tribunal that there is no default or that
the application filed by the 'financial creditor' is incomplete and deserves to be dismissed.
Reliance was placed on Hon'ble Supreme Court's decision in S.L. Kapoor vs Jagmohan 1980 (4)
SCC 379 and Sahara India (Firm), Lucknow vs CIT 2008 (14) SCC 151.
6. It was also contended that the Tribunal being a creation of the Companies Act, 2013 (hereinafter
referred to as Act, 2013) is bound by Section 420 of the Act 2013 which stipulates 'reasonable
opportunity of being heard' to be given to the 'parties' before passing an order. Further, Section 424 of the
Act 2013, which grants liberty to the Tribunal to regulate its own procedure mandate to follow the
principles of natural justice. Therefore, the aforesaid sections cast duty upon the Tribunal to issue notice
to and hear a party before passing any order affecting the rights of the party.
7. The next contention was that (Maharashtra Relief Undertaking (Special Provisions Act (Bombay
Act XCVI of 1958) (hereinafter referred to as MRU Act, 1958), being a piece of legislation intended to
give relief to industrial undertakings will prevail over I&B Code, 2016.
8. Ld. Senior Counsel submitted that MRU Act, 1958 being a legislation referable to Entry 24 of
List II of Schedule 7 of the Constitution of India operates in different fields overriding the provisions of
I&B Code, 2016.
9. It was also submitted that MRU Act being a beneficial piece of legislation and the State
legislature having competent to enact it and the field being exclusively reserved for State legislature, will
prevail over the I&B Code 2016, even if it may incidentally encroach upon field occupied by some other
enactment.
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He placed reliance on Hon'ble Supreme Court decision in Vishal N. Kalsaria vs Bank of India
2016 (3) SCC 762; Gram Panchayat vs Maiwinder Singh 1985 (3) SCC 661; Ishwari Khetan Sugar Mills
(P) Ltd. vs State of UP 1980 (4) SCC 136.
10. It was further contended that there was complete non-application of mind by the Ld. Tribunal.
According to him, Subsection (4) and (5) of Section 7 of Code, 2016 casts duty on the Tribunal to first
ascertain default and satisfy itself of default. The ascertaining of the fact that whether there is default or
not can be satisfactorily reached only on perusal of documents produced by both the parties. A bare
perusal of the impugned orders shows no such exercise has been undertaken by the Ld. Tribunal based
on documents, materials, etc.
11. It was further contended that though so called default on the part of the Appellant has been dealt
with by Tribunal holding that the Respondent No. 1 has placed the Information Utility, however, a
perusal of the application filed by Respondent No. 1 would show that the Respondent has not produced
any such material. In the column prescribed for details of Information Utility, only 'Not applicable' has
been mentioned by Respondent No. 1. Without any further discussion the Tribunal has held that the
default has occurred. Thus there is no ascertainment of default by the Ld. Tribunal as per sub-Section (3)
(a) of Section 7 of the I&B Code, 2016 which requires consideration of the record of default recorded
with Information Utility or only such other record or evidence 'as may be prescribed'. No such 'specified'
evidence was produced by the Respondent No. 1 before the Ld. Tribunal.
12. Subsequently, upon mentioning, another order dated 23rd January 2017 was passed by the Ld.
Tribunal purporting to clarify its earlier order. By this impugned order the Tribunal, quite contrary to its
earlier order, held that there was no requirement of hearing the opposite party under the I&B Code, 2016.
Further, the impugned order refers to the record of Credit Information Bureau of India Limited
(hereinafter referred to as CIBIL), not 'Information Utility' which was relied upon though earlier order
clearly spoke about record of 'Information Utility'.
13. It was further contended that all the parties are bound by the Master Restructuring Agreement
(hereinafter referred to as MRA) dated 8.9.2014. After MRA a fresh agreement came into existence and
the previous debts came to an end. Under MRA both creditors and debtors had reciprocal obligations.
Respondent No. 1 failed to fulfil its obligation under MRA. On the other hand Appellant has performed
his obligations under MRA. This would be evident from the certificate issued by the auditor appointed
by the bank consortium itself. The fact that Respondent No. 1 has not performed any of its obligation
would also be evident from the reply of R2 (the lead consortium bank) at para 7 (g), (k), (1), (m) and (o)
of the reply filed by Respondent No. 2 before the Tribunal.
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14. According to appellant, Respondent No. 1 has attempted to manufacture a default by its own
conduct/ default. A party which has defaulted its obligation cannot complaint about other's alleged
default. Respondent No. 1 has not performed its obligation on the one hand and on the other had has
wrongly adjusted the amounts due to the Appellant, in other accounts.
15. Ld. Senior Counsel for the Appellant further contended that Respondent No. 1 has not obtained
permission/ consent from Joint Lender Forum (hereinafter referred to as 'JLF' for short) to initiate the
present proceedings even though their application would adversely affect the loans of other members of
JLF. In fact, Respondent No. 1 had applied for such permission but it was not granted. Against the total
loan of Rs.90 crores given by other members to JLF, Respondent No. 1 has not given anything and the
Appellant has already paid about thrice the amount. The other members of JLF have, therefore, no such
grievance against the Appellant.
16. Mr Ramji Srinivasan, Ld. Senior Counsel for the 1St Respondent submitted that there was no
provision for 'hearing' specified under the I&B Code, 2016. According to him the law prescribe that the
'adjudicating authority' is only required to ascertain the existence of default and pass necessary orders for
admission only on the basis of these specified documents. The time bound process for ascertaining the
existence of default is recognised as key object of the I&B Code, 2016 in order to ensure maximisation of
value of assets of such persons.
17. However, it was accepted by the Ld. Senior Counsel for the Financial Creditor that in view of the
application of Section 424 of the Companies Act, 2013 read with Section 60 (5) of the Code, 2016 and
Rule 4(3) of the Insolvency & Bankruptcy (Application to the Adjudicating Authority) Rules, 2016, the
'adjudicating authority' is within its powers to issue the limited notice for a hearing, should the
'adjudicating authority' consider that a hearing is required to be given to the corporate debtor for
ascertainment of existence of default based on the material submitted by the corporate debtor.
18. Ld. Senior Counsel for the Financial Creditor further submitted that there was no adverse civil
consequences for the corporate debtor at the stage of admission which may attract the principles of natural
justice. According to him, the application of Section 424 of the Companies Act to proceedings under the
Code does not necessarily require or call for a hearing at the admission stage or for that matter at any
subsequent stage. It was submitted that the consequences of the admission of the Resolution process are
in no manner prejudicial or against the interest of the corporate debtor. On the contrary, the
aforementioned provisions only seek to (i) preserve and protect the value of the corporate debtor; (ii)
ensure the corporate debtor's smooth functioning as a going concern under professional management; and
(iii) facilitate insolvency resolution. Thus, upon the admission of the application, the corporate debtor and
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its assets are in fact protected by the operation of the Code against inter alia any action for recovery or
claims by any third party, including the financial creditors themselves. He referred to Section 13, 14, 15,
16 and 17 of the Code, 2016 to highlight the scheme of resolution process.
19. It was further contended that only notice of filing of application is required to be provided as
specified under sub-Rule (3) of Rule 4 of the Rules. No other notice is required to be provided by the
'adjudicating authority'. Further, according to Ld. Sr. Counsel for the Financial creditor, Section 424 of
the Companies Act, 2013 does not extend to create an absolute right of hearing under the scheme of the
Code. Reliance was placed on different Supreme Court Decisions, which will be discussed at appropriate
stage.
20. According to Ld. Sr. Counsel for the Respondent, the protection granted under the Notification
issued under Section 4 of the MRU Act is limited to the enactments as specified in the Schedule to the
MRU Act. The MRU Act specifies only certain acts to which the restriction applies and the same cannot
be extended to any other legislation. Further, according to him, the I&B Code, 2016 has a clear non-
obstante clause (Section 238) which overrides operation of MRU Act. He placed reliance on certain other
Supreme Court decisions.
21. He further submitted that the order of the 'adjudicating authority' considers the submissions made
by the appellant and provide reasoned grounds for rejection of the First Interim Application as well as the
Second Interim Application. He further submitted that the admission of the Respondent No. I's
application was done with due application of mind by the 'adjudicating authority' after ascertaining the
clear and unambiguous existence of default from the records placed by the Respondent No. 1, including
the records of the credit information company.
22. The question (s) involved in this appeal are: -
(i). Whether a notice is required to be given to the Corporate Debtor for initiation of Corporate
Insolvency Resolution Process under I&B Code, 2016 and if so, at what stage and for what
purpose?
(ii). Whether 'Maharashtra Relief Undertaking (Special Provisions) Act (Bombay Act XCVI of 1958)'
(hereinafter referred to as MRU Act 1958) shall prevail over I&B Code 2016. In other words,
whether a Corporate Debtor who is enjoying the benefit of MRV Act, can be subjected to I&B
Code 2016? and
(iii).Whether in a case where Joint Lender Forum (JLF) have reached agreement and granted
permission to the Corporate Debtor prior consent of JLF is required by financial creditor, before
filing of an application under Section 7 of the I&B Code 2016?
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23. For determination of first issue, it is desirable to notice different decisions of Hon'ble Apex Court
on the question as to how far rules of natural justice is an essential element.
24. In Maneka Gandhi v UoI & Anr (1c78) 1 SCC 248, the Apex Court while posing the question as
to how far natural justice is an essential element of "procedure established by law" held as follows:
........There are certain well recognised exceptions to the audi

alteram partem rule established by judicial decisions and they are
summarised by S.A. de Smith in Judicial Review of Administrative
Action, 2nd ed., at page 168 to 179. If we analyse tlese exceptions a little
closely, it will be apparent that they do not in any way militate against
the principle which requires fair play in administrative action. The word
'exception' is really a misnomer because in these exclusionary cases the
audi alteram partem rule is held inapplicable not by way of an exception
to 'fair play in action", but because nothing unfair can be inferred by not
affording an opportunity to present or meet a case. The audi alteram
partem rule is intended to inject justice into the law and it cannot be
applied to defeat the ends ofjustice, or to make the law 'lifeless, absurd,
stultifying, self-defeating or plainly contrary to the common sense of the
situation'. Since the life of the law is not logic but experience and every
legal proposition must, in the ultimate analysis, be tested on the
touchstone of pragmatic realism, the audi alteram partem rule would, by
the experiential test, be excluded, if importing the right to be heard has
the effect of paralysing the administrati'e process or the need for
promptitude or the urgency of the situation so demands. But at the same
time it must be remembered that this is a rule of vital importance in the
field of administrative law and it must not be jettisoned save in very
exceptional circumstances where compulsive necessity so demands.
It is a wholesome rule designed to- secure the rule of law and the
court should not be too ready to eschew it in its application to a given
case. True rue it is that in questions of this kind a fanatical or
doctrinaire approach should be avoided, but that does not mean that
merely because the traditional methodology of a formalised hearing may
have the effect of stultifying the exercise of the statutory power, the audi
alteram partem should be wholly excluded. The court must make every
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effort to salvage this cardinal rule to the maximum extent permissible in

a given case. It must not be forgotten that "natural justice is
pragmatically flexible and is amenable to capsulation under the
compulsive pressure of circumstances". The audi alteram partem rule is
not cast in a rigid mould and judicial decisions establish that it may
suffer situational modifications. The core of it must, however, remain,
namely, that the person affected must have a reasonable opportunity of
being heard and the hearing must be a genuine hearing and not an empty
public relations exercise. That is why Tucker, L.J., emphasised in Russel
v. Duke of Norfolk(1 949) 1 All Eng. Reports 109 that "whatever
standard of natural justice is adopted, one essential is that the person
concerned should have a reasonable opportunity of presenting his case".
25. In the said case, Kailasam, J, while dealing with the concept of applicability of natural justice
referred to the decision of Hon'ble Supreme Court in Union of India v J N Sinha (1970) 2 SCC 458 and
held as follows:
"Rules of natural justice cannot be equated with the fundamental

rights". As held by the Supreme Court in Union of India v J.N. Sinha (19
70) 1 SCR 791, that "Rules of natural justice are not embodied rules nor
can they be elevated to the position of Fundamental Rights. Their aim is
to secure justice and to prevent miscarriage of justice. They do not
supplant the law but supplement it. If a statutory provision can be read
consistently with the principles of natural justice the court should do so
but if a statutory provision that specifically or by necessary implication
excludes the application of any rules of natural justice this Court cannot
ignore the mandate of the legislature or the statutory authority and read
into the concerned provision the principles of natural justice." So also
the right to be heard cannot be presumed when in the circumstances of
the case, there is paramount need for secrecy or when a decision will
have to be taken in emergency or when promptness of action is called for
where delay would defeat the very purpose or where it is expected that
the person affected would take an obstructive attitude. To a limited extent
it may be necessary to revoke or to impound a passport without notice if
there is real apprehension that the holder of the passport may leave the
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country if he becomes aware of any intention on the part of the Passport

Authority or the Government to revoke or impound the passport. But that
itself would not justify denial of an opportunity to the holder of the
passport to state his case before the final order is passed. It cannot be
disputed that the legislature has not by express provision excluded the
right to be heard..."
26. In Swadeshi Cotton Mills v. Union of India, (198 1) 1 SCC 664, Sarkaria, J. speaking for the
majority noticed the concept of basic facets of natural justice, the twin principles, namely, audi alteram
partem and nemojudex in re sua, the decisions rendered in Maneka Gandha, State of Orissa v. Dr. Bina
Pani Dei, AIR 1967 SC 1269 and A. K. Kraipak v. UoI, (19 69) 2 SCC 262 and held.
"31. The rules of natural justice can operate only in areas not covered
by any law validly made. They can supplement the law but cannot
supplant it (Per Hegde, J. in A. K. Kraipak, 2 SCC 262). If a statutory
provision either specifically or by inevitable implication excludes the
application of the rules of natural justice, then the Court cannot ignore
the mandate of the Legislature. Whether or not the application of the
principles of natural justice in a given case has been excluded, wholly
or in part, in the exercise of statutory power, depends upon the
language and basic scheme of the provision conferring the power, the
nature of the power, the purpose for which it is conferred and the effect
of the exercise of that power. (See Union of India v. Col. J. N. Sinha,
(1970)2 SCC 458.)
33. The next general aspect to be considered is: Are there any
exceptions to the application of the principles of natural justice,
particularly the audi alteram partem rule ? We have already noticed
that the statute conferring the power, can by express language exclude
its application. Such cases do not present any difficulty. However,
difficulties arise when the statute conferring the power does not
expressly exclude this rule but its exclusion is sought by implication due
to the presence of certain factors: such as, urgency, where the
obligation to give notice and opportunity to be heard would obstruct the
taking of prompt action of a preventive or remedial nature...."
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27. In Liberty Oil Mills & Ors. v. UoI & Ors., (1984) 3 SCC 465, Larger Bench of the Apex Court
has held.... We do not think that it is permissible to interpret any statutory instruments so as to exclude
natural justice, unless the language of the instrument leaves no option to the court
28. In UoI & Anr. Vs. Tulsiram Patel, (1985) 3 SCC 398 = AIR 1985 SC 1416 the Apex Court has
expressed thus
"100. In Swadeshi Cotton Mills v. UoI, (1981) 1 SCC

664 Chinnappa Reddy, J., in his dissenting judgment summarised the
position in law on this point as follows (at page 591): (SCC p. 712,
para 106).
The principles of natural justice have taken deep root in the

judicial conscience of our people, nurtured by Binapani, Kraipak,
Mohinder Singh Gill, Maneka Gandhi etc., etc. They are now
considered as fundamental to the 'implicit in the concept of ordered
liberty' and, therefore, implicit in every decision-making function, call it
judicial, quasi-judicial or administrative. Where authority functions
under a statute and the statute provides for the observance of the
principles of natural justice in a particular manner, natural justice will
have to be observed in that manner and in no other. No wider right than
that provided by statute can be claimed nor can the right be narrowed.
Where the statute is silent about the observance of the principles of
natural justice, such statutory silence is taken to imply compliance with
the principles of natural justice. The implication of natural justice being
presumptive it may be excluded by express words of statute or by
necessary intendment. Where the conflict is between the public interest
and the private interest, the presumption must necessarily be weak and
may, therefore, be readily displaced."
29. In Union of India and another v W.N. Chadha 1993 Supp. (4) SCC 260 their Lordships, while
adverting to the issue of applicability of the doctrine of natural justice, have ruled as follows:
"79. The rule of audi alteram partem is a rule of justice and its
application is excluded where the rule will itself lead to injustice. In A.
S. de Smith's Judicial Review of Administrative Action, 4th Ed. at page
184, it is stated that in administrative law, a prima facie right to prior
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notice and opportunity to be heard may be held to be excluded by

implication in the presence of some factors, singly or in combination
with another. Those special factors are mentioned under items (1) to
(10) under the heading "Exclusion of the audi alteram partem rule'.
80. Thus, there is exclusion of the application of audi alteram partem

rule to cases where nothing unfair can be inferred by not affording an
opportunity to present and meet a case. This rule cannot be applied to
defeat the ends of justice or to make the law 'lifeless, absurd stultifying
and self-defeating or plainly contrary to the common sense of the
situation' and this rule may be jettisoned in very exceptional
circumstances where compulsive necessity so demands.
81. Bhagwati, J. (as the learned Chief Justice then was) in Maneka
Gandhi speaking for himself, Untawalia and Murtaza Fazal Ali, JJ has
stated thus:
.................Now, it is true that since the right to prior notice and

opportunity of hearing arises only by implication from the duty to act
fairly, or to use the words of Lord Morris of Borth-y-Gest, from fair
play in action', it may equally be excluded where, having regard to the
nature of the action to be taken, its object and purpose and the scheme
of the relevant statutory provision, fairness in action does not demand
its implication and even warrants its exclusion...."
82. Thus, it is seen from the decision in Maneka Gandhi that there
are certain exceptional circumstances and situations where under the
application of the rule of audi alteram pattern is not attracted..." After
so stating, their Lordships referred to a passage from Paul Jackson in
Natural Justice and various other decisions.
88. Applying the above principle, it may be held that when the
investigating officer is not deciding any matter except collecting the
materials for ascertaining whether a prima facie case is made out or
not and a full enquiry in case of filing a report under Section 173(2)
follows in a trial before the Court or Tribunal pursuant to the filing of
the report, it cannot be said that at that stage rule of audi alteram
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partem superimposes an obligation to issue a prior notice and hear the

accused which the statute does not expressly recognise. The question is
not whether audi alterant partem is implicit, but whether the occasion
for its attraction exists at all.
30. In D.K. Yadav v. J.M.A. Industries Limited (1993) 3 SCC 259, the Hon'ble Supreme Court has
held as follows:-
"7. Particular statute or statutory rules or orders having statutory

flavour may also exclude the application of the principles of natural
justice expressly or by necessary implication. In other respects the
principles of natural justice would apply unless the employer should
justice its exclusion on given special and exceptional exigencies."
31. In Dr. Rash Lal Yadav v. State of Bihar & Ors., (1994) 5 SCC 267, the Apex Court, after
referring to the decisions in A.K. Kraipak v. UoI, (1969) 2 SCC 262, Dr. Bina Pani Dei, AIR 1967 SC
1269, Union of India v J N Sinha (1970) 2 SCC 458, Swadeshi Cotton Mills v. UoI, (198 1) 1 SCC 664
and Mohinder Singh Gill v. Chief Election Commissioner, (1978) 1 SCC 405, 439, held as follows:-
"9. What emerges from the above discussion is that unless the law
expressly or by necessary implication excludes the application of the
rule of natural justice, courts will read the said requirement in
enactments that are silent and insist on its application even in cases of
administrative action having civil consequences. However, in this case,
the High Court has, having regard to the legislative history, concluded
that the deliberate omission of the proviso that existed in Sub-section
(7) of section 10 of the Ordinance (1980) while re-enacting the said
subsection in the Act, unmistakably reveals the legislature's intendment
to exclude the rule of giving an opportunity to be heard before the
exercise of power of removal. The legislative history leaves nothing to
doubt that the legislature did not expect the State Government to seek
the incumbent's explanation before exercising the power of removal
under the said provision. We are in complete agreement with the High
Court's view in this behalf...."
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32. In Mangilal v. State of M.P., (2004) 2 SCC 447, while dealing with the principle of applicability
of natural justice in awarding compensation under Section 357 (4) of the Code of Criminal Procedure,
1973, their Lordships have observed thus:
"10 It has always been a cherished principle.
Where the statute is silent about the observance of the principles of

natural justice, such statutory silence is taken to imply compliance with
the principles of natu rat justice where substantial rights of parties are
considerably affected. The application of natural justice becomes
presumptive, unless found excluded by express words of statute or
necessary intendment ,,
33. In Union of India v Tulsiram Patel AIR 1985 SC 1416, Hon'ble Supreme court observed:
" The right of opportunity to be heard can be excluded where the nature
of action taken, its objects and purpose and the scheme of the relevant
statutory provision warrant its exclusion .."
34. In Dharampal Satyapal v Deputy commissioner central Excise (2015) 8SCC 519, Hon'ble Apex
court was of the view:
' .If it is felt that a hearing would not change the ultimate conclusion
reached by the decision maker, then no legal duty to supply a hearing
arises
35. In Union of India v W.N. Chaddha AIR 1993 Sc 1082, Hon'ble Apex Court observed that:
The question is not whether audi alteram partem is implicit, but

whether the occasion for its attraction exists at all........
36. In State of Maharashtra v. Jalgaon Municipal Council, (2003) 9 SCC 731, the Hon'ble Supreme
Court observed as:
"Some of the relevant factors which enter the judicial process of

thinking for determining the extent of moulding the nature and scope of
fair hearing and may reach to the extent of right to hearing being
excluded are: (i) the nature of the subject-matter, and (ii) exceptional
situations. Such exceptionality may be spelled out by (i) need to take
urge)nt action for safeguarding public health or safety or public
interest, (ii) the absence of legitimate exceptions, (iii) by refusal of
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remedies in discretion, (iv) doctrine of pleasure such as the power to

dismiss an employee at pleasure, (v) express legislation."
37. In A.K. Kraipak v. Union of India, (1969) 2 SCC, Hon'ble Supreme Court observed that:
........The aim of the rules of natural justice is to secure justice or to put

it negatively to prevent
miscarriage of justice. These rules can operate
only in areas not covered by any law validly made. In other words they
do not supplant the law of the land but supplement it...."
38. In C.B. Gautam vs Union Of India 1993 (1) SCC 78, Hon'ble Apex Court was of the view
"It is true that if a statutory provision can be read consistently with the
principles of natural justice, the courts should do so because it must be
presumed that the legislatures and the statutory authorities intend to act
in accordance with the principles of natural justice. But If, on the other
hand, a statutory provision either specifically or by necessary
implication excludes the application of any or all the principles of
natural justice then the court cannot ignore the mandate of the
Legislature or the statutory authority and read into the concerned
provision the principles of natural justice....
38. In M.P. Industries Ltd. v. Union of India, AIR 1966 SC 671, it was observed by Hon'ble Supreme
Court that:
"The said opportunity need not necessarily be by personal hearing. It

can be by written representation. Whether the said opportunity should
be by written representation or by personal hearing depends upon the
facts of each case and ordinarily it is in the discretion of the tribunal.
The facts of the present case disclose that a written representation
would effectively meet the requirements of the principles of natural
justice."
40. In S.L Kapoor v. Jagmohan, (1980) 4 SCC 379 the Hon'ble Supreme Court was of the view:
"Where on the admitted or undisputed facts only one conclusion is

possible and under the law only one penalty is permissible, the Court
may not insist on the observance of the principles of natural justice."
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41. The aforesaid observation has been highlighted by Hon'ble Supreme Court, in a different way,
observing that "useless formality" is another exception to the ratio of natural justice. Where on the
admitted or undisputed facts only one conclusion is possible and under the law only one penalty is
permissible, the Court may not insist on the observance of the principles of natural justice because it
would be futile to order its observance. Therefore, where the result would not be different, and it is
demonstrable beyond doubt, order of compliance with the principles of natural justice will not be
justified.
42. From the aforesaid decisions of Hon'ble Supreme Court, the exception on the Principle of Rules
of natural justice can be summarised as follows:-
(i) Exclusion in case of emergency,
(ii) Express statutory exclusion
(iii) Where discloser would be prejudicial to public interests
(iv) Where prompt action is needed,
(v) Where it is impracticable to hold hearing or appeal,
(vi) Exclusion in case of purely administrative matters.
( v i i ) Where no right of person is infringed,
( v i i i ) The procedural defect would have made no difference to the outcome.
( i x ) Exclusion on the ground of 'no fault' decision maker etc.
( x ) Where on the admitted or undisputed fact only one conclusion is possible - it

will be useless formality
43. There is no specific provision under the I&B Code, 2016 to provide hearing to Corporate debtor
in a petition under Section 7 or 9 of the I&B Code, 2016.
44. Sub-section (1) of Section 5 defines "adjudicating authority" for the purpose of that part means
"National Company Law Tribunal", (NCLT) constituted under Section 408 of the Companies Act, 2013
(18 of 2013).
45. Section 420 of the Companies Act, 2013 relate to 'orders of Tribunal'. Sub-Section (1) of Section
420 mandates the Tribunal to provide the parties before it, the reasonable opportunity of being heard
before passing orders as it thinks fit, as quoted below:-
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by Hon’ble NCLAT
" 420. Orders of Tribunal.— (1) The Tribunal may, after giving the
parties to any proceeding before it, a reasonable opportunity of being
heard, pass such orders thereon as it thinks fit."
46. I&B Code, 2016 empowers 'adjudicating authority' to pass orders under Section 7, 9 and 10 of the
Code, 2016 and not the National Company Law Tribunal. It is by virtue of the definition under sub-
Section (1) of Section 5 read with section 60 of the I&B Code, 2016, the National Company Law
Tribunal plays role of an "adjudicating authority".
47. Section 60 of the I&B Code, 2016 which relate to 'Adjudicating Authority' for corporate persons
which empowers the National Company Law Tribunal to entertain and dispose of the petition as
stipulated under sub-section (5) of Section 60 reads as follows: -
"ADJUDICATING AUTHORITY FOR CORPORATE PERSONS 60. (1)

The Adjudicating Authority, in relation to insolvency resolution and
liquidation for corporate persons including corporate debtors and
personal guarantors thereof shall be the National Company Law
Tribunal having territorial jurisdiction over the place where the
registered office of the corporate person is located.
(5) Notwithstanding anything to the contrary contained in any other law

for the time being in force, the National Company Law Tribunal shall
have jurisdiction to entertain or dispose of— (a) any application or
proceeding by or against the corporate debtor or corporate person; (b)
any claim made by or against the corporate debtor or corporate person,
including claims by or against any of its subsidiaries situated in India;
and (c) any question of priorities or any question of law or facts, arising
out of or in relation to the insolvency resolution or liquidation
proceedings of the corporate debtor or corporate person under this
Code."
48. By Section 255 of the I&B Code 2016 certain provisions of the Companies Act, 2013 has been
amended in the manner as specified in the XIth Schedule. By virtue of Article 32 of XIth Schedule, the
Section 424 of the Companies Act, 2013 stands amended as follows:
"32. In section 424, - Commencement of winding up by Tribunal. (i) in

sub-section (1), after the words, "other provisions of this Act", the
words "or of the Insolvency and Bankruptcy Code, 2016" shall be
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inserted; (ii) in sub-section (2), after the words, "under this Act", the
words "or under the Insolvency and Bankruptcy Code, 2016" shall be
inserted."
On such amendment, Section 424 of the Companies Act, 2013 reads as

follows: -
"424. Procedure before Tribunal and Appellate Tribunal -
(1) The Tribunal and the Appellate Tribunal shall not, while disposing
of any proceeding before it or, as the case may be, an appeal before it,
be bound by the procedure laid down in the Code of Civil Procedure,
1908, but shall be guided by the principles of natural justice, and,
subject to the other provisions of this Act (or of Insolvency and
Bankruptcy Code 2016) and of any rules made thereunder, the Tribunal
and the Appellate Tribunal shall have power to regulate their own
procedure.
(2) The Tribunal and the Appellate Tribunal shall have, for the
purposes of discharging their functions under this Act (or under the
Insolvency and Bankruptcy Code 2016,) the same powers as are vested
in a civil court under the Code of Civil Procedure, 1908 while trying a
suit in respect of the following matters, namely: -
(a) summoning and enforcing the attendance of any person and

examining him on oath;
(b) requiring the discovery and production of documents;
(c) receiving evidence on affidavits;
(d) subject to the provisions of sections 123 and
124 of the Indian Evidence Act, 1872, requisitioning any public record
or document or a copy of such record or document from any office;
(e) issuing commissions for the examination of witnesses or documents;
(fi dismissing a representation for default or deciding it ex parte;
(g) setting aside any order of dismissal of any representation for default
or any order passed by it exparte; and
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by Hon’ble NCLAT
(h) any other matter which may be prescribed. (3) Any order made by
the Tribunal or the Appellate Tribunal may be enforced by that
Tribunal in the same manner as if it were a decree made by a court in a
suit pending therein, and it shall be lawful for the Tribunal or the
Appellate Tribunal to send for execution of its orders to the court within
the local limits of whose jurisdiction, -
(a) in the case of an order against a company, the registered office of

the company is situate; or
(b) in the case of an order against any other person, the person
concerned voluntarily resides or carries on business or personally
works for gain.
(4) All proceedings before the Tribunal or the Appellate Tribunal shall
be deemed to be judicial proceedings within the meaning of sections
193 and 228, and for the purposes of section 196 of the Indian Penal
Code, and the Tribunal and the Appellate Tribunal shall be deemed to
be civil court for the purposes of section 195 and Chapter XXVI of the
Code of Criminal Procedure, 1973."
49. As amended Section 424 of the Companies Act, 2013 is applicable to the proceeding under the
I&B Code, 2016, it is mandatory for the adjudicating authority to follow the Principles of rules of natural
justice while passing an order under I&B Code, 2016. Further, as Section 424 mandates the 'Tribunal' and
Appellate Tribunal, to dispose of cases or/appeal before it subject to other provisions of the Companies
Act, 2013 or I&B Code 2016 such as, Section 420 of the Companies Act 2013 was applicable and to be
followed by the Adjudicating Authority.
50. One "Sree Metaliks Limited & Ann" moved before the Hon'ble Calcutta High Court in Writ
Petition 7144 (W) of 2017 assailing the vires of Section 7 of the Code, 2016 and the relevant rules under
the Insolvency & Bankruptcy (Application to the Adjudicating Authority) Rules, 2016 (hereinafter
referred to as I&B Rules, 2016). The challenge was premise upon the contention that the Code, 2016 does
not afford any opportunity of hearing to a corporate debtor in a petition under Section 7 of I&B Code,
2016. The Hon'ble High Court noticed relevant provision of Section 7 of the I&B Code 2016, the
definition of 'adjudicating authority' as defined under Section 5(1), Section 61 of the I&B Code, 2016
relating to appeal and amended Section 424 of the Companies Act, 2013 and by judgment dated 7th April,
2017 held as follows:-
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by Hon’ble NCLAT
However, it is to apply the principles of natural justice in the

proceedings before it. It can regulate it own procedure, however,
subject to the other provisions of the Act of 2013 or the Insolvency and
Bankruptcy Code of 2016 and any Rules made thereunder. The Code of
2016 read with the Rules 2016 is silent on the procedure to be adopted
at the hearing of an application under section 7 presented before the
NCLT, that is to say, it is silent whether a party respondent has a right
of hearing before the adjudicating authority or not Section 424 of the
Companies Act, 2013 requires the NCLT and NCLAT to adhere to the
principles of the natural justice above anything else. It also allows the
NCLT and NCLAT the power to regulate their own procedure. Fetters
of the Code of Civil Procedure, 1908 does not bind it. However, it is
required to apply its principles. Principles of natural justice require an
authority to hear the other party. In an application under Section 7 of
the Code of 2016, the financial creditor is the applicant while the
corporate debtor is the respondent. A proceeding for declaration of
insolvency of a company has drastic consequences for a company. Such
proceeding may end up in its liquidation. A person cannot be
condemned unheard. Where a statute is silent on the right of hearing
and it does not in express terms, oust the principles of natural justice,
the same can and should be read into in. When the NCLT receives an
application under Section 7 of the Code of 2016, therefore, it must
afford a reasonable opportunity of hearing to the corporate debtor as
Section 424 of the Companies Act, 2013 mandates it to ascertain the
existence of default as claimed by the financial creditor in the
application. The NCLT is, therefore, obliged to afford a reasonable
opportunity to the financial debtor to contest such claim of default by
filing a written objection or any other written document as the NCLT
may direct and provide a reasonable opportunity of hearing to the
corporate debtor prior to admitting the petition filed under Section 7 of
the Code of 2016. Section 7(4) of the Code of 2016 requires the NCLT
to ascertain the default of the corporate debtor. Such ascertainment of
default must necessarily involve the consideration of the documentary
claim of the financial creditor. This statutory requirement of
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by Hon’ble NCLAT
ascertainment of default brings within its wake the extension of a

reasonable opportunity to the corporate debtor to substantiate by
document or otherwise, that there does not exist a default as claimed
against it. The proceedings before the NCLT are adversarial in nature.
Both the sides are, therefore, entitled to a reasonable opportunity of
hearing.
The requirement of NCLT and NCLAT to adhere to the principles of

natural justice and the fact that, the principles of natural justice are not
ousted by the Code of 2016 can be found from Section 7(4) of the Code
of 2016 and Rule 4 of the Insolvency and Bankruptcy (Application to
Adjudicating Authority) Rules, 2016. Rule 4 deals with an application
made by a financial creditor under Section 7 of the Code of 2016. Sub-
rule (3) of Rule 4 requires such financial creditor to despatch a copy of
the application filed with the adjudicating authority, by registered post
or speed post to the registered office of the corporate debtor. Rule 10 of
the Rules of 2016 states that, till such time the Rules of procedure for
conduct of proceedings under the Code of 2016 are notified, an
application made under Sub-section (1) of Section 7 of the Code of 2017
is required to be filed before the adjudicating authority in accordance
with Rules 20, 21, 22, 23, 24 and 26 or Part-Ill of the National
Company Law Tribunal Rules, 2016.
Adherence to the principles of natural justice by NCLT or NCLAT

would not mean that in every situation, NCLT or NCLAT is required to
afford a reasonable opportunity of hearing to the respondent before
passing its order.
In a given case, a situation may arise which may require NCLT to pass
an ex-parte ad interim order against a respondent. Therefore, in such
situation NCLT, it may proceed to pass an ex-parte ad interim order,
however, after recording the reasons for grant of such an order and
why it has chosen not to adhere to the principles of natural justice at
that stage. It must, thereafter proceed to afford the party respondent an
opportunity of hearing before confirming such ex-parte ad interim
order.
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by Hon’ble NCLAT
In the facts of the present case, the learned senior advocate for the
petitioner submits that, orders have been passed by the NCLT without
adherence to the principles of natural justice. The respondent was not
heard by the NCLT before passing the order.
It would be open to the parties to agitate their respective grievances

with regard to any order of NCLT or NCLAT as the case may be in
accordance with law. It is also open to the parties to point out that the
NCLT and the NCLAT are bound to follow the principles of natural
justice while disposing of proceedings before them.
In such circumstances, the challenge to the vires to Section 7 of the

Code of 201 6 fails."
51. As per clause (3) of Rule 4 of Insolvency and Bankruptcy (Application to Adjudicating
Authority) Rules, 2016, the financial creditor is required to despatch forthwith a copy of the application
filed with the 'adjudicating authority' to the corporate debtor as quoted below:-
"4(3) The applicant shall dispatch forthwith, a copy of the application

filed with the Adjudicating Authority, by registered post or speed post to
the registered office of the corporate debtor."
Thus it is clear that sub-Rule (3) of Rule 4 of I&B (Application to Adjudicating Authority) Rules,
2016, mandates the applicant to dispatch forthwith, a copy of the application "filed with the Adjudicating
Authority". Thereby a post filing notice required to be issued and not as notice before filing of an of
application. The purpose for the same being to put corporate debtor to adequate impound notice so that
the Corporate Debtor may bring to the notice of Adjudicating Officer "mitigating factor/records before
the application is accepted even before formal notice is received."
52. The insolvency resolution process under Section 7 or Section 9 of I&B Code, 2016 have serious
civil consequences not only on the corporate debtor - company but also on its directors and shareholders
in view of the fact that once the application under Sections 7 or 9 of the I&B Code, 2016 is admitted it is
followed by appointment of an 'interim resolution professional' to manage the affairs of the corporate
debtor, instant removal of the board of directors and moratorium for a period of 180 days. For the said
reason also the Adjudicating Authority is bound to issue limited notice to the corporate debtor before
admitting a case under section 7 and 9 of the 'I & B Code', 2016.
53. In view of the discussion above, we are of the view and hold that the Adjudicating Authority is
bound to issue a limited notice to the corporate debtor before admitting a case for ascertainment of
356
by Hon’ble NCLAT
existence of default based on material submitted by the corporate debtor and to find out whether the
application is complete and or there is any other defect required to be removed. Adherence to Principles
of natural justice would not mean that in every situation the adjudicating authority is required to afford
reasonable opportunity of hearing to the Corporate debtor before passing its order.
Purpose of Issuance of Notice:
54. Section 7 of the Code provides for process of initiation of corporate Insolvency Resolution
process by a financial creditor, Section 8 and 9 provide for process of initiation of Insolvency Resolution
process by an operational creditor and Section 10 of the Code provides for process of initiation of
Insolvency Resolution process by the corporate debtor itself.
55. Process of initiation of Insolvency Resolution process by a financial creditor is provided in

Section 7 of the I & B Code. As per sub-section (1) of Section 7 of the I & B Code, the trigger for filing
of an application by a financial creditor before the Adjudicating Authority is when a default in respect of
any financial debt has occurred. Sub-section (2) of Section 7 provides that the financial creditor shall
make an application in prescribed form and manner and with prescribed documents, including:
i. "record of the default" recorded with the information utility or such other record or
ii. the name of the resolution professional proposed to act as an interim resolution
professional; and
iii. any other information as may be specified by the Board
56. The procedure once an application is filed by the financial creditor with the Adjudicating
Authority is specified in sub-section (4) of Section 7 to sub-section (7) of Section 7 of the Code. As per
sub-section (4) of Section 7 of the I & B Code:
"(4) The Adjudicating Authority shall, within fourteen days of the

receipt of the application under sub-section (2), ascertain the existence
of a default from the records of an information utility or on the basis of
other evidence furnished by the financial creditor under sub-section
(3)."
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by Hon’ble NCLAT
57. Sub-section (5) of Section 7 of the I & B Code provides for admission or rejection of application
of a financial creditor Where the Adjudicating Authority is satisfied that-...'. the documents are complete
or incomplete.
58. The Adjudicating Authority post ascertaining and being satisfied that such a default has occurred
may admit the application of the financial creditor. In other words, the statute mandates the Adjudicating
Authority to ascertain and record satisfaction as to the occurrence of default before admitting the
application. Mere claim by the financial creditor that the default has occurred is not sufficient. The same
is subject to the Adjudicating Authority's summary adjudication, though limited to 'ascertainment' and
'satisfaction'.
59. Unlike Section 7 of the I & B Code, before making an application to the Adjudicating Authority
under Section 9 of the I & B Code, the requirements under Section 8 of the I & B Code are required to be
complied with.
60. Under sub-section (1) of Section 8 of the Code, an Operational Creditor, on occurrence of a
default, is required to deliver a notice of demand of unpaid debt or get copy of the invoice demanding
payment of the defaulted amount served on the corporate debtor. This is the condition precedent under
section 8 and 9 of the I & B Code, unlike in Section 7, before making an application to the Adjudicating
Authority.
61. Under Section 9 of the Code, a right to file an application accrues after expiry of ten days from
the date of delivery of the demand notice or copy of invoice as the case may be, demanding payment
under sub-section (1) of Section 8 of the I & B Code. The operational creditor would receive either the
payment or a notice of dispute in terms of sub-section (2) of Section 8 of the I & B Code.
62. Thus, it is evident from Section 9 of the I & B Code that the Adjudicating Authority has to,
within fourteen days of the receipt of the application under sub-section (2), either admit or reject the
application. Section 9 has two-fold situations insofar as notice of dispute is concerned. As per sub-
section (5) (1) of Section 9, the Adjudicating Authority can admit the application in case no notice
raising the dispute is received by the operational creditor (as verified by the operational creditor on
affidavit) and there is no record of a dispute is with the information utility.
On the other hand, sub-section (5) of Section 9(5) mandates the Adjudicating Authority to reject
the application if the operational creditor has received notice of dispute from the corporate debtor.
Section 9 thus makes it distinct from Section 7. While in Section 7, occurrence of default has to be
ascertained and satisfaction recorded by the Adjudicating Authority, there no similar provision under
Section 9. The use of language in sub-section (2) of Section 8 of the I & B Code provides that the
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by Hon’ble NCLAT
"corporate debtor shall, within a period of ten days of the receipt of the demand notice or copy of the
invoice mentioned in sub-section (1), 'bring to the notice of the operational creditor... the existence of a
dispute " Under Section 7 neither notice of demand nor a notice of dispute is relevant whereas under
Sections 8 and 9 notice of demand and notice of dispute become relevant both for the purposes of
admission as well as for and rejection.
63. While ascertaining the 'Adjudicating Authority' to comes to a conclusion whether there is an
existence of default for the purpose of section 7 or there is a dispute raised by the corporate debtor and
all other purpose whether an application is complete or incomplete, it is not only necessary to hear the
financial creditor! 'Operational Creditor but also the corporate debtor.
64. The different decisions of the Hon'ble Supreme Court, as referred to above and exception of
principles of natural justice as noticed and summarised in the preceding paragraphs is not applicable to
the insolvency resolution process as it is not a case of emergency declared or prejudicial to public
interest or that there is a statutory exclusion of rules of natural justice or it is impracticable to hold
hearing. It is not the case that no right of any person has been affected, as immediately on appointment of
an Interim Resolution Professional, the Board of directors stand superseded. There are other persons who
are also affected due to order of moratorium. Therefore, the 'adjudicating authority' is duty bound to give
a notice to the corporate debtor before admission of a petition under Section 7 or Section 9.
65. In the present case though no notice was given to the Appellant before admission of the case but
we find that the Appellant intervened before the admission of the case and all the objections raised by
appellant has been noticed, discussed and considered by the 'adjudicating authority' while passing the
impugned order dated 17th January 2017. Thereby, merely on the ground that the Appellant was not
given any notice before admission of the case cannot render the impugned order illegal as the Appellant
has already been heard. If the impugned order is set aside and the case is remitted back to the
adjudicating authority, it would be 'useless formality' and would be futile to order its observance as the
result would not be different. Therefore, order to follow the principles of natural justice in the present
case does not arise.
66. However, in some of the cases initiation of Insolvency Resolution Process may have adverse
consequences on the welfare of the Company. Therefore, it will be imperative for the "adjudicating
authority" to adopt a cautious approach in admitting Insolvency Application by ensuring adherence to the
principle of natural justice.
67. The next question is whether the Appellant can claim any protection having granted benefit under
MRU Act, 1956.
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by Hon’ble NCLAT
The protection granted by notification issued under Section 4 of the MRU Act, 1956 is limited to
the enactments as specified in the Schedule to the MRU Act, as apparent from Section 4(1) (a) (1) of the
MRU Act and provides as follows: -
"4. (1) Notwithstanding any law, usage, custom, contract, instrument,

decree, order, award, submission, settlement, standing order or other
provision whatsoever, the State Government may, by notification in the
official Gazette, direct that—
(a) in relation to any relief undertaking and in respect of the period for
which the relief undertaking continues as such under sub-section (2) of
section 3-
(i) all or any of the laws in the Schedule to this Act or any provisions
thereof shall not apply (and such relief undertaking shall be exempt
therefrom), or shall, if so directed by the State Government, be applied
with such modifications (which do not however affect the policy of the
said laws) as may be specified in the notification;...
(ii) all or any of the agreements, settlements, awards or standing orders

made under any of the laws in the Schedule to this Act, which may be
applicable to the undertaking immediately before it was acquired or
taken over by the State Governme;it 3[ or before any loan, guarantee or
other financial assistance was provided to it by, or with the approval of,
the State Government,] for being run as a relief undertaking, shall be
suspended in operation or shall, if so directed by the State Government,
be applied with such modifications as may be specified in the
notification;
(iii). rights, privileges, obligations and liabilities shall be determined

and be enforceable in accordance with clauses (i) and (ii) and the
notification;
(iv) any right, privilege, obligation or liability accrued or incurred

before the undertaking was declared a relief undertaking and any
remedy for the enforcement thereof shall be suspended and all
proceedings relative thereto pending before any court, tribunal, officer
or authority shall be stayed" (emphasis supplied")
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by Hon’ble NCLAT
68. The Schedule to the MRU Act specifies only certain acts to which the restriction applies.
Accordingly, the application of the MRU Act can only be extended to such acts as specified in the
schedule and no other legislation. The legislations referred to in the 'schedule' to the MRU Act are
employment welfare related which is in consonance with the objects and purposed of the MRU Act i.e.
'employment and unemployment'. The protection under the MRU Act, therefore, cannot be extended to
other legislations especially to union legislation which is subsequent to the MRU Act and related to
insolvency resolution i.e. I&B Code, 2016.
69. Section 4 of the MRU Act, including Section 4 (iv), therefore, is limited in scope to the acts listed
in the schedule thereto.
70. Section 238 of the I&B Code, 2016 is non-obstante clause which overrides the operation of the
MRU Act. As per Section 238 of the I&B Code, 2016 the provisions of the Code are to are to be given
effect to notwithstanding anything contrary contained any other law or any instrument having effect under
such law. Section 238 states as follows:
"238 - The provisions of this Code shall have effect, notwithstanding

anything inconsistent therewith contained in anti other law for the time
being in force or anti instrument havina effect by virtue of any such law."
71. In light of the aforementioned non-obstante provision (which is a subsequent Union Law), the
provisions of the I&B Code, 2016 shall prevail over the provisions of the MRU Act and any instrument
issued under the MRU Act including the Notification.
72. It was submitted on behalf of the Appellant that by virtue of the provisions of Sections 3 and 4 of
the MRU Act read with the notification issued thereunder, a creditor is restrained from exercising its
statutory rights under the provisions of the Code. But such submission cannot be accepted as Section 238
of the I&B Code, 2016 clearly mandates that the provisions of the I&B Code, 2016 shall have effect,
notwithstanding anything inconsistent therewith contained in any other law for the time being in force or
any instrument having effect by virtue of any such law. This being the position and considering the
mandate laid down in Section 238, which is a subsequent law enacted by Parliament, the provisions of the
Section 238 would have effect notwithstanding the provisions of the MRU Act and any notification issued
thereunder, insofar as it restrains the creditor from enforcing its security interest against the relief
undertaking in whose favour a notification has been issued.
73. The MRU Act operates in a different field from the I&B Code, 2016. MRU Act is an Act to make
temporary provisions for industrial relations and other matters to enable the State Government to conduct
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by Hon’ble NCLAT
or to provide a loan, guarantee or financial assistance for the conduct of certain industrial undertakings 'as
a measure of preventing unemployment or of unemployment relief.'
74. On the other hand the I&B Code, 2016 is an Act enacted to consolidate and amend the laws
relating to reorganization and insolvency resolution of corporate persons, partnership firms and
individuals in a time bound manner for maximization of value of assets of such persons, to promote
entrepreneurship, availability of credit and balance the interest of all the stakeholders including alteration
in the order of priority of payments of Government dues. The I&B Code, 2016, which is later act of
greater specificity, seeks to balance the interests of all stake holders.
75. In view of the aforesaid objects of the two enactments it is apparent that the two enactments
operate in entirely different fields. This is further made clear by the fact that the MRU Act is enacted
under Entry 23 of List III while the Code has been enacted under Entry 9 of the List III. The stand taken
by the learned counsel for the Appellant that the MRU Act has been enacted under Entry 24 of List II
cannot be accepted as the MRU Act has received Presidential assent under Article 2 54(2) of the
Constitution of India, which is only required for statutes enacted by the State Government in exercise of
its legislative competence under the Concurrent List.
76. In Yogender Kumar Jaiswal Vs. State of Bihar, (2016) 3 SCC 183, the Hon'ble Supreme Court,
while dealing with Article 254, noticed the decision in "Hoechst Pharmaceuticals Ltd. (1983) 4 SCC 45"
and observed as follows:-
55. Thereafter, the Court proceeded to state that: (Hoechst

Pharmaceuticals Ltd. case [Hoechst Pharmaceuticals Ltd. v. State of
Bihar, (1983) 4 SCC 45:1983 SCC (Tax) 248: AIR 1983 SC 1019], SCC
pp. 89-90, para 69)
"69. ... The question of repugnancy under Article 254(1) between a law
made by Parliament and a law made by the State Legislature arises only
in case both the legislations occupy the same field with respect to one of
the matters enumerated in the Concurrent List, and there is direct
conflict between the two laws. It is only when both these requirements
are fulfilled that the State law will, to the extent of repugnancy, become
void. Article 254(1) has no application to cases of repugnancy due to
overlapping found between List U on the one hand and List land List III
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by Hon’ble NCLAT
on the other. If such overlapping exists in any particular case, the State
law will be ultra vires because of the non obstante clause in Article
246(1) read with the opening words 'subject to' in Article 246(3). In such
a case, the State law will fail not because of repugnance to the Union
law but due to want of legislative competence. It is no doubt true that the
expression 'a law made by Parliament which Parliament is competent to
enact' in Article 254(1) is susceptible of a construction that repugnance
between a State law and a law made by Parliament may take place
outside the concurrent sphere because Parliament is competent to enact
law with respect to subjects included in List HI as well as 'List F. But if
Article 254(1) is read as a whole, it will be seen that it is expressly made
subject to clause (2) which makes reference to repugnancy in the field
ofConcurrent List—in other words, if clause (2) is to be the guide in the
determination of scope of clause (1), the repugnancy between Union and
State law must be taken to refer only to the Concurrent field. Article
254(1) speaks of a State law being repugnant to (a) a law made by
Parliament or (b) an existing law."
62. Having stated the proposition where and in which circumstances the
principle of repugnancy would be attracted and the legislation can be
saved or not saved, it is necessary to focus on clause (2) of Article 254 of
the Constitution. In Hindustan Times v. State of U.P. [Hindustan Times
v. State of U.P., (2003) 1 SCC 591], after referring to the earlier
judgments, it has been held that Article 254(2) carves out an exception
and, that is, if the Presidential assent to a State law which has been
reserved for his consideration is obtained under Article 200, it will
prevail notwithstanding the repugnancy to an earlier law of the Union.
The relevant passage of the said authority is extracted below: (SCC pp.
599-600, para 19)
"19. As noticed hereinbefore, the State of Uttar Pradesh intended to

make a legislation covering the same field but even if the same was to be
made, it would have been subject to the parliamentary legislation unless
assent of the President of India was obtained in that behalf. The State
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executive was, thus, denuded of any power in respect of a matter with

respect whereto Parliament has power to make laws, as its competence
was limited only to the matters with respect to which the legislature of
the State has the requisite legislative competence. Even assuming that
the matter relating to the welfare of the working journalists is a field
which falls within Entry 24 of the Concurrent List, unless and until a
legislation is made and assent of the President is obtained, the provisions
of the 1955 Act and the Working Journalists (Fixation of Rates and
Wages) Act, 1958 would have prevailed over the State enactment."
77. In "Madras Pet rochem Limited and Another Vs Board for Industrial and Financial
Reconstruction and Others," (2016)4, SCC 1, the Hon'ble Supreme Court was considering the question
whether pendency of reference before BIFR bar enforcement of secured assets under SARFAESI Act,
2002. In the said case, the Hon'ble Supreme Court having noticed the earlier decisions observed:
"29. On the other hand, in Solidaire India Ltd. v. Fairgrowth Financial

Services Ltd. [Solidaire India Ltd. v. Fairgrowth Financial Services Ltd.,
(2001) 3 SCC 71], it was the Special Courts (Trial of Offences Relating
to Transactions in Securities) Act, 1992 which came up for consideration
vis-d-vis the Sick Industrial Companies (Special Provisions) Act, 1985.
In paras 9 and 10 of this Court's judgment, this Court noted that both
Acts were special Acts. In a significant ext ract from a Special Court
judgment, which was approved by this Court, it was stated that the
SpeciaZ Courts Act, 1992, being a later enactment and also containing a
non obstante clause, would prevail over the Sick Industrial Companies
(Special Provisions) Act, 1985. Had the legislature wanted to exclude the
provisions of the Sick Industrial Companies (Special Provisions) Act,
1985, from the ambit of the said Act, the legislature would specifically
have so provided (emphasis supplied). The fact that the legislature did
not specifically so provide necessarily means that the legislature
intended that the provisions of the said Act were to prevail over the
provisions of the Sick Industrial Companies (Special Provisions) Act,
1985. In short, when property of notified persons under the Special
Courts Act, 1992 stands attached, it is only the Special Court which can
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by Hon’ble NCLAT
give directions to the custodian under the said Act as to disposal of such
property of a notified party. The legislature expressly overrode Section
22 of the Sick Industrial Companies (Special Provisions) Act, 1985 and
permitted the custodian to give directions under Section 11 of the Special
Courts Act, 1979, notwithstanding Section 22 of the Sick Industrial
Companies (Special Provisions) Act, 1985.
36. A conspectus of the aforesaid decisions shows that the Sick Industrial
Companies (Special Provisions) Act, 1985 prevails in all situations
where there are earlier enactments with non obstante clauses similar to
the Sick Industrial Companies (Special Provisions) Act, 1985. Where
there are later enactments with similar non obstante clauses, the Sick
Industrial Companies (Special Provisions) Act, 1985 has been held to
prevail only in a situation where the reach of the non obstante clause in
the later Act is limited—such as in the case of the Arbitration and
Conciliation Act, 1996—or in the case of the later Act expressly yielding
to the Sick Industrial Companies (Special Provisions) Act, 1985, as in
the case of the Recovery of Debts Due to Banks and Financial
Institutions Act, 1993. Where such is not the case, as in the case of
Special Courts Act, 1992, it is the Special Courts Act, 1992 which was
held to prevail over the Sick Industrial Companies (Special Provisions)
Act, 1985.
39. This is what then brings us to the doctrine of harmonious
construction, which is one of the paramount doctrines that is applied in
interpreting all statutes. Since neither Section 35 nor Section 37 of the
Securitisation and Reconstruction of Financial Assets and Enforcement
of Security Interest Act, 2002 is subject to the other, we think it is
necessary to interpret the expression "or any other law for the time being
in force" in Section 37. If a literal meaning is given to the said
expression, Section 35 will become completely otiose as all other laws
will then be in addition to and not in derogation of the Securitisation and
Reconstruction of Financial Assets and Enforcement of Security Interest
Act, 2002. Obviously this could not have been the parliamentary
intendment, after providing in Section 35 that the Securitisation and
Reconstruction of Financial Assets and Enforcement of Security Interest
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by Hon’ble NCLAT
Act, 2002 will prevail over all other laws that are inconsistent therewith.
A middle ground has, therefore, necessarily to be taken. According to us,
the two apparently conflicting sections can best be harmonised by giving
meaning to both. This can only be done by limiting the scope of the
expression "or any other law for the time being in force" contained in
Section 37. This expression will, therefore, have to be held to mean other
laws having relation to the securities market only, as the Recovery of
Debts Due to Banks and Financial Institutions Act, 1993 is the only other
special law, apart from the Securitisation and Reconstruction of
Financial Assets and Enforcement of Security Interest Act, 2002, dealing
with recovery of debts due to banks and financial institutions. On this
interpretation also, the Sick Industrial Companies (Special Provisions)
Act, 1985 will not be included for the obvious reason that its primary
objective is to rehabilitate sick industrial companies and not to deal with
the securities market."
78. Following the law laid down by Hon'ble Supreme Court in "Yogendra Krishnan Jaiswal" and
"Madras Petrochem Limited" we hold that there is no repugnancy between I&B Code, 2016 and the MRU
Act as they both operate in different fields. The Parliament has expressly stated that the provisions of the
I&B Code, 2016 (which is a later enactment to the MRU Act) shall have effect notwithstanding the
provisions of any other law for the time being in force. This stipulation does not mean that the provisions
of MRU Act or for that matter any other law are repugnant to the provisions of the Code.
79. In view of the finding as recorded above, we hold that the Appellant is not entitled to derive any
advantage from MRU Act, 1956 to stall the insolvency resolution process under Section 7 of the
Insolvency & Bankruptcy Code, 2016.
80. Insofar as Master Restructuring Agreement dated 8th September 2014 is concerned; the appellant
cannot take advantage of the same. Even if it is presumed that fresh agreement came into existence, it
does not absolve the Appellant from paying the previous debts which are due to the financial creditor.
81. The Tribunal has noticed that there is a failure on the part of appellant to pay debts. The Financial
Creditor has attached different records in support of default of payment. Apart from that it is not supposed
to go beyond the question to see whether there is a failure on fulfilment of obligation by the financial
creditor under one or other agreement, including the Master Restructuring Agreement. In that view of the
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matter, the Appellant cannot derive any advantage of the Master Restructuring Agreement dated 8th
September, 2014.
82. As discussed in the previous paragraphs, for initiation of corporate resolution process by financial
creditor under sub-section (4) of Section 7 of the Code, 2016, the 'adjudicating authority' on receipt of
application under sub-section (2) is required to ascertain existence of default from the records of
Information Utility or on the basis of other evidence furnished by the financial creditor under sub-section
(3). Under Section 5 of Section 7, the 'adjudicating authority' is required to satisfy -
(a) Whether a default has occurred;

(b) Whether an application is complete; and
(c) Whether any disciplinary proceeding is against the proposed Insolvency
Resolution Professional.
83. Once it is satisfied it is required to admit the case but in case the application is incomplete
application, the financial creditor is to be granted seven days' time to complete the application. However,
in a case where there is no default or defects cannot be rectified, or the record enclosed is misleading, the
application has to be rejected.
84. Beyond the aforesaid practice, the 'adjudicating authority' is not required to look into any other
factor, including the question whether permission or consent has been obtained from one or other
authority, including the JLF. Therefore, the contention of the petition that the Respondent has not
obtained permission or consent of JLF to the present proceeding which will be adversely affect loan of
other members cannot be accepted and fit to be rejected.
85. In the aforesaid circumstances the 'adjudicating authority' having satisfied on all counts, including
default and that the application is complete and that there is no disciplinary proceeding pending against
the Insolvency Resolution Professional, no interference is called for against the impugned judgment.
86. We find no merit in this appeal. It is accordingly dismissed. However, in the facts and
circumstances, there shall be no order as to cost.
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NEW DELHI
C.P. (I.B.) No. 17&19//NCLAT/2017
Applicant: M/s. J.R. Agro Industries (P) Ltd.

Vs.
Respondent: Swadisht Oils Pvt. Limited
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Arvind Kumar & Ms. Henna George Learned Advocate
For Respondents/Defendant : None.
C.P. (I.B.) No. 20&21//NCLAT/2017
Applicant: M/s. Abhi Agro (P) Ltd.

Vs.
Judges/Coram:
Counsels:
C.P. (I.B.) No. 22&23//NCLAT/2017
Applicant: M/s. Jai Lakshmi Solvents (P) Ltd.

Vs.
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Judges/Coram:
Counsels:
C.P. (I.B.) No. 24&25//NCLAT/2017
Applicant: M/s. Rungta Industries Private Ltd.

Vs.
Judges/Coram:
Counsels:
C.P. (I.B.) No. 26&27//NCLAT/2017
Applicant: M/s. Arohul Foods Private Ltd.

Vs.
Judges/Coram:
Counsels:
ORDER
369
by Hon’ble NCLAT
These appeals under section 61 of Insolvency & Bankruptcy Code, 2016 ("I & B Code" for short)
have been preferred by Appellant/ Operational Creditors M/s. J.R Agro Industries Pvt. Ltd., against
order(s) dated 3rd March, 2017 etc, whereby the application preferred by Appellants were adjourned for
another date.
2. The grievance of the appellants was that the Adjudicating Authority has not passed the order
within 14 days as prescribed under section 9 of the I & B Code, which may render their applications
infructuous.
3. On 10th April, 2014, when the matter was taken up, this Appellate Tribunal issued notice on the
Respondents.
4. Today when the matter was taken up, Ld. Counsel for the Appellant(s) brought to our notice three
order(s) all dated 9th May, 2017, passed by Adjudicating Authority in corresponding applications under
section 9, whereby the Adjudicating Authority has pointed out the defects to be removed by each of the
Appellants within 7 days. Ld. Counsel for the Appellant submits that the defects will be removed in
course of day.
5. The question as to whether 14 days' period prescribed under subsection (5) of section 9 of the 'I &
B Code' is mandatory or directory fell for consideration before the Appellate Tribunal in "Company
Appeal (AT) (Insolvency) No. 9 of 2017, M/s. J.K. Jute Mills Company Limited Vs. M/s. Surendra
Trading Company". In the said appeal, the Appellate Tribunal held that the 14 days period prescribed
under sub-section (5) of Section 9 being a procedural law is directory.
6. In view of decision in "M/s J.K. Jute Mills Company Limited" now no further finding is required
to be given in regard to same issue in these appeals. The appellants are allowed to complete the records
within time granted by the Adjudicating Authority, if not completed. All the appeals stand disposed of
with the aforesaid observations. No cost.
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by Hon’ble NCLAT

NEW DELHI
C.P. (I.B.) No. 28/NCLAT/2017
Applicant: Smart Timing Steel Ltd.

Vs.
Respondent: National Steel and Agro Industries Ltd.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Sanjay Grover, Learned Advocate
For Respondents/Defendant : Mr. Sandeep S. Deshmukha, Learned Advocates.
ORDER
This appeal under Section 61 of Insolvency & Bankruptcy Code (hereinafter referred to 'I &B
Code' for short) has been preferred by appellant against Order dated 31st January 2017 passed by
'Adjudicating Authority' in Mumbai Bench in C.P.No. 06/1 & BP/NCLT/MAH/2017, which reads as
follows:
"The Petitioner/ Operational Creditor filed this Creditor Petition

u/ s 9 of Insolvency and Bankruptcy Code without filing certificate from
the Financial Institution maintaining Accounts of the operational
Creditor confirming that there is no payment of this unpaid Operational
Debt by the Corporate Debtor as set out in (c) of Subsection (2) of
Section (9) of this Code 2016.
Looking at non-filing of the certificate that is required to be filed

along with this petition, this Bench had already given time to furnish the
said document, but the counsel failed to furnish the said certificate.
When this Bench has put it to the petitioner counsel how this Bench
could pass this order without furnishing the certificate mandatorily to be
filed along with the petition, the counsel appearing on behalf of the
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by Hon’ble NCLAT
Operational Creditor submits that it is impossible to file copy of such

Certificate from the Financial Institution for the Bank of the operational
creditor is situated outside India, therefore, the compliances with such
requirements shall be exempted."
On perusal of Section 9 of Insolvency and Bankruptcy Code, it is

evident, that it is mandatory to file copy of the Certificate from the
Financial Institutions reflecting nonpayment of the operational debt
impugned, for the Operation Creditor has failed to annex copy of the
said Certificate as required u/ s 9(3) (c) of the Code, this petition is
liable to be rejected.
Accordingly, the same is hereby rejected."
2. The question for determination in this appeal is whether filing of "a copy of certificate from the
"Financial Institution" maintaining accounts of the Operational Creditor confirming that there is no
payment of unpaid operational debt by the 'Corporate Debtor' as prescribed under clause (c) of sub-
section 3 of Section 9 of the 'I & B Code' is mandatory or directory.
3. The appellant who claimed to be 'Operational Creditor' filed an application under Section 9 of 'I
& B Code' for initiation of Corporate Insolvency Resolution Process, enclosing some of the relevant
documents. However, no copy of "the certificate from the Financial Institution maintaining account of the
'Operational Creditor" as prescribed under clause(c) of subsection (3) of Section 9 was enclosed. For the
said reason the adjudicating authority rejected the application.
4. For deciding the issue it is desirable to notice relevant provisions of 'I&B Code' and Rules framed
thereunder. Sub-section (14) of Section 3 defines `Financial Institution' means--
(b) financial institution as defined in section 45-I of the Reserve Bank

of India Act, 1934 (2 of 1934); and
(c) Public financial institution as defined in clause (72) of section 2 of

the Companies Act, 2013 (18 of 2013); and
(d) such other institution as the Central Government may by

notification specify as a financial institution;
5. The appellant is a foreign company of Hong-Kong having no office or bank account in India.
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by Hon’ble NCLAT
6. As the appellant has no account in any scheduled bank or 'Financial Institution' as defined in
Section 45-I of the RBI Act 1934 nor having such account with "Public 'Financial Institution" as defined
in clause (72) of Section 2 of the Companies Act 2013 or with any other institution notified by Central
Government as 'Financial Institution', it failed to enclose any certificate from `Financial Institution'
maintaining account of the 'Operational Creditor'.
7. Learned counsel appearing on behalf of the appellant submitted that the foreign companies and
multi-national companies having no office or having no account in India with any of the 'Financial
Institution' will suffer to recover the debt as due from 'Corporate Debtors' of India. The appellant being a
foreign based 'Operational Creditor', the 'Adjudicating Authority' was required to interpret the provisions
of 'I B Code' in such a manner that Section 9 would have taken in its fold all the 'Operational Creditors'
who are entitled to recover the debt defaulted by 'Corporate Creditors' of India. Learned counsel for the
appellant further submitted that the word 'shall' used in sub-section (3) of Section 9 for furnishing
documents etc. should be read as 'may', and hold that sub-section (3) of Section 9 is directory. Reliance
was placed on Hon'ble Supreme Court decision in "Kailash Vs. Nanhku and Others"- (2005) 4 SCC 480".
8. In the said case the Hon'ble Supreme Court while deciding the question whether time limit of 90
days as prescribed by the Proviso appended to Rule-1 of Order VIII of CPC is mandatory or directory in
nature? The Hon'ble Supreme Court held that ordinarily the time prescribed by Order VIII, Rule I has to
be honoured but it held that the provision being part of the procedural code is directory.
9. With due respect we are of the view that aforesaid decision of Hon'ble Supreme Court in 'Kailash
Vs. Nanhku and Others' is not applicable in the present case, as clause (c) of sub-section (3) of section 7
does not relate to prescription of time.
10. Section 9 deals with application for initiation of corporate insolvency resolution process by
'operational creditor' which reads as follows: -
"9. Application for initiation of corporate insolvency resolution process

by operational creditor:
(1) After the expiry of the period of ten days from the date of
delivery of the notice or invoice demanding payment under sub-section
(1) of section 8, if the operational creditor does not receive payment
from the corporate debtor or notice of the dispute under sub-section (2)
of section 8, the operational creditor may file an application before the
process.
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by Hon’ble NCLAT
(2) The application under sub-section (1) shall be filed in such

(3) The operational creditor shall, along with the application

furnish-



(4) An operational creditor initiating a corporate insolvency

resolution process under this section, may propose a resolution
professional to act as an interim resolution professional.
(5) The Adjudicating Authority shall, within fourteen days of the

receipt of the application under sub-section (2), by an order-

operational creditor and the corporate debtor
there is no repayment of the unpaid operational debt;


resolution professional proposed under subsection
(ii) reject the application and communicate such decision to the

operational creditor and the corporate debtor, if-
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by Hon’ble NCLAT
(c) the creditor has not delivered the invoice or notice for payment
to the corporate debtor;
(d) notice of dispute has been received by the operational creditor

or there is a record of dispute in the information utility; or
(e) any disciplinary proceeding is pending against any proposed

resolution professional:
Provided that Adjudicating Authority, shall before rejecting an application under sub clause (a) of
clause (ii) give a notice to the applicant to rectify the defect in his application within seven days of the

section".
11. On perusal of entire Section (3) along with sub-sections and clauses, inclusive of proviso, it
would be crystal clear that, the entire provision of sub-clause (3) of Section 9 required to be mandatorily
followed and it is not empty statutory formality.
12. Sub-section (2) stipulates filing of an application under Section (1) only in the form and manner
and accompanied with such fees as may be prescribed. The Insolvency and Bankruptcy (Application to
Adjudicating Authority) Rules 2016 (hereinafter referred to as 'Adjudicating Authority Rules 2016' for
short) are also enacted in exercise of the power conferred by Clauses (c), (d), (e), (1), of sub-section 239
read with sections 7, 8, 9 and 10 of the 'I & B Code'. The rules provide the procedure required to be
followed by filing an application by corporate insolvency resolution process. As per Rule 6 of the
Àdjudicating Authority' Rules 2016, an operational creditor shall make an application for initiating the
corporate insolvency process under section 9, in Form 5 accompanied with documents and records
required therein. As per sub-rule (2) of Rule 6 it is mandatory again to dispatch a copy of application filed
with the adjudicating authority, by registered post or speed post to the registered office of the Corporate
Debtor.
13. The provisions of sub-section (3) mandates the operational creditor to furnish copy of invoice
demanding payment or demand notice delivered by the operational creditor to the corporate debtor, an
affidavit to the effect that, there is no notice given by the corporate debtor relating to dispute of unpaid
375
by Hon’ble NCLAT
operational debt, a copy of the certificate from the 'Financial Institutions' maintaining accounts of the
operational creditor confirming that, there is no payment of an unpaid operational debt by the corporate
debtor and such other information as may be stipulated. Sub-section (5) of section 9 is procedure required
to be followed by Adjudicating Authority. One can say that procedural part is not mandatory but is
directory.
14. The provision being "directory" or "mandatory" has fallen for consideration before Hon'ble
Supreme Court on numerous occasions. In Manilal Shah Vs. Sardar Sayed Ahmed (1955) 1 SCR 108, the
Hon'ble Apex Court held that where statute itself provide consequences of breach or noncompliance,
normally the provision has to be regarded as having mandatory in nature.
15. One of the cardinal principles of interpretation of statute is that, the words of statute must prima
facie be given their ordinary meaning, unless of course, such construction leads to absurdity or unless
there is something in the context or in the object of the statute to the contrary. When the words of statute
are clear, plain and unambiguous, then, the courts are bound to give effect to that meaning, irrespective of
the consequences involved. Normally, the words used by the legislature themselves declare the legislative
intent particularly where the words of the statute are clear, plain and unambiguous. In such case, effort
must be to give a meaning to each and every word used by the legislature and it is not sound principle of
construction to brush aside words in statute as being redundant or surplus, and particularly when such
words can have proper application in circumstances conceivable within the contemplation of the statute.
16. For determination of the issue whether a provision is mandatory or not, it will be desirable to
refer to decision of Hon'ble Supreme Court in State of Mysore Vs. V.K. Kangan (1976) 2 SCC 895. In the
said case, the Hon'ble Supreme Court specifically held:
"10. In determining the question whether a provision is

mandatory or directory, one must look into the subject-matter and
consider the importance of the provision disregarded and the relation of
that provision to the general object intended to be secured. No doubt, all
laws are mandatory in the sense they impose the duty to obey on those
who come within its purview. But it does not follow that every departure
from it shall taint the proceedings with a fatal blemish. The
determination of the question whether a provision is mandatory or
directory would, in the ultimate analysis, depend upon the intent of the
law-maker. And that has to be gathered not only from the phraseology of
the provision but also by considering its nature, its design and the
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by Hon’ble NCLAT
consequences which would follow from construing it in one way or the

other."
16. Therefore, it is clear that the word 'shall' used in sub-section (3) of section 9 of 'I & B Code' is
mandatory, including clause 3 therein.
17. The appellant has enclosed a Final Award given by Sole-Arbitrator, Hong Kong Special
Administrative Region, People's republic of China dated 18th August 2014 to suggest that the respondent
Corporate Debtor is liable to pay the amount determined by arbitrator but defaulted to pay the amount.
Even if such submission is accepted, the Adjudicating Authority cannot assume that the amount has not
been paid pursuant to the award till on the basis of evidence on record i.e. copy of certificate from the
"Financial Institution" maintaining accounts of the appellant confirming that there is no payment of an
unpaid operational debt by the Corporate Debtor".
18. From the record we find that the appellant was given opportunity to complete the record by
enclosing the certificate of "Financial Institution" and thereby to remove the defects within 7 days but
failed to do so.
19. In "J.K. Jute Mills Company Limited Vs. M/ s Surendra Trading Company - Company Appeal
(AT) No. 09 of 2017", the Appellate Tribunal was considering whether the time limit prescribed in 'I & B
Code' 2016 for admitting or rejecting the petition or initiation of Insolvency Resolution Process is
mandatory? The Appellate Tribunal, by Judgement dated 1st May 2017 held that proviso to sub-section
(5) of section 7 and proviso to subsection (5) of section 9 granting "Financial Creditor/ Operational
Creditor" to complete the documents, if incomplete is mandatory.
20. In view of the aforesaid findings of this Appellate Tribunal in "J.K. Jute Mills Company Limited,
the appellant having failed to complete the documents within 7 days, the Tribunal was right in dismissing
the application preferred by the Appellant.
21. The argument that the foreign companies having no office in India or no account in India with
any "Financial Institution" will suffer in recovering the debt from Corporate Debtor cannot be accepted as
apart from the 'I 8v B Code', there are other provisions of recovery like suit which can be preferred by any
person.
377
by Hon’ble NCLAT

NEW DELHI
C.P. (I.B.) No. 6/NCLAT/2017
Applicant: Kirusa Software Private Ltd.

Vs.
Respondent: Mobilox Innovations Private Limited
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Amar Gupta, Mr. Sanjeev Jain, Ms. Apoorva Aharwal, Mr. Alok
Dhir, Ms. Varsha Banerjee, Mr. Milan Negi & Mr. Kunal Godhwani, Learned Advocate
For Respondents/Defendant : Mr. Devansh Mohta, Mr. Shyam Pandya, Mr. Puneet Singh Bindra & Mr.
Rohan Kaushal, Learned Advocates.
ORDER
The appellant — operational creditor filed petition under section 9 of the Insolvency &
Bankruptcy Code 2016 (hereinafter referred to as 'I & B Code' 2016) which was rejected by the
'Adjudicating Authority'. Mumbai Bench by the impugned order dated 27th January 2017, with following
observations: -
"When this Bench has directed the petitioner to furnish the

requisite documents as described u/s 9 of the Insolvency & Bankruptcy
Code, the Petitioner filed the Notice of dispute raised by the Corporate
Debtor disclosing the Corporate Debtor disputing the claim made by the
Petitioner.
Though the petitioner filed all the invoices raised on the Debtor
Company aggregating debt to Rs.20,08,202, details of transaction on
account of which debt fell due, default thereof and demand notice served
upon the Debtor, for this Bench having noticed that notice of dispute
raised by Respondent side has not been annexed to the CP, this Bench
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by Hon’ble NCLAT
hereby directed to furnish the documents as prescribed u/s 9 of the I&BP

Code. In compliance of it, the Petitioner filed the notice of dispute issued
by the Corporate Debtor disclosing the corporate debtor disputing the
claim made by the Petitioner. On perusal of this sub-section (5) of
Section 9 of this Code, it is evident that notice of dispute has been
received by the Operational Creditor.
On perusal of this notice dated 27.12.2016 disputing the debt

allegedly owed to the petitioner, this Bench, looking at the Corporate
Debtor disputing the claim raised by the Petitioner in this CP, hereby
holds that the default payment being disputed by the Corporate Debtor,
for the petitioner has admitted that the notice of dispute dated 27th
December, 2016 has been received by the operational creditor, the claim
made by the Petitioner is hit by Section (9)(5)(ii)(d) of The Insolvency
and Bankruptcy Code, hence this Petition is hereby rejected"
3. The plea taken by the appellant is that mere disputing a claim of default of debt cannot be a
ground to reject the application under Section 9 of 'I & B Code', till the corporate debtor refer any dispute
pending.
4. The only question arises for considered in this appeal is what does "dispute" and "existence of
dispute" means for the purpose of determination of a petition under section 9 of the 'I & B Code'?
5. Unlike Section 7 of the Code, before making an application to the Adjudicating Authority under
Section 9 of the Code, the requirements under Section 8 of the Code are required to be complied with,
which reads as under: -
"8. Insolvency Resolution by operational creditor
(1) An operational creditor may, on the occurrence of a default, deliver a

demand notice of unpaid operational debtor copy of an invoice
379
by Hon’ble NCLAT
(2) The corporate debtor shall, within a period of ten days of the receipt
of the demand notice or copy of the invoice mentioned in sub-section (1)
bring to the notice of the operational creditor—
(a) existence of a dispute, if any, and record of the pendency of the

suit or arbitration proceedings filed before the receipt of such
notice or invoice in relation to such dispute;
(b) the repayment of unpaid operational debt
(i) by sending an attested copy of the record of electronic transfer

of the unpaid amount from the bank account of the corporate
debtor; or
(ii) by sending an attested copy of record that the operational

creditor has encashed a cheque issued by the corporate debtor.
Explanation. —For the purposes of this section, a "demand notice" mea

ns a notice served by an operational creditor to the corporate debtor
demanding repayment of the operational debt in respect of which the
default has occurred."
6. In sub-section (1) of Section 8 of the 'I & B Code', though the word "may" has been used, but in
the context of Section 8 and Section 9 reading as a whole, an 'Operational Creditor,' on occurrence of a
default, is required to deliver a notice of demand of unpaid debt or get copy of the invoice demanding
payment of the defaulted amount served on the corporate debtor. This is the condition precedent under
Section 8 and 9 of the 'I & B Code', before making an application to the Adjudicating Authority.
7. Under sub-section (2) of Section 8 of the 'I & B Code', once the demand notice is served on the
corporate debtor by the 'operational creditor', the corporate debtor has to bring to the notice of the
operational creditor the payment of debt or dispute if any, with respect to such operational debt within
10 days of the receipt of demand notice/invoice.
8. Under Section 9 of the Code, as quoted below, a right to file an application accrues after expiry
of ten days from the date of delivery of the demand notice or copy of invoice as the case may be,
demanding payment under sub-section (1) of Section 8 of the 'I & B Code'. The 'operational creditor'
380
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would receive either the payment or a 'notice of dispute' in terms of sub-section (2) of Section 8 of the 'I
& B Code':
"9. Application for initiation of corporate insolvency resolution process by

operational creditor: (1) After the expiry of the period of ten days from the date
of delivery of the notice or invoice demanding payment under sub-section (1) of
section 8, if the operational creditor does not receive payment from the corporate
debtor or notice of the dispute under sub-section (2) of section 8, the operational
creditor may file an application before the Adjudicating Authority for initiating a
corporate insolvency resolution process.
(2) The application under sub-section (1) shall be filed in such form and manner
(a) a copy of the invoice demanding payment or demand notice delivered by

the operational creditor to the corporate debtor;
(b) an affidavit to the effect that there is no notice given by the corporate
debtor relating to a dispute of the unpaid operational debt;
(c) a copy of the certificate from the financial institutions maintaining

accounts of the operational creditor confirming that there is no payment of an
unpaid operational debt by the corporate debtor; and

application under sub-section (2), by an order-
(i) admit the application and communicate such decision to the operational
creditor and the corporate debtor if, —
381
by Hon’ble NCLAT
(c) the invoice or notice for payment to the corporate debtor has been delivered
by the operational creditor;
(d) no notice of dispute has been received by the operational creditor or there is
no record of dispute in the information utility; and
(e) there is no disciplinary proceeding pending against any resolution

professional proposed under sub-section (4), if any.
(ii) reject the application and communicate such decision to the operational
creditor and the corporate debtor, if-
(b) there has been repayment of the unpaid operational debt,.
(c) the creditor has not delivered the invoice or notice for payment to the
corporate debtor,.
(d) notice of dispute has been received by the operational creditor or there is a
record of dispute in the information utility; or

professional:

application under sub clause (a) of clause (ii) give a notice to the applicant to
rectify the defect in his application within seven days of the date of receipt of
such notice from the adjudicating Authority.
(6) The corporate insolvency resolution process shall commence from the
date of admission of the application under sub-section (5) of this section"
9. Thus it is evident from Section 9 of the 'I& B Code' that the Adjudicating Authority has to,
within fourteen days of the receipt of the application under subsection (2), either admit or reject the
application.
10. Section 9 has two-fold situations in so far as notice of dispute is concerned. As per sub-section
(5)(1)(d) of Section 9, the Adjudicating Authority can admit the application in case no notice raising the
dispute is received by the operational creditor (as verified by the operational creditor on affidavit) and
there is no record of a dispute is with the information utility.
382
by Hon’ble NCLAT
12. On the other hand, sub-section (5)(ii) of Section 9 mandates the Adjudicating Authority to reject
the application if the operational creditor has received notice of dispute from the corporate debtor.
Section 9 thus makes it distinct from Section 7. While in Section 7, occurrence of default has to be
ascertained and satisfaction recorded by the Adjudicating Authority, there no similar provision under
Sections 9. The use of language in sub-section (2) of Section 8 of the 'I & B Code' provides that the
"corporate debtor shall, within a period of ten days of the receipt of the demand notice or copy of the
invoice mentioned in sub-section (1), 'bring to the notice of the operational creditor... the existence of a
dispute ....".
13. Under Section 7 neither notice of demand nor a notice of dispute is relevant whereas under
Sections 8 and 9 notice of demand and notice of dispute become relevant both for the purposes of
admission as well as for and rejection.
14. It may be helpful to interpret Sections 8 and 9 and the jurisdiction of the Adjudicating Authority
being akin to that of a judicial authority under Section 8 of the Arbitration & Conciliation Act, 1996
amended up to date, which mandates that the judicial authority must refer the parties to arbitration if the
matter before it is subject to an arbitration agreement Section 8 as amended in 2015 contemplates the
judicial authority to form a prima facie view in relation to existence of a valid arbitration agreement,
thereby conferring limited jurisdiction.
15. Though the words 'prima facie' are missing in Sections 8 and 9 of the Code, yet the Adjudicating
Authority would examine whether notice of dispute in fact raises the dispute and that too within the
parameters of two definitions — 'debt' and 'default' and then it has to reject the application if it
apparently finds that the notice of dispute does really raise a dispute and no other factual ascertainment is
required. On the other hand, if the Adjudicating Authority finds that the notice of dispute lacks in
particulars or does not raise a dispute, it may admit the application but in either case, there is neither an
ascertainment of the dispute, nor satisfaction of the Adjudicating Authority.
The role of Adjudicating Authority may become easier once the information utility starts
functioning for it is a record of dispute that would then be sufficient to reject the application of the
16. The terms "Claim", "Debt" and "Default" are define under Part I of the Code.
Section 3(6) of the Code defines "claim" to mean a right to payment and included within its
ambit disputed and undisputed, legal, equitable, secured, including arising out of breach of contract.
Therefore, "right to payment" is the foundation for making a claim under the Code.
383
by Hon’ble NCLAT
Section 3(11) defines "debt" to mean, the liability or obligation in respect of a claim which is due
from any person. Thus, claim transforms into a debt, financial & operational, once liability or obligation
to pay gets attached to the claim.
Section 3(12) defines "default" to mean "non-payment of the debt" once it has become due and
payable and the same is not repaid by the debtor. "Default" occurs on fulfilment of twin conditions:
(a) debt becoming due and payable and
(b) non-payment thereof.
17. For the purposes of Part II only of the Code, some terms/words have been defined.
Sub Section (6) of Section 5 defines "dispute", to include, unless the context otherwise requires, a
dispute pending in any suit or arbitration proceedings relating to:
(a) existence of amount of the debt;
(b) quality of good or service;
(c) breach of a representation or warranty.
The definition of "dispute" is "inclusive" and not "exhaustive". The same has to be given wide
meaning provided it is relatable to the existence of the amount of the debt, quality of good or service or
breach of a representation or warranty.
18. Once the term "dispute" is given its natural and ordinary meaning, upon reading of the Code as a
whole, the width of "dispute" should cover all disputes on debt, default etc. and not be limited to only two
ways of disputing a demand made by the operational creditor, i.e. either by showing a record of pending
suit or by showing a record of a pending arbitration.
The intent of the Legislature, as evident from the definition of the term "dispute", is that it wanted
the same to be illustrative (and not exhaustive). If the intent of the Legislature was that a demand by an
operational creditor can be disputed only by showing a record of a suit or arbitration proceeding, the
definition of dispute would have simply said dispute means a dispute pending in Arbitration or a suit.
20. The Hon'ble Supreme Court in P. Kasilingam Vs PSB College of Technology 1995 Supp. (2)
SCC 348 was dealing with the question what expression 'College' includes as used in the relevant Rule.
The Hon'ble Supreme Court observed what is the intent of the of the Legislature when the expression
used in the definition is 'means' and when the expression used is 'includes'. At page 356 para 19 it
observed as under:
384
by Hon’ble NCLAT
a particular expression is often defined by the Legislature by using the word

'means ', or the word 'includes '. Sometimes the words `means and includes ' are
used. The use of the word 'means ' indicates that "definition is a hard-and-fast
definition, and no other meaning can be assigned to the expression than is put
down in definition". (See: Gough V Gough: Punjab Land Development and
Reclamation Corpn. Ltd Vs. Presiding Officer, Labour Court.) The word 'includes '
when used, enlarges the meaning of the expression defined so as to comprehend
not only such things as they signify according to their natural import but also
those things which the clause declares that they shall include. "
21. Admittedly in sub-section (6) of Section 5 of the 'I & B Code', the Legislature used the words
'dispute includes a suit or arbitration proceedings '. If this is harmoniously read with Section (2) of
Section 8 of the 'I & B Code', where words used are 'existence of a dispute, if any, and record of the
pendency of the suit or arbitration proceedings, ' the result is disputes, if any, applies to all kinds of
disputes, in relation to debt and default. The expression used in subsection (2) of Section 8 of the 'I & B
Code' existence of a dispute, if any,' is disjunctive from the expression 'record of the pendency of the suit
or arbitration proceedings'. Otherwise, the words 'dispute, if any', in sub-section (2) of Section 8 would
become surplus usage.
22. Sub-section (2) of Section 8 of the 'I & B Code' cannot be read to mean that a dispute must be
pending between the parties prior to the notice of demand and that too in arbitration or a civil court. Once
parties are already before any judicial forum/authority for adjudication of disputes, notice becomes
irrelevant and such an interpretation renders the expression 'existence of a dispute, if any,' in sub-section
(2) of Section 8 itiose.
23. The Hon'ble Supreme Court in Mithlesh Singh Vs. Union of India (2003) 3 SCC 309 observed
that the Legislature is deemed not to waste its words or to say anything in vain. If the intent of the
legislature was to limit the dispute to only a pending suit or arbitration proceedings, sub-section (2) of
Section 8 (a) would have required a notice of dispute to only refer to a record of pendency of the suit or
arbitration proceedings and not to 'existence of a dispute, if any'. In the said case, the Hon'ble Supreme
Court at page 316 para 8 observed as under:
"It is not a sound principle of construction to brush aside word (s) in a

statute as being inapposite surplusage: if they can have appropriate
application in circumstances conceivably within the contemplation of the
statute. In the interpretation of statutes the Courts always presume that
385
by Hon’ble NCLAT
the Legislature inserted every part of the statute for a purpose and the
legislative intention is that every part of the statute should have effect.
The Legislature is deemed not to waste its words or to say anything in
vain"
24. The statutory requirement in sub-section (2) of Section 8 of the 'I & B Code' is that the dispute
has to be brought to the notice of the Operational Creditor. The two comes post the word 'dispute' (if
any) have been added as a matter of convenience and/or to give meaningfulness to sub-section (2) of
Section 8 of the 'I & B Code'. Without going into the grammar and punctuation being hapless victim of
pace of life, if one discovers the true meaning of sub-section (2)(a) of Section 8 of the 'I & B Code',
having regard to the context of Sections 8 and 9 of the Code, it emerges both from the object and
purpose of the 'I & B Code' and the context in which the expression is used, that disputes raised in the
notice sent by the corporate debtor to the Operational Creditor would get covered within sub-section
(2) of Section 8 of the 'I & B Code'.
25. The true meaning of sub-section (2)(a) of Section 8 read with sub-section (6) of Section 5 of
the 'I & B Code' clearly brings out the intent of the Code, namely the Corporate Debtor must raise a
dispute with sufficient particulars. And in case a dispute is being raised by simply showing a record of
dispute in a pending arbitration or suit, the dispute must also be relatable to the three conditions
provided under sub-section (6) of Section 5 (a)-(c) only. The words 'and record of the pendency of the
suit or arbitration proceedings' under sub-section (2)(a) of Section 8 also make the intent of the
Legislature clear that disputes in a pending suit or arbitration proceeding are such disputes which
satisfy the test of subsection (6) of Section 5 of the 'I & B Code' and that such disputes are within the
ambit of the expression, 'dispute, if any'. The record of suit or arbitration proceeding is required to
demonstrate the same, being pending prior to the notice of demand under sub-section 8 of the 'I & B
Code'.
26. It is a fundamental principle of law that multiplicity of proceedings is required to be avoided.

Therefore, if disputes under sub-section (2)(a) of Section 8 read with sub-section (6) of Section 5 of the
'I & B Code' are confined to a dispute in a pending suit and arbitration in relation to the three classes
under subsection (6) of Section 5 of the 'I & B Code', it would violate the definition of operational debt
under sub-section (21) of Section 3 of the 'I & B Code' and would become inconsistent thereto, and
would bar Operational Creditor from invoking Sections 8 and 9 of the Code.
27. Sub-section (6) of Section 5 read with sub-section (2)(a) of Section 8 also cannot be confined
to pending arbitration or a civil suit. It must include disputes pending before every judicial authority
386
by Hon’ble NCLAT
including mediation, conciliation etc. as long there are disputes as to existence of debt or default etc., it
would satisfy subsection (2) of Section 8 of the 'I & B Code'.
28. Therefore, as per sub-section (2) of the 'I & B Code', there are two ways in which a demand of
an Operational Creditor can be disputed:
i. By bringing to the notice of an operational creditor, 'existence of

a dispute'. In this case, the notice of dispute will bring to the notice of the
creditor, an 'existence of a dispute' under the Code. This would mean
disputes as to existence of debt or default etc,; or
ii. By simply bringing to the notice of an operational creditor,

record of the pendency of a suit or arbitral proceedings in relation to a
dispute. In this case, the dispute in the suit/arbitral proceeding should
relate to matters (a)-(c) in sub-section (6) of Section 5 and in this case,
showing a record of pendency of a suit or arbitral proceedings on a
dispute is enough and to intent of the Legislature is clear, i.e. once the
dispute (on matters relating to 3 classes in sub-section (6) of Section 5 of
the 'I & B Code') is pending adjudication, that in itself would bring it
within the ambit of sub-section (6) of Section 5 of the 'I & B Code'.
29. The definition of 'dispute' for the purpose of Section 9 must be read alongwith expression
operational debt as defined in Section 5(21) of I&B Code, 2016 means:
(21) "operational debt" means a claim in respect of the provision of

goods or services including employment or a debt in respect of the
repayment of dues arising under any law for the time being in force and
payable to the Central Government, any State Government or any local
authority; "
Thus the definition of 'dispute', 'operational debt' is read together for the purpose of Section 9 is
clear that the intention of legislature to lay down the nature of 'dispute' has not been limited to suit or
arbitration proceedings pending but includes other proceedings "if any".
30. Therefore, it is clear that for the purpose of sub-section (2) of Section 8 and Section 9 a 'dispute'
must be capable of being discerned from notice of corporate debtor and the meaning of "existence" a
"dispute, if any", must be understood in the context.
387
by Hon’ble NCLAT
31. The dispute under I&B Code, 2016 must relate to specified nature in clause (a), (b) or (c) i.e.
existence of amount of debt or quality of goods or service or breach of representation or warranty.
However, it is capable of being discerned not only from in a suit or arbitration from any document related
to it. For example, the 'operational creditor' has issued notice under Code of Civil Procedure Code, 1908
prior to initiation of the suit against the operational creditor which is disputed by 'corporate debtor.
Similarly notice under Section 59 of the Sales and Goods Act if issued by one of the party, a
labourer/employee who may claim to be operation creditor for the purpose of Section 9 of I&B Code,
2016 may have raised the dispute with the State Government concerning the subject matter i.e. existence
of amount of debit and pending consideration before the competent Government. Similarly, a dispute may
be pending in a Labour Court about existence of amount of debt. A party can move before a High Court
under writ jurisdictions against Government, corporate debtor (public sector undertaking). There may be
cases where one of the party has moved before the High Court under Section 433 of the Companies Act,
1956 for initiation of liquidation proceedings against the corporate debtor and dispute is pending.
Similarly, with regard to quality of foods, if the 'corporate debtor' has raised a dispute, and brought to the
notice of the 'operational creditor' to take appropriate step, prior to receipt of notice under sub-section (1)
of Section 8 of the 'I & B Code', one can say that a dispute is pending about the debt. Mere raising a
dispute for the sake of dispute, unrelated or related to clause (a) or (b) or (c) of Subsection (6) of Section
5, if not raised prior to application and not pending before any competent court of law or authority cannot
be relied upon to hold that there is a 'dispute' raised by the corporate debtor. The scope of existence of
'dispute', if any, which includes pending suits and arbitration proceedings cannot be limited and confined
to suit and arbitration proceedings only. It includes any other dispute raised prior to Section 8 in this in
relation to clause (a) or (b) or (c) of sub-section (6) of Section 5. It must be raised in a court of law or
authority and proposed to be moved before the court of law or authority and not any got up or malafide
dispute just to stall the insolvency resolution process.
32. There may be other cases such as a suit relating to existence of amount of debt stands decided and
decree is pending for execution. Similarly, existence of amount of debt or quality of goods or service for
which a suit have been filed and decreed; an award has been passed by Arbitral Panel, though petition
under Section 34 of Arbitration and Reconciliation Act, 1996 may be pending. In such case the question
will arise whether a petition under Section 9 will be maintainable particularly when it was a suit or
arbitration proceeding is not pending, but stand decided? Though one may argue that Insolvency
resolution process cannot be misused for execution of a judgement and decree passed in a suit or award
passed by an arbitration Tribunal, but such submission cannot be accepted in view of Form 5 of
388
by Hon’ble NCLAT
Insolvency & Bankruptcy (Application to Adjudicating Authority) Rules 2016 wherein a decree in suit
and award has been shown to be a debt for the purpose of default on non-payment.
33. Thus it is clear that while sub-section (2) of Section 8 deals with "existence of a dispute", sub-
section (5) of Section 9 does not confer any discretion on adjudicating authority to verify adequacy of the
dispute. It prohibits the adjudicating authority from proceeding further if there is a genuine dispute raised
before any court of law or authority or pending in a court of law or authority including suit and arbitration
proceedings. Mere a dispute giving a colour of genuine dispute or illusory, raised for the first time while
replying to the notice under Section 8 cannot be a tool to reject an application under Section 9 if the
operational creditor otherwise satisfies the adjudicating authority that there is a debt and there is a default
on the part of the corporate debtor.
34. The onus to prove that there is no default or debt or that there is a dispute pending consideration
before a court of law or adjudicating authority shift from creditor to debtor and operational creditor to
corporate debtor.
35. In view of the aforesaid discussions we hold that the dispute as defined in sub-section (6) of
Section 5 cannot be limited to a pending proceedings or "lis, within the limited ambit of suit or arbitration
proceedings, the word 'includes' ought to be read as "means and includes" including the proceedings
initiated or pending before consumer court, tribunal, labour court or mediation, conciliation etc. If any
action is taken by corporate debtor under any act or law including while replying to a notice under section
80 of CPC, 1908 or to a notice issued under Section 433 of the Companies Act or Section 59 of the Sales
and Goods Act or regarding quality of goods or services provided by 'operational creditor' will come
within the ambit of dispute, raised and pending within the meaning of sub-section (6) of Section 5 read
with sub-section (2) of Section 8 of I&B code, 2016.
36. In the present case we find that the notice in Form '13' under the I&B Code,2016, Application to
Adjudicating Authority Rules, 2016, was given by appellant-'operational creditor' on 23rd December,
2016 under the said rules was also forwarded. One M/s Desai & Diwanji, Advocates, Solicitors and
Notaries vide letter dated 27th December, 2016 replied to the same on behalf of respondent-corporate
debtor- M/s Mobilox Innovations Private Limited, relevant of which reads as follows:
"1. At the outset, we say that you on behalf of your Client have engaged
yourselves into a protracted correspondence with our Client on the
issues raised in the Notices. Our Client disputes and denies each of the
statements and allegations made in the said Notices as being absolutely
389
by Hon’ble NCLAT
false, frivolous, misconceived, devoid of merits and erroneous. Nothing

stated in the said Notices should be deemed to have been admitted by our
Client, unless specifically admitted herein, and the same be treated as
specifically set out herein and denied Each of the contentions hereinafter
contained, are in the alternative and/or without prejudice to one another.
2. At the further outset, it is respectfully submitted that the Notices are

liable to be disregarded at the threshold and does not deserve to be
entertained as the same are not maintainable in law.
3. It is stated that the claim on behalf of your Client as stated in the
Notices are not contractually due and payable to your client, as there
exist serious and bonafide dispute between your client and our client;
and neither a winding up notice is maintainable nor any application
before the Adjudicating Authority (as defined in the Code) for initiating a
corporate insolvency resolution process under the Code.
4. The Notices are not only misconceived but also mala fide in nature
and has been colourable issued as a "pressure-inducing tactic" to realise
a purported debt which is not due and payable to your client by our
client. The purported debt is seriously and bonafide disputed by our
client and the same is not liable to be paid for reasons more specifically
mentioned herein. It is well settled that neither winding up notice nor any
insolvency resolution process is a legitimate means of seeking to enforce
payment of an amount that is bona fide disputed by a party. A disputed
sum can neither be termed as 'inability to pay' the same so as to incur the
liability under Section 271(2) (e )read with Section 271(1)(a) of the
Companies Act, 2013 nor can it be termed as a "default" as defined
under section 3(12) of the Code read with other applicable provisions of
the Code."
Xxx
e) In and around 30 January, 2015, it had come to the knowledge of our
client that your client in flagrant breach of the terms and conditions of
the NDA, had divulged our client's Confidential Information and
approached certain clients of our client; further, your client had
indulged in breach of trust and breach of the NDA by displaying our
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by Hon’ble NCLAT
client's confidential client information and client campaign information

on a public platform i.e. at http://kirusalpairserver.com/ ?page_id=34
and https://in.linkedin.coin/ pub/vikram-agarwa1/7/3a1/83b. Your client
should note that any client information of any party carries intrinsic
confidentiality obligations (including under the NDA) and your client's
breach of the NDA violated the basic keystone of a business
relationship."
Xxx
g) With respect to paragraph no.8 of the 12 December, 2016 Notice, it is

denied that an amount of Rs.20,08,202.55 is an admitted debt on the part
of our client based on the contracts in the form of POs placed by our
Client and the corresponding Invoices raised by your client for effecting
the required services for the campaign under the POs. Our client deny
that it had failed to discharge its admitted liability; therefore, it is
evident that it is not unable to pay its debt. It is pertinent to highlight that
our client has, at no point of time, confirmed or admitted its liability
towards your client to pay an amount of Rs.20,08,202.55. In this regard,
our client repeats and reiterates the contents of paragraph number 6 of
this reply."
37. Apart from the quoted portion, if reply dated 27th December, 2016 is read in totality, we find that
the respondent-corporate debtor has not raised any dispute within the meaning of sub-section (6) of
Section 5 or sub-section (2) of Section 8 of I&B Code, 2016 and in that view of the matter, merely on
some or other account the respondent has disputed to pay the amount, cannot be termed to be dispute to
reject the application under Section 9 of the I&B Code, 2016 as was preferred by appellant-operational
creditor.
38. The requirement under sub-section (3)(c) of Section 9 while independent operational creditor to
submit a certificate from the financial institution as defined in sub-section (4) of section 3 including
Schedule Bank and public financial institution and like which is a safeguard prevent the operational
creditor to bring a non-existence or baseless claim, similarly the adjudicating authority is required to
examine before admitting or rejecting an application under Section 9 whether the 'dispute' raised by
corporate debtor qualify as a 'dispute' as defined under sub-section (6) of Section 5 and whether notice of
391
by Hon’ble NCLAT
dispute given by the corporate debtor fulfilling the conditions stipulated in sub-section (2) of Section 8 of
I&B Code, 2016.
39. In the present case the adjudicating authority has acted mechanically and rejected the application
under sub-section (5)(ii)(d) of Section 9 without examining and discussing the aforesaid issue. If the
adjudicating authority would have noticed the provisions as discussed above and what constitute and as
to what constitute 'dispute' in relation to services provided by operational creditor then would have come
to a conclusion that condition of demand notice under subsection (2) of Section 8 has not been fulfilled
by the corporate debtor and the defence claiming dispute was not only vague, got up and motivated to
evade the liability.
40. For the reasons aforesaid we set aside the impugned order dated 27.1.2017 passed by adjudicating
authority in CP No.01/I&BP/NCLT/MAH/2017 and remit the case to adjudicating authority for
consideration of the application of the appellant for admission if the application is otherwise complete.
41. The appeal is allowed with the aforesaid observations. However, in the facts and circumstances
there shall be no order as to cost.
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by Hon’ble NCLAT

NEW DELHI
C.P. (I.B.) No. 5/NCLAT/2017
Applicant: M/s. Starlog Enterprises Limited

Vs.
Respondent: ICICI Bank Limited
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. R.S. Majumdar, Mr. Darshan Mehta, Mr. Raghav Dwivedi, Ms.
Nirali Sanghavi & Mr. Vaibhav Modi, Learned Advocate
For Respondents/Defendant : Mr. Ramji Srinivasan, Mr. Aslam Ahmed, Mr. Sharad Kharra, Ms.
Srivardhani & Mr. Babit Singh, Learned Advocates.
ORDER
This application under Section 61 of Insolvency & Bankruptcy Code, 2016 (hereinafter referred
to as I&B Code) has been preferred by Appellant/ Corporate Debtor against ex-parte order dated 17th
February 2017 passed by 'adjudicating authority', Mumbai Bench, under Section 7 of the I8GB Code
whereby the àdjudicating authority' was pleased to admit the petition preferred by Respondent/ Financial
Creditor.
2. The Appellant has challenged the impugned order on one of the ground that in absence of notice
given to the Appellant before admitting the case under Section 7 of the I&B Code, the impugned order is
violative of rules of natural justice.
3. The other ground taken by the Appellant is that the application preferred by Respondent/
Financial Creditor under Section 7 is incomplete, misleading and being not bonafide was fit to be
rejected.
4. Ld. Counsel for the Appellant submitted that the Appellant could have brought the aforesaid facts
to the notice of the àdjudicating authority' had it been given notice prior to admission. Detailed argument
has been made by Ld. Senior Counsel for the Appellant on the question of issuance of notice prior to
admission, in adherence to principle of rules of natural justice,
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by Hon’ble NCLAT
5. The aforesaid issue now stands decided by decision of the Appellate Tribunal in "M/ s.
Innoventive Industries Limited vs ICICI Bank & Anr. in CA (AT) (Insolvency) No. 1 862 of 2017"
wherein the Appellate Tribunal observed and held :-
" 43.There is no specific provision under the I&B Code, 2016 to provide
hearing to Corporate debtor in a petition under Section 7 or 9 of the I&B
Code, 2016. "
"53. In view of the discussion above, we are of the view and hold that the
Adjudicating Authority is bound to issue a limited notice to the corporate
debtor before admitting a case for ascertainment of existence of default
based on material submitted by the corporate debtor and to find out
whether the application is complete and or there is any other defect
required to be removed. Adherence to Principles of natural justice would
not mean that in every situation the adjudicating authority is required to
afford reasonable opportunity of hearing to the Corporate debtor before
passing its order."
In this connection we may state that the vires of Section 7 of I&B Code
was considered by Hon'ble Calcutta High Court in " Sree Metaliks
Limited & Anr." in writ petition 7144 (W) of 2017, wherein Hon'ble High
Court by its judgment dated 7th April, 2017 held as follows:-
".........However, it is to apply the principles of natural justice in the

proceedings before it. It can regulate it own procedure, however, subject
to the other provisions of the Act of 2013 or the Insolvency and
2016 read with the Rules 2016 is silent on the procedure to be adopted at
the hearing of an application under section 7 presented before the NCLT,
that is to say, it is silent whether a party respondent has a right of
hearing before the adjudicating authority or not.
Section 424 of the Companies Act, 2013 requires the NCLT and NCLAT
to adhere to the principles of the natural justice above anything else. It
also allows the NCLT and NCLAT the power to regulate their own
procedure. Fetters of the Code of Civil Procedure, 1908 does not bind it.
However, it is required to apply its principles. Principles of natural
394
by Hon’ble NCLAT
justice require an authority to hear the other party. In an application

under Section 7 of the Code of 2016, the financial creditor is the
applicant while the corporate debtor is the respondent. A proceeding for
declaration of insolvency of a company has drastic consequences for a
company. Such proceeding may end up in its liquidation. A person
cannot be condemned unheard. Where a statute is silent on the right of
hearing and it does not in express terms, oust the principles of natural
justice, the same can and should be read into in. When the NCLT
receives an application under Section 7 of the Code of 2016, therefore, it
must afford a reasonable opportunity of hearing to the corporate debtor
as Section 424 of the Companies Act, 2013 mandates it to ascertain the
the Code of 2016. Section 7(4) of the Code of 2016 requires the NCLT to
ascertain the default of the corporate debtor. Such ascertainment of
hearing.

395
by Hon’ble NCLAT

with Rules 20, 21, 22, 23, 24 and 26 or Part-HI of the National Company
Law Tribunal Rules, 2016.
Adherence to the principles of natural justice by NCLT or NCLAT would

not mean that in every situation, NCLT or NCLAT is required to afford a
reasonable opportunity of hearing to the respondent before passing its
order.
however, after recording the reasons for grant of such an order and why
it has chosen not to adhere to the principles of natural justice at that
stage. It must, thereafter proceed to afford the party respondent an
opportunity of hearing before confirming such ex-parte ad interim order.
It would be open to the parties to agitate their respective grievances with

regard to any order of NCLT or NCLAT as the case may be in
In such circumstances, the challenge to the vires to Section 7 of the Code of 2016 fails."
6. Therefore, it is clear that before admitting an application under Section 9 of the I&B Code it is
mandatory duty of the àdjudicating authority' to issue notice.
396
by Hon’ble NCLAT
7. In the present case admittedly no notice was issues by the àdjudicating authority' to the corporate
debtor, before admitting the application filed under Section 9 of the I&B Code. For the said reason the
judgement order cannot be upheld having passed in violation of principle of natural justice.
8. Next contention of Ld. Senior Counsel for the Appellant was that the Financial Creditor
misrepresented material facts before the àdjudicating authority' in order to obtain order of admission of
the application. He highlighted the conduct of the Financial Creditor by highlighting the following facts.
9. On 6th February, 2017, the Financial Creditor addressed a notice to the Appellant calling upon to
pay a sum of Rs. 10,02,28,271.60 (Rupees ten crore two lac twenty eight thousand two hundred seventy
one and paise sixty only) which was overdue as on 6th February, 2017. The notice dated 6th February,
2017 was received by the Appellant only on 8th February 2017.
10. Before the Appellant could have replied or taken any necessary action in respect of the said notice
on 8th February 2017 the Appellant received a letter from the Counsel for the Financial Creditor serving a
copy of the present application, relevant portion of which reads as follows:-
`We send herewith a copy of the captioned Company Application on

behalf of our client under Section 7 of the I&B Code, as and by way of
service upon you,'
without directly or indirectly specifying whether the said application has been filed or clarifying whether
the said application would be mentioned or heard on any particular date/time, as is the prevalent practice.
11. Ld. Senior Counsel for the Appellant also submitted that the application filed by the Financial
Creditor before the 'adjudicating authority' they inflated the default amount to be Rs.29,81,02,395.62
(Rupees twenty nine crore eighty one lac two thousand three hundred ninety five and paise sixty two
only). Even Annexure 2 to the said application reflected 'Principal Unmatured' arrived in the computing
the 'Default Amount'.
12. Ld. Senior Counsel for the Appellant further submits that as per the repayment schedule under
the loan agreements, the entire aforementioned amount had not become due and payable as on 6th
February, 2017. Neither the Financial Creditor, by his own admission, recalled the entire loan amount.
13. In view of the same, it was submitted that the computation of the default amount of
Rs.29,81,02,395.62 (Rupees twenty nine crore eighty one lac two thousand three hundred ninety five and
paise sixty two only) is grossly incorrect and contrary to the provisions of law.
14. It was further submitted that for the said misstatement, the Financial Creditor ought to be
adequately penalised under the provisions of the I&B Code,2016 particularly under Section 75.
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by Hon’ble NCLAT
15. The Ld. Counsel also highlighted the conduct of the Respondent - ICICI Bank - and pleaded as
follows:
a. The Respondent herein is a part of the Joint Lenders' Forum

(hereinafter referred to as JLF) constituted by the Appellant pursuant to
the guidelines of the Reserve Bank of India (hereinafter referred to as
RBI). The JLF for the Appellant was formed at the instance of the
Respondent vide the meeting held on 14th June, 2014. Thereafter, from
14th June 2014ti11 2nd February, 2017, the Respondent along with the
other lenders of the Appellant and the Appellant itself, have been
participating in the periodically held meetings of the JLF, in all of which
meetings the JLF had unanimously agreed to adopt 'rectification' as the
corrective action plan (CAP) for the Appellant. It is pertinent to note that
the Respondent itself had requested the lead lender of the Appellant
(L&T Infrastructure Finance Company) to convene the JLF meetings as
the lead lender from February 2016 onwards.
b. As per the minutes of the meeting held on 2nd February 2017

circulated by the Lead Lender, the effect of the JLF meeting is that the
JLF has decided to continue with rectification as CAP for the Appellant
and members of JLF have been requested 'not to proceed with any
individual asset level action'. The Respondent however, chose to dispute
these minutes vide their email dated 16th February 2017as circulated by
Respondent No. 33. As per the purported minutes of the meeting, the JLF
lenders had resolved that rectification as the CAP has failed and the JLF
members have decided to explore their options for regularising the
account.
c. By the time the correct minutes of the meeting dated 2.2.2017

were circulated by the Lead lender on 16.2.2017, the Respondent had
already filed its application on 8th February 2017 itself with the
àdjudicating authority' against the Appellant without the
knowledge/consent of the other members of the JLF. It is pertinent to
note that the Respondent while disputing the said minutes does not even
mention about the said application filed by the Respondent against the
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by Hon’ble NCLAT
Appellant before the 'adjudicating authority' and their reliance on the

purported minutes of meeting in the said application.
d. Arguendo the purported minutes of the meeting are correct, that

still does not justify the filing of the said application by the Respondent
before the 'adjudicating authority' de hors the structure of JLF. The JLF
members as per Respondent's own version had agreed to 'explore their
action for resolving. . ..' And not to resort to filing of application under
Section 7 of the I&B Code. Possibly the notice of demand served by the
Respondent to the Appellant on 6th February 2017 was in furtherance of
'exploration of its action for resolving....' However, the filing of the
application under Section 7 of the I&B Code independently by the
Respondent, totally disregarding the other members of the Forum was a
mischief played by the Respondent upon the Appellant for reasons best
known to them, which mischief is apparent from the aforesaid conduct of
the Respondent.
e. The Respondent has acted contrary to the guidelines of the RBI

in relating to JLF, particularly the guideline issued on 24.9.2015 which at
para 5.2 of the guidelines stipulates that in case of disagreement between
the members of the JLF on deciding the CAP for borrower, the
dissenting lender shall have an option to exit their exposure by
completely selling their exposure to a new or existing lender. Therefore,
clearly the object of the RBI is clearly that the lenders act through the
JLF structure and do not go beyond the JLF structure or in other words
lenders do not act independent of JLF especially when an exit option
exists for an individual lender. In this regard, it is pertinent to refer to the
recent judgment of the Hon'ble Bombay High Court in the caser of IDFC
Bank Limited v M/ s. Ruchi Soya Industries Limited, inter alia, laying
down two propositions - firstly, circulars issued by the RBI pertaining to
JLF are statutory in nature and binding upon the banks and secondly, that
member of JLF cannot independently resort to/adopt any proceedings
during the on-going process of rectification through the JLF.
399
by Hon’ble NCLAT
16. Similar argument was raised in M/ s. Innoventive Industries Ltd v ICICI Bank & Anr. Having
noticed such argument, the Appellate Tribunal in "M/s. Innoventive Industries Ltd v ICICI Bank & Anr."
held that:-
"82. As discussed in the previous paragraphs, for initiation of corporate

resolution process by financial creditor under sub-section (4) of Section
7 of the Code, 2016, the 'adjudicating authority' on receipt of application
under sub-section (2) is required to ascertain existence of default from
the records of Information Utility or on the basis of other evidence
furnished by the financial creditor under subsection (3). Under Section 5
of Section 7, the 'adjudicating authority' is required to satisfy -
(c) Whether any disciplinary proceeding is against the proposed

Insolvency Resolution Professional.
83. Once it is satisfied it is required to admit the case but in case the
application is incomplete application, the financial creditor is to be
granted seven days' time to complete the application. However, in a case
where there is no default or defects cannot be rectified, or the record
enclosed is misleading, the application has to be rejected.
84. Beyond the aforesaid practice, the 'adjudicating authority' is not

required to look into any other factor, including the question whether
permission or consent has been obtained from one or other authority,
including the JLF. Therefore, the contention of the petition that the
Respondent has not obtained permission or consent of JLF to the present
proceeding which will be adversely affect loan of other members cannot
be accepted and fit to be rejected."
17. The impact of the Insolvency Resolution Professional on the business and management of the
Appellant, alleged to be as follows.
The Interim Insolvency Resolution Professional (hereinafter referred to as IRP) has been
appointed by the 'adjudicating authority' by the impugned order. On 1st March 2017 the IRP issued a
public notice in Economic Times therein calling upon the creditors of the company to submit their claims.
400
by Hon’ble NCLAT
From 2nd March 2017 onwards the IRP has been attending office from the Appellant's premises and has
taken over the management of affairs of the Appellant.
18. Ld. Counsel highlighted the events that occurred pursuant to IRP taking over the management of
the affairs of the Appellant.
18.1 M/ s. G.E Industrial India Pvt Ltd (hereinafter referred to as GE) has been a crucial and important
client of the Appellant. GE had placed several orders in October 2016 and January 2017 for commission
of the Appellant's cranes at its project sites at Lalpur, Kadapa, Jamnagar etc. The nature of Appellant's
contracts with its clients are such that the Appellant is required to regularly and in a very prompt, timely
manner, meet the requirements raised by its clients such as release of funds for the day to day functioning
of the cranes as well as management of the staff handling the cranes, hiring and dispatching the necessary
contractors, engineers to the project sites as may be required etc.
18.2 M/ s. G.E addressed several e-mails dated 6th march and 7th March 2017 and so on to the
Appellant in respect of the Appellant's cranes commissioned at G.E's Kadappa site. GE, inter-alia,
required the Appellant to urgently release funds for the crane's diesel, send a safety engineer at the project
site and take necessary action in respect of replacement of cotter pin in one of the ancillary equipments.
18.3 The appellant's Project Manager forwarded each of these e-mails to the IRP along with an
explanation regarding the nature of the service and the time lines for the same, wherever required.
18.4 Despite the lengthy trail of correspondence and constant service requests, IRP failed to do much
as satisfactorily reply to GE's concerns, much less release the necessary funds and take actions. As a
result of IRP's failure to release necessary funds and act on the service requests in a timely manner, the
Appellant was unable to perform its contractual obligations qua G.E.
18.5 Ultimately vide an email dated 18th march 2017, G.E has terminated the contract with the
Appellant resulting in a financial loss of at least Rs.2,70,00,000/ - as well as loss of goodwill that the
Appellant has painstakingly built in this business over the last 30 years.
18.6 It came to the knowledge of one of Appellant's Director Mr Saket Agarwal that the IRP had
contrary to the powers granted to him under the I&B Code, instruct some of the employees of the
Respondent to disclose the bank account details of the following companies which are subsidiaries of the
Appellant - (i) Starport Logistics Ltd; (ii) ABG Turnkey Pvt Ltd; (iii) Kandla Container Terminal Pvt Ltd
and (iv) ABG Projects & Services Ltd., UK.
401
by Hon’ble NCLAT
18.7 It appears that the IRP had directed employees of the Appellant to change the mandate of
authorised signatories in the bank accounts of the aforesaid subsidiaries and had also addressed
correspondence to the banks requesting a change in the authorised signatories.
18.8 The I&B Code does not in any manner empower an IRP to interfere with the affairs of the
subsidiaries of the corporate debtor. In fact, the Explanation to Section 18 of the I&B Code, 2016
explicitly provides that the assets of the corporate debtor shall not include the assets of its Indian or
foreign subsidiaries. In that view of the matter, the aforesaid act of the IRP is ex-facie illegal and
unsustainable in law.
18.9 As a result of the absolute mismanagement and dis interest in the management of the affairs of
the Appellant, the Appellant has suffered loss of several valuable human resources namely, Mr R.0
Swamy, Project Manager who has been with the employment of the Appellant since 26 years, submitted
his resignation therein citing "the working. atmosphere" at the Appellant's office as "severe stress" as the
reasons for his resignation. Mr Meet Shay, Deputy Manager e-mailed his resignation on 28th March,
2017. Mr Arup Kumar Ghosh, who was directed by the IRP to take charge of the head office activities of
the Appellant e-mailed his resignation on 29th March 2017 citing inability to "bear the stress to do so".
Mr Varun Kaka, Legal Associate of the Appellant also resigned on 29th March, 2017.
19. Sub-section (12) of Section 3 of I&B Code defined "default" to mean "a liability or obligation in
respect of claim which is due from an person..." The principal (unmatured) amount, never having become
due and payable to the Financial Creditor could not have been claimed as the default amount.
20. Impugned order herein suffers from the vice of non-application of mind by the 'adjudicating
authority' on the following counts:-
20.1 The ascertainment of existence of default by the 'adjudicating authority' which under the
provisions of Sub-Section (4) of Section 7 of the I&B Code has to be based on the application/other
evidence submitted by the financial creditor, suffers from non-application of mind given the apparent and
conspicuous mismatch between the amount demanded by the Respondent from the Appellant in its
demand notice dated 6th February 2017 and the amount stated to be in default in the said application.
20.2 Secondly, the 'adjudicating authority' in paragraph 8 of the impugned order has recorded that
proof of service showing service of notice upon the corporate debtor before filing the petition has been
filed by the Financial Creditor, without considering the true nature and purport of the so called notice
dated 8th February 2017 which did not even mention the essential details which were to be mentioned,
such as:-
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by Hon’ble NCLAT
a . Whether the application has been filed;
b . if the application is filed, what is the filing number; and
c . date of listing, if notified.
20.3 The notice has been given without considering the provisions of sub-rule (3) of Rule 4 of
Insolvency & Bankruptcy (Application to Adjudicating Authority) Rules, 2016 which mandates that an
application shall "dispatch forthwith", a copy of the application "filed with the Adjudicating Authority".
Thereby meaning a post-filing notice and not `before filing", the obvious purpose for the same being to
put the corporate debtor to adequate and informed notice. The àdjudicating authority' ought to have
realised these deviations from the prescribed procedure and either rejected the application or directed the
Respondent to follow the provisions of sub-Rule (3) of Rule 4 of Insolvency & Bankruptcy (Application
to Adjudicating Authority) Rules, 2016 and Rule 21 of the National Company Law Tribunal Rules.
20.4 Lastly, the 'adjudicating authority' has reached a conclusion at paragraph 9 of the impugned order
that it is satisfied that the Appellant has committed a default of Rs.27.77 crores, which finding is not only
perverse, but also is contrary to the very application of the Financial Creditor itself in complete disregard
to the apparent and conspicuous mismatch between the amount demanded by the Financial Creditor from
the Appellant-Corporate Debtor in its demand notice dated 6th February 2017 and the amount stated to be
in default in the said application.
21. Showing an incorrect claim, moving the application in a hasty manner and obtaining an ex-parte
order from the 'adjudicating authority' which admitted such an incorrect claim, the Financial Creditor
cannot disprove its mala fide intention by stating that the claim submitted is correct amount. The I&B
Code does not provide for any such mechanism where post-admission, the applicant financial creditor can
modify their claim amount.
22. In some of the cases, an insolvency resolution process can and may have adverse consequences
on the welfare of the company. This makes it imperative for the 'adjudicating authority' to adopt a
cautious approach in admitting insolvency applications and also ensuring adherence to the principles of
natural justice.
23. Admittedly the impugned order is ex-facie illegal and ought to be set aside by the Appellate
Tribunal. For the reasons aforesaid, we set aside the ex-parte impugned order dated 17th February 2017
passed by 'adjudicating authority', Mumbai Bench in C.P. No. 12/I&BP/NCLT/MAH/2017 and allow the
appeal.
24. In effect the appointment of Interim Resolution Professional, order declaring moratorium,
403
by Hon’ble NCLAT
freezing of account and all other order passed by 'adjudicating authority' pursuant to impugned order and
action taken by the Interim Resolution Professional, including the advertisement published in the
newspaper calling for applications are declared illegal. The 'adjudicating authority' is directed to close the
proceeding. The appellant company is released from the rigour of law and allow the appellant company to
function independently through its Board of Directors from immediate effect.
25. In the facts and circumstances, we impose a cost of Rs. 50,000/- (Rupees fifty thousand only) on
Respondent - Financial Creditor, ICICI Bank - to be paid in favour of Registrar, National Company Law
Appellate Tribunal, New Delhi by Demand draft within one month towards development of its Library.
The appeal is allowed with aforesaid observations and directions.
404
by Hon’ble NCLAT

NEW DELHI
C.P. (I.B.) No. 53/NCLAT/2017
Applicant: Seema Gupta

Vs.
Respondent: Supreme Infrastructure India Ltd & Ors
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. P. Nagesh, Mr. Ashutosh Gupta & Mr. Dhruv Gupta, Learned
Advocate
For Respondents/Defendant :
ORDER
This appeal has been preferred by the appellant who claims to be the operational creditor against
the order dated 10th March, 2017 passed by the Learned Adjudicating Authority (National Company Law
Tribunal) Mumbai Bench whereby and whereunder the application preferred by appellant for initiation of
Corporate Insolvency Resolution process under Section 9 of the Insolvency & Bankruptcy Code, 2016
(hereinafter referred to as "I&B Code") has been rejected.
Learned counsel for the appellant submitted that the application preferred by appellant under
Section 9 cannot be rejected at the threshold on the ground of technicalities that the notice has not been
issued under Section 8 of the I&B Code. It is contended that earlier a notice was issued under earlier
Section 433 and 434 of the Companies Act, 1956 which provides for statutory period of 21 days as
against notice period of 10 days enshrined under Section 8 of I&B Code. He placed reliance on Section
6(B) of the General Clauses Act but it is not necessary to discuss all such submissions in view of the
provisions of law, as discussed below.
Before filing of an application under Section 9 it is mandatory to issue a notice under Section 8 of
I&B Code, 2016, relevant of which reads as follows:
405
by Hon’ble NCLAT
"8(1) An operational creditor may, on the occurrence of a default,

deliver a demand notice of unpaid operational debtor copy of an invoice
corporate debtor in such form and manner as may be prescribed."
Section 9 mandates filing of the petition only after expiry of the period of 10 days from the date
of delivery of notice or invoice demanding payment under sub-section (1) of Section 8, which reads as
follows:
"9(1) After the expiry of the period of ten days from the date of delivery
of the notice or invoice demanding payment under sub-section (1) of
Section 8, if the operational creditor does not receive payment from the
process."
From the aforesaid provisions it will be clear that without a notice under sub-section (1) of
Section 8, no application can be preferred under Section 9 of I&B Code.
Similar question was considered by this Appellate Tribunal in "Era Infra Engineering Ltd Vs
Prideco Commercial Projects Pvt Ltd, Company Appeal (AT)(Ins) No.31 of 2017". In the said case
the Appellate Tribunal vide judgement dated 3rd May, 2017 rejected the similar contentions that a notice
issued to corporate debtor under provision of the Companies Act, 2013 for winding up and the Appellate
Tribunal held as follows:-
"On notice, the Respondent/ Operational Creditor has appeared and

filed reply affidavit. Ld. Counsel appearing on behalf of Operational
Creditor while accepted that no notice under Section 8 of I & B Code,
2016 was served on the Appellant/ Corporate Debtor, it is submitted that
the other formalities were completed. It is further submitted that earlier a
notice was issued to the Appellant/ Corporate Debtor under Section 271
of the Companies Act, 2013 for winding up which should be treated to be
a notice for the purpose of section 8 of the I&B Code, 2016. However,
such submissions made on behalf of the Operational Creditor cannot be
accepted in view of the mandatory provision under section 8 of the I & B
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by Hon’ble NCLAT
Code read with Rule 5 of Insolvency and Bankruptcy, (application to

Adjudicating Authority) Rules, 2016."
In view of the discussions made above, while we hold that giving a prior notice under Section 8
of I&B Code is mandatory before initiation of interim resolution process, such notice having not been
issued in this case, the adjudicating authority rightly rejected the application.
We find no merit in appeal. It is accordingly dismissed.
407
by Hon’ble NCLAT

NEW DELHI
C.P. (I.B.) No. 52/NCLAT/2017
Applicant: Kaliber Associates Pvt. Ltd.

Vs.
Respondent: Mrs Tripat Kaur
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Ayush Beotra, Learned Advocate
For Respondents/Defendant : Mr. R.K. Gupta, Learned Advocate
ORDER
This appeal has been preferred by the appellant-corporate debtor M/s Kaliber Associates Pvt Ltd
(hereinafter referred to as 'Corporate Debtor') against the order dated 26th April, 2017 passed by the
Adjudicating Authority (National Company Law Tribunal), New Delhi in Company Petition No.(IB)-
51(ND) / 2017 whereby and whereunder application preferred by respondent, proprietor of a firm under
the name and style of M/s Gallerie Nvya for initiation of insolvency resolution process under Section 7 of
the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as "I&B Code") has been admitted.
Further a moratorium have been declared and an Interim Resolution Professional have been appointed
who has been asked to announcement of corporate insolvency resolution process under Section 15 of the
I&B Code and to perform the duties as per I&B Code.
Learned counsel appearing on behalf of the appellant, corporate debtor, submitted that the
impugned order has been passed by the Adjudicating Authority in violation of principle of natural justice
i.e. without giving any notice to the corporate debtor prior to admission of the application. Reliance was
placed on the decision of the Appellate Tribunal in "Innoventive Industries Ltd Vs ICICI Bank and
Another, Company Appeal (AT)(Insolvency) No. 1 and 2 of 2017". In the said case the Appellate
Tribunal vide judgement dated 15th May, 2017 taking into consideration the decision of Hon'ble Supreme
Court and provisions of I&B Code and rules framed thereunder held
408
by Hon’ble NCLAT
"As amended Section 424 of the Companies Act, 2013 is applicable to the
proceeding under the I&B Code, 2016, it is mandatory for the
adjudicating authority to follow the Principles of rules of natural justice
while passing an order under I&B Code, 2016. Further, as Section 424
mandates the Tribunal and Appellate Tribunal, to dispose of cases or/
appeal before it subject to other provisions of the Companies Act, 2013
or I&B Code 2016 such as, Section 420 of the Companies Act, 2013 was
applicable and to be followed by the Adjudicating Authority."
Learned counsel appearing on behalf of the appellant further contended that the appellant is a
solvent company and in a position to pay the dues. Since financial dealings was entered into in the year
2012 a sum of Rs.50 lacs out of Rs.1.5 crores has been repaid to the respondent, financial creditor.
However, in the year 2016 some disagreements arose between the parties on account of which the
corporate debtor was constrained to stop payment to the Respondent. He further submitted that after
receipt of legal demand notice dated 20.10.2016, the appellant was making arrangement for amount for
making payment to the respondent and is now willing to unconditionally in irrevocably pay the
respondent, financial creditor the entire sum of Rs.1 crores alongwith interest of Rs.12 lakhs subject to
deduction of TDS. The cheques of the amount issued in the name of the respondent, financial creditor,
have been shown as follows:
i) Cheque No.139895 dated 4.6.2017 drawn on Union Bank, Lajpat Nagar Branch for a
sum of Rs.1,00,00,000/-.
ii) Cheque No.139896 dated 4.6.2017 drawn on Union Bank of India, Lajpat Nagar Branch
for a sum of Rs.10,80,000/-
He further submitted that the appellant unconditionally agrees to deposit the relevant TDS with
respect to the above mentioned amounts with the Tax Authorities within the prescribed time period.
Learned counsel appearing on behalf of the respondent, financial creditor while accepts that no
notice was issued by the Adjudicating Authority before admitting the application under Section 7 of I&B
Code and that he has no objection to settle the dispute with the appellant.
In the aforesaid background, as we find that the impugned order dated 26th April, 2017 passed by
Adjudicating Authority in Company Petition No.(IB)-51(ND)/2017 have been passed in violation of rules
of natural justice and against the decision of the Appellate Tribunal in Innoventive Industries Ltd case, no
other option is left except to set aside the impugned order dated 26th April, 2017.
409
by Hon’ble NCLAT
In the result, the appointment of Interim Resolution Professional, order declaring moratorium,
freezing of account and all other order passed by Adjudicating Authority pursuant to impugned order and
action taken by the Interim Resolution Professional including the advertisement published in the
newspaper calling for applications are declared illegal. The Adjudicating Authority is directed to close the
proceeding. The appellant is released from the rigour of law and allow the appellant company to function
independently through its Board of Directors with immediately effect.
After the order was dictated the learned counsel appearing on behalf of the appellant handed over
two account payees cheque issued in the name of firm M/s M/s Gallerie Nvya, posted dated 4th June,
2017, one for Rs.1 crore and another for Rs.10,80,000/- drawn on Union Bank of India to Learned
counsel for the respondent as full and final payment of debt with interest for onward transmission to the
financial creditor.
The appeal stands disposed of with the aforesaid observations.
The Adjudicating Authority will fix the fee of Interim Resolution Professional and the financial
creditor will pay the fees of the Interim Resolution Professional for the period he has worked.
410
by Hon’ble NCLAT

NEW DELHI
C.P. (I.B.) No. 41/NCLAT/2017
Applicant: Vasan Healthcare Pvt. Ltd.

Vs.
Respondent: M/s. Alcon Laboratories (India) Pvt. Ltd.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. S.R. Rajagopal, Mr. S. Santanam Swaminadhan, Mr. Rohan
Rajasekaran & Ms. Nishtha Khuranna, Learned Advocate
For Respondents/Defendant : Mr. Arun Kathpalia, Mr. C.A. Sinha & Mr. D. Philip, Learned Advocate
ORDER
This appeal has been preferred by Appellant/ Corporate Debtor under section 61 of Insolvency &
Bankruptcy Code, 2016 ("I & B Code" for short) against order dated 21st April, 2017 passed by the
National Company Law Tribunal, Chennai Bench in C.A 1/ (IB)/2017, whereby and whereunder the
application preferred by Respondent Operational Creditor for initiation of corporate insolvency resolution
process under section 9 of I&B Code has been admitted, order of moratorium passed and all proceedings
pending before all courts were stayed.
On 1st May, 2017, the Appellant brought to the notice of the Appellate Tribunal that a winding
up petition is pending before the Hon'ble Madras High Court pursuant to an application made by
Appellant under section 433(e) of the Companies Act, 1956. Having noticed such facts, the Appellate
Tribunal issued notice to Respondents Operational Creditor to decide whether the insolvency resolution
process initiated under section 9 of the I&B Code is maintainable in a case where winding up petition
against the corporate debtors is pending.
On 19th May, 2017, Ld. Counsels for the Appellant brought to the notice of this Appellate
Tribunal an order passed by Hon'ble Madras High Court in Company Application Nos. 462 and 463 (in
Company Petition No. 267 of 2015), whereby the Hon'ble Madras High Court stayed the operation of
insolvency proceedings initiated by Adjudicating Authority. On hearing the parties this Appellate
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by Hon’ble NCLAT
Tribunal raised doubt about the jurisdiction of the Hon'ble Madras High Court under section 433(e) of the
Companies Act, 1956 in interfering with a resolution process initiation by adjudicating authority under
I&B Code, in view of Section 238, of MO Code which reads as follows:
"238. Provisions of this Code to override other laws:- The

provisions of this Code shall have effect, notwithstanding anything
inconsistent therewith contained in any other law for the time being in
force or any instrument having effect by virtue of any such law."
Now having heard the Ld. Counsels for the parties and taking into consideration the fact that the
Appellant has already moved before the Hon'ble Madras High Court and have obtained an order of stay
on 4th May, 2017, the Appellant was asked to reply as to why the present appeal be not dismissed, as the
Appellant has already another remedy before the Hon'ble Madras High Court.
Today when the matter was taken up, Ld. Counsel for the Appellant sought permission to
withdraw the appeal. In the circumstances, we allow the Appellant to withdraw the appeal without any
liberty to move against the same very impugned order dated 21St April, 2017 passed by Adjudicating
Authority in Company Application No.1 / (IB) /2017.
The appeal is dismissed as withdrawn with aforesaid observations.
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by Hon’ble NCLAT

NEW DELHI
C.P. (I.B.) No. 29/NCLAT/2017
Applicant: M/s. MCL Global Steel Pvt. Ltd. & Anr.

Vs.
Respondent: M/s. Essar Projects India Ltd. & Anr.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Alok Dhir, Ms. Versha Banerjee, Mr. Milan Singh Negi & Mr.
Kunal G., Learned Advocate
For Respondents/Defendant : Mr. Ankoosh Mehta, Mr. V. Tandon & Mr. Karan Khanna, Learned
Advocate
ORDER
This appeal has been preferred by appellant M/s MCL Global Steel Pvt. Ltd. 8v Anr. (hereinafter
referred to as 'Corporate Debtor') against order dated 6th March 2017 passed by 'Adjudicating Authority'
(National Company Law Tribunal), Mumbai Bench in C.P. No. 20/I & BP/NCLT/MAH/2017, whereby
the application preferred by Respondents M/s Essar Projects India Limited and Anr. (hereinafter referred
to as 'Operational Creditor') under section 8 and 9 of the Insolvency and Bankruptcy Code, 2016
(hereinafter referred to as 'I & B Code') read with Rule 6 of the Insolvency and bankruptcy (Application
to Adjudicating Authority), Rules 2016 (hereinafter referred to as 'Adjudicating Authority') Rules 2016
for initiation of Corporate Insolvency Resolution Process has been admitted. The Adjudicating Authority
while declaring moratorium also passed certain directions, ordered to issue public announcement of the
corporate insolvency resolution process and appointed an Interim Resolution Professional to carry the
function of the company in terms of 'I & B Code'.
Learned counsel for the appellant while assailing the impugned order taken following plea and
grounds: -
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by Hon’ble NCLAT
(i) The impugned ex parte order was passed by Àdjudicating Authority without
prior notice or intimation of hearing to the Appellants-Corporate Debtors against the
principles of rules of natural justice.
(ii) Learned 'Adjudicating Authority' has failed to notice that existence of dispute
between the parties which Òperational Creditor' did not brought to the notice of the
Àdjudicating Authority' while getting an ex parte order. If notice would have been
served on 'Corporate Debtor' this fact would have been highlighted.
( i i i ) The Respondents - Operational Creditors concealed the material fact that it

issued a winding up notice under Section 433 of Companies "Act 1956 which was duly
replied by Appellant - Corporate Debtor vide reply dated 21St November 2016
disputing the entire claim. Even before issuance of notice under Section 8 of I&B
Code', the Appellant - Corporate Debtor by its email dated 5th March 2014, 20th
August 2013, 27th October 2014, 29th October 2014, 15th November 2014, 16th
November 2014 and 30th November 2014 had specifically raised its concern with
regard to quality of construction work and non-completion of the work within time
frame. The aforesaid correspondences clearly demonstrate the existence of dispute
3. Learned counsel appearing on behalf of the Appellant submitted that the word "includes" as
mentioned in sub-section (6) of Section 5 of I&B Code' though is not exhaustive but an illustrative one.
The word "includes" connote other dispute, if any, raised apart from the dispute mentioned in Section 8 of
the 'I & B Code'.
4. It was further contended that under sub-section 5(2)(d) of Section 9, the 'Adjudicating Authority'
is independent to reject an application if notice of dispute has been replied by the 'Corporate Debtor' and
the same is not brought to the notice of the 'Adjudicating Authority'. The 'Adjudicating Authority' on
wrong assumption of non-pendency of suit for arbitration proceedings accepted the plea taken by the
It was also contended that the dispute raised by Appellant is bonafide and fall within the meaning
of 'dispute' under sub-section (6) of Section 5 of 'I&B Code'.
5. Learned counsel appearing on behalf of the Respondent - Operational Creditor while contended
that the appeal is not maintainable at the instance of 1st Appellant and that the 2nd Appellant has no legal
authority whatsoever to initiate a proceeding on behalf of the 'Corporate Debtor' after appointment of
Interim Resolution Professional, further contended that the Appellants themselves have concealed
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by Hon’ble NCLAT
material facts by making false and baseless submissions. It was submitted that the e-mails as referred to
above, were addressed in the year 2014, however, based on the instructions of the Directors, one Mr.
Arvind Pujari an Officer working in the Accounts Department of 'Corporate Debtor' by e-mail dated 21St
November 2015 intimated the 'Operational Creditor' that he will be paid its dues for its services.
Moreover, no such payment was made. The 'Corporate Debtor' had agreed to make part payment by 1st
December 2015 which again it failed to pay and all the time the 'Corporate Debtor' neglected to repay the
unpaid amount to the 'Operational Creditor'.
6. Learned counsel for the respondent while submitted that demand notice under sub-section (1) of
Section 8 was sent in Form-3/Form-4 of the Rules on 28th December 2016, as per the Rule, the
'Corporate Debtor' failed to provide a record of the pendency of legal proceedings with regard to alleged
dispute. On the other hand, upon receipt of Demand Notice, the 'Corporate Debtor' addressed a letter
dated 3rd January 2017 and, inter alia, admitted that the 'Corporate Debtor' is presently under distress and
seeking its rehabilitation and restructuring of loans given by the banks and financial institutions.
7. It was contended that as per the scheme of the Code particularly subsection (2) of Section 8, there
should be an "existence of a dispute, if any," and a record of pendency of the suit or arbitration
proceedings filed before receipt of such notice or invoice in relation to such dispute the 'Corporate Debtor'
has to meet the dual threshold of: -
(a) identifying the existence of a dispute; and
(b) providing a record of the pendency of a suit or arbitration

proceedings in relation to such dispute.
It was further submitted that the aforesaid scheme of the Code and Rules are reinforced twice i.e.
at the time of sending the demand notice and at the time of receipt of the reply from a 'Corporate Debtor'.
The notice of dispute has to disclose pendency of the proceedings which the Appellant - `Corporate
Debtor' failed to bring on record. Learned counsel referred to the "notice of dispute" as mentioned in
Section 9 and submitted that the same necessarily be read as a notice under sub-section (1) of Section 8.
8. It was contended that as per Rule 24 of the National Company Law Tribunal, a copy of the
application was provided to the 'Corporate Debtor' and a copy of the same was served by letters dated
16th February 2017 and 28th February 2017 respectively. The Code does not envisage any other notice to
be provided to the 'Corporate Debtor' except for service of the application at the time of filing. Therefore,
it was contended that under the 'I & B Code' the `Corporate Debtor' has no right of hearing at the stage of
admission of an application filed under the Code. The detailed arguments were advanced on the question
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by Hon’ble NCLAT
but as such issues have already been decided by this Appellate Tribunal, we are not reproducing the
detailed arguments.
9. It was further contended that there is no adverse civil consequences for the 'Corporate Debtor' at
the stage of admission which may attract the principles of natural justice.
10. From the impugned order passed by the 'Adjudicating Authority' it is clear that the 'Corporate
Debtor' was not heard before the admission of the application. The Respondent - Operational Creditor has
also not disputed the aforesaid facts.
11. The 'Adjudicating Authority' in impugned order, noticed the submission made on behalf of the
Respondent - Operational Creditor and observed as follows: -
"6. The Petitioner Counsel submits, to say that dispute is in existence,

mere mentioning in the notice that dispute is in existence in relation to
impugned debt is not sufficient, the corporate debtor has to prove that
the Company already raised such dispute either in court proceeding or
Arbitration before receipt of notice u/ s 8 of the Code, here no such
proceeding being pending before any court of law or in Arbitration
proceeding before receipt of the notice supra, the debtor company
merely mentioning dispute in the reply to the notice u/ s. 8 will not
amount to dispute in existence, hence the counsel for the petitioner prays
this Bench to admit the petition by construing no dispute is in existence
against the debtor as on the date of receipt of notice u/ s. 8 of the Code.
7. Since the Corporate Debtor, as stated by the Petitioner, admitted

issuing invoices in relation to the amount mentioned, the grievance
remained in the reply would be regarding quality of construction, the
timeline of construction, loss due to delay in construction etc. Since the
same is not disputed before any court of law before receipt of notice
issued u/s. 8 of the Code, the dispute raised in the corporate debtor reply
to the notice u/ s. 8 of the Code cannot be treated as dispute in existence
at the time of receipt of the notice u/s 8 for two reasons, one — due to
admission of raising invoices and two — due to raising it as dispute in
the reply only after notice u/s 8 has been issued.
8. On perusal of definition of dispute u/s 5(6) and on perusal of section 8

(2)(a), it is evident that "dispute in existence" means and includes raising
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dispute in court of law or Arbitral Tribunal before receipt of notice u/s 8

of the Code.
12. The question as to whether a prior notice before admission of an application for Corporate
Insolvency Resolution Process is required or not was considered by this Appellate Tribunal in "M / s
Innoventive Industries Ltd., Company Appeal (AT) (Insolvency) Nos. 1 and 2 of 2017" decided on 15th
May 2017.
13. In the said case the Appellate Tribunal after detailed deliberations with regard to the provisions
of the Act particularly amended Section 424 of the Companies Act, as amended vide XIth Schedule of
Article 32 of Section 255 of the 'I & B Code' and held as follows:-
"49. As amended Section 424 of the Companies Act, 2013 is applicable

to the proceeding under the I&B Code, 2016, it is mandatory for the
while passing an order under I&B Code, 2016. Further, as Section 424
mandates the 'Tribunal' and Appellate Tribunal, to dispose of cases
or/appeal before it subject to other provisions of the Companies Act,
2013 or I&B Code 2016 such as, Section 420 of the Companies Act 2013
was applicable and to be followed by the Adjudicating Authority.
50. One "Sree Metaliks Limited & Anr." moved before the Hon'ble
Calcutta High Court in Writ Petition 7144 (W) of 2017 assailing the
vires of Section 7 of the Code, 2016 and the relevant rules under the
Insolvency & Bankruptcy (Application to the Adjudicating Authority)
Rules, 2016 (hereinafter referred to as I&B Rules, 2016). The challenge
was premise upon the contention that the Code, 2016 does not afford any
opportunity of hearing to a corporate debtor in a petition under Section
7 of I&B Code, 2016. The Hon'ble High Court noticed relevant provision
of Section 7 of the I&B Code 2016, the definition of 'adjudicating
authority' as defined under Section 5(1), Section 61 of the I&B Code,
2016 relating to appeal and amended Section 424 of the Companies Act,
2013 and by judgment dated 7th April, 2017 held as follows: -
"........However, it is to apply the principles of natural justice in the

proceedings before it. It can regulate it own procedure, however, subject
to the other provisions of the Act of 2013 or the Insolvency and
417
by Hon’ble NCLAT
2016 read with the Rules 2016 is silent on the procedure to be adopted at
the hearing of an application under section 7 presented before the NCLT,
that is to say, it is silent whether a party respondent has a right of
hearing before the adjudicating authority or not.
Section 424 of the Companies Act, 2013 requires the NCLT and NCLAT
to adhere to the principles of the natural justice above anything else. It
also allows the NCLT and NCLAT the power to regulate their own
procedure. Fetters of the Code of Civil Procedure, 1908 does not bind it.
However, it is required to apply its principles. Principles of natural
justice require an authority to hear the other party. In an application
under Section 7 of the Code of 2016, the financial creditor is the
applicant while the corporate debtor is the respondent. A proceeding for
declaration of insolvency of a company has drastic consequences for a
company. Such proceeding may end up in its liquidation. A person
cannot be condemned unheard. Where a statute is silent on the right of
hearing and it does not in express terms, oust the principles of natural
justice, the same can and should be read into in. When the NCLT
receives an application under Section 7 of the Code of 2016, therefore, it
must afford a reasonable opportunity of hearing to the corporate debtor
as Section 424 of the Companies Act, 2013 mandates it to ascertain the
the Code of 2016. Section 7(4) of the Code of 2016 requires the NCLT to
ascertain the default of the corporate debtor. Such ascertainment of
418
by Hon’ble NCLAT

hearing.

with Rules 20, 21, 22, 23, 24 and 26 or Part-III of the National Company
Law Tribunal Rules, 2016.
Adherence to the principles of natural justice by NCLT or NCLAT would

not mean that in every situation, NCLT or NCLAT is required to afford a
reasonable opportunity of hearing to the respondent before passing its
order.
however, after recording the reasons for grant of such an order and why
it has chosen not to adhere to the principles of natural justice at that
stage. It must, thereafter proceed to afford the party respondent an
opportunity of hearing before confirming such ex-parte ad interim order.
419
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It would be open to the parties to agitate their respective grievances with

regard to any order of NCLT or NCLAT as the case may be in
In such circumstances, the challenge to the vires to Section 7 of the Code

of 2016 fails."
14. The Appellate Tribunal in the said case of "M/s Innoventive Industries Limited" also noticed
Clause (3) of Rule 4 of Insolvency and bankruptcy (Application to Adjudicating Authority), Rules 2016
and observed :-
"51. As per clause (3) of Rule 4 of Insolvency and Bankruptcy

(Application to Adjudicating Authority) Rules, 2016, the financial
creditor is required to despatch forthwith a copy of the application filed
with the àdjudicating authority' to the corporate debtor as quoted
below:-
"4(3) The applicant shall dispatch forthwith, a copy of the application

filed with the Adjudicating Authority, by registered post or speed post to
the registered office of the corporate debtor."
Thus it is clear that sub-Rule (3) of Rule 4 of I&B (Application to

Adjudicating Authority) Rules, 2016, mandates the applicant to dispatch
forthwith, a copy of the application "filed with the Adjudicating
Authority". Thereby a post filing notice required to be issued and not as
notice before filing of an of application. The purpose for the same being
to put corporate debtor to adequate impound notice so that the
Corporate Debtor may bring to the notice of Adjudicating Officer
"mitigating factor/ records before the application is accepted even before
formal notice is received."
52. The insolvency resolution process under Section 7 or Section 9 of

I&B Code, 2016 have serious civil consequences not only on the
corporate debtor - company but also on its directors and shareholders in
420
by Hon’ble NCLAT
view of the fact that once the application under Sections 7 or 9 of the
I&B Code, 2016 is admitted it is followed by appointment of an 'interim
resolution professional' to manage the affairs of the corporate debtor,
instant removal of the board of directors and moratorium for a period of
180 days. For the said reason also the Adjudicating Authority is bound
to issue limited notice to the corporate debtor before admitting a case
under -,ection 7 and 9 of the 'I & B Code', 2016.
53. In view of the discussion above, we are of the view and hold that the
Adjudicating Authority is bound to issue a limited notice to the corporate
debtor before admitting a case for ascertainment of existence of default
based on material submitted by the financial creditor and to find out
whether the application is complete and or there is any other defect
required to be removed. Adherence to Principles of natural justice would
not mean that in every situation the adjudicating authority is required to
afford reasonable opportunity of hearing to the Corporate debtor before
passing its order.
15. In the aforesaid case of "M/s Innoventive Industries Limited", the Appellate Tribunal also
noticed the purpose of issuance of notice and held: -
"55. Process of initiation of Insolvency Resolution process by a financial

creditor is provided in Section 7 of the I & B Code. As per sub-section (1) of
Section 7 of the I & B Code, the trigger for filing of an application by a
financial creditor before the Adjudicating Authority is when a default in
respect of any financial debt has occurred. Sub-section (2) of Section 7
provides that the financial creditor shall make an application in prescribed
form and manner and with prescribed documents, including:
i. "record of the default" recorded with the information utility

or such other record or evidence of default as may be
specified;
ii. the name of the resolution professional proposed to act as an

421
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iii. any other information as may be specified by the Board."
16. In view of the decision of Appellate Tribunal in "M/s Innoventive Industries Limited", while we
accept the submissions made on behalf of the Appellant that the principle of rules of natural justice was
violated, also reject the contention made by learned counsel for the respondents that no such notice is
required or that there is no civil consequences, if any such application for initiation of Corporate
Insolvency Resolution Process is initiated.
17. The next question arises for consideration is what does "dispute" and "existence of dispute"
means for the purpose of initiation of Insolvency Resolution Process pursuant to application under
Section 9 of the 'I & B Code'. The aforesaid issue was considered by this Appellate Tribunal in "Kirusa
Software Private Limited Vs. Mobilox Innovations Private Limited, Company Appeal (AT) (Insolvency)
No. 06 of 2017". Having noticed different provisions of the I&B Code' including meaning of "dispute" as
defined under sub-section (6) of Section 5, the expression "existence of dispute", if any", used in sub-
section (2) of Section 8 of 'I & B Code'. This Appellate Tribunal observed and held as follows: -
"17. For the purposes of Part II only of the Code, some terms/ words
have been defined.
Sub Section (6) of Section 5 defines "dispute", to include, unless the

context otherwise requires, a dispute pending in any suit or arbitration
proceedings relating to:
The definition of "dispute" is "inclusive" and not "exhaustive". The same

has to be given wide meaning provided it is relatable to the existence of
the amount of the debt, quality of good or service or breach of a
representation or warranty.
18. Once the term "dispute" is given its natural and ordinary
meaning, upon reading of the Code as a whole, the width of "dispute"
422
by Hon’ble NCLAT
should cover all disputes on debt, default etc. and not be limited to only
two ways of disputing a demand made by the operational creditor, i.e.
either by showing a record of pending suit or by showing a record of a
pending arbitration.
The intent of the Legislature, as evident from the definition of the

term "dispute", is that it wanted the same to be illustrative (and not
exhaustive). If the intent of the Legislature was that a demand by an
operational creditor can be disputed only by showing a record of a suit
or arbitration proceeding, the definition of dispute would have simply
said dispute means a dispute pending in Arbitration or a suit.
21. Admittedly in sub-section (6) of Section 5 of the 'I & B

Code', the Legislature used the words 'dispute includes a suit or
arbitration proceedings'. If this is harmoniously read with Section (2) of
Section 8 of the 'I & B Code, where words used are 'existence of a
dispute, if any, and record of the pendency of the suit or arbitration
proceedings,' the result is disputes, if any, applies to all kinds of disputes,
in relation to debt and default. The expression used in sub-section (2) of
Section 8 of the 'I & B Code' existence of a dispute, if any,' is disjunctive
from the expression 'record of the pendency of the suit or arbitration
proceedings'. Otherwise, the words 'dispute, if any', in sub-section (2) of
Section 8 would become surplus usage.
22. Sub-section (2) of Section 8 of the & B Code' cannot be

read to mean that a dispute must be pending between the parties prior to
the notice of demand and that too in arbitration or a civil court. Once
parties are already before any judicial forum/ authority for adjudication
of disputes, notice becomes irrelevant and such an interpretation renders
the expression 'existence of a dispute, if any,' in sub-section (2) of
Section 8 itiose.
25. The true meaning of sub-section (2)(a) of Section 8 read

with sub-section (6) of Section 5 of the 'I & B Code' clearly brings out
the intent of the Code, namely the Corporate Debtor must raise a dispute
423
by Hon’ble NCLAT
with sufficient particulars. And in case a dispute is being raised by

simply showing a record of dispute in a pending arbitration or suit, the
dispute must also be relatable to the three conditions provided under
sub-section (6) of Section 5 (a)-(c) only. The words 'and recoil of the
pendency of the suit or arbitration proceedings' under sub-section (2)(a)
of Section 8 also make the intent of the Legislature clear that disputes in
a pending suit or arbitration proceeding are such disputes which satisfy
the test of sub-section (6) of Section 5 of the 'I & B Code' and that such
disputes are within the ambit of the expression, 'dispute, if any'. The
record of suit or arbitration proceeding is required to demonstrate the
same, being pending prior to the notice of demand under sub-section 8 of
the 'I & B Code'.
26. It is a fundamental principle of law that multiplicity of

proceedings is required to be avoided. Therefore, if disputes under sub-
section (2)(a) of Section 8 read with sub-section (6) of Section 5 of the 'I
& B Code' are confined to a dispute in a pending suit and arbitration in
relation to the three classes under sub-section (6) of Section 5 of the 'I &
B Code', it would violate the definition of operational debt under sub-
section (21) of Section 3 of the & B Code' and would become
inconsistent thereto, and would bar Operational Creditor from invoking
Sections 8 and 9 of the Code.
27. Sub-section (6) of Section 5 read with sub-section (2)(a)

of Section 8 also cannot be confined to pending arbitration or a civil suit.
It must include disputes pending before every judicial authority including
mediation, conciliation etc. as long there are disputes as to existence of
debt or default etc., it would satisfy sub-section (2) of Section 8 of the 'I
& B Code'."
18. The Appellate Tribunal also noticed various natures of "existence of dispute in
"Kirusa Software Private Limited Vs. Mobilox Innovations Private Limited" and held:-
"31. The dispute under I&B Code, 2016 must relate to

specified nature in clause (a), (b) or (c) i.e. existence of amount of debt
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by Hon’ble NCLAT
or quality of goods or service or breach of representation or warranty.

However, it is capable of being discerned not only from in a suit or
arbitration from any document related to it. For example, the
'operational creditor' has issued notice under Code of Civil Procedure
Code, 1908 prior to initiation of the suit against the operational creditor
which is disputed by 'corporate debtor. Similarly notice under Section 59
of the Sales and Goods Act if issued by one of the party, a
labourer/employee who may claim to be operation creditor for the
purpose of Section 9 of I&B Code, 2016 may have raised the dispute with
the State Government concerning the subject matter i.e. existence of
amount of debt and pending consideration before the competent
Government. Similarly, a dispute may be pending in a Labour Court
about existence of amount of debt. A party can move before a High Court
under writ jurisdictions against Government, corporate debtor (public
sector undertaking). There may be cases where one of the party has
moved before the High Court under Section 433 of the Companies Act,
1956 for initiation of liquidation proceedings against the corporate
debtor and dispute is pending. Similarly, with regard to quality offoods,
if the 'corporate debtor' has raised a dispute, and brought to the notice of
the 'operational creditor' to take appropriate step, prior to receipt of
notice under sub-section (1) of Section 8 of the I & B Code', one can say
that a dispute is pending about the debt. Mere raising a dispute for the
sake of dispute, unrelated or related to clause (a) or (b) or (c) of Sub-
section (6) of Section 5, if not raised prior to application and not pending
before any competent court of law or authority cannot be relied upon to
hold that there is a 'dispute' raised by the corporate debtor. The scope of
existence of 'dispute', if any, which includes pending suits and arbitration
proceedings cannot be limited and confined to suit and arbitration
proceedings only. It includes any other dispute raised prior to Section 8
in this in relation to clause (a) or (b) or (c) of sub-section (6) of Section
5. It must be raised in a court of law or authority and proposed to be
moved before the court of law or authority and not any got up or
malafide dispute just to stall the insolvency resolution process.
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by Hon’ble NCLAT
33. Thus it is clear that while sub-section (2) of Section 8

deals with "existence of a dispute", sub-section (5) of Section 9 does not
confer any discretion on adjudicating authority to verify adequacy of the
dispute. It prohibits the adjudicating authority from proceeding further if
there is a genuine dispute raised before any court of law or authority or
pending in a court of law or authority including suit and arbitration
proceedings. Mere a dispute giving a colour of genuine dispute or
illusory, raised for the first time while replying to the notice under
Section 8 cannot be a tool to reject an application under Section 9 if the
operational creditor otherwise satisfies the adjudicating authority that
there is a debt and there is a default on the part of the corporate debtor."
19. What appears from the present case is that much before enactment of the Insolvency and
Bankruptcy Code 2016, in or around 2013, the Appellant - Corporate Debtor' entered with respondent M/s
Essar Projects India Limited and Another Memorandum of Understanding for construction of work at
0.2MTPA Steel Melt Shop Complex at Pithampur, Dist. Dhar, Madhya Pradesh. For one or other reason
the outstanding dues in connection with construction work were alleged to have not been paid by
appellant to the Respondent - Operational Creditor. The respondent by a notice dated 26th October 2016
while referred to a Memorandum of Understanding dated 27th June 2013 mentioned :-
"7. We state that the Work Orders issue by MCL in connection with the
Project were duly completed by our Client as per the work set out in
each of such Work Orders. It is extremely pertinent to note that our
Client has successfully completed the Project within the contractual
period i.e. on November 30, 2014 as per the terms of the Work Orders
and has handed over possession of the plant to MCL by December 31,
2014. As MCL is aware, after the completion of certain additional work
i.e. by January 2015, the plant has been in operation. We further state
that our Client has also removed its machinery and other objects from
the Project premises in furtherance of the completion of the Project as
per the Work Orders.
8. The aforesaid clearly evinces that our Client has performed its
entire obligation in accordance with the terms and conditions agreed
upon with MCL and completed the project within the defined time period.
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by Hon’ble NCLAT
9. As per the terms of the MOU and the work Order, our Client regularly
raised the requisite invoices with respect to work carried out and the
invoices were received and accepted by MCL (the "Invoices"). We state
that a substantial portion of the Invoices currently remain outstanding
(the "Unpaid Invoices"). We further state that an amount aggregating to
INR 6,83,06,077 (Indian Rupees Six Crores Eighty Three Lakhs Six
Thousand Seventy Seven only) along with interest at the rate of 18
(eighteen) percent per annum is due and payable to our Client under
such Unpaid Invoice (collectively referred to as, the "Debt")."
20 In the light of the above, the appellants were called upon by Respondent - Operational Creditor to
repay the dues of Rs. 6,83,06,077 (Rupees Six Crores Righty Three Lakhs Six Thousand Seventy-Seven
only) along with interest @ 18%. It was mentioned that the said notice issue under Section 433(e) read
with Section 434 of the Companies Act 1956.
21. Referring to the aforesaid notice dated 26th October 2016 (received on 29th October 2016) by
letter dated 21st December 2016 the Corporate Debtor opposed the contentions and disputed the claim,
relevant to which are quoted below: -
"1. At the outset contents of notice under reply are incorrect,

misleading, therefore denied. Contents of notice are not to be deemed to
have been admitted unless admitted specifically.
2. Provisions contained in Section 434 of Companies Act, 1956 are

not available to your client to institute a proceeding for winding up of
Company for the following reasons:
i. My client seriously dispute the amount sought to be recovered by

your client under the terms of MOU dated 27.06.2013.
ii. There are very serious disputes between your client and my
client about the outstanding amount sought to be recovered by your
client.
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by Hon’ble NCLAT
iii. There are serious disputes between your client and my client
regarding qualify of construction and time line within which construction
was to be completed.
iv. My client has made huge payments in-between 30.10.2012 to

03.11.2014. Accounts of your client have not been reconciled with my
client.
v. Due to delayed construction, my client has suffered losses.

No completion certificate is issued. Outstanding bills are not verified and
certified.
There are very serious disputes about enforceability of the Contract between my client and your client.
vi. Amount sought to be recovered is not admitted by my client as

alleged by you.
3. In addition to above issues there are various other issues which

are involved in the matter which are seriously opposed by my client. My
client opposes the endeavour/ effort on the part of your client to recover
money from my client.
4. It is submitted that the issue-area of dispute between your client

and my client is of recovery of contract amount and those issues and
area of disputes are yet to be finally settled.
5. It is submitted that by issuing the notice under reply your client

is misusing the provisions contained in Companies Act, 1956. Winding
up notice in the aforementioned back ground of the facts and
circumstances is nothing but arms twisting which is not permissible in
law.
8.Without prejudice to above, please note that recovery of contract

amount sought by your client is under dispute and said dispute cannot be
resolved by the Company court. The dispute between your client and my
client can be resolved by alternative dispute resolution mechanism.
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by Hon’ble NCLAT
10. Please note that dispute raised by your client is in persona and is
covered by Arbitration Clause. Dispute raised by your client is not in
rem therefore not required to be adjudicated by courts and public
tribunals."
22. From the aforesaid notice dated 26th October 2016 issued by Respondent - Operational Creditor
under Section 433(e) and 434 of the Companies Act 1956 and the reply thereto given by Appellant -
Corporate Debtor by this letter dated 21st November 2016 it is clear that there is an "existence of a
dispute" between the parties regarding: -
(i). Quality of construction

(ii). Tying time line within its construction was to be completed, but not completed.
(iii). a huge amount has been paid by 'Corporate Debtor' to the 'Operational Creditor' in between 30th
December 2012 to 3rd November 2014.
23. This fact was also highlighted by the Appellant - Corporate Debtor while it filed a reply to the
notice issued by the 'Operational Creditor' under sub-section (2) of Section 8 of the 'I & B Code'.
24. The e-mail issued by Appellant - Corporate Debtor as referred to above and not disputed by the
Respondent - Operational Creditor also relates to the quality of work and non-completion of work within
time.
25. In "Kirusa Software Private Limited", this Appellate Tribunal held that for the purpose of sub-
section (2) of Section 8 and Section 9 "dispute" can be of being discerned from notice of 'Corporate
Debtor' and meaning of "existence of a dispute", if any, must be understood in the context of the dispute
of 'I & B Code' 2016 must relate to satisfy nature of clause (a), (b) or (c) of sub-section (6) of Section 5
i.e. existence of amount of debt or quality of goods or services or breach of representation or warranty. It
can be of being discerned not only from a suit or arbitration from documents related to it but form other
factors like notice issued under Section 8 of Code of Civil Procedure, 1908 prior to initiation of suit
against 'Operational Creditor' which is disputed by 'Corporate Creditor' etc.
26. In the present case as admittedly a notice was issued by Respondent - Operational Creditor under
Section 433(e) and 434 of the Companies Act 1956 in 28th October 2016 which was disputed by
Appellant - 'Corporate Debtor' objecting quality of service and non-completion of the work within time
which is much prior to enactment of 'I&B Code', 2016, and notice under Section 8 of the B code', we hold
429
by Hon’ble NCLAT
that there is an "existence of dispute" for which the petition under Section 9 preferred by Respondent -
Operational Creditor was not maintainable.
27. Further, as the impugned order dated 6th March 2017 was passed by Àdjudicating Authority
without notice to the Appellant - Corporate debtor in violation of principle of natural justice and the
Adjudicating Authority failed to notice the relevant facts that there was a dispute raised and replied by the
Corporate Debtor, the impugned order passed by Adjudicating Authority cannot be upheld.
28. We, accordingly, set aside the impugned order dated 6th March 2017 passed by the Adjudicating
Authority, Mumbai Bench in C.P.No. 20(I) 8s BP/NCLT/ MAH /2017 and make the Appellant -
Corporate Debtor free from all rigour of Corporate Insolvency Resolution Process.
29. In the result the order of Moratorium, freezing of bank accounts, appointment of Interim
Resolution Professional, advertisement issued notice to the persons about initiation of 'Corporate
Insolvency Resolution Process etc. all stand set aside.
30. It will be open to the Board of Directors to take over the possession and function of the Appellant
company with immediate effect. The Tribunal is directed to close the proceedings and dismiss the
application in view of the order passed by Appellate Tribunal and determine the fees of Interim
Resolution Professional to which he will be entitled for the period he has performed the duty to be borne
by the respondent - Operational Creditor.
31. The appeal is allowed with the aforesaid observations and directions. However, in the facts and
430
by Hon’ble NCLAT

NEW DELHI
C.P. (I.B.) No. 33/NCLAT/2017
Applicant: M/s. Meyer Apparel Ltd. & Anr

Vs.
Respondent: M/s. Surbhi Body Products Pvt. Ltd.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Rajbirbal, Ms. Raavi Birbal, Mr. Govil & Ms. Swastika Kumar,
Learned Advocate
For Respondents/Defendant : Ms. Isha Agarwal & Mr. Rhishabh Jetely, Learned Advocate
C.P. (I.B.) No. 34/NCLAT/2017
Applicant: M/s. Meyer Apparel Ltd. & Anr

Vs.
Respondent: M/s. Godolo & Godolo Exports Pvt. Ltd.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Rajbirbal, Ms. Raavi Birbal, Mr. Govil & Ms. Swastika Kumar,
Learned Advocate
For Respondents/Defendant : Ms. Isha Agarwal & Mr. Rhishabh Jetely, Learned Advocate
ORDER
In both the appeals as Appellant is common and common order is under challenge, we have heard
both the appeals together and disposed of by this common judgement.
431
by Hon’ble NCLAT
2. The Respondent M/s. Surbhi Body Products (P) Ltd., claimed to be the ‘Operational Creditor’
filed application under Section 9 of Insolvency & Bankruptcy Code, 2016 (hereinafter referred to as I&B
Code) seeking to set in motion the Corporate Insolvency Resolution Process in relation to Appellant –
M/s Meyer Apparel Limited – Corporate Debtor.
3. Another M/s Godolo and Godolo Exports Pvt. Ltd. also claimed to be ‘Operational Creditor’ and
filed similar application under Section 9 of the I&B Code against Appellant/Corporate Debtor.
4. Both the aforesaid applications were heard together and by impugned common order dated 7th
April 2017, the Adjudicating Authority admitted both the applications and initiated Corporate Insolvency
Resolution Process, declaring moratorium prohibiting the institution of suits, continuation of pending
suits and other proceedings against Corporate Debtor.
5. The main ground taken by the Appellant is that the petition under Section 9 of the I&B Code was
not maintainable there being existence of dispute between the parties with regard to the debt claimed by
Operational Creditor.
6. In Appeal No. 33 of 2017, it is stated that the respondent issued a notice for recovery-cum-
winding up proceedings dated 2nd March 2015 allegedly claiming an amount of Rs. 2,13,570/- (Rupees
two lakh thirteen thousand five hundred and seventy) along with 24% interest. Pursuant to the aforesaid
notice under Section 433, 434 and 450 of the Companies Act 1956 a case has been instituted before the
Hon’ble High Court of Punjab & Haryana in C.P. No. 164 of 2015 with an application for appointment of
Provisional Liquidator.
7. It is further stated that Appellant No. 1 company suffered loss due to inferior quality of goods
supplied by Respondent/Operational Creditor and based on notices dated 27th February 2015, 4th
September 2015, 8th September 2015 and 21st September 2015 and the debit note dated 8th September
2015, the Appellant/Corporate Debtor has already filed a Suit for recovery of Rs. 2,16,610/- against the
Respondent/Operational Creditor before the Court of Civil Judge (Senior Division), Gurugram.
8. It is further pleaded that in the meantime, pursuant to the petitions preferred by the Corporate
Debtor, the Hon’ble High Court has already passed order on 8th September 2015 and then on 9th January
2017.
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by Hon’ble NCLAT
9. Exactly similar ground has been taken in the other appeal. Both the Operational Creditor (s) have
appeared and accepted that disputes were pending with regard to the amount of debts claimed by them.
A joint petition has been filed by the parties, along with supporting affidavit for disposal of both the
appeal (s) in the light of the ‘settlement’ entered between the parties with supporting affidavits.
10. Ld. Counsel for one of the ‘creditor’ appeared and submitted he has instruction to file a petition
for intervention as the creditor has already filed claim pursuant to notice of advertisement issued by
Interim Resolution Professional.
11. From the common impugned order dated 07.04.2017 passed by the Adjudicating Authority,
Chandigarh Bench, Chandigarh in CP (IB) No. 13/CHD/HRY/2017 & CP (IB) No. 14/CHD/HRY/2017,
while we find that the Adjudicating Authority noticed the purchase and supply of various qualities of
interlining and linen items by Corporate Debtor worth Rs.2,13,500 (Rupees two lakh thirteen thousand
five hundred only) from one of the Operational Creditor, the Adjudicating Authority also noticed that a
legal notice dated 2nd March 2015 was issued under Section 433 read with Section 434 of the
Companies Act, 1956 for payment of the amount. The Adjudicating Authority further noticed that a
letter dated 4.9.2015 was written by the Corporate Debtor raising the dispute about “quality of goods
being inferior and poor quality” and for failure to make payment, a Company Petition No. 164 of 2015
for winding up was filed by the Operational Debtor which is pending before the Punjab & Haryana High
Court since 28th August, 2015. The Adjudicating Authority further noticed the order of the Hon’ble
High Court dated 6.9.2016 wherein the Hon’ble High Court noticed the question of maintainability of
the winding up petition filed by Corporate Debtor in view of the pendency of matter before the Board
for Industrial & Financial Reconstruction (hereinafter referred to as BIFR). In such background, the
Operational Creditor withdrew the winding up petition.
12. In relation to the other case, the Adjudicating Authority noticed that the purchase orders were
given by the Corporate Debtor from time to time with the condition that the payment will be made
within sixty days of delivery. The invoices, 32 in number, show that out of total amount of
Rs.16,09,152/- (Rupees sixteen lakh nine thousand one hundred and fifty-two only), amount payable is
Rs.12,49,307.50 paise (Rupees twelve lakh forty-nine thousand three hundred and seven and paise fifty
only). The due date of payment against each invoices were mentioned and it was clearly mentioned in
the invoices, that the defects/shortage/rate difference have to be notified in writing by the Corporate
Debtor. The Corporate Debtor paid a sum of Rs. 80,473.50 (Rupees eighty thousand four hundred and
seventy-three and paise fifty only) on 26.2.2015 and balance outstanding amount of Rs.11,68,834/-
(Rupees eleven lakh sixty eighty thousand eight hundred and thirty-four) along with interest was not
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by Hon’ble NCLAT
paid. When the notice for winding up was issued, the Corporate Debtor raised the question of quality of
goods and alleged inferior quality in the letter dated 21.9.2015.
13. However, all the aforesaid stand taken by the Corporate Debtor about the objections as were
raised earlier in proceeding under Section 433 of the Companies Act, 1956 and inferior quality of
materials supplied by Operational Creditor was not accepted by the Ld. Adjudicating Authority for the
following reasons: -
“29. Therefore, the dispute relating to quality of goods and service would
also be included in the said definition. The question basically is whether
raising this dispute in the Notice dated 27.9.2015 more than one year
after the last transaction is covered within the scope of the term
‘dispute’, especially when the recourse to the recovery of the outstanding
amount by filing a civil suit seems to have been taken just at the time of
sending reply to the demand notice under Section 8 of the ‘Code” in
February, 2017."
14. From the impugned order dated 7th April 2017, we find that the Adjudicating Authority relied on
the decision of the Punjab & Haryana High Court in “Max India Limited vs Unicoat Tapes (P) CP No.
99 of 1994 decided on 4.7.1997” to find out the meaning of ‘dispute’, though we find specific definition
of ‘dispute’ has been defined under sub-Section (6) of Section 5 of the I&B Code.
15. In the present case the Respondents have accepted that disputes were pending prior to issuance
of notice under Section 8 of I&B Code. Apart from aforesaid admitted position, we find that since 2015
there was a dispute raised by the Appellant (s)/ Corporate Debtor (s) about quality of goods.
16. The question as to what does ‘dispute’ and ‘existence of dispute’ means for the purpose of
maintaining a petition for Corporate Insolvency Resolution Process under Section 9 of I&B Code was
considered by this Appellate Tribunal in “Kirusa Software Private Ltd. v. Mobilox Innovations Private
Limited in Company Appeal (AT) (Insolvency) 6 of 2017” by its judgment dated 24th May 2017 while
noticed the different provisions of the I&B Code, including the meaning of ‘dispute’ as defined in sub-
section (6) of Section 5 and the sentence “existing of a dispute, if any “and” record of pendency of suit
or arbitration proceeding” as defined in sub-section (2) of Section 8 and Section 9 of the I&B Code
respectively and held as follows: -
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by Hon’ble NCLAT
“17. For the purposes of Part II only of the Code, some terms/words
have been defined.
Sub Section (6) of Section 5 defines “dispute”, to include, unless

the context otherwise requires, a dispute pending in any suit or
arbitration proceedings relating to:
The definition of “dispute” is “inclusive” and not “exhaustive”.

The same has to be given wide meaning provided it is relatable to the
existence of the amount of the debt, quality of good or service or breach
of a representation or warranty.
18. Once the term “dispute” is given its natural and ordinary
meaning, upon reading of the Code as a whole, the width of “dispute”
should cover all disputes on debt, default etc. and not be limited to only
two ways of disputing a demand made by the operational creditor, ie.
either by showing a record of pending suit or by showing a record of a
pending arbitration.
The intent of the Legislature, as evident from the definition of the

term “dispute”, is that it wanted the same to be illustrative (and not
“21. Admittedly in sub-section (6) of Section 5 of the ‘I & B Code’, the

Legislature used the words ‘dispute includes a suit or arbitration
proceedings’. If this is harmoniously read with Section (2) of Section 8 of
the ‘I & B Code’, where words used are ‘existence of a dispute, if any,
435
by Hon’ble NCLAT
and record of the pendency of the suit or arbitration proceedings,’ the

result is disputes, if any, applies to all kinds of disputes, in relation to
debt and default. The expression used in sub-section (2) of Section 8 of
the ‘I & B Code’ ‘existence of a dispute, if any,’ is disjunctive from the
expression ‘record of the pendency of the suit or arbitration
proceedings’. Otherwise, the words ‘dispute, if any’, in sub-section (2) of
22. Sub-section (2) of Section 8 of the ‘I & B Code’ cannot be read to

mean that a dispute must be pending between the parties prior to the
notice of demand and that too in arbitration or a civil court. Once
parties are already before any judicial forum/authority for adjudication
the expression ‘existence of a dispute, if any,’ in sub-section (2) of
Section 8 itiose.”
“25. The true meaning of sub-section (2)(a) of Section 8 read with sub-
section (6) of Section 5 of the ‘I & B Code’ clearly brings out the intent
of the Code, namely the Corporate Debtor must raise a dispute with
sufficient particulars. And in case a dispute is being raised by simply
showing a record of dispute in a pending arbitration or suit, the dispute
must also be relatable to the three conditions provided under sub-section
(6) of Section 5 (a)-(c) only. The words ‘and record of the pendency of
the suit or arbitration proceedings’ under subsection (2)(a) of Section 8
also make the intent of the Legislature clear that disputes in a pending
suit or arbitration proceeding are such disputes which satisfy the test of
sub-section (6) of Section 5 of the ‘I & B Code’ and that such disputes
are within the ambit of the expression, ‘dispute, if any’. The record of
suit or arbitration proceeding is required to demonstrate the same, being
pending prior to the notice of demand under sub-section 8 of the ‘I & B
Code’.
26. It is a fundamental principle of law that multiplicity of proceedings is

required to be avoided. Therefore, if disputes under sub-section (2)(a) of
Section 8 read with sub-section (6) of Section 5 of the ‘I & B Code’ are
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by Hon’ble NCLAT
confined to a dispute in a pending suit and arbitration in relation to the

three classes under sub-section (6) of Section 5 of the ‘I & B Code’, it
would violate the definition of operational debt under sub-section (21) of
Section 3 of the ‘I & B Code’ and would become inconsistent thereto,
and would bar Operational Creditor from invoking Sections 8 and 9 of
the Code.
27. Sub-section (6) of Section 5 read with sub-section (2)(a) of Section 8

also cannot be confined to pending arbitration or a civil suit. It must
include disputes pending before every judicial authority including
debt or default etc., it would satisfy sub-section (2) of Section 8 of the ‘I
& B Code’. “
"31. The dispute under I&B Code, 2016 must relate to specified nature in
clause (a), (b) or (c) ie. existence of amount of debt or quality of goods
or service or breach of representation or warranty. However, it is
capable of being discerned not only from in a suit or arbitration from
any document related to it. For example, the ‘operational creditor’ has
issued notice under Code of Civil Procedure Code, 1908 prior to
initiation of the suit against the operational creditor which is disputed by
‘corporate debtor. Similarly notice under Section 59 of the Sales and
Goods Act if issued by one of the party, a labourer/employee who may
claim to be operation creditor for the purpose of Section 9 of I&B Code,
2016 may have raised the dispute with the State Government concerning
the subject matter ie. existence of amount of debit and pending
consideration before the competent Government. Similarly, a dispute
may be pending in a Labour Court about existence of amount of debt. A
party can move before a High Court under writ jurisdictions against
Government, corporate debtor (public sector undertaking). There may be
cases where one of the party has moved before the High Court under
Section 433 of the Companies Act, 1956 for initiation of liquidation
proceedings against the corporate debtor and dispute is pending.
Similarly, with regard to quality of foods, if the ‘corporate debtor’ has
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by Hon’ble NCLAT
raised a dispute, and brought to the notice of the ‘operational creditor’

to take appropriate step, prior to receipt of notice under sub-section (1)
of Section 8 of the ‘I & B Code’, one can say that a dispute is pending
about the debt. Mere raising a dispute for the sake of dispute, unrelated
or related to clause (a) or (b) or (c) of Sub-section (6) of Section 5, if not
raised prior to application and not pending before any competent court
of law or authority cannot be relied upon to hold that there is a ‘dispute’
raised by the corporate debtor. The scope of existence of ‘dispute’, if
any, which includes pending suits and arbitration proceedings cannot be
limited and confined to suit and arbitration proceedings only. It includes
any other dispute raised prior to Section 8 in this in relation to clause (a)
or (b) or (c) of sub-section (6) of Section 5. It must be raised in a court of
law or authority and proposed to be moved before the court of law or
authority and not any got up or malafide dispute just to stall the
insolvency resolution process.”
17. In the present case, we find that the Appellants/ Corporate Debtor in both the cases have already
raised dispute relating to quality of goods which culminated into pendency of Company Petition before
the Punjab & Haryana High Court, no matter whether it was withdrawn, we hold that the dispute as raised
by the Appellants/Corporate Debtor fall within the ambit of expression “dispute, if any” as defined under
sub-section (6) of Section 6 of the I&B Code and also within he ambit of expression ‘existence of a
dispute, if any” as mentioned under sub-Section (2) of Section 8 of I&B Code. The aforesaid fact has also
been admitted by both the Respondents.
18. In view of the fact that we have given a specific finding merit, we have not taken notice of
‘agreement, if any reached between the parties’ as brought on record for determination of the issue.
19. For the reason aforesaid, the impugned common order dated 7th April 2017 passed by the
Adjudicating Authority, Chandigarh Bench in Company Petition (IB) No. 13/Chd/Hry/2017 and in
Company Petition (IB) No. 14/Chd/Hry/2017 cannot be upheld and the same is accordingly set aside. In
effect the appointment of Interim Resolution Professional (s), order declaring moratorium, freezing of
account and all other order passed by Adjudicating Authority pursuant to impugned order and action
taken by the Interim Resolution Professional, including the advertisement published in the newspaper
calling for applications are declared illegal. The Adjudicating Authority is directed to close the
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by Hon’ble NCLAT
proceeding. The appellant company is released from the rigour of law and allow the appellant company to
20. At this stage, we may only add that once in a petition under Section 7 or 9 of the I&B Code when
corporate resolution process is initiated, the Adjudicating Authority has no jurisdiction to initiate another
corporate resolution process against the same very Corporate Debtor, though it may allow the Financial
Creditor/Operational Creditor to file claim pursuant to the advertisement issued, before the ‘interim
resolution professional’.
21. Both appeals are allowed with aforesaid observation and direction but in the facts and
circumstances there shall be no order as to cost.
439
by Hon’ble NCLAT

NEW DELHI
C.P. (I.B.) No. 14/NCLAT/2017
Applicant: Philips India Limited

Vs.
Respondent: Goodwill Hospital & Research Centre Ltd.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. N. Mahabir & Mr. P.C. Arya, Learned Advocate
For Respondents/Defendant : Ms. S.N. Jha, Mr. Atul T.N & Mr. Harsh Raghuvanshi, Learned Advocate
C.P. (I.B.) No. 15/NCLAT/2017
Applicant: Philips India Limited

Vs.
Respondent: Karina Healthcare Private Limited
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. N. Mahabir & Mr. P.C. Arya, Learned Advocate
For Respondents/Defendant : Ms. S.N. Jha, Mr. Atul T.N & Mr. Harsh Raghuvanshi, Learned Advocate
ORDER
As both the appeals have been preferred against common order dated 2nd March 2017 passed by
'Adjudicating Authority' (National Company Law Tribunal), Principal Bench, New Delhi, the appellant is
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by Hon’ble NCLAT
common and common question of law is involved, they were heard together and disposed of by this
common judgement.
2. Appellant, Philips India Limited (hereinafter referred to as 'Operational Creditor') had preferred
two separate applications for initiation of Corporate Insolvency Resolution Process invoking provisions
of Section 9 of Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as 'I&B Code') against one
Respondent - Corporate Debtor "Goodwill Hospital and Research Centre Limited" and another Corporate
Debtor, "Karina Healthcare Private Limited". Both the applications under Section 9 were rejected by
impugned common judgement passed by 'Adjudicating Authority' with observations that the remedy of
the Appellant/Applicant lies elsewhere and not under the provisions of 'I & B Code'.
3. The brief fact of the case are as follows: -
The appellant entered into a Comprehensive Annual Maintenance Contract with respondent
'Goodwill Hospitals and Research Centre' on 2nd August 2011 and 11th May 2012 for the period from
1St September 2011 to 31st August 2012 and 1st September 2012 to 31St August 2013 respectively in
respect of maintenance of Allum FD 20C.
4. Another Comprehensive Annual Maintenance Contract was reached between Appellant and the
Respondent 'Karina Healthcare Private Limited' on 14th March 2010 for maintenance of installed
machine Brilliance 64 without MRC tube coverage but with UPS, battery, injector for the period from
15th March 2010 to 14th March 2013.
5. In both the cases the grievance of the appellant is that the Respondent - Corporate Debtor
defaulted to make payment of debts giving rise to filing of the petitions under Section 9 of 'I&B Code'.
6. A perusal of the impugned order would show that the 'Adjudicating Authority' noticed the work
order placed by the 'Corporate Debtor' primarily related to maintenance of equipments. A bare perusal of
invoices would show that it has included the charges of material and labour apart from CST, service tax,
operational cess, small and secondary and higher education cess. The Learned Adjudicating Authority
also noticed that there was no document placed on record certified by the 'Corporate Debtor' or its
authorised representative or a medical technician that the work has been done satisfactorily in accordance
with the standard of norms/ quality stipulated in the agreement. The Adjudicating Authority noticed the
aforesaid factors and in view of the objections raised by both the 'Corporate Debtors', pursuant to a notice
issued by Appellant - 'Financial Creditor' under Section 433 and 434 of the Companies Act 1956, rejected
the applications with following observations: -
"The reliance of the applicant on the provisions of Section 9 of IBC is not meritorious. The applicant ha:,
claimed and has classified itself as 'operational creditor' and has prayed for triggering of the Insolvency
441
by Hon’ble NCLAT
Process. A bare perusal of Section 9 of IBC would inter alia, reveal that this Tribunal is vested with the
powers to reject the application of the operational creditor under Section 9(5) (d) of IBC in case it is
found that notice of dispute has been received by such an operational creditor, or there is a record of
dispute with the information utility. We have been informed that no 'Information Utility' has so far been
set up and we are per force to rely on the notice of dispute as sent by the respondent operational debtor to
the applicant in the notice of dispute, the liability to pay has been completely denied."
7. The 'Corporate Debtors' have taken plea that there was an existence of dispute which they brought
to the notice of the 'Operational Creditor' in reply to notice under Section 8 of the 'I&B Code' read with
Section 9 of 'I & B Code'.
8. At this stage it is desirable to state that the Appellant - Operational Creditor issues a notice under
Section 433(e) read with Section 434(1)(a) of the Companies Act on 9th March 2016 to the respondent
'Goodwill Hospital and Research Centre Ltd'. Referring to earlier notice it was pointed out that
Òperational Creditor' will be left with no alternative but to call upon the said `Corporate Debtor' to
forthwith and without any further delay make the outstanding payment or otherwise the 'Operational
Creditor' have been constrained to initiate appropriate proceedings, both under Civil and Criminal law,
including winding up. Similar notice under Section 433(e) read with Section 434(1)(a) dated 9th March
2016 was issued on respondent Karina Healthcare (P) Limited.
9. Learned Adjudicating Authority to appreciate the nature of the dispute while noticed the aforesaid
facts, also noticed the reply dated 30th march 2016 filed by both 'Corporate Debtors' with similar plea, as
apparent from impugned order and quoted below: -
"To appreciate the nature of dispute, it would be profitable to read the following part of the reply dated
30.3.2016: -
"At the outset the allegations levelled under your notice dated 9.3.2016 are being denied in its entirety for
being false and concocted. It appears from the tone and tenor of your notice that your client had not
apprised you with the correct facts and circumstances of the matter at hand, leading to the issuance of the
misconceived and ill-founded notice dated 9.3.2016. It is brought to your kind notice that dues as claimed
by your notice were never outstanding against my clients and the demand notice for the same is
hopelessly barred by laws of limitation and hence untenable under law.
It is brought to your notice that our clients entered into a Comprehensive Annual Maintenance Contract
with your client for the maintenance of installed Allura Xper FD 20C at its hospital to keep the same in a
good and proper working condition. It was agreed under the clause 2 of the contract that the service will
be provided by your clients for the upkeep of the above mentioned medical equipment at the site of my
442
by Hon’ble NCLAT
client but your client in the most unprofessional manner failed to keep up with the contractual obligation
taken by it vide contract dated 11.5.2012. It is further important to mention herein that the officials of
your client had failed to visit the premises of my client in a periodic manner for the upkeep of the medical
equipment due to which the functioning of the equipment was majorly effected.
It is further important to mention herein that the Allura Xper FD 20C installed at the hospital of mu client
was left unattended at the hospital of my client for several days due to minor problems which were to be
repaired by your client but were never repaired in time causing severe financial loss due to non activity
of the machine of my client. The unprofessional approach by the officials of your client has caused major
loss of reputation for my client and caused severe inconvenience to the patient awaiting their treatment at
the Hospital of my client due to which the payment was deducted by my client and the same was
informed to the officials of your client.
10. The Adjudicating Authority then proceeded to discuss the provisions of law including the
expression 'dispute' as defined and inclusive definition as could be seen from sub-section (6) of Section 5
of the 'I & B Code' and observed: -
"dispute" includes a suit or arbitration proceedings relating to—
(a) The existence of the amount of debt;
(b) The quality of goods or service; or
(c) The breach of a representation or warranty;
A bare perusal of the above provision of the 'IBC' shows that a dispute could be proved by
showing that a suit has been filed or Arbitration proceedings are pending. It further elaborates that the suit
or arbitration should be in respect of the existence of the amount of debt, quality of goods or services, or
for a breach of a representation or a warranty. Obviously, it is not an exhaustive definition but an
illustrative one. It becomes evident from the expression 'includes' which immediately succeeds the word
'dispute'. Moreover, under Section 8(1) of the Code adequate room has been provided for the `NCLT' to
ascertain the existence of a dispute. A demand notice by 'operational creditor' to an 'operational debtor'
must be sent who has not paid operational dues and has committed default. Sub-section (2) of Section 8
further clarifies that the corporate debtor is obliged to bring to the notice of the òperational creditor,
within 10 days of the receipt of notice, the existence of a dispute and show the record of the pendency of
the suit or arbitration proceeding filed before the receipt of such notice or invoice in relation to such
dispute. The other option is to pay the demanded amount. In the instant case, the applicant sent a demand
notice which was duly received by the respondent. A reply has also been duly filed where serious dispute
has been raised."
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by Hon’ble NCLAT
11. On perusal of the documents submitted before the Adjudicating Authority and in view of the
discussions, part of which were noticed above, the Adjudicating Authority held that it was unable to
fathom any material on record to dislodge the stand of the respondents that there is existence of dispute
12. Learned counsel for the Appellant - Operational Creditor referred to sub-section (6) of Section 5
and sub-section (2) of Section 8 of 'I & B code' made the following submissions: -
Section 5(6) :
12.1 Dispute under S. 5(6) is limited to a 'proceeding' or `lis'. The word proceeding has been qualified
to be a suit or Arbitration proceeding.
12.2 The word 'dispute' has to be read in conjunction with Suit or Arbitration. The word 'include' is a
limitation to 'dispute'. The word 'include' connotes 'comprise' or 'consist'. The word ìncludes' ought to be
read as 'means and includes'.
12.3 The word 'include' is used because the proceedings could be of various other nomenclature and
cannot be listed by an exhaustive definition. Proceedings could include a Writ petition, Consumer Court,
Rent tribunal, Labour court, mediation, conciliation etc.
12.4 Dispute; connotes a claim made and denied by the other party. A suit or arbitration would
ordinarily be covered by 'Dispute'. Therefore, construing 'Dispute' to situations other than a proceedings/
lis would render the words 'suit or arbitration' in S. 5(6) otiose.
Section 8(2):
12.5 Use of the word AND envisages a lis/ proceeding regarding the dispute.
12.6 It would not be an appropriate construction that there are two parts in Section 8(2) with the first
party bring 'existence of a dispute' and the second part being 'record of the pendency of suit or
arbitration...' by reading the conjunctive 'and' as disjunctive òr'. Such a reading would render the second
part otiose for the following reasons:
(i) There is no limitation of time for the first part i.e. to notify 'existence of a
dispute'. Whereas a limitation is prescribed for the second part i.e. to notify
'record of suit or arbitration', by the words 'filed before the receipt of notice'.
(ii) The second part 'suit or arbitration' is ordinarily covered by the first pay t
'dispute' rendering the second part surplus age.
(iii) It creates this discrimination without any reasonable basis.
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13. Reliance was also placed on meaning of 'dispute' as per Oxford English Dictionary means a dis-
agreement or argument.
14. Learned counsel for the appellant made much stress on the word ìncludes' and placed reliance
on decision of Hon'ble Supreme Court in Namboodripad vs. Union of India, (2007) 4 SCC 502; Godfray
Phillips Ltd. vs. State of UP & Others ( 2005) 2 SCC 515; The South Gujarat Roofing Tiles
Manufacturers Association & Anr. Vs. The State of Gujarat, (1976) 4 SCC 601 wherein the Hon'ble
Supreme court held that there could not be inflexible rule that the word 'include' should be read always as
a word of extension without reference to the context...
15. It was further contended that general word 'dispute' has to be restricted to a lis/ proceedings by
applying the principles of Noscuntur a Sociis and Ejusdem generis. When a general word is qualified by
specific words of narrower construction, the legislative intent is clear that the general word should be
read and limited to characteristics of the specific words. Therefore, according to learned counsel for the
appellant the specific words 'suit or arbitration' is ordinarily understood and covered by the general word
`dispute'.
16. Per contra, according to Learned Senior counsel for the respondents the definition provided
under the sub-section (6) of section 5 of the Code is illustrative in nature and it enumerates three types of
disputes that the operational creditor can have with the corporate debtor but it does not rest here. It was
submitted that there could be various other types of disputes which have not been mentioned in the
present definition so as such the list in the body of the definition is not exhaustive and the term
"includes" used by the legislature cannot be read down to include only these three types of dispute and
has to be assigned a wider meaning by this Hon'ble Tribunal. The conjoint meaning of the definition with
the section 8(2) (a) of the Code enlarges the scope of the definition as provided in the section 5(6) of the
Code and gives illustration of a pending suit or arbitration. It was submitted that after the rendering of
defective services by operational creditor, to avoid the rigors of section 9 of the Code, the Corporate
Debtor would, if the term dispute has to give a narrow meaning of a Suit or Arbitration proceeding be
constraint to approach the Court seeking a negative declaration of non-payment which is prohibited
under the Specific Relief Act. Hence, as per the submission of the respondent herein, a dispute would
mean communication of a denial or repudiation of the claim of the operation creditor at first instance
either when the invoice has been raised and duly communicated to the Corporate Debtor, a Recovery
Notice has been received by a Corporate Debtor or a statutory notice under section 8(2) (a) has been
received by a Corporate Debtor. Further as per submission of the Respondent, no negative burden of
filing a suit or arbitration could be casted upon operational creditor in view of the above submission. The
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word 'includes' is a very wide term and creates extensive meaning to the word and covers within its
ambit all other aspects as well apart from the ones mentioned in the section 5(6) of the IBC Code 2016.
17. The question as to what does "dispute" and "existence of dispute" means for the purpose of
determination of an application under Section 9 of the 'I & B Code' fell for consideration before this
Appellate Tribunal in "Kirusa Software (P) Limited Vs. Mobilox Innovations Pvt. Ltd. - Company
Appeal(AT)(Insol.) 06/2017". By judgement dated 24th May 2017, the Appellate Tribunal observed and
held as follows: -
"25. The true meaning of sub-section (2)(a) of Section 8 read with sub-
section (6) of Section 5 of the 'I & B Code' clearly brings out the intent of
the Code, namely the Corporate Debtor must raise a dispute with
sufficient particulars. And in case a dispute is being raised by simply
showing a record of dispute in a pending arbitration or suit, the dispute
must also be relatable to the three conditions provided under sub-section
(6) of Section 5 (a)-(c) only. The words 'and record of the pendency of
the suit or arbitration proceedings' under sub-section (2)(a) of Section 8
also make the intent of the Legislature clear that disputes in a pending
suit or arbitration proceeding are such disputes which satisfy the test of
sub-section (6) of Section 5 of the 'I & B Code' and that such disputes are
within the ambit of the expression, 'dispute, if any'. The record of suit or
arbitration proceeding is required to demonstrate the same, being
pending prior to the notice of demand under sub-section 8 of the 'I & B
Code'.

Section 8 read with sub-section (6) of Section 5 of the 'I & B Code' are
three classes under sub-section (6) of Section 5 of the 'I & B Code', it
would violate the definition of operational debt under sub-section (21) of
Section 3 of the 'I & B Code' and would become inconsistent thereto, and
would bar Operational Creditor from invoking Sections 8 and 9 of the
Code.
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by Hon’ble NCLAT

debt or default etc., it would satisfy sub-section (2) of Section 8 of the 'I
& B Code'.
28. Therefore, as per sub-section (2) of the 'I & B Code, there are two
ways in which a demand of an Operational Creditor can be disputed:
i. By bringing to the notice of an operational creditor, èxistence of

a dispute'. In this case, the notice of dispute will bring to the notice of the
creditor, an èxistence of a dispute' under the Code. This would mean
disputes as to existence of debt or default etc,; or
ii. By simply bringing to the notice of an operational creditor,

record of the pendency of a suit or arbitral proceedings in relation to a
dispute. In this case, the dispute in the suit/ arbitral proceeding should
relate to matters (a)-(c) in sub-section (6) of Section 5 and in this case,
showing a record of pendency of a suit or arbitral proceedings on a
dispute is enough and to intent of the Legislature is clear, i.e. once the
dispute (on matters relating to 3 classes in subsection (6) of Section 5 of
the 'I & B Code') is pending adjudication, that in itself would bring it
within the ambit of sub-section (6) of Section 5 of the 'I & B Code'.
29. The definition of 'dispute' for the purpose of Section 9 must be

read alongwith expression operational debt as defined in Section 5(21)
of I&B Code, 2016 means:
(21) "operational debt" means a claim in respect of the provision of

repayment of dues arising under any law for the time being in force and
payable to the Central Government, any State Government or any local
authority;"
Thus the definition of 'dispute', 'operational debt' is read

together for the purpose of Section 9 is clear that the intention of
legislature to lay down the nature of `dispute' has not been limited to suit
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or arbitration proceedings pending but includes other proceedings "if

any".
30. Therefore, it is clear that for the purpose of sub-section (2) of

Section 8 and Section 9 a 'dispute' must be capable of being discerned
from notice of corporate debtor and the meaning of "existence" a
"dispute, if any", must be understood in the context.
31. The dispute under I&B Code, 2016 must relate to specified
nature in clause (a), (b) or (c) i.e. existence of amount of debt or quality
of goods or service or breach of representation or warranty. However, it
is capable of being discerned not only from in a suit or arbitration from
any document related to it. For example, the 'operational creditor' has
issued notice under Code of Civil Procedure Code, 1908 prior to
'corporate debtor. Similarly notice under Section 59 of the Sales and
Goods Act if issued by one of the party, a labourer/ employee who may
the subject matter i.e. existence of amount of debt and pending
party can move before a High Court under writ jurisdictions against
Government, corporate debtor (public sector undertaking). There may be
cases where one of the party has moved before the High Court under
Similarly, with regard to quality of foods, if the 'corporate debtor' has
raised a dispute, and brought to the notice of the 'operational creditor' to
take appropriate step, prior to receipt of notice under sub-section (1) of
Section 8 of the 'I & B Code', one can say that a dispute is pending about
the debt. Mere raising a dispute for the sake of dispute, unrelated or
related to clause (a) or (b) or (c) of Sub-section (6) of Section 5, if not
of law or authority cannot be relied upon to hold that there is a 'dispute'
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raised by the corporate debtor. The scope of existence of 'dispute', if any,

which includes pending suits and arbitration proceedings cannot be
insolvency resolution process."
18. In the present case the Respondent - Corporate Debtor much prior to issuance of notice under
Section 8 of 'I & B code', raised a dispute relating to quality of service/maintenance pursuant to notice
under Section 433(e) and 434 (1)(a) of the Companies Act 2013 to the notice of the 'Operational
Creditor'. In that view of the matter, it can be safely being stated that there is 'existence of dispute' about
the claim of debt.
19. Objection raised by Respondent - 'Corporate Debtor', not raised for the first time while replying
to the notice issued by 'Operational Creditor' under Section 8 of the 'I & B code'. The objection cannot
be called to be mere objection raising a dispute for the sake of 'dispute' and/or unrelated to Clause (a) or
(b) or (c) of sub-section (6) of Section 5 of 'I&B code'. For the said reason if the Adjudicating Authority
has refused to entertain the application under Section 9 of 'I & B code, no ground is made out to
interfere with such orders.
20. We find no merit in both the appeals. They are accordingly dismissed. However, there shall be
no order as to cost.
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NEW DELHI
C.P. (I.B.) No. 46/NCLAT/2017
Applicant: James Hotels Limited

Vs.
Respondent: Punjab National Bank
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Rakesh Kumar & Mr. P.K. Sachdeva, Learned Advocate
For Respondents/Defendant: Mr. Ajay Shanker, Learned Advocates
ORDER
Ld. Counsel for the Appellant sought permission to withdraw the appeal, to which, the
Respondent has no objection
In the circumstances, we allow the Appellant to withdraw the appeal but without any liberty to
move against the same very impugned order.
The appeal stands disposed as withdrawn.
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NEW DELHI
C.P. (I.B.) No. 56/NCLAT/2017
Applicant: P.K. Ores Private Limited

Vs.
Respondent: Tractors India Private Limited
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Amt Kumar Muhuri, Learned Advocate
For Respondents/Defendant: Mr. Rishav Banerjee & Ms. Ishita Chakrabarti, Learned Advocates
ORDER
This appeal under Section 61 of the Insolvency & Bankruptcy Code, 2016 (hereinafter referred to
as I&B Code) have been preferred by Appellant - P.K. Ores Private Limited (Corporate Debtor) against
order dated 3rd April 2017 passed by Ld. Adjudicating Authority (National Company Law Tribunal,
Kolkata Bench, Kolkata) in Company Petition No. 172 of 2017 whereby and where under the application
preferred by Respondent – Tractors India Private Limited – (Operational Creditor) under Section 9 of the
I&B Code for initiating the Corporate Resolution Process against the Appellant - Corporate Debtor has
been admitted and the Operational Creditor has been asked to propose the name of Interim Resolution
Professional along with the consent letter for taking immediate possession of the assets of Corporate
Debtor, including the bank account (s).
2. Ld. Counsel appearing for the Appellant while assailed the order, submitted that the impugned
order dated 3rd April, 2017 has been passed by the Adjudicating Authority in violation of rules of natural
justice, without any notice and without giving any opportunity to Corporate Debtor. It is further
contended that there is an ‘existence of dispute’ which the Appellant- Corporate Debtor could have
brought to the notice of the Adjudicating Authority, if given an opportunity.
3. On the other hand according to Ld. Counsel for Respondent- Operational Creditor the Appellant-
Corporate Debtor was served with a notice under Section 8 of the I&B Code and the copy of the petition
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under Section 9 was also forwarded to the Appellant. It is further contended that the Appellant failed to
reply to the notice given by the Operational Creditor under Section 8 of I&B Code.
4. We have heard Ld. Counsels for the parties and perused the record.
5. From the Order Sheets enclosed with the appeal, we find that the Adjudicating Authority initially
taken up the matter on 17th March 2017 and thereafter on 30th March 2017 but the application was
incomplete as the Respondent- Operational Creditor had not filed any affidavit regarding pendency of any
litigation with the Corporate Debtor. The Operational Creditor had also not filed Board’s resolution for
initiating proceeding against the Corporate Debtor. Therefore, time was allowed for the Operational
Creditor. From the aforesaid order sheets it is clear that only Ld. Counsels appearing for the Operational
Creditor were present and no notice was given to the Appellant –Corporate Debtor.
6. It appears that the matter was subsequently taken up on 3rd April 2017. On the said date taking
into consideration the fact that after service of notice by the Operational Creditor under Section 8 of the
I&B Code, the petition had been filed and the Operational Creditor had alleged that the Corporate Debtor
has failed to pay Rs. 9,76,095/- (Rupees Nine Lakh seventy-six thousand ninety-five only) in spite of
notice dated 17th January 2017 and the petition was otherwise complete, the application was admitted.
From the said order it is clear only Ld. Counsels for the Respondent/Operational Creditor were present
and no notice was given to the Appellate – Corporate Debtor.
7. It appears that on 10th April 2017 when the matter was taken up the Ld. Counsel for the
Respondent submitted that the Operational Creditor will propose the name of Insolvency Resolution
Professional along with the consent letter by 12th April, 2017. On the said date for the first time, Ld.
Counsel for Corporate Debtor appeared. However, there is nothing on record to suggest that the Ld.
Adjudicating Authority issued any notice to the Appellant-Corporate Debtor. The Respondent -
Operational Creditor has also not brought on record any order to suggest that the Ld. Adjudicating
Authority issued any notice to Corporate Debtor before admitting the application.
8. Ld. Counsel appearing on behalf of Appellant submits that the Appellant requested the National
Company Law Tribunal, Kolkata Bench to allow the Appellant to inspect the records. On inspection of
records, the Appellant came to know that no notice was issued by Ld. Adjudicating Authority to the
Appellant – Corporate Debtor prior to admission of the case.
9. As per Section 424 of the Companies Act, 2013 the Adjudicating Authority is supposed to follow
the rules of natural justice before passing any order. In “Innoventive Industries Limited vs. ICICI Bank”
Company Appeal (AT) (Insolvency) No. 1 & 2 of 2017 this Appellate Tribunal by judgment dated 15th
453
by Hon’ble NCLAT
May, 2017, also held that a notice required to be given to the Corporate Debtor before admitting any
application for initiation of corporate resolution process under Section 7 and 9 of the I&B Code.
10. In the present case as the Adjudicating Authority has not given any notice to the Corporate
Debtor, prior to admitting the application under Section 9 of the I&B Code, the impugned order is fit to
be set aside having been passed in violation of rules of natural justice.
11. Ld. Counsel appearing on behalf of the Appellant – Corporate Debtor brought to our notice,
letters communicated between the Corporate Debtor and the Operational Creditor, which are not in
dispute.
12. From the record we find that in reply to the letter dated 4th November 2016, written by
Operational Creditor, the Appellant- Corporate Debtor by reply dated 16th November, 2016 brought the
notice of the Operational Creditor that one of the ‘Caterpillar Engine’ (CAT 6.6) which was repaired and
installed by Operational Creditor was not functioning properly from the date of installation. It was further
informed that since last 8 months several times without rectifying the defects of existing engine it was not
possible for the Corporate Debtor to lift the Engine which was lying idle in the work shop of Operational
Creditor. It was also alleged that the Operational Creditor failed to supply the spare parts as per agreement
due to negligence of the Operational Creditor for that the Appellant - Corporate Debtor had to incur loss
to the tune of Rs. 2 crores. The relevant portion of the letter dated 16th November, 2016 reads as follows:-
“This has reference to your letter dated November 4 2016 and the content has been noted by us. In this
regard, we feel it necessary to bring to your notice the following facts for taking necessary action at your
end to avoid legal complications. That one of the Caterpillar Engine (CAT 6.6) which was repaired and
installed is not functioning property from the date of installation. This was brought to your notice several
times and the same was verified by your Engineers on this spot and assured for its rectification without
any fruitful results. You were also informed for taking necessary measures to overcome our huge revenue
loss.
In this regard, we informed you since last 8 months several times that without rectifying the existing
Engine it is not possible on our part to lift the captioned Engine, which is lying repaired at your
workshop. Needless to mention here that you have also failed to supply the spares, which were committee
by you and due to your negligence we have incurred a lost in the tune of Rs.2 crores and you shall be held
responsible for the same.
In nutshell, to maintain in long lasting business relation with your organization we request your good
self-for taking necessary action for a smooth function of the existing CAT6.6 Engine to proceed further in
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by Hon’ble NCLAT
the matter or else, we will be forced to take shelter under the law and social media to solve the issue
which is obviously not desirable.
Looking forward to your views for an amicable solution of the same.”
13. In reply to the said letter, the Respondent - Operational Creditor by letter dated 15th December
2016 while shown surprise and shock, intimated the Corporate Debtor that the allegations are baseless.
With regard to faulty, non-functional machine it was intimated that the Engine was earlier repaired. The
Operational Creditor threatened to initiate legal proceeding, including civil and criminal proceedings
against the Corporate Debtor, as apparent from the letter aforesaid, relevant portion of which (letter dated
15th December, 2016) reads as under:-
“At the outset, we are surprised and shocked to having received your reply letter dated 16th November,
2016 and the contents therein.
We would like to state in this regard that such a baseless allegation with respect to some faulty, non-
functional machine which was earlier repaired by us on receipt of our legal notice for legitimate
outstanding dues is purely after thought, sham and baseless, only to avoid paying our due debts.
You will appreciate that Tractors India is a trusted brand in the industry for last 7 decades and such
baseless and false allegation written with malicious intent is only to damage the reputation of our
organization and only delay the legitimate dues of ours.
In this regard, we would like to further state that such baseless allegations which leave us with no option
but to instigate legal proceedings against your organization, both civil and criminal, including but not
limited to proceedings for offences committed under Section 193, 195, 196, 199, 200 and Section 420 of
the Code of Criminal Procedure, which you are requested to note hereby.
We are hereby calling upon you as a final reminder for forthwith payment of our dues to the tune of
Rs.9,76,095/-
In case we don’t hear from you within 2 weeks from the date of receipt of this letter, we initiate legal
proceedings, both civil and criminal and will also dispose off the said machine in parts or as a whole as
scrap lying in unclaimed and abandoned state at your cost and consequence.”
14. In “Kirusa Software Private Ltd. Vs Mobilox Innovations Private Ltd” Company Appeal (AT)
(Insolvency) No. 6 of 2017, the Appellate Tribunal by judgment dated 24th May 2017 decided the
question as to what does a ‘dispute’ and ‘existence of dispute’ means for the purpose of determination of
petition under Section 9 of the I&B Code. In the said case, the Appellate Tribunal held:-
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by Hon’ble NCLAT
“25. The true meaning of sub-section (2)(a) of Section 8 read with sub-section (6) of Section 5 of the 'I &
B Code' clearly brings out the intent of the Code, namely the Corporate Debtor must raise a dispute with
sufficient particulars. And in case a dispute is being raised by simply showing a record of dispute in a
pending arbitration or suit, the dispute must also be relatable to the three conditions provided under sub-
section (6) of Section 5 (a)-(c) only. The words 'and record of the pendency of the suit or arbitration
proceedings' under sub-section (2)(a) of 16 Section 8 also make the intent of the Legislature clear that
disputes in a pending suit or arbitration proceeding are such disputes which satisfy the test of subsection
(6) of Section 5 of the 'I & B Code' and that such disputes are within the ambit of the expression, 'dispute,
if any'. The record of suit or arbitration proceeding is required to demonstrate the same, being pending
prior to the notice of demand under sub-section 8 of the 'I & B Code'.
26. It is a fundamental principle of law that multiplicity of proceedings is required to be avoided.

Therefore, if disputes under sub-section (2)(a) of Section 8 read with sub-section (6) of Section 5 of the 'I
& B Code' are confined to a dispute in a pending suit and arbitration in relation to the three classes
under subsection (6) of Section 5 of the 'I & B Code', it would violate the definition of operational debt
under sub-section (21) of Section 3 of the 'I & B Code' and would become inconsistent thereto, and would
bar Operational Creditor from invoking Sections 8 and 9 of the Code.
27. Sub-section (6) of Section 5 read with sub-section (2)(a) of Section 8 also cannot be confined to
pending arbitration or a civil suit. It must include disputes pending before every judicial authority
including mediation, conciliation etc. as long there are disputes as to existence of debt or default etc., it
would satisfy subsection (2) of Section 8 of the 'I & B Code'.
28. Therefore, as per sub-section (2) of the 'I & B Code', there are two ways in which a demand of an
Operational Creditor can be disputed: 17 i. By bringing to the notice of an operational creditor,
'existence of a dispute'. In this case, the notice of dispute will bring to the notice of the creditor, an
'existence of a dispute' under the Code. This would mean disputes as to existence of debt or default etc. or
ii. By simply bringing to the notice of an operational creditor, record of the pendency of a suit or arbitral
proceedings in relation to a dispute. In this case, the dispute in the suit/arbitral proceeding should relate
to matters (a)-(c) in sub-section (6) of Section 5 and in this case, showing a record of pendency of a suit
or arbitral proceedings on a dispute is enough and to intent of the Legislature is clear, i.e. once the
dispute (on matters relating to 3 classes in sub-section (6) of Section 5 of the 'I & B Code') is pending
adjudication, that in itself would bring it within the ambit of sub-section (6) of Section 5 of the 'I & B
Code'.
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by Hon’ble NCLAT
31. The dispute under I&B Code, 2016 must relate to specified nature in clause (a), (b) or (c) i.e.
However, it is capable of being discerned not only from in a suit or arbitration from any document
related to it. For example, the 'operational creditor' has issued notice under Code of Civil Procedure
Code, 1908 prior to initiation of the suit against the operational creditor which is disputed by 'corporate
debtor. Similarly notice under Section 59 of the Sales and Goods Act if issued by one of the party, a
labourer/employee who may claim to be operation creditor for the purpose of Section 9 of I&B Code,
2016 may have raised the dispute with the State Government concerning the subject matter i.e. existence
of amount of debit and pending consideration before the competent Government. Similarly, a dispute may
be pending in a Labour Court about existence of amount of debt. A party can move before a High Court
under writ jurisdictions against Government, corporate debtor (public sector 19 undertaking). There may
be cases where one of the party has moved before the High Court under Section 433 of the Companies
Act, 1956 for initiation of liquidation proceedings against the corporate debtor and dispute is pending.
Similarly, with regard to quality of goods, if the 'corporate debtor' has raised a dispute, and brought to
the notice of the 'operational creditor' to take appropriate step, prior to receipt of notice under sub-
section (1) of Section 8 of the 'I & B Code', one can say that a dispute is pending about the debt. Mere
raising a dispute for the sake of dispute, unrelated or related to clause (a) or (b) or (c) of Sub-section (6)
of Section 5, if not raised prior to application and not pending before any competent court of law or
authority cannot be relied upon to hold that there is a 'dispute' raised by the corporate debtor. The scope
of existence of 'dispute', if any, which includes pending suits and arbitration proceedings cannot be
limited and confined to suit and arbitration proceedings only. It includes any other dispute raised prior to
Section 8 in this in relation to clause (a) or (b) or (c) of sub-section (6) of Section 5. It must be raised in a
court of law or authority and proposed to be moved before the court of law or authority and not any got
up or malafide dispute just to stall the insolvency resolution process."
15. In the present case we find that the Corporate Debtor raised dispute about the quality of goods
and brought the same to the notice of the Operational Creditor. The Corporate Debtor also claimed
damage for inferior quality of goods and its loss much prior to receipt of notice under sub-section (1) of
Section 8 of the I&B Code. In this background and in view of decision in “Kirusa Software Private Ltd.
Vs Mobilox Innovations Private Ltd”, we hold that a dispute is existing about the quality of goods which
is one of the clause of sub-section (6) of Section 5 of I&B Code.
16. In this appeal as admittedly the Adjudicating Authority has passed the impugned order dated 3rd
April 2017 without notice to the Appellant, in violation of rules of natural justice and there exists a
dispute between the parties, we hold that the as impugned order dated 3rd April 2017 passed by
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by Hon’ble NCLAT
Adjudicating Authority is not only in violation of rules of natural justice, the application under Section 9
was also not maintainable. For the reasons aforesaid, we set aside impugned order dated 3rd April 2017.
17. In effect the order appointing an Interim Resolution Professional, order declaring moratorium,
action, if any, taken by the Interim Resolution Professional, including the advertisement published in the
proceeding. The appellant company is released from the rigour of law. The appellant company is allowed
to function independently through its Board of Directors from immediate effect.
18. The Adjudicating Authority will fix the fee of Interim Resolution Professional and the Financial
Creditor will pay the fees to the Interim Resolution Professional, for the period he has worked.
19. The appeal is allowed with aforesaid observation and direction. However, there shall be no order
as to cost.
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by Hon’ble NCLAT

NEW DELHI
C.P. (I.B.) No. 57/NCLAT/2017
Applicant: Agroh Infrastructure Developers Pvt. Ltd.

Vs.
Respondent: Narmada Construction (Indore) P. Ltd.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Alok Krishna Agarwal, Mr. Mayank Bughani & Mr. Swapnesh
Garg, Learned Advocate
For Respondents/Defendant: Mr. Aditya Mewar, Learned Advocates
ORDER
This appeal has been preferred by the appellant, corporate debtor against the order dated 18th
May, 2017 passed by the Adjudicating Authority (National Company Law Tribunal), Ahmedabad Bench,
Ahmedabad whereby and whereunder the application preferred by the respondent, operational creditor,
under Section 9 of the Insolvency & Bankruptcy Code, 2016 (hereinafter referred to as I&B Code) read
with Rule 6 of the Insolvency & Bankruptcy (Application to Adjudicating Authority) Rules, 2016 has
been admitted and following order has been passed:-
"1.8(a) In view of the above discussions, the petition is admitted.
(b) This Adjudicating Authority hereby order reference to Insolvency and Bankruptcy Board of India to
recommend the name of Insolvency Professional against whom no disciplinary proceedings are pending
to this Authority within 10(Ten) days from the date of receipt of reference to function as Interim
(c) This. Adjudicating Authority hereby declares moratorium under Section 13(1)(a) prohibiting the
following as laid down in Section 14 of the Code:
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(i) The institution of suits or continuation of pending suits or proceedings against the corporate
debtor including execution of any judgment, decree or order in any court of law, tribunal, arbitration
panel or other authority;
(ii) Transferring, encumbering, alienating or disposing of by the corporate debtor any of its assets or
any legal right or beneficial interest therein.
(iii) Any action to foreclose, recover or enforce any security interest. created by the corporate debtor
in respect of its property including any action under the Securitisation and Reconstruction of Financial
Assets and Enforcement of Security Interest Act, 3002 (54 of 2002).
(iv) The recovery of any property by an owner lessor where such property is 'occupied by or in the
(d) However, the supply of goods and essential services to the corporate debtor shall not be terminated or
suspended or interrupted during moratorium period. The moratorium order in respect of (i), (ii), (iii) and
(iv) above shall not apply to the transactions notified by the Central Government."
The appellant has challenged the impugned order on the following grounds:-
i) the 'operational creditor' had not issued any notice under Section 8 the I&B Code.
ii) The operational creditor had issued notice under Rule 6 of the Insolvency and Bankruptcy
(Application to Adjudicating Authority) Rules, 2016 but it was served on appellant one day after date of
hearing.
iii) Adjudicating Authority admitted the application without notice to appellant in violation of rules
of natural justice.
Learned counsel appearing on behalf of the appellant contended that notice under Section 8 of
I&B Code was not served on him. However, we are not inclined to accept such submission as the
adjudicating authority in the impugned order noticed that the demand notice under Section 8 of I&B Code
was issued by the operational creditor on 4th April, 2017 and the track record of Postal Department shows
that the said demand notice was served on the appellant, corporate debtor on 8th April, 2017
Suggestion made by the learned counsel for the appellant, that the track report is incorrect cannot
be accepted, having been issued from Postal Department of Government of India.
The other point taken is that the Adjudicating Authority before taking the adjudicating application
has not given any notice to the appellant corporate debtor and admitted the application in violation of
rules of natural justice. In this regard we find that the respondent has not disputed the fact that no notice
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was issued by the adjudicating authority to the appellant before admitting the application and passed the
impugned order in violation of principles of natural justice.
We also heard parties as to whether remand of the case After setting aside the impugned order
will be futile or not if otherwise the application is complete. In this regard the learned counsel for the
parties submitted that they have settled the dispute and if the impugned order is set aside on the ground
violation of principle of natural justice the respondent will withdraw the application. In view of such
suggestions made on behalf of the parties and that the impugned order dated 18.5.2017 was passed in
violation of principles of natural justice we set aside the impugned order and give liberty to the
respondent to withdraw the application filed under Section 9 of I&B Code.
In the result, the appointment of Interim Resolution Professional, order declaring moratorium,
newspaper calling for applications are declared illegal. The Adjudicating Authority may allow the
operational creditor to withdraw the application and close the proceeding. The appellant is released from
the rigour of law and allow the appellant company to function independently through its Board of
Directors.
The appeal stands disposed of with the aforesaid observations.
The Adjudicating Authority will fix the fee of Interim Resolution Professional and the operational
creditor will pay the fees of the Interim Resolution Professional for the period he has worked.
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by Hon’ble NCLAT
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NEW DELHI
C.P. (I.B.) No. 10/NCLAT/2017
Applicant: KKV Naga Prasad

Vs.
Respondent: Lanco Infratech Ltd.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Ankush Raj, Learned Advocate
For Respondents/Defendant: Mr. A.S. Chandhiok, Ms. Pooja Mahajan, Ms. Sweta Kakad, Mr. Savar
Mahajan, Ms. Mahima Singh, Ms. Shruti Sharma, Ms. Deepti & Mr. Amardeep Jaiswal, Learned
Advocates
ORDER
This appeal has been preferred by appellant against order dated 21St February 2017 passed by Ld.
Adjudicating Authority (National Company Law Tribunal), (hereinafter referred to as the Tribunal)
Hyderabad Bench, Hyderabad in Company Petition (IB) No. 9/9/ HDB/ 2017, whereby and whereunder
application preferred by appellant under section 9 of the Insolvency and Bankruptcy Code, 2016
(hereinafter referred to as I&B Code 2016) was rejected on one of the grounds that the Tribunal cannot go
into roving enquiry into the disputed claims made by the parties.
2. The case was taken up and the Appellate Tribunal having noticed that the appellant was an
employee of the Respondent/ Corporate Debtor, on request of the parties, the matter was adjourned to
enable them to settle the dispute amicably. On such request, the Respondent/Corporate Debtor has paid a
sum of Rs.15 lacs in favour of the appellant (Rs.5 lacs earlier and Rs.10 lacs during the pendency of the
appeal) as full and final claim. Ld. Counsel appearing on behalf of appellant submits that apart from Rs.
15 lacs they have also given a Mercedes Car to the appellant towards full and final dues. However, the
appellant is not happy with the same.
3. Today, after some arguments Ld. Counsel for the appellant sought permission to withdraw the
appeal to enable the appellant to raise claim before the Interim Resolution Professional, if any insolvency
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resolution process under section 7 or Section 9 or 10 is initiated against the Respondent/ Corporate
Debtor. It is further submitted that the appellant may also be permitted to take other remedial measures in
other forum i.e. a Court of Competent Jurisdiction. Ld. Senior Counsel appearing on behalf of the
respondent has no objection to withdraw of the appeal.
4. In view of the prayer made on behalf of the appellant, we allow the appellant to withdraw the
appeal with liberty to raise claim if any due, before a Court of Competent jurisdiction.
The appeal is dismissed as withdrawn with aforesaid liberty. No cost.
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NEW DELHI
C.P. (I.B.) No. 95/NCLAT/2017
Applicant: Lokhandwala Kataria Construction Pvt. Ltd.

Vs.
Respondent: Nisus Finance & Investment Manager LLP.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Abhiman Vashist, Mr. Peshwan Jehangir & Mr. Snehal Kakrania,
Learned Advocate
For Respondents/Defendant: Mr. Shiv Kumar Suri & Mr. Shikhil Suri, Learned Advocates
ORDER
This appeal is preferred by the appellant, Corporate Debtor against order dated 15th June, 20.17
passed by learned Adjudicating Authority (National Company Law Tribunal) Mumbai, Bench, Mumbai
in CP No.61/I&BP/NCLT/MAH/2017 whereby and whereunder the application preferred by the
respondent, financial creditor under Section 7 of the Insolvency and Bankruptcy Code, 2016 (hereinafter
referred to as 'I&B Code') has been admitted, with following observation and direction:
"It is very much evident on the record the first cheque issued for redemption of the part of the debenture
being dishonoured, it is evident that default has occurred and the Corporate Debtor is under obligation
to make repayment to the debenture holders, the same not being made, this application is fit for
initiating corporate insolvency resolution process. Accordingly, this application is hereby admitted."
Learned counsel appearing on behalf of the respondent - Financial Creditor submitted that the
parties have settled the dispute and part amount has already been paid. This is also highlighted by
learned counsel for Corporate Debtor. However, such settlement cannot be ground to interfere with the
impugned order in absence of any other infirmity.
At this stage, we may notice and refer Rule 8 of I&B (Application to Adjudicating Authority)
Rules, 2016, which reads as follows:
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"8 Withdrawal of Application - The Adjudicating Authority may permit withdrawal of the application
made under Rules 4, 6 or 7, as the case may be, on a request made by the applicant before its
admission."
Thus, before admission of an application under Section 7, it is open to the Financial Creditor to
withdraw the application but once it is admitted, it cannot be withdrawn and is required to follow the
procedures laid down under Sections 13, 14, 15, 16 and 17 of I&B Code, 2016. Even the Financial
Creditor cannot be allowed to withdraw the application once admitted, and matter can not be closed till
claim of all the creditors are satisfied by the corporate debtor.
Mere admission without subsequent step of advertisement having carried out, would not amount
to refusal of claim of other creditors. Such submission as made by learned counsel for the appellant
cannot be accepted in view of the provisions of the Act.
Learned counsel for the appellant requests to exercise inherent power, under Rule 11 of the
National Company Law Appellate Tribunal Rules, 2016 which reads as follows:
"11. Inherent powers — Noting in these rules shall be deemed to limit or otherwise affect the inherent
powers of the Appellate Tribunal to make such orders or give such directions as may be necessary for
meeting the ends of justice or to prevent abuse of the process of the Appellate Tribunal."
However, as the said Rule 11 has not been adopted for the purpose of I&B Code, 2016 and only
Rules 20 to 26 have been adopted in absence of any specific inherent power and where there is no merit,
the question of exercising inherent power does not arise.
We find no merit in this appeal. The appeal is accordingly dismissed. No cost.
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NEW DELHI
C.P. (I.B.) No. 94/NCLAT/2017
Applicant: Mother Pride Dairy India Pvt. Ltd.

Vs.
Respondent: Portrait Advertising & Marketing Pvt. Ltd.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Surabh Kalia & Ms. Samridhi Gogia, Learned Advocate
For Respondents/Defendant: Mr. Akshay Sapra & Mr. Jaideep Singh, Learned Advocates
ORDER
The appellant has challenged the order dated 27th June, 2017 passed by Adjudicating Authority
(National Company Law Tribunal), New Delhi in C.P. No.(IB)-60(PB) / 2017, whereby the application
preferred by respondent - Operational Creditor under Section 9 of the Insolvency and Bankruptcy Code,
2016 (I&B Code, 2016) has been admitted and order of moratorium has been ordered.
Learned counsel appearing on behalf of the appellant submits that the appellant is negotiating
with the respondent to settle the dispute. However, that cannot be a ground to interfere with the impugned
order in absence of any illegality. Learned counsel appearing on behalf of the Operational Creditor next
contended that the parties have, in fact, settled the dispute and payment has been made. However, it is not
in dispute that the settlement has been made after admission of the application under Section 9 of the
1&B Code, 2016. In view of Rule 8 of Insolvency & Bankruptcy (Adjudicating Authority) Rules, 2016, it
was open to the Operational Creditor to withdraw the application under Section 9 before its admission but
once it was admitted, it cannot be withdrawn even by the Operational Creditor, as other creditors are
entitled to raise claim pursuant to public announcement under Section 15 read with Section 18 of the I&B
Code, 2016.
For the reason afore and in absence of any merit, the appeal cannot be allowed. The prayer as
made is accordingly rejected.
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However, we make it clear that the impugned order passed by learned Adjudicating Authority,
Principal Bench New Delhi or this order passed by the Appellate Authority will not come in the way of
the appellant to satisfy and settle the claim of other creditors. If the appellant satisfies the claim of other
creditors, whoever has made claim, in that case Insolvency Resolution Professional will bring the matter
to the notice of learned Adjudicating Authority for closure of the resolution process. The learned
Adjudicating Authority in such case will consider the case in accordance with law, even before
completion of Resolution process and may close the matter.
The Appeal is dismissed with the aforesaid observation. No cost.
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NEW DELHI
C.P. (I.B.) No. 75/NCLAT/2017
Applicant: Satish Mittal

Vs.
Respondent: Ozone Builders & Developers Pvt. Ltd.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Rishi Sood, Learned Advocate
For Respondents/Defendant: Mr. Abhishek, Learned Advocates
ORDER
This appeal has been preferred by the appellant against the order dated 24th April, 2017, passed
by Ld. Adjudicating Authority (National Company Law Tribunal), (hereinafter referred to as the
'Tribunal") Principal Bench, New Delhi, whereby and whereunder application preferred by the appellant
under section 9 of Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as I&B Code 2016) has
been rejected on the ground that the appellant is not an 'Operational Creditor' as defined under sub section
(20) read with sub-section (21) of Section 5 of the I&B Code 2016.
2. Ld. Counsel appearing on behalf of appellant submits that appellant deposited a sum of Rs.30 lacs
with Respondent/ Corporate Debtor for booking a plot in Ozone City, Aligarh. The receipt was granted on
22" February 2013 (vide Annexure 5-B) wherein it is mentioned that in case of non-confirmation of
booking within one year, the amount will be refunded without interest. It is contended that the amount of
booking has not been confirmed within one year as the respondent failed to refund the amount and there
being default of debt the application under section 9 of I&B Code, 2016 was maintainable.
3. We have heard Ld. Counsel for the appellant and perused the record. There is nothing on the
record to suggest that the appellant reached any agreement with the respondent/ corporate debtor for
purchase of a plot in Ozone City, Aligarh. A receipt has been enclosed which shows that an amount of
Rs.30 lacs was deposited in advance in cash on 22nd February 2013 for booking of plot in 'Ozone City',
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Aligarh and in case of non-confirmation of booking within one year the amount is required to be
refunded without interest.
4. Sub-section (20) of section 5 defines 'Operational Creditor' as follows:
"operational creditor" means a person to whom an operational debt is owed and includes any person to
whom such debt has been legally assigned or transferred"
5. Sub-section (21) of Section 5 defines 'Operational Debt' which reads as follows:
"operational debt" means a claim in respect of the provision of goods or services including employment
or a debt in respect of the repayment of dues arising under any law for the time being in force and
payable to the Central Government, any State Government or any local authority"
6. Admittedly, the appellant has not made any claim in respect of goods. The appellant has also not
rendered any services for which he is entitled to claim any amount. It is not the case of the appellant that
he was in employment or a debt in respect of repayment of dues arising under any law is due to him. As
the dues to which the appellant claim does not arise under any law for the time being in force and merely
based on the receipt, we find no ground to interfere with the impugned order of rejection of application
under section 9 in absence of any merit.
The appeal is dismissed. No cost.
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NEW DELHI
C.P. (I.B.) No. 90/NCLAT/2017
Applicant: West Bengal Essential Commodities Supply Corporation Ltd.

Vs.
Respondent: Bank of Maharashtra
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Subhasish Bhowmick, Learned Advocate
ORDER
This Appeal has been preferred by the appellant - West Bengal Essential Commodities Supply
Corporation Ltd. against order dated 29th May, 2017 passed by Adjudicating Authority (National
Company Law Tribunal) Kolkata Bench in C.P. (IB) No.240/ KB/ 2017, whereby the application
preferred by respondent-Financial Creditor under Section .7 of the Insolvency and Bankruptcy Code,
2016 (hereinafter referred to as 1&B Code, 2016") has been admitted, declaration of moratorium and
public announcement order has been ordered and Interim Resolution Professional (IRP) has been
appointed for ascertaining the particulars of creditors and convening a Committee of Creditors for
appointment of Resolution Professional and for evolving a resolution plan.
Learned counsel appearing on behalf of the appellant submitted that the appellant is a State
Government undertaking and dealing with poor farmers. It is supplying essential commodities to the
farmers and settlement talks are going on between the appellant and the Financial Creditors. However,
such ground cannot be accepted to interfere with the impugned order dated 29th May, 2017 passed by
learned Adjudicating Authority Kolkata Bench under Section 7 of 'I & B Code' 2016. The learned
Adjudicating Authority having noticed that the application preferred by the respondent Financial Creditor
is complete and in absence of any defect, admitted the application.
In absence of any infirmity, we are not inclined to interfere with the impugned order.
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However, we make it clear that after ascertaining the particulars of the creditors, pursuant to
public announcement made in the newspaper, if the appellants intends to settle the dispute with the
respondents by paying Rs.27.93/ - crores (the amount as owned by the creditors) and if rest of the
creditors are also satisfied by the appellant, in such case, it will be open, to the appellant to request the
learned Adjudicating Authority, Kolkata Bench to close the Resolution Process having satisfied all the
creditors. In such case, the Adjudicating Authority will consider the request and will pass appropriate
order un-influenced by the impugned order dated 29th May, 2017 and the order passed by this Appellate
Tribunal.
The Appeal stands disposed of with the aforesaid observation
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NEW DELHI
C.P. (I.B.) No. 48/NCLAT/2017
Applicant: M/s. Hotel Gaudavan Pvt. Ltd.

Vs.
Respondent: Alchemist Asset Reconstruction Co. Ltd.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Abhishek Singh, Learned Advocate
For Respondents/Defendant: Mr. Amit Chadha & Mr. Abhirup Dasgupta, Learned Advocates
ORDER
The case was earlier heard in part. Today, when the matter was taken up, learned counsel for the
appellant sought permission to withdraw the appeal to enable the petitioner to file appropriate application
before the court of competent authority. Learned counsel appearing for the respondent has no objection to
this.
In the circumstance, we dismiss the appeal as withdrawn without any liberty to challenge this
very impugned order before the Tribunal.
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by Hon’ble NCLAT

NEW DELHI
C.P. (I.B.) No. 96/NCLAT/2017
Applicant: Macquarie Bank Limited

Vs.
Respondent: Uttam Galva Metallics Limited
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Vivek Sibal, Learned Advocate
For Respondents/Defendant: Mr. Puneet Singh Bindra & Mr. Arvind Gupta, Learned Advocates
ORDER
Appellant "Macquarie Bank Limited", a company incorporated under the laws of Singapore,
having its Office at 10, Marina Boulevard, # 17.01, Tower-2, Marina Bay Financial Centre, Singapore-
018983 claiming to be the 'Operational Creditor', preferred the application under Section 9 of Insolvency
and Bankruptcy Code, 2016 (hereinafter referred to as 'I&B Code') seeking to set in motion the Corporate
Insolvency Resolution Process against the respondent "Uttam Galva Metallics Limited" ( alleged to be the
'Corporate Debtor').
2. Learned Adjudicating Authority (National Company Law Tribunal), Chandigarh Bench,

Chandigarh, by impugned order dated 1st June 2017, having noticed that the demand notice under Section
8 of 'I&B Code' was issued through an Advocate of Singapore and that the appellant has not enclosed any
certificate from a 'Financial Institution' maintaining the accounts of the 'Operation Creditor' in terms of
Clause (c) of sub-section (3) of Section 9 of the 'I & B Code' held that the petition preferred by appellant,
a foreign company having office at Singapore, under Section 9 was not maintainable.
3. Before deciding the issue, it is desirable to notice the relevant facts and the provisions of 'I & B
Code'.
4. The appellant, a foreign company is not constituted under Companies Act 1956 or/Companies
Act 2013, having account with one 'Macquarie Bank', Australia. The appellant has no office in India, nor
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any account with any of the Bank or 'Financial Institution' as defined under sub-section (14) of Section 3
of 'I & B Code', which reads as follows:-
"Definitions : -
3. In the Code, unless the context otherwise requires:
(14) financial institution" means—

(b) financial institution as defined in section 45-I of the Reserve Bank of India Act 1934
(2 of 1934);
(c) public financial institution as defined in clause (72) of section 2 of the Companies
Act, 2013 ( 18 of 2013); and
(d) such other institution as the Central Government may by notification specify as
&financial institution;"
5. Admittedly, Macquarie Bank, Australia is not a scheduled bank in India nor is a 'financial
institution' as defined under Section 45-I of Reserve Bank of India Act 1934 (2 of 1934). The Macquarie
Bank, Australia also do not come within the meaning of 'Public Financial Institution' as defined in clause
(72) of Section 2 of Companies Act 2013 (18 of 2013). The Central Government has also not issued any
Notification specifying 'Macquarie Bank' for the purpose of sub-section (14) of Section 3 r/w Section 9 of
I&B Code'.
6. Section 9 of 'I&B Code' deals with application for initiation of Corporate Insolvency Resolution
Process by 'Operational Creditor'. Clause (c) of subsection (3) of Section 9 mandate the 'Operational
Creditor' to file the application 'in the form and manner accompanied with such fee as may be prescribed'
and also directs the 'Operational Creditor' to furnish along with application a copy of the certificate from
the 'Financial Institution' maintaining accounts of the 'Operational Creditor' confirming that there is no
payment of unpaid operational debt by the 'Corporate Debtor', as apparent from the provision, as quoted
below:-
"9. Application for initiation of corporate insolvency resolution process by operational

creditor:
(1) After the expiry of the period of ten days from the date of delivery of the notice or invoice
demanding payment under sub-section (1) of section 8, if the operational creditor does not
receive payment from the corporate debtor or notice of the dispute under sub-section (2) of
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by Hon’ble NCLAT
section 8, the operational creditor may file an application before the Adjudicating Authority
for initiating a corporate insolvency resolution process.
(2) The application under sub-section (1) shall be filed in such form and manner and
(b) an affidavit to the effect that there is no notice given by the corporate debtor relating
to a dispute of the unpaid operational debt;
(c) a copy of the certificate from the financial institutions maintaining accounts of the
operational creditor confirming that there is no payment of an unpaid operational
debt by the corporate debtor; and
(4) An operational creditor initiating a corporate insolvency resolution process under this
section, may propose a resolution professional to act as an interim resolution professional.
(5) The Adjudicating Authority shall, within fourteen days of the receipt of the application
under sub-section (2), by an order-
(i) admit . the application and communicate such decision to the operational creditor and the
corporate debtor if,—

(c) the invoice or notice for payment to the corporate debtor has been delivered by the
operational creditor;
(d) no notice of dispute has been received by the operational creditor or there is no
record of dispute in the information utility; and
(e) there is no disciplinary proceeding pending against any resolution professional
proposed under sub-section
(ii) reject the application and communicate such decision to the operational credii.or and
the corporate debtor, if-

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by Hon’ble NCLAT
(c) the creditor has not delivered the invoice or notice for payment to the corporate
debtor;
(d) notice of dispute has been received by the operational creditor or there is a record
of dispute in the information utility; or
professional:
Provided that Adjudicating Authority, shall before rejecting an application under sub. clause
(a) of clause (ii) give a notice to the applicant to rectify the defect in his application within
seven days of the date of receipt of such notice from the adjudicating Authority.
(6) The corporate insolvency resolution process shall commence from the date of admission
of the application under sub-section (5) of this section".
7. The question whether filing of a copy of certificate from the 'Financial Institution' maintaining
accounts of the 'Operational Creditor' confirming that there is no payment of unpaid operational debt by
the 'Corporate Debtor' as prescribed under clause (c) of sub-section (3) of Section 9 of the 'I B Code is
mandatory or directory was considered by this Appellate Tribunal in "Smart timing Steel Ltd. Vs.
National Steel and Agro Industries Ltd." - Company Appeal (AT) (Insol) No. 28 of 2017. The Appellate
Tribunal by its judgement dated 19th May 2017 while held that certificate from the 'Financial Institution'
maintaining accounts of the 'Operational Creditor' confirming that there is no payment of unpaid
operational debt by the 'Corporate Debtor', as prescribed under clause (c) of sub-section (3) of Section 9
of the 'I & B Code' mandatory, observed and held as follows: -
"11. On perusal of entire Section (3) along with sub-sections and

clauses, inclusive of proviso, it would be crystal clear that, the entire
provision of sub-clause (3) of Section 9 required to be mandatorily followed
and it is not empty statutory formality.
12. Sub-section (2) stipulates filing of an application under Section

(1) only in the form and manner and accompanied with such fees as may be
prescribed. The Insolvency and Bankruptcy (Application to Adjudicating
Authority) Rules 2016 (hereinafter referred to as 'Adjudicating Authority
Rules 2016' for short) are also enacted in exercise of the power conferred by
Clauses (c), (d), (e), (D, of sub-section 239 read with sections 7, 8, 9 and 10
of the 'I & B Code'. The rules provide the procedure required to be followed
by filing an application by corporate insolvency resolution process. As per
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by Hon’ble NCLAT
Rule 6 of the 'Adjudicating Authority' Rules 2016, an operational creditor

shall make an application for initiating the corporate insolvency process
under section 9, in Form 5 accompanied with documents and records
required therein. As per sub-rule (2) of Rule 6 it is mandatory again to
dispatch a copy of application filed with the adjudicating authority, by
registered post or speed post to the registered office of the Corporate Debtor.
13. The provisions of sub-section (3) mandates the operational

creditor to furnish copy of invoice demanding payment or demand notice
delivered by the operational creditor to the corporate debtor, an affidavit to
the effect that, there is no notice given by the corporate debtor relating to
dispute of unpaid operational debt, a copy of the certificate from the
'Financial Institutions' maintaining accounts of the operational creditor
confirming that, there is no payment of an unpaid operational debt by the
corporate debtor and such other information as may be stipulated. Sub-
section (5) of section 9 is procedure required to be followed by Adjudicating
Authority. One can say that procedural part is not mandatory but is
directory.
14. The provision being "directory" or "mandatory" has fallen for

consideration before Hon'ble Supreme Court on numerous occasions. In
Manilal Shah Vs. Sardar Sayed Ahmed (1955) 1 SCR 108, the Hon'ble Apex
Court held that where statute itself provide consequences of breach or non-
compliance, normally the provision has to be regarded as having mandatory
in nature.
15. One of the cardinal principles interpretation of statute is that, the

words of statute must prima facie be given their ordinary meaning, unless of
course, such construction leads to absurdity or unless there is something in
the context or in the object of the statute to the contrary. When the words of
statute are clear, plain and unambiguous, then, the courts are bound to give
effect to that meaning, irrespective of the consequences involved. Normally,
the words used by the legislature themselves declare the legislative intent
particularly where the words of the statute are clear, plain and
unambiguous. In such case, effort must be to give a meaning to each and
every word used by the legislature and it is not sound principle of
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by Hon’ble NCLAT
construction to brush aside words in statute as being redundant or surplus,

and particularly when such words can have proper application in
circumstances conceivable within the contemplation of the statute.
16. For determination of the issue whether a provision is mandatory

or not, it will be desirable to refer to decision of Hon'ble Supreme Court in
State of Mysore Vs. V.K. Kangan. (1976) 2 SCC 895. In the said case, the
Hon'ble Supreme Court specifically held:
"10. In determining the question whether a provision is mandatory

or directory, one must look into the subject-matter and consider the
importance of the provision disregarded and the relation of that provision to
the general object intended to be secured. No doubt, all laws are mandatory
in the sense they impose the duty to obey on those who come within its
purview. But it does not follow that every departure from it shall taint the
proceedings with a fatal blemish. The determination of the question whether
a provision is mandatory or directory would, in the ultimate analysis, depend
upon the intent of the law-maker. And that has to be gathered not only from
the phraseology of the provision but also by considering its nature, its design
and the consequences which would follow from construing it in one way or
the other."
16. Therefore, it is clear that the word 'shall' used in sub-section (3)
of section 9 of 'I & B Code' is mandatory, including clause 3 therein."
8. Learned counsel appearing on behalf of appellant, tried to distinguish the judgement in Smart
Timings Steel Ltd.' on the ground that the said company had not enclosed any other evidence in support
of the debt and default of debt. Reliance was placed on Form-5 enclosed with Insolvency and Bankruptcy
(Application to Adjudicating Authority) Rules 2016 (hereinafter referred to as "Adjudicating Authority
Rules"). As per Rule 6 of 'Adjudicating Authority Rules', the 'Operational Creditor' is required to make an
application in Form-5. In the said Form-5 at Part V, particulars of operational debt (documents, records
and evidence of default) have been mentioned, as quoted below:-
Part-V
PARTICULARS OF OPERATIONAL DEBT [DOCUMENTS, RECORDS

AND EVIDENCE OF DEFAULT]
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by Hon’ble NCLAT
1 PARTICULARS OF SECURITY HELD, IF ANY, THE DATE OF ITS

ATTACH A COPY OF A CERTIFICATE OF REGISTRATION OF
CHARGE ISSUED BY THE REGISTRAR OF COMPANIES (IF THE
2. DETAILS OF RESERVATION / RETENTION OF TITLE
ARRANGEMENTS (IF ANY) IN RESPECT OF GOODS TO WHICH THE
3. PARTICULARS OF AN ORDER OF A COURT, TRIBUNAL OR
ARBITRAL PANEL ADJUDICATING ON THE DEFAULT, IF ANY
4. RECORD OF DEFAULT WITH THE INFORMATION UTILITY, IF
ANY (ATTACH A COPY OF SUCH RECORD)
5. DETAILS OF SUCCESSION CERTIFICATE, OR PROBATE OF A WILL,
OR LETTER OF ADMINISTRATION, OR COURT DECREE (AS MAY BE
APPLICABLE), - UNDER THE INDIAN SUCCESSION ACT, 1925 (10
6. PROVISION OF LAW, CONTRACT OR OTHER DOCUMENT UNDER
7. A STATEMENT OF BANK ACCOUNT WHERE DEPOSITS ARE MADE
OR CREDITS RECEIVED NORMALLY BY THE OPERATIONAL
CREDITOR IN RESPECT OF THE DEBT OF THE CORPORATE
8. LIST OF OTHER DOCUMENTS ATTACHED TO THIS APPLICATION
IN ORDER TO PROVE THE EXISTENCE OF
9. It was contended that the record of default with the 'information utility' has been mentioned
therein but not the record as a certificate for 'financial institution'. But such submission cannot be
accepted for two reasons, the first being the appellant has not even enclosed 'record of default with the
information utility', as mentioned therein and the second reason is that Form-5 cannot override the
substantive provision of clause (c) of sub-section (3) of Section 9 of 'I&B Code' which mandates
enclosure of certificate from 'Financial Institution' maintaining accounts of 'Operation Creditor'
confirming that there is no payment of unpaid operational debt by the 'Corporate Debtor'.
10. We thereby, hold that 'Macquarie Bank', Australia not being a 'financial institution' within the
meaning of sub-section (14) of Section 3 of the 'I & B Code', any certificate given by the said bank cannot
be relied upon, to decide default of debt.
11. There is another reason to hold that the application under Section 9 is not maintainable. We find
from the record that the so called application under Section 8 is not in accordance with law and is
480
by Hon’ble NCLAT
defective. The notice under sub-section (1) of Section 8 of 'I & B Code was not issued by the 'Operational
Creditor' but by a Lawyer of Singapore.
12. Section 8 of 'I & B Code' is as follows: -
"8. Insolvency resolution by operational creditor:
(1) An operational creditor may, on the occurrence of a default, deliver a demand notice of
unpaid operational debtor copy of an invoice demanding payment of the amount involved in
the default to the corporate debtor in such form and manner as may be prescribed. Persons
who may initiate corporate insolvency resolution process. Initiation of corporate insolvency
resolution process by financial creditor. Insolvency resolution by operational creditor.
(2) The corporate debtor shall, within a period of ten days of the receipt of the demand notice
or copy of the invoice mentioned in sub-section (1) bring to the notice of the operational
creditor—
(a) existence of a dispute, if any, and record of the pendency of the suit or arbitration
proceedings filed before the receipt of such notice or invoice in relation to such dispute;
(i). by sending an attested copy of the record of electronic transfer of the unpaid amount from the
bank account of the corporate debtor; or
(ii). by sending an attested copy of record that the operational creditor has encashed a cheque
issued by the corporate debtor.
Explanation.—For the purposes of this section, a "demand notice" means a notice served by
an operational creditor to the corporate debtor demanding repayment of the operational debt
in respect of which the default has occurred."
13. From the plain reading of sub-section (1) of Section 8 it is clear that on occurrence of default, the
'Operational Creditor' is required to deliver a demand notice of unpaid operational debt, copy of invoice,
demanding payment of amount involved in the default to the 'Corporate Debtor' "in such form and manner
as prescribed."
14. Sub-Rule (1) of Rule-5 of the Adjudicating Authority Rules mandates the 'Operational Creditor'
to deliver the 'Corporate Debtor' the demand notice in Form-3 or invoice attached with the notice in
Form-4 as quoted below:-
"5. Demand notice by operational creditor. — (1) An operational creditor shall deliver to the
corporate debtor, the following documents, namely. -
481
by Hon’ble NCLAT

(2) The demand notice or the copy of the invoice demanding payment referred to in sub-
section (2) of section 8 of the Code, may be delivered to the corporate debtor,
(b) by electronic mail service to a whole time director or designated partner or key managerial
personnel, if any, of the corporate debtor.
(3) A copy of demand notice or invoice demanding payment served under this rule by an
operational creditor shall also be filed with an information utility, if any."
15. Clause (a) & (b) of sub-Rule (1) of Rule-5 of the Adjudicating Authority Rules mandates the
'Operational Creditor' to deliver the 'Corporate Debtor' either the demand notice in Form - 3 or a copy of
an invoice attached with a notice in Form - 4. If the Rule 5 is read with the demand notice Form - 3 or
invoice in Form - 4, it is clear that who are persons authorized to give the notice under Section 8 of the 'I
& B Code', as apparent from last portion of Form - 3 & Form - 4, as quoted below: -
"6. The undersigned request you to unconditionally repay the unpaid operational debt (in default)
in full within ten days from the receipt of this letter failing which we shall initiate a corporate
insolvency resolution process in respect of [name of corporate debtor].
Yours sincerely,
Signature of person authorised to act on behalf of the operational

creditor
16. From bare perusal of Form-3 and Form-4, read with sub-Rule (1) of Rule 5 and Section 8 of the
I&B Code, it is clear that the 'Operational Creditor' can apply himself or through a person authorized to
act on behalf of the 'Operational Creditor', who hold same position with or in relation to the 'Operational
Creditor'. Thereby such person(s) authorized by 'Operational Creditor', holding position with or in relation
to the 'Operational Creditor' can only apply.
17. In view of such provision we hold that an advocate /lawyer or Chartered Account or a Company
Secretary or any other person in absence of any authority by the 'Operational Creditor', and if such person
do not hold any position with or in relation to the 'Operational Creditor', cannot issue notice under Section
482
by Hon’ble NCLAT
8 of 'I & B Code', which otherwise can be treated as a lawyer's notice/pleader's notice, as distinct from
notice under Section 8 of 'I&B Code.
18. The demand notice/invoice Demanding Payment under the I&B Code required to be issued in
Form-3 or Form - 4. By the said notice, the 'Corporate Debtor' is to be informed of particulars of
'Operational Debt', with a demand of payment, with clear understanding that the 'Operational Debt' (in
default), as claimed, is to be paid, unconditionally within ten days from the date of receipt of letter failing
which the 'Operational Creditor' will initiate a Corporate Insolvency Process in respect of 'Corporate
Debtor', as apparent from last paragraph no. 6 of notice contained in form - 3, and quoted above.
Only if such notice in Form - 3 or Form - 4 is served, the 'Corporate Debtor' will understand the
serious consequences of non-payment of 'Operational Debt', otherwise like any normal pleader
notice/Advocate notice or like notice under Section 80 of C.P.C. or notice for initiation of proceeding
under Section 433 of the Companies Act 1956, the 'Corporate Debtor' may decide to contest the suit/ case
if filed, as distinct Corporate Resolution Process, where such claim otherwise cannot be contested, except
where there is an existence of dispute, prior to issuance of notice under Section 8.
19. In the present case, as the notice has been given by an advocate /lawyer and there is nothing on
the record to suggest that the lawyer was authorized by the appellant, and as there is nothing on the record
to suggest that the said lawyer/ advocate hold any position with or in relation to the appellant company,
we hold that the notice issued by the advocate/lawyer on behalf of the appellant cannot be treated as
notice under Section 8 of the 'I&B Code'. And for the said reason also the petition under Section 9 at the
instance of the appellant against the respondent was not maintainable.
circumstances of the case there shall be no order as to cost.
483
by Hon’ble NCLAT

NEW DELHI
C.P. (I.B.) No. 07/NCLAT/2017
Applicant: Nikhil Mehta and Sons

Vs.
Respondent: AMR Infrastructure Ltd.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Varun Kathuria, Learned Advocate
For Respondents/Defendant: Mr. Ajay Verma, Learned Advocates
ORDER
This appeal has been preferred by appellants against order dated 23rd January 2017 passed by
'Adjudicating Authority (National Company Law Tribunal), Principal bench, New Delhi whereby and
whereunder the 'Adjudicating Authority' held that appellants are not 'Financial Creditor' as defined under
section 5(7) of the Insolvency & Bankruptcy Code, 2016 (hereinafter referred to as 'I & B Code). The
adjudicatory authority further held that as many winding up petitions are pending before the Hon'ble
Delhi High Court against the 'Corporate Debtor' and Financial Liquidator has been appointed, the
application preferred by appellants for triggering insolvency process by invoking Section 7 of the 'I & B
Code read with Rule-4 and Rule-9(1) of the Insolvency and Bankruptcy (Application to Adjudicating
Authority), Rules 2016 (hereinafter referred to as 'Adjudicating Authority' Rules 2016) is not
maintainable.
2. The case of the appellants and the submission as made by learned counsel for the appellants are
as follows:-
The appellants reached different agreements/Memorandum of Understanding with respondent M/

s ,AMR Infrastructures Limited (hereinafter referred to as 'Corporate Debtor') for purchase of three units
being a residential flat, shop and office space in the projects, Kessel-I Valley, One Mall and One Home
which were being developed by and promoted by 'Corporate Debtor'.
484
by Hon’ble NCLAT
3. The one of the unit was purchased by the Appellant(s) under the 'Committed Return Plan' as per
which if the Appellant(s) were to pay a substantial portion of the total sale consideration upfront at the
time of Execution of the MOU, and the Respondent undertook to pay a particular amount to the buyer/
purchaser (The appellant(s) in this case) each month, as Committed Returns/Ass-ured Returns from the
date of execution of the MOU till the time the actual physical possession of the unit is handed over to the
buyer/purchaser. In the said projects the appellants also had an option to choose the construction /time
linked payment plan as per which they were required to pay a certain percentage of the sale consideration
amount at various stages of construction of the project.
4. The Respondent started paying the committed returns to the Appellant(s) as per the MOU, but
stopped paying the committed returns to the Appellant(s) from April, 2014, for the unit of the Appellants
No.3 and 4, and from January, 2014, for the units of the remaining Appellants, unilaterally and without
assigning any reason. The Appellants contacted the Respondent on various occasions demanding the
release/payment for their monthly committed returns but to no avail.
5. Having no other option, the Appellants had jointly filed an Application U/s 7 of the Insolvency
and Bankruptcy Code, 2016, before the Adjudicating Authority on 16.01.2017 which was dismissed vide
order dated 23.01.2017, which is why the present Appeal has been filed.
6. It is the case of the Appellants that the concept and plan of payment of Committed
Returns/Assured Returns by the builders/real estate developers such as the Respondent, is a method
adopted by them to mobilise funds/raise finance from the general public/ open market at much lower rates
than what is normally made available to them by banking and other financial institutions without having
the obligation to offer security or any collateral and without there being any regulatory body to supervise
and oversee such a transaction thereby making the Appellants the "Financial Creditors" of the Respondent
as defined U/ s 5 (8)(f) of the I&B Code.
7. It is for this reason that the Respondent had offered to pay a fixed monthly amount to the
Appellants as Committed Returns /Assured Returns if the Appellants were willing to pay a substantial
portion of the entire consideration amount upfront to them at the time of booking their units, as the
Respondent was getting easy access to the funds of the Appellants without having to offer/pledge any
collateral / security in return. It is pertinent to mention here that there were no other
contingencies/conditions/criteria which were to be fulfilled /met by the Appellants in order to get the
monthly committed returns and therefore, the agreement/Memorandum of Understanding and transaction
between the Appellants and the Respondent were not a simple real-estate transaction. The Appellants
have also placed on record the order dated 19.12.2014 passed by SEBI in the matter of M/ s MVL
485
by Hon’ble NCLAT
Limited wherein it has held that such transactions where the developer offers to pay assured returns to the
buyers "are not pure real estate transactions., rather they satisfy all the ingredients of a Collective
Investment Scheme as defined under Section 1 IAA of the SEBI Act," and has made other observations as
well stating that the developer was engaged in "fund mobilization activity" by offering assured returns.
Copy of the SEBI Order is at pages 451 to 473 of the Appeal.
8. It is the case of the Appellants that various winding up petitions have been filed and are pending
against the Respondent for non-payment of the assured returns to various buyers wherein the Respondent
has admitted liability and has offered to settle the claims but has not yet been able to do so. Therefore,
since the provision of the Winding up under the Companies Act, stands substituted by the Insolvency and
Bankruptcy Code, 2016, then the Appellants should be entitled to relief under the I&B Code itself.
9. It is the case of the Appellants that they are undoubtedly "creditors" of the Respondent as defined
under the I&B Code, to whom an admitted and quantified "debt" is owed by the Respondent and who
have a valid "claim" against the Respondent as has been defined under the I&B Code and therefore, the
Adjudicating Authority should have heard and allowed the claim/application of the Appellants holding
them to be "Financial Creditors" as defined under the I&B Code.
10. Further case of the Appellants is that as per the latest balance sheet of the respondent, the amount
which is to be paid to the Appellants by the Respondent as Committed Returns/Assured Returns is shown
as "Commitment Charges" under the header of "Financial Costs". The Respondents has not filed any
reply to the said claim of the Appellants despite of being given an opportunity to do so by this Appellate
Tribunal. The said balance sheet is at pages 34-63 of the paper book dated 17.04.2017 of the Appellants
and the relevant entry is at page 60 of the said paper book.
11. According to Appellants they are the "Financial Creditors" of the Respondent, and the
Respondent was deducting TDS on the amount which it was paying to the Appellants as Committed
Returns/Assured Returns under Section 194(A) of the Income Tax Act, which is applicable to deduction
of TDS on the amount which is paid to some as "Interest, other than Interest on Securities". This
therefore, makes it clear that the payment made by the Respondent to the Appellants in the form of
Committed Returns/Assured Returns is nothing but a payment of "interest" to the Appellants by the
Respondent thereby making the amount paid by the Appellants to the Respondent at the time of booking
of their unit a Loan given by the Appellants to the Respondent for constructing the project. In support of
the above claim the Appellants have placed on records, their Form 16A and 26AS which are at pages 5-33
of their paper book dated 17.-04.2017, filed before this Appellate Tribunal.
486
by Hon’ble NCLAT
12. The Respondent-Corporate Debtor has appeared but not filed any affidavit denying the averments
made by appellants or the enclosures attached with the appeal.
13. The petition for condonation of delay of seven days in preferring the appeal under Section 61(2)
of the 'I & B Code' has been filed. Taking into consideration the grounds taken therein particularly that
number of petitions were wrongly mentioned in the original impugned judgement and on hearing the
parties the delay of seven days in preferring the appeal is condoned.
14. The question arises for consideration in this appeal are:-
i) Whether the appellants who reached with agreements/Memorandum of Understandings with

respondent for the purchase of three units being a residential flat, shop and office space in the
projects developed, promoted and marketed by the respondent come within the meaning of
'Financial Creditor' as defined under the provisions of sub-section (5) of Section 7 of the 'I & B
code and
ii) Whether an application for triggering insolvency process under Section 7 of 'I &B code' is
maintainable where winding up petitions have been initiated and pending before Hon'ble High
Court against the 'Corporate Debtor'.
15. To determine the first question it is desirable to notice and refer provisions of Section 5(7) and
5(8) and Section 7 of the 'I&B code', which are set out below:-
"5. In this Part, unless the context otherwise requires, --
(7) "financial creditor" means any person to whom a financial debt is

owed and includes a person to whom such debt has been legally assigned
or transferred to;
(8) 'financial debt" means a debt alongwith interest, if any, which is

disbursed against the consideration for the time value of money and
includes-

(b) any amount raised by acceptance under any acceptance credit
facility or its de-materialised equivalent;
(c) any amount raised pursuant to any note purchase facility or the
issue of bonds, notes, debentures, loan stock or any similar
instrument;
487
by Hon’ble NCLAT
(d) the amount of any liability in respect of any lease or hire

purchase contract which is deemed as a finance or capital lease
under the Indian Accounting Standards or such other accounting
standards as may be prescribed;
(e) receivables sold or discounted other than any receivables sold on
nonrecourse basis;
(f) any amount raised under any other transaction, including any
forward sale or purchase agreement, having the commercial
effect of a borrowing;
(g) any derivative transaction entered into in connection with
protection against or benefit from fluctuation in any rate or price
and for calculating the value of any derivative transaction, only
the market value of such transaction shall be taken into account;
(h) any counter-indemnity obligation in respect of a guarantee,
indemnity, bond, documentary letter of credit or any other
instrument issued by a bank or financial institution;
(i) the amount of any liability in respect of any of the guarantee or
indemnity for any of the items referred to in sub-clauses (a) to
(h) of this clause;
"7. (1) A financial creditor either by itself or jointly with other financial
creditors may file an application for initiating corporate insolvency
resolution process against a corporate debtor before the Adjudicating
Explanation.; For the purposes of this sub-section, a default includes a

debtor.
(2) The financial creditor shall make an application under sub-section (1)
in such form and manner and accompanied with such fee as may be
prescribed. (3) The financial creditor shall, along with the application
furnish— (a) record of the default recorded with the information utility
or such other record or evidence of default as may be specified; (b) the
name of the resolution professional proposed to act as an interim
488
by Hon’ble NCLAT
resolution professional; and (c) any other information as may be

specified by the Board.
(3) The financial creditor shall, along with the application furnish—
record of the default recorded with the information utility or such other
record or evidence of default as may be specified;
(a) the name of the resolution professional proposed to act as an

(b) any other information as may be specified by the Board.
of the application under sub-section (2), ascertain the existence of a
default from the records of an information utility or on the basis of other
evidence furnished by the financial creditor under subsection (3).
(5) Where the Adjudicating Authority is satisfied that—(a) a default has

occurred and the application under sub-section (2) is complete, and there
is no disciplinary proceedings pending against the proposed resolution
professional, it may, by order, admit such application; or (b) default has
not occurred or the application under sub-section (2) is incomplete or any
disciplinary proceeding is pending against the proposed resolution
professional, it may, by order, reject such application: Provided that the
Adjudicating Authority shall, before rejecting the application under
clause (b) of sub-section (5), give a notice to the applicant to rectify the
defect in his application within seven days of receipt of such notice from
the Adjudicating Authority.

the date of admission of the application under sub-section (5).
(7) The Adjudicating Authority shall communicate—
(a) the order under clause (a) of sub-section (5) to the financial
creditor and the corporate debtor;
(b) the order under clause (b) of sub-section (5) to the financial
creditor, within seven days of admission or rejection of such
application, as the case may be"
489
by Hon’ble NCLAT
16. From a bare perusal of Section 7, it is patent that the insolvency process can be triggered by a
'Financial Creditor' or jointly against the 'Corporate Debtor' when default or debt has occurred.
17. The first question arises for consideration is as to who is a 'Financial Creditor'. Learned
Adjudicating Authority, for determination of the aforesaid issue examined the definition provided in
Section 5 (7) and 5(8) and in the impugned judgement rightly observed:-
"12. A perusal of definition of expression 'Financial Creditor' would

show that it refers to a person to whom a Financial debt is owed and
includes even a person to whom such debt has been legally assigned or
transferred to. In order to understand the expression 'Financial
Creditor', the requirements of expression financial debt' have to be
satisfied which is defined in Section 5(8) of the IBC. The opening words
of the definition clause would indicate that a financial debt is a debt
along with interest which is disbursed against the consideration for the
time value of money and it may include any of the events enumerated in
sub-clauses (a) to N. Therefore the first essential requirement of
financial debt has to be met viz. that the debt is disbursed against the
consideration for the time value of money and which may include the
events enumerated in various sub-clauses. A Financial Creditor is a
person who has right to a financial debt. The key feature of financial
transaction as postulated by section 5(8) is its consideration for time
value of money. In other words, the legislature has included such
financial transactions in the definition of 'Financial debt' which are
usually for a sum of money received today to be paid for over a period of
time in a single or series of payments in future. It may also be a sum of
money invested today to be repaid over a period of time in a single or
series of instalments to be paid in future. In Black's Law- Dictionary (9th
edition) the expression 'Time Value' has been defined to mean "the price
associated with the length of time that an investor must wait until an
investment matures or the related income is earned". In both the cases,
the inflows and outflows are distanced by time and there is a
compensation for time value of money. It is significant to notice that in
order to satisfy the requirement of this provision, the financial
transaction should be in the nature of debt and no equity has been
490
by Hon’ble NCLAT
implied by the opening words of Section 5(8) of the IBC. It is true that
there are complex financial instruments which may not provide a happy
situation to decipher the true nature and meaning of a transaction. It is
pertinent to point out that the concept 'Financial Debt' as envisaged
under Section 5(8) of the IBC is distinctly different than the one
prevalent in England as provided in its Insolvency Act, 1986 and the
'Rules' framed thereunder. It appears that in England there is no
exclusive element of disbursement of debt laced with the consideration
for the time value of money. However, forward sale or purchase
agreement as contemplated by Section-5 (8)(f) may or may not be
regarded as a financial transaction. A forward contract to sell product at
the end of a specified period is not a financial contract. It is essentially a
contract for sale of specified goods. It is true that some time financial
transactions seemingly restructured as sale and repurchase. Any
repurchase and reverse repo transaction are sometimes used as devices
for raising money. In a transaction of this nature an entity may require
liquidity against an asset and the financer in return sell it back by way of
a forward contract. The difference between the two prices would imply
the rate of return to the financer. (See Taxman's Law Relating to IBC,
2016 by Vinod Kothari Sikha Bansal)."
18. However, while examining the nature of transactions of the present case the learned Adjudicating
Authority came to a conclusion that the appellants do not come within the meaning of 'Financial Creditor',
as in the case in hand "Assured Returns" is associated with the delivery of possession of the properties
and has got nothing to do with the requirement of Section 5(8), the time value of money which is
mercifully missing in the transaction in hand, with following observations:-
"When we examine the nature of transactions in the present case, we find

that it is a pure and simple agreement of sale or purchase of a piece of
property.
The agreement to sell a flat or office space etc. Merely because some
"assured amount" of return has been promised and it stands breached,
such a transaction would not acquire the status of a financial debt' as the
transaction does not have consideration for the time value of money,
491
by Hon’ble NCLAT
which is a substantive ingredient to be satisfied for fulfilling

requirements of the expression 'Financial Debt'.
Essentially in the case in hand Assured Returns' is associated with the

delivery of possession of the aforementioned properties and has got
nothing to do with the requirement of sub-section(8) of section 5. It is the
consideration for the time value of money which is mercifully missing in
the transaction in hand. The classical transaction which would cover the
definition of financial debts is illustrated in sub-clause (a) of sub-section
(8) of Section-5 i.e. the money borrowed against the payment of interest.
Learned Counsel of Applicants has not been able to show from any
material on record or otherwise that it is a financial transaction in which
a debt has been disbursed against the consideration for the time value of
money and he being the Financial Creditor is entitled to trigger the
insolvency process against the Respondent in accordance with Section 7
of the IBC."
From the provisions of Law and discussion as made and quoted above, we find that following
essential criteria's to be fulfilled for a Creditor to come within the meaning of 'Financial Creditor':-
(i). A person to whom a 'Financial debt' is owed and includes a person whom such debt has been
legally assigned or transferred to
(ii). The debt along with interest, if any, is disbursed against the consideration for time value of
money and include any one or more mode of disbursed as mentioned in clause (a) to (i) of sub-
section (8) of Section 5.
19. To determine the question whether appellants came within the meaning of 'Financial Creditor', it
is desirable to notice the relevant clause of one of the Memorandum of Understanding .dated 12th April
2008 reached between the appellants and the Respondent-Corporate Debtor, relevant portion of which is
quoted below:-
" AND whereas the Developer has represented that it shall complete the
construction of the Shoopping Mall on or before December 2009, in all
respects and shall render the shoppind mall ready for occupation
&possession by the said date unless the construction is stoped or
odelayed on account of factors beyond the control of Developer, as
stipulated in the later part of this memorandum of Understanding."
492
by Hon’ble NCLAT
AND WHEREAS the Investor is interested in booking of Shop No. E-47

measuring 1453.432 sq. ft. For a total consideration amount of Rs.
46,67,402/ - (rupees Forty Six Lacs Sixty Seven Thousand four Hundred
Two Only). The Investor acknowledge that the Developer has readily
provided all information & clarifications as required by them but that
they has not unduly relied upon and is not influenced by any architect's
plans, advertisements representations, warranties, statements or
estimates of any nature whatsoever whether written or oral made by the
Developer.
"Cheque of Rs.27,00,000/ - payable on Punjab National Bank vide

Cheque No.462365 dated 19.03.2008.
Cheque of Rs.9,00,000/ - payable Punjab National Bank vide Cheque

No.462350 dated 19.03.2008.
The receipt of which is acknowledged by the Developer and the

Developer hereby discharge the Investor of all the Payments under this
MOU except the amount of Rs.10,17,402/ - which is payable at the time
of possession.
Since the Investor has paid most of the consideration as on 19.03.2008,

the Developer is ready to pay the monthly committed return to the
Investor but the Investor does not require the monthly return till
December, 2008 i.e. for the 9 month. So the DEVELOPER hereby
undertakes to make a consolidated payment of Rs.99,600/ - (Rupees
Ninety Nine Thousand Six Hundred only) less TDS as applicable every
calendar month to the INVESTOR as a committed return w.e.f. January
2009 up to the date of handing over of possession to the INVESTOR.
The Investor has given the first leasing rights to the Developer and
Developer hereby assures the investor that they will assist the Investor in
leasing out the shop as per general market trends and practices
prevailing till time of possession. The developer further assures the
investor that if they are not able to lease the unit till possession they will
pay the amount of Rs. 1, 10,000/ - per month w. e.1 dated of possession
till unit is first leased out."
493
by Hon’ble NCLAT
20. From the aforesaid agreement/ Memorandum of Understanding it is clear that appellants are
"investors" and has chosen "committed return plan". The respondent in their turn agreed upon to pay
monthly committed return to investors. Thus, the amount due to the appellants come within the meaning
of 'debt' as defined in Section 3(11) of the 'I & B Code' which reads as follows:-
"(11) "debt" means a liability or obligation in respect of a claim
which is due from any person and includes a financial debt and
operational debt;"
21. The appellants have enclosed the annual return of Respondent-Corporate Debtor dated 31St
March 2014. Therein the amount deposited by 'investors' including the appellants as has been shown as
committed return while giving the 'financial cost"/ at par with interest on loans, as shown below:-
"27 FINANCIAL COSTS

Interest on Loans 39,83,980.89.00 9,33,359.01.00
Leasing Charges 5,93,29,559.00 1,96,67,593.00
Interest & Penalties
55,85,518.00 59,75,659.05
for non-compliance
Commitment charges 15,30,91,296.00 32,32,97,199.00
Processing Fee 7,49,449.00
Bank Char ges 7,76,690.19 4,71,313.03
22. Form 16-A shows the TDS deducted from the interest earned by the appellant Nikhil Mehta under
Section 194-A of the Income Tax Act 1961. Therein summary of payment including amount credited has
been shown as follows:-
Summary of Payment
Amount Nature of Date of Status of
paid/credi Payment payment/credit Booking
ted . (dd/mm/yyyy)
(Rs)
41,107.00 194A-Interest 30/04/2011 MATCHED
other than Interest

on Securities
494
by Hon’ble NCLAT
other than Interest

on Securities
other than Interest

on Securities
Summary of Tax Deducted at Source in respect of deductee
Quarter Receipt Numbers. Amount of tax Amount of
of original deducted i n tax
quarterly respect of the deposited/re
statements of deductee mitted in
TDS under sub- (Z) respect of
section (3) of deductee
section 200 (Rs)
BHRXHRAC 12,333.00 12,333.00
23. From the 'Annual Return' of the Respondent and Form-16A, we find that the 'Corporate Debtor'
treated the appellants as 'investors' and borrowed the amount pursuant to sale purchase agreement for their
commercial purpose treating at par with 'loan' in their return. Thereby, the amount invested by appellants
come within the meaning of 'Financial Debt', as defined in Section 5(8)(f) of I&B Code, 2016 subject to
satisfaction as to whether such disbursement against the consideration is for time value of money, as
discussed in the subsequent paragraphs.
24. Learned Adjudicating Authority has rightly highlighted the opening word of the definition clause
which indicate that a 'financial debt' is a debt along with interest which is disbursed against the
consideration for the time value of money and may include any of the events enumerated in sub-clause (a)
to (i). Therefore, it is to be seen whether the amount paid by the appellants to the Corporate Debtor, fulfil
the other condition of "disbursement against consideration of time value and money", to come within
the definition of "Financial Creditor" having satisfied that the Corporate Debtor raised the amount
through a transaction of sale and purchase of agreement having commercial effect of a borrowing
(Section 5(8)(f)).
25. The agreement shows that the respondent agreed to complete the construction of shopping mall
on or before December 2009, in all respects. and was required to complete and handover the shop in the
shopping mall before the said date. It is not the case of the respondent that the construction was stopped
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or delayed on account of factors beyond the control of the respondent, as stipulated in the later part of the
Memorandum of Understanding. It was agreed upon by the respondent that since the appellants have paid
most of the amount the respondent was ready to pay "monthly committed returns" to the appellants.
However, as the appellants were not required the monthly return till December 2008 i.e. for 9 months so
the Respondent-Corporate Debtor undertook to make a consolidated payment of Rs. 99,600/- less TDS.
For every calendar month the Corporate Debtor was liable to pay committee return w.e.f. January 2009
till the date of handing over of the possession to the appellants. Therefore, it is clear that the amount
disbursed by the appellants was "against the consideration of the time value of the money" and "the
Respondent-Corporate Debtor raised the amount by way of sale - purchase agreement, having a
commercial effect of borrowing." This is also clear from annual returns filed by Respondent and not
disputed by the Respondent-Corporate Debtor in their annual returns, wherein the amount so
raised/borrowed has been shown as 'commitment charges' under the head "Financial cost". The financial
cost includes "Interest of loans" and other charges. Therefore, the 'commitment charge', which include
interest on loan, shown against the head "Financial cost" having accepted by the Corporate Debtor in their
annual return, we hold that the appellants have successfully proved that they are 'financial Creditor' within
the meaning of Section 5(7) of the 'I & B Code'.
26. Learned Adjudicating Authority while rightly interpreted the provisions of law to understand the
meaning of expression 'financial creditor' at paragraph 12 of the impugned judgement as quoted above,
but failed to appreciate the nature of transactions in the present case and wrongly came to a conclusion
"that it is a pure and simple agreement of sale and purchase of a piece of property and has not acquired
the status of a financial debt as the transaction does not have consideration for the time value of money".
27. For the reasons aforesaid, we set aside the impugned judgement dated 23rd January 2017 passed
by the learned Adjudicating Authority in C.P.No. (ISB)- 03(PB)/2017 and remit the matter to
Adjudicating Authority to admit the application preferred by appellants and pass appropriate order, if the
application under Section 7 of the 'I&B Code' is otherwise complete. In case it is found to be not
complete, the appellants should be given seven days' time to complete the application as per proviso to
Section 7 of the 'I & B Code'.
28. The appeal is allowed with aforesaid observations and directions. However, in the facts and
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NEW DELHI
C.P. (I.B.) No. 08/12/50/NCLAT/2017
Applicant: Rubina Chadha & Anr.

Sajive Kanwar
Mukesh Kumar & Anr.
Vs.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Swapnil Gupta, Mr. Angad Mehta, Ms. Shabdita Singh, Mr.
Krishnamaohan K. Menon & Mr. Chetan Priyadarsh, Learned Advocate
For Respondents/Defendant: Mr. Sanjay Shorey, Learned Advocates
ORDER
These appeals have been preferred by the appellants against common Respondent, AMR
Infrastructure Ltd.
2. Rubin Chadha and Another [Appellants in Company Appeal (AT) (Insolvency) No. 8 of 2017]
initially preferred a petition under Section 433(e) of the Companies Act, 1956 before the Delhi High
Court. The said petition was transferred pursuant to Rule 5 of the Companies (Transfer of Pending
Proceedings) Rules, 2016 notified on 7th December, 2016 under sub-sections (1) and (2) of Section 434
of the Companies Act, 2013 read with sub-section (1) of Section 239 of the Insolvency and Bankruptcy
Code, 2016 (hereinafter referred to as 'I&B Code').
3. On 24th March, 2017, the Appellate Tribunal doubted the power of Central. Government to frame
rule under Section 239 of the 1&B Code for the purpose of exercising power under Section 434 of the
Companies Act, 2013 and referred the matter to the Secretary, Ministry of Corporate Affairs, Government
of India, New Delhi.
4. Shri Sanjay Shorey, Joint Director (Legal), Ministry of Corporate Affairs, New Delhi, appeared
and filed an amended Rule 5 notified by the Central Government on 29th June, 2017 in exercise of
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powers conferred by sub-sections (1) and (2) of Section 434 of the Companies Act, 2013 read with sub-
section (1) of Section 239 of the I&B Code. Vide this Notification, earlier Rule 5 has been substituted,
and pursuant to which all petitions under Clause (e) of Section 433 of the Companies Act, 1956, which
are pending .before a High Court, and where petition has not been served on the respondent as required
under Rule 26 of the Companies (Court) Rules, 1959 has been transferred to the Bench of the Tribunal
having territorial jurisdiction to be dealt with in accordance with Part-II of the I&B Code. The first
proviso stipulates that such transfer is subject to submission of all information by Petitioner, other than
information forming part of the records transferred in accordance with Rule 7, required for admission of
the petition under Sections 7 or 8 or 9 of the I&B Code, as the case may be, upto 15th July, 2017, failing
which, the petition shall stand abated.
5. What happened in the case of Rubina Chadha and Another' that they filed a petition under Section
433(e) of the Companies Act, 1956 before the Delhi High Court, which was transferred to the Tribunal
but they could not satisfy the Learned Adjudicating Authority that they come within the meaning of
'Financial Creditor' or 'Operational Creditor'. The petition was accordingly, dismissed giving rise to the
appeal.
6. It has not been disputed that "Rubina Chadha and Another" claimed to be the creditors of the
respondent- AMR Instructure Ltd. and we were required to decide as to whether the impugned order
passed by the learned Adjudicating Authority (National Company Law Tribunal), Principal Bench, New
Delhi is proper or not ?
7. In one of the two other appeals, Sajive Kanwar [Appellant in Company Appeal (AT) (Insolvency)
No. 12 of 2017] claimed to be 'Financial Creditor'. However by the impugned order, the Learned
Adjudicating Authority has not accepted such claim and held that the appellant is not a 'Financial
Creditor' and dismissed the application.
8. On the other hand, in the case of 'Mukesh Kumar and Another' [Appellants in Company Appeal
(AT) (Insolvency) No. 50 of 2017], they claimed to be 'Operational Creditor'. Their claim was also not
accepted by the learned Adjudicating Authority who dismissed the application giving rise to the aforesaid
two appeals.
9. The claim of the appellants in two appeals, 'Sanjiv Kumar' and 'Mukesh Kumar and another', is
that they are the creditors of Respondent-AMR Infrastructure Ltd. The respondent has not filed any
affidavit disputing the same.
10. In these appeals, we were required to determine the question as to whether one or other appellant
are the 'Financial Creditor' or 'Operational Creditor' or not, but such questions are not required to be
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determined in these appeals in view of the development as taken place during the pendency of the
appeals.
11. One 'Nikhil Mehta and Sons' claimed to be 'Financial Creditor' and filed an application under
Section 7 of the I&B Code before the Learned Adjudicating Authority (National Company Law
Tribunal), Principal Bench, New Delhi against the Respondent-AMR Infrastructure Ltd. The said
application was dismissed on the ground that they are not 'Financial Creditors'. Being aggrieved 'Nikhil
Mehta and Sons' preferred Company Appeal (AT) (Insolvency) No. 07 of 2017 challenging the order
passed by Learned Adjudicating Authority. This Appellate Tribunal, after considering the case of 'Nikhil
Mehta and sons', held them to be the 'Financial Creditors' of AMR Infrastructure Ltd. ('Corporate Debtor')
and by judgement dated 21.07.2017, passed the following order:
"27. For the reasons aforesaid, we set aside the impugned judgement
dated 23rd January 2017 passed by the learned Adjudicating Authority
in C.P. No. (ISB)-03(PB)/ 2017 and remit the matter to
Adjudicating Authority to admit the application
preferred by appellants and pass appropriate order, if the application

under Section 7 of the 'I & B Code' is otherwise complete. In case it is
found to be not complete, the appellants should be given seven days' time
to complete the application as per proviso to Section 7 of the 'I & B
Code'.
28. The appeal is allowed with aforesaid observations and directions.

However, in the facts and circumstances, there shall be no order as to
cost."
12. As pursuant to this Appellate Tribunal's order, the application preferred by Nikhil Mehta & Sons
is to be admitted, and Resolution Process will be initiated, the question of initiation of further proceeding
under any of the provisions of I&B Code (Sections 7, 9 or 10) does not arise. The appellants herein,
whether they are 'Financial Creditor' or 'Operational Creditor' or 'Secured Creditor' or 'Unsecured
Creditor', as claim to be creditors are now entitled to file their respective claims before the 'Interim
Resolution Professional', as may be appointed and the advertisement as may be published in the
newspaper calling of such application(s) with regard to resolution of 'Corporate Debtor'- AMR
Infrastructure Ltd. In such case, their claim should be considered by the Interim Resolution. Professional
(IRP) and the Committee of Creditors, in accordance with the provisions of the 'ISO Code'. Therefore, no
further order is required to be passed in these appeals.
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13. However, in case the application preferred by Nikhil Mehta and sons' under Section 7 of I&B
Code is not found to be complete or if they fail to complete the defect, if any, as per proviso to Section 7
of I&B Code and in case the said application of Nikhil Mehta and Sons' is dismissed on such ground, in
such case, as the appellants cannot prefer any application before the Interim Resolution Professional, we
give liberty to the appellants to file 'interlocutory applications' in these present appeals for recall of this
order for their decision on merit.
14. All the three appeals stand disposed of with the aforesaid observations. However, in the facts and
circumstances of the cases, there shall be no order as to costs.
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NEW DELHI
C.P. (I.B.) No. 45/NCLAT/2017
Applicant: Unimark Remedies Ltd.

Vs.
Respondent: Ashok Alco Chem Ltd.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Swapnil Gupta, Learned Advocate
For Respondents/Defendant: Mr. Bineesh K., Learned Advocates
ORDER
This appeal has been preferred by the appellant against two orders dated 24th February, 2017 and
4th April, 2017 passed by the Learned Adjudicating Authority (National Company Law Tribunal),
Mumbai Bench, Mumbai. By the first order dated 24th February, 2017, Learned Adjudicating Authority
dismissed the petition preferred by the appellant and by the subsequent order dated 4th April, 2017,
Learned Adjudicating Authority refused to recall the earlier order dismissing the appeal.
2. Respondent herein preferred an application under clause (e) of Section 433 of the Companies Act,
1956 before the Bombay High Court. Pursuant to Rule 5 of "The Companies (Transfer of Pending
Proceedings) Rules, 2016" notified on 7th December, 2016 by the Central Government, the case was
transferred from the Bombay High Court to Learned Adjudicating Authority (National Company Law
Tribunal), Mumbai Bench, Mumbai. Rule 5 reads as follows
"5. Transfer of pending proceedings of Winding up on the ground of

inability to pay debts.- (1) All petitions relating to winding up under
clause (e) of section 433 of the Act on the ground of inability to pay its
debts pending before a High Court, and where the petition has not been
served on the respondent as required under rule 26 of the Companies
(Court) Rules, 1959 shall be transferred to the Bench of the Tribunal
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established under subsection (4) of section 419 of the Act, exercising

territorial jurisdiction and such petitions shall be treated as applications
under sections 7, 8 or 9 of the Code, as the case may be, and dealt with
in accordance with Part H of the Code:
Provided that the petitioner shall submit all information, other

than information forming part of the records transferred in accordance
with Rule 7, required for admission of the petition under sections 7, 8 or
9 of the Code, as the case may be, including details of the proposed
insolvency professional to the Tribunal within sixty days from date of this
notification, failing which the petition shall abate.
(2) All cases where opinion has been forwarded by Board for
Industrial and Financial Reconstruction, for winding up of a company to
a High Court and where no appeal is pending, the proceedings for
winding up initiated under the Act, pursuant to section 20 of the Sick
Industrial Companies (Special Provisions) Act, 1985 shall continue to be
dealt with by such High Court in accordance with the provisions of the
Act."
3. Learned Adjudicating Authority treated the petition under Section 9 of the Insolvency and
Bankruptcy Code, 2016 (hereinafter referred to as 'I&B Code') admitted the application and ordered
moratoriam.
4. The Appellate Tribunal by its order passed today (21st July, 2017) in Company Appeal (AT)
(Insolvency) No. 8 of 2017 - Rubina Chadha and Another Vs. AMR Infrastructure Ltd., doubted the
validity of the Notification dated 7th December, 2016 issued by the Central Government and doubted the
power of the Central Government to frame Rules under Section 239 of the I&B Code to transfer the cases
under Section 433 of the Companies Act, 1956 while exercising its power conferred under sub-sections
(1) and (2) of Section 434 of the Companies Act, 2013. While dealing with the case of Rubina Chadha
and another today, Shri Sanjay Shorey, Joint Director (Legal), Ministry of Corporate Affairs, Government
of India appeared and brought to the notice of the Appellate Tribunal a Notification dated 29th June, 2017
issued by the Central Government in exercise of the powers conferred under sub-sections (1) and (2) of
Section 434 of the Companies Act, 2013 read with sub-section (1) of Section 239 of the I&B Code
framing the Companies (Transfer of Pending Proceedings) Second Amendment Rule, 2017, whereby Rule
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5 circulated vide Notification dated 7th December, 2016 has been substituted by new Rule 5, which reads
as follows:

inability to pay debts.— (1) All petitions relating to winding up of a
company under clause (e) of section 433 of the Act on the ground of
inability to pay its debts pending before a High Court, and, where the
petition has not been served on the respondent under rule 26 of the
Companies (Court) Rules, 1959 shall be transferred to the Bench of the
Tribunal established under sub-section (4) of section 419 of the
Companies Act, 2013 exercising territorial jurisdiction to be dealt with
in accordance with Part 11 of the Code:
Provided that the petitioner shall submit all information, other

than information forming pan of the records transferred in accordance
with rule 7, required for admission of the petition under sections 7, 8 or
9 of the Code, as the case may be, including details of the proposed
insolvency professional to the Tribunal upto 15th day of July, 2017,
failing which the petition shall stand abated:
Provided further that any party or parties to the petitions shall,

after the 15th day of July, 2017, be eligible to file fresh applications
under sections 7 or 8 or 9 of the Code, as the case may be, in accordance
with the provisions of the Code:
Provided also that where a petition relating to winding up of a

company is not transferred to the Tribunal under this rule and remains in
the High Court and where there is another petition under clause (e) of
section 433 of the Act for winding up against the same company pending
as on 15th December, 2016, such other petition shall not be transferred
to the Tribunal, even if the petition has not been served on the
respondent."
5. As the earlier Rule 5 now stand substituted by the amended Rule 5 vide Notification dated 29th
June, 2017, we are of the opinion that the Tribunal should re-consider the matter in terms of the
substituted Rule 5, in view of the fact that earlier Rule 5 was doubted by the Appellate Tribunal and the
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Central Government accepting the same, issued substituted Rule 5 vide Notification dated 29th June,
2017.
6. We are also of the prima facie view that the petition under Section 433(e) of the Companies Act,
1956 on transfer under subsections (1) and (2) of Section 434 of the Companies Act, 2013 cannot be
treated to be an application under Sections 7, 9 or 10 of the I&B Code, as sub-section (1) of Section 239
of the I&B Code relates to framing of rules by the Central Government with regard to the I&B Code to
the extent empowered therein and the Central Government has not been empowered to transfer the cases
under the said provision except under Section 434 of the Companies Act, 2013.
7. For the reasons aforesaid, we set aside the impugned orders dated 24th February, 2017 and 4th
April, 2017 passed by the Learned Adjudicating Authority (National. Company Law Tribunal), Mumbai
Bench, Mumbai.
8. As it is informed that the parties have settled the claim amicably, we have not remitted the case to
Adjudicating Authority to admit the application, after hearing the parties. If any amount is due to Interim
Resolution Professional, the appellants will pay the cost as may be determined by the Tribunal.
9. The appeal stands disposed of with the aforesaid observations and directions. However, on the
facts and circumstances of the case, there shall be no order as to costs.
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NEW DELHI
C.P. (I.B.) No. 49/NCLAT/2017
Applicant: Creative Solutions

Vs.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Rohit K. Aggarwal, Learned Advocate
For Respondents/Defendant: Mr. Shivam H., Learned Advocates
ORDER
This appeal has been preferred by the appellant against order dated 25th April, 2017 passed by
the Learned Adjudicating Authority (National Company Law Tribunal), Principal Bench, New Delhi
(hereinafter referred to as 'Adjudicating Authority') in Company Application No. (I.B.)/PB/2017. By the
impugned order, learned Adjudicating Authority rejected the application preferred by the appellant under
Section 9 of the Insolvency and Bankruptcy Code, 2016 ('I&B Code' for short) on the ground that the
appellant is not an 'Operational Creditor'.
2. The case of the appellant is that the appellant, who is in the business of architecture and interior
designing, was approached by the respondent-'Corporate Debtor' for rendering services relating to
designing and development of the Project "Kessel I-Valley" at Greater Noida, which, inter alia, included
masonry work, wood work and other ancillary work in 2012 till 2015. As per the industrial practice, the
appellant from time to time raised various bills/invoices towards the work for inspection/verification
which were acknowledged by the respondent. The respondent made part payment and an amount of Rs.
1,08,99,705/- is still due and outstanding.
3. Despite repeated requests and reminders, no response having received by the respondent, the
appellant sent a notice on 30th January, 2017 under Section 8 of the I&B Code read with Rule 5 of the
Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016. Even after service of
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notice, as the respondent neither made any payment nor filed any reply to the said demand notice, the
applicant/ petitioner preferred the company application before the Learned Adjudicating Authority as
mentioned above.
4. According to the respondent-'Corporate Debtor', the invoices/ bills raised by the appellant were
bogus and do not contain the name of the party against whom they were raised, and there is no date
shown on them. It is further stated that there was no registration number with regard to service tax or sales
tax or any other fiscal statute printed on the face of bills/invoices raised. As regards the acknowledgement
of notice, learned counsel for the respondent submitted that one Mr. Vijay Yadav who had acknowledged
the bills/invoices was in employment of the respondent company prior to 2014 and he had no authority to
acknowledge the bills or invoices. It is also pointed out that no statement of accounts detailing the
transactions between the appellant and the respondent company has been produced for the relevant
period. Denying the claim of the appellant, the respondent claimed that actually a sum of Rs.45,00,000/-
has already been paid for the work done.
5. Learned counsel for the appellant submitted that the appellant is a service provider and come
within the meaning of 'Operational Creditor'. According to him, in absence of any dispute raised by the
respondent-'Corporate Debtor' prior to issuance of notice under Section 8, it cannot be held that any
dispute was in existence.
6. We have heard the learned counsel for the parties but in view of the development as taken in
place in the meantime. It is not necessary to decide the claim as made by respective parties.
7. One 'Nikhil Mehta and Sons' claimed to be 'Financial Creditor' and filed an application under
Section 7 of the I&B Code before the Learned Adjudicating Authority (National Company Law
Tribunal), Principal Bench, New Delhi against the Respondent-AMR Infrastructure Ltd. The said
application was dismissed on the ground that they are not 'Financial Creditors'. Being aggrieved 'Nikhil
Mehta and Sons' preferred Company Appeal (AT) (Insolvency) No. 07 of 2017 challenging the order
passed by Learned Adjudicating Authority. This Appellate Tribunal, after considering the case of 'Nikhil
Mehta and sons', held them to be the 'Financial Creditors' of AMR Infrastructure Ltd. ('Corporate Debtor')
and by judgement dated 21.07.2017, passed the following order:
"27. For the reasons aforesaid, we set aside the impugned judgement
dated 23rd January 2017 passed by the learned Adjudicating Authority
in C.P. No. (ISB)-03(PB)/ 2017 and remit the matter to Adjudicating
Authority to admit the application preferred by appellants and pass
appropriate order, if the application under Section 7 of the 'I & B Code'
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is otherwise complete. In case it is found to be not complete, the

appellants should be given seven days' time to complete the application
as per proviso to Section 7 of the 'I & B Code'.
28. The appeal is allowed with aforesaid observations and

directions. However, in the facts and circumstances, there shall be no
order as to cost."
8. As pursuant to this Appellate Tribunal's order, the application preferred by Nikhil Mehta & Sons
is to be admitted, and Resolution Process will be initiated, the question of initiation of further proceeding
against some 'Corporate Debtor' under any of the provisions of I&B Code (Sections 7, 9 or 10) does not
arise. The appellant herein, whether it is 'Operational Creditor' or not, claim to be creditor is now entitled
to file its claim before the 'Interim Resolution Professional', as may be appointed and the advertisement as
may be published in the newspaper calling of such application with regard to resolution of 'Corporate
Debtor'-AMR Infrastructure Ltd. In such case, their claim should be considered by the Interim Resolution
Professional (IRP) and the Committee of Creditors, in accordance with the provisions of the 'I&B Code'.
Therefore, no further order is required to be passed in this appeal.
9. However, in case the application preferred by 'Nikhil Mehta and sons' under Section 7 of I&B
Code is not found to be complete or if they fail to complete the defect, if any, as per proviso to Section 7
of I&B Code and in case the said application of 'Nikhil Mehta and Sons' is dismissed on such ground, in
such case, as the appellant cannot prefer any application before the Interim Resolution Professional, we
give liberty to the appellant to file 'interlocutory applications' in the present appeal for recall of this order
for the decision on merit.
10. The appeal stands disposed of with the aforesaid observations. However, in the facts and
circumstances of the cases, there shall be no order as to costs.
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by Hon’ble NCLAT

NEW DELHI
C.P. (I.B.) No. 65/NCLAT/2017
Applicant: Diamond Engineering (Chennai)

Vs.
Respondent: Shah Brothers
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. A.K. Mylasamy & Ms. Shalini Kaul, Learned Advocate
For Respondents/Defendant: Mr. S.N. Mookherjee, Mr. Pritha Srikumar & Mr. Sulabh Rewari, Learned
Advocates
ORDER
This appeal has been preferred by the appellant - 'Corporate Debtor' against the order dated 6th
June, 2017 passed by the learned Adjudicatory Authority (National Company Law Tribunal), Chennai
whereby and whereunder the application preferred by the respondent - 'Operational Creditors' under
Section 9 of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as 'I&B Code') for
initiation of resolution against the 'Corporate Debtor' has been admitted, order of moratorium has been
passed and the matter has been referred under Section 14 of the I &B Code for appointment of an 'Interim
Resolution Professional' with further prohibitory order(s) as made therein.
2. Learned counsel appearing on behalf of the appellant submitted that the bills on the basis of
which default was claimed by the respondent - Operational Creditor', are forged and fabricated
documents. On the basis of forged document, no claim can be .entertained under Section 9 of the 18r. B
Code. However, from the record, we find that no such objection was made by the appellant, prior to
receipt of Notice under Section 8 of the 1& B Code.
3. The other ground taken by the appellant is that the person who signed 'Form 3 and Form 5', as
prescribed in I&B Code (application to Adjudicatory Authority) under Rules, 2016 for issuing notice
under Section 8 or filing application under Section 9 of the I&13 Code, has not been signed by 'authorised
person' authorised by the Board of Directors. However, in reply to such averment the respondents have
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shown that apart from the fact that a decision was taken by the respondent company to contest the case,
the person who signed the notice in the Form3 and Form 5 is one of the Director of the 'operational
creditor' (respondent company). From the provisions of the law, including Form 3 and Form 5, we find
that any person who is authorised and having relation to the company is entitled to issue notice under
Section 8 of the I&B Code and is also competent to file an application under Section 9. In such
circumstances, the person, who has signed the notice under Section 8 and filed the petition under Section
9 being the Director of the Company and having authorised by the Board of Directors or the company, no
interference is called for.
4. Learned counsel for the appellant next submitted that no proper bank certificate was filed by the
respondent but such plea having not taken by the appellant before the Learned Adjudicating Authority, we
are not inclined to notice any new plea. We find no merit in this appeal. It is accordingly dismissed.
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by Hon’ble NCLAT

NEW DELHI
C.P. (I.B.) No. 103 & 108/NCLAT/2017
Applicant: Inox Wind Ltd.

Vs.
Respondent: Jeena & Co.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Amit Sibal, Mr. Sudhir Kumar, Mr. Anand Shankar Jha & Mr.
Pulkit Srivastava, Learned Advocate
For Respondents/Defendant: Mr. Saurabh Prakash, Learned Advocates
ORDER
These two appeals have been preferred by the common appellants impleading the same very
respondent against orders dated 5th July 2017 and 11th July 2017 passed by Learned Adjudicating
Authority (National Company Law Tribunal), Chandigarh Bench, Chandigarh in CP (IB) No.
31/Chd/HP/2017.
2. By first order (dated 5th July 2017), the application preferred by Respondent - 'Operational
Creditor' under Section 9 of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as 'I & B
Code') was admitted with following observations and directions:-
"23. In view of the aforesaid discussion, the instant petition deserves to

be admitted. The petition is, therefore, admitted declaring the
moratorium with the following directions:-
(i). That the Bench hereby prohibits the institution of suits or

continuation of pending suits or proceedings against the
'Corporate Debtor' including execution of any judgement, decree
or order in any court of law, tribunal, arbitration panel or other
authority; transferring, encumbering, alienating or disposing of
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by the corporate Debtor any of its assets or any legal right or

beneficial interest therein; any action to foreclose; recover or
enforce any security interest created by the 'Corporate Debtor'
in respect of its property including any action under the
Securitization and Reconstruction of financial Assets and
Enforcement of Security interest Act, 2002; the recovery of any
property by an owner or lessor where such property is occupied
by or in the possession of the Corporate Debtor.
(ii). That the supply of essential goods or services to the 'Corporate
Debtor, if continuing, shall not be terminated or suspended or
interrupted during moratorium period.
(iii).That the order of moratorium shall have effect from the date of
this order till completion of the corporate insolvency resolution
process or until this Bench approves the resolution plan under
sub-section (1) of Section 31 or passes an order for liquidation
of Corporate Debtor under Section 33 as the case may be."
By the subsequent order dated 11t July 2017 the 'Interim Resolution Professional' has been
appointed.
2. Learned counsel appearing on behalf of the appellant, corporate debtor, submitted that the
impugned order has been passed by the Adjudicating Authority in violation of principle of natural justice
i.e. without giving any notice to the corporate debtor prior to admission of the application. Reliance was
placed on the decision of the Appellate Tribunal in "Innoventive Industries Ltd Vs ICICI Bank and
Another, Company Appeal (AT)(Insolvency) No.1 and 2 of 2017". In the said case the Appellate Tribunal
vide judgement dated 15th May, 2017 taking into consideration the decision of Hon'ble Supreme Court
and provisions of I&B Code and rules framed thereunder held
"As amended Section 424 of the Companies Act, 2013 is applicable to the
proceeding under the MB Code, 2016, it is mandatory for the
while passing an order under I83B Code, 2016. Further, as Section 424
mandates the Tribunal and Appellate Tribunal, to dispose of cases or/
appeal before it subject to other provisions of the Companies Act, 2013
or MB Code 2016 such as, Section 420 of the Companies Act, 2013 was
applicable and to be followed by the Adjudicating Authority."
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3. Learned counsel appearing on behalf of the appellant further contended that the appellant is a
solvent company and is in a position to pay the dues. It was also submitted that the amount due to the
respondent - 'Financial Creditor' has already been paid.
4. Learned counsel appearing on behalf of the respondent-financial creditor while accepted that no
notice was issued by the Adjudicating Authority before admitting the application under Section 9 of I&B
Code, it is also accepted that the amount due to the respondent has been paid by the appellant.
5. When the hearing was going on, one Mr. Shailendra Puri an Ex-employee of the 'Corporate
Debtor' who worked as AVP (Marketing) w.e.f. 4th June 2013 till 21st April 2016 submitted that the
appellant company has not paid his salary. Such statement was made without filing any application for
intervention, just orally. Therefore, he was allowed to state his claim in writing. On the next date Mr.
Shailendra Puri appeared in person, signed one synopsis dated 25th July 2017 and informed that after the
hearing on 24th July 2017, the officers of the Appellant Company held a meeting with him and resolved
the matter by paying the claimed amount, to his utmost satisfaction. He has no more claim and has no
objection if the insolvency resolution process pending against the Appellant Company is set aside.
6. In the present, as we find that the impugned order dated 5th July, 2017 passed by Adjudicating
Authority in Company Petition No . (IB)No.31 / CHD. / HP/2017 have been passed in violation of rules
of natural justice and against the decision of the Appellate Tribunal in Innoventive Industries Ltd case, no
other option is left to us except to set aside both the impugned order(s) dated 5th July 2017 and 11th July
2017.
7. In the result, the appointment of Interim Resolution Professional, order declaring moratorium,
proceeding. The appellant is released from the rigour of law and allow the appellant company to function
independently through its Board of Directors with immediately effect.
8. Learned Adjudicating Authority will now determine the fee of Interim Resolution Professional
and the appellant will pay the fees of the Interim Resolution Professional for the period he has worked.
9. Both the appeals stand disposed of with the aforesaid observations. However, in the facts and
circumstances of the case, there shall be no order as to cost.
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by Hon’ble NCLAT

NEW DELHI
C.P. (I.B.) No. 39/NCLAT/2017
Applicant: Uttam Galva Steels Limited

Vs.
Respondent: DF Deutsche Forfait AG & Anr.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Sudipto Sarkar, Mr. Virendra Ganda, Mr. Arvind Kumar Gupta,
Mr. Sumesh Dhawan, Ms. Purti Marwaha Gupta, Mr. Mahesh Agarwal, Mr. Anuj Kumar, Ms. Vatsala
Kak & Mr. Rajeev, Learned Advocate
For Respondents/Defendant: Mr. Vivek Sibal, Ms. Pooja M Saigal, Mr. Akshay Gupta & Mr. Sahil
Bhatia, Learned Advocates
ORDER
The Respondents - both of whom claim to be Operational Creditor (s) filed a joint application
under Section 9 of the Insolvency & Bankruptcy. Code, 2016 (hereinafter referred to as I&B Code) for
initiation of corporate insolvency resolution process against Appellant - Corporate Debtor.. By impugned
order dated 10th April, 2017, Learned Adjudicating Authority (National Company Law Tribunal)
Mumbai Bench while rejected the objection as were raised by the Appellant, admitted the application and
directed to refer the matter to the Insolvency & Bankruptcy Board of India to recommend name of Interim
Resolution Professional for his appointment.
2. Ld. Counsel for the Appellant Corporate Debtor challenged the impugned order on different
count. It was submitted that there is a pre-existing bonafide dispute between the parties and therefore, the
insolvency under Section 9 of the I&B Code is not maintainable. that :
(i) there is no privity contract with the Respondents;
(ii) Respondents violated the contractual terms;
(iii) Appellant disputed execution of contract;
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by Hon’ble NCLAT
(iv) There is dispute about quantum of default;
(v) There is a dispute as to who is the. defaulter (whether the default can at all be attributed
to Uttam Steels in view of actual liability being that of a 3rd party);
(vi) There is a dispute as to whether the Respondents are Operational Creditors of the
Appellant etc.
3. It was pointed out that the Respondents had issued a windingup notice on 8th December 2016
much prior to the issuance of so called notice under Section 8 of the I&B Code. Pursuant to which, the
Appellant disputed the claim by a detailed reply dated 3rd January 2017. Apart from that, the
Respondents are relying on a document dated 27th December 2013- to fix liabi not been signed by
Appellant and was Respondents in the year 20-13 itself.
The Ld. Counsel for the Appellant referred to an e-mail dated 10.4.2014 forwarded by One of the
Respondent to demonstrate existence of bonafide dispute between the parties and submitted that in view
of bonafide pre-existing dispute, in terms of sub-Section (6) of Section 5 of the I&B Code, the joint
insolvency application is not maintainable.
4. It was further pointed out that the notice under Section 8 of I&B Code dated 28.2.17 was issued
jointly by two Respondents, both of whom claimed to be 'Operational Creditors' but not by Respondents
themselves but through their Advocate, Ms Sonu Tandon. According to Appellant the joint petition under
Section 9 by two separate Operational Creditors is not permissible and Demand Notice under Section 8 in
Form-3 or Form-4 of Insolvency & Bankruptcy (Application to Adjudicating Authority) Rules, 2016
(hereinafter referred to as Adjudicating Authority Rules) was not issued by the 'authorised persons' in
accordance with law.
5. It was further submitted that the certificate of 'financial institution' as prescribed and mandatory
under clause (c) of sub-section (3) of Section 9 of the I&B Code was not filed by Respondents in support
of their claim that there is no payment of the unpaid operational debt. Further, according to Appellant, the
bank certificate dated 6th March 2017 submitted by Respondents is defective on multiple counts as it was
not issued by a notified "financial institution", but has been issued by 'Misr Bank" which is not recognised
as a "financial institution" in india as per sub-section (14) of Section 3 read with clause (c) of sub-section
(3) of Section 9 of the I&B Code. It was further contended that the affidavit in the insolvency application
was also defective and incomplete. According to the Ld. Counsel for the Appellant, the affidavit in
support of insolvency application should have been filed, as prescribed in Form-5 of the Adjudicating
Authority Rules.
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by Hon’ble NCLAT
6. On the other hand according to Ld. Counsel for the Respondents a joint petition by 'Operational
Creditors' is maintainable. Joint petition per say would indicate or suggest the joinder of more than one
cause of action to enable the parties/litigants to institute a proceeding jointly in the court of law by
pleading inter-alia a commonality of interest of reliefs. He further submitted that 'AIC Handles GmbH'
(supplier) who entered into sales contract with the Appellant (Uttam Galva Steels Limited) for sale of
steel billets for a value of US$ 10,800,000 and raised an invoice for US$ 10,787,040. According to
Respondents, no disputes were raised by the Appellant with regard to delivery of the goods. either in
terms of the quality or quantity. The debt, which was secured by a collateral security in the form of a Bill
of Exchange for US$ 5,387,040 and US$ 5,400,000 was thereafter, assigned to 1st Respondent by
forfeiting agreement by supplier.
7. He also highlighted facts relating to sale of goods through sale contracts. It was submitted that
transaction was single and the same has not been split in two cause of actions as is erroneously contended
by the Appellant. It is only the right payment under the Bills of Exchange that has now been vested in the
two entities i.e., 1st Respondent and 2nd Respondent. Therefore, in essence, there is no joinder of cause
of action but only right to receive the payment under the Bills of Exchange having been vested in two
entities and, therefore, a joint petition has been filed by two entities with respect to single cause of action
and the same is maintainable under section 9 of the I&B Code.
8. Ld. Counsel for the Respondent submitted that in terms of Rule 10 of the 'Adjudicating Authority
Rules, 2016', Rule 20, 21, 22, 23, 24 and 25 of the NCLT Rules 2016' stands adopted. Reliance was also
placed on notification dated 20.12.2016 whereby NCLT Rules, 2016 was amended and Rule 23A was
inserted, which is as follows:-
"23A. Presentation of joint petition. - (1) The Bench may permit more than one person to joint together
and present a single petition if it is satisfied, having regard to the cause of action and the nature of relief
prayed for, that they have a common interest in the matter.
(2) Such permission shall be granted where the joining of the petitioners by a single petition is
specifically permitted permitted by the Act."
In view of Rules 23A it was contended that a joint petition is maintainable.
9. It was further contended that the Appellant himself has admitted that a suit was filed by Appellant
before the Hon'ble High Court of Bombay but therein the Appellant has not disputed the transactions of
sale/purchase in terms of quality/quantity of goods supplied nor has disputed the existence of debt. The
only contention it sought to raise is that the goods were meant for consumption of another end user,
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namely, "Aartee Commodities. (UK) Limited" and that the said end user has not paid any another to the
Appellant despite the notice of demand for supplied made.
10. Insofar as issuance of notice under section 8 of the I&B Code through a lawyer is concerned,
according to Respondents, notice under section 8 can also be given through a lawyer. Ld. Counsel for the
Respondents submitted that settled position is that the procedures are hand maiden of justice which
cannot defeat the substantive rights of the parties. The matter of procedure is within the realm of curial
law and are not to be read in a manner that defeat the very purpose and the intent of enactment or in a
manner that takes away or abridge, the substantive rights of the party. Therefore, the format of demand
notice cannot be stated to be mandatory and that it does not suggest or mandate that it is to be issued by
an 'Operational Creditor' personally.
11. Insofar as certificate by 'Financial Institutions' is concerned, it was contended that in the case of
"Smart Timing Steel Limited vs National Steel and Agro Industries Limited", the Appellate Tribunal while
held the requirement of Certificate is mandatory, but in that case no such certificate was filed by the party.
In the said case the creditor had no office in India and no certificate of an 'financial institution' was filed.
On the other hand, in the present case, the Respondents along with their application to the Adjudicating
Authority has filed a certificate by a banking company which maintains its operations to prove that no
payment has been received in respect to the notice for demand issued under section 8 of the I&B Code.
Since the requirement of certificate by a financial institution which has been held to be mandatory is only
for the purpose of confirming or ascertaining through a trustworthy source like any financial institution to
find out, whether any payment has been received in response to the demand notice or not. Ld. Counsel
submitted that in the present case a certificate of bank albeit incorporated under the law of Germany has
been produced to affirm that no payment has been received.
12. It was also submitted that the Appellant has accepted that the end customer is "Aartee
Commodities (UK) Limited" which has to make payment (through this assertion is being denied by the
Respondents) and such end customer has not made payment to the Appellant, therefore, non-payment of
the invoice is an admitted fact and require no further elaboration by way of independent certificate in the
manner interpreted by the Appellant Tribunal. However, as the certificate of the foreign bank has been
produced in support of the claim that no amount has been received by the Respondents any other
interpretation would frustrate the rights of a foreign entities to file an insolvency petition as an
'Operational Creditor' under the I&B Code.
13. The question involved in this appeal are:-
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by Hon’ble NCLAT
(i) Whether a joint application by two or more 'operational creditors' under section 9 of the
I&B Code is maintainable ?
(ii) Whether it is mandatory to file 'certificate of recognised financial institution' along with
an application under section 9 of the I&B Code ?
(iii) Whether the demand notice with invoice under section 8 of the I&B Code can be issued
by any lawyer on behalf of an Operational Creditor? and
(iv) Whether there is an existence of dispute, if any, in the present case?
14. To decide the issues, it is desirable to notice the difference between section 7 of I&B Code. Apart
from the fact that some of the questions already stand decided by this Appellate Tribunal but in this
appeal, we have given main thrust on the questions not decided earlier i.e., maintainability of a joint
application under section 9 of the I&B Code and whether a notice under section 8, can be given through a
lawyer.
15. Initiation of insolvency resolution process by 'Financial Creditor' either by itself or jointly with
other Financial Creditors is provided in Section 7 of the l&B Code. As per sub-section (1) of Section 7 of
the I&B Code, the trigger of filing of an application by a Financial Creditor by himself or jointly with
other Financial Creditors before the Adjudicating Authority is when a default in respect of any financial
debt has occurred. Sub-section (2) of Section 7 of the MB Codc provides that a Financial Creditor to
make an application on the prescribed form and manner and with documents as prescribed in sub-section
(3) of Section 7 of the I&B Code. The relevant provision of Section 7 of the I&B Code reads as follows:
"7.- Initiation of corporate insolvency resolution process by financial

creditor - (1) A financial creditor either by itself or jointly with other
financial creditors may file an application for initiating corporate
insolvency resolution process against a corporate debtor before the
Adjudicating Authority when a default has occurred.
Explanation.—For the purposes of this sub-section, a default includes a

debtor.
(2) The financial creditor shall make an application under sub-section
(1) in such form and manner and accompanied with such fee as may be
prescribed.
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by Hon’ble NCLAT
3) The financial creditor shall, along with the application furnish— (a)
record of the default recorded with the information utility or such other
record or evidence of default as may be speçjfied; (b) the name of the
resolution professional proposed to act as an interim resolution
professional, and (c) any other information as may be specified by the
Board."
16. Unlike Section 7 of the I&B Code, before making an application to the Adjudicating Authority
under Section 9 of the 1&B Code, the requirements under Section 9 of the I&B Code are required to be
fulfilled, as apparent from the said provision, as quoted below: -
8. Insolvency resolution by operational creditor - (1) An operational
creditor may. on the occurrence of a default. deliver a demand notice of

unpaid operational debtor copy of an invoice demanding payment of the
amount involved in the default to the corporate debtor in such form and
manner as may be prescribed. Persons who may initiate corporate
insolvency resolution process. Initiation of corporate insolvency
resolution process by financial creditor. Insolvency resolution by
operational creditor. (2) The corporate debtor shall, within a period of
ten days of the receipt of the demand notice or copy of the invoice
mentioned in sub-section (1) bring to the notice of the operational
creditor— (a) existence of a dispute, if any, and record of the pendency
of the suit or arbitration proceedings filed before the receipt of such
notice or invoice in relation to such dispute; (b) the repayment of unpaid
operational debt— (i) by sending an attested copy of the record of
electronic transfer of the unpaid amount from the bank account of the
corporate debtor;. or (ii) by sending an attested copy of record that the
operational creditor has encashed a cheque issued by the corporate
debtor.
Explanation.— For the purposes of this section, a "demand notice"

means a notice served by an operational creditor to the corporate debtor
demanding repayment of the operational debt in respect of which the
default has occurred
518
by Hon’ble NCLAT
17. Under sub-section (1) of Section 8 of the I&B Code, an 'Operational Creditor' on occurrence of a
default, is required to deliver the notice of payment of unpaid debt or get copy of the invoice payment of
the defaulted amount served on the Corporate Debtor. This is the condition, precedent under Section 8 &
9 of the I&B Code, unlike Section 7 before making an application to the adjudicating authority under
section 9 of the I&B Code. Under sub-section (1 ) of section 9 of the code, the right to file an application
accrues after expiry of ten days from the delivery of Demand Notice or copy of invoice, as the case may
be. If the Operational Creditor does not receive payment from the Corporate Debtor or notice of dispute
under sub Section (2) of Section 8, the Operational Creditor only thereafter may file an, application before
the Adjudicating Authority for the initiation of corporate insolvency resolution process.
18. An application under Section 9 of I&B Code is required to be filed in such, format and manner
and accompanied by such fee, as may be prescribed. The Operational Creditor along with the application
is required to furnish documents as mentioned in clause (a), (b), (c) and (d) of sub-Section (3) of Section
9 of I&B Code, and quoted below: -
"9. Application for initiation of corporate insolvency resolution process

by operational creditor - (1) After the expiry Of the period of ten days
from the date of delivery of the notice or invoice demanding payment
under sub-section (1) of section 8, if the operational creditor does not
receive payment from the corporate debtor or notice of the dispute under
sub-section (2) of section 8, the operational creditor may file an
application before the Adjudicating Authority for initiating a corporate
(2) The application under sub-section (1) shall be filed in such form and
(a) a copy of the invoice demanding payment or demand notice delivered

by the operational creditor to the corporate debtor;
(b) an affidavit to the effect that there is no notice given by the corporate
debtor relating to a dispute of the unpaid operational debt;
(c) a copy of the certificate from the financial institutions maintaining

accounts of the operational creditor confirming that there is no payment
of an unpaid operational debt by the corporate debtor; and
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by Hon’ble NCLAT
(4) An operational creditor initiating a corporate insolvency

resolution process under this section, may propose a resolution
professional to act as on interim resolution professional."
19. From the aforesaid provisions of Section 8 and 9 of I&B Code, it is clear that unlike Section 7, a
notice under Section '8 is to be issued by an "Operational Creditor" individually and the petition under
Section 9 has to be filed by Operational Creditor individually and not jointly.
20. Otherwise also it is not practical for more than one 'operational creditor' to file a joint petition.
Individual 'Operational Creditors' will have to issue their individual claim notice under Section 8 of the
I&B Code. The claim will vary which will be different. Date of notice under Section 8 of the I&B Code in
different cases will be different. It will have to be issued in format(s). Separate Form-3 or Form-4 will
have to be filled. Petition under section 9 in the format will contain, separate individual data.
21. The Respondent have relied on Rule 23A on the NCLT Rules, 2016 but as the said Rule has not
been adopted by section 10 of the I&B Code, 2016, the Rule 23A is not applicable to the application
under section 9 of the I&B Code, 2016. For the reasons aforesaid, we hold that a joint application under
section 9 by one or more 'operational creditor' is not maintainable.
22. Second question raised is, whether it is mandatory to file 'certificate of recognised financial institution'
along with an application under Section 9 of the I&B Code?
23. The aforesaid issue was considered by this Appellate Tribunal in "Smart Timing Steel Limited vs.
National Steel and Agro Industries Limited". By judgment dated 19th May 2017 in Company Appeal
(AT) (Insolvency) No. 28 of 2017, Appellate Tribunal while held that filing of 'certificate of recognised
financial institution' maintaining account of the 'Operational Creditor' confirming that there is no payment
of unpaid operational debt made by the Corporate Debtor is mandatory, observed as follows: -
"11. On perusal of entire section (3) along with sub-section and clauses,
inclusive of proviso, it would be crystal clear that, the entire provision of
sub-clause (3) of section 9 required to be mandatorily followed and it is
not empty statutory formality.
12. Sub-section (2) stipulates filing of an application under section (1)

only in the form and manner and accompanied with such fees as may be
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by Hon’ble NCLAT
Rules 2016 for short) are also enacted in exercise of the power conferred
by Clauses (c), (d), (e), (f), of sub-section 239 read with sections 7, 8, 9
and 10 of the 'I & B Code'. The rules provide the procedure required to
be followed by filing an application by corporate insolvency resolution
process. As per Rule 6 of the 'Adjudicating Authoty' Rules 2016, an
operational creditor shall make an application for initiating the
corporate insolvency process under section 9, in Form 5 accompanied
with documents and records required therein. As per sub-rule (2) of Rule
6 it is mandatory again to dispatch a copy of application filed with the
adjudicating authority, by registered post or speed post to the registered
office of the Corporate Debtor.
13. The provisions of sub-section (3) mandates the operational creditor

to furnish copy of invoice demanding payment or demand notice
delivered by the, operational creditor to the corporate debtor, , an
affidavit to the effect that, 9 there is no notice given by the corporate
debtor relating to dispute of unpaid operational debt, a copy of the
certificate from the 'Financial Institutions 'maintaining accounts of the
operational creditor confirming that, there is no payment of an unpaid
operational debt by the corporate debtor and such other information as
may be stipulated. Sub-section ('5) of section 9 is procedure required to
be followed by Adjudicating Authority. One can say that procedural part
is not mandatory but is directory.
14. The provision being "directory' or "mandatory" has fallen for

Manual Shah Vs. Sardar Sayed Ahmed (1955) 1 SCR 108, the Hon'ble
Apex Court held that where statute itself provide consequences of breach
or noncompliance, normally the provision has to be regarded as having
mandatory in nature.
15. One of the cardinal principales of interpretation of statute is that, the

words of statute must prima facie be given their ordinary meaning,
unless of course, such construction leads to absurdity or unless there is
something in the context or in the object 'of the statute to the contrary.
When the words of statute are clear, plain and unambiguous, then, the
521
by Hon’ble NCLAT
courts are bound to give effect to that meaning, irrespective of the

consequences involved. Normally, the words used by the legislature
themselves declare the legislative intent particularly where the words of
the statute are clear, plain and unambiguous. In such case, effort must be
to give a meaning to each and every word used by the legislature and it
is not sound principle of construction to brush aside words in statute as
being redundant or surplus, and particularly when such 10 words can
have proper application in circumstances conceivable within the
contemplation of the statute.
16. For determination of the issue whether a provision is mandatory or

not, it will be desirable to refer to decision of Hon'ble Supreme Court in
State of Mysore Vs. V.K.Kangan (1976) 2 SCC 895. In the said case, the
Hon'ble Supreme Court specifically held: "10. In determining the
question whether a provision is mandatory or directory, one must look
into the subject matter and consider the importance of the provision
disregarded and the relation of that provision to the general object
intended to be secured. No doubt, all laws are mandatory in the sense
they impose the duty to obey on those who come within its purview. But it
does not follow that every departure from it shall taint the proceedings
with a fatal blemish. The determination of the question whether a
provision is mandatory or directory would, in the ultimate analysis,
depend upon the intent of the law-maker. And that has to be gathered not
only from the phraseology of the provision but also by considering its
nature, its design and the consequences which would follow from
construing it in one way or the other."
16. Therefore, it is clear that the word 'shall' used in sub-section (3) of
section 9 of I&B Code is mandatory, including clause 3 therein."
24. In this case, we find that the Certificate dated 6th March 2017 attached by Respondents has not been
issued by any 'financial institution' as defined in sub-section (14) of Section 3 of the I&B Code, 2016 but
has been issued by Misr Bank which is a foreign bank and is not recognised as a 'financial institution'.
The said Certificate has been issued by 'collecting agency' as distinct from "Financial Institution" and
genuity of the same can not be verified by the Adjudicating Authority. We also find that the affidavit in
support of insolvency application, as prescribed in Form-5 of the 'Adjudicating Authority Rules' has not
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by Hon’ble NCLAT
been filed, which mandates that 'no notice of dispute received to be returned or it is returned when dispute
was raised', has to be enclosed by the 'operational creditor'. In absence of such certificate from 'notified
Financial Institution', and as Form-5 is not complete, we hold that the application under section 9 of the
I&B Code, was not maintainable.
25. Next question is whether the demand notice with invoice under section 8 of the I&B Code can be
issued by any 'lawyer on behalf of an the Operational Creditor' ?
26. To determine the said issue it is desirable to refer to section 8 of the I&B Code, 2016 which reads
as follows:-
"8. Insolvency Resolution by Operational Creditor - (1) An operational

creditor may, on the occurrence of a default, deliver a demand notice of
unpaid operational debtor copy of an invoice demanding payment of the
amount involved in the default to the corporate debtor in such form and
manner as may be prescribed. Persons who may initiate corporate
insolvency resolution process. Initiation of corporate insolvency
resolution process by financial creditor. Insolvency resolution by
(2) The corporate debtor shall, within a period of ten days of the receipt
of the demand notice or copy of the. invoice mentioned in sub-section (1)
bring to the notice of the operational creditor— (a) existence of a
dispute, if any, and record of the pendency of the suit or arbitration
proceedings filed before the receipt of such notice or invoice in relation
to such dispute; (b) the repayment of unpaid operational debt—
(i) by sending an attested copy of the record of electronic transfer of the

unpaid amount from the bank account of the corporate debtor; or (ii) by
sending an attested copy of record that the operational creditor has
encashed a cheque issued by the corporate debtor.
Explanation.—For the purposes of this section, a "demand notice" means

a notice served by an operational creditor to the corporate debtor
demanding repayment of 1he operational debt in respect of which the
default has occurred."
27. From a plain reading of sub-section (1) of Section 8, it is clear that on occurrence of default, the
Operational Creditor is required to deliver the demand notice of unpaid Operational Debt and copy of the
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by Hon’ble NCLAT
invoice demanding payment of the amount involved in the default to the Corporate Debtor in such form
and manner as is prescribed.
28. Sub-rule (1) of Rule 5 of the 'Adjudicating Authority Rules' mandates the 'Operational Creditor'
to deliver to the 'Corporate Debtor' the demand notice in Form-3 or invoice attached with the notice in
Form-4, as quoted below: -
"Rule 5. (1) An operational creditor shall deliver to the corporate debtor

the following documents, namely: -

(b) a copy of an invoice attached with a notice in Form 4."
29. Clause (a) and (b) of sub-rule (1) of Rule 5 of the 'Adjudicating Authority Rules' provides the format
in which the demand notice/ invoice demanding payment in respect of unpaid 'Operational Debt' is to be
issued by 'Operational Creditor'. As per Rule 5(1) (a) & (b), the following person (s) are authorised to act
on behalf of operational creditor, as apparent from the last portion of form-3 which reads as follows:-
"6. The undersigned request you to unconditionally repay the unpaid

operational debt (in default) in full within ten days from the receipt of
this letter failing which we shall initiate a corporate insolvency
resolution process in respect of [name of corporate debtor].
Yours sincerely,
Signature of person authorised to act on behalf of

the operational creditor
Position with or in relation to the operational

Creditor
30. From bare perusal of Form-3 and Form-4, read with sub-rule (1) of Rule 5 and Section 8 of the
I&B Code, it is clear that an Operational Creditor can apply himself or through a person authorised to act
on behalf of Operational Creditor. The person who is authorised to act on behalf of Operational
Creditor is also required to state "his position with or in relation to the Operational Creditor",
meaning thereby the person authorised by Operational Creditor must hold position with or in
relation to the Operational Creditor and only such person can apply.
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by Hon’ble NCLAT
31. The demand notice/invoice Demanding Payment under the I&B Code is required to be issued in
Form-3 or Form-4. Through the said formats, the 'Corporate Debtor' is to be informed of particulars of
'Operational Debt', with a demand of payment, with clear understanding that the 'Operational Debt' (in
default) required to pay the debt, as claimed, unconditionally within ten. days from the date of receipt of
letter failing which the 'Operational Creditor' will initiate a Corporate Insolvency Process in respect of
'Corporate Debtor', as apparent from last paragraph no. 6 of notice contained in Form - 3, and quoted
above.
Only if such notice in Form-3 is served, the 'Corporate Debtor' will understand the serious
consequences of non-payment of 'Operational Debt', otherwise like any normal pleader notice/Advocate
notice, like notice under Section 80 of C.P.C. or for proceeding under Section 433 of the Companies Act
1956, the 'Corporate Debtor' may decide to contest the suit/ case if filed, distinct Corporate Resolution
Process, where such claim otherwise cannot be contested, except where there is an existence of dispute,
prior to issue of notice under section 8.
32. In view of provisions of I&B Code, read with Rules, as referred to above, we hold that an
'Advocate/Lawyer' or 'Charted Accountant" or "Company Secretary' in absence of any wuthority of the
Board of Directors, and holding no position with or in relation to the Operational Creditor cannot issue
any notice under section 8 of the I&B Code, which other wise is a 'lawyer's notice' as distinct from notice
to be given by operational creditor in terms of section 8 of the I&B Code.
33. In the present case as an advocate/lawyer has given notice and there is nothing on record to
suggest that the lawyer has been authorised by 'Board of Directors' of the Respondent - 'DF Deutsche
Forfait AG' and there is nothing on record to suggest that the lawyer hold any position with or in relation
with the Respondents, we hold that the notice issued by the lawyer on behalf of the Respondents can not
be treated as a notice under section 8 of the I&B Code and for that the petition under section 9 at the
instance of the Respondents against the Appellant was not maintainable.
34. The other question raised is whether there is existence of dispute, if any, in the present case ?
35. From bare persual of record it is clear that the Respondents issued a winding up notice on the
Appellant on 8th December 2016 i.e., much prior to issuance of lawyer's notice purported to be under
section 8 of the I&B Code. On receipt of such notice, the Appellant disputed the claim by detailed reply
dated 3rd January 2017. Apart from that the Respondents were relying on document dated 27th December
2013 to fix liability on the Appellant, which according to Appellant was not signed by the Appellant such
fact was brought to the notice of the Respondents as back as in the year 2013.
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by Hon’ble NCLAT
36. In "Kirusa Software Private Ltd. Vs Mobilox Innovations Private Ltd. ", - Company Appeal (AT)
(Insolvency) No. 6 of 2017, this Appellate Tribunal decided as to what is the meaning of 'dispute' and
'existence of dispute' in terms of Section 8 of the I&B Code and sub-Section (5) of Section 5 of I&B Code
and by judgment dated 24th May 2017 held as follows -
"17. For the purposes of Part H only of the Code, some terms/words
have been defined. S 12 Sub Section (6) of Section 5 defines "dispute", to
include, unless the context otherwise requires, a dispute pending in any
suit or arbitration proceedings relating to: (a) existence of amount of the
debt; (b) quality of good or service; (c) breach of a. representation or
warranty. The definition of "dispute" is "inclusive" and not "exhaustive".
The same has to be given wide meaning provided it is relatable to the
existence of the amount of the debt, quality of good or service or breach
of a representation or warranty.
18. Once the term "dispute" is given its natural and ordinary meaning,
upon reading of the Code as a whole, the width of "dispute" should cover
all disputes on debt, default etc. and not be limited to only two ways of
disputing a demand made by the operational creditor, i.e. either by
showing a record of pending suit or by showing a record of a pending
arbitration. The intent of the Legislature, as evident from the definition
of the term "dispute", is that it wanted the same to be illustrative (and not
21. Admittedly in sub-section (6) of Section 5 of the 'I & B Code', the
Legislature used the words 'dispute includes a suit or arbitration
Proceedings'. If this is harmoniously read with Section (2) of Section 8 of
the 'I & B Code', where words used are 'existence of a dispute, if any,
and record of the pendency of the suit or arbitration proceedings, 'the
result is disputes, if any, applies to all 14 kinds of disputes, in relation to
debt and default. The expression used in subsection (2) of Section 8 of
the 'I & B Code' 'existence of a dispute, if any,' is disjunctive from the
expression 'record of the pendency of the suit or arbitration
526
by Hon’ble NCLAT
proceedings'. Otherwise, the words 'dispute, if any'. in subsection (2) of

22. Sub-section (2) of Section 8 of the 'I & B Code' cannot be read to
mean that a dispute must be pending between the parties prior to the
notice of demand and that too in arbitration or a civil court. Once
parties are already before any judicial forum/authority for adjudication
the expression 'existence of a dispute, if any, in sub-section (2) of Section
8 itiose. 24. The statutory requirement in subsection (2) of Section 8 of
the 'I & B Code' is that the dispute has to be brought to the notice of the
Operational. Creditor. The two comes post the word 'dispute' (f any)
have been added as a matter of convenience and/or to give
meaningfulness to sub-section (2) of Section 8 of the 'I&B Code'. Without
going into the grammar and punctuation being hapless victim of pace of
life, if one discovers the true meaning of subsection (2)(a) of Section 8 of
the 'I&B Code', having regard to the context of Sections 8 and 9 of the
Code, it emerges, both from the object and purpose of the 'I& B Code'
and the context in which the. expression is used, that disputes raised in
the notice sent by the corporate debtor to the Operational Creditor
would get covered within sub-section (2) of Section 8 of the 'I & B Code'.
25. The true meaning of sub-section (2)(a) of Section 8 read with

subsection (6) of Section 5B the '1 & B Code' clearly brings out the
intent of the Code, namely the Corporate Debtor must raise a dispute
with sufficient particulars. And in case a dispute is being raised by
simply showing a record of dispute in a pending arbitration or suit, the
dispute must also be relatable to the three conditions provided under
sub-section (6) of Section 5 (a)-(c) only. The words 'and record of the
pendency of the suit or arbitration proceedings' under sub-section (2)(a)
of 168 on 8 also make the intent of the Legislature clear that disputes in
a pending suit or arbitration proceeding are such disputes which satisfy
(he test of subsection (6) of Section. 5 of the 'I & B Code' and that such
disputes are within the ambit of the expression, 'dispute, if any'. The
record of suit or arbitration proceeding is required to demonstrate the
527
by Hon’ble NCLAT
same, being pending prior to the notice of demand under sub-section 8 of

the '1 &B Code'.

Section 8 read with sub-section (6) of Section 5 of the 'I & B Code' are
three classes under subsection (6) of Section 5 of the 'I & B Code, it
would violate the definition of operational debt under subsection (21) of
Section 3 of the 'I & B Code' and would become inconsistent thereto, and
would bar Operational Creditor from invoking Sections 8 and 9 of the
Code.

debt or default etc., it would satisfy subsection (2) of Section 8 of the 'I&
B Code'.
29. The definition of 'dispute' for the purpose of Section 9 must be read
alongwith expression operational debt as defined in Section 5(21) of I&B
Code, 2016 means: (21) "operational debt" means a claim in respect of
the provision of goods or services including employment or a debt in
respect of the repayment of dues arising under any law for the time being
in force and payable to the Central Government, any State Government
or any local authority;" S 18 Thus the definition of 'dispute',
'operational debt' is read together for the purpose of Section 9 is clear
that the intention of legislature to lay down the nature of 'dispute' has not
been limited to suit or arbitration proceedings pending but includes
other proceedings "if any".
30. Therefore, it is clear that for the purpose of sub-section (2) of Section
8 and Section 9W 'dispute' must be capable of being discerned from
notice of corporate debtor and the meaning of "existence" a "dispute, if
any", must be understood in. the context.
528
by Hon’ble NCLAT
31. The dispute under I&B Code, 2016 must relate to specified nature in
clause (a). (b) or (c) i.e. existence of amount of debt or quality of goods
or service or breach of representation or warranty. However, it is
capable of being discerned not only from in a suit or arbit ration from
any document related to it. For example, the 'operational creditor' has
issued notice under Code of Civil Procedure Code. 1908 prior to
'corporate debtor. Similarly notice under Section 59 of the Sales and
Goods Act f issued by one of the part y, a labourer/employee who may
the subject natter i.e. existence of amount of debit and pending
party can m.ove before a High Court under writ jurisdictions against
Government, corporate debtor (public sector 19 undertaking). There may
be cases where one of the party has moved before the High Court under
Similarly, with regard to quality of foods, if the 'corporate debtor' has
raised a dispute, and brought to the notice of the 'operational creditor' to
take appropriate step, prior to receipt of notice under sub-section (1) of
Section 8 of the 'I & B Code', one can say that a dispute is pending about
the debt. Mere raising a dispute for the sake of dispute, unrelated or
related to clause (a) or (b) or (c) of Subsection (6) of Section 5, if not
of law or authority cannot be relied upon to hold that there is a 'dispute'
raised by the corporate debtor. The scope of existence of 'dispute', if any,
which includes pending suits and arbitration proceedings cannot be
529
by Hon’ble NCLAT
32. There may be other cases such as a suit relating to existence of

amount of debt stands decided and decree is pending for execution.
Similarly, existence of amount of debt or quality of goods or service for
which a suit have been filed and decreed; an award has been passed by
Arbitral Panel, though petition under Section. 34 of Arbitration and
Reconciliation Act, 1996 may be pending. In such 26;6' the question will
arise whether a petition under Section. 9 will be maintainable
particularly when it was a suit or arbitration proceeding is not pending,
but stand decided? Though one may argue that Insolvency resolution
process cannot be misused for execution of a judgment and decree
passed in a suit or award passed by an arbitration Tribunal, but such,
submission cannot be accepted in view of Form 5 of Insolvency .&
Bankruptcy (Application to Adjudicating Authority) Rules 2016 wherein
.a decree in suit and award has been shown to be a debt for the purpose
of default on non-payment.
33. Thus it is clear that while sub-section (2) of Section 8 deals with
"existence of a dispute', suo-section (5) of Section 9 does. not confer any
discretion on adjudicating authority to verify adequacy of the dispute. ft
prohibits the adjudicating authority from proceeding further if there is a
genuine dispute raised before any court of law or authority or pending in
a court of law or authority including suit and arbitration proceedings.
Mere a dispute giving a colour of genuine dispute or illusory, raised fur
the first time while replying to the notice under Section 8 cannot be a
tool to reject an application under Section 9 if the operational creditor
otherwise satisfies the adjudicating authority that there is a debt and
there is a default on the part of the corporate debtor."
37. In view of the decision of "Kirusa Software Put. Ltd. v. Mobilox Innovations Put. Ltd", as a
notice of winding up dated 8th December 2016, was issued by Respondents and the claim was disputed
by Appellant by detailed reply dated 3rd January 2017 i.e., much prior to purported notice under Section
8, issued by Lawyer and a suit between the parties is pending, we hold that there is an existence of
'dispute', within the meaning of Section 8 read with sub-section (5) of Section 5 of I&B Code and,
530
by Hon’ble NCLAT
therefore, the petition under Section 9 preferred by Respondents against the Appellant was not
maintainable.
38. In view of detailed reasons and finding recorded above, we hold the impugned order is illegal and
set aside the impugned order dated 10th April 2017 passed by the Learned Adjudicating Authority,
Mumbai Bench in— Company Petition No. 45/Mah/2017 of 20.17.
39. In effect, order (s), if any, passed by Ld. Adjudicating Authority appointing any 'Interim
Resolution Professional' or declaring moratorium, freezing of account and all other Order (s) passed by
Adjudicating Authority pursuant to impugned order and. action, if any, taken by the 'Interim Resolution
Professional', including the advertisement, if any, published in the newspaper calling, for applications all
such orders and actions are declared illegal and are set aside. The joint application preferred by
Respondent under Section 9 of the I&B Code, 2016 is dismissed. Learned Adjudicating Authority will
now close the proceeding. The appellant company is released from all the rigour of law and is allowed to
40. Learned Adjudicating Authority will fix the fee of 'Interim Resolution Professional ', if appointed and
the Respondents will pay the fees of the Interim Resolution Professional, for the period he has functioned
The appeal is allowed with aforesaid observation and direction. However, in the facts and circumstances
of the case, there shall be no order as to cost.
531
by Hon’ble NCLAT

NEW DELHI
C.P. (I.B.) No. 97/NCLAT/2017
Applicant: Achenbach Buschhutten CmbH & Co.

Vs.
Respondent: Arcotech Ltd.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Vivek Sibal, Ms. Pooja M. Saigal & Ms. Khyati Sharma, Learned
Advocate
For Respondents/Defendant: Mr. Ramesh Singh & Mr. A.T. Patra, Learned Advocates
ORDER
This appeal has been preferred by the appellant against the order dated 25th May, 2017 passed by
the Learned Adjudicating Authority (National. Company Law Tribunal), Chandigarh Bench, Chandigarh
in CP(IB) No. 21/Chd/Hry/2017.
2. Appellant - Achenbach Buschhutten GmbH & Co., is a company incorporated under the laws, of
Germany having its office at 'Siegener StraRe, 152, 57223, Kreurtal, Germany', claimed to be
'Operational Creditor' and filed an application under Section 9 of the Insolvency and Bankruptcy Code,
2016 (hereinafter referred to as 'I&B Code') to initiate Corporate Insolvency Resolution Process in respect
of respondent-Arcotech Limited/ Corporate Debtor'. The said order is under challenge in the present
appeal.
3. One of the plea taken by the learned counsel for the appellant is that the Learned Adjudicating
Authority, referring to clause of arbitration, has not entertained the application on the ground that there is
an existence of a dispute. We are of the view that mere clause of arbitration in an agreement cannot be
termed to be an "existence of dispute" pending before the Arbitral Tribunal for the purpose of refusal of
an application preferred under Section 9 of the I&B Code.
532
by Hon’ble NCLAT
4. Learned counsel for the respondent brought to our notice that the appellant has not enclosed any
certificate granted by the 'Financial Institution' as stipulated under clause (c) of sub-Section (3) of Section
9 of the I&B Code. From the record, we find that the appellant has enclosed one letter relating to
'confirmation of receipt of payment' from foreign institution known as 'Sparkasse Siegen'.
5. The question as to whether filing of a copy of the certificate from the 'Financial Institution',
"maintaining accounts of the Operational Creditor confirming that there is no payment of unpaid
operational debt by the Corporate Debtor" as prescribed under clause (c) of sub-section (3) of Section 9 of
the I&B Code is mandatory or directory, was considered by this Appellate Tribunal in "Smart Timing
Steel Ltd. Vs. National Steel and Agro Industries Ltd.- [Company Appeal (AT) (Insolvency) No. 28 of
2017]". The Appellate Tribunal by its judgement dated 19th May 2017 while held that certificate from the
'Financial Institution' maintaining accounts of the 'Operational Creditor' confirming that there is no
payment of unpaid operational debt by the 'Corporate Debtor', as prescribed under clause (c) of sub-
section (3) of Section 9 of the 'I&B Code' mandatory, observed and held as follows:-
"11. On perusal of entire Section (3) along with sub-sections and

clauses, inclusive of proviso, it would be crystal clear that, the entire
provision of sub-clause (3) of Section 9 required to be mandatorily
followed and it is not empty statutory formality.
12. Sub-section (2) stipulates filing of an application under Section (1)

only in the form and manner and accompanied with such fees as may be
Rules 2016' for short) are also enacted in exercise of the power
conferred by Clauses (c), (d), (e), (D of sub-section 239 read with
sections 7, 8, 9 and 10 of the I&B Code'. The rules provide the procedure
required to be followed by filing an application by corporate insolvency
resolution process. As per Rule 6 of the 'Adjudicating Authority' Rules
2016, an operational creditor shall make an application for initiating the
corporate insolvency process under section 9, in Form 5 accompanied
with documents and records required therein. As per sub-rule (2) of Rule
6 it is mandatory again to dispatch a copy of application filed with the
adjudicating authority, by registered post or speed post to the registered
office of the Corporate Debtor.
533
by Hon’ble NCLAT
13. The provisions of sub-section (3) mandates the operational creditor

to furnish copy of invoice demanding payment or demand notice
delivered by the operational creditor to the corporate debtor, an affidavit
to the effect that, there is no notice given by the corporate debtor relating
to dispute of unpaid operational debt, a copy of the certificate from the
'Financial Institutions' maintaining accounts of the operational creditor
confirming that, there is no payment of an unpaid operational debt by the
corporate debtor and such other information as may be stipulated. Sub-
section (5) of section 9 is procedure required to be followed by
Adjudicating Authority. One can say that procedural part is not
mandatory but is directory.

Manilal Shah Vs. Sardar Sayed Ahmed (1955) 1 SCR 108, the Hon'ble
Apex Court held that where statute itself provide consequences of breach
or noncompliance, normally the provision has to be regarded as having
mandatory in nature.
15. One of the cardinal principles of interpretation of statute is that, the

words of statute must prima facie be given their ordinary meaning,
unless of course, such construction leads to absurdity or unless there is
something in the context or in the object of the statute to the contrary.
When the words of statute are clear, plain and unambiguous, then, the
courts are bound to give effect to that meaning, irrespective of the
consequences involved. Normally, the words used by the legislature
themselves declare the legislative intent particularly where the words of
the statute are clear, plain and unambiguous. In such case, effort must be
to give a meaning to each and every word used by the legislature and it
is not sound principle of construction to brush aside words in statute as
being redundant or surplus, and particularly when such words can have
proper application in circumstances conceivable within the
contemplation of the statute.
16. For determination of the issue whether a provision is mandatory or

not, it will be desirable to refer to decision of Hon'ble Supreme Court in
534
by Hon’ble NCLAT
State of Mysore Vs. V.K.Kangan (1976)2 SCC 895. In the said case, the
Hon'ble Supreme Court specifically held:
"10. In determining the question whether a provision is mandatory or

directory, one must look into the subject-matter and consider the
importance of the provision disregarded and the relation of that
provision to the general object intended to be secured. No doubt, all laws
are mandatory in the sense they impose the duty to obey on those who
come within its purview. But it does not follow that every departure from
it shall taint the proceedings with a fatal blemish. The determination of
the question whether a provision is mandatory or directory would, in the
ultimate analysis, depend upon the intent of the law-maker. And that has
to be gathered not only from the phraseology of the provision but also by
considering its nature, its design and the consequences which would
follow from construing it in one way or the other."
16. Therefore, it is clear that the word 'shall' used in sub-section (3) of
section 9 of 'I & B Code' is mandatory, including clause 3 therein."
6. In 'Macquarie Bank Limited Vs. Uttam Galva Metallics Limited' -(Company Appeal (AT) (Insol.)
No. 96 of 2017) decided on 17th July, 2017, this Appellate Tribunal, after taking into consideration that
the foreign bank was not incorporated under the Companies Act, 1956 or Companies Act, 2013 and the
bank has no office in India nor any account with any of the bank or 'Financial Institution', held that the
said bank is not a 'Financial Institution' as defined under sub-section (14) of Section 3 of the I&B Code.
In this regard, we may only refer to sub-section (14) of Section 3 of the I&B Code, which reads as
follows:
"Definitions: -
3. In the Code, unless the context otherwise requires: -
(14) "financial institution" means—

(b) financial institution as defined in section45-I of the Reserve
Bank of India Act 1934 (2 of 1934);
(c) public financial institution as defined in clause (72) of section 2
of the Companies Act, 2013 (18 of 2013); and
535
by Hon’ble NCLAT
(d) such other institution as the Central Government may by

notification specify as a 'financial institution;"
7. Admittedly, the Bank in question is not a scheduled bank, nor is a 'financial institution' as defined
under Section 45-1 of Reserve Bank of India Act 1934 (2 of 1934). The Bank aforesaid also do not come
within the meaning of 'Public Financial Institution' as defined in clause (72) of Section 2 of Companies
Act 2013 (18 of 2013). The Central Government has also not issued any Notification specifying the Bank
in question for the purpose of subsection (14) of Section 3 r/w Section 9 of 'I & B Code'.
8. In the circumstances, we hold that the application preferred by the appellant was not maintainable
in the absence of record of 'Financial Institution' as defined in sub-section (14) of Section 3 of the I&B
Code.
9. We find no merit in this appeal and it is accordingly dismissed. However, in the facts and
circumstances of the case, there shall be no order as to costs.
536
by Hon’ble NCLAT

NEW DELHI
C.P. (I.B.) No. 116/NCLAT/2017
Applicant: Alpha & Omega Diagnostics (India) Ltd.

Vs.
Respondent: Asset Reconstruction Company of India Ltd. & Ors.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Amit Vyas, Learned Advocate
For Respondents/Defendant: Mr. Arun Kathpalia, Mr. Rohit Gupta & Mr. P.S. Sudheer, Learned
Advocates
ORDER
The Appellant-Corporate Applicant filed an application under Section 10 of the Insolvency

and Bankruptcy Code, 2016 (hereinafter referred to as "I & B Code") for initiation of corporate
insolvency resolution process in so far it relates to Corporate Debtor with the Adjudicating Authority.
2. Ld. Adjudicating Authority (National Company Law Tribunal) Mumbai Bench, Mumbai, after
notice to the 'Financial Creditor' and others passed impugned order dated 10th July, 2017 in T.C.P. No.
1117/I&BP/ NCLT/ MB / MAH / 2017, admitting the application subject to qualification, as quoted
below:
"4.8. Nevertheless, the decision on "Admission" as pronounced

hereinabove is subject to a qualification. The I&BP Code, 2016 has
prescribed certain limitations which are inbuilt and must not be
overlooked. The 'Moratorium' indeed is an effective tool, sometimes
being used by the corporate Debtor to thwart or frustrate the Recovery
Proceedings, as happened in this Case. The Learned Chief Metropolitan
Magistrate vide Order (supra) dated 11.04.2017 has appointed a Court
Commissioner to take over the possession of the flats. The admitted
position is that the Flats in question are not under the Ownership of the
537
by Hon’ble NCLAT
corporate Debtor. A question in this regard was raised during the

hearing however not disputed by the either side. Even in the balance
sheet of the Corporate Debtor these flats are not reflected. It is further
evidenced that the documents annexed have dearly demonstrated that the
personal properties of the Promoters have been given as a "Security" to
the banks. Now the question is that whether a property(ies) which is/ are
not 'owned' by a Corporate Debtor shall come within the ambits of the
Moratorium? To examine this aspect, it is useful to reproduce verbatim
the provisions of Section 14 of the Code as under:-
5. Section 14. Moratorium
(1) Subject to provisions of sub-sections (2)(3), on the insolvency

commencement date, the Adjudicating Authority shall by order declare
moratorium for prohibiting all of the following namely:-
(a) the institution of suits or continuation of pending suits or

proceedings against the corporate debtor including execution of any
judgment, decree or order in any court of law, tribunal, arbitration panel
or other authority;
(b) transferring, encumbering, alienating or disposing of by the

corporate debtor any of its assets or any legal right or beneficial interest
therein;
(c) any action to foreclose, recover or enforce any security interest

created by the corporate debtor in respect of its property including any
action under the Securitisation and Reconstruction of financial Assets
and Enforcement of Security Interest Act, 2002 (54 of 2002);
(d) the recovery of any property by an owner or lessor where such

property is occupied by or in the possession of the corporate debtor.
3.......
4......
6. On careful reading I have noticed that the term "its" is

significant. The plain language of the Section is that on the
538
by Hon’ble NCLAT
commencement of the Insolvency process the 'Moratorium' shall be

declared for prohibiting any action to recover or enforce any security
interest created by the Corporate Debtor in respect of "its" property.
Relevant section which needs in-depth examination is Section 14(1)(c) of
the Code.
7. There are recognised canons of interpretation. Language of the

Statute should be read as it existed. This is a trite law that no word can
be added or substituted or deleted from the enacted Code duly legislated.
Every word is to be read and interpreted as it exists in the statute with
the natural meaning attached to the word. Rather in this Section the
language is so simple that there is no scope even to supply 'casus
omissus'. I hasten to add that the doctrine of Woscitur a Sociis' is
somewhat applicable that the associated words take their meaning from
one another so that common sense meaning coupled together in their
cognate sense be interpreted. As a result, "its" denotes the property
owned by the Corporate Debtor. The property not owned by the
Corporate Debtor do not fall within the ambits of the Moratorium. Even
Section 10 is confined to the Book of the Accounts of the Corporate
Debtor, due to the reason that Section 10(3) has specified that the
Corporate Applicant shall furnish "its" Books of Accounts. This Bench
has no legislative authority to expand the meaning of the term "its" even
under the umbrella of ‘Ejusdem generie.
8. The outcome of this discussion is that the Moratorium shall

prohibit the action- against the properties reflected in the Balance Sheet
of the Corporate Debtor. The Moratorium has no application on the
properties beyond the ownership of the Corporate Debtor. For the sake
of completeness, it is worth to refer that the provisions of The
Securitisation and Reconstruction of Financial Assets and Enforcement
of Securities Interest Act, 2002 (the SARFAESI Act) may be having
different criteria for enforcement of recovery of outstanding debt, which
is not the subject matter of this Bench. Before I past with it is necessary
to clarify my humble view that the SARFAESI Act may come within the
ambits of Moratorium if an action is to foreclose or to recover or to
539
by Hon’ble NCLAT
create any interest in respect of the property belonged to or owned by a

Corporate Debtor, otherwise not.
9. To conclude the Application under Section 10 of the Code is

hereby "Admitted" subject to the exception as carved out supra. The
consequential directions shall be that the provisions of Section 14 of The
Code i.e. "Moratorium" shall come into operation: Next, the proposed
name of Interim Resolution professional i.e. Mr. Rajendra Karanmal
Bhuta, C/o RK Bhutta & Co. Chartered Accountants, Insolvency
Professionals, 1207, Yogi paradise, Yodi Nagar, Borivali (West),
Mumbai-400 092, email rkbhuta,co.@gmail.corn, IP Registration No.
INNI/ IBA-IP/ 00078/ 2016-2017/ 1074 is hereby approved. The IRP
shall take appropriate action such as Public Announcement etc. so that
the Insolvency Resolution Process shall be initiated expeditiously. He is
directed to submit a Progress Report within one month's time from the
commencement of Insolvency Resolution Process."
3. The impugned order dated 10th July, 2017 is under challenge in this appeal.
4. Ld. Counsel appearing on behalf of the Appellant submitted that the appellant has grievance only
relating to qualifying part of the impugned order as quoted above. According to the appellant, the
Moratorium should take into its recourse on the subject matters and assets relating to its matters pending
before the Debt Recovery Tribunal (DRT) and under Securitisation and Reconstruction of Financial
Assets and Enforcement of Security Interest Act, 2002 (SARFAESI).
5. However, we are not inclined to accept such submissions as Appellant-Corporate Applicant has
sought for "its" own insolvency resolution process that will include only the assets of the Corporate
Debtor and not any assets, movable or immovable of a third party, like any director or other. In so far as
'guarantor' is concerned, we are not expressing any opinion, as they come within the meaning of
'Corporate Debtor individually', as distinct from principal debtor who has taken a loan.
6. In the aforesaid background, if Ld. Adjudicating Authority, on careful reading of the provisions
has come to the definite conclusion that on commencement of the insolvency process the "Moratorium"
shall be declared for prohibiting any action to recover or enforce any security interest created by the
'Corporate Debtor' in respect of "its" property, no ground is made out to interfere with the said order.
540
by Hon’ble NCLAT

NEW DELHI
C.P. (I.B.) No. 98/NCLAT/2017
Applicant: Mindtree Exports Private Limited

Vs.
Respondent: M/s. Ashmita Multitrade Private Limited & Anr.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. P. Nagesh & Mr. Karan Gandhi, Learned Advocate
For Respondents/Defendant: Mr. Bakul Jain, Learned Advocates
ORDER
The respondent company claimed to be 'Financial Creditor' as defined under Section 5(7) of the
Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as 'I&B Code') and filed an application
under Section 7 of t e I&B Code to initiate Corporate Insolvency Resolution Process against the
appellant-'Corporate Debtor'. Learned Adjudicating Authority (National Company Law Tribunal),
Mumbai Bench Mumbai (hereinafter referred to 'Adjudicating Authority') by the order dated 13th June,
2017 in Company Petition No. 1073/1&BP NCLT/MB/MAH/2017, admitted the application, declared
'Moratorium' under Section 14 of the I&B Code, appointed an Interim Resolution Professional and passed
prohibitory orders. The said order is under challenge in the present appeal.
2. From the record, we find that the respondent initially claimed to be an 'Operational Creditor' and
preferred an application under Section 9 of the I8&13 Code in Form-5 of the Insolvency and Bankruptcy
(Application to Adjudicating Authority) Rules, 2016 (hereinafter referred to as 'Adjudicating Authority
Rules') on 4th April, 2017. However, the same was withdrawn and thereafter a separate application under
Section 7 of I8sB Code was filed in Form-1 claiming to be 'Financial Creditor', which was registered as
Company Petition No. 1073/I&BP/NCLT/MB/MAH/2017 and was admitted by impugned order dated
13th June, 2017.
541
by Hon’ble NCLAT
3. It is not necessary to record all the facts as has been advanced by the parties, except the relevant
one for disposal of this appeal.
4. Admittedly, the impugned order dated 13th June, 2017 has been passed by the Learned
Adjudicating Authority without issuing notice to the respondent/appellant-'Corporate Debtor'. The order
sheet also shows that nobody appeared on behalf of the 'Corporate Debtor'. Apart from this, according to
the appellant/respondent, no notice under Rule 4(3) of the Adjudicating Authority Rules was served after
filing of the application under Section 7 of the I&B Code. The appellant had no knowledge of the
application and, so, the appellant could not oppose the prayer. It is stated that the amount, as claimed to
be due to the respondents, has already been paid.
5. Learned counsel for the respondents/'Financial Creditors' has not disputed the fact that the
impugned order was passed ex-parte without hearing the appellant on 13th June, 2017. Learned
Adjudicating Authority in the impugned order though recorded that the 'Financial Creditor' has sent a
notice on 15th February, 2017, to the 'Corporate Debtor' demanding a sum of Rs. 5,37,00,000/ - (Rupees
Five Crores Thirty Seven Lakhs only), but failed • to appreciate whether any notice was actually served
on the 'Corporate Debtor' or not.
6. There is nothing on record to suggest that any notice was issued under Rule 4(3) of the
Adjudicating Authority Rules, which provides for serving a copy of the application under Section 7,
mentioning the date of hearing before the Adjudicating Authority. Learned Adjudicating Authority also
failed to consider whether the respondents/petitioners come within the meaning of 'Financial Creditors' or
not as they earlier claimed to be 'Operational Creditors'.
7. For the reasons aforesaid, we set aside the impugned order dated 13th June, 2017 passed by the
Learned Adjudicating Authority, Mumbai Bench, Mumbai in Company Petition No. 1073/
I&BP/NCLT/MB/MAH/2017 and remit the matter to Learned Adjudicating Authority (National
Company Law Tribunal), Mumbai Bench, Mumbai to decide the question as raised and noticed above.
8. In the result, the order declaring 'Moratorium', seizure of all the bank accounts, payment to
Interim Resolution Professional and other rigorous orders passed against the appellant-'Corporate Debtor'
are set aside. The 'Corporate Debtor' is allowed to function through its Board of Directors till the Learned
Adjudicating Authority decides the matter after notice and hearing the parties.
9. We make it clear that we have not decided the question as raised above, which are required to be
decided by the Learned Adjudicating Authority at the first instance.' Learned Adjudicating Authority will
fix the date of hearing and, after notice to the parties, will decide the application afresh.
10. The appeal is allowed with the aforesaid observations and directions. However, in the facts and
circumstances of the case, the parties will bear their own cost.
542
by Hon’ble NCLAT
543
by Hon’ble NCLAT

NEW DELHI
C.P. (I.B.) No. 73/NCLAT/2017
Applicant: Design Worx Infrastructure India Pvt. Ltd.

Vs.
Respondent: Premier Restaurants Private Limited
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. R.L. Bhatia & Mr. S.K. Tuli, Learned Advocate
ORDER
This appeal has been referred by the Appellant against impugned order dated 8th May 2017
passed by the Ld. Adjudicating Authority (National Company Law Tribunal) Principal Bench, New Delhi
in C.P. No. (IB)-76 (ND)/2017 whereby and whereunder the application of the Appellant under Section 9
of the Insolvency & Bankruptcy Code, 2016 (hereinafter referred to I&B Code) for initiation of corporate
insolvency resolution process against Respondent/ Corporate Debtor was rejected with the following
observation:-
"5. In the reply filed by the Corporate Debtor they have pointed out and relied
upon emails to show that there was dissatisfaction over the work done. Ld.
Counsel for the corporate debtor has submitted the following points in resisting
the prayer made for by the operational creditor.
(i) The entire contract for the job work assigned was for a sum of Rs. 95
lakhs only; there was no approval for any escalation in the contractual amount
which has unilaterally been increased by the petitioner without due sanction
from them.
(ii) There is correspondence between the parties where dissatisfaction over

the job work done has been expressed. Since the snags were not removed by the
544
by Hon’ble NCLAT
petitioner, the Corporate Debtor was constrained to engage the services of a

third party for completion of the job. Reliance by the Operational Creditor on
the virtual handing over certificate given by M/s. Cushman & Wakefield on their
behalf is misplaced as it does record satisfaction of the work done. Even this
certificate contains a Defect Liability period of 12 months when extended till
March 2017. During this period itself, various snags were pointed out, not only
by them but even the Mall Management, specially in respect of Kitchen Audits,
but the petitioner abandoned the project in. June 2016 itself.
(iii) There was inordinate delay in executing the work and handing over the
premises to them which saddled them with additional rent to be paid to their
lessors vis., M/s. DLF Mall. The time limit for execution was initially fixed for
31.07.2015 but was later extended to January 2016. Despite the same, the
premises were only handed over by the Operational Creditor in March 2016.
For this delay in handing over the property, in an operational condition, they
incurred a liability of Rs. 11 lakhs towards the rent to be paid to their lessors,
without being in a position to commence their business.
(iv) As per the agreement, the delay in execution invited a liquidated

damage which was capped at 10% of the contractual amount. Failure to execute
the job work on time resulted in losses to them and they were entitled to adjust
the is amount against the final bill.
6. Attention of this Bench is further drawn to various emails, including those

dated 4.5.2016 and 17.5.2017. whereby the corporate debtor had asked the
operational creditor to remove these snags. As these were not removed, the
Corporate Debtor submits that they were constrained to engage the services of a
third party, so as to minimize their losses."
Ld. Counsel on behalf of the Appellant tried to rely on different facts to suggest that there is no
dispute prior to the issuance of notice under Section 8 of the I&B Code. He also wanted to rely upon sub-
Section (6) of Section 5 of the Code to show that it does not constitute any 'dispute'. However, we are not
inclined to accept such submission in view of the specific finding passed vide impugned order dated 8th
May 2017 by the Ld. Adjudicating Authority showing existence of 'dispute' between the parties. In the
absence of any merit, the appeal is dismissed.
545
by Hon’ble NCLAT

NEW DELHI
C.P. (I.B.) No. 72/NCLAT/2017
Applicant: International Road Dynamics South Asia Pvt. Ltd.

Vs.
Respondent: Reliance Infrastructure Ltd.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Joydip Bhattacharya, Mr. Surendra Kumar & Mr. Mayank
Sharma, Learned Advocate
For Respondents/Defendant: Mr. Hasan Murtaza, Learned Advocate
C.P. (I.B.) No. 77/NCLAT/2017
Applicant: International Road Dynamics South Asia Pvt. Ltd.

Vs.
Respondent: D.A. Toll Road Pvt. Ltd.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Joydip Bhattacharya, Mr. Surendra Kumar & Mr. Mayank
Sharma, Learned Advocate
For Respondents/Defendant: Mr. Hasan Murtaza, Learned Advocate
ORDER
As both the appeals have been preferred by the appellant - International Road Dynamics South
Asia Pvt. Ltd., they were heard together and disposed of by this common judgment.
546
by Hon’ble NCLAT
2. In Company Appeal (AT) (Insolvency) No. 72 of 2017, the appellant has challenged the order
dated 29th March, 2017 passed by the learned Adjudicating Authority (National Company Law Tribunal,
Mumbai Bench, Mumbai) whereby the application preferred by the appellant under Section 9 of the
Insolvency & Bankruptcy Code, 2016 (hereinafter referred to as the 'I&B Code') for initiation of
Insolvency Resolution Process (IRP) against the respondent - Reliance Infrastructure Ltd. ('Corporate
Debtor') has been rejected.
3. In other case, Company Appeal (AT) (Insolvency) No. 77 of 2017, similar application under
Section 9 of the I & B Code preferred by the appellant against the 'Corporate Debtor' - D.A. Toll Road
Pvt. Ltd. has been rejected by the Learned Adjudicating authority, Mumbai Bench, Mumbai by the
impugned order dated 3rd April, 2017.
4. In the case of Reliance Infrastructure Ltd., apart from the other grounds, learned Adjudicating
Authority while held that 'Operational Creditor' can initiate 'Arbitration proceedings', further held that the
facts of the case do not warrant to invoke Section 9 of the I&B Code.
5. Learned counsel for' the appellant submits that there is no dispute in existence. In such case,
merely on the ground that there is an arbitration clause in the agreement or that the 'Corporate Debtor' is
solvent, the application under Section 9 cannot be rejected, if otherwise complete.
6. Learned counsel for the respondent - Reliance Infrastructure Ltd. submitted that there are existing
disputes and the application preferred by the appellant under Section 9 is not complete. According to him,
claim with regard to three different projects arising out of three different agreements have been mingled
together to show outstanding dues, without explaining the date of default. Further, according to him some
of the claims are time barred.
7. Having heard learned counsel for the parties, insofar as Company Appeal (AT) (Insolvency) No.
72 of 2017 is concerned, while we hold that 'alternative remedy of arbitration' cannot be a ground to reject
an application under Section 9 and no application under Section 9 can be rejected on the ground that
'Corporate Debtor' is solvent. Though, we hold above, but for the reasons recorded below we are not
inclined to interfere with the impugned order dated 29th March, 2017.
8. From the notice dated 21St January, 2017 issued by the appellant under Section 8 to 'Corporate
Debtor' - Reliance Infrastructure Ltd., we find that the claim has been made with regard to outstanding
dues on account of 'three different projects' arising out of three separate work orders. For example, with
regard to 'GF Toll Project', the total payment made by the 'Corporate Debtor' is Rs. 5,41,07,993/ -
including the last payment of Rs.1,06,55,322 made on 17th May, 2013 as pleaded by appellant. The
amount of Rs.2,84,52,328/- is shown to be due.
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by Hon’ble NCLAT
If the last payment made by the 'Corporate Debtor' on 17th May, 2013, then why the appellant did
not chose to move before any Forum for more than four years, particularly when three years prescribed
under the Limitation Act, 1963 for filing a suit for money claim has not been explained. However, we
make it clear that we are not giving any specific finding on the question as to whether Limitation Act,
1963 is applicable or not in filing application for corporate resolution process under the I&B Code, but
certainly the claimant is required to explain the delay and laches.
9. The other claim relates to DS Toll Project' and 'NK Toll Projects', arising out of two different
work orders. With regard to DS Toll Project', it is stated that till date entire amount of Rs. 28,31,430/- is
due. The said amount has been added with Rs.2,84,52,328/- in respect of 'GF Toll Project', which arise
out of separate work order.
10. We are of the view that different claim(s) arising out of different agreements or work order,
having different amount and different dates of default, cannot be clubbed together for alleged default of
debt, the cause of action is being separate. For the said reasons, we hold that the joint application
preferred by appellant under Section 9 is defective, as distinct from incomplete, and, was not
maintainable.
11. Learned counsel for the respondent also highlighted 'existence of dispute' in regard to non-
completion of the project within the time, and, the counter-claim as made by the respondent - 'Corporate
Debtor'. However, in absence of any document enclosed, showing dispute raised prior to issuance of
Section 8 notice, we are not deciding such issue.
For the reason aforesaid, we are not inclined to interfere with the impugned order dated 29th March,
2017, though it is open to the appellant to move separate application in respect of separate work
orders/contracts, if not barred by limitation or delay and laches and if there is no dispute after following
the procedure laid down under I&B Code and Rules framed thereunder.
12. Insofar as the proceedings against 'D A Toll Road Pvt. Ltd.' is concerned, the learned
Adjudicating Authority by impugned order dated 3rd April, 2017 noticed the relevant fact. It was noticed
that the 'Corporate Debtor' - DA Toll Pvt. Ltd. was making part payment from time to time in respect to
invoices of the creditors; in the process of which last payment was made on 26th September, 2013. Ever
since, no further payment was made by the 'Corporate Debtor' towards alleged claimed amount of
Rs.65,22,971/- which alleged to be outstanding. The learned Adjudicating Authority while noticed that
cause of action took place on 26th September, 2013 and a reconciliation between the Creditor and
Corporate Debtor made on 13th August, 2015 stating that outstanding amount due to the Creditor is
Rs.25,03,900/- and beneath the said reconciliation statement, a note was entered by an employee of debtor
548
by Hon’ble NCLAT
company namely Ajay Sharma stated that the bills on hold come to Rs.40,19,071/- and bills were not
brought forward into the books of the debtor company to show that the total amount due was
Rs.65,22,971/-, the Tribunal accepted the plea taken on behalf of the appellant that since the
reconciliation has entered into between the parties on 13th August, 2015 showing an amount of
Rs.40,19,071/- needs to be credited in the debtor company's account therefore, the outstanding amount of
default of Rs.65,22,971/- has been doubted. For the reason aforesaid, the learned Adjudicating Authority
held that there is a dispute of claim and some part of such claim is hit by limitation, it needs elaborate
enquiry and not permitted under I&B Code, 2016
13. We find no merit in both the appeal(s).
14. In the result, no interference is called for. Both the appeals stand disposed of with the
observations as made above. However, there shall be no order as to costs.
549
by Hon’ble NCLAT

NEW DELHI
C.P. (I.B.) No. 101&102/NCLAT/2017
Applicant: Shilpi Cable Technologies Limited

Vs.
Respondent: Macquarie Bank Ltd.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Abhinav Vasisht, Mr. Sumit K Batra & Ms. Priya, Learned
Advocate
For Respondents/Defendant: Mr. Vivek Sibal, Ms. Pooja N Saigal & Ms. Khyati Sharma, Learned
Advocate
ORDER
These two appeals have been preferred by the Appellant against impugned orders both dated 24th
May 2017 passed in C.P. No. (IB)-64(PB)/20I 7 and in C.P. No. (IB)-65(PB)/2017 whereby and
whereunder the applications preferred by the Respondent (Macquarie Bank Ltd) under Section 9 of the
Insolvency & Bankruptcy Code, 2016 (hereinafter referred to I&B Code) have been admitted, order of
moratorium- has been passed and Insolvency Resolution Professional (hereinafter referred to as IRP) has
been appointed with further direction.
2. We find that both the appeals are covered by the decision of this Appellate Tribunal in the case of
Macquarie Bank Ltd v. Uttam Galva Metallics Limited who is the Respondent herein. In C.A (AT) (Ins)
96 of 2017 this Appellate Tribunal by its judgement dated 17th July 2017 held as follows:-
"10. We thereby, hold that 'Macquarie Bank, Australia not being a financial institution' within the
meaning of sub-section (14) of Section 3 of the 'I & B Code, any certificate given by the said bank cannot
be relied upon, to decide default of debt.
550
by Hon’ble NCLAT
19. In the present case, as the notice has been given by an advocate/ lawyer and there is nothing on the
record to suggest that the lawyer was authorized by the appellant, and as there is nothing on the record to
suggest that the said lawyer/ advocate hold any position with or in relation to the appellant company, we
hold that the notice issued by the advocate/ lawyer on behalf of the appellant cannot be treated as notice
under Section 8 of the 'I & B Code'. And for the said reason also the petition under Section 9 at the
instance of the appellant against the respondent was not maintainable."
3. In these appeals we find that the Respondent, Macquarie Bank Ltd., has not enclosed any
certificate from ariancial institution' as defined under sub-section (14) of Section the I&B Code and
Lawyer's notice as given has been deprecated the 'adjudicating authority'.
4. In effect, order (s), if any, passed by Ltd. Adjudicating Author' pursuant to impugned order and
action, if any, taken by Resolution Professional', including the advertisement, is any, published in the
newspaper calling for applications all such orders and actions are declared illegal and are set aside.
Learned Adjudicating Authority will now close the. proceeding. The appellant company is released from
all the rigour of law and is allowed to function independently through its Board of Directors from
immediate effect.
5. Learned Adjudicating Authority will fix the fee of IRP, if appointed and the Appellant will pay
the fees of the IRP, for the period the IRP has functioned.-For the reasons aforesaid we set aside both the
orders dated 24th May 2017 passed in C.P. No. (IB)-64(PB)/2017 and in C.P. No. (IB)- 65(PB)/2017.
Both the appeals are allowed with aforesaid observations.
6. For the reasons aforesaid we set aside both the orders dated 24th May 2017 passed in C.P. No.
(IB)-64(PB)/2017 and in C.P. No. (IB)-65(PB)/2017. Both the appeals are allowed with aforesaid
observations.
7. We may make it clear that we have not decided the other issues raised in these appeals.
551
by Hon’ble NCLAT

NEW DELHI
C.P. (I.B.) No. 59/NCLAT/2017
Applicant: M/s. Aruna Hotels Limited

Vs.
Respondent: Mr. N. Krishna
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Mohan Parasaran, Mr. Gopal Jain, Mr. Vishal Gehrana, Mr.
Nakul Gandhi, Mr. Kriti Awasthi & Mr. Arvind Chari, Learned Advocate
For Respondents/Defendant: Mr. Ritin Rai, Mr. S. Santanam Swaminadhan & Mr. Aabhas Kshetrapal,
Learned Advocate
C.P. (I.B.) No. 87/NCLAT/2017

Vs.
Respondent: Mr. D. Ramjee
Judges/Coram:
Counsels:
Learned Advocate
C.P. (I.B.) No. 87/NCLAT/2017
552
by Hon’ble NCLAT

Vs.
Respondent: Mr. C. Ganapathy
Judges/Coram:
Counsels:
Learned Advocate
ORDER
In these three appeals, as common questions of law involved, they are heard together and are
being disposed of by this common judgement.
2. The respondents, Mr. N. Krishnan (in Company- Appeal (AT) (Insolvency) No. 59 of 2017),
Mr. D. Ramjee (in Company Appeal (AT) (Insolvency) No. 87 of 2017) and Mr. C. Ganapathy (in
Company Appeal (AT) (Insolvency) No. 88 of 2017) are ex-employees of appellant-M/s. Aruna Hotels
Limited, preferred their respective applications under Section 9 of the Insolvency and Bankruptcy Code,
2016 (hereinafter referred to as 'I&B Code') for initiation of Corporate Insolvency Resolution Process
against the appellant/'Corporate Debtor'-M/s. Aruna Hotels Ltd. They alleged that the arrears of salaries
due to them have not been paid and thereby, there is a default of debt.
3. Learned Adjudicating Authority (National Company Law Tribunal) Division Bench, Chennai
(hereinafter referred to as 'Adjudicating Authority') noticed that one of the respondent employee, Mr. D.
Ramjee, claimed amount to the tune of Rs.2,13,65,565/- towards arrears of salary, and Rs. 47,03,318/-
towards gratuity and leave salary, totaling Rs. 2,60,68,883/- and a demand notice was sent by the said
employee on 24th March, 2017. An affidavit sworn by Mr. D. Ramjee under Section 9 (3)(b)(c) of the
I&B Code has been placed on record and thereby admitted the application.
4. In view of the fact that one of the application has been admitted, in relation to the other two
applications, preferred by Mr. N. Kirshnan and. Mr. C. Ganapathy, both the 'Operational Creditors',
Learned Adjudicating Authority directed them to approach Interim Insolvency Professional appointed
pursuant to the first case of Mr. D. Ramjee to make their claim and the Insolvency Professional has been
asked to deal with the same in accordance with law by common order dated 13th June, 2017. The
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by Hon’ble NCLAT
aforesaid common order has been passed in C.P. No. 478 of 2017 with C.P. No. 479 of 2017 and C.P.
No. 480 of 2017.
5. On 7th July, 2017, when the matter was taken up, learned senior counsel for the appellant
submitted that all the respective respondents/ex-employees/'Operational Creditors' served advocate
notice on the appellant purported to have been issued under Section 8 of the I&B Code. It was further
submitted that no notice under Section 8 read with Rule 5 of the Insolvency and Bankruptcy
(Application to Adjudicating Authority) Rules, 2.016 (hereinafter referred to as 'Adjudicating Authority
Rules') and Form-3/Form-4 thereof were served on the appellant. The appellant also raised other
questions to suggest that the applications preferred by all the three respondents/ 'Operational Creditors'
under Section 9 of the I&B Code were not complete and were fit to be rejected.
6. In view of such submission notices were issued on respondents. They have appeared. We have
heard learned counsel for the parties.
7. From the record we find that an advocate notice dated 27th February, 2017 was given by one
Shri G.V. Mohan Kumar, Advocate, on behalf of respondent-Mr. N. Krishnan, aged about 66 years. He
retired on 30th September, 2011, i.e. about six years back.
8. In the case of Mr. D. Ramjee, similar notice was issued by Mr. G.V. Mohan Kumar, Advocate
on 27th February, 2017 on behalf of Mr. D. Ramjee aged about 70 years who was relieved on 31st May,
2013 i.e. about four years back. Another similar notice dated 27th February, 2017 was issued by the
same lawyer, on behalf of Mr. C. Ganapathy, aged 70 years who was also relieved on 31st May, 2011
i.e. about six years back. Thus, we find that there is delay in preferring all the applications, without
going into the question of limitation or the other questions, as raised by learned senior counsel for the
appellant, taking into consideration the fact that the respondents are ex-employees of the appellant, we
requested the learned senior counsel for the appellant to find out whether the appellant intends to pay
the arrears, if any, due to one or other employee.
Today, it is informed that though the claims of the respondents are barred by limitation, the
appellant may agree to pay arrears of three years' salary, if due to one or other respondent and post-
retirement benefit, if due.
9. Learned counsel for the respondents submits that the respondents do not agree with the proposal
as given on behalf of the appellant and, therefore, we heard the appeals on merit.
10. Admittedly, no demand notice under Section 8 was given by any of the individual respondent-
'Operational Creditor', either in Form-3 or Form-4 of the Adjudicating Authority Rules. All the notices,
which are same and similar and all dated 27th February, 2017, were issued by the same advocate, on
554
by Hon’ble NCLAT
behalf each of the respondents. Only the amount of default shown therein are varying. Learned counsel
for the respondents accepts that apart from advocate notice, no separate notice under Section 8 were
individually given by any of the respondents.
11. Similar issue fell for consideration before this Appellate Tribunal, in the case of "Macquarie
Bank Limited Vs. Uttam Galva Metallics Limited - (Company Appeal (AT) (Insol.) No. 96 of 2017." In
the said case, this Appellate Tribunal, having noticed that the notices under Section 8 of the I&B Code
were issued by advocate/lawyer, by judgement & order dated 17th July, 2017 observed and held as
follows:
"13. From the plain reading of sub-section (1) of Section 8 it is clear that on occurrence of default, the
'Operational Creditor' is required to deliver a demand notice of unpaid operational debt, copy of invoice,
demanding payment of amount involved in the default to the 'Corporate Debtor' "in such form and
manner as prescribed."
14. Sub-Rule (1) of Rule-5 of the Adjudicating Authority Rules mandates the 'Operational Creditor' to
deliver the 'Corporate Debtor' the demand notice in Form-3 or invoice attached with the notice in Form-
4 as quoted below:-
"5. Demand notice by operational creditor. -
(1) An operational creditor shall deliver to the corporate debtor, the following documents, namely.-
(b) a copy of an invoice attached with a notice in Form4
(2) The demand notice or the copy of the invoice demanding payment referred to in sub-section (2) of
section 8 of the Code, may be delivered to the corporate debtor,
(b) by electronic mail service to a whole time director or designated partner or key managerial
personnel, if any, of the corporate debtor
(3) A copy of demand notice or invoice demanding payment served under this rule by an operational
creditor shall also be filed with an information utility, if any."
15. Clause (a) & (b) of sub Rule (1) of Rule-5 of the Adjudicating Authority Rules mandates the
'Operational Creditor' to deliver the 'Corporate Debtor' either the demand notice in Form - 3 or a copy of
an invoice attached with a notice in Form - 4. If the Rule 5 is read with the demand notice Form - 3 or
555
by Hon’ble NCLAT
invoice in. Form - 4, it is clear that who are persons authorized to give the notice under Section 8 of the
I&B Code', as apparent from last portion of Form - 3 & Form - 4, as quoted below: -
"6. The undersigned request you to unconditionally repay the unpaid operational debt (in default) in full
within ten days from the receipt of this letter failing which we shall initiate a corporate insolvency
Yours sincerely,

Address of person singing
16. From bare perusal of Form-3 and Form-4, read with sub-Rule (1) of Rule 5 and Section 8 of the 'I
& B Code, it is clear that the 'Operational Creditor' can apply himself or through a person authorized to
act on behalf of the 'Operational Creditor', who hold same position with or in relation to the 'Operational
Creditor'. Thereby such person(s) authorized by 'Operational Creditor', holding position with or in relation
to the 'Operational. Creditor' can only apply.
17. In view of such provision we hold that an advocate / lawyer or Chartered Account or a Company
Secretary or any other person in absence of any authority by the 'Operational Creditor', and if such person
do not hold any position with or in relation to the 'Operational Creditor', cannot issue notice under Section
8 of 'I & B Code', which otherwise can be treated as a lawyer's notice/ pleader's notice, as distinct from
notice under Section 8 of & B Code'.
18. The demand notice/ invoice Demanding Payment under the I& B Code required to be issued in
Form-3 or Form - 4. By the said notice, the 'Corporate Debtor' is to be informed of particulars of
'Operational Debt, with a demand of payment, with clear understanding that the 'Operational Debt' (in
default), as claimed, is to be paid, unconditionally within ten days from the date of receipt of letter failing
which the 'Operational Creditor' will initiate a Corporate Insolvency Process in respect of 'Corporate
Debtor', as apparent from last paragraph no. 6 of notice contained in form - 3, and quoted above.
Only if such notice in Form - 3 or Form - 4 is served, the 'Corporate Debtor' will understand the
serious consequences of non-payment of 'Operational Debt, otherwise like any normal pleader notice/
Advocate notice or like notice under Section 80 of C.P.C. or notice for initiation of proceeding under
Section 433 of the Companies Act 1956, the 'Corporate Debtor' may decide to contest the suit/ case if
556
by Hon’ble NCLAT
filed, as distinct Corporate Resolution Process, where such claim otherwise cannot be contested, except
where there is an existence of dispute, prior to issuance of notice under Section 8."
12. Learned counsel appearing on behalf of respondents tried to make a distinction between the
aforesaid case of 'Macquarie Bank Limited' and the present case on the ground that the notice in the said
case was issued on behalf of the 'Operational Creditor', which was a bank, whereas respondents are
individual ex-employees. But such distinction cannot be accepted, in view of the law laid down under the
I&B Code. It is true that no authorisation on behalf of any Company or firm is required to be given, but
the individual(s) are also required to give notice under Section 8 in Form-3 or Form-4 under their
signatures with clear understanding and request to repay the unpaid 'Operational Debt' (in default)
unconditionally, in full, within ten days from the receipt of the letter, with further intimation that on
failure, the said employee(s)/ workmen shall initiate a Corporate Insolvency Process in respect of the
'Corporate Debtor'. If such notice in Form-3 or Form-4 with the aforesaid stipulation is served on the
'Corporate Debtor', the 'Corporate Debtor' will understand the serious consequences of non-payment of
'Operational Debt', otherwise like any normal pleader notice/advocate notice or like notice under Section
80 of the Code of Civil Procedure, 1908 or notice for initiation of proceeding under the Industrial
Disputes Act, 1947, the 'Corporate Debtor' may not take it seriously and may decide to contest the
suit/case, if filed, before the appropriate forum. However, where the claim is made under Section 8 of
I&B Code, in such case, the 'Corporate Debtor' will understand the seriousness that it cannot contest the
claim, except in a case where a dispute has already been raised, prior to the issuance of notice under
Section 8.
13. As the case of the appellant in all the appeals, is covered by the decision rendered in the case of
'Macquarie Bank Limited (supra); we are not going into other aspects as to whether the respective claims
made by the respondents are barred by limitation or there is a delay and laches on their part or there is any
dispute in existence.
14. In view of the discussion as made above, we have no other option but to set aside the impugned
order dated 13th June, 2017 passed by the Learned Adjudicating Authority, Chennai Bench in C.P. No.
478 of 2017, C.P. No. 479 of 2017 and C.P. No. 480 of 2017. The common order is accordingly set aside.
15. In effect, order(s), if any, passed by the Learned Adjudicating Authority appointing any 'Interim
Adjudicating Authority pursuant to impugned order and. action, if any, taken by the 'Interim Resolution
Professional', including the advertisement, if any, published in the newspaper calling, for applications all
such orders and actions are declared illegal and are set aside. The applications preferred by each of the
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by Hon’ble NCLAT
respondents under Section 9 of the. I&B Code are dismissed. Learned Adjudicating Authority will now
close the proceedings. The appellant is released from all the rigour of law and is allowed to function
independently through its Board of Directors with immediate effect.
16. Learned Adjudicating Authority will fix the fee of 'Interim Resolution Professional', if appointed
and the appellant will pay the fees of the Interim Resolution Professional, for the period he has
functioned. The appeals are allowed, with the aforesaid observation and direction.
17. However, we make it clear that the appellant has given assurance that they will be paying the
respondents three years' arrears of salary, if due, for the period prior to their retirement, taking into
consideration any revision of salary, if any, and post-retirement benefits such as Provident Fund, Gratuity
etc., if due to one or other respondent. We hope and trust that the appellant will stick to its assurance
given before this Appellate Tribunal and pay such admitted dues to the respondents.
18. All the appeals stand disposed of with the aforesaid observation and direction. However, in the
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by Hon’ble NCLAT

NEW DELHI
C.P. (I.B.) No. 74/NCLAT/2017
Applicant: Anil Mahindroo & Anr

Vs.
Respondent: Earth Iconic Infrastructure (P) Ltd.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Vikas Tiwari & Mr. Neeraj Kr. Gupta, Learned Advocate
ORDER
The appellants, who claimed to be 'Financial Creditor' filed an application under section 7 of the
Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as "I & B Code) for initiation of
insolvency process in respect of the Respondent- 'Corporate Debtor'.
2. Ld. Adjudicating Authority (National Company Law Tribunal) Principal Bench, New Delhi by
impugned order dated 8th March, 2017 dismissed the application with the following observations:
"27. Brief facts of the case necessary for disposal of the instant petition are that a MOU, allotment letter
was executed between the applicants and Respondent Company. They were allotted one flat reference No.
ETTS 1959 on the first floor in the project Earth Titanium Studios developed by Respondent Company at
Greater Noida, UP. The MOU contains an express promise made on behalf of the Respondent Company
for guaranteed a returned on the investment and has been styled as 'commitment amount' till the actual
possession is delivered. The total sale consideration for the flat was Rs. 20,80,000 plus taxes. The
possession of the flat was to be delivered in September 2016. On the date of signing of the MOU part
payment of sale consideration alongwith service tax was paid and Respondent Company had undertaken
to make payment of commitment of amount of Rs. 20,000/- per month and it was to increase with the
payment of the next instalment. The last instalment of the sale consideration was payable in May 2015.
Eventually the applicants have paid the entire agreed sale consideration plus taxes. The Respondent
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by Hon’ble NCLAT
Company paid the commitment amount to the applicants till February 2016 and has stopped paying the
same subsequently.
28. The facts of the instant case are akin to those of a decided . case in material particulars namely Nikhil
Mehta & Sons (HUF) & Ors. V. M/ s AMR Infrastructures Ltd. [C.P.No. (ISB)-03(PB)/ 2017] decided on
23.1.2017 by this Bench. The aforesaid petition was also filed under section 7 of the Code. After hearing
learned counsel for the applicants we have expressed the view that applicants could not be regarded as
Financial Creditors within the meaning of section 5(7) & (8) of the Code nor their advance payment for
purchase of the flat could be regarded as a 'Financial Debt' merely because there is a stipulation in the
MOU with regard to payment of assured return. In view thereof we adopt the same reasons which have
been given in the case of Nikhil Mehta (supra). A copy of the aforesaid order in the Nikhil Mehta and
sons' case may be added by the office which shall constitute as a part of this order as well."
3. While dismissing the application, Ld. Adjudicating Authority observed that any observation made
in the said order shall not be construed as an expression of opinion on the merit of the controversy as the
Ld. Adjudicating Authority had refrained from entertaining the application at the initial stage.
4. Ld. Counsel for the appellant brought to our notice the decision of this Appellate Tribunal in
"Nikhil Mehta and Sons v. .AMR Infrastructure Ltd" dated 21st July, 2017 passed in Company Appeal
(AT) (Insol.) No. 07 of 2017. It is submitted that the original judgment passed by Ld. Adjudicating
Authority in "Nikhil Mehta and Sons v. AMR Infrastructure Ltd" has been referred in the impugned order
dated 8th March, 2017, which has been ordered to be communicated to the appellant along with copy of
the impugned order.
5. The aforesaid order passed by Ld. Adjudicating Authority in Nikhil Mehta & Sons' was
challenged before this Appellate Tribunal. In Wikhil Mehta & Sons v. AMR Infrastructure Ltd',
considering the agreement/ Memorandum of Understanding relating to purchase of shops and flats, this
Appellate Tribunal, held as follows: -
"20. From the aforesaid agreement/ Memorandum Understanding it is clear that appellants are "investors"
and has chosen "committed return plan". The respondent in their turn agreed upon to pay monthly
committed return to investors. Thus, the amount due to the ,appellants come within the meaning of 'debt'
as defined in Section 3(11) of the 'I & B Code' which reads as follows: -
"(11) "debt" means a liability or obligation in respect of a claim which is due from any person and
includes a financial debt and operational debt;"
23. From the 'Annual Return' of the Respondent and Form-16A, we find that the 'Corporate Debtor'
treated the appellants as 'investors' and borrowed the amount pursuant to sale purchase agreement for their
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by Hon’ble NCLAT
commercial purpose treating at par with 'loan' in their return. Thereby, the amount invested by appellants
come within the meaning of 'Financial Debt, as defined in Section 5(8)(D of I & B Code, 2016 subject to
satisfaction as to whether such disbursement against the consideration is for time value of money, as
discussed in the subsequent paragraphs.
24. Learned Adjudicating Authority has rightly highlighted the opening word of the definition clause
which indicate that a 'financial debt' is a debt along with interest which is disbursed against the
consideration for the time value of money and may include any of the events enumerated in sub-clause (a)
to (i). Therefore, it is to be seen whether the amount paid by the appellants to the Corporate Debtor, fulfil
the other condition of "disbursement against consideration of time value and money", to come within the
definition of "Financial Creditor" having satisfied that the Corporate Debtor raised the amount through a
transaction of sale and purchase of agreement having commercial effect of a borrowing (Section 5(8)(f)).
25. The agreement shows that the respondent agreed to complete the construction of shopping mall on or
before December 2009, in all respects. and was required to complete and handover the shop in the
shopping mall before the said date. It is not the case of the respondent that the construction was stopped
or delayed on account of factors beyond the control of the respondent, as stipulated in the later part of the
Memorandum of Understanding. It was agreed upon by the respondent that since the appellants have paid
most of the amount the respondent was ready to pay "monthly committed returns" to the appellants.
However, as the appellants were not required the monthly return till December 2008 i.e. for 9 months so
the Respondent-Corporate Debtor undertook to make a consolidated payment of Rs. 99,600/ - less TDS.
For every calendar month the Corporate Debtor was liable to pay committee return w.e.f. January 2009
till the date of handing over of the possession to the appellants. Therefore, it is clear that the amount
disbursed by the appellants was "against the consideration of the time value of the money" and "the
Respondent-Corporate Debtor raised the amount by way of sale - purchase agreement, having a
commercial effect of borrowing." This is also clear from annual returns filed by Respondent and not
disputed by the Respondent-Corporate Debtor in their annual returns, wherein the amount so raised/
borrowed has been shown as 'commitment charges' under the head "Financial cost". The financial cost
includes "Interest of loans" and other charges. Therefore, the 'commitment charge, which include interest
on loan, shown against the head "Financial cost" having accepted by the Corporate Debtor in their annual
return, we hold that the appellants have successfully proved that they are 'financial Creditor' within the
meaning of Section 5(7) of the 'I & B Code'.
26. Learned Adjudicating Authority while rightly interpreted the provisions of law to understand the
meaning of expression 'financial creditor' at paragraph 12 of the impugned judgement as quoted above,
but failed to appreciate the nature of transactions in the present case and wrongly came to a conclusion
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"that it is a pure and simple agreement of sale and purchase of a piece of property and has not acquired
the status of a financial debt as the transaction does not have consideration for the time value of money".
6. The judgment passed by Ld. Adjudicating Authority in the case of " Nikhil Mehta and Sons v.
AMR Infrastructure Ltd" was set aside and matter has been remitted back to the Ld. Adjudicating
Authority for admission.
7. Notice was issued on respondents both by Speed-post and e-mail. In spite of service of notice
both by Speed-post and e-mail, the Respondent-Corporate Debtor refused to appear.
8. From the agreement/ Memorandum of Understanding dated 14th May, 2014, we find that the said
agreement relates to the allotment of apartment admeasuring 520 sq. ft., therein the following terms and
conditions of payment (commitment amount) has been stipulated and agreed between the parties: -
"The Company hereby undertakes to make a fixed payment of Rs. 13,000/ - (Rupees Thirteen Thousand
only (hereinafter referred to as the 'Commitment Amount') every calendar month to the Allottee(s) w.e.f.
May - 2014 till the date of First PDC, which the Allottee(s) duly accepts. After realization of the
abovementiOned First PDC dated 1.11.14 on its due date, the Company assures the Allottees(s) that the
Commitment amount shall be Rs. 11,160/- and will be effective from the date of realization of the first
PDC till the date of realization of the Second PDC as mentioned in this MOU. Further, subject to
realization of the Second PDC on its due date, the Commitment Amount shall be of Rs. 21,320/ - with
immediate effect of its realization till the date of offer of possession. The Company hereby clarifies that
the monthly Commitment Amount in all the situations stated above is subject to the timely payment of all
the instalments as per the plan opted by the Allottee(s). The Company shall stop the payment of
commitment Amount, where any of the abovementioned PDC's gets bounced on account of any reason
whatsoever, and/or in case of non-payment of the balance amount on due date (as mentioned in this
MOU) by the Allottee(s). The Flexi Payment Plan of the Allottee(s) shall change into Construction
Linked payment Plan (CLP) without any notice to the Allottee(s) and after the change of payment plan
into CLP, commitment Amount will not be paid by the Company to the Allottee(s). Further, the
Allottee(s) is also liable to return to the Company 50% of the Commitment Amount already paid to the
Allottee(s). If in any case Commitment Amount is not returned, Company may adjust the same by
reducing the area allotted to the Allottee(s) or recover the amount with interest at any time as the
Company deems fit and appropriate. The Allottee(s) knows and understands that Commitment Amount is
applicable only in the case of Down Payment Plan and Flexi Payment Plan."
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by Hon’ble NCLAT
9. The appellants have enclosed the Balance Sheet of the Respondent Company as on 31st March,
2015 wherein against the 'current liabilities', apart from 'short term borrowings', the following liabilities
have been shown:-
4. Current liabilities 6 670,368
( a ) Short term 7 5,225,389

140,372,795
Borrowings
(b) Trade Payables 8 1,748,474,195 867,749,891
( c ) Other current 9 370,641 49,501

liabilities
( d ) Short-term
provisions
Total: 1,754,740,593 1,008,172,187
1,764,825,748 1,018,244,845
10. In the end of the said Balance Sheet, against the Note 8 "other current liabilities" have been
shown as quoted hereunder:
Particulars As at 31 March As at 31 March

2015 2014
(a) Other payables 5,783,392 5,548,820
Duties & Taxes)

1,729,554,149 860,069,589
(ii) Others
Customer 227,042 31,274
( b ) Retention
( c ) Book Overdraft 8,138,140
( d ) Expenses Payable 4,771,472 2,100,208
Total: 1,748,474,195 867,749,891
*Represents advances adjustable against sale consideration of shops/plots/office/fiats net of debtors

adjustable against sale consideration of shops/plots/fiats etc. and are generally not refundable. It also
includes amount credited toward commitment charges paid/ payable.
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by Hon’ble NCLAT
*The amount of Rs. 1,35,09,464 (PVR Rs. 17,80,000) was being directly deposited into the bank account
of the company, which are not identifiable by the company."
11. In the present case, the Respondent has not taken any plea that the appellants failed to pay the
balance amount on due date or any of the cheque has been bounced on account of any reasons. The
respondent has also not denied the allegation that the 'commitment amount" as mentioned in the
agreement/ Memorandum of Understanding has not been paid month to month and there is a default.
12. From the agreement/Memorandum of Understanding, we find that the appellants are also
"investors" and have chosen "committed return plan" like "Nikhil Mehta and Sons v. AMR Infrastructure
Ltd". Thereby we hold that the amount as is due to the appellants, come within the meaning of "debt" as
defined in Section 3(11) of the 'I&B Code'.
13. The Balance Sheet has been enclosed by the appellants, wherein the amount deposited by
'persons', including the appellants as shown also suggest that the Respondent 'Corporate Debtor' treated
the appellants as 'investors' and borrowed the amount pursuant to sale purchase agreement for their
'commercial purpose' treating the amount at par with 'loan' in their return. Thereby, the amount invested
by appellants come within the meaning of 'Financial Debt', as defined in Section 5(8)(f) of I&B Code,
2016, subject to satisfaction as to whether such disbursement against the consideration is for time value of
money.
14. "Disbursed against the consideration for the time value of money", as mentioned in the opening
line of Section 5 has been rightly highlighted and considered by the Ld. Adjudicating Authority in "Nikhil
Mehta and Sons v. AMR Infrastructure Ltd", but the Appellate Tribunal while agreed with such findings
but disagreed with the other part of findings in the said case.
15. In the present case, we find that no case has been made out by the respondent that the construction
was stopped or delayed on account of factors beyond its control. It has also not been disputed that the
respondent failed to pay monthly committed returns which was to be paid month to month till the
completion of the project/ apartment. Thereby we find and hold that the appellants in this case have also
successfully proved that the money disbursed by them is against the consideration for the time value of
money and for all purpose, they come within the meaning of 'Financial Creditor' as defined in Section 5(7)
of the. 'I&B Code'.
16. For the reasons aforesaid, we set aside the impugned judgment dated 8th March, 2017 passed by
the Ld. Adjudicating Authority in C.P. No. (IB)-16(PB)/ 2017 and remit the matter to Adjudicating
Authority to admit the application preferred by appellants and pass appropriate order, if the application
under Section 7 of the 'I&B Code' is otherwise complete. In case it is found to be not complete, the
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by Hon’ble NCLAT
appellants should be given seven days' time to complete the application as per proviso to Section 7 of the
'I&B Code'.
17. The appeal is allowed with aforesaid observations. However, in the facts and circumstances of the
case,. there shall be no order as to cost.
565
by Hon’ble NCLAT

NEW DELHI
C.P. (I.B.) No. 104/NCLAT/2017
Applicant: S3 Electrical & Electronics Private Limited

Vs.
Respondent: Briau Lau
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. PBA Srinivasan & Ms. Swati Swati seth, Learned Advocates
For Respondents/Defendant: Mr. Aditya Sharma, Learned Advocate
C.P. (I.B.) No. 109/NCLAT/2017
Applicant: Andhra Bank

Vs.
Respondent: Briau Lau
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. PBA Srinivasan & Ms. Swati Swati seth, Learned Advocates
For Respondents/Defendant: Mr. Aditya Sharma, Learned Advocate
ORDER
The respondent-Brian Lau, a resident of 18B, Tower-2, The Marinella, 9 Welfare Road, Wong
Chuk Hang, Hong Kong claimed to be 'Operational Creditor' and preferred an application under Section 7
of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as I&B Code') with a prayer to
initiate Corporate Insolvency. Resolution Process against the appellant-'Corporate Debtor'-S3 Electrical
and Electronics Private Limited. Learned Adjudicating Authority (National Company Law Tribunal),
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by Hon’ble NCLAT
Principal Bench, New Delhi, by judgement & order dated 28th June, 2017, admitted the application,
declared 'Moratorium', appointed Insolvency Resolution Professional and passed order in terms of
Sections 15, 16, 17, 18 and 20 of the I&B Code with certain observations and directions. The appeal has
been preferred against the aforesaid order.
2. The same very impugned judgement & order has been challenged by Andhra Bank in connected
appeal (Company Appeal (AT) (Insolvency) No. 109 of 2017). According to the appellant-Andhra Bank,
they are banker of 'Corporate Debtor'- S3 Electricals & Electronics Private Limited and there is no default
shown in the account. The Andhra Bank is satisfied with the performance of the 'Corporate Debtor'.
3.The appellant-'Corporate Debtor' has assailed the impugned judgement mainly on the ground that
(a) The Adjudicating Authority, Principal Bench, New Delhi passed the impugned judgement & order
without notice to the 'Corporate Debtor', in violation of the rules of natural justice;
(b) The respondent, who claimed to be 'Financial Creditor' do not come within the meaning of
'Financial Creditor' as defined under sub-section (7) read with sub-section (8) of Section 3 of the
I&B Code;
(c) The respondent failed to produce any record of default or such other record or evidence of
default as specified by the Insolvency and Banking Board of India; and
(d) The notice under Section 8 was not issued by respondent but by his Lawyer which is not
permissible.
5. Learned counsel appearing for the respondent has not disputed the fact that no notice was issued
on the 'Corporate Debtor' before the admission of the application i.e. before passing of impugned order
dated 28th June, 2017. He submitted that there are other records, such as 'Unsecured Loan Agreement
dated '18th June, 2014' and communications on record to show evidence of default. However, such
documents cannot be taken into consideration for the purpose of initiation of Insolvency Resolution
Process under Section 7 of the I&B Code in absence of the documents as prescribed in the Code. In any
case, as the impugned order dated 28th June, 2017 has been passed without notice to the 'Corporate
Debtor' and in violation of the rules of natural justice, we are of the view that the same is fit to be set
aside.
6. At this stage, we have been informed by learned counsel for the parties that during the pendency
of the appeal, the parties have settled their dispute and amount as claimed by the respondent has been
satisfied by issuing cheque(s) in his favour. However, we are not going into such question in this appeal.
567
by Hon’ble NCLAT
7. For the reasons as recorded above, we set aside the impugned order dated 28th June, 2017 passed
by Learned Adjudicating Authority, Principal Bench, New Delhi in. C.P. No. 1251 of 2016.
8. In effect, order(s), if any, passed by the Learned Adjudicating Authority appointing any 'Interim
Learned Adjudicating Authority pursuant to the impugned order and action, if any, taken by the 'Interim
Resolution Professional', including the advertisement, if any, published in the newspaper calling for
applications all such orders and actions are declared illegal and are set aside. The application preferred by
the respondent(s) under Section 7 of the I&B Code is dismissed. Learned Adjudicating Authority will
close the proceedings. The appellant(s) are released from all the rigour of law and is allowed to function
independently through its Board of Directors with immediate effect.
9. Learned Adjudicating Authority will fix the fee of 'Interim Resolution Professional', if appointed
and the appellant-'Corporate Debtor' will pay the fees of the Interim Resolution Professional, for the
period he has functioned.
10. Both the appeals are allowed with the aforesaid observations and directions. However, in the facts
and circumstances of the case, there shall be no order as to costs.
568
by Hon’ble NCLAT

NEW DELHI
C.P. (I.B.) No. 40/NCLAT/2017
Applicant: Pawan Dubey & Anr.

Vs.
Respondent: J.B.K. Developers Private Limited
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Pawan Dubey & Mr. Bishwajit Das, Learned Advocates
ORDER
The appellants claimed to be 'Financial Creditors' and jointly preferred an application under
Section 9 of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as 'I&B Code') with the
prayer to initiate an insolvency process against the respondent company, namely, J.B.K. Developers Pvt.
Ltd., the application having dismissed the present appeal has been preferred.
2. The applicants are son and father. They booked a residential Flat No. IRIS-
102 having super area of 1295 sq.ft. with construction linked plan in the Green Avenue project.
According to appellants, they paid a total sum of Rs. 25,97,940/- to the respondent. On deposit of the
amount made by the appellants, the respondent issued allotment letter on Pt November 2012 allotment of
a flat, containing terms and conditions of allotment. It was alleged that the respondents were to hand over
the possession of the residential flat positively within 30 months from the date of allotment letter which
expired on 30th April 2015.
3. On account of the delay in raising the construction, the appellants sent a number of e-mail
messages and visited the office of the respondent company, held meeting on different dates and the
respondents had agreed to cancel the allotment and refund the amount of Rs. 25,97,940/- along with the
interest @ 19% per annum for the delay period in accordance with the builder-buyer agreement dated 1st
569
by Hon’ble NCLAT
November 2012. Having not paid back the amount, the appellant preferred the application under section 9
of the 'I & B Code'.
4. Learned Adjudicating Authority (National Company Law Tribunal), Principal Bench, New Delhi
having noticed the arguments and the facts that the appellants have already served statutory notice under
Section 433 of the Companies Act 1956, before a notice as per performa under Section 8 of 'I&B Code'
on 23rd January 2017 followed by another notice under I&B Code' issued on 10th February 2017 calling
upon the respondent to pay outstanding principal sum with interest @ 18% per annum, rejected the claim
by impugned order dated 31st March 2017 in C.P.No. (IB)-19(PB)/2017.
5.The Tribunal held that the appellants do not come within the meaning of 'Operational Creditor'.
Reliance has been placed on a decision of Learned Adjudicating Authority rendered in another case of
"Col. Vinod Awasthy Vs. A.M.R. Infrastructure Ltd."
6. The question arises for consideration in this appeal is whether appellants are 'Operational
Creditor' and are entitled to initiate Corporate Insolvency Resolution Process against Respondents -
'Corporate Debtor' under Section 8 and 9 of the 'I&B Code?
7. Learned Counsel for the appellants' highlighted the introduction of 'I & B Code' 2016 by
repealing Presidency Towns Insolvency Act, 1909 85 Provincial Insolvency Act 1920. According to him
it was introduced by amending 11 special statutes including Section 272(1)(b) of Companies Act, 2013
with clear objectives for such collective, changes in 13 existing laws. It was submitted that 'I&B Code' is
a complete code for insolvency resolution, liquidation and bankruptcy process which can be preferred by
different category of people including Company, LLP, other body corporate, partnership firms and
individuals as enumerated under Section 2 thereof. It was further contended that the 'I&B Code' is a new
layer of remedy to provide a commercial resolution, as against judicial resolution which is better and an
additional layer of new remedy in place of old law.
8. It was also contended that all kinds of Creditors except contingent and prospective creditors, who
were eligible under Section 272(1)(b) to initiate winding up proceeding are rearranged under .2 classes,
namely, 'Financial Creditor' and 'Operational Creditor' for the purpose of 'I&B code'. Only exception to
the eligibility to trigger Corporate Insolvency Resolution Process is Section 11 which talks of
'ineligibility'. Referring a Committee Report, learned counsel for the appellants submitted that this is a fit
case for adjudication. However, it is not necessary to notice any Report, all the aforesaid reports having
noticed and taken into consideration by Legislators while enacting 'I&B Code'.
9. The stand of the appellants is that legislator having not used expression, 'All Creditors' other than
the 'Financial Creditor' to define 'Operational Creditor' in Section 5(20) or Section 5(21) therefore, the
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by Hon’ble NCLAT
intention of legislator is that all Creditors entitled to claim the debt amount and can prefer the application
on default. However, we are not inclined to accept such submission that all creditors can take resort to
Section 9 of the 'I&B Code'. The 'Operational Creditor' and 'Operational Debt' having defined in Section
5(20) and Section 5(21), except those who come within the meaning of Operational Creditor no other
creditor, whether secured or unsecured creditor are entitled to file an application under Section 9 though
they are entitled to file claim before the Interim Resolution Professional, once Insolvency Resolution
Process starts against a 'Corporate Debtor', either under Section 7 or Section 9 or Section 10 of the 'I & B
Code'.
10. Learned Tribunal has referred to the judgement passed in the case of Col. Vinod Awasthi Vs.
A.M.R. Infrastructure Ltd., relevant portion of which reads as under: -
"7. A perusal of section 9 of the code would show that in order to maintain an application as an
'Operational Creditor' the Petitioner has to satisfy the requirements of section 5(20) and (21) of the Code.
According to section 9(1) a petition like the one in hand could be maintained only by an 'Operational
Creditor' against the 'Corporate Debtor. The aforesaid expression has been defined in section 5(20) 83
(21) which would also be attracted and applicable. Section 5 (20) 86 (21) of the code read thus:
"5. In this Part, unless the context otherwise requires,_
(20) operational creditor" means a person to whom an operational debt is owed and includes any person to
whom such debt has been legally assigned or transferred
(21) operational debt" means a claim in respect of the provision of goods or services including
force and payable to the Central Government, any State Government or any local authority;
8. It is evident from the perusal of the aforesaid definition of 'Operational Debt' that it is a claim in
respect of provision of goods or services including dues on account of employment or a debt in respect of
repayment of dues arising under any law for the time being in force and payable to Centre or State
Government or local authority. It is thus clear that debt may arise out of provision of goods or services or
dues arising out of employment or dues arising under any law for time being in force and payable to the
Centre/ State Government. The framer of the Code have also defined the expression 'Financial Debt' in
section 5(8) to mean a debt which is disbursed against the consideration of time value of money. However
the framer of the Code has not included in the expression 'Operation Debt' as any debt other than the
'Financial Debt'. It is thus confined to aforesaid four categories like goods, services, employment and
Government dues. In the present case the debt has not arisen out of the provisions of goods or services.
The debt has also not arisen out of employment or the dues which are payable under the statute to the
571
by Hon’ble NCLAT
Centre/ State Government or local body. The refund sought to be recovered is necessarily associated with
the delivery of the possession of immovable property which has been delayed.
9. The next question is whether the Petitioner could be regarded as an 'Operational Creditor' within
the meaning of section 5(20). The Operational Creditors' are those persons to whom the 'Corporate Debt'
is owed and whose liability from the entity comes from a transaction on operations. The final report of the
Committee in para 5.2.1 defines 'Operational Creditor' like the wholesale vendor of spare parts whose
spark plugs are kept in inventory by Car Mechanic and who gets paid only after spark plugs are sold to
acquire the status of 'Operational Creditor' so and so forth. The Petitioner in the present case has neither
supplied any goods nor has rendered any service to acquire the status of an 'Operational Creditor'.
10. We are further of the view that given the time line in the code it is not possible to construe section
9 read with section 5(20) 83 (21) of the Code so widely to include within its scope even the cases where
dues are on account of advance made to purchase the flat or a commercial site from a construction
company like the Respondent in the present case especially when the Petitioner has remedy available
under the Consumer Protection Act and the General Law of the land. Therefore we are not inclined to
admit the petition.
11. Like wise we have decided the case of Sajive Kanwar v. AMR Infrastructure CP. No. (ISB)-
03(PB)/ 2017 on 16.2.2017 which has also discussed the possibility of treating a person like the petitioner
as an "Operational Creditor
11. Similar question as to who can claim to be an 'Operational Creditor'; and whether a person who
has entered into agreement for purchase of a 'flat' or 'shop' or 'any immovable property' is Operational
Creditor or not fell for consideration before this Appellate Tribunal. This has been held in the case of
Nikhil Mehta Vs. A.M.R. Infrastructure Ltd. Taking into consideration the terms and condition of
agreement/ sale deed, the Appellate Tribunal held the appellant of the said case, as "Financial Creditor".
12. The appellants have filed a Letter of Allotment dated 1st November 2012 wherein certain terms
and conditions have been mentioned. As paragraph 3(b) of the Letter of Allotment, it is mentioned that
the allottee(s) shall be entitled to refund of money paid by him subject to deduction of 15% of the total
cost of the unit only after the expiry of a period of six months from the date on which the Company
receives the notice of the Allottee's for cancellation of agreement.
13. First of all, the letter of allotment is not an agreement to sell and the terms condition aforesaid is
conditional as the question of default will arise, once 'Corporate Debtor' receives the notice of
cancellation from the allottee(s) and if the amount is not paid.
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by Hon’ble NCLAT
14. Apart from the fact that the appellants are merely an allottee of a flat and does not come within
the meaning of 'Operational Creditor,' as held by the Learned Adjudicating Authority, there appears to be
a variation in their claim amount, though the notice under • Section 8 and 9 or application under Section 9
has not been filed.
15. The appellants initially claimed that they are entitled for refund of total amount. deposited by
them after one year, the flat having not completed within time along with 19% interest. But before the
Tribunal the appellants claimed total amount along with 18% interest. On the other hand, as per the
Allotment Letter at paragraph 3(b), the allottee is entitled to get refund of amount, subject to deduction of
15% of the total cost on receipt of allottees(s) application for cancellation. At paragraph 3(d) of the letter
of allotment has further mentioned that if the amount paid by the allottee(s) is less than the amount
deducted under (a) above, the allottee shall pay to the Company, deficient amount to the extent of 15% as
mentioned therein. Thus we find there is a variation of claim amount i.e. the amount of debt alleged to
have been defaulted by the respondent.
17. For the reason aforesaid, while we hold that the appellants are not 'Operational Creditor', we also
hold that there is confusion about the actual amount of default of debt and the date of notice for
cancellation forwarded by appellant, the petition under Section 9 is fit to be rejected.
18. For the reasons aforesaid we are not inclined to interfere with the impugned judgement.
19. In absence of any merit, the appeal is dismissed.
573
by Hon’ble NCLAT

NEW DELHI
C.P. (I.B.) No. 120/NCLAT/2017
Applicant: PEC Ltd. Through Shri Indra Vikram Singh

Vs.
Respondent: M/s. Sree Ramakrishna Alloys Ltd.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Rajesh Kumar Gautam, Mr. Bhumit Solanki & Ms. Khushboo
Aggarwal, Learned Advocates
C.P. (I.B.) No. 121/NCLAT/2017
Applicant: PEC Ltd. Through Shri Indra Vikram Singh

Vs.
Respondent: M/s. Sree Gangadhar Steels Ltd.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Rajesh Kumar Gautam, Mr. Bhumit Solanki & Ms. Khushboo
Aggarwal, Learned Advocates
ORDER
The appellant preferred two separate applications under Section 7 of the I&B Code for initiation
of corporate insolvency resolution against two separate "Corporate Debtors". Learned Adjudicating
Authority in both the cases passed similar orders both dated 29th July 2017 and adjourned the case for
29th August 2017, one of which reads as follows:-
574
by Hon’ble NCLAT
"2.. The Petition is filed by PEC, the Financial Creditor under Section 7 of IBC
r/ w Rule 4 of IBC (Application to Adjudicating Authority) by seeking to initiate
a Corporate Insolvency Resolution Process in the matter of m/s Sree
Ramakrishna Alloys Ltd. under IBC 2016. The Learned Counsel for the
Petitioner submitted they have extended loan as Financial Creditor by way of
ILC to the tune of Rs. 10,35,95,033/ - being Principal amount plus interest Rs.
4,80,31,8754/- total amount is Rs. 15,16,26,907/,
3. Shri V.K. Sajith, Learned Counsel for the Petitioner submits that the
matter is adjourned from time to time at the request of the Learned Counsel for
the Respondent on the ground that the issue was going to be resolved now.
Hence, the Learned Counsel for the Petitioner insist to initiate Resolution
process as the matter is pending for a long time and also the amount involved is
huge amount for the Company.
4. Shri Rajesh Bohra, Learned Counsel for the Respondent submitted that
he will file a memo stating the modalities of payment of outstanding dues by
serving a copy to the other side.
5. In view of the facts and circumstances of the case and because

employment of several employees is at stake, we are not inclined to take a
decision to admit the case at present and wanted to see the issue settled at the
earliest possible time. The Learned Counsel for the respondent is directed to
strictly adhere to the terms and conditions of his memo and ensure the issue is
resolved well before the next date of hearing. Post the case on 29.08.2017."
Learned Counsel for the appellant submits that Learned Adjudicating Authority, instead of giving
time ought to have looked into the records to find out whether the records are complete or not and
thereafter, the authority was required to pass appropriate order admitting the application or rejecting the
same, as the case may be. However, he accepts that Learned Adjudicating Authority has only given one
opportunity to 'Corporate Debtors', as to whether "Corporate Debtors" intends to satisfy the appellant, as
otherwise admission of the case may affect a large number of employees.
As per Rule 7 of Insolvency and Bankruptcy (Adjudicating Authority) Rules 2016, an application
filed under Section 7 or 9 can be withdrawn prior to admission of the case in effect application, which
means after admission of an application, an 'Operational Creditor' or "Financial Creditor" cannot
withdraw the application.
575
by Hon’ble NCLAT
In the aforesaid circumstances, the Adjudicating Authority, if granted some time to the
"Corporate Debtor(s)", we are not inclined to interfere with the impugned order(s) both dated 29th June
2017, with liberty to appellant to approach the appropriate Forum in case the applications are not admitted
or if the appellant is not satisfied. We hope and trust that Learned Adjudicating Authority, Hyderabad,
will not grant further time to any of the parties and decide the case(s) either way, there being a time frame
given for admission or rejection of an application.
Both the appeals stand disposed of with the aforesaid observations.
576
by Hon’ble NCLAT

NEW DELHI
C.P. (I.B.) No. 7/NCLAT/2017
Applicant: Nikhil Mehta & Sons (HUF) & Ors.

Vs.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Varun Kathuria, Learned Advocates
ORDER
Ld. Counsel for the appellant pointed out the following omissions /typographical errors as
occurred in the judgment dated 21st July, 2017:
(i) In the cause title of the judgment, in place of "Nikhil Mehta 86 Sons (HUF) 86 Ors. V. AMR
Infrastructures Limited" it has been wrongly typed as "Nikhil Mehta 86 Sons v. AMR Infrastructures
Limited".
(ii) Similarly, in the second last line of paragraph no.2 of the judgment, the name of the project has
been wrongly mentioned as "Kessel-I Valley, one Mall and One Home" instead of "Kessel-I Valley, I
Mall and I Homes".
(iii) It is also pointed out that in the second line of para 21 of the judgment it is wrongly typed as
"the amount deposited by "investors" including the appellants as has been shown as committed
return...." in place of "the amount to be paid to the "investors" including the appellants as committed
returns/assured returns has been shown as Commitment charges...".
We accordingly direct to read the cause title as "Nikhil Mehta & Sons (HUF) & Ors." in place
of "Nikhil Mehta 136 sons v. AMR Infrastructure Limited."
577
by Hon’ble NCLAT
It is also ordered to read "Kessel-I Valley, I Mall and I Homes" in place of "Kessel-I Valley,
one Mall and One Home" in the second last line of paragraph no. 2 of the judgement.
It is further ordered to read "the amount to be paid to the "investors" including the appellants as
committed returns/assured returns has been shown as Commitment charges..." in place of "the amount
deposited by "investors" including the appellants as has been shown as committed return...." in the
second line of para 21 of the judgment.
The Registry is directed to make necessary typographical corrections in the judgment dated 21st
July, 2017 as pointed out and ordered above. The judgment dated 21st July, 2017 stands corrected to the
extent above. Let corrected certified copy of the judgment be forwarded to the parties.
578
by Hon’ble NCLAT

NEW DELHI
C.P. (I.B.) No. 129/NCLAT/2017
Applicant: Schweitzer Systemtek India Pvt. Ltd.

Vs.
Respondent: Phoenix ARC Pvt. Ltd. & Ors.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Davesh Bhatia, Learned Advocates
For Respondents/Defendant: Mr. Rishab A. Chowdhary & Mr. Manaswi, Learned Advocates
ORDER
The Appellant-Corporate Applicant has challenged the order dated 3rd July, 2017 passed by Ld.
Adjudicating Authority (National Company Law Tribunal) Mumbai Bench, Mumbai in T.C.P. No. 1059 /
I86l3P/ NCLT/ MB / MAH / 2017, whereby and whereunder the application preferred by appellant under
Section 10 of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as "I&B Code") has
been admitted, an order of Moratorium has been passed and Insolvency Resolution Professional has been
ordered to be appointed.
2. The grievance of the appellant is that the movable and immovable property of Guarantor
(promoter) has been attached pursuant to Corporate Resolution Process initiated under section 10 against
the Appellant-Corporate Applicant. However, such statement has been disputed by the Ld. Counsel
appearing on behalf of 1St Respondent/ 'Financial Creditor'.
3. From the impugned order, we find that the Ld. Adjudicating Authority noticed the provision
relating to Moratorium (Sec.14) and clarified as to which property is to be attached, as apparent from the
observations and finding as quoted below:
8.1. On careful reading I have noticed that the term "its" is significant. The plain
language of the Section is that on the commencement of the Insolvency process
the 'Moratorium' shall be declared for prohibiting any action to recover or
579
by Hon’ble NCLAT
enforce any security interest created by the Corporate Debtor in respect of "its"
property. Relevant section which needs in-depth examination is Section 14 (1)
(c) of The Code.
There are recognised canons of interpretation. Language of the Statute

should be read as it existed. This is a trite law that no word can be added or
substituted or deleted from the enacted Code duly legislated. Every word is to be
read and interpreted as it exists in the statute with the natural meaning attached
to the word. Rather in this Section the language is so simple that there is no
scope even to supply casus omissue. I hasten to add that the doctrine of Noscitur
a Sociis' is somewhat applicable that the associated words take their meaning
from one another so that common sense meaning coupled together in their
cognate sense be interpreted. As a result, "its" denotes the property owned by
the Corporate Debtor. The property not owned by the Corporate Debtor do not
fall within the ambits of the Moratorium. Even Section 10 is confined to the
Book of the Accounts of the Corporate Debtor, due to the reason that Section
10(3) has specified that the Corporate Applicant shall furnish "its" Books of
Accounts. This Bench has no legislative authority to •expand the meaning of the
term "its" even under the umbrella of Musdern. generis'.
8.2 The outcome of this discussion is that the Moratorium shall prohibit the
action against the properties reflected in the Balance Sheet of the Corporate
Debtor. The Moratorium has no application on the properties beyond the
ownership of the Corporate Debtor. As a result, the Order of the Hon'ble Court
directing the Court Commissioner to take over the possession shall not fall
within the clutches of Moratorium. Even otherwise, the provisions of The
Securitisation and Reconstruction of Financial Assets and Enforcement of
Securities Interest Act, 2002 (the SARFAESI Act) may be having different
criteria for enforcement of recovery of outstanding debt, which is not the subject
matter of this Bench. Before I part with it is necessary to clarify my humble view
that The SARFAESI Act may come within the ambits of Moratorium if an action
is to foreclose or to recover or to create any interest in respect of the property
belonged to or owned by a Corporate Debtor, otherwise not.
9. To conclude the Application under Section 10 of The Code is hereby

"Admitted" subject to the exception as carved out supra. The consequential
580
by Hon’ble NCLAT
directions shall be that the provisions of Section 14 of The Code i.e.

"Moratorium" shall come into operation. Next, the proposed name of Interim
Resolution Professional i.e. (Page 4 name) is hereby approved. The IRP shall
take appropriate action such as Public Announcement etc. so that the Insolvency
Resolution Process shall be initiated expeditiously. He is directed to submit a
Progress Report within one month's time from the commencement of Insolvency
Resolution Process."
4. Similar question fell for consideration before this Appellate Tribunal in "Alpha & Omega
Diagnostics (India) Ltd. V. Asset Reconstruction Company of India Ltd. & Ors." in Company Appeal
(AT) (Insol.) No.116 of 2017 by judgment dated 31st July, 2017, this Appellate Tribunal while upheld
such findings, made following observations:-
"4. Ld. Counsel appearing on behalf of the Appellant submitted that the
appellant has grievance only relating to qualifying part of the impugned order
as quoted above. According to the appellant, the Moratorium should take into its
recourse on the subject matters and assets relating to its matters pending before
the Debt Recovery Tribunal (DRT) and under Securitisation and Reconstruction
of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI).
5. However, we are not inclined to accept such submissions as Appellant-

Corporate Applicant has sought for "its" own insolvency resolution process that
will include only the assets of the Corporate Debtor and not any assets, movable
or immovable of a third party, like any director or other. In so far as 'guarantor'
is concerned, we are not expressing any opinion, as they come within the
meaning of 'Corporate Debtor individually', as distinct from principal debtor
who has taken a loan.
6. In the aforesaid background, if Ld. Adjudicating Authority, on careful

reading of the provisions has come to the definite conclusion that on
commencement of the insolvency process the 'Moratorium" shall be declared for
prohibiting any action to recover or enforce any security interest created by the
'Corporate Debtor' in respect of "its" property, no ground is made out to
interfere with the said order."
5. At this stage, it will be desirable to refer to the relevant portion of Section 60 of the I&B Code, as
quoted below: -
581
by Hon’ble NCLAT
"60. Adjudicating Authority for corporate persons- (1) The Adjudicating

Authority, in relation to insolvency resolution and liquidation for corporate
persons including corporate debtors and personal guarantors thereof shall be
the National Company Law Tribunal having territorial jurisdiction over the
place where the registered office of the corporate person is located.
(2) Without prejudice to sub-section (1) and notwithstanding anything to the

contrary contained in this Code, where a corporate insolvency resolution
process or liquidation proceeding of a corporate debtor is pending before a
National Company Law Tribunal, an application relating to the insolvency
resolution or bankruptcy of a personal guarantor of such corporate debtor shall
be filed before such National Company Law Tribunal.
(3) An insolvency resolution process or bankruptcy proceeding of a personal

guarantor of the corporate debtor pending in any court or tribunal shall stand
transferred to the Adjudicating Authority dealing with insolvency resolution
process or liquidation proceeding of such corporate debtor.
(4) The National Company Law Tribunal shall be vested with all the powers of
the Debt Recovery Tribunal as contemplated under Part III of this Code for the
purpose of sub-section (2).
(5) Notwithstanding anything to the contrary contained in any other law for the
time being in force, the National Company Law Tribunal shall have jurisdiction
to entertain or dispose of—
(a) any application or proceeding by or against the corporate

debtor or corporate person;
(b) any claim made by or against the corporate debtor or corporate

person, including claims by or against any of its subsidiaries situated in
India; and
(c) any question of priorities or any question of law or facts, arising

out of or in relation to the insolvency resolution or liquidation
proceedings of the corporate debtor or corporate person under this Code.
(6) Notwithstanding anything contained in the Limitation Act, 1963 or in any

other law for the time being in force, in computing the period of limitation
582
by Hon’ble NCLAT
specified for any suit or application by or against a corporate debtor for which
an order of moratorium has been made under this Part, the period during which
such moratorium is in place shall be excluded".
6. In this respect one may also refer to Section 60 of the I&B Code, as per which under sub-section
(2) if Corporate Insolvency Resolution Process, or liquidation proceeding of a corporate debtor is pending
before the 'Adjudicating Authority', an application relating to the 'insolvency resolution' or 'bankruptcy' of
a personal guarantor required to be filed before the same Bench of Adjudicating. Authority, meaning
thereby, separate application for initiation of resolution process require to be filed against the guarantor
before the same very Bench of the Adjudicating Authority who is hearing the corporate resolution process
or liquidation proceeding against principal corporate debtor.
7. Sub-section (3) of Section 60 further makes it clear that if an insolvency resolution process or
bankruptcy proceeding of a personal guarantor of the corporate debtor is pending before any other court of
law or Tribunal, such as "Debt Recovery Tribunal", who is the Adjudicating Authority for the purpose of
Part-III- Insolvency Resolution and Bankruptcy for Individuals and Partnership Firms all those proceeding
shall also stand transferred to the Adjudicating Authority, dealing with insolvency resolution process or
liquidation proceeding of the Corporate Debtor.
8. Sub-section (5) of Section 60 further makes it clear that the Adjudicating Authority has
jurisdiction to entertain and dispose of an application or proceeding by or against the Corporate Debtor or
corporate person including any claim made by or against the Corporate Debtor or Corporate person,
including claims by or against any of its subsidiaries situated in India.
9. In view of the observations made above, the impugned order having passed by Ld. Adjudicating
Authority in accordance with law, we reject the prayer. The appeal is dismissed. However, in facts and
circumstances of the case, the parties shall bear the respective costs.
583
by Hon’ble NCLAT

NEW DELHI
C.P. (I.B.) No. 105/NCLAT/2017
Applicant: State Bank of India

Vs.
Respondent: S. Muthuraju & Ors.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Om Prakash & Mr. M. Anbalagan, Learned Advocates
For Respondents/Defendant: Mr. Krishnendu Datta, Ms. Pritha Srikumar Iyer, Mr. Nikhil Nayyar & Mr.
Dhananjay, Learned Advocates
ORDER
This appeal was preferred by State Bank of India (one of the financial creditor) against order dated 7th
July, 2017, which reads as follows:
"Mr. T. Saikrishnan, Applicant IRP present. Counsel for the Financial Creditor
i.e. State Bank of India present. Counsel for 2 and 3 promoters present. The
Application is disposed of in terms of the submissions that had been made by the
Counsel for financial Creditor that they are ready to cooperate with the IRP in
accordance with law. The assurance that has been given by the Counsel for
financial Creditor reflects that there is no resistance from the Financial
Creditor. However, the financial Creditor is directed to cooperate with the IRP
and provide necessary information as desired by IRP within the stipulated time.
The Financial Creditor shall also hand over possession of the assets under its
control. Accordingly, the petition is disposed of and the IRP is directed to
constitute a committee of the Creditors at the earliest."
On 26th July, 2017, the Appellate Tribunal taking into consideration the submissions made on
behalf of the appellant that the Interim Resolution Professional (IRP) is not recognizing that debt due is to
the appellant - Financial Creditor, State Bank of. India, passed the following order:
584
by Hon’ble NCLAT
"In the meantime, IRP will take into consideration the stand of the appellant -
State Bank of India; who claims to be 'Financial Creditor'. We may only observe
except in a decision with regard to the creditors, 'prima facie' it appears that the
Interim Resolution Professional has not been empowered to decide as to who is
creditor or not? The appellant will also provide all evidences to the IRP in
support of the claim, if not provided."
Shri Krishnendu Datta, learned counsel appearing for the Interim Resolution Professional (IRP)
submits that the appellant - State Bank of India is being treated as creditor subject to verification of the
quantum of debt due to the appellant. While, we record such statement made, we observe that we are not
deciding the issue whether IRP has power to decide the amount of debt due to one or other creditor or not.
IRP is required to act in accordance with the law. We further make it clear that if more than 30 days have
passed • after the appointment of Interim Resolution Professional, learned Adjudicating Authority will
take steps to appoint insolvency resolution professional, and, if so required, may allow the Interim
Insolvency Resolution Professional to function as Insolvency Resolution Professional.
In view stand taken by Interim Resolution Professional, the appellant is allowed to take part in the
meeting of creditors and to deliberate in accordance with law.
We further make it clear that we have not decided the issue as to whether the Financial Creditor -
State Bank of India, if taken over the possession of the land of the Corporate Debtor under the
SARFAESI Act, 2002 the said Financial. Creditor can be asked to hand over the possession of such land,
which may be decided by the learned Adjudicating Authority, if such question is raised by Insolvency
Resolution Professional or any Creditor or any other aggrieved person.
The appeal stands disposed of with the above observations.
585
by Hon’ble NCLAT

NEW DELHI
C.P. (I.B.) No. 114/NCLAT/2017
Applicant: Ved Cellulose Ltd.

Vs.
Respondent: Reliance Communication Finance Ltd. & anr.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. K.K. Dua, Learned Advocates
For Respondents/Defendant: Mr. Harsh Sinha, Mr. Abhishek Sharma, Mr. V. Seshagiri & Mr. Kumar
Rachit, Learned Advocates
ORDER
Shri K.K. Dua, General Manager of the Company - Ved Cellulose Ltd. appeared in person and
submits that the appellant company does not want to press the appeal the appellant having settled the
dispute with the respondents.
In view of such statement made by Shri K.K. Dua, the power of attorney holder, under whose
signature the appeal has been filed, we allow the appellant to withdraw the appeal, without expressing any
opinion on the question whether after admission of an application under Section 7, the parties can settle
the dispute.
We also record the statement made by the learned counsel appearing on behalf of the Financial
Creditor - Bank of India that no settlement has been reached with the Financial Creditor, who has already
filed its claim before the I.R.P.
In the circumstances, we allow the appellant to withdraw this appeal but without any liberty to
challenge the same very impugned order dated 30th June, 2017 before this Appellate Tribunal. Learned
Adjudicatory Authority may proceed in accordance with law.
The appeal is dismissed as withdrawn, with the aforesaid observations.
586
by Hon’ble NCLAT

NEW DELHI
C.P. (I.B.) No. 60/NCLAT/2017
Applicant: Asian Natural Resources (India) Limited

Vs.
Respondent: IDBI Bank Limited
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Arvind Kumar & Ms. Henna George, Learned Advocates
For Respondents/Defendant: Mr. Abhishek Anand, Learned Advocate
C.P. (I.B.) No. 62/NCLAT/2017
Applicant: Bhatia Global Trading Limited

Vs.
Respondent: IDBI Bank Limited
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Arvind Kumar & Ms. Henna George, Learned Advocates
For Respondents/Defendant: Mr. Abhishek Anand, Learned Advocate
ORDER
In both these appeals as similar question has been raised they were heard together and disposed of
by this common judgment.
2. Both the Appellant(s)-'Corporate Debtor (s)' have challenged similar Order (s), both dated 23rd
May 2017, passed by Adjudicating Authority (National Company Law Tribunal Ahmedabad Bench)
587
by Hon’ble NCLAT
(hereinafter referred to as Tribuunal) in C.P.(IB) No. 18/ 7/NCLT/Ahm 2017 and C.P. (IB) No.
19/7/NCLT/Ahm/2017, where whereunder the applications referred by Respondent Financial Creditor'
under Section 7 Insolvency & Bankruptcy Code, 2016 (hereinafter referred to as I&B Code) for initiation
of insolvency resolution process again Appellant (s)/ 'Corporate Debtors' have been admitted
Insolvency Resolution Professionals have been appointed and moratorium have been declared with
certain directions in terms of the I&B Code.
3. The Appellants have challenged the impugned orders both dated 23.5.2017 on the ground that
both the orders have been passed in violation of rules of natural justice, without giving any notice to any
of the Appellant (s)/ 'Corporate Debtors'.
4. According to Respondent, the aforesaid submission made on behalf of the Appellants is

misleading and contrary to the record. Notices in terms of sub-rule (3) of Rule 4 of the Insolvency 86
Bankruptcy (Application to Adjudicating Authority) Rules, 2016 (hereinafter referred to as Adjudicating
Authority Rules) were sent to Appellant -:Bhatia Global Trading Limited and Appellant - Asian Natural
Resources (India) Limited by Speed Post letter (s) both date 8th May 2017 which was duly served on the
said Appellant 9th May 2017 and Bhatia Global Trading Limited on 12th May 2017. Copies of the receipts
of the Speed Post(s) and 'delivery receipt (s) have been annexed with the reply. Ld. Counsel for the
Respondent also brought to our notice the order(s) both dated 12th May 2017 passed by the Ld
Adjudicating Authority wherein the Ld. Adjudicating Authority having noticed that nobody appeared on
behalf of the 'Corporate Debtors' and date of hearing had not been informed to 'Corporate Debtors',
directed to issue notice (s) of hearing to the respective 'Corporate Debtors', and the Respondent was
directed to file 'proof of service'. The Respondent, thereafter, sent notices to the Appellants by Speed Post
(s) both on 12th May 2017 (Annexure R-3 to the respective Appellants) intimating the Corporate Debtor
(s) order passed by Ld. Adjudicating Authority, Ahmedabad Bench with further intimation that the case
has been fixed. The report enclosed shows that the said notice (s) were received by the Appellants on 15th
May 2017.
5. In view of the records enclosed by the Respondent, we hold that the rules of natural justice was
followed before admitting the applications.
6. Next it was contended by Ld. Counsel for the Appellants' that the 'financial creditor', being a
party to the consortium of bankers and having signed Inter-se Agreement on 21.2.2009, Respondent-
'financial creditor' had waived its right in favour of the 'lead bank', namely, State Bank of India
(hereinafter referred to as SBI). Reliance has been placed on Inter-se Agreements dated 21.2.2009
588
by Hon’ble NCLAT
[Annexure A-3 - CA (AT) (Ins) 60/2017] and 17.3.2011 [Annexure A2-CA(AT)(Ins)62/2017]

respectively reached between SBI and 15th other banks, including Respondent-IDBI Bank, recognizing
one of the bank as 'Lead Bank' and other bank as second 'lead bank', relevant portion of one of which
reads as follows:-
"1. The Member Banks hereby recognise A bank as the Lead Bank and B Bank
as the second Lead Bank of the A Bank Consortium.
2. The Member Banks/Trustee hereby agree to able by the directions,

instructions and clarifications, as may be given from time to time by the Lead
Bank in consultation with second lead Bank in respect of any matters arising out
of or in relation to the Cash Credit Account (S) or other Account (S) opened by
the Borrower with the A Bank Consortium.
However, in respect of share in the enhancement of the/ additional/ adhoc limit,

the members' banks would be entitled/free to use their discretion.
3. Notwithstanding anything to the contrary in or arising out of or implied

by the said consortium Agreement and / or the Deed of Hypothecation and/ or
the Second Charge, it is hereby agreed, and declared by and between the said
Banks/ Trustee as follows:
(a) A Bank shall act as the Lead Bank of the A Bank Consortium and B
Bank as the second lead bank and all the Members shall act in the spirit of the
consortium and all decisions should, as far as possible, be arrived at
unanimously including those relating to sharing of ancillary business and
drawings under different Facilities sanctioned to the Borrower.
(b) The Members of the Consortium do hereby agree to execute in favour of

the Lead Bank and the second lead bank a power of attorney or other
authorisation as may be deemed approproate for constituting the Lead Bank and
the Second Lead Banks as their true and lawful attorneys for them, in their name
and on their behalf to do, execute and perform all acts, deeds and things as to
the Lead Bank and the second lead bank may deem appropriate, necessary or
expedient in the given circumstances as the leaders of the A Bank Consortium
and to take decisions for an on behalf of the Consortium to Communicate the
same in the general interest of the A Bank Consortium. The Member Banks do
589
by Hon’ble NCLAT
hereby agree to ratify and confirm whatever all acts, deeds and things lawfully
and bonafide done, taken or effected by the lead bank and second lead bank as
such attorney in exercise of the powers, authorities and liberties hereby
conferred upon, under and by virtue of this Agreement".
7. Apart from that the Inter-se Agreement between different banks is not binding in nature, the
'Corporate Debtors' not being signatories cannot derive advantage of such Inter-se Agreement. This apart,
the 'financial creditors' having right to file application under Section 7 of the I&B Code, individually or
jointly on behalf of other 'financial creditors' as quoted below, the Inter-se Agreement between the
'financial creditors' cannot override the said provision, nor can take away the right of any Financial
Institution to file application under Section 7 of the I&B Code:-
"Initiation of corporate insolvency resolution process by financial creditor - 7.

(1) A financial creditor either by itself or jointly with other financial creditors
occurred
Explanation-For the purpose of this sub-section, a default includes a default in

respect of a financial debt owed not only to the applicant financial creditor but
to any financial creditor of the corporate debtor.
(2) xxxxx"
8. For the reasons aforesaid, while we reject the submission made on behalf of the appellants, in
absence of any merit, dismiss both the Appeals. However, in the facts and circumstances of the case, there
590
by Hon’ble NCLAT

NEW DELHI
C.P. (I.B.) No. 44/NCLAT/2017
Applicant: Neelkanth Township and Construction Pvt. Ltd.

Vs.
Respondent: Urban Infrastructure Trustees Limited
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Dr. U.K. Chaudhary, Mr. Kush Chaturvedi, Ms. Anshula Grover, Ms.
Chaitrika Pathi, Mr. Aman Uarma, Mr. Saket Mone & Mr. Himanshu Vij, Learned Advocates
For Respondents/Defendant: Mr. Jaideep Gupta, Mr. Arif Doctor, Ms. Surekharaman & Mr. Anuj
Sharma, Learned Advocates
ORDER
This appeal has been preferred by Appellant/ Corporate Debtor against order dated 21st April
2017 passed by Learned Adjudicating Authority, (National Company Law Tribunal), Mumbai Bench,
Mumbai, in C.P.No. 69/I86BP/NCLT/MAH/2017. By the impugned order Learned Adjudicating
Authority entertained the application preferred by the Respondent-Financial Creditor under Section 7 of
the Insolvency & Bankruptcy Code, 2016 (hereinafter referred to as 'I&B Code'), admitted the application
and ordered moratorium with further order to appoint an Insolvency Resolution Professional and passed
consequential directions.
2. Learned Counsel for the Appellant-Corporate Debtor assailed the impugned order mainly on the
following grounds:-
(i) The application filed by Respondent under Section 7 is defective and not complete as it was not
accompanying the documents, as mandated by sub-section (3) of Section 7 of the 'I & B Code'.
(ii) The application under section 7 is time barred, as the debt claimed related to the years 2011, 2012
and 2013.
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(iii) That the 'default of debt' as claimed by Respondent has not been admitted by the Corporate
Debtor and
(iv) That the Respondent is not a 'Financial Creditor', but an Investor.
3. Learned counsel for the appellant submitted that an application by a 'Financial Creditor' under
Section 7 can only be filed when it is furnished with the documents provided under sub-section (3) of
Section 7 and none other, namely (a) a record of the default as recorded with the information utility (b)
Such other record or evidence of default as may be specified.
4. The expression "such other record of evidence of default" as may be specified can only be such
record or evidence as is specified by the Insolvency and Bankruptcy Board of India (hereinafter referred
to as "the Board") under sub-section 2(f) of Section 240 of 'I & B Code'. Reliance was also placed on
definition of the word "specified" as defined under Section 3(32) of the 1&B Code'.
5. Learned counsel for the appellant placed reliance on decision of this Appellate Tribunal in "Smart
Timing Steel Limited Vs. National Steel & Agro Industries Ltd." - Company Appeal (AT)(Ins.) No. 28 of
2017 to suggest that the provision of sub-section 3(a) of Section 7 is mandatory.
6. It was also submitted that it was the duty of the Insolvency and Bankruptcy Board of India (In
short "Board") to specify Regulations and in absence of the same the proceeding under Section 7 of 'I & B
Code' cannot be initiated.
7. In support of the second contention it was submitted that the time barred debt cannot be enforced
by filing an application for Corporate Insolvency Resolution Process. The claim of the 'Financial
Creditor', is completely time barred as the debenture certificates were due for redemption as far back as in
the years 2011, 2012 and 2013 respectively. Consequently, the application filed by the 'Financial Creditor'
in the year 2017 is hopelessly time barred.
8. It was next submitted that the respondent does not come within the meaning of "Financial
Creditor" as defined in sub-section (7) read with subsection (8) of Section 5 of the 'I&B code'. No
'financial debt' is owed to the Respondent.
9. Counsel for the Appellant further submitted that 'Debenture Certificates' forming basis of claim of
the Respondent do not fall within the definition of 'financial debt' as provided under sub-section (8) of
Section 5 of the I&B Code'. A plain reading of the definition of 'financial debt' makes it apparent that it is
the debt which is only if disbursed against the consideration for time value of money. Therefore, there has
to be a consideration flowing from the advance of money which is at par with the time value of money.
Since the 'debenture certificates' issued to the Respondent were carrying zero interest and another was
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carrying only one percent interest, the same were not issued against consideration for time value of
money, as envisaged under sub-section (8) of Section 5. The debenture certificates were purchased by
Respondent only by way of an investment, and do not come within the meaning of 'financial debt'.
10. Learned Counsel for the appellant also placed reliance on definition of "debt" as defined under
sub-section (11) of Section 3 of the 'I&B Code'. It was further contended that there is pendency of
proceedings between the parties as the 'Financial Creditor' has already invoked arbitration against the
'Corporate Debtor' for the same cause of action which is an admitted fact.
11. In reply Learned Counsel appearing on behalf of the respondent submitted that in absence of the
Regulations framed by the Board, the statutes (I&B Code) cannot be made ineffective, having come into
force since 15th December 2016. Reliance was also placed on Insolvency and Bankruptcy (Adjudicating
Authority Rules, 2016) (hereinafter referred to as Adjudicatory Rules) framed by the Central
Government, under section 239 of the I&B Code'.
12. Learned Counsel for the respondent submitted that the Balance Sheet of 'Corporate Debtor' was
noticed by Learned Adjudicating Authority, before admitting the case. Reliance was also placed on
Regulation 8(2) and 'Form-C' of Insolvency and Bankruptcy Board of India (Insolvency Resolution
Process for Corporate Persons) Regulations 2016 (hereinafter referred to 'Corporate Person'), Regulation
2016.
13. The question to be determined is whether in absence of record of default as recorded with the
information utility or any other "record or evidence of default" specified by the Board, an application
under Section 7 is maintainable or not?
14. Process of initiation of Insolvency Resolution process by a financial creditor is provided in

Section 7 of the I&B Code. As per sub-section (1) of Section 7 of the I&B Code, the trigger for filing of an
application by a financial creditor before the Adjudicating Authority is when a default in respect of any
financial debt has occurred. Sub-section (2) of Section 7 provides that the financial creditor shall make an
application in prescribed form and manner and with prescribed documents, including "record of the
default" recorded with the information utility or such other record or evidence of default as may be
specified"
15. Once the application is filed by the 'Financial Creditor' with the Adjudicating Authority, the
Adjudicating Authority, within 14 days of the receipt of the application under sub-section (2) of Section 8
required to ascertain the existence of default from the records of an information utility or on the basis of
other evidence furnished by the Financial creditor' under subsection (3)(a) of Section 7.
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16. 'Financial Creditor' along with the application required to be furnished information and other facts
as prescribed under sub-section (3) of Section 7. Where the Adjudicating Authority is satisfied that a
default has occurred and the application under sub-section (2) is complete, and there are no disciplinary
proceedings pending against the proposed resolution professional, it can admit such application and in
case the application is incomplete, required to provide 7 days' time to complete the record and on failure
is to dismiss the application.
17. The aforesaid facts are to be considered from the procedure for initiation of corporate insolvency
resolution process by 'financial creditor' as mandated under Section 7 of 'I&B Code', and quoted below:-
"7. (1) A financial creditor either by itself or jointly with other financial
creditors may file an application for initiating corporate insolvency resolution
process against a corporate debtor before the Adjudicating Authority when a
Explanation. —For the purposes of this sub-section, a default includes a default

in respect of a financial debt owed not only to the applicant financial creditor
but to any other financial creditor of the corporate debtor.
(2) The financial creditor shall make an application under subsection (1) in such
(a) record of the default recorded with the information utility or such other

application under sub-section (2), ascertain the existence of a default from the
(5) Where the Adjudicating Authority is satisfied that—
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(a) a default has occurred and the application under subsection (2) is complete,
and there is no disciplinary proceedings pending against the proposed
resolution professional, it may, by order, admit such application; or
(b) default has not occurred or the application under sub-

section (2) is incomplete or any disciplinary proceeding is pending against the
proposed resolution professional, it may, by order, reject such application:
Provided that the Adjudicating Authority shall, before rejecting

the application under clause (b) of sub-section (5), give a notice to the applicant
to rectify the defect in his application within seven days of receipt of such notice
(6) The corporate insolvency resolution process shall commence from the date
of admission of the application under sub-section (5).
(a) the order under clause (a) of sub-section (5) to the financial creditor and the
corporate debtor;
(b) the order under clause (b) of sub-section (5) to the financial creditor, within
seven days of admission or rejection of such application, as the case may be."
18. It is well settled that rules of procedure are to be construed not to frustrate or obstruct the process
of adjudication under the substantive provisions of law. A procedural provision cannot override or affect
the substantive obligation of the adjudicating authority to deal with applications under Section 7 merely
on the ground that Board has not stipulated or framed
Regulations with regard to sub-section 3(a) of Section 7. The language of Section 240, whereby Board
have been empowered to frame regulations is clear that the said regulation should be consistent with the
'I&B' Code and the rules made thereunder by the Central Government.
19. In exercise of power conferred by Section 239 read with Sections 7, 8, 9 and 10 of the 'I 8a B
code, the Central Government framed the rules known as "Insolvency 86 Bankruptcy (Application to
Adjudicating Authority) Rules, 2016 (hereinafter referred to as 'Adjudicating Authority Rules, 2016). As
per Rule 41, a 'Financial Creditor' required to apply itself or jointly in an application under Section 7 in
terms of Form-1 attached thereto. Part V of Form-1 deals with particulars of 'Financial Debt' (documents,
record and evidence of default), as quoted below: -
PART V
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PARTICULARS OF FINANCIAL DEBT [ DOCUMENTS,

RECORDS AND EVIDENCE OF DEFAULT]



ANY (ATTACH A COPY OF SUCH RECORD)
4. DETAILS OF SUCCESSION CERTIFICATE, OR PROBATE OF A

WILL, OR LETTER OF ADMINISTRATION, OR COURT DECREE
(AS MAY BE APPLICABLE), UNDER THE INDIAN SUCCESSION
ACT, 1925 (10 OF 1925) (ATTACH A COPY)
5. THE LATEST AND COMPLETE COPY OF THE FINANCIAL

CONTRACT REFLECTING ALL AMENDMENTS AND WAIVERS TO
DATE (ATTACH A COPY
6. A RECORD OF DEFAULT AS AVAILABLE WITH ANY CREDIT

INFORMATION COMPANY (ATTACH A COPY)
7. COPIES OF ENTIRES IN A BANKERS BOOK IN ACCORDANCE

WITH THE BANKERS BOOKS EVIDENCE ACT, 1891 (18 OF 1891)
8. LIST OF OTHER DOCUMENTS ATTACHED TO THIS APPLICATION

IN ORDER TO PROVE THE EXISTENCE OF OPERATIONAL DEBT
AND THE AMOUNT IN DEFAULT"
20. The rules framed by the Central Government under Section 239 having prescribed the documents,
record and evidence of default as noticed above, we hold that in absence of regulation framed by the
Board relating to record of default recorded with the information utility or other record of evidence of
default specified, "the documents", 'record' and 'evidence of default' prescribed at Part V of Form-1, of the
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Adjudicatory Rules 2016 will hold good to decide the default of debt for the purpose of Section 7 of the
'I&B Code'.
21. We further hold that the 'Regulations framed by the Board' being subject to the provisions of 'I&B
Code' and rules framed by the Central Government under Section 239, 'Part V of Form - 1' of
Adjudicating Authority Rules, 2016 framed by Central Government relating to 'documents', 'record' and
'evidence of default', will override the regulations, if framed by the Board and if inconsistent with the
Rule. However, it is always open to Board to prescribe additional records in support of default of debt,
such as records of default recorded with the information utility or such other record or evidence of default
in addition to the records as mentioned in Part V of Form-I.
22. At this stage, it is pertinent to note that the Board has also framed Insolvency Resolution Process
for Corporate Persons, Regulations, 2016 ('Corporate Persons Regulation' for short). It has come into
force since Notification dated 30th November 2016 was issued. Regulation 8 of 'Corporate Persons
Regulation', 2016 relate to claims by 'Financial Creditor'. Regulation 11(2) relates to existence of debt due
to 'Financial Creditor', which is to be proved on the basis documents mentioned therein and quoted below:
-
"8. Claims by financial creditors.
(1) A person claiming to be a financial creditor of the corporate debtor

shall submit proof of claim to the interim resolution professional in electronic
form in Form C of the Schedule:
Provided that such person may submit supplementary documents or

clarifications in support of the claim before the constitution of the committee.
(2) The existence of debt due to the financial creditor may be proved on the
basis of -
(i) a financial contract supported by financial statements as evidence of the

debt;
(ii) a record evidencing that the amounts committed by the financial creditor to
the corporate debtor under a facility has been drawn by the corporate debtor;
(iii) financial statements showing that the debt has not been repaid; or
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(iv) an order of a court or tribunal that has adjudicated upon the non-payment
of a debt, if any."
23. 'Form - C' attached to the Regulation relates to proof of claim of 'Financial Creditor' whereunder
at Serial No. 10, the 'Financial Creditor' is supposed to refer the list of documents in proof of claim in
order to prove the existence and non-payment of claim dues to the 'Operational Creditor'.
Therefore, the stand of the appellant that the Board has not framed any Regulations, relating to
clause (a) of sub-section (3) of Section 7, cannot be accepted.
24. The next ground taken on behalf of the appellant is that the claim of the respondent is barred by
limitation, as the Debentures were matured between the year 2011 - 2013 is not based on Law. There is
nothing on the record that Limitation Act, 2013 is applicable to I&B Code. Learned Counsel for the
appellant also failed to lay hand on any of the provision of I&B Code to suggest that the Law of
Limitation Act, 1963 is applicable. The I&B Code, 2016 is not an Act for recovery of money claim, it
relates to initiation of Corporate Insolvency Resolution Process. If there is a debt which includes interest
and there is default of debt and having continuous course of action, the argument that the claim of money
by Respondent is barred by Limitation cannot be accepted.
25. Next question arises is whether the respondent come within the meaning of 'Financial Creditor' or
not.
26. For determination of the aforesaid issue, it is desirable to notice meaning of 'Financial Creditor',
as defined in sub-section (7) of Section 5 of 'I&B Code', and quoted hereunder: -
"(7) 'financial creditor" means any person to whom a financial debt is owed and
includes a person to whom such debt has been legally assigned or transferred
to"
27. 'Financial Debt' means a debt along with interest, if any, which is disbursed against the
consideration of time value and money as defined in subsection (8) of Section 5, as quoted below:-
"Sec.5. Definitions - In this Part, unless the context otherwise requires, --
xxx xxx xxx
(8) 'financial debt" means a debt alongwith interest, if any, which is disbursed
against the consideration for the time value of money and includes—
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(b) any amount raised by acceptance under any acceptance credit facility or
its de-materialised equivalent;
(c) any amount raised pursuant to any note purchase facility or the issue of
bonds, notes, debentures, loan stock or any similar instrument;
(d) the amount of any liability in respect of any lease or hire purchase
contract which is deemed as a finance or capital lease under the Indian
Accounting Standards or such other accounting standards as may be prescribed;

nonrecourse basis;
(f) any amount raised under any other transaction, including any forward
sale or purchase agreement, having the commercial effect of a borrowing;
(g) any derivative transaction entered into in connection with protection

against or benefit from fluctuation in any rate or price and for calculating the
value of any derivative transaction, only the market value of such transaction
shall be taken into account;
(h) any counter-indemnity obligation in respect of a guarantee, indemnity,

bond, documentary letter of credit or any other instrument issued by a bank or
financial institution;

indemnity for any of the items referred to in sub-clauses (a) to (h) of this
clause."
28. Clause (c) of sub-section (8) of Section 5 deals with any amount raised pursuant to any note
purchase facility or the issue of bonds, notes, debentures, loan stock or any similar instrument.
29. From the aforesaid provision, we find that the debentures come within the meaning of 'Financial
Debt' as defined in Clause (c) of sub-section (8) of Section 5.
30. 'Debt' is defined in sub-section (11) of Section 3 means:
"(11) "debt" means a liability or obligation in respect of a claim which is due

from any person and includes a financial debt and operational debt"
31. It is admitted that the appellant is debenture holder. The Respondent-'Corporate Debtor' also
pleaded that the appellant is Investor. From the relevant facts as we noticed above, we find that the
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Respondent- 'Corporate Debtor has a liability and obligation in respect of amount which is due to the
debenture holder from the 'Corporate Debtor', including 'Financial Debt' i.e the amount due on maturity of
debentures.
32. The 'default' means non-payment of debt as defined in sub-section 12 of Section 3, as below: -
"(12) "default" means non-payment of debt when whole or any part or

instalment of the amount of debt has become due and payable and is not repaid
by the debtor or the corporate debtor, as the case may be"
33. The fact as pleaded and not disputed by Respondent - 'Corporate Debtor' that the 'debenture
holder' (Appellant) and amount matured in the year 2011, 2012 and 2013 has not been paid. Thus, we find
There is a default as defined under section 3(12) of the I&B Code.
The 'Corporate Debtor' had a liability and obligation in respect of claim of respondent which
includes the 'Financial Debt', including those come within clause (c) of sub-section (8) of Section 5. As
per the agreement, the same was liable to be paid from the date of maturity along with interest, if any and
the same having not paid, the default of debt is apparent.
34. This apart we find that the amount of debt and interest, as shown by appellant was to be disbursed
against consideration for time value of the money. Therefore, it cannot be stated that debentures on
maturity do not come within the purview of amount payable against the consideration for the time value
of the money.
35. In the aforesaid background, the Learned Adjudicating Authority having admitted the application
under Section 7, the application being complete, no interference is called for.
36. In absence of any merit the appeal is dismissed. However, in the facts and circumstances, there
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NEW DELHI
C.P. (I.B.) No. 64/NCLAT/2017
Applicant: Wanbury Ltd.

Vs.
Respondent: Panacea Biotech Ltd.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Ms. Purti Marwaha Gupta, Learned Advocate
For Respondents/Defendant: Mr. N.P.S. Chawla & Ms. Vaishnavi Rao, Learned Advocates
ORDER
A petition under section 433 of the companies Act, 1956 was filed by the Appellant against
Respondent before the Punjab & Haryana High Court in terms of notification of the Central Government
dated 7th December 2016. The case was transferred from the High Court to the Ld. Adjudicating
Authority (National Company Law Tribunal), Chandigarh Bench. The case was stated to be an
application under section 9 of the Insolvency & Bankruptcy Code, 2016 (hereinafter referred to as I&B
Code).
2. Before admission of the case, the Respondent-'corporate debtor' paid the principal amount and
statisfied the Appellant. The Appellant claimed that as 'operational creditor' he is entitled to interest. Ld.
Adjudicating Authority by impugned order dated 18th April, 2017 in C.P. No. 8 of 2016 having noticed
the principal amount been paid and there is no provision to pay interest and the document of banks which
was shown by the Appellant for claiming interest was applicable in the matter, rejected the claim of
payment of interest as the amount due having paid, closed the matter.
3. On 10th August, 2017, when the case was taken up, the matter was discussed and parties
informed that they may settle the dispute. Ld. Counsel for the 'corporate debtor' informed that through the
Appellant is 'operational creditor', is not entitled for any interest under the law but in view of some delay
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to make payment, an approximate sum of Rs. 1.5 lacs will be paid. On such submission, the case was
adjourned for the day.
4. Ld. Counsel for the Appellant handed over a cheque bearing No. 712439 dated 10th August, 2017
drawn on Axis Bank for Rs. 1,55,200/- (Rupees One lakh fifty-five thousand two hundred only) to Ms.
Purti Marwaha Gupta, Ld. Counsel appearing on behalf of the Appellant for onward transmission to the
Appellant. She submitted that the Appellant will not make any further claim towards the 'terms' pursuant
to the settlement of the claim. In view of the stand taken by the Respondent and the satisfaction shown on
behalf of the Appellant, no further order be passed. However, if the cheque is not encashed or get
bounced, in that case it will be open to the Appellant to bring the fact to the notice of this Appellate
Tribunal for passing a final appropriate order. The appeal stands disposed of in view of the observation
above. No cost.
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NEW DELHI
C.P. (I.B.) No. 86/NCLAT/2017
Applicant: Origin Foods Ltd.

Vs.
Respondent: Axis Bank Ltd. & Anr.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Rahul Malhotra, Learned Advocate
For Respondents/Defendant: Mr. Sanjay Bhatt & Mr. Davesh Bhatia, Learned Advocates
ORDER
Ld. Counsel appearing on behalf of 2nd Respondent Pudumjee Pulp 85 Paper Mills Limited
submits that said respondent intends to file an application before the Adjudicating Authority, Chennai
Bench, to withdraw him as applicant from the application treated under section 7 of the Insolvency and
Bankruptcy Code,2016.
2. On his prayer, we allow the 2nd Respondent to file a petition for withdrawal of the application.
The Adjudicating Authority, Chennai Bench in its turn will allow .the applicant and dispose of the
application as withdrawn and close the proceeding.
3. However, withdrawal of the application under section 7 wherein the 2nd Respondent has been
imposed as applicant will not come in the way of 2nd Respondent to move before any appropriate forum
for appropriate relief, including application for initiation of Insolvency Resolution Process against a
Corporate Debtor, if there is default of debt and the 2nd Respondent comes within the meaning of
'Financial Creditor' or 'Operational Creditor' or 'Corporate Applicant' and fulfil other eligibility criteria as
per law. The appellant in such case has right to contest and raise all the questions raised before the
Adjudicating Authority and this Appellate Tribunal.
4. The appeal stands disposed of with aforesaid observations and directions. However, there shall be
no order as to cost.
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NEW DELHI
C.P. (I.B.) No. 89/NCLAT/2017
Applicant: Prowess International Pvt. Ltd.

Vs.
Respondent: Parker Hannifin India Pvt. Ltd.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Akhilesh Shrivastava, Learned Advocate
ORDER
The Respondent- Parker Hannifin India Pvt. Ltd. 'Operational Creditor' preferred an application
under Section 9 of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to' as "I&B Code") for
initiation of 'Corporate Insolvency Resolution Process' before the National Company Law Tribunal
(hereinafter referred to as "Adjudicating Authority"), Kolkata Bench. The Adjudicating Authority by
order dated 20th April, 2017 admitted the application and initiated the 'Corporate Insolvency Resolution
Process'. Ordered for publication of notice in the newspaper and declared Moratorium.
2. The appellant-'Corporate Debtor' having come to know of order passed by Adjudicating

Authority, settled the dispute with the 'Operational Creditor' and other Creditors who applied pursuant to
notice and filed an Interlocutory Application for withdrawal of the petition. By impugned order dated
29th May, 2017, the Adjudicating Authority rejected the application on the ground that after admission of
an application, petition for withdrawal cannot be entertained.
3. Ld. Counsel appearing on behalf of the appellant submits that the application was admitted on
20th April, 2017, without notice to the appellant-Corporate Debtor'. Subsequently, having come to know
of the same, the amount claimed by 'Operational Creditor' and other Creditors has already been paid and
claims of all the Creditors have been satisfied; in that view of the matter, the Adjudicating Authority
ought to have allowed the appellant to withdraw the application.
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4. Notice was issued on respondent and the 'Insolvency Resolution Professional'. In spite of service
of notice, the Respondent- 'Operational Creditor' has not appeared and not disputed the stand taken by
appellant.
5. Mr. Arun Kumar Gupta, Chartered Accountant, 'Insolvency Resolution Professional' is present in
person and filed an affidavit wherein following statement has been made: -
"2. That in terms of Section 15 of the Code and as required under Regulation
6(2)(b)(i) of the Insolvency and Bankruptcy Board of India (Insolvency
Resolution Process for Corporate persons) Regulations, 2016, and also per
direction of the Hon'ble Bench vide its order passed on 20.4.17, a public
announcement was issued in two newspapers in the state of Jharkhand where the
Registered Office of the Corporate Debtor is situated. The public announcement
were issued in the Jamshedpur editions of The Telegraph (English) and
Chamakta Aaina (Hindi) on 26.4.17. A copy of the public announcement as
published in both the newspapers are annexed hereto and collectively marked as
Annexure - B.
3. That in terms of Section 15 of the Code and as required under Regulation

6(2)(b)(iii) of the Insolvency and Bankruptcy Board of India (Insolvency
Resolution Process for Corporate Persons) Regulations, 2016, the same public
announcement was also uploaded on the website of the Insolvency and
Bankruptcy Board of India (IBBI).
4. That the last date for submission of claims was 4, 5, 17 per the Public
Announcement. As per Regulations, a creditor, who failed to submit proof of
claim within the time stipulated in the public announcement, may submit such
proof to the Interim Resolution Professional or the Resolution Professional, as
the case may be, till the approval of a resolution plan by the committee.
That pursuant to the public announcement, claims from only 2 creditors have
been received till date as per details given below-
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SL. NAME OF CONTACT PERSON CATEGORY SECURITY AMOUNT Date

NO. CREDITO R CREATED CLAIMED Claim
(Rs.) ed
1 Punjab Preeti Jha, Chief Financial Fixed 2,87,55,64 Email

National Bank, Manager, Creditor- Deposit of 9/- on
Bistupur bo02254@pnb.co.in Cash 1,85,10,50 5/-, Block 4.5.1 7
Credit
Branch, Account assets including •

Jamshedp ur Leasehold factory
Account Number- land
02250031
71160
2 Punjab Preeti Jha, Chief Financial Cash 54,71,127/- Email
National Bank, Manager, Creditor- margin of on
Bistupur bo02254@pnb.co.in Bank 100%- 4.5.1 7
Guarantee 54,71,127/-
Branch, Block
Jamshedp ur assets including
Account Number- Leasehold factory
02250031 land
71160
3 Parker Hannifin Priti Baria, Operational None 45,73,250/ Email
Company Creditor- of
India Pvt. Ltd. Secretary, - Applicant 8.5.1 7
priti.baria@parker.
Com
6. That the meetings of the Committee of Creditors, consisting solely of Punjab

National Bank were held on 6.5.17 and 12.7.17 respectively.
7. That progress reports were submitted by me before the Hon'ble National

Company Law Tribunal, Kolkata Bench, Kolkata as per below details -
1st Progress Report on 28.4.17 and 4th Progress Report on 23.6.17."
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6. 'Insolvency Resolution Professional' submits that the claim amount of all the creditors have been
paid. The Punjab National Bank has not declared their account as Non-Performing Asset (NPA) account
and the account is standard account from where payment is made.
7. As per Rule 8 of the I&B Code (Application to Adjudicating Authority) Rules 2016, the
Adjudicating Authority may permit withdrawal of the application on the request of the applicant before its
admission. Tribunal has no power to allow any applicant or any other person to withdraw the application
after admission, as apparent from Rule 8. and quoted below:
"8. Withdrawal of application- The Adjudicating Authority may permit withdrawal of the
application made under rules 4, 6 or 7, as the case may be, on a request made by the
applicant before its admission."
8. In the aforesaid circumstances, Ld. Adjudicating Authority having refused the applicant- Parker
Hannifin India Pvt. Ltd. to withdraw the application after admission of the same, no interference is called
for in absence of any illegality.
9. In so far as the order dated 20th April, 2017 by which the application under section 9 was
admitted is concerned, we are not deciding the question of legality and proprietary of the said order
having not challenged. However, we have noticed the submissions made on behalf of the appellant and
not disputed by the respondent that order dated 20th April, 2017 has been passed in violation of Rules of
natural justice without notice to the 'Corporate Debtor'. This is also clear from the order dated 20th April,
2017, wherein the appearance of the applicant/ respondent has been recorded but no reference of the
appearance of the 'Corporate Debtor' has been made by the Adjudicating Authority.
10. If the order dated 20th April, 2017, would have been challenged by the appellant, it was open to
this Appellate Tribunal to set aside the order dated 20th April, 2017 and then to permit the 'Operational
Creditor' to withdraw the application, in view of settlement. In the present case as the order of admission
is not under challenge and the application cannot be withdrawn, we cannot grant the relief as sought for by
the appellant.
11. However, we make it clear that the 'Corporate Insolvency Resolution Process' starts with
admission of an application under sections 7 or 9 or 10 of the I&B Code and comes to an end if resolution
plan is approved under sub-section (1) of Section 31 and if not approved after completion of liquidation
proceeding. As per the procedure, a Committee of Creditors is to be formed under section 21, which reads
as follows:
"21. Committee of creditors. — (1) The interim resolution professional shall

after collation of all claims received against the corporate debtor and
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determination of the financial position of the corporate debtor, constitute a

committee of creditors.
(2) The committee of creditors shall comprise all financial creditors of the
corporate debtor:
Provided that a related party to whom a corporate debtor owes a

financial debt shall not have any right of representation, participation or voting
in a meeting of the committee of creditors. Personnel to extend cooperation to
interim resolution professional. Management of operations of corporate debtor
as going concern. Committee of creditors.
(3) Where the corporate debtor owes financial debts to two or more financial
creditors as part of a consortium or agreement, each such financial creditor
shall be part of the committee of creditors and their voting share shall be
determined on the basis of the financial debts owed to them.
(4) Where any person is a financial creditor as well as an operational creditor,

—
(a) such person shall be a financial creditor to the extent of the financial
debt owed by the corporate debtor, and shall be included in the
committee of creditors, with voting share proportionate to the extent of
financial debts owed to such creditor;
(b) such person shall be considered to be an operational creditor to the

extent of the operational debt owed by the corporate debtor to such
creditor.
(5) Where an operational creditor has assigned or legally transferred any

operational debt to a financial creditor, the assignee or transferee shall be
considered as an operational creditor to the extent of such assignment or legal
transfer.
(6) Where the terms of the financial debt extended as part of a consortium
arrangement or syndicated facility or issued as securities provide for a single
trustee or agent to act for all financial creditors, each financial creditor may—
(a) authorise the trustee or agent to act on his behalf in the committee of
creditors to the extent of his voting share;
608
by Hon’ble NCLAT
(b) represent himself in the committee of creditors to the extent of his

voting share;
(c) appoint an insolvency professional (other than the resolution

professional) at his own cost to represent himself in the committee of
creditors to the extent of his voting share; or
(d) exercise his right to vote to the extent of his voting, share with one or
more financial creditors jointly or severally.
(7) The Board may specify the manner of determining the voting share in respect
of financial debts issued as securities under sub-section (6).
(8) All decisions of the committee of creditors shall be taken by a vote of not less
than seventy-five per cent. of voting share of the financial creditors:
Provided that where a corporate debtor does not have any financial
creditors, the committee of creditors shall be constituted and comprise of such
persons to exercise such functions in such manner as may be specified by the
Board.
(9) The committee of creditors shall have the right to require the resolution
professional to furnish any financial information in relation to the corporate
debtor at any time during the corporate insolvency resolution process.
(10) The resolution professional shall make available any financial information
so required by the committee of creditors under sub-section (9) within a period
of seven days of such requisition."
12. It should be followed by meeting of Committee of Creditors under section 24 for the purpose as
mentioned therein and quoted below:--
"24. Meeting of Committee of Creditors. — (1) The members of the committee of

creditors may meet in person or by such electronic means as may be specified.
(2) All meetings of the committee of creditors shall be conducted by the

(3) The resolution professional shall give notice of each meeting of the
committee of creditors to—
(a) members of Committee of creditors;
609
by Hon’ble NCLAT
(b) members of the suspended Board of Directors or the partners of the

corporate persons, as the case may be;
(c) operational creditors or their representatives if the amount of their

aggregate dues is not less than ten per cent. of the debt.
(4) The directors, partners and one representative of operational creditors, as

referred to in sub-section (3), may attend the meetings of committee of creditors,
but shall not have any right to vote in such meetings:
Provided that the absence of any such director, partner or

representative of operational creditors, as the case may be, shall not invalidate
proceedings of such meeting.
(5) Any creditor who is a member of the committee of creditors may appoint an
insolvency professional other than the resolution professional to represent such
creditor in a meeting of the committee of creditors:
Provided that the fees payable to such insolvency professional

representing any individual creditor will be borne by such creditor. Resolution
professional to conduct corporate insolvency resolution process. Meeting of
committee of creditors.
(6) Each creditor shall vote in accordance with the voting share assigned to him
based on the financial debts owed to such creditor.
(7) The resolution professional shall determine the voting share to be assigned
to each creditor in the manner specified by the Board.
(8) The meetings of the committee of creditors shall be conducted in such

manner as may be specified."
13. In the meantime, Interim Resolution Professional is required to perform duties in terms of Section
23 and to protect and preserve the assets of the 'Corporate Debtor' under Section 25.
14. After collection of all the materials, the Committee of Creditors are required to submit a
resolution plan to the Resolution Professional on the basis of information memorandum as per Section 30,
as quoted below: -
610
by Hon’ble NCLAT
"30. Submission of resolution plan. - (1) A resolution applicant may submit a

resolution plan to the resolution professional prepared on the basis of the
information memorandum.
(2) The resolution professional shall examine each resolution plan received by
him to confirm that each resolution plan—
(a) provides for the payment of insolvency resolution process costs in a

manner specified by the Board in priority to the repayment of other
debts of the corporate debtor;
(b) provides for the repayment of the debts of operational creditors in

such manner as may be specified by the Board which shall not be less
than the amount to be paid to the operational creditors in the event of a
liquidation of the corporate debtor under section 53;
(c) provides for the management of the affairs of the Corporate debtor
after approval of the resolution plan;
(d) the implementation and supervision of the resolution plan;
(e) does not contravene any of the provisions of the law for the time
being in force;
(f) conforms to such other requirements as may be specified by the

Board.
(3) The resolution professional shall present to the committee of creditors for its
approval such resolution plans which confirm the conditions referred to in sub-
section (2).
(4) The committee of creditors may approve a resolution plan by a vote of not
less than seventy-five per cent. of voting share of the financial creditors.
(5) The resolution applicant may attend the meeting of the committee of
creditors in which the resolution plan of the applicant is considered:
Provided that the resolution applicant shall not have a right to vote at
the meeting of the committee of creditors unless such resolution applicant is also
a financial creditor.
611
by Hon’ble NCLAT
(6) The resolution professional shall submit the resolution plan as approved by
the committee of creditors to the Adjudicating Authority."
15. As noticed above, the Adjudicating Authority, thereafter, if satisfied with resolution plan
approved by the committee of creditors and meets the requirements as referred to in sub-section (2) of
section 36, it shall by order may approve the resolution plan in terms of sub-section (1) of Section 31,
which reads as follows: -
"31. Approval of resolution plan. - (1) If the Adjudicating Authority is satisfied

that the resolution plan as approved by the committee of creditors under sub-
section (4) of section 30 meets the requirements as referred to in sub-section (2)
of section 30, it shall by order approve the resolution plan which shall be
binding on the corporate debtor and its employees, members, creditors,
guarantors and other stakeholders involved in the resolution plan. Submission of
resolution plan. Approval of resolution plan.
(2) Where the Adjudicating Authority is satisfied that the resolution plan does
not confirm to the requirements referred to in sub-section (1), it may, by an
order, reject the resolution plan.
(3) After the order of approval under sub-section (1),—
(a) the moratorium order passed by the Adjudicating Authority under

section 14 shall cease to have effect; and
(b) the resolution professional shall forward all records relating to the
conduct of the corporate insolvency resolution process and the
resolution plan to the Board to be recorded on its database."
16. Only if the resolution plan does not confirm the requirements referred to in sub-section (1) of
Section 31, the Adjudicating Authority may reject the same. However, if approval of plan under sub-
section (1) of Section 31 is granted, the Moratorium order passed by the Adjudicating Authority under
Section 14 shall cease to have its effect in view of sub-section (3) of Section 31.
17. In the present case, it is informed that in terms of Section 21 the meeting of the Committee of
Creditors has taken place. Meeting of the Committee of Creditors as required under section 24 after
notice has also taken place, as informed by Interim Resolution Professional.
18. All the information having received by 'Insolvency Resolution Professional' after publication of
notice in the newspaper and all creditors having satisfied, except Punjab National Bank who has reported
612
by Hon’ble NCLAT
that there is no default and they intend to proceed with their business with the 'Corporate Debtor', the
'Insolvency Resolution Professional' is required to prepare a memorandum to that extent under section 29
of the I&B Code. Thereafter, in case(s) where all creditors have been satisfied and there is no default
with any other creditor, the formality of submission of resolution plan under section 30 or its approval
under section 31 is required to be expedited on the basis of plan if prepared. In such case, the
Adjudicating Authority without waiting for 180 days of resolution process, may approve resolution plan
under section 31, after recording its satisfaction that all creditors have been paid/ satisfied and any other
creditor do not claim any amount in absence of default and required to close the Insolvency Resolution
Process. On the other hand, in case the Adjudicating Authority do not approve resolution plan, will
proceed in accordance with law.
19. It is made clear that Insolvency Resolution Process is not a recovery proceeding to recover the
dues of the creditors. I&B Code, 2016 is an Act relating to reorganisation and insolvency resolution of
corporate persons, partnership firms and individuals in a time bound manner for maximisation of value
of assets of such persons and to promote entrepreneurship, availability of credit and balance the interests
of all the stakeholders including the Government dues. Such being the object of the I&B Code 2016, if
the interest of all the stakeholders are balanced and satisfied then to promote entrepreneurship and to
ensure that the company continue to function as on going concern, it is desirable to close such
proceeding without delay and going into technical rigour of one or other provisions, which are all
otherwise futile for all purpose.
20. In the circumstances, instead of interfering with the impugned order, we remit the case to the
Adjudicating Authority for its satisfaction whether the interest of all stakeholders have been satisfied and
whether one or other creditor has not raised any claim like Punjab National Bank, after giving notice to
individual claimant and taking into consideration of the Insolvency Resolution plan and report of the
Insolvency Resolution Professional as may be prepared, the Adjudicating Authority may close the
proceedings.
21. Hope and trust that all the formalities will be completed by group of 'Financial Creditors' and
Insolvency Resolution Professional expeditiously and the Adjudicating Authority will pass appropriate
order, in accordance with law after notice of hearing the parties
22. The appeal stands disposed of with aforesaid observations and directions. However, in the facts
and circumstances, there shall be no order as to cost.
613
by Hon’ble NCLAT

NEW DELHI
C.P. (I.B.) No. 135/NCLAT/2017
Applicant: Ardor Global Pvt. Ltd.

Vs.
Respondent: Nirma Industries Pvt. Ltd.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Virender Ganda, Mr. Ashok Bhailal Shah, Mr. Arvind Kumar &
Ms. Henna George, Learned Advocate
ORDER
The appellant has preferred this appeal against order dated 11th July, 2017 passed by the learned
Adjudicating Authority (National Company Law Tribunal), Ahmedabad Bench, Ahmedabad (hereinafter
referred to as 'Adjudicating Authority') in C.P. (LB.) No. 34/9/NCLT/AHM/ 2017. The order reads as
follows :
"Learned Advocate Mr. Nandish Chudgar present for Operational Creditor/

Petitioner. Learned Advocate Mr. Arjun Sheth present for Respondent.
Objections filed by Learned Counsel for Respondent.
Heard arguments of Learned Counsel for petitioner and Respondent.
During the course of arguments, it is noticed that there are following defects in
the Application.
1. In respect of the written communication filed by IRP in form no. 2.
2. In respect of the affidavits of Mr. Jitendra Patel dated 26.05.2017 filed

along with the petition.
614
by Hon’ble NCLAT
It is contended by the Learned Counsel for the petitioner that there is no defect
in the written communication filed by IRP even if such defect is there it is
rectifiable.
It is contended by the Learned Counsel for Respondent that defect pointed out is
a defect which cannot be rectified. Coming to the affidavits this Adjudicating
Authority is of a view that defects in the Affidavit are rectifiable.
At this stage Learned Counsel appearing for the petitioner on the instructions of
his client requested this Tribunal to grant leave to withdraw this petition with
liberty to file fresh petition.
Learned Counsel appearing for the Respondent opposed the same.
Rule 8 of the Adjudication Rules gives discretion to the Adjudicating Authority

to permit withdrawal of the petition of the petition on the request made by the
petitioner before its admission.
Petitioner is permitted to withdraw this petition with liberty to file fresh petition
if so advised.
Petition is disposed of accordingly."
2. Learned counsel' for the appellant submits that once the defect was pointed out, then it was
mandatory for the Adjudicating Authority to allow seven day' time to the 'Operational Creditor' to remove
the defect and it has no authority to allow the 'Operational Creditor' to withdraw the application, but such
submission cannot be accepted as it is always open to the Adjudicating Authority to allow the party(s) to
withdraw an application and to grant liberty of filing a fresh application before admission of a case and
where default has not been decided, in view of Rule 8 of the Insolvency &Bankruptcy (Application to
Adjudicating Authority) Rules, 2016, which is as follows :
"8. Withdrawal of application.— The Adjudicating Authority may permit

withdrawal of the application made under rules 4, 6 or 7, as the case may be, on
a request made by the applicant before its admission."
3. Next it was contended that filing of the subsequent petition will be hit by 'constructive res
judicata' but we do not agree with such submission, as no decision was given by the Adjudicating
Authority while allowing a party to withdraw the application with liberty to file a fresh application.
4. In the absence of any merit, the appeal is dismissed. However, in the facts and circumstances of
the case, there shall be no order as to costs.
615
by Hon’ble NCLAT

NEW DELHI
C.P. (I.B.) No. 136/NCLAT/2017
Applicant: M/s. Sunil Packaging Pvt. Ltd.

Vs.
Respondent: Dishnet Wireless Limited
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Varsha Banerjee, Mr. Milan Singh Negi & Mr. Kunal Godhwani,
Learned Advocate
ORDER
This appeal has been preferred by the appellant-Operational Creditor' against order dated 14th
June, 2017 passed by the learned Adjudicating Authority (National Company. Law Tribunal), Mumbai.
Bench, Mumbai (hereinafter referred to as 'Adjudicating Authority') in C.P. No.
508/I&BP/NCLT/MAH/2017, whereby and whereunder the application preferred by the appellant under
Section 9 of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as I&B Code') has been
dismissed.
2. From paragraph 7 of the impugned order, we find that there is an existence of dispute between the
parties with regard to the execution of lease of the land in question.
3. Learned counsel appearing on behalf of the appellant submits that the land in question belongs to
the appellant and it was a frivolous objection, raised by the respondent stating that the land belonged to
U.P. Financial Corporation Ltd.
4. From the record, we find that the appellant served a legal notice dated 7th November, 2016 on the
'Corporate Debtor' under Section 434(1)(a) of the Companies Act, 1956 claiming a sum of Rs. 39,15,726 /
- (Rupees Thirty Nine Lakhs Fifteen Thousand Seven Hundred and Twenty Six only) with interest, for
616
by Hon’ble NCLAT
which, the 'Corporate Debtor' replied on 1st December, 2016, through its counsel, raising dispute, the
relevant portion of which, reads as follows :
"4. Our Client has instructed us to inform you that your notice under reply is
misconceived and unsustainable as clearly issued without being aware about the
facts and circumstances of the case. All the allegations made therein are
frivolous, without any substance and hence denied. Your Client has not only
suppressed the material facts but also misinformed you about sequence of
events. Your Client has clearly not come with clean hands as your notice under
reply has been issued without verifying the facts on record We submit that the
following facts assume relevance in this regard:
i. On 25th October, 2013 a Lease Deed was executed between your Client
and our Client wherein factory shed admeasuring 36495 sq. ft (2260 sq. ft.
including constructed area) being part of Khasra No.2150, Meerat-Mawana
Road, Village Mawana, Kalan, District Meerut (hereinafter referred as leased
Premises') was leased out to our Client.
ii. At the time of execution of Lease Deed, your Client wilfully misled and
induced our Client to believe that your Client was the absolute and lawful owner
and was in peaceful possession of the Leased Premises. Your Client also
represented that they had not created any right or charge or encumbrance in
favour of any entity or person in respect of the Leased Premises that may
adversely affect the right of the Lessee (Our Client) over the Leased Premises
under this Lease Deed. The relevant Clause in this regard is reproduced as
under:-
"8. Covenants
The LESSOR hereby represents, declare and agree;
(b) That LESSOR have not created any tenancy, license and lease deed or any
right in favour of any person in respect of the Leased Premises nor has created
any such charge or encumbrance on the said Leased Premises nor shall create
or purport to create any such charge or encumbrance hereafter that may
adversely affect the right of the LESSEE over the Leased Premises under this
Lease Deed;"
617
by Hon’ble NCLAT
iii. To the shock and surprise of our Client, on 4th April, 2014 and 24th
June, 2014, our Client received successive notices from UP Financial
Corporation Limited (UPFCL) threatening therein that since the leasehold
rights with respect to the subject Leased Premises were mortgaged with UPFCL
and due to your Client's default, UPFCL has initiated recovery action under
Section 29 of State Financial Corporation Act and as such going to take over the
possession of the Leased Premises that was leased to our Client.
iv. The aforesaid fact clearly indicate that your Client entered into the
Lease Deed by suppressing material facts which if informed earlier our Clients
would pot have executed the Lease Deed in question since the Leased Premises
were encumbered and a charge in favour of UPFCL was created by your Client
having consented to mortgage of the properties including Lease Premises in
favour of UPFCL by one M/ s Greenfield Corporation Ltd. M/ s Greenfield
Corporation were reported to have failed in repaying the loan amount leading
UPFCL to issue the notice dated 4th April, 2014 and 24th June, 2014 and also
published notices in the newspaper. Copies of the notices dated 4th April, 2014
and 24th June, 2014 and newspaper cutting is enclosed herewith for your ready
reference as ANNEXURE-B, collectively. UPFCL called upon our Client to
vacate the Leased Premises on the ground that arrangement between your and
our Client was without prior approval of UPFCL. The very edifice of the alleged
claim of your Client as such is illegal as your Client did not enter into legally
enforceable Lease Deed much less entitling your Clients to seek alleged rent
which our Clients rightly stopped and terminated the Lease Deed in the
circumstances being threatened dispossession by UPFCL holding superior
rights than your Clients. In view of facts as above your Client's notice under 434
(1) (a) is a gross abuse of process of the law and not maintainable.
v. On 8th October, 2014,. our Client informed your Client that they are not
interested in keeping the Leased Premises due to the reasons stated in the
UPFCL notices and issued notice in terms of Clause 11 of the Lease and
requested your Client to take possession of the Leased Premises within 15 days.
However, your Client, with a malafide intention, deliberately failed to take the
possession of the Leased Premises. On 12th November, 2014, our Client was
constrained to communicate to your Client that the Lease Deed with respect to
618
by Hon’ble NCLAT
the said .Leased Premises stands terminated on 23rd October, 2014 and the
same are lying vacant and unused. Our Client further called upon your Client to
refund our Client's security deposit amounting to Rs.3,75,000/ - (Rupees Three
Lakh Seventy Five Thousand Only) paid in terms of Clause 5 of the Lease Deed
which has not been refunded by your Client and thus they are liable to refund
the same with interest.
The aforesaid facts clearly indicate that our Client has acted on good faith and
is not liable to pay any amounts whatsoever to your. Client or as claimed by
your Client and the contentions vide notice under reply are devoid of any merits
hence denied. The notice under reply has been clearly instructed with a sole
motive to foist illegal claim by putting pressure and threat of winding-up."
5. From the aforesaid reply, it is clear that there is 'an existence of a dispute'. The case of the
appellant is covered by this Appellate Tribunal's decision in 'Kirusa Software Private Ltd. Vs. Mobilox
Innovations Private Ltd.' - [Company Appeal (AT)(Insolvency) No. 6 of 2017 (24th May, 2017). In
these circumstances the application under Section 9 was not maintainable. The Adjudicating Authority
rightly dismissed the application.
6. In absence of any merit, the appeal is dismissed. However, in the facts and circumstances of the
case, there shall be no order as to costs.
619
by Hon’ble NCLAT

NEW DELHI
C.P. (I.B.) No. 124&125/NCLAT/2017
Applicant: Ganesh Sponge Pvt. Ltd.

Vs.
Respondent: Aryan Mining & Trading Corporation Pvt. Ltd.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Amarendra Sharan, Mr. Dhananjaya Mishra, Mr. R.M. Patnaik &
Mr. Avnish Sharma, Learned Advocates
For Respondents/Defendant: Mr. Anuj Singh & Mr. Rotiban Sarkar, Learned Advocates
ORDER
Both these appeals have been preferred . by the appellant-'Corporate Debtor' against orders dated
19th July, 2017 and 3rd August, 2017 passed by the Learned Adjudicating Authority (National Company
Law Tribunal), Kolkata Bench, Kolkata in C.P. (I.B.) No. 341/KB/2017.
2. By impugned order dated 19th July, 2017, learned Adjudicating Authority, while admitted the
application preferred by the respondent 'Operational Creditor' under Section 9 of the Insolvency and
Bankruptcy Code, 2016 (hereinafter referred to as 'I&B Code), by the subsequent
order dated 3rd August, 2017, learned Adjudicating Authority rejected the joint application preferred by
the appellant and the respondent to withdraw the petition.
3. Before deciding the question about the legality and proprietary of , order dated 19th July, 2017, it
is desirable to notice Rule 8 of the Insolvency and Bankruptcy (Application to Adjudicating Authority)
Rules, 2016, which .reads as follows :
"8. Withdrawal of application.—The Adjudicating Authority may permit

a request made by the applicant before its admission."
620
by Hon’ble NCLAT
4. From the aforesaid Rule, it is clear that the learned Adjudicating Authority is empowered to
permit withdrawal of the application under Section 7, 9 or 10 of the I&B Code, as the case may be, on the
request made by the appellant before the admission, but such withdrawal cannot be permitted once the
application is admitted. In view of the aforesaid provisions and in absence of any illegality, we find no
ground to interfere with the impugned order dated 3rd August, 2017.
5. In so far as impugned order dated 19th July, 2017 is concerned, the appellant has challenged the
order on different counts.
6. Shri Amarendra Sharan, Learned Senior Counsel appearing for the appellant submits that the
application was defective; the notice under Section 8 was not issued by the 'Operational Creditor' but by
its lawyer. Reliance has been placed on decision of this Appellate Tribunal in "Macquarie Bank Limited
Vs. Uttam Galva Metallics Limited" - [Company Appeal (AT) (Insolvency) No. 96 of 20171 wherein by
order dated 17th July, 2017, the Appellate Tribunal held as follows :
"15. Clause (a) & (b) of sub-Rule (1) of Rule-5 of the Adjudicating Authority
Rules mandates the 'Operational Creditor' to deliver the 'Corporate Debtor'
either the demand notice in Form - 3 or a copy of an invoice attached with a
notice in Form-4. If the Rule 5 is read with the demand notice Form -3 or
invoice in Form - 4, it is clear that who are persons authorized to give the notice
under Section 8 of the 'I & B Code', as apparent from last portion of Form - 3 &
Form - 4, as quoted below: -
"6. The undersigned request you to unconditionally repay the unpaid

Yours sincerely,

Position with or in relation to the
621
by Hon’ble NCLAT
16. From bare perusal of Form-3 and Form-4, read with sub-Rule (1) of Rule 5
and Section 8 of the 'I & B Code, it is clear that the 'Operational Creditor' can
apply himself or through a person authorized to act on behalf of the
'Operational Creditor', who hold same position with or in relation to the
'Operational Creditor'. Thereby such person(s) authorized by 'Operational
Creditor', holding position with or in relation to the 'Operational Creditor' can
only apply.
17. In view of such provision we hold that an advocate/ lawyer or Chartered

Account or a Company Secretary or any other person in absence of any
authority by the 'Operational Creditor', and if such person do not hold any
position with or in relation to the 'Operational Creditor, cannot issue notice
under Section 8 of 'I & B Code', which otherwise can be treated as a lawyer's
notice/ pleader's notice, as distinct from notice under Section 8 of 'I & B Code."
•
7. It has also been brought to our notice that there is an 'existence of dispute' regarding the quality of
goods for which complaints were made by the appellant on 3rd August, 2012 and 25th August, 2012 etc.
8. The respondent has appeared and has not disputed that the notice under Section 8 was issued by a
lawyer and that some objections were raised by the appellant much prior to the so-called notice under
Section 8 regarding quality of goods.
It is submitted that the parties have settled the dispute in the meantime and the due amount has
already been paid to the respondent.
9. In the present case, we are not deciding the question as to whether the parties have settled the
dispute or not, but in view of the fact that the impugned order dated 19th July, 2017 was passed by the
learned Adjudicating Authority in the application under Section 9, which was not complete and the case
of the appellant is covered by decision of this Appellate Tribunal in 'Macquarie Bank Limited Vs. Uttam
Galva Metallics Limited (supra); we set aside the impugned order dated 19th July, 2017.
10. In effect, order(s), if any, passed by learned Adjudicating Authority appointing any 'Interim
Resolution Professional' or declaring moratorium, freezing the account and all other order(s) passed by
Adjudicating Authority pursuant to impugned order dated 19th July, 2017 and action, if any, taken by the
'Interim Resolution Professional', including the advertisement, if any, published in the newspaper calling
622
by Hon’ble NCLAT
for applications etc. and all such orders and actions are declared illegal and are set aside. The application
preferred by the respondent under Section 9 of the I&B Code, 2016 is dismissed. Learned Adjudicating
Authority will now close the proceeding. The appellant company is released from all the rigour of law and
is allowed to function independently through its Board of Directors from immediate effect.
11. Learned Adjudicating Authority will fix the fee of 'Interim Resolution Professional ', if appointed
functioned. The appeal is allowed with aforesaid observations and directions. However, in the facts and
623
by Hon’ble NCLAT

NEW DELHI
C.P. (I.B.) No. 55/NCLAT/2017
Applicant: Gurcharan Singh Soni & Kuldeep Kaur Soni

Vs.
Respondent: Unitech Ltd. & Anr.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. G.K. Jain, Learned Advocates
For Respondents/Defendant: Ms. Navneet S. Sehgal & Ms. Rishika Katyal, Learned Advocates
ORDER
Appellants have challenged the order dated 21St March, 2017 passed by Ld. Adjudicating Authority
(National Company Law Tribunal), Principal Bench, New Delhi in Company Petition No. (IB)- 29(PB) /
2017, whereby and whereunder application preferred by Appellants-Operational Creditor' has been
rejected in terms of order passed in "Sajive Kunwar v. AMR Infrastructure" decided on 15th February,
2017 by the Adjudicating Authority.
2. When the matter was taken up, Ld. Counsel for the appellants brought to our notice that the State
Consumer Disputes Redressal Commission passed an order on 3rd October, 2016, directing the
respondents-'Corporate Debtor' to refund the amount with interest, compensation and litigation expenses.
It was submitted that the 'amount' due comes within the meaning of 'debt' and due amount having not
been paid there is 'default' and therefore, petition under section 9 was maintainable.
3. Notices were issued on respondents- 'Corporate Debtor'. On notice, Ld. Counsel for the
respondents submits that notice under Section 8 was not served on the 'Corporate Debtor'. However, from
the record we find Section 8 notice was issued and served on 'Corporate Debtor' on 31st January, 2017 as
reported by Postal Department in the tracking report of the Speed-Post.
4. Ld. Counsel for the respondents next contended that the notice under section 8 was not issued by
proper authority but by the Power of Attorney holder who is not competent to issue such notice.
624
by Hon’ble NCLAT
5. In reply, Ld. Counsel for the appellants has brought to our notice that one Mr. Mukesh Chadha
has been given General Power of Attorney, to lodge any case and sign on behalf of the appellants.
6. From the General Power of Attorney attested on 4th February 2017, by the Notary Chandigarh,
we find that the appellants are residing at Canada and on a visit to India and they revoked the earlier
General Power of Attorney executed on 27th April, 2015 in favour of one Mr. Gulshan Kumar Jain and
appointed Mr. Mukesh Chadha, son of Late Shri Inder Raj Chadha, Chartered Accountant as their General
Power of Attorney holder for the purposes of singing on their behalf on all the applications and
documents, which may be required in connection with purchase of premises from Unitech Ltd. etc. The
said General Power of Attorney also empowers Mr. Mukesh Chaddha to engage, appoint
advocates/attorney(s) on their behalf under his own signatures and to sign and verify all types of
documents in the Courts etc., relating to Civil and Criminal matters in India. He has also been given the
power to move before the Consumer Court etc. to protect their interest. In that view of the matter, we hold
that Mr. Mukesh Chadha, General Power of Attorney holder has right to issue notice under section 8 and
sign Form -3 showing his relationship with appellants as their General Power of Attorney holder.
7. So far as the decision in the case of "Sajive Kunwar Vs. AMR Infrastructure" is concerned as
referred to in the impugned judgment, similar finding given by Ld. Adjudicating Authority in "Nikhil
Mehta and Sons. v. AMR Infrastructure Ltd." has been overruled by this Appellate Tribunal by
judgment dated 21st July, 2017 in Company Appeal (AT) (Insol.) No. 07 of 2017. In that view of the
matter, the decision of the Ld. Adjudicating Authority based on the earlier case against the "AMR
Infrastructure Limited", cannot be a ground to reject the application preferred by the appellants.
8. The term 'debt' has been defined in Section 3(11) of the I&B Code, which reads as under:
"'debt' means a liability or obligation in respect of a claim which is due from

any person and includes a financial debt and operational debt"
"Default" has been defined in Section 3(12) as:
"default" means non-payment of debt when whole or any part or instalment of

the amount of debt has become due and payable and is not repaid by the debtor
or the corporate debtor, as the case may be"
Section 5(20) defines 'Operational Creditor' means a, person to whom an

operational debt is owed, as quoted below:
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"Operational Creditor means a person to wham an operational debt is owed and

includes any person to whom such debt has been legally assigned or
transferred"
9. Section 5(21) defines 'Operational Debt' means a claim in respect of the provision of goods or
services including employment or a debt in respect of the repayment of dues arising under any law,
payable to the Central Government, any State Government or any local authority, as quoted below: -
"Operational debt means a claim in respect of the provision of goods or services

including employment or a debt in respect of the repayment of dues arising
under any law for the time being in force and payable to the Central
Government, any State Government or any local authority"
10. In view of the aforesaid provisions, we hold that there is a 'debt' due to the appellants and there is
default on the part of the respondents-'Corporate Debtor'. However, the appellants do not come within the
meaning of "Operational Creditor".
11. In the case of "Nikhil Mehta and Sons. v. AMR Infrastructure Ltd." this Appellate Tribunal
noticed that Nikhil Mehta 8v Ors. purchased flat/ shops from builder pursuant to an agreement. In terms
of the said agreement, this Appellate Tribunal held the "Nikhil Mehta and Sons" as the 'Financial
Creditor', as in their case the 'Financial Debt' was coming within the meaning of Section 5(8)(f) of the
I&B Code. As the agreement reached between the parties pursuant to which amount has been ordered to
be refunded by consumer forum is not available before us and appellants have not taken a plea that they
are the 'Financial Creditor', we are not deciding such question leaving the question open for decision in
case the appellants claims to be 'Financial Creditor' and moves before the Adjudicating Authority with
such plea.
12. For the reasons aforesaid, while we are not inclined to interfere with the impugned order dated
21st March, 2017 on the ground that the Appellants are not 'Operational Creditor', give liberty to the
parties to decide their course of action as they may take, in accordance with law. 13. The appeal is
dismissed with the aforesaid observations. However, in the facts and circumstances, there shall be no
order as to costs.
626
by Hon’ble NCLAT

NEW DELHI
C.P. (I.B.) No. 99/NCLAT/2017
Applicant: Tirupati Infra Project Pvt. Ltd. & Another

Vs.
Respondent: Bank of India
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Manoj K. Singh, Mr. Vijay K. Singh & Mr. Vineet Arora, Learned
Advocates
For Respondents/Defendant: Mr. Sanjay Bhatt, Learned Advocate
ORDER
This appeal has been preferred by Appellants-Tirupati Infra Projects Pvt. Ltd. (hereinafter referred
to as 'Corporate Debtor') and another against judgement dated 3rd July, 2017 passed by the Learned
Adjudicating Authority (National Company Law Tribunal), Principal Bench, New Delhi (hereinafter
referred to as 'Adjudicating Authority'), whereby and whereunder the application preferred by
Respondent-Bank of India (hereinafter referred to as 'Financial Creditor') under Section 7 of the
Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as 'I&B Code') was admitted, 'Corporate
Insolvency Resolution Process' initiated and consequent order of 'Moratorium' has been passed under
Section 14 of the I&B Code. The Interim Resolution Professional has also been directed to perform all his
functions contemplated under Sections 15, 17, 18, 19, 20 and 21 of the I&B code.
2. Learned counsel for the Appellants has submitted that there is a mismatch between amount of
debt shown in the original application and the amount shown in record submitted after rectification of
defect. Reliance was placed on decision of this Appellate Tribunal in 'M/s. Starlog Enterprises Limited
Vs. ICICI Bank Limited' - [Company Appeal (AT) (Insolvency) No. 5 -of 2017], wherein, taking into
consideration the mismatch of amount shown in notice under Rule 4(3) of Insolvency and Bankmptcy
(Application to Adjudicating Authority) Rules, 2016 and the amount of default mentioned in the
application under Section 7, this Appellate Tribunal, by judgement dated 24th May, 2017, held :
627
by Hon’ble NCLAT
"20.1 The ascertainment of existence of default by the 'adjudicating authority'

which under the provisions of Sub-Section (4) of Section 7 of the I&B Code has
to be based on the application/ other evidence submitted by the financial
creditor, suffers from non-application of mind given the apparent and
conspicuous mismatch between the amount demanded by the Respondent from
the Appellant in its demand notice dated 6th February 2017 and the amount
stated to be in default in the said application."
xxx xxx
"21. Showing an incorrect claim, moving the application in a hasty manner and
obtaining an exparte order from the 'adjudicating authority' which admitted
such an incorrect claim, the Financial Creditor cannot disprove its mala fide
intention by stating that the claim submitted is correct amount. The I&B Code
does not provide for any such mechanism where post-admission, the applicant
financial creditor can modify their claim amount.
22. In some of the cases, an insolvency resolution process can and may have
adverse consequences on the welfare of the company. This makes it imperative
for the 'adjudicating authority' to adopt a cautious approach in admitting
insolvency applications and also ensuring adherence to the principles of natural
justice."
3. Learned counsel for the Appellants referring the application submitted that Rs.82.37 Crores
(Rupees Eighty Two Crore Thirty Seven Lakhs only) was the amount of default shown therein, but after
rectification of defect, the amount of default has been shown to the extent to Rs. 1,09,32,72,312.86p.
(Rupees One Hundred and Nine Crores Thirty Two Lakhs Seventy Two Thousands Three Hundred 86
Twelve and Eighty Six Paise only). It was further contended that the Learned Adjudicating Authority
though allowed seven days' time to make necessary corrections, but correction was made beyond the
period of seven days.
4. Learned counsel for the Respondent-'Financial Creditor' (Bank of India) submitted that the
original amount of default of Rs. 82.37 Crores was shown calculating the interest upto 31st March, 2012.
Subsequently, statement of uncharged/differential interest combined with the defaulting amount for the
period from 1st April, 2012 to 14th May, 2017 was added which comes to Rs. 1,09;32,72,312.86p. It was
contended that the supplementary statement filed by the 'Financial Creditor' (Bank of India) cannot be
termed to be 'removal of defects'. It was further contended that, in any case, even if the amount of default
628
by Hon’ble NCLAT
as shown in original application is taken into consideration, the 'Corporate Debtor' has a right to claim
total amount with interest before the 'Interim Resolution Professional'.
5. For the purpose of determination of the objection as raised by appellant, it is desirable to refer
Section 7, which is as follows:
"7. Initiation of corporate insolvency resolution process by financial

creditor.—(1) A financial, creditor either by itself or jointly with other financial
Explanation.—For the purposes of this sub-section, a default includes a default

(2) The financial creditor shall make an application under sub-section (1) in
such form and manner and accompanied with such fee as may be prescribed.

application under subsection (2), ascertain the existence of a default from the
the financial creditor under subsection (3).
(5) Where the Adjudicating Authority is satisfied that
(a) a default has occurred and the application under sub-section (2) is complete,
and there is no disciplinary proceedings pending against the proposed
629
by Hon’ble NCLAT
(b) default has not occurred or the application under sub-section (2) is
incomplete or any disciplinary proceeding is pending against the proposed
resolution professional, it may, by order, reject such application:
Provided that the Adjudicating Authority shall, before rejecting the

application under clause (b) of subsection (5), give a notice to the applicant to
(6) The corporate insolvency resolution process shall commence from the date
of admission of the application under sub-section (5).
(a) the order under clause (a) of sub-section (5) to the financial creditor and the
corporate debtor;
within seven days, of admission or rejection of such application, as the case may
be."
6. From sub-section (5) of Section 7, it is. clear that once the Adjudicating Authority is satisfied that
a default has occurred and the application under sub-section (2) is complete, and no disciplinary
proceeding is pending against the proposed interim resolution professional, it may, by order, admit the
application. Only in case(s) where there is no default or the application under sub-section (2) is
incomplete or any disciplinary proceeding is pending against the proposed resolution professional, the
Adjudicating Authority may reject such application, but before passing such order of rejection, the
Adjudicating Authority is required to give a notice to the applicant to rectify the defect, if any, within
seven days.
7. A defective application can be corrected by removing the defect. Similarly, if an application is

incomplete, it can be completed, but if any misleading statement is made in an application no time can be
granted to recall the misleading statement and such application is fit to be rejected. This is the essence of
the judgement of this Appellate Tribunal in M/s. Starlog Enterprises Limited Vs. ICICI Bank Limited. In
the said case, the Adjudicating Authority held that it was satisfied that there is a default of Rs. 27.77
Crores. Such finding being contrary to the application filed by the 'Financial Creditor' itself and in
complete disregard to the apparent and conspicuous mismatch between the amount shown in the notice
630
by Hon’ble NCLAT
under Rule 4(3) and the amount shown in the ex-parte order of the Adjudicating Authority, the Appellate
Tribunal set aside the order of admission.
8. In the present case, it is not the case of the Appellants that there is a mismatch between the
amount shown in the notice under Rule 4(3) and the amount of default shown by the 'Financial Creditor'
in its original application under Section 7. On the other hand, the 'Corporate Debtor' has explained that the
amount of interest as was calculated upto 31st March, 2012, if further calculated for the period from 1st
April, 2012 to 14th May, 2017, then the total debt comes to Rs. 1,09,32,72,312.86p. The default amount
as on 31st March, 2012 remains constant. Thus we find that neither any misleading statement was made
by the 'Financial Creditor' nor any misleading statement of default was made. The case of the
RespondentiFinancial Creditor', being different from the case of MCI Bank Limited' (the 'Financial
Creditor' of M/s. Starlog Enterprises Limited), the plea taken by the Appellants cannot be accepted.
9. Another ground taken by Learned Counsel for the Appellants is that the person, who filed the
application under Section 7 was not authorised by the Board of Directors of the Bank of India ('Financial
Creditor).
10. The Respondent has brought to our notice that the person who has filed the petition under Section
7, is an officer of Bank of India (Financial Creditor) and was authorised by the Board of Directors to do
so. Therefore, the impugned judgement cannot be interfered with on such ground.
11. In view of the discussions as made above and in absence of merit, we are not inclined to interfere
with the impugned judgment dated 3rd July, 2017 passed in C.P. No. IB-104(PB)/2017 and, accordingly,
dismiss the appeal.
However, in the facts and circumstances of the case, the parties shall bear their respective costs.
631
by Hon’ble NCLAT

NEW DELHI
C.P. (I.B.) No. 61/NCLAT/2017
Applicant: Devesh Singh

Vs.
Respondent: Mega Soft Infrastructure Pvt. Ltd.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Rahul Shukla & Mr. Akash Jandial, Learned Advocates
ORDER
Ld. Counsel for the Appellant submits that the issue has (National Company Law Tribunal) New Delhi
Bench in "Neelam Singh & Ors. vs Mega Soft Infrastructure Private Limited" against the very same
'corporate debtor'. In view of such development, Ld. Counsel for the Appellant has been asked to
withdraw the appeal. Ld. Counsel for the Respondent has no objection to the same. The appeal is
accordingly dismissed as withdrawn with no liberty to file any appeal against the very same impugned
order. No cost.
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by Hon’ble NCLAT

NEW DELHI
C.P. (I.B.) No. 32/NCLAT/2017
Applicant: M/s. Annapurna Infrastructure Pvt. Ltd.

Vs.
Respondent: M/s. SORIL Infra Resources Ltd.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Vijay Nair, Mr. Prashant Jain, Ms. Aparna Malhotra & Ms.
Sanyogita Jain, Learned Advocates
For Respondents/Defendant: Mr. Chetna Sharma, Mr. Abhishek Swaroop & Mr. Rudreshwar Singh,
Learned Advocates
ORDER
This appeal has been preferred by the appellants against order dated 24th March, 2017 passed by
the Learned Adjudicating Authority (National Company Law Tribunal), Principal Bench, New Delhi
whereby the application preferred by the appellant under Section 9 of Insolvency and Bankruptcy Code,
2016 (hereinafter referred to as 'I&B Code') for initiation the Corporate Insolvency Resolution Process
against the 'Corporate Debtor' has been rejected on the ground that there is an existence of dispute
pending adjudication between the parties.
2. In order to decide the controversy in its proper perspective, it will be necessary to notice the
material facts.
3. Appellants rented the premises, rent of which was payable by respondent - Corporate. Debtor
pursuant to Lease Deed dated 23rd November, 2005 but having not paid, the parties invoked arbitration
clause. Pursuant to the order passed by the Hon'ble High Court of Delhi, Hon'ble Justice (Dr.)
Mukundakam Sharma (Retired) was appointed as a Sole Arbitrator to adjudicate all disputes arising out of
Lease Deed dated 23rd November, 2005 between the appellants and the respondent.
633
by Hon’ble NCLAT
4. The Arbitrator passed an award on 9th September, 2016 in favour of the

appellants granting the following relief:-
"a. Rs.2,67,52,283/ - on account of rend from 1.4.2008 upto 22.3.2010 along

with interest @ 12% per annum w.e.f 23.3.2010 upto the date of the Award.
b. Rs. 1,11,56,145/ - on account of damages equivalent to rend for a period of 6

months from 22.3.2010.
c. Future interest @12% per annum on the amounts, as calculated above, from
the date of the award till the date of realization."
5. The respondent then challenged the award under Sec. 34 of the Arbitration
and Conciliation Act, 1996 (hereinafter referred to as 'Arbitration Act') with the prayer to set aside the
award. The application preferred by respondent under Sec. 34 was dismissed on 19th December, 2016
affirming the award.
6. As a consequence, the appellants issued a demand notice dated 13th January, 2017 under Sec. 8
of the I&B Code. In response to the demand notice, respondent filed a reply on 27th January, 2017 raising
objection on the ground that there is an existence of dispute about 'Operational Debt'. It was also stated
that the appeal bearing No. FA(OS)(COMM) 20 of 2017 has been filed under section 37 of the
Arbitration Act against the order dated 19th December, 2016 before the Ld. Single Judge. It was also
pointed out that an execution proceedings to recover the amount due under the award dated 9th
September, 2016 have also been initiated and are pending consideration before the Hon'ble Delhi High
Court.
7. Learned counsel for the appellants submitted that the 1st appellant is to be regarded as an
"operational creditor" within the meaning of Sec. 9 r/w subsections (20) and (21) of Section 5 of the I&B
Code. A reference has also been invited to the definition of the words 'debt' and 'default' as defined in
Section 3(11) and Section 3(12) of the I&B Code.
8. According to learned counsel for the appellants the award passed by the learned Arbitrator had
attained finality as the application under Section 34 of the Arbitration Act has been dismissed on 19th
December, 2016. It was further contended that expression "arbitration proceedings" used in Sec. 8(2)( ) of
the I&B Code cannot be deemed to be pending because under Sec. 21 of the Arbitration Act, arbitration
proceedings commenced on the date on which request for referring such a dispute to arbitration was
received by the respondent. The said proceeding came to an end in terms of Sec. 32 on the date of
announcing the final award or by an order of the Arbitral Tribunal in accordance with sub-section (2) of
634
by Hon’ble NCLAT
Sec. 32 of the Arbitration Act. According to the learned counsel for the appellants, there is no arbitral
proceeding pending and it reached finality and come to an end on 9th September, 2016.
9. Similar argument was advanced by the learned counsel for the appellant before the learned
Adjudicating Authority wherein reliance was placed on decision of one or other High Court's order.
10. According to the learned counsel for the respondent the petition under Sec. 9 of the I&B Code is
not maintainable because the appellants do not owe any 'operational debts' to the Corporate Debtor and
thereby the 1st appellant is not an 'operational creditor'. Referring to the definition of 'operational debts' as
defined under Section 5(21) of the I&B Code, learned counsel for the respondent contended that ipsofacto
claim arising out of 'supply of goods' and providing 'services', which may include employment will not
amount to operation debt.
Therefore, ipsofacto the 1st appellant does not and cannot qualify to be an 'operational creditors',
as there is no 'operational debt'. "Debt" is not arising under the law for the time being inforce as is
mandate of sub-section (21) of Sec. 5 of the I & B Code and it would be attracted only when the said debt
is payable as per said provision.
11. It was further contended that Sections 8, 9, 5(20) and 5(21) must be construed in accordance with
the object of the court as outlined in the long title.
12. Similar arguments was advanced by the learned counsel for the respondent before the learned
Adjudicating Authority wherein a number of decisions of other Courts and Tribunal were also relied
upon.
13. Learned Tribunal at the beginning before deciding the dispute observed that "it is a classical case
where a dispute between the parties has already been subjected to the arbitration proceedings
which are yet to attain finality". Thereby, we find that learned Adjudicating Authority before deciding
the issue made up their mind that 'a dispute is pending and not attained finality'. We do not appreciate
such observation, as before discussing the case and claim of the parties and the provision of law, the
Adjudicating Authority cannot express and open its mind. Learned Adjudicating Authority while decided
the question as to whether the appellants come within the meaning of 'operational creditor', rejected the
submission that the 'arbitration proceedings' stand concluded by virtue of Section 32 of the Arbitration
Act.
14. Learned Adjudicating Authority while held that the application is not maintainable, observed as
follows:
635
by Hon’ble NCLAT
"27. We are further of the view that already proceedings for execution of the
award have been initiated. An effective remedy has been availed by the
applicant. We have not been able to accept that a party can invoke more than
one remedy simultaneously. It is in fact against the fundamental principles of
judicial administration to allow a party to avail more than one remedies.
Ordinarily only one remedy at one time could be availed as is evident from the
fundamental principles laid down in section 10 CPC. It would promote forum
shopping which is wholly impermissible in law. ........."
15. We have heard learned counsel for the parties and perused the record.
16. The questions arise for determination in this appeal are:-
(i) Whether there is an 'existence of dispute' between the parties, the award
passed by Arbitral Tribunal having affirmed by the Court under Sec. 34 of the
Arbitration Act?
(ii) Whether pendency of a proceeding for execution of an award or a

judgment and decree bar an operational creditor to prefer any petition under the
I&B Code?
(iii) Whether the 1st appellant is an 'operational creditor' within the meaning
of Sec. 5(20) r/w Sec. 5(21) of the I&B Code?
17. Before deciding the first and second issue, it is desirable to refer the observations of the
Adjudicating Authority to understand the reasons for not entertaining the application under Sec. 9. The
Tribunal proceeded on presumption that a dispute is pending in view of the pendency of a case under Sec.
37 of the Arbitration Act as is apparent from the observation and finding quoted below:
"22. In the instant case an arbitral award has been announced on 9.9.2016 and
the application for setting aside the award filed under section 34 of the
Arbitration Act has been rejected on 19.12.2016. It has been mentioned by the
respondent in its reply dated 27.01.2017 sent under section 8(2) of the Code to
the notice issued under section 8(1) of the Code by the applicant that the debt is
disputed and appeal under section 37 of the Arbitration Act is pending. The
reply dated 27.1.2017 reads as under:-
"1. At the outset, kindly note that our client is disputing the existence of the
'operational debt' allegedly payable to you by our client.. Our client is
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by Hon’ble NCLAT
vigorously contesting the Award dated 9.9.2016 (Award) passed by Mr. Justice
Mukundakam Sharma (Retd.), Sole Arbitrator, in Arbitration Case No.3 of 2013,
before the Hon'ble Delhi High Court.
2. As you are aware, our client had filed a petition under section 34 of the
Arbitration and Conciliation Act, 1996 (Act) bearing No.- OMP (Comm.)
No.570 of 2016, before the Honrble Delhi High Court vide order dated
19.12.2016. Please note that our client has filed an appeal against the said
order under section 37 of the Act, bearing No. FAO(OS)(COMM) 20 of 2017,
for setting aside the order dated 1912.206, and the same is presently pending
adjudication before the Hon'ble Court.
3. In view of the above, please note that no default has occurred in terms
of section 8(1) of the Code and, therefore, no process for Corporate Insolvency
Resolution can be initiated at this stage. Any action in this regard would be at
your own cost, risk and consequences.
Kindly note that this reply is without prejudice to any other rights or remedies
available to our client under contract and in law."
23. A close examination of the aforesaid reply would show that the respondents
have disputed the existence of 'Operational Debt' by disclosing that its
application under section 34 of the Arbitration Act was dismissed and the appeal
under section 37 of the Arbitration Act bearing No. FAO (OS)(COMM) 20 of
2017 was pending adjudication. It is also pertinent to mention that the applicant
has filed a caveat for issuance of notice to it before passing any order. Therefore
the applicants are contesting the litigation tooth nail before this forum. In this
backdrop respondent has claimed no default within the meaning section 8(1)
read with section 3(12) of the Code is deemed to have occurred. It is also
pertinent to notice that execution proceedings for enforcement of the award have
also been initiated and are pending for consideration of the Hon'ble Delhi High
Court on 12.5.2017.
24. In the face of the aforesaid facts we find that there is complete answer to the
claim made by the applicant in terms of section 8(2)(a) read with section 9(1) of
the 'Code' which bars initiation of insolvency process. It cannot be said that
arbitration proceedings have come to an end merely on the dismissal of
637
by Hon’ble NCLAT
application under section 34 of the Arbitration Act as sought to be canvassed on

behalf of the applicant. The proceedings are yet to attain finality as appeal
under section 37 of the Arbitration Act is pending. On behalf of the respondents
reliance has rightly been placed on the judgement of the Bombay High Court
rendered in the cases of DSL Enterprises Private Ltd. (DB) and Rajendra (SB)
(Supra).
25. We have not been able to persuade ourselves to accept the submission
advanced on behalf of the applicant that 'arbitration proceedings' stand
concluded by virtue of section 32 of the Arbitration Act. The argument is wholly
unsustainable once we take into account the provisions of section 33 of the
Arbitration Act itself. It provides for corrections and interpretation of award and
even for additional award after the award has been announced. As already
observed section 34 and section 37 of the Arbitration Act provide for setting
aside of the award and the remedy of appeal. The appeal under section 37 of the
Arbitration Act is still pending. The judgements of Bombay High Court has been
rightly relied upon by the learned counsel for respondents."
18. The Adjudicating Authority further proceeded to observe :
"27. We are further of the view that already proceedings for execution of the
award have been initiated. An effective remedy has been availed by the
applicant. We have not been able to accept that a party can invoke more than
one remedy simultaneously. It is in fact against the fundamental principles of
judicial administration to allow a party to avail more than one remedies.
Ordinarily only one remedy at one time could be availed as is evident from the
fundamental principles laid doivn in section 10 CPC. It would promote forum
shopping which is wholly impermissible in law."
19. To decide the question as to whether the pendency of case under Section 37 of the Arbitration Act
amounts to pendency of a dispute before a court of law, it is desirable to refer the relevant provisions of
the I& B Code.
20. Sub-section (6) of Section 5 of the I &B Code defines 'dispute' as

follows:
"5. In this Part, unless the context otherwise requires,—
(6) "dispute" includes a suit or arbitration proceedings relating to—
638
by Hon’ble NCLAT
(c) the breach of a representation or warranty;"
21. Clause (a) of sub-section (2) of Sec. 8 relates to an existence of dispute, as quoted herein:
"8. (2) The corporate debtor shall, within a period of ten days of the receipt of
the demand notice or copy of the invoice mentioned in sub-section (1) bring to
the notice of the operational creditor—
(a) existence of a dispute, if any, and record of the pendency of the suit or
arbitration proceedings filed before the receipt of such notice or invoice in
relation to such dispute;
(i) by sending an attested copy of the record of electronic transfer of the

unpaid amount from the bank account of the corporate debtor; or
(ii) by sending an attested copy of record that the operational creditor has
encashed a cheque issued by the corporate debtor.
Explanation.— For the purposes of this section, a "demand notice" means a

notice served by an operational creditor to the corporate debtor demanding
repayment of the operational debt in respect of which the default has occurred."
22. From clause (a) of sub-section (2) of Sec. 8, we find that pendency of an arbitration
proceedings has been termed to be an 'existence of dispute' and not the pendency of an application under
Sec. 34 or Sec. 37 of the Arbitration Act.
23.Form 5 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016
(hereinafter referred to as the 'Rules, 2016') is the form required to be filled to apply under Sec. 9 of the
I&B Code, wherein the order passed by Arbitral Panel has b6en cited as one of the document, record and
evidence of default. This is apparent from Part V of Form 5, as quoted below:
"FORM 5
Part-V

[DOCUMENTS, RECORDS AND EVIDENCE OF DEFAULT]
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by Hon’ble NCLAT

2. DETAILS OF RESERVATION / RETENTION OF TITLE
ARRANGEMENTS (IF ANY) IN RESPECT OF GOODS TO WHICH
THE OPERATIONAL DEBT REFERS
ANY _(ATTACH A COPY OF SUCH RECORD)
5. DETAILS OF SUCCESSION CERTIFICATE, OR PROBATE OF A
WILL, OR LETTER OF ADMINISTRATION, OR COURT DECREE
(AS MAY BE APPLICABLE), UNDER THE INDIAN SUCCESSION
ACT, 1925 (10 OF 1925H ATTACH A COPY)
6. PROVISION OF LAW, CONTRACT OR OTHER DOCUMENT
7. A STATEMENT OF BANK ACCOUNT WHERE DEPOSITS ARE
MADE OR CREDITS RECEIVED NORMALLY BY THE
OPERATIONAL CREDITOR IN RESPECT OF THE DEBT OF THE
CORPORATE DEBTOR (ATTACH A COPY)
8. LIST OF OTHER DOCUMENTS ATTACHED TO THIS
IN ORDER TO PROVE THE EXISTENCE OF OPERATIONAL DEBT
AND THE AMOUNT IN DEFAULT
24. The aforesaid provisions and format of application makes it clear that while pendency of the suit
or arbitration proceeding has been termed as existence of dispute, apart from other disputes decree and
award of Tribunal has been shown as record of default.
25. In Kirusa Software Private Ltd. Vs. Mobilox Innovations Private Limited - Company Appeal
(AT) (Insolvency) 6 of 2017, this Appellate Tribunal by judgment dated 24th May, 2017 while deciding
the meaning of 'dispute' and "existence of dispute' held:
"32. There may be other cases such as a suit relating to existence of amount of
debt stands decided and decree is pending for execution. Similarly, existence of
amount of debt or quality of goods or service for which a suit have been filed
and decreed;
640
by Hon’ble NCLAT
an award has been passed by Arbitral Panel, though petition under

Section 34 of Arbitration and Reconciliation Act, 1996 may be pending. In such
case the
question will arise whether a petition under Section 9 will be

maintainable particularly when it was a suit or arbitration proceeding is not
pending, but stand decided?
Though one may argue that Insolvency resolution process cannot be misused for
execution of a judgement and decree passed in a suit or award passed by an
arbitration Tribunal, but such submission cannot be accepted in view of Form 5
of Insolvency & Bankruptcy (Application to Adjudicating Authority) Rules 2016
wherein a decree in suit and award has been shown to be a debt for the purpos6
of default on nonpayment."
26. Under Sec. 36 of .the Arbitration Act, an arbitral award is executable as decree but it can be
enforced only after the time for filing the application under Sec. 34 has expired and no application is
made or such application having been made has been rejected. That means, the arbitral award reaches
finality after expiry of enforceable time under Sec. 34 and/ or if application under Section 34 is filed and
rejected.
27. In Vipul Agarwal vs. Atul Kanodia & Co. and anr. - [AIR 2004 All 205], the Hon'ble Allahabad
High Court observed
"4. The language of the section clearly indicates that the award can be executed
in two situations - one when the time for filing an application for setting aside
the award has expired and no application has been filed or where the
application has been filed and it has been refused. It is not in dispute that an
award can be executed as a decree in view of the provisions of Section 36 of the
Act. The only question for consideration in this case is whether the word
'refused' used in Section 36 of the Act means a final refusal after all the
proceedings of appeal etc. up to the Supreme Court are over or a refusal by the
District Judge is sufficient to make the award executable. If the legislature
intended that it is only after the application under Section 34 has been rejected
at the appellate stage would the award be enforceable it could have used such
words as 'finally refused' in the section. As stated above the first situation
referred to in the section when an award becomes executable is where the
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limitation for filing an application under Section 34 has run out and no
application has been filed The application for setting aside the award in the
context necessarily means the application filed before the District Judge as it is
the running out of the limitation for such an application which would make the
award executable. It is clear, that the opening part of the section does not refer
to the running out of the period of limitation of filing an appeal. Now the second
situation when the award becomes executable is when 'such application having
been made' has been refused. The words "such application having been made"
are significant. The words 'such application' refer to the application
contemplated in the first situation which is clear from the use of the expression
'such' which in the context is used to describe something which has been
referred to earlier. On the plain language the refusal contemplated in the
section is the refusal by the Court where the application is filed and not by the
appellate Court. Section 37(1)(b) of the Act provides for appeal against an order
'setting aside or refusing to set aside an arbitral award under Section 34'. The
reference in the expression 'refusing to set aside an arbitral award' is obviously
to the order of refusal of the application under Section 34 by the Court of first
instance because Section 34 refers to an application made before the Court of
first instance. From the scheme of Sections 34, 36 and 37 it is clear that the
refusal of the application referred to in Section 36 for setting aside the award is
the application filed under Section 34. An interpretation that Section 36 refers to
the refusal of the application at the stage of the appeal is not possible without
straining the language of Section 36 and adding the word 'finally' as qualifying
'refused'. Such an interpretation also does not promote any purpose, which the
legislature may have had in mind. The purpose of arbitration is to provide a
speedy remedy. If the award cannot be executed until it has successfully borne
all challenges even up to the Apex Court it cannot be conceived of as a speedy
remedy. While the legislature has used the word 'final' in respect of an award in
Section 35 the finality being subject to an appeal under Section 37, no such
expression of finality to the decision of an application under Section 34 has been
used in Section 36."
28. Russell on Arbitration (22nd edition) paragraph 6.001 defines an award to mean: "in principle an
award is a final determination of a particular issue or claim in the arbitration.........."
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29. The Hon'ble Supreme Court in Centrotrade Minerals & Metals Inc. vs. Hindustan Copper Limited
[ (2017) 2 SCC 228 I while dealing with the finality of award under Arbitration and Conciliation Act,
1996 observed and held :
"9. The general principle that we have accepted is supported by two passages in
Comparative International Commercial Arbitration. In Para 24-3 thereof reference is
made to Article 31(1) of the United Nations Commission on International Trade Law (or
UNCITRAL) Rules to suggest that while all awards are decisions of the Arbitral
Tribunal, all decisions of the Arbitral Tribunal are not awards. Similarly, while a
decision is generic, an award is a more specific decision that affects the rights of the
parties, has important consequences and can be enforced. The distinction between an
award and a decision of an Arbitral Tribunal is summarised in Para 24-13. It is observed
that an award:
concludes the dispute as to the specific issue determined in the award so that it has res
judicata effect between the parties; if it is a final award,' it terminates the tribunal's
jurisdiction;
(ii) disposes of parties' respective claims;
( i i i ) may be confirmed by recognition and enforcement;
(iv) may be challenged in the courts of the place of arbitration.
10. In International Arbitration a similar distinction is drawn between an award and decisions such as
procedural orders and directions. It is observed that an award has finality attached to a decision
on a substantive issue. Para 9.08 in this context reads as follows:
"9.08. The term "award" should generally be reserved for decisions that finally determine
the substantive issues with which they deal. This involves distinguishing between awards,
which are concerned with substantive issues, and procedural orders and directions, which
are concerned with the conduct of the arbitration. Procedural orders and directions help
to move the arbitration forward; they deal with such matters as the exchange of written
evidence, the production of documents, and the arrangements for the conduct of the
hearing. They do not have the status of awards and they may perhaps be called into
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question after the final award has been made (for example as evidence of 'bias, or 'lack of
due process')."
11. In International Commercial Arbitration the general characteristics of an award are stated. In Para
1353 it is stated as follows:
"1353.—An arbitral award can be defined, as a final decision by the arbitrators on all
or part of the dispute submitted to them, whether it concerns the merits of the dispute,
jurisdiction, or a procedural issue leading them to end the proceedings."
This is subsequently elucidated through four aspects of an award, namely:
(i) an award is made by the arbitrators;
(ii) an award resolves a dispute;
(iii) an award is a binding decision; and
(iv) an award may be partial.
12. The arbitration result in the present case has all the elements and ingredients of an arbitration award.
Taking also into consideration the view expressed by the above authors, we have no hesitation in
concluding that the "arbitration result" in the first part of Clause 14 of the contract must mean an
arbitration award given by the arbitral panel of the Indian Council of Arbitration. To this extent we
disagree with the learned counsel for Centrotrade but agree with the learned counsel for Hindustan
Copper Ltd. (hereafter referred to as "HCL")."
30. Learned counsel appearing on behalf of the respondent referred to the decision of the Hon'ble
Supreme Court in Paramjeet Singh Patheja Vs. ICDS Limited — [ 2006 (13) SCC 322 J wherein
interpreting Section 9(2)(a) and (b) of the Presidency Towns Insolvency Act, 1909, the Apex Court held
an arbitral award is "decree" or "order" for the purpose of insolvency notice under Section 9(2) of the
Presidency Towns Insolvency Act, 1909.
31. The aforesaid decision is not applicable in the present context, the Presidency Town Insolvency
Act, 1909 having superseded by Insolvency and Bankruptcy Code, 2016 and for the purpose of 'dispute'
as 'existence of dispute', only the pendency of arbitral proceeding has been accepted as one of the ground
of dispute. On the other hand, as apparent from Form 5 of Rules, 2016 for the purpose of I&B Code, and
Arbitral Award has been held to be a document of debt and non-payment of awarded amount amounts to
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'default' debt. Therefore, the aforesaid decision referred by learned counsel for the respondent is of no
help to the respondent.
32. What has been held by the learned Adjudicating Authority that a dispute has been pending is not
only against the provision of law and rules framed thereunder, as noticed above, but is also against the
decision of this Appellate Tribunal in Kirusa Software Pvt. Ltd. as noticed above. In this background, the
finding of the Adjudicating Authority that a dispute pending is being against the law cannot be upheld.
33. 'Insolvency and Bankruptcy is an act to consolidate and amend the laws relating to reorganisation
and insolvency resolution of corporate persons in a time bound manner for maximisation of the value of
assets of such person and to promote the entrepreneurship, availability of credit and balance the interests
of all the stakeholders including alteration in the order of priority of payment of the Government dues.'
Insolvency resolution process is not a money suit for recovery nor a suit for execution for any decree or
award as distinct from Section 35 of the Arbitration Act, which relates to execution of an award. For the
reasons aforesaid, while we hold that Corporate Insolvency Resolution Process can be initiated for
default of debt, as awarded under the Arbitration Act, we further hold that the finding of the learned
Adjudicating Authority that it is an executable matter is against the essence of the I&B Code. The
question of availing any effective remedy or alternative remedy, in case of default of debt for an
'operational creditor', as held by the learned Adjudicatory Authority, is not based on any sound principle
of law. For the reasons aforesaid, the impugned order passed by the learned Adjudicating Authority
cannot be sustained.
34. The issues Nos. 1 and 2 as framed and noticed above are, thereby answered in the negative in
favour of the appellant - 'Operational Creditor' and against the respondent - 'Corporate Debtor'.
35. Sub-section (20) of Sec. 5 defines 'Operational Creditor', as follows:
"5. In this Part, unless the context otherwise requires,—
XXX XXX XXX
(20) "operational creditor" means a person to whom an operational debt is owed and
includes any person to whom such debt has been legally assigned or transferred;"
36. Operational Debt is defined in sub-section (21) of Sec. 5 as follows:
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by Hon’ble NCLAT
"(21) "operational debt" means a claim in respect of the provision of goods or services
including employment or a debt in respect of the repayment of dues arising under any
law for the time being in force and payable to the Central Government, any State
Government or any local authority;"
37. From the record, it appears that the 1st appellant claimed to be an 'operational creditor' on the
basis of lease deed. The respondent in its reply has taken a plea that the Adjudicating Authority has
confined its finding to point as dealt with in the impugned order and all other points; though urged and
argued, have not been considered.
38. From the impugned order dated 24th March, 2017, we find that the learned Adjudicating
Authority noticed the aforesaid plea at paragraph 6 of the impugned judgment, as quoted below:
"6.In order to buttress his stand that applicant is an 'Operational Creditor' learned counsel
has placed reliance on a portion of para 3.2.2 of the report of the Bankruptcy Law Reforms
Committee Volume I: Rationale and Design and has argued that the report clearly brings
out that the obligation to pay rent is certainly cover by the definition of expression
'Operational Creditors'. According to the learned counsel the expression 'Operational
Creditor 'used in section 5(20) and 5(21) of the Code must be construed to include the
obligation to pay rent to the applicant as an 'Operational Creditor'. According to the
learned counsel the definition of 'Operational Creditor' as adopted in section 5(20) of
the Code is not exhaustive but it is illustrative as it is evident from the use of word
iinclude'. Mr. Nair has submitted that it is well settled principle of law that wherever the
expression 'include' is used to define an expression then it has room to imply many other
things as the definition is not exclusive."
39. However, we find that the aforesaid issue has not been decided by the learned Adjudicating
Authority, having not entertained the application under Sec. 9, on other ground of 'existence of dispute'.
40. For the reason aforesaid, while we hold that the finding of the learned Adjudicating Authority
insofar as it relates to 'award', 'default of debt' and the 'alternative remedy', are not based on sound
principle and against the provisions of law, we refrain to decide the question as to whether the 1st
appellant is an 'operational creditor' or not which is first required to be decided by learned Adjudicating
Authority.
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41. For the aforesaid reasons, we set aside the impugned order dated 24th March, 2017 and remit the
case to the learned Adjudicating Authority, Principal Bench, New Delhi to decide as to whether the 1st
appellant is an 'operational creditor' and if so, whether the application under Sec. 9 preferred by the
appellants is complete for admitting and initiation of corporate insolvency resolution process. If the first
question relating to status of appellant as 'operational creditor' is decided in affirmative, in favour of the
appellant, then learned Adjudicating Authority will decide the issue whether the application is 'complete
or not' and if not complete may grant seven days' time to the appellants to complete the record as per the
proviso to Sec. 9 of the I&B Code.
42. The appeal is allowed with aforesaid observations. We make it clear that we have not expressed
any opinion in regard to other questions such as whether the 1st appellant is an operational creditor and
whether the application preferred under Sec. 9 is complete or not, which is to be decided by the
Adjudicating Authority after notice to the parties uninfluenced by any observation made in the
impugned order.
43. In the facts and circumstances, however, there shall be no order as to costs.
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NEW DELHI
C.P. (I.B.) No. 79/NCLAT/2017
Applicant: M/s. Bhash Software Labs Pvt. Ltd.

Vs.
Respondent: M/s. Mobme Wireless Solutions Ltd.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Shishira Amarnath, Mr. Shoumendu Mukherji & Mr. Vishwanath,
Learned Advocates
For Respondents/Defendant: Ms. Haripriya Padmanabhan & Ms. Pooja Dhar, Learned Advocates
ORDER
The Respondent-M/s. Mobme Wireless Solutions Ltd-"Operational Creditor" preferred an application

under section 9 of Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as "I &B Code") for
initiation of Corporate Insolvency Resolution Process against Appellant-M/ s. Bhash Software Labs Pvt.
Ltd.-"Corporate Debtor". The Adjudicating Authority, (National Company Law Tribunal), Chennai
Bench, Chennai, by impugned order dated 1st June, 2017 admitted the application, initiated Insolvency
Resolution Process and passed prohibitory orders in terms of I&B Code.
2. The Appellant has challenged the impugned order mainly on following grounds:-
(i) The impugned order has been passed in violation of Rules of natural justice without
notice to the appellant.
(ii) No notice under section 8 of I&B Code or under Rule 5(3) of the I&B (Application to
Adjudicating Authority) Rules, 2016 has been served on the appellant.
(iii) There is an existence of dispute and therefore application under section 9 was not
maintainable.
3. On notice Respondent- "Operational Creditor" has appeared. Ld. Counsel for the Respondent
submitted that the appellant changed its address but had not informed the same to the "Operational
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Creditor". It was further contended that the e-mail notice was served on appellant on 7th March, 2017. A
copy of notice under Section 8 of the I&B Code, 2016 for unpaid debts was attached. However, Ld.
Counsel for the Respondent accepts that the Adjudicating Authority had not issued any notice to the
Appellant before admission of the application under section 9 of the I&B Code.
4. From impugned order dated 5th June, 2017, it is clear that the notice sent by Respondent was not
served on the appellant and was returned with the endorsement "left without information". Though, the
same was noticed by the Adjudicating Authority, instead of directing the respondents to issue fresh notice
on correct and present address, the Adjudicating Authority observed "However, the petition was sent to
proper address".
5. From the record, we find that the Registered Office of the "Corporate Debtor" is at #267-A,
Kilipauck Garden Road, Chennai-600 010. However, the notice was sent to the Appellant on different
address at Dharmaraja Koil Street, Kilpauk Garden, Chennai-600 010'.
6. It is not in dispute that the address of the appellant was changed and recorded in the register with
the Registrar of Companies. It was not the duty of the appellant to inform the "Operational Creditor" the
change of the address for the purpose of filing a case/application under section 9 of the I & B Code. If the
notice under section 8 issued by respondent-"Operational Creditor" was returned due to incorrect address,
it was the duty of the "Operational Creditor" to provide the correct and present address of the 'Corporate
Debtor" before preferring any application under section 9 of the I&B Code.
7. In any case, it is accepted that no notice was issued by the Adjudicating Authority before
admission of the application.
8. In "M/s. Innoventive Industries Ltd. v. ICICI Bank & Anr - Company Appeal (AT) (Insolvency)
No. 1 & 2 of 2017", this Appellate Tribunal held:
"53. In view of the discussion above, we are of the view and hold that the
Adjudicating Authority is bound to issue a limited notice to the corporate debtor
before admitting a case for ascertainment of existence of default based on
material submitted by the financial creditor and to find out whether the
application is complete and or there is any other defect required to be removed.
Adherence to Principles of natural justice would not mean that in every situation
the adjudicating authority is required to afford reasonable opportunity of
hearing to the Corporate debtor before passing its order."
9. In view of the such decision, we hold that the impugned order dated 1st June, 2017 cannot be
upheld having passed in violation of Rules of natural justice.
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10. There is an existing dispute with regard to the debt amount as is apparent from the record.
11. The respondent-"Operational Creditor" issued a notice dated 25th August, 2016 under section
433(e) of the Companies Act, 1956 to the Appellant-"Corporate Debtor" for payment of debt amount.
Notice was issued through Mr. Robi Isaac, Ninan and Mathem, Advocates. Pursuant to the said notice, the
"Corporate Debtor" sent reply through Advocate Mr. Vishwanath Venkatesh on 23rd September, 2016,
raising the dispute about the service rendered by respondent-"Operational Creditor" and pointed out the
poor quality of the service. The relevant portion of the reply dated 23rd September,2016 on behalf of the
appellant reads as follows:
"2. In pursuance of the Service, Our Client was in need of persons with the
infrastructure and technical proficiency to send such bulk SMSes to the public
("Service"). Your Client is one such entity that does so as its primary
occupation and approached Our Client with an offer its expertise to Our Client.
Thereafter, Our Client entered into a Service Level Agreed dated 3 January
2015 ("Agreement") to engage Your Client for the above. As per the
Agreement, Our Client would provide the content of the SMSes and the phone
numbers to which such SMS would be sent and response to any subsequent
interest that the SMS may evoke and Your Client would perform the Service. As
per Annexure III of the Agreement, Our Client was to pay Your Client INR. 085/
- plus taxes per SMS sent by Your Client in pursuance of the Agreement.
3. The Agreement was performed by both parties to satisfaction up till November

2015. In November 2015, Your Client requested Our Client to opt for a higher
category of the Service offered by Your Client, promising Our Client that this
would provide Our Client with access to better network resources that would
enable Our Client to send more SMSes at superior speeds compared to the
category of Service currently by Our Client ("New Service"). If Our Client was
to avail the New Services, the rate for each SMS would be higher than that
stipulated in the Agreement. Your Client assured Our. Client that the New
Service would be optimal for Our Client's requirements and would greatly
benefit Our Client's business. Agreeable to the above, Our Client opted for the
higher category of services offered by Your Client.
4. However, despite availing the New Service, there was no change in the speed
or quality from that of the Service itself. Our Client brought this to Your Client's
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attention on numerous occasions and requested that they address the same
considering that Your Client had commenced invoicing Our Client as per the
rates for the New Service. Despite further, it was brought to Your Client's notice
that the New Service's failure to live up to Your Client's promises are "Priority
Level Problems" as provided for in Annexure IV of the Agreement.
5. The above situation persisted for a few months upon availing the New Service.
Thereafter, in February 2016, rather than address the problems highlighted
above, Your Client abruptly terminated the Agreement, leaving Our Client in the
lurch and scrambling for alternatives to continue the Service. Your Client made
a demand for payment of the outstanding invoices for the period commencing
November 2015 and ending February 2016 for a total amount of INR.
75,76,380/ - ("Invoice Amount"). Our Client once again brought to Your
Client's attention the poor quality of the New Service was a breach of the terms
of the Agreement. However, Our Client, agreed to commence payments towards
the undisputed part of the Invoice Amount while the parties renegotiated the
invoices to factor in the failures of the New Service. Accordingly, Our Client
paid INR. 29,00,000/ - till date towards the Invoice Amount.
xxx xxx xxx
8. Further, we bring to your attention that, the above circumstances is a bona

fide dispute between the parties over the terms of the Agreement. There is no
question of invoking Sec.433(e) of the Companies Act, 1956 against a solvent
entity such as Our Client, and the same would be frivolous, extortionist and a
misuse of judicial process. Our Client shall not be cowed into submission by
threats of malicious prosecution made to preclude Your Client's obligations
under the Agreement and the dispute resolution mechanism provided therein.
9. Therefore, if Your Client elects to pursue such a legally unsound course of

action, it would be at Your Client's risk, cost and embarrassment. Further, in
such an event, Our Client shall be constrained to initiate legal action against
Your Client, both civil and criminal, against Your Client to protect itself against
any adverse consequences to Our Client's reputation and business due to Your
Client's malicious petition."
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12. In "Kirusa Software Private Ltd. v. Mobilox Innovations Private Ltd.- Company Appeal (AT)
(Insol.) No. 6 of 2017" this Appellate Tribunal by judgment dated 24th May, 2017 while interpreting the
meaning of "dispute" and "existence of dispute, if any", observed:
"31. The dispute under I&B Code, 2016 must relate to specified nature in clause (a), (b) or (c) i.e.
However, it is capable of being discerned not only from in a suit or arbitration from any document related
to it. For example, the 'operational creditor' has issued notice under Code of Civil Procedure Code, 1908
prior to initiation of the suit against the operational creditor which is disputed by 'corporate debtor.
Similarly notice under Section 59 of the Sales and Goods Act if issued by one of the party, a labourer/
employee who may claim to be operation creditor for the purpose of Section 9 of I&B Code, 2016 may
have raised the dispute with the State Government concerning the subject matter i.e. existence of amount
of debt and pending consideration before the competent Government. Similarly, a dispute may be pending
in a Labour Court about existence of amount of debt. A party can move before a High Court under writ
jurisdictions against Government, corporate debtor (public sector undertaking).. There may be cases
where one of the party has moved before the High Court under Section 433 of the Companies Act, 1956
for initiation of liquidation proceedings against the corporate debtor and dispute is pending. Similarly,
with regard to quality of foods, if the 'corporate debtor' has raised a dispute, and brought to the notice of
the 'operational creditor' to take appropriate step, prior to receipt of notice under sub-section (1) of Section
8 of the 'I & B Code', one can say that a dispute is pending about the debt. Mere raising a dispute for the
sake of dispute, unrelated or related to clause (a) or (b) or (c) of Sub-section (6) of Section 5, if not raised
prior to application and not pending before any competent court of law or authority cannot be relied upon
to hold that there is a 'dispute' raised by the corporate debtor. The scope of existence of 'dispute', if any,
which includes pending suits and arbitration proceedings cannot be limited and confined to suit and
arbitration proceedings only. It includes any other dispute raised prior to Section 8 in this in relation to
clause (a) or (b) or (c) of sub-section (6) of Section 5. It must be raised in a court of law or authority and
proposed to be moved before the court of law or authority and not any got up or malafide dispute just to
stall the insolvency resolution process."
13. The case of appellant is covered by decision in "Kirusa Software Private Ltd. v. Mobilox
Innovations Private Ltd." There being "existence of dispute", we hold that the petition under section 9
preferred by respondent- "Operational Creditor" was not maintainable.
14. For the reasons aforesaid, we set aside the impugned order dated 1st June, 2017 passed by the Ld.
Adjudicating Authority, Chennai Bench in Company Petition No. 506(IB) / CB /2017.
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by Hon’ble NCLAT
Resolution Professional' or declaring moratorium, freezing of account, if any, and all other order (s)
passed by Adjudicating Authority pursuant to impugned order and action, if any, taken by the 'Interim
16. Learned Adjudicating Authority will fix the fee of 'Interim Resolution Professional ', if appointed,
and the Respondents will pay the fees of the Interim Resolution Professional, for the period he has
functioned. The appeal is allowed with aforesaid observation and direction. However, in the facts and
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by Hon’ble NCLAT

NEW DELHI
C.P. (I.B.) No. 51/NCLAT/2017
Applicant: Steel Knnoect (India) Private Limited

Vs.
Respondent: M/s. Hero Fincorp Limited
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Vivek Sibal, Ms. Pooja M. Saizal & Mr. Ajoy Tola, Learned
Advocates
For Respondents/Defendant: Mr. Venancio D'Costa & Ms. Astha, Learned Advocates
ORDER
The respondent M/s Hero Fincorp Limited (hereinafter referred to as 'Financial Creditor')
preferred an application under Section 7 of the Insolvency and Bankruptcy Code, 2016 (hereinafter
referred to as 'I& B Code'), for initiation of Corporate Insolvency Resolution Process against Appellant-
'Corporate Debtor'. The Learned Adjudicating Authority (National Company Law Tribunal), Ahmedabad
Bench, by impugned order dated 19th April 2017 in C.P.No. (IB) 05/NCLT/AHM/2017, admitted the
application, appointed an Interim Resolution Professional and passed order of moratorium with certain
observations and directions in terms of I&B Code'.
2. Learned Counsel for the appellant submitted that the impugned order was passed by the
Adjudicating Authority in violation of Rules of natural justice without giving any notice to the Appellant
- 'Corporate Debtor'.
3. It was also submitted that no post filing notice under Rule 4(3) of the Insolvency and Bankruptcy
(Application to Adjudicating Authority) Rules, 2016 (hereinafter referred to as 'Adjudicating Authority
Rules') was given by the respondent - "Financial Creditor". A notice was served on appellant, purported to
be a notice under Rule 4(3), was pre filing notice with wrong date of admission of the application
mentioned therein.
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by Hon’ble NCLAT
4. It was further submitted that a record of default recorded with the information utility or a record
of default available with any Credit Information Company (CIBIL) or copies of entries in Banker's book
in accordance with the Bankers Book Evidence Act, 1891 as required in terms of Form - I read with Rule
4 of the Adjudicating Authority Rules was not filed. Reliance was also placed on sub-section (3) of
Section 7 to suggest that record of default recorded with the information utility or such other record or
evidence of default as specified by Insolvency 86 Bankruptcy Board of India (IBBI) has not been filed.
5. On the other hand, according to Learned Counsel for the respondents, the appellant has no locus
to file this appeal after appointment of Interim Resolution Professional, who has already taken over the
management of the 'Corporate Debtor'. The powers of Board of Directors, since then stands suspended in
terms of Section 17(1)(a) & (b) of the 'I&B Code.
6. In so far as notice under Rule 4(3) is concerned, according to Learned Counsel for the respondent
proper notice was issued to the 'Corporate Debtor' who had appeared before Learned Adjudicating
Authority on 17th April 2017 and was given ample opportunity to present the case.
7. Relying on the decision of the Appellate Tribunal in "M/s. Innoventive Industries Ltd. Vs ICICI
Bank 83 Ann" (Company Appeal (AT)(Ins.) Nos. 1 and 2 of 2017 decided on 15th May 2017), it was
contended that the Adjudicating Authority is required to issue only a limited notice to the 'Corporate
Debtor' before admitting a case for ascertainment of existence of default. It was submitted that along with
application under Section 7 of 'I&B Code' preferred before the Learned Adjudicating. Authority, notice
was issued to appellant under Rule 4(3) of the Adjudicating Authority Rules, intimating that the said
application is likely to be listed. Therefore, according to respondent there is no violation of Rule 4(3) of
the Rules or the principles of natural justice.
8. In so far as statement of account is concerned it was contended that Learned Adjudicating

Authority, before admitting the application under Section 7 of the 'I&B Code', is only required to
ascertain whether there has been a default of debt on the part of the 'Corporate Debtor'. In the present
case, the 'Financial Creditor', apart from filing the statement of accounts duly certified by the office of the
'Financial Creditor's Company, filed records of default which is available with CIBIL. In so far as
Banker's Book of Evidence Act 1891 is concerned, it is submitted that the same is not applicable to the
non-banking financial companies.
10. In "M/s Innoventive Industries Limited Vs. ICICI Bank & Anr." - Company Appeal (AT) (Insol.)
No. 1 862 of 2017, this Appellate Tribunal by judgement dated 15th May 2017, noticed the exception of
the principle of rules of natural justice, as follows: -
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by Hon’ble NCLAT
"42. From the aforesaid decisions of Hon'ble Supreme Court, the exception on
the Principle of Rules of natural justice can be summarised as follows: -
(i) Exclusion in case of emergency,
(ii) Express statutory exclusion
(iii) Where discloser would be prejudicial to public interests
(iv) Where prompt action is needed,
(v) Where it is impracticable to hold hearing or appeal,
(vi) Exclusion in case of purely administrative matters.
(vii) Where no right of person is infringed,
(viii) The procedural defect would have made no difference to the outcome.
(ix) Exclusion on the ground of 'no fault' decision maker etc."
11. In the said case this Appellate Tribunal, taking into consideration the facts that though notice was
not issued to "M/s Innoventive Industries Limited" (Appellant), but the said appellant having appeared
and heard by Adjudicating Authority at the time of admission of the application under Section 9 of the
'I&B Code', observe and held as under: -
"65. In the present case though no notice was given to the Appellant before
admission of the case but we find that the Appellant intervened before the
admission of the case and all the objections raised by appellant has been
noticed, discussed and considered by the 'adjudicating authority' while passing
the impugned order dated 17th January 2017. Thereby, merely on the ground
that the Appellant was not given any notice before admission of the case cannot
render the impugned order illegal as the Appellant has already been heard. If
the impugned order is set aside and the case is remitted back to the adjudicating
authority, it would be 'useless formality' and would be futile to order its
observance as the result would not be different. Therefore, order to follow the
principles of natural justice in the present case does not arise."
12. In the present case we find that the respondent issued post filing notice under Rule 4(3) along
with application under Section 7 of 'I&B Code'. In the said notice date of hearing was shown as 11th
April 2017 but the matter was listed before the Adjudicating Authority, a day earlier on 10th April 2017.
In the aforesaid background, the Adjudicating Authority adjourned the matter, and directed to issue notice
656
by Hon’ble NCLAT
on respondent. When the application was taken up for admission on 19th April 2017, the appellant
appeared through their lawyers, Mr. Ketan Parikh with Mr. Pavan Godiawala. Paragraph 6 of the
impugned order dated 19th April 2017 suggests that both the counsel for the "Financial Creditor"
(Respondent) and "Corporate Debtor" (Appellant) were heard wherein after the impugned order was
passed.
In the aforesaid background, we hold that even if it is presumed that no separate notice was issued
by Adjudicating Authority to the "Corporate Debtor", the appellant having heard before passing the
impugned order, the question of remitting the case for hearing on the ground of non-compliance of
principles of natural justice does not arise as it will be futile. For the reason aforesaid we are not inclined
to interfere with the impugned order dated 19th April 2017 on the ground that no notice was issued to
appellant by the Adjudicating Authority.
13. For the same reason, we also reject the plea taken by the appellant that the notice under Rule 4(3)
of the Adjudicating Authority Rules was a pre filing notice, wrong date of hearing having shown therein.
14. Whether enclosures of record of default or copies of entries in Banker's Book as required in terms
of Form - 1, read with Rule 4 of the Adjudicating Authority Rules and sub-section (3) of Section 7 of the
'I & B Code', is mandatory or not fell for consideration before this Appellate Tribunal in "Neelkanth
Township and Construction Pvt. Limited. Vs. Urban Infrastructure Trustees Limited" - Company
Appeal (AT) (Insolvency) No. 44 of 2017 by its judgement dated 11th August 2017. In the said case, this
Appellate Tribunal held:
"18. It is well settled that rules of procedure are to be construed not to frustrate
or obstruct the process of adjudication under the substantive provisions of law.
A procedural provision cannot override or affect the substantive obligation of
the adjudicating authority to deal with applications under Section 7 merely on
the ground that Board has not stipulated or framed Regulations with regard to
sub-section 3(a) of Section 7. The language of Section 240, whereby Board have
been empowered to frame regulations is clear that the said regulation should be
consistent with the 'I & B' Code and the rules made thereunder by the Central
Government.
19. In exercise of power conferred by Section 239 read with Sections 7, 8, 9 and
10 of the 'I & B code, the Central Government framed the rules known as
"Insolvency & Bankruptcy (Application to Adjudicating Authority) Rules, 2016
(hereinafter referred to as 'Adjudicating Authority Rules, 2016). As per Rule 41,
657
by Hon’ble NCLAT
a 'Financial Creditor' required to apply itself or jointly in an application under

Section 7 in terms of Form-1 attached thereto. Part V of Form-1 deals with
particulars of 'Financial Debt' (documents, record and evidence of default), as
quoted below: -
"PART V
PARTICULARS OF FINANCIAL DEBT [ DOCUMENTS,

RECORDS AND EVIDENCE OF DEFAULT]

CREATION, ITS ESTIMATED VALUE AS PER THE CREDITOR. ATTACH A
COPY OF A CERTIFICATE OF REGISTRATION OF CHARGE ISSUED BY
THE REGISTRAR OF COMPANIES (IF THE CORPORATE DEBTOR IS A
COMPANY)
2. PARTICULARS OF AN ORDER OF A COURT, TRIBUNAL OR ARBITRAL

PANEL ADJUDICATING ON THE DEFAULT, IF ANY (ATTACH A COPY OF
THE ORDER)
3. RECORD OF DEFAULT WITH THE INFORMATION UTILITY, IF ANY

4. DETAILS OF SUCCESSION CERTIFICATE, OR PROBATE OF A WILL, OR

LETTER OF ADMINISTRATION, OR COURT DEGREE (AS MAY BE
APPLICABLE), UNDER THE INDIAN SUCCESSION ACT, 1925 (10 OF 1925)
(ATTACH A COPY)
5. THE LATEST AND COMPLETE COPY OF THE FINANCIAL CONTRACT

REFLECTING ALL AMENDMENTS AND WAIVERS TO DATE (ATTACH A
COPY)
6. A RECORD OF DEFAULT AS AVAILABLE WITH ANY CREDIT

INFORMATION COMPANY (ATTACH A COPY)
7. COPIES OF ENT1RES IN A BANKERS BOOK IN ACCORDANCE WITH THE

BANKERS BOOKS EVIDENCE ACT, 1891 (18 OF 1891)
LIST OF OTHER DOCUMENTS ATTACHED TO THIS APPLICATION IN

ORDER TO PROVE THE EXISTENCE OF OPERATIONAL DEBT AND THE
AMOUNT IN DEFAULT"
658
by Hon’ble NCLAT
20. The rules framed by the Central Government under Section 239 having
prescribed the documents, record and evidence of default as noticed above, we
hold that in absence of regulation framed by the Board relating to record of
default recorded with the information utility or other record of evidence of
default specified, "the documents", 'record' and 'evidence of default' prescribed
at Part V of Form-1, of the Adjudicatory Rules 2016 will hold good to decide the
default of debt for the purpose of Section 7 of the 'I &B Code'.
21. We further hold that the 'Regulations framed by the Board' being subject to
the provisions of I&B Code' and rules framed by the Central Government under
Section 239, 'Part V of Form - 1' of Adjudicating Authority Rules, 2016 framed
by Central Government relating to 'documents, 'record' and 'evidence of default,
will override the regulations, if framed by the Board and if inconsistent with the
Rule. However, it is always open to Board to prescribe additional records in
support of default of debt, such as records of default recorded with the
information utility or such other record or evidence of default in addition to the
records as mentioned in Part V of Form-I
22. At this stage, it is pertinent to note that the Board has also framed
Insolvency Resolution Process for Corporate Persons, Regulations, 2016
('Corporate Persons Regulation' for short). It has come into force since
Notification dated 30th November 2016 was issued. Regulation 8 of 'Corporate
Persons Regulation', 2016 relate to claims by 'Financial Creditor'. Regulation
11(2) relates to existence of debt due to 'Financial Creditor', which is to be
proved on the basis documents mentioned therein and quoted below: -
(1) A person claiming to be a financial creditor of the corporate debtor

shall submit proof of claim to the interim resolution professional in electronic
form n Form C of the Schedule:
Provided that such person may submit supplementary documents or

clarifications in support of the claim before the constitution of the committee.
(2) The existence of debt due to the financial creditor may be proved on the
basis of-
659
by Hon’ble NCLAT
(i) a financial contract supported by financial statements as evidence of the

debt;
(ii) a record evidencing that the amounts committed by the financial creditor to
the corporate debtor under a facility has been drawn by the corporate debtor;
(iv) an order of a court or tribunal that has adjudicated upon the nonpayment of
a debt, if any."
23. 'Form - C' attached to the Regulation relates to proof of claim of 'Financial
Creditor' whereunder at Serial No. 10, the 'Financial Creditor' is supposed to
refer the list of documents in proof of claim in order to prove the existence and
non-payment of claim dues to the 'Operational Creditor'.
Therefore, the stand of the appellant that the Board has not framed any
Regulations, relating to clause (a) of sub-section (3) of Section 7, cannot be
accepted."
15. The case of the appellant is covered by the decision in "Neelkanth Township and Construction
Pvt. Ltd.". For the said reason, the contention with regard to documents, records and evidence of default
as raised by appellant is also rejected.
17. For determination of the issue whether the "Corporate Debtor" can prefer appeal under Section
61 of the I&B Code' through the Board of Directors, which stand suspended after admission of an
application it is necessary to refer to Section 17, which reads as follows:
"17. Management of affairs of corporate debtor by interim resolution

professional. —
(1) From the date of appointment of the interim resolution professional, —
(a) the management of the affairs of the corporate debtor shall vest in the
interim resolution professional;
(b) the powers of the board of directors or the partners of the corporate debtor,
as the case may be, shall stand suspended and be exercised by the interim
resolution professional;
660
by Hon’ble NCLAT
(c) the officers and managers of the corporate debtor shall report to the interim
resolution professional and provide access to such documents and records of the
corporate debtor as may be required by the interim resolution professional;
(d) the financial institutions maintaining accounts of the corporate debtor shall
act on the instructions of the interim resolution professional in relation to such
accounts and furnish all information relating to the corporate debtor available
with them to the interim resolution professional.
(2) The interim resolution professional vested with the management of the
corporate debtor shall—
(a) act and execute in the name and on behalf of the corporate debtor all deeds,
receipts, and other documents, if any;
(b) take such actions, in the manner and subject to such restrictions, as may be
specified by the Board;
(c) have the authority to access the electronic records of corporate debtor from
information utility having financial information of the corporate debtor;
(d) have the authority to access the books of account, records and other relevant
documents of corporate debtor available with government authorities, statutory
auditors, accountants and such other persons as may be specified."
16. From Clause (a) of sub-section (1) of Section 17 while it is clear that the Management of affairs
of the 'Corporate Debtor' stand vested with the 'Interim Resolution Professional', such vesting is limited
and restricted to the extent of power vested under sub-section (2) of Section 17 which empowers the
'Interim Resolution Professional' to act and execute in the name of 'Corporate Debtor' all deeds, receipts,
and other documents, if any, to take such action in the manner and subject to such restrictions, as may be
specified by the Board and have access of authority to the electronic records of 'Corporate Debtor', books
of accounts, records etc.
From the aforesaid provision we find that "Interim Resolution Professional' has not been vested
with any specific power to sue any person on behalf of. the 'Corporate Debtor'. However, in case of such
difficulty, it is always open to the 'Interim Resolution Professional' to bring to the notice of the
Adjudicating Authority for appropriate order.
17. Admittedly, 'Corporate Debtor' was a party respondent to the resolution process when
application under Section 7 or 9 is preferred. The 'Corporate Debtor' represented itself, at the initial stage
661
by Hon’ble NCLAT
before the Adjudicating Authority through the Board of Directors or person authorised by the Board of
Directors. It is only after hearing the 'Corporate Debtor' the Adjudicating Authority can pass an order
under Section 7 or 9, admitting or rejecting the application.
18. Once the application under Section 7 or 9 is admitted, the 'Corporate Insolvency Resolution
Process' starts in such case one of the aggrieved party being the 'Corporate Debtor' has a right to prefer
an appeal under Section 61, apart from any other aggrieved person like Director(s) of the company or
members, who do not cease to be Director(s) or member(s), as they are not suspended but their function
as 'Board of Director(s)' is suspend.
19. The 'Corporate Debtor' if represented before the Adjudicating Authority through its Board of
Directors or any person authorised by Board of Director or its officers, for the purpose of.preferring an
appeal, no objection can be raised that the 'Corporate Debtor' cannot appear through its Board of
Directors .or authorised person or officer through whom 'Corporate Debtor' represented before the
Once a 'Corporate Debtor' appeared before the Adjudicating Authority through its Board of
Director(s) or its officers or through authorised person and is heard before admission of an application
under I&B Code', being aggrieved such 'Corporate Debtor' cannot prefer an appeal under Section 61 on
the ground that the 'Corporate Debtor' appeared through another person 'Interim Resolution Professional',
though he had not appeared before the Adjudicating Authority.
20 Though the Board of Directors or partners of 'Corporate Debtor', as the case may be is suspended
and their power can be exercised by the 'Interim Resolution Professional', but such exercise of power is
limited to the extent to sub-section (2) of Section 17 of the 'I&B Code' and not for any other purpose. If
the matter is looked from another angle, it will be clear as to why 'Corporate Debtor' should not be
represented through 'Interim Resolution Professional' for preferring an appeal under Section 61 of the
'I&B Code'. The Role of 'Interim Resolution Professional' starts after initiation of 'Corporate Insolvency
Resolution Process' against the 'Corporate Debtor'. The 'Interim Resolution Professional' once given
consent to function directly or indirectly he cannot challenge his own appointment, except in case where
he has not given consent. If the 'Corporate Debtor' is left in the hands of 'Interim Resolution Professional'
to raise his grievance by filing an appeal under Section 61, it will be futile, as no 'Interim Resolution
Professional' will challenge the initiation of 'Insolvency Resolution Process' which ultimately result into
the challenge of his appointment.
21. For example, if an application under Section 7 or 9 is admitted and at the stage of admission, the
'Interim Resolution Professional' is not appointed and such appointment is made later on within 14 days
662
by Hon’ble NCLAT
of admission under Section 16, then in case of appointment of an ineligible 'Interim Resolution
Professional' against whom a Departmental proceeding is pending; can the 'Corporate Debtor' prefer
appeal under Section 61 challenging the appointment of 'Interim Resolution Professional', if the
'Corporate Debtor' is asked to be represented through the same very 'Interim Resolution Professional'?
The answer will be in negative means a 'Corporate Debtor' in such case cannot be represented to the
'Interim Resolution Professional', whose appointment is under challenge and for all purpose to be
represented through the person who represented the 'Corporate Debtor' at the stage of admission before
22. At this stage, it is desirable to notice that though pursuant to Section 17, the Board of Directors
of a 'Corporate Debtor' stand suspended (for a limited period of 'Corporate Resolution Process maximum
180 days or extended period of 90 days i.e. 270 days), but they continued to remain as Directors and
members of the Board of Directors for all purpose in the records of Registrar of Companies under the
Companies Act 2013.
23. For the reasons aforesaid, we also reject the plea taken by Learned Counsel for the appellant that
the "Corporate Debtor' has no locus to prefer appeal under sub-section (1) of Section 61 through its
Board of Directors or authorise person or its officers except through the "Interim Resolution
Professional".
circumstances of the case the parties shall bear the respective costs.
663
by Hon’ble NCLAT

NEW DELHI
C.P. (I.B.) No. 126/NCLAT/2017
Applicant: Chharia Holdings Pvt. Ltd.

Vs.
Respondent: Brys International Pvt. Ltd. & Ors.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Pawan Sharma & Ms. Arpita yadav, Learned Advocates
ORDER
The appellant who claimed to be 'Financial Creditor' filed an application under section 7 of the
Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as "I&B Code") for initiation of
'Corporate Insolvency Resolution Process' against the Respondents-M/ s. Brys International Pvt. Ltd. 86
Ors. ('Corporate Debtor'). Ld. Adjudicating Authority (National Company Law Tribunal), Principal
Bench, New Delhi, by impugned order dated 22nd June, 2017 dismissed the application under section 7
of the 'I&B Code' preferred by appellant with the following observations:-
"On reading of the above 2 sub-sections, it is apparent that while there is a

provision for the Adjudicating Authority to make a reference to the Board for a
recommendation of an Insolvency professional, in the case of an operational
creditor, there is no such provision in the case of a financial creditor. The instant
application has been filed under section 7 of IBC as a financial creditor. The
applicant financial creditor has not proposed the name of any insolvency
professional and thus, has not fulfilled the requirement as in sub-section 3 (b) of
section 7 of the Code, which reads as follows: -
"The financial creditor shall, along with the application furnish -
664
by Hon’ble NCLAT
(a) Record of the default recorded with the information utility or such other

resolution professional ; and
(c) any other information as may be specified by the Board."
Hence, we are unable to admit the application for insolvency as the same is not
complete. Application is dismissed."
2. Ld. Counsel for the appellant submits that the appellant had proposed the name of the 'Interim
Resolution Professional' and referred to Part-III of the application filed under section 7 in format to
suggest that name of one "Mr. Vivek Raheja, R/o CU-49, Pitampura, Delhi-110088 with e-mail address
vivek@vpgs.in and Registration No. IBBI/IPA-01/IP-00006/2016-17" along with consent letter of the
'Interim Resolution Professional' in Annexure A-4 attached thereto. It is also submitted that non-
furnishing the name of proposed 'Interim Resolution Professional' will not render the application
incomplete.
3. The questions arise for consideration in this appeal are:
(i) Whether it is mandatory for a 'Financial Creditor' to propose the name of 'Interim Resolution
Professional' in an application under section 7 of the '1&B Code'?
(ii) Whether in absence of proposal of name of 'Interim Resolution Professional' the application
is incomplete?
(iii) Whether the impugned order dated 22nd June, 2017 is legal and valid?
4. Before deciding the first two questions, it is desirable to notice the relevant facts as pleaded by
the parties.
5. Appellant has pleaded and not disputed by respondents that the appellant preferred an
application under section 7 in Form-1 of the Insolvency and Bankruptcy (Application to Adjudicating
Authority) Rules, 2016. In the said Form-1, the appellant has proposed the name of 'Interim Resolution
Professional', as apparent from the record and noticed in the preceding paragraph. In view of such
admitted facts, the impugned order dated 22nd June, 2017 cannot be sustained and the matter is required
to be remitted back to the Ld. Adjudicating Authority for admission of the case, if the application is
otherwise complete.
665
by Hon’ble NCLAT
6. To determine the question as to whether it is mandatory for the 'Financial Creditor' to propose
the name of an 'Interim Resolution Professional' in the application under section 7 of the 'I&B Code', it is
desirable to notice the relevant provisions.
7. As per clause (b) of Sub-section (3) of Section 7 the 'Financial Creditor' required to furnish name
of the resolution professional proposed to act as an 'Interim Resolution Professional', the relevant portion
of which reads as follows: -
"7. Initiation of corporate insolvency resolution process by financial creditor.

—(1) A financial creditor either by itself or jointly with other financial creditors
occurred.
Explanation. —For the purposes of this subsection, a default includes a default

(2) The financial creditor shall make an application under sub-section (1) in
such form and manner and accompanied with such fee as may be prescribed.

application under sub-section (2), ascertain the existence of a default from the
the financial creditor under subsection (3)."
8. However, under sub-section (4) of Section 9 an 'Operational Creditor' has been given option to
propose the name of any 'Interim Resolution Professional' of its own choice, which reads as follows:
"9. Application for initiation of corporate insolvency resolution process by

operational creditor.—(1) After the expiry of the period of ten days from the
666
by Hon’ble NCLAT
date of delivery of the notice or invoice demanding payment under sub-section

(1) of section 8, if the operational creditor does not receive payment from the
corporate debtor or notice of the dispute under subsection (2) of section 8, the
operational creditor may file an application before the Adjudicating Authority
for initiating a corporate insolvency resolution process.
(2) The application under sub-section (1) shall be filed in such form and manner
(b) an affidavit to the effect that there is no notice given by the corporate debtor
relating to a dispute of the unpaid operational debt;
(c) a copy of the certificate from the financial institutions maintaining accounts
of the operational creditor confirming that there is no payment of an unpaid
operational debt by the corporate debtor; and

xxx xxx xxx
9. From the aforesaid provision, it is clear that the 'Operational Creditor' may provide the name of
an 'Interim Resolution Professional' and in a particular case, the 'Operational Creditor' may not provide
the name of the 'Operational Creditor'.
10. In so far the 'Corporate Applicant' is concerned, in their case provision has been made under
clause (b) of sub-section (3) of Section 10 to furnish the name of 'Interim Resolution Professional', as
quoted below: -
"10. Initiation of corporate insolvency resolution process by corporate

applicant. - (1) Where a corporate debtor has committed a default, a corporate
applicant thereof may file an application for initiating corporate insolvency
resolution process with the Adjudicating Authority.
667
by Hon’ble NCLAT
(2) The application under sub-section (1) shall be filed in such form, containing
such particulars and in such manner and accompanied with such fee as may be
prescribed.
information relating to—
(a) its books of account and such other documents relating to such period as
may be specified; and
(b) the resolution professional proposed to be appointed as an interim resolution

professional.
(4) The Adjudicating Authority shall, within a period of fourteen days of the
receipt of the application, by an order—
(a) admit the application, if it is complete; or
(b) reject the application, if it is incomplete:
Provided that Adjudicating Authority shall, before rejecting an application, give

a notice to the applicant to rectify the defects in his application within seven
days from the date of receipt of such notice from the Adjudicating Authority.
11. On bare reading of the provisions aforesaid, it is clear that subsection (3)(b) of Section 7 and sub-
section (3)(b) of Section 10, are mandatory and the 'Financial CreditOr' and the 'Corporate Applicant' are
required to furnish the name of 'Interim Resolution Professional', failing which application being defective
may be rejected.
12. On the other hand on bare perusal of sub-section (4) of Section 9, it is clear that for the
'Operational Creditor' it is not mandatory to propose the name of an 'Interim Resolution Professional', in
view of the word 'may' used in sub-section (4) of Section 9, as distinct from word 'shall' used in sub-
section (3) of Section 7 and sub-section (3) of Section 1Q of 'MO Code'.
13. Section 16 relates to appointment and tenure of 'Interim Resolution Professional' which reads as
follows: -
"16. Appointment and tenure of interim resolution professional. —(1) The

Adjudicating Authority shall appoint an interim resolution professional within
fourteen days from the insolvency commencement date.
668
by Hon’ble NCLAT
(2) Where the application for corporate insolvency resolution process is made
by a financial creditor or the corporate debtor, as the case may be, the
resolution professional, as proposed respectively in the application under
section 7 or section 10, shall be appointed as the interim resolution professional,
if no disciplinary proceedings are pending against him.
(3) Where the application for corporate insolvency resolution process is made
by an operational creditor and—
(a) no proposal for an interim resolution professional is made, the Adjudicating

Authority shall make a reference to the Board for the recommendation of an
insolvency professional who may act as an interim resolution professional;
(b) a proposal for an interim resolution professional is made under sub-section

(4) of section 9, the resolution professional as proposed, shall be appointed as
the interim resolution professional, if no disciplinary proceedings are pending
against him.
(4) The Board shall, within ten days of the receipt of a reference from the
Adjudicating Authority under sub-section (3), recommend the name of an
insolvency professional to the Adjudicating Authority against whom no
disciplinary proceedings are pending.
(5) The term of the interim resolution professional shall not exceed thirty days
from date of his appointment."
14. From sub-section (2) of Section 16, it is clear that the 'Interim Resolution Professional', who have
been proposed by 'Financial Creditor' and 'Corporate Applicant' under section 7(3)(b) and Section 10(3)(b)
respectively are to be appointed as 'Interim Resolution Professional', if no disciplinary proceedings are
pending. On the other hand, Clause (b) of sub-section (3) of Section 16 makes it is clear that if the name
of 'Interim Resolution Professional' is proposed by 'Operational Creditor' as per subsection (4) of Section
9, then only such person is to be appointed, if no disciplinary proceedings are pending, on the other hand,
if no name of 'Interim Resolution Professional' is proposed by an 'Operational Creditor', the Adjudicating
Authority is required to make reference to the Board for recommendation of an 'Interim Resolution
Professional' under subsection (1) read with sub-section 3(a) of Section 16 who may act as an 'Insolvency
Resolution Professional'.
15. If Section 7(3)(b), Section 9(4) and Section 10(3)(b) are read along with Section 16, it will be
clear that while it is mandatory for 'Financial Creditor' and 'Corporate- Applicant' to propose name of an
669
by Hon’ble NCLAT
'Interim Resolution Professional', but for 'Operational Creditor' it is not mandatory and the 'Operational
Creditor' may or may not propose the name of an 'Interim Resolution Professional'.
16. In view of the findings aforesaid, while we uphold the decision of the Adjudicating Authority that
proposal of name of 'Interim Resolution Professional' in terms of clause (b) of sub-section (3) of Section 7
is mandatory, but in the facts and circumstances of the case, as the name of 'Interim Resolution
Professional' has already been proposed by the Appellant-'Financial Creditor', the impugned order dated
22nd June, 2017 cannot be upheld.
17. Further, we are of the view that if the application filed by 'Financial' Creditor' or 'Corporate
Applicant' is defective in absence of name of an 'Interim Resolution Professional', then in such case in
terms of proviso to Section 7 and Section 10, the Adjudicating Authority is required to give a notice to the
applicant to rectify the defect within seven days of the receipt of such notice.
18. For the reasons aforesaid, we set aside the impugned order dated 22nd June, 2017 passed in
Company Petition No. IB-80(PB)/2017 and remit the case to the Ld. Adjudicating Authority, Principal
Bench, New Delhi. If the application is otherwise complete, Ld. Adjudicating Authority will admit the
application. However, in case of any defect, the appellant be provided with seven days' time to remove the
defects/ complete record.
19. The appeal is allowed with the aforesaid observations. However, in the facts and circumstances of
the case, there shall be no order as to costs.
670
by Hon’ble NCLAT

NEW DELHI
C.P. (I.B.) No. 127/NCLAT/2017
Applicant: M/s. Paharpur Cooling Towers Limited

Vs.
Respondent: Dalmia Cement (Bharat) Limited
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Murari, Mr. Raj Jhabakh & Mr. Anandh. K, Learned Advocates
For Respondents/Defendant: Mr. Goutham Shivshankar, Mr. Avinash Krishanan & Mr. Prashant,
Learned Advocates
ORDER
On 8th August, 2017, notice was issued and the following observations were made by this
Appellate Tribunal: -
"The question arises whether the Tribunal ought to have allowed the appellant
to start the insolvency and bankruptcy proceeding without giving notice under
Section 8 of the Insolvency and Bankruptcy Code, 2016 ( I&B Code for short),
followed by Rule 4(3) of the Insolvency and Bankruptcy (Application to
(Adjudicating Authority) Rules, 2016, before going through the question whether
the bank statement as per Section 9(3),(b) & (c) of the I & B Code has been
complied with or not?
Shri Gautam Shivshankar, Advocate accepts notice on behalf of the respondent.

No further notice need be issued on it. The respondent is allowed a week's time
to file reply. Rejoinder, if any, be filed within a week thereof. Post the matter on
31st August 2017."
2. We have noticed that the Central Government issued Notification No. G.S.R. 1119(E) dated 7th
December, 2016 exercising powers conferred under sub-sections (1) and (2) of Section 434 of the
671
by Hon’ble NCLAT
Companies Act, 2013 read with sub-section (1) of Section 239 of the Insolvency and Bankruptcy' Code,
2016 framed the Companies (Transfer of Pending Proceedings) Rules, 2016. Rule 5 therein reads as
follows: -
"5. Transfer of pending proceedings of Winding up on the ground of inability to

pay debts.- (1) All petitions relating to winding up under clause (e) of section
433 of the Act on the ground of inability to pay its debts pending before a High
Court, and where the petition has not been served on the respondent as required
under rule 26 of the Companies (Court) Rules, 1959 shall be transferred to the
Bench of the Tribunal established under sub-section (4) of section 419 of the
Act, exercising territorial jurisdiction and such petitions shall be treated as
applications under sections 7, 8 or 9 of the Code, as the case may be, and dealt
with in accordance with Part H of the Code:
Provided that the petitioner shall submit all information, other than information
forming part of the records transferred in accordance with Rule 7, required for
admission of the petition under sections 7, 8 or 9 of the Code, as the case may
be, including details of the proposed insolvency professional to the Tribunal
within sixty days from date of this notification, failing which the petition shall
abate.
(2) All cases where opinion has been forwarded by Board for Industrial and
Financial Reconstruction, for winding up of a company to a High Court and
where no appeal is pending, the proceedings for winding up initiated under the
Act, pursuant to section 20 of the Sick Industrial Companies (Special
Provisions) Act, 1985 shall continue to be dealt with by such High Court in
accordance with the provisions of the Act."
3. The aforesaid notification was doubted by this Appellate Tribunal as we were of the view that
Central Government while exercising powers conferred under sub-sections (1) and (2) of Section 434 of
the Companies Act, 2013 has no jurisdiction to frame Rules with respect to transferred cases under Rule
239 of the Insolvency and Bankruptcy Code, 2016. This was also pointed out to the Central Government.
4. This was also noticed by Appellate Tribunal in the case of "Unimark Remedies Ltd. Vs. Ashok
Alco Chem Ltd. in Company Appeal (AT) (Insol.) No.45 of 2017" disposed of on 21st July, 2017. The
Central Government thereafter came out with the notification dated 28th February, 2017, under the same
provision as referred to earlier and framed the Companies (Transfer of Pending Proceedings) Amended
672
by Hon’ble NCLAT
Rules, 2017, therein in place of 'sixty days' time, the time was extended to 'six months' from the date of
transfer. Rule 2 of amended Rules 2017 reads as follows:-
"2. In the Companies (Transfer of Pending Proceedings) Rules, 2016, in rule 5,

in sub-rule (1) in the proviso for the words "sixty days" the words "six months"
shall be substituted."
5. In that view of the matter, the matter should have been transferred within the time allowed to act
in view of said Rules which was extended by 'six months'. However, suddenly the Central Government
issued a Notification No. GSR 732(E) dated 29th June, 2017, whereby in exercise of the powers conferred
under sub-sections (1) and (2) of Section 434 of the Companies Act, 2013 read with sub-section (1) of
Section 239 of the Insolvency and Bankruptcy Code, 2016 amended the Rule known as The Companies
(Transfer of Pending Proceedings) Second Amendment Rules, 2017 wherein Rule 5 was substituted and
time was granted only till 15th July, 2017.

pay debts.— (1) All petitions relating to winding up of a company under clause
(e) of section 433 of the Act on the ground of inability to pay its debts pending
before a High Court, and, where the petition has not been served on the
respondent under rule 26 of the Companies (Court) Rules, 1959 shall be
transferred to the Bench of the Tribunal established under sub-section (4) of
section 419 of the Companies Act, 2013 exercising territorial jurisdiction to be
dealt with in accordance with Part of the Code:
Provided that the petitioner shall submit all information, other than
information forming pan of the records transferred in accordance with rule 7,
required for admission of the petition under sections 7, 8 or 9 of the Code, as the
case may be, including details of the proposed insolvency professional to the
Tribunal upto 15th day of July, 2017, failing which the petition shall stand
abated:
Provided further that any party or parties to the petitions shall, after the
15th day of July, 2017, be eligible to file fresh applications under sections 7 or 8
or 9 of the Code, as the case may be, in accordance with the provisions of the
Code:
Provided also that where a petition relating to winding up of a company

is not transferred to the Tribunal under this rule and remains in the High Court
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and where there is another petition under clause (e) of section 433 of the Act for
winding up against the same company pending as on 15th December, 2016, such
other petition shall not be transferred to the Tribunal, even if the petition has not
been served on the respondent."
6. Ld. Counsel for the appellant submits that the appellant was entitled to act in terms of the First
Amended Rules published by notification dated 28th February 2017 i.e. in, six months, before issuance of
the subsequent Second Amended Rule by notification dated 29th June, 2017. Before last date of
completion on 15th July, 2017, the impugned order was passed on 6th July, 2017 rejecting the transfer
application on the ground that steps have not been taken in terms of Rule 5.
7. We have heard Ld. Counsel for the appellant and Ld. Counsel for the respondent. The aforesaid
fact has not been denied.
8. Ld. Counsel for the respondent submits that before treating the petition under section 9, the
respondent should have given notice under section 8 of the Insolvency and Bankruptcy Code, 2016.
9. Taking into consideration the totality of the case, while we accept the stand taken by Ld. Counsel
for the appellant that it should have been allowed time till 15th July, 2017 to take steps in terms of Second
Amended Rules published on 29th June, 2017 i.e. prior to the impugned order, but setting aside of the
impugned order will be of no avail as no further time can be granted to the appellant to act in terms of
Rules aforesaid which is not in force after 15th July, 2017.
10. In the circumstances, in terms of Second proviso to Second Amendment Rule 5, the appellant is
allowed to file a fresh application under Section 7 or Section 9 of the Insolvency and Bankruptcy Code,
2016, as the case may be, in accordance with the provision of the I&B Code. It is for the appellant is to
decide whether it comes within the meaning of 'Financial Creditor' or 'Operational Creditor'. If the
appellant feels that if the company is an 'Operational Creditor' then before filing application under section
9, it will provide notice under section 8 to the ',Corporate Debtor' and follow all conditions of the
Insolvency and Bankruptcy Code and Rules framed thereunder.
11. In such case, the application cannot be decided on the ground of limitation taking into
consideration that the appellant originally preferred a petition under section 433(e) of the Companies Act,
1956, for the purpose of counting delay and laches.
12. It will also be open to the respondent to raise all the objections at the stage of giving reply to
Section 8 notice or at the time of admission of the application.
13. The appeal stands disposed of with aforesaid observations and directions. However, in the facts
and circumstances, there shall be no order as to cost.
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by Hon’ble NCLAT

NEW DELHI
C.P. (I.B.) No. 130/NCLAT/2017
Applicant: Sysco Industries Ltd.

Vs.
Respondent: Ecoplast Ltd.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Pankaj Jain & Mr. Ashok Jain, Learned Advocates
ORDER
When the matter was taken up, it is informed that the parties have settled the dispute and Hon'ble
Supreme Court of India accepted the settlement vide order dated 28th August, 2017 in Civil Appeal
No.10581 of 2017, which reads as follows:-
"Heard. Mr. Shyam Divan, learned senior counsel for the appellant and Mr.
U.K. Choudhary, learned senior counsel for respondent No. 1.
Though we find that the order passed by the National Company Law Appellate
Tribunal is correct, yet we think it is a fit case to exercise power under Article
142 of the Constitution and accept the settlement that has been entered into
between the parties. As we are accepting the settlement, the peoceeding pending
before the national company law tribunal shall stand disposed of.
Needless to say the cheque that has been given by the appellant shall have to be
honoured failing which the Managing Directed and others shall be liable for
contempt of this Court. The present order shall not debar other creditors if they
intend to proceed against the appellant. The appeal is disposed of accordingly.
There shall be no order as to costs." In view of the order passed by the Hon'ble
Supreme Court, the appeal is closed and stands disposed of.
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by Hon’ble NCLAT
676
by Hon’ble NCLAT

NEW DELHI
C.P. (I.B.) No. 139/NCLAT/2017
Applicant: M/s. Kee Projects Ltd.

Vs.
Respondent: Sharda Rawat
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Dr. Anurag Kumar Agarwal and Mr. Umesh Mishra, Learned
Advocate
For Respondents/Defendant: Mr. Rakesh Mukhija,Learned Advocates
ORDER
1. The appellant has preferred this appeal against judgement dated 6th July, 2017 passed by the
Learned Adjudicating Authority (National Company Law Tribunal), Principal Bench, New Delhi
(hereinafter referred to as 'Adjudicating Authority') in CO.PET. No. 662 /2016. By the impugned order;
learned Adjudicating Authority, on a transfer petition of winding-up under Section 439 read with Section
443 read with Section 433(e) read with Section 434 of the Companies Act, 1956, treated the application
preferred by the respondent as an application under Section 9 of the Insolvency and Bankruptcy Code,
2016 (hereinafter referred to as 'I&B Code') pursuant to the Central Government Notification No. G.S.R.
1119(E) dated 7th December, 2016 and admitted the application.
2. The main grievance of the appellant is that the impugned order has been passed in violation of the
rules of natural justice without notice to the appellant. Learned counsel for the appellant further submits
that the matter has also been settled with the respondent-'Operational Creditor' (Sharda Rawat) and part
payment of Rs.9,21,619/- (Rupees Nine Lakhs Twenty One Thousand Six Hundred and Nineteen only)
has been made by a draft bearing No. 020489 dated 19th August, 2017 drawn on HDFC Bank, Meera
Bagh, Outer Ring Road Branch, New Delhi.
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by Hon’ble NCLAT
3. Shri Rakesh Mukhija, learned counsel appearing for the respondent accepts that the impugned
order was passed without notice to the appellant-'Corporate Debtor'. From the judgement also, while we
find that the names of the advocates appearing on behalf of 'Operational Creditor' have been recorded, no
appearance has been shown on behalf of the 'Corporate Debtor'.
4. In "Innoventive Industries Ltd. Vs. ICICI Bank & Anr."- [Company Appeal (AT) (Insolvency)
Nos. 1 & 2 of 2017], the Appellate Tribunal by judgement dated 15th May, 2017 held :
"53. In view of the discussion above, we .are of the view and hold that
the Adjudicating Authority is bound to issue a limited notice to the
corporate debtor before admitting a case for ascertainment of existence
of default based on material submitted by the corporate debtor and to
find out whether the application is complete and or there is any other
defect required to be removed. Adherence to Principles of natural justice
would not mean that in every situation the adjudicating authority is
required to afford reasonable opportunity of hearing to the Corporate
debtor before passing its order."
5. In the circumstances, as the case of the appellant is covered by the decision in "Innoventive
Industries Ltd. Vs. ICICI Bank & Anr." and the impugned order has been passed in violation of rules of
natural justice, we set aside the impugned order.
6. The case is remitted to the learned Adjudicating Authority, Principal Bench, New Delhi to
decide the professional fee of Interim Resolution Professional, if appointed, and if any amount is
payable, will direct the appellant to pay the same and will close the case in view of the settlement.
The appeal is allowed with the above observations. However, in the facts and circumstances of the
case, there shall be no order as to costs.
678
by Hon’ble NCLAT

NEW DELHI
C.P. (I.B.) No. 131/NCLAT/2017
Applicant: Ms. Vidul Sharma

Vs.
Respondent: M/s. Technopak Advisors Pvt. Ltd.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Alok Kumar and Mr. Abhishek Paruthi, Learned Advocate
For Respondents/Defendant: Mr. Shambhu Sharan and Mr. Shashaank Bhansali ,Learned Advocates
ORDER
Admittedly, the Salary, Gratuity and Provident fund of the appellant has been paid before
admission of the application under section 9 of the Insolvency and Bankruptcy Code, 2016. It is also not
in dispute that the provident fund amount and gratuity have been paid along with interest.
Ld. Counsel appearing on behalf of the respondent submits that after payment, the disputed
claim is only Rs.58,264.02/ -. This is also clear from impugned order.
In the circumstances, as the amount is less than Rupees One lakh, in view of Section 4 of
Insolvency and Bankruptcy Code, the application is not maintainable.
For the reasons aforesaid, we are not inclined to interfere with the impugned order dated 27th
June, 2017 passed by Learned Adjudicating Authority, Principal Bench, New Delhi in Company Petition
No. (IB) No. 53(PB)2017. The appeal is dismissed. However, in the facts and circumstances, there shall
be no order as to costs.
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by Hon’ble NCLAT

NEW DELHI
C.P. (I.B.) No. 144 & 149/NCLAT/2017
Applicant: Jammu Paper Pvt. Ltd.

Vs.
Respondent: Shiv Pooja Traders
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Arun Kathpalia, Mr. Jayant Mehta, Mr. Atul Sharma, Mr. Nitesh
Jain, Ms. Arveena Sharma and Mr. Shubhankar, Learned Advocate
For Respondents/Defendant: Mr. Nonu Khera, Learned Advocates
ORDER
1. Both the appeals have been preferred by the appellant against order(s) dated 10th July, 2017 and
21st July, 2017 passed by the Adjudicating Authority (National Company Law Tribunal), Chandigarh
Bench, Chandigarh. By the order dated 10th July, 2017, the learned Adjudicating Authority admitted the
application preferred by respondent - 'Operational Creditor' under Section 9 of the Insolvency and
Bankruptcy Code, 2016 ( hereinafter referred to as the 'I&B Code' ) declared moratorium and requested
the Insolvency and Bankruptcy Board of India to recommend the name of the Insolvency Resolution
Professional. By the subsequent order dated 21st July, 2017, the learned Adjudicating Authority
appointed the Interim Resolution Professional and directed to prepare a list of inventory assets of the
'Corporate Debtor' etc. in terms of the provisions of the I & B Code.
2. Learned counsel for the appellant submits that both the impugned order(s) dated 10th July and
21st July, 2017 have been passed without serving any notice on the appellant - 'Corporate Debtor'. He
further submits that the respondent - 'Operational Creditor' also not given any notice to the appellant
under Rule 4(3) of the Insolvency and Bankruptcy (Application to Adjudicating Authority), Rules 2016.
It is further stated that the parties have settled the dispute and the amount has already been paid to the
'Operational Creditor'.
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by Hon’ble NCLAT
3. On notice the respondent - 'Operational Creditor' has appeared.
4. Learned counsel for the respondent accepts that the matter has been settled and the amount has
been paid. He further submits that because of wrong address of the appellant the notice under Rule 4(3)
could not be served. The respondent has made the following statement in its reply :
That later after the above mentioned meeting the appellant also apprised the
deponent of the fact that the appellant has not received any demand notice in
Form-4 and the address mentioned in the track report as well as the postal
receipt of the same is "SIDCO I/ Complex, Bari Brahmna" whereas the
correct address of the appellant is "SIDCO I/ Complex, Phase II, Bari
Brahmna, Samba" as mentioned in the Form-4 also, and pursuant to which
the deponent also noticed that various track reports as well as the postal
receipts show the address of the appellant written as "SODCP I/ Complex,
Bari Brahmna: and the deponent does not deny that there is a possibility that
the address therein on some of the postal envelops could have been
inadvertently written as "SIDCO I/ Complex, Bari Brahmna" instead of
"SIDCO I/ Complex, Phase II, Bari Brahmna, Samba", due to which the
possibility that Appellant might not have been duly served with Form-4 or
with the copy of Petition cannot be denied."
5. From both the impugned order(s), we find that no appearance has been recorded on behalf of the
'Corporate Debtor'. There is nothing on record to suggest that the Tribunal has issued any notice to the
appellant before admission of the application nor anything on record to suggest that the copy of the
impugned order dated 10th July, 2017 was served on appellant prior to 21st July, 2017.
6. Learned counsel for the appellant submits that the said order was served after appointment of
Interim Resolution Professional (IRP) i.e. on 21st July, 2017.
7. From the statement made by the parties and record as we find that the impugned order(s) dated
10th July and 21st July, 2017 have been passed by the learned Adjudicating Authority in violation of the
rules of natural justice and against the decision of the Appellate Tribunal in Innoventive Industries Ltd.
vs. ICICI Bank and another, [Company Appeal (AT) (Insolvency) No. I and 2 of 2017/, we set aside
both the impugned order(s) dated 10th July, 2017 and 21st July, 2017 and direct the Adjudicating
Authority to close the petition under Section 9 of the Companies Act, in absence of any claim.
681
by Hon’ble NCLAT
freezing of account and all other order(s) passed by the Adjudicating Authority pursuant to impugned
order(s) and action taken by the Interim Resolution Professional including the advertisement published
in the newspaper calling for applications are declared illegal. The appellant is released from the rigour
of law and allow the appellant company to function independently through its Board of Directors with
immediate effect.
8. Both the appeals stand disposed of with the aforesaid observation and direction. However, in the
facts and circumstances of the case, there shall be no order as to cost.
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by Hon’ble NCLAT

NEW DELHI
C.P. (I.B.) No. 165/NCLAT/2017
Applicant: M/s. James Hotels Ltd.

Vs.
Judges/Coram:
Counsels:
ORDER
Admittedly, 'Corporate Insolvency Resolution Proces' started against appellant-'Corporate

Debtor' M/s. James Hotels Limited is pending before the Adjudicating Authority (National Company
Law Tribunal) Chandigarh Bench, Chandigarh. During the resolution process, the 'Corporate Debtor'
alleged that the 'Financial Creditor'- Punjab National Bank has committed a fraud on the basis of record
filed by 'Corporate Debtor' which was seriously contested by the 'Financial Creditor'.
2. In the aforesaid background on 23rd August, 2017, the Adjudicating Authority passed the
following order in Company Petition No. (IB) No. 15/Chd/CHD/2017:-
"It is argued on behalf of the Corporate Debtor that Punjab

National Bank has committed a fraud on the basis of record filed by
Corporate Debtor which is seriously contested by the learned counsel for
the Bank Financial Creditor.
List the matter for arguments on 29.08.2017 to be kept high up in

the list. In the meanwhile, Registrar of Companies, Punjab & Chandigarh
be directed to preserve the CCTV footages relating to the visitors entering
the premises of ROC for one month upto 01.08.2017.
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by Hon’ble NCLAT
Notice of this application to ARGIL. Mr. V.K. Sachdeva, Advocate

who is present in the Court accepts notice on behalf of ARGIL and seek to
file the Power of Attorney with the necessary authorisation."
3. Ld. Counsel appearing on behalf of the appellant-'Corporate Debtor' submits that the "offences
and penalties" under I & B Code can be looked into only by Special Judge in terms of Chapter VIII of
Part II of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as 1&B Code'). However,
we find that the fraudulent or malicious initiation of the proceedings' and 'fraudulent bank trading' etc.
can be looked into by Tribunal under Sections 65 and 66 of the I&B Code. In any case, during the
course of Insolvency Resolution Process, if allegation of fraud by one or other party is brought to the
notice of the Adjudicating Authority it is always open to the Adjudicating Authority to notice the
appropriate authorities and parties to find out whether a prima facie case is made out and the same has
any effect in the resolution process or not.
4. It is informed that the matter was again taken by the Adjudicating Authority on 23rd August,
2017 and when on the said date further observations and direction have been made. The said order is not
under challenge.
5. In the aforesaid circumstances, as the Adjudicating Authority to find out the truth of the
allegation has issued notice, we are not inclined to interfere with the order at this stage.
6. However, if any adverse order is passed or any order is passed under section 31 of the I&B
Code in view of enquiry being made, it is open to the aggrieved person to move before the Adjudicating
Authority or the Appellate Tribunal. The appeal is dismissed with aforesaid observations. However, in
the facts and circumstances of the case, there shall be no order as to costs.
684
by Hon’ble NCLAT

NEW DELHI
C.P. (I.B.) No. 82/NCLAT/2017
Applicant: JK Jute Mill Mazdoor Morcha

Vs.
Respondent: Juggilal Kamlapat Jute Mills Co. Ltd.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Sanjeev Sen, Mr. Ashok Jam, Mr Ankit Kohli and Mr Káran
Khanna, Learned Advocates
For Respondents/Defendant: Mr. Abhijit Sinha, Mr. Titash Sen, Mr. Atanu Mukherjee, Mr. Arjun
Aggarwal and Ms. Vaishali, Learned Advocates
ORDER
This appeal has been preferred by Appellant- JK Jute Mill Mazdoor Morcha (hereinafter referred
to as Trade Union) against order dated 28th April, 2017 passed by Adjudicating Authority (National
Company Law Tribunal (hereinafter referred to as Tribunal), Allahabad Bench, in Company Petition No.
36/ALD 2017 whereby and where under the application preferred Appellant/Workmen Association under
Section 9 of the Insolvency & Bankruptcy Code, 2016 (hereinafter referred to as I&B code) has been
dismissed.
2. In the impugned order, the Tribunal, taking into consideration different facts, including the
documents whereby Appellant in respect of claim/operational debt due on various Heads of workers like
payment wages, salaries, bonus, provident fund, gratuity in respect of different workmen held that the
application preferred by the Appellant under Section 9 is not maintainable.
3. The only question arises for determination in this appeal is whether an application under Section
9 of the I&B Code is maintainable at the instance of Workmen Association ?
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by Hon’ble NCLAT
4. Ld. Counsel for the Appellant while submitted that the Adjudicating Authority has accepted that
the Respondent/'corporate debtor' cannot deny the liability for making payments of workmen's wages,
contended that illegal acts and conduct of the 'corporate debtor' is glaring from the facts as narrated. It
was submitted that the conduct of the 'corporate debtor' has already been deprecated by Hon'ble Supreme
Court in "Ghanshyam v. Shiv Shankar Trading Co. & Ors." 2015 (1) SCC 298 and in number of pending
proceedings under provisions SICA, 1985 the 'corporate debtor' obstructed the BIFR from sectioning the
'revival scheme' envisaging payment of dues of the workmen and adopted all means and methods to
ensure that no effective order is passed by BIFR.
5. Referring to various acts on the part of the 'corporate debtor' it was contended that the default by
'corporate debtor' is admitted and borne out from audited balance sheet.
6. Ld. Counsel for the Appellant submitted that if the Appellant is a registered Trade union under
sub-section (8) of Section 10 of the Trade Union Act,
.1926 and under section 15 of the Trade Union Act,
the General Fund can be used by the Appellant for
prosecution or defence of any legal proceeding.
7. It was further contended that the Appellant falls within the meaning of 'operational creditors'
under Section 5 (20) of the I&B Code since the 'corporate debtor' owed operational debt to its workmen
and employees in respect of services, including employment, as per sub-section (21) of Section 5 of the
I&B Code.
8. It was also contended that the Trade union is a 'person' defined under Section 3, sub-section (23)
(g) of the Trade Union Act and from collective reading of Section 3 (23) (g) of the Trade Union Act with
Section 5 (20) d (21) of the I&B Code, it is clear that the trade union being a 'person' the petition under
Section 9 of the I&B Code is maintainable. Reliance was placed on decisions of High Courts which
relates to Trade Union Act, however, according to us they are not applicable to the provisions of the I&B
Code.
9. Ld. Counsel appearing on behalf of the Respondent/ 'corporate debtor' submitted that the
application under Section 9 of the I&B Code is not maintainable as no 'operational debt' is owed by the
corporate debtors to the Appellant/Trade Union under sub-section (2) of Section 5. Further, according to
Respondent, the Appellant/Trade Union does not fulfil the criteria under sub-Section (20) of Section 5 of
the I&B Code to come within in the meaning of 'operational creditor'. Furthermore, if sub-section (20) of
Section 5 is read with Form 5 of Insolvency & Bankruptcy (Application to Adjudicating Authority), 2016
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by Hon’ble NCLAT
(hereinafter referred to Adjudicating Authority Rules), it is clear that application can only be filed by
'operational creditor' i.e., an individual workman himself or person specifically authorized to act on behalf
of the workman. As the Appellant is a Trade Union, it lacks authority to issue demand notice /file an
insolvency application against the answering Respondent under the I&B Code.
10. According to Respondents, there is a pre-existing dispute prior to filing of Section 9. application;
a civil suit, "Juggilal Kamlapat Jute Mills Company Limited vs J.K. Jute Mazdoor Rinchayat (CITU) and
Ors." is pending before the Civil Court of First Additional Civil Judge. (CD), Kanpur Nagar. Another
Writ Petition titled "J.K. Jute Mills Mazdoor Ekta Union vs UoI and Ors." is pending wherein the
Appellant is also a party and the matter is pending against the Respondent before the High Court of Delhi.
11. It was also submitted that the Respondent/'corporate debtor' is in lockout and no dues are payable
to the workmen/employees.
12. Ld. Counsel for the Respondent relied on decision of this Appellate Tribunal in "Kirusa Software
Pvt. Ltd. v. Mobilox Innovations Pvt. Ltd'. and submitted that by judgement dated 24th May 2017, this
Appellate Tribunal held that where there is a preexisting dispute, the petition under Section 9 is not
maintainable. It was also contended that the Appellant along with application under Section 9 has not
provided any certificate from any 'Financial Institution' which is mandatory for filing application under
Section 9 as held by the Appellate Tribunal in" Smart Timing Steel Ltd., v. National Steel and Agro
Industries Limited."
13. Further according to the Respondent, the demand notice issued by the Appellant was not only
defective and incomplete but they also raised false claim without providing the requisite details about
how the amount as claimed has been calculated, nor provided the detailed particulars of the workers,
such as names, designation and the area of service, the period of service etc. and no default has taken
place. Further, according to Respondents, the petition under Section 9 was filed before the expiry of
prescribed period of 10 days from the date of receipt of demand notice.
14. 19 Interveners have intervened who claim to be the members of different Trade Unions of
Respondent/'corporate debtor', this apart, some of them are widow, successor of the deceased workers.
According to them, inspite of repeated demands and reminders, the Jute Mill failed to make payment for
realization of legitimate dues towards: -
i. Wage Deduction @ 10% of wages p.m as per MoU
ii. Overtime
iii. Provident Fund
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by Hon’ble NCLAT
iv. Gratuity
v. Holiday Arrears
vi. Money deposited in company's society and savings, and
vii. Wage from the period since the factory has closed.
It is stated that apart from that the minimum wages has also not been paid and total dues to the members
of the Intervenors are more than Rs.113.8 lacs. The details of period of lockout etc., has been shown.
15. Another Intervening Application has been filed by Ghanshyam Sarda who claim to be the co-
promoter. According to him due to multiple litigations by the 'corporate debtor' under management of
Govind. Sarda, the Hon'ble Supreme Court earlier directed the BIFR to decide the issue of correct net-
worth position and to finalise the DRS. Further according to them, the MoU with the Trade Union is
binding on all the signatories. It is further stated that on 18th October 2008, the 'corporate debtor' under
Govind Sarda entered into a MoU with 8 Trade Unions for re-scheduling/re-payment of workers' due
which has not been honoured by Govind Sarda. According to the intervening co-promoters, such unpaid
worker/ employee cannot afford to invoke the provision of the I&B Code in view of the cost of litigation
and, therefore, the court must give effect to the purport and object of the Act and Rules thereof and
'purposive construction' should be made applicable in the present case. Request has been made to set aside
the impugned order and remit the matter to the Adjudicating Authority to admit the application.
16. In this appeal it, is not necessary to decide whether the Appellant/Trade Union come within the
meaning of 'person' as defined in sub-section (23) of Section 3 of the I&B Code which reads as follows: -
"3. In this Code, unless the context otherwise requires, -

(23) 'person" includes—
(a) an individual
(b) a Hindu Undivided Family;
(c) a company;
(d) a trust;
(e) a partnership;
(/) a limited liability;
(g) any other entity established under a statue, and includes a person resident outside India;"
17. Even if it is accepted that the appellant/Trade Union come within the meaning of 'person'
according to us it do not fall within the meaning the meaning of 'operational creditor' as defined in sub-
section (20) of Section 5, which reads as below: -
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by Hon’ble NCLAT
"5. In this Part, unless the context otherwise requires, -

(20) "operational creditor" means a person to whom an operational
debt is owed and includes any person to whom such debt has been
legally assigned or transferred;"
18. 'Operational Debt' as defined in sub-section (21) of Section 5 reads as follows:-
"(21) "operational debt" means a claim in respect of the provision of

repayment of dues arising under any law for the time being in force
and payable to the Central Government, any State Government or
any local authority;"
19. From the aforesaid provision we find that the following persons can claim to be an 'operational
creditor': -
.respect of a claim
i. The person who has claim in respect of provision of financial debt and
goods (supplied) to the 'corporate debtor';
ii. Person who have provided services to the 'corporate debtor',
including those who are in employment; and
iii. Central Government, State Government and Local Authorities, who
are entitled to claim debt in respect of dues arising under any Law
for time being in force.
20. In view of definition aforesaid, while we hold that a workman or employee who has rendered
services to the corporate debtor individually come within the meaning of 'operational creditor'. The Trade
Union or Association of Workmen/employee, do not come within the meaning of 'operational creditor' as
no services is rendered by the Workmen's Association/Trade Union to the 'corporate debtor' to claim any
dues which can be termed to be 'debt' as defined in sub-Section (11) of Section 3, and reads as follows:-
"3. In this Code, unless the context otherwise requires,-

"(11) "debt" means a liability or obligation in respect of a claim which is due from any
person and includes a financial debt and operational debt,"
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by Hon’ble NCLAT
21. In absence of any liability or application in respect of any claim which is due to Workmen
Association/Trade Union from a corporate debtor' and as they do not provide any service to the 'corporate
debtor', the question of default of debt does not arise and therefore they cannot claim to be 'operational
creditor' for preferring any application under Section 9 of the I&B Code.
22. This apart, members of a Trade Union/Workmen Association, who are workman or employee of a
'corporate debtor', some amount may be due to such individual workman/ employee from a 'corporate
debtor' including salary, gratuity, provident fund etc., in view of services rendered by them, but in such
cases, in respect of each workman there will be separate cause of action, separate claim and separate date
of default of debt.
23. For example, as pleaded by 19 Interveners, each workman/ employee and those deceased and
now represented through their widows or legal heirs/legal representatives in respect of each of them, there
are separate claim of salary or retirement benefits or other dues for different period. In majority of the
cases, the date of default of debt will also be different. Without ascertaining any such amount no
application under Section 9 in Form 5 will be complete nor the Adjudicating Authority can give any
finding with regard to the individual claim nor it will be in possible for the Interim Resolution
Professional to collect the details.
24. There may be workmen/employees who are also member of the Workmen Association/Trade
Union but ma not have any claim at all. In absence of their debt or default no application on behest of
such members can be maintained by Trade Union under Section 9.
25. In the case of "Uttam Galva Steels Limited V. DF Deutsche Forfait AG & Anr" in Company
Appeal (Insolvency) No. 39 of 2017, this Appellate Tribunal by Judgement dated 28th July 2017 held
that joint application under Section 9 is not maintainable and observed as follows: -
"17. Under sub-section (1) of Section 8 of the I&B Code, an 'Operational

Creditor' on occurrence of a default, is required to deliver the notice of
payment of unpaid debt or get copy of the invoice payment of the defaulted
amount served on the Corporate Debtor. This is the condition, precedent
under Section 8 & 9 of the I&B Code, unlike Section 7 before making an
application to the adjudicating authority under Section 9 of the I&B Code.
Under sub-Section (1) of Section 9 of the Code, the right to file an
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application accrues after expiry of ten days from the delivery of demand
notice or copy of invoice, as the case may be if the operation creditor does
not receive payment from the corporate Debtor or notice of dispute under
sub Section (2) of Section 8, the Operational Credit& only thereafter may file
an, application before the Adjudicating Authority for the initiation of
18. An application under Section 9 I&B Code is required to be filed in such,

format and manner and accompanied by such fee, as may be prescribed. The
Operational Creditor along with the application is required to furnish
documents as mentioned in clause (a), (b), (c) and (d) of sub-Section Section
9 of I&B Code, and quoted below:-
"9 Application or initiation of corporate insolvency resolution process by

operational creditor - (1) After the expiry of the period of ten days from the
date of delivery of the notice or invoice demanding payment under sub-
section (1) of section 8, if the operational creditor does not receive payment
from the corporate debtor or notice of the dispute under sub- section (2) of
section 8, the operational creditor may file an application before the
process. (2) The application under sub-section (1) shall be filed in such form
and manner and accompanied with such fee as may be prescribed. (3) The
operational creditor shall, along with the application furnish—(a) a copy of
he invoice demanding payment or demand notice delivered by the
operational creditor to the corporate debtor;. (b) an affidavit to the effect
that there is no notice given by the corporate debtor relating to a dispute of
the unpaid operational debt; (c) a copy of the certificate from the financial
institutions maintaining accounts of the operational creditor confirming that
there is no payment of an unpaid operation debt by the corporate debtor; and
(d) such other information as may be specified. (4) An operational creditor
initiating a corporate insolvency process under this section, may propose a
professional to act as an interim resolution professional.
19. From the aforesaid provisions of Section 8 and 9 of I&B Code, it is clear
that unlike Section 7, a notice under Section '8 is to be issued by an
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by Hon’ble NCLAT
"Operational Creditor" individually and the petition under Section 9 has to

be filed by Operational Creditor individually and not jointly.
20. Otherwise also it is not practical for more than one 'operational creditor'
to file a joint petition. Individual Operational Creditors' will have to issue
their individual claim notice under Section 8 of the I&B Code. The claim will
vary which will be different. Date of notice under Section 8 of the I&B Code
in different cases will be different. It will have to be issued in format(s).
Separate Form -3 or Form -4 will have to be filled. Petition under Section 9
in the format will contain separate individual data.
26. In view of the finding as recorded above we hold that the application under Section 9 at the
instance of Appellant -JK Jute Mill Mazdoor Morcha is not maintainable. The Adjudicating Authority has
rightly rejected the claim though for some other reason.
27. However, it does not mean that an application under Section 9 of I&B Code is not maintainable at
the instance of an individual employee/workman who has rendered services to the 'corporate debtor' and if
there is debt and default such individual workman/ employee can prefer an application under Section 9
giving details of debt and date of default but it should not be less than one lakh rupees in view of Section
4 of the I&B Code. In such cases if corporate insolvency resolution process if started against the corporate
debtor, it is always open to the other creditors, including workmen/ employees, their legal heirs to file
claim before the Insolvency Resolution Professional once notice is published in the newspaper under
Section 15 of the I&B Code and/or prior to completion of insolvency resolution process. This observation
we are making so that in such case the 'corporate debtor' cannot take plea that earlier the application
moved by workers' association/Trade union in respect of such workmen/ employee/ legal heirs of
deceased employees under Section 9 and the appeal under Section 61 have been rejected.
28. In absence of any merit the appeal preferred at the instance of JK Jute Mill Mazdoor
Morcha is dismissed with liberty to individual workman/employee to raise such claim, if there is
a debt and default. However, in the facts and circumstances, there shall be no order as to cost.
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by Hon’ble NCLAT

NEW DELHI
C.P. (I.B.) No. 161/NCLAT/2017
Applicant: Ajay Sadana

Vs.
Respondent: Acteon India Private Limited
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Sandeep Bajaj, Mr Soayib Qureshi and Ms. Aakansha Nehra,
Learned Advocates
For Respondents/Defendant: Mr.Ravi Verma and Mr.Yash Srivastava, Learned Advocates
ORDER
Admittedly Appellant has been. removed from the service of the Respondent/Corporate debtor',
on 28th April 2017 on the ground of embezzlement and misappropriation etc. The Appellant, an
employee, who claim to be the 'operational creditor' has also filed a suit for payment of arrears of salary,
provident fund, gratuity etc., and thereby it appears that there is a dispute pending before a Court. In the
circumstances, the Ld. Adjudicating Authority has rejected the petition and refused to entertain the
application preferred by the Appellant under Section 9 of the Insolvency and Bankruptcy Code, 2016.
After some argument, Ld. Counsel for the Appellant sought permission to withdraw the appeal and
permission is granted to the Appellant to withdraw the appeal. The case is dismissed without any liberty
to prefer any appeal before this Appellate Tribunal.
The Vakalatnama along with Board's resolution filed by the Respondent is returned back to the Ld.
Counsel to re-file after appropriate binding.
693
by Hon’ble NCLAT

NEW DELHI
C.P. (I.B.) No. 147/NCLAT/2017
Applicant: Canara Bank

Vs.
Respondent: Deccan Chronicle Holdings Limited.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Rajesh Kumar Gautam and Ms. Khushboo Aggarwal, Learned
Advocates
ORDER
The Appellant-Canara Bank (‘financial creditor’) has challenged the impugned order dated 19th July
2017 passed by the Adjudicating Authority (National Company Law Tribunal) (hereinafter referred to as
Tribunal) Hyderabad Bench whereby while admitting the application preferred by Appellant under
section 7 of the Insolvency & Bankruptcy Code, 2016 (hereinafter referred to as I&B Code), passed
order of moratorium, relevant portion of which reads as follows: -
We hereby declared the following Moratorium by prohibiting the following actions: -
i) The institution of suits or continuation of pending suits or

proceedings except before the Hon’ble High Court (s) and Hon’ble
Supreme Court of India, against the Corporate Debtor including
execution of any judgement, decree or order in any court of law,
Tribunal, arbitration panel or other authority;
ii) Transferring, encumbering, alienating or disposing of by the
Corporate Debtor any of its assets or any legal right or beneficial
interest therein;
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iii) Any action to foreclose, recover or enforce any security interest

created by the Corporate Debtor in respect of its property including
any action under Securitization and Reconstruction of Financial
Assets and Enforcement of Security Interest Act, 2002 (54 of 2002);
iv) The recovery of any property by an owner or lessor where
such property is occupied by or in possession of the Corporate
Debtor;
v) Section 14(2) of the IBC Code, 2016 already exempted supply
of essential goods and services to the Corporate Debtor and in
addition the Learned Counsels for the Respondent submitted that
goods/services viz., Water, Electricity, Prinking Ink, Printing Plates,
Printing Blanker, Solvents etc. will also come under the purview of
exemption and thus prayed to exempt above goods/services from
moratorium. We are convinced with the prayer of the Respondent
that the above goods and services would come under exemption
under this Section. Hence, we clarify that goods/services viz., Water,
Electricity, Printing Ink, Printing Plates, Printing Blanket, Solvents
etc., will come under this Section and these essential goods or
services to Corporate Debtor shall not be terminated or suspended
and interrupted during the moratorium period.”
2. Ld. Counsel appearing on behalf of the Appellant submits that the Adjudicating Authority cannot
exclude any court from the purview of Moratorium for the purpose of recovery of amount or execution
of any judgement or decree, including the proceeding, if any, pending before the Hon’ble High Courts
and Hon’ble Supreme Court of India against a ‘corporate debtor’.
3. Notice was issued to the Respondent limited to the aforesaid question. But in spite of service of
notice, none appeared on behalf of the Respondent.
4. We have heard Ld. Counsel for the Appellant and perused the provisions of I&B Code.
5. Section 14 relate to ‘Moratorium’ which the Adjudicating Authority is required to declare at the
time of admission of the application for ‘corporate insolvency resolution process’, which reads as
follows:-
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by Hon’ble NCLAT
“14. Moratorium - (1) Subject to provisions of sub-sections (2) and (3), on

the insolvency commencement date, the Adjudicating Authority shall by
order declare moratorium for prohibiting all of the following, namely:— (a)
the institution of suits or continuation of pending suits or proceedings
against the corporate debtor including execution of any judgment, decree or
order in any court of law, tribunal, arbitration panel or other authority; (b)
transferring, encumbering, alienating or disposing of by the corporate debtor
any of its assets or any legal right or beneficial interest therein; (c) any
action to foreclose, recover or enforce any security interest created by the
corporate debtor in respect of its property including any action under the
Securitisation and Reconstruction of Financial Assets and Enforcement of
Security Interest Act, 2002; (d) the recovery of any property by an owner or
lessor where such property is occupied by or in the possession of the
corporate debtor.
(2) The supply of essential goods or services to the corporate debtor

as may be specified shall not be terminated or suspended or interrupted
during moratorium period.
(3) The provisions of sub-section (1) shall not apply to such

transactions as may be notified by the Central Government in consultation
with any financial sector regulator.
(4) The order of moratorium shall have effect from the date of such
order till the completion of the corporate insolvency resolution process:
Provided that where at any time during the corporate insolvency resolution
process period, if the Adjudicating Authority approves the resolution plan
under sub-section (1) of section 31 or passes an order for liquidation of
corporate debtor under section 33, the moratorium shall cease to have effect
from the date of such approval or liquidation order, as the case may be.”
6. From clause (a) of sub-Section (1) of Section 14, it is clear that institution of suits or continuation
of pending suits or proceedings against the corporate debtor including execution of any judgment, decree
or order by any court of law, tribunal, arbitration panel or other authority come within the purview of
‘moratorium. The said provision specifically do not exclude any Court, including the Hon’ble High
Courts or Hon’ble Supreme Court of India.
7. There is no provision to file any money suit or suit for recovery before the Hon’ble Supreme
Court except under Article 131 of the Constitution of India where dispute between Government of India
and one or more States or between the Government of India and any State or States on one side and one
696
by Hon’ble NCLAT
or two or more States is filed. Some High Courts have original jurisdiction to entertain the suits, which
may include money suit or suit for recovery of money. The Hon’ble Supreme Court has power under
Article 32 of the Constitution of India and Hon’ble High Court under Article 226 of Constitution of India
which power cannot be curtailed by any provision of an Act or a Court. In view of the aforesaid provision
of law, we make it clear that ‘moratorium’ will not affect any suit or case pending before the Hon’ble
Supreme Court under Article 32 of the Constitution of India or wherean order is passed under Article 136
of Constitution of India. ‘Moratorium’ will also not affect the power of the High Court under Article 226
of Constitution of India. However, so far as suit, if filed before any High Court under original jurisdiction
which is a money suit or suit for recovery, against the ‘corporate debtor’ such suit cannot proceed after
declaration of ‘moratorium, under Section 14 of the I&B Code.
8. In view of the aforesaid position of law, the impugned order passed by Tribunal, as mentioned at
clause (c) (i) of the last paragraph relating to ‘moratorium’, stands clarified to the extent above. The
appeal stands disposed of with aforesaid observations. No. cost.
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by Hon’ble NCLAT

NEW DELHI
C.P. (I.B.) No. 58/NCLAT/2017
Applicant: VDS Plastics Pvt. Ltd.

Vs.
Respondent: Pal. Mohan Electronics (P) Ltd.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. D. Moitra, Learned Advocates
For Respondents/Defendant: Mr. K. K. Sharma, Senior and Mr. Avrial, Learned Advocate.
ORDER
The Appellant- 'Operational Creditor' preferred an application under section 9 of the Insolvency and
Bankruptcy Code, 2016 (hereinafter referred to as 'I&B Code') for initiation of 'Corporate Insolvency
Resolution Process' against the 'Corporate Debtor'. Learned Adjudicating Authority (National
Company Law Tribunal) New Delhi Bench, New Delhi, by impugned order dated 21st April, 2017
rejected the application there being a dispute in existence.
2. Learned Counsel for the Appellant while submitted that there is no dispute pending or in
existence and referred to the decision of Appellate Tribunal in "Kirusa Software Pvt. Ltd. Vs.
Mobilox Innovations Pvt. Ltd. Company Appeal (AT) (Insolvency) 6 of 2017", contended that
mere a dispute giving a colour of genuine dispute or illusory, raised for the first time cannot be a
ground to reject the application under section 9 of the 'I&B Code'.
3. Per contra, according to Learned Counsel for the Respondent, there is a dispute in existence,
which have been noticed by the Adjudicating Authority.
4. We have heard Learned Counsel for the parties and perused the record.
5. From letter dated 1st August, 2016 written on behalf of appellant-Operational Creditor, it
appears that statutory notice for winding up under section 433(e) and 434(1)(a) of the Companies Act,
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by Hon’ble NCLAT
1956 was issued by appellant on the respondent-'Corporate Debtor'. Therein it was mentioned that
pursuant to the order placed by the 'Corporate Debtor', the goods and materials were duly supplied as
per the entire satisfaction of the 'Corporate Debtor' and the same were duly acknowledged. The
amount sold, supplied and delivered to the 'Corporate Debtor' is worth Rs. 1,48,37,586/- (Rupees One
crore forty-eight lakhs thirty-seven thousand five hundred eighty-six only) and against the above
mentioned amount, part payment has been received of Rs.57,56,610/- (Rupees Fifty-Seven Lakhs
Fifty-Six Thousand Six Hundred and Ten only) and balance amount of Rs.90,80,976/- (Rupees ninety
lakhs eighty thousand nine hundred seventy-six only) is payable to appellant as on that date.
6. In reply to the said letter on behalf of 'Corporate Debtor', by letter dated 20th September, 2016
the claim was denied and the appellant was intimated as follows:
"It is pertinent to mention here that it is completely incorrect to state that

goods and materials worth Rs.1,48,37,586/ - were supplied by your client
to our client. Our Client never acknowledged and accepted the said
goods and materials.
5. That the contents of para no.5 of the notice under reply are false and
denied. It is specifically denied that a balance amount of Rs.90,80,976/ -
is outstanding as on date against the aforesaid alleged supply.
6. That the contents of para no.6 of the notice under reply are false and
denied. It is denied that the goods and materials were ever supplied by
your client to our client as per orders placed by our client and the same
were duly received by our client."
7. From the aforesaid two letters, both of which were addressed prior to issuance of notice under
section 8 of the 'I&B Code', as we find that there is an existence of dispute with regard to supply of
goods and materials. In spite of notice under section 433(e) and 434(1)(a) of the Companies Act, 1956,
and receipt, of reply, no steps was taken by the appellant. Much thereafter, application for initiation of
'Corporate Insolvency Resolution Process' was filed. In the circumstances, we find no reason to
interfere with the impugned order wherein the Adjudicating Authority held that there is an 'existence
of dispute'.
8. In absence of any merit, the appeal is dismissed. However, in the facts and circumstances of the
case, there shall be no order as to cost.
699
by Hon’ble NCLAT

NEW DELHI
C.P. (I.B.) No. 188/NCLAT/2017
Applicant: JEKPL Private Limited

Vs.
Respondent: Export Import Bank of India
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Nesar Ahmad, Mr. Ahsan Ahmad and Mr. Hitesh Joshi, Learned
Advocates, Mr. Mukesh Mohan, RP
For Respondents/Defendant: Mr. Rajeev Mehra and Mr. Ashish Rana, Learned Advocate.
ORDER
This appeal has been preferred by 'Corporate Debtor 'JEKPL Private Limited through the
Resolution Professional against part of the order dated 22nd August, 2017 passed by Adjudicating
Authority (National Company Law Tribunal), Allahabad Bench, Allahabad in Company Petition No. (IB)
24/ALD/2017, Company Application Nos. 72 and 159 of 2017, which reads as follows: -
"Shri Biswajit Dubey, for the petitioner Axis Bank, Advocate, Shri Shambhu
Chopra for the R.P. JEKPL. It is brought to our notice that in a subsequent
development, the R.P Shri Mukesh Mohan reconsidered the Axis Bank's
representation and accepted its claim and status of a Secured Creditor in the
committee of Creditors.
Thus, the grievance of the Axis Bank stands to be redressed by this

subsequent decision of the learned R.P. Thus, the present application C.A.
No. 72/2017 has now become infructuous in view of the communication
dated 9.8.2017 received from the learned R.P. Hence, the CA is accordingly
disposed off.
700
by Hon’ble NCLAT
Senior Advocate, Sri Anurag Khanna along with Gunjan Jadwani, Advocate
appeared for the Exim Bank. Advocate Sri Shambhu Chopra, represents the
JEKPL. A copy of the present application be served to Shri Chopra on behalf
of the R.P. Shri Mukesh Mohan. He is at liberty to offer his comments on
action impugned in the present application and may file reply by 30th
August, 2017 by serving an advance copy thereof to the applicant's counsel.
Meanwhile, the applicant in CA provisionally permitted to continue and

participate in the COC meetings as a Member of the Committee of Creditors.
However, this would be subject to outcome of the present petition.
The matter be listed on 30th august, 2017."
2. When this Appellate Tribunal enquired as to how the 'Corporate Debtor' will be affected,
pursuant to impugned order, it was submitted that the Insolvency Resolution Professional has opposed
the continuity of Exim Bank' as one of the creditor.
3. Having heard learned counsel for the 'Corporate Debtor' and Mr. Rajeev Mehra, Senior Advocate
appearing on behalf of the respondent, while we are of the view that appeal at the instance of 'Corporate
Debtor' is not maintainable, but make it clear that the Resolution Professional has right to oppose
induction of a third party as a creditor. However, in view of the fact that the Exim Bank has been
provisionally permitted to continue as a member of the Committee of Creditors and final order is yet to
be passed by the Adjudicating Authority, Allahabad Bench and time has been granted to the contesting
party to file rejoinder, we are not expressing any view at this stage. After hearing the parties, if the
Adjudicating Authority allows Exim Bank to continue as Member of the Committee of Creditors, it will
be open to the Resolution professional to challenge the final order before this Appellate Tribunal.
4. It is expected that the Adjudicating Authority will decide the question of continuity of Exim
Bank' as a member of the Committee of Creditors either way and will not continue with interim
arrangement for days together. An early decision be taken on production of copy of this order.
5. The appeal stands disposed of with aforesaid observation. However, in the facts and
701
by Hon’ble NCLAT

NEW DELHI
C.P. (I.B.) No. 118/NCLAT/2017
Applicant: United Motors Heavy Equipment Pvt. Ltd.

Vs.
Respondent: Sundaram Industries Pvt. Ltd.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Vijayan, Mr. Tejaswiai BR and Mr. Sujit Kesheri, Learned
Advocates
For Respondents/Defendant: Mr. Arun Kathpalia, Mr. Anirudh Wadhwa, Mr. Chandramouli Prabhakar
Mr. Hiresh Chaudhary, Learned Advocate.
ORDER
The appellant-Operational Creditor' filed application under section 9 of the Insolvency and
Bankruptcy Code, 2016 after serving notice under section 8 on the respondent-'Corporate Debtor'.
Learned Adjudicating Authority by impugned order dated 15th June, 2017, taking into consideration the
fact that there is a dispute in existence, relying on decision of this Appellate Tribunal in "M/s. Kirusa
Software Private Limited V. Mobilox Innovations Private Limited", rejected the application.
2. Learned Counsel appearing on behalf of the appellant submitted that there was no dispute in
existence and suit was filed after service of Section 8 notice only to save the period of limitation.
3. Notice was issued on Respondent-'Corporate Debtor' to state whether any dispute was in
existence prior to issuance of Section 8 notice.
4. In reply to the notice, the respondents in their counter affidavit enclosed e-mail dated 15th
November, 2011 which shows that the engineering department of one John Bin Technology Corporate,
to whom the supply was made through the 'Corporate Debtor' who raised objection regarding quality of
30 solid tyres supplied by the appellant as materials were substandard.
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by Hon’ble NCLAT
5. Learned Counsel appearing on behalf of appellant referred to one or other record to suggest that
subsequently they have resolved the dispute about the quality of goods were discussed, but there being
an existence of dispute, we are not inclined to interfere with the impugned order.
6. In absence if any merit, the appeal is dismissed. However, the order passed by the Adjudicating
Authority or this Appellate Tribunal will not come in the way of appellant for decision by Court of
competent jurisdiction before which the suit preferred by appellant is pending. No cost.
703
by Hon’ble NCLAT

NEW DELHI
C.P. (I.B.) No. 30/NCLAT/2017
Applicant: Palogix Infrastructure Private Limited

Vs.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Arun Kathpalia, Mr. Jayant Mehta, Ms. Smita Mukherjee, Ms.
Manju Bhuteria, Mr. Rajesh Gupta, Ms. Sonia Dube, Mr. Satadru Chakraborty, Mr. Anurag Singh & Ms.
Harshita Verma, Learned Advocates
For Respondents/Defendant: Mr. Ramji Srinivasan, Mr. Anand Shankar Jha, Mr. Mohammad Ali, Mr.
Vivek Paul & Ms. Divyani Tripathi, Learned Advocates
C.P. (I.B.) No. 37/NCLAT/2017

Vs.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Ramji Srinivasan, Mr. Anand Shankar Jha, Mr. Mohammad Ali,
Mr. Vivek Paul & Ms. Divyani Tripathi, Learned Advocates
For Respondents/Defendant: Mr. Arun Kathpalia, Mr. Jayant Mehta, Ms. Smita Mukherjee, Ms. Manju
Bhuteria, Mr. Rajesh Gupta, Ms. Sonia Dube, Mr. Satadru Chakraborty, Mr. Anurag Singh & Ms.
C.P. (I.B.) No. 54/NCLAT/2017

Vs.
704
by Hon’ble NCLAT
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Arun Kathpalia, Mr. Jayant Mehta, Ms. Smita Mukherjee, Ms.
Manju Bhuteria, Mr. Rajesh Gupta, Ms. Sonia Dube, Mr. Satadru Chakraborty, Mr. Anurag Singh & Ms.
For Respondents/Defendant: Mr. Ramji Srinivasan, Mr. Anand Shankar Jha, Mr. Mohammad Ali, Mr.
Vivek Paul & Ms. Divyani Tripathi, Learned Advocates
ORDER
ICICI Bank Limited (Financial Creditor) filed an application under section 7 of the Insolvency
and Bankruptcy Code, 2016 (hereinafter referred to as "I&B Code") for initiation of 'Corporate
Insolvency Resolution Process' against 'Palogix Infrastructure Private Limited'-(Corporate Debtor).
2. The case was heard by a Division Bench of the Adjudicating Authority which having noticed
that the 'Financial Creditor' preferred the application under section 7 through Power of Attorney Holder,
passed two separate orders, one holding the application through Power of Attorney is not maintainable
(Member Judicial) and the other (Member Technical) held that the application was maintainable as the
Power of Attorney was given in favour of the Legal Manager to initiate proceedings before the National
Company Law Tribunal which is the Adjudicating Authority under 'I&B Code'.
3. The case was referred to the Hon'ble President, National Company Law Tribunal exercising
power under sub Section (5) of Section 419 of the Companies Act, 2013 for constituting a larger Bench
for decision on the following questions: -
"Whether The Constituted Attorney authorised on 20/ 10/2014 to file

suits and/or proceedings against the company for recovery of the amount
and also to affirms plaints cum affidavits and other pleadings in any
court of India including NCLT can file application for initiation of
corporate insolvency process under Section 7 of the Insolvency and
Bankruptcy Code 2016 without having specifically authorized to lodge
Application/ Petition under IBC 2016?"
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by Hon’ble NCLAT
4. By majority judgment, the Adjudicating Authority held that for initiation of 'Corporate
Insolvency Resolution Process', there should be specific authorization to the Power of Attorney Holder
to initiate the 'Corporate Insolvency Resolution Process'. The 'Financial Creditor'-ICICI Bank having
not filed specific authorization to initiate 'Corporate Insolvency Resolution Process', was directed by
the order dated 12th April, 2017 to rectify the defects. The said order has been challenged by the
'Corporate Debtor' in Company Appeal (AT) (Insolvency) No. 30 of 2017.
5. The 'Financial Creditor' has also challenged the said order dated 12th April, 2017 in Company
Appeal (AT) (Insolvency) No. 37 of 2017 on the ground that no specific authorisation required for
initiation of 'Corporate Insolvency Resolution Process'.
6. By subsequent order dated 16th May, 2017, the Adjudicating Authority admitted the application
on removal of defects; ordered Moratorium and appointed 'Interim Resolution Professional' who has
been directed to convene a meeting of the Committee of Creditors in accordance with 'I&B Code'. The
said order has been challenged by 'Corporate Debtor'- Palogix Infrastructure Private Limited in
Company Appeal (AT) (Insolvency) No.54 of 2017.
The stand of the 'Financial Creditor'- ICICI Bank
7. According to 'Financial Creditor', the 'Corporate Debtor' has not disputed the existence of the
debt and default on their part. They are opposing the matter on technical ground, which is incorrect and
in any case if there was a defect it has been removed.
8. Learned Counsel appearing on behalf of the 'Financial Creditor 'ICICI Bank referred to Section
7 of the 'I&B Code' and Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules,
2016 (hereinafter referred to as "Adjudicating Authority Rules") and submitted that the 'form and
manner' in which an application under section 7 of the 'I&B Code' is to be filed by a 'Financial Creditor'
is provided in 'Form-1' of 'Adjudicating Authority Rules'.
9. Upon perusal of the Adjudicating Authority Rules and Form-4 it may be duly noted that the
'I&B Code' and the 'Adjudicating Authority Rules' recognize that a 'Financial Creditor' being a juristic
person can only act through an "Authorised Representative". Entry 5 & 6 (Part I) of Form No.1
mandates the 'Financial Creditor' to submit "name and address of the person authorised to submit
application on its behalf (Enclose Authorisation)".
706
by Hon’ble NCLAT
10. The signature block of the aforementioned Form-1 also provides for the authorised person's
detail is to be inserted and also includes inter alia the position of the authorised person in relation to the
'Financial Creditor'.
Thus, it is clear that an authorised person of the 'Financial Creditor' can make an application
under Section 7 of the '1&B Code'.
11. Learned Counsel for the 'Financial Creditor' referred to Rule 2(6) of the NCLT Rules, 2016
which defines an "authorised representative" to be a person authorised in writing by a party to present
his case before the Tribunal as the representative of such party as provided under Section 432 of the
Companies Act, 2013. The said Rule having not been adopted under 'I&B Code' or Rules framed
thereunder, we are of the view that no reliance can be placed on Rule 2(6) of NCLT Rules, 2016.
12. Rule 10 of 'Adjudicating Authority Rules' states that till the time rules of procedure for conduct
of proceedings under the 'I&B Code' are notified, an application made under section 7(1) shall be filed
before the Adjudicating Authority in accordance with Rules 20, 21, 22, 23, 24 and 26 of Part III of
NCLT Rules, 2016.
13. Rule 23(1) of NCLT Rules permits an authorised representative to present an application or
petition before the Tribunal. Thus, we hold that 'Authorised Representative' can file an application under
Section 7 of the 'I&B Code' on behalf of the 'Financial Creditor'.
14. Learned Counsel for the appellant relied on Order III of the Code of Civil Procedure, 1908
which provides for recognized agents and pleaders, but such submission cannot be accepted as the Code
of Civil Procedure is not applicable for filing application under I&B Code'.
15. Section 179 of Companies Act, 2013 empowers the Board of Directors to do all such acts that a
company is authorised to do. A company being a juristic person is capable of initiating and defending
legal proceedings and, therefore, the Board of Directors is empowered to exercise such rights on behalf
of the Company or may duly empower 'Authorised Representative' to do so on its behalf.
16. Thereby the person authorised by the Board of Directors is duly empowered to initiate or defend
any legal proceedings by or against the 'Financial Creditor'/Corporate Debtor' in any Court of law
including the matters relating to Insolvency and Bankruptcy proceedings. Thereby, the Board of
Directors of a Bank are empowered to delegate powers to any of its officer.
17. The question arises whether the 'Power of, Attorney Holder' given power of attorney prior to
enactment of 'I&B Code', is entitled to file an application under Section 7 or 9 or 10 of the 'I&B Code'?
707
by Hon’ble NCLAT
18. Learned counsel for the 'Financial Creditor' submitted that ICICI Bank vide Board's Resolutions
dated 3rd May, 2002 and 30th October, 2009 resolved to authorise and execute Power of Attorney in
favour of designated officers of the Bank. These resolutions continue to be in force, and authorise
officers/Power of Attorney Holders of Bank are entitled to deal with all the legal proceeding for or
against the Bank.
19. Reliance has been placed on Hon'ble Supreme Court's decision in "A.C. Narayanan vs. State
of Maharashtra (2014) 11 SCC 790" wherein the Hon'ble Supreme Court held :
"28. The power-of-attorney holder is the agent of the grantor. When the
grantor authorises the attorney holder to initiate legal proceedings and the
attorney holder accordingly initiates such legal proceedings, he does so as
the agent of the grantor and the initiation is by the grantor represented by his
attorney holder in his personal capacity..."
20. According to Learned Counsel for the 'Corporate Debtor', the application under Section 7 of the
'I&B Code' if signed and filed by a 'General Power of Attorney Holder' without specific authorization is
not maintainable. According to him, the procedure prescribed requires specific authorization such as:
(i). The Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 (Rules 4 &
10) incorporate by reference procedure prescribed under Rule 23 and 26 of the National
Company Law Tribunal Rules 2016.
(ii). Rule 23 read with Rule 26 of the National Company Law Tribunal Rules, 2016 requires
petition/application to be signed and verified by 'Authorized Representative' of the petitioner.
21. According to the 'Corporate Debtor' the 'Authorization' in the case of a company would mean a
specific authorization by the Board of Directors of the company by passing a resolution. The reliance has
been placed on the Hon'ble Supreme Court's decision in "State Bank of Travancore vs. Kingston
Computers India Pvt. Ltd. (2011) 11 SCC 524".
22. Therefore, according to the 'Corporate Debtor', an application under section 7 of the 'I&B Code'
in absence of any supporting affidavit verifying the petition is not maintainable. It was also contended
that prerequisites under the 'I&B Code' are mandatory and it should be strictly construed and barring
specific Power of Attorney, no application can be entertained.
708
by Hon’ble NCLAT
23. Learned counsel for the 'Corporate Debtor' submitted that a Power of Attorney is an
authorization by a 'principal' to its 'agent' to do an act. A fortiori, such authorisation can only be of acts
which are in the contemplation and knowledge of the 'principal' as on the date when such authorisation is
given. If the 'principal' itself is unaware of an eventuality, it cannot authorize its agent for such
eventuality. This is more so when 'I&B Code' sets in motion a very serious and irreversible process,
therefore, according to the 'Corporate Debtor', the procedural pre-requisites under the ‘I&B Code' must
be strictly construed.
In this connection, our attention was drawn by referring to judgments relating to winding up
under the erstwhile Companies Act, 1956 but we are not referring the same as the decisions under the.
Companies Act, 1956, has no relevance with the procedure to be followed under 'I&B Code'.
24. It was also contended by learned counsel for the 'Corporate Debtor' that the removal of defect as
was ordered by the Adjudicating Authority was not removed by the 'Financial Creditor' within seven
days.
25. In reply, Learned Counsel for the 'Financial Creditor' pointed out that during seven days' period,
there were Saturday, Sunday and other holidays which cannot be counted for the purpose of counting
seven days' period of completion of removal of defect. Otherwise defect was removed within seven
days.
26. Having regard to objection regarding the removal of defect, we reject the submission made on
behalf of the 'Corporate Debtor, in view of the proviso to sub-section (5) of Section 7 of the I&B Code',
which reads as follows:-
"Provided that the Adjudicating Authority shall, before rejecting the application
under clause (b) of sub-section (5), give a notice to the applicant to rectify the
defect in his application within seven days of receipt of such notice from the
Adjudicating Authority."
Similar provision has been made under proviso to sub-section (5) of Section 9 and sub-section
(4) of Section 10 of the 'I&B Code'.
27. The seven days for rectification of defects is to be counted not from the date of the order passed
by the Adjudicating Authority but from the date of "receipt of such notice from the Adjudicating
Authority to rectify the defects in the application." The 'Corporate Debtor', though raised objection that
709
by Hon’ble NCLAT
the defects were not removed within seven days, but not given the date on which the notice for correction
of defect was served by the Adjudicating Authority on the 'Financial Creditor'-ICICI Bank. In absence of
such specific pleadings stand taken by the 'Corporate Debtor' that objection that defect was not removed
within seven days cannot be accepted. This apart, we accept the stand taken by the 'Financial Creditor'
that for the purpose of counting the period of seven days, apart from the date of receipt of the order for
removal of defects, the holidays such as Saturdays, Sundays and other holidays of the Tribunal to be
excluded.
28. For determination of question relating to Power of Attorney, as raised in this appeal, it is
desirable to refer Section 2 of Power of Attorney Act, 1882 which reads as follows:-
"2. Execution under Power-of-Attorney: The donee of a power-of-attorney may,

if he thinks fit, execute or do any instrument or thing in and with his own name
and signature, and his own seal, where sealing is required, by the authority of the
donor of the power; and every instrument and thing so executed and done, shall
be as effectual in law as if it had been executed or done by the donee of the power
in the name, and with the signature and seal, of the donor thereof. This section
applies to powers-of-attorney created by instruments executed either before or
after this Act comes into force."
29. In "T.C. Mathai and Another Vs. District & Sessions Judge, Thiruvananthapuram, Kerala,
(1999) 3 SCC 614" the Hon'ble Supreme Court held that "Section 2 of the Power of Attorney Act,
1882 cannot override the specific provision of a statute which requires that a particular act should be
done by a party-in-person."
30. 'I&B Code', 2016 is a complete Code in itself. The Hon'ble Supreme Court in "M/s. Innoventive
Industries Ltd. Vs. ICICI Bank & Anr. 2017 SCC OnLine SC 1025" held:
"59 The Insolvency and Bankruptcy Code, 2016 is an Act to
consolidate and amend the laws relating to reorganization and insolvency
resolution, inter alia of corporate persons. Insofar as corporate persons
are concerned, amendments are made to the following enactments by
Sections 249 to 252 and 255......."
The Hon'ble Supreme Court further held: -
710
by Hon’ble NCLAT
"60 It is settled law that a consolidating and amending act like the
present Central enactment forms a code complete in itself and is exhaustive
of the matters dealt with therein........... ......."
The Hon'ble Supreme Court further proceeded to held: -
"63. There can be no doubt, therefore, that the Code is a Parliamentary law
that is an exhaustive code on the subject matter of insolvency in relation to
corporate entities, and is made under Entry 9, List HI in the 7th Schedule
which reads as under:
"9. Bankruptcy and insolvency"
31. As per Section 7 of the 'I&B Code' an application for initiation of 'Corporate Insolvency
Resolution Process' requires to be filed by 'Financial Creditor' itself. The form and manner in which an
application under section 7 of the 'I&B Code' is to be filed by a 'Financial Creditor' is provided in 'Form-1'
of the Adjudicating Authority Rules. Upon perusal of the Adjudicating Authority Rules and Form-1, it
may be duly noted that the MB Code' and the Adjudicating Authority Rules recognize that a 'Financial
Creditor' being a juristic person can only act through an "Authorised Representative". Entry 5 & 6 (Part I)
of Form No.1 mandates the 'Financial Creditor' to submit "name and address of the person authorised to
submit application on its behalf. The authorization letter is to be enclosed. The signature block of the
aforementioned Form 1 also provides for the authorised person's detail is to be inserted and also includes
inter alia the position of the authorised person in relation to the 'Financial Creditor'. Thus, it is clear that
only an "authorised person" as distinct from "Power of Attorney Holder" can make an application under
section 7 and required to state his position in relation to "Financial Creditor".
32. The 'I&B Code' is a complete Code by itself. The provision of the Power of Attorney Act, 1882
cannot override the specific provision of a statute which requires that a particular act should be done by a
person in the manner as prescribed thereunder.
33. Therefore, we hold that a 'Power of Attorney Holder' is not competent to file an application on
behalf of a 'Financial Creditor' or 'Operational Creditor' or 'Corporate Applicant'.
34. At this stage, it is desirable to refer Section 65 of 'I&B Code' which relates to 'fraudulent and
malicious initiation of proceedings', by a person who initiates the Insolvency Resolution Process or
711
by Hon’ble NCLAT
Liquidation proceeding fraudulently or with malicious intent for any purpose other than for the resolution
of insolvency, or liquidation, as the case may be. In such case, the Adjudicating Authority is empowered
under sub section (2) of Section 65 to impose upon such person a penalty which shall not be less than one
lakh rupees, but may extend to one crore rupees.
35. In a case where it is noticed that the Insolvency Resolution proceeding has been initiated by a
person fraudulently or with malicious intention for personal act on the part of an individual, can a Power
of Attorney Holder be punished? This is one of the reasons we have noticed to hold that a 'Power of
Attorney holder' cannot file any application under Section 7 or Section 9 or Section 10 of 'I&B Code'.
36. In so far as, the present case is concerned, the 'Financial Creditor'-Bank has pleaded that by
Board's Resolutions dated 30th May, 2002 and 30th October, 2009, the Bank authorised its officers to do
needful in the legal proceedings by and against the Bank. If general authorisation is made by any
'Financial Creditor' or 'Operational Creditor' or 'Corporate Applicant' in favour of its officers to do needful
in legal proceedings by and against the 'Financial Creditor' / 'Operational Creditor'/'Corporate Applicant',
mere use of word 'Power of Attorney' while delegating such power will not take away the authority of
such officer and 'for all purposes it is to be treated as an 'authorization' by the 'Financial Creditor'/
Operational Creditor'/ Corporate Applicant' in favour of its officer, which can be delegated even by
designation. In such case, officer delegated with power can claim to be the 'Authorized Representative' for
the purpose of filing any application under section 7 or Section 9 or Section 10 of 'I&B Code'.
37. As per Entry 5 & 6 (Part I) of Form No.1, 'Authorised Representative' is required to write his
name and address and position in relation to the 'Financial Creditor'/ Bank. If there is any defect, in such
case, an application under section 7 cannot be rejected and the applicant is to be granted seven days' time
to produce the Board Resolution and remove the defect.
38. This apart, if an officer, such as senior Manager of a Bank has been authorised to grant loan, for
recovery of loan or to initiate a proceeding for 'Corporate Insolvency Resolution Process' against the
person who have taken loan, in such case the 'Corporate Debtor' cannot plead that the officer has power to
sanction loan, but such officer has no power to recover the loan amount or to initiate 'Corporate
Insolvency Resolution Process', in spite of default of debt.
39. If a plea is taken by the authorised officer that he was authorised to sanction loan and had done
so, the application under section 7 cannot be rejected on the ground that no separate specific authorization
letter has been issued by the 'Financial Creditor' in favour of such officer designate.
712
by Hon’ble NCLAT
40. In view of reasons as recorded above, while we hold that a 'Power of Attorney Holder' is not
empowered to file application under section 7 of the 'I&B Code', we further hold that an authorised
person has power to do so.
41. For the reasons aforesaid, we find no ground to interfere with the impugned order(s). All the
appeals are dismissed, the order of admission of application under section 7 is affirmed. However, in the
713
by Hon’ble NCLAT

NEW DELHI
C.P. (I.B.) No. 63/NCLAT/2017
Applicant: R.G. Shaw & Sons Private Limited & Anr.

Vs.
Respondent: Naviplast Traders Private Limited & Ors.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Alok Dhir, Ms. Varsha Banerjee, Mr. Milan Singh Negi and Mr.
Kunal Godhwani, Learned Advocates
ORDER
This appeal has been preferred by Appellant ('corporate debtor') & another against order dated
12th April, 2017 passed by the Adjudicating Authority (National Company Law Tribunal), Kolkata
Bench, in Company Petition No. 186/2017. By the impugned order, the application preferred by
Respondents ('financial creditor') under Section 7 of the Insolvency & Bankruptcy Code, 2016
(hereinafter referred to as I&B Code) has been admitted, moratorium has been declared, Insolvency
Resolution Professional has been appointed and directions has been issued to proceed in terms of the
provisions of the I&B Code.
2. Before the Adjudicating Authority the Appellant ('corporate debtor') took plea that the
Respondent ('financial creditor') has not come with clean hands and have suppressed the facts that they
have initiated proceeding under Section 138 of the Negotiable Instruments Act, 1881 on account of
dishonor of cheque.
3. We have heard Ld. Counsel for the parties and perused the order. We agree with the Adjudicating
Authority that proceeding under section 138 of the negotiable Instruments Act was initiated due to
dishonor of the cheque and the same cannot be a ground to reject the application under Section 7 of the
I&B Code, there being debt and default. The Appellant while referring to letters, money receipts, demand
714
by Hon’ble NCLAT
promissory note, other relevant documents, including cheques have taken plea that they have been shown
as security towards loan amount paid on different dates as detailed in the appeal. According to the
Appellants, pursuant to oral agreement between the parties, the loan amount has been taken and there is
no stipulation of any specific date of re-payment. However, it is accepted that payment is due to the
'financial creditor' and cheques presented by the Appellants were dishonoured.
4. One of the plea taken by the Appellants is that pursuant to oral understanding/agreement between
the parties, the terms for repayment of the loan was to be renewed /restructured with effect from 31.3.17
and therefore the question of default in making re-payment does not arise. However, in absence of any
such 'agreement', no such plea can be accepted.
5. Ld. Counsel of the Appellants submitted that Form 1 was not in accordance with the provisions of
Section 7 and. Rules framed thereunder. But such submission cannot be accepted as we find that
application under Section 7 was filed by authorized representative of 'financial creditor', namely, Mr.
Chinmoy Guchhait, Director.
6. Next it was contended that particulars of security etc., were to be given in Part V of Form No. 1,
including order of court, if any, but it has not been shown. However, such submission cannot be accepted
as the particulars as mentioned therein are not applicable in the present case. For example, if no order has
been passed by any Tribunal or Arbitration Panel or any suit is pending, the question of giving details of
such case does not arise. The 'financial creditor' rightly mentioned the word 'not applicable' against the
relevant column.
7. As we find no illegality in the impugned order and the application preferred by Respondents
('financial creditors') being in order and complete, the question of interference with the impugned order
dated 12th April, 2017 does not arise. In absence of any merit, the appeal is dismissed. However, in the
715
by Hon’ble NCLAT

NEW DELHI
C.P. (I.B.) No. 112/NCLAT/2017
Applicant: Mass Metals Pvt. Ltd.

Vs.
Respondent: Sunflag Iron & Steel Co. Ltd.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Manish Raghav, Learned Advocates
For Respondents/Defendant: Mr. Ankur S. Kulkarni, Mr. Uditha Kulkarni and Ms. Shweta S. Parihar,
Learned Advocate.
ORDER
The appellant has challenged the order dated 24th May 2017 passed by Adjudicating Authority
(National Company Law Tribunal) Principal Bench, New Delhi in CP No.16/2017. By the impugned
order, the Adjudicating Authority treating the Transfer Petition under Section 434 (1)(a) as a petition
under Section 9 of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as I&B Code)
admitted the application, initiated Corporate Insolvency Resolution Process, declared moratorium and
appointed Interim Resolution Professional with other directions in accordance to the I&B Code.
2. On 25th July, 2017 when the matter was taken up, the learned counsel for the corporate debtor
made submission, as recorded below:
“Learned counsel for the appellants submits that no separate notice was issued
by the Learned Adjudicating Authority on the appellant. Whatever discussion
about the notice has been made is so-called mobile and Whats App notice(s)
given by the respondent. According to the appellant, though the application of
respondent was treated to be an application under Section 9 of the Insolvency
and Bankruptcy Code, 2016 (I&B Code), but no notice was issued under Section
8 of the I&B Code. Further it is pleaded that there is an 'existence of dispute'.
716
by Hon’ble NCLAT
Let notice be issued on the respondent by Speed Post. Requisite along with
process fees, if not filed, be filed by tomorrow i.e. 26th July, 2017. If the
appellant provides email address of the respondent, let notice be also issued
through e-mail.
Post the matter on 8th August, 2017.”
3. On notice, the respondent has appeared. Learned counsel for the respondent - the operational
creditor submits that notice under sub-section (1) of section 8 was issued on the appellant - corporate
debtor on 17th March, 2017.
4. From the demand notice dated 17th March, 2017, we find that the so called notice under Section
8 was issued by e-mail/ speed post by an advocate on record of Supreme Court of India namely Ankur S.
Kulkarni. The said so called notice under section 8 was not issued by respondent - operational creditor.
5. In “Uttam Galva Steels Limited vs. DF Deutsche Forfait AG & Anr.” Company Appeal (AT)
(Insolvency) No. 39 of 2017), similar issue fell for consideration as to whether a notice under sub-section
(1) of Section 8 can be issued by an advocate/lawyer or Chartered Accountant or Company Secretary.
This Appellate Tribunal by its Judgement dated 28th July 2017 held as follows:
“30. From bare perusal of Form-3 and Form-4, read with sub-rule (1) of Rule 5
and Section 8 of the I&B Code, it is clear that an Operational Creditor can
apply himself or through a person authorised to act on behalf of Operational
Creditor. The person who is authorised to act on behalf of Operational Creditor
is also required to state "his position with or in relation to the Operational
Creditor", meaning thereby the person authorised by Operational Creditor must
hold position with or in relation to the Operational Creditor and only such
person can apply.
31. The demand notice/invoice Demanding Payment under the I&B Code is
required to be issued in Form-3 or Form-4. Through the said formats, the
‘Corporate Debtor’ is to be informed of particulars of ‘Operational Debt’, with
a demand of payment, with clear understanding that the ‘Operational Debt’ (in
default) required to pay the debt, as claimed, unconditionally within ten days
from the date of receipt of letter failing which the ‘Operational Creditor’ will
initiate a Corporate Insolvency Process in respect of ‘Corporate Debtor’, as
717
by Hon’ble NCLAT
apparent from last paragraph no. 6 of notice contained in Form-3, and quoted
above.
Only if such notice in Form-3 is served, the ‘Corporate Debtor’ will understand
the serious consequences of nonpayment of ‘Operational Debt’, otherwise like
any normal pleader notice/Advocate notice, like notice under Section 80 of
C.P.C. or for proceeding under Section 433 of the Companies Act, 1956, the
‘Corporate Debtor’ may decide to contest the suit/case if filed, distinct
Corporate Resolution Process, where such claim otherwise cannot be contested,
except where there is an existence of dispute, prior to issue of notice under
Section 8.
32. In view of provisions of I&B Code, read with Rules, as referred to above, we
hold that an ‘Advocate/Lawyer’ or ‘Chartered Accountant’ or ‘Company
Secretary’ in absence of any authority of the Board of Directors, and holding no
position with or in relation to the Operational Creditor cannot issue any notice
under Section 8 of the I&B Code, which otherwise is a ‘lawyer’s notice’ as
distinct from notice to be given by operational creditor in terms of section 8 of
the I&B Code.”
6. In the present case as an advocate/lawyer has given notice under Section 8 and there is nothing on
record to suggest that the Advocate/lawyer has been authorised by 'Board of Directors' of the Respondent
- 'Sunflag Iron & Steel Co. Ltd.' to do so, and there is nothing on record to suggest that the
Advocate/lawyer hold any position with or in relation with the Respondent, we hold that the notice issued
by the Advocate/lawyer on behalf of the Respondent cannot be treated as a notice under section 8 of the
I&B Code. For the said reason, the petition under section 9 at the instance of the Respondent against the
Appellant was not maintainable.
7. This apart, we find that no notice issued by Adjudicating Authority was served on the appellant
prior to passing of the impugned order. Learned counsel appearing on behalf of the respondent -
operational creditor brings to the notice of this Appellate Tribunal, an order dated 20th April 2017 passed
by the Adjudicating Authority in CP No.16/2017 to suggest that the respondent - operational creditor
issued a notice to the appellant. From the said order, we find that for giving another opportunity on 26th
718
by Hon’ble NCLAT
April, 2017 notice was issued by speed post as well as by e-mail but no such notice was issued by the
Adjudicating Authority but was issued by the respondent - operational creditor.
8. In “M/s. Innoventive Industries Ltd. vs. ICICI Bank & Anr.”, [Company Appeal (AT)
(Insolvency) No. 1 & 2 of 2017], this Appellate Tribunal held that limited notice is required to be given
by the Adjudicating Authority before admitting an application, as quoted below:-
“In view of the discussion above, we are of the view and hold that the
Adjudicating Authority is bound to issue a limited notice to the corporate debtor
before admitting a case for ascertainment of existence of default based on
material submitted by the corporate debtor and to find out whether the
application is complete and or there is any other defect required to be removed.
Adherence to Principles of natural justice would not mean that in every situation
the adjudicating authority is required to afford reasonable opportunity of
hearing to the Corporate debtor before passing its order.”
9. In view of the fact that notice under sub-section (1) of Section 8 was issued by an advocate and
not by the Respondent and that the appellant was not given a proper opportunity by the Adjudicating
Authority before passing of the impugned order and the impugned order was passed in violation of the
rules of natural justice, the impugned order cannot be upheld. We accordingly set aside the impugned
order dated 24th May 2017 and dismiss the CP No.16/2017 preferred by the respondent, operational
creditor.
freezing of account and all other order(s) passed by the Adjudicating Authority pursuant to impugned
order(s) and action taken by the Interim Resolution Professional including the advertisement published in
the newspaper calling for applications are declared illegal. The appellant is released from the rigour of
law and allow the appellant company to function independently through its Board of Directors with
immediate effect.
719
by Hon’ble NCLAT
12. At this stage, learned counsel for the appellant submits that appellant, corporate debtor intends to
settle the dispute with the respondent, operational creditor. The Appellant may do so, to ensure that no
subsequent step is taken by the operational creditor.
The appeal is allowed with aforesaid observation. No cost.
720
by Hon’ble NCLAT

NEW DELHI
C.P. (I.B.) No. 198/NCLAT/2017
Applicant: Rajinder R.K.Kapoor & Co.

Vs.
Respondent: Anil Kumar Interim Resolution Professional & Ors.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Sanjay Kumar Chhetry, Learned Advocate
C.P. (I.B.) No. 200/NCLAT/2017
Applicant: Ashwini Kumar Prabhakar Director Rolex Cycles Pvt. Ltd.

Vs.
Respondent: Anil Kumar Interim Resolution Professional & Ors.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Arun Francis, Learned Advocate
ORDER
The appellants have challenged the order dated 8th September, 2017 passed by the Adjudicating
Authority (National Company Law Tribunal), Chandigarh Bench, Chandigarh in CA Nos. 122/2017 with
C.A. Nos. 123/2017 & 124/2017 in CP (IB) No. 37/Chd/Pb/2017.
2. Learned Counsel for the appellant(s) submits that the term of 'Interim Resolution Professional'
(thirty days) has already expired.
721
by Hon’ble NCLAT
Thereafter, the Adjudicating Authority was required to appoint 'Insolvency Resolution Professional'.
3. Referring to provisions of 'Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as

"I&B Code") while we observed that it is open for the Adjudicating Authority to allow the 'Interim
Resolution Professional' to continue as Resolution Professional, learned Counsel for the appellants
submits that the Committee of Creditors has already decided to remove the present 'Interim Resolution
Professional' and to appoint another 'Insolvency Resolution professional'.
4. In this connection, we may refer to the provisions of Section 27 of the 'I&B Code' which deals
with replacement of Resolution Professional by Committee of Creditors, which reads as follows: -
"27. Replacement of resolution professional by committee of creditors. — (1)

Where, at any time during the corporate insolvency resolution process, the
committee of creditors is of the opinion that a resolution professional appointed
under section 22 is required to be replaced, it may replace him with another
resolution professional in the manner provided under this section.
(2) The committee of creditors may, at a meeting, by a vote of seventy-five per

cent. of voting shares, propose to replace the resolution professional appointed
under section 22 with another resolution professional.
(3) The committee of creditors shall forward the name of the insolvency
professional proposed by them to the Adjudicating Authority.
(4) The Adjudicating Authority shall forward the name of the proposed
resolution professional to the Board for its confirmation and a resolution
professional shall be appointed in the same manner as laid down in section 16.
(5) Where any disciplinary proceedings are pending against the proposed
resolution professional under subsection (3), the resolution professional
appointed under section 22 shall continue till the appointment of another
resolution professional under this section."
5. In view of the aforesaid provision, we are of the view that the Adjudicating Authority is duty
bound to consider the name of another 'Resolution Professional', if proposed by the Committee of
Creditors or may call for name from the 'Insolvency and Bankruptcy Board of India', if no name has been
722
by Hon’ble NCLAT
proposed. We hope and trust that the Adjudicating Authority will act in accordance with law, as quoted
above, and pass appropriate order on the next date of hearing.
6. Till appropriate order in this regard is passed by the Adjudicating Authority, the Adjudicating
Authority will not give effect to the impugned order and directions to the extent it is against the
provisions of 'I&B Code'. However, till the regular 'Insolvency Resolution Professional' is appointed, the
Interim Resolution Professional may be asked to perform the day to day routine work, strictly in
accordance with the provisions of the 'I&B Code'.
7. Both the appeals stand disposed of with aforesaid observations and directions. However, in the
facts and circumstances, there shall be no order as to cost.
723
by Hon’ble NCLAT

NEW DELHI
C.P. (I.B.) No. 157/NCLAT/2017
Applicant: Zapp India Ltd.

Vs.
Respondent: Maheshwar Textiles & Anr.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Amol Vyas and Mr. Gaurav Sharma, Learned Advocates
For Respondents/Defendant: Mr. Saurabh Sharma and Mr. Ashok Kriplani, Learned Advocates
ORDER
The respondent, Maheshwar Textiles & Anr. (operational creditor) filed an application under
section 9 of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as I&B Code) for
initiation of Corporate Insolvency Resolution Process against appellant, Zapp India Ltd. (corporate
debtor). The Adjudicating Authority (National Company Law Tribunal), New Delhi Bench by impugned
order dated 20th July, 2017 passed in IB No.(IB)-170(ND)/2017 having admitted the application,
declaring moratorium and calling for name of Interim Resolution Professional. The present appeal has
been preferred by the appellant-corporate debtor against the said order.
2. One of the ground taken by the appellant - corporate debtor is that the Adjudicating Authority
before admitting the application under section 9 had not issued any notice to the appellant - corporate
debtor and impugned order dated 20th July, 2017 was passed in violation of rules of natural justice.
3. Learned counsel for the respondents disputed the aforesaid stand taken by appellant and
submitted that notices were issued twice on appellant one, by order dated 30th June, 2017 and another on
10th July, 2017.
4. Learned counsel for the appellant next contended that the notice under sub-section (1) of section
8 was not issued by the operational creditor but by the advocate on behalf of the operational creditor.
724
by Hon’ble NCLAT
5. From the notice dated 29th May 2017, we find that the demand notice was issued not by the
operational creditor but on its behalf by one advocate namely, Saurabh Sharma, who claimed to be the
counsel for the operational creditor - Maheshwar Textiles & Anr.
6. Similar issue fell for consideration before this Appellate Tribunal in “Uttam Galva Steels Limited
vs. DF Deutsche Forfait AG & Anr.” (Company Appeal (AT) (Insolvency) 39 of 2017). This Appellate
Tribunal by its Judgement dated 28th July 2017 held as follows:
is also required to state "his position with or in relation to the Operational
Creditor", meaning thereby the person authorised by Operational Creditor must
person can apply.
above.
the serious consequences of nonpayment of ‘Operational Debt’, otherwise like
C.P.C. or for proceeding under Section 433 of the Companies Act, 1956, the
Section 8.
725
by Hon’ble NCLAT
the I&B Code.”
7. In the present case as an advocate/lawyer has given notice and there is nothing on record to
suggest that the lawyer has been authorised by 'Board of Directors' of the Respondents - 'Maheshwar
Textiles & Anr.' and there is nothing on record to suggest that the lawyer hold any position with or in
relation with the Respondents, we hold that the notice issued by the lawyer on behalf of the Respondents
cannot be treated as a notice under section 8 of the I&B Code and for that the petition under section 9 at
the instance of the Respondents against the Appellant was not maintainable.
8. For the reasons aforesaid, we set aside the impugned order dated 20th July, 2017 passed by the
Adjudicating Authority, New Delhi in IB No. (IB)-170(ND)/2017 and allow the appeal.
freezing of account and all other order (s) passed by the Adjudicating Authority pursuant to impugned
order(s) and action taken by the Interim Resolution Professional including the advertisement published in
the newspaper calling for applications are declared illegal. The appellant is released from the rigour of
law and allow the appellant company to function independently through its Board of Directors with
immediate effect.
11. The appeal stands disposed of with the aforesaid observation and direction. However, in the facts
and circumstances of the case, there shall be no order as to cost. Company Petition is dismissed.
726
by Hon’ble NCLAT
727
by Hon’ble NCLAT

NEW DELHI
C.P. (I.B.) No. 132/NCLAT/2017
Applicant: Centech Engineers Private Limited & Anr.

Vs.
Respondent: Omicron Sensing Private Limited
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Rahul Chitnis & Mr. Aaditya Pande, Learned Advocates
For Respondents/Defendant: Mr. Dhaval Deshpande, Learned Advacate
ORDER
I.A. No. 486 of 2017:
Delay in re-filing the appeal is condoned. I.A. No. 486 of 2017 stands disposed of.
Company Appeal (AT) (Insolvency) No. 132 of 2017:
This appeal has been preferred by the appellants-'Corporate Debtor' against order dated 6th July,
2017 passed by the learned Adjudicating Authority (National Company Law Tribunal), Mumbai Bench
(hereinafter referred to as 'Adjudicating Authority') in C.P. No. 1112/I&BP/2017, whereby and
whereunder the application preferred by the respondent-Operational Creditor' under Section 9 of the
Insolvency & Bankruptcy. Code, 2016 (hereinafter referred to as I&B Code') for initiation of 'corporate
insolvency resolution process' against the appellants has been admitted, Moratorium has been declared,
name of the Interim Resolution Professional called for and order passed in terms of the I&B Code.
2. Learned counsel for the appellants submitted that the demand notice in Form-3 of the Insolvency
and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 (hereinafter referred to as
'Adjudicating Authority Rules') in terms of Rule 5, was not issued by the 'Operational Creditor' but by the
Advocates Associates, namely, 'SPS & Associates'. Reliance has been placed on a decision of this
Appellate Tribunal in 'Macquarie Bank Limited Vs. Uttam Galva Metallilcs Limited' - Company Appeal
728
by Hon’ble NCLAT
(AT) (Insol.) No. 96 of 2017, wherein by an order dated 17th July, 2017, the Appellate Tribunal held as
follows :
"17. In view of such provision we hold that an advocate/ lawyer or

Chartered Account or a Company Secretary or any other person in absence of
any authority by the 'Operational Creditor', and if such person do not hold any
position with or in relation to the 'Operational Creditor', cannot issue notice
under Section 8 of I&B Code', which otherwise can be treated as a lawyer's
notice/ pleader's notice, as distinct from notice under Section 8 of 'I & B Code'.
18. The demand notice/ invoice Demanding Payment under the 1& B Code
required to be issued in Form -3 or Form-4. By the said notice, the 'Corporate
Debtor' is to be informed of particulars of 'Operational Debt', with a demand of
payment, with clear understanding that the 'Operational Debt' (in default), as
claimed, is to be paid, unconditionally within ten days from the date of receipt of
letter failing which the 'Operational Creditor' will initiate a Corporate
Insolvency Process in respect of 'Corporate Debtor' as apparent from last
paragraph no. 6 of notice contained in form - 3, and quoted above.
Only if such notice in Form -3 or Form -4 is served, the 'Corporate

Debtor' will understand the serious consequences of non-payment of
'Operational Debt', otherwise like any normal pleader notice/ Advocate notice
or like notice under Section 80 of C.P.C. or notice for initiation of proceeding
under Section 433 of the Companies Act 1956, the 'Corporate Debtor' may
decide to contest the suit/ case if filed, as distinct Corporate Resolution Process,
where such claim otherwise cannot be contested, except where there is an
existence of dispute, prior to issuance of notice under Section 8."
3. In the present case, admittedly the notice has been given by 'Associate of Advocates' and there is
nothing on the record to suggest that the 'Associate of Advocates' was authorised by the respondent-
'Operational Creditor' or was holding any position with or in relation to the respondent company, the so-
called notice cannot be treated as notice under Section 8 of the I&B Code.
4. The aforesaid fact is also accepted by the learned counsel appearing on behalf of the respondent-
'Operational Creditor', who submits that the due amount has already been paid by the appellants-
'Corporate Debtor'.
729
by Hon’ble NCLAT
5. In view of the aforesaid admitted position that the notice under Section 8 was not issued in terms
of the provisions of the Adjudicating Authority Rules and I&B Code, we have no option but to set aside
the impugned order dated 6th July, 2017. The same is accordingly set aside.
Resolution Professional' or declaring moratorium, freezing of account and all other order (s) passed by
Adjudicating Authority pursuant to impugned order dated 6th July, 2017 and action, if any, taken by the
'Interim Resolution Professional', including the advertisement, if any, published in the newspaper calling
for applications all such orders and actions are declared illegal and are set aside. The application preferred
by the parties under Section 9 of the I&B Code is dismissed. Learned Adjudicating Authority will now
close the proceeding. The appellant company is released from all the rigour of law and is allowed to
7. Learned Adjudicating Authority will fix the fee of 'Interim Resolution Professional', if appointed,
and the respondent will pay the fees of the Interim Resolution Professional, for the period he has
functioned. The appeal is allowed with aforesaid observations and directions. However, in the facts and
730
by Hon’ble NCLAT

NEW DELHI
C.P. (I.B.) No. 194/NCLAT/2017
Applicant: A.D. Electro Steel Co. Pvt. Ltd. & Anr.

Vs.
Respondent: Anil Steels
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. P. Nagesh & Mr. A.K. Jain, Learned Advocates
For Respondents/Defendant: Mr. Sameer Rastogi, Mr. Yatin Sachdeva, Mr. V. Seshagiri & Mr. Anchit
Tripathi, Learned Advacates
ORDER
The Respondent-'Operational Creditor' filed an application under section 9 of the Insolvency and
Bankruptcy Code, 2016 (hereinafter referred to as "I&B Code") for initiation of 'Corporate Insolvency
Resolution Process' against the Appellants-'Corporate Debtor'. By impugned order dated 7th September,
2017, the Adjudicating Authority (National Company Law Tribunal), Kolkata Bench, Kolkata, having
admitted the application and appointed 'Interim Resolution Professional' with direction to take steps as per
sections 15, 17 and 18 of the 'I&B Code', the present appeal has been preferred against the said order.
2. The main plea taken by the Appellants-'Corporate Debtor' is that there is a dispute in existence
and therefore the application under Section 9 was not maintainable at the instance of the Respondent-
'Operational Creditor'.
3. From the record we find that the Respondent-'Operational Creditor' through Advocate issued
notice dated 15th June, 2016 under section 138 of the Negotiable Instrument Act, 1881 and made certain
claims. In reply to the same, learned counsel for the Appellants- 'Corporate Debtor' by reply dated 28th
June, 2016 raised the dispute about the supply of certain quantities of Buffer Plunger (Wagon) Casting
and Buffer Casing (Wagon) Casting. It was also alleged that the terms and conditions of the agreement
have been violated.
731
by Hon’ble NCLAT
4. The question about existence of a dispute fell for consideration before the Hon'ble Supreme Court
in "Mobilox Innovations Private Ltd v. Kirusa Software Private Ltd, (2017) SCC Online SC 1154".
Taking into consideration the provisions in the 'I&B Code', the Hon'ble Supreme Court observed and held
as follows: -
"33. The scheme under Sections 8 and 9 of the Code, appears to be that an
operational creditor, as defined, may, on the occurrence of a default (i.e, on
non-payment of a debt, any part whereof has become due and payable and has
not been repaid), deliver a demand notice of such unpaid operational debt or
deliver the copy of an invoice demanding payment of such amount to the
corporate debtor in the form set out in Rule 5 of the Insolvency and Bankruptcy
(Application to Adjudicating Authority) Rules, 2016 read with Form 3 or 4, as
the case may be (Section 8(1)). Within a period of 10 days of the receipt of such
demand notice or copy of invoice, the corporate debtor must bring to the notice
of the operational creditor the existence of a dispute and/or the record of the
pendency of a suit or arbitration proceeding filed before the receipt of such
notice or invoice in relation to such dispute (Section 8(2)(a)). What is important
is that the existence of the dispute and/or the suit or arbitration proceeding must
be pre-existing - i.e it must exist before the receipt of the demand notice or
invoice, as the case may be. In case the unpaid operational debt has been
repaid, the corporate debtor shall within a period of the self-same 10 days send
an attested copy of the record of the electronic transfer of the unpaid amount
from the bank account of the corporate debtor or send an attested copy of the
record that the operational creditor has encashed a cheque or otherwise
received payment from the corporate debtor (Section 8(2)(b)). It is only if after
the expiry of the period of the said 10 days, the operational creditor does not
either receive payment from the corporate debtor or notice of dispute, that the
operational creditor may trigger the insolvency process by filing an application
before the adjudicating authority under Sections 9(1) and 9(2). This application
is to be filed under Rule 6 of the Insolvency and Bankruptcy (Application to
Adjudicating Authority) Rules, 2016 in Form 5, accompanied with documents
and records that are required under the said form. Under Rule 6(2), the
applicant is to dispatch by registered post or speed post, a copy of the
application to the registered office of the corporate debtor. Under Section 9(3),
732
by Hon’ble NCLAT
along with the application, the statutory requirement is to furnish a copy of the
invoice or demand notice, an affidavit to the effect that there is no notice given
by the corporate debtor relating to a dispute of the unpaid operational debt and
a copy of the certificate from the financial institution maintaining accounts of
the operational creditor confirming that there is no payment of an unpaid
operational debt by the corporate debtor. Apart from this information, the other
information required under Form 5 is also to be given. Once this is done, the
adjudicating authority may either admit the application or reject it. If the
application made under subsection (2) is incomplete, the adjudicating authority,
under the proviso to sub-section 5, may give a notice to the applicant to rectify
defects within 7 days of the receipt of the notice from the adjudicating authority
to make the application complete. Once this is done, and the adjudicating
authority finds that either there is no repayment of the unpaid operational debt
after the invoice (Section 9(5)(i)(b)) or the invoice or notice of payment to the
corporate debtor has been delivered by the operational creditor (Section
9(5)(i)(c)), or that no notice of dispute has been received by the operational
creditor from the corporate debtor or that there is no record of such dispute in
the information utility (Section 9(5)(i)(d)), or that there is no disciplinary
proceeding pending against any resolution professional proposed by the
operational creditor (Section 9(5)(i)(e)), it shall admit the application within 14
days of the receipt of the application, after which the corporate insolvency
resolution process gets triggered. On the other hand, the adjudicating authority
shall, within 14 days of the receipt of an application by the operational creditor,
reject such application if the application is incomplete and has not been
completed within the period of 7 days granted by the proviso (Section
9(5)(ii)(a)). It may also reject the application where there has been repayment of
the operational debt (Section 9(5)(ii)(b)), or the creditor has not delivered the
invoice or notice for payment to the corporate debtor (Section 9(5)(ii)(c)). It
may also reject the application if the notice of dispute has been received by the
operational creditor or there is a. record of dispute in the information utility
(Section 9(5)(ii)(d)). Section 9(5)(ii)(d) refers to the notice of an existing dispute
that has so been received, as it must be read with Section 8(2)(a). Also, if any
disciplinary proceeding is pending against any proposed resolution
professional, the application may be rejected (Section 9(5)(ii)(e)).
733
by Hon’ble NCLAT
34. Therefore, the adjudicating authority, when examining an application under

Section 9 of the Act will have to determine:
(i) Whether there is an "operational debt" as defined exceeding Rs. 1 lakh? (See
Section 4 of the Act)
(ii) Whether the documentary evidence furnished with the application shows that
the aforesaid debt is due and payable and has not yet been paid? And
(iii) Whether there is existence of a dispute between the parties or the record of
the pendency of a suit or arbitration proceeding filed before the receipt of the
demand notice of the unpaid operational debt in relation to such dispute?"
39. It is now important to construe Section 8 of the Code. The operational

creditors are those creditors to whom an operational debt is owed, and an
operational debt, in turn, means a claim in respect of the provision of goods or
services, including employment, or a debt in respect of repayment of dues
arising under any law for the time being in force and payable to the Government
or to a local authority. This has to be contrasted with financial debts that may be
owed to financial creditors, which was the subject matter of the judgment
delivered by this Court on 31.8.2017 in Innoveritive Industries Ltd. v. ICICI
Bank (Civil Appeal Nos. 8337-8338 of 2017). In this judgment, we had held that
the adjudicating authority under Section 7 of the Code has 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 within 14 days. The corporate
debtor is entitled to point out to the adjudicating authority that a default has not
occurred; in the sense that a debt, which may also include a disputed claim, is
not due i.e it is not payable in law or in fact. This Court then went on to state:
"29. The scheme of Section 7 stands in contrast with the scheme under Section 8
invoice mentioned in sub-section (1), bring to the notice of the operational
arbitration proceedings, which is pre-existing - i.e before such notice or invoice
734
by Hon’ble NCLAT
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."
40. It is, thus, clear that so far as an operational creditor is concerned, a

demand notice of an unpaid operational debt or copy of an invoice demanding
payment of the amount involved must be delivered in the prescribed form. The
corporate debtor is then given a pertod of 10 days from the receipt of the
demand notice or copy of the invoice to bring to the notice of the operational
creditor the existence of a dispute, if any. We have also seen the notes on clauses
annexed to the Insolvency and Bankruptcy Bill of 2015, in which "the existence
of a dispute" alone is mentioned. Even otherwise, the word "and" occurring in
Section 8(2)(a) must be read as "or" keeping in mind the legislative intent and
the fact that an anomalous situation would arise if it is not read as "or". If read
as "and", disputes would only stave off the bankruptcy process if they are
already pending in a suit or arbitration proceedings and not otherwise. This
would lead to great hardship; in that a dispute may arise a few days before
triggering of the insolvency process, in which case, though a dispute may exist,
there is no time to approach either an arbitral tribunal or a court. Further,
given the fact that long limitation periods are allowed, where disputes may arise
and do not reach an arbitral tribunal or a court for upto three years, such
persons would be outside the purview of Section 8(2) leading to bankruptcy
proceedings commencing against them. Such an anomaly cannot possibly have
been intended by the legislature nor has it so been intended. We have also seen
that one of the objects of the Code qua operational debts is to ensure that the
amount of such debts, which is usually smaller than that of financial debts, does
735
by Hon’ble NCLAT
not enable operational creditors to put the corporate debtor into the insolvency
resolution process prematurely or initiate the process for extraneous
considerations. It is for this reason that it is enough that a dispute exists between
the parties."
5. In the present case, we find that there was an "existence of dispute" between the parties. Learned
Counsel for the Respondent-'Operational Creditor' while did not dispute the aforesaid fact and submits
that the amount due to the 'Operational Creditor' have already been paid.
6. In view of the fact that there was a dispute between the parties and the decision of the present
case is covered by the Hon'ble Supreme Court in "Mobilox Innovations Private Ltd v. Kirusa Software
Private Ltd" we have no other option but to set aside, the impugned order dated 7th September, 2017
passed in CP (IB) No. 415/KB/2017. The said order is accordingly, set aside.
Resolution Professional' or declaring moratorium, freezing of account, if any, and all other order (s)
passed by Adjudicating Authority pursuant to impugned order and action, if any, taken by the 'Interim
function independently through, its Board of Directors from immediate effect.
8. Learned Adjudicating Authority will fix the fee of 'Interim Resolution Professional if appointed,
736
by Hon’ble NCLAT

NEW DELHI
C.P. (I.B.) No. 156/NCLAT/2017
Applicant: Innoventive Industries Ltd.

Vs.
Respondent: Maharashtra State Electricity Distribution Company Ltd.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Ms. Misha, Mr. Vijayant Paliwal, Learned Advocates
For Respondents/Defendant: Mr. Nirav Shah, Learned Advacate
ORDER
Learned counsel appeared on behalf of the respondent – Maharashtra State Electricity

Distribution Company Limited submits that in view of the earlier order dated 21st September, 2017,
respondent is inclined to restore the electrical connection of the ‘Corporate Debtor’, if the amount towards
consumption of electricity due since the date of moratorium (17.01.2017) till September, 2017 is paid.
2. In the circumstances, we allow the (Interim) Resolution Professional (IRP) to pay the charges due
to respondent towards consumption of electricity since the date of moratorium i.e. 17th January, 2017 till
September, 2017. If such amount is deposited, the respondent will restore the electrical connection within
48 hours from the date of receipt of amount to ensure that the company remains on going and functional.
On such restoration of such electricity, the IRP on behalf of the ‘Corporate Debtor’ will also pay month to
month charges towards consumption of electricity failing which it will be open to the respondent –
Maharashtra State Electricity Distribution Company Limited to take appropriate steps.
3. We make it clear that the Corporate Debtor or Resolution Professional are not liable to pay the
dues of period prior to passing of order of moratorium, which can be considered at the time of payment of
dues to the creditors (Resolution Plan).
4. The appeals stands disposed of with the aforesaid observations and directions.
737
by Hon’ble NCLAT

NEW DELHI
C.P. (I.B.) No. 111/NCLAT/2017
Applicant: Shyam Industries Ltd.

Vs.
Respondent: R. L. Steel Energy Ltd.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Ms. Akanksha Jain & Ms. Sayli Petiwale, Learned Advocates
For Respondents/Defendant: Mr. Rohit Rathi & Mr. Rameshwar Totala, Learned Advacate
ORDER
This appeal has been preferred by the appellant against the order dated 24th May, 2017 passed by
the Adjudicating Authority (National Company Law Tribunal), Ahmedabad Bench, Ahmedabad in C.P.
(I.B.) No. 20/9/NCLT/AHM/2017. The appeal has been preferred beyond the prescribed period of 30 days
from the date of receipt of the order, and, therefore, the application for condonation of delay has been
filed.
2. Learned counsel for the appellant submits that the appeal was required to be
filed on 23rd June, 2017 but the Appellate Tribunal was closed during the summer vacations and opened
only on 3rd July, 2017. The appeal was presented on 29th June, 2017 and re-presented on 14th July, 2017.
If the period of vacation is excluded, then there is a delay of 11 days.
3. Having heard the learned counsel for the parties and being satisfied, the delay
of 11 days’ is condoned.
4. The main ground taken by the appellant is that the impugned order has been
passed by the Adjudicating Authority without taking into consideration the fact that the notice dated 15th
January, 2017 under sub-section (1) of Section 8 of the Insolvency and Bankruptcy Code, 2016
(hereinafter referred to as the ‘I&B Code’) was not issued by the respondent – ‘Operational Creditor’ but
through legal firm namely ‘RT Legal, Advocates & Consultants. Subsequently, another notice was issued
738
by Hon’ble NCLAT
on 18th February, 2017 also by the same very legal firm i.e. RT Legal, Advocates & Consultants. This
was informed that the settlement has been reached and the amount has already been paid.
5. From the report, we find that notice under sub-section (1) of Section 8 of I & B Code was not
issued by the respondent – ‘Operational Creditor’ and this is also accepted by the learned counsel for the
respondent.
6. Similar issue was considered by the Appellate Tribunal in Uttam Galva Steels Limited v. DF
Deutsche Forfait AG & Anr. – Company Appeal (AT) (Insolvency) 39 of 2017, wherein by an order
dated 28th July, 2017, the Appellate Tribunal held as follows :
is also required to state “his position with or in relation to the Operational
Creditor”, meaning thereby the person authorised by Operational Creditor
must hold position with or in relation to the Operational Creditor and only such
person can apply.
required to be issued in Form-3 or Form - 4. Through the said formats, the
apparent from last paragraph no. 6 of notice contained in Form – 3, and quoted
above.
the serious consequences of non-payment of ‘Operational Debt’, otherwise like
C.P.C. or for proceeding under Section 433 of the Companies Act 1956, the
739
by Hon’ble NCLAT

Section 8.
the I&B Code.
33. In the present case as an advocate/lawyer has given notice and there is
nothing on record to suggest that the lawyer has been authorised by ‘Board of
Directors’ of the Respondent – ‘DF Deutsche Forfait AG’ and there is nothing
on record to suggest that the lawyer hold any position with or in relation with
the Respondents, we hold that the notice issued by the lawyer on behalf of the
Respondents cannot be treated as a notice under section 8 of the I&B Code and
for that the petition under section 9 at the instance of the Respondents against
the Appellant was not maintainable.”
7. In view of the aforesaid findings in the case of Uttam Galva Steels Limited (Supra), there is no
option but to set aside the impugned order.
8. In effect, order(s), if any, passed by Ld. Adjudicating Authority appointing any ‘Interim
Resolution Professional’ or declaring moratorium, freezing of account, if any, and all other order (s)
passed by Adjudicating Authority pursuant to impugned order and action, if any, taken by the ‘Interim
Resolution Professional’, including the advertisement, if any, published in the newspaper calling for
9. Learned Adjudicating Authority will fix the fee of ‘Interim Resolution Professional’, if appointed,
740
by Hon’ble NCLAT

NEW DELHI
C.P. (I.B.) No. 206/NCLAT/2017
Applicant: Flacon Tyres Ltd.

Vs.
Respondent: Belthangady Taluk Rubber Growers Marketing & Processing Co-op. Society Ltd. &
Anr.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Ashok K. Jain, Learned Advocates
ORDER
This appeal has been preferred by the appellant against the order dated 30th August, 2017 passed
by the Adjudicating Authority (National Company Law Tribunal), Bengaluru Bench in Case No. I.A. No.
102/17 in CP (IB) No. 01/BB/17. The main plea taken is that an association of workmen have been
impleaded in the case under Section 9 of the Insolvency and Bankruptcy Code, 2016 (for short ‘I&B
Code’), which is not permissible.
Having regard to the fact that after the impugned order being passed, the Adjudicating Authority
has already admitted the application under Section 9, as informed by the learned counsel for the appellant,
we are not inclined to interfere with the impugned order. However, we are of the view that after
admission of the application for initiation of Corporate Insolvency Resolution, against the appellant, the
association of workmen have no role to play except their members, individually may file claim, the
Insolvency Resolution Professional, who is required to proceed in accordance with the provisions of I &
B Code.
The appeal stands disposed of with the aforesaid observations. However, this order will not come
in the way of the aggrieved person to challenge the order of admission of the application under Section 9
of the I & B Code. No costs.
741
by Hon’ble NCLAT

NEW DELHI
C.P. (I.B.) No. 152/NCLAT/2017
Applicant: M/s. Hyosan Automative India Pvt. Ltd.

Vs.
Respondent: Metecno (India) Pvt. Ltd.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. P. Jegan, Learned Advocates
For Respondents/Defendant: Mr. Nikhil, Learned Advocates
ORDER
This appeal has been preferred by Appellant-'Corporate Debtor' against the order dated 16th
August, 2017 passed by the Adjudicating Authority (National Company Law. Tribunal), Chennai Bench,
Chennai in TCP/232/(IB)/CB/2017 whereby and whereunder on the Transfer Petition under Sections
433(e)(f), 433(i)(a) and 439(i)(b) of the Companies Act 1956, the Adjudicating Authority treated the
application under Section 9 of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as "I&B
Code"), admitted the application, initiated 'Corporate Insolvency Resolution Process', passed prohibitory
orders in terms of 'I&B Code' and requested the Insolvency and Bankruptcy Board of India to recommend
the name of 'Interim Resolution Professional'.
2. The main plea taken by the appellant is that the Adjudicating Authority has treated the petition as
an application under Section 9 wherein the documents were not complete in terms of the 'I&B Code'.
3. Learned Counsel for the appellant submits that Rule 5 of the Companies (Transfer of Pending
Proceedings) Rules, 2016 as notified by the Central Government on 7th December, 2016 and
subsequently modified, has not been complied with. The respondent has not submitted all information
required for admission of the petition under Section 9 of the 'I&B Code' within 60 days, nor proposed the
name of the 'Interim Resolution professional'. He further submits that the parties have already settled the
dispute.
742
by Hon’ble NCLAT
4. On notice, the Respondent-Operational Creditor' has appeared and filed reply. It has not been
disputed that the provisions of the 'I&B Code' were not followed in letter and spirit. Nothing on records
suggest that notice under Section 8 was issued or the requirements under Rule 5 was followed.
5. Learned Counsel appearing on behalf of the Respondent submits that the parties have settled the
dispute and filed a copy of the settlement.
6. Having heard the parties, as we find that the application under Section 433(e)(f) read with
Sections 433(i)(a) and 439(i)(b) of the Companies Act 1956, which was transferred to the Adjudicating
Authority was not complete before treating it as an application under Section 9 of the Ì&B Code' and
admitting the case, we hold that the application was fit to be rejected. The Adjudicating Authority having
failed to notice the same, we set aside the impugned order dated 16th August, 2017.
7. In effect, order (s), if any, passed by Ld. Adjudicating Authority appointing 'Interim Resolution
Professional', declaring moratorium, freezing of account, if any, and all other order (s) passed by
Adjudicating Authority pursuant to impugned order and action, if any, taken by the Ìnterim Resolution
Professional', including the advertisement, if any, published in the newspaper calling for applications all
such orders and actions are declared illegal and are set aside. The application preferred by Respondent
under Section 9 of the I&B Code, 2016 is dismissed. Learned Adjudicating Authority will now close the
proceeding. The appellant company is released from all the rigour of law and is allowed to function
independently through its Board of Directors from immediate effect.
8. Learned Adjudicating Authority will fix the fee of 'Interim Resolution Professional if appointed,
and the Respondent will pay the fees of the Interim Resolution Professional, for the period he has
743
by Hon’ble NCLAT

NEW DELHI
C.P. (I.B.) No. 145/NCLAT/2017
Applicant: Anu Elastics Pvt. Ltd.

Vs.
Respondent: Aggarwal Elastics
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. P. Nagesh & Mr. Dhruv Gupta, Learned Advocates
For Respondents/Defendant: Ms. Judy James, Learned Advocates
ORDER
The respondent - M/s Aggarwal Elastics Pvt. Ltd. through its proprietor (Operational Creditor)
filed an application under Section 9 of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to
as ‘I&B Code’) for initiation of corporate insolvency resolution processes against the appellant - M/s Anu
Elastics Pvt. Ltd. (Corporate Debtor). The Adjudicating Authority (National Company Law Tribunal),
New Delhi Bench by impugned order dated 25th July, 2017 admitted the application, declared
moratorium in terms of Section 15 of I&B Code and called for the names of interim Resolution
Professional from Insolvency and Bankruptcy Board of India. The said order is under challenge in this
appeal.
2. The main plea taken by the appellant is that no notice was issued or served by the Adjudicating
Authority on the appellant. It is further submitted that though there is an existence of dispute, still the
application has been admitted.
3. Learned counsel appearing on behalf of the appellant relied on a letter dated 1st June 2016 written
by a lawyer on behalf of the appellant to the lawyer of the Operational Creditor pursuant to the legal
notice dated 09.03.2016 issued on behalf of the Operational Creditor in support of the claim that there is
an existence of dispute.
744
by Hon’ble NCLAT
4. Learned counsel appearing on behalf of the respondent – Operational Creditor referred to an order
dated 31st May, 2017 to suggest that the notice was issued by the Adjudicating Authority by Dasti, i.e.
through the Operational Creditor returnable on 3rd July, 2017. Reliance has also been placed on the
affidavit filed by the Operational Creditor along with the postal receipt and the tracking record to re-
affirm that the notice has been served. However, from the order dated 3rd July, 2017 enclosed by the
respondent, we find that no notice was served on the appellant. This is apparent from the order dated 3rd
July, 2017 passed by the Adjudicating Authority, as quoted below:
“Affidavit of service is being filed along with the postal receipt and the
tracking report which reflects that though the steps were taken at the registered
office of the Corporate Debtor, the same has been received with the report, “No
such office at the given address”. This is deemed sufficient and service.
None is present on behalf of the Corporate Debtor to come out for

further consideration on 7th July, 2017.”
5. Though it was reported that no notice has been served at the given address, but the Adjudicating
Authority wrongly treated the notice deemed to have been served. It is a settled law that on refusal of the
notice by a party, the same can be deemed to have been served, but for insufficient or on wrong address,
return of notice cannot be treated to be served. From the aforesaid fact, we find that the impugned order
dated 25th July, 2017 was passed by the Adjudicating Authority completely in violation of rules of
natural justice.
6. The letter issued on behalf of the appellant – Corporate Debtor dated 1st June, 2016 shows that
there is also an ‘existence of dispute’ as is clear from the relevant portions and the preliminary objections
as quoted below:
“3. That your client in order to extort money from my client, has sent false and
frivolous legal notice, which even to the knowledge of your client, is based on
false facts. It is in the knowledge of your client that no amount is due and
recoverable from my client as my client has already paid entire amount in
respect of the invoices, which have been raised by your client on my client and
further your client time and again have also issued credit notes to my client as
goods supplied by your client to my client were defective and the same were
taken back by your client.
xxx xxx xxx
745
by Hon’ble NCLAT
8. That the contents of para No. 8 of the legal notice are wrong and
denied. It is wrong to states that my client is liable to pay amount of
Rs.47,56,651.50 paise as principle amount to your client. It is again reiterated
herein that my client is not liable to pay any amount to your client. It is further
wrong to states that my client is also liable to pay amount of Rs.46,03,115/- to
your client on account of interest.”
7. For the reasons aforesaid, the impugned order cannot be sustained. The said order is accordingly
set aside.
Resolution Professional’ or freezing of account, if any, and all other order (s) passed by Adjudicating
Authority pursuant to impugned order and action, if any, taken by the ‘Interim Resolution Professional’,
including the advertisement, if any, published in the newspaper calling for applications all such orders
and actions are declared illegal and are set aside. The application preferred by Respondent under Section
9 of the I&B Code, 2016 is dismissed. Learned Adjudicating Authority will now close the proceeding.
The appellant company is released from all the rigour of law and is allowed to function independently
through its Board of Directors from immediate effect.
746
by Hon’ble NCLAT

NEW DELHI
C.P. (I.B.) No. 115/NCLAT/2017
Applicant: International Recreation & Amusement Ltd.

Vs.
Respondent: S.R. Construction
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Virender Ganda, Mr. Vivek Mallik, Mr. Tarun Mehta & Mr.
Dhawan Jain, Learned Advocates
For Respondents/Defendant: Mr. Swaroop George, Mr. Pankaj Jain, Learned Advocates
ORDER
An application for condonation of delay has been preferred by the appellant. It is stated that the
impugned order dated 28th April, 2017 was passed without notice to the appellant-'Corporate Debtor', no
copy of the order was made available by the Adjudicating Authority (National Company Law Tribunal),
Principal Bench, New Delhi (hereinafter referred to as 'Adjudicating Authority'). The appellant could
come to know of the impugned order from the 'Interim Resolution Professional' on 20th July, 2017 and
preferred the appeal on 26th July, 2017.
2. On notice, learned counsel for the respondent-'Operational Creditor' has appeared and not
disputed the aforesaid fact. Learned counsel for the respondent further submits that the parties have
settled the dispute.
3. Shri Pankaj Jain, Advocate appeared and filed Vakalatnama on behalf of some of the Financial
Creditors. He submits that the other Financial Creditors have also filed the claim application before the
'Interim Resolution Professional'. However, it has not been disputed that the impugned order was passed
without notice to the appellant-'Corporate Debtor' in violation of the rules of natural justice.
747
by Hon’ble NCLAT
4. For the reasons aforesaid, while we hold that the appeal is within the time i.e. within 30 days
from the date of knowledge, the impugned order dated 28th April, 2017 having passed in violation of
rules of natural justice is set aside.
5. In effect, order(s), if any, passed by learned Adjudicating Authority appointing any 'Interim
Resolution Professional' or declaring moratorium, freezing the account and all other order(s) passed by
Adjudicating Authority pursuant to impugned order dated 28th April, 2017 and action, if any, taken by
the 'Interim Resolution Professional', including the advertisement, if any, published in the newspaper
calling for applications etc. and all such orders and actions are declared illegal and are set aside. The
application preferred by the respondent under Section 9 of the I&B Code, 2016 is dismissed. Learned
Adjudicating Authority will now close the proceeding. The appellant company is released from all the
rigour of law and is allowed to function independently through its Board of Directors from immediate
effect.
6. Learned Adjudicating Authority will fix the fee of 'Interim Resolution Professional', if appointed,
and the appellant will pay the fees of the 'Interim Resolution Professional', for the period he has
functioned as per their settlements. The appeal is allowed with the aforesaid observations and directions.
However, in the facts and circumstances of the case, there shall be no order as to cost.
7. However, the impugned order will not come in the way of other Financial Creditor(s)/
Operational Creditor(s), if any, move before appropriate forum.
748
by Hon’ble NCLAT

NEW DELHI
C.P. (I.B.) No. 80/NCLAT/2017
Applicant: Smartcity (Kochi) Infrastructure Pvt. Ltd.

Vs.
Respondent: Synergy Property Development Services Private Limited and Another
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Ramji Srinivasan, Mr. Tushar Bhardwaj, Mr. Sohil Yadav & Ms.
Jasmine Damkewala, Learned Advocates
For Respondents/Defendant: Mr. Balaji Srinivasan & Ms. Pratiksha Mishra, Learned Advocates
ORDER
This appeal has been preferred by the Appellant-M/s SmartCity (Kochi) Infrastructure Pvt. Ltd.
(‘Corporate Debtor’) challenging the order dated 9th June, 2017 passed by the Adjudicating Authority
(National Company Law Tribunal), Chennai Bench, Chennai in CP/484 (IB)/CB/2017.
2. By the impugned order, the Adjudicating Authority entertained the application under section 9 of
the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as “I&B Code”) preferred by
Respondent- M/s. Synergy Property Development Services Pvt. Ltd. (‘Operational Creditor’) admitted the
application, appointed the Interim Resolution Professional and ordered for Moratorium with further
directions in terms of ‘I&B Code’.
3. The appellant has challenged the impugned order dated 9th June, 2017, mainly on the following
grounds:-
(i) Notice under sub-section (1) of Section 8 was not issued by the ‘Operational Creditor’
but by the ‘Law Firm’, which is not in accordance with law.
(ii) Notice under Rule 4(3) of the Insolvency and Bankruptcy (Application to Adjudicating
Authority) Rules, 2016 was not sent by the ‘Operational Creditor’, but by a ‘Law Firm’ and,
749
by Hon’ble NCLAT
(iii) There is a dispute in existence and therefore the application under Section 9 was not
maintainable.
4. Learned Counsel appearing on behalf of the ‘Operational Creditor’ has not disputed the aforesaid
facts and submitted that the parties have already reached settlement.
5. Notice under sub-section (1) of Section 8 is to be issued in Form-3 or Form-4, as prescribed under
Rule 5 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016, which
reads as follows:-
“5. Demand notice by operational creditor. ─ (1) An operational creditor shall

deliver to the corporate debtor, the following documents, namely, ─
(2) The demand notice or the copy of the invoice demanding payment referred to
in sub-section (2) of section 8 of the Code, may be delivered to the corporate
debtor,
(a) at the registered office by hand, registered post or speed post with
acknowledgement due; or
(b) by electronic mail service to a whole time director or designated partner or

key managerial personnel, if any, of the corporate debtor.
(3) A copy of demand notice or invoice demanding payment served under this
rule by an operational creditor shall also be filed with an information utility, if
any.”
6. From the said so-called notice dated 20th April, 2017, we also find that it has not been issued by
the ‘Operational Creditor’ but by a Law Firm- ‘JUSTLAW’.
7. In reply to the said notice, the appellant by its reply dated 18th May, 2017 requested the
‘Operational Creditor’ to follow the procedures as per agreement by appointing nominee arbitrator
without prejudice to the right of the appellant.
8. Another notice seems to have been issued in terms of Rule 5 of the Adjudicating Authority
Rules, 2016 dated 7th January, 2017. Though, it has been issued in the Form-3 but it has not been issued
by the ‘Operational Creditor’ but by the same Law Firm-‘JUSTLAW’.
750
by Hon’ble NCLAT
9. Similar issue fell for consideration before this Appellate Tribunal in “M/s. Uttam Galva Steels
Limited v. DF Deutsche Forfait AG & Anr. Company Appeal (AT) (Insolvency) No. 39 of 2017”
wherein this Appellate Tribunal by its judgment dated 28th July, 2017 held as follows: -
“30. From bare perusal of Form-3 and Form-4, read with sub-rule (1) of
Rule 5 and Section 8 of the I&B Code, it is clear that an Operational Creditor
can apply himself or through a person authorised to act on behalf of
Operational Creditor. The person who is authorised to act on behalf of
Operational Creditor is also required to state “his position with or in relation to
the Operational Creditor”, meaning thereby the person authorised by
Operational Creditor must hold position with or in relation to the Operational
Creditor and only such person can apply.
above.
Only if such notice in Form-3 is served, the ‘Corporate Debtor’ will

understand the serious consequences of nonpayment of ‘Operational Debt’,
otherwise like any normal pleader notice/Advocate notice, like notice under
Section 80 of C.P.C. or for proceeding under Section 433 of the Companies Act
1956, the ‘Corporate Debtor’ may decide to contest the suit/case if filed, distinct
Section 8.
32. In view of provisions of I&B Code, read with Rules, as referred to

above, we hold that an ‘Advocate/Lawyer’ or ‘Chartered Accountant’ or
‘Company Secretary’ in absence of any authority of the Board of Directors, and
holding no position with or in relation to the Operational Creditor cannot issue
751
by Hon’ble NCLAT
any notice under Section 8 of the I&B Code, which otherwise is a ‘lawyer’s
notice’ as distinct from notice to be given by operational creditor in terms of
section 8 of the I&B Code.”
10. In the present case also the notice has been issued by a Law Firm and there is nothing on the
record to suggest that the said Law Firm has been authorised by the Board of Directors of the
‘Operational Creditor’- M/s. Synergy Property Development Services Pvt. Ltd. There is nothing on the
record to suggest that any Lawyer or Law Firm hold any position with or in relation with the
Respondents-‘Operational Creditor’.
11. In view of the aforesaid facts and the decision of this Appellate Tribunal in “ M/s. Uttam Galva
Steels Limited v. DF Deutsche Forfait AG & Anr” we hold that the notice(s) issued by the Law Firm
‘JUSTLAW’ on behalf of Respondents-‘Operational Creditor’ cannot be treated as a notice under section
8 of the ‘I&B Code’ and for that the petition under section 9 at the instance of the Respondents against the
appellant was not maintainable.
12. The other question raised is whether there is existence of dispute, if any, in the present case?
13. From bare perusal of the record, it is clear that on 12th November, 2016, one Mr. Govindan
Kutty M on behalf of the Appellant- ‘Corporate Debtor’ intimated the Respondent-‘Operational Creditor’
that the Respondent discontinued the service and abandoned the work. The relevant portion of the letter
reads as follows:-
“Synergy Property Development Services Pvt. Ltd.

Easwaravilasom Road
Vazhuthacaud, Trivandrum
Kerala – 695 014
Attn.: Mr. Liju Eapen – Associate Director
Dear Mr. Liju Eapen
We refer to the mail from Mr. Govindan Kutty M dated 4th November, 2016 with copy to
you on discontinuation of PMC services on alleged nonpayment of dues and wish to
bring to your attention to the following aspects:
1.This is the third unilateral discontinuation of the PMC services by you till date. We
feel that such action of you by abandoning the work and withdrawing the staff
without proper notice and formal handing over of documents is unprofessional and
752
by Hon’ble NCLAT
delaying the project completion resulting in losses to SCK for which you alone will
be responsible. This action of you is against the true spirit of the engagement.
2.We confirm that all our commitments for payments, those are due as per
conditions of extension letter will be honored and paid on the due dates. As a
gesture of goodwill, an amount of Rs. 30 lakhs was paid as advance.
3.We also wish to bring to your notice that the documents especially those related to
ongoing works including bills some of which are kept in the work stations allotted to
you in SCK Pavilion, have not been handed over in an orderly manner with proper
index thereby putting us in difficulty to trace out the same. We also would like to
bring to your notice that keeping of official documents of SCK in your office outside
SCK premises is detrimental to the contract conditions and you are requested to take
immediate remedial steps.
4.The delays in completion of the project has mainly resulted from you non
adherence to PMC Services Contract conditions including taking over of certain
responsibilities to be performed by the Lead Architect and Consultant while
abandoning your own responsibilities with respect to design management and
coordination of work under your scope. There are many instances of lack or poor
coordination a few of which is pointed out here.
i) Water cascading – The work was being executed without coordinated shop
drawings approved by the Consultant or any coordination during work stage.
ii) Sliding doors provided by the Contractor in the reception lobbies. The installed
units do not match with the BOQ or specification.
Therefore, we request you to take necessary immediate action for completing your scope
of work in an orderly fashion as envisaged in the contact.
Yours faithfully.
For SmartCity (Kochi) Infrastructure Pvt. Ltd.
Sd/-
Kurian Kurjan
Director Projects”
14. Therefore, it is clear that much prior to the so-called notice under section 8 of the ‘I&B Code’, a
dispute was raised by Appellant-‘Corporate Debtor’ regarding non-completion and abandoning of the
work.
753
by Hon’ble NCLAT
15. In view of the aforesaid reasons and findings recorded above, we hold that the impugned order
dated 9th June, 2017 is illegal and set aside the said order passed by Adjudicating Authority, Chennai
Bench in CP/484 (IB)/CB/2017.
16. In effect, order (s), if any, passed by Ld. Adjudicating Authority appointing any ‘Interim
Resolution Professional’ or declaring moratorium, freezing of account and all other order (s) passed by
Adjudicating Authority pursuant to impugned order and action, if any, taken by the ‘Interim Resolution
Professional’, including the advertisement, if any, published in the newspaper calling for applications all
under Section 9 of the I&B Code, 2016 is dismissed. Learned Adjudicating Authority will now close the
17. Learned Adjudicating Authority will fix the fee of ‘Interim Resolution Professional’, if appointed
754
by Hon’ble NCLAT

NEW DELHI
C.P. (I.B.) No. 158/NCLAT/2017
Applicant: Jord Engineers India Ltd.

Vs.
Respondent: Valia & Company
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Pallav Shishodia, Mr. R..N. Singh & Mr. Rajiv Kumar, Learned
Advocates
For Respondents/Defendant: Ms. Vatasala Kak, Learned Advocates
ORDER
The respondent – Valia & Company (Operational Creditor) filed an application under Section 9
of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as the ‘I&B Code’) for initiation of
‘Corporate Insolvency Resolution Process’ against the appellant – Jord Engineers India Ltd. (Corporate
Debtor) on the ground that the corporate debtor defaulted in making payment against the goods supplied
by the Operational Creditor i.e. Iron, Steel and Raw Material in between 2011 and 2012 amounting to
Rs.4,72,28,431 with interest of Rs. 10,70,493 for delayed payment.
The Adjudicating Authority (National Company Law Tribunal) Mumbai Bench by order dated
31st July, 2017 admitted the application, ordered moratorium and called for names of Interim Resolution
Professional from Insolvency and Bankruptcy Board of India. The aforesaid order dated 31st July, 2017 is
under challenge.
2. The main plea taken by the appellant is that Section 9 application was not maintainable being
incomplete and in absence of proper demand notice under sub-section (1) of Section 8 of the I&B Code.
3. Shri Pallav Shishodia, learned Senior Counsel appearing on behalf of the appellant referred to
letter dated 26th April, 2017 written by one Mr. Amir Arsiwala, Advocate purported to be demand notice
under sub-section (1) of Section 8. Reliance has also been placed on the decision of this Appellate
755
by Hon’ble NCLAT
Tribunal in Uttam Galve Steels Limited v. DF Deutsche Forfait AG & Anr. in Company Appeal (AT)
(Insolvency) 39 of 2017 wherein this Appellate Tribunal held that notice by a lawyer cannot be treated to
be a notice under sub-section (1) of Section 8 for the reasons mentioned therein.
4. Learned counsel appearing on behalf of the respondent – Financial Creditor submits that the
advocate was given a letter of retainership on 10th February, 2017 for initiation of proceedings, civil,
criminal and under the I&B Code, which reads as follows:
“LETTER OF RETAINER
10th February 2017

To,
Amir Arsiwala, Advocate,

4th Floor, Cambatta Building,
East Wing, above Eros Cinemas,
42, M.K. Marg, Churchgate,
Mumbai- 400 020
Sir,
This is with reference to our meeting at your office on the 6th of February, 2017, in
relation to various legal matters for which I require your services. In particular, I require
your services to initiate proceedings –civil, criminal and under the Insolvency and
Bankruptcy Code, 2016- against debtors of my proprietorship concern. In this regard, I
propose to retain your services on an ongoing basis as my legal advisor and attorney on
the terms and conditions set out below:
TIME PERIOD:
1. This retainer shall initially be for a period of one year from the date of this letter.
It may be extended by mutual consent.
2. FEES: As compensation for being retained, you shall be a fixed monthly sum of
Rs. 35,000 during the period this retainer is valid.
3. NON-EXCLUSIVE: It is expressly clarified that this retainer is nonexclusive,

and that you will not be considered an employee of my concern.
4. DUTIES: While the retainer is subsisting, it shall be your duty to dispatch all
notices, demand notices, statutory notices, etc, to my debtors on my behalf seeking
repayment of the dues owed to me. For this purpose, you shall have the authority to
dispatch such communications on my behalf on your letter head after obtaining my
approval to the draft of the notice. It is expressly stated that it shall also be your
756
by Hon’ble NCLAT
responsibility to initiate any and all legal proceedings required against my debtors.
However, it is clarified that the fees for the same may be charged separately by you at
mutually agreeable rates.
5. You undertake to perform your duties in an utmost impartial manner and agree
to provide your expertise to assist me with my legal disputes.
6. You acknowledge that by virtue of your position, it is extremely likely that you
will be exposed to sensitive information relating to my affairs. In this regard you
undertake to maintain strict confidentiality of all information provided by me to you, and
not disclose the same without my consent.
7. You shall keep the original of this letter of retainer after signing it and provide
me with a copy.
Sincerely, Agreed & Accepted

Sd/- sd/-
Mr. Girish Valia Amir Arsiwala,

Proprietor Advocate”
5. As noticed, similar issue fell for consideration before this Appellate Tribunal in ‘Uttam Galva
Steels Limited’ (Supra). In the said case the Appellate Tribunal’s judgment dated 28th July, 2017 held as
follows :
“27. From a plain reading of sub-section (1) of Section 8, it is clear that on

occurrence of default, the Operational Creditor is required to deliver the
demand notice of unpaid Operational Debt and copy of the invoice demanding
payment of the amount involved in the default to the Corporate Debtor in such
form and manner as is prescribed.
28. Sub-rule (1) of Rule 5 of the ‘Adjudicating Authority Rules’ mandates

the ‘Operational Creditor’ to deliver to the ‘Corporate Debtor’ the demand
notice in Form-3 or invoice attached with the notice in Form-4, as quoted
below: -
“Rule 5. (1) An operational creditor shall deliver to the corporate debtor the
following documents, namely: -
(b) a copy of an invoice attached with a notice in Form 4.”
757
by Hon’ble NCLAT
29. Clause (a) and (b) of sub-rule (1) of Rule 5 of the ‘Adjudicating
Authority Rules’ provides the format in which the demand notice/invoice
demanding payment in respect of unpaid ‘Operational Debt’ is to be issued by
‘Operational Creditor’. As per Rule 5(1) (a) & (b), the following person (s) are
authorised to act on behalf of operational creditor, as apparent from the last
portion of Form-3 which reads as follows: -
“6. The undersigned request you to unconditionally repay the unpaid

operational debt (in default) in full within ten days from the receipt of this letter
failing which we shall initiate a corporate insolvency resolution process in
respect of [name of corporate debtor].
Yours sincerely,

Position with or in relation to

30. From bare perusal of Form-3 and Form-4, read with sub-rule (1) of
Operational Creditor is also required to state “his position with or in relation
to the Operational Creditor”, meaning thereby the person authorised by
758
by Hon’ble NCLAT
above.

understand the serious consequences of nonpayment of ‘Operational Debt’,
Section 8.

6 In the present case as the demand notice has been given by an advocate and there is nothing on
record to suggest that the advocate in question holds any position with or in relation to the respondent –
Valia & Company and the demand notice has not been issued in mandatory Form 3 or Form 4, as
stipulated under Rule 5 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules,
2016, the initiation of resolution process cannot be upheld. The case of the appellant being covered by the
decision of the Uttam Galve Steels Limited (Supra), we have no other option but to set aside the
impugned order.
7. In effect, order(s) passed by Ld. Adjudicating Authority appointing any ‘Interim Resolution
Professional’, declaring moratorium, freezing of account and all other order (s) passed by Adjudicating
Authority pursuant to impugned order and action taken by the ‘Interim Resolution Professional’,
759
by Hon’ble NCLAT
circumstances of the case, there shall be no order as to cost
760
by Hon’ble NCLAT

NEW DELHI
C.P. (I.B.) No. 186/NCLAT/2017
Applicant: S3 Electrical and Electronics Pvt. Ltd.

Vs.
Respondent: Brian Lau & Anr.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Aditya Shrama, Learned Advocate
For Respondents/Defendant: Mr. Navneet Kumar Jain, Learned Advocate
ORDER
By the impugned order dated 31st August, 2017, the learned Adjudicating Authority (National
Company Law Tribunal), Principal Bench, New Delhi fixed the fee of Interim Resolution Professional in
terms of order passed by this Appellate Tribunal on 2nd August, 2017 in Company Appeal (AT)
(Insolvency) No. 104/2017 whereby the proceedings against the appellant – Corporate Debtor were set
aside and the Adjudicating Authority was requested to determine the fee payable to the Interim
Having heard the learned counsel for the appellant and Interim Resolution Professional Shri
Navneet Kumar Jain, we find no ground to interfere with the impugned order whereby the fee of the
Interim Resolution Professional has been fixed.
Insofar the review application against order dated 2nd August, 2017 passed in Company Appeal
(AT) (Insolvency) No. 104 of 2017 is concerned, the said application is not maintainable in this appeal. In
absence of any error apparent on the face of the record and in absence of any new facts brought to our
notice, the question of reviewing the order does not arise.
The appeal is dismissed. Consequentially, the application for review is also dismissed. No cost.
761
by Hon’ble NCLAT

NEW DELHI
C.P. (I.B.) No. 190/NCLAT/2017
Applicant: D. Srinivasulu and Anr.

Vs.
Respondent: Dr. Reddy's Laboratories Ltd.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Sourav Roy, Learned Advocate
For Respondents/Defendant: Mr. Mullapudi Rambabu & Mr. Vijayshree Pathak, Learned Advocate
ORDER
This appeal has been preferred by the appellant against the order dated 22nd August, 2017 passed
by the Adjudicating Authority (National Company Law Tribunal), Hyderabad Bench, Hyderabad in CP
(IB) No. 109/9/HDB/2017 whereby and whereunder the application preferred by the respondent –
Operational Creditor under section 9 has been admitted, order of moratorium has been passed, IRP has
been appointed and further directions passed in Insolvency and Bankruptcy Code, 2016 (hereinafter
referred to as ‘I&B Code’).
2. The main plea taken by the learned counsel for the appellant is that a dispute is in existence and
other plea is that the notice under sub-section (1) of Section 8 has been issued not by the ‘Operational
Creditor’ but a Law Firm/Advocate.
3. Respondent in its affidavit has not disputed that the notice under sub-section
(1) of Section 8 was issued by a lawyer.
4. Similar issue fell for consideration before this Appellate Tribunal in Uttam Galve Steels Limited
v. DF Deutsche Forfait AG & Anr. in Company Appeal (AT) (Insolvency) 39 of 2017. In the said case the
Appellate Tribunal by judgment dated 28th July, 2017 observed and held as follows :
"27. From a plain reading of sub-section (1) of Section 8, it is clear that on

762
by Hon’ble NCLAT

below: -
“Rule 5. (1) An operational creditor shall deliver to the corporate

debtor the following documents, namely: -

Yours sincerely,
Signature of person authorised to act on behalf of

Position with or in relation the

to creditor operationl
763
by Hon’ble NCLAT
above.

understand the serious consequences of non-payment of ‘Operational Debt’,
Section 8.

764
by Hon’ble NCLAT
5. The case of the appellant being covered by the decision in “Uttam Galva Steels
Limited” (Supra), we have no other option but to set aside the impugned order.
Professional’ or declaring moratorium, freezing of account, if any, and all other order(s) passed by
Adjudicating Authority pursuant to impugned order and action taken by the ‘Interim Resolution
Professional’, including the advertisement published in the newspaper calling for applications all such
orders and actions are declared illegal and are set aside. The application preferred by Respondent under
Section 9 of the I&B Code, 2016 is dismissed. Learned Adjudicating Authority will now close the
765
by Hon’ble NCLAT

NEW DELHI
C.P. (I.B.) No. 113/NCLAT/2017
Applicant: M/s. Bhagwan Motors Pvt. Ltd.

Vs.
Respondent: Harshad V. Vora
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Shivam Sharma, Mr. Raj Kishor Choudhary & Mr. Sakil Ahmad,
Learned Advocates
For Respondents/Defendant: Mr. Rajeshwar Kr. Gupta, Learned Advocate
ORDER
This appeal has been preferred by the appellant – M/s. Bhagwan Motors Pvt. Ltd. (Corporate
Debtor) against order dated 6th June, 2017 passed by the Adjudicating Authority (National Company law
Tribunal), Ahmedabad Bench, Ahmedabad in CP No. (I.B.) 29/9/NCLT/AHM/2017 whereby and
whereunder the application preferred by the respondent (Operational Creditor) under Section 9 of the
Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as the, “I&B Code’) read with Rule 4 of
the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 has been admitted,
order of moratorium has been passed and the Interim Resolution Professional has been appointed.
2. Learned counsel appearing on behalf of the appellant ‘Corporate Debtor’ submits that the
impugned order dated 6th June, 2017 has been passed by the Adjudicating Authority is in violation of
rules of natural justice as no notice was served on the appellant. It is further submitted that notice under
sub-section (1) of Section 8 was not issued by the Operational Creditor but through its lawyer/ advocate.
3. In reply, learned counsel for the respondent – ‘Operational Creditor’ disputes the stand and
submits that notice was issued on the appellant before the admission of the case. He placed reliance on the
order dated 26th May, 2017 of the Adjudicating Authority, Ahmedabad Bench, Ahmedabad in its support,
which reads as follows:
766
by Hon’ble NCLAT
“Learned Advocate Mr. Rajeshwer Gupta with Learned Advocate Ms. Sumati
Sharma present for Operational Creditor / Petitioner. None present for
Corporate Debtor/Respondent.
Heard arguments of Learned Counsel for Petitioner.
Learned Counsel for petitioner filed track report to show that copy of petition
was delivered to the Respondent on 22.05.2017.
Petitioner is directed to file acknowledgment of service of notice under section 8

r/w rule 5 of Insolvency and Bankruptcy Code, 2016 and Rules there under on
or before 30.05.2017.
Petitioner is also directed to send notice of date of hearing to the respondent

along with copy of this order and file proof of service.
List the matter on 30.05.2017 for hearing before admission.”
4. In M/s. Innoventive Industries Ltd. Vs. ICICI Bank & Anr. in Company Appeal (AT)
(Insolvency) No. 1 & 2 of 2017, the Appellate Tribunal held that it is the duty of the Adjudicating
Authority to issue notice and not the party. In this case, Adjudicating Authority directed the contesting
party to issue notice, which is not in accordance with law. This apart, in absence of any service of such
notice, it was not open to the Adjudicating Authority to admit the application for the said reason, the
impugned order dated 6th June, 2016 cannot be upheld.
5. This apart, from the record we find that an advocate’s firm Shri Rajeshwer K. Gupta & Co. issued
the notice under sub-section (1) of section 8 on behalf of the respondent on 12th March, 2017. Later on
another so called notice under subsection(1) of Section 8 was issued by the same advocate on 18th April,
2017. In both the notice, he has not mentioned his position and relation with Operational Creditor as
required under the law.
6. Learned counsel appearing on behalf of the respondent referring to the power of attorney
submitted that the advocate had been provided with power of attorney on 30th March, 2017, but from the
said power of attorney it appears that Mr. Rajeshwer Kumar Gupta, advocate was appointed as lawful
attorney and he has been authorised to do and execute all or any acts and deeds as mentioned therein
which includes recovery of dues of the goods supplied to various firms.
7. Similar issue fell for consideration before this Appellate Tribunal in

“Uttam Galve Steels Limited v. DF Deutsche Forfait AG & Anr.” in Company
767
by Hon’ble NCLAT
Appeal (AT) (Insolvency) 39 of 2017. In the said case, the Appellate Tribunal
held and observed as follows :
"27. From a plain reading of sub-section (1) of Section 8, it is clear that on


below: -
“Rule 5. (1) An operational creditor shall deliver to the corporate

debtor the following documents, namely: -

Yours sincerely,
Signature of person authorised to act on

behalf of the operational creditor
Name in block
letters
768
by Hon’ble NCLAT
Position with or t
in relation to h
creditor e
Address of
person signing
above.

Section 8.

769
by Hon’ble NCLAT

8. The present case is covered by the decision in “Uttam Galva Steels Limited”
(Supra). In this circumstances, we have no other option but to set aside the impugned order.
Professional’ or declaring moratorium, freezing of account, if any, and all other order (s) passed by
770
by Hon’ble NCLAT

NEW DELHI
C.P. (I.B.) No. 196/NCLAT/2017
Applicant: Prime Cars Pvt. Ltd.

Vs.
Respondent: Reliance Commercial Finance Ltd.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Ms. Reema Jain, Learned Advocates
For Respondents/Defendant: Mr. Soumyajit Dutta, Learned Advocate
ORDER
The appellant – Corporate Debtor has challenged the order dated 4th September, 2017 passed by
the Adjudicating Authority in C.P.No.(I.B.) 87/7/NCLT/AHM/2017 whereby and whereunder the
Corporate Resolution process has been initiated against the appellant. Taking into the consideration the
fact that no notice was served on the appellant and the parties have settled the dispute, respondents were
allowed time to file reply. An interim order was also passed. Today it has been brought to our notice that
in view of the settlement reached between the parties they moved before the Hon’ble Supreme Court in
Civil Appeal No. 15473 of 2017 wherein the Supreme Court on 9th September, 2017 passed the
following order:
“1) Heard Mr. K. V. Vishwanathan, learned senior counsel appearing for the
appellant and Mr. Soumya Dutta, learned counsel appearing for the respondent.
2) We take the Settlement Deed dated 30.09.2017 entered into between the
parties, on record. We make it clear that we are passing the present order only
under our powers under Articles 142 of the Constitution.
3) As a result, the impugned interim order is set aside and the matter pending
before the National Company Law Appellate Tribunal, stands disposed of.
4) The appeal is disposed of accordingly.”
771
by Hon’ble NCLAT
2. In view of the order passed by the Hon’ble Supreme Court in the present appeal no further
decision is required to be taken.
3. In view of order of the Hon’ble Supreme Court, the appellant company is now free from the
rigour of Corporate Insolvency Resolution Process. As it is informed that Interim Resolution Professional
has already been paid as per Settlement, the Adjudicating Authority will close the C.P.(I.B.) No.
87/7/NCLT/AHM/2017. No cost.
772
by Hon’ble NCLAT

NEW DELHI
C.P. (I.B.) No. 222/NCLAT/2017
Applicant: Yogendra Yasupal

Vs.
Respondent: M/s. Jigsaw Solution & Anr.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. P.V. Balasubramaniam, Mr. Anish R. Shah & Mr. K.R. Samratt,
Learned Advocates
For Respondents/Defendant: Mr. Karthigeyan Srinivasan, Learned Advocate
ORDER
1st Respondent- ‘Operational Creditor’ filed application under Section 9 of the Insolvency and
Bankruptcy Code, 2016 (hereinafter referred to as ‘I&B Code’) against 2nd Respondent- ‘Corporate
Debtor’. The application having been admitted by impugned order dated 15th September, 2017 passed
by Adjudicating Authority (National Company Law Tribunal), Chennai Bench, Chennai in Company
Petition No. 559/(IB)/CB/2017, and order of moratorium having been passed with further orders in
terms of the ‘I&B Code’, this present appeal has been filed.
2. Learned counsel appearing on behalf of the appellant submitted that there is an ‘existence of
dispute’ and, therefore, the application under Section 9 of the ‘I&B Code’ was not maintainable. He
relied on one or other documents including the order passed by Hon’ble High Court of Judicature at
Madras in an Anticipatory Bail Petition preferred by the appellant/director (shareholder) to suggest
that there is a ‘dispute in existence’.
3. From the enclosure attached to the appeal, we find that the document preferred by
‘Operational Creditor’ was complete. In so far dispute is concerned, any observations with regard to
individual officer if made by a court of law or in a communication made by the ‘Operational Creditor’,
the same cannot be treated to be an ‘existence of dispute’. As we find that there is no specific
objection made by the ‘Corporate Debtor’ in writing, raising any dispute with regard to the quality of
773
by Hon’ble NCLAT
services as claimed to have been rendered by the Respondents-‘Operational Creditors’, no dispute can
be raised at the stage of submitting reply under sub-section (2) of Section 8 of the ‘I&B Code’. In this
regard one may rely on decision of Hon’ble Supreme Court’s in “Mobilox Innovations Private Ltd v.
Kirusa Software Private Ltd, (2017) SCC Online SC 1154”.
4. We find no merit in this appeal. It is accordingly, dismissed. However, in the facts and
circumstance of the case, there shall be no order as to cost.
774
by Hon’ble NCLAT

NEW DELHI
C.P. (I.B.) No. 71/NCLAT/2017
Applicant: Bharti Defence and Infrastructure Limited

Vs.
Respondent: Edelweiss Asset Reconstruction Company Limited
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Arun Kathpalia, Ms. Saumya, Ms. Nidhi Nagpal & Ms. Tanushree
Nigam, Learned Advocates
For Respondents/Defendant: Mr. Ramji Srinivasan, Mr. Animesh Bisht, Mr. Karan Khanna, Mr. Sohil
Yadav & Mr. Tushar Bhardwaj, Learned Advocates
ORDER
Respondent- M/s. Edelweiss Asset Reconstruction Company Limited (Tinancial Creditor') filed
an application under Section 7 of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as
"I&B Code") for initiation of 'Corporate Insolvency Resolution Process' against Appellant-M/ s. Bharti
Defence and Infrastructure Limited- ('Corporate Debtor). After notice and hearing the parties, the
Adjudicating Authority (National Company Law Tribunal), Mumbai Bench, Mumbai by impugned order
dated 6th June, 2017 admitted the application, declared the Moratorium, appointed 'Interim Resolution
Professional' and passed prohibitory orders in terms of 'I&B Code'. The said order is under challenge in
this appeal.
2. Learned counsel appearing on behalf of the Appellant-'Corporate Debtor' submitted that the
application under Section 7 was not maintainable as the Respondent-'Financial Creditor' failed to produce
the record or evidence of default in terms of Clause (a) of sub-section (3) of Section 7 of the 'I&B Code'.
3. It was submitted by learned counsel for the Appellant-'Corporate Debtor' that by virtue of
Notification dated 30th March, 2017, the provisions contained in Chapter-V of Part- IV of 'I8d3 Code'
relating to information utility has been notified. The 'information utility' is to be registered under Section
210 of the 'I&B Code'. Under Section 215 of the 'I&B Code', a 'Financial Creditor' is required to submit in
775
by Hon’ble NCLAT
a prescribed form to the 'information utility', financial information and information relating to assets in
relation to which any security interest is created. Upon such financial information being submitted by the
'Financial Creditor', an application is maintainable to the 'information utility' under Section 216 of the
'I&B Code' for modification and/or rectification of error in such financial information. Such application
for modification/rectification can be filed by "a person" (which expression necessarily includes a
'Corporate Debtor'). These provisions provide an opportunity to a 'Corporate Debtor' to apply and/or seek
modification/rectification in case of an error in the financial information submitted by 'Financial Creditor'
under Section 215 of the 'I&B Code' before the same is regarded by the Adjudicating Authority as record
of default for the purpose of Section 7(3)(a) thereof. Accordingly, in the absence of record of the default
recorded with the information utility, no application can lie before the Adjudicating Authority.
4. According to learned counsel for the Appellant- 'Corporate Debtor', in the present case, the
'Financial Creditor' has merely recorded in its application alongside column at Serial No.3 of Part-V of
Form-1 (framed under Rule 4 of Insolvency Rules) that it is not applicable, without stating any reason in
support thereof.
5. It was further contended that no regulations have been framed by the Insolvency and Bankruptcy
Board of India ("Board") under Clause (f) of sub-section (2) of Section 240 of the 'I&B Code' for
specifying "such other record of evidence of default" for the purpose of Clause (a) of subsection (3) of
Section 7 and therefore, in the absence of such regulations specifying any "record or evidence of default'
as contemplated under Clause (a) of sub-section (3) of Section 7, the petition was not maintainable.
6. Reliance was also placed on Rule 239(1)(c) of the 'I&B Code' whereunder the Central
Government is empowered to frame rules only with respect to the form, manner and fee for making
application before the Adjudicating Authority for initiating 'Corporate Insolvency Resolution Process' by
'Financial Creditor'. According to Learned Counsel for the appellant, the power under Section 239 cannot
be construed to include specification of the records of default, which are required to be submitted to the
Adjudicating Authority under sub-section (3) of Section 7. The power is conferred only with the Board
under Clause (f) of sub-section (2) of Section 240. Therefore, Regulation 8 of the Insolvency Regulations,
which specify the records of default to be submitted to the 'Insolvency Resolution Process' at a later stage,
cannot be made applicable in the preadmission stage of furnishing evidence before the Adjudicating
Authority.
7. Furthermore, according to the learned counsel for the Appellant-'Corporate Debtor', sub-section
(2) of Section 7 cannot be read in isolation with sub-section (3) of Section 7 of the I&B Code', Parliament
has explicitly conferred separate powers, on one hand to the Central Government under clause (c) of sub-
776
by Hon’ble NCLAT
section (1) of Section 239 .to frame Rules and to the Board under Section 240 to frame Regulations
specifying the 'other record' or 'evidence of default'.
8. It was further contended that the details in terms of Form 1 prescribed under Rule 4 of the
as "Adjudicating Authority Rules") is required to be given, the provision being mandatory.
9. In reply, learned counsel appearing on behalf of the Respondent-'Financial Creditor' submitted

that the Adjudicating Authority is required to ascertain only the existence of default from the documents
filed by the 'Financial Creditor' by way of an application filed under Section 7 in Form 1. Sub-section (2)
of Section 7 provides that such an application must be in the form and manner as may be prescribed.
Therefore, according to the learned counsel for the Respondent-'Financial Creditor', the form and manner
of such application and the documents to be supplied therewith have, as prescribed under the Insolvency
and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 are required to be followed.
10. It was further contended that Form 1 of the 'Adjudicating Authority Rules' set out the form and
manner in which an application under Section 7 is required to be filed. The said Form 1 expressly and
unambiguously lists out the content of the application including, Part V of Form 1 and the documents that
are to be annexed to the application as the evidence of default.
11. It was also submitted that the Respondent-Tinancial Creditor' has filed an application under
section 7 of the 'I&B Code' in Form-1 of the 'Adjudicating Authority Rules' and enclosed the records in
terms of said Rules and therefore, the Form was complete and the Adjudicating Authority rightly admitted
the application.
12. Similar issue fell for consideration before this Appellate Tribunal "Neelkanth Township and
Construction Pvt. Ltd. Vs. Urban Infrastructure Trustees Limited" in Company Appeal (AT)
(Insolvency) No. 44 of 2017, this Appellate Tribunal by Judgment dated 11th August, 2017 observed and
held as follows: -
"16. 'Financial Creditor' along with the application required to be furnished information and other facts as
prescribed under sub-section (3) of Section 7. Where the Adjudicating Authority is satisfied that a default
has occurred and the application under sub-section (2) is complete, and there are no disciplinary
proceedings pending against the proposed resolution professional, it can admit such application and in
case the application is incomplete, required to provide 7 days' time to complete the record and on failure
is to dismiss the application.
17. The aforesaid facts are to be considered from the procedure for initiation of corporate insolvency
resolution process by 'financial creditor' as mandated under Section 7 of 'I & B Code', and quoted below: -
777
by Hon’ble NCLAT
"7. (1) A financial creditor either by itself or jointly with other financial creditors may file an application
for initiating corporate insolvency resolution process against a corporate debtor before the Adjudicating
Explanation. For the purposes of this sub-section, a default includes a default in respect of a financial debt
owed not only to the applicant financial creditor but to any other financial creditor of the corporate debtor.
(2) The financial creditor shall make an application under sub-section (1) in such form and manner and
(a) record of the default recorded with the information utility or such other record or evidence of
default as may be specified;
(b) the name of the resolution professional proposed to act as an interim resolution professional; and
(4) The Adjudicating Authority shall, within fourteen days of the receipt of the application under sub-
other evidence furnished by the financial creditor under sub-section (3).
(a) a default has occurred and the application under sub-section (2) is complete, and there is no
such application; or
(b) default has not occurred or the application under sub-section (2) is incomplete or any disciplinary
application:
Provided that the Adjudicating Authority shall, before rejecting the application under clause (b) of sub-
application under sub-section (5).
(a) the order under clause (a) of sub-section (5) to the financial creditor and the corporate debtor;
778
by Hon’ble NCLAT
(b) the order under clause (b) of sub-section (5) to the financial creditor, within seven days of
admission or rejection of such application, as the case may be."
18. It is well settled that rules of procedure are to be construed not to frustrate or obstruct the process of
adjudication under the substantive provisions of law. A procedural provision cannot override or affect the
substantive obligation of the adjudicating authority to deal with applications under Section 7 merely on
the ground that Board has not stipulated or framed Regulations with regard to sub-section 3(a) of Section
7. The language of Section 240, whereby Board have been empowered to frame regulations is clear that
the said regulation should be consistent with the 'I & B' Code and the rules made thereunder by the
Central Government.
20. The rules framed by the Central Government under Section 239 having prescribed the documents,
record and evidence of default as noticed above, we hold that in absence of regulation framed by the
Board relating to record of default recorded with the information utility or other record of evidence of
default specified, "the documents", 'record' and 'evidence of default' prescribed at Part V of Form-1, of the
Adjudicatory Rules 2016 will hold good to decide the default of debt for the purpose of Section 7 of the 'I
& B Code'.
21. We further hold that the 'Regulations framed by the Board' being subject to the provisions of 'I & B
Code' and rules framed by the Central Government under Section 239, 'Part V of Form - 1' of
Adjudicating Authority Rules, 2016 framed by Central Government relating to 'documents, 'record' and
'evidence of default', will override the regulations, if framed by the Board and if inconsistent with the
Rule. However, it is always open to Board to prescribe additional records in support of default of debt,
such as records of default recorded with the information utility or such other record or evidence of default
in addition to the records as mentioned in Part V of Form-I.
22. At this stage, it is pertinent to note that the Board has also framed Insolvency Resolution Process for
Corporate Persons, Regulations, 2016 ('Corporate Persons Regulation' for short). It has come into force
since Notification dated 30th November 2016 was issued. Regulation 8 of 'Corporate Persons Regulation',
2016 relate to claims by 'Financial Creditor'. Regulation 11(2) relates to existence of debt due to
'Financial Creditor', which is to be proved on the basis documents mentioned therein and quoted below: -
(1) A person claiming to be a financial creditor of the corporate debtor shall submit proof of claim to
the interim resolution professional in electronic form in Form C of the Schedule:
Provided that such person may submit supplementary documents or clarifications in support of the claim
before the constitution of the committee.
779
by Hon’ble NCLAT
(2) The existence of debt due to the financial creditor may be proved on the basis of -
(i) a financial contract supported by financial statements as evidence of the debt;
(ii) a record evidencing that the amounts committed by the financial creditor to the corporate debtor
under a facility has been drawn by the corporate debtor;
(iv) an order of a court or tribunal that has adjudicated upon the non-payment of a debt, if any."
23. 'Form C' attached to the Regulation relates to proof of claim of 'Financial Creditor' whereunder at
Serial No. 10, the 'Financial Creditor' is supposed to refer the list of documents in proof of claim in order
to prove the existence and non-payment of claim dues to the 'Operational Creditor'.
Therefore, the stand of the appellant that the Board has not framed any Regulations, relating to
clause (a) of sub-section (3) of Section 7, cannot be accepted."
13. In the present case, the Appellant-'Corporate Debtor' has enclosed the application preferred by the
Respondent-'Financial Creditor' under Section 7 in Form 1 as Annexure-A-13 (Colly.). Therein the
Respondent-'Financial Creditor' at Part V has given the details of the particulars of the 'Financial Debt'
(Documents, Records and Evidence of default). In support of the details of security held by or created for
the benefit of the 'Financial Creditor"mortgages', 'guarantees', 'share pledge' etc. has been shown
In support of record of default with the information utility, if any', but against In support of record of
default though nothing stated against Serial Serial Nos. 7 and 8, the details of record of debt and default
has been mentioned, as quoted below: -
7. COPIES OF ENTRIES IN A BANKERS BOOK IN ACCORDANCE WITH THE

BANKERS BOOKS EVIDENCE ACT, 1891 (18 OF 1891) (ATTACH A COPY)
Copies of entries in the bankers book in accordance with the Bankers Book Evidence Act,
1891 have been annexed at Exhibit- '13"
8. LIST OF OTHER DOCUMENTS ATTACHED TO THIS APPLICATION IN ORDER
TO PROVE THE EXISTENCE OF FINANCIAL DEBT, THE AMOUNT AND DATE
OF DEFAULT
780
by Hon’ble NCLAT
The other documents that prove the ,existence of financial debt have been listed below:
1) Letter dated August 21, 2014 issued by the Corporate Debt Restructuring
("CDR") cell mentioning the failure of CDR approved package (pursuant to
which the MRA was executed and the MRA Facilities were granted) in r elation
to the Company/Respondent
2) Letter dated June 09, 2015 issued by IDBI Bank Limited revoking the reliefs and
sanctions provided to the Company/ respondent.
3) Recall notice dated August 05, 2015 issued by IDBI Bank (the assignor) to the
Company/Respondent directing the Company/Respondent to inter alia make
payment of the dues owed it in relation to the Facilities to IDBI Bank;
4) Letter dated August 25, 2016 issued by EARC instructing SBICAP Trustee
Company ltd. (in its capacity , as a Security Trustee) to invoke pledge of shares of
Nirupam Energy Projects Private Limited, Bharti Defence and Infrastructure
Limited, Dhanashree Properties Private Limited, GOL Offshore Limited, Natural
Power Ventures Private Limited, made in favour of inter alia IDBI Bank;
5) Letters dated August 25, 2016 issued by SBICAP Trustee Company Ltd. (the
Security Trustee appointed to hold securities, on behalf of inter alia IDBI Bank,
created by the Company) to respective shareholders for invoking pledge of shares
of Nirupam Energy Projects Private Limited, Bharti Defence and Infrastructure
Limited, Dhanashree Properties Private Limited, GOL Offshore Limited, Natural
Power Ventures Private Limited, made in favour of inter alia IDBI Bank;
6) Order dated September 03, 2016 passed in the Notice of Motion (L) No. 92 of
2016 in Commercial Suit (L) No. 133 of 2016 filed before the Hon'ble Bombay
High Court; and
7) Order dared September 20, 2016 passed in the Commercial Appeal (L) No. 26 of
2016 in Notice of Motion (L) No. 92 of 2016 in Commercial Suit (L) No. 133 of
2016 filed before the Hon'ble. Bombay High Court.
8) The annual report of the Company for the financial year 2015-2016.
The copied of the aforementioned documents proving existence of financial debt have
been annexed herewith at Exhibit- "14 Colly".
14. From the aforesaid fact, as we find, that the application preferred by the Respondent-'Financial
Creditor' under section 7 in Form 1 is complete and there are records of debt and records of default, we
781
by Hon’ble NCLAT
hold that the Adjudicating Authority rightly admitted the application and passed the order of moratorium
and prohibitory orders in accordance with 'I&B Code'.
15. We find no merit in this appeal. It is accordingly, dismissed. However, in the facts and circumstances,
782
by Hon’ble NCLAT

NEW DELHI
C.P. (I.B.) No. 91/NCLAT/2017
Applicant: Black Pearl Hotels Pvt. Ltd.

Vs.
Respondent: Palnet M Retail Ltd.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Pritha Srikumar Iyer, Learned Advocates
For Respondents/Defendant: None.
ORDER
The appellant Black Pearl Hotels Pvt. Ltd. who claimed to be operational creditor, engaged in
operating a retail store in a building situated at First Floor, Curzon Complex, No.9, Bangalore – 560001,
entered into a Business Conducting Agreement dated 1st February 2008 with respondent, Planet M Retail
Limited – (corporate debtor), to conduct and manage the business of running a music concept store by
name “Planet M” on behalf of operational creditor, in consideration of which, corporate debtor is liable to
pay monthly conducting fee to the operational creditor.
2. Subsequently, at the request of the corporate debtor on the reasoning that business venture is not
making profit, on 24th June, 2009, an addendum to agreement was entered whereby the monthly
minimum guaranteed fee was scaled down to Rs.7 lakhs for a period of only 26 months from 1st
February, 2009 to 31st March, 2011 retrospectively.
3. According to appellant - operational creditor, the respondent - corporate debtor continued to pay
Rs.7 lakhs per month from April, 2011 to September, 2011 as fees instead of paying Rs.11 lakhs per
month in terms of Business Conduct Agreement and the Addendum to the said agreement. Thereafter,
since October, 2011 the corporate debtor failed to pay the conducting fee and, therefore, the operational
creditor terminated the business conduct agreement.
783
by Hon’ble NCLAT
4. On the ground that a sum of Rs.3,92,38,405 is due from corporate debtor, the appellant -
operational creditor issued notice under sub-section (1) of section 8 of the Insolvency and Bankruptcy
Code, 2016 (hereinafter referred to as I&B Code). The Respondent - corporate debtor, in its reply dated
18th March, 2017 denied the claim on the ground that the operational creditor has not duly performed its
duty in terms of agreement.
5. After waiting for 10 days and having received such reply, the appellant - operational creditor,
filed an application under section 9 before the Adjudicating Authority (National Company Law Tribunal)
Mumbai Bench, Mumbai registered as CP No.464/I&BP/NCLT/MAH/2017 for initiation of corporate
insolvency resolution process against the respondent - corporate debtor.
6. The Adjudicating Authority by impugned order dated 4th May 2017 having noticed that an
arbitration application was filed by operational creditor, which was dismissed on 4th March, 2014,
dismissed the application under section 9 on one of the grounds that the application was barred by
limitation with following observation:
“11. The another contention of the operational creditor that since Arbitration
Application was filed for the appointment of Arbitrator under Section 11 of the
Arbitration and Conciliation Act, 1996 and hence the recovery of debt is not
barred by limitation, is far fetching in view of the fact that the Arbitration
Application was dismissed on 4.4.2014 and that claim covered the debit notes
raised from November, 2011 to the date of filing of Arbitration Application on
30.3.2012. In order to save limitation on this portion of the claim, the
operational creditor should have obtained liberty to proceed against the
corporate debtor but that is not the case herein, the Arbitration Application was
dismissed without any liberty. In so far as the debit notes subsequent to the filing
of Arbitration Application the same is not covered in the Arbitration
Application, the corporate debtor is not in possession of the premises, not
carried on his business activities and the raising of the debit notes against the
corporate debtor was illegal. It is to be noted that after the last payment in
September, 2011, neither there was an acknowledgement of liability nor any
payment by the corporate debtor. In this situation, the whole debit as claimed by
the financial creditor is time barred.
12. Section 3(11) of IB Code provides that “debt” means a liability or obligation
in respect of a claim which is due from any person and includes a financial debt
784
by Hon’ble NCLAT
and operation debt. When the debt is a time barred one, there is no legal
obligation on the part of the corporate debtor to pay the same and due to lapse
of time the right to sue is barred by limitation, hence, in this case, there is no
debt as defined in the IB Code.
13. In view of the above discussion, this Bench is of the view that the debt is time
barred and unenforceable and hence the petition is dismissed.”
7. The questions that arises for consideration is :
“Whether the application preferred by appellant - operational creditor is barred by

limitation?”
8. Learned counsel for the appellant contended that law of limitation is not applicable and referred
to decision of this Appellate Tribunal in “Neelkanth Township and Construction Pvt. Ltd. vs. Urban
Infrastructure Trustee Ltd.” of Company Appeal (AT) (Insolvency) No.44/2017.
9. In spite of service of notice the respondent has not appeared to contest this appeal. The pleading
made in the company petition and the appeal has not been controverted.
9. In ‘Neelkanth Township and Construction Pvt. Ltd. vs. Urban Infrastructure Trustee Ltd.’, similar
plea was taken by the appellant of the said appeal. This Appellate Tribunal by Judgement dated 11th
August, 2017 observed and held as follows:
“The next ground taken on behalf of the appellant is that the claim of the
respondent is bared by limitation, as the Debentures were matured between the
year 2011 – 2013 is not based on Law. There is nothing on the record that
Limitation Act, 2013 is applicable to I&B Code. Learned Counsel for the
appellant also failed to lay hand on any of the provision of I&B Code to suggest
that the Law of Limitation Act, 1963 is applicable. The I&B Code, 2016 is not an
Act for recovery of money claim, it relates to initiation of Corporate Insolvency
Resolution Process. If there is a debt which includes interest and there is default
of debt and having continuous course of action, the argument that the claim of
money by Respondent is barred by Limitation cannot be accepted.”
10. In Neelkanth Township and Construction Pvt. Ltd. vs. Urban Infrastructure Trustee Ltd., Civil
Appeal No.10711 of 2017, the parties raised before Hon’ble Supreme Court the question of application of
Limitation Act for initiation of Corporate Insolvency Resolution Process under I&B Code. The Hon’ble
Supreme Court by order dated 23rd August 2017 while dismissing the appeal observed as:
785
by Hon’ble NCLAT
“In view of the this, we find no merit in the appeal. Accordingly, the appeal is
dismissed keeping the question of law viz. whether the Limitation Act would
apply to this proceeding, open.”
11. In this case even if it is accepted that the Limitation Act, 1963 is applicable for initiation of
Corporate Insolvency Resolution Process, in such case Article 137 of the Limitation Act, 1963 will be
applicable, which is quoted below:
“Description of application Period of Time from which

Limitation period begins to run Any other
application for Three years When the right
which no period of to apply accrues. limitation is
provided
elsewhere in this
division.”
12. Insolvency and Bankruptcy Code, 2016 has come into force with effect from 1st December, 2016.
Therefore, the right to apply under I&B Code accrues only on or after 1st December, 2016 and not before
the said date (1st December, 2016). As the right to apply under section 9 of I&B Code accrued to
appellant since 1st December, 2016, the application filed much prior to three years, the said application
cannot be held to be barred by limitation.
13. In so far as the application under section 9 of the Arbitration and Conciliation Act, 1996 preferred
by appellant, it has been specifically pleaded by the appellant and not disputed by the respondent that the
appellant filed an application to withdraw the application under section 9 of the Arbitration Act, expressly
reserving liberty to institute fresh proceeding for interim relief. In such circumstances and as no arbitral
dispute is pending, the application cannot be rejected.
14. There is nothing on the record to suggest that the respondent disputed the claim prior to issuance
of notice under section (1) of section 8 of the I&B Code. In the aforesaid background, we are of the view
that the Adjudicating Authority, Mumbai Bench was not correct in holding that the application was barred
by limitation. For the said reason the order rejecting the application cannot be sustained.
15. We accordingly set aside the impugned order dated 04.05.2017 passed bythe Adjudicating
Authority, Mumbai Bench in CP No.464/I&BP/NCLT/MAH/2017 and remit the case for admission after
notice and hearing the parties. If the application under section 9 is otherwise complete, the Adjudicating
Authority will admit the application. In case the application is incomplete or defective, the Adjudicating
Authority will allow time to the appellant to complete the documents/remove the defect in terms of
786
by Hon’ble NCLAT
proviso to sub-section (5) of section 9 of I&B Code. The Adjudicating Authority is required to pass a
reasoned order.
16. The appeal is allowed with aforesaid observations and directions. However, in the facts and
787
by Hon’ble NCLAT

NEW DELHI
C.P. (I.B.) No. 179/NCLAT/2017
Applicant: Ramesh Chander Gupta

Vs.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Alok Dhir, Ms. Varsha Banerjee & Mr. Milan Singh Negi,
Learned Advocates
ORDER
The appellant – Ramesh Chander Gupta, one of the Director of Arcee Ispat Udyog Ltd. (the
Corporate Debtor) has preferred this appeal against the order dated 30th August, 2017 passed by the
Adjudicating Authority (National Company Law Tribunal) Chandigarh Bench, Chandigarh. By the
impugned order, the application preferred by the respondent – Punjab National Bank (Financial Creditor)
under Section 7 of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as ‘I & B Code’)
has been admitted, order of moratorium has been declared, the case has been adjourned for appointment
of Interim Resolution Professional and for further directions.
2. Learned counsel for the appellant while assailing the impugned order submitted that the
application filed under Section 7 of the I & B Code is not maintainable as it was not filed by the
authorised person of the Financial Creditor, but by a power of attorney holder. It was further submitted
that there is no authorisation made by the Financial Creditor – Punjab National Bank in favour of the
person concerned who filed the application and the Adjudicating Authority failed to consider the fact that
letter dated 28th March, 2017 issued by the Chief Manager, Punjab National Bank would not amount to
sufficient authority to initiate the proceedings under Section 7 of the I & B Code.
3. On the other hand, according to the learned counsel for the respondent, the application under
Section 7 was maintainable as it was filed by one of the authorised officer of the Punjab National Bank.
788
by Hon’ble NCLAT
4. Similar issue was fell for consideration before this Appellate Tribunal in “Palogix Infrastructure
Private Limited vs. ICICI Bank Limited - Company Appeal (AT) (Insol.) No. 30 of 2017” etc. The
Appellate Tribunal by common judgment dated 20th September, 2017 held as follows :
“31. As per Section 7 of the ‘I&B Code’ an application for initiation of

‘Corporate Insolvency Resolution Process’ requires to be filed by ‘Financial
Creditor’ itself. The form and manner in which an application under section 7 of
the ‘I&B Code’ is to be filed by a ‘Financial Creditor’ is provided in ‘Form-1’
of the Adjudicating Authority Rules. Upon perusal of the Adjudicating Authority
Rules and Form-1, it may be duly noted that the ‘I&B Code’ and the
Adjudicating Authority Rules recognize that a ‘Financial Creditor’ being a
juristic person can only act through an “Authorised Representative”. Entry 5 &
6 (Part I) of Form No.1 mandates the ‘Financial Creditor’ to submit “name and
address of the person authorised to submit application on its behalf”. The
authorization letter is to be enclosed. The signature block of the aforementioned
Form 1 also provides for the authorised person’s detail is to be inserted and
also includes inter alia the position of the authorised person in relation to the
‘Financial Creditor’. Thus, it is clear that only an “authorised person” as
distinct from “Power of Attorney Holder” can make an application under
section 7 and required to state his position in relation to “Financial Creditor”.
32. The ‘I&B Code’ is a complete Code by itself. The provision of the Power of
Attorney Act, 1882 cannot override the specific provision of a statute which
requires that a particular act should be done by a person in the manner as
prescribed thereunder.
33. Therefore, we hold that a ‘Power of Attorney Holder’ is not competent to file
an application on behalf of a ‘Financial Creditor’ or ‘Operational Creditor’ or
‘Corporate Applicant’.”
5. In the said case of Palogix Infrastructure Private Limited (Supra), the Appellate Tribunal notice
the pleadings made by the Bank who authorize one of the officer to do the needful but at the top of the
authorization letter the word “Power of Attorney” was written. Having noticed the aforesaid fact, the
Appellate Tribunal by the aforesaid judgment dated 20th September, 2017 observed and further held as
follows:
789
by Hon’ble NCLAT
“36. In so far as, the present case is concerned, the ‘Financial Creditor’-Bank
has pleaded that by Board’s Resolutions dated 30th May, 2002 and 30th
October, 2009, the Bank authorised its officers to do needful in the legal
proceedings by and against the Bank. If general authorisation is made by any
‘Financial Creditor’ or ‘Operational Creditor’ or ‘Corporate Applicant’ in
favour of its officers to do needful in legal proceedings by and against the
‘Financial Creditor’ / ‘Operational Creditor’/’Corporate Applicant’, mere use
of word ‘Power of Attorney’ while delegating such power will not take away the
authority of such officer and ‘for all purposes it is to be treated as an
‘authorization’ by the ‘Financial Creditor’/‘Operational Creditor’/‘Corporate
Applicant’ in favour of its officer, which can be delegated even by designation.
In such case, officer delegated with power can claim to be the ‘Authorized
Representative’ for the purpose of filing any application under section 7 or
Section 9 or Section 10 of ‘I&B Code’.
37. As per Entry 5 & 6 (Part I) of Form No.1, ‘Authorised Representative’ is

required to write his name and address and position in relation to the ‘Financial
Creditor’/Bank. If there is any defect, in such case, an application under section
7 cannot be rejected and the applicant is to be granted seven days’ time to
produce the Board Resolution and remove the defect.
38. This apart, if an officer, such as senior Manager of a Bank has been
authorised to grant loan, for recovery of loan or to initiate a proceeding for
‘Corporate Insolvency Resolution Process’ against the person who have taken
loan, in such case the ‘Corporate Debtor’ cannot plead that the officer has
power to sanction loan, but such officer has no power to recover the loan
amount or to initiate ‘Corporate Insolvency Resolution Process’, in spite of
default of debt.
39. If a plea is taken by the authorised officer that he was authorised to sanction
loan and had done so, the application under section 7 cannot be rejected on the
ground that no separate specific authorization letter has been issued by the
‘Financial Creditor’ in favour of such officer designate.
790
by Hon’ble NCLAT
40. In view of reasons as recorded above, while we hold that a ‘Power of

Attorney Holder’ is not empowered to file application under section 7 of the
‘I&B Code’, we further hold that an authorised person has power to do so.”
6. In the present case, the appellant has enclosed the so-called “Power of Attorney” of the Punjab
National Bank like ICICI Bank. As noticed in the case of Palogix Infrastructure Private Limited, in the
present case also we find that by an instrument dated 5th November, 2015 the committee of Board of
Directors empowered an officer of the Bank and delegated him power to move before a Court on behalf
of the Bank, with power to do everything requisite for the purpose mentioned therein, including
borrowing money from the Reserve Bank of India and financial institutions of big authorities in India and
also to appear and take action on behalf of the Bank in any Court of original jurisdiction, court of appeal,
revision, civil, criminal, revenue courts, tribunals and office/offices and to engage counsel on behalf of
the Bank for such courts, tribunal and offices. In view of the aforesaid Board’s Resolution by letter dated
28th March, 2017 the Chief Manager, Branch Head, MCB Hisar was authorised to file petition before the
Adjudicating Authority under Section 7 of the I & B Code and named the IRP for appointment. From the
application filed under Section 7 in Form 1 filed by the respondent – Financial Creditor we find that the
authorised officer of the Bank has signed the document.
7. In the aforesaid circumstances, as the case in hand is covered by the decision of this Appellate
Tribunal in Palogix Infrastructure Private Limited (Supra) and as the Senior Manager of the Bank has
filed the application under Section 7, we find no ground to interfere with the impugned order.
8. The appeal is accordingly dismissed, the order of admission of application under Section 7 is
affirmed. However, in the facts and circumstances of the case, there shall be no order as to costs.
791
by Hon’ble NCLAT

NEW DELHI
C.P. (I.B.) No. 226/NCLAT/2017
Applicant: Allied Media Network Pvt. Ltd.

Vs.
Respondent: M/s. Sanraa Media Ltd.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Sanjay Kumar, Learned Advocates
ORDER
The appellant preferred an application under Section 433(e) of the Companies Act, 1956 before
the Hon'ble Madras High Court. Pursuant to Rule 5 of the Companies (Transfer of Pending
Proceedings) Rules, 2016 notified by Central Government on 7th December, 2016 the case was
transferred to the Adjudicating Authority.
2. Notification dated 7th December, 2016 was subsequently modified by the Companies (Transfer
of Pending Proceedings) second amendment Rules, 2017 by notification dated 29th June, 2017. Rule 5
therein reads as follows: -

pay debts.- (1) All petitions relating to winding up under clause (e) of section
433 of the Act on the ground of inability to pay its debts pending before a High
Court, and where the petition has not been served on the respondent as required
under rule 26 of the Companies (Court) Rules, 1959 shall be transferred to the
Bench of the Tribunal established under sub-section (4) of section 419 of the
Act, exercising territorial jurisdiction and such petitions shall be treated as
with in accordance with Part II of the Code:
792
by Hon’ble NCLAT
information forming part of the records transferred in accordance with Rule 7,
Tribunal within sixty days from date of this notification, failing which the
petition shall stand abated.
Provided further that any party or parties to the petitions shall, after the
15th day of July, 2017, be eligible to file fresh applications under sections 7 or 8
or 9 of the Code, as the case may be, in accordance with the provisions of the
Code:
Provided also that where a petition relating to winding up of a company

is not transferred to the Tribunal under this rule and remains in the High Court
and where there is another petition under clause € of Section 433 of the Act for
been served on the respondent."
3. After transfer of the case, the appellant filed affidavit and bank statement and other required
statutory formalities, but not filed the same within the time limit i.e. 15th July, 2017, but on 19th July
2017. In this background, the Adjudicating Authority declared the application abated by the impugned
order dated 22th August, 2017, which reads as follows:
"Counsel for petition present and filed an affidavit in proof of the paper
publication made for the appearance of the respondent for his appearance and
for making submissions. Respondent called absent. No representation. While
hearing the arguments, it is submitted that the petitioner has filed affidavit and
bank statement u/s 9(3)(b)&(c) and other required statutory formalities to be
complied as per IB Code, 2016 only on 19.07.2017. in view of the notification
dated 29.06.2017 issued by the Ministry of Corporate Affairs, the matter stands
closed as abated."
4. We agree with the submissions made by the learned counsel for the appellant that pursuant to
earlier notification, six months' time was allowed which is beyond 19th July, 2017 but in view of the
subsequent notification dated. 29th June, 2017. Last date of submissions has been forwarded resulting
abatement of the application, without any fault on the part of the appellant.
793
by Hon’ble NCLAT
5. In the present case, even if we set aside the impugned order dated 22nd August, 2017 on the
ground that the appellant was entitled to file bank statement u/s 9(3)(b)86(c) and other required statutory
formalities even on 19th July, 2017, but that will not suffice give any relief to the appellant as more than
five months have passed thereafter.
6. In the circumstances, in terms of Rule 5 aforesaid, we allow the appellant to file fresh
application under Section 7 or Section 9, as the case may be, after fulfilling the requirements under 'MO
Code'. If such application is filed within the reasonable period, the Adjudicating Authority will consider
the same in accordance with law uninfluenced by the impugned order dated 22nd August, 2017. The
appeal stands disposed of with aforesaid observations.
794
by Hon’ble NCLAT

NEW DELHI
C.P. (I.B.) No. 159/NCLAT/2017

Vs.
Respondent: S. Muthuraju & 3 others.
Judges/Coram:
Hon'ble Sh. A.I.S. Cheema and Sh. Bansi Lal Bhat, Member (J)
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Om Prakash, Mr. Pawan Kishore Singh and Mr. S. Sethuraman,
Learned Advocate
For Respondents/Defendant: Mr. Nikhil Nayyar and Mr. Divyanshu Raz, Learned Advocate
ORDER
Heard learned counsel for the appellant and the learned counsel for Respondent Nos. 2 and 3. The
impugned order passed in this matter by NCLT, Chennai Bench, Chennai was as under:
“Counsel for IRP present. Counsel for Financial creditor (State Bank of India)
present. Section 18 contains the duties of the IRP and under clause (f) and f(ii) of
the section, it is provided that the IRP shall take over the control and custody of
any asset over which the Corporate Debtor has ownership right as recorded in the
Balance Sheet of the Corporate Debtor, assets that may or may not be in the
possession of the Corporate Debtor. In view of this, financial Creditor (State
Bank of India) is directed to hand over the physical possession of the assets of
the Corporate Debtor to the IRP within two days from today, failing which the
Adjudication Authority shall be constrained to take action against the financial
Creditor under section 74 of the IBC, 2016, for contravention of the moratorium.
Accordingly, application No. 9 of 2017 stands disposed of.”
795
by Hon’ble NCLAT
Learned counsel for the appellant referred to the order passed earlier by this Tribunal in Company Appeal
(AT) (Insolvency) No. 105 of 2017 and submitted that this Tribunal on that occasion made it clear that the
Financial Creditor if it has taken over the possession of the land of the Corporate Debtor under the
SARFAESI Act, 2002 the said Financial Creditor can be asked to hand over the possession of such land,
which may be decided by the learned Adjudicating Authority, if such question is raised by Insolvency
Resolution Professional or any Creditor or any other aggrieved person. The learned counsel submitted
that this issue is yet to be decided.
Learned counsel for the respondent submitted that the appellant had objected to the continuation
of Respondent No. 1 – S. Muthuraju as Interim Resolution Professional. The said person is at present no
more looking after the affairs of the Corporate Insolvency Resolution Process and the new Resolution
Professional has already taken over and further steps regarding possession have also been taken and thus
according to him the impugned order in this matter no more requires any further consideration and the
appeal should be treated as infructuous. Learned counsel for the appellant states that fresh application has
been filed by Respondent Nos. 2 and 3 before the Adjudicating Authority for seeking action for violation
of the earlier order dated 7th July, 2017.
The appellant may pursue its remedies with the NCLT. In view of the submissions made, nothing
survives in this appeal with reference to impugned order and thus the appeal is treated as infructuous.
In view of this, the appeal stands disposed of.
796
by Hon’ble NCLAT

NEW DELHI
C.P. (I.B.) No. 119/NCLAT/2017
Applicant: Maini Construction Equipments Pvt. Ltd.

Vs.
Respondent: Mr. Nitin Khandelwal
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Ms. Aarti Kumar, Learned Advocate
For Respondents/Defendant: Mr. Dushyant K. Mahant & Mr. Ankur Mittal, Learned Advocates
ORDER
Ms. Aarti Kumar, learned counsel appearing on behalf of the appellant submits that she has
instructions not to press this appeal. Mr. Rakshak Maini, Director in the appellant Company-M/s.
Maini Construction Equipments Pvt. Ltd. is also present and made similar submission. This statement
has been made in the presence of the counsel for the respondent.
In view of the aforesaid submission, we dismiss the appeal being not pressed. No cost.
797
by Hon’ble NCLAT

NEW DELHI
C.P. (I.B.) No. 207/NCLAT/2017
Applicant: Transparent Technologies Pvt. Ltd.

Vs.
Respondent: Multi Trade
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Ms. Sumi Soman, Learned Advocate
For Respondents/Defendant: Mr. Narpat Mehta, Learned Advocates
ORDER
The respondent – Multi Trade filed a Petition under Sections 433 and 434 of the Companies
Act,1956 for winding up of the appellant – Transparent Technologies Pvt. Ltd. (Corporate Debtor) before
the High Court of Bombay on 12.04.2016. During the pendency of the said case and in view of
introduction of Insolvency & Bankruptcy Code, 2016 (hereinafter referred to as the ‘I&B Code’) and
pursuant of transfer Notification of 7th December, 2016 issued by Central Government, the matter was
transferred from High Court of Bombay to the Adjudicating Authority (National Company Law
Tribunal), Mumbai Bench. On hearing the counsel for the respondent – Multi trade, the Adjudicating
Authority treated the application under Section 9 of the I & B Code, admitted the case, declared
moratorium and called for the names from Insolvency and Bankruptcy Board of India (IBBI) by the
impugned order dated 17th August, 2017 which is under challenge in this appeal.
2. At this stage, it is relevant to state that the Central Government in exercise of powers conferred
under sub-sections (1) and (2) of Section 434 of the Companies Act, 2013 read with sub-section (1) of
Section 239 of the I & B Code framed rules namely “Companies (Transfer of pending proceedings)
Rules, 2016”, with regard to transfer of pending proceedings of winding up on the ground of inability to
pay debts. Rule 5 thereof reads as follows:
798
by Hon’ble NCLAT
“5. Transfer of pending proceedings of Winding up on the ground of inability to

pay debts.-
(1) All petitions relating to winding up under clause (e) of section 433 of the
Act on the ground of inability to pay its debts pending before a High Court, and
where the petition has not been served on the respondent as required under rule
26 of the Companies (Court) Rules, 1959 shall be transferred to the Bench of the
Tribunal established under sub-section (4) of section 419 of the Act, exercising
territorial jurisdiction and such petitions shall be treated as applications under
sections 7, 8 or 9 of the Code, as the case may be, and dealt with in accordance
with Part II of the Code:
Tribunal within sixty days from date of this notification, failing which the
petition shall abate.
(2) All cases where opinion has been forwarded by Board for Industrial and
Act, pursuant to section 20 of the Sick Industrial Companies (Special
Provisions) Act, 1985 shall continue to be dealt with by such High Court in
accordance with the provisions of the Act."
3. In view of the aforesaid Rule 5, the application filed under Sections 433 and 434 was transferred
from High Court to the Adjudicating Authority who treated the application under Section 9 and admitted
the case.
4. Learned counsel for the appellant submits that no notice under subsection (1) of Section 8 was
issued and the copy of Form 5 was also not served on the appellant. In fact, no application under Section
9 or Form 5 was filed before the Adjudicating Authority. The Adjudicating Authority has passed the order
only after consideration of the reply filed by the appellant pursuant to notice under Section 434 of the
Companies Act, 1956 which cannot be taken into consideration for admitting the application under
section 9 of the I & B Code.
799
by Hon’ble NCLAT
5. Shri Narpat Mehta, Proprietor of Multi Trade appeared in person has also filed a reply to the
appeal. Though with regard to paragraph 8(f), the respondent has denied the averments relating to serving
a copy of Form 5, but there is nothing on record to suggest that any notice under sub-section (1) of
Section 8 was issued and served or the application under Form 5 was filed. The respondent has also taken
a plea that there is no requirement of furnishing the copy of the application on the appellant. However,
such submission cannot be accepted in view of Rule 5 aforesaid.
6. In view of the fact that as per the requirement the respondent has not submitted the information as
required for admission of application under Section 9 before the Adjudicating Authority, we hold that in
terms of Rule 5 and in absence of non-supply of requisite informations in terms of the Rule aforesaid the
application cannot be treated as an application under Section 9 for initiation of Corporate Insolvency
Resolution Process of the appellant.
7. For the reasons aforesaid, we set aside the impugned order dated 17th August, 2017 passed by the
Adjudicating Authority in TC.P. No. 183/I&BP/NCLT/MAH/2017.
8. In effect, order(s) passed by Ld. Adjudicating Authority appointing the ‘Interim Resolution
Professional’, declaring moratorium, freezing of account and all other order(s) passed by Adjudicating
including the advertisement published in the newspaper calling for applications and all such orders and
actions are declared illegal and are set aside. The application preferred by Respondent is dismissed.
Learned Adjudicating Authority will now close the proceeding. The appellant company is released from
immediate effect.
9. Learned Adjudicating Authority will fix the fee of ‘Interim Resolution Professional’ and the
Appellant will pay the fees of the Interim Resolution Professional, for the period he has functioned. The
appeal is allowed with aforesaid observation and direction. However, in the facts and circumstances of the
case, there shall be no order as to cost.
800
by Hon’ble NCLAT

NEW DELHI
C.P. (I.B.) No. 356/NCLAT/2017
Applicant: Vijay Kumar Arora

Vs.
Respondent: Jaswant Rai Arora & Ors.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Kumar Sudeep & Mr. Prasanna, Learned Advocate
For Respondents/Defendant: Mr. K. Datta & Mr. Rohan Malik, Learned Advocates
ORDER
This appeal has been preferred by the appellant against order dated 1st September, 2017 passed by
the National Company Law Tribunal, Kolkata Bench, Kolkata (hereinafter referred to as ‘Tribunal’) in
Company Petition No. 40 of 2013, whereby and whereunder the Tribunal passed the following order:
“ORDER
“C.P. No. 40/2013 is allowed with costs. The preliminary decree is being passed
for an investigation into the affairs of the company w.e.f. 8/9/2008, i.e., from the
date when R2 recovered back the possession of R1 company from the Official
Liquidator by order of the Hon’ble High Court.
Central Government is directed to take appropriate steps for appointment of one

or more persons as Inspectors to investigate into the affairs of the company and
to call for report thereon in such manner as the Central Government may direct
within three months from the date of order.
Cost and expenses of the investigation may be provided by petitioner which shall
be reimbursed from R-1 Company’s account.
801
by Hon’ble NCLAT
Investigation report may be called for within three months from the date of
order.
Let a copy of the order be sent to the Regional Director for compliance with
above direction.”
2. The brief fact of the case is that the respondents, Mr. Jaswant Rai Arora (deceased) and others,
preferred an application under Sections 397 and 398 read with Sections 402 and 403 of the Companies
Act, 1956 complaining several causes of ‘oppression and mismanagement’ precipitated by the
respondents including 2nd Respondent (Appellant herein). A declaration was sought for that the sale of
moveable and immoveable assets by the 2nd Respondent (Appellant herein) after 28th August, 2008 is
null and void and to appoint a retired High Court Judge as a Liquidator of the Respondent Company
directing him to liquidate the Respondent Company.
3. The Tribunal taking into consideration the submissions made by the parties and the evidence on
record, noticed that due to different factors and the report under Section 15 of the Sick Industrial
Companies (Special Provisions) Act, 1985 (hereinafter referred to as ‘SICA’) submitted before the Board
for Industrial and Financial Reconstruction (BIFR), by order dated 28th August, 1997, a direction was
issued for winding up of the Company and the report was sent to Hon’ble Patna High Court under Section
20 of the SICA. Taking into account the fact that 1st Petitioner (deceased) had remained a silent spectator
during his lifetime and subsequent other factors and the resolution passed between the years 2008 and
2009 as also sale of assets took place between July and November, 2009 and other relevant factors, the
Tribunal thought it proper to order for an investigation into the affairs of the Company with effect from
8th September, 2008 i.e. the date from which the 2nd Respondent (Appellant herein) recovered back the
position of the Company from the Official Liquidator by the order of the Hon’ble High Court.
4. Learned counsel appearing on behalf of the appellant submits that the matter related to 8th
September, 2008 and the Company Petition was filed after long delay in the year 2013. He further submits
that the alleged act of ‘oppression and mismanagement’ relates to year 1995 and, therefore, petition under
Sections 397 and 398 of the Companies Act, 1956 filed after long delay in the year 2013 was not
maintainable. It is also submitted that the laches and negligence on the part of the respondents have also
been noticed by the Tribunal.
5. Learned counsel for the respondents submits that there was no laches as the Company was under
liquidation and the assets were surreptitiously sold in favour of the 2nd Respondent (Appellant herein)
and the investigation relates to the period from 8th September, 2009 onwards i.e. till today has been
ordered.
802
by Hon’ble NCLAT
6. Having noticed the rival contentions made by the learned counsel of the parties, we do
not find any reason to interfere with the impugned order as it is always open to the Tribunal, even suo
motu, to order for investigation into the affairs of the Company, in view of the powers conferred upon it
under clause (b) of Section 213 of the Companies Act, 2013, as quoted below :
“213. Investigation into company’s affairs in other cases
The Tribunal may,—
(a) xxx xxx xxx
(b) on an application made to it by any other person or otherwise, if it is

satisfied that there are circumstances suggesting that,
(i) the business of the company is being conducted with intent to defraud its
creditors, members or any other person or otherwise for a fraudulent or
unlawful purpose, or in a manner oppressive to any of its members or that the
company was formed for any fraudulent or unlawful purpose;
(ii) persons concerned in the formation of the company or the management

of its affairs have in connection therewith been guilty of fraud, misfeasance or
other misconduct towards the company or towards any of its members; or
(iii) the members of the company have not been given all the information
with respect to its affairs which they might reasonably expect, including
information relating to the calculation of the commission payable to a managing
or other director, or the manager, of the company,
order, after giving a reasonable opportunity of being heard to the parties

concerned, that the affairs of the company ought to be investigated by an
inspector or inspectors appointed by the Central Government and where such an
order is passed, the Central Government shall appoint one or more competent
persons as inspectors to investigate into the affairs of the company in respect of
such matters and to report thereupon to it in such manner as the Central
Government may direct:
Provided that if after investigation it is proved that—
803
by Hon’ble NCLAT
(i) the business of the company is being conducted with intent to defraud its
creditors, members or any other persons or otherwise for a fraudulent or
unlawful purpose, or that the company was formed for any fraudulent or
unlawful purpose; or
(ii) any person concerned in the formation of the company or the

management of its affairs have in connection therewith been guilty of fraud,
then, every officer of the company who is in default and the person or persons
concerned in the formation of the company or the management of its affairs
shall be punishable for fraud in the manner as provided in section 447.”
7. According to us, if an investigation into the affairs of the Company is made and the appellant,
who was 2nd Respondent before the Tribunal, if otherwise not involved, he should not fear the
investigation.
8. In so far as certain observations as made by the Tribunal with regard to the 2nd Respondent
(Appellant herein) are concerned, the same are merely passing observations for the purpose of the
investigation and cannot be construed to be an allegation substantiated against the appellant.
9. For the reasons aforesaid, we have no option but to dismiss the appeal. It is accordingly
dismissed. However, on the facts and in the circumstances of the case, there shall be no order as to costs.
804
by Hon’ble NCLAT

NEW DELHI
C.P. (I.B.) No. 106/NCLAT/2017
Applicant: Krishna Kraftex Pvt. Ltd.

Vs.
Respondent: HDFC Bank and Ors.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Vivek, Learned Advocate
For Respondents/Defendant: Mr. Abhishek Kumar & Mr. Ankit Malhotra, Learned Advocates
ORDER
When the case was taken over prayer was made to pass over the case, which was allowed.
Subsequently, after taking up all the cases when the matter was again taken up, prayer for adjournment
has been made on the ground that the lawyer is not available. However, as no such submission was made
when request to Passover the case was made, we refuse the prayer for adjournment. The appeal has not
been pressed, we dismiss the appeal for non-prosecution.
805
by Hon’ble NCLAT

NEW DELHI
C.P. (I.B.) No. 228/NCLAT/2017
Applicant: Sandeep Reddy & Anr.

Vs.
Respondent: Jaycon Infrastructure Ltd.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Arun Kathpalia, Mr. Swapnil Gupta, Mr. Angad Meht, Ms. Ankita,
Mrs. Shivambika Sinha, Learned Advocate
For Respondents/Defendant: Mr. R.K. Gupta & Mr. Achin Goel, Learned Advocates
ORDER
An Interlocutory Application has been filed in this appeal for praying to pass such interim order.
However, as Respondent-'Operational Creditor' has appeared through learned counsel, on the suggestion
of learned counsel for both the parties, the appeal is taken up for hearing and final disposal at this stage.
2. This appeal has been preferred by the appellants against order dated 10th October, 2017 passed by
Adjudicating Authority (National Company Law Tribunal) Hyderabad Bench, Hyderabad, whereby and
whereunder, the application preferred by Respondent-Operational Creditor' under Section 9 of the
Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as "I&B Code") has been admitted, order
for public announcement of initiation of 'Corporate Insolvency Resolution Process' has been ordered,
'Interim Resolution Professional' has been appointed who has been directed to constitute a Committee of
Creditors, after collection of all claims received against the 'Corporate Debtor' and passed other orders in
terms of 'I&B Code'.
3. On 18th October 2017, it was argued by learned senior counsel for the appellant that there is a
dispute in existence prior to issuance of notice of demand under sub-section (1) of Section 8 of the 'I&B
Code'. It was further submitted that the Adjudicating Authority without calling for name of any 'Interim
Resolution Professional' from the Insolvency and Bankruptcy Board of India (hereinafter referred to as
"Board") appointed one Dr. K. Lakshmi Narasimha, Ph.D as 'Interim Resolution Professional', without
806
by Hon’ble NCLAT
any such suggestion from the 'Operational Creditor' or the Board. Taking into consideration the aforesaid
submissions, notices were issued on the respondent, particularly to decide whether the Adjudicating
Authority of his own has jurisdiction to appoint an 'Interim Resolution Professional'/ 'Resolution
Professional', if no such powers is specifically vested under the I&B Code'.
4. On notice, the respondent has appeared and accepted that the 'Interim Resolution Professional'
was not appointed on the suggestion made by the 'Operational Creditor'. He further submits that parties
have reached the settlement in writing which is binding on the parties.
5. From the record we find that a sub-contract works agreement was reached between the parties.
The scheduled completion date in relation to works of agreement dated 19th April, 2011 was 31St
December, 2012. According to appellant, the respondent/ applicant failed and ignored to complete the
agreement works by that date. The respondent/ applicant continued the works till May, 2014 and executed
only 78% of the agreement value of works and had wilfully abandoned the works w.e.f May, 2014.
6. From the aforesaid fact not disputed by respondent, it is clear that there was a dispute in existence
prior to issuance of demand notice under sib-section (1) of Section 8 of the 'I&B Code' and for that the
application under Section 9 of the 'I&B Code' was not maintainable.
7. Prima facie, we are of the opinion that as the 'I&B Code' do not empower the Adjudicating
Authority to suggest any name or appoint any 'Interim Resolution Professional'/ Resolution Professional
of its own choice. However, as we find that the parties have settled the dispute and initiation of Resolution
process under section 9 of the 'I&B Code' was not maintainable, in view of existence of dispute, we leave
the question open as to whether the Adjudicating Authority has power to appoint any person of its own
choice or not which will be decided in an appropriate case.
8. We have already held that application under Section 9 was not maintainable, in view of existence
of dispute and that parties have already reached the settlement, for the reasons aforesaid, we set aside the
impugned order dated 10th October, 2017 passed by Adjudicating Authority, Hyderabad Bench in
Company Petition (IB) No/45/09/HDB/2017.
9. In effect, order (s), passed by Ld. Adjudicating Authority appointing 'Interim Resolution
Professional', declaring moratorium, freezing of account, and all other order (s) passed by Adjudicating
Authority pursuant to impugned order and action, if any, including the advertisement, if any, published in
the newspaper calling for applications and all such orders and actions are declared illegal and are set
aside. The application preferred by Respondent under Section 9 of the 'I&B Code, 2016 is dismissed.
Learned Adjudicating Authority will now close the proceeding. The appellant company is released from
807
by Hon’ble NCLAT
immediate effect.
10. As Dr. K Lakshmi Narasimha, Ph.D was appointed as 'Interim

Resolution Professional could not function in view of the interim order of stay
passed by this Appellate Tribunal on 18th October, 2017, therefore, the question
of payment to the 'Interim Resolution Professional' does not arise. The appeal is
allowed and l.A also stands disposed of with aforesaid observation and direction.
However, in the facts and circumstances of the case, there shall be no order as to
cost.
808
by Hon’ble NCLAT

NEW DELHI
C.P. (I.B.) No. 246/NCLAT/2017
Applicant: M/s Renault Nissan Automative India Private Ltd.

Vs.
Respondent: M/s SRL Advisors LLP
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. S. N Mookherjee, Mr. Kalyan Jhabakh, Mr. Puneet Singh Bindra,
Mr. Sharad Khana and Mr. David Russel, Learned Advocate
For Respondents/Defendant: None
ORDER
Heard Learned counsel for the appellants, Perused Impugned order. The same reads as under:
Counsels for both the parties are present. Counsel for the Petitioner submitted
that as per the relevant rules he has already filed affidavit on 13.06.2017 and
Bank Certificate on 14.06.2017 under the provisions of section 9(3)(b) and (c) of
I& B Code, 2016. Counsel for the Petitioner has now filed the type set containing
documents; the copy of which is given to the Counsel for Respondent to which he
raised objection stating that as per the rules the type set cannot be allowed to be
brought on record at the belated stage. The Counsel for the Petitioner submitted
that the documents are already mentioned in the petition and some of the
documents are pertaining to communication between the parties. Therefore, the
objection of the Counsel for the Respondent is rejected. The documents are taken
on record. Counsel for the Respondent prayed for two weeks’ time to go through
the documents and to argue the matter. At request, time is enlarged. Put up on
25.10.2017 at 10.30 A.M.
MEMBER(JUDICIAL)
809
by Hon’ble NCLAT
It may not be in the interest of justice to allow any of the parties to bring on
record additional documents even after many hearings on the petition. This
petition was first listed before this Bench on 09.06.2017. If in case any additional
documents are to be taken on record, the other party should be given an
opportunity to file their objections, if any. In view of this, I am of the opinion that
the additional documents may be taken on record, if necessary, after hearing the
Respondents in the instant case.
MEMBER(TECHNICAL)
Learned counsel submits that it is transfer petition which has been treated as Section 9
proceeding under the Insolvency and Bankruptcy Code, 2016. According to him although the
proceeding was transferred to the adjudicating authority somewhere in June, 2017, still the same is
pending and the matter is protracting. He is submitting that the proceeding should have been treated as
abated. It is argued that in the impugned order Member (Judicial) took documents on record while
Member (Technical) expressed opinion of giving a hearing.
We find that the impugned order to be an interim order regarding filling and receiving of
documents. It will be appropriate for the appellant to move the adjudicating authority with regard to
grievances being raised. The Appellant may raise the points being raised here before the learned
adjudicating authority.
We hope and expect that the adjudicating authority will look into the provisions of the
Insolvency and Bankruptcy Code, 2016 and decisions rendered by this Tribunal regarding scope
available to the adjudicating authority while considering the application under Section 9. Reference can
be made to the judgment of the Hon’ble Supreme Court in the matter of “Innoventive Industries Limited
Vs. ICICI Bank & Another”, Dt. 31.08.2017 in Civil Appeal No. 8337-8338 of 2017.
With these observations present appeal stands disposed.
810
by Hon’ble NCLAT
811
by Hon’ble NCLAT

NEW DELHI
C.P. (I.B.) No. 249/NCLAT/2017
Applicant: Engenious Engineering Pvt. Ltd.

Vs.
Respondent: Onaex Natura Pvt. Ltd.
Judges/Coram:
Hon'ble Justice Sh. S. J. Mukhopadhaya, Chairperson
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. V. Seshagiri, Mr. Anchit Tripathi and Mr. Adhish Rajvanshi,
Learned Advocates
For Respondents/Defendant: Mr. Jay Savla and Mr. Prabhat Chaurasia, Learned Advocates
ORDER
Hon’ble Justice Sh. S. J. Mukhopadhaya, Chairperson
In this appeal, the appellant has challenged the order dated 20th September, 2017 passed by Ld.
Adjudicating Authority (National Company Law Tribunal) Ahmedabad Bench, Ahmedabad in Company
Petition No. (IB) 92/7/NCLT/AHM/2017 whereby and whereunder the application preferred by appellant
under section 7 of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as “I&B Code”) has
been rejected on the ground that the appellant is not a ‘Financial Creditor’.
2. We have heard learned counsel appearing on behalf of the appellant and the respondent.
3. From the record we find that the appellant invested some amount with the respondent company
and was allotted equity shares. In a petition under Sections 397 & 398 of the Companies Act, 1956, the
then Company Law Board cancelled the allotment of share capital in favour of the appellant. On such
cancellation, the amount is lying with the respondent company which has been shown as debt amount of
Rs.79,15,480/-. Though, the aforesaid fact has been disputed by the learned counsel for the respondent,
but without going into the question as to what amount is lying with the respondent, we do find nothing on
the record to suggest that the appellant come within the meaning of ‘Financial Creditor’ under Section
5(8) read with Section 5(9) of the ‘I&B Code’. Even if it is accepted that the amount has been shown to
be a debt in the records of the Company, does not mean that the appellant is a ‘Financial Creditor’.
4. We find no merit in this appeal. It is accordingly dismissed. No Cost.
5. However, the impugned order passed by the Adjudicating Authority will not come in the way of
the appellant to move before the appropriate forum for appropriate relief.
812
by Hon’ble NCLAT
NEW DELHI
C.P. (I.B.) No. 154/NCLAT/2017
Applicant: Dolphin Offshore Enterprises (Mauritius) Pvt. Ltd.

Vs.
Respondent: Unison Engineering & Construction Private Ltd.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Arun Saxena and Ms. Nalini, Learned Advocates
ORDER
The appellant, Director of Corporate Debtor has preferred this appeal under Section 61 of the
Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as the ‘I&B Code’) against the order dated
20th June, 2017 passed by the Adjudicating Authority (National Company Law Tribunal) Mumbai Bench
in C.P. No. 594/I&BP/2017 whereby and whereunder the application preferred by the respondent –
Dolphin Offshore Enterprises (Mauritius) Pvt. Ltd. (hereinafter referred to as ‘Operational Creditor’) for
initiation of ‘Corporate Insolvency Resolution Process’ has been admitted, order of moratorium has been
declared and the Insolvency Bankruptcy Board of India has been requested to recommend the name of an
Interim Resolution Professional (IRP).
2. One of the plea taken by the appellant is that the demand notice under sub-Section (1) of Section
8 was not issued by the Operational Creditor but by an advocate on behalf of the ‘Operational Creditor’,
which is not permissible. The other ground taken is that the Bank Certificate attached is not in terms of
the provisions of sub-section (3)(c) of Section 9 of the I & B Code.
3. Notices were issued on respondents including the Corporate Debtor through the Interim
Resolution Professional but in spite of service of notice, they did not appear to oppose nor disputed the
facts.
813
by Hon’ble NCLAT
4. Learned counsel appearing on behalf of the appellant brought to our notice the purported demand
notice dated 17th March, 2017 from which we find that the notice was issued by one Ms. Prinyanka Patel,
Advocate on behalf of Operational Creditor.
5. Similar issue fell for consideration before this Appellate Tribunal in Uttam Galve Steels Limited
v. DF Deutsche Forfait AG & Anr. – Company Appeal (AT) (Insolvency) 39 of 2017 wherein this
Appellate Tribunal held as follows:

occurrence of default, the Operational Creditor is required to deliver the demand
notice of unpaid Operational Debt and copy of the invoice demanding payment of
the amount involved in the default to the Corporate Debtor in such form and
manner as is prescribed.
28. Sub-rule (1) of Rule 5 of the ‘Adjudicating Authority Rules’mandates the

‘Operational Creditor’ to deliver to the ‘Corporate Debtor’ the demand notice in
Form-3 or invoice attached with the notice in Form-4, as quoted below: -
“6. The undersigned request you to unconditionally repay the unpaid operational
debt (in default) in full within ten days from the receipt of this letter failing which
we shall initiate a corporate insolvency resolution process in respect of [name of
corporate debtor].
814
by Hon’ble NCLAT
Yours sincerely,
Signature of person authorised to act on behalf of the operational creditor

30. From bare perusal of Form-3 and Form-4, read with sub-rule (1) of Rule 5 and
Section 8 of the I&B Code, it is clear that an Operational Creditor can apply himself or
through a person authorised to act on behalf of Operational Creditor. The person who is
authorised to act on behalf of Operational Creditor is also required to state “his position
with or in relation to the Operational Creditor”, meaning thereby the person authorised
by Operational Creditor must hold position with or in relation to the Operational
‘Corporate Debtor’ is to be informed of particulars of ‘Operational Debt’, with a
demand of payment, with clear understanding that the ‘Operational Debt’ (in
above.

Section 8.
815
by Hon’ble NCLAT
32. In view of provisions of I&B Code, read with Rules, as referred to above,
we hold that an ‘Advocate/Lawyer’ or ‘Chartered Accountant’ or ‘Company
the I&B Code.”
6. In the present case as the demand notice has been given by an advocate and there is nothing on
record to suggest that the advocate in question holds any position with or in relation to the respondent –
Dolphin Offshore Enterprises (Mauritius) Pvt. Ltd. and the demand notice has not been issued in
mandatory Form 3 or Form 4, as stipulated, under Rule 5 of the Insolvency and Bankruptcy (Application
to Adjudicating Authority) Rules, 2016, the initiation of resolution process cannot be upheld. The case of
the appellant being covered by the decision of the Uttam Galve Steel Limited (Supra), we have no other
option but to set aside the impugned order.
7. We accordingly set aside the impugned order passed by the Adjudicating Authority, Mumbai
Bench in C.P. No. 594/I&BP/2017.
Professional’ or declaring moratorium, freezing of account, if any, and all other order(s) passed by
816
by Hon’ble NCLAT
NEW DELHI
C.P. (I.B.) No. 250/NCLAT/2017
Applicant: Prowess International Pvt. Ltd.

Vs.
Respondent: Jaybalaji Industries Ltd.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Akhilesh Shrivastava, Learned Advocate with Ms. Suhita
Mukhopadhyay, PCS
ORDER
This appeal has been filed by the appellant under Section 61 of the Insolvency and Bankruptcy
Code, 2016 (hereinafter referred to as ‘I&B Code’) against order dated 31st August, 2017 passed by the
National Company Law Tribunal, Kolkata Bench, Kolkata (hereinafter referred to as ‘Tribunal’) in C.P.
No. 29/KB/2017. By the impugned order, the Tribunal rejected the petition preferred by the appellant for
winding- up under Sections 433, 434 and 439 of the Companies Act, 1956.
A petition for condonation of 13 days’ delay has also been preferred along with this appeal.
At this stage, before condonation of delay, it is desirable to decide whether the appeal under
Section 61 of the I&B Code is maintainable or not..
Admittedly, the appellant initially filed one winding-up petition against the respondent-Jaybalaji
Industries Ltd., under Sections 433, 434 and 439 of the Companies Act, 1956 before the Hon’ble
Calcutta High Court, which was dismissed on 21st September, 2016. Thereafter, the appellant filed
another Company Petition under Sections 433, 434 and 439 of the Companies Act, 1956 before the
Tribunal on 5th January, 2017. The Tribunal, having noticed different facts including the provisions of
Section 9 of the I&B Code, held that the petition under Sections 433, 434 and 439 of the Companies Act,
1956 preferred on 5th January, 2017 was not maintainable.
817
by Hon’ble NCLAT
In view of the fact that the petition was filed under Sections 433, 434 and 439 of the Companies
Act, 1956, which is held to be not maintainable by the Tribunal, we hold that the appeal under Section 61
of the I&B Code is not maintainable.
The appeal is accordingly dismissed. No costs.
818
by Hon’ble NCLAT
NEW DELHI
C.P. (I.B.) No. 133/NCLAT/2017
C.P. (I.B.) No. 197/NCLAT/2017
Applicant: Shriram EPC Limited

Applicant: T. Shivaraman
Vs.
Respondent: Rio Glass Solar SA
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Arun Kathpalia, Senior Advocate with Ms. Pooja M. Saigal, Ms.
Khyati Sharma and Mr. R. Sridharan, Learned Advocates
Respondents/Defendant: Mr. Rajshekhar Rao, Ms. Ranu Purohit and Mr. Chaitanya Puri, Learned
Advocates
ORDER
In both these appeals, as common order is under challenge and common question of law is
involved, they were heard together and disposed of by this common judgement.
2. Respondents – ‘Rio Glass Solar SA’ (Operational Creditor), a company incorporated under the
laws of Spain, preferred an application under Section 9 of the Insolvency and Bankruptcy Code, 2016
(hereinafter referred to as ‘I&B Code’) seeking to set in motion the ‘Corporate Insolvency Resolution
Process’ against the appellant ‘Shriram EPC Limited –‘ Corporate Debtor’
3. Learned Adjudicating Authority (National Company Law Tribunal), Division Bench, Chennai,
by the impugned order dated 10th August, 2017 in CP/537/(IB)/CB/2017, admitted the application,
ordered Moratorium, appointed ‘Interim Resolution Professional’ with order of prohibition in terms of
I&B Code against which the appellant-‘Corporate Debtor’ preferred one of this appeal (Company Appeal
(AT) (Insolvency) No. 133 of 2017).
819
by Hon’ble NCLAT
4. Other appeal (Company Appeal (AT) (Insolvency) No. 197 of 2017) has been preferred against
the same order dated 10th August, 2017 passed in CP/537/(IB)/CB/2017 by the other aggrieved person.
5. Learned counsel for the appellants submitted that the application under Section 9 of the I&B
Code was not maintainable for different reasons. According to him, the demand notice under sub-Section
(1) of Section 8 was not given by the respondent –‘Operational Creditor’ but through Advocate/Lawyers’
Firm, which is not permissible. Reliance has been placed on the decision of this Appellate Tribunal in
“Uttam Galva Steels Limited Vs. DF Deutsche Forfait AG & Anr.”- Company Appeal (AT) (Insolvency)
No. 39 of 2017, wherein this Appellate Tribunal by judgement dated 28th July, 2017 held as follows :

28. Sub-rule (1) of Rule 5 of the ‘Adjudicating Authority Rules’ mandates the
820
by Hon’ble NCLAT
corporate debtor].
Yours sincerely,
Signature of person authorised to act on

behalf of the operational creditor
Position with or in relation to the
30. From bare perusal of Form-3 and Form-4, read with sub-rule (1) of Rule
5 and Section 8 of the I&B Code, it is clear that an Operational Creditor can
Creditor. The person who is authorised to act on behalf of Operational
Creditor is also required to state “his position with or in relation to the
Operational Creditor”, meaning thereby the person authorised by Operational
Creditor must hold position with or in relation to the Operational Creditor and
only such person can apply.
above.

821
by Hon’ble NCLAT
Section 8.
the I&B Code.”
6. In the present case, we find that the notice dated 5th May, 2017 under sub-Section (1) of Section
8 has been issued and signed by a Law Firm which is at Page 196, namely, ‘Advani & Co. – Barristers-
At-Law’. Even in the end portion of the said notice, the signature is made as ‘ M/s. Advani & Co.’ and
not the signature of any individual.
7. Learned counsel for the respondent has also not disputed the aforesaid fact and there is nothing on
record to suggest that the person/Law Firm was authorised by the ‘Operational Creditor’ or the Law firm
is holding any position within the office of the ‘Operational Creditor’.
8. For the reasons aforesaid and in view of the decision in “Uttam Galva
Steels Limited Vs. DF Deutsche Forfait AG & Anr.”, we hold that the application under Section 9
preferred by the respondent-‘Operational Creditor’ was not maintainable.
9. The other plea taken by the learned senior counsel for the appellant
is that the application under Section 9 in Form-5 of the Insolvency and Bankruptcy (Application to
Adjudicating Authority) Rules, 2016 (hereinafter referred to as ‘Adjudicating Authority Rules’) has not
been signed by the ‘Operational Creditor’, but by the “Power of Attorney holder”. Reliance has been
placed on Form-5 enclosed at Page 206, which has been signed by four ‘Advocates’, as is apparent from
Serial Nos. 6 and 7 of the said Form, as quoted below :
822
by Hon’ble NCLAT
6. NAME, ADDRESS AND M/s. S. R. RAJAGOPAL, S. R.
AUTHORITY OF PERSON RAGHUNATHAN, ROHAN RAJASEKARAN
SUBMITTING APPLICATION ON AND PREETHI, S. ARAS, Advocates Having Office
BEHALF OF OPERATIONAL at : New No. 18, Old No. 9, Sadasivam Street
CREDITOR (ENCLOSE Gopalapuram, Chennai 600086.
AUTHORISATION)
Vakalatnama filed as Annexure VII;
7. NAME AND ADDRESS OF M/s. S.R. RAJAGOPAL, S. R.
PERSON RESIDENT IN RAGHUNATHAN, ROHAN
INDIA AUTHORISED TO ACCEPT RAJASEKARAN AND PREETHI, S.
THE SERVICE OR PROCESS ON ARAS, Advocates Having Office at : New No. 18,
ITS BEHALF Old No. 9, Sadasivam Street Gopalapuram, Chennai
600086
Vakalatnama filed as Annexure VII
10. The question whether a ‘Power of Attorney holder’ can file an application for initiation of
‘Corporate Insolvency Resolution Process’ fell for consideration before this Appellate Tribunal in
“Palogix Infrastructure Limited Vs. ICICI Bank Limited”-Company Appeal (AT) (Insol.) No. 30 of
2017. Therein this Appellate Tribunal by judgement dated 20th September, 2017 held :
“32. The 'I&B Code' is a complete Code by itself. The provision of the Power
of Attorney Act, 1882 cannot override the specific provision of a statute which
33. Therefore, we hold that a 'Power of Attorney Holder' is not competent to

file an application on behalf of a 'Financial Creditor' or 'Operational Creditor'
or 'Corporate Applicant'.”
11. In the present case, as the application under Section 9 has been signed and filed by ‘Power of
Attorney holders’ for the said reason also, we hold that the application under Section 9 preferred by the
Respondent-‘Operational Creditor’ was not maintainable.
12. The next plea taken by the learned counsel for the appellants is that the respondent, which is a
foreign company of Spain, has not submitted a copy of any “Certificate from Financial Institutions
maintaining accounts” of the ‘Operational Creditor’ confirming that there is no payment of an ‘Unpaid
Operational Debt’ by the ‘Corporate Debtor’, in terms of Clause (c) of sub-Section (3) of Section 9 of
the I&B Code.
823
by Hon’ble NCLAT
13. From the record, we find that one ‘CaixaBank’, having its Corporate Banking Unit at ‘Paseo De
La Castellana, 7 P1 28046, Madrid’, has given a chart which has been filed by the Respondent, and
which is not recognized as ‘Financial Institution of India’ under the I&B Code.
14. The question whether filing of a copy of certificate from the 'Financial Institution' maintaining
accounts of the 'Operational Creditor' confirming that there is no payment of unpaid operational debt by
the 'Corporate Debtor' as prescribed under clause (c) of subsection (3) of Section 9 of the ‘I & B Code’
is mandatory or directory was considered by this Appellate Tribunal in "Smart timing Steel Ltd. Vs.
National Steel and Agro Industries Ltd." - Company Appeal (AT) (Insol) No. 28 of 2017. The Appellate
Tribunal by its judgement dated 19th May 2017 while held that certificate from the 'Financial
Institution' maintaining accounts of the 'Operational Creditor' confirming that there is no payment of
unpaid operational debt by the 'Corporate Debtor', as prescribed under clause (c) of sub-section (3) of
Section 9 of the 'I & B Code' mandatory, observed and held as follows: -
"11. On perusal of entire Section (3) along with sub-sections and clauses,
inclusive of proviso, it would be crystal clear that, the entire provision of sub-
clause (3) of Section 9 required to be mandatorily followed and it is not empty
statutory formality.
12. Sub-section (2) stipulates filing of an application under Section (1) only
in the form and manner and accompanied with such fees as may be prescribed.
The Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules
2016 (hereinafter referred to as 'Adjudicating Authority Rules 2016' for short)
are also enacted in exercise of the power conferred by Clauses (c), (d), (e), (f) of
subsection 239 read with sections 7, 8, 9 and 10 of the 'I & B Code'. The rules
provide the procedure required to be followed by filing an application by
corporate insolvency resolution process. As per Rule 6 of the 'Adjudicating
Authority' Rules 2016, an operational creditor shall make an application for
initiating the corporate insolvency process under section 9, in Form 5
accompanied with documents and records required therein. As per sub-rule (2)
of Rule 6 it is mandatory again to dispatch a copy of application filed with the
adjudicating authority, by registered post or speed post to the registered office of
the Corporate Debtor.
13. The provisions of sub-section (3) mandates the operational creditor to

furnish copy of invoice demanding payment or demand notice delivered by the
824
by Hon’ble NCLAT
operational creditor to the corporate debtor, an affidavit to the effect that, there
is no notice given by the corporate debtor relating to dispute of unpaid
operational debt, a copy of the certificate from the 'Financial Institutions'
maintaining accounts of the operational creditor confirming that, there is no
payment of an unpaid operational debt by the corporate debtor and such other
information as may be stipulated. Sub-section (5) of section 9 is procedure
required to be followed by Adjudicating Authority. One can say that procedural
part is not mandatory but is directory.

consideration before Hon'ble Supreme Court on numerous occasions. In Manilal
Shah Vs. Sardar Sayed Ahmed (1955) 1 SCR 108, the Hon'ble Apex Court held
that where statute itself provide consequences of breach or non-compliance,
normally the provision has to be regarded as having mandatory in nature.
15. One of the cardinal principles of interpretation of statute is that, the

words of statute must prima facie be given their ordinary meaning, unless of
course, such construction leads to absurdity or unless there is something in the
context or in the object of the statute to the contrary. When the words of statute
are clear, plain and unambiguous, then, the courts are bound to give effect to
that meaning, irrespective of the consequences involved. Normally, the words
used by the legislature themselves declare the legislative intent particularly
where the words of the statute are clear, plain and unambiguous. In such case,
effort must be to give a meaning to each and every word used by the legislature
and it is not sound principle of construction to brush aside words in statute as
being redundant or surplus, and particularly when such words can have proper
application in circumstances conceivable within the contemplation of the statute.
16. For determination of the issue whether a provision is mandatory or not,

it will be desirable to refer to decision of Hon'ble Supreme Court in State of
Mysore Vs. V.K.Kangan (1976)2 SCC 895. In the said case, the Hon'ble Supreme
Court specifically held:
"10. In determining the question whether a provision is mandatory or

directory, one must look into the subject-matter and consider the
importance of the provision disregarded and the relation of that
825
by Hon’ble NCLAT
provision to the general object intended to be secured. No doubt, all laws

are mandatory in the sense they impose the duty to obey on those who
come within its purview. But it does not follow that every departure from
it shall taint the proceedings with a fatal blemish. The determination of
the question whether a provision is mandatory or directory would, in the
ultimate analysis, depend upon the intent of the law-maker. And that has
to be gathered not only from the phraseology of the provision but also by
considering its nature, its design and the consequences which would
follow from construing it in one way or the other.
16. Therefore, it is clear that the word 'shall’ used in sub-section (3)
of section 9 of 'I & B Code' is mandatory, including clause 3 therein."
15. Learned counsel appearing on behalf of the respondent has also not disputed the aforesaid fact
that the Report of M/s. CaixaBank is not recognised and any other record of default has not been
enclosed by the respondent. For the said reason also, the impugned order cannot be upheld.
16. In view of the finding recorded above, we set aside the impugned order dated 10th August, 2017
passed by learned Adjudicating Authority in CP/537/(IB)/CB/2017.
under Section 9 of the I&B Code is dismissed. Learned Adjudicating Authority will now close the
18. Learned Adjudicating Authority will fix the fee of ‘Interim Resolution Professional’, if
appointed, and the appellant company will pay the fees of the Interim Resolution Professional, for the
period he has functioned. The appeal is allowed with aforesaid observation and direction. However, in
the facts and circumstances of the case, there shall be no order as to cost.
826
by Hon’ble NCLAT
NEW DELHI
C.P. (I.B.) No. 216-217/NCLAT/2017
Applicant: VA Tech Wabag Ltd. & Anr.

Vs.
Respondent: Consolidated Construction Consoutium Ltd. & Anr.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Bishwajit Dubey, Learned Advocates
Respondents/Defendant: Mr. M. P. Parthiban and Mr. S. Parthasarthi, Learned Advocates
ORDER
Shri Bishwajit Dubey, advocate appears on behalf of the appellants and sought permission to
withdraw the appeals. Shri M.P. Parthiban, advocate for 1st Respondent appears and has no
objection to the same. The appeal is accordingly dismissed as withdrawn.
827
by Hon’ble NCLAT

NEW DELHI
C.P. (I.B.) No. 199/NCLAT/2017
Applicant: Siddharth Nahata

Director/ Shareholder of Tryst Industries Private Limited
A-713, Sector-19
Noida-201301
Vs.
Respondent: Billets Elektro Werke Pvt. Ltd.
42,1st Floor, Jagat Satguru Industrial Estate,
Off Aarey Road Goregaon East,
Mumbai-400063
Judges/Coram:
Hon'ble Justice Sh. A.I.S. Cheema, Member (J)
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Anish Dayal, Mr. Jaideep Maheshwari, Ms. Rupam Sharma, Mr.
Arjit Pratap Singh and Mr. S.K Sing, Learned Advocates
Respondents/Defendant: Ms. Varsha Banerjee, Mr. Milan Singh Negi and Mr. Kunal Godhwani, Learned
Advocates
ORDER
Hon'ble Justice Sh. A.I.S. Cheema, Member (J)
Heard learned counsel for the appellant as well as the respondent.
The present appeal has been filed in view of the admission of Insolvency proceedings filed under
Section 9 of the Insolvency & Bankruptcy Code, 2016 (Code-In brief) by the Adjudicating Authority-
NCLT, New Delhi Bench in Insolvency Proceeding (IB-257(ND)/ 2017), vide orders dated 8th
September, 2017. The respondent claimed to be an Operational Creditor & initiated the insolvency
resolution process against the appellant (original respondent) Corporate Debtor on the grounds of default.
The respondent claimed outstanding debt of Rs. 33.78 lakhs including of overdue interest.
The respondent had sent Section 8 notice dated 22nd May, 2017 (Annexure A-7) and the
appellant replied raising dispute vide reply dated 7th June, 2017. Reference was made to earlier exchange
828
by Hon’ble NCLAT
of correspondence dated 20th July, 2016 and 3rd August, 2017 and criminal complaint filed by appellant
to show that the amount was yet not due for reasons stated.
When the matter came up before the learned NCLT, parties for both sides were heard but the
learned NCLT did not find the dispute raised by the appellant acceptable and was of the opinion that it
was illusory and without legs to stand upon. For reasons recorded the learned NCLT admitted the
Insolvency Resolution Process.
Now when this appeal has come up, learned counsel for the appellant as well as the respondent
both submit that the matter has been compromised between the Operational Creditor and the Corporate
Debtor and even the necessary payments have been made as well as care has been taken regarding the
payments of the Insolvency Resolution Professional, who has been appointed. Counsel for Appellant
stated that there are no other Creditors there.
A Compromise has taken place would not be material for the decision of this appeal, once the
process has been set into motion. We have to consider this appeal on its own merits.
The learned counsel for the appellant refers to the letter dated 20th July, 2016 (Annexure-3)
which was sent by the respondent claiming dues and the reply which was sent by appellant on 3rd August,
2016, copy of which has been filed. At that time itself the appellants had raised dispute that between the
parties there was an understanding that the appellant would be dealing in the articles received from the
respondent and when the purchase order is executed & payment is received Appellant will pay. Dispute
was raised that in spite of such understanding the respondent had sold articles directly in the area of
operation of the appellant and because of this the stock with Appellant could not be sold & adjustment
was required to be made. It is stated that, appellant had claimed that there was violation of agreement,
principles and ethics of business and violation of terms of dealership contract.
Similar dispute has been raised by the appellant in reply to the Section 8 notice. Learned counsel
for the appellant is submitting that the understanding between parties about the business was violated and
thus dispute had arisen. A prior existing dispute was there before Section 8 notice was sent and thus
according to him the respondent could not have resorted Insolvency Proceeding.
The learned counsel for the respondent submits that there was no written document of dealership
executed. At this stage learned counsel for the appellant points out Para 7(iv) from the counter filed by
respondent where the Respondent admitted contents of Para 7(iv) of the Appeal and clearly admitted that
there was relationship between the appellant and the respondent of dealer and principal.
829
by Hon’ble NCLAT
Looking to the record, we find substance in the arguments of learned counsel for Appellant that
indeed there was a prior existing dispute and the application under Section 9 should not have been
admitted.
In view of the above, the appeal is allowed. The impugned order admitting the Insolvency
Resolution Process is quashed and set aside. The further proceedings in view of the impugned order are
stopped. No orders as to costs.
830
by Hon’ble NCLAT
NEW DELHI
C.P. (I.B.) No. 254/NCLAT/2017
Applicant: Export-Import Bank of India

Vs.
Respondent: Resolution Professional JEKPL Private Limited
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Rajeev Mehra, Senior Advocate with Mr. Ashish Rana and Mr.
Surekh Baxy, Learned Advocates
Respondents/Defendant: Dr. U.K. Chaudhary, Senior Advocate with Mr. Himanshu Vij, Ms. Manisha and
Mr. Sarvesh Kashyap, Learned Advocates
ORDER
In the present case, on hearing the counsel for the parties, we are of the opinion that it is not the stage for
deciding the issues raised in this appeal and leave the question open for decision by the Adjudicating
Authority (National Company Law Tribunal), Allahabad Bench (hereinafter referred to as ‘Adjudicating
Authority’) for the reasons mentioned below.
A ‘Corporate Insolvency Resolution Process’ has been initiated under Section 10 of the Insolvency and
Bankruptcy Code, 2016 (hereinafter referred to as ‘I&B Code’) against the ‘Corporate Debtor’- JEKPL
Private Limited at the instance of the ‘Corporate Applicant’.
After initiation of the ‘Corporate Insolvency Resolution Process’, the Resolution Professional objected
the applicant-Export Import Bank of India (‘Exim Bank’ for short). While the appellant requested to
allow it to continue as a member in the Committee of Creditors, in view of such objection, the appellant-
Exim Bank preferred Company Appeal (AT) (Insolvency) No. 188 of 2017, wherein the following order
as passed by this Appellate Tribunal on 18th September, 2017 :
“3. Having heard learned counsel for the 'Corporate Debtor' and Mr. Rajeev
Mehra, Senior Advocate appearing on behalf of the respondent, while we are of
the view that appeal at the instance of 'Corporate Debtor' is not maintainable,
831
by Hon’ble NCLAT
but make it clear that the Resolution Professional has right to oppose induction
of a third party as a creditor. However, in view of the fact that the Exim Bank has
been provisionally permitted to continue as a member of the Committee of
Creditors and final order is yet to be passed by the Adjudicating Authority,
Allahabad Bench and time has been granted to the contesting party to file
rejoinder, we are not expressing any view at this stage. After hearing the parties,
if the Adjudicating Authority allows Exim Bank to continue as Member of the
Committee of Creditors, it will be open to the Resolution professional to
challenge the final order before this Appellate Tribunal.
4. It is expected that the Adjudicating Authority will decide the question of

continuity of 'Exim Bank' as a member of the Committee of Creditors either way
and will not continue with interim arrangement for days together. An early
decision be taken on production of copy of this order.”
After the matter was remitted to the Adjudicating Authority, the issue was not decided by the
Adjudicating Authority in terms with the order of the Appellate Tribunal and the Adjudicating Authority
remitted the matter to the Resolution Professional and Committee of Creditors to decide the application of
the appellant, which was supposed to be decided by the Adjudicating Authority. For the said reason, the
appellant-Exim Bank has challenged the order dated 27th October, 2017 whereby the Resolution
Professional and Committee of Creditors have been asked to take collective decision.
Having heard Shri Rajeev Mehra, learned senior counsel for the appellant and Dr. U.K.
Chaudhary, learned senior counsel appearing on behalf of the Resolution Professional, we are of the view
that the final decision in terms of the order of this Appellate Tribunal dated 18th September, 2017 is to be
taken by the Adjudicating Authority, which cannot abdicate its power by asking other authority to decide
the question. However, it is always open to the Adjudicating Authority to take opinion from the
Resolution Professional or the Committee of Creditors.
For the reasons aforesaid, while we observe that the report, if any, filed by the Resolution
Professional or the Committee of Creditors is not binding on the Adjudicating Authority or the appellant
or any other creditor, direct the Adjudicating Authority to decide the question as ordered by this Appellate
Tribunal on 18th September, 2017 about the continuity of the Exim Bank as a member of the Committee
of Creditors, immediately, preferably within three weeks, uninfluenced by the opinion if any submitted by
the Resolution Professional and the Committee of Creditors.
832
by Hon’ble NCLAT
We leave all the questions for determination by the Adjudicating Authority at the first instance
and in case of any adverse decision, it will be open to the aggrieved person to move before this Appellate
Tribunal.
The appeal stands disposed of with the aforesaid observations and directions. However, in the
833
by Hon’ble NCLAT

NEW DELHI
C.P. (I.B.) No. 138/NCLAT/2017
Applicant: Rolex Cycles Pvt. Ltd.

Vs.
Respondent: Hero Steels Ltd.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Arun Francis, Learned Advocates
Respondents/Defendant: Mr. Sameer Rastogi and Ms. Poona Singh, Learned Advocates
ORDER
In view of the decision of the Hon’ble Supreme Court in “Innoventive Industries Ltd. Vs. ICICI
Bank and Ors. (Civil Appeal Nos.8337 – 8338 of 2017), the appellant has filed an application for
substitution of the one of the aggrieved person namely Mr. Ashwini Kumar Prabhakar,
Director/Shareholder of the company (‘Corporate Debtor’) as appellant.
Having heard the learned counsel for the appellant and the respondent the application of
substitution of name of Mr. Ashwini Kumar Prabhakar in place of original appellant – Corporate Debtor
is allowed. Let the name of Mr Ashwini Kumar Prabhakar’ be substituted as ‘Appellant’.
‘Rolex Cycles Pvt. Ltd. (‘Corporate Debtor’) be transposed as 2nd Respondent, through the
I.A. No. 761 of 2017 stands disposed of.
834
by Hon’ble NCLAT
NEW DELHI
C.P. (I.B.) No. 138/NCLAT/2017
Applicant: Mr. Ashwini Kumar Prabhakar

Vs.
Respondent: Hero Steels Ltd. & Rolex Cycles Pvt. Ltd.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Arun Francis, Learned Advocates
Respondents/Defendant: Mr. Sameer Rastogi and Ms. Poona Singh, Learned Advocates
ORDER
This appeal has been preferred by the appellant-Director/Shareholder (aggrieved person) against
the order dated 13th July, 2017 passed by the Adjudicating Authority (National Company law Tribunal),
Chandigarh Bench, Chandigarh in CP(IB) No. 37/Chd/Pb/2017 whereby and whereunder the application
preferred by the respondent – Operational Creditor under Section 9 of the Insolvency and Bankruptcy
Code, 2016 (hereinafter referred to as the ‘I & B Code’) for initiation of ‘Corporate Insolvency
Resolution Process’ has been admitted, order of moratorium has been declared and other order in terms of
the I & B Code has been issued and the name of an Interim Resolution Professional (IRP) has been
invited.
2. When the matter was taken up, learned counsel for the appellant
pleaded that the demand notice under sub-Section (1) of Section 8 was not issued in accordance with law
and demand notice/invoices were not properly filled up.
3. On notice, the respondent(s) have appeared and enclosing the copy of the notice under sub-
section(1) of Section (8) issued in Form 3 dated 20th April, 2017. It is submitted that Form 3 was
properly filled up showing the total amount of Rs.2,49,27,324 (Rupees Two crores forty-nine lakhs
twenty-seven thousands and three hundred twenty four) towards unpaid invoices plus interest as shown
therein. Learned counsel appearing on behalf of the appellant submits that the invoices are in the proper
835
by Hon’ble NCLAT
form and number of documents have been shown therein the including amount from 31.12.2014 to
15.04.2017 etc. However, we are not convinced with the arguments of the appellant, as we find that the
demand notice under sub-section (1) of Section 8 in Form 3 is complete. There is nothing on record to
suggest that there is any error in the notice issued under sub-section (1) of Section 8 of I & B Code. The
notice and application under Section 9 being in order and complete, the Adjudicating Authority has
admitted the application. In the circumstances, no interference is called for. The appeal is dismissed. No
cost.
836
by Hon’ble NCLAT
NEW DELHI
C.P. (I.B.) No. 182/NCLAT/2017
Applicant: Rajesh Arora

Vs.
Respondent: M Y Agro Pvt. Ltd.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Harish Malhotra, Senior Advocate assisted by Mr. Simran Jyot
Singh and Mr. Ruchin Middha, Learned Advocates
Respondents/Defendant: Mr. Ashok Kumar Jumesh and Mr. Mithlesh Kr. Singh, Learned Advocates
ORDER
This appeal has been preferred by Mr. Rajesh Arora, Director of Amira Pure Foods Private Limited
(Corporate Debtor) against order dated 24th August, 2017 passed by the Adjudicating Authority (National
Company Law Tribunal), New Delhi Bench, New Delhi whereby and whereunder the application
preferred by the respondent (Operational Creditor) under Section 9 of the Insolvency and Bankruptcy
Code, 2016 (hereinafter referred to as the ‘I & B Code’) has been admitted, order of moratorium has been
passed, Insolvency Resolution Professional has been appointed and orders have been passed in terms of
the I & B code.
2. As the appeal is being decided on a short question of law, it is not necessary to notice all the facts
except the relevant one.
3. The respondent (Operational Creditor) issued a demand notice under subsection (1) of Section 8
of the I & B Code on the Corporate Debtor on 5th June, 2017. The Corporate Debtor through an advocate
replied on 28th June, 2017 and disputed the claim. Thereafter, the respondent – Operational Creditor filed
an application under Section 9 on 11th July, 2017 which has been admitted by the impugned order dated
24th August, 2017.
837
by Hon’ble NCLAT
4. Learned counsel for the appellant submits that the Corporate Debtor issued cheques in favour of
the Operational Creditor but they bounced; thereafter after negotiation the admitted dues has been paid to
a third party as per wish and intimation given by the Operation Creditor. The amount has been paid by
R.T.G.S. However, aforesaid plea taken by appellant is disputed by the learned counsel for the respondent
(Operational Creditor). According to him no meeting was held and therefore the question of payment of
debt to third party does not arise.
5. Learned counsel for the appellant next contended that the notice under sub-section (1) of Section
8 was issued by the Operational Creditor in Form 3 was incomplete and no proper opportunity was given
to the respondent to file reply.
6. Learned counsel appearing on behalf of the appellant also referred to the application preferred by
the Operational Creditor under Section 9 in Form 5 (at page 57) to suggest that the said application is also
incomplete and therefore the Adjudicating Authority should have rejected the application.
7. Learned counsel for the respondent submits that the returned envelops were produced before the
Adjudicating authority which was opened there and found all the documents were enclosed therein. The
aforesaid stand taken by respondent makes it clear that the notices sent to the Corporate Debtor was not
served and returned unserved.
8. Learned counsel for the appellant submits that Form 3 dated 05.06.2017, whereunder the demand
notice under sub-section (1) of Section 8 was issued therein list of documents were mentioned which were
required to be attached but no such documents were attached. Therefore, according to counsel for the
appellant the notice under sub-section (1) of Section 8 was incomplete and therefore the application under
Section 9 was not maintainable.
9. However, from the reply dated 28th June, 2017 (at page 138) we find that the Corporate Debtor
has taken a specific plea that the notice under sub-section (1) of Section 8 was served on Corporate
Debtor was not complete, relevant portion of which reads as follows:
“That the notice as served is not complete as there is no enclosure in

tabular form enclosed with the notice demonstrating the working for computation
of default; although the Enclosure has been referred in the averments of Notice
in 2nd Para, 2nd Row and 3rd Column of notice. further in devoid of said
enclosure it is incomprehensible on what basis M Y Agro has computed the
amount of alleged debt.”
838
by Hon’ble NCLAT
10. In the said letter it is also mentioned that against the head ‘Computation of Claim is Baseless’ as
there is no debt due from the Corporate Debtor in terms of the settlement and consequential there is no
default, relevant portion of which is quoted below:
“III. Computation of Claim Baseless
That M Y Agro has computed the Claim adding along with the alleged
Outstanding Debt an interest of 18%. That as, already been stated, here is no
debt due from Our Client Company in terms of settlement and consequently there
is no default. Hence there is no case of interest. Without prejudice to aforesaid it
is further submitted that the exercise of your Client to demand interest on 18% is
erroneous as there was no covenant to pay interest.”
11. There is nothing on record to suggest that “Operational Creditor” served the documents alongwith
notice under Section 8(1). Therefore, the oral submissions made on behalf of respondents cannot be
accepted.
12. It is also curious to notice that in Form 5 filled up by the Operation Creditor which is the format
of application under Section 9 therein, with regard to ‘Statutory demand notice under Section 8’, the
following plea has been taken:
“Statutory demand notice under section 8 of Insolvency & Bankruptcy

Code, 2016 was issued by OC 10th June, 2017 to CD at its registered office and
all its Directors and KMP (Copy of Demand notice in form – 3along with copy of
Form -4 and proof of service attached hereto as Annexure F).
All the notices issued to CD at Registered office, Corporate office and

directors at their address available on website of Ministry of Corporate Affairs
came back as undelivered to Operational Creditor (except two notices issued to –
their Company Secretary and ex-director Mr. Shyam Poddar shown as delivered.
(Copy of the delivery status of speed post attached as Annexure F).”
13. From the statement made by the ‘Operational Creditor’ it is clear that the demand notice issued to
the Corporate Debtor at its registered office and to the Director(s) were returned unserved. Notices were
served only to the Company Secretary and to one ex-Director, Mr. Shyam Poddar. Though such specific
statement has been made by the Operational Creditor in the application under Section 9, the Adjudicating
Authority ignoring the same and without verifying the other facts admitted the case.
839
by Hon’ble NCLAT
14. In view of the plea taken by the appellant and the facts as narrated above, we hold that notice
under sub-section(1) of Section 8 in form 3 was incomplete and the application under Section 9 was not
maintainable. For the reasons aforesaid, we set aside the order dated 24th August, 2017 passed in C.P.
No. (IB)- 211(ND)/2017.
Resolution Professional’ or freezing of account, if any, and all other order (s) passed by Adjudicating
and the Corporate Debtor will pay the fees of the Interim Resolution Professional, for the period he has
840
by Hon’ble NCLAT
NEW DELHI
C.P. (I.B.) No. 184/NCLAT/2017
Applicant: Goa Antibiotics & Pharmaceuticals Ltd. and Anr.

Vs.
Respondent: Lark Chemicals Pvt. Ltd.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr Pallav Shishodia, Senior advocate assisted by Mr. Anand Sukumar
and Mr. S. Sukumaran, Learned Advocates
Respondents/Defendant: Mr. Sanjay Kumar Ruia and Mr. Vishal Jain, C.A.
ORDER
The respondent – Lark Chemicals Pvt. Limited (Operational Creditor)filed an application under
Section 9 of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as the ‘I & B Code’) and
sought the ‘Corporate Insolvency Resolution Process’ against the appellant – Goa Antibiotics and
Pharmaceuticals Limited (Corporate Debtor) on the ground that the Corporate Debtor committed default
on 25th November, 1998 onwards in repayment of principal amount of Rs. 1,11,30,063 along with
interest of Rs.4,38,00,611/- calculated @ 30% per annum till 10th May, 2017 and also claiming further
interest for the period from 11th May, 2017 onwards at the same rate.
The Adjudicating Authority by the impugned order dated 14th August, 2017 after hearing the
parties admitted the application, declared moratorium and passed directions in terms of the I & B Code
requested the Insolvency and Bankruptcy Board of India (IBBI) to recommend the name of Interim
Resolution Professional for his appointment. Being aggrieved this appeal has been preferred by the
Corporate Debtor along with another aggrieved person.
2. Learned Senior counsel appearing for the appellant submits that demand notice under sub-
section(1) of Section 8 was not issued by the Operational Creditor but by a legal firm ‘Dhruve Liladhar &
Co., Advocates, Solicitors and Notary’. It is further submitted that the said demand notice in Form 3 or
Form 4 the legal firm has not mentioned its position and relation with the Operational Creditor.
841
by Hon’ble NCLAT
3. Learned counsel appearing on behalf of the respondent – Operational Creditor relied on the
extract from the minutes of the meeting of the Board of Directors of M/s. Lark Chemicals Pvt. Ltd. as
held on 4th April, 2017 and submitted that by the said resolution the company authorised M/s. Dhruve
Liladhar & Co., Advocates, Solicitors and Notary to send the demand notice on behalf of the company
under the I & B Code, 2016 to the appellant – M/s. Goa Antibiotics and Pharmaceuticals.
4. We have heard the learned counsel for the parties and perused the record.
Similar issue fell for consideration before this Appellate Tribunal in Uttam Galve Steels Limited
v. DF Deutsche Forfait AG & Anr. – Company Appeal (AT) (Insolvency) 39 of 2017. In the said case the
Appellate Tribunal by its judgment dated 28th July, 2017 held as follows:

28. Sub-rule (1) of Rule 5 of the ‘Adjudicating Authority Rules’ mandates the


842
by Hon’ble NCLAT
Yours sincerely,

30. From bare perusal of Form-3 and Form-4, read with sub-rule (1) of Rule
5 and Section 8 of the I&B Code, it is clear that an Operational Creditor can
is also required to state “his position with or in relation to the Operational
Creditor”, meaning thereby the person authorised by Operational Creditor must
person can apply.
above.

843
by Hon’ble NCLAT

Section 8.
the I&B Code.”
5. The respondent has enclosed the extract from the Minutes of the Meeting of the Board of
Directors held on 4th April, 2017, as quoted below:
“LARK CHEMICALS PVT. LTD.
Radha Bhuvan, 3rd Floor, 121 Nagindas Master Road, Fort Mumbai – 400 001
EXTRACT FROM THE MINUTES OF THE MEETING OF THE

BOARD OF DIRECTORS OF M/S. LARK CHEMICALS PVT.
LTD. HELD ON 4th APRIL 2017
The Board of Directors discussed in detail the long pending outstanding dues
recoverable from M/s. Goa antibiotics & Pharmaceuticals Ltd., Goa. It was
further discussed that since said M/s. Goa antibiotics & Pharmaceuticals Ltd.
was discharged from the purview of SICA/BIFR vide order dated 02/06/2014
passed by the BIFR, the company intends to initiate insolvency Resolution
process under the Insolvency and Bankruptcy Code 2016 and sought permission
from the board to send demand notice to M/s. goa Antibiotics & Pharmaceuticals
Ltd. under Insolvency and Bankruptcy Code 2016.
After due discussion, the Board approved the proposal and authorised the
company to initiate steps under the Insolvency and Bankruptcy Code 2016 and
also appointed M/s. DHRUVE LILADHAR & CO., Advocates, Solicitors &
Notary to send demand notice on behalf of the Company and passed the
following resolution.
844
by Hon’ble NCLAT
“RESOLVED that Company be and is hereby authorised M/s. DHRUVE
LILADHAR & CO.,Advocates, Solicitors & Notary to send demand notice on
behalf of the Company under the Insolvency and Bankruptcy Code, 2016 to
M/s. Goa Antibiotics & Pharmaceuticals Ltd., Goa”.
Sd/-
CHAIRMAN”
6. In the present case as the demand notice has been issued by a legal firm and there is nothing on
record to suggest that the said legal firm holds any position with or in relation to the respondent – Lark
Chemicals Pvt. Ltd. and the demand notice has not been issued in mandatory Form 3 or Form 4, as
stipulated under Rule 5 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules,
2016, we hold that the initiation of resolution process at the instance of respondent cannot be upheld. The
case of the appellant being covered by the decision of the “Uttam Galve Steels Limited (Supra”), we have
no other option but to set aside the impugned order.
7. This apart, as we find that the respondent in their application under Section 9 mentioned that the
Corporate Debtor committed default from 25.11.1998 onwards, as noticed by the Adjudicating Authority
in the first paragraph of the impugned order dated 14th August, 2017. In absence of explanation of delay,
the resolution proceeding cannot proceed. For the reasons aforesaid, we set aside the impugned order
passed by the Adjudicating Authority, Mumbai Bench in C.P. No. 1066/2017.
Professional’, declaring moratorium, freezing of account, , and all other order(s) passed by Adjudicating
including the advertisement published in the newspaper calling for applications all such orders and
actions are declared illegal and are set aside. The application preferred by Respondent under Section 9 of
the I&B Code, 2016 is dismissed. Learned Adjudicating Authority will now close the proceeding. The
appellant company is released from all the rigour of law and is allowed to function independently through
its Board of Directors from immediate effect.
845
by Hon’ble NCLAT

NEW DELHI
C.P. (I.B.) No. 47/NCLAT/2017
Applicant: M/s. Speculum Plast Pvt. Ltd.

Vs.
Respondent: PTC Techno Pvt. Ltd.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Shubho Jana & Ms. Kanti Mohan Rustagi, Learned Advocates
Respondents/Defendant: Mr. Dhruv Gupta, Learned Advocate
ORDER

NEW DELHI
C.P. (I.B.) No. 76/NCLAT/2017
Applicant: Parag Gupta & Associates

Vs.
Respondent: B.K. Educational Services Pvt. Ltd.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Mukul K. Gupta & Mr. N.K. Singh, Learned Advocates
Respondents/Defendant: Mr. Ruchi Khurana & Mr. Pertpal Singh, Learned Advocate
ORDER
846
by Hon’ble NCLAT
NEW DELHI
C.P. (I.B.) No. 78/NCLAT/2017
Applicant: Ashlay Infrastructure Pvt. Ltd.

Vs.
Respondent: LDS Engineers Pvt. Ltd.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Ms. Jhankar Rastogi & Mr. Navodaya Singh, Learned Advocates
Respondents/Defendant: Mr. H.D. Arya, Learned Advocate
ORDER
In all these appeals as common question of law is involved, they were heard together and are
being disposed of by this common judgment.
2. The question that arises for determination in these appeals is: -
Whether Limitation Act, 1963 is applicable for triggering `Corporate Insolvency Resolution
Process' under Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as "I&B Code")?
3. According to Learned Counsel for the appellant(s) Ì&B Code' is a `Special Act' enacted by
Parliament and is a 'self-contained code' and in absence of any specific provision made therein the
Limitation Act, 1963 is not applicable for triggering 'Corporate Insolvency Resolution Process'.
4. To substantiate the arguments, Learned Counsel for the appellant(s) relied on the report of the
'Bankruptcy Law Reforms Committee' to suggest that the legislative intent behind the formulation of the
185B Code' is to formulate a 'single law', independent of any other law including the Limitation Act.
5. On the other hand, according to learned counsel for the Respondents-`Corporate Debtor(s)' the
Limitation Act, 1963 is applicable for triggering `Corporate Insolvency Resolution Process' under 'I&B
Code' which is to be read in conjunction with the provisions of the Companies Act, 2013 and other Acts,
as far as they are applicable.
847
by Hon’ble NCLAT
6. It was submitted that the 'Adjudicating Authority', as defined in subsection (1) ' of Section 5 of
the Ì&B Code' being 'National Company Law Tribunal' as constituted under Section 408 of the
Companies Act, 2013, the provisions of Chapter XXVII of the Companies Act, 2013 including Section
433 of the said Act are applicable as it is not in conflict with the provisions of the Ì86B Code'.
7. Further, according to learned counsel for the 'Corporate Debtor(s)', as the Ì8sB Code' nowhere
specifically bars the applicability of the Companies Act, 2013, Section 433 of the Companies Act, 2013
is applicable to MB Code'.
8. Referring to Sections 424, 425, 433, 434 and 430 of the Companies Act, 2013, it was contended
that the aforesaid provisions necessarily imply that the law of limitation and procedure of the Tribunal are
applicable to the `18513 Code'.
9. On merit, Learned Counsel for the 'Corporate Debtor(s)' submitted that all the application in
question, having filed beyond the period of three years, the application for triggering 'Corporate
Insolvency Resolution Process' were not maintainable.
10. Mr. A.S. Chandhiok, Learned Senior Counsel, who assisted the Court as Amicus Curiae,
submitted that the Doctrine of Limitation and Prescription is based on two broad considerations.
First, there is a presumption that the right not exercised for a long time becomes non-existent.
The second is that the rights of debt or right on property or rights in general should not be in a state of
constant uncertainty, doubt and suspense.
Reliance was placed on Salmond: Jurisprudence 12th Ed. Page 438 and 439, and observation
of Hon'ble Abbott CJ in Battley v. Faulkner 1(1820) 3 B & Aid 288].
11. It was submitted that the above principles were also recognised by the Hon'ble Supreme Court of
India in "Rajinder Singh v. Santa Singh, AIR 1973 SC 2537".
12. It was further submitted that the object of fixing time-limit for litigation is based on Public
Policy, fixing a life span of legal remedies for the purpose of general welfare as held by Hon'ble Supreme
Court in "N. Balakrishnan v. M.A. Krishnamurthy, (1998) 7 SCC 123".
13. According to Learned Amicus Curiae, the Limitation Act was enacted in the year 1963, when the
provisions relating to all kinds of winding up of the Companies were governed by the Companies Act,
1956 wherein the question of limitation arose at two stages i.e.
(i) When winding up petition was presented before the Hon'ble High Court, and
848
by Hon’ble NCLAT
(ii) When the creditor presented its claim against the company in winding up before the
Official Liquidator.
14. It was contended that it is a settled principle of law, that bar of limitation applied to the winding
up petitions which used to be presented before the Hon'ble High Court and a creditor is not entitled to file
a winding up petition based on a debt, if the debt is, otherwise time-barred.
15. Learned Amicus Curiae referred to Section 3 of Limitation Act, 1963 and submitted that the bar
of limitation would apply to a claim filed by a creditor before the Official Liquidator attached to the
Hon'ble High Court in terms of Companies Act, 1956, though the Official Liquidator is not a Court or a
Judicial Tribunal or Quasi-Judicial Tribunal, but an executive appointed and authority recognized under
the Companies Act, 1956. Such Òfficial Liquidator' merely invites claims and submits report before the
Hon'ble High Court.
16. According to him now under the Code' the Insolvency Professional takes the position of the
'Official Liquidator', but with greater role to play, than the 'Official Liquidator'.
17. Learned Amicus Curiae also relied on Section 433 of the Companies Act, which provides that the
provision of Limitation Act, 1963 shall, as far as may be, apply to proceedings or appeals before the
Tribunal or the Appellate Tribunal as the case may be. It was also submitted that the Limitation Act, 1963
is also applicable for 'Corporate Insolvency Resolution Process'.
18. Learned Amicus Curiae placing reliance on sub-section (6) of Section 60 of the cI85B Code'
submitted that the said provision makes it clear that the Limitation Act, 1963 is applicable to the
proceedings under Ì&B Code'.
19. It was further submitted that the legislature in sub-section (5) of Section 60 has not used the
expression 'Adjudicating Authority', but retained the word 'National Company Law Tribunal' which also
clears the intent of the legislature that Section 433 of the Companies Act, 2013 is applicable for
triggering the 'Corporate Insolvency Resolution Process' under Sections 7 or 9 and 10 of the Ì&B Code'.
Reliance was also placed on definition of 'Adjudicating Authority' as defined under sub-section
(1) of Section 5 of the '18513 Code' which means `National Company Law Tribunal' constituted under
Section 408 of the Companies Act, 2013:
20. According to Learned Senior Counsel, even if it is accepted that 'MO Code' is 'self-contained
Code', unless it expressly bars the provision(s), the other provisions can be made applicable. Reliance
was placed on Hon'ble Supreme Court decision in "Girnar Traders (3) v. State of Maharashtra & Ors.
(2011) 3 SCC 1", wherein two legislations fell for consideration before the Apex Court, namely the
849
by Hon’ble NCLAT
'Maharashtra Regional and Town Planning Act, 1966 (MRTP Act)', and the 'Land Acquisition Act, 1894'.
The appellant in the said case had urged that the provisions of the Land Acquisition Act would mutatis
mutandis apply to an acquisition under the MRTP Act. The respondent had, in contradiction, taken plea
that MRTP Act was a 'self-contained Code' in itself and as such the provisions of Land Acquisition Act
could not be referred to. In the said case, the Hon'ble Supreme Court considering the aforesaid question
raised by the parties held: -
"69. For an Act to be a "self-contained code", it is required to be shown that it is

a complete legislation for the purpose for which it is enacted. The provisions of
the MRTP Act relate to preparation, submission and sanction of approval of
different plans by the authorities concerned which are aimed at achieving the
object of planned development in contradistinction to , haphazard development.
An owner/ person interested in the land and who wishes to object to the plans at
the appropriate stage a self-contained adjudicatory machinery has been spelt out
in the MRTP Act. Even the remedy of appeal is available under the MRTP Act
with a complete chapter being devoted to acquisition of land for the planned
development. Providing adjudicatory mechanism is one of the most important
facets of deciding whether a particular statute is a "complete code" in itself or
not."
21. We have noticed the rival contentions, the relevant provisions of law and decisions, as referred to
above.
22. For determination of the issue, it is to be noticed as to whether Ì&B Code' is a 'self- contained
Code' or not.
In `M/s. Innoventive Industries Ltd v. ICICI Bank & Anr', 2017 SCC Online SC 1025', the
Hon'ble Supreme Court noticed the statement of objects and reasons in passing the `186B Code' based on
various reports, most important of which the report of Bankruptcy Law Reforms Committee of
November, 2015, and observed: -
"13. One of the important objectives of the Code is to bring the insolvency law in
India under a single unified umbrella with the object of speeding up of the
insolvency process. As per the data available with the World Bank in 2016,
insolvency resolution in India took 4.3 years on an average, which was much
higher when compared with the United Kingdom (1 year), USA (1.5 years) and.
South Africa (2 years). The World Bank's Ease of Doing Business Index, 2015,
850
by Hon’ble NCLAT
ranked India as country number 135 out of 190 countries on the ease of resolving
insolvency based on various indicia."
23. In paragraph 16 of the said judgment, the Hon'ble Supreme Court noticed the Bankruptcy Law
Reforms Committee Report of November, 2015 and the 'key economic question' in the Bankruptcy
Process highlighted by Bankruptcy Law Reforms Committee, as quoted below: -
"The key economic question in the bankruptcy process When a firm (referred to
as the corporate debtor in the draft law) defaults, the question arises about what
is to be done. Many possibilities can be envisioned. One possibility is to take the
firm into liquidation. Another possibility is to negotiate a debt restructuring,
where the creditors accept a reduction of debt on an NPV basis, and hope that
the negotiated value exceeds the liquidation value. Another possibility is to sell
the firm as a going concern and use the proceeds to pay creditors. Many hybrid
structures of these broad categories can be envisioned.
The Committee believes that there is only one correct forum for evaluating such
possibilities, and making a decision: a creditors committee, where all financial
creditors have votes in proportion to the magnitude of debt that they hold. In the
past, laws in India have brought arms of the government (legislature, executive
or judicial-Li) into this question. This has been strictly avoided by the
Committee. The appropriate disposition of a defaulting firm is a business
decision, and only the creditors should make it."
XXX XXX XXX XXX
"Speed is of essence
Speed is of essence for the working of the bankruptcy code, for two reasons.
First, while the 'calm period' can help keep an organisation afloat, without the
full clarity of ownership and control, significant decisions cannot be made.
Without effective leadership, the firm will tend to atrophy and fail. The longer the
delay, the more likely it is that liquidation will be the only answer. Second, the
liquidation value tends to go down with time as many assets suffer from a high
economic rate of depreciation.
From the viewpoint of creditors, a good realisation can generally be obtained if

the firm is sold as a going concern. Hence, when delays induce liquidation, there
is value destruction. Further, even in liquidation, the realisation is lower when
851
by Hon’ble NCLAT
there are delays. Hence, delays cause value destruction. Thus, achieving a high
recovery rate is primarily about identifying and combating the sources of delay."
XXX XXX XXX XXX
"The role that insolvency and bankruptcy plays in debt financing
Creditors put money into debt investments today in return for the promise of
fixed future cash flows. But the returns expected on these investments are still
uncertain because at the time of repayment, the seller (debtor) may make
repayments as promised, or he may default and does not make the payment.
When this happens, the debtor is considered insolvent. Other than cases of
outright fraud, the debtor may be insolvent because of
 Financial failure - a persistent mismatch between payments by the enterprise and

receivables into the enterprise, even though the business model is generating
revenues, or
 Business failure - which is a breakdown in the business model of the enterprise,
and it is unable to generate sufficient revenues to meet payments.
Often, an enterprise may be a successful business model while still failing to
repay its creditors. A sound bankruptcy process is one that helps creditors and
debtors realise and agree on whether the entity is facing financial failure and
business failure. This is important to allow both parties to realise the maximum
value of the business in the insolvency."
XXX XXX XXX XXX
"Control of a company is not divine right. When a firm defaults on its debt,
control of the company should shift to the creditors. In the absence of swift and
decisive mechanisms for achieving this, management teams and shareholders
retain control after default. Bankruptcy law must address this."
24. In the said decision of Hon'ble Supreme Court the 'Principles driving the design' the new
Insolvency and Bankruptcy Resolution framework has been noticed as quoted below: -
"Principles driving the design
The Committee chose the following principles to design the new
insolvency and bankruptcy resolution framework:
I. The Code will facilitate the assessment of viability of the enterprise at a
very early stage.
852
by Hon’ble NCLAT
1. The law must explicitly state that the viability of the enterprise is a
matter of business, and that matters of business can only be negotiated between
creditors and debtor. While viability is assessed as a negotiation between
creditors and debtor, the final decision has to be an agreement among creditors
who are the financiers willing to bear the loss in the insolvency.
2. The legislature and the courts must control the process of resolution, but
not be burdened to make business decisions.
3. The law must set up a calm period for insolvency resolution where the
debtor can negotiate in the assessment of viability without fear of debt recovery
enforcement by creditors.
4. The law must appoint a resolution professional as the manager of the
resolution period, so that the creditors can negotiate the assessment of viability
with the confidence that the debtors will not take any action to erode the value of
the enterprise. The professional will have the power and responsibility to monitor
and manage the operations and assets of the enterprise. The professional will
manage the resolution process of negotiation to ensure balance of power
between the creditors and debtor, and protect the rights of all creditors. The
professional will ensure the reduction of asymmetry of information between
creditors and debtor in the resolution process.
II. The Code will enable symmetry of information between creditors and
debtors.
5. The law must ensure that information that is essential for the insolvency
and the bankruptcy resolution process is created and available when it is
required.
6. The law must ensure that access to this information is made available to
all creditors to the enterprise, either directly or through the regulated
professional.
7. The law must enable access to this information to third parties who can
participate in the resolution process, through the regulated professional.
III. The Code will ensure a time-bound process to better preserve economic
value.
8. The law must ensure that time value of money is preserved, and that
delaying tactics in these negotiations will not extend the time set for negotiations
at the start.
853
by Hon’ble NCLAT

9. The law must ensure that all key stakeholders will participate to
collectively assess viability. The law must ensure that all creditors who have the
capability and the willingness to restructure their liabilities must be part of the
negotiation process. The liabilities of all creditors who are not part of the
negotiation process must also be met in any negotiated solution.
10. The law must be impartial to the type of creditor in counting their weight
in the vote on the final solution in resolving insolvency.
VI. The Code must ensure that, when the negotiations fail to establish
viability, the outcome of bankruptcy must be binding.
11. The law must order the liquidation of an enterprise which has been found
unviable. This outcome of the negotiations should be protected against all
appeals other than for very exceptional cases.
VII. The Code must ensure clarity of priority, and that the rights of all
stakeholders are upheld in resolving bankruptcy.
12. The law must clearly lay out the priority of distributions in bankruptcy to
all stakeholders. The priority must be designed so as to incentivise all
stakeholders to participate in the cycle of building enterprises with confidence.
13. While the law must incentivise collective action in resolving bankruptcy,
there must be a greater flexibility to allow individual action in resolution and
recovery during bankruptcy compared with the phase of insolvency resolution."
25. The aforesaid 'principles driving the design' shows that the Code has been framed to facilitate the
assessment of viability of the enterprise at a very early stage; to enable symmetry of information between
creditors and debtors; to ensure a time-bound process to better preserve economic value; to ensure a
collective process; to respect the rights of all creditors equally; to ensure that when the negotiations fail to
establish viability; the outcome of bankruptcy must be binding and to ensure clarity of priority, and that
the rights of all stakeholders are upheld in resolving bankruptcy.
26. The Hon'ble Supreme Court in `M/s. Innoventive Industries Ltd. Vs. ICICI Bank & Anr. 2017
SCC OnLine SC 1025" referring to different provisions of the Ì&B Code', observed:
"59. The Insolvency and Bankruptcy Code; 2016 is an Act to consolidate and
amend the laws relating to reorganization and insolvency resolution, inter alia of
854
by Hon’ble NCLAT
corporate persons. Insofar as corporate persons are concerned, amendments are
made to the following enactments by Sections 249 to 252 and 255 ........."
The Hon'ble Supreme Court further held: -
"60 It is settled law that a consolidating and amending act like the present
Central enactment forms a code complete in itself and is exhaustive of the
matters dealt with therein........."
The Hon'ble Supreme Court further proceeded to hold: -
"63 There can be no doubt, therefore, that the Code is a Parliamentary law
that is an exhaustive code on the subject matter of insolvency in relation to
corporate entities, and is made under Entry 9, List III in the 7th Schedule which
reads as under:
"9. Bankruptcy and insolvency"
27. Thereby it is clear that the `186B Code' is complete code in itself.
28. Limitation Act, 1963 is the general legislation on the law of limitation. Section 3 prescribes 'bar
of limitation', as quoted below:
"3. Bar of limitation.— (1) Subject to the provisions contained in sections 4 to

24 (inclusive), every suit instituted, appeal preferred, and application made after
the prescribed period shall be dismissed, although limitation has not been set up
as a defence. (2) For the purposes of this Act— (2) For the purposes of this
Act—"
(a) a suit is instituted-
(i) in an ordinary case, when the plaint is presented to the proper officer;
(ii) in the case of a pauper, when his application for leave to sue as a pauper
is made; and
(iii) in the case of a claim against a company which is being wound up by the
court, when the claimant first sends in his claim to the official liquidator;
(b) any claim by way of a set off or a counter claim, shall be treated as a separate
suit and shall be deemed to have been instituted—
(i) in the case of a set off, on the same date as the suit in which the set off is
pleaded;
855
by Hon’ble NCLAT
(ii) in the case of a counter claim, on the date on which the counter claim is
made in court;
(c) an application by notice of motion in a High Court is made when the

application is presented to the proper officer of that court."
29. In view of aforesaid provisions in `Mukri Gopalan v. Cheppilat Puthanpuravil Aboobacker (1995)
5 SCC 5', the Hon'ble Supreme Court examined the question whether Limitation Act, 1963 will apply to
the Kerala Buildings (Lease and Rent) Control Act, 1965. Though, the Court noticed that the Act
prescribes a period of limitation, which is different from the period of limitation under the Limitation Act,
1963, in absence of any exclusion of Sections 4 to 24 of the Limitation Act 1963, the Hon'ble Supreme
Court held that those Sections 4 to 24 of Limitation Act, 1963 shall be applicable to the Kerala Buildings
(Lease and Rent) Control Act, 1965.
30. However, in liukumdev Narain Yadav v. Lalit Narain Mishra (1974) 2 SCC 133', a three Judges
Bench of the Hon'ble Supreme Court, while examining the question as to whether the Limitation Act,
1963 would be applicable to the provisions of Representation of People Act, held as under:
"17....... but what we have to see is whether the scheme of the special law, that is
in this case the Act, and the nature ' of the remedy provided therein are such that
the Legislature intended it to be a complete code by itself which alone should
govern the several matters provided by it. If on an examination of the relevant
provisions it is clear that the provisions of the Limitation Act are necessarily
excluded, then the benefits conferred therein cannot be called in aid to
supplement the provisions of the Act. In our view, even in a case where the
special law does not exclude the provisions of Sections 4 to 24 of the Limitation
Act by an express reference, it would nonetheless be open to the Court to
examine whether and to what extent the nature of those provisions or the nature
of the subject-matter and scheme of the special law exclude their operation."
31. From the decision of Hon'ble Supreme Court in 'Hukumdev Narain Yadav v. Lalit Narain Mishra
(1974) 2 SCC 133', it is clear that even if there exists .no express exclusion in the special law, the court
reserves the right to examine the provisions of the special law, to arrive at a conclusion as to whether the
legislative intent was to exclude the operation of the Limitation Act, 1963 or not.
32. To examine the legislative intent to decide whether the 'I&B Code' excludes the operation of the
Limitation Act, 1963, it is desirable to refer the previous Acts on Insolvency, namely the 'Presidency-
Towns Insolvency Act, 1909' and the 'Provincial Insolvency Act, 1920'.
856
by Hon’ble NCLAT
33. In. Part VII of the 'Presidency-Towns Insolvency Act, 1909', the period of limitation was
prescribed under Sections 101, which reads as follows:
"Limitation
101. The period of limitation for an appeal from any act or decision of the
official assignee, or from an order made by an officer of the Court empowered
under section 6, shall be twenty days from the date of such act, decision or order,
as the case may be."
34. Section 101A related to computing the period of limitation for any suit or other legal proceedings,
which reads as follows: -
"101A. Where an order of adjudication has been annulled under this Act, in
computing the period of limitation prescribed for any suit or other legal
proceeding (other than a suit or legal proceeding in respect of which the leave of
the Court was obtained under section 17) which might have been brought but for
the making of an order of adjudication under this Act, the period from the date of
the order of adjudication to the date of the order of annulment shall be excluded:
Provided that nothing in this section shall apply to any suit or other legal
proceeding in respect of a debt provable but not proved under this Act."
35. Similarly in the 'Provincial Insolvency Act, 1920' under Section 78 the limitation was prescribed,
as quoted below: -
"78. Limitation.—(1) The provisions of sections 5 and 12 of the Indian

Limitation Act, 1908 (9 of 1908), shall apply to appeals and applications under
this Act, and for the purpose of the said section 12, a decision under section 4
shall be deemed to be a decree
(2) Where an order of adjudication has been annulled under this Act, in
computing the period of limitation prescribed for any suit or application for the
execution of a decree or (other than a suit or application in respect of which the
leave of the Court was obtained under sub-section (2) of section 28) which might
have been brought or made but for the making of an order of adjudication under
this Act, the period from the date of the, order of adjudication to the date of the
order of annulment shall be excluded:
857
by Hon’ble NCLAT
Provided that nothing in this section shall apply to a suit or application

in respect of a debt provable but not proved under this Act."
36. The 'Presidency-Towns Insolvency Act, 1909' and the 'Provincial Insolvency Act, 1920' have
been repealed by Section 243 of the '18613 Code', relevant provision of which reads as follows: -
"243. Repeal of certain enactments and savings. — (1) The Presidency Towns
Insolvency Act, 1909 and the Provincial Insolvency Act, 1920 are hereby
repealed.
(2) Notwithstanding the repeal under sub-sections (1), -
(i) all proceedings pending under and relating to the Presidency Towns
Insolvency Act 1909, and the Provincial Insolvency Act 1920 immediately before
the commencement of this Code shall continue to be governed under the
aforementioned Acts and be heard and disposed of by the concerned courts or
tribunals, as if the aforementioned Acts have not been repealed;
(ii) any order, rule, notification, regulation, appointment, conveyance,

mortgage, deed, document or agreement made, fee directed, resolution passed,
direction given, proceeding taken, instrument executed or issued, or thing done
under or in pursuance of any repealed enactment shall, if in force at the
commencement of this Code, continue to be in force, and shall have effect as if
the aforementioned Acts have not been repealed;
(iii) anything done or any action taken or purported to have been done or
taken, including any rule, notification, inspection, order or notice made or issued
or any appointment or declaration made or any operation undertaken or any
direction given or any proceeding taken or any penalty, punishment, forfeiture or
fine imposed under the repealed enactments shall be deemed valid;
(iv) any principle or rule of law, or established jurisdiction, form or course

of pleading, practice or procedure or existing usage, custom, privilege,
restriction or exemption shall not be affected, notwithstanding that the same
respectively may have been in any manner affirmed or recognised or derived by,
in, or from, the repealed enactments;
(v) any prosecution instituted under the repealed enactments and pending
immediately before the commencement of this Code before any court or tribunal
858
by Hon’ble NCLAT
shall, subject to the provisions of this Code, continue to be heard and disposed of
by the concerned court or tribunal;
(vi) any person appointed to any office under or by virtue of any repealed
enactment shall continue to hold such office until such time as may be
prescribed; and
(vii) any jurisdiction, custom, liability, right, title, privilege, restriction,

exemption, usage, practice, procedure or other matter or thing not in existence
or in force shall not be revised or restored.
(3) The mention of particular matters in sub-section (2) shall not be held to
prejudice the general application of section 6 of the General Clauses Act, 1897
with regard to the effect of repeal of the repealed enactments or provisions of the
enactments mentioned in the Schedule."
37. Though the aforesaid two Acts have been repealed, in the Ì&B Code', the Legislature did not
choose to prescribe any separate provisions of `limitation' as was made in Section 101 of the 'Presidency-
Towns Insolvency Act, 1909' or sub-section (1) of Section 78 of the 'Provincial Insolvency Act, 1920'
whereunder provisions of Sections 5 and 12 of the 'Indian Limitation Act, 1908' were made applicable to
appeals and applications under the aforesaid Acts and the decision under the provisions was treated to be
decree.
38. However, the provision of computing the period of limitation prescribed for any suit or other
legal proceeding, as ordered to be excluded in Section 101A of the 'Presidency-Towns Insolvency Act,
1909' and sub-section (2) of Section 78 of the 'Provincial Insolvency Act, 1920' has been retained with
appropriate modification under sub-section (6) of Section 60 of the '18d3 Code', as quoted-below: -
"60. Adjudicating Authority for corporate persons. — (6) Notwithstanding

anything contained in the Limitation Act, 1963 or in any other law for the time
being in force, in computing the period of limitation specified for any suit or
application by or against a corporate debtor for which an order of moratorium has
been made under this Part, the period during which such moratorium is in place
shall be excluded."
39. The aforesaid provisions, makes clear the intent of the Legislature which necessarily excluded the
provisions of Sections 4 to 24 of the Limitation Act, 1963.
859
by Hon’ble NCLAT
40. A separate time period has been prescribed under different provisions of the `185B Code' such as:
-
Fourteen days' time allowed under sub-section (4) of Section 7 and sub-section (4) of Section 10
of the ‘186B Code' has been allowed to the Adjudicating Authority to ascertain fact and thereafter to
admit or reject the application, if incomplete.
41. Similarly, ten days' expiry period prescribed under sub-section (1) of Section 9 from the date of
delivery of the notice or invoice demanding payment under sub-section (1) of Section 8 of the `186B
Code' has been prescribed for filing an application under section 9 of the 'ISO Code'.
42. Like, Sections 7 and 8 of the `18513 Code' under sub-section (5) of Section 9, the Adjudicating
Authority has been allowed fourteen days' time to admit or reject the application if incomplete, provided
before rejecting an application seven days' time is to be granted to the Applicant to remove the defects.
43. Under Section 12 of the Ì&B Code', one hundred and eighty days time has been prescribed for
completion of 'Insolvency Resolution Process' though it is open to the Adjudicating Authority to extend
the period, but not exceeding ninety days' (Total 270 days). If the Resolution Plan is not received within
the aforesaid period by Adjudicating Authority or it rejects the same, under Section 33 liquidation
proceedings shall be initiated.
44. For preferring appeals under Section 61 while thirty days time has been allowed, the Appellate
Tribunal has been allowed only fifteen days time beyond thirty days to condone the delay.
45. Under Section 62 of the MB Code', against order of Appellate Tribunal, an appeal can be
preferred by aggrieved person to the Hon'ble Supreme Court but such appeal is required to be preferred
within forty-five days and the Hon'ble Supreme Court has been allowed to condone the delay but not
exceeding fifteen days.
There are other provisions where such time limit has been prescribed, which is different from the
time prescribed under the Limitation Act, 1963.
46. From the aforesaid provision, we find that the scheme of the 'Special Act' i.e. the Ì8sB Code',
and the nature of the remedy provided therein are such that the Legislature intended it to be a complete
code by itself which alone should govern the several matters provided by it.
47. In so far as, the application under Section 433 of the Companies Act, 2013 is concerned, we are
of the view that the said provision is not applicable for the following reasons: -
Under Section 255 of the `186B Code', certain provisions of the Companies Act, 2013 have been
amended in the manner specified in the Eleventh Schedule of the Ì86B Code'. Thereunder Section 424 of
860
by Hon’ble NCLAT
the Companies Act, 2013 has been made part of the 186B Code' for the purpose of following procedural
or principles of natural justice.
Section 433 of the Companies Act, 2013 relates to limitation as quoted below: -
"433. Limitation. — The provisions of the Limitation Act, 1963 (36 of 1963) shall, as far as may be,
apply to proceedings or appeals before the Tribunal or the Appellate Tribunal, as the case may be."
However, Section 433 of the Companies Act, 2013 has not been amended to make it as a part of the
`186B Code', therefore, we hold that Section 433 which relates to limitation of the Companies Act, 2013,
ipso facto will not be applicable to Ì86B Code'.
48. There is a provision of limitation under the 'Recovery of Debts Due to Banks and Financial
Institutions Act, 1993' (hereinafter referred to as "DRT Act") and `Securitisation and Reconstruction of
Financial Assets and Enforcement of Security Interest Act, 2002' (hereinafter referred to as "SARFAESI
Act").
49. By Section 249 of the Ì&B Code', the 'Recovery of Debts Due to Banks and Financial
Institutions Act, 1993' has been amended in the manner specified in the Fifth Schedule. In the said Act,
sub-section (1) and subsection (4) of Section 1 has been amended, as quoted below: -
"(a) In sub-section (1), for the words "Due to Banks and Financial Institutions" the words
"and Bankruptcy" shall be substituted;
(b) In sub-section (4), for the words 'The provision of this Code", the words "Save as
otherwise provided, the provisions of this Code", shall be substituted."
50. Section 24 of the 'Recovery of Debts due to Banks and Financial
Institutions Act, 1993' relates to limitation, as quoted below: -
"24. Limitation.— The provisions of the Limitation Act, 1963 (36 of 1963), shall, as far
as may be, apply to an application made to a Tribunal."
Section 24 of the said Act has not been amended by `18&B Code' and thereby not made
applicable to Ì86l3 Code'.
51. Similarly, by Section 251 of the Ìti6B Code' the SARFAESI Act has been amended in the
manner specified in the Seventh Schedule. Thereunder in sub-section (9) of Section 13, for the words "In
the case of', the words and figures "Subject to the provisions of the Ì&B Code, in the case of have been
substituted.
52. Section 36 of the SARFAESI Act relate to limitation, as quoted below:-
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by Hon’ble NCLAT
"36. Limitation. — No secured creditor shall be entitled to take all or any of the
measures under sub-section (4) of section 13, unless his claim in respect of financial
asset is made within the period of limitation prescribed under the Limitation Act, 1963
(36 of 1963)."
However, Section 36 of the SARFAESI Act has not been amended to make applicable to `185B
Code'.
53. In view of the aforesaid discussion, we hold that Section 24 of the Recovery of Debts and
Bankruptcy Act, 1993 and Section 36 of the SARFAESI Act, 2002 are not applicable to the proceedings
for initiation of `Corporate Insolvency Resolution Process'.
54. On the other hand, the Committee by its report suggested to frame law for 'Insolvency Resolution
Process' to facilitate the assessment of viability of the enterprise at a very early stage; to enable symmetry
of information between creditors and debtors; to ensure a time-bound process to better preserve economic
value; to ensure a collective process; to respect the rights of all creditors equally; to ensure that when the
negotiations fail to establish viability, the outcome of bankruptcy must be binding and to ensure clarity of
priority, and that the rights of all stakeholders are upheld in resolving bankruptcy, as noticed above.
55. In `M/s. Innoventive Industries Ltd v. ICICI Bank & Anr' (Supra) the Hon'ble Supreme Court
held that one of the important objectives of the Code is to bring the insolvency law in India under a single
unified umbrella with the object of speeding up of the insolvency process. While noticing the key
economic question in the bankruptcy process, the Hon'ble Supreme Court noticed the report of the
Bankruptcy Law Reforms Committee, and observed that there is only one forum for evaluating
possibilities, and for taking a decision there is a creditors committee, where all 'Financial Creditors' have
votes in proportion to the magnitude of debt that they hold. As mentioned, the Hon'ble Supreme Court
also noticed that 'speed is the essence' under Ì&B Code'. We find that the Committee never suggested
that for admitting the 'Resolution Process' question of limitation, should also be considered.
56. The matter can be looked at from another angle. If law of limitation prescribed under the
Limitation Act, 1963 is made applicable, one may take a plea that default of debt is barred by limitation to
initiate 'Corporate Insolvency Resolution Process' under Section 7 or Section 9 of the Ì86B Code'.
However, such stand cannot be taken, where a 'Corporate Applicant' applies for initiation of 'Corporate
Insolvency Resolution Process' against itself (`Corporate Debtor'), having no capacity to pay back the
debt and default having occurred. The law of limitation cannot be made applicable for filing an
application under section 10, which otherwise will render the provisions of Section 10 of the cl8sB Code'
redundant as the 'Corporate Applicants', do not file application for money claim. This apart, there may be
862
by Hon’ble NCLAT
companies which are closed for more than three years and having failed to pay a debt, such sick
companies will have to be allowed to continue resulting in depreciation of the value of its assets for time
to come, which is against the statement and object of the Ì&B Code'.
57. Similarly, in a case which is not barred by limitation, if application filed under Section 7 or
Section 9 or Section 10 of the '18d3 Code' is admitted, pursuant to public notice under Section 15 of the
Ì&B Code', the Ìnterim Resolution Professional' is required to receive and collect all the claims as may
be submitted by creditors to him, as stipulated in clause (b) of sub-section (1) of Section 18. In such case,
once the creditors put their claim, the 'Insolvency Resolution Professional' cannot reject the claim on the
ground that the claim is barred by limitation, as the provision of Limitation Act, 1963 will not be
applicable for filing a claim before the 'Interim Resolution Professional'. Similarly, the Committee of
Creditors while deciding the resolution plan, cannot reject any such claim, on the ground that the same is
barred by limitation though the Committee of Creditors may not make any provision in the resolution
plan on the ground of unexplained delay.
58. Even if it is accepted that the Limitation Act, 1963 is applicable, though we have held otherwise,
in that case also application under Section 7 or 9 or 10 cannot be rejected on the ground that the
application is barred by limitation for being filed beyond three years for following reasons.
Except Article 137 of Part II i.e. 'other applications', as quoted below, no other provisions of
Limitation is applicable in the matter of filing application under Sections 7 or 9 or 10: -
Part II-OTHER APPLICATION
Description of application Period of Limitation Time from which period

begins to run when the
137. Any other application for which no period Three years
right to apply accrues
limitation is provided elsewhere in this
division.
59. From Article 137 of the Limitation Act, 1963, it is clear that the period of three years' is to be
counted from the date right to apply accrues to a `Financial Creditor' or 'Operational Creditor' or
'Corporate Debtor'.
60. For initiation of 'Corporate Insolvency Resolution Process', the right to apply accrues under
Section 7 or Section 9 or Section 10 only with effect from 1st December, 2016 when `185E3 Code' has
come into force, therefore, the right to apply under Section 7 or Section 9 or Section 10 in all present
863
by Hon’ble NCLAT
cases having accrued after 1st December 2016, such applications cannot be rejected on the ground that the
application is barred by limitation.
61. Learned Amicus Curiae rightly contended that there should be a time limit for raising claim,
including money claim. In this regard, it is desirable to refer the definition of 'Debt' and 'Default' as
defined in sub-section (11) and (12) of Section 3 of the `18&B Code', and quoted below: -
"3(11) "debt" means a liability or obligation in respect of a claim which is due

from any person and includes a financial debt and operational debt;
3(12) "default" means non-payment of debt when whole or any part or instalment
of the amount of debt has become due and payable and is not repaid by the
debtor or the corporate debtor, as the case may be"
62. From the aforesaid definition, it is clear that 'debt' is a liability or obligation in respect of a claim
which is due from any person and includes a `Financial Debt' and 'Operational Debt'. It is further clear
that when whole or any part or instalment of the amount of debt has become due and payable and is note
repaid by the debtor or the 'Corporate Debtor', it amounts to `default'.
63. Now, the question arises, whether a person can claim any amount due from another, a 'Corporate
Debtor' after long delay on the ground that Limitation Act, 1963 is not applicable?
64. To decide the aforesaid issue, it is necessary to notice the Doctrine of Limitation and Prescription,
as held by jurists and Hon'ble Courts. The Doctrine of Limitation and Prescription is based on two broad
considerations. First, there is a presumption that the right not exercised for a long time is non-existent. In
Salmond: Jurisprudence 12th Ed. Page 438 and 439, the learned author described the doctrine in the
following words:
"In order to avoid the difficulty and error that necessarily result from lapse of
time the presumption of the coincidence of fact and right is rightly accepted as
final after a certain number of years. Whoever wishes to dispute this presumption
must do so within the period, otherwise his right, if has one will be forfeited as a
penalty for his neglect, vigilantibus non dormientibus Jura subvenient (Laws
come to the assistance of the vigilant and not of the sleepy)"
65. It is also necessary to ensure that the rights of debt, in property or rights in general should not be
in a state of constant uncertainty, doubt and suspense. In Abbott CJ in Battley v. Faulkner [(1820) 3 B &
Aid 2881 the Court observed that "the statute of limitation was intended for relief and quiet of the
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by Hon’ble NCLAT
defendant and to prevent the persons from being harassed at a distant period of time after the committing
of the injury complained of.
66. The above principles have been also recognised by the Hon'ble Supreme Court of India in
Rajinder Singh v. Santa Singh, AIR 1973 SC 2537, wherein the Hon'ble Supreme Court observed:
"The object of law of limitation is to prevent disturbance or deprivation of what

may have been acquired in equity and justice by long enjoyment or what may
have been lost by a party's own inaction, negligence or latches."
67. The object of fixing time-limit for litigation is based on Public Policy, fixing a life span of legal
remedies for the purpose of general welfare. The Hon'ble Supreme Court in N. Balakrishnan v. M.A.
Krishnamurthy, (1998) 7 SCC 123, inter alia observed:
"the rules of limitation are not meant to destroy the rights of the parties but are
meant to see that the parties do not resort to dilatory tactics but seek their remedy
promptly and the law of limitation fixes a life span for legal injury suffered and
that it is enshrined in the maxim interest reipublicae ut sit finis litum i.e. it is for
the general welfare that a period to be put to litigation and this is not meant to
destroy the rights of the parties, but they are meant to see that the party do not
resort to dilatory tactics but seek their remedy promptly because the idea is that
every legal remedy must be alive for a legislatively fixed period of time."
68. In view of the settled principle, while we hold that the Limitation Act, 1963 is not applicable for
initiation of 'Corporate Insolvency Resolution Process', we further hold that the Doctrine of Limitation
and Prescription is necessary to be looked into for determining the question whether the application under
Section 7 or Section 9 can be entertained after long delay, amounting to laches and thereby the person
forfeited his claim.
69. If there is a delay of more than three years from the date of cause of action and no laches on the
part of the Applicant, the Applicant can explain the delay. Where there is a continuing cause of action, the
question of rejecting any application on the ground of delay does not arise.
70. Therefore, if it comes to the notice of the Adjudicating Authority that the application for initiation
of 'Corporate Insolvency Resolution Process' under section 7 or Section 9 has been filed after long delay,
the Adjudicating Authority may give opportunity to the Applicant to explain the delay within a reasonable
period to find out whether there are any laches on the part of the Applicant.
865
by Hon’ble NCLAT
71. The stale claim of dues without explaining delay, normally should not be entertained for
triggering 'Corporate Insolvency Resolution Process' under Section 7 and 9 of the `18d3 Code'.
72. However, the aforesaid principle for triggering an application under Section 10 of the '186B
Code' cannot be made applicable as the 'Corporate Applicant' does not claim money but prays for
initiation of 'Corporate Insolvency Resolution Process' against itself, having defaulted to pay the dues of
creditors.
In so far it relates to filing of claim before the 'Insolvency Resolution Professional', in case of
stale claim, long delay and in absence of any continuous cause of action, it is open to resolution applicant
to decide whether such claim is to be accepted or not, and on submission of resolution plan, the
Committee of Creditors may decide such question. If any adverse decision is taken in regard to any
creditor disputing the claim on ground of delay and laches, it will be open to the aggrieved creditor to file
objection before the Adjudicating Authority against resolution plan and for its necessary correction who
may decide the same in accordance with the observations as made above.
73. Coming to merits of present matter, in the case of M/s. Speculum Plast Pvt. Ltd. Vs. PTC Techno
Pvt. Ltd. in Company Appeal (AT) (Insolvency) No. 47 of 2017, the Adjudicating Authority by impugned
order dated 11th April, 2017 has not decided the question whether Limitation Act, 1963 is applicable in
the proceeding for initiation of 'Corporate Insolvency Resolution Process' or not and without deciding the
same rejected the case on the 'ground that the amount legally recoverable is beyond the period of
limitation. It has not been noticed that the invoices raised are of the period from 1st April, 2013 to 19th
September, 2013, and, therefore, default must have occurred after September, 2013. The Ì&B Code'
having come into effect on 1st December 2016, the Adjudicating Authority was not correct in dismissing
the application on the ground that the application is beyond the period of limitation.
74. For the reasons aforesaid, we set aside the impugned order dated 11th April, 2017 passed by the
Adjudicating Authority (National Company Law Tribunal) New Delhi in Company Petition No. (IB)-
41(ND)/2017 and remit back the case to the Adjudicating Authority, New Delhi to find out whether the
application is otherwise complete or not and, after notice and hearing the parties, will pass appropriate
orders in accordance with law. In case, the application is complete, the Adjudicating Authority will admit
the application preferred by the Appellants. In case it is incomplete, the Appellant be granted minimum
seven days' time to remove the defects in terms of proviso to sub-section (5) of Section 9 of the Ì&B
Code'.
75. In Parag Gupta Vs. M/s. B K Educational Services Pvt. Ltd.. in Company Appeal (AT)
(Insolvency) No. 76 of 2017, the Adjudicating Authority observed that the amount having been paid
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by Hon’ble NCLAT
between the period 1st October, 2012 and 5th February, 2013, there was nothing on the record to suggest
that it would extend the limitation to recover the same. The Income Tax Returns filed by 'Corporate
Debtor' for the assessment years 2014-15 & 2015-16 were, not taken into consideration as it does not
specify that the short term borrowings of over 8 crores including the loans alleged to have been given by
the Appellants as barred by limitation has taken into consideration for rejecting the application for non-
initiation of 'Corporate Insolvency Resolution Process', the impugned order dated 25th April, 2017 cannot
be sustained.
76. For the reasons aforesaid, the impugned order dated 25th April, 2017 passed by the Adjudicating
Authority in Company Petition No. (IB)- 27(PB)/2017 is set aside and we remit the case to the
Adjudicating Authority who after notice and hearing the parties will consider the application under
Section 7 of the `185B Code' preferred by the Appellant- Mr Parag Gupta and without going into question
of limitation, if application is complete, will admit the application. In case of any defect, the appellant be
granted seven days' time to remove the defects in terms of proviso to subsection (5) of Section 9 of the
'185B Code. Further, if the application is not maintainable for any other reasons, the Adjudicating
Authority record such reason.
77. In Ashlay Infrastructure Private Limited Vs. LDS Engineers Pvt. Ltd. in Company Appeal (AT)
(Insolvency) No. 78 of 2017, the Adjudicating Authority rejected the application preferred by the
Appellant on the ground that it is time barred. The impugned order dated 4th May, 2017 having been
passed on the basis that the Limitation Act, 1963 is applicable for initiation of 'Corporate Insolvency
Resolution Process', the said order cannot be sustained.
78. We accordingly set aside the impugned order dated 4th May, 2017 passed in Company Petition
No. (IB)-77(ND)/2017 and remit the case to the Adjudicating Authority who after notice and hearing the
parties will consider the application preferred by Appellant under Section 9 of the `186B Code' and
without going into question of limitation, if application is complete, will admit the application. In case of
any defect, the appellant be granted seven days' time to remove the defects in terms of proviso to sub-
section (5) of Section 9 of the '180 Code. Further, if the application is not maintainable for any other
reasons, the Adjudicating Authority may record such reason.
79. All the appeals are allowed with aforesaid observations and directions. However, in the facts and
867
by Hon’ble NCLAT

NEW DELHI
C.P. (I.B.) No. 261/NCLAT/2017
Applicant: Shrivarad Polyfab

Vs.
Respondent: OLAM Agro Pvt. Ltd.
Judges/Coram:
Counsels:
Respondents/Defendant:
ORDER
Nobody appears for the Appellant. The appeal is dismissed for non-prosecution. No cost.
868
by Hon’ble NCLAT
NEW DELHI
C.P. (I.B.) No. 204/NCLAT/2017
Applicant: M/s Paharpur Cooling Towers Limited

Vs.
Respondent: M/s Ankit Metal & Power Limited
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Sanjoy Ghosh, Senior Advocate assisted by Mr. R. N. Ghosh and
Mr. Santanu Ghosh, Learned Advocates
Respondents/Defendant: Mr. Susanta Dutta, Mr. Bidyut Dutt and Mr. Anirudhya Dutta, Learned
Advocates
ORDER
This appeal has been preferred by M/s Paharpur Colling Towers Limited (Operational Creditor)
against the order dated 21st August, 2017 passed by the Adjudicating Authority (National Company Law
Tribunal, Kolkata Bench) whereby and whereunder the Adjudicating Authority dismissed the application
under Section 9 of the Insolvency & Bankkruptcy Code, 2016 (hereinafter referred to as ‘I & B Code’) on
the ground that there is ‘an existence of dispute’ and Application was not filed directly by the
‘Operational Creditor’ but by its Company Secretary.
2. Learned Counsel for the Appellant submits that the Appellant ought to have been granted more
time to remove the defect. It is also submitted that the Company Secretary who filed Application under
Section 9 of I & B Code was authorised by the Appellant. However, such submission cannot be accepted
in view of the decision of this Appellate Tribunal in “Palogix Infrastructure Private Limited Vs. ICICI
bank Limited” – Company Appeal (AT)(Insol) No. 30 of 2017 wherein this Appellate Tribunal by
judgment dated 20th September, 2017 held as follows:
“32. The ‘I&B Code’ is a complete code by itself. The provision of the Power
of Attorney Act, 1882 cannot override the specific provision of a statute which
869
by Hon’ble NCLAT

33. Therefore, we hold that a ‘Power of Attorney Holder’ is not competent to

file an application on behalf of a ‘Financial Creditor’ or ‘Operational Creditor’
or “Corporate Application’.”
4. Learned Counsel for the Appellant requested to allow the Appellant to file another Application
under Section of 9 ‘I&B Code’. However, permission cannot be granted as the application filed by the
Appellant has been dismissed also on the ground of existence of a dispute, even prior to the issuance of
the demand notice sub-Section (1) of Section 8 of the ‘I & B Code’.
5. From the impugned order we find that the Respondents brought to the notice of the Adjudicating
Authority certain disputes which were also supported by e-mail dated 13th May, 2015 which were marked
as Annexure R-4. Other documents were also brought to the notice to the Adjudicating Authority. In
reply, learned Counsel for the Appellant referred to a letter dated 2nd April, 2016 issued by an Advocate
on behalf of the Appellant but such stand has been disputed by the Respondent.
6. However, even after dispute of the amount if certain amount is admitted by the Respondents but
has not paid such amount the Appellant may prefer application under Section 9 after notice to the
Respondent under Sub-Section (1) of Section 8 of the I & B Code giving a reference to such undisputed
debt, if defaulted.
7. For the reasons aforesaid, while we are not inclined to interfere with the impugned order dated
21st August, 2017, we allow the Appellant to move before the appropriate forum in respect of the
admitted dues if any. The Appeal stands disposed of with aforesaid observation. No costs.
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NEW DELHI
C.P. (I.B.) No. 168/NCLAT/2017
Applicant: Balaji Enterprise

Vs.
Respondent: Gammon India Limited & Ors.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Hareesh Shah and Mr. Sanjay Ruia Chartered Accountant
Respondents/Defendant: Mr. Rudraweshwar Pratap Singh, Mr. Prashan Kumar, Mrs. Awantika
Manohar and Mr. Aniruddh Singh, Learned Advocates
ORDER
Appellant (Operational Creditor) filed an application under Section 9 of the Insolvency and Bankruptcy
Code, 2016 (I&B Code) for initiation of a Corporate Resolution Process against the Respondent-Gamon
India Limited. Learned Adjudicating Authority – (National Company Law Tribunal), Mumbai Bench,
Mumbai by impugned order dated 19.07.2017 dismissed the application with the following observations:
“6. Admittedly the Operational Creditor has initiated Arbitration

proceedings on 5.1.2017 by issuing notice to the Corporate Debtor for referring
the dispute to Arbitration under Section 21 of the Arbitration and Conciliation
Act, 1996. Hence it is abundantly clear that before the issue of Demand Notice
under Section 8(2) the Operational Creditor initiated arbitration proceedings. The
only contention of the Operational Creditor in respect of initiation of arbitration
proceedings is that the Corporate Debtor as required under Section 8(2) of the
Code has neither brought to the notice of the Operational Creditor the existence
of pendency of any suit or arbitration proceedings filed nor repaid the debt. These
Arbitration proceedings is not initiated by the Corporate Debtor but by the
Operational Creditor. Hence the contention of the Operational Creditor defies the
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logic as if the Operational Creditor is unaware of the arbitration proceedings.

Since arbitration proceedings already initiated is pending, the same will attract
the provisions of Section 5(6) of the IB Code, which provides that:
“dispute” includes a suit or arbitration proceedings relating to:-
(a) The existence of the amount of debt;

(b) The quality of goods or service; or
(c) The breach of a representation or warranty:
7. The Operational Creditor Counsel argued that initiation of arbitration

proceedings cannot be taken as arbitration proceedings filed since neither
arbitrator was appointed nor any claim was filed before the Arbitrator. The
Counsel for the Corporate Debtor cited many decisions in support of its claim
that the arbitral proceedings in respect of a particular dispute commenced on the
date on which a request for the dispute would be referred to arbitration is
received by the Respondent. The following are the decisions:
(a) State of Goa Vs. Pravin Enterprises (2012) SCC 581 – to say that Section
21 of the Act provides that the arbitration proceedings shall be deemed to
commence on the date on which a request for the dispute to be referred to
arbitration is received by the Respondent.
(b) Milkfood Ltd. Vs. GMC Icecream Pvt. Ltd. Reported in 2004 (7) SCC
288 – wherein it was held that service of notice for appointment of an
Arbitrator would be relevant date for the purpose of commencement of
arbitration proceedings.
(c) H. Candolker & Sons, Civil Engineer and Contractors Vs. Union of India
through Secretary, Government of India, Ministry of Communication and
Ors. Reported in Manu/MH/1417/2009 wherein the Hon’ble Supreme
Court has held that service of notice for appointment of an arbitrator
would be relevant date for the purpose of commencement of Arbitration
proceedings.
8. The Hon’ble National Company Law Appellate Tribunal in the matter of

Kirusa Software Pvt. Ltd. Vs. Mobilex Innovations Pvt. Ltd. held that the dispute
in Insolvency and Bankruptcy must relate to specified nature in clause (a), (b) or
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by Hon’ble NCLAT
(c) of sub-Section 6 of Section 5 of the Code. Accordingly, the case on hand
herein squarely falls under section 5(6) of the Code in view of the dispute
relating to the existence of debt.”
Learned Counsel appearing on behalf of the Appellant submits that the Respondents having
refused to go for arbitration cannot take advantage of the Section 21 of the Arbitration and Conciliation
Act, 1996. It is only after the rejection of the Application under Section 9 of the I & B Code, the
Respondents has now agreed for arbitration proceeding.
It is further submitted that the Application under Section 9 of the I & B Code was filed with
regard to default pursuant to different agreements. In one of the agreements while there is a clause of
arbitration, in the other agreement there is no such clause of arbitration and therefore in respect to the
other agreement, advantage of Section 21 of the Arbitration and Conciliation Act, 1996 cannot be taken.
However, we find that the aforesaid plea was not taken by the Appellant before the Adjudicating
Authority.
According to the Counsel for the Respondents clause for arbitration exists in both the agreements.
However, such disputed question of facts cannot be determined in this appeal particularly the Appellant or
the Respondents having not taken such plea before the Adjudicating Authority.
While we are not inclined to interfere with the impugned order dated 19th July, 2017 passed by
the Adjudicating Authority in view of the proper appreciation of law i.e. Section 21 of the Arbitration and
Conciliation Act, 1996, as per which the Arbitration proceeding commence on the date request for the
dispute to be referred to arbitration is received by the Respondent, we give liberty to the Appellant to
move before appropriate forum, in respect to any agreement if there is no clause of agreement and
arbitration proceeding has not commenced.
With the aforesaid observation the appeal stands disposed of. However, in the facts and
circumstances, there shall be no orders as to cost.
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NEW DELHI
C.P. (I.B.) No. 195/NCLAT/2017
Applicant: Labdhi Enterprises

Vs.
Respondent: Baramati Agro Pvt. Limited
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Suresh Dhawan and Ms. Vatsala Kak, Learned Advocates
Respondents/Defendant: Mr. P.K. Mittal and Ms. Deepika Dixit, Learned Advocates
ORDER
The appellant Lobdhi Enterprises (Operational Creditor) filed an application under Sections 433, 434(e)
and 439 of the Companies Act, 1956 before the Hon’ble Bombay High Court, Mumbai for winding up the
Respondent Company- Baramati Agro Pvt. Limited on the ground that the debtor Company defaulted in
making payment of Rs. 27,97,696/- to the Appellant. It was pleaded that the Appellant supplied goods to
the Corporate Debtor which they received without raising any dispute but failed to repay the amount in
spite of invoices raised and received by them.
During the pendency of the case before the Hon’ble High Court, the Central Government, in
exercise of the power conferred under sub-Sections (1) and (2) of Section 434 of the Companies Act,
2013 read with sub-Section (1) of Section 239 of the Insolvency and Bankruptcy Code, 2016 (hereinafter
referred to as ‘I&B Code’), by notification dated 7th December, 2016 framed Rule namely “The
Companies (Transfer of pending proceedings) Rules 2016”. The said Rule was modified by notification
dated 29th June, 2017 by the “The Companies (Transfer of pending proceedings), Second Amendment
Rules, 2017. Rule-5 of relates to the transfer of pending proceeding of winding up on the ground of
inability to pay debts which reads as follows:
pay debts. – (1) All petitions relating to winding up of a company under clause
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by Hon’ble NCLAT
(e) of section 433 of the Act on the ground of inability to pay its debts pending
before a High Court, and, where the petition has not been served on the
respondent under rule 26 of the Companies (Court) rules, 1959 shall be
transferred to the Bench of the Tribunal established under sub-section (4) of
section 419 of the Companies Act, 2013 exercising territorial jurisdiction to be
dealt with in accordance with Part II of the Code:
Provided that the petition shall submit all information, other than information
forming part of the records transferred in accordance with rule 7, required for
admission of the petition under Sections 7,8 or 9 of the Code, as the case may be,
including details of the proposed insolvency professional to the Tribunal upto
15th of July, 2017, failing which the petition shall stand abated:
Provided further that any party or parties to the petitions shall, after the 15th day
of July, 2017, be eligible to file fresh applications under sections 7 or 8 or 9 of
the Code, as the case may be, in accordance with the provisions of the Code:
Provided also that where a petition relating to winding up of a company is not

transferred to the Tribunal under this rule and remains in the High Court and
where there is another petition under clause (e) of section 433 of the Act for
been served on the respondent.”
In view of the aforesaid provision, the petition under Sections 439, 434(e) and 439 of the
Companies Act, 1956, which was pending before the Hon’ble Bombay High Court was transferred to the
Tribunal, Mumbai Bench, Mumbai.
The Respondent – Corporate Debtor pursuant to the notice appeared and took plea that the claim
was barred by limitation. The Adjudicating Authority by impugned order dated 30th June, 2017 taking
into consideration the Central Government Notification dated 7th December, 2016, refused to treat the
Application under Section of 9 of the I & B Code on one of the grounds that the Appellant failed to show
that the debtor Company acknowledged the debt due since last three years from 27th April, 2010 when it
was payable and thereby the debt is time barred.
We have heard the learned Counsel for the Appellant and learned Counsel appearing on behalf of
the Respondent (Corporate Debtor).
875
by Hon’ble NCLAT
The question as to whether the Limitation Act, 1963 will be applicable for triggering incorporate
resolution process under Sections 7 or 9 of the I & B Code fell for consideration before this Appellate
Tribunal in - “M/s Speculam Plast Pvt. Ltd. Vs. PTC PTC Techno Private Ltd.”- in Company Appeal(AT)
(Insolvency) No. 47/2017. In the said case this Appellate Tribunal, by judgment dated 07th
November,2017 held as follows:
……..
“68. In view of the settled principle, while we hold that the Limitation Act,
1963 is not applicable for initiation of 'Corporate Insolvency Resolution
Process', we further hold that the Doctrine of Limitation and Prescription is
necessary to be looked into for determining the question whether the application
under Section 7 or Section 9 can be entertained after long delay, amounting to
laches and thereby the person forfeited his claim.
69. If there is a delay of more than three years from the date of cause of
action and no laches on the part of the Applicant, the Applicant can explain the
delay. Where there is a continuing cause of action, the question of rejecting any
application on the ground of delay does not arise.
70. Therefore, if it comes to the notice of the Adjudicating Authority that the
application for initiation of 'Corporate Insolvency Resolution Process' under
section 7 or Section 9 has been filed after long delay, the Adjudicating Authority
may give opportunity to the Applicant to explain the delay within a reasonable
71. The stale claim of dues without explaining delay, normally should not be
entertained for triggering 'Corporate Insolvency Resolution Process' under
Section 7 and 9 of the 'I&B Code'.”
However, while holding so this Appellate Tribunal in “M/s Speculam Plast Pvt. Ltd. Vs. PTC PTC
Techno Private Ltd.” also observed:
“59. From Article 137 of the Limitation Act, 1963, it is clear that the period of
three years' is to be counted from the date right to apply accrues to a 'Financial
Creditor' or 'Operational Creditor' or 'Corporate Debtor'.
876
by Hon’ble NCLAT
60. For initiation of 'Corporate Insolvency Resolution Process', the right to
apply accrues under Section 7 or Section 9 or Section 10 only with effect from 1st
December, 2016 when 'I&B Code' has come into force, therefore, the right to
apply under Section 7 or Section 9 or Section 10 in all present cases having
accrued after 1st December 2016, such applications cannot be rejected on the
ground that the application is barred by limitation.”
In view of the fact that the case of the Appellant is covered by the decision of this Appellate
Tribunal in -“M/s Speculam Plast Pvt. Ltd. Vs. PTC PTC Techno Private Ltd.” (supra), the impugned
order cannot be upheld. However, as we find that the Appellant had not submitted all the information
other than information forming part of the records of the transferred case, as required in terms of first
proviso to Rule -5 aforesaid, we hold that the Application under Sections 433, 434 and 439 of the
Companies Act which was transferred to the Tribunal stood abated in view of Rule 5 aforesaid. However,
in view of the Second provision to Rule-5, as quoted above, the Appellant is given liberty to file a fresh
Application under Section 9 of the I & B Code in accordance with the provision of law i.e., after giving
Notice of Demand under sub-Section (1) of Section 8 in requisite form 3 or 4. After such notice, if there is
no dispute and the Appellant prefers application under Section 9 of the I & B Code, in such case, the
Adjudicating Authority will not dismiss the case on the ground of delay there being continuing cause of
action since 27th April, 2010, and it cannot be held to be barred by limitation. If there remains a defect,
the Adjudicating Authority may allow the Appellant to remove the defect in terms of the proviso to
Section 9 of the I&B Code.
However, this order will not come in the way of Respondent to settle the dispute before
admission of Application under Section 9 of the I & B Code, if preferred or has already been preferred.
The Appeal is allowed with the above observation but there shall be no order to cost.
877
by Hon’ble NCLAT

NEW DELHI
C.P. (I.B.) No. 208/NCLAT/2017
Applicant: Global Communication Services Holdings Limited & Anr.

Vs.
Respondent: Siva Industries and Holdings Limited
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Malak Bhatt, Learned Advocates
Respondents/Defendant: Mr. Anirudh Wadhwa and Mr. Bhargav Thali, Learned Advocates
ORDER
Learned counsel for the appellants sought for permission to withdraw the appeal. Learned counsel
for the respondent has some objection as to whether the appellant can move before any forum in future,
but we are not expressing any opinion with regard to the same. As the appellant has sought permission for
withdrawal of the appeal, we allow the prayer and dismiss the appeal as withdrawn. There shall be no
order as to costs.
878
by Hon’ble NCLAT
NEW DELHI
C.P. (I.B.) No. 264/NCLAT/2017
Applicant: M/s. Oxygen Communications & Anr.

Vs.
Respondent: M/s. Iris Computers Ltd.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Sanjeev Kumar Singh and Mr. Shighra Kumar, Learned
Advocates
ORDER
The Appellants-Òperational Creditor' filed an application under Section 9 of the Insolvency and
Bankruptcy Code, 2016 (hereinafter referred to as "I&B Code") for initiation of 'Corporate Insolvency
Resolution Process' against the Respondent-‘Corporate Debtor'. The Adjudicating Authority (National
Company Law Tribunal), New Delhi Bench, New Delhi, by impugned order dated 27th September, 2017
dismissed the application on the ground of 'existence of dispute' giving raise to the present appel.
On hearing learned counsel for the Appellants and learned counsel for the Respondent and perusal of the
record, we find that purported notice under sub-Section (1) of Section 8 of the ‘I&B Code' was issued by
an Advocate and Solicitor firm on 8th August, 2017. Prior to that pursuant to the notices dated 23rd
March, 2017 and 20 April, 2017 issued by the Appellants, the Respondent disputed the amount on 30th
May, 2017. Apart from this, we find that the purported demand notice issued under sub-section (1) of
Section 8 of the Ì&B Code' is not by the Appellant-Òperational Creditor' but by the Advocates and
Solicitors firm.
As there is an 'existence of dispute' since prior to issuance of notice under sub-section (1) of Section 8 of
the Ì&B Code', and we find that the purported notice under sub-section (1) of Section 8 of the Ì&B
Code' has been issued by Advocates and Solicitors firm, which is not permissible as held by this Court in
879
by Hon’ble NCLAT
"Uttam Galva Steels Limited v. DF Deutsche Forfait AG & Anr. in Company Appeal (AT) (Insolvency)
39 of 2017", the application under Section 9 was not maintainable.
We find no merit in this appeal. It is accordingly, dismissed. However, in the facts and circumstances of
the case, there shall be no order as to cost.
880
by Hon’ble NCLAT
NEW DELHI
C.P. (I.B.) No. 265/NCLAT/2017
Applicant: Prem Sarup Narula

Vs.
Respondent: ByCell Telecommunications India Pvt. Ltd.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Praveen Agarwal, Learned Advocates
ORDER
This appeal has been preferred by the Appellant-Òperational Creditor' against the order dated
28th September, 2017 passed by the Adjudicating Authority (National Company Law Tribunal), New
Delhi Bench, New Delhi, whereby and whereunder the application preferred by the Appellant under
Section 9 of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as "I&B Code') has been
dismissed on the ground of 'existence of dispute'.
On hearing learned counsel for the Appellant and perusal of the record, we find that the Appellant
initially issued a legal notice on 24th May, 2016 for winding up of the Company under Section 433(e) of
the Companies Act, 1956, a Company Petition No. 790 of 2016 was filed before the Hon'ble High Court
of Delhi. In the said case, in reply to the demand notice dated 31st July, 2017, the Respondent-`Corporate
Debtor' disputed the claim on the ground that a sum of USD 33,000/- has already been paid to the
Appellant as full and final settlement of the dues to the Appellant.
In view of the aforesaid position that there is 'existence of dispute', we are not going to determine
whether any further amount is payable or not, which issue can be decided by any court of competent
jurisdiction, but not for triggering 'Corporate Insolvency Resolution Process' against the 'Corporate
Debtor'.
We find no merit in this appeal. It is accordingly, dismissed. However, in the facts and
881
by Hon’ble NCLAT

NEW DELHI
C.P. (I.B.) No. 164/NCLAT/2017
Applicant: United Projects Constructions Ltd.

Vs.
Respondent: Aerocon Buildwell Pvt. Ltd.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Vivek Dalai and Mr. Rohit Gupta, Learned Advocates
Respondents/Defendant: Mr. Manoj Munshi and Mr. R.D. Makhhija, Learned Advocates
ORDER
The Appellant- United Projects Constructions Limited (Operational Creditor') filed an application
under Section 9 of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as "I&B Code") for
initiation of 'Corporate Insolvency Resolution Process' against the Respondent- Aerocon Buildwell
Private Limited (`Corporate Debtor'). In the said case, the Respondent appeared and filed objection on the
ground that there is an 'existence of dispute' and therefore the application under section 9 of the `186B
Code' is not maintainable. The application having been dismissed by the impugned order dated 31st July,
2017 in CP No. (IB) 30/9/NCLT/AHM/2017 passed by Adjudicating Authority (National Company Law
Tribunal), Ahmedabad Bench, Ahmedabad, the present appeal has been preferred.
2. On 6th October, 2017, on hearing learned counsel for the parties, this Appellate Tribunal made
following observation and direction:-
"ORDER
08.11.2017. — Learned counsel for the Respondent enclosed a letter dated 10th
October, 2016 (Page No.81) to the reply, to suggest that they have disputed the
claim. According to Appellant, this letter is subsequently manufactured by the
Respondent after filing of the insolvency application under Section 9 of the
2. In this background, we direct the Respondent to file additional affidavit

by 13th November, 2017 enclosing any evidence to suggest that so-called letter
882
by Hon’ble NCLAT
dated 10th October, 2016 was issued and served on the Appellant. In absence of
any such evidence, it will be treated that no such letter was issued or served by
the Respondent-`Corporate Debtor'.
3. Post the matter on 13th November, 2017.
4. The appeal may be disposed of on the next date."
3. Today, an affidavit in compliance has been filed by the Respondent enclosing a copy of letter
dated 10th October, 2016 but we find no document enclosed by Respondent to suggest that the notice was
served on the Appellant. In the additional affidavit the Respondent has enclosed a so-called e-mail which
according to learned counsel for the appellant cannot be termed to be an e-mail notice to the appellant.
From the said e-mail, it is clear that the same has not been issued to the Appellant-'Operational Creditor';
even the name of the sender has not been mentioned therein.
4.Having heard learned counsel for the parties and taking into consideration the aforesaid fact, as we find
no record of 'existence of dispute' we are of the view that the matter requires reconsidering by
Adjudicating Authority and to decide as to whether there is any document available on record to suggest
'existence of dispute' prior to notice of demand served, on Appellant-'Operational Creditor' and whether
the respondent created certain documents to stall triggering of the 'Corporate Insolvency Resolution
Process' against it.
5.For the reasons aforesaid, we remit the case to the Adjudicating Authority and make it clear that we
have not allowed either the Appellant-Qperational Creditor' or the Respondent-`Corporate Debtor' to file
any additional affidavit or document, except the copies of the affidavit and documents filed before this
Appellate Tribunal, which may be noticed apart from other documents earlier filed by parties for
determining issue about 'existence of dispute'.
6. We, accordingly, set aside the impugned order dated 31st July, 2017 and remit the case to the
Adjudicating Authority to reconsider the case. If there is no evidence of dispute, the Adjudicating
Authority will proceed in accordance with law; that means if the application, if otherwise complete, is to
be admitted and if there is any defect, then time is to be provided to the appellant to remove the defects
/complete the record or otherwise if there is a dispute in existence then to dismiss the application.
7. No separate notice to be issued to the parties, they are directed to appear before the Adjudicating
Authority on 27th November, 2017 when the Adjudicating Authority will fix a date for hearing. The
appeal stands disposed of with aforesaid observations and directions. No Cost.
883
by Hon’ble NCLAT

NEW DELHI
C.P. (I.B.) No. 187NCLAT/2017
Applicant: Radheshyam Fibres Pvt. Ltd.

Vs.
Respondent: State Bank of India
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Arvind Kumar Gupta and Ms. Henna George, Learned Advocates
Respondents/Defendant: Mr. S.L. Gupta and Mr. Sharan Kumar, Learned Advocates
ORDER
In view of the recent decision of the Hon’ble Supreme Court in “Innoventive Industries Ltd. vs.
ICICI Bank and Ors., (Civil Appeal Nos. 8337-8338 of 2017)”, an application for substitution of one of
the aggrieved person namely ‘Popatbhai Ramjibhai Bhalara’, shareholder of corporate debtor has filed
with prayer to substitute him as Appellant and to transpose the original ‘Corporate Debtor’ – Radheshyam
Fibres Pvt. Ltd. through Interim Resolution Professional as 2nd Respondent.
2. Having heard the learned counsel for the parties and being satisfied with the grounds, we allow
the petition for substitution. Let Mr. Popatbhai Ramjibhai Bhalara be substituted as appellant in place of
‘Corporate Debtor and the original appellant Radheshyam Fibres Pvt. Ltd. be transposed as 2nd
Respondent through Interim Resolution Professional. Let necessary corrections be made in the cause title
of the appeal during the course of the day.
884
by Hon’ble NCLAT
NEW DELHI
C.P. (I.B.) No. 153/NCLAT/2017
Applicant: Ellora Paper Mills Limited & Anr

Vs.
Respondent: Ajithnath Steels Pvt. Ltd.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Rahul Chitnis, Mr. V. Mulay and Shri Aaditya Pande, Learned
Advocates
Respondents/Defendant: Mr. Sandeep Bajaj, Mr. Soayib Quereshi, Ms. Aakanksha Nenca and Ms.
Shourya Mittal, Learned Advocates
ORDER
This appeal has been preferred by the Appellants against the order dated 21st August, 2017 in
C.P. No. 716/I&BP/2017 whereby and whereunder the Adjudicating Authority (National Company Law
Tribunal) Mumbai Bench, Mumbai changed the Interim Resolution Professional after 30 days.
Learned Counsel for the Respondent brought to our notice that Interim Resolution Professional
who was originally appointed his licence having expired, another eligible person has been appointed as
Interim Resolution Professional.
Learned Counsel for the Appellants accepts that, after 30 days, Regular Resolution Professional
having been appointed, this appeal has become infructuous.
In the aforesaid facts and circumstances of the case, no further order is required to be passed. This
appeal is dismissed being infructuous. No Cost.
885
by Hon’ble NCLAT

NEW DELHI
C.P. (I.B.) No. 122/NCLAT/2017
Applicant: Ellora Paper Mills Limited & Anr

Vs.
Respondent: Ajithnath Steels Pvt. Ltd.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Rahul Chitnis, Mr. V. Mulay and Shri Aaditya Pande, Learned
Advocates
Respondents/Defendant: Mr. Sandeep Bajaj, Mr. Soayib Quereshi, Ms. Aakanksha Nenca and Ms.
Shourya Mittal, Learned Advocates
ORDER
Corporate Debtor has preferred this appeal against the order dated 19th July, 2017 passed by
Adjudicating Authority (National Company Law Tribunal) Mumbai in C.P. No. 716/I&BP/2017 whereby
and wherunder an application preferred by the Respondent- Financial Creditor under Section 7 of the
Insolvency and Bankruptcy Code (hereinafter referred to as ‘I & B Code’) read with Rule-4 of Insolvency
and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 has been admitted, order of
moratorium has been passed and Interim Resolution Professional has been appointed.
2. The main plea taken by the learned Counsel for the Appellants is that the Application under
Section 7 of the I & B Code was barred by limitation. However, such submission cannot be accepted in
view of the decision of this Appellate Tribunal in ‘M/s Speculum Plast Pvt. Ltd. Vs. PTC Techno Private
Ltd.’ – Company Appeal (AT)(Insolvency) No. 47/2017 wherein this Appellate Tribunal held as follows:
1963 is not applicable for initiation of 'Corporate Insolvency Resolution
Process', we further hold that the Doctrine of Limitation and Prescription is
886
by Hon’ble NCLAT
69. If there is a delay of more than three years from the date of
cause of action and no laches on the part of the Applicant, the Applicant can
explain the delay. Where there is a continuing cause of action, the question of
rejecting any application on the ground of delay does not arise.
70. Therefore, if it comes to the notice of the Adjudicating

Authority that the application for initiation of 'Corporate Insolvency Resolution
Process' under section 7 or Section 9 has been filed after long delay, the
Adjudicating Authority may give opportunity to the Applicant to explain the delay
within a reasonable period to find out whether there are any laches on the part of
the Applicant.
71. The stale claim of dues without explaining delay, normally

should not be entertained for triggering 'Corporate Insolvency Resolution
Process' under Section 7 and 9 of the 'I&B Code'.
72. However, the aforesaid principle for triggering an application

under Section 10 of the 'I&B Code' cannot be made applicable as the 'Corporate
Applicant' does not claim money but prays for initiation of 'Corporate Insolvency
Resolution Process' against itself, having defaulted to pay the dues of creditors.
In so far it relates to filing of claim before the 'Insolvency Resolution

Professional', in case of stale claim, long delay and in absence of any continuous
cause of action, it is open to resolution applicant to decide whether such claim is
to be accepted or not, and on submission of resolution plan, the Committee of
Creditors may decide such question. If any adverse decision is taken in regard to
any creditor disputing the claim on ground of delay and laches, it will be open to
the aggrieved creditor to file objection before the Adjudicating Authority against
resolution plan and for its necessary correction who may decide the same in
accordance with the. observations as made above.”
Learned Counsel for the Respondent submits that as per the understanding the amount was required to be
paid back by Appellants within specified period and in case of default, interest was payable. As the
887
by Hon’ble NCLAT
interest accrued every month and there being continuous cause of action there is no latches on the part of
the Respondent.
4. In this context it is also relevant to rely on observation of this Appellate Tribunal in ‘M/s
Speculum Plast Pvt. Ltd. as quoted below:-
"58. Even if it is accepted that the Limitation Act, 1963 is applicable, though
we have held otherwise, in that case also application under Section 7 or 9 or 10
cannot be rejected on the ground that the application is barred by limitation for
being filed beyond three years for following reasons.
Except Article 137 of Part II i.e. 'other applications', as quoted below, no

other provisions of Limitation is applicable in the matter of filing application
under Sections 7 or 9 or 10:
Part II – OTHER APPLICTION
Description of application Period of Limitation Time from which period

begins to run
137. Any other application for Three years When the right to apply
which no period of limitation
is provided elsewhere in this
division.
59. From Article 137 of the Limitation Act, 1963, it is clear that the period of
three years' is to be counted from the date right to apply accrues to a 'Financial
Creditor' or 'Operational Creditor' or 'Corporate Debtor'.
60. For initiation of 'Corporate Insolvency Resolution Process', the right to

December, 2016 when 'I&B Code' has come into force, therefore, the right to
5. In view of the aforesaid position of law and decision of this Appellant Tribunal, we find no
infirmity in the impugned order. In absence of any merit, the appeal is dismissed. However, in the facts
and circumstances of the case, there shall be no cost.
888
by Hon’ble NCLAT
NEW DELHI
C.P. (I.B.) No. 267/NCLAT/2017
Applicant: Indian Overseas Bank

Vs.
Respondent: Mr. Dinkar T. Venkatsubramaniam Resolution Professional for Amtek Auto Ltd.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Karan Khanna and Ms. Asmita Kumar, Learned Advocates
Respondents/Defendant: None
ORDER
The 'Corporation Bank'-'Financial Creditor' preferred an application under Section 7 of the Insolvency
and Bankruptcy Code, 2016 (hereinafter referred to as Ì&B Code') for initiation of 'Corporate Insolvency
Resolution Process' against M/ s. Amtek Auto Ltd (`Corporate Debtor'). The application was admitted on
24th July, 2017, order of moratorium was passed and 'Interim Resolution Professional' was appointed on
27th July, 2017. While declaring moratorium, the following order was passed by the Adjudicating
Authority (National Company Law Tribunal) Chandigarh Bench, Chandigarh in terms of Section 14(1) of
the 'I&B Code', as under: -
"(a) the institution of suits or continuation of pending suits or proceedings

against the corporate debtor including execution of any judgment, decree or
order in any court of law, tribunal, arbitration panel or other authority;
(b) transferring, encumbering, alienating or disposing of by the corporate

debtor any of its assets or any legal right or beneficial interest therein;
(c) any action to foreclose, recover or enforce any security interest created
by the corporate debtor in respect of its property including any action under the
Securitisation and Reconstruction of financial Assets and Enforcement of
Security Interest Act, 2002 (54 of 2002);
889
by Hon’ble NCLAT
(d) the recovery of any property by an owner or lessor where such property
is occupied by or in the possession of the corporate debtor."
2. As per Section 17 (1) (d) of the 'I&B Code', the financial institutions maintaining the accounts of
the 'Corporate Debtor' have to act on the instructions of the 'Interim Resolution Professional' in relation
to such accounts and furnish all information relating to the 'Corporate Debtor' available with them to the
'Interim Resolution Professional'. The Appellant-Ìndian Overseas Bank', Hosur Branch is one of the
'Financial Creditor' of the 'Corporate Debtor' and constitutes 4.08% of the total value of the financial
debt. The 'Corporate Debtor' is maintaining an account with the Appellant-Indian Overseas Bank' in its
Hosur Branch to the extent of Rs.6,65,13,958/-. In view of initiation of 'Corporate Insolvency Resolution
Process' and in terms of Section 17, the 'Interim Resolution Professional' by letter dated 1st September,
2017 requested the Appellant -Indian Overseas Bank' to transfer the amount of Rs.6,65,13,958/- through
RTGS to the bank account of the 'Corporate Debtor' maintained with the Corporation Bank and cheque
No. 870093 dated 1st September, 2017 was also enclosed with the said letter.
3. It appears that in spite of reminder to the Appellant-'Indian Overseas Bank' amount having not
been transferred, notice was given to the Appellant-"Indian Overseas Bank'. The Appellant opposed the
application and stated that the amount available in the current account of the 'Corporate Debtor' at Hosur
Branch is neither a security interest nor an asset of the 'Corporate Debtor' and therefore, it is not liable to
release the amount to the 'Corporate Debtor' and the amount available in the said current amount is to be
appropriated towards the dues payable to the Appellant-'Indian Overseas Bank'. The stand taken by the
Appellant having rejected by the Adjudicating Authority and the Appellant having been directed to
transfer the amount of Rs.6,65,13,958/- to the bank account of the 'Corporate Debtor' maintained with the
Corporation Bank, present appeal has been preferred against the impugned order dated 13th October,
2017 in CA No.142/2017 in CP (IB) No. 42/Chd/Hry/2017.
4. Learned counsel for the Appellant has taken similar plea as was taken before the Adjudicating
Authority that the amount of 'Corporate Debtor' lying in the Hosur Branch of Appellant- 'Indian
Overseas Bank' was neither a security interest nor an asset of the 'Corporate Debtor' and the 'Corporate
Debtor' having borrowed the amount from the Appellant-Ìndian Overseas Bank', the amount required to
be appropriated to the dues.
5. Having heard learned counsel for the Appellant, we do not accept the submissions made on behalf
of the Appellant in view of the fact that after admission of an application under Section 7 of the 'I&B
Code', once moratorium has been declared it is not open to any person including `Financial Creditors'
890
by Hon’ble NCLAT
and the appellant bank to recover any amount from the account of the 'Corporate Debtor, nor it can
appropriate any amount towards its own dues.
6. If the 'Corporate Debtor' has borrowed some amount from the Appellant-'Indian Overseas Bank'
and the Appellant- 'Indian Overseas Bank' come within the definition of 'Financial Creditor' as defined in
Section 5(7) of the 'I&B Code', it is always open to the Appellant- 'Indian Overseas Bank' to file its claim
before the 'Interim Resolution Professional' for getting the amount back. If the Appellant claims to be
`Financial Creditor' and file's such claim before the 'Interim Resolution Professional' showing the
principal amount and interest thereon, the 'Interim Resolution Professional will consider the same and the
Appellant being 'Financial Creditor' may be taken in the Committee of Creditors'.
7. We find no merit in this appeal, therefore, we are not inclined to interfere with the impugned
order dated 13th October, 2017. However, liberty is given to the Appellant-'Indian Overseas Bank' to
raise its claim before the 'Interim Resolution Professional' and request him to allow it to be a member of
the Creditors Committee which should be considered in accordance with law.
8. The Appellant will act in terms with the order passed by the Adjudicating Authority and transfer
the amount to the Corporation Bank immediately but not later than 30th November, 2017.
9. The appeal stands disposed of with aforesaid observation. However, in the facts and
891
by Hon’ble NCLAT

NEW DELHI
C.P. (I.B.) No. 110/NCLAT/2017
Applicant: Mr. T. Vinayak ravi Reddy

Vs.
Respondent: Canara Bank & Anr.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Ms. Varsha Banerjee, Mr. Milan Singh Negi and Mr. Kunal
Gudhwani, Learned Advocates
Respondents/Defendant: Mr. Rajesh Kumar Gautam, and Mr. Khusboo Aggarwal, Learned Advocates
ORDER
In view of the decision of the Hon’ble Supreme Court in Innoventive Industries Vs. ICICI Bank
Ltd. – 2017(11) SCALE 4, an application for substitution has been filed by the aggrieved person Mr. T.
Vinayak Ravi Reddy shareholder and Director of the Corporate Debtor with prayer to substitute him (Mr.
T. Vinayak Ravi Reddy) as the Appellant and to transpose the Corporate Debtor -Deccan Chronicle
Holdings Ltd through Interim Resolution Professional as 2nd Respondent.
2. Having heard learned Counsel for the Appellant and learned counsel for the Respondent, the
application for substitution is allowed. Let Mr. T. Vinayak Ravi Reddy be substituted as Appellant. The
Corporate Debtor “Deccan Chronicle Holdings Limited” through Internal Resolution Professional be
transposed as 2nd Respondent. I.A. No. 783 of 2017 stands disposed of.
892
by Hon’ble NCLAT
NEW DELHI
C.P. (I.B.) No. 201/NCLAT/2017
Applicant: SAK Industries Pvt Ltd

Vs.
Respondent: Fenance Auto Ltd
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Anuj Kumar with Mr. Anuj Verma, Learned Advocates
ORDER
This appeal has been preferred by the appellant, M/s SAK Industries Pvt Ltd (hereinafter referred
to as the “operational creditor) against the order dated 19th July, 2017 passed by the Adjudicating
Authority (National Company Law Tribunal), New Delhi whereby and whereunder the application
preferred by appellant under Section 9 of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred
to as “I&B Code”) has been rejected on the ground that the defects have not been removed within 7 days
which is mandatory in terms fo the decision of the Appellate Tribunal in the case of Smart Timing Steel
Ltd Vs National Steel and Agro Industries Ltd.
Notice was issued on Respondents but inspite of service of notice it did not choose to appear nor
disputed the facts stated in the appeal.
Learned counsel for the appellant brought to the notice of this Appellate Tribunal the decision of
the Hon’ble Supreme Court in the case of M/s Surendra Trading Company Vs M/s Juggilal Kamlapat
Jute Mills Company Ltd and Others, Civil Appeal No.8400 of 2017 etc. In the said case the Hon’ble
Supreme Court by its judgement dated 19th September, 2017 has held that subsection (5) of Section 7 or
proviso to sub-section (5) of Section 9 or proviso to sub-section (4) of Section 10 relating to removing of
defects within 7 days is not mandatory. The judgement of the Appellate Tribunal to that extent has been
set aside.
893
by Hon’ble NCLAT
In view of the aforesaid decision of the Hon’ble Supreme Court, we have no other option but to
set aside the impugned order dated 19th July, 2017. It is accordingly set aside. The case is remitted back
to the Adjudicating Authority, who after notice to the parties will consider the case. If there is any defect,
the appellant be allowed time to remove the defects. The appeal is allowed with the aforesaid
observations. However, in the facts and circumstances there shall be no order as to cost.
894
by Hon’ble NCLAT
NEW DELHI
C.P. (I.B.) No. 193/NCLAT/2017
Applicant: Sanjay Bagrodia

Vs.
Respondent: Sathyam Green Power Pvt Ltd
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Anush Raajan, Learned Advocate
ORDER
The Registry raised the question of delay in preferring this appeal under Section 61 of the
Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as “I&B Code”). Learned counsel
appearing on behalf of the appellant submits that there is no delay as the copy of the order was made
available to appellant on 28th June, 2017 whereinafter the appeal was preferred on 28th July, 2017.
Inspite of the same the Registry of the Appellate Tribunal had not registered the matter on the ground of
delay and after an order passed by the Registrar of this Appellate Tribunal, the case was registered. In the
facts and circumstances aforesaid we hold that there is no delay in preferring the appeal.
2. This appeal has been preferred by the appellant against the order dated 25th May, 2017 passed by
the Adjudicating Authority (National Company Law Tribunal), Principal Bench, New Delhi (hereinafter
referred as the “Tribunal”) in C.P. No.(IB)(108)(PB)/2017. By the impugned order the Tribunal rejected
the application under Section 9 preferred by the appellant on one of the grounds that the application is
barred by limitation.
3. We have heard the learned counsel for the appellant and learned counsel for the respondent.
4. The question as to whether Limitation Act, 1963 is applicable for triggering ‘Corporate
Insolvency Process” under I&B Code came for consideration before this Appellate Tribunal in M/s
895
by Hon’ble NCLAT
Speculum Plast Pvt Ltd Vs PTC Techno Pvt Ltd- Company Appeal (AT) (Insolvency) No.47 of 2017. In
the said case this Appellate Tribunal by its judgement dated 7.11.2017 has held as follows:
1963 is not applicable for initiation of ‘Corporate Insolvency Resolution
Process’, we further hold that the Doctrine of Limitation and Prescription is
69. If there is a delay of more than three years from the date of cause of
action and no laches on the part of the Applicant, the Applicant can explain the
delay. Where there is a continuing cause of action, the question of rejecting any
application on the ground of delay does not arise.
70. Therefore, if it comes to the notice of the Adjudicating Authority that the
application for initiation of ‘Corporate Insolvency Resolution Process’ under
section 7 or Section 9 has been filed after long delay, the Adjudicating Authority
may give opportunity to the Applicant to explain the delay within a reasonable
71. The stale claim of dues without explaining delay, normally should not be
entertained for triggering ‘Corporate Insolvency Resolution Process’ under
Section 7 and 9 of the ‘I&B Code’.
72. However, the aforesaid principle for triggering an application under

Section 10 of the ‘I&B Code’ cannot be made applicable as the ‘Corporate
Applicant’ does not claim money but prays for initiation of ‘Corporate
Insolvency Resolution Process’ against itself, having defaulted to pay the dues of
creditors.
In so far it relates to filing of claim before the ‘Insolvency Resolution

Professional’, in case of stale claim, long delay and in absence of any continuous
cause of action, it is open to resolution applicant to decide whether such claim is
to be accepted or not, and on submission of resolution plan, the Committee of
Creditors may decide such question. If any adverse decision is taken in regard to
any creditor disputing the claim on ground of delay and laches, it will be open to
896
by Hon’ble NCLAT
the aggrieved creditor to file objection before the Adjudicating Authority against
resolution plan and for its necessary correction who may decide the same in
accordance with the observations as made above.”
5. This Appellate Tribunal also notice the provisions of Article 137 (Part II) of the Limitation Act
and observed
“58. Even if it is accepted that the Limitation Act, 1963 is applicable, though
we have held otherwise, in that case also application under Section 7 or 9 or 10
cannot be rejected on the ground that the application is barred by limitation for
being filed beyond three years for following reasons.
Except Article 137 of Part II i.e. ‘other applications’, as quoted below, no other
provisions of Limitation is applicable in the matter of filing application under
Sections 7 or 9 or 10: -
Part II-OTHER APPLICATION
Description of application Period of Limitation Time from which

period begins to run
137. Any other application for Three years When the right to
which no period of limitation is apply accrues
provided elsewhere in this division.
59. From Article 137 of the Limitation Act, 1963, it is clear that the period of
three years’ is to be counted from the date right to apply accrues to a ‘Financial
Creditor’ or ‘Operational Creditor’ or ‘Corporate Debtor’.
60. For initiation of ‘Corporate Insolvency Resolution Process’, the right to

December, 2016 when ‘I&B Code’ has come into force, therefore, the right to
897
by Hon’ble NCLAT
6. As the case of the appellant is covered under the decision in M/s Speculum Plast Pvt Ltd Vs PTC
Techno Pvt Ltd-Company Appeal (AT) (Insolvency) No.47 of 2017, we have no option but to set aside
the impugned order. We, accordingly, set aside the impugned order dated 25th May, 2017 and remit C.P.
No.(IB)(108)(PB)/2017 back to the Adjudicating Authority, Principal Bench, New Delhi to consider the
matter in accordance with law. The appeal is allowed with the aforesaid observations. However, in the
facts and circumstances of the case there shall be no order as to cost.
898
by Hon’ble NCLAT
NEW DELHI
C.P. (I.B.) No. 183/NCLAT/2017
Applicant: M/s. Custodial Services (India) Private Limited

Vs.
Respondent: M/s. Metafilms (India) Ltd.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. R. Subramaniam and Mr. Arnav Dash, Learned Advocates
Respondents/Defendant: Mr. Mohit D Ram and Mr. Rajul Shrivastav, Learned Advocates
ORDER
This appeal has been preferred by Appellant against order dated 13th July, 2017 passed by the
Adjudicating Authority (National Company Law Tribunal), Chennai Bench, Chennai in
TCP/423/(IB)/2017, whereby and whereunder the transferred petition under Section 433 (e) (f) has not
been treated as an application under Section 9 of the Insolvency and Bankruptcy Code, 2016 (hereinafter
referred to as "I&B Code") in view of pendency of case under Section 11 of the Arbitration and
Conciliation • Act, 1996. The Tribunal adjourned the case sine die.
2. This appeal has been preferred under Section 61 of the '1&B Code' with a petition for
condonation of delay. Prayer has been made to condone the delay in preferring the appeal.
3. As per sub-section (3) of Section 61 of the I&B Code', the appeal required to be filed within thirty
days and this Appellate Tribunal has been empowered to condone delay not exceeding fifteen days, if
satisfied on the ground mentioned in the petition for condonation of delay.
4. Learned counsel for the Appellant accepts that the impugned order was passed on 13th July, 2017
in presence of counsel for the Appellant and the appellant had knowledge of the same on the said date and
that the thirty days' period comes to 12th August, 2017. It is also accepted that there being Saturday and
899
by Hon’ble NCLAT
Sunday intervening and 15th August, 2017 being holiday, the matter could have been presented on 16th
August, 2017. We accept the contention that if the case would have been filed on 16th August, 2017, this
Appellate Tribunal could have accepted the appeal without delay. However, we find that there being
defect the appeal was taken back and after removal of defects if was filed on 7th September, 2017. If
thirty days' period is calculated, it comes to 12th August, 2017 and fifteen days thereafter that if allowed,
the appeal should have been filed by 27th August, 2017. However, 27th August, 2017 being holiday at
best the appeal could have been entertained if it would have been filed by 28th August. We find that after
removal of the defects the appeal was filed on 7th September, 2017.
5. In the aforesaid circumstances, as the appeal has been filed beyond the period of forty-five days
i.e. thirty days of filing and further fifteen days' period, this Appellate Tribunal could have allowed, we
hold that this Appellate Tribunal has no jurisdiction to condone the delay.
6. The petition for condonation of delay is accordingly rejected. In the result, the appeal is dismissed
being barred by limitation. No cost.
900
by Hon’ble NCLAT
NEW DELHI
C.P. (I.B.) No. 128/NCLAT/2017
Applicant: Sh Sumeet Ahuja

Vs.
Respondent: Union Bank of India & another
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Ankit Singal with Mr. Aditya Khamparia, Learned Advocates
Respondents/Defendant: Mr. Aslam Ahmed with Ms. Shraddha Chaudhri, Learned Advocates
ORDER
The petition for substitution has been filed by Mr. Sumeet Ahuja, Director for impleading him as
appellant. Learned counsel for the appellant further prays to transpose M/s Paramshakti Steels Ltd
through Interim Resolution Professional as the second respondent.
Having heard both the parties the petition for substitution is allowed. Let Shri Sumeet Ahuja be
substituted as appellant and M/s Paramshakti Steels Ltd through IRP be transpose as second respondent.
Appellant to make necessary corrections in the cause title. I.A. No.860 of 2017 stands disposed off.
ORDER
The present appeal has been preferred by the appellant against the order dated 3rd July, 2017
passed by the Adjudicating Authority, (National Company Law Tribunal), Mumbai Bench, Mumbai in
CP No.727/I&BP/NCLT/MAH/2017 whereby and whereunder the Adjudicating Authority admitted the
application preferred by the 1st respondent (financial creditor) under Section 7 of the Insolvency &
Bankruptcy Code, 2016 (hereinafter referred to as the “I&B Code”), passed order of moratorium and
appointed Interim Resolution Professional (IRP).
901
by Hon’ble NCLAT
2. The main plea taken by the Learned counsel for the appellant is that the application under Section
7 of the I&B Code has been filed by the Power of Attorney holder which according him is not
permissible.
3. The 1st respondent has refuted such allegations as the application has been filed by the
‘authorised person’ namely the Deputy General Manager of the Bank.
4. Similar issue fell for consideration before this Appellate Tribunal in the case of M/s Palogix
Infrastructure Pvt Ltd Vs ICICI Bank, Company Appeal (AT) (Insolvency) No.30 of 2017. In the said
case this Appellate Tribunal by its judgement dated 20th September, 2017 observed and held as under:
“36. x x x x x. If general authorisation is made by any ‘Financial Creditor’ or

‘Operational Creditor’ or ‘Corporate Applicant’ in favour of its officers to do
needful in legal proceedings by and against the ‘Financial Creditor’ /
‘Operational Creditor’/’Corporate Applicant’, mere use of word ‘Power of
Attorney’ while delegating such power will not take away the authority of such
officer and ‘for all purposes it is to be treated as an ‘authorization’ by the
‘Financial Creditor’/‘Operational Creditor’/‘Corporate Applicant’ in favour of
its officer, which can be delegated even by designation. In such case, officer
delegated with power can claim to be the ‘Authorized Representative’ for the
purpose of filing any application under section 7 or Section 9 or Section 10 of
‘I&B Code’.
37. As per Entry 5 & 6 (Part I) of Form No.1, ‘Authorised Representative’ is

required to write his name and address and position in relation to the ‘Financial
Creditor’/Bank. If there is any defect, in such case, an application under section
7 cannot be rejected and the applicant is to be granted seven days’ time to
produce the Board Resolution and remove the defect.
38. This apart, if an officer, such as senior Manager of a Bank has been
authorised to grant loan, for recovery of loan or to initiate a proceeding for
‘Corporate Insolvency Resolution Process’ against the person who have taken
loan, in such case the ‘Corporate Debtor’ cannot plead that the officer has
power to sanction loan, but such officer has no power to recover the loan amount
or to initiate ‘Corporate Insolvency Resolution Process’, in spite of default of
debt.
902
by Hon’ble NCLAT
39. If a plea is taken by the authorised officer that he was authorised to
sanction loan and had done so, the application under section 7 cannot be
rejected on the ground that no separate specific authorization letter has been
issued by the ‘Financial Creditor’ in favour of such officer designate.”
5. As noticed, in the present case the application under Section 7 has been filed by the Deputy
General Manager of the Bank, in the authorisation order it is mentioned as Power of Attorney, but that
will not change the complex of the instrument which is an order of authorisation. In view of such position
of law the submission made by the counsel for the appellant can not be accepted.
6. Learned counsel for the appellant then referred to the impugned order and submitted that the
Adjudicating Authority has treated the 1st respondent as 'secured creditor' and has made certain
observations. However, as it has no relevancy with admission of the application, we are not expressing
any opinion. We find no merit in this appeal. It is accordingly dismissed. No cost.
903
by Hon’ble NCLAT

NEW DELHI
C.P. (I.B.) No. 157/NCLAT/2017
Applicant: M/s Zapp India Limited

Vs.
Respondent: M/s. Maheshwar Textile & Anr.
Judges/Coram:
Counsels:
ORDER
Heard learned Counsel for the Appellant. We find no ground made out to clarify the order dated
22nd September, 2017 passed in Appeal No. IB No.(IB)-170(ND) of 2017 which is specific. It is needless
to state that Interim Resolution Professional functions for 30 days and thereafter Resolution Professional
takes up the mater upto the end of Resolution process.
For the reason aforesaid, no further order is required to be passed. I.A. No. 856 of 2017 is
dismissed.
904
by Hon’ble NCLAT
NEW DELHI
C.P. (I.B.) No. 117/NCLAT/2017
Applicant: M/s Sabari Inn Pvt. Ltd.

Vs.
Respondent: M/s. Rameesh Associates Pvt. Ltd.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Akash Jandial & Mr. Kumar Dushyant Singh, Learned Advocates
Respondents/Defendant: None.
ORDER
The Appellant-`Corporate Debtor' has challenged the impugned order dated 19th June, 2017
passed by Adjudicating Authority (National Company Law Tribunal), Chennai Bench, Chennai, whereby
and whereunder the application preferred by the Respondent- M/s. Rameesh Associates Pvt. Ltd.
(Òperational Creditor') under Sections 433 and 434 of the Companies Act, 1956 has been treated to be an
application under Section 9 of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as
"I86B Code") read with Rule 6 of the Insolvency and Bankruptcy (Application to Adjudicating Authority)
Rules, 2016 (hereinafter referred to as "Adjudicating Authority Rules, 2016"), the order of admission and
Moratorium has been passed, name of 'Interim Resolution Professional' has been called for from the
'Insolvency and Bankruptcy Board of India' (hereinafter referred to as "Board") with further prohibitory
orders in terms of Ì&B Code'.
2. Learned counsel for the Appellant-torporate Debtor' submitted that before treating the application
as under Section 9 of the Ì&B Code', Respondent has not complied with the provisions of the Ì&B
Code'. No notice under sub-section (1) of Section 8 was issued in Form-3 or 4 and the application has
been admitted though there is an existence of dispute.
3. Notice was issued on Respondent but in spite of service of notice, the Respondent has not
appeared nor disputed the statement made in the appeal.
905
by Hon’ble NCLAT
4. The brief facts of the case are that the Appellant-`Corporate Debtor' entered into a contract with
Respondent Contractor. According to Appellant, pursuant to the contract entire amount has already been
settled and paid. However, in spite of that the Respondent issued a legal notice on 7th September, 2013
through a lawyer calling upon the Appellant to pay the outstanding sum of Rs. 12,06,508/ -. Thereafter,
the Respondent filed a Company Petition under Sections 433 & 434 of the Companies Act, 1956 before
the Hon'ble High Court of Madras in C.P.No. 243 of 2015 claiming a sum of Rs. 12,06,508/ - from the
Appellant.
5. After constitution of the Tribunal and Adjudicating Authority, pursuant to the Notification No.
G.S.R. 1119(E) dated 7th December, 2016, issued by Central Government under Section 434 of the
Companies Act, 2013 read with Section 239 of the Ì&B Code', the case was transferred to Adjudicating
Authority, Chennai Bench and re-numbered as TCP/263/(IB)/2017.
6. On notice, the Appellant appeared on 7th June, 2017 and disputed the liability. The case was
adjourned to 20th June, 2017, on which date the counsel for the Appellant sought time to file reply.
According to Appellant, no such opportunity was given and the transferred application has been treated to
be an application under Section 9 of the `186B Code' and was admitted by impugned order dated 20th
June, 2017 giving rise to the present appeal.
7. Learned counsel for the Appellant submitted that no notice under sub-section (1) of Section 8 was
issued in Form-3 or 4 prior to treating the application as under Section 9 of the Ì&B Code' or before the
admission. The application was also not filed in the proper format i.e. Form 5, as required under Section 9
of the Ì&B Code' read with Rule 6 of the Adjudicating Authority Rules, 2016 in terms of which details of
record of default etc. were required to be provided.
8. The aforesaid stand taken by the Appellant has not been disputed by the Respondent, as he failed
to appear.
9. Learned counsel for the Appellant has enclosed the Central Government notification dated 7th
December, 2016 issued from the Ministry of Corporate Affairs. By the said notification, in exercise of the
powers conferred under sub-sections (1) and (2) of Section 434 of the Companies Act, 2013 read with
sub-section (1) of Section 239 of the '186B Code', the Central Government framed "The Companies
(Transfer of Pending Proceedings) Rules, 2016".
10. Rule 5 relates to transfer of pending proceedings of winding up on the ground of inability to pay
debts which are to be transferred from the Hon'ble High Court's to the respective Tribunal and reads as
follows: -
906
by Hon’ble NCLAT
pay debts.- (1) All petitions relating to winding up under clause (e) of section 433
of the Act on the ground of inability to pay its debts pending before a High Court,
and where the petition has not been served on the respondent as required under
rule 26 of the Companies (Court) Rules, 1959 shall be transferred to the Bench
of the Tribunal established under sub-section (4) of section 419 of the Act,
exercising territorial jurisdiction and such petitions shall be treated as
with in accordance with Part H of the Code:
Tribunal within sixty days from date of this notification, failing which the petition
shall abate.
2. All cases where opinion has been forwarded by Board for Industrial and
Act, pursuant to section 20 of the Sick Industrial Companies (Special Provisions)
Act, 1985 shall continue to be dealt with by such High Court in accordance with
the provisions of the Act."
11. From the aforesaid Rule 5, it is clear after transfer of the case the Applicant (Respondent herein)
was required to submit all information, other than in formation forming part of the records transferred
from the High Court, for admission of the petition under Sections 7, 8 or 9 of the Ì86B Code', including
details of the proposed 'Insolvency Professional' within sixty days, failing which, the petition shall stand
abated.
12. As per Section 9 of the 'MO Code', before admission of application and its filing, a demand notice
under sub-section (1) of Section 8 is required to be issued on the 'Corporate Debtor', as quoted below: -
"8. Insolvency resolution by operational creditor. — (1) An operational creditor

may, on the occurrence of a default, deliver a demand notice of unpaid
operational debtor copy of an invoice demanding payment of the amount
907
by Hon’ble NCLAT
involved in the default to the corporate debtor in such form and manner as may
be prescribed."
13. It is only on receipt of such notice under sub-section (1) of Section 8 of the 'I& B Code', the
'Corporate Debtor' may either pay the amount or may dispute the claim in terms of sub-section (2) of
Section 8 of the 'MB Code'.
14. Clause (a) and (b) of sub-rule (1) of Rule 5 of the 'Adjudicating Authority Rules' provides the
format in which the demand notice /invoice demanding payment in respect of unpaid 'Operational Debt' is
to be issued by 'Operational Creditor'. As per Rule 5(1) (a) & (b), the following person (s) are authorised
to act on behalf of operational creditor, as apparent from the last portion of Form-3 and 4 which reads as
follows: -
"6. The undersigned request you to unconditionally repay the unpaid operational
corporate debtor].
Yours sincerely,

15. In the case of "Uttam Galva Steels Limited v. DF Deutsche Forfait AG & Anr. in Company
Appeal (AT) (Insolvency) 39 of 2017" this Appellate Tribunal by judgment dated 28th July, 2017 held as
follows:
"30. From bare perusal of Form-3 and Form-4, read with sub-rule (1) of Rule 5
and Section 8 of the I&B Code, it is clear that an Operational Creditor can apple
himself or through a person authorised to act on behalf of Operational Creditor.
The person who is authorised to act on behalf of Operational Creditor is also
required to state "his position with or in relation to the Operational Creditor",
meaning thereby the person authorised by Operational Creditor must hold
position with or in relation to the Operational Creditor and only., such person
can apply.
908
by Hon’ble NCLAT
31. The demand notice/ invoice Demanding Payment under the I&B Code is
'Corporate Debtor' is to be informed of particulars of 'Operational Debt', with a
demand of payment, with clear understanding that the Òperational Debt' (in
from the date of receipt of letter failing which the Òperational Creditor' will
initiate a Corporate Insolvency Process in respect of 'Corporate Debtor', as
apparent from last paragraph no. 6 of notice contained in Form - 3, and quoted
above. Only if such notice in Form-3 is served, the `Corporate Debtor' will
understand the serious consequences of non-payment of 'Operational Debt,
otherwise like any normal pleader notice/ Advocate notice, like notice under
Section 80 of C.P. C. or for proceeding under Section 433 of the Companies Act
1956, the 'Corporate Debtor' may decide to contest the suit/ case if filed, distinct
Section 8."
16. Form-5 is the format for filing application under section 9, as per which the following details are
to be provided: -
"Part I- particulars of applicant
Part II- particulars of corporate debtor
Part III- particulars of the proposed interim resolution professional (if proposed)
Part IV- particulars of operational debt
Part V- particulars of operational debt [documents, records and evidence of
default]
As, per the instructions, the following documents are required to be attached:
Annex I Copy of the invoice/ demand notice as in Form 3 of the Insolvency and
Corporate debtor.
Annex III Copy of the relevant accounts from the banks/ financial institutions
available.
Annex VI Written communication by the proposed interim resolution professional
Adjudicating Authority) Rules, 2016.
Annex VI Proof that the specified application fee has been paid."
909
by Hon’ble NCLAT
17. Admittedly, no notice was issued under sub-section (1) of Section 8 of the Ì&B Code'. In terms
with Rule 5, other informations were also not placed before the Adjudicating Authority.
18. The Respondent having failed to provide all the details as required under Form-5 as noticed
above, the application under sections 433 and 434 of the Companies Act, 1956 cannot be treated to be an
application under section 9 of the `186B Code' in terms of Rule 5 of Transfer Rules, 2016. In such
circumstances, in view of proviso to Rule 5 of the Transfer Rules, the application under Sections 433 and
434 of the Companies Act, 1956 stands abated.
19. For the reasons aforesaid, while we set aside the impugned order dated 20th June, 2017 passed
by the Adjudicating Authority, Chennai Bench in T.C.P No. 263/ (IB)/2017, also declare that the
application preferred by Respondent under Sections 433 and 434 of the Companies Act, 1956 stood
abated.
20. In effect, order (s) passed by Adjudicating Authority appointing Ìnterim Resolution
Professional', declaring moratorium, freezing of account and all other order (s) passed by Adjudicating
Authority pursuant to impugned order and action, if any, taken by the 'Interim Resolution Professional',
including the advertisement, if any, published in the newspaper calling for applications and all such
orders and actions are declared illegal and are set aside. The application preferred by Respondent is
dismissed as abated. Learned Adjudicating Authority will now close the proceeding. The appellant
company is released from all the rigour of law and is allowed to function independently through its
Board of Directors from immediate effect.
21. The Adjudicating Authority will fix the fee of 'Interim Resolution Professional `, if appointed,
and the Appellant will pay the fees of the Interim Resolution Professional, for the period he has
functioned. The appeal is allowed with aforesaid observation and direction. However, in
910
by Hon’ble NCLAT
NEW DELHI
C.P. (I.B.) No. 748/NCLAT/2017
Applicant: M/s B.K.R. Hotels and Resorts Pvt. Ltd.

Vs.
Respondent: Indian Bank
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Kumarpal R. Chopra & Mr. Karan Tarwar, Learned Advocates
Respondents/Defendant: Mr. Brijesh Kumar Tamber, Learned Advocate
ORDER
An application for substitution has been preferred by one Mr. D.R. Balakrishna Raja, Director of
M/s. B.K.R. Hotels & Resorts. We find that there is an affidavit signed by the deponent and the original
Vakalatnama has also been signed by the said Mr. D.R. Balakrishna Raja. In the circumstances, the
application for substitution is accepted and the objection raised by the Registry is rejected.
Apart from this, the application for substitution having already been allowed on 2nd November,
2017, the I.A. No. 748 of 2017 should be treated as disposed of.
911
by Hon’ble NCLAT

NEW DELHI
C.P. (I.B.) No. 178/NCLAT/2017
Applicant: DBM Geotechnics and Construction Private Limited

Vs.
Respondent: Gopalpur Ports Limited.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Ms. Vanita Bhargava, Mr. Aseem Chaturvedi & Ms. Wamika Trehan,
Learned Advocates
Respondents/Defendant: None.
ORDER
This appeal has been preferred by ‘Operational Creditor’ against the order dated 9th August, 2017
passed by Adjudicating Authority (National Company Law Tribunal), Kolkata Bench in C.P. (IB) No.
250/KB/2017 whereby the application preferred by Appellant-Operational Creditor has been rejected.
Earlier the matter was adjourned on the application of the Appellant for their negotiation to settle
the dispute. Application has been filed on behalf of the Appellant for withdrawal of the Appeal in view of
the settlement of the agreement dated 9th November, 2017 agreed by them which is annexed as
Annexure-A.
In the present case we have not gone into the merit in view of application for withdrawal of
appeal in terms of settlement dated 9th November, 2017. For the reason aforesaid, without expressing any
opinion, we allow the Appellant to withdraw the application but without any liberty to challenge the same
very order before the Appellate Tribunal.
However, we hope and trust the parties will act in terms of agreement. The appeal is disposed of
as withdrawn. No cost.
912
by Hon’ble NCLAT
NEW DELHI
C.P. (I.B.) No. 211/NCLAT/2017
Applicant: K. Kishan
Vs.
Respondent: Vijay Nirman Company Pvt. Ltd.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Sakel Bhushan & Mr. Akash Jardial, Learned Advocates
Respondents/Defendant: Mr. Soumyajit Pani & Inayat Ahmed, Learned Advocates
ORDER
This appeal has been preferred by Appellant against order dated 29th August, 2017 passed by the
Adjudicating Authority. Against the same very impugned order dated 29th August, 2017 challenged in
CP(IB) No. 100/9/HDB/2017 this Appellate Tribunal by todays judgment (20th November, 2017) in
“Ksheerabad Construction Pvt. Ltd. Vs. Vijay Nirman Company Pvt. Ltd.“- Company Appeal(AT)(Ins)
no. 167 of 2017, dismissed the appeal. The case of the Appellant being covered by the decision in
“Ksheerbad Construction Pvt. Ltd. Vs. Vijay Nirman Company Pvt. Ltd.”, this appeal is also dismissed
for same ground as shown in the aforesaid appeal. However, there shall be no order as to cost.
913
by Hon’ble NCLAT

NEW DELHI
C.P. (I.B.) No. 167/NCLAT/2017
Applicant: M/s. Ksheeraabd Constructions Pvt. Ltd.

Vs.
Respondent: M/s. Vijay Nirman Company Pvt. Ltd.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Arun Kathpalia, Mr. D. Abhinav Rao, Mr. D. Bharathi Reddy, Mr.
Somaksh Goyal, Mr. Swaroop George & Mr. George Thomas, Learned Advocates
Respondents/Defendant: Mr. Sanjay Kumar Chhetry & Mr. Vijayshree Pattnaik, Learned Advocates
ORDER
The Respondent- M/s. Vijay Nirman Company Pvt. Ltd. (Òperational Creditor') filed an
application under Section 9 of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as "I&B
Code") for initiation of 'Corporate Insolvency Resolution Process' against the Appellant- M/s.
Ksheeraabad. Constructions Pvt. Ltd. (`Corporate Debtor'). By impugned order dated 29th August, 2017
passed by Company Appeal (AT) (Insolvency) No. 167 of 2017 Adjudicating Authority (National
Company Law Tribunal), Hyderabad Bench, Hyderabad in CP(IB) No.100/9/HDB/ 2017, the application
having been admitted, order of moratorium having been passed and in view of appointment of 'Insolvency
Resolution Professional', present appeal has been preferred by the 'Corporate Debtor'.
2. The main plea taken by the Appellant-`Corporate Debtor' is that there is an 'existence of a dispute'
and therefore, the petition under Section 9 of the Ì&B Code' was not maintainable.
3. Learned counsel appearing on behalf of the Appellant-`Corporate Debtor' submitted that the
'Corporate Insolvency Resolution Process' cannot be initiated and decided when notice of dispute is
issued to the Òperational Creditor' under sub-section (2) (a) of Section 8 of the `18,5B Code' bringing to
its attention an 'existence of a dispute' or 'pendency of arbitration proceedings'.
4. Learned counsel appearing on behalf of the Appellant-`Corporate Debtor' further submitted that
after Arbitral Award passed by the Arbitral Tribunal, the application under Section 34 of the Arbitration
914
by Hon’ble NCLAT
and Conciliation Act, 1996 having been preferred, it amounts to pendency of a case and 'existence of a
dispute'. It was submitted that the aforesaid fact was brought to the notice of the Adjudicating Authority
but in spite of the same, impugned order of admission and moratorium has been passed.
5. Learned counsel for the Appellant-`Corporate Debtor' relied on Hon'ble Supreme Court judgment
in Mobilox Innovations Pvt. Ltd. Vs. Kirusa Software Pvt. Ltd. (2017) SCC OnLine SC 1154' wherein
the Hon'ble Supreme Court held:-
"54. It is clear, therefore, that once the, operational creditor has filed an
application, which is otherwise complete, the adjudicating authority must reject
the application under Section 9(5)(2)(d) if notice of dispute has been received by
the operational creditor or there is a record of dispute in the information utility.
It is clear that such notice must bring to the notice of the operational creditor the
"existence" of a dispute 'or the fact that a suit or arbitration proceeding relating
to a dispute is pending between the parties. Therefore, all that the adjudicating
authority is to see at this stage is whether there is a plausible contention which
requires further investigation and that the "dispute" is not a patently feeble legal
argument or an assertion of fact unsupported by evidence. It is important to
separate the grain from the chaff and to reject a spurious defence which is mere
bluster. However, in doing so, the Court does not need to be satisfied that the
defence is likely to succeed. The Court does not at this stage examine the merits
of the dispute except to the extent indicated above. So long as a dispute truly
exists in fact and is not spurious, hypothetical or illusory, the adjudicating
authority has to reject the application."
6. It was submitted that the Adjudicating Authority has erred in not considering that the Appellant
while opposing the claims raised by the Respondent has also raised a counter claim of Rs. 19 crores
before the Arbitral Tribunal. That fact that the counter claim was raised by the Appellant is itself
sufficient to show that there is an 'existence of dispute' as brought to the notice of the 'Operational
Creditor' pursuant to reply under sub-section (2)(a) of Section 8 of the Ì&B Code'. It was submitted that
the Arbitral Award dated 21st January, 2017 cannot be termed to be 'decree', till it is enforceable and
cannot be regarded as a 'debt' before it is final, if challenged under Section 34 of the Arbitration and
Conciliation Act, 1996. It was further submitted that as per Section 36 of the Arbitration and Conciliation
Act, 1996, an Arbitral Award is enforceable in the same manner as if there is a decree of the Court but
only on the expiry of the time to make an application to set aside the award under Section 34 of the
915
by Hon’ble NCLAT
Arbitration and Conciliation Act, 1996. Reliance has been placed on Hon'ble Supreme Court's decision in
Tiza Developers and Inter-trade P. Ltd. Vs. AMCI (I) (P) (Ltd.) — 2009 (7) SCC 796'.
7. On the other hand, according to counsel for the Respondent-Òperational Creditor', the Award
having been passed, the dispute stand decided and the award amount is a debt payable to the 'Operational
Creditor'.
8. It was submitted that the Appellant never raised any dispute prior to notice under sub-section (1)
of Section 8 of the "186B Code', therefore, it cannot be termed as dispute in existence. Reliance has been
placed on decision of this Appellate Tribunal in Ws. Annapurna Infrastructure Pvt. Ltd. and Anr. Vs. M/s.
SORIL Infra Resource Ltd — Company Appeal (AT) (Insolvency) No. 32 of 2017' wherein the Appellate
Tribunal held: -
"38. From the impugned order dated 24th March, 2017, we find that the learned
Adjudicating Authority noticed the aforesaid plea at paragraph 6 of the
impugned judgment, as quoted below:
"6. In order to buttress his stand that applicant is an 'Operational

Creditor' learned counsel has placed reliance on a portion of para 3.2.2 of the
report of the Bankruptcy Law Reforms Committee Volume I: Rationale and
Design and has argued that the report clearly brings out that the obligation to
pay rent is certainly cover by the definition of expression Òperational
Creditors'. According to the learned counsel the expression 'Operational
Creditor' used in section 5(20) and 5(21) of the Code must be construed to
include the obligation to pay rent to the applicant as an Òperational Creditor'.
According to the learned counsel the definition of 'Operational Creditor' as
adopted in section 5(20) of the Code is not exhaustive but it is illustrative as it is
evident from the use of word 'include'. Mr. Nair has submitted that it is well
settled principle of law that wherever the expression 'include' is used to define an
expression then it has room to imply many other things as the definition is not
exclusive."
39. However, we find that the aforesaid issue has not been decided by the learned
Adjudicating Authority, having not entertained the application under Sec. 9, on
other ground of 'existence of dispute'.
40. For the reason aforesaid, while we hold that the finding of the learned
Adjudicating Authority insofar as it relates to 'award', 'default of debt' and the
916
by Hon’ble NCLAT
'alternative remedy', are not based on sound principle and against the provisions
of law, we refrain to decide the question as to whether the 1st appellant is an
'operational creditor' or not which is first required to be decided by learned
41. For the aforesaid reasons, we set aside the impugned order dated 24th
March, 2017 and remit the case to the learned Adjudicating Authority, Principal
Bench, New Delhi to decide as to whether the 1st appellant is an 'operational
creditor' and if so, whether the application under Sec. 9 preferred by the
appellants is complete for admitting and initiation of corporate insolvency
resolution process. If the first question relating to status of appellant as
'operational creditor' is decided in affirmative, in favour of the appellant, then
learned Adjudicating Authority will decide the issue whether the application is
'complete or not' and if not complete may grant seven days' time to the appellants
to complete the record as per the proviso to Sec. 9 of the I&B Code."
10. In Mobilox Innovations Pvt. Ltd. Vs. Kirusa Software Pvt. Ltd.' (supra) the Hon'ble Supreme
Court referred to the facts is to be considered by the Adjudicating Authority for admitting an application
under Section 9 of the 18613 Code' and held as follows: -
"34. Therefore, the adjudicating authority, when examining an application under

Section 9 of the Act will have to determine:
(i) Whether there is an "operational debt" as defined exceeding Rs. 1 lakh?

(See Section 4 of the Act)
(ii) Whether the documentary evidence furnished with the application shows
that the aforesaid debt is due and payable and has not yet been paid? and
(iii) Whether there is existence of a dispute between the parties or the record
of the pendency of a suit or arbitration proceeding filed before the receipt of the
demand notice of the unpaid operational debt in relation to such dispute.?
35. If any one of the aforesaid conditions is lacking, the application would have
to be rejected.
36. Apart from the above, ,the adjudicating authority must follow the mandate of
Section 9, as outlined above, and in particular the mandate of Section 9(5) of the
917
by Hon’ble NCLAT
Act, and admit or reject the application, as the case may be, depending upon the
factors mentioned in Section 9(5) of the Act."
11. The question arises for consideration, whether pendency of a case before a Court under Section
34 of the Arbitration and Conciliation Act, 1996 can be termed to be 'dispute in existence' for the purpose
of subsection (6) of Section 5 of the `18613 Code'.
12. It is true that under Section 36 of the Arbitration and Conciliation Act, 1996, an Arbitral Award is
executable as a decree. It can be enforced only after the time for filing the application under Section 34
has expired and/or if no application is made or such application having been made has been rejected.
Therefore, for the purpose of Arbitration and Conciliation Act, 1996, an Arbitral Award reaches its
finality after expiry of enforcement time or if the application under Section 34 is filed and rejected.
However, for the purpose of Ì&B Code' no reliance can be placed on Section 34 of the Arbitration and
Conciliation Act, 1996, for the reasons stated below.
13. The Ì&B Code' being a Complete Code will prevail over all other Acts including Arbitration and
Conciliation Act, 1996. As per Section 238, provision of Ì&B Code' is to override other laws, including
Arbitration Act, 1996, as quoted below: -
"238. Provisions of this Code to override other laws. — The provisions of this
Code shall have effect, notwithstanding anything inconsistent therewith
contained in any other law for the time being in force or any instrument having
effect by virtue of any such law."
14. Therefore, the provision under the Ì&B Code' with regard to finality of an Arbitral Award for
initiation of 'Corporate Insolvency Resolution Process' will prevail the provisions of the 'Arbitration and
Conciliation Act, 1996'.
15. For the purpose of Section 9 of the 'I&B Code', the application to be preferred under Form-5 of
the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 (hereinafter referred
to as "Rules, 2016") as per which, the order passed by Arbitral panel/Arbitral Tribunal has been treated to
be one of the documents/records and evidence of default, as apparent from Part V of Form 5, as quoted
below:
"FORM 5
Part-V
[DOCUMENTS, RECORDS AND EVIDENCE OF DEFAULT]
918
by Hon’ble NCLAT
PARTICULARS OF SECURITY HELD, IF ANY, THE DATE OF ITS

ATTACH A COPY OF A CERTIFICATE OF REGISTRATION OF CHARGE

ISSUED BY THE REGISTRAR OF COMPANIES (IF THE CORPORATE
DEBTOR IS A COMPANY)
DETAILS OF RESERVATION / RETENTION OF TITLE ARRANGEMENTS

(IF ANY) IN RESPECT OF GOODS TO WHICH THE OPERATIONAL DEBT
REFERS
PARTICULARS OF AN ORDER OF A COURT, TRIBUNAL OR

RECORD OF DEFAULT WITH THE INFORMATION UTILITY, IF ANY

DETAILS OF SUCCESSION CERTIFICATE, OR PROBATE OF A WILL, OR
LETTER OF ADMINISTRATION, OR COURT DECREE (AS MAY BE
APPLICABLE), UNDER THE INDIAN SUCCESSION ACT, 1925 (10 OF 1925)
(ATTACH A COPY)
PROVISION OF LAW, CONTRACT OR OTHER DOCUMENT UNDER

A STATEMENT OF BANK ACCOUNT WHERE DEPOSITS ARE MADE OR

CREDITS RECEIVED NORMALLY BY THE OPERATIONAL CREDITOR IN
RESPECT OF THE DEBT OF THE CORPORATE DEBTOR (ATTACH A
LIST OF OTHER DOCUMENTS ATTACHED TO THIS APPLICATION IN

ORDER TO PROVE THE EXISTENCE OF OPERATIONAL DEBT AND
THE AMOUNT IN DEFAULT"
16. The aforesaid provisions made in the Form-5 if read with subsection (6) of Section 5 and Section
9 of the 180 Code' it is clear that while pendency of the suit or Arbitral Proceeding has been termed to be
an 'existence of dispute', an order of a Court, Tribunal or Arbitral Panel adjudicating on the default
(commonly known as Award), has been treated to be a "record of Operational Debt".
919
by Hon’ble NCLAT
17. In view of the aforesaid provisions of law and mandate of `186B Code', we hold that no person
can take advantage of pendency of a case under Section 34 of the Arbitration and Conciliation Act, 1996
to stall `Corporate Insolvency Resolution Process' under Section 9 of the 'ISO Code'.
18. In view of the findings above, no interference is called for against the impugned order dated 29th
August, 2017. In absence of any merit, the appeal is dismissed. However, in the facts and circumstances
of the case, there shall be no order as to cost.
920
by Hon’ble NCLAT
NEW DELHI
C.P. (I.B.) No. 150/NCLAT/2017
Applicant: Paramjeet Singh

Vs.
Respondent: Maxim Tubes Company Pvt. Ltd.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Pankaj Khetan, CS
Respondents/Defendant: Ms. Gargi R. Vyas, Mr. Subramanyam, & Mr. Ankur Singhal, Learned
Advocates
ORDER
This appeal has been preferred by the appellant - Paramjeet Singh, Director of M/s. International
Coil Limited against order dated 16th August, 2017 passed by the Adjudicating Authority (National
Company Law Tribunal), Special Bench, New Delhi in (IB)-120(PB)/2017 whereby and whereunder the
application preferred by the respondent (Financial Creditor) under Section 9 of the Insolvency and
Bankruptcy Code, 2016 (hereinafter referred to as the ‘I&B Code’) has been admitted, order of
moratorium has been passed and the Interim Resolution Professional (IRP) has been appointed.
Learned counsel appearing on behalf of the appellant submitted that there is an existence of
dispute and brought on record certain letter in support of such claim. However, aforesaid plea taken by
the appellant has been objected by the learned counsel for the respondent. According to respondent the
letter is forged for which the appellant is liable for punishment. It is further submitted that the respondent
has received a letter from M/s. Mundra Solar Power, Adani informing that no such letter was issued in
favour of the appellant. However, in this appeal we are not deciding the question whether document is
forged one or not for the reasons mentioned below.
Admittedly, operational creditor issued notice under sub-section (1) of Section 8 of I & B Code to
the Corporate Debtor; in spite of receipt of the such notice, the Corporate Debtor had not disputed the
claim nor submitted any reply under sub-section (2) of Section 8 within a period of ten days. It was in the
aforesaid circumstances application under Section 9 was filed in Form 5, wherein it was specifically
921
by Hon’ble NCLAT
mentioned that ‘no objection has been filed by Corporate Debtor’ under sub-Section (2) of Section 8. In
the aforesaid circumstances and in absence of any specific evidence brought on record, we are not
inclined to interfere with the impugned order dated 16th August, 2017.
We find no merit in this appeal. It is accordingly dismissed. No cost.
922
by Hon’ble NCLAT
NEW DELHI
C.P. (I.B.) No. 123/NCLAT/2017
Applicant: Mr. D.R. Balakrishna Raja, Director

Vs.
Respondent: Indian Bank
M/s. B.K.R. Hotels & Resorts Pvt. Ltd.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Kumarpal R. Chopra & Mr. Karan Tarwar, Learned Advocates
Respondents/Defendant: Mr. Brijesh Kumar Tamber, Mr. Amit Dhingra & Mr. Amandeep Bawa, Learned
Advocates
ORDER
This appeal has been preferred by the appellant against order dated 30th May, 2017 passed by the
Adjudicating Authority (National Company Law Tribunal), Division Bench, Chennai in
CP/472/(IB)/CB/2017 (IND/822/(IB)/CB/2017) whereby and whereunder the application preferred by the
respondent (Financial Creditor) under Section 7 of the Insolvency and Bankruptcy Code, 2016 (
hereinafter referred to as the ‘I&B Code’ ) read with Rule 4 Insolvency and Bankruptcy (Application to
Adjudicating authority) Rules, 2016 has been admitted, order of moratorium has been passed and the
Interim Resolution Professional (IRP) has been appointed with certain directions.
We have heard the learned counsel appearing on behalf of the appellant, the learned counsel
appearing on behalf of the respondent and the Interim Resolution Professional appearing on behalf of the
Corporate Debtor.
Learned counsel for the appellant has submitted that the impugned order dated 30th May, 2017
has been passed by the Adjudicating Authority in violation of rules of natural justice without notice to the
Corporate Debtor.
However, such submission has been objected by the learned counsel for the respondent on the
ground that on the date of admission, the Corporate Debtor appeared through their counsel Mr. T.
923
by Hon’ble NCLAT
Moorthy, who raised all the objections and after hearing the parties, the impugned order was passed by
On hearing the parties, we find from the impugned order that the Corporate Debtor has appeared
through counsel and the Adjudicating Authority noticed the submissions made on behalf of the Corporate
Debtor. The Adjudicating Authority has specifically mentioned that “on perusal of the application along
with the record indicates that the requirement of law are fulfilled and the counsel representing the
Corporate Debtor neither resisted the application nor raised any objection”. In view of the fact that
counsel for the Corporate Debtor was heard and the records is complete and in absence of any other
defect, we hold that the Adjudicating Authority rightly admitted the application under Section 7 and
passed the impugned order.
We find no merit in this appeal. It is accordingly dismissed. However, on the facts and
924
by Hon’ble NCLAT
NEW DELHI
C.P. (I.B.) No. 274/NCLAT/2017
Applicant: T.R. Jawahar & Anr.

Vs.
Respondent: Edelweiss Asset & Anr.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Vivek Sibal, Ms. Pooja M. Saigal & Ms. Khyati, Learned
Advocates
Respondents/Defendant: Mr. Sanjeev Puri, Mr. Dheeraj Nair & Mr. Kunal Mimani, Learned Advocates
ORDER
This appeal has been preferred by T.R. Jawahar, Shareholder/ Director of Frontline Printers
Private Limited (Corporate Debtor) and another against order dated 2nd November, 2017 passed by the
Adjudicating Authority (National Company Law Tribunal), Chennai in CP/606/(IB)/CB/2017 whereby
and whereunder the application preferred by the respondent (Financial Creditor)under Section 7 of the
Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as the ‘I&B Code’) read with Rule 4 of
Insolvency and Bankruptcy (Application to Adjudicating authority) Rules, 2016 has been admitted, order
of moratorium has been passed and the Interim Resolution Professional (IRP) has been appointed with
certain directions.
The only plea taken by the learned counsel for the appellants is that the respondent(s) has filed
the application under Section 7 of the I & B Code in the capacity of ‘Trustee’ and not as a ‘Financial
Creditor’. Reliance has been placed on part-I of Form I wherein it mentioned that it is ‘Acting in its
capacity as Trustee for EARC Trust SC-Trust-SC 19 (Series IV)’. However, on perusal of the record, we
find that in Part-I of Form I, it has been mentioned that the respondent is a ‘Financial Creditor’. Its date of
incorporation as financial creditor has been shown as 5th October, 2007 with the identification number as
financial creditor.
925
by Hon’ble NCLAT
It is true that the respondent is a ‘trustee’ but we find that the respondent is also a company
registered under the Companies Act, 1956 and come within the definition of ‘Financial Creditor’ as
defined under sub-section (7) read with sub-section (8) of Section 5 of the I & B Code.
In view of the fact that the respondent has filed the application in the capacity of the ‘Financial
Creditor’ and the application is complete, we find no ground to interfere with the impugned order. In
absence of any merit, the appeal is dismissed. No cost.
926
by Hon’ble NCLAT
NEW DELHI
C.P. (I.B.) No. 262/NCLAT/2017
Applicant: D-Art Furniture Systems Pvt. Ltd.

Vs.
Respondent: Sudhir Sales & Service Ltd.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Sumesh Dhawan, Ms. Vatsala Kak & Ms. Charu Sharma, Learned
Advocates
Respondents/Defendant: Mr. Y. Sarat Chandra, Learned Advocates
ORDER
This appeal has been preferred by Appellant-M/s D-ART Furniture Systems Pvt. Ltd. against the
order dated 24th October, 2017 passed by the Adjudicating Authority (National Company Law Tribunal)
Principal Bench, New Delhi in C.P. No. (IB)-313)PB)/2017 whereby and whereunder the Adjudicating
Authority taking into consideration the Preliminary objections raised by Corporate Debtor, allowed 7
days’ time to issue proper notice to the Appellant-Corporate Debtor under sub-Section (1) of Section 8 of
the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as ‘I&B Code’).
2. Learned Counsel for the Appellant submits that the notice under sub Section (1) of Section 8 of
‘I&B Code’ was issued by an Advocate so it has been held to be illegal. In view of decision of this
Appellate Tribunal in ‘Uttam Galva Steels Limited Vs. DF Deutsche Forfait AG & Anr.’ - Company
Appeal (AT)(Ins) No. 39 of 2017 wherein this Appellate Tribunal observed:
"31 The demand notice/invoice Demanding Payment under the I&B Code is
‘Corporate Debtor’ is to be informed of particular of ‘Operational Debt’, with a
927
by Hon’ble NCLAT

above.

Corporate Resolution Process,, where such claim otherwise cannot be contested,
Section 8.”
3. According to learned Counsel for the Appellant, in absence of a separate notice under sub –
Section (1) of Section 8 of the I&B Code, no application can be entertained under Section 9 of the I&B
Code. Notice issued by a lawyer cannot be termed to be a defect occurring in the application under
Section 9 of the I&B Code.
4. Having heard learned Counsel for the parties, while we accept the submissions made on behalf of
the Appellant that no Application under Section 9 can be entertained by Adjudicating Authority before
completion of 10 days of service of notice under sub-Section(1) of Section 8, learned Counsel appearing
on behalf of the Respondent submits that he has been instructed to withdraw the application under Section
9 from the Court of the Adjudicating Authority, Principal Bench, New Delhi with a liberty to issue notice
under sub-Section (1) of Section 8, in accordance with law and then in the case of failure of payment,
may file a fresh Application under Section 9 of the I&B Code.
5. In view of such stand taken by the learned Counsel for Respondent, we allow the prayer as made
on behalf of Respondent and recorded above. In the result the Company Petition No. (IB)-313)PB)/2017
is dismissed as withdrawn with liberty to the Respondent – ‘Operational Creditor’ to issue proper demand
notice under Section 8(1) through its authorised representative holding post & position with the
‘Operational Creditor’ and in case of failure to pay the admitted debts it is open to the Respondent-
‘Operational Creditor’ to file a fresh application under Section 9 of I&B Code.
6. In view of the order recorded above, the Adjudicating Authority, Principal Bench, New Delhi will
close the proceeding in C.P. No. C.P. No. (IB)- 313)PB)/2017. The appeal stands disposed of with the
aforesaid observation and liberty to the Respondent. No Cost.
928
by Hon’ble NCLAT
NEW DELHI
C.P. (I.B.) No. 253/NCLAT/2017
Applicant: IVRCL Limited

Vs.
Respondent: Sanghvi Movers Limited
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Sumesh Dhawan, Ms. Vatsala Kak, & Ms. Charu Sharma,
Learned Advocates
Respondents/Defendant: Mr. Nitin S. Tambwekar, Learned Advocates
ORDER
This appeal has been preferred by M/s IVRCL Limited (Corporate Debtor) against the order dated 27th
September, 2017 passed by Adjudicating Authority (National Company Law Tribunal) Hyderabad Bench,
Hyderabad in C.P. No.117/9/HDB/2017 whereby and whereunder the Adjudicating Authority noticed that
without comply with the provisions of Section 8 of the Insolvency & Bankruptcy Code, 2016(“I&B
Code”), the petition under Section 9 of the I&B Code has been filed by Respondent – M/s Sanghvi
Movers Limited (‘Operational Creditor’) thereby allowed time to the Respondent (‘Operational Creditor’)
to issue a fresh demand notice treating the application as defective.
When the matter was taken up, Mr. Nitin S. Tambwekar, learned Counsel for the Respondent
(‘Operational Creditor’) submits that he has been instructed by the Operational Creditor to withdraw the
Application under Section 9 of the I&B Code as has been filed before the Adjudicating Authority to
enable the ‘Operational Creditor’ to issue a fresh notice on the Corporate Debtor under sub-Section (1) of
Section 8 and then in case of failure of payment of debt amount to file fresh an Application under Section
9 of the I & B Code. It is also informed that such an application has already been filed on 8th November,
2017.
In the facts and circumstances of the case, without going into the merit of the case, we allow the
prayer as made on behalf of the Respondent (“Operational Creditor”); dismiss the application filed under
Section 9 of the I&B Code before the Adjudicating Authority as withdraws with a liberty to the
‘Operational Creditor’ as prayed for, noted above.
In view of the order aforesaid, the Adjudicating Authority will close C.P. No. 117/9/HDB/2017 as
dismissed as withdrawn with liberty aforesaid. However, there shall be no cost.
929
by Hon’ble NCLAT

NEW DELHI
C.P. (I.B.) No. 212/NCLAT/2017
Applicant: Shri Shyam Sunder Yadav

Vs.
Respondent: M/s. Steel Indian Corporation & Anr.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Raj Karan Sharma, Learned Advocate
Respondents/Defendant: Mr. Rahul Sood, Learned Advocate
ORDER
This appeal has been preferred by the Appellant against the order dated 28th April, 2017 after
long delay. Though the impugned order was passed on 28th April, 2017 and the Interim Resolution
Professional has already taken over the management on 8th September, 2017 but the Appeal has been
filed on 6th October, 2017. No ground has been shown to prefer the appeal after long delay.
As per Section 61 of the Insolvency & Bankruptcy Code, 2016 (“I&B Code’), an appeal is
required to be filed within 30 days and the Appellate Tribunal is empowered to condone delay not
exceeding 15 days. In the present circumstances, the appeal having been preferred beyond 15 days’ time,
this Appellate Tribunal is not empowered to condone the delay. The Appeal is accordingly dismissed,
being barred by limitation. No cost.
930
by Hon’ble NCLAT
NEW DELHI
C.P. (I.B.) No. 858/NCLAT/2017
Applicant: Shri Shyam Sunder Yadav

Vs.
Respondent: M/s. Steel Indian Corporation & Anr.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Raj Karan Sharma, Learned Advocate
Respondents/Defendant: Mr. Rahul Sood, Learned Advocate
ORDER
An application has been filed by one Shyam Sunder Yadav, s/o Shri Bhim Singh Yadav, Director
of the Corporate Debtor M/s Shree Radha Raman Packaging Pvt. Ltd. to substitute him as Appellant in
place of the original Appellant and to transpose the original Appellant – Corporate Debtor through
Interim Resolution Professional as Second Respondent.
Having heard the learned Counsel Mr. Shaym Sunder Yadav and Counsel for the First
Respondent, the Application of substitution is allowed. Let Shri Shyam Sunder Yadav be substituted as
Appellant and Shree Radha Raman Packaging Pvt. Ltd. (Original Appellant) be transposed as Second
Respondent through Interim Resolution Professional. The Appellant will make necessary corrections of
Cause Title and Appeal. Shri Shyam Sunder Yadav having already been authorised and filed
Vakalatnama on behalf of the original Appellant, the said Vakalatnama is to be treated to be an
independent Vakalatnama on behalf of Shri Shyam Sunder Yadav. I.A. No. 858 of 2017 is disposed of.
931
by Hon’ble NCLAT

NEW DELHI
C.P. (I.B.) No. 151/NCLAT/2017
Applicant: M/s. Aggcon International Equipments Pvt. Ltd.

Vs.
Respondent: Isolux Corsan India Engineering & Construction Pvt. Ltd.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Saurabh Seth & Ms. Sumeera Seth, Learned Advocate
Respondents/Defendant: Mr. Vineet Tayal, Learned Advocate
ORDER
The Appellant – ‘Operation Creditor’ has filed an application under Section 9 of the Insolvency
& Bankruptcy Code 2016 (hereinafter referred to as ‘I&B Code’) for initiation of Corporate Insolvency
Resolution Process against Respondent- M/s Isolux Corsan India Engineering and Construction Pvt. Ltd.
The Adjudicating Authority (National Company Law Tribunal) Chandigarh Bench, Chandigarh by
impugned order dated 21st July, 2017 in CP(IB) No. 33/Chd/Hry/2017 noticed that the actual claim of the
Appellant is against one ‘Isolux Corsan India- C&C “JV” and not against the Respondent which is joint
venture firm and the firm not being a party in the application under Section 9 of ‘I&B Code’, the
application was dismissed.
2. That on 9th November, 2017 when the matter was taken up, the following submission was
recorded: -
“Learned Counsel for the Appellant who also accepts that “Isolux Corsand India-
C&C ‘JV’, District Kaimur, Bhar is not a company incorporated under the
Companies Act, 1956 or 2013.”
3. Having heard the learned Counsel for the parties and in view of the fact that the agreement
between the Appellant was not with the Respondent- ‘Isolux Corsan India Engineering Construction Pvt.
Ltd.’ but with a joint venture firm namely ‘Isolux Corsan India- C&C “JV”, we hold that the application
932
by Hon’ble NCLAT
under Section 9 of the I&B Code against the Respondent- ‘Isolux Corsan India Engineering Construction
Pvt. Ltd.’ is not maintainable.
4. For the reasons stated above, no interference is called for in the impugned order. In absence of
any merit the appeal, is dismissed. No cost.
933
by Hon’ble NCLAT

NEW DELHI
C.P. (I.B.) No. 189/NCLAT/2017
Applicant: K. Raghavendra Rao

Vs.
Respondent: Lakshmi Vilas Bank & Anr.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Haripriya Padmanabha & Ms. Pooja Dhar, Learned Advocate
Respondents/Defendant: Ms. Shalini Kaul & Mr. Rajendra Beniwal, Learned Advocate
ORDER
Respondent- Laxmi Vilas Bank filed an application under Section 9 of the Insolvency &
Bankruptcy Code (“I&B Code”) 2016 read with Rule-6 of the Insolvency & Bankruptcy (Application to
Adjudicate Authority) Rules, 2016. During the pendency of the petition there was confusion as to whether
the application should have been filed under Section 7 of I&B Code or not but finally the Respondent
preferred to treat the Application under Section 9 of I&B Code. The records being complete in terms of
I&B Code, the Adjudicating Authority (National Company Law Tribunal) Chennai Bench, Chennai, by
impugned order dated 17th August, 2017 admitted the application, initiated Corporate Insolvency
Resolution Process, declared moratorium and appointed Interim Resolution Professional with certain
directions.
2. Learned Counsel appearing on behalf of the Appellant submits that there was a dispute ongoing
between the parties but he accepts that there is nothing on record in support of such dispute. Earlier time
was taken by the Counsel for the Appellant on the ground that they will settle the dispute with the
Respondent (‘Operational Creditor’). Today it is informed by learned Counsel for the Appellant that the
Appellant is negotiating the matter and State Bank of India has filed Interlocutory Application for
impleadment and may agree to bail out the Appellant and may allow to settle the dispute.
934
by Hon’ble NCLAT
3. Learned Counsel appearing on behalf of the State Bank of India submits that they have filed
Interlocutory Application for impleadment.
4. Having heard the learned Counsel for the Appellant, the ‘Operational Creditor’ and State Bank of
India, we are of the view that in absence of any defect in the application under Section 9 of the I&B Code
and there is nothing on record to suggest any existence of dispute, no interference can be made with the
impugned order dated 17th August, 2017. For the said reason, no relief can be granted by this Appellate
Tribunal. However, this order will not come in the way of the Appellant to settle the dispute with
‘Operational Creditor’ and to ask for appropriate relief from a Court of Competent Jurisdiction. The
appeal is dismissed with aforesaid observations.
935
by Hon’ble NCLAT

NEW DELHI
C.P. (I.B.) No. 277/NCLAT/2017
Applicant: Axis Bank Ltd.

Vs.
Respondent: Dinkar T. Venkatsubramanian
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Bishwajit Dubey, Ms. Surabhi Khattar & Mr. Aditya Marwah,
Learned Advocate
ORDER
Learned counsel for the appellant submits that after filing of the appeal the matter was taken up in
the Meeting of the Committee of Creditors held on 3rd November, 2017 pursuant to which decision has
been taken by and accepted and the Interim Resolution Professional which is accepting the claim of the
Financial Creditor. In the aforesaid background, counsel for the appellant sought for and is permitted to
withdraw the appeal.
Let the minutes of meeting of the Committee of Creditors of JODPL Pvt. Ltd. be kept on record.
The appeal stands disposed of as withdrawn. No cost.
936
by Hon’ble NCLAT
NEW DELHI
C.P. (I.B.) No. 238/NCLAT/2017
Applicant: Electrosteel Steels Ltd.

Vs.
Respondent: Imperia Structures Ltd.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Naman Joshi & Mr. Ankit Rajgarhia, Learned Advocate
ORDER
Having heard the learned counsel appearing on behalf of the appellant and taking into
consideration the grounds stated in the application, the order dated 10.11.2017 is recalled. The Company
Appeal (AT)(Insolvency) No.238/2017 is restored on record. Let the main appeal be listed on 1st
December, 2017. This appeal be not treated as part heard matter.
R.A. No.6/2017 stands disposed off.
937
by Hon’ble NCLAT

NEW DELHI
C.P. (I.B.) No. 202/NCLAT/2017
Applicant: Forech India Pvt. Ltd.

Vs.
Respondent: Edelweiss Assets Reconstruction Company Ltd. & Anr.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Ms. Purti Marwaha & Ms. Henna George, Learned Advocates
Respondents/Defendant: Ms. Misha & Mr. Shantanu Chaturvedi, Learned Advocates
ORDER
An application under Section 7 of the Insolvency and Bankruptcy Code, 2016 (hereinafter
referred to as the ‘I & B Code’ ) was filed by the Edelweiss Assets Reconstruction Company Ltd.
(Financial Creditor) against one ‘Tecpro Systems Ltd.’ (Corporate Debtor). After notice to the Corporate
Debtor, the case was taken up by the Adjudicating Authority, Principal Bench, New Delhi. The appellant,
who is not a ‘Corporate Debtor’, but a third party and claimed to be an ‘Operational Creditor’, appeared
and opposed the application under Section 7 preferred by the ‘Edelweiss Assets Reconstruction Company
Ltd.’ (Financial Creditor) on the ground of pendency of winding up cases. The Adjudicating Authority on
hearing the parties and taking into consideration the facts that the record was complete, filed in Form 1 of
the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 (hereinafter referred
to as the ‘Adjudicating Authority Rules’) by impugned order dated 7th August, 2017 admitted the
application, passed order of moratorium and appointed Interim Resolution Professional with certain
directions. Thereby objection raised by the appellant stands rejected.
2. Learned counsel appearing on behalf of the appellant submits that a number of winding up
applications have been filed and pending against the ‘Tecpro Systems Ltd.’ (Corporate Debtor) and,
therefore, the petition under Section 7 is not maintainable. However, such objection cannot be accepted in
absence of any ineligibility, as imposed under Section 11 of the I & B Code and reads as follows:
938
by Hon’ble NCLAT
“11. Persons not entitled to make application - The following persons shall not
be entitled to make an application to initiate corporate insolvency resolution
process under this Chapter, namely:—
(a) a corporate debtor undergoing a corporate insolvency resolution

process; or
(b) a corporate debtor having completed corporate insolvency resolution

process twelve months preceding the date of making of the application; or
(c) a corporate debtor or a financial creditor who has violated any of the
terms of resolution plan which was approved twelve months before the date of
making of an application under this Chapter; or
(d) a corporate debtor in respect of whom a liquidation order has been

made.
Explanation.— For the purposes of this section, a corporate debtor includes a

corporate applicant in respect of such corporate debtor.”
3. From the aforesaid provision, we find that the ‘Corporate Debtor’ or ‘Financial Creditor’ is
ineligible to make application under Section 7 or 10 where (a) a corporate debtor undergoing a corporate
insolvency resolution process; or (b) a corporate debtor having completed corporate insolvency resolution
process twelve months preceding the date of making of the application; or (c) a corporate debtor or a
financial creditor who has violated any of the terms of resolution plan which was approved twelve
months before the date of making of an application under this Chapter; or (d) a corporate debtor in
respect of whom a liquidation order has been made.
4. Thus, the ‘Financial Creditor’ is ineligible to file an application under Section 7 only if the
‘Financial Creditor’ has violated any of the terms of resolution plan which was approved twelve months
from the date of making an application.
5. Chapter III of Part II deals with liquidation process. In the said Chapter the word ‘winding up’
has not been mentioned. However, if Section 255 is read with Schedule 11 of the I & B Code, we find
that in Section 2 of the Companies Act, 2013 after clause (94), the following clause shall be inserted
namely :
"2. In this Act, unless the context otherwise requires –
xxx xxx xxx
939
by Hon’ble NCLAT
(94A) "winding up" means winding up under this Act or liquidation under the
Insolvency and Bankruptcy Code, 2016, as applicable.”
6. Therefore, it is clear that the “winding up” under the Companies Act, 2013 has been treated to be
“liquidation” under the I & B Code.
7. There is no provision under the I & B Code which stipulate that if a ‘winding up’ or ‘liquidation’
proceeding has been initiated against the Corporate Debtor, the petition under Section 7 or Section 9
against the said Corporate Debtor is not maintainable.
8. However, if a ‘Corporate Insolvency Resolution’ has started or on failure, if liquidation

proceeding has been initiated against the Corporate Debtor, the question of entertaining another
application under Section 7 or Section 9 against the same very ‘Corporate Debtor’ does not arise, as it is
open to the ‘Financial Creditor’ and the ‘Operational Creditor’ to make claim before the Insolvency
Resolution Professional/Official Liquidator.
9. Similarly, one may argue that in case where ‘winding up’ proceeding has been ordered by the
Hon’ble High Court and thus stands initiated, where is the question of filing an application under section
7 or 9 or initiation of Corporate Insolvency Resolution Process, which, on failure ultimately culminates
into liquidation proceedings (winding up proceedings) ? The argument can be that once second stage i.e.
liquidation (winding up) proceedings has already initiated, the question of reverting back to the first stage
of ‘Corporate Insolvency Resolution Process’ or preparation of Resolution plan does not arise. One can
appreciate such stand which can be decided in an appropriate case, but such issue being not involve in the
present case, we are not deciding the issue aforesaid. It is left open to be decided in other appropriate
case.
10. In the present case, admittedly no order for winding up has been passed against the ‘Corporate
Debtor’ by Hon’ble High Court. No liquidation proceeding has been initiated. It appears that some of the
applications for ‘winding up’ under the Companies Act, 1956 are pending, but no order for ‘winding up’
has been passed. In the circumstances, in the absence of actual initiation of ‘winding up’ proceedings
against the Corporate Debtor, it is always open to the Financial Creditor/Operational Creditor to file an
application for Corporate Insolvency Resolution Process against the Corporate Debtor.
11. For the reasons aforesaid, the objection raised by the appellant that petition under Section 7 is not
maintainable against the Corporate Debtor because of pendency of some applications for winding up
cannot be accepted.
940
by Hon’ble NCLAT
NEW DELHI
C.P. (I.B.) No. 853/NCLAT/2017
Applicant: Forech India Pvt. Ltd.

Vs.
Respondent: Edelweiss Assets Reconstruction Company Ltd. & Anr.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Ms. Purti Marwaha & Ms. Henna George, Learned Advocates
Respondents/Defendant: Ms. Misha & Mr. Shantanu Chaturvedi, Learned Advocates
ORDER
This appeal has been preferred by ‘Forech India Pvt. Ltd.’ against order dated 7th August, 2017
passed by the Adjudicating Authority (National Company Law Tribunal), Principal Bench, New Delhi in
C.A. NO. (IB) 197 (PB)/2017 whereby and whereunder the objection raised by the appellant has been
rejected. The appeal has been preferred after delay of ten days with an application for condonation of
delay.
On hearing the learned counsel for the parties and being satisfied with the ground shown in the
application the delay of ten days in preferring this appeal is condoned. I.A. No. 853 /2017 stands disposed
of.
941
by Hon’ble NCLAT

NEW DELHI
C.P. (I.B.) No. 140/NCLAT/2017
Applicant: Indian Bank

Vs.
Respondent: M/s. Cethar Ltd. & Ors.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. R. Chandrachud & Mr. Nitin Thukral, Learned Advocates
Respondents/Defendant: Mr. Amitesh Chandra, Mr. Prem Mardi, Mr. K.D. Sharma & Mr. M.D. Sharma,
Learned Advocates
ORDER
Shri Nitin Thukral, learned counsel for the appellant submits that he has instructions from the
officials of the Indian Bank to withdraw the appeal. Learned counsel for the respondent has no objection
to such prayer. The appeal is accordingly dismissed as withdrawn. No cost.
942
by Hon’ble NCLAT
NEW DELHI
C.P. (I.B.) No. 283/NCLAT/2017
Applicant: India Cement Capital ltd.

Vs.
Respondent: Jitendra Kumar Jain, Insolvency Professional
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: None
ORDER
This is a defective appeal preferred by the appellant under Section 61 of the Insolvency and
Bankruptcy Code, 2016 (hereinafter referred to as the ‘I & B Code’) against a letter send in mailbox dated
17th October, 2017, which appears to be a notice of information. As the appeal is not maintainable under
Section 61 of the I & B Code, against a notice/letter dated 17th October, 2017 is appeared to be
dismissed. This apart, in the absence of learned counsel for the appellant who had not appeared after
repeated calls, the appeal is dismissed for non-prosecution. Hence, the appeal is dismissed on both counts.
No costs.
943
by Hon’ble NCLAT

NEW DELHI
C.P. (I.B.) No. 288/NCLAT/2017
Applicant: Jindal Steel & Power Ltd.

Vs.
Respondent: DCM International Ltd.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Manoj K. Singh, Ms. Daizy Chawla, Mr. Vineet Arora and Mr.
Shresth Sharma, Learned Advocates
ORDER
Admittedly, the Appellant is a tenant of Respondent-‘Corporate Debtor’. Even if it is accepted that a

Memorandum of Understanding has been entered between the parties in regard to the premises in
question, the Appellant being a tenant, having not made any claim in respect of the provisions of the
goods or services and the debt in respect of the repayment of dues does not arise under any law for the
time being in force payable to the Central Government or State Government, we hold that the Appellant
tenant do not come within the meaning of ‘Operational Creditor’ as defined under sub-section (20) read
with sub-Section (21) of Section 5 of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to
‘I&B Code’) for triggering Insolvency and Bankruptcy Process under Section 9 of the ‘I&B Code’.
2. For the said reasons, the Adjudicating Authority having dismissed the application under Section 9
of the ‘I&B Code’ by the impugned order dated 6th October, 2017, no interference is called for.
3. In absence of any merit, the appeal is dismissed. No Cost.
944
by Hon’ble NCLAT
NEW DELHI
C.P. (I.B.) No. 291/NCLAT/2017
Applicant: Nityanand Singh and Co.

Vs.
Respondent: Ferrous Infrastructure Pvt. Ltd.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Naresh Kumar, Learned Advocates
ORDER
This appeal has been preferred by the appellant (Operational Creditor) against order dated 28th
September, 2017 whereby and whereunder the application preferred under Section 9 of Insolvency and
Bankruptcy Code, 2016 (hereinafter referred to as the ‘I&B Code’) has been rejected. The petition of
condonation of delay has also been filed.
On hearing the learned counsel for the appellant and perusal of the order, we find that the order
dated 28th September, 2017 was passed by the Adjudicating Authority in the presence of the appellant –
Mr. Nityanand Singh, Company Secretary, who appeared in person. However, he applied for certified
copy of the impugned order after more than thirty days on 30th October, 2017, which was supplied to him
on the same day i.e. 30th October, 2017. The delay in making such application has not been explained.
The appeal, after removal of the defects, was filed on 27th November, 2017. Thus, we find that the appeal
has been preferred after sixty days from the date of the order i.e. 28th September, 2017.
An appeal can be preferred by an aggrieved person under sub-section (1) and sub-section (2) of
Section 61 of the I & B Code. As per sub-section (2) of Section 61 such appeal is to be filed within thirty
days. As per proviso thereto, the Appellate Tribunal has power to condone the delay, if it is satisfied that
there was sufficient cause for not filing the appeal but such period cannot exceed fifteen days from
beyond the period of thirty days. In this case as the appeal has been preferred after 60 days of the
impugned order, we hold that Appellate Tribunal has no jurisdiction to condone the delay.
For the reasons aforesaid, we dismiss the application for condonation of delay. In the result the
appeal is dismissed being barred of limitation. No cost.
945
by Hon’ble NCLAT

NEW DELHI
C.P. (I.B.) No. 292/NCLAT/2017
Applicant: Aditya Kumar Jajodia

Vs.
Respondent: Srei Infrastructure Finance Ltd.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Naresh Kumar, Learned Advocates
ORDER
In spite of repeated calls nobody appears for the appellant. The appeal is dismissed for non-
prosecution. No cost.
946
by Hon’ble NCLAT
NEW DELHI
C.P. (I.B.) No. 295/NCLAT/2017
Applicant: Amod Amladi

Vs.
Respondent: Mrs. Sayali Rane & Anr.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Sanjiv Sen, Senior Advocate with Mr. Rahul Gaikwad, Mr. Ajay
Kumar and Mr. Kapil Joshi, Learned Advocates
ORDER
The Appellant, who claims to be Investor of “Citrus Check Inns Limited”, a Company
incorporated under the Companies Act, 1956 and 2013, filed intervention Petition before the
Adjudicating Authority (National Company Law Tribunal) Mumbai Bench, Mumbai in CP
No.896/I&BC/NCLT/MB/MAH/2017 alleging initiation of ‘Corporate Insolvency Resolution Process’
against ‘Citrus Check Inns Limited’ as nullity, the initiation under Section 9 of the Insolvency and
Bankruptcy Code, 2016 (hereinafter referred to as ‘I&B Code’) having made fraudulently by the
‘Operational Creditor’ in collusion with the Directors. Before the Adjudicating Authority prayer was
made to recall the order dated 2nd May, 2017 passed by the Adjudicating Authority admitting the
application under Section 9 of the ‘I&B Code’ with further request to dismiss the said Petition (CP.
No.896/I&BC/NCLT/MB/MAH/2017).
2. The Adjudicating Authority having noticed all the relevant facts and submissions made on behalf
of the Appellant, rejected the prayer by impugned order dated 3rd October, 2017 on the ground that the
Adjudicating Authority has no power to recall the order dated 2nd May, 2017 or to dismiss the Company
Petition after admission of the application under Section 9 of the ‘I&B Code’ for initiation of ‘Corporate
Insolvency Resolution Process’. The impugned order dated 3rd October, 2017 is under challenge in the
present appeal.
947
by Hon’ble NCLAT
3. Learned senior counsel appearing on behalf of the Appellant submitted that the Company Petition
under Section 9 of the ‘I&B Code’ preferred by the ‘Operational Creditor’ was filed fraudulently in
connivance with the Directors and due to the same, by consent order ‘Corporate Insolvency Resolution
Process’ was initiated on 2nd May, 2017. According to him, the ‘Operational Creditor’ is also liable to be
punished under Section 65 of the ‘I&B Code’ for not bringing relevant facts to the notice of the
Adjudicating Authority that the Respondent- ‘Citrus Check Inns Limited’ is not a ‘Corporate Debtor’ and
no Petition under Section 9 of the ‘I&B Code’ is thus maintainable. It is also submitted that the order
passed by SEBI, as modified by Securities Appellate Tribunal (SAT) which was also upheld by the
Hon’ble Supreme Court by judgment dated 9th November, 2016 in Civil Appeal No. 6590- 91/2016 were
not brought to the notice of the Adjudicating Authority.
4. Heard learned counsel for the Appellant. Admittedly, the Appellant is an Investor therefore, the
Appellant cannot claim to be an ‘aggrieved person’ for preferring appeal against the order dated 2nd May,
2017 passed by Adjudicating Authority whereby the application under Section 9 of the ‘I&B Code’ was
admitted. In fact, the Appellant being an investor is entitled to file its claim before the ‘Insolvency
5. Further, as the order dated 2nd May, 2017 is not under challenge in this appeal this Appellate
Tribunal cannot express any opinion with regard to the order of admission dated 2nd May, 2017. If the
said order dated 2nd May, 2017 is allowed to be challenged, the appeal will be barred by limitation under
sub-section (2) of Section 61 of the ‘I&B Code’.
6. In absence of any power of review or recall vested with the Adjudicating Authority, we hold that
the Adjudicating Authority rightly refused to recall the order of admission dated 2nd May, 2017.
7. For the reasons aforesaid, no relief can be granted. In absence of any merit the appeal is
dismissed. However, the impugned order dated 3rd October, 2017 passed by the Adjudicating Authority,
Mumbai and the order of this Adjudicating Authority will not come in the way of Appellant Investor to
file its claim before the ‘Insolvency Resolution Professional.
948
by Hon’ble NCLAT
NEW DELHI
C.P. (I.B.) No. 296/NCLAT/2017
Applicant: Anant Kajare

Vs.
Respondent: Eknath Aher & Anr.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Sanjiv Sen, Senior Advocate with Mr. Rahul Gaikwad, Mr. Ajay
Kumar and Mr. Kapil Joshi, Learned Advocates
ORDER
The Appellant, who claims to be Investor of “M/s. Royal Twinkle Star Club Limited”, a
Company incorporated under the Companies Act, 1956 and 2013, filed intervention Petition before the
Adjudicating Authority (National Company Law Tribunal) Mumbai Bench, Mumbai in CP No.
895/I&BC/NCLT/MB/MAH/2017 alleging initiation of ‘Corporate Insolvency Resolution Process’
against ‘M/s. Royal Twinkle Star Club Limited’ as nullity, the initiation under Section 9 of the Insolvency
and Bankruptcy Code, 2016 (hereinafter referred to as ‘I&B Code’) having made fraudulently by the
‘Operational Creditor’ in collusion with the Directors. Before the Adjudicating Authority prayer was
made to recall the order dated 2nd May, 2017 passed by the Adjudicating Authority admitting the
pplication under Section 9 of the ‘I&B Code’ with further request to dismiss the said Petition (CP. No.
895/I&BC/NCLT/MB/MAH/2017).
2. The Adjudicating Authority having noticed all the relevant facts and submissions made on behalf
of the Appellant, rejected the prayer by impugned order dated 3rd October, 2017 on the ground that the
Adjudicating Authority has no power to recall the order dated 2nd May, 2017 or to dismiss the Company
Petition after admission of the application under Section 9 of the ‘I&B Code’ for initiation of ‘Corporate
Insolvency Resolution Process’. The impugned order dated 3rd October, 2017 is under challenge in the
present appeal.
949
by Hon’ble NCLAT
3. Learned senior counsel appearing on behalf of the Appellant submitted that the Company Petition
under Section 9 of the ‘I&B Code’ preferred by the ‘Operational Creditor’ was filed fraudulently in
connivance with the Directors and due to the same, by consent order ‘Corporate Insolvency Resolution
Process’ was initiated on 2nd May, 2017. According to him, the ‘Operational Creditor’ is also liable to be
punished under Section 65 of the ‘I&B Code’ for not bringing relevant facts to the notice of the
Adjudicating Authority that the Respondent- ‘M/s. Royal Twinkle Star Club Limited’ is not a ‘Corporate
Debtor’ and no Petition under Section 9 of the ‘I&B Code’ is thus maintainable. It is also submitted that
the order passed by SEBI, as modified by Securities Appellate Tribunal (SAT) which was also upheld by
the Hon’ble Supreme Court by judgment dated 9th November, 2016 in Civil Appeal No. 6590-91/2016
were not brought to the notice of the Adjudicating Authority.
4. Heard learned counsel for the Appellant. Admittedly, the Appellant is an Investor therefore, the
Appellant cannot claim to be an ‘aggrieved person’ for preferring appeal against the order dated 2nd May,
2017 passed by Adjudicating Authority whereby the application under Section 9 of the ‘I&B Code’ was
admitted. In fact, the Appellant being an investor is entitled to file its claim before the ‘Insolvency
5. Further, as the order dated 2nd May, 2017 is not under challenge in this appeal this Appellate
Tribunal cannot express any opinion with regard to the order of admission dated 2nd May, 2017. If the
said order dated 2nd May, 2017 is allowed to be challenged, the appeal will be barred by limitation under
sub-section (2) of Section 61 of the ‘I&B Code’.
6. In absence of any power of review or recall vested with the Adjudicating Authority, we hold that
the Adjudicating Authority rightly refused to recall the order of admission dated 2nd May, 2017.
7. For the reasons aforesaid, no relief can be granted. In absence of any merit the appeal is
dismissed. However, the impugned order dated 3rd October, 2017 passed by the Adjudicating Authority,
Mumbai and the order of this Adjudicating Authority will not come in the way of Appellant Investor to
file its claim before the ‘Insolvency Resolution Professional.
950
by Hon’ble NCLAT
NEW DELHI
C.P. (I.B.) No. 294/NCLAT/2017
Applicant: Gurdeep Singh Sahani

Vs.
Respondent: Berger Paints India Ltd. & Ors.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Ramji Srinivasan, Senior Advocate with Mr. N.P.S Chawla, Mr.
Naveen Hegde, Mr. Tushar Bhardwaj, Mr. Sohil Yadav and Mr. Sujoy Datta, Learned Advocates
ORDER
The Appellant, who claimed to be a Promoter/Director of the ‘Corporate Debtor’ has preferred
this appeal against the order dated 17th October, 2017 passed by Adjudicating Authority (National
Company Law Tribunal), Kolkata Bench, Kolkata in C.A. (IB) No. 405/2017 in C.P. (IB) No. 173/2017,
whereby and whereunder the application preferred by one of the ‘Financial Creditor’ namely L & T
Finance has been allowed and ‘Resolution Professional’ has been directed to give proportionate voting
rights to the said Applicant- L & T Finance, in respect of the entire amount of the claim as shown therein.
2. Learned senior counsel appearing on behalf of the Appellant submitted that the extent of
proportionate voting rights has been allowed in favour of the Respondent- L & T Finance is not just and
proper. However, as we find that the Appellant is a Promoter/Director of the ‘Corporate Debtor’, we are
of the view that the Appellant has no locus standi to challenge the voting right of any of the ‘Financial
Creditor’, the promoters having no such voting right under the ‘I&B Code’.
3. It was also contended that the Appellant, who is a Promoter/Director of the ‘Corporate Debtor’ is
also a ‘Resolution Applicant’ and already filed ‘Resolution Plan’ which is under consideration. However,
we do not intend to express any opinion on such claim in absence of any pleading but may refer to
provision of in eligibility as prescribed under Section 29A of the Insolvency and Bankruptcy Code, 2016,
inserted vide notification dated 23rd November, 2017, and reads as follows: -
951
by Hon’ble NCLAT
“29A. A person shall not be eligible to submit a resolution plan, if such person,
or any other person acting jointly with such person, or any person who is a
promoter or in the management or control of such person, -
(a) is an undischarged insolvent;

(b) has been identified as a wilful defaulter in accordance with the
guidelines of the Reserve Bank of India issued under the Banking
Regulation Act, 1949;
(c) whose account is classified as nonperforming asset in accordance with
the guidelines of the Reserve Bank of India issued under the Banking
Regulation Act, 1949 and period of one year or more has lapsed from the
date of such classification and who has failed to make the payment of all
overdue amounts with interest thereon and charges relating to non-
performing asset before submission of the resolution plan;
(d) has been convicted for any offence punishable with imprisonment for two
years or more; or
(e) has been disqualified to act as a director under the Companies Act,
2013;
(f) has been prohibited by the Securities and Exchange Board of India from
trading in securities or accessing the securities markets;
(g) has indulged in preferential transaction or undervalued transaction or
fraudulent transaction in respect of which an order has been made by the
Adjudicating Authority under this Code;
(h) has executed an enforceable guarantee in favour of a creditor, hi respect
of a corporate debtor under insolvency resolution process or liquidation
under this Code;
(i) where any connected person in respect of such person meets any of the
criteria specified in clauses (a) to (h).
Explanation.— For the purposes of this clause, the expression “connected person” means—
i. any person who is promoter or in the management or control of the

resolution applicant; or
952
by Hon’ble NCLAT
ii. any person who shall be the promoter or in management or control of
the business of the corporate debtor during the implementation of the
resolution plan; or
iii. the holding company, subsidiary company, associate company or related
party of a person referred to in clauses (i) and (ii)
iv. has been subject to any disability, corresponding to clauses (a) to (i),
under any law in a jurisdiction outside India.”.
4. In fact, the aforesaid provision is to be looked into by ‘Resolution Professional’ and the
Committee of Creditor as and when any ‘Resolution Plan’ will be taken up for consideration.
5. For the reasons aforesaid, no relief can be granted. We find no merit in this appeal. It is
accordingly dismissed. However, in the facts and circumstances of the case, there shall be no order as to
cost.
953
by Hon’ble NCLAT

NEW DELHI
C.P. (I.B.) No. 134/NCLAT/2017
Applicant: M/s. Hotel Gaudavan Pvt. Ltd. & Ors.

Vs.
Respondent: Alchemist Asset Reconstruction Co. Ltd. & Anr.
C.P. (I.B.) No. 163/NCLAT/2017
Applicant: Harendra Singh Rathore

Vs.
Respondent: Arunava Sikdar & Anr.
C.P. (I.B.) No. 166/NCLAT/2017
Applicant: M/s. Hotel Gaudavan Pvt. Ltd.

Vs.
Respondent: Alchemist Asset Reconstruction Co. Ltd. & Anr.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Amit Singh Chadha, Senior Advocate with Mr. Abhirup Dasupta
and Ms. Swati Sharma, Learned Advocates
Respondents/Defendant: Mr. Krishnendu Datta and Mr. Ashu Bansal, Learned Advocates
ORDER
All these appeals arise out of common ‘Corporate Insolvency Resolution Process’ initiated
against M/s. Hotel Gaudavan Private Limited & Ors (‘Corporate Debtor’).
2. The brief facts of the case are that the Respondents- M/s. Alchemist Asset Reconstruction
Company Limited & Anr. filed an application under Section 7 of the Insolvency and Bankruptcy Code,
2016 (hereinafter referred to as “I&B Code”) against M/s. Hotel Gaudavan Private Limited & Ors
(‘Corporate Debtor’).
954
by Hon’ble NCLAT
3. On 31st March, 2017, the Adjudicating Authority (National Company Law Tribunal), Special
Bench, New Delhi admitted the application, passed order of moratorium and appointed an ‘Interim
Resolution Professional’ with certain directions.
4. It appears that the ‘Corporate Debtor’ thereafter, along with another shareholder filed a Writ
Petition before the Hon’ble High Court of Rajasthan, challenging the order passed by the Adjudicating
Authority. However, the Hon’ble High Court refused to look into the merits of the order dated 31st
March, 2017 and left it open to be examined by this Appellate Tribunal.
5. Thereafter, the ‘Corporate Debtor’ along with another shareholder moved before the Hon’ble
Supreme Court in SLP(C) No.12606-12707 of 2017 against different orders passed by Adjudicating
Authority which were also dismissed on 26th April, 2017. The ‘Corporate Debtor’ and Another thereafter
preferred appeal before this Appellate Tribunal on 2nd May, 2017, which was subsequently withdrawn on
17th July, 2017.
6. The ‘Corporate Debtor’ thereafter moved before the Arbitral Tribunal and against such action the
‘Insolvency Resolution Professional’ moved before the Adjudicating Authority which decided the matter
against the ‘Corporate Debtor’ on 31st May, 2017.
7. In the meantime, as the Board of Directors refused to comply with the order of the Adjudicating
Authority, the ‘Interim Resolution Professional’ filed Contempt Petition (CA No. 183(PB)/2017) before
the Adjudicating Authority against the Directors, in which an adverse order was passed on 29th June,
2017 by the Adjudicating Authority against the Directors.
8. As noticed above, the ‘Corporate Debtor’ had filed an application under Section 8 of the
Arbitration and Conciliation Act, 1996 wherein certain orders were passed against which the Appellant(s)
preferred the appeal before the District Judge, Jaisalmer, who admitted the appeal, issued notice to the
Respondents and passed interim orders. Against the said order, the ‘Financial Creditor’ moved before the
Hon’ble Supreme Court in Civil Appeal No. 16929 of 2017 (arising out of S.L.P. (C) No. 18195/2017)
wherein following order was passed: -
“ORDER
1) Leave granted.
2) Heard the learned Senior Counsel/Counsel appearing for the parties.
955
by Hon’ble NCLAT
3) The facts of the present case disclose a very sorry state of affairs. Several
proceedings had been taken and ultimately a petition filed under the
Insolvency and Bankruptcy Code, 2016 was admitted on 31.03.2017 by
the National Company Law Tribunal, Principal Bench, New Delhi. As a
result, the moratorium that is imposed by Section 14 came into effect on
that date and Respondent No.3 has been appointed as the Interim
Resolution Professional (IRP). A Writ Petition was filed against this
order, which was admitted only to the extent of the challenge to the vires
of the Insolvency Code, is pending. A Special Leave Petition against this
order was dismissed on 26.04.2017. Meanwhile, despite the moratorium,
a letter was issued by Respondent No. 1 to Respondent No. 2 invoking
the arbitration clause between the parties and Shri Pankaj Garg, an
Advocate, was appointed as Sole Arbitrator. Shri Garg entered upon the
reference. In an other order dated 31.05.2017, the National Company
Law Tribunal, Principal Bench, New Delhi referred to Section 14 (1) (a)
of the Insolvency Code and stated that given the moratorium that is
imposed, no arbitration proceedings could go on. A notice was issued on
29.06.2017 by the National Company Law Tribunal, Principal Bench,
New Delhi in C.A. No. 186 (PB) of 2017.
4) A First Appeal was filed before the District Judge, Jaisalmer, Rajasthan
under Section 37 of the Arbitration and Conciliation Act, 1996 and by
the impugned order dated 06.07.2017, the appeal was asked to be
registered and notice was issued awaiting a reply.
5) The mandate of the new Insolvency Code is that the moment an
insolvency petition is admitted, the moratorium that comes into effect
under Section 14 (1) (a) expressly interdicts institution or continuation of
pending suits or proceedings against Corporate Debtors.
6) This being the case, we are surprised that an arbitration proceeding has
been purported to be started after the imposition of the said moratorium
and appeal under Section 37 of the Arbitration Act are being entertained.
Therefore, we set aside the order of the District Judge dated 06.07.2017
and further state that the effect of Section 14 (1) (a) is that the
arbitration that has been instituted after the aforesaid moratorium is non
est in law.
956
by Hon’ble NCLAT
7) Mr. Jayant Bhushan, learned Senior Counsel, also informs us that
criminal proceeding being F.I.R. No. 0605 dated 06.08.2017 has been
taken in a desperate attempt to see that the IRP does not continue with
the proceedings under the Insolvency Code which are strictly time
bound. We quash this proceeding.
8) As a result, the appeal is allowed and the steps that have to be taken
under the Insolvency Code will continue unimpeded by any order of any
other Court.”
9. The aforesaid fact discloses not only very sorry state of affairs and its legal action on the part of
the Director(s) of the ‘Corporate Debtor(s)’ which has also been noticed by Hon’ble Supreme Court in the
order aforesaid.
10. In this Appellate Tribunal three appeals have been preferred. Two appeals by ‘Corporate Debtor’-
M/s. Hotel Gaudavan Pvt. Ltd. and another by Mr. Harendra Singh Rathore but against three different
orders arising out of same Insolvency Proceedings. All the cases were listed but since the initial date
either on the ground of casualty in the family of the counsel for the Appellant(s) and illness of the counsel
for the Appellant(s) or any other ground, the Appellant(s) sought for adjournments since August, 2017,
which were allowed.
11. On 8th November, 2017, when all the three appeals were taken up for hearing, nobody appeared
for the Appellant(s). Learned counsel brought to the notice of this Appellate Tribunal the order passed by
the Hon’ble Supreme Court, as recorded above, which is final.
12. In the facts and circumstances, we have no other option but to dismiss all the three appeals with
cost of Rs. 25,000/- imposed on each Appellant(s) namely, Mr. Harendra Singh Rathore, Mr. Lokendra
Singh Rathore, Mr. Deependra Singh Rathore and Ms. Mohan Kanwar, to be paid by Bank Draft in
favour of the Registrar, National Company Law Appellate Tribunal within thirty days from the receipt of
this order.
Let copy of this order be forwarded to the Appellant(s) aforesaid at their respective addresses.
Learned counsel for the Respondent(s) will also serve a copy of this order on the Directors/shareholders
named above.
957
by Hon’ble NCLAT

NEW DELHI
C.P. (I.B.) No. 279/NCLAT/2017
Applicant: Madhukar Tulsi

Vs.
Respondent: Ajay Kumar Gupta & Ors.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. U.K. Chaudhary, Senior Advocate assisted by Mr. Parminder
Singh and Mr. Himanshu Vij, Learned Advocates
Respondents/Defendant: Mr. Sachin Jain and Mr. Ajay Gupta, Learned Advocates
ORDER
The appellant, Director of IERO Fiveriver Pvt. Ltd. (Corporate Debtor) has preferred this appeal
against order dated 13th November, 2017 passed by the Adjudicating Authority (National Company Law
Tribunal), New Delhi in C.P. No. IB-355/ND/2017 whereby and whereunder the application preferred by
Ajay Kumar Gupta and Mrs. Poonam Gupta under Section 7 of the Insolvency and Bankruptcy Code,
2016 (hereinafter referred to as the “I&B Code’) has been admitted, order of moratorium has been passed
and Interim Resolution Professional has been appointed.
When the matter was taken up, learned Senior Counsel for the appellant submits that settlement
has been reached between the Corporate Debtor and Financial Creditor on 18th November, 2017 and
thereby requested to dispose of the appeal in terms of the settlement. However, as this Appellate Tribunal
is not empowered to accept any settlement/agreement reached between the parties, in absence of any
illegality in the impugned order dated 13th November, 2017, no interference is called for against the
impugned order.
At this stage, it is desirable to notice Rule 8 of the Insolvency and Bankruptcy (Application to
Adjudicating Authority) Rules, 2016, which reads as follows:
958
by Hon’ble NCLAT
“8. Withdrawal of application.—The Adjudicating Authority may permit
a request made by the applicant before its admission.”
From the aforesaid Rule, it is clear that before admission of an application under section 7 or 9 or
10, the Adjudicating Authority may permit the applicant to withdraw the application, but after admission
of the application, the application cannot be withdrawn.
For the reasons aforesaid, no relief can be granted by this Appellate Tribunal, though we find that
parties have settle the dispute which is also accepted by the learned counsel for the Financial Creditor.
However, the order passed by this Appellate Tribunal will not come in the way of the appellant to
ask for appropriate relief from the Hon’ble Supreme Court.
The appeal is dismissed with the aforesaid observation. No cost.
959
by Hon’ble NCLAT
NEW DELHI
C.P. (I.B.) No. 297/NCLAT/2017
Applicant: Deltronix India Ltd. & Ors.

Vs.
Respondent: Indiabulls Housing Finance Ltd.
Judges/Coram:
Hon'ble Sh. S. J. Mukhopadhaya, Chairperson
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Nesar Ahmad, PCS & Mr. Ashutosh Dubey, Mr. Ramas & Mr.
Tarun Khanna, Learned Advocates
For Respondents/Defendant: Mr. Sumesh Dhawan & Mr. Vatsala Kak, Learned Advocates
ORDER
Hon’ble Sh. S. J. Mukhopadhaya, Chairperson
On the oral request of the learned Company Secretary appearing on behalf of the Appellants- M/s.
Deltronix India Ltd. is allowed to be transposed as 2nd Respondent. Indiabulls Housing Finance Ltd' be
treated to be 1St Respondent. The appeal will be treated to an appeal preferred by Mr. Kapil Gupta &
Anr. Appropriate modification in the cause title be made accordingly.
960
by Hon’ble NCLAT
NEW DELHI
C.P. (I.B.) No. 297/NCLAT/2017
Applicant: Kapil Gupta & Anr.

Vs.
Respondent: Indiabulls Housing Finance Ltd.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Nesar Ahmad, PCS & Mr. Ashutosh Dubey, Mr. Ramas & Mr.
Tarun Khanna, Learned Advocates
For Respondents/Defendant: Mr. Sumesh Dhawan & Mr. Vatsala Kak, Learned Advocates
ORDER
This appeal has been preferred by Appellants against the order dated 24th November, 2017
passed by Adjudicating Authority (National Company Law Tribunal), Principal Bench, New Delhi in
Company Petition No. (IB)-245(PB)/2017, whereby and whereunder the application preferred by 1st
Respondent under Section 7 of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as
"I&B Code") has been admitted, order of moratorium has been passed and Ìnterim Resolution
Professional' has been appointed with certain directions.
2. Mr. Nesar Ahmad, Company Secretary appearing on behalf of the Appellants submits that the
Appellant has reached a settlement with the 1st Respondent (Financial Creditor') and therefore, the
'Corporate Insolvency Resolution Process' initiated against the 'Corporate Debtor' be set aside.
3. Learned counsel appearing on behalf of the Respondent-`Financial Creditor', while accepting that
settlement has been reached, submits that settlement has been reached after the impugned order dated
24th November, 2017 was passed and only part payment has been made.
4. It is a settled law that after admission of an application under Section 7 of the Ì&B Code', the
'Financial Creditor' or 'Operational Creditor' or 'Corporate Applicant' cannot withdraw the application
even if a settlement has been made. The Adjudicating Authority once initiates the 'Corporate Insolvency
961
by Hon’ble NCLAT
Resolution Process', has no jurisdiction to recall the order of admission dated 24th November, 2017. In
this connection, one may refer to Rule 8 of the Insolvency and Bankruptcy (Application to Adjudicating
Authority) Rules, 2016, which is as follows:
"8. Withdrawal of application. — The Adjudicating Authority may permit

a request made by the application before its admission."
5. In the present case, as we find that there is no illegality or infirmity committed by Adjudicating
Authority in admitting the application under Section 7 of the 180 Code', we find no ground to interfere
with the impugned order. For the said reasons also this Appellate Tribunal has no jurisdiction to accept
the settlement reached between the parties to annul the impugned order, though it is open to the
Appellants to move before a court of competent jurisdiction for appropriate relief.
6. After the order was dictated, learned Company Secretary appearing on behalf of the Appellants,
requested to pass interim order of protection to enable the appellant to move before the Hon'ble Supreme
Court but as we are not interfering with the impugned order dated 24th November, 2017, the question of
granting interim protection does not arise.
7. However, it is needless to say that during the 'Resolution Process', the 'Resolution Professional' is
required to ensure that the Company remains on-going and if so necessary, he may take assistance of the
(suspended) Board of Directors. The authorised person of the 'Corporate Debtor', who is authorised to
sign the bank cheques may issue cheque only after authorisation of the 'Resolution Professional'. The
bank account(s) of the 'Corporate Debtor(s)' can be allowed to be operated for day-to-day functioning of
the companies and its projects and for payment of current bills of the suppliers, salaries and wages of the
officers, employees'/workmen, electricity and water bills, etc.
8. The appeal is dismissed with the aforesaid observations. No cost.
962
by Hon’ble NCLAT
NEW DELHI
C.P. (I.B.) No. 81/NCLAT/2017
Applicant: M/s. Unigreen Global Private Limited

Vs.
Corporation Bank
Vijaya Bank
Oriental Bank of Commerce
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Dhruv Gupta & Mr. P. Nagesh, Learned Advocates
For Respondents/Defendant No.1: Mr. Sartaj Singh, Learned Advocate
For Respondents/Defendant No.4: Mr. Kailash Sharma, Learned Advocate
ORDER
This appeal has been preferred by the appellant – Unigreen Global Private Limited (Corporate
Debtor) against order dated 8th May, 2017 passed by the Adjudicating Authority (National Company Law
Tribunal), Principal Bench, New Delhi whereby and whereunder the application preferred by the
appellant – Corporate Debtor under Section 10 of the Insolvency & Bankruptcy Code, 2016 (hereinafter
referred to as the ‘I & B Code’) in Form 6 of the Insolvency and Bankruptcy (Application to Adjudicating
Authority) Rules, 2016 (hereinafter referred to as the ‘Adjudicating Authority Rules’) has been rejected.
The Adjudicating Authority has also imposed penalty of Rs. Ten Lakhs on the appellant – Corporate
Debtor under Section 65 of the I & B Code.
The questions involved in this appeal are :
i) Whether non-disclosure of facts beyond the statutory requirement under the I &
B Code read with relevant form, prescribed under the Insolvency and Bankruptcy
963
by Hon’ble NCLAT
(Application to Adjudicating Authority), Rules, 2016 can be a ground to dismiss an
application for initiation of Corporate Insolvency Resolution Process ?
and
ii) Whether the penalty imposed by the Adjudicating Authority under Section 65 of
the I & B Code is legal or not?
3. The brief facts of the case are that the appellant – Corporate Debtor / Corporate Appellant filed an
application under Section 10 in Form 6 for initiation of Corporate Insolvency Resolution Process against
it on the ground that it has failed to pay the debt due to financial creditors and other creditors. On notice,
Punjab National Bank (Financial Creditor) appeared and alleging the suppression of facts on the ground
that the appellant has not disclosed the full facts and has not furnished full particulars in relation to the
assets mortgaged or the securities furnished to the financial creditors. It was also alleged that the legal
proceeding in respect of certain properties includes Khari Baoli property has been entangled by the
owners themselves. In view of such submission the application preferred by the appellant has been
rejected.
4. Before discussing the stand taken by appellant (Corporate Debtor), it is desirable to notice the
stand taken by Respondent – Punjab National Bank.
5. According to the respondent Punjab National Bank – (Financial Creditor) civil suits were
deliberately engineered and instigated with a view to remove the mortgaged properties from the
accountability of the creditors. The appellant kept pending the Civil Suits, such as “Mayank Maheshwari
v. Anurag Garg” - csdj/0094/2017 before the learned Additional District and Sessions Judge, Tis Hazari
District Courts, Delhi. The said suit has been filed seeking a declaration and mandatory and permanent
injunction against one of the Directors of the Company namely Mr. Anurag Garg. It was further alleged
that subsequent to the above suit, in collusion with the plaintiff a S.A. has been filed before DRT III
alleging that two sale deeds dated 21.10.2016 with respect to basement and mezzanine floor of the said
property as well as two un-registered agreements to sell dated 1st September, 2011 had been executed by
the said Director in the capacity as owner of the property in a petition under Section 17 of the
Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002
(SARFAESI Act) in diary No. 146/2017/DRT-III, thereby sought for recall of order dated 21st January,
2017 wherein the learned CMM, Tis Hazari Court was pleased to pass an order dated 21st January, 2017
in favour of Punjab National Bank in ‘Punjab National Bank vs. M/s. Unigreen Global Private Limited’
appointing a Court receiver to take possession of the property. Pursuance of the said order, the Financial
Creditor – Punjab National Bank has already taken over the possession of the said property. In the
964
by Hon’ble NCLAT
circumstances, it was submitted that prayer for initiation of the Corporate Insolvency Resolution Process
amounts to abuse of process of law.
6. The aforesaid submission made on behalf of the ‘Financial Creditor’ has been noticed by the
Adjudicating Authority in the impugned order dated 8th May, 2017, relevant of which are quoted below:
“12. In addition to the above details which have not been fully disclosed in the
petition, Learned Counsel also contends that in relation to the Defence Enclave
property of its objection statement, which property is also in the personal name of
the Directors of the company, is also caught in the web of legal entanglement
deliberately created by the directors of the petitioner in relation to the said
property, as a civil suit again for permanent and mandatory injunction being
No.9398/2016, titled as Sh. Jagat Nath Mahto vs. Vedika Overseas Tradex (P)
Ltd. & Ors. is pending consideration before the Learned ASCJ, Karkardooma
Court, Delhi and that the next date of hearing is fixed for 12.05.2017 and
incidentally, it is pointed by the Financial Creditor that the plaintiff in the above
said suit allegedly also happens to be someone close to the directors/ promoters
of the petitioner company, namely, a driver working in one of the sister concerns
in which both Ms. Ritu Garg and Mr. Anurag Garg, being the Directors of the
petitioner company are also involved. The claim of the said person who happens
to be a driver as stated above is that he is occupying the said Defence Enclave
property on tenancy and that he has also been paying rent in relation to the same
and in the circumstances, his possession should not be disturbed except under
due process of law. Learned Counsel for the Bank also points out that the above
said suit came to be filed in collusion with the Directors of the applicant
company on 10.05.2016 after the issue of notice under Section 13(2) of the
SARFAESI Act, 2002 by the bank to the corporate debtor and its Directors and
guarantors.
13. A similar strategy in relation to the above Defence Enclave property too as
was done as described in the earlier portion of the property at Khari Baoli in
which the Bankers/ Financial creditors had obtained the physical possession also
seems to have been adopted, in the sense that the plaintiff in the above suit has
also approached the D.R.T. in SA No.48 of 2017 under Section 17 of the
SARFAESI Act, 2002 and it is submitted that the same is also pending
consideration and posted for hearing on 01.05.2017. The Bank being the financial
965
by Hon’ble NCLAT
creditor also narrates a similar set of facts in relation to property, as detailed in 3
(c) of the objection statement, namely, House No.D-3A, Dayanand Block, Delhi-
110092 wherein it is alleged that the corporate debtor managed by its Director
have not come with clean hands in the legal proceedings in which the property is
entangled deliberately by the actions or at the instigation of the said Directors of
the corporate debtor in order to have the properties removed from the clutches of
law. The further submission of Punjab National bank, being the Lead Banker, in
relation to the consortium of Banks and all of whom have made availably
finances details in the paragraphs above is that the directors of the Corporate
debtor have manipulated the business of the company by dealing directly with the
buyers, thereby, by-passing the objection of Bank and engaging in the trading of
raw-material instead of regular process, which action is a deliberate fraud and
which made the accounts of Corporate debtor an NPA despite sanction by the
Joint Leader Forum in relation to the approval and restructuring of credit
facilities vide another letter dated 31.3.2015. All the actions of the financial
creditors, namely, Punjab National Bank, according to its submission, has been
made only in line with the RBI guidelines and the Corporate debtor has come to
this sorry state of affairs only due to the deliberate actions of the Directors of the
corporate debtor and the way in which the Directors have managed the company.
This situation has not arisen out of the business cycle as contended by the
Corporate Debtor. It is also averred by the objector Bank that the Corporate
Debtor is under enquiry by Department of Revenue Intelligence (DRI).”
7. Having noticed the aforesaid facts, the Adjudicating Authority observed as follows :
“14. From the above facts, it is averred by the Banks that it is clear that the
Corporate debtor and directors also being guarantors are trying to avoid making
lawful payments of the dues owed to the Bank and also thwarting the Bankers
from realizing the securities by initiating several legal proceedings in different
courts and Forums with the sole motive of removing their personal properties
from the clutches of law and that the instant action before this Tribunal is yet
another attempt in the same direction.”
8. Learned counsel appearing on behalf of the appellant submitted that the application under section
10 in Form 6 was filed with the following documents :
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by Hon’ble NCLAT
i) List of financial creditors and operational creditors as per the balance sheet for
the year 2015-16.
ii) Details of the security created by the Directors of the Corporate Applicant for the
loan obtained by the bank.
iii) the company master data
iv) books of accounts/balance sheets evidencing the default to the creditors.
v) details of identifiable assets in the name of Directors of the company who stood
as guarantors to the loans obtained from the bank
vi) details of guarantee given by the guarantors in relation to the debts of corporate
debtor.
vii) details of all proceedings before the Debt Recovery Tribunal between the banks
and the corporate debtor and the status of the proceedings including the status of
possession of the immoveable properties of the guarantors with the banks.
9. It was also submitted that the appellant dispatched the copy of the application under Section 10
by Registered Post to the Financial Creditors/banks whereinafter notice was issued in terms of Rule 7 of
the Adjudicating Authority Rules, 2016. According to learned counsel for the appellant the objections of
the respondent – financial creditor/banks relating to non-mentioning of the allied and collateral
proceedings cannot be taken into consideration by the Adjudicating Authority as the Corporate Debtor is
not involved in those proceeding/suit. It was submitted that such grounds are beyond the scope and
scrutiny of initiation of Corporate Insolvency Resolution Process.
10. Further according to learned counsel for the Corporate Debtor as the aforesaid informations are
not contemplated under the I & B Code or the Adjudicating Authority Rules, 2016, it is not open to the
Financial Creditor/ Banks (Respondents) to raise such issue nor the Adjudicating Authority can dismiss
the application on the ground of non-disclosure of facts unrelated to the Corporate Insolvency Resolution
Process.
11. It was further submitted that Corporate Insolvency Resolution having not been initiated the
question of imposition of penalty under Section 65 of the I & B Code does not arise.
12. Learned counsel for the Punjab National Bank has taken the similar plea as was taken before the
Adjudicating Authority and referred to above. It was submitted that the following details of the mortgaged
property were supressed by the appellant :
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by Hon’ble NCLAT
PROPERTY
Shop No. 467- Civil Suit titled “Mayank Maheshwari v. Anurag Garg” registered as CS
DJ/000094/2017 before Ld. Tis Hazari Courts seeking declaration,
468, Ground & First Floor,
mandatory and permanent injunction. An S.A. under Sec.17 of
Katra Ishwar Bhavan,
SARFAESI Act, 2002 also filed by Mr. Mayank Maheshwari in
Khari Baoli, New Delhi.
collusion with Mr. Anurag is pending adjudication before Lf. DRT.
The contention of the Appellant that the suit is with respect to the
basement and mezzanine floor, which are not mortgaged with the
Answering Respondent proves to be false in wake of the prayer made in
the aforementioned Civil Suit, which includes the ground floor (@
pg.377 of the Appeal)
Single storied Civil Suit for permanent and mandatory injunction
bearing No. 9398/2016 titled as “Sh. Jagar Nath Mehto
house at 83, Defence v. Vedika Overseas Tradex Ltd.” before Ld. ASCJ,
Enclave, Vivek Marg,
Karkardooma Court, Delhi filed by Shri Mehto alleging that he was
Delhi – 110 092
induced as tenant in the property after appointment as a driver in the
company of which Sh. Anurag and Ms. Ritu Garg are directors. An S.A.
under Section 17 of SARFAESI Act is also pending before Ld. DRT-II.
House No. D-3A, A Securitization Application filed under Section 17 of

Dayanand Block, Delhi – the SARFAESI Act, 2002 by Sh. Anurag Gar titled as
110 092 “ S.A. No. 120/2016 pending adjudication. ”
13. It was further submitted that the appellant is not precluded in law to initiate proceedings under the
provisions of SARFAESI Act, 2002 as has been initiated and the appellant is duty bound to bring the
aforesaid facts to the notice of the Adjudicating Authority.
14. We have heard the parties, noticed the rival contentions and perused the record.
15. Before deliberating on the question involved, it is desirable to refer ‘Statement of Objects and
Reasons’ of I & B Code, 2016, as noticed by the Hon’ble Supreme Court in “Innoventive Industries Ltd.
Vs. ICICI Bank and Ors.” – 2017 SCC online SC 1025 and as quoted below :
968
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12. The Insolvency and Bankruptcy Code, 2016 has been passed after great
deliberation and pursuant to various committee reports, the most important of which is
the report of the Bankruptcy Law Reforms Committee of November, 2015. The
Statement of Objects and Reasons of the Code reads as under:
“STATEMENT OF OBJECTS AND REASONS
There is no single law in India that deals with insolvency and bankruptcy. Provisions
relating to insolvency and bankruptcy for companies can be found in the Sick Industrial
Companies (Special Provisions) Act, 1985, the Recovery of Debt Due to Banks and
Financial Institutions Act, 1993, the Securitisation and Reconstruction of Financial
Assets and Enforcement of Security Interest Act, 2002 and the Companies Act, 2013.
These statutes provide for creation of multiple fora such as Board of Industrial and
Financial Reconstruction (BIFR), Debt Recovery Tribunal (DRT) and National Company
Law Tribunal (NCLT) and their respective Appellate Tribunals. Liquidation of
companies is handled by the High Courts. Individual bankruptcy and insolvency is dealt
with under the Presidency Towns Insolvency Act, 1909, and the Provincial Insolvency
Act, 1920 and is dealt with by the Courts. The existing framework for insolvency and
bankruptcy is inadequate, ineffective and results in undue delays in resolution, therefore,
the proposed legislation.
2. The objective of the Insolvency and Bankruptcy Code, 2015 is to consolidate and
amend the laws relating to reorganization and insolvency resolution of corporate persons,
partnership firms and individuals in a time bound manner for maximization of value of
assets of such persons, to promote entrepreneurship, availability of credit and balance the
interests of all the stakeholders including alteration in the priority of payment of
government dues and to establish an Insolvency and Bankruptcy Fund, and matters
connected therewith or incidental thereto. An effective legal framework for timely
resolution of insolvency and bankruptcy would support development of credit markets
and encourage entrepreneurship. It would also improve Ease of Doing Business, and
facilitate more investments leading to higher economic growth and development.
3. The Code seeks to provide for designating the NCLT and DRT as the
Adjudicating Authorities for corporate persons and firms and individuals, respectively,
for resolution of insolvency, liquidation and bankruptcy. The Code separates commercial
aspects of insolvency and bankruptcy proceedings from judicial aspects. The Code also
seeks to provide for establishment of the Insolvency and Bankruptcy Board of India
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(Board) for regulation of insolvency professionals, insolvency professional agencies and
information utilities. Till the Board is established, the Central Government shall exercise
all powers of the Board or designate any financial sector regulator to exercise the powers
and functions of the Board. Insolvency professionals will assist in completion of
insolvency resolution, liquidation and bankruptcy proceedings envisaged in the Code.
Information Utilities would collect, collate, authenticate and disseminate financial
information to facilitate such proceedings. The Code also proposes to establish a fund to
be called the Insolvency and Bankruptcy Fund of India for the purposes specified in the
Code.
4. The Code seeks to provide for amendments in the Indian Partnership Act, 1932,
the Central Excise Act, 1944, Customs Act, 1962, Income-Tax Act, 1961, the Recovery
of Debts Due to Banks and Financial Institutions Act, 1993, the Finance Act, 1994, the
Securitisation and Reconstruction of Financial Assets and Enforcement of Security
Interest Act, 2002, the Sick Industrial Companies (Special Provisions) Repeal Act, 2003,
the Payment and Settlement Systems Act, 2007, the Limited Liability Partnership Act,
2008, and the Companies Act, 2013.
5. The Code seeks to achieve the above objectives.
(Emphasis Supplied)”
16. Hon’ble Supreme Court also noticed the Committee Reports and objects as speed is the essence,
as quoted below :
“Principles driving the design
“The Committee chose the following principles to design the new insolvency and
bankruptcy resolution framework:
I. The Code will facilitate the assessment of viability of the enterprise at a

very early stage.
1. The law must explicitly state that the viability of the enterprise is a
matter of business, and that matters of business can only be negotiated between
creditors and debtor. While viability is assessed as a negotiation between
creditors and debtor, the final decision has to be an agreement among creditors
who are the financiers willing to bear the loss in the insolvency.
970
by Hon’ble NCLAT
2. The legislature and the courts must control the process of resolution, but
not be burdened to make business decisions.
3. The law must set up a calm period for insolvency resolution where the
debtor can negotiate in the assessment of viability without fear of debt recovery
enforcement by creditors.
4. The law must appoint a resolution professional as the manager of the

resolution period, so that the creditors can negotiate the assessment of viability
with the confidence that the debtors will not take any action to erode the value of
the enterprise. The professional will have the power and responsibility to monitor
and manage the operations and assets of the enterprise. The professional will
manage the resolution process of negotiation to ensure balance of power
between the creditors and debtor, and protect the rights of all creditors. The
professional will ensure the reduction of asymmetry of information between
creditors and debtor in the resolution process.
II. The Code will enable symmetry of information between creditors and
debtors.
5. The law must ensure that information that is essential for the insolvency
and the bankruptcy resolution process is created and available when it is
required.
6. The law must ensure that access to this information is made available to
all creditors to the enterprise, either directly or through the regulated
professional.
7. The law must enable access to this information to third parties who can
participate in the resolution process, through the regulated professional.
III. The Code will ensure a time-bound process to better preserve economic
value.
8. The law must ensure that time value of money is preserved, and that
delaying tactics in these negotiations will not extend the time set for negotiations
at the start.
971
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9. The law must ensure that all key stakeholders will participate to
collectively assess viability. The law must ensure that all creditors who have the
capability and the willingness to restructure their liabilities must be part of the
negotiation process. The liabilities of all creditors who are not part of the
10. The law must be impartial to the type of creditor in counting their weight
in the vote on the final solution in resolving insolvency.
VI. The Code must ensure that, when the negotiations fail to establish
viability, the outcome of bankruptcy must be binding.
11. The law must order the liquidation of an enterprise which has been found
unviable. This outcome of the negotiations should be protected against all
appeals other than for very exceptional cases.
VII. The Code must ensure clarity of priority, and that the rights of all
stakeholders are upheld in resolving bankruptcy.
12. The law must clearly lay out the priority of distributions in bankruptcy to
all stakeholders. The priority must be designed so as to incentivise all
stakeholders to participate in the cycle of building enterprises with confidence.
13. While the law must incentivise collective action in resolving bankruptcy,
there must be a greater flexibility to allow individual action in resolution and
recovery during bankruptcy compared with the phase of insolvency resolution.”
17. In the said case, Hon’ble Supreme Court while it noticed the scheme of the Code also noticed
Section 7, which stands in contrast with the scheme under section 9 and observed as follows:
“27. The scheme of the Code is to ensure that when a default takes place, in the
sense that a debt becomes due and is not paid, the insolvency resolution process
begins. Default is defined in Section 3(12) in very wide terms as meaning non-
payment of a debt once it becomes due and payable, which includes non-payment
of even part thereof or an instalment amount. For the meaning of “debt”, we
have to go to Section 3(11), which in turn tells us that a debt means a liability of
obligation in respect of a “claim” and for the meaning of “claim”, we have to go
back to Section 3(6) which defines “claim” to mean a right to payment even if it
972
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is disputed. The Code gets triggered the moment default is of rupees one lakh or
more (Section 4). The corporate insolvency resolution process may be triggered
by the corporate debtor itself or a financial creditor or operational creditor. A
distinction is made by the Code between debts owed to financial creditors and
operational creditors. A financial creditor has been defined under Section 5(7) as
a person to whom a financial debt is owed and a financial debt is defined in
Section 5(8) to mean a debt which is disbursed against consideration for the time
value of money. As opposed to this, an operational creditor means a person to
whom an operational debt is owed and an operational debt under Section 5(21)
means a claim in respect of provision of goods or services.
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 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
973
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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.”
18. At this stage, it is desirable to compare the provisions of Section 7 with Section 10 of the I & B
Code.
Section 7 is as follow:
“7. (1) A financial creditor either by itself or jointly with other financial
default has occurred. Explanation.—For the purposes of this sub-section, a
default includes a default in respect of a financial debt owed not only to the
applicant financial creditor but to any other financial creditor of the corporate
debtor.
(2) The financial creditor shall make an application under sub-section (1) in such

application under subsection (2), ascertain the existence of a default from the
(a) a default has occurred and the application under sub-section (2) is
complete, and there is no disciplinary proceedings pending against the proposed
974
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(b) default has not occurred or the application under sub-section (2) is
incomplete or any disciplinary proceeding is pending against the proposed
resolution professional, it may, by order, reject such application:
Provided that the Adjudicating Authority shall, before rejecting the

application under clause (b) of sub-section (5), give a notice to the applicant to
from the Adjudicating Authority
(a) the order under clause (a) of sub-section (5) to the financial creditor and
within seven days of admission or rejection of such application, as the case may
be.”
19. Similar is the provision of Section 10, which reads a follows:
“10. (1) Where a corporate debtor has committed a default, a corporate

applicant thereof may file an application for initiating corporate insolvency
resolution process with the Adjudicating Authority.
(2) The application under sub-section (1) shall be filed in such form, containing
such particulars and in such manner and accompanied with such fee as may be
prescribed.
information relating to—
(a) its books of account and such other documents relating to such period as
may be specified; and
(b) the resolution professional proposed to be appointed as an interim

(4) The Adjudicating Authority shall, within a period of fourteen days of the
receipt of the application, by an order— (a) admit the application, if it is
975
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complete; or (b) reject the application, if it is incomplete: Provided that
Adjudicating Authority shall, before rejecting an application, give a notice to the
applicant to rectify the defects in his application within seven days from the date
of receipt of such notice from the Adjudicating Authority.
admission of the application under sub-section (4) of this section.”
20. Under both Section 7 and Section 10, the two factors are common i.e. the debt is due and there is
a default. Sub-section (4) of Section 7 is similar to that of sub-section (4) of Section 10. Therefore we,
hold that the law laid down by the Hon’ble Supreme Court in “Innoventive Industries Ltd. (Supra) is
applicable for Section 10 also, wherein the Hon’ble Supreme Court observed as “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” .
21. In an application under Section 10, the ‘financial creditor’ or ‘operational creditor’, may dispute
that there is no default or that debt is not due and is not payable in law or in fact. They may also oppose
admission on the ground that the Corporate Applicant is not eligible to make application in view of
ineligibility under Section 11 of the I & B Code. The Adjudicating Authority on hearing the parties and
on perusal of record, if satisfied that there is a debt and default has occurred and the Corporate Applicant
is not ineligible under Section 11, the Adjudicating Authority has no option but to admit the application,
unless it is incomplete, in which case the Corporate Applicant is to be granted time to rectify the defects.
22. Section 10 does not empower the Adjudicating Authority to go beyond the records as prescribed
under Section 10 and the informations as required to be submitted in Form 6 of the Insolvency and
Bankruptcy (Application to the Adjudicating Authority) Rules, 2016 subject to ineligibility prescribed
under Section 11. If all informations are provided by an applicant as required under Section 10 and Form
6 and if the Corporate Applicant is otherwise not ineligible under Section 11, the Adjudicating Authority
is bound to admit the application and cannot reject the application on any other ground.
23. Any fact unrelated or beyond the requirement under I & B Code or Forms prescribed under
Adjudicating Authority Rules (Form 6 in the present case) are not required to be stated or pleaded. Non-
disclosure of any fact, unrelated to Section 10 and Form 6 cannot be termed to be suppression of facts or
to hold that the Corporate Applicant has not come with clean hand except the application where the
‘Corporate Applicant’ has not disclosed disqualification, if any, under Section 11. Non-disclosure of
facts, such as that the ‘Corporate Debtor’ is undergoing a corporate insolvency resolution process; or that
976
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the ‘Corporate Debtor’ has completed corporate insolvency resolution process twelve months preceding
the date of making of the application; or that the corporate debtor has violated any of the terms of
resolution plan which was approved twelve months before the date of making of an application under the
said Chapter; or that the corporate debtor is one in respect of whom a liquidation order has already been
made can be a ground to reject the application under Section 10 on the ground of suppression of fact/not
come with clean hand.
24. 1st Respondent –financial creditor has referred to pendency of a Civil Suit between ‘Mayank
Maheshwari v. Anurag Garg’ and another suit between ‘Sh. Jagar Nath Mehto v. Vedika Overseas
Tradex Ltd.’ . Pendency of such suits cannot be a ground to deny admission of an application under
Section 10, if all the information in terms of Section 10 of the I & B Code and Form 6 has been supplied
by a Corporate Applicant/Corporate Debtor and the application is otherwise complete. Non-mentioning of
suit(s) pending between the parties cannot termed to be suppression of facts nor can be a ground to reject
the application. In fact, once the application under Section 10 is admitted, all such related proceedings,
including suits for recovery of moveable or immovable property of the Corporate Debtor and other
proceeding cannot proceed further in any Court or Tribunal or Authority in view of order of ‘moratorium’
as may be declared under Section 13 and prohibition that may be imposed under Section 14 of I & B
Code.
25. Similarly, if any action has been taken by a ‘Financial Creditor’ under Section 13(4) of the
SARFAESI Act, 2002 against the Corporate Debtor or a suit is pending against Corporate Debtor under
Section 19 of DRT Act, 1993 before a Debt Recovery Tribunal or appeal pending before the Debt
Recovery Appellate Tribunal cannot be a ground to reject an application under Section 10, if the
application is complete.
26. Any proceeding under Section 13(4) of the SARFAESI Act, 2002 or suit under Section 19 of the
DRT Act, 1993 pending before Debt Recovery Tribunal or appeal pending before Debt Recovery
Appellate Tribunal cannot proceed in view of the order of moratorium as may be passed.
27. It is also desirable to refer to Section 238 of the I & B Code, as quoted below :
"238 Provisions of this Code to override other laws - The provisions of this
Code shall have effect, notwithstanding anything inconsistent therewith
effect by virtue of any such law.”
977
by Hon’ble NCLAT
In view of the aforesaid provision also, I & B Code shall have the effect notwithstanding anything
inconsistent therewith contained in any other law for the time being in force including DRT Act, 1993;
SARFAESI Act, 2002; money suit etc.
28. In a case where a winding up proceedings has already been initiated against a Corporate Debtor
by the Hon’ble High Court or Tribunal or liquidation order has been passed in respect of Corporate
Debtor, no application under Section 10 can be filed by the Corporate Applicant in view of ineligibility
under Section 11(d) of I & B Code, as quoted below:
“11. Persons not entitled to make application - The following persons shall
not be entitled to make an application to initiate corporate insolvency resolution

process; or


made.

29. In view of the aforesaid provision where a winding up proceeding has already been initiated
under the Companies Act, 1956 / 2013 by the Hon’ble High Court such cases have not been transferred to
National Company Law Tribunal, pursuant to “Companies (Transfer of Pending Proceedings) Rules,
2016”, framed by the Central Government.
30. Clause (d) of Section 11 refers to “liquidation order”, against a Corporate Debtor. The word
‘winding up’ has not been mentioned therein. For the said reason by Section 255 read with Schedule 11 of
the I & B Code, in Section 2 of the Companies Act, 2013 for clause (23), the following clause has been
substituted :
“1. In section 2,—
(a) for clause (23), the following clause shall be substituted, namely:—
978
by Hon’ble NCLAT
xxx xxx xxx
"(23) "Company Liquidator" means a person appointed by the Tribunal as the

Company Liquidator in accordance with the provisions of section 275 for the
winding up of a company under this Act";
(b) after clause (94) , the following clause shall be inserted, namely:—
"(94A) "winding up" means winding up under this Act or liquidation under the
Insolvency and Bankruptcy Code, 2016, as applicable.”
31. By aforesaid amendment, the legislatures have made it clear that the word “winding up”
mentioned in the Companies Act, 2013 is synonymous to the word “liquidation” as mentioned in the I &
B Code.
32. In view of the provisions aforesaid, we hold that, if any winding up proceeding has been initiated
against the Corporate Debtor by the Hon’ble High Court or Tribunal or liquidation order has been passed,
in such case the application under Section 10 is not maintainable. However, mere pendency of a petition
for winding up, where no order of winding up or order of liquidation has been passed, cannot be ground
to reject the application under Section 10.
33. In this case, it is not the case of the Financial Creditor/Respondent that a winding up proceeding
under the Companies Act or liquidation proceeding under the I & B Code has been initiated against the
Corporate Debtor. Therefore, the Corporate Applicant is eligible to file application under Section 10, if
there is a debt and default.
34. Further, as we find that the Adjudicating Authority has noticed the extraneous factors unrelated to
the Resolution process not required to be disclosed in terms of Section 10 or Form 6 and as the suits
referred to relate to dispute between third parties, and not the Corporate Debtor, we hold that the
Adjudicating Authority erred in rejecting the application on the ground of suppression of facts.
35. To decide the question, whether impugned order of penalty imposed by the Adjudicating
Authority under Section 65 of the I & B Code is in accordance with law or not it is desirable to notice the
provision, as quoted below:
"65. (1) If, any person initiates the insolvency resolution process or
liquidation proceedings fraudulently or with malicious intent for any purpose
other than for the resolution of insolvency, or liquidation, as the case may be, the
Adjudicating Authority may impose upon such person a penalty which shall not
be less than one lakh rupees, but may extend to one crore rupees.
979
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(2) If, any person initiates voluntary liquidation proceedings with the intent to
defraud any person, the Adjudicating Authority may impose upon such person a
penalty which shall not be less than one lakh rupees but may extend to one crore
rupees.”
36. Sub-section (11) of Section 5 defines “initiation date” i.e. the date of initiation of corporate
insolvency resolution process and reads as follows:
“(11) "initiation date" means the date on which a financial creditor, corporate
applicant or operational creditor, as the case may be, makes an application to
the Adjudicating Authority for initiating corporate insolvency resolution
process;”
If sub-section (11) of Section 5 is read with Section 65 it is clear that if a ‘Financial Creditor’, or
‘Corporate Applicant’ or ‘Operational Creditor’ makes an application to the Adjudicating authority for
initiating Corporate Resolution Process or liquidation proceedings fraudulently or with malicious intent
for any purpose other than for the resolution of insolvency, or liquidation, the Adjudicating Authority
may impose upon such person a penalty which shall not be less than one lakh rupees, but may extend to
one crore rupees in terms of sub-section (1) of Section 65. Similarly, if any person such as Corporate
Applicant initiates voluntary liquidation proceedings with the intent to defraud any person, the
Adjudicating Authority may impose upon such person a penalty which shall not be less than one lakh
rupees but may extend to one crore rupees in terms of sub-section (2) of Section 65.
37. From the aforesaid provision, it is clear that for imposition of penalty under Section 65, the
Adjudicating Authority on the basis of record is required to form prima facie opinion that the person
(Financial Creditor / Corporate Applicant / Operational Applicant) has filed the petition for initiation of
proceeding “fraudulently” or “with malicious intent” for the purpose other than the resolution of the
insolvency or liquidation or that voluntary liquidation proceedings has been filed with the intent to
defraud any person.
38. No such penalty under sub-section (1) or (2) of Section 65 can be imposed by the Adjudicating
Authority without recording opinion for coming to the conclusion that a prima facie case is made out to
suggest that the person “fraudulently” or “with malicious intent” for the purpose, other than the resolution
insolvency or liquidation or with the intent to defraud any person has filed the application.
39. Section 424 of the Companies Act, 2013 is applicable to the proceedings under I & B Code, as
held by this Appellate Tribunal in M/s. Innoventive Industries Ltd. Vs. ICICI Bank & Anr. in Company
Appeal (AT) (Insolvency) No. 1 & 2 of 2017. In view of the aforesaid provision if the Adjudicating
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by Hon’ble NCLAT
Authority prima facie comes to a conclusion that a case is made out to impose penalty under sub-sections
(1) and (2) of Section 65, after recording its prima facie reasons the Adjudicating Authority is required to
give reasonable opportunity of hearing to the person concerned, so as to enable the person to explain his
case.
40. There is nothing on record to suggest that the Corporate Applicant has suppressed any fact or has
not come with the clean hands. The Adjudicating Authority has also not held that the application has been
filed by the Corporate Applicant “fraudulently” or “with malicious intent” for any purpose other than for
the resolution process or liquidation or that the voluntary liquidation proceedings have been initiated with
the intent to defraud any person. In absence of any such reasons recorded by the Adjudicating Authority
the impugned order cannot be upheld.
41. Further, as the Adjudicating Authority before imposing penalty under Section 65 has not given
nor served any notice to the Corporate Applicant recording its prima facie view and intent to punish the
Corporate Applicant, the impugned order dated 8th May, 2017 cannot be upheld having been passed in
violation of rules of natural justice.
42. For the reasons aforesaid, the impugned order dated 8th May, 2017 passed in C.P. No. IB-
39(PB)/2017 is set aside. The case is remitted back to the Adjudicating Authority for admission of the
application under Section 10, if the application is otherwise complete. In case it is incomplete, the
Adjudicating Authority will grant time to the appellant to remove the defects.
43. At this stage, it is desirable to state that the Central Government in Form 1 or 5 or 6 of the
‘Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016’, has not provision for
the parties to state whether any winding up proceeding has been initiated or liquidation order has been
passed against the Corporate Debtor or not. No provision has been made there in for the parties to state
whether any of clause of Section 11 is attracted or not.
44. Non-disclosure of such relevant facts in the relevant Form 6, may be a ground to reject the
application but a person can plead that the Form does not stipulate to disclose any ineligibility under
Section 11. Therefore, we are of the view that the Central Government should make necessary
amendment in the relevant Form 6 appended to the Insolvency and Bankruptcy (Application to
Adjudicating Authority) Rules, 2016, which will enable the Adjudicating Authority to decide at the time
of admission whether any fact has been suppressed or the person has come with the clean hand or not. We
hope and trust that appropriate modification of the relevant Rules and Forms shall be made by the Central
Government.
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45. In the meantime, the Adjudicating Authority may direct the Financial Creditors / Corporate
Applicant to file an affidavit giving declaration in terms of Section 11 of the I & B Code and to state
whether any winding up proceeding has been initiated or liquidation order has been passed by any High
Court or Tribunal or Adjudicating Authority or not. The appeal is allowed with the aforesaid
observations. However, there shall be no order as to costs.
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by Hon’ble NCLAT
NEW DELHI
C.P. (I.B.) No. 162/NCLAT/2017
Applicant: Sobha Limited

Vs.
Respondent: Pancard Clubs Ltd.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Basav Prabhu S. Patel Senior Advocate, Mr. Shailesh Madiyal,
Mr. Mrigank Prabhakar, Mr. Geet & Ms. Shivani Srivastava, Learned Advocates
ORDER
This appeal has been preferred by Appellant- Sobha Limited (‘Operational Creditor’) against the
order dated 29th July, 2017 passed by Adjudicating Authority (National Company Law Tribunal),
Mumbai Bench, Mumbai in Company Petition Nos. 593 & 1085/ I&BP/NCLT/MAH/2017 whereby and
whereunder the application preferred by the Appellant under Section 9 of the Insolvency and Bankruptcy
Code, 2016 (hereinafter referred to as “I&B Code”) against the Respondent- ‘Corporate Debtor’ namely
‘Pancard Clubs Limited’ has been rejected on the ground of ‘existence of a dispute’ and in view of action
taken by the Securities and Exchange Board of India (hereinafter referred to as “SEBI”) against the
‘Operational Creditor’.
2. The brief facts of the case are that the Appellant- ‘Operational Creditor’ entered into an
agreement with the Respondent-‘Corporate Debtor’ on 1st November, 2012 for RCC construction of
additional three floors and extension of the existing floors and allied development work at its club at
Baner, Pune, known as ‘Pan Card Club Ltd’, for a contract price of Rs.10,81,31,099/-. Thereafter, further
agreements were entered into between the parties on 18th December 2013, 18th March 2013, 30th April
2013, 19th June 2013 and 23rd September, 2013 for the projects at Baner, Pune and Durgapur, West
983
by Hon’ble NCLAT
Bengal. Since construction work had been taken up, the ‘Operational Creditor’ raised invoices on the
‘Corporate Debtor’ and forwarded them time to time in regard to both the projects.
3. The Respondent-‘Corporate Debtor’ having failed to pay the dues of Pune project, the
‘Operational Creditor’ issued notice under Section 434 of the Companies Act, 1956.
4. According to Appellant, the Respondent-‘Corporate Debtor’ had admitted the debt of Rs.
1,26,91,809/- and Rs. 73,24,160/- aggregating to Rs. 2,00,15,969/- as regards work at Baner, by endorsing
the ledger extracts and furnishing the same to the ‘Operational Creditor’. After notice under Section 434
of the Companies Act, 1956, the ‘Corporate Debtor’ also admitted the due amount Rs. 2,84,48,027/-, as
regards to work at Durgapur, West Bengal, but no payment was made.
5. From the record we find that the ‘Operational Creditor’ initially issued notice dated 25th January,
2017 under sub-section (1) of Section 8 of the ‘I&B Code’ on the ‘Corporate Debtor’ demanding payment
of Rs. 6,25,42,007.04/- as due on 19th January, 2017. It followed by an application under Section 9.
However, as the Appellant-‘Operational Creditor’ failed to enclose a financial certificate, the ‘Operational
Creditor’ withdrew the application filed under Section 9 of the ‘I&B Code’ and subsequently filed
another application under Section 9 of the ‘I&B Code’ after serving another notice under Section 8 of the
‘I&B Code’.
6. On notice, the ‘Corporate Debtor’ appeared before the Adjudicating Authority and brought on
record that an Arbitration Proceedings under Section 11 of the Arbitration and Conciliation Act, 1996 has
been filed by parties before the Hon’ble High Court much prior to service of notice under sub-section (1)
of Section 8 of the ‘I&B Code’ and thereby, there is an ‘existence of dispute’. Prayer was made to dismiss
the application.
7. Taking into account the fact that there is an ‘existence of a dispute’ the Adjudicating Authority
refused to entertain the application under Section 9 of the ‘I&B Code’.
8. It is desirable to state that apart from aforesaid ground recorded in the impugned order, the
Adjudicating Authority also noticed the activities of the ‘Corporate Debtor’.
9. Learned Counsel appearing on behalf of the Appellant-‘Operational Creditor’ submitted that the
‘Corporate Debtor’ having failed to pay the dues for the work carried out, the Adjudicating Authority
cannot reject the application referring to an order dated 29th February, 2016 passed by SEBI. It was
submitted that SEBI has passed an order, inter alia, directing the ‘Corporate Debtor’ not to alienate,
dispose or sell any of the assets of the Company except for the purpose of making refunds to its investors
and the Ministry of Corporate Affairs and to initiate the process of winding up of the Respondent.
984
by Hon’ble NCLAT
10. In spite of service of notice, Corporate Debtor’ has not appeared nor filed any counter affidavit.
11. Having heard learned counsel for the appellant, while we agree that initiation of ‘Corporate
Insolvency Resolution Process’ under ‘I&B Code’ cannot be nullified by any order passed by SEBI nor
can be a ground to reject an application under Section 9 of the ‘I&B Code’ but as there is an ‘existence of
dispute’ with regard to the invoices raised by the Appellant-‘Operational Creditor’, we hold that the
application under Section 9 of the ‘I&B Code’ was not maintainable.
985
by Hon’ble NCLAT
NEW DELHI
C.P. (I.B.) No. 299/NCLAT/2017
Applicant: Steamline Industries Ltd.

Vs.
Respondent: Tecpro Systems Ltd. & Anr.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Aditya Tiwari, Learned Advocate
ORDER
Admittedly, 'Corporate Insolvency Resolution Process' has already been initiated against
Tecpro Systems Limited' (`Corporate Debtor') pursuant to an application under Section 7 of the
Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as "I85B Code") preferred by
'Edelweiss Asset Reconstruction Company Limited' in Company Petition No. (IB)197(PB)/2017. In
view of the order of moratorium passed under Section 13 read with Section 14 of the Ì&B Code', the
Civil Suit (COMM) 123/2017 against the 'Corporate Debtor' and Another pending before the Hon'ble
High Court of Delhi cannot proceed.
2. In view of the order of moratorium, as the suit filed by the Appellant is not proceeding, the
Appellant filed an application before the Adjudicating Authority (National Company Law Tribunal),
Principal Bench, New Delhi, to permit the Appellant to pursue the proceedings pending before the
Hon'ble High Court of Delhi in Civil Suit (COMM) 123/2017. The Adjudicating Authority referring to
Section 14(1)(a) of the Ì&B Code' rejected the application preferred by Appellant with cost.
3. Learned counsel appearing on behalf of the Appellant submits that the suit in question has
been filed under 'Commercial Court Act', therefore, the provision of the said Act will prevail over the
Ì8613 Code'. However, such submissions cannot be accepted in view of Section 238 of the 180 Code',
which reads as follows:-
986
by Hon’ble NCLAT
"238. Provisions of this Code to override other laws.-The provisions of this
Code shall have effect, notwithstanding anything ,inconsistent therewith
effect by virtue of any such law."
4. In the circumstances, no relief can be granted to the Appellant.
5. However, we make it clear that the impugned order passed by the Adjudicating Authority on 9th
October, 2017 or order passed by this Appellate Tribunal will not come in the way of Appellant to claim
the amount, if due from the 'Corporate Debtor' by filing application before the 'Insolvency Resolution
Professional'. In such case, the 'Insolvency Resolution Professional' and the 'Committee of Creditors' will
consider the Appellant's application along with other claimants in accordance with law. The appeal is
dismissed with aforesaid liberty to the Appellant. No separate cost.
987
by Hon’ble NCLAT
NEW DELHI
C.P. (I.B.) No. 210/NCLAT/2017
Applicant: T. Sreemannarayana
Vs.
Respondent: Magnifico Minerals Pvt. Ltd. & Ors.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. B.B. Pradhan & Mr. Kishor Kumar Behuria, Learned Advocates
For Respondents/Defendant: Mr. Rishabh Gupta Learned Advocate
ORDER
The Appellant, a shareholder/Director of Sai Balaji Sponge Iron India Pvt. Ltd. (Corporate
Debtor) has challenged the order dated 22nd June, 2017 passed by the Adjudicating Authority (National
Company Law Tribunal), Hyderabad Bench, Hyderabad, whereby and whereunder the application
preferred by the Respondent- Magnifico Minerals Pvt. Ltd. (‘Operational Creditor’) under Sections 433,
434 and 439 of the Companies Act, 1956 has been treated to be an application under Section 9 of the
Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as “I&B Code”) read with Rule 6 of the
as “Adjudicating Authority Rules, 2016”), order of admission and Moratorium has been passed and
‘Interim Resolution Professional’ has been appointed.
2. The main plea taken by the Appellant is that before treating the application as under Section 9 of
the ‘I&B Code’, and its admission 1st Respondent (Operational Creditor) has not complied with the
provisions of the ‘I&B Code’. No notice of demand under sub-section (1) of Section 8 in Form 3 or 4 was
given by ‘Operational Creditor’ to the Corporate Debtor.
3. The brief facts of the case are that the ‘Corporate Debtor’ entered into a contract with Respondent
‘Operational Creditor’ and pursuant to the contract entire amount was not been paid and post-dated
cheques were issued which were dishonoured. However, in spite of the same the 1st Respondent
988
by Hon’ble NCLAT
(Operational Creditor) issued a legal notice on 10th December, 2015 calling upon the Corporate Debtor to
pay the outstanding sum of Rs. 4,25,10,464/-. Subsequently, the 1st Respondent (Operational Creditor)
filed a Company Petition under Sections 433 & 434 of the Companies Act, 1956 before the Hon’ble High
Court of Andhra Pradesh in Company Petition No. 360/2016.
4. After constitution of the Tribunal, pursuant to the Notification No. G.S.R. 1119(E) dated 7th
December, 2016, issued by Central Government under subsection (1) and (2) of Section 434 of the
Companies Act, 2013 read with subsection (1) of Section 239 of the ‘I&B Code’, the case was transferred
to the Adjudicating Authority, Chennai Bench and re-numbered as TCP/263/(IB)/2017. On 6th July,
2017, the Corporate Debtor came to know that Adjudicating Authority had passed the ex-parte order on
22.06.2017.
5. According to Appellant, no opportunity was given by the Adjudicating Authority to the Corporate
Debtor and the transferred petition under Sections 433 and 434 was treated to be an application under
Section 9 of the ‘I&B Code’ and was admitted by the impugned order dated 22nd June, 2017 giving rise
to the present appeal.
6. Learned counsel appearing on behalf of the Appellant submitted that no notice under sub-section
(1) of Section 8 was issued to the Corporate Debtor in Form-3 or 4 prior to treating the application as
under Section 9 of the ‘I&B Code’ or before the admission. The application was also not filed in the
proper format i.e. Form 5, as required under Section 9 of the ‘I&B Code’ read with Rule 6 of the
Adjudicating Authority Rules, 2016. In terms of Rules details of records of debt and default etc. were not
provided.
7. The aforesaid stand taken by the Appellant has not been disputed by the learned counsel for the
respondent.
8. Learned counsel for the Appellant brought to our notice the Central Government notification
dated 7th December, 2016 issued from the Ministry of Corporate Affairs. By the said notification, in
exercise of the powers conferred under sub-sections (1) and (2) of Section 434 of the Companies Act,
2013 read with sub-section (1) of Section 239 of the ‘I&B Code’, the Central Government framed “The
Companies (Transfer of Pending Proceedings) Rules, 2016”.
debts which are to be transferred from the Hon’ble High Court’s to the respective Tribunal and reads as
follows: -

989
by Hon’ble NCLAT
shall abate.
the provisions of the Act.”
10. From the aforesaid Rule 5, it is clear after transfer of the winding up case the Applicant – 1st
Respondent herein was required to submit all information, other than in formation forming part of the
records transferred from the High Court, for admission of the petition under Sections 7, 8 or 9 of the ‘I&B
Code’, including details of the proposed ‘Insolvency Professional’ within sixty days, failing which, the
petition shall stand abated.
11. As per Section 9 of the ‘I&B Code’, before admission of application and its filing, a demand
notice under sub-section (1) of Section 8 is required to be issued on the ‘Corporate Debtor’, as quoted
below: -
“8. Insolvency resolution by operational creditor. ─ (1) An operational creditor

be prescribed.”
990
by Hon’ble NCLAT
12. It is only on receipt of such notice under sub-section (1) of Section 8 of the ‘I& B Code’, the
‘Corporate Debtor’ may either pay the amount or may dispute the claim and reply in terms of sub-section
(2) of Section 8 of the ‘I&B Code’.
13. Clause (a) and (b) of sub-rule (1) of Rule 5 of the ‘Adjudicating Authority Rules’ provides the
format in which the demand notice/invoice demanding payment in respect of unpaid ‘Operational Debt’ is
to be issued by ‘Operational Creditor’. As per Rule 5(1) (a) & (b), the following person (s) are authorised
to act on behalf of operational creditor, who is also required to state, the action as may be taken in case of
failure to pay the dues, as apparent from the last portion of Form-3 and 4 which reads as follows: -
corporate debtor].
Yours sincerely,

Position with or in relation to creditor the operational
Address of person signing”
to be provided: -
“Part I- particulars of applicant

default]
991
by Hon’ble NCLAT
15. As per the instructions, the following documents are required to be attached:
“Annex I Copy of the invoice/demand notice as in Form 3 of the Insolvency and

Corporate debtor.
Annex III Copy of the relevant accounts from the banks/financial

institutions maintaining accounts of the operational creditor confirming that
there is no payment of the relevant unpaid operational debt by the operational
debtor, if available.

Annex VI Written communication by the proposed interim resolution

professional as set out in Form 2 of the Insolvency and Bankruptcy (Application
to Adjudicating Authority) Rules, 2016.
Annex VI Proof that the specified application fee has been paid.”
16. Admittedly, no demand notice was issued by 1st Respondent to the Corporate Debtor in term of
sub-section (1) of Section 8 of the ‘I&B Code’. In terms with Rule 5, other informations were also not
brought to the notice of the Adjudicating Authority.
17. The 1st Respondent (Operational Creditor) having failed to provide all the details as required
under Form-5 and noticed above, the application under sections 433 and 434 of the Companies Act, 1956
cannot be treated to be an application under section 9 of the ‘I&B Code’ in terms of Rule 5 of Transfer
Rules, 2016. In such circumstances, in view of proviso to Rule 5 of the Transfer Rules, the application
under Sections 433 and 434 of the Companies Act, 1956 stands abated.
18. For the reasons aforesaid, while we set aside the impugned order dated 22nd June, 2017 passed
by the Adjudicating Authority, Hyderabad Bench in C.P. No. 360/2016, also declare that the application
preferred by Respondent under Sections 433 and 434 of the Companies Act, 1956 stood abated.
19. In effect, order (s) passed by the Adjudicating Authority appointing ‘Resolution Professional’,
declaring moratorium, freezing of account and all other order (s) passed by the Adjudicating Authority
pursuant to impugned order and action taken by the ‘Resolution Professional’, including the
advertisement published in the newspaper calling for applications and all such orders and actions are
declared illegal and are set aside. The application preferred by the 1st Respondent is dismissed as abated.
992
by Hon’ble NCLAT
The Adjudicating Authority will now close the proceeding. The Corporate Debtor is released from all the
effect.
20. The Adjudicating Authority will fix the fee of ‘Interim Resolution Professional and the Corporate
Debtor will pay the fees of the Resolution Professional, for the period he has functioned. The appeal is
allowed with aforesaid observation and direction. However, in the facts and circumstances of the case,
993
by Hon’ble NCLAT
NEW DELHI
C.P. (I.B.) No. 242-245/NCLAT/2017
Applicant: Jap Infratech Pvt. Ltd.

Vs.
Respondent: Innovation House Industries Pvt. Ltd.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Chandra Shekhar Yadav, Learned Advocate
For Respondents/Defendant: Mr. Manish Paliwal, Learned Advocate
ORDER
In view of the decision of Hon'ble Supreme Court in the mater of M/s Innoventive Industries Ltd
Vs M/s ICICI Bank and Another (Civil Appeals No.8337-8338 of 2017), learned counsel for the appellant
is allowed to substitute Mr. Kumar Jyoti Ranjan and Ms Priyanka Kumari, Directors of `JAP Infratech
Private Ltd' as appellants in place of original appellant (corporate debtor) and to transpose WI/ s JAP
Infratech Private Limited' as 2nd respondent. Necessary corrections be made in the records accordingly.
Mr. Kumar Jyoti Ranjan and Ms Priyanka Kumari having already filed Vakalatnama, no separate
Vakalatnama is required to be filed.
994
by Hon’ble NCLAT
NEW DELHI
C.P. (I.B.) No. 242-245/NCLAT/2017
Applicant: Kumar Jyoti Ranjan and Ms. Priyanka Kumari

Vs.
Respondent: Innovation House Industries Pvt. Ltd.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Chandra Shekhar Yadav, Learned Advocate
For Respondents/Defendant: Mr. Manish Paliwal, Learned Advocate
ORDER
These appeals have been preferred by Mr. Kumar Jyoti Ranjan and Ms Priyanka Kumari,
Directors of the Corporate Debtor against the impugned orders dated 27th July, 2017, 24th August, 2017,
4th October, 2017 and 24th October, 2017 passed by the Adjudicating Authority (National Company Law
Tribunal), New Delhi Bench passed in 1B No.(IB)- 212(ND)/2017.
2. Vide order dated 27th July, 2017 the Adjudicating Authority admitted the application preferred
by Respondent, M/s Innovation House Industries Pvt Ltd under Section 9 of the Insolvency 85
Bankruptcy Code, 2016 (hereinafter referred to as the '184B Code'), initiated corporate insolvency
resolution process against `M/ .s JAP Infratech Private Limited' (Corporate Debtor), passed order of
moratorium with certain directions and requested the Insolvency and Bankruptcy Board of India to
recommend the name of the Insolvency Resolution Professional. Rest of the impugned orders are
consequential to the impugned order dated 27th July, 2017, including appointment of Interim Resolution
Professional (IRP) dated 4th October, 2017.
3. Learned counsel appearing on behalf of the appellant referred to the demand notice dated 28th
February, 2017 issued under sub-section (1) of section 8 the IBC Code and submitted that the said notice
has been issued by an advocate of "Corporate Legal Partners" namely Mr. Vikas Kumar, Advocate. The
reliance has been placed on decision of this Appellate Tribunal in the Uttam Galva Steel Ltd Vs DF
995
by Hon’ble NCLAT
Deutsche Forfait AG & Anr-Company Appeal (AT) (Insolvency) No.39/2017 to suggest that demand
notice issued through a lawyer is not permissible.
4. Learned counsel appearing on behalf of the respondent referred to a certified copy of the
resolution passed by the Board of Directors of 'Innovation House Industries Private Ltd' on 13.02.2017,
which reads as follows:
"Resolved that, Mr. Manish Paliwal, Mr. Vikas Kumar, Advocates at

Corporate Legal Partners, New Delhi are hereby authorized to issue notice
under the Insolvency & Bankruptcy Code, 2016 against M/s JAP Infratech
Private Ltd, New Delhi and further to do necessary acts in this regards.
5. According to the learned counsel for the appellant .this resolution is a forged, fabricated
document now brought on record, which has been disputed by learned counsel for the Respondent.
6. We have heard the learned counsel for the parties perused the record.
7. Without going into the disputed question of fact as to whether the resolution dated 13th February,
2017 authorising Mr. Manish Paliwal and Mr. Vikas Kumar, Advocates to issue demand notice under
sub-section (1) of section 8 of the IBC Code, what we find that the petition under Section 9 preferred by
the Respondent was not maintainable for the following reasons.
8. In 'Uttam Galva Steel Ltd' wherein this Appellate Tribunal vide judgement dated 28th July, 2017
having notice the relevant provisions of the 185B Code and rules framed thereunder, held as follows:
"28. Sub-rule (1) of Rule 5 of the 'Adjudicating Authority Rules' mandates the
'Operational Creditor' to deliver to the 'Corporate Debtor' the demand notice in Form-3
or invoice attached with the notice in Form-4, as quoted below: -
"Rule 5. (1) An operational creditor shall deliver to the corporate debtor the following
documents, namely: -
(b) a copy of an invoice attached with a notice in Form
29. Clause (a) and (b) of sub-rule (1) of Rule 5 of the Àdjudicating Authority Rules'
provides the format in which the demand notice/invoice demanding payment in respect of
unpaid Òperational Debt' is to be issued by 'Operational Creditor'. As per Rule 5(1) (a)
& (b), the following person (s) are authorised to act on behalf of operational creditor, as
apparent from the last portion of Form-3 which reads as follows:
996
by Hon’ble NCLAT
"6. The undersigned request you to unconditionally repay the unpaid operational
corporate debtor].
Yours sincerely,
"6. The undersigned request you to unconditionally repay the
Yours sincerely,
"6. The undersigned request you to unconditionally repay the
Yours sincerely,
30. From bare perusal of Form.-3 and Form-4, read with sub-rule (1) of Rule 5 and
Section 8 of the I&B Code, it is clear that an Operational Creditor can apply himself or
through a person authorised to act on behalf of Operational Creditor. The person who is
authorised to act on behalf of Operational Creditor is also required to state "his position
with or in relation to the Operational Creditor", meaning" thereby the person authorised
by Operational Creditor must hold position with or in relation to the Operational
31. The demand notice/ invoice Demanding Payment under the MB Code is required to
be issued in Form-3 or Form - 4. Through the said formats, the 'Corporate Debtor' is to
be informed of particulars of 'Operational Debt', with a demand of payment, with clear
understanding that the 'Operational Debt' (in default) required to pay the debt, as
claimed, unconditionally within ten days from the date of receipt of letter failing which
the Òperational Creditor' will initiate a Corporate Insolvency Process in respect of
'Corporate Debtor', as apparent from last paragraph no. 6 of notice contained in Form -
3, and quoted above.
Only if such notice in Form-3 is served, the 'Corporate Debtor' will understand the
serious consequences of non-payment of Òperational Debt, otherwise like any normal
pleader notice/ Advocate notice, like notice under Section-80 of C.P.C. or for proceeding
under Section 433 of the Companies Act 1956, the `Corporate Debtor' may decide to
contest the suit/ case if filed, distinct Corporate Resolution Process, where such claim
997
by Hon’ble NCLAT
otherwise cannot be contested, except where there is an existence of dispute, prior to
issue of notice under Section 8.
32. In view of provisions of I&B Code, read with Rules, as referred to above, we hold
that an 'Advocate/ Lawyer' or `Chartered Accountant' or 'Company Secretary' in absence
of any authority of the Board of Directors, and holding no position with or in relation to
the Operational Creditor cannot issue any notice under Section 8 of the I&B Code, which
otherwise is a 'lawyer's notice' as distinct from notice to be given by operational creditor
in terms of section 8 of the I&B Code."
9. In the present case the notice has been issued by a law firm namely "Corporate Legal Partners"
and there is nothing on record to suggest that the said law firm has been authorised or holds any position
with or in relation to the respondent (operational creditor). In view of the fact that the law firm do not
hold any position 'with or in relation to the operational creditor', we hold that the demand notice issued by
the Corporate Legal Partners on behalf of the respondent cannot be treated to be a demand notice under
sub-section (1) of section (8) of the IBC Code and for the said reason the petition under Section 9 was not
maintainable.
10. In view of the detailed reasons and findings as recorded above we have no option but to set aside
impugned orders dated 27th July, 2017, 24th August, 2017, 4th October, 2017 and 24th October, 2017
passed by the Adjudicating Authority (National Company Law Tribunal), New Delhi Bench passed in IB
No.(IB)-212(ND)/2017.
11. In effect, order (s) passed by Ld. Adjudicating Authority appointing Ìnterim Resolution
Professional', declaring moratorium, freezing of account and all other order (s) passed by Adjudicating
Authority pursuant to impugned order(s) and action taken by the 'Resolution Professional', including the
advertisement published in the newspaper calling for applications and all such orders and actions are
declared illegal and are set aside. The application preferred by Respondent under Section 9 of the I&B
Code, 2016 is dismissed. Learned Adjudicating Authority will now close the proceeding. The appellant
company is released from all the rigour of law and is allowed to function independently through its Board
of Directors from immediate effect.
12. Learned Adjudicating Authority will fix the fee of 'Resolution Professional `, and the appellant
will pay the fees of the Interim Resolution Professional, for the period he has functioned. The appeal is
998
by Hon’ble NCLAT
NEW DELHI
C.P. (I.B.) No. 300/NCLAT/2017
Applicant: KJMC Corporate Advisors (India) Ltd.

Vs.
Respondent: India Steel Works Ltd.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Vipul Ganda, Mr. Tarun Mehta & Mr. Mayank Srivastav, Learned
Advocates
ORDER
After some arguments, learned counsel for the appellant sought permission to withdraw the
appeal with liberty to file fresh application under Section 9 of the Insolvency and Bankruptcy Code, 2016
(hereinafter referred to as the ‘I & B Code’) after notice to the respondent (Corporate Debtor) under sub-
section (1) of Section 8 of the I & B Code. In view of the prayer made on behalf of the appellant, we
allow the appellant to withdraw the appeal with liberty to file a fresh application. However, we do not
express any opinion with regard to the question whether there is any ‘dispute in existence’ and that
whether the fresh application filed under Section 9 will be maintainable or not.
The appeal is dismissed as withdrawn.
999
by Hon’ble NCLAT
NEW DELHI
C.P. (I.B.) No. 301/NCLAT/2017
Applicant: Nagarjuna Travels & Hotels Ltd.

Vs.
Respondent: Kotak Mahindra Bank & Ors.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Saurabh Kalia & Mr. Nishant Piyush, Learned Advocates
ORDER
The appellant has challenged the order dated 16th November, 2017 passed by the Adjudicating
Authority (National Company Law Tribunal), Hyderabad Bench, which reads as follows:
“Heard Shri S. Chidambaram, Learned PCS for the Petitioner, Shri T. Nagender,
(For Canara Bank), Shri P. Srihasha Reddy, (KMB) Learned Counsels for
Respondents and Shri K.K. Rao, Learned RP.
Shri T. Nagender, Learned Counsel for Canara Bank requested time. Post the
case on 07.12.2017.”
The only plea taken by the learned counsel for the appellant is that there was an urgency in the
matter as the appellant sought for injunction and the case has been adjourned.
Having heard the learned counsel for the appellant, we find that the present appeal is frivolous
and the case is likely to be listed on 7th December, 2017. For the said reason, we dismiss the appeal with
cost of Rupees One Lakh be paid in favour of Kotak Mahindra Bank by Shri E. Venkatram Reddy,
Director who filed the appeal on behalf of the Corporate Debtor without any authority.
1000
by Hon’ble NCLAT
NEW DELHI
C.P. (I.B.) No. 209/NCLAT/2017
Applicant: D. Muthukumar
Vs.
Respondent: A. Premkumar & Another
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Goutham Shivshankar, Learned Advocate
For Respondents/Defendant: Mr. Biju Thankappen & Mr. Prakash Yedhola, Learned Advocates
ORDER
The Respondents, A. Prem Kumar & Another originally filed an application under Section 433(e)
& (f) of the Companies Act, 1956 before the Hon’ble High Court of Madras. The case was transferred to
the Adjudicating Authority (National Company Law Tribunal), Chennai Bench, Chennai, pursuant to
“The Companies (Transfer of Pending Proceedings) Rules, 2016” framed by Central Government in
2013 read with sub-section (1) of Section 239 of the Insolvency and Bankruptcy Code, 2016 (hereinafter
referred to as “I&B Code”).
2. The Adjudicating Authority by impugned order dated 21st August, 2017 in TCP/89/(IB)/CB/2017
treated the application under Section 433(e) & (f) of the Companies Act, 1956 to be an application under
Section 7 of the ‘I&B Code’ read with Rule 6 of the Insolvency and Bankruptcy (Application to
Adjudicating Authority) Rules, 2016 (hereinafter referred to as “Adjudicating Authority Rules, 2016”),
admitted the application, passed order of moratorium and appointed ‘Interim Resolution Professional’
with certain directions. The said order is under challenge in this appeal.
3. The case of the Appellant is that prior to 2004, he along with his wife and one Mr. P. Asokan and
Mr. P. Velraj were doing real estate business through a proprietary concern in the name and style of M/s.
K.K.Flats. During the year 2004, the said Company was floated and ventured into a land project
1001
by Hon’ble NCLAT
belonging to M/s. Madura Coats Ltd. at Madurai by utilising the funds available with the proprietary
concern and taking further investments from different persons including Mr. P. Asokan and Mr. P. Velraj.
Thereby, the land was procured, details of completion of the projects that the Company purchased and
promoted an amount contributed by different persons have been shown. The amount paid by one or other
persons in favour of one or other creditors has also been detailed and it was submitted that the table shows
that the Company had paid back the investments made in it through various transactions coming to its
total sum of Rs. 1,54,93,980/- (Rupees one Crore fifty-four lakhs ninety-three thousand nine hundred and
eighty only). It is alleged that the Respondents without paying back the amount with sole motive of
unjustly enriching themselves, issued a statutory notice on 25th October, 2014 alleging that the Company
has taken loan from them, to which, the Appellant objected.
4. Thereafter, the Respondents filed an application for winding up under Section 433(e) & (f) of the
Companies Act, 1956 before the Hon’ble High Court of Madras. The said case was transferred to the
Adjudicating Authority, who treated the petition as an application under Section 7 of the ‘I&B Code’ and
passed the impugned order dated 21st August, 2017.
5. Learned counsel for the Appellant submitted that the Respondents are not ‘Financial Creditor’,
within the meaning of sub-section (7) read with sub-section (8) of Section 5 of the ‘I&B Code’. It was
also submitted that before admitting the application under Section 7, all facts were required to be brought
to the notice of the Adjudicating Authority, were not pleaded.
6. The Appellant has enclosed copies of the cheques issued by Mr. P. Asokan, apart from copies of
the relevant pages of ledger book to suggest that repayment has already been made to the 1st Respondent-
A. Premkumar. Balance sheets has been enclosed in support of the plea that the due amount had already
been paid to the 1st Respondent.
7. According to 1st Respondent, he approached the Appellant Company on many occasions, seeking
repayment of dues, along with the accrued interests but the amount was not paid. Further, according to 1st
Respondent, the Income Tax Return was submitted by the Company (KK Flats (P) Ltd) and enclosed by
Appellant suggests that the amount was taken from the 1st Respondent and shown as ‘loan’, relevant
portion of which is quoted below: -
1002
by Hon’ble NCLAT
KK FLATS PRIVATE LIMITED

NO. 1E, SUN FLOWER APARTMENT
10, MANDABAM CROSS ROAD
KILPAUK, CHENNAI-10
SCHEDULES TO BALANCE SHEET AS ON 31.03.2012
Amount in (Rs.)
Particulars 31.03.2012 31.03.2011
SCHEDULE – D
Unsecured Loans
Anitha R 1070224 1070224

Arun P.V. 2064647 2064647
Asokan P 1880913 1880913
Deva Kavitha 7940000 10390000
KK Flats Deva K 348500 5348500

Muthukumaar 13918058 13667758
Porkodi 961586 961586
Prem Kumar 3110382 3110382
Raja sekar 3366713 3366713
Rithu Pandey 324000 324000
Ram kumar A 2645114 2645114
Shanthi V 1708167 1708167
Others 338000 338000
Paramendra Tiwari 3450000 3450000
Rathinapandian 300000 300000
Tamilselvan 600000 0
Ajay Prakash V 1477521 1477521
Alagesan & Ajitha 500000 500000
Prakash S 100000 100000
TOTAL 52703525
46103825
1003
by Hon’ble NCLAT
For M/s. K K Flats Private Limited For Ravichandran & Thangaraj Associates
Sd/- Sd/- Sd/-

D. Muthukumar M. Devakavitha G. Thangaraj
Managing Director Director Partner
Place: Chennai
Date:
8. We have heard learned counsel for the Appellant and learned counsel for the Respondents.
9. To decide the issue, it is desirable to refer the Rule framed by the Central Government, pursuant
to which pending winding up cases were transferred from the Hon’ble High Courts to the Adjudicating
Authority (Tribunal).
The Central Government in exercise of the powers conferred under sub-sections (1) and (2) of
Section 434 of the Companies Act, 2013 read with sub-section (1) of Section 239 of the ‘I&B Code’
framed “The Companies (Transfer of Pending Proceedings) Rules, 2016”. Rule 5 therein relates to
transfer of pending proceedings of winding up on the ground of inability to pay debts and reads as
follows: -

with in accordance with Part II of the Code.
shall abate.
1004
by Hon’ble NCLAT
10. Rule 4 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016
relate to “Application by ‘Financial Creditor’”, as quoted below: -
“4. Application by financial creditor. ─ (1) A financial creditor, either by itself

or jointly, shall make an application for initiating the corporate insolvency
resolution process against a corporate debtor under Section 7 of the Code in
Form 1, accompanied with documents and records required therein and as
specified in the Insolvency and Bankruptcy Board of India (Insolvency Resolution
process for Corporate Persons) regulations, 2016.”
(2) Where the applicant under sub-rule (1) is an assignee or transferee of a

financial contract, the application shall be accompanied with a copy of the
assignment or transfer agreement and other relevant documentation to
demonstrate the assignment or transfer.
(3) The applicant shall dispatch forthwith, a copy of the application filed with the
Adjudicating Authority, by registered post or speed post to the registered office
of the corporate debtor.
11. From sub-rule (1) of Rule 4 of the Adjudicating Authority Rules, 2016, it is clear that the
applicant is required to provide information as required under Form-1. Sub-rule (3) of Rule 4 of the
Adjudicating Authority Rules, 2016, mandates the applicant to provide the copy of the application to the
‘Corporate Debtor’, immediately after filing of the application.
12. As per Form-1 i.e. the format for filing an application under Section 7 of the ‘I&B Code as per
which following details are to be provided.
“Part I- Particulars of Applicant (Please provide for each Financial Creditor

Making the Application)
Part II- Particulars of Corporate Debtor
Part III- Particulars of the Proposed Interim Resolution Professional
1005
by Hon’ble NCLAT
Part IV- Particulars of Financial Debt
Part V- Particulars of Financial Debt [Documents, Records and Evidence of

Default]
I, hereby certify that, to the best of my knowledge, [name of proposed insolvency

professional], is fully qualified and permitted to act as an insolvency professional
in accordance with the Insolvency and Bankruptcy Code, 2016 and the
associated rules and regulations.
[Name of the financial creditor] has paid the requisite fee for this application
through [state means of payment] on [date].”
As per the instructions, the following documents are required to be attached:
“Annex I Copies of all documents referred to in this application.
Annex II Written communication by the proposed interim resolution

professional as set out in Form 2.
Annex III Proof that the specified application fee has been paid.
Annex IV Where the application is made jointly, the particulars specified

in this form shall be furnished in respect of all the joint applicants along with a
copy of authorisation to the financial creditor to file and act on this application
on behalf of all the applicants.”
13. From the record we find that except for the information as mentioned in the petition under
Section 434 (e) & (f) of the Companies Act, 1956, no further information was provided by the
Respondents in terms of Rule 5 of “The Companies (Transfer of Pending proceedings) Rules, 2016”. As
per proviso, the Respondent was required to submit all information, other than information forming part
of the records transferred in accordance with Rule 7, required for admission of the petition under Sections
7, 8 or 9 of the ‘I&B Code. In the present case, there is nothing on the record to suggest that in terms of
Part V of Form-1 ‘Particulars of Financial Debt [Documents, Records and Evidence of Default]’ have
been supplied by the Respondents nor copies of documents as mentioned below Part V of Form I were
provided by the Respondents. For example, the Respondents have not filed any record of default with the
information utility nor any other record, as prescribed by ‘Insolvency and Bankruptcy Board of India’ has
been enclosed.
14. This apart, there is a doubt, as submitted by the learned counsel for the Appellant, as to whether
the 1st Respondent, A. Prem Kumar can claim to be a ‘Financial Creditor’.
1006
by Hon’ble NCLAT
15. From the Income Tax Return enclosed by the 1st Respondent, while we find that the 1st
Respondent has been treated to be a ‘Creditor’, but in Schedule D, the debt has been shown to be
unsecured loans. The 1st Respondent has not brought on record to suggest that debt along with interest, if
any, has been disbursed by the 1st Respondent to the ‘Corporate Debtor’ against ‘the consideration for the
time value of money’ or that the said money was borrowed by the ‘Corporate Debtor’ for one or other
purpose as shown in sub-section (8) of Section 5 of the ‘I&B Code’.
16. The Adjudicating Authority without ascertaining the question as to whether the 1st Respondent is
a ‘Financial Creditor’ or not, particularly in absence of any pleading treated the application under Section
7 of the ‘I&B Code’, which shows non application of mind on the part of the Adjudicating Authority.
17. For the reasons aforesaid while we hold that the application under Section 433 (e) & (f) of the
Companies Act, 1956 transferred to the Tribunal cannot be treated to be an application under Section 7 of
the ‘I&B Code’, the impugned order dated 21st August, 2017 being bad in law, and in view of the
observations made above, is set aside. In the result, in terms of proviso to Rule 5 of “The Companies
(Transfer of Pending proceedings) Rules, 2016”, the application preferred by the Respondents under
Section 433 (e) & (f) of the Companies Act, 1956 stands abated. However, it will be open to the
Respondents to move before appropriate forum for appropriate relief.
18. In effect, order (s) passed by Adjudicating Authority appointing ‘Interim Resolution
including the advertisement, if any, published in the newspaper calling for applications and all such
orders and actions are declared illegal and are set aside. The application preferred by Respondent is
dismissed as abated. Learned Adjudicating Authority will close the proceeding. The ‘Corporate Debtor’
company is released from all the rigour of law and is allowed to function independently through its Board
of Directors from immediate effect.
19. The Adjudicating Authority will fix the fee of ‘Interim Resolution Professional ‘, if appointed,
and the ‘Corporate Debtor’ will pay the fees of the Interim Resolution Professional, for the period he has
1007
by Hon’ble NCLAT
NEW DELHI
C.P. (I.B.) No. 220/NCLAT/2017
Applicant: M/s. J.P. Engineers Pvt. Ltd.

Vs.
Respondent: M/s. Indo Alusys Industries Ltd.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Sanjeev Sindhwani, Senior Advocate, Mr. P. Nagesh & Mr. Dhruv
Gupta, Learned Advocates
For Respondents/Defendant: Mr. Virender Ganda, Senior Advocate, Mr. Ruchi Mahajan, Ms. Anannya
Ghosh, Mr. Dushyant M & Mr. Tarun, Learned Advocates
ORDER
The Appellant-‘Operational Creditor’ preferred an application under Section 9 of the Insolvency

and Bankruptcy Code, 2016 (hereinafter referred to as “I&B Code”). The Adjudicating Authority
(National Company Law Tribunal), New Delhi, having rejected the application by order dated 5th
September, 2017 in Company Petition No.(IB)-203(ND)/2017, the present appeal has been preferred.
2. The main ground taken by the Adjudicating Authority is that the notice under sub-section (1) of
Section 8 of the ‘I&B Code’ has not been issued by ‘Operational Creditor’ or its Authorised
Representative having position with or in relation to the ‘Operational Creditor’ but by an Advocate.
Reliance has been placed on this Appellate Tribunal decision in “M/s. Uttam Galva Steels Limited v. DF
Deutsche Forfait AG & Anr. Company Appeal (AT) (Insolvency) No. 39 of 2017”.
3. Learned counsel appearing on behalf of the Respondent submitted that the Lawyer notice is
permissible and as per Companies Act, 2013, an act of any Authorised person can be rectified by Board of
Directors, which has been done in the present case. Reliance has been placed on Hon’ble Supreme Court
decision in “Maharashtra State Mining Corporation Vs. Sunil S/O Pundikaro Pathak, 2006(5) SCC 96”,
1008
by Hon’ble NCLAT
wherein the meaning of ratification is explained by the Hon’ble Supreme Court and held that a subsequent
ratification of an act is equivalent to a prior authority to perform such act.
4. Learned counsel appearing on behalf of the Respondent-‘Corporate Debtor’ submitted that notice
under sub-section (1) of Section 8 of the ‘I&B Code’ was issued on 9th May, 2017 by one Mr. Sharad
Tyagi, an Advocate on behalf of the Appellant-‘Operational Creditor’. He relied on decision of this
Appellate Tribunal in “Uttam Galva Steel Ltd. (supra)”. It was further submitted that the Appellant-
‘Operational Creditor’s’ application was not maintainable under Section 9 of the ‘I&B Code’ on account
of notice of dispute to the Appellant. Reliance was placed on Hon’ble Supreme Court’s decision in
“Mobilox Innovations Pvt. Ltd. Vs. Kirusa Software (P) Limited− 2017 SCC OnLine SC 1154”.
5. According to counsel for the Respondent-‘Corporate Debtor’, the application filed by the
Appellant-‘Operational Creditor’ was not only incomplete and defective in absence of statutory affidavit
in terms of Section 9(3)(b) of the ‘I&B Code’, there being ‘dispute in existence’ and other defects, the
application under Section 9 of the ‘I&B Code’ was not maintainable.
6. In “Uttam Galva Steel Ltd. (supra)”, this Appellate Tribunal decided the issue whether an
‘Advocate/Lawyer’ or ‘Chartered Accountant’ or ‘Company Secretary’ in absence of any authority of the
Board of Directors, and holding no position with or in relation to the ‘Operational Creditor’ can issue
notice under sub-section (1) of Section 8 of the ‘I&B Code’ or not. The answer of the Appellate Tribunal
is in negative, as quoted below: -
and Section 8 of the I&B Code, it is clear that an Operational Creditor can apply
himself or through a person authorised to act on behalf of Operational Creditor.
The person who is authorised to act on behalf of Operational Creditor is also
required to state “his position with or in relation to the Operational Creditor”,
meaning thereby the person authorised by Operational Creditor must hold
position with or in relation to the Operational Creditor and only such person
can apply.
1009
by Hon’ble NCLAT
above.
the serious Company Appeal (AT) (Insolvency) No. 220 of 2017 consequences of
non-payment of ‘Operational Debt’, otherwise like any normal pleader
notice/Advocate notice, like notice under Section 80 of C.P.C. or for proceeding
under Section 433 of the Companies Act 1956, the ‘Corporate Debtor’ may
decide to contest the suit/case if filed, distinct Corporate Resolution Process,
where such claim otherwise cannot be contested, except where there is an
existence of dispute, prior to issue of notice under Section 8.
the I&B Code.”
7. In the present case, admittedly notice has been issued by an Advocate and there is nothing on the
record to suggest that the said Lawyer has been authorised by Board of Directors of the Appellant or
holding any position with or in relation with the Appellant. In this background, we hold that the
Adjudicating Authority rightly held that the notice issued by the lawyer on behalf of the Appellant cannot
be treated as notice under Section 8 of the ‘I&B Code’.
8. In so far as ratification of Power of Attorney is concerned, it will not cure the defects in
preferring the appeal under Section 9 of the ‘I&B Code’, which can be preferred by the ‘Operational
Creditor’ only after ten days of issuance of notice under sub-section (1) of Section 8 of the ‘I&B Code’
and in the requisite Form-5, in terms of Section 9(3)(b) of the ‘I&B Code’. The ‘Operational Creditor’ is
required to mention whether the ‘Corporate Debtor’ has raised any dispute pursuant to demand notice.
9. In “Mobilox Innovations Pvt. Ltd. (supra)”, the Hon’ble Supreme Court while dealing with
Section 9 of the ‘I&B Code’ observed:-
“54. It is clear, therefore, that once the operational creditor has filed an
1010
by Hon’ble NCLAT
“existence” of a dispute or the fact that a suit or arbitration proceeding relating
requires further investigation and that the “dispute” is not a patently feeble legal
authority has to reject the application.”
10. In the present case, we find that the Appellant-‘Operational Creditor’ filed an application but
curiously it has not made clear that a notice of dispute has been received by the Appellant-‘Operational
Creditor’. For the reasons aforesaid and in the light of decision in “Mobilox Innovations Pvt. Ltd. (supra)”
the Adjudicating Authority rightly rejected the claim.
11. Even otherwise, on merit the Adjudicating Authority noticed that the claim as made by the
Appellant-‘Operational Creditor’ is not sustainable under ‘I&B Code’. From the rejoinder’s referred by
‘Operational Creditor’ makes it clear that the petition under Section 9 of the ‘I&B Code’ has been filed
not on behalf of the ‘Operational Creditor’ in relation to its alleged outstanding owed from the
Respondent-‘Corporate Debtor’, but also for and on behalf of another firm namely ‘M/s. J.P.Engineers’
allegedly taken over by the Appellant-‘Operational Creditor’ since 4th November, 2016.
12. From the record we also find that before purported notice under sub-section (1) of Section 8
issued by lawyer pursuant to notice under Section 138 of the Negotiable Instruments Act, 1881, by letter
dated 4th March, 2017, the Respondent-‘Corporate Debtor’ disputed the claim and brought to the notice
of the Respondent that they did not match the invoice number of the invoices received and paid by the
‘Corporate Debtor’. In view of the fact there is an ‘existence of dispute’, we hold that the petition under
Section 9 of the ‘I&B Code’ was even otherwise not maintainable.
13. For the reasons aforesaid, no interference is called for against the impugned order dated 5th
September, 2017. We find no merit in this appeal. It is accordingly dismissed. However, in the facts and
1011
by Hon’ble NCLAT
NEW DELHI
C.P. (I.B.) No. 155/NCLAT/2017
Applicant: MSP Paper Mill Pvt. Ltd.

Vs.
Respondent: Arjun Chemicals Pvt. Ltd.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Kumarpal R. Chopra, Learned Advocate
For Respondents/Defendant: Mr. A. K. Mishra, Learned Advocate
ORDER
Mr. M.S. Palanivel, Ex-Director of M/s MSP Paper Mill Pvt Ltd (Corporate Debtor) has
challenged the impugned order dated 28th July, 2017 passed by the Adjudicating Authority (National
Company Law Tribunal), Chennai Bench, Chennai, whereby and whereunder the application preferred by
Respondent M/s Arjun Chemicals Pvt Ltd (operational creditor) under Section 433(e) and 434 of the
Companies Act, 1956 has been treated to be an application under Section 9 of the Insolvency and
Bankruptcy Code, 2016 (hereinafter referred to as I&B Code) read with Rule 6 of the Insolvency and
Bankruptcy (Application to Adjudicating Authority) Rules, 2016, and the application has been admitted
with order of moratorium. Name of the Interim Resolution Professional has been called for from the
Insolvency and Bankruptcy Board of India (IBBI).
2. Learned counsel for the appellant submitted that before treating the petition for winding up as am
application under Section 9 of the I&B Code the respondent has not complied with the provisions of the
I&B Code as no notice under sub-section (1) of Section 8 of the I&B Code was issued in Form 3 or 4 and
the application has been admitted though there is existence of a dispute.
3. Learned counsel appearing on behalf of the respondent (operational creditor) submits that there is
no dispute in existence and in fact part of the payment was made when the matter was pending before the
1012
by Hon’ble NCLAT
Hon’ble High Court. However, he accepts that no notice was issued under sub-section (1) of section 8 in
Form 3 or Form 4 and the application has been admitted.
4. Similar issue fell for consideration before this Appellate Tribunal in M/s Sabari Inn Pvt Ltd Vs
Rameesh Associates Pvt Ltd, Company Appeal (AT) (Insolvency) No.117 of 2017. In the said appeal this
Appellate Tribunal vide judgement dated 17th November, 2017 having noticed the Rule 5 of “The
Companies (Transfer of Pending Proceedings) Rules, 2016 and other provisions observed and held as
follows:
“9. Learned counsel for the Appellant has enclosed the Central Government
notification dated 7th December, 2016 issued from the Ministry of Corporate
Affairs. By the said notification, in exercise of the powers conferred under sub-
section (1) and (2) of Section 434 of the Companies Act, 2013 read with sub-
section (1) of Section 239 of the ‘I&B Code’, the Central Government framed
“The Companies (Transfer of Pending Proceedings) Rules, 2016.”
10. Rule 5 relates to transfer of pending proceedings of winding up on the

ground of inability to pay debts which are to be transferred from the Hon’ble
High Court’s to the respective Tribunal and reads as follows:-

pay debts(1) all petitions relating to winding up under clause (e) of Section 433
of Tribunal established under sub-section (4) of Section 419 of the Act,
with in accordance with Part II of the Code.
shall abate.
1013
by Hon’ble NCLAT
11. From the aforesaid Rule 5, it is clear after transfer of the case the
Applicant (Respondent herein) was required to submit all information, other than
in formation forming part of the records transferred from the High Court, for
admission of the petition under Sections 7, 8 or 9 of the ‘I&B Code’, including
details of the proposed ‘Insolvency Professional’ within sixty days, failing which,
the petition shall stand abated.
12. As per Section 9 of the ‘I&B Code’, before admission of application and
its filing, a demand notice under sub-section (1) of Section 8 is required to be
issued on the ‘Corporate Debtor’, as quoted below:-
“8.Insolvency resolution by operational creditor.
-(1) An operational creditor may, on the occurrence of a default, deliver a

demand notice of unpaid operational debtor copy of an invoice demanding
payment of the amount involved in the default to the corporate debtor in such
form and manner as may be prescribed.”
13. It is only on receipt of such notice under sub-section (1) of Section 8 of

the ‘I&B Code’, the ‘Corporate Debtor’ may either pay the amount or may
dispute the claim in terms of sub-section (2) of Section 8 of the ‘I&B Code’.
Xxx
16. Form-5 is the format for filing application under Section 9, as per which
the following details are to be provided:-
“Part I- particulars of applicant.
Part II- particulars of corporate debtor.
Part III- particulars of the proposed interim resolution Professional (if proposed)
Part IV-particulars of operational debt.
1014
by Hon’ble NCLAT
Part V- particulars of operational debt (documents, records and evidence of
default)
As per the instructions, the following documents are required to be attached:

Corporate Debtor.
Annex II. Copies of all documents referred to in this application.
available.

Insolvency and Bankruptcy (application to Adjudicating Authority) Rules, 2016.
Annex V Written communication by the proposed interim resolution professional

5. In the present case as notice under sub-section (1) of Section 8 of I&B code has not been issued
by the Respondent (operational creditor), we hold that the application preferred by the Respondent was
incomplete. In this circumstances, we have no other option but to set aside the impugned order dated 28th
July, 2017 passed by the National Company Law Tribunal, Chennai Bench, Chennai and declare that the
application preferred by the Respondent under Section 433 of the Companies Act, 1956 stands abated.
6. In effect, order (s) passed by Ld. Adjudicating Authority appointing any ‘Interim Resolution
Professional’ declaring moratorium, freezing of account and all other order (s) passed by Adjudicating
Authority pursuant to impugned order and action, if any, taken by the ‘Resolution Professional’, including
the advertisement, if any, published in the newspaper calling for applications all such orders and actions
are declared illegal and are set aside. The application preferred by Respondent is dismissed. Learned
Adjudicating Authority will now close the proceeding. The appellant company is released from all the
effect.
1015
by Hon’ble NCLAT
7. The Adjudicating Authority will fix the fee of ‘Interim Resolution Professional ‘, and the
appellant will pay the fees of the ‘Resolution Professional’, for the period he has functioned. The appeal
is allowed with aforesaid observation and direction. However, in the facts and circumstances of the case,
8. However, this order will not come in the way of the respondent, operational creditor, to issue
fresh notice under sub-section (1) of Section 8 of I&B Code and if there is debt and default and there is no
dispute in existence, the respondent may file an application under section 9 of the I&B Code.
1016
by Hon’ble NCLAT
NEW DELHI
C.P. (I.B.) No. 265/NCLAT/2017
Applicant: Prem Sarup Narula

Vs.
Respondent: ByCell Telecommunications India Pvt. Ltd.
Judges/Coram:
Counsels:
ORDER
Nobody appears on behalf of the Applicant/'Operational Creditor'. On perusal of record and

pleading, we also find that no case for review is made out. The review application is accordingly
dismissed.
1017
by Hon’ble NCLAT
NEW DELHI
C.P. (I.B.) No. 141&146/NCLAT/2017
Applicant: Ravi Mahajan

Vs.
Respondent: Sunrise 14 A/S, Denmark
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Manoj Swarup, Mr. Soheb Rahman & Mr. Aditya Singh, Learned
Advocates
For Respondents/Defendant: Mr. Virendra Ganda, Senior Advocate, Mr. Manish Kumar Jha & Mr.
Yohaann Limathwalla, Learned Advocates
ORDER
As both these appeals arises out of common ‘Corporate Insolvency Resolution Process’ initiated
against the Appellant-‘Corporate Debtor’, filed a common set of paper books, they were heard together
and disposed of by this common judgment.
2. The Respondent- Sunrise 14 A/S, Denmark, a Company incorporated under the Danish Law
having its registered office at Esplanaden 50, 1263 KØbenhavn K, Denmark, claiming itself to be the
‘Financial Creditor’ filed application under Section 7 of the Insolvency and Bankruptcy Code, 2016
(hereinafter referred to as “I&B Code”) against M/s. Muskaan Power Infrastructure Limited (‘Corporate
Debtor’). The Adjudicating Authority (National Company Law Tribunal), Chandigarh Bench,
Chandigarh, by order dated 28th July, 2017 admitted the application, declared moratorium, adjourned the
case for appointment of ‘Insolvency Resolution Professional’.
By subsequent order dated 3rd August, 2017, the Adjudicating Authority appointed ‘Interim
Resolution Professional’ and passed certain directions.
Both the aforesaid orders are under challenge in these appeals.
1018
by Hon’ble NCLAT
3. Learned counsel for the Appellant submitted that in absence of any ‘record of default’ or
certificate from financial institution, the application under Section 7 of the ‘I&B Code’ was not
maintainable. Referring to Part V of Form-1 of application preferred by Respondent, it was submitted that
none of these documents referred to ‘record of default’, as required under sub-section (3)(a) of Section 7
of the ‘I&B Code’ not filed. Therefore, according to Appellant in absence of relevant ‘record of default’,
it was not open to the Adjudicating Authority to admit the application under Section 7 of the ‘I&B Code’.
4. Learned counsel appearing on behalf of the Respondent submitted that the aforesaid objections
were not raised by the Appellant before the Adjudicating Authority. It is also submitted that following the
Golden Rule of Principles of Interpretation the Court should follow the purposive interpretation to
achieve the object i.e. existence of default, to the satisfaction of the Adjudicating Authority which has
been done. Therefore, it cannot be alleged that there is a failure on the part of the Respondent to produce
‘record of default’ in terms of sub-section (3)(a) of Section 7 of the ‘I&B Code’.
5. We have heard learned counsel for the Appellant and learned counsel for the Respondent and also
perused the record.
6. Sub-section (3)(a) of Section 7 of the ‘I&B Code’ mandates the ‘Financial Creditor’ to enclose
‘record of the default’ recorded with the information utility or such other record or evidence of default as
may be specified by ‘Insolvency and Bankruptcy Board of India’.
7. Admittedly, the Respondent is a Foreign Company, incorporated under the Danish Law not under
the Companies Act, 1956 or 2013. In the application (Form-1) while the amount of default has been
shown to be USD$ 190,210 including interest, date of default has been shown to be 16th June, 2016 and
24th August, 2016. In Part-V of Form-1, while details of financial contracts have been mentioned as
against document to prove ‘existence of financial debt and date of default’, no record of default recorded
with the ‘information utility’ or any such other record evidence of default as specified by ‘Insolvency and
Bankruptcy Board of India’ has been enclosed. This will be apparent from relevant portion of Part V of
Form-1, as quoted below: -
1019
by Hon’ble NCLAT
PARTICULARS OF FINANCIAL DEBT DOCUMENTS / RECORDS

AND EVIDENCE OF DEFAULT
1. PARTICULARS OF None
SECURITY HELD,
IF ANY, THE DATE
OF ITS
CREATION, ITS
ESTIMATED
VALUE AS PER
THE CREDITOR
ATTACH A COPY
OF A
CERTIFICATE OF
REGISTRATION
OF CHARGE
ISSUED BY THE
REGISTRAR OF
COMPANES (IF
THE CORPORATE
DEBTOR IS A
COMPANY)
XXX XXX XXX
1020
by Hon’ble NCLAT
8 LIST OF OTHER DOCUMENTS

PERTAINING TO
DOCUMENTS
.
ATTACHED TO LOAN 15:
THIS
i. Disbursement
APPLICATION IN
Request Letter from
ORDER TO PROVE
Corporate Debtor to
THE EXISTENCE
Financial Creditor
OF FINANCIAL
DEBT. THE dated March 21, 2016
AMOUNT AND for release of funds
DATE OF amounting to
DEFAULT hereto;
ii. Notice of Assignment
from
“ Corporate”
8. On perusal of sub-section (3) of Section 7 of the ‘I&B Code’ and clauses therein, it would be
clear that the provision of sub-clause (3) (a) of Section 7 required to be followed mandatorily and is not
an empty formality. Sub-section (2) of Section 7 stipulates filing of an application under Section (1) only
‘in the form and manner’ and accompanied with such fees as may be prescribed.
9. The Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules 2016 (hereinafter
referred to as ?Adjudicating Authority Rules 2016? for short) has been framed by Central Government in
exercise of the power conferred by Clauses (c), (d), (e), (f), of sub-section (2) of Section 239 read with
sections 7, 8, 9 and 10 of the ?I & B Code?. The Adjudicating Authority Rules provide the procedure
required to be followed for filing an application for ‘Corporate Insolvency Resolution Process’. As per the
said Rule 6, ‘Financial Creditor’ is required to make an application under Section 7 for initiating the
‘Corporate Insolvency Resolution Process’ in Form 5 accompanied with ‘documents and records’
required for the purpose.
10. Sub-section (3) of Section 7 of the ‘I&B Code’ if read with Form-5 of the Adjudicating Authority
Rules, 2016, it is clear that it is mandatory to provide the relevant information and to enclose relevant
record and on failure the application to be treated to be defective/incomplete and liable to be rejected.
1021
by Hon’ble NCLAT
11. In this case, we find that the application preferred by Respondent under Section 7 is not complete
in absence of ‘records of default’, as required in terms of sub-section (3) (a) of Section 7 of the ‘I&B
Code’. In such case, it was not open to the Adjudicating Authority to entertain the application preferred
by Respondent.
12. This apart, as we find that the application under Section 7 of the ‘I&B Code’ in Form-1 has not
been filed by the Respondent-‘Operational Creditor’, but an Advocate, Mr. Rohit Khanna, who is neither
Authorised Representative nor holds any position with or in relation to the ‘Financial Creditor’, as
required to be stated as Form-1 of the Adjudicating Authority Rules, 2016, we hold that application under
Section 7 of the ‘I&B Code’ was not maintainable at the instance of the Respondent.
13. In view of the discussion as made above, the impugned orders dated 28th July, 2017 and 3rd
August, 2017 cannot be sustained. Both the orders are accordingly set aside.
such orders and actions are declared illegal and are set aside. The joint application preferred by
15. Learned Adjudicating Authority will fix the fee of ‘Interim Resolution Professional ‘, if appointed
and the Appellant-‘Corporate Debtor’ will pay the fees of the Interim Resolution Professional, for the
period he has functioned. The appeal is allowed with aforesaid observation and direction. However, in the
1022
by Hon’ble NCLAT
NEW DELHI
C.P. (I.B.) No. 305/NCLAT/2017
Applicant: Value Kine Interiors Pvt. Ltd.

Vs.
Respondent: Rattan India Power Ltd.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Manohar Malik, Learned Advocates
ORDER
The appellant (Operational Creditor) preferred an application under Section 9 of the Insolvency
and Bankruptcy Code, 2016 (hereinafter referred to as the ‘I & B Code’) for initiation of ‘Corporate
Insolvency Resolution Process’ of the respondent – M/s. Rattan India Power Ltd. Having noticed that
there is an ‘existence of dispute’ between the parties, the Adjudicating Authority (National Company Law
Tribunal) New Delhi Bench by the impugned order dated 23rd October, 2017 rejected the application No.
(IB) -367(ND)/2017.
2. Learned counsel appearing on behalf of the appellant submitted that the defects as were pointed
out has already been rectified. After rectification of the defects, there was no dispute since 30th June,
2016.
3. From the record, we find that the Adjudicating Authority has referred to the correspondence
between the parties on different dates such as 1st October, 2015, 10th February, 2016, 16th May, 2016
etc. By those letters, the Corporate Debtor had specifically alleged that the Operational Creditor did not
finish several items and abandoned the work. In their letter dated 11th March, 2016, the Corporate Debtor
has also taken a plea that due to non-completion of work it caused loss to the Corporate Debtor. This
apart, we also find that pursuant to demand notice issued by the appellant under sub-section (1) of Section
8, the respondent disputed the claim by reply dated 11th September, 2017.
1023
by Hon’ble NCLAT
4. Similar issue fell for consideration before the Hon’ble Supreme Court in Mobilox Innovations
Private Ltd. vs. Kirusa Software Pvt. Ltd. – 2017 SCC ONLINE SC 1154 wherein the Hon’ble Supreme
Court observed as follows:
“40. It is, thus, clear that so far as an operational creditor is concerned, a

corporate debtor is then given a period of 10 days from the receipt of the demand
notice or copy of the invoice to bring to the notice of the operational creditor the
existence of a dispute, if any. We have also seen the notes on clauses annexed to
the Insolvency and Bankruptcy Bill of 2015, in which “the existence of a dispute”
alone is mentioned. Even otherwise, the word “and” occurring in Section 8(2)(a)
must be read as “or” keeping in mind the legislative intent and the fact that an
anomalous situation would arise if it is not read as “or”. If read as “and”,
disputes would only stave off the bankruptcy process if they are already pending
in a suit or arbitration proceedings and not otherwise. This would lead to great
hardship; in that a dispute may arise a few days before triggering of the
insolvency process, in which case, though a dispute may exist, there is no time to
approach either an arbitral tribunal or a court. Further, given the fact that long
limitation periods are allowed, where disputes may arise and do not reach an
arbitral tribunal or a court for upto three years, such persons would be outside
the purview of Section 8(2) leading to bankruptcy proceedings commencing
against them. Such an anomaly cannot possibly have been intended by the
legislature nor has it so been intended. We have also seen that one of the objects
of the Code qua operational debts is to ensure that the amount of such debts,
which is usually smaller than that of financial debts, does not enable operational
creditors to put the corporate debtor into the insolvency resolution process
prematurely or initiate the process for extraneous considerations. It is for this
reason that it is enough that a dispute exists between the parties.”
While Observing so, the Hon'ble Supreme Court further held that:
“44. This being the case, is it not open to the adjudicating authority to then go
into whether a dispute does or does not exist?”
The Hon’ble Supreme Court further observed that once the operational creditor has filed an
application, which is otherwise complete, the Adjudicating Authority must reject the application under
1024
by Hon’ble NCLAT
Section 9(5)(2)(d) if notice of dispute has been received by the ‘Operational Creditor’ or there is a record
of dispute in the information utility, as quoted below:
5. In the present case, we find that there is an ‘existence of dispute’ and a notice of dispute has been
received by the ‘Operational Creditor’. In the aforesaid background the Adjudicating Authority rightly
rejected the application filed by the appellant under Section 9 of the I & B Code. In absence of any merit
in the appeal, the appeal is dismissed. However, in the facts and circumstances of the case, there shall be
no order as to costs.
1025
by Hon’ble NCLAT
NEW DELHI
C.P. (I.B.) No. 306/NCLAT/2017
Applicant: Varda Spining & Weaving Mills Pvt. Ltd.

Vs.
Respondent: Jindal Cotex Ltd.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Arvind Kr. Gupta, Ms. Purti Marwaha Gupta & Ms. Henns
George, Learned Advocates
For Respondents/Defendant: Mr. Ahsan Ahmad & Mr. Rohit Chaudhary, Learned Advocates
ORDER
The appellant (Operational Creditor) preferred an application under Section 9 of the Insolvency
and Bankruptcy Code, 2016 (hereinafter referred to as the ‘I & B Code’) for initiation of ‘Insolvency
Resolution Process’ of the respondent – ‘Jindal Cotex Ltd.’. Having noticed that there is an ‘existence of
dispute’ between the parties, the Adjudicating Authority (National Company Law Tribunal) Chandigarh
Bench, Chandigarh by the impugned order dated 25th October, 2017 rejected the application No. CP(IB)
No. 63/Chd/Pb/2017.
2. Learned counsel appearing on behalf of the appellant –Operational Creditor submitted that a
notice dated 21st July, 2016 to the respondent – ‘Corporate Debtor’ under Section 433 and 434 of the
Companies Act, 1956 informing that out of total outstanding amount of Rs.12,26,05,047/-, the respondent
has made part payment of Rs.4,10,07,375/- and there is still outstanding dues of Rs.8,15,97,672/- as on
21.08.2014. In reply to such notice the Corporate Debtor informed that no further amount is payable to
the Operational Creditor and the amount already paid is full and final. According to the learned counsel
for the appellant the dispute as alleged is not based on any evidence. However, if it is accepted that a sum
of Rs. 4 crores has been received by the appellant, which according to respondent is full and final, is not
entertained by the Adjudicating Authority.
1026
by Hon’ble NCLAT
4. Similar issue fell for consideration before the Hon’ble Supreme Court in ‘Mobilox Innovations
Private Ltd. vs. Kirusa Software Pvt. Ltd.’ – 2017 SCC ONLINE SC 1154 wherein the Hon’ble Supreme
Court observed as follows:
“40. It is, thus, clear that so far as an operational creditor is concerned, a

corporate debtor is then given a period of 10 days from the receipt of the demand
notice or copy of the invoice to bring to the notice of the operational creditor the
existence of a dispute, if any. We have also seen the notes on clauses annexed to
the Insolvency and Bankruptcy Bill of 2015, in which “the existence of a dispute”
alone is mentioned. Even otherwise, the word “and” occurring in Section 8(2)(a)
must be read as “or” keeping in mind the legislative intent and the fact that an
anomalous situation would arise if it is not read as “or”. If read as “and”,
disputes would only stave off the bankruptcy process if they are already pending
in a suit or arbitration proceedings and not otherwise. This would lead to great
hardship; in that a dispute may arise a few days before triggering of the
insolvency process, in which case, though a dispute may exist, there is no time to
approach either an arbitral tribunal or a court. Further, given the fact that long
limitation periods are allowed, where disputes may arise and do not reach an
arbitral tribunal or a court for upto three years, such persons would be outside
the purview of Section 8(2) leading to bankruptcy proceedings commencing
against them. Such an anomaly cannot possibly have been intended by the
legislature nor has it so been intended. We have also seen that one of the objects
of the Code qua operational debts is to ensure that the amount of such debts,
which is usually smaller than that of financial debts, does not enable operational
creditors to put the corporate debtor into the insolvency resolution process
prematurely or initiate the process for extraneous considerations. It is for this
reason that it is enough that a dispute exists between the parties.”
While observing so, the Hon’ble Supreme Court further held that :
“44. This being the case, is it not open to the adjudicating authority to then go
into whether a dispute does or does not exist?”
The Hon’ble Supreme Court further observed that once the operational creditor has filed an
application, which is otherwise complete, the Adjudicating Authority must reject the application under
1027
by Hon’ble NCLAT
Section 9(5)(2)(d) if notice of dispute has been received by the Operational Creditor or there is a record of
dispute in the information utility, as quoted below:
5. In the present case as we find that there is an ‘existence of dispute’ and notice of dispute has been
received by the ‘Operational Creditor’, we uphold the impugned order passed by the Adjudicating
Authority. We find no merit in this appeal. The appeal is accordingly dismissed. However, in the facts
and circumstances of the case, there shall be no order as to costs.
1028
by Hon’ble NCLAT
NEW DELHI
C.P. (I.B.) No. 312/NCLAT/2017
Applicant: M/s. Lease Pal India Pvt. Ltd.

Vs.
Respondent: ACPL HR Services Pvt. Ltd.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Sanchit Guru & Mr. Janmesh Kumar, Learned Advocates
ORDER
The appellant has preferred an application for condonation of 14 days’ delay in filing this appeal
against order dated 17th October, 2017 passed by the Adjudicating authority (National Company law
Tribunal), New Delhi in No. IB-208/ND/2017.
Having heard the learned counsel for the appellant and being satisfied with the grounds shown in
the appeal, the delay of 14 days in preferring the appeal is condoned.
1029
by Hon’ble NCLAT
NEW DELHI
C.P. (I.B.) No. 312/NCLAT/2017
Applicant: M/s. Lease Pal India Pvt. Ltd.

Vs.
Respondent: ACPL HR Services Pvt. Ltd.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Sanchit Guru & Mr. Janmesh Kumar, Learned Advocates
ORDER
The appellant – M/s. Lease Pal India Pvt. Ltd. (Operational Creditor) filed an application under
Section 433(e) of the Companies Act, 1956 before the Hon’ble High Court of Delhi. It was transferred
pursuant to Rule 5 of “The Companies (Transfer of Pending Proceedings) Rules, 2016”.
2. On transfer, the appellant prayed to treat the petition as an application under Section 9 of the
Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as the “I&B Code’). The application not
being in order and requisite information in terms of Rule 5 having not being compiled with the said
application has been rejected by the Adjudicating Authority by the impugned order dated 17th October,
2017.
3. Learned counsel for the Appellant has brought to our notice the Central Government notification
follows: -
1030
by Hon’ble NCLAT
with in accordance with Part II of the Code:\
shall abate.
5. Learned counsel for the appellant submits that a statutory notice under Section 433(e) and
434(1)(A) and 439 of the Companies Act, 1956 was earlier issued by the appellant for payment of
outstanding amount of Rs. 15 lakhs approximately. The said amount having not been paid, the appellant
preferred the petition for winding up under section 433(3), 434(1)(A) and 439 of the Companies Act,
1956. In view of the fact that the case was subsequently transferred, a lawyer notice was issued on the
respondent (Corporate Debtor) with request to pay the outstanding dues of Rs.17,26,667/-. Thereafter,
according to appellant no further notice was required to be given.
6. We have heard the learned counsel for the appellant and perused the record.
7. Apart from the fact that an Advocate’s notice was given to the Corporate Debtor under sub-
section(1) of Section 8, who was not authorised nor holding any post or position with the Operational
Creditor, as we find that the application prepared by appellant was defective in absence of Bank’s
1031
by Hon’ble NCLAT
certificate from the ‘Financial Institution’ which was not enclosed and is mandatory under Section 9(3) of
the I & B Code, the application was not maintainable.
8. For the reasons aforesaid, we dismiss the appeal. The application preferred by the appellant under
Section 433, 433 and 439 of the Companies Act, 1956 stands abated. However, the impugned order dated
17th October, 2017 passed by the Adjudicating Authority will not come in the way of the appellant to
issue fresh notice under sub-section (1) of Section 8 in accordance with the provisions of I &B Code and
in case of debt and default, the appellant may prefer fresh application in accordance with law.
1032
by Hon’ble NCLAT
NEW DELHI
C.P. (I.B.) No. 283/NCLAT/2017
Applicant: India Cement Capital Ltd.

Vs.
Respondent: Jitendra Kumar Jain (Insolvency Professional)
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Kaustubh Bhardwaj, Learned Advocates
ORDER
The application for restoration has been filed on behalf of the appellant on the ground that the
counsel for the appellant was not present on the 27th November, 2017 for the reasons mentioned therein.
Though we find that a valid ground has been shown but as the appeal was dismissed, both on
the count of non-appearance and merit, it is not desirable to restore the appeal.
In fact on 27th November, 2017, this Appellate Tribunal noticed that a defective appeal has been
preferred by the appellant – ‘India Cement Capital Ltd.’, under Section 61 of the Insolvency and
Bankruptcy Code, 2016 (hereinafter referred to as the ‘I&B Code’) against a letter sent in mailbox on
17th October, 2017, which is not an order passed by the Adjudicating Authority (National Company Law
Tribunal). Such being the position, the Appellate Tribunal held that the appeal is not maintainable under
Section 61 of the I &B Code against a notice/letter of information dated 17th October, 2017.
For the reasons aforesaid, the restoration application is dismissed.
1033
by Hon’ble NCLAT
NEW DELHI
C.P. (I.B.) No. 100/NCLAT/2017
Applicant: Leo Duct Engineers & Consultants Limited,

Vs.
Respondent: Canara Bank
Standarad Chartered Bank
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Darpan Wadhwa, Senior Advocate, Mr. Devesh Bhatia, Mr.
Saurabh Kumar & Mr. Auburt Sebastian, Learned Advocates
For Respondents/Defendant: Mr. Kersi Dastoor, Learned Advocate
ORDER
The appellant, Leo Duct Engineers & Consultants Ltd. (Corporate applicant) preferred an
application under Section 10 of the Insolvency and Bankruptcy Code (hereinafter referred to as the ‘I & B
Code’). On notice the Canara Bank and Standard Chartered Bank (Financial Creditors) appeared and
opposed the appeal. The Adjudicating Authority while noticed that the petition has been filed in the
required format providing requisite details of its corporate debtor and its creditors and details of debts and
default but dismissed the application under Section 10 on the ground that the petition would have serious
impact on the financial creditor who have already set the wheel in motion to Securitization and
Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to
as the ‘SARFAESI Act’).
2. For deciding this case, it is desirable to notice the ground shown by the Adjudicating Authority
(National Company Law Tribunal), Mumbai Bench, Mumbai, relevant portions of which read as follows :
“10. Given the aforesaid facts, it appears that the Corporate Debtor is eager to sound its own death knell,
presumably to scuttle the proceedings before SARFAESI as the consequential moratorium imposed u/s 14
of the Code on admission of this Petition would automatically stay/ stall the proceedings vide which the
1034
by Hon’ble NCLAT
personal properties of the guarantors offered as securities/ collateral are not enforced or taken possession
of. Under the provisions of SARFAESI, guarantees can be invoked, as the liability towards the Financial
Creditors would be joint and several. In the resolution process, these personal properties would neither be
seized, attached nor repossessed, as the resolution professional would only be concerned about the assets
of the Corporate Debtor or any immovable property in its name. The direction for imposing a moratorium
would suit the directors and the guarantors perfectly from being dispossessed from their immovable
properties.
11. The admission of the Petition would have a serious impact on the Financial Creditors who have
already set the wheel in motion to secure their debts. The apprehension, or rather certainty, of taking away
the physical possession of their valuable properties and being dispossessed appears to be the motivation
for the Corporate Debtor to approach this Tribunal under the Code, rather than ensuring Resolution of
their debts or seeking a turnaround of the Corporate business. To stay the repossession of immovable
properties by Banks by resorting to the provision of Sec. 10 of the Code, and the consequential effect of
the moratorium which has to follow, would clearly be an abuse of the process of law to which this Bench
certainly cannot be a party to. It is not sufficient just to meet the requirements under sec. 10 of the Code
which would automatically entitle the Corporate Debtor to initiate such proceedings. Surely it could never
have been the intention of the legislature to provide relief to defaulters of the Banks by taking refuge
under this Code. The Adjudicating Authority has to consider the merits of each case and see beyond what
meets the eye, and only after due application of mind, consider the case on its merits.
12. In the facts of the case, this Bench does not deem it just, fit and proper to admit the petition as
initiation of the proceedings by the Corporate Debtor shall cause irreparable loss and injury to the Banks,
and an uncalled for protection to the borrowers and various guarantors.”
3. The main plea taken by the appellant – Corporate Applicant is that initiation of proceedings under
the SARFAESI Act cannot be a ground to reject an application under Section 10, if otherwise it is
complete in terms of I & B Code and Insolvency and Bankruptcy (Application to Adjudicating Authority)
Rules, 2016 (hereinafter referred to as the ‘Adjudicating Authority Rules’) including Form 6 therein. The
respondents on appearance have taken the similar plea as noticed by the Adjudicating Authority and
recorded as above.
4. Similar question fell for consideration before this Appellate Tribunal in “M/s. Unigreen Global
Private Limited vs. Punjab National Bank and others” – Company Appeal (AT) (Insolvency) 81/2017. In
the said case, this Appellate Tribunal by its judgement dated 1st December, 2017 held as follows :
1035
by Hon’ble NCLAT
“20. Under both Section 7 and Section 10, the two factors are common i.e. the
debt is due and there is a default. Subsection (4) of Section 7 is similar to that of
sub-section (4) of Section 10. Therefore we, hold that the law laid down by the
Hon’ble Supreme Court in “Innoventive Industries Ltd. (Supra) is applicable for
Section 10 also, wherein the Hon’ble Supreme Court observed as “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” .
21. In an application under Section 10, the ‘financial creditor’ or ‘operational

creditor’, may dispute that there is no default or that debt is not due and is not
payable in law or in fact. They may also oppose admission on the ground that the
Corporate Applicant is not eligible to make application in view of ineligibility
under Section 11 of the I & B Code. The Adjudicating Authority on hearing the
parties and on perusal of record, if satisfied that there is a debt and default has
occurred and the Corporate Applicant is not ineligible under Section 11, the
Adjudicating Authority has no option but to admit the application, unless it is
incomplete, in which case the Corporate Applicant is to be granted time to rectify
the defects.
22. Section 10 does not empower the Adjudicating Authority to go beyond the
records as prescribed under Section 10 and the informations as required to be
submitted in Form 6 of the Insolvency and Bankruptcy (Application to the
Adjudicating Authority) Rules, 2016 subject to ineligibility prescribed under
Section 11, If all informations are provided by an applicant as required under
Section 10 and Form 6 and if the Corporate Applicant is otherwise not ineligible
under Section 11, the Adjudicating Authority is bound to admit the application
and cannot reject the application on any other ground.
22. Any fact unrelated or beyond the requirement under I & B Code or Forms
prescribed under Adjudicating Authority Rules (Form 6 in the present case) are
not required to be stated or pleaded. Non-disclosure of any fact, unrelated to
Section 10 and Form 6 cannot be termed to be suppression of facts or to hold
that the Corporate Applicant has not come with clean hand except the
application where the ‘Corporate Applicant’ has not disclosed disqualification, if
1036
by Hon’ble NCLAT
any, under Section 11. Nondisclosure of facts, such as that the ‘Corporate
Debtor’ is undergoing a corporate insolvency resolution process; or that the
‘Corporate Debtor’ has completed corporate insolvency resolution process
twelve months preceding the date of making of the application; or that the
corporate debtor has violated any of the terms of resolution plan which was
approved twelve months before the date of making of an application under the
said Chapter; or that the corporate debtor is one in respect of whom a
liquidation order has already been made can be a ground to reject the
application under Section 10 on the ground of suppression of fact/not come with
clean hand.
xxx xxx xxx
25. Similarly, if any action has been taken by a ‘Financial Creditor’ under
Section 13(4) of the SARFAESI Act, 2002 against the Corporate Debtor or a suit
is pending against Corporate Debtor under Section 19 of DRT Act, 1993 before a
Debt Recovery Tribunal or appeal pending before the Debt Recovery Appellate
Tribunal cannot be a ground to reject an application under Section 10, if the
application is complete.
26. Any proceeding under Section 13(4) of the SARFAESI Act, 2002 or suit under
Section 19 of the DRT Act, 1993 pending before Debt Recovery Tribunal or
appeal pending before Debt Recovery Appellate Tribunal cannot proceed in view
of the order of moratorium as may be passed.
xxx xxx xxx
28. In a case where a winding up proceedings has already been initiated against
a Corporate Debtor by the Hon’ble High Court or Tribunal or liquidation order
has been passed in respect of Corporate Debtor, no application under Section 10
can be filed by the Corporate Applicant in view of ineligibility under Section
11(d) of I & B Code, as quoted below:
“11. Persons not entitled to make application - The following persons shall not
be entitled to make an application to initiate corporate insolvency resolution

process; or
1037
by Hon’ble NCLAT

made.

29. In view of the aforesaid provision where a winding up proceeding has

already been initiated under the Companies Act, 1956 / 2013 by the Hon’ble
High Court such cases have not been transferred to National Company Law
Tribunal, pursuant to “Companies (Transfer of Pending Proceedings) Rules,
2016”, framed by the Central Government.”
5. In the present case, it has not been pleaded that the appellant – Corporate Debtor is ineligible in
terms of Section 11 of the I & B Code. The Adjudicating Authority has noticed unrelated facts which are
not required to be disclosed in terms of Section 10 or Form 6 and as the case also relates to third party suit
or proceeding, and not the Corporate Debtor. In the circumstances, the Adjudicating Authority was not
correct in rejecting the application on the ground of suppression of relevant facts.
6. The Adjudicating Authority, having held that otherwise the application under Section 10 is
complete and in absence of any ineligibility of appellant, it was incumbent on the part of the Adjudicating
Authority to admit the appeal, having no jurisdiction to notice unrelated facts beyond the requirement
under the I & B Code and the Forms prescribed under the Adjudicating Authority Rules.
7. For the reasons aforesaid and as the case of the appellant is covered by the decision of this
Appellate Tribunal in “M/s. Unigreen Global Private Limited” (Supra), we have no option but to set aside
the order dated 22nd June, 2017 passed in CP No. 1103/I&BP/2017and the same is accordingly set aside.
The case is remitted back to the Adjudicating Authority, Mumbai Bench to admit the application under
Section 10 after notice to the parties if there is no defect. In case of any defect, appellant be allowed time
to remove the defects. The appeal is allowed with the aforesaid observations. However, there shall be no
order as to costs.
1038
by Hon’ble NCLAT
NEW DELHI
C.P. (I.B.) No. 180/NCLAT/2017
Applicant: Mr. Ajay Agarwal

Vs.
Respondent: Central Bank of India
State Bank of India
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Amit S. Chadha, Senior Advocate, Mr. Rajesh Bohra, Ms. Srishti
Govil, Mr. Aditya Narayan, Mr. M.S. Shanmuga Sundaram & Mr. Sahil Mongia, Learned Advocates
For Respondents/Defendant No.1: Mr. Rajiv S. Roy, Ms. Avrojyoti Chatterjee, Mr. Abhijit S. Roy & Ms.
Jayshree Saha, Learned Advocate
For Respondents/Defendant No.3: Mr. Arnav Dash, Learned Advocate
For Respondents/Defendant from SBI: Mr. Abhishek Agarwal, Learned Advocate
ORDER
This appeal has been preferred by Mr. Ajay Agarwal, Director/shareholder of M/s. Ashok
Magnetics Limited (‘Corporate Debtor’) against the order dated 4th September, 2017 passed by
Adjudicating Authority (National Company Law Tribunal), Chennai in Company Petition No.
551(IB)/CB/2017, whereby and whereunder the application preferred by Respondents- the Central Bank
of India and the State Bank of India (‘Financial Creditors’) under Section 7 of the Insolvency and
Bankruptcy Code, 2016 (hereinafter referred to as “I&B Code”) has been admitted, order of moratorium
has been passed and ‘Interim Resolution Professional’ has been appointed with directions as mentioned
therein.
2. The main ground taken by the Appellant is that there is ‘mismatch of figures and dates of
default’, as apparent from the face of the application and therefore, petition under Section 7 of the ‘I&B
Code’ preferred by the Respondents was fit to be rejected.
1039
by Hon’ble NCLAT
3. Learned counsel appearing on behalf of the Appellant submitted that there is a ‘mismatch of
figures and dates of default’ relating to dues of 2nd Respondent- State Bank of India, as quoted below: -
1. STATE BANK OF INDIA (R2):
Description Amount
i. Part-IV, Form 1 at Pg. 95 Rs. 27,47,85,655.86 as on

19.10.15
ii. See SBI S.13(2), Sarfeasi Rs. 31,27,32,857.06 stated to

Notice be amount due on 19.10.15
@ Pg. 680
(Pg.679 Vol. II dt. 19.10.15
Also at Pg.681 outstanding
on 19.10.15
iii. Also see Statement of account of Rs. 27,37,67,069.81

SBI (Pg.650) @ Pg. 652
Outstanding as on 19.10.15
4. It was submitted that the aforesaid objection was raised in the Ground XLV and the State Bank of
India also accepted that the outstanding amount was only Rs. 27,47,85,655.86/-. The statement of account
was also filed which reflects the balance sheet as on 19th October, 2015.
5. It was further submitted that the State Bank of India also accepted that after the account was
classified as NPA on 17th January, 2015, no payment has been made.
6. In so far as 1st Respondent- Central Bank of India is concerned, learned counsel for the Appellant
submitted that there is similar ‘mismatch of figures and dates of default’ including Cash Credit facility,
Letter of Credit facility, Fixed Deposit Credit etc. Following facts have been highlighted:
“ 2. CENTRAL BANK OF INDIA (R1) :
1040
by Hon’ble NCLAT
Description Amount
i. Part IV, Form 1 at Pg. 95 Rs. 12,96,57,829.19 as on

30.11.16
ii. See SBI S.13(2), Rs.10,98,76,416.00 under 2

Sarfeasi Notice (Pg.177) dt. facilities namely:
17.12.15 wherein NPA dt.
CC – Rs.620,21,860
26.08.15
Inland LC Devolved –
Rs.4,78,54,556
2.1 For CC Facility:
Description Amount
• The breakup of the
CC facility as Rs. 5,98,81,058.19
on Pg. 106, the
NPA (26.08.15)
> See Statement of Rs. 588,77,744.19
Account @ Pg.
222, the Outstanding

amount filed by CBI on
31.08.15
> And on 19.08.15 Rs. 5,81,63,324.19
2.1 For Inland LC Facility
1041
by Hon’ble NCLAT
Description Amount
• @Pg. 106 Balance Rs. 4,31,01,528
26.08.15
> See Statement of Rs. 2,60,25,000
Account @ Pg.230,
the Outstanding
• Thereafter FD Credit of Rs. 6,24,791 and a Devolvement of LC Debit of Rs. 35,20,000 has been shown,
which are both reflected @ Pg.231 of Statement of Account.
> Rs. 4,31,01,528
(-) Rs. 6,24,791
Rs. 4,24,76,737 (+) Rs.

35,20,000
Rs. 4,59,96,737”
7. It was submitted that the amount as on 30th November, 2016 has been calculated is based on the
figure Rs. 5,98,81,058.19/- as on 26th August, 2015, which figure itself does not match the statement of
account.
8. Learned counsel appearing on behalf of the Respondents explained the difference and submitted
that on 18th September, 2012, the 1st Respondent along with other consortium members had advanced
‘fund based’ and ‘non-fund based’ credit facility aggregating to Rs. 43.29 crores to the ‘Corporate
Debtor’. Out of the said total limits, the 1st respondent had sanctioned total credit facilities of ₹10.50
crores i.e. Rs. 5.00 crores in the form of ‘fund based’ limits and Rs. 5.50 crores in the form of ‘non-fund
based’ limits.
9. According to Respondents, on account of several alleged envisaged losses, the ‘Corporate

Debtor’ filed a reference before the erstwhile ‘Board for Industrial and Financial Reconstruction’ (BIFR)
under the provision of the Sick Industrial Companies (Special Provisions) Act, 1956 (“SICA”) (now
repealed), based on its audited accounts for the financial year ended on 31st March, 2015 was calculated.
It was brought to our notice that the Respondents have also taken steps under Section 13(2) of the
1042
by Hon’ble NCLAT
SARFAESI Act against the ‘Corporate Debtor’ as well as the guarantors to repay entire outstanding as on
16th December, 2015. The parties have moved before the Debt Recovery Tribunal-II, Chennai, being
O.A. No. 114/2017, seeking recovery of the outstanding loan amount. The said matter is pending before
the Debt Recovery Tribunal. According to learned counsel for the Respondents, the current dues on
calculation was reflected in the Form-1, which was filed under Section 7 of the ‘I&B Code’.
10. Learned counsel appearing on behalf of the Appellant relied on decision of this Appellate
Tribunal in “M/s. Starlog Enterprises Limited Vs. ICICI Bank Limited─ Company Appeal (AT)
(Insolvency) No. 5 of 2017” , disposed of on 24th May, 2017 and submitted that there being a mismatch
of figures and date of default in the said appeal, this Appellate Tribunal set aside the order initiating
‘Corporate Insolvency Resolution Process’. However, such submissions cannot be accepted as in the case
of “M/s. Starlog Enterprises Limited (supra)” this Appellate Tribunal noticed that the ‘Financial
Creditor’-ICICI Bank Limited in their notice issued under sub-rule (3) of Rule 4 of the ‘Insolvency and
Bankruptcy (Application to Adjudicating Authority) Rules, 2016’ shown different claim whereas different
claims were shown in the petition filed under Section 7 (Form-1). Because of ‘misleading statement’, the
Adjudicating Authority reached to a conclusion of default which was contrary to the application preferred
by ‘Financial Creditor’. Such ‘misleading statement’ having been made by the ‘Financial Creditor’ in the
said case, this Appellate Tribunal interfered with the order impugned therein.
11. In the present case, the Respondents have explained the difference between the claim amount as
made on 19th October, 2015 and as on the date of filing in the year 2017, which has been calculated,
taking into consideration the interest payable in the meantime and the amount, if any, recovered under
other proceedings. Apart from the aforesaid fact, we are of the view that mere mismatch of the figures
will ipso facto not invalidate the order initiating ‘Corporate Insolvency Resolution Process’ under Section
7 of the ‘I&B Code’.
12. The provisions of Sections 7 and 9 of the ‘I&B Code’ fell for consideration before the Hon’ble
Supreme Court in “M/s. Innoventive Industries Ltd. Vs. ICICI Bank & Anr.─ 2017 SCC OnLine SC
1025”, wherein the Hon’ble Supreme Court observed and held:
“29. The scheme of Section 7 stands in contrast with the scheme under Section 8
invoice mentioned in sub-section (1), bring to the notice of the operational
1043
by Hon’ble NCLAT
arbitration proceedings, which is pre-existing - i.e before such notice or invoice
that the debt is disputed so long as the debt is “due” i.e payable unless
and not otherwise.”
13. The decision aforesaid makes it clear that in case a ‘Corporate Debtor’ 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. The Hon’ble
Supreme Court further held that “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.”
14. In the present case, the Appellant raised dispute and pleaded mismatch of debt amount, but it has
not been disputed that some debt is “due” and is payable to the ‘Financial Creditor’ and the ‘Corporate
Debtor’ has defaulted in making such payment.
15. For the reasons aforesaid, no interference is called for against the impugned order dated 4th
September, 2017 passed in Company Petition No. 551/(IB)/2017.
1044
by Hon’ble NCLAT
NEW DELHI
C.P. (I.B.) No. 247/NCLAT/2017
Applicant: Mr. Karthikk Elangovan

Vs.
Respondent: M/s. Metal Gems & Anr.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Gautam Singh & Mr. Amol Dhadrak, Learned Advocates
For Respondents/Defendant: Mr. R.K. Bachchan, Learned Advocate
ORDER
The Appellant/shareholder of the ‘Corporate Debtor’ has challenged the order dated 22nd
September, 2017 passed by Adjudicating Authority (National Company Law Tribunal), Chennai Bench,
Chennai, whereby and whereunder the application preferred by the Respondent- M/s. Metal Gems.
(‘Operational Creditor’) under Sections 433 and 434 of the Companies Act, 1956 has been treated to be
an application under Section 9 of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as
“I&B Code”) read with Rule 6 of the Insolvency and Bankruptcy (Application to Adjudicating Authority)
Rules, 2016 (hereinafter referred to as “Adjudicating Authority Rules, 2016”), admitted the application,
passed order of Moratorium and name of ‘Interim Resolution Professional’ has been called for from the
‘Insolvency and Bankruptcy Board of India’ (IBBI).
2. Learned counsel for the Appellant submitted that before treating the application as under Section
9 of the ‘I&B Code’, Respondent- ‘Operational Creditor’ has not complied with the provisions of the
‘I&B Code’. No notice under sub-section (1) of Section 8 was issued in Form-3 or 4 and the application
has been admitted though there is an ‘existence of dispute’.
3. The brief facts of the case is that “M/s. Saranya Forging & Engineers India Private Limited”
(‘Corporate Debtor’) is involved in manufacturing of components made up of aluminium, copper, brass &
steel and part of pump, automobile and machinery and also supply components to spare manufacturing
1045
by Hon’ble NCLAT
industries. The 1st Respondent “M/s. Metal Gems” (‘Operational Creditor’) is engaged in business of
manufacturing and selling of all kinds of copper and copper alloys. According to Appellant, the
Respondent- ‘Operational Creditor’ supplied copper rods and other products to ‘Corporate Debtor’ during
the years 2012 and 2013, however, the goods were of sub-standard quality, which was informed by the
‘Corporate Debtor’ to the Respondent by e-mails dated 27th February, 2013 and 3rd August, 2013, but no
step was taken by the Respondent-‘Operational Creditor’ to replace the materials supplied.
4. The 1st Respondent-‘Operational Creditor’ initially send an Advocate notice on 28th November,
2014 to the ‘Corporate Debtor’ claiming the amount, which was disputed by the ‘Corporate Debtor’ by
letter dated 20th December, 2014 informing the sub-standard quality of goods supplied by the 1st
Respondent. Thereafter, the 1st Respondent send a statutory notice to the ‘Corporate Debtor’ on 1st June,
2015 under sections 433 and 434 of the Companies Act, 1956, followed by filing of a winding up petition
before the Hon’ble High Court of Madras under Sections 433 and 434 of the Companies Act, 1956. In the
said case, notice was issued on 7th December, 2016 but before notice could be served and the ‘Corporate
Debtor’ could appear before the Hon’ble High Court, the Central Government from its Ministry of
Corporate Affairs issued a notification dated 7th December, 2016 transferring pending winding up cases
from the High Courts to the respective Tribunal.
5. On notice, the ‘Corporate Debtor’ appeared and disputed the liability and brought to the notice of
the Tribunal that no notice under sub-section (1) of Section 8 of the ‘I&B Code’ has been received. On
hearing the parties, the Adjudicating Authority treated the petition as an application under Section 9 of the
‘I&B Code’ and admitted the application by impugned order dated 22nd September, 2017.
6. Learned counsel for the Appellant submitted that no notice under sub-section (1) of Section 8 was
issued in Form-3 or 4 prior to treating the application as under Section 9 of the ‘I&B Code’ or before the
admission. The application was also not filed in Form 5, as required under Section 9 of the ‘I&B Code’
read with Rule 6 of the Adjudicating Authority Rules, 2016 in terms of which details of record of default
etc. were required to be provided were not provided.
7. Learned counsel appearing on behalf of the Respondent submitted that statutory notice under
Sections 433 and 434 of the Companies Act, 1956, having issued no further notice was required to be
issued under sub-section (1) of Section 8 of the ‘I&B Code’, which is also accepted by the Adjudicating
Authority.
8. Learned counsel for the Appellant brought to our notice the Central Government notification
dated 7th December, 2016 issued from the Ministry of Corporate Affairs whereunder in exercise of the
powers conferred under sub-sections (1) and (2) of Section 434 of the Companies Act, 2013 read with
1046
by Hon’ble NCLAT
sub-section (1) of Section 239 of the ‘I&B Code’, the Central Government framed “The Companies
(Transfer of Pending Proceedings) Rules, 2016”.
follows: -

shall abate.
was required to submit all information, other than in formation forming part of the records transferred
from the High Court, for admission of the petition under Sections 7, 8 or 9 of the ‘I&B Code’, including
details of the proposed ‘Insolvency Professional’ within sixty days, failing which, the petition shall stand
abated.
1047
by Hon’ble NCLAT
11. As per Section 9 of the ‘I&B Code’, before admission of application and its filing, a demand
notice under sub-section (1) of Section 8 is required to be issued on the ‘Corporate Debtor’, as quoted
below: -
“8. Insolvency resolution by operational creditor. ─ (1) An operational creditor

be prescribed.”
12. It is only on receipt of such notice under sub-section (1) of Section 8 of the ‘I& B Code’, the
‘Corporate Debtor’ may either pay the amount or may dispute the claim in terms of sub-section (2) of
Section 8 of the ‘I&B Code’.
13. Clause (a) and (b) of sub-rule (1) of Rule 5 of the ‘Adjudicating Authority Rules’ provides the
format in which the demand notice/invoice demanding payment in respect of unpaid ‘Operational Debt’ is
to be issued by ‘Operational Creditor’. The said notice is to be given in Form 3 or Form 4.
to be provided: -
“Part I- particulars of applicant

default]
As per the instructions, the following documents are required to be
attached:
Corporate debtor.
available.
1048
by Hon’ble NCLAT
Annex VI Written communication by the proposed interim resolution professional

From the aforesaid instructions, it is evident that copy of the invoice/demand notice as in Form 3
of Adjudicating Authority Rules served on the ‘Corporate Debtor’ is to be enclosed.
15. Admittedly, no notice was issued under sub-section (1) of Section 8 of the ‘I&B Code’. In terms
with Rule 5, other informations were also not placed before the Adjudicating Authority.
16. 1st Respondent having failed to provide all the details as required under Form-5 as noticed above,
the application under sections 433 and 434 of the Companies Act, 1956 cannot be treated to be an
application under section 9 of the ‘I&B Code’ in terms of Rule 5 of Transfer Rules, 2016. In such
circumstances, in view of proviso to Rule 5 of the Transfer Rules, the application under Sections 433 and
434 of the Companies Act, 1956 stands abated.
17. For the reasons aforesaid, while we set aside the impugned order dated 22nd September, 2017
passed by the Adjudicating Authority, Chennai Bench in T.C.P No. 77/(IB)/CB/2017, also declare that the
application preferred by Respondent under Sections 433 and 434 of the Companies Act, 1956 stands
abated.
18. In effect, order (s) passed by the Adjudicating Authority appointing ‘Interim Resolution
including the advertisement published in the newspapers calling for applications and all such orders and
actions are declared illegal and are set aside. The application preferred by Respondent is dismissed as
abated. Learned Adjudicating Authority will now close the proceeding. The ‘Corporate Debtor’ is
released from all the rigour of law and is allowed to function independently through its Board of Directors
from immediate effect.
19. The Adjudicating Authority will fix the fee of ‘Interim Resolution Professional’, which the
‘Corporate Debtor’ will pay. The appeal is allowed with aforesaid observation and direction. However, in
1049
by Hon’ble NCLAT
NEW DELHI
C.P. (I.B.) No. 191/NCLAT/2017
Applicant: Mr. Piyush

Vs.
Respondent: Reliance Commercial Finance Ltd. & another
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Alok Dhar, Ms. Varsha Banerjee, Mr. Milan Singh Negi & Mr.
Kunal Godhwani, Learned Advocates
For Respondents/Defendant: Though present name not given
ORDER
This appeal has been preferred by the appellant, the authorised signatory of the suspended Board
of Directors of Maharashtra Vidyut Nigam Pvt. Ltd. (Corporate Debtor) against order dated 4th August,
2017 passed by the Adjudicating Authority (National Company Law Tribunal), Mumbai Bench, Mumbai
in C.P. No. 1140/I&BP/NCLT/MB/MAH/2017 whereby and whereunder the application preferred by the
respondent – ‘Reliance Commercial Finance Limited’ (Financial Creditor) under Section 7 of the
Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as the ‘I&B Code’) has been admitted,
order of moratorium has been passed and the Interim Resolution Professional has been appointed.
2. Learned counsel appearing on behalf of the appellant submits that the impugned order dated 4th
August, 2017 has been passed in violation of rules of natural justice and against the decision of this
Appellate Tribunal in the matter of “Innoventive Industries Limited vs. ICICI Bank & Anr. – Company
Appeal (AT) Nos. 1 & 2 of 2017”. Before passing the impugned order dated 4th August, 2017 no notice
was given by the Adjudicating Authority to the Corporate Debtor.
3. Learned counsel for the appellant further submits that the parties have already settled the dispute
by compromise agreement dated 13th December, 2017, a copy of which has been produced before this
Appellate Tribunal.
1050
by Hon’ble NCLAT
4. Learned counsel appearing on behalf of the respondent – ‘Reliance Commercial Finance Limited’
(Financial Creditor) accepts that the impugned order was passed without notice and without hearing the
Corporate Debtor - ‘Maharashtra Vidyut Nigam Private Limited’.
5. In the Court, learned counsel for the appellant handed over a demand draft dated 12th December,
2017 issued by ‘Yes Bank Limited’, 9th Floor, Nehru Centre, Discovery of India Building, Dr. A.B.
Road, Worli, Mumbai issued in the name of Financial Creditor – ‘Reliance Commercial Finance Limited’
for a sum of Rupees Two Crores as a part payment in terms of agreement dated 13th December, 2017.
6. Having heard the learned counsel for the parties and taking into consideration the fact that the
impugned order dated 4th August, 2017 was passed by the Adjudicating Authority in violation of rules of
natural justice, the impugned order is set aside. Further, in view of the compromise agreement reached
between the parties on 13th December, 2017, we are not inclined to remit the matter to the Adjudicating
Authority, who is directed to close the proceedings and the parties will be bound by the compromise
agreement, which should be treated as a direction of the Appellate Tribunal.
7. In effect, order(s) passed by the Adjudicating Authority appointing ‘Resolution Professional’

declaring moratorium, freezing of account and all other order(s) passed by the Adjudicating Authority
advertisement published in the newspaper calling for applications all such orders and actions are declared
illegal and are set aside. The application preferred by Respondent under Section 433 and 434 stands
abated. The Adjudicating Authority will now close the proceeding. The Corporate Debtor is released from
immediate effect.
8. The Adjudicating Authority will fix the fee of the ‘Resolution Professional’ and the Corporate
Debtor will pay the fees for the period the Resolution Professional has functioned. The appeal is allowed
with aforesaid observation and direction. However, in the facts and circumstances of the case, there shall
be no order as to cost.
1051
by Hon’ble NCLAT
NEW DELHI
C.P. (I.B.) No. 225-236/NCLAT/2017
Applicant: PEC Ltd.

Vs.
Respondent: M/s. Sree Ramakrishna Alloys Ltd.
M/s. SriGangadhara Steels Limited
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mrs. Sangeeta Sondhi, Mr. Sanjeev Narula, Ms. Kaanan Gupta & Mr.
Vikas, Learned Advocates
For Respondents/Defendant: Mr. Rajesh Bohra, Mr. Aditya Naryan & Mr. Tanmay Jain, Learned
Advocates
ORDER
In both the appeals as common question of law is involved, Appellant is common, the terms of
agreement are similar, they were heard together and are being disposed of by this common judgment.
2. The Appellant- ‘M/s. PEC Ltd.’ is a Government of India Enterprise, and is a ‘Financial Creditor’
of Respondent(s)- ‘Corporate Debtor(s)’ of both the appeals.
3. The case of the Appellant is that the Respondent- ‘M/s. Sree Ramakrishna Alloys Limited’
defaulted of Rs.15,16,26,907/- as on 6th March, 2017. Initially, on demand, the Respondent- ‘M/s. Sree
Ramakrishna Alloys Limited’ issued three cheques which have been bounced, three Criminal Complaints
under Section 138 of the Negotiable Instrument Act, 1881 has been instituted against the said Respondent
being Criminal Complaint No. 40156/2016, Criminal Complaint No. 18535/2016 and Criminal Complaint
No. 18399/2017 pending in Patiala House Courts, New Delhi.
4. According to Appellant, the Respondent(s)- ‘M/s. Sree Ramakrishna Alloys Limited’ has also
sold the goods pledged by the Appellant and has misappropriated the sale proceeds of the stock of
pledged goods for which Criminal Complaints have also lodged by filing FIR before Station House
Officer (SHO), Parawada Police Station, Visakhapatnam-CII.
1052
by Hon’ble NCLAT
5. The Appellant- ‘M/s. PEC Ltd’ filed an application under Section 7 of the Insolvency and
Bankruptcy Code, 2016 (hereinafter referred to as “I&B Code”) for initiation of ‘Corporate Insolvency
Resolution Process’ against ‘M/s. Sree Ramakrishna Alloys Limited’. The said application on notice has
been admitted by impugned order dated 29th August, 2017, order of moratorium has been passed and
‘Interim Resolution Professional’ has been appointed. The grievance of the Appellant is that though the
application was preferred by the Appellant under Section 7 of the ‘I&B Code’, at the request of the
Respondent- ‘M/s. Sree Ramakrishna Alloys Limited’ (‘Corporate Debtor’), the application has been
treated to be an application under Section 9 of the ‘I&B Code’, and order of admission has been passed.
6. Learned counsel appearing on behalf of the Appellant submits that in view of the fact that the
application under Section 7 of the ‘I&B Code’ has been treated to be an application under Section 9 of the
‘I&B Code’, the Appellant is now deprived of its right as ‘Financial Creditor’ and cannot take part as a
member of ‘Committee of Creditors’ which has a vital role to play. It was further submitted that the
application having filed under Form-1 of the Insolvency and Bankruptcy (Application to Adjudicating
Authority) Rules, 2016, (hereinafter referred to as “Adjudicating Authority Rules”) the same cannot be
treated to be an application under Form-5 of the Adjudicating Authority Rules, as per which different
informations and records are to be provided and enclosed.
7. Similar is the plea taken in the case of ‘M/s. SriGangadhara Steels Limited’ the other (‘Corporate
Creditor’) Respondent in the other appeal. According to Appellant, ‘M/s. SriGangadhara Steels Limited’,
also defaulted to pay the amount of Rs. 7,43,89,467/- as on 6th March, 2017. The said ‘M/s.
SriGangadhara Steels Limited’ also issued three cheques which were bounced giving rise to three
Criminal Complaints under Section 138 of the Negotiable Instrument Act against the Respondent(s) being
Criminal Complaints No. 40154/2016, Criminal Complaint No.18534/2016 and Criminal Complaint No.
18400/2017, all pending in the Patiala House Court at New Delhi.
8. In the said appeal similar plea has been taken that the Respondent- ‘M/s. SriGangadhara Steels
Limited’ had also sold the goods pledged by the Appellant and have misappropriated the proceeds of the
stock of pledged goods and for which, the Appellant has filed Criminal Complaints. Against ‘M/s.
SriGangadhara Steels Limited’-(‘Corporate Debtor’) also an application under Section 7 of the ‘I&B
Code’ was filed but the Adjudicating Authority at the instance of the ‘Corporate Debtor’, treated the
application as an application under Section 9 and by impugned order dated 29th August, 2017, admitted
the application, passed order of moratorium and appointed ‘Interim Resolution Professional’.
9. We have heard learned counsel for the Appellant(s) and learned counsel appearing on behalf of
the Respondent(s).
1053
by Hon’ble NCLAT
10. From the record of both the appeals, we find that the agreement reached between the Appellant-
‘M/s. PEC Ltd.’ and respective Respondent(s) are verbatim similar. For the said reason, we are referring
one of the agreement, language of both the agreements being same, except the name of one of the party.
11. From relevant fact as pleaded we find that ‘M/s. Sree Ramakrishna Alloys Limited’ (‘Corporate
Debtor’) by their letter dated 19th February, 2014 intimated the Appellant- ‘M/s. PEC Ltd.’ that the said
Respondent has proposed to procure ‘M.S. Billets’ as per the policies of the Appellant. So, the Appellant
was requested to approve and grant clearance for the purchase of ‘M.S. Billets’ through ILC for Rs.
4,99,97,493/- (Rupees Four Crores Ninety-Nine Lakhs Ninety-Seven Thousand Four Hundred and
Ninety-Three Only) and enclosed the offer and proforma invoice with request to the Appellant- ‘M/s.
PEC Ltd.’ to arrange an amount of Rs.63,75,000/- (Sixty-Three Lakh Seventy-Five Thousand Only)
towards the 12.5% margin money with conditions as mentioned therein, which reads as follows:
“SREE RAMAKRISHNA ALLOYS LIMITED

INNOVATIVE GROWTH
To
M/s PEC Limited
A Govt. of India Enterprise
(Under Ministry of Commerce)
Jagannadh Nilayam, 10-27-17A,
Waltalr Uplands,
VISAKHAPATNAM-530 003
Tel. No. 0891-2710311, Fax No. 0891-6642008
Kind Attn: Shri G.Y. Dupate, Branch Manager

Dear Sir,
Sub: Proposal for procurement M.S. Billets as per your policies
We are very thankful to you for your continued support. We now wish to
procure 1292 MT of MS Billets from M/s. HARI HARA TRADERS MIG-81, D.
No. 24-33-26, Vinayaka Nagar, Vuda Colony, Peda Gantyada, Visakhapatnam
(AP) 530044 for which we request you for your approval and clearance for the
purchase through ILC for Rs. 4,99,97,493/- (Rupees Four Crores Ninety Nine
Lakhs Ninety Seven Thousand Four Hundred and Ninety Three Only). We are
enclosing herewith a firm offer and proforma Invoice from the supplier of MS
Billets M/s. HARI HARA TRADERS Visakhapatnam at Rs. 36,855/- (Basic
price Inlusive of duty) + VAT 5% extra. This price is inclusive of freight i.e.,
delivery to our yard.
1054
by Hon’ble NCLAT
We hereby inform your good selves that we will arrange an amount of
Rs.63,75,000/- (Sixty Three lakh Seventy Five Thousand Only) towards the
12.5% margin money for the above LC by way of RTGS.
We request your good selves to open ILC with following conditions:
1.Advising bank: State Bank of India Overseas branch, Visakhapatnam

2.Time for lifting of material: One month
3.Time for documentation: 10 days
4.Partial Negotiations should be allowed
We look forward for your confirmation of our proposal for domestic purchase.
With Best Regards

Thanking you,
Yours faithfully,
For SREE RAMAKRISHNA ALLOYS LIMITED
Sd/-
(S.RAMAKRISHNA)
Managing Director”
12. It was followed by an agreement reached between the Appellant- M/s. PEC Ltd. and Respondent-
‘M/s. Sree Ramakrishna Alloys Limited’ on 24th February, 2014. Relevant portion of the said agreement
reads as follows: -
“NOW IT IS AGREED BY AND BETWEEN THE PARTIES AS UNDER:-
SRAL is desirous of purchase approx. LC1292.000 MTS (+/-2%) MS Billets @

Rs. 36,855/- PMT + 5% Taxes. (Total value to Rs. 4,99,97,493/- (+/-2%).
The material shall be delivered and stored in open space earmarked for PEC and
duly fenced at SRAL’s Yard Paravada, Visakhapatnam.
In order to procure raw material and to fulfill their obligations under their supply
contracts with different buyers of the finished goods, SRAL has requested PEC
for financial assistance to purchase the raw material. And at the request of SRAL,
PEC has agreed to provide ILC of Rs. 4,99,97,493/- (+/-2%) (Rupees Four Crore
1055
by Hon’ble NCLAT
Ninety Nine Lakhs Ninety Seven Thousand Four Hundred and Ninety Three
Only) towards cost of said material (inclusive of applicable taxes).
1. SRAL shall provide to PEC Margin Money as advance equal to 12.5%

on 100% of the value of the material to be procured through PEC.
2. SRAL has to pay 1% Trade Margin to PEC on invoice value of the

material procured through PEC.
3. PEC shall raise Tax invoice by loading 1% Trade margin on purchase

value immediately and differential VAT would be remitted to the state govt. and
same shall be recovered from SRAL.
4. SRAL shall pledge the stock to PEC by way of entering into deed of
pledge.
5. SRAL shall lift the entire stock with in the usance period of ILC i.e. 90
by making payment at the Release Order rate fixed by the PEC.
6. SRAL agrees to pay usance interest at the applicable rate. All bank
charges, incidental expenses, taxes, levies & duties involved in the said supply
transactions shall be on SRAL’s account.
7. In case PEC remains out of pocket beyond the recovery period of 90

days as stated above and PEC’s fund remain blocked, SRAL will pay interest at
the rate of 14.5% per annum for the delayed period beyond 90 days.
8. SRAL will also pay to PEC all bank charges including DD/Pay
Order/Fax charges etc. and any other incidental charges that may be incurred by
PEC. These charges will be settled at actuals. Any excess/refund will be settled
within a week’s time after getting such advice from PEC.
9. SRAL will ensure the delivery of material from M/s HARI HARA
TRADERS immediately on opening of ILC by PEC. PEC shall not be
responsible for the quantity and quality of material at the point of loading as well
as at the point of unloading. Immediately after delivery of material by supplier,
SRAL will intimate PEC and it’s surveyor with a copy of the invoices/DC and
will immediately pledge the Material in favour of PEC and will store the Material
in PEC’s warehouse/Plant Premises of SRAL to the satisfaction of PEC.
1056
by Hon’ble NCLAT
10. SRAL has agreed to pledge the Material in favour of PEC and store them
in Warehouse/plant premises to the satisfaction of PEC at the cost and risk of
SRAL. It will be a first charge and SRAL will not put any further charge with
any other person/party. For this, SRAL shall sign an Agreement of Pledge, which
shall form an integral and inseparable part of this Agreement.
11. SRAL shall earmark area in their plant premises for PEC to store the
pledged material/goods. The area so earmarked shall be properly fenced and shall
have the facility of electricity/water and sitting arrangement for PEC’s security at
the cost of SRAL. Shall also reimburse to PEC electricity, water and/or any other
charges for the services available at PEC’s warehouse and/or provide these
services free of cost.”
13. Sub-Section (7) of Section 5 of the ‘I&B Code’ defines ‘Financial Creditor’ means:
“5(7) “financial creditor” means any person to whom a financial debt is owed
and includes a person to whom such debt has been legally assigned or
transferred to”
‘Financial Debt’ is defined in sub-section (8) of Section 5 of the ‘I&B Code’ as follows:
“5(8) "financial debt" means a debt alongwith interest, if any, which is disbursed
its dematerialised equivalent;

nonrecourse basis;
1057
by Hon’ble NCLAT


indemnity for any of the items referred to in sub-clauses (a) to (h) of this clause”
14. From the letter referred to above and the agreement, we find that the Appellant-M/s. PEC Ltd. has
disbursed the amount to ‘M/s. Sree Ramakrishna Alloys Limited’ against the consideration for the time
value of money. It is also clear that M/s. Sree Ramakrishna Alloys Limited by the agreement dated 24th
February, 2014 has borrowed money from the Appellant-M/s. PEC Limited against the payment of
interest. Thus, the Appellant-M/s. PEC Ltd. come within the meaning of ‘Financial Creditor’ and is
eligible to file an application under Section 7 of the ‘I&B Code’ there being a debt and default on the part
of the Respondent.
15. In so far as the other Respondent-‘M/s. SriGangadhara Steels Limited’ is concerned, similar
proposal for procurement M.S.Billets as per the policies of the Appellant-‘M/s. PEC Ltd.’ was made by
letter dated 3rd May, 2014. The language of letter dated 3rd May, 2014 is same and similar to the
language used by ‘M/s. Sree Ramakrishna Alloys Limited’ dated 19th February, 2014.
16. It is stated that both the Respondents belong to same group of Directors, and have same business.
17. In the agreement reached between the Appellant-M/s. PEC Ltd. and Respondent-‘M/s.
SriGangadhara Steels Limited’ dated 19th May, 2014 similar terms and conditions have been mentioned,
as in the agreement of ‘M/s. Sree Ramakrishna Alloys Limited’ and quoted above, except the difference
of amount. In the agreement with ‘M/s. SriGangadhara Steels Limited’ also terms and conditions is
similar. It has been agreed that beyond the period of ninety days, if the amount is not paid, ‘M/s.
SriGangadhara Steels Limited’ will have to pay interest @ 14.5% per annum for the delayed period
beyond ninety days, as the terms and conditions in the case of ‘M/s. Sree Ramakrishna Alloys Limited’.
18. From the letter dated 3rd May, 2014, written by ‘M/s. SriGangadhara Steels Limited’ and the
agreement reached with M/s. PEC Ltd. with the said Respondent(s) dated 19th May, 2014, it is clear that
the Appellant-M/s. PEC Limited is a ‘Financial Creditor’ of ‘M/s. SriGangadhara Steels Limited’
(‘Corporate Debtor’).
1058
by Hon’ble NCLAT
19. For the reasons aforesaid, we hold that the Adjudicating Authority failed to appreciate that the
application(s) preferred by Appellant under Section 7 of the ‘I&B Code’ cannot be treated as an
application under Section 9 of the ‘I&B Code’ and the Appellant who is a ‘Financial Creditor’ cannot be
treated as ‘Operational Creditor’.
20. Further, we hold that if an application is filed by a person under Section 7 of the ‘I&B Code’ and
in case the Adjudicating Authority comes to the conclusion that the Applicant is not a ‘Financial Creditor’
in such case the Adjudicating Authority has jurisdiction to reject the application under Section 7 of the
‘I&B Code’, but the said Authority cannot treat the format of the application under Section 7 of the ‘I&B
Code’ (Form-1) as an application under Section 9 of the ‘I&B Code’ (Form-5), nor can treat such person
an ‘Operational creditor’, in absence of any claim made under Section 9 of the ‘I&B Code’. Further, as
the informations required to be given in Form-1 varies from the informations as required to be given in
Form-5 (As per Section 9), including instructions made below the requisite form(s), no application filed
under Section 7 can be treated as an application under Section 9 of the ‘I&B Code.
21. Further, for filing an application under Section 9 of the ‘I&B Code’ it is mandatory to issue a
demand notice/invoice of payment under subsection (1) of Section 8, but no such requirement is there for
filing an application under Section 7 of the ‘I&B Code’. Therefore, in absence of a notice under sub-
section (1) of Section 8 of the ‘I&B Code’, an application under Section 7 cannot be treated to be an
application under Section 9.
22. In the present case, as the application preferred by the Appellant under Section 7 in both the
appeals are maintainable and have been admitted, order of moratorium has been passed and ‘Interim
Resolution Professionals’ have been appointed, no interference is called for against the impugned order
dated 29th August,2017 challenged in Company Petition No. (IB)-39/7/HDB/2017 and the impugned
order dated 29th August, 2017 challenged in Company Petition No. (IB)-40/7/HDB/2017, except to
modify the part of the order whereby the Appellant is treated to be an ‘Operational Creditor’. Both the
applications for all purpose should be treated to be an application under Section 7 of the ‘I&B Code’ and
the Appellant-‘M/s. PEC Ltd.’ in both the cases should be treated as ‘Financial Creditor’. The ‘Interim
Resolution Professionals’ are directed to treat the Appellant accordingly, and include the Appellant as a
Member of ‘Committee of Creditors’ in both the cases for taking decisions in accordance with law.
23. Both the appeals are allowed with aforesaid observations and directions. However, in the facts
and circumstances of the case, there shall be no order as to cost.
1059
by Hon’ble NCLAT
NEW DELHI
C.P. (I.B.) No. 271,272&273/NCLAT/2017
Applicant: Rajinder Kumar Malhotra

Vs.
Respondent: Harish Taneja, (Interim Resolution Professional)
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Vipul Ganda & Ms. Shreya Jain, Learned Advocates
For Respondents/Defendant: Mr. S. Kalia & Mr. Harish Agarwal, Learned Advocates
ORDER
Learned counsel appearing on behalf of the appellant submits that in view of judgment
pronounced today in “Vishwa Nath Singh vs. Visa Drugs & Pharmaceuticals Pvt. Ltd. – Company Appeal
(AT) (Insolvency) Nos. 234 and 235 of 2017”, this appeal has become infructuous and, therefore, the
learned counsel for the appellant prays for to withdraw the appeal(s).
The appeal(s) are accordingly disposed of as withdrawn. No cost.
1060
by Hon’ble NCLAT
NEW DELHI
C.P. (I.B.) No. 237,235/NCLAT/2017
Applicant: Vishwa Nath Singh

Vs.
Respondent: M/s. Visa Druga & Pharmaceuticals Pvt. Ltd.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Virender Ganda, Senior Advocate, Mr. Vipul Ganda, Mr. Mohit
Oommen & Ms. Shreya Jain, Learned Advocates
For Respondents/Defendant: Mr. Yash Pal Gupta, Learned Advocate
ORDER
The appellant, Director/shareholder of M/s. Swan Aluminiums Private Limited has preferred
these appeals against orders dated 4th September, 2017 and 18th September, 2017 both passed by the
Adjudicating Authority (National Company Law Tribunal), Chandigarh Bench, Chandigarh in C.P. No.
209/2016. By the first order, the application preferred by the respondent – M/s. Visa Drugs &
Pharmaceuticals Pvt. Ltd. under Sections 433 and 434 of the Companies Act, 1956 for winding up has
been treated as an application under Section 7 of the Insolvency and Bankruptcy Code, 2016 (hereinafter
referred to as the ‘I&B Code’) by the Adjudicating Authority admitted the application, passed order of
moratorium with certain directions and called for the names of Interim Resolution Professionals and
adjourned the matter for appointment of Interim Resolution Professional.
In the second order dated 18th September, 2017 the Insolvency Resolution Professional has been
appointed with further directions as given therein.
2. The relevant facts as pleaded are as follows:
The erstwhile shareholder i.e. Shri Ashok Kumar Aggarwala and others approached M/s. Swan
Aluminiums Private Limited (Corporate Debtor) for sale of their entire shareholding in M/s. Swan
Aluminiums Pvt. Ltd. A Memorandum of Understanding was executed on 18th February, 2013 between
1061
by Hon’ble NCLAT
M/s. Swan Aluminiums Pvt. Ltd. (Corporate Debtor) and Jupiter Strips Private Limited wherein certain
agreements were reached. On 9th December, 2013, all bank accounts in the name of the company M/s.
Swan Aluminiums Pvt. Ltd. (Corporate Debtor) were closed after clearance of all past/previous
dues/liabilities, (both secured and unsecured) which was reflected in the balance-sheet prepared by the
erstwhile shareholders.
4. However, when audited the balance-sheet of M/s. Swan Aluminiums Pvt. Ltd. (Corporate Debtor)
were prepared on 31st March, 2014 and 31st March, 2015, debt due or liability payable to the respondent
were not shown therein.
5. On 11th August, 2016 six identical demand notices under Sections 433 and 434 of the Companies
Act, 1956 were sent by erstwhile shareholders including the respondent – M/s. Visa Drugs &
Pharmaceuticals Pvt. Limited. On 20th September, 2016, a common reply was sent by M/s. Swan
Aluminium Pvt. Ltd. (Corporate Debtor) disputing the claim. In the aforesaid background, six company
petitions were preferred by the respondent under Section 433(e), 434 and 439 of the Companies Act, 1956
before the Hon’ble High Court of Punjab and Haryana.
6. Pursuant to the Notification No. G.S.R. 1119(E) dated 7th December, 2016, issued by Central
Government under sub-section (1) and (2) of Section 434 of the Companies Act, 2013 read with sub-
section (1) of Section 239 of the ‘I&B Code’, the winding up cases were transferred from Hon’ble High
Court to the Tribunal/Adjudicating Authority.
7. The case of M/s. Swan Aluminiums Pvt. Ltd. (Corporate Debtor), was transferred to the
Adjudicating Authority (National Company Law Tribunal), Chandigarh Bench. The application under
Sections 433(e), 434 and 439 preferred by the respondent were treated to be application(s) under Section
7 of the I & B Code and were admitted, as noticed above.
8. Learned counsel for the Appellant has brought to our notice the Central Government notification
follows: -

1062
by Hon’ble NCLAT
shall abate.
was required to submit all information, other than information forming part of the records transferred
from the High Court, for admission of the petition under Sections 7, 8 or 9 of the ‘I&B Code’, including
details of the proposed ‘Insolvency Professional’ within sixty days, failing which, the petition shall stand
abated.
11. Learned counsel for the appellant submitted that the respondent – M/s. Visa Drugs &
Pharmaceuticals Private Limited was a shareholder and do not come within the meaning of “Financial
Creditor” as defined under sub-section (7) r/w sub-section (8) of Section 5 of the I & B Code. The
respondent also cannot claim to be an ‘Operational Creditor’. He placed reliance on the balance-sheet of
M/s. Swan Aluminiums Pvt. Ltd. (pages 322-355 of the paper book) wherein the details of “unsecured
loans/advances” as on 5th December, 2013 has been shown and the name of “M/s. Visa Drugs &
Pharmaceuticals Private Limited” has been shown therein. It was submitted that the unsecured loan
having been taken without any interest cannot be termed to be a ‘financial debt’ within the meaning of
sub-section (8) of Section 5 of the I & B Code.
1063
by Hon’ble NCLAT
12. “Financial Creditor” is defined in sub-section (7) of Section 5, which means :
“any person to whom a financial debt is owed and includes a person to whom such debt has been legally
assigned or transferred to”.
13. Sub-section (8) of Section 5 defines ‘financial debt’, as follows:
“(8) "financial debt" means a debt alongwith interest, if any, which is disbursed

nonrecourse basis;



indemnity for any of the items referred to in sub-clauses (a) to (h) of this clause;”
14. Learned counsel appearing on behalf of the respondent submits that the loan given by the
respondent comes within the meaning of ‘financial debt’ as per clause (a) of sub-section(8) of Section 5
i.e. money borrowed against the payment of interest. However, there is nothing on record to suggest that
1064
by Hon’ble NCLAT
M/s. Swan Aluminiums Pvt. Ltd. (Corporate Debtor) has borrowed money against the payment of interest
from the respondent – Visa Drugs & Pharmaceuticals Pvt. Limited. There may be a loan taken by the
Corporate Debtor from the respondent but that does not mean that such loan amount can be termed a
money borrowed against the payment of interest.
15. ‘Financial debt’ means a debt along with interest, if any, which is ‘disbursed against the
consideration for the time value of money’. In 'Nikhil Mehta and Sons vs. AMR Infrastructure Ltd. -
Company Appeal (AT) (Insolvency) No. 07 of 2017, this Appellate Tribunal, while discussing the
aforesaid provisions, observed as follows :
"17. The first question arises for consideration is as to who is a 'Financial

Creditor'. Learned Adjudicating Authority, for determination of the aforesaid
issue iiexamined the definition provided in Section 5 (7) and 5(8) and in the
impugned judgement rightly observed:-
"12. A perusal of definition of expression 'Financial Creditor' would show

that it refers to a person to whom a Financial debt is owed and includes even a
person to whom such debt has been legally assigned or transferred to. In order to
understand the expression 'Financial Creditorçthe requirements of expression
financial debt' have to be satisfied which is defined in Section 5(8) of the IBC The
opening words of the definition clause would indicate that a financial debt is a
debt along with interest which is disbursed against the consideration for the time
value of money and it may include any of the events enumerated in sub-clauses
(a) to (i). Therefore the first essential requirement of financial debt has to be met
viz, that the debt is disbursed against the consideration for the time value of
money and which may include the events enumerated in various sub-clauses. A
Financial Creditor is a person who has right to a financial debt. The key feature
of financial transaction as postulated by section 5(8) is its consideration for time
value of money. In other words, the legislature has included such financial
transactions in the definition of 'Financial debt' which are usually for a sum of
money received today to be paid for over a period of time in a single or series of
payments in future. It may also be a sum of money invested today to be repaid
over a period of time in a single or series of instalments to be paid in future. In
Black's Law- Dictionary (9th edition) the expression 'Time Value' has been
defined to mean "the price associated with the length of time that an investor
must wait until an investment matures or the related income is earned". In both
1065
by Hon’ble NCLAT
the cases, the inflows and outflows are distanced by time and there is a
compensation for time value of money. It is significant to notice that in order to
satisfy the requirement of this provision, the financial transaction should be in
the nature of debt and no equity has been implied by the opening words of
Section 5(8) of the IBC. It is true that there are complex financial instruments
which may not provide a happy situation to decphe1 the true nature and meaning
of a transaction. It is pertinent to point out that the concept 'Financial Debt' as
envisaged under Section 5(8) of the IBC is distinctly different than the one
prevalent in England as provided in its Insolvency Act, 1986 and the 'Rules'
framed thereunder. It appears that in England there is no exclusive element of
disbursement of debt laced with the consideration for the time value of money.
However, forward sale or purchase agreement as contemplated by Section-5
(8)(f) may or may not be regarded as a financial transaction. A forward contract
to sell product at the end of a specified period is not a financial contract. It is
essentially a contract for sale of specified goods. It is true that some time
financial transactions seemingly restructured as sale and repurchase. Any
repurchase and reverse repo transaction are sometimes used as devices for
raising money. In a transaction of this nature an entity may 13 require liquidity
against an asset and the financer in return sell it back by way of a forward
contract. The difference between the two prices would imply the rate of return- to
the financer. (See Twcman's Law Relating to IBC, 2016 by Vinod Kothari &
Sikha Barisal)."
16. In the present case, the respondent has failed to show that the amount of loan treated to have been
given to the Corporate Debtor were disbursed against the consideration for the time value of money. In
absence of any such evidence on record to suggest that the amount was disbursed against the
consideration for the time value of money and was borrowed by the Corporate Debtor against the
payment of interest, we hold that the respondent – M/s. Visa Drugs and Pharmaceuticals do not come
within the meaning of ‘financial creditor’.
17. The Adjudicating Authority having failed to notice the facts, we have no other option but to set
aside the impugned orders dated 4th September and 18th September, 2017.
18. In effect, order(s) passed by the Adjudicating Authority appointing ‘Resolution Professional’
declaring moratorium, freezing of account and all other order(s) passed by the Adjudicating Authority
1066
by Hon’ble NCLAT
advertisement published in the newspaper calling for applications all such orders and actions are declared
illegal and are set aside. The application preferred by Respondent under Section 433 and 434 stands
abated. The Adjudicating Authority will now close the proceeding. The Corporate Debtor is released from
immediate effect.
19. The Adjudicating Authority will fix the fee of the ‘Resolution Professional’ and the Corporate
Debtor will pay the fees of the ‘Resolution Professional’, for the period he has functioned. The appeal is
1067
by Hon’ble NCLAT
NEW DELHI
C.P. (I.B.) No. 287/NCLAT/2017
Applicant: Hounslow Builders Pvt. Ltd.

Vs.
Respondent: M/s. Lakshmi Steels
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Aakanksha Nehra, Learned Advocates
For Respondents/Defendant: Mr. Naman Tandon, Mr. Gaurav & Mr. Dharmender, Learned Advocate
ORDER
Ms. Aakanksha Nehra, learned counsel for the appellant submits that she has been instructed to
withdraw the appeal.
In view of the prayer made on behalf of the appellant, we allow the appellant to withdraw the
appeal, but without any liberty to challenge the same very impugned order before the Appellate Tribunal.
The appeal is dismissed as withdrawn.
1068
by Hon’ble NCLAT
NEW DELHI
C.P. (I.B.) No. 314/NCLAT/2017
Applicant: Shaw Traders

Vs.
Respondent: Balaji Paper & Newsprint Pvt. Ltd.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: None.
ORDER
On 13th December, 2017, when the appeal was taken up, nobody appeared on behalf of the
Appellant. On the said date, this Appellate Tribunal passed the following order:
"In spite of repeated calls, nobody appeared on behalf of the Appellant.
2. From the impugned order we find that the Application preferred by the
Appellant under Section 9 of Insolvency 86 Bankruptcy Code, 2016 has been
rejected by the Adjudicating Authority in view of the decision passed by Hon'ble
Supreme Court in the case- "Mobilox Innovation Private Ltd. Vs. Kirusa
Software Private Ltd.", there being a notice of dispute sent by the 'Corporate
Debtor' to the 'Operational Creditor'. The Registry has also pointed out that the
appeal is barred by limitation.
3. However, to give another opportunity, we adjourn the case. Post the

matter on 15th December, 2017."
Today, in spite of repeated calls, nobody appears on behalf of the Appellant. In the circumstance,
we dismiss the appeal being barred by limitation and as also for default.
1069
by Hon’ble NCLAT
NEW DELHI
C.P. (I.B.) No. 224/NCLAT/2017
Applicant: Teknow Consultants and Engineers Pvt. Ltd.

Vs.
Respondent: Bharat Heavy Electricals Limited
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Anirudh Bhat & Mr. Rajeev Kumar, Learned Advocates
For Respondents/Defendant: Mr. Dibya Nishant, Learned Advocate
ORDER
On 14th November, 2017, on hearing the Counsel for the parties following order was passed: -
"14.11.2017 On hearing the counsel for the parties, prima facie, we are of the
view that the pendency of the case under Section 37 of the Arbitration and
Conciliation Act, 1996 cannot be termed to be an existence of dispute in terms of
the provisions of the Insolvency and Bankruptcy Code, 2016, thereby prima facie
the impugned order dated 31st August, 2017 passed by the Adjudicating
Contd/ -
Authority (National Company law Tribunal), New Delhi Bench can be doubted.
However, before passing any order on merits, it is brought to our notice by the
learned counsel for the respondent - Bharat Heavy Electricals Limited that the
principal amount approximately Rs. 16,98,000/ - has already been paid but the
appellant claimed the interest. We adjourn the case. By next date, the parties will
inform whether the respondent intends to pay 6% compound interest or not.
Learned counsel for the parties sought time to obtain instructions.
Post the matter on 29th November, 2017."
1070
by Hon’ble NCLAT
2. Subsequently, on 29th November, 2017, the parties informed that they may settle the dispute
when this Appellate Tribunal passed following orders: -
"29.11.2017 Learned counsel appearing on behalf of the respondent agrees to

pay the amount in terms of the observations made by the Appellate Tribunal on
14th November, 2017. In view of such stand taken by the respondent, while
learned counsel for the appellant do not intend to press the appeal if the matter is
settled, we allow the respondent two weeks' time to file affidavit with the specific
stand that the respondent is agreed to pay 6% compound interest to the appellant
for the delayed payment.
Post the matter on 15th December, 2017.
3. Learned counsel appearing on behalf of the Respondent submits that in terms of the order dated
29th November, 2017 the amount is being paid to the Appellant i.e. 6% compound interest minus the
TDS amount. He handed over cheque no. 428463 dated 11th December, 2017 of HDFC Bank, E-1/ 57,
Arera Colony Scheme of capital project, Bhopal issued in favour of Teknow Consultants and Engineers
Pvt. Ltd. for the sum of Rs.10,32,443/- (Rupees Ten Lakh Thirty-two Thousand Four hundred and forty-
three only) to Mr. Anirudh Bhat, counsel for the Appellant for onward transmission to the Appellant. He
received the cheque subject to encashment of the cheque amount.
4. In view of the development aforesaid, learned counsel for the Appellant sought permission to
withdraw the appeal with liberty to revive the appeal in case the cheque is bounced. The prayer as made
on behalf of the Appellant is allowed. The appeal stands disposed of with liberty aforesaid.
1071
by Hon’ble NCLAT
NEW DELHI
C.P. (I.B.) No. 257/NCLAT/2017
Applicant: Omniactive Health Technologies Ltd.

Vs.
Respondent: Indus Finance Limited and Others
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Ms. Swati Sinha, Learned Advocate
For Respondents/Defendant: Mr. Ajay Kumar, Mr. Bishwajit Dubey & Ms. Sakshi Malhotra, Learned
Advocate
ORDER
Ms. Swati Sinha, learned Counsel appearing on behalf of the Appellant submits that she has been
asked by Mr. Rishi Agarwal, learned Counsel to withdraw the appeal in view of the fact that 3rd
Respondent has agreed to refund the amount. Permission is granted. Appeal is disposed of as withdrawn.
1072
by Hon’ble NCLAT
NEW DELHI
C.P. (I.B.) No. 281/NCLAT/2017
Applicant: Mitcon Consultancy & Engineering Services Ltd.

Vs.
Respondent: Al-Ameen Green Energy Pvt. Ltd.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Rajiv Sankar Roy, Mr. Avrojyoti Chatterjee, Mr. Abhijit S. Roy &
Mrs. Jayashree Saha, Learned Advocates
ORDER
This appeal has been preferred by the appellant against the order dated 23rd October, 2017 passed
by the Adjudicating Authority (National Company Law Tribunal), Chennai whereby and whereunder the
application preferred by the appellant under Section 9 of the Insolvency and Bankruptcy Code, 2016
(hereinafter referred to as the ‘I&B Code’) read with Rule 6 of the Insolvency and Bankruptcy
(Application to Adjudication Authority) Rules, 2016 has been rejected on the ground that the claim is pre-
matured.
2. Learned counsel for the appellant referred to the work order issued by the respondent dated 18th
May, 2015 at page 73 of the paper-book, particularly paragraph 7 which is the ‘Terms of payment’ and
submitted that the respondent was liable to pay the dues much before the filing of the application under
Section 9 of the I & B Code. Therefore, it cannot be held that the payment of debt was not mature.
3. From the records, including the work order it appears that the date of payment was matured and
the Adjudicating authority failed to notice the same.
4. Learned counsel for the appellant further submitted that it was brought to notice of the
Adjudicating Authority that no dispute was in existence prior to the demand notice issued under sub-
1073
by Hon’ble NCLAT
section (1) of Section 8 and a dispute was raised for the first time by the respondent while giving reply
under sub-section (2) of Section 8.
5. In spite of notice and service of notice, the respondent did not choose to appear nor disputed the
aforesaid facts.
6. Having heard counsel for the parties and in view of observations as made above, as we find that
the Adjudicating Authority has not appreciated the facts and failed to notice the terms and conditions of
work order dated 18th May, 2015 and accepted the statement made by the respondent without any basis,
we have no other option but to the set aside the order.
7. We, accordingly, set aside the order dated 23rd October, 2017 passed by Adjudicating Authority
in CP/575/(IB)/CB/2017 and remit the case to the Adjudicating Authority, Chennai for appropriate order.
If the application is complete and there is no defect, after notice to the respondent and hearing the parties,
it will admit the application. If there is defect, appropriate time be granted to the appellant to remove the
defects.
8. The appeal is allowed with the aforesaid observations. No costs.
1074
by Hon’ble NCLAT
NEW DELHI
C.P. (I.B.) No. 38/NCLAT/2017
Applicant: Dr. B.V.S. Lakshmi

Vs.
Respondent: Geometrix Laser Solutions Private Limited
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Arun Kumar, Ms. Niveditha Jhinnaiah and Ms. Bhabna Das,
Learned Advocate
For Respondents/Defendant: Mr. Alok Dhir, Ms. Varsha Banerjee and Mr. Kunal Godhwani, Learned
Advocate
ORDER
1. The Appellant, claimed to be ‘Financial Creditor’ filed an application under Section 7 of the
Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as “I&B Code”) read with Rule 4 of the
Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 to initiate ‘Corporate
Insolvency Resolution Process’ against Geometrix Insolvency Solutions Private Limited (Respondent).
The Adjudicating Authority (National Company Law Tribunal), Hyderabad Bench, Hyderabad,
by impugned order dated 13th March, 2017 in Company Petition (IB)/19/7/HBD/2017 held that the
Appellant do not come within the meaning of ‘Financial Creditor’ and failed to satisfy the Adjudicating
Authority about requisite ingredients of Section 7 of the “I&B Code” to claim any relief and thereby
rejected the application.
2. The case of the Appellant is that loans totalling Rs. 91,47,864/- were advanced by the Appellant
to the Respondent in fifty-two transactions between 26th April, 2013 and 9th March, 2015 for the purpose
of (a) repaying interest/instalments on bank loans taken by the Respondent so that loans are not defaulted
upon or rendered NPA; and (b) ensuring payment of salaries and money due to suppliers/ vendors, so that
business continues unabated.
1075
by Hon’ble NCLAT
3. Further, according to Appellant though the terms of the loan were not recorded in writing, it was
agreed that money advanced would carry interest, as evidenced by the following:
a) E-mail from the Managing Director of the Respondent directing that interest should be added for
loans advanced by shareholders.
b) The Auditor of the Respondent, in the auditor’s report dated 31st August, 2016, states that interest
has been credited for loans advanced.
4. The stand of the Appellant is that the loans were repayable on demand and the Respondent has
admitted its liability towards the Appellant in its books of accounts as follows: -
Financial Year Debt due Acknowledged in the Books of the
Respondent
2012—13 Rs. 98,37,596 Pages 393, 355, 435 of
Appeal papers
2013—14 Rs. 38,74,767 Pages 393, 351, 435, 406,
354, 439 of Appeal papers
2014—15 Rs. 89,85,792 Pages 406, 459, 95 of Appeal
papers
2015—16 Rs. 85,20,548 Pages 99 & 163
5. Learned counsel for the Appellant submitted that the Respondent has not disputed the sums
shown above, and the only defence raised by it, both before the Adjudicating Authority and this Appellate
Tribunal, is that the amount has been set off.
6. The Appellant issued notice for repayment of the loans totalling Rs. 91,47,864/- by notice dated
7th September, 2016. The Respondents, in its reply dated 26th September, 2016 claimed that the money
has been repaid thus: “ the balance lying to your client’s account as on 31st
March, 2015 is history and it has been repaid and/or adjusted as desired by your client, and as on 3rd
September 2016, your client ceased to be a creditor of my client.”
7. Learned counsel for the Appellant submitted that the Tribunal wrongly held that the Appellant is
not a ‘Financial Creditor’. According to learned counsel for the Appellant, she is ‘Financial Creditor’
within the meaning of sub-section (7) of Section 5 of the “I&B Code”.
8. Learned counsel for the Appellant submitted that the debt owed by the Respondent to the
Appellant is a ‘Financial Debt’ as per sub-section (8)(a) of Section 5 of the ‘I&B Code’ as the loans
carried interest. It was also submitted that the transaction is a ‘Financial Debt’ under subsection (8) (f) of
Section 5 of the ‘I&B Code’, as it has the commercial effect of a borrowing.
1076
by Hon’ble NCLAT
9. According to counsel for the Appellant, the Respondent has admitted in the books of accounts
that the Appellant is an ‘unsecured creditor’, and the money advanced by her were loans to the Company.
The money was disbursed against the consideration of time value of money as the Appellant was a
shareholder of the Respondent, and had an interest in protecting and increasing the value of her
investment in the Company. The loans were advanced by the Appellant so as to ensure that the
Respondent remains a “going concern”, and preventing it from going bankrupt, which evidenced that the
loans were given for a commercial purpose. Thus, according to Appellant, the Time value of money to be
calculated by expected future value of the Appellant’s investment in the Respondent for allowing it to
continue as a “on-going concern” and to make profits. This would include the profit she would make on a
future sale of her shares in the Respondent, which would increase in value, as well as dividends she would
receive from the Respondent, in the event the Respondent made profits.
10. It was submitted that the definition of “Financial Debt”, uses the words “means and includes”, is
inclusive, rather than an exhaustive definition. Hence, a loan advanced by the Appellant to the
Respondent against the time value of money, as discussed hereinabove, would nevertheless fall within the
ambit of “Financial debt”, even if it does not specifically fall within sub-clauses (a) to (i) of sub-section
(8) of Section 5.
11. It was contended that that finding of the Adjudicating Authority that the Appellant is not a
‘Financial Creditor’ under sub-section (7) of Section 5 of the “I&B Code” is devoid of merit.
12. According to Respondent, the Appellant is not a ‘Financial Creditor’ in absence of any ‘Financial
Debt’ being disbursed by the Appellant in terms of sub-section (7) read with sub-section (8) of Section 5
of the ‘I&B Code’. Reliance has been placed on decision of this Appellate Tribunal in “Nikhil Mehta
and Sons (HUF) Vs. AMR Infrastructure Ltd.─ Company Appeal (AT) (Insolvency) No. 07 of
2017”.
13. In the light of the aforesaid decision of this Appellate Tribunal in “Nikhil Mehta and Sons
(HUF)”, the following essential criterians to be fulfilled for a Creditor to come within the meaning of the
term ‘Financial Creditor’.
(i) A person to whom a ‘Financial debt’ is owed and includes a person whom such debt has been
legally assigned or transferred to
(ii) The debt along with interest, if any, is disbursed against the consideration for time value of
money and include any one or more mode of disbursed as mentioned in clause (a) to (i) of sub-
section (8) of Section 5 of the ‘I&B Code’.
1077
by Hon’ble NCLAT
Therefore, it is to be seen whether the amount paid by the Appellant fulfils the conditions of
disbursement against consideration of time value and money. It is only pursuant to such satisfaction that
the Appellant can plead that the amount allegedly disbursed by the Appellant has a commercial effect of
borrowing under sub-section (8)(f) of Section 5 of the ‘I&B Code’.
14. The term ‘Creditor’ has been defined in sub-section (10) of Section 3 of the ‘I&B Code’, wherein
a ‘Financial Creditor’ as well as an ‘unsecured creditor’ have been independently mentioned. However,
‘I&B Code’ proceedings can be triggered only by either a ‘Financial Creditor or an ‘Operational
Creditor’. According to Respondent, the Appellant does not fall within the meaning of ‘Financial Creditor
in absence of ‘financial debt’ being disbursed by the Appellant, therefore, the Appellant has no locus to
initiate ‘I&B Code’ proceedings against the Respondent Company. It was also submitted that the
Appellant at best can claim to be an ‘unsecured creditor’ of the Respondent Company, however no
proceedings can be triggered by an ‘unsecured creditor’, who fails to meet the criterias of Section 7 or
Section 9 of the ‘I&B Code’.
15. According to learned counsel for the Respondent, the Appellant in the present case has failed to
establish that there has been disbursement against consideration of time value and money. The amounts as
reflected in the earlier Balance Sheet of the Company merely describes certain ‘unsecured loan’ being
payable to the Appellant as on 31st March, 2014. The Respondent Company has already placed on record
the Auditor certificate, which categorically states that no amount is due and payable to the Appellant and
further the Audited Balance Sheet of the Respondent Company as on 31st March, 2017 also nowhere
reflects any amount being due and payable to the Appellant either as the ‘financial debt’ or as an’
unsecured loan’. The qualification of the Auditor in the Balance Sheet of the Respondent Company as on
31st March, 2016, also categorically states that in absence of any document pertaining to approval of any
loan taken, interest erroneously paid on account of an alleged loan given by the Appellant herein is not to
be provided and accounted for.
16. Learned counsel for the Respondent relied on decision of the Hon’ble Supreme Court in “M/s.
Innoventive Industries Ltd. Vs. ICICI Bank & Anr.─ 2017 SCC OnLine SC 1025”, and submitted that the
Adjudicating Authority has to be satisfied as to existence of a default. The term ‘default’ has been defined
in Section 3(12) of the ‘I&B Code’. For the purpose of ascertainment of default, it is imperative to point
out the date and time when the alleged debt has become due and payable. A debt may not be due, if it is
not payable in law or in fact. In the instant case, no debt is due as nothing is payable to the Appellant in
law or in fact. Admittedly, the Appellant has not stated any date on which the alleged debt became due
and payable.
1078
by Hon’ble NCLAT
17. It was further submitted that the Appellant moved before the Adjudicating Authority with unclean
hands and placed on record false and fabricated documents. According to the Respondent, in the
application under Section 7 of the ‘I&B Code’, the Appellant placed ‘fabricated Memorandum and
Articles of the Respondent-Corporate Debtor’. The Articles as placed on record by the Appellant,
wrongfully mentions the name of P. Kedarnath and B. Kalyana Hyma as the first Directors of the
Respondent -‘Corporate Debtor’. The correct Articles as placed by the Respondent-‘Corporate Debtor’
mentions the name of the first Directors as P. Kedarnath and Dr. B.V.S. Lakshmi i.e. the Appellant
herein. Further, according to the Respondent, the Balance Sheets as placed on record, were prepared at the
time when the Appellant was exercising control over the Respondent Company.
18. It was further contended that the Appellant is guilty of siphoning funds which has been explained
in detail by the Respondent Company in its additional affidavit. A criminal complaint and FIR being
lodged against the Appellant in August, 2016 and therefore, according to the Respondents, the Appellant
with a malafidely intent to arm-twist the Respondent-‘Corporate Debtor’ tried to initiate the process for
alleged recovery of amount due to the Appellant.
19. We have heard learned counsel for the parties and perused the records.
20. The Appellant has enclosed the copy of Form-32 and the annual ledger statement from the
Respondent for the period from 2013-14 to 2015-16 evidencing the transfer of funds from the Appellant
to the Respondent-‘Corporate Debtor’. In the Annual ledger statement for the year ended 31st March,
2017 in Schedule-D ‘unsecured loan’, following amount has been shown against the name of the
Appellant:
GEOMETRIX LASER SOLUTIONS PVT. LTD.
SCHEDULES TO BALANCE SHEET SUB Year Ended Year Ended

SCHEDULE 31.03.2014 31.03.2013
Rs. Rs.
SCHEDULE-A SHARE CAPITAL
AUTHORISED CAPITAL
13,90,000 EQUITY SHARES OF RS.
10/- EACH
(Previous year 10,000 equity shares of 1,39,00,000 1,39,00,000
Rs. 10 each
PAID UP CAPITAL
10,000 EQUITY SHARES OF RS.10/- 3,90,000 80,50,000
EACH
(Previous year 10,000 equity shares of 3,90,000 80,50,000
Rs. 10 each)
SCHEDULE – B SHARE APPLICATION - 58,50,000
1079
by Hon’ble NCLAT
MONEY - 58,50,000
SCHEDULE – C SECURED LOAN
INDIAN BANK OCC A/C 36,67,937 10,67,370
INDIAN BANK T/L 6106957536 67,04,081 3,77,845
INDIAN BANK T/L 899902028 2,10,74,989 1,97,63,812
3,14,47,007 2,12,09,027
SCHEDULE – D UNSECURED LOAN
-KALYANI - 20,000
-KEDARNATH PULIPAKA - 20,000
-DR. B.V.S. LAKSHMI 38,74,767 98,37,596
-KARTHIK CONSULTANCY SERVICES - 8,00,000
-K JAGANNADHA RAO - 11,78,000
-B.S. RAMACHANDRA RAO - 4,00,000
-DIRECTORS THEIR RELATIVES - 20,00,000
38,74,767 1,42,55,596
21. In the ledger account against the name of the Appellant, the amount has been reflected as
‘unsecured loan’, which is as follows:
M/s. Geometrix Laser Solution Private Ltd., 14-15

Plot No.#04, Indl. Prak, Mambattu
Ph-II, Tada (M) Nellore Dist
Andhra Pradesh, 524121
Indian
Dr.B.V.S.Lakshmi UN -Secured Loans
Ledger Account
1-Apr-2014 to 31-Mar-2015
Date Particular Vch Type Debit Credit
1-4-2014 By Opening Balance 41,04,391.00
15-4-2014 By Kedarnath Indian Bank A/c 6124317562 Journal 1,74,980.00
6-5-2014 By Professional Charges Journal 24,000.00
16-5-2014 By Kedarnath Indian Bank A/c 6124317562 Journal 75,000.00
1080
by Hon’ble NCLAT
10-6-2014 By Travelling & Convyence Journal 11,334.00
By Travelling & Convyence Journal 50,298.00
19-6-2014 By Younus Petty Cash Cash Receipt 2,000.00
By Travelling & Convyence Journal 13,334.00
30-6-2014 By Indian Bank C A/c No. 887783615-Nellore Bank Receipt 3,50,000.00
24-7-2014 By Travelling & Convyence Journal 60,559.00
26-7-2014 By Younus Petty Cash Cash Receipt 2,500.00
28-8-2014 By Venkat Reddy Current A/c Journal 2,000.00
5-9-2014 By Younus Indian Bank A/c 6124549605 Journal 25,000.00
7-9-2014 By Petty Cash Mastanaiah Cash Receipt 7,200.00
9-9-2014 By Petty Cash Mastanaiah Cash Receipt 5,000.00
10-9-2014 By Younus Indian Bank A/c 6124549605 Journal 4,49,940.00
31-10-2014 By Younus Indian Bank A/c 6124549605 Journal 10,00,000.00
7-11-2014 By Indian Bank CA 6241424998 Bank Receipt 1,20,000.00
14-11-2014 To Younus Indian Bank A/c 6124549605 Journal 25,000.00
31-12-2014 By Travelling & Convyence Journal 1,41,676.00
9-3-2015 By Indian Bank CA 6241424998 Bank Receipt 1,09,250.00
To Clocing Balance 25,000.00 75,28,462.00
75,03,462.00
75,28,462.00 75,28,462.00
1081
by Hon’ble NCLAT
22. Learned counsel appearing on behalf of the Respondent while brought to the notice of the
Appellate Tribunal that the aforesaid document suggests that majority of the amount has been shown
against journal or by bank receipt and whatever the amount shown therein has been shown to be
‘unsecured loan’. In the ledger book, the loans and advances from related parties shown to be ‘unsecured
loan’ and one of the them shows from Director’s relatives (daughter of the Appellant is the Director), as
Rs. 95,48,279/- for year ending 31st March, 2016 and Rs. 81,64,250/- for the year ending 31st March,
2015.
23. Similar is the position with regard to the other documents wherein the amount has been shown to
be ‘unsecured loan’.
24. Sub-section (11) of Section 3 defines ‘debt’ as:
“3(11) “debt” means a liability or obligation in respect of a claim which is due

from any person and includes a financial debt and operational debt”
25. Default has been defined in sub-section (12) of Section 3, which is as follows: -
“3(12) “default” means non-payment of debt when whole or any part or

instalment of the amount of debt has become due and payable and is not repaid
by the debtor or the corporate debtor, as the case may be”
26. As per sub-section (7) of Section 5, ‘Financial Creditor’ means any person to whom a financial
debt is owed and includes a person to whom such debt has been legally assigned or transferred to.
27. ‘Financial Debt’ has been defined under sub-section (8) of Section 5, which is as follows:-
“5(8) "financial debt" means a debt alongwith interest, if any, which is disbursed
a) money borrowed against the payment of interest;
b) any amount raised by acceptance under any acceptance credit facility or
c) any amount raised pursuant to any note purchase facility or the issue of
d) the amount of any liability in respect of any lease or hire purchase
Accounting Standards or such other accounting standards as may be
prescribed;
1082
by Hon’ble NCLAT
e) receivables sold or discounted other than any receivables sold on
nonrecourse basis;
f) any amount raised under any other transaction, including any forward
sale or purchase agreement, having the commercial effect of a
borrowing;
g) any derivative transaction entered into in connection with protection
against or benefit from fluctuation in any rate or price and for
calculating the value of any derivative transaction, only the market value
of such transaction shall be taken into account;
h) any counter-indemnity obligation in respect of a guarantee, indemnity,
bond, documentary letter of credit or any other instrument issued by a
bank or financial institution;
i) the amount of any liability in respect of any of the guarantee or
clause;”
28. In “Nikhil Mehta and Sons”, this Appellate Tribunal while noticed sub-section (8) of Section 5 of
the ‘I&B Code’ observed: -
“17. The first question arises for consideration is as to who is a ‘Financial Creditor’. Learned
Adjudicating Authority, for determination of the aforesaid issue examined the definition provided in
Section 5 (7) and 5(8) and in the impugned judgement rightly observed: -
“12. A perusal of definition of expression 'Financial Creditor' would show that it

refers to a person to whom a Financial debt is owed and includes even a person
to whom such debt has been legally assigned or transferred to. In order to
understand the expression 'Financial Creditor', the requirements of expression
'financial debt' have to be satisfied which is defined in Section 5(8) of the IBC.
The opening words of the definition clause would indicate that a financial debt is
a debt along with interest which is disbursed against the consideration for the
time value of money and it may include any of the events enumerated in sub-
clauses (a) to (i). Therefore the first essential requirement of financial debt has to
be met viz. that the debt is disbursed against the consideration for the time value
of money and which may include the events enumerated in various sub-clauses. A
Financial Creditor is a person who has right to a financial debt. The key feature
of financial transaction as postulated by section 5(8) is its consideration for time
value of money. In other words, the legislature has included such financial
transactions in the definition of 'Financial debt' which are usually for a sum of
1083
by Hon’ble NCLAT
money received today to be paid for over a period of time in a single or series of
payments in future. It may also be a sum of money invested today to be repaid
over a period of time in a single or series of instalments to be paid in future. In
Black's Law Dictionary (9th edition) the expression 'Time Value' has been
defined to mean "the price associated with the length of time that an investor
must wait until an investment matures or the related income is earned". In both
the cases, the inflows and outflows are distanced by time and there is a
compensation for time value of money. It is significant to notice that in order to
satisfy the requirement of this provision, the financial transaction should be in
the nature of debt and no equity has been implied by the opening words of
Section 5(8) of the IBC. It is true that there are complex financial instruments
which may not provide a happy situation to decipher the true nature and
meaning of a transaction. It is pertinent to point out that the concept 'Financial
Debt' as envisaged under Section 5(8) of the IBC is distinctly different than the
one prevalent in England as provided in its Insolvency Act, 1986 and the 'Rules'
framed thereunder. It appears that in England there is no exclusive element of
disbursement of debt laced with the consideration for the time value of money.
However, forward sale or purchase agreement as contemplated by Section-5
(8)(f) may or may not be regarded as a financial transaction. A forward contract
to sell product at the end of a specified period is not a financial contract. It is
essentially a contract for sale of specified goods. It is true that some time
financial transactions seemingly restructured as sale and repurchase. Any
repurchase and reverse repo transaction are sometimes used as devices for
raising money. In a transaction of this nature an entity may require liquidity
against an asset and the financer in return sell it back by way of a forward
contract. The difference between the two prices would imply the rate of return to
the financer. (See Taxman's Law Relating to IBC, 2016 by Vinod Kothari &
Sikha Bansal).”
29. For coming within the definition of ‘Financial Debt’ as defined under sub-section (8) of Section
5, the Claimant is required to show that (i) there is a debt alongwith interest, if any, which has been
disbursed and (ii) such disbursement has been made against the ‘consideration for the time value of
money’. Thereby, if the Claimant claims to be ‘Financial Creditor’ he will have to show that debt is due
which he has disbursed against the ‘consideration for the time value of money’ and that the borrower has
raised the amount directly or through other modes like credit facility or its de-materialised equivalent,
1084
by Hon’ble NCLAT
note purchase facility or the issue of bonds, notes, debentures, loan stock or any other similar instrument.
The amount of any liability in respect of any lease or hire purchase contract which is deemed as a finance
or capital lease under the Indian Accounting Standards or such other accounting standards can also be
referred to by the Creditor to claim that there is a ‘financial debt’ due to him which has been disbursed
against the ‘consideration for the time value of money’.
To show that there is a debt due which was disbursed against the ‘consideration for the time value
of money’, it is not necessary to show that an amount has been disbursed to the ‘Corporate Debtor’. A
person can show that the disbursement has been made against the ‘consideration for the time value of
money’ through any instrument. For example, for any derivative transaction entered into in connection
with protection against or benefit from fluctuation in any rate or price and for calculating the value of any
derivative transaction for which only the market value of such transaction shall be taken into account, it is
not necessary to show that amount has been disbursed. The disbursement against the ‘consideration for
the time value of money’ is the main factor.
30. In the present case, the Appellant has failed to bring on record any evidence to suggest that she
disbursed the money has been made against ‘consideration for the time value of money’. There is nothing
on the record to suggest that the Respondents borrowed the money. In absence of such evidence, the
Appellant cannot claim that the loan if any given by the Appellant comes within the meaning of ‘financial
debt’ in terms of sub-section (8)(a) of Section 5 of the ‘I&B Code’.
31. The Appellant has also failed to show that the amount has been raised by Respondent under any
other transactions, such as sale or purchase agreement, having commercial effect of borrowing. In
absence of any such evidence, the Appellant cannot claim that loan amount, if any given to the
Respondent comes within the meaning of ‘financial debt’, as defined under sub-section (8)(f) of Section 5
of the ‘I&B Code’.
32. In view of aforesaid findings, we hold that the Adjudicating Authority rightly held that the
Appellant is not a ‘Financial Creditor’.
33. In view of the aforesaid findings, no interference is called for in the impugned order. There is no
merit in this appeal. It is accordingly dismissed. However, in the facts and circumstances of the case,
1085
by Hon’ble NCLAT
NEW DELHI
C.P. (I.B.) No. 237/NCLAT/2017
Applicant: Mintri Tea Company Limited

Bhavesh Mintri
Purnima Mintri
Shiwaani Mintri
Vs.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Aanchal Tikmani, Learned Advocate
For Respondents/Defendant: Mr. Rajesh Kumar Gautam & Ms. Khushboo Agarwal, Learned Advocate
ORDER
The Appellant(s) Mintri Tea Company Limited (Corporate Debtor) along with others
(shareholders) have preferred this appeal against the order dated 20th September, 2017 passed by the
Adjudicating Authority (National Company Law Tribunal, Kolkata Bench, Kolkata) whereby and
whereunder the application preferred by Respondent- Punjab National Bank (Operational Creditor) under
Section 7 of the Insolvency & Bankruptcy Code, 2016 (hereinafter referred to as I&B Code) r/w Rule 4 of
Insolvency and Bankruptcy Code, (Application to Adjudicating Authority) Rules, 2016, has been
admitted, order of Moratorium has been passed, Interim Resolution Professional has been appointed with
directions as mentioned therein.
2. The case of the Appellant(s) is that the ‘Corporate Debtor’ having failed to pay the debt amount,
‘Financial Creditor’ initiated notice under sub Section (2) of Section 3 of SARFAESI Act, 2002
demanding payment of Rs. 8,92,68,513.80 (Rupees Eight Crores, Ninety-two Lakhs, Sixty-eight
Thousand Five Hundred Thirteen and paise Eighty only) within 60 days.
3. In reply to the notice, the Appellant(s) while pointing out the illegality being contrary to the
provisions of Section 31 of SARFAESI Act, approached the ‘Financial Creditor’, who informed that the
1086
by Hon’ble NCLAT
notice was issued by mistake and were ready to restructure the loan account of the 1st Applicant.
Accordingly, on 25th September, 2013 restructuring of the loan amount of the 1st Appellant took place.
4. Learned Counsel for the Appellant(s) submitted that in spite of same, ‘Financial Creditor’
suddenly moved an application under Section 7 of I & B Code, 2016 alleging default of Rs.
10,37,69,840.06 (Rupees Ten Crores, Thirty-seven Lakhs, Sixty-nine Thousands, Eight Hundreds Forty
and paise six only) on the 1st Appellant. No explanation has been provided in the said application for
arriving at such figure.
5. It was submitted that 5 (five) months earlier the amount was shown to be Rs. 7,62,64,904.80
(Rupees Seven Crores, Sixty-two Lakhs, Sixty-four thousands Nine hundreds four paise eighty only) as
on 6th February, 2017 and merely after five months, higher amount of Rs. 10,37,69,840.06 (Rupees Ten
Crores, Thirty-seven Lakhs, Sixty-nine Thousands, Eight Hundreds Forty and paise six only) have been
shown to be due.
6. It was submitted that there was a mismatch between amounts demanded and shown in the petition
under Section 7 of I & B Code, 2016 and thereby as mismatching statements have been given, the
application was fit to be rejected.
7. Learned Counsel for the Respondent have disputed the aforesaid plea taken by the Appellant(s).
Learned Counsel for the ‘Financial Creditor’ submitted that the Term Loan and other loans were properly
calculated after calculating the interest upto the date of filing of the application under Section 7 of the
I&B Code.
8. Learned Counsel for the Appellant(s) provided the break-up of the amount claimed to suggest that
there was a mismatching of amount but were not inclined to decide such question whether there was
mismatch in the amount or not for the reasons stated below.
Section 7 of I & B Code fell for consideration of Hon’ble Supreme Court in “Innovative
Industries Ltd. Vs. ICICI Bank” – 2017 SCC online SC 1025. In the said case, the Hon’ble Supreme
Court held:
1. .........
“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
1087
by Hon’ble NCLAT
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 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.” ...
“30. On the other hand, as we have seen, in the case of a corporate debtor who
that the debt is disputed so long as the debt is “due” i.e payable unless
and not otherwise.” ....
1088
by Hon’ble NCLAT
9. In the present case, it is not disputed that there is a debt due and default has accrued. The
Appellant(s), including the Corporate Debtor, has not claimed that default has not occurred in the sense
that the “debt” includes disputed claim but not due. It is also not the case of the Appellant(s) that the debt
is not due nor payable in law or in fact. The amount of debt, which is the claim amount will always vary
with the default of debt amount which may be part of the claim and total amount and may include interest.
10. In the present case as we find that the Respondent on calculation of interest have shown the
amount due and default taken place, such records placed before the Adjudicating Authority and record
being complete if the application under Section 7 of the I & B Code has been entertained as admitted, no
interference is called for. We find no merit in this appeal. It is accordingly dismissed. However, in the
facts and circumstances of the case, there shall be no orders to cost.
1089
by Hon’ble NCLAT
NEW DELHI
C.P. (I.B.) No. 269/NCLAT/2017
Applicant: Vimal Organics Limited

Vs.
Respondent: Anya Polytech & Fertilizers Pvt. Ltd.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Nesar Ahmad, PCS & Mr. Ahsan Ahmad, Mr. Rohit Chaudhary &
Mr. S.K.Aggarwal, Learned Advocate
For Respondents/Defendant: Mr. Nagesh P., & Mr. Om Prakash, Learned Advocate
ORDER
The appellant –‘Vimal Organics Limited’ reached an agreement with respondent – ‘M/s. Anya
Polytech and Fertilizers Pvt. Ltd.’ (Corporate Debtor) on 3rd May, 2014 for supply of Buyer Zinc
Sulphate Manufacturing Plant (50MTPD) complete with machinery. It was alleged that the Corporate
Debtor did not pay any amount for the invoices raised by the Operational Creditor against the Corporate
Debtor.
2. After demand notice issued under sub-section (1) of Section 8 of the Insolvency and Bankruptcy
Code, 2016 (hereinafter referred to as the ‘I&B Code’), the respondent having not paid the amount, the
Operational Creditor preferred an application under Section 9 I & B Code, which has been rejected by the
Adjudicating Authority (National Company Law Tribunal) New Delhi by the impugned order dated 10th
October, 2017 in case No. (IB)-370(ND)/2017.
3. Learned counsel appearing on behalf of the appellant submitted that there is no dispute in
existence on the date of filing of the application, whatever the dispute raised by the respondent relates to
payment of tax which cannot be treated to be an ‘existence of dispute’ within the meaning of subsection
(6) of Section 5 read with Section 9 of the I & B Code.
4. Per contra, according to the learned counsel for the Corporate Debtor there is an ‘existence of
dispute’. Both the parties relied on the evidence on record in support of their claim.
1090
by Hon’ble NCLAT
5. On hearing the learned counsel for the parties and perusal of the record, the following facts
emerges:
The agreement was reached between the ‘Operational Creditor’ and the ‘Corporate Debtor’ on
3rd May, 2014 wherein the ‘Operational Creditor’ undertook to supply the Corporate Debtor ‘Zinc
Sulphate Monohydrate’ (50 MTPD). In terms of said agreement the ‘Operational Creditor’ after supply of
goods was required to provide services to the Corporate Debtor in the matter of engineering, supervision
and erection and commissioning the project. The price for “supply of goods, and for supervision, erection
and commissioning” have been mentioned at Article 3. The ‘terms and conditions of the payment’ for
such supply and services has been mentioned at Article 4.1.
6. It is not in dispute that the appellant (Operational Creditor) supply i.e. ‘Zinc Sulphate
Monohydrate’ (50 MTPD) to the Corporate Debtor but it appears that after supply of goods
commissioning was not made properly which was detected during the trial run. By email dated 25th
February, 2016, the respondent Corporate Debtor intimated the Operational Creditor that the Corporate
Debtor need support and cooperation of the Operational Creditor and required to visit their site to start
trial run of zinc plant. The Corporate Debtor also intimated that the Managing Director of the Corporate
Debtor is anxious and impatient due to the non-starting of the trial run due to which production has been
hampered. By a subsequent letter dated 31st May, 2016, the Corporate Debtor intimated the Operational
Creditor that the efforts of team of engineers etc. could not achieve production of 40.0 MT/per day, due to
design by the Operational Creditor. Every day there is a failure either in equipment tripping procedure or
for any other reason. It was specifically mentioned that due to non-performance on the part of the
‘Operational Creditor’, the ‘Corporate Debtor’ were unable to supply the quantity of zinc. The
‘Operational Creditor’ was also informed that the ‘Corporate Debtor’ will work out on actual damage on
this account of non-performance on the part of the Operational Creditor.
7. By subsequent letter dated 18th June, 2016, it was informed that the ‘Operational Creditor’ has
not completed trial run of the plant successfully and remained unsuccessful. Therein, it has also been
mentioned that 15 items have also remained undelivered and details of which has been shown in the letter
dated 18th June, 2016.
8. There is nothing on record to show that the defects were removed thereafter. For the said reason,
in reply to the demand notice issued by Operational Creditor under sub-section (1) of Section 8 the
Corporate Debtor by reply dated 20th July, 2017 brought the aforesaid facts to the notice of the
Operational Creditor.
9. In the present case as we find that there is an ‘existence of dispute’, we hold that the Adjudicating
Authority rightly dismissed the application preferred by the appellants under Section 9 of the I & B Code.
In absence of any merit, the appeal is dismissed. No cost.
1091
Order Passed Under Sec 7
Hon’ble NCLT Principal Bench
By Hon’ble NCLT Principal Bench
1093
IN THE NATIONAL COMPANY LAW TRIBUNAL
PRINCIPAL BENCH
C.P. (I.B.) No. 03/7/NCLT/PB/2017
Applicant: Nikhil Mehta & Sons (HUE) & ors

VS
Respondent: M/s AMR Infrastructures Ltd.
Judges/Coram:
Hon'ble Sh. M. M. Kumar Member (J)
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Varun Kathuria, Learned Advocate
ORDER
Hon'ble Sh. M.M. Kumar Member (J)
1. This is an application filed by four applicants for triggering insolvency process by invoking
Section (7) of the Insolvency and Bankruptcy Code, 2016 (for brevity 'IBC') read with Rule-4 and Rule-9
(1) of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 (for brevity
'IBR'). The application is directed against M/s. AMR Infrastructure Limited. The details of Applicants as
disclosed in the application is as follows: Applicant No.1 is a HUF with Shri Nikhil Mehta as its Karta,
Applicant No.2 is the wife of Shri Nikhil Mehta who himself is Applicant No.3. Applicant No.4 is Mrs.
Praveen Mehta, mother of Applicant No.3. The application has been filed through Power of Attorney
holder Shri Suresh Mehta, who is father of Applicant 3 and husband of Applicant No.4. He is also
resident of Greater Kailash-I, New Delhi.
2. It is appropriate to mention that all the Applicants claim themselves to be the "Financial
Creditors' within the meaning of the term used in Section-7 of 'IBC'. In order to put the controversy in its
proper perspective few facts may first be noticed. In accordance with the averments made in the
application, the first three Applicants are resident of United States of America and the Applicant No.4,
mother of Applicant No.3 resides in Delhi. Respondent viz. M/s. AMR Infrastructure is a Registered
Company having its Head Office in Delhi. It is in the real estate business of constructing, promoting and
1094
developing commercial and residential properties, office spaces etc. A true typed copy of its
Memorandum of Association has been placed on record (Annexure-A).
3. Applicants No.3 and 4 booked two Office spaces measuring 1000 sq.ft. in their respective names
under the project known as "Kessel-I — Valley" and executed Memorandum of Understanding dated
12.07.2007. It is alleged that the Memorandum of Understanding was lost by the Respondent with a mala
fide intention and some ulterior motive. In its place, a new Memorandum of Understanding was sent to
the petitioners for signature which had terms and conditions different than the one originally agreed
between the parties. As a consequence, the applicants refused to sign the new Memorandum of
Understanding and demanded refund of the amount paid by them to the Respondent. The applicants then
substituted their booking in the project called "I-Mall" which had shops and other commercial units. It
required further investment to purchase a unit in the "I-Mall" project. Accordingly, a fresh Memorandum
of Understanding dated 17.10.2012 was executed and unit No.E-06 measuring about 1101 sq.ft. was
allotted to the applicant in the project 'I-Mall'. The total price of the unit was Rs.39,57,400/- and a sum of
Rs.39,21,300/- was paid by the applicants to Respondent on 17.10.2012 at the time of execution of the
Memorandum of Understanding. The balance amount of Rs.36,100/- was to be paid by the applicants 3 &
4 at the time of possession of the aforesaid unit. According to the terms of Memorandum of
Understanding, the Respondents were required to build and deliver possession of the unit within two
years from the date of execution of the MOU. The Memorandum of Understanding, however, stipulated
payment of Rs.82,214/- per month as its "Assured Returns" with effect from 30.10.2012 till the
possession of the unit was delivered to the applicant.
4. Likewise applicants No.2 and 3 also booked a shop bearing No.E-47 in the "I-
Mall" project measuring 1453.432 sq.ft. super area for a total consideration of Rs.46,67,402/-. An amount
of Rs.36,50,000/- was paid by them at the time of booking. The remaining amount of Rs.10,17,402/- was
to be paid by them at the time of taking possession. A Memorandum of Understanding dated 12.04.2008
was executed between the parties with various terms and conditions of the Sale/Allotment. The
Respondent were to complete the construction by December 2009. The stipulation in the MOU required
the Respondent to pay the applicants No. 2 and 3, a sum of Rs.99,600/- each month as an amount of
"Assured Returns" with effect from April 2008 till the possession of shop was delivered to them. It
appears that the applicants had agreed for payment of Assured Returns from January 2009 and in return
Respondent committed itself to make the payment of Assured Returns for the period of 9 months to
applicants 2 and 3 in future returns or adjust the total amount at the time of possession. It is pleaded by
the Respondent that from January 2009 till March 2010, the Respondent continued making payment to
1095
the applicants 2 and 3 for an amount of Rs.88,315/-, whereas it was actually supposed to pay an amount
Rs.99,6001-. However, the mistake was rectified and the Respondent started paying to the applicants the
agreed amount from April 2010. It was further agreed by the Respondent to pay the difference of amount
of Rs.19,875/- in the near future.
5. Applicant No.1 also booked a fully-furnished residential flat measuring 550 sq.ft. on the 4th Floor
for a consideration amount of Rs.7,24,000/-. A sum of Rs.5 80,000/- was paid by the Applicant No.1 to
the Respondent at the time of booking and the remaining amount of Rs.1,44,000/- was to be paid at the
time of delivery of possession which included Club charges, EFC charges, EEC charges and IFMS
charges. A Memorandum of Understanding was executed between the parties on 20.08.2009 with detailed
terms and conditions. According to the terms of the MOU, construction of the fully-furnished flat was to
be completed on or before July 2011. Before the offer of possession, a sum of Rs.12,000/- as Assured
Returns each month was required to be made with effect from August 2009.
6. After the execution of various Memorandum of Understandings, the Respondent started paying
the monthly "Assured Returns" to the applicants although erratically. It is alleged that the cheques issued
by the Respondent was dishonoured for the reasons, inter alia, of insufficient funds. The last cheque
issued for Assured Returns credited in the account of the Applicant No.1, Applicant No.2 and 3 for their
respective unit was on 11.01.2014 in respect of the month of December 2013. In respect of the Applicant
No.3 and 4, it was credited in their account on 26.07.2014. It was actually for the month of March 2014.
Thereafter no cheque for the Assured monthly Return has been issued by the Respondent despite repeated
requests. None of the project of any of the Applicant has been completed by offering possession. It is
alleged that many other like the applicants have been duped to invest their hard-earned money in many
projects belonging to the Respondent. It is alleged that a number of persons have initiated winding up
proceedings against the Respondent Company which are pending in the High Court of Delhi, and are
listed for 28.03.2017. A true copy of Order dated 30.05.2016 passed by the Hon'ble High Court Delhi has
been placed on record (Annexure-B).
7. The Applicant issued 3 legal notices on 13.12.2016 under section 433(e) and 434 of the
Companies Act, 1956 demanding different amounts being the amount of monthly "Assured Returns" due
as per terms of MOUs and payable to the Applicant No.1, Applicant No.2 and 3; and Applicant No.3 and
4 respectively for their three units. It is asserted that the aforesaid amount is an admitted debt by
Respondent. According to the Applicants, the Respondent is unable to meet its liability as is evident from
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the non-payment of dues. Therefore the instant application has been filed for triggering the corporate
insolvency resolution process under Section 7 of the Act.
8. The matter came up for hearing on 19.1.2017 and we posted the same for hearing today because
no one had put in appearance on behalf of the Respondent. Learned Counsel for the Applicants have
shown us the tracking report which reveal that a copy of the application was delivered to the Respondent
on 17.01.2017.
9. We have heard learned counsel at some length. We confronted learned counsel for the Applicants
with a query as to how the Applicants would be covered by the expression 'Financial Creditor' and the
expression 'Financial Debt within the meaning of the term used in Section 7 and Section 5 (7) & (8) of the
IBC. According to the learned counsel, the default in payment of the amount of "Assured Returns"
payable by the Respondent would be sufficient to satisfy the requirement of Section 7 read with Section 5
(7) and (8) of the IBC.
10. In order to find out as to whether the Applicant answers the description of "Financial Creditor"
and "Financial Debt' in terms of the aforesaid provision of the Act, it would be profitable to read the
provisions of Sections 5 (7) & (8) and Section 7 of IBC which are set out below:
"5. Definitions: In this Part, unless the context otherwise requires,-
7. "financial creditor" means any person to whom a financial debt is owed and includes a person to
whom such debts has been legally assigned or transferred to;
8."financial debt" means a debt along with interest, if any, which is disbursed against
the consideration for the time value of money and includes-

(b) any amount raised by acceptance under any acceptance credit facility or its dematerialised
equivalent ;
(c) any amount raised pursuant to any note purchase facility or the issue of bonds, notes, debentures,
loan stock or any similar instrument;
finance or capital lease under the Indian Accounting Standards or such other accounting standards
as may be prescribed;
1097
(e) receivables sold or discounted other than any receivables sold on non-recourse basis;
(f) any amount raised under any other transaction including any forward sale or purchase agreement,
(g) any derivative transaction entered into in connection with protection against or benefit from
fluctuation in any rate or price and for calculating the value of any derivative transaction, only the
market value of such transaction shall be taken into account;
(h) any counter — indemnity obligation in respect of a guarantee, indemnity, bond, documentary
letter of credit or any other instrument issued by a bank or financial institution;
(i) the amount of any liability in respect of any of the guarantee or indemnity or any of the items
referred to in sub-clauses (a) to (h) of this clause;
7. Initiation of corporate insolvency resolution process by financial creditor —
1) A financial creditor either by itself or jointly with other financial creditors may file an application
for initiating corporate insolvency resolution process against a corporate debtor before the
Adjudicating Authority when a default has occurred. Explanation.-For the purposes of this sub-
section, a default includes a default in respect of a financial debt owed not only to the applicant
financial creditor but to any other financial creditor of the corporate debtor.
2) The financial creditor shall make an application under sub-section (1) in such form and manner
3) The financial creditor shall, along with the application furnish--
(c) any other information as may be specified by the Board
11. From a bare perusal of Section 7 of the IBC, it is patent that the insolvency
process can be triggered by a "Financial Creditor" individually or jointly against a corporate debtor when
default has occurred. The first question arises for consideration is as to who is a 'Financial Creditor'. In
order to ascertain the meaning of that expression we have to examine its definition as provided by Section
5 which is applicable to Part II. We have already extracted the provisions of Sections 5 (7) and 5 (8) of
the IBC which are relevant to the issue raised. Section 5 (7) of IBC defines the expression "Financial
Creditor" and Section 5 (8) of IBC defines the expression "Financial debt" which has been used in Section
5 (7) of IBC.
1098
12. A perusal of definition of expression 'Financial Creditor' would show that it refers to a person to
whom a Financial debt is owed and includes even a person to whom such debt has been legally assigned
or transferred to. In order to understand the expression 'Financial Creditor', the requirements of expression
'financial debt' have to be satisfied which is defined in Section 5(8) of the IBC. The opening words of the
definition clause would indicate that a financial debt is a debt along with interest which is disbursed
against the consideration for the time value of money and it may include any of the events enumerated in
sub-clauses (a) to (i). Therefore the first essential requirement of financial debt has to be met viz. that the
debt is disbursed against the consideration for the time value of money and which may include the events
enumerated in various sub-clauses. A Financial Creditor is a person who has right to a financial debt. The
key feature of financial transaction as postulated by section 5(8) is its consideration for time value of
money. In other words, the legislature has included such financial transactions in the definition of
`Financial debt' which are usually for a sum of money received today to be paid for over a period of time
in a single or series of payments in future. It may also be a sum of money invested today to be repaid over
a period of time in a single or series of installments to be paid in future. In Black's Law Dictionary (9th
edition) the expression 'Time Value' has been defined to mean "the price associated with the length of
time that an investor must wait until an investment matures or the related income is earned". In both the
cases, the inflows and outflows are distanced by time and there is a compensation for time value of
money. It is significant to notice that in order to satisfy the requirement of this provision, the financial
transaction should be in the nature of debt and no equity has been implied by the opening words of
Section 5(8) of the IBC. It is true that there are complex financial instruments which may not provide a
happy situation to decipher the true nature and meaning of a transaction. It is pertinent to point out that
the concept 'Financial Debt' as envisaged under Section 5(8) of the IBC is distinctly different than the one
prevalent in England as provided in its Insolvency Act, 1986 and the 'Rules' framed thereunder. It appears
that in England there is no exclusive element of disbursement of debt laced with the consideration for the
time value of money. However, forward sale or purchase agreement as contemplated by Section-5 (8)(f)
may or may not be regarded as a financial transaction. A forward contract to sell product at the end of a
specified period is not a financial contract. It is essentially a contract for sale of specified goods. It is true
that some time financial transactions seemingly restructured as sale and repurchase. Any repurchase and
reverse repo transaction are sometimes used as devices for raising money. In a transaction of this nature
an entity may require liquidity against an asset and the financer in return sell it back by way of a forward
contract. The difference between the two prices would imply the rate of return to the financer. (See
Taxman's Law Relating to IBC, 2016 by Vinod Kothari & Sikha Bansal) When we examine the nature of
transactions in the present case, we find that it is a pure and simple agreement of sale or purchase of a
piece of property. The agreement to sell a flat or office space etc. Merely because some "assured amount"
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of return has been promised and it stands breached, such a transaction would not acquire the status of a
'financial debt' as the transaction does not have consideration for the time value of money, which is a
substantive ingredient to be satisfied for fulfilling requirements of the expression 'Financial Debt'.
13. Essentially in the case in hand 'Assured Returns' is associated with the delivery of possession of
the aforementioned properties and has got nothing to do with the requirement of sub-section(8) of section
5. It is the consideration for the time value of money which is mercifully missing in the transaction in
hand. The classical transaction which would cover the definition of financial debts is illustrated in sub-
clause (a) of sub-section (8) of Section-5 i.e. the money borrowed against the payment of interest.
Learned Counsel of Applicants has not been able to show from any material on record or otherwise that it
is a financial transaction in which a debt has been disbursed against the consideration for the time value of
money and he being the Financial Creditor is entitled to trigger the insolvency process against the
Respondent in accordance with Section 7 of the IBC.
14. Even otherwise the present petition would not be maintainable as many winding up petitions have
been filed before Hon'ble Delhi High Court being Company Petition No.477 of 2014, Company Petition
Nos. 689,691,692,693, 694, 695, 700, and 722 of 2015 along with CP No.238 and 244 of 2016. Even the
Official Liquidator has been appointed as a provisional liquidator although the matter is presently pending
before the Appellate Bench with interim directions.
15. As a sequel to the above discussions, we are unable to persuade ourselves to accept that the
applicants are covered by the expression "Financial Creditor" in term. The arrears of "assured returns"
would also not be covered by the expression `financial debt'. Therefore the applicants do not answer the
description of Section 7 read with Section 5(7) & 5(8) of IBC. The application is accordingly dismissed.
The remedy of the Applicant may lie elsewhere.
16. We make it clear before parting that any observations made in this order shall not be construed as
an expression of opinion on the merit of the controversy as we have refrained from entertaining the
application at the initial stage itself when the Respondents have not entered appearance and are not
present before us. Therefore the right of the Applicants before any other forum shall not be prejudiced on
account of dismissal of instant application.
1100
PRINCIPAL BENCH
C.P. (I.B.) No. 22/7/NCLT/PB/2017
Applicant: Annapurna Infrastructure EM. Ltd. & Ors.

VS
Respondent: Soril Infra Resources Ltd.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Chetan Sharma, Mr. Abhishek Swaroop & Mr. Abhishek Shivpuri,
Learned Advocates
For Respondents/Defendant: Mr. Vijay Nair, Mr. Prashant Jain, Ms. Sanyogita Jain, Ms.Arpana
Malhotra and Mr. P. R. Gupta, Learned Advocates
ORDER
1. M/s Annapurna Infrastructure Pvt. Ltd. & Ors — applicants (for brevity 'the applicants) have
invoked the provision of Section 9 of Insolvency and Bankruptcy Code 2016 (for brevity the Code') with
a prayer to trigger Insolvency Process against M/s SORIL Infra Resources Limited — Respondent (for
brevity the respondent). The applicants have made the following prayers:
1) To admit the application and pass an order for initiating the Corporate Insolvency Resolution
Process under section 9 of the Insolvency and Bankruptcy Code 2016;
2) To appoint an interim resolution professional in terms of section 16 of the Code;
3) To cause a Public announcement of the initiation of Corporate Insolvency Resolution Process and
calling for submission of claims under section 15 of the Code; and
4) To declare a moratorium in terms of section 14 of the Code.
2. In order to put the controversy in its proper perspective it would first be necessary to notice few
material facts. The applicants have some claims against the Respondent and in pursuance of the order
passed by Hon'ble High Court of Delhi Justice (Dr.) Mukundakam Sharma (Retd.) was appointed as Sole
Arbitrator to adjudicate all disputes arising out of the lease deed dated 23.11.2005 between the applicants
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and respondents. It is pertinent to mention that respondent have changed their name and is now known as
M/s SORIL Infra Resources Limited-Respondent. The applicants claimed that applicants are 'Operational
Creditor' and the Respondent is a 'Corporate Debtor' within the meaning of code.
3. The arbitrator passed an award on 9.9.2016 in favour of the applicants granting the following
reliefs:-
a) Rs. 2,67,52,283/- on account of rend from 1.4.2008 upto 22.3.2010 along with interest @ 12 %
per annum w.e.f. 23.3.2010 upto the date of the Award.
b) Rs.1,11,56,145/- on account of damages equivalent to rend for a period of 6 months from
22.3.2010.
c) Future interest © 12% per annum on the amounts, as calculated above, from the date of the award
till the date of realization.
4. The Respondent then challenged the award u/s 34 of the Arbitration and Conciliation Act, 1996
(for brevity the 'Arbitration Act') with a prayer to set aside the award. However the application was
dismissed on 19.12.2016. As a consequence each of the applicants issued Demand Notice on 13.1.2017
under section 8 of the Code. In response to the Demand Notice Respondent filed reply on 27.1.2017. It is
conceded by the applicants that in the reply sent by Respondent the existence of Òperational Debt' has
been disputed and it also stated that an appeal being numbered as FAO(OS)(COMM) 20 of 2017 has been
filed under section 37 of the Arbitration Act against the order dated 19.12.2016 passed by learned single
Judge while dismissing the appeal under section 34 of the Arbitration Act. It has also been pointed out
that execution proceedings to recover the amount due under the award dated 9.9.2016 have also been
initiated and are pending consideration before Hon'ble Delhi High Court. it is thus evident that the dispute
has arisen on account of payment of rent and interest/damages on the rental amount.
5. Mr. Vijay Nair learned counsel for the Petitioner has vehemently argued that the applicant has to
be regarded as a 'Operational Creditor' within the meaning of section 9 read with section 5(20) and 5(21)
of the Code. A reference has also been invited to the definition of words the 'debt' and 'default' as defined
in section 3(11) and section 3(12) of the Code. It has been submitted that the Demand Notice dated
13.1.2017 was served on 16.1.2017. According to the learned counsel on the date of service of Demand
Notice the award of the Arbitrator had attained finality as the application u/s 34 of the Arbitration Act was
dismissed on 19.12.2016 and no appeal u/s 37 was filed or pending. According to the learned counsel
filing of appeal subsequent on 20.1.2017 would be immaterial.
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6. In order to buttress his stand that applicant is an 'Operational Creditor' learned counsel has placed
reliance on a portion of para 3.2.2 of the report of the Bankruptcy Law Reforms Committee Volume I:
Rationale and Design and has argued that the report clearly brings out that the obligation to pay rent is
certainly cover by the definition of expression 'Operational Creditors'. According to the learned counsel
the expression 'Operational Creditor' used in section 5(20) and 5(21) of the Code must be construed to
include the obligation to pay rent to the applicant as an 'Operational Creditor'. According to the learned
counsel the definition of 'Operational Creditor' as adopted in section 5(20) of the Code is not exhaustive
but it is illustrative as it is evident from the use of word Include'. Mr. Nair has submitted that it is well
settled principle of law that wherever the expression ìnclude' is used to define an expression then it has
room to imply many other things as the definition is not exclusive.
7. Mr. Nair has then submitted that application u/s 34 of the Arbitration Act cannot be regarded as
continuation of arbitration proceeding because the arbitrator is the final judge of the facts and the High
Court while hearing objections u/s 34 is not expected to scrutinize the award as an appellate forum. In
support of his submissions learned counsel has placed reliance on para 30 of a judgment of Hon'ble High
Court of Delhi in the case of 1141.5 Raj Kishan & Company v. National Thermal Power Corporation
2012VIIIAD(Delhi)53. It has been pointed out that in some-what similar circumstances a Division Bench
of Hon'ble High Court of Madras in the case of N. Poongodi and Anr v. Tata Finance Limited 2005(4)
CTC 577 has rejected the objections to the issuance of the insolvency notice and rejected the objections as
is evident from the perusal of para 7 of judgment.
8. Another submission made by Mr. Nair is that expression 'arbitration proceedings' used in section
8(2)(a) of the 'Code' cannot be deemed to be pending because under section 21 the Arbitration Act
arbitration proceedings commence, on the date on which a request for referring such a dispute to
arbitration is received by the respondent. The 'arbitration proceedings' and it comes to an end in terms of
section 32 on the date of announcing the final award or by an order of the arbitral Tribunal in accordance
with sub section (2) of section 32 of the Arbitration Act. According to the learned counsel there are no
arbitral proceeding pending in accordance with the provision of section 32 which have come to an end on
9.9.2016. The proceeding could be considered pending between the period contemplated by section 21
and section 32 of the Arbitration Act. In support of his submission learned counsel has placed reliance on
the observations made in para 10 of the judgement rendered by Hon'ble High Court of Bombay in the
case of Rendezvous sports World v. Board of Control for Cricket in India 2016 SCC Online Born 6064
and argued that the term "arbitral proceedings" would not include post-award proceedings i.e.
proceedings for enforcement of the arbitral award or proceedings to challenge the arbitral award, which
arise only after the award is made. Therefore the pendency of appeal u/s 37 of the Arbitration Act and the
1103
execution proceeding in any case would not constitute a Bar in triggering the insolvency process in
accordance with the provision of section 9 o the Code.
9. Mr. Nair has also submitted that there is well known yardstick applicable to test and ascertain
whether renting of property would be regarded as service or not. According to the learned counsel renting
a property for commercial purpose is certainly a service and has value for the service receiver. In that
regard reliance has been placed on para 22 of the Division Bench judgment rendered by the Punjab &
Haryana High Court in the case of 1141s Shubh Timb Steels Limited v. Union of India and Another
2011(1) ILR (Punjab & Haryana) 1008. Learned counsel has also placed reliance on the observations
made by Division Bench of Gujarat High Court in the case of Cinemax India Limited v. Union of India
2011 SCC online Guj 4584.
10. Mr. Nair further argued that pendency of appeal without any interim order would not constitute a
bar for initiation of execution of the award because the main purpose of the Arbitration Act has been to
provide a speedy remedy. In that regard learned counsel has placed reliance on the observations made in
para 7 of the Division Bench judgment rendered by the Hon'ble High Court of Delhi in the case of Decor
India Pvt. Ltd. v. National Building Consti. Corpon Ltd. 2007 (97) DRJ 428 (DB).
11. Mr. Chetan Sharma leaned counsel for the Respondent has made few preliminary submissions.
According to him instant petition u/s 9 of the Code per se is not maintainable because the Respondent
does not owe any 'Operational Debt' to the applicant. The applicant is not an 'operational creditor'.
Operational debt is clearly defined in section 5(21) of the Code. According to Mr. Sharma Ipso-facto an
Operational Debt arises only in respect of the claim of 'goods' and 'services'. The expression goods and
service include 'employment'.
12. Mr. Sharma maintains that it is clear from the bare reading of the statute, the applicant ipso-facto
and ipso-jure does not and cannot qualify to be by any stretch of imagination an Operational creditor by
any stretch of imagination as there is no operational Debt. Learned counsel has maintained that the 'debt'
is not arising under any law for the time being in force, as is the mandate of sub section 21 section 5 of
the Code and it would be attracted only when the said debt is payable to (i) Central Government; (ii) State
Government; and (iii) Local Authority.
13. According to the learned counsel sections 8, 9, 5(2), 5(21) must be construe in accordance to the
object of the Code as outlined in the long title. Learned counsel has maintained that any external aid for
construction of the provisions in the Code like the Committee report must be avoided because it was after
the report that the Parliament has passed the code. The Code as it stands must be construed strictly. In
1104
support of his submissions learned counsel has invited out attention to para 9 & 10 of the judgement
rendered in the case of Workmen of Dimakuchi Tea Estate v. Management of Dimakuchi Tea Estate AIR
1958 SC 353
14. Mr. Sharma has placed reliance on the judgement delivered by us in Sajive Kunwar v. AMR
infrastructure (IB-06(PB) 2017 decided on 16.2.2017) where it has been held that a person who claims to
be 'Operational Creditor' must show that he is covered by section 5(20) of the Code which defines the
expression 'Operational Creditor'. Such person is also required to satisfy the requirement of section 5(21)
by showing that his claim is in respect of provision of goods or services including employment or debt in
respect of repayment of dues arising under any law payable to the Centre/State Government to acquire
locus stanch and to file a petition u/s 9 of the Code. According to the learned counsel this judgment is in
terms against the applicant and the application is liable to be dismissed on that score alone.
15. Mr. Sharma then submitted that on 27.1.2017 the Respondent served a notice under section 8(2)
of the Code clearly pointing out that there is no default in terms of section 8(1) of the Code and has raised
the dispute with regard to any such claim. Once there is a dispute raised then the Insolvency Process
cannot be triggered in the face of section 8(2). Learned counsel has also pointed out that no affidavit in
pursuance of section 9(3)(b) has been filed and no notice has been given by the `Corporate Debtor'
relating to a dispute of unpaid 'Operational Debt'. It has been maintained that such an affidavit could not
have been filed in view of notice sent u/s 8(2) dated 27.1.2017 disclosing the detail of pendency of appeal
filed u/s 37 which came up for hearing on 30.1.2017. Therefore the application is liable to be rejected.
16. Mr. Sharma has also submitted that there is deliberate suppression of material facts as notice
dated 27.01.2017 disputing the demand raised by the applicant has not been disclosed and no disclosure
has been made with regard to execution of the proceeding as per the prescribed performa (form V).
Therefore on that score also the petition is liable to be dismissed. It has also been pointed out that sections
75 and 76 of the Code would also be attracted on account of non —disclosure. A reference has also been
made to the order dated 30.1.2017 passed by Division Bench of Hon'ble High Court of Delhi in which
appeal preferred by the Respondent under section 37 of the Arbitration Act. It has further been pointed
out that the execution proceedings for enforcement of award dated 9.9.2016 have also been filed which
are listed on 23.5.2017.
17. Mr. Sharma has pointed out that the initiation of Insolvency process has serious consequences
and if person like the petitioner has already availed a remedy of execution then the draconian Insolvency
Process should not be triggered which may bring a profit making corporate entity to a complete halt.
1105
According to the learned counsel it would result in delirious effect and a profit making corporate entity
may suffer in its reputation and irreparable loss.
18. It has further been pointed out that arbitration proceeding do not in terms come to an end on the
announcement of award which is to pass through the process of challenge u/s 34 and then u/s 37 of the
Arbitration Act as well as subject to any further proceedings before Hon'ble the Supreme Court. In
support of his submissions learned counsel has placed reliance on the observations made in para 10 by a
Division of Bombay High Court in the case of DSL Enterprises Pvt. Ltd. v. Mrs. N.C. Chandratre Income
tax Officer, TDS-I, Nasik & Ors. (manu1M1-11018712013) and has argued that award would attained
finality only after remedies available to a party are exhausted u/s 34 & 37 of the Arbitration Act or even
in further appeal to Hon'ble the Supreme Court. For the same proposition eliance has also been placed on
an another judgement of Bombay High Court rendered in the case of Rajendra N. Mehtra and Ors. v.
Prabhudas Liladhar P. Ltd. 2013(1) Mh. L.J. 532
19. Mr. Nair for the applicant in rebuttal has argued that there is no concealment and the factum of
dispute as raised by the Respondent in its reply, has been duly disclosed in para 4 of the brief synopsis.
Learned counsel has further pointed out that the factum of filing appeal uis 37 of the Arbitration Act has
also been disclosed in the list of dates and events and that there is no further obligation on the part of the
applicant to disclose any other fact.
20. Having heard the learned counsel for the parties and perusing the paper book with their able
assistance we proceed to take up the issues raised before us. It is a classical case where dispute between
the parties has already been subjected to arbitration proceedings which are yet to attain finality. The
expression 'dispute' has been defined in section 5(b) of the Code and it must be read with section 8(1) &
(2) thereof. It would thus be profitable to read the above mentioned provisions which are as under :-
Definition
5. In this Part, unless the context otherwise requires,—'
(6) "dispute" includes a suit or arbitration proceedings relating to—
(c) (c)the breach of a representation or warranty;
Insolvency resolution by operational creditor.
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8. (1) An operational creditor may, on the occurrence of a default, deliver a demand notice of unpaid
operational debtor copy of an invoice demanding payment of the amount involved in the default to the
the invoice mentioned in sub-section (1) bring to the notice of the operational creditor—
before the receipt of such notice or invoice in relation to such dispute; (b) the repayment of unpaid
operational debt--
0) by sending an attested copy of the record of electronic transfer of the

unpaid amount from the bank account of the corporate debtor; or
(ii) by sending an attested copy of record that the operational creditor has encashed a cheque issued by
Explanation.—For the purposes of this section, a "demand notice" means a notice served by an
operational creditor to the corporate debtor demanding repayment of the operational debt in respect of
which the default has occurred.
21. A co-joint perusal of the aforesaid provisions makes it clear that a corporate debtor has option
available under section 8(2) of the Code. The corporate debtor could either place on record material
disclosing the existence of a dispute or to pay the unpaid debt. According to section 5(b) of the Code the
expression dispute includes a suit or arbitration proceedings relating to (a) the existence of the amount
due; (b) the quality of goods or service or (c) the breach of representation or warranty. The definition of
the word 'dispute' is not exhaustive but is, in fact illustrative. In other words a 'corporate debtor' is not left
with the only option of showing the existence of dispute by way of a pending suit, arbitration or to show
the breach of representation or warranty. The corporate debtor would be well within his right to show that
'goods' and services were not supplied at all or the supply was far from satisfactory in case of demand
raised by an 'operational creditor'. Hence a corporate debtor would be well within his rights to reject the
demand on any sustainable grounds. It would therefore, depend on the facts and circumstances of each
case.
22. In the instant case an arbitral award has been announced on 9.9.2016 and the application for
setting aside the award filed under section 34 of the Arbitration Act has been rejected on 19.12.2016. It
has been mentioned by the respondent in its reply dated 27.01.2017 sent under section 8(2) of the Code to
1107
the notice issued under section 8(1) of the Code by the applicant that the debt is disputed and appeal
under section 37 of the Arbitration Act is pending. The reply dated 27.1.2017 reads as under:-
1. At the outset, kindly note that our client is disputing the existence of the òperational
debt' allegedly payable to you by our client. Our client is vigorously contesting the Award dated
9.9.2016 (Award) passed by Mr. Justice Mukundakam Sharma (Retd.), Sole Arbitrator, in
Arbitration Case No.3 of 2013, before the Hon'ble Delhi High Court.
2. As you are aware, our client had filed a petition under section 34 of the Arbitration and
Conciliation Act, 1996 (Act) bearing No. OMP (Comm.) No.570 of 2016, before the Hon'ble
Delhi High Court vide order dated 19.12.2016. Please note that our client has filed an appeal
against the said order under section 37 of the Act, bearing No.FA0(0S)(COMM) 20 of 2017, for
setting aside the order dated 19.12.206, and the same is presently pending adjudication before the
Hon'ble Court.
3. In view of the above, please note that no default has occurred in terms of section 8(1) of
the Code and, therefore, no process for Corporate Insolvency Resolution can be initiated at this
stage. Any action in this regard would be at your won cost, risk and consequences.
Kindly note that this reply is without prejudice to any other rights or remedies available to our client
under contract and in law."
23. A close examination of the aforesaid reply would show that the respondents have disputed the
existence of 'Operational Debt' by disclosing that its application under section 34 of the Arbitration Act
was dismissed and the appeal under section 37 of the Arbitration Act bearing No. FAO(OS)(COMM) 20
of 2017 was pending adjudication. It is also pertinent to mention that the applicant has filed a caveat for
issuance of notice to it before passing any order. Therefore the applicants are contesting the litigation
tooth nail before this forum. In this backdrop respondent has claimed no default within the meaning
section 8(1) read with section 3(12) of the Code is deemed to have occurred. It is also pertinent to notice
that execution proceedings for enforcement of the award have also been initiated and are pending for
consideration of the Hon'ble Delhi High Court on 12.5.2017.
24. In the face of the aforesaid facts we find that there is complete answer to the claim made by the
applicant in terms of section 8(2)(a) read with section 9(1) of the 'Code' which bars initiation of
insolvency process. It cannot be said that arbitration proceedings have come to an end merely on the
dismissal of application under section 34 of the Arbitration Act as sought to be canvassed on behalf of the
applicant. The proceedings are yet to attain finality as appeal under section 37 of the Arbitration Act is
1108
pending. On behalf of the respondents reliance has rightly been placed on the judgement of the Bombay
High Court rendered in the cases of DSL Enterprises Private Ltd. (DB) and Rajendra (SB) (Supra)
25. We have not been able to persuade ourselves to accept the submission advanced on behalf of the
applicant that 'arbitration proceedings' stand concluded by virtue of section 32 of the Arbitration Act. The
argument is wholly unsustainable once we take into account the provisions of section 33 ofthe Arbitration
Act itself. It provides for corrections and interpretation of award and even for additional award after the
award has been announced. As already observed section 34 and section 37 of the Arbitration Act provide
for setting aside of the award and the remedy of appeal. The appeal under section 37 of the Arbitration
Act is still pending. The judgements of Bombay High Court has been rightly relied upon by the learned
counsel for respondents.
26. The other judgment that no proceedings were pending on the date of issuance of demand notice in
terms of section 8(1) of the Code is equally falicious. Admittedly appeal under section 37 of the
Arbitration Act could be preferred within 30 days against an order passed under section 34 of the
Arbitration Act. Merely because no appeal was pending on 16.1.2017 when the respondent have time to
prefer the appeal would not entitle the applicant to invoke section 9 of the Code. If that view is taken then
extreme technicality would result in nullifying the remedy of appeal within 30 days provided by section
37 of the Arbitration Act. No reasonable person would take such a view. Thus the argument is wholly
devoid of merit and therefore we have no hesitation to reject the same.
27. We are further of the view that already proceedings for execution of the award have been
initiated. An effective remedy has been availed by the applicant. We have not been able to accept that a
party can invoke more than one remedy simultaneously. It is in fact against the fundamental principles of
judicial administration to allow a party to avail more than one remedies. Ordinarily only one remedy at
one time could be availed as is evident from the fundamental principles laid down in section10 CPC. It
would promote forum shopping which is wholly impermissible in law. For the aforesaid view we draw
support from the observations in paras 22,23 & 24 of the judgment of the Supreme Court rendered in the
case of Dr. Aloys Wobben and Another v. Yogesh Mehta & Ors. (2014) 15 SCC 360. Accepting the
aforesaid contention their lordships of the Supreme Court observed as under:-
"22. We do not have the slightest hesitation in accepting the above contention (fifth in the series of
contentions), that even though more than one remedies are available to the respondents in Section 64 of
the Patents Act, the word "or" used therein separating the different remedies provided therein, would
disentitle them, to avail of both the remedies, for the same purpose, simultaneously. On principle also,
this would be the correct legal position.
1109
23. Keeping in view the submissions advanced at the hands of the learned counsel for the appellants (as
have been noticed in the foregoing paragraphs), the question which arises for determination is, that
having chosen both the above remedies, which one of the two, should the respondents, be permitted to
pursue. The answer to the above query, will, if possible, have to be determined from the provisions of the
Patents Act itself In this behalf we may at the outset record, that learned counsel for the rival parties, did
not invite our attention to any provision from the Patents Act, which would provide a clear pointer, to the
course to be adopted. Whilst it was undoubtedly submitted, on the one hand, that the choice should fall in
favour of the superior forum. Details about the locus, in respect of other challenges have been narrated in
paragraph 16 hereinabove. We may in the passing record, that the determination of the "counter-claim"
would be with the superior forum, i.e., the jurisdictional High Court (Sections 64(1) and 104 of the
Patents Act). The above submission was sought to be countered, on the other hand, by pointing out, that
the opportunities provided by the legislature to assail the order(s) passed under the Patents Act, could not
be reduced. In this behalf, it was submitted, that the remedies provided by the legislature, where a
"revocation petition" is filed, were far in excess of the remedies, in case revocation was sought through a
"counter-claim". The legitimate inference derived from the former submission, was thus equally
legitimately, repudiated by the latter contention. Since no legitimate solution could emerge from the
provisions of the Patents Act, it would be essential, to rely 26 on known principles of law, to resolve the
issue. We shall therefore attempt to resolve the issue, on accepted principles of law.
24. A "counter-claim" for all intents and purposes, must be understood as a suit, filed by one who is
impleaded as a defendant. A "counter-claim" is essentially filed to obstruct the claim raised in a suit. A
"counter-claim" is tried jointly, with the suit filed by the plaintiff, and has the same effect as a cross-suit.
Therefore, for all intents and purposes a "counter-claim" is treated as a plaint, and is governed by the
rules applicable to plaints. The court trying a suit, as well as, the "counter-claim", has to pronounce its
judgment on the prayer(s) made in the suit, and also, those made in the "counterclaim". Since a "counter-
claim" is of the nature of an independent suit, a "counter-claim" cannot be allowed to proceed, where the
defendant has already instituted a suit against the plaintiff, on the same cause of action. he above
conclusion is drawn on the basis of the accepted principle of law crystallized in Section 10 of the Code of
Civil Procedure, 1908 (hereinafter referred to as, the CPC) read with Section 151 of the CPC. Both the
above provisions are being extracted hereunder:-
"10. Stay of suit. - No Court shall proceed with the trial of any suit in which the matter in issue is also
directly and substantially in issue in a previously instituted suit between the same parties, or between
parties under whom they or any of them claim litigating under the same title where such suit is pending in
the same or any other Court in India having jurisdiction to grant the relief claimed, or in any Court
1110
beyond the limits of India established or continued by the Central Government and having like
jurisdiction, or before the Supreme Court.
Explanation- The pendency of a suit in a foreign Court does not preclude the Courts in India from trying
a suit founded on the same cause of action. 27.
151. Saving of inherent powers of Court.- Nothing in this Code shall be deemed to limit or otherwise
affect the inherent power of the Court to make such orders as may be necessary for the ends of justice or
to prevent abuse of the process of the Court."
Therefore, where an issue is already pending adjudication between the same parties, in a Court having
jurisdiction to adjudicate upon the same, a subsequently instituted suit on the same issue between the
same parties, cannot be allowed to proceed. A similar question arises for consideration before this Court,
in the present controversy. If the respondents in their capacity as "any person interested", had filed a
"revocation petition" before the institution of an "infringement suit", they cannot be permitted to file a
"counter-claim" on the same cause of action. The natural conclusion in the above situation would be, the
validity of the grant of the patent would have to be determined in the "revocation petition". Therefore, in
the above situation, while the "revocation petition" will have to be permitted to be pursued, the "counter-
claim" cannot be permitted to be continued. Therefore, in the above eventuality, it is apparent that the
situation would be resolved, in the same manner as it would have been resolved in cross-suits filed by the
rival parties, before different jurisdictional courts. in our considered view, the above conclusion is
imperative for a harmonious interpretation of the relevant provisions of the patent act."
28. In view of the above we do not feel the necessity of expressing our views on the other issues
which are left open. Accordingly we hold that application does not warrant admission and the same is
dismissed with cost of Rs. 1,00,000/- (Rs. One Lac).
1111
PRINCIPAL BENCH
C.P. (I.B.) No. 55/7/NCLT/PB/2017

VS
Respondent: Athena Demwe Power Limited
Judges/Coram:
Hon'ble Sh. M.M. Kumar, Member (J)
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Brijesh KumarTamber, Advocate
For Respondent:
ORDER
1. This CP is filed for mooting the Corporate Insolvency Resolution Process (CIRP) under the provisions
of Insolvency & Bankruptcy Code (IBC), 2016 in relation to the respondent company named as
'Corporate Debtor'. The Petition has been has been filed by a Financial Creditor namely Indian Bank
through its authorized person being the Assistant General Manager, ARMB-Delhi, World Trade Centre,
Babar Road, New Delhi vide Power of Attorney dated 30.6.2006 annexed as Annexure-A to the above
Petition.
2. The following facts can be ascertained ona perusal of the application and also on the representation of
the Learned Counsel for the Petitioner namely:
The Corporate Debtor named above is a (Special Purpose Vehicle) SPV company specifically
incorporated in the year 2007 for the purpose of generating and distribution of electricity. Pursuant to its
objects and for putting up a electricity generation plant in Arunachal Pradesh it had approached the
Financial Creditor for multiple credit facilities in the form of term loan as well as non-fund based
facilities as supplement to term loan. Request for financial facilities by the Corporate Debtor was
accepted by the Financial Creditor vide sanction letter dated 30.7.2010, which comprised of term loan to
the extent of Rs.200 crores and non-fund based loan facilities of Rs.100 crores and the sanction was valid
1112
for a period of 6 months with pre disbursement conditions as detailed in the sanction letter. Since the pre-
disbursement conditions were not met by the Corporate Debtor, request to extend the validity of the
sanction letter dated 30.7.2010 was sought by the Corporate Debtor vide letter dated 30.1.2011 and
1.2.2011. On 11.4.2011 based on the request of the Corporate Debtor for urgent project implementation
expenses, a sum of Rs.200 crores for a duration of 6 months was sought by the Corporate Debtor from the
Financial Creditor, and acceding to the said request of the Corporate Debtor, as compared to the earlier
sanction letter, a term loan of Rs.269 crores, short-term loan of Rs.200 crores and non-fund based
facilities such as FLC/ILCMG/LOC were sanctioned in a sum of Rs.100 crores. The short-term loan
facility granted was in the nature of bridge loan, in order to assist the Corporate Debtor, to meet the
urgent project expenses till the disbursal of the regular funding for the project from the consortium of
lenders. As a security to the short-term financial facilities, pari pasu charge on all the immovable assets of
the company, both present and future, as well as inter alia, corporate guarantee of one M/s Athena Infra
Projects Ltd was given and pledge of shares in the Corporate Debtor held by M/s Athena Infra Projects
Ltd in Athena Energy Ventures Private Limited along with its promoters to the tune of Rs.150 crores was
also offered as collaterals. Corporate Debtor in acceptance of revised sanction letter dated 6.6.2011 had
executed documents in favour of the financial creditor, including an agreement for bridge loan dated
17.6.2011, in relation to Rs.200 crores sanctioned by the Financial Creditor towards the bridge loan
repayable within a period of 6 months from the date of first disbursement of loan. Various other
documents have also been executed, all of which have been annexed along with the Petition, according to
the submission of the Financial Creditor. The sum of Rs.200 crores as sanctioned and approved by the
Financial Creditor had been disbursed to the Corporate Debtor which it is claimed by the Financial
Creditor is evidenced by letter dated 20.10.2011 wherein it has also been acknowledged by the Corporate
Debtor at paragraph 1, Annexure A-22 of the Petition, as follows:
At the outset we would like to thank you for sanctioning the

short term loan assistance of Rs.200 Crs to 1750 MW Demwe
Lower HEP. We have utilized the entire short term loan of
Rs.200 Crs sanctioned by Indian Bank towards project
implementation expense. As you are aware, we have executed
the Common Loan Agreement with consortium lenders for the
loan component of Rs.9659 Crs on 9th September 2011.
3. However, the Corporate Debtor did not repay the short-term loan/bridge loan within the period of 6
months as undertaken by it, and instead, submitted a revised proposal vide Annexure A-22 of the Petition
1113
and the revised proposal was duly taken into consideration by the Financial Creditor and accordingly
sanction, it is claimed by the Financial Creditor, was further revised as follows:
Term Loan Rs. 200 Crores

Non-Fund based financial facilities Rs. 100 Crores
Short-term loan Rs. 200 Crores
Despite the above revised sanction letter dated 12.03.2012 by the Financial Creditor, Corporate Debtor
failed to repay the loan availed by it as a short-term loan and instead sought for extension of time for
repayment of the same vide letters dated 14.06.2012, 21.06.2012 and 4.7.2012. Heeding to the repeated
request of the Corporate Debtor, the Financial Creditor it is averred, had conditionally accepted the
request and the time limit for repayment was extended upto 28.02.2013 upon the execution of the
additional securities. However, instead of repaying the amount within the extended period, Corporate
Debtor vide letter dated 25.02.2013 sought for another extension for a period of 2 months upto
31.05.2013 in order to enable it to repay the short term loan. The Financial Creditor, taking into
consideration the above request of the Corporate Debtor for further extension, granted time till
28.02.2014 for repayment of the short-term loan and for early closure of the conditions prescribed
originally and subsequently revised from time to time for availing financial facilities as granted to the
Corporate Debtor vide letter dated 17.06.2013. However, despite the cooperation and support extended by
the Financial Creditor to the Corporate Debtor and despite personal visits and reminders, Corporate
Debtor failed to repay the amounts due to the Financial Creditor which forced it to classify the accounts
of the Corporate Debtor as non-performing asset (NPA) on and from 31.5.2013 in accordance with the
instructions /circular of the Reserve Bank of India.
4. It is contended that the Financial Creditor was forced, in view of the defaults committed as detailed
above on the part of the Corporate Debtor, to issue a letter dated 21.5.2013 to the Corporate Debtor
calling upon it to remit the overdue amount of Rs.207,51,07,223.34 with the then up-to-date interest
immediately. However, even though no payment was forth coming, Corporate Debtor had acknowledged
on 28.02.2014, the debt owed in a sum of Rs.211,96,68,427.34 to the Financial Creditor as due and
payable, vide acknowledgement of debt-cum-security annexed at Annexure A-38 to the Petition. Despite
the acknowledgement by the Corporate Debtor it is claimed by the Financial Creditor, no payment was
forth coming, and hence the Financial Creditor, it is submitted, had issued a notice on 11.7.2014 under
Section 13(2) of the Securitization and Reconstruction of Financial Assets and Enforcement of Security
Interest Act, 2002 (SARFAESI Act, 2002) invoking the securities. Ultimately, the Financial Creditor, due
1114
to persistent defaults committed on the part of the Corporate Debtor, was forced to recall the entire loan
and demand monies due to it vide a loan recall-cum- demand notice dated 22.3.2016 which notice of
recall, it is submitted, is annexed as Annexure A-42 to the Petition. Other notices it is claimed have also
been issued without much avail. It is averred by the Financial Creditor that it is a nationalized bank and
has been maintaining regular books of accounts in the ordinary course of business and as per the same a
sum of Rs.320,40,38,089.52 is due and payable by the Corporate Debtor including interest payable as on
31.03.2017. In evidence of the same it is claimed that a certificate under the Bankers Book of Evidence
Act, 1891 has been annexed as Annexure A-45 to sustain the plea of default on the part of the Corporate
Debtor and since the amount owed and defaulted is in excess of Rs.1,00,000/-, it is contended that the
Petition is maintainable under the provisions of IBC.
5. It is also submitted by the Financial Creditor that it has also initiated in OA No.218/2016 titled as
'Indian Bank' vs. Athena Demwe Power Ltd. and Others for recovery of the amounts due under the
provisions of recovery of Debts Due to Banks and Financial Institutions Act, 1993 before DRT-1, New
Delhi claiming a sum of Rs.284,35,10,320.52 as on 5.5.2016against the Corporate Debtor and others and
the same is pending disposal.
6. The Financial Creditor, it is seen has filed the necessary application under Form-I to initiate CIRP
under IBC, 2016 read with Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules,
2016 (for brevity AAA Rules). In view of the default as narrated above it is claimed, proceedings herein
have been preferred and an Interim Resolution Professional as mandated has also been named as one Mr.
Anil Kohli, duly registered Insolvency and Bankruptcy Board of India (IBBI), and who, it is claimed, has
also submitted his consent to act as an Interim Resolution Professional in the prescribed format.
7. We have carefully considered the averments contained in the Petition as well as the submissions of the
learned counsel appearing far the Financial Creditor/Petitioner. Going through the records, it is seen that
the above Petition at the request of the Financial Creditor had been posted by the Registry before us on
18.04.2017 which is evidenced by the mentioning letter circulated on behalf of the Financial Creditor to
the Registrar of this Tribunal to have the matter listed on 18.04.2017. In the circumstances, Company
Petition, as above was placed before us on 18.04.2017 on which date at the request of the learned counsel
for the petitioner, time was given to enable him to file the tracking report with respect to service of
notices of the Petition on the Corporate Debtor and in the circumstances the matter was posted on
19.04.2017. On 19.04.2017, tracking report in relation to notice dispatched to the Corporate Debtor was
filed by the Financial Creditor and upon a perusal of the same it is evident that the consignment bearing
identical consignment number, both in the postal receipt as well as in the tracking report, seem to have
1115
been delivered to the Lodi Road H.0, however delivery on the Corporate Debtor is not conclusive .
Despite notice of the Petition/application as represented by Financial Creditor on the Corporate Debtor,
none appeared for it, as is evident from the attendance sheet of the respective hearing dates and in the
circumstances we were constrained to proceed in its absence. With a view to ascertain if any payments
towards the short term loan had been made by the Corporate Debtor, the Financial Creditor was directed
to furnish the statement of accounts in full concerning the Corporate Debtor particularly in view of the
absence of the Corporate Debtor and the concise accounts reflecting only interest calculation as and from
22.03.2016 as produced by the Financial Creditor avowedly under Certificate issued under Section 2A of
the Bankers' Book of Evidence Act, 1891 and lacking in other material particulars reflective of the
accounts of the Corporate Debtor as maintained by it.
8. Despite the absence of the Corporate Debtor and since the process of Insolvency is attendant with
serious consequences to all the stake holders concerned, this Tribunal after careful appraisal of the
pleadings and evidence available on record as filed by the Financial Creditor is constrained to reach the
following conclusions based on pertinent facts relevant to the present proceedings :-
9. The Corporate Debtor seems to have been incorporated originally as Athena Demwe Power Private
Limited on 03.08.2007 and subsequently on and from 17.12.2010 had changed its name to Athena
Demwe Power Limited, all of which are evidenced from the Fresh Certificate of Incorporation.
Consequent upon change of name on conversion into public limited company by the Corporate Debtor,
issued by the Registrar of Companies, NCT of Delhi and Haryana dated 29.03.2010. It is pertinent to note
that the address of the registered office as reflected in the Fresh Certificate of Incorporation dated
29.03.2010 issued by ROC, NCT Delhi is given as 15t Floor NBCC Tower, 15 Bhikaji Cama Place, New
Delhi 110 066 and the said address is also reflected in the Certificate of Registration of Charges of Assets
detailed in the certificate under Section 132 of the erstwhile provisions of the Companies Act, 1956 dated
21.06.2011 issued by ROC, NCT of Delhi & Haryana in favour of the Financial Creditor.
10. Further a perusal of all the documents annexed by the Financial Creditor along with the
Petition/Application discloses the address of the registered office of the Corporate Debtor at 1st Floor
NBCC Tower, 15 Bhikaji Cama Place, New Delhi 110 066, including the Sanction Letter dated
30.07.2010 and 06.06.2011 annexed as Annexure A-1 and Annexure A-5. Further even the notice under
Section 13(2) of SARFAESI Act, 2002 sent by the Petitioner to the Corporate Debtor and annexed as
Annexure A-39 dated 13.05.2014 discloses the above address Bhikaji Cama Place as registered office
address. The same is the case with Annexure A-40 being the reply sent by the Corporate Debtor dated
11.07.2014, wherein at the bottom of the first page of the reply, the registered office is stated to be that of
1116
15t Floor NBCC Tower, 15 Bhikaji Cama Place, New Delhi 110 066. It is also seen that the counsel for
the Financial Creditor on 22.03.2016 while issuing a notice on behalf of the Financial Creditor to the
Corporate Debtor had dispatched the same to its registered office address at 1st Floor NBCC Tower, 15
Bhikaji Cama Place, New Delhi 110 066 and to another address at Connaught Place, New Delhi as
evident from Annexure A-42.
11. While so in relation to the above petition/application as well as in the prescribed format filed in Form
I of the Adjudicating Authority Rules 2016, the registered office of the Corporate Debtor is stated to be J-
38, 2nd Floor, B.K. Dutt Colony, Near Paryavaran Bhawan, Jor Bagh, New Delhi — 110 003 and prima
facie it is seen from the postal receipt dated 11.03.2017 issued by the postal authorities as well as the
related tracking report extracted and produced by the Financial Creditor discloses the delivery at Lodi
Road H.0 of postal authorities. The postal receipt produced by the Counsel for the Financial Creditor
dated 22.04.2017 is also addressed to Jar Bagh, Lodi Road, New Delhi 110 003 address allegedly of the
Corporate Debtor which address curiously is not seen anywhere in the documents as filed by the Financial
Creditor itself.
12. The above facts becomes incumbent to be extracted as Rule 4 as applicable to the Application by
financial creditor and more particularly sub rule (2) of Rule 4, both of Insolvency & Bankruptcy
(Application to Adjudicating Authority) Rules, 2016 specifically directs that the applicant shall dispatch
forthwith, a copy of the application filed with the Adjudicating Authority, by registered post or speed post
to the registered office of the corporate debtor (Italics supplied). In the absence of any material or
document to demonstrate that the registered office of the Corporate Debtor having been shifted from 1st
Floor NBCC Tower, 15 Bhikaji Cama Place, New Delhi 110 066 to any other address, particularly to the
address as claimed to be registered office address by the Financial Creditor in the application, we are
constrained to hold that the application has not been properly served on the Corporate Debtor and that we
consider basically explains the absence of the Corporate Debtor before us, more so, when according to the
records produced by the Financial Creditor, the Corporate Debtor seems to be defending its cause in the
proceedings pending before DRT I, Delhi as manifest vide order dated 01.03.2017 passed in 0.A.218 of
2016.
13. It is also pertinent to note that in Company Appeals (AT)(Ins) No.31 of 2017 in the matter of Era Infra
Engineering Ltd Vs. Prideco Commercial Projects Pvt. Ltd. the Hon'ble NCLAT has laid down, albeit in
the case of an 'Operational Creditor' that in view of the mandatory provision under Section 8 of the I & B
Code read with Rule 5 of Insolvency & Bankruptcy (Application to Adjudicating Authority) Rules, 2016
the same are strictly required to be complied with, failing which the application under Section 9 of IBC,
1117
2016 is to be dismissed. In a similar vein in relation to a 'Financial Creditor' too as in the present instance
service of the application at the registered office of the Corporate Debtor is a pre-requisite as required
under Rule 4(2) of the AAA Rules for entertaining the application, all the more so when a notice of
demand as contemplated under Section 8 for an 'Operational Debtor' is not mandated and notice of
application being the only one to put on notice about the initiation of a Corporate Insolvency Resolution
Process by a Financial Creditor against the Corporate Debtor.
14. Finally for the above reasons and despite considerable opportunity being afforded to the Financial
Creditor to rectify the defects in relation to service of proper notice of the application as required under
IBC, 2016 read with AAA Rules, 2016 on the Corporate Debtor not done , we are constrained to dismiss
this Company Petition.
15. However before parting we make it clear that any observations made in this order shall not be
construed as an expression of opinion on the merit of controversy as we have refrained from entertaining
the application at the initial stage itself. Therefore the right of the applicant before any other forum shall
not be prejudiced on account of dismissal of instant application.
16. A copy of the instant order shall be communicated by the Registry to the Financial Creditor within a
period of 7 days from the date of this order as required under Section 7(b) of IBC, 2016.
1118
PRINCIPAL BENCH
C.P. (I.B.) No. 80/7/NCLT/PB/2017
Applicant: M/s Chharia Holdings (P) Ltd.

VS
Respondent: M/s Brys International Private Limited.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Pawan Sharma, Ms. Arpita Yadav, Advocate
For Respondents/Defendant: Mr. Satish Kumar Bhati, Advocate
ORDER
1. This is a petition filed under section 7 of Insolvency and Bankruptcy Code by M/s Chharia
Holding Pvt. Ltd., to seek initiation of Corporate Insolvency Resolution Process in accordance with the
Insolvency and Bankruptcy Code 2016 against the corporate debtor namely M/s Brys International Pvt.
Ltd.
2. The petitioner financial creditor has stated that the corporate debtor was given short term loan in
three tranches of Rs. 1 crore 50 lakhs on 9.12.2013, Rs. 50 lakhs on 13.12.2013 and Rs. 25 lakhs on
24.01.2014. It is asserted that loan amount became payable but the corporate debtor requested for more
time for repayment. Accordingly, an MoU dated 01.07.2014 was entered into. A copy of this MoU has
been filed along with the application. As per this MoU, the loan assistance was allowed upto 30.04.2015
and the loan carried interest at the rate of 10 per cent per annum. It is further stated that cheque dated
30.04.2015 for a sum of Rs. 2.25 Crores, issued by the corporate debtor in favour of the applicant
financial creditor as a security, has now lapsed. By way of collateral security allotment of Flat No. 541 in
the proposed project Brys Buzz was also offered to the financial creditor.
3. The instant application has been filed on 28.04.2017 as the loan advanced by the applicant
financial creditor has not been repaid, despite recalling of the same vide letter dated 06.01.2016 and
19.07.2016. It is stated that the corporate debtor had defaulted both in repayment of principal amount and
1119
accrued interest. However, from the copy of TD S return filed with the application it is seen that the
corporate debtor had deducted TD S on interest and deposited the same with the Income Tax Department
for the period commencing from 31.12.2013 to 30.09.2014. Subsequently, there has been default in
deducting TICS and depositing the same with Income Tax Department. The applicant has stated that this
default was notified vide letters dated 22.09.2015, 23.09.2015 and 5.10.2015, but no response was
received from the Corporate debtor.
4. The financial creditor issued legal notice dated 03.12.2016 but the same has not been replied to.
In view of the above facts, the financial creditor has submitted that the corporate debtor is unable to pay
its debt and is liable to be declared insolvent. The application under section 7 of IBC has been filed in the
prescribed form. The amount of Rs. 2.25 crores is claimed to be the defunct amount. It is stated that an
insolvency petition no. 6/2017 filed by the financial creditor before the NCLT had been rejected vide
interim order dated 06.03.2017 stating that the petition was incomplete as no insolvency professional had
been nominated. Thus, the present insolvency petition has been filed. However, it is seen that again no
insolvency professional had been proposed.
5. The 'corporate debtor' has opposed the instant petition. While acknowledging that an amount of
Rs. 2.25 crores was paid to R-1 in December 2013 and January 2014, it is stated by the respondents 1 to 3
in their written submission that the petitioner promoters has further advanced loan Rs. 5 crores to R-1,
Director / Promoters in June 2014. It is stated that the payment of the same was towards the purchase of
the properties of the family of respondent no.-2, being D-33 Kaushmbhi for consideration of Rs.
3,32,00,000 and R-8/23 Raj Nagar, Ghaziabad for consideration of Rs. 5,80,00,000 which were handed
over to the `financial creditor', Against these consideration, only a sum of Rs. 2,25,00,000 and
5,00,00,000 were paid and the rest of the amount remain unpaid. In support of the averments copies of the
sale deeds of these properties have been filed. It is the case of the corporate debtor that there is no default
on their part and in fact the financial creditor has to repay them a sum of Rs. 4.25 crores.
6. After going through the sale deeds and other documents filed by the Corporate Debtor, it is seen
that there is no privity- of contract between the petitioner and the respondent with regard to the property
transactions between the petitioner and family of respondent-2. The Corporate debtor in this case is a Pvt.
Ltd. Company and the above-mentioned property transactions are not accompanied by Board Resolution
of the respondent company authorising the individual director to enter into the transaction on behalf of the
respondent company. Thus, these transactions cannot be cited for adjustment of the outstanding debt of
the corporate debtor against the applicant financial creditor.
1120
7. It is seen that the financial creditor has not named any proposed insolvency resolution
professional. Section 16(2) and Section 16(3) of the Code read as follows:-
"(2) Where the application for corporate insolvency resolution process is made by a financial creditor or
the corporate debtor, as the case may be, the resolution professional, as proposed respectively in the
application under section 7 or section 10, shall be appointed as the interim resolution professional, if no
disciplinary proceedings are pending against him.
(3) Where the application for corporate insolvency resolution process is made by an operational creditor
and-
no proposal for an interim resolution professional is made, the Adjudicating Authority shall make a
reference to the Board for the recommendation of an insolvency professional who may act as an interim
resolution professional;
a proposal for an interim resolution professional is made under sub-section (4) of section 9, the
resolution professional as proposed, shall be appointed as the interim resolution professional, if no
disciplinary proceedings are pending against him."
On reading of the above 2 sub-sections, it is apparent that while there is a provision for the Adjudicating
Authority to make a reference to the Board for a recommendation of an Insolvency professional, in the
case of an operational creditor, there is no such provision in the case of a financial creditor. The instant
application has been filed under section 7 of IBC as a financial creditor. The applicant financial creditor
has not proposed the name of any insolvency professional and thus, has not fulfilled the requirement as in
sub-section 3 (b) of section 7 of the Code, which reads as follows: -
"The financial creditor shall, along with the application furnish -
(a) Record of the default recorded with the information utility or such other record or evidence of default
as may be specified ;
(b) the name of the resolution professional proposed to act as an interim resolution professional ; and
(c)any other information as may be specified by the Board."
Hence, we are unable to admit the application for insolvency as the same is not complete.
Application is dismissed.
1121
PRINCIPAL BENCH
C.P. (I.B.) No. 102/7/NCLT/PB/2017
Applicant: DBS Bank Ltd.

VS
Respondent: Edu Smart Service Pvt. Ltd.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. R.S. Randhawa and Sujeet Anand, Advocates
For Respondents/Defendant: P. Nagesh and Karan Gandhi, Advocates
ORDER
1. The DBS Bank Limited (for brevity 'Bank') has filed the instant application under Section 7 of the
Insolvency and Bankruptcy Code, 2016 (for brevity 'the Code') in its capacity as 'Financial Creditor'. The
prayer made by the Bank is that corporate insolvency resolution process may be initiated against Edu
Smart Services Private Limited 'Corporate Debtor' for its inability to pay debts. According to the
averments made by the 'Financial Creditor', the Bank is a body corporate incorporated in Singapore. It has
its head Office at 12, Marina Boulevard, Marina Bay Financial Centre Tower 3, Singapore-018982 and its
Branch Office is at Capital Point, Baba Kharak Singh Marg, Connaught Place, New Delhi-110 001. The
'Corporate Debtor'-Respondent has also been incorporated in Delhi on 02.07.2009 with authorised share
capital of Rs. 825,000,000/-. The paid up share capital is Rs. 450,100,000/-.
2. The Bank has also proposed the name of Interim Resolution Professional, Ms. Ritu Rastogi, D-
2/33, 2nd Floor, Janak Puri, New Delhi.
3. The Bank has disclosed that a term loan amounting to Rs. 500 millions was sanctioned on
12.10.2011 and it was disbursed on 19.10.2011, Another credit facilities of Rs. 175 million was again
sanctioned on 18.07.2013 and of this Rs. 1,35,000,000/- was disbursed on different dates as are given
below:-
1122
Issue Date Loan Amount in Rupees
23-Jul-2013 40,000,000.00
13-Jan-2014 13,000,000.00
30-Dec-2013 15,000,000.00
23-Apr-2014 10,000,000.00
11-Oct-2013 7,500,000.00
15-Jan-2014 12,000,000.00
27-Mar-2014 5,000,000.00
07-Oct-2013 10,000,000.00
30-Sep-2013 22,500,000.00
4. The default occurred on 21.07.2015 and as on 01.05.2017, the total amount due was Rs.
13,96,01,507.78/-. A computation of the outstanding due has also been placed on record.
5. In the particulars of security, the 'Financial Creditor' has disclosed that a charge in its favour stand
duly registered with the RoC. The credit facilities in terms of the Facility Documents and by virtue of the
Hypothecation Deed was to be secured by exclusive charge on receivables worth Rs. 750 million from
designated schools, which included the current receivables pool of 414 Schools and proposed receivables
of 48 Schools. True copies of CHG-1 Form for creation of charge, CHG-1 Form for modification of
charge, Certificate of Registration of charge, Certificate of registration for modification of charge and
valuation report have been placed on record. The latest and complete copy of the Financial Statement
reflecting all amendments and waivers have also been placed on record. Further copies of entries in the
Bankers Book in accordance with the Bankers Books Evidence Act, 1981 have also been attached, which
are true copies of the Statement of Accounts, Balance Confirmation Certificate in accordance with the
Bankers Books Evidence Act, 1891 alongwith IT Certificate.
6. There are a number of other documents attached to the application to prove the existence of
financial debt, the total outstanding amount and the date of default, which are as under:
(i) True copy of the offer cum Sanction letter No. CDT/ADMIN/503/2011 dated 12th October, 2011
(ANNEXURE-G).
(ii) True copy of the Board Resolution dated 13th October, 2011 passed by the Corporate Debtor-
(ANNEXURE-H).
1123
(iii) True copy of the Term Loan Agreement dated 13th October, 2011 for INR 500 Million
(ANNEXURE-I).
(iv) True copy of the Demand Promissory Note dated 13th October, 2011 in the sum of Rs. 500,000,000
(Rupees Five Hundred Million only) with interest thereon (ANNEXURE-K).
(v) True copy of Letter of Continuity dated 13th October, 2011 (ANNEXURE-L),
(vi) True copy of Deed of Hypothecation dated 13th October, 2011 for INR 500 Million (ANNEXURE-
J).
(vii) True copy of the Corporate Guarantee of M/s. Educomp Solutions Limited (ANNEXURE-M).
(viii) True copy of the offer cum Sanction letter No. CDT/ADMIN/396/2013 dated 18th July, 2013-
(ANNEXURE-N).
(ix) True copy of the Board Resolution dated 18th July, 2013 passed by the Corporate Debtor-
(ANNEXURE-O).
(x) True copy of the Term Loan Agreement dated 18th July, 2013 for INR 175 Million - (ANNEXURE-
P),
(xi) True copy of the Demand Promissory Note dated 18th July, 2013 in the sum of Rs. 175,000,000
(Rupees One Hundred Seventy Five Million Only) with interest thereon - (ANNEXURE-R).
(xii) True copy of the Deed of Hypothecation dated 18th July, 2013 to secure repayment of the credit
facility for INR 175 Million - (ANNEXURE-Q).
(xiii) True copy of the Deed of Guarantee dated 18th July, 2013 executed by Mr. Shantanu Prakash
(Guarantor) - (ANNEXURE-S).
(xiv) True copy of the Letter of Undertaking given by M/s. Educomp Solutions Limited dated 18th July,
2013 -(ANNEXURE-T).
(xv) True copy of the Deed of Hypothecation dated 18th July, 2013 to secure repayment of the credit
facility for INR 500 Million - (ANNEXURE-U).
(xvi) True copy of the supplemental agreement dated 06.09.2013 wherein certain provisions of the escrow
agreement dated 17.10.2011 were amended (ANNEXURE-V).
(xvii) True copy of the loan recall notice 04.05.2017 - (ANNEXURE-W).
1124
(xviii) True copy of the reply dated 08.05.2017 by Corporate Debtor to the notice, showing inability to
repay-(ANNEXURE-X).
(xix) True copy of Form 8 for creation of charge & for modification of charge and Copy of Certificate of
Registration of Charge (ANNEXURE-F) (COLLY).
(xx) True copy of the IT certificate dated 08.05.2017 (ANNEXURE-Z),
(xxi) Computation of the amount due as on 01st May 2017 (ANNEXURE-D).
(xxii) True copy of Power of Attorney dated 5th September, 2013 in favour of Mr. Sujeet Anand, Vice-
President (ANNEXURE-C).
(xxiii) Original copy of the Form 2 dated 15.05.2017 (ANNEXURE-Y).
7. The 'Financial Creditor' recalled the loan by sending a registered AD letter dated 04.05.2017
(Annexure-W) and called upon the 'Corporate Debtor' jointly and severally to repay the entire outstanding
amount of Rs. 13,96,01,507.78/- (Thirteen crores, ninety six lakhs one thousand,
five hundred seven and paise seventy eight only) alongwith interest and other charges till the date of
notice by granting 7 days time.
8. In reply to the notice, the 'Corporate Debtor' has sent reply and has completely showed its
inability as is evident from its short reply, which reads, thus:
"We are in receipt of your loan recall notice dated 4th May 2017 received by us on 8th May 2017. Please
note, we are currently in financial distress on account of default in payment by our customers. We are
trying our best to ensure recoveries from our customer, however, it appears that such recoveries will take
longer time than we had anticipated and thus we are not in a position to clear your outstanding at the
current moment".
A perusal of the above quoted para does not leave any manner of doubt that the 'Corporate Debtor' has
shown complete inability to pay the debt of the 'Financial Creditor'. There is also acknowledgement of
debt by the 'Corporate Debtor' and no dispute regarding the same has been raised.
9. In compliance of the direction issued by this Tribunal, respondent has filed affidavit of
compliance by one Mr. Pramod Thatoi, a Director of the 'Corporate Debtor' attached an audited Balance
sheet for the year ending 2015-16 (Annexure-B) and the list of pending litigations (Annexure-C).
1125
10. We have heard learned Counsel for the parties at a considerable length and are of the view that
the corporate insolvency resolution process deserves to be initiated against the 'Corporate Debtor' in the
face of clear admission in its reply dated 08.05.2017 (Annexure-X). The Applicant on its part has
complied with all the necessary requirements postulated by Section 7 of the Code. It has disclosed
particulars of each 'Financial Creditor', particulars of 'Corporate Debtor', particulars of proposed Interim
Resolution Professional and financial debt alongwith other details. The record in the form of statement of
account, certificate of registration of charge alongwith Form-8, a copy of offer letter, a copy of the Board
Resolution dated 13.10.2011, a copy of the Term Loan Agreement dated 13.10.2011 for a sum of Rs. 500
Million, Deed of Hypothecation dated 13.10.2011, Demand Promissory Note dated 13.10.2011 for a sum
of Rs. 500 Million with interest, a letter of continuity dated 13.10.2011, corporate guarantee of M/s.
Educomp Solutions Ltd. dt. 13.10.2011, a copy of offer letter dated 18.7.2013, a copy of the Board
Resolution dated 18.07.2013, a copy of the term loan dated 18.07.2013, a Deed of Hypothecation dated
18.07.2013, a copy of Demand Promissory Note dated 18.07.2013 for a sum of Rs. 175,000,000/- with
interest thereon, a copy of the Deed of Guarantee dated 18.07.2013 executed by Mr. Shantanu Prakash, a
copy of letter of undertaking given by Educomp Solutions Ltd. dated 18.07.2013, a copy of the
supplemental agreement dated 06.09.2013, a copy of the loan recall notice dated 04.05.2017, a copy of
the reply sent by the Corporate Debtor dated 08.05.2017 and written communication by the proposed
Interim Resolution Professional too have been placed on record.
11. For the reasons afore-mentioned, this petition is admitted. Accordingly, the corporate insolvency
resolution process is initiated against the Respondent. Ms. Ritu Rastogi is hereby appointed as an Interim
Resolution Professional. The Interim Resolution Professional shall make a public announcement of the
corporate insolvency resolution process by referring to the instant order passed by this Tribunal. In terms
of Section 14 of the Code, the moratorium will come in operation from the date of this order and there is
complete prohibition from doing the following acts:
"(a) the institution of suits or continuation of pending suits or proceedings against the corporate debtor
including execution of any judgment, decree or order in any court of law, tribunal arbitration panel or
other authority;
1126
possession of the corporate debtor".
12. However, the aforesaid prohibition shall be subject to sub-section (2) & (3) which permits the
supply of essential goods or services to the corporate debtor as may be specified by the Insolvency
Resolution Professional and the same were not to be terminated or suspended or interrupted during the
moratorium period. The provisions of Section 14 of the Code are also not to apply to transaction as may
be notified by the Central Government in consultation with the financial sector regulator. The Insolvency
Professional shall be under obligation to perform all acts as contemplated by Section 15, 16, 17, 18 and
20 of the Code.
13. The personnel of the 'Corporate Debtor', its promoter or any other person associated with its
management is to extend all assistance and co-operation to the Interim Resolution Professional as may be
required by him or her in managing the affairs of the 'Corporate Debtor'. In case of any failure, the Interim
Resolution Professional would be at liberty to initiate action by filing appropriate application to this
Tribunal.
14. The petition stands disposed of in the above terms.
1127
PRINCIPAL BENCH
C.P. (I.B.) No. 84/7/NCLT/PB/2017
Applicant: Jindal Saxena Financial Services Pvt. Ltd.

VS
Respondent: Mayfair Capital Pvt. Ltd.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Umesh Mishra, Advocate
ORDER
1. This is an application filed under Section 7 of the Insolvency and Bankruptcy Code, 2016 (for
brevity the 'Code) by a Non-Banking Financial Company with a prayer to initiate Corporate Insolvency
Resolution Process against the 'Corporate Debtor'-M/ s Mayfair Capital Private Limited (for brevity the
'Corporate Debtor'). It is appropriate to mention that the 'Financial Creditor' has been registered as a
NBFC under Section 45 1A of the Reserve Bank of India Act, 1934 on 18.05.1994 (Annexure P/1 86P/2).
It is engaged in the business of providing financial assistance and management consultancy along with
related services.
2. The Corporate Debtor-respondent is a Company incorporated under the provisions of the

Companies Act, 1956 and its authorized share capital is 25,62,00,000/-. The paid up share capital of the
Corporate Debtor is 1,27,99,390/ -. The aforesaid information is supported by the master data concerning
the Corporate Debtor obtained from the official website of the Registrar of Companies (Annexure P/3).
3. The Corporate Debtor availed a loan of Rs. 44,50,00,000/-(Rupees Forty-Four Crores and Fifty
Lakhs) by way of Inter Corporate Deposit from the Financial Creditor. In that respect, an Inter Corporate
Deposit Agreement was executed between the parties on 25.04.2014 (Annexure P/4). The amount of loan
was disbursed to the Corporate Debtor over a period of two months between 28.04.2014 to 06.06.2014 by
way of RTGS/NEFT from the IDBI Bank. A copy of the bank statement of the Financial Creditor has
1128
been placed on record (Annexure P/5) and the entries from the same have been extracted in form of the
table produced in para 3 of the application. The amount of loan was lent to the Corporate Debtor for a
period of 24 months from the date of 1CD Agreement. In other words, it was payable on 24.04.2016 as
the Corporate Debtor has agreed to repay it on or before the aforesaid date. It was to bear a simple rate of
interest of 9.5% per annum. The interest was payable quarterly on arrears. On account of interest a sum of
Rs. 8,17,70,274/- (Rupees Eight Crore Seventeen Lakh Seventy Thousand Two Hundred and Seventy-
Four) is outstanding till 07.03.2017 which is evident from the ledger account of the Corporate Debtor as.
maintained by the Financial Creditor during the ordinary course of its business (Annexure P/6). The
Corporate Debtor has also alleged that TD S certificate for tax deducted for the year 2014 and 2015 have
not been provided which amounts to a sum of Rs. 7,41,573/ - (Rupees Seven Lakh Forty-One Thousand
Five Hundred and Seventy-Three only).
4. The Corporate Debtor has committed default and failed to repay the loan as per the terms of
agreement on 24.04.2016 along with interest despite demand raised by the Financial Creditor. Eventually
on 25.11.2015 the Financial Creditor served upon the Corporate Debtor a legal notice for repayment of
the loan amount (Annexure P/7). The Corporate Debtor has failed to make any payment. Again on
15.03.2017 a legal notice under Section 271 (2) of the Companies Act for winding up of the Corporate
Debtor company was served calling upon the Corporate Debtor to make the payment of entire outstanding
amount of Rs. 56,33,96,066/-' (Rupees Fifty Six Crores Thirty Three Lakhs Ninety Six Thousand and
Sixty Six Only) along with interest (Annexure P/8). Despite that no payment has been made.
5. The petition has been duly verified, signed and filed by Ms. Rekha Jain, one of the Directors of
the Financial Creditor by virtue of the Board resolution passed in her favour (Annexure P/9).
6. The Financial Creditor has named the Insolvency Professional Shri Sanjay Kumar Agarwal who
is duly registered with the IBBI. He has also filed an affidavit dated 25.05.2017 making a disclosure in
connection with the proposed corporate insolvency resolution process. The disclosure has been made as
per the code of conduct for insolvency professionals set out in the Insolvency and Bankruptcy Board of
India (Insolvency Professional) Regulations 2016. The Insolvency Professional has undertaken to perform
his duties faithfully and to the best of his skill and ability He has also declared that he has no direct or
indirect interest in the business related to the Financial Creditor or the Corporate Debtor and that he is not
disqualified as per the First Schedule of the regulations.
7. The Financial Creditor has also filed an affidavit of service dated 08.05.2017 disclosing that a
copy of the paper book was sent to the Corporate Debtor on 27,04.2017. Even a copy of the mentioning
letter was sent on 01.05.2017 through speed post. The postal receipts have already been placed on record
1129
and the tracking report have also been filed along with an affidavit which shows that the item was
received by the Corporate Debtor on 03.05.2017 therefore, the service is complete. Despite service no one
has preferred to appear on behalf of respondent to oppose the claim made by the Financial Creditor.
8. We have heard learned counsel for the Financial Creditor at length and have examined the record
with his able assistance. It is evident that Financial Creditor has placed on record all the documents
concerning the default and the name of resolution professional proposed to act as an interim resolution
professional. We are satisfied that the default has occurred and the application in all other respects is
complete. Moreover, there is no opposition despite the fact that the service has been effected. Therefore,
we are inclined to admit this petition.
9. As a sequel to the above discussion this petition is admitted. The necessary consequence of
admission is that a declaration is made in terms of Section 13 (a) for the purpose of Section 14 of the
Code. A direction is issued to the interim resolution professional Shri Sanjay Kumar Agarwal to make
public announcement in accordance with the provisions of Section 13 (1) (b) of the Code. The corollary
of the declaration is that moratorium under Section 14 of the Code shall come in operation from the date
of this order and the following prohibitions would come in operation:-
other authority;
transferring, encumbering, alienating or disposing of by the corporate debtor any of its assets or any
any action to foreclose, recover or enforce any security interest created by the corporate debtor in
respect of its interest created by the corporate debtor in respect of its property including any action under
the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002;
possession of the corporate debtor."
10. The aforesaid prohibitions shall remain subject to sub section 2 86 3 of Section 14 of the Code. It
shall not apply to the supply of the essential goods or services to the Corporate Debtor as may be
specified. The supply shall not be terminated or suspended during the moratorium period nor the
prohibition would apply to transactions which may be notified by the Central Government.
11. The Petition is disposed of in the above terms
1130
PRINCIPAL BENCH
C.P. (I.B.) No. 156/7/NCLT/PB/2017
Applicant: Reliance Commercial Finance Limited

VS
Respondent: Ved Cellulose Limited
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Shri Parvinder, Advocate Shri B.K.V. Subrahamanyam, Advocate Shri
Abhishek Sharma, Advocate Shri Harsh Sinha, AdvocateShri Shruynesh Rastogi, Authorised Rep.
ORDER
1. Reliance Commercial Finance Limited has approached this Tribunal with a prayer for initiation of
Corporate Insolvency Resolution Process against Ved Cellulose Limited by invoking the provisions of
Section 7 of the Insolvency and Bankruptcy Code, 2016 (for brevity the 'Code. The petitioner-'Financial
Creditor' become entitled to realize the default amount from the 'Corporate Debtor' having been duly
transferred to it within the meaning of Section 5 (7) of the Code. The debt was originally payable to
Reliance Capital Finance Limited by virtue of an order dated 09.12.2016 passed by Honble Bombay High
Court (Annexure-I) duly sanctioning a scheme of arrangement between Reliance Capital Ltd. and
Reliance Commercial Finance Limited under the provisions of Section 391-394 of the Companies Act,
1956. As a result of the approval of the scheme by Honble Bombay High Court the loan amount stands
transferred to and vested in the petitioner-`Financial Creditor', together with the securities and/or benefits,
rights and obligations. Accordingly, the petitioner has acquired the status of 'Financial Creditor' in terms
of Section 5 (7) of the Code. It has made adequate disclosure being the transferee of the financial contract
by placing on record a copy of the order dated 09.12.2016 passed by Honble Bombay High Court. Thus,
it has fulfilled the requirement of Rule 4 (2) of the Insolvency and Bankruptcy (Application to
Adjudicating Authority) Rules, 2016or brevity 'Adjudicating Authority Rules').
1131
2. The 'Financial Creditor' was incorporated on 17.08.2000 as is evident from a copy of the
Company Master Data obtained from the website of Ministry of Corporate Affairs (Annexure-III). All
other necessary disclosures have been made. The 'Corporate Debtor' was incorporated on 08.03.1995 with
authorized and paid up share capital of Rs. 9,00,00,000/- which is evident from the Master Data of the
'Corporate Debtor' obtained from the website of Ministry of Corporate Affairs (Annexure-IV). The
registered office of the `Corporate Debtor' is 29, Gujarat Vihar, Vikas Marg, Delhi.
3 The 'Financial Creditor' granted a loan of Rs. 1,92,38,526.00 (Rupees One Crore Ninety Two
Lakhs Thirty Eight Thousand Five Hundred Twenty Six only) to the 'Corporate Debtor' on 28.03.2014.
The loan was to be repaid alongwith interest @ 16% per annum in 60 EMIS of Rs. 467844/ - each. The
loan was disbursed on 29.03.2014. The 'Financial Creditor' has submitted that the `Corporate Debtor'
failed to make payment of the EMIs as per the schedule of repayment and thus the 'Financial Creditor'
was forced to recall the loan facility. As on 31.05.2017 a total sum of Rs. 2,01,26,510/ - (Rupees Two
Crores One Lakh Twenty Six Thousand Five Hundred Ten Only) is recoverable. A copy of the statement
of working computation has been placed on record (Annexure-V). The 'Corporate Debtor' was required to
make the payment of EMI starting from 05.05.2014 upto 05.04.2019 on the 5th day of every calendar
month. The arrangements made by the `Corporate Debtor' got dishonoured and thus it defaulted in
making the payments of EMI as per repayment schedule although some payments of EMIs were made by
the 'Corporate Debtor' on belated dates. The detailed list is provided in part-IV of Form 1 prescribed by
rule 4 of the Adjudicatory Authority Rules. After 31.03.2016 no installment has been received as per the
loan repayment schedule.
4. The loan was advanced after the 'Corporate Debtor' entered into the secured lending loan
agreement with the 'Financial Creditor' towards the equipment. The hypothecation was duly marked and
agreed under the agreement. A copy of Form 8 filed by the 'Corporate Debtor' registered in favour of the
'Financial Creditor' with the Registrar of Companies, NCT of Delhi 8& Haryana is enclosed (Annexure-
VI). In support of the claim of default, report of CIBIL has been enclosed (Annexure-VIII). The parties
had also executed an agreement to that effect which has been placed on record concerning hypothecation
(Annexure-VI). A copy of the account statements from 30.05.2000 to 30.05.2017 has also been placed on
record which shows that on 31.03.2016 a cheque for EMI of Rs. 467,8441- was issued and the same was
paid which was the last payment received. On 30.04.2016 a cheque of similar amount was issued and
presented for payment. However, the same was dishonoured as is evident from the entries dated
1132
05.05.2016. Similar is the position with regard to another cheque dated 06.05.2016 which bounced on
10.05.2016. The story is no different for the month of July, August and October, 2016 and so on.
5. At the hearing, we asked learned counsel for the petitioner that disclosure has been made in para
2 part-V of the petition that the arbitration proceeding were pending and in face of arbitration proceeding
how the Corporate Insolvency Resolution Process can be initiated. Learned counsel has stated that under
Section 7 of the Code there is no bar to initiate Corporate Insolvency Resolution Process even if
arbitration proceeding is pending. According to learned counsel such a bar exists in respect of claim made
by Operational Creditor under Section 9 of the Code. In support of his view learned counsel has placed
reliance on the observation made by the learned Appellate Tribunal in the case of Kirusa Software Private
Limited v. Mobi lox Innovations Private Limited, Company Appeal (AT) (Insolvency) No. 6 of 2017
decided on 24.05.2017 and has argued that Section 7 of the Code is free from any such bar of pendency
dispute in a civil suit or arbitration proceeding which operate in case of 'Operational Creditor'.
6. Having heard the learned counsel and perusing the paper book with his able assistance, we are of
the view that all necessary requirements contemplated by Section 7 of the Code stand complied with. The
'Financial Creditor' has disclosed the relevant data by placing on record the evidence of advance, the
delay in payment of EMIs and the last payment made on 31.03.2016. It is thereafter that the 'Corporate
Debtor' has committed default as is evident from the statement of accounts maintained by the petitioner in
respect of the respondent accounts. The default has also been established on account of dishonoured of
cheques. Therefore, we are satisfied with the petitioner answer the prescription of Section 7 of the Code
and the Rules framed thereunder. The pendency of arbitration proceeding is also not a hindrance under
Section 7 of the Code for initiating the Corporate Insolvency Resolution Process.
7. For the reasons, aforementioned this petition is admitted. Shri Rakesh Wadhwa has been
proposed as an Interim Resolution Professional. He has also filed his written communication in
connection with the application to initiate Corporate Insolvency Resolution Process. The disclosure has
been made in the letter dated 05.06.2017. Accordingly, in pursuance of Section 13 (2) of the Code we
direct that public announcement shall be immediately made by him with regard to admission of the
application under Section 7 of the Code. We also declare moratorium for the purposes of Section 14. A
necessary consequence of the moratorium flows from the provisions of Section 14 (1) (a), (b), (c) 86 (d).
Thus, the following prohibitions are imposed:
other authority;
1133
(c any action to foreclose, recover or enforce any security interest created by the corporate debtor in
8. It is made clear that the provisions of moratorium shall not apply to transactions which might be
notified by the Central Government or the supply of the essential goods or services to the Corporate
Debtor as may be specified is not to be terminated or suspended or interrupted during the moratorium
period.
9. The Interim Resolution Professional shall perform all his functions contemplated inter alia by
Sections 15, 17, 18, 19, 20 85 21 of the Code. It is further made clear that all the personnel connected
with the Corporate Debtor, its promoters or any other person associated with the Management of the
Corporate Debtor are under legal obligation under Section 19 of the Code to extend all assistance and
cooperation to the Interim Resolution Professional as may be required by him in managing the affairs of
the Corporate Debtor. In case there is any violation the Interim Resolution Professional would be at
liberty to make appropriate application to this Tribunal with a prayer for passing an appropriate order.
The Interim. Resolution Professional shall be under duty to protect and preserve the value of the property
of the `Corporate Debtor' as a part of its obligation imposed by Section 20 of the Code and perform all his
functions strictly in accordance with the provisions of the Code.
10. The Petition is disposed of in the above terms.
1134
PRINCIPAL BENCH
C.P. (I.B.) No. 1251/7/NCLT/PB/2017
Applicant: Brian Lau, Ski Gemma Lau,

VS
Respondent: S3 Electrical and Electronics Pvt. Ltd.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Shri Siddhesh Katwal, Advocate Shri Raghunathasethupathy,
Advocate
ORDER
1. This is an application filed under Section 7 of the Insolvency and Bankruptcy Code, 2016 (for
brevity 'the Code') read with Rule 4 of the Insolvency and Bankruptcy (Application to Adjudicating
Authority) Rules, 2016 with a prayer to initiate corporate insolvency resolution process against
respondent-`Corporate Debtor'.
2. The facts in brief are that the 'Financial Creditor' advanced unsecured loan of US Dollar 30,000 to
the 'Corporate Debtor' on 18.06.2014. In that regard, the parties executed 'Unsecured Loan Agreement'
dated 18.06.2014 under clause 4 read with clause 3 of Schedule I appended to the loan agreement. The
`Corporate Debtor' was to pay the borrowed amount within a period of three months alongwith interest @
15% per annum. The 'Corporate Debtor' was thus obliged to repay the loan by 17.09.2014. The 'Corporate
Debtor' failed to do so, despite various reminders sent by the 'Financial Creditor. On 15.09.2014, Mr.
Shalabh Srivastava, Chief Executive Officer of the 'Corporate Debtor' sent an email to the Financial
Creditor' and promised to repay the loan amount by October, 2014. Accordingly, extension was granted in
good faith. On 29.01.2015, the Financial Creditor' tried to contact the Chief Executive Officer, Mr.
Shalabh Srivastava, who cited his marital discord and business setbacks as reasons for him not responding
1135
and he then promised to repay the loan by March, 2015. The `Financial Creditor' again extended the time
and even the promises made at Hong Kong on 18.05.2015 went in vain. There is correspondence
/promises for payment from 08.06.2015 to June, 2016. On 07.06.2016, the 'Financial Creditor' sent a
notice dated 07.06.2016 which was duly received by the `Corporate Debtor' on 08.06.2016.
3. The 'Financial Creditor' first filed a Company Petition before the Hon'ble High Court but on
account. of technical defect pointed out. by the Registry, the Company Petition was withdrawn. Then on
14.09.2016, the 'Financial Creditor' sent a notice under Section 434 of the Companies Act, 1956
requesting the `Corporate Debtor' to pay the entire outstanding amount with interest within three weeks,
which was duly received by the `Corporate Debtor' on 15.09.2016.
4. From the aforesaid facts, it is evident that the loan amount has been admitted in the email dated
15.09.2014, 19.05.2016, 08.06.2015, 22.11.2015 and 20.01.2016, the amount has not been paid as is
evident from various emails and the promises were made for repayment. In pursuance to Order dated
28.04.2017, the petitioner-`Financial Creditor' has filed audited Financial Statement for the year 2012-13,
2013-14 and 2014-15. A copy of the master data has also been filed. The 'Financial Creditor'-petitioner
has further filed a copy of proof of service with the tracking report of the courier company. All these
documents have been placed on record vide Application dated 04.05.2017 and accordingly the same are
taken on record.
5. Despite service, no one has put in appearance on behalf of the respondent and the claim made by
the 'Financial Creditor' goes un-rebutted.
6. We have heard learned Counsel at some length. At the outset, we raised a query as to how a
shareholder can be a `Financial Creditor'. In response to the aforesaid query, learned Counsel for the
petitioner has placed reliance on a part of the judgment rendered by the Division Bench of NCLT,
Mumbai in the case of Urban Infrastructure Trustee Ltd. v. Neelkanth Township and Construction Private
Ltd. (CP No. 69/165BP/NCLT/MAII/2017, decided on 21404.2017). The view taken by the Mumbai
Bench is that in his capacity as a 'Financial Creditor'-petitioner has locus standi to initiate proceedings
under the Code particularly when there is no bar. We agree with the aforesaid view.
7. The facts in the present case show advancement of loan, its acknowledgement and the default.
The documents on record answer the prescription of the Code and is in accordance with the provisions of
Section 7. It is complete in all respects and therefore, the petition warrants admission.
8. For the reasons afore-mentioned, this petition is admitted. Mr. Navneet Kumar Jain, Registration
No. IBBI/IPA-003/IPN00004 /2016- 17/ 10023 is appointed as Interim Resolution Professional as
1136
proposed by the 'Financial Creditor'-petitioner. As a consequence of admission, the Interim Resolution
Professional shall make a public announcement immediately as per the requirement of Section 13(2) of
the Code. There shall be moratorium effective under Section 14 of the Code from the date of this order.
The respondent-`Corporate Debtor' is estopped from doing any of the following acts:
includlng execution of any judgment, decree or order in any court of law, tribunal, arbitration panel or
other authority;
(c) any action to foreclose, recover or enforce any security interest created by the corporate debtor in.
possession of the corporate debtor".
9. However, the supply of essential goods or services to the corporate debtor as may be specified by
the Insolvency Resolution Professional shall not be terminated or suspended or interrupted during the
moratorium period. The moratorium provisions shall also not apply to such transaction which may be
notified by the Central Government in consultation with the financial sector regulator.
10. The Insolvency Professional shall perform all his functions as per the requirement of Section
15,16,17, 18. 20 and so on and so forth. It is expected that the personnel of the 'Corporate Debtor'-
respondent, its promoters or any other person associated with its management of the 'Corporate Debtor'
must extend all assistance and co-operation to the Interim Resolution Professional as may be required by
him in managing the affairs of the 'Corporate Debtor'. In case the statutory duties are not performed by the
'Corporate Debtor' or anyone else, then the Interim Resolution Professional would be entitled to file
appropriate application to this Tribunal seeking appropriate directions.
11. The petition stands disposed of in the above terms.
1137
PRINCIPAL BENCH
C.P. (I.B.) No. 104/7/NCLT/PB/2017
Applicant: Bank of India
Vs
Respondent: Tirupati Infraprojects Pvt. Ltd.
Judges/Coram:
Hon'ble Sh. M.M. Kumar (Member (J)
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Sanjay Bhatt, Mr. Naveen Kumar, Learned Advocates
For Respondents/Defendant: Mr. Manoj Kumar Singh, Mr. Vijay Kumar Singh, Ms. Daizy Chawla, Ms.
Vijaya Singh, Learned Advocates
ORDER
1. Bank of India being a lead Bank comprising the consortium of Bank of Baroda, Dena Bank
(which has assigned its debt in favour of Phoenix ARC Pvt. Ltd. on March 23, 2016), Canara Bank, Uco
Bank, Union Bank of India and Corporation Bank has approached this Tribunal under Section 7 of the
Insolvency and Bankruptcy Code, 2016 (for brevity the 'Code') describing itself as 'Financial Creditor'
with a prayer to initiate Corporate Insolvency Resolution Process against the 'Corporate Debtor'. The
applicant has claimed that it is a 'Financial Creditor' and the respondent is a 'Corporate Debtor' within the
meaning of the provisions of the Code.
2. Brief facts necessary for disposal of the controversy raised in this application are that Bank of
India is a body corporate constituted under the Banking Companies (Acquisition and Transfer of
Undertakings) Act, 1970 with its head office at Mumbai. The 'Corporate Debtor'-Tirupati Infraprojects
Pvt. Ltd. was incorporated under the Companies Act, 1956 on 05.01.2007 and _duly registered with the
1138
Registrar of Companies, NT of Delhi and Haryana. A certificate of its Incorporation alongwith
Memorandum of Association and Articles of Association has been placed on record (Annexure A/ I).
3. The 'Corporate Debtor' approached the 'Financial Creditor' for grant of term loan facility of Rs. 70
Crores out of its total term loan requirement of Rs. 300 Crores under multiple banking arrangement with a
view to set up a five star hotel cum retail space at Plot No. D, Commercial District Centre, Paschim
Vihar, New Delhi in area measuring 13158.71 sq. mtrs. It was represented that the 'Corporate Debtor' was
a part of group of companies with diverse interest in real estate, public schools, shopping malls and
hospitality township developments, etc. It was further disclosed that the 'Corporate Debtor' had acquired
land measuring 3.25 acres from DDA and it has already paid a sum of Rs. 60.26 crores to DDA, which
was 25% of the total bid value of the land i.e. Rs. 241 Crores. The 'Corporate Debtor' proposed to develop
a hotel and shopping complex on the said plot. Accordingly, a letter dated 15.09.2008 was submitted with
a request to grant term loan of Rs. 70 Crores.
4. The 'Financial Creditor' considered the request of the `Corporate Debtor' and after obtaining
necessary information sanctioned a term loan of Rs. 50 Crores to the 'Corporate Debtor' vide its sanction
letter dated 19.01.2009 on the terms and conditions stated in that letter. It was duly accepted by the
`Corporate Debtor' and the summary of the terms and conditions is as under: -
(Rs. In Crore)
Facility Existing Proposed Margin Effective

ROI/Commission
Fund based Limit - 50 Margin for TL 0.75% over BPLR

44% Overall 45% presently 13.25%
p.a. with monthly
rest
Total Fund Based - 50
Non-Fund Based - -
Limits
1139
5. The term loan of Rs. 50 Crores was repayable in 31 quarterly instalments of Rs. 160 lakhs each,
and 32nd instalment worth Rs. 40 lakhs. The repayment EMI was to commence from March, 2011. The
tenure of the term loan was 10 years and 3 months. The term loan was duly secured by securing personal
guarantees of the promoters alongwith following:
a. First Pari Passu Charge on the entire project assets including mortgage of Project land measuring 3.25
acres (13158.71 sq mtrs) with super structure thereon.
b. Hypothecation of all movable assets of the Project.
c. First Charge over all receivables and other current assets of the Project."
A copy of the sanction letter has been placed on record (Annexure A-3)
6. The terms and conditions indicated and incorporated in the sanction letter dated 19.01.2009 were
duly accepted by the Board Resolution passed by the 'Corporate Debtor' on 21.01.2009. The total term
loan sanctioned to the 'Corporate Debtor' by the Bank of India Consortium was Rs. 200 Crores apart from
a non-fund based facility of Rs. 12.60 Crores sanctioned by Canara Bank. The 'Corporate Debtor' as per
the resolution was to execute the necessary documents in favour of the Bank of India Consortium to avail
the term loan. A copy of the resolution dated 21.01.2009 has been placed on record (Annexure A-4). On
16.02.2009 the 'Corporate Debtor' executed various loan and security documents in pursuance of the
terms and conditions incorporated in the sanction letter in favour of the Bank of India Consortium,
including, the 'Financial Creditor'. It is appropriate to mention the details of the deed of hypothecation
executed by the 'Corporate Debtor' which are as under:-
a. On 16.02.2009, the 'Corporate Debtor' executed the term loan facility agreement in favour of the Bank
of India Consortium for due repayment of the term loan to the member Banks in accordance with the
terms specified. The term loan of Rs. 50 Crores disbursed by the 'Financial Creditor' was to be repaid
within a period of 10 years and 3 months in 31 equal quarterly instalments of Rs. 160 lakhs each and the
last instalment of Rs. 40 lakhs being 32nd. The term loan repayment was to commence from March 2011
with interest @ 0.75% over BPLR minimum 13.25% per annum with monthly rests (Annexure A-5).
b. The 'Corporate Debtor' also executed on 16.02.2009 a joint deed India Consortium for creating first
pari passu charge on all tangible moveable assets situated at the Project Property and/or in transit along
with first pari passu charge on all present and future debts of the `Corporate Debtor' (Annexure A-6).
The 'Financial Creditor' was appointed as a lead bank vide Inter Se Agreement dated 16.02.2009
(Annexure A-7). All approvals were duly obtained from the 'Financial Creditor' and three members of the
Consortium. That earlier sanctioned term loan of Rs. 200 Crones was increased to Rs. 300.00 Crones as
1140
the Corporation Bank, Dena Bank and Bank of Baroda had joined the Consortium (Annexure A-8).
Similar term loan facility agreement and joint deed of hypothecation were executed (Annexure A-9 as
Annexure A-10). The petitioner has also given the details of the Inter Se Agreement dated 06.03.2009
(Annexure A-11) and the Escrow Agreement dated 01.05.2009 (Annexure A12). The details of the
mortgage, title deeds and the amount secured have also been specified which include the land with
buildings, sheds and structures etc. As per the resolution of the Board of the 'Corporate Debtor' dated
27.11.2009 (Annexure A-13 Annexure A-14) various other documents have also been placed on record.
7. It was observed in 2011 that the term loan account of the 'Corporate Debtor' was not in order due
to non-servicing of interest for the months of March 201.1 to May 2011, amounting to Rs. 2.02 Ccores.
On the request made by the 'Corporate Debtor' the first restructuring was made and the 'Corporate Debtor'
was to make repayment of the loan in 36 instalments instead 32 EMIs in June 2011. The second
rescheduling took place in 2013. The matter was referred to the Corporate Debt Restructuring Cell on
16.08.2012 the financial restructuring package on the request 'Corporate Debtor' was approved on
07.03.2013
8. Despite efforts made by re-structuring the repayment schedule the default took place in 2014 as
from August, 2014 onwards monthly interest levied in Funded Interest Term Loan account was not
serviced. The statement. of FITL account No. 605965610000006 has been placed on record (Annexure A-
34). Despite written notices and constant follow up the 'Corporate Debtor' failed and neglected to make
payment to the 'Financial Creditor' in utter disregard and breach of the contractual obligations assumed
under the agreement.
9. In para 3 of the reply dated 26.05.2017 filed by the respondent-'Corporate Debtor' has accepted
the amount of term loan facility was availed by it for setting up a hotel cum retail space at a plot allotted
by the DDA. It has also conceded that term loan of Rs. SO Crores was sanctioned in January 2009 by the
'Financial Creditor'. The other material facts have not been controverted. It has been stated in the reply
that for the reasons beyond the control of the 'Corporate Debtor' the hotel business did not pick up and the
loan amount could not be repaid.
10. We have heard learned counsel for the parties.
11. The question which arises for consideration is whether the petitioner has been able to satisfy the
requirement of Section 7 of the Code. According to Section 7 (1) of the Code an application by the
'Financial Creditor' either on its own behalf or jointly with the other financial creditor would be
competent for initiating Corporate Insolvency Resolution Process against a Corporate Debtor before the
1141
present Tribunal when, a default has occurred. It is thus obvious that the lead bank like the petitioner is
thus competent to file this application on its own behalf and other banks who are members of the
Consortium.
12. In order to ascertain whether the default has occurred. it will be profitable to read Section 3 (12)
of the Code which states that default means non-payment of debt when whole or any part of the
instalment of the debt has become due 8[, payable and the same has not been repaid by the 'Corporate
Debtor'. In the present case, it has come on record that the default has occurred many a time when the
restructuring had taken place in 2011 and 2013. In any case finally a default has occurred when the loan
account of the 'Corporate Debtor' was classified as NPA on 30.09.2014 in accordance with the guidelines
issued by the Reserve Bank of India. In that regard particulars of financial debt have been mentioned
indicating that default occurred on 30.06.2014 when the first quarterly instalment of the term loan was
due for payment (Annexure A-46). In part IV of Form-1 a sum of Rs. 86,79,49,061.33/- only as on
15.05.2017 has been claimed to be a defaulted amount and the figure has been rectified by the affidavit
filed on 07.06.2017. The total defaulted amount is claimed to be over Rs. 1,09,32,72,312.86/- as per para
9 of affidavit.
13. Learned counsel for the petitioner has argued that in the additional affidavit it has been
adequately explained that the present petition has been instituted by Shri Rahulcndu Singh who is
working as Senior Manager, New Delhi Large Corporate Branch of Bank of India. According to the
learned counsel he has been duly authorized by the General Manager SiShri Ram Krishna Sinha and
Mrityunjay Kumar Gupta. It has been pointed out there is a resolution concerning delegation of power to
General Manager for granting Power of Attorney to other officers like Shri Rahulendu Singh. On
27.05.2016 a resolution by the Bank of India was passed with regard to delegation of powers to General
Managers for granting Power of Attorney to other officers (Annexure A-1 with the additional affidavit).
In the aforesaid meeting Memorandum No. HR/T&P/P0A/ASC/16-17 dated 27.05.2016 was submitted by
Human Resources Department for-seeking approval for delegation of Powers to General Managers for
granting Power of Attorney to other officers and it was considered and resolved as under:
"IT WAS RESOLVED THAT
APPROVAL he and is hereby accorded for granting Comprehensive General Manager's Power of
Attorney in favour of:
(i) Shri Nikhilcsh Bhargava;
(ii) Shri Bhalchandra Vasudeo Upadhye;
1142
(iii) Shri Prakash Kashinath Vartak;
(iv) Shri Mrityunjay Kumar Gupta;
for the reasons and as per the details as brought out in the memorandum."
Accordingly, the power of attorney dated 05.01.2017 (pages 761-762 Annexure A-44) duly
shows that Shri Ram Krishna Sinha and Mrityunjay Kumar Gupta, the General Manager of the Bank of
India have duly authorized and appointed Shri Rahulendu Singh to act as Senior Manager and in para 10
of the power of attorney he has been authorized to do all those acts mentioned therein. Para 10 of the
Power of Attorney reads as under:-
"10. In respect of any person, firm, society, company, corporation, association, syndicate or body
corporate to apply or petition for adjudication as insolvent or bankrupt or for winding up and prove any
debt or claim in the bankruptcy or insolvency or winding up and to take any proceedings and appear or
cause an appearance to be entered for the Bank in any proceeding for or in or after any such bankruptcy or
insolvency or any winding up and to make, sign, verify, affirm, swear, declare and file any petition,
affidavit, declaration, application or other claim or affidavit in proof of any debt due or claimed to be due
to the Bank and to attend and Vote or to give a proxy to or authorise any employee or employees of the
Bank or any other person to attend and vote at any meeting of creditors in any composition or in
insolvency bankruptcy or winding up proceedings & to propose, second or vote for or against any
resolution or resolutions at any such meeting and t.o appear at any public examination or any application
for discharge and t.o vote and/or to take part in appointment of any inspector, trustee or liquidator or
receiver or committee and generally to act for the Bank in all insolvency or bankruptcy or winding up
proceedings or authorise any employees of the Bank or any other person to so act in the premises."
The aforesaid narration of facts would show that the petition has been instituted by an authorized
person namely Shri Rahulendu Singh and the objection raised by the 'Corporate Debtor' would not
survive for consideration.
14. On behalf 'Corporate Debtor' learned counsel has raised some other objections namely that there
is mismatch of the defaulted amount given in Form- I and the affidavit filed on 07.06.2017. On a closer
scrutiny, we find that there is hardly any discrepancy. It is true that at various places, the amount
mentioned has been Rs. 82,37,29,049.33/-. However, in pares 9 of the affidavit filed on 07.06.2017 it has
been explained that some discrepancy in calculation had occurred and the actual total amount is Rs.
1,09,32,72,312.86/-. We are not impressed with the objection raised by the learned counsel for the
`Corporate Debtor' for variety of reasons. Firstly, as an Adjudicating Authority we are not entrusted with
1143
any function to determine the amount of default. Once the default has occurred involving rupees one lac
or more in terms of Section 4 of the Code one of the requirements is satisfied and secondly any objection
with regard to amount would be maintainable before the Committee of Creditors. Once default in terms of
Rule 3 (12) of the Code is established and all other requirements are fulfilled the Insolvency Resolution
Process has to be triggered.
15. On behalf of 'Corporate Debtor' still another objection has been raised which is based on a
judgment of the National Company Law Appellate Tribunal rendered in the case of JIC Jute Mills
Company Limited v. M/s Surendra Trading Company, Company Appeal (XI') (Insolvency) No. 09 of
2017 decided on 01.05.2017. Placing reliance on pare 51 of the judgment learned counsel has argued that
seven additional days' time could begranted to the 'Financial Creditor' for removing the defects and it is
mandatory. On the aforesaid principles, it has been submitted that the defects were pointed out on
30.05.2017 and the affidavit removing the defect was filed on 07.06.2017. According to the learned
counsel there is delay of one day in filing the objection whereas learned counsel for the petitioner has
argued that the there is no delay if language of Section 7 of the Code is considered.
16. we have thoughtfully considered the rival submissions advanced by the learned counsel for the
parties and are of the view that in order to arrive at the correct conclusion it would be necessary to
examine the provisions of Section 7 (2) and 7 (5) of the Code which read as under:
"Initiation of corporate insolvency resolution process by financial creditor.
7 (1) ................
7 (2) The financial creditor shall make an application under sub-section (1) in such form and manner and
accompanied with such fee as may be prescribed
7 (3) ..................
7 (4) .................
7 (5) Where the Adjudicating Authority is satisfied that-
disciplinary proceedings pending against the proposed resolution professional, it may, be order, admit
1144
application:
Provided that the Adjudicating Authority shall, before rejecting the application under clause (b)
of sub-section (5), give a notice to the application to rectify the defect in his application within seven days
of receipt of such notice from the Adjudicating Authority."
A Conjoint perusal of the aforesaid provision would reveal that from and manner of the
application has to be the one prescribed by the authorities. It is required to be accompanied by the
prescribed fee. It is further evident that if the application is incomplete as per the requirement of Section 7
(2) of the Code then this Tribunal being the Adjudicating Authority may reject it. However, proviso t
Section 7 (5) of the Code postulates that before rejecting the application on the ground that it is
incomplete in terms of Section 7(2) of the Code the Tribunal is obliged to give notice to the application to
rectify the defect in his application. The defect in the application needs to be removed within seven days
from the date of receipt of notice.
17. In the present case, no notice contemplated by proviso to Section 7 (5) of the Code was issued by
the registry of this Tribunal. In legal parlance expression notice has a definite connotation. It means an
advance notification or warning. It sows there was no defect in terms of Section 7 (2) of the Code read
with Rule 4 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 (fro
brevity Adjudicating Authority Rules). On the basis of the order dated 30.05.2017 the argument has been
carved out that seven days period commenced on 31.05.2017. Firstly, the order dated 30.05.2017 may not
by itself be regarded as notice within the meaning of proviso to Section 7 (5) of the Code. Secondly it is
highly doubtful whether the defect concerning power of attorney would be the one covered by Section 7
(2) of the Code. Section 7 (2) of the Code only provides that application has to be in the form and manner
as may be prescribed. By virtue of Section 7 of the Code read with Rule 4 of the Adjudicating Authority
Rules Form-1 has been prescribed as Performa for presentation of the application by a 'Financial
Creditor'. A perusal of Form-1 would reveal that there is no requirement specified in any part of that
Performa with regard to power of attorney. It would thus mean that there is no defect in terms of Section
7 (2) read with Section 7 (5) of the Code. It does not however lead to the conclusion that there is no
requirement of filing a power of attorney. But then it is a different matter and would not be hit by the
defect in the Performa prescribed by Rule 4 of Adjudicating Authority Rules. It is not that every defect is
hit by Section 7 (2) of the Code. Therefore, no notice by the registry was issued. This is a hyper technical
legal argument raised on the basis of order dated 30.05.2017. Talking clue from the order of that date this
1145
argument has been advanced. Therefore, we do not accept the submission. Going by that conclusion we
find affidavit has been filed on 07.06.2017 which has consumed seven days time. Therefore, we do not
find any substance in the aforesaid submission and reject the same.
18. For the reasons, aforementioned this petition is admitted. Shri Anil Kohli (Charted Accountant,
LLB) who is duly registered with Insolvency and Bankruptcy Board of India (IIBI/IPA-01/IP-
00049/2016-17/1600) has been proposed as an Interim Resolution Professional. He has filed his
certificate of registration with Insolvency and Bankruptcy Board of India. He has also filed his written
communication dated 16.05.2017 in connection with the application to initiate Corporate Insolvency
Resolution Process (pages 69/72). The disclosure has been made in the letter dated 16.05.2017.
19. In pursuance of Section 13 (2) of the Code we direct that public announcement shall be
immediately made by the Interim Resolution Professional with regard to admission of this application
under Section 7 of the Code. We also declare moratorium in terms of Section 14 of the Code. A necessary
consequence of the moratorium flows from the provisions of Section 14 (1) (a), (b), (c) & (d). Thus, the
following prohibitions are imposed:
order authority;
possession of the corporate debtor;
period.
21. The Interim Resolution Professional shall perform all his functions contemplated, interalia, by
Section 15, 17, 18, 19, 20 & 21 of the Code. It is further made clear that all the personnel connected with
1146
the Corporate Debtor, its promoters or any other person associated with the Management of the Corporate
Debtor are under legal obligation under Section 19 of the Code to extend every assistance and cooperation
to the Interim Resolution Professional as may be required by him in managing the affairs of the Corporate
Debtor. In case there is any violation the Interim Resolution Professional would be liberty to make
appropriate application to this Tribunal with a prayer for passing an appropriate order. The Interim
Resolution Professional shall be under duty to protect and preserve the value of the property of the
'Corporate Debtor' as a part of its obligation imposed by Section 20 of the Code and perform all his
22. The petition is disposed of in the above terms.
1147
PRINCIPAL BENCH
C.P. (I.B.) No. 202/7/NCLT/PB/2017
Applicant: Punjab National Bank
Vs
Respondent: Bhushan Power and Steel Limited
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Bishwajit Dubey, Mr.Manpreet Lamba, Ms. Priyal Moot, Ms.
Surabhi Kattar, Learned Advocates
For Respondents/Defendant: Mr. U.K. Chaudhary, Sr. Advocate Mr. Mahesh Aggarwal, Advocate Mr,
Surnesh Dhawan, Advocate, Mr. Rajeev Kumar, Learned Advocate, Ms. Vatsala Kak, Ms. Shally Bhasin
Ms. Jasuin Dhama, Learned Advocates, Mr. Vivek Sibal, Ms. Jasmine Kottai. Learned Advocats
ORDER
The Punjab National Bank (for brevity ?NB-Financial Creditor') has filed the instant application
under Section 7 of the Insolvency and Bankruptcy Code, 2016 (for brevity 'the Code'). with a prayer for
triggering the insolvency resolution process in the matter of Bhushan Power and Steel Limited (for
brevity the `Corporate Debtor). It is appropriate to mention that PNB`Financial Creditor' is a body
corporate constituted by the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970
having its registered office at 7, Bhikaji Lama Place, New Delhi. The 'Corporate Debtor' has CIN No.
U27100DL1999PLC108350. It was incorporated on 22.02.1999. Its authorised share capital is Rs.
450,00,00.000i- (Rupees Four Hundred Fifty Crore only) and the paid up share capital is
Rs.249,70,11,300/- (Rupees Two Hundred Forty Nine Crore Seventy Lakhs Eleven Thousand Three
Hundred). The aforesaid data concerning the Corporate Debtor is authenticated by master data available
on the website of Ministry of Corporate Affairs and the Memorandum of Association available with the
'PNB-Financial Creditor' (Annexure-3).
1148
2. The 'Financial Creditor' has also named Shri Mahender Kumar Khandewal, Golf Course,
Gurgaon (Regn. No. IBRI/IPA 001/ IP-P00033/2016-17/ 10086), which satisfied the requirement of
Section 7(3)(b) of the Code.
3. The 'Financial Creditor' has also given the details of Financial Debt, Working Capital Facilities,
Details of Term Loan and External Commercial Borrowings Facilities. In part-IV of the application,
which is on a proforma prescribed under Rule-4 of the Insolvency 86 Bankruptcy (Application to
Adjudicating Authority) Rules, 2016 read with Section 7 of the Code, has given the following details
about the financial debts:
a) In total facilities aggregating to Rs.3750,53,92,271/- (Rupees Three Thousand Seven Hundred Fifty
Crores Three Lakhs Ninety Two Thousand and Two Hundred Seventy One only).
b) External commercial borrowings aggregating to USD98,000,000 (Ninety Eight Million Dollars) (rupee
equivalent of which as of May 31, 2017 as per RBI reference rating is Rs.632,59,00,000/- (Rupees Six
Hundred Thirty Two Crores and Fifty Nine Lakhs only).
c) The total amount of facilities is Rs.4383,12,92,271/- (Rupees Four Thousand Three Hundred Eighty-
Three Crores Twelve Lakhs Ninety Two Hundred and Two Hundred Seventy One only).
There is full description of the individual facilities and the amounts disbursed thereunder which
have been set out under the working capital facilities, term loan facilities and external commercial
borrowings facilities.
4. The defaulted amount within the meaning of Section 3(12) has also been disclosed under the
Working Capital Consortium Agreement. The defaulted amount as on 31.05.2017 in respect of fund based
working capital facilities is Rs.541,43,00,000 (Rupees Five Hundred Forty One Crores and Forty Three
Lakhs). The amount include for which letters of credit and guarantees were issued, invoked and not repaid
under the non-fund based facilities and include interest on such amounts. The initial date of default by the
'Corporate Debtor' in respect of fund based working capital facilities is 01.02.2016. In respect of term
loan, the initial date of default is 01.03.2016 and the defaulted amount under the Term Loan Agreement I
as on 31.05.2017 is Rs.17,04,00,000/- (Rupees Seventeen Crores and Four Lakhs Only). Likewise, In
respect of Term Loan Agreement II, the defaulted amount is claimed to be Rs.34,73,00,000/- (Rupees
Thirty Four Crores and Seventy Three Lakhs Only) and the initial date of default by the 'Corporate Debtor
is 01.11.2016. There are further illustration of defaulted amount in respect of Term Loan Agreement III,
IV, V, VI and VII and the details are available on record (pgs. 13-15). In respect of ECB Facility
Agreement-I, II and III, again defaulted amount has been specified in US Dollar at pages 15 to 18. All the
1149
aforesaid figures are proved by the documents placed on record (Annexure P-5 to P17). The 'Financial
Creditor has also given particulars of Financial debt documents, records and evidence of default with the
help of annexures, which have been placed on record (P-7 to P-11, pgs. 18 to 23). Evidence as per
Banker's Book has also been placed on record. The guarantees furnished by Mr. Sanjay Singhal and
Ms.Aarti Singhal as guarantors have also been placed on record (Annexures- 24 to 42).
5. From the perusal of the record, we are satisfied that the 'Financial Creditor' has proved by
overwhelming evidence that default has occurred, which meets the requirement of Section 3(11) 8r, (12)
read with Section 7(3)(a) and Section 7(5) of the Code. We further find that the application is complete in
all respects as the Insolvency Professional, Mr. Mahender Kumar has also been proposed.
1150
PRINCIPAL BENCH
C.P. (I.B.) No. 201/7/NCLT/PB/2017
Vs
Respondent: Bhushan Power and Steel Limited
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Bishwajit Dubey, Mr.Manpreet Lamba, Ms. Priyal Moot, Ms.
Surabhi Kattar, Learned Advocates
For Respondents/Defendant: Mr. U.K. Chaudhary, Sr. Advocate Mr. Mahesh Aggarwal, Advocate Mr,
Surnesh Dhawan, Advocate, Mr. Rajeev Kumar, Learned Advocate, Ms. Vatsala Kak, Ms. Shally Bhasin
Ms. Jasuin Dhama, Learned Advocates, Mr. Vivek Sibal, Ms. Jasmine Kottai. Learned Advocats
ORDER
1. The State Bank of India is a Bank established by the State Bank of India Act, 1955. It is a
Parliamentary Legislation which was to transfer all the assets of imperial Bank of India to it. The Act
made various provisions with regard to the transfer and other matter connected with or incidental thereto.
There are many other developments which might have taken place but in the present case we are
concerned with the merger of other five subsidiaries Banks into State Bank of India namely State Bank of
Bikaner and Jaipur, State Bank of Hyderabad, State Bank of Mysore, State of Patiala and State Bank of
Travancore. As a result of merger, the combination has become the first Indian lender bank to rank
amongst the world's top 50 banks. A document with regard to merger has been placed on record of this
petition. The merger has taken place w.e.f. 01.04.2017 vide notification dated 22.02.2017. The gazette
notification to this effect has been placed on record (Annexure P/1).
1151
2. Sometimes in the history of a nation evolutionary processes are perfected so as to usher in
financial stability by striking at the elements of uncertainty. To achieve the object Insolvency and
Bankruptcy Code, 2016 has been enacted (for brevity 'IBC'). The problems of ever increasing Non-
performing assets is attempted to be resolved in a time bound manner for maximisation of value of assets,
inter alia, in respect of Corporate persons and also to promote entrepreneurship, availability of credit and
balancing the interests of, and alteration in, the order of priority of Government dues.
3. Taking advantage of the IBC, the present petition has been filed by the State Bank of India under
Section 7 thereof in the matter of Bhushan Steel Limited (for brevity 'the Financial Debtor') with a prayer
to initiate Corporate Insolvency Resolution Process. The Financial Debtor has its registered office at
Bhushan Centre, Ground Floor, Hyatt Regency Complex, Bhikaji Cama Place, New Delhi. The petitioner
has also proposed the name of Interim Resolution Professional Mr. Vijay Kumar V. Iyer (IBBI/IPA-
001/IP-P00261/2017-18/10490). He has also filed a declaration stating that he was eligible to be
appointed as Interim Resolution Professional in respect of the Financial Debtor in accordance with the
provisions of Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate
persons) Regulations, 2016. The petition was filed on 03.07.2017 and the pleadings have been completed.
4. Facts which are material to the controversy raised may first be noticed. According to the
particulars of the debt disclosed in part IV of Form-1 prescribed under sub-rule 1 of Rule 4 of the
Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 the total amount of debt
granted to the Corporate Debtor is 9227,15,79,856 (Rupees Nine Thousand Two Hundred and Twenty
Seven Crores Fifteen Lakhs Seventy Nine Thousand Eight Hundred and Fifty Six Only) as Indian Rupee
Loan and US$ 527,434,877 (United States Dollars Five Hundred and Twenty Seven Million Four
Hundred and Thirty Four Thousand Eight Hundred Seventy Seven Only) as Foreign Currency Loan. The
details of the amount disbursed have been furnished in Annexure P/6. A perusal of the aforesaid
document would show the date and amount of disbursement alongwith the account number of the State
Bank of India and other Banks merged with it in pursuance of the gazette notification dated 22.02.2017
w.e.f. 01.04.2017. The details of disbursement as given in Annexure P/6 are as under:-
"DETAILS OF DISBURSEMENT
MASTER FACILITY AGREEMENT OF RS. 1000 CRORE

GRANTED BY STATE BANK OF INDIA
Account No. - 32904061641
1152
Date of Disbursement Amount of Disbursement (Rs.)
23/03/2013 200,00,00,000
4/02/2013 300,00.00,000
4/03/2013 500.00.00.000
TOTAL 1000,00,00.000
MASTER FACILITY AGREEMENT FOR RS. 4300 CRORE
INTER ALFA GRANTED BY STATE BANK OF INDIA
Account No. - 33727442305 (State Bank of India)
18/03/2014 210,00,00,000
22/03/2014 40,00,00,000
17/06/2014 50,00,00,000
27/08/2014 33,25,00,000
30/08/2014 800,00,000
29/11/2014 875,00,000
27/12/2014 50,00,00,000
28/01/2015 30,00,00,000
23/03/2015 20,00,00,000
6/05/2015 25,00,00.000
6/06/2015 10,00,00,000
31/07/2015 15,00,00,000
1153
TOTAL 500,00,00,000
Account No. - 62344427009 (State Bank of Hyderabad)
Date of Disbursement Amount of Disbursement (Rs)
30/05/2014 40,00,00,000
9/07/2014 7,00,00,000
22/10/2014 12,00,00,000
24/11/2014 5,00,00,000
22/12/2014 7,00,00,000
17/01/2015 4,00,00,000
TOTAL 75,00,00,000
Account No. - 67271238142 (State Bank of Travancore)
31/03/2014 58.00.00,000
25/06/2014 75,00,00,000
28/11/2014 2,71,00,000
18/12/2014 14,00,00,000
Total 149,71,00,000
Loan Account No. - 65192556441 (State Bank of Patiala)
24/03/2014 20,00,00.000
25/03/2014 19,00.00.000
1154
31/03/2014 55,00,00,000
28/07/2014 9,00,00,000
28/07/2014 8,75,00,000
28/08/2014 59,10,00,000
2/09/2014 8,00,00,000
18/11/2014 10.50.00,000
19/11/2014 1,00,00,000
24/12/2014 1965,00,000
27/12/2014 55,00.00,000
31/12/2014 67,00,000
23/03/2015 32.00,00,000
30/04/2015 2,33.00,000
Total 300,00,00,000
Loan Account No. - 65220217147 (State Bank of Patiala)
23/12/2014 80,00,00,000
24/12/2014 25,00,00.000
27/12/2014 27,00,00,000
31/12/2014 33,00,000
23/03/2015 16,00,00.000
30/04/2015 1,67,00.000
1155
TOTAL 150,00,00,000
Loan Account No. - 64139342941 (State Bank of Mysore)
25/03/2014 62,50,00,000
23/06/2014 12,50,00,000
23/08/2014 10,31,00,000
16/12/2014 2,19,00,000
26/12/2014 12,50,00,000
23/02/2015 12,50,00,000
8/06/2015 12,50,00,000
TOTAL 125,00,00,000
Account No. - 61216936803 (State Bank of Bikaner and Jaipur)
24/03/2014 50,00,00,000
28/07/2014 20,00,00,000
30/12/2014 10.00,00,000
25/02/2015 2,00.00,000
25/02/2015 1,50,00.000
25/03/2015 14,30,00,000
30/03/2015 2,20,00,000
TOTAL 100,00,00,000
1156
TERM LOAN FOR 410 CRORE FOR PHASE I AND 11 GRANTED
BY STATE BANK OF INDIA (STRUCTURED VIDE DEBT
STRUCTURING AGREEMENT FOR FLEXIBLE STUCTURING
SCHEME)

28/05/2007 78,5000.000
2/07/2008 78,50,00,000
22/10/2008 26,03,00,000
TOTAL 183,03,00,000
3/01/2008 7,50,00,000
TOTAL 7,50,00,000
TERM LOAN FOR GENERAL MAINTENANCE CAPEX OF RS.
2026 CRORES GRANTED BY STATE BANK OF INDIA
18/09/2015 25.00,00,000
19/10/2015 25,00,00,000
21/12/2015 12,50.00.000
TOTAL 62,50,00,000
. ..
1157
26/08/2015 12,00,00,000
21/09/2015 3,00,00,000
27/11/2015 2,50,00,000
22/12/2015 2,50,00,000
TOTAL 20,00,00,000
22/01/2016 3,50,00,000
22/02/2016 63,00.00,000
28/04/2016 8,50.00.000
TOTAL 75,00,00,000
Account No. - 65237788306 Corporate loan (State Bank of Patiala)
26/08/2015 10.00,00,000
27/08/2015 15.00,00,000
30/09/2015 4,00,00,000
4/12/2015 17,50,00,000
31/12/2015 16,50,00,000
TOTAL 63.00.00,000
Account No. - 64181459039 OMB (State Bank of Mysore)
8/09/2015 19.50,00,000
1158
27/10/2015 7,50,00,000
13/11/2015 7,00,00,000
8/12/2015 17,00,00,000
30/01/2016 10,60,00,000
24/02/2016 14 ,25.00.000
16/05/2016 22,25,00,000
17/06/2016 3,00,00,000
28/06/2016 3,25,00,000
31/08/2016 3,00,00,000
4/11/2016 3,83,808
TOTAL 107,38,83,808

30/05/2015 4,00,00,000
05/06/2015 5,05,000
28/10/2015 3,94,95,000
TOTAL 8,00,00,000
TERM LOAN OF RS. 13,245 CRORES PURSUANT TO FLEXIBLE

STRUCTURING SCHEME GRANTED BY STATE BANK OF INDIA
26/08/2015 266,18,00,000
Account No. - 65235531431 (State Bank of Patiala)
Date of Disbursement Date of Disbursement
30/6/2015 295,01,99,999
1159
(1) This account combines three (3) facilities i.e. (a) Memorandum of Agreement dated 26 December
2013 of loan for overall limit executed between erstwhile State Bank of Hyderabad to the Corporate
Debtor for Rs. 100 Crores; (b) Memorandum of Agreement dated 11 May 2012 of loan for overall limit
executed between erstwhile State Bank of Hyderabad to the Corporate Debtor for Rs. 150 Crores; and (c)
Sanction limit of erstwhile State Bank of Hyderabad in Common Facility Agreement dated 27 February
2008
(2) This account combines three (3) facilities i.e. Sanction limit of erstwhile State Bank of Patiala in
Common Facility Agreement dated 27 February 2008; (b) Agreement of Loan for Overall Limited dated
23 March 2013 executed between the Corporate Debtor and the erstwhile State Bank of Patiala
(structured vide Debt Structuring Agreement 5/25 scheme); and (c) Agreement of Loan for Overall
Limited executed between the Corporate Debtor and the erstwhile State Bank of Patiala (structured vide
Debt Structuring Agreement 5/25 scheme).
COMMON FACILITY AGREEMENT FOR RS. 2733 CRORE FOR

PHASE III GRANTED BY STATE BANK OF INDIA (STRUCTURED
VIDE DEBT STRUCTURING AGREEMENT FOR FLEXIBLE
STUCTURING SCHEME)
16/06/2008 71,66,00,000
20/01/2012 91,00,00,000
30/08/2012 140,00,00,000
9/05/2012 16,67.00.000
31/10/2012 3,48.00,000
21/11/2012 8,77,88,000
30/11/2012 16,97,00.000
12/05/2012 20.65,00.000
18/01/2013 5,38,00,000
2/11/2013 20,31,00,000
Total 394,89,88,000
1160
16/06/2008 6,59,00,000
12/07/2010 4,28,00,000
28/01/2012 45,96,908
28/01/2012 18,69,309
28/01/2012 6,10,523
28/01/2012 14,97,309
22/02/2012 26.38.530
22/02/2012 96,10,663
12/03/2012 10,96,480
26/03/2012 50,33,281
17/04/2012 69,59,596
17/04/2012 1,01,04,546
17/04/2012 14,85,710
17/04/2012 2,85,53,760
12/05/2012 95,42,474
5/11/2012 9,50.00,000
16/12/2015 750.00,000
Total 36,22,99,089
20/6/2015 31,22,00,000
Total 31,22,00,000
1161
TERM LOAN FOR ADDITIONAL BALANCING CAPER FOR AN
AMOUNT OF RS. 960 CRORES GRANTED BY STATE BANK OF
INDIA

17/12/2015 50,00.00,000
19/05/2016 44,59,96.644
28/06/2016 6,03,91.880
Total 100,63,88,524
9/03/2016 3,39,63,823
3/06/2016 91,03,161
25/07/2016 7,58,73,690
1/08/2016 4,07,84,375
5/08/2016 4,14,11,465
8/08/2016 26,90,010
12/08/2016 1,24,58.346
7/09/2016 62,29,173
23/09/2016 25.31,917
13/10/2016 28,08,543
TOTAL 22,78,54,503
Account No. - 64182838979 CAME (State Bank of Mysore)

8/06/2016 7.60,05.000
1162
23/08/2016 6,25,00,000
13/10/2016 6.35,00,000
TOTAL 20,20,05,000
28/10/2015 3,00,00,000
23/12/2015 1,70,00.000
07/10/2016 9.30.00.000
Total 14,00,00,000
RS. 150 CRORE LOAN AGREEMENT GRANTED BY STATE
BANK OF BIKANER AND JAIPUR (STRUCTURED VIDE DEBT
STRUCTURING AGREEMENT FOR FLEXIBLE STUCTURING
SCHEME)
Account No. - 61276197463
20/06/2015 100.00,00.000
Total 100,00,00,000
CORPORATE LOAN OF R8. 75 CRORE GRANTED BY STATE
BANK OF BIKANER AND JAIPUR
Account No. - 61190633597
28/06/2013 75,00.00,000
Total 75,00,00,000
1163
CORPORATE LOAN OP RS. 150 CRORES BY ERSTWHILE
STATE BANK OF TRAVANCORE
Account No. - 67203789519
7/12/2012 150.00,00,000
7/12/2012 150.00,00,000
Total 150,00,00,000
CORPORATE LOAN OF RS. 150 CRORES BY ERSTWHILE STATE

BANK OF TRAVANCORE
Account No. - 67238477555

12/08/2013 150,00.00,000
Total 150,00,00,000
CORPORATE LOAN OF RS 200 CRORES GRANTED BY ERSTWHILE

STATE BANK OF HYDERABAD
Account No. - 62295533428

10/08/2013 200,00,00,000
CORPORATE LOAN OF RS. 100 CRORES BY ERSTWHILE STATE
BANK OF MYSORE
Account No. - 64127017006
25/09/2013 100,00,00,000
1164
CORPORATE LOAN OF RS. 75 CRORES GRANTED BY THE
ERSTWHILE STATE BANK OF MYSORE
Account No. - 64104161997

12/09/2012 75.00.00,000
CORPORATE LOAN OF RS. 75 CHORES GRANTED BY THE

ERSTWHILE STATE BANK OF MYSORE
Account No. - 64094999957

21/03/2012 19,48,30,000
24/09/2014 53,92,64,000
TOTAL 73,40,94,000
TERM LOAN OF RS. 100 CRORES GRANTED BY THE ERSTWHILE
STATE BANK OF MYSORE (STRUCTURED MIS
DEBT STRUCTURING AGREEMENT FOR FLEXIBLE
STUCTURING SCHEME)
Account No. - 64175772277
26/06/2015 66,52,00,000
TERM LOAN OF RS. 100 CRORES GRANTED BY THE
ERSTWHILE STATE BANK OF MYSORE (STRUCTURED VIDE
DEBT STRUCTURING AGREEMENT FOR FLEXIBLE
STUCTURING SCHEME)
Account No. - 64175772288

26/06/2015 44,44,00,000
/NOTE: The working capital has been disbursed vide working capital consortium agreement dated 2
March 2015 entered into inter alia between the Corporate Debtor and State Bank of India (including the
associate banks amalgamated w.e.f. 1 April 2017 in pursuance of the Gazette notification dated 22
February 2017) for the purposes of providing working capital to the Corporate Debtor upto a total limit of
1165
Rs. 12,459 Crores. The accounts for the said facility are running accounts with disbursals on a regular
basis and the details for the same are reflected in the statement of accounts for the accounts maintained
with respect to the working capital consortium agreement dated 2 March 2015 and enclosed separately
with this Application."
5. A perusal of the aforesaid details of disbursement would show that the working capital has been
disbursed vide the working capital consortium agreement dated 02.03.2015 entered into inter alia between
the Corporate Debtor and the State Bank of India along with other associate Banks amalgamated with it
w.e.f. 01.04.2017 for the purpose of providing working capital to the Corporate Debtor upto a total limit
of Rs. 12,459 crores. The account for the said facility for running accounts with disbursal on a regular
basis and the details of the same have been reflected in the statement of account. For the accounts
maintained with respect to the working capital consortium agreement dated 02.03.2015 which have been
separately enclosed with the application.
6. In column 2 of part IV the amount claimed to be default and the date on which the default
occurred have been stated in the clear terms. According to the averments made by the Financial Creditor-
State Bank of India the facility availed by the Corporate Debtor are overdue and total amount in default is
Rs. 4390,75,41,611 (Indian Rupees Four Thousand Three Hundred Ninety Crores Seventy Five Lakhs
Forty One Thousand Six Hundred and Eleven Only) for the Indian Rupee Loans and US$ 49,684,877
(United States Dollars Forty Nine Million Six Hundred Eighty Four Thousand Eight Hundred and
Seventy Seven Only) towards the Foreign Currency Loan. The details with regard to the date, amount and
the days of default with respect to the facility granted by the Financial Creditor to the Corporate Debtor
have also been placed on record (Annexure P/7).
7. In order to avoid lapsing of loan on account of the period of limitation the Corporate Debtor
and/or Mr. Brij Bhushan Singal and Mr. Neeraj Singal have issued the revival letters constituting its
acknowledgment of liabilities towards the Financial Creditor in relation to various facilities. The
following is the list of letters acknowledging the financial debt outstanding towards the respondent:
1. Revival Letter(s) dated 5 February 2008 in favour

of SBI with respect to the Term Loan Facilities
Agreement dated 15 March 2005 for a total limit
of Rs. 2100 Crores
2. Revival Letter(s) dated 1 I January 2011 in favour
of 561 with respect to the Common Facility
1166
Agreement 27 February 2008 (as amended on I
May 2010) for a total limit of Rs. 2733 Crores.
3. Revival Letter(s) dated 11 January 2011 in favour
of SBI with respect to the Term Loan Facilities
Agreement dated 15 March 2005 and revival letter
dated 5 February 2008 for a total limit of Rs. 2100
Crores.
4. Revival Letters) dated 27 April 2013 in favour of
SB1 with respect to the Term loan Facilities
Agreement 15 March 2005 and revival letters
dated 5 February 2008 and 11 January 2011 for a
total limit of Rs. 2100 Crores.
5. Revival Letters dated 15 March 2016 in favour of
SBI with respect to the Term Loan Facilities
Agreement 15 March 2005 and revival letters
dated 5 February 2008, 11 January 2011 and 27
April 2013 for a total limit of Rs. 2100 Crores.
6. Revival Letters dated 15 March 2016 in favour of
SBI with respect to the Term Loan Facilities
Agreement dated 22 March 2013 for a total limit
of Rs. 1000 Crore
7. Revival Letters. dated March 2016 in favour of
$31 with respect to the Common Facility
Agreement 27 February 2008 (as amended on
May 2010), revival letter dated 11 January 2011
and 27 April 2013 for a total limit of Rs. 2733
Crores.
8. Revival Letter dated 1 August 2016 in favour of
the erstwhile State Bank of Hyderabad with
respect to the, loan agreement for Rs. 200 Crores.
9. Revival letter dated 9 December 2014 in favour of
the erstwhile State Bank of Bikaner and Jaipur
with respect to the Memorandum of Agreement
dated 23 December 2011 for a corporate loan of
1167
Rs. ISO Crores.
10. Revival letter dated 10 June 2016 in favour of
erstwhile State Bank of Bikaner and Jaipur with
respect to the Memorandum of Agreement dated
28 June 2013 for a corporate loan of Rs. 75
Crores.
11. Revival Letters) dated 21 July 2016 in favour of
erstwhile State Bank of Travancore with respect to
the Memorandum of Agreement dated 7 August
2013 for meeting funding requirement of the
ongoing normal capex for a corporate loan of Rs.
150 Crores.
12. Revival Letter dated 19 September 2014 issued by
Mr. Neemj Singal for the purposes of the
Limitation in favour of erstwhile State Bank of
Mysore with respect to the Memorandum of
Agreement dated 19 March 2012 for a corporate
loan of Rs. 75 Crores for part financing the normal
capital expenditure at the existing manufacturing
facilities.
13. Revival Letter dated 17 March 2017 issued by the
Corporate Debtor for the purposes of the
limitation in favour of erstwhile State Bank of
Mysore with respect to the Memorandum of
Agreement dated 19 March 2012 for a corporate
loan of Rs. 75 Crores for part financing the normal
capital expenditure at the existing manufacturing
facilities.
14. Revival Letter dated 1 August 2016 in favour of
erstwhile State Bank of Hyderabad with respect to
the Agreement of Loan for Overall Limit dated 7
August 2013 executed between the Corporate
Debtor and the erstwhile State Bank of Patiala for
a Corporate Loan of Rs. 2001 Crores.
1168
15. Revival Latter(s) dated 10 March 2017 in favour
of State Bank 01 India with respect to the Master
Facility Agreement dated 12 March 2014 for a
sum of Rs. 4300 Crores.
16. Revival Letter dated 1 September 2016 in favour
of erstwhile State Bank of Mysore with respect to
the Memorandum of Agreement dated 16
September 2013 for Rs. 100 Crores.
Copies of the above revival letters are annexed herein

as Annexure 8 Molly).
8. There are then the balance confirmation letters by the Corporate Debtor which have been placed
on record at pgs. 7321-7342 (Vol 38-39). It is pertinent to notice one sample confirmation letter duly
signed on behalf of the respondent which reads 'I/We confirm that the balance of my/our Buyer's Credit
Account of Rs. 133.00 Cr as on 31st March 2016 was Rs. 127,84,14,555.16 Cr. (Rs. One hundred twenty
seven crores eighty four lacs fourteen thousand five hundred fifty five only). Similar confirmation letters
have been issued to the State Bank of India and the associate Banks which have merged with it w.e.f.
01.04.2017. The petitioner have furnished the details of balance confirmation in the form of a table which
for convenience is extracted and the same reads as under:-
"Details of balance confirmation
Entity Date of Balance Amount confirmed (In Page No.

Rupees)
Sate Bank of India 31 March 2016 4011,67,48,711.23 Pg 7342 (Vol 39)
Erstwhile State Bank of 31 March 2016 926,40,52,394.00 Pgs. 7321-7334 (Vol
Bikaner and Jaipur 38)
Erstwhile State Bank of 31 March 2015 916,94,31,879.70 Pg 7335 (Vol. 38)
Patiala
Erstwhile State Bank of 31 March 2017 670,07,92,810.70 Pgs. 7336-7338 (Vol
Mysore 38) & Pgs. 7339 to 7341
(Vol 39)
Total 6525,10,25,795.63
1169
9. In addition to the amount confirmed as reflected in the column 'Total' the Corporate Debtor has
also admitted accrued interest on this amount which could not be quantified at the time of balance
confirmation.
10. It is also pertinent to mention that the Corporate Debtor in its balance sheet has acknowledged the
following amounts as borrowed from the Banks:
Principal Amount Interest Amount

Type of loan
(In Rupees) (In Rupees)
Cash Credit from banks
Foreign Currency Loans 519,00,14,000 315,70,31,000
Rupee Loan 9249,10.04,000 6661,81,38,000
Term Loan from banks
Foreign Currency Loans 827,19,91,000 132,67,19,000
Rupee Loans 196,41,33,000 950,57,18,000
Total 10791,71,42,000 8060,76,06,000

Principal + Interest 18852,47,48,000*
*Only secured loans details have been included in the table above."
11. The State Bank of India and the associate Banks which have merged with it w.e.f. 01.04.2017
have issued default notice to the Corporate Debtor from time to time and the details of the latest letters
sent to the Corporate Debtor are as under:
1170
12. It is already noticed in the preceding paras that the Corporate Debtor and the guarantors have also
issued facility wise revival letters for the purposes of limitation.
13. The Financial Creditor has also furnished details of facilities furnished to the Corporate Debtor
from time to time by attaching all sanction letters and facility agreements which have been placed on
record (pages 381 to 3131). The details of the security interest held by the Financial Creditor along with
ROC record has also been placed on record (from pages 193-372).
14. There are various documents placed on record establishing authority to file the application which
include authorization dated 16.06.2017 issued by the Chairman of the State Bank of India. It clearly states
that in pursuance of powers confer under Section 27 of the Bank of India Act, 1955 the Chairman
authorize all the officers on whom signing powers have been conferred vide the gazette Notification dated
27.03.1987 to sign applications, reply, affidavit, counter affidavit, sur rejoinder and generally all
pleadings and file applications for initiation of Corporate Insolvency Resolution Process before the
National Company Law Tribunal, under the provisions of IBC on behalf of the Bank or in connection
with any proceedings before Tribunal for or against the Bank under IBC. A reference has then be made to
Regulation 76 & 77 of the State Bank of India (General Regulations, 1955). Regulation 77 with regard to
signing the pleadings clearly stipulates that plaints, written statements, petitions and applications may be
signed and verified, affidavits may be sworn or affirmed, bonds may be signed, sealed and delivered, and
generally all other documents connected with legal proceedings may be made and completed on behalf of
the State Bank of India by the Chairman or by any officer or employee empowered by or under
Regulation 76 to sign documents for and on behalf of the State Bank. According to Regulation 76 the
managing directors (deputy managing director), the chief general manager and such other officers and
employees of the State Bank as may be authorized in this behalf by the Central Board or the Executive
Committee have been authorized to sign all documents, instruments, accounts, receipts etc. It is pertinent
to notice that a notification dated 27.03.1987 was issued (at page 51) authorising all officers in the Grade
of Senior Management Grade Skill-IV (SMGS-IV) and above to exercise the signing power to sign all
documents, instruments, accounts, receipts, letter and advices etc. connected with the current or
authorized business of the Bank in respect of all matters coming in discharge of functions of the posts
held for the time being. Accordingly, the present petition has been signed by one Mr. Akhilesh Kumar
who has been an officer in the SMGS-IV w.e.f. 27.06.2015. Therefore, it is established that the petition
has been filed by a person authorized in accordance with law. The affidavit and the vakalatnama have also
been signed by the aforesaid officer.
1171
15. When the matter came up for consideration on the first date of hearing on 13.07.2017 learned
counsel for the respondent sought time to file objection. We granted time for filing objection on or before
17.07.2017 and ordered listing of the matter for arguments on 19.07.2017. Accordingly, the objections
have been filed. The first objection is with regard to specific authorization of Mr. Akhilesh Kumar
alleging that the officer did not have authority to initiate and file the application on behalf of the Financial
Creditor. As already observed this objection would not survive in view of the detailed averments made by
the Financial Creditor as noticed in para 14 (supra). Therefore, the objection is not sustainable and is
hereby rejected at the outset. The same has not been raised by the respondents during the course of
arguments.
16. Likewise, another objection has been raised that the present application has been filed which is
contrary to the decision of the Reserve Bank of India issued on 13.06.2017 (press release). It has been
highlighted that the criteria mentioned in the press release dated 13.06.2017 for initiation of Insolvency
and Bankruptcy Process was two folds namely concerning all accounts with fund and non-fund based
outstanding amount greater than Rs. 5000 crore and the account with 60% or more which is classified as
non-performing by banks as on 31.03.2016. It has been emphasized that both the criterion had to be
fulfilled before initiation of any action under the IBC. The lender banks were required to finalize a
resolution plan within six months effective from 13.06.2017 in case the Corporate Debtor does not fall
within the criteria mention. It is claimed that the Corporate Debtor does not fall within the parameters
fixed by the RBI for initiation of Insolvency and Bankruptcy process. The reason disclosed is that on
31.03.2016 the outstanding amount of the Corporate Debtor classified as non-performing was less than
60%. The respondents have also referred to circular dated 26.02.2014 issued by the RBI which required
the banks to identify any incipient stress in the account by creating three sub categories under the Special
Mention Account ("SMA") which are as follows:
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17. A further reference has been made to the Master Circular dated 01.07.2015 which deals with
classification of asset as NPA if interest and/or instalment of principal remained overdue for a period of
more than 90 days in respect of a term loan than it has to be treated as NPA. Thus, the total NPA of the
Corporate Debtor was much less than 60% as on 31.03.2016. Accordingly, it has been claimed that no
Insolvency and Bankruptcy process could have been initiated.
18. Respondent has further submitted that the Financial Creditor was required to give the Corporate
Debtor a period of six months to work out a resolution plan as per the press release issued by the Reserve
Bank of India vide circular dated 05.05.2017 titled as "Timelines for Stressed Assets Resolution". It was
clarified that the lenders must adhere to timeliness for implementation of Corrective Action Plan (CAP)
(including S4A i.e. Scheme for Sustainable Structuring of Stressed Assets dated 13.06.2016). The
decision agreed upon by a minimum of 60% of creditors by value and 50% of creditors by number in the
Joint Lenders Forum would be considered as the basis for deciding Corrective Action Plan (CAP), and
will be binding on all lenders. The petition has extracted the circular issued in May 2017 (CD3). It is
claimed that Joint Lender Forum led by the applicant itself was actively considering restructuring of the
debt of the borrower under Scheme of sustainable structuring of stressed assets (S4A) and the Financial
Creditor was obliged to implement the same vis-a-vis the Corporate Debtor.
19. It has then we asserted that the application lacks in material particulars and the amounts claimed
are not substantiated. A reference has been made highlighting the discrepancies in material particulars
which are as under:-
(a) The Application lacks material particulars and the amounts claimed are unsubstantiated
(i) The Applicant in Part IV, Sr. No. 2 of the Application/Form 1 has claimed an amount of Rs.
4390,75,41,611 for the Indian Rupee Loans and US$ 49,684,877 towards foreign currency loans, are in
default details whereof have been sought to be provided in Annexure 7 to the Application. While the
Application/Form 1 does not mention the period of alleged default, Annexure-7 states "Details of default
as on 30 June 2017". Mandatory evidence to corroborate the claims made in Annexure 7 is however not
provided by the Applicant.
(ii) Part V, Sr. Nos. 6 and 7 of the Application, refer to record of default (Annexure 11) and detailed
account statements (Annexure 12). Annexure-11 provides "Report on Exposure to a Borrower" with
31.03.2017 as the quarter in reference. The account statements provided in Annexure-12, on the other
1173
hand, do not refer to the period upto 30.06.2017. It is thus stated that the Applicant has failed to provide
any evidence to support and corroborate its claims of purported default for the period up to 30.06.2017.
Thus, in absence of the mandatory evidence, it cannot be deciphered as to on what basis a sum of Rs.
4390,75,41,611 and US$ 49,684,877 has been claimed in the present Application.
(b) Calculations for the purported claims are incorrect and wrong:
The amounts as claimed by the Applicant (as detailed in Annexure 7 to the Application/Form 1) are
categorised as under:
1. Term Loan:
(a). Principal Amount
(b). Interest Amount
2. Working Capital Accounts:
(a). Principal Amount
(b). Interest Amount
(i) Discrepancies in the alleged principal as well as interest amounts under Term Loan:
In Part IV, Sr. No. 2 of the Application, an amount of Rs. 4390,75,41,611 and US$ 49,684,877 has been
claimed to be the 'amount in default' and details thereof have been provided in Annexure - 7 (Pg. 143-156,
Vol- I of the Application). It is stated that a perusal of Annexure-7 shows various discrepancies in the
alleged claimed principal amount and without assigning any basis for the alleged interest amount. This
fact gets corroborated from perusal of the corresponding individual loan documents. Apart many others,
some of the glaring discrepancies in the alleged amounts as claimed under the heading"
20. There are further allegations of wrongful clubbing of Working Capital Accounts under the
heading of "Principal Amount in Default" which are as under:-
"(ii) Wrongful clubbing of Working Capital Accounts under the heading of "Principal Amount in
Default"
It is stated that in the calculation of the alleged default amount in Annexure 7 to the Application, the
various Working Capital Accounts have been wrongly clubbed under the heading of "Principal Amount in
Default". In this regard, it is pertinent to mention that at Pg 142, the Applicant itself has stated that "The
1174
working capital has been disbursed vide working capital consortium agreement dated 2 March 2015.....for
the purposes of providing working capital to the corporate debtor upto a limit of Rs. 12,459 Crores. The
accounts for the said facility are running accounts with disbursals on a regular basis and the details for the
same are reflected in the statement of accounts for the accounts maintained with respect to the working
capital consortium agreement dated 2 March 2015...."
21. It is thus admitted and undisputed position that the working capital accounts are running
accounts, where the obligation of the borrower is limited to payment of interest only unless the facility
has been closed or recalled. No such action has even been considered in the instant case. It is also relevant
to note that the consortium of lenders under JLF in their meeting dated 16.03.2016 had approved
"Holding on operations", which means that the accounts of the borrower are not to be freezed or recalled
and allowed to be continued for smooth running of operations, which aspect continued to be recorded as
late as 08.06.2017, the date on which the meeting of Steering Committee of Lenders was held. Pertinently
the holding on operations were never discontinued by the lenders including the Applicant.
Copy of the minutes of the meetings of the JLF dated 16.03.2016 and meeting of Steering Committee
dated 08.06.2017 have been placed on record (Annexures CD-11 and CD-19 marked in paras 16(f) and
16(q) respectively below).
22. A tabular representation of the error in treatment i.e. clubbing of working capital accounts as
default amount is provided hereunder:
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23. It is pertinent to mention that the aforementioned amount of Rs. 3068,77,83,713, which has
wrongly been treated as principal amount in default itself constitutes about 65% of the total amount
alleged to be in default Sr 2 Part IV of the Application/Form 1. Thus, the alleged claim of the Applicant
suffers from blatant misrepresentations, exaggerations and are thus misconceived and liable to be
dismissed.
24. The Corporate Debtor then has given the detail facts relating to its financial position stating that
the Corporate Debtor became a stressed asset not because of any mismanagement/malfeasance/fraud by
the Company or its management but for the reasons attributable to the change in government policies,
orders passed by various courts and external global factors and also delay in adoption and approval of
S4A by the Joint Lender Forum. Then reference has been made to Coal Block iron ore mine and global
phenomenon of dumping of steel by China etc.
25. Before proceeding further, we may deal with CA No. 203(PB)/2017 filed on 17.07.2017. A copy
of the application stated to have been sent to the respondent on 15.07.2017. The application prays for
rectification of some errors in part IV, error in synopsis, page No. 5 & 6 of Form-1, page 142 of Annexure
P/6 and Annexure P/7 to the application as specifically mentioned in para 3 of the application. A further
request has been to take the amended synopsis and amended pages on record.
26. It is appropriate to mention that respondent in para 16 under the caption 'the application lacks
material particulars and the amount claimed are unsubstantiated' has raised objection to the discrepancies
occurring at pages 5 and 6 of Form-1 and the discrepancy in the figures of the amount claimed to be in
default and other things.
27. After hearing learned counsel for both sides on the application C.A. No. 203(PB)/2017, we are of
the view that the application for amendments deserves to be accepted for the reason that the application
was signed on 15.07.2017 and a copy of the same was supplied to the respondent. Objection by the
respondent were filed on 18.07.2017 and such objection would not have survived in view of the
amendment sought in the various pages. Therefore, the objection having being raised at least three days
later cannot be taken into account and the request for amendment made in CA No. 203(PB)/2017 warrants
acceptance.
28. In view of the aforesaid we allow the application and take the amendments on record.
1176
29. Mr. S.N. Mukherjee learned Senior counsel on behalf of the respondent has submitted that the
default took place on 29.11.2015 and IBC was enforced w.e.f. 01.12.2016. There were various meetings
held in accordance with the guidelines issued by the Reserve Bank of India which included the
examination of Forensic Audit Report by Deloitte. According to the learned counsel it was the petitioner
itself who informed the Joint Lender Forum with regard to the Forensic Audit Report prepared by the
Deloitte which covers the period of 2012-14 and 2014-16. State Bank of India also informed the
Committee no commission of malfeasance, fraud or siphoning of funds by the respondents could be
established from the Forensic Audit Report. The Joint Lender Forum decided to send a suitable reply to
the Reserve Bank of India. Mr. Mukherjee has also made reference to the meeting with regard to
Corrective Action Plan including S4A i.e. Scheme for Sustainable Structuring of Stressed Assets and the
efforts made in that direction. A reference has been invited to the minutes of high level lenders meet of
the respondent dated 16.03.2016. According to the learned counsel when the solution was well in sight a
decision has been taken on 15.06.2017 by the Reserve Bank of India to issue direction to the petitioner to
initiate process under Section 7 of IBC in the matter of respondent. The submission seems to be that the
decision at the instance of Reserve Bank of India has been taken in a hot haste.
30. Mr. Mukherjee has also submitted that if the computation of the default amount is grossly
incorrect and contrary to the provisions of law then penal action contemplated by Section 75 of IBC
deserves to be invoked. In that regard, he has placed reliance on para 11 to 15 of the judgment rendered
by learned National Company Law Appellate Tribunal in Company Appeal (AT) (Insolvency) No. 5/2017
titled as M/s. Starlog Enterprises Limited v. ICICI Bank Limited and has argued that such like
applications are not only liable to be dismissed but penalty as laid down in Section 75 of IBC deserves to
be imposed. Reliance has also been placed on the observation made in para 83 of the judgment rendered
in the case of M/s. Innoventive Industries Limited v. ICICI Bank & Anr. in Company Appeal (AT)
(Insolvency) No. 1 & 2 of 2017.
31. Ms. Pallavi S. Shroff learned senior counsel for the petitioner has vehemently argued that all
requirements of Section 7 for the initiation of Corporate Insolvency Resolution Process by a Financial
Creditor stand fulfilled. In that regard, she has submitted that the application as prescribed by Rule 4(1) of
the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 read with Section
7(2) of IBC has been filed with amendments. The Financial Creditor has also given the details of the
merger of associate Banks which have merged with the petitioner-State Bank of India by virtue of the
notification dated 22.02.2017 w.e.f. 01.04.2017. She has further submitted that the details of the default
along with the dates have been clearly stated in part IV along with all the minute details. There is
1177
overwhelming evidence available in the shape of the default and name of the resolution professional has
also been clearly specified.
32. Ms. Shroff has placed reliance on the observations made by this Bench in para 14 of the judgment
rendered in the case of Bank of India v. Tirupati Infraprojects Pvt. Limited. This Bench has observed that
if there was any discrepancy in calculation then it does not materially affect the admission of the such
application. We observed that the Adjudicating Authority is not entrusted with any function to determine
the amount of default and once the default has occurred involving rupees one lac or more in terms of
Section 4 of IBC then one of the requirements for initiating the insolvency process stand satisfied. The
objection of this nature concerning discrepancy in calculation of the amount would surely be maintainable
before the Committee of Creditors. It was further observed that once default in terms of Rule 3(12) of
IBC is established and all other requirements are fulfilled the Insolvency Resolution Process must be
triggered.
33. Having heard the learned counsel for the parties and having perused the paper book with their
able assistance it would be imperative to examine the provisions of Section 7(2) and Section 7(5) of IBC
which read as under:-
7 (1)..................
7 (3)..................
7 (4)..................
7 (5) Where the Adjudicating Authority is satisfied that--
application:
1178
receipt of such notice from the Adjudicating Authority."
34. A conjoint reading of the aforesaid provision would show that form and manner of the application
has to be the one prescribed by the authorities. The application is required to be accompanied by the
prescribed fee. It is evident from the record that the application has been filed on the proforma prescribed
under Rule 4 (2) of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016
read with Section 7 of IBC. Where the Adjudicating Authority is satisfied that a default has occurred and
the application under sub-section 2 of Section 7 is complete; and no disciplinary proceedings were
pending against the proposed Interim Resolution Professional then the Adjudicating Authority may admit
such application. In the present case, the application was filed on 05.07.2017 and even amendment was
sought by C.A. No. 203(PB)/2017 on 17.07.2017. The objections and reply was filed on 18.07.2017.
35. Keeping in view the aforesaid facts it is required to be seen as to what was the amount of default
and when it occurred. According to amended part IV of the application filed on Form-1 it is clearly stated
that the amount in default is Rs. 4295,96,16,611 (Indian Rupees Four Thousand Two Hundred Ninety
Five Crores Ninety Six Lakhs Sixteen Thousand Six Hundred and Eleven Only) for the Indian Rupee
Loans and US$ 49,684,877 (United States Dollars Forty Nine Million Six Hundred Eighty Four Thousand
Eight Hundred and Seventy Seven Only) towards the Foreign Currency Loan. The date of default is
disclosed at pgs. 143-156 as different amount of default has occurred on different dates in respect of
different nature of loans. For example, in respect of Term loan (GMC) 125 Cr the date of default in
repayment of principal is 30.06.2017 and in respect of Corporate Loan (1000 Cr) the default occurred on
30.09.2016 so on and so forth. The whole details are available from pgs. 143 to 156. We are satisfied that
the default has occurred in repayment of loan. Hence, one more requirement stand fulfilled as per the
provisions of Section 7(5)(a) read with Section 3(12) of IBC. We also satisfied that the Financial Creditor
has given the facility of loan to the Financial Debtor and is covered by the provisions of Section 5(7) and
(8) of IBC. Mr. Vijay Kumar V Iyer (IBBI/IPA-001/IP-P00261/2017-18/10490) has been proposed as in
Interim Resolution Professional who has filed his consent with necessary disclosures made.
36. The objection raised by the learned counsel on behalf of respondent with regard to discrepancy in
the amounts of the default claimed would not survive because we have accepted the application C.A. No.
203(PB)/2017 incorporating the correct figures. In any case the objection would not survive in view of
our observation in para 14 of the judgment rendered in the case of Bank of India v. Tirupati Infraprojects
Pvt. Limited which reads as under:-
1179
"On behalf of 'Corporate Debtor' learned counsel has raised some other objections namely that there is
mismatch of the defaulted amount given in Form-1 and the affidavit filed on 07.06.2017. On a closer
scrutiny, we find that there is hardly any discrepancy. It is true that at various places, the amount
mentioned has been Rs. 82,37,29,049.33/-. However, in para 9 of the affidavit filed on 07.06.2017 it has
been explained that some discrepancy in calculation had occurred and the actual total amount is Rs.
1,09,32,72,312.86/-. We are not impressed with the objection raised by the learned counsel for the
'Corporate Debtor' for variety of reasons. Firstly, as an Adjudicating Authority we are not entrusted with
any function to determine the amount of default. Once the default has occurred involving rupees one lac
or more in terms of Section 4 of the Code one of the requirements is satisfied and secondly any objection
with regard to amount would be maintainable before the Committee of Creditors. Once default in terms of
Rule 3(12) of the Code is established and all other requirements are fulfilled the Insolvency Resolution
Process has to be triggered."
A perusal of the aforesaid para would show that by no stretch of imagination the National Company
Tribunal has been entrusted with the function to determine the amount of default. The only issue for us to
examine is whether in terms of Section 4 of IBC the amount of default is rupee one lac or more than rupee
one lac, than requirement stand satisfied.
37. The other arguments has also not impressed us that the adequate opportunity for restructuring in
terms of the policy of the RBI issued vide the press release dated 13.06.2017, master circular dated
01.07.2015, Timelines for Stressed Assets Resolution dated 05.05.2017 or framework for structuring of
Stressed Assets in the economy - guidelines in Joint Lender Forum and Corrective Action Plan (CAP)
dated 26.02.2014 as all such efforts are the part of external processes which are beyond the scope of the
Insolvency and Bankruptcy Code. It is imperative to observe that Insolvency is not equivalent to
liquidation or winding up. This involves restructuring, re-planning and facilitation of evolving a
resolution for the industry to survive. If the argument of Mr. Mukherjee is correct and the solution was
well in sight than there would not be any difficulty for the Creditors Committee with the assistance of the
Corporate Insolvency Resolution Professional to adopt a resolution plan in a time bound disciplined
manner under a Parliamentary Act which may be acceptable to all the stake holders. It is only on the
failure of a resolution that the liquidation process may have to be initiated in accordance with the
provisions of Section 33 of IBC. We may observe in the passing that issuance of direction by the RBI on
30.06.2017 cannot also be termed as illegal because there is adequate power conferred by the Banking
Regulation Act by amendment of Section 35 to issue directions to Banks being a Regulator entitled to do
so. Therefore, we are unable to persuade ourselves to accept the submission made by Mr. Mukherjee
learned senior counsel for the respondent.
1180
38. As a sequel to the above discussion this petition is admitted. Mr. Vijay Kumar V. Iyer who is
duly registered with the Insolvency and Bankruptcy Board of India is appointed as an Interim Resolution
Professional. He has also filed his certificate of registration with the IBBI along with his written
communication dated 29.06.2017. The disclosure has also been made in the letter dated 29.06.2017. We
have also found his latest registration number from the IBBI website and the same has already been
quoted in the preceding paras.
39. In pursuance of Section 13(2) of IBC we direct that public announcement shall be immediately
made by the Interim Resolution Professional with regard to admission of this application under Section 7
of IBC. We also declare moratorium in terms of Section 14 of IBC. A necessary consequence of the
moratorium flows from the provisions of Section 14(1) (a), (b), (c) & (d) and thus the following
prohibitions are imposed:
other authority;
period.
41. The Interim Resolution Professional shall perform all his functions religiously and strictly which
are contemplated, inter alia, by Sections 15, 17, 18, 19, 20 & 21 of IBC. It is further made clear that all
the personnel connected with the Corporate Debtor, its promoters or any other person associated with the
Management of the Corporate Debtor are under legal obligation under Section 19 of IBC to extend every
assistance and cooperation to the Interim Resolution Professional as may be required by him in managing
1181
the affairs of the Corporate Debtor. In case there is any violation the Interim Resolution Professional
would be at liberty to make appropriate application to this Tribunal with a prayer for passing an
appropriate order. The Interim Resolution Professional shall be under duty to protect and preserve the
value of the property of the 'Corporate Debtor' as a part of its obligation imposed by Section 20 of IBC
and perform all his functions strictly in accordance with the provisions of IBC.
1182
PRINCIPAL BENCH NEW DELHI
C.P. (I.B.) No. 152/7/NCLT/PB/2017
Applicant: Macro Leafin Private Limited
Vs
Respondent: Arrow Resources Limited
Judges/Coram:
Hon'ble Sh. M.M Kumar Member (J)
Deepa Krishan, Member (T)
Counsels:
For the Appellant/Petitioner/Plaintiff: Pulkit Deora, Learned Advocate
ORDER
Hon'ble Sh. M.M. Kumar, C.J. (President)
1. The Macro Leaf in Private Limited (for brevity 'Financial Creditor) has filed the instant
application under Section 7 of the Insolvency and bankruptcy Code, 2016 (for brevity 'the Code') with a
prayer for initiation of Insolvency Resolution Process in the matter of Arrow Resources Limited (for
brevity 'the Corporate Debtor'). It is appropriate to mention that Financial Creditor is a Company
incorporated under the provisions of the Companies Act, 1956. Its CIN number is
U67190WB1995PTC073610 and it has its registered office situated at 39/1, Sir Hariram Goenka Street,
Ist Floor, Banstalla, Kolkata-700007.
2. The Financial Creditor has also proposed the name of Shri Ambarish Chatterjee, A-395, Sector-
19, Noida-201301. His registration number is IBBI/IPA-IP/00036/2016-17/1045. A written
communication dated 31.05.2017 in terms of Rule 9(1) of the Insolvency and Bankruptcy (Application to
Adjudicating Authority) Rules, 2016 has also been placed on record (Annexure-J). There are necessary
disclosures made by Mr. Ambarish Chatterjee as per the requirement of the IBBI Regulations.
Accordingly, he satisfies the requirement of Section 7(3)(b) of the Code.
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3. The Corporate Debtor-respondent is incorporated as a Company limited by shares in the category
of Non-government public company and its authorized share capital is 25,00,000/-. The paid up share
capital of the Corporate Debtor is 5,00,000/-. The aforesaid information is supported by the master data
concerning the Corporate Debtor which has been obtained by the 'Financial Creditor' from the official
website of the Registrar of Companies. It has its registered office situated at A-67, Ground Floor, Jawahar
Park, Devli Road, Khanpur, New Delhi - 62.
4. The 'Financial Creditor' granted a loan of Rs. 4,50,000/- (Rupees Four Lakhs Fifty Thousand) on
10.06.2016 and Rs. 86,000/- (Rupees Eighth Six Thousand) on 13.06.2016 to the 'Corporate Debtor'. In
that respect, loan Agreement was executed between the parties on 01.06.2016 (Annexure-A). The total
loan amount of Rs. 5,36,000/- (Rupees Five Lakhs Thirty Six Thousand) was to be repaid on 31.03.2017.
A copy of the bank statement of the Financial Creditor has been placed on record (Annexure-F) and the
entries to this effect are also reflected therein. A copy of ledger account of Corporate Debtor has also
been placed on record (Annexure-B). The default on the part of Corporate Debtor occurred on
01.04.2017. Eventually on 10.05.2017 the Financial Creditor wrote a letter to the Corporate Debtor
requesting to pay the loan amount of Rs. 5,36,000/- along with interest (Annexure-C). The Corporate
Debtor confirmed the outstanding amount through a balance confirmation dated 24.05.2017 (Annexure-
D).
5. The petition has been duly verified, signed and filed by Mr. Ramesh Kumar Somani, one of the
Directors of the Financial Creditor by virtue of the Board resolution passed in his favour (Annexure-G).
overwhelming evidence that default has occurred, which meets the requirement of Section 3(11) and (12)
all respects as the Insolvency Professional, Mr. Ambarish Chatterjee has been duly proposed and he has
also made full declaration. It is further evident from the affidavit of service that before filing the instant
application it was duly dispatched to the Corporate Debtor at its registered address which was delivered
and received by the Corporate Debtor.
7. The matter came up for consideration on 07.06.2017 but on that occasion learned counsel for the
petitioner did not appear and the matter was posted for arguments on 27.06.2017,
8. Accordingly, we have heard Mr. Pulkit Deora, learned counsel for the Financial Creditor. Mr.
Deora has taken us through the paper book and various documents which has led us to record our
satisfaction with regard to the advancement of loan, default, its due admission by the Corporate Debtor
1184
and the proposal of Mr. Ambarish Chatterjee as the Insolvency Professional. Therefore, no exception is
provided by the Corporate Debtor to refuse admission of the application.
9. As a sequel to the above discussion, this petition is admitted and Mr. Ambarish Chatterjee, A-
395, Sector-19, Noida-201301 is appointed as an Interim Resolution Professional.
10. In pursuance of Section 13(2) of Code, we direct that public announcement shall be immediately
of the Code. We also declare moratorium in terms of Section 14 of the Code. A necessary consequence of
the moratorium flows from the provisions of Section 14(1)(a), (b), (c) & (d) and thus the following
including execution of any judgment, decree or order in any court of law, tribunal, arbitration
(b) transferring, encumbering, alienating or disposing of by the corporate debtor any of its assets or
any legal right or beneficial interest therein;
respect of its property including any action under the Securitisation and Reconstruction of
Financial Assets and Enforcement of Security Interest Act, 2002;
period.
are contemplated, inter alia, by Sections 15, 17, 18, 19, 20 & 21 of the Code, it is further made clear that
all the personnel connected with the Corporate Debtor, its promoters or any other person associated with
the Management of the Corporate Debtor are under legal obligation under Section 19 of the Code to
extend every assistance and cooperation to the Interim Resolution Professional as may be required by him
in managing the affairs of the Corporate Debtor. In case there is any violation the Interim Resolution
Professional would be at liberty to make appropriate application to this Tribunal with a prayer for passing
1185
an appropriate order. We specifically direct the Interim Resolution Professional to protect and preserve
the value of the property of the 'Corporate Debtor' as a part of its obligation imposed by Section 20 of the
Code and perform all his functions strictly in accordance with the provisions of the Code and ethical
obligations imposed by various Acts, Rules and Regulations.
1186
C.P. (I.B.) No. 197/7/NCLT/PB/2017
Applicant: Edelweiss Assets Reconstruction Company Ltd.
Vs
Respondent: Tecpro Systems Limited
Judges/Coram:
Hon'ble Sh. M.M.KUMAR, Member (J)
Counsels:
For the Financial Creditors: Vaijayant Paliwal, Advocate and Ms Mishu, Learned Advocates
For Respondents/Defendant: Arvind Kumar, Advocate, C.S. Chauhan, Learned Advocate, Purti
Marwaha, Advocate Heena, George, Learned Advocate
ORDER
1. The Edelweiss Assets Reconstruction Company Ltd (for brevity the 'Financial Creditor') has filed
the instant application under section 7 of the Insolvency and Bankruptcy Code, 2016 (for brevity 'the
Code') with a prayer for initiating the corporation Insolvency Resolution process in the matter of Tecpro
systems Ltd. (For brevity the 'Corporate Debtor') The "Financial Creditor' has stated that it has filed the
petition in its capacity as the Trustee of EARL Trust SC -124 and Trust (for brevity EARCL and Trust
respectively). A copy of the Memorandum of Articles of Association of the 'Financial Creditor' along
with declaration of trust dated 17.3.2015 which led to the formation of 'Financial Creditor' have been
placed on record (Annexure-1 colly) The 'Financial Creditor' has been allotted CIN No.
L167100MH2007IDLC174759 and that it was incorporated on 5,10.2007. The registered office of the
'Financial Creditor' is situated at Edelweiss House, off. CST Road, Kalina, Mumbai-400098
(Maharashtra).
2. The 'Corporate Debtor' has been incorporated on 7.11.1990 and its CIN
No.L74899DL1990PLC041985. The authorised share capital of the 'Corporate Debtor' is
Rs.131,15,00,000/- (Rs. One hundred Thirty One crores Fifteen lacs only). The paid up capital is
1187
Rs.50,47,37,910/- (Rs. Fifty crore Forty Seven lacs Thirty Seven thousand Nine hundred and Ten only).
3. Copies of its Memorandum of Association and Articles of Association have been placed on
record (Annexure A-3). Corporate Debtor has been incorporated under the provision of the Companies
Act, 1956 and its registered office is situated at 106, Vishwadeep Tower, plot No.4 District Centre
Janakpuri New Delhi -110058.
4. The 'Financial Creditor' has also proposed interim Resolution Professional namely Mr.
Venkatesan Sankaranarayanan who has been registered with the IBBI with registration No. IBBVIPA-
001/IP-P00123/20172018/10265. The proposed resolution professional has sent written communication
making necessary disclosures in accordance with the provision of Rule 9 of the Insolvency and
Bankruptcy (Application to Adjudicating Authority) Rule 2016, Thus it satisfy the requirement of section
7(3)(b) of the Code. The 'Financial Creditor' has also disclosed the particulars of financial debt granted by
it to the 'Corporate Debtor' through its predecessor in interest namely State Bank of India CM"), the
predecessor in interest of the Financial Creditor. The following debts were advanced to the Corporate
Debtor:
1. Working capital facilities of Rs.2125 crores ( Rs. Two thousand one hundreds twenty five
crores only) under the Working Capital Consortium Agreement dated 26.4.2013.
Subsequently, the working capital facilities were renewed and enhanced to Rs.2350 Crores
(Rs. Two thousand Three hundred Fifty crores only) vide Working Capital Consortium
Agreement dated 7.8.2013. As per Article 1, pars 6 of the said Working Capital Consortium
Agreement, the facilities extended comprised of following facilities:
(a) Cash Credit-1
(b) Cash credit-2
(c) Bank Guarantees
These facilities have been collectively named as "Facility A".
2. Further, a Short Term Loan of Rs.15O crores (Rs. One Hundred Fifty crores) under
Agreement of Loan for overall Limit dated 25.2.2014 which has been named as "Facility
B"
(Facility A and Facility B have been collectively referred as "the facilities")
1188
34
5. It is appropriate to mention that the debt advanced to the 'Corporate Debtor'
was assigned to the `Financial Creditor' vide Assignment Agreement dated 23.3.2015, 29.6.2015,
29.9.2015, 30.12.2015, 29.3.2016, 30.6.2016 and 28.2.2017. All these agreements have been placed on
record (annexure 7 cony). Accordingly the 'Financial Creditor' is fully qualified to file the application as
per the provision of section 5(7) of the Code. According to the aforesaid provision a 'Financial Creditor'
includes a person to whom a financial debt has been legally assigned or transferred to. Therefore no doubt
can be sustained concerning the competence of the 'Financial Creditor' to invoke the jurisdiction of the
adjudication authority cum Tribunal.
6. The 'Financial Creditor' has then disclosed in sufficient details the amount in
default along with the date on which the default occurred. The total amount of default for two types of
facilities "A' and 'B' is Rs.2081,44,52,368/-(Rs. Two thousand Eighty One crores Forty Four lacs Fifty
Two thousand Three hundred sixty eight only). The details of the default as on 23111 June, 2017 are as
under:
Name of the Amount of default Date of default

facility
Facility A Rs. 2556,96,76,008 ( Rs. Two 28th May 2014

thousand five hundred fifty six
crores ninety six lacs seventy
six thousand and eighty only)
Facility B Rs.244,47,76,360 (Rs. Two 28th May 2014

hundred forty four crores forty
seven lacs seventy six thousand
and three sixty only.)
Total Rs.2081,44,52,368/-
7. The working/computation of amount and days of default in tabular format along with the
statement of account maintained by the 'Financial Creditor' is enclosed herein as (Annexure 5)
8. In support of the claim the 'Financial Creditor' has placed on record the particulars of security
held, the date of its creation, its estimated value as per the 'Financial Creditor'. The detail of the security
interest created in favour of 'Financial Creditor' along with the certificate of registration of charge have
1189
been placed on record (Annexure 6 colly). The estimated value of security interest created in favour of the
'Financial Creditor' on the basis of annual report of 2014-2015 is as under:
A. Valuation of Fixed assets INR 314 crores
B. Valuation of current assets INR 2340 crores
9. The 'Financial Creditor' has also placed on record latest and complete copy of financial contract
along with all amendments and waivers upto date and the copy of the same have been placed on record
(Annexure 7 colly). The documents placed on record are as under:-
(a) Sanction letter dated 2.4.2013 by SBI with respect to Working Capital Consortium Agreement
dated 7.8.2013.
(b) Working Capital Consortium Agreement dated 26.4.2013 executed between SBI, other
consortium lenders and the Corporate Debtor.
(c) Sanction letter dated 25.7.2013 by SBI with respect to Working Capital Consortium Agreement
dated 7.8.2013.
(d) Working Capital Consortium Agreement dated 7.8.2013 executed between SBI, other consortium
lenders and the Corporate Debtor.
(e) Agreement of Loan for overall limit dated 25.2.2014 executed between SBI and the Corporate
Debtor
(f) Assignment Agreements dated 23.3.2015, 29.6.2015, 29.9.2015, 30.12.2015, 29.3.2016,

30,6.2016 and 28.2.2017 executed between SBI and Edelweiss Assets Reconstruction Company
Ltd. in its capacity as trustee of EARCT.
10. To fulfil the requirement of showing the record of default the 'Financial Creditor' has annexed
status classification report of corporate debtor dated 21.62017 issued by CIBIL (Annexure 8). Copies of
entries in Bankers book in accordance with the Bankers Book Evidence Act, 1891 showing the detail
account of Corporate Debtor maintained by the State Bank of India have also been placed on record
(Annexure 9 Cony). Acknowledgment of debt issued by Corporate Debtor vide letter dated 28.3.2017 in
favour of 'Financial Creditor' along with the annual report are also placed on record (annexure 10 colly).
The 'Financial Creditor' in its capacity as trustee of other trusts has separately acquired financial assets
and loan accounts of the Corporate Debtor to enable it to file claim for financial default on behalf of such
other trusts for the financial assets acquired by such other trusts in accordance with the provision of
1190
6
sections 13 & 15 of the Code and to enable the Interim Resolution Professional to perform his duties
envisaged under section 18(1) (b) of the Code.
overwhelming evidence that default has occurred, which meets the requirement of Section 3(11) & (12)
all respects as the Insolvency Professional, Mr. Venkatesan Sankaranarayanan has also been proposed
who has filed his written communication.
12. The Petitioner has placed on record the proof of service to the respondent and we have heard
learned counsel for the petitioner and the interveners Le, Forth India Pvt, Ltd.
13. Learned counsel for the 'Financial Creditor' has taken us through various paras of the application.
As has been recorded in the preceding paras we have also expressed our satisfaction with regard to
fulfilling the requirements of Code by the `Financial Creditor'. It is appropriate to mention that the interest
of all creditors including the intervener, if any, have to be considered by the Committee of creditors as per
the provisions of 20, 21 and 24 of the Code.
14. As a sequel to the above discussion, this petition is admitted and Mr. Venkatesan
Sankaranarayanan, D 301, Sreevatsa Residency, 10 G N Mills Post, Mettupalayam Road, Coimbatore-
641029 whose name also figures in the latest list of Insolvency Professionals issued by the Insolvency &
Bankruptcy Board of India is appointed as an Interim Resolution Professional.
15. In pursuance of Section 13 (2) of Code, we direct that public announcement shall be immediately
the moratorium flows from the provisions of Section 14 (1) (a), (b), (c) & (d) and thus the following
"(a) the institution of suits or continuation of pending suits or proceedings against the corporate
debtor including execution of any judgment, decree or order in any court of law, tribunal,
arbitration panel or other authority;
1191
notified by the Central Government or the supply of the essential goods or services to the
Corporate Debtor as may be specified is not to be terminated or suspended or interrupted during
the moratorium period.
1192
C.P. (I.B.) No. 144/7/NCLT/PB/2017
Applicant: ICICI Bank Limited
Vs
Respondent: S R Foils and Tissue Limited
Judges/Coram:
Counsels:
For the Financial Creditors: Jayant Mehta, Advocate, Divakar Maheshwari, Learned Advocate
Aditya Singh, Learned Advocate
For Respondents/Defendant: Rakesh Gupta, Managing Director
ORDER
1. The ICICI Bank Limited (for brevity 'Financial Creditor) has filed the instant application under
Section 7 of the Insolvency and Bankruptcy Code, 2016 (for brevity 'the Code') with a prayer for
triggering the Insolvency Resolution Process in the matter of S R Foils and Tissue Limited (for brevity
the Corporate Debtor'). It is appropriate to mention that the 'Financial Creditor' was incorporated on
05.01.1994 and was assigned CIN No. L65190W1994PLCO21012. It has its registered office at ICICI
Bank Tower, Near Chakil Circle, Old Padra Road, Vadodara 390007, Gujrat. The aforesaid information is
authenticated by the master data of the Financial Creditor available on the website of Ministry of
Corporate Affairs which has been placed on record (Annexure-B). It is further pertinent to mention that
the authorized capital of the Financial Creditor is 150000000 (Indian Rupees Fifteen Crore) and its paid-
up capital is 138734800 (Indian Rupees Thirteen Crore Eighty Seven Lakh Thirty Four Thousand Eight
Hundred).
2. The Financial Creditor has also proposed the name of Shri Anil Kohli, 1011, Kiriti Shikhar,
District Centre, Janakpuri, New Delhi -110058. His registration number is IBBI/IPA-001/IPP00112/2017-
18/10219. A written communication in terms of Rule 9(1) of the Insolvency and Bankruptcy (Application
1193
to Adjudicating Authority) Rules, 2016 has also been placed on record (Annex-ure-D). There are
necessary disclosures made by Mr. Anil I ohli as per the requirement of the IBBI Regulations.
Accordingly, he satisfies the requirement of Section 7 (3) (b) of the Code.
3. In the application, the Financial Creditor has given the details of financial debt granted to the
Corporate Debtor with the dates of disbursement, A perusal of part IV of the application has highlighted
the following particulars of financial debt:
"PARTICULARS OF FINANCIAL DEBT
1. TOTAL AMOUNT OF DEBT GRANTED 31July, 2010: Creditor sanctioned facilities,

DATE(S) OF DISBURSEMENT comprising an overall limit not exceeding INR
750 million, broken into a fund based facility of
INR 700 million and a non-fund based facility of
INR 50 million. A copy of the Credit Arrangement
Letter dated 31 July 2010 is enclosed herewith as
Annexure-E. Further a copy of the Master Facility
Agreement dated 31 July 2010, executed between
the Financial Creditor and Corporate Debtor for a
facility of INR 400 million is enclosed herewith as
Annexure L and the Rupee Loan facility dated 31
July 2010 executed between the parties for a
facility not exceeding INR 300 million is enclosed
as Annexurp-Q.
16 December 2010: The Financial Creditor

reviewed the earlier facility and renewed the
financial assistance for INR 700 million
comprising a fund based facility. of INR 400
million and a non-fund based facility of 1NR 300
million. A copy of the Credit Arrangement Letter
dated 16 December 2010 is enclosed
herewith RS Annexure-H.
1194
Further, a Master Facility Agreement of Loan
dated 16 December 2010 executed between the
parties for a facility of INR 650 million is
enclosed herewith as Annexure-I.
21 April 2011: The Financial Creditor issued a

Credit Arrangement Letter dated 21 April 201.1 to
the Corporate Debtor whereby the facility
sanctioned on 16 December 2010 was renewed
with change in terms and conditions qua security
clauses for the loan. A copy of the Credit
Arrangement Letter dated 21 April 2011 is
enclosed herewith as Annexure J. Further, an
amendment was also made to the Master Facility
Agreement dated 16 December 2010 by way of
Letter of Amendment. A copy of the Letter of
Amendment dated 5 May 2011 is enclosed
herewith as Annexure-K.
26 May 2011: Owing to the increasing

requirement of working capital limits by the
Corporate Debtor, a consortium was formed for
working capital limit. A copy of Working Capital
Consortium Agreement dated 26 May 2011 is
enclosed herewith as Annexure-L.
7 October 2011: Credit facility for an overall

limit of INR 700 million, comprising fund based
facility of INR 400 and non-fund based facility of
INR 300 million, as reviewed and renewed by the
Financial Creditor vide Credit Arrangement Letter
dated 7 October 2011. A copy of the said Credit
Arrangement Letter dated 7 October 2011 is
enclosed herewith as Annexure-M.
1195
2 March 2012: An amendatory Credit
Arrangement Letter dated 2 March 2012 was
issued by the Financial Creditor to the Corporate
Debtor through which cash credit facility was
changed from INR 400 million to INR 450
million. Copy of the amendatory Credit
Arrangement Letter dated 2 March 2012 is
enclosed herewith as Annexure-N.
26 September 2012: Credit facility were reviewed

and renewed with overall limit of INR 750
million, comprising fund based facility of INR
450 and non-fund based facility of INR 300
million vide Credit Arrangement Letter dated 26
September 2012. The Credit Arrangement Letter
dated 26 September 2012 is enclosed herewith as
Annexure-O.
28 March 2013: The Corporate Debtor in order to

meet the additional working capital requirement
again approached the Financial Creditor and other
member financial institutions forming part of the
le1C1 Bank Consortium-I which led to the
execution of the another Working Capital
Consortium Agreement dated 28 March 2013
(ICICP Bank Consortium-II) for an overall limit
of INR 3,560 million, broken into a fund based
component of INR 2,150 million and non-fund
based component of INR 1,410 million. In this
consortium, exposure of Financial Creditor was
continued for INR 700 million. A copy of the said
Agreement is enclosed as Annexure-P.
1196
27 March 2014: The Financial Creditor reviewed
and renewed the last financial facility with a
reduction in credit limit to INR 631.3 million vide
Credit Arrangement Letter dated 27 March 2014,
which is enclosed herewith as Annexure-Q."
The aforesaid details would show that the loan facilities were extended to the Corporate Debtor to
the extent shown in the aforesaid data. The total outstanding of principal amount is to the tune of Rs.
647.4 million plus interest component of Rs. 491.1 million.
4. The aforesaid amount of default disclosed by the 'Financial Creditor' satisfies the requirement of
Section 3 (12) of the Code. The amount of default as on 31.05.2017 is Rs. 1,138+5 million including the
component of interest. The default by the Corporate Debtor occurred on 31.12.2013, when the Corporate
Debtor admitted the dues but failed to make the payment. The Financial Creditor has claimed that the
default occurred on 18_04.2014 when its account was classified as a Non-performing asset by the
Financial Creditor at the end of 90 days. The default continued to operate on 08.05.2[11 4 when the
Financial Creditor was slapped with a notice under Section 13 (2) of the SARFAESI Act to initiate
recovery process. As a consequence of the proceeding the Financial Creditor took symbolic possession of
the mortgaged property belonging to the Corporate Debtor on 15.09.2014. The default has also occurred
on 09.06.2015 when the property mortgaged by Mr. RC. Gupta, situated at E-163, Pandav Nagar, New
Delhi was sold under the SARFAESI Act against a cash consideration of Rs. 17.1 million and sale
proceeds were adjusted against the outstanding dues of all the consortium banks on pari passu basis.
However, the dues could not be satisfied completely. Again, the property mortgaged by Mr. Rishi Gupta,
situated at 462, 6th Floor, Sector 6/33 Dwarika, New Delhi was sold under the provisions of SARFAESI
Act against a cash consideration of Rs. 12.4 million and sale proceeds were again adjusted against the
outstanding dues of all the consortium banks on pall passu basis. Likewise, the properties mortgaged by
Ms. Shanta Gupta, situated at Hari Nagar, New Delhi was sold on 05.10.2016 against a cash consideration
of Rs. 20.1 million and the sale proCeeds were adjusted against the outstanding dues of all the consortium
banks on pari passu basis. Notices with regard to public auction of the mortgaged properties were
published in the newspaper on 11.03.2016, 11.11.2016 and 23.12.2016 which are illustrations of default
and default continued to occur on each and every day. The default finally occurred on 31.01.2017 when
the property mortgaged situated at Bhiwadi was auctioned and the amount adjusted. After adjustment, a
sum of Rs. 1,138.15 million continued to be in default even after appropriating the proceeds of the auction
1197
towards repayment of debt owed by the Corporate Debtor to the Financial Creditor and others. A
tabulated chart has been placed on record (Annexure-R).
5. The . Financial. Creditor has disclosed in detail the particulars of financial debt in the form of
documents, records and evidence of default. Under the caption 'Working Capital Consortium Limits' the
following disclosures have been made:
S. No. Name and date of the document executed Description of the securities
1. Joint Deed of Hypothecation dated  First charge on whole of current assets of

28 March, 2013 company namely stock of raw material,
stock in process semi-finished finished
goods, stores & spares not relating to plant
84 machinery (consumables, stores &
spares), bills receivables & book-debts & all
other movables both present & future lying
or stored in or about or shall hereinafter
from time to time during continuance of
security stored at SP 26,- SP 26A, 86
SP26A-1, Sotanala Industrial Area,
Behrore, Rajasthan and Plot No. 812/G-27 7
27A, Industrial Area, Bhiwadi Rajasthan
(auctioned property) or wherever else the
same may be or held by any part to the order
or disposition of borrower or on the course
of transit or on high seas.
 Second charge on movable fixed assets of
borrower both present 86 future
2. Mortgage Declaration from the Borrower Second charge on immovable fixed assets of
dated 28 March, 2013 borrower namely
 SP 26 Sotanala Industrial Area, Behrore,

Rajasthan
 SP 26A Sotanala Industrial Area, Behrore,
Rajasthan
1198
 SP 26A-1, Sotanala Industrial Area,
Behrore, Rajasthan
 Plot No. .812/0-27 & 27A, Industrial
Area, Bhiwadi
Rajasthan (Captioned property has been sold
under SARFAESI Act at 31 January, 017
against the cash consideration of INR 36
million and sale proceeds have been
distributed among ICICI Bank & SBBJ on
pari passe basis.)
3. Mortgage Declaration from Rishi Gupta First charge on immovable property at 462, 5th
dated 28 March, 2013 Floor, Sector 6/33, Dwarka, New Delhi in the name
of Rishi Gupta
(Captioned property has been sold under SARFAESI

Act at 11 December, 2015 against the cash
consideration of INR 12.4 million and sale proceeds
have been distributed among all the member banks
on pat i passe basis.)
4. Mortgage Declaration from Shama Gupta First charge on immovable property in the name of
dated 28 March, 2013 Shanta Gupta namely
 BE-60, Hari Nagar New Delhi

 BE-61(1 )8; (2), Hari Nagar, New Delhi
 BE-63, Hari Nagar, New Delhi

Act at 5 October, 2016 against the cash
consideration of INR 20,1 million and sale proceeds
have been distributed among all the member banks
on pari passu basis).
1199
5. Mortgage Declaration First charge on immovable property at E-163,
From R.C. Gupta dated 28 March, 2013 Pandav Nagar

Act at 09 June, 2015 against the cash consideration
of INR 20,1 million and sale proceeds have been of
INR 17.1 million and sale proceeds have been
distributed among all the member banks on pari
passu basis).
6 Form 8 dated 13 May, 2013  First pari passu charge on current assets of
the borrower
 Second pari passu charge on entire fixed
assets of the borrower
7 Personal Guarantees securing the dues in  Mr Rakesh Gupta

repayment by the Corporate Debtor  Mr. Rishi Gupta
 Mr R C Gupta
 Ms Shanta Gupta
There are further disclosures made under the caption "Rupee Term Loan' which is as under:
B. Rupee Term Loan Facility:
S No. Name and date of the document executed Description of the securities
1 Mortgage Declaration from the Borrower First charge on immovable fixed assets of borrower
dated 28 March, 2013 namely
 SP 26 Sotanala Industrial Area, Behrore,

Rajasthan
 SP 26A Sotanala Industrial Area, Behrore,
Rajasthan
 SP 26A-1, Sotanala Industrial Area,
Behrore, Rajasthan
1200
 Plot No. 812/G-27 & 27A, Industrial Area,
Bhiwadi Rajasthan (Captioned property hass
been sold under SARFAESI Act at 31
January, 2017 against the cash consideration
of INR 36 million and sale proceeds have
been distributed among ICICI Bank & SBBJ
on pari passu basis.)
2 Deed of Hypothecation for Rupee Loan  First pari passu charge on movable fixed
assets of the borrower
 Second pari passu charge on current assets
of the borrower
2. PARTICULARS OF AN ORDER OF A COURT, TRIBUNAL OR ARBITRAL PANEL

ADJUDICATING ON THE DEFAULT, IF ANY (ATTACH A COPY OF THE ORDER)
A Copy of the Order 08 October 2014 passed by the DRT-1, Delhi in the matter pending
adjudicating under RDDBFI Act, bearing OA 275/2014 is enclosed herewith and marked as
Annexure-T.
3. ...............................
4. ...............................
5. THE LATEST AND COMPLETE COPY OF THE FINANCIAL CONTRACT REFLECTING

ALL AMENDMENTS AND WAIVERS TO DATE
(ATTACH A COPY)
Working Capital Consortium Agreement dated 28 March 2013 executed between the Financial
Creditor along with other banks forming part of the ICICI Bank Consortium-II and the
Corporate Debtor, already enclosed hereinabove as Annexure-P.
6. A ROCORD OF DEFAULT AS AVAILABLE WITH ANY CREDIT INFORMATION

COMPANY (ATTACH A COPY)
1201
A copy of CRILC Report pertaining to the default of the corporate Debtor qua the Financial
Creditor is enclosed herewith as Annexure-U.
7. COPIES IN ENTRIES IN A BANKERS BOOK IN ACCORDANCE WITH THE BANKERS

BOOKS EVIDENCE ACT, 1891 (18 OF 1891) (ATTACH A COPY)
Copies of the entries and statement of the Corporate Debtor, as maintained by the Financial
Creditor regarding the outstanding mount pertaining to the cash credit, term loan, overdraft and
letter of credit accounts, supported by certificate under Bankers Books Evidence Act 1891 as
Annexure-V.
8. LIST OF OTHER DOCUMENTS ATTACHED TO THIS APPLICATION IN ORDER TO

PROVE THE EXISTENCE OF FINANCIAL DEBT, THE AMOUNT AND DATE OF
DEFAULT
1. Declaration as of December 31, 2013 sent from the Corporate Debtor to Financial
Creditor admitting to the liability towards the debt borrowed from the Financial
Creditor.
2. Letter dated 24 February 2014 issued by the Financial Creditor to the Corporate Debtor
informing about the overdues, duly acknowledged by the Corporate Debtor;
3. Letter dated 18 March 2014 issued by the Financial Creditor to the Corporate Debtor
informing about the overdues, duly acknowledged by the Corporate Debtor;
4. Letter dated 25 April 2014 whereby the Corporate Debtor was informed about the
classification of its account as NPA;
5. Notice dated 8 May 2014 issued by the Financial Creditor to the Corporate Debtor
under Section 13 (2) of the SARFAESI Act;
6. Possession Notice dated 11 September 2014 issued by the Financial Creditor to the
Corporate Debtor in terms of Section (4) of the SARFAESI Act;
7. Copy of a newpaper publication of the Possession Notice dated 15 September 2014;
8. Copy of the newspaper advertisement dated 11 March 2016, 11 November 2016 and 23
December 2016 given in the public notice for auction of the mortgage property of the
Corporate Debtor;
9. Latest Form 8/Form CHG dated 13 May 2013 filed in relation to the charges created
over the assets of the Corporate Debtor;
10. Notices dated 19 April, 24 April 2017, 25 April 2017 and 8 May 2017 issued by the
1202
Commercial Tax Officer, SPL-I, Bhiwadi, Rajasthan;
11. Reply dated 27 April 2017 issued by the Financial Creditor, in relation to the Notice of
the Department of Commercial Tax;
12. Notice of the Public Auction dated 02 May 2017 published by the Commercial Tax
department for Sotanala properties.
Copies of the abovementioned documents are enclosed herewith as Annexure-W (Colly).
6. The application is duly supported by the affidavit of duly authorized representative of he

Financial Creditor Shri Balwant Kumar S/o Shri S.C. Singh.
read with Section 7(3)(a) and Section 7(5) of the Code. A copy of CRILC Report (annexure-U), a copy of
Banker's Book ass per Banker's Evidence Act, 1891 (Annexure-V), Declaration of the Corporate Debtor
dated 3.12.2013 sent by the Corporate Debtor to the Financial Creditor admitting the liability, various
letters issued by Financial Creditor including the one declaring the account as NPA show overwhelmingly
the default committed by the 'Corporate Debtor'. We further find that the application is complete in all
other respects as the Insolvency Professional, Mr. Anil Kohli has been duly proposed and he has also
made full declaration. It is further evident from the affidavit of service that before filing the instant
application it was duly dispatched to the Corporate Debtor at its registered office which was delivered
and received by the Corporate Debtor.
8. The matter came up for consideration on 02.06.2017 and was posted for arguments on
27.06.2017. On 27.06.2017 Mr. Rakesh Gupta, Managing Director of the Corporate Debtor had appeared.
9. Accordingly, we have heard Mr. Jayant Mehta, learned counsel for the Financial Creditor and Mr.
Rakesh Gupta, Managing Director of the Corporate Debtor. Mr. Mehta has taken us through the paper
book and various documents which has led us to record our satisfaction with regard to the advancement of
loan, default, its dues admission by the Corporate Debtor and the proposal of Mr. anil Kohli as the
Insolvency Professional. Therefore, no exception is provided by the Corporate Debtor to decline
admission of the application.
10. As a sequel to the above discussion, this petition is admitted and Mr. Anil Kohli, 1011, Kiriti
Shikhar, Districte Centre, Janakpuri, New Delhi - 110058, e-mail aniljullundur@gmail.com, whose name
has also figured in the latest list of Insolvency Professionals issued by the Insolvency & Bankruptcy
Board of India is appointed as an Interim Resolution Professional.
1203
11. In pursuance of Section 13(2) of Code, we direct that Interim Insolvency Resolution Professional
shall immediately make public announcement with regard to admission of this application under Section 7
(b) transferring, encumbering, alienating or disposing of by the Corporate Debtor any of its
assets or any legal right or beneficial interest therein;
(c) any action to foreclose, recover or enforce any security interest created by the corporate
debtor in respect of its property including any action under the Securitization and
Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002;
(d) the recovery of any property by an owner or lessor where such property is occupied by or in
the possession of the corporate debtor."
period.
are contemplated, interalia, by Sections 15, 17, 18, 19, 20 & 21 of the Code. He must follow best
practices available in the discipline of Insolvency even borrowing from others jurisdiction provided such
practices are suitable to the conditions of this Country. It is further made clear that all the personnel
connected with the Corporate Debtor, its promoters or any other person associated with the Management
of the Corporate Debtor are under legal obligation under Section 19 of the Code to extend every
assistance and cooperation to the Interim Resolution Professional as may be required by him in managing
the affairs of the Corporate Debtor. In case there is any violation the Interim Resolution Professional
would be at liberty to make appropriate application to this Tribunal with a prayer for passing and
appropriate order. We specifically direct the Interim Resolution Professional to protect and preserve the
value of the property of the ' Corporate Debtor ' as a part of its obligation imposed by Section 20 of the
Code and perform all his functions strictly in accordance with the provisions of the Code.
1204
C.P. (I.B.) No. 190/7/NCLT/PB/2017
Applicant: Union Bank Of India
Vs
Respondent: Era Infra Engineering Limited
Judges/Coram:
Hon'ble Sh. R.Varadharajan, J. (Member (J)
Counsels:
For Appellant/Petitioner/Plaintiff: Nesar Ahmad, Practicing Company Secretary and Ahsan Ahmad,
Learned Advocate
For Respondents/Defendant: Manoj_K_Singh,_Advocate and Vijay K.Singh, Learned Advocate
ORDER
Hon'ble Sh. R.Varadharajan, J. Member (J)
1. Union Bank of India has categorized itself as a Financial Creditor under the provisions of
Insolvency & Bankruptcy Code, 2016 (hereinafter for sake brevity called as 'Code') for the purpose of
initiating the Corporate Insolvency Resolution Process (CIRP) as contemplated under the Code against
Era Engineering Infra Limited, being the Corporate Debtor. The circumstances leading to the filing of the
present petition as per the averments of the Financial Creditor is detailed as follows: -
(a) The Corporate Debtor being an EPC contractor is engaged in execution of large construction
projects like construction of highways, airports and industrial projects and since 1990 has been
availing credit from the Financial Creditor and the latest being in the year 2012 wherein a Working
Capital Term Loan of Rs.100 crores on standalone basis was sanctioned vide sanction letter bearing
No.IFB:CR:602.12. Pursuant to the sanction the loan was also disbursed to the Corporate Debtor on
31.12.2012. The amount of term loan along with interest was repayable in 14 instalments as agreed
to between the parties. Perusal of the form as prescribed under Insolvency and Bankruptcy
(Application to Adjudicating Authority) Rules, 2016 in Form I as filed by the Financial Creditor
discloses in Part IV of the said form that the total amount sanctioned to the Corporate Debtor on
1205
several dates is to the extent of Rs.1506.33 crores and the amount claimed to be in default is to the
extent of Rs.681.04 crores and in addition External Commercial Borrowing of USD 11,971,939.12
as on 31.05.2017 is also in default, all it is averred substantiated by Statement of Accounts filed
along with the Petition. In relation to the facilities granted, the Financial Creditor has given in Part
V of Form I as referred to above, securities created by the Corporate Debtor and held by the
Financial Creditor under pari-passu charge as well as in relation to certain securities which it is
having a first charge with the consortium of lenders as well as the personal guarantees given by the
promoters of the Corporate Debtor as well as Corporate Guarantees given.
(b) After due notice of the petition by the Financial Creditor on the Corporate Debtor, appearance on
behalf of the Corporate Debtor/Respondent was put in and as per the representation made by the
Counsel for the respondent before the Hon'ble Principal Bench, NCLT which is evident vide order
dated 11.07.2017 that several company petitions seeking for winding up of the Corporate Debtor is
pending before the Hon'ble High Court of Delhi and in the circumstances vide the said order of the
Hon'ble Principal Bench the following question has been framed, namely:
"Whether the process under the Insolvency and Bankruptcy Code, 2016 can
be triggered in the face of the pendency of the winding up petitions or it is
to be considered as an independent process?"
(c) For arguments of the aforesaid issue the Company Petition was listed on 25.07.2017. Since the
Hon'ble Principal Bench did not sit on the said date and as a PRINCIPAL BENCH was constituted
to hear the matters listed before the Hon'ble Principal Bench in lieu of it, this PRINCIPAL BENCH
taking into consideration the exigencies of the situation chose to hear the submissions of the
respective parties in this as well as in C.P.No.110 (PB) of 2017 in the matter of Alchemist Asset
Reconstruction Company Limited — Vs- Tirupati Buildings & Offices Private Limited in which
petition also a similar issue has arisen due to the pendency of winding up petitions against the
Corporate Debtor therein.
(d) At the time of submissions by the counsels appearing for the parties it was able to be discerned that
coordinate benches of the NCLT have taken different viewpoints on the above question framed by
the Hon'ble Principal Bench.
(e) Thus in the matter of M/s.Alcon Laboratories (India) Private Limited -Vs- M/s.Vasan Health Care
Private Limited the Hon'ble Division Bench of NCLT, Chennai,wherein one of the issues raised by
the Corporate Debtor was to effect that since a winding up petition is sub-judice before the Hon'ble
1206
High Court of Madras the maintainability was sought to be questioned of the CIRP process under
the Code before it and in relation to the same it has been held as follows at Paragraph 5 of the said
decision rendered on 21st April 2017, namely:-
The last objection that has been raised by the counsel for corporate
debtor is that winding up petition is sub judice before the Hon'ble High
Court of Madras, where the Court permitted Andhra Bank to appoint
suitable person to conduct forensic audit of the corporate debtor. The
pendency of the winding up petition cannot be a bar under the Code for
initiating the corporate insolvency resolution process, because the
Hon'ble High Court has not passed any order for winding up of the
corporate debtor and no Official Liquidator has been appointed.
Therefore, this objection is also rejected.
(f) Even though the above decision had been taken in Appeal before the Hon'ble NCLAT in Company
Appeal (AT) (Insol.)No.41 of 2017 by the Corporate Debtor, the Hon'ble Appellate Tribunal did not
have the occasion to consider the above question in view of the Corporate Debtor having obtained a
stay of the proceedings before the Hon'ble High Court of Madras in relation to the Insolvency
Resolution Process pending before the Hon'ble NCLT, Chennai.
(g) The view of the Hon'ble NCLT, Ahmedabad it is seen from the decision rendered in Industrial and
Commerce Bank of China -vs- Alok Industries Ltd in IA No.188 of 2017 in C.P. (IA
No.48/7/NCLT/AHM/2017 rendered as recently as 18.07.2017 is similar to the view expressed as
above by the Hon'ble NCLT Bench, Chennai.
(h) On the other hand the Hon'ble Principal Bench, NCLT, New Delhi in several of its orders including
the one passed in M/s.Nauvata Engineering Pvt. Ltd -Vs- Punftlyods Ltd in C.P.No.(IB)-
217(PB)/2017 on 19.07.2017 has held as follows:-
Learned Counsel for the respondent has brought to the 'notice of

the Bench that winding up petition against the respondent company
namely Punj Lloyds Ltd. is already pending before the Hon'ble Delhi
High Court and taking notice of the aforesaid fact C.P.No. 1156 of
2016 was transferred back to the Hon'ble Delhi High Court.
In various orders passed by this Tribunal, we have expressed the

opinion that in cases where winding up proceedings are pending
1207
against a Company, then it would not be conducive for the Tribunal to
trigger insolvency process against that very company as there is
likelihood of conflict between the two statutory entities, namely
Official Liquidator and the Insolvency Resolution Professional.
Therefore, the proceedings which are continuing in the Hon'ble Delhi
High Court may constitute a better basis for adjudication being earlier
in point of time and the claim having been made by other Operational
Creditors in the proceedings for winding up. The Ministry of
Corporate Affairs has also issued notification on 29.06.2017 to that
effect. Accordingly, we refer this matter for consideration of Hon'ble
High Court. The Registry is directed to send all the papers at the
earliest.
Parties through their Counsel are directed to appear before the

Hon'ble Delhi High Court on 18th September, 2017.
This order may first be placed before Hon'ble the Chief justice
for appropriate orders.
(i) In the case of Nikhil Mehta and Sons (HUF) -Vs- AMR Infrastructure Ltd in C.P.No. (ISB) -
03(PB)/2017, a decision rendered by the Hon'ble Principal Bench, NCLT, New Delhi one of issues
considered by it, amongst others, was in relation to the similar question on hand and at paragraph
14 of the said decision it has been held as follows:-
Even otherwise the present petition would not be maintainable as many

winding up petitions have been filed before Hon'ble Delhi High Court
being Company Petition No.477 of 2014, Company Petition Nos.
689,691,692,693,694,695,700 and 722 of 2015 alongwith CP No.238 and
244 of 2016. Even the Official Liquidator has been appointed as a
provisional liquidator although the matter is presently before the
Appellate Bench with interim directions.
(j) The above decision rendered in Nikhil Mehta's case had been taken in appeal before the Hon'ble
NCLAT in Company Appeal (AT) (Insolvency) No.07 of 2017 and it is pertinent to note that the
Hon'ble NCLAT had framed the following two issues at paragraph 14 while rendering its
judgement in appeal in Nikhil Mehta's case, namely:
1208
Whether the Applicant who reached with agreements/Memorandum of
Understanding with respondent for the purchase of three units being a
residential flat, shop and office space in the projects developed,
promoted and marketed by the respondent come within the meaning of
'Financial Creditor' as defined under the provisions of sub-section (5)
of Section 7 of the 'I & B code'; and
Whether an application for triggering insolvency process under Section

7 of 'I & B code' is maintainable where winding up petitions have been
initiated and pending before Hon'ble High Court against the
'Corporate Debtor'.
(k) However question no.(ii) as framed above by the Hon'ble NCLAT has not been answered as
probably it did not consider the same in view of holding that the petitioner will fall under the
category of 'Financial Creditor' as compared what was otherwise held by Hon'ble NCLT and had
thus remitted back the matter to NCLT, New Delhi for admission, if the papers are otherwise in
order.
(l) In addition, this PRINCIPAL BENCH of NCLT in the case of M/s.Nowfloats Technologies Pvt.
Ltd -VsM/s.Getit Infoservices Pvt.Ltd in C.A.No. (18) 45(PB)/2017 vide order dated 11.04.2017
had specifically held, where the Official Liquidator has been appointed as the Provisional
Liquidator, then the recourse of the parties is to approach the Court which has thought it fit to
appoint the Liquidator and not this Tribunal and that the proceedings cannot be sustained before
this Tribunal without obtaining the leave of the Hon'ble High Court under Section 450 of the
Companies Act, 1956 for continuation of the proceedings under the Code.
(m) Strictly speaking the above cases referred to are not transferred cases as contemplated under
Section 434 of the Companies Act, 2013 and the notifications issued thereunder from time to time
to facilitate and to remove difficulties in relation to matters which are required to be transferred and
for bringing in clarity as to jurisdiction of the respective judicial forums. A combined reading of
Section 434 of the Companies Act, 2013 and the notifications issued thereunder from time to time,
in relation to winding up, particularly under Section 433(e) of the Companies Act of 1956 discloses
the following categorization and the judicial forum which is to have jurisdiction, namely: -
1209
Category of Cases in relation to Winding up Relevant Forum to have
Notification Jurisdiction
(i) In which notice not served in relation 07.12.2016 NCLT

To respondent company GSR 1119 (E)
(ii) In the case of more than 29.06.2017 High Court

against the same respondent company S.0.2042 (E)
notice served in one and notice not
served in the other
(iii) Winding up petition admitted - High Court*

Pending service
(iv) Winding up petitions in which orders 07.12.2016 High Court

Have been reserved prior to 15.12.2016
* As interpreted by the Hon'ble High Court of Bombay in an order passed in C.P.No.331 of 2016
in the matter of M/s.West Hills Realty Pvt.Ltd vs Neelkamal Realtors Pvt Ltd dated 23.12.2016.
(n) The Hon'ble High Court of Bombay has also expressed its view in relation to the conflict of
jurisdiction between High Courts on the one hand and NCLT on the other in relation to proceedings
which were pending before it on 15.12.2016 and the notifications issued in relation to transfer of
proceedings as well in relation to the non-obstante clause as provided under Section 238 of IBC of
2016 in following terms: -
In my view, it is clear that all winding up proceedings shall not stand

transferred to the NCLT. It is clear that if the service of the notice of
the Company Petition under Rule 26 of the Companies (Court) Rules,
1959 is not complied before the 15th December 2016 such petitions shall
stand transferred to NCLT whereas all other Company Petitions would
continue to be heard and adjudicated upon only by the High Court. The
Legislative intent is thus clear that two sets of winding up proceedings
would be heard by two different forum i.e. one by NCLT and another
by the High Court depending upon the date of service of Petition before
or after 15th December 2016. In my view, there is thus, no embargo on
this Court to hear this Petition along with other companion Petitions, in
view of the admitted position that the notice under Rule 26 of the
Companies (Court) Rules, 1959 has been served on the respondent
prior t 15th December 2016.
1210
In my view, since there is no inconsistency in the provisions of the
Insolvency and Bankruptcy Code, 2016 and the Companies Act, 2013 or
Companies Act, 1956 in respect of the jurisdiction of the Company
Court or of the NCLT in so far as winding up proceedings are
concerned, reliance placed by Mr. Andhyarujina, the learned Counsel
appearing for the respondent on Section 238 of the Insolvency and
Bankruptcy Code,2016 is totally misplaced. The effect of non obstante
provisions if any in Section 238 of the insolvency and Bankruptcy code,
2016 would have been significant only if there would have been conflict
in aforesaid provisions and not otherwise. In my view, Mr. Sen, the
learned Counsel appearing for the petitioner is right in his submission
that Section 238 of the Code has no application in this situation on the
ground that there is no conflict between the provisions of the Code and
the provisions of the Companies Act, 1956 or the Companies Act, 2013.
(o) The above extracts is from the decision rendered on 11.04.2017 by the Hon'ble High Court of
Bombay in C.P.No.136 of 2014 along with C.A.No.932 of 2015 and C.A.No.887 of 2015 in the
matter of Ashok Commercial Enterprises vs Parekh Aluminex Limited.
(p) Thus taking into consideration all the above and more particularly the differing views taken by
coordinate benches of this Tribunal, this PRINCIPAL BENCH is of the considered view that the
matter should be placed before the Hon'ble President of NCLT for the purpose of being transferred
to a Larger Bench or as the Hon'ble President may deem fit in accordance with the second proviso
to sub section (2) of Section 419 of the Companies Act, 2013 and the question to be referred to such
Bench as the Hon'ble President, NCLT may deem fit and proper is as follows:-
"1. Whether the process under the insolvency and Bankruptcy Code, 2016 can be
triggered in the face of the pendency of the winding up petitions before the
respective High Courts or it is to be considered as an independent process?
2. In case the process is considered to be not independent, whether the petition filed
under the Code is required to be transferred to the concerned High Court which is
having seisin over the winding up proceedings or await the outcome of the winding
up proceedings by adjourning it sine die?
1211
3. Whether the Code gives any room for discretion to be exercised for adjourning it
sine die in view -of the given under Section 7, 9 and 10 of the Code for expeditious
disposal of cases by either admitting or rejecting it within the fixed time frame?
4. In case if the petition is adjourned sine die and if the winding up petition is
dismissed or set aside in appeal subsequently, whether there is scope in such an
eventuality for power of revival within the frame work of the Code conferred on
this Tribunal?
2. The Registrar, NCLT, New Delhi is directed to place the above reference made by this Special
Bench, NCLT, New Delhi by virtue of second proviso to sub section (2) of Section 419 of the Companies
Act, 2013 as expeditiously as possible before the Hon'ble President.
1212
C.P. (I.B.) No. 185/7/NCLT/PB/2017
Applicant: Inderpreet Singh
Vs
Respondent: Mariners Buildcon India Limited
Judges/Coram:
Hon'ble Sh. R. Varadharajan, Member (J)
Deepa Krishan, Member (T)
Counsels:
For the Financial Creditors: Divesh Goel, Practicing Company Secretary
ORDER
Hon'ble Sh. R. Varadharajan, Member (J)
1. This is an application filed under section 7 of the Insolvency and Bankruptcy Code, 2016 (for
brevity 'the code') read with rule 4 of the Insolvency and Bankruptcy (Application to Adjudicating
Authority) Rule, 2016 (for brevity 'the rule') with a prayer for initiation of Corporate Insolvency process
in respect of Corporate Debtor.
The Applicant claims to be financial creditor having given loans to the Respondents/Corporate
Debtor, as the Corporate Debtor has failed to repay the same.
2. Mariners Buildcon India Ltd. (Corporate Debtor), was incorporated on 09.05.2005. Corporate
debtor approached, Mr. Inder Preet Singh (Financial Creditor) to avail some temporary unsecured loan
and financial creditor gave an amount of Rs. 800,000/- through RTGS, UTR No.
ICICR12014082900014869 on 29th August, 2014. It is submitted that the said loan amount and the
accrued interest @ 18% per annum has been admitted by Corporate debtor vide acknowledgment dated
30th August, 2014.
1213
3. Further it is submitted that the interest was to be paid quarterly but no interest has been paid by
the Corporate Debtor. As per the decided terms the amount was to be repaid on 25th February, 2015.
After repeated demands financial creditor sent a demand notice on 22nd May, 2017 and the same was
delivered on 25th May 2017.
4. The Financial Creditor submits that the principal amount of unsecured loan of Rs. 8,00,000 with
due interest of Rs. 4,47,590/- is due up to 30th April 2017. It is submitted by the Financial Creditor that
the aforesaid debt, which was agreed to be returned with interest of 18%, is still outstanding and despite
verbal assurances, the Corporate Debtor has failed to repay either the principal amount or the interest
thereon despite legal notices dated 22nd May 2017.
5. A perusal of the averments made in the petition supports the submissions of the Ld. Counsel in
respect of the debt claimed.
6. In the instant case, the amount was given to the corporate debtor on 29th August 2014, with
interest @ 18% per annum for six months. The corporate debtor failed to repay the loan amount along
with interest till date, so a demand notice was issued to corporate debtor on 22nd May 2017.
7. The matter came up for hearing first time on 04.07.2017. On the same day, it has been submitted by the
Ld. Counsel for the Petitioner that the notice of the application has been duly sent to the corporate debtor
on 29.06.2017. It is further represented that a correspondence has been received from the corporate debtor
in relation to the claim made after the filing of the petition. Thereafter the petitioner was directed vide
order dated 04.07.2017 to file an affidavit in relation to the notice sent to the corporate debtor on
29.06.2017 along with the tracking report and other relevant documents.
8. Subsequently, in pursuance of the order dated 04.07.2017 passed by this Bench, an affidavit of
proof of service of application dated 05.07.2017 has been filed by the applicant along with copy of speed
post tracking proof of service in form-1 to corporate debtor, speed post tracking proof of service in form-1
to director of the corporate debtor and copy of the acknowledgement made by Ms. Harjas Kaur Anand,
Director of Corporate debtor dated 03.07.2017. It is mentioned that in the acknowledgement receipt dated
03.07.2017 it has been affirmed that a copy of the application in Form-1 has been duly received by the
director. It is further mentioned in the acknowledgment receipt that due to non-recoveries from customers
they are unable to pay their outstanding at the current moment.
9. It is pertinent to mention here that a copy of the petition as per Rule 4(3) of the 'AAA' Rules 2016 has
been despatched to the address of the Registered office of the Corporate debtor, but the same was not
served because the registered office of the corporate debtor has been moved as per the tracking report.
1214
10. Rule 4 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 is
applicable in this case. The said rule reads as under:
Application of financial creditor
(1)--------
(2)--------
(3) "The applicant shall dispatch forthwith, a copy of the application filed with the Adjudicating
Authority, by registered post or speed post to the registered office of the corporate debtor."
(4) ----------
11. The National Company Law Appellate Tribunal in its Order dated 15.05.2017 in Company
Appeal (AT) (Insolvency) No. 1 and 2 of 2017 in the case of Innoventive Industries Ltd. Vs. ICICI Bank
& Ors. has discussed in detail the issue as to whether it is mandatory for the Adjudicating Authority to
follow the principles of natural justice while passing an Order under Insolvency and Bankruptcy Code,
2016. The Hon'ble Appellate Tribunal has referred to the judgment of Hon'ble Calcutta High Court dated
7th April, 2017 in the Writ Petition No. 7144(W) of 2017 assailing the vires of Section 7 of the Code,
2016 and the relevant rules under the Insolvency and Bankruptcy (Application to the Adjudicating
Authority, 2016) in the case of "Sree Metaliks Limited & Ann." After quoting extensively from this
judgment and discussing the same, the Hon'ble Appellate Tribunal has stated that "we are of the view and
hold that the Adjudicating Authority is bound to issue a limited notice to the corporate debtor before
admitting a case for ascertainment of existence of default based on material submitted by the corporate
debtor and to find out whether the application is complete and or there is any other defect required to be
removed. Adherence to Principles of natural justice would not mean that in every situation the
adjudicating authority is required to afford reasonable opportunity of hearing to the Corporate debtor
before passing the order."
12. In the instant case, while a copy of the petition has not been served at the registered address of the
Corporate Debtor, the same has been served on a Director of the Corporate Debtor. This Director,
Shrimati Harjas Kaur Anand (DIN 00442543) has vide letter dated 3rd July, 2017 acknowledged receipt
of the application in Form-1 against Mariners Buildcon India Ltd. (Corporate Debtor) for initiation of
Corporate Insolvency Resolution Process. This letter further goes on to state as follows:-
"Please note, we are currently in financial distress on account of default in payment by our
customers. We are trying our best to ensure recoveries from our customers, however, it
1215
appears that such recoveries will take longer time than we had anticipated and thus we are
not in a position to clear your outstanding at the current moment.
13. We note that the debt has been acknowledged by the Director whose name is also listed as one of
the Directors in the master data of the company maintained by MCA. She has also acknowledged receipt
of the application of the Financial Creditor in Form-1. Thus, we are of the opinion that the corporate
debtor has been given due notice of the application to initiate Corporate Insolvency Resolution
Proceedings.
14. We have also heard the learned Counsel for the 'Financial Creditor' who has taken us through the
various paras of the application as already recorded in the preceding paras and we have also expressed our
satisfaction with regard to fulfilling the requirements of the Code by the 'Financial Creditors'.
15. As a sequel to the above discussion, this petition is admitted and Mr. Prabhjit Singh Soni, address
- GG-1/144-C, 3rd Floor, Near PVR Cinemas, Vikas Puri, New Delhi-110018, an Insolvency Professional
registered with ICSI IPA having registration number IBBI/IPA-002/IP-N00065/2016-2017/10143, as
proposed by the Financial Creditor, is appointed as an Interim Resolution Professional. A certificate of
registration issued by IBBI stated to be valid from 2nd May, 2017 with respect to the aforesaid mentioned
Insolvency Professional has also been placed on record.
(c) any action to foreclose, recover or enforce any security interest created by the corporate debtor
in respect of its property including any action under the Securitisation and Reconstruction of
1216
possession of the Corporate Debtor."
period.
18. The Interim Resolution Professional shall perform all his functions religiously and strictly in
compliance with the provisions, which are/contemplated, inter alia, by Sections, 15, 17, 18, 19, 20 & 21
of the Code. It is further made clear that all the personnel connected with the Corporate Debtor, its
promoters or any other person associated with the Management of the Corporate Debtor are under legal
obligation under Section 19 of the Code to extend every assistance and cooperation to the Interim
Resolution Professional as may be required by him in managing the affairs of the Corporate Debtor. In
case there is any violation the Interim Resolution Professional would be at liberty to make appropriate
application to this Tribunal with a prayer for passing an appropriate order.
1217
PRINCIPAL BENCH
C.P. (I.B.) No. 121/7/NCLT/PB/2017
Applicant: Bank of Baroda

VS
Respondent: Amrapali Silicon City Pvt. Ltd.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Bishwajit Dubey, Ms. Surbhi Khatter & Ms. Priyal Modi, Learned
Advocates
For Respondents/Defendant: Mr. Alok Agarwal, Ms. Rati Tandon, Learned Advocates
For Intervener: Mr. Vishnu Sharma, Mr. Naveen Kapoor, Ms. Anupama Sharma, Ms. Sonali Negi, Ms.
Deepti Dayal, Learned Advocates
ORDER
Oral order dictated in open court on 04 .09.2017
1. The 'Financial Creditor'-Bank of Baroda has filed the instant application under Section 7 of the
Insolvency and Bankruptcy Code, 2016 (for brevity 'the Code') with a prayer to trigger the Corporate
Insolvency Resolution Process in the matter of Amrapali Silicon City Private Limited. It is appropriate to
mention that the financial creditor is a body corporate constituted by and under the Banking Companies
(Acquisition and Transfer of Undertakings) Act, 1970 (for brevity 'Banking Companies Act'). The
'financial creditor' had its head office at Baroda House, Mandvi, Baroda, Gujrat. It was incorporated on
02.03.1911 and subsequently constituted as a corresponding new bank on commencement of the Banking
Companies Act, The permanent account number of the financial creditor is AAACB1534F and its branch
office is at Corporate Financial Services Branch, Ist Floor, Bank of Baroda Building, 16, Parliament
Street, New Delhi-110001.
1218
2. Ms. Archana Mishra has been authorized by the letter dated 03.02.2017 (Exhibit-1)
3. The Corporate Debtor-Amrapali Silicon City Private Limited was incorporated on 20.02.2010.Its
authorised share capital is Rs. 2,00,00,000/- (Rupees Two Crores) and the paid up share capital is Rs.
1,03,69,820/- (Rupees One Crore Three Lakhs Sixty Nine Thousand Eight Hundred and Twenty) as per
the master data available on the website of Ministry of Corporate Affairs. It has its registered office also
at Delhi.
4. The financial creditor has proposed the name of Mr. Rajesh Samson as an Insolvency Professional. A
certificate of registration dated 30.06.2017 issued by the Insolvency and Bankruptcy Board of India has
been placed on record (Annexure-B) attached with the application. He has registration No. IBBI/IPA-
001/IP-P00240/2017-18/10469. He has also made declaration and sent a written communication dated
04.08.2017. According to the declaration made, Mr. Rajesh Samson has no disciplinary proceedings
pending against him nor he is a related party to 'Financial Debtor' namely Amrapali Silicon City Private
Limited nor he is an employee of the Amrapali Silicon City Private Limited.
5. The details of the 'financial debt' may now be set out. There was a term loan agreement dated
25.02.2012 (Exhibit-3) executed between the financial debtor and consortium banks which include the
financial creditor-Bank of Baroda, Oriental Bank of Commerce and Bank of Maharashtra. In pursuance of
the aforesaid agreement the consortium banks along with the financial creditor sanctioned a term loan to
the corporate debtor. Under the term loan agreement, the consortium banks sanctioned to the corporate
debtor a term loan of Rs. 100,00,00,000 (Rupees One Hundred Crores). However, the financial creditor
has contributed Rs. 96,88,00,000 (Rupees Ninety Six Crores Eighty Eight Lakhs). The details of the same
have been annexed (Exhibit-4). The principal amount in default under the term loan facility as on
30.04.2017 is claimed to be Rs. 59,38,00,000 (Rupees Fifty Nine Crore Thirty Eight Lakhs). In addition,
the default amount towards the overdue interest and penal interest aggregates to Rs. 11,77,43,681 (Rupees
Eleven Crore Seventy Seven Lakhs Forty Three Thousand Six Hundred Eighty One). The corporate
debtor defaulted the term loan in March, 2016. Further details of the defaulted amount and the period of
default have been disclosed (Exhibit-5). The total amount of default under the term loan facility has been
further accelerated by the consortium of Bank of Baroda through the notice of acceleration-cum-demand
dated 06.03.2017.According to the notice the repayment of the defaulted amount was required to be made
within seven days from the date of the acceleration notice.
6. The 'financial creditor' has placed on record an overwhelming evidence to prove the default. The details
of the security interest have been given in Part V which are set out below:-
1219
(a) Second charge on a pari-passu basis by way of mortgage by deposit of title deeds of the immovable
properties located by Plot No. GH-01/A, Sector - 76, Noida, Uttar Pradesh, along with the building and
structures thereon as detailed in Exhibit - 6 ("Immovable Property");
(b) First charge on a pari-passu basis by way of hypothecation of all the movable assets of the Corporate
Debtor including but not limited to the raw materials, work in progress etc., both present and future;
(c) First floating charge on a pari-passu basis by way of hypothecation or assignment of all book debts,
operating cash flows, receivables, commissions; intangibles and revenues of whatsoever nature and
wherever arising, both present and future;
(d) First charge on a pari-passu basis on all the bank accounts of the Corporate Debtor including but not
limited to the trust and retention account, into which inter alia, all the operating cash flows, treasury
income, revenues/receivables of the Corporate Debtor, debt service reserve amount would be deposited;
(e) First charge on a pari-passu basis by way of assignment or creation of security interest of all the rights,
title, interest, benefits, claims and demand whatsoever of the Corporate Debtor:
(i) ......................
(ii) ......................
(iii) .....................
(iv) .....................
(v) ......................
(f) first charge on the profits of the Corporate Debtor after provision for taxation.
The copies of certificate of registration of charges issued by the Registrar of Companies with respect to
the aforementioned securities have been annexed herewith at Exhibit - 7.
A copy of the memorandum of entry dated February 25, 2012 (the "Memorandum of Entry") in respect of
the second charge on a pari passu basis created in favour of the BoB Consortium by way of mortgage by
deposit of title deeds of the Immovable Property, along with a copy of letter dated February 27, 2012 of
the Corporate Debtor confirming deposit of title deeds has been annexed herewith at Exhibit - 8.
A copy of the deed of hypothecation dated February 25, 2012 (the "Deed of Hypothecation") executed by
the Corporate Debtor in favour of the BoB consortium has been annexed herewith at Exhibit - 9.
1220
7. The following Corporate Guarantors have furnished the Corporate guarantees:-
(a) Ultra Home Construction Private Limited;
(b) Rinku Clothing Creations Private Limited;
(c) Jotindra Steels and Tubes Limited; and
(d) Vidhya Shree Buildcon Private Limited
All of them have guaranteed the obligation of the corporate debtor under the loan agreement executed by
the Corporate Guarantors in favour of the consortium banks. Copies of the Corporate Guarantee
Agreements have been placed on record (Exhibit-10).
8. The Financial Creditor also placed on record the Personal Guarantees of the Corporate Debtor namely
Mr. Anil Kumar Sharma, Mr. Pramod Kumar and Mr. Shivpriya. All of them have guaranteed the
obligation of the Corporate Debtor under the loan agreement dated 25.02.2012. Copies of the Personal
Guarantees have been placed on record (Exhibit-11).
9. The estimated value of the aforementioned securities (except the corporate and personal guarantees) is
approximately Rs. 13,23,49,84,000 (Rupees One Thousand Three Hundred and Twenty Three Crores
Forty Nine Lakhs and Eighty Four Thousand). A copy of the valuation report has also been placed on
record (Exhibit - 12).
10. The copies of the loan agreement and the sanction letter along with letter dated 24.06.2016 conveying
modification/re-fixing of loan instalments have been placed on record (Exhibit - 3 and Exhibit- 21)
11. A record of default is also available with the Credit Information Companies like the status
classification report of the 'Corporate Debtor' issued by the Trans Union CIBIL dated 28.02.2017 (Exhibit
- 13). Likewise, Entries in Bankers Book in accordance with the Bankers Books Evidence Act, 1891 has
also been placed on record which relate to term loan facility (Exhibit -14).
12. The 'financial creditor' has then attached a list of other documents to the application to prove the
financial debt, the total amount due and the date of default. Those documents are as under:-
a) A copy of Acceleration Notice dated March 6, 2017 by BoB to the 'Corporate Debtor' calling upon the
'Corporate Debtor' to repay the default amount within seven days of the date of the notice and reply of the
Corporate Debtor to the Acceleration Notice;
b) A copy of reply by 'Corporate Debtor' dated April 4, 2017 to aforementioned notice;
1221
c) A copy of letter dated May 5, 2017 on behalf of -BoB to 'Corporate Debtor' in response to
aforementioned reply;
d) A copy of reporting of the account of the 'Corporate Debtor' as SMA - II account with the Central
Repository of Information on Large Credits (CRILC)
e) Copies of the letters dated June 29, 2016, June 25, 2016, June 18, 2016 and e-mail dated June 2, 2016
by BoB to the 'Corporate Debtor' indicating persistent overdues;
f) Copies of the acknowledgement letters dated February 15, 2015 and February 16, 2015 acknowledging
indebtedness of the 'Corporate Debtor' to BoB.
The copies of the aforementioned documents proving existence of 'financial debt' have also been annexed
(Exhibit - 15, 16, 17, 18, 19 and 20).
13. The application has been duly presented by Ms. Archana Mishra on the basis of authorization dated
03.02.2017 (Exhibit-1).
14. The 'corporate debtor' has opposed the admission of the application by arguing that the demand of Rs.
71,15,43,682/- is wholly arbitrary. The applicant is part of consortium of banks and the RTL agreement
was executed for providing a term loan of Rs. 300,00,00,000/-. In the said agreement the Bank of Baroda,
Oriental Bank of Commerce and Bank of Maharashtra are described as consortium or the lenders. It is
also conceded that the applicant was designated as lead bank of the Consortium. The applicant cannot
individually enforce any right or obligation of the term loan agreement. The application even otherwise is
incomplete and the same is liable to be rejected. A reference has been made to the provisions of Section
7(5)(a) of the Code in as much as the question has been raised with regard to the authority of Ms. Archana
Mishra from Bank of Baroda who is authorized by Power of attorney dated 03.02.2017to file the present
application. According to the learned Counsel Ms. Archana Mishra would have the same power and
authority which were conferred upon Mr. Ravi Kant Thakral vide a power of attorney dated 16.12.2015
and the Board resolution of the company. The power of attorney has not been placed on record. We have
duly considered the objection. The power of attorney has been later placed before us. A perusal of power
of attorney dated 16.12.2015 executed in favour of Shri Ravi Kant Thakral would show that both these
objections would not survive. The Bank has conferred upon him powers and authorities as are therein
contained including the power to substitute and appoint one or more Attorney or Attorneys to exercise for
the Bank of Baroda as its attorney. Accordingly, Shri Thakral has executed Power of Attorney in favour
of Mrs. Archana Mishra on 03.03.2017 (pp. 17-23). Clause 19 thereof clearly authorized the power of
attorney to sign on behalf of the Bank all matters incidental to or arising out of the bankruptcy or
1222
insolvency or any composition or arrangement with the creditors. In pursuance thereof, she has signed
power of attorney, pleadings and other papers. The application cannot be considered in complete.
Therefore, the objection raised would not survive.
15. It has further been argued that the default amount mentioned in part IV column 2 of the application
does not match with the amount mentioned in various other documents annexed by the applicant. A
reference has been invited to status classification report of the corporate debtor issued by CIBIL dated
28.02.2017, bankers book maintained by the applicant and acceleration notice. Even this objection will
not survive because a perusal of the CIBIL report dated 28.02.2017 mention the same figure of default
namely Rs. 59,38,00,000/- (Rupees Fifty Nine Crore Thirty Eight Lakhs) and the element of interest
amounting to Rs. 11,77,43,681 (Rupees Eleven Crore Seventy Seven Lakhs Forty Three Thousand Six
Hundred Eighty One) is not required to be reflected. It clearly mentions the account to be substandard.
Likewise, in the Bankers Book (Exhibit-14) same amount has been worked out under the column balance
as on 16.08.2016 namely Rs. 59,38,00,000/- (Rupees Fifty Nine Crore Thirty Eight Lakhs). The amount
of default continued to be similar as on 18.05.2017 namely Rs. 59,38,34,500/-. This variation appears to
be on account of difference of dates. In any case the 'Corporate Debtor' would be entitled to raise
objection of any mismatching before the Committee of Creditors. It was then submitted that consent from
other members of consortium has not been obtained. The objection would not require any serious
consideration because Explanation to section 7(1) clarifies that for the purposes of section 7 a default
includes a default in respect of financial debt, owed not only to the applicant-financial creditor but to any
other financial creditor of the Corporate debt. Moreover, no other financial creditor has come to the
forefront to oppose the application.
16. The respondent has also made an attempt to highlight that the group housing project namely Silicon
City Project is being driven through an SPV being the current respondent. It is further stated the land in
question is not owned by the 'corporate debtor'. As a matter of fact, the land is owned by Noida Authority.
The 'corporate debtor' has issued a lease, which is governed by various covenants and the covenants
include the provisions of cancellation of the lease and to take over the entire project, including the land in
case of default in payment. It is claimed that the aforesaid stipulation has found further strength from the
RERA Act. The project is likely to be completed in year 2021. To start with there would be construction
of 6000 flats by December 2017. The 'corporate debtor' is to handover possession of 900 flats to the
respective flat buyers in 2018 and another 900 flats would be handed over in the year 2019 and remaining
2200 flats shall be constructed and delivered by 2021. The delay has been caused on account of the order
dated 07.04.2015passed by the National Green Tribunal which had banned construction activity in the
1223
area(Annexure R/5). As a result, construction was completely suspended. Reference has also been made
to the Joint Lender meetings but no substantial resolution could be achieved.
The objection raised by the 'Corporate Debtor' has been noticed to highlight their wish. However, the fact
remains that till date substantial outstanding amount in default is payable by the 'Corporate Debtor'.
Therefore, this objection too would not cut any ice.
17. The New Okhla Industrial Development Authority has filed an application for intervention under Rule
32 of the NCLT Rules, and has placed on record a copy of the lease deed executed between the 'Corporate
Debtor' and the New Okhla Industrial Development Authority.
requirement of Section 7 of the Code. According to explanation appended to Section 7(1) of the Code an
application by the financial Creditor' either on its own behalf or jointly with the other financial creditor
would be competent for initiating Corporate Insolvency Resolution Process against a 'Corporate Debtor'
before this Tribunal when a default has occurred. It is obvious that the lead bank like the petitioner is
competent to file this application on its own behalf and other banks who are members of the Consortium.
19. In order to ascertain whether the default has occurred, it will be profitable to read Section 3(12) of the
Code which states that default means non-payment of debt when whole or any part of the instalment of
the debt has become due & payable and the same has not been repaid by the 'Corporate Debtor'. In the
present case, it has eminently come on record that the 'default' has occurred many a times. The initial date
of default by the 'corporate debtor' in accordance with the term loan facility is 31.03.2016. The
computation of defaulted amount and the date of default is as under:-
Sr. Facility Total overdue at [30th April], 2017 Date of Days of

No. (Principal + Interest + Overdue Interest + Penal Interest) Default Default
(INR)
RTL Facility 59,38,00,000.00+4,51,75,849.00+6,63,86,493.08+61,81,339.8 31.03.201 398
8 6 days till
date
Total 71,15,43,682.00
20. The default has again occurred when a demand notice dated 06.03.2017 was issued (acceleration
notice) and the repayment of the defaulted amount was required to be made within seven days from the
date of acceleration notice. The principal defaulted amount in most documents is the same. However, in
1224
one of the documents it may vary as the calculation has been made for different dates. Therefore, it would
not be a material factor warranting the dismissal of the application. Any objection to the amount of
default shall remain available to the 'corporate debtor' before the 'Committee of Creditors'.
21. In order to arrive at a correct conclusion, it would be further necessary to examine the provisions of
Section 7(2) and 7(5) of the Code which read as under:
"Initiation of corporate insolvency resolution process by financial creditor,
(1) ..................
(2) The financial creditor shall make an application under sub-section (1) in such form and manner and
(3) ..................
(4) ..................
application:
A conjoint perusal of the aforesaid provision would reveal that form and manner of the application has to
be the one prescribed by the authorities. It is required to be accompanied by the prescribed fee. It is
further evident that if the application is incomplete as per the requirement of Section 7(2) of the Code
then this Tribunal being the Adjudicating Authority may reject it. However, proviso to Section 7(5) of the
Code postulates that before rejecting the application on the ground that it is incomplete in terms of
Section 7(2) of the Code the Tribunal is obliged to give notice to the applicant to rectify the defect in his
1225
application. The defect in the application needs to be removed within seven days from the date of receipt
of notice.
22. For the reasons, aforementioned this petition is admitted. Shri Rajesh Samson who is duly registered
with Insolvency and Bankruptcy Board of India (IBBI/IPA-001/IP-P00240/2017-18/10469) has been
proposed as an Interim Resolution Professional. He is hereby appointed as an Interim Resolution
Professional. He has filed his certificate of registration with Insolvency and Bankruptcy Board of India.
He has also filed his written communication dated 04.08.2017 in connection with the application to
initiate Corporate Insolvency Resolution Process. The disclosure has been made in the letter dated
04.08.2017.
23. In pursuance of Section 13(2) of the Code we direct that public announcement shall be made by the
Interim Resolution Professional within the statutory period with regard to admission of this application
under Section 7 of the Code. We also declare moratorium in terms of Section 14 of the Code. Some
necessary consequences of imposing the moratorium flows from the provisions of Section 14(1)(a), (b),
(c) & (d). Thus, the following prohibitions are imposed:
other authority;
period.
25. The Interim Resolution Professional shall perform all his functions contemplated, inter alia, by
Sections 15, 17, 18, 19, 20 & 21 of the Code. It is further made clear that all the personnel connected with
1226
the Corporate Debtor, its promoters or any other person associated with the Management of the Corporate
Debtor are under legal obligation under Section 19 of the Code to extend every assistance and cooperation
to the Interim Resolution Professional as may be required by him in managing the day to day affairs of
the 'Corporate Debtor'. In case there is any violation, the Interim Resolution Professional would be at
The Interim Resolution Professional shall be under duty to protect and preserve the value of the property
of the 'Corporate Debtor' as a part of its obligation imposed by Section 20 of the Code and perform all his
26. The intervener shall be at liberty to file any claim before the Insolvency Professional in accordance
with law which shall be duly considered.
1227
PRINCIPAL BENCH
C.P. (I.B.) No. 132/7/NCLT/PB/2017

VS
Respondent: Samtel Color & Ors.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Hashmat Nabi, Ms. Sweta Jha, Advocate
For Respondent: Mr. Kunal Godhwani, Mr. Karan Khanna, Mr. Mohit Taneja, Advocates
ORDER
1. The Punjab National Bank (for brevity 'PNB-Financial Creditor') has filed the instant application under
triggering the insolvency resolution process in the matter of Samtel Color & Ors. (for brevity the
'Corporate Debtor'). It is appropriate to mention that 'PNB-Financial Creditor' is a body corporate
constituted by the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 having its
registered office at 7, Bhikaji Cama Place, New Delhi.
2. The Corporate Debtor is M/s. Samtel Color Limited having its registered office at 501, 5th Floor, Copia
Corporate Suits, Plot No. 9, District Centre - Jasola, New Delhi - 110025. Its identification number is
L51909DL1986PLC024222, and date of incorporation is 16.06.1986. The Corporate Debtor's nominal
share capital is Rs. 175,00,00,000/- (Rupees One Hundred and Seventy-Five Crores Only) and paid up
capital is Rs. 1,16,28,53,870/- (Rupees One Hundred Sixteen Crores, Twenty-Eight Lakhs, Fifty-Three
Thousand, Eight Hundred and Seventy).
3. The 'Financial Creditor' has proposed the name of Insolvency Professional, Shri Sanjay Gupta, Address
- E-86, Second Floor, Lajpat Nagar-1, New Delhi-110024, email jd-sanjay.gupta@aaacapitalservices.com
(Regn. No. IBBI/IPA-001/IP-00513/2016-17/1344). A copy of the registration certificate dated
1228
25.05.2017 issued by the Insolvency and Bankruptcy Board of India has also been filed along with a print
out of the list of registered Insolvency Professionals along with extract of list of Insolvency Professionals
as appearing on their website, which includes the name of Sanjay Gupta. The relevant entry is reproduced
below:-
252 IBBI/IPA- Mr. E-10A, Sanjay.gupta@aaac Indian 25 May, Registered

001/IP- Sanjay Kailash apitalservices.com Institute of 2017 Under
P00117/201 Gupta Colony Insolvency Regulation
7-18/10252 Greater profession 9(Sl.No.277)
Kailash-I, als of ICAI
New Delhi-
110048
It is seen that the details given above are correct, with regard to email and address of IRP as it
pertains to the later period of 2017-18.
4. The instant application under section 7 of IBC was filed on 24.05.2017 by Punjab National Bank in
respect of sixteen respondents. In addition to Respondent-1 company, M/s. Samtel Color Ltd., respondent
No. 2 to 16 were impleaded in their capacity as being other banks and financial institutions who were
claiming pari passu charge over the movable and immovable assets of Respondent-1. On 06.07.2017, the
applicant filed an application for deletion of Respondent No. 2 to 16 from the array of parties, as they
were neither proper nor necessary parties for the purposes of the instant petition. This application was
disposed of with the direction that the names of aforesaid respondents be deleted from the memo of
parties. Thus, the instant petition survives against only one respondent, namely, Samtel Color Ltd. the
Corporate Debtor.
5. The 'Financial Creditor' has given the details of Financial Debt, Working Capital Facilities, Details of
Term Loan and External Commercial Facilities. In part-V of the application, which is on a proforma
prescribed under Rule-4 of the Insolvency & Bankruptcy (Application to Adjudicating Authority) Rules,
2016 read with Section 7 of the Code, has given the following details about the financial debts:
Part-IV
Particulars of Financial Debt
Punjab National Bank (PNB) sanctioned the following facilities:
Total Amount of Debt
Applicant Bank sanctioned various facilities which were extended
Granted from time to time to the Respondent no.-1 company, lastly sanctioned
on 05.12.2006. The facility sanction and availed by Respondent no.-1
1229
were Fund based limit of Rs. 31.32 crores, Non-Fund based limit of
Rs. 55.04 crores and Corporate Loan of Rs. 25.00 crores
Date(s) of Disbursment :-
The brief particulars of the various facilities which was earlier extended to M/s Samtel Colour
Ltd. by Consortium led by
Applicant Bank before another consortium led by ICICI Bank were as under :-
Date of Sanction Details of the Facilities Sanctioned by the Applicant and availed by
the M/s. Samtel Colour Limited.
21.01.1987 1. Fund-based limit of Rs. 1.60 Crore
2. Non-Fund Based Limit of Rs. 4.75 Crore
3. Term Loan of Rs. 4.00 Crore
4. Bridge Loan of Rs. 2.00 Crore.

24.02.1987 FLC limit was enhanced from Rs. 3 Crore to 5.60 Crore on usance
basis.
08.09.1987 The Term Loan was enhanced from Rs. 4 Crore to 5.00 Crore.
Specific FCL for import of machinery was to the tune of Rs. 5.00
Crore.
29.08.1988 Fund Based Limit was enhanced from Rs. 1.60 Crore to 5.08 Crore
and non-fund based limit was enhanced from Rs. 5.75 Crore to Rs.
18.00 Crore.
30.03.1989 Fund Based limit was enhanced from Rs. 5.08
Crore to Rs. 11.09 Crore and non-fund based
limit was enhanced from Rs. 18 Crore to Rs. Additional Term Loan
of Rs. 0.46 Crore was also sanctioned.
19.10.1989 P/C limit was enhanced from Rs. 6 Crores to Rs. 12 Crores within
the Fund Based Limit of Rs. 19.75 crores and Non-Fund Based Limit
was enhanced from Rs. 20 crores to Rs. 27 Crores.
13.03.1990 After review of existing Fund-Based Limit it was enhanced to Rs.
19.75 Crore as a consortium finance. Non-Fund Based Limit was
enhanced from Rs. 27.00 to Rs. 32.00 Crores and ABC (DDB) was
enhanced from Rs. 1.00 Crore to Rs. 5.00 Crore within Post
Shipment Facility of Rs. 8.00 Crore.
31.01.1992 The consortium enhanced the facility from Rs. 19.75 Crore to Rs.
24.80 crores with PNB share remaining at level of Rs. 14 Crores.
Post Shipment Facility by the consortium was enhanced from Rs. 8
Crores to Rs. 18 Crores with PNB shares from Rs. 8 Crores to Rs. 12
Crores.
The Non-Fund Based Limits was enhanced from Rs. 32 Crores to Rs.
38.00 Crores by the Consortium with PNB shares being reduced
from Rs. 32 Crores to Rs. 19.25 Crores.
18.08.1994
Fund Based Limit was enhanced from Rs. 14 Crores to Rs. 18.40
Crores.
Non-Fund Based Limits was enhanced from Rs. 19.25 Crores to

Rs. 24.80 Crores.
The Post Shipment Facility of Rs. 12 Crores was renewed (outside
PBF).
1230
17.02.1997
Fund Based Limits was enhanced to Rs. 36.90 Crores & Non-Fund
Based Limit was enhanced to Rs. 32.50 Crores with Specific FLC
(DP) of Rs. 10 Crore, Specific LG of Rs. 10 Crore.
01.12.2000
Working Capital Consortium Agreement was entered into between
Samtel Color Limited (Respondent no.-1) PNB, Canara Bank,
Standard Chartered Bank, Grindlays Bank Ltd., ICICI Bank Ltd.
The Applicant Bank share was to the tune of Rs. 36.90 Crore for
fund based facilities and Rs. 34.50 Crore for non-fund based
facility.
15.03.2003 Inter-se agreement dated 15.03.2003
executed between consortium banks and Joint deed of
Hypothecation dated 15.03.2003 between company and consortium
banks. In terms of the consortium documents, the applicant bank
facilities were to the tune of Rs. 30.40 Crore for fund based facility
and Rs. 32.20 Crore for non-fund based facility.
23.05.2003
Working Consortium Agreement entered into between Samtel
Color Limited with Applicant Bank being Consortium Leader and
Canara Bank, Lin Bank Ltd., SBI, Standard Chartered Bank,
Export Import Bank of India, ICICI Bank Ltd. Applicant Bank
Facilities were to the tune of Rs. 30.40 Crore for fund based
facilities and Rs. 32.20 Crore for non-fund based facility.

Inter-se agreement dated 23.05.2003
executed between consortium banks.
18.08.2004
Fund Based Limits was enhanced to Rs. 29.47 Crores and Non-
Fund Based Limit was enhanced to Rs. 42.14 Crores.

30.12.2005 Working Capital Consortium agreement
between Samtel Colour limited and the Applicant Bank acting as
leader on its behalf and on behalf of Genera Bank, UTI Bank Ltd.,
SBI, ABN Amro Bank NV, ICICI Bank Ltd. Applicant Bank Credit
1231
Facilities were to the tune of Rs. 29.47 Crore for non-fund based
facility.
Joint Deed of Hypothecation executed

between Samtel Colour Limited, Respondent no.-1 and Applicant
Bank (Leader of the Consortium) and subsequently on 17.07.2006,
Supplementary Agreement was executed by the company.
Inter-se agreement dated 30.12.2005
executed between consortium banks

21.11.2006 The Fund Based Limit and Non-Fund Based
Limits of Applicant Bank was to the tune of Rs. 31.32 Crores and
Rs. 55.04 Crores respectively, and one-time FLC limit of Rs. 10
Crore was also sanction.
12.12.2006
Deed of hypothecation to secure LC on DA/DP basis dated
12.12.2006 for Rs. 55.04 Crore was executed by Respondent no.-1.
Hypothecation of movable assets forming part of fixed / block assets
dated 12.12.2006 for Rs. 86.36 Crores was executed by the
Respondent no.-1.
Packing Credit agreement (Hypothecation) dated 12.12.2006 for Rs.
15 Crores was executed by the Respondent no.-1.
Bill discounting, FOBP/FOBNLC/FOUBP/ Advance against clearing,
OD against export incentives, ODD agreement dated 12.12.2006 for
Rs. 37.62 Crores was executed by the company.

Hypothecation of current assets agreement dated 12.12.2006 for Rs.
86.36 Crores was executed by the Respondent no.-1.
Term loan cum Hypothecation agreement dated 12.12.2006 for Rs. 25

Crores was executed by the Respondent no.-1.
Agreement for loan for duty draw back dated 12.12.2006 for Rs.
4.30 Crores was executed by the Respondent no.-1.
1232
17.08.2007
Agreement of Guarantee dated 17.08.2007 executed by Shri Satish
Kaura, Director of the Respondent no.-1 in his personal capacity as
guarantor, for Term Loan of Rs. 25 Crore.
2 Amount Claimed = Rs. 236,20,17,559.29/-

Date of Default = 14.01.2016
6. It is also averred in the application that "on the request of the Respondent No. 1 through its
M.D./authorized person, Applicant Bank vide letter dated 16.06.2009 reviewed the NFB Limit of Rs. 41
crores and deferred the TL instalments falling due in 2009-10 by another one year. In regard to the facility
the Respondent No. 1 executed following letters/documents;-
Supplemental and Amendatory Agreement of Guarantee dated 29.06.2009 executed by the

Respondent No. 2.
Supplementary Agreement for Reschedulement of Term Loan (Corporate Loan) dated 29.06.2009
executed by the Respondent No. 1
Supplementary Agreement for Reschedulement of Working Capital Term Loan dated 29.06.2009
executed by the Respondent No. 1.
Supplemental and Amendatory Agreement of Guarantee dated 30.06.2009 executed by Mr. Satish
Kaura, Director of the Respondent No. 1 in his personal capacity as guarantor.
7. The said Working Capital Facility was secured by first pari passu charge in favour of Applicant Bank
with other consortium Banks by way of hypothecation of Borrower's entire stock of raw materials, semi-
finished goods, consumables stores and such other movables including book debts, outstanding monies,
receivables, both present and future ("Current Assets") and second pari passu charge in favour of
Applicant Bank with other consortium Banks on Borrower's fixed assets, both present and future,
including movable machinery, machinery spares, tools and accessories, present and future ranking second
and subservient to the charge created/to be created in favour of the term lenders ("Fixed Assets").
8. The Restructured Credit Facilities were secured by creation of equitable mortgage over the Immovable
Properties (hereinafter collectively referred to as "the Mortgaged Properties") situated at:
1233
Part of the Chhapraula Property, i.e. (i) 23.93 acres (11.43 acre leasehold and 12.50 acre of freehold)
land and buildings along with any structures etc. situated at Chhapraula Village, Tehsil Dadri, Dist
Ghaziabad, Uttar Pradesh as well as (ii) 1.7 acres (8243 sq. yard) of land and buildings along with any
structures etc. and plant and Machinery situated at Chhapraula Village, Tehsil Dadri, Distt. Ghaziabad,
Uttar Pradesh.
Greater Noida Property i.e. 41.10 acre (166294.81 Sqm.) of land and building along with any
structure situated thereof and Plant and Machinery situated at Plot No. 2, Ecotech IV, G.T. Road. Greater
Noida.
Ghaziabad Property-I and Ghaziabad Property-II i.e. 3.4 acre of industrial plot along with Buildings
and structures situated thereof and Plant and Machinery situated at Industrial Plot No. C-1/1, C-2 & C-3
Industrial Area, Sector-22, Meerut Road, Ghaziabad UP.
Parwanoo Property i.e. 9581 Sq. Meters of land along with buildings and structures situated thereof
and Plant and Machinery situated at Plot No. 6, Sector-II, Parwanoo Industrial Area, Parwanoo-173 220,
(H.P.).
_0.25 acre (1,216.66 Sq yard) of land along with buildings and structures thereof and Plant and
Machinery situated at R-9/10, Raj Nagar, Ghaziabad, UP.
9. Further, the Respondent No. 1 created first pari passu Charge on all present and future Fixed Assets
including stocks, consumables, book debts, Plant and Machinery (hereinafter referred to as "the
Hypothecated Assets") of the Respondent No. 1 situated, at:
a) Chhapraula Village, Bullandshahar Road, Tehsil Dadri, Distt Ghaziabad (Now in Distt. Gautam
Budh Nagar) Ghaziabad, Uttar Pradesh.
b) Plot No. 6, Sector-II, Parwanoo Industrial Area, Parwanoo-173 220, (HP).
c) Plot No. C-1/1, C-2 & C-3, Industrial Area, Sector-22, Meerut Road, Ghaziabad, U.P.
d) Village-Naya Nohra, Kota Barran Road, Tehsil-Laadpura, District-Kota.
The Respondent No. 1 executed the following balance security confirmation letters dated 07.05.2009
in favour of applicant bank:-
S.No. Facility Amount

1. WCTL-l 259459172/-
1234
2. Corporate Loan 252557299/-
3. FITL 54628730/-
4. WCTL-ll 45100000/-
In terms of the Amendatory MRA dated 19.01.2010, the liability of the Respondent No. 1 company,
was also duly acknowledged by the Respondent Company which was as under:-
Term Loan : Rs. 24.83 crore
Working Capital Facility : Rs. 41.00 crore
That the Respondent No. 1 company also intended to create charge over the property situated at 7 KM
milestone, Naya Nohra, Kota Baran Road, Kota admeasuring 6.2 Hectares (15.3 acre) (hereinafter
"KOTA PROPERTY"). However, in order to secure the repayment of the restructured credit facilities the
Respondent No. 1 company executed a Non-disposal undertaking whereby they undertook not to sell,
transfer, assign, dispose off, mortgage, charge, pledge, or create any lien or in any way encumber in the
said Kota Property.
10. That pursuant to the Facility Documents and Other Documents executed by the borrower in
favour of the lender (including the applicant bank), the applicant bank disbursed the amount to the
borrower from time to time out of the Restructured Facilities. In terms of the facility documents the
borrower was required to repay the dues under the Restructured Facilities and also to pay interest there on
at the rates and in the manner set out therein. The borrower failed and neglected to meet its repayment
obligation towards and bank and has committed serious breaches and defaults.
11. In view of the aforesaid classification, the Applicant Bank issued demand notice dated 20.08.2013
demanding an amount of Rs. 158,59,74,423.98 (Rupees One Hundred Fifty-Eight Crore Fifty-Nine Lakhs
Seventy-Four Thousand Four Hundred Twenty-Three and Paise Ninety-Eight Only) under Section 13(2)
of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act.
The borrower was informed that in case of their failure to pay the above-mentioned amount with further
interest at the contractual rate within 60 days from the date of notice, the Bank would exercise all or any
of the power as provided under Section 13(4) of the said Act and outcome of the action taken under
Securitization Act will be informed. The copy of the Notice dated 20.08.2013 issued u/s. 13(2)
Securitisation and Reconstruction of Financial Assets and Enforcement Security Interest Act, 2002 is
annexed hereto as Annexure-PP to the list of documents.
1235
12. That since the Respondent failed to comply with the requisition contained in notice issued under
Section 13(2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security
Interest Act, 2002, the Respondent No. 2 has proceeded and taken symbolic possession under Section
13(4) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest
Act, 2002 qua all the mortgaged properties which was a secured assets of the applicant bank on
11.04.2014, 16.04.2014 & 24.04.2014.
13. That the applicant bank also sent recall notice on 14.01.2016 and called upon the respondent No. 1 to
the pay due with interest up to 14.01.2016 which comes to Rs. 236,20,17,559.29 (Rupees Two Hundred
Thirty Six Crores Twenty Lacs Seventeen Thousand Five Hundred Fifty Nine and Twenty Nine Paise).
The copy of the recall notice dated 14.01.2016 is annexed hereto as Annexure-QQ to the list of
documents.
14. The amount due with interest up to 14.01.2016 comes to Rs. 236,20,17,559.29 (Rupees Two Hundred
Thirty Six Crores Twenty Lacs Seventeen Thousand Five Hundred Fifty Nine and Twenty Nine Paise).
Applicant bank is filing the statement account duly certified as per banker's books evidence act and
redrawn statement of accounts as per pre-CDR terms and interest re-calculated."
15. The Summary of Outstanding Balances as given in the part-IV of the application is as follows;-
Account A/c No. O/s as per CBS on O/s as on 14.01.2016 (excluding

date penal interest)
Term Loan IC19279 202,800,000.00 634,897,329.03
Devolved LCs Combined 731,226,632.10 1,532,864,160.55
934,026,632.10 2,167,761,489.58
Penal Interest
Term Loan IC19279 68,629953.29
Devolved LCs Combined 125,469,115.42
194,099,068.71
1236
Accountwise Total O/s (including Penal Interest)
Term Loan IC19279 703,527,282.32
Devolved LCs Combined 1,658,333,275.97
Total 934,026,632.10 2,361,860,558.29
Add: Legal / other expenses not debited to the accounts 157,001.00
Total Bank's claim as on 14.01.2016 2,362,017,559.29
Particulars of the Financial Debt along with documents, records and evidence of default have been
filed in the application.
16. It is seen that the original application No. 86/2016 titled "Punjab National Bank Vs. M/s. Samtel
Colour Limited & Ors." was filed under Section 19 of recovery of debts due to banks and Financial
Institution Act, 1993 before the Debts Recovery Tribunal-II, Delhi for seeking recovery of Rs.
236,20,17,559.29/- being the due amount as on 14.01.2016 payable by the respondents jointly and
severally to the applicant bank besides pendente lite and future interest @ 13% P.A. in the Corporate
Loan Account and @ 17.50 % P.A. in the due date default accounts with monthly rest alongwith all
further charges, expenses, etc. and cost of the application.
17. It is stated in the above para-IV of the application that Corporate Debtor had filed a reference under
Section 15(1) of the Sick Industrial Companies Act (Special Provisions) Act, 1985 being Case No.
58/2012 before Board for Industrial and Financial Reconstruction Branch Office-III, (BIFR) and BIFR
vide order dated 03.12.2014 declared the Corporate Debtor as a sick company.
18. It is further stated in the application that the Corporate Debtor has been availing credit facilities from
other banks apart from Punjab National Bank-Financial Creditor/Applicant and other banks and financial
institutions. These banks also have pari passu charge over the property and assets both movable and
immovable, hypothecated in their favour. The details of charges created in favour of applicant bank and
other banks as per ROC search report have been filed in Part-V of the application.
19. Copies of entries in Bankers Books in accordance with Bankers Book Evidence Act, 1891 for the
period from 13.06.2006 to 14.01.2016 are attached as Annexure-B to the list of documents.
20. Counsel for the Financial Creditor/Applicant has filed before us, a copy of letter dated 06.07.2017 of
the Respondent No.-1 company/Corporate Debtor in response to the Financial Creditor's notice dated 30th
June, 2017 enclosing a complete set of application filed on behalf of Punjab National Bank under Section
7 of the IBC. An extract of the Respondent No.-1's reply is given below:-
1237
(1) "The company have manufacturing plants spread across three states and have invested huge fund
in building the said manufacturing facilities. In those manufacturing facilities, approximately 4500
workers are engaged. They have not received their wages & dues and are very actively agitating at all
locations.
(2) That despite adverse market conditions, the Company's manufacturing activities were in full
swing till 2010-2011 and it could have continued for much longer period had there been cooperation and
understanding of the liquidity crisis by the Bankers/Secured Lenders.
(3) That even, at that stage the Management put all their efforts to revive the Company and were
almost successful but for the non-cooperative attitude of the Banks/Secured Lenders. If, the desired
liquidity has been pumped in at that time, the Company would have been active at this juncture.
(4) That the Company, in fact till 2011-12 put its best efforts to honour its commitment towards
payment of Principal and interest thereon and on cursory look of your application, it appears that your
client i.e. Punjab National Bank has not taken into account all the adjustment made as per the
restructuring schemes approved under CDR mechanism and payments made thereafter by the Company.
Thus, the claim put forward by your client in the application before the Hon'ble National Company
Law Tribunal is exaggerated, unsubstantiated, frivolous and not in accordance with the accepted
restructuring scheme.
(5) That Due to heavy losses and erosion of net worth, the Company made a reference to the erstwhile
Hon'ble Board for Industrial & Financial Reconstruction (BIFR) and same was registered under reference
number 58/2012 in October, 2012.
That as per the order of Hon'ble BIFR, the Company had drawn up an elaborate revival plan, taking
into consideration the market demand and available financial strength. The revival plan was submitted to
the Secured Creditors, including Punjab National Bank, through ICICI Bank Ltd. the Operating Agency
(OA). The revival plan was prepared, considering the interest of all stake holders including the secured
creditors, the Workers & Employees and the Statutory Authorities (for Statutory Dues).
However, instead of deliberating and exploring the possibilities of revival of the Company, the
secured creditors including Punjab National Bank opt for actions under Securitisation and Reconstruction
of Financial Assets and Enforcement of Security Interest Act, 2002 and got the proceedings at BIFR
abated.
1238
By this action of the Secured Lenders, not only the revival of the Company was jeopardized, but the
future of approximately 4500 workers, many employees and other stakeholders was adversely affected.
(6) That your client i.e. Punjab National Bank to recover its alleged dues has also approached the
Hon'ble Debt Recovery Tribunal, Delhi and the matter is sub-judice."
21. Learned Counsel of the Corporate Debtor was given an opportunity to file a reply to the petition
within one week on 10.07.2017. However, it is seen that the Corporate Debtor has not availed of this
opportunity, even by the next date of hearing i.e. 18.07.2017. So be it.
22. We have also heard learned Counsel for the 'Financial Creditor' who has taken us through the various
paras of the application as already recorded in the preceding paras from the perusal of the record. We are
satisfied that the 'Financial Creditor' has proved by overwhelming evidence that default has occurred.
Accordingly, the application for initiation of Corporate Insolvency Resolution Process under section 7 is
admitted and Mr. Sanjay Gupta, Registration No. IBBI/IPA-001/IP-P00117/2017-18/10252 is appointed
as Interim Resolution Professional.
"(a) the institution of suits or continuation of pending suits or proceedings against the Respondent
No.-1 including execution of any judgment, decree or order in any court of law, tribunal, arbitration panel
or other authority;
(b) transferring, encumbering, alienating or disposing of by the Respondent No.-1 any of its assets or
(c) any action to foreclose, recover or enforce any security interest created by the Respondent No.-1
possession of the Respondent No.-1."
notified by the Central Government or the "supply of the essential goods or services to the Respondent
No.-1 as maybe specified is not to be terminated or suspended or interrupted during the moratorium
period.
1239
PRINCIPAL BENCH
C.P. (I.B.) No. 159/7/NCLT/PB/2017
Applicant: Gudearth Homes Infracon Private Limited

VS
Respondent: Veebro Techoplast Private Limited
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Ms. Anju Jain, Mr. Hitesh Sachar, Ms. Meghna Nagpal, Advocates,
Mr. Anshul Chhabra, Practing Company Secretary, Mr. Sumnish Kumar Jain, Insolvency Professional
ORDER
The Gudearth Homes Infracon Private Limited and three others (for brevity 'Financial Creditors')
have filed the instant application under Section 7 of the Insolvency and Bankruptcy Code, 2016 (for
brevity 'the Code') with a prayer for initiation of Insolvency Resolution Process in the matter of Vccbro
Technopla.st Private Limited (for brevity 'the Corporate Debtor'). It is appropriate to mention that
Financial Creditor No. 1-M/s. Gudeai-th Homes Infracon Private Limited is a family-owned company
incorporated by Financial Creditor No. 2-Mr. Anuj Guliani 8z, husband of Financial Creditor No. 4-Mr.
Anil Kumar Guliani. The Financial Creditor No. 1 is a Company incorporated under the provisions of the
Companies Act, 1956. Its IN number is U15400DL2012PTC240539 and it has its registered office
situated at house No. 5, Road No. 8, Punjabi Bah Extension, New Delhi-11002b.
2. The Corporate Debtor-respondent is a private limited Company and its authorized share capital is
2,00,000/-. The paid up share capital of the Corporate Debtor is 1,00,000/ -. It has two Directors namely
Mr. Atul Sharma and Mr. Nipun Sharma. Its CIN number is U51495DL2004PTC126798 and it has its
registered offic . sit uated at A-1/15, Sector-7, Rohini, New Delhi-110085.
3. The case of the Financial Creditors is that Directors of Corporate Debtor were introduced to them
through common friends namely Mr. Vinay Lakra and Mr. Kewal Kishan Gupta in the year 2013. At that
time, Corporate Debtor needed financial assistance for a. short period therefore, Corporate Debtor
1240
approached and requested the Financial. Creditors to help them out. Thereafter on different elates as per
the table mentioned at Part-IV of the application, an amount of Rs. 51,750,000/- was disbursed by the
Financial Creditors which included a sum of Rs. 25,00,000 given by one Mr. Vinay Lakra.
4. It is also the case of the Financial Creditors that Financial Creditor Nos. 3 & 4 namely Ms. Babita
Guliani and Ms. Juhi Guliani executed two sale deeds dated 01.01.2014 & 12.02-2014 (Annexure-1) with
respect to first floor and ground floor respectively of their house in favour of Ms. Mahima Sharma. W/o
Shri Atul Sharma. Out of the total consideration received from aforesaid sale transactions, an amount of
Rs. 3,37,00,000 (Rupees Three Crore Thirty Seven Lakh) was given as loan to the Corporate Debtor by
Financial Creditors. In terms of the said loan the respective floors were mortgaged in favour of Financial
Creditor No. 1
5. Financial Creditors have further claimed that thereafter on 12.05.2014 another sale deed (Annexurc-2)
with respect to the second floor without roof rights of property No. 5, Road No. 5, Punjabi Ba.gh Extn_
New Delhi-1 10026 was executed by Ms. Anita Guliani mother of Financial Creditor No. 2 in favour of
Ms. Mahima Sharma W/o Shri Atul Sharma. Out of the total consideration received from aforesaid sale
transactions, an amount of Rs. 2,20,50,000 (Rupees Two Crore Twenty Lakh Fifty Thousand) was given.
as loan to the Corporate Debtor by Financial Creditors. In terms of the said loan the respective floors were
mortgaged in favour of Financial Creditors.
6. It is also the case of the Financial Creditors that on 17,02.2014, a loan agreement (Annexure-3) was
executed between the Financial Creditor No. 1 along with one Mr. Vinay Lakra and the Corporate Debtor.
Ms. Mahima Sharma W/o Shri Atul Sharma has been a Guarantor of the said loan. In pursuance of
aforesaid agreement, a loan of Rs. 3,12,00,000i- (Three Crore Twelve Lakhs) and Rs. 25,00,000/-
(Twenty Five Lakhs) was given by Financial Creditor No. 1 along with one Mr. Vinay Lakra to the
Corporate Debtor for a period of 90 days. In the aforesaid transaction Ms. Mahima Sharma being the
Guarantor had also given the possession of the Ground and First Floor of the property bearing No_ 5,
Road No. 8, Punjabi Bagh Extn. New Delhi as security to the Financial Creditors. A copy of the loan
agreement with charge over the floors which is dated 17.02.2014 and a security cheque for a sum of Rs.
50,00,000/- was issued. The security cheque bearing No. 000022 is on record (AnneKure-3 (Cony)). The
cheque is drawn on. Bank of India, 54, Old Ishwa• Nagar, New Friends Colony Branch, New Delhi. On
the presentation of the said cheque it was dishonoured on 16.08.2014. A copy of the return memo has
been placed on record (Annexure-4(Colly)).
7. Financial Creditor in its application have further asserted that as a timely repayment of loan amount
Corporate Debtor issued three postdated cheques in favour of Financial Creditor for an amount of Rs.
1241
1,06,00,000/ - bearing cheque No. 000019 dated 1€-).04.2014, Rs. 1,16,00,000/- bearing cheque No.
000020 dated 16.05.2014 86 Rs. 1,15,000/- bearing cheque No. 000021 dated 16.05.2014 all drawn on
Bank of India, New Friends Colony Branch, New Delhi.
8. It is then asserted by the Financial Creditors that subsequently to aforesaid transactions, on 14.05.2014
an addendum loan agreement (Annexure-7) with security was also entered into between Financial
Creditors alongwith one Mr. Vinay Lakra and Corporate Debtor alongwith Ms. Mahima Sharma in which
Ms. Mahima Sharma put her signature as a Guarantor. The said loan agreement (Annexure-7) was only
executed for the purpose of extending the time period for repayment of loan of Rs. 3,37.00,000/- upto
2001 June, 2014 without any interest. On the same very date, another loan agreement with security of
second floor with roof rights of the property situated at House No. 5, Punjabi Bagh Extension, New
Delhi-110026, was also entered into between the same parties. In pursuance of aforesaid loan agreement
dated 14.05.2014, an amount of Rs. 1,80,50,000/- and Rs. 40,00,000/- was paid by Financial Creditor
along with Mr. Vinay Lakra to the Corporate Debtor for a period of 55 days from the date of disbursal of
loan i.e. 16th May, 2014. Ms. Mahima Sharma being the guarantor in the aforesaid loan agreement had
given the possession of the second floor of her property bearing No. 5, Road No. 8, Punjabi Bagh Extra.
New Delhi - 110026 as security to the Creditor company. A copy of the loan agreement has been placed
on record (Annexure-8).
9. In discharge of aforesaid loan liability Corporate Debtor issued three postdated cheques dated
10.07.2014 in favour of Financial Creditors bearing cheque No. 000077 for an amount of Rs. 40,00,000/-,
cheque No, 000076 for Rs. 60,00,000/- & Cheque No 000078 for Rs. 1,20,50,000/- all drawn on Bank of
India, New Friends Colony Branch, New Delhi. Subsequently on 09.10.2014 at the request of Corporate
Debtor all the aforesaid six cheques were replaced with new dates of 30.10.2014. Thereafter again on
29.01.2015 facing similar situation all the aforesaid six cheques were again replaced with cheques dated
31.03.2015. On 09.06.2015 Financial Creditors presented five cheques bearing No. 000118, 000119,
000120, 000121 & 0001222 and thereafter on 18.06.2015 remaining single cheque bearing No. 000123
for encashment but same were returned back with the endorsement of "exceeds arrangement" (Annexure-
12). Thereafter Financial Creditors served a legal demand notice (Annexure-13) under Section 138 of
Negotiable Instrument Act upon the Corporate Debtor and proceedings (Annexure-14) in that regard are
pending adjudication before the Court of Chief Metropolitan Magistrate, Delhi.
10. The Financial Creditors have further claimed that the default has occurred when the cheques were
dishonoured on 10.06.2015 for the reason stated in the return memo 'exceeds arrangements'. The total
1242
amount claimed in default is Rs. 51750000J- (Rupees Five C•ores Seventeen Lakh Fifty Thousand) which
was disbursed on various dates through cheques by Financial Creditor Nos. 1 to 4.
11. A perusal of the aforesaid factual narration proved beyond doubt that the respondent has committed
default within the meaning of Section 7 (5) read with Section 3 (12) of the Code. The default is apparently
for a sum of rupees exceeding Rs. 1 lac as per the requirement of Section 4 of the Code and therefore, a
case for initiation of Corporate Insolvency and Resolution Process has been made out.
12. The Financial Creditors had proposed the name of Ms. Kiran Sharma as an Interim Resolution
Professional but during pendency of the application her registration expired on 30.06_2017. Thereafter
an application for substitution of Insolvency Professional was filed by the Financial Creditors on
07.07,2017 proposing the name of Mr. Sumnish Kumar Jain, 2188, Main Road, West Patel Nagar, Opp.
Metro Pillar No. 225, New Delhi-110008, email jainsumnish@ya_h.00.com.in as an Interim Resolution
Professional. His registration number is IBBI/IPA-001/IP-P00292/2017-18/ 10536. A written
communication dated 06.07.2017 in terms of Rule 9(1.) of the Insolvency and Bankruptcy (Application to
Adjudicating Authority) Rules. 2016 has also been placed on record. On the direction of this Tribunal
again written communication dated 05.08.2017 was produced by Mr. Sumnish Kumar Jain wherein
necessary disclosures have been made as per the requirement of the IBBI Regulations. Accordingly, he
satisfies the requirement of Section 7 (3) (b) of the Code.
13. It is evident from the affidavit of service that before filing the instant application it was duly
dispatched to the Corporate Debtor at. its registered office address which was returned with the
endorsement "item delivery attempted unclaimed". Financial Creditor again made an attempt by serving
Corporate Debtor through e-mail and the same was effected. Further a copy of the petition alongwith an
order dated 10.07.2017 was again served on the wife of Mr. Atul Sharma, namely Mahima Sharma, one
of the Director of Corporate Debtor but despite that Corporate Debtor did not appea.r. Accordingly, the
respondent has been duly served and were proceeded ex-parte vide order dated 01.08.2017.
14. As a sequel to the above discussion, this petition is admitted and Mr. Sumnish Kum.ar Jain, 2188,
Main Road, West Patel Nagar, Opp. Metro Pillar No. 225, New Delhi-110008, email jains-
umnish@yahoo.com.in is appointed as an Interim Resolution Professional. His registration number is
IBBI/IPA ,LSO 1/IP, P00292/2017-18/10536, whose name has also figured in the latest list of Insolvency
Professionals issued by the Insolvency 86 Bankruptcy Board of India.
15. In pursuance of Section 13 (2) of Code, we direct that Interim Insolvency Resolution Professional
1243
imposition of the moratorium resulting from the provisions of Section 14 (1) (a), (b), (c) & (d) would thus
be that the following prohibitions come in operation:
other authority;
16. It is made clear that the provisions of moratorium shall riot apply to transactions which might be
notified by the Central Government or to the supply of the essential goods or services to the Corporate
Debtor- which may be specified. Such supply is not to be terminated or suspended or interrupted during
the moratorium period_
17. The Interim Resolution Professional shall perform all his functions religiously and strictly which are
contemplated, interalia, by Sections 15, 17, 18, 19, 20 8z, 21 of the Code_ He must follow best practices
available in the discipline of Insolvency even borrowing from others jurisdiction provided such practices
are suitable to the conditions of this Country. It. is further made clear that all the personnel connected
Corporate Debtor are under legal obligation under Section 19 or the Code to extend every assistance and
liberty to make appropriate application to this Tribunal with a prayer for passing an appropriate order,
18. We specifically direct the Interim Resolution Professional to protect and preserve the value of the
property of the 'Corporate Debtor' as a part of its obligation imposed by Section 20 of the Code and
perform all his functions strictly in accordance with the provisions of the Code.
1244
PRINCIPAL BENCH
C.P. (I.B.) No. 184/7/NCLT/PB/2017
Applicant: Magma Fincorp Ltd.

VS
Respondent: Amrapali Infrastructure Pvt. Ltd.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Ms. Ritu Singh & Ms. Akansha Singh, Advocates
For Respondent: Mr. Alok Agarwal & Ms. Rati Tandon, Advocates
ORDER
This is a petition filed under Section 7 of the Insolvency and Bankruptcy Code, 2016. The petitioner
claims itself to be an `Financial Creditor' and has asserted that 'financial debt' for a sum of Rs.
1,11,50,922/- (Rupees One Crore Eleven Lac Fifty Thousand Nine Hundred Twenty Two) is recoverable
as per his books of accounts. The whole amount is stated to be in default.
The necessity of going into the merit of the claim made by the petitioner has been obviated because
against the Corporate Debtor we have admitted another petition namely Bank of Baroda v. Amrapali
Infrastructure Private Limited, (IB)-123(PB)/2017) vide a_ separate order pronounced today. Another
Corporate Insolvency Process cannot be initiated against a corporate debtor undergoing a corporate
insolvency resolution process. However, it is needless to add that the petitioner would be entitled to file
his claim before the Insolvency Professional namely Mr. Rajesh Samson, registration No. IBBI/IPA-
001/IP-P00240/2017-18/10469 in accordance with law which shall be duly considered.
The Petition is disposed of in the above terms.
1245
PRINCIPAL BENCH
C.P. (I.B.) No. 123/7/NCLT/PB/2017

VS
Judges/Coram:
Counsels:
Advocates
For Respondents/Defendant: Mr. Alok Agarwal, Ms. Rati Tandon, Learned Advocates
ORDER
The 'Financial Creditor'-Bank of Baroda has filed the instant application under Section 7 of the
Insolvency and Bankruptcy Code, 2016 (for brevity the Code') with a prayer to trigger the Corporate
Insolvency Resolution Process in the matter of Amrapali Infrastructure Private Limited. It is appropriate
to mention that the financial creditor is a body corporate constituted by and under the Banking Companies
'financial creditor' had its head office at Baroda House, Mandvi, Baroda, Gujarat. It was incorporated on
02.03 .1911 and subsequently constituted as a corresponding new bank on commencement of the Ranking
Companies Act. The permanent account number of the financial creditor is AAACB1534F and its branch
office is at Corporate Financial Services Branch, 1st Floor, Bank of Baroda Building, 16, Parliament
2. Ms. Archana Mishra has been authorized by the letter dated 03.02.2017 (Exhibit - 1)
3. The Corporate Debtor-Amrapali Infrastructure Private Limited was incorporated on 28.12.2007. Its
authorised share capital is Rs. 3,00,00,000/ (Rupees Three Crores) and the paid up share capital is Rs.
2,93,52,6L10/- (Rupees Two Crores Ninety Three Lakhs Fifty Two Thousand Six Hundred and Forty) as
1246
per the master data available on the website of Ministry of Corporate Affairs. It has its registered office
also at Delhi.
4. The financial creditor has proposed the name of Mr. Rajesh Samson as an Insolvency Professional. A
certificate of registration dated 30.06.2017 issued by the Insolvency and Bankruptcy Board of India has
been placed on record (Annexure-B) attached with the application. He has registration No. IBBI/IPA-
001/IP- P00240/2017-18/10469. He has also made declaration and sent. a written communication dated
04.08.2017. According to the declaration made, Mr. Rajesh Samson has no disciplinary proceedings
pending against him nor he is a related party to 'Financial Debtor' namely Amrapali Infrastructure Private
Limited nor he is an employee of the Amrapali Infrastructure Private Limited.
5. The details of the 'financial debt' may now he set out, There was a facility agreement dated 16.04.2013
(Exhibit-3) executed between the 'financial debtor' and consortium banks which include the financial
creditor-Bank of Baroda and Union Bank of India. It is pertinent to mention that aforesaid facility
agreement was amended by an amendatory facility agreement dated 18.06.2013. In pursuance of the
aforesaid facility agreement the consortium banks along with the financial creditor sanctioned a term loan
to the corporate debtor. Under the term loan agreement, the 'financial creditor' sanctioned to the 'corporate
debtor' a term loan. of Rs. 53,75,00,000 (Rupees Fifty Three Crores and Seventy Five Lakhs). However,
the financial creditor has contributed Rs. 53,09,00,000 (Rupees Fifty Three Crores Nine Lakhs). The
details of the same have been annexed (Exhibit-3 86 4). The principal amount in default under the term
loan facility as on 30.04.2017 is claimed to be Rs. 44,59,00,000 (Rupees Forty Four Crore Fifty Nine
Lakhs). In addition, the default amount towards the overdue interest and penal interest aggregates to Rs.
7,18,50,626 (Rupees Seven Crore Eighteen Lakhs Fifty Thousand Six Hundred and Twenty Six), The
corporate debtor defaulted the term loan in 31th July, 2016. Further details of the defaulted amount and
the period of default has been disclosed (Exhibit-7).
6. There was also a working capital agreement dated 16.04.2013 (Exhibit-5) executed between the
financial debtor and consortium banks which include the financial creditor-Bank of Baroda and Union
Bank of India. In pursuance of the aforesaid agreement the consortium banks along with the financial
creditor sanctioned certain working capital facility to the 'corporate debtor'. Under the working capital
agreement, the 'financial creditor' sanctioned to the 'corporate debtor' cash credit facility of Rs.
17,50,00,000/- (Rupees Seventeen Crores Fifty Lakhs) as well as letter of credit facility of Rs.
25,00,00,000 (Rupees Twenty Five Crores). However, under the head of letter of credit facility the
financial creditor has contributed Rs. 24,86,31,354 (Rupees Twenty Four Crores Eighty Six Lakhs Thirty
One Thousand Three Hundred and Fifty Four Rupees), The details of the same have been annexed
1247
(Exhibit-6). The principal amount in default under the cash credit facilities as on 30.04.2017 is claimed to
be Rs. 17,50,00,000 (Rupees Seventeen Crores Fifty Lakhs). In addition, the default amount towards the
overdue interest and penal interest aggregates to Rs. 2,69,14,420 (Rupees Two Crore Sixty Nine Lakhs
Fourteen Thousand Four Hundred and Twenty). The 'corporate debtor' defaulted the cash credit facilities
in 30th June, 2016. The principal amount in default under the letter of credit facilities as on 30.04.2017 is
claimed to be Rs. 21,80,57,874 (Rupees Twenty One Crores Eighty Lakhs Fifty Seven Thousand Eight
Hundred and Seventy Four). In addition, the default amount towards the overdue interest and penal
interest aggregates to Rs. 3,51,64,783 (Rupees Three Crore Fifty One La.khs Sixty Four Thousand Seven
Hundred and Eighty Three). The corporate debtor defaulted the letter of credit facilities in 23th May,
2016. Further details of the defaulted amount and the period of default has been disclosed (Exhibit-7).
The total amount of default under the term loan facility has been further accelerated by the consortium of
Bank of Baroda through the notice of acceleration-cum-demand dated 02.03.2017. According to the
notice the repayment of the defaulted amount was required to be made within 45 days from the date of the
acceleration notice.
7. The 'financial creditor' has placed on record an overwhelming evidence to prove the default. The details
of the security interest have been given in Part V which are set out below:-
(a) Second pari passu charge in favour of the BoB Consortium, in a form satisfactory to the BoB
Consortium, over all immovable assets, present and future of the Corporate Debtor, including at A-
2, Ecotech-6, Greater Noida (subject to the first charge with the Greater NOIDA Authority)
admeasuring 1,00,000 square meters (the "Immovable Property" as detailed in Exhibit-8;
(b) First charge by way of hypothecation of all the tangible / intangible/ movable properties of the
Corporate Debtor including, goodwill, revenues/receivables, plant and machinery, furniture,
fixtures and equipment and other movable assets, present and further, pertaining to the project;
(c) First charge by way of assignment or creation of security interest in favour of the BoB
Consortium of (more particularly stated in the indication list in Schedule II of the Facility
Agreement)
(i) ...............
(ii) ...............
(iii) ..............
(iv) ..............
1248
(d) charge on the assets created/ to be created out of the Facilities;
(e) a first charge on Borrower's all bank accounts including but not limited to escrow account/
trust and retention accounts, DSRA, which consists of operating cash flow, treasury income and
revenue / receivables of the Borrower;
(f) second charge on all the current assets of the Borrower (first charge created / to be created in
favour of working capital lender).
A copy of certificate of registration of charges issued by the Registrar of Companies with respect to the
aforementioned securities have been annexed (Exhibit-9).
A copy of the memorandum of entry dated April 16, 2013 (the "Memorandum of Entry") in respect of the
second charge on a pari passu basis created in favour of the BoB Consortium by way of mortgage by
deposit of title deeds of the Immovable Property has been annexed (Exhibit - 10).
A copy of the composite deed of hypothecation dated April 16, 2013, as amended by the composite deed
of hypothecation dated June 18, 2013 (collectively, the "RTL Deed of Hypothecation") executed by the
Corporate Debtor in favour of the BoB consortium in respect of the RTL Facility has been annexed
(Exhibit-11).
A copy of the joint deed of hypothecation dated April 16, 2013, (the "WC Deed of Hypothecation")
executed by the Corporate Debtor in favour of the BoB consortium in respect of the WC Facility has been
annexed (Exhibit-12).
8. The following Corporate Entities have furnished the Corporate guarantees:-
(a) Ultra Home Construction Private Limited; and
(b) Amrapali Smart City Private Limited
Both of them have guaranteed the obligations of the corporate debtor under the Facility Agreement and
WC Agreement executed by the Corporate Entities in favour of the consortium banks. Copies of the
Corporate Guarantee Agreements have been placed on record (Exhibit-13).
9. The Financial Creditor also placed on record the Personal Guar tees of the Corporate Debtor furnished
Mr. Anil Kumar Sharma, Mr. Shivpriya and Mr. Ajay Kumar. All of them have guaranteed the
obligations of the Corporate Debtor under the Facility Agreement and WC Agreement dated 16.04.2013
86 27.04.2016. Copies of the Personal Guarantees have been placed on record (Exhibit- 14).
1249
10. The details of the security interest have also been given in Part V in respect of RTL Facility which are
set out below:-
first charge on Corporate Debtor's all bank accounts including but not limited to escrow account/trust and
retention accounts, debt service reserve account, which consists of operating cash flow, treasury income
and revenue/ receivables of the Corporate Debtor; and
second charge on the all current assets of the Corporate Debtor (subject to first charge created/ to be
created in favour of working capital lenders).
11. The estimated value of the aforementioned securities (except the corporate and personal guarantees) is
approximately Rs. 138,94,16,800 (Rupees One Hundred Thirty Eight Crore Ninety
Four Lakh Sixteen Thousand and Eight Hundred). A copy of the valuation report has also been placed on
record (Exhibit - 15).
12. The copies of the Original Facility Agreement, Amendatory Facility Agreement, WC Agreement and
the sanction letter have been placed on record (Exhibits - 3, 4, 5, 22 and 23)
classification report of the `Corporate Debtor' issued by the TransUnion CIBIL dated 28.02.2016 (Exhibit
also been placed on record which relate to the facilities (Exhibit - 17).
a) A copy of Acceleration Notice dated March 2, 2017 by BoB to the 'Corporate Debtor' calling upon
the `Corporate Debtor' to repay the default amount within seven days of the date of the notice;
b) A copy of reporting of the account of the 'Corporate Debtor' as SMA - II account with the Central
Repository of Information on Large Credits (CRILC)
c) A copy of the acknowledgment letter dated April 15, 2016 by the Corporate Debtor to BoB in
respect of acknowledgement of debt by the Corporate Debtor;
d) Copies of the letters dated August 6, 2016, August 17, 2016 and September 26, 2016 by Bob to the
`Corporate Debtor' indicating persistent overdoes;
1250
e) A copy of the sanction letter in respect of RTL Facility dated November 30, 2012 issued by BOB;
and
f) A copy of the sanction letter in respect of WC Facility dated November 30, 2012 issued by BoB.
The copies of the aforementioned documents proving existence of 'financial debt' have also been annexed
(Exhibit - 18, 19, 20, 21, 22 and 23).
15. The application has been duly presented by Ms. Archana Mishra on the basis of authorization dated
03,02.2017 (Exhibit-1).
16. The 'corporate debtor' has opposed the admission of the application by arguing that the demand of Rs.
51,77,50,626/ - for Term Loan Facility, Rs. 20,19,14,220/- for Cash Credit Facility 85 Rs. 25,32,22,657/-
for Letter of Credit is wholly arbitrary. The applicant is part of consortium of banks and the Facility
Agreement was executed for providing various loan facilities of Rs. 162,30,00,000/-. In the said
agreement, the financial creditor-Bank of Baroda and Union Bank of India are described as consortium or
the lenders. It is also conceded that the applicant was designated as lead bank of the Consortium. The
applicant cannot individually enforce any right or obligation of the term loan agreement. The application
even otherwise is incomplete and the same is liable to be rejected. A reference has been made to the
provisions of Section 7 (5) (a) of the Code in as much as the question has been raised with regard to the
authority of Ms. Archana Mishra from Bank of Baroda who is authorized by Power of attorney dated
03.02,2017 to file the present application. According to the learned Counsel Ms. Archana Mishra would
have the same power and authority which were conferred upon Mr. Ravi Kant. Thakral vide a power of
attorney dated 16,12.2015 and the Board resolution of the company. The power of attorney has not been
placed on record.
17. We have duly considered the objection. The power of attorney has been later placed before us. A
perusal of power of attorney dated 16.12.2015 executed in favour of Shri Ravi Kant Thakral would show
that both these objections would not survive. The Bank has conferred upon him powers and authorities as
are therein contained including the power to substitute and appoint one or more Attorney or Attorneys to
exercise for the Bank of Baroda as its attorney. Accordingly, Shri Thakral has executed Power of
Attorney in favour of Mrs. Archana Mishra on 03.03.2017 (pp. 17-23). Clause 19 thereof clearly
authorized the power of attorney to sign on behalf of the Bank all matters incidental to or arising out of
the bankruptcy or insolvency or any composition or arrangement with the creditors. In pursuance thereof,
she has signed power of attorney, pleadings and other papers. The application cannot be considered
incomplete. Therefore, the objection raised would not survive and is hereby rejected.
1251
18. It has further been argued that the default amount mentioned in part. IV column 2 of the application
does not match with the amount mentioned in various other documents annexed by the applicant. A
reference has been invited to status classification report of the corporate debtor issued by CIBIL dated
02.05.2017, bankers book maintained by the applicant and acceleration notice. In any case the 'Corporate
Debtor' would be entitled to raise objection of any mismatching before the Committee of Creditors.
19. The respondent has further stated the land in question is not owned by the 'corporate debtor', As a
matter of fact, the land is owned by Noida Authority. The 'corporate debtor' has issued a lease, which is
governed by various covenants and the covenants include the provisions of cancellation of the lease and
to take over the entire project, including the land in case of default in payment. It is claimed that the
aforesaid stipulation has found further strength from the RERA Act. The respondent has further stated
that delay has been caused on account of the order dated 07,04.2015 passed by the National Green
Tribunal which had banned construction activity in the area (Annexure R/2). As a result, construction was
completely suspended. Reference has also been made to the joint lender meetings but no substantial
resolution could be achieved.
The objection raised by the 'Corporate Debtor' has been noticed to highlight their wishful thinking.
There is no provision in the Code to take into consideration any talks between the `corporate debtor' and
'Joint Lender Forum'. These are wholly irrelevant considerations. However, the fact remains that till date
substantial outstanding amount in default is payable by the `Corporate Debtor' which fulfil the
requirement of Section 4 of the Code. Therefore, this objection too would not cut any ice.
20. A further question which arises for consideration is whether the petitioner has been able to satisfy the
requirement of Section 7 of the Code. According to explanation appended to Section 7 (1) of the Code an
application by the 'Financial Creditor' either on its own behalf or jointly with the other financial creditor
before this Tribunal when a default has occurred. It is obvious that the lead bank like the petitioner is
competent to file this application on its own behalf and also on behalf of other banks who are members of
the Consortium.
21. In order to ascertain whether the default has occurred. it will be profitable to read Section 3 (12) of the
Code which states that default means non-payment of debt when whole or any part of the installment of
the debt has become due 84 payable and the same has not been repaid by the 'Corporate Debtor'. In the
present case, it has come on record eminently that the 'default.' has occurred many a times. The initial date
of default by the 'corporate debtor' in accordance with the term loan facility is 31.07.2016, cash credit
1252
facility is 30.06.2016 8; letter of credit is 23.05.2016. The computation of defaulted amount and the date
of default is as under: -
Sr. Facility Total overdue at [30th April], 2017 Date of Days of

No. (Principal + Interest + Overdue Interest) Default Default
(INR)
Term Rs. 51,77,50,626 (44,59,00,000 ± 3,66,10,533 + 3,52,40,093) 31.07.2016 274 days

1. loan
facility
2. Cash Rs. 20,19,14,420 (1 /,S0,00,000 + 1,08,04,990 + 1,61,09,430) 30,06,2016 304 days

Credit 23.05.2016 313 days
facility
3. Letter of Rs. 25,32,22,657 (21,80,57,874 + 1,42,23,938 + 2,09,40,845)
Credit
Total Rs. 97,28,87,703
22. The default has again occurred when a demand notice dated 02.03.2017 was issued (acceleration
notice) and the repayment of the! defaulted amount was required to be made within 45 clays from the date
of acceleration notice. The principal defaulted amount in most documents is the same. However, in one of
the documents it may vary as the calculation has been made for different dates, Therefore, it would not be
a material factor warranting the dismissal of the application on that ground. Any objection to the amount
of default shall remain available to the 'corporate debtor' before the 'Committee of Creditors'.
23. In order to arrive at a correct conclusion, it would be further necessary to examine the provisions of
Section 7 (2) and 7 (5) of the Code which read as under:
7 (1) ................
7 (3) ................
7 (4)................
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7 (5) Where the Adjudicating Authority is satisfied that—
disciplinary proceedings pending against the proposed resolution professional., it may, by order, admit
application:
Provided that the Adjudicating Authority shall, before rejecting the application under clause (b) of
sub-section (5), give a notice to the applicant to rectify the defect in his application within seven days of
A conjoint perusal of the aforesaid provision would reveal that form and manner of the application
has to be the one prescribed by the authorities. It is required to be accompanied by the prescribed fee. It is
further evident that if the application is incomplete as per the requirement of Section 7 (2) of the Code
then this Tribunal being the Adjudicating Authority may reject it. However, proviso to Section 7 (5) of
the Code postulates that before rejecting the application on the ground that it is incomplete in terms of
Section 7(2) of the Code the Tribunal is obliged to give notice to the applicant to rectify the defect. The
defect in the application needs to be removed within seven clays from the date of receipt. of notice. No
such situation has arisen and we find that application is complete in all respect.
24. For the reasons, aforementioned this petition is admitted. Shri Rajesh Samson who is duly registered
with Insolvency and Bankruptcy Board of India (IBBIIIPA-001 /IP-P00240 / 2017- 18/ 10469) has been
proposed as an Interim Resolution Professional. He is hereby appointed as an Interim Resolution
Professional. He has filed his certificate of registration with Insolvency and Bankruptcy Board of India.
He has also filed his written communication dated 04.08.2017 in connection with the application to
initiate Corporate Insolvency Resolution Process, The disclosure has been made in the letter dated
04.08.2017.
25. In pursuance of Section 13 (2) of the Code we direct that public announcement shall be made by the
Interim Resolution Professional within the statutory period with regard to admission of this application
under Section 7 of the Code. We also declare moratorium in terms of Section 14 of the Code. Some
necessary consequences of imposing the moratorium flows from the provisions of Section 14 (1) (a), (b),
(c) (d). Thus, the following prohibitions are imposed:
1254
other authority;
period.
Sections 15, 17, 18, 19, 20 8/, 21 of the Code. It is further made clear that all the personnel connected
Corporate Debtor are under legal obligation under Section 19 of the Code to extend every assistance and
cooperation to the Interim Resolution Professional as may be required by him in managing the day to day
affairs of the 'Corporate Debtor'. In case there is any violation, the Interim Resolution Professional would
be at liberty to make appropriate application to this Tribunal with a prayer for passing an appropriate
order. The Interim Resolution Professional shall be under duty to protect and preserve the value of the
property of the `Corporate Debtor' as a part of its obligation imposed by Section 20 of the Code and
1255
PRINCIPAL BENCH
C.P. (I.B.) No. 161/7/NCLT/PB/2017
Applicant: Tata Capital Financial Services Ltd.

VS
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Sanjeev Goyal, Mr. Varun Bedi, Learned Advocates
For Respondent: Mr. Alok Agarwal, Ms. Rati Tandon, Learned Advocate
ORDER
This is a petition filed under section 7 of the Insolvency and Bankruptcy Code, 2016. The petitioner
claims itself to be an `Financial Creditor' and has asserted that 'financial debt' for a sum of Rs.
3,64,31,988/ - (Rupees Three Crore Sixty Four Lac Thirty One Thousand Nine Hundred Eighty Eight) is
recoverable as per his books of accounts. The whole amount is stated to be in default.
The necessity of going into the merit of the claim made by the petitioner has been obviated because
against the Corporate Debtor we have admitted another petition namely Bank of Baroda v. Amrapali
Infrastructure Private Limited, (IB)-123(PB)/2017) vide a separate order pronounced today. Another
Corporate Insolvency Process cannot be initiated against a corporate debtor undergoing a corporate
insolvency resolution process. However, it is needless to add that the petitioner would be entitled to file
his claim before the Insolvency Professional namely Mr. Rajesh Samson, registration No. IBBIJIPA-
001/IP-P00240/2017-18/10469 in accordance with law which shall be duly considered.
1256
PRINCIPAL BENCH
C.P. (I.B.) No. 89/7/NCLT/PB/2017
Applicant: Vivek Agarwal

VS
Respondent: Kanak Resource Management Limited
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Amit Agarwal , Mr. Tejaswita & Mr. Mohit Negi, Advocates
For Respondent: Mr. Piyush Joshi & Mr. Kaustav Som, Advocates
ORDER
This is an application filed under Section 9 of the Insolvency and Bankruptcy Code, 2016 (for brevity
The Code') read with Rule 6 of the Insolvency and Bankruptcy (Application to Adjudicating Authority)
Rules, 2016. The petitioner claims that it is an 'Operational Creditor' and the respondent is a 'Corporate
Debtor'.
2. The Corporate Debtor ‘M/s. Kanak Resource Management Limited' has been incorporated on
26.11.2017. Its CIN number is U74140DL2007PLC170750. Its authorized share capital is 15,00,00,000/-
and paid up share capital is Rs. 12,85,80,000/-and it is based at 4th Floor, Gopal Das Bhawan, 28
Barakhamba Road, New Delhi-110001.
3. The case of the 'Operational Creditor' is that it has entered into a Consultancy Agreement with
'Corporate Debtor' on 01.07.2015 for a period of three years which is valid upto 30.06.2018. It is for
providing management consultancy services to 'Corporate Debtor'. As per the terms of the aforesaid
consultancy agreement, 'Operational Creditor' has provided the services to the 'Corporate Debtor'. A
copy of the consultancy agreement has been placed on record (Annexure-1). Pursuant to clause 5 of the
aforesaid consultancy agreement, 'Corporate Debtor' has agreed to pay the 'Operational Creditor'
remuneration against the consultancy services which reads as under:-
1257
"3.1 The compensation of Rs. 54,00,000/- per annum to be broken down into a monthly payment
of Rs. 4,50,000/- per month.
3.2 Performance related pay limited to 2% (two percent) of the profit after tax at the end of the
financial year."
In addition to above 'Operational Creditor' is also entitled to get the benefits under the Group Insurance
Scheme of the Company. As per the terms set out in the aforesaid agreement, Òperational Creditor'
raised timely bills on monthly basis for the management consultancy services, which 'Corporate Debtor'
never disputed. As per the 'Operational Creditor' till 30.05.2016 payment was made by the 'Corporate
Debtor' but thereafter 'Corporate Debtor' failed to make the payment.
4. The details of the unpaid bills are as under:-
S.No. Date of Bill Period Amount (Rs.)

1 01.07.2016 01.06.2016 to 30.06.2016 4,50,000
2 01.08.2016 01.07.2016 to 31.07.2016 4,50,000
3 31.08.2016 01.08.2016 to 31.08.2016 4,50,000
4 30.09.2016 01.09.2016 to 30.09.2016 4,50,000
5 31.10.2016 01.10.2016 to 31.10.2016 4,50,000
6 30.11.2016 01.11.2016 to 30.11.2016 4,50,000
7 31.12.2016 01.12.2016 to 31.12.2016 4,50,000
8 01.02.2017 01.01.2017 to 31.01.2017 4,50,000
9 01.03.2017 01.02.2017 to 28.02.2017 4,50,000
Copies of the invoices demanding payment have also been placed on record (Annexure-2).
5. 'Operational Creditor' further claims that as per the agreed terms, Operational Creditor is also entitled
to receive 2% (two percent) of the profit of the financial year 2015-16, amounting to Rs, 9,64,324/-.
Operational Creditor' has further asserted that in aforesaid circumstances 'Corporate Debtor' is under
obligation to make the payment of above outstanding amount alongwith interest 18% till the realization
of the payment. A copy of statement of account has also been placed on record (Annexure4), Another
table showing the monthly remuneration due plus 2% of the profit for the financial year 2015-16 as well
as interest @18% per annum, is also projected in the application which is as under:-
Particulars Amount (Rs.)
1258
1. Monthly remuneration due 40,50,000/-
2. 2% of the profit (Rs. 4,82,16,196/- 9,64,324/-

as on 31.03.2016)
3. Interest @ 18% per annum 3,87,649/-

Total 54,01,973/-
6. The total amount of debt claimed by the 'Operational Creditor' is Rs. 51 ,01,973/- in respect of all such
bill mentioned in the aforesaid table.
7. The 'Operational Creditor' had sent a demand notice in respect of unpaid 'operational debt' which is
dated 20.03.2017. The demand notice has been duly served as per the admission of the Corporate Debtor.
A copy of the demand notice and postal receipt. have also been placed on record (Annexure-3).
8. The 'Operational Creditor' has proposed the name of Mr. Deepak Arora, 23 Ka 4, Jyoti Nagar, Near
Vidhan Sabha, Jaipur-302005. His registration number is IBBI/IPA-IP/00032/2016-17/1049. A written
communication dated 27.04.2017 in terms of Rule 9(1) of the Insolvency and Bankruptcy (Application to
Adjudicating Authority) Rules, 2016 has also been placed on record (Annexure-6). There are necessary
disclosures made by Mr. Deepak Arora as per the requirement of the IBBI Regulations. Accordingly, he
satisfies the requirement of Section 7 (3) (b) of the Code.
9. The 'Corporate Debtor' after service appeared before this Tribunal and filed the short affidavit in reply
to the petition alongwith a copy of the reply (Annexure-I) dated 29.04.2017 to the demand notice sent by
the Operational Creditor. The Corporate Debtor has averred that the communication of demand notice
(Annexure-3) sent by the Operational Creditor cannot be said to be a valid demand notice under Section
8 of the Code, 2016. Further the status of the Operational Creditor is also questioned by the Corporate
Debtor asserting that no operational debt is owed to Operational Creditor. The Corporate Debtor has
placed reliance on Clause 5(e) of the Consultancy Agreement which is to the effect that Corporate
Debtor would be under obligation to make a payment only in respect of monthly invoice `duly approved
by the Managing Director of the Corporate Debtor and since none of the invoices as described by the
Operational Debtor have been duly approved by the Managing Director of the Corporate Debtor, no
obligation is cast on the Corporate Debtor to make any payment to the Operational Creditor. Moreover,
Corporate Debtor also raised dispute by asserting that no service has been taken by him nor any services
been provided by the Operational Creditor for the period to which the invoices relate.
1259
10. In light of direction issued by this Tribunal, Corporate Debtor has also filed correspondences
exchanged between the Operational Creditor and Corporate Debtor in 2015, since around the time when
the consultancy agreement between both of them dated 01.07.2015 came into force (Annexure-I (Colly).
The Corporate Debtor has also filed correspondence exchanged between both of them after June, 2016
being the time period when disputes arose between the Operational Creditor and Corporate Debtor
relating to the consultancy agreement and other related matters (Annexure-II (Colly).
11. We have heard learned counsel for the parties and have perused the various affidavits and the
pleadings with their able assistance. The Corporate Debtor has raised the issue that the Operational
Creditor has not issued a notice under Section 8 of the Code, 2016 validly because the communication
should have been issued by the Operational Creditor in respect of an operational debt which is in default.
The Operational Creditor and operational debt are defined by Section 5 (20) 85 (21) of the Code and the
same is set out below:-
Section 5 (20) & (21)
(20) "operational creditor" means a person to whom an operational debt is owed and includes any person
to whom such debt has been legally assigned or transferred;
(21) "operational debt" means a claim in respect of the provision of goods or services including
force and payable to the Central Government, any State Government or any local authority.
Operational Creditor is a person to whom operational debt is owed and includes any person to whom
such debt has been assigned or transferred. The definition of Operational Creditor is not exhaustive but
illustrative and is capable of covering those heads which are not specifically mentioned in the definition.
The definition of operational debt postulates that it is a claim in respect of the provision of 'goods' or
'services' including employment etc. It is not denied by the Corporate Debtor that the petitioner has
rendered management consultancy services to it in pursuance of a consultancy agreement dated
01.07.2015.
Therefore, it has to be assumed that the Operational Creditor has provided consultancy services to
the Corporate Debtor ire accordance with the terms of agreement. There is default in making the
payment. It cannot thus be concluded that the petitioner is not an Operational Creditor or that the default
is not in respect of an operational debt.
1260
12. The argument with regard to demand notice issued under Section 8 of the Code has also not
impressed us as the same is without substance. Demand notice under Section 8 of the Code (Annexure-3)
was issued on a proper proforma furnished under Rule 5 of the Insolvency and Bankruptcy (Application
to Adjudicating Authority) Rules, 2016. In the reply to the demand notice the amount has been disputed.
It has been argued that the approval from the Managing Director in relation to monthly invoices was
necessary before it becomes payable. On behalf of the Operational Creditor it was argued that. as per the
practice in the past. no such approval by the Managing Director has ever been considered necessary not it
has ever been insisted in respect of the payments made.
13. It was then submitted that from June, 2016 Operational Creditor ceased to give any work and they
were discussing full and final settlement. According to the learned counsel there is no consultancy
provided by the Operational Creditor to the Corporate Debtor and therefore, no payment is due. In that
regard, our attention has been drawn to terms of consultancy agreement. A reference to clauses 2, 5, 9 86
11 has been made which are as under:-
"2. Functions
The Consultant shall be designated as "Advisor" in Kanak Resources Management Limited, a subsidiary
of IL86FS Environmental Infrastructure 8r, Services Limited (IEISL), based at Delhi. The Consultant is
subject to the direction and supervision of the Chairman of the Company and shall provide services for
various mandates of Kanak Resources Management Limited during the contract period. The
responsibilities of the Consultant are enumerated below:-
a) ...............
b) ...............
c) Be responsible for business development including sourcing of projects from municipalities,

townships, special areas, etc. at remunerative rates
d) To assist in creating a long term business plan for the Company over a five years horizon
e) Responsible for increasing the Company's profitability and cash flow.
f) ...............
g) ..............
5. Remuneration
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a) The Consultant shall be paid the total compensation as mentioned below
i. The compensation of Rs. 54,00,000/- (Rs. Fifty Four Lakhs only) per annum would be broken down
into a monthly payment of Rs. 4,50,000/- on the basis of services provided by the Consultant.
ii. In addition to monthly payment (mentioned above in point i), the Consultant shall be paid performance
related pay limited to 2% (two percent) of the profit after tax at the end of financial year.
b) ...............
c) ...............
d) ..............
e) The Company will make the payment on the Consultant submitting a monthly invoice duly approved
by Managing Director.
9. Non-compete & Non-solicitation Obligation The Consultant shall not directly or indirectly in any
geographic area or market where the Company or any of the sister concerns or subsidiaries are conducting
any business until one year from the date of Termination of this agreement
 either on his/her own or on behalf of any person, firm, or corporation in any way, directly or
indirectly deal with, solicit, divert, or take away any existing customer of the Company
 induce any employee of the Company or any of the related concerns/ associates to terminate his
engagement/ employment with the Company.
11. Notice Period & Termination
Either party shall have the right to terminate this agreement at any time before its expiry by giving three
months' notice in writing. In the event of termination, the Consultant shall be entitled to receive his/her
dues up to the date of which his/her services is terminated. The Consultant shall handover to the
Company all documents, electronic files, passwords, records, company property and assets like Laptop,
data card, pen drive, mobile, simcard, camera etc relating to his/her assignment with the Company, as is
in his/her possession, before the last day in service_ The Consultant shall not attempt to make, retain or
delete copies by any means what so ever of any data, information, know-how or records of the Company.
In the event of gross indiscipline, violation of service code of conduct or non-conformity to organizational
policies and rules 8z, regulations as framed/applicable from time to time, the organization can terminate
the consultancy in a single day's notice and in this case the Consultant are not entitled to seek any
due/compensation from the Company."
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A perusal of the aforesaid provision would show that the Operational Creditor was subject to direction
and supervision of the Chairman of the company. They were to provide services for various mandates of
the Corporate Debtor. They were responsible for business development, creating a long term business
plan for the Company and were also responsible for increasing the Company's profitability and cash flow.
As per clause 5 they were to be paid a sum of Rs. 54,00,000/- per annum which worked out to be a
monthly payment of Rs. 4,50000/- on the basis of services provided by it. The consultant/ Operational
Creditor was also to be paid performance related payment limited to 2% of the profit after tax at the end
of the financial year. There is nothing in the agreement which would show that the remuneration payable
to the Operational Creditor was variable or dependent on the order to be placed by Corporate Debtor. It is
fixed amount payable monthly. It is not a piece work contract as per the language used. The dispute
sought to be raised is illusory and imaginary as there is no evidence shown from any past payment that
the amount paid monthly varied, Therefore, we do not feel persuaded to accept the submissions of the
learned counsel for the Corporate Debtor.
14. It is evident that Corporate Debtor has committed default and the amount g: Rs. 4,50,000/- plus 2% of
the profit after tax has not been paid since 01.06.2016. The invoices have been raised (Annexure-2
(Colly) and there is default committed within the meaning of Section 3 (12) read with Section 4 and
Section 9 ( 1) of the Code, 2016. The notice under Section 8 of the Code has been duly served. Even the
bank statement (Annexure-4 and 5) have been filed to satisfy the requirement of Section 9 (3) (c) of the
Code,
15. The Operational Creditor has also proposed the name of Interim Insolvency Professional namely Mr.
Deepak Arora, 23 Ka 1, Jyoti Nagar, Near Vidhan Sabha, Jaipur-302005, aroracsl(c4,-;gmail.com, who
has made declaration in accordance with the provisions of Rule 9 of the Insolvency and. Bankruptcy
(Application to Adjudicating Authority) Rules, 2016.
16. As a sequel to the above discussion, this petition is admitted and Mr. Deepak Arora is appointed as an
Interim Resolution Professional. His registration number is IBBI/IPA-IP/00032/2016-17/1049.
17. In pursuance of Section 13 (2) of Code, we direct that Interim Insolvency Resolution Professional
imposition of the moratorium resulting from the provisions of Section 14 (1) (a), (b), (c) 86 (d) would
thus be that the following prohibitions come in operation:
1263
other authority;
18. lt is made clear that the provisions of moratorium shall not apply to transactions which might be
notified by the Central Government or to the supply of the essential goods or services to the Corporate
Debtor which may be specified. Such supply is not to be terminated or suspended or interrupted during
the moratorium period.
contemplated, interalia, by Sections 15, 17, 18, 19, 20 8z, 21 of the Code. He must follow best practices
available in the discipline of Insolvency even borrowing from others jurisdiction provided such practices
arc suitable to the conditions of this Country. It is further made clear that all the personnel connected with
the Corporate Debtor, its promoters or any other person associated with the Management. of the
20. We specifically direct the Interim Resolution Professional to protect and preserve the value of' the
1264
PRINCIPAL BENCH
C.P. (I.B.) No. 122/7/NCLT/PB/2017
Applicants: Bank of Baroda

Vs.
Respondent: Ultra Home Construction Pvt. Ltd.
Judges/Coram:
Counsels:
Advocates
For Respondents/Defendant: Mr. Alok Agarwal & Ms. Rati Tandon, Learned Advocate
ORDER
The 'Financial Creditor'-Bank of Baroda has filed the instant application under Section 7 of the
Insolvency and Bankruptcy Code, 2016 (for brevity 'the Code') with a prayer to trigger the Corporate
Insolvency Resolution Process in the matter of Ultra Home Construction Private Limited. It is appropriate
to mention that the financial creditor is a body corporate constituted by and under the Banking Companies
(Acquisition and Transfer of Undertakings) Act, 1970 (for brevity 'Banking Companies Act). The
'financial creditor' had its head office at Baroda House, Mandvi, Baroda, Gujarat. it was incorporated on
02.03.1911 and subsequently constituted as a corresponding new bank on commencement of the Banking
Companies Act. The permanent account number of the financial creditor is AAACB1534F and its branch
office is at Corporate Financial Services Branch, Ist Floor, Bank of Baroda Building, 16, Parliament
2. The holder of Power of Attorney dated 16.12.2015 Shri Ravi Kant Thakral has been vested with
the power to appoint counsel and authorized any officer to sign on behalf of the 'Financial Creditor-Bank
of Baroda'. Accordingly, Ms. Archana Mishra has been authorized by the letter dated 03.02.2017 (Exhibit
- 1).
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3. The Corporate Debtor-Ultra Home Construction Private Limited was incorporated on 07.04.2003.
Its authorised share capital is Rs. 20,00,00,000/- (Rupees Twenty Crores) and the paid up share capital is
Rs. 6,09,46,120/- (Rupees Six Crore Nine Lakh Forty Six Thousand One Hundred and Twenty) as per the
master data available on the website of Ministry of Corporate Affairs. It has its registered office also at
Delhi.
4. The details of the 'financial debt' may now be set out. There was a common loan agreement dated
06.01.2010 (Exhibit-3) executed between the Corporate debtor and consortium banks which include the
financial credito•-Bank of Baroda, Bank of India, Oriental Bank of Commerce, Punjab National Bank and
Union Bank of India. In pursuance of the aforesaid agreement. the consortium banks along with the
financial creditor sanctioned a term loan to the corporate debtor. Under the common loan agreement dated
06.01.2010 the 'Financial Creditor-Bank of Baroda' sanctioned to the corporate debtor a term loan of Rs.
75,00,00,000 (Rupees Seventy Five Crores). However, the financial creditor had disbursed Rs.
65,84,00,000 (Rupees Sixty Five Crores Eighty Four Lakhs) (See part IV-Particulars of Financial Debt).
The details of the same have been annexed (Exhibit-4).
5. The principal amount in default under the common loan facility as on 30.04.2017 is claimed to be
Rs. 31,92,31,627 (Rupees Thirty One Crore Ninety Two Lakhs Thirty One Thousand Six Hundred and
Twenty Seven). In addition, the default amount has further been claimed towards the overdue interest and
penal interest aggregates to Rs. 4,96,62,526 (Rupees [pour Crore Ninety Six Lakhs Sixty Two Thousand
Five Hundred and Twenty Six). The corporate debtor defaulted the term loan in June 30, 2016. Further
details of the defaulted amount and the period of default has been disclosed (Exhibit-5). The total amount
of default under the common loan facility has been further accelerated by the consortium of Bank of
Baroda through the notice of acceleration cum-demand dated 02.03.2017. According to the notice the
repayment of the defaulted amount was required to be made within seven days from the date of the
acceleration notice.
6. The 'financial creditor' has placed on record overwhelming documentary evidence which
highlight the particulars of debt and evidence to prove the default. The details of the security interest have
been given in Part V which are set out below:-
a) A first pari-passu charge by way of equitable mortgage on all the project's immovable properties,
both present and future, including any furniture, fixture. and equipments thereon ("Immovable Property")
as detailed in Exhibit - 6;
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b) A first pari-passu charge and hypothecation on all the movable properties including all
receivables and intangible properties except judicial/ quasi judicial permissions and permits both present
and future;
c) A first pari-passu charge on all the project's bank accounts including, but not limited to, trust and
retention account;
d) A first pari-passu charge on the operating cash flows, book debts, commissions, intangibles.
goodwill, uncalled capital, revenues of whatsoever nature and wherever arising, and all other incomes
pertaining to the project's present and future;
e) Security interest by way of assignment of all the rights, titles, permits, approvals and interests of
the Corporate Debtor in, to and in respect of all the clearances, agreements, permits, approvals, consents
in relation to the project including proceeds of insurance policies in favour of the Bob Consortium;
f) Security interest by way of assignment of contractor guarantees, performance bonds and any
letter of credit that may be provided by contractor or any third party in favour of the Bob Consortium.
The copy of certificate of registration of charges issued by the Registrar of Companies with
respect to the aforementioned securities have been annexed herewith at Exhibit - 7.
A copy of the memorandum of entry dated January 15, 2010 (the "Memorandum of Entry") in
respect of the first charge on a part passu basis created in favour of the BOB Consortium by way of
mortgage by deposit of title deeds of the Immovable Property has been annexed herewith at Exhibit - 8.
A copy of the joint deed of hypothecation dated January 6, 2010 and the supplementary deed of
hypothecation dated January 12, 2010 (collectively, the "Deed of Hypothecation") executed by the
Corporate Debtor in favour of the BOB consortium has been annexed herewith at Exhibit - 9.
7. The Financial Creditor also placed on record the Personal Guarantees of the Corporate Debtor
namely Mr. Anil Kumar Sharma, Mr. Ajay Kumar, Mr. Shivpriya & Mr. Madan Mohan Sharma., All of
them have guaranteed the obligations of the Corporate Debtor under the loan agreement dated
06.01,2010. Copies of the Personal Guarantees have been placed on record (Exhibit-10). The estimated
project cost is approximately Rs. 713.15 crore (Rupees Seven Hundred and Thirteen Crore and Seventy
Five Lakh.
8. The copies of the loan agreement and the sanction letter have been placed on record (Exhibit - 3
and Exhibit - 21)
classification report of the `Corporate Debtor' issued by the TransUnion CIBIL dated 25.05,2017 (Exhibit
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also been placed on record which relate to common loan facility (Exhibit-11)
(a) A copy of notice of acceleration-cum-demand ("Acceleration Notice") dated March 2, 2017 by

BoB to the 'Corporate Debtor' calling upon the `Corporate Debtor' to repay the default amount within
seven days of the date of the notice and reply of the 'Corporate Debtor' to the Acceleration Notice;
(b) A copy of reporting of the account of the 'Corporate Debtor' as SMA — II account with the
Central Repository of Information on Large Credits (CRUX);
(c) A copy of the acknowledgement letter dated August 4, 2015 by the 'Corporate Debtor' to BoB;
and
(d) Copies of the letters dated August 17, 2016 and September 26, 2016 by BoB to the 'Corporate
Debtor' indicating persistent Overdues.
The copy of the aforementioned documents proving existence of 'financial debt' and default have
also been annexed (Exhibit - 12, 13, 14 and 15).
11. The application has been duly presented by Ms. Archana Mishra on the basis of authorization
dated 03.02.2017 (Exhibit-1),
12. The 'corporate debtor' has opposed the admission of the application by arguing that the demand of
Rs. 36,88,94,153/ - is wholly arbitrary. The applicant is part of consortium of banks and the common loan
agreement was executed for providing a term loan of Rs. 288,00,00,000/-. In the said agreement. the Bank
of Barocla, Bank of India, Oriental Bank of Commerce, Punjab National Bank and Union Bank of India
are described as consortium or the lenders. It is also conceded that the applicant was designated as lead
bank of the Consortium. The applicant cannot individually enforce any right or obligation of the common
loan agreement. The application even otherwise is incomplete and the same is liable to be rejected. A
reference has been made to the provisions of Section 7 (5) (a) of the Code in as much as the question has
been raised with regard to the authority of Ms. Archana Mishra from Bank of Baroda who is authorized
by Power of attorney dated 03.02.2017 to file the present. application. According to the learned Counsel
Ms. Archana Mishra would have the same power and authority which were conferred upon Mr. Ravi Kant
Thakral vide a power of attorney dated 16.12.2015 and the Board resolution of the company. The power
of attorney has not been placed on record.
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13. We have duly considered the objection, The power of attorney has been later placed before us. A
perusal of power of attorney dated 16.12.2015 executed in favour of Shri Ravi Kant Thakral would show
that both these objections would not survive. The Bank has conferred upon him powers and authorities as
are therein contained including the power to substitute and appoint one or more Attorney or Attorneys to
act for the Bank of Baroda as its attorney. Accordingly, Shri Thakral has executed Power of Attorney in
favour of Mrs. Archana Mishra on 03.03.2017 (pp. 17- 23). Clause 19 thereof clearly authorized the
power of attorney to sign on behalf of the Bank all matters incidental to or arising out of the bankruptcy
or in solvency or any composition or arrangement with the creditors. In pursuance thereof, she has signed
power of attorney, pleadings and other papers. The application cannot be considered incomplete.
Therefore, the objection raised would not survive.
14. It has further been argued that the default amount mentioned in part IV column 2 of the
application does not match with the amount mentioned in various other documents annexed by the
applicant. A reference has been invited to status classification report of the corporate debtor issued by
CIBIL dated 25.05.2017, bankers book maintained by the applicant and acceleration notice. Even this
objection will not survive because a perusal of the Bankers Book (Exhibit-11) would show that the same
amount has been worked out under the column 'balance' as on 18_05.2017 namely Rs. 31,92,31,627
(Rupees Thirty One Crore Ninety Two Lakhs Thirty One Thousand Six Hundred and Twenty Seven). In
any case the 'Corporate Debtor' would be entitled to raise objection of any mismatching before the
Committee of Creditors. It was then submitted that consent from other members of consortium has not
been obtained. The objection would not require any serious consideration because Explanation to section
7 (1) expressly clarifies that for the purposes of section 7 a default includes a default in respect of
financial debt, owed not only to the applicant-financial creditor but to any other financial creditor of the
Corporate debt. Moreover, no other financial creditor has come to the forefront to oppose the application.
15. The respondent has further stated the land in question is not owned by the 'corporate debtor'. As a
matter of fact, the land is owned h Nokia Authority. The 'corporate debtor' has issued a lease, which is
governed by various covenants. The covenants include the provisions of cancellation of the lease and to
take over the entire project, including the land in case of default in payment. It is claimed that the
aforesaid stipulation has found further strength from the RERA Act. The respondent has further stated
that delay has been caused on account of the order dated 07.04.2015 passed by the National Green
Tribunal which had banned construction activity in the area (Annexure R/2). As a result, construction was
completely suspended. Reference has also
The objection raised by the 'Corporate Debtor' has been noticed to highlight their wishful
thinking. There is no provision in the Code to take into consideration any talks between the `corporate
1269
debtor' and 'Joint Lender Forum'. These are wholly irrelevant considerations. However, the fact remains
that till date substantial outstanding amount in default is payable by the `Corporate Debtor' which fulfil
the requirement of Section 4 of the Code. Moreover, there is admission regarding default in the reply filed
by the 'Corporate Debtor' (pr.8 p.7). Therefore, this objection too would not cut any ice.
16. The Greater Noida Industrial Development Authority has filed an application for intervention
under Order 1 Rule 10 (4) of CPC, and has placed on record a copy of the letter dated 10.07.2017 wrote
by the 'Corporate Debtor' and further has placed on record a copy of the intimation dated 26.05.2017
issued by the counsel of the 'Financial Creditor' with respect to filing of the application before this
Tribunal.
17. A further question which arises for consideration is whether the petitioner has been able to satisfy
the requirement of Section 7 of the Code. According to explanation appended to Section. 7 (1) of the
Code an application by the 'Financial Creditor' either on its own behalf or jointly with the other financial
creditor would be competent for initiating Corporate Insolvency Resolution Process against a 'Corporate
Debtor' before this Tribunal when a default has occurred. It is obvious that the lead bank like the
petitioner is competent to file this application on its own behalf and also on behalf of other banks who are
members of the Consortium.
18. In order to ascertain whether the default has occurred it will be profitable to read Section 3 (12) of
the Code which states that default means non-payment of debt when whole or any part of the installment
of the debt has become due payable and the same has not been repaid by the 'Corporate Debtor'. In the
present case, it has come on record eminently that the 'default' has occurred many a. times. The initial date
of default by the 'corporate debtor' in accordance with the common loan facility is 30.06.2016 (Exhibit-5).
The computation of defaulted amount and the date of default is as under:-
S.N. Facility Total Over due at 30th April, 2017 Date of default Days of
Default
(principal+ interest+ overdue interest)
RTL Rs36,88,94,154 30.06.2017 304 Days

facility (31,92,31,627+228,000,753+26,861,773)
19. The default has again occurred when. a demand notice dated 02.03.2017 was issued (acceleration
notice) (Exhibit-12) and the repayment of the defaulted amount was required to be made within seven
days from the date of acceleration notice. The principal defaulted amount in most documents is the same.
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However, in one of the documents it may vary as the calculation has been made for different dates.
Therefore, it would not be such a substantial and a material factor warranting the dismissal of the
application, Any objection to the amount of default shall remain available to the `corporate debtor' before
the 'Committee of Creditors'.
20. In order to arrive at a correct conclusion, it would be further necessary to examine the provisions
of Section 7 (2) and 7 (5) of the code which read as under:
7- 1) ................
7- 2) The financial creditor shall make an application under
sub-section (1) in such form and manner and
7- 3) .................
7- 4) ................
7- 5) Where the Adjudicating Authority is satisfied that—

a) a default has occurred and the application under sub-section
(2) is complete, and there is no disciplinary proceedings
pending against the proposed resolution professional, it may,
by order, admit such application; or
b) default has not occurred or the application un.der sub-
section. (2) is incomplete or any disciplinary proceeding is
pending against the proposed resolution professional, it may,
by order, reject such. application:
Provided that the Adjudicating Authority shall, before rejecting the application under clause (b)
of sub-section (5), give a notice to the applicant to rectify the defect in. his application within
seven days of receipt of such. notice from the Adjudicating Authority."
A conjoint perusal of the aforesaid provision would reveal that form and manner of the application has to
be the one prescribed by the authorities. It is required to be accompanied by the prescribed fee. It is
further evident. that if the application is incomplete as per the requirement of Section 7 (2) of the Code
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then this Tribunal being the Adjudicating Authority may reject it. However, proviso to Section 7 (5) of
the Code postulates that before rejecting the application on the ground that it is incomplete in terms of
Section 7(2) of the Code the Tribunal is obliged to give notice to the applicant to rectify the defect in his
application. The defect in the application needs to be removed within seven days from the date of receipt
of notice. No such situation has arisen and we find that application is complete in all respects.
21. The 'financial creditor' has proposed the name of Mr. Rajesh Samson as an Insolvency
Professional but subsequently after reserving the order, an application bearing C.A. No. 340(PB)/2017
was filed by the 'Financial Creditor' withdrawing the name of earlier proposed Insolvency Professional
namely Mr. Rajesh Samson and in his place name of Mr. Sanjay Gupta was proposed as Insolvency
Professional. A certificate of registration dated 3006.2017 issued to Mr. Sanjay Gupta by the Insolvency
and Bankruptcy Board of India has already been placed on record. He has registration No. IBBI/ IPA-
001/IP-P00117/2017-18/10252. He has also made declaration and sent a written communication dated
03.08.2017. According to the declaration made by Mr. Sanjay Gupta, no disciplinary proceedings are
pending against him nor he is a related party to 'Financial Debtor' namely Ultra Home Construction
Private Limited nor he is an employee of the Ultra Home Construction Private Limited.
22. We have heard the arguments on the application bearing C.A. No. 340(PR)/2017 and vide order
dated 27.09.2017 directed the same to be added with the original file. Accordingly, we accept the prayer
made in the application as no serious objection has been raised against the substituted Interim Insolvency
Professional.
23. For the reasons, aforementioned this petition is admitted. Shri Sanjay Gupta who is duly
registered with Insolvency and Bankruptcy Board of India (IBBI/IPA-001/IP-P00117/2017- 18/10252),
has been proposed as an Interim Resolution Professional. He is hereby appointed as an Interim
Resolution Professional He has filed his certificate of registration with Insolvency and Bankruptcy Board
of India. He has also filed his written communication dated 03.08.2017 in connection with the
application to initiate Corporate Insolvency Resolution Process. The disclosure has been made in the
letter dated 03.08.2017.
24. In pursuance of Section 13 (2) of the Code we direct that public announcement shall be made by
the Interim Resolution Professional within the statutory period with regard to admission of this
application under Section 7 of the Code. We also declare moratorium in terms of Section 14 of the Code.
Some necessary consequences of imposing the moratorium flows from the provisions of Section 14 (1)
(a), (b), (c) & (d). Thus, the following prohibitions are imposed:
1272
a) the institution of suits or continuation of pending suits or
proceedings against the corporate debtor including execution
of any judgment, decree or order in any court of law,
tribunal, arbitration panel or other authority;
b) transferring, encumbering, alienating or disposing of by the
corporate debtor any of its assets or any legal right or
beneficial interest therein;
c) any action to foreclose, recover or enforce any security
interest created by the corporate debtor in respect of its
property including any action under the Securitisation and
Reconstruction of Financial Assets and Enforcement of
Security Interest Act, 2002;
d) the recovery of any property by an owner or lessor where
such property is occupied by or in the possession of the
corporate debtor."
period.
order, The Interim Resolution Professional shall be under duty to protect and preserve the value of the
27. The intervener shall be at liberty to file any claim before the Insolvency Professional in
accordance with law which shall be duly considered.
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PRINCIPAL BENCH
C.P. (I.B.) No. 102/7/NCLT/PB/2017
Applicants: Axis Bank Limited

DBS Bank Limited
Vs.
Respondent: Edu Smart Services Private Limited
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. R.S. Randhawa, Ms. Misha & Mr. Siddhant Kant, Learned
Advocates
For Respondents/Defendant: Mr. Rajeev Mehtra, Mr. Sumeesh Dhawan & Ms. Vatsala Kak, Learned
Advocate
ORDER
This is an application filed by Axis Bank Limited under Section 60(5) of the Insolvency and
Bankruptcy Code, 2016 (for brevity the 'Code') with a prayer to set aside the decision of the Resolution
professional dated 20.07.2017 (Annexure-5) and 06.09.2017 (Annexure-10) rejecting the claim of the
Applicant filed before her. A further direction has been sought to the Resolution Professional to accept
the claim of the applicant as a Financial Creditor of the Edu Smart Services Pvt. Ltd. -Corporate Debtor
(for brevity the 'Corporate Debtor') to the extent of the amount of debt on account of invocation of the
corporate guarantee by the applicant.
2. Brief facts of the case necessary for disposal of the application are that the Financial Creditor,
namely DBS Bank Limited filed C.P. No, (IB)- l02(PB)/2017, which was admitted in the matter of
`Corporate Debtor' under Section 7 of the Code. While admitting the petition on 27.06.2017, we have also
issued direction for the moratorium in terms of Section 14 of the Code as is evident from the perusal of
pares 11 of that order. The Interim Resolution Professional issued public notice inviting the claims, which
was duly published on 30.06.2017 (Annexure-3). The applicant submitted its proof of claim in form 'C' on
11,7.2017 along with supporting documents to the 1RP in respect of its claim aggregating to Rs.
396,76,07,676.68/-. The aforesaid amount was claimed being the amount guaranteed by the Corporate
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Debtor vide Corporate Guarantee furnished by it in favour of Educom Solutions Ltd. It is appropriate to
mention that Educom Solutions Ltd. had entered into a Master Restructuring Agreement dated
25.03,2014, inter alia with the applicant-Axis Bank Ltd. for restructuring and reconstitution of the
existing loans amongst other things and working capital facilities granted to Educomp Solutions Ltd. by a
consortium of lenders. Thereafter, three addendums dated 03.09.2014, 29.09.2014 and 31.03.2015 were
signed inter alia, between Educomp Solutions Ltd. and the applicant-Axis Bank Ltd. In addition to the
Master Restructuring Agreement dated 25.03.2014, it has also been claimed by the applicant that various
rules were sanctioned to the Educomp Solutions Ltd. and later restructured by Standard Chartered Bank in
the year 2014. In furtherance of the Master Restructuring Agreement, SBICAP Trustee Company Limited
was appointed as the Security Trustee vide the amended and restated security trustee agreement dated
03.06.2015.
3. In pursuance to the terms of the Master Restructuring Agreement, the SCB Loan Agreements and
the Security Trustee Agreement, the loans granted under the said agreements to Educomp Solutions
Limited were inter cilia, secured by way of an irrevocable and unconditional corporate guarantee dated
03.06.2015 granted by the Corporate Debtor-respondent in favour of SBICAP and the lenders under the
Master Restructuring Agreement and the SEB Loan Agreements. A copy of the Corporate Guarantee
dated 03.06.2015 is on record (Annexure-2).
4. Axis Bank Ltd.- applicant made a claim before the Insolvency Resolution Professional. A
communication was sent by the IRP vide email dated 20.07.2017 intimating that the claim cannot be
verified as the corporate guarantee had not been invoked and the liability of the Corporate Debtor-
respondent to the Axis Bank Ltd. - applicant is contingent (Annexure A-5).
5. After the receipt of the communication from the IRP, the applicant vide letter dated 21.07.2017
invoked corporate guarantee in accordance with the terms of the corporate guarantee and intimation
regarding the same was given to SBICAP vide letter dated 01.08.2017 (Annexure-5). The 'Corporate
Debtor' sent a letter to the Axis Bank Ltd.-applicant inter alia, stating that invocation of the guarantee
could not be accepted on account of CIRP and the moratorium (Annexure-7).
6. The factum of invoking corporate guarantee was brought to the notice of the Insolvency
Resolution professional vide email dated 21.07.2017, who responded by stating that the liability under the
corporate guarantee was contingent as on the date of commencement of insolvency process on
27.06.2017, therefore, it could not be verifiable. Another objection raised by the Resolution professional
was that the applicant did not submit fresh claim form subsequent to the invocation of the Corporate
Guarantee, therefore, the claim could not be accepted and verified The factum of invoking corporate
guarantee was brought to the notice of the Insolvency Resolution professional vide email dated
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21.07.2017, who responded by stating that the liability under the corporate guarantee was contingent as
on the date of commencement of insolvency process on 27.06.2017, therefore, it could not be verifiable.
Another objection raised by the Resolution professional was that the applicant did not submit fresh claim
form subsequent to the invocation of the Corporate Guarantee, therefore, the claim could not be accepted
and verified(Annexure-7)(Colly). The RP also raised objections to the invocation of the corporate
guarantee by the applicant in view of the Security Trustee Agreement. Axis Bank Ltd.-applicant has
submitted that each of the grounds for objecting to the tenability of applicant's claim and its consequent
rejection were untenable and contrary to the provisions of the Code. In that regard, reliance has been
placed on Regulations 12,13 and 14 of the Insolvency and Bankruptcy Board of India (Insolvency
Resolution Process for Corporate Persons) Regulations 2016 (for brevity 'IBBI Regulations). Axis Bank
Ltd.-applicant has also placed reliance on the definition of 'Financial Creditor' as given in Section 5(7) to
argue that it includes any person to whom financial debt is owed and also includes the person to whom
the said debt has been legally assigned or transferred. Reliance has also been placed on the definition of
'financial debt' under Section 5(8) of the Code and various clauses of the corporate guarantee like clauses
1.3 and 11.10.
7. In response to the claim made by the applicant, the resolution professional has filed reply raising
many preliminary objections. The first objection raised is suppression of material facts and has sought
dismissal of the application on that ground. According to the Resolution Professional, Axis Bank Ltd.-
applicant has already claimed the amount of debt in the corporate insolvency resolution process of the
principal borrower-Educomp Solutions Ltd., which has been subject matter of proceeding in C.P. No.
101(PB)/2017. According to the preliminary objection, this is a material, fact which ought to have been
disclosed in the application which has substantial bearing on the adjudication of the present application. It
has also been suggested that Axis Bank Ltd. -applicant ought to have made other Financial Creditor of the
Corporate Debtor as a party to the present proceeding as any alternation in the claims would materially
prejudice the rights of such creditors.
8. The Resolution professional has further pleaded in reply that the claim was made vide its
communication dated 11.07.2017 by the applicant without even recalling its loan and without invoking or
making any demand on the Corporate Debtor-Corporate Guarantor. It has also been highlighted that the
applicant vis-a-vis other Corporate Debtors, like DBS Bank, PNB, SICOM, Indus Ind Bank and Standard
Chartered Bank (Now KB-assignee). The total claim of the secured creditors is about Rs. 112 crores,
whereas the corporate guarantee furnished by the Corporate Debtor is of the value of Rs. 2048 crores in
favour of SBI trustee. The liquidation valuation of the assets of the Corporate Debtor is about Rs. 25
crores only. Therefore, it has been submitted that the claim made by the Axis Bank Ltd.-applicant on the
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basis of the corporate guarantee is a malafide attempt to create hurdle in the CIRP of the Corporate
Debtor.
9. The Resolution professional has also taken stand that the amount cannot be claimed
simultaneously against the principal borrower, i.e. Educomp Solutions Ltd. and the corporate guarantor
under the insolvency resolution process as already noticed in the preceding paras. The submission made
by the Resolution professional is that if such a claim is accepted under two different CIRPs, then the same
would amount to unjust enrichment to such creditor and would lead to anomalous situation. It has thus
been contended that once the Axis Bank Ltd. -applicant has exercised its right to file claim against the
principal borrower, i.e. Educomp Solutions Ltd., it was incumbent upon it to wait for the CIRP of the
principal borrower to get over before filing any claim against the guarantor.
10. It has further been stated by the Resolution professional that an un-matured claim at the time of
commencement of the insolvency process cannot be accepted. According to the pleadings, the mature
claim would be the one which are due on the date of admission of the petition, i.e. 27.06.2017. In that
regard, reliance has been placed on Section 3(11) of the Code to argue that liability or obligation has to be
due from any person in respect of a claim. The applicant had invoked the corporate guarantee on
21.07.2017, which is after the date of commencement of the insolvency process on 27.06.2017 and the
claim has been rightly rejected. For the aforesaid submission, reliance has also been placed on Regulation
13 of the Regulations as the Resolution Professional has to verify only those claims which are existing as
on the insolvency commencement date. The purpose of giving the cut-off date is to ensure that the assets
and liabilities are frozen and a Resolution Plan is finalised on the basis of cut-off date. It is further
submitted that the Resolution professional is under obligation to ensure that the Corporate Debtor remains
a going concern and therefore, every claim before the commencement of the insolvency would not
become a part of the resolution process in terms of Regulation 14 of the IBBI Regulations. The
Resolution professional would only revive the amount of the claim already admitted and there is no
provision for admitting any new claim.
11. The Resolution Professional has also raised the issue that invocation of corporate guarantee
against the Corporate Debtor was patently in violation of the moratorium imposed under Section 14 of the
Code. In that regard, reliance has been placed on the provisions of Section 14(1)(c) of the Code to argue
that invoking the corporate guarantee vide letter dated 21.07.2017 would amount to an action to cover the
amount from the Corporate Debtor as Section 14 creates a calm period in which the rights under the
contracts are suspended. It has further been pointed out that the Resolution Professional moved C.A. No,
257(PB)/2017 in (IB)102(PB)/2017, and vide order dated 21.08.2017, this Bench has disposed of the
1277
application by observing that the issues raised in the application were entirely in the domain of the
insolvency professional and it was not considered proper to opine either way by us (Annexure-1).
12. The Resolution professional has also filed para-wise reply virtually taking similar stand as she has
pleaded in the preliminary objections and has prayed for dismissal of the application.
13. In the rejoinder filed by Axis Bank Ltd.-applicant, it has been asserted that the liability of the
principal debtor and the corporate guarantor is co-extensive and reliance has been placed on Section 128
of the Indian Contract Act, 1872. The applicant has also placed reliance on the Judgments of the Flonble
Supreme Court in the case of Central Bank of India &Ors. v. C.L. Vimla & Ors. (2015) 7 SCC 337 and
State Bank of India v. Saksaria Mills Limited (36 Ors., AIR 1986 SC 868. Reliance has also been placed
on various provisions of the Code, Rules and Regulations and other Judgments.
14. It has been categorically denied the allegations of concealment and has stated that it was not
necessary to make disclosure with regard to the claim made against the principal borrower, i.e. Educomp
Solutions Ltd.
15. The applicant has also claimed that there is no provision of raising the assets and liabilities of the
Corporate Debtor on the date of commencement of the insolvency process as it is erroneously claimed by
the Resolution professional.
16. We have heard learned Counsel for the parties at a considerable length and have perused the
records with the able assistance.
17. The question which needs determination in the present proceedings is whether the Axis Bank Ltd.
-applicant is entitled to make a claim by invoking the corporate guarantee after the date of
commencement of the insolvency process. In order to appreciate the aforesaid issue, we may first refer to
certain terms and conditions of the corporate guarantee executed between the parties on 03.06.2015
(Annexiare-2). Under the caption '1.3 Terms of the Guarantee' clause-3 provides as under:
"In the event of any default on the part of the Borrower in payment / repayment and in reimbursement of
any of the monies referred to above, or in the event of any default on the part of the Borrower to comply
with or perform any of the terms, conditions and covenants contained in the Restructuring Documents, the
Guarantor shall, upon demand from the Security Trustee/ Lenders, forthwith pay to the Security Trustee/
Lenders without demur all the amounts payable by the Borrower under the Restructuring Documents".
A perusal of the aforesaid clause clearly postulates that in the event of any default on the part of
the Borrower, i.e. Educomp Solutions Ltd. in payment/repayment or in the event of any default to comply
with or perform any of the terms, conditions and covenants in the Restructuring Documents, the
1278
Guarantor under obligation upon demand from the Security Trustee/Lenders to forthwith pay to the
Security Trustee /Lenders without demur all the amounts payable by the Borrower under the
Restructuring Documents."
18. At this stage, we may refer to the provisions of Regulations 12 & 13 of the Insolvency and
Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations 2016. The
aforesaid Regulations read as under:
"Submission of proof of claims
12. (1) Subject to sub-regulation (2), a creditor shall submit proof of claim on or before the last date
mentioned in the public announcement.
(2) A creditor, who failed to submit proof of claim within the time stipulated in the public announcement,
may submit such proof to the interim resolution professional or the resolution professional, as the case
may be, till the approval of a resolution plan by the committee.
(3) Where the creditor in sub-regulation (2) is a financial. creditor, it shall be included in the committee
from the date of admission of such claim:
Provided that such inclusion shall not affect the validity of any decision taken by the committee
prior to such inclusion.
Verification of claims
13.(1) The interim resolution professional or the resolution professional as the case may be, shall verify
every claim, as on the insolvency commencement date, within seven days from the last date of the receipt
of the claims and thereupon maintain a list of creditors containing names of creditors along with the
amount claimed by them, the amount of their claims admitted and the security interest, if any, in respect
of such claims, and update it.
(2) The list of creditors shall be -
(a) available for inspection by the persons who submitted proofs of claim;
(b) available for inspection by members, partners, directors and guarantors of the corporate debtor;
(c) displayed on the website, if any, of the corporate debtor;
(d) filed with the Adjudicating Authority; and
(e) presented at the first meeting of the committee.
1279
A co-joint reading of the aforesaid Regulations would show that a creditor has to submit proof of
claim on or before the last date mentioned in the public announcement and if he has failed to submit proof
of claim by the stipulated date, then he may still submit the proof to the Resolution professional till the
approval of a Resolution Plan by the committee of creditors. As per Regulation 13(1) of IBBI
Regulations, the claims are to be verified by the Resolution Professional as on the date of commencement
of insolvency process. The verification has to be completed within seven days from the last date of the
receipt of the claims.
1280
PRINCIPAL BENCH
C.P. (I.B.) No. 314/7/NCLT/PB/2017
Applicants: ICICI Bank Limited

Vs.
Respondent: M/s. Tirupati Inks Ltd.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Milind Rastogi, Mr. Navneet Gupta & Ms. Shilpa Thakur, Learned
Advocates
For Respondents/Defendant: Mr. Ravi Data & Mr. Rajesh Sharma, Learned Advocate
ORDER
The ICICI Bank Limited (for brevity 'Financial Creditor') has filed the instant application under
triggering the Insolvency Resolution Process in the matter of M/ s. Tirupati Inks Ltd. (for brevity 'the
Corporate Debtor). It is appropriate to mention that the 'Financial Creditor' was incorporated on
05.01.1994 and was assigned GIN No. L65190G,11994PLCO21012. It has its registered office at ICICI
Bank Tower, Near Chakil Circle, Old Padra Road, Vadodara 390007, Gujrat.
2. Mr. Milind Rastogi has been authorized by the power of attorney dated 05.11.2014 (Annexure-
FC1) to submit and sign the petition.
3. The Corporate Debtor-M/s. Tirupati Inks Ltd. was incorporated on 10,04.1984. Its authorised
share capital is Rs. 26,00,00,000/- and the paid up share capital is Rs. 25,09,98,000/- as per the master
data available on the website of Ministry of Corporate Affairs. It has its registered office at Delhi. A
copy of the master data relating to Corporate Debtor has been placed on record (Annexure FC2).
4. The Financial Creditor has proposed the name of Shri Mukesh Mohan, 1106-07, New Delhi
House, Barakhamba Road, Connaught Place, Delhi -110001. His registration number is 1BBI/IPA-
001/IP-P00018/2016-17/ 10042. A written communication dated 23.08.2017 in terms of Rule 9(1) of the
Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 has also been placed
1281
on record (AnnexureII). There is a declaration made by him that no disciplinary proceedings are
pending against him in Insolvency and Bankruptcy Board of India or elsewhere. In addition further
necessary disclosures have been made by Mr. Mukesh Mohan as per the requirement of the IBBI
Regulations. Accordingly, he satisfies the requirement of Section 7 (3) (b) of the Code.
Corporate Debtor with the dates of disbursement. A perusal of part IV of the application has highlighted
"PARTICULAR OF FINANCIAL DEBT
1. TOTAL AMOUNT OF DEBT 03.07.2014:

GRANTED DATE(S) OF
At the request of the Corporate
DISBURSEMENT
Debtor, the Financial Creditor vide
CAL No. 45/W36DEL/71414 dated
03.07.2014 had sanctioned various
credit facilities to the Corporate
Debtor comprising of Fund Based
facilities of Rs. 11.00 Crores and
Non Fund Based facilities of Rs.
19.00 Crores aggregating Rs. 30.00
Crores.
22.07.2014
The Credit facilities were

modified vide CAL No.
45/W36DEL/72114 dated
22.07.2014 whereby the
Financial Creditor had sanctioned
revised Fund Based Facilities of Rs.
17.00 Crores and Non Fund Based
Facilities of Rs. 12,00 Crores
aggregating Rs. 29.00 Crores
27.03.2015
1282
The Corporate Debtor defaulted in

payment of the dues not only to the
Financial Creditor but also to other
members of Consortium led by
Punjab National Bank ("PNB
Consortium"). Pursuant to the Joint
Lender's Forum meeting held on
04.03.2015, the credit facilities
sanctioned by the members of PNB
Consortium were restructured and
accordingly, the Financial Creditor
vide CAL No. 45/W36DEL/81978
dated 27.03.2015 restructured its
credit facilities as under:-
Cash Credit Rs. 13.11 crores
Working Rs. 9.17 crorse

Capital Term
Loan
Funded Interest Rs. 3.79 crores

Term Loan
TOTAL Rs. 26.09

crores
The aforesaid details would show that the various credit facilities comprising of Fund Based
Facilities of Rs. 11 crores and Non Fund Based Facilities of Rs. 19.00 crores aggregating Rs. 30.00
crores were extended to the Corporate Debtor to the extent shown in the aforesaid data. Thereafter credit
facilities were modified on 22.07.2014 whereby the Financial Creditor had sanctioned revised Fund
Based facilities of Rs. 17.00 crores and Non fund Based facilities of Rs. 12.00 crores aggregating Rs.
29.00 crores.
6. As per the averments of the Financial Creditor, the Corporate Debtor defaulted in payment of the
aforesaid dues not only on the Financial Creditor but also to other members of consortium led by Punjab
1283
National Bank. Thereafter the Joint Lenders' Forum meeting was held on 04.03.2015 wherein credit
facilities sanctioned by members of PNB Consortium were restructured and accordingly, the Financial
Creditor vide Credit Arrangement Letter dated 27.03.2015 restructured its credit facilities with respect to
cash credit Rs. 13.11 crores, working capital term loan Rs. 9.19 crores and funded interest term loan. Rs.
3.79 crores.
7. The Financial Creditor in its application further asserted that after restructuring the default
occurred and the account of the Corporate Debtor was classified as Non-Performing Asset on 30.06.2016
by the Financial Creditor, it recalled the facilities, invoked personal and corporate guarantee vide letter
dated 11.07.2016 calling upon the Corporate Debtor, personal guarantors, corporate guarantors,
mortgagors 86 pledgers to pay a sum of Rs. 26,95,31,014.20 as on June 30, 2016 along with further
interest, costs, charges etc.
8. The Financial Creditor afterward on account of nonpayment of the dues by the Corporate Debtor
filed an Original Application bearing No. 814/2016 before Debt Recovery Tribunal- III, New Delhi in
which an order dated 22.11.2016 was passed restraining the Corporate Debtor and other defendants from
transferring, selling or disposing off or creating third party interest in respect of hypothecated assets and
mortgaged properties, as per details given the aforesaid OA and the OA is still pending for consideration.
In the aforesaid OA, with respect to cash credit Rs. 14,55,69,105.89, working capital term loan Rs.
9,72,99,188.88, funded interest term loan of Rs. 3,80,32,390.50 aggregating Rs. 28,09,00,685.10 have
been claimed by the Financial Creditor which were due as on 20.10.2016 along with pendent and future
interest @ 17.35% per annum w.e.f. 21.10.2016 till date of payment, along with all costs, charges,
expenses etc. Delhi. A copy of OA No. 814/2016 (with annexures) filed before DRT-III, New Delhi with
copy of order dated 22.11.2016 have also been placed on record (Annexure FC29 (colly).
9. The Financial Creditor further asserted that other members of PNB Consortium namely Bank of
Baroda have also filed their respective claim of Rs. 32,47,29,221.00 against the Corporate Debtor before
DRT, New Delhi and same is also pending con ration.
10. The Financial Creditor has also invoked the provisions of SARFAES1 Act and issued a notice
dated 14.07.2016 under Section 13(2) of the SARFAESI Act calling upon, inter alia, the Corporate
Debtor to pay a sum of Rs. 26,95,31,014.20 along with further interest, costs, charges expenses etc.,
within a period of 60 days from the date of notice. Delhi. A copy of the notice under Section 13(2) of the
SARFAESI Act dated 14.07.2017 has also been placed on record (Annexure-FC26).
1284
11. The Financial Creditor further asserted that as per the statement of account being maintained by
it in the ordinary course of business, as on July 31, 2017 the following sums as per the tabulated chart
below are due and payable by the Corporate Debtor and other obligors:-
Facility Amount (Rs.)
Cash Credit 16,50,44,697.89
WCTL 11,19,51,359.88
FITL 4,37,59,680.43
TOTAL 32,07,55,733.30
12. The 'financial creditor' has placed on record an overwhelming evidence to prove the default. The
details of the security interest have been given in Part V which are set out below:-
(i) First pari passu charge by way of hypothecation of the Corporate Debtor's entire
current assets, both present and future.
(ii) First pari passu charge by way of hypothecation of the Corporate Debtor's entire
movable fixed assets, both present and future except those financed by other lenders.
(iii) First pari passu charge by equitable mortgage by way of first time
deposit/constructive delivery of the title documents on the following properties:-
a) A-1/33, Coop. Industrial Area, Data Nagar, Kanpur.
b) A-1/29, Coop. Industrial Area, Data Nagar, Kanpur.
c) Duplex House No. 143, Swarnim Vihar Sector 82, Noida, U.P.
d) Factory at D-109, 110, 111, 112 Industrial Area, GNEPIP, Site V,

Greater Noida, U.P.
e) Factory at 267, Lane No. 4, Phase II, SIDCO, Bari Brahmana, Samba,
Jammu in the name of the Corporate Debtor.
(iv) Pledge of 6578095 (26.21%) equity shares of the Corporate Debtor held by Mr.
Sanjiv Agarwal, Mrs. Sangeeta Agarwal and M/s Shyarn Raj Colour Chem Pvt Ltd. in
favour of the Financial Creditor and other members of the PNB Consortium.
1285
The charge on the aforesaid Hypothecated Assets and the mortgaged Immovable
Properties of the Corporate Debtor/Respondent No. 5, lastly created on 17.06.2015 have
been lastly registered with the Registrar of Companies, NCT of Delhi 86 Haryana by
filing Form No. CHG-1.
13. The following Corporate Guarantors have furnished the Corporate guarantees: -
(a) M/s Ramdeo Polyester Pvt. Ltd.
(b) M/s Shyam Raj Colour Chem Pvt. Ltd.
Both of them executed their corporate guarantees all dated 17.06.2015, inter alia, guaranteeing
that in the event of default by the Corporate Debtor, they shall be jointly, severally and coextensively
liable to make the payment of the dues under the credit facilities granted by the PNB Consortium. Copies
of deeds of corporate guarantee dated 22.07.2014 have also been placed on record (Annexure-FC9
(colly).
namely Mr. Sanjiv Agarwal, Mrs. Sangeeta Agarwal and Mr. Satya Narain Agarwal. All of them
executed their respective unconditional and irrevocable deed(s) of guarantee all dated 17.06.2015, inter
alia, guaranteeing that in the event of default by the Corporate Debtor, they were to be jointly, severally
and co-extensively liable to make the payment of the dues under the credit facilities granted by the PNB
Consortium. Copies of deeds of guarantee dated 27.03.2015 have also been placed on record (Annexure-
FC 13).
15. The estimated value of the securities of the Corporate Debtor, Corporate Guarantors including
current assets and movable fixed assets as per the balance sheet dated 31.03.2016, properties situated in
different locality as per the valuation report dated 30.03.2017 carried out by PNB Lead Bank and equity
shares of the Corporate Debtor and same has been described by the Financial Creditor as per the table
below:-
Property Owned by (In lakhs) Basis of valuation

Value/
Distress sale
value
1286
Current assets Corporate Debtor 10786.68 Balance Sheet as at

March 31, 2016
Movable fixed assets Corporate Debtor 2292.59 Balance Sheet as at

March 31, 2016
Property being A- Corporate Debtor 60.02/48.02 Valuation Report dated

1/33, Coop. Industrial March 30, 2017 as
carried out by PNB
Area, Data Nagar,
Lead Bank PNB Lead
Kanpur.
Bank
Property being A- M/s. Ramdeo 60.02/48.02 Valuation Report dated

1/29, Coop. Industrial Polyesters P Ltd. - March 30, 2017 as
Area, Data Nagar, Guarantor of Corporate carried out by PND
Kanpur Debtor Lead Bank
Property being Mr. Sanjiv Agarwal - 140.1/112.0 Valuation Report dated

Duplex House No. Guarantor of Corporate March 24, 2017 as
143, Sector 82, Noida, Debtor carried out by PNB
U.P. Lead Bank
Property being Factor Corporate Debtor 550/440 Valuation Report dated

at D-109, 110, 111, February 06, 2017 as
112, Industrial Area, carried out by PNB
GNEPIP, Site V, Lead Bank
Greater Noida, U.P.
Property being Corporate Debtor 98.0/78.0 Valuation Report dated

Factory at 267, Lane March 24, 2017 as
No. 4, Phase II, carried out by PNB
SIDCO, Bari Lead Bank
Brahmana, Samba,
Jammu in the name of
the Corporate Debtor
1287
6578095 equity Mr. Sanjiv Agarwal, 0.0 Trading is suspended

shares, (being 26.21% Mrs Sangeeta Agarwal due to penal reasons.
equity shares) of the and M/s Shyamraj
Equity share of Tirupati
Corporate Debtor Colour Chem P Ltd. -
Inks Limited was last
Guarantors of
trade at Rs. 1.59 on
Corporate Debtor
May 02, 2017
Copies of the balance sheet for the year 2015-16 and valuation reports of various immovable
properties have also been placed on record (Annexure-FC31 FC32).
16. The Financial Creditor further asserted that other members of PNB Consortium have also
invoked the provisions of SARFAESI Act and issued their respective notices. The possession of the
aforesaid mortgaged properties as described in pares 16 were taken by Punjab National Bank, the Lead
Bank, and were put to auction on 16.08.2017. As per the information provided to the Financial Creditor
by the Punjab National Bank, it had received one bid for a sum of Rs. One Crore Twelve Lacs Only from
one bidder who submitted his bid to purchase the Duplex House No. 143, Swarnim Vihar, Sector 82,
Noida, UP and deposited 25% of the total bid price. However, the rest of the properties could not be sold
for want of any bid. The Financial Creditor stated in his application that once the entire sale
consideration is deposited by the bidder, the same shall be distributed proportionately amongst all banks
including Financial Creditor having charge thereon and such distribution shall reduce the outstanding
due amount payable by the Corporate Debtor to the Financial Creditor by such an amount.
17. In pursuance to restructuring of the credit facilities by the Financial Creditor as discussed above,
the Corporate Debtor executed Master Restructuring Agreement (Annexure-FC 15), Working Capital
Term Loan Consortium Agreement (AnnexureFC16), Funded Interest Term Loan Agreement
(Annexure-FC 17), Supplement Working Capital Consortium Agreement (Annexure- FC 18) 86 Inter-se
Agreement amongst members of PNB Consortium (Annex-ure-FC22) all dated 17.06.2015.
18. A record of default is also available with the Central Repository of Information on Large Credits
(CRILC) and as per the CRILC report dated 02.08.2017, the account of the Corporate Debtor was
reported as SMA-2 as early as on 30.09.2014 by Bank of Baroda and as latest as on 02.06.2016 by
Punjab National Bank. Further all banks have classified the asset of the Corporate Debtor to be doubtful
restructured/sub-standard. A copy of CRILC report dated 02.08.2017 has also been placed on record
(Annexure-FC33). Further as per the CIBIL report dated 05.06.2017, most of the facilities availed by the
Corporate Debtor are past dues. Besides many facilities have been shown to be doubtful/sub-standard.
1288
Copy of CIBIL report dated 05.06.2017 has also been placed on record (Annexure-FC34). Likewise,
Entries in Bankers Book in accordance with the Bankers Books Evidence Act, 1891 has also been placed
on record which relate to credit facilities as on 31.07.2017 (Annexure-FC3O(colly).
19. The 'corporate debtor' has opposed the admission of the application by arguing that the applicant
is a part of consortium of banks and the credit facilities as availed by the Corporate Debtor were a part of
consortium finance. In the said credit facilities, the Punjab National Bank is the Lead Bank and rest of
the Banks namely Oriental Bank of Commerce, IDBI Bank Limited, Syndicate Bank, Bank of Baroda
including Financial Creditor are described as consortium or the lenders. The applicant cannot
individually enforce any right or obligation of the aforesaid credit facilities without the consent of other
member banks who are also the stake holders in the Corporate Debtor Company. Filing of aforesaid OA
No. 814/2016 by the Financial Creditor against the Corporate Debtor has admitted by the Corporate
Debtor. Issuance of various sanction letters with respect to credit facilities from time to time by the
Financial Creditor has been conceded by him. It was then submitted that consent from other members of
consortium has not been obtained.
20. The objection would not require any serious consideration because Explanation to section 7 (1)
clarifies that for the purposes of section 7 a default includes a default in respect of financial debt, owed
not only to the applicant-financial creditor but to any other financial creditor of the Corporate debt. Rule
4 of the Insolvency and Bankruptcy (Adjudicating Authority) Rules, 2016 also clarify that a financial
creditor either by itself or jointly could file an application. Therefore, on the bare perusal. of statute such
an objection cannot be sustained.
21. The Corporate Debtor has also asserted that they had various plans of business expansion
including stabilization of a new product range but the said plan could not materialize due to lack of
support from the consortium of bankers. They further stated that deterioration in working capital
availability has put strain on the operations of the Corporate Debtor which resulted in lower utilization of
capacity and strained profitability which affected the ongoing business operations. Reference has also
been made to the Joint Lender meetings held on 14.02.2014 to discuss various issues being faced by the
Corporate Debtor but no substantial resolution could be achieved.
22. Another, objection has been raised by the Corporate Debtor that in violation of binding
guidelines issued by the Reserve Bank of India regarding classification of account as Non Performing
Asset as well as in violation of Section 2 (0) of the Securitization 2002, account of Corporate Debtor has
been classified as NPA. In respect of classifying the account of Corporate Debtor as Non-Performing
Asset, further focus on Master circular issued by Reserve Bank of India was also put. On account of
accumulated losses increased at the end of financial year ended March 31, 2016 and its net worth stood-
1289
completely eroded therefore, they became a sick industrial company within the meaning of erstwhile
Section 3 (1)(6) of Sick Industrial Companies (Special Provisions) Act, 1986 (for brevity 'SICA').
Therefore, they made a reference before BIFR under Section 15 (1) of the SPCA which was registered
with BIFR as Case No. 69/2016.
23. The Corporate Debtor further asserted that Lead Bank PNB has taken possession of all the
secured assets under the provisions of Section 13 (4) of SARFAESI Act and have also put them on
public auction and said proceeding was challenged before the Hon'ble DRT-Lucknow by filing S.A.
24. Rejoinder to the written statement has also been filed by the Financial Creditor reiterating the
submissions made in the application and controverting the allegations.
requirement of Section 7 of the Code. According to explanation appended to Section 7 (1) of the Code an
application by the 'Financial Creditor' either on its own behalf or jointly with the other financial creditor
before this Tribunal when a default has occurred. It is obvious that a part of consortium bank like the
petitioner is competent to file this application on its own behalf and other banks who are members of the
Consortium.
read with Section 7(3)(a) and Section 7 (5) of the Code. A copy of CRILC Report (Annexure-FC33), a.
copy of Banker's Book as per Banker's Evidence Act, 1891 (AnnexureFC30), various letters issued by
Financial Creditor including the one declaring the account as NPA show overwhelmingly the default
committed by the 'Corporate Debtor'. We further find that the application is complete in all other respects
as the Insolvency Professional, Mr. Mukesh Mohan has been duly proposed and he has also made full
declaration stating that no disciplinary proceedings are pending against him.
27. The objection concerning acceptance of plan would not warrant acceptance because a possibility
of any viable/ stabilisation plan was within the domain of the consortium banks or any other agency
competent to accept such a plan for a valid consideration. For the purpose of admission Section 7 (5) of
the Code lays down that the Adjudicating Authority should be satisfied with regard to three factors
namely a default should have occurred and the application under Section 7 (2) of the Code should be
complete in all respects and no disciplinary proceeding should be pending against Interim Resolution
Professional. All proceedings before the Joint Lenders Forum or any other fora would not constitute a
material consideration for the purpose of admission of the petition or refusal to do so. This issue was
1290
raised before Hon'ble the Supreme Court in the case of M/s. Innoventive Industries Limited v. ICICI
Bank & Anr., Civil Appeal No. 8337-8338 of 2017 decided on 31.08.2017. In para 50 of the judgment an
argument on behalf of Corporate Debtor was raised that there was a promise to infuse funds into the
Corporate Debtor but not a single paisa was disbursed. The aforesaid submission in term has been
rejected by Hon'ble the Supreme Court in para 59 of the judgment holding that the obligation of the
corporate debtor to pay debt was unconditional and did not depend upon infusing of funds by the
creditors into the Corporate Debtor's company. Accordingly, we are of the view that such an argument
would not cut any ice and we have no hesitation to reject the same,
The other objection by referring to the provisions of SICA and SARFAESI would also not detain
us from admission of the petition because Section 238 of the Code contained a non-
obstante clause in the widest terms possible. The parliament in its wisdom is presume to have knowledge
of the provision of various statues prevailing earlier to the enforcement of the Code. ftIihe aforesaid
proposition was also discussed by Honble the Supreme Court in the case of M/s. Innoventive Industries
Limited (supra) rejecting the argument in respect of Maharashtra Relief Undertakings (Special.
Provisions Act), 1958. Hon'ble the Supreme Court observed in pares 56 as under:-
"......................It is precisely for this reason that the non-obstante clause, in the widest
terms possible, is contained in Section 238 of the Code, so that any right of the corporate
debtor under any other law cannot come in the way of the Code........................"
Therefore, this objection also lacks any substance.
28. For the reasons, aforementioned this petition is admitted. Shri Mukesh Mohan who is duly
registered with Insolvency and Bankruptcy Board of India IBBI/IPA-001/IP-P00018/2016- 17/10042)
has been proposed as an interim Resolution Professional. He is hereby appointed as an Interim
Resolution Professional. He has filed his certificate of registration with Insolvency and Bankruptcy
Board of India. He has also filed his written communication dated 23.08.2017 in connection with the
application to initiate Corporate Insolvency Resolution Process. The disclosure has been made in the
letter dated 23.08.2017, No disciplinary proceedings are pending against him.
the Interim Resolution Professional within the statutory period with regard to admission of this
application under Section 7 of the Code. We also declare moratorium in terms of Section 14 of the Code.
Some necessary consequences of imposing the moratorium flows from the provisions of Section 14 (1)
(a), (b), (c) 86 (d). Thus, the following prohibitions are imposed:
1291
(b) transferring, encumbering, alienating or disposing of by the corporate debtor any

of its assets or any legal right or beneficial interest therein;
(c) any action to foreclose, recover or enforce any security its property including
any action under the Securitisation and Reconstruction of Financial Assets and
Enforcement of Security Interest Act, 2002;
(d) the recovery of any property by an owner or lessor where such property is
occupied by or in the possession of the corporate debtor."
period.
31. The Interim Resolution Professional shall perform all his functions contemplated, inter-alia, by
order. The Interim Resolution Professional shall be under duty to protect and preserve the value of the
33. The office is directed to communicate a copy of the order to the Financial Creditor and the
Corporate Debtor at the earliest possible but not later than seven days from today in fulfilment of
requirement of Section 7 (7) of the Code.
1292
PRINCIPAL BENCH
C.P. (I.B.) No. 254/7/NCLT/PB/2017
Applicants: Central Bank of India

Vs.
Respondent: NCML Industries Limited
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Jaswinder Singh, Mr. Ashwani Arora, Learned Advocates
For Respondents/Defendant: Mr. Arvind Kumar & Ms. Heena George, Learned Advocate
ORDER
The 'Financial Creditor'-Central Bank of India has filed the instant application under Section 7 of
the Insolvency and Bankruptcy Code, 2016 (for brevity 'the Code') with a prayer to trigger the Corporate
Insolvency Resolution Process in the matter of NCML Industries Limited. It is appropriate to mention
that the 'financial creditor' is a body corporate constituted by and under the Banking Companies
'financial creditor' had its head office at Chandermukhi, Nariman Point, Mumbai-400021. The
identification number of the financial creditor is BSR Code 283869 and its branch office is at Mid
Corporate Finance Branch, OF (Right Wing), Link House, 3, Bahadur Shah Zafar Marg, New Delhi-
110002.
2. Mr. Ashwani Kumar Arora has been authorized by the power of attorney dated 08.09.2016
(Annexure-A1) to sign and submit the petition.
3. The Corporate Debtor-NCML Industries Limited was incorporated on 26.09.1996. The

identification number of the Corporate Debtor is U65923BL1996PLC082284 and its registered office is
situated at 1818, Naya Bazar, New Delhi-110006. Its authorised share capital is Rs. 23,55,00,000/
(Rupees Twenty three crores fifty five lacy) and the paid up share capital is Rs. 2354,85,000/- (Rupees
Twenty three crores fifty four laces eighty five thousand) as per details of guarantee clause as well as
Memorandum of Association.
1293
'Corporate Debtor' with the dates of disbursement. A perusal of part IV of the application has highlighted
1. TOTAL AMOUNT OF DEBT Debt granted on fresh working capital

GRANTED DATE(S) OF limit (FLC) of Rs. 40 crores on
DISBURSEMENT 17.09.2012 and renewed thereafter.
Further debt granted upon review cum

enhancement proposal whereby FLC
limit was increased on 13.11.2013 to
Rs. 50 crores and fresh limit as CC
(Hypothecation) for a sum of Rs. 7
crorse was granted.
The dates of disbursement under the

aforesaid facilities are annexed herewith
as Annexure A-2.
The aforesaid details would show that fresh working capital limit (FLC) of Rs. 40 crores was
extended to the Corporate Debtor on 17.09.2012 and subsequently it was renewed. Further debt was
granted upon review-cum-enhancement proposal whereby FLC limit was increased to Rs. 50 crores on
13.11.2013 and fresh limit as CC (Hypothecation) for a sum of Rs. 7 crores was granted. The details
concerning dates of disbursement under the aforesaid facilities have been annexed (Annexure A-2).
5. As per the averments of the 'Financial Creditor', the principal amount in default under CC
(Hypothecation) limit as on 25.07.2017 is claimed to be Rs. 9,93,34,797 (Rupees nine crores ninety three
lacy thirty four thousand seven hundred and ninety seven). In addition, the default amount towards LC
development as on 25.07.2017 is claimed to be Rs. 47,03,02,370 (Rupees forty seven crores three lass
two thousand three hundred seventy). A copy of computation of amount of default and date of default has
been placed on record (Annexure A-3).
6. The 'financial creditor' has placed on record an overwhelming evidence to prove the amount
advanced and secured by Corporate guarantees. The details of the security held by, or created for the
benefit of 'financial creditor'- Central Bank of India have been given in Part V which are set out below: -
1294
"CC (Hypothecation) facility granted by Central Bank of India, Mid Corporate
Finance Branch, 3, Bahadur Shah Zafar Marg, New Delhi- 110002
First charge shared pari passu amongst the Lenders, (including the Forward contract limit
on the Lenders as per their respective Sanction Letter, outside the consortium limit) over
the entire current assets of the Company (present and future) including but not limited to:
(i) Book debts, bills receivables, commissions, revenues, claims, demands, bills,
receipts, monies, guarantees, letters of credit, contracts, engagements and stocks, shares,
notes, bounds, warrants and other securities of any kind belonging to or held by the
Company, and all those in action which may rise to any debt, revenue or monetary claim
which are now due and owing or accruing and which may at any time hereafter during the
continuance of this Deed become due and owing or accrue to the Company and the
benefits of any security, guarantee or other rights in relation to any of the foregoing;
(ii) Stocks of raw materials, consumables, general stores, of whatsoever nature and
wherever arising finished and semi-finished goods, goods in process and stores, which
are now lying or stored in or which may become consumable hereafter from time to time
during the continuance of this Deed by lying or stored in or brought into or be in or about
the factories and godowns of the company or warehouses, wherever situated;
(iii) Accounts receivable, operating cash flows, treasury income, deposits of the
Company with third parties, and any other revenues or whatsoever nature and wherever
arising, present and future;
LC (Development) facility granted by Central Bank of India
First charge shared pari passu amongst the Lenders, (including the Forward contract limit
on the Lenders as per their respective Sanction Letter, outside the consortium limit) over
the entire current assets of the Company (present and future) including but not limited to:
(i) Book debts, bills receivables, commissions, revenues, claims, demands, bills,
receipts, monies, guarantees, letters of credit, contracts, engagements and stocks, shares,
notes, bounds, warrants and other securities of any kind belonging to or held by the
Company, and all those in action which may rise to any debt, revenue or monetary claim
which are now due and owing or accruing and which may at any time hereafter during the
continuance of this Deed become due and owing or accrue to the Company and the
benefits of any security, guarantee or other rights in relation to any of the foregoing;
1295
(ii) Stocks of raw materials, consumables, general stores, of whatsoever nature and
wherever arising finished and semi-finished goods, goods in process and stores, which
are now lying or stored in or which may become consumable hereafter from time to time
during the continuance of this Deed by lying or stored in or brought into or be in or about
the factories and godowns of the company or warehouses, wherever situated;
(iii) Accounts receivable, operating cash flows, treasury income, deposits of the
Company with third parties, and any other revenues or whatsoever nature and wherever
arising, present and future"
namely Mr. Mohan Lai. Jain, Ms. Suman Jain, Ms. Kamla Jain and Ms. Sangeeta Jain. All of them
executed deed of guarantee namely 'form of guarantee for advances as credits generally' dated
31.03.2014, inter alia, guaranteeing that in the event of default by the Corporate Debtor, they were to be
liable to make the payment of the dues under the CC and LC limits granted by the Financial Creditor. A
copy of deed of guarantee dated 31.03.2014 has been placed on record (Annexure A-4).
8. The Corporate Guarantor namely N.M. Industries Private Limited, which is sister concern of
Corporate Debtor, vide deed of guarantee dated 31.03.2014 (Annexure A-5) furnished the Corporate
guarantee, inter alia, guaranteeing that Corporate Guarantor shall be liable to secure the repayment of
dues payable by the Corporate Debtor. A copy of deed of corporate guarantee dated 31.03.2014 has also
been placed on record (Annexure A-5). Further Corporate Debtor has also placed on record omnibus
counter guarantee (Annexure A-6) of Manish Jain (HUF) for the letter of credit dated 31.03.2014.
9. As per the financial creditor the estimated value of the aforementioned securities is
approximately 1000 crores (Rupees one thousand crores) as on 31.12.2015.
10. The Financial Creditor further asserted that Original Application No. 533 of 2017 has been filed
by State Bank of India as Consortium Leader with the Financial Creditor as a joint plaintiff which is
pending consideration of Debt Recovery Tribunal-I, New Delhi.
11. The Financial Creditor has also attached the financial contracts with respect to the CC
(Hypothecation) facility and LC facility. Those documents are as under:-
1) A copy of the Inter se agreement dated 08.02.2013 between the Consortium

members including Financial Creditor has been annexed as Annexure A-8.
2) A copy of Joint deed of hypothecation dated 24.04.2014 has been annexed as

Annexure A-9.
1296
3) A copy of Composite deed of hypothecation dated 31.03.2014 has been annexed
as Annexure A10.
4) A copy of agreement of hypothecation of current assets dated 31.03.2014 has

been annexed as Annexure A-11.
5) A copy of letter of undertaking not to encumber assets dated 31.03.2014 has been
annexed as Annexure A-12.
6) A copy of agreement of non diversion of funds dated 31.03.2014 has been

annexed as Annexure A-13.
7) A copy of application and agreement of letter of credit (Foreign) dated

31.03.2014 has also been annexed as Annexure A-14.
classification report of the 'Corporate Debtor' issued by the TransUnion CIBIL dated 03.08.2017
(Annexure A-15). Likewise, Entries in Bankers Book in accordance with the Bankers Books Evidence
Act, 1891 has also been placed on record which relate to CC and LC Devolvement facility, depict the
closure balance as on 25.07.2017 in respect of both two facilities (Annexure A-16).
a) A copy of letter of interest variation dated 31.03.2014.
b) A copy of letter of waiver dated 31.03.2014.
c) A copy of letter of continuity dated 31.03.2014.
d) A copy of undertaking dated 31.03.2014.
e) A copy of consent letter by company dated 31.03.2014.
f) A copy of legal notice dated 23.01.2017 issued by SBI acting as a Consortium

leader on behalf of other Consortium members incorporated the dues of the Financial
Creditor.
g) A copy of reply dated 15.02.2017 issued on behalf of the Corporate Debtor.
h) A copy of demand notice dated 25.02.2017 issued by Financial Creditor to the

Corporate Debtor and its Directors/ Guarantors demand a sum of Rs. 56,96,37,167/ -
(Rupees fifty six crores ninety six lacy thirty seven thousand one hundred sixty seven
1297
only) within 5 days failing which appropriate legal action will be taken against the
Corporate Debtor including filing of the present application.
The copy of the aforementioned documents proving existence of 'financial debt'

and default have also been annexed (Annexure A- 17, 18, 19, 20, 21, 22, 23 65 24).
14. The 'corporate debtor' has opposed the admission of the application by arguing that the petition is
incomplete as no statutory details required in part IV of the prescribed form have been given. It is
appropriate to mention that the proforma has been prescribed by Rule 4 of the Rules known as
Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016. In part IV two columns
are mentioned namely (1) total amount of debt granted with date(s) of disbursement (2) amount claimed
to be in default and the date on which the default occurred,
The petitioner has given the particulars of financial debt in part IV satisfying all the aforesaid
requirements and the same read as under:-
1. TOTAL AMOUNT OF DEBT GRANTED

Debt granted on fresh working capital limit (FLC) of
DATE(S) OF DISBURSEMENT
Rs. 40 crores on 17.09.2012 and renewed thereafter.
Further debt granted upon review cum enhancement
proposal whereby FL C limit was increased on
13.11.2013 to Rs. 50 crores and fresh limit as CC
(Hypothecation) for a sum of Rs. 7 crores was
granted.
The dates of disbursement under the aforesaid

facilities are annexed herewith as Annexure A-2.
2. AMOUNT CLAIMED TO BE IN DEFAULT
The amount of default under CC (Hypothecation)
AND THE DATE ON WHICH THE
DEFAULT OCCURRED (ATTACH THE Limit as on 25.07.2017 is Rs. 9,93,34,797 (Rupees
WORKINGS FOR COMPUTATION OF
nine crores ninety three lacs thirty four thousand
AMOUNT AND DAYS OF DEFAULT IN
TABULAR FORM) seven hundred and ninety seven only) and the date of
1298 default is 30.06.2015.
The amount of default under LC development is Rs.

47,03,02,370 (Rupees forty seven crores three lacs
two thousand, three hundred seventy only) as on
25.07,2017 and the date of default is 30.06.2015.
The computation of amount of default and date of

default has been annexed herewith as Annexure A-3.
A perusal of the aforesaid table would show that the total amount of debt granted and disbursed has been
elaborately explained and for further details reference has been made to Annexure A-2 which shows that
CC facility was given by disbursing Rs. 7 crores on 04.04.2017. Another facility described as LC-4 A/cs
account Rs. 50 crores was given and the amount was disbursed on 02.03.2015. Likewise, the amount of
default has also been elaborately given along with the dates which can be ascertained by referring to
Annexure A-3. Therefore, we do not find any substance in the objection raised by the Corporate Debtor.
15. Another objection raised by the Corporate Debtor is that the petition was not maintainable
without joining the lead Bank. This objection would not detain us as Section 7 of the Code itself shows
that a financial creditor either by itself or jointly with other financial creditor may file an application for
initiating Corporate Insolvency Resolution Process against a Corporate Debtor when a default has
occurred. Therefore, there is no obligation to join the lead Bank. The rational for the argument put forth
by the Corporate Debtor is that Section 7 must be interpreted harmoniously with the Rules framed by the
Reserve. Bank of India under Banking Regulation Act and Section 7 is wide enough to cover the
requirements of formation of Joint Lenders Forum (for brevity VLF). The argument is wholly devoid of
merit because Section 238 of the Code expressly provides that the provision of the Code have to effect,
notwithstanding anything inconsistent therewith contained in any other law for the time being in force or
any instrument having effect by virtue of any such law. 1-lonble the Supreme Court in the case of M/s
Innoventive Industries Limited v. ICICI Bank & Ann, Civil Appeal No. 8337-8338 of 2017 decided on
31.03.2017 has concluded that Section 238 is a later non-obstante clause of the Parliamentary enactment
which would prevail over the limited non-obstante clause. The Banking Regulation Act to which
reference has been made is also much earlier to the enactment of the Code and the non-obstante clause
which is in the widest terms possible under Section 238 of the Code must prevail. Hon'ble the Supreme
Court also dealt with a cognate argument that under the Maharashtra Relief Undertakings (Special
Provisions Act), 1958 even if there was a promise to infuse funds into the Corporate debtor then it would
not make any difference if no fund were actually infused. The observations made in para 59 of the
judgment are direct answer to the argument raised on behalf of the Corporate Debtor. Para 59 of the
aforesaid judgment read as under:-
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"59. The obligation of the corporate debtor was, therefore, unconditional and did not
depend upon infusing of funds by the creditors into the appellant company. Also, the
argument taken for the first time before us that no debt was in fact due under the MRA as
it has not fallen due (owing to the default of the secured creditor) is not something that
can be countenanced at this stage of the proceedings.................."
16. The 'financial creditor' has proposed the name of Mr. Anil Kohli as an Insolvency Professional
but subsequently vide Diary No. 3287 dated 17.10.2017 request was made to withdraw the name of
earlier proposed Insolvency Professional namely Mr. Anil Kohli and in his place name of Mr. Gian Chand
Narang was proposed as Insolvency Professional. A certificate of registration dated 14.09.2017 issued to
Mr. Gian Chand Narang by the Insolvency and Bankruptcy Board of India has been placed on record vide
aforesaid diary number. His registration number is IBBI/IPA-002/IP-N00362/2017-18/11031. He has also
made declaration and filed a written communication dated 17.10.2017 in terms of Rule 9(1) of the
Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 along with the aforesaid
diary number. According to the declaration made by Mr. Gian Chand Narang, no disciplinary proceedings
are pending against him nor he is a related party to 'Financial Debtor' namely NCML Industries Limited
nor he is an employee of the NCML Industries Limited. Accordingly, he satisfies the requirement of
Section 7 (3) (b) of the Code.
17. For the reasons, aforementioned this petition is admitted. Shri Arian Chand Narang who is duly
registered with Insolvency and Bankruptcy Board of India IBBI/IPA-002/IP-N00362/2017- 18/11031 is
hereby appointed as an Interim Resolution Professional.
the Interim Resolution Professional immediately (3 days as prescribed by Regulations) with regard to
admission of this application under Section 7 of the Code. We also declare moratorium in terms of
Section 14 of the Code. The necessary consequences of imposing the moratorium flows from the
provisions of Section 14 (1) (a), (b), (c) 86 (d). Thus, the following prohibitions are imposed:
"(a) the institution of suits or continuation of pending suits or proceedings against the

1300
Debtor as may be specified, are not to be terminated or suspended or interrupted during the moratorium
period.
Sections 15, 17, 18, 19, 20 86 21 of the Code and transact proceedings with utmost dedication, honesty
and strictly in accordance with the provisions of the 'Code', Rules and Regulations. It is further made clear
that all the personnel connected with the Corporate Debtor, its promoters or any other person associated
with the Management of the Corporate Debtor are under legal obligation under Section 19 of the Code to
in managing the day to day affairs of the `Corporate Debtor'. In case there is any violation, the Interim
Resolution Professional would be at liberty to make appropriate application to this Tribunal with a prayer
for passing an appropriate order. The Interim Resolution Professional shall be under duty to protect and
preserve the value of the property of the 'Corporate Debtor' as a part of its obligation imposed by Section
20 of the Code and perform all his functions strictly in accordance with the provisions of the Code.
21. The Petition is disposed of in the above terms. The office is directed to communicate a copy of
the order to the Financial Creditor and the Corporate Debtor at the earliest possible but not later than
seven days from today.
1301
PRINCIPAL BENCH
C.P. (I.B.) No. 352/7/NCLT/PB/2017
Applicants: M/s. ACPC Enterprises

Vs.
Respondent: Affinity Beauty Salon Pvt. Ltd.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. K. Datta & Ms. Prachi Johri, Learned Advocates
For Respondents/Defendant: Mr. Shaunak Kashyap & Mr. Rahul Mukherjee, Learned Advocate
ORDER
M/s ACPC Enterprises, a partnership firm has approached this Tribunal u/s 7 of the Insolvency
and Bankruptcy Code 2016 (for brevity 'the Code') with a prayer to initiate Corporate Insolvency
Resolution Process in the matter of Affinity Beauty Salon Pvt. Ltd. —Respondent. The Petitioner claims
to be a 'Financial Creditor' and describe the Affinity Beauty Salon Pvt. Ltd. —Respondent as 'Corporate
Debtor'
2. Before we embark upon the legal controversy raised in this petition few facts may be noticed. The
case of the petitioner is that the parties have entered into a Share Subscription Agreement (for brevity
'SSA' ) on 4.6,2016 envisaging transfer of 2,50,000 shares which are known as Cumulative Convertible
Redeemable Preference shares ((for brevity ‘CCRPS') in favour of the petitioner against the payment of
sum of Rs.2,50,00,000/-. The amount of consideration was duly received by the 'Corporate Debtor' on
13.62016 and share certificate with distinctive share Nos.500001 to 750000 being 8% CCRPS were
issued in favour of the petitioner-`Financial Creditor'. The 'Corporate Debtor' later alleged that the
CCRPS issued were not registered with the ROC in favour of petitioner- Financial Creditor on the ground
it was an unregistered partnership firm. The petitioner later on got itself registered with the Registrar of
Firms, Noida. The period of 60 days from the date of receipt of money by the Corporate Debtor for
subscription expired on 14.8.2016. It is alleged that discussion between the parties concerning the
issuance of CCRPS to the Corporate Debtor —respondent have failed as 'Corporate Debtor' did not
1302
honour his promise to issue the CCRPS. Eventually on 26,4.2017 Financial Creditor issued a letter cum
notice to the Corporate Debtor that if the CCRPS were not dully issued and registered with the ROC
within seven days then the money paid by the Financial Creditor under the SSA and the 'Corporate
Debtor' was be treated as liable to respect the claim which is due along with interest. After the receipt of
the aforesaid letter cum notice the Corporate Debtor —respondent sold off his profit making business of
Affinity Express Franchise on 30.5.2017. Vide letter dated 1.82017 address to LLP Incorporated by the
partners of the Corporate Debtor —respondent offer to issue CCRPS which now stand drastically
devalued. It is thus claimed that shares have not been issued and share subscription money become a debt
and payable with interest therefore Corporate Insolvency resolution process deserved to be initiated.
3. Respondent have opposed the claim made by the petitioner —Financial Creditor asserting that the
petition Ws 7 of the Code read with rule 4 of the Insolvency & Bankruptcy (Application to Adjudicating
Authority) Rules, 2016 the petition is not maintainable. The execution of the SSA dated 4.6.2016 has
been admitted which provide for issuance and allotment of 2,50,000 CCRPS. It is also conceded that
clause 5.1 of the SSA provides for refund of the entire subscription and guaranteed return in accordance
with the provisions of clause 5.2(a) to the investors like the petitioner within a period of five years and
which has to be regarded as tenure of the investor shares. After five years the petitioner shall tre,
compulsorily bound to choose whether to exit or continue to hold equity shareholding. As per clause 5.8
no exit was permitted before the expiry of 30 months from the date of the SSA i.e. 4.6.2016. The pleaded
case of the respondent is that before the expiry of 30 months as per clause 5.8 of the SSA, the petitioner
— Financial Creditor cannot seek redemption of CCRPS and the only remedy is to seek refund of the
money paid in lieu of allotment of shares. It is further pleaded that the amount paid for the purposes of
allotment of shares cannot be considered as an amount paid by way of loan or it involved any kind of
borrowing. The amount was paid for specific purpose for allotment of shares and could be returned if the
shares were not allotted and therefore such an amount cannot be treated as receipt of loan, deposit or
borrowing nor it amounts to a debt within the meaning of section 3(11) of the Code. The case of the
respondent- 'Corporate Debtor' is that no default has taken place. The share certificate dated 7.6.2016
were issued by the respondent on the terms and conditions stipulated in the SSA. The ROC refused to
accept the transfer of shares in favour of petitioner-'Financial Creditor' on the ground that it was an
unregistered partnership firm. The terms of SSA did not provide that share certificate were to be allotted
by the 'Corporate Debtor' in favour of the individual partners of the petitioner firm and noi- the
partnership firm has to exist on the date of issuance of share certificate dated 7.6.2016. There are details
of various emails depicted in paras 7 to 11 which are not necessary to be referred in details. The pleaded
case of the Corporate Debtor is that the money paid by the petitioner 'Financial Creditor' to the respondent
1303
'Corporate Debtor' for allotment of shares in no manner would amount to a loan or deposit and reliance
has been placed on various judgments decided under the Income Tax Act.
4. Even a rejoinder to the reply has been filed by the petitioner —Financial Creditor and it is stated
that under section 42(6) of the Companies Act, 2013 when the company is unable to allot securities
within a period of 60 days from the receipt of the application money it becomes liable to repay the
application money to the subscribers within 15 days from the date of expiry of 60 days along with interest
of 12%. The averment made in the affidavit to the contrary have been controverted by submitting that the
debts have become due u/s 42(6) of the Companies Act, 2013. It is also asserted that there is a default on
account of non payment on the expiry of 15 days from the date of completion of 60 days provided for
allotment of shares and hence there is default. The averment made in the petition has been reiterated in
the rejoinder.
5. We have heard learned counsel for the parties.
6. The question which arises for consider before us is 'whether the petition
satisfies the requirements of section 7 which provide that corporate insolvency resolution process can be
initiated against a corporate debtor by attaching record of the default and proposing name of the
resolution professional to act as an interim resolution professional'. The first requirement is that a
petitioner Ws 7 of the Code shall be a Financial Creditor. The expression 'Financial Creditor' is defined in
section 5(7) and it needs to be read with section 5(8) of the Code which read thus:-
"5 In this Part, unless the context otherwise requires,—
(1) to (6).................
(7) "financial creditor" means any person to whom a financial debt is owed and includes
a person to whom such debt has been legally assigned or transferred to;
(8) "financial debt" means a debt alongwith interest, if any, which is disbursed against
the consideration for the time value of money and includes—
(b) any amount raised by acceptance under any acceptance credit facility or its de-
materialised equivalent;
(c) any amount raised pursuant to any note purchase facility or the issue of bonds,
notes, debentures, loan stock or any similar instrument;
1304
(d) the amount of any liability in respect of any lease or hire purchase contract
which is deemed as a finance or capital lease under the Indian Accounting Standards or
such other accounting standards as may be prescribed;
(e) receivables sold or discounted other than any receivables sold on nonrecourse
basis;
(f) any amount raised under any other transaction, including any forward sale or
purchase agreement, having the commercial effect of a borrowing;
(g) any derivative transaction entered into in connection with protection against or
benefit from fluctuation in any rate or price and for calculating the value of any
derivative transaction, only the market value of such transaction shall be taken into
account;
(h) any counter-indemnity obligation in respect of a guarantee, indemnity, bond,

documentary letter of credit or any other instrument issued by a bank or financial
institution;
(i) the amount of any liability in respect of any of the guarantee or indemnity for any
of the items referred to in sub-clauses (a) to (h) of this clause;
7. A perusal of the above provisions would show that 'Financial Creditor' would be any person to
whom financial debt is owed and includes a person to whom such debt has been legally assigned or
transferred to. The expression "Financial debt" used in sub section 7 of 5.5 has been defined to mean a
debt along with interest which is disbursed against the consideration for time value of money and includes
money borrowed against the payment of interest etc. It is obvious that the subscription money advanced
for purchase of shares would not fall within the definition of expression 'Financial Debt' and therefore the
petitioner cannot be regarded as a Financial Creditor. The subscription amount has not been disbursed
against the consideration for time value of money nor this is money borrowed against payment of interest.
8. Therefore we are unable to persuade ourselves to accept that the petitioner could be regarded as a
Financial Creditor. The reason for the aforesaid view is that it lack necessary ingredient of consideration
for the time value of money and it is not money borrowed against the payment of interest. Moreover the
shares as per the SSA were allotted to the petitioner- Financial Creditor which was unregistered
partnership firm which altogether a different controversy. It was later on found that allotment could not be
made to an unregistered partnership firm. Therefore there is no trapping of a financial loan or a financial
debt in terms of section 5(7) and 5 (8) of the Code in the transaction of SSA.
1305
9. The arguments of Mr. K. Datta learned counsel for the petitioner-Financial Creditor is that it is
debt within the meaning of section 3(11) and subsequently under clause 5.1 of the SSA, the 'Corporate
Debtor' has guaranteed that at the option of the petitioner- Financial Creditor it would pay back entire
subscription consideration along with guaranteed returns as stipulated in clause 5.2.a to the petitioner —
Financial Creditor within a period of five years which was to be the tenure of the investors share.
According to clause 5 learned counsel has highlighted the provision of clause 5.2 which provides that
after the period of five years the petitioner- Financial Creditor was compulsorily bound to choose whether
to exit the investment made or to continue to hold equity shareholding of the Financial Creditor. There
was no exit possible before the period of 30 months from the date of the agreement i.e from 4.6.2016
which is apparently the lock in period.
10. We have thoughtfully considered aforesaid submissions of the learned counsel for the petitioner-
Financial Creditor and are of the view that the same are devoid of merit. The expression 'Debt' u/s 3(11)
of the Code is a general definition and in respect of insolvency resolution and liquidation for corporate
debtor section 4 provide that Part II was to be applied to matter related to insolvency and liquidation for
corporate debtor where a minimum amount of default is one lac rupees and section 5 further clarifies that
in part II the various expression have been defined unless the context otherwise required. The expression
debt has not been used in sub sections (7) and (8) of section 5. The expressions used are financial creditor
and financial debt. Every 'debt' is not essentially a financial debt. Therefore the definition of expression
debt cannot be imported to part II and the argument is hereby rejected.
11. The other argument that there is a buy back clause and the guaranteed return provided by clause
5.1, 52 and 5.8 of the SSA would also lack substance because the share has been allotted to unregistered
firm and the ROC refused to transfer the same. In the absence of any valid transfer of share to the
petitioner — Financial Creditor the SSA could not be regarded to have come into operation and triggering
the various clauses 5.1, 5.2 and 5.8 of the SSA. Even if it is presumed that there is valid allotment a
minimum locking period of 30 months from 4.6.2016 is to expire on December 2018. The guaranteed
returns as per the provisions of clause (5.2.a) of SSA would start only after the period of five years has
lapsed. The period of five years is to expire in June 2021. There could not be any default. Likewise we
find no substance in the argument that in accordance with clause 5.3.1 read with clause 5.8 it could be
regarded as default as no valid allotment of share has taken place and in any case period of three years
and five years is yet to expire. We are further of the view that any default has not occurred in terms of
section 7(5). The expression default has been defined by section 3(12) to mean non payment of debt when
whole or any part or instalment of the debt have become due and payable and the same is not repaid by
the corporate debtor. In the present case the petitioner financial creditor has pleaded that no allotment of
1306
CCRPL in accordance with law has been made. As a matter of fact allotment made was to an unregistered
firm and the ROC refused to register the transfer. Therefore there is no question of any default occurring.
12. Mr. Datta has also placed reliance on a Division Bench of Delhi High Court in the case of Ajay
Singh v. Kal Airways Pvt. Ltd and Ors. FA0(05)(COMM)61/2016, C.M. APPL.28195/2016 decided on
3.7.2017 and specific reliance was placed on the observation made in pars 28 which read as under:-
'28. The question then 15 was the discretion exercised appropriately by the learned single
judge, in the facts of this case? The facts are fairly straightforward, in the opinion of the
court. The appellant was able to get hold of a substantial shareholding in the company
(58% to be exact) for an overall cost of R.5.2/-, This cost carried with it, the obligation to
step in and discharge the petitioners' guarantee to their creditors and issue share
warrants at a pre-agreed price, on predetermined dates; it also obliged them to issue
preference shares. In exchange, the appellants got Rs.579 cranes (in addition they were
to, but did not get a further Rs. BOO crams). The parties agree that the share warrants
were not issued; nor were the preference shares. The appellants say that this situation
came about because of lack of statutory approval by the 5E81 and the lack of permission
by 8.5E. The appellants also did not discharge the statutory tax liabilities, but applied for
waiver, after prosecution through complaint was launched. Their defence to non- refund
or payment is that the petitioners have to establish their claims (including the claim for
compensation). However, their pleadings categorically amount to a prima facie
admission that the obligations they had undertaken were rendered impossible (on
account of lack of regulatory approval). Niceties apart, the appellants' pleadings as to
the justification for their retaining the amounts, when they clearly cannot deliver their
part of the bargain, is feeble and ineffective. So also as to their inability to issue
preference shares. On the other hand, the petitioners point out that the share prices have
increased (from the agreed of Rs.16.30/- per share to of Rs.125/- per share at the time of
hearing of the appeal)- a fact not denied. In these circumstances, the petitioners, In the
opinion of the court, established prima facie a strong case on the merits of their
application, with respect to the amounts they paid towards shares that were not allotted.
There is also a statutory basis for this-Section 42 of the Companies Act and Section 65 of
the Contract Act,"
13. According to the learned counsel the aforesaid observations would show that amount paid for
share subscription money became payable in view of section 42 of the Companies Act, 2013 read with
section 65 of the Contract Act. The aforesaid observation cannot be accepted to have satisfied the
1307
definition of 'Financial Creditor' as given in section 5(7) and 5(8). The Division Bench of Delhi High
Court was not dealing with the case of Insolvency and Bankruptcy Code. Moreover, it is one thing to
show that the amount become payable but it is quite another to conclude that the financial debt was
advanced for time value of money whereas the share subscription amount was paid for allotment of share.
The allotment in fact was made to unregistered partnership firm at that time which remains a matter of
dispute on account of refusal of the ROC to register the transfer. The e-mail exchange between the parties
suggests that the dead lock with regard to transfer to the petitioner after registration, or their LLP
remained pending. It has not been mutually decided. We have at hand a situation whereas 1CCRPS' were
allotted to unregistered partnership firm and the petitioner did not succeed to persuade the ROC as it was
an unregistered partnership firm. Thereafter it got itself registered and also floated an LLP. The
respondent 'Corporate Debtor' offered for allotment but the petitioner refused as the price of ‘CCRIDS1
has decreased. Therefore no reliance could be placed on those observations of Delhi High Court which do
not have any relevance to the issue raised before us under the Insolvency and Bankruptcy Code.
14. As a sequel to the above discussion, this petition fails and the same is dismissed. The dismissal of
the petition would not constitute any bar for the petitioner — Financial Creditor to avail any other remedy
in accordance with law, In that case the observations made by us on any other aspect would not constitute
an expression of opinion on the merit of controversy
15. We leave the party to bear their own cost.
1308
PRINCIPAL BENCH
C.P. (I.B.) No. 378/7/NCLT/PB/2017
Applicants: Alchemist Asset Reconstruction Co. Ltd.

Vs.
Respondent: Moser Baer India Ltd.
Judges/Coram:
Counsels:
For Respondents/Defendant: Ms. Varsha Banerjee, Learned Advocate
ORDER
The 'Financial Creditor'- Alchemist Asset Reconstruction Co. Ltd (AARC) has filed the instant
application under Section 7 of the Insolvency and Bankruptcy Code, 2016 (for brevity the Code) with a
prayer to trigger the Corporate Insolvency Resolution Process in the matter of Moser Baer India Ltd. It is
appropriate to mention that the 'financial creditor' is a body corporate that acquired the secured debt of
State Bank of Hyderabad (now merged with State Bank of India) vide assignment deed dated
30.03.2016. The 'financial creditor'/Applicant was incorporated on 19.09.2002 and its identification
number is U74999DL2002PLC117052 and has its registered office at D-54, First Floor, Defence Colony,
New Delhi-110024
2. Mr. Manish Nihalani, Assistant Vice-President has been authorised by the Board of Directors of
AARC vide Resolution passed in the Board Meeting held on 30.12.2016 inter-alia to file the requisite
application before the Hon'ble Tribunal. Copy of Board of Directors' Resolution dated 30.12.2016 is
attached as Annexure 1.
3. The Corporate Debtor- M/s Moser Baer India Ltd. (MBIL) was incorporated on 21.03.1983. The
identification number of the Corporate Debtor is L51909DL1983PLC015418 and its registered
office is situated at 43-B, Okhla Industrial Estate, New Delhi- 110020. Its nominal share capital of equity
shares is Rs. 1250.00 Crores (1,25,00,00,000 shares of Rs. 10 each) and paid-up share
capital is Rs. 221.77 Crores (22,17,65,983 shares of Rs. 10 each).
1309
1 TOTAL AMOUNT Total amount of debt disbursement by State Bank of

OF DEBT Hyderabad (now merged with State Bank of India) to
GRANTED DATE(S) the Corporate Debtor is as under:
OF
(Rs. In Crores)
DISBURSEMENT T
S.No. Particulars Date of Amount
Disbursement Disbursed
1. Corporate 25.09.2009 50.00

Loan
Agreement
2. Working 31.05.2010 50.00

Capital (available in
Facility parts upto
2012)
Vide Master Restructuring Agreement dated

27.12.2012, the debt disbursed was restructured as
under:
(Rs. In Crores)
S.No. Particulars Amount

Restructured
1. Term Loan 50.00
2. Fund Based Working 36.00

Capital Limits (FWCL)
3. Non-Fund Based 18.00

Working Capital
1310
Limits (NFWCL)
4. Funded-Interest Term 6.88

Loan (FITL)
5. Working Capital Term 5.42

Loan (WCTL)
6. Funded-Interest 0.57
Working Capital Term
Loan (FIWCTL)
7. New Term Loan 2.60
(not disbursed)
However, as the Corporate Debtor could not honour the

obligations as per the MRA, lenders decided to exit the
matter of the Corporate Debtor from CDR on
10.10.2016. Against the above debt, the total
outstanding of the Corporate Debtor to the applicant as
on 10.09.2017 amount to Rs. 1,85,37,13,958/-.
The detailed working by AARC for computation of amount outstanding as on 10.09.2017 along
with accounts statement has been given as Annexure-3.
5. As per Part-IV of the Application, the amounts claimed to be in default and the dates on which
the default occurred are mentioned as below: -
i. Rs. 1,85,37,13,958/- (Rupees One Hundred Eighty-Five Crores Thirty-Seven Lakh Thirteen
Thousand Nine Hundred Fifty-Eight Only) as on 10.09.2017 along with future interest at contractual
rate.
ii. Account of the Company acquired by AARC became NPA with effect from 26.11.2014 and that
the said date may be considered as date of default. From the said date, total number of days of default as
on 10.09.2017 are 1020.
iii. After the account of the company became NPA, AARC issued recall notice dated 04.04.2017 to
the Corporate Debtor giving it time of 15 days for making payment of the dues, however, again
Corporate Debtor defaulted in making payment of the dues demanded.
1311
iv. Working by AARC for computation of amount outstanding as on 10.09.2017 along with the
account statements is enclosed as Annexure 3.
The computation of claim as on 10th September 2017, and computation of days of default is given
below:-
Computation of Claim as on September 10, 2017
Moser Baer India Limited
S. No. Account Account No. Amount
1 Term Loan 62271047709 85,85,90,910.19
2 Cash Credit 62132691020 90,32,65,284.45
3 WCTL 62271050802 6,75,59,395.23
4 FITL-I 62270986524 2,23,91,383.44
5 FITL-II 62271012925 19,06,984.89
Total 1,85,37,13,958.21
Total no of Days of Default from declaration of NPA 26-11-2014 till 10-09-2017, 1020 days.
Moser Baer India Limited
S.No. Year Start Date End Date No. of Days
1 2014 26-Nov-14 31-Mar-15 125
2 2015 31-Mar-15 31-Mar-16 366
3 2016 31-Mar-16 31-Mar-17 365
4 2017 31-Mar-17 10-Sep-17 164
1020
1312
The details of security held by on pari passe basis by the Financial Creditor / Applicant along with other
CDR lenders have been filed as Annexure-4. These arc detailed below:
Secured Assets
Primary Security: -
For Term Loan and FITL
 First part passu charge on fixed assets of the company.

 Second pari passu charge on the current assets
For Working Capital Facilities.
 First pan passu charge over current assets.

 Second part passu charge over entire (present and future) fixed assets of the company.
Collateral Security- lst pari passu charge
 Negative lien on SEZ land owned in Chennai by subsidiary named Moser Baer Infrastructure 85
Developers Ltd. (MBIDL).
 Pledge of 100% of promoters' shareholding in Moser Baer India Limited.
 Pledge of shares of MBIDL
Details of properties
The details of properties Equitably Mortgaged by M/s. Moser Baer India Limited, in favour of Centbank
Financial Services Limited, Security Trustee
i. Plot No.- 119-124, Block-A, Sector-80, Noida. admeasuring 12,464.37 Sq. Meters
ii. Plot No.-125, Block-A, Sector-80, Noida admeasuring 672 Sq. Meters.
iii. Plot No.-162, Block-A, Noida admeasuring 3478.84 Sq. Meters
iv. Plot No.-164, Block-A, Sector-80, Noida admeasuring 38,218.28 Sq. Meters
v. Plot No.-164 A, Block-A, Sector-80 Noida admeasuring 4024.00 Sq. Meters
vi. Plot No.- 66, Udhyog Vihar, Sector Ecotech-II, Greater Noida admeasuring 2,70,201.16 Sq.
Meters
vii. Plot No.- 66, Noida Special Economic Zone, Noida admeasuring 3937.50 Sq. Meters
viii. Office premises No. 510, Maker Chamber-V, Nariman Point, Mumbai-400 021 admeasuring 600
Sq. ft.
1313
Besides the aforementioned assets the loans are inter-alia secured by,
Personal Guarantee from:
1. Shri Deepak Puri
2. Mrs. Neeta Puri
Corporate Guarantee from:
1. Moser Baer Infrastructure 86 Developers Limited

43B, Okhla Industrial Estate
New Delhi-110020.
6. As per Part-V of the application the total estimated value of the security held by all the lenders of
the Company as per estimate made by AARC is Rs. 271.85 Crores. Copies of Certificates of Registration
of Mortgage and of Modification of Mortgages issued by Registrar of Companies, New Delhi have also
been enclosed with the Application as Annexure 5 (Cony).
The financial creditor/Applicant has also placed the copies of the financial contracts with respect to the
facilities given by the consortium lenders including State Bank of Hyderabad (now merged with State
Bank of India), now held by AARC are as Annexure 6 to 54 with the Application as Proof of Existence of
Debt.
7. The 'financial creditor' has placed on record an overwhelming amount of evidence to prove the
amount advanced to the Corporate Debtor.
8. Copies of entries in a Banker's Book in accordance with the Bankers Books Evidence Act, 1891
(18 of 1891) have also been filed. The entries in books of accounts of State Bank of Hyderabad (now
merged with State Bank of India) are as follows:
(a) Term Loan (TL) (A/c No. 62108454191) - 25.09.2009 to 16.02.2013
(b) Restructured Term Loan (TL) (A/c No. 62271047709) - 16.02.2013 to 30 03.2016
(c) Working Capital (WC) (A/c No.- 62132691020) - 01.06.2010 to 30.03.2016
(d) Working Capital Term Loan (WCTL) (A/c No. 62271050802) 16.02.2013 to 30.03.2016
(e) Funded-Interest Term Loan 1 (FITL 1) (A/c No. 62270986524) - 16.02.2013 to 30.03.2016
(f) Funded-Interest Working Capital Term Loan 2 (FITL 2) (A/c No.- 62271012925) - 16.02.2013 to
30.03.2016
1314
Copy of State Bank of Hyderabad's (now State Bank of India) consent letter dated 30.03.2016 to AARC
under section 5 of the SARFAESI Act wherein the Bank has given its consent to AA.RC for seeking
substitution of its name in place of bank's name in all the pending legal proceedings are enclosed as
Annexure 55.
Copy of Statement of Account of MBIL prepared in the books of .P.,A.R.0 from 19.03.2016 till
10.09.2017 is already enclosed as if Annexure 3.
9. For the purpose of providing the existence of financial debt, the amount of debt and date of
default, in addition to the order documents attached along with this application, the following additional
documents are also attached:
i. Copy of State Lank of Hyderabad's (now State Bank of India) letter dated 12.04.2016 to MBIL
informing about the assignment of dues of State Bank of Hyderabad (now State Bank of India) in favour
of AARC is enclosed as Annexure 56,
ii. Copies of entries in the Books of State Bank of Hyderabad (now State Bank of India) in
accordance with Bankers Book Evidence Act, 1891 with respect to the loan facilities granted by it to
MBIL is enclosed as Annexure 57.
iii. Copy of the Certificates obtained from Central Registry of. Securitization Asset Reconstruction
8s Security Interest of India on various dates showing the security interest to secure the loans to MBIL
created in favour of Centbank Financial. Services Limited as Security Trustee for lenders including State
Bank of. Hyderabad (now merged with State Bank of India) is enclosed as Annexure 58.
iv. Copy of the letter dated 10.10.2016 issued by CDR Cell informing the lenders that the account of
the corporate debtor stands exited from CDR system on account of failure of approved restructuring
package is enclosed as Annexure 59.
v. Copy of the Recall Notice dated 04.04.2017 issued by AARC to MBIL and its guarantors for
recall of the loan facility is enclosed as Annexure 60.
vi. Copy of the Notice dated 13.09.2017 issued by Alchemist Asset Reconstruction Company
Limited (AARC) to MBIL 85 its guarantors under section 13(2) of the Securitization and Reconstruction
of Financial Assets and Enforcement of Security Interest (SARFAESI) Act, 2002 along with the
corrigendum dated 14.09.2017 is enclosed as Annexure 61.
vi. Audited Balance Sheet of MBIL as on 31.03.2017 downloaded from the website of the Corporate
Debtor is enclosed. as Annexure 62. On page 103 of the said balance sheet (on Page No. 1180 of the
1315
application), in Note No. 45, there is an admission by the Corporate Debtor of the existence of default to
its lenders.
viii. The Company was registered with Hon'ble BIFR vide Registration No, 49/2014 on 16.09.2014.
However, subsequently on notification of provisions of Sick Industrial Companies (Special Provisions)
Repeal Act, 2003 with effect from 01.12.2016, the reference of the Company with Hon'ble BIFR got
abated. Copy of the last order of the Hon'ble BIFR dated 17.02.2015 is enclosed as Annexure 63.
ix. Prcof of Service to Corporate Debtor is enclosed as Annexure 64.
10. The Learned Counsel for the Corporate Debtor accepted the notice of the application on
28.09.2017 and stated before us at the hearing that filing of reply would not be necessary. Thus, it is
apparent that the Corporate Debtor does not oppose the application of the Financial Creditor filed u/s 7 of
IBC and accordingly has nothing to say in respect of commission of default.
11. The,. 'financial creditor has proposed the name of Devendra Singh, Director Witworth insolvency
Professionals Pvt. Ltd., 93, DDS, Shanker Road, New Rajinder Nagar, New Delhi-
110060, email-id:- cicvsi,ri.F112006(am, registration no.- IBBI/IPA-002/IPIN0000112016-17/10001 as
the Interim Resolution Professional in Part-III of the Application. Copy of the Consent Letter from
Interim Resolution Professional in Form-2 is enclosed as Annexure 2.
He has also made declaration and filed a written communication dated 19.09.2017 in Form-2 in
terms of Rule 9(1) of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules,
2016, According to the declaration made by Shri Devendra Singh. no disciplinary proceedings are
pending against him and he is not serving as a Resolution Professional in any other proceedings. It is also
stated in the communication that he is eligible to be appointed as Resolution Professional in respect of the
Corporate Debtor in accordance with provisions of the Insolvency and Bankruptcy Board of India
(Insolvency Resolution Process for Corporate persons) Regulations, 2016. He has also stated in the
written communication that he is not a related party either of the Financial Creditor or the Corporate
Debtor. Accordingly, he satisfies the requirement of Section 7 (3) (b) of the Code.
12. For the reasons aforementioned, this petition is admitted. Shri Devendra Singh who is duly
registered with Insolvency and Bankruptcy Board of India IBBIJIPA-002/1PN00001/2016- 17 /10001 is
hereby appointed as an Interim Resolution Profession al .
1316
(a) the institution of suits or continuation of pending suits or proceeding against the corporate debtor
other authority;
(b) Transferring encumbering, alienating or disposing of by the c3rporate debtor any of its assets or
any legal fight beneficial interest therein;
respect of :LI3 property, including any action under the Securitisation Reconstruction of Financial Assets
and Enforcement of Security Interest Act, 2002;
(d) the recovery of ,Jay property by an owner or lessor where such property is occupied by or in the
period.
Sections 15, 17, 18, 19, 20 & 21 of the Code and transact proceedings with utmost dedication, honesty
and strictly in accordance with the provisions of the 'Code', Rules and. Regulations. It is further made
clear that all the personnel connected with the Corporate Debtor, its promoters or any other person
associated with the Management of the Corporate Debtor are under legal obligation under Section 19 of
the Code to extend every assistance and cooperation to the Interim Resolution Professional as may be
required by him in managing the day to day affairs of the 'Corporate Debtor'. In case there is any
violation, the Interim Resolution Professional would be at liberty to make appropriate application to this
Tribunal with a prayer for passing, an appropriate order. The Interim Resolution Professional shall be
under duty to protect and preserve the value of the property of the 'Corporate Debtor' as a part of its
obligation imposed by Section 20 of the Code and perform all his functions strictly in accordance with the
provisions of the Code.
Corporate Debtor at the earliest possible but not later than seven days from today.
1317
1318
PRINCIPAL BENCH
C.P. (I.B.) No. 272/7/NCLT/PB/2017
Applicants: Central Bank of India

Vs.
Respondent: Moser Baer Solar Ltd.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Ms. Reema Khorana & Mr. Kartik Rathi, Learned Advocates
For Respondents/Defendant: Ms. Varsha Banerjee, Learned Advocate
ORDER
The 'Financial Creditor'-Central Bank of India has filed the instant application under Section 7 of
the Insolvency and Bankruptcy Code, 2016 (for brevity 'the Code') with a prayer to trigger the Corporate
Insolvency Resolution Process in the matter of Moser Baer Solar Ltd. It is appropriate to mention that the
`financial creditor' is a body corporate constituted by and under the Banking Companies (Acquisition and
Transfer of Undertakings) Act, 1970 (for brevity 'Banking Companies Act'). The 'financial creditor' has its
head office at Chandermukhi, Nariman Point, Mumbai-400021 and its branch office is at Corporate
Finance Branch, Jeevan Tara Building, 5 Parliament Street, New Delhi-110001.
2. Mr. R. Radhakrishnan, Assistant General Manager has been authorized by the power of attorney
dated 09.01.2017 (Annexure1) to sign and submit the petition.
3. The Corporate Debtor- Mi s Moser Baer Solar Ltd. was incorporated on 06.03.2007. The
identification number of the Corporate Debtor is U74999DL2007PLC160162 and its registered office is
situated at 43-B, Okhla Industrial Estate, New Delhi-110020. Its paid-up share capital is Rs. 982.50 crores
(Rupees Nine Hundred and Eighty-Two Crores and fifty lass) as per the audited balance sheet for
financial year 2015-16 as mentioned in Part-II of the application.
1319
1. TOTAL AMOUNT OF Initially in September, 2010, the Financial

DEBT GRANTED DATE(S) Creditor had sanctioned fund based working
OF DISBURSEMENT capital limits of Rs. 25.00 Crore and term loan
of Rs. 50.00 Crore. The Creditor allowed a
corporate debt restructuring in March, 2013,
which subsequently failed and the concessions
granted were withdrawn.
Total amount of debt granted to the Corporate

Debtor from time to time is more particularly
described in Annexure 1-A.
The aforesaid details would show that in September, 2010, financial creditor had sanctioned
funds based on working capital limits of Rs. 25 crores and term loan of Rs. 50 Crores. Subsequently, a
Corporate Debt Restructuring was allowed in March, 2013, which subsequently failed and the
concessions granted were withdrawn. The details concerning dates of disbursement and the total amount
of debt granted to the Corporate Debtor from time to time have been annexed as Annexure 1-A.
5. As per the averments of the 'Financial Creditor', the total amount in default is claimed to be Rs.
114,03,90,617.00 (Rupees One Hundred and Fourteen Crores Three Lacs Ninety Thousand Six Hundred
and Seventeen Only) as on 31.07.2017. It is stated that the account was classified as NPA on 30.12.2015.
The detailed computation of amount of default and dates of default have been placed on record in
Annexure 1-B.
6.
The 'financial creditor' has placed on record overwhelming evidence to prove the amount
advanced. The details of the security held by, or created for the benefit of 'financial creditor'-- Central
Bank of India have been given in Part V of the application and in Annexure 1-C which are set out below:
-
1320
I. Particulars of Security:
A. Primary Security.
1. Term Loan/WCTL/PITL:
1. First pari passu charge on the entire fixed assets of the company.
2. First pari passu charge on property no. 66B, Udyog Vihar, Phase-II, Greater Noida, Uttar
Pradesh, together with all buildings, erections, godowns and constructions of every description which are
standing, erected or attached to the earth or permanently fastened to anything attached to earth.
3. First pari passu charge on Plant 86 Machinery.
4. Second charge on the current assets of the company.
2. Working Capital
1. First pari passu charge on the entire current assets of the company including book debts and
stocks.
2. Second pari passe charge on the entire fixed assets of the company.
B. Collateral Security:
1. Pledge of 51% of issued and paid up equity share capital of Company.
II. Date of creation of security:
The security was created on various dates viz, 15.06.2010, 09.09.2010, 07.03.2011, 12.12.2014,
28.08.2015 on pari passe basis with, other banks, when the corporate debtor 8; its guarantors executed the
security documents viz., Deeds of Hypothecation, deeds of personal guarantee, share pledge agreements
& deed of mortgage for and on behalf of the corporate debtor with the lead bank 86 Security Trustee
under consortium of Financial Creditors.
7. The Financial Creditor has also placed on record details of the creation of charge and registration
of same with ROC on 27.05.2014. The latest and complete copy of the financial contract of the Financial
Creditor with the Corporate Debtor has been filed as Annexure 1-D. This also includes the letter of
Financial Creditor dated 03.09.2010 sanctioning the credit facilities to the Corporate Debtor and the term
loan agreement between the Corporate Debtor and the Financial Creditor dated 15.09.2010. A copy of the
letter of hypothecation dated 15.09.2010 has also been attached along with other documents such as deed
of hypothecation to secure LC, hypothecation agreement for bank guarantee etc. The complete list of
financial contract reflecting all amendments and waivers to date has been placed at page 33 of the
application and the corresponding documents are placed as Annexure 1-D.
1321
The record of default as available with credit information company i.e. CIBIL report dated 31.07.2017
has also been filed as Annexure 1-E. Copies of entries in Banker's book in accordance with the Banker's
Book Evidence Act, 1891 have been filed as Annexure 1-F.
8. The 'financial creditor' has then attached Annexure 1-G that contains a list of other documents to
the application to prove the financial debt, the total amount due and the date of default. These documents
are as under: -
1. Notice u/s 13(2) of SARFAESI Act by Financial Creditor.
2. Reply to the notice u/s 13(2) of SARFAESI Act by the corporate debtor.
3. Demand notice dated 25.072017 seeking repayment of dues from corporate debtor.
4. Debit balance confirmation from corporate debtor dated 21.01.2017.
9. The Learned Counsel for the Corporate Debtor accepted the notice of the application on
28.09.2017 and stated before us at the hearing that filing of reply would not be necessary. Thus, it is
apparent that the Corporate Debtor does not oppose the application of the Financial Creditor filed u/s 7 of
IBC and accordingly has nothing to say in respect of commission of default.
10. The 'financial creditor' has proposed the name of Ms. Ritu Rastogi, CA as an Insolvency
Professional. Her registration number is IBBI/IPA-001/1P-00204/2017-18/10393. She has also made
declaration and filed a written communication dated 01.08.2017 in Form-2 in terms of Rule 9(1) of the
Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016. According to the
declaration made by Ms. Ritu Rastogi, no disciplinary proceedings are pending against her and she is
serving as a Resolution Professional in three proceedings. It is also stated in the communication that she
is eligible to be appointed as Resolution Professional in respect of the Corporate Debtor in accordance
with provisions of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for
Corporate persons) Regulations, 2016. She has also filed an affidavit dated 01.08.2017 certifying that she
is not a related party either of the Financial Creditor or the Corporate Debtor. Accordingly, she satisfies
the requirement of Section 7 (3) (b) of the Code.
11. For the reasons, aforementioned this petition is admitted. Ms. Ritu Rastogi who is duly registered
with Insolvency and Bankruptcy Board of India IBBI/IPA-001/IP-00204/2017- 18/10393 is hereby
appointed as an Interim Resolution Professional.
1322

period.
in managing the day to day affairs of the 'Corporate Debtor'. In case there is any violation, the Interim
20 of the Code and perform all his functions strictly in accordance with the provisions of the Code.
PRINCIPAL BENCH
1323
C.P. (I.B.) No. 245/7/NCLT/PB/2017
Applicants: Indiabulls Housing Finance Limited

Vs.
Respondent: Deltronix India Private Limited
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Sumesh Dhawan & Ms. Vatsala Kak, Learned Advocates
For Respondents/Defendant: Mr. Biswajit Das, Mr. Akhilesh & Ms. Anjali Verma, Learned Advocate
ORDER
The 'Financial Creditor'-Indiabulls Housing Finance Limited has filed the instant application
under Section 7 of the Insolvency and Bankruptcy Code, 2016 (for brevity The Code') with a prayer to
trigger the Corporate Insolvency Resolution Process in the matter of Deltronix India Private Limited (for
brevity 'the Corporate Debtor). It is appropriate to mention that the 'financial creditor' is a company
incorporated under the Companies Act, 1956 and regulated by the National Housing Rank (NHB). The
'financial creditor' was incorporated. on 10.05.2005 and was assigned identification number CIN No.
L65922DL2005PLC136029. It has its registered office at M-62 86 63, First Floor, Connaught Place, New
Delhi-110001.
2. Mr. Devbrat Mitra has been authorized by the Board Resolution dated 07.07.2017 (Annexure A-
1) to sign and submit the petition.
3. The Corporate Debtor-Deltronix India Limited was incorporated on 26.07.1984. The

identification number of the Corporate Debtor is CIN-US1909DL1984PLC018787 and its registered
office is situated at A-323, Santa Vihar, New Delhi-110076. Its authorised. share capital is Rs.
40,00,00,000/ Rupees Forty Crores) and the paid up share capital is -Rs. 33,93,11,500/- (Rupees Thirty
three Crores Ninety Three Lacs Forty One Thousand Five Hundred and Four) as per the master data
available on the website of Ministry of Corporate Affairs as well as Memorandum of Association of the
Corporate Debtor. A copy of the master data and the Memorandum of Association along with certificate
of incorporation relating to Corporate Debtor has been placed on record (Annexure A-3(Colly).
1324
4. The Financial Creditor has proposed the name of Shri Sajeve Bhushan Deora, EC 13, Inderpuri,
Delhi -110002, email id saieve.deora(cD,deora.corn. His registration number is IBBI /IPA001/IP-
00317/2017-18/ 10581. A written communication dated 28.07.2017 in terms of Rule 9(1) of the
Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 has also been placed on
record (Exhibit-?). There is a declaration made by him that no disciplinary proceedings are pending
against him in Insolvency and Bankruptcy Board of India or elsewhere. In addition, further necessary
disclosures have been made by Mr. Sajeve Bhushan Deora as per the requirement of the IBBI
Regulations. Accordingly, he satisfies the requirement of Section 7 (3) (b) of the Code.
5. In the application, the Financial Creditor has given the de its of financial debt granted to the

1. TOTAL AMOUNT DEBT GRANTED Indiabulls Housing Finance Ltd. granted
DATED(S) OF DISBURSEMENT various loans to the Corporate Debtor as
follows:-
a) Loan for an amount of Rs. 16,09,57,000/-
(Rupees Sixteen Crores Nine Lacs Fifty Seven
Thousand Only) vide Agreement dated
18.11.2010. (Loan 1)
Date of Disbursal: 24.11.2010
b) Loan for an amount of Rs. 7,55,66,552/-
(Rupees Seven Crores Fifty Five Lacs Sixty
Six Thousand Five Hundred and Fifty Two
Only) vide Agreement dated 23.08.2012.
(Loan 2)
c) Loan for an amount of Rs. 4,97,32,752/-
(Rupees Four Crores Ninety Seven Lacs Thirty
Two Thousand Seven Hundred and Fifty Two
Only) vide Agreement dated 27.06.2013.
(Loan 3)
d) Loan For an amount of Rs. 1,38,00,000/-
(Rupees One Crore Thirty Eight Lacs Only)
1325
vide Agreement dated 21.07.2015. (Loan 4)
e) Loan for an amount of Rs. 1,00,00,000/-
(Rupees One Crore Only) vide Agreement
dated 31.12.2013. (Loan 5)
The total loan granted by the Applicant to the
Corporate Debtor is Rs. 31,00,56,304/-
(Rupees Thirty One Crores Fifty Six Thousand
Three Hundred and Four only)
The aforesaid details would show that vide loan No. 1 to 5 a total loan of Rs. 31,00,56,304/-
(Rupees Thirty One Crores Fifty Six Thousand Three Hundred and Four only) was granted to the
Corporate Debtor on different dates. Copies of the loan agreements including the details concerning dates
of disbursement have been annexed (Annexure A-4, A-5, A-6, A-7 8s A-8) respectively,
6. As per the averments of the 'Financial Creditor', the principal amount in default under aforesaid
five loan agreements as on 21.07.2017 is claimed to be Rs. 13,01,14,268/- (Rupees Thirteen Crore One
Lakh Fourteen Thousand Two Hundred Sixty Eight) and the particular date of default for each loan
agreement is 27.07.2017, A copy of computation of amount of default and days of default has been placed
on record (Annexure A-9),
7. The 'financial creditor' has placed on record an overwhelming evidence to prove the default. The
details of the security held by, or created for the benefit of 'financial creditor Indiabulls Housing Finance
Limited have been given in Part V which are set out below:-
(i) Deed of Mortgage (without possession) dated 6.12.2010 over property bearing Farm House, M
66-67 Block, Jonapur Village, Plot No Opp Neem Karoli, Ashram Mandi Road, Jonapur Delhi - 110047
annexed and marked as Annexure A-10.
(ii) Share Pleadge Agreement - pledging 2,00,000 shares held in Sonia & Co Private Limited annexed
and marked as Annexure A-11.
(iii) Declaration of creation of equitable mortgage over the property by the borrower. (Property being -
Farm House, M 66-67 Block, Jonapur Village, Plot No Opp Neem Karoli, Ashram Mandi Road, Jonapur,
Delhi - 110047) annexed and marked as Annexure A-12 (Cony)
1326
8. The estimated value of the aforementioned property bearing Farm House, M 66-67 Block,
Jonapur Village, Plot No Opp Neem Karon., Ashram Mandi Road, Jonapur Delhi - 110047 is
approximately Rs. 31,71,10,800/- (Rupees Thirty One Crore Seventy One Lacs Ten Thousand Eight
Hundred Only). In addition to aforesaid property the estimated value of security of 2,00,000 shares at par
i.e. Rs. 10/- per share is approximately Rs. 20,00,000/- (Rupees Twenty Lacs Only).
classification report of the `Corporate Debtor' issued by the TransUnion CIBIL dated 27,07.2017
(Annexure A-13).
a) Legal Notices dated 21.07,2017 for recalling loan facilities sanctioned to the Corporate Debtor are
annexed and marked as Annexure A-14 (Cony).
b) Copies of Statement of Account and Foreclosure of the Loan Facilities of the Corporate Debtor
arc annexed and marked as Annexure A-15 (Colly.)
11. Mr. Dhawan, learned counsel for the petitioner has argued that under five agreements loan was
advanced to the Corporate Debtor and it was specifically mentioned in the loan agreement that delay in
payment of EMI was not to require issuance of notice or reminder and it was to render a Corporate Debtor
liable to pay additional rate of interest. The liability of the borrowers is stipulated to be joint and several.
In that regard learned counsel has drawn our attention to Article 2.10 and 2.11 of the loan agreement. A
reference has also been made to Article 6.2 to argue that after the notice or lapse of time an event of
default is deemed to have happened and the Financial Creditor was to give notice to the Corporate Debtor
in writing and thereupon the entire principal amount of the loan together with interest was to become due
and payable. According to learned counsel the total amount of default due to the Financial Creditor as on
21.07.2017 is over Rs. 13 crores as is evident from column II of part IV of the proforma application and
the date of default for each loan is 27.07.2017. The computation is also available (Annexure A-9). The
present application was filed on 01.08.2017 by asserting that the default has occurred on 27.07.2017 and
the days of default was only one day. Learned counsel has also pointed out that the loan agreements were
executed and loan amount was disbursed on 21.07.2015 which were payable by 21.07.2017 through EMI.
On account of default legal notice dated 21.07.2017 was issued recalling the loan facility sanctioned to the
Financial Debtor, He has drawn our attention to pares 6 82-, 8 of the notice dated 21.07.2017 where the
event of default and the letters written by the Financial. Creditor on 13.02.2017 and 10.03.2017 have been
mentioned. Those two paras 68z, 8 reads as under:-
1327
"6. That, you have been irregular in your payment of EMI's, and you have lastly made the
part payment on 30.06.2017 and you have failed to repay instalments as per terms of the
loan agreement. 111FL vide its letters dated 13.02.2017 8i, 10.03.2017 had called upon
the Addresses No. 1 to 6 to regularize the repayments. However, despite repeated
reminder both verbal as well as written, IHFL did not receive the payment of outstanding
dues payable in accordance with the Loan Agreement.
7. .................
8. In view of the recall of the Loan Facility you the Addresses No. 1 to 6 are called
upon to pay the entire outstanding amount of Rs. 4,7500,048/- (Rupees Four Crore
Seventy Five Lakhs Forty Eight Only) by way of Outstanding Principal and interest
61121.07.2017 is due and payable by you along with future interest @ 16.90% per annum
w.e.f. 22.07.2017 (outstanding Amount") till actual date of payment within 4 days from
the date of issue of this notice, together with any interest, penal interest, Cheque
Bouncing Charges, cost and other charges which may fall due, failing which the Secured
Creditor will take remedy under civil as well as criminal law to recover the loan amount."
12. Mr. Dhawan, learned counsel has also pointed out that all the requirements of Section 7 of the
Code have been met. The Interim Resolution Professional has been duly proposed in part II1 of the
application i.e. Mr. Sajeve Bhushan Deora who has filed his declaration.
13. Mr. Biswajit Das, learned counsel for the Corporate Debtor opposed the admission and has argued
that basic object of Insolvency and Bankruptcy Code is to explore a negotiated resolution with pre-
supposed compromise offer from the Financial Creditor as a penultimate exercise prior to triggering of
Corporate Insolvency Resolution Process and that such a harsh process of CIRP should not be triggered at
the drop of a hat and for every kind of default particularly when the Financial Debtor is solvent. In
essence the argument of Mr. Das is that a fair opportunity to reach an amicable settlement should be
explored before actually triggering the CIRP. In that regard he has placed reliance on para 71 of the
judgment of Honble the Supreme Court rendered in the case of Mardia Chemicals Limited v. Union of
India, (2004) 4 SC C 311. Learned counsel has emphasized that in the present case only because of delay
of one day the petition has been filed to trigger the CIRP. He has also referred to paragraphs 2 and 6 of
affidavit dated 16.08.2017 filed by the Financial Debtor to show that all efforts have been made by the
Financial Creditor to devastate the debtor without caring for the long relationship existing for more than
seven years. According to the learned counsel the 'Financial Debtor' has been paying in bonafide manner
all the instalments and as the petition has been filed on the basis of delay of one day the same is premature
and is liable to be dismissed. This is all evident from the letter dated 27.07.2017 for foreclosure of loan
1328
account sent by the Financial Creditor. Learned counsel has also referred to clause 6.2 of the loan
agreement and claimed that the same shall be read with clause 2.1 which would mean that adequate notice
has to be issued and no CIRP be triggered without first exhausting the possibility of settlement
particularly when the Financial Debtor is a solvent entity. Learned counsel has also referred to the
affidavit dated 05.10.2017 to bank upon exchange of e-mails dated 06.09.2017 (Annexure-G), 24.09.2017
86 26.09.2017 and argue that the parties had resolved their dispute. The Financial Debtor accordingly was
to pay a sum of Rs. 1.40 crore towards foreclosure to show their bonafide. It was also agreed that as part
of the same arrangement, Financial Debtor was to begin making payment of Rs. 35 lakhs w.e.f.
November, 2017 till the completion of foreclosure of all accounts. In that direction e-mail was exchanged
on 24.09.2017 when a request was made that two cheques which were to be deposited on 17.09.2017 may
be deposited after 15 days. However, both the cheques were presented and they were dishonoured which
caused utter embarrassment to the Financial Debtor. A reference has been made to the e-mail dated
27.09.2017 (Annexure-I). It has also been submitted that the Financial Debtor is passing through
temporary financial constraints on account of back to back default committed by its own debtor which has
lowered its own revenue. He has also referred to huge foreign direct investment which is likely to come to
the Financial Debtor and the same can be utilised for payment of the total amount of foreclosure to the
Financial Creditor.
14. We have thoughtfully considered the submissions made by the learned counsel for the parties and
are of the view that the instant petition merits admission. It is established on facts that before taking
extreme steps of foreclosure on 21.07.2017 was taken the Financial Debtor has committed default on
more than one occasion. The aforesaid facts have been highlighted in paras 6 & 8 of the notice dated
21.07.2017 (supra). In the aforesaid paras the Financial Creditor has pointed out to the Financial Debtor
about irregularity in payment of EMI's and the last part payment made on 30.06.2017. He had failed to
repay instalments as per the terms of the loan agreement. A reference has also been made to the letter
dated 14.03.2017 when the Financial Debtor was called upon to regularize the repayment which has not
been done des the repeated reminders in writing as well as oral request sent by the Financial Creditor.
There is adequate notice with regard to breach of terms of the loan agreement and request made for
payment of defaulted EMI's on 14.03.2017. It was after more than four months that on 21.07.2017 the
loan amount has been recalled. The principles of natural justice as per clause 2.10 read with clause 6.2 of
the loan agreement stand adequately complied with. The bogey raised by the Financial Debtor with regard
to the breach of principles of natural justice by citing para 71 of the judgment rendered in the case of
Mardla Chemicals Limited (supra) would not survive for consideration in view of the aforesaid factual
backdrop. We are unable to conclude that the present petition is premature.
1329
15. It is also pertinent to mention that while the petition was pending we granted numerous
opportunities to the Financial Debtor for settlement with the Financial Creditor. In that regard
reference may be made to the interlocutory order dated 23.08.2017. According to the aforesaid order the
parties were given opportunity to reconcile all the loan accounts with each other and explore the
possibility of settlement of the accounts and the matter was to be disposed of on merits if such a
settlement is not reached. On 07.09.2017 the hearing was deferred to facilitate the settlement. Even we
delayed the dictation of this order as the Financial Debtor has been asking for time upto 15.10.2017 and
the order was reserved on 09.10.2017. There is no settlement insight despite the expiry of about six
weeks, therefore, the efforts of the Financial Debtor to enter into a settlement has not born any fruit and
we are not in a position to further delay the admission of the present petition. All this has been done in
order to avoid the triggering of Insolvency process so that the Financial Debtor may continue with his
enterprise and there is no demoralising effect. Alas! all these efforts are in vain. We find that there is
admission with regard to loan and its default. The Financial Creditor has also named the Interim
Resolution Professional and it satisfies all the requirements of Section 7 of the Code. Therefore, the
petition warrants admission and the same is hereby admitted.
admission of this application under Section 7 of the Code. We also declare moratorium in terms of Section
14 of the Code. The necessary consequences of imposing the moratorium flows from the provisions of
Section 14 (1) (a), (b), (c) & (d). Thus, the following prohibitions are imposed:
law, tribunal, arbitration panel or other authority,
(b) transferring, encumbering, alienating or disposing of by the corporate debtor any of its
(d) the recovery of any property by an owner or lessor where such property is occupied by
or in the possession of the corporate debtor."
1330
period.
in managing the day to day affairs of the 'Corporate Debtor'. In case there is any violation, the Interim
20 of the Code and perform all his functions strictly in accordance with the provisions of the Code, Rules
and Regulations.
1331
Hon’ble NCLT Principal Bench
By Hon’ble NCLT Ahemdabad Bench
AHMEDABAD BENCH
C.P. (I.B.) No. 11/7/NCLT/AHM/2017
Applicant: Vasanti Petro Chem Ltd.

VS
Respondent: Anil Ltd.
Judges/Coram:
Hon'ble Sh. Bikki Raveendra Babu, Member (J)
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Arjun Sheth
For Respondents/Defendant: Mr. Ashish Doshi
ORDER
Learned Advocate Mr. Arjun Sheth present for Petitioner/ Financial Creditor. Learned PCS Mr. Ashish
Doshi present for Corporate Debtor/ Respondent.
Application is filed by the Financial creditor seeking permission to withdraw CP (IB) no. 11/2017 on the
ground that there is a settlement between Financial creditor and Corporate debtor.
The said application is registered as IA 104/2017. Notice on the application given to the Financial
creditor.
Heard both sides arguments.
The petitioner is at the stage of hearing before admission. It appears there is a settlement between
Financial Creditor and Corporate debtor.
Financial Creditor is permitted to withdraw the petition. IA 104/2017 is allowed accordingly.
In view of the order passed in IA 104/2017, this CP (TB) no. 11/2017 is dismissed as withdrawn. No
order as to costs.
1333
By Hon’ble NCLT Ahmedabad Bench
AHMEDABAD BENCH
C.P. (I.B.) No. 18/7/NCLT/AHM/2017
Applicant: IDBI Bank Ltd.

VS
Respondent: Bhatia Global Trading Ltd.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Baiju Bhagat
ORDER
Learned Advocate Mr. Baiju Bhagat present for Financial Creditor/ Petitioner. None present for
Corporate Debtor.
Order pronounced in open Court. Vide separate sheet.
1. IDBI Bank Limited filed this Petition under Section 7 of The Insolvency and Bankruptcy Code, 2016
[hereinafter referred to as "the Code"] read with Rule 4 of The Insolvency and Bankruptcy (Application to
Adjudicating Authority) Rules, 2016 [hereinafter referred to as "the Rules"] seeking reliefs under Section
7(5)(a) and Section 13(1)(b) of the Code.
2. Bhatia Global Trading Limited is a Public Limited Company (hereinafter called as "Company") and
was incorporated on 28.8.1991 under the Companies Act, having its Registered Office at BCC House,
8/5, Manoramaganj, Navratan Bagh Main Road, Indore, Madhya Pradesh.
3. The Authorised Share Capital of the Company is Rs. 46,30,00,000/ -. The Paid-Up Share Capital of the
Company is Rs. 45,96,71,890/ -. The Main Object of the Company was to carry out the business of
trading of Coal. IDBI sanctioned Working Capital Limits aggregating to Rs. 75.60 Crores comprising of
Fund-based Limit of Rs. 5.00 Crores, and Non- Fund-based Limit by way of Inland Letter of Credit,
Foreign Letter of Credit/ Buyers Credit of Rs. 70.00 Crores and Review of Rupee Term Loan of Rs. 60.00
1334
Lakhs. Subsequently, Forward Contract Limit of Rs. 10.00 Crores was sanctioned for the purpose of
meeting Working Capital requirements aggregating to Rs. 85.00 Crores. The Company mortgaged its
properties and created Charge by way of Hypothecation over the moveables of the Company. The
Company also gave Irrevocable Corporate Guarantee for the financial assistance to the tune of Rs. 50.70
Crores granted and disbursed to Asian Natural Resources (India) Ltd., on 21.02.2009. The Company
availed Rs. 75.00 Crores and LER facility (outside consortium) of Rs. 10.00 Crores from time to time.
The Company also availed Fund-based Cash Credit Limit of Rs. 05.00 Crores. The Asian Natural
Resources (India) Ltd., has also availed sums aggregating to Rs. 50.70 Crores which was secured by
Corporate Guarantee of the Respondent Company
4. Inspite of repeated reminders given by the Petitioner Bank, Respondent Company did not choose to
repay the amounts. According to the Petitioner, the outstanding Principal amount is Rs. 68,90,36,417.64
ps. and interest and liquidated damages, expenses to the tune of Rs. 13,13,76,401.77 ps., totaling Rs.
82,04,12,819.41 ps. Petitioner Financial Creditor issued Demand Notice dated 17th February, 2017
calling upon the Respondent Company to pay the aforesaid amount within a period of 15 days. The notice
was duly served on the Respondent Company. Respondent Company, being a Corporate Guarantor, failed
and neglected to pay the amount due and payable by Asian Natural Resources (India) Ltd, in its capacity
as 'Principal Borrower'. Petitioner Bank issued a Notice dated 7th March, 2017 to the Respondent
Company calling upon them to pay forthwith an amount of Rs. 38,31,06,744.44 ps„together with interest
thereon with effect from February 18, 2017. The notice was served on the Respondent Company.
Respondent Company neither made payment nor gave reply. According to the Petitioner, Respondent
Company is liable to pay Rs. 82,04,12,819.41 ps., as 'Principal Borrower' and Rs. 38,31,06,744.44 ps. as
`Corporate Guarantor' to Asian Natural Resources (India) Ltd
5. IDBI Bank Ltd., filed this Petition on 9.5.2017 before the Registry of this Adjudicating Authority.
Proof of dispatch of copy of this Petition on the Corporate Debtor is filed
6. Petitioner Bank filed Deed of Hypothecation dated 17.3.2011; Notice of Invocation of Corporate
Guarantee dated 07.3.2017; Certificate of Registration of Mortgage Charges dated 17.3.2011; Modified
Certificate of Registration Charges dated 19.3.2011; Joint Working Capital Consortium Agreement dated
01.3.2011; Term Loan Agreement dated 17.3.2011; and Certificate under Bankers Books Evidence Act,
dated April 15, 2017. The Revival Letter dated 20.12.2013; Revival Letter dated 25.8.2016; and Balance
Confirmation Letter dated 02.4.2016 are filed before this Adjudicating Authority on 22nd May, 2017. The
above documents clearly establish existence of default to the Financial Creditor. The material on record
1335
clearly establish that a default has occurred. The claim is based on equitable mortgage and continuing
guarantee and Revival Letters. Hence, it is within time
7. From the material on record, it is clear that there is no disciplinary proceedings pending against the
Interim Resolution Professional, proposed by the Financial Creditor
8. This Petition was listed before this Adjudicating Authority on 12.5.2017. This Adjudicating Authority
directed the Financial Creditor to issue Notice of hearing. Financial Creditor, in compliance with the
directions of this Adjudicating Authority, issued Notice of date of hearing and filed proof of dispatch. On
17.5.2017, i.e., on the date of hearing, none remained present on behalf of the Corporate Debtor. The debt
due to the Financial Creditor is a 'Financial Debt'. The Petition is complete in all respects. The 'Financial
Debt' is defined in sub-section (8) of Section 5 of the Code
9. In view of the above discussions, this Petition is admitted under Section 7(5) of the Code. This
Adjudicating Authority is also appointing Company Secretary, Shri Nitin Hasmukhlal Parikh, residing at
7th Floor, 737, Fortune Tower, Sayajigunj, Vadodara-390005 (E-mail: nitin_parron2000@yahoo.corn)
having Registration No. IBBI/IPA-002/1P-N00058/2016-17/10110 as "Interim Resolution Professional"
under Section 13(1)(b) of the Code.
10. Section 13 of the Code says that after admission of the application under Section 7, the Adjudicating
Authority shall pass an order declaring a moratorium for the purposes referred to in Section 14. Therefore,
in view of the commencement of the Insolvency Resolution Process with the admission of this Petition
and appointment of the Interim Resolution Professional, this Adjudicating Authority hereby passes the
order declaring moratorium under Section 13(1)(a) prohibiting the following as laid down in Section 14
of the Code;
other authority;
1336
(i) The moratorium order in respect of (a), (b), (c) and (d) above shall not apply to the transactions
notified by the Central Government
(ii) However, the order of moratorium shall not apply in respect of supply of essential goods or services to
Corporate Debtor
(iii) The Petitioner shall also make public announcement about initiation of 'Corporate Insolvency
Resolution Process', as required by Section 13(1)(b) of the Code.
11. This order of moratorium shall be in force from the date of order till the completion of Corporate
Insolvency Resolution Process subject to the Proviso under sub-section (4) of Section 14.
12. This Petition is ordered accordingly.
13. Communicate a copy of this order to the Petitioner Financial Creditor, and to the Interim Insolvency
Resolution Professional, and to the Respondent Corporate Debtor.
1337
AHMEDABAD BENCH
C.P. (I.B.) No. 19/7/NCLT/AHM/2017

VS
Respondent: Asian Natural Resources India Ltd.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Baiju Bhagat
ORDER
Learned Advocate Mr. Baiju Bhagat present for Financial Creditor/ Petitioner. None present for
Corporate Debtor.
1. IDBI Bank Limited filed this Petition under Section 7 of The Insolvency and Bankruptcy Code, 2016
[hereinafter referred to as "the Code"] read with Rule 4 of The Insolvency and Bankruptcy (Application to
Adjudicating Authority) Rules, 2016 [hereinafter referred to as "the Rules"] seeking reliefs under Section
7(5)(a) and Section 13(1)(b) of the Code
2. Asian Natural Resources (India) Limited is a Public Limited Company (hereinafter called as
"Company"). It was incorporated on 13.8.1999 under the Companies Act, having its Registered Office at
102, Sundaram Complex,3, Gurmeet Nagar, Indore, Madhya Pradesh. The Petitioner filed fresh
Certificate of Incorporation consequent upon change of name. It shows that M/ s. Bhatia International
Limited, which was originally incorporated on 30th August, 1999, has changed its name as Àsian
Natural Resources (India) Limited with effect from 23.8.2012
1338
3. The Authorised Share Capital of the Company is Rs. 15,00,00,000/ -. The Paid-Up Share Capital of the
Company is Rs. 9,26,12,770/ -. The Main Object of the Company was to carry out the business of trading
of Coal. IDBI sanctioned Working Capital Limits aggregating to Rs. 50.70 Crores comprising of Fund-
based Limit of Rs. 5.00 Crores, and Non-Fund-based Limit by way of Inland Letter of Credit, Foreign
Letter of Credit/ Buyers Credit of Rs. 19.70 Crores and Bank Guarantee facility of Rs. 23.60 Crores.
Subsequently, Forward Contract Limit of Rs. 02.40 Crores was sanctioned for the purpose of meeting
Working Capital requirements aggregating to Rs. 45.70 Crores. The Company mortgaged its properties
and created Charge by way of Hypothecation over the moveables of the Company. The Company also
gave Irrevocable Corporate Guarantee for the financial assistance to the tune of Rs. 85.00 Crores granted
and disbursed to Bhatia Global Trading Ltd., on 17.3.2011. The Company availed Rs. 43.30 Crores and
LER facility (outside consortium) of Rs. 2.40 Crores from time to time. The Company also availed Fund-
based Cash Credit Limit of Rs. 05.00 Crores. Bhatia Global Trading Ltd., has also availed sums
aggregating to Rs. 85.00 Crores which was secured by Corporate Guarantee of the Respondent Company
4. Inspite of repeated reminders given by the Petitioner Bank, Respondent Company did not choose to
repay the amounts. According to the Petitioner, the outstanding Principal amount is Rs.36,66,03,057.44
ps. and interest and liquidated damages, and expenses to the tune of Rs. 11,90,857/- totaling
Rs.38,31,06,714.44 ps. Petitioner Financial Creditor issued Demand Notice dated 18th February, 2017
calling upon the Respondent Company to pay the aforesaid amount within a period of 15 days. The notice
was duly served on the Respondent Company. Respondent Company, being a Corporate Guarantor, failed
and neglected to pay the amount due and payable by Bhatia Global Trading Ltd, in its capacity as
'Principal Borrower'. Petitioner Bank issued a Notice dated 7th March, 2017 to the Respondent Company
calling upon them to pay forthwith an amount of Rs. 82,04,12,819.41 Ps together with interest thereon
with effect from February 18, 2017. The notice was served on the Respondent Company. Respondent
Company neither made payment nor gave reply. According to the Petitioner, Respondent Company is
liable to pay Rs. 38,31,06,744.44 ps., as 'Principal Borrower' and Rs. 82,04,12,819.41 ps. as 'Corporate
Guarantor' to Bhatia Global Trading Ltd
5. IDBI Bank Ltd., filed this Petition on 9.5.2017 before the Registry of this Adjudicating Authority.
Proof of dispatch of copy of this Petition on the Corporate Debtor is filed
6. Petitioner Bank filed Deed of Hypothecation dated 21.02.2009; Notice of Invocation of Corporate
Guarantee dated 07.3.2017; Certificate of Registration of Mortgage Charges dated 21.02.2009; Modified
Certificate of Registration Charges dated 21.3.2009; Corporate Guarantee Agreement dated 17.3.2011;
and Certificate under Bankers Books Evidence Act, 1891, dated 15th April, 2017. Petitioner filed copies
1339
of Revival Letters dated 12.11.2014 and 25.8.2016 and copy of Acknowledgement of Balance
Confirmation Letter dated 02.4.2016. The above documents clearly establish existence of default to the
Financial Creditor. The material on record clearly establish that a default has occurred. The claim is based
on equitable mortgage and continuing guarantee and revival letters. Hence, it is within time
7. From the material on record, it is clear that there is no disciplinary proceedings pending against the
Interim Resolution Professional, proposed by the Financial Creditor
8. This Petition was listed before this Adjudicating Authority on 12.5.2017. This Adjudicating Authority
directed the Financial Creditor to issue Notice of hearing. Financial Creditor, in compliance with the
directions of this Adjudicating Authority, issued Notice of date of hearing and filed proof of dispatch. On
17.5.2017, i.e., on the date of hearing, none remained present on behalf of the Corporate Debtor. The debt
due to the Financial Creditor is a 'Financial Debt'. The Petition is complete in all respects. The 'Financial
Debt' is defined in sub-section (8) of Section 5 of the Code
9. In view of the above discussions, this Petition is admitted under Section 7(5) of the Code. This
Adjudicating Authority is also appointing Company Secretary, Shri Nitin Hasmukhlal Parikh, residing at
7th Floor, 737, Fortune Tower, Sayajigunj, Vadodara-390005 (E-mail: nitin_parron2000@yahoo.com)
having Registration No. IBBI/IPA-002 /IP-N00058 /2016- 17/ 10110 as "Interim Resolution Professional"
under Section 13(1)(b) of the Code
of the Code;
other authority;
1340
notified by the Central Government.
Corporate Debtor.
(iii) The Petitioner shall also make public announcement about initiation of 'Corporate Insolvency
12. This Petition is ordered accordingly
13. Communicate a copy of this order to the Petitioner Financial Creditor, and to the Interim Insolvency
1341
AHMEDABAD BENCH
C.P. (I.B.) No. 26/7/NCLT/AHM/2017
Applicant: Kumal Finance & Credit Pvt. Ltd.

VS
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Ms. Natasha Sutaria
For Respondents/Defendant: Mr. Ashish Doshi
ORDER
Learned Advocate Ms. Natasha Sutaria present for Financial Creditor/ Petitioner. Learned PCS Mr.
Ashish Doshi present for Corporate Debtor/ Respondent.
Learned PCS Mr. Ashish Doshi filed Memorandum of Appearance for Corporate Debtor. Joint affidavit
filed.
Application is filed by the Financial Creditor seeking permission to withdraw CP (IB)26/2017 on the
ground of settlement between Financial Creditor and Corporate Debtor.
The said Application is registered as IA 121/2017. Notice on the application given to the Financial
Creditor.
Heard both sides arguments. The petition is at the stage of hearing before admission. It appears there is a
settlement between the Financial creditor and Corporate Debtor.
Financial Creditor is permitted to withdraw the Petition. IA no. 121/2017 is allowed accordingly.
In view of the order passed in IA no. 121/2017, this CP(IB) 26/2017 is dismissed as withdrawn. No order
as to costs.
1342
AHMEDABAD BENCH
C.P. (I.B.) No. 17/7/NCLT/AHM/2017
Applicant: State Bank of India, Colombo

VS
Respondent: Western Refrigeration Pvt. Ltd.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Nirag Pathak
For Respondents/Defendant: Mr. Arjun Sheth
ORDER
Learned Advocate Mr. Nirag Pathak present for Financial Creditor/ Petitioner. Learned Advocate Ms.
Kreena Parekh i/b Learned Advocate Mr. Arjun Sheth present for Respondent/ Corporate Debtor.
1. State Bank of India, Colombo, Sri Lanka, filed this Petition under Section 7 of The Insolvency and
Bankruptcy Code, 2016 [hereinafter referred to as "the Code"] read with Rule 4 of The Insolvency and
Bankruptcy (Application to Adjudicating Authority) Rules, 2016 [hereinafter referred to as "the Rules"],
seeking reliefs under Section 7(5)(a) and Section 13 of the Code.
2. M/s. Western Refrigeration Private Limited is a Private Limited Company registered under the
Companies Act. Its Registered Office is situated in Silvassa, in Union Territory of Dadra 86 Nagar
Haveli.
1343
3. M/s. Haikawa Industries (P) Limited, is a Company incorporated in Sri Lanka under the Companies
Ordinance. Registered Office of M/s. Haikawa Industries (P) Limited is situated at Plot No. 121 and 122,
Phase-I, Katunayake Export Processing Zone, Katunayake, Sri Lanka.
4. The Registered Office of Petitioner Bank is situated at Corporate Centre, State Bank Bhavan, Madame
Cama Road, Mumbai-400021. The Branch Office of the Petitioner Bank is situated at Office No. 16, Sir
Baron Jayatilake Mawatha, Colombo, Sri Lanka.
5. Shri Pankajkumar Pathak, who is working as Chief Manager, State Bank of India, is the Authorised
Signatory of the Petitioner Bank.
6. Petitioner Bank extended credit facilities to M/s. Haikawa Industries (P) Limited, which has been duly
guaranteed by M/s. Western Refrigeration Private Limited and M/s. Indo Western Refrigeration Pvt. Ltd.,
by way of Corporate Guarantee and the Directors in their personal capacities as 'Guarantors'.
7. The Principal Borrower, M/s. Haikawa Industries (P) Limited, Colombo had defaulted in payment of
financial assistance given to it. Inspite of several demands and reminders, M/s. Haikawa Industries (P)
Limited has failed and neglected to make repayment and honour the terms and conditions of the Loan
Agreement entered into between the Principal Borrower and the Bank.
8. It is the case of the Petitioner Bank that the amount is due and payable as on 31st January, 2017. It is
also the case of the Petitioner that Principal Borrower, M/ s. Haikawa Industries (P) Limited, Colombo
has since gone into liquidation, a Provisional Liquidator was appointed on 26.4.2013. Petitioner lodged its
claim before the Official Liquidator of the said Company at Colombo. Further, it is the case of the
Petitioner Bank that Respondent Company executed a Guarantee Agreement on 14th January, 2008. It is
the further case of the Petitioner that the liability of the Respondent Company to pay the outstanding
balance with interest is co-existence with the liability of the Principal Borrower.
9. Petitioner Bank, on 13th February, 2017 got issued a legal notice to the Respondent Company
demanding payment of Rs. 49,27,02,852.08 ps. as on 31.1.2017 within 10 days from the receipt of the
notice failing which Petitioner Bank would initiate corporate insolvency resolution process under Section
7 of the Code. On 27.2.2017, Respondent Company issued a Reply to the legal notice stating that the
matter is sub-judice and pending in Debt Recovery Tribunal (DRT), Mumbai as O.A. No. 242 of 2013.
Respondent Company disputed the said alleged claim of the Bank and thereupon on 8th May, 2017
Petitioner dispatched the copy of the Petitioner to the Respondent Company by Registered Post and filed
this Petition before this Adjudicating Authority. Petitioner Bank filed Additional Affidavit before this
Adjudicating Authority on 9th May, 2017 enclosing the Memorandum of Association; Articles of
1344
Association; Audited Balance Sheet for the year 2014-2015 of the Respondent Company along with proof
of dispatch of copy of Petition to the Respondent Company. The Petition was listed before this
Adjudicating Authority for the first time on 12.5.2017.
10. On 12.5.2017, this Adjudicating Authority directed the Petitioner Bank to issue notice of date of
hearing to Corporate Debtor and file proof of service. The matter was listed for hearing before admission
on 17.5.2017. On 17.5.2017, Respondent Company appeared through its learned Counsel before this
Adjudicating Authority. This Adjudicating Authority directed the parties to file material papers filed in
OA No. 242/2013. This Authority directed the Respondent Company to file Letter of Revocation of
Guarantee, if any, and the papers relating to the proceedings pending before the Hon'ble High Court of
Colombo. The matter was listed on 19.5.2017 for hearing before admission. The Managing Director of
the Respondent Company filed Affidavit along with Guarantee Agreement dated 14th January, 2008,;
letter dated 30.3.2010 revoking the Guarantee; copy of the notice dated 10.10.2012 issued by the
Petitioner Bank to the Respondent Company and others; copy of the letter dated 1.11.2012 addressed to
Mr. Bharat H. Mehta, Advocate for Petitioner Bank by the Respondent Company, copy of the Original
Application No. 242 of 2013 filed before the DRT No.3, Mumbai by the Petitioner Bank against
Respondent Company and its Directors; copy of the Plaint filed by the Respondent Company against the
Petitioner Bank before the Hon'ble High Court of Western Province Holden in Colombo exercising civil
jurisdiction. On 19.5.2017, arguments of learned counsel for the Petitioner and learned counsel for the
Respondent were heard. At the concluding stage of arguments, learned counsel for the Petitioner filed
Written Arguments.
11. It is the case of the Petitioner Bank that the Guarantee Agreement dated 10.1.2008 is a continuing
Guarantee and Respondent being a Corporate Guarantor is liable to pay the amount due from the Principal
Borrower, M/s. Haikawa Industries (P) Limited. It is also the case of the Petitioner that Respondent
Company has committed default in making payment of the outstanding amount due by the Principal
Borrower and therefore Petitioner Bank is entitled to trigger the insolvency resolution process under
Section 7 of the Code.
12. The case of the Respondent, as narrated in the Affidavit of the Managing Director of the Respondent
Company is as follows;
12.1 The credit facilities availed by M/s. Haikawa Industries (P) Limited was restructured by the
Petitioner Bank in terms of sanction letter dated 14th February, 2007. The credit facility was secured by
way of Corporate Guarantee by the Respondent and the personal guarantee of Mr. Bhupinder Singhe
Machre; Mr. Parmeet Singh Machre and Mr. Harmeet Singh Machre. The Corporate Guarantee is dated
1345
14th January, 2008. It is stated by the Respondent Company that there is a Clause in the Corporate
Guarantee which says that the Guarantee shall remain in force and be binding as a continuing security
against the Guarantors till it is discontinued and determined. Further, it is the case of the Respondent that
by letter dated 30th March, 2010, Respondent Company terminated the Corporate Guarantee and the said
letter was duly served on the Petitioner Bank and acknowledged by the Petitioner Bank. Further, it is the
case of the Respondent that inspite of the termination of the Corporate Guarantee as stated above, on 10th
October, 2012 Petitioner Bank issued a Demand Notice calling upon the Respondent to pay the
outstanding amount without mentioning about the termination of Guarantee. Respondent gave reply to the
said letter on 1.11.2012 stating that the Guarantee was not enforceable and asked the Petitioner Bank to
recover dues from the Principal Borrower. Petitioner Bank filed OA No. 242 of 2013 before the DRT
against the Respondent Company and other Guarantors seeking a declaration that the various guarantees
executed by the defendants from time to time are valid, subsisting and binding on the Guarantors and to
pass an order under Section 19 of the Recovery of Debts Due to Financial Institutions Act directing the
defendants to pay the amount of Rs. 40,25,71,409.20 ps. along with interest at the rate of 14.5.% p.a. with
monthly rests from 1.11.2012 till the date of payment and issue of Recovery Certificate accordingly and
for other reliefs.
12.2 Respondents stated that the Company filed a Declaratory Suit before the High Court of the
Western Province Holden in Colombo exercising civil jurisdiction bearing No. CHC/233/2013 MR
seeking declaration that the alleged Corporate Guarantee dated 14th January, 2008 stand cancelled /
determined / discontinued as unenforceable in law; and for a further declaration that the petitioner bank
herein is not entitled to initiate any action against the Respondent Company herein should discharge from
the aforesaid incomplete guarantee with effect from 22nd April, 2009; and for a declaration to declare that
the alleged Corporate Guarantee dated 14th January, 2008 stand cancelled/determined/discontinued as
unenforceable in law; and for a further declaration that the Petitioner Bank herein is not entitled to initiate
any action against the Respondent Company herein in Sri Lanka or any other jurisdiction with regard the
above said Guarantee. According to the Respondent that Suit is pending before the High Court of Western
Province Holden, Colombo exercising civil jurisdiction. According to the Petitioner Bank, date of default
is 10th October, 2012 and therefore Petitioner could have very well filed a petition for winding-up of
Respondent under the provisions of the Companies Act, 1956. It is also the case of Respondent that
alleged default which occurred in October 2012 is well beyond the period of limitation prescribed under
the Limitation Act.
1346
13. A 'Financial Creditor' is entitled to file an Application for initiating Corporate Insolvency Resolution
Process against a Corporate Debtor before the Adjudicating Authority, when a default has occurred, under
Section 7(1) of the Code.
14. 'Financial Creditor' is defined in sub-section (7) of Section 5 of the Code, which read as follows;
"Financial Creditor" means any person to whom a financial debt is owed and includes a person to whom
such debt has been legally assigned or transferred to".
Therefore, in order to determine whether Petitioner Bank is a `Financial Creditor' or not, one has to look
at the definition of `financial debt', which is defined in sub-section (8) of Section 5, which reads as
follows;
(8) "financial debt" means a debt along with interest, if any, which is disbursed against the consideration
for the time value of money and includes
(c) any amount raised pursuant to any note purchase facility or the issue of bonds, notes, debentures, loan
stock or any similar instrument;
finance or capital lease under the Indian Accounting Standards or such other accounting standards as may
be prescribed;
having the commercial effect of a borrowing; any derivative transaction entered into in connection with
protection against or benefit from fluctuation in
(g) any rate or price and for calculating the value of any derivative transaction, only the market value of
such transaction shall be taken into account;
(h) any counter-indemnity obligation in respect of a guarantee, indemnity, bond, documentary letter of
credit or any other instrument issued by a bank or financial institution;
1347
(i) the amount of any liability in respect of any of the guarantee or indemnity for any of the items referred
to in sub-clauses (a) to (h) of this clause;"
Petitioner Bank filed only Guarantee Agreement dated 14th January, 2008 and the Statement of Accounts
of M/s. Haikawa Industries (P) Limited, (Principal Borrower) for the period from 10.10.2012 to
14.3.2017. From the above said guarantee documents, it appears that the Principal Borrower, M/s.
Haikawa Industries (P) Limited, was granted Cash Credit Loan; and Working Capital Term Loan.
14.1 Sub-clause (i) of sub-section (8) of Section 5 says that the amount of any liability in respect of
any guarantee for any of the items referred to in sub-clause (a) to (h) is a 'financial debt'. Therefore, the
amount lent to the Principal Borrower by the Petitioner Bank and for which the Respondent Company
stood as a Guarantor amounts to 'financial debt' and therefore Petitioner Bank is a `Financial Creditor'.
14.2. Respondent is a 'Company' registered under the Companies Act, 1956.
14.3. Sub-section (7) of Section 3 defines "Corporate Person", which means a "Company" as defined in
Clause 20 of Section 2 of Companies Act, 2013, a limited liability partnership, as defined in clause (n) of
sub-section (1) of Section 2 of the Limited Liability Partnership Act, 2008 or any other person
incorporated with limited liability under any law for the time being in force but shall not include any
financial service provider". Therefore, Respondent Company is a 'Corporate Person".
14.4. "Corporate Debtor" is defined in sub-section (8) of Section 3, which means a corporate person
who owes a debt to any person". Debt is defined in sub-section (11) of Section 3. "Debt" means a liability
or obligation in respect of a claim which is due from any person and includes a financial debt and
operational debt". Sub-section (12) of Section 3 deals with 'default'. It says that "Default" means non-
payment of debt when whole or any part or installment of the amount of debt has become due and payable
and is not repaid by the debtor or the corporate debtor, as the case may be.
15. The first contention raised by the learned Counsel appearing for the Petitioner Bank is Respondent
Company by its letter dated 27th February, 2017 refused to pay the amount demanded in the Notice dated
13th February, 2017 and therefore Respondent Company has committed default in non-payment of debt.
In this case, as can be seen from the material placed on record, the first legal notice was issued by the
Petitioner Bank to the Respondent Company on 10.10.2012. In the said notice itself, there was a demand
by the Bank to the Respondent Company and other guarantors to pay the outstanding amount in Cash
Credit Account and Working Capital Term Loan Account which is due from the Principal Borrower, M/s.
Haikawa Industries (P) Limited. The Reply was given by the Respondent Company to the said notice on
1.11.2012. In the said Reply, it is clearly stated that the Guarantee given by the Respondent Company is
1348
not enforceable and requested the Petitioner Bank to collect dues from the Principal Borrower, M/s.
Haikawa Industries (P) Limited, It is pertinent to mention here that even before 1.11.2012, i.e., on 30th
March, 2010 itself, Respondent Company wrote a letter to the Petitioner Bank stating that Corporate
Guarantee stood discontinued and determined with immediate effect. The said letter was acknowledged
by the Petitioner Bank. Respondent also filed the postal receipt of the Courier. Petitioner Bank did not
deny the receipt of the letter dated 30th March, 2010 whereby Guarantee Agreement dated 14.1.2008 was
revoked. On the other hand, Petitioner Bank having received the letter dated 30th March, 2010 did not
make any whisper about it in the legal notice dated 10.10.2012 which was issued nearly two-and-a-half
years after the revocation of the Guarantee. Therefore, the cause of action, if any, is there for the
Petitioner Bank against the Respondent Company it was either on the day on which the revocation of the
Guarantee i.e., 30th March, 2010 or at least on 1.11.2012 when the reply notice was received by the
Petitioner Bank. The revocation of Guarantee and reply that the Agreement is unenforceable certainly
amounts to refusal to pay as per the Guarantee Agreement dated 14.1.2008 unless the Bank concedes to
the action of the Respondent Company. Therefore, the issuance of legal notice dated 13.02.2017 and its
reply dated 27.2.2017 by any stretch of imagination do not constitute a first demand or the first refusal by
the Respondent Company. Therefore, the first contention of the learned counsel appearing for the
Petitioner Bank that it is the Notice dated 27.2.2017 issued by the Respondent Company to the Petitioner
Bank that constitutes a refusal, do not merit acceptance.
16. The second contention is that the amount due from the Principal Borrower to the Petitioner Bank is a
'financial debt' and in respect of which Respondent Company gave Corporate Guarantee, vide Agreement
dated 14th January, 2008 and therefore the liability of the Respondent squarely falls under the definition
of 'financial debt' as per Section 5(8)(1) of the Code. He further contended that the Petitioner nominated
the Interim Insolvency Resolution Professional and provided the letter of the IRBI. The contention of the
learned counsel for the Petitioner Bank is that the money lent to the Principal Borrower is a 'financial
debt'. The liability of the guarantor, if any, under the Guarantee Agreement dated 14.1.2008 certainly
comes within the definition of 'financial debt' as contended by the learned counsel for the Petitioner. The
material on record clearly show that Petitioner nominated Interim Insolvency Resolution Professional and
provided a Written Communication of the Interim Insolvency Resolution Professional. Therefore,
Petitioner duly complied with Section 7(3)(b) of the Code.
17. The third contention of the learned Senior Counsel appearing for the Petitioner Bank is unlike Section
8 no defence is available to the Corporate Debtor in a Petition under Section 7 of the Code. He contended
that in case of operational creditors, the Corporate Debtor is having a defence to show a pre-existing
dispute in relation to the debt, but no such provision is there in Section 7 of the Code which exclusively
1349
applies to financial creditors. No doubt, Section 8 contemplates the existence of a dispute prior to the
receipt of Demand Notice issued by the Operational Creditor is a defence available to the Corporate
Debtor in the Petitions filed by the Operational Creditor. No such similar provision is there in case of a
petition filed by 'Financial Creditor' under Section 7 of the Code. Here, it is pertinent to mention, that job
of ascertaining the existence of default or the satisfaction that existence of default has occurred has not
been entrusted to the Adjudicating Authority in Sections 8 and 9 of the Code, which relate to the petitions
filed by the Operational Creditor, but whereas in a petition filed under Section 7 by a 'financial creditor',
the job of ascertaining the existence of default from the records of the information utility or on the basis
of evidence furnished by the financial creditor and the satisfaction that default has occurred, is there on
the Adjudicating Authority. While dealing with the Petitions filed by the Operational Creditor, the
satisfaction or otherwise of the Adjudicating Authority regarding ascertaining the existence of default or
the satisfaction regarding occurrence of default is not required. What is the criteria for admission of an
application filed by the Operational Creditor under Section 9 of the Code is the Application must be
complete; there must not be any repayment of unpaid operational debt; demand notice would have been
given to the Corporate Debtor; notice of dispute would not have been received by the Operational
Creditor; and there shall not be any disciplinary proceeding against the Interim Insolvency Resolution
Professional. Therefore, in case of Operational Creditor, demand notice is contemplated and in response
to such a demand notice if the Corporate Debtor informs the Operational Creditor that there exist a
dispute and a suit or arbitration proceeding which has been initiated before the receipt of the demand
notice, there ends the matter. Therefore, while comparing Section 7 and 8 of the Code, it must be borne in
mind that the judicial function of the Adjudicating Authority is more in the case of Petition filed under
Section 7 when compared to the petitions filed under Section 8 and 9 by the Operational Creditor. When
it is contended by the learned counsel for the Petitioner that no demand notice is contemplated under
Section 7 of the Code, before filing a Petition triggering the Insolvency Resolution Process under Section
7, it is not known why the Petitioner Bank chose to issue a Demand Notice dated 13.2.2017 to the
Respondent Company. It is the argument of the learned counsel for the Petitioner that Reply dated
27.2.2017 issued by the Respondent, to the notice dated 13.2.2017 amounts to refusal to make payment
under the Guarantee dated 14.1.2008. Therefore, it is obvious that the Petitioner Bank wants to create a
second cause of action by issuing the notice dated 13.2.2017 to the Respondent and invite a refusal of
payment which refusal is very well within the knowledge of Petitioner right from 30th March, 2010, the
day on which the Guarantee was revoked. Therefore, the contention of the learned counsel for the
Petitioner Bank that no defence of pre-existing dispute is not at all available to a Corporate Debtor in a
Petition filed by the Financial Creditor, in my considered view, may amount to close the doors of defence
to the Corporate Debtor in case of Petitions filed under Section 7, which course is unknown to law and
1350
the principles of natural justice. To say that a Corporate Debtor against whom Insolvency Resolution
Process, was triggered has no defence of pre- existing dispute and it is only the Corporate Debtor in case
of Petition filed by the Operational Creditor is entitled to take defence of pre-existing dispute is nothing
but asking this Adjudicating Authority in a classic way not to consider the defence of the Respondent
Company. Therefore, this argument of the learned counsel for the Petitioner, when viewed superficially
appears to be appeasing, but for the reasons stated above, the aforesaid contentions of the learned counsel
for the Petitioner is against the principles of natural justice even in a summary judicial proceeding where
consequences are having far reaching effect on the Company.
18. It is further contended by the learned counsel for the Petitioner Bank that the proceedings before the
Court in Colombo has no bearing for the purpose of this Petition under Section 7 of the Code.
19. The contention of the learned Counsel for the Petitioner Bank that the proceedings before the Court in
Colombo has no bearing for the purpose of this petition under Section 7 of the Code needs a careful
scrutiny. In the Petition or in the Additional Affidavit filed by the Petitioner, it is nowhere stated that
Respondent filed a Civil Suit against the Petitioner Bank before the High Court of Western Province
Holden in Colombo which is exercising original jurisdiction. It is the Respondent, along with Affidavit of
Managing Director of Company brought on record the copy of the Plaint in CHC- 233/2013 MR filed
before the High Court of Western Province Holden in Colombo. A perusal of the said Plaint clearly goes
to show that Plaintiff therein (Respondent herein) prayed for the following reliefs;
"a. Make a declaration that the aforesaid alleged corporate guarantee dated 14 January 2008 furnished by
the Plaintiff Company to the Defendant arising out of the aforesaid commercial transactions is void ab
initio and non-est;
b. Make a declaration that the Plaintiff Company in any event stood discharged from the aforesaid
incomplete guarantee with effect from 22nd April 2009;
c. Make a declaration that the aforesaid alleged corporate guarantee dated 14 January 2008 furnished by
the Plaintiff Company to the Defendant arising out the aforesaid commercial transactions stands
cancelled/ determined/ discontinued and/or is unenforceable in law consequent to the aforesaid notice
dated 30 March 2010;
d. Make a declaration that the Defendant is not entitled to initiate any action against the Plaintiff
Company in Sri Lanka and/or in any other jurisdiction with regard to the aforesaid Guarantee;
e. Award the Plaintiff costs and such other and further relief as to Your Honours Court shall deem fit."
20. The pleadings in the Plaint in CHC-233/2013 are as follows;
(i) The Guarantee Agreement dated 14th January, 2008 is an incomplete Guarantee;
(ii) The sanction letter dated 22nd April, 2009 given by the Petitioner Bank to the Principal Borrower has
been unilaterally and fraudulently altered.;
1351
AHMEDABAD BENCH
C.P. (I.B.) No. 27/7/NCLT/AHM/2017
Applicant: Jhaveri Trading & Investment Pvt. Ltd.

VS
Respondent: Oasis Textiles Ltd.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Navin Pahwa
ORDER
Learned Advocate Mr. Navin Pahwa present for Petitioner/ Financial Creditor.
1. Jhaveri Trading & Investment Pvt. Ltd. filed this petition under section 7 of The Insolvency and
Bankruptcy Code, 2016 (hereinafter referred to as "the Code") read with Rule 4 of The Insolvency and
Bankruptcy (Application to Adjudicating Authority) Rules, 2016 (hereinafter referred to as "the Rules")
seeking reliefs under Section 7(5)(a) and Section 13(1)(a)(b)(c) of the Code.
2. Oasis Textiles Ltd. is a company incorporated under the Companies Act, 1956 having its registered
office at Vapi, Gujarat State. The said company borrowed an amount of Rs. 1,23,50,000/- by way of Inter
Corporate Deposit from M/s. Jhaveri Trading & Investment (P) Ltd. (petitioner) and entered into
agreement dated 09.03.2017. As per the terms of that agreement, respondent shall repay the loan amount
with interest @ 12% per annum in installments as listed herein below: -
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Date Amount (Rs.) Particulars
08.04.2017 40,00,000/- Principal
08.05.2017 40,00,000/- Principal
07.06.2017 43,50,000/- Principal
07.06.2017 2,20,142/- Interest (net of TDS)
3. Respondent also executed demand promissory note dated 10.03.2017 according to which the
respondent shall repay the loan amount to the petitioner or its order on demand. Respondent also executed
receipt evidencing receipt of Rs. 1,23,50,000/- from the petitioner by way of RTGS as Inter Corporate
Deposit for a period of 90 days from 09.03.2017 to 06.06.2017 bearing interest @ 12% per annum.
Respondent also issued cheques towards repayment of principal and interest amount in favour of the
petitioner. Petitioner filed copies of the statement of accounts maintained by Central Bank of India.
Respondents addressed letter dated 7th April, 2017 requesting the petitioner not to transfer cheque dated
8th April, 2017 till further instructions. On 9th May, 2017 petitioner issued a notice to the respondent
company demanding repayment of the loan with interest within five days from the receipt of notice, but
the respondent have not repaid the loan amount.
4. On 17th May, 2017, petitioner filed this petition before this Tribunal under section 7 of The Insolvency
and Bankruptcy Code, 2016. In the petition, petitioner proposed the name of Mr. Umesh Harjivandas
Ved, 304, Shoppers Plaza - V, Opp. Municipal Market, C.G. Road, Navrangpura, Ahmedabad 380 009 as
Interim Resolution Professional. Petitioner dispatched copy of the application along with annexure to the
respondents by speed post on 16.05.2017.
5. This petition is listed for the first time before this Tribunal on 19th May, 2017. This Tribunal directed
the petitioner to issue notice of date of hearing to corporate debtor and file proof of service. On 26th May,
2017, petitioner filed proof of service of notice of hearing on the respondent. Mr. Ashish Doshi, PCS
represented the Corporate Debtor/Respondent before this Tribunal.
6. Petitioner is a company registered under the Companies Act, 1956.
7. A perusal of Inter Corporate Deposit Agreement dated 09.03.2017, demand promissory note dated
10.03.2017 and Inter Corporate Deposit Receipt clearly show that the respondent is liable to pay certain
amount of money to the petitioner.
1353
8. A copy of the statement of accounts of the petitioner maintained by Central Bank of India also show
that amount was lent to the respondent. The amount due to the petitioner from respondents is not barred
by limitation. Inspite of notice dated 9th May, 2017 the respondents did not chose to clear the debt due to
the petitioner. Therefore, it is clear that, there is a debt due to the petitioner from the respondent and the
respondent has committed default in payment of said debt.
9. Petitioner is financial creditor and the amount due to it is financial debt. Respondents is Corporate
Debtor and it has committed default in repayment of financial debt. The petitioner has suggested Interim
Resolution Professional. Petitioner has also filed written communication given by professional. There is a
declaration by Interim Resolution Professional that no disciplinary proceedings are pending against him.
The petition is complete in all respects. Hence the petition is admitted under Section 7(5)(a) of the Code.
10. The Adjudicating Authority hereby appoint Mr. Umesh Harjivandas Ved, 304, Shoppers Plaza - V,
Opp. Municipal Market, C.G. Road, Navrangpura, Ahmedabad 380009 as Interim Resolution
Professional under Section 13(1)(a) of the Code.
of the Code;
a. the institution of suits or continuation of pending suits or proceedings against the corporate debtor
other authority;
b. transferring, encumbering, alienating or disposing of by the corporate debtor any of its assets or
c. any action to foreclose, recover or enforce any security interest created by the corporate debtor in
d. the recovery of any property by an owner or lessor where such property is occupied by or in the
1354
i. The moratorium order in respect of (a), (b), (c) and (d) above shall not apply to the transactions notified
by the Central Government.
ii. However, the order of moratorium shall not apply in respect of supply of essential goods or services to
Corporate Debtor.
iii. The Applicant shall also make public announcement about initiation of Corporate Insolvency
Resolution Process, as required by Section 13(1)(b) of the Code.
14. Communicate a copy of this order to the Applicant Financial Creditor and to the Interim Insolvency
1355
AHMEDABAD BENCH
C.P. No. (IB) 48/7/NCLT/AHM/2017

Vs.
Respondent: Alok Industries Limited
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Animesh Bisht Gaurav Gupte and Sahil Shah, Learned Advocates
For Respondents/Defendant: Petrushka Deas, Learned Advocate, Ishan Ravendranath and Haresh
Jagtiani, Learned Advocates
ORDER
1. State Bank of India a body Corporate established under the State Bank of India Act, 1955 having its
Corporate centre at State Bank Bhavan, Madam Cama Road, Mumbai-400021 filed this application to
initiate Corporate Insolvency resolution process in respect of Alok Industries Limited under the
2. It is stated that vide separate gazette notifications each dated February 22nd, 2017 State Bank of
Hyderabad, State Bank of Patiala, State Bank of Mysore, State Bank of Travancore and State Bank of
Bikaner and Jaipur have merged into SBI with effect from April 01, 2017.
3. For the purpose of this application various facilities granted to Alok Industries by the Associate Banks
prior to the effect of merger is now considered as of facilities of State Bank of India.
4. Mr. Munna Prasad Thakur is a person authorised to file this application pursuant to Regulation of 77 of
the State Bank of India General Regulations, 1955 (framed under Section 50 of the State Bank of India
Act, 1955.) The authorisation letter dated 27 March, 1987 has been filed.
5. Alok Industries Limited is a Company registered under Companies Act, 1956 having its Registered
Office at 17/5/1, 521/1, Village Rakholi/Saily, Silvassa, 396 230, Union Territory Dadra & Nagar Haveli,
1356
India. The authorised Share Capital of Alok Industries is INR 4000,00,00,000/- (Rupees Four Thousand
Crores) only. The paid up share capital of Alok Industries is INR 1377,31,78,950 (Rupees one Thousand
Three Hundred Seventy-Seven Crores Thirty-One Lacs, Seventy-Eight Thousand Nine Hundred Fifty)
only.
6. It is stated that State Bank of India including the Associates Banks had granted various term loans and
working capital facilities to Alok Industries from time to time. The aggregate sanctioned amount as at the
date of this application in Indian Rupees by State Bank of India and Associates Banks are as follows:
1. SBI: 4636.42 crores
2. SBBJ: 1483.30 crores
3. SBH: 976.76 crores
4. SBM: 727.16 crores
5. SBP: 772.41 crores
6. SBBT: 674.80 crores
The dates of disbursement relating to SBI and Associates Banks are annexed to the application as
Annexures 10 to 15.
7. It is stated the following are the amounts defaulted as of 31 May, 2017 by Alok Industries.
1. SBI: 2218.56 crores (Annexure A-16)
2. SBP: 309.92 crores (Annexure A-17)
3. SBH: 419.20 crores (Annexure A-18)
4. SBM: 252.63 crores (Annexure A-19)
5. SBT: 320.04 crores (Annexure A-20)
6. SBBJ: 251.80 crores (Annexure A-21)
1357
Alok Industries also provided securities for the facilities availed by it from SBI and its Associate Banks
which are detailed in Annexure 22 to 27. It is stated that HongKong and Shanghai Banking Corporation
Limited filed winding up Petition against Corporate Debtor (Alok Industries) before the Hon'ble High
Court of Bombay on March 11, 2016 and the matter is still pending and the Petition has not been
admitted.
8. It is stated that the following record of default is available:
1. The CRILC report relating to creditor debtor generated on June 23, 2017 vide (Annexure A-90).
2. The CIBIL report relating to corporate debtor generated on June 22, 2017 (Annexure A-91).
Applicant filed copies of entries in accordance with the Bankers Books Evidence Act, 1891.
9. It is stated that on June 27, 2017 Corporate Debtor acknowledged the outstanding balance as on May
31, 2017. It is also stated that Reserve Bank of India its letter dated June 15, 2017 directed the State Bank
of India to initiate resolution process, singly or jointly with other lenders under the Insolvency and
Bankruptcy Code, 2016 in respect of default committed by the Corporate Debtor (vide Annexure 125 and
126). Applicant proposed Mr., Ajay Joshi, Address: A-3/204, Oxford Village, Wanowrie, Pune-411 040
as interim resolution practice.
10. Applicant served a copy of the application on the Corporate Debtor/respondent. This application is
filed before this tribunal on June 29, 2017. This application is listed before this Tribunal for the first time
on July 12, 2017. Respondent appeared before this Tribunal through his counsel and made a statement
that Financial debt is due to the bank and for present he has no defence to make and respondent agreed for
resolution process.
11. Heard the arguments of Learned Counsel appearing for the applicant and respondents. It is
represented by both sides' counsels that the winding up proceedings filed by other creditors are pending
before the Hon'ble High Court of Bombay but no winding up order has been passed in those winding up
Petitions.
12. Learned Counsel appearing for the applicant referring to Section 446 of the Companies Act, 1956
contended unless and until winding up order has been made or the Official Liquidator has been appointed
as Interim Liquidator, it cannot be said that other legal proceedings shall not be commenced or shall be
proceeded with against the Company. He further, contended that in view of Clause-a of Sub-Section 1 of
1358
Section-14 coupled with Section 238 of the Insolvency and Bankruptcy Code, the provisions of the code
shall have overriding affect notwithstanding anything inconsistent with the provisions contained in any
other law for the time being in force.
13. In support of the said contention he referred to decision of the National Company Law Tribunal
Division Bench, Chennai CA/1/(IB)/2017 decided at April 21, 2017 and the order of National Company
Law Appellate Tribunal, New Delhi in Company Appeal (AT) (Insol.) No. 41 of 2017 dated 19.05.2017.
14. Learned Counsel appearing for the Respondent also supported the arguments of the Learned Counsel
for the applicant.
15. From the statements made by both sides Counsel it is clear that no order of liquidation has been
passed and no appointment of Official Liquidator has been made by the Hon'ble High Court of Bombay in
the winding up Petitions pending before the High Court.
16. In view of Rule 5 of Companies (Transfer of Pending Proceedings) Rules, 2016, winding up Petitions
in which notice has been served on the Respondent shall be disposed of by the Hon'ble High Courts in
which the winding up Petitions are filed and pending. But in winding up petitions in which notices have
not been served on the Respondents, such winding up Petitions shall be transferred to the concerned
Benches of the National Company Law Tribunal, having territorial jurisdiction. The winding up Petitions
filed against respondent Corporate Debtor are pending before the Hon'ble High Court of Bombay and
they are not Transferred to this Tribunal since it appears that notices in such petitions have been served on
Respondents.
17. Now, the controversy is, in view of the pendency of the winding up petitions before the Hon'ble High
Court of Bombay whether this Tribunal can entertain and pass orders in this application. In view of the
fact that no winding up order has been passed and no Official Liquidator has been appointed in the
winding up Petitions pending before the High Court, Section-446 of Companies Act, 1956 is not
applicable. In view of Clause-a of Sub-Section 1 of Section-14 of the Code all proceedings against
Corporate Debtor in any court of Law shall stand stayed, on the insolvency commencement date.
18. In view of Section-238 of the Code, the provisions of this code shall have overriding effect over any
other law which is inconsistent with the provisions of the code. However, without going into the aspect of
overriding effect, since no winding up order has been passed in the winding up Petitions, this adjudicating
Authority is of the considered view that this application before this Authority is maintainable and this
authority has got jurisdiction over the subject matter to pass orders.
1359
19. This view of this Authority has also been supported by the view taken by the National Company Law
Tribunal, Division Bench, Chennai in CA/1/(IB)/2017 decided on April 21, 2017. It appears that
Corporate debtor in the said Petitions filed Company Appeal No. 41/2017 before the National Company
Law Appellate Tribunal and also filed petitions in the company petition pending before the Hon'ble High
Court for orders to stay the process of the Insolvency proceedings.
20. The National Company Law Appellate Tribunal, New Delhi in Company Appeal (AT) (Insol.) No. 41
of 2017, by its order dated May 19, 2017 observed that in view of the Section-14 and Section-238 of the
Code the provisions of Insolvency and Bankruptcy Code, 2016 will prevail over any other law in force
including Companies Act, 1956 under which winding up proceedings have been initiated. Therefore, it is
clear that this Adjudicating Authority having jurisdiction over the subject matter of this Petition. In this
case, the Corporate debtor admitted his liability by acknowledging the debt and making statement
agreeing for resolution process before this Authority.
21. State Bank of India triggered the insolvency resolution process against the Corporate Debtor. In order
to trigger the insolvency resolution process, Financial Creditor shall place on record material which is
sufficient for this Adjudicating Authority to ascertain the debt and to satisfy that a default had occurred;
application is complete; and there is no disciplinary proceedings pending against the proposed Interim
22. Now, this Authority proceeds to consider whether there is sufficient material on record to satisfy that
a default had occurred in payment of financial debt.
23. 'Financial Debt' is defined in Section 5(8) of the Code. In the case on hand, Financial Creditor placed
on record sanction letters given by the State Bank of India and Associate Banks sanctioning the various
Term Loans and other loans. Financial Creditor also placed on record, the Term Loan Agreements entered
into between the State Bank of India, its Associate Banks on one hand, and the Corporate Debtor on the
other hand. Financial Creditor also placed on record Facility Agreements entered into between the Banks
and the Corporate Debtor. Financial Creditor also placed on record Guarantee Facility Agreement.
Corporate Debtor acknowledged the debt by a letter dated 27th June, 2017 in respect of the outstanding
balance as on 31st May, 2017. In fact, learned counsel appearing for the Corporate Debtor admitted the
liability and default has occurred in repayment of the loan amounts to State Bank of India and Associate
Banks. Therefore, this Adjudicating Authority basing on the material available on record, conclude that
there exists default and a default has occurred in repayment of the financial debt.
1360
24. A perusal of the application filed by the Financial Creditor shows that the same is complete in all
respects. Financial Creditor also filed the Written Communication given by the proposed Interim
Insolvency Resolution Professional in Form No. II. Financial Creditor also filed various copies of the
accounts, Certificate under the Bank's Book Evidence Act and the copies of the ledger accounts of
Corporate Debtor. Therefore, the application is complete in all respects. Hence, the Application is
admitted under sub-section (5)(a) of Section 7 of the Code. This Adjudicating Authority is also
appointing Shri Ajay Joshi, residing at A-3/204, Oxford Village, Wanowrie, pune-411040 having Regn.
No. IBBI/IPA-003/IPN00019/2016-2017/10166 as "Interim Resolution Professional" under Section
13(1)(c) of the Code.
of the Code;
(i) the institution of suits or continuation of pending suits or proceedings against the corporate debtor
other authority;
(ii) transferring, encumbering, alienating or disposing of by the corporate debtor any of its assets or any
(iii) any action to foreclose, recover or enforce any security interest created by the corporate debtor in
(iv) the recovery of any property by an owner or lessor where such property is occupied by or in the
(a) The moratorium order in respect of (i), (ii), (iii) and (iv) above shall not apply to the transactions
(b) The Applicant shall also make public announcement about initiation of Corporate Insolvency
Resolution Process, as required by Section 13(1)(b) of the Code.
1361
28. Industrial and Commercial Bank of China Limited filed IA No. 188 of 2017 seeking permission to
intervene in the proceedings in this Application and to stay the proceedings in this Petition after the
matter is listed for pronouncement of orders.
29. The said Application is dismissed by this Authority by way of a separate reasoned order.
30. Communicate a copy of this order to the Applicant, Financial Creditor, Corporate Debtor and to the
Interim Insolvency Resolution Professional.
1362
AHMEDABAD BENCH
C.P. (I.B.) No. 42/7/NCLT/AHM/2017
Applicant: Spectrum Trimpex Pvt. Ltd.

Vs.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Rahil Jain, Learned Advocates
For Respondents/Defendant: Raheel Patel, Learned Advocate
ORDER
Learned Advocate Mr. Rahil Jain present for Financial Creditor/ Applicant. Learned Advocate Mr. Raheel
Patel present Respondent.
Learned Counsel for Applicant filed memo seeking leave to unconditionally withdraw CP (IB) No.
42/2017.
Leave granted. CP (I13) 42/2017 is permitted to withdraw.
1363
AHMEDABAD BENCH
C.P. (I.B.) No. 48/7/NCLT/AHM/2017
Applicant: Industrial and Commerce Bank of China

Vs.
Respondent: Alok Industries Ltd.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Saubrabh, Jaimin R. Dave, Animesh Bisht, Gaurav Gupta, Sahil shah
& Bhadrish S. Raju, Learned Advocates
For Respondents/Defendant: Ishan Ravindranath & Petmshka Deas, Learned Advocates
ORDER
Learned Advocate Mr. Saurabh Soparkar with Learned Advocate Mr. Jaimin Dave with Learned
Advocate Mr. Bhadrish Raju with Learned Advocate Mr. Udit Mendiratta present for Applicant. Learned
Advocate Mr. Animesh Bisht with Learned Advocate Mr. Sahil Shah present for Respondent/ Original
Petitioner. Learned Advocate Mr. Ishan Ravendranath with Learned Advocate Ms. Petrusha Deas i/b
Haresh Jagtiani present for Respondent/ Original Respondent. Heard arguments of Learned Counsel for
Applicant /Intervener and Learned Counsel for State Bank of India and learned Counsel for Alok
Industries Ltd.
1. Industrial and Commercial Bank of China Limited filed this Application for intervention in the
proceedings filed by State Bank of India against Alok Industries Ltd., for triggering Insolvency
Resolution Process under Section 7 of The Insolvency and Bankruptcy Code, 2016(" Insolvency
1364
Code" for short) seeking permission to intervene in CP No.(IB) 48/2017; to dismiss CP No.(IB)
48/2017 or in the alternative to stay the proceedings in CP No.(IB) 48/2017.
2. The facts in brief, that are germane for the disposal of this Application are as follows;
a. The Hongkong and Shanghai Banking Corporation Limited ("HSBC") as an agent of

Lenders including the present Applicant, filed Company Petition No. 194 of 2016 on
8th March, 2016 before the Hon'ble High Court of Bombay seeking winding up of
Alok Industries Ltd under Section 433 (e) of the Companies Act, 1956.
b. During the pendency of winding up petition, State Bank of India, who is the
Petitioner in CP No.(IB) 48/2017 filed an Intervention Application, being Company
Application (L) No. 353 of 2016 on 27th April, 2016; seeking the vacation of the
order dated 11th March, 2016 and permission to implement the Resolutions passed at
the EOGM of Alok Industries Limited dated 14th March, 2016 and to keep the
Company Petition in abeyance. State Bank of India sought withdrawal of
Intervention Application vide CA No. 353 of 2016 and it was accordingly dismissed
as withdrawn on 3rd May, 2017. On 15th May, 2017 Alok Industries Ltd placed
before the Hon'ble High Court of draft Restructuring Proposal which has not yet been
approved by Joint Lenders Forum (JLF). State Bank of India having withdrawn its
Intervention Application in the Company Petition No. 194 of 2016 filed his
Application before this Adjudicating Authority on 29th June, 2016. The Company
Petition No. 194 of 2016 is listed for admission before the Hon'ble Bombay High
Court on 19.7.2017 for admission.
c. Further, it is the case of the Applicant that when the winding up proceedings are at an
advanced stage before the Hon'ble High Court of Bombay, any order passed in CP
No.(IB) 48/2017 will lead to conflicting orders being passed by different forums. The
present Application is filed before this Authority on 17.7.2017. The notice on this
Application has been served on the State Bank of India and Alok Industries Ltd.
3. Heard the arguments of learned Senior Counsel appearing for Industrial And Commercial Bank
of China Ltd and the learned counsel appearing for the State Bank of India and Alok Industries
Ltd.
4. It is stated that HSBC filed Company petition No. 194 of 2016 before the Hon'ble High Court of
Judicature at Bombay as an Agent of Lenders and the present Applicant is one of the Lenders and
therefore the Applicant has got a right to intervene in the proceedings in CP No.(IB) 48/2017
which is listed for pronouncement of orders on this date, i.e., 18th July, 2017.
1365
5. There is no dispute about the fact that Industrial And Commercial Bank of China Limited is one
of the Financial Creditors of Alok Industries Ltd. There is no dispute about the fact that HSBC as
an Agent of some of the Lenders filed winding up Petition No. 194/2016 before the Hon'ble High
Court of Judicature at Bombay. It is also a fact that State Bank of India along with its Associate
Banks filed CP No.(IB) 48/2017 being the Financial Creditors under Section 7 of the Code.
6. It is the contention of the learned Counsel appearing for the Applicant that State Bank of India
having withdrawn its Intervention Application in the winding up proceedings pending before the
Hon'ble Court of Bombay, filed CP No.(IB) 48/2017, and it clarifies that State Bank of India has
got full knowledge about the winding up proceedings pending before the Hon'ble High Court of
Bombay. Learned Counsel appearing for the Applicant further contended that it is on account of
the Joint Lenders Forum proposes to place a concrete scheme before the Hon'ble High Court the
admission of the winding up petition and the appointment of Interim Liquidator has been
postponed.
7. Learned Counsel appearing for the Applicant further contended that any order passed in this
Application may result in conflict with the order that is going to be passed by the Hon'ble High
Court of Bombay on 19th July, 2017 or thereafter.
8. Learned Counsel appearing for the State Bank of India contended that Applicant is not entitled to
take shelter under Section 446 of the Companies Act, 1956 in view of the fact that the winding up
petition has not yet been admitted; no winding up order has been passed; and no Liquidator was
appointed.
9. Learned Counsel appearing for the Applicant fairly conceded that his case is not covered by the
provisions of Section 446 of the Companies Act, 1956 since no winding up order was passed and
no Liquidator was appointed till today by the Hon'ble High Court of Bombay.
10. The contention of the learned Counsel appearing for the Applicant, that Company Petition No.
194 of 2016 filed by HSBC has to be adjudicated only before the Hon'ble High Court of Bombay,
merits acceptance in view of the Companies (Transfer of Pending Proceedings) Rules, 2016. Rule
5 is the relevant Rule in the said Rules.
11. In Company Petition No. 194 of 2016, notices have been served on the Respondent and therefore
the proceedings in Company Petition No. 194/2016 shall take place only before the Hon'ble High
Court of Bombay in accordance with the provisions of the Companies Act, 1956.
12. This Insolvency Application is filed by State Bank of India and its Associate Banks in their
capacity as 'Financial Creditors'. Whereas Company Petition No. 194 of 2016 is filed by an Agent
of some other Financial Creditors including the present Applicant.
1366
13. There is no bar in the Insolvency Code either expressly or impliedly debarring the creditors from
triggering the insolvency resolution process under Sections 7, 9, 10 of the Insolvency Code, other
than Section 11 of the Code, Section 11 of the Code listed out the persons not entitled to make
Application. Section 11 of the Code listed out the persons not entitled to make Application.
Section 11 of the Code listed out the persons not entitled to make Application. Section 11 of the
Code has got four clauses. State Bank of India and its Associate Banks do not come under any of
the Clause of Section 11 of the Code. Therefore, there is nothing that prevent the State Bank of
India and its Associate Banks who are Financial Creditors from triggering the insolvency
resolution process under Section 7 of the Code.
14. The pendency of winding up proceedings before the Hon'ble High Court of Bombay before its
admission is no bar either for the initiation of proceedings under section 7 of the Code or for
continuation of such proceedings.
15. In the case on hand, in Company Petition No. 194 of 2016, the winding up petition has not yet
been admitted; no winding up order has been passed by the Hon'ble High Court of Bombay.
There is no order appointing official Liquidator as Interim Liquidator.
16. When there is no order passed by the Hon'ble High Court of Bombay, the argument of the Senior
Learned Counsel appearing for the Applicant that the order which is going to be passed by the
Hon'ble High Court of Bombay on 19.7.2017 would come in conflict with the order that is going
to be passed by this Adjudicating Authority today cannot be accepted. The Applicant has no
knowledge as to what is the order that is going to be passed by this Adjudicating Authority in CP
No.(IB) 48/2017. Even according to the Applicant, no order has been passed by the Hon'ble High
Court of Bombay till today admitting the winding up proceedings. It is not known what is the
order that is going to be passed by the Hon'ble High Court of Bombay in the winding up the
proceedings. Therefore, without knowing what are the orders that are going to be passed by this
Adjudicating Authority in CP No.(IB) 48/2017 and by the Hon'ble High Court of Bombay in
Company Petition No. 194 of 2016, this Application is filed only with a view to prevent this
Adjudicating Authority from exercising its jurisdiction which is vested on this Authority by virtue
of the provisions of the Insolvency Code.
17. In case CP No.(IB) 48/2017 is admitted, there would be stay of all further proceedings pending in
any Court of Law by virtue of the provisions of Section 14 of the Code. In such a case, even if CP
No.(IB) 48/2017 is admitted, it is not going to create any conflict of orders. More over, Section
238 of the Code overrides other Laws.
18. On this aspect, Division Bench of the National Company Law Tribunal, Chennai, by its order
dated 21.4.2017 in CA/1/(IB)/2017 clearly held that the pendency of winding up petition cannot
1367
be a bar under the Code for initiating the corporate insolvency process unless the winding up
order has been passed by the Hon'ble High Court and Liquidator has been appointed. The said
order was challenged before the National Company Law Appellate Tribunal, New Delhi. The
National Company Law Appellate Tribunal, in Company Appeal (AT) (Insolvency) No. 41 of
2017 vide its order dated 19.5.2017 referring to Section 14 of the Code and Section 238 of the
Code observed that the provisions of Insolvency and Bankruptcy Code will prevail over all other
Laws in force including the Companies Act, 1956. It is also observed in the said order that the
said provisions have not been brought to the notice of the Hon'ble Judge of the Madras High
Court in the petitions filed by Vasan Healthcare Pvt. Ltd. before the Hon'ble High Court of
Madras vide Company Applications No. 462 and 463 of 2017 in Company Petition No. 267 of
2015 on the File of Hon'ble High Court of Madras. It is a fact that Hon'ble High Court of Madras
stayed the order of the National Company Law Tribunal, Chennai Bench passed in
CA/1/(IB)/2017 on 21.4.2017. However, in view order of the National Company Law Tribunal,
Chennai Bench, and in view of the observations made by the National Company Law Appellate
Tribunal, New Delhi, it is more than clear that the provisions of the Insolvency Code will prevail
order all other Laws in force in case of insolvency including the Companies Act, 1956
underwhich winding up proceedings have been initiated.
19. Learned Counsel appearing for the Application cited the decision in M/s. Nowfloates
Technologies Pvt.Ltd. Vs. M/s. Getit Infoservices Pvt.Ltd., reported in 2017 SCC Online NCLT
89, rendered by the National Company Law Tribunal, Special Bench at New Delhi. In that case,
the Hon'ble High Court of Delhi appointed Official Liquidator as 'Provisional Liquidator' and
therefore in case Interim Resolution Professional is appointed by the Tribunal there would be
conflict in administering the assets of Corporate Debtor in that case. In those circumstances, the
Special Bench of New Delhi disallowed the Insolvency Resolution Process. But in the case on
hand, the winding up petition filed by other creditors including the present Applicant are not even
admitted by the Hon'ble High Court of Bombay till today.
20. Learned Counsel appearing for the Application contended that propriety also demands this
Adjudicating Authority to postpone the order in CP No.(IB) 48/2017. When there is no order
from the Hon'ble High Court of Bombay, it is neither just nor expedient nor appropriate to
postpone the pronouncement of order in CP No.(IB) 48/2017 awaiting an order from the Hon'ble
High Court of Bombay.
21. The argument of the learned counsel for the Applicant that his client being the Financial Creditor,
he is entitled to be heard in CF No.(IB) 48/2017 do not merit acceptance for the simple reason
that neither Section 7 of the Code nor the relevant Rule 4 of the Adjudication Rules do not
1368
contemplate any notice to other Financial Creditors. Section 7 of the Code and Rule 4 of the
Adjudication Rules contemplate only notice to the Corporate Debtor. The learned Counsel for the
Corporate Debtor appeared before this Adjudicating Authority and he was heard. Moreover, even
the Applicant herein wants winding up of Alok Industries Ltd. The provisions of Insolvency Code
initially contemplates Insolvency Resolution Process and in case of failure of Resolution Process,
then the Company would go for liquidation. Therefore, no prejudice is going to be caused to the
present Applicant even if CP No.(IB) 48/2017 is admitted. In case of admission of CP No. (IB)
48/2017, the present Applicant can as well represent his claim before the Interim Insolvency
Resolution professional and he will become one of the Members of Creditors Committee.
Therefore, no prejudice is going to be caused to the debt due to the present applicant or for that
matter any other Creditor even in case Insolvency Resolution Process is initiated under Section 7
of the Code. In case CP No.(IB) 48/2017 is not admitted, the present Applicant can pursue his
remedies in the Winding up proceedings pending before the Hon'ble High Court of Bombay.
Therefore, there is no need to permit the present Applicant to intervene in the proceedings in CP
No.(IB) 48/2017, that too on the date on which the matter is listed for pronouncement of orders in
GP No.(IB) 48/2017. There are no valid grounds to grant other reliefs prayed in this Application.
22. For the above said reasons, the Application is dismissed. No order as to costs.
1369
AHMEDABAD BENCH
C.P. (I.B.) No. 55/7/NCLT/AHM/2017
Applicant: Religare Finvest Pvt. Ltd.

Vs.
Respondent: V.S. Texmiles Pvt. Ltd.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Dhruvik Patel i/b Kalpesh , Learned Advocates
For Respondents/Defendant: Asha Panchal i/b A.R. Gupta & Associates, Learned Advocate
ORDER
Learned Advocate Mr. Dhruvik Patel i/b Learned Advocate Mr. Kalpesh Patel present for Financial
Creditor/ Applicant. Learned Advocate Mrs. Asha Panchal i/b A R Gupta & Associates present for
Respondent.
Learned Counsel appearing for applicant requested for permission to withdraw the application on the
ground of settlement was arrived between the parties.
Letter for withdrawn signed by both Counsels along with copy of settlement terms.
Applicant is permitted to withdraw the application.
Application is disposed of as withdrawn.
1370

AHMEDABAD BENCH
C.P. (I.B.) No. 32/7/NCLT/AHM/2017
Applicant: SREI Infrastructure Finance Ltd.

Vs.
Respondent: K.S. Oils Ltd.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Sandeep Singhi and Mihir Parikh, Learned Advocates for Singhi &
Co.
For Respondents/Defendant: Basant Agarwal, Learned Advocate
ORDER
Learned Advocate Mr. Sandeep Singhi with Learned Advocate Mr. Mihir Parikh with Learned Advocate
Mr. Pravin Dabhi with Learned Advocate Ms. Rashmi Sapkal present for Financial Creditor/Applicant.
None present for Respondent.
1. M/s. SREI Infrastructure Finance Limited filed this Application invoking Section 7 of the Insolvency
and Bankruptcy Code, 2016 ("Code") in respect of M/s. K.S. Oils Limited.
2. Applicant is a Company registered under the Companies Act. Mr. Somraj Mukherjee filed this
Application on behalf of the Applicant by virtue of Power of Attorney dated 20th March, 2017 given by
the Applicant.
3. M/s. K.S. Oils Limited/Respondent is a Company registered under the Companies Act.
4. The facts in brief, that are necessary for disposal of this Application, are as follows;
1371
4.1 Applicant sanctioned Rupee Term Loan of Rs. 100 Crores to the Respondent on 16th August, 2010.
Respondent accepted the terms and conditions mentioned in the sanction letter. On 23rd August, 2010,
Rupee Loan Agreement No. SRE 130 was entered into between Applicant and Respondent.
4.2 In lieu of the loan granted by the Applicant to the Respondent in terms of Rupee Loan Agreement No.
SRE 130 dated 23rd August, 2010 and as security for the due repayment thereof Respondent executed
following documents in favour of the Applicant;
(i) Deed of Hypothecation dated 23rd August, 2010;
(ii) Demand Promissory Note;
(iii) Mr. Ramesh Chandra Garg executed a Deed of Guarantee dated 23rd August, 2010.
Respondent failed and neglected and refused to make payment of its outstanding dues in accordance with
the terms and conditions of Rupee Loan Agreement. Various cheques given by the Respondent to the
Applicant towards payment of its outstanding dues under the Rupee Loan Agreement were dishonoured
upon presentation. Applicant also initiated proceedings against the Respondent under the provisions of
The Negotiable Instruments Act. On the request of Respondent, Applicant restructured the aforesaid
Rupee Loan. On 2nd September, 2011 a Supplementary Agreement was entered into between the
Applicant, Respondent and Mr. Ramesh Chandra Garg. In terms of the said Agreement, Mr. Ramesh
Chandra Garg agreed to stand as a Guarantor for repayment of loan facilities advanced to the Respondent
under terms of Rupee Loan Agreement dated 23rd August, 2010 and Supplementary Agreement dated
2nd September, 2011. As security, Respondent executed Deed of Hypothecation dated 2nd September,
2011 creating a charge on the assets of the Respondent Company. Respondent entered into a Master
Restructuring Agreement with the Applicant on 14th March, 2012. By virtue of Amendment Agreement
dated 28th June, 2013, Applicant became a CDR Lender but the CDR package failed as the Respondent
neglected to pay the outstanding amount. Respondent in its Annual Report for the year 2014-15
acknowledged that the Corporate Debtor owes to the Financial Creditor to the tune of Rs. 99,73,00,000/-
with a First Charge on the entire assets of the Respondent Company. Similar acknowledgements were
also made by the Respondent in its Annual Reports for the year 2011-12, 2013-14 and 2015-16. Applicant
filed Original Application No. 458 of 2016 on 22nd June, 2016 before the Debt Recovery Tribunal-I at
Kolkata against Respondent and Mr. Ramesh Chandra Garg for recovery of outstanding dues and it is
pending.
1372
5. Applicant filed this Application in Proforma-1 as per sub-Rule (1) of Rule 4 of the Insolvency and
Bankruptcy (Application to Adjudicating Authority) Rules, 2016. Applicant also furnished all the
information that is required as per Form-1. Applicant before filing this Application served a copy of its
Application on the Respondent on 29th May, 2017. Proof of such service is filed.
6. This Application was listed for the first time before this Authority on 5.7.2017. This Adjudicating
Authority directed the Applicant to issue notice of date of hearing to the Respondent. Accordingly,
Applicant issued notice of hearing to the Respondent and filed proof of service. Respondent appeared
through Counsel and filed its Reply. In the Reply Respondent stated that Respondent Company was
India's largest Mustard Oil Producer having 25% market share in Branded mustard oil segment and 11%
market share in overall sale of Mustard Oil. It is also stated that Respondent Company was 2nd largest
exporter of De-oiled Cake for the financial years 1995-96, 1996-97, 2006-07, 2007-08 and 2008-09. In
the year 2010 the Company employed over 3300 people directly or indirectly. The Company had a strong
and consumer centric distribution network. According to the Respondent, in Master Restructuring
Agreement entered into in March 2012 no WCF was granted to the Company. It is also stated that
Secured Creditors filed Original Application No. 306 of 2016 before the Debt Recovery Tribunal-II, New
Delhi in respect of the assets of the Company. Respondent also stated that multiple litigations are pending
between the Company and Secured Creditors including claims/counter claims, set offs. The Secured
Creditors are interested in realization of dues through direct sale under SARFAESI Act. Respondent
stated that initiation of corporate insolvency resolution process is not in public interest. It is also stated
that incidence of default claimed in the petition would be subject matter of adjudication before DRT,
Kolkata. Respondent stated that this Tribunal has to see whether Interim Resolution Professional would
be able to prepare resolution scheme.
7. A perusal of the Rupee Loan Agreement dated 23rd August, 2010, Deed of Hypothecation dated 23rd
August, 2010, Supplementary Agreement dated 2nd September, 2011; Master Restructuring Agreement
dated 28th June, 2013; Statement of Account in accordance with the Banker's Books Evidence Act, 1891;
and True Copies of Annual Reports of the Respondent for the years 2011-12; 2013-14; 2014-15; and
2015-16, is sufficient to ascertain the existence of default, and a default has occurred in payment of the
debt. Applicant is a Company. Respondent is also a Company registered under the Companies Act.
Amount was lent by the Company to the Respondent for interest. Therefore, the amount due from the
Respondent to the Applicant is a 'financial debt'. Hence, the Applicant is a 'Financial Creditor' and the
Respondent is a 'Corporate Debtor'. Application filed by the Applicant is complete in all respects.
Applicant proposed the name of an Interim Resolution Professional. Applicant also filed the Written
1373
Communication of the proposed Interim Resolution Professional. The Written Communication filed
discloses that no disciplinary proceedings are pending against the proposed Interim Resolution
Professional.
8. The pendency of proceedings before the Debt Recovery Tribunal and the initiation of action under
SARFAESI Act by other Secured Creditors is no ground to reject this Application. Provisions of Section
7 read with Rule 4 do not contemplate notice to other creditors, Secured or Unsecured, Operational
Creditor or Financial Creditor. There is every opportunity for other Creditors of any class to refer their
claims before the Interim Resolution Professional in case of admission of this Application. Therefore, in
the absence of any provision enjoining upon this Authority to issue a notice to other Creditors, no notice
need be issued to other Creditors.
9. Learned Counsel appearing for the Respondent contended that this Adjudicating Authority has to see
whether corporate insolvency resolution process is in the public interest or not. He further argued that
'public interest' includes interest of stakeholders.
10. The main object of enacting 'Insolvency Code' is to have Corporate Insolvency Resolution Plan in
respect of Corporate Debtors with an intention to revive the operations of the Corporate Debtor without
straightway going to liquidation. In the process of resolution, every Creditor has an opportunity and
interest of every stakeholder is to be taken into consideration. Therefore, to say that Corporate Insolvency
Resolution Process is not in public interest in all cases is not correct. In the case on hand Corporate
Debtor is unable to pay the debts to several Creditors including the present Financial Creditor. Therefore,
to keep the Corporate Debtor away from the Resolution Process is, in my view, not in public interest
including the stakeholders. Therefore, the argument of the learned counsel for the Respondent may not
suit to the facts of this case.
11. In view of the above discussion, this Petition is admitted under Section 7(5) of the Code. This
Adjudicating Authority is also appointing Shri Kuldip Verma, 3, Jagabandhu Modak Road, 4th Floor,
Shovabazar, Kolkata-700005 having Registration Number IBBI/IPA-001/IP-POOO14/2016-17/10038 as
"Interim Insolvency Resolution Professional" under Section 13(1)(b) of the Code.
Authority shall pass an order declaring a moratorium for the purposes referred to in Section 14 Therefore,
1374
of the Code;
(a) the institution of suits or continuation of pending suits or proceedings against the corporate
(b) transferring, encumbering, alienating or disposing of by the corporate debtor any of its assets
or any legal right or beneficial interest therein;
Financial Assets and Enforcement of Security Interest Act, 2002 (54 of 2002);
the possession of the corporate debtor.
(i) The moratorium order in respect of (a), (b), (c) and (d) above shall not apply to the
transactions notified by the Central Government.
(ii) However, the order of moratorium shall not apply in respect of supply of essential goods or
services to Corporate Debtor.
(iii) The applicant shall also make public announcement about initiation of 'Corporate Insolvency
(e) However, the supply of goods and essential services to the Corporate Debtor shall not be
terminated or suspended or interrupted during moratorium period. The moratorium order in
respect of (i), (ii), (iii) and (iv) above shall not apply to the transactions notified by the Central
Government.
(f) The provisions of sub-section (1) of Section 14 shall not apply to such transactions as may be
14. This Application is ordered accordingly.
15. Communicate a copy of this order to the Applicant Financial Creditor, and to the Interim Insolvency
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AHMEDABAD BENCH
C.P. (I.B.) No. 40/7/NCLT/AHM/2017
Applicant: Standard Chartered Bank Ltd. and Ors.

Vs.
Respondent: Essar Steels India Limited
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Kamal Trivedi, Learned Senior Counsel, Rasesh Sanjanwala, Learned
Senior Advocate, Sandeep Singhi, Learned Advocate, Siddharth Joshi and Vinay Bairagra, Learned
Advocates for Singhi & Co.
For Respondents/Defendant: Saurabh Soparkar, Learned Senior Counsel, Mihir Thakore, Learned Senior
Advocate, Keyur Gandhi, Raheel Patel and Nisarg Desai, Learned Advocates
ORDER
1. Standard Chartered Bank (SCB) and State Bank of India (SBI) initiated Corporate Insolvency
Resolution Process under Section 7 of Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as
"IBC") read with Rule 4 and 9(1) of Insolvency and Bankruptcy (Application to Adjudicating Authority)
Rules, 2016 (for brevity sake "IBR") in respect of ESSAR Steel India Limited (for brevity sake
"ESSAR").
2. SCB is a Banking Corporation incorporated in England by a Royal Charter, 1853 with its Registered
Office in London, England. SCB is a leading International Banking Group and has been carrying on
operations in India for over 150 years.
3. SBI was constituted under the Statutory Enactment of the State Bank of India Act, 1955. SBI with the
sanction of the Central Government and Reserve Bank of India has acquired by way of amalgamation the
business including the assets and liabilities of all of its associate Banks which are State Bank of Bikaner
and Jaipur, State Bank of Hyderabad, State Bank of Mysore, State Bank of Patiala, State Bank of
Travancore with effect from 1st April, 2017. The Corporate Centre of SBI is in Mumbai.
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4. ESSAR is an Unlisted Public Company incorporated on 1st June, 1976 under the Companies Act, 1956
with its Registered Office at Essar House, Surat. The Objects for which ESSAR was constituted as set out
in its Memorandum of Association, inter alia, include to carry on business of constructional engineers,
mechanical engineers, Iron Founders, Public Works and general Contractors, Constructors, Builders,
dealers in bridges Steel Frames, Buildings, steel, iron, structures of all kinds, iron and steel converters,
smiths, wood workers, painters, electrical engineers and electricians and dredgers.
5. The Application filed by SCB discloses that it has provided a loan in an amount of US $ 413,000,000
to Essar Steel Offshore Limited ('ESOL') which was disbursed to ESOL on January 3, 2014. The said
loan is secured, inter alia, by the Guarantee of the ESSAR (Corporate Debtor).
6. Pursuant to the Facility Agreement dated 3rd January 2014, as amended on 7th February, 2014, SCB
provided a loan of US Dollars 413,000,000 to ESOL to refinance its then existing loan facility of US $
431.1 Million on the terms and conditions contained therein. ESOL is a Company incorporated under the
Laws of Mauritius with its Registered Office at Essar House, Mauritius and it is a wholly owned
subsidiary of ESSAR. In terms of Clause 17 of the Facility Agreement, ESSAR provided a guarantee for
the repayment of the term loan facility under the Facility Agreement. The Guarantee has been
acknowledged and recorded as a 'Contingent Liability' in ESSAR's Annual Reports for the years 2014-15
and 2015-16. On 7.12.2015, SCB issued notice demanding immediate payment of amounts due under the
Facility Agreement. SCB also issued a statutory notice of demand under Section 434(1)(a) of the 1956
Companies Act to ESSAR on 18th April, 2016 once again demanding the immediate repayment of the
entire amount outstanding under the Facility Agreement. ESSAR has been unable to service its overall
debt aggregating to an amount of approximately Rs. 450,000,000,000. As per Clause 17.1 of the Facility
Agreement, ESSAR agreed to act as a guarantor in relation to the loan and other amounts due and payable
under the Facility Agreement and, inter alia, irrevocably and unconditionally agreed that ESSAR
undertakes with each Secured Party that whenever another Obligor or a Security Provider does not pay
any amount when due under or in connection with any Secured Document, that Guarantor shall
immediately on demand pay that amount as if it was the principal obligor. ESSAR also waives any right
to proceed against or enforce any other rights as per Clause 17.5 of Facility Agreement.
7. According to SCB, ESOL failed to pay the amounts specified in Clauses 6.1, 8.2., 8.3., 11.1, 11.2 and
12 of the Facility Agreement. It is stated by SCB that an "Event of Default" as defined in Clause 23.1 of
the Facility Agreement has occurred and is continuing. ESOL's default in repayment under the Facility
Agreement started in January 2015. On 15th September, 2015, SCB also issued notice to ESOL marking
copies to ESSAR. On 7.12.2015, SCB served a notice of demand on ESOL stating the amounts due. On
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7.12.2015 SCB also issued a demand notice to ESSAR. ESSAR failed to respond or to pay under the
demand notice. SCB on 18.4.2016 issued a notice under Section 434(1)(a) of the Companies Act, 1956.
ESSAR neglected to pay the amount within 21 days of the statutory notice. As on 22nd June, 2017, the
following were the outstanding amounts;
a) US $ 413,000,000 towards principal amount of the loan;
b) US $ 30,160,545.83 towards accrued interest of the loan; and
(c) US $ 95,187,481.61 towards all other outstanding amounts due and payable under the Facility
Agreement.
SCB stated that ESSAR has no bona fide, valid or legal defence in respect of the amounts payable to the
SCB. SCB also issued further notice on 17th November, 2015 stating that ESSAR is implementing a
scheme between it and its Secured Creditors without prior approval of SCB. Thereafter, on 10th
December, 2015, ESSAR wrote a letter to SCB requesting for a meeting of the Steering Committee of the
ESSAR's Indian Lenders to discuss about the dues payable to SCB. On 24th January, 2017, ESSAR
issued a letter to SCB suggesting a Debt Restructuring Proposal pursuant to which the outstanding
amount would be paid at the end of 25 years along with interest at 1% per annum. SCB rejected the said
Restructuring Proposal. SCB also wrote a letter dated 22nd February, 2017 to SBI stating that Debt
Restructuring Proposal was carried out without involvement and consent of SCB. SBI gave reply on 15th
March, 2017 stating that Lenders of ESSAR did not give their consent to the ESSAR for issuing the
Guarantee under the Facility Agreement. ESSAR issued a letter dated 4th April, 2017 to the SCB
acknowledging the debt owed under the Guarantee. SCB by letter dated 7th April, 2017 stated that the
consent of the lenders of the ESSAR is not necessary to enforce the Guarantee given by ESSAR. It is the
case of SCB that it was never invited to the Joint Lenders Forum ("JLF") and it was precluded from
participating in the JLF. SCB stated that ESSAR failed to respondent to the demands of the SCB and
therefore it initiated Corporate Insolvency Resolution Process in respect of ESSAR in the public interest
and for the benefit of all the creditors of ESSAR.
8. SCB filed true copy of Facility Agreement dated 3rd January, 2014; true copy of Amendment Letter
dated 2nd February 2014 amending Facility Agreement dated 3rd January, 2014; true copy of Statement
of Accounts; true copy of Annual Report of ESSAR for the years 2014-15 and 2015-16, and copies of
notices. SCB also proposed the name of Interim Insolvency Resolution Professional and filed his Written
Communication.
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9. It is the case of SBI that the total debt of Rs. 14860,82,00,000, granted to the ESSAR by SBI is as
follows;
a) Term Loan-Rs. 4000,00,00,000
b) Term Loan (5/25) * - Rs. 2195,00,00,000
c) Corporate Loan 1-Rs. 2585,00,00,000
d) Corporate Loan 2-Rs. 1516,00,00,000
e) EPBG Facility-USD 237.05 Million (Rs. 1528,97,00,000).
f) Working Capital Facility Rs. 4738,00,00,000
g) Derivative Facility - Rs. 331,60,00,000.
[* Term Loan under 5/25 scheme is carved out from existing loans and hence not included in the total
amount].
10. SBI filed details of case of disbursements and revival letters upto 7th July, 2016. SBI also filed
financial debt documents, records and evidence of default in accordance with Banker's Books Evidence
Act, 1891. SBI also filed Certificates of Registration of charges SBI also filed copies of Common Loan
Agreement, SBLC Facility Agreement, Guarantee Facility Agreement, Working Capital Facility
Agreement, Amended and Restated Working Capital Facility Agreement etc. SBI also filed Minutes of
Meeting of JLF whereby SBI was authorised by other Banks of JLF to file CIR Application. SBI also
proposed the name of Interim Insolvency Resolution Professional and filed his Written Communication.
11. The case of ESSAR, as can be seen from the objections in both the Applications, is as follows;
11.1 ESSAR stated that it is not a willful defaulter. ESSAR stated that there is no diversion of funds,
fraud or malfeasance. According to the ESSAR, ESSAR has set up several plants across the Country for
the purpose of providing customized steel products to the consumers by investing Rs. 50,000 Crores. All
the manufacturing facilities of ESSAR are world class facilities capable of manufacturing various steel
products conforming to International standards and used in core and critical sectors such as infrastructure,
oil & gas, automobiles and defense. ESSAR invested heavily on its manufacturing units to the extent
mentioned herein below;
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a) Beneficiation Plant at Kirandul (8 mtpa)
b) Slurry Pipeline between Kirandul and Vishakhapatnam (267 kms.)
c) Pelletization Plant at Vishakhapatnam (8 mtpa)
d) Beneficiation Plant at Dabuna (8 mtpa)
e) Slurry Pipeline between Dabuna and Paradip (253 kms)
f) Pelletization Plant at Paradip (6 mtpa)
g) Pelletization Plant at Paradip (6 mtpa)-under construction.
Hazira Steel Complex
h) HBI/DRI (Gas based) Plant (6.7 mtpa)
i) Blast Furnace (1.74 mtpa)
j) Corex Plants (2 Nos.) (1.76 Mtpa)
k) Compact Strip Mill (3.5 Mtpa)
l) Plate Mill (1.5 Mtpa)
m) Pipe Mill (0.6 Mtpa)
n) Steel Service Centres at 7 locations across the country.
o) Retail Hypermart at 19 locations across the country.
11.2 ESSAR had commenced its manufacturing activities from the year 1989 and has been consistently
increasing production volumes at its natural gas based facilities at Hazira, Gujarat for the period between
financial years 1990-2000 to 2010-2011. ESSAR recorded Profit After Tax in 16 years except for the
period of 4 years, i.e., from Financial Years 1998-1999 to 2001-2002 and Financial Year 2010-2011
where the Company had incurred losses on account of external factors. ESSAR set up its Gas Based Plant
on the basis of assurances of Gas supply given by the Government of India. Due to non-supply of natural
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gas, ESSAR had fatal and severe consequences on its operations. In March, 2011, Government of India
arbitrarily and suddenly without notice categorized the steel sector from priority sector to non-core sector
and issued directions to the contractors of KG-D6 Field to cut off the supply of natural gas on a
disproportionate basis in case of shortage of supply of gas from the Field. Due to that the operations of
ESSAR have been gravely affected. ESSAR in between 2011 and 2016, incurred a loss of approximately
Rs. 26,000 Crores on account of arbitrary decision of the Government of India. During the years 2011-
2012 to 2015-2016, the Natural Gas available in the open market other than Government allocation was
available at a very high price making it commercially unviable for ESSAR or any gas based Steel unit.
The anti-social elements damaged the Kirandul-Vizag Slurry Pipeline which was used for transporting
iron ore fines in slurry form to the Pellet Plant in a cost effective and environmentally friendly manner.
Therefore, it was not operational between March 2010 to December 2010 and May 2012 to January 2014.
The Pipeline has been repaired and has been in operation from January 2014. Due to that also ESSAR has
incurred losses.
11.3 Further, according to the ESSAR, entire steel sector in India was undergoing major crisis in the year
2014 and 2015 which was primarily due to the dumping of steel by various countries such as China,
Japan, Republic of Korea and Russia amongst others. The Government of India took various measures
through various Ministries to support the Indian Steel Industry. ESSAR gave the chronological sequence
of various initiatives taken by the Government in Annexure-R/11.
11.4 Further, it is the case of the ESSAR that the operations of the ESSAR are very complex involving
large number of stakeholders including suppliers, creditors, employees, promoters, customers,
Government exchequer over and above the financial creditors. ESSAR is on the path of improvement to
carry on the operations at 80% capacity. Further, it is stated by ESSAR that Debt Resolution Process was
undertaken and there were discussions between the Lenders and ESSAR till 13th June, 2017 on the day
on which Reserve Bank of India (RBI) issued a Press Release. ESSAR stated that the directions given by
RBI to SBI triggered the reference before National Company Law Tribunal. According to ESSAR,
Resolution Process has two risks. First, the process of formulation of Debt Resolution Process will have
to be reinitiated and further time will be lost due to fresh start. The second one is potential risk to the
operations and value of the Company under the hands of IRP. ESSAR also stated that if the Company is
in the hands of IRP who is an individual person it is difficult for him to oversee such complex operations
in a short period of 180 days. Further, according to the ESSAR, the funding supported by the creditors
and suppliers which were available to the Company under the stewardship of Board of Directors and
promoters may not be available to IRP. According to the ESSAR, promoters, lenders, employees,
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creditors, suppliers, customers have invested time, efforts and resources to revive the Company and
implement a satisfactory Debt Resolution Plan and if at this stage the Insolvency Resolution Plan is
invoked it would adversely affect the interest of the Company and all its stakeholders. It is further stated
that in view of Section 13 and 16 of the IBC, the appointment of IRP shall be made only after the
admission of the petition within 14 days. Further, it is stated by ESSAR that there are 4500 people
working in the Company and all would be affected in case of commencement of Insolvency Resolution
Process. It is also stated that National Company Law Tribunal has got discretion not to admit the petition
in view of language used in Section 7.
12. For initiation of Corporate Insolvency Resolution Process against a Corporate Debtor under Section 7
of the IBC, it is essential that a default must occur in respect of financial debt owed to
Applicant/Financial Creditor.
13. Here, SCB and SBI are the Applicants. There is no dispute about the fact that SCB and SBI are
Financial Creditors. There is no dispute about the fact that amounts due to SCB and SBI are 'financial
debts'. ESSAR did not even dispute the debt due to SCB and SBI. It is the case of ESSAR that it has
submitted proposals for restructuring of its debts to the Lenders for approval and Lenders held several
meetings with ESSAR from time to time and suggested certain modifications to the said proposals. After
several meetings and exchange of communications, ESSAR in the month of January 2017 finally
submitted to the Lenders the boundary conditions that were acceptable to it for their approval. Lenders
informed ESSAR that yield applicable for buy-back of shares by the promoters should be increased from
14% as proposed by ESSAR to 18%. Finally ESSAR agreed to pay the yield at 16%. During such period
Sections 35AA and 35AB were inserted in the Banking Regulation Act, 1949 by an Ordinance issued by
the Central Government. RBI vide its powers under Section 35AA issued directions to the SBI to initiate
Corporate Insolvency Resolution Process.
14. The first and foremost objection raised by the ESSAR is that the Application filed by SBI is not
signed by a competent person. On this aspect, learned Senior Counsel appearing for ESSAR referred to
the letter issued by Chairman, SBI on 16th June, 2017 which is at Page No. 80 of the Application. In that
letter, Chairman, SBI referring to Section 27 of the State Bank of India Act, authorised all officers on
whom signing powers have been conferred vide Notification dated 27th March, 2017 to sign applications
etc., in the proceedings that are going to be filed before National Company Law Tribunal under the
provisions of the IB Code. Referring to Section 27 of the SBI Act, learned Senior Counsel appearing for
ESSAR contended that unless there is general or special directions given by the Central Board of the
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Bank, the Chairman cannot exercise powers authorising the officers to sign the pleadings before the
National Company Law Tribunal.
15. This contention of the learned Senior Counsel appearing for the ESSAR has been answered by the
learned Senior Counsel appearing for SBI by referring to Regulations 76 and 77 of The State Bank of
India General Regulations, 1955. Regulation 76 of SBI General Regulations says, the Managing
Directors, the Deputy Managing Directors, the Chief General Managers and such other officers and
employees of the State Bank as the SBI may authorise in this behalf by notification in the Gazette of India
are severally empowered for and on behalf of SBI to sign all documents, instruments, accounts, receipts,
letters and advices connected with the current or authorised business of the State Bank. Regulation 77 of
the said Regulations says, that Plaints, written statements, petitions and applications may be signed and
verified on behalf of the SBI by the Chairman or by any officer or employee empowered by or under the
Regulation 76. Along with the Application the Applicant filed a Gazette Notification dated 2nd May,
1987 wherein it is stated that all the officers in the Grades of SMGS-IV and above are empowered to sign
all documents pursuant to Regulation 76.1 of State Bank of India General Regulations. On this aspect,
learned Senior Counsel appearing for SBI cited the following decisions;
1. State Bank of India Vs. Earnest Traders Exporters, Importers & Commission Agents,
reported in MANU/DE/0542/1997 : 1997 (41) DRJ.
2. State Bank of India Vs. Kashmir Art Printing Press, Sirsa and Others, reported in
MANU/PH/0123/1981.
In the above said two decisions, the Hon'ble High Courts, after considering Regulations 76 and 77 of the
State Bank of India General Regulations, 1955 and Gazette Notifications, held that Manager of the Bank
could be duly authorised to sign and verify the pleadings and also would be entitled to institute suits for
and on behalf of the State Bank of India. In the case on hand, the officers who have signed in the
Applications are above IV Grade. Therefore, the objection raised by the learned Senior Counsel for
ESSAR regarding the competency of the person who signed the Application is not a valid objection. In
view of the above discussion, Mr. Kshitij Mohan, Deputy General Manager is having valid authority to
sign the Application and is competent to file the Application for and on behalf of SBI.
16. The contention raised by the learned Senior Counsel for the SCB is, that the word "may" used in
Section 7(5)(a) of the Code shall be read as "shall" but not as "may" in the context of initiation of
1383
Corporate Insolvency Resolution Process, Adjudicating Authority having satisfied about the other
requirements. In support of his contention, he relied upon the following decisions;
1. Bachahan Devi And Another Vs. Nagar Nigam, Gorakhpur And Another, reported in
MANU/SC/7111/2008 : (2008) 12 Supreme Court Cases 372. Relevant Paras 18 to 21.
2. Sarla Goel And Others Vs. Kishan Chand, reported in MANU/SC/1131/2009 : (2009) 7 Supreme Court
Cases 658.
In both the decisions, it is held that "in order to find out whether the words "may" or "shall" are used in a
directory or in a mandatory sense, the intent of the Legislature should be looked into along with the
pertinent circumstances."
17. On the other hand, learned Senior Counsel, appearing for ESSAR, contended that the Legislature in its
wisdom used the word "may" in Section 7(5)(a), whereas in the same Code in Section 9(5) and 10(4),
used the word "shall" in respect of admission of Applications for initiation of Corporate Insolvency
Resolution Process. He further contended that the intention of the Legislature in case of Operational
Creditor, Corporate Debtor, and Corporate Applicant, the Adjudicating Authority, subject to fulfillment of
other conditions, shall admit the Application, but in case of Application by Financial Creditor the
Adjudicating Authority has got discretion either to admit the Application for initiation of Insolvency
Resolution Process or reject the same.
18. There is no dispute about the proposition of law that in order to give appropriate meaning to the words
"may" and "shall" used by the Legislature, the intent of the particular enactment and the attendant
circumstances must be taken into consideration. The Hon'ble High Court of Gujarat, vide Judgment in the
matter of Essar Steel India Limited and Another vs. Reserve Bank of India and Others, in Special Civil
Application No. 12434 of 2017, held that admission of an Insolvency Application filed by Financial
Creditor is not a routine order and the Adjudicating Authority shall apply its mind to all the factual details
and then pass an order. This Adjudicating Authority is of the view that the order of admission of an
Application for initiation of Corporate Insolvency Resolution Process is a judicial order which should be
according to the provisions of the Code, principles of natural justice, and taking the consequences of the
order into consideration. Therefore, there this Adjudicating Authority shall exercise its discretion in either
admitting or rejecting the Insolvency Resolution Applications. It is needless to say that discretionary
power has to be exercised in a judicious manner taking into consideration all the facts and circumstances
of the case, the provisions of the applicable laws and the object of the Insolvency and Bankruptcy Code.
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This Adjudicating Authority shall look into the aspect of the occurrence of default, and, while doing so,
shall take into consideration various factual and legal pleas raised by both parties in order to record its
satisfaction. Therefore, the argument of the learned Senior Counsel for the SCB, that the word "may" in
Section 5(a) shall be read as "shall" and therefore it is mandatory on the part of the Adjudicating
Authority to admit all the Insolvency Resolution Applications filed by the Financial Creditors, if they are
complete, do not merit acceptance.
19. Learned Senior Counsel appearing for the ESSAR, depending upon certain observations made by the
Honourable High of Gujarat in Special Civil Application No. 12434 of 2017, contended that the
Adjudicating Authority shall take into consideration the Debt Reconstruction Scheme and the complex
situation that arises in case of admission of this Application and whether Interim Resolution Professional
(IRP) can manage the affairs of the Company or not.
20. On the other hand, learned Senior Counsel appearing for the SCB and SBI vehemently contended that
the Special Civil Application filed by ESSAR against RBI, SCB and SBI was dismissed without granting
any relief and the Hon'ble High Court only observed to take certain facts into consideration and decide the
same in accordance with law. Learned Senior Counsel appearing for SCB and SBI relied upon the
decision of the Hon'ble National Company Law Appellate Tribunal, on 17th January, 2017, in Company
Appeal (AT) (Insolvency) No. 1 & 2 of 2017 in the matter of M/s. Innoventive Industries Ltd. Vs. ICICI
Bank & Anr., and contended that in an application under Section 7 of the Code, the Adjudicating
Authority is required to ascertain existence of default from the records of information utility or on the
basis of other evidence furnished by the Financial Creditor. It is also contended that Adjudicating
Authority has to satisfy whether a default has occurred, whether the application is complete, and whether
any disciplinary proceeding is pending against the proposed Insolvency Resolution Professional. Learned
Senior Counsel appearing for the SCB and SBI contended that once the Adjudicating Authority is
satisfied about the aforesaid aspects the Application shall be admitted and Insolvency Resolution Process
shall commence.
21. Following are the observations made by the Hon'ble High Court in Special Civil Application No.
12434 of 2017. In Para 27, it is observed;
"27.....The emphasis on opinion or necessity can be looked into by NCLT because discussion on factual
merits would otherwise prejudice the either side and, therefore, I have avoided to discuss the factual
details to ascertain that whether there was actual necessity to initiate proceedings under the Code or not..."
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In Para No. 35, the Hon'ble High Court has observed;
"35......The adjudicating authority i.e., NCLT is not bound to admit the petition as a matter of rule but it
has to be decided in accordance with law for which generally reasonable opportunity needs to be extended
to all concerned."
The Hon'ble High Court has further observed in Para No. 39.2 and 3) as under;
"2) It is undisputed fact that filing of such application itself cannot be questioned or that action cannot be
quashed, but it goes without saying that such filing would not amount to admitting or allowing the
petition for insolvency without offering reasonable opportunity to the company, which is requested to be
taken into insolvency by any such person. Therefore, the adjudicating authority being NCLT herein,
which is constituted in place of the Company Court, needs to decide on its own based upon factual details
that whether the insolvency petition is required to be entertained as such or not."
"3) For the purpose, adjudicating authority, certainly requires to extend hearing and reasonable
opportunity to the company to explain that why such an application should not be entertained. In other
words, filing of an application may not result into mechanical admission of application as seen and posed
by RBI in impugned press release. It would be a decision based on judicial discretion by the adjudicating
authority to deal with such application in accordance with law and based upon facts, evidence and
circumstance placed before it. To that extent, prayers 7(b) and (c) cannot be granted."
The Hon'ble High Court of Gujarat, while dealing with the submissions of the ESSAR, in Para No. 39.12)
at Page 77 observed as follows;
"12) However, before concluding the petition, one has to deal with the submission of the petitioner that
considering the provisions of Insolvency and Bankruptcy Code, 2016, filing of petition would result into
admitting the petition within 14 days being mandate of the NCLT under the Act, and it would result into
drastic impact on the day to day functioning of the company and its process of restructuring the affairs of
the company so as to survive. It is contended that on admission of the petition under Insolvency and
Bankruptcy Code, 2016, if Interim Resolution Professionals are to be appointed mechanically, without
considering the facts and circumstances and without offering an opportunity to finalise the restructuring
plan, which is at the advance stage, and thereby, if control of the Board of Directors is withdrawn, then,
suppliers would not continue to supply raw-materials, which would result into closure of all units and
thereby, retrenchment of 4500 employees' for no valid reasons, more particularly when company is
functioning at its 80% capacity and doing well to cope-up with the competitive market against non-
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availability of gas (fuel) from Government and against dumping of similar product from foreign countries
whereby there is imbalance in production because of final profit. Though it may seem to be an attractive
argument, in my humble opinion, at this stage, in a petition under Article 226 of the Constitution of India,
I do not wish to explore all such issues and to determine anything precisely because, ultimately, all such
issues would be raised before NCLT, which has to ascertain that whether there is reason to admit the
insolvency resolution process immediately or not."
21.1 The Hon'ble High Court, at the end of Para 39.12, observed as follows;
".....However, at the cost of repetition, it is made clear that factual details and on-going process of
restructuring plan and other details would be taken care of by NCLT before taking any decision on
merits."
22. The following are the findings of the Hon'ble National Company Law Appellate Tribunal, in
Company Appeal (AT) (Insolvency) No. 1 & 2 of 2017 (supra);
"82. As discussed in the previous paragraphs, for initiation of corporate resolution process by financial
(3). Under Section 5 of Section 7, the 'adjudicating authority' is required to satisfy-
(c) Whether any disciplinary proceeding is against the proposed Insolvency Resolution Professional.
83. Once it is satisfied it is required to admit the case but in case the application is incomplete application,
the financial creditor is to be granted seven days' time to complete the application. However, in a case
where there is no default or defects cannot be rectified, or the record enclosed is misleading, the
84. Beyond the aforesaid practice, the 'adjudicating authority' is not required to look into any other factor,
including the question whether permission or consent has been obtained from one or other authority,
including the JLF. Therefore, the contention of the petition that the Respondent has not obtained
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permission or consent of JLF to the present proceeding which will be adversely affect loan or other
members cannot be accepted and fit to be rejected."
23. In the case on hand, from the material placed on record by SCB and SBI, it is clear that it is
established that ESSAR has committed default in repayment of financial debt to SCB and SBI. The
Applications filed by the SCB and SBI are complete in all respects. As can be seen from the Written
Communications of proposed Interim Resolution Professionals filed by the SCB and SBI, no disciplinary
proceedings are pending against them. In view of the Judgment of the Hon'ble National Company Law
Appellate Tribunal (supra), this Adjudicating Authority need not look into any other factor. In fact, in the
Judgment of the National Company Law Appellate Tribunal (supra), one of the defences raised by the
Corporate Debtor therein was that the Corporate Debtor is entitled for protection having granted the
benefit under MRU Act, 1956. The Hon'ble Appellate Tribunal, referring to Section 4 of the MRU Act,
held that the protection under the MRU Act is limited to the acts listed in the schedule. The Hon'ble
Appellate Tribunal also held that in view of Section 238 of the IB Code it would prevail over Sections 3
and 4 of MRU Act. The Hon'ble Appellate Tribunal also held that the Adjudicating Authority need not
consider the Master Restructuring Agreement dated 8th September, 2014.
24. However, the Hon'ble High Court of Gujarat in Special Civil Application No. 12434 of 2017 observed
that this Adjudicating Authority shall take into the fact situation including the process of Debt
Restructuring Plan. Therefore, I proceed to consider whether Debt Restructuring Process or Debt
Restructuring Plan is going to absolve the ESSAR, Corporate Debtor from the Insolvency Resolution
Process. From the material placed on record, it is in the year 2014 that Debt Reconstructing Process
commenced. For one reason or the other, the Debt Reconstructing Process has not been finalised till today
or till the date of filing of the Applications. It is not a case where ESSAR owed monies to Lenders in the
previous year. The Lenders are there from the beginning of the ESSAR Company. As contended by the
learned Senior Counsel for ESSAR there are several reasons that prevented the ESSAR from discharging
the debts. No doubt, there are no allegations of siphoning of funds, diversion of funds or fraud. But, the
fact remains that except showing a little progress in the last financial year, there appears to be no scope
for the ESSAR to repay its debts till 25 years or in a span of 25 years. Therefore, the Debt Restructuring
Process, which is going on for the last two years, may not be a factor not to enter into Insolvency
Resolution Process. It is pertinent to mention here, that even in the Corporate Insolvency Resolution Plan,
Debt Restructuring Plan can be taken into consideration by the Committee of Creditors as one of the
Resolution Plans, if submitted by any of the Resolution Applicants. Therefore, commencement of
Insolvency Resolution Process cannot be construed as putting an end to the Debt Restructuring Process
which has been commenced. The apprehension of ESSAR, that, to again start Debt Restructuring Process
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would consume lot of time, appears to be not acceptable for the reason that Insolvency Resolution Plan is
a time bound programme. There is no scope for the stakeholders to prolong the process without taking a
decision and without finalising the Resolution Plan. Therefore, on the ground that when a Debt
Restructuring Process is going on there is no need to commence the Insolvency Resolution Process under
the IBC does not hold the field. It is contended by the learned Senior Counsel appearing for ESSAR that
it is not possible for the Interim Resolution Professional, within a short period to manage the several units
of the Company and to convince the customers and other lenders in the absence of Board of Directors. If
Insolvency Resolution Process is commenced by appointing Interim Resolution Professional, no doubt the
Board of Directors would be suspended. That does not mean the entire machinery of the Company is
suspended. Even after appointment of IRP, all the employees of the Company, top to bottom, would
continue to function under the control of IRP instead of the Board of Directors. Therefore, the
apprehension of ESSAR that suspension of Board of Directors may cause prejudice to the interest of the
Company and the stakeholders may not be correct. The Object of the IBC is to chalk out a Resolution
Plan to revive the Company, but not to liquidate the Company straightway. It is needless to say that a
company like ESSAR need not be liquidated and there are several other alternatives to revive the
Company. If all the eligible Creditors sit together; evolve a Resolution Plan, it would help not only the
Company, its stakeholders, Steel Industry, and ultimately the economy of India. In chalking out such
Resolution Plan, mainly the Lenders, must sacrifice to a great extent which makes the Company to revive.
If a Resolution Plan is chalked out with such objectives in mind, the Resolution Plan will certainly help
the Company and it would come out of the present situation. Therefore, as opined by the Hon'ble High
Court of Gujarat, taking all the material facts, and the Debt Restructuring Plan, and the objects of the IB
Code, into consideration this Adjudicating Authority is of the view that it is only the Resolution Plan that
would make the ESSAR Company survive which course would safeguard the interest of all the
stakeholders of the Company. Therefore, there is no need for an apprehension that Resolution Plan is
going to be detrimental to the interest of the Company. The finding of this Authority, after taking into all
factual aspects, the complex activities of ESSAR, the ongoing Debt Restructuring Process, is that both
Applications merit admission.
25. In view of the above discussion, this Adjudicating Authority is of the considered view that the
Applications filed by the SCB and SBI are complete, there is occurrence of default in respect of financial
debts, and there are no disciplinary proceedings pending against the Insolvency Resolution Professionals
proposed by both the Applicants, i.e., SCB and SBI. Hence, this Adjudicating Authority is hereby
admitting both the Applications filed by SCB and SBI.
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26. In case of admission of an Application under Section 7 of the Code, the Corporate Insolvency
Resolution Process commences. Section 13 of the code says that after the admission of the Application
under Section 7, the Authority shall declare moratorium, cause public announcement of initiation of
Corporate Insolvency Resolution Process, and call for submission of claims under Section 15 of the Code,
and appoint Interim Resolution Professional in the manner laid down in Section 16. The learned Senior
Counsel appearing for ESSAR vehemently contended that there is no need to appoint Interim Resolution
Professional on the same day on which date admission order is passed and it can be passed within 14 days
of the admission of the Applications. In this context, learned Senior Counsel appearing for ESSAR
referred to Section 16 sub-section (1). He also referred to Sections 14 and 15 of the Code. He contended
that Section 14 where under moratorium is declared it should be on the insolvency commencement date.
Learned Senior Counsel, referring to Section 15 contended that public announcement of Corporate
Insolvency Resolution Process under Section 13(b) shall be only after the appointment of Interim
Resolution Professional since the publication shall contain details of Interim Resolution Professional. In
that premise, learned Counsel contended that it is only moratorium under Section 14 that has to be
declared on the date of commencement of Insolvency Resolution Process, i.e., on the date of the
admission of the Application under Section 7 but the appointment of Interim Insolvency Resolution
Professional and the public announcement can be deferred. No doubt, a reading of Sections 13, 14, 15 and
16(1) of the Code goes to show that Adjudicating Authority need not appoint the Interim Resolution
Professional on the same day on which Application under Section 7, 9 or 10 is admitted. But, there is no
provision which bars the Adjudicating Authority from appointing Interim Resolution Professional on the
same day on which the admission order was passed and simultaneously with the admission order. In an
application filed under Section 9, in case if the Operational Creditor did not give the name of the IRP,
then the Adjudicating Authority, availing the 14 days' time provided under Section 16(1), can appoint the
Interim Resolution Professional within 14 days from the date of admission order. Suppose in a given case
there is some omission in the Written Communication or there is some difficulty in the appointment of the
recommended IRP, in such cases the Adjudicating Authority may appoint IRP even in an application
under Section 7 not on the date of order of admission, but on a subsequent date, but before 14 days from
the date of admission. Therefore, there must be facts and circumstances that warrant the Adjudicating
Authority to defer the appointment of IRP in an application filed under Section 7 of the Code. In the case
on hand, no such circumstance exists which warrant deferring the appointment of Interim Resolution
Professional to some other date but not on the date of admission order. Learned Counsel appearing for
ESSAR contended that ESSAR can go in appeal against the admission order, and if the appointment of
Interim Resolution Professional is deferred, then the interest of the Company would not be jeopardised. I
am unable to agree with the contention of the learned Senior Counsel for the Interim Resolution
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Professional for the reason that no two stages or no two separate hearings are contemplated under the
Code, namely, the first stage is admission and the second stage is appointment of Interim Resolution
Professional. The object of the Code is to complete the entire process in a time bound programme. When
such is the object of the Code, without any compelling circumstances, there is no need to defer the
appointment of Interim Resolution Professional only to give an opportunity to the Corporate Debtor to
agitate the decision of this Adjudicating Authority twice in two Appeals. The Corporate Debtor is entitled
to prefer an Appeal against the order of admission and also against the appointment of Interim Resolution
Professional. If both the orders, namely admission order and the order appointing Interim Resolution
Professional are made separate, then the Corporate Debtor will file two Appeals at two stages and thereby
gain more time, which is not the object of the Code. Therefore, the Code enjoins upon this Authority to
declare Moratorium; to make public announcement of initiation of Corporate Insolvency Resolution
Process; and to appoint Interim Resolution Professional on the date of commencement of Insolvency
Resolution Process as Rule and the exception is differing the appointment of Interim Resolution
Professional to some other date that depend upon the facts of the case.
27. In the case on hand, SCB and SBI filed two separate Applications under Section 7 of the Code. Both
the Applications are being disposed of by this Common Order because both the Applications are filed
against one Corporate Debtor. In both the Applications, there are certain similar contentions. In the case
of SCB, the direction of the RBI is not applicable, whereas in the case of SBI, there is a direction from
RBI to file Application under Section 7 to SBI. The direction given by RBI to SBI to file Application
under Section 7 is held to be valid by the Hon'ble High Court in the Judgment delivered in Special Civil
Application No. 12434 of 2017 filed by ESSAR. Even otherwise, SBI, being a Financial Creditor, by
itself is competent to file an Application under Section 7 of the Code. SBI along with its application filed
Minutes recorded by the Joint Lenders Forum dated 22nd June, 2017 whereby the SBI was authorised by
other Banks of JLF to initiate Corporate Insolvency Resolution Process.
27.1 In the said Minutes, the Joint Lenders Forum decided to recommend the name of one Shri Satish
Kumar Gupta supported by A & M as Interim Resolution Professional in the Application.
28. SCB also proposed the name of Shri Dinkar Venkatasubramanian as Interim Resolution Professional.
It is contended by the learned Senior Counsel appearing for the SCB that it is the SCB that initiated the
proceedings even before the SBI filed the Application. Learned Senior Counsel appearing for SCB also
referred to the definition of 'initiation date' in Section 5(11) of the Code. As per Section 5(11) of the
Code, "initiation date" means the date on which the Financial Creditor, Corporate Applicant or the
Operational Creditor, as the case may be, makes the application to the Adjudicating Authority for
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initiating Corporate Insolvency Resolution Process. No doubt, among the two Applications, the
Application filed by SCB, i.e. CP (IB) No. 39 of 2017 is earlier in point of time than the Application of
SBI.
29. Learned Senior Counsel appearing for SCB also contended that the criteria of value of the Creditors is
not the guideline for appointing the Interim Resolution Professional. He contended that even if one
Creditor recommends the name of Interim Resolution Professional, he shall be appointed irrespective of
the fact that other Creditors together recommended another name of Interim Resolution Professional.
30. On the other hand, learned Senior Counsel appearing for SBI contended that before recommending
the name of Interim Resolution Professional, SBI has undertaken lot of exercise in the Joint Lenders
Forum Committee Meeting held on 22.6.2017. The JLF called for quotations from the Resolution
Professionals including their experience. The JLF also considered the presentations given by the
Insolvency Resolution Professionals. The JLF, after considering the profiles of various Interim Resolution
Professionals, proposed the name of Shri Satish Kumar Gupta. He further contended that the value of debt
of the JLF is far more than the value of the debt of SCB and therefore it is appropriate to appoint the
Interim Resolution Professional as recommended by JLF which authorised the SBI to present the
Application as Single Creditor.
31. In the light of the above said contentions, now it has to be seen whether the proposed Interim
Resolution Professional proposed by the SCB can be appointed or whether the Interim Resolution
Professional proposed by the SBI can be appointed.
32. The contention of the learned Senior Counsel, appearing for SCB, that the Interim Resolution
Professional proposed by SCB has to be appointed on the ground that SCB's Application is prior in point
of time, in my considered view, is not an argument that merit acceptance. If the date of initiation of the
Corporate Insolvency Resolution Process is taken as criteria, if two Applications by two different
Creditors for initiation of Corporate Insolvency Resolution Process were filed on one day, then it has to
be seen which Application was presented first in point of time on the same day. Therefore, the date of
initiation of Insolvency Resolution Process cannot be taken as a yardstick or as a guideline for appointing
Interim Resolution Professional. By this Common Order, this Adjudicating Authority admitted both the
Applications. Both the Financial Creditors recommended the names of Interim Professionals. The
material placed on record by SBI in the form of Minutes of the Meeting dated 22.6.2017 clearly indicate
that a lot of exercise has been undertaken by the SBI before recommending the name of Mr. Satish Kumar
Gupta. Further, the Joint Lenders Forum authorised the SBI to initiate the Insolvency Resolution Process.
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The debts due to JLF is more in value than the debt due to SCB. Therefore, this Adjudicating Authority,
taking those aspects into consideration, is of the considered view that it is just to appoint Mr. Satish
Kumar Gupta Address Flat No. 17012, Building No. 17, Kohinoor City, Phase 2, off LBS road, Mumbai-
400070, Maharashtra, India, Email Address: satishg196@yahoo.co.in. as "Interim Insolvency Resolution
Professional", to commence Corporate Insolvency Resolution Process in respect of ESSAR.
33. From the discussion in the foregoing paragraphs, the following are the findings of this Adjudicating
Authority;
(i) SBI, as a 'Financial Creditor', is entitled to invoke Section 7 of the Code irrespective of direction given
by RBI (the direction given by RBI to SBI is held to be valid by the Hon'ble High Court of Gujarat in
Special Civil Application No. 12434 of 2017 filed by ESSAR against RBI, SBI, SCB);
(ii) The Application filed by SBI is signed by duly Authorised Person and he is entitled to file the
Application;
(iii) The Corporate Debtor committed default in payment of financial debt to Financial Creditors SCB and
SBI;
(iv) The Applications filed by SCB and SBI are complete in all aspects;
(v) No disciplinary proceedings are pending against IRPs proposed by SCB AND SBI;
(vi) The factual details, such as the Debt Resolution Process with JLF, the complex activities of Corporate
Debtor, and consequences of appointment of Insolvency Resolution Professional, do not come in the way
of commencement of Corporate Insolvency Resolution Process, more so, Corporate Insolvency
Resolution Process is in the interest of Corporate Debtor and all its stakeholders;
(vii) The Interim Resolution Professional, proposed by SBI, which is authorised by JLF, is the most
suitable person to act as "Interim Resolution Professional";
(viii) SCB, SBI and other Creditors are entitled to file claims before the Interim Resolution Professional
appointed;
(ix) SBI shall make a public announcement of the commencement of Corporate Insolvency Resolution
Process and call for submission of claims under Section 15 of the Code;
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(x) The Committee of Creditors may take into consideration the Debt Restructuring Process between
Corporate Debtor and the Lenders, if proposed by Resolution Applicant subject to approval of the
Committee of Creditors as per the provisions of the Code, Rules and Regulations in force.
34. In view of the above said findings, CP No. (IB) 39/7/NCLT/AHM/2017 filed by SCB and CP No.
(IB) 40/7/NCLT/AHM/2017 filed by SBI are admitted. This Adjudicating Authority hereby appoints Mr.
Satish Kumar Gupta, as "Interim Insolvency Resolution Professional", residing at Flat No. 17012,
Building No. 17, Kohinoor City, Phase 2, Off LBS Road, Mumbai-400070, Maharashtra, India, and
having Registration No. IBBI/IPA-001/IPP00023/2016-2017/10056. SBI is directed to make public
announcement about the commencement of Corporate Insolvency Resolution Process and call for
submission of claims under Section 15 of the Code.
35. SCB and SBI are entitled to file their claims before the Interim Resolution Professional.
36. This Adjudicating Authority hereby declare moratorium under Section 13(1)(a) of the Code
prohibiting the following as laid down in Section 14 of the Code;
other authority;
Corporate Debtor.
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(iii) The applicant SBI shall also make public announcement about initiation of 'Corporate Insolvency
Resolution Process', as required by Section 13(1)(b) of the Code and call for submission of claims under
section 15 of the code.
38. Both the Applications, CP No. (IB) 39 of 2017 and CP No. (IB) 40 of 2017 are disposed of
accordingly.
39. IA No. 153 of 2017 filed by SCB in CP No. (IB) 39 of 2017 is disposed of as infructuous.
40. Communicate a copy of this Common Order to both the Applicant Financial Creditors, SCB and SBI,
Corporate Debtor, and to the Interim Insolvency Resolution Professional.
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AHMEDABAD BENCH
C.P. (I.B.) No. 56/7/NCLT/AHM/2017
Applicant: Religafre Finvest Pvt. Ltd.

Vs.
Respondent: Balaji Infrabuild Pvt. Ltd.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Mandeep Singh Saluja & Mr. Kalpesh Patel, Learned Advocates
For Respondent: None.
ORDER
Learned Advocate Mr. Mandeep Singh Saluja i/b Learned Advocate Mr. Kalpesh patel present for
Financial Creditor/ Applicant. None present for Respondent.
Advocate for Applicant filed memo to withdraw the CP(IB) 56/2017.
Permission granted.
Application is disposed of as withdraw with liberty to file fresh application provided if it is accordingly to
law.
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AHMEDABAD BENCH
C.P. (I.B.) No. 407/NCLT/AHM/2017

Vs.
Respondent: Essar Steels India Limited
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Kamal Trivedi, Learned Senior Counsel, Rasesh Sanjanwala, Learned
Senior Advocate, Sandeep Singhi, Learned Advocate, Siddharth Joshi and Vinay Bairagra, Learned
Advocates for Singhi & Co.
For Respondents/Defendant: Saurabh Soparkar, Learned Senior Counsel, Mihir Thakore, Learned Senior
Advocate, Keyur Gandhi, Raheel Patel and Nisarg Desai, Learned Advocates
ORDER
1. Standard Chartered Bank (SCB) and State Bank of India (SBI) initiated Corporate Insolvency
Resolution Process under Section 7 of Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as
"IBC") read with Rule 4 and 9(1) of Insolvency and Bankruptcy (Application to Adjudicating Authority)
Rules, 2016 (for brevity sake "IBR") in respect of ESSAR Steel India Limited (for brevity sake
"ESSAR").
2. SCB is a Banking Corporation incorporated in England by a Royal Charter, 1853 with its Registered
Office in London, England. SCB is a leading International Banking Group and has been carrying on
operations in India for over 150 years.
3. SBI was constituted under the Statutory Enactment of the State Bank of India Act, 1955. SBI with the
sanction of the Central Government and Reserve Bank of India has acquired by way of amalgamation the
business including the assets and liabilities of all of its associate Banks which are State Bank of Bikaner
and Jaipur, State Bank of Hyderabad, State Bank of Mysore, State Bank of Patiala, State Bank of
Travancore with effect from 1st April, 2017. The Corporate Centre of SBI is in Mumbai.
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4. ESSAR is an Unlisted Public Company incorporated on 1st June, 1976 under the Companies Act, 1956
with its Registered Office at Essar House, Surat. The Objects for which ESSAR was constituted as set out
in its Memorandum of Association, inter alia, include to carry on business of constructional engineers,
mechanical engineers, Iron Founders, Public Works and general Contractors, Constructors, Builders,
dealers in bridges Steel Frames, Buildings, steel, iron, structures of all kinds, iron and steel converters,
smiths, wood workers, painters, electrical engineers and electricians and dredgers.
5. The Application filed by SCB discloses that it has provided a loan in an amount of US $ 413,000,000
to Essar Steel Offshore Limited ('ESOL') which was disbursed to ESOL on January 3, 2014. The said
loan is secured, inter alia, by the Guarantee of the ESSAR (Corporate Debtor).
6. Pursuant to the Facility Agreement dated 3rd January 2014, as amended on 7th February, 2014, SCB
provided a loan of US Dollars 413,000,000 to ESOL to refinance its then existing loan facility of US $
431.1 Million on the terms and conditions contained therein. ESOL is a Company incorporated under the
Laws of Mauritius with its Registered Office at Essar House, Mauritius and it is a wholly owned
subsidiary of ESSAR. In terms of Clause 17 of the Facility Agreement, ESSAR provided a guarantee for
the repayment of the term loan facility under the Facility Agreement. The Guarantee has been
acknowledged and recorded as a 'Contingent Liability' in ESSAR's Annual Reports for the years 2014-15
and 2015-16. On 7.12.2015, SCB issued notice demanding immediate payment of amounts due under the
Facility Agreement. SCB also issued a statutory notice of demand under Section 434(1)(a) of the 1956
Companies Act to ESSAR on 18th April, 2016 once again demanding the immediate repayment of the
entire amount outstanding under the Facility Agreement. ESSAR has been unable to service its overall
debt aggregating to an amount of approximately Rs. 450,000,000,000. As per Clause 17.1 of the Facility
Agreement, ESSAR agreed to act as a guarantor in relation to the loan and other amounts due and payable
under the Facility Agreement and, inter alia, irrevocably and unconditionally agreed that ESSAR
undertakes with each Secured Party that whenever another Obligor or a Security Provider does not pay
any amount when due under or in connection with any Secured Document, that Guarantor shall
immediately on demand pay that amount as if it was the principal obligor. ESSAR also waives any right
to proceed against or enforce any other rights as per Clause 17.5 of Facility Agreement.
7. According to SCB, ESOL failed to pay the amounts specified in Clauses 6.1, 8.2., 8.3., 11.1, 11.2 and
12 of the Facility Agreement. It is stated by SCB that an "Event of Default" as defined in Clause 23.1 of
the Facility Agreement has occurred and is continuing. ESOL's default in repayment under the Facility
Agreement started in January 2015. On 15th September, 2015, SCB also issued notice to ESOL marking
copies to ESSAR. On 7.12.2015, SCB served a notice of demand on ESOL stating the amounts due. On
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7.12.2015 SCB also issued a demand notice to ESSAR. ESSAR failed to respond or to pay under the
demand notice. SCB on 18.4.2016 issued a notice under Section 434(1)(a) of the Companies Act, 1956.
ESSAR neglected to pay the amount within 21 days of the statutory notice. As on 22nd June, 2017, the
following were the outstanding amounts;
a) US $ 413,000,000 towards principal amount of the loan;
b) US $ 30,160,545.83 towards accrued interest of the loan; and
(c) US $ 95,187,481.61 towards all other outstanding amounts due and payable under the Facility
Agreement.
SCB stated that ESSAR has no bona fide, valid or legal defence in respect of the amounts payable to the
SCB. SCB also issued further notice on 17th November, 2015 stating that ESSAR is implementing a
scheme between it and its Secured Creditors without prior approval of SCB. Thereafter, on 10th
December, 2015, ESSAR wrote a letter to SCB requesting for a meeting of the Steering Committee of the
ESSAR's Indian Lenders to discuss about the dues payable to SCB. On 24th January, 2017, ESSAR
issued a letter to SCB suggesting a Debt Restructuring Proposal pursuant to which the outstanding
amount would be paid at the end of 25 years along with interest at 1% per annum. SCB rejected the said
Restructuring Proposal. SCB also wrote a letter dated 22nd February, 2017 to SBI stating that Debt
Restructuring Proposal was carried out without involvement and consent of SCB. SBI gave reply on 15th
March, 2017 stating that Lenders of ESSAR did not give their consent to the ESSAR for issuing the
Guarantee under the Facility Agreement. ESSAR issued a letter dated 4th April, 2017 to the SCB
acknowledging the debt owed under the Guarantee. SCB by letter dated 7th April, 2017 stated that the
consent of the lenders of the ESSAR is not necessary to enforce the Guarantee given by ESSAR. It is the
case of SCB that it was never invited to the Joint Lenders Forum ("JLF") and it was precluded from
participating in the JLF. SCB stated that ESSAR failed to respondent to the demands of the SCB and
therefore it initiated Corporate Insolvency Resolution Process in respect of ESSAR in the public interest
and for the benefit of all the creditors of ESSAR.
8. SCB filed true copy of Facility Agreement dated 3rd January, 2014; true copy of Amendment Letter
dated 2nd February 2014 amending Facility Agreement dated 3rd January, 2014; true copy of Statement
of Accounts; true copy of Annual Report of ESSAR for the years 2014-15 and 2015-16, and copies of
notices. SCB also proposed the name of Interim Insolvency Resolution Professional and filed his Written
Communication.
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9. It is the case of SBI that the total debt of Rs. 14860,82,00,000, granted to the ESSAR by SBI is as
follows;
a) Term Loan-Rs. 4000,00,00,000
b) Term Loan (5/25) * - Rs. 2195,00,00,000
c) Corporate Loan 1-Rs. 2585,00,00,000
d) Corporate Loan 2-Rs. 1516,00,00,000
e) EPBG Facility-USD 237.05 Million (Rs. 1528,97,00,000).
f) Working Capital Facility Rs. 4738,00,00,000
g) Derivative Facility - Rs. 331,60,00,000.
[* Term Loan under 5/25 scheme is carved out from existing loans and hence not included in the total
amount].
10. SBI filed details of case of disbursements and revival letters upto 7th July, 2016. SBI also filed
financial debt documents, records and evidence of default in accordance with Banker's Books Evidence
Act, 1891. SBI also filed Certificates of Registration of charges SBI also filed copies of Common Loan
Agreement, SBLC Facility Agreement, Guarantee Facility Agreement, Working Capital Facility
Agreement, Amended and Restated Working Capital Facility Agreement etc. SBI also filed Minutes of
Meeting of JLF whereby SBI was authorised by other Banks of JLF to file CIR Application. SBI also
proposed the name of Interim Insolvency Resolution Professional and filed his Written Communication.
11. The case of ESSAR, as can be seen from the objections in both the Applications, is as follows;
11.1 ESSAR stated that it is not a willful defaulter. ESSAR stated that there is no diversion of funds,
fraud or malfeasance. According to the ESSAR, ESSAR has set up several plants across the Country for
the purpose of providing customized steel products to the consumers by investing Rs. 50,000 Crores. All
the manufacturing facilities of ESSAR are world class facilities capable of manufacturing various steel
products conforming to International standards and used in core and critical sectors such as infrastructure,
oil & gas, automobiles and defense. ESSAR invested heavily on its manufacturing units to the extent
mentioned herein below;
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a) Beneficiation Plant at Kirandul (8 mtpa)
b) Slurry Pipeline between Kirandul and Vishakhapatnam (267 kms.)
c) Pelletization Plant at Vishakhapatnam (8 mtpa)
d) Beneficiation Plant at Dabuna (8 mtpa)
e) Slurry Pipeline between Dabuna and Paradip (253 kms)
f) Pelletization Plant at Paradip (6 mtpa)
g) Pelletization Plant at Paradip (6 mtpa)-under construction.
Hazira Steel Complex
h) HBI/DRI (Gas based) Plant (6.7 mtpa)
i) Blast Furnace (1.74 mtpa)
j) Corex Plants (2 Nos.) (1.76 Mtpa)
k) Compact Strip Mill (3.5 Mtpa)
l) Plate Mill (1.5 Mtpa)
m) Pipe Mill (0.6 Mtpa)
n) Steel Service Centres at 7 locations across the country.
o) Retail Hypermart at 19 locations across the country.
11.2 ESSAR had commenced its manufacturing activities from the year 1989 and has been consistently
increasing production volumes at its natural gas based facilities at Hazira, Gujarat for the period between
financial years 1990-2000 to 2010-2011. ESSAR recorded Profit After Tax in 16 years except for the
period of 4 years, i.e., from Financial Years 1998-1999 to 2001-2002 and Financial Year 2010-2011
where the Company had incurred losses on account of external factors. ESSAR set up its Gas Based Plant
on the basis of assurances of Gas supply given by the Government of India. Due to non-supply of natural
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gas, ESSAR had fatal and severe consequences on its operations. In March, 2011, Government of India
arbitrarily and suddenly without notice categorized the steel sector from priority sector to non-core sector
and issued directions to the contractors of KG-D6 Field to cut off the supply of natural gas on a
disproportionate basis in case of shortage of supply of gas from the Field. Due to that the operations of
ESSAR have been gravely affected. ESSAR in between 2011 and 2016, incurred a loss of approximately
Rs. 26,000 Crores on account of arbitrary decision of the Government of India. During the years 2011-
2012 to 2015-2016, the Natural Gas available in the open market other than Government allocation was
available at a very high price making it commercially unviable for ESSAR or any gas based Steel unit.
The anti-social elements damaged the Kirandul-Vizag Slurry Pipeline which was used for transporting
iron ore fines in slurry form to the Pellet Plant in a cost effective and environmentally friendly manner.
Therefore, it was not operational between March 2010 to December 2010 and May 2012 to January 2014.
The Pipeline has been repaired and has been in operation from January 2014. Due to that also ESSAR has
incurred losses.
11.3 Further, according to the ESSAR, entire steel sector in India was undergoing major crisis in the year
2014 and 2015 which was primarily due to the dumping of steel by various countries such as China,
Japan, Republic of Korea and Russia amongst others. The Government of India took various measures
through various Ministries to support the Indian Steel Industry. ESSAR gave the chronological sequence
of various initiatives taken by the Government in Annexure-R/11.
11.4 Further, it is the case of the ESSAR that the operations of the ESSAR are very complex involving
large number of stakeholders including suppliers, creditors, employees, promoters, customers,
Government exchequer over and above the financial creditors. ESSAR is on the path of improvement to
carry on the operations at 80% capacity. Further, it is stated by ESSAR that Debt Resolution Process was
undertaken and there were discussions between the Lenders and ESSAR till 13th June, 2017 on the day
on which Reserve Bank of India (RBI) issued a Press Release. ESSAR stated that the directions given by
RBI to SBI triggered the reference before National Company Law Tribunal. According to ESSAR,
Resolution Process has two risks. First, the process of formulation of Debt Resolution Process will have
to be reinitiated and further time will be lost due to fresh start. The second one is potential risk to the
operations and value of the Company under the hands of IRP. ESSAR also stated that if the Company is
in the hands of IRP who is an individual person it is difficult for him to oversee such complex operations
in a short period of 180 days. Further, according to the ESSAR, the funding supported by the creditors
and suppliers which were available to the Company under the stewardship of Board of Directors and
promoters may not be available to IRP. According to the ESSAR, promoters, lenders, employees,
creditors, suppliers, customers have invested time, efforts and resources to revive the Company and
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implement a satisfactory Debt Resolution Plan and if at this stage the Insolvency Resolution Plan is
invoked it would adversely affect the interest of the Company and all its stakeholders. It is further stated
that in view of Section 13 and 16 of the IBC, the appointment of IRP shall be made only after the
admission of the petition within 14 days. Further, it is stated by ESSAR that there are 4500 people
working in the Company and all would be affected in case of commencement of Insolvency Resolution
Process. It is also stated that National Company Law Tribunal has got discretion not to admit the petition
in view of language used in Section 7.
12. For initiation of Corporate Insolvency Resolution Process against a Corporate Debtor under Section 7
of the IBC, it is essential that a default must occur in respect of financial debt owed to
Applicant/Financial Creditor.
13. Here, SCB and SBI are the Applicants. There is no dispute about the fact that SCB and SBI are
Financial Creditors. There is no dispute about the fact that amounts due to SCB and SBI are 'financial
debts'. ESSAR did not even dispute the debt due to SCB and SBI. It is the case of ESSAR that it has
submitted proposals for restructuring of its debts to the Lenders for approval and Lenders held several
meetings with ESSAR from time to time and suggested certain modifications to the said proposals. After
several meetings and exchange of communications, ESSAR in the month of January 2017 finally
submitted to the Lenders the boundary conditions that were acceptable to it for their approval. Lenders
informed ESSAR that yield applicable for buy-back of shares by the promoters should be increased from
14% as proposed by ESSAR to 18%. Finally ESSAR agreed to pay the yield at 16%. During such period
Sections 35AA and 35AB were inserted in the Banking Regulation Act, 1949 by an Ordinance issued by
the Central Government. RBI vide its powers under Section 35AA issued directions to the SBI to initiate
14. The first and foremost objection raised by the ESSAR is that the Application filed by SBI is not
signed by a competent person. On this aspect, learned Senior Counsel appearing for ESSAR referred to
the letter issued by Chairman, SBI on 16th June, 2017 which is at Page No. 80 of the Application. In that
letter, Chairman, SBI referring to Section 27 of the State Bank of India Act, authorised all officers on
whom signing powers have been conferred vide Notification dated 27th March, 2017 to sign applications
etc., in the proceedings that are going to be filed before National Company Law Tribunal under the
provisions of the IB Code. Referring to Section 27 of the SBI Act, learned Senior Counsel appearing for
ESSAR contended that unless there is general or special directions given by the Central Board of the
Bank, the Chairman cannot exercise powers authorising the officers to sign the pleadings before the
National Company Law Tribunal.
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15. This contention of the learned Senior Counsel appearing for the ESSAR has been answered by the
learned Senior Counsel appearing for SBI by referring to Regulations 76 and 77 of The State Bank of
India General Regulations, 1955. Regulation 76 of SBI General Regulations says, the Managing
Directors, the Deputy Managing Directors, the Chief General Managers and such other officers and
employees of the State Bank as the SBI may authorise in this behalf by notification in the Gazette of India
are severally empowered for and on behalf of SBI to sign all documents, instruments, accounts, receipts,
letters and advices connected with the current or authorised business of the State Bank. Regulation 77 of
the said Regulations says, that Plaints, written statements, petitions and applications may be signed and
verified on behalf of the SBI by the Chairman or by any officer or employee empowered by or under the
Regulation 76. Along with the Application the Applicant filed a Gazette Notification dated 2nd May,
1987 wherein it is stated that all the officers in the Grades of SMGS-IV and above are empowered to sign
all documents pursuant to Regulation 76.1 of State Bank of India General Regulations. On this aspect,
learned Senior Counsel appearing for SBI cited the following decisions;
1. State Bank of India Vs. Earnest Traders Exporters, Importers & Commission Agents,reported in
MANU/DE/0542/1997 : 1997 (41) DRJ.
2. State Bank of India Vs. Kashmir Art Printing Press, Sirsa and Others,reported in
MANU/PH/0123/1981.
In the above said two decisions, the Hon'ble High Courts, after considering Regulations 76 and 77 of the
State Bank of India General Regulations, 1955 and Gazette Notifications, held that Manager of the Bank
could be duly authorised to sign and verify the pleadings and also would be entitled to institute suits for
and on behalf of the State Bank of India. In the case on hand, the officers who have signed in the
Applications are above IV Grade. Therefore, the objection raised by the learned Senior Counsel for
ESSAR regarding the competency of the person who signed the Application is not a valid objection. In
view of the above discussion, Mr. Kshitij Mohan, Deputy General Manager is having valid authority to
sign the Application and is competent to file the Application for and on behalf of SBI.
16. The contention raised by the learned Senior Counsel for the SCB is, that the word "may" used in
Section 7(5)(a) of the Code shall be read as "shall" but not as "may" in the context of initiation of
Corporate Insolvency Resolution Process, Adjudicating Authority having satisfied about the other
requirements. In support of his contention, he relied upon the following decisions;
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1. Bachahan Devi And Another Vs. Nagar Nigam, Gorakhpur And Another, reported in
MANU/SC/7111/2008 : (2008) 12 Supreme Court Cases 372.Relevant Paras 18 to 21.
2. Sarla Goel And Others Vs. Kishan Chand,reported in MANU/SC/1131/2009 : (2009) 7 Supreme Court
Cases 658.
In both the decisions, it is held that "in order to find out whether the words "may" or "shall" are used in a
directory or in a mandatory sense, the intent of the Legislature should be looked into along with the
pertinent circumstances."
17. On the other hand, learned Senior Counsel, appearing for ESSAR, contended that the Legislature in its
wisdom used the word "may" in Section 7(5)(a), whereas in the same Code in Section 9(5) and 10(4),
used the word "shall" in respect of admission of Applications for initiation of Corporate Insolvency
Resolution Process. He further contended that the intention of the Legislature in case of Operational
Creditor, Corporate Debtor, and Corporate Applicant, the Adjudicating Authority, subject to fulfillment of
other conditions, shall admit the Application, but in case of Application by Financial Creditor the
Adjudicating Authority has got discretion either to admit the Application for initiation of Insolvency
Resolution Process or reject the same.
18. There is no dispute about the proposition of law that in order to give appropriate meaning to the words
"may" and "shall" used by the Legislature, the intent of the particular enactment and the attendant
circumstances must be taken into consideration. The Hon'ble High Court of Gujarat, vide Judgment in the
matter of Essar Steel India Limited and Another vs. Reserve Bank of India and Others, in Special Civil
Application No. 12434 of 2017, held that admission of an Insolvency Application filed by Financial
Creditor is not a routine order and the Adjudicating Authority shall apply its mind to all the factual details
and then pass an order. This Adjudicating Authority is of the view that the order of admission of an
Application for initiation of Corporate Insolvency Resolution Process is a judicial order which should be
according to the provisions of the Code, principles of natural justice, and taking the consequences of the
order into consideration. Therefore, there this Adjudicating Authority shall exercise its discretion in either
admitting or rejecting the Insolvency Resolution Applications. It is needless to say that discretionary
power has to be exercised in a judicious manner taking into consideration all the facts and circumstances
of the case, the provisions of the applicable laws and the object of the Insolvency and Bankruptcy Code.
This Adjudicating Authority shall look into the aspect of the occurrence of default, and, while doing so,
shall take into consideration various factual and legal pleas raised by both parties in order to record its
satisfaction. Therefore, the argument of the learned Senior Counsel for the SCB, that the word "may" in
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Section 5(a) shall be read as "shall" and therefore it is mandatory on the part of the Adjudicating
Authority to admit all the Insolvency Resolution Applications filed by the Financial Creditors, if they are
complete, do not merit acceptance.
19. Learned Senior Counsel appearing for the ESSAR, depending upon certain observations made by the
Honourable High of Gujarat in Special Civil Application No. 12434 of 2017, contended that the
Adjudicating Authority shall take into consideration the Debt Reconstruction Scheme and the complex
situation that arises in case of admission of this Application and whether Interim Resolution Professional
(IRP) can manage the affairs of the Company or not.
20. On the other hand, learned Senior Counsel appearing for the SCB and SBI vehemently contended that
the Special Civil Application filed by ESSAR against RBI, SCB and SBI was dismissed without granting
any relief and the Hon'ble High Court only observed to take certain facts into consideration and decide the
same in accordance with law. Learned Senior Counsel appearing for SCB and SBI relied upon the
decision of the Hon'ble National Company Law Appellate Tribunal, on 17th January, 2017, in Company
Bank & Anr., and contended that in an application under Section 7 of the Code, the Adjudicating
Authority is required to ascertain existence of default from the records of information utility or on the
basis of other evidence furnished by the Financial Creditor. It is also contended that Adjudicating
Authority has to satisfy whether a default has occurred, whether the application is complete, and whether
any disciplinary proceeding is pending against the proposed Insolvency Resolution Professional. Learned
Senior Counsel appearing for the SCB and SBI contended that once the Adjudicating Authority is
satisfied about the aforesaid aspects the Application shall be admitted and Insolvency Resolution Process
shall commence.
21. Following are the observations made by the Hon'ble High Court in Special Civil Application No.
12434 of 2017. In Para 27, it is observed;
"27.....The emphasis on opinion or necessity can be looked into by NCLT because discussion on factual
merits would otherwise prejudice the either side and, therefore, I have avoided to discuss the factual
details to ascertain that whether there was actual necessity to initiate proceedings under the Code or not..."
In Para No. 35, the Hon'ble High Court has observed;
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"35......The adjudicating authority i.e., NCLT is not bound to admit the petition as a matter of rule but it
has to be decided in accordance with law for which generally reasonable opportunity needs to be extended
to all concerned."
The Hon'ble High Court has further observed in Para No. 39.2 and 3) as under;
"2) It is undisputed fact that filing of such application itself cannot be questioned or that action cannot be
quashed, but it goes without saying that such filing would not amount to admitting or allowing the
petition for insolvency without offering reasonable opportunity to the company, which is requested to be
taken into insolvency by any such person. Therefore, the adjudicating authority being NCLT herein,
which is constituted in place of the Company Court, needs to decide on its own based upon factual details
that whether the insolvency petition is required to be entertained as such or not."
"3) For the purpose, adjudicating authority, certainly requires to extend hearing and reasonable
opportunity to the company to explain that why such an application should not be entertained. In other
words, filing of an application may not result into mechanical admission of application as seen and posed
by RBI in impugned press release. It would be a decision based on judicial discretion by the adjudicating
authority to deal with such application in accordance with law and based upon facts, evidence and
circumstance placed before it. To that extent, prayers 7(b) and (c) cannot be granted."
The Hon'ble High Court of Gujarat, while dealing with the submissions of the ESSAR, in Para No. 39.12)
at Page 77 observed as follows;
"12) However, before concluding the petition, one has to deal with the submission of the petitioner that
considering the provisions of Insolvency and Bankruptcy Code, 2016, filing of petition would result into
admitting the petition within 14 days being mandate of the NCLT under the Act, and it would result into
drastic impact on the day to day functioning of the company and its process of restructuring the affairs of
the company so as to survive. It is contended that on admission of the petition under Insolvency and
Bankruptcy Code, 2016, if Interim Resolution Professionals are to be appointed mechanically, without
considering the facts and circumstances and without offering an opportunity to finalise the restructuring
plan, which is at the advance stage, and thereby, if control of the Board of Directors is withdrawn, then,
suppliers would not continue to supply raw-materials, which would result into closure of all units and
thereby, retrenchment of 4500 employees' for no valid reasons, more particularly when company is
functioning at its 80% capacity and doing well to cope-up with the competitive market against non-
availability of gas (fuel) from Government and against dumping of similar product from foreign countries
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whereby there is imbalance in production because of final profit. Though it may seem to be an attractive
argument, in my humble opinion, at this stage, in a petition under Article 226 of the Constitution of India,
I do not wish to explore all such issues and to determine anything precisely because, ultimately, all such
issues would be raised before NCLT, which has to ascertain that whether there is reason to admit the
insolvency resolution process immediately or not."
21.1 The Hon'ble High Court, at the end of Para 39.12, observed as follows;
".....However, at the cost of repetition, it is made clear that factual details and on-going process of
restructuring plan and other details would be taken care of by NCLT before taking any decision on
merits."
22. The following are the findings of the Hon'ble National Company Law Appellate Tribunal, in
Company Appeal (AT) (Insolvency) No. 1 & 2 of 2017 (supra);
84. Beyond the aforesaid practice, the 'adjudicating authority' is not required to look into any other factor,
including the question whether permission or consent has been obtained from one or other authority,
including the JLF. Therefore, the contention of the petition that the Respondent has not obtained
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permission or consent of JLF to the present proceeding which will be adversely affect loan or other
members cannot be accepted and fit to be rejected."
23. In the case on hand, from the material placed on record by SCB and SBI, it is clear that it is
established that ESSAR has committed default in repayment of financial debt to SCB and SBI. The
Applications filed by the SCB and SBI are complete in all respects. As can be seen from the Written
Communications of proposed Interim Resolution Professionals filed by the SCB and SBI, no disciplinary
proceedings are pending against them. In view of the Judgment of the Hon'ble National Company Law
Appellate Tribunal (supra), this Adjudicating Authority need not look into any other factor. In fact, in the
Judgment of the National Company Law Appellate Tribunal (supra), one of the defences raised by the
Corporate Debtor therein was that the Corporate Debtor is entitled for protection having granted the
benefit under MRU Act, 1956. The Hon'ble Appellate Tribunal, referring to Section 4 of the MRU Act,
held that the protection under the MRU Act is limited to the acts listed in the schedule. The Hon'ble
Appellate Tribunal also held that in view of Section 238 of the IB Code it would prevail over Sections 3
and 4 of MRU Act. The Hon'ble Appellate Tribunal also held that the Adjudicating Authority need not
consider the Master Restructuring Agreement dated 8th September, 2014.
24. However, the Hon'ble High Court of Gujarat in Special Civil Application No. 12434 of 2017 observed
that this Adjudicating Authority shall take into the fact situation including the process of Debt
Restructuring Plan. Therefore, I proceed to consider whether Debt Restructuring Process or Debt
Restructuring Plan is going to absolve the ESSAR, Corporate Debtor from the Insolvency Resolution
Process. From the material placed on record, it is in the year 2014 that Debt Reconstructing Process
commenced. For one reason or the other, the Debt Reconstructing Process has not been finalised till today
or till the date of filing of the Applications. It is not a case where ESSAR owed monies to Lenders in the
previous year. The Lenders are there from the beginning of the ESSAR Company. As contended by the
learned Senior Counsel for ESSAR there are several reasons that prevented the ESSAR from discharging
the debts. No doubt, there are no allegations of siphoning of funds, diversion of funds or fraud. But, the
fact remains that except showing a little progress in the last financial year, there appears to be no scope
for the ESSAR to repay its debts till 25 years or in a span of 25 years. Therefore, the Debt Restructuring
Process, which is going on for the last two years, may not be a factor not to enter into Insolvency
Resolution Process. It is pertinent to mention here, that even in the Corporate Insolvency Resolution Plan,
Debt Restructuring Plan can be taken into consideration by the Committee of Creditors as one of the
Resolution Plans, if submitted by any of the Resolution Applicants. Therefore, commencement of
Insolvency Resolution Process cannot be construed as putting an end to the Debt Restructuring Process
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which has been commenced. The apprehension of ESSAR, that, to again start Debt Restructuring Process
would consume lot of time, appears to be not acceptable for the reason that Insolvency Resolution Plan is
a time bound programme. There is no scope for the stakeholders to prolong the process without taking a
decision and without finalising the Resolution Plan. Therefore, on the ground that when a Debt
Restructuring Process is going on there is no need to commence the Insolvency Resolution Process under
the IBC does not hold the field. It is contended by the learned Senior Counsel appearing for ESSAR that
it is not possible for the Interim Resolution Professional, within a short period to manage the several units
of the Company and to convince the customers and other lenders in the absence of Board of Directors. If
Insolvency Resolution Process is commenced by appointing Interim Resolution Professional, no doubt the
Board of Directors would be suspended. That does not mean the entire machinery of the Company is
suspended. Even after appointment of IRP, all the employees of the Company, top to bottom, would
continue to function under the control of IRP instead of the Board of Directors. Therefore, the
apprehension of ESSAR that suspension of Board of Directors may cause prejudice to the interest of the
Company and the stakeholders may not be correct. The Object of the IBC is to chalk out a Resolution
Plan to revive the Company, but not to liquidate the Company straightway. It is needless to say that a
company like ESSAR need not be liquidated and there are several other alternatives to revive the
Company. If all the eligible Creditors sit together; evolve a Resolution Plan, it would help not only the
Company, its stakeholders, Steel Industry, and ultimately the economy of India. In chalking out such
Resolution Plan, mainly the Lenders, must sacrifice to a great extent which makes the Company to revive.
If a Resolution Plan is chalked out with such objectives in mind, the Resolution Plan will certainly help
the Company and it would come out of the present situation. Therefore, as opined by the Hon'ble High
Court of Gujarat, taking all the material facts, and the Debt Restructuring Plan, and the objects of the IB
Code, into consideration this Adjudicating Authority is of the view that it is only the Resolution Plan that
would make the ESSAR Company survive which course would safeguard the interest of all the
stakeholders of the Company. Therefore, there is no need for an apprehension that Resolution Plan is
going to be detrimental to the interest of the Company. The finding of this Authority, after taking into all
factual aspects, the complex activities of ESSAR, the ongoing Debt Restructuring Process, is that both
Applications merit admission.
25. In view of the above discussion, this Adjudicating Authority is of the considered view that the
Applications filed by the SCB and SBI are complete, there is occurrence of default in respect of financial
debts, and there are no disciplinary proceedings pending against the Insolvency Resolution Professionals
proposed by both the Applicants, i.e., SCB and SBI. Hence, this Adjudicating Authority is hereby
admitting both the Applications filed by SCB and SBI.
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26. In case of admission of an Application under Section 7 of the Code, the Corporate Insolvency
Resolution Process commences. Section 13 of the code says that after the admission of the Application
under Section 7, the Authority shall declare moratorium, cause public announcement of initiation of
Corporate Insolvency Resolution Process, and call for submission of claims under Section 15 of the Code,
and appoint Interim Resolution Professional in the manner laid down in Section 16. The learned Senior
Counsel appearing for ESSAR vehemently contended that there is no need to appoint Interim Resolution
Professional on the same day on which date admission order is passed and it can be passed within 14 days
of the admission of the Applications. In this context, learned Senior Counsel appearing for ESSAR
referred to Section 16 sub-section (1). He also referred to Sections 14 and 15 of the Code. He contended
that Section 14 where under moratorium is declared it should be on the insolvency commencement date.
Learned Senior Counsel, referring to Section 15 contended that public announcement of Corporate
Insolvency Resolution Process under Section 13(b) shall be only after the appointment of Interim
Resolution Professional since the publication shall contain details of Interim Resolution Professional. In
that premise, learned Counsel contended that it is only moratorium under Section 14 that has to be
declared on the date of commencement of Insolvency Resolution Process, i.e., on the date of the
admission of the Application under Section 7 but the appointment of Interim Insolvency Resolution
Professional and the public announcement can be deferred. No doubt, a reading of Sections 13, 14, 15 and
16(1) of the Code goes to show that Adjudicating Authority need not appoint the Interim Resolution
Professional on the same day on which Application under Section 7, 9 or 10 is admitted. But, there is no
provision which bars the Adjudicating Authority from appointing Interim Resolution Professional on the
same day on which the admission order was passed and simultaneously with the admission order. In an
application filed under Section 9, in case if the Operational Creditor did not give the name of the IRP,
then the Adjudicating Authority, availing the 14 days' time provided under Section 16(1), can appoint the
Interim Resolution Professional within 14 days from the date of admission order. Suppose in a given case
there is some omission in the Written Communication or there is some difficulty in the appointment of the
recommended IRP, in such cases the Adjudicating Authority may appoint IRP even in an application
under Section 7 not on the date of order of admission, but on a subsequent date, but before 14 days from
the date of admission. Therefore, there must be facts and circumstances that warrant the Adjudicating
Authority to defer the appointment of IRP in an application filed under Section 7 of the Code. In the case
on hand, no such circumstance exists which warrant deferring the appointment of Interim Resolution
Professional to some other date but not on the date of admission order. Learned Counsel appearing for
ESSAR contended that ESSAR can go in appeal against the admission order, and if the appointment of
Interim Resolution Professional is deferred, then the interest of the Company would not be jeopardised. I
am unable to agree with the contention of the learned Senior Counsel for the Interim Resolution
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Professional for the reason that no two stages or no two separate hearings are contemplated under the
Code, namely, the first stage is admission and the second stage is appointment of Interim Resolution
Professional. The object of the Code is to complete the entire process in a time bound programme. When
such is the object of the Code, without any compelling circumstances, there is no need to defer the
appointment of Interim Resolution Professional only to give an opportunity to the Corporate Debtor to
agitate the decision of this Adjudicating Authority twice in two Appeals. The Corporate Debtor is entitled
to prefer an Appeal against the order of admission and also against the appointment of Interim Resolution
Professional. If both the orders, namely admission order and the order appointing Interim Resolution
Professional are made separate, then the Corporate Debtor will file two Appeals at two stages and thereby
gain more time, which is not the object of the Code. Therefore, the Code enjoins upon this Authority to
declare Moratorium; to make public announcement of initiation of Corporate Insolvency Resolution
Process; and to appoint Interim Resolution Professional on the date of commencement of Insolvency
Resolution Process as Rule and the exception is differing the appointment of Interim Resolution
Professional to some other date that depend upon the facts of the case.
27. In the case on hand, SCB and SBI filed two separate Applications under Section 7 of the Code. Both
the Applications are being disposed of by this Common Order because both the Applications are filed
against one Corporate Debtor. In both the Applications, there are certain similar contentions. In the case
of SCB, the direction of the RBI is not applicable, whereas in the case of SBI, there is a direction from
RBI to file Application under Section 7 to SBI. The direction given by RBI to SBI to file Application
under Section 7 is held to be valid by the Hon'ble High Court in the Judgment delivered in Special Civil
Application No. 12434 of 2017 filed by ESSAR. Even otherwise, SBI, being a Financial Creditor, by
itself is competent to file an Application under Section 7 of the Code. SBI along with its application filed
Minutes recorded by the Joint Lenders Forum dated 22nd June, 2017 whereby the SBI was authorised by
other Banks of JLF to initiate Corporate Insolvency Resolution Process.
27.1 In the said Minutes, the Joint Lenders Forum decided to recommend the name of one Shri Satish
Kumar Gupta supported by A & M as Interim Resolution Professional in the Application.
28. SCB also proposed the name of Shri Dinkar Venkatasubramanian as Interim Resolution Professional.
It is contended by the learned Senior Counsel appearing for the SCB that it is the SCB that initiated the
proceedings even before the SBI filed the Application. Learned Senior Counsel appearing for SCB also
referred to the definition of 'initiation date' in Section 5(11) of the Code. As per Section 5(11) of the
Code, "initiation date" means the date on which the Financial Creditor, Corporate Applicant or the
Operational Creditor, as the case may be, makes the application to the Adjudicating Authority for
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initiating Corporate Insolvency Resolution Process. No doubt, among the two Applications, the
Application filed by SCB, i.e. CP (IB) No. 39 of 2017 is earlier in point of time than the Application of
SBI.
29. Learned Senior Counsel appearing for SCB also contended that the criteria of value of the Creditors is
not the guideline for appointing the Interim Resolution Professional. He contended that even if one
Creditor recommends the name of Interim Resolution Professional, he shall be appointed irrespective of
the fact that other Creditors together recommended another name of Interim Resolution Professional.
30. On the other hand, learned Senior Counsel appearing for SBI contended that before recommending
the name of Interim Resolution Professional, SBI has undertaken lot of exercise in the Joint Lenders
Forum Committee Meeting held on 22.6.2017. The JLF called for quotations from the Resolution
Professionals including their experience. The JLF also considered the presentations given by the
Insolvency Resolution Professionals. The JLF, after considering the profiles of various Interim Resolution
Professionals, proposed the name of Shri Satish Kumar Gupta. He further contended that the value of debt
of the JLF is far more than the value of the debt of SCB and therefore it is appropriate to appoint the
Interim Resolution Professional as recommended by JLF which authorised the SBI to present the
Application as Single Creditor.
31. In the light of the above said contentions, now it has to be seen whether the proposed Interim
Resolution Professional proposed by the SCB can be appointed or whether the Interim Resolution
Professional proposed by the SBI can be appointed.
32. The contention of the learned Senior Counsel, appearing for SCB, that the Interim Resolution
Professional proposed by SCB has to be appointed on the ground that SCB's Application is prior in point
of time, in my considered view, is not an argument that merit acceptance. If the date of initiation of the
Corporate Insolvency Resolution Process is taken as criteria, if two Applications by two different
Creditors for initiation of Corporate Insolvency Resolution Process were filed on one day, then it has to
be seen which Application was presented first in point of time on the same day. Therefore, the date of
initiation of Insolvency Resolution Process cannot be taken as a yardstick or as a guideline for appointing
Interim Resolution Professional. By this Common Order, this Adjudicating Authority admitted both the
Applications. Both the Financial Creditors recommended the names of Interim Professionals. The
material placed on record by SBI in the form of Minutes of the Meeting dated 22.6.2017 clearly indicate
that a lot of exercise has been undertaken by the SBI before recommending the name of Mr. Satish Kumar
Gupta. Further, the Joint Lenders Forum authorised the SBI to initiate the Insolvency Resolution Process.
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The debts due to JLF is more in value than the debt due to SCB. Therefore, this Adjudicating Authority,
taking those aspects into consideration, is of the considered view that it is just to appoint Mr. Satish
Kumar Gupta Address Flat No. 17012, Building No. 17, Kohinoor City, Phase 2, off LBS road, Mumbai-
400070, Maharashtra, India, Email Address: satishg196@yahoo.co.in. as "Interim Insolvency Resolution
Professional", to commence Corporate Insolvency Resolution Process in respect of ESSAR.
33. From the discussion in the foregoing paragraphs, the following are the findings of this Adjudicating
Authority;
(i) SBI, as a 'Financial Creditor', is entitled to invoke Section 7 of the Code irrespective of direction given
by RBI (the direction given by RBI to SBI is held to be valid by the Hon'ble High Court of Gujarat in
Special Civil Application No. 12434 of 2017 filed by ESSAR against RBI, SBI, SCB);
(ii) The Application filed by SBI is signed by duly Authorised Person and he is entitled to file the
Application;
(iii) The Corporate Debtor committed default in payment of financial debt to Financial Creditors SCB and
SBI;
(iv) The Applications filed by SCB and SBI are complete in all aspects;
(v) No disciplinary proceedings are pending against IRPs proposed by SCB AND SBI;
(vi) The factual details, such as the Debt Resolution Process with JLF, the complex activities of Corporate
Debtor, and consequences of appointment of Insolvency Resolution Professional, do not come in the way
of commencement of Corporate Insolvency Resolution Process, more so, Corporate Insolvency
Resolution Process is in the interest of Corporate Debtor and all its stakeholders;
(vii) The Interim Resolution Professional, proposed by SBI, which is authorised by JLF, is the most
suitable person to act as "Interim Resolution Professional";
(viii) SCB, SBI and other Creditors are entitled to file claims before the Interim Resolution Professional
appointed;
(ix) SBI shall make a public announcement of the commencement of Corporate Insolvency Resolution
Process and call for submission of claims under Section 15 of the Code;
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(x) The Committee of Creditors may take into consideration the Debt Restructuring Process between
Corporate Debtor and the Lenders, if proposed by Resolution Applicant subject to approval of the
Committee of Creditors as per the provisions of the Code, Rules and Regulations in force.
34. In view of the above said findings, CP No. (IB) 39/7/NCLT/AHM/2017 filed by SCB and CP No.
(IB) 40/7/NCLT/AHM/2017 filed by SBI are admitted. This Adjudicating Authority hereby appoints Mr.
Satish Kumar Gupta, as "Interim Insolvency Resolution Professional", residing at Flat No. 17012,
Building No. 17, Kohinoor City, Phase 2, Off LBS Road, Mumbai-400070, Maharashtra, India, and
having Registration No. IBBI/IPA-001/IPP00023/2016-2017/10056. SBI is directed to make public
announcement about the commencement of Corporate Insolvency Resolution Process and call for
submission of claims under Section 15 of the Code.
35. SCB and SBI are entitled to file their claims before the Interim Resolution Professional.
36. This Adjudicating Authority hereby declare moratorium under Section 13(1)(a) of the Code
other authority;
Corporate Debtor.
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(iii) The applicant SBI shall also make public announcement about initiation of 'Corporate Insolvency
Resolution Process', as required by Section 13(1)(b) of the Code and call for submission of claims under
section 15 of the code.
38. Both the Applications, CP No. (IB) 39 of 2017 and CP No. (IB) 40 of 2017 are disposed of
accordingly.
39. IA No. 153 of 2017 filed by SCB in CP No. (IB) 39 of 2017 is disposed of as infructuous.
40. Communicate a copy of this Common Order to both the Applicant Financial Creditors, SCB and SBI,
1416

AHMEDABAD BENCH
C.P. (I.B.) No. 51/7/NCLT/AHM/2017

Vs.
Respondent: Radheshyam Fibres Pvt. Ltd.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Arjun Sheth, Learned Advocate
For Respondent:
ORDER
None present for Petitioner. Learned Advocate Mr. Arjun Sheth present for Respondent.
Order pronounced in open Court. Vide Separate Sheet.
1. State Bank of India filed this Application under Section 7 of the Insolvency and Bankruptcy Code,
2016 ["Code" for short] read with Rule 4 of the Insolvency and Bankruptcy (Application to Adjudicating
Authority) Rules, 2016 ["Adjudication Rules" for short] to trigger 'Insolvency Resolution Process' against
M/s. Radheshyam fibers Private Limited [hereinafter called as "Respondent/Corporate Debtor"].
2. The Application is signed by Shri Yogesh M. Avasia, Assistant General Manager & Relationship
Manager for and on behalf of State Bank of India, Stressed Assets Management Branch, Ahmedabad.
3. M/s. Radheshyam fibers Private Limited is a Private Limited Company incorporated under the
Companies Act, 1956 having its Registered Office at 134, Sardar Patel Marketing Yard National
Highway-8 B, Gondal Rajkot-360311 Gujarat.
4. The Authorised Share Capital of the Corporate Debtor is Rs. 3,00,00,000/- (30,00,000 shares of Rs. 10
each). The Paid-up Capital of the Corporate Debtor is Rs. 2,99,75,000/- (29,97,500 shares of Rs. 10/-
each. The main object for which the Corporate Debtor was incorporated is to carry out the business of
1417
printing, weaving, finishing etc. The other objects of the Corporate Debtor are set out in the
Memorandum and Articles of Association. Corporate Debtor originally approached the Applicant Bank at
its Commercial Branch, Noble House, Rajkot, Gujarat at different points of time, i.e., 2008, 2011, 2012
and 2013 for availing financial assistance in the form of Cash Credit and Standby Line of Credit facilities
of the nature of Demand Cash Credit of Rs. 16.00 Crores subject to the terms and conditions contained in
the Sanction Letter dated 30.10.2008. The Working Capital facilities are repayable on demand. As per the
rate of interest applicable from time to time, the Board of Directors of Corporate Debtor passed necessary
Resolutions on 01.11.2008 authorising availment of above said credit facilities by the Corporate Debtor
and executed various documents and securities by the Corporate Debtor in consideration of the above said
Working Capital Term Loan. Corporate Debtor executed Agreement of Loan dated 03.11.2008,
Agreement of Hypothecation of Goods and Assets dated 03.11.2008 for securing the aforesaid Credit
Facility Limit of Rs. 16 Crores. The Deed of Guarantee dated 3.11.2008 was also executed for the
security of the above said facilities by Mr. Ramniklal C. Bhalala and others. Corporate Debtor also
mortgaged the immovable properties being Plot No. 12, land admeasuring 1519.13 sq.mtrs. with building
thereon situated in Hadmatala, Rajkot District and Plots No. 3, 4, and 5 in Survey No. 51 Paiki of
Hadmatala. The Corporate Debtor also mortgaged all the immovable properties situated in Rajkot.
Corporate Debtor deposited the title deeds by executing Memorandum of Deposit of Title Deeds.
Subsequently in the year 2011 on the request of the Corporate Debtor, Applicant again renewed the
Working Capital Facilities and enhanced the sanction by Rs. 9.00 Crores making it to Rs. 25.00 Crores.
Vide Sanction Letter dated 01.01.2011, Board of Directors approved the enhancement of Working Capital
Limits and in consideration of the same security documents were executed. Corporate Debtor fully
availed the aforesaid enhanced facility sanctioned by the Applicant.
5. On request of the Corporate Debtor on 9.02.2012, again Applicant renewed the Working Capital and
enhanced it to Rs. 32.00 Crores. Corporate Debtor executed necessary documents and provided security
documents. Corporate Debtor fully availed the Working Capital Facility.
6. Again on 29.3.2013, on the request of Corporate Debtor, Applicant renewed various working capital
facilities with enhancement as well as fresh limit as well as Corporate Loan as per the Sanction Letter
dated 29.3.2013, viz., Cash Credit Limit of Rs. 40.00 Crores, Standby Line of Credit of Rs. 6.00 Crores
and Corporate Loan of Rs. 0.50 Crores, totalling to Rs. 46.50 Crores. All the loans carry interest and
repayable as and when applied. Board of Directors of the Corporate Debtor passed necessary Resolutions
authorising availing of the Credit Facilities by the Corporate Debtor and executed necessary documents
and also created mortgage over the immovable properties. Subsequently, on 17.4.2015, Applicant
renewed the Cash Credit Facility of Rs. 40.00 Crores and Standby Line of Credit facility of Rs. 6.00
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Crores. Subsequently, Corporate Debtor started committing default in repayment of obligations and
consequently the relevant Working Capital facility accounts, Cash Credit and Standby Line of Credit
became irregular and overdue in the books of the Applicant Bank. Inspite of consistently followed up by
the Applicant Bank, the Corporate Debtor did not regularize the account. Applicant issued notice dated
29.6.2016 to the Corporate Debtor, guarantors, mortgagors recalling the Cash Credit and Standby Line of
Credit accounts and demanding repayment of Rs. 42,99,58,270.20 ps., which was due and payable by the
Corporate Debtor to the Applicant as on 28.6.2016 with interest. But Corporate Debtor did not repay the
amount.
7. Thereafter, Authorised Officer of the Applicant issued notice under Section 13(2) of SARFAESI Act,
2002 to the Corporate Debtor and guarantor-mortgagors on 01.7.2016. Applicant also filed Original
Application No. 575 of 2016 before learned Debt Recovery Tribunal-II, Ahmedabad for recovery of Rs.
43,38,65,688.07. The Corporate Debtor is liable to pay the above said amount. In the Original Application
No. 575/2016, DRT-II, Ahmedabad, by order dated 6.9.2017 granted various interim reliefs including
injunction against alienation of charged/hypothecated/mortgaged assets by the Corporate Debtor.
Corporate Debtor appeared and filed Written Statement. The Original Application is pending. After the
filing of the Original Application, the accounts of the Corporate Debtor have been transferred from
Applicant's Commercial Branch, Rajkot, Gujarat to its Stressed Assets Management Branch, Ahmedabad.
According to the Applicant, the Corporate Debtor is unable to pay the outstanding financial debt and that
arose in the usual and ordinary course of business and that it has become commercially insolvent.
8. The Applicant proposed the name of Insolvency Resolution Professional. Applicant filed all the
relevant documents as required by Form-1 of the Adjudication Rules.
9. Applicant stated that it had sent the Insolvency Application along with Annexures to the Corporate
Debtor on 28.6.2017 and it was delivered to the Corporate Debtor on 30.6.2017. Applicant also filed
Postal Department Tracking Report along with a Memo. Applicant also filed the Written Communication
given by the proposed Interim Resolution Professional. Applicant also filed the copy of Original
Application No. 575 of 2016 filed before the Debt Recovery Tribunal. Applicant filed the Revival Letter
executed on 25.8.2016 apart from other Loan Agreements. Applicant also filed Statement of Accounts in
respect of the Standby Line of Credit and Cash Credit facility. Applicant also filed Statement of
Unapplied Interest on Cash Credit and Standby Line of Credit. Applicant also filed Certificate under
Banker's Book Evidence Act, in respect of SLC Account and Cash Credit Account.
1419
10. The Respondent appeared through learned Counsel and filed objections. The first objection raised by
the Corporate Debtor is that the copy of Application served on them is not in accordance with the
requirement of Rule 4(3) and it is only a draft Application that was served to them with blanks at several
material places.
10.1 The second objection raised by the Corporate Debtor is that the person who signed the Application is
not authorised by the Applicant Bank. The third objection is that the date of default has not been set out in
the Application and the working computation of the amount and dates of default not attached in tabulation
form. The fourth objection is whether default has occurred or not on the part of the Corporate Debtor is an
issue which is sub judice before the DRT. It is stated by the Respondent that this Application is nothing
but an arm-twisting mechanism on the part of the Applicant to somehow recover the amount.
11. Rule 4(3) of the Adjudication Rules says, the Applicant shall despatch valid copy of the Application
filed with the Adjudicating Authority by Registered Post or Speed Post to the Registered Office of the
Corporate Debtor. In the case on hand, Applicant filed Memorandum along with Speed Post Track Report
issued by the Postal Department stating that it has despatched the copy of the Application. It is not even
the case of the Corporate Debtor that it has not received the copy of the Application. It is the case of the
Corporate Debtor that the copy of the Application received by it is only a draft Application with several
blanks. The statement was made by the Corporate Debtor in the Reply Affidavit but Corporate Debtor did
not choose to file the copy of the Application received by him.
12. It is pertinent to mention that this matter has been listed for the first time before this Authority on
13.7.2017. On that date, learned Advocate, Mr. Arjun Sheth filed Vakalatnama for the Respondent. On
that date, it was not stated by the learned Advocate that the copy of the Application received by the
Corporate Debtor is with blanks and it is only a draft. For the first time, in the Objections filed on 20th
July, 2017 the said issue was raised. In view of the above said facts, it cannot be said that there is non-
compliance of sub-rule (3) of Rule 4 of the Adjudication Rules.
13. Learned Counsel appearing for the Corporate Debtor relied upon a decision of the Hon,ble National
Company Law Tribunal, Principal Bench, New Delhi in the case of Indian Bank Vs. Athena Demwe
Power Limited, in Company Petition No. 55 of 2017. In that case, the Application has not been served on
the Corporate Debtor, as required by Rule 4(2) of the Rules. In that case, the Application was sent to
some other address but not to the Registered Office address of the Corporate Debtor. In the case on hand,
the Application was sent to the Registered Office of the Corporate Debtor and in fact it was received by
the Corporate Debtor. It is not even the case of the Corporate Debtor that it has not received the copy of
1420
the Application but it is its case that only a draft of the Application is received. Therefore, the facts in this
case are different from the facts in the case of Indian Bank Vs. Athena Demwe Power Limited.
13.1 Another decision relied upon by the learned Advocate for the Corporate Debtor is in case of Era
Infra Engineering Ltd. Vs. Prideco Commercial Projects Pvt. Ltd., in Company Appeals (AT) No. 31 of
2017 rendered by Hon'ble National Company Law Appellate Tribunal, New Delhi. In that case,
admittedly no notice was issued by the Operational Creditor under Section 8 of the Code. Demand notice
by Operational Creditor stipulated under Rule 5 in Form No. 3 had not been served. But in the case on
hand, it is filed by the Corporate Debtor. No Demand Notice is contemplated under the Rules. There is
substantial compliance of Rule 4(3) of the Adjudication Rules by serving the copy of the Application on
the Corporate Debtor. Therefore, the aforesaid decision is not applicable.
14. The Form 1 is signed by Mr. Yogesh M. Avasia, Assistant General Manager and Relationship
Manager of SBI.
15. The Applicant filed Certificate issued by the Deputy General Manager of the Bank. In support of the
authority of the Officer of the Bank for signing the Application, Applicant also filed extracts of relevant
pages of State Bank of India General Regulations regarding signing of the Application. A perusal of
Regulations 76 and 77 of the SBI General Regulations clearly goes to show that all the officers of the
Bank above Grade-4 are authorised to sign the plaints, affidavits etc., and therefore it cannot be said that
the person who signed on the Application is not competent to file the Application for and on behalf of the
SBI.
16. The third objection raised is that the date of default is not mentioned and working computation of
amount not enclosed. In fact, during the course of arguments, it is noticed that Application, Form No. 1 is
incomplete in respect of Part IV columns No. 1 and 2. Therefore, this Adjudicating Authority asked the
Applicant to rectify the defects in Part IV of Columns 1 and 2 by 31.7.2017 and accordingly, Registry
was directed to issue a notice under Section 7(5) of the Code to rectify the defect. The Registry of this
Tribunal accordingly issued a notice to the Applicant. Applicant filed rectified papers of Form No. 1 of
Part IV and working computation of defaults. Therefore, the defect found in Form No. 1 has been
rectified by the Applicant within the stipulated time.
17. The last objection raised by the learned Advocate for the Corporate Debtor is that in view of the
pendency of debt recovery proceedings it cannot be said that a default has been committed by the
Corporate Debtor in payment of amount to the Financial Creditor.
1421
18. The debt recovery proceedings are initiated by the Financial Creditor to recover the amount. Simply
because the Financial Creditor initiated proceedings before the Debt Recovery Tribunal, it does not lie in
the mouth of the Financial Creditor to say that no default occurred. Corporate Debtor did not disclose any
bona fide defence based on substantial grounds for the claim made by the Financial Creditor either before
this Authority or before the Debt Recovery Tribunal.
18.1 The Financial Creditor in order to establish the defaults, filed copies of accounts certified under the
Banker's Book of Evidence Act and also the loan account copies and Revival Letters executed by the
Corporate Debtor. The above said evidence is sufficient to substantiate the plea of the Applicant that a
default has been committed by the Corporate Debtor in payment of amount due to the Applicant.
19. The Applicant granted several facilities including Cash Credit Facility to the Corporate Debtor and the
Corporate Debtor fully availed those facilities. Those facilities carry interest applicable from time to time
as per the terms and conditions mentioned in the Sanction Letters. Therefore, the amount due to the
Financial Creditor from the Corporate Debtor is a financial debt. In view of the Judgment of the Hon'ble
National Company Law Appellate Tribunal, in case of M/s. Innoventive Industries Ltd. Vs. ICICI Bank &
Anr., in Company Appeal (AT)(Insolvency) No. 1 & 2 of 2017, this Adjudicating Authority has to satisfy
whether a default has occurred; whether the Application is complete; and whether any disciplinary
proceeding is pending against the proposed Insolvency Resolution Professional.
20. In the case on hand, from the material placed on record by the Applicant, this Authority satisfied that
the Corporate Debtor committed default in paying the financial debt to the Applicant. The Application,
after rectification, is complete. As can be seen from the Written Communication of the proposed
Insolvency Resolution Process, no disciplinary proceedings are pending against him. In view of the above
said findings, this Application is required to be admitted and accordingly it is admitted.
21. This Adjudicating Authority hereby appoint Shri Ramachandra D. Choudhary, R. Choudhary &
Associates, CA, residing at 9-B, Vardan Tower, Near Vimal House, Lakhudi Circle, Navrangpura,
Ahmedabad-380014, having Registration No. IBBI/IPA-001/IP-00455/2016-17/2007 to act as "Interim
Insolvency Resolution Professional" under Section 13(1)(b) of the Code.
22. The Applicant is also directed to make public announcement about initiation of Corporation
Insolvency Resolution Process as required by Section 13(1)(b) of the Code and call for submission of
claims under Section 15 of the Code.
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23.(i) This Authority hereby order Moratorium under Section 13(1) for the following purposes referred to
in Section 14 of the Code;
other authority;
(ii) However, the supply of goods and essential services to the Corporate Debtor shall not be terminated
or suspended or interrupted during the moratorium period.
(iii) The order of moratorium is not applicable to the transactions that may be notified by the Central
Government in consultation with any financial sector regulator.
(iv) The order of moratorium comes into force from the date of the order till the completion of Corporate
24. This Application is disposed of accordingly. No order as to costs.
25. Communicate a copy of this order to the Applicant Financial Creditor, and to the Interim Insolvency
1423
AHMEDABAD BENCH
C.P. (I.B.) No. 54/7/NCLT/AHM/2017
Applicant: Axis Bank Limited

Vs.
Respondent: Keti Highway Developers Private Limited
Judges/Coram:
Bikki Raveendra Babu, Member (J)
Counsels:
For Appellant/Petitioner/Plaintiff: Ameya Gokhale, Learned Advocate, Pulkitesh Tiwari, Nirag Pathak,
Shalin Jani, Learned Advocates on behalf of and Shardul Amarchand Mangaldas & Co.
For Respondents/Defendant: Saurabh Soparkar, Learned Senior Counsel, Kunal Vaishnav and Atul
Nema, Learned Advocates
ORDER
1. The Applicant Bank, originally filed Company Petition No. 47 of 2016 before the Hon'ble High Court
of Madhya Pradesh, at Indore Bench against Respondent under Section 433(e) and (f), 434 and 439 of the
Companies Act, 1956 read with Rule 9 of the Company Court Rules, 1959. The Hon'ble High Court of
Madhya Pradesh, Indore Bench, transferred the above said Petition to the National Company Law
Tribunal, Ahmedabad Bench in view of Rule 5 read with Rule 7 of the Company (Transfer of pending
Proceedings) Rules, 2016. Thereafter, Applicant furnished further information and filed the necessary
Forms before this Tribunal which came to be registered as "CP (IB) No. 54 of 2017".
2. The case of the Applicant Company, in brief, is as under;
2.1 The Applicant Bank is a Banking Company within the meaning of Section 5(c) of the Banking
(Regulation) Act, 1949 having its Registered Office at Trishul, Law Garden, Ahmedabad, Gujarat and
Corporate Office at Axis House, Worli, Mumbai. Shri Sumit Sharma, Branch Manager of the Applicant
Bank, Indore, is authorised to file this Petition by way of General Power of Attorney dated 22nd May,
2011.
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2.2 Respondent Company is a Company registered under the Companies Act, 1956 having its Registered
Office at Vatsalya Chambers, Indore. The Object of the Respondent Company is to carry on the business
of construction, development etc. The Authorised Share Capital of Respondent Company is Rs.
21,00,00,000 divided into 2,10,00,000 Equity Shares of Rs. 10/- each.
2.3 On the request of the Respondent Company, the Applicant Bank sanctioned Term Loan to the tune of
Rs. 55 Crores for development of Chandpur-Alirajpur-Kukshi-Barwani Road on the terms and conditions
mentioned in the Sanction Letter dated 24.3.2011 which was duly accepted by the Respondent Company.
The reduction in rate of interest was sanctioned and conveyed to Respondent Company vide letter dated
04.01.2013.
2.4 The Respondent Company had executed the following Agreements;
1. Escrow Account Agreement;
2. Term Loan Agreement;
3. Composite Hypothecation Deed;
4. Loan Agreement.
Respondent Company availed credit facility but not paid the outstanding dues to the Applicant Bank
towards the Credit Facility. The account of the Respondent Company became a non-performing asset
with effect from 29.11.2013 in the books of accounts of the Applicant Bank. The Applicant Bank issued a
Demand Notice under Section 434 of the Companies Act, 1956, on 21.4.2016. In that Demand Notice,
Applicant Bank claimed outstanding amount of Rs. 68,07,42,449/- as on 20th April, 2016 and called upon
the Respondent Company to pay the said amount with further interest at contractual rate from 21.4.2016.
2.5 Applicant filed Form-1 before this Tribunal on 5th June, 2017.
3. Rule 4 Sub-Rule (3) of Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules,
2016 require the Applicant to despatch forthwith copy of Application filed with the Adjudicating
Authority by Registered Post or Speed Post to the Registered Office of the Corporate Debtor. On
02.8.2017, when the matter was heard before this Adjudicating Authority, it was brought to the notice of
this Authority that a copy of the Application has not been despatched to the Respondent Corporate
Debtor. It is also found out that the Applicant did not disclose the information relating to the proceedings
1425
pending before Debt Recovery Tribunal in Item No. 2 Para 5 of Form-1. It has also come to light that
Applicant has not filed Escrow Agreement, Concession Agreement and Substitution Agreement.
Thereupon, this Adjudicating Authority directed the Registry to give Notice to the Applicant to rectify the
above said defects within 7 days. Accordingly, a Notice was issued by the Registry to the Applicant.
Applicant, in compliance with the direction, filed the following documents;
1. Copy of Original Application No. 455 of 2016 along with Annexures filed by Financial Creditor before
Debt Recovery Tribunal at Jabalpur;
2. Copy of Concession Agreement dated 30th June, 2017 between Madhya Pradesh Road Development
Corporation Limited ['MPRDC'], Corporate Debtor/Respondent Company;
3. Copy of Substitution Agreement dated 4th October, 2011 between MPRDC. Corporate Debtor and
Financial Creditor;
4. Copy of Escrow Account Agreement dated 4th October, 2011 between Corporate Debtor, Financial
Creditor and MPRDC;
5. Order dated 7th December, 2016 passed in Company Petition No. 47 of 2016;
6. Orders dated 23rd January, 2017 passed in Company Petition No. 47 of 2016.
Applicant also served a copy of the Application on the Respondent.
4. On the next date of hearing, on 7th August, 2017, during the course of the arguments it was noticed
that in the copy of the Loan Agreement filed by the Applicant some clauses were missing and some pages
of the Agreement were also missing, whereupon the learned Counsel undertook to file fresh copy of Loan
Agreement containing all clauses in all pages in the Loan Agreement. Accordingly, on 10.8.2017, copy of
Loan Agreement was filed.
5. Respondent Company filed objections.
5.1 The first and foremost objection raised by the Respondent is that Applicant Bank has not produced the
vital documents such as Escrow Account Agreement, Concession Agreement, Substitution Agreement,
and that those documents were suppressed because those documents contained the dispute resolution
mechanism.
1426
5.2 This objection raised by the Respondent has been rectified by the Applicant by filing the above said
Agreements. In fact, Applicant filed Escrow Agreement along with Company Petition No. 47 of 2016 as
Annexure P-4. Applicant filed Concession Agreement dated 30th June, 2017.
5.3 It is the contention of the Applicant that Financial Creditor is not a party to the Concession Agreement
and therefore it need not be filed as a material document. Further, it is the contention of the Applicant that
the claim is not based on Substitution Agreement dated 4th October, 2011 and it is based on Loan
Agreement and therefore the Substitution Agreement is not a material document for the purpose of
adjudication of Application under Section 7 of the IB Code.
5.4 It is the contention of the learned Senior Counsel appearing for the Respondent that in view of the
Clauses in the Substitution Agreement and Concession Agreement, it cannot be said that a default has
been committed by the Respondent in repayment of the Cash Credit amount.
5.5 In view of the contention of the learned Senior Counsel for the Respondent only, this Adjudicating
Authority directed the Applicant to file Escrow Account Agreement, Concession Agreement and
Substitution Agreement and accordingly Applicant filed those documents. In view of the above said facts,
the first objection of the learned Senior Counsel for the Respondent, relating to non-filing of certain
Agreements, no longer holds good for the purpose of adjudication of this Application.
6. The second objection raised by the learned Senior Counsel for the Respondent is that Clause 8.1.1. of
the Substitution Agreement provides for Dispute Resolution Mechanism and according to the Dispute
Resolution Mechanism, any dispute, difference or claim arising out of or in connection with Substitution
Agreement shall be referred to arbitration and therefore the present Application filed by the Applicant is
not maintainable before this Authority. On this aspect, learned Counsel appearing for the Applicant
contended that default has been committed by the Corporate Debtor in terms of the Loan Agreement and
the claim in the present Application relates to the terms of the Loan Agreement, but not related to the
Substitution Agreement. He further contended that the Arbitration Clause in the Substitution Agreement
cannot be made applicable to the present proceedings since the claim does not arise under the Substitution
Agreement. He further contended that provisions of Section 238 of the IB Code will have overriding
effect over any other provisions in Law which is inconsistent with the provisions of the IB Code, and the
Arbitration Clause does not bar the filing of the insolvency proceedings.
6.1 The Substitution Agreement dated 4th October, 2011 is entered into between MPRDC, Corporate
Debtor and Financial Creditor.
1427
6.2 A reading of Clause 3 of the Substitution Agreement clearly indicates that in substance it is
assignment of rights and title. It says, the Concessionaire (Corporate Debtor) assigns the rights, title and
interest in the Concession Agreement in favour of Lender's Representative by way of security in respect
of financing by the Lenders under the Financing Agreement. As per Clause 3.1.2. of the Substitution
Agreement, MPRDC agrees to substitute the Concessionaire by endorsement on the Concession
Agreement in favour of the nominated Company selected by the Lender's Representative in accordance
with the Substitution Agreement. It is further stated in Clause 3.2. that substitution is upon occurrence of
Financial Default.
6.3 Clause 3.2.1. further lays down that upon occurrence of a Financial Default, the Lender's
Representative may issue a notice to the Concessionaire marking a copy to MPRDC and upon issuance of
such notice without prejudice to its rights under Financing Agreement, substitute the Concessionaire by a
nominated Company. The Substitution Agreement also provides procedure for substitution. In view of the
said Clauses in the Substitution Agreement, the Arbitration Clause 8.1.1. of the Substitution Agreement in
no way prevent the Financial Creditor to claim the amount due under the Loan Agreement. Clause 8.1.1.
is only to resolve the dispute that arise out of or in connection with the Substitution Agreement. It is
pertinent to mention here that there is no Arbitration Clause in the Loan Agreement. In the absence of
Arbitration Clause in the Loan Agreement, on the basis of Arbitration Clause in the Substitution
Agreement, it cannot be said that the proceedings under the Insolvency Code are barred because of an
Arbitration Clause in the Substitution Agreement. Moreover, given the fact that even though there is an
Arbitration Clause, and even if the arbitration proceedings are pending, it is no bar for initiation of
Insolvency Resolution Process under Section 7 of the Code, in view of Section 238 of the IB Code.
Therefore, the second objection raised by the learned Senior Counsel for the Respondent do not merit
acceptance.
7. The third objection raised by the learned Senior Counsel for the Respondent is, that in view of the
Escrow Agreement dated 4th October, 2011 there is no default committed by the Respondent.
7.1 Learned Senior Counsel for the Respondent pointed out that as per the Amortisation Schedule, the
repayment of the loan is based on cash flow of the borrower. Learned Senior Counsel for the Respondent
further contended that as per the Escrow Account Agreement, Applicant Bank itself is an Escrow Agent
and it is the Escrow Agent that maintains the Escrow Account in terms of the Escrow Account Agreement
and whatever deposited into Escrow Account in whatever manner will be disbursed as per the Escrow
Account Agreement and the borrower has no control over it.
1428
7.2 A perusal of the Escrow Account Agreement dated 4th October, 2011 entered into between Corporate
Debtor, MPRDC and the Applicant shows that Escrow Account is required to be funded as per Clauses
(a) to (i) mentioned in Clause 4.1. of the Agreement and the withdrawals are according to Clause 4.2.1.
The Escrow Account Agreement also says what are the rights and obligations of the Escrow Agent.
Therefore, the functions of Escrow Agent as per the Escrow Account Agreement are different from the
functions of the Insolvency Resolution Professional, in case of triggering of Insolvency Resolution
Process. Simply because no sufficient funds are deposited into the Escrow Account, due to less cash flow
or 'Nil' cash flow, the borrower is not absolved from the liability to pay the outstanding loan amounts. In
case of amounts deposited in the Escrow Account, they have to be disbursed by the Escrow Agent in the
manner in which it is laid down in the Escrow Agreement. Therefore, the Escrow Account Agreement
nowhere absolves the liability of the Corporate Debtor to pay the outstanding loan amount, if any.
8. The most important argument advanced by the learned Senior Counsel for the Respondent is that there
is no material on record to satisfy this Adjudicating Authority that Corporate Debtor has committed
default in repayment of the loan amount. He further contended that this is not a case where the amounts
are due by virtue of the Loan Agreement alone. He further contended that on consideration of the Loan
Agreement, Concession Agreement, Substitution Agreement and Escrow Account Agreement it shows
that whatever the Toll amount collected by the Corporate Debtor has to be deposited in the Escrow
Account and from out of it the payment has to be made to the Loan Account and other amounts as agreed
upon. He contended that in Clause 2A.3 of the Loan Agreement, the outstanding amounts are payable
from time to time and on all monies occurring due under the agreement and not paid on due dates
monthly in each year on the dates set out in Schedule IV. He contended that in Schedule IV, there are no
such dates. Learned Senior Counsel appearing for the Respondent contended that Clause 2A.3 deals with
interest. The Schedule number is wrongly typed as 'Schedule IV instead of 'Schedule III'. A perusal of
Schedule III shows that it deals with particulars of interest, whereas Schedule IV deals with Drawdown
schedule. Therefore, it is obvious that a typographical mistake is there in typing the Schedule number in
Clause 2A.3. Therefore, it is necessary to read the Schedule Number in Clause 2A.3 as "Schedule-III"
instead of "Schedule IV".
9. Learned Senior Counsel appearing for the Respondent, turning to Schedule III, contended that the dates
of payment of interest indicated in Schedule III is monthly on the last date of each calendar month or as
and when debited to the account. He contended that no interest has been debited to the loan account and
therefore the interest amount is not due and payable. Learned Senior Counsel further contended that the
amounts already deposited by the Respondent are more than the Principal amount which is due and the
1429
interest so far debited i.e., up to March 2014 and therefore there is no default committed by the
Respondent. Along with the Additional Objections, Respondent filed summary of Toll deposited in Axis
Bank Term Loan Account. As per the said Statement, no interest was shown as due for the months from
April 2014 to June 2017 and interest was debited only up to March 2014. Learned Senior Counsel for the
Respondent contended that after the loan account became non-performing account, interest will not be
shown in the account but it is due and recoverable. It is a fact that the loan account of the Respondent
became a non-performing account and therefore on the ground that interest is not shown as due in the loan
account of the Respondent, it cannot be said that interest is not payable.
10. As per the Loan Agreement, its Clause 2A.7 deals with repayment. The repayment shall be made as
per the Amortisation Schedule. No doubt, in Clause 2A.7(i), the Schedule number is mentioned as
'Schedule VI', but if we refer to Schedule VI, it deals with the Facility Sanction Letters, but not
Amortisation Schedule. Amortisation Schedule is there in Schedule-V. Basing on the description of
Amortisation Schedule in Clause 2A.7(i), the Schedule number has to be read as "Schedule-V" instead of
"Schedule-VI", since it is a typographical error. "Schedule-V" deals with Amortisation Schedule. It says
that based on the cash flow of the borrower the repayment of the loan will be made in 144 step up
monthly instalments. In this Amortisation Schedule, it is clearly mentioned that interest will be served as
and when applied into the account. Therefore, the argument of the learned Senior Counsel for the
Respondent, that interest is not due and payable and it has not been debited to the Loan Account, do not
merit acceptance. Here, it is pertinent to mention that before filing the winding up petition itself before
the Hon'ble High Court of Madhya Pradesh, in the statutory notice itself a demand has been made by the
Applicant/Financial Creditor to the Corporate Debtor to pay the entire outstanding loan amount.
Therefore, the contention of the learned Senior Counsel for the Respondent, that the Respondent has paid
more than what is due, do not merit acceptance. The Clauses in the Loan Agreement clearly give
authority to the Financial Creditor to recall the entire loan amount which carries interest irrespective of
the Substitution Agreement and Concession Agreement which are in the nature of securities. It is a case
where the Financial Creditor chose to recall the entire loan amount and, therefore, the contention of the
learned Senior Counsel for the Respondent, that as on date what is due has been paid by the Respondent,
and there is no default in making payment, do not merit acceptance. Therefore, this Adjudicating
Authority is unable to accept the contention of the learned Senior Counsel for the Respondent that no
default has been committed by the Corporate Debtor in repayment of the loan amount as per the Loan
Agreement. Learned Senior Counsel appearing for the Respondent further contended that in view of
Clause 7.2(ii) there must be declaration of the unpaid principal amount and interest in respect of the loans
and unless and until such declaration of unpaid principal amount and interest is there it cannot be said that
1430
Respondent committed default. The very fact that Financial Creditor chose to recall the entire outstanding
amount by issuing statutory notice in the winding-up proceedings, amounts to declaration of unpaid
principal amount and interest. Therefore, this argument is also not acceptable. The documents placed on
record by the Applicant, such as Loan Agreement and Statement of Accounts certified under the Banker's
Books Evidence Act clearly establish that a default has been committed by the Corporate Debtor in
repayment of the loan amount outstanding to the Financial Creditor. The Financial Creditor complied
with all the requirements and now the Application is complete in all aspects.
11. Learned Senior Counsel for the Respondent further contended that in view of the pendency of debt
recovery proceedings, this Application is not maintainable. I see no force in the contention of the learned
Senior Counsel for the Respondent. The debt recovery proceedings are initiated by the Financial Creditor
against the Corporate Debtor and the Guarantor and they are at the stage of filing of Reply by the
Corporate Debtor.
11.1 In view of provisions of Section 238 of the IB Code, the pendency of Debt Recovery proceedings is
no ground not to initiate 'Corporate Insolvency Resolution Process' under Section 7 of the Code if this
Authority satisfies that there is an occurrence of default in repayment of the loan amount and if the
Application is complete in all aspects.
12. In view of the above discussions, the Application deserves to be admitted, and accordingly admitted
under Section 7(5)(a) of the IB Code.
13. Coming to the appointment of 'Insolvency Resolution Professional', in the Application, Applicant
proposed the name of one Shri Rajan Wadhwan for the purpose, but after the filing of the Application,
Applicant filed IA No. 197 of 2017 seeking for substitution of the Insolvency Resolution Professional on
the ground that the registration of Mr. Rajan Wadhwan as Insolvency Resolution Professional' has expired
on 6th July, 2017 and hence he cannot be appointed as Interim Resolution Professional'. To substantiate
the same, Applicant placed on record a copy of letter dated 7th July, 2017 written by Mr. Rajan Wadhwan
to the Financial Creditor. In the said circumstances, the Applicant by way of IA No. 197/2017 proposed
the name of Mr. Udayraj Patwardhan and filed his Written Communication. In view of the above said
facts and circumstances, Mr. Udayraj Patwardhan is appointed as 'Interim Insolvency Resolution
Professional' who is residing at 2, Patwardhan Apartments, Patil Colony #3, College Road, Nashik-
422005 with Registration No. IBBI/IPA-001/IP-P00024/2016-17/10057.
1431
14. This Adjudicating Authority hereby directs the Interim Insolvency Resolution Professional to cause
public announcement of the initiation of Corporate Insolvency Resolution Process and calls for
submission of claims under Section 13(1)(b) read with Section 15 of the Code and Regulation 6 of
Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons)
Regulations, 2016.
15. This Adjudicating Authority hereby order moratorium under Section 13(1)(a) of the IB Code
prohibiting the following as referred to in Section 14 of the Code;
other authority;
(i) However, the order of moratorium shall not apply in respect of supply of essential goods or services to
Corporate Debtor.
(ii) The order of moratorium is not applicable to the transactions that may be notified by the Central
(iii) The order of moratorium comes into force from the date of the order till the completion of Corporate
17. Communicate a copy of this order to the Applicant Financial Creditor, and to the Respondent
1432

AHMEDABAD BENCH
C.P. (I.B.) No. 86/7/NCLT/AHM/2017
Applicant: Reliance Commercial Finance Ltd.

Vs.
Respondent: Steel Konnect (India) Pvt. Ltd.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Jaimin Dave, Learned Advocate
For Respondent:
ORDER
Learned Advocate Mr. Jaimin Dave present for Financial Creditor/ Applicant. None present for
Respondent.
Heard arguments of Learned Counsel for Applicant.
In view of the commencement of Insolvency Resolution process in respect of M/s. Steel Konnect (India)
Pvt Ltd as per the order dated 19.04.2017 passed by this Adjudicating Authority in CP(IB) 5/2017 and in
view of the observation of the Hon'ble NCLAT in Company Appeal (AT) (Insolvency) 33/2017 dated
31.05.2017 Learned Counsel for Applicant sought permission to withdraw this application to file its claim
before the IRP.
Applicant is accordingly permitted.
Application is disposed of as withdrawn.
1433
AHMEDABAD BENCH
C.P. (I.B.) No. 71/7/NCLT/AHM/2017
Applicant: Sacrato Capital Pvt. Ltd.

Vs.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Ms. Natasha Sutaria, Learned Advocate
For Respondent: Mr. Raheel Patel, Learned Advocate
ORDER
1. All these four Applications are filed by four different companies styling as Financial Creditors with a
request to initiate Insolvency Resolution Process under Section 7 of the Insolvency and Bankruptcy Code,
2016 ["IB Code" for short] read with Rule 4 of the Insolvency and Bankruptcy (Application to
Adjudicating Authority) Rules, 2016, ["Adjudication Rules" for short] in Form-1 against one Company,
M/s. Anil Limited. Hence, all the four Applications are being disposed of by this Common Order.
2. M/s. Reliance Commercial Finance Limited styled itself as 'Financial Creditor' in CP (IB) No. 66 of
2017.
3. The said Company gave General Power of Attorney to Shri Hitesh Joshi, as its lawful Attorney vide
General Power of Attorney dated 1st April, 2017.
4. The case of M/s. Reliance Commercial Finance Limited, in brief, is as follows;
4.1. M/s. Anil Nutrients Limited had approached and applied to M/s. Reliance Capital Limited to avail
Term Loan Facility for Working Capital and entered into a Loan Agreement dated 31.12.2014 with M/s.
Reliance Capital Ltd. M/s. Reliance Capital Ltd., disbursed Rs. 10,00,00,000 to M/s. Anil Nutrients Ltd.
(Principal Borrower). M/s. Anil Nutrients Ltd. executed various documents in favour of M/s. Reliance
1434
Capital Limited, which include Working Capital Agreement, Deed of Hypothecation, Demand
Promissory Note, etc.
4.2. M/s. Anil Limited, Respondent herein stood as Corporate Guarantor to the Facility Agreement or the
Working Capital Agreement dated 31.12.2014 made between M/s. Reliance Capital Ltd., and M/s. Anil
Nutrients Ltd. and thereby Respondent herein (Anil Ltd.) became a Guarantor to the loan borrowed by
M/s. Anil Nutrients Ltd.
4.3. M/s. Reliance Capital Limited, was demerged into M/s. Reliance Commercial Finance Ltd., as per the
order of the Hon'ble High Court of Bombay. As per the said Demerger Scheme all the debts of M/s.
Reliance Capital Ltd., were transferred to the Applicant herein, i.e., M/s. Reliance Commercial Finance
Ltd., and that is how the present Applicant has become Financial Creditor of M/s. Anil Nutrients Ltd. and
M/s. Anil Limited, i.e., Respondent herein is the Corporate Guarantor for the loan borrowed by M/s. Anil
Nutrients Ltd. from M/s. Reliance Capital Limited.
4.4. M/s. Anil Nutrients Ltd. and M/s. Anil Limited did not care to make repayment of the loan amount as
per the agreed terms and conditions inspite of repeated requests and reminders made by M/s. Reliance
Capital Ltd., and as well as by the present Applicant. M/s. Anil Nutrients Ltd. and M/s. Anil Limited have
failed and neglected to pay the outstanding amount. Applicant got issued a legal notice dated 28.9.2016 to
M/s. Anil Nutrients Ltd. and called upon the Respondent M/s. Anil Limited to repay the loan amount in
its capacity as 'Corporate Guarantor'.
4.5. M/s. Reliance Capital Limited maintained the account of M/s. Anil Nutrients Ltd. As per the said
account, M/s. Anil Nutrients Ltd. is due to pay Rs. 8,87,94,014/- as on 12.10.2016. The amount due from
M/s. Anil Nutrients Ltd. is liable to be paid by M/s. Anil Limited as 'Guarantor' and the debt is a 'financial
debt' within the definition of 'Financial Debt' as provided under Clause (i) of sub-section (8) of Section 5
of the IB Code.
4.6. Applicant issued statutory notice dated 31.12.2016 to M/s. Anil Nutrients Ltd. and M/s. Anil Limited,
Respondent herein, calling upon them to pay the outstanding amount of Rs. 8,87,94,014/- within 21 days.
Respondents received the said notice but did not choose to pay the amount. Applicant came to know that
Respondent Company owes huge amount of monies not only to the Applicant but to various Financial and
Operational Creditors. Applicant states that the Respondent Company has been making huge losses and is
not in position to clear its debts and liabilities. The Registered Office of the Respondent Company is
situated at Ahmedabad.
1435
5. Applicant filed copies of all Agreements executed by M/s. Anil Nutrients Ltd. in favour of M/s.
Reliance Capital Limited. Applicant filed copy of Deed of Guarantee executed by Respondent Company.
Applicant filed Bank Statements. Applicant in Form-1 Part III mentioned Shri Subodhkumar Bajranglal
Kedia as 'Interim Resolution Professional' but filed Written Communication of Shri Pramod Bajranglal
Kedia, as Interim Resolution Professional. Applicant filed proof of despatch of the Application to the
Respondent by Speed Post. This Adjudicating Authority directed the Applicant to issue notice of date of
hearing and file proof of service. Accordingly, Applicant issued notice of date of hearing and filed proof
of service on Respondent. Respondent appeared through Advocate, Mr. Raheel Patel. Respondent not
filed any objections. Learned Counsel appearing for both parties submitted their arguments. Learned
Counsel appearing for the Applicant contended that the liability of the Respondent as 'Guarantor' is co-
extensive with that of the Principal Borrower. In support of his contention, he relied upon the decision in
State Bank of India Vs. Messrs Indexport Registered and others, reported in MANU/SC/0328/1992 : AIR
1992 SC Page 1740. A perusal of the documents clearly goes to show that M/s. Anil Limited (Respondent
herein) stood as a 'Guarantor' for the loan availed by M/s. Anil Nutrients Ltd. from M/s. Reliance Capital
Limited, as a result of Scheme of Demerger by which one financial unit was merged with M/s. Reliance
Commercial Finance Ltd. vide Guarantee Agreement dated 31st December, 2014.
6. In an application under Section 7 of the Code, this Adjudicating Authority is required to ascertain
existence of default from the records of information utility of on the basis of other evidence furnished by
the Financial Creditor, as laid down in the decision of the Hon'ble National Company Law Appellate
Tribunal, on 17th January, 2017, in Company Appeal (AT) (Insolvency) No. 1 & 2 of 2017 in the matter
of M/s. Innoventive Industries Ltd. Vs. ICICI Bank & Anr. in the following paragraphs;
1436
the financial creditor is to he granted seven days' time to complete the application. However, in a case
application has to be rejected."
7. 'Financial Debt' is defined in Section 5, sub-section (8). Clause (i) of sub-section (8) of Section 5 says
that the amount of any liability in respect of any of the guarantee or indemnity for any of the items
referred to in sub-clauses (a) to (h) of sub-section (8) is a 'financial debt'. Therefore, the debt due from
M/s. Anil Nutrients Limited to the Applicant is a 'financial debt' within the meaning of Clause (i) of sub-
section (8) of Section 5. Respondent, being a Corporate Guarantor, is liable to pay the outstanding loan
amount to the Financial Creditor, the present Applicant.
8. A perusal of the legal notice got issued by the Applicant and the statutory notice issued by Applicant
clearly goes to show that Applicant recalled the entire loan amount both from the Principal Borrower and
the Guarantor and both of them failed to repay the loan amount. The liability of the Respondent being a
Guarantor is coextensive with the liability of the Principal Borrower. The debt due to the Applicant
Financial Creditor from the Respondent is a financial debt. There is material on record to show that there
is occurrence of default in repayment of the financial debt by the Respondent herein, being the Guarantor.
9. The Application filed by M/s. Reliance Commercial Finance Limited is complete in all respects and no
defect is pointed out.
10. In this Application filed by M/s. Reliance Commercial Finance Ltd., Respondent did not choose to
file any objections. Learned Counsel appearing for the Respondent stated that they are making every
effort to settle with all the creditors by making payments in due course of time. In view of the above
discussion, the Application filed by the Applicant, M/s. Reliance Commercial Finance Ltd., i.e., CP (IB)
No. 66 of 2017 deserves to be admitted, and it is accordingly admitted under Section 7(5) of the Code.
C.P. No. (IB) 69/7/NCLT/AHM/2017:
11. Applicant in CP (IB) No. 69 of 2017 is M/s. Kunal Finance and Credit Private Limited. Respondent
Corporate Debtor is M/s. Anil Limited.
12. Respondent Company authorised Shri Jay Prakash Yadav, as an Authorised Representative to file this
Application by way of a Board Resolution.
1437
13. Applicant herein had earlier filed Company Petition (IB) No. 26/7/NCLT/AHM/2017 against the
Corporate Debtor under Section 7 of the IB Code. The said Application came to be withdrawn by the
Applicant on the ground that there was a settlement between the Financial Creditor and the Corporate
Debtor, as can be seen from the Affidavit at Page No. 13 which is filed in CP (IB) No. 26 of 2017. It
appears that the Respondent Company issued cheques to the Applicant Company towards full and final
settlement of all dues. Applicant filed copy of Written Memo issued by Axis Bank to show that the
cheques issued by the Corporate Debtor were dishonoured on the ground "Exceeds Arrangements".
Applicant also filed copy of Bank Statement of Account of the Applicant for the period from 26.5.2017 to
06.7.2017 in order to show that Corporate Debtor has not paid the debt as agreed upon by him as per the
settlement terms by honouring the cheques. It is the case of the Applicant that Corporate Debtor took a
loan of Rs. 42 lakhs and failed to repay the said amount and the amount claimed in default is Rs.
42,00,000/-. Applicant filed Computation Table of outstanding amount along with interest.
14. In this Application, Applicant despatched copy of the Application to the Corporate Debtor and filed
proof of despatch and as well as proof of service. This Adjudicating Authority directed the Applicant to
issue notice to the Corporate Debtor informing the date of hearing. Corporate Debtor appeared through
Counsel. Although Respondent's learned Counsel took time to file objections, no objections were filed.
15. Heard the arguments of both sides' learned Counsel. The documents places on record by the Applicant
clearly establish that 'financial debt' is due from the Corporate Debtor and Corporate Debtor has
committed default in repayment of the same. In fact, learned Counsel appearing for the Respondent did
not dispute the default in payment of debt due to the Applicant. The Application is complete in all
respects. Applicant proposed the name of Mr. Umesh Ved as Interim Resolution Professional' and filed
his Written Communication. Hence, the Application deserves admission under Section 7(5) of the IB
Code. Accordingly, it is admitted.
C.P. No. (IB) 70/7/NCLT/AHM/2017:
16. M/s. Oarsman Credit Private Ltd., filed CP (IB) No. 70 of 2017 through Authorised Person, Mr. Jay
Prakash Yadav who is authorised by the Board of Directors of the Applicant Company by way of
Resolution dated 18th May, 2017. It is the case of the Applicant Financial Creditor that Corporate Debtor
borrowed Rs. 40 lakhs, which amount was transferred through 'RTGS' from the Applicant to the
Corporate Debtor. According to the Applicant, the amount in default is Rs. 45,04,986/- as on 23rd
November, 2016. Applicant filed computation of interest amount due and not paid and particulars of
principal amount due but not paid in a tabular form. Applicant filed Bank Statement of Account of
1438
Applicant Company for the period from 12.01.2017 to 06.6.2017 along with Certificate of the Banker
under Bankers' Books Evidence Act. Applicant also filed a letter dated 10.5.2016 addressed by the
Corporate Debtor to the Applicant enclosing two post-dated cheques by way of security towards
repayment of deposit accepted from Applicant Company. Applicant/Financial Creditor also filed
Promissory Note dated 10.5.2016 executed by the Corporate Debtor in favour of the Applicant.
17. Applicant filed proof of despatch and proof of service of the Application on the Corporate Debtor.
This Adjudicating Authority directed the Applicant to issue notice of date of hearing to the Corporate
Debtor. Applicant also issued notice of date of hearing and filed proof of service. Respondent appeared
through learned Advocate and requested time to file objections, but Respondent did not choose to file
objections even after time is granted.
18. Heard the arguments of the learned counsel appearing for the Applicant and the learned counsel
appearing for the Respondent. The documents filed by the Applicant clearly establish that the financial
debt is due from the Corporate Debtor to the Applicant/Financial Creditor. The documents filed by the
Applicant also show that the Corporate Debtor committed default in repayment of the financial debt due
to the Financial Creditor. The Application is complete in all respects and no defect has been pointed out.
In fact, Respondent did not dispute the default committed in repayment of the financial debt. Applicant
proposed the name of Shri Umesh Ved as Interim Resolution Professional' and filed his Written
Communication. In view of the above discussion, this Application deserves to be admitted and it is
accordingly admitted under Section 7(5) of the IB Code.
C.P. No. (IB) 71/7/NCLT/AHM/2017:
19. M/s. Socrato Capital Private Ltd., filed CP (IB) No. 71 of 2017 through its Authorised Representative,
Mr. Jay Prakash Yadav, under Section 7 of the IB Code read with Rule 4 of the Adjudication Rules for
initiating Corporation Insolvency Resolution Process against the Corporate Debtor, Anil Limited. It is the
case of the Applicant that Corporate Debtor borrowed an amount of Rs. 35 lakhs on 10.5.2016 and it was
renewed for the period from 09.8.2016to 16.11.2016. It is also the case of the Applicant that Applicant
transferred the amount through 'RTGS' to the Corporate Debtor. Applicant stated that the amount in
default is Rs. 39,41,863/- as on 17th November, 2016. Applicant filed letter dated 09.8.2016 addressed by
Anil Ltd., to the Applicant enclosing two post-dated cheques dated 17.11.2016 along with inter Corporate
Deposit Receipt dated 09.8.2016 issued by M/s. Anil Limited for a sum of Rs. 35,00,000/- to the
Applicant. Applicant also filed a Certificate of the banker stating that the amount was paid by the
Applicant to M/s. Anil Limited. Applicant also filed Statement of Account of the Applicant Company. A
1439
perusal of the above documents show that the financial debt is due from the Corporate Debtor to the
Applicant and the Corporate Debtor has committed default in repayment of the said financial debt.
20. Learned Counsel appearing for the Respondent did not dispute the default committed in repayment of
financial debt due to the Applicant/Financial Creditor. Applicant/Financial Creditor proposed the name of
Mr. Umesh Ved as 'Interim Resolution Professional'. The Application filed by the Applicant is complete
in all respect and no defect has been pointed out. Hence, the Application, CP (IB) No. 71 of 2017
deserves to be admitted and it is accordingly admitted under Section 7(5) of the IB Code.
21. By virtue of this order, all the four Applications filed by all the four Financial Creditors under Section
7 of the Code are admitted. Applicant/Financial Creditor in CP (IB) No. 66 of 2017 proposed the name of
'Pramod Bajranglal Kedia as Interim Resolution Professional'. The financial debt due to the Applicant in
CP (IB) No. 66 of 2017 is Rs. 8,87,94,014/-, which is far higher than the total financial debt due to all the
three other Applicants/Financial Creditors.
22. Therefore, in the given facts and circumstances of the case, and considering the fact that the financial
debt due to the Financial Creditor, M/s. Reliance Commercial Finance Limited is higher than the debts
together due to other Applicant Financial Creditors, this Adjudicating Authority is of the considered view
that the Interim Resolution Professional proposed by M/s. Reliance Commercial Finance Limited should
be appointed as 'Interim Resolution Professional'. Therefore, this Adjudicating Authority appoints Shri
Pramod Bajranglal Kedia, C/o. Kedia & Kedia Associates, Chartered Accountants, 205, Kaling, Near
Mount Carmel School, Behind Bata Show Room, Ashram Road, Ahmedabad-380009, having
Registration No. IBBI/IPA-001/IP-P00091/2017-2018/10191, as Interim Resolution Professional',
because his Written Communication is available.
23. This Adjudicating Authority hereby declares moratorium under Section 13(1)(a) of the Code
other authority;
1440
24. The Interim Resolution Professional appointed shall also make public announcement about initiation
of 'Corporate Insolvency Resolution Process', as required by Section 13(1)(b) of the Code.
25. All the four applicants/Financial creditors can file their claims before the Interim Resolution
Professional appointed.
26. However, the supply of goods and essential services to the Corporate Debtor shall not be terminated
or suspended or interrupted during moratorium period.
27. The provisions of sub-section (1) of Section 14 shall not apply to such transactions as may be notified
by the Central Government in consultation with any financial sector regulator.
29. All the four Applications are disposed of accordingly. No order as to costs.
30. Communicate a copy of this Common Order to all the four Applicant Financial Creditors, and to the
Respondent Corporate Debtor, and to the Interim Insolvency Resolution Professional appointed.
1441
AHMEDABAD BENCH
C.P. (I.B.) No. 837/NCLT/AHM/2017

Vs.
Respondent: Bhatia Coke Washeries Ltd.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Baiju Bhagat, Learned Advocate
For Respondent: Ms. Krina Parikh, Learned Advocate
ORDER
Learned Advocate Mr. Baiju Bhagat present for Financial Creditor/ Applicant. Learned Advocate Ms.
Krina Parikh i/b Learned Advocate Mr. Arjun Sheth present for Respondent.
Proof of service of notice of date of hearing filed.
Learned Advocate Mr. Arjun Sheth filed Vakalatnama for Respondent.
Learned Counsel for Applicant filed memo stating that as per the instruction of the applicant he is
withdrawing the application with liberty to file it before appropriate Tribunal.
Permission granted accordingly.
Application is disposed of as withdrawn with liberty to file before appropriate Tribunal.
1442

AHMEDABAD BENCH
C.P. (I.B.) No. 82/7/NCLT/AHM/2017

Vs.
Respondent: Bhatia Coke Energy Ltd.
Judges/Coram:
Counsels:
For Respondent: Ms. Krina Parikh, Learned Advocate
ORDER
Learned Advocate Mr. Baiju Bhagat present for Financial Creditor/ Applicant. Learned Advocate Ms.
Krina Parikh i/b Learned Advocate Mr. Arjun Sheth present for Respondent.
Proof of service of notice of date of hearing filed.
Learned Advocate Mr. Arjun Sheth filed Vakalatnama for Respondent.
Learned Counsel for Applicant filed memo stating that as per the instruction of the applicant he is
withdrawing the application with liberty to file it before appropriate Tribunal.
Permission granted accordingly.
Application is disposed of as withdrawn with liberty to file before appropriate Tribunal.
1443
AHMEDABAD BENCH
C.P. (I.B.) No. 70/7/NCLT/AHM/2017
Applicant: Oarsman Credit Pvt. Ltd.

Vs.
Judges/Coram:
Counsels:
ORDER
2017.
4.1 M/s. Anil Nutrients Limited had approached and applied to M/s. Reliance Capital Limited to avail
1444
4.2 M/s. Anil Limited, Respondent herein stood as Corporate Guarantor to the Facility Agreement or the
4.3 M/s. Reliance Capital Limited, was demerged into M/s. Reliance Commercial Finance Ltd., as per the
4.4 M/s. Anil Nutrients Ltd. and M/s. Anil Limited did not care to make repayment of the loan amount as
4.5 M/s. Reliance Capital Limited maintained the account of M/s. Anil Nutrients Ltd. As per the said
of the IB Code.
4.6 Applicant issued statutory notice dated 31.12.2016 to M/s. Anil Nutrients Ltd. and M/s. Anil Limited,
1445
Kedia as Interim Resolution Professional' but filed Written Communication of Shri Pramod Bajranglal
existence of default from the records of information utility or on the basis of other evidence furnished by
(3). Under Section 5 of Section 7, the 'adjudicating authority' is required to satisfy -
1446
C.P. No. (IB) 69/7/NCLT/AHM/2017:
1447
respects. Applicant proposed the name of Mr. Umesh Ved as 'Interim Resolution Professional' and filed
C.P. No. (IB) 70/7/NCLT/AHM/2017:
1448
C.P. No. (IB) 71/7/NCLT/AHM/2017:
renewed for the period from 09.8.2016 to 16.11.2016. It is also the case of the Applicant that Applicant
1449
'Pramod Bajranglal Kedia as 'Interim Resolution Professional'. The financial debt due to the Applicant in
Registration No. IBBI/IPA-001/IP-P00091/2017-2018/10191, as 'Interim Resolution Professional',
other authority;
1450
respect of its property-including any action under the Securitisation and Reconstruction of Financial
1451
AHMEDABAD BENCH
C.P. (I.B.) No. 66/7/NCLT/AHM/2017

Vs.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Jaimin Dave, Learned Advocate
ORDER
2017.
1452
4.2 M/s. Anil Limited, Respondent herein stood as Corporate Guarantor to the Facility Agreement or the
4.4 M/s. Anil Nutrients Ltd. and M/s. Anil Limited did not care to make repayment of the loan amount as
of the IB Code.
4.6 Applicant issued statutory notice dated 31.12.2016 to M/s. Anil Nutrients Ltd. and M/s. Anil Limited,
1453
Kedia as Interim Resolution Professional' but filed Written Communication of Shri Pramod Bajranglal
1454
C.P. No. (IB) 69/7/NCLT/AHM/2017:
1455
respects. Applicant proposed the name of Mr. Umesh Ved as Interim Resolution Professional' and filed
C.P. No. (IB) 70/7/NCLT/AHM/2Q17:
1456
C.P. No. (IB) 71/7/NCLT/AHM/2017:
1457
Mr. Umesh Ved as Interim Resolution Professional'. The Application filed by the Applicant is complete
'Pramod Bajranglal Kedia as 'Interim Resolution Professional'. The financial debt due to the Applicant in
other authority;
1458
possession of the corporate debtor,
Insolvency Resolution Process subject to the Proviso under sub-section (4) of Section 14,
1459
AHMEDABAD BENCH
C.P. (I.B.) No. 65/7/NCLT/AHM/2017

Vs.
Respondent: Anil Nutrients Ltd.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Jaimin Dave, Laerned Advocate
ORDER
1. This Application is preferred by M/s. Reliance Commercial Finance Ltd., styled itself as 'Financial
Creditor' with a request to initiate Insolvency Resolution Process under Section 7 of the Insolvency and
Bankruptcy Code, 2016 ["IB Code" for short] read with Rule 4 of the Insolvency and Bankruptcy
(Application to Adjudicating Authority) Rules, 2016, ["Adjudication Rules" for short] in Form-1 against
M/s. Anil Nutrients Ltd., treating as 'Corporate Debtor' (Principal Borrower).
2. M/s. Reliance Commercial Finance Ltd., styled itself as 'Financial Creditor' gave Power of Attorney to
Shri Hitesh Joshi, as its lawful Attorney vide General Power of Attorney dated 1st April, 2017.
1460
3.2 M/s. Anil Limited, stood as a Corporate Guarantor to the Facility Agreement or the Working Capital
Agreement dated 31.12.2014 made between M/s. Reliance Capital Ltd., and M/s. Anil Nutrients Ltd. and
thereby Anil Ltd. became a Guarantor to the loan borrowed by M/s. Anil Nutrients Ltd.
order of the Hon'ble High Court of Bombay. As per the said Demerger Scheme, all the debts of M/s.
Ltd., and that is how the present Applicant has become Financial Creditor of M/s. Anil Nutrients Ltd.
Respondent herein.
3.4 M/s. Anil Nutrients Ltd., did not care to make repayment of the loan amount as per the agreed terms
and conditions inspite of repeated requests and reminders made by M/s. Reliance Capital Ltd. and as well
as by the present Applicant. M/s. Anil Nutrients Ltd. failed and neglected to pay the outstanding amount.
Applicant got issued a legal notice dated 28.9.2016 to M/s. Anil Nutrients Ltd., and called upon the
Respondent to repay the loan amount as 'Principal Borrower'.
account, M/s. Anil Nutrients Ltd. is due to pay Rs. 8,87,94,014/- as on 12.10.2016.
3.6 Applicant issued statutory notice dated 31.12.2016 to M/s. Anil Nutrients Ltd., calling upon it to pay
the outstanding amount of Rs. 8,87,94,014/- within 21 days. Respondent received the said notice but did
not choose to pay the amount. Applicant came to know that Respondent Company owes huge amount of
monies not only to the Applicant but to various Financial and Operational Creditors. Applicant states that
the Respondent Company has been making huge losses and is not in position to clear its debts and
liabilities. The Registered Office of the Respondent Company is situated at Ahmedabad.
Reliance Capital Limited. Applicant filed Bank Statements. Applicant in Form-1 Part III proposed the
name of Shri Subodhkumar Bajranglal Kedia as 'Interim Resolution Professional' and filed his Written
Communication.
5. Applicant filed proof of despatch of Application to Respondent by Speed Post. This Adjudicating
Authority directed the Applicant to issue notice of date of hearing and file proof of service. Accordingly,
Applicant issued notice of date of hearing and filed proof of service on Respondent. Respondent appeared
through Advocate, Mr. Raheel Patel. Respondent not filed any objections. Learned Counsel appearing for
1461
both the parties submitted their arguments. Learned Counsel appearing for the Applicant contended that
the documents filed by the Applicant clinchingly establish that Respondent is liable to pay the outstanding
loan amount and Respondent committed default in payment of such amount.
of M/s. Innoventive Industries Ltd. Vs. ICICI Bank & Anr., in the following paragraphs;
7. Perusal of the documents filed by Applicant clearly goes to show that outstanding amount is payable by
the Respondent to the Applicant. Clause (a) of sub-section (8) of Section 5 defines 'Financial Debt'. In the
case on hand, the loan was granted by the Applicant to the Respondent against payment of interest and it
is the time value for money. Therefore, the amount due from the Respondent to the Applicant is a
financial debt within the meaning of Section 5, sub-section (8).
8. A perusal of the legal notice got issued by the Applicant and the statutory notice issued by the
Applicant clearly goes to show that Applicant recalled the entire loan amount both from the Principal
1462
Borrower and the Guarantor and both of them failed to repay the loan amount. Therefore, the Respondent
Corporate Debtor committed default in repayment of the loan amount.
11. The Applicant proposed the name of Mr. Subodhkumar Bajranglal Kedia as Insolvency Resolution
Professional'. Hence, this Adjudicating Authority hereby appoint, Mr. Subodhkumar Bajranglal Kedia,
residing at 205, Kaling, Near Mount Carmel School, Behind Bata Show Room, Ashram Road,
Ahmedabad-380009 with Registration No. IBBI/IPA-001/IP-P00009/2016-17/10028 as 'Interim
Insolvency Resolution Professional' under Section 13(1)(c) of the Code.
other authority;
1463
13. The Interim Resolution Professional shall make public announcement about initiation of 'Corporate
Insolvency Resolution Process', as required by Section 13(1)(b) of the Code.
17. The Application is disposed of accordingly. No order as to costs.
18. Communicate a copy of this order to the Applicant Financial Creditor, to the Respondent Corporate
Debtor, and to the Interim Insolvency Resolution Professional appointed.
1464

AHMEDABAD BENCH
C.P. (I.B.) No. 69/7/NCLT/AHM/2017
Applicant: Kunal Finance and Credit Pvt. Ltd.

Vs.
Judges/Coram:
Counsels:
ORDER
All these four Applications are filed by four different companies styling as Financial Creditors with a
request to initiate Insolvency Resolution Process under Section 7 of the Insolvency and Bankruptcy
Code, 2016 ["IB Code" for short] read with Rule 4 of the Insolvency and Bankruptcy (Application to
M/s. Reliance Commercial Finance Limited styled itself as 'Financial Creditor' in CP (IB) No. 66 of
2017.
The said Company gave General Power of Attorney to Shri Hitesh Joshi, as its lawful Attorney vide
The case of M/s. Reliance Commercial Finance Limited, in brief, is as follows;
M/s. Anil Nutrients Limited had approached and applied to M/s. Reliance Capital Limited to avail Term
Loan Facility for Working Capital and entered into a Loan Agreement dated 31.12.2014 with M/s.
Reliance Capital Ltd. M/s. Reliance Capital Ltd., disbursed Rs. 10,00,00,000 to M/s. Anil Nutrients Ltd
(Principal Borrower). M/s. Anil Nutrients Ltd executed various documents in favour of M/s. Reliance
1465
M/s. Anil Limited, Respondent herein stood as Corporate Guarantor to the Facility Agreement or the
Nutrients Ltd and thereby Respondent herein (Anil Ltd.) became a Guarantor to the loan borrowed by
M/s. Reliance Capital Limited, was demerged into M/s. Reliance Commercial Finance Ltd., as per the
Reliance Capital Ltd. , were transferred to the Applicant herein, i.e., M/s. Reliance Commercial Finance
Ltd. , and that is how the present Applicant has become Financial Creditor of M/s. Anil Nutrients Ltd,
and M/s. Anil Limited, i.e., Respondent herein is the Corporate Guarantor for the loan borrowed by M/s.
Anil Nutrients Ltd, from M/s. Reliance Capital Limited.
M/s. Anil Nutrients Ltd and M/s. Anil Limited did not care to make repayment of the loan amount as per
the agreed terms and conditions inspite of repeated requests and reminders made by M/s. Reliance
Capital Ltd., and as well as by the present Applicant. M/s. Anil Nutrients Ltd and M/s. Anil Limited have
failed and neglected to pay the outstanding amount. Applicant got issued a legal notice dated 28.9.2016
to M/s. Anil Nutrients Ltd and called upon the Respondent M/s. Anil Limited to repay the loan amount in
M/s. Reliance Capital Limited maintained the account of M/s. Anil Nutrients Ltd. As per the said
account, M/s. Anil Nutrients Ltd, is due to pay Rs. 8,87,94,014/- as on 12.10.2016. The amount due from
M/s. Anil Nutrients Ltd, is liable to be paid by M/s. Anil Limited as 'Guarantor' and the debt is a
'financial debt' within the definition of 'Financial Debt' as provided under Clause (i) of sub-section (8) of
Section 5 of the 1B Code.
Applicant issued statutory notice dated 31.12.2016 to M/s. Anil Nutrients Ltd, and M/s. Anil Limited,
Respondent herein, calling upon them to pay the outstanding amount of Rs. 8,87,94,014/-within 21 days.
Respondent Company owes huge amount of monies not only to the Applicant but to various Financial
and Operational Creditors. Applicant states that the Respondent Company has been making huge losses
and is not in position to clear its debts and liabilities. The Registered Office of the Respondent Company
is situated at Ahmedabad.
1466
Applicant filed copies of all Agreements executed by M/s. Anil Nutrients Ltd, in favour of M/s. Reliance
Capital Limited. Applicant filed copy of Deed of Guarantee executed by Respondent Company.
Kedia as 'Interim Resolution Professional' but filed Written Communication of Shri Pramod Bajranglal
State Bank of India Vs. Messrs Indexport Registered and others, reported in AIR 1992 SC Page 1740. A
perusal of the documents clearly goes to show that M/s. Anil Limited (Respondent herein) stood as a
'Guarantor' for the loan availed by M/ s. Anil Nutrients Ltd, from M/ s. Reliance Capital Limited, as a
result of Scheme of Demerger by which one financial unit was merged with M/s. Reliance Commercial
Finance Ltd, vide Guarantee Agreement dated 31st December, 2014.
In an application under Section 7 of the Code, this Adjudicating Authority is required to ascertain
of M/s. Innoventive Industries Ltd. Vs. ICICI Bank & Anr, in the following paragraphs;
creditor under sub- section (4) of Section 7 of the Code, 2016, the 'adjudicating authority' on receipt of
Information Utility or on the basis of other evidence furnished by the financial creditor under sub-
section (3). Under Section 5 of Section 7, the 'adjudicating authority' is required to satisfy -
Whether a default has occurred;
Whether an application is complete; and
Whether any disciplinary proceeding is against the proposed Insolvency Resolution Professional.
1467
'Financial Debt' is defined in Section 5, sub-section (8). Clause (i) of sub-section (8) of Section 5 says that
the amount of any liability in respect of any of the guarantee or indemnity for any of the items referred to
in sub-clauses (a) to (h) of sub-section (8) is a `financial debt'. Therefore, the debt due from M/s. Anil
Nutrients Limited to the Applicant is a 'financial debt' within the meaning of Clause (i) of sub-section (8)
of Section 5. Respondent, being a Corporate Guarantor, is liable to pay the outstanding loan amount to the
Financial Creditor, the present Applicant.
A perusal of the legal notice got issued by the Applicant and the statutory notice issued by Applicant
Guarantor is co-extensive with the liability of the Principal Borrower. The debt due to the Applicant
The Application filed by M/s. Reliance Commercial Finance Limited is complete in all respects and no
In this Application filed by M/ s. Reliance Commercial Finance Ltd., Respondent did not choose to file
any objections. Learned Counsel appearing for the Respondent stated that they are making every effort to
settle with all the creditors by making payments in due course of time. In view of the above discussion,
the Application filed by the Applicant, M/s. Reliance Commercial Finance Ltd., i.e., CP (IB) No. 66 of
2017 deserves to be admitted, and it is accordingly admitted under Section 7(5) of the Code.
C.P. No.(IB) 69/7/NCLT/AHM/2017:
Applicant in CP (IB) No. 69 of 2017 is M/s. Kunal Finance and Credit Private Limited. Respondent
Respondent Company authorised Shri Jay Prakash Yadav, as an Authorised Representative to file this
1468
Applicant herein had earlier filed Company Petition (IB) No.26/7/NCLT/AHM/2017 against the
Corporate Debtor under Section 7 of the 1B Code. The said Application came to be withdrawn by the
Debtor, as can be seen from the Affidavit at Page No.13 which is filed in CP (IB) No.26 of 2017. It
42,00,000/ -. Applicant filed Computation Table of outstanding amount along with interest.
In this Application, Applicant despatched copy of the Application to the Corporate Debtor and filed proof
of despatch and as well as proof of service. This Adjudicating Authority directed the Applicant to issue
notice to the Corporate Debtor informing the date of hearing. Corporate Debtor appeared through
Heard the arguments of both sides' learned Counsel. The documents places on record by the Applicant
clearly establish that `financial debt' is due from the Corporate Debtor and Corporate Debtor has
respects. Applicant proposed the name of Mr. Umesh Ved as 'Interim Resolution Professional' and filed
his Written Communication. Hence, the Application deserves admission under Section 7(5) of the 1B
C.P. No.(IB) 70/7/NCLTJAHM/2017:
M/ s. Oarsman Credit Private Ltd., filed CP (IB) No. 70 of 2017 through Authorised Person, Mr. Jay
borrowed Rs. 40 lakhs, which amount was transferred through `RIGS' from the Applicant to the
1469
Applicant filed proof of despatch and proof of service of the Application on the Corporate Debtor. This
Adjudicating Authority directed the Applicant to issue notice of date of hearing to the Corporate Debtor.
Applicant also issued notice of date of hearing and filed proof of service. Respondent appeared through
learned Advocate and requested time to file objections, but Respondent did not choose to file objections
even after time is granted.
Heard the arguments of the learned counsel appearing for the Applicant and the learned counsel appearing
for the Respondent. The documents filed by the Applicant clearly establish that the financial debt is due
from the Corporate Debtor to the Applicant/Financial Creditor. The documents filed by the Applicant also
show that the Corporate Debtor committed default in repayment of the financial debt due to the Financial
Creditor. The Application is complete in all respects and no defect has been pointed out. In fact,
Respondent did not dispute the default committed in repayment of the financial debt. Applicant proposed
the name of Shri Umesh Ved as 'Interim Resolution Professional' and filed his Written Communication.
In view of the above discussion, this Application deserves to be admitted and it is accordingly admitted
under Section 7(5) of the IB Code.
C.P. No.(IB) 71/7/NCLT/AHM/2017:
M/s. Socrato Capital Private Ltd., filed CP (IB) No. 71 of 2017 through its Authorised Representative,
Mr. Jay Prakash Yadav, under, Section 7 of the IB Code read with Rule 4 of the Adjudication Rules for
default is Rs. 39,41,863/ - as on 17th November, 2016. Applicant filed letter dated 09.8.2016 addressed
by Anil Ltd., to the Applicant enclosing two post-dated cheques dated 17.11.2016 along with inter
Corporate Deposit Receipt dated 09.8.2016 issued by MJ s. Anil Limited for a sum of Rs. 35,00,000/ - to
the Applicant. Applicant also filed a Certificate of the banker stating that the amount was paid by the
Applicant to M/ s. Anil Limited. Applicant also filed Statement of Account of the Applicant
1470
Company. A perusal of the above documents show that the financial debt is due from the Corporate
Debtor to the Applicant and the Corporate Debtor has committed default in repayment of the said
financial debt.
Learned Counsel appearing for the Respondent did not dispute the default committed in repayment of
By virtue of this order, all the four Applications filed by all the four Financial Creditors under Section 7
of the Code are admitted. Applicant/Financial Creditor in CP (IB) No. 66 of 2017 proposed the name of
Tramod Bajranglal Kedia as 'Interim Resolution Professional'. The financial debt due to the Applicant in
CP (TB) No. 66 of 2017 is Rs. 8,87,94,014/-, which is far higher than the total financial debt due to all the
three other Applicants /Financial Creditors.
Therefore, in the given facts and circumstances of the case, and considering the fact that the financial debt
due to the Financial Creditor, M/ s. Reliance Commercial Finance Limited is higher than the debts
Pramod Bajranglal Kedia, C/ o. Kedia 8v Kedia Associates, Chartered Accountants, 205, Kaling, Near
Mount Carmel School, Behind Bata Show Room, Ashram Road, Ahmedabad- 380009, having
This Adjudicating Authority hereby declares moratorium under Section 13(1)(a) of the Code prohibiting
the following as laid down in Section 14 of the Code;
the institution of suits or continuation of pending suits or proceedings against the corporate debtor
other authority;
transferring, encumbering, alienating or disposing of by the corporate debtor any of its assets or any legal
right or beneficial interest therein;
1471
any action to foreclose, recover or enforce any security interest created by the corporate debtor in respect
of its property including any action under the Securitisation and Reconstruction of Financial Assets and
Enforcement of Security Interest Act, 2002 (54 of 2002);
the recovery of any property by an owner or lessor where such property is occupied by or in the
The Interim Resolution Professional appointed shall also make public announcement about initiation of
'Corporate Insolvency Resolution Process', as required by Section 13(1)(b) of the Code.
AL11 the four applicants/ Financial creditors can file their claims before the Interim Resolution
1472

AHMEDABAD BENCH
C.P. (I.B.) No. 78/7/NCLT/AHM/2017
Applicant: Kalol Nagrik Sahakari Bank Ltd.

Vs.
Respondent: Shakti Nutreceuticals Pvt. Ltd.
Judges/Coram:
Counsels:
ORDER
1. This Application is filed by The Kalol Nagrik Sahakari Bank Limited, styling itself as 'Financial
Creditor', seeking Corporate Insolvency Resoltuion PRocess against M/s. Shakti Nutraceuticals
Pvt. Ltd., under Section 7 of the Insolvency and Bankruptcy Code, 2016["IB Code" for short]
read with Rule 4 of the Insolvency and Bankruptcy (Application to Adjudicating Authority)
Rules, 2016, ["Adjudication Rules" for short].
2. The facts, that are germane for disposal of this Application, are as follows;
2.1 The Kalol Nagrik Sahakari Bank Limited, [hereinafter referred to as "the bank"] gave loan
of Rs. 1,05,00,000 to M/s. Shakti Nutraceuticals Pvt. Ltd., [hereinafter referred to as "the
Respondent Company"] on 181.3.2015. In evidence of the sid borrowing, the Company and its two
Directors of the Respondent Company, i.e., Dhiren Kaniyalal Thakkar and Vinodchandra K.
Pandya stood as Gouarantors. Gunvant Kantibhai Patel and Gitaben Gunvantbhai Patel also stood
as 'Guarantors' for the above said loan amount and also mortgaged their immovable property
detailed in Part-V Column 1 of Form 1. The Company and its two Directors agreed to pay interest
as determined by the Bank from time to time. They also agreed to pay monthly interest for 120
months at the rate of Rs. 87,500/- commencing the first installment from 18.4.2015. It has also
been agreed upon that in case of non-payment of any installment or non-payment of interest the
borrower shall be liable to pay penal interest at 3% and liable to pay entire amount in one go.
1473
2.2 The Application issued Demand Notice dated 2.7.2016, 23.5.2017 and 20.6.2017. Inspite of
the Demand Notice and repeated demands the Company, its Directors and Guarantors did not
choose to repay the loan amount.
3. Applicant filed copy of Demand Promissory Note dated 18.3.2015, Undertaking dated 18.3.2015
to repay the loanb amount, Affidavit of the Respondent Company and its Directors dated
12.5.2015, Deed of Guarantee dated 18.3.2015, Memorandum of Deposit of Title Deeds dated
13.3.2015 relating to mortgage of residential Polt No. 96, Vraj Vihar Co-op. Housing Society,
Mouje-Bhopal, Taluka Dascroi, District Ahmedabad. The Applicant also filed Statements of
Accounts of the Respondent company maintained with the Bank. The Applicant stated that the
amount in default of Rs. 1,10,09,041/-. The Applicant named the Insolvency Resolution
Professional of Mr. Pinakin Shah and filed his Written Communication in Form No.2. The
Applicant filed proof of dispatch of service of Application on the Respondent Company.
4. This Application was listed before this Adjudicating Authority on 11.8.2017. The Applicant was
directed to comply with the requirements in Columns 2, 7 and 8 of Part-V of Form No.1 and
directed to file proper authorization letter to file this Application. Applicant has accordingly given
Notice as per proviso to section 7(5) of the code. This Adjudicating Authority also directed the
Applicant to service notice of date of hearing and file proof of service. The Applicant also filed
proof of dispatch informing the date of hearing on Respondent. Applicant also filed proof of
service of date of hearing. Applicant also served notice of date of hearing by E-Mail to the
Respondent Company. Inspite of service of notice, Respondent Company did not choose to
appear before this Adjudicating Authority. Heard the arguments of learned counsel for the
Applicant.
5. The Applicant rectified the defects in the Application and as such there are no defects in the
Application filed by the Applicant. The documents filed by the Applicant along with the
Application as evidenced by Promissory Note Etc., clearly establish that an amount of Rs.
1,05,00,000 was given as loan to M/s. Shakti Nutraceuticals Pvt. Ltd. The loan was also
guaranteed by the Guarantors by executing the Guarantee Agreement and by deposit of Title
Deeds. The borrower agreed to pay interest on the loan amount and agreed to repay the loan
amount in instalments and in case of failure to pay the Installments, Borrower is liable to pay the
entire amount at once. The Applicant issued Notices dated 2.7.2016, 23.5.2017 and 20.6.2017 to
the Principal Borrower and Guarantors. But the Respondent Company and its Directors and
Guarantors did not choose to repay the loan amount.
1474
6. In view of the above stated facts, the amount due to the Applicant Bank from the Respondent
Company is a 'financial debt' within the meaning of clause (a) of sub-section (8) of section 5 of
the IB code. Therefore, the Applicant Bank is Financial Creditor and Respondent Company is a
Corporate Debtor. In view of the above said documents, it is clear that Respondent Company
committed default in repayment of the loan amount.
7. In an application under section 7 of the code, this Adjudicating Authority is required to ascertain
existence of default from the records of information utility or on the basis of other evidence
furnished by the Financial Creditor, as lid down in the decision of the Hon'ble National Company
Law Applelate Tribunal, on 17th January, 2017, in Company Appeal (AT) (Insolvency) No. 1 & 2
of 2017 in the matter of M/s. Innoventive Industries Ltd. Vs. ICICI Bank & Anr, in the following
paragraphs;
"82. As discussed in the previous paragraphs, for initiation of corporate

resolution process by financial creditor under sub-section (4) of section 7 of the
code, 2016, the 'adjudicating authority' on receipt of application under sub0sectio
n (2) is required to ascertain existence of fedault from the records of Information
Utility or on the basis of other evidence furnished by the financial creditor under
sub-section (3). Under section 5 of section 7, the 'adjudicating authority' is
required to satisfy-
(c) Whether any disciplinary proceeding is against the proposed

83. Once it is satisfied it is required to admit the case but in case the application
is incomplete application, the financial creditor is to be granted seven days' time
to complete the application. However, in a case where there is no default or
defects cannot be rectified, or the record enclosed is misleading, the application
has to be rejected."
8. Further, the applicant proposed the name of "Insolvency Resolution Professional and also field
his written Communication in Form-2. This Adjudicating Authority hereby ppoint Mr. Pinakin
Shah, CS, having address at M/s. Pinakin Shah & Company, A-201, Siddhi Vinayak Tower, Next
to Kataria House, Makrba, Ahmedabad-380051 with Registration No. IBBI/IPA-002/IP-
00106/2017-2018/10248, as 'Interim Insolvency Resolution Professional; In view of the above
1475
discussions, the Application deserves to admitted and it is accordingly admitted under Section
7(5) of the IB Code.
9. This Adjudicating Authority also directs that the Interim Resolution Professional shall make
public announcement about initiation of 'Corporate Insolvency Resolution Process', as required
by Section 13(1)(b) of the Code and call for submission of claims under Section 15 of the IB
Code.
(a) The institution of suits or continuation of pending suits or proceedings against the
(b) Transferring, encumbering, alienating or disposing of by the corporate debtor any of its
(c) Any action to foreclose, recover or enforce any security interest created by the
and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002
(54 of 2002);
(d) The recovery of any property by an owner or lessor where such property is occupied by
or in the possession of the corporate debtor.
11. However, the supply of goods and essential services to the Corporate Debtor shall not be
12. The provisions of sub-section (1) of Section 14 shall not apply to such transactions as may be
Insolvency Resolution Process subject to the Proviso under sub-section (4) of section 14.
14. The Application is disposed of accordingly. No order as to costs.

Communicate a copy of this order to the Applicant Financial Creditor, the Respondent Corporate Debtor,
and to the Interim Insolvency Resolution Professional appointed.
1476

AHMEDABAD BENCH
C.P. (I.B.) No. 111/7/NCLT/AHM/2017
Applicant: Diligent Investment Ltd.

Vs.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Rahul Jain, Learned Advocate
ORDER
Learned Advocate Mr. Rahil Jain present for Applicant/ Financial Credit& None present for Respondent.
Advocate for Applicant filed memo to withdraw the CP(IB) 111/2017 with liberty to file fresh
application.
Permission granted.
Application is disposed of as withdrawn with liberty to file fresh application provided if it is accordingly
to law.
1477
AHMEDABAD BENCH
C.P. (I.B.) No. 53/7/NCLT/AHM/2017
Applicant: ICICI Bank Ltd.

Vs.
Respondent: ABG Shipyard Ltd.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Sahil Shah, Learned Advocate
For Respondent: Mr. Parth Contractor, Learned Advocate
ORDER
Learned Advocate Mr. Sahil Shah with Learned Advocate Mr. Abhishek Mukherjee i/b Cyril Amarchand
Mangaldas present for Financial Creditor/ Applicant. Learned Advocate Mr. Parth Contractor present for
Respondent.
1478

AHMEDABAD BENCH
C.P. (I.B.) No. 107/7/NCLT/AHM/2017
Applicant: Indus Agro Services and Consultants Pvt. Ltd.

Vs.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Natasha Sutaria, Learned Advocate
ORDER
Learned Advocate Ms. Natasha Sutaria present for Applicant/ Financial Creditor. None present for
Respondent.
application.
Permission granted.
to law.
1479
AHMEDABAD BENCH
C.P. (I.B.) No. 102/7/NCLT/AHM/2017
Applicant: Lacto Cosmetics (Vapi) Pvt. Ltd.

Vs.
Judges/Coram:
Counsels:
For Respondent:
ORDER
Respondent.
application.
Permission granted.
to law.
1480

AHMEDABAD BENCH
C.P. (I.B.) No. 108/7/NCLT/AHM/2017
Applicant: Logisys Advisors Pvt. Ltd.

Vs.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Rahil Jain
For Respondent:
ORDER
Learned Advocate Mr. Rahil Jain present for Applicant/ Financial Creditor. None present for Respondent.
application.
Permission granted.
to law.
1481
AHMEDABAD BENCH
C.P. (I.B.) No. 101/7/NCLT/AHM/2017
Applicant: Medicare Equipment's (I) Pvt. Ltd.

Vs.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Ms. Natasha Sutaria
For Respondent:
ORDER
Respondent.
application.
Permission granted.
to law.
1482

AHMEDABAD BENCH
C.P. (I.B.) No. 103/7/NCLT/AHM/2017
Applicant: P H Financial Investment Consultants Pvt. Ltd.

Vs.
Judges/Coram:
Counsels:
For Respondent:
ORDER
Respondent.
application.
Permission granted.
to law.
1483
AHMEDABAD BENCH
C.P. (I.B.) No. 106/7/NCLT/AHM/2017
Applicant: PICO Capital Pvt. Ltd.

Vs.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Ms. Natasha Sutaria, Laerned Advocate
For Respondent:
ORDER
Respondent.
application.
Permission granted.
to law.
1484

AHMEDABAD BENCH
C.P. (I.B.) No. 109/7/NCLT/AHM/2017
Applicant: Premier Auto Finance Ltd.

Vs.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Rahil Jain, Learned Advocate
For Respondent:
ORDER
application.
Permission granted.
to law.
1485
AHMEDABAD BENCH
C.P. (I.B.) No. 105/7/NCLT/AHM/2017
Applicant: Samir Diamond Exports Pvt. Ltd.

Vs.
Judges/Coram:
Counsels:
For Respondent:
ORDER
Respondent.
application.
Permission granted.
to law.
1486

AHMEDABAD BENCH
C.P. (I.B.) No. 100/7/NCLT/AHM/2017
Applicant: Streamline Shipping Company Ltd.

Vs.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Natasha Sutaria, Learned Advocate
ORDER
Respondent.
application.
Permission granted.
to law.
1487
AHMEDABAD BENCH
C.P. (I.B.) No. 110/7/NCLT/AHM/2017
Applicant: Tejbhandas Mohandas Traders Pvt. Ltd.

Vs.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Rahil Jain, Learned Advocate
ORDER
application.
Permission granted.
to law.
1488

AHMEDABAD BENCH
C.P. (I.B.) No. 98/7/NCLT/AHM/2017
Applicant: Ashtavinayak Ecometals Pvt Ltd.

Vs.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Aditya Bihani, Learned Advocate
For Respondent:
ORDER
Learned Advocate Mr. Aditya Bihani i/b Learned Advocate Mr. Anuj Trivedi present for Applicant/
Financial Creditor. None present for Respondent.
Advocate for Applicant filed memo to withdraw the CP(IB) 98/2017 with liberty to file fresh application.
Permission granted.
to law. However, applicant is at liberty to file its claim, if any before the IRP.
Application is disposed of accordingly.
1489
AHMEDABAD BENCH
C.P. (I.B.) No. 87/7/NCLT/AHM/2017

Vs.
Respondent: Prime Cars Pvt. Ltd.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Jaimin Dave on behalf of Mr. Chintan Abhichandani, Learned
Advocate
ORDER
1. Reliance Commercial Finance Ltd, styling itself as 'Financial Creditor' under Section 7 of the
Insolvency and Bankruptcy Code, 2016 ["IB Code" for short] read with Rule 4 of the Insolvency and
Bankruptcy (Application to Adjudicating Authority) Rules, 2016, ("IB Rules" for short) against the
Respondent Company treating it as 'Corporate Debtor' for triggering Corporation Insolvency Resolution
Process.
2. The Commercial Finance Division of Reliance Capital Limited was demerged into Reliance
Commercial Finance Ltd/Applicant Company vide order dated 9.12.2016 passed by the Hon'ble High
Court of Judicature at Bombay in a Scheme of Demerger.
3. Respondent/Prime Cars Private Limited is doing business in buying and selling of motorcycles and its
parts and accessories. It is a Company registered under the Companies Act, 1956. The Authorised Share
Capital of the Respondent Company is Rs. 4,50,00,000/- and the Paid-Up Share Capital is Rs.
4,06,00,520/-. The Registered Office of the Respondent Company is situated at Indore, Madhya Pradesh.
Respondent Company approached Reliance Capital Limited to avail a Revolving Loan Facility for
Inventory Funding up to Rs. 2,00,00,000/- for purchase of vehicles/inventory. Reliance Capital Limited
sanctioned and disbursed loan of Rs. 50,00,000/- to Respondent Company on 26.8.2016. Reliance Capital
1490
Ltd., disbursed a loan of another Rs. 50,00,000/- to Respondent Company on 7.9.2016. The first loan was
repayable on 10.10.2016 and the second loan was repayable on 22.10.2016. As on 22.10.2016, the
amount repayable to Reliance Capital Limited was Rs. 97,02,848/- including interest in both the loan
accounts together.
4. By virtue of the merger of the Commercial Finance Division of Reliance Capital Limited into Reliance
Commerce Finance Limited, all the debts due to Reliance Capital Ltd., stand assigned to the
Applicant/Reliance Commercial Finance Limited.
5. In support of the loan, Respondent executed Inventory Fund Agreement, Deed of Hypothecation, Letter
of Credit/Guarantee Facility, Demand Promissory Note etc., in favour of Reliance Capital Ltd. All those
documents stood assigned in the name of the Petitioner Company by virtue of the demerger.
6. Applicant filed the Table showing the amount disbursed to the Respondent in pursuance of the facility
extended and amount repaid by the Respondent till 30.6.2017. Respondent committed default in
repayment of the above said Loan Agreement as per the agreed terms and conditions. Inspite of repeated
demands, Respondent did not choose to repay the outstanding amounts.
7. Reliance Capital Limited got issued a Legal Notice dated 31.1.2017 on the Respondent calling upon it
to repay the facility amount aggregating to Rs. 1,02,48,606/- to the Applicant within three days. The said
Notice has been duly served on the Respondent but Respondent did not choose to give any reply. The
conduct of the Respondent shows its inability to repay the outstanding amount due to the Applicant
Company. Reliance Capital Limited, and thereafter Applicant has been regularly maintaining the account
of the Respondent. As per the said Statement of Account, an amount of Rs. 97,02,848/- is due from the
Respondent as on 31.5.2017. The Applicant filed copies of all Agreements executed by the Respondent.
8. Applicant despatched copy of the Application to the Respondent simultaneously while filing the
Application before this Tribunal. The matter was listed before this Adjudicating Authority for the first
time on 18.8.2017. This Adjudicating Authority directed the Applicant to serve notice of date of hearing,
and listed the matter on 28.8.2017. None appeared for Respondent on 28th August, 2017. Applicant filed
proof of service of date of hearing on Respondent. Learned Counsel for the Applicant requested time to
file copy of the Resolution. On 31st August, 2017, Applicant's learned Counsel represented that the copy
of the Resolution is already available on record even on 31.8.2017. None appeared on behalf of the
Respondent. Heard the arguments of the learned Counsel for the Applicant. Application is signed by Mr.
Hitesh Joshi as Power of Attorney holder of Applicant Company. Applicant filed copy of Power of
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Attorney and the Resolution passed by the Board of Directors of the Company authorising Mr. Hitesh
Joshi to sign the Application on behalf of the Company.
9. A perusal of the Application and its Annexures clearly show that the Application is complete in all
respects. A perusal of the Table showing the amount disbursed and the payments made, and the
documents executed by the Respondent Company clinchingly establish that Respondent committed
default in repayment of money borrowed from Reliance Capital Limited on interest which debt was
assigned to the Applicant Company by virtue of a demerger order in a Demerger Scheme. Therefore, the
Applicant is a Financial Creditor and the amount due to the Applicant is a financial debt. The material on
record clearly establish that the Respondent Company committed default in repayment of financial debt.
The Applicant proposed the name of Shri Subodh kumar Bajranglal Kedia as Interim Resolution
Professional' and also filed his Written Communication.
10. In view of the above discussions, the Application deserves to be admitted and it is accordingly
admitted under sub-section 5(a) of Section 7 of the Code.
11. This Adjudicating Authority hereby appoint, Shri Subodh kumar Bajranglal Kedia, C/o. Kedia &
Kedia Associates, Chartered Accountants, 205, Kaling, Near Mount Carmel School, Behind Bata Show
Room, Ashram Road, Ahmedabad-380009, having Registration No. IBBI/IPA-001/IP-P00009/2016-
2017/10028, as 'Interim Resolution Professional', under Section 13(1)(c) of the Code.
12. The Interim Insolvency Resolution Professional is hereby-directed to cause a public announcement of
the initiation of 'Corporate Insolvency Resolution Process' and call for submission of claims under
Section 13(l)(b) read with Section 15 of the Code and Regulation 6 of Insolvency and Bankruptcy Board
of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016.
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(i) However, the order of moratorium shall not apply in respect of supply of essential goods or
(ii) The order of moratorium is not applicable to the transactions that may be notified by the
(iii) The order of moratorium comes into force from the date of the order till the completion of
Corporate Insolvency Resolution Process subject to the Proviso under sub-section (4) of Section
14.
14. This Application is ordered accordingly. No order as to costs.
Corporate Debtor and to the Interim Insolvency Resolution Professional.
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AHMEDABAD BENCH
C.P. (I.B.) No. 84/7/NCLT/AHM/2017
Applicant: Edelweiss Asset Reconstruction Co. Ltd.

Vs.
Respondent: Kalptaru Alloys Pvt. Ltd.
Judges/Coram:
Counsels:
For Respondents/Defendant: Ritesh Patadia, Learned Advocate
ORDER
1. Edelweiss Asset Reconstruction Co. Ltd., acting as Trustee' of EARC Trust SC 143, filed this
Application under Section 7 of the Insolvency and Bankruptcy Code, 2016 ["IB Code" for short] read
with Rule 4 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016, ("IB
Rules" for short) styling itself as 'Financial Creditor' for initiation of Corporate Insolvency Resolution
Process in respect of Kalptaru Alloys Private Limited, treating it as 'Corporate Debtor'.
2. Respondent Company is a Private Limited Company incorporated under the Companies Act having its
Registered Office in Thaltej Cross Road, Ahmedabad. The Authorised Share Capital of the Respondent
Company is 7,50,00,000. The Paid-Up Capital of the Respondent Company is Rs. 3,90,25,000. The Main
Object of the Respondent Company is to carry on business of manufacturing of MS Ingots (raw material
for steel making).
3. Respondent approached Indian Overseas Bank (IOB) in 2004 for credit facilities for the purpose of
business. IOB sanctioned Cash Credit, Letter of Credit, Letter of Guarantee and various Term Loan
facilities to the Respondent Company amounting 28.61 Crores vide Sanction Letter dated 23.02.2012.
Respondent Company in evidence of the loans borrowed executed relevant loan and security documents
in favour of IOB on various dates, the last one being in 2012. Respondent also executed Hypothecation
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Agreements, Guarantee Agreements, Term Loan Agreements in favour of IOB. On 23rd February, 2012,
IOB sanctioned/renewed/enhanced the following facilities to the Respondent;
1. Cash Credit - Rs. 4.50 Crs.(Renewal)
2. WCTL - Rs. 5.72 Crs.(Renewal; original limit was Rs. 7.50 Crs.)
3. Term Loan I - Rs. 0.52 Crs.(Renewal; original limit was of Rs. 3.00 Crs)
4. Term Loan II - Rs. 0.66 Crs.(Renewal; original limit was of Rs. 2.85 Crs.)
5. Term Loan III - Rs. 1.03 Crs (Renewal; original limit was of Rs. 3.25 Crs.)
6. Term Loan IV - Rs. 7.08 Crs (Renewal; original limit was of Rs. 7.20 Crs.)
7. Term Loan (Fresh) for purchase of plant and machineries costing 6.80 Crs. Rs. 5.10 Crs.
8. Letter of Credit - Rs. 4.00 Crs.(renewal); Sub Limit: Letter of Guarantee - (4.00 Crs) enhanced
from 0.50 lacs.
4. Respondent also created mortgage in favour of IOB. Respondent also created a charge of hypothecation
in favour of IOB on its moveables including machinery, tools, accessories etc.
5. Applicant also filed Sanction Letters, Term Loan Agreement, Guarantee Agreement, Demand
Promissory Note etc.
6. Inspite of repeated demands, Respondent Company did not choose to make payments. Respondent
Company in respect of Working Capital and Term Loan facilities, executed several Revival Letters dated
17.9.2007, 25.7.2008, 28.4.2009, 29.1.2011 and 19.7.2013 acknowledging its liability.
7. IOB executed Assignment Agreement dated 22.7.2015 in favour of Edelweiss Asset Reconstruction
Co. Ltd., (Applicant) where-under IOB assigned the debt due to it from the Respondent Company to the
Applicant Company, which is also signed by the Authorised Signatory of the IOB. The Assignor under
the Assignment Agreement dated 22.7.2015 assigned the debts of the Respondent Company along with
all rights, title and interest to the Applicant herein. Respondent Company is liable to pay to the Applicant
an unpaid debt of Rs. 46,75,80,181/- as on 30th June, 2017 as Principal Borrower, with interest till the
date of realisation.
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8. It is further stated in the Application that Respondent Company has lost its substratum and is not in a
position to clear outstanding liabilities to the Applicant Company. Respondent Company filed its last
Annual Return for the financial year ended March 2015 only. Applicant filed the Certificate issued under
Bankers' Books Evidence Act. Applicant named Mr. Anil Kohli as Interim Resolution Professional and
filed his Written Communication in Form No. 2.
9. Applicant served copy of the Application on the Respondent Company and filed proof of despatch. The
matter was listed before the Adjudicating Authority for the first time on 17th August, 2017. This
Adjudicating Authority directed the Applicant to service notice of date of hearing on the Respondent.
Accordingly, Applicant served notice of date of hearing on the Respondent. Respondent appeared through
learned Counsel. Learned Counsel for the Respondent requested time to file Objections and ultimately
filed Objections on 30th August, 2017. The following are the objections raised by the Respondent in its
Objections;
(a) The Applicant has not disclosed the nature of default and the details of default;
(b) Respondent is not a party to the assignment proceedings and there is no privity of contract
between the Applicant and the Respondent;
(c) The proceedings are barred by limitation, since the last demand notice is dated 7.3.2014. It is
stated that the provisions of Section 433 of the Companies Act make the provisions of Limitation
Act applicable before the National Company Law Tribunal and its mechanism cannot be used to
recover time barred debts;
(d) IOB already initiated proceedings against the Respondent Company under the provisions of
the SARFAESI Act. Respondent is disputing the outstanding amount. The mandatory period of
14 days has already expired.
(e) The Respondent has no information about the proposed Interim Resolution Professional.
10. Considering the provisions of Section 7 of the Code read with Rule 4 of the Rules and the instructions
contained in Form-1, the Application is complete in all respects.
11. The first and foremost objection raised by the Respondent is that the provisions of Limitation Act are
applicable before this Adjudicating Authority in view of Section 433 of the Companies Act basing on the
last demand notice dated 7.3.2014. Even assuming that the last demand notice was on 7.3.2014, in view
of the balance confirmation letter signed by the Respondent Company on 31.12.2014, the debt is within
the limitation period. Therefore, the proceedings initiated under this Application are within limitation,
1496
even assuming that the provisions of the Limitation Act are applicable to the proceedings before this
12. The second objection raised is regarding initiation of proceedings under SARFAESI Act by the IOB.
The initiation of proceedings under SARFAESI Act by the IOB is no bar for initiation of insolvency
proceedings under IB Code in view of the overriding effect given to the provisions of IOB in Section 238
of the IB Code.
13. The third objection raised by the Respondent is that there must be ascertainment of debt before
admitting the Application. In view of the Judgment of the Hon'ble National Company Law Appellate
Tribunal rendered in Company Appeal (AT) (Insolvency) No. 1 & 2 of 2017 in the matter of M/s.
Innoventive Industries Ltd. Vs. ICICI Bank & Anr., reported in MANU/NL/0020/2017, this Adjudicating
Authority, on receipt of application filed by the Financial Creditor under Section 7 of the Code, is
required to satisfy-
(c) Whether any disciplinary proceeding is against the proposed Insolvency Resolution
Professional
In the above said decision, the Hon'ble Appellate Tribunal further held that once the Adjudicating
Authority is satisfied on all the above aspects, it is required to admit the case.
14. Now, I proceed to examine whether a default has occurred. A perusal of the Certificate under the
Bankers' Books Evidence Act, which is available at Exhibit 'K' collectively at Pages 218 to 233 of the
Application shows that there is a debt due from the Respondent Company to IOB and the Respondent
Company committed default in repayment of the same. The existence of debt is also proved by the
documents such as Loan Agreements, Guarantee Agreements, Demand Promissory Note etc., executed by
the Respondent Company. Respondent Company also executed several Revival Letters admitting the
liability. Respondent Company also executed Balance Confirmation Letters, the last one being 31st
December, 2014.
14.1. The above said documents clearly establish that the Respondent borrowed monies from the Indian
Overseas Bank with an agreement to pay interest and therefore the amount due to IOB from the
Respondent is a 'financial debt' within the meaning of Clause (a) of sub-section (8) of Section 5 of the
1497
Code. The debt is due from the Respondent Company which is registered under the Companies Act.
Therefore, the Respondent is a 'Corporate Debtor'.
15. The other objection raised by the learned Counsel for the Respondent is that there is no privity of
contract between the Applicant and the Respondent and Respondent is not a party to the Assignment
Agreement.
15.1. A perusal of the Assignment Agreement dated 22nd July, 2015, which is available at Page No. 53 of
the Application, clearly goes to show that the Indian Overseas Bank assigned its debt to the Applicant
Company which is an Asset Reconstruction Company and the same is within the knowledge of the
Respondent Company.
16. Rule 4(1) of the IB Rules says, a Financial Creditor either by itself or jointly are entitled to file an
application for initiation of Corporate Insolvency Resolution Process against the Corporate Debtor under
Section 7 of the IB Code in Form No. 1.
16.1. Sub-Rule (2) of Rule 4 of the IB Rules says, where the Applicant is an Assignee, the Application
shall be accompanied by a copy of the Assignment Deed. In the case on hand, the Applicant is the
Assignee of the debt from the Indian Overseas Bank in an Assignment Deed. The copy of the Assignment
Agreement dated 22nd July, 2015 is filed along with the Application. Therefore, the Assignee of the debt
is also entitled to file Application and such Assignee steps into the shoes of the Financial Creditor.
Therefore, this Application filed by the Applicant is an application by an Assignee of the Financial
Creditor and therefore the Applicant is entitled to file this Application. The argument of the learned
Counsel for the Respondent that there is no privity of contract between the Applicant and the Respondent
do not merit acceptance for the simple reason that Respondent Company agreed to repay the outstanding
loan amounts either to the Indian Overseas Bank or to its Assignee or Transferee as contemplated in all
the Loan Agreements and other documents. Therefore, the contention of the learned Counsel for the
Respondent that the Applicant being the Assignor of the financial debt is not entitled to file this
Application, do not merit acceptance.
17. The Applicant proposed the name of Interim Resolution Professional and filed his Written
Communication in Form No. 2.
18. In view of the above discussion, the Application deserves to be admitted and it is accordingly
admitted under Section 7(5)(a) of the IB Code. This Adjudicating Authority is hereby appoint Shri Anil
Kohli, as 'Interim Insolvency Resolution Professional' having address at 1011, Kirti Shikhar, District
1498
Centre Janak Puri, New Delhi-110058 and having Registration No. IBBI/IPA-001/IP-POO 112/2017-
18/10219 under Section 13(1)(c) of the Code.
19. The Interim Insolvency Resolution Professional is hereby directed to cause a public announcement of
Section 13(1)(b) read with Section 15 of the Code and Regulation 6 of Insolvency and Bankruptcy Board
14.
1499
AHMEDABAD BENCH
C.P. (I.B.) No. 80/7/NCLT/AHM/2017

Vs.
Respondent: BCC Estate Pvt. Ltd.
Judges/Coram:
Counsels:
For Respondents/Defendant: Mr. Arjun Sheth, Learned Advocate
ORDER
1. IDBI Bank Limited filed this Application under Section 7 of the Insolvency and Bankruptcy Code,
Adjudicating Authority) Rules, 2016, ("IB Rules" for short) against BCC Estates Private Limited, treating
as 'Corporate Guarantor/Corporate Debtor' with a request to initiate Corporate Insolvency Resolution
Process.
2. IDBI Bank Limited is a Company incorporated under the Companies Act having its Registered Office
in Mumbai. According to the Applicant, in 113th Meeting of the Board of Directors of the IDBI Bank
held on 12th February, 2016 there was Comprehensive Revision in Delegation of Powers which came
into force with effect from 1st March, 2016. It is further stated that as per Chapter 25 of the Delegation of
Powers in respect of Court matters, DGM (Retail Recovery) and AGM (Retail Recovery) are entitled to
sign the Applications for filing claims before any Court, Tribunal etc.
3. The case of the Applicant is that Respondent Company stood as a Corporate Guarantor to Asian
Natural Resources India Limited which is due to pay an amount of Rs. 38,31,06,744.44 to the Applicant
1500
Bank. Applicant Bank also filed Insolvency Petition against the Principal Borrower, viz., Asian Natural
Resources India Ltd. The said Petition was admitted by this Authority by order dated 23.5.2017.
4. Respondent Company is a Company registered under the Companies Act having its Registered Office
in Indore, Madhya Pradesh. The Paid-up Share Capital of the Respondent Company is Rs. 1,59,88,500.
The Main Object of the Respondent Company is to carry out the business of Real Estate. Respondent
Company has given unconditional and irrevocable Corporate Guarantee for the financial assistance to the
tune of Rs. 50.70 Crores granted and disbursed to Asian Natural Resources India Ltd., on 21.2.2009. The
financial facilities granted to Asian Natural Resources India Ltd. was secured by Guarantee Agreement
executed by the Respondent in favour of the Applicant on 21.2.2009. Asian Natural Resources India Ltd.
availed the loan aggregating to Rs. 50.70 Crores which was secured by the Corporate Guarantee of the
Respondent Company. Inspite of repeated reminders sent to the Respondent Company no payments were
made to the Applicant. At no stage Respondent disputed the amounts due and payable by the Applicant.
The Board of Directors of the Respondent Company by a Resolution dated 3.6.2016 resolved that
Respondent is one of the Guarantors in respect of the Credit Facility of Rs. 2268 Crores availed by Asian
Natural Resources India Ltd. Respondent Company executed Revival Letters 12.11.2014 and 25.8.2016
acknowledging liability to the lenders and other secured parties. Respondent Company being a Corporate
Guarantor failed and neglected to pay the amount due and payable by Asian Natural Resources India Ltd.
in its capacity as 'Principal Borrower'.
5. Applicant issued a notice dated 7th March, 2017 to the Respondent Company calling upon them to pay
forthwith an amount of Rs. 38,31,06,744.44 together with further interest from 15th February, 2017 at the
contractual rate with compound interest. The said notice was duly served on the Respondent Company,
but Respondent Company did not choose to give reply or make payment. On the other hand, Respondent
Company acknowledged the Balance Confirmation. Respondent Company as a Corporate Guarantor is
liable to pay Rs. 38,31,06,744.44 to the Applicant. Respondent Company filed its last Annual Return for
the year ended 31st March, 2016. Applicant proposed the name of Shri Ravi Kapoor, as Interim
Resolution Professional and filed his Written Communication. Applicant filed this Application on 12th
July, 2017. Applicant despatched copy of the Application to the Respondent. This matter was listed for
the first time before this Authority on 17th August, 2017. This Adjudicating Authority directed the
Applicant to serve notice of date of hearing. Respondent appeared through their Counsel. Learned
Counsel for the Respondent filed Objections on 28.8.2017. Applicant also filed an Affidavit along with
further documents. Heard the arguments of the learned Counsel appearing on both the sides.
1501
6. The first objection raised is that Mr. Amit Kumar Nanda has no proper authority to file this Application
and therefore it is liable to be rejected. In view of the Delegation of Powers, Chapter No. 25, Mr. Amit
Kumar Nanda being the Deputy General Manager of the Applicant Bank is duly authorised to file this
Application which is approved by the Board of Directors of the IDBI Bank.
7. The second objection raised is that Applicant did not place copies of entries in Bankers' Book in
accordance with the Bankers' Books Evidence Act.
7.1. Applicant along with Additional Affidavit filed copies of Statement of Account of Principal
Borrower. In fact, Applicant filed along with Application, Certificate issued under Bankers' Books
Evidence Act and therefore there is no substance in the said objection.
8. The third objection is there are other financial creditors that are Banks and they constitute consortium
of Banks and therefore this Application is not maintainable.
8.1. Section 7 of the Code says that any one of the financial creditors can file an application to trigger
Corporate Insolvency Resolution Process either jointly with other financial creditors or individually.
Therefore, this objection does not sustain.
9. The objection that this Application is against the RBI guidelines and circulars that deals with distressed
entities does not merit acceptance for the simple reason that the Circulars given by RBI cannot override
the effect of the provisions of the Code. It is for the Financial Creditor either to initiate Resolution
Process or not.
10. The next objection is that Respondent Company is only a Guarantor but not a Principal Borrower and
therefore this Application is not maintainable.
10.1. It is a settled law that liability of the Guarantor is co-extensive with that of the Principal Borrower.
It is for the Creditor to choose against whom he wants to proceed. There is no bar in the Law which
prevents any Creditor to proceed both against the Principal Borrower and Guarantor. Therefore, this
objection is also not sustainable.
11. The next objection is that the Principal Borrower is already undergoing Corporate Insolvency
Resolution Process in an Application filed by IDBI and therefore if Resolution Process is commenced
against the Corporate Debtor it amounts to redundancy since the Corporate Debtor submitted Resolution
Plan which consists of assets of the Guarantors also.
1502
11.1. Respondent is a Corporate Body. Respondent stood as a Corporate Guarantor to the Principal
Borrower, Asian Natural Resources India Ltd. In such a case on the ground that Corporate Insolvency
Resolution Process already commenced against the Principal Borrower, the Guarantor cannot avoid
Corporate Insolvency Resolution Process when it failed to repay the amount borrowed by the Principal
Borrower. The Guarantee Agreement executed by the Respondent Company is a continuing Guarantee
and an Irrevocable Guarantee. Applicant by issuing a notice revoked the Guarantee and recalled the entire
loan amount. The account copies and the other documents executed by the Respondent Company such as
Guarantee Agreements etc., clearly establish that Respondent as a Guarantor failed to repay the loan
amount borrowed by the Principal Borrower from the Applicant Bank.
12. Another objection raised by the Respondent is regarding the validity of the registration of the
proposed Interim Resolution Professional. Applicant filed a copy of the Registration of Interim
Resolution Professional which shows that the Certificate is valid from 2nd June, 2017 and therefore this
objection also does not survive.
13. Sub-Clause (i) of sub-section (8) of Section 5 of the Code says, 'the amount of any liability in respect
of any of the guarantee for any of the items referred to in sub-clauses (a) to (h) of Clause 8 is a financial
debt. In the case on hand, the Principal Borrower borrowed money from the Applicant Bank against the
payment of interest by executing the Loan Agreement, Mortgage Deeds etc. For such loan transaction,
Respondent Company stood as a Guarantor as a Corporate Guarantor. Therefore, Respondent Company is
under a legal obligation to repay the loan amount borrowed from the Principal Borrower. Therefore, the
amount due to the Applicant from the Principal Borrower is a financial debt and as the Respondent stood
as a Guarantor for the financial debt the Respondent shall be treated as a Corporate Debtor because the
financial debt is due from him also to the Applicant.
14. The material on record clearly goes to show that Respondent committed default in repayment of the
loan amount even after demand made by the Applicant Company.
15. The Hon'ble National Company Law Appellate Tribunal, on 17th January, 2017, in Company Appeal
(AT) (Insolvency) No. 1 & 2 of 2017 in the matter of M/s. Innoventive Industries Ltd. Vs. ICICI Bank &
Anr., held that in an application filed by the Financial Creditor under Section 7 for initiation Corporation
Insolvency Resolution Process, the Adjudicating Authority is required to satisfy-
1503
(c) Whether any disciplinary proceeding is against the Proposed Insolvency Resolution
Professional.
In the case on hand, Respondent Company committed a default in repayment of the outstanding amount.
The Application is complete in all respects. The material on record show that no disciplinary proceeding
is pending against the proposed Interim Resolution Professional.
16. In view of the above discussion, this Application deserves to be admitted and it is accordingly
admitted under Section 7(5)(a) of the Code. This Adjudicating Authority hereby appoint Shri Ravi
Kapoor, Company Secretary, as 'Interim Insolvency Resolution Professional' residing at 7th Floor, 737,
Fortune Tower, Sayajigunj, Vadodara-390005 and having Registration No. IBBI/IPA-002/IP-
N00121/2017-18/10290 under Section 13(1)(c) of the Code.
17. The Interim Insolvency Resolution Professional is hereby directed to cause public announcement of
1504
14.
1505
AHMEDABAD BENCH
C.P. (I.B.) No. 81/7/NCLT/AHM/2017

Vs.
Respondent: BCC Estate Pvt. Ltd.
Judges/Coram:
Counsels:
For Respondents/Defendant: Mr. Arjun Sheth, Learned Advocate
ORDER
1. IDBI Bank Limited filed this Application under Section 7 of the Insolvency and Bankruptcy Code,
Adjudicating Authority) Rules, 2016, ("IB Rules" for short) against BCC Estates Private Limited, treating
as 'Corporate Guarantor/Corporate Debtor' with a request to initiate Corporate Insolvency Resolution
Process.
2. IDBI Bank Limited is a Company incorporated under the Companies Act having its Registered Office
in Mumbai. According to the Applicant, in 113th Meeting of the Board of Directors of the IDBI Bank
held on 12th February, 2016 there was Comprehensive Revision in Delegation of Powers which came
into force with effect from 1st March, 2016. It is further stated that as per Chapter 25 of the Delegation of
Powers in respect of Court matters, DGM (Retail Recovery) and AGM (Retail Recovery) are entitled to
sign the Applications for filing claims before any Court, Tribunal etc.
3. The case of the Applicant is that Respondent Company stood as a Corporate Guarantor to Bhatia
Global Trading Ltd., which is due to pay an amount of Rs. 82,04,12,819.41 to the Applicant Bank.
Applicant Bank also filed Insolvency Petition against the Principal Borrower, viz., Bhatia Global Trading
Ltd. The said Petition was admitted by this Authority by order dated 23.5.2017.
1506
4. Respondent Company is a Company registered under the Companies Act having its Registered Office
in Indore, Madhya Pradesh. The Paid-up Share Capital of the Respondent Company is Rs. 1,59,88,500.
The Main Object of the Respondent Company is to carry out the business of Real Estate. Respondent
Company has given unconditional and irrevocable Corporate Guarantee for the financial assistance to the
tune of Rs. 85.00 Crores granted and disbursed to Bhatia Global Trading Ltd., on 17.3.2011. The financial
facilities granted to Bhatia Global Trading Ltd., was secured by Guarantee Agreement executed by the
Respondent in favour of the Applicant on 17.3.2011. Bhatia Global Trading Ltd., availed the loan
aggregating to Rs. 80 Crores which was secured by the Corporate Guarantee of the Respondent Company.
Inspite of repeated reminders sent to the Respondent Company no payments were made to the Applicant.
At no stage Respondent disputed the amounts due and payable by the Applicant. The Board of Directors
of the Respondent Company by a Resolution dated 3.6.2016 resolved that Respondent is one of the
Guarantors in respect of the Working Capital Facility of Rs. 1299 Crores availed by Bhatia Global
Trading Ltd., Respondent Company executed Revival Letters 20th December, 2013, and 25.8.2016
acknowledging liability to the lenders and other secured parties. Respondent Company being a Corporate
Guarantor failed and neglected to pay the amount due and payable by Bhatia Global Trading Ltd., in its
capacity as 'Principal Borrower'.
5. Applicant issued a notice dated 7th March, 2017 to the Respondent Company calling upon them to pay
forthwith an amount of Rs. 82,04,12,819.41 together with further interest from 15th February, 2017 at the
contractual rate with compound interest. The said notice was duly served on the Respondent Company,
but Respondent Company did not choose to give reply or make payment. On the other hand, Respondent
Company acknowledged the Balance Confirmation. Respondent Company as a Corporate Guarantor is
liable to pay Rs. 82,04,12,819.41 to the Applicant. Respondent Company filed its last Annual Return for
the year ended 31st March, 2016. Applicant proposed the name of Shri Ravi Kapoor, as Interim
Resolution Professional and filed his Written Communication. Applicant filed this Application on 12th
July, 2017. Applicant despatched copy of the Application to the Respondent. This matter was listed for
the first time before this Authority on 17th August, 2017. This Adjudicating Authority directed the
Applicant to serve notice of date of hearing. Respondent appeared through their Counsel. Learned
Counsel for the Respondent filed Objections on 28.8.2017. Applicant also filed an Affidavit along with
further documents. Heard the arguments of the learned Counsel appearing on both the sides.
6. The first objection raised is that Mr. Amit Kumar Nanda has no proper authority to file this Application
and therefore it is liable to be rejected. In view of the Delegation of Powers, Chapter No. 25, Mr. Amit
1507
Kumar Nanda being the Deputy General Manager of the Applicant Bank is duly authorised to file this
Application which is approved by the Board of Directors of the IDBI Bank.
7. The second objection raised is that Applicant did not place copies of entries in Bankers' Book in
accordance with the Bankers' Books Evidence Act.
7.1. Applicant along with Additional Affidavit filed copies of Statement of Account of Principal
Borrower. In fact, Applicant filed along with Application, Certificate issued under Bankers' Books
Evidence Act and therefore there is no substance in the said objection.
8. The third objection is there are other financial creditors that are Banks and they constitute consortium
of Banks and therefore this Application is not maintainable.
8.1. Section 7 of the Code says that any one of the financial creditors can file an application to trigger
Corporate Insolvency Resolution Process either jointly with other financial creditors or individually.
Therefore, this objection does not sustain.
9. The objection that this Application is against the RBI guidelines and circulars that deals with distressed
entities does not merit acceptance for the simple reason that the Circulars given by RBI cannot override
the effect of the provisions of the Code. It is for the Financial Creditor either to initiate Resolution
Process or not.
10. The next objection is that Respondent Company is only a Guarantor but not a Principal Borrower and
therefore this Application is not maintainable.
10.1. It is a settled law that liability of the Guarantor is co-extensive with that of the Principal Borrower.
It is for the Creditor to choose against whom he wants to proceed. There is no bar in the Law which
prevents any Creditor to proceed both against the Principal Borrower and Guarantor. Therefore, this
objection is also not sustainable.
11. The next objection is that the Principal Borrower is already undergoing Corporate Insolvency
Resolution Process in an Application filed by IDBI and therefore if Resolution Process is commenced
against the Corporate Debtor it amounts to redundancy since the Corporate Debtor submitted Resolution
Plan which consists of assets of the Guarantors also.
1508
11.1. Respondent is a Corporate Body. Respondent stood as a Corporate Guarantor to the Principal
Borrower, Bhatia Global Trading Ltd. In such a case on the ground that Corporate Insolvency Resolution
Process already commenced against the Principal Borrower, the Guarantor cannot avoid Corporate
Insolvency Resolution Process when it failed to repay the amount borrowed by the Principal Borrower.
The Guarantee Agreement executed by the Respondent Company is a continuing Guarantee and an
Irrevocable Guarantee. Applicant by issuing a notice revoked the Guarantee and recalled the entire loan
amount. The account copies and the other documents executed by the Respondent Company such as
Guarantee Agreements etc., clearly establish that Respondent as a Guarantor failed to repay the loan
amount borrowed by the Principal Borrower from the Applicant Bank.
12. Another objection raised by the Respondent is regarding the validity of the registration of the
proposed Interim Resolution Professional. Applicant filed a copy of the Registration of Interim
Resolution Professional which shows that the Certificate is valid from 2nd June, 2017 and therefore this
objection also does not survive.
13. Sub-Clause (i) of sub-section (8) of Section 5 of the Code says, the amount of any liability in respect
of any of the guarantee for any of the items referred to in sub-clauses (a) to (h) of Clause 8 is a financial
debt. In the case on hand, the Principal Borrower borrowed money from the Applicant Bank against the
payment of interest by executing the Loan Agreement, Mortgage Deeds etc. For such loan transaction,
Respondent Company stood as a Guarantor as a Corporate Guarantor. Therefore, Respondent Company is
under a legal obligation to repay the loan amount borrowed from the Principal Borrower. Therefore, the
amount due to the Applicant from the Principal Borrower is a financial debt and as the Respondent stood
as a Guarantor for the financial debt the Respondent shall be treated as a Corporate Debtor because the
financial debt is due from him also to the Applicant.
14. The material on record clearly goes to show that Respondent committed default in repayment of the
loan amount even after demand made by the Applicant Company.
15. The Hon'ble National Company Law Appellate Tribunal, on 17th January, 2017, in Company Appeal
(AT) (Insolvency) No. 1 & 2 of 2017 in the matter of M/s. Innoventive Industries Ltd. Vs. ICICI Bank &
Anr., held that in an application filed by the Financial Creditor under Section 7 for initiation Corporation
Insolvency Resolution Process, the Adjudicating Authority is required to satisfy-
1509
(c) Whether any disciplinary proceeding is against the Proposed Insolvency Resolution
Professional.
admitted under Section 7(5)(a) of the Code. This Adjudicating Authority hereby appoint Shri Ravi
Kapoor, Company Secretary, as 'Interim Insolvency Resolution Professional' residing at 7th Floor, 737,
Fortune Tower, Sayajigunj, Vadodara-390005 and having Registration No. IBBI/IPA-002/IP-
1510
14.
1511
AHMEDABAD BENCH
C.P. (I.B.) No. 113/7/NCLT/AHM/2017
Applicant: J.M. Financial Assets Reconstruction Co. Ltd.

Vs.
Respondent: Sandhya Prakash Ltd.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. R.S. Sanjanwala, Senior Advocate and Mr. Mihir Parikh, Learned
Advocate
For Respondents/Defendant: Ms. Shikha Sethia, Learned Advocate, Mr. Rajdeep Lahiri and Mr. Rahul
Gajera, Learned Advocate on behalf of Singhani Legal Services
ORDER
1. JM Financial Asset Reconstruction Company Limited, styling itself as 'Financial Creditor', filed this
Rules" for short) with a request to initiate Corporate Insolvency Resolution Process against Sandhya
Prakash Limited, treating it as 'Corporate Debtor'.
2. JM Financial Asset Reconstruction Company Limited is a Company incorporated under the Companies
Act, 1956 and registered as an Asset Reconstruction Company under Section 3 of the Securitisation and
Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, having its Registered
Office in Mumbai.
3. Sandhya Prakash Limited (Respondent) is a Company incorporated and registered under the
Companies Act, 1956 having its Registered Office in Bhopal, Madhya Pradesh. Respondent Company is
engaged in the business of printing, newspaper, packaging, real estate etc.
1512
4. Respondent initially obtained loans from Housing and Urban Development Corporation Limited
(HUDCO) and Dena Bank which were subsequently assigned to JM Financial Asset Reconstruction
Company Limited. After assignment of the debts the Applicant restructured the loans and sanctioned
additional loans to the Respondent Company.
5. HUDCO sanctioned a Term Loan of Rs. 18.50 Crores to the Respondent for project construction of
Multiplex Mall "AURA" at Bhopal in the State of Madhya Pradesh (hereinafter referred to as "the Mall
Project") in respect of above said Term Loan, a Loan Agreement dated 4th April, 2008 was executed
between the Respondent, its Directors and HUDCO, The said Loan Agreement was amended. The said
Term Loan of Rs. 18.50 Crores is secured by Hypothecation Deed dated 28th April, 2008. The borrowers
and the Co-Borrowers created First Charge by creating mortgage by deposit of Title Deeds with HUDCO
with respect to the immovable properties situated in District-Bhopal in the State of Madhya Pradesh. Smt.
Bharati S. Patel, Smita B. Patel, Shri Bharat S. Patel and DSP Fin print Limited pledged their shares of
the Respondent Company and executed Agreement for Pledge of Shares on 29th April, 2008 in favour of
Financial Creditor. Guarantors, Shri Bharat Patel, Smt. Bharati Patel and Smt. Smita B. Patel executed
Personal Guarantee Deed dated 28th April, 2008 in favour of Financial Creditor. M/s. Surya Offset
Printers (India) Private Limited executed a Deed of Corporate Guarantee dated 28th April, 2008. As per
the Loan Agreement dated 4th April, 2008, Respondent shall open an Escrow Account into which the
Respondent shall deposit or cause to be deposited all amounts accruing under the Scheme in the said
account and the account shall be operated by the Respondent on the terms and conditions contained in the
Escrow Agreement dated 28th April, 2008. Applicant filed all the relevant documents relating to the said
loan transactions.
6. Dena Bank sanctioned Term Loan of Rs. 8.50 Crores to the Respondent vide Sanction Letter dated 16th
September, 2010 read with Letters dated 20th September, 2010, 24th September, 2010, 18th October,
2010 and 4th November, 2010 for construction of AURA Mall under the multiple banking arrangements
with HUDCO. The Loan Agreement dated 24th September, 2010 was executed between the Respondent
and Dena Bank. The said loan is also secured by Agreement of Hypothecation of goods etc. The
Respondent Company, and Mr. Bharat Patel and Smt. Bharati Patel created a Charge by deposit of title
deeds with respect to their immovable properties situated in Bhopal, State of Madhya Pradesh and the
mortgage is recorded in the Memorandum of Entry dated-10th November, 2010. Personal Guarantee was
also given by Shri Bharat Patel, Smt. Bharati Patel and Smt. Smita Patel by executing Deed of Mortgage
dated 24th September, 2010. Corporate Guarantee was furnished on the same day by M/s. Surya Offset
Printers (India) Private Limited. Shri Bharat Patel, Smt. Bharati Patel and Smt. Smita B. Patel pledged
1513
2453192 shares held by them in the Respondent Company by executing an Agreement of Pledge. A
Revised Agreement dated 8th November, 2010 was executed by the Respondent, and its Directors in
favour of Dena Bank. Applicant filed all the documents relating to the loan sanctioned by the Dena Bank.
7. HUDCO and Dena Bank vide separate registered Assignment Agreements both dated 30th March,
2013 assigned the financial asset pertaining to the Corporate Debtor together with the security interest
created thereof and all their rights, title, and interest thereon in favour of the Applicant under the
provisions of the SARFAESI Act. As per the Assignment Agreements, Dena Bank and HUDCO assigned
and transferred the financial debt in favour of the Applicant who is the Financial Creditor.
8. After the assignment of debt in favour of the Applicant, Corporate Debtor and Guarantors vide their
letter dated 9th April, 2013 requested the Financial Creditor for restructuring of the outstanding loans of
the Corporate Debtor on the terms and conditions mentioned in the letter. On the request of Corporate
Debtor, the Financial Creditor vide its letter dated 16th April, 2013 agreed to grant Additional Facility of
Rs. 12 Crores and restructuring of the outstanding dues. Accordingly, Restructuring Agreement dated
18th April, 2013 was executed between the Corporate Debtor, Mr. Bharat Patel, Mrs. Bharati Patel, Mrs.
Smita Patel and Surya Offset Printers (India) Private Limited and the Financial Creditor thereby agreed to
the terms of Restructuring Agreement. As per the Restructuring Agreement, the debt acquired from
HUDCO is Rs. 21,34,44,661/- and Rs. 7,59,16,048/- as acquired from Dena Bank and it is treated as
outstanding debt. As per the Restructuring Agreement, the existing security interest already created in
favour of HUDCO and Dena Bank would continue and ensue for the benefit of Financial Creditor. The
Restructuring Agreement also provides for creation of Additional Security Interest. Financial Creditor
sanctioned Additional Loan of Rs. 12 Crores to the Corporate Debtor. Corporate Debtor executed Loan
Agreement dated 18th April, 2013. An Addendum to the Loan Agreement was executed on 23rd April,
2013. The Additional Loan is also secured by Deed of Hypothecation, by Mortgage and by Personal
Guarantors, Corporate Guarantee etc. Financial Creditor vide letter dated 28th February, 2014
restructured the loans and additional loan was rescheduled. Further, on the request of the Corporate
Debtor, another sum of Rs. 5 Crores was given as loan by a letter dated 26th February, 2014. In that
connection, Loan Agreement dated 28th February, 2014 was executed. The said loan was secured by
Deed of Hypothecation by creating charge on the immovable properties by deposit of title deeds, by
giving Personal Guarantees and Corporate Guarantee, and by pledging the shares.
9. The Corporate Debtor, vide its letter dated 9th April, 2013 acknowledged that they have not been able
to meet their loan obligations on time and requested the Financial Creditor for restructuring of the
outstanding loans. The Corporate Debtor in its communication dated 31st January, 2014 addressed to the
1514
Financial Creditor acknowledged the defaults committed to Punjab National Bank and requested the
Financial Creditor to take over their 'NPA' account with Punjab National Bank. The Financial Creditor
vide its letter dated 22nd May, 2015 called upon Corporate Debtor to make payment of outstanding
overdue amount in accordance with the repayment schedule by 30th June, 2015. Corporate Debtor by its
Reply dated 2nd June, 2015 acknowledged that they could not meet with the commitment with the
Financial Creditor by making regular payment against the outstanding dues. Corporate Debtor
acknowledged the outstanding amount in respect of the Restructured Loans and Additional Loans of Rs.
12 Crores and Rs. 5 Crores as on 31st March, 2015 and 31st March, 2016 by executing Letters of
Acknowledgement of Total Outstanding Dues on 8th May, 2015 and 20th April, 2016. Corporate Debtor
signed Balance Confirmation Letter dated 1st April, 2015 in respect of Additional Loan of Rs. 12 Crores
and Rs. 5 Crores. Similarly, Corporate Debtor has confirmed the balance payable to the Financial Creditor
as on 31st March, 2016 in respect of Additional Loan of Rs. 12 Crores and Rs. 5 Crores by signing the
Balance Confirmation Letter dated 13th April, 2016 confirming the balance of Additional Loans, viz., Rs.
29,76,49,799, The Corporate Debtor in its Balance Sheets for the Financial Year ended on 31st march,
2013, 31st March, 2014 and 31st March, 2016 admitted and acknowledged the outstanding dues due to
the Financial Creditor.
10. The Financial Creditor initiated measures under the SARFAESI Act by issuing a notice dated 10th
April, 2017 under Section 13(2) of the SARFAESI Act to the Corporate Debtor, Mr. Bharat Patel, Mrs.
Bharati patel, Mrs. Smita Patel, M/s. Surya Offset Printers (India) Private Limited, and DSP Finprint
Limited. The Corporate Debtor and its Directors and Guarantors issued several letters dated 5th June,
2017. Syndicate Bank has also initiated action under SARFAESI Act and brought the property situated in
Arera Colony, Bhopal for sale. The said property is part of the property mortgaged by the Corporate
Debtor, Shri Bharat Patel and Smt. Bharati Patel to the Financial Creditor. Financial Creditor addressed a
letter dated 7th October, 2016 to the Syndicate Bank objecting to the auction of the aforesaid property by
Syndicate Bank. Thereupon, Financial Creditor filed Securitisation Application No. 31/2017 before Debt
Recovery Tribunal at Jabalpur against Syndicate Bank, Corporate Debtor and others which is pending
adjudication. The following are the outstanding amounts as on 4th August, 2017:-
A. Loans acquired from Dena Bank and HUDCO.
Particulars Amount (in Rs.)

Principal Outstanding 28,93,60,709
Interest 54,87,52,740
1515
Penal Interest 5,91,39,613
Total 89,72,53,062
B. Additional Loan of Rs. 12 Crores.

Interest 17,28,55,910
Penal Interest 2,26,88,562
Total 31,55,44,473
C. Additional Loan of Rs. 5 Crores.

Interest 5,56,86,709
Penal Interest 81,27,035
Total 11,38,13,744
Grand Total Rs. 132,66,11,279/-
Financial Creditor received an amount of Rs. 37,00,000/- from the Corporate Debtor.
11. This Application was, for the first time, listed before this Adjudicating Authority on 30th August,
2017. Copy of the Application has been served on the Respondent and proof of service is filed. This
Adjudicating Authority directed the Applicant to comply with Column-7 of Part V of Form-1, i.e., copies
of Entries in Bankers Books in accordance with Bankers' Books Evidence Act, and accordingly notice
was issued under Section 7(5) of the Code. This Adjudicating Authority also directed the Applicant to
serve notice of date of hearing along with copy of order and file proof of service and listed the matter on
1st September, 2017 for objections and hearing. Applicant filed proof of service of notice on Respondent
on 1.9.2017, however the Applicant did not file copies of bankers books, and hence the matter was listed
on 5.9.2017. On 5.9.2017 Applicant filed certified statement of account along with Affidavit. Respondent
appeared through their learned Counsel and requested time to file Objections. The matter was listed on
8.9.2017 for filing objections. On that date, Respondent took time for filing objections. Ultimately,
Respondent filed Reply on 11th September, 2017.
1516
12. In the Reply, it is stated that the Company for the purpose of construction of AURA Multiplex Mall in
Bhopal deliberated with HUDCO and Dena Bank for its financing and financial assistance. On 30th
March, 2013 due to non-completion of project of constructing the Mall the entire debts and liabilities
stood transferred to the present Financial Creditor. The representatives of Corporate Debtor were coerced
into agreeing upon the interest rate of 25% per annum, compounded monthly which is inadmissible as per
the extant laws of India, In fact Applicant gave advertisements in Economic Times and Times of India for
sale of AURA Mall for which bills worth Rs. 13.80 lakhs were raised against the Company. The
Applicant did not communicate the result of advertisements for 7 months. Thereafter, Applicant issued
notice under Section 13(2) of the SARFAESI Act on 10th April, 2017. The assets of the Company worth
more than Rs. 300 Crores were illegally mortgaged with the Financial Creditor for the initial loan of Rs.
45.94 Crores and now the Applicant established liability of Rs. 132 Crores which is 3 times over and
above the initial amount in a span of 4 years and 3 months which is highly improbable and grossly illegal.
Respondent also pleaded that in complete deviation to the terms and conditions agreed between JM
Financial Asset Reconstruction Company Ltd, a letter of termination of service was served upon the
Company without any prior intimation or communication.
13. Respondent also stated that it has also published the sale of Aura Mall in the Economic Times for
which 27 prospective responses have come but the Company could not capitalise the responses as the
Applicant already terminated their engagement with the Company due to the reasons best known to the
Applicant. Respondent also stated in the Reply about the glorious past of the Company and the bright
future for reviving the unit. Respondent also stated that it has credited all its income into Escrow Account
which is with IDBI and therefore there is no question of default. In Reply, it is stated that this
Adjudicating Authority has no jurisdiction to entertain this Application since the jurisdiction is there only
to the Courts at Mumbai, India and to no other Courts as per the Agreements between the parties.
14. The first objection that is to be answered is regarding jurisdiction of this Adjudicating Authority. No
doubt, the Agreements between the parties show that the Courts at Mumbai are having jurisdiction.
14.1 It is settled law that the parties cannot confer jurisdiction on Courts or Tribunals unless the Courts or
Tribunals are having jurisdiction over the subject matter and as well as the territorial and pecuniary
jurisdiction.
14.2 If more than one Court or Tribunal is having jurisdiction over a particular subject matter or over a
particular pecuniary limit or the territorial limits, then if there is an Agreement between the parties, the
Courts situated at a particular place, on which the parties agree, will have jurisdiction.
1517
14.3 Section 60, sub-section (1) of the IB Code reads as follows;
"60.(1). The Adjudicating Authority, in relation to insolvency resolution and liquidation for corporate
persons including corporate debtors and personal guarantors thereof shall be the National Company Law
Tribunal having territorial jurisdiction over the place where the registered office of the corporate person is
located."
In the case on hand, the Registered Office of the Company is situated in Bhopal, Madhya Pradesh.
Therefore, the National Company Law Tribunal at Ahmedabad is having territorial jurisdiction over the
State of Gujarat and Madhya Pradesh. In this context, even if the parties to the Agreements agree for
jurisdiction of the Courts at Mumbai, the Courts at Mumbai will have no jurisdiction to entertain the
Insolvency Resolution Process in respect of the Corporate Debtor, since Tribunal at Mumbai has no
territorial jurisdiction over Bhopal.
14.4 Therefore, it is held that this Adjudicating Authority (NCLT), is having jurisdiction to entertain the
Corporate Insolvency Resolution Process in respect of the Corporate Debtor.
15. The Hon'ble National Company Law Appellate Tribunal, in Company Appeal (AT) (Insolvency) No.
1 & 2 of 2017 in the matter of M/s. Innoventive Industries Ltd. Vs. ICICI Bank & Anr., decided on 17th
January, 2017, held as follows in the following paragraphs; "82. As discussed in the previous paragraphs,
for initiation of corporate resolution process by financial creditor under subsection (4) of Section 7 of the
Code, 2016, the 'adjudicating authority' on receipt of application under sub-section (2) is required to
ascertain existence of default from the records of Information Utility or on the basis of other evidence
furnished by the financial creditor under sub-section (3). Under Section 5 of Section 7, the 'adjudicating
authority' is required to satisfy -
Professional.
83. Once it is satisfied it is required to admit the case but in case the, application is incomplete
1518
16. The above said Judgment delivered by the Hon'ble National Company Law Appellate Tribunal is also
confirmed by the verdict of the Hon'ble Supreme Court in Civil Appeal Nos. 8337-8338 of 2017 delivered
on 31st August, 2017.
17. In the case on hand, the Application is complete since the defects pointed out have been rectified as
narrated in the earlier paragraphs of this order. Applicant filed documents in support of the assigned debts
borrowed from HUDCO and Dena Bank. Applicant also filed the documents relating to the Additional
Loans sanctioned by the Financial Creditor. The documents are not at all disputed by the Corporate
Debtor, except disputing the rate of interest. Even according to the Respondent, they are ready to sell the
Aura Mall and pay the amounts to the Applicant. The termination of services by the Applicant in
deviation to the terms and conditions and it has been done without prior intimation or communication to
Corporate Debtor is no ground to come to a conclusion that a default has not occurred in repayment of
financial debt. The material on record clearly go to show that in order to finance the project of 'Aura
Mall', Respondent-Corporate Debtor borrowed monies from HUDCO and Dena Bank and furnished
Securities, Guarantee Agreements and Corporate Guarantee, as well as Pledge of Shares. The Registered
Assignment Agreements executed by HUDCO and Dena Bank in favour of the Applicant clearly show
that the monies borrowed from them along with the Securities were assigned to the Applicant. Since the
monies were borrowed by the Corporate Debtor from the HUDCO and Dena Bank on interest basis, it is a
'financial debt'. Such 'financial debt' has been assigned to the Applicant. Moreover, the Applicant has also
granted Additional Financial Assistance of Rs. 12 Crores and Rs. 5 Crores to the Respondent on interest
basis. Therefore, it is also a 'financial debt'. The documents on record, including the Notice under
SARFAESI Act, clearly show that a default has been committed by the Respondent in repayment of the
financial debt. Therefore, Applicant is a 'Financial Creditor' and Respondent is a 'Corporate Debtor'. A
default has been committed by the Corporate Debtor in repayment of the financial debt. The Applicant
proposed the name of Mr. Devendra Padamchand Jain as 'Interim Insolvency Resolution Professional' and
also filed his Written Communication.
admitted under Section 7(5) of the Code.
1519
19. This Adjudicating Authority hereby appoint Shri Devendra Padamchand Jain, having his address at
A-43, Prima Plaza, Opposite DLA School, Bodakdev, Ahmedabad-380054, and having Registration No.
IBBI/IPA-001/IP-P00255/2017-18/10484 under Section 13(1)(c) of the Code.
of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016. The other Secured and
Unsecured Creditors and Operational Creditors are also entitled to file their claims before the Interim
(b) transferring, encumbering, alienating or disposing of by the corporate debtor any of

(54 of 2002);
(d) the recovery of any property by an owner or lessor where such property is occupied
(i) However, the order of moratorium shall not apply in respect of supply of essential
goods or services to Corporate Debtor.
(ii) The order of moratorium is not applicable to the transactions that may be notified by
the Central Government in consultation with any financial sector regulator.
1520
(iii) The order of moratorium comes into force from the date of the order till the
completion of Corporate Insolvency Resolution Process subject to the Proviso under sub-
22. This Application stands disposed of accordingly. No order as to costs.
1521
AHMEDABAD BENCH
C.P. (I.B.) No. 114/7/NCLT/AHM/2017

Vs.
Respondent: ABXL Retails India Pvt. Ltd.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Anip Gandhi and Mr. Raju Kothari, Learned Advocate
ORDER
1. Punjab National Bank, styling itself as 'Financial Creditor', filed this Application under Section 7 of the
Bankruptcy (Application to Adjudicating Authority) Rules, 2016, ("IB Rules" for short) with a request to
initiate Corporate Insolvency Resolution Process against ABXL Retails (I) Private Ltd., categorising it as
'Corporate Debtor'.
2. Applicant is a Bank constituted under the provisions of Banking Companies (Acquisition & Transfer of
Undertakings) Act, 1970. This Application is signed by Senior Manager-Chief Manager of Punjab
National Bank, Ahmedabad Branch on the basis of authority given to him vide Power of Attorney dated
30th May, 2002 and Authority Letter dated 23.8.2017.
3. Respondent is a Company registered under the provisions of Companies Act, 1956 having its
Registered Office situate in Ahmedabad.
4. Respondent Company applied for Cash Credit Limit of Rs. 7,00,00,000 to the Applicant Bank and
accordingly Applicant Bank sanctioned the Cash Credit Limit to the Respondent Company on 9.7.2010.
Respondent Company executed Master Undertaking on 21.7.2010 pursuant to the sanction of Cash Credit
Limit of Rs. 7 Crores. Respondent also furnished necessary securities and guarantors. Respondent also
1522
hypothecated the goods to the tune of Rs. 10,00,00,000 and collateral security was charged in favour of
the Bank on 21.7.2010. Respondent Company is unable to repay outstanding amount of Rs.
10,82,58,373.74 ps. including interest till 20th August, 2017. Respondent being the Principal Borrower
and the Guarantors failed to honour the terms and conditions of the Credit Facility. Applicant issued
Notice under Section 13(2) of the SARFAESI Act demanding outstanding amount with interest to the
Respondent-Principal Borrower and Guarantors. The Authorised Officer of the Bank has taken measures
under Section 13(4) of the SARFAESI Act. The Hon'ble District Magistrate passed an order under
Section 14 of the SARFAESI Act and possession of the property was taken on 26.9.2011. The Applicant
Bank auctioned the mortgaged property on 21.2.2012, 22.2.2012 and 29.6.2012 and realised Rs.
5,16,52,111. Applicant Bank filed O.A. No. 151 of 2012 for the remaining claim of Rs. 6,53,38,550.37
ps. with further interest at the rate of 12 per cent until realisation. Debt Recovery Tribunal, Ahmedabad,
by order dated 15.1.2014 decreed the claim of the Applicant Bank.
5. Applicant proposed the name of Interim Resolution Professional as Shri Vikas Gautamchand Jain.
Applicant filed proof of service. This Application has been filed on 24th August, 2017. This matter was
listed before this Adjudicating Authority for the first time on 31st August, 2017. This Adjudicating
Authority directed the Applicant to serve notice of date of hearing along with copy of the order and file
proof of service. Applicant filed proof of despatch of notice of date of hearing on Respondent on
6.9.2017. Applicant also filed another proof of Service Affidavit stating that the covers addressed to the
Respondent returned unserved. Applicant also filed Certificate under the Bankers' Books Evidence Act.
Applicant in the Affidavit stated that they also sent the notice of date of hearing by E. Mail and filed copy
of the E. Mail. Inspite of sending copy of the Application and inspite of sending notice of date of hearing,
Respondent did not choose to appear before this Authority and file any objection.
6. A perusal of the Application and its Annexures clearly show that the Application is complete in all
respects. Applicant filed the copy of Master Undertaking dated 21.7.2010; copy of Statement of Account
and Interest Calculation Sheet calculating interest till 20th August, 2017 and Certificate of the Bankers
under the Bankers' Books Evidence Act. Applicant also filed copy of Notice dated 4.7.2011 issued under
Section 13(2) of the SARFAESI Act and copy of the Notice issued under Section 13(4) of the SARFAESI
Act to the Respondent. It is also stated in the Affidavit of the Applicant that Debt Recovery Tribunal
passed decree in favour of the Applicant. Applicant Bank also stated that the mortgaged properties of the
Respondent were sold and the Bank realised certain amounts. As can be seen from the Statement of
Account along with interest, outstanding amount payable by the Respondent is Rs. 10,82,58,373.74 Ps.
1523
7. Inspite of sending copy of the Application; inspite of sending the date of hearing notice; and inspite of
the E-Mail intimation regarding the date of hearing, Respondent did not choose to appear before this
Adjudicating Authority and did not choose to file Objections. In view of the documents filed by the
Applicant, it is clear that Respondent committed default in repayment of outstanding loan amount which
it has borrowed with certain terms and conditions including payment of interest. Therefore, the debt due
to the Respondent to the Applicant Bank is a financial debt. Since the financial debt is due from the
Respondent, which is a Company, it is the Corporate Debtor and the Bank is the Financial Creditor. The
Financial Creditor filed the Written Communication of the Insolvency Resolution Professional. The fact
that Debt Recovery Tribunal passed the decree in favour of the Bank is no impediment for the Financial
Creditor to trigger Corporate Insolvency Resolution Process against the Corporate Debtor for the
outstanding amount due to it, which is a financial debt.
8. In view of the above discussion, this Application deserves to be admitted and it is accordingly admitted
under Section 7(5) of the Code.
9. This Adjudicating Authority hereby appoint Shri Vikas Gautamchand Jain, as "Interim Insolvency
Resolution Professional" having his Office at 204, Wall Street-1, Opposite Orient Club, Near Gujarat
College, Ellisbridge, Ahmedabad-380006, and having Registration No. IBBI/IPA-001/IP-P00354/2017-
18/10612 under Section 13(1)(c) of the Code.
1524
14.
1525
AHMEDABAD BENCH
C.P. (I.B.) No. 115/7/NCLT/AHM/2017
Applicant: V.R. Polyfab Private Limited

Vs.
Respondent: Sadbhav Enterprise Private Limited
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Harmish Shah, Learned Advocate Advocate
For Respondents/Defendant:Mr. Pavan Godiawala and Mr. Ishan Shah, Learned Advocates
ORDER
1. V.R. Polyfab Private Limited, saying itself as 'Financial Creditor', filed this Application under Section
7 of the Insolvency and Bankruptcy Code, 2016 ["IB Code" for short] read with Rule 4 of the Insolvency
and Bankruptcy (Application to Adjudicating Authority) Rules, 2016, ("IB Rules" for short) with a
request to initiate Corporate Insolvency Resolution Process against Sadbhav Enterprise Private Limited
categorising it as 'Corporate Debtor'.
2. Applicant is a Private Limited Company. This Application is signed by Mr. Deepakkumar R. Jain, who
is one of the Directors of the Applicant Company, basing on the Resolution of the applicant Company
dated 5th April, 2017.
3. Respondent Company is a Private Limited Company incorporated under the provisions of the
Companies Act, 1956 having its Registered Office in Ahmedabad. The Paid-up Share Capital of the
Respondent Company is Rs. 12,67,200.
4. It is the case of the Applicant, that Respondent Company approached the Applicant in the year 2014 for
the purpose of Unsecured Loan. Applicant Company has originally advanced a loan for an amount of Rs.
1526
90,00,000 vide Cheque No. 717932 on 9.6.2014. Thereafter, Respondent had periodically received an
amount of Rs. 3,03,60,000 as Unsecured Loan during the financial year 2014-15. The details of the
money given by the Applicant in the financial year 2014-15 ended on 31.3.2015 are as shown in Exhibit
'C' attached to the Application. Respondent Company admitted the debt and deducted 'TDS' on the
interest payable on the debt. Respondent Company deducted the TDS of Rs. 1,96,724 on the total amount
of interest of Rs. 19,67,238/- as on 31.3.2015. Applicant filed copy of Form No. 26AS showing the
interest amount and TDS amount as Exhibit 'D'. Applicant also filed copy of Interest Calculation upto
31.3.2015 and confirmation of the account as Exhibit 'E'.
5. Applicant, thereafter, gave an amount of Rs. 1,62,97,000/- towards Unsecured Loan to the Respondent
in the year ended on 31.3.2016. Applicant received back an amount of Rs. 1,50,00,000 in the year 2015-
16. Applicant Company filed Balance Sheet as on 31.3.2016 and the details of the amount paid and
received in the year 2015-16 as 'Exhibit F' The total amount of interest receivable by the Applicant
Company during the period ended on 31.3.2016 was Rs. 28,59,925/-. The Applicant filed Interest
Calculation Sheet as 'Exhibit G' Respondent deducted TDS of Rs. 2,85,993/- on the total amount of
interest of Rs. 28,59,925/- receivable by the Applicant Company in the year ended on 31.3.2016.
Applicant filed copy of Form 26AS showing the interest amount and TDS amount as 'Exhibit H'.
6. Applicant again gave an amount of Rs. 83,87,500/- towards Unsecured Loan in the year ended on
31.3.2017. Applicant Company received back an amount of Rs. 32,00,000/- in the year 2016-17. The
details of the amount paid and received in the year 2016-17 are shown in Exhibit T. The total amount
advanced by the Applicant from the year 2014 till date is Rs. 5,50,44,500/-. The total amount received
back by the Applicant is Rs. 1,82,00,000/-. Applicant filed the Bank Statement and Bank Certificate as
'Exhibit J'.
7. Inspite of repeated reminders, Respondent Company failed to pay an amount of Rs. 4,47,85,703/- with
9% interest. Respondent never disputed the outstanding amount due and payable to the Applicant. The
details of the outstanding amount as on 31.3.2017 are shown at 'Exhibit K'.
8. Applicant wrote a letter dated 24.4.2017 requesting the Respondent to clear the outstanding of Rs.
4,47,85,703/-. Respondent Company having received the said letter did not choose to give reply. The said
letter is marked as 'Exhibit L'. Applicant Company got issued a notice to the Respondent Company on
12.6.2017. Respondent Company refused to receive the Notice. A copy of the Notice and postal proof are
filed as 'Exhibit M'. According to the Applicant as on 31st July, 2017 the total outstanding amount was
Rs. 4,57,96,141, as shown in Exhibit 'N'.
1527
9. Further, according to the Applicant, Respondent Company is unable to pay the outstanding financial
debt and therefore it has chosen to initiate the Corporate Insolvency Resolution Process. Respondent
Company filed Annual Return for the financial year ended on 31.3.2016. The Registered Office of the
Respondent Company is in Ahmedabad. It is stated that the Application is within time. Applicant
proposed the name of Shri Umesh Ved, as 'Interim Resolution Professional' and filed his Written
Communication in Form-2.
10. Applicant despatched the copy of the Application to the Respondent. This Application has been filed
on 29th August, 2017 and the same was listed before this Adjudicating Authority for the first time on 31st
August, 2017. This Adjudicating Authority directed the Applicant to serve notice of date of hearing and
file proof of service. Applicant filed proof of service of date of hearing. Respondent appeared through a
Counsel and filed Objections on 13.9.2017.
11. The following are the Objections filed by the Respondent. The Applicant Company's Director is a real
brother of the Director of the Respondent Company, and there is corresponding obligations of the
Applicant Company and its management to make payment to the Respondent Company and its
management. It is further stated that there is one partnership firm jointly owned and run by management
of both the Companies and there are transactions which are between relative parties and details of the
same are narrated. It is stated that the Applicant approached this Authority with unclean hands by using
this Insolvency Resolution Process as an arm twisting mechanism to collect money.
11.1 Respondent pleaded that the alleged debt does not come within the four corners of financial debt.
11.2 The management of Respondent Company belongs to promoter Director Mr. Vinay Jain and that of
the Applicant belongs to the real brother of Mr. Vinay Jain, by name Mr. Deepak Jain. Both the brothers
are partners since 2010 in a family partnership firm named V.R. Fashion, Ahmedabad and there is an
Admission Deed of Partnership. The Respondent further pointed out that Applicant in its letter dated 24th
April, 2017 addressed to the Respondent, stated that "association of your company with our is since last
more than one decade.......Company is thankful to you for your continued patronage to our Company."
According to the Respondent, the said statement in the letter dated 24th April, 2017 is nothing but an
acknowledgment of the Applicant about debtor and creditor relationship for more than one decade and
transactions entered during 2014-15, 2015-16 and 2016-17 had its roots as debtor and creditor
relationship. It is also pleaded that the plea of the Applicant that Respondent approached the Applicant
some time in the year 2014 for the purpose of Unsecured Loan is falsified by the letter dated 24th April,
2017.
1528
11.3 According to the Respondent, Applicant owed Rs. 4,05,20,067/- as on 12.6.2017 towards purchase
of fabrics. A statement of accounts is attached as 'Annexure B'. The Director of the Respondent Company
along with his associate has leased the property consisting of land, building and plant and machinery to
the Applicant since 2004 and the Applicant is in default in payment of lease rent of Rs. 51,35,446/- till
date. A copy of Lease Agreement is filed as Annexure 'C'. Respondent pleaded that there is no evidence
to show that Applicant lent money. Applicant did not produce copy of financial contract as required under
Sr. No. 5 of Part V of Form-I and copy of entries made in its Register of Loans, i.e., Form MBP-2 as
required under Sr. No. 7 of Part V of Form I and Sr. No. 8 of Part V of Form-I. Respondent pleaded that
in order to initiate Insolvency Resolution Process there must be default occurred in respect of the financial
debt and in this case there is no evidence to show that default has occurred. Respondent further stated that
it has no liabilities or claims from any secured creditors or Government debtors and it is discharging its
contractual and statutory liabilities in ordinary course of business, and there is no question of Respondent
Company running away and unable to pay debts. Respondent pleaded that it is not the duty of the
Company Court to examine whether the Respondent has genuine dispute to the claimed debt. It is
contended that the Company Court has to see whether the dispute is on substantial grounds and it is a
bona fide one or not.
12. Heard the learned counsel for the Applicant and the learned counsel for the Respondent. In view of
the Objections raised by the Respondent, this Adjudicating Authority has to first decide whether the
amount claimed from the Respondent by the Applicant is a financial debt or not. "Financial Debt", to the
extent relevant for the purpose of this case, is defined in Clause (a) of sub-section (8) of Section 5 of the
Code. It says, "financial debt" means a debt along with interest, if any, which is disbursed against the
consideration for the time value of money and includes money borrowed against the payment of interest.
13. The details of money given by the Applicant Company to the Respondent Company during the year
2014-15 are shown in 'Exhibit C'. Exhibit C is the ledger Account of the Respondent Company
maintained by the Applicant Company. It shows the amount disbursed to Respondent Company. A
perusal of Exhibit 'D', which is Form No. 26AS Sr. No. 16 shows that an amount of Rs. 1,96,724 was
deducted towards TDS on the interest amount of Rs. 19,67,238 payable to the Applicant Company.
14. The copy of the Balance Sheet as on 31.3.2016 shows that Respondent company paid Rs. 1,50,00,000
to the Applicant Company. The Interest Calculation Sheet as on 31.3.2016 shows the interest receivable
by the Applicant during the period ended on 31.3.2016 as Rs. 28,59,925/-. A perusal of Exhibit 'H' Form
No. 26AS at Serial No. 11 shows that an amount of Rs. 2,85,993 was deducted towards TDS on the
interest amount of Rs. 28,59,925/- payable to Applicant Company by the Respondent Company. A
1529
perusal of Exhibit 'I' shows the details of amount paid and received in the year 2016-17. It shows that an
Unsecured Loan of Rs. 83,87,500 was advanced. A perusal of 'Exhibit J' shows the total amount advanced
by the Applicant to the Respondent as Rs. 5,50,44,500/- and the amount paid by the Respondent to the
Applicant as Rs. 1,82,00,000/-. Applicant Company also wrote a letter dated 24.4.2017 and got issued a
Legal Notice dated 12.6.2017, but no reply was given by the Respondent. From the above said
documents, it is clear that Unsecured Loans were given by the Applicant to the Respondent and in respect
of which on interest amounts TDS at the rate of 10% was deducted. Therefore, the amount of debt due
from the Respondent to the Applicant comes within the four corners of financial debt as defined in Clause
(a) of sub-section (8) of Section 5 of the Code.
15. Now, the question for consideration is whether the default has been committed by the Respondent in
respect of payment of the financial debt to the Applicant.
15.1 In this context, it is necessary to the refer to the decision rendered by the Hon'ble National Company
Law Appellate Tribunal, in Company Appeal (AT) (Insolvency) No. 1 & 2 of 2017 in the matter of M/s.
Innoventive Industries Ltd. Vs. ICICI Bank & Anr., on 17th January, 2017, wherein it is, inter alia, held
that the Adjudicating Authority has to ascertain and record satisfaction as to the occurrence of default
before admitting an Application. It is further held in that Judgement, that once the Adjudicating Authority
is satisfied that a default occurred and the Application is complete and that there is no disciplinary
proceeding pending against the proposed Insolvency Resolution Professional, it is required to admit the
case, and in case if the Application is incomplete, the Financial Creditor has to be granted 7 days' time to
complete the Application. The above said Judgment of the Hon'ble National Company Law Appellate
Tribunal was challenged in Civil Appeal No. 833 7-8338 of 2017 before the Honourable Supreme Court
of India. The Hon'ble Apex Court vide Judgment dated 31st August, 2017, dismissed the above said
Appeals. In Para No. 30 the Hon'ble Supreme Court has held as follows;
"30. On the other hand, as we have seen, in the case of a corporate debtor who commits a default of a
otherwise."
1530
15.2 In view of the above said observations made by the Hon'ble Supreme Court, this Adjudicating
Authority has to see whether 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 also held by the Hon'ble Supreme
Court that the Adjudicating Authority has to satisfy about the default of a financial debt from the records
of the information utility or other evidence produced by the Financial Creditor.
16. Learned Counsel appearing for the Respondent, relying upon the Judgment of the Hon'ble Supreme
Court in a winding up proceeding under the Companies Act, 1956 in the case of IBH Health Vs. Info-
Drive Systems, contended that, it is not the duty of the Company Court to examine whether the Company
has a genuine dispute to the claimed debt and the Company Court has only to see whether a dispute is a
bona fide dispute on substantial grounds and it is not a spurious, speculative, illusory or misconceived
dispute. This proposition is laid down by the Hon'ble Supreme Court in a winding up proceeding filed by
the creditor on the ground of inability to pay debts by the debtor. The object of the Insolvency and
Bankruptcy Code is to initiate 'Corporate Insolvency Resolution Process' with the primary aim of reviving
the Company within a period of 180 days or within the extended period and if not the liquidation process
commence. Therefore, in view of the Judgement of the Hon'ble Supreme Court dealing with Section 7 of
the Insolvency Code referred to above, this Adjudicating Authority has to satisfy about the occurrence of
default in payment of financial debt.
17. In the case on hand, the dispute raised by the Respondent is that it has supplied some goods to the
Applicant Company and in that connection the Applicant has to pay certain amount. Another plea raised
by the Respondent is that the Director of the Applicant Company is the brother of the Director of the
Respondent Company and they have got a joint partnership business and they had transactions right from
2010. No doubt, the letter dated 24th April, 2017 produced by the Applicant shows that there is a creditor-
debtor relationship between the Applicant Company and the Respondent Company right from 2010. That
supports more the case of the Applicant than the case of the Respondent. Pertaining to this transaction, the
Applicant stated that Respondent approached it in 2014 for Unsecured Loan. That does not even
impliedly mean that there are no transactions much less credit transactions between the Applicant and the
Respondent prior to 2014. The very fact that the Respondent deducted tax on interest on loan amount
shows that there is an outstanding debt, which is a financial debt due from the Respondent to the
Applicant. Even assuming that Respondent is entitled for certain amounts from the Applicant, it can only
be treated as a set off or counter-claim and it cannot be a dispute relating to the financial debt due to the
Applicant from the Respondent. On the ground that there is counter-claim or set off as pleaded by the
Respondent, it cannot be said that there is no default in repayment of the financial debt. Therefore, this
1531
Adjudicating Authority is of the considered view that there is occurrence of default in payment of
financial debt by the Respondent.
18. It is contended by the learned counsel for the Respondent that columns at Serial Nos. 5, 6, and 8 of
Part V of Form-I are not provided by the Applicant. It is stated in Column 5 of Part V as "Not
Applicable". Since it is a case of Unsecured Loan from Applicant Company to the Respondent Company
which reflects in the Statement of Account there is no financial contract and therefore it cannot be said
that Column 5 is not answered by the Applicant. Column 6 refers to record of default. It is stated that it is
"Not Applicable". Therefore, it cannot be said that Column 6 is not complied with. Coming to Column 8,
Applicant has attached the documents that are available to show that financial debt is payable to it.
Therefore, the contention of the learned Counsel for the Respondent that the Application is incomplete in
respect of Columns 5, 6 and 8 of Part V of Form-I does not merit acceptance.
20. This Adjudicating Authority hereby appoint Shri Umesh Ved, as 'Interim Insolvency Resolution
Professional" having address at 304, Shoppers Plaza-5, Govt. Servants Co-Op Hsg. Soc, Opp. Municipal
Market, C.G. Road, Navrangpura, Ahmedabad-380009, and having Registration No. IBBI/IPA-002/IP-
1532
Financial Assets and Enforcement of Security Interest Act, 2002(54 of 2002);
14.
1533
AHMEDABAD BENCH
C.P. (I.B.) No. 92/7/NCLT/AHM/2017
Applicant: Engenious Engineering Pvt. Ltd.

Vs.
Respondent: Onex Natura Pvt. Ltd.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Ajay Antarkar, Learned Advocate
ORDER
1. Engenious Engineering Private Limited stying itself as `Financial Creditor', filed this Application
under Section 7 of the Insolvency and Bankruptcy Code, 2016 ["iB Code" for short] read with Rule 4 of
the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016, ("1B Rules" for
short) with a request to initiate Corporate Insolvency Resolution Process against, Onaex Natura Private
Limited categorising it as 'Corporate Debtor'.
2. The facts, that are necessary for disposal of this Application, are as follows;
2.1. Two of the Shareholders of Onaex Natura Private Limited, i.e., Respondent herein filed
Company Petition No. 51 of 2011 before the Company Law Board, Mumbai Bench, alleging acts
of oppression and mismanagement under Section 397, 398 of the Companies Act, 1956 against
Onaex Natura Private Limited and its two Directors. In the said Petition, M/ s. Engenious
Engineering Private Limited, Applicant herein was added as 'Respondent No.4'. The said
Company Petition came to be disposed of by the Hon'ble Company Law Board by order dated
1534
14.3.2013 which is filed as Annexure-6' of the Petition. A perusal of the said order shows that the
increase in the Authorised Share Capital from Rs. 1 Crore to Rs. 5 Crore has been set aside and
Form-23 filed in that regard has been cancelled from the records of the Registrar of Companies.
In the said order, the Hon'ble Company Law Board held that 5,25,000 shares allotted to
Engenious Engineering Private Limited, the Applicant herein (Respondent No.4 in Company
Petition No. 51 of 2011) are cancelled.
2.2. It is the case of the Applicant, as can be seen from Column No.4 of Part V, that the
Applicant Company invested amounts in Respondent Company by way of Share Capital, but the
allotment of shares by the Respondent Company to the Applicant Company has been cancelled by
the Hon'ble Company Law Board by its order dated 14.3.2013 which has already been referred to
in the earlier paragraph. That is how the Applicant is claiming an amount of Rs. 79,15,480/-.
2.3. In Column No.8 of Part V of Form-I, it is stated that Shri G. Padmanabhan, one of the
Directors of Engenious Engineering Private Limited filed an Affidavit before the Hon'ble
Company Law Board on 9th April, 2014 in CP No. 51 of 2011 stating that Engenious
Engineering Private Limited had no objection to sell the property of Onaex Natura Private
Limited, i.e., the Respondent herein, provided that their money is paid back to them with 10 per
cent interest till the date of payment. Applicant also filed Certificate of Auditor of Respondent
Company stating that there is an Unsecured Loan from Engenious Engineering Private Limited as
on 31.3.2016 for an amount of Rs. 78,94,887/-.
3. Basing on the above said material, Applicant is claiming to be the Financial Creditor.
4. This Application has been filed before this Tribunal on 9th August, 2017. Applicant has
despatched copy of the Application to the Respondent Company on 1st August, 2017 and filed proof of
despatch. When this matter was listed before this Adjudicating Authority on 23rd August, 2017, this
Authority directed the Applicant to serve notice of hearing and file proof of service. Accordingly, the
Applicant filed proof of service. None appeared for the Respondent through a proper Vakalatnama or
Authorisation Letter. On the date of hearing on 7th September, 2017, a letter was received from Savla 86
Associates who did not even file Vakalatnama on behalf of the Respondent requesting this Tribunal to list
this Application along with Company Petition No. 51 of 2011 on 12.9.2017. Since the said Savla 86
1535
Associates have no locus standi in absence of any Vakalatnama on behalf of the Respondent, that letter
was not taken into consideration by this Adjudicating Authority.
5. Again on 12.9.2017, learned Advocate Mr. Prabhat Chaurasia represented that he is having
scanned copy of Vakalatnama sent by group of shareholders of the Company who were not parties to this
Application. It is pertinent to mention here that the Respondent Company is Onaex Natura Private
Limited. In order to contest the matter, Respondent's authorised representative either in person or through
his duly appointed Advocate can represent and file objections before this Adjudicating Authority. The
shareholders of Onaex Natura Private Limited are not parties to this Application. There is no Rule that
enjoins upon this Adjudicating Authority to give notice to all the shareholders of the Respondent
Company. The shareholders also did not choose to file any Intervening Application in this matter. That is
how the matter remain uncontested since none appeared for the Respondent Company.
6. The point involved in this case is whether the amount claimed by the Applicant from the
Respondent Company is a `financial debt' or not. 'Financial Debt' is defined in Section 5(8) of the Code.
7. The amount claimed in this case, according to the Applicant, is for allotment of shares of the
Respondent Company. In fact, 5,25,000 shares of the Respondent Company were allotted to the Applicant
Company but the allotment of such shares was held to be illegal and the allotment was set aside by an
order of Company Law Board.
8. It appears that the only property of the Respondent Company was sold with the permission of the
Applicant Company and the amount is lying in the National Company Law Tribunal. There is no order
from the National Company Law Tribunal that Applicant is entitled for the amount invested by it for the
shares allotted to it and that were cancelled. Therefore, it cannot be said that any amount is due to the
Applicant from the 1st Respondent Company as a debt much less as a financial debt. The aspect whether
the Applicant Company is entitled for a share in the sale proceeds of the property of the Respondent
Company is a matter to be adjudicated in the pending Applications in Company Petition No. 51 of 2011.
9. Another contention of the learned Counsel for the Applicant is that an Unsecured Loan of the
Applicant is lying with the Respondent Company, as can be seen from the Balance Sheet of the
Respondent Company and the Chartered Accountant Certificate. The Balance Sheet of the Respondent
1536
Company is not filed. Only the Certificate of the Auditor is filed. The Certificate of the Auditor shows
that an amount of Rs. 78,94,887/- is due as Unsecured Loan as on 31st March, 2016 in the name of
Applicant Company. But no Balance Sheet of the Respondent Company is filed. In Part IV, Column-1,
the total amount of debt is shown as Rs. 79,15,480/ - and in support of it Ledger Account of Applicant
Company is filed, i.e., from 1.4.2008 to 31.3.2017. It is not pointed out by the learned Counsel for the
Applicant that in the ledger books of the Applicant Company the account of Respondent's Unsecured
Loan is shown. Therefore, there is no material on record to show that unsecured debt is due from the
Respondent Company to the Applicant Company and when the amount claimed is only in respect of the
shares of the Respondent Company allotted to the Applicant Company and cancelled by virtue of the
order of the Hon'ble Company Law Board, it can only be said that there is no financial debt due to the
Applicant Company from the Respondent Company and no default has been considered.
10. In view of the above, this Application is liable to be dismissed and accordingly it is dismissed. No
order as to costs.
1537
AHMEDABAD BENCH
C.P. (I.B.) No. 53/7/NCLT/AHM/2017

Vs.
Respondent: ABG Shipyard Ltd.
Judges/Coram:
Counsels:
For Respondents/Defendant: Mr. Parth, Learned Advocate
ORDER
Learned Advocate Mr. Sahil Shah i/b Cyril Amarchand Mangaldar present for. Applicant.
Learned Advocate Mr. Parth Contractor present for Respondent in IA 329/2017.
Heard arguments of learned Counsel for Applicant.
Notice on application given to Counsel for Respondents.
This application is filed under Rule 154 and 155 r/w Rule 11 of NCLT, Rules, 2016 for
rectification of certain clerical mistakes that arose due to accidental slip in the final order dated
01.08.2017 passed in CP(IB) 53/2017.
Perused the final order dated 01.08 2017.
The mistakes pointed out in final order dated 01.08.2017 are only clerical mistakes due to
accidental slip and omission except relief para 6 (v).
Hence, application is allowed in part in respect of in para 6 (i) to (iv) of the application.
Application is dismissed in respect of para 6 (v) of application. Application is disposed of accordingly.
1538

AHMEDABAD BENCH
C.P. (I.B.) No. 87/7/NCLT/AHM/2017

Vs.
Respondent: Prime Care Pvt. Ltd.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Jaimin R. Dave, Learned Advocate
For Respondents/Defendant: Mr. Vishal J. Dave, Learned Advocate
ORDER
Learned Advocate Mr. Jaimin Dave present for Financial Creditor/ Petitioner. Learned Advocate Mr. V J
Dave present for Respondent.
Learned Advocate Mr. V J Dave filed Vakalatnama for Respondent.
In view of the order dated 16.10.2017 passed by NCLAT in Company Appeal (AT) (INS) 196/2017,
CP(IB) no. 87/2017 is closed.
1539
AHMEDABAD BENCH
C.P. (I.B.) No. 66/7/NCLT/AHM/2017
Applicant: Bank of India (COC)

Vs.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Vishal j. Dave, Learned Advocate
ORDER
Learned Advocate Mr. Vishal Dave present for Applicant. None present for Respondent in IA 344/2017.
IRP sent a mail reported no objection.
Confirmation mail from IBBI received confirming the name of Mr. Ramchandra D. Chaudhary as
Hence, Mr. Ramchandra D. Chaudhary is appointed as Resolution Professional under section 22 of the
Code.
1540

AHMEDABAD BENCH
C.P. (I.B.) No. 113/7/NCLT/AHM/2017
Applicant: J M Financial Assest Reconstruction Co. Ltd.

Vs.
Respondent: Sandhya Prakash Ltd.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Pranjal, Learned Advocate
ORDER
Learned Advocate Mr. Pranjal Buch present for Applicant. None present for Respondent (Corporate
Debtor) and IRP in IA 357/2017.
Proof of service of notice of date of hearing on Respondent (Corporate Debtor) and IRP filed.
Heard arguments of learned Counsel for applicant.
It is represented by learned counsel for applicant that no appeal is filed against the order dated 14.09.2017
passed in CP (IB) no. 113/2017.
This application is filed under rule 154 and 155 r/w Rule 11 of NCLT, Rules, 2016 for correction of some
mistakes in the admission order dated 14.09.2017.
It appears that the word "Applicant" has been used in para 12, 13 and 17 of the order instead of "J M
Financial Institutional Securities Ltd.". The relevant sentences where the word applicant has been used in
para 12, 13 and 17 as pointed out in page 4 and 5 of this application, it based on the pleadings filed by the
Corporate Debtor in paragraphs 3H, 31, 3K, 3L and 3K respectively.
It is noticed that the name of applicant company is "J M Financial Asset Reconstruction Company Ltd"
whereas the company referred to in the reply of corporate debtor in paragraphs 3H, 31, 3K, 3L and 3K is
"J M Financial Institutional Securities Ltd."
1541
Since there is some similarity in the names of the companies by inadvertence in the order dated
14.09.2017 the word "applicant" has been used in paragraphs 12, 13 and 17 of the order as narrated in
pages 4 and 5 of this application, instead of "J M Financial Institutional Securities Ltd".
Hence, the Application as prayed for is allowed. The word "applicant" in 9th line and 11th line of Para 12
and the word "applicant" in line 4 of para 13, 10th line of para 17 and the word "JM Financial Asset
Reconstruction Company Ltd" in line 20 and 21 of para 12 shall be replaced by "J M Financial
Institutional Securities Ltd".
Application is disposed of accordingly.
1542

AHMEDABAD BENCH
C.P. (I.B.) No. 128/7/NCLT/AHM/2017

Vs.
Respondent: Varia Aluminium Pvt. Ltd.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Animesh Bisht, Mr. Abhishek Mukherjee & Mr. Sahil Shah,
Learned Advocate
ORDER
1. Bank of Baroda, through its Chief Manager, filed this Application under Section 7 of the
Bankruptcy (Application to Adjudicating Authority) Rules, 2016, ("IB Rules" for short) against Varia
Aluminium Pvt.Ltd., with a request to initiate Corporate Insolvency Resolution Process treating it as
`Corporate Debtor'.
2. Bank of Baroda ]"BOB"] gave a General Power of Attorney to Mr. Mridul Misra, Chief Manager
of BOB on 21st August, 2017 authorising Mr. Mridul Misra, Chief Manager to appear and represent the
Bank in Courts of Law, Suits, arbitration or other proceedings relating to the BOB and sign pleadings,
applications etc. Further, BOB by its Circular Resolution dated 14th July, 2017 authorised all Chief
Managers of the BOB to file Applications, proceedings before the National Company Law Tribunal and
the National Company Law Appellate Tribunal and to sign the papers, petition etc.
3. BOB sanctioned the following facilities to the Corporate Debtor, vide Sanction Letters dated 2nd
January, 2012 read with Sanction Letter dated 3rd July, 2043;
(a) Rupee term loan facility to the tune of Rs.50,00,00,000 (Rupees Fifty Crores Only);and
1543
(b) Cash Credit facility of Rs.60,00,00,000 (Rupees Sixty Crore Only);
(i) Rupee Term Loan of Rs. 45,21,00,000 (Rupees Forty Five Crores Twenty One Lakhs Only)
("Term Loan"), as mentioned in Schedule II of the Facility Agreement;
(ii) Working Capital Term Loan of Rs. 22,56,00,000 (Rupees Twenty Two Crores Fifty Six Lakhs
Only) ("WCTL Facility") as set out in Schedule II of the Facility Agreement;
(iii) Funded Interest Term Loan of Rs.20,15,00,000 (Rupees Twenty Crores Fifteen lakhs Only)
("FITL Facility"), as set out in Schedule II of the Facility Agreement;
(iv) Cash Credit Facility of Rs. 40,00,00,000 (Rupees Forty Crores), having following sub-limits;
a) Letter of Credit limit of up to Rs.20,00,00,000 (Rupees Twenty Crores Only);and
b) Letter of Credit for Buyer's Credit of upto Rs. 20,00,00,000 (Rupees Twenty Crores Only);
(collectively referred to as "Cash Credit Facility").
The total debt granted to the Corporate Debtor under the Facilities is Rs. 127,92,00,000 (Rupees One
Hundred Twenty Seven Crore Ninety Two Lakhs Only).
3.1 The dates of disbursements are as follows;
S.No. Facility Disbursed amount (in First date of Comments

INR) Disbursement
1 Term Loan 45,15,67,308 March 31, This account was opened on
2015 March 27, 2012 and as per the
initial sanction of Rs.
50,00,00,000 the total
disbursement was Rs.
49,94,14,122, up to February 27,
2013. Between February, 2013
and March, 2015, the sanctioned
amount was mostly availed.
Pursuant to the restructuring on
March 31, 2015 the outstanding
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amount in this amount was to Rs.

45,15,67,308
2 WCTL 22,56,00,000 March 31, The facility was disbursed in as a
Facility 2015 single tranche.
3 FITL Facility 18,36,19,377 March 31, The facility was disbursed in
2015 multiple tranches since the date of
first disbursement. The interest
charged on the Term Loan and
the WCTL Facility accounts were
being served by way of
disbursement from the FITL
account as per the restructuring.
4 Cash Credit 37,94,00,000 July 22, 2015 This limit was made available for
Facility drawal by the Corporate Debtor.
3.2 According to the Petitioner, the amounts in default and dates of default under various Facilities
are as follows;
1) The amount in default under the Term Loan as on June 30, 2017 is Rs. 52,04,57,370.20 (Rupees
Fifty Two Crores Four Lakhs Fifty Seven Thousand Three Hundred and Seventy Only). The first date of
default in respect of this facility was July 01, 2016.
2) The amount in default under the WCTL Facility as on June 30, 2017 is Rs. 25,89,46,803.41
(Rupees Twenty Five Crores Eighty Nine Lakhs Forty Six Thousand Eight Hundred and Eighty Three
only).
3) The amount in default under the FITL Facility as on June 30, 2017 is Rs. 19,62,04,067.55
(Rupees Nineteen Crore Sixty Two Lakhs Four Thousand and Sixty Seven Only).
The first date of default in respect of this facility was May 01, 2016.
4) The amount in default under the Cash Credit Facility as on June 30, 2017 is Rs. 46,23,49,474.06
(Rupees Forty Six Crore Twenty Three Lakhs Forty Nine Thousand Four Hundred Seventy Four Only).
The first date of default in respect of this facility was April 01, 2016.
The total amount in default as on June 30, 2017 is Rs. 143,79,57,715.22 (Rupees One Hundred Forty
Three Crore Seventy Nine Lakhs Fifty Seven Thousand Seven Hundred and Fifteen Only).
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The account was classified as NPA on June 30, 2016, w.e.f. March 30, 2015. Vide notice dated October
06, 2016, the Corporate Debtor was asked to pay the outstanding amount of Rs. 130.64,19,734.24 (as on
October 01, 2016) within 60 days of the notice therefrom, however, the Corporate Debtor failed to make
such payment.
4. The Petitioner also gave the particulars of securities held by the Banker. Petitioner also filed
copies of Entries in Banker's Book in accordance with Bankers' Books Evidence Act. Petitioner filed the
following documents to prove the existence of financial debt, the amount of default, and dates of default;
1) Annual Report of the Corporate Debtor for the year 2015-2016;
2) Letter of acknowledgment of debt amounting to Rs. 72,83,72,908 (Rupees Seventy Two Crore
Eighty Three Lakhs Seventy Two Thousand Nine Hundred and Eight Only), dated July 23, 2013, by the
Corporate Debtor;
3) Letter of acknowledgment of debt amounting to 109,72,54,134.35 (Rupees One Hundred and

Four Crores Seventy Two lakhs Fifty Four Thousand One Hundred and
Thirty Four Only) dated March 30, 2015, by the Corporate Debtor;
4) Notice under section 13(2) of the SARFAESI Act dated October 06, 2016, issued by the
Financial Creditor to the Corporate Debtor;
5) Letter dated November 18, 2016, issued by the Corporate Debtor, acknowledging the debt owed
to the Financial Creditor; and
6) Letter dated November 25, 2016, issued by the Financial Creditor to the Corporate Debtor.
5. BOB issued a Notice under sub-section (2) of Section 13 of the SARFAESI Act on 6.10.2016
recalling the entire outstanding loan amount under various facilities. The copy of the said Notice is filed
as Annexure 21' along with the Application.
6. Petitioner proposed the name of Mr. Sanjay Gupta as Ìnterim Resolution Professional' and filed
the Written Communication given by Mr. Sanjay Gupta.
7. Varia Aluminium Private Limited is a Company registered under the Companies Act. The
Authorised Share Capital of the Company is Rs.70,00,00,000. The Paid-up Share Capital of the Company
is Rs. 45,00,00,000.
8. It is the case of the Petitioner, inspite of restructuring sanction of credit facilities Corporate
Debtor failed to pay even the amount due towards interest on various Facilities and therefore following
the guidelines given by the Reserve Bank of India the account of the Corporate Debtor with the BOB was
1546
classified as `NPA' on 30th June, 2016 with effect from 30th March, 2015 and the Corporate Debtor was
informed of the same vide Notice dated 6th October, 2016.
9. According to the Petitioner BOB, there is a debt due and payable from the Corporate Debtor and
the Corporate Debtor has committed default in payment of such debt.
10. Petitioner served a copy of the Application on the Corporate Debtor. Corporate Debtor appeared
through their Counsel and filed Reply Affidavit. The first objection raised by the Corporate Debtor is the
amounts in default and dates of default mentioned in Clause 2 of Part-IV are incorrect and contrary to the
contract entered into by and between the Financial Creditor and Corporate Debtor.
11. According to the Corporate Debtor, as per the revised Sanctioned Letter dated 3.7.2013
Repayment Schedule began only from October 2013. Further, the Credit Facilities thereafter came to be
restructured and a sanction letter dated 30th March, 2013 was issued by the Financial Creditor. As per the
Sanction Letter dated 30th March, 2013 the debt was restricted and the revised Repayment Schedule
came to be issued by the Financial Creditor to the Corporate Debtor. As per the revised Repayment
Schedule, the Term Loan-I Repayment Schedule start from 30.11.2016 and end on 31.10.2024. The
Working Capital Term Loan was converted into Term Loan and there was a moratorium of 18 months on
it. The repayment of monthly instalments start from 30.11.2016 and end on 31.10.2024. According to the
Corporate Debtor, even in respect of Funded Interest Term Loan it was restructured and the Repayment
Schedule start from 30.11.2016 with a moratorium of 24 months and end on 31.10.2022. Moreover, it is
the case of the Corporate Debtor that it has furnished all kinds of securities and guarantees to clear the
restructured debt; the Corporate Debtor is an ongoing concern having assets of Rs. 105 Crores and
Revenues of Rs. 26 Crores; and there are 120 direct employees in the Company. It is also stated by the
Corporate Debtor that the Financial Creditor classified the account of the Corporate Debtor as `NPA' on
30th June, 2016 which is against the terms and conditions mentioned in the Sanction Letter dated 30th
March, 2015.
12. The Corporate Debtor pleaded that it brought an investor and tried to meet the General Manager
of the Financial Creditor but he was not allowed to meet the General Manager of the Financial Creditor
on 21.9.2017. It is stated that the Corporate Debtor faced complete non-cooperation from the Financial
Creditor. The Financial Creditor even did not want to discuss and meet the Investor.
13. During the course of arguments, learned Senior Counsel for the Respondent contended that the
Petition is not filed by the Authorised Person. He further contended that General Power of Attorney
["GPA"] is not a valid authorisation for the Chief Manager to file this Petition. In the case apart from the
GPA dated 21st August, 2017 there is a Circular Resolution of the Board of BOB dated 14th July, 2017
1547
which clearly authorised all Chief Managers of the Bank to sign and initiate proceedings before the
National Company Law Tribunal. Therefore, in this case, it cannot be said there is no authorisation to the
Chief Manager to file this Petition. The objection raised by the Financial Creditor on this count is not
sustainable.
14. The main objection raised is that no debt is due and payable to the Financial Creditor in view of
the restructuring of the debt and the Revised Sanction Letter dated 30th March, 2015. It is not in dispute
that there is a debt between the Financial Creditor and the Corporate Debtor. There is no dispute about
the fact that the debt is a 'financial debt'. The whole controversy, in this case, is whether there is any
default in payment of the financial debt as contemplated in Section 3(12) of the Code.
Section 3(12) of the Code reads as follows;
"3. In this Code, unless the context otherwise requires,_
(1) to (11)
(12) "default means non-payment of debt when whole or any part or instalment of the
corporate debtor, as the case may be."
15. Therefore, in order to constitute 'default' within the meaning of Section 3(12) of the Code, the
debt must be due and payable.
16. The contention of the "Corporate Debtor is that in view of the restructuring of the debt and in
view of the Revised Sanction Letter dated 30th March, 2015 none of the facilities granted to the
Corporate Debtor by the Financial Creditor is due and payable and therefore there is no default
committed by the Corporate Debtor.
17. On this aspect, learned Senior Counsel appearing for the Respondent relied upon a decision of
the Hon'ble National Company Law Appellate Tribunal in Company Appeal (AT) (Insolvency) No. 5 of
2017 in the matter of M/s. Starlog Enterprises Limited Vs. ICICI Bank Limited. In that Judgment, the
Hon'ble Appellate Tribunal held, "no notice was issued by the 'adjudicating authority' to the corporate
debtor, before admitting the application filed under Section 9 of the .186B Code." It was a case where
none appeared for the Corporate Debtor and an ex parte order was passed by the Hon'ble NCLT, Bombay
Bench.
17.1 In the case on hand, the Corporate Debtor represents its case through a learned Senior Counsel
and filed its objections. Therefore, the question of violation of principles of natural justice did not arise in
this case.
1548
17.2 In that case, Financial Creditor issued a notice to the Corporate Debtor on 6th February, 2017
calling upon the Corporate Debtor to pay Rs. 10,02,28,271.60 ps. In that case, Financial Creditor in the
Petition filed before the Adjudicating Authority inflated the default amount as Rs. 29,81,02,395.62 ps. In
that case, the amount reflected Principal Unmatured also. In that case, the Financial Creditor by its own
admission not recalled the entire loan amount.
17.3 In the case on hand, no doubt, there is a restructuring of debt and a Revised Sanction Letter dated
30th March,2016 was issued by the Financial Creditor to the Corporate Debtor.
17.4 As per the Sanction Letter dated 30th March, 2015, the Term Loan-I Repayment Schedule starts
from 30.11.2016 and end on 31.10.2024;
17.5 The Working Capital Term Loan (WCTL) moratorium is 18 months, the repayment of
instalments starts from 30.11.2016 and end on 31.10.2024;
17.6 The Funded Interest Term Loan moratorium is 24 months; the monthly instalments start from
30.11.2016 and end on 31.10.2022.
18. First of all in this case, the outstanding amount claimed as on 1St October, 2016 in the Petition is
Rs. 130,64,19,734.24 ps. In the Notice dated 6.10.2016 also, the amount claimed is the same. In the
Application, the total amount of default as on 30th June, 2017 is mentioned as Rs. 143,79,57,750.22 ps.
Therefore, it cannot be said that there is any inflation of the amount from the amount claimed in the
Notice and from the amount claimed in the Petition as was the case in the decision relied upon by the
learned Counsel for the Corporate Debtor.
19. In the decision relied upon by the learned Counsel for the Respondent, the un-matured principal
amount was included in the default amount. No doubt, in the case on hand also, there was a moratorium
on repayment of Term Loan-I; Working Capital Term Loan; and Funded Interest Term Loan. But, the
Funded Interest Term Loan's instalments started from 30.11.2016.
20. The materials placed on record by the Corporate Debtor show that the Corporate Debtor
committed default even in payment of interest and in respect of it the Financial Creditor paid the
instalment amounts from the Funded Interest Term Loan even beyond 30.11.2016 and therefore the
Corporate Debtor has committed default in terms of the Sanction Letter dated 30th March, 2015, and
therefore the Financial Creditor issued notice under Section 13(2) of SARFAESI Act on 6.10.2016
recalling the entire loan amount.
21. As per the terms of the Sanction Letter, the Financial Creditor is entitled to recall the entire loan
amount in case of default. In the decision relied upon by the learned Counsel for the Corporate Debtor,
1549
admittedly the Financial Creditor did not recall the loan amount. But in the case on hand, the Financial
Creditor recalled the entire loan amount.
22. Coming to treating the account of the Corporate Debtor as `NPA', no doubt, the account of the
Corporate Debtor was treated as `NPA' from 30.10.2016 but with effect from 30th March, 2015.
According to the learned Counsel for the Respondent it is against the terms of the contract. Learned
Counsel appearing for the Financial Creditor brought to the notice of this Adjudicating Authority the
clauses in Master Circular issued by the Reserve Bank of India declaring the norms on asset
classification, provision pertaining to advances of norms on income recognition. The Asset Classification
Norms
"17.2.2 reads as follows; "17.2.2 The non-performing assets, upon restructuring, would
continue to have the same asset classification as prior to restructuring and slip into
further lower asset classification categories as per extant asset classification norms with
reference to the pre-structuring repayment schedule."
23. In view of the same, in case of a default even in case of restructuring of debts, the account will be
treated as `NPA' with reference to the Pre-structuring Repayment Schedule. Therefore, what has been
done, by the Banker Financial Creditor, is in accordance with the Reserve Bank of India Circular.
Therefore, there is no merit in the contention of the learned Senior Counsel appearing for the Respondent,
that Financial Creditor is not right in treating the account of the Corporate Debtor as `NPA' with effect
from 31.3.2015. In view of the above discussion, it is held that the Corporate Debtor has committed
default in repayment of financial debt due and payable to the Financial Creditor.
24. It is settled law that in a Petition under Section 7 of the Code, this Adjudicating Authority has to
see whether there is existence of financial debt and a default has been committed in payment of financial
debt. On both the aspects, there is sufficient material on record. The finding is against the Corporate
Debtor.
25. Moreover, this Petition filed by the Financial Creditor is complete in all respects. Therefore,
there are no grounds to reject this Petition.
27. This Adjudicating Authority hereby appoint Shri Sanjay Gupta, as 'Interim Resolution
Professional" having address at E-86, Second Floor, Lajpat Nagar-I, New Delhi-110024, and having
Registration No. IBBI/IPA-001/IP-P00117/2017-18/10252 under Section 13 (1) (c) of the Code.
1550
28. The Interim Insolvency Resolution Professional is hereby directed to cause public announcement
of the initiation of 'Corporate Insolvency Resolution Process' and call for submission of claims under
prohibiting the following as referred to in Section 14 of the Code.
Corporate Insolvency Resolution Process subject to the Proviso under sub-section (4) of Section 14.
31. Communicate a copy of this order to the Petitioner Financial Creditor, and to the Respondent
1551
AHMEDABAD BENCH
C.P. (I.B.) No. 116/7/NCLT/AHM/2017
Applicant: Allahabad Bank

Vs.
Respondent: Gujarat Foils Ltd.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Pranav Desai, Learned Advocate
For Respondents/Defendant: Mr. Shriraj Khambete, Learned Advocate
ORDER
1. Allahabad Bank, through its Authorised Signatory filed this Application under Section 7 of the
Bankruptcy (Application to Adjudicating Authority) Rules, 2016, ("IB Rules" for short) against M/ s.
Gujarat Foils Limited, with a request to initiate Corporate Insolvency Resolution Process treating it as
'Corporate Debtor'.
2. It is the case of the Financial Creditor that Gujarat Foils Limited ["the Corporate Debtor"] was
sanctioned loan of amount of Rs. 55,00,00,000. Financial Creditor has furnished dates of disbursement of
various amounts in Column 2 of Form-1. In proof of the debt, Financial Creditor filed the following
documents;
(a) Sanction letter dated 26.5.2011;
(b) Modification of sanction letter dated 30th July 2017;
(c) Sanction letters dated 28.9.2012; 6.11.2012; 16.4.2014; and 19.5.2015;
(d) Registered extension of mortgage dated 8.7.2013 for credit facilities of Rs. 175 crores;
(e) Registered extension of mortgage dated 18.5.2012 for credit facilities of Rs. 135 crores;
(f) Demand Promissory Note of Rs. 12 crores dated 9.10.2012;
1552
(g) Letter of continuing security dated 9.12.2012;
(h) Letter of hypothecation dated 9.10.2012;
(i) Demand Promissory Note for Rs. 14 Crores dated 11.12.2012;
(j) Letter of continuing security dated 11.12.2012;
(k) Undertaking dated 11.12.2012;
(l) Letter of hypothecation dated 11.12.2012 for Rs.14 crores;
(m) Demand Promissory Note for Rs. 175 crores dated 25.3.2013;
(n) 2nd Supplemental Hypothecation Agreement dated 25.3.2013;
(o) 2nd Supplemental Deed of Hypothecation dated 25.3.2013;
(p) Letter of hypothecation, dated 4.6.2014;
(q) Demand Promissory Note for Rs. 5 Crores dated 4.6.2014;
(r) Letter of continuing security dated 4.6.2014;
(s) 3rd Supplemental Working Capital Consortium Agreement dated 2.3.2015;
(t) 3rd Supplemental Interse Agreement dated 2.3.2015;
(u) Revival Letter dated 2.3.2015;
(v) Board Resolutions of the Company dated 4.2.2015; 14.8.2012; 12.2.2014; and 28.3.2014;
(w) Letters of Guarantee executed by Mr. Abhay N. Lodha dated 21.3.2013; 2.4.2013; and 2.3.2015;
(x) Certified account statement of the company;
(y) Certificate under Section 2-a of the Banker's Book Evidence Act, 1891;
(z) Notice under Section 13(2) of the SARFAESI Act;
(aa) Demand Notice dated 24.7.2017 demanding outstanding dues as on 24.7.2017 of Rs.
61,67,37,712/- inclusive of interest.
3. It is the case of the Financial Creditor that Corporate Debtor has committed default in payment of
the debt. Financial Creditor proposed the name of Interim Resolution Professional and filed his Written
Communication. Financial Creditor served a copy of the Application on the Corporate Debtor. The
Corporate Debtor filed its objections.
4. The following are the objections raised by the Corporate Debtor;
1553
(a) Lack of authority to file the petition;
(b) Non-filing of Working Computation separately and showing date of default as 30th September,
2016, charging penal interest. Unilateral transfer of the LC Limit to CC Limit;
(c) Not adjusting the Fixed Deposit of the Corporate Debtor lying with Financial Creditor till
January, 2017 instead of 28th February, 2016;
(d) Loan documents are hit by Gujarat Stamp Act;
(e) Financial Creditor alone filed this petition ignoring the understanding reached in the JLP meeting
of all creditors.
5. Petitioner filed Additional Affidavit stating that General Power of Attorney is given to the
Authorised Person by the Financial Creditor and further produced authority letter issued by the Assistant
General Manager, Shri S.K. Panigrahi, dated 30th August, 2017 authorising Mr. Kalu Ram Meena, Chief
Manager to file this petition. Along with the additional affidavit, petitioner also filed Working for
Computation of the amount.
6. A perusal of the additional affidavit filed by Financial Creditor, Power of Attorney dated 8th
October, 1996; Power of Attorney dated 31st January, 2014; and the Authority Letter dated 30th August,
2017 clearly indicate that Mr. Kalu Ram Meena is authorised to file this petition on behalf of Financial
Creditor, Allahabad Bank.
7. The contention of the learned counsel appearing for the Respondent is that the General Power of
Attorney holder cannot file this petition. In support of his contention, he relied upon the decision of the
Hon'ble National Company Law Appellate Tribunal in Company Appeal (AT) (Insol.) No. 30 of 2017 in
the matter between Palogix Infrastructure Private Limited Vs. ICICI Bank Limited. The findings in Paras
No. 33 and 36 are relevant for the purpose of taking a decision in this matter;
Para No. 33 reads as follows;
"33. Therefore, we hold that a 'Power of Attorney Holder' is not competent to file
an application on behalf of a 'Financial Creditor' or 'Operational Creditor' or
'Corporate Applicant'.
Para No. 36 reads as follows;
"36. In so far as, the present case is concerned, the `Financial Creditor' Bank
has pleaded that by Board's Resolutions dated 30th May, 2002 and 30th October,
2009, the Bank authorised its officers to do needful in the legal proceedings by
and against the Bank. If general authorisation is made by any 'Financial
1554
Creditor' or Òperational Creditor' or 'Corporate Applicant' in favour of its

officers to do needful in legal proceedings by and against the 'Financial
Creditor'/ 'Operational Creditor'/'Corporate Applicant', mere use of word 'Power
of Attorney' while delegating such power will not take away the authority of such
officer and for all purposes it is to be treated as an àuthorization' by the
'Financial Creditor'/ 'Operational Creditor'/'Corporate Applicant' in favour of its
officer, which can be delegated even by designation. In such case, officer
delegated with power' can claim to be the 'Authorised Representative' for the
purpose of filing any application under section 7 or Section 9 or Section 10 of
Ì&B Code'."
A reading of Para 36 goes to show that a general authorisation made by 'Financial Creditor' or
'Operational Creditor' or 'Corporate Applicant' in favour of its officers, to do needful in legal proceedings
by and against the 'Financial Creditor'/ 'Operational Creditor'/ 'Corporate Applicant', is sufficient. It is
further stated in Para 36 that mere use of word 'Power of Attorney' by delegating such power will not take
away the authority of such officer and for all purposes it is to be treated as an 'authorization' by the
'Financial Creditor'/'Operational Creditor'/ 'Corporate Applicant' in favour of its officer, which can be
delegated even by designation. It is further stated in Para 36 of the Judgment, in case such officer
delegated with power can claim to be the 'Authorised Representative' for the purpose of filing any
application under section 7 or Section 9 or Section 10 of I&B Code.
7.1 In that Judgment in Para No. 38, it is further held that if an officer of a Bank such as Senior
Manager who has been authorised to grant loan, for recovery of loan can also initiate 'Corporate
Insolvency Resolution Process'.
8. Financial Creditor also filed the detailed Working for Computation along with the Additional
Affidavit. Therefore, the second objection raised by the Corporate Debtor is not tenable.
9. The delayed adjustment of F.D. amount of Corporate Debtor to the outstanding loan amount is
not a valid defence available to Corporate Debtor.
10. The objection of the Corporate Debtor that the loan documents are not properly stamped is not an
issue to be gone into in this petition at the admission stage. More over, what is pleaded is sanction letter is
not stamped as per the provisions of the Gujarat Stamp Act. Respondent did not specify what Section of
Gujarat Stamp Act, 1958 require payment of stamp duty on sanction letters.
1555
10.1 Generally, Sanction Letters will not bear any stamp. It is only the Loan Agreements,
Hypothecation Agreements and other loan documents will bear the stamp duty as required by the Stamp
Act. Therefore, the objection raised by the Corporate Debtor is not tenable.
11. Coming to the fourth objection, the material on record show that the JLF decided to go for
forensic audit and initiate proceedings under the SARFAESI Act individually by issuing notices under
Section 13(4) of the SARFAESI Act. Even if there is an understanding amongst the JLF that all lenders to
initiate proceedings under the SARFAESI Act it will not bar any of the Financial Creditors who are part
of JLF to initiate proceedings under Section 7 of the Insolvency Code for triggering Corporate Insolvency
Resolution Process. On this aspect, there is a decision of the Hon'ble National Company Law Appellate
Tribunal, New Delhi, reported in 2017 SCC Online NCLAT 225, in the matter Asian Natural Resources
(India) Limited Vs. IDBI Bank Limited. In the said Judgment, it is clearly held by the Hon'ble Appellate
Tribunal, "Inter-se Agreement between different banks is not binding in nature, the `Corporate Debtors'
not being signatories cannot derive advantage of such Inter-se Agreement." It is further held in that
Judgment, "financial creditors" are having right to file application under Section 7 of the I&B Code,
individually or jointly on behalf of other 'financial creditors' as quoted below." It is also held that "Inter-se
Agreement between the 'financial creditors' cannot override the provisions of the IB Code nor can take
away the right of the Financial Institution to file an application under Section 7 of the Code". Therefore,
the above objection is not tenable.
12. Learned counsel for the Respondent relied upon the decision reported in Indian Law Reports
(1991) I Delhi, at Page 303, in the matter between M/s. Nanak Builders and Investors Pvt. Ltd., Vs. Sh.
Vinod Kumar Alag. The said decision is not applicable to the facts on hand as the said decision deals with
only the case relating to specific performance of the contract.
13. The Hon'ble Supreme Court, in the Judgment delivered in the matter between M/s. Innoventive
Industries Ltd. Vs. ICICI Bank & Anr., in Civil Appeal Nos. 8337-8338 of 2017, in Para No. 30 has
clearly held as follows;
"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
that the debt is disputed so long as the debt is "due" i.e. payable unless
1556

and not otherwise."
In the case on hand, the documents produced by the Financial Creditor clearly establish the 'debt'. Section
13 (2) Notice issued by the Financial Creditor clearly indicates that entire debt was recalled. There is a
default on the part of the Corporate Debtor in payment of the 'financial debt'.
14. A perusal of the Application goes to show that it is complete in all respects. The material on
record clearly establish that the 'financial debt' is due from the Corporate Debtor to the Financial Creditor.
15. In view of the above said findings and discussion, this Petition deserves to be admitted and it is
accordingly admitted under Section 7(5) of the Code.
16. This Adjudicating Authority hereby appoint Shri Alok Kailash Saksena, as 'Interim Resolution
Professional" having address at C/o. Desai Saksena 86 Associates, Chartered Accountant, First Floor,
Laxmi Building, SIR P.M. Road, Fort, Mumbai-400001, and having Registration No. IBBI/ IPA-001 / IP-
P00056 /2017-18/ 10134 under Section 13 (1) (c) of the Code.
other authority;
1557
(i) However, there shall not be any termination, suspension or interruption in respect of supply of
essential goods or services to Corporate Debtor.
1558

AHMEDABAD BENCH
C.P. (I.B.) No. 164/7/NCLT/AHM/2017

Vs.
Respondent: Sai Infosystem (India) Ltd.
Judges/Coram:
Hon'ble Sh. Bikki Raveendra Babu,& Ms. Manorma Kumari, Member (J)
Counsels:
ORDER
Hon'ble Sh. Bikki Raveendra Babu, & Ms. Manorma Kumari, Member (J)
1. Allahabad Bank, through Shri Laxmichand Batra, Assistant General Manager filed this
Rules" for short) against M/s. Sai Infosystem (India) Limited, with a request to initiate Corporate
Insolvency Resolution Process treating it as 'Corporate Debtor'.
1.1 The Chief Manager of the Applicant Bank has by letter dated 25.8.2017 authorised the Assistant
General Manager, SP Nagar Branch to refer the case to NCLT under IBC on immediate basis.
2. Respondent Corporate Debtor is a Public Limited Company having its Registered Office at
Ahmedabad. he Authorised Capital of the Respondent Company is Rs. 32,00,00,000/-. The Paid-up Share
Capital of the Respondent Company is Rs. 9,42,93,580/ -. The main object and other objects for which
the Respondent Company was incorporated are as set out in the Memorandum and Articles of Association
filed with the Registrar of Companies, Gujarat.
3. It is the case of the Applicant that the Respondent was sanctioned a Fresh Term Loan of Rs. 50.00
Crores (out of Total TL requirement of Rs. 160.00 Crores) vide sanction letter dated 18/19.4.2011 to part
finance the Internet Data Centre (IDC) project in association with BSNL for four locations, namely,
Bangalore, Hyderabad, Ranchi and Ernakulam at a total project cost of Rs. 240.00 under the consortium
1559
lead by State Bank of India. The Applicant Bank also issued a Sanction Letter dated 18.9.2012 in favour
of the Respondent at 'Annexure A/8 with terms and conditions. The Applicant also issued a Sanction
Letter dated 20.4.2013 vide Annexure A/ 10 to the Respondent with terms and conditions. The
Respondent executed various documents in favour of the Applicant Bank. The Applicant granted fund-
based facilities and non-fund based facilities as per Annexure A5 (collectively) which were accepted by
the Respondent vide its letter dated 20.5.2011. The Respondent Company had executed a Demand
Promissory Note dated 24.5.2011 for Rs. 60.00 Crores and General Letter of Hypothecation dated
24.5.2011 for Rs. 60 Crores in favour of the Applicant Bank. Thereafter the Respondent approached the
Applicant Bank in the year 2012 and proposed to review the account and requested for renewal of the
Credit Facilities, i.e. Cash Credit at Rs. 25 Crores and Term Loan at Rs. 31.76 Crore on the existing terms
and conditions. The Applicant renewed the same and executed various security documents. The
Respondent again approached the Applicant in the year 2013 and review and renewal of the credit
facilities, i.e. Cash Credit limit at existing level at Rs. 25 Crores and Term Loan outstanding of Rs. 26.89
crores under the consortium lead by State Bank of India, sanction of Cash Credit (ad-hoc limit) of Rs.
2.50 Crores (10% of existing Cash Credit Limit) for a period of 90 days @ BR plus 3.50% p.a. for
meeting the working capital gap of the Company under the Consortium led by the State Bank of India;
Sanction of fresh One Time Performance Bank Guarantee Limit of Rs. 69.89 Crores for a period of 6
years for executing the order issued by the Home Department, Govt. of Maharashtra for execution of
certain projects. The Respondent Company had accepted all the terms and conditions of the sanction letter
No. AB/ SPN/ADV/ SIS/2013-14/081 dated 20.4 2013.
3.1 The Respondent Company had executed Demand Promissory Notes dated 12.6.2013 for Rs.
124.28 Crores, Undertaking ADV-24 dated 12.6.2013 for Stocks and Book Debts in Cash Credit Facility
account; General Letter of Hypothecation dated 12.6.2013 for Rs.. 124.63 Crores. Disbursements on
account of various Facilities granted by the Applicant to the Respondent Corporate Debtor were made
through Funds Transfer under RTGS to the account of the Respondent Corporate Debtor. The copy of the
Certificate as per Banker's Book of Evidence Act, 1891 dated 24.10.2017 shows the total outstanding
amount due and payable as Rs. 84,41,49,406.00.
3.2 It is the case of the Applicant that the Respondent Company defaulted in repayment of term
loans/financial facilities and the total irregularities in the account amounted to Rs. 51.63 Crores and as the
Chief Promoter/Director of the Respondent Company fled away from the country the Applicant had filed
First Information Report against the Respondent Company.
3.3 The Applicant also filed Original Application, bearing OA No. 408 of 2014 before the Hon'ble
Debts Recovery Tribunal and the same is pending.
1560
3.4 According to the Applicant various financial assistances aggregating to Rs. 132.39 crores were
given to the Respondent, out of which a sum of Rs. 60.00 crores was secured by the Guarantee of the
Respondent Company.
3.5 Inspite of repeated reminders, the Respondent Company did not make any payment to the
Applicant Bank. The Applicant Bank has declared the account of the Respondent Company as `NPA' on
21.10.2013. The Applicant issued a Demand Notice under the SARFAESI Act, 2002 dated 12.11.2013
calling upon the Respondent Company to pay an amount of Rs. 52,52,00,074.24 together with further
interest thereon with effect from 13.11.2013. However the Respondent failed and neglected to make
payment. Thereafter, the Applicant Bank issued notice dated 8.9.2017 claiming outstanding amount of Rs.
83,28,73,387.00 inclusive of interest. But the said notice was returned with remarks "Left". The Applicant
Bank has also issued a letter bearing Ref. No. HO/Rec/WD/ 1309 dated 1.10.2016 under which the
Respondent Company was declared as a Wilful Defaulter, which was acknowledged by Mr. Sunil S.
Kakkad, one of the Directors of the Respondent Company. It is thus the case of the Applicant that the
Respondent Company is liable to pay to the Applicant an unpaid debt of Rs. 84,41,49,406.00 together
with further interest thereon till date of realisation.
3.6 The Applicant has filed Total Due Certificate under the Bankers' Books Evidence Act; copy of
the Search Report dated 24.10.2017; Particulars of Security held; copy of ROC record confirming the
charges of Financial Creditor; Audited Balance sheet for the financial years 2010-11, 2011-12 and 2012-
13; and Ledger accounts of all loans and liabilities.
4. Petitioner proposed the name of Shri Parag Sheth, as Ìnterim Resolution Professional' and filed
his Written Communication.
5. This Application was, listed before this Adjudicating Authority for the first time on 15.11.2017.
Petitioner filed an Affidavit stating that copy of Application sent to the Corporate Debtor was returned
unserved as "left". This Adjudicating Authority directed the Petitioner to serve notice of date of hearing
on Respondent along with copy of application and order and also to inform the date of hearing by mail.
On the next date of hearing on 22.11.2017 the Petitioner filed the Track Report issued by Postal
Department which disclosed "addressee left". Petitioner also served the notice by email. Hence the service
of notice by email is treated as sufficient notice on the Respondent. This Authority directed the Registry
to issue notice to Respondent and accordingly Registry issued notice to Respondent.
6. Heard arguments of learned Counsel for the Petitioner. None appeared on behalf of the
Respondent.
1561
7. A perusal of the Application and its Annexures clearly show that the Application is complete in
all respects. A perusal of the the documents executed between the Applicant Bank and the Respondent
Company clinchingly establish that Respondent committed default in repayment Financial Debt i.e.,
various Facilities granted to the Respondent by the Bank. Therefore, the Applicant is a Financial Creditor
and the amount due to the Applicant is a financial debt. The materials on record clearly establish that the
Respondent Company committed default in repayment of financial debt.
8. The Hon'ble National Company Law Appellate Tribunal, on 17th January, 2017, in Company
Bank & Anr, held that in an application filed by the Financial Creditor under Section 7 for initiation
Corporation Insolvency Resolution Process, the Adjudicating Authority is required to satisfy-
(b) Whether any disciplinary proceeding is against the Proposed Insolvency

admitted under Section 7 (5)(a) of the Code. This Adjudicating Authority hereby appoint Mr. Parag Sheth
as 'Interim Insolvency Resolution Professional' having Office at 404, Sachet-2, Opp: GLS University,
Maradia Plaza, C.G. Road, Ahmedabad-380006 and having Registration No. IBBI/IPA-002/IP-
N00142/2017-18/ 10381 under Section 13 (1) (c) of the Code.
Section 13(1)(b) read with Section 15 of the Code and Regulation 6 of Insolvency arid Bankruptcy Board
other authority;
1562
(b) any action to foreclose, recover or enforce any security interest created by the corporate debtor in
(c) the recovery of any property by an owner or lessor where such property is occupied by or in the
1563
AHMEDABAD BENCH
C.P. (I.B.) No. 138/7/NCLT/AHM/2017
Applicant: L & T Finance Ltd.

Vs.
Respondent: Logix Express Pvt. Ltd.
Judges/Coram:
Hon'ble Sh. Bikki Raveendra Babu,& Ms. Manorma Kumari, Member (J)
Counsels:
ORDER
Hon'ble Sh. Bikki Raveendra Babu, & Ms. Manorma Kumari, Member (J)
1. L&T Finance Limited, through Ms. Supriya Shetty, Manager, Legal, filed this Application under
Section 7 of the Insolvency and Bankruptcy Code, 2016 ["IB Code" for short] read with Rule 4 of the
Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016, ("TB Rules" for short)
against M/s. Logix Express Private Limited, with a request to initiate Corporate Insolvency Resolution
Process treating it as 'Corporate Debtor'.
2. The Deputy General Manager of the Petitioner Company authorised Ms. Supriya Shetty,
Manager, Legal, by way of Power of Attorney dated 25th February, 2015, executed in her favour to file
and institute civil suits at the appropriate court/ s and/ or initiate, institute and file any other legal
proceedings etc., before any court or legal, judicial and/or quasi judicial fora, including before the
Supreme Court of India.
3. The Respondent Corporate Debtor is a Private Limited Company having its Registered Office in
Ahmedabad, Gujarat. Its Authorised Capital is Rs. 1,00,000/ - and Paid-up Capital is Rs. 1,00,000/-.
4. It is the case of the Petitioner Financial Creditor that the Petitioner had granted a loan of Rs.
58,36,000 vide Sanction Letter dated 27th May, 2013 and the sanctioned loan amount was disbursed on
31st May, 2013 to the Respondent Corporate Debtor. It is the further case of the Financial Creditor that
1564
the Corporate Debtor had committed default in repayment of the loan amount and interest thereon. The
details of outstanding amount as on 16.8.2017 are as under;
Total Principal Outstanding as on Rs. 41,13,901.22

16.8.2017
Default/Penal Interest at the Rate of Rs. 41,51,447.99

36% p.a.
Total Amount payable Rs. 82,65,349.21
The Petitioner claims the total outstanding amount of Rs. 82,65,349.21 along with further interest at the
rate of 36% per annum till the date of payment. The loan amount was secured by the Deed of
Hypothecation dated' 24th May, 2013 executed by and between the parties whereby certain goods of the
Corporate Debtor are hypothecated in favour of the Financial Creditor. The loan amount was guaranteed
by a Guarantor, by name, Shri Ajay Dwarkadas Thakkar and a Deed of Guarantee was executed 27th
May, 2013 in favour of the Financial Creditor. The Loan Agreement dated 27.5.2013 was also executed
by and between the parties as per terms and conditions thereof.
5. The Petitioner had also referred the dispute before the Sole Arbitrator, which was numbered as
Arbitration Proceedings No. L&T/LOT-14/LOS/BU1/CVF/ARB/ 10723 of 2015. The learned Sole
Arbitrator passed the Award dated 19.9.2016 holding that the Respondents are liable to pay a sum of Rs.
41,13,901 inclusive of interest and other charges with further interest at 18% per annum on the said
amount to be computed from 25.11.2014 till the date of payment/ realization.
6. The Petitioner issued Notices dated 14.3.2014; 10.11.2014; 2.12.2014; and 2.1.2015; to the
Respondent calling upon them to make repayment of the due amount. Petitioner also got issued legal
notices dated 22nd June, 2015 and 26th July, 2017 on the Respondent to make repayment of the amounts
due and payable by them to the Financial Creditor.
7. The Petitioner has filed the following documents along with the Application;
(a) Copy of Deed of Hypothecation;
(b) Copy of the Arbitral Award;
(c) Copy of the Loan Agreement;
(d) Copy of the CIBIL Report;
1565
(e) Copy of the Sanction Letter;
(f) Copy of the Demand Promissory Note;
(g) Copy of the Guarantee Deed;
(h) Copies of Notices addressed by the Financial Creditor to the Corporate Debtor;
(i) Copies of Legal Demand Notices addressed on behalf of Financial Creditor through their
advocates to Corporate Debtor;
(j) Statement of Accounts as on 16th August, 2017.
8. The Petitioner proposed the name of Interim Resolution Professional and filed his Written
'Communication.
9. This Petition was listed for the first time on 25.10.2017 when the Petitioner was directed to serve
notice of date of hearing along with copy of order and file proof of service. On 3.11.2017 when the matter
was heard it was noticed that proof of service of notice was served on the Respondent and the Respondent
was directed to file their objection if any. When the matter was taken up for hearing on 15.11.2017, as the
Respondent did not file objection, the matter was again listed on 22.11.2017. Since the Respondent has
not filed objections, it is treated that the Respondent has no objections.
10. Heard arguments of learned Counsel for the Petitioner. None appeared on behalf of the
Respondent although notice of date of hearing was served on the Respondent. The material on record
clearly go to show that Respondent Company committed default in making payment of financial debt.
11. The Hon'ble Supreme Court, in the Judgment delivered in the matter between M/s. Innoventive
Industries Ltd. Vs. ICICI Bank & Anr., in Civil Appeal Nos. 8337-8338 of 2017, in Para No. 30 has
clearly held as follows;
"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 informati6n utility or other evidence produced by the
that the debt is disputed so long as the debt is "due" i.e. payable unless
and not otherwise."
1566
In the case on hand, the documents produced by the Financial Creditor clearly establish the 'debt'. The
Notices issued by the Financial Creditor and the Notices got issued by the Financial Creditor on the
Respondent Corporate Debtor clearly indicate that entire debt was recalled. There is a default on the part
of the Corporate Debtor in payment of the 'financial debt'.
12. A perusal of the Application goes to show that it is complete in all respects. The material on
record clearly establish that the 'financial debt' is due from the Corporate Debtor to the Financial Creditor.
13. In view of the above said findings and discussion, this Petition deserves to be admitted and it is
accordingly admitted under Section 7(5) of the Code.
14. This Adjudicating Authority hereby appoint Shri Dhiren Shantilal Shah, as 'Interim Resoltition
Professional" having address at B-102, Bhagirathi Niwas, Near Natraj Studio, Sir M.V. Road, Andheri-
East, Mumbai-400069, and having Registration No. IBBI/IPA-001/IP-P00220/2017-18/ 10419 under
Section 13 (1) (c) of the Code.
(a) the institution of suits r or continuation of pending suits or proceedings against the corporate
1567
corporate Debtor and to the Interim Insolvency Resolution Professional.
1568

AHMEDABAD BENCH
C.P. (I.B.) No. 135/7/NCLT/AHM/2017

Vs.
Respondent: Vimal Oil & Foods Ltd.
Judges/Coram:
Hon'ble Sh. Bikki Raveendra Babu & Smt. Manorama Kumari, Member (J)
Counsels:
ORDER
1. Bank of Baroda, through its Deputy General Manager of Grade/Scale-VI, filed this Application
under Section 7 of the Insolvency and Bankruptcy Code, 2016 ["IB Code" for short] read with Rule 4 of
the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016, ("IB Rules" for
short) against Vimal Oil. and Foods Limited with a request to initiate Corporate Insolvency Resolution
Process treating it as 'Corporate Debtor'.
2. Bank of Baroda ]"BOB"] gave a General Power of Attorney to Mr. S. Rengarajan, Deputy
General Manager of BOB dated 15th December, 2009 authorising the said Deputy General Managar to
appear and represent the Bank in Courts of Law, Suits, arbitration or other proceedings relating to the
BOB and sign pleadings, applications etc. Further, BOB by its Circular Resolution dated 14th November,
2017 authorised all the Executives of the BOB in the category of General Managers in Grade-VII/Deputy
General Managers in Grade-VI etc., to file Applications, proceedings before the National Company Law
Tribunal and the National Company Law Appellate Tribunal and to sign the papers, petition etc.
3. BOB sanctioned the following facilities to the Corporate Debtor under the Working Capital
Consortium Agreement dated 14th October, 2006 as set out in the First Schedule thereof;
(i) Cash Credit Facilities upto an overall limit of Rs. 8.5 crores having the following sub-limits:
1569
(a) WCDL/FCNR (B) Loan upto a limit of Rs.6.80 Crores;
(b) Export Packing Credit Facility of upto a limit of Rs. 3.80 crores; and FBP/FBD of upto a limit of
Rs. 1.25 crores.
(c) Import Letter of Credit Facilities of upto a limit of Rs. 15 Crores.
3.1. Thereafter, pursuant to execution of First Supplemental Working Capital Consortium Agreement
dated February 2, 2008, the above said facilities were renewed and enhanced in the following manner as
set out in detail in the Third Schedule of the Agreement;
(i) Limits under the Cash Credit Facility was enhanced to Rs. 15 Crores with the sub-limits as stated
in the Third Schedule.
(ii) Limits under the Letter of Credit Facilities was enhanced to Rs. 18.Crores.
The total debt granted to the corporate Debtor on renewal and enhancement of the above said facilities
under the First Supplemental Working Capital Consortium Agreement is Rs. 33,00,00,000.
3.2. Thereafter, on execution of Second Supplemental Working Capital Consortium Agreement dated
29th December, 2009 the above said facilities were further renewed and enhanced as detailed below as
per Third Schedule of the Agreement;
(i) Limits under the Cash Credit Facility was enhanced to Rs. 23 Crores with the sub-limits as stated
in the Third Schedule;
(ii) Limits under the Letter of Credit Facilities was enhanced to Rs. 24 Crores.
The total debt granted to the Corporate Debtor on further renewal and enhancement of the above said
facilities under the Second Supplemental Working Capital, Consortium Agreement is Rs. 47,00,00,000.
3.3. Thereafter, pursuant to execution of Third Supplemental Working Capital Consortium Agreement
dated 31st January, 2011 the above said facilities were further renewed and enhanced as detailed below as
per Third Schedule of the said Agreement;
(i) Limits under the Cash Credit Facility was enhanced to Rs. 27 Crores with certain sub-limits as
per the Third Schedule of the said Agreement;
1570
(ii) Letter of Credit Facilities upto an overall limit of Rs. 44.43 Crores along with a sub-limit in the
form of Buyer's Credit Facility upto a limit of Rs. 27 Crores;
(iii) Forward Cover limit upto Rs. 0.43 crores;
(iv) A Corporate Loan of Rs. 5.83 Crores;
(v) A Short Term Loan of Rs. 25 Crores.
The total debt granted to the Corporate Debtor under the Third Supplemental Working Capital
Consortium Agreement is Rs. 77,26,00,000.
3.4. Thereafter, pursuant to the Fifth Supplemental Working Capital Consortium Agreement dated
March 29, 2012 the Facilities were renewed and enhanced as detailed in Third Schedule of the said
Agreement as under;
(i) Limits under the Cash Credit Facility was enhanced to Rs. 38 Crores with sub-limits;
(ii) Letter of Credit Facilities was enhanced to an overall limit of Rs. 92 Crores; and
(iii) Limits under the Forward Cover Limit was enhanced up to Rs. 0.95 crores;
(iv) The amount under the Corporate Loan was enhanced to Rs. 2.91 crores.
The total debt granted to the Corporate Debtor under the Fifth Supplemental Working Capital Consortium
Agreement is Rs. 133,86,00,000.
3.5. Thereafter, pursuant to the Sixth Supplemental Working Capital Consortium Agreements dated
August 16, 2013, the Facilities were renewed and enhanced as detailed in Third Schedule of the said
Agreement as under;
(i) Limits under the Cash Credit Facility was enhanced to Rs. 46 Crores with certain sub-limits;
(ii) Letter of Credit Facilities was enhanced to an overall limit of Rs. 111.95 crores; and
(iii) Limits under the Forward Cover Limit was enhanced upto Rs. 0.95 crores.
1571
The total debt granted to the Corporate Debtor under the Sixth Supplemental Working Capital
3.6. Thereafter, pursuant to the Seventh Supplemental Working Capital Consortium Agreement dated
January 23, 2015, the Facilities were renewed and enhanced as detailed in Third Schedule of the said
Agreement as under;
(i) Limits under the Cash Credit Facility was enhanced to Rs. 50 Crores;
(ii) Limits under the Letter of Credit Facilities was enhanced to Rs. 123.00 crores.
The total debt granted to the Corporate Debtor under the Seventh Supplemental Working Capital
4. The details of disbursements made under the Cash Credit Facilities and issuance of Letter 'of
Credit to various parties to the Corporate Debtor are as follows as detailed in Annexure-3 to the Petition;
Details of Amount and Date of Disbursement under the Cash Credit Facilities
1. Cash Credit Facilities Rs. 50,00,00,000/- This limit was made available to
the Corporate Debtor as on
January 23, 2015.
Details of LCs that were issued and which develved along with outstanding amounts thereof
Gayatri 08491LCIS0005015 June 15, September 10,23,75,000 9,21,37,500

1. Trading Co. 2015 14, 2015
2. Gayatri 08491LCIS0004515 May 28, August 28, 9,35,44,500 7,92,62,265
Enterprise 2015 2015
3. Akshar 08491LCIS0004215 May 09, August 11, 7,47,85,200 9,80,783
Commodity 2015 2015
Total 17,23,80,548.00
1572
5. According to the Petitioner, as per the Computation of amount of default on part of the Corporate
Debtor the following are the amounts in default;
The total amount in default as on August 31, 2017 was Rs. 205,46,37,451.80.
5.1. The account was classified as NPA w.e.f. November 09, 2015. Vide notice dated March 01, 2016,
the Facilities provided to the Corporate Debtor were recalled and the Corporate Debtor was asked to pay
the outstanding amount of Rs. 171,99,73,549.86 (as on February 22, 2016) and vide another notice dated
May 7, 2016 the Corporate Debtor was asked to pay the outstanding amounts as on March 2016 within 60
days of the notice therefrom, however, the Corporate Debtor failed to make such payment.
6. The Petitioner also gave the particulars of securities held by the Banker; the Corporate
Guarantees given by various parties guaranteeing secured obligations of the Corporate Debtor; Demand
Promissory Notes by the Corporate Debtor; Letters of Undertaking; Letter of Pledge by the Corporate
Debtor etc. The Petitioner also provided copies of all the documents executed between the parties; Copies
of various Agreements and Sanction Letter viz., copies of Financial Contracts and documents as set out in
Part V of the Application; copies of the Report of the Central Repository of Information on Large Credits
and Report of TransUnion CIBIL; copies of entries in the bankers' book maintained by the BOB in
accordance with the Bankers' Books Evidence Act, 1891; copies of statements of accounts of the
Corporate Debtor maintained by the BOB; copies of other documents proving existence of 'financial debt'
such as Annual Report of the Corporate Debtor for the year 2015-2016; Letter of Acknowledgment of
Debt issued by the Corporate Debtor dated 19th June, 2013; copies of Revival Letters issued by the
Corporate Debtor under Section 18 of the Indian Limitation Act, 1963 in respect of the various facilities
granted by the Petitioner; and copies of financial statements of last three years of the Corporate Debtor.
7. The Petitioner proposed the name of Mr. Abhay N. Mamudhane as 'Interim Resolution
Professional' and filed the Written Communication given by Mr. Abhay N. Mamudhane.
8. Vimal Oil and Foods Limited is a Company registered under the Companies Act. The Authorised
Share Capital of the Company is Rs. 33,00,00,000. The Paid-up Share Capital of the Company is Rs.
30,02,00,000.
9. It is the case of the Petitioner, inspite of renewal and enhancement of various Facilities the
Corporate Debtor failed to pay the amount due towards interest on various Facilities and therefore the
1573
account of the Corporate Debtor with the BOI was classified as `NPA' on 9th November, 2015 and the
Corporate Debtor was informed of the same vide Notices dated 1st March, 2016 and 7th May, 2016.
10. According to the Petitioner BOB, there is a debt due and payable from the Corporate Debtor and
the Corporate Debtor has committed default in payment of such debt.
11. Petitioner served a copy of the Application on the Corporate Debtor. Corporate Debtor appeared
through their Counsel and filed -Objections. The first objection raised on behalf of the Corporate Debtor
is that though the Petitioner was directed to serve notice of next date of hearing to the Corporate Debtor
by order passed by this Adjudicating Authority on 23rd October, 2017 the Petitioner served such notice
on the Corporate Debtor only on 31.10.2017 and Corporate Debtor was required to file objections within
one week. It appears from the record that the Corporate Debtor filed their Objections on 7.11.2017, i.e.,
one week from the date of service of notice on the Corporate Debtor.
12. The second objection raised is the present Petition is filed by a power of attorney holder and such
power of attorney holder cannot file the Petition. In this case apart from the General Power of Attorney
dated 15th December, 2009, there is a Board Resolution dated 14th November, 2017 which clearly
authorised all the Executives of the Bank in the category of General Managers in Grade- VII/ Deputy
General Managers in Grade-VI etc., to file applications, petitions, lodge with petitions, representations in
the nature of original proceedings, appellate proceedings, writ petitions and/or proceedings of any other
kind including the proceedings before the National Company Law Tribunal/ s (NCLT) and National
Company Law Appellate Tribunal (NCLT) and other Forums. Such a Board Resolution was adopted with
reference to the Circular Resolution passed by the Board of the Bank on 14th July, 2017 wherein it was
resolved that the above said categories of Executives of the Bank were authorised to take all such actions
as set out in the said circular Resolution. In view of, the Power of Attorney coupled with Circular
Resolution dated 14th July, 2017, it cannot be said that the power of attorney holder cannot file the
present Petition. The objection raised by the Corporate Debtor on this count is not sustainable.
13. The main objection raised is that there is no default on the part of the Corporate Debtor to pay the
dues of the Financial Creditor. According, to the Corporate Debtor, the Financial Creditor was amongst
the other lenders from whom the Corporate Debtor got the Facilities; in the Joint Lenders Meeting it was
categorically agreed upon between the lenders and the Corporate Debtor that a new schedule for payment
of dues was agreed upon and according to which as of today there is no default on the part of the
Corporate Debtor in payment of the dues to the Financial Creditor. It is further stated in the objections
that the Corporate Debtor had taken the facility of Cash Credit and Letter of Credit from the Financial
1574
Creditor and upon agreement of new schedule for the repayment there has been no withdrawals under the
said Facilities. The Corporate Debtor annexed copies of the minutes of the meetings at Annexure R/2 and
R/3 to their objections. On perusal of the Minutes of the Meeting of 17th Joint Lenders Forum consisting
of Bank of India, Punjab National Bank, Bank of Baroda, IDBI, Syndicate Bank, Dena Bank held on 24th
August, 2017, in relation to recovery/ resolution plan in the account of the Corporate Debtor, the member
Banks agreed in principle and will give their consent to Bank of India for taking up NCLT route after
taking approval from the competent authorities; and all the lender Banks agreed to wait for one month for
routing of transaction to improve and compny to put up some concrete plan of recovery/ resolution
otherwise NCLT route will be explored. Therefore, the objection raised by the Corporate Debtor on this
count is not entertained.
14. Heard the learned counsel appearing for the Petitioner and the Respondent. It is not in dispute that
there is a debt between the Financial Creditor and the Corporate Debtor. There is no dispute about the fact
that the debt is a 'financial debt'. The whole controversy, in this case, is whether there is any default in
payment of the financial debt as contemplated in Section 3(12) of the Code.
15. Section 3(12) of the Code reads as follows;
"3. In this Code, unless the context otherwise requires,_
.(1) to (11)...............
(12) "default means non-payment of debt when whole or any part or instalment of the
corporate debtor, as the case may be."
16. Therefore, in order to constitute 'default' within the meaning of Section 3(12) of the Code, the
debt must be due and payable.
17. The contention of the Corporate Debtor is that in view of the restructuring of the debt none of the
facilities granted to the Corporate Debtor by the Financial Creditor is due and payable and therefore there
is no default committed by the Corporate Debtor.
18. As regards restructuring of debt, it is required to mention the clauses in Master Circular issued by
the Reserve Bank of India declaring the norms on asset classification, provision pertaining to advances of
norms on income recognition. The Asset Classification Norms 17.2.2 reads as follows;
1575
- "17.2.2 The non performing assets, upon restructuring, would continue to have the
same asset classification as prior to restructuring and slip into further lower asset
classification categories as per extant asset classification norms with reference to the
pre-structuring repayment schedule."
19. In view of the same, in case of a default even in case of restructuring of debts, the account will
be treated as `NPA' with reference to the Pre-structuring Repayment Schedule. Therefore, what has been
done, by the Banker Financial Creditor, is in accordance with the Reserve Bank of India Circular. In view
of the above discussion, it is held that the Corporate Debtor has committed default in repayment of
financial debt due and payable to the Financial Creditor.
20. In fact, in this case, there is no actual restructuring of debt. Moreover, in this case, the Corporate
Debtor vide acknowledgement dated 15.6.2013 even acknowledged the debt (page 1617). The Credit
Information Bureau of India Limited (CIBIL) also shows the status of the debt of Bank of Baroda in
respect of Cash Credit Facility as "Wilful Default" (page 1218). Similarly, a perusal of page 1349 of the
petition shows that CIBIL classified the Export Bill Discount Credit Facility granted by Bank of Baroda
as doubtful.
21. In view of the judgment of the Honourable the National Company Appellate Tribunal in
Innovative Industries Limited v. ICICI Bank 86 Another, permission of the Joint Lending Forum is not
necessary' for a Financial Creditor to initiate Corporate Insolvency Resolution Process. Further the
Financial Creditor issued a notice under Section 13(2) of the Securitisation and Reconstruction of
Financial. Assets and Enforcement of Security Interest Act, 2002 recalling the entire debt relating to
various banks including Bank of Baroda.
22. In the decision of the National Company Law Tribunal, Principal Bench, New Delhi, relied upon
by the learned counsel appearing for the respondent in Company Application No. (IB) 13/PB/2017 in the
matter of Jeevan Credit 85 Leasing Pvt. Ltd. and Ors., on facts, it is held that there was a collusion
between the Financial Creditor and the Corporate Debtor. In those facts, the said application was
dismissed. In that case, the certificates issued by the Auditors were not tallying with the accounts of the
company. The said decision is not applicable to the facts of this case.
23. Learned counsel for the respondent also relied upon a decision rendered by the National
Company Law Tribunal, Mumbai Bench, in International Road Dynamics South Asia Pvt. Ltd. and Ors
MCP 40/I&BP/ NCLT/MAH/2017). In that case, in paragraph 16, it is held by the Honourable Mumbai
1576
Bench of NCLT that unless the company is unable to pay or refused to pay, the process of insolvency
cannot be resorted to. But, in view of the judgment of NCALT in Innovative Industries Limited (supra),
the judgment of Mumbai Bench of NCLT cannot be made applicable in favour of the respondent
Corporate Debtor.
24. It is settled law that in a Petition under Section 7 of the Code, this Adjudicating Authority has to
see whether there is existence .of financial debt and a default has been committed in payment of financial
debt. On both the aspects, there is sufficient material on record. The finding is against the Corporate
Debtor.
25. The Financial Creditor has filed copy of Power of Attorney; copies showing details of dates of
disbursement and the amounts in respect of the Facilities; copies of various security documents creating/
recording various security interests; copies of certificate of charges with respect to the securities created;
copy of Valuation Report; copies of Financial Contracts and documents; copies of the Report of the
Central Repository of Information on Large Credits and Report of TransUnion CIBIL dated August 31,
2017 and September, 2017; copies of entries in the bankers' book maintained by the Petitioner Bank as
per the Banker's' Books Evidence Act, 1891; copies of Statement of Accounts; and copies of other
documents proving existence of Financial Debt.
26. The Petitioner Bank has proposed the name of an Interim Resolution Professional and filed his
Written Communication.
27. Moreover, this Petition filed by the Financial Creditor is complete in all respects. Therefore, there
are no grounds to reject this Petition.
29. This Adjudicating Authority hereby appoint Shri Abhay N. Manudhane, as 'Interim Resolution
Professional" having address at 201, Shubh Ashish, 129, Model Town, Four Bungalows, Andheri West,
Mumbai-400053, and having Registration No. IBBI/IPA-001/1P-P00054/2017-18/10128 under Section
13 (1) (c) of the Code.
1577
Section 13(1) (b) read with Section 15 of the Code and Regulation 6 of Insolvency and Bankruptcy Board
other authority;
(b) transferring, encumbering, alienating or disposing of by the corporate .debtor any of its assets or
(i) However, there shall not be termination, suspension or interruption in respect of supply of
essential goods or services to Corporate Debtor during Moratorium period under section 14(2) of Code.
33. Communicate a copy of this order to the Petitioner Financial Creditor, Respondent Corporate
Debtor and to the Interim Insolvency Resolution Professional.
1578

AHMEDABAD BENCH
C.P. (I.B.) No. 171/7/NCLT/AHM/2017
Applicant: Reliance Marine And Offshore Ltd.

Vs.
Respondent: IFCI Ltd.
Judges/Coram:
Counsels:
ORDER
Learned Senior Advocate Mr. Saurabh Soparkar with Learned Advocate Mr. Nandish Chudgar with
Learned Advocate Mr. Raheel Patel i/b Nanavati Associates present for Applicant. Learned Advocate Mr.
Dinesh with Learned Advocate Ms. Nikitha Menon with Learned Advocate Mr. Vishal Raval i/b India
Law LLP present for Respondent in IA 410/2017.
Heard arguments of Learned Senior Counsel for Applicant and Learned Counsel for Respondent in IA
410/2017.
Corporate Debtor in CP (IB) 171/2017 filed this application to keep the petition CP(IB) 171/2017 filed by
the Financial creditor in abeyance till the Hon'ble High Court of Gujarat decide the constitutional validity
of section 7 of IB Code in the matter of Shivam Water treaters Pvt Ltd v. Union of India Spl. Civil
Application no. 19808/2017.
Learned Senior Counsel for the applicant contended that it will be appropriate to defer the hearing in CP
(IB) 171/2017 till the constitutional validity of section 7 of IB Code in the matter of Shivam Water
treaters Pvt Ltd v. Union of India Spl. Civil Application no. 19808/2017.
Learned Counsel for Financial Creditor contended that there no interim order restraining this authority
from proceeding with the hearing and disposal of CP(IB) 171/2017 and therefore there is no need to
postpone the hearing in CP(IB) 171/2017 on the ground that constitutional validity of section 7 of IB
1579
Code in the matter of Shivam Water treaters Pvt Ltd v. Union of India Spl. Civil Application no.
19808/2017 is pending before Hon'ble high Court of Gujarat.
The applicant herein not filed any Spl Civil Application before High Court of Gujarat. Spl Civil
Application no. 19808/2017 is filed by Shivam Water Treaters Pvt Ltd against Union of India wherein
there is interim order directing this Tribunal not to pass any adverse order. The said interim order is not
applicable to the present Applicant and it is applicable only to proceedings filed against Shivam Water
Treaters Pvt Ltd.
Pendency of Spl. Civil Application no. 19808/2017 Before Hon'ble High Court of Gujarat is no ground to
keep this petition the CP(IB) 171/2017 in abeyance in absence of any interim order by the Hon'ble High
Court pertaining to the present applicant.
Hence, application is dismissed. No order as to Costs.
1580

AHMEDABAD BENCH
C.P. (I.B.) No. 172/7/NCLT/AHM/2017
Applicant: Reliance Naval and Engineering Ltd.

Vs.
Respondent: IFCI Ltd.
Judges/Coram:
Counsels:
ORDER
Learned Senior Advocate Mr. Saurabh Soparkar with Learned Advocate Mr. Nandish Chudgar with
Learned Advocate Mr. Raheel Patel i/b Nanavati Associates present for Applicant. Learned Advocate Mr.
Dinesh with Learned Advocate Ms. Nikitha Menon with Learned Advocate Mr. Vishal Raval i/b India
Law LLP present for Respondent in IA 411/2017.
Heard arguments of Learned Senior Counsel for Applicant and Learned Counsel for Respondent in IA
411/2017.
Corporate Debtor in CP (IB) 172/2017 filed this application to keep the petition CP(IB) 172/2017 filed by
the Financial. Creditor in abeyance till the Hon'ble High Court of Gujarat decide the constitutional
validity of section 7 of IB Code in the matter of Shivam Water Treaters Pvt Ltd v. Union of India Spl.
Civil Application no. 19808/2017.
Learned Senior Counsel for the applicant contended that it will be appropriate to defer the hearing in CP
(TB) 172/2017 till the constitutional validity of section 7 of IB Code in the matter of Shivam Water
Treaters Pvt Ltd v. Union of India Spl. Civil Application no. 19808/2017.
Learned Counsel for Financial Creditor contended that there no interim order restraining this authority
from proceeding with the hearing and disposal of CP(IB) 172/2017 and therefore there is no need to
postpone the hearing in CP(IB) 172/2017 on the ground that constitutional validity of section 7 of IB
1581
Code in the matter of Shivam Water Treaters Pvt Ltd v. Union of India Spl. Civil Application no.
19808/2017.is pending before Hon'ble high Court of Gujarat.
The applicant herein not filed any Spl Civil Application before High Court of Gujarat. Spl Civil
Application no. 19808/2017 is filed by Shivam Water Treaters Pvt Ltd against Union of India wherein
there is interim order directing this Tribunal not to pass any adverse order. The said interim order is not
applicable to the present Applicant and it is applicable only to proceedings filed against Shivam Water
Treaters Pvt. Ltd.
Pendency of Spl. Civil Application no. L9808/2017 Before Hon'ble High Court of Gujarat is no ground to
keep this petition the CP(IB) 172/2017 in abeyance in absence of any interim order by the Hon'ble High
Court pertaining to the present applicant.
Hence, application is dismissed. No order as to Costs.
1582

AHMEDABAD BENCH
C.P. (I.B.) No. 149/7/NCLT/AHM/2017

Vs.
Respondent: Varia Engineering Work Pvt. Ltd.
Judges/Coram:
Counsels:
ORDER
1. Bank of Baroda through its Chief Manager, Mr. Mridul Misra filed this application uncer section
7 of The Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as "the Code") read with Rule 4
of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 (hereinafter
referred to as "the Rules") with a prayer to trigger Corporate Insolvency Resolution process in respect of
M/s. Varia Engineering Works Private Limited.
2. Bank of Baroda by power of attorney as well as Board Resolution No. 62 authorised the Chief
Manager to appear and represent the bank in courts of law, suits, arbitration or other proceedings relating
to Bank of Baroda and sign pleadings, applications etc. In view of the said authorisation, Chief Manager
is authorised to file this petition
3. Bank of Baroda sanctioned the following facilities to the Corporate Debtor as restructured in the
Master Restructuring Agreement dated 31.03.2015: -
(1) Rupee term loan facility to the tune of Rs. 7,00,00,000 (Rupees seven crores only) (Term
Loan - I) as set out in schedule IVA of the MRA, read with Schedule III of the MRA.
(2) Rupee term loan facility to the tune of Rs. 7,84,00,000 (Rupees seven crore eighty four
lacs only) (Term loan - II) as set out in schedule IVA of the MRA, read with schedule III of the
MRA.
1583
(3) Various working capital term loan facilities as set out below: -
(i) Working capital term loan-I (WCTL-I) of Rs. 20,14,00,000 (Rupees twenty
crores fourteen
lacs only) os set out in Schedule IVB of the MRA, read with Schedule III of the MRA;
and
(ii) Working capital term loan - II (WCTL-II) of Rs. 14,97,00,000 (Rupees fourteen
crores ninety
seven lacs only), as set out in schedule IVB of the MRA, read with schedule III of the
MRA
(4) Restructured funded interest term loan facility of Rs. 9,74,00,000 (Rupees nine crores
seventy four lacs only) FITL facility) as set out in schedule IVC of the MRA read with schedule
III to the MRA.
(5) Restructured Fund Based Working capital facility of Rs. 12,86,00 000 (Rupees twelve
crore eighty six lakhs only) (Fund Based WC facility), as set out in schedule III to the MRA.
The Following additional facilities were also sanctioned under the MRA, however, no disbursements
were made under these facilities: -
(6) Additional fund based working capital facility of Rs. 4,17,00,000 (Rupees four crorer
seventeen lacs only) (additional fund based WC facility) as set out in schedule III to the MRA.
(7) Additional letter of credit facility of Rs. 2100,00 000 (Rupees two crores only) (LC
facility) as set out in schedule III to the MRA
4. According to the Financial Creditor the following amounts are in default under various facilities:
-
(1) The amount in default under the term loan - I as on June, 30, 2017 is Rs. 8,35,27,454.92
(rupees eight crores thirty five lacs twenty seven thousand four hundred and fifty four only)
The first date of default in respect of this facility was March 01, 2016.
(2) The amount in default under the term loan - II as on June, 30, 2017 is Rs. 9,38,99,532.80
(Rupees nine crores thirty eight lacs ninety nine thousand five hundred and thirty two only)
The first date of default in respect of this facility ws March 01, 2016.
1584
(3) The amount in default under the WCTL I as on June 30, 2017 is Rs. 24,12,16,401.86
(Rupees twenty four crores twelve lacs sixteen thousand four hundred and one only)
The first date of default in respect of this facility was March 01, 2016
(4) The amount in default under the WCTL - II as on June 30, 2017 is Rs. 17,92,05,576.78
(Rupees seventeen crores ninety two lacs five thousand five hundred and seventy six only)
(5) The amount in default under the FITL facility as on June 30, 2017 is Rs. 11, 66,55,797.13
(Rupees eleven crore sixty six lacs fifty five thousand seven hundred ninety seven only)
(6) The amount in default under the fund based WC facility as on June 30, 2017 is Rs.
15,12,22,883.65 (Rupees fifteen crores twelve lacs twenty two thousand eight hundred eighty
three only)
The first date of default in respect. of this facility was February 29, 2016.,
The total amount in default as on June 30, 2017 is Rs. 86,57,27,647.15 (Rupees eighty six crores fifty
seven lacs twenty seven thousand six hundred and forty seven only)
Vide a notice dated December 31, 2016 issued under Section 13 (2) of the Securitisation and
Reconstruction of Financial
Assets and Enforcement of Security Interest Act, 2002, the Financial Creditor has requested the Corporate
debtor to repay an amount of Rs. 81,28,43,076 (Rupees eighty one crore twenty eight lacs forty three
thousand and seventy six only) within 60 days therefrom, however, the Corporate Debtor has failed to
make the said payment.
Further, vide a notice dated February 16, 2017 the Corporate debtor was asked to pay inter-alia the
outstanding amount of Rs. 82,55,88,560 (Rupees eighty two crore fifty five lacs eighty eight thousand
five hundred sixty only) as on February 14, 2017 within 15 days therefrom. However, the said amounts
were not paid by the corporate debtor.
1585
The table containing the details of the computation of the amount of default on the part of the corporate
debtor, the dates of default and the number of days of default under the facilities is annexed herewith as
annexure - II.
5. The Financial Creditor has also furnished particulars of securities held and its estimated value
which are given below:-
(1) Hypothecation
(a) Under the joint deed of hypothecation dated December 23, 2009 (Deed of
Hypothecation - I) between the Corporate debtor and inter-alia the financial creditor, the
corporate debtor has created a first charge on pari passu basis on all the fixed assets (as
more elaborately described under part A of second schedule of the deed) and a second
charge on pail passu basis on all current assets (as more elaborately described under part
B of second schedule of the deed) to secure the term loans. Further, the corporate debtor
has created a first charge on pari passu basis on all the current assets as more elaborately
described under Part B of second schedule of the deed and a second charge on pari passu
basis on all fixed assets, as more elaborately described under part B of second schedule of
the deed, to secure the working capital credit facilities.
(b) Subsequently, vide the supplemental joint deed of hypothecation dated January 31,
2011 (deed of hypothecation - II) the hypothecation on current assets (as more
elaborately described under the second schedule of the deed) was extended to secure the
modified limits of the facilities (the description of which is provided in the third and
fourth schedule to the deed).
(c) Further, vide the second supplemental joint deed of hypothecation dated August
11, 2012 (deed of hypothecation - III) the hypothecation on current assets (as more
elaborately under the first schedule of the deed) and fixed assets (as more elaborately
described under the second schedule of the deed) was extended to secure the modified
limits of the facilities (the description of which is provided in parts A and B of the third
schedule to the deed).
(d) Further, under the composite hypothecation agreement dated September 04, 2013
(deed of hypothecation - IV) executed by the corporate debtor for securing the facility
amount with a limit of Rs. 68,23,00,000 (Rupees sixty eight crores twenty three lacs
only) a hypothecation charge on the corporate debtor's raw materials, stock in process,
1586
finished goods and book debts, movable plant and machinery/vehicles/crafts, consumable
stores and spares, both present and future (as more elaborately described in schedule II to
the deed) was created.
(e) Further, vide'the third supplemental joint deed of hypothecation dated October
23, 2013 (deed of hypothecation - V) the hypothecation on current assets (as more
elaborately described under part A of the third schedule of the deed ) and fixed assets (as
more elaborately described under part B of the third schedule of the deed) was extended
to secure the modified Omits of the facilities (the description of which is laid down in
parts A and B of the second schedule to the deed).
(2) Mortgage
As per the memorandum of deposit of title deeds executed on October 29, 2013
(Mortgage Deed) by the mortgagors, namely Varia Engineering Works Private Limited
(Mortgage No. 1) Shri Himanshu Prafulchandra Varia (Mortgagor No. 2) and Smt. Sejal
Himanshu Varia (Mortgagor No. 3) in favour of PNB Investment Services Ltd. (Security
Trustee):
(a) Mortgagor No. 1 deposited the title deeds, documents and papers as described in
parts A, C and F of the first schedule of the Mortgage Deed pertaining to the immovable
properties, more elaborately described in parts A, B, C and F of the second schedule of
the Mortgage Deed with the authorised officer of the Security Trustee, on October 29,
2013 in order to secure the facilities in the following manner:
For term loans, first charge on pari-passu basis over shed/building, along with land of
Survey No. 246 at Kerala' Industrial Area, GIDC, Taluka Bavla, Dist. Ahmedabad,
particularly described in part C of the second schedule.
For working capital facilities, second charge on pari-passu basis over shed/building,
along with land of survey No. 246 at Kerala Industrial Area, GIDC, Taluka Bavia, Dist.
Ahmedabad, particularly described in part C of the second schedule and first charge on
pari-passu basis over office building and guest house constructed over land bearing
survey No. 246 at Kerala Industrial Area, GIDC, Taluka Bavia, Dist. Ahmedabad.
For both term loans and working capital facilities, first charge on pari-passu basis over
immovable properties described in parts A, B and F of the second schedule.
1587
(b) Mortgage No. 2 deposited the title deeds, documents and papers as described in
parts D & E of the first schedule of the mortgage deed pertaining to the immovable
properties, more elaborately described in para D & E of the second schedule of the
mortgage deed with the authorised officer of the Security Trustee, on October 29, 2013,
in order to secure the facilities by first charge on pari-passu basis.
(c) Mortgagor No. 3 deposited the title deeds, documents and papers as described in
part G of the first schedule of the Mortgage Deed, pertaining to the immovable
properties, more elaborately described in part G of the second schedule of the mortgage
deed with the authorised officer of the security trustee, on October 29, 2013 in order to
secure the facilities by first charge on pari-passu basis.
(3) Guarantee
Two deeds of guarantee, dated October 23, 2013 were executed by Prafulchandra P.
Varia, Himanshu P. Varia and Sejal Himanshu Varia, in favour of inter-alia, the financial
creditor vide deed of guarantee (guarantee deed - 1) for the due repayment of the
facilities.
Two deeds of guafantee, dated October 23, 2013 was executed by Krish Tech-Con P. Ltd.
in favour of inter alia the financial creditor vide deed of guarantee (guarantee deed - 2)
for the diie repayment of the facilities.
A copy of the guarantee deed - 1 is annexed as annexure - 14 and a copy of the guarantee deed - 2
annexed as annexure 15
Copies of the certificates of registration charges with respect to the aforementioned securities
created for the benefit of the financial creditor have been annexed at annexure 16.
Estimated value of the aforementioned security
As per the financial creditor, the estimated value of the aforementioned securities (as created for
the benefit of the financial creditor pursuant to the terms of the MRA and the security documents)
is Rs. 33,03,80,348 (Rupees thirty three crore three lacs eighty thousand three hundred and forty
eight - only).
6. It is stated by the financial creditor that the Presiding Officer of Debt Recovery Tribunal - I,
Ahmedabad by its order dated 11.05.2017 stated that further action by the consortium banks lead by State
1588
Bank of India on the representation of the Corporate Debtor that it is ready to pay Rs. 1.00 crore per
month till the entire dues are repaid. The Financial Creditor further stated that Hon'ble Debt Recovery
Appellate Tribunal, Mumbai set aside the said order and remanded the matter to Presiding Officer, Debt
Recovery Tribunal - 1, Ahmedabad to decide the matter after 'jiving opportunity to the bank to file their
reply.
7. Financial Creditor filed the report of TransUnion CIBIL dated 02.08.2017 and report of the
Central Repository of Information on large Credits dated 09.08.2017.
8. The Financial Creditor filed the following documents along with petition: -
(1) Letter under sectiort 18 of the Limitation Act, 1963, from the corporate debtor, issued to
the SBI consortium, of which the financial creditor is a member bank dated March 31, 2015
acknowledging debit balance owed to the consortium to the tune of Rs. 418,89,00,000 (Rupees
four hundred eighteen crore and eighty nine lacs only);
(2) The annual report of the Corporate debtor for the financial year 201472015;
(4) Notice dated December 31, 2016 issued under Section 13 (2) of the Securitisation and
Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, by the
financial creditor to the corporate debtor;
(5) Minutes of the meetings of the joint lenders forum held on September 23, 2015, January
30, 2016, February 29, 2016, March 29, 2016, April 27, 2016 and May 27, 2016; and
(6) Letter from the corporate debtor to the financial creditor dated July 07, 2016 discussing
the revival scheme.
9. Financial Creditor filed copies of entries in the banker's book in accordance with the Bankers
Books Evidence Act, 1891. Financial Creditor also fired copy of the annual report of the corporate debtor
for the financial year 2014-15. Financial Creditor issued notice under section 13 (2) of Securitisation and
Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 on 31.12.2016
recalling the amounts due in all the facilities. Financial creditor filed proof of service of the Company
petition on the corporate debtor.
10. Financial creditor proposed the name of Mr. Ramubhai Shankerlal Patel as Interim Resolution
Professional and filed his written communication in form No. 2.
1589
11. Corporate debtor appeared through counsel and filed objections. Corporate debtor in his
objections stated that the petition is incomplete and without enclosing proper documents and without
giving details of guarantee and, therefore, it is liable to be dismissed. It is sated by the corporate debtor
that he has filed application under Section 19 (8) of the Recovery of Debt (due to Banks and financial
Institutions) Act, 1993 for an amount of Rs. 934.12 crores against all the banks and it is pending.
12. According to the corporate debtor the main reason for the sickness of the company is non-
cooperation by the banks, particularly State Bank of India during the course of considering the company's
application for enhancement of loan. Requirement of the company is Rs. 120.00 crores but State Bank of
India decided to grant only Rs. 37.00 crores on behalf of the consortium members and that too with an
additional condition of "Matching Collateral". The company is unable to offer "Matching Collateral" and
it resulted in sickness of the company. It is also stated that the present application is not in accordance
with IB Code.
13. A perusal of the petition show that it is complete in all respects. The documents show that
financial debt is due from the Corporate Debtor and there is occurrence of default. In fact, even in the
reply filed by the corporate debtor it has not denied the liability or the occurence of default. Moreover,
Financial Creditor issued notice under section 13 (2) of the Securitisation and Reconstruction of Financial
Assets and Enforcement of Security Interest Act, 2002, recalling the entire loan facilities. There is no
tenable objection filed by the Corporate Debtor in the reply. Pendency of proceedings before the Debt
Recovery Tribunal, Ahmedabad is not a ground for not commencing Insolvency Resolution Process in
view of the fact that provisions of the Code is having overriding effect over any other Law.
14. In view of the above discussion this petition deserves to be admitted and it is accordingly
admitted under section 7 (5) of the Code.
15. Adjudicating Authority hereby appoint Mr. Ramubhai Shankerlal Patel having address at M/s.
R.S. Patel & Co., 801 Popular House, Ashram Road, Ahmedabad 380 009 (Gujarat) and having
Registration No. IBBI/IPA-001/IP-P00081/2017-18/10177 as Interim Resolution Professional under
section 13 (1) (c) of the Code.
of the initiation of "Corporate Insolvency Resolution Process" and call for submission of claims under
Section 13 (1) (b) read with Section 15 of the Code and Regulation 6 of the Insolvency and Bankruptcy
Board of India (Insolvency Resolution process for Corporate Persons) Regulations, 2016.
1590
17. This Adjudicating authority hereby order moratorium under Section 13 (1) (a) of the 1B code
(i) the institution of suits or continuation of pending suits or proceedings against the
corporate debtor including execution of any judgment, decree or order in any court of law,
(ii) transferring, encumbering, alienating or disposing of by the corporate debtor any of its
(iii) any action to foreclose, recover or enforce any security interest created by the corporate
debtor in respect of its property including any action under the Securitisation and Reconstruction
of Financial Assets and Enforcement of Security Interest Act, 2002 (54 of 2002);
(iv) the recovery of any property by an owner or lessor where such property is occupied by or
in the possession of the corporate debtor.
(a) However, there shall not be termination, suspension or interruption of supply of goods
and essential services to the corporate debtor.
(b) The order of moratorium is not applicable to the transactions that may be notified
(c) The order of moratorium comes into force from the date of the order, till the
18. This application stands disposed of accordingly. No order as to costs.
19. Communicate a copy or this order to the Petitioner Financial Credit, Respondent Corporate
1591
AHMEDABAD BENCH
C.P. (I.B.) No. 127/7/NCLT/AHM/2017
Applicant: Invent ARC Pvt. Ltd.

Vs.
Respondent: Asset Reconstruction Company (India) Ltd. & Anr.
Judges/Coram:
Counsels:
ORDER
Learned Advocate Mr. Ketan Parikh present for Applicant. Learned Advocate Mr. Ravish Bhatt present
for Respondent (Corporate Debtor) in Inv P 5/2017.
Heard agreements of Learned Counsel for Applicant and Learned Counsel for Respondent.
This application is filed by Invent ARC pvt Ltd. with a request to permit them to intervene in the
proceedings in CP (IB) 127/2017 initiated by Asset Reconstruction (India( Ltd as Financial Creditor
against Neesa Leisure ltd styling it as Corporate Debtor.
It is stated in the application that applicant is willing to take over the debts of Corporate Debtor and it has
also participated in Joint Lenders Forum meeting.
It is a fact that applicant is neither a creditor not a debtor of the Corporate Debtor. It is a fact that
applicant is neither a guarantor of Corporate Debtor or Financial Creditor.
Hence, in that view of the matter applicant has no right to interfere in the proceedings in CP(IB)
127/2017. Hence, this application is dismissed at admission stage.
1592

AHMEDABAD BENCH
C.P. (I.B.) No. 140/7/NCLT/AHM/2017
Applicant: Bell Finvest (India) Ltd.

Vs.
Respondent: Laser Care India Pvt. Ltd.
Judges/Coram:
Hon'ble Sh. Bikki Raveendra Babu, & Ms. Manorama Kumari, Member (J)
Counsels:
ORDER
Hon'ble Sh. Bikki Raveendra Babu, & Ms. Manorama Kumari, Member (J)
1. Bell Finvest (India) Ltd. through its authorised person Mr. Sunil Sawant, Sr. Assistant Manager
(Legal) filed this petition under- Section 7 of The Insolvency and Bankruptcy Code, 2016 (hereinafter
referred to as "the Code") read with Rule 4 of the Insolvency and Bankruptcy (Application to
Adjudicating - Authority) Rules, 2016 (hereinafter referred to as "the Rules") with a prayer to trigger
Corporate Insolvency process in respect of M/s. Laser Care India Private Limited.
2. Board of Directors of Bell Finvest (India) Ltd. passed a resolution on 07.09.2017 to file a petition
under section 7 of the Insolvency and Bankruptcy Code, 2016read with Rule 4 of the Insolvency and
Bankruptcy Code 2016 and authorised Mr. Sunil Sawant, Sr. Assistant Manager (Legal) to file this
petition.
3. Petitioner sanctioned an amount of Rs. 16.00 lacs in a single tranche and disbursed the said
amount in a single tranche on request of the corporate debtor towards business loans for the tenure of
sixty months at flat rate of 36% per annum. Corporate debtor paid five equal monthly instalments, but not
on due dates. Therefore, corporate debtor and its guarantors failed to repay the loan amount. Since
corporate debtor and its guarantors failed to repay monthly instalments from 24.02.2017, the arrears of
additional interest amounting to Rs. 4,05,408/- has been aggregated and it has been set out in detail in the
statement marked annexure B. Petitioner financial creditor issued legal notice dated 05.07.2017 to the
respondent corporate debtor and the guarantors.
1593
4. Respondent corporate debtor is a company registered under the Companies Act, 1956 having its
registered office at Indore, Madhya Pradesh. Material on record disclose that a loan agreement dated
06.08.2016 has been entered between the respondent corporate debtor and petitioner Financial creditor.
Corporate debtor also executed demand promissory note in favour of the financial creditor for Rs. 06.00
lacs dated 06.08.2016. Deed of personal guarantees were also executed by the guarantors for the loan
advanced to the corporate debtor in favour of financial creditors. Petitioner also filed disbursement of loan
letters. Petitioner also filed deed of mortgage executed by M/s. Nihira Builders & Developers. Petitioner
also filed financial statements of the corporate debtor and loan recall notice.
5. Petitioner proposed the name of Mr. Bhupendra Singh Rajput as Interim Resolution Professional.
6. Petitioner served a copy of petition on the respondent and filed proof of service. Petitioner also
filed proof of service of notice of the date of hearing on respondent. This Tribunal also directed Registry
to issue notice of date of hearing on respondent. Registry of this Tribunal also issued notice to the
respondent but it was returned unserved. None appeared for the respondent. Respondent has not filed any
objections. Heard arguments of learned counsel for the petitioner.
7. A perusal of the documents filed by petitioner disclose that financial debt is due from the
corporate debtor/respondent to the financial creditor/petitioner. Inspite recalling the entire loan amount,
corporate debtor did not choose to repay the loan amount. The material on record clearly indicate that
corporate debtor committed default in repayment of financial debt. The petition filed by the financial
creditor is complete in all respect. Hence this petition is admitted.
8. The Adjudicating Authority hereby appoint Mr. Bhupendra Singh Rajput having address at A-
309, ATMA House, Opp. Old- RBI, Ashram Road, Ahmedabad 380 009 (Gujarat) and having
Registration No. IBBI/IPA-001/IP-P003972017-18/10715 as Interim Resolution Professional under
section 13 (1) (c) of the Code.
9. The Interim Insolvency' Resolution Professional is hereby- directed to cause public

announcement of the initiation of "Corporate Insolvency Resolution Process" and call for submission of
claims under Section 13 (1) (b) read with Section 15 of the Code and Regulation 6 of the Insolvency and
Bankruptcy Board of India (Insolvency Resolution process for Corporate Persons) Regulations, 2016.
10. This Adjudicating authority hereby order moratorium under Section 13 (1) (a) of the 1B code
(i) the institution of suits or continuation of pending suits or proceedings against the
1594
(ii) transferring, encumbering, alienating or disposing of by the corporate debtor any of its
(iii) any action to foreclose, recover or enforce any security interest created by the corporate
of 'Financial Assets and Enforcement of Security Interest Act, 2002 (54 of 2002);
(iv) the recovery of any property by an owner or lessor where such property is occupied by or
in the possession of the corporate debtor.
(a) However, there shall not be termination, suspension or interruption of supply of

goods and essential services to the corporate debtor.
(b) The order of moratorium is not applicable to the transactions that may be notified
(c) The order of moratorium comes into force from the date of the order, till the
11. This application stands disposed of accordingly. No order as to costs.
12. Communicate a copy of this order to the Petitioner Financial Creditor, Respondent Corporate
1595
By Hon’ble NCLT Allahabad Bench
1596

ALLAHABAD BENCH
C.P. (I.B.) No. 77/7/NCLT/ALD/2017
Applicant: IDBI Bank Limited

Vs.
Respondent: Jaypee Infratech Limited
Judges/Coram:
Hon'ble Sh. H.P. Chaturvedi, Member (J)
Counsels:
For Appellant/Petitioner/Plaintiff: Bishwajit Dubey, Rahul Agarwal and Uday Khare, Learned Advocates
For Respondents/Defendant: R.P Agarwal, Learned Advocate
ORDER
1. The applicant IDBI Limited (for brevity Financial Creditor) has filed the present petition u/s. 7 of the
Insolvency & Bankruptcy Code, 2016 read [hereinafter referred to as "the Code") with Rule 4 of the
Insolvency & Bankruptcy (Application to Adjudicating Authority) Rules, 2016 to initiate the Corporate
Insolvency Resolution Process in respect of the respondent corporate debtor company M/s. Jaypee
Infratech Ltd. The Brief facts of the present case are slated as under:
(i) The applicant IDBI Bank Ltd. is a company within the meaning of the Companies Act, 2013
and a banking company within the meaning of the Banking Regulation Act, 1949 and having its
registered office IDBI Tower. WTC Complex, Cuffe Parade, Colaba, Mumbai - 400 005, in the
State of Maharashtra and a branch, inter alia, at IDBI Tower, 4th Floor, Plot No. C-7, G Block,
Opp. NSE, Next to SBI, Bandra-Kurla Complex Bandra (East), Mumbai-400051, in the State of
Maharashtra.
(ii) It was incorporated on September 27, 2004 as a company within the meaning of the
Companies Act, 2013 and further a banking company within the meaning of the Banking
Regulation Act, 1949.
(iii) The 'Corporate Debtor' has CIN No. L45203UP2007PLC033119. It was incorporated on
April 5th, 2007. Its authorised share capital is Rs. 3000,00,00,000/- (Rupees Three Thousand
1597
Crore only) and the paid up share capital is Rs. 1388,93,34,970/- (Rupees One Thousand Three
Hundred Eighty-Eight Crore Ninety-Three Lakh Thirty-Four Thousand Nine Hundred and
Seventy). The aforesaid data concerning the Corporate Debtor is authenticated by master data
available on the website of Ministry of Corporate Affairs.
(iv) The 'Financial Creditor' has given all the details of financial debt as per the Code. In part-IV
of the application, which is on a proforma prescribed under Rule-4 of the Insolvency &
Bankruptcy (Application to Adjudicating Authority) Rules, 2016 read with Section 7 of the Code,
the following details are given about the financial debts:
a. In total the Financial Creditor has sanctioned four (4) loans aggregating to Rs. 4650,00,000
(Rupees Four Thousand Six Hundred and Fifty Cores) and disbursed the entire said amount.
b. An amount of Rs. 900,00,00,000 (Rupees Nine Hundred Crore) was then sold to India
Infrastructure Finance Company Limited, as per the Takeout Finance Agreement dated May 22,
2015, and by a Novation Deed to the Common Loan Agreement all rights and obligations in
respect of the said amount were novated to India Infrastructure Finance Company Limited. The
total debt, therefore granted to the Corporate Debtor was Rs. 3750,00,00,000 (Rupees Three
Thousand Seven Hundred and Fifty Crore).
The tabulation of the four loans is as follows:
Particulars (Facility-wise) Sanction Amount (In INR)

Rupee Term Loan 200,00,00,000/-
Tranche-II
Rupee Term Loan 4000,00,00,000/-
Tranche-II
(900,00,00,000 Down sold
to India Infrastructure
Finance Company Limited)
Rupee Term Loan - B 350,00,00,000/-
Rupee Term Loan - B 100,00,00,000/-
1598
The date of disbursement of loan under the Loan Agreement has been annexed the application as Exhibit-
6.
(v) The defaulted amount within the meaning of Section 3(12), i.e. the computation relating to the
defaulted amount and days of default has been annexed by the Financial Creditor at Exhibit - 7.
The total amount clue as on June 15, 2017 is Rs. 526,11,40,827/- (Rupees Five Hundred Twenty-
Six Crore, Eleven Lakh, Forty Thousand. Fight Hundred Twenty-Seven), this includes the
principal amount in default under the Rupee Term Loan - Tranche - II of the Common Loan
Agreement which is Rs. 49,99,99,998 (Rupees Forty-Nine Crore Ninety-Nine Lacs Ninety-Nine
Thousand, Nine Hundred and Ninety-Fight). In addition to this, the default amount towards the
overdue interest (including liquidated damages as default interest) amounts to Rs. 476,11,40,829
(Rupees Four Hundred and Seventy-Six Crore Eleven Lacs Forty Thousand, Eight Hundred and
Twenty-Nine).
IDBI EXPOSURE AS ON JUNE 01, 2017 (Amount in Rs.)
Particulars Sanction Outstanding Overdues Overdues

(Facility wise) amount since
Principal Interest Total
RTL 200,00,00,000 218,63,02,119 Nil 18,63,02,119 18,63,02,119 31.10.2016

Tranche-I
RTL 4000,00,00,000 3513,24,20,268 Nil 413,24,20,268 413,24,20,268 31.07.2016
Tranche-II
RTL - A 350,00,00,000 384,52,59,120 Nil 34,52,59,120 34,52,59,120 31.10.2016
RTL - 8 100,00,00,000 109,71,59,322 49,99,99,998 9,71,59,322 59,71,59,320 31.10.2016
Total 4226,11,40,829 4226,11,40,829 49,99,99,998 476,11,40,829 526,11,40,827
(vi) The Financial Creditor has provided particulars of financial debt documents, records and
evidence of default. The Financial Creditor has provided details of the Security documents from
Exhibit 8 to Exhibit 13 in Volume II - IV of the Application. The Security comprises the
following:
I. Deed of Hypothecation: The Unattested Deed of Hypothecation dated May 25, 2015 (the "Unattested
Deed of Hypothecation") and the Amended and Restated Deed of Hypothecation dated February 6, 2016
(the "Amended and Restated Deed of Hypothecation") have been attested by the Corporate Debtor in
favour of the Security Trustee. Following security has been created;
1599
a. A first charge on all the movables of the company, present and future; excluding movables
which are forming part of the common infrastructural facilities of real estate development;
b. A first charge on the corporate debtor company's book debts, receivables, on all bank account
including but not limited to the Debt Service Reserve Account (DSRA), the Trust & Retention
Account (TRA) where all the cash inflows from toll collection and sale proceeds of the real-estate
shall be utilized in a manner & priority to be decided by the lender's agent/RTL lenders,
commissions, revenues of whatsoever nature & wherever arising, intangibles including but not
limited to goodwill, rights, undertaking and uncalled capital, both present and future;
c. A first charge on or assignment of all rights, title, interest, benefits, claim and demands
whatsoever of the Corporate Debtor in the concession agreement save and except in relation to
portion of land which is developed/undeveloped and alienated by Corporate Debtor from time to
time pursuant to sale agreement and project documents duly acknowledged and consented to be
the relevant counter parties to such project documents, all as amended, varied or supplemented
from time to time, statutory/non-statutory clearances & approvals obtained/to be obtained for the
project; letter of credit, guarantee, performance bond, etc. provided by any party for the project;
insurance contracts/insurance Proceeds pertaining to the project (other than those in respect of
discharge of third party liability) and all benefits incidental to project activities.
d. A first charge on the Debt Service Reserve Account (DSRA) for an amount equal to 1.5 times
the principal and interest payment due for the ensuing quarter to the rupee term lenders.
e. In support of the above the applicant bank has annexed copies of its Unattested Deed of
Hypothecation, Amended and Re-Attested Deed of Hypothecation dated February 6, 2016
executed by the Corporate Debtor in favour of the Security Trustee as Exhibit-10 (Colly) of the
present petition.
II. Personal Guarantee: Shri Manoj Gaur the chairman cum managing director of the Company as being
"Personal Guarantor" has further guaranteed the obligations of the Corporate Debtor under the Loan
Agreements pursuant to the personal guarantee dated May 25, 2015. (the "Personal Guarantee") executed
by the Personal Guarantor in favour of the Security Trustee. Copy of the Personal Guarantee has been
annexed herewith as Exhibit-11.
III. Indentures of Mortgage: Copies of Indentures of Mortgage have been annexed which is marked as
forming part of Exhibit-12 of the application.
1600
IV. Pledge: Jaiprakash Associates Limited, a shareholder of the Corporate Debtor by way of a Deed of
Pledge dated February 6, 2016 pledged 51% of the Corporate Debtor's total paid up share capital in favor
of Security Trustee. A Copy of the Deed of pledge is annexed herewith as Exhibit-13 of present 1 & B
Application.
Estimated Value of the Aforementioned Security: Including 51% of the shares of the Corporate Debtor
pledged as stated above and movable properties of the Corporate Debtor, the market value of the assets is
estimated to be INR 17116,00,00,000/- (Rupees Seventeen Thousand One Hundred and Sixteen Crore
only). The distress value of the assets is estimated to INR 14548,00,00,000/- (Rupees Fourteen Thousand
Five Hundred and Forty-Eight Crore only).
(vi) In support of the existing financial debts under default the Financial Creditor Applicant has annexed
following documents giving particular of the amount and date of default:
a) Copy of the audited Balance Sheet for the Financial year 2016-2017 of the Corporate Debtor
acknowledging the indebtedness of the Corporate Debtor;
b) Balance Confirmation acknowledging the indebtedness of the Corporate Debtor as on March

31, 2017.
c) RBI directive No. DBR No. BP. IBC10/21.04.048/2016-2017 dated June 15, 2017 giving
directions to the IDBI Bank Limited to initiate Insolvency Resolution Process under the
provisions of the I & B Code, 2016.
d) Report from the Central Repository on Information on Large Credits ("CRILC") date June 17,
2017.
e) CIBIL Report, showing account of the Corporate Debtor as substandard from April 2016 -
March 2017.
f) Entries in Banker's Book in accordance with the Banker Books Evidence Act, 1891 as
maintained by the IDBI Bank.
2. By perusal of the application filed by Financial creditor it appears to be found complete as being in
conformity with the provision of Section 7 of the Code and Rules applicable. The provision of Section 7
of the Code reads as under:
1601
7. Initiation of corporate insolvency resolution process by financial creditor.
(1) A financial creditor either by itself or jointly with other financial creditors may file an application for
initiating corporate insolvency resolution process against a corporate debtor before the Adjudicating
Explanation - For the purposes of this sub-section, a default includes a default in respect of a financial
debt owed not only to the applicant financial creditor but to any other financial creditor of the corporate
debtor.
(2) The financial creditor shall make an application under sub-section (I) in such form and manner and
(3) The financial creditor shall, along with the application furnish--
(4) The Adjudicating Authority shall, within fourteen days of the receipt of the application under sub-
section (2) ascertain the existence of a default from the records of an information utility or on the basis of
other evidence furnished by the financial creditor under sub-section (3).
disciplinary proceedings pending against the proposed resolution professional, it may by order, admit
proceeding is pending against the proposed resolution professional, it may, by order reject such
application:
1602
(a) the order under clause (a) of sub-section (5) to the financial creditor and the corporate debtor;
(b) the order under clause (b) of sub-section (5) to the financial creditor, within seven days of admission
or rejection of such application, as the case may be.
3. From the perusal of documents annexed with the present petition, it is evident the default has occurred,
that meets the requirement of Section 3(11) & (12) of the Code.
Section 3(11) and 3(12) of the Code which reads as under:
(11) "debt" means a liability or obligation in respect of a claim which is due from any person and includes
a financial debt and operational debt;
(12) "default" means non-payment of debt when whole or any part or instalment of the amount of debt has
become due and payable and is not repaid by the debtor or the corporate debtor, as the case may be;
4. The Financial Creditor has also filed the Written Communication sent by the proposed Interim
Insolvency Resolution in Form No. II informing that there is no disciplinary proceeding pending against
the proposed IRP.
5. As, the total amount of default now comes to Rs. 526,11,40,827/- (Rupees Five hundred twenty-six
crores eleven lakh forty thousand eight hundred twenty-seven) which is in excess of Rs. 1,00,000/-
(Rupees One Lakh only). Hence, the present application to initiate the Corporate Insolvency Resolution
Process (as per the I & B Code, 2016) in respect of Corporate Debtor Company.
6. The Corporate Debtor Company in the present matter earlier had filed its objection opposing the
Admission but later on 04.08.2017 in presence of its officer through its counsel withdrew the same.
1603
7. Thus, by considering the subsequent development took place in the present matter, this court being
Adjudicating authority advised the Corporate Debtor Company to file a formal memo to such effect.
Pursuant thereto Shri Manoj Gaur, being Chairman Cum Managing Director filed a formal memo through
his Learned counsel Shri R.P. Agarwal, containing such averment, are stated as. "the parties to the
petition had a meeting on 03.08.2017. They discussed need to withdraw their objection on the present
petition. In such meetings they expressed their desire for early approval of the resolution plan of the
Corporate Debtor Company which is already under consideration of its lenders. In view of this the
Corporate Debtor has expressed its no-objection".
8. The Corporate Debtor Company has further explained about its memo of no-objection given on account
of considering the interest of all the stakeholders of the Respondents Company including home buyers
and depositors. In view of this the Corporate Debtor Company did not press for its objection to the
present petition.
9. Considering the such statement of the withdrawal of the objection and to concede with the prayer made
in for seeking admission of the present Petition. It is felt, not necessary to look into merits of such
objection.
10. We have perused the above stated memo and gone through the present petition and duly considered
the subsequent development that took place in the matter.
11. It is now undisputed position in the present matter the Financial Creditor along with other lenders and
the present Corporate Debtors are having a consensus for early approval of resolution plan of the
corporate debtor company.
12. In addition to above the Hon'ble NCLAT in the matter of M/s. Innoventive Industries Ltd. Vs. ICICI
Banks & Anr. Company Appeal (AT) (Insolvency) No. 1 & 2 of 2017 has examined the relevant
provision of the Section 7 of the Code and ruled that the 'adjudicating authority* on receipt of the
application under Section 7 sub-section (2) is required to ascertain existence of default on the basis of
evidence furnished by the Financial Creditor under sub - section (3). The 'adjudicating authority' is
required to satisfy three things: Occurrence of default; application is complete and no disciplinary
proceeding is against the proposed Insolvency Resolution Professional.
For the sake of convenience relevant portion is reproduced as under:
1604
82. As discussed in lite previous paragraphs, for initiation of corporate resolution process by
Financial creditor under sub-section (4) of Section 7 of the Code, 2016, the adjudicating authority
on receipt of application under sub-section (2) is required to ascertain existence of default from
the records of Information Utility or on the basis of other evidence furnished by the financial
creditor under sub-section (3) under section 5 of Section 7, the 'adjudicating authority' is required
to satisfy-
(a) Whether a default has occurred.
(b) Whether an application is complete: and
Professional.
83. Once, it is satisfied, it is required to admit the case but in case the application is incomplete
application, the financial creditor is to be granted seven days' time to complete the application.
However, in a case where there is no default or defects cannot be rectified, or the record enclosed
is misleading, the application has to be rejected.
84. Beyond the aforesaid practice, the 'adjudicating authority' is not required to look into any
other factor.
13. Having heard the submission of Shri Bishwajit Dubey along with Shri Rahul Agarwal,
Advocate for Financial Creditor as well as Shri R.P. Agrawal, Advocate for Corporate Debtor, the
present petition deserves admission. Hence, it is admitted under the Section 7 of the I & B Code,
with consequential directions given as under:
I. That the adjudicating Authority of this bench of the Tribunal hereby appoints Mr. Anuj Jain, Email. Id.
anujvjain @brsaffiliates.com, Registration No. 1BBI/IPA-001/IP-P00142/2017-18/10306, Address: M/s.
BSRR & Co. Chartered Accountants, 8th Floor, Building No. 10, DLF Cybercity, Gurgaon - 122002 as
Interim Resolution Professional to carry the functions as mentioned under the Code.
II. That the order of moratorium u/s. 14 shall have effect from 09.08.2017 till the completion of corporate
insolvency resolution process or until this Bench approves the resolution plan under sub-section (1) of
Section 31 or passes an order for liquidation of corporate debtor under section 33 as the case may be.
1605
III. That the Bench hereby prohibits the institution of suits or continuation of pending suit or proceedings
against the corporate debtor including execution of any judgment, decree or order in any court of law,
tribunal, arbitration panel or other authority; transferring, encumbering, alienating or disposing of by the
corporate debtor any of its assets or any legal right or beneficial interest therein; any action to foreclose,
recover or enforce any security interest created by the Corporate Debtor in respect of its property
including any action under the SARFESI Act, 2002; the recovery of any property by an owner or less or
where such property is occupied by or in the possession of the corporate debtor.
IV. That the supply of essential goods or services to corporate debtor, continuing, shall not be terminated
or suspended or interrupted during the Moratorium period. The Corporate Debtor to provide effective
assistance to the IRP as and when he takes charge of the Corporate Debtor.
V. During the period of Moratorium, the affairs of Corporate Debtor to be continued and conducted in
accordance with the law and as a going concern.
VI. That the provisions of Section 14 sub - section (1) shall not apply to such transactions as may be
VII. That the public announcement of corporate insolvency resolution process be made immediately as
specified under Section 13 of the code and calling for submissions of claim under Section 15 of the Code.
VIII. The Interim Resolution Professional shall perform all his functions strictly which are contemplated,
inter alia, by Sections 17, 18, 20, 21 of the Code. It is further made clear that all the personnel connected
with Corporate Debtor, its promoter or any other person associated with Management of the Corporate
Debtor are under legal obligation under Section 19 of the Code extend every assistance and cooperation to
the Interim Resolution Professional. Where any personnel of the corporate debtor, its promoter or any
other person required to assist or co-operate with IRP. does not assist or co-operate, IRP would be at
IX. The IRP shall be under duty to protect and preserve the value of the property of the 'Corporate Debtor'
and manage the operations of the Corporate Debtor as a going concern as a part of its obligation imposed
by Section 20 of the I & B Code. 2016.
X. The Registry is hereby directed to communicate this order to the Financial Creditor and the Corporate
Debtor after the completion of necessary formalities.
XI. A Copy of this order be communicated to the IRP as well as to Insolvency and Bankruptcy Board of
India.
1606

ALLAHABAD BENCH
C.P. (I.B.) No. 68/7/NCLT/ALD/2017
Applicants: Prabodh Kumar Gupta

Sudha Gupta
Nimish Gupta
Saanvi Gupta (Minor)
Nimit Gupta
Abhilash Gupta
Kusum Jain
Vs.
Respondent: Jaypee Infratech Limited
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Mukesh Chadha, C.A
For Respondents/Defendant: Mr. Ajay Bhanot, Senior Advocate & Mr. Siddarth Singhal, Learned
Advocate
ORDER
The present petition is filed U/s 7 of the Insolvency & Bankruptcy Code, 2016 read with Rule 4 of the
insolvency bankruptcy (Application to Adjudicating Authority) Rules, 2016 by the petitioner/ Depositors
jointly to initiate Corporate Insolvency Resolution Process on such ground that the Corporate Debtor
company M/s Jaypee Infratech Ltd, commits default in making payment to their maturity amount of the
fixed deposits, even after maturity periods and due date of payment has now become due.
The total outstanding amount on the petitioner's FD's is stated to have been defaulted is Rs. 85,79,105/-
(inclusive interest of Rs. 13,68,445/-.) The details particulars about the FD's, due date of its payment/ or
amount of payment are described in the synopsis and dates of events of the present petition.
The petitioners, who made their fixed deposits with the respondent corporate debtor company, claim their
status as such of 'Financial Creditor' under section 5(7) of the insolvency & bankruptcy code, 2016 for the
purpose of proceeding under the I & B code.
1607
The present Petition is however strongly opposed by the Respondent/ Corporate Debtor company raising
preliminary objection to the maintainability of the present petition and on locus-standi of the present
petitioner as 'Financial Creditor' in terms of the section 5(7) of the Code. It has been contended on behalf
of the Corporate Debtor Company that the subject matter of present petition does not fall within ambit
and scope of the insolvency & bankruptcy code. Hence the present company petition is liable to be
rejected on such ground. The Respondent/ Corporate Debtor counsel further contends that, it cannot be
said that the company has committed any 'default' in making payment of its deposits as this bench of
NCLT, in exercise of its powers vested in under section 74(2) of the companies act, 2013, vide its order
dated 12.04.2017 has already granted extension of time for such repayment of deposits up to 30.06.2017.
Hence, the present petition being not maintainable under the I & B code, before this court. Hence to be
rejected.
We heard the rival submissions made by learned chartered Accountant for Petitioners. We have gone
through the contents of the present petition as well as objection filed on behalf of the Corporate Debtor
Company and have perused the other material placed on record. It is now a matter of record that in
subsequent development this bench vide its order dated 09.08.2017 passed in CP(IB)No.77/ALD/2017
IDBI BANK LIMITED VS JAYPEE INFRATECH LIMITED in respect of the same Corporate Debtor
company has already initiated Corporate Insolvency Resolution Process and appointed an Interim
Resolution Professional Shri Anuj Jain by directing him to take over the management of company and
manage the affairs of the company.
In the light of aforesaid order, it is now not necessary to go into the merits of the Present Company
Petition and to deal with and determine the status of applicants as of Financial Creditors / Operational
Creditors as the case may be and their eligibility for filing the present application under section 7 of the
insolvency & bankruptcy code, before this court.
Considering the above stated factual/ legal position in the matter we feel the present company petition
now becomes infructuous. The legal issue, which is subject matter of the present petition on the status of
fixed depositors as 'Financial Creditors' can be dealt with by this court in appropriate case on some other
occasion. Hence, such issue is kept open. The present petition is being disposed of as become infructuous.
Notwithstanding the above, before parting with the present case, and in order to provide substantial
justice to the party concern, we feel appropriate to observe as such that the position of the present
petitioners is undisputedly as of stakeholders. Therefore, the IRP appointed by this court (in the above
referred matter) in respect of the corporate debtor company is equally expected to consider and take care
1608
of interest of petitioners along with other creditors/ stake holder (e.g. home / flats buyers) and to receive /
collect their respective claims in accordance with law.
In this respect it would not be out of context to refer to the relevant recommendation / extract of the
bankruptcy law committee report which has enumerated the basic principles of present code and pleased
to place reliance on principles of UNCITRAL Legislative Gide on insolvency, which speaks about the
following objectives for a collective insolvency resolution regime (UNCITRAL, 2005): and reads as
under;-
Principles for a new Code
1. Provision of certainty in the market to promote efficiency and growth.

2. Maximization of value of assets.
3. Striking a balance between liquidation and reorganization.
4. Ensuring equitable treatment of similar situated creditors.
5. Provision of timely, efficient and impartial resolution of insolvency.
6. Preservation of the insolvency estate to allow equitable distribution to creditors.
7. Ensuring a transparent and predictable insolvency law that contains incentives for gathering and
dispensing information.
8. Recognition of existing creditor rights and establishment of clear rules for ranking priority of
claims.
9. Establishment of a framework for cross-border insolvency.
These principles are derived from three core features that most well developed bankruptcy and insolvency
resolution regimes share; a linear process that both creditors and debtors follow when insolvency is
triggered; a collective mechanism for resolving insolvency within a framework of equity and fairness to
all stakeholders to preserve economic value in the firm as a going enterprise, or liquidates and distributes
the assets to the various stakeholder. These feature are common across widespread differences in structure
and content, present either through statutory provisions or their implementation in practice these feature
unsure certainly debt market corporate
BSLR Committee further chose the following principles to design new insolvency and bankruptcy
resolution framework, which may be reproduced hereunder;
1609
Principles driving the design
1. The code will facilitate the assessment of viability of the enterprise at a very early
stage.
2. The code will enable symmetry of information between creditors and debtors.
3. The code will ensure a time-bound process to better preserve economic value.
4. The code will endure a collective process. - The law must ensure that all key
stakeholders will participate to collectively assess viability. The law must ensure that all
creditors who have the capability and the willingness to restructure their liabilities must be
part of the negotiation process. The liabilities of all creditors who are not part of the
5. The code will respect the rights of all creditors equally. The law must be impartial to
the type of creditor in counting their weight in the vote on the final solution in resolving
insolvency.
6. The code must ensure clarity of priority, and that the rights of all stakeholders are
upheld in resolving bankruptcy. The law must clearly lay out the priority of
distributions in bankruptcy to all stakeholders. The priority must be designed so as to
incentivise all stakeholders to participate in the cycle of building enterprises with
confidence. While the law must incentivise collective action in resolving bankruptcy,
there must be a greater flexibility to allow individual action in resolution and recovery
during bankruptcy compared with the phase of insolvency resolution.
The above mentioned suggestions of the BSLR to the great extent, have been incorporated in the I & B
code which is evident from its preamble, which is reproduced hereunder;
"An Act to consolidate and amend the laws relating to

reorganization and insolvency resolution of corporate persons,
partnership firms and individuals in a time bond manner for
maximization of value of assets of such persons, to promote
entrepreneurship, availability of credit and balance the
interests of all the stakeholders including alternation in the
order of priority of payment of government dues and to
1610
establish an insolvency and bankruptcy board if india, and for

matters connected therewith or incidental thereto."
Considering the above stated preamble and guiding principles as described in bankruptcy
law reform committee. The IRP/RP is expected to give due weightage to the claim of the
present category of petitioners being stakeholders whose needs may appears to be greater,
then others.
The IRP/RP may take appropriate decision and to act in accordance with the provisions
of insolvency and bankruptcy code read with other applicable provisions of law. With the
above stated observation, the present petition stands finally disposed.
A copy of this order to be communicated to the IBBI, IRP, Committee of creditors

through the IRP and to the concerned parties through their counsel/representative.
1611
ALLAHABAD BENCH
C.P. (I.B.) No. 70 & 71/7/NCLT/ALD/2017

Vs.
Respondent: Rotomac Global Pvt. Ltd.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Sh. Anurag Khanna, Sr, Advocate, alongwith Sh. Rahul Agarwal,
Advocate
For Respondents/Defendant: Sh. Navin Sinha, Sh. Dinesh Kakkar, Advocates
ORDER
Present insolvency Applications i.e. CP No.(113)70/ALD/2017 and CP No.(IB)71/ALD/2017 are

tiled by the Financial Creditor the Bank of Baroda) against the Corporate Debtor Companies Rotomac
Global Private Limited and Rotomac Exports Private Limited respectively.
These applications have been filed U/s 7 of the insolvency & Bankruptcy Code, 2016 [hereinafter
referred to as "the Code] read with Rule 4 of the Insolvency & Bankruptcy (Application to Adjudicating
Authority) Rules, 2016 for triggering the Corporate Insolvency Resolution Process in respect of the
corporate debtor companies namely M/s Rotomac Global Private Limited (being principal borrower)
and further M/s Rotomac Exports Private Limited (as being surety to the loan availed). lance, both
the applications were heard together and for the sake of convenience, are being disposed of by this
common order.
Brief facts of the case, as per the Applicant Bank is that the Corporate Debtor Company has
committed default in making payment of its debts for outstanding amount of Rs.553,78,21,954.66/-
(Rupees Five hundred and Fifty-Three Crores, Seventy-Eight Lakhs, Twenty-One Thousand, Nine
Hundred and Fifty-Four and Sixty-Six Paise Only) such loan facilities have been availed by the
borrower company M/s Rotomac Global Pvt. Ltd, to which the another Corporate Debtor Company (in
CP No .71/2017) M/s Rotomac Exports has stood as guarantor. In addition to such loan the admitted
1612
outstanding debts due by the Corporate Debtors in respect of other secured creditors also comes around to
Rs.4,4201- Crores (Rupees Four Thousand Four Hundred Twenty Crores) which is evident from the
company's own letter dated 14th March, 2016 in respect of the loan amount advanced to the Rotomac
Global Put. Ltd+ being a principal borrower for which the Rotomac Export Pvt, 1.td. Company (herein
the Como rate Debtor in CP No.71 of 2017) stood as corporate guarantor. Hence, as per the Applicant
Banks, their liabilities are joint and several co-extensive with the liabilities of principal borrower. It is
stated that a default is occurred U/s 3(11) of the B Cock in making repayments of debts,
In support of its claim, the Applicant Bank has produced certain documents which are annexed with
the present Insolvency Bankruptcy applications to meet the requirement of Section 3(11) of the Code
which includes among other i.e. statement of accounts for the Borrower, C1.BIL Report, Report. o I the
Independent Auditor pertaining to the Borrower, Order of the Debt Recovery Tribunal (Allahabad Bench)
in CM 613 of 2006. her, the above stated documents annexed are stated as under:-
(A) I. A letter from the Borrower to the financial Creditor dated March 14th, 2016 acknowledging debt
owed to it under the Working Capital Consortium Agreement dated October 06"', 2015.
II. A letter from the Borrower to the financial Creditor dated March 3 1', 20 16 acknowledging debt
to the tune of Rs.35 Crores.
III. A reply of the Borrower to notice issued by the Financial Creditor under Section 13(2) of the
SARFAES I Act, dated November 28th, 2016.
IV. The demand Notice sent by the financial creditor to the Corporate Debtor Company Rotomac
Exports Pvt. Ltd . by invoking the corporate guarantee issued by it on February 03rd, 2014 and for
demanding payment to the tune of Rs.529,25,95,650167/- (as on November 2] ', 2016) in respect of loans
availed by the Borrower.
V. The recall letter sent by Financial Creditor to the Borrower dated May 11111, 20 i 6.
VI. A demand Notice sent by the Financial Creditor to interalia the Corporate Debtor Company and
the Borrower dated October 04th, 2016 for repayment of Rs.515,99,56,040.131-.
VII. The Demand Notice sent by the Financial Creditor to the Borrower under Section 13(2) of
SARFAESI dated November 21st 2016 for repayment of Rs.529,25,95,650,67/-. Corporate Guarantee
given by Corporate Debtor (e.g. M/s Rotomac Exports Ltd.)
(B) Corporate Guarantee given by Corporate Debtor (e.g. M/s Rotomac Export Ltd)
1613
I. Corporate Guarantee No. 1 dated 16.01.2001
II. Corporate Guarantee No. 2 dated 13.12.2010
III. Corporate Guarantee No. 3 dated 23.01.2012
IV. Corporate Guarantee No. 4 dated 03.02.2014
V. Consortium Corporate Guarantee dated 06.10.2015
The applicant Bank has annexed also a written communication which is sent by the proposed
Interim Resolution Professional in Form Noll informing such that there is no disciplinary proceeding
pending against him. Hence, the present applications to trigger the CIRP against the Corporate Debtor
Companies,
1. In opposition of these applications, the Corporate Debtor Companies have raised

objection stating that the Applicant-Bank was granting to it certain loan facilities from 2009 onwards and
time to time. The last loan facilities were sanctioned to a sum of Rs.435 crores as per the Consortium of.
Bank's Agreement. As the total loan availed by the Corporate Debtor Company through all the members
Banks of Consortium (including the Bank of India as a Lead Bank) comes around to Rs.2,129/- Crores.
Thus, as per the Corporate Debtor Companies such outstanding against the present Applicant
Bank/Financial Creditor in view of the amounts of loan advanced by the Consortium Banks comes only to
22% of the entire debts. it is reported that the Consortium of Banks is comprised of seven banks namely:-
i. Bank of India (Lead Bank)

ii. Indian Overseas Bank
iii, Bank of Baroda
iv. Allahabad Bank
v. Union Bank of India
vi. Oriental Bank of Commerce
viii. Bank of Maharashtra
2. As per the Corporate Debtor Company, the demand for making repayment of such loan
was first made by the Applicant-Bank on 04.102016, and not in 2015 as have been stated in the present
applications.
3. It is stated/contended that the Applicant Bank has already initiated proceedings before
the. Debts Recovery Tribunal, Allahabad Bench. Allahabad vide OA No,613 of 2016 and by the order
1614
dated 10.01.2017 (Exhibit XVO the Debts Recovery Tribunal, Allahabad has issued a recovery certificate
against the present Corporate Debtor ‘which includes guarantors e.g. M/s Rotornac Exports Pvt. Ltd.
Furthermore, the said recovery certificate is under execution by initiating a recovery proceeding before
the Recovery Officer of the DRT, Allahabad who has already issued a notice on 29.05.2017 under section
29 of the RDDBF I Act, 1993 to the Corporate Debtors.
4. It is also contended that apart the Applicant Bank has further issued notice dated
21.11.2016 under Section 13(2) of SARFAESI Act, and consequent thereto a symbolic possession has
also been taken by the Bank U/s 13(4) of the SARFAES1 Act in respect of secured/mortgaged properties.
5. It is also contended that although the Debts Recovery Tribunal, Allahabad passed an
order for issuing recovery certificates against the Corporate Debtor Company, but it was kind enough to
grant time for one year from the date of its order to make payment of such amount with such a direction
that in event of non-payment by the company during such period of one year, then such period may
further be extendable upto another six months to enable the respondents to liquidate its outstanding to the
Applicant-Bank.
It is stated that certain differences have arisen between the Management and the Applicant-
Financial Creditor Bank, due to such, the Bank has refused to give further financial assistance to the
Corporate Debtor Companies.
Therefore, a Joint Lender's Forum has earlier been constituted on 06.04.2015 with the Bank of
India as being Lead Banker and with other Banks in terms of the RB1 guidelines dated 26,12,2014. Tt is
reported that pursuant thereto, 8 meetings of the Joint Lender's Forum have so far been convened on the
issue of restructuring of debts between the periods 19.06.2015 to 05.11.2016 and the Banks were working
out for a restructuring programme but till the last meeting of HI held on 5th November, 2016 such
Resolution Plan could not be materialized and thereafter, no KT meeting could be held, On such pretext
that the Financial Creditor Bank has initiated a debt recovery proceeding against the Corporate Debtor in
the DRT, Allahabad as well as under the SARFAEST Act.
It is also alleged that Financial Creditor Bank went on further to declare the Corporate Debtor as
wilful defaulter by its decision dated 04.03.2017. 'Hence, such action of the Bank was impugned in a Writ
Petition No.12648 of 2017 filed by the Corporate Debtor Company before the Hon'ble Allahabad High
Court. The above said writ petition me to be disposed of by the Hon'ble High Court's order dated
20.04.2017 with following direction/observation:-
1615
"The Review Committee, thereafter shall pass a fresh order, as expeditiously as possible
and in any ease on or before 20.05.2017. After a fresh order is passed by the Review Committee, as
aforesaid the orders' dated 15.02.2017 and 04.03.2017 shall render in effective."
6. During the course of hearing, some clarifications \I/ere sought for by this Court from the
Financial Creditor/Applicant Bank who informed such that its above referred decision, has been duly
reconsidered pursuant to the (above stated) directions of the Hon'ble Allahabad High Court but there is no
change in it. Thus, the Corporate Debtor Company still stands categorised as a wilful defaulter. The
Corporate Debtor Company Rotomac Pvt. Ltd. made such allegation that Applicant Bank took such
decision deliberately despite such being facts that, it itself had 'participated in the JLF meeting held in
Mumbai on 05.11.2016.
7. It is further contended that the loan percentage of the present Applicant-Bank is Limited only
22% o f the total outstanding debts due to these Banks which comes around Rs.2,620/- Crores.
8. It is submitted that the Co orate Debtor Companies are pursuing the matter with the Lead
Bank as well a the other Banks to take a decision for bringing the company beck on track by preparing a
resolution plan and restructuring the debts but because of filing of the present application for pail, amount
of s, 00 Crores (odd), will necessarily .jeopardize the process of coming for settlement with the lead bank
as well as with the other banks, who are holding a stake of almost 80% of total outstanding debts.
9. It is also contended that, if one banker from the Consortium of Banks declare the
borrower company as a wilful defaulter then it will necessarily fetter its restructuring process. In support
of such contention the Corporate Debtors have referred to a Reserve Bank of India's Circular dated
26.02,2014. Which speaks such to consider "the possibility of restructuring the Account, if it is prima
facie viable find borrower is not a wilful defaulter." However since the Corporate Debtor has been
declared as a wilful defaulter the proceedings before the .JLF are going to adversely affected.
10. It is also contended that the amount of debts due to the Applicant-Bank of Baroda is only
a part of substantial amount due by the Corporate Debtor Company to the various other Banks, those have
not yet opted to file present application. Hence, admission or the present applications under the I (St B
Code would certainly jeopardize the entire process of restructuring of account of Corporate Debtor
Company, and if the company goes into liquidation, then there is every possibility that the present
Applicant-Bank may not get any redress from such liquidation as per the Applicant Bank is not a
Financer.
1616
11. The Corporate Debtor Companies have further pointed out that the manufacturing
activities of the Company are being carried out from Kanpur, Jamnagar and Ahmadabad wherein around
1000 employees are engaged on regular basis, Therefore, the result of admission of the instant
application5 Will necessarily lead to their un-employment and displacement of their families.
12. It is also submitted that the Corporate Debtor C:ompanies are hopeful enough that some
positive. result will come out in (he JL.F meeting that may be convened in immediate future (depending
upon the convenience of the various Banks), Hence, in the interest of justice the present applications are
liable to be dismissed with costs.
The Applicant-Financial Creditor in its rejoinder to the above stated objection has filed affidavit
of its Senior Manager Mr. Chandra Shekhar Awasthi stating interalia that the financial creditor flied its
Supplementary Affidavit4l on 21.06,2017 with respect to the observations made by, this Tribunal with
regard to interalia the maintainability of the present company petition,
The Applicant/Financial Creditor by way of this affidavit is bringing on record its reply to the
objections/counter affidavit filed by the Corporate Debtor. it is humbly submitted that:-
i. The contents of paragraphs no. 1 to 5 of the Counter Affidavit are either matters of record or
statement of fact.
ii. Vide the statements made in paragraphs 6, 7, 8, 11 & 25, the Corporate Debtor is admitting the
fact that it has availed a debt from the. Applicant and that it is in default with respect. to that debt.
iii. With reference to paragraphs 9, 9A, 10, 13.. 14, 15, 20, 22 & 23. it is submitted that the
fact that the financial creditor has initiated proceedings before the Debt Recovery Tribunal, Allahabad
Bench and it has also initiated proceeding under the Securitisation and Reconstruction of Financial Assets
and Enforcement of Security interest Act, 2002, or that the pendency of certain proceedings before the. I
Hon'ble High Court in Misc, Writ Petition No.1264gof 2017 arc not impediments to a financial creditor
for moving an application before this Hon'ble Tribunal under Section 7 of the Insolvency Code, and in no
manner affects its ability to do so,
iv. With reference to the submissions made by the Corporate Debtor in paragraphs 12, 16,
17, 18, 19, 21„ 22, 24 & 27 of the Counter Affidavit, It is replied that the fact that certain other creditors
of the Corporate Debtor Companies are working on certain mechanism to fix the default position of the
Corporate Debtor but it does not create. a bar o the Financial Creditor to approach Hon'ble Tribunal by
tiling present application under the provisions of the Code and nor it absolve the Corporate Debtor
1617
Companies from its obligation to repay its debt availed from the present Financial Creditor, In this
respect, the Financial Creditor has placed reliance on an order of the Hon'ble Appellate Tribunal in the
matter of M/s lnnoventive Industries Ltd. vis ICICI Bank & & Anr. Company Appeal AT (Insolvencv)
N0.1 & 2 of 2017 wherein the Hon'ble Appellate Tribunal has dealt with the question of whether in a case
the Joint Lender's Forum (A ,F) reached agreement and considering the debts restructuring of the
Corporate Debtor, then its prior permission is required by the financial creditor before filing an
application under Section 7 of the present Code. In this context, the Hon' File. NCLAT held and observed
as such:-
"Insofar as the Master Restructuring Agreement dated 8 September, 2014 is concerned,

the Appellant cannot take advantage of the same. Even if it is presumed that fresh
agreement came into existence, ii does not absolve the Appellant from paying the
previous debts are due to the financial creditor."
"the Tribunal/ has noticed that there is a failure on the part of the appellant to pay debts.
The Financial Creditor has attached different records in support of default of payment
Apart from that it is not supposed to go beyond the question to see whether there is a
_failure on fulfillment of obligation by Melina/Ida, creditor under on or other
agreement...."
........beyond the aforesaid practice, the Adjudicating Authority is not required to /00A
into any other factor, including the qUe511011 Whether permission or consent has been
obtained from on or other factor, including the JLE"
It is submitted that in fact, several other creditors including, Union Bank of India, Bank
of India, Indian Overseas Bank and Oriental Bank of Commerce have also initiated DRT
proceedings against the Corporate Debtor.
With reference to paragraph 2.6 of the Counter Affidavit, it is contended that the facts mentioned
therein have no bearing on !lac issue of &fault committed by the Corporate Debtor Companies and it
appears to be a frivolous attempt by it to divert the attention of this Hon'ble Tribunal from the actual issue
of commission of its default. In fact throughout in the contents of the Counter Affidavit, the Corporate
Debtor nowhere contested the claim of the Financial Creditor and in fact has admitted its default clearly.
During the course of hearing, this Court vide its order dated 15.06.2017 further sought for certain
clarification on procedural irregularity and defects by issuing a notice under Section 7(5) of the 1 & B
Code to the al Creditor which has been replied through an affidavit of Mr. chandra Shekhar Awasthi,
1618
wherein the Applicant Bank further took such a plea by bringing on record a Power of Attorney dated
June 19', 2017 executed by its Power of Attorney holder Sh. Brijesh Kumar Singh by appointing &
authorizing to Mr. Chandra Shekhar Awasthi as an attorney to file application on behalf of the Applicant
Bank against. the Corporate Debtor Companies including Ming of the present application i.e.
CP.No.(IB)70/ALD/2017 & CP No(IB)71/ALD/2017. Thus, the Bank has duly ratified the authority of
authorisation in favour of Mr. Chandra Shekhar Awasthi to sign the pleadings and to file the present
application. A copy of such power of attorney dated 19th, June, 2017 is placed on record alongwith his
affidavit. The Applicant Bank anther took such plea that the pendency of the recover proceeding before
the DRT, Allahabad and proceeding under the SARFAES1 Act arc not impediments to a Financial
Creditor for making an application U/s 7 of the I & B Code before this Tribunal and in no manner affects
its eligibility to do so. Further, the Applicant Bank placed reliance on a latest decision of Hon'ble
Supreme Court in the matter of Innoventive Industries Ltd. vis ICICI Bank & Ann and also to the view
taken by the Hon'ble NCLT, Chandigarh Bench in the matter of Punjab National Bank vis M/s James
Hotels & Ors., wherein it has been held that the provisions of the I & B Code are having over raid in
effect over other laws and 'wino latest law on the subject hence the proceedings before DRT will not
debar the right of Financial Creditor to file the application U/s 7 of the Code. It is also emphasised that
the proceedings under the DB1-1 Act is different one then the proceeding of I & B Code before the as the
formal relate to recovery of debt due to the Bank and Financial ion by way of proceeding against the
secured assets of debtor, ,ever, the later Code provides for securing assets of debtor in initial nine months
and to ascertain its liability for revival of a company or for a speedy liquidation. Therefore, the later Code
balance the interests of all the stakeholders including alteration in the priority of payment of Government
dues. It is also contended before us, in case the court finds that the present applications fulfil the
requirement of Section 7 read with Section 3(11) & (12), then it is not expected to call for further
explanation/submission keeping in view of language U/s 7(5)(b) of the Code and thus the Court being an
Adjudicating Authority is expected to admit the present application for triggering the CIRP in respect of
the Corporate Debtor Companies.
We have perused the pleadings and documents annexed therewith filed by the applicant Financial
Creditors as well as of the. Corporate Debtor Companies. We duly considered the above stated rival
submissions put forth before us by the learned counsel for both the parties i.e. Sh. Anurag Khanna, Ld. Sr.
Advocate alongwith Sh. Rahul Agarwal, Advocate for the Financial Creditor and Sh. Navin Sinha, Sr.
Advocate alongwith Sh. Dinesli Kakkar, Advocate on behalf of the Corporate Debtor Company. The Le.
Sr. Advocate representing the Financial Creditor drew our attention to the decision of the 1-Ion'ble
NCLAT passed in the matter of Innoventive Industries Ltd. ICICI Bank & Ann, wherein it has been held
1619
and ruled that the Adjudicating Authority on receipt of application U/s 7(2) is required to ascertain
existence of default on the basis of evidence furnished by the Financial Creditor under sub-Section (3)
including, Joint Lender Forum. Therefore, Ld. Sr. Advocate for applicant, the Adjudicating Authority is
not required to look into any other factor for consideration of admission or lion of the present application
except to as provided in the Code and on occurrence of default U/s 7, it is immaterial for deciding the
present application as to whether a prior permission of or consent from one or other authority including
the LF is obtained or otherwise. Therefore. according to him, the present application &serves for
admission.
In contra to this, Sh. Navin Sinha, Ld. Sr. Advocate alongwith Advocate Sh. Dinesh Kakkar for
the Corporate Debtor Company would submit that the financial creditor was not fair enough to approach
this Court because the debt owed to the Applicant Bank is only, 22% of the total debt owed to the
consortium of Ban other Banks except the present applicant other Banks have not opted to initiate such
proceedings, but went to constitute a Joint Lender's Forum on 26.12.2014 when. the amount of the
Corporate Debtor Companies become irregular. Such RI has been constituted as per the statutory
guidelines of RBI dated 06.04,2015 for the purpose of Revitalising Distressed Assets in the economy
through Joint Lender's Forum and Corrective action Nan Reference May kindly be made to Annexure S
of the Counter Affidavit at Page -35 Statutory Guidelines of the RBI. The present Applicant Bank is also
a member.
Therefore, it is submitted that instead of the fact, 8 meetings of JLF were held between the period
from 09.06.2015 to 05.11.2016 for the purpose of restructuring the debt of Corporate Debtor with a view
to come up with a viable plan for rehabilitating the financial condition of the Corporate Debtor Company
so as to ensure the repayment of the loans owed to the various constituent financial institutions of the JLF,
to which the present Applicant Bank was a also party by representing its meeting in the JLF but in later
course opted out from such proceedings moreover deliberately went on her to declare and categorized the
Corporate Debtor Company as a wilful Lifter by its decision dated 04.03,2017 which is done with some
malafide itention to make the Corporate Debtor Companies ineligible for seeking restructuring of its debts
and to put a complete stop on all the activities of the Joint Lender's Forum. Therefore, it is alleged such
that the Bank has taken steps in contravention to the Statutory guidelines issued by the RBI, hence, filing
of the present application under the 1 & B Code should not be entertained. In addition to this, the Ld. Sr.
Advocate further stressed on such point the Bank has already availed effective and efficacious remedy for
recovery of its debt under the SARFAESI Act and RDDBFI Act before the DRT, Allahabad, hence, such
attempt and act on the part of the Applicant Bank/Financial Creditor is wholly impermissible in law as
this would amount to FORUM SHOPPING. In support of his contention, he placed reliance on a decision
1620
of the Hon'ble Principal Bench of the NCLT in the matter of Anna urna Infrastructure Pvt. Ltd v/s Soril
Inra Resources Ltd. (CP No.(1B)-22(PB)/2017. in pars 27-
"We are further of the view that already proceedings or execution of the award have been
initiated An effective remedy has been availed by the applicant I'VE have not been able to
accept that a party can invoke more than on remedy in It /s inflict against the
fundamental principles of judicial administration to allow a party to avail more than one
remedies. Ordinarily only one remedy at one time could be availed as is evident from the
fundamental principles laid down in Section /0 CPC. It would promote rum shopping
which is wholly impermissible in law",
He further placed. reliance on a decision oldie Bombay High Court in Company Application ppI
No4470 of 2016 in Company Petition No.570/2016 alontwith group of matters in the matter of IDFC
Bank Ltd. v/s Ruchi Soya Indystries Ltd., wherein the Ld. Single Judge of the. le Bombay High Court
took such view by observing that if 98% of the s in value of the total dues of respondent are agreed to
oppose the mg up petition are participating in .11_1's meetings to take steps for rectification and
restructuring of the debts of respondent company then a winding up petition at the instance °fa petitioner
who claims only 1% of the total debts of the respondent company cannot be entertained and such order or
winding up in favour of the petitioner would not benefit generally the petitioner nor the creditors of the
respondent company. Thus, the Hon`ble Bombay High Court has pleased to consider the wishes of large
number of creditors who were seriously opposing the winding up of the respondent company as they had
agreed to take steps to revive the respondent company by taking corrective action plan. In view of this the
winding up petition was dismissed by the Hon' We Bombay High Court.
We gave due importance to the above stated judgment, however, with due respect to the Hon'ble
Bombay Nigh Court and Hon'ble Principal Bench, NLC.1. in the above referred judgment in our humble
opinion the above stated judgment is not of much assistance to the present Corporate Debtor Companies.
Keeping in view, the statutory provision of the Section 7 of the Code wherein pendency °fa dispute is no
Bar to a Financial Creditor when default occurred is of more than Rupees One Lakh to move the CIRP in
respect of Corporate Debtor. Further, the Horeble Supreme Court in its recent judgment in innoventive
Industries V/S ICIO. Bank & Anr. As well as the Hon'ble NCLAT its decision in the very same matter
has held the provision of the I & B Code are having overriding effect U/s 238 (Attie Code, Hence, in our
humble view the judgments as referred to on behalf of the Corporate Debtor Companies are
distinguishable and may not apply to the the present case. As the facts & circumstances of the case were t
before the Honible Bombay High Court in the matter of IDFC td. vi s Ruehi So a Industries Ltd as in that
1621
case the other creditors came forward to oppose the winding up petition, which is not the ease here before
this Tribunal as during the course of hearing through. the Corporate Debtor Company the views from the
lead Bank of the Consortium Bank were expected by informing such it about the pendency and current
proceedings before the JLF but no member other than the applicant Bank came forward to express its
view on the maintainability o f present application and opted to remain silent. Moreover, it is a fact the
functioning of the JLF is now not workable since the Corporate Debtor Company has been declared as a
wilful defaulter, That apart the Hon'ble NCLT in the matter of Annapurna Infrastructure Pvt. l .td. vis
Soril Resources Ltd. took a Iliew on such issue rvliere an adjudication betwlien the same parties is
pending in a Court having jurisdiction to adjudicate upon the same and a subsequently instituted suit on
the basis of same issue between the same parties cannot he allowed to proceed. While, we feel that the
pendency of the suit is distinguishable from restructuring of debts or resolution plan pending mulct.
consideration before the Joint Lender's Forum, Moreover, the lion' ble Supreme Court in the above
referred recent judement in the matter of Innoventive Industries Ltd. vis ICICI Bank & Anr. has ruled to
set u p i Euidelines and pleased to issue a mandate to us b observin as such 'because this is very first
licalion that has been moved under the Code, we thou ht it necessary to deliver a detailed judgment so that
all Courts and Tribunals ma take notice of a )aradi in shift i n the law. Entrenched managments are no
loir ,er allowed to coptinue in management if they cannot pay their debts."
The Insolvency & Bankruptcy Code, 2016 has been passed alter at deliberation and pursuant to
various committee reports, the most important of which is the report of the Bankruptcy Law Reforms
Commitiee of November, 1015. The Statement ()I-Objects & Reasons 1' the Code read as under:
"STA TEMENT OF OBJECTS & REASONS There is no single law in _India lhat
fleas with Insavency and an ProvisionN relating to insolvency and bankruptcy frr
companies ran b and in the Sick Industrial Companies (Special Provisions) Act,
1985, the Recovery of Debt Due to Banks and Financial Msfitutions Act, 1993, the
Securitisation and Reconstruction of Financial Assets and Enpreentent of Security
Interest d, 2002 and the Companies Act, 2013. These statutes provide for creation of
mu/1111k ,for a such as Board of In and Financial Reconstruction (/311-1?), Debt
Recovery Tribunal (DRT) and ,National Coinpfiny La 'v Tribunal (NCL T) illrd their
respective Appellate Tribunals. Liquidation qf companies is handled by the High
Courts. In Bankruptcy & Insolvency is dealt with under the Presidency Towns
Insolvency A et, 1909, and the Provincial Insolvency Act, 1920 and is (lath' with by the
Courts. The existing framework for insolvency and bankruptcy is inadequate,
ineffective and results in undue delays in resolution, therefore, i/ie proposed
1622
legislation. The objective of the Insolvency ct Bankruptcy Code, 2015 is to consolidate

and amend the laws relating to reorganization and insolvency resolution of corporate
persons, partnersh4) firms and individuals in a time hound nranner for maximization
of value of assets of such persons, lo promote entreprenelfrship, availability of credit
and balance the in ofall the stakeholders including alteration /n the priority of payment
of verin dues and to establish an Insolvency and Bankruptcy Fund, and matters
connected therewith or incidental thereto. A it effective legal framework fir timely
resolution of insolvency and bankruptcy would support development of credit markets
and encourage entrepreneurship. It would also improve Ease of Doing Business, and
more investments leading to higher economic growth and development he Code seeks
to provide Pr designating the CL. T DRI as the Adjudicating A uthorilles for corporate
persons and firms and in dividuals, respectively, for resolution of insolvency,
liquidation imd bankruptcy. The code separates commercial aspects' of insolvency and
bankruptcy proceedings ikon, judicial aspects. The Code also seeks to provide for
establishment ofthe Insolvency and Bankruptcy Board of India (Board) for regulation
of insolvency professionals, insolvency professional agencies and information Wiliam
Ti/l the Board is established, the Central Government shall exercise powers qf the
Board or designate any financial sector regulator to exercise the powers and ,functions
of the Board. Insolvency professional will assist in completion of insolvency resolution,
liquidation and bankruptcy proceedings envisaged /n the Code. Infirmation utilities
Would collect, co//u/c, as and disseminate financial in to facilitate such
proceedings. The Code also proposes to establish a _fund to be called the Msolvency
and Bankruptcy Fund of India for the purposes specified in the Code. The Code seeks
to provide for amendments in the
In Partnership Act, 193Z the Central Excise Ad, 1944, Customs Act, 1962, Income Tax
Act, 1961, the Recovery of Debts Due to Banks and Financial Institutions Act, 1993,
the Finance Act, 1994, the Securitisation and Reconstruction of Financial Assets and
Enforcement of Security Interest Act, 2002, the Sick Industrial Companies (Special
Provisions) Repeal Act, 2003, the Payment and Settlement Systems Act, 2007, the
Limited Liability Partnership Act, 2008, and the Companies Act, 2013.
The code seeks to achieve the alui lie objectives. "
1623
It is now matter of record that the Corporate Debtor Company M/s Rotomac Global Pvt. Ltd. Still
stands categorized as a wilful defaulter in the review / reconsidered decision dated 04.03.2017 of the
Bank of Baroda / Financial Creditor by reiterating the same. Such review of its decision is made pursuant
to a direction issued by the Hon'ble Allahabad High Court in the above referred writ petition which may
be subject to further challenge before the Hon'ble Allahabad High Court but the things remains still
unchanged until such decision (to classify the corporate debtor as a wilful defaulter) is not reversed by the
Hon'ble High Court or by a competent court of law. Thus in our view, till then the joint Lender's Forum is
not in a position to work on preparation of a resolution plan, if any, in respect of the corporate debtor
company, nor such plan can be materialized until & unless such legal disability/procedural difficulty is
removed by a competent court of law. It is also reported that the meetings of the JLF are not being
convened since long nor any resolution plan in respect of the corporate debtor companies has so far been
materialised.
Thus, in the light of above stated discussion and by perusal of the present applications filed by the
Financial Creditor, it seems that these are found to be filed in conformity with Section 7 of Code to meet
the requirement of Section 3(11) and 3(12) of the Code, which reads as under:-
Section 3(11) "debt" means a liability or obligation in res act of a claim which is due from
airy person and includes a financial debt and operational debt;
Section 3(12) "default" means non-payment 01 debt when whole y part or instalment of the
amount of debt has become due and e and is not repaid by the debtor or corin debt, as the
may be;
Keeping in view 01 the above stated provision of the 1 & B Code, the present
applications/petitions are found complete for admission and to trigger a CIRP in respect of Corporate
Debtor Companies, moreover, the legal position in I & B Code has recently been settled by Hon'ble Apex
Court in the matter of1447s. innoventive Industries Ltd versus WWI Bank wherein it has been held as
such., the moment the court is satisfied that a default has occurred, then the application tiled by the
financial creditor under Section 7 of the Code must be admitted (unless it is found incomplete) the I I h] e
Supreme Court further pi eased to observe, "that the non-obstinate clause, in the widest knit): possible, is
contained in Section 238 of the Code, so that any right of the corporate debtor under any other law cannot
come in the way of the Code"
Further, the Hon'ble NCLAT, in the very same case before, it has ruled that the 'Adjudicating
Authority' on receipt of the application under Section 7 sub-section (2) is required Lo ascertain existence
1624
of default on the basis of evidence furnished by the Financial Creditor under sub-section (3). The
'adjudicating authority' is required to satisfy three things Occurrence of default; application is complete
and no disciplinary proceedings is pending against the proposed Insolvency Resolution Professional.
Beyond the aforesaid practice, this 'Adjudicating Authority' is not required to look into any other factor;
including the question whether permission or consent is obtained from one or other authority, including
1/w JLF (Joint Lender's forum)."
Further, the Hon'ble Allahabad High Court in its recent decision in the matter of Sanjeev Shriya
v/s State Bank of India & 6 Ors. (Writ-C No. 30285/2017) and in connected case Deepak Singhania &
Anr. v/s State Bank of India (Writ-C No. 30033 of 2017) has also held that the provision of I & B Code
would prevail over the provisions of DRT proceedings by observing (in the relevant para nos. 21,24, 29,
31, & 32 of the judgment) as such:-
21. Section 60 .simulates that they Adjudicating A mill o thy, in relation to insolvency
resolution and liquidation for emporate per including corporate debtors and personal
guarapptors thereof; shall be the National Company Law Tribunal having territorial
jurisdiction over die place where the registered office the 7orporate person is located. s
per provisions contained under Section 60 qf the IBC, 201 the National Company Law
Tribunal shall he die Adjudicating A tiff, on for Insolvency resolution and I liquidation of
corporate debtors and also lays down the criteria for establishing the territorial
jurisdiction of the Tribunal. The insolvency resolution or bankruptcy proceedings
relating to a personal guarantor of a corporate debtor shall also be filed before the
National Company Law Tribunal
24. The object of [SC. 2016 is. categorical and as per provisions contained under Section
60(1) the Adjudicating Authority, in relation to in resolution and liquidation fir corporate
persons including corporate debtors and personal guarantors. thereof shall be the
National Company Law Tribunal. In the present matter, ,leinrittedly the proceeding has
been initiated under the /BC, 1 and the Moratorium Under Section 14 of the IBC, 201 has
already been issued b the NUE The NCLT is already ceased with the process of
Insolvency resolution against the company (in 14.) under IBC, 201 and moreover, the SRI
has also put their appearance in the said proceedings regarding its claim. Ai no point of
time the SRI has disassociated itself from the proceeding before NCLT and it is actively
participating in the proceeding.
1625
29. In the present matter, ii has been urged that while passing the impugned order the DR
T /Iasi-ailed to take notice of Part-in off BC, 2016, wirk7h prevails Over the provisions qf
the A c t 1993. I/ has also been urged that the entire proceeding befrre the DR T
completely P.vithout jurisdiction precisely in the backdrop that once the proceeding has
alremly been commenced under IBC, 2016 and Moratorium under Section 14 q1Bc..,
2016 has already been issued and even in the said proceeding the parties have put their
appearance before the insolvency professionals, then the impugned proceeding agallist
the guarantors of principal debtor is per se had
31. This Court is (ye the considered opinion that in the aforementioned facts
iireumstances one the sufficient safeguards. are provided in the I BC, 2016 & die
reguiations fremind thereunder to the bank, and even the liability has not been
crystallized either against the principal debtor or guarantors/mortgagors at present,
then the proceeding, wi: icFi is pending before the Debt Recovery Tribunal, dilahabad
cannot go on and the same is stayed till the finalisation of corporate insolveng.P
resolution process or till the NCLT approves the resolution plan under sub section (1) of
Section 31 or pass o an order for liquidation o f corporate debtor under Section 33, as
the case may he.
32. With the afiresaid directions/observations, both the writ petitions are disposed of
By considering the above stated legal and factual position of the present case, such
objections raised by the Corporate Debtor Companies carry no force that the Applicant
Bank cannot. move an application under the 1 & B Code before this Court., while the
JLF is considering or has seized of the issue of resolution plan for the Corporate Debtor
or the Applicant Bank the present petition contrary to the guidelines issued by the RBI. C
in our humble opinion such objection/contention may sound high, medy lie elsewhere not
necessarily before (his Court under the I & B Code. The company could take up such
issue with the RBI but such action does not necessarily debar the Applicant Bank for
filing present application under the 1 & B Code before this Court nor jurisdiction of this
Courts is expressly barred, if such R.BI Circular/Guidelines are ignored or violated by
the Applicant Bank. Moreover, M/s Rotomac Global Pvt. Ltd. earlier itself, in its letter
dated March 14th, 2016 NoRGPL12015-16 addressed to AGM,
By considering the above stated legal and factual position of the present case, such objections raised by
the Corporate Debtor Companies carry no force that the Applicant Bank cannot. move an application
1626
under the I & B Code before this Court., while the JLF is considering or has seized of the issue of
resolution plan for the Corporate Debtor or the Applicant Bank the present petition contrary to the
guidelines issued by the RBI. C in our humble opinion such objection/contention may sound high, middy
lie elsewhere not necessarily before (his Court under the I & B Code. The company could take up such
issue with the RBI but such action does not necessarily debar the Applicant Bank for filing present
application under the I & B Code before this Court nor jurisdiction of this Courts is expressly barred, if
such R.BI Circular/Guidelines are ignored or violated by the Applicant Bank. Moreover, M/s Rotomac
Global Pvt. Ltd. earlier itself, in its letter dated March 14th, 2016 NoRGPL12015-16 addressed to AGM,
Bank of India, Kanpur earlier has proposed for reassessment of its non-fund based limits from Rs.2,250/-
Crores to Rs.4220/- Crones out of which a debt of 1 .3. 1001- Crores as a non-fund based loan has been
duly admitted. Since, such being position that the Corporate Debtor Companies are, not able to repay its
debts then, its Board of Director cannot he expected to remain in and to keep continue with the affair of
managing the company, As per its biter dictum the Hon'ble Supreme Court in the above referred matter of
Innoventive Nis ICICI Bank has pleased to refer Bankruptcy Law Reforms Committee (BLRC) Report
and made some observation (in its relevant para) for the sake of convenience may he reproduced here
under:
16. At this stage, it is important to set out the important

paragraphs contained in the report of the Bankruptcy Las
Reforms Committee of November, 2015, as these excerpts give u a
good insight into why the Code was enacted and the purpose for
which it was enacted:
XXX XXX XXX XXX
"The limited liability company is a contract between equity) and debt,
As ion as debt obligations are met equity owners have complete
control, and creditors have no say in how the business is run. When
default take place, control is supposed to transfer to the creditors
equity owners have no say."
Under these conditions, the recovery rates obtained in India are
among the lowest in the world When delimit takes place, broadly
speaking, lenders seem to recover 20% of the value of debt, on an
NPV basis,
When creditors know that they have we lights' resulting a low
recovery rate, they are averse to lend, Hence, lending in India is
concentrated in a few large companies that have a low probability of
failure. Further, secured credit dominates, as creditors rights are
partially present only in this case, Lenders have an emphasis 0 n
secured credit In thi6 case, credit analysis is relatively easy: It only,
requires taking a view on the market value of the collateral As a
consequence, credit analysis of the business prospects of a firm has
shrivelled.
1627
XXX XXX XXX XXX
"The key economic question in the bankruptcy process
The Committee believes that there is only one correct forum for
evaluating such possibilities, and making a decision: a creditors
committee, where all financial creditors have votes in proportion to
the magnitude of debt that the ; hold In the past, taws in India have
brought arms of the government (legislature, executive or judiciary
into this pest ion. This has. been strictly avoided by the Committee.
The appropriate disposition of a defaulting firm is a business
decision, and only the creditors should. make it,"
XXX XXX XXX XX.X
"Speed is of essence
Speed is of essence for the working of the bankruptcy code, for two
reasons. First while the 'cairn period' can help keep an organisation
afloat, without the fill/ clarify of ownership and control, significant
decisions cannot he made. Without effective leadership, the firm -will
tend to atrophy and Al The longer the delay, the more likely it is that
liquidation will be the only answer, Second, the liquidation value
tends' to go down with time as many assets suffer from a high
economic rate of depreciation.
From the viewpoint of creditors, a good realisation can generally be
obtained if the ,firm is sold as a going concern. Hence, when delays
induce liquidation, there is value destruction. Further, even in
liquidation, the realisation is lower when there are delays, Hence,
delays cause value destruction, Thus, achieving a high recovery rate
is primarily about identifying and combating the sources off delay "
XXX XXX XXX XXX.
"The role that insithgenry and bankruptcy plays in debt financing
Often, an enterprise may be as successful business model while still
filling to repay, its creditors. A sound bankruptcy process is one that
helps creditors and debtors realise and agree on agree the entity is
facing financial failure and business failure, This is important to
allow both parties to realize the maximum value of-the business in the
insolvency."
XXX XXX XXX XXX
"Control of. a company is not divine right, When firm default on its
debt control of the company should shift to the creditors. In the
absence of swift and decisive mechanisms for achieving this
management teams and shareholders retain control after default,
Bankruptcy law must address this,"
In the light of the aforesaid rulings and the law of the land as declared by the Hon'ble Supreme
Court under Article 141 & 144 of the Constitution of India, this Court is equally bound by it and is
expected to act in aid with the Hon' ble Supreme Court. Therefore we find that the objections as raised by
the or Debtor Companies are no lonver relevant for rejecting the present petition under the 1. B Code,
1628
Moreover, it is a matter of record that the Corporate Debtor Companies M/s Rotomac Global Private
Limited itself through its letter dated 14.03.2016 has admitted its loan liability to the extent of Rs.3,100/-
Crores. Such beina the factual position the Company is not to repay its debts then its management cannot
he expected to have a divine right to keep continue with the. managing the affair of the company.
Therefore, by considering. the above stated facts & circumstances of the present applications and
by following the Judicial Trends, as settled we find that the present applications deserve for admission,
hence, are admitted Section 7 of I & 13 Code, 2.016 with such consequential directions which given as
under: -
1. That this Bench hereby appoints Mr. Anil God, Registration No :111B 11P -0014 P P-00 II 8/20
7-201 8/10253., Address AAA, insolvency Professionals LLP, E-104, /Kailash Colony, Greater Kailas11-
i , New Delhi, National Capital Territory of Delhi 110048; Email ID anilgoel@aaainsolvency.com cont as
I Racal Resolution Professional to can)... the functions as mentioned under Insolvency and Bankruptcy
Code, 2016 in respect of both the Corporate Debtor Companies,
2. That the order oF moratorium to is 14 shall have effect from 20 September, 201 7 till the
completion of corporate insolvency resolution process or until this Bench approves the resolution plan
under subsection (1) of Section 31 or passes an order for liquidation of corporate debtor under section 33
as the case may he.
3. That this Bella hereby prohibits the institution of suits or Continuation of pending suit or
proceedings against the corporate debtor including execution of any judgement, decree or order in any
court of law, tribunal, arbitration panel or other authority; transferring, encumbering, alienating or
disposing or by the corporate debtor any of its assets or any legal right or beneficial interest therein; any
action to foreclose, recovery or Lin force any security interest created by the Corporate Debtor in respect
of its property including any action under the SARFAESI Act, 2002; the recovery of any, property by an
owner or Jess or where such property is occupied by or in the possession of the corporate debtor.
4. That the supply of essential goods or services to corporate debtor continuing, shall not be terminated or
suspended or interrupted during the Moratorium period Corporate Debtor to provide effective assistance
to the II P as and when he takes charge of the Corporate Debtor.
5. That the provisions of Section I 4 sub-Section (1) shall not apply to such transactions as may be
6. That the public announcement of Corporate Insolvency Resolution Process be made immediately
as specified under Section 13 of the code and calling for submissions of claim under Section 1 of the
Code,
7. The Interim Resolution Professional shall perform all his functions strictly which are
contemplated, interracial, by Sections 17, 18, 20, 21 of the Code. It is further made clear that all the
personnel connected with Corporate Debtor, its promoter or any other person associated with
management of the Corporate Debtor are under legal obligation under Section 19 of the Code extend
every assistance and cooperation to the Interim Resolution Professional. Where any personnel of the
corporate debtor, its promoter or any other person required to assist or co-operate with IRP, does not
assist or co-operate, IRP would be at liberty to make appropriate application to this Tribunal with a prayer
for passing an appropriate order.
1629
8. The IRP shall be under duty to protect and preserve the value of the property of the 'Corporate
Debtor' and manage the operations of the Corporate Debtor as a going concern as a part of its obligation
imposed by Section 20 of the I & B Code, 2016.
9. Further in the light of Hon'ble Supreme Court Judgement the case of Chitra Sharma & ors. Ws
Union of India & ORS.2 read with decision of this bench in the matter of Prabodh Kumar Gupta & ors.
v/s. Jaypee Infratech Limited and in the spirit of Preamble of present Insolvency and Bankruptcy Code
and considering the guiding principles as described in Bankruptcy Law Reform Committee Report, IRP is
expected to take care of the interest of other Creditors and stakeholders, who are not necessarily coming
under definition of "Financial Creditor" or "Operational Creditor" but whose needs may appears to be
greater than others.
10. The Registry is hereby directed to communicate a copy of this order to the Financial Creditor and
the Corporate Debtor after the completion of necessary formalities.
11. A Copy of this order may also be communicated to the IRP as well as to Insolvency and
Bankruptcy Board of India. No order as to cost.
1630
By Hon’ble NCLT Bengaluru Bench
1631
Order Passed by Sec 7
BENGALURU BENCH
C.P. (I.B.) No. 36/7/NCLT/BB/2017
Applicant: Vedha Marketing Corporation

Vs.
Respondent: G.K. Shelters Private Limited
Judges/Coram:
Hon'ble Sh. Ratakonda Murali, Member (J)
Dr. Ashok Kumar Mishra, Member(T)
Counsels:
For Appellant/Petitioner/Plaintiff: Poornima Hatti and Harish B.N., Learned Advocates
For Respondents/Defendant: C.V. Nagesh Associates, Learned Advocates
ORDER
Hon'ble Sh. Ratakonda Murali, Member (J); Dr. Ashok Kumar Mishra, Member (T)
Ms. Poornima Hatti and Shri Harish 13.M. filed vakalat for Petitioner Company. A memo was
filed on behalf of Petitioner Company seeking permission for withdrawal of the petition on the ground
that the petitioner company is taking steps to settle the debts of the creditors. In case the company does
not succeed, liberty be given to the petitioner company to approach the Tribunal afresh.
Since the Corporate applicant is seeking permission to withdraw the petition, there is no problem
to grant permission to the petitioner to withdraw the petition.
Therefore, permission is granted. Memo is recorded. The petition is dismissed as withdrawn with
liberty to approach the Tribunal.
1632

BENGALURU BENCH
C.P. (I.B.) No. 04/7/NCLT/BB/2017
Applicant: Vedha Marketing Corporation

Vs.
Respondent: G.K. Shelters Private Limited
Judges/Coram:
Hon'ble Sh. Ratakonda Murali, Member (J)
Dr. Ashok Kumar Mishra, Member(T)
Counsels:
For Appellant/Petitioner/Plaintiff: P. Suresh, Learned Advocates
For Respondents/Defendant: C.V. Nagesh Associates, Learned Advocates
ORDER
Hon'ble Sh. Ratakonda Murali, Member (J); Dr. Ashok Kumar Mishra, Member (T)
Counsel for petitioner is present. counsel for respondents is also present. Parties to the petition are present
including their counsel.
They filed joint memo stating that the matter is settled and that the matter may be closed recording
settlement.
The memo is recorded. The matter is settled between the parties outside the Tribunal.
The petition is therefore, dismissed as settled out of Tribunal.
1633
By Hon’ble NCLT Chandigarh Bench
1634

CHANDIGARH BENCH
C.P. (I.B.) No. 15/7/NCLT/CHB/2017

VS
Respondent: James Hotels Ltd.,
Judges/Coram:
Hon'ble Sh. R.P. Nagrath, Member (J)
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. R.S. Bhatia, Advocate
For Respondents/Defendant: Mr. Anand Chhibbar, Senor Advocate with Mr. Nitish K. Vasudeva,
Advocate
ORDER
1. This application is filed by Punjab National Bank, a body corporate, constituted under the Banking
Companies (Acquisition & Transfer of Undertakings) Act, 1970. the Financial Creditor under Section 7
of Insolvency and Bankruptcy Code, 2016 {for short to be referred hereinafter as 'the Code') read with
rule 4 of Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules 2016 (for brevity the
Rules') against the Corporate Debtor for having defaulted in making payment of the financial debt. The
application has been filed through Shri Shambunath Gupta, Assistant General Manager, Branch Office
ARMB, Sector 17, Chandigarh, who is authorised to file this application vide power of attorney dated
15.02 1995, cony of which is at Annexure 1. The competent authority has also permitted the filing of the
application vide letter dated 30.03.2017 Annexure 2.
2. The application has been filed in Form No.1 of the Rules as required by Rule 4(1) of the Rules The
instant application has been filed exactly in terms of format in Form Nal , which is in five parts providing
the necessary information. Under sub-rule (3) of rule 4 of the Rules, the petitioner is required to despatch
copy of Application filed to Adjudicating Authority through the registered post or speed post to the
registered office of the Corporate Debtor. The petitioner attached the pasta! receipt dated 05 04.2017 of
despatch of the application.
1635
3. The matter was listed for the first time before us on 07 04,2017 and on the said date, appearance was
made by Mr Anand Chhibbar. learned Senior Advocate with Mr. Gaurav Mankotia, Advocate for the
Corporate Debtor'. On 07.04.2017 the petitioner/Financial Creditor was directed to file an affidavit of
despatch of the notice to the registered office of 'Corporate Debtor' and also furnish fresh synopsis of
dates and events, as the date of CP number was left blank. This compliance was to be made by
13.04.2017 The said compliances were made by the petitioner-financial creditor. Copy of these
documents were supplied to the learned counsel opposite.
4. The matter was, however, adjourned from 07.04 12017 to 19.04.2017 due to spell of holidays from
08.04.2017 to 16.04.2017. 22.04.2017 and 23.04.2017 were the weekly holidays These observations are
being made in order to calculate the period of 14 days within which, the application filed by the Financial
Creditor' is to be decided. Taking the actual working days into account, the application being disposed of
within a period of 10 days from the date when it was listed before the Bench for the first time.
5. It is admitted fact that the 'Corporate Debtor' was incorporated on 25.08.1980 in the name of Mehfil
Restaurants & Hotels Limited The name of the company was changed to James Hotels Limited in 1992
with fresh certificate of incorporation obtained on 20.03.1992. The certificate of incorporation of the
Corporate Debtor' with changed name is at Annexure 3, with which the Memorandum and Articles of
Association have been annexed. The CIN number of the Corporate Debtor is L55101CH1980PLC004249
The `Corporate Debtor has the authorised share capital of Rs. 14,00,00 000/- and its paid up capital is Rs.
8.00,05,0001-.
6. In Part ill of Form No.1 . the 'Financial Creditor' has proposed the Interim Resolution Professional as
Mr. Vivek Goyal, House No. 5756, Duplex Complex, MHC Manimajra and there is also the written
communication in Form 2 annexed as Annexure 4. When the matter was listed on 19.04.2017 statement
of the proposed IF Mr.Vivek Goyal was recorded, He stated that he has since been appointed as
Insolvency Resolution Professional on 12.04.2017 i e after Ming of this petition by the Hon'ble Principal
Bench of National Company Law Tribunal New Delhi, in Insolvency Petition No.26 (ND) of 2017 titled
as Prideco Commercial Projects Pert Ltd. Vs MIs Era Infra Engineering Ltd. He further stated that he is
eligible to be appointed as Resolution Professional in respect of Corporate Debtor in terms of Regulation
3 of Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons)
Regulations, 2016 (for short the Regulations) and that he is not a related party to the parties to this
petition. He is neither employee nor promoter or partner etc. of the respondent company or connected
with the petitioner Bank, He undertook to abide by the Code of Conduct set out by the Board under the
Regulations.
1636
7. We have heard learned counsel for the applicant-petitioner and the learned senior counsel for the
'Corporate Debtor' and perused the record with their able assistance.
8. The crucial issue before the Adjudicating Authority would be to ascertain the existence of default from
the records of an information utility or on the basis of other evidence furnished by the financial creditor as
per subsection (3) of Section 7 of the Code The other contentions raised by the learned counsel for the
parties would be discussed in the later part of this order
9. As per sub-section (3) of Section 7 of the 'Code', the 'financial creditor' has to furnish along with the
application-
professional and
The information utility has not so far been formed. Therefore. the existence of default has to be
ascertained from the other record of evidence of default, which is attached with the instant petition.
10. The term 'specified' Js defined in Section 3 (32) of the Code as meaning specified by regulations made
by the Board under this Code and the term 'specify shall be construed accordingly. Under regulation 8 (2)
of the Regulations, the existence of debt due to the financial creditor may be proved on the basis of
(a) the records available with the information utility, if any
(b) other relevant documents, including-
(i) a financial contract supported by financial statements as evidence of the debt;
(ii) a record evidencing that the amounts committed by the financial creditor to the corporate debtor under
the facility has been drawn by the corporate debtor;
(iii) financial statements showing that the debt has not been repaid, or
(iv) an order of a court or tribunal that has adjudicated upon the non-payment of a debt, if any.
11. In part IV of the application in Form 1 against the relevant columns, the applicant-financial creditor
has mentioned the date of sanction of the term loan of Rs. 28.00 crores as per sanction letter !dated
09.01.2010 and further amount of Rs. 3.40 crores sanctioned on 29 11.2012 The total amount in default is
1637
shown as Rs. 52 57,19.407/- along with interest upto 31.03.2017 for which the calculation sheets in
respect of all the three different loans are at Annexure 5 to 7.
12. As per the information given in part V of Form No 1, the original term loan of Rs. 28 00 crores, was
sanctioned to the 'Corporate Debtor' vide sanction order dated 28.01.2010. Annexure P-12 is the sanction
order in favour of Corporate Debtor The terms and conditions of the term loan are annexed with this
Annexure Annexure P-14 is the agreement dated 18.03.2010 in respect of hypothecation of assets to
secure the loan executed by corporate debtor. Annexure P-15 dated 18.03.2010 is agreement of
Hypothecation of movable assets forming part of Fixed/Block assets and agreement of hypothecation of
current assets of the even date is at Annexure P-16.
13. It is further stated that the loan was rescheduled and second term loan was sanctioned on 29.11.2012
It is revealed that now the irregular portion of the initial loan was transferred to FITL Account. The
sanction order dated 29.11.2012 is Annexure P-13. As per this letter, the fresh loan consisted of term loan
of Rs. 27.29 crores, additional term loan of Rs. 3.40 crores and funded interest term loan (FITL) of Rs.
3.38 crores were sanctioned. Alongwith this sanction letter, the terms and conditions are annexed.
14. Learned counsel for the petitioner referred to the repayment schedule in respect of term loan of Rs.
3.40 crores as fixed in the sanction letter to be 48 monthly instalments of Rs. 1 lac each commencing
w.e.f April. 2015: 36 monthly instalment of Rs. 10 lacs each w.e.f. April, 2019 and 8 monthly instalment
of 10 lac each with effect from April, 2022 The other condition was that the interest during the
implementation period and thereafter to be serviced/recovered as and when levied was also to be paid.
Similarly, the instalments were also fixed in respect of the repayment of the FITL and the rescheduled
term loan of Rs. 27 29 crores with the clause of interest to be deposited as and when levied. The
supplementary agreement dated 30.11.2012 on the basis of the aforesaid sanction in respect of Rs. 27.29
crores is Annexure ID-17; for fresh term loan of Rs. 3.40 crores Annexure P-18. These agreements
executed by the corporate-debtor also contain the repayment schedule as per the sanction letter.The fresh
hypothecation agreement in respect of all the three loans are at Annexure P-19 arid P-20 both dated
30.11.2012.
15. The petitioner Bank has also disclosed that in order to secure the loan, the corporate debtor mortgaged
the Hotel constructed on the land situated on commercial plot measuring 9602 square yards in Block No 1
Sector 17-A Chandigarh, in which the Corporate Debtor has lease hold right. In the list of events, it is also
pointed out that State Bank of India and United Bank of India also sanctioned the term loans to the
Corporate Debtor. SBI has granted the term loan of Rs. 45 crores and United Bank of India gave term
loan of Rs. 9.5 crores. The SBI has assigned the loan to ARCIL The Financial Institutions have pari
1638
passu charge on the aforesaid property along with the ARCIL and United Bank of India, The Certificates
of Registration of charges with the ROC are Annexure-8 and issued by ROC on 20.04.2010 and nnexure-
9 in respect of the charge created on 30.11.2012 Annexure-9 was issued on 22.01.2013.
16. The question basically that falls for consideration is whether the Corporate Debtor has defaulted in
making the payment. For that also, there was no dispute in the written objections filed by the Corporate
Debtor, but the argument vehemently raised by learned Senior counsel was that the Corporate Debtor has
seriously challenged the manner of calculation of the outstanding amount and therefore, the amount of
default cannot be possibly determined. particularly when various litigations are pending about the amount
of default as claimed by the petitioner Bank It would be pertinent to refer to the definition of term 'default'
given in Section 3 (12) of the Code. The 'default means non-payment of debt, when whole or any part or
instalment of the amount of debt has become due and payable amount is not repaid by the debtor or the
corporate debtor, as the case may be. So the term used is very wide and thus calculations of the exact
amount of default is not required to be determined by the Tribunal before admitting the application. This
aspect has been properly taken care of by the Statutory Regulations. Regulation 10 of the Regulations
says that the interim resolution professional or the resolution professional, as the case may be may ca4 for
such other evidence or clarification as he deems fit from a creditor for substantiating the whole or part of
its claim Under Regulation E. the creditor has to bear the cost of proving the debt due to such creditor_
17. It would also be relevant to refer to regulation 14 of the Regulations, which reads as under
"14. (1) Where the amount claimed by a creditor is not precise due to any contingency or
other reason the interim resolution professional or the resolution professional as the case
may be, shall make the best estimate of the amount of the claim based on the information
available with them.
(2) The interim resolution professional or the resolution professional, as the case may be,
shall revise the amounts of claims admitted, including the estimates of claims made under
sub-regulation (1), as soon as may be practicable, when he comes across additional
information warranting such revision"
So the above provisions would take care of contentions raised with vehemence by the learned senior
counsel for respondent.
18. The primary documents for determining the default would be the copies of the statements of account
certified under the Banker's Book's Evidence Act Learned counsel for the petitioner would refer to the
statement of account Annexure 22 relating to the term loan of Rs. 28 crores: Annexure 23 in respect of
1639
fresh term loan of Rs. 3.4 crores and Annexure 24 in respect of FITL loan of Rs. 3.38 crores. These
statements would fortify the contention of learned counsel for the applicant that no instalment was
deposited after the account was declared NPA in the year 2014.
19. The applicant-financial creditor has also made the calculation chart of outstanding amount upto
31.03.2017 Annexure 5 to 7 and as per default statements the total amount comes to be Rs. 52,57,19.407,
though this calculation may not be accepted, as the exact amount of default to be ultimately determined,
in case the IIMP is appointed. But the fact remains that there is default committed by the Corporate
Debtor in making the payments to the financial creditor.
20. In the statutory Form l at Sr. No 6 of Part-V the applicant- corporate debtor' is to inform, if there is
any record of default available with any credit information company. The applicant has relied upon
Annexure 21, the report of Credit Information Bureau (India) Limited to be also evidencing the default
committed by the corporate debtor.
21. The corporate debtor has stated in the objection petition that the Applicant/ Financial Creditor intends
to thwart the working of the company which even after turbulent times managed to sustain itself and has
also approached the Bank for restructuring the loan and to make one-time settlement. The Bank, however,
wants to grab the possession of the property and sell to the land mafia for peanuts. It was further alleged
that Corporate Debtor was always ready to do one-time settlement and request was also made to the Bank
for OTS, but same was not accepted by the Bank. It was stated that many debtors have been privileged
with the offer of restructuring of their loans throughout the country. The above are not the relevant
question on the basis of which the application can be rejected It is rather not the version of the corporate
debtor in the objection petition that any instalment was paid by it after the account was declared NPA in
the year 2014. The above facts amount to admission of the default by the corporate debtor The
apprehension projected by the 'corporate debtor' can be taken care of by the IRP who has to take charge of
the company as a going concern. He may even make efforts to settle the debts with the applicant.
22. The learned senior counsel for the Corporate Debtor however, laid emphasis on the language of sub-
section 5 of Section 5 of the Code and vehemently contended that the Adjudicating Authority is to first
satisfy itself that the application is complete and to then determine that the Corporate Debtor has
committed default. Learned counsel submits that the application cannot be considered as complete as the
information in respect of various litigations has not been provided, The other contention is that even no
notice of this petition to the other financial creditors to whom the corporate debtor owes about 60% of
total loan, namely: the SRI now ARGIL as well as United Bank of India. The learned senior counsel
further submitted that there are about 36,80,05,000 shareholders of the company and shareholding of the
1640
public is to the extent of about 47.62%. It is vehemently contended that in case the a ppIrcation is
admitted, the interest of large number of people who are not aware of these proceedings would be
jeopardised. The learned counsel would further contend that the interest of other shareholders cannot be
possibly protected without any publication of notice of the instant petition
23. Learned senior counsel further submitted that the petitioner Bank has in fact concealed material facts
by simply attaching copy of notice under Section 13(2) of SARFAESI Act 2002. dated 09.08.2014.
though the subsequent notice under Section 13 (4) dated 11,01,2016 *as also issued. annexed with the
objection petition at page 225 of the objections, in which the financial creditor i.e. PNB claimed to be the
Consortium Lenders Leader, with the other financial creditors as United Bank of India and ARGIL. It was
further contended that a petition before the Debt Recovery Tribunal can be filed only after obtaining
consent of 60% of the creditors by virtue of Section 13 (9) of the SARFAESI Act, 2002 and such a
principle should have been followed.
24. Having given our thoughtful consideration to the above contentions, we are of the view that on plain
reading of sub-section (1) of Section 7 of the Code, the consent of other 'financial creditors to the extent
of any percentage was never intended nor such an interpretation can be implied Section 7 (1) of the Code
says that the financial creditor either by itself or jointly with the other financial creditors may file an
application for initiating corporate insolvency resolution process against the corporate debtor before the
Adjudicating Authority when a default has occurred As per explanation to this sub-section, a default
includes a default in respect of financial debt not only to the petitioner financial creditor, but to any other
financial creditor of the corporate debtor. The above provision is inclusive and has wide implication and
the eligibility of moving application by one of the financial creditors cannot be curtailed, The requirement
of sub Section (2) of Section 7 is filing of an application by the financial creditor in such form and
manner as may be prescribed Form has statutory backing and no additional information other than what is
intended in different parts of form, can be imported. Part 1 of the Form requires the particulars of the
financial creditor making the application and there is no indication to provide the information relating to
the other financial creditors Requirement of service of notice to the shareholders by publication or
impleading the other financial creditors as parties, is neither required under the provisions of the Code nor
under the Rules framed thereunder,
25. The learned counsel for applicant-Bank seems to be Quite correct in contending that the consent of
60% of the creditors as required by Section 9 of SARFAESI Act 2002 cannot be applied to the
proceedings under the Code. It is apparent from the amendment made in Section 13 {9) of SARFAES I
Act, 2002 by virtue of Section 251 of the Code and its schedule Vi. Now the requirement of the consent
1641
under Section 13 (9) of SARFAESI Act, has been made subject to the provisions of Insolvency and
Bankruptcy Code, 2016 and the 'Code' enables the creditor either by itself or jointly to trigger the
26. With regard to the contention raised by the learned senior counsel for the corporate debtor, as to how
to protect the interest of other financial creditors i.e. ARGIL and United Bank of India. We find that it is
for the 1RP to take care of these questions on account of multifarious duties assigned to him under the
Code itself The IRP is to constitute a committee of the creditors, which has to comprise of all the financial
creditors of the corporate debtor, as provided in Section 21 of the Code The issue of pari-passu charge in
respect of the same property by the three financial creditors is for the 1RP to take care because he would
not be representing the applicant, but all the creditors, financial creditors and others, while taking over the
charge of corporate debtor as a going concern. There are various other safeguards with onerous duties cast
upon the IRF as laid down in Section 21 of the Code with regard to the claim of creditors of the corporate
debtor.
27. Otherwise the contention of learned counsel for the petitioner/financial creditor that the corporate
debtor has no right to be heard or that it cannot file the objections being not provided in the Code or rules
framed thereunder cannot be sustained because the principles of natural justice to the extent permissible
within the time line prescribed under the Act should be complied. This principle can be implied from the
provisions of Rule 4 of the Rules. Sub-section (3) of Section 4 says that the applicant shall despatch
forthwith 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 objective of the aforesaid rule to alert the corporate
debtor so as to enable it to deposit the amount of default or to raise objections though of course within the
possible time frame as may be fixed by the Adjudicating Authority so as to comply with the statutory
time line of disposal of the application. In view of rule 4(3) of the Rules as discussed above, which
requires notice to be sent to the corporate debtor only, it emerges that the legislature never intended the
public notice 10 the shareholders or for that matter any other person
28. Coming to the other contention. in the synopsis dated 11.04. 2017, the applicant/Financial Creditor
has given the list of 19 cases relating to this corporate debtor. but 10 cases out of those have been
disposed of as mentioned in the said table. The following cases, however, are still pending:
CASES PENDING IN PUNJAB AND HARYANA HIGH COURT.
CASE NO. TITLE NEXT DATE STATUS
1642
CWP/24392/2016 PNB Vs. UT Magistrate 01.05.2017 Pending

and others.
CP/48/2016 UBI Vs. James Hotel. 17.07.2017 Pending
CASES PENDING IN BOMBAY HIGH COURT.
WP-2341-2016 H.S. Arora Vs. BOD, 20.03.2017 Pending

PNB
CASES PENDING IN DEBT RECOVERY APPELLATE TRIBUNAL
M/s. Appeal 379.2016 PNB Vs. James Hotels 05.05.2017 Pending

& Ors.
CASES PENDING BEFORE DRT, CHANDIGARH.
SARR/2028/2016 James Hotel Vs. SBI & 26.04.2017 Pending

Ors.
Now
SA/225/2016
SARR/1976/2016 A.S. Bhillar Vs. SBI & 27.10.2016 Pending

Ors.
OA/1270/2016 PNB Vs. James Hotel 17.05.2017 Pending
OA/215/2016 ARCIL Vs. James Hotel 31.05.2017 Pending
OA/1110/2016 UBI Vs. James Hotel 31.05.2017 Pending
It is also informed in the synopsis that besides the above information, the other litigation between the
company and other co-shareholders is also pending. These cases include Civil Writ petitions filed in the
High Court at the instance of the corporate debtor and its directors/promoters, apart from the litigation
filed at the instance of ARCIL and also the petitioner financial creditor. The learned senior counsel for
corporate debtor vehemently contended that copies of those cases have not been filed to know the nature
of controversy involved in different forums. It was further submitted that the Adjudicating Authority
would not be able to know the nature of the dispute in these cases in the absence whereof the petition
1643
cannot be considered as complete nor the Adjudicating Authority would be able to satisfy itself about the
default for the purpose of admitting the application.
29. As discussed already, we have found that there is default committed by the corporate debtor and the
rest of the issues can be conveniently dealt with under various provisions of the Code. The only bar for a
person, who is not eligible to make application is contained in Section) 11 of the Code, which reads as
under:
The following persons shall not be entitled to make an application to initiate corporate insolvency
resolution process under this Chapter namely
(a) a corporate debtor having completed corporate insolvency resolution process, or
(b) a corporate debtor having completed corporate insolvency resolution process twelve months preceding
the date of making of the application; or
(c) a corporate debtor or a financial creditor who has violated any of The terms of resolution plan which
was approved twelve months before the date of making of an application under this Chapter or
(d) a corporate debtor in respect of whom a liquidation order has been passed.
The applicant does not fall under any of the above clauses to debar it from filing the instant petition. It is
none of the case of the parties that any liquidation order has been passed against the corporate debtor_
30. Pendency of various litigations in different forums as revealed by the applicant or any other case(s)
would have no bearing in the instant petition unless there is any adjudication in respect of the claim made
by the applicant or the default of the corporate debtor. Taking a contrary view would make the provisions
of the Code as redundant As per the particulars given in Form 1, the petitioner has given reference to the
OA No 1270 of 2015 before DRT-II. Chandigarh where the matter is still pending adjudication Even the
other financial creditors having not come before the Adjudicating Authority so far.
31. Learned counsel for Applicant referred to M/s Transcore Vs Union of India and Anr - AIR 2007
Supreme Court 712(1) in support of his contention. One of the question before the Hon'ble Supreme
Court was whether the Bank or Financial Institutions, having elected to seek remedy in terms of DRT
Act, 1993 can still take recourse to the Securitization and Reconstruction of Financial Assets and
Enforcement of Security Interest Act (NPA Act for shod) It was held by the Hon'ble Supreme Court that
NPA Act was an additional remedy under the DRT Act. Together they constitute one remedy and
therefore, the doctrine of election does not apply Even according to SNELL's Equity (31st Edition page
1644
119) the doctrine of remedies is available only when there are two or more co-existent remedies available
to the litigants at the time of election which are repugnant and inconsistent. It was further held that there
is no repugnancy or inconsistency between the two remedies and therefore the doctrine of election has no
application. In the instant case rather the provisions of the. 'Code' have overriding effect and takes care of
the suits or proceedings against the Corporate Debtor already pending.
32. There is a clear difference in the intention of the legislature in cases of application filed by
'Operational Creditors and 'Financial Creditors An application for Corporate Insolvency Resolution
Process by Operational Creditor can be filed under section 9 of the 'Code' One of the conditions for
admitting the application is that no notice of the dispute has been received by the Operational Creditor or
there is no record of dispute in the information utility. There is no such condition while taking up the
application under section 7 of the Act about the existence of the dispute in relation to the default
committed by the Corporate Debtor
33. In any case, the legislature has taken complete care with regard to the pending cases Sub-section (1 )
of Section 14 of the Code says that subject to the provisions of sub-sections (2) and (3), on the insolvency
the following, namely:
other authority;
respect of its property including any action under the Securitsation arid Reconstruction of Financial
So, even the continuation of pending suits or proceedings against the corporate debtor including execution
of any judgment, decree or order in any Court of law, Tribunal, Arbitration Panel or other authority,
would stand stayed. There is no indication in any provision of the Code or the Rules framed thereunder
that mere pendency of the suit or any litigation by or against the corporate debtor has any bearing upon
1645
the proceeding of the application under the Code, This intention of the legislature is manifest from the
import of Section 238 of the Code, which reads as under:
"The provisions of this Code shall have effect notwithstanding anything inconsistent therewith contained
in any other law for the time being in force or any instrument having effect by virtue of any such law."
34. The Code is the later legislation and has the overriding effect over the other laws relating to the issues
in question. If the corporate debtor or the directors etc have filed any suit or proceedings, it may be
contended that those proceedings are not against the corporate debtor for applicability of Section 14 of the
Code, but such a proposition may not arise at this stage.
35. The petitioner Bank had already issued a notice dated 20 08,2015 (Annexure R-1) attached with the
objections, for initiating the proceedings for declaring the corporate debtor as wilful defaulter. For that
matter the applicant Bank has already filed OA before the DRT. Learned senior counsel for the corporate
debtor contended that the present petition declare the respondent/corporate debtor as insolvent would be
setting up an inconsistent case. We have already discussed above that the provisions of the Code have
overriding effect over other taws and being the latest law on the subject, the proceedings before the DRT
will not debar the right of the financial creditor to file application under Section 7 of the Code.
36. The next contention was that by taking over of custody of the premises of the corporate debtor, it will
seriously prejudice the respondent corporate debtor in pursuing the criminal case already pending on a
private complaint against the Bank official and others as they could tamper with the evidence We find
that the insolvency professional has an onerous duty not to act an agent of the applicant, but he has to
abide by the Code of Conduct and follow the norms framed by the Board. He has to maintain the high
ethical standards While taking in custody the premises and the articles lying therein, we can direct the IRP
to prepare an inventory of all the articles, which are lying there and to keep them in safe custody,
wherever necessary and while preparing the inventory of articles, one of the authorised representative of
the corporate debtor, can be permitted to associate himself in the said process, but such a person would be
duty bound to attest the inventory as a witness.
37. It was also submitted for the corporate debtor that the proposed IRP is already appointed in another
case, by the Hon'ble Principal Bench after the filing of this petition, but this aspect can be taken care of,
as we are of the view that the nature of involvement in The business of the corporate debtor. IRP may not
be able to manage the affairs of the corporate debtor. Learned counsel for the petitioner in fact had even
suggested that the Bank would be proposing the name of other IRP by filing the fresh communication in
form No.2 so that this objection is removed. The fresh written communication in Form II has been filed in
1646
the registry by the applicant proposing the name of Navneet Gupta having registration No. IBBI/IPA-
01/1P-00453/-2016-17/2006 as interim Resolution Professional in place of Mr. Vivek Goyal. The Form is
complete in all respect.
38. It was also contented on behalf of the Corporate Debtor that there is no prayer made by the Applicant
in the instant case Perusal of Form No.1 in which the Financial Creditor has to apply does not contain any
such clause, though there is such a requirement under the Recovery of debts and Bankruptcy Act, 1993,
The application before the DRT is to be flea in Form Noll of The Debt Recovery Tribunal (Procedure)
Rules, 1993 at Sr. no.VI for the relief prayed for or any other relief, but there is no such requirement in
Form No.1 of the Rules. obviously because the consequences of admission are provided under provisions
of the Code itself and the Rules framed thereunder.
39. The petition, therefore, is admitted declaring the moratorium with the following directions-
i) That the Bench hereby prohibits the institution of suits or continuation of pending suits or proceedings
against the 'Corporate Debtor' including execution of any judgment, decree or order in any court of law,
Corporate Debtor any of its assets or any legal right or beneficial interest therein, any actor to foreclose,
recover or enforce any security interest created by the 'Corporate Debtor' in respect of its property
including arty action under the Securitization and Reconstruction of Financial Assets and Enforcement of
Security Interest Act, 2002; the recovery of any property by an owner or lessor where such property is
occupied by or in the possession of the Corporate Debtor.
ii) That the supply of essential goods or services to the 'Corporate Debtor' if continuing, shall not be
terminated or suspended or interrupted during moratorium period
iii) That the provisions of sub7section (1) shall not apply to such transactions as may be notified by the
iv) That the order of moratorium shall have effect from the date of this order till completion of the
corporate insolvency resolution process or until this Bench approves the resolution plan under sub-section
(1) of Section 31 or passes an order for liquidation of Corporate Debtor under Section 33 as the case may
be
40. As per the sub-section (1) of Section 16. the Adjudicating Authority is to appoint Insolvency
Resolution Professional within 14 days of the insolvency commencement date As per sub-section (6) of
1647
section 7. the Corporate Insolvency Resolution Process shall commence from the date of the admission of
the application under sub-section (5).
The matter is adjourned for further directions and passing formal order for appointment of
Insolvency Resolution Professional on 08.5.2017 The order be communicated to the applicant/Financial
Creditor and the Corporate Debtor forthwith.
1648

CHANDIGARH BENCH
C.P. (I.B.) No. 19/7/NCLT/CHD/HRY/2017
Applicant: Giridhar Infracon Private Limited

VS
Respondent: Y.K. Developers Private Limited
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. R.K. Gupta, Mr. Swapnil Gupta, Advocates
ORDER
1. This petition has been filed by M/s Giridhar Infracon Private Limited stated to be the 'Financial
Creditor' against the "Corporate Debtor' under Section 7 of the Insolvency and Bankruptcy Code, 2016
(for short to be referred here-in-after as the 'Code') read with Rule 4 of the Insolvency and Bankruptcy
(Application to Adjudicating Authority) Rules, 2016 (for short 'the Rules') to initiate insolvency
resolution process for the default committed by the 'Corporate Debtor to return the amount of crores
advanced as loan on 15.04.2014, cleared to the account of Corporate Debtor on 17.04.2014.
2. It is alleged that the 'Financial Creditor' (for brevity the 'petitioner') is engaged in the business of Real
Estate and Construction activities and having its Head Office in New Delhi. The 'Corporate Debtor' (for
brevity the `respondent') is also engaged in the business of interalia, Residential & Commercial Real
Estate Development in NCR & other Regions. It is further averred that after various discussions,
deliberations and meetings between the petitioner and the main Director of the respondent, Mr. Yogesh
Sharma and Mr. Ishpal Bhardwaj, the petitioner agreed to grant and disburse a loan of Rs. 2.5 crores to
the Corporate Debtor-respondent. It is alleged that the amount of crores was disbursed as loan against the
deposit of title deed and equitable mortgage of the immovable property was created in favour of the
petitioner by virtue of the Memorandum of Entry Recording Deposit of Title Deeds dated 15.04.2014.
1649
The original sale deed dated 21.09.2007 is said to be in possession of the petitioner and its copy is
attached as part of Anriexure 2. The loan was repayable after two years along with interest.
3. It is further alleged that after receipt of crores as roan, the respondent neither demanded disbursement
of the balance amount of ,Rs. 50 lass nor there was any occasion to disburse the same. The petitioner
demanded the return of the amount after the expiry of a period of two years, but the respondent failed to
repay the same. A legal notice dated 09.06.2016 was issued to the respondent, but no reply was sent,
4. The petitioner is said to have again issued a legal notice through its counsel on 17.02.2017 demanding
the principal amount only Copy of the said notice is Annexure 5. Reply dated 10.03.2017 (Annexure 6)
was sent by the respondent through its Advocate denying having accepted any loan and claiming that the
said amount was received from Mr. Ishpal Bhardwaj against the sale of land.
5. The instant petition has been filed in Form No.1 of the Rules mentioning all the necessary particulars as
required therein. It was stated that the petitioner company was incorporated on 29.01.1996 and Annexure
1 is the copy of Resolution dated 11.04.2017 of the Board of Directors of the Company authorising Mr.
Tarun Kumar Aggarwal for initiating the Corporate Insolvency Resolution Process under the Code and to
do all the necessary acts in the progress of the case.
6. Respondent was incorporated on 02.06.2005 with an authorised share capital of lacs and paid up share
capital of Rs. 1 lac. Its registered office is at Faridabad and therefore, this Tribunal has the territorial
jurisdiction to entertain and dispose of the instant petition.
7. The petitioner also named Mr. Vinay Talwar as the Interim Resolution Professional registered with the
Insolvency and Bankruptcy Board of India (IBBI), who has given the written communication (Annexure
13).
8. It was further stated that the estimated value of the property mortgaged by the respondent with the
petitioner is approximately 10 crores The sale deed of the property of the respondent, which was
deposited with the Respondent is dated 21.09.2007 suggesting that it was for a sale consideration of
2,57,92,800/-.
9. This matter was listed before the Bench for the first time on 01.05.2017. Having heard the learned
counsel for the petitioner, some defects were noticed and following directions were issued for compliance
by the petitioner:
1650
i) To file affidavit stating dispatch of copy of this petition along with entire Paper Book to the
Respondent/ Corporate Debtor, receipt of dispatch of postal article and the Track Report of the postal
department;
ii) To file certificate of incorporation of applicant-company along with list of its shareholders and
Directors and the Memorandum and Articles of Association by way of affidavit;
iii) To file latest financial statements of the applicant-company for the years ending 31.03.2015 and
31.03.2016 filed with the Registrar of Companies;
iv) To submit affidavit disclosing that there is no Regulator(s) in respect of the applicant-company with
regard to lending of the loan;
v) To file fresh Resolution of the applicant-company naming the person authorised to accept the process
of insolvency on behalf of the company; and
vi) To file fresh written communication in Form No. 2 by the Insolvency Resolution Professional giving
all the details as noted by the learned counsel for the applicant-company.
The petitioner has made the necessary compliances including the filing of proper nomination giving
particulars of Interim Resolution Professional as required in Form No.2, which is attached as Annexure 7
with the additional documents.
10. We have heard the learned counsel for the petitioner and carefully perused the records.
11. The learned counsel for the petitioner vehemently contended that the documents filed in support of
petitioner's case would clinch the issue in its favour with regard to lending of the loan to respondent.
Learned counsel mainly referred to the financial statements of the petitioner company and also the bank
record, apart from the documents of creating equitable mortgage. The learned counsel further submitted
that the factum of having the respondent received the amount of Rs. 2 crores on the date as represented by
the petitioner is not even denied. The petitioner has placed on record its financial statements for the years
ending 31 .03.2015 and 31.03.2016 and there is entry of loans and advances against head 'Inter Corporate'
to the tune of crores.
12. There is also certificate Annexure 4 Nay) filed with the additional documents issued by Sushiel
Shandilya & Co., Chartered Accountant, who are the auditors of the petitioner company filed with the
additional documents, It is certified that as per the audited Balance Sheets (Annexure 3), the corporate
secured loan under the Head "Long Term Loans & Advances" in note No,9 of 'Assets and Liabilitiesm to
1651
the tune of Rs. 2 crores has been given to MIs Y.K. Developers Private Limited These two certificates
relate to both the aforesaid financial years.
13. It was further contended that the aforesaid factum of the loan having been advanced is further
established from the Bank record Annexure 3 (Colly) are the original documents in the paper book. At
page 66 of the paper book is the statement of account of the petitioner company obtained from the Bank,
which contains the entry dated 15,04,2014 about transfer of Rs. 2 crores in favour of the respondent by
way of demand draft. Copy of the demand draft is at page 67 of the paper book and the name of remitter
mentioned thereon is of the petitioner.
14. To fortify the petitioner's case, the learned counsel laid emphasis on the reply dated 10.03.2017
(Annexure 6) to the notice sent by the petitioner. in the reply, the receipt of Rs. 2 crores is admted, but it
is claimed that the said amount was received from Ishpai Bhardwaj and Mr. Puneet Sharma as earnest
money for purchase of a piece of land in District Afwar, Rajasthan and this is so reflected in the books of
account of the respondent company.
15. The learned counsel further contended that the respondent has not even bothered to put in appearance
to contest the instant petition, despite service of notice of the application along with the entire paper book
and thus it can be implied that the respondent has nothing to argue to oppose the instant petition along
with the additional affidavit of Mr. Tarun Aggarwal. The track report of the postal department is also
attached which shows that the envelope containing paper book was delivered to the Corporate Debtor on
27.04.2017.
16. The above arguments raised by the learned counsel for the petitioner seem to be attractive, but these
do not withstand the test of scrutiny. The basic document on which the petitioner relies upon is the
memorandum of entry dated 15.04.2014 regarding deposit of title deeds. This document purports to have
been executed between the parties. The respondent has been described as the 'Mortgagor' and the
petitioner as 'Investor or Mortgagee'. This is a document executed on behalf of the respondent company
corporate debtor, we are of the considered view that the settled principle of law is that a company the
document Annexure 2, as to how the person, who signed this mortgage deed on behalf of the respondent
derived his authority. There is not even the remote reference to any resolution passed by the Company nor
the date of such resolution authorising Ishpal Bhardwaj to execute the document of mortgage.
17. It would be significant to refer to paragraph 10 of the document at Annexure 2 to which specific
reliance was also placed by the learned counsel for petitioner_ It says that while making the deposit of the
said property document, Dr. Ishpal Bhardwaj, who signed the document on behalf of the Corporate
1652
Debtor, declared that he has full powers and authority pursuant to the resolution passed by the Board of
Directors of the Mortgagor dated 05.04.2014 to create an equitable mortgage over the mortgaged property
and he further stated that the said resolution has not been and shall not be during the terms of Investment
Agreement, rescinded, modified and superseded and the same shall remain in full force and effect.
18. It is pertinent to note that the petitioner is itself a Corporate Body and must have known, how a
company functions. Without seeing the resolution or attaching copy thereof with the agreement, the
contention of the petitioner that the respondent should not be believed about credentials of Dr. lshpal
Bhardwaj is unacceptable, It was not disputed during the course of arguments that Ishpar Bhardwaj was
neither a shareholder nor a Director of the respondent company on 15.04.2014, the date of execution of
this agreement. As per the Annual Return of the respondent company Annexure 12, Ishpal Bhardwaj was
inducted as the Director of the Company on 29.04.2014 i.e. after the execution of this document and he
ceased to be the Director of the company w.e.f. 02.09.2014, as per the columns of the Annual Return at
page 159 of the paper book_ In this financial year, the Annual Return shows that the only shareholders of
the company were Usha Sharma and Yogesh Sharma having 5000 shares each out of the total paid-up
share capital of 10,000.
19. The learned counsel for the petitioner relied upon the judgment of Hon'ble Allahabad High Court
reported in "Lakshrni Ratan Cotton Mills Co. Ltd., Kanpur Vs. J.K.Jute Mills Co. Ltd., Kanpur, MR 1957
All 311, in which the following seriatim were made in paragraph 45 of the said judgment:
It was held that even if the borrowing by the agent of a company is unauthorised, the company would be
liable to pay, if it is shown that the money had gone into the coffers of the company. The lender having
not advanced the money as a gift but as a loan, and the borrower having received the benefit of the
money, the law implies a promise to repay. On the establishment of these facts. a dairrt on the footing of
money had and received would be maintainable.
That matter arose before the Honble Allahabad High Court in a suit for recovery, whereas we are dealing
with a matter under the Code, the consequences are stringent and the provisions of the Code have to be
strictly construed.
20. In our considered view, the most significant document was the Investment Agreement dated 05.04
2014 referred to in paragraph C of the document Annexure 2. This is in reference to the Investment
Agreement dated 05.04.2014 in Annexure-2 describing the petitioner as "investor' as well as `Mortgagee'
and its significance could only be understood by producing the primary document called 'Investment-
Agreement, rt was basically the Investment agreement from where it could be declared as to whether the
1653
petitioner is a 'Financial Creditor' entitling it to an order of admission under Section 7 of the Code, in the
absence of the said document, it cannot be inferred as to what exactly is meant by the term 'Investor'. The
original or copy of the Investment Agreement has not been placed on record and that would be the
clinching factor against the petitioner.
21. The learned counsel, however, referred to the DDR dated 10.04.2017 Annexure 8 to suggest that the
document was not in possession of the petitioner at the time of filing the instant petition. This report is
made by Tarun Kumar Aggarwal at Police Station Crime Branch, Delhi. It is reported to the police by
Tarun Kumar Aggarwal that he lost his bag containing original documents of the Companies as well as
personal documents, in Sanwa! Nagar (Sadiq Nagar) market around 3.00 PM to 4.00 PM, when he had
gone to buy grocery and vegetables. The details of the missing document are secretarial documents i.e.
the minute's record, statutory registers, ROC files in the case of petitioner company and the loan
documents other than the property documents for facilitating loan to the respondent etc, Just two days
after lodging DDR the instant petition was prepared, which is dated 12_04.2017 and it was filed in the
registry on 17_04,2017. So, non-production of even copy of this Investment Agreement coupled with the
fact that there was no authority letter in favour of Drishpal Bhardwaj, while executing the document
Annexure 2, the petition would be found without merit as, it can be safely inferred that the crucial
document has been concealed from the Tribunal for obvious reasons. In any case, without prejudice to the
merits of the claim of the petitioner regarding the outstanding amount, remedy with the petitioner would
lie elsewhere, where he can apply for proving the Investment Agreement by way of secondary evidence,
if the original is either lost or not traceable.
22. It may be further commented that the petitioner alleged in the petition that the loan was repayable
after two years with interest, but in the agreement itself, there is no such term of the period of return of
the loan or rate of interest chargeable thereon. The learned counsel for the petitioner rather submtted
during arguments that no time was fixed for return of the loan and therefore, A was payable on demand
and default occurred, when demand was made by the petitioner by issuing the first legal notice dated
09.06.2016 Annexure 4.
23. In view of the above discussion, we find no merit in the Instantpetition, which is, therefore, rejected.
Copy of the order be sent to the petitioner by speed post immediately.
1654

CHANDIGARH BENCH
C.P. (I.B.) No. 35/7/NCLT/CHD/HP/2017
Applicant: Seashells Infrastructures Pvt. Ltd.

Vs.
Respondent: Rajpur Hydro Power Pvt. Ltd.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. S.K. Bokolia and Ms. Divya Sharma, Learned Advocate
For Respondents/Defendant: Mr. Vivek Singla, Learned Advocate Mr. Muneesh Malhotra, Learned
Advocate
ORDER
1. This petition filed by the Financial Creditor under Section 7 of the Insolvency and Bankruptcy Code,
2016 was admitted by this Tribunal on 11 07.2017 and moratorium was granted with certain
directions. It was also observed that the written communication filed by the proposed Insolvency
Resolution Professional is proper The matter was listed today for passing formal order of appointment
of Interim Resolution Professional.
2. In view of the above, I issue the following directions,-
(i) Appoint Mr. Gurvinder Singh Sarin bearing IP Regn. No. IBBUIPA002/1P-N 0007212016-
2017/10170, resident of House No 2274, Sector 47-C, Chandigarh-160047 email:
sharmasarinassociate@yahoo,com, Mobile No. 9814685649 a registered Insolvency
Professional (I P) as Interim Resolution Professional as contemplated under Section 16 of the
Code and his term of appointment shall be for a period of thirty days from the date of this order
or as may be determined by the Committee of Creditors whichever is earlier;
(ii) In terms of Section 17 of the Code', from the date of his appointment, the powers of the Board
of Directors shall stand suspended and the management of the affairs shall vest with the Interim
Resolution Professional and the officers and the managers of the 'Corporate Debtor' shall report
1655
to the Interim Resolution Professional, who shall be enjoined to exercise all the powers as are
vested with Interim Resolution Professional and strictly perform all the duties as are enjoined on
the Interim Resolution Professional under Section 18 and other relevant provisions of 'the Code,
including taking control and custody of the assets over which the 'Corporate Debtor' has
ownership rights recorded in the balance sheet of the 'Corporate Debtor' etc. as provided in
Section 18 (1) (f) of 'the Code' The Interim Resolution Professional is directed to prepare a
complete list of inventory of assets of the 'Corporate Debtors
(iii) The interim Resolution Professional shall strictly act in accordance with the 'Code', all the rules
framed thereunder by the Board or the Central Government and in accordance with the 'Code' of
Conduct governing his profession and as an Insolvency Professional with high standards of
ethics and moral.
(iv) The Interim Resolution Professional shall endeavour to constitute the Committee of Creditors at
the earliest but not later than three weeks from the date of this order. It is hereby directed that
the 'Corporate Debtor, its properties, personnel and the persons associated with the management
shall extend all cooperation to the Interim Resolution Professional in managing the affairs of the
'Corporate Debtor' as a going concern and extend all cooperation in accessing books and records
as well as assets of the 'Corporate Debtor',
(v) The Interim Resolution Professional shall cause a public announcement within three days as
contemplated under Regulation 6 of the Insolvency and Bankruptcy Board of India (Insolvency
Resolution Process for Corporate Persons) Regulations, 2016 of the initiation of the Corporate
Insolvency Resolution Process in terms of Section 13 (1) (b) of the 'Code' read with Section 15
carling for the submission of claims against 'Corporate Debtor',
3. It is further directed that the Insolvency Resolution Professional shall positively file regular reports of
events in this Tribunal after every 10 days in relation to the 'Corporate Debtor'
4. Copy of this order and copy of order dated 11,07.2017 be supplied for learned counsel for both the
parties. Copies of both the orders be also communicated to Mr, G.S. Sarin, IRP at his email address.
1656

CHANDIGARH BENCH
C.P. (I.B.) No. 109/7/NCLT/CHD/PB/2017
Applicant: Canbank Factors Ltd.

Vs.
Respondent: Supreme Tex Mart Ltd. & anr.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. S.K. Bokolia and Ms. Divya Sharma, Learned Advocate
For Respondents/Defendant: Mr. Vivek Singla, Advocate Mr. Muneesh Malhotra, Learned Advocate
ORDER
This petition was filed in the Hon'ble Punjab and H6ryana High Court for winding up of
the respondent company on the grounds of its inability to pay the debt due to the petitioner and the same
was received in the Tribunal in terms of Rule 5 of the Companies (Transfer of Pending Proceedings)
Rules, 2016. Learned counsel for the petitioners was present on 05.04.2017 and 04.05.2017 but there was
no representation on 06.07.2017. However, the proceedings in the instant petition shall stand
automatically abated in view of the notification dated 29.06.2017 amending Rule 5 of the Companies
(Transfer of Pending Proceedings) Rules, 2016 according to which the requisite information/documents
in terms of Rule 7, 8 or 9 of the Insolvency and Bankruptcy Code, 2016 was required to be filed by
15.07.2017 failing which the petition has to abate. The proceedings in this petition, therefore, stand
abated. As per the proviso to amended Rule 5 aforesaid, the petitioner would be at liberty to file
application under Section 7, 8 or 9 of the Code as the case may be, if so advised in accordance with the
provisions of the IB Code.
1657
CHANDIGARH BENCH
Applicant: Kotak Mahindra Prime Ltd.

Vs.
Respondent: Flywell overseas Pvt. Ltd.
Judges/Coram:
Counsels:
ORDER
As per the office report, no information has been filed by the petitioner as required by
Sections 7, 8 or 9 of the Insolvency & Bankruptcy Code, 2016. This case was received by transfer from
the Hon'ble High Court of Punjab & Haryana, Chandigarh in terms of Rule 5 of the Companies (Transfer
of Pending Proceedings) Rules, 2016 as the respondent was not served. This petition was filed before the
Hon'ble High Court with a prayer for winding up of the company for its inability to pay the debt. As per
the proviso to rule 5 of the Companies (Transfer of Pending Proceedings) Amended Rules, 2016 vide
notification dated 29.06.2017, the petitioner was required to file the necessary information in terms of
Sections 7, 8 or 9 of the IB Code by 15.07.2017, failing which, the petition has to abate.
The compliance having not been made, the instant petition stands abated.
1658

CHANDIGARH BENCH
Applicant: Sunrise 14 A/S

Vs.
Respondent: Muskaan Power Infrastructure Limited
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Rohit Khanna and Raghav Kapoor, Advocates
For Respondents/Defendant: I.P.S. Mangat, Advocate for Ishpuneet Singh, Advocate
ORDER
1. This petition has been filed by Sunrise 14 A/S, a Company incorporated under the Danish law having ts
registered office at Kobenhavn Denmark, claiming itself to he the Financial Creditor for initiating the
insolvency resolution process under Section 7 of the Insolvency & Bankruptcy Code, 2016 (for short to
be referred here-in-after as the 'Code') against the Respondent ("Corporate Debtor"), The application has
been filed in Form No. 1 as prescribed by sub-rule (1) of Rule 4 of the Insolvency & Bankruptcy
(Application to Adjudicating Authority) Rules, 2016 (for brevity the 'Rules').
2. The Board of Directors of "Financial Creditor" passed resolution dated 21.02.2017 (Annexure I(A)
authorising Mr. Varghese Thomas, Partner, J. Sagar Associates and Mr. Rohit Khanna, Advocate, all
rights to act, appear and plead on behalf of the company for initiation of corporate insolvency against the
"Corporate Debtor". It was further resolved to appoint and authorise Ms. Rakhi Lalwani to fife requisite
applications, papers, documents and affidavits to represent the company in the above proceedings. The
contents of the application are supported by an affidavit of Ms. Rakhi Lalwani, resident of Mumbai. The
affidavit is at page 95-A of the paper book.
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3. The "Financial Creditor" was incorporated on 04.12.2013 and in column No. 6 of Part-I of the
application, the name and address of the person authorised to accept service of the process is Mr.
Varghese Thomas, resident of Mumbai on the basis of resolution of the Board of Directors (Annexure
I(A). The respondent was incorporated as a company under the Companies Act, 1956 on 17.11.2008
having its registered office at Ludhiana. Therefore, the matter falls within the territorial jurisdiction of this
Tribunal. The certificate of incorporation is at Annexure I(B) (Colly).
4. It is stated that the "Financial Creditor" extended the Trade Finance Facility to the "Corporate Debtor"
to the extent of USD 600,000, for which the Agreement dated 01.01.2016 was entered into between the
parties. The Agreement is at Annexure I(D). The "Corporate Debtor" is referred to as the Seller in this
agreement. The Seller could make request for one or more Loans to be advanced by the "Financial
Creditor" The term "Loan" is defined in the agreement as, a loan made or to be made under the Facility or
the principal amount outstanding for the time being of that loan, such individual Joan never to exceed
80% of the purchase price on which the loan is provided. The 'Corporate Debtor' was to sell goods to its
buyers by shipments through the "Financial Creditor. The Trade Facility Agreement was executed with
the "Financial Creditor" for the purpose of pre-financing the sale of relevant goods. The 'Corporate
Debtor' accepted to assign all the rights to the purchase price under each purchase order as further set out
in clause 3 of the agreement.
5. The agreement further provides that upon the "Financial Creditor" receiving the purchase price, the
Spread less the outstanding shipping costs fees and interest payable to the "Financial Creditor" in
accordance with clause 6, was to be paid to the Seller "Spread" as defined in the agreement means, the
amount equalling the purchase price less the loan advanced to the respondent (Seller). All the
disbursement under the Facility was to be on a with recourse basis to the Corporate Debtor' (Seller). The
same is further evident from the fact that demand promissory notes dated 21.01.2016 and 30.03.2016
were executed in favour of the Financial Creditor. The demand promissory note dated 21.01.2016 was
invoked by the Financial Creditor vide legal notice dated 05.10.2016 Annexure I(U).
6. Now coming to the disputed transactions, a purchase order dated 07.12.2015 bearing No. 001 was
issued by the Corporate Debtor's buyer i.e. YM Power Supplies and Contractors Limited, copy of which
is Annexure I(E). The "Corporate Debtor" issued the invoice dated 21.03.2016 (page 54 of Paper Book)
bearing No. MPIL/120 amounting to USD: 185,200.00 to the buyer' located at Malawi.
7. Another purchase order dated 01.01.2016 was issued by the Corporate Debtor's buyer namely; M/s.
Yiannakis General Import and Export and consequent to that on 20.04.2016, the invoice bearing No.
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MPIL/130 for an amount of USD: 40,429.00 was issued by the "Corporate Debtor" to its buyer. Copy of
the purchase order and the corresponding invoice is at Annexure I(F),
8. In accordance with clause 3 of the Agreement, the "Corporate Debtor" assigned all the rights to the
Financial Creditor with respect to the payments under both the invoices. The notice of assignment sent to
the first buyer is at Annexure I(H), dated 21.03.2016 and the buyer acknowledged the receipt of the
assignment which is at page 62 of the paper book and agreed to act in accordance with the terms thereof
Similarly, the notice dated 04.01.2016 of assignment was issued by the "Corporate Debtor" to the second
buyer and that notice is at Annexure I(M) and the acknowledgement of this notice by the buyer is at page
70 of the paper book and the buyer agreed to act in accordance with the terms thereof.
9. The "Corporate Debtor" having failed to make the payment under both the invoices. Several reminder
notices were issued to the respondent and a demand notice dated 29.08.2016 Annexure I(S) was sent to
the "Corporate Debtor" and the "Corporate Debtor" sent response dated 04.09.2016 to the demand notice
raising frivolous allegations. The copy of response sent by the "Corporate Debtor" is at Annexure I(T).
Another notice dated 05.10.2016 Annexure I(U) was also sent to the Corporate Debtor.
10. In Part III of the application Form, the total amount of debt is stated to be USD: 180,503 by adding
80% of the amount of both the invoices sent by the "Corporate Debtor". The first transaction is ascribed
as Loan No. 15 with date of disbursement as 31.03.2016 and the second is Loan No. 23 disbursed on
31.05.2016. The amount in default is stated to be USD 190,210 including interest at the agreed rate with
dates of default for first loan as 16.06.2016 and for second loan as 24.08.2016, The computation chart of
the calculation is at Annexure I(C). The other documents relied upon by the "Financial Creditor" are the
transaction details evidencing the payment made by the "Financial Creditor" to the "Corporate Debtor" as
at Annexure I(I) and delivery order bearing transport documents Annexure I(J) and bill of lading dated
20.07.2016 Annexure I(K) These are pertaining to the loan No. 15 and similarly the documents pertaining
to the second loan are from Annexure I(L) to Annexure I(P),
11. Copy of the petition along with the entire paper book was despatched to the "Corporate Debtor" by
registered post on 24.05.2017 and the track report of the postal department shows that the article was
delivered on 26.05.2017.
12. When the matter was listed on 07.07.2017, Mr. Chandan Deep Singh, Advocate was present for the
Corporate Debtor. Notice of motion of this petition was issued to the respondent and Mr. Chandan Deep
Singh, Advocate accepted notice on its behalf. It was admitted by learned counsel that copy of the petition
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along with the entire paper book was received by the "Corporate Debtor". The matter was adjourned for
enabling the respondent to file objections, if any, to the instant petition.
13. On the adjourned date 13.07.2017, Mr. I.P.S. Mangat, Advocate put in appearance for Mr. Jshpuneet
Singh, Advocate for the respondent-Corporate Debtor and filed the power of attorney and later on filed
the resolution of the Board of Directors dated 12.07.2017 along with the objections. The execution of
Agreement dated 01.01.2016 between the parties is admitted. The "Corporate Debtor" has raised the
objections by filing short reply that as per clause 22 of the agreement, the contract is to be governed and
construed in accordance with the English law and disputes from the said agreement were to be settled by
Arbitration in London. It was, therefore, stated that the application is not maintainable before this Forum.
14. On merits, it was alleged that the "Corporate Debtor" issued a legal notice dated 01.11.2016 to the
"Financial Creditor demonstrating mis-representation and the acts of default committed by them, for
which the respondent suffered losses. Copy of the notice is at Annexure R-1. It is further stated that the
credit facility to the tune of USD: 600,000 was extended to the "Corporate Debtor" on payment of 1%
processing charges, but the respondent was never allowed to use full credit extended to it despite various
requests. Further that the "Financial Creditor" established direct contact with the buyers of the
consignment of the goods and has taken payment from them directly, which has not been adjusted nor
appropriate payment released to the respondent.
15. I have heard the learned counsel for the parties and carefully perused the records with their able
assistance.
16. Sub-section (3) of Section 7 of the Code reads as under:-
"The financial creditor shall, along with the application furnish-
(c) any other information as may be specified by the Board."
17. The petitioner has proposed the name of Interim Resolution Professional as Mr. Jalesh Kumar Grover,
insolvency Professional registered with the Indian Institute of insolvency Professional of ICAI (IIIPI).
1662
Mr. Grover has furnished the written communication dated 24.05.2017 in Form No. 2. It has been pointed
out that the fresh registration number has been allotted to Mr. Jalesh Kumar Grover by the Insolvency &
Bankruptcy Board of India of the year 2017-18. The written communication in Form No. 2 Is found in
order as it complies with all the necessary requirements and the respondent has also not raised any issue
on this aspect.
18. As per requirement of sub-clause (a) of sub-section (3) of Section 7, the "Financial Creditor" has
produced abundant evidence of default. In the response filed by the "Corporate Debtor", the factum of the
facility as alleged in the application having been granted is not in dispute. It is also not disputed that the
facility was granted to the extent of 80% of the value of invoices in terms of the agreement.
19. The objection raised by the "Corporate Debtor" about the petitioner having not been granted full
facility as agreed is absolutely untenable. This contention was raised on the basis of legal notice dated
01.11.2016 Annexure R-1 sent by the respondent It was stated in the objections to the present petition that
the petitioner established direct contract with the buyers of the respondent and received the entire
payment from them directly, but the payment has not been adjusted nor appropriate payment has been
released to the respondent.
20. The above is a bald assertion without any supportive document on record. There is even no
correspondence exchanged between the "Corporate Debtor" and the 'Buyers' to affirm the aforesaid fact.
The objections petition has not even been filed on affidavit. None of the persons authorised by the
"Corporate Debtor" in the resolution dated 12.07.2017 filed affidavit to support the assertions contained
in the reply/objections.
21. During the course of arguments, the main contention of the learned counsel for 'Corporate Debtor"
was that the petitioner could at best proceed against the buyers as the transactions were assigned to the
"Corporate Debtor". It is thus contended that in this way, the petitioner has assumed the character of
"Operational Creditor" of the buyers.
22. Learned counsel further submitted that as per clause 8 of the agreement, the petitioner had lien over
the relevant goods and the documents relating thereto for all sums due by the 'Seller' or by the 'Buyer'
under this Facility Agreement, the Bills of Lading issued with respect to the relevant goods and any other
contract relating to the relevant goods. Even if, goods were released without payment, the petitioner as an
"Operational Creditor" has to fall back upon the 'Buyers' of the assignment of the debt, as the debt has
been assigned to the petitioner
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23. So, the first question would be whether the petitioner falls within the definition of the term "Financial
Creditor". The term "Financial Creditor" is defined in sub-section (7) of Section 5 of the Code, as
meaning any person to whom a financial debt is owed and includes a person to whom such debt has been
legally assigned or transferred. Sub-Section (8) of Section 5 defines the term 'financial debt' and the
relevant clauses are reproduced below;-
"'financial debt' means a debt along with interest, if any, which is disbursed against the consideration for
the time value of money and includes-
(c) ......................;
(d) ......................;
(g) ..................;
(h) ..................;
(i) ...................;
24. This definition is of very wide connotation and undoubtedly covers the instant transaction where 80%
amount of each invoice has been paid to the respondent by way of loan on interest. Under the head
'Interest and Fees' as per clause 6.2 of the agreement, each loan shall be subject to-
(a) An annual fixed interest of 3.8% + USD LIBOR-6 months, The interest will be calculated daily from
the Disbursement Date and until the Repayment Date; and
(b) Processing fee of USD 100 per drawdown.
The process fee and interest accrued shall be due and payable by the seller on the repayment date.
1664
25. Most important is the clause of the agreement i.e. 2.1(d) that all disbursements made under this
facility shall be on a with recourse basis to the Seller. Sub-clause (e) of sub-section (8) of Section 5 of the
Code includes with the definition of term 'financial creditor', the receivables sold or discounted other than
any receivables sold on non-recourse basis. The present is a case, where the agreement pertains to the
facility to be on a with recourse basis to the Seller and not on a non-recourse basis.
26. Coming to the contention that the goods were released despite the petitioner vested with right to
withhold the goods in the absence of the payment As per clause 8.3 of the agreement, any lien shall
extend to cover the cost of recovering any sums due under the agreement and in connection with the
relevant goods and for that the petitioner would have the right to sell the relevant goods by public auction
or private treaty, without notice to 'Seller' and 'Buyer' the petitioner's right to lien shall survive delivery of
relevant goods.
27. This contention can be straightaway repelled by referring to the letter Annexure I(T), dated
04.09.2016 sent by the "Corporate Debtor" to the petitioner. A story has been developed in this notice that
the representatives of the petitioner in its office in Mumbai have stopped giving credit for the supply of
goods to the African countries but that subject is not at all relevant to the issue Reference was also made
to certain buyers from Malawi, where the payments were made to the 'Financial Creditor' on time. To
highlight the stand of the respondent, it is stated in the notice sent by the respondent as under:-
"We have spoken to our buyer who is very upset and unhappy with your approach towards the agreement
and deal and he has shown his clear picture that every delayed shipment has put him in good losses and
further YM Power Machineries payment was supposed to pay from first three containers payment as was
planned by him, but due to delayed delivery by Maersk (Petitioner), he is yet to get the payment from
ESCOM and requested Mr. BRUGE in MAERSK Africa office with copy to Mumbai office to allow him to
pay you the money for YM Power in few instalments with one immediate payment of USD 50,000 from the
total invoice (ready to pay interest on delayed payment). Further he assured that he is ready to pay full
payment to Sunrise (Maersk) for the 4th container of Nuts and bolts within 10 days of handling over the
container.
To ease and close the matter, we request you to claim the 80% payment + Interest from our buyer which
has been funded to us against the said two containers payment under discussion, which means instead of
185200.00 USD, you please consider taking USD 148160.00 USD + Libor interest applicable from our
buyer by giving him 3-5 monthly instalments support. He assured us that he is ready to pay you USD
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50000.00 immediately which means you have to support him for mere 98160.00 USD to be paid in
monthly instalments.
Similarly you can claim 80% payment for the 4th container of Yiannakis which he will pay you within 10
days from handing over the container"
So, the respondent cannot take any advantage of the release of the goods as it was done on the insistence
of the "Corporate Debtor". In the fact situation, it is quite clear that the goods and the documents in
exercise of its right of Lien, the petitioner would be both an "Operational Creditor", but qua the
purchaser/buyer on the basis of assignment, but it is definitely a "Financial Creditor" under the Trade
Facility Agreement qua the respondent - 'Corporate Debtor'.
28. This can be further explained by an illustration that in case the payment of goods is not made by the
buyer to the petitioner, the petitioner detains the goods and the documents in exercise of its right of lien,
the status of petitioner would always remain that of the "Financial Creditor" qua the Respondent-
'Corporate Debtor' and that status would not change simply, if the goods are released on the insistence of
the "Corporate Debtor".
29. Coming to the grievance that there was a loss to the "Corporate Debtor" because its purchase orders
for African countries were not being accepted despite the trade facility agreement, the answer can be
found from the terms of the agreement itself. Clause 4.2 of the agreement says that upon delivery by the
Seller of a Disbursement Request, the petitioner may in its entire discretion decide whether or not to grant
a Loan to the Seller, Should the petitioner agree to grant the proposed Loan, the term of such Loan shall
be governed by this Agreement and the relevant Disbursement Request, unless the petitioner accepts other
terms in writing. So, the petitioner was not bound to accept every disbursement request of the respondent.
30. The other contention of the "Corporate Debtor is based on the objection that as per clause 22 of the
agreement, the contract is to be governed by English law and the dispute have to be settled by arbitration
in London and, therefore, the instant petition is not maintainable before this Tribunal.
31. There is no substance in the above contention. I am of the considered view that once the petitioner is
proved to be a "Financial Creditor" and there being abundant evidence to determine the existence of
default committed by the "Corporate Debtor", the application under Section 7 of the Code is
maintainable. Sub-section (4) of Section 7 of the Code reads as under:-
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"The Adjudicating Authority shall, within fourteen days of the receipt of the application under sub-section
(2), ascertain the existence of a default from the records of an information utility or on the basis of other
evidence furnished by the financial creditor under sub-section (3)."
In this case, the record relied upon by the "Financial Creditor" establishes the existence of default and the
other conditions being satisfied, the instant petition deserves to be admitted. It is found that the
application filed In the prescribed proforma is complete in all respect.
32. In view of the above, the instant petition is admitted declaring the moratorium prohibiting all of the
following, namely:
a) the institution of suits or continuation or pending suits or proceedings against the corporate debtor
including execution of any judgment, decree or order in any Court of Law, tribunal, arbitration panel or
other authority;
b) transferring, encumbering, alienation or disposing of by the corporate debtor any of its assets or any
c) any action to foreclose, recover or enforce any security interest created by the corporate debtor in
d) the recovery of any property by an owner or lessor, where such property is occupied by or in the
33. It is further directed that the supply of essential goods or services to the Corporate Debtor as specified
by the Insolvency and Bankruptcy Board of India shall not be terminated or suspended or interrupted
during the moratorium period except for those transactions as may be notified by the Central Government
in terms of Section 14(2) of the Code. The moratorium shall take effect from today i.e. 28.07.2017 till the
completion of the Corporate Insolvency Process.
34. The matter is adjourned to 03.08.2017 for passing formal order of appointment of Interim Insolvency
Resolution Professional and further directions. Copy of this order be communicated to both the parties
immediately.
1667
CHANDIGARH BENCH

Vs.
Respondent: Concord Hospitality Pvt. Ltd.
Judges/Coram:
Hon'ble Sh. M.M. Kumar, C.J. (President) and R.P. Nagrath, J. (Member (J))
Counsels:
For Appellant/Petitioner/Plaintiff: Yogesh Goyal, Advocate for Gaurav Goel, Learned Advocate
For Respondents/Defendant: Ashok Gupta, Learned Advocate
ORDER
Hon'ble Sh. R.P. Nagrath, J. (Member (J)
1. The petitioner has also impleaded the directors and guarantors as respondents No. 2 to 9 in the Memo
of Parties, but being not necessary parties in the matter, their names are ordered to be struck off from
array of respondents.
2. Punjab National Bank the 'Financial-Creditor', a body corporate constituted under the Banking
Companies (Acquisition & Transfer of Undertakings Act. 1970) having its registered office at No. 7,
Bhikhaji Cama Place, New Delhi through its Branch Office at Amritsar has filed this application under
Section 7 of the Insolvency and Bankruptcy Code, 2016 (to be herein-after referred to as the Code) for
initiating the insolvency resolution process in respect of M/s. Concord Hospitality Pvt. Ltd. the
Respondent-Corporate Debtor. The application has been filed in Form No. 1 prescribed under rule 4(1) of
the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 (for brevity, the
'Rules'). This petition has been filed through Ms. Richa Malhotra, Officer of the 'Financial Creditor' on
the basis of General Power of Attorney dated 17.05.2016 (Annexure A-1) issued in her favour by the
bank. The Circle Head of the bank also authorised Ms. Richa Malhotra for initiating the insolvency
resolution process under the 'Code' against the 'Corporate Debtor', vide letter dated 15.05.2017 (Annexure
A-2).
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3. 'Corporate-Debtor' was incorporated on 29.09.2005 having authorised share capital of ` 7,00,00,000/-

(Rupees seven crores only) and paid up capital of ` 5,85,42,010/- (Rupees five crores eighty-five lacs
forty-two thousand and ten only). It has been allotted CIN No. U55100PB2005PTC29009. The registered
office of the 'Corporate-Debtor' is at Amritsar and thus the matter falls within the territorial jurisdiction of
this Tribunal.
4. The 'Financial-Creditor' also proposed the name of C.A. Navneet Gupta, #1598, Level-I, Sector 22-B,
Chandigarh, Email: indiaiip@gmail.com. as Interim Resolution Professional to satisfy the requirement of
Section 7(3)(b) of the 'Code' Mr. Navneet Gupta, CA has filed the written communication in Form No. 2
(Annexure A-44) which is found in order.
5. It is stated that the total loan granted to the Corporate-Debtor' was ` 25,00,00,000/- (Rupees twenty-five
crores only) with details of disbursement mentioned at Annexure A-3 (colly), These are different term
loans and working capital (cash credit facility). The Term Loan No. I was for ` 13.00 crores; Term Loan
No. II for ` 4.50 crores; Term Loan No. III for ` 5.00 crores and CC limit of ` 2.50 crores.
6. The 'Financial-Creditor' has also relied upon various documents of loan. In respect of the Term Loan
No. I, the documents are at Annexure A-9 to 15. Annexure A-9 is the loan application; the sanction letter
dated 23.11.2006 Annexure A-10; resolution of Board of Directors of the 'Corporate-Debtor' of the year
2006 Annexure A-12; document of hypothecation of assets Annexure A-13 dated 01.12.2006; the
agreement of term loan of December, 2006 Annexure A-14 and guarantee agreement Annexure A-15
(colly).
7. Similarly, various documents of Term Loan No. II are from Annexure A-16 to A-21 of the year 2011
and for Term Loan No. III at Annexure A-22 to A-28. In respect of the working capital loan the
documents are from Annexure A-29 to A-33 comprising of the sanction letter dated 31.01.2012,
hypothecation deed, guarantee agreement and the renewal letter of the year 2015. The 'Financial-Creditor'
also placed on record copies of Statements of Account in respect of all the four loan facilities. These are
from Annexures A-36 to A-39.
8. It is further disclosed that the 'Corporate-Debtor' along with its directors/guarantors mortgaged the
below mentioned property in favour of applicant by way of deposit of various sale deeds along with all
the movable property, plant, machinery, machinery spares, tools and accessories, office equipments,
computers furniture and fixtures both present and future.
1669
DESCRIPTION OF PROPERTIES MORTGAGED
(a) 1st pari pasu charge over fixed assets of the company present and future including Land & Building
situated at Ajnata Road Opposite Amritsar international Airport, Amritsar.
(b) Extension of charge over the SCO No. 166 Sector 38 C & D Chandigarh.
(c) Extension of charge over the SCO No. 205 Sector 36D, Chandigarh.
(d) Extension of charge over the SCO No. 167 Sector 38 C & D, Chandigarh.
(e) Extension of charge over the COMMERCIAL LAND AND BUILDING AND LAND AT G.T. Road,
Amritsar
(f) Extension of charge over the residential property bearing No. 21, Block L, Birch Court, Nirwana
Country, South City 2, Phase II Gurgaon Haryana.
(g) Extension of charge over the residential property bearing No. 30, Road No. 64, Village Madipur West
Punjabi Bagh New Delhi.
(h) Exclusive charge of Property bearing Pt No. 75, 76, 77, Khasra No. 22/120 Min situated at Rakba
Village Sichandar, Tehsil & distt. Amritsar Vide Sale Deed 9803 dated 10.10.2006.
Entries were made in the relevant register of the Bank in proof of creation of equitable mortgage by
deposit of title deeds. These entries are at Annexure A-34 (colly) from pages 622 to 625 of the Paper
Book. The Certificate of Registration of Charge entered in the record of Registrar of Companies is at
Annexure A-6 (colly).
9. It is further stated that due to continuous default committed by the 'Corporate-Debtor' the account of
the 'Corporate-Debtor' was declared as Non-Performing Asset (NPA) on 14.07.2016 and the petitioner
bank issued the recall notice dated 31.01.2017 Annexure A-4, The 'Corporate-Debtor' is said to have
defaulted for an amount of ` 13,34,38,741.78 as on 01.07.2016 plus the interest w.e.f. 01.07.2018 and
according to 'Financial-Creditor' the amount of default up to 30.04.2017 comes to ` 14,76,36,740.34.
10. When the matter was listed for the first time before the Tribunal on 11.07.2017 it was noticed that
statements of account of the 'Corporate-Debtor' relied upon by the Financial-Creditor' were not certified
under the Bankers' Books Evidence Act. Notice of this defect was issued to the petitioner and learned
1670
counsel for the petitioner present accepted the notice. It was directed to make compliance within a period
of seven days. Notice of this petition was also directed to be issued to the respondent The 'Financial-
Creditor' also filed fresh account statements duly certified under the Bankers' Books Evidence Act with
the affidavit of Authorised Signatory of the bank.
11. The 'Corporate-Debtor' has also filed the objections in writing. It is stated that the petition deserves to
be dismissed as the petitioner did not comply with paragraph-7 of Part-V of the application prescribed
under the rules, requiring copies of the Entries in a Banker's Book in accordance with the Bankers Books
Evidence Act. 1891. It is averred that the 'Financial-Creditor' had not submitted the copies of Entries in a
Banker's Book in accordance with the aforesaid Act, The defect having been noticed by the Adjudicating
Authority when the matter was listed on 11.07.2017 seven days time was granted to the petitioner to
furnish the required documents. The defect could be removed on or before 18.07.2017 and there is thus
violation of the mandatory requirement of proviso to sub-section (5) of Section 7 of the Code. It was
further stated that notice of the petition issued to the respondent for 21.07.2017 was received by the
'Corporate-Debtor' on 18.07.2017 The Tribunal directed the counsel for petitioner to supply certain
documents/affidavit to respondent No. 1 but the compliance has not been made.
12. On merits it was stated that the petitioner has concealed important and relevant facts from the
Tribunal in as much as the Corporate-Debtor' was sanctioned various loan facilities by the consortium
comprising of three banks i.e. State Bank of India, IDBI Bank and Punjab National Bank (petitioner). The
lead bank is State Bank of India but no approval to file this petition was obtained from either the State
Bank of India or IDBI Bank. However, the factum of grant of loan facilities and that the 'Corporate-
Debtor' committed default in making repayment of debt has not been disputed. It was rather stated that on
26.07.2017 the 'Corporate-Debtor' submitted an application to the petitioner bank for review-cum-
restructuring proposal which was received by the Chief Manager of the bank. The 'Corporate-Debtor' also
proposed to deposit an amount of ` 125 lacs. After some discussion it was verbally conveyed by the
officials of Bank that on such deposit by the 'Corporate-Debtor' the bank would restructure the loan
facilities by withdrawing the present application. It was further stated that the 'Corporate-Debtor' was in
the process of arranging funds and to deposit the aforesaid amount with the bank.
13. We have heard learned counsel for the parties and have perused the record with their able assistance.
14. It was contended by learned counsel for the 'Corporate-Debtor' that the loan facilities were granted by
the consortium of three banks, with State Bank of India as the lead bank, the present application would
not be maintainable without getting approval of the other two banks. We find no substance in this
1671
contention. The petitioner bank is undoubtedly a 'Financial-Creditor' qua the loans granted by it and
entitled to make an application for initiating corporate insolvency process in terms of Section 7(1) of the
Code which reads as under-
"A financial creditor either by itself or jointly with other financial creditors may file an application for
initiating corporate insolvency resolution process against a corporate debtor before the Adjudicating
Authority when a default has been occurred.
Explanation: For the purposes of this sub-section, a default includes a default in respect of a financial debt
owed not only to the applicant financial creditor but to any other financial creditor of the corporate
debtor."
15. The other submission of the 'Corporate-Debtor' that a proposal has been made to the petitioner bank
requesting to restructure the loan by proposing to deposit ` 1,25,00,000/- cannot be accepted as the
account of the petitioner has been declared N.P.A. whereupon recall notice dated 31.01.2017 (Annexure
A-4) was issued. We are of the view that there cannot be any preferential treatment to the petitioner in
comparison with the claims of other financial-creditors as all would be constituting the "Committee of
Creditors", in the event of an order of admission.
16. The other contention of learned counsel for the 'Corporate-Debtor' was that as per paragraph 7 of Part-
V of Form No. 1 the 'Financial Creditor' is required to attach copies of the entries in accordance with the
Bankers' Books Evidence Act. This defect was noticed by the Tribunal when the matter was listed on
11.07.2017 and seven days time was granted for removal of the same. However, the petitioner bank filed
the fresh account statements in the Tribunal on 20.07.2017 i.e. more than seven days from 11.07.2017 and
therefore, the application may be rejected. This contention of the learned counsel is based on proviso to
Section 7(5) of the 'Code' which reads as under:-
"Where the Adjudicating Authority is satisfied that-
proceedings is pending against the proposed resolution professional, it may, by order, reject such
application:
1672
17. Leaned counsel for the 'Financial-Creditor" however, submitted that though all the particulars of
application in Form No. 1 were complete, yet as an abundant caution the petitioner's counsel filed
application for condonation of delay of two days in filing the statement of account duly certified under the
Bankers' Books Evidence Act, on the ground that the counsel for the applicant bank was admitted in the
hospital on 14.07.2017 and had undergone surgery of intestine on 15.07.2017.
18. Having given thoughtful consideration, we are of the view that as per paragraph 7 Part-V of Form No.
1 the bank is required to file copies of the Entries in the Banker's Books maintained in accordance with
the Bankers Books Evidence Act, 1891 which the 'Financial-Creditor' had furnished but to make the said
statements admissible per se necessary certificate was appended on the statements of account furnished
with the affidavit dated 19.07.2017 of the Authorised Signatory of the bank as noticed in the order dated
11.07.2017. The requirement of the Paragraph 7 Part-V of Form No. 1 precisely is that the bank has to file
copies of the account statements which should be maintained as per the Bankers Books Evidence Act,
1891 and to attach copies thereof. The same were accordingly attached with the application originally.
The 'Corporate-Debtor' being in default in depositing the financial debt was not in fact disputed rather
attempt was made for restructuring of the loan by offering to deposit an amount of ` 125 lacs which is not
permissible as already observed.
19. In view of the above discussion and perusal of the record, we are satisfied that the 'Financial-Creditor'
has proved by overwhelming evidence that default has occurred, which meets the requirement of Section
3(11) & 12 read with Section 7(3)(a) and Section 7(5) of the Code. The 'Corporate-Debtor' in fact has not
disputed that it is in default of making repayments. We further find that the application is complete in all
respects as the Insolvency Professional, Mr. Navneet Gupta, CA has also been proposed.
20. As a sequel to the above discussion, this petition is admitted and Mr. Navneet Gupta, CA, # 1598,
Level-I, Sector 22-B, Chandigarh whose name also figures in the latest list of Insolvency Professionals
issued by the Insolvency & Bankruptcy Board of India is appointed as an Interim Resolution Professional.
1673
other authority;
Assets and Enforcement of Security Interest Act 2002;
(d) the recovery of any properly by an owner or lessor where such property is occupied by or in the
period.
contemplated, inter alia, by Sections 15, 17, 18, 19, 20 & 21 of the Code. It is further made clear that all
the personnel connected with the 'Corporate-Debtor', its promoters or any other person associated with the
Management of the 'Corporate-Debtor' are under legal obligation under Section 19 of the Code to extend
every assistance and cooperation to the Interim Resolution Professional as may be required by him in
managing the affairs of the 'Corporate-Debtor'. In case there is any violation the Interim Resolution
Professional would be at liberty to make appropriate application to this Tribunal with a prayer for passing
an appropriate order. The Interim Resolution Professional shall further protect and preserve the value of
the property of the 'Corporate-Debtor' as a part of its obligation imposed by Section 20 of the Code and
1674

CHANDIGARH BENCH
Applicant: Balageria Central Co-op Bank Ltd.

Vs.
Respondent: S.R. Green Housing Projects (India) Limited
Judges/Coram:
Hon'ble Sh. R.P. Nagrath, Member Judicial.
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Ankush Chowdhary, Advocate and Mr. Dibasis Basu, Learned
Advocates
ORDER
Hon'ble Sh. R.P. Nagrath, J. (Member (J))
1. The petitioner a Cooperative Bank filed the instant petition before the Honble High Court in
terms of Section 433 (e) of the Companies Act, 1956 for winding up of the respondent company
for its inability to pay the debt, The respondent having not been served before 15.12.2016, the
instant petition was received by transfer in terms of Rule 5 of the Companies (Transfer of
Pending Proceedings) Rules, 2016.
2. Rule 5 of the aforesaid Rules as amended vide notification dated 29,06.2017 reads as under

inability to pay debts.- (1) All petitions relating to winding up of a
company under clause (e)of Section 433 of the Act on the ground of
inability to pay its debts pending before a High Court, and, where
the petition has not been served on the respondent under rule 26 of
the Companies (Court) Rules, 1959 shall be transferred to the Bench
of the Tribunal established tinder sub-section (4) of section 419 of
the Companies Act, 2013 exercising territorial jurisdiction to be
dealt with in accordance with Part 11 of the Code:
1675
information forming part of the records transferred in accordance
with rule 7, required for admission of the petition under sections 7, 8
or 9 of the Code, as the case may be, including details of the
proposed insolvency professional to the Tribunal upto 15Th day of
July, 2017, failing which the petition shall stand abated:
Provided further that any party or panties to the petitions shall, after
the 15Ih day of July, 2017, be eligible to Me fresh applications under
sections 7 or 8 or 9 of the Code, as the case may be, in accordance
with the provisions of the Code:
Provided also that where a petition relating to winding up of a

company is not transferred to the Tribunal under this rule and
remains in the High Court and where there is another petition under
clause (e) of section 433 of the Act for winding up against the same
company pending as on 16h December, 2016, such other petition
shall not be transferred to the Tribunal, even if the petition has not
been served on the respondent "
3. The petitioner has filed application in Form Noi of Insolvency & Bankruptcy (Application to
Adjudicating Authority) Rules, 2016 (for brevity the 'Rules') as a "Financial Creditor, The
respondent is stated to have issued the debentures for an amount of about Z2 crores and copy of
letters of allotment have been annexed with the application and it is submitted that the debentures
were not issued.
4. When the matter was listed on 24.07.2017, the following defects were noticed:
(i) File copies of all the Debentures;
(ii) Both the envelopes sent to the Registered Office of the Company which have been
returned to the petitioner by the postal department; and
(iii) File the written communication in Form No.2 of the Rules of the Interim Resolution
Professional."
1676
5. The petitioner was directed to remove the defects and file documents along with affidavit of the
Authorised representative within a period of seven days. The petitioner has filed the compliance
affidavit so far as the service of the respondent is concerned and also attached the copy of the
envelopes, which were earlier sent and returned undelivered. The petitioner has filed the affidavit
dated 01.082017 with regard to the service of notice by attaching copy of the postal receipt dated
27.07.2017 along with the track report of the post office showing that the item was returned with
the remarks "insufficient address', though It is stated that the notice was sent at the Registered
Office of the respondent company.
6. I have heard the learned counsel for the petitioner and perused the record.
7. As per sub-section (3) of Section 7 of the Insolvency & Bankruptcy Code, 2016 (for short to be
referred here-in-after as the `Code), the Financial Creditor along with the application has to
furnish the following:
(b) the name of the resolution profession& proposed to act as an interim resolution
professional; and
(c) any other information as may be specified by the Board,"
8. According to the aforesaid requirement, the name of the resolution professional proposed to act as
Interim Resolution Professional has to be furnished and with written communication in Form
No.2 of the Rules_
9. In the application originally filed in NCLT Form No.1, it was stated in Part li I that appropriate
application shall be moved with regard to the name, address and registration number of the
Interim Resolution Professional at the relevant time_ Having notice of the aforesaid defects,
1677
seven days' time was granted to the petitioner to rectify the same. For this, it would be relevant to
refer to sub-section (5) of Section 7 of the Code, which reads as under:-
"(5) Where the Adjudicating Authority is satisfied that-
(a) a default has occurred and the application under sub-section (2) is complete, and
there is no disciplinary proceedings pending against the proposed resolution
professional, if may, by order, admit such application; or
(b) default has not occurred or the application under subsection (2) is incomplete or any
disciplinary proceeding is pending against the proposed resolution professional, it
may, by order, reject such application.
Pro vide d that the Adjudicating Authority shall, before rejecting the application under clause (b) of sub-
10. The learned counsel for petitioner has stated that he received the copy of the order dated
24.07.2017 on 26.07.2017 and, therefore, even if the above contention is to be accepteeL the
seven days period would expire on 02.08,2017.
11. The mailer has been quite well settled by the Honble Appellate Tribunal in "Company Appeal
(AT) No.09 of 2017, JK Jute Mills Company Limited Vs. M/s Surendra Trading Company",
wherein it was held that the seven days' period for the rectification of the defects as stipulated
under the proviso to the relevant provisions of Sections 7, 8, or 9 is required to be complied with
by the Corporate Debtor, whose application otherwise being incomplete is fit to be rejected. It
was thus held that the proviso to the aforesaid section made to remove the defects within seven
days are mandatory and on failure to do so, the application is ft to be rejected,
12. however, the learned counsel for the petitioner submits that the Interim Insolvency Resolution
Professional could not be named because of non-availability of the Chief Executive Officer of the
petitioner Society for sometimes, but that cannot be the reason to grant extension in respect of the
period of seven days, the same being mandatory in nature.

In views of the above, the instant petition is rejected.
1678

CHANDIGARH BENCH
C.P. (I.B.) No. 31/7/NCLT/CHD/HP/2017
Applicant: Jeena and Co.

Vs.
Respondent: Inox wind limited
Judges/Coram:
Hon'ble Sh. Mr. R.P. Nagrath, Member Judicial.
Counsels:
For Appellant/Petitioner/Plaintiff: Ms. Samiya Singh, Learned Advocate & Mr. Bhupesh Gupta,
Proposed interim resolution professional.
For Respondents/Defendant: Mr. Pulkit Srivastava, Learned Advocate with Mr. Kalyan Ghosh, Head-
Legal.
ORDER
The matter has been listed today to comply with the directions issued by the Hon'ble National Company
Law Appellate Tribunal, New Delhi in Company Appeal (AT) (Insolvency) No. 103 & 108 of 2017 -
Inox Wind Ltd. Vs. Jeena & Co. The Hon'ble Appellate Tribunal has set aside the judgement passed by
this Tribunal in this case and passed the following directions: -
"7. ......................................................... The Adjudicating Authority
is directed to close the proceeding. .............................................
8. Learned Adjudicating Authority will now determine the fee of Interim

Resolution Professional and the appellant will pay the fees of the Interim
Resolution Professional for the period he has worked."
The Insolvency Resolution Professional and learned counsel for both the parties have made separate
statements with regard to the amount of fee of Insolvency Resolution Professional. They have agreed for
a fee of Rs. 3 lacs.
The fee of the Insolvency Resolution Professional is assessed at Rs. 3 lacs. Out of the total fee of Rs. 3
lacs, the "Operational Creditor" has paid Rs. 1.75 lacs to the Insolvency Resolution Professional which
1679
has already been reimbursed to them by the `Corporate Debtor'. It is directed that the remaining amount
of Rs. 1.25 lacs be paid to the Insolvency Resolution Professional by the Corporate Debtor within two
weeks.
As per the directions of Hon'ble National Company Law Appellate Tribunal, the proceedings of this
petition under Section 9 of the insolvency and bankruptcy code, 2016 are closed.
1680

CHANDIGARH BENCH
Applicant: The Hongkong & Shanghai Banking Corporation Ltd.

Vs.
Respondent: M/s Leeway Logistics Limited.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Ms. Neeru Bansal, Learned Advocate.
ORDER
1. This petition has been filed under Section 7 of Insolvency & Bankruptcy Code. 2016 (for short,
to be referred hereinafter as the 'Code) by the Financial Creditor in Form No.1 prescribed as per
rule 4(1) of the Insolvency & Bankruptcy (Application to Adjudicating Authority) Rules, 2016,
The petitioner is a banking company incorporated under the relevant laws of Hong Kong with
registered office at 1 Queens Road Central, Hong Kong and having India registered office at
Mumbai and Branch Office at Gurgaon. The petitioner had granted credit facility to the
Corporate Debtor to the tune of t15 crones vide facility letters dated 08.092014 and 08.07.2015.
2. The Respondent-Corporate Debtor authorised Mr. Sanjay Sinha, Managing Director andlor Ms.
Namita Sinha, Director of the company severally, to enter into agreement for obtaining credit
facility as per resolution dated 17.04.2014 (page-144 of Paper Book). The loan documents were
accordingly executed which are part of Annexure A-3. By a letter dated 02.03.2016, the
Corporate Debtor also admitted liability to the tune of t 4,21,90,3291- as on 29.02.2016. The
Corporate Debtor issued 15 cheques of different dates according to the schedule of payment.
When the matter was listed on 25.07.2017, learned counsel for the petitioner submitted that out
of 15 cheques, five cheques were encashed but rest of the 10 cheques bounced and copies of
bounced cheques are at page 217 to 226 of Paper Book for which the petitioner has sent notice
1681
to the respondent-Corporate Debtor and other Directors under Section 138 of the Negotiable
Instruments Act.
3. Having heard the learned counsel for the petitioner, the following defects were noticed vide
order dated 25.07.2017:-
(i) The written communication in Form No.2 of the Rules as Annexure A-9 is furnished by
Mr. Atanu Mukherjeer proposed Interim Resolution Professional but the learned
counsel submits that this certificate expired on 28.06.2017, therefore, fresh
communication in Form No,2 for proposing the Interim Resolution Professional has to
be filed with complete particulars,
(ii) The copy of the statement of account at Annexure A-8 has not been certified under the
Bankers Books Evidence Act, The fresh statement with the aforesaid certificate is to be
filed.
Notice of these defects was issued to the itzi.rafA-eFoiasohiBrtlsD petitioner and the learned counser
accepted notice of these defects. It was directed that these defects be removed within seven days.
4. At the same time, notice of this petition was also issued to the Corporate Debtor for today as to
why this petition be not admitted_ The petitioner was further directed to file affidavit stating
compliance along with original postal receipt and track report of the Post Office. Envelope
containing copy of petition along with Paper Book sent at the registered office of the Corporate
Debtor by Speed Post has been returned to the Tribunal with the report purportedly made by the
Postal Department that the addressee has left the address. The notice was sent at the address of
registered office of the company as shown in the Master Data of the Corporate Debtor and,
therefore, it is the service of the notice of hearing. There is no representation from the respondent-
Corporate Debtor.
5. During the course of hearing, learned counsel for the petitioner has handed over today the fresh
written communication dated 05.08.2017 of the proposed Interim Resolution Professional,
namely Mr. Krishan Vrind Jain having Registration No, IBBI/IPA-01/2016-17/876. However, the
statement of accounts duly certified under the Bankers Books Evidence Act,1891 has not been
filed, Learned counsel for the petitioner seeks short time for filing the statement of accounts in
terms of directions vide order dated 25,07.2017 on the ground that this is to be received from
Mumbai Registered Office of the petitioner- company.
1682
6. I have heard the learned counsel for the petitioner and perused the record and find that the
petitioner having not removed the above defect pointed out in the order dated 25.07.2017 within
the mandatory period of seven days, the petition is fit to be rejected. The principle of law on the
subject has been quite well settled by the Honble National Company Law Appellate Tribunal in
"Company Appeal (AT) No. 09 of 2017, ..11( Jute Mills Company Limited Vs. M/s Surendra
Trading Company", wherein it was held that the seven days' period for the rectification of the
defects as stipulated under the proviso to the relevant provisions of Sections 7, 8, or 9 is required
to be complied with by the Corporate Debtor, whose application otherwise being incomplete is fit
to be rejected. It was thus held that the provisos to the aforesaid sections to remove the defects
within seven days are mandatory and on failure to do so, the application is fit to be rejected,
7. As per col. I of Par t-V of Form No. 1 prescribed under the Rules, the Financial Creditor is
supposed to file copies of the entries in a banker's book in accordance with the Bankers Books
Evidence Art, 1891. Despite the defect having been pointed out, the compliance has not been
made.
8. There are other factors which disentitle the petitioner to an order of admission. The first is that as
per sub-rule (2) of Rule 4 of the Rules, the copy of the petition filed with the Adjudicating
Authority is to be sent by registered post or Speed Post at the registered office of the Corporate
Debtor. The Postal Receipt at page 327 of the Paper Book shows that it was addressed to Mr.
Sanjay Sinha and not to the Corporate Debtor itself though Mr. Sanjay in ha was authorised as
Managing Director of the Corporate Debtor for getting the credit facility from the petitioner bank.
I am of the view that when the petition under Section 7 of the Code is to be filed, ifs copy has to
be sent to the Corporate Debtor at its registered office.
9. The second aspect is that the instant petition has been filed by the petitioner-Financial Creditor
under the signatures of Mr. Neeiesh Utturkar and the Chief Executive Officer of the Financial
Creditor has appointed Mr. Neelesh Utturkar as the Substitute Attorney for and on behalf of the
Petitioner-Financial Creditor. Mr. Neetesh Utturkar aforesaid has given the letter of authority in
favour of the Advocates through whom the instant petition has been filed authorising them to
make, file, sign, engage professionals and to do all such things, deeds and acts in connection with
the application to be filed before the National Company Law Tribunal under Section 7 of the
Insolvency and Bankruptcy Code. This Power of Attorney is at Annexure A-6 but interestingly
this does not refer to any specific case to be filed particularly against the Respondent-Corporate
Debtor.
10. In view of the above discussion, the Instant petition is rejected. Copy of this order be
communicated to both the parties.
1683
CHANDIGARH BENCH
Applicant: Shekhar Bhandari

Vs.
Respondent: Tirupati Ceramics Ltd.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Ankit Chawla, Learned Advocate with Mr. Anshul Chhabra,
Parctising Company Secretary.
For Respondents/Defendant: Mr. Manish Jain and Ms. Divya Sharma , Learned Advocates
JUDGMENT
Learned counsel for petitioner submits that there are certain defects in the petition as certain
papers filed are not part of the case. Learned counsel for petitioner seeks and permitted to withdraw the
instant petition with liberty to file fresh one on same cause of action, if so advised.
1684

CHANDIGARH BENCH
C.P. (I.B.) No. 51/7/NCLT/CHD/HRY/2017

Vs.
Respondent: MOR Farms Pvt. Ltd
Judges/Coram:
Hon'ble Sh. R. P. Nagrath, Member (J)
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. R. S. Bhatia, Learned Advocate
For Respondents/Defendant: Mr. Diwan Sharma, Learned Advocate
ORDER
Hon'ble Sh. R. P. Nagrath, Member (J)
This petition filed by the 'Financial-Creditor under Section 7 of the insolvency and Bankruptcy Code,
2016 (for brevity, 'the Code') read with Rule 4 of the Insolvency and Bankruptcy (Application to
Adjudicating Authority) Rules, 2016 (for brevity the Rules') for initiating the insolvency resolution
process was admitted on 04.09.2017. The matter was fixed for today for passing of the formal order of
appointment of Interim Resolution Professional, Mr. Anil Kohli, who has furnished communication in
Form No.2. which was found to be in order as observed in the order dated 04.09.2017.
2. In view of above, 1 issue the following directions: -
i. Appoint Mr. Anil Kohli, Registration No. IBBI/IPA-001/1P-P00112/2017-18/10219, resident of

Flat No. 1011, Kirti Shikhar, District Centre, Janakpuri New Delhi-110058 email.
insolvency@arck.in, Mobile No. 9810071182 as Interim Resolution Professional;
ii. The term of appointment of Mr. Anil Kohli shall be for a period of 30 days from the date of his
appointment as Interim Resolution Professional or as may be determined by the committee of
creditors whichever is earlier;
iii. In terms of Section 17 of the Code', from the date of this appointment, the powers of the Board of
Directors shall stand suspended and the management of the affairs shall vest with the Interim
Resolution Professional and the officers and the managers of the 'Corporate Debtor' shall report to
1685
the Interim Resolution Professional, who shall be enjoined to exercise all the powers as are vested
with Interim Resolution Professional and strictly perform all the duties as are enjoined on the
Interim Resolution Professional under Section 18 and other relevant provisions of the 'Code',
including taking control and custody of the assets over which the 'Corporate Debtor' has
ownership rights recorded in the balance sheet of the 'Corporate Debtor' etc, as provided in
Section 18 (1) (f) of the 'Code' The Interim Resolution Professional is directed to prepare a
cornplete list of inventory of assets of the 'Corporate Debtor'.
iv. The Interim Resolution Professional shall strictly act in accordance with the 'Code', all the rules
framed thereunder by the Board or the Central Government and in accordance with the 'Code' of
Conduct governing his professional and as an Insolvency Professional with high standards of
ethics and moral;
v. The Interim Resolution Professional shall endeavor to constitute the Committee of Creditors at
the earliest but not rater than three weeks from the date of this order_ it is hereby directed that the
'Corporate Debtor', its properties. personnel and the persons associated with the management she
extend all cooperation to the Interim Resolution Professional in managing the affairs of the
'Corporate Debtor. as a going concern and extend all co-operation in accessing books and records
as well as assets of the 'Corporate Debtor':
vi. The Interim Resolution Professional shall cause a public announcement within three days as
Insolvency Resolution Process in terms of Section 13 (1) (b) of the 'Code' read with Section 15
calling for the submission of claims against Corporate Debtor. and
vii. As required under Rule 27 of the Insolvency and Bankruptcy Board of India (Insolvency
Resolution Process for Corporate Persons) Regulations, 2016, the Interim Insolvency Resolution
Professional shall within seven days from today, appoint two registered valuers to determine the
liquidation value of the Corporate Debtor in terms of Regulation 35.
3. It is further directed that the Interim Insolvency Resolution Professional shall positively file a
report of events before this Tribunal every seven days in relation to the 'Corporate Debtor'.
4. A copy of this order and the order dated 04.09.2017 if not already supplied be communicated to
both the parties and learned counsel for the petitioner shall supply copies o these orders to the Interim
Resolution Professional. Copies of these orders be sent to the Interim Resolution Professional at his email
address by the Registry.
1686

CHANDIGARH BENCH
C.P. (I.B.) No. 50/7/NCLT/CHD/2017
Applicant: Sahara Fincon Private Limited

Vs.
Respondent: Tirupati Ceramics Ltd.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Ajay Ghangas, Learned Advocate
For Respondents/Defendant: Mr. Manish Jain and Ms. Divya Sharma, Learned Advocate
ORDER
This petition filed under section 7 of the Insolvency and Bankruptcy Code, 2016 was admitted on
29.09.2017 and the matter was listed today for passing formal order of appointment of Interim Resolution
Professional. The petitioner had proposed the name of Mr. Amit Sharma as the Interim Resolution
Professional who filed the written communication in Form No. 2 which has been found in order.
2. In view of the above, the following directions are issued:-
(i). Appoint Mr. Amit Sharma bearing IP Regn. No. IBBI/IPA-002/IP-N00172/2017-

18/10442, resident of House No. S-50, Pandav Nagar, Delhi-110092, email: amit2002-
shr@rediffmail. com, as Interim Resolution Professional;
(ii). The term of appointment of Mr. Amit Sharma shall be for a period of 30 days from the
date of his appointment as Interim Resolution Professional or as may be determined by the
committee of creditors whichever is earlier;
(iii). In terms of Section 17 of ‘the Code’, from the date of this appointment, the powers of the
Board of Directors shall stand suspended and the management of the affairs shall vest with the
Interim Resolution Professional and the officers and the managers of the ‘Corporate Debtor’ shall
report to the Interim Resolution Professional, who shall be enjoined to exercise all the powers as
are vested with Interim Resolution Professional and strictly perform all the duties as are enjoined
1687
on the Interim Resolution Professional under Section 18 and other relevant provisions of the
‘Code’, including taking control and custody of the assets over which the ‘Corporate Debtor’ has
ownership rights recorded in the balance sheet of the ‘Corporate Debtor’ etc. as provided in
Section 18 (1) (f) of the ‘Code’. The Interim Resolution Professional is directed to prepare a
complete list of inventory of assets of the ‘Corporate Debtor’;
(iv). The Interim Resolution Professional shall strictly act in accordance with the ‘Code’, all
the rules framed thereunder by the Board or the Central Government and in accordance with the
‘Code of Conduct’ governing his profession and as an Insolvency Professional with high
standards of ethics and moral;
(v). The Interim Resolution Professional shall endeavour to constitute the Committee of
Creditors at the earliest but not later than three weeks from the date of this order. It is hereby
directed that the ‘Corporate Debtor’, its properties, personnel and the persons associated with the
management shall extend all cooperation to the Interim Resolution Professional in managing the
affairs of the ‘Corporate Debtor’ as a going concern and extend all co-operation in accessing
books and records as well as assets of the ‘Corporate Debtor’;
(vi). The Interim Resolution Professional shall cause a public announcement within three days
as contemplated under Regulation 6 of the Insolvency and Bankruptcy Board of India (Insolvency
Insolvency Resolution Process in terms of Section 13 (1) (b) of the ‘Code’ read with Section 15
calling for the submission of claims against ‘Corporate Debtor’ ; and
(vii.) As required under Rule 27 of the Insolvency and Bankruptcy Board of India (Insolvency
report of events before this Tribunal every week in relation to the ‘Corporate Debtor’.
4. A copy of this order be also supplied to both the parties. The learned counsel for the petitioner
shall immediately deliver copy of this order and the order dated 29.09.2017 to the Interim Resolution
Professional forthwith. The registry is also directed to send both these orders to the Interim Resolution
Professional at his e-mail address forthwith.
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CHANDIGARH BENCH
C.P. (I.B.) No. 67/7/NCLT/CHD/2017

Vs.
Respondent: M/s. Supreme Tex Mart Limited
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Nakul Sharma, Mr. Bhupesh Gupta, Learned Advocate
ORDER
This petition filed under section 7 of the Insolvency and Bankruptcy Code, 2016 was admitted on
29.09.2017 and the matter was listed today for passing formal order of appointment of Interim Resolution
Professional. The petitioner had proposed the name of Mr. Bhupesh Gupta as the Interim Resolution
Professional who filed the written communication in Form No. 2 which was found in order.
(i). Appoint Mr. Bhupesh Gupta bearing IP Regn. No. IBBI/IPA-002/IP-N00030/2016-

17/10067, resident of House No. 2181, Sector 38-C, Chandigarh-160036,
email:bkg.majestic@gmail.com Mobile No. 9815605702 as Interim Resolution Professional;
(ii). The term of appointment of Mr. Bhupesh Gupta shall be for a period of 30 days from the
date of his appointment as Interim Resolution Professional or as may be determined by the
committee of creditors whichever is earlier;
(iii). In terms of Section 17 of ‘the Code’, from the date of this appointment, the powers of the
Board of Directors shall stand suspended and the management of the affairs shall vest with the
Interim Resolution Professional and the officers and the managers of the ‘Corporate Debtor’ shall
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report to the Interim Resolution Professional, who shall be enjoined to exercise all the powers as
are vested with Interim Resolution Professional and strictly perform all the duties as are enjoined
on the Interim Resolution Professional under Section 18 and other relevant provisions of the
‘Code’, including taking control and custody of the assets over which the ‘Corporate Debtor’ has
ownership rights recorded in the balance sheet of the ‘Corporate Debtor’ etc. as provided in
Section 18 (1) (f) of the ‘Code’. The Interim Resolution Professional is directed to prepare a
complete list of inventory of assets of the ‘Corporate Debtor’;
(iv). The Interim Resolution Professional shall strictly act in accordance with the ‘Code’, all
the rules framed thereunder by the Board or the Central Government and in accordance with the
‘Code of Conduct’ governing his profession and as an Insolvency Professional with high
standards of ethics and moral;
(v). The Interim Resolution Professional shall endeavour to constitute the Committee of
Creditors at the earliest but not later than three weeks from the date of this order. It is hereby
directed that the ‘Corporate Debtor’, its properties, personnel and the persons associated with the
management shall extend all cooperation to the Interim Resolution Professional in managing the
affairs of the ‘Corporate Debtor’ as a going concern and extend all co-operation in accessing
(vi). The Interim Resolution Professional shall cause a public announcement within three days
as contemplated under Regulation 6 of the Insolvency and Bankruptcy Board of India (Insolvency
Insolvency Resolution Process in terms of Section 13 (1) (b) of the ‘Code’ read with Section 15
calling for the submission of claims against ‘Corporate Debtor’ ; and
(vii). As required under Rule 27 of the Insolvency and Bankruptcy Board of India (Insolvency
4. A copy of this order be also supplied to both the parties. The learned counsel for the petitioner
shall deliver immediately copy of this order and the order dated 29.09.2017 to the Interim Resolution
Professional forthwith. The registry is also directed to send both the orders to the Interim Resolution
Professional at his e-mail address forthwith.
1690

CHANDIGARH BENCH
C.P. (I.B.) No. 75/7/NCLT/CHD/2017

Vs.
Respondent: A. Power Himalayas Ltd.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. D.K. Gupta, Mr. Rajesh Sharma, Mr. Rajiv Khurana, Learned
Advocate
For Respondents/Defendant: Mr. Bhal Singh Malik & Mr. Amit Mahajan, Learned Advocate
ORDER
This petition has been filed by Punjab National Bank as a Financial Creditor under Section 7 of
Insolvency and Bankruptcy Code, 2016 (for short to be referred hereinafter as the ‘code’) in Form No.1
prescribed under Rule 4(1) of the Insolvency and Bankruptcy (Application to Adjudicating Authority)
Rules, 2016 for initiating corporate insolvency resolution process against the respondent-corporate debtor.
2. The petitioner-bank was incorporated on 31.03.1970 under Banking Companies (Acquisition &
Transfer of Undertakings) Act, 1970, having its Head Office at Bikhaji Cama Place, New Delhi and the
petition has been filed by the Branch Office of the Financial Creditor at Chandigarh through Mr. Rajesh
Sharma, Senior Manager in whose favour the Bank has given a Power of Attorney dated 27.02.2014
Annexure-1. The Branch Head has Issued authority dated 02.08.2017 Annexure-2 in favour of Mr. Rajesh
Sharma, Senior Manager of the Branch Office to file application before NCLT on behalf of the Bank.
3. When the matter was listed on 18.09.2017 the petitioner was directed to file specific authority
granted by the competent authority to initiate the proceedings against the Corporate Debtor under the
Code. With the compliance affidavit dated 28.09.2017 of Mr. Rajesh Sharma, Senior Manager filed letter
dated 06.06.2017 issued by Deputy Circle Head of the Bank Annexure-88 that the Asstt. General
Manager of the Branch Office of the Bank at Mohali Phase-1 is permitted to file the application under
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Section 7 of the Code before National Company Law Tribunal, Chandigarh. The Assistant General
Manager, Mohali was also authorised to permit any of its Manager working under the branch to file and
submit any other application, affidavit, or to receive notice and to pursue the case etc. on behalf of the
Financial Creditor. In the same letter the Deputy Circle Head also authorised appointment of
Mr.D.K.Gupta, Advocate, through whom the instant petition has been filed to represent the Financial
Creditor before the Adjudicating Authority. This affidavit also states that the unit of the corporate debtor
in question is running business of Hydro Power Stations and all kinds of activities related to power
generation, distribution etc. since the year 1994.
4. The respondent-corporate debtor was incorporated on 02.08.1984 having been allotted CIN
U29219HP1994PLC014893. Its Registered Office is in Himachal Pradesh and therefore, the matter falls
within the territorial jurisdiction of this Tribunal. The nominal share capital of the respondent is Rs. 22
crores as per the master data of the company and paid-up share capital of Rs. 21,02,32,120/- as per the
audited balance sheet for the year ending 31.03.2016. Copy of the Memorandum and Articles of
Association of the respondent-corporate debtor is at Annexure-3.
5. Facts of the case, briefly stated, are that the respondent-corporate debtor vide loan application
dt.30.05.2007 approached the financial creditor for grant of credit facility to the tune of Rs. 1100 lacs by
way of term loan and Rs. 300 lacs by way of ILC/FLC which were sanctioned vide letter dt.19.07.2007.
The loan application is at Annexure-14 and the sanction letter is at Annexure-16. The loan was granted on
the basis of resolution of Board of Directors of the respondent-corporate debtor dated 23.07.2007, copy of
which is at Annexure-15. The corporate debtor along with the mortgagors and guarantors executed loan
and security documents Annexure-17 to 24 on 01.08.2007.
6. The corporate debtor also approached the financial creditor for grant of Bank Guarantee of Rs. 50
lacs for expansion of the business and the loan application for that is dated 01.10.2007, Annexure-25 and
the same was sanctioned vide letter dt.05.11.2007 Annexure-26. The resolution dated 10.10.2007 of the
Board of Directors authorising the directors to furnish securities and sign/execute the loan/security
documents is at Annexure-27. Various guarantee agreements and counter indemnities executed by other
persons including some companies are from Anenxure-28 to 31, apart from certain equitable mortgages of
immovable properties by deposit of title deeds were also created which are from Anenxure-32 to 34. The
financial creditor has also given particulars of the mortgages and details of land/immovable properties in
respect of the creation of the mortgage.
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7. It is further stated that the corporate debtor further approached the financial creditor for grant of
term loan of Rs. 2 crores and Bank Guarantee of Rs. 1.20 crores to meet the increased cost of projects.
This was sanctioned vide letter dt.07.02.2011 (Annexure-36). The company vide resolution dated
31.01.2011 authorised its directors to furnish securities and to sign loan/security documents relating to the
additional credit facilities. Copy of the resolution is at Annexure-37.
8. The corporate debtor further executed term loan/hypothecation of assets, hypothecation of current
assets (Annexure-38 to 40) to secure term loan of Rs. 2 crores. It also furnished hypothecation of movable
assets to secure fresh term loan of Rs. 2 crores and Bank Guarantee of Rs. 1.20 crores (Annexure-41). It
also executed General Counter Indemnity (Anenxure-42) to secure Bank Guarantee of Rs. 1.20 crores and
agreement of guarantee was jointly executed by Mr.Arun Sharma, Smt.Sunita Sharma and Shri Amitabh
Shama to secure fresh term loan of Rs. 2 crores and Bank Guarantee of Rs. 1.20 crores in their personal
capacities which are Annexure-43.
9. Agreement of guarantee was also executed by M/s Charu Finevest Consultants Ltd. & M/s
Maritime Barter Pvt. Ltd. through its directors to secure credit facilities of Rs. 3.20 crores which are
Annexure-44 & 45 respectively. Another agreement of guarantee for this amount was also furnished by
M/s Regency Aquaelectro and Motel Resorts which was substituted with M/s Sunrays Agencies Pvt. Ltd.
in 2014. The letter of continuity dated 24.03.2011 executed by Shri Amitabh Sharma by which he
extended the charge executed on 26.03.2009 and 12.09.2009 for aforesaid amounts of Rs. 2 crores and Rs.
1.20 crores as at Annexure-46.
10. It is further stated that the corporate debtor again approached the financial creditor for fresh FITL
of Rs. 186.02 lakhs as well as re-schedulement of existing term loan of Rs. 1300 lakhs which was
sanctioned (Annexure 47 & 48). The corporate debtor vide resolution dated 06.09.2012 authorised its
directors to furnish securities and documents and copy of the resolution is at Annexure49. The corporate
debtor executed fresh documents in respect of availing FITL and re-schedulement of term loan (from
Annexure 50 to 55). Equitable mortgage of various properties were also created along with execution of
term loan. These documents are from Anenxure-56 to 59. Details of the mortgage along with particulars
of the properties have also been given.
11. The corporate debtor further approached the financial creditor for fresh FITL of Rs. 1.71 crores as
well as re-schedulement of existing term loan of Rs. 1300 lakhs and FITL of Rs. 1.86 crores for
expansion of the business and the relevant documents in this regard are at Annexure-62 to 79, including
the letters of continuities.
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Before filing of this petition, the financial creditor issued demand notice dated 11.04.2017 to the
corporate debtor by Registered Post and to all the guarantors to pay the amount within 15 days and copy
of this notice is at Annexure-86. Revised demand notice dated 05.08.2017 was also sent wherein total
amount in default was stated to be Rs. 20,73,90,189/- as on 31.07.2017 with further interest w.e.f.
01.08.2017.
13. Along with the application the petitioner-bank has also attached copies of the statement of
accounts of the corporate debtor as on 28.08.2017 certified under Bankers Books Evidence Act, 1891
from Annexure-81 to 84 with detail of the amount in default in various accounts and total amount in
default is stated to be Rs. 20,96,67,934/-. The corporate debtor had also executed balance confirmation
letters dated 27.03.2009, 29.11.2012, 07.11.2013, 30.10.2014 and 29.04.2016 confirming the correctness
of the outstanding balance in the accounts which are at Annexure-85 (colly).
14. One of the essential requirements of Section 7 (3) of the Code is for the financial creditor to
propose the name of Resolution Professional to act as an Interim Resolution Professional. Mr. Rajeev
Khurana having Registration No.IBBI/IPA-001/IP-P00126/2017-18/10268 has been proposed as an
Interim Resolution Professional who filed written communication in Form No.2 giving all the necessary
particulars. When the matter was listed on 18.09.2017, it was contended that Mr.Rajeev Khurana, IRP has
since been appointed in two other cases. Mr.Rajeev Khurana, IRP was present in the court and he was
directed to file undertaking/declaration as to how he will be able to deal with this matter also along with
the other cases. Mr. Rajeev Khurana filed his declaration dated 28.09.2017 that one of the two cases in
which he has been appointed as IRP the works/factories are only partially operational and in case of the
other case, namely, Shivek Labs Limited the works/factories was not still in operation. The written
communication filed by the Interim Resolution Professional is found to be in order.
15. Notice of this application was directed to be issued to the respondent-corporate debtor to show
cause as to why this petition be not admitted. The corporate debtor is represented by Mr. Bhal Singh
Malik, Advocate and it filed reply/objections to the instant petition to oppose the prayer made by the
financial creditor. It is stated that the provisions of the Code, SARFAESI Act, 2002 and Recovery of
Debts due to Banks and Financial Institutions Act, 1993 (RDB Act, 1993) are not applicable to potentially
viable sick MSME accounts and it is the imperative and statutory duty of the Bank/Financial Creditor to
rehabilitate the account in public interest under the policy for revival / rehabilitation and the guidelines
promulgated by RBI by virtue of the powers conferred on it under Sections 21 and 35A of the Banking
Regulation Act, 1949 vide notified circulars at Annexure CD/2 and CD/3 of the reply.
16. It is further stated that the respondent is a specialised company incorporated to undertake designs,
consultancy and implementation of Small Hydel Power Projects on turnkey basis as well as own them on
1694
the principles of build operate. The company has been promoted by a group of experienced technocrats,
professionals and non-resident Indians, who have a wide ranging experience in various fields related to
Hydel Power Projects. This company has been set up as a first private sector SHP project in Himachal
Pradesh connected to 33 KV Grid and was selected on its merits by a reputed International Agency. In
addition to the Power Station, the company also built Transmission Line and 33 KV Grid Station for
HPSEB at Palchan to provide interconnectivity to Solang SHP Project. Solang SHP project has been
running the Project since June, 2002. The project being the first one in the Hilly region has been
considered as a model for SHP Sector and was used as educational / training for technical persons by
AHEC, Roorkee. The company has 2.25 MW Beas SHP Project presently for which the Implementation
Agreement has already been signed with Government of Himachal Pradesh and the project is under
construction and expected generation shortly. These projects are covered under the Income Tax Rebate
u/s 80 IA and have long term high returns potential.
17. This unit is a “Medium (Manufacturing) Enterprise” as defined in the MSMED Act, 2006 and the
RBI circular dated 02.07.2012 regarding lending to Micro, Small Enterprises (MSME) sector as the
investment in the Plant and Machinery (excluding land and building) is more than Rs. 5 crores but does
not exceed Rs. 10 crores. The unit is a valuable national asset, set up in public interest, generating
employment, earning revenue for the Government in the form of taxes for social benefits and contributing
towards the overall production of the country.
18. It is stated that out of sanction of Rs. 1400 lakhs, the financial creditor has only disbursed an
amount of Rs. 800 lakhs and the balance of Rs. 600 lakhs was merely disbursed in the books and
misappropriated by the financial creditor to adjust the overdues in the term loan account. This illegal act
of the Bank at the time of implementation /commissioning of the Project caused severe shortfall in the
means of finance for the smooth implementation of the project thereby, causing delay. The reasons for
delay were beyond the control of private promoters due to stoppage of work by the Army and
Government restrictions in Rohtang area, where the project is located. The delay has also been caused due
to the time taken by the High Court orders from time to time, apart from involvement of multifarious
departments such as forest, revenue, public health, fishery, soil conservation, pollution control board,
electricity board, army etc.
19. The respondent-corporate debtor has also given details of the progress and implementation of the
project as of now. It is also highlighted that the working construction period available at site is only
around 5 months in a year which is from April to June and October to November due to winter snow and
monsoon rains. One NGO also filed a case in the Hon’ble High Court regarding diversion of land given
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for the project by the government department and final order was passed in favour of the company in
September, 2009 and work could be restarted in April, 2010.
20. Even in April 2011, the company was advised not to have further construction activities as there
was a petition filed in the High Court regarding environmental issues. In November, 2011 the company
was advised that there was a ban on all kinds of construction in the area and the matter was cleared in
December, 2011 to resume the works from April, 2012 onwards. Documents of the order of Hon’ble High
Court of Himachal Pradesh in this regard are at Annexure-CD/6 (colly). It is stated that the company has
paid interest to the Bank till 2015 which was more than what they had disbursed to the company. It also
wrote a letter to the Bank dated 20.05.2016 requesting them to take a sympathetic and practical view
keeping in mind the genuine problems being faced by them with regard to the implementation of the
project and the Government of Himachal Pradesh has given extension till 31.03.2018 and the Bank/the
financial creditor also extended the bank guarantee till 31.03.2017 and no action could be taken till the
validity of the bank guarantee. Further, Government of India has also given directions that all the stressed
renewal energy projects be given long-term financing upto 20 years at lower competitive rates of interest.
The Bank is stated to have initiated recovery measures and illegally classified the account as a non-
performing asset on 31.12.2015 and even filed a Suit under Section 19 of the RDB Act, 1993 in DRT,
Chandigarh.
21. On merits, however, the factum of execution of various documents by the corporate debtor and
availing various facilities from time to time is not disputed. It is, however, stated that the financial
creditor has made several diversions and defaults in compliance of the guidelines issued by RBI which
have statutory force and binding on all the Scheduled and Commercial Banks.
22. When the matter was listed on 23.10.2017 learned counsel for respondent submitted that the
petitioner-bank may first be directed to file Appraisal Report prepared by the bank at the time of original
sanction of the loan. Finding this request to be unsustainable the same was declined. I have heard learned
counsel for the parties and carefully perused the records.
23. The main plank of argument of learned counsel for respondent was that there is a violation of RBI
guidelines issued under Section 35A of the Banking Regulations Act, 1949 by the petitioner-bank which
have binding force. It was also contended that the provisions of the Code, RDB Act, 1993 and
SARFAESI Act, 2002 are not applicable to potentially viable sick MSME accounts and it is the statutory
duty of the bank-financial creditor to rehabilitate the account in public interest. The RBI guidelines have
been issued for rehabilitation of Sick Micro and Small Enterprises. That circular is dated 01.11.2012 as at
Annexure CD/2 with the reply and structured mechanism for monitoring the credit growth of Micro and
Small Enterprises (MSE) sector vide circular dated 09.05.2013 Annexure CD/3. The respondent-corporate
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debtor has also attached master circular issued by RBI dated 02.07.2012 (Annexure CD/4) which defines
the Micro, Small and Medium Enterprises (MSME) under the Micro, Small and Medium Enterprises
Development Act, 2006. The Medium Enterprise is defined as an enterprise where the investment in plant
and machinery is more than Rs. 5 crores but does not exceed Rs. 10 crores.
24. The loan application Annexure-14 dated 30.05.2007 does not at all suggest that this was
sanctioned as a loan under the aforesaid MSME scheme, nor it can be possibly be accepted as the
application for loan was for grant of Rs. 11 crores as a term loan with LLC/FLC of Rs. 3 crores with an
overall ceiling of Rs. 11 crores. The sanction letter Annexure-16 dated 19.07.2007 is filed by the
petitioner bank where under the aforesaid loans were sanctioned by the bank. So, the protection claimed
on behalf of the respondent in this regard, under the aforesaid Act would not be attracted to the facts of
the present case.
25. Otherwise on facts, here is no dispute with regard to the grant of loan facilities or about the
respondent-corporate debtor being in default.
26. In Innoventive Industries Ltd. Vs. ICICI Bank and Ors. Civil Appeal Nos. 8337-8338 of
2017 (MANU/SC/1063/2017) the Hon’ble Supreme Court held that in 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.
27. In the said case before the Hon’ble Supreme Court, the corporate debtor had only raised a plea of
suspension of its debt under Maharashtra Act to contend that it was no debt due in law. The Hon’ble
Supreme Court held that the adjudicating authority correctly referred to the non-obstante clause contained
in Section 238 of the Code and arrived at a conclusion that a notification under the Maharashtra Act
would not stand in the way of the corporate insolvency resolution process under the Code.
28. In the present case, on sanction of the loan, the corporate debtor executed various documents i.e.
hypothecation of assets, term loan agreement, hypothecation agreement-current assets, power of attorney,
agreement of guarantee, agreement of mortgage which are from Annexure-17 to 24.
29. Further, on 01.10.2007 the corporate debtor approached the financial creditor for granting of
Bank Guarantee to the tune of Rs. 50 lacs for expansion of business and executed relevant documents,
reference to which has already been made while narrating the facts of the case. Further, there are security
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documents and so many other documents with regard to the loan and execution of FITL facilities
whenever the amount of interest becomes due at different times. Copies of various documents to show the
term loan facilities, creation of equitable mortgages by deposit of title deeds etc. have also been referred
already. The latest sanction letter dated 31.03.2014 (Annexure-60) relates to the sanction of term loan
subject to additional stipulations. The balance confirmation letters have also been executed by the
corporate debtor.
30. The petitioner-bank has filed certified copies of books of accounts of corporate debtor maintained
by it. Annexure 81 to 84 are the certified copies of the bank accounts duly certified under the Bankers
Books Evidence Act showing the outstanding amount and the computation chart is also enclosed in
respect of each of these account. Page 647 is relating to account No.115500J100000012 suggesting that
the account became NPA on 31.12.2015 and the interest and penal interest till 20.08.2017 has been added.
Total amount outstanding in this account is Rs. 13,78,74,835/-. So on perusal of these statements of
accounts, the version of the petitioner-financial creditor in respect of total amount in default to be
₹20,96,67,934 as on 20.08.2017 is established. There was no dispute in the written reply / objections to
the execution of various documents of loans relied upon by the Bank or about the outstanding amount as
per the statement of accounts. There is, in fact, an admission by the corporate debtor with regard to the
loans in its balance sheets for the year ending 31.03.2014, 31.03.2015 and 31.03.2016 which are attached
as Annexure-89 to 91 with the affidavit dated 28.09.2017 of the financial creditor.
31. Learned counsel for the financial creditor refers to the account statements at Page 67 of the paper
book of the compliance affidavit which are part of Annexure-91, the annual report. In this balance sheets,
the corporate debtor has shown an amount of Rs. 9,06,93,772/- against the entry in respect of PNB,
Mohali relating to term loan Account No.-1; an amount of Rs. 1,62,41,226/- in term loan Account No.2;
an amount of Rs. 67,22,864/- in term loan-FITL-I and an amount of Rs. 67,06,729/- in term loan-FITL-II.
32. This balance sheet shows that the respondent has also availed loan facility from SBI. With regard
to the term loan from the financial creditor (PNB), the financial statement contains notes at page 68, the
description of which is given as below:-
“TERM LOAN III(a) (BEAS SHP)
Term loan of Rs. 11.00 crores from PNB, Mohali payable in 37 graded quarterly
instalments started from June, 2010. Further repayment schedule revised by PNB on
27.11.2012 now the loan is repayable in 33 graded quarterly instalments started from
March 2014. Further, the above loan revised by PNB during the year under audit and now
the loan is repayable in 33 graded instalments starting from March 2015 to March 2023.
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TERM LOAN-III (b) (BEAS SHP)
Term loan of Rs. 2.00 crores from PNB, Mohali payable in 31 graded quarterly instalments
started from September, 2012. Further repayment schedule revised by PNB on 27.11.2012
now the loan is repayable in 33 graded quarterly instalments started from March 2014.
Further, the above loan revised by PNB during the year under audit and now loan is
repayable in 33 graded instalments starting from March 2015 to March 2023.
TERM LOAN-III (C) (BEAS SHP – FITL-I)
Term loan of Rs. 1.86 crores from PNB, Mohali as restructured during the year under audit
now as per revised sanction letter loan is to be repaid in 11 graded quarterly instalments
starting from March 2015 and ending on September 2017.
TERM LOAN-IV (C) (BEAS SHP – FITL-II)
Fresh Term loan of Rs. 1.71 crores from PNB, Mohali has sanctioned during the year
under audit as per sanction letter loan is to be repaid in 11 graded quarterly instalments
starting from March 2015 and ending on September 2017.”
33. There is absolutely no scope of any contest from the respondent- corporate debtor. It is not the
case that the Bank has not granted any chance to the corporate debtor to repay the amount sanctioned way
back in the year 2007 and it was renewed on various occasions and rather additional facilities were being
granted. The loan has been declared as NPA in the year 2015 and 2 years have passed since then.
34. The petitioner-financial creditor has complied with all the requirements of sub-section (3) of
Section 7 of the code which is reproduced as under:-
“(3) The financial creditor shall, along with the application furnish—
(b) the name of the resolution professional proposed to act as an interim resolution professional;
and
(c) any other information as may be specified by the Board.”
35. The financial creditor has produced sufficient evidence of default which is rather not in dispute.
The Interim Resolution Professional has been proposed and written communication in Form No.2 has
already been furnished by the proposed Interim Resolution Professional and as already observed, the
same is in order. Necessary declaration has been given in the application form by the authorised
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representative to the effect that to the best of his knowledge the proposed IRP is fully qualified and
permitted to act as a Resolution Professional in accordance with the provisions of the Code read with
Rules and Regulations framed thereunder.
36. Sub-section (4) of Section 7 of the Code requires the adjudicating authority to ascertain the
existence of a default from the records of information utility or on the basis of other evidences. There is
no dispute about the fulfilment of the aforesaid requirement by the financial creditor. Apart from the
statement of accounts maintained by the Bank, the CIBIL report (Annexure-80) has also been obtained by
the Bank with regard to the default.
37. In view of the aforesaid discussion, the default having occurred and the application being
complete, the instant application deserves to be admitted.
38. The petition is, therefore, admitted declaring the moratorium prohibiting all of the following as
provided in section 14(1) of the Code: -
other authority;
39. It is further directed that the supply of essential goods or services to the Corporate Debtor, as
specified in Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate
Persons) Regulations, 2016 shall not be terminated or suspended or interrupted during moratorium period.
This, however, shall not apply to such transactions as may be notified by the Central Government in
consultation with any financial sector regulator.
40. The matter be now listed on 10.11.2017 for passing formal order of appointment of Interim
Resolution Professional. Copy of the order be communicated to both the parties immediately.
1700

CHANDIGARH BENCH
C.P. (I.B.) No. 75/7/NCLT/CHD/2017

Vs.
Respondent: A. Power Himalayas Ltd.
Judges/Coram:
Counsels:
For Respondents/Defendant: Mr. Rajiv Khurana, Learned Advocate
ORDER
This petition filed by the ‘Financial Creditor’ under Section 7 of the Insolvency and Bankruptcy
Code, 2016 was admitted on 03.11.2017 and moratorium was granted under Section 14 of the Code ibid.
Further, the written communication in Form No. 2 furnished by the proposed Interim Resolution
Professional was found in order. The matter was listed for today for passing formal order of appointment
of Interim Resolution Professional.
(i) Appoint Mr. Rajiv Khurana, bearing IP Regn. No. IBBI/IPA-001/IP-

P00126/2017-18/10268, resident of House No. 1073, Sector 43-B, Chandigarh,
email: cakhurana@gmail.com, Mobile No. 9815547399 as Interim Resolution
Professional;
(ii) The term of appointment of Mr. Rajiv Khurana shall be for a period of
30 days from the date of his appointment as Interim Resolution Professional or as
may be determined by the committee of creditors whichever is earlier;
1701
(iii) In terms of Section 17 of ‘the Code’, from the date of this appointment,
the powers of the Board of Directors shall stand suspended and the management
of the affairs shall vest with the Interim Resolution Professional and the officers
and the managers of the ‘Corporate Debtor’ shall report to the Interim Resolution
Professional, who shall be enjoined to exercise all the powers as are vested with
Interim Resolution Professional and strictly perform all the duties as are enjoined
on the Interim Resolution Professional under Section 18 and other relevant
provisions of the ‘Code’, including taking control and custody of the assets over
which the ‘Corporate Debtor’ has ownership rights recorded in the balance sheet
of the ‘Corporate Debtor’ etc. as provided in Section 18 (1) (f) of the ‘Code’. The
Interim Resolution Professional is directed to prepare a complete list of inventory
of assets of the ‘Corporate Debtor’;
(iv) The Interim Resolution Professional shall strictly act in accordance with
the ‘Code’, all the rules framed thereunder by the Board or the Central
Government and in accordance with the ‘Code of Conduct’ governing his
profession and as an Insolvency Professional with high standards of ethics and
moral;
(v) The Interim Resolution Professional shall endeavour to constitute the

Committee of Creditors at the earliest but not later than three weeks from the date
of this order. It is hereby directed that the ‘Corporate Debtor’, its properties,
personnel and the persons associated with the management shall extend all
cooperation to the Interim Resolution Professional in managing the affairs of the
‘Corporate Debtor’ as a going concern and extend all co-operation in accessing
(vi) The Interim Resolution Professional shall cause a public announcement

within three days as contemplated under Regulation 6 of the Insolvency and
Bankruptcy Board of India (Insolvency Resolution Process for Corporate
Persons) Regulations, 2016 of the initiation of the Corporate Insolvency
Resolution Process in terms of Section 13 (1) (b) of the ‘Code’ read with Section
15 calling for the submission of claims against ‘Corporate Debtor’; and
1702
(vii) As required under Rule 27 of the Insolvency and Bankruptcy Board of

India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016,
the Interim Insolvency Resolution Professional shall within seven days from
today, appoint two registered valuers to determine the liquidation value of the
Corporate Debtor in terms of Regulation 35.
4. The Registry is directed to send copy of this order to both the parties forthwith. Mr. Rajiv
Khurana is directed to collect copy of this order and order dated 03.11.2017 today itself i.e. on 10.11.2017
from the office.
1703
CHANDIGARH BENCH
C.P. (I.B.) No. 72/7/NCLT/CHD/2017

Vs.
Respondent: Vegan Colloids Limited
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Sanjay Bhatt, Learned Advocate
For Respondents/Defendant: Mr. Anand Chhibar, Senior Advocate, Mr. Gaurav Mankoria, Learned
Advocate
ORDER
This petition has been filed by Bank of India as a Financial Creditor under Section 7 of the
Insolvency and Bankruptcy Code, 2016 (for short to be referred here-in-after as the ‘Code’) by moving
application in Form 1 as prescribed by Rule 4 (1) of the Insolvency and Bankruptcy (Application to
Adjudicating Authority) Rules, 2016 (for brevity the ‘Rules) to initiate the insolvency resolution process
against the Respondent-Corporate Debtor.
2. The petitioner Bank is a Body Corporate constituted under the Banking Companies (Acquisition
and Transfer of Undertakings) Act, 1970. The petition was instituted by the Bank through its Branch
Office in New Delhi. Mr. Pawan Kumar is the Chief Manager of the Branch through whom the instant
petition has been filed. It is stated that vide resolution dated 20.02.2017 passed by the Board of Directors
of the petitioner Bank, the General Managers were granted the authority to issue the power of attorneys in
favour of the officers of the Bank with power to sub-delegate and accordingly Mr.Mrityunjay Kumar
Gupta and Mr. Ravi Prakash Gupta have executed the power of attorney in favour of Pawan Kumar, Chief
Manager of the Bank. The Board resolution of the Bank dated 20.02.2017 is at Annexure A-1 and the
power of attorney dated 20.04.2017 is at Annexure A-2.
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3. When the matter was listed on 13.09.2017, learned counsel for the petitioner Bank also contended
that the power of attorney in favour of Pawan Kumar authorised him among other acts to initiate the
insolvency and bankruptcy proceedings on behalf of the Bank. The petitioner also filed affidavit dated
27.09.2017 of one Vinod Kumar stating therein that copy of the complete set of petition under Section 7
of the Code was sent to the Corporate Debtor by speed post at its registered office. Copy of the postal
receipt dated 19.09.2017 is attached at Annexure A-1 with which the track report of the postal department
was also annexed with affidavit of service dated 27.09.2017 showing the delivery of the postal article to
the Corporate Debtor on 22.09.2017. The aforesaid documents would comply with the requirement of
sub-rule (3) of Rule 4 of the Rules.
4. The respondent company was incorporated on 02.03.1998 and its name was changed to the
present name on 05.08.2002. It has been allotted CIN No.U74999HR1998PLC035357. Copy of the
Certificate of Incorporation is at Annexure A-3 and the Memorandum and Articles of Association is at
Annexure A-4. The Respondent-Corporate Debtor has the authorised share capital of ₹60,00,00,000/-
divided into 60,00,00,000 equity shares of ₹1/- each and the paid-up share capital of Corporate Debtor is
52,95,00,000/- divided into 52,95,00,000 equity shares of ₹1/- each. The balance sheet of the Respondent-
Corporate Debtor for the financial year ending 31.03.2016 filed with the Registrar of Companies, NCT of
Delhi and Haryana is at Annexure A-5 and the Master Data of the company is at Annexure A-6. The
respondent company has its registered office at Siwani in the State of Haryana and therefore, the matter
falls within the jurisdiction of this Tribunal. The particulars of the principal office and corporate office of
the Respondent-Corporate Debtor have also been given.
5. The facts of the case, briefly stated, are that on 07.11.2011, the Respondent-Corporate Debtor
approached the petitioner Bank for seeking financial assistance for ₹30 Crores including Export Packing
Credit and Post Shipment Finance Facilities. The loan was sanctioned vide letter dated 15.12.2011 which
was duly accepted by the Corporate Debtor and its guarantors. The request letter of the Corporate Debtor
is at Annexure A-11 and sanction letter is at Annexure A-12. Copy of the Board resolution of the
Corporate Debtor dated 16.12.2011 is at Annexure A-13. The amount sanctioned under both these heads
is ₹30 Crores each, but the maximum amount that could be availed under both the facilities could not
exceed ₹30 Crores as evident from the documents Annexure A-12 and A-13. The other documents
executed by the Corporate Debtor are the demand promissory note dated 22.12.2011; Credit Facility
Agreement; Agreement of Hypothecation of plant, machinery and stock etc.; Letter of Undertakings,
Deed of Guarantee, copy of Omnibus Guarantee, all of the even date are at Annexures A-14 to A-19.
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6. The petitioner Bank also received a letter dated 27.12.2011 from Punjab National Bank, Bikaner,
Rajasthan confirming creation of first parri passu clear equitable mortgage charge on the land and
building of the Corporate Debtor along with the entry dated 27.12.2011 as at Annexure A-20. Thereafter
the loan was reviewed and fresh sanction letter dated 22.08.2013 Annexure A-21 was also issued. This
review sanction letter was issued on the request received from the Corporate Debtor for enhancement of
the credit facility from ₹30 crores to ₹50 crores as per the terms and conditions contained in the review
sanction letter. The Corporate Debtor again approached the Bank for review of the working capital
facilities and reduction of the limit to ₹30 crores in January, 2015 and the same was granted vide letter
dated 06.02.2015. The copy of review sanction letter dated 06.02.2015 is at Annexure A-23 and the copy
of the resolution dated 21.04.2015 of the Corporate Debtor at Annexure A-24 showing that the Managing
Director and Mr. Jitender Jindal Director of the respondent company were authorised to sign all the
documents/papers/deeds etc. for the purpose of converting the existing Packing Credit Bank Limit to
Cash Credit Limit taken from the petitioner Bank. The Respondent-Corporate Debtor executed demand
promissory note dated 23.04.2015; credit facility agreement dated 23.04.2015; agreement of
hypothecation; letter of undertakings and copy of the deed of guarantee dated 23.04.2015, which are from
Annexure A-25 to A-29. The copy of acknowledgement of debt and security dated 27.10.2015 is at
Annexure-30.
7. The petitioner Bank has given the particulars of the amount disbursed to the respondent on
various dates in column No.1 of Part IV of the application. The amount in default as on 22.08.2017 is
stated to be Rs. 20,28,87,067.11/- as on 22.08.2017 after including the interest. The petitioner Bank has
also attached the copies of the Certificates of Registration of Charge issued by the Registrar of Companies
along with modification certificate as at Annexure A-9.
8. The Corporate Debtor defaulted in making payments and accordingly, the petitioner Bank
declared the account of Corporate Debtor as Non Performance Asset on 31.12.2015 and issued demand
notice under Section 13 (2) of the SARFAESI Act, 2002 on 28.01.2016 requesting the Corporate Debtor
to discharge its liabilities, but the Corporate Debtor failed to discharge its liabilities. The notice sent under
the SARFAESI Act, 2002 is at Annexure A-34. The notice dated 25.10.2015 sent to the Corporate Debtor
declaring the account as NPA dated 25.10.2015 is at Annexure A35 requesting for repayment. Further
notice dated 24.12.2015 was also issued intimating the Corporate Debtor that the account was declared as
NPA on 20.11.2015. There are certain subsequent communications to the Corporate Debtor to pay the
amount, which was not paid.
1706
9. The petitioner Bank has also attached the copies of statement of account of the Respondent-
Corporate Debtor certified under the Banker’s Books Evidence Act, 1891 to support the contention about
the outstanding amount of default. The statements of account are at Annexure A-32 and the Certificate
under the Banker’s Books Evidence Act is at Annexure A-33. The petitioner Bank has also relied upon
the report of CIBIL dated 08.08.2017 as evidence in proof of the default and copy of the said report is at
Annexure A-31. The other Financial Creditor of the Corporate Debtor was also informed vide letter dated
02.06.2017 that the petitioner Bank has proposed to initiate the action under the Code. Copy of the said
letter is Annexure A-37, but no response was received.
10. Notice of this petition was issued to the Respondent-Corporate Debtor. The petitioner filed his
affidavit of service dated 18.09.2017 with the track report of the postal department in proof of the
delivery of postal article.
11. The Respondent-Corporate Debtor filed a short reply, wherein the factum of availing of the credit
facilities and the respondent being in default has not been disputed. It is stated that the respondent is at the
final stages of receiving US $ 40 million from a party based in Houston, USA and the instant petition
would derail the recovery process affecting the management of the Respondent-Corporate Debtor, which
has employed about 150 employees. The version relating to the details of transaction with the said US
firm has also been given. It is also stated that the total amount of dues in respect of the transaction of USA
is US $ 227.73 million equivalent to ₹1246 crores, for which the respondent along with the related
company filed a civil suit against Economy Polymers & Chemicals, USA on 19.11.2013 Annexure A.
12. It is also stated that out of the total outstanding amount of Rs. 26,49,50,000/- as on 01.01.2015,
the Respondent-Corporate Debtor has paid an amount of Rs. 12,66,50,000/- in 6 months on receipt of
foreign claim which shows the bona fides of the Corporate Debtor. The foreign company stopped making
further payment for which the respondent and its other group companies Vikas WSP Limited filed breach
of settlement in the District Court, Houston, USA and the matter was fixed for 01.11.2017 and now for
final hearing on 23.01.2018.
13. It is further stated that the petitioner Bank is well informed that during the consortium meeting on
07.09.2017, the respondent categorically explained that the Houston Court case is about to be finalised
and the company will be paying all its dues of Rs. 13.83 crores plus the accrued interest. It was also
averred that the respondent company has paid an amount of Rs. 9.60 crores to Punjab National Bank,
Bikaner and after the said payment, the Punjab National Bank has handed over the possession to the
management on 06.09.2016 vide letter dated 06.10.2016 Annexure E. The outstanding amount of Punjab
1707
National Bank is ₹12.93 crores after payment of the aforesaid amount. Further the Financial Creditor has
declared the security furnished by the Corporate Debtor and 50% of the payment has been made.
Therefore, filing of this application is stated to be an effort to block all the endeavours of the Corporate
Debtor for resolution of the financial debt. The respondent has attached copy of the civil suit in USA
Court and out of Court settlement there and letters pertaining to the Punjab National Bank, with the reply.
14. I have heard the learned counsel for the petitioner and the learned senior counsel for the
Respondent-Corporate Debtor and have perused the records.
15. The first issue to be determined is whether the Corporate Debtor has committed a default for
enabling the “Financial Creditor” to file application before the Adjudicating Authority in terms of Section
7 of the Code. The term default is defined in sub-section (12) of Section 3 of the Code as meaning non-
payment of debt when whole or any part or instalment of the amount of debt has become due and payable
and is not repaid by the debtor or the corporate debtor, as the case may be. There is even no dispute in the
instant case about the Corporate Debtor having committed default in repaying the financial debt.
16. Sub Section (3) of Section 7 of the Code reads as under:-
“The financial creditor shall, along with the application furnish-
professional; and
17. The Financial Creditor has furnished the entire evidence of default as per the particulars given in
Form No.1 as prescribed under the Rules. Reference to various documents of loan, the creation of
security, ROC charge and agreements, hypothecation deed, equitable mortgage has already been made
while narrating the facts of the case. The amount in default in Export Packing Credit Account and current
account have been separately given in column No.2 of part IV of the application. In paragraph 12 of the
reply also, the Corporate Debtor being in default is admitted that as on 01.01.2015, there was an
outstanding amount of Rs. 26,49,50,000/- in default, out of which an amount of about Rs. 12,66,50,000/-
was paid in six months therefrom.
1708
18. The audited balance sheet of the Respondent-Corporate Debtor as on 31.03.2016 is at Annexure
A-5. The Corporate Debtor has admitted in this balance sheet itself that the then outstanding principal
amount of default was to the tune of Rs. 1383,00,000/-. The Corporate Debtor has also added interest to
the tune of Rs. 1,88,56,906/- as on 31.03.2016. In the instant case, the Financial Creditor has added
interest over the defaulted amount as per notice under Section 13 (2) of SURFAECI Act for the period
from 01.01.2016 to 22.08.2017. The Respondent-Corporate Debtor made the last payment in this account
in the year 2015. Learned counsel for the petitioner contended that with reference to various payments
deposited by the respondent as in para 12 of the reply are reflected in the statement of accounts relied
upon by the petitioner and para 11 of the reply shows that the last payment was made on 30.06.2015.
Annexure A-33 is the Certificate issued by the Bank as per the Banker’s Books Evidence Act with regard
to the statement of account relied upon in this case.
19. It is thus shown that the Financial Creditor has produced the record of evidence of default as
prescribed in the application form required to be filed by the Financial Creditor.
20. The learned counsel for Respondent-Corporate Debtor submitted that the Punjab National Bank is
the Lead Bank, which has released the property of the Corporate Debtor after paying of certain amount as
mentioned in the reply. In reply thereto, the learned counsel for petitioner has referred to letter dated
02.06.2017 sent by the petitioner to the Punjab National Bank. The said letter is Annexure A-37 and the
Punjab National Bank was informed that it was a Lead Bank under the Multiple Banking Arrangement.
The petitioner Bank had given its consent for taking recovery action under SARFAESI Act and filing of
suit, but no progress has been made. The Punjab National Bank was specifically informed that the
Financial Creditor has approved the initiation of CIRP under Insolvency and Bankruptcy Code, 2016 and
also proposed the name of Mr. Anil Kohli as Interim Resolution Professional. Punjab National Bank was
advised to co-operate/support in the recovery of dues of both the Banks. The learned counsel submitted
that no further response from Punjab National Bank was received. The learned senior counsel for
respondent, however, contended vehemently that the Corporate Debtor would clear all defaulted
outstanding amount of the petitioner by month of January, 2017, but the petitioner Bank has initiated the
proceedings in a hasty manner. This contention cannot defeat the admission of this petition.
21. The learned counsel for petitioner referred to the judgment of Hon’ble National Company Law
Appellate Tribunal in the matter of “M/s Innoventive Industries Ltd. Vs. ICICI Bank & Anr.” Company
Appeal (AT) (Insolvency) No.1 & 2 of 2017, 2017, SCC OnLine NCLAT 70. It was held as under:-
1709
“82. As discussed in the previous paragraphs, for initiation of corporate resolution process by financial
(3). Under Section 5 of Section 7, the 'adjudicating authority' is required to satisfy - (a) Whether a default
has occurred; (b) Whether an application is complete; and (c) Whether any disciplinary proceeding is
against the proposed Insolvency Resolution Professional.
83. Once it is satisfied it is required to admit the case but in case the application is incomplete
84. Beyond the aforesaid practice, the 'adjudicating authority' is not required to look into any other
authority, including the JLF. Therefore, the contention of the petitioner that the Respondent has not
other members cannot be accepted and fit to be rejected.”
22. Under clause (b) of Section 7 (3) of the Code, the name of Insolvency Resolution Professional is
required to be proposed by the Financial Creditor. Copy of the written communication in Form No.2
furnished by the Interim Resolution Professional is at Annexure A-7. Mr. Anil Kohli has been registered
with Insolvency & Bankruptcy Board of India vide Registration No.IBBI/IPA-001/IP/P00112/2017-
18/10219. He has given the necessary information. He has been appointed as Interim Resolution
Professional in one case and as Resolution Professional in two cases already, but certified that there are
no disciplinary proceedings pending against him. The written communication sent by Mr. Anil Kohli in
Form No.2 is in order.
23. No defect in the application has been pointed out and complete information has been given.
24. In view of the above, the instant petition deserves to be admitted.
25. The petition is thus admitted and the moratorium is declared for prohibiting all the following in
terms of sub-section (1) of Section 14 of the Code:
1710

occupied by or in the possession of the corporate debtor.
26. It is further directed that the supply of essential goods or services to the Corporate Debtor, if
continuing, shall not be terminated or suspended or interrupted during moratorium period. The provisions
of subsection (1) shall however not apply to such transactions as may be notified by the Central
27. That the order of moratorium shall have effect from the date of this order till completion of the
be.
28. The matter be listed on 04.12.2017 for passing of the formal orders of appointment of Interim
Resolution Professional. Copy of the order be communicated to both the parties.
1711
CHANDIGARH BENCH
C.P. (I.B.) No. 104/7/NCLT/CHD/2017

Vs.
Respondent: M/s. Dinesh Polytubes Pvt. Ltd.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. R.S. Bhatia, Learned Advocate
For Respondents/Defendant: Mr. Atul Sharma, Learned Advocate
ORDER
This petition has been filed by the Punjab National Bank under Section 7 of the Insolvency and
Bankruptcy Code, 2016 (for short to be referred hereinafter as the ‘Code’) read with rule (4) of
Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 (for brevity, the ‘Rules’)
for initiating insolvency resolution process against the Respondent-Corporate Debtor. The application has
been filed in Form No.1 of the Rules as prescribed under 4(1) of the Rules, giving the necessary
particulars.
2. The petitioner Bank was incorporated on 31.03.1970 under the Banking Companies (Acquisition
and Transfer of Undertakings) Act, 1970 with Head Office at 7, Bikhaji Cama Place, New Delhi and a
Branch Office at MCB, Model Town, Hissar. The Respondent-Corporate Debtor was incorporated on
10.06.2009 as a company registered under Companies Act, 1956 and allotted CIN
U25194HR2009PTC039191 with authorised share capital of Rs. 50 lacs and paid up capital of Rs. 37
lacs. Copy of Memorandum and Articles of Association of the respondent are at Annexure A/3. The
Registered Office of the corporate debtor is at Hissar, in the State of Haryana and therefore, the matter
falls within the territorial jurisdiction of this Tribunal.
3. The instant petition has been filed through Mr. Navdeep, Senior Manager of the Branch at Hissar
in whose favour, the Bank has executed General Power of Attorney dated 05.11.2015 Annexure A-1. The
competent authority vide letter dated 28.07.2017 Annexure A/2 has also accorded permission to the
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Branch Head to file the petition before NCLT under the Insolvency and Bankruptcy Code, 2016 against
the Respondent–Corporate Debtor. Vide this letter Mr. R.S.Bhatia, Advocate has been authorised on
behalf of the Bank to file this petition. The competent authority has also proposed the name of Mr.Jalesh
Kumar Grover, Resolution Professional to act as Interim Resolution Professional.
4. The facts of the case, briefly stated, are that the corporate debtor approached the Petitioner-Bank
for sanction of various credit facilities in the year 2010. These were in the nature of CC limit of Rs. 90
lacs; CC book debt limit of Rs. 60 lacs and term loan for plant & machinery of Rs. 150 lacs, total
amounting to Rs. 300 lacs.
5. The request of corporate debtor was allowed by the Bank for CC limit of Rs. 30 lacs on
04.03.2011 which was enhanced to Rs. 250 lacs on 15.03.2011 and fresh term loan of Rs. 75 lacs was also
sanctioned. Further, the corporate debtor was sanctioned adhoc limit of Rs. 10 lacs on 03.10.2011; adhoc
limit of Rs. 50 lacs on 25.02.2011 and one car loan was also sanctioned to the corporate debtor which,
however, stands adjusted.
6. The corporate debtor was then sanctioned the cash credit limit of Rs. 250 lacs on 09.03.2013. The
corporate debtor executed various documents i.e. hypothecation of goods and book debts to secure cash
credit facility dated 26.02.2010 (Annexure A/12); hypothecation of assets to secure term loans (Annexure
A/13), hypothecation of moveable assets (Annexure A/14) hypothecation of current assets (Annexure
A/15), all dated 26.02.2010. Annexure A-16 is the copy of sanction of enhanced CC limit dated
15.03.2011 and the other documents of hypothecation of the similar nature dated 15.03.2011 which are at
Annexure A/17 to A/19. Further documents Annexure A/20 to Annexure A/22 all dated 30.03.2011 were
also executed. Annexure A/23 is the sanction of credit facilities dated 09.03.2013. The different loans
sanctioned to the corporate debtor are Cash Credit(hypothecation) of Rs. 150 lacs; CC book debt of Rs.
100 lacs; Term Loan-I of Rs. 150 lacs and Term Loan-II of Rs, 75 lacs. The corporate debtor is said to
have committed default and recall notice dated 08.01.2015 (Annexure A/9) was issued. It was mentioned
in this notice that the total amount outstanding as on 31.12.2014 inclusive of interest was Rs.
4,07,43,345.08. This notice (Annexure A/9) was sent to the company, its directors and others.
7. Thereafter, the Bank issued a notice to the corporate debtor under Section 13(2) of the
SARFAESI Act, 2002 (Annexure A/10) dated 13.02.2015. The petitioner-bank then filed a Suit bearing
OA No.519 of 2016 (old) and 2597 of 2017 (new) dated 14.03.2016 before DRT which was still pending.
Annexure A/8 is the copy of that application.
8. By way of evidence in support of the claim of default committed by the corporate debtor, the
petitioner-bank has relied upon various balance confirmation letters executed by the corporate debtor
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ranging from 07.05.2013 to 28.05.2014 which are from Annexure A/28 to A/33. The petitioner-bank has
also relied upon statements of account of the corporate debtor under different loan accounts as at
Annexure A/25 to A/27 which are certified under the Bankers Books Evidence Act, 1891.
9. Before filing this petition, the petitioner-bank also served Demand Notice to the corporate debtor
(Annexure A/34) dated 09.02.2017 wherein the then outstanding amount as on 08.02.2017 was stated as
Rs. 36833617.24. The petitioner-bank has also relied upon CIBIL report (Annexure A/24) dated
27.10.2016 in order to bring further evidence of default. In this notice it was stated that the Bank proposes
to initiate the proceedings under the Insolvency and Bankruptcy Code in case the debt remains unpaid by
the date specified in the notice.
10. It is also stated that the corporate debtor mortgaged the factory building on the land measuring 14
Kanal 18 Marla comprised in Khewat No.350, Khatoni No.535 and Khasra No.11/10 (7-10), 11(7-8)
situated at Balsmand Road, Village Pattan, Tehsil, District Hissar. The value of the mortgaged property is
stated to be Rs. 2,03,36,000/-, apart from the valuation of the stock has been given.
11. The petitioner sent copy of this petition along with copy of entire paper book to the corporate
debtor in order to comply with the requirements of sub-rule (2) of Rule 4 of the Rules.
12. Notice of this petition was issued to the Respondent-Corporate Debtor at the two addresses of the
company furnished by the petitioner and filed affidavit of compliance dated 14.11.2017 of the authorised
representative of the bank.
13. The appearance was made by learned counsel for respondent-corporate debtor and some time was
requested to file reply. Preliminary objection raised by the respondent is that the petition has been filed on
behalf of the Bank without any valid authorisation. Further that this petition has been filed to over-reach
the procedure adopted by the Bank under SARFAESI Act,2002. It is stated that during those proceedings,
no sale of the mortgaged property was effected for which a statement was made before the DRT. Later on,
sale was confirmed in favour of a third party which is the obvious reason for filing this petition. Filing
this petition is said to be abuse of the process of the Court.
14. The Respondent-Corporate Debtor has reproduced elaborate facts placed before the DRT under
Section 17 of the Securitisation Act – for amendment keeping in view the fact of sale process being
conducted by the Bank also. Various objections taken before the DRT have been reiterated. The
respondent further stated that in the interest of justice and fairness of law the amendments were prayed in
the matter pending before the DRT as the case was at the initial stages. Copy of the interim application
filed by the corporate debtor before the DRT is at Annexure R-2.
15. I have heard learned counsel for the parties and perused the records.
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16. The primary contention of learned counsel for respondent is that the petition has not been filed by
the competent officer on behalf of the Bank and there is no Power of Attorney in favour of Mr. Navdeep,
Senior Manager, of the bank to initiate proceedings under the Code. The learned counsel placed reliance
upon the order passed by Guwahati Special Bench of NCLT in SB Case No.01/IBC/GB/2017 in
Company Petition No. 37/2017, titled ICICI Bank Ltd. Vs. Palogix Infrastructure Private Ltd. In the said
case, the power of attorney was issued by the ICICI Bank on 20.10.2014, on the basis of which, the
petition under the Code was filed. It is submitted that the terms of power of attorney in the instant case are
similar to the power of attorney as discussed in the order dated 30.03.2017 in the matter referred to
Guwahati Bench by the Division Bench of NCLT Kolkata and it was held that there should be a specific
authorisation for the purpose of initiating the proceedings under the Code. It would be seen that the
Kolkata Bench of NCLT ultimately in the order dated 12.04.2017 pointed out the aforesaid defect to the
petitioner and issued a direction to rectify the defect within seven days.
17. The aforesaid judgment was discussed by the Mumbai Bench of NCLT in “M/s DF Deutsche
Forfait AG and Anr. Vs. M/s Uttam Galva Steel Ltd.”, CP No.45/I&BP/NCLT/MAH/2017, decided on
10.04.2017, wherein it was held that the nature of the proceedings under the winding up as well as
insolvency is more or less the same, though the procedure is slightly different.
18. In the instant case, the general power of attorney in favour of Mr.Navdeep through whom the
instant petition has been filed also empowers him to make compliances with the instructions received
from the Bank from time to time to settle, compromise, compound, refer to arbitration, terminate,
withdraw or abandon any suits, action or any proceedings and for all or any of the purposes aforesaid to
execute such instruments and take such steps or to do such things as may be necessary in the case.
19. There are clear instructions in the authority issued by the Circle Head of the bank vide letter
dt.28.07.2017 (Annexure A/2) which is in reference to the letter of the Branch Head at Hissar seeking
permission to file petition before NCLT under the provisions of the Code.
20. The General Power of Attorney dated 05.11.2015 was also executed in favour of Mr. Navdeep by
the bank, authorising him to do the following acts on behalf of the Bank: -
“To take and use all lawful legal proceedings, actions and means for
realising recovering of debts, advances and claims due to the said Bank and also
to institute and conduct, defend proceedings relating to the property, assets and
affairs of the said Bank and realisation of its claims, demands or decrees. He shall
have the power to take and use all legal proceedings necessary for the purpose of
realisation of rents of property belonging to or taken on lease by the said Bank and
1715
also for the possession, ejectment of the tenants or the occupants thereof. He shall
also have the power in compliance with instructions received from the said Bank
from time to time, to settle, compromise, compound, refer to arbitration, terminate,
withdraw or abandon any suits, action or any proceedings and for all or any of the
purposes aforesaid to execute such instruments and take such steps or do such
things as may be necessary and expedient.
To take criminal proceedings/action and take insolvency and liquidation

proceedings against the debtors of the Bank, to appear and act in a court of
insolvency and Liquidation Judge and before the Official Receiver and Liquidator,
to file claims prove debts of the said Bank in the insolvency and liquidation Court
and before the Official Receiver or Liquidator to oppose discharge of the insolvent
and to collect/receive dividend declared by the insolvency or liquidator court in
respect of any insolvency or liquidation case.”
21. In view of the aforesaid, I find the petition to have been filed by the Bank through a competent
person.
22. Sub-section (3) of Section 7 of the code says that the Financial Creditor shall along with the
application furnish –
“(a) record of the default recorded with the information utility or such other
professional; and
23. There is no dispute that the petitioner-bank has complied with the requirements of clause (b) of
sub-section (3) of section 7 of the Code inasmuch as there is written communication by the proposed
Interim Resolution Professional in Form No.2 as at Annexure A/4. All the necessary particulars required
to be furnished have been given. It is stated that there are no disciplinary proceedings pending against the
said Resolution Professional. Learned counsel for respondent pointed out that this Form No.2 is defective
inasmuch as it does not bear date on which it was executed by the proposed Interim Resolution
Professional. The column of date is lying blank. I do not think that this can be considered as a defect in
the written communication which of course should be before the date of filing of this petition in the
Tribunal on 26.09.2017. I find no ground to reject the written communication and then to direct the Bank
to file fresh Form No.2 of the proposed Interim Resolution Professional. Rest of the particulars required
1716
to be given in the form have been given. In view of the above, the written communication in Form No.2 is
found to be in order.
24. There is abundant record of default committed by the corporate debtor and the detail of that
record has already been discussed. There are also certificates certifying each of the bank statements under
the Bankers Books Evidence Act, 1891. This would be an important piece of evidence in proof of the
default committed by the Corporate Debtor.
25. Learned counsel for respondent, however, referred to the order dated 22.01.2016 of DRT-I
(Annexure R-4) with the reply. Learned counsel made specific reference to the said order which shows
that the corporate debtor had alleged that the Bank at the back of the Tribunal despite passing proper
order has fixed the sale. Attention of DRT was also drawn towards Annexure A-1 attached with the
interim application of the respondent whereby the authorised officer, after giving a statement before the
DRT through counsel, specifically stated that no bid has been received but later on through same sale sold
the property and sale was confirmed. Learned counsel for petitioner submitted that earlier statement was
incorrect.
26. I, however, find that such issues are not of much relevance for disposing of the petitions under the
Code. The provisions of the Code have over-reaching effect and it would be appropriate enough to refer
to the Section 238 of the Code which reads as under: -
“The provisions of this Code shall have effect, notwithstanding anything

inconsistent therewith contained in any other law for the time being in force or any
instrument having effect by virtue of any such law.”
27. Insolvency and Bankruptcy Code, 2016 is a self-contained Code and the Adjudicating Authority
has to be governed by these provisions. Sub-section (4) and sub-section (5) of Section 7 of the Code reads
as under: -
“(4) The Adjudicating Authority shall, within fourteen days of the receipt of the application under
sub-section (2), ascertain the existence of a default from the records of an information utility or on
the basis of other evidence furnished by the financial creditor under sub-section (3).
(a) a default has occurred and the application under subsection (2) is complete, and there is
no disciplinary proceedings pending against the proposed resolution professional, it may, by order,
admit such application; or
1717
(b) default has not occurred or the application under subsection (2) is incomplete or any
disciplinary proceeding is pending against the proposed resolution professional, it may, by order,
reject such application:
Provided that the Adjudicating Authority shall, before rejecting the application under
clause (b) of sub-section (5), give a notice to the applicant to rectify the defect in his application
within seven days of receipt of such notice from the Adjudicating Authority.”
28. The existence of default has been shown from abundant evidence on record. The corporate debtor
in the reply is not denying that it is in default of payment to the Bank. The above is the requirement of the
aforesaid provisions for enabling the Adjudicating Authority to admit the petition. I find that the
application filed by the Financial Creditor in Form No.1 is complete in all respects. Therefore, the instant
petition deserves to be admitted.
29. In view of the above, the instant petition is admitted and the moratorium is declared for
prohibiting all of the following in terms of sub-section (1) of Section 14 of the Code.

occupied by or in the possession of the corporate debtor.
30. It is further directed that the supply of essential goods or services to the Corporate Debtor, if
of sub-section (1) shall however not apply to such transactions as may be notified by the Central
31. That the order of moratorium shall have effect from the date of this order till completion of the
be.
1718
32. The matter is adjourned to 18.12.2017 for passing formal order of appointment of Interim
Insolvency Resolution Professional with further directions. Copy of this order be communicated to both
the parties.
1719
CHANDIGARH BENCH
C.P. (I.B.) No. 105/7/NCLT/CHD/2017
Applicant: M/s. Bharat Food and Agro Products,

Mr. Mohit Dewan
Vs.
Respondent: M/s. White Water Hospitality Pvt. Ltd.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Sumit Jain & Mr. Aditya Grover, Learned Advocate
For Respondents/Defendant: Mr. Anand Chhibbar, Mr. Sahil Sharma, & Gaurav Mankotia, Learned
Advocate
ORDER
After arguing for some time, learned counsel for the petitioner seeks permission to withdraw the
instant petition due to some technical defect with liberty to file fresh one on the same cause of action.
Permission is granted. The instant petition is dismissed as withdrawn with liberty aforesaid.
1720

CHANDIGARH BENCH
C.P. (I.B.) No. 101/7/NCLT/CHD/2017
Applicant: M/s. V.I.R. Foods Ltd.

Vs.
Respondent: M/s. White Water Hospitality Pvt. Ltd.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Sumit Jain & Mr. Aditya Grover, Learned Advocate
For Respondents/Defendant: Mr. Anand Chhibbar, Mr. Sahil Sharma, & Gaurav Mankotia, Learned
Advocate
ORDER
After arguing for some time, learned counsel for the petitioner seeks permission to withdraw the
instant petition due to some technical defect with liberty to file fresh one on the same cause of action.
Permission is granted. The instant petition is dismissed as withdrawn with liberty aforesaid.
1721
CHANDIGARH BENCH
C.P. (I.B.) No. 104/7/NCLT/CHD/2017

Vs.
Respondent: M/s. Dinesh Polytubes Pvt. Ltd.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. R.S. Bhatia, Learned Advocate
ORDER
This petition filed by the Punjab National Bank under Section 7 of the Insolvency and
Bankruptcy Code, 2016 was admitted on 11.12.2017 and moratorium was granted in terms of sub-section
(1) of Section 14 of the Code. The matter was listed for today for passing formal order of appointment of
the Interim Resolution Professional. The Financial Creditor has proposed the name of Mr. Jalesh Kumar
Grover to act as Interim Resolution Professional and the written communication furnished in Form 2 was
found to be in order as observed in the order dated 11.12.2017.
(i) Appoint Mr. Jalesh Kumar Grover, bearing IP Regn. No. IBBI/IPA-001/IP-P00200/2017-
2018/10390, resident of Flat No. 202, GH-40, Sector 20 Panchkula-134116, email: jk.grover@gmail.com,
Mobile No. 9501081808 as Interim Resolution Professional;
(ii) The term of appointment of Mr. Jalesh Kumar Grover shall be for a period of 30 days from the
date of his appointment as Interim Resolution Professional or as may be determined by the committee of
creditors whichever is earlier;
(iii) In terms of Section 17 of ‘the Code’, from the date of this appointment, the powers of the Board
of Directors shall stand suspended and the management of the affairs shall vest with the Interim
Resolution Professional and the officers and the managers of the ‘Corporate Debtor’ shall report to the
1722
Interim Resolution Professional, who shall be enjoined to exercise all the powers as are vested with
Interim Resolution Professional and strictly perform all the duties as are enjoined on the Interim
Resolution Professional under Section 18 and other relevant provisions of the ‘Code’, including taking
control and custody of the assets over which the ‘Corporate Debtor’ has ownership rights recorded in the
balance sheet of the ‘Corporate Debtor’ etc. as provided in Section 18 (1) (f) of the ‘Code’. The Interim
Resolution Professional is directed to prepare a complete list of inventory of assets of the ‘Corporate
Debtor’;
(iv) The Interim Resolution Professional shall strictly act in accordance with the ‘Code’, all the rules
framed thereunder by the Board or the Central Government and in accordance with the ‘Code of Conduct’
governing his profession and as an Insolvency Professional with high standards of ethics and moral;
(v) The Interim Resolution Professional shall endeavour to constitute the Committee of Creditors at
the earliest but not later than three weeks from the date of this order. It is hereby directed that the
‘Corporate Debtor’, its properties, personnel and the persons associated with the management shall extend
all cooperation to the Interim Resolution Professional in managing the affairs of the ‘Corporate Debtor’ as
a going concern and extend all co-operation in accessing books and records as well as assets of the
‘Corporate Debtor’;
(vi) The Interim Resolution Professional shall cause a public announcement within three days as
Resolution Process for Corporate Persons) Regulations, 2016 of the initiation of the Corporate Insolvency
Resolution Process in terms of Section 13 (1) (b) of the ‘Code’ read with Section 15 calling for the
submission of claims against ‘Corporate Debtor’; and
(vii) As required under Rule 27 of the Insolvency and Bankruptcy Board of India (Insolvency
4. The Registry is directed to communicate copy of this order to both the parties . The learned
counsel for the petitioner shall deliver copy of this order and the order dated 11.12.2017 to the Interim
Resolution Professional forthwith. The Registry is also directed to send copies of both these orders to the
Interim Resolution Professional at his email address.
1723
CHANDIGARH BENCH
C.P. (I.B.) No. 116/7/NCLT/CHD/2017

Vs.
Respondent: Castex Technologies limited
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Ms. Misha and Mr. Sidhant Kant, Learned Advocates
For Respondents/Defendant: Mr. Vaibhav Sharma, Learned Advocate
ORDER
This petition has been filed by the State Bank of India established pursuant to the State Bank of
India Act, 1955 incorporated on 01.07.1955 vide notification No. S.R.O. 1077 dated 14.05.1955, having
its corporate office at Corporate Centre, State Bank Bhawan, Madame Cama Road, Nariman Point,
Mumbai – 400021. It has its Industrial Finance Branch at 1, Tolstoy Marg, 14-15 Floor, Jawahar Vypaar
Bhawan, Janpath, New Delhi. The petition is filed to initiate insolvency resolution process against the
respondent-corporate debtor under Section 7 of the Insolvency and Bankruptcy Code, 2016 (for short to
be referred here-in-after as the ‘Code’), in application Form 1 as prescribed in Rule 4 (1) of the
Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 (for brevity, the
‘Rules’). The registered office of the respondent-corporate debtor is at Gurgaon (Gurugram) and,
therefore, the matter falls within the territorial jurisdiction of this Tribunal.
2. It is stated that Mr. Braj Nandan Jha, Deputy General Manager, State Bank of India is empowered
in terms of the authorization dated 16.06.2017 Annexure-2, issued by the Chairman of State Bank of India
in accordance with Section 27 of the State Bank of India Act, 1955 read with the State Bank of India
General Regulations, 1955 and the Gazette notification dated 27.03.1987. Copy of the relevant part of the
Act, Regulation 77 and the Gazette Notification are at Annexure-3 (colly). There is the affidavit of Mr.
Braj Nandan Jha in support of the contents of the application.
1724
3. The respondent-corporate debtor was incorporated on 02.12.1983 and allotted CIN

L65921HR1983PLC033789 with authorized capital of Rs.97,00,00,000/- (Rupees ninety seven crore
only) and paid-up capital of Rs.80,62,46,000/- (Rupees eighty crore sixty two lac and forty six thousand
only). Annexure-4 (colly) is the Memorandum and Articles of Association of the company with which
Certificates of Incorporation and fresh Certificates issued regarding change of the name issued by the
Registrar of Companies are also annexed.
4. It is further stated that with effect from 01.04.2017 with the sanction of the Central Government
and the Reserve Bank of India, the petitioner bank acquired by way of amalgamation, the business
including the assets and liabilities of all the following banks:-
(a) State Bank of Bikaner and Jaipur

(b) State Bank of Hyderabad
(c) State Bank of Mysore
(d) State Bank of Patiala
(e) State Bank of Travancore
Gazette notification dated 22.02.2017 in this regard is at Annexure-1
5. The respondent-corporate debtor was granted various loan facilities under various loan
agreements by the State Bank of India, including its erstwhile associate banks. Details regarding
disbursement made against each facility as mentioned in point-5 of Part-V of the application are given in
Annexure-6. As per the details Annexure-10 the financial-creditor granted term loan of Rs.300 crore on
22.07.2013. Another sanction letter of this term loan of Rs.300.00 crore whereby an additional condition
of providing personal guarantee of Mr. Arvind Dham was issued on 20.11.2013. The corporate debtor
executed loan agreement for overall limit on 20.11.2013, copies of which have been annexed. The State
Bank of India further granted additional facility of corporate loan of Rs.50.00 crore on 06.08.2015 for
which sanction letter was issued on 07.08.2015. The corporate debtor executed Memorandum of
Agreement for additional loan facility of Rs.50.00 crore. The petitioner-financial creditor also relies upon
inter se Agreement dated 28.03.2016, executed amongst the JLF Lenders nominating State Bank of India
as Lead Bank, and Letter of Authority of even date executed by JLF Lenders in favour of State Bank of
India. There are Framework Agreement for Corrective Action Plan and Trust and Retention Account
Agreement dated 17.08.2015, the copies of which have also been annexed.
6. It is further stated that State Bank of Hyderabad sanctioned term loan of Rs.100.00 crore on
30.12.2013 for which the corporate debtor executed loan agreement for overall limit on 31.12.2013, and
1725
they executed consortium agreement for grant of term loan aggregating to Rs.200.00 crore on 25.10.2014.
Thereafter, State Bank of Hyderabad sanctioned corporate loan of Rs.30.00 crore vide sanction letter
dated 24.09.2015 and agreement of loan for overall limit of the even date.
7. Further, the State Bank of Mysore issued sanction letter for Rs.110.00 crore on 30.06.2015 for
capex requirement and shoring up of net worth capital for which the loan agreement for overall limit of
Rs.110.00 crore was executed on the said date. The State Bank of Patiala granted loan of Rs.150.00 crore
for ongoing/regular capital expenditure on 26.06.2013 and agreement of loan for overall limit was
executed by the corporate debtor on 28.06.2013.
8. The State Bank of Bikaner and Jaipur granted corporate loan of Rs.15.00 crore on 14.09.2015 for
part financing of critical capital expenditure etc. for which the corporate debtor executed agreement of
loan under the Framework Agreement for Corrective Action Plan on 22.09.2015.
9. Further the State Bank of Hyderabad also issued a sanction letter for refinancing of existing term
loan of Rs.98.16 crore on 24.09.2015. The corporate debtor had executed Master Joint Lenders Forum
Agreement dated 19.05.2015 executed between 30 banks forming the Joint Lenders Forum and erstwhile
associate banks. The corporate debtor also executed Framework Agreement dated 28.03.2016, Corrective
Action Plan with the JLF Lenders providing for Rs.1667.50 crore for capital expenditure and shoring up
of Networth Capital, refinancing of JLF Term Loan Facilities to the extent of Rs.920.86 crore. In this
regard the corporate debtor has executed various documents and loan agreements for implementation and
execution of the Framework Agreements for Corrective Action Plan.
10. The details of working capital consortium agreement for Rs.1323 crore granted by consortium of
lenders have also been given. These details are given in column No. I of Annexure-10. These documents
relate to the years 2014 to 2016 as detailed in the tabulated form at page 160 of the Paper Book. All the
documents referred to in the application have been annexed by the petitioner-financial creditor.
11. It is stated that the total amount of debt granted by the financial creditor to the corporate debtor is
Rs.1191,54,00,000/- (Rupees one thousand one hundred and ninety one crore and fifty four lac) and the
details of the disbursement made against each loan facility as mentioned in Part-V of the petition as at
Annexure-6. The amount of default is Rs.572,44,81,139/- (Rupees five hundred and seventy two crore
forty four lac eighty one thousand one hundred and thirty nine only) as on 09.10.2017 and further interest
is to be added on this amount. The details regarding all the loans and the dates of defaults in respect of
different loan facilities granted by the financial creditor to corporate debtor have been provided in
Annexure-7.
1726
12. The details of security including moveable and immoveable assets of the company are as per the
details given in Annexure-9 (colly) and list of the financial facilities granted to the corporate debtor are
given in Annexure-10.
13. Notice of this petition was issued to the corporate debtor and despite sufficient time granted,
reply/objections have not been filed. It is rather submitted by the learned counsel for the respondent-
corporate debtor that reply is not to be filed by the respondent.
14. I have heard learned counsel for the parties and perused the record with their able assistance.
15. Perusal of the application in Form 1 would show that complete information has been supplied by
the bank in respect of all the requirements prescribed under sub-section (3) of Section 7 of the Code
which reads as under:-
“(3)The financial creditor shall, along with the application furnish —
16. Under sub-clause (b) of Section 7(3), it is mandatory for the financial creditor to propose the
name of Resolution Professional to be appointed as the Interim Resolution Professional. The petitioner
bank has proposed the name of Mr. Dinkar Tiruvannadapuram Venkatasubramanian as Resolution
Professional bearing registration No.IBBI/IPA-001/IP-P00003/2016- 2017/10011. The proposed
Resolution Professional has furnished written communication in Form 2 giving his consent for being
appointed as Interim Resolution Professional. It is stated that there are no disciplinary proceedings
pending against him. He is Interim Resolution Professional/Resolution Professional and Liquidator
relating to three proceedings. Learned counsel for the petitioner submits that in one of the case,
liquidation order has been passed and that is a small company. In another case of Amtek Auto, it is
submitted that the corporate debtor is a group company of the said company. In the 3rd case, the
Resolution Professional has submitted his report before the Committee of Creditors for consideration.
Learned counsel for the petitioner submits that basic reason for proposing the name of this Resolution
Professional is that he is already appointed as Resolution Professional in Amtek Auto and the corporate
debtor is part of the same group company.
1727
17. The other requirement is whether the financial creditor has furnished the record of default
recorded with Information Utility or such other evidence or record of default as may be specified.
Learned counsel for the petitioner submits that information utility has not yet started functioning,
however, there is a report of the Central Repository of Information on Large Credits (CRILC) as at
Annexure-11.
18. The amount in default in respect of all the facilities is Rs. 572,44,81,139/- as on 09.10.2017. The
details of the outstanding amount in default in respect of all the facilities are given in the document
Annexure-7 at page 130 of the Paper Book. There is abundant evidence on record produced by the
petitioner-financial creditor with regard to the sanction letters, the documents of loan and the balance
confirmation letters etc. executed by the corporate debtor. Copies of revival letters dated 24.09.2015 and
20.05.2016 are at Annexure-8 and balance confirmations at Annexure-13 (colly) executed from time to
time from. It is not the case of Corporate Debtor that it is either not in default nor it could be shown that
the application is either incomplete or defective. In case there is any dispute about the exact amount in
default, that of course is for the Resolution Professional to determine.
19. As per sub section (4) of Section 7 of the Code the Adjudicating Authority is to ascertain the
existence of a default from the records of an Information Utility or on the basis of other evidence
furnished by the financial creditor. In the instant case the financial creditor has also filed copies of various
statements of accounts of the respondent-corporate debtor with respect to different facilities. These
Statements of Account are at Annexure-12 (colly) and have been duly certified under the Bankers Books
Evidence Act, 1891. The account of corporate debtor was declared as N.P.A on 27.07.2015 on account of
the default in making payment of principal as well as the interest. Final notice was issued on 29.09.2017
which is part of Annexure-13 (colly).
20. In view of the above discussion, the petitioner bank-financial creditor has fulfilled all the
requirements of Section 7 of the Code and, therefore, the instant petition deserves to be admitted.
21. The petition is, therefore, admitted and the moratorium is declared prohibiting all of the following
in terms of sub-section (1) of Section 14 of the Code:-
including execution of any judgment, decree or order in any court of law, tribunal, arbitration
1728
22. It is further directed that the supply of essential goods or services to the corporate-debtor, if
of sub-section (1) of Section 14 shall, however, not apply to such transactions as may be notified by the
23. The order of moratorium shall have effect from the date of this order till the completion of the
corporate insolvency resolution process or until this Bench approves the resolution plan under sub-
section(1) of Section 31 or passes an order for liquidation of corporate debtor under Section 33 as the case
may be.
24. The matter be posted on 22.12.2017 for passing formal order to appoint Insolvency Resolution
Professional with further directions. Copy of this order be communicated to both the parties.
1729
CHANDIGARH BENCH
C.P. (I.B.) No. 116/7/NCLT/CHD/2017

Vs.
Respondent: Castex Technologies limited
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Nitin Kaushal and Mr. Sidhant Kant, Learned Advocates
For Respondents/Defendant: Mr. Vaibhav Sharma, Learned Advocate
ORDER
This petition filed by the State Bank of India under Section 7 of the Insolvency and Bankruptcy
Code, 2016 was admitted on 20.12.2017 and moratorium was granted in terms of sub-section (1) of
Section 14 of the Code. The matter was listed for today for passing formal order of appointment of the
Interim Resolution Professional. The Financial Creditor has proposed the name of Mr. Dinkar
Tiruvannadapuram Venkatasubramanian to act as Interim Resolution Professional and the written
communication furnished in Form 2 was found proper as observed in the order dated 20.12.2017.
(i) Appoint Mr. Dinkar Tiruvannadapuram Venkatasubramanian, bearing IP

Regn. No. IBBI/IPA001/IP-P00003/2016-17/10011, address Ernst &
Young LLP, 3rd and 6th Floor, Worldmark-1, IGI Airport Hospitality
District Aerocity, New Delhi-110037, email:
dinkar.venkatasubramanian@in.ey.com as Interim Resolution
Professional;
(ii) The term of appointment of Mr. Dinkar Tiruvannadapuram
Venkatasubramanian shall be for a period of 30 days from the date of his
1730
appointment as Interim Resolution Professional or as may be determined

by the committee of creditors whichever is earlier;
(iii) In terms of Section 17 of ‘the Code’, from the date of this appointment, the
powers of the Board of Directors shall stand suspended and the
management of the affairs shall vest with the Interim Resolution
Professional and the officers and the managers of the ‘Corporate Debtor’
shall report to the Interim Resolution Professional, who shall be enjoined
to exercise all the powers as are vested with Interim Resolution
Professional and strictly perform all the duties as are enjoined on the
Interim Resolution Professional under Section 18 and other relevant
provisions of the ‘Code’, including taking control and custody of the assets
over which the ‘Corporate Debtor’ has ownership rights recorded in the
balance sheet of the ‘Corporate Debtor’ etc. as provided in Section 18 (1)
(f) of the ‘Code’. The Interim Resolution Professional is directed to
prepare a complete list of inventory of assets of the ‘Corporate Debtor’;
(iv) The Interim Resolution Professional shall strictly act in accordance with
the ‘Code’, all the rules framed thereunder by the Board or the Central
Government and in accordance with the ‘Code of Conduct’ governing his
profession and as an Insolvency Professional with high standards of ethics
and moral;
(v) The Interim Resolution Professional shall endeavour to constitute the
Committee of Creditors at the earliest but not later than three weeks from
the date of this order. It is hereby directed that the ‘Corporate Debtor’, its
properties, personnel and the persons associated with the management
shall extend all cooperation to the Interim Resolution Professional in
managing the affairs of the ‘Corporate Debtor’ as a going concern and
extend all co-operation in accessing books and records as well as assets of
the ‘Corporate Debtor’;
(vi) The Interim Resolution Professional shall cause a public announcement
within three days as contemplated under Regulation 6 of the Insolvency
and Bankruptcy Board of India (Insolvency Resolution Process for
Corporate Persons) Regulations, 2016 of the initiation of the Corporate
Insolvency Resolution Process in terms of Section 13 (1) (b) of the ‘Code’
1731
read with Section 15 calling for the submission of claims against
‘Corporate Debtor’; and
(vii) As required under Rule 27 of the Insolvency and Bankruptcy
Board of India (Insolvency Resolution Process for Corporate Persons)
Regulations, 2016, the Interim Insolvency Resolution Professional shall
within seven days from today, appoint two registered valuers to determine
the liquidation value of the Corporate Debtor in terms of Regulation 35.
4. The Registry is directed to communicate copy of this order and order dated 20.12.2017 to both
the parties forthwith. The learned counsel for the petitioner shall deliver copy of this order and the order
dated 20.12.2017 to the Interim Resolution Professional forthwith. The Registry is also directed to send
copies of both these orders to the Interim Resolution Professional at his email address forthwith.
1732
By Hon’ble NCLT Chennai Bench
1733
CHENNAI BENCH
C.P. (I.B.) No. 472/7/NCLT/CB/2017

VS
Respondent: M/s. BKR Hotels and Resorts Private Limited
Judges/Coram:
Hon'ble Sh. CH Mohd Sharief Tariq, Member (J)
Counsels:
ORDER
1. Under adjudication is an application filed under Section 7 of the Insolvency And Bankruptcy Code,
2016 (IBC 2016) read with Rule 4 of the Insolvency and Bankruptcy (Application to Adjudicating
Authority) Rules, 2016 and numbered as CA/1/(IB)/2017. We have been given to understand that the
applicant (financial creditor) has made demand under section 13 (2) of the Securitisation and
Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARSAESI Act,
2002) on 1St July 2014. At this juncture, the learned counsel Mr. T.Moorthy appeared on behalf of the
corporate debtor M/s.BKR Hotels and Resorts Private Ltd. The perusal of application along with the
records indicates that the requirements of law are fulfilled and the counsel representing the party
(corporate debtor) neither resisted the application nor raised any objection. In other words, the
outstanding debts claimed by the financial creditor has been admitted. We admit the application and
declare the moratorium from the date of this order.
2. After having satisfied that all the requirements under law have been fulfilled, we hereby allow the
application of the financial creditor and order the commencement of the corporate insolvency resolution
process which ordinarily shall get completed within 180 days, reckoning from the day this order is
passed. We appoint Mr. R. Venkatakrishnan, Chartered Accountant, as interim insolvency professional
1734
who has been proposed by the financial creditor. He is directed to take charge of the corporate debtor
immediately. He is also directed to cause public announcement as prescribed under Section 15 of the
Code within three days from the date the copy of this order is received, and call for submissions of claim
under section 15 of IBC 2016 in the manner as prescribed. We declare the moratorium which shall have
effect from the date of this order till the completion of corporate insolvency resolution process, for the
purposes referred to in Section 14 of the IBC 2016. We order to prohibit all of the following, namely
(a) The institution of suits or continuation of pending suits or proceedings against the corporate
(b) Transferring, encumbering, alienating or disposing of by the corporate debtor any of its assets
(c) Any action to foreclose, recover or enforce any security interest created by the corporate
(d) The recovery of any property by an owner or less or where such property is occupied by or in
3. The Registry is directed to inform the Insolvency Resolution Professional to take charge of the entity
and make compliance of this order as per the provisions of IBC, 2016. No disciplinary proceeding is
pending against the Interim Insolvency Professional and his name is reflected on the website of the
Insolvency and Bankruptcy Board of India.
Accordingly, the application is admitted.
1735
CHENNAI BENCH
C.P. (I.B.) No. 491/7/NCLT/CB/2017
Applicant: Chivas Trading Pvt. Ltd.

VS
Respondent: Abhayam Trading Limited
Judges/Coram:
Counsels:
ORDER
1. This is an application filed under Section 7 of the Insolvency And Bankruptcy Code 2016 r/w Rule 4 of
the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016. The applicant has
provided evidence for default (placed at Page 37) wherein it has been confirmed that the corporate debt to
the tune of Rs.26,50,000/- is outstanding as on 31.03.2017. The applicant (financial creditor) also issued
demand notice on 01.04.2017 for payment of the outstanding amount.
2. Looking to the contents of the application and the records placed on file, the requirements of law are
fulfilled. We hereby allow the application of the financial creditor and order the commencement of the
corporate insolvency resolution process which ordinarily shall get completed within 180 days, reckoning
from the day this order is passed. We appoint Mr. J.Rakesh Tulsidas Chaturvedi, Chartered Accountant,
as interim insolvency professional who has been proposed by the financial creditor. He is directed to take
charge of the corporate debtor immediately. He is also directed to cause public announcement as
prescribed under Section 15 of the Code within three days from the date the copy of this order is received,
and call for submissions of claim under section 15 of IBC 2016 in the manner as prescribed. No
disciplinary proceeding is pending against the Interim Insolvency Professional and his name is reflected
on the website of the Insolvency and Bankruptcy Board of India. We declare the moratorium which shall
1736
have effect from the date of this order till the completion of corporate insolvency resolution process, for
the purposes referred to in Section 14 of the IBC 2016. We order to prohibit all of the following, namely :
(b) Transferring, encumbering, alienating or disposing of by the corporate debtor any of

(c) Any action to foreclose, recover or enforce any security interest created by the
(54 of 2002);
(d) The recovery of any property by an owner or less or where such property is occupied
3. The Registry is directed to inform the Insolvency Resolution Professional to take charge of the entity
and make compliance with this order as per the provisions of IBC, 2016.
Accordingly, the application is admitted. The Registry is directed to communicate this order to the
financial creditor and the corporate debtor.
1737
CHENNAI BENCH
C.P. (I.B.) No. 515/7/NCLT/CB/2017

VS
Respondent: M/s Summer India Textiles Mills Private Ltd.
Judges/Coram:
Hon'ble Sh. Mohd Sharief Tariq, Member (J)
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. N. Ramadass, CM-SBI
For Respondents/Defendant: Mr. K. Ravindranath & Mr. S. S. Prabhakaran, Learned Advocate
ORDER
Hon'ble Sh. Mohd Sharief Tariq, Member (J)
1. Under adjudication is C.P.No.515 of 2017 that has been filed under section 7 of I&B Code, 2016.
2. We heard both the counsel for petitioner and respondent. Counsel for petitioner, with the help of
the documents placed on file established the default. In support of his contention, he has drawn our
attention to the Annexure in Page 562 of the petition which is a copy of loan sanctioned by the bank and the
acknowledgement is also there. The other documents are placed at Page 567 wherein it is clearly
mentioned that ROC is in the process of removal of names of the company which are not carrying on
business and dormant for a period of two years or more as per the Register of the Companies. In the letter,
the name of the corporate debtor is clearly mentioned as Summer India Textile Mills Private Ltd., Counsel
for Petitioner has also drawn our attention to the demand notice (page 491) u/s 13 (2) of the
Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act,
2002. The demand has been raised to the tune of Rs.105 crores with further interest and incidental
expenses, cost as stated in the notice to which no reply has been given by the Corporate Debtor. The
company's position is reflected from the Directors' Report dated 09.09.2014 which clearly states that the
deficit carried to balance sheet is 3577 lakhs. At Page 586, there is an admission to this effect by the
company itself. It provides that the company has defaulted in the payment of both the principal and
interest to the banks. The names of the banks are also mentioned as State Bank of India and State Bank of
1738
Patiala. At Page 592, it has further been confirmed that the company has not settled the payment of dues as
on 31.03.2014 where the name of SBI is mentioned. The total amount to be paid to SBI and State Bank of
Patiala is Rs.3051 lakhs.
3. Counsel for respondent has submitted that the company has received orders, but it does
not have the finance for the operations of the company. It is on record that an application has also been
filed by the corporate debtor for restructuring/revival plan. In the circumstances, there does not appear to
be any hurdle in the way of corporate debtor to submit the plan to the Interim Insolvency Professional for
restructuring/revival.
4. Therefore, in the light of the facts and circumstances discussed above and after
ascertaining the default, we are satisfied that a case is made out for initiating the corporate insolvency
process. We admit the application and order the commencement of the corporate insolvency resolution
process which ordinarily shall get completed within 180 days, reckoning from the day this order is passed.
We appoint Mr. C.V. Madhusudhanan, KSR & Co. Company Secretaries LLP, 101, Indus Chambers,
Government Arts College Road, Coimbatore-641018 (cell No.9442162014) as interim insolvency
professional who has been proposed by the operational creditor. It is stated here that no disciplinary
proceeding is pending against the proposed Interim Insolvency Professional and his
name is reflected on the website of the Insolvency and Bankruptcy Board of India. He
is directed to take charge of the corporate debtor immediately. He is also directed to
cause public announcement as prescribed under Section 15 of the Code within three days from the date
the copy of this order is received, and call for submissions of claim under section 15 of I&B Code, 2016
in the manner as prescribed. We declare the moratorium which shall have effect from the date of this
order till the completion of corporate insolvency resolution process, for the purposes referred to in
Section 14 of the I&B Code, 2016. We order to prohibit all of the following, namely :
(b) Transferring, encumbering, alienating or disposing of by the corporate debtor any of its assets or
1739
(c) Any action to foreclose, recover or enforce any security interest created by the corporate debtor in
(d) The recovery of any property by an owner or less or where such property is occupied by or in the
5. The supply of essential goods or services of the Corporate Debtor shall not be terminated or
suspended or interrupted during moratorium period. The provisions of Sub-section (1) of Section 14 shall
not apply to such transactions, as notified by the Central Government.
6. The Interim Insolvency Professional shall comply with the provisions of Sections 13 (2), 15,
17 & 18 of the Code. The Directors of the Corporate Debtor, its promoters or any person associated with
the Management of the Corporate Debtor is expected to extend all assistance and cooperation to the Interim
Resolution Professional as stipulated under Section 19 and for discharging his functions under Section 20 of
the I&B Code, 2016.
7. The Registry is directed to inform the Insolvency Resolution Professional to take charge of the
entity and make compliance with this order as per the provisions of I&B Code, 2016.
Accordingly, the petition is disposed of. The Registry is directed to issue copy of this order to the
financial creditor and corporate debtor.
Pronounced in the open court.
1740

CHENNAI BENCH
C.P. (I.B.) No. 06/7/NCLT/CB/2017
Applicant: Summer India Textiles Mills Pvt. Ltd.

Vs.
Respondents: State Bank of India
Judges/Coram:
Hon'ble Sh. Ch. Mohd Sharief Tariq, J. (Member (J))
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Satish Parasaran
For Respondents/Defendant: Mr. Ilayarajkumar and V.M. Karthik
ORDER
Hon'ble Sh. Ch. Mohd Sharief, J. (Member (J))
1. This is an Application numbered as CA 6/2017 filed by the Corporate Debtor before this Bench to
grant injunction against the IRP from convening the creditors' meeting which is fixed today i.e.
04.08.2017 until further orders; restrain him from performing his duties and also to declare that
the acts performed by the Interim Resolution Professional (IRP) after 12.07.2017 as null and
void.
2. Heard the Counsels for the Corporate Debtor, Financial Creditor and the representative of IRP
and perused the record.
3. It is on record that the Order dated 13.06.2017 has been passed in the presence of both the
Counsels appearing on behalf of the Corporate Debtor and the Financial Creditor, appointing the
IRP and declaring the moratorium. Thereafter, the Corporate Debtor has filed Writ Petition under
Article 226 r/w Article 227 of the Constitution of India before the Hon'ble High Court of Madras.
The Hon'ble High Court of Madras has granted stay on 19.06.2017 till 05.07.2017 and directed
the Corporate Debtor to approach the NCLAT. Thereafter, the Corporate Debtor approached the
NCLAT by filing an Appeal. On 07.07.2017 the prayer for interim stay was rejected by the
Hon'ble NCLAT and the matter was posted to 19.07.2017. On 19.07.2017, the Appellant was
granted a week's time to file additional Affidavit for making necessary pleadings and now the
matter is posted to 09.08.2017.
1741
4. As seen that, after passing the Order by the adjudicating authority, the Corporate Debtor has been
making efforts to stall the resolution process commenced on 13.06.2017 and did not provide the
relevant record to the IRP for performance of his duties. There is non-cooperation and creation of
legal hurdles by the Corporate Debtor. Therefore, the IRP was not in a position to complete his
assignment within the time prescribed. In view of the above, the time period which is stated to
have expired on 12.07.2017 is extended till RP is appointed. Therefore, all the actions taken by
the IRP after 12.07.2017 are regularized.
5. The IRP is directed to immediately file the report before this Bench in relation to the
recommendations of the Committee of Creditors (CoC) proposing the name of a RP. The IRP
shall perform the functions as per the provisions of the I&B Code, 2016, till RP is appointed. The
Corporate Debtor is directed to cooperate with IRP and in case there is any noncooperation on the
part of the Corporate Debtor hereinafter, the same shall be reported to this Bench immediately by
the IRP by way of an Affidavit. Accordingly, the CA 6/2017 stands disposed of.
1742

CHENNAI BENCH
C.P. (I.B.) No. 551/7/NCLT/CB/2017
Applicant: The Central Bank of India and The State Bank of India
Vs.
Respondent: Ashok Magnetics
Judges/Coram:
Hon'ble Sh. Mohd. Sharief Tariq, Member (J)
Counsels:
ORDER
1. Interim Insolvency Resolution Professional (IRP) viz., Mr. Venkataramanarao Nagarajan, who have
been appointed by this Bench on 04.09.2017 in the matter of Central Bank of India & State Bank of India
Vs. Ashok Magnetics Ltd., has filed a Memo stating therein that he had made efforts to take charge of the
assets of the Corporate Debtor being the IRP to discharge the functions under the provisions of the I&B
Code, 2016. But, there is stout resistance from the Corporate Debtor and prays for Police assistance to
discharge his functions as IRP in the said matter.
2. Considering the urgency of the prayer made in the Memo filed by the IRP, we direct the Superintendent
of Police in whose jurisdiction the Registered Office of the Corporate Debtor viz., M/ s. Ashok Magnetics
Ltd., is situated, i.e. at B, 73, SIPCOT Industrial Complex, Gummidipoondi, 601 201; the Commissioner
of Police, Chennai, having jurisdiction over Royapettah/Teynampet Police Station where Corporate
Office of the Corporate Debtor is situated and the Superintendent of Police, Puducherry having
jurisdiction over Erripakkam Village, Nettapakkam. Commune, Pondicherry where the Factory of the
Corporate Debtor is situated, to give proper Police assistance and personal security to the IRP so that he
can take charge of the assets of the Corporate Debtor and perform the functions as per the provisions of
I85B Code, 2016.
1743
3. The IRP viz., Mr. Venkataramanarao Nagarajan, is directed to approach to the above said Police
authorities for seeking the Police assistance and personal security for discharging his duties under the
provisions of I85B Code, 2016.
4. Registry is directed to issue notice to the Corporate Debtor and the Counsel who caused appearance on
behalf of the Corporate Debtor in the matter. The Directors of the Corporate Debtor are also directed to
furnish the books of accounts, list of assets, list of Financial and Operational Creditors, list of documents
and other relevant particulars as envisaged in the I85 B Code, 2016 and extend all co-operations to the
IRP and the Managing Director of the Corporate Debtor is directed to remain present before this Bench
on the next date of hearing. The Registry is directed to send the copy of this order to the Corporate Debtor
and the Police authorities for compliance. Put up on 15.09.2017 at 10.30 A.M.
1744

CHENNAI BENCH
C.P. (I.B.) No. 563/7/NCLT/CB/2017

Vs.
Respondent: Oceanic Edibles International Ltd.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. H. Kartik Seshadri & Mr. V. Hari Kumar & Mr. Suraj, Advocates
For Respondents/Defendant
ORDER
1. Under adjudication is an Application that has been filed by ICICI Bank Ltd. (hereinafter referred to as
Financial Creditor) under Section 7 of the Insolvency and Bankruptcy Code 2016 r/w Rule 4 of the
Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 against Oceanic Edibles
International Ltd. ( hereinafter referred to as Corporate Debtor). The prayer made in the Application is to
admit the Application, initiate the Corporate Insolvency Resolution Process and declare Moratorium
2. We have heard the Counsel for Financial Creditor and perused the record. There is no representation on
behalf of the Corporate Debtor. As seen from the Order dated 07.09.2017, the Corporate Debtor was
proceeded ex parte.
3. In the Application, the Financial Creditor has claimed the payment of the outstanding debt to the tune
of Rs.39,21,41,910/- which is evidenced in the appended statement of account confirmed by the
certificate dated 20.06.2017 issued by the Financial Creditor under Section 2 (a) of the Banker's Book
Evidence Act 1891. The account of the Corporate Debtor was classified as Non-Performing Asset (NPA)
on 31.12.2014 and again the facilities were recalled on 12.05.2015. The acknowledgement of the
borrower is placed at page 323 of the typed set with the Application shows that the debt was due as on
10.08.2013. The notice given on 24.01.2014 shows default on the part of the Corporate Debtor which is
1745
placed at page 340 of the typed set filed with the Application. The Financial Creditor has also filed
Original Application before DRT, which has been allowed by the DRT on 30.06.2017.
4. We have perused the Application along with the record placed on file and have ascertained the
existence of default on the part of the Corporate Debtor as is evidenced by the record. Thus, the default
has been committed by the Corporate Debtor in making payment of the outstanding debt to the Financial
Creditor/Applicant.
5. The Financial Creditor has fulfilled all the necessary requirements and has also proposed the name of
IRP after obtaining the written consent in Form-2. We are satisfied that Corporate Debtor has committed
default in making payment of the outstanding debt to the Financial Creditors. Therefore,
CP/563/(IB)/CB/2017 is admitted and we order the commencement of the Corporate Insolvency
Resolution Process which ordinarily shall get completed within 180 days, reckoning from the day this
order is passed.
6. We appoint Mr. C. Ramasubramaniam, as IRP as proposed by the Financial Creditor. There is no

disciplinary proceedings pending against the IRP as evidenced from Form-2 and his name is reflected in
IBBI website. The IRP is directed to take charge of the Respondent Corporate Debtor's management
immediately. He is also directed to cause public announcement as prescribed under Section 15 of the I&B
Code, 2016 within three days from the date the copy of this order is received, and call for submissions of
claim in the manner as prescribed.
7. We declare the moratorium which shall have effect from the date of this Order till the completion of
corporate insolvency resolution process, for the purposes referred to in Section 14 of the I&B Code, 2016.
We order to prohibit all of the following, namely:
1746
(d) The recovery of any property by an owner or lessor where such property is occupied by or in
8. The supply of essential goods or services of the Corporate Debtor shall not be terminated or suspended
or interrupted during moratorium period.The provisions of Sub-section (1) of Section 14 shall not apply
to such transactions, as notified by the Central Government.
9. The IRP shall comply with the provisions of Sections 13 (2), 15, 17 & 18 of the Code. The directors of
the Corporate Debtor, its promoters or any person associated with the Management of the Corporate
Debtor is expected to extend all assistance and cooperation to the IRP as stipulated under Section 19 and
for discharging his functions under Section 20 of the I86B Code, 2016.
10. The Financial Creditor and the Registry are directed to send the copy of this Order to IRP so that he
could take charge of the Corporate Debtor's assets etc. and make compliance with this Order as per the
provisions of I&B Code, 2016.
11. The Registry is directed to communicate this Order to the Financial Creditor and the Corporate
Debtor. The address details of the IRP are as follows: -
Mr. C. Ramasubramaniam,
Insolvency Resolution Professional
IP Registration No. IBBI/IPA-002/IP-N00052/2016- 2017/10096,
`SRINIDHI' G4 RMC Flats
No.1 Venkatesapuram Colony,
Vadapalani, Chennai - 600 026.
1747
CHENNAI BENCH
C.P. (I.B.) No. 564/7/NCLT/CB/2017

Vs.
Respondent: Oceanic Tropical Fruits Pvt. Ltd.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. H. Kartik Seshadri & Mr. V. Hari Kumar Advocates
For Respondents/Defendant
ORDER
1. Under adjudication is an Application that has been filed by ICICI Bank Ltd. (hereinafter referred to as
Financial. Creditor) under Section 7 of the Insolvency and Bankruptcy Code 2016 r/w Rule 4 of the
Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 against Oceanic Tropical
Fruits Private Ltd. (hereinafter referred to as Corporate Debtor). The prayer made in the Application is to
admit the Application, initiate the Corporate Insolvency Resolution Process and declare Moratorium
2. We have heard the Counsel for Financial Creditor and perused the record. There is no representation on
behalf of the Corporate Debtor. As seen from the Order dated 07.09.2017, the Corporate Debtor was
proceeded ex parte.
3. In the Application, the Financial Creditor has claimed the payment of the outstanding debt to the tune
of Rs. 1,00,94,30,499/- which is evidenced in the appended statement of account along with computation
and confirmed by certificate dated 20.06.2017 issued by the Financial Creditor under Section 2 (a) of the
Banker's Book Evidence Act 1891. The account of the Corporate Debtor was classified as Non-
Performing Asset (NPA) on 31.12.2014 and again the facilities were recalled on 12.05.2015. The
acknowledgement of the borrower is placed at page 947 of the typed set with the Application which
shows that the debt was due as on 31.12.2014. The notice given on 12.05.2014 records default on the part
1748
of the Corporate Debtor which is placed at pages 953 to 955 of the typed set filed with the Application.
The Financial Creditor has also filed Original Application before DRT, which has been allowed by the
DRT on 30.06.2017.
4. We have perused the Application along with the record placed on file and have ascertained the
existence of default on the part of the Corporate Debtor as is evidenced by the record. Thus, the default
has been committed by the Corporate Debtor in making payment of the outstanding debt to the Financial
Creditor/Applicant.
5. The Financial Creditor has fulfilled all the necessary requirements and has also proposed the name of
IRP after obtaining the written consent in Form-2. We are satisfied that Corporate Debtor has committed
default in making payment of the outstanding debt to the Financial Creditors. Therefore, CP/564/
(IB)/CB/2017 is admitted and we order the commencement of the Corporate Insolvency Resolution
Process which ordinarily shall get completed within 180 days, reckoning from the day this order is
passed.
6. We appoint Mr. C. Ramasubramaniam, as IRP as proposed by the Financial Creditor. There is no

7. We declare the moratorium which shall have effect from the date of this Order till the completion of
corporate insolvency resolution process, for the purposes referred to in Section 14 of the I&B Code, 2016.
We order to prohibit all of the following, namely:
1749
8. The supply of essential goods or services of the Corporate Debtor shall not be terminated or suspended
or interrupted during moratorium period. The provisions of Sub-section (1) of Section 14 shall not apply
to such transactions, as notified by the Central Government.
9. The IRP shall comply with the provisions of Sections 13 (2), 15, 17 & 18 of the Code. The directors of
the Corporate Debtor, its promoters or any person associated with the Management of the Corporate
Debtor is expected to extend all assistance and cooperation to the IRP as stipulated under Section 19 and
for discharging his functions under Section 20 of the I&B Code, 2016.
10. The Financial Creditor and the Registry are directed to send the copy of this Order to IRP so that he
IP Registration No. IBBI / IPA-002 / IP-N00052 / 2016 2017/10096, `SRINIDHI' G4 RMC Flats
1750

CHENNAI BENCH
C.P. (I.B.) No. 551/7/NCLT/CB/2017
Applicant: The Central Bank of India and The State Bank of India
Vs.
Respondent: Ashok Magnetics
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. M.L. Ganesh
For Respondents/Defendant: Mr. Ram, Sr. Counsel for jaysh B. Dolia and M.S. Shanmugasundaram
ORDER
IRP Viz., Mr. V. Nagarajan present in person. Mr. Ajay Agarwal, Managing Director for M/s. Ashok
Magnetics Ltd. present along with his Counsel. Heard the IRP and the Counsel for the Corporate Debtor.
In view of the submissions made by the parties, the Managing Director has been directed to file an
affidavit by 1 p.m. today for making compliance with the orders passed by this Bench dated 04.09.2017
and 11.09.2017 and order passed by NCLAT dated 13.09.2017 by extending all cooperation to the IRP as
per the provisions of IBC, 2016. Pursuant to which the affidavit duly sworn in by the Managing Director
has been filed, the same is placed on record. Based on the assurance given by the Managing Director (by
affidavit) and the Counsel for the Corporate Debtor to make compliance with the orders of this Bench and
Hon'ble NCLAT and co-operate with the IRP, the memo filed by the IRP stands disposed of. A copy of
this order shall be sent to the IRP and the Corporate Debtor.
1751
CHENNAI BENCH
C.P. (I.B.) No. 553/7/NCLT/CB/2017
Applicant: Asset Reconstruction Company (India) Limited

Vs.
Respondent: Paragon Steel Private Limited
Judges/Coram:
Hon'ble Sh. K. Anantha Padmanabha Swamy, Member (J)
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. V. Kamala Kumar, Advocate
For Respondents/Defendant: Mr. R. Vidhyashankar, Advocate
ORDER
1. Under Consideration is a Company Petition filed by Asset Reconstruction Company (India) Limited (in
short, `Petitioner/Financial Creditor') against M/s. Paragon Steel Private Limited (in short,
'Respondent/Corporate Debtor') under section 7 of the Insolvency and Bankruptcy Code 2016 (In short,
ÌB Code 2016') r/w Rule 4 of the Insolvency & Bankruptcy (Application to Adjudicating Authority)
Rules, 2016 (for brevity, TB Rules 2016').
2. Before proceeding with this matter, it would be appropriate to make a note of background facts for the
purpose of determination of this petition.
3. Ms. V. Kamala Kumar, the learned counsel appearing on behalf of the petitioners/FC submitted that the
petitioner is an assignee under an assignment agreement dated 31.03.2015 whereby the City Union Bank
Limited, assignor, has assigned the loans disbursed to the corporate debtor together with all its rights,
title, interest, pledges and guarantees in respect of the said loan. It is further submitted that the CD vide its
letter dated 15.12.2015 had submitted financials for final settlement of loan to the petitioner to a tune of
Rs. 75 Crores in respect of all the loans availed.
1752
4. It is further submitted that the petitioner vide its letter dated 29.12.2015 had considered the request for
settlement of dues provided there was an upfront payment of Rs. 10.20 Crores to be paid on or before 31st
March, 2016 and the final sanction letter shall be issued only upon payment of Rs. 10.20 Crores on or
before 31st March, 2016.
5. The learned counsel submitted that the above said condition as admitted by the CD was not adhered to
and the CD had defaulted in conforming to the terms as agreed, hence the final sanction letter was not
issued. It is also submitted that a letter dated 02.05.2017 from the petitioner to the CD clearly indicated
that the restructuring scheme had failed therefore, the petitioner proceeded to recover its dues as fell due
on 30.04.2017 with further interest thereon.
6. The learned counsel finally submitted that when the Corporate Debtor was unable to pay its Financial
Debt which became due and payable on 30th January 2017, then petitioner, having been left with no other
option approached this Adjudicating Authority claiming the payment of Rs. 176,00,66,070/-towards the
Corporate Debtor in capacity of a Financial Creditor under the provisions of the 1B Code 2016 and
prayed to initiate Corporate Insolvency Resolution Process against the Respondent/CD.
7. Shri R. Vidhyashankar, the learned counsel for the Respondent/CD caused appearance and submitted
that the petition should be dismissed on the grounds of technical laches as there are some serious defects
in the Application in Form- I filed by the petitioner and the amount in default and the principal
outstanding amount shown is grossly erroneous. He submitted that in terms of Clause 1 of Part V of Form
I, the Financial Creditor is required to give an estimated value of assests held by the financial creditor as
security for the claim and the plant and machinery relating to SMM Re-Rolling Mills Private Limited
Unit- I is hypothecated to the financial creditor, the value of which has been totally omitted to be
reckoned and is excluded in the valuation submitted by the financial creditor. Apart from this, the
valuation even for the other assets held as security has been given by the petitioner by their own
admission based only on a valuation report taken in November.
8. He further submitted that in respect of an industrial estate land granted on lease to Paragon Steels
Private Limited by District Industries Centre, Palakkad, Kerala, which is incapable of alienation, the asset
is shown as own land in Form - 1. It is further submitted that the mandatory requirement of serving notice
of the application on the Corporate Debtor under Rule 4 of the IB Rules 2016 was not complied with.
Moreover, the Annexures attached to Form- 1 was not served on the Corporate Debtor.
1753
9. The learned counsel finally submitted that without prejudice to the foregoing, even if this Adjudicating
Authority is inclined to admit the Application of the Financial Creditor, the appropriate directions to
preserve the value of the undertaking to ensure continued operations of the undertaking and to permit the
continued involvement of promoters in the operations of the companies is absolutely imperative and
placed his reference to section 20 of the 1B Code 2016 whereby IRP is obligated to preserve & protect the
value of the property and manage the operations of the Corporate Debtor as a going concern. In this
regard, he placed his reliance on a judgement passed by the Hon'ble NCLT, Principal Bench in
MANU/NC/0702/2017 wherein and whereby a specific direction was given to ensure preservation of the
value of the asset and to ensure operation as a going concern.
10. With regard to the prayer made in relation to specific directions to IRP, the learned counsel for the
petitioner company has not made any objection and submitted that the prayer made by the counsel for the
respondent in relation to specific directions to IRP may be decide appropriately.
11. As per the submission of the counsel for the petitioner, the Petitioners have complied with all the
requirements as stipulated under the provisions of the LB Code, 2016 and the rules formed thereunder.
12. After hearing submissions of the counsel for the petitioner and respondent and having perused the
record, this Adjudicating authority is satisfied that the petitioner has proved by placing overwhelming
evidence that default has occurred which the Corporate Debtor was responsible to pay. In relation to the
technical laches as pointed out by the counsel for respondent, it is pertinent to mention that the petitioner
has established clearly that the amount in default is genuine and is supported by the documentary
evidence placed by her. Therefore, I am of the opinion that the said objection is not a valid ground of
rejection of the instant petition. In the circumstances, I am inclined to admit the instant application.
13. Therefore, the instant petition is admitted and I order the commencement of the Corporate Insolvency
Resolution Process which shall ordinarily get completed within 180 days, reckoning from the day this
order is passed.
14. I appoint R. Venkatakrishnan as Interim Resolution Professional (IRP) proposed by the Financial
Creditor. There is no disciplinary proceedings pending against the IRP and his name is reflected in IBBI
website. The IRP is directed to take charge of the Respondent/Corporate Debtor's management
1754
15. I declare the moratorium which shall have effect from the date of this Order till the completion of
corporate insolvency resolution process for the purposes referred to in Section 14 of the I&B Code,
2016.1 order to prohibit all of the following, namely :
17. The IRP shall comply with the provisions of Sections .13 (2), 15, 17 & 18 of the Code. The directors,
Promoters or any other person associated with the management of Corporate Debtor are directed to
extend all assistance and cooperation to the IRP as stipulated under Section 19 and for discharging his
functions under Section 20 of the I&B Code, 2016. Accordingly, the application is admitted.
18. The IRP is further directed to protect and preserve the value of the property of the Corporate Debtor
as a going concern as a part of its obligation imposed under section 20 of the B3 Code 2016 and perform
all his duties strictly in accordance with the provisions of the IB Code 2016.
19. The Petitioner/FC as well as the Registry is directed to send the copy of this Order to IRP so that he
1755
20. The Registry is also directed to communicate this Order to the Financial Creditor and the Corporate
Debtor.
21. The address details of the IRP are as follows: -
R. Venkatakrishnan
Regn. No: (IBBI/IPA-01/IP-00115/2017-2018/10250)
1/4th Rangas, 4th Main Road, R A Puram, Chennai- 28
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CHENNAI BENCH
C.P. (I.B.) No. 552/7/NCLT/CB/2017
Applicant: Asset Reconstruction Company (India) Limited

Vs.
Respondent: SMM Steel Re-Rolling Mills Private Limited
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. V. Kamala Kumar, Advocate
For Respondents/Defendant: Mr. R. Vidhyashankar, ADvocate
ORDER
1. Under Consideration is a Company Petition filed by Asset Reconstruction Company (India) Limited (in
short, `Petitioner/Financial Creditor') against M/s. SMM Steel Re-Rolling Mills Private Limited (in short,
'IB Code 2016') r/w Rule 4 of the Insolvency & Bankruptcy (Application to Adjudicating Authority)
Rules, 2016 (for brevity, 'IB Rules 2016').
3. Ms. V. Kamala Kumar, the learned counsel appearing on behalf of the petitioners/FC submitted that the
petitioner is an assignee under an assignment agreement dated 31.03.2015 whereby the City Union Bank
Limited, assignor, has assigned the loans disbursed to the corporate debtor together with all its rights,
title, interest, pledges and guarantees in respect of the said loan. It is further submitted that the CD vide its
letter dated 15.12.2015 had submitted financials for final settlement of loan to the petitioner to a tune of
Rs. 75 Crores in respect of all the loans availed.
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4. It is further submitted that the petitioner vide its letter dated 29.12.2015 had considered the request for
settlement of dues provided there was an upfront payment of Rs. 10.20 Crores to be paid on or before 31"
March, 2016 and the final sanction letter shall be issued only upon payment of Rs. 10.20 Crores on or
before 31st March, 2016.
6. The learned counsel finally submitted that when the Corporate Debtor was unable to pay its Financial
Debt which became due and payable on 30th January 2017, then petitioner, having been left with no other
option approached this Adjudicating Authority claiming the payment of Rs. 40,05,41,313/- towards the
Corporate Debtor in capacity of a Financial Creditor under the provisions of the IB Code 2016 and prayed
to initiate Corporate Insolvency Resolution Process against the Respondent/CD.
7. Shri R. Vidhyashankar, the learned counsel for the Respondent/CD caused appearance and submitted
that the petition should be dismissed on the grounds of technical laches as there are some serious defects
in the Application in Form- I filed by the petitioner and the amount in default and the principal
outstanding amount shown is grossly erroneous. He submitted that in terms of Clause 1 of Part V of Form
I, the Financial Creditor is required to give an estimated value of assests held by the financial creditor as
security for the claim and the plant and machinery relating to SMNI Re-Rolling Mills Private Limited
Unit- I is hypothecated to the financial creditor, the value of which has been totally omitted to be
reckoned and is excluded in the valuation submitted by the financial creditor. Apart from this, the
valuation even for the other assets held as security has been given by the petitioner by their own
admission based only on a valuation report taken in November.
8. He further submitted that in respect of an industrial estate land granted on lease to Paragon Steels
Private Limited by District Industries Centre, Palakkad, Kerala, which is incapable of alienation, the asset
is shown as own land in Form - 1. It is further submitted that the mandatory requirement of serving notice
of the application on the Corporate Debtor under Rule 4 of the IB Rules 2016 was not complied with.
Moreover, the Annexures attached to Form- 1 was not served on the Corporate Debtor.
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9. The learned counsel finally submitted that without prejudice to the foregoing, even if this Adjudicating
Authority is inclined to admit the Application of the Financial Creditor, the appropriate directions to
preserve the value of the undertaking to ensure continued operations of the undertaking and to permit the
continued involvement of promoters in the operations of the companies is absolutely imperative and
placed his reference to section 20 of the IB Code 2016 whereby IRP is obligated to preserve & protect the
value of the property and manage the operations of the Corporate Debtor as a going concern. In this
regard he placed his reliance on a judgement passed by the Hon'ble NCLT, Principal Bench in
MANU/NC/0702/2017 wherein and whereby a specific direction was given to ensure preservation of the
value of the asset and to ensure operation as a going concern.
10. With regard to the prayer made in relation to specific directions to IRP, the learned counsel for the
petitioner company has not made any objection and submitted that the prayer made by the counsel for the
respondent in relation to specific directions to IRP may be decide appropriately.
11. As per the submission of the counsel for the petitioner, the Petitioners have complied with all the
requirements as stipulated under the provisions of the IB Code, 2016 and the rules formed thereunder.
evidence placed by her. Therefore, I am of the opinion that the said objection is not a valid ground of
rejection of the instant petition. In the circumstances, I am inclined to admit the instant application.
order is passed.
14. I appoint R. Venkatakrishnan as Interim Resolution Professional (IRP) proposed by the Financial
1759
corporate insolvency resolution process for the purposes referred to in Section 14 of the I&B Code, 2016.
I order to prohibit all of the following, namely :
17. The IRP shall comply with the provisions of Sections 13 (2), 15, 17 & 18 of the Code. The directors,
18. The IRP is further directed to protect and preserve the value of the property of the Corporate Debtor
as a going concern as a part of its obligation imposed under section 20 of the IB Code 2016 and perform
all his duties strictly in accordance with the provisions of the IB Code 2016.
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Debtor.
R. Venkatakrishnan
1761
CHENNAI BENCH
C.P. (I.B.) No. 558/7/NCLT/CB/2017

Vs.
Respondent: Infinitas Energy Solutions Pvt. Ltd.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. N. Chndra Raj, Advocate
For Respondents/Defendant: Mr. Karthik Ranganathan, Advocate & Mr. T.S. Sundaram, Advocate
ORDER
1. Under Consideration is a Company Petition filed by Indian Bank (in short, 'Petitioner/Financial
Creditor') against M/s. Infinitas Energy Solutions Pvt. Ltd. (in short, 'Respondent/Corporate Debtor')
under section 7 of the Insolvency and Bankruptcy Code 2016 (In short, '1B Code 2016') r/w Rule 4 of the
Insolvency & Bankruptcy (Application to Adjudicating Authority) Rules, 2016 (for brevity, ÌB Rules
2016').
3. The Petitioner/FC is a Banking Company incorporated under the Companies Act, 1956 and now is a
nationalized Bank having its Branch office at Indian Guindy Branch, No. 131, GST Road, Chennai-14
whereas the Respondent/CD is a Private Unlimited Company in the business of renewable energy sector,
claiming to be India's first professional end-toend renewable power infrastructure solution provider
having its registered office at No. 480, Anna Salai, Khivraj Complex-1, 2nd Floor, Tamilnadu- 600035.
4. It is also pertinent to mention herein that name of the Respondent/CD was changed from M/s. Trishe
Renewable Energy Solutions P. Ltd. to M/s. Infmitas Energy solutions Private Limited by a fresh
certificate of incorporation no. U45400TN2010PTC078050 on 12.02.2014.
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5. Shri N. Chandra Raj, the learned counsel appearing on behalf of the petitioners/FC submitted that the
respondent approached to the petitioner for availing loans and the petitioner granted loans as mentioned in
the petition. Accordingly, the petitioner issued sanction letters dated 14.06.2013 & 23.07.2013 to the
respondent for the facilities of OCC Rs. 1500 Lakhs and LC limit Rs. 2500 Lakhs respectively. It is
further submitted that the petitioner has executed all the loan documents independently to the petitioner
by providing independent collateral security and by executing independent mortgage deeds. A few other
banks also funded the respondent in a consortium with Punjab National bank as its lead bank.
6. It is also submitted that the respondent executed all the loan documents on 23.07.2013 including the
Promissory Notes and several Agreements of Guarantee. Afterwards, the sanctioned amounts were
disbursed to the respondent on 24.07.2013 and subsequent dates by the petitioner. It is further submitted
that to secure the financial assistance granted to the respondent, the Guarantors have deposited the
originals of the title documents as collateral security and also given the Letter confirming deposit of title
deeds and creation of equitable mortgage by borrowers & guarantors and also executed and registered
memorandum of deposit of title deeds on various dates. The respondent and M/s. Trishe EPC P. Ltd.
executed the Corporate Guarantee on 02.08.2013guaranteeing the facilities availed by the Respondent/CD
and Agreement of Guarantee dated 24.10.2013 was executed by M/s. Trishe Infrastructure Services P.
Ltd. in favour of the petitioner.
7. It is further submitted that the respondent also executed the acknowledgement of Debt cum Security on
01.03.2016 to the petitioner acknowledging a sum of 18,70,45,042.04/- as outstanding in OCC Account
and a sum of Rs. 23,80,46,584.18/- as outstanding in Devolved LCs Account as on 31.12.2015.
9. The learned counsel further submitted that as per the Annual Report and Audited Balance Sheet dated
20.09.2013 of the respondent for the year 2015-16, the total outstanding borrowing of the Respondent/CD
from the Petitioner/FC is Rs. 41,47,46,380/-.
10. The learned counsel submitted that when the Corporate Debtor was unable to pay its Financial Debt
which became due and payable on various dates, then petitioner, having been left with no other option
approached this Adjudicating Authority claiming the payment of Rs. 1500 Lakhs towards OCC and Rs.
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2500 Lakhs towards LC Limits against the Corporate Debtor in capacity of a Financial Creditor under the
provisions of the IB Code 2016. In view of the foregoing, the learned counsel for the petitioner finally
submitted that the Respondent/CD is commercially insolvent due to its inability to pay its debts and thus
11. Shri Karthik Ranganathan, the learned counsel for the Respondent/CD vehemently opposed the
contentions raised by the counsel for petitioner and submitted that the instant petition is not maintainable
in law and in facts as the same is premature and is liable to be rejected in limine.
12. It is submitted that the petitioner has filed an application under SARFAESI Act, 2002 in OA No.
379/2017 before the Hon'ble DRT- II, Chennai for the very same cause of action of recovery of the dues
from the respondent and the DRT was pleased to issue summons to the respondent on 18.07.2017. He
placed his reliance on section 10 of CPC submitting that it is well settled principle that any party to any
proceeding cannot file two different applications before two forums against the same party for the same
cause of action and if such a proceeding is initiated then the subsequent and latest proceeding has to be
stayed.
13. He further submitted that Punjab National Bank, lead bank of consortium, has also filed an application
before the DRT- II, Chennai though no summons have been served on the petitioner yet. Therefore, this
petitioner cannot file the present petition as it is well settled principal of law that some parties or one of
the parties cannot institute multiple proceedings on the same cause of action against the same respondent.
This is clearly barred by section 10 of CPC and the jurisprudence of Res Judicata is equally applicable to
this Adjudicating Authority also and allowing the petitioner to continue with simultaneous proceedings
before various forums would be a clear case of abuse of process of law and against the public policy. He
also placed his reliance on a judgement passed by the Hon'ble Supreme Court in Aspi Jal Anr. Vs.
Khushroo Rustom Dadyburjo, Civil appeal No. 2908 of 2013 wherein it was held that subsequent
proceedings should be stayed until the first set of proceedings are concluded.
14. With regard to the above submissions, the learned counsel for the petitioner submitted that there are a
catena of judgements passed by the Hon'ble Supreme Court wherein it has been held that section 10 of
CPC is not applicable on Tribunals and the DRT is not a "court" thus the proceedings before the DRT
cannot be considered a "suit". Therefore, the Adjudicating Authority has to adjudicate the matters keeping
in view the inherent power entrusted and principle of natural justice. It is further submitted that suit filed
before the DRT and the petition filed before this Adjudicating Authority are on different footing as the
OA filed before the DRT relates to recovery proceedings whereas the instant petition before this
Adjudicating Authority pertains to initiation of Corporate Insolvency Resolution Process and declaring
1764
the Corporate Debtor insolvent. Moreover, if such a peculiar situation is permitted then the very authority
of insolvency code will come at stake and there will be no finality of judgment. To further support his
claim, the learned counsel relied on a recent judgement passed by the Hon'ble Supreme Court in M/s.
Innovative Industries Ltd. Vs. ICICI Bank & Anr., Civil Appeal Nos. 8337-8338 of 2017 wherein and
whereby it was held that the IB Code 2016 would prevail over the Maharashtra Act, 1956. He finally
submitted that in view of the above, the LB Code would prevail over SARFAESI Act, 2002 and there is
no bar if the Corporate Insolvency Resolution Process is initiated.
15. The learned counsel for the respondent further submitted that the amount of the claim made by the
petitioner is specifically denied and there is dispute with regard to the quantum of the claim and prayed
that the quantum of the amount has to be first determined before the application is admitted as the same
cannot be done before the IRP & Committee of Creditors (CoC) because they are not empowered to
determine the quantum of the claim. He further submitted that though there is no dispute that there is a
debt, even though the quantum is in dispute, therefore the instant petition should be rejected at threshold
in view of dispute in existence.
16. In relation to above submission, the learned counsel for the petitioner submitted that there is no any
dispute regarding the quantum of amount and the amount claimed by the petitioner is based on various
documentary evidence placed on record. Moreover, the IRP is empowered to ascertain the claim under the
provisions of the 1B Code 2016 and finally submitted that the plea of dispute raised by the counsel for
respondent is nothing but a moonshine defence.
17. As per the submission of the counsel for the petitioner, the Petitioner has complied with all the
requirements as stipulated under the provisions of the FB Code, 2016 and the rules formed thereunder.
evidence viz. Agreement of Guarantee, Corporate Guarantee, Letter confirming deposit of title deeds,
Acknowledgement of Debt cum Security, CIBIL Reports, OCC & LC Account Statements and entries in
Bankers Book under the Bankers Books Evidence Act, 1891 that default has occurred which the
Corporate Debtor was responsible to pay. Therefore, I am of the opinion that the objections raised by the
counsel for petitioner are not a valid ground of rejection of the instant petition.
19. Moreover, the petitioner bank, no doubt, filed its claim before this Adjudicating Authority after
preferring the OA before the DRT. If the reasoning of the learned counsel for the respondent, that a
concurrent proceeding before DRT and NCLT is abuse of process of law, are to be affirmed, then a
1765
piquant situation would be permitted where an Adjudicating Authority, exclusively created by the
legislature to decide insolvency matters filed by the Financial/Operational Creditors would have to await
decisions of other tribunals/courts, thus frustrating the very purpose of parliamentary intention at quick
resolution of insolvency matters. The public purpose underlying the creation of Adjudicating Authority
would thus be easily countenanced and such a decision cannot be plainly approved. In the circumstances,
I am inclined to admit the instant application.
order is passed.
21. I appoint Mr. R. Venkatakrishnan as Interim Resolution Professional (IRP) proposed by the Financial
I order to prohibit all of the following, namely
(a) The institution of suits or continuation of pending suits or proceedings against the corporate debtor
other authority;
(b) Transferring, encumbering, alienating or disposing of by the corporate debtor any of its assets or any
(d) The recovery of any property by an owner or lessor where such property is occupied by or in the
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24. The IRP shall comply with the provisions of Sections 13 (2), 15, 17 & 18 of the Code. The directors,
Debtor.
Mr. R. Venkatakrishan
1/4th Rangas, 4th Main Road, R A Puram, Chennai-28
E-Mail-rvk@rvkassociates.com
1767
CHENNAI BENCH
C.P. (I.B.) No. 568/7/NCLT/CB/2017
Applicant: Vinitha Associates Ltd.

Vs.
Respondent: Vasavi Housing Infrastructure Ltd.
Judges/Coram:
Counsels:
ORDER
Counsel for the petitioner present and made her submissions. Order is reserved.
1768

CHENNAI BENCH
C.P. (I.B.) No. 551/7/NCLT/CB/2017
Applicants: Toughened Alloys & Steels Pvt Ltd

BKL Steels Pvt Ltd
Dnepro Advisory Pvt Ltd
Vs.
Respondent: Ashok Magnetics Ltd
Judges/Coram:
Hon'ble Sh. Ch. Mohd Sharief Tariq, Member (J)
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Vivek Menon, Mr. Anant Merathia and Mr. B. Arvind Srevatsa,
Learned Advocates
ORDER
Counsel for Applicants in CA/22,23,24/113/2017 present. Counsel for IRP along with IRP
present. After hearing both the parties, the IRP is directed to reconsider the claims of the Applicants under
Regulation 14(2) of IBBI (CIRP) Regulation, 2016 provided the Applicants submit the necessary
documents to the IRP on or before 13.10.2017. The IRP based on the documents submitted shall
review/revise the amounts of claims. If the Applicants would be in a position to make out the claims as
Financial Creditors, then the IRP shall include the Applicants in the Committee of the Creditors and shall
convene the first meeting of the CoC.
The term of the IRP is likely to be expired on 04.10.2017. The same is extended till the first meeting of
CoC is convened, the name of the R.P. is proposed and appointed by this Bench. The interim orders dated
26.09.2017 stand modified. Accordingly, all the three Applications are disposed of by way of common
order.
1769
CHENNAI BENCH
C.P. (I.B.) No. 472/7/NCLT/CB/2017

Vs.
Respondent: BKR Hotels And Resorts Pvt Ltd
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. N. Chandra Raj, Learned Advocate
For Respondents/Defendant: Mr. M. Roshan and Mr. Kumarpal Chopra, Learned Advocates
ORDER
Counsel for IRP present. It is submitted that after passing the order on 30.05.2017, the Corporate
Debtor filed the Writ Petition before the Hon'ble High Court of Madras wherein stay was issued on
21.06.2017. Thereafter, on 21.08.2017 he withdrew the petition and filed an appeal before the NCLAT.
The order of the NCLAT dated 14.09.2017 is placed on record. After perusal, it appears that no stay has
been granted in the matter. Therefore, the 1RP is directed to proceed in the matter and make compliance
with the provisions of the IBC, 2016.
The IRP is directed to make fresh public announcement in the matter. His time period is also
extended till the first meeting of the Committee of Creditors is convened; name of the R.P. is proposed
and appointed by this Bench. Accordingly, the Application is disposed of.
1770

CHENNAI BENCH
C.P. (I.B.) No. 602/7/NCLT/CB/2017
Applicant: BKL Steels Pvt Ltd

Vs.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. S. Ravi, Learned Advocate
ORDER
Counsel for the Applicant present and filed an Application under section 9 being the
Operational Creditor against M/s. Ashok Magnetics Ltd. It is on record that this Bench has already
initiated Corporate Insolvency Resolution process against the Corporate Debtor and moratorium
was declared and IRP has also been appointed. In view of this, the Applicant is directed to file the
claim, if any, before the IRP. Accordingly, the Application stands disposed of.
1771
CHENNAI BENCH
C.P. (I.B.) No. 595/7/NCLT/CB/2017
Applicant: The Central Bank of India

Vs.
Respondent: M/s. Deivaanai Sinter Metals Pvt. Ltd.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. M. L. Ganesh, Learned Advocate
ORDER
1. Counsel for the Financial. Creditor present. No representation on behalf of the Corporate Debtor.
It is on record that Financial Creditor before filing the Application, sent the notice to the Corporate
Debtor at Registered Office Address which was received on 27.09.2017. The proof of the same is also
placed on file. Thereafter, as per the direction of this Bench, the Financial Creditor has also sent private
notice to the Registered Office Address of the Corporate Debtor, the postal receipt dated 04.10.2010,
copy of the notice and track delivery report are placed on record along with an affidavit. But, the
Corporate Debtor chose not to appear before this Bench. It appears that the Corporate Debtor is
deliberately avoiding to cause appearance in the matter before this Bench. The service of notice on the
Corporate Debtor is held sufficient. Therefore, the Corporate Debtor is proceeded ex parte.
2. An Application has been filed under Section 7 of the Insolvency and Bankruptcy Code 2016 r/w
Rule 4 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 by the
Central Bank of India (hereinafter referred to as 'Financial Creditor') against M/s. Deivaanai Sinter Metals
Pvt. Ltd. (hereinafter referred to as 'Corporate Debtor).
The prayer made is to admit the Application, to initiate the Corporate Insolvency Resolution Process
against the Corporate Debtor, declare moratorium and appoint Interim Resolution Professional (IRP)
under the Insolvency and Bankruptcy Code, 2016 (I8sB Code).
1772
We have heard the Counsel for Financial Creditor and perused the Application including the record
placed on file.
3. The Financial Creditor has sent the Demand Notice under Section 13(2) of the SARFAESI Act,
2002 on 26.03.2014 to the Corporate Debtor indicating the total amount of Rs.6,97,94,811.45p due to the
Financial Creditor as on 23.09.2013, which is placed at page 164 of the typed set filed with the
Application. The Possession Notice under Section 13(4) of the SARFAESI Act was sent to the Corporate
Debtor on 25.02.2015 indicating total amount of Rs.7,39,22,305.65p due to the Financial Creditor as on
23.09.2013, which is placed at page 168 of the typed set filed with the Application. Thereafter,
corrigendum to the Possession Notice was sent on 10.03.2015 indicating the correct amount of
Rs.6,97,94,811.45p, due to the Financial Creditor as on 23.09.2013, which is placed at page 170 of the
typed set filed with the Application.
4. Besides above, the Financial Creditor sent Demand Notice under Section 7 of the I&B Code,
2016 to the Corporate Debtor on 15.05.2017 which is placed at page 240 and 241 of the additional typed
filed with the Application. The reply has been given by the Corporate Debtor on 28.08.2017 which is
placed at page 242 of the additional typed set filed with the Application, wherein under para 8, the
Corporate Debtor has admitted the liability to the extent of Rs.4 Crores and under para 11 (L) stated that
the Corporate Debtor can solve the temporary crisis if the Bank affords sufficient time for repayment. The
Financial Creditor has also placed on file the Bank statements at page 260 onwards of the additional typed
set which go to show that the balance amount due was not paid by the Corporate Debtor.
5. The above mentioned documents are sufficient to ascertain that the Corporate Debtor has
defaulted in making payment of the outstanding debt to the Financial Creditor/Applicant.
6. Thus, the Financial Creditor has fulfilled all the requirements of law and has also proposed the
name of IRP after obtaining the written consent in Form-2, copy of which is placed at page 27 of the
typed set filed with the Application. We are satisfied that Corporate Debtor has committed default in
making payment of the outstanding debt to the Financial Creditors. Therefore, CP/595/ (1B) /CB/2017 is
admitted and we order the commencement of the Corporate Insolvency Resolution Process which
ordinarily shall get completed within 180 days, reckoning from the day this order is passed.
7. We appoint Mr. C. Ramasubramaniam, as IRP as proposed by the Financial Creditors. There is

no disciplinary proceedings pending against the IRP as evidenced from Form-2 and his name is reflected
in IBBI website. The IRP is directed to take charge of the Respondent Corporate Debtor's management
immediately. He is also directed to cause public announcement as prescribed under Section 15 of the
1773
185E3 Code, 2016 within three days from the date the copy of this order is received, and call for
submissions of claim in the manner as prescribed.
8. We declare the moratorium which shall have effect from the date of this Order till the completion
of corporate insolvency resolution process, for the purposes referred to in Section 14 of the I&B Code,
2016. We order to prohibit all of the following, namely:
(c) Any action to foreclose, recover or enforce any security interest created by the corporate debtor
10 The IRP shall comply with the provisions of Sections 13 (2), 15, 17 & 18 of the Code. The
directors of the Corporate Debtor, its promoters or any person associated with the Management of the
Corporate Debtor is expected to extend all assistance and cooperation to the IRP as stipulated under
Section 19and for discharging his functions under Section 20 of the I86B Code, 2016.
11. The Financial Creditor and the Registry are directed to send the copy of this Order to IRP so that
he could take charge of the Corporate Debtor's assets etc. and make compliance with this Order as per the
IP Registration No.IBBI/IPA-002/IP- N00052/ 2016-2017/10096,
'SRINIDHI' G4 RMC Flats
E-mail ID-fcs.rms@gmail.com
Mobile No. 9884068291
1774

CHENNAI BENCH
C.P. (I.B.) No. 586/7/NCLT/CB/2017
Applicant: National Skill Development Corporation

Vs.
Respondent: Everonn Skill Development Ltd
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Vikas Kumar, Learned Advocate
For Respondents/Defendant: Ms. Jaya Priya- M/s. Dheeraj Mani, Learned Advocate
ORDER
Counsel representing both the parties are present and submitted their arguments. Order is reserved.
1775
CHENNAI BENCH
C.P. (I.B.) No. 551/7/NCLT/CB/2017
Applicant: CKPL Steels Pvt Ltd

Vs.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Arvind Pandian, Learned Advocate
For Respondents/Defendant: Mr. R. Subramaniam, Learned Advocate
ORDER
Counsel for Applicant present. Counsel for IRP present. Counsel for State Bank of India
and Central Bank of India also present. Heard both the sides.
Under consideration is IA/29/2017 that has been filed by CKPL Steels Pvt. Ltd. seeking
permanent injunction restraining the IRP viz., Mr. Venkataramanarao Nagarajan from interfering
with the peaceful possession and rentals of the Applicant with respect to the Leased Property.
The first Respondent Company, viz., M/s. Ashok Magnetics Ltd. is under Corporate
Insolvency Resolution Process and the moratorium has been declared. The IRP was appointed. The IRP
in exercise of the powers conferred under clause (f) of section 18 of the IBC, 2016 has to take control
and custody of the assets over which the Corporate Debtor has ownership rights as recorded in the
balance sheet of the Corporate Debtor. The Applicant pleads that the property in question has been
leased out by the 1st Respondent Company to the Applicant on 11.11.2016. Based on the registered
Lease Agreement, the Applicant is enjoying the rights of lessee.
The IRP has filed the counter stating therein that the scheduled property is covered by equitable
mortgage by deposit of Title Deeds under section 58 (f) of the Transfer of Property Act and such
mortgage was made on 30.12.2014. Therefore, subsequent lease by the Mortgagor is covered under
1776
section 65 A of the Transfer of Property Act, 1882 and such lease shall in no case exceed three
years. But the claimed lease relied upon by the Applicant of the Scheduled property is for a period of
10 years which per se is invalid under sub clause (e) of sub section (2) of section 65 A of the
Transfer of Property Act, 1882. It has further been submitted by the Counsel representing the IRP that
besides the above, lease deed in question is in contravention of the provisions of section 13 (13) of the
SARFAESI Act, 2002, for the reasons that in respect of the said property notice on 17.12.2015
under section 13 (2) of the SARFAESI Act, 2002 was issued by the Central Bank of India i.e., a secured
lender in whose favour the equitable mortgage was created on 30.12.2014 by the first
Respondent Company. Therefore, on and from the date of notice the first Respondent Company was
barred from dealing with the property without written consent of the Secured Creditor as provided
under the provisions of section 13 (13) of the SARFAESI Act, 2002. Therefore, the claimed lease in
favour of the Applicant is in violation of the said provisions and the same is non est in law. Counsel
for the IRP has also referred to the ruling given by the Apex Court in Harshad Govardhan
Sondaqar v/s. International Assets Reconstruction Co. Ltd. reported in (2014) 6SCC1 wherein
under para 15, the Hon'ble Court observed as follows:-
"Subsection (13) of Section 13 of the SARFAESI Act, however, provides that after receipt
of notice referred to in sub-section (2) of Section 13 of the SARFAESI Act, no borrower shall lease
any of his secured assets referred to in the notice, without the prior written consent of the
secured creditor. This provision in subsection (13) of Section 13 of the SARFAESI Act and
the provisions of the Transfer of Property Act enabling the borrower or the mortgagor to
make a lease are inconsistent with each other. Hence, sub-section (13) of Section 13 of the
SARFAESI Act will override the provisions of Section 65A of the Transfer of Property Act by virtue
of Section 35 of the SARFAESI Act, and a lease of a secured asset made by the borrower after he
receives the notice under sub-section (2) of Section 13 from the secured creditor intending to
enforce that secured asset will not be a valid lease".
It has further been submitted by the Counsel for the IRP that the property leased out is in
violation of the provisions of section 180 (1)(a)(i)and(ii) of the Companies Act, 2013, because the Board
of Directors has no authority to lease out the said property, without seeking the consent of the Company
by a 'special resolution'.
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Counsel for the Applicant has not been able to controvert the arguments that have been
submitted by the Counsel appearing on behalf of the IRP. The arguments submitted by the Counsel for
the IRP are plausible. Therefore, the contentions raised by the Applicant are hereby rejected.
In the light of facts and circumstances of the case and the arguments submitted by the parties, the Lease
Deed dated 11.11.2016, is not tenable in the eye of the law, as discussed herein above. Therefore, the
interim order dated 17.10.2017 is hereby vacated. The IRP is directed to initiate action in accordance
with law to take control and custody of the property purportedly leased out to the Applicant by the
Corporate Debtor.
In terms of the above, the IN29/2017 stands disposed of.
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CHENNAI BENCH
C.P. (I.B.) No. 585/7/NCLT/CB/2017
Applicant: Bermaco Energy Systems Ltd

Vs.
Respondent: Grand Luxe Hotels Ltd
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Dhananjay Kumar, Learned Advocate
ORDER
Counsel for Petitioner present. Counsel for Corporate Debtor also present. Heard. Order is reserved.
1779
CHENNAI BENCH
C.P. (I.B.) No. 588/7/NCLT/CB/2017
Applicant: State Bank Of India

Vs.
Respondent: Summer India Weaving & Processing Mills Pvt Ltd
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. E. Omprakash, Learned Advocate
For Respondents/Defendant: Mr. PJ. Sriganesh, Learned Advocate
ORDER
Counsel representing both the parties are present. Heard submissions of both the counsel. Order is
reserved.
1780

CHENNAI BENCH
C.P. (I.B.) No. 605/7/NCLT/CB/2017
Applicant: State Bank Of India

Vs.
Respondent: Balu Spinning Mills Pvt Ltd
Judges/Coram:
Counsels:
For Respondents/Defendant: Mr. R. Vidhya Shankar, Learned Advocate
ORDER
Counsel for the Applicant viz., State Bank of India present. Counsel for Corporate Debtor also present.
The Application was filed under section 7 of the IBC by the Financial Creditor. The matter was fixed for
filing reply by the Corporate Debtor. However, a memo has been filed by the Financial Creditor for
withdrawal of the petition stating therein that the petition be allowed to be withdrawn with the liberty to
file afresh at a later date after working out the consensus with the Financial Creditors viz., Punjab
National Bank. The Petitioner is at liberty to withdraw the petition before the same is admitted. However,
the reason cited for giving liberty to file afresh is devoid of merits. Therefore, we allow the prayer of the
Petitioner to withdraw the petition. Therefore, the petition is dismissed as withdrawn.
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CHENNAI BENCH
C.P. (I.B.) No. 485/7/NCLT/CB/2017
Applicant: Milestone Real Estate Fund

Vs.
Respondent: Landmark Housing Projects India Pvt Ltd
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Ashish Jain, Learned Advocate
For Respondents/Defendant: Mr. A. Abdul Rehman, Learned Advocate
ORDER
Counsels for both the parties are present. Counsel for the Financial Creditor has submitted memo stating
therein that the matter has been settled between the parties and prayed to withdraw the petition. The
prayer is allowed. The petition is dismissed as withdrawn.
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CHENNAI BENCH
C.P. (I.B.) No. 588/7/NCLT/CB/2017
Applicants: State Bank of India

Vs.
Respondent: M/s. Summer India Weaving and Processing Mills Private Limited
Judges/Coram:
Counsels:
For Respondents/Defendant: Mr. K. Ravichandran, Mr. S.S. Prabhakaran, Learned Advocates
ORDER
1. Under Consideration is a Company Petition filed by State Bank of India (in short,
'Petitioner/Financial Creditor') against M/s. Summer India Weaving and Processing Mills Private Limited
(in short, 'Respondent/Corporate Debtor') under section 7 of the Insolvency and Bankruptcy Code 2016
(In short, ÌB Code 201.6') r/w Rule 4 of the Insolvency & Bankruptcy (Application to Adjudicating
Authority) Rules, 2016 (for brevity, ÌB Rules 2016') on grounds of respondent's inability to pay debt.
2. The petitioner is State Bank of India, a Banking company whereas the Respondent/Corporate
Debtor is a Company registered under the Companies Act, 1956 and engaged in the business of Weaving
and Processing mills.
3. Before proceeding with this matter, it would be appropriate to make a note of background facts
for the purpose of determination of this petition.
4. Shri E. Omprakash, the learned counsel appearing on behalf of the petitioner/FC submitted that
the Corporate Debtor availed two credit facilities from the petitioner of Rs. 31,16,71,064/- and Rs.
1,18,80,684.75 amounting to Rs. 32,35,51,748/- dated 22.08.2017. The corporate debtor also stood as the
corporate guarantor to the facilities availed by a group company, M/s. Summer India Textiles Mills
Private Limited for the facilities sanctioned to the aggregate limit of Rs. 156.81 Crores dated 08.08.2012.
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5. It is further submitted that the petitioner vide its letter dated 12.09.2017 had considered a scheme
for One Time Settlement (in short ÒTS') of non-performing assets in connection with amount due from
CD for settlement under SBI OTS 2017 outstanding ( excluding accrued interest from the date of NPA) is
Rs. 17,63,61,057/- as on 31.03.2017.
6. The learned counsel submitted that the above said condition as admitted by the CD was not
adhered to and the CD had defaulted in conforming to the terms as agreed.
7. It is further submitted that the petitioner, having awaited for a long period of time for their
legitimate dues and despite of the respondent acknowledging its dues to the petitioner, approached this
Adjudicating Authority for the payment of Rs. 32,35,51,748/- as on 22.08.2017 with further interest and
other charges in the capacity of an Operational Creditor under the provisions of the 113 Code 2016 and
prayed to initiate Corporate Insolvency Resolution Process against the Respondent/CD on the grounds of
respondent's inability to pay debt.
8. Shri K. Ravichandran, the learned counsel for the Respondent/CD caused appearance, denied all
the allegations contained and submitted that the petition is not maintainable on the grounds of technical
laches as there are some serious defects in the Application filed by the petitioner and the amount in
default & the principal outstanding amount shown are grossly erroneous. He further submitted that the
financial Creditor came out with a scheme for One Time Settlement (OTS) for the management and
recovery of nonperforming assets in the current financial year for covering the manufacturing, trade,
services & agriculture sector with outstanding more than Rs. 20 lakhs & upto 25 crores as on 31.03.2017.
In term of the said scheme, the Applicant/FC wide letter dated 12.09.2017, 19.09.2017 and 09.10.2017
conveyed its consent for one time settlement of all dues and requested the respondent to express its
willingness in terms of the conditions. The respondent had, in accordance with the scheme and the
proposal of petitioner, evinced its interest and expressed willingness to utilize the OTS under the said
scheme. In fact the respondent had with regard Account No: 52095859147 approached the petitioner/FC
with Demand Draft of an amount equivalent to 5% of outstanding as on 31.03.2017. With regard to other
loan account no. 34219327835, the respondent is in the process of making an application with deposit of
5% as time is granted till 31.10.2017.
9. It is further submitted that in view of the subsequent events, the claims made out and shown as
due in form no. 1 along with the statement of accounts would no longer be relevant and would be novated
by terms of the OTS. Therefore the company petition should be dismissed as the cause of action ceases to
exist and further under the aforementioned scheme, there is no default by the respondent/CD under
section 7 of 1B Code, 2016
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10. He further submitted that the company petition is not maintainable since the petition discloses
multiple cause of action which is established by the simple fact that the applicant has claimed dues from
two different loan accounts which are distinct and different from each other. Further, the applicant/FC has
filed separate Original Applications before DRT with respect to each of the loan accounts viz. O.A No.
618 of 2014 and O.A No.686 of 2014 and the petitioner has not taken any steps to merge the two OAs
filed before the DRT which clearly points to the fact that they are distinct and separate. The Petitioner has
also in its Form-1 part V has specified the pendency of O.A 618 of 2014 before Hon'ble DRT Madurai by
stating that a sum of Rs.131,63,82,382.66 is payable as on 10.08.2014. However, the aspect of counter
claim has been concealed which amounts to suppression of material facts and the petition should be
dismissed on this basis only.
11. He further submitted that the instant petition has been filed by the State Bank of India through its
Stressed Assets Management Branch, which ought to have been filed by the State Bank of India,
Commercial Branch. Furthermore, no authorization letter has been given by the State Bank of India to and
in favour of Stressed Management Branch to institute the proceedings.
12. With regard to the contentions put forth by the counsel for the respondent, the learned counsel for
the petitioner submitted that from record, it is clear that the respondent has admitted the amount in
question and defaulted on several occasions and plea put forth by the respondent is nothing but a
moonshine defence.
13. The Petitioner has also filed rejoinder and replied each and every averments made in the counter
by the respondent.
14. While submitting arguments the learned counsel for Corporate Debtor pointed out that there are
discrepancies i.e in form-1 EPC Facility (A/c No.10482651992) is shown and in rejoinder it is mentioned
that this account number is for Term loan, likewise the limit of sanction and statement of account differs
from form-land rejoinder as per the documents filed in support of the claim.
requirements as stipulated under the provisions of the IB Code, 2016 and the rules formed thereunder.
evidence placed by them. This Adjudicating Authority is also satisfied with the submission stated in the
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rejoinder. Therefore, I am of the opinion that the said technical objection is not a valid ground of rejection
of the instant petition. In the circumstances, I am inclined to admit the instant application.
17. Therefore, the instant petition is admitted and I order the commencement of the Corporate
Insolvency Resolution Process which shall ordinarily get completed within 180 days, reckoning from the
day this order is passed.
18. I appoint Shri C.V. Madhusudhanan as Interim Resolution Professional (IRP) proposed by the
Financial Creditor. There is no disciplinary proceedings pending against the IRP and his name is reflected
in IBBI website. The IRP is directed to take charge of the Respondent/Corporate Debtor's management
immediately. He is also directed to cause public announcement as prescribed under Section 15 of the I
&B Code, 2016 within three days from the date the copy of this order is received, and call for
21. The IRP shall comply with the provisions of Sections 13 (2), 15, 17 & 18 of the Code. The
directors, Promoters or any other person associated with the management of Corporate Debtor are
directed to extend all assistance and cooperation to the IRP as stipulated under Section 19 and for
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discharging his functions under Section 20 of the I&B Code, 2016. Accordingly, the application is
admitted.
22. The Petitioner/FC as well as the Registry is directed to send the copy of this Order to IRP so that
23. The Registry is also directed to communicate this Order to the Financial Creditor and the
Corporate Debtor.
Shri C.V. Madhusudhanan

Regn. No: (IBBI/IPA-IP/2016-2017/1059)
Email: madhu@ksrandco.in
Contact No.: 9442162014
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CHENNAI BENCH
C.P. (I.B.) No. 606/7/NCLT/CB/2017
Applicants: M/s. Edelweiss Asset Reconstruction Company Limited

Vs.
Respondent: M/s. Frontline Printers Private Limited
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Vinod Kumar, Learned Advocates
For Respondents/Defendant: Mr. R. Parthasarathy, Mr. Rahul Balaji, Mr. Madan Babu & Mr. Vishnu
Mohan, Learned Advocates
ORDER
Under consideration is a Company petition filed by M/s. Edelweiss Asset Reconstruction

Company Limited acting in its capacity as Trustee for Edelweiss ARF - I Trust (in short,
'Petitioner/Financial Creditor') against M/s. Frontline Printers Private Limited (in short,
Respondent/Corporate Debtor) under section 7 of the Insolvency and Bankruptcy Code, 2016 (in short IB
Code 2016) r/w rule 4 of Insolvency & Bankruptcy (Application to Adjudicating Authority) Rules, 2016
(for brevity, IB Rules 2016)
3. The petitioner/FC is an Asset Reconstruction Company incorporated on 05.10.2007 having its

registered office at Edelweiss House, off CST Road, Kalina, Mumbai — 400 098.
4. The learned Counsel for the Applicant submitted that the respondent has availed various loans to
the tune of Rs. 20,14, 00,000/- from M/s Indian Bank. The said debt along with security interest was
assigned to the Applicant vide an Assignment Agreement dated 31.10.2011 entered into between the
Applicant and M/s. Indian Bank . Further a Restructuring Agreement was also entered into between the
Applicant and the Respondent on 04.04.2012 and the debt due of the Respondent was fixed as Rs.
19,00,00,000/- payable to the Applicant in two instalments of Rs. 10,00,00,000/- by 30.06.2012 and Rs.
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9,00,00,000/- by 30.10.2012. The Respondent failed to repay the said instalments on the due dates and in
terms of the Restructuring Agreement, interest at the rate of 30% per annum is payable in the event of
non- payment of instalments on the agreed dates.
5. The learned Counsel for the Applicant submitted that when the Corporate Debtor was unable to
pay its financial debt which became due and payable on two dates, then the petitioner, left with no other
option approached this Adjudicating Authority claiming the payment of Rs. 61, 09, 26,925/- including the
interest against the corporate debtor in the capacity of a Financial Creditor under the provisions of the IB
Code, 2016. The learned Counsel submitted that the Corporate Debtor has become commercially
insolvent due to its inability to pay its debts and thus prayed to initiate Corporate Insolvency Resolution
Process against the Respondent/CD.
6. The learned Counsel for the Respondent vehemently opposed the contentions raised by Counsel
for the applicant and submitted that the instant petition is not maintainable in law and facts for the reason
that the petition is filed on behalf of a wrong entity viz, EARC Trust — SC 19 instead of Edelweiss ARF
— I Trust. The application by a wrong party is not a curable defect since the same goes to the root of the
matter and locus standi of a party to file the application. The same is not capable of being amended and
there is no specific provision in the 1B Code permitting filing of such an application for amendment or
substitution of the Applicant. He has further submitted that the Applicant has initiated under the Recovery
of Debts Due to Banks and Financial Institutions Act, 1993 by filing OA No. 454 of 2014 before the
DRT- II Chennai for recovery of the sum allegedly due and payable by the Respondent. Finally the said
OA has been dismissed as not maintainable vide order dated 04.08.2017, therefore the Applicant cannot
enforce an alleged debt under IB Code when the matter has already been determined in favour of the
Respondent. Therefore, there is no default for invocation of the IB Code by the Applicant.
7. The learned Counsel for the Applicant submitted for the above contentions of the Respondent,
that under proviso to Section 7(5) of the IB Code read with Rule 11 and 155 of the NCLT Rules the
Applicant can rectify any defect in the application. The Applicant has filed necessary application to
rectify the defect. With regard to the contention that there is no debt and there is no default to invoke the
IB Code, the learned Counsel for the Applicant submitted that the Respondent itself has admitted that the
due amount is payable to the Applicant and even prayed not to take any coercive act against the
Respondent. The DRT order also confirms that the Respondent has not disputed the debt in the DRT
proceedings and the DRT gave the liberty to the applicant to file suit for recovery. In support of his
submissions, the learned Counsel for the Applicant relied on the following judgments:
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(a) Sree Metaliks Limited and others Vs UOI and others — Manu/WB/0236/2017 — To show
that under Order1 Rule 10 of the Code of Civil Procedure, 1908 any person can be substituted or added as
plaintiff if there is a bonafide mistake.
(b) Bal Niketan Nursery School Vs Kesari Prasad — (1987) 3 Supreme Court Cases 587 — To
show that if the court is satisfied that a bonafide mistake has occurred in the filing of the suit in the name
of the wrong person then the court should set right matters in exercise of its powers under Order 1 rule 10
and promote the cause of justice and the courts should set right matters by ordering the addition or
substitution of the proper plaintiff for ensuring the due dispensation of justice.
(c) M/s Edelweiss Asset Reconstruction Company Limited Vs Bharati Defence and others —
Manu/NC/0981/2017 — To show that the assignee will automatically become Financial Creditor as
stated in the definition to Financial Creditor to file the company petition.
(d) M/s. Indian Bank Vs Infinitas Energy Solutions Private Limited — Manu/NC/1250/2017 —
To show that the Adjudicating Authority is exclusively created by the legislature to decide the insolvency
matters filed by the Financial/lOperational Creditors.
The learned Counsel for the Applicant based on the above submissions prayed to admit the petition.
8. Heard. Perused the pleadings and documents submitted by both the parties. The learned Counsel
for the Applicant satisfied the Adjudicating Authority by filing relevant charge documents and the
agreements entered into between the Applicant and Respondent and the case laws in support of his
submissions. The Applicant is proved that there is a debt due payable by the Respondent/CD and they
have defaulted in making payments even after entering into the Restructuring Agreement and Respondent
is responsible to pay. The objections raised by Counsel for the Respondent are not valid ground for
rejection of the instant petition. Further, the case laws referred by the Applicant are supporting the
submission that the bonafide mistake can be corrected and therefore the contention of the Respondent is
not tenable and the entire case of the Applicant cannot be brushed aside at the threshold itself for a simple
bonafide and curable mistake. In these circumstances the present name of the applicant is amended as
prayed.
9. Therefore, in view of the above the instant petition is admitted and I order commencement of the
Corporate Insolvency Resolution Process which shall ordinarily get completed within 180 days,
reckoning from the day this order is passed.
10. I appoint Mr. Balasubramanian T. V, (Registration No. IBBUIPA-01/IPP00198/2017-

2018/10388) of M/s. PKF Sridhar & Santhanam LLP 91/92, having office at VII Floor KRD Gee Gee
Crystal, Dr. Radhakrishnan Road, Mylapore, Chennai — 600 004 as Interim Resolution Professional
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(IRP) proposed by the Applicant. There is no disciplinary proceedings pending against the IRP and his
name is reflected in IBBI website. The IRP is directed to take charge of the Respondent/Corporate
Debtor's management immediately. He is also directed to cause public announcement as prescribed under
Section 15 of the I & B Code, 2016 within three days from the date of the copy of this order is received
and call for submissions of claim in the manner as prescribed.
11. I declare the moratorium which shall have effect from the date of this order till the completion of
Corporate insolvency resolution process for the purpose referred to in Section 14 of the I & B Code, 2016.
I order to prohibit all of the following, namely:
panel or other authority.
(ii) Transferring, encumbering, alienating or disposing of by the corporate debtors any of its assets or
(iii) Any action to foreclose, recover or enforce any security interest created by the corporate debtor in
Assets and Enforcement of Security Interest Act, 2002 (54 of 2002)
(iv) The recovery of any property by an owner or lessor where such property is occupied by or in the
13. The IRP shall comply with the provisions of sections 13(2), 15, 17 & 18 of the Code. The
discharging his functions under Section 20 of the I & B Code. Accordingly, the application is admitted.
14. The petitioner/FC as well as the Registry is directed to send the copy of this order to IRP so that
he could take charge of the Corporate Debtor's assets etc. and make compliance with this order as per the
15. The Registry is also directed to communicate this order to the Financial Creditor and the
Corporate Debtor.
16. With the above observations the application is disposed of
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CHENNAI BENCH
C.P. (I.B.) No. 604/7/NCLT/CB/2017

Vs.
Respondent: M/s. NSR Elkemet Private Limited
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. E. Omprakash, Senior Advocates
ORDER
1. Under Consideration is a Company Petition filed by ICICI Bank Limited (in short,
'Petitioner/Financial Creditor') against M/s. NSR Elkemet Private Limited (in short,
`Respondent/Corporate Debtor') under section 7 of the Insolvency and Bankruptcy Code 2016 (In
short, 'IB Code 2016') r/w Rule 4 of the Insolvency & Bankruptcy (Application to Adjudicating
Authority) Rules, 2016 (for brevity, 'IB Rules 2016') on grounds of respondent's inability to repay the
loan.
3. The petitioner is ICICI Bank Limited, a Banking company whereas the Respondent/Corporate
Debtor is a Company registered under the Companies Act, 1956 and engaged in the business of
manufacture buy, sell, import, deal in, assemble , distribute, fit, repair, convert overhaul, alter, maintain
and improve all types of components, devices, equipments and appliances etc.
4. Shri E. Omprakash, the learned counsel appearing on behalf of the petitioner/FC submitted that
the Corporate Debtor availed credit facilities in the nature of fund based and non-fund limits aggregating
total Rs. 120 Million (i.e Rs. 12.0 Crores) consisting of fund based limits in the nature of cash credit
facilities Rs. 10.1 Million (i.e 10.1 crores), a Rupee Term Loan of Rs. 6.5 million (i.e Rs. 65 lakhs), and
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non-fund based limits in the nature of Letter of Credit (LC) of Rs. 10 million ( i.e Rs. 1 crore) and Bank
Guarantee (BG) of Rs. 2.5 million ( i.e Rs. 25 lakhs) with full sub-limits of counter Bank Guarantees,
sanctioned in and by way of a credit armament letter dated on 14.12.2013. The Financial Creditor claimed
amount from corporate debtor of Rs. 13,40,00,355.91 as on 04.09.2017 together with further interest and
charges as applicable.
5. It is further submitted that the Financial Creditor had given said loan to Corporate Debtor by way
of security held by way of Hypothecation and Mortgage of entire current assets of corporate debtor, the
mortgaged industrial properties located at Vengailvasal Village, Medavakkam, Membakkam Road valued
at Rs. 15.78 crores and commercial property located at No.41, Mowbrays Road, Alwarpet, Chennai-18
valued at Rs. 2.75 Crores. The aforesaid collateral securities are cross collateralized to facility availed
from Financial Creditor by M/s. N. S Rama Rao Body Works, a Partnership firm.
6. Further submitted that the applicant/FC has filed separate Original Applications before DRT-1
Chennai as per Q.A. No. 243 of 2016 for seeking recovery of Rs. 11,40,62, 734.36/- as on 07.09.2016
with further interest at the ate 13.10% p.a. The Financial Creditor has issued recall notice dated
01.07.2016 to Corporate Debtor and Guarantee Invocation Recall Notice to corporate debtor on
05.07.2016 and the Demand Notice issued on 11.07.2016 under section 13(2) of the SARFAESI Act,
2002 by the Financial Creditor to Mortgagors and also issued Statutory Notice Dated 08.08.2016 under
the Companies Act, by Financial Creditor to the Corporate Debtor, reply has been sent by the Corporate
Debtor to Financial Creditor on 31.08.2016, the Financial Creditor has sent rejoinder to the Corporate
Debtor on 13.09.2016.
7. It is further submitted that the petitioner, after making several notices to Corporate Debtor for
settling the loan amount and having waited for a long period of time for legitimate loan amount, has filed
the application under section 7 of the IBC, 2016 r/w rule 4 before this Tribunal and sent notice to
Corporate Debtor on 11.10.2017 and also served a copy of this application with documents as bound
books on 07.09.2017, which has been duly acknowledged. An affidavit of service has been filed to this
effect. The Financial Creditor has prayed for initiating Corporate Insolvency Resolution Process against
the Respondent/CD.
8. Before proceeding with the matter, it is necessary to mention herein that the Respondent was set
ex-parte vide order dated 02.11.2017 due to non-appearance on several occasions. The Respondent
neither gave a reply to the Notice dated 16.10.2017, nor filed any counter resisting the claim. Therefore
there are no submissions nor any pleadings on behalf the Respondent/CD by appearing before this
Adjudicating Authority in spite of several notices. The petitioner has also placed on record, proof of
sending notices and its service by hand. The Petitioner has complied with all the requirements as
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stipulated under the provisions of the I&B Code, 2016 for the purpose of initiating Corporate Insolvency
Resolution Process.
9. After hearing submissions of the counsel for the Petitioner/FC and having perused the record, this
Adjudicating authority is satisfied that the Petitioner/FC has clearly made out his case by establishing that
the Corporate Debtor has defaulted the repayment of loan on various occasions to the Petitioner/FC. Also,
the petitioner has proved by placing overwhelming evidence viz. Invoices, Demand Notice, Statutory
Notices, Financial Transactions and Bank Statements that default has occurred which the Corporate
Debtor was responsible to pay. Therefore, I am of the opinion that the Petitioner/FC has established
clearly that the loan amount in default committed by the corporate debtor is genuine and is supported by
the documentary evidence placed before this Adjudicating authority. In the circumstances, having
satisfied with the submissions put forth by the learned counsel for the Petitioner/FC, I am inclined to
admit the instant petition.
11. I appoint Shri V. Mahesh as Interim Resolution Professional (IRP) proposed by the Financial
immediately. He is also directed to cause public announcement as prescribed under Section 15 of the I
&B Code, 2016 within three days from the date of the copy of this order is received, and call for
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admitted.
Corporate Debtor.

Mr. V. Mahesh
Regn No. IBBI/IPA-002/1P-N00307/2017-2018/10865
39/19, Aspen Court, III Floor, RA Puram 66 Main Road,
RA Puram, Chennai-600028
E-Mail: maheshvenka,vmacs.co.in
Mobile No. 044-24331082
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CHENNAI BENCH
C.P. (I.B.) No. 608/7/NCLT/CB/2017
Applicants: M/s. ICICI Bank Limited

Vs.
Respondent: Rathna Stores Private Limited
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Shiva Kumar, Learned Advocate
For Respondents/Defendant: Mr. Sanjay Kumar, Mr. R. Sreedhar, & Mr. E. Raja Balaj, Learned
Advocates
ORDER
Under consideration is a Company petition filed by M/s. ICICI Bank Limited (in short
Petitioner/Financial Creditor) against M/s. Rathna Stores Private Limited (in short Respondent/Corporate
Debtor) under section 7 of the Insolvency and Bankruptcy Code, 2016 (in short IB Code 2016) r/w rule 4
of Insolvency & Bankruptcy (Application to Adjudicating Authority) Rules, 2016 (for brevity, IB Rules
2016).
3. The petitioner/FC is Bank having its registered office at ICICI Bank Tower, Near Chakil Circle,
Old Padra Road, Vadodara, Gujarat — 390 007 and Respondent/CD is a private Company limited by
shares having its registered office at New No. 79, Usman Road, T. Nagar, Chennai — 600 017.
4. The learned Counsel for the Applicant submitted that the respondent has availed various loans
from the Applicant and on default of payment, the Applicant declared the loan as NPA and issued notice
to the Respondent under section 13(2) of SARFAESI Act, 2002 on 15.07.2014, to one Mr. S. Ganesh who
had mortgaged his personal property to secure the facilities availed by the Respondent. Subsequently the
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Respondent made a part payment of Rs 91 lakhs in various tranches. Since the Respondent failed to pay
the balance amount, the Applicant proceeded with the auction sale of the personal property of the Mr.
Ganesh and sold the same for Rs. 9,00,90,000/- on 28.09.2015. Thereafter, the Applicant instituted
recovery proceedings before DRT-II in OA. No. 653/2015 and in the said proceedings the Respondent
and others were set ex-parte. The DRT made final orders on 31.05.2016 against the Respondents directing
them to pay Rs. 11,72,05,503 together with the interest of 12% per annum. Taking into consideration of
the amounts received from the auction sale, the DRT made a final order and issued a Recovery Certificate
and the Recovery Officer issued a demand notice for a total sum of Rs. 3,07,97,285.58,(DRC No.
358/2015 dated 30.06.2016 in OA No. 653/2015), however, the same has not been deposited by the
Respondent.
5. The learned Counsel for the Applicant has further submitted that the Applicant has filed a
winding up petition before the High Court, Madras and on the constitution of this Tribunal, the same was
transferred to this Tribunal and it was pending in TCP No. 48/1B/2017. The said petition was abated by
this Tribunal vide order dated 31.07.2017 as per notification No. GSR 732(E) dated 29.06.2017 and
therefore the fresh petition under I& B Code, 2016 was filed before this Tribunal. The Recovery
Certificate issued by the DRT is a decree and when the Corporate Debtor was unable to pay its financial
debt which became due and payable to the Applicant, then the petitioner, left with no other option except
approaching this Adjudicating Authority claiming the payment of Rs. 3,07,97,285.58/- including the
interest against the corporate debtor in the capacity of a Financial Creditor under the provisions of the IB
Code, 2016. The learned Counsel submitted that the Corporate Debtor has become commercially
insolvent due to its inability to pay its debts and thus prayed to initiate Corporate Insolvency Resolution
Process against the Respondent/CD.
6. The learned Counsel for the Respondent filed a counter Statement and vehemently opposed the
contentions raised by Counsel for the applicant and submitted that the instant petition is not maintainable
in law and facts for the reason that the petition is filed by stating that this Tribunal has given liberty to the
Applicant when the TCP No. 48/IB/2017 was abated whereas as no such liberty has been given to the
Applicant by the Tribunal. He has further submitted that the Applicant has initiated recovery proceedings
before the DRT and sold the mortgaged property and appropriated the amount towards the loans. The
property is also under the mortgage of UCO Bank and the Income Tax Authorities have also attached the
same property. The Applicant failed to array various parties in this application as the Respondent is
contesting various cases relating to settlement of debts in DRT, DRAT and High Court. The learned
Counsel submitted that if any adverse order is passed against the Respondent it would greatly prejudice
1797
the other stakeholders and in view of the pending proceedings the Applicant cannot enforce the debt
under IB Code.
7. Heard. Perused the pleadings and documents submitted by both the parties.
8. With regard to the submission of the learned Counsel for the Respondent that this Tribunal has
not given any liberty to file fresh petition, I wish to state that such liberty is not to be given by this
Tribunal as the same is given in the notification No. GSR 732(E) dated 29.06.2017 itself and therefore the
said submission of the learned Counsel for the Respondent is unsustainable. It is on record that the
Applicant initiated recovery proceedings before the DRT and sold the mortgaged property and
appropriated the sale amount towards the loans. The Applicant has further obtained a Recovery
Certificate from DRT for Rs. 3,07,97,285.58/-, the balance amount and according to the Applicant it is a
decree made by the DRT and the Applicant is enforcing the same in the present proceedings before this
Tribunal. It is also on record that the DRT has issued a Recovery Certificate and according to the
Respondent the appeal is pending before DRAT. Besides, there are cases before High Court and other
parties are also involved in the litigations in the matter. However, the Respondent has not placed any
documentary proof to that effect. Therefore, in my considered view, since the petition has been filed on
the basis of Recovery Certificate issued by the DRT, admitting the petition under I & B Code, 2016 is
proper and in view of the above I am inclined to admit the petition.
9. Therefore, the instant petition is admitted and I order commencement of the Corporate Insolvency
order is passed.
10. I appoint Mr. V. Nagarajan, (Registration No. IBBI/IPA-02/IPN/00055//2016-2017/10107,

having office at New No. 29, Kavarai Street, West Mambalam, Chennai — 600 033 (E-
Mail:csnagarajana,gmail.com) as Interim Resolution Professional (IRP) proposed by the Applicant. There
is no disciplinary proceedings pending against the TRP and his name is reflected in IBBI website. The
IRP is directed to take charge of the Respondent/Corporate Debtor's management immediately. He is also
directed to cause public announcement as prescribed under Section 15 of the I & B Code, 2016 within
three days from the date of the copy of this order is received and call for submissions of claim in the
manner as prescribed.
1798
Corporate Insolvency Resolution Process for the purpose referred to in Section 14 of the I & B Code,
2016. I order to prohibit all of the following, namely:
panel or other authority.
(ii) Transferring, encumbering, alienating or disposing of by the corporate debtors any of its assets or
(iii) Any action to foreclose, recover or enforce any security interest created by the corporate debtor in
Assets and Enforcement of Security Interest Act, 2002 (54 of 2002)
(iv) The recovery of any property by an owner or lessor where such property is occupied by or in the
13. The IRP shall comply with the provisions of sections 13(2), 15, 17 & 18 of the Code. The
discharging his functions under Section 20 of the I & B Code. Accordingly, the application is admitted.
14. The petitioner/FC as well as the Registry is directed to send the copy of this order to IRP so that
he could take charge of the Corporate Debtor's assets etc and make compliance with this order as per the
15. The Registry is also directed to communicate this order to the Financial Creditor and the
Corporate Debtor.
16. With the above directions the application is disposed of
1799
CHENNAI BENCH
C.P. (I.B.) No. 612/7/NCLT/CB/2017

Vs.
Respondent: M/s. Senthil Paper and Boards Private Limited
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. K. Ramesh, Learned Advocate
For Respondents/Defendant: Mr. P.H. Arvind Pandian, Senior Adocate, Mr. M. Roshan Atiq, Mr. A.
Sandeep Kumar, & Mr. Amrith Bargav, Learned Advocates
ORDER
1. Under Consideration is a Company Petition filed by State Bank of India (in short,
'Petitioner/Financial Creditor') against M/s. Senthil Papers and Boards Private Limited (in short,
'IB Code 2016') r/w Rule 4 of the Insolvency & Bankruptcy (Application to Adjudicating Authority)
Rules, 2016 (for brevity, 'IB Rules 2016').
3. The petitioner is State Bank of India (Stressed Assets Management Branch), a Banking company
whereas the Respondent/Corporate Debtor is a Company registered under the Companies Act, 1956 and
engaged in the business of transport, cartage and haulage contractors, garage properties, owners and
characters of road vehicles, aircraft packers, haulers, warehouseman, store-keepers etc.
4. Mr. K. Ramesh, the learned counsel appearing on behalf of the petitioners/FC submitted that the
Corporate Debtor availed financial assistance in the nature of credit facilities under Consortium led by
Tamilnadu Mercantile Bank, Indian Overseas Bank and Erstwhile State Bank of Travancore (SBT) and
1800
State Bank of Patiala (SBP). Now, State Bank of Travancore (SBT) has merged with State Bank of India.
The SBT(erstwhile) has sanctioned of Rs. 47.50 Crores vide sanction Letter Date 05.10.2012 which is
consisting of term loan of Rs. 45.00 Crores(LC-One time within new TL-Rs. 30.00 Crores and LC limit
of Rs. 2.05 Cores and State Bank of Patiala (SBP) has sanctioned of Rs. 31.06 Crores vide letter dated
28.01.2013 which is consisting of Term Loan of Rs. 30.00 Crores (LC- Onetime within New TL —Rs.
24.00 Crores) and BG limit of Rs. 1.06 Crores, which has been renewed to Rs. 40.00 Crores (TL- Rs.
300.00 Crores and CC-Rs. 10.00 Crores as on 09.10.2014.
of security held by way of Hypothecation and Mortgage. The Financial Creditor issued Demand Notice
on 14.07.2017 under section 13(2) of the SARFAESI Act, 2002.
6. The learned counsel submitted that the above said condition as admitted by the CD was not
adhered to and the CD had defaulted in conforming to the terms as agreed, hence the final sanction letter
was not issued. It is also submitted that a letter dated 14.07.2017 from the petitioner to the CD clearly
indicated that the restructuring scheme had failed therefore, the petitioner proceeded to recover its dues as
fell due on 04.10.2017 with further interest thereon.
7. The learned counsel finally submitted that when the Corporate Debtor was unable to pay its
Financial Debt which became due and payable on 04.10.2017, then petitioner, having been left with no
other option approached this Adjudicating Authority claiming the payment of Rs. 70,10,24,423/- towards
the Corporate Debtor in the capacity of Financial Creditor under the provisions of the TB Code 2016 and
8. Shri P.H Arvind Pandian, the learned Senior Counsel for the Respondent/CD caused appearance.
No counter filed on behalf of Respondent/CD. He simply opposed the Company Petition.
9. Heard both sides. As per the submission of the counsel for the petitioner, the Petitioners have
complied with all the requirements as stipulated under the provisions of the TB Code, 2016 and the rules
formed thereunder.
10. After hearing submissions of the counsel for the Petitioner/FC and having perused the record, this
Adjudicating authority is satisfied that the Petitioner/FC has clearly made out his case by establishing that
the Corporate Debtor has defaulted the repayment of loan on various occasions to the Petitioner/FC. Also,
the petitioner has proved by placing overwhelming evidence viz. Demand Notice, Waiver Notices,
1801
Financial Transactions and Bank Statements that default has occurred which the Corporate Debtor was
responsible to pay. I am of the opinion that the Petitioner/FC has established clearly that the loan amount
in default committed by the corporate debtor is genuine and is supported by the documentary evidence
placed before this Adjudicating authority. In the circumstances, having satisfied with the submissions put
forth by the learned counsel for the Petitioner/FC, I am inclined to admit the instant petition.
12. Iappoint Shri. N. Sivachalam as Interim Resolution Professional (IRP) proposed by the Financial
1802
admitted.
16. The IRP is further directed to protect and preserve the value of the property of the Corporate
Debtor as a going concern as a part of its obligation imposed under section 20 of the 1B Code 2016 and
perform all his duties strictly in accordance with the provisions of the IB Code 2016.
Corporate Debtor.
Shri. N. Sivachalam
Regn. No:(IBBI/TPA-01/IP-P00187/2017-2018/10366)
No.12, Govindarajalu Street, Stanes Road,
Avinashi Road, Tirupur-641602
E-Mail: sivachalamca@gmail.corn
Phone No. 9842222644
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CHENNAI BENCH
C.P. (I.B.) No. 491/7/NCLT/CB/2017
Applicants: Chivas Trading Pvt. Ltd.

Vs.
Respondent: Abhayam Trading Limited
Judges/Coram:
Counsels:
ORDER
Mr. Rakesh Chaturvedi, RP in person present. J.R.K. Sarma, Representative of the Corporate
Debtor, holding position of Independent Director present. Mr. Preeti Mohan, Counsel for Financial
Creditor present. Mr. Akshaya Ramadurai, Counsel for Resolution Professional present. The report
of RP has already been submitted. Heard the Counsels for the parties, the RP and the representative
of the Corporate Debtor. Reserved for orders.
1804

CHENNAI BENCH
C.P. (I.B.) No. 233/7/NCLT/CB/2017
Applicants: M/s. L&T Finance Limited

Vs.
Respondent: M/s. C.T. Ramanathan Infrastructure Pvt. Ltd.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. R. Umashankar, Learned Advocate
For Respondents/Defendant: Mr. S. Srinivasu, Learned Advocate
ORDER
1. Under consideration is the Petition that came to be filed before Hon'ble High Court of Madras on
23.07.2013 under Sections 433 (e) 85 (f), 434 (i) (a) and 439 (i) 85 (b) of the Companies Act 1956 for
winding up of the Respondent Company. After the enforcement of the Insolvency and Bankruptcy Code,
2016 (I&B Code, 2016, for short), the same has been transferred to this Bench and renumbered as
TCP/233/(IB)/CB/2017 and treated under Section 7 of the I& B Code, 2016 r/w Rule 4 of the Insolvency
and Bankruptcy (Application to Adjudicating Authority) Rules, 2016. The prayer made is to admit the
Application, to initiate the Corporate Insolvency Resolution Process against the Corporate Debtor,
declare moratorium and appoint Interim Resolution Professional (IRP) under the Insolvency and
Bankruptcy Code, 2016 (I&B Code).
2. We have heard the Counsels for Financial Creditor and the Corporate Debtor, and perused the
record.
3. The brief facts of the case are that the Financial Creditor has extended loan facility to the
Corporate Debtor in the month of January, 2012 for the business purposes. The Financial Creditor has
further extended loan facility to the Corporate Debtor in the month of February, 2012, for purchase of
machinery and vehicles. After availing the above facilities, the Corporate Debtor failed to settle the
outstanding amount as per the agreements. The Financial Creditor has sent statutory notice to the
1805
Corporate Debtor on 12.03.2013 giving the details of agreement and the amount due. The Financial
Creditor has also resorted to the clause provided for resolution of the disputes in the agreements by filing
claims before the Arbitral Tribunal. The Arbitral Tribunal on 20.05.013 and 21.05.2013 passed Awards
in both the matters in favour of the Financial Creditor. The Counsel for the Financial Creditor submitted
that the total outstanding debt as on date is Rs.3,03,92,383/-.
4. The Corporate Debtor caused appearance in the matter before this Bench and submitted that they
are ready and willing to pay the outstanding debt and prayed for time as reflected from the Order dated
08.11.2017. Further, a Memo has been filed by the Corporate Debtor on 17.11.2017 stating therein that
they are negotiating with the Financial Creditor for settlement and intend to settle the dues towards the
financial debt. The admission made by the Corporate Debtor by way of filing the Memo is also
supporting the claim made by the Financial Creditor.
5. We have perused the Application along with the record placed on file. From the submissions
made by the Counsels for the Financial Creditor and the Corporate Debtor, we have ascertained that the
Corporate Debtor has defaulted in making payment of the outstanding debt.
6. Thus, the Financial Creditor has fulfilled all the requirements of law and has also proposed the
name of IRP after obtaining the written consent in Form-2. We are satisfied that Corporate Debtor has
committed default in making payment of the outstanding debt to the Financial Creditor. Therefore,
TCP/233/(IB)/CB/2017 is admitted and we order the commencement of the Corporate Insolvency
Resolution Process which ordinarily shall get completed within 180 days, reckoning from the day this
order is passed.
7. We appoint Mr. Dhiren Shantilal Shah, as IRP as proposed by the Financial Creditor. There is no
of corporate insolvency resolution process, for the purposes referred to in Section 14 of the I&B Code,
2016. We order to prohibit all of the following, namely:
1806
Section 19 and for discharging his functions under Section 20 of the I86B Code, 2016.
he could take charge of the Corporate Debtor's assets etc.' and make compliance with this Order as per
the provisions of I86B Code, 2016.
Debtor. The address details of the IRP are as follows:
Mr. Dhiren Shantilal Shah,

Regn No: (IBBI/IPA-001/IP-P00220/2017-18/ 10419)
B-102, Bhagirathi Niwas,
Near Natraj Studio, Sir M. V. Road,
Andheri - East, Mumbai - 400 069.
Email: dss@dsshah.in
Mobile No: 9820073090
1807
CHENNAI BENCH
C.P. (I.B.) No. 634/7/NCLT/CB/2017

Vs.
Respondent: M/s. Vangal Amman Health Services Limited
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. G. Kalyan Jhabakh, Learned Advocate
For Respondents/Defendant: Mr. C. Deivasigamani, Learned Advocate
ORDER
1. Under Consideration is a Company Petition filed by Bank of Baroda (in short,

'Petitioner/Financial Creditor') against M/s. Vangal Amman Health Services Limited (in short,
`Respondent/Corporate Debtor') under section 7 of the Insolvency and Bankruptcy Code 2016 (In short,
Rules, 2016 (for brevity, ÌB Rules 2016') on grounds of respondent's inability to pay debt.
2. The petitioner is Bank of Baroda, a Banking company whereas the Respondent/Corporate Debtor
is a Company registered under the Companies Act, 1956 and engaged in the business of Health Services.
4. The learned counsel appearing on behalf of the petitioner/FC submitted that the Corporate Debtor
availed three credit facilities from the petitioner of TL Rs. 17,00,00,000/-, FITL-I Rs. 2,10,00,000/- and
FITL-II Rs. 4,15,00,000/- amounting to Rs. 23,25,00,000/- current total outstanding amount of Rs.
15,95,00,000/- as on 31.07.2017 date of NPA-07.09.2013 in December, 2015 quarter with back dated
effect (Account is under CDR Mechanism).
1808
of security held of primary Securities, Hypothecation and Collateral Securities of entire current assets of
6. It is further submitted that the petitioner, having awaited for a long period of time for their
legitimate dues and despite the respondent acknowledging its dues to the petitioner, approached this
Adjudicating Authority for the payment outstanding amount of Rs. 15,95,00,0001- as on 31.07.2017 in
the capacity of Financial Creditor under the provisions of the IB Code 2016 and prayed for initiation of
Corporate Insolvency Resolution Process against the Respondent/CD on the grounds of respondent's
inability to pay debt.
7. The learned counsel for the Respondent/CD caused appearance, denied all the allegations
contained and submitted that the petition is not maintainable on the grounds of technical laches as there
are some defects in the Application filed by the petitioner as there are no complete particulars regarding
the loan accounts and default. The Statement of term loan accounts have not been attached to substantiate
the amount due. The Copies of Entries are not in accordance with the Bankers Books Evidence Act, 1891.
He further submitted that the total area of the project land held as security is wrongly stated as 165.43
instead of 1894.02 cents in form-1. Therefore the company petition should be dismissed as the cause of
action has cease to exist and further under the aforementioned scheme, there is no default by the
respondent/CD under section 7 of IB Code, 2016.
requirements as stipulated under the provisions of the IB Code, 2016 and the rules framed thereunder.
evidence placed. Therefore, we are of the opinion that the said objection is not a valid ground of rejection
of the instant petition. In the circumstances, we are inclined to admit the instant application.
10. Therefore, the instant petition is admitted and we order the commencement of the Corporate
11. We appoint Shri. Getticheviyur Venkatraman Ravikumar as Interim Resolution Professional

(IRP) proposed by the Financial Creditor. There is no disciplinary proceedings pending against the 1RP
1809
and his name is reflected in IBBI website. The 1RP is directed to take charge of the
Respondent/Corporate Debtor's management immediately. He is also directed to cause public
announcement as prescribed under Section 15 of the I &B Code, 2016 within three days from the date the
copy of this order is received, and call for submissions of claim in the manner as prescribed.
of corporate insolvency resolution process for the purposes referred to in Section 14 of the I&B Code,
2016 and order to prohibit all of the following, namely :
Directors, Promoters or any other person associated with the management of Corporate Debtor are
admitted.
15. The Petitioner/FC as well as the Registry are directed to send the copy of this Order to IRP so that
Corporate Debtor.
1810
Shri. Getticheviyur Venkatraman Ravikumar

Regn. No: (IBBMPA-001/1P-P00370/2017-2018/10627)
34-36-38 New Hospital Road,
Gobichettipalayam, Erode District
Tamil Nadu
E-mail: ravikumar@gmail.com
1811
CHENNAI BENCH
C.P. (I.B.) No. 586/7/NCLT/CB/2017
Applicants: National Skill Development Corporation

Vs.
Respondent: Everonn Skill Development Limited
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Vikas Kumar, & Mr. Thriyambak J. Kannan, Learned Advocate
For Respondents/Defendant: Mr. Dheeraj Mani, Learned Advocate
ORDER
1. Under Consideration is a Company Petition filed by M/s. National Skill development Corporation
(in short, 'Petitioner/Financial Creditor') against M/s. Everonn Skill Development Limited (in short,
'Respondent/Corporate Debtor') under Section 7 of the Insolvency and Bankruptcy Code 2016 (In short,
'IS Code 2016') r/w Rule 4 of the Insolvency & Bankruptcy (Application to Adjudicating Authority)
Rules, 2016 (for brevity, ÌB Rules 2016').
3. The Petitioner/Financial Creditor is National Skill Development Corporation (NSDC), an entity

under Ministry of Finance and providing financial assistance to skill development agencies for imparting
skill development training. The Respondent is a Company registered under the Companies Act 1956 and
running skill development training centres in India.
4. The learned counsel appearing on behalf of the Petitioner/FC submitted that the National Skill
Development is not for Profit Company. NSDC promotes skill development by catalysing creation of a
number of non-profit vocational institutions. The Corporate debtor is 100% wholly owned subsidiary of
M/s. Everonn Education Limited. The Respondent/CD approached the petitioner and expressed for being
a funded training partner and pursuant to the same, the parties entered into a loan Agreement on
1812
16.03.2011 for providing financial assistance of Rs. 101.34 Crores. As per the agreement the first tranche
of the loan amount of Rs. 41,16,00,000/- was released on 30.04.2011. It was further submitted that the as
per the loan agreement, facility agreements was executed on 16.03.2011 by both the parties. An
irrevocable power of Attorney was executed by the parties wherein the respondent has given absolute
authority to the petitioner to deal with the hypothecated assets of the respondent as it deems fit in the
event of default of repayment of the loan amount. Therefore, since there are no assets of the respondent at
the moment, the hypothecation agreement has no relevance at this point of time. During the period of
January, 2012 to November, 2016 the respondent defaulted in repayment of the loan amount as well as
the interest due to the applicant under the loan agreement. The Applicant/Financial Creditor sent Legal
Notice to Corporate Debtor on 22.08.2016 and 22.11.2016 intimating that an amount of Rs.
22,08,70,628/- was due from the Respondent.
5. The learned counsel for Petitioner further submitted that the above said position as admitted by
the CD was not adhered to and the CD had defaulted as per terms of the loan agreement, hence a legal
notice issued to the respondent for recovery of loan amount of Rs. 22,40,00,791/- (including interest) on
23.01.2017. It is also submitted that in a letter dated 26.05.2017, the respondent replied to the legal notice
dated 23.01.2017 and intimated that the company was going through a financial crunch and wherein the
respondent admitted in the reply that they repaid an amount of Rs. 21.06 crores only. The Bank statement
conforming disbursement and part repayment of loan amount by the respondent and the claim amount of
Rs. 20,69,76,293/- along with applicable interest till date of payment is undisputed by the respondent but
is in fact admitted by the Respondent.
6. Its further submitted that when the Corporate Debtor was unable to pay its Financial Debt which
became due and payable on 23rd January 2017, then petitioner, having been left with no other option
approached this Adjudicating Authority claiming the payment of Rs. 20,69,96,293/- along with applicable
interest towards the Corporate Debtor in the capacity of a Financial Creditor under the provisions of the
1B Code 2016 and prayed to initiate Corporate Insolvency Resolution Process against the
Respondent/CD.
7. The learned counsel for the Respondent/CD caused appearance and submitted that they had
replied to the Petitioners notice dated 23.01.2017 stating that the parent company of the respondent, M/s.
Everonn Education Limited, was in liquidation and that the Provisional Liquidator appointed by the
Hon'ble High court of Madras in CP No. 375 of 2014 had also filed a report seeking to take possession of
all the wholly owned subsidiary companies including the Respondent Company i.e M/s. Everonn Skill
Development Limited.
1813
8. The Official Liquidator filed a Memo inter-alia, stating that respondent company was a party in
CP No. 275/2013 and that the Hon'ble High Court of Madras had appointed a Provisional Liquidator for
the respondent company in the said proceedings and had further granted interim stay for 2 weeks by an
order dated 21.08.2014 in CA No. 819 and 820 of 2014.
9. However, the learned counsel for the respondent has filed a memo dated 14.11.2017 and stating
that CP No. 275 of 2013 was dismissed as withdrawn by the Hon'ble High Court of Madras on
22.12.2015 pursuant to a settlement agreement filed by the parties.
10. 1n relation to above submission, the learned counsel for the petitioner submitted that there is no
pending proceeding, winding up or otherwise, against the Respondent Company as on date. There is no
liquidator, provisional and/or official appointed in respect of the affairs of the respondent company. The
applicant has also provided the respondent/CD the copy of the petition and has filed an affidavit of
service. However, no counter has been filed by the respondent/CD and he has not denied the facts of the
loan and the acts of default as stated in the petition.
requirements as stipulated under the provisions of the IB Code, 2016 and the rules framed thereunder.
evidence. viz. loan agreement, Deed of Hypothecation, Corporate Guarantee, investment agreement and
Account Statements that default has occurred due to the inability to pay by the Corporate Debtor to
service loan together with the interest.
13. Therefore, the instant petition is admitted and we order the commencement of the Corporate
14. We appoint Mr. C. Ramasubramaniam as Interim Resolution Professional (IRP) proposed by the
Financial Creditor. There is no disciplinary proceedings pending against the IRP and his name is reflected
in IBBI website. The IRP is directed to take charge of the Respondent/Corporate Debtor's management
2016 and order to prohibit all of the following, namely :
1814
Directors, Promoters or any other person associated with the management of Corporate Debtor are
admitted.
18. The Petitioner/FC as well as the Registry are directed to send the copy of this Order to IRP to
take charge of the Corporate Debtor's assets etc. and make compliance with this Order as per the
Corporate Debtor.
Mr. C. Ramasubramaniam
Regn. No: (IBBI/IPA-002/1P-N00052/2016-2017110096)
Srinidhi, G4-RMC Flats, No.1,
Venkatespuram Colony,
Vadapalani, Chennai-600026
E-Mail- fcs.rmsAgmail.com
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CHENNAI BENCH
C.P. (I.B.) No. 472/7/NCLT/CB/2017
Applicants: Indian Bank

Vs.
Respondent: BKR Hotels And Resorts Pvt. Ltd.
Judges/Coram:
Counsels:
ORDER
Mr. R. Venkatakrishnan, RP along with his Counsel present and submitted to extend the period of
the Corporate Insolvency Resolution Process for further a period of 90 days under section 12(2) of the
IBC, 2016 on the ground that the Corporate Debtor has filed one Writ Petition No.15627/2017 before the
Hon'ble High Court of Madras. The same was withdrawn on 21.08.2017 and thereafter an appeal was
filed before the Hon`ble NCLAT, New Delhi on 14.09.2017 which has been dismissed on 20.11.2017.
The time period of 90 days will be over on 26.11.2017.
In view of the circumstances and as has been recommended by the CoC in its meeting on
01.11.2017, the time period of the Corporate Insolvency Resolution Process against the Corporate Debtor
is extended for 90 days with effect from 26.11.2017. The order passed on 30.05.2017 shall remain in
operation for a further period of 90 days. Accordingly, CA/44/2017 stands disposed of.
1816

CHENNAI BENCH
C.P. (I.B.) No. 422/7/NCLT/CB/2017
Applicants: Ranganath Spinning Industries

Vs.
Respondent: Guruvayur Spinning Mills Pvt. Ltd.
Judges/Coram:
Counsels:
ORDER
Counsels representing both the parties are present. Counsel for respondent filed an affidavit
stating that the matter has been settled and handed over Demand Drafts for the accepted amount to the
petitioner. The affidavit has been endorsed by the counsel for the petitioner who stated that there is no
objection to close the matter. The affidavit is taken on record. The terms of settlement will be taken as
being a part of this order. In view of the settlement between the parties, the matter is closed.
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CHENNAI BENCH
C.P. (I.B.) No. 623/7/NCLT/CB/2017
Applicants: Indian Bank

Vs.
Respondent: NSR Steels Pvt. Ltd.
Judges/Coram:
Counsels:
ORDER
1. Under adjudication is an Application that has been filed by Indian Bank (hereinafter referred
to as Financial Creditor) under Section 7 of the Insolvency and Bankruptcy Code 2016 r/w Rule 4 of
the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 against M/s.
N.S. R. Steels Private Limited ( hereinafter referred to as Corporate Debtor). The prayer made is to
admit the Application, to initiate the Corporate Insolvency Resolution Process against the Corporate
Debtor, declare moratorium and appoint Interim Resolution Professional (IRP) under the Insolvency
and Bankruptcy Code, 2016 (I&B Code). The counter has been filed by the Corporate Debtor. Mr.
Karthik an Administrative Manager of the Corporate Debtor is present on behalf of the Corporate
Debtor.
2. We have heard the Counsel for Financial Creditor and the Administrative Manager for the
Corporate Debtor and perused the record.
3. The Financial Creditor is claiming outstanding debt to the tune of Rs.36,47,81,328/- as on

22.09.2017. The loan facilities have been extended to the Corporate Debtor under several agreements;
copies of which are placed in the typed set filed with the Application. The amount of loan was given
for manufacturing the steel rolls, as the Corporate Debtor is running the factory and dealing in the
business of manufacturing of steel rolls. The facilities of loan have been extended by the Financial
Creditor to the Corporate Debtor on different dates as stated in the Application. But, the Corporate
1818
Debtor failed to make the payments of the outstanding debt. Therefore, account of the Corporate
Debtor was classified as NPA on 30.06.2015. The statements of accounts are placed at pages 468 to
629 of volume II of typed set filed with the Application. It is established from the record placed on
the file that there is existence of default on the part of the Corporate Debtor.
4. The Corporate Debtor has stated in the counter that the Financial Creditor has suppressed
several material facts and has placed wrong cause of action. It has further been stated that the
Financial Creditor has not come before the Adjudicating Authority with clean hands and the
Application is liable to be dismissed as the same is devoid of merits. However, during the course of
the hearing, Mr. Karthik representing the Corporate Debtor has admitted the fact that there is
outstanding debt, which has not been paid.
5. The Financial Creditor has sent notice under Section 13(2) of the SARFAESI Act, 2002 on
20.07.2015 to the Corporate Debtor, the copy of which is placed at page 433 of the typed set field
with the Application. The Financial Creditor has also placed on file the other required documents.
6. The Application along with the record placed on file has been perused and there is default on
the part of Corporate Debtor in making payment of the outstanding debt to the Financial
Creditor/Applicant.
7. The Financial Creditor has fulfilled all the requirements of law and has also proposed the
name of IRP after obtaining the written consent in Form-2. Therefore, CP/623/(IB)/CB/2017 is
admitted and the commencement of the Corporate Insolvency Resolution Process is ordered which
ordinarily shall get completed within 180 days, reckoning from the day this order is passed.
8. Mr. Venkataramanarao Nagarajan, as IRP is hereby appointed as proposed by the Financial

Creditor. There is no disciplinary proceedings pending against the IRP as evidenced from Form-2 and
his name is reflected in IBBI website. The IRP is directed to take charge of the Respondent Corporate
Debtor's management immediately. He is also directed to cause public announcement as prescribed
under Section 15 of the I&B Code, 2016 within three days from the date the copy of this order is
received, and call for submissions of claim in the manner as prescribed.
9. The moratorium is hereby declared which shall have effect from the date of this Order till the
completion of corporate insolvency resolution process, for the purposes referred to in Section 14 of
the I&B Code, 2016. It is hereby ordered to prohibit all of the following, namely:
1819
debtor in respect of its property including any action under the Securitisation and Reconstruction of
suspended or interrupted during moratorium period. The provisions of Sub-section (1) of Section 14
shall not apply to such transactions, as notified by the Central Government.
11. The IRP shall comply with the provisions of Sections 13 (2), 15, 17 86 18 of the Code. The
Section 19 and for discharging his functions under Section 20 of the I&B Code, 2016.
12. The Financial Creditor and the Registry are directed to send the copy of this Order to IRP so
that he could take charge of the Corporate Debtor's assets etc. and make compliance with this Order
as per the provisions of I86B Code, 2016.
13. The Registry is directed to communicate this Order to the Financial Creditor and the
Corporate Debtor. The address details of the IRP are as follows: -
Mr. Venkataramanarao Nagarajan,

Regn No: (IBBI/IPA-002/IP-N00055/2017-18/ 10107)
New No. 29, Kavarai Street, West Mambalam,
Chennai - 600 033
Tamilnadu
Email: csnagarajan@gmail.corn
Mobile No: 9940111058.
1820

CHENNAI BENCH
C.P. (I.B.) No. 507/7/NCLT/CB/2017
Applicants: Diamond Engineering Chennai P Ltd.

Vs.
Respondent: Shah Brothers Ispat Pvt. Ltd.
Judges/Coram:
Counsels:
ORDER
Mr. V. Mahesh, RP in person present and prayed for extension of time under section 12 (2) of the
IBC, 2016 for another 60 days i.e., till 31.01.2018 so that the Committee of Creditors could consider the
suitable resolution plan(s) for the Corporate Debtor. Counsel for the Operational Creditor is also present
and submitted that he has no objection for extension of the period of time for 60 days. The reasons
mentioned in CA/43/2017 are sufficient for grant of the extension of 60 days. Based on the submission of
the RP, the Counsel for the Operational Creditor and as recommended by the CoC in its meeting on
10.11.2017, the time period is extended for 60 days for submission of the Resolution Plan(s). Therefore,
order dated 06.06.2017 shall remain in operation till 31.01.2018. Accordingly, CA/43/2017 stands
disposed of.
1821
CHENNAI BENCH
C.P. (I.B.) No. 628/7/NCLT/CB/2017
Applicants: M R Ventures
Vs.
Respondent: M/s. Royal Splendour Development Private Limited
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. M. Sunil Kumar, Learned Advocates
ORDER
1. Under Consideration is a Company Petition filed by M/s. M R Ventures (in short,

'Petitioner/Financial Creditor') against M/s. Royal Splendour Developers Private Limited (in short,
`Respondent/Corporate Debtor') under section 7 of the Insolvency and Bankruptcy Code 2016 (In short,
Rules, 2016 (for brevity, ÌB Rules 2016').
3. The Petitioner/FC is a Partnership Firm, having its registered office at No. 9, Trevelyan Basin
Street, Sowcarpet, Chennai600079 and carrying on business in finance in the name and style of M/s. M R
Ventures whereas the Respondent/CD is a Private Limited Company incorporated under the provisions of
the Companies Act 1956 and having its registered office at No.9, Ganapathy Colony, Guindy Industrial
Estate, Chennai600032.
4. Shri. Sunil Kumar, the learned counsel appearing on behalf of the petitioners/FC submitted that
the Respondent had approached the petitioner expressed its requirements for financial assistance for
constructions needs to advance a loan of Rs. 50,00,000/- for its business purposes and promised to
discharge the same by executing an on-demand Promissory note with interest @ 24% p.a as stipulated by
1822
the petitioner. Accordingly, the petitioner advanced a sum of Rs. 50,00,000/-as loan payable on demand
by of cheques/ details of which are mentioned in the petition.
5. It is further submitted that the respondent having received the credit facility, acknowledged the
same by and under receipt dated 13.06.2014 forwarding the Promissory Note executed on 13.06.2014 by
the Directors of the respondnet company. It is further submitted that on demand of the petitioner for
repayment of monies advanced, cheque favouring petitioner for the sum of Rs. 5,00,000/- each were
executed by the Directors of the respondent company. Also, on the instruction and with the consent of
respondent, the petitioner presented the aforesaid cheques for collection with HDFC Bank, Sowcarpet
Branch on 02.06.2016. The aforesaid cheques have been returned by the Bank for the reason of
"Insufficient Funds". Thereafter, the petitioner intimated the relevant facts to the respondent by way of
Legal notice dated 28.06.2016 as required under section 138 r/w 142 of the Negotiable Instruments Act
1881 and called upon them to pay the monies within 15 days of receipt of the said notice.
6. It is also submitted that the respondent even thereafter defaulted in payments, hence the petitioner
issued a statutory notice dated 13.01.2017 upon the respondent under section 434 of the Companies Act
1956 (correspondingly to section 271(2)(a) of the companies Act, 2013) calling for repayment of the
monies due.
7. The learned counsel finally submitted that when the Corporate Debtor was unable to pay its
Financial Debt despite several reminders, the petitioner, having been left with no other option but to
approach this Adjudicating Authority claiming the payment of Rs. 7,57,1871- including interest towards
the Corporate Debtor in capacity of a Financial Creditor under the provisions of the IB Code 2016 and
8. Before proceeding the matter, it is necessary to mention herein that a final chance was given to
Respondent for appearance before this Adjudicating Authority but they failed to appear on 04.12.2017.
The Respondent neither gave a reply to the Demand Notice dated 08.04.2017 nor filed any counter nor
caused appearance before this Adjudicating Authority in spite of several notices. The petitioner has also
placed on record proof of sending notices and its deliveries. The Petitioner has complied with all the
requirements as stipulated under the provisions of the I&B Code, 2016 for the purpose of initiating
9. After hearing submissions of the counsel for the petitioner and having perused the record, this
Adjudicating authority is satisfied that the petitioner has proved by placing overwhelming evidence viz.
Cheques alongwith memo, statutory notice etc. that the respondent defaulted in payment of dues on
various occasion to the petitioner. We are of the opinion that the petitioner has established clearly that the
1823
amount in default is genuine and is supported by the documentary evidence placed before this
Adjudicating authority. In the circumstances, we hereby admit the instant Petition.
10. The instant petition is admitted and we order the commencement of the Corporate Insolvency
order is passed.
11. We appoint Shri. Arumugam Arumugam as Interim Resolution Professional (IRP) proposed by
the Financial Creditor. There is no disciplinary proceedings pending against the IRP and his name is
reflected in IBBI website. The IRP is directed to take charge of the Respondent/Corporate Debtor's
management immediately. He is also directed to cause public announcement as prescribed under Section
15 of the I&B Code, 2016 within three days from the date the copy of this order is received, and call for
2016. I order to prohibit all of the following, namely :
1824
admitted.
Corporate Debtor.
Shri. Arumugam Arumugam

Regn. No: (IBBI/IPA-003/IP-N00094/2017-2018/10936)
No. 1/56, Market Road, Kelambakkam,
Chennai-603103
E-Mail: arumuru2008@gmail.corn
Mobile No. 8015240147
1825
CHENNAI BENCH
C.P. (I.B.) No. 515/7/NCLT/CB/2017
Applicants: Summer India Textiles Mills Pvt. Ltd.

Vs.
Respondent: State Bank of India
Judges/Coram:
Counsels:
ORDER
1. Representative for RP present and filed CA/54/2017 in CP/515/IB/2017. Counsel for State Bank
of India present. Counsel for Mr. Asai Thambi, Managing Director present and submitted that he is
handicapped as he does not have instructions from his client.
2. The allegation in the application is that Mr. Asai Thambi, MD and Mr. S.S. Prabhakaran, General
Manager-Finance (GM-F) of the 1st Respondent Company are not co-operating with the RP. It has been
submitted by the representative for the RP that due to non-cooperation of the MD and GM-F, the RP is
not in a position to provide the basic information to be shared in the form Information Memorandum in
terms of Regulation 36 (1) of Insolvency and Bankruptcy Board of India (Insolvency Resolution Process
for Corporate Persons) Regulations, 2016, with the Members of the Committee of Creditors.
3. The copies of the Financial Statements for the period 2014-15 and 2015-16 have been provided
which are of 4th September, 2015 and 2nd September 2016 respectively and relevant audit reports given
are also back dated respectively. The Corporate Debtor refused to provide the books of accounts, soft
copy of the account maintained in the tally, which has created doubt in the minds of the Committee of
Creditors and accordingly, the appointment of forensic audit was initiated specifically keeping in mind
the provisions of Section 43 (Preferential Transactions), Section 45 ( Avoidance Undervalued
Transactions) and Section 50 (Extortionate Transactions) all read with Section 66 (Fraudulent Trading or
Wrongly Trading) of the IBC, 2016.
1826
4. On 11th October, 2017, the MD and GM provided print outs of books of accounts on specific
ledgers and other documents, but refused to provide the soft copy of the accounts. However, on
14.10.2017, the OM has concocted a story that the accounting software is infested with virus, and hence,
the same has crashed and therefore, they are unable to provide the soft version of the same. When the
auditors have gone for the audit on 27.10.2017 for physical verification of the books, vouchers and
documents and further to verify the genuineness of the claim of the Corporate Debtor with regard to the
virus attack, MD warned the auditors against entering the premises of the Registered Office of the
Corporate Debtor.
5. Accordingly, the Chartered Accountants/Forensic Auditors in the third meeting of Committee of

Creditors presented their report which inter alia summarised their difficulty in conducting the audit
without the soft copy of the accounts.
6. Due to the non-cooperation of the MD and GM, the Committee of Creditors in its third meeting
dated 07.11.2017, resolved that the RP should initiate action under Section 19 of the I86B Code of the
2016 and to seek complete soft copy of the account of the Financial year 2008-09 to 2016 to 17 and from
1st April, 2017 to 20th November, 2017.
7. Having stated so, the following reliefs have been claimed by the RP under para 9-11:-
a. To provide the complete soft copy of accounts maintained in the tally, all physical books
of accounts, documents and vouchers maintained in the registered office and all other units of the
company for the financial years 2008-09 to 2016-17 and from 01st April, 2017 to 30th November,
2017.
b. To provide all assistance, inputs and information to the forensic auditors and to permit
them to enter the premises and complete the audit.
c. To direct the Respondent No.1 / Corporate Debtor to cooperate with the Applicant /
Resolution Professional / agencies / auditors and provide all necessary information in terms of
Section 43 (Preferential Transactions), Section 45 (Avoidance of Undervalued Transactions) and
Section 50 (Extortionate Transactions) of the IBC, 2016.
d. To provide access to the Applicant/ Resolution Professional and / or persons /

professionals / agencies / auditors appointed by him in carrying out their duties under the CIRP.
e. To direct the Respondent No.1 / Corporate Director to cooperate with the Resolution
Professional and provide all necessary information as would be required to render his duties as
per Section 25 of the IBC, 2016.
1827
7. As seen from the order dated 04.08.2017, it has been observed that the Corporate Debtor has been
making efforts to stall the resolution process commenced on 13.06.2017 and did not provide the relevant
records to the RP for the performance of his duties. There is non-cooperation and creation of legal
hurdles by the Corporate Debtor. Again the allegations have been levelled against the MD and GM-F for
noncooperation with the RP. In view of the above and the prayers made by the RP, Mr. Asai Thambi,
MD and Mr. S.S. Prabhakaran, GM-F of the 1st Respondent Company are directed to co-operate with the
RP by providing the documents and relevant information as stated in the relief clause of the application
under adjudication.
8. Mr. Asai Thambi, M.D. and Mr. S.S. Prabhakaran, GM-F of the 1st Respondent Company are
directed to file affidavits on 19.12.2017 before this Adjudicating Authority after making compliance with
this order. Put up on 19.12.2017 at 10.30 A.M.
1828

CHENNAI BENCH
C.P. (I.B.) No. 551/7/NCLT/CB/2017
Applicants: Dnepro Advisory Pvt. Ltd.

Vs.
Respondent:
Judges/Coram:
Counsels:
ORDER
Counsel for the Applicant present. Counsel for IRP also present. Counsel for the Applicant submitted to
withdraw the petition. The prayer is allowed. The Application is dismissed as withdrawn.
1829
CHENNAI BENCH
C.P. (I.B.) No. 649/7/NCLT/CB/2017
Applicants: A. Pandian
Vs.
Respondent: Kothari Industrial Corporation Ltd.
Judges/Coram:
Counsels:
ORDER
1. Under adjudication is an Application that has been filed by Mr. A. Pandian (hereinafter referred
to as `Financial Creditor') under Section 7 of the Insolvency and Bankruptcy Code 2016 r/w Rule 4 of the
Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 against M/s. Kothari
Industrial Corporation Limited (hereinafter referred to as 'Corporate Debtorl. The prayer made is to admit
the Application, to initiate the Corporate Insolvency Resolution Process against the Corporate Debtor,
declare moratorium and appoint Interim Resolution Professional (IRP) under the Insolvency and
Bankruptcy Code, 2016 (I86B Code).
2. Heard the Counsels for Financial Creditor and the Corporate Debtor and perused the record.
3. The case of the Financial Creditor is that the Corporate Debtor had approached the Financial
Creditor for short term advances for the purpose of trading in rock and phosphate. Based on the
assurances and representations of the Corporate Debtor, the Financial Creditor had advanced money
during the period from 04.01.2013 to 19.06.2014.
4. The Counsel for the Financial Creditor has referred to the loan amount statement dated
31.12.2014, which is placed at page 109 of the typed set filed with the Application, wherein the detail of
the loan advanced to the Corporate debtor are given. The total amount that has been disbursed is Rs.
1,25,00,000/-- out which the Corporate Debtor has made payments on several dates amounting to
1830
Rs.97,00,000/- and the balance amount due as on 10.06.2013 was Rs.28,00,000/-. As on 31.12.2014, the
total amount after calculating interest @ 18% p.a. became Rs.49,20,305/- which now have become
Rs.66,67,271/- (including further interest).
5. The Counsel for the Financial Creditor has also referred to the document placed at page 104 of
the typed set filed with the Application, which has been signed by the General Manager (Finance) of the
Corporate Debtor, wherein the liability amounting to Rs.44 Lakhs as loan facility availed from the
Financial Creditor has been admitted, the Corporate Debtor was willing to transfer some loan in favour of
the Financial Creditor in lieu of the payment of the loan amount. The document has been signed on
07.03.2014. It has also been submitted by the Counsel for the Financial Creditor that in order to pay the
debt two Cheques were issued by the Corporate Debtor to the Financial Creditor amounting to
Rs.28,00,000/- and Rs.16,14,210/- each on 30.09.2014, which were dishonoured on 23.12.2014, for
which a separate proceedings under Section 138 of the Negotiable Instruments Act, 1881 have already
been initiated against the Corporate Debtor. The photo copy of the Cheques are placed are pages 105 and
106 of the typed set filed with the Application.
6. Counsel for the Corporate Debtor filed the counter and submitted that the document dated
07.03.2014 has been signed by the Executive of the Company wrongly for which a separate action has
been initiated against him. When a query was raised by this Bench about the Cheques which were signed
by the Chairman and authorized signatory of the Company, the Counsel for the Corporate Debtor
submitted that the Financial Creditor has manipulated all the documents. However, the Counsel for the
Corporate Debtor has not been able to show any documentary evidence that the Cheques have been
manipulated or letter dated 07.03.2014 has not been written by the executive of the Corporate Debtor.
Therefore, the submissions made by the Corporate Debtor are devoid of merits and stand rejected.
7. The Application along with the record placed on file has been perused and there is default on the
part of Corporate Debtor in making payment of the outstanding debt to the Financial Creditor/Applicant.
8. The Financial Creditor has fulfilled all the requirements of law and has also proposed the name
of IRP after obtaining the written consent in Form-2. Therefore, CP/649/(IB)/CB/2017 is admitted and
the commencement of the Corporate Insolvency Resolution Process is ordered which ordinarily shall get
completed within 180 days, reckoning from the day this order is passed.
9. Mr. C. Ramasubramaniam, as IRP is hereby appointed as proposed by the Financial Creditor.

There is no disciplinary proceedings pending against the IRP as evidenced from Form-2 and his name is
reflected in IBBI website. The IRP is directed to take charge of the Respondent Corporate Debtor's
management immediately. He is also directed to cause public announcement as prescribed under Section
1831
15 of the I&B Code, 2016 within three days from the date the copy of this order is received, and call for
10. The moratorium is hereby declared which shall have effect from the date of this Order till the
completion of corporate insolvency resolution process, for the purposes referred to in Section 14 of the
I86B Code, 2016. It is hereby ordered to prohibit all of the following, namely:
Section 19 and for discharging his functions under Section 20 of the I&B Code, 2016.
IP Registration No.IBBI/ IPA-002 / IP-N00052 / 2016-
2017/10096,
‘SRINIDHI’ G4 RMC Flats
1832
By Hon’ble NCLT Guwahati Bench
1833
Order Passed under Sec 7
GUWAHATI BENCH
C.P. (I.B.) No. 37/7/NCLT/GB/2017

Vs.
Respondent: Palogix Infrastructure Pvt. Ltd. & Ors.
Judges/Coram:
Hon'ble Sh. P K Saikia, Member (J)
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. R. Banerjee & Mr. V. Jhunjhunwala,, Learned Advocates
For Respondents/Defendant: Ms. M. Bhuteria, Mr. R. Gupta and Ms. S. Mukherjee, Learned Advocates
ORDER
Hon'ble Sh. P K Saikia, Member (J)
1. This Proceeding has been necessitated in view of two divergent orders, passed by the learned
Members of NCLT, Kolkata Bench in C.P.No.37/2017. While Mr V.P. Singh, learned Member (J)
directed that application be returned to the applicant for rectifying the defects notified in the order, Mr. S.
Vijaraghavan, learned Member (Technical) was of the opinion that the application was duly filed and, as
such, same is required to be admitted.
2. Facts leading to filing of C.P.No.37/2017 may be narrated in a narrow campus as follows:
3. ICICI Bank, a bank incorporated under the laws of India with its registered office at ICICI Bank
Tower, Near Chakli Circle, Old Padra Road, Vadodara 390 007, Gujarat, India and a Regional Office at
ICICI Bank House, 3A Gurusaday Road, Kolkata, had filed an application under Section 7 of the
Insolvency and Bankruptcy Code, 2016 (for short, Code of 2016) read with Rule 4 of the Insolvency and
Bankruptcy (Application to Adjudication Authority) Rules, 2016 ( in short, Rules of 2016) against
Palogix Infrastructure Private Ltd., a company incorporated under the laws of India with its registered
office at 86 B/2, Topsia Road, Gajraj Chambers, Kolkata.
4. In the application, aforesaid 10101 Bank, (hereinafter referred to as financial creditor), has
alleged that it had sanctioned a term loan to the tune of Rs.111 crores to M/s Palogix Infrastructure
Private Ltd., (hereinafter referred to as the corporate debtor). Out of the aforesaid loan amount, an amount
1834
to the tune of Rs.65,60,00,000/- was disbursed to the Corporate Debtor. The dates of disbursement of
loan, given in instalments, has been described in detail in the application. According to the financial
creditor, on 31.12.2016, an amount to the tune of Rs.32,21,97,699.06 remains as outstanding debt since
the Corporate Debtor defaulted in repayment of the loan in accordance with schedule fixed earlier.
5. In the application, it has been stated that the first default occurred on 26.06.2016 and thereafter,
on 30.06.2016. In such circumstances, financial creditor, through its attorney, has filed an application
under Section 7 of the Code of 2016 read with Rule 4 of the Rules, 2016 seeking initiation of resolution
process as contemplated in the Code of 2016 which was registered as CP No. 37/2017.
6. On the same day, a copy of the application was sent for delivery to the Corporate Debtor as
required under Rule 4 of the Rules, 2016. On hearing both the parties, the learned Members, NCLT,
Kolkata Bench rendered orders expressing divergent views on the qualification of attorney holder to
initiate proceeding under Section 7 of the Code of 2016.
7. have perused the orders aforesaid and found that without any notice having been served on it, the
corporate debtor entered appearance and objected the application on the ground that the Attorney who had
filed the application under Section 7 did not have the requisite power to initiate a resolution process under
Section 7 of the Code of 2016. In that connection, it has been stated that the power of attorney in question
did not at all authorise the attorney holder Sri Srinjoy Bhattacharjee to initiate aforesaid proceeding.
8. In support of such contention, it has been pointed out that the Code of 2016 was brought into
existence in 2016 whereas the Power of Attorney was executed on 20.10.2014. The Code of 2016, it is
argued, contemplated and also put in place a whole lot of new ideas and conceptions vis-a vis the
recovery of debt etc. due from various debtors which include the corporate debtors as well. What is
however, important to note is that it has also prescribed very special procedures for realisation of such
debts etc. which were mostly unknown to the Statutes holding the field till the time of coming into
operation of Code of 2016.
9. In such a complex scenario, on the date of executing the power of attorney in favour of Sri
Srinjoy Bhattacharjee, ICICI Bank (herein after also referred as to donor) could not have contemplated
even remotely about authorizing Sri Srinjoy Bhattacharjee (hereinafter referred to as donee), to initiate
corporate insolvency resolution process under the section 7 of Code of 2016, and that too, in the capacity
of the financial creditor as contemplated section 5(7) of Code of 2016.
10. In support of such contention the decision in Shantilal Khuslaldas and Bors Pvt. Ltd Vs Smt
Chandanbala Sughir Shah and Another -reported in (1993) 77 Comp Cas 253 as well as the decision in
1835
Coromandel International Ltd V Chemcel Biotech Ltd, reported in (2011) 166 Comp Cas 676 were relied
on. In both those cases, it was held that it is a settled principle of law that the power of attorney needs to
be interpreted strictly, reason behind such principle being that the powers given are not abused by agent
or the actions are restricted within an only to the extent the power is indicated or given.
11. In the aforesaid cases, it was held that when the donor of a power of attorney had authorised the
donee to initiate suits, the donee, being armed with such a power of attorney, cannot initiate a winding up
proceeding since a winding up proceeding under the company law can never be equated with a suit. The
relevant part of Coromandel International Ltd (supra) is reproduced below:
"A suit for recovery of money is essentially a suit between the parties where no third party can seek any
indulgence or impleadment. The proceedings under the Companies Act for winding up are entirely
different, a special remedy provided for and the idea is not to restrict the proceedings to the parties alone
and its range is widened and all steps taken in winding up proceedings are in public interest. Sometimes
the relief for winding up is denied when it is against public interest".
The settled principle is that the power of attorney must be strictly construed, the rationale behind the
principle being that the powers given are not abused by agent or the actions are restricted within an only
to the extent the power is indicated or given".
12. Refuting such contentions, learned counsel for the financial creditor argued that the power of
attorney in question had very specifically empowered Sri Srinjoy Bhattacharjeet to do varieties of acts
which clearly included the power to initiate a resolution process under Section 7 of the Code of 2016 as
well. The fact that under the power in question, the attorney holder was authorised to institute suit/
winding up proceeding/ other proceeding even before a whole lot of authorities including High Court
/CLB / NCLT makes such a conclusion inescapably inevitable
13. According to the learned counsel for the financial creditor, the decisions, relied on by the counsel
for the corporate debtor, have no application to the proceeding in hand since the facts and circumstances
in the cases, relied on, and facts and circumstances in the case, before the Tribunal, are fundamentally
different inasmuch as in the case in hand, the power of attorney had clearly authorised the Attorney to
institute all kinds of suits or proceedings including a winding up proceeding/insolvency
proceeding/bankruptcy proceeding , and that too, even before the NCLT. However, such facts are
conspicuously lacking in the cases, referred to from the side of the corporate debtor.
14. On hearing the learned counsel for the parties, the learned Members rendered, as stated above,
two divergent opinions on the competence of the attorney holder to initiate the proceeding under section 7
1836
of the Code. While the learned Member (Technical) did not find any fault in attorney holder's initiating a
proceeding under section 7 of the Code, the learned Member (Judicial) upheld the objection, raised,
holding that the Attorney holder did not have the required competence to initiate the proceeding under
consideration.
15. For ready reference, relevant parts of the orders, rendered by learned Member (J) and Learned
Member (T) are reproduced below:
Order by: (Member) (J)
"In this case, general power of attorney is in favour of Shri Srinjoy Bhattacharjee which was given on
20.102014 to commence and institute any proceedings before any Court of Law including National
Company Law Tribunal, but this power of attorney cannot be treated as specific power of attorney to
initiate Corporate Insolvency Resolution Process under the Insolvency & Bankruptcy Code, 2016. The
law laid down by the Hon'ble High Court is relating to the winding up cases which were moved under the
Companies Act, 1956 and the provisions of IBC , 2016 are quite different. But in Corporate Insolvency
proceeding also, the lis is not only between the Financial Creditor and the Corporate Debtor. Once the
petition is admitted, the creditors, contributors, shareholders, etc. seek redress in the proceedings and
even oppose proceedings. Upto this extent, insolvency proceedings are also like winding up proceedings
which not only restrict the proceedings to the parties alone and its range is widened and all steps taken in
insolvency proceedings are in public interest. A power of attorney must be strictly construed the rationale
behind the principle being that the powers given are not abused by the agent and its actions are restricted
within and only to the extent the power is indicated or given.
In the above circumstances, in my view, specific authorisation to initiate Corporate Insolvency Resolution
Process is needed. It also appears from the application that the applicant has not filed any affidavit in
support of the application. Therefore, the applicant has also to submit affidavit in support of the
application. Notice be issued to the applicant petitioner to ratify the defect in the application within seven
days of receipt of such notice. List on dated 15/2/17 for FO."
Order by : Member) (T)
1 beg to differ from the Ld. Judicial Member in this respect proceedings made under Section 7 of the
Insolvency & Bankruptcy Code, 2016 does not necessarily lead to liquidation of the Corporate Debtor.
Under sub-section (1) of Section 20, the Interim Resolution Professional shall make every endeavour to
protect and preserve the value of the property of the corporate debtor and manage the operations of the
corporate debtor as a going concern. It may lead to liquidation or winding up, in case no viable
1837
Insolvency Resolution Plan could be evolved in consultation with the Committee of Creditors. Moreover,
in this case, the applicant is a bank which necessarily deals with huge number of loan accounts. The
power of attorney mentioned above clealy mentions that the Legal Manager is empowered to initiate
proceedings under the NCLT which automatically includes its role as an Adjudicating Authority under
I.B. C. In case, this is insistent upon in every petition under the IBC, involving a Financial Creditor that
the petition be filed on the basis of a specific power of attorney on a Board's Resolution, it will defeat the
very purpose of the IBC Code; which is for speedy resolution of insolvency cases.
The facts of the outstanding loan and the defaults have been established by the petitioner as evidenced by
the records. The Ld. Counsel for the Corporate Debtor had not expressly denied these facts and as such
the petition deserves to be admitted.
In my view, the petition is to be admitted and the Interim Resolution Professional (IRP) may be appointed
as per section 16 of the Insolvency & Bankruptcy Code, 2016. The applicant may also proceed with the
compliance of section 13 and 14 of the IBC pertaining to declaration of moratorium and public
announcement.
The judgment of the Hon'ble High Courts referred to by Ld. Counsel for the Corporate Debtor
specifically deal with the winding up proceedings under the Companies Act only".
16. Following such divergence of opinions between the learned Members of NCLT, Kolkata, the
Hon'ble President, NCLT was pleased to constitute a special Bench to decide the aforesaid point over
which the learned Members of NCLT, Kolkata were in disagreement. For ready reference, the relevant
part of the letter dated 20.02.2017 from Registrar NCLT, New Delhi addressed to the Hon'ble Members is
reproduced below:
"I am directed to convey that Hon'ble President is pleased to constitute following Bench to decide the
matter regarding passing of different orders in Company Petition 37/2017 under section 7 of the
Insolvency & Bankruptcy Code 2016 by Shri Ojai Pratap Singh, Member (Judicial) and Shri S.
Vijaraghavan, Member (Technical) NCLT Kolkata.
NCLT, Special Bench at Guwahati.
Justice Shri P.K.Saikia, Member (Judicial)
17. This is how the present proceeding cropped up before NCLT, Guwahati Bench.
1838
18. The counsel for the parties, I find, reiterated the arguments which had they advanced before the
learned members of the NCLT, Kolkata Bench. Mr R. Banerjee, learned Sr. Counsel for the financial
creditor, has vehemently contended that the power of attorney, under which one Shri Srinjoy
Bhattacharjee was constituted as attorney of ICICI Bank had given him unqualified and absolute power to
do various acts which obviously included the power to initiate corporate insolvency resolution proceeding
under section 7 of the Code of 2016 as well. A very careful reading of the power of attorney in question
makes it abundantly clear.
19. In that connection, it has been stated that the power of attorney is required to be read as a whole
in order to understand true intent, meaning and purport of such power of attorney. In support of his
contention, the learned counsel for financial creditor has relied on the decision of Hon'ble Privy Council
in the case of Bank of Bengal vs. R. Chetty, reported in PC 1915reported in 1915 PC 527.
20. In the aforesaid case, it was held that where an act purporting to be done under the power of
attorney is challenged as being in excess of the authority to confer the power of attorney, it is necessary to
show that on fair construction of the whole instrument, the authority in question is to be found within the
four corners of the instruments either in express terms or by necessary implication. The relevant part of
the judgment is reproduced below:
"Applying to the power in the present case the canon of construction laid down in Bryant, Powis and
Bryant, Ld. V. La Banque du Peuple (1) viz.-"that where an act purporting to be done under a power of
attorney is challenged as being in excess of the authority conferred by the power, it is necessary to show
that on a fair construction of the whole instrument the authority in question is to be found within the four
corners of the instrument, either in express terms or by necessary implication," their Lordships consider
that the authority to enter into transactions of the nature in dispute is to be found in the document itself by
necessary implication from the nature of the business, with the general management of which the agent
was entrusted. Without such authority it would hardly have been possible to carry on the business of a
money-lender and financier."
21. According to Mr. Banerjee a harmonious reading of various clauses in the power of attorney,
more particularly, clauses 3, 4 and 5, would undoubtedly show that under the power of attorney in
question, the financial creditor gave his attorney full and complete authority to file any suit/ winding up
proceeding, and, more importantly, the "proceeding of any kind whatsoever", and that too, before any
Court/ Tribunal including the NCLT.
1839
22. Referring to clause 9 of the power of attorney, it has also been submitted that under the power,
the donor thereof had also authorized the donee to initiate insolvency/ bankruptcy proceeding even before
the NCLT. Being so, when one reads the power of attorney in question taking into account all the facts
and circumstances, specified therein in their proper perspective, there cannot be any escape from the
conclusion that Shri Srinjoy Bhattacharjee (donee) had required competence or authority to initiate a
proceeding even under the Section 7 of the Code of 2016.
23. It is also the case of the financial creditor that there was no provision in the Code of 2016
requiring the Tribunal to issue notice to the corporate debtor giving the later an opportunity to object the
initiation of a proceeding under section 7 of the Code and as such, the corporate debtor has no right,
whatsoever, to point out any defect in the petition, so filed by financial creditor before the NCLT under
Section 7 of the Code aforesaid.
24. As stated above, such contentions were strenuously disputed by Mrs Manju Bhutoria, the learned
counsel appearing for the corporate debtor stating that the argument advanced from the side of petitioner
is structured entirely on surmises and conjectures, and not, on law and logic. In that connection, it has
been pointed out that the Code of 2016 was brought into existence in 2016 whereas the power of attorney,
aforesaid was executed on 20.10.2014.
25. Learned counsel for the corporate debtor further submits that Code of 2016 contemplated a
regime for recovery of debt etc which is fundamentally different from all the regimes which had been
holding the field before coming into operation of the Insolvency and Bankruptcy Code of 2016.
Therefore, on the date of execution of the power of attorney in favour of Shri Srinjoy Bhattacharjee, the
donor could not have contemplated, even distantly, about authorizing the donee to initiate action under
the Code of 2016. In support of such contention, the counsel for the corporate debtor has relied on the
decisions, which were already placed before the learned members of NCLT, Kolkatta Bench
26. Replying to the contention that the corporate debtor has no right of hearing at the stage of
initiation of a process under section 7 of the Code, it has been contended that since with the initiation of
the proceeding under section 7 of the Code, the corporate debtor stands to suffer a whole lot difficulties of
enormous size and nature, the process under section 7 of the Code cannot be initiated without giving the
corporate debtor an opportunity of hearing, more particularly, to show that no debt , as contemplated in
law, was not due from such debtor.
1840
27. In support of such contention, my attention has been drawn to the decision of the Apex Court in
the case of Automotive Tyre Manufacturers Association vs. Designated Authority & Ors., reported in
(2011) 2 SCC 258. Both the sides have, however, submitted their written synopsis of arguments as well.
28. Since both the parties heavily relied on the power of attorney and since the power of attorney has
been interpreted by the parties in their own way to advance their respective case, in order to appreciate the
rival submission, I find it necessary to have a look at the relevant part of the Power of Attorney. For ready
reference, the relevant parts of the same which have huge bearing on the question before this court are
reproduced below:
4) To appoint pleaders, advocates and solicitors to appear and act on behalf of ICIC1 Bank in any
Court of justice or Tribunal or Recovery Officer or before any revenue and/or Income-tax, Gift-
tax, Wealth-tax, Recovery, Refund, Appellate, Assistant Commissioner, Income-tax, Tribunal,
Company Law Board/ National Company Law Tribunal and/or before other forums and/or other
officer or officers and to revoke such appointment and to substitute any others in their place and
stead.
5) To sign, verify and execute all vakalatnamas, plaints , recovery applications, written statements,
counter-claims, complaints, petitions, company petitions, winding up petitions, appeals, reviews,
applications, affidavits, power of attorney and papers of every description that may be necessary
to be signed, verified and for the purpose of any suit, proceeding for recovery or for enforcement
of security or for preservation and protection of security, original application, interim
applications, miscellaneous application, intervener application, notice of motion, action, appeals
and proceedings of any kind whatsoever in any court of Law and/or Tribunal and/or Recovery
Officer, including but not limited to High Court/National Company Law Tribunal/Company Law
Board, whether of original, appellate, testamentary or revisional jurisdiction, established by
lawful authority or before the Income-tax, Gift-tax, Wealth-tax, Recovery, Refund, Appellate,
Assistant Commissioner or Income-tax Tribunal and to do all acts and appearances or
applications to any such Court/Tribunal or Courts and forums aforesaid in any suits, action,
appeals or proceedings and all information of complaints that it shall or may be had, brought or
commenced and to defend, answer or oppose the same or suffer judgment or decrees to be had,
given, taken or pronounced in any such suits, action, appeals, proceedings, bills, information or
complaints as the said Attorney shall be advised or my think proper and to execute
decrees/Recovery Certificates or any other certificate/order for recovery of dues and also to bid
at auction sales or to authorize all agents or sub-agents to bid at auction sales and purchase the
1841
property of the said auction sales, to make withdrawals of decretal amounts or sale proceeds
from any court/Tribunals or appoint authorized agents or sub-agents to do the same.
6) To appear before all Civil, Criminal, revenue, judicial and quasi-judicial officer or officers
exercising administrative functions and before all local and public or other bodies and
authorities as the occasion may require.
7) To cause these presents to be registered in the books of any bank, company or corporation
whatsoever or in any public or government office or elsewhere as occasion may require.
8) To concur in doing any of the acts and things hereinbefore mentioned in conjunction with any
other person or persons or parties interested in the premises.
9) To attend meetings of creditors in insolvency or bankruptcy or winding up matters of any
borrower or debtor and to vote at such meetings and to accept composition and to take such
proceedings as the said Attorney shall or may think proper.
10) To exercise all rights and privileges and perform all duties which now or hereinafter may
appertain to IC/CI Bank as holder of debentures, shares or securities or as otherwise interested
in any company or corporation".
29. However, before proceeding further, I find it necessary to have a look at the decision, rendered by
Hon'ble Madras High court in the case of P. M. Desappa Nayanim Varu and Ors Vs Ramabhaktula
Ramiah and ors where Hon'ble Madras High court, amongst other things, had the occasion to consider the
law relating to interpretation of power of attorney. For ready reference the relevant part is reproduced
below: -
Para 3.....The principle governing the construction of a power of attorney are succinctly stated in
Bowstead on Agency (sixth edition). The learned author says as follows as Page 73, "Powers of attorney
must be strictly pursued, and are construed as giving only such authority as they confer expressly or by
necessary implication. The following are the most important rules of construction:
01. The operative part of the deed is controlled by the recitals.

02. Where authority is given to do particular acts, followed by general words, the general words are
restricted to what is necessary for the proper performance of the particular acts.
03. General words do not confer general powers, but are limited to the purpose for which the
authority is given, and are construed as enlarging the special powers when necessary and only
when necessary for that purpose.
04. The deed must be construed so as to include all medium powers necessary for its effective
execution".
1842
30. Now, the question is "whether the power of attorney in question had ever bestowed upon the
attorney holder the necessary authority to initiate a proceeding U/s 7 of the Code." In order to reply such a
query, one needs to take into consideration several facts and circumstances which occurred soon before
and after the execution of power of attorney in question since all those facts and circumstances have huge
bearing on the outcome of the present proceeding.
31. In this connection, one may note here that when the power of attorney was executed on 20.10
2014, the Companies Act 2013 has already been in operation. One may also note here that the
Companies Act 2013 has brought numerous changes to the Act of 1956.Thus, the abolition of CLB and
substitution of it by NCLT is one of such important changes brought about by the Act, 2013.
32. It is also worth noting that under the Companies Act, 1956, the matters pertaining to arbitration,
compromise, arrangement and reconstruction and winding up of the companies etc. were entrusted to
High Court/District Court whereas some other matters, such as, oppression and mismanagement etc were
left to be decided exclusively by the CLB.
33. However, with the repeal of the Act of 1956, the matters, such as, arbitration, compromise,
arrangement and reconstruction and winding up of the companies, which were earlier dealt with by the
High Court/District Court, are entrusted to NCLT for disposal in accordance with the procedures,
prescribed therein or the Rules, framed there-under. Similarly, with enactment of Act of 2013 and on the
abolition of the CLB, the matters, triable by CLB, are also entrusted to NCLT for disposal.
34. But then, in so far insolvency of corporate debtor or liquidation thereof as well as insolvency and
bankruptcy individual and partnership firm are concerned, the situations have undergone sea change
following the enactment of the Insolvency and Bankruptcy Code, 2016. This is because of the fact that a
complete new regime in respect of insolvency /bankruptcy of corporate debtor, individual and partnership
firm has been put in place under the Code of 2016. More importantly, such a regime establishes detailed
procedures for realisation of purposes for which such a system was brought into existence.
35. Equally importantly, the Code of 2016, amongst other things, constituted different Adjudicating
Authorities to deal with the matters incorporated therein. Thus, for the adjudication of corporate
insolvencies/liquidation etc, an Adjudicating Authority is constituted. Similarly, for the adjudication
corporate insolvencies/bankruptcy of individual/partnership firm, another Adjudicating Authority is also
created.
36. Quite significantly, the Code of 2016 also prescribes detailed but separate procedures for each of
such Authorities for realisation of such conceptions/ objects etc which were, however, almost unknown to
1843
he old regime. A careful perusal of various provisions in the aforesaid Code makes such a conclusion
inevitable.
37. One may note here that though the procedures for adjudication of insolvency and liquidation for
corporate person etc, or the procedures for adjudication corporate insolvencies/ bankruptcy of individual/
partnership firm under the Code of 2016 have some resemblances to some of the procedures, prescribed
for winding up of the companies under the Companies Act, 1956, yet, in many other respects, procedures,
prescribed there-for, under the Code of 2016, are radically different from the procedures, prescribed under
the old Act.
38. Situations being such, in my considered opinion, the procedures for adjudication of insolvency
and liquidation for corporate person etc, or the procedures for adjudication of corporate
insolvency/bankruptcy of individual/partnership firm under the Code of 2016 can never be equated with
the proceeding for winding up/ insolvency/liquidation of the companies under the Act of 1956. In other
words, the procedures vis-à-vis winding up/insolvency/liquidation of the companies etc. under the Act of
1956 and the procedures for insolvency/liquidation etc under the Code of 2016 are not one and same.
39. One may note here that under the power of attorney in question, the author thereof had bestowed
various power on the attorney appointed thereunder which included the power to initiate winding
proceeding as well. But then, in view of our foregoing discussion, its needs to be concluded conclusively
that the power, so given to the attorney under the instrument above, can never be stretched to embrace the
power to initiate a corporate insolvency resolution proceeding under section 7 of the Code of 2016.
40. The above conclusion of mine draws unfettered support if one views the dispute before us from a
yet another angle. Section 5 (1) of the Code says that Adjudicating Authority for the purpose of the Part II
of the Code means NCLT, constituted under Companies Act 2013. Similarly, Section 79 (1) of the Code
says that Adjudicating Authority for the purpose of the Part III of the Code means DRT, constituted under
the Recovery of Debts due to Banks and Financial Institutions Act 1993.
41. Thus, it is quite clear that Code of 2016 itself constituted two totally new classes of Adjudicating
Authorities for purpose of adjudication of the matters, covered by the Code, aforesaid and such
Authorities were even not in existence when the power of Attorney was executed on 20.10.2014. All
these speak loud and clear that under no circumstances, the power of attorney in question can be said to
have authorised the attorney, appointed there-under, to initiate a corporate insolvency resolution
proceeding under section 7 of the Code.
1844
42. It may also be stated here that the learned counsel for the financial creditor has laid enormous
reliance on the clause 9 of the power of attorney to contend that under such power, attorney concerned,
was clearly authorized to initiate insolvency or bankruptcy proceeding under the Code of 2016. But such
contention is found to be too farfetched one. Our foregoing discussion has made it more than clear and it
needs no further restatements.
43. Even otherwise too, such argument hardly holds any water. This is because of the fact that under
the instrument in question, the attorney was authorized only "to attend meetings of creditors in insolvency
or bankruptcy or winding up matters of any borrower or debtor and to vote at such meetings and to accept
composition and to take such proceedings as the said Attorney shall or may think proper".
44. Such authorization, therefore, can never be construed to mean that under the power, the attorney
was also authorized to initiate insolvency or bankruptcy proceeding, as contemplated in the code of 2016.
In that view of the matter, the contention of the learned counsel for the financial creditor, premised on
clause 9 of the power of attorney, being found without any substance, is required to be rejected.
45. In view of our foregoing discussion, I have no doubt, whatsoever, in my mind that when the
financial creditor executed the power of attorney in question on 20.10.2014, he could not have visualized
even remotely that the donee would be required, one day, to initiate a corporate insolvency resolution
proceeding under the Code of 2016 which, as stated above, was not even in existence in 2014.
46. It may be stated here that the broad facts and circumstances in the case in hand are very similar to
the facts and circumstances in P.M. Desappa Nayanim Varu & Ors. vs. Ramabhaktula Ramiah & Ors.,
reported in AIR 1952 Mad 559. Therefore, one may also peruse profitably the decision, rendered by
Hon'ble Madras High Court in the case of P.M. Desappa Nayanim Varu (supra).
47. In Desappa Nayanim Varu's case (supra), the plaintiff had executed a power of attorney in favour
of person empowering him to institute a suit before the Court of Munsiff, Tirupathi. Accordingly, a suit
was filed before the court aforesaid. However, the Court of Munsiff had found that the suit was beyond
pecuniary jurisdiction of the court and, therefore, it was returned to the plaintiff to file the same before the
proper court.
48. Accordingly, attorney had filed a suit before the Court of Subordinate Judge at Chitoor on the
basis of power of attorney, executed earlier. But the Court of Subordinate Judge at Chitoor dismissed the
suit on holding that the attorney holder did not have requisite competence to institute a suit before the
Subordinate Judge's Court of Chittoor since the said power of attorney gave the attorney to authority to
initiate a suit only before the Court of Munsiff, Tirupathi and not beyond.
1845
49. The matter was then carried to Hon'ble Madras High Court by the way of an appeal challenging
the order of the Subordinate Judge's Court at Chitoor. On hearing the parties, Hon'ble Madras High Court
had found reason to affirm the decision of the Subordinate Judge. The relevant part of the judgment is
reproduced below:
"This power of attorney is a special power conferred on Narayanaswami Naidu for a particular purpose.
It says that the plaintiffs filed 0. S. No. 314 of 1943 on the file of the Court of the District Munsif of
Tirupathi & as it was not possible for them to conduct the same personally they appointed
Narayanaswami Naidu as an agent to conduct the said suit. He is also authorised to conduct the entire
proceedings which, have to be taken in the said suit. The document therefore confers an express power on
Narayanaswami Naidu to conduct a particular suit pending in a particular Court. It does not expressly
engage the attorney for the purpose of conducting the litigation generally in respect of the plaint schedule
properties. But Mr. Ramaswami Ayyangar argued that such power must be inferred by necessary
implication; as if the plaint is returned for want of jurisdiction or for any other similar reason, some such
power is necessary to enable the power of attorney to re-present the plaint and conduct the suit in a
proper forum. If that were the intention' of the parties, they would have expressly conferred such power
also. Further it cannot be assumed that the parties contemplated any such contingency as when the
plaintiffs filed the suit they must have filed it only on the basis that that Court had jurisdiction to entertain
and dispose of the suit. If the contention put forward on behalf of the appellants is accepted, the Court
will be introducing new words in the power of attorney and also confer a new power on him. When the
plaintiffs expressly authorised Narayanaswami Naidu to conduct a suit in a particular Court. I cannot
hold that they intended to empower Narayanaswami Naidu to conduct that suit in any other Court. I
am therefore constrained to hold, on a fair construction of the express words used in the power of
attorney, that Narayanaswami Naidu has no power, under the power of attorney, to institute and
conduct the suit in the Subordinate Judge's Court of Chittoor. In my view the conclusion arrived at by
the Subordinate Judge is correct.
50. In my view, the law, laid down in P.M. Desappa Nayanim Varu's case (supra), is clearly
applicable to our case since the fundamental facts of both the cases are very similar. Being so, I have no
hesitation in holding that Shri Srinjoy Bhattacharjee did not have requisite authority to initiate the
proceeding under section 7 of the Code, 2016 against the corporate debtor.
51. It may be noted here that the counsel appearing for corporate debtor contends that the proceeding
in hand cannot be initiated without giving the Corporate Debtor a fair chance of hearing. Such
opportunity, contends counsel for the Corporate Debtor, is required to be given so that it can establish that
1846
no debt, as contemplated in 5(8) of the Code of 2016 remains outstanding from the side of Corporate
Debtor on the dates, so specified in the application.
52. Such contention is opposed to by the learned counsel for the financial creditor stating that this
Special Bench was constituted only to answer only one question and same being, if, under the power of
attorney in question, the attorney holder had necessary competence to present an application under section
7 of the Code and nothing else. He, therefore, urges this court not to try such a query which does not fall
for consideration of this Special Bench.
53. I have considered the rival submissions on this count and found the learned members of NCLT,
Kolkata Bench rendered divergent opinions only on one point, same being, whether the power of attorney
had given holder thereof the required competence to initiate a proceeding under section7 of the code, and,
on no other point. That being so, this Special Bench is required to decide only such a question and no
others.
54. A perusal of the orders rendered by the learned Members of the NCLT, Kolkata Bench makes it
clear. Therefore, this Bench has no occasion or the authority to embark upon the question which is sought
to be presented before this court by the learned counsel for the corporate debtor.
55. In view of the foregoing discussions, I have found reason to concur with the finding arrived at by
the learned Member (J) while differing respectfully from the conclusion, reached by the learned Member
(T), NCLT, Kolkata Bench.
56. Resultantly, the reference is answered as stated above.
57. Registry is directed to send immediately the record along with a copy of the order to the NCLT,
Kolkata Bench for doing further needful with intimation thereof to the President, NCLT, New Delhi.
1847
By Hon’ble NCLT Hyderabad Bench
1848

HYDERABAD BENCH
C.P. (I.B.) No. 16/7/NCLT/HDB/2017
Applicants: M/s. Indian Bank

Vs.
Respondent: Kamineni Steel And Power India Private Limited
Judges/Coram:
Hon'ble Sh. Rajeswara Rao Vittanala, Member (J)
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. V. K. Sajith, Learned Advocate
For Respondents/Defendant: Mr. E Ajay Reddy and Mr. K. Ravi Kumar Chary, Learned Advocates
ORDER
Hon'ble Sh. R ajeswara Rao Vittanala, Member (J)
1. The Insolvency and Bankruptcy Petition was filed by Indian Bank (Financial Creditor) to initiate
Corporate Insolvency Resolution Process Under section 7 of the Insolvency and Bankruptcy Code, 2016
read with Rule 4 of Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 to
initiate Corporate Insolvency Resolution Process.
2. It is stated that Indian Bank along with other banks granted loans to Kamineni Steel and Power
India Private Limited as follows:-
S.No Limit (Rs. In Crores)
Name of the Bank

Term Loans WC FB & NFB Total
1 Indian Bank 333.77 103.64 437.41
2 Oriental Bank of 178.94 58.94 237.88

Commerce
3 Karur Vysya Bank / JM 133.65 68.52 202.17
Financial
1849
4 Allahabad Bank 106.08 39.33 145.41
5 Indian Overseas Bank 212.16 78.78 290.94
6 Central Bank of India 156.16 57.62 213.78
7 Andhra Bank 202.89 68.54 271.43
8 Bank of Maharashtra 87.74 29.63 117.37
TOTAL 1411.39 505.00 1916.39
However, Kamineni Steel and Power India Private Limited failed to pay the loan extended by the above
said Banks and committed a default. The total default of the bank is Rs.335,32,10,602.10 (Rupees Three
Hundred and Thirty Five Crores Thirty Two Lakhs Ten Thousand Six Hundred and Two Rupees Ten
Paisa) together with future interest and costs from 31.01.2017 till the date of payment.
3. Heard Sh. V.K. Sajith, Learned Counsel for Financial Creditor and Sh. E.Ajay Reddy along with
Sh.K.Ravi Kumar Chary, Learned Counsels for the Corporate Debtor.
4. The Learned Counsel for Corporate Debtor submits that he has filed CP(IB) No.11/10/HDB/2017
under Section 10 of the Insolvency and Bankruptcy Code, 2016 read with Rule 7 of Insolvency and
Bankruptcy (Application to Adjudicating Authority) Rules, 2016 by interalia seeking to initiate Corporate
Insolvency Resolution Process in respect of Kamineni Steel and Power India Private Limited.
5. Kamineni Steel and Power India Private Limited filed a memo dated 17.02.2017 stating that the
Hon'ble Tribunal has passed an Order under Section 13(1)(a) for the purposes mentioned in Section 14
and appointed Mr. Chodavarapu Bala Mouli, as an Interim Resolution Professional (IRP). Thus, the
Corporate Insolvency Resolution Process commenced with effect from 10.02.2017. In pursuant to the
above order, the IRP has already made public announcement in Form A in newspapers viz., the Hindu and
Saakshi on 16.02.2017 and the public announcement was also displayed on Insolvency and Bankruptcy
Board of India (IBBI) website, calling for submission of claims from all creditors including employees
and workmen etc by fixing time limit as 24.02.2017. Hence, the present petition is not maintainable and
liable to be dismissed.
1850
6. The Learned Counsel for Corporate Debtor further submitted that the Company has also served a
copy of NCLT order dated 10.02.2017 to Branch Manager and as well as to Chief Manager/Authorized
Officer, Indian Bank, main Branch, Surabhi Arcade, koti, Hyderabad, vide letter dated 13.02.2017 against
their acknowledgement dated 16.02.2017. Hence, the Hon'ble Tribunal may not admit the petition made
by Indian Bank under Section 7 of IBC as the Corporate Insolvency Resolution Process (CIRP) was
already initiated by IRP.
7. The Learned Counsel for Corporate Debtor also submitted that the Indian Bank is one among the
Eight member banks of the consortium and also the leader bank with a share of about 20% of the total
debt of the eight lenders (viz., Indian Bank, Oriental Bank of Commerce, Allahabad Bank, Indian
Overseas Bank, Central Bank of India, Andhra Bank, Bank of Maharashtra and Karur Vysya Bank/JM
Financial Asset Reconstruction Company Private Limited) and the Indian Bank is part and parcel under
the present Corporate Insolvency Resolution Process (CIRP)
8. Today the Learned Counsel for Financial Creditor has filed a memo dated 20.02.2017 by inter-
alia stating that it has come to the knowledge of the Financial Creditor that on 06.02.2017 the Corporate
Debtor has filed an application vide CP(IB)No.11/10/HDB/2017 under section 10 of the Code, to initiate
Corporate Insolvency Resolution Process against the Corporate Debtor and Hon'ble Tribunal after hearing
the matter was pleased to admit the same on 10.02.2017 and further passed on Order under section
13(1)(a) declaring moratorium period in accordance with section 14 of the Code.
9. The Learned Counsel for Financial Creditor further submits that in view of Hon'ble Tribunal's
order dated 10.02.2017 declared moratorium period under section 14 of the Code, which prohibits
institution of any kind of proceeding against the Corporate Debtor, the Financial Creditor seeks the
permission of Hon'ble Tribunal to withdraw the captioned Application under Rule 8 of the Insolvency and
Bankruptcy (Application to Adjudicating Authority) Rules, 2016.
10. In view of that CP(IB) No. 16/07/HDB/2017 is dismissed as withdrawn.
No order as to costs.
1851
HYDERABAD BENCH
C.P. (IB) No. 19/7/NCLT/HDB/2017
Appellants: Dr. B.V.S. Lakshmi

Vs.
Respondent: M/s. Geometrix Laser Solutions Private Limited
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. K. Arun Kumar
For Respondents/Defendant: Mr. KV Simhadri & Ms. Suchithra
ORDER
1. The present Company Petition (which is herein after referred to as Company petition) bearing No.
CP(IB)/19/7/HDB/2017 is filed by Dr. BVS Lakshmi, a financial creditor, (hereinafter referred to as
Petitioner/applicant ) under Section 7 of the Insolvency and Bankruptcy Code, 2016, read with Rule 4 of
the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016, by interalia seeking
directions to initiate Corporate Insolvency Resolution process, in the matter of GEOMETRIX LASER
SOLUTIONS PRIVATE LIMITED, (which is herein after referred to as Company') in accordance with
the provisions of IBC, 2016; appoint Interim resolution professional , award cost etc.
2. The case was first listed on 22.02.2017, whereby Mrs. BVS Lakshmi was present, and Mr. A.V. Raghu
Ram accepted notice on behalf of Respondent and at the request of both the parties, the case was posted to
28.02.2017. On 28.02.2017, Mr. K. Arun Kumar appeared on behalf of Petitioner but none appeared for
the Respondents. Subsequently, on 01.03.2017, the learned counsel for the Petitioner submitted that due
amount was not paid to the Petitioner till date, while the Learned Counsel for the Respondent denied the
claim itself The Bench directed the Learned Counsel for the Respondent to furnish any proof with regard
to payment of claim in question, and adjourned the matter to 03.03.2017. Again on 03.03.2017, the
Learned Counsel for the Respondent requested time, and finally on 08.03.2017 both the counsels argued
and reserved for orders. Since the Tribunal cannot refuse time, when parties requested reasonable time to
assist it, the case was adjourned on the above dates duly following principles of natural justice.
1852
3. The brief facts of the case, as set out in Company petition along with material papers filed , are as
follows:
a) M/s Geometrix Laser Solutions. Private Limited , the Respondent Company, is a Company
incorporated under the provisions of Companies Act, 1956 on 5the January, 2006 with the Registrar of
Companies, A, P. Hyderabad presently having Authorised and paid up Capital of Rs.3, 90,00,000/-.
b) The petitioner contends that the Company is liable to make payment to the Petitioner a sum of Rs.
91,47,864/- (Rupees Ninety One Lakhs Forty Seven Thousand Eight Hundred Sixty Four only) together
with Interest at rate of 18% per annum (calculated from the date of each disbursement until the date of re-
payment) and legal costs incurred by the Petitioner on this behalf.
c) The Petitioner, in support of her claim, relied upon the Company's Annual Audited Financial
Statements filed with the Registrar of Companies to establish her claim spread over the three years period
from March 2014 to March 2016. The petitioner has furnished the following details of her claims, which
she claims Acknowledged Debts:
(i) Debt owed as on 31/03/2014
The annual audited accounts of the Respondent Company for the year 2013-14 for the full set of audited
financial statements discloses a sum of Rs. 38,74,767.00 (Rupees Thirty Eight Lakhs Seventy Four
Thousand Seven hundred sixty seven) as being due to the Petitioner shown under the heading Dr. B.V.S
Lakshmi. The sub-ledger in the name of Dr B V S Lakshmi for the year 2013-14 shows the amount owed
as Rs 41,04,391.00 (Rupees Forty one lakhs four thousand three hundred ninety one only). The Petitioner
relies upon on the Sub-ledger (ignoring the error in the Unsecured Loans Schedule in the Balance Sheet)
to establish her claim. So Petitioner claims Rs 41,04,391.00 (Rupees Forty One Lacs Four Thousand
Three Hundred Ninety One only) as due as on 31/03/2014.
(ii) Debt owed as at 31/03/2015
The annual audited accounts of the Respondent Company for the year 2014-15 discloses a sum of Rs.
89,85,792.00 (Rupees Eighty Nine Lakhs Eighty Five Thousand Seven Hundred Ninety Two) as being
due to the Petitioner herein under the heading Dr. B.V.S Lakshmi. The Sub-ledger in the name of Dr. B V
S Lakshmi for the year 2014-15 shows the amount owed as Rs 75,03,462.00 (Rupees Seventy Five Lakhs
Three Thousand Four Hundred Sixty Two only) represents what is owed by the Company to Dr B V S
Lakshmi group, comprising four persons. To that extent, the Petitioner relies on the sub-ledger (ignoring
1853
the error in the Unsecured Loans Schedule in the Balance Sheet) to establish her claim. Therefore the
acknowledged debt of the Petitioner stands at Rs 75,03,462.00 (Rupees Seventy Five Lakhs three
thousand four hundred Sixty Two only) as on 31/03/2015.
(iii) Debt Owed as at 31/03/2016
Similarly, the annual audited accounts of the Respondent Company for the year 2015-16 discloses a sum
of Rs 79,36,737/- (Rupees Seventy nine Lakhs Thirty Six Thousand Seven hundred thirty seven only) as
being due to the petitioner herein under the heading Unsecured Loans from Director. This is patently
incorrect, as Dr BVS Lakshmi is NOT a Director of the Company. Further, if we proceed from the
acknowledged debt of Dr B V S Lakshmi as on 31/03/2015 standing at Rs 75,03,462.00 (Rupees Seventy
Five Lakhs Three Thousand Four Hundred Sixty Two only).
d) The petitioner contends that during the year 2015-16, no repayments were made out of the said Rs.
75,03,462.00 to the Petitioner. Whereas, the Petitioner advances the following sums on the following
dates to the Respondent Company:
23/10/2015 Rs 12,50,000.00(by cheque)
23/10/2015 Rs 2,50,000.00 (by cash)
21/12/2015 Rs 1,00,000.00 (by cheque)
Sub-total Rs 16,00,000.00
Further, the Petitioner also claimed the following expenses:
30/10/2015 Rs 22,934.00 (as Travel & Conveyance)
04/11/2015 Rs 15,468.00 (as expenses incurred on behalf of the Respondent Company)
31/12/2015 Rs 6,000.00(as paid to Mr Prem Prasad, an employee on Co .behalf)
Sub-total Rs 44,402.00
Grand total Rs 16,44,402.00 (advances + expenses)
Consequently, the amounts owed to Petitioner as on 31/03/2016 ought to stand at:
1854
Carried over from 31/03/2015 Rs 75,03,462.00
Added during 2015-16 Rs 16,44,402.00
Less any repayments during 2015-16 Rs Nil
Owed to Petitioner as on 31/03/2016 is Rs 91,47,864.00
e) The Petitioner, therefore, contends that while the Audited Financial Statement of the Company as on
31/03/2015 correctly reflect the amounts owed on the Petitioner, the Audited Financial Statements as on
31.03.2016, are mischievously and wrongly conceived as Rs 79,36,737.11. The difference of Rs
12,11,127.00 remains un-explainable.
f) The petitioner contends that several other related transactions were incorrectly and mischievously
shown as loans given/ re-paid against several names, including those of Ms Kalyana Hyma and Dr B V S
Lakshmi. None of these disclosures are genuine. All of these are fabricated statements in order to show
that the Petitioner was paid all her dues. So the petitioner wants the Company put to strict proof of
establishment of re-payments of loans to her during the FY 2015-16.
g) As the Company did not pay the dues as mentioned above, she got issued a statutory notice dated 7th
September, 2016 to the Respondent Company, under Section 434 of the Companies Act, 1956
corresponding to Section 271(2) of the Companies Act, 2013 demanding it to repay the entire amount of
Rs 91, 47,864.00 with Interest 18% per annum failing which, it was warned that appropriate proceedings
for winding up would be initiated.
h) In pursuant to the above legal notice, the Respondent Company got issued a reply dated 26th
September, 2016 through their counsels Sri. AV Raghuram that the Accounts of petitioner as on
31.05.2015 was history and, it has been repaid and or adjusted as desired by the Petitioner, and the
Petitioner ceased to be a creditor of the Company and thus denied any dues to the Petitioner much less
interest.
i) Since the petitioner could not get any repayment of her dues, even after the said legal notice, the
Petitioner has approached the Hon'ble High Court for the State of Telangana and AP by filing Company
Petition bearing C.P. No. 408 of 2016, under section 433(e) & (f) R/w Sections 434(1)(a) & 439 of the
companies Act, 1956 by seeking the following reliefs:
1855
a) That M/s. Geornetrix Laser Solutions Private Limited, the Respondent herein, may be wound up by this
Hon'ble court under the provisions of Sections 434, 435 & 436 the Companies Act, 1956.
b) The Official Liquidator High Court, Hyderabad or some other fit and propel person be appointed as
liquidator of the Respondent with all powers under the provisions of the Companies Act. 1956.
c) That, pending disposal of the main company petition, the official liquidator attached to this Hon'ble
Court be pleased to appointed as Provisional Liquidator of the Respondent Company i.e. Geometrix Laser
Solutions Private Limited.
However the above CP was withdrawn by the petitioner reserving her liberty to file a fresh petition before
the Company Law Tribunal. Accordingly, the Hon'ble High court dismissed the Company petition as
withdrawn by an order dated 13th December, 2016. Subsequently, the present petition is filed by seeking
the relief as stated supra.
4. The respondents have filed an Interim reply affidavit dated 28th day of February, 2017 by interalia
contending as follows:
a. All the allegations are denied as not correct and not tenable. The applicant has not come to the Hon'ble
Tribunal with clean hands to claim the equitable relief of the corporate insolvency resolution process
under the provisions of the insolvency and Bankruptcy Code, 2016 and the same is not maintainable
either in law or on facts.
b. It is contended that Respondent Company was incorporated on 5th January, 2006 with Promoter
Directors, Mr. Pulipaka Kedarnath and Mrs. BVS Lakshmi (Petitioner herein). The main object of the
Company is to carry on business as a laser job shop providing services to the industry in India and abroad
contributing to advancement of Indian industry in science and technology.
c. The Petitioner has suppressed several material facts of the issue. She has not stated/disclosed her status
as Promoter Director. To conceal fact of Promoter Director, she has fabricated crucial and relevant
documents wilfully and wantonly in Memorandum and Articles of Association, issued by Registrar of
companies by changing her name as Promoter Director to that of her daughter's name i.e., B. Kalyana
Hyma. This is utter false statement and the fact remains that she was the founder Director of the
Respondent Company and memorandum of association supports the same. She has submitted her
resignation by letter dated 14.3.2007.
1856
d. The Petitioner has also suppressed the criminal complaint filed by Respondent Company's Managing
Director, against the petitioner, before the Commissioner of Police, Hyderabad 27.08.2016, which was
registered under FIR No. 202/2016, under Section 406,420,468, 471 of IPC. In the Complainant, it is
alleged that the signature of another Founder Director, Mr. Pulipaka Kedarnath was forged, apart from
other illegal activities, which are of serious in nature.
e. The Petitioner failed to pay any supported documents to prove that she is a financial creditor, more
particularly the Respondent Company constituting as a Debtor, to claim any legally enforceable debt
against Respondent Company. It is stated that the Petitioner was well aware that Respondent Company
itself is entitled to recover an amount of Rs.88,32,727.05/- from the Petitioner and her daughter, Mrs.
B.Kalyana Hyma. It is also stated that the law also recognizes and permit the parties to set-off under
Order VIII, Rule 6 of CPC. Apart from that, as stated above, there is a Criminal complaint pending
against the Petitioner.
f. It is further stated that the Petitioner was the Managing Director of M/s Supriya Granites Private
Limited (currently under liquidation). The Punjab National Bank has filed OA. No.629/2002 before DRT,
Visakhapatnam against M/s Supriya Granites Private Limited (D1). BVS Lakshmi (D2/Petitioner herein)
and Ors by seeking to pass an Order-cum-certificate against the Defendants therein directing them to pay
a sum of Rs.1,80,11,735.50/- together with further interest of 12.25%. The said OA was partly allowed by
an order dated 19.10.2007, by interalia directing D1 and D2 to pay the amount and disallow the relief
against D3 to D8, and also permitted to sale the scheduled properties in that application.
Aggrieved by not allowing all the reliefs claimed in the original application and allowing only against D 1
& D 2 , the Punjab National Bank has filed Appeal No. 23 of 2014/899, 1480/67 before the Hon'ble
DRAT, at Kolkata. After hearing the case, the appeal was allowed by setting aside the negative portion of
DRT with regard to the claim against D3 to D8 by order dated 29.1.2015.
g. In pursuant to the above proceedings, the Punjab National bank has addressed a letter dated 14.11.2016
to MD of Respondent Company by interalia stating that Supriya Granites Private Limited, Vijayawada,
for which Smt. BVS Lakshmi, Managing Director (the petitioner herein) has availed the credit facilities
for her company i.e. Cash Credit (Hyp) Rs.20 lakhs, Term Loan Rs.8.15 Lakhs, Bridge Loan Rs. 5 Lakhs,
FLC Rs. 64 Lakhs, Bank Guarantee Rs. 10 Lakhs, Bill Purchase Rs. 8.50 Lakhs. The said limits were
availed for the Company from erstwhile New Bank of India. Suryaraopet, Vijayawada during the year
1989. Subsequently, the said bank was merged with Punjab National Bank.
1857
It is stated, that despite repeated legal notices, reminders, court summons, Dr BVS Lakshmi and her
husband have not paid any amount in pursuant to the DRT order as mentioned above. Therefore, the Bank
requested the Respondent Company to inform them the complete details of shareholdings/debentures held
by the Petitioner and her husband in Respondent Company and also requested not to transfer any of their
shareholdings, etc to any third party.
h. The Respondent relied upon on judgments of Hon'ble Supreme Court's in IBH Health Vs. Info-Drive
Systems (CA No. 8230/2010), wherein the Hon'ble Chief Justice Sri Kapadia made the following
observations:
"The Company Court cannot be 'maliciously' used as a 'debt collection agency', and that an action may lie
in appropriate Court in respect of the injury to reputation caused by maliciously and unreasonably
commencing liquidation proceedings against a Company and later dismissed when a proper defence is
made out on substantial grounds.: This Judgment. may ensure that a winding-up petition is scrutinized
more carefully before it is admitted"
i. The Respondent further submits that the Petition itself is not in proper format, and even the notice
issued by the Counsel is not as postulated in the Insolvency and Bankruptcy Code, 2016 and its rules
made there under, more particularly, NCLT Form-V and therefore, on this ground alone, the Petition is
not maintainable in law.
j. It is also submitted that, Respondent Company is a running Company, and it has no liabilities or claims
from any secured creditors including the Banks, and it is meeting all the expenses of salaries to its
employees and staff and payment of revenue to the Government, if any orders are passed in the present
case, it will affect the smooth functioning of the Company.
5. We have heard Sri K.Arun Kumar, the learned counsel for the petitioner, and Sri K.V.Simhadri, the
learned counsel for the respondent, and have carefully considered various pleadings and along with
material papers filed by the respective parties.
6. The Learned Counsel for the Petitioner, while retreating all the averments made in the Petition, and in
the accompanying documents, including legal notice, has further submitted as follows:
(a) In pursuant to the legal notice, the Respondent Company has not only failed to repay the due in
question but totally denied the claim itself in their legal notice in their reply dated 26.09.2016. On the
1858
contrary, they are making counter stating they have set off the dues in question, and the petitioner herself
is due to them to the extent of Rs.33,07,136/-.
(b) The Learned Counsel further submits that the claim made in the Petition is a specified debt, and it
cannot simply be disputed basing on untenable grounds. The dues in question still to be paid. The
Criminal complaint made by the Respondents against the Petitioners is frivolous and they have given
suitable replies to the queries.
(c) The Learned Counsel also relied upon the judgements of the Hon'ble Karnataka High Court, rendered
in State Bank of India Vs Hegde and Golay Limited vide citation (1988) CompCas 581(Kar), ILR 1987
Karnataka 2496.
In this case, the main issue was the appointment of provisional liquidator u/s 433 of Companies Act,
1956. The Hon'ble High court of Karnataka has considered various issues arise out of Winding up
petitions. The Hon'ble High court has referred various decisions/judgements of various courts including
National and international. One of the judgements referred in this case, which is some extant relevant to
the present case is Madhusudhan Gordhanadas and Co. V. Madhu Wollen Industries P.Ltd. (
MANU/SC/0033/1971, wherein it is interalia held Where the debt is undisputed, the court will not act
upon a defence that the Company has the ability to pay the debt but the Company chooses not to pay the
particular debt "
Another finding given in this case relates to maintaining a Civil Suit and Winding up proceedings and
held it there is no bar for it. Limitation issue with reference to acknowledgement of debt in balance sheet
and the relevance of facts stated on the date of filing petition/instituting a case would have any bearing on
the subsequent change of facts and law on the issue etc.
As stated above, these issues have hardly had any bearing on the present case. As stated supra, the
petitioner herself is the promoter Director and naturally associated with several financial affairs of
Respondent Company. There is no accepted/un-disputed debt in the instant case, and on the other hand,
the petitioner herself is due to the Company.
d) Another judgement of Hon'ble High Court of Andhra Pradesh, rendered in Vikas Jahn Vs Nucon
Industries Private Limited (1998(5)ALD402, 1998(3)AnWR686, [2001] 103CompCas343(AP)
This is a case filed under Section 433(c) of the Companies Act for winding up the Respondent Company
on the ground of its inability to pay debt. The question considered in the case was whether debt in
1859
question was genuine and whether respondent Company has got a bonafide and probable defence to make
on facts and law and when the set off plea was available to other parties. The Hon'ble High court, on
examining the entire issue including evidence found that the debt in question was found to be bonafide.
In the instant case, facts are totally on different footing. As stated above, the petitioner is former founder
Director of the Company and several financial transactions in the course of business of Company stated to
be transacted and the petitioner has relied upon selective balance sheets of the Company to make her
claim. The alleged debt could not be substantiated. It is not in dispute that the daughter of petitioner
(Hyma) was also a director of Company. The petitioner has not raised that set off in question is legal or
not. So the above case is not applicable to the present case
7. Shri K.V.Simhadri, the Learned Counsel for the Respondent, while reiterating the contentions raised in
the interim reply filed, has further contented that the Petitioner is not at all a financial creditor and no
amount what so ever was due to the Petitioner; on the other hand, after setting off, the Petitioner herself is
due to the Company. She was also given suitable reply. He has also filed several documents alleging
illegal acts on the part of petitioner and resorted to manipulation of the records of the Company. And the
Respondents have also filed a Petitioner. The petition is also is not maintainable, as the present cause of
action arises prior to the IBC came into force.
8. The learned counsel further submit that Petitioner has not come to this Tribunal with clean hands as she
has suppressed several material facts so as to create factious cause of action to file the present petition.
The Petitioner has gone to the High Court seeking to wind up the Company in order to satisfy her selfish
ends. However, for the reasons best known to the Petitioner, She has withdrawn the petition and
subsequently filed the present petition. The Petitioner even did not state her status in the Respondent No.1
Company, and tried to show her daughter in the records of the Company by manipulating the records.
9. The Learned Counsel further states that the Petitioner herself along with her husband suffered an order
passed by DRT as mentioned above and also avoiding to repay the amounts as ordered by the DRT. But
she is trying to malign the Respondent Company and filing frivolous complaints against the Company.
10. The Learned Counsel also relied up on the judgement of the Hon'ble Principal Bench rendered in
Nikhil Mehta & Sons (HUF) & Others Vs AMR Infrastructures Limited.
This case was also instituted by a Financial Creditor. The Hon'ble Tribunal, after discussing entire law
with regard to definition of `Financial Creditor and Financial Debt, has inter alia held that merely some
assured amount of return has been promised, and it stands beached, such a transaction would not acquire
1860
the status of a 'financial debt as the transaction does not have the consideration for the time value of
money, which is a substantive ingredient to be satisfied fulfilling requirements of the expression
'Financial Debtor. Ultimately, the Hon'ble Principal Bench has dismissed the application as the applicant
did not cover the definition of Financial Creditor' and 'Assured terms 'as required to invoke Section 7 of
IBC.
Though the facts of above case are different from the present case, but the present petition was also filed
invoking same Section 7 of IBC and thus interpretation of section is relevant for the present case.
11. The Hon'ble Supreme Court in Amalgamated Commercial Traders Private Limited Vs A.C.K.
Krishnaswami (1965) 35 Company Cases 456 (SC), held as follows:
"It is well-settled that a winding up petition is not a legitimate means of seeking to enforce payment of the
debt, which is bonafide disputed by the company. A petition presented ostensibly for a winding up order
but really to exercise pressure will be dismissed, and under circumstances may be stigmatized as a
scandalous abuse of the process of the court".
12. In the light of above discussion of the case, the following issues arise for consideration in the case:
a) Whether the petitioner/applicant come under the definition of Section 7 of IBC as Financial Creditor so
as to invoke insolvency proceedings against the Company;
b) Whether the petitioner is bonafide in claiming the relief;
c)If so, what is the relief, the petitioner is entitled for.
13. Firstly, we will deal with the scope of jurisdiction of Tribunal in dealing with initiation of Insolvency
Proceedings under IBC, 2016.
14. It is more or less an accepted proposition of law that bankruptcy forums are forums of summary
proceedings, and they cannot get into complex questions of dispute over a debt or a claim, as that will be
the domain of civil courts. The Hon'ble Supreme Court of India in the case of IBA Health Private Limited
Vs Infodrive Systems Sdn, Bhd., (2010) 10 SCC 553, held as follows:-
`The question that arises for consideration is that when there is a substantial dispute as to liability, can a
creditor prefer an application for winding up for discharge of that liability? In such a situation, is there not
a duty on the Company Court to examine whether the company has a genuine dispute to the claimed debt?
A dispute would be substantial and genuine if it is bona fide and not spurious, speculative, illusory or
1861
misconceived. The Company Court, at that stage, is not expected to hold a full trial of the matter. It must
decide whether the grounds appear to be substantial. The grounds of dispute, of course, must not consist
of some ingenious mask invented to deprive a creditor of a just and honest entitlement and must not be a
mere wrangle. It is settled law that if the creditor's debt is bonafide dispute on substantial grounds, the
court should dismiss the petition and leave the creditor first to establish his claim in an action, lest there is
danger of abuse of winding up procedure.
15. As per section 7(5) of Insolvency and Bankruptcy Code, 2016, one of the ingredients to initiate
insolvency resolution process is that a 'default' should have occurred. As per section 3(12) default means
'non-payment of debt' when whole or any part or instalment of the amount of debt has become due and
payable and is not repaid by the debtor or the corporate debtor, as the case may be. Debt is also defined
under section 3(11), it means a liability or obligation in respect of a claim which is due from any person
and includes a financial debt and operational debt.
16. In the light of above proposition of law and the definition of Financial Creditor, we will examine the
facts of present case basing on the documents filed by the petitioner in her support ;
a) As stated supra, the petitioner put a total claim of Rs. 91,47,864.00 as on 31.03.2016 covering a period
of 3 years from March, 2014 to March 2016, owed from the Company. In support of the claim,
the petitioner enclosed a copy of Schedules to Balance sheet (page No.33 to 35 Attachment 1-A ) in
which the name of Dr. B.V.Lakshmi was shown under Schedule-D un-secured loan as Rs. 38,74,767/-
and closing balance to the credit of petitioner as Rs. 41,04,391/- as on 31.03.2014. Another attachment
enclosed is Attachment 1-B, page No. 36-40. At page No. 36(notes to Accounts-Balance sheet, the name
of petitioner was shown under un-secured loans for Rs. 8,985,793/ as on 31.03.2014 and in Group
summary of un-secured Loans as lst April, to 31 March, 2015 (page 37) and that of Ledger Account (page
38 ) shown closing balance as Rs. 75,28,462/-
b) The petitioner has enclosed another attachment under IC as page Nos 39 and 40 in support of her claim
in question. Page 39 relates to Notes Forming part of Balance at 31.03.2016 of the Company. In which,
under 5(b) Loans and advances from related parties (unsecured) show as 'From Director Rs. 79,36,737/-
and from Director relatives as Rs. 95,48,279/- as on 31.03.2016. Note 23 (page 40) gives related parties
disclosures in which Niyaz Ahmed was shown as Managing Director: Kalayana Hyma(daughter of
petitioner) was shown as Director and Dr B.V.Lakshmi and Nusrath Parveen were shown as relative of
Director. Details of related party transaction during the year ended 31 March, 2016 and balances
outstanding as at 31 March, 2016 given in Page No. 40 which shows Loan given/repaid shown as Rs.
1862
27,84,452/ and 17,67,366/- respectively and balance outstanding (Loans) at the year end was shown for
Kalyana Hyma Rs. 79,36,737/-, Dr. BVS Lakshmi Rs. 10,17,086/-.
c) So as per the above documents filed by the petitioner herself shows loan outstanding/ payable to her is
only Rs. 10,17,086/-.
d) The legal notice dated '7th September, 2016 got issued by Counsel for the petitioner stated that the
petitioner was shareholder and creditor of the Company and alleged several acts of oppression and mis-
management on the part of Niyaz Ahmed and Kedarnath. And without giving any details of dues, has
claimed for a total amount of Rs. 91, 47,864/- basing on Annual audited accounts.
16. The petitioner has filed Articles of Association of Respondent Company (page 20 of material papers)
in which, it is falsely shown P.Kedarnath and B.Kalayana Hyma as First Directors of the Company.
However, by perusal of the original Memorandum and Articles of Association of the Company evenly
dated 03.01.2006 (page No. 15 to 31 of material papers) Page 19 and internal page 5 of Memorandum of
Association & Articles of Association at page No. 31, internal page 12 of Articles, filed by the
Respondent Company, clearly shows that the first directors are Pulipaka Kedarnath and B.V.S. Laxmi and
not Hyma as claimed. However, for the reasons best known to the Petitioner, she has chosen to file
concocted Articles of Association, which was downloaded from website, showing her daughter's name as
First Director of the Company. In fact, that issue was also under investigation by the police as mentioned
supra. It cannot be disputed that the petitioner was the first director of the Company as she had admittedly
resigned as Director w.e.f. 01.04.2007 vide her letter dated 14th March, 2007.
17. The Respondent has also filed relevant folios of Ledger Account of Dr. B.V.S.Lakshmi and Kalyana
Hyma Recoverable Account ( page No. 175 to 181 ) for period from 1st April 2016 to 27th February,
2017 by debiting various illegitimate payments made by the petitioner to her Account, and set off of the
balance payable on Kalyana Hyma against the petitioner as per the provisions of order VIII Rule 6 of
CPC.
18. The petitioner is still a shareholder holding 5, 57,946 shares of the Company constituting 14.31 %.
She has transacted several financial transactions with it and she has also filed Winding up petition against
the Company. The petitioner is fully well aware that a criminal case is pending and set off was also made
with reference to her daughter's transactions, and she herself also filed a case making allegations/counter
allegations against each other. All these things clearly show that the petitioner is resorting to legal
proceedings conveniently one after the other. Moreover, the due claimed itself is in serious dispute and
1863
petitioner is aware of all those proceedings. Whether the Company is entitled for set off of dues of the
petitioner with that of her daughter cannot be questioned in the present petition. The Tribunal cannot be
misused to settle and determine the cases of disputed claims. In the instant case, as stated supra, there is
no prima facie evidence to show that the petitioner has lent money to the Company with a promise to
repay. When the respondent has filed adequate proof that there was no due to the petitioner and on the
contrary, she is due to the Company, the Tribunal cannot enter into the disputed questions of fact, which
can be resolved through process of recording evidence by a competent Civil Court. In a summary
proceedings prescribed under IBC 2016, Tribunal cannot entertain a litigation where basic issues like
Financial Creditor, default etc are in dispute.
19. In view of the above facts and circumstances, we are of the considered view that the petitioner do not
come under the definition of "Financial Creditor" and she failed to satisfy the Tribunal about requisite
ingredients of section 7 of IBC 2016 to claim any relief. The petitioner miserably failed to make out even
a prima facie case to entertain this petition and she has not come to the Tribunal with clean hands as ought
to be in accordance with law. Therefore, the petitioner is not entitled for any relief as sought for.
20. For the all reasons stated above, we are of the considered opinion that it is not a fit case to initiate
Insolvency process as prayed for by the petitioner/applicant. Hence, we hereby dismissed
CP(IB)/19/7/HDB/2017 with no order as to costs. we further observe that this order will not be precluded
the petitioner from taking recourse to any remedy available under any other law
1864

HYDERABAD BENCH
C.P. (I.B.) No. 103/7/NCLT/HDB/2017
Applicant: VNR Infrastructures Limited

Vs.
Respondent: Employees' Provident Fund Organisation
Respondent: South Central Railway
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Rajesh Bohra, Learned Advocate
For Respondents/Defendant: M. Ramesh Reddy, Learned Advocate
ORDER
Hon'ble Sh. Rajeswara Rao Vittanalla, Member (J)
1. The present Company Application bearing CA No. 103/2017 in CP (1B) No.12/10/HDB/2017,

was filed by M/s VNR Infrastructures Limited, by inter-alia, seeking directions to the Respondents to stay
on the notice dated 10.03.2017 issued by the Respondent No.1 EPFO, Hyderabad, direct the Respondent
No.1 to withdraw the order dated 12.07.2016 and Prohibitory / Attachment Order dated 06.09.2016, to
direct the Respondent No.2 to act in pursuant to order dated 12.07.2016 passed by the Respondent No.1
and release the payment due to Corporate Applicant etc.
2. Heard Shri Rajesh Bohra, Learned Counsel for the Petitioner and Shri Ramesh Reddy, Learned
Counsel for the Respondent No.1. The case was listed on 19.6.2017, 29.6.2017 and today. After hearing
the case for some time Shri Rajesh Bohra, Learned Counsel for the Applicant wanted to withdraw the
present application. The Learned Counsel for the Respondent has no objection for the same.
3. In view of the above, CA.No.103/2017 in CP (IB) No. 12/10/HDB/2017 is dismissed as

withdrawn.
No order as to costs.
1865
HYDERABAD BENCH
C.P. (I.B.) No. 81/7/NCLT/HDB/2017
Applicants: Mr. Gondimalla Madhu Mohan

Mr. Kolanu Jaya Reddy
Mr. K. Subba Reddy
Mr. Pabba Amarnath
Vs
Respondent: Aayusidhhi Life Sciences Private Limited
Judges/Coram:
Hon'ble Shri Rajeswara Rao Vittanala, J. (Member (J))
Counsels:
For Appellant/Petitioner/Plaintiff: Shri A Nagraj Kumar, Learned Advocate
For Respondents/Defendant: Shri Y. Suryanarayana, Learned Advocate
ORDER
Hon'ble Shri Rajeswara Rao Vittanala, Member (J)
1. The present Company petition bearing CP No. 81/7/HDB/2017 was filed under Section 7 of
Insolvency and Bankruptcy Code 2016 read with Rule 4 of Insolvency and Bankruptcy (Application to
Adjudicating Authority) Rules, 2016 to initiate Corporate Insolvency Resolution Process against
Aayusiddhi Life Sciences Private Limited.
2. Four individuals have filed a Joint Application claiming as Financial Creditors to initiate CIRP
against Corporate Debtor namely Aayusiddhi Life Sciences Private Limited.
3. The above referred Application was filed on 16th May 2017, and registry of NCLT vide letter
dated 25th May 2017, requested the Applicants to comply with certain defects within 7 days of date of
letter.
4. The case was first listed before Adjudicating Authority on June 2017. The
counsel requested some more time to submit requested documents/clarify the legal position and
maintainability of case. Petitioner was also directed to take personal notice to Corporate Debtor and
submit proof of service and case was posted to 21.06.2017. The case was further posted on 28.06.2017,
1866
30.06.2017, 04.07.2017, 06.07.2017, 24.07.2017 (the Petitioner wanted to file Rejoinder and
Requested time to file the same) and case was again posted on 28.07.2017, 02.08.2017, 04.08.2017, and
08.08.2017.
5. Brief facts of the present Company Petition are stated here under:
i. Mr. Gondimalla Madhu Mohan is First Financial Creditor/Applicant No.1 in present Petition who
was one of the Directors of the Aayusiddhi Life Sciences Private Limited Claiming an amount
due of Rs 2,10,28,045/- from the Respondent Company i.e. from Aayusiddhi Life Sciences
Private Limited as on 31.03.2015, and a letter for repayment of loan dated:08.08.2016 is sent
through registered post to Corporate Debtor.
ii. Mrs. Kolanu Jaya Reddy is Second Financial Creditor/Applicant No.2
in present Petition claiming an amount due of Rs.15,80,000/- from the Respondent Company i.e.
Aayusiddhi Life Sciences Private Limited and a letter for repayment of loan dated: 08.08.2016 is
sent through registered post to Corporate Debtor.
iii. Mr. K. Subba Reddy is Third Financial Creditor/Applicant No. 3 in present Petition claiming an
amount due of Rs. 11,00,000/- from Respondent Company i.e. Aayusiddhi Life Sciences Private
Limited and a letter for repayment of loan dated: 21.01.2016 is sent through registered post to
Corporate Debtor.
iv. Mr. Pabba Amarnath, Fourth Financial Creditor/Applicant No. 4 in present Petition claiming an
amount due of Rs. 2,50,000/- from Respondent Company i.e. Aayusiddhi Life Sciences Private
Limited and a letter for repayment of loan dated: 10.02.2016 is sent through registered post to
Corporate Debtor.
6. The Financial Creditors also recommended Mr. Ahalada Rao Vummenthala as Insolvency
Resolution Professional (IRP).
7. Managing Director of the Respondent Company in his Affidavit dated 04.07.2017 opposed the
admission of Application as Stated below:
i. That the instant Application filed by Mr. G. Madhu Mohan and other Applicants is liable to be
dismissed at the threshold since the said application is not only incomplete but for the reasons that
the Applicants have approached this Hon'ble Tribunal with unclean hands by supressing various
material facts and thereby to mislead this Hon'ble Tribunal and obtain orders to suit their malafide
intentions.
1867
ii. The Applicant No I is a practicing tax consultant and Shri. K. Sailendra (Managing Director of
Respondent Company, here in referred as K.S/MD) was his client during the period, 2010-2014.
Applicant No.1 and K.S enjoyed very healthy and cordial relationship as he was advising K.S on
his financial matters, K.S developed full trust and faith in Applicant No.1. Somewhere in the year
2012, the Applicant No.1 approached K.S with a request to provide him personal loan and K.S
obliged Applicant No.1 by advancing him an amount of 70,00,000/-during the period of 2012-
2014. Subsequently, when K.S started following for the payment of his loan, K.S learnt that the
Applicant No.1 was finding it difficult to repay the said personal loan. At this Juncture, Applicant
No.1 informed K.S about the Respondent Company and also that Applicant No.1 is having some
investment therein.
When K.S persistently requested Applicant No.1 to repay the said loan, Applicant No.1 came out
with an offer that K.S also invest in the Respondent Company. Applicant No.1 lured K.S by
painting a rosy picture about the then current net worth and the future of the Respondent
Company. Unsuspecting of the designs of the Applicant No.1 and by reposing blind faith in his
words, K.S started making investment in the Respondent Company.
iii. Respondent Company was originally incorporated under the name V K Drugs Private Limited by
one Mrs. K. Vijaya Reddy (sister of Applicant No.2) and one Mr. K. Krishna and Mrs. K. Sunitha
(wife of Mr. K. Krishna) was appointed on Board. Thereafter Several Changes in Board, K.S
along with Applicant No 1 and Applicant No 2 joined the Board. Applicant No.1 induced K.S to
become its Managing Director for administrative ease of business. And was appointed as the
Managing Director of the Respondent Company with effect from 16.07.2014.
iv. K.S later realized that Applicants No.1 and No.2 had nefarious intentions behind making him
Managing Director of the Respondent Company and also make him invest therein. However, by
then, he already had invested a huge sum of Rs3.04 Crores (approximately) in Equity capital of
Respondent Company, which if aggregated with the personal loan to the Applicant No.1
amounted to Rs.3.74 Crores approx. At this juncture, K.S realize that there were several gaps and
missing links in the state of affairs of the Company and that the whole scheme of the Applicant
No.1 was designed with fraudulent and malafide intentions. In june,2014, due to personal dispute
amongst erstwhile Directors, Mrs K. Sunitha, one of the erstwhile Director of the Company was
brutally murdered and Mrs. K. Vijaya Reddy, an ex-director, who happens to be the sister of the
Applicant No.2, and also a close accomplice of Applicant No.1, was squarely exposed and when
K.S tried to raise the glaring irregularities of the transactions conducted in the respondent
company the applicant no. 1 asked K.S. to remain silent and for obvious reasons, he had no
1868
alternative but to remain as a mute spectator fearing the potential threat to his life. And he was
compelled to sign the financial statements without a murmur.
v. K.S further submit that having realised that the Company needed further expertise and
investments and with his financial sources going dry, he started searching for potential investors.
At this juncture, he happened to meet Mr. Narendra Babu, Mr. Uday Kumar Reddy, Mr. M.
Muralidhar Rao and Mrs K. Kavitha Reddy and additional investments of Rs. 90 lakhs were
brought into the Company by way of unsecured loans by Uday Kumar Reddy and Kavitha Reddy.
One Mr. Pawan Kumar has also extended a sum of Rs.25 lakhs as an unsecured loan. Further, K.S
invested an additional amount of Rs.1.4 I Crores into the Company.
vi. The Applicant No.1 sent an email, dated 08.08.2016, demanding repayment of Rs.2.10 Crores,
claimed to have been lent as an unsecured loan to the Company, for which replied on 13.08.2016,
requesting him to produce all the related papers and documents in the forthcoming Board
Meeting. However, the Applicant No.1 never produced any such related papers or documents
which could prove his claim. The Applicant No.1 resorted to officially relieve himself
clandestinely from the Board and filed his resignation with the Registrar of Companies (Form
NO. D1R —11) without even bringing his intention to the notice of the Board at any point of
time. K.S received Applicant No.1 resignation letter by way of registered Post and subsequent e-
mail from the Ministry of Corporate Affairs. The Board while taking note of the said resignation,
took liberty to bring to the notice of the Registrar of Companies about the fraudulent conduct of
the Applicant No.1.
vii. K.S further submit that, the Applicant No.1 in order to pre-empt any legal action from the
Respondent Company, filed the instant Application containing false and fraudulent claims against
Respondent Company.
viii. The Applicant No.1 has claimed, in the instant Application that an amount of Rs.2,10,28,045/- is
due to him as "unsecured Loan" by the Company. The said claim comprises of illogical payments
made to third parties, to which the Company never owed any amount nor was a party to the
claimed transactions. It is baffling to note that the Applicant No.1 has, while failing to provide
any logical justification to the claimed transactions has made self-contradictory statements in the
supporting documents provided by him. It is glaring to note that, in one of the transactions, an
amount of Rs.60.13 lacks seems to have been paid to some Company on behalf of Mrs. K. Vijaya,
to which the Respondent Company was never a party.
ix. Applicant No.1 adopted several ingenious modus operandi to establish himself as financial
creditor of the Respondent Company, which is depicted herein below:
1869
(a) Finished goods of the Company were sold in cash, without recording the same in the Books of the
Company,
(b) Cash amounts so realised were deposited in the personal accounts of the Applicant No.1 and 2.
(c) The cash amounts so deposited were brought back in the Company under the head "unsecured
Loan" or claimed to have been paid to the Creditors on behalf of the Company.
8. During the hearing held on 15.06.2017, the Learned Counsel for the Petitioners submitted that
Petitioners already complied with the requisite condition with regard to IBC. However, Bench
was not satisfied with the compliance. The Learned Counsel for the Petitioners, therefore,
requested some more time to submit the requisite documents/clarify the legal position regarding
maintainability of the case. Petitioners were directed to take personal notice to the Corporate
Debtor and submit proof of service before the next date of hearing and case was posted on
21.06.2017.
9. During the hearing held on 21.06.2017, the Learned Counsel for the Respondent took notice for
the Respondent and requested one week time to file his reply. The Learned Counsel for the
Petitioners was also directed to submit necessary documents on legal position as per Central
Government Rules dated 07.12.2016, and case was posted/adjourned on various occasions as
requested by the Counsels on 28.06.2017, 30.06.2017 and 04.07.2017.
10. During the hearing held on 04.07.2017, the Learned Counsel for the Corporate Debtor, Shri. Y.
Su.ryanarayana, submitted that he was going to file reply on same day and on request of both the
Counsels, matter was posted on 06.07.2017, and again on request of both the Counsels on
06.07.2017, case was posted on 24.07.2017.
11. During the hearing held on 24.07.2017, the Learned Counsel for the Petitioners wanted to file a
Rejoinder and same was allowed and matter was posted on 28.07.2017, and again the matter was
posted on 02.08.2017 and 04.08.2017.
12. During the hearing held on 04.08.2017, it was recorded that the objection raised by the registry
was not complied with and matter was posted on 08.08.2017.
13. During the hearing held on 08.08.2017, Shri Y. Suryanarayana, Learned Counsel for the
Respondent disputed about the claim of the Petitioners and also issue of share certificates. Shri A.
Nagaraj Kumar, Learned Counsel for the Petitioners, after hearing all the contentions of the
Respondent, decided to withdraw the present Company Petition bearing CP(IB)/81/7/HDB/2017,
requesting to file a fresh application after complying with all the defects and also sought liberty to
file a fresh application.
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14. Heard Shri A. Nagaraj Kumar, Learned Counsel for the Petitioners and Shri Y. Suryanarayana,
Learned Counsel for the Respondent and perused all the documents submitted by the counsels
filed in the above Company Petition bearing CP No. CP(IB)/81/7/HDB/2017.
15. In the above facts and circumstances of the case and as prayed by the Learned Counsel for the
Petitioners, we permit the Petitioners to withdraw present Company Petition with a liberty to file
afresh in accordance with the law. Accordingly the CP No. CP(IB)/81/7/HDB/201 7 is disposed
off as withdrawn.
16. No order as to costs.
1871
HYDERABAD BENCH
C.P. (I.B.) No. 138/7/NCLT/HDB/2017
Applicant: West Coast Ventures (India) Pvt. Ltd
Vs
Respondent: Windstream Energy Technologies India Pvt. Ltd
Judges/Coram:
Hon'ble Shri Rajeswara Rao Vittanala, J. (Member (J))
Counsels:
For Appellant/Petitioner/Plaintiff: Ms.Suchitra, Learned Advocate
For Respondents/Defendant: Shri CVLN Murthy, Learned Advocate
ORDER
Hon'ble Shri Rajeswara Rao Vittanala, Member (J)
1. The present Company petition bearing No. CP(IB) 138/07/HDB/2017 is filed by West Coast
Ventures (India) Private Ltd under Section 7 of IBC against Windstream Energy Technologies
India Private Limited.
2. Heard Ms Suchitra, Learned Counsel for the Financial Creditor and Shri CVLN Murthy, Learned
Counsel for the Respondent. Learned Counsel for the Financial Creditor has filed a memo dated
21.08.2007 by stating as follows:-
The Financial creditor has not obtained the certificate from bank stating that monies were not repaid
by the Corporate Debtor. Hence prays to withdraw the said application and request the leave of the
court to file another application after getting Bank certificate.
3. In the light of the above, the Learned Counsel requests to permit her to withdraw the instant
application with a leave to file a fresh application for the same cause of action after duly
complying with the provisions of law.
4. In view of the above facts and circumstances of the case we are inclined to permit the Petitioner
to withdraw the Company Petition. Accordingly, the present CP No. (IB) No. 138/7/HDB/2017 is
withdrawn, by reserving right to the Petitioner to approach the Adjudicating Authority for the
same cause of action as per law.
5. No orders as to costs.
1872

HYDERABAD BENCH
C.P. (I.B.) No. 96/7/NCLT/HDB/2017
Applicant: M/s. Asset Advisory Services India Pvt. Ltd.

Vs.
Respondent: VSS Projects Pvt. Ltd.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Surya Satish & Mr. M.Srkanth, Learned Advocates
For Respondents/Defendant: Mr. S.Agasthya Sharma, Learned Advocate
ORDER
1. This Company petition bearing CP bearing CP (IB) No. 96/7/HDB/2017 is filed by M/s. Asset
Advisory Services India Pvt Ltd. Financial Creditor, U/s 7 of IBC, 2016 R/w Rule 4 of the Insolvency and
Bankruptcy(Application to Adjudicating Authority) Rules, 2016, by seeking to initiate Corporate
Insolvency Resolution Process under IBC against VSS Projects Pvt. Ltd.
2. Brief facts, leading to the filing of present company petition, are as follows:
1) M/s Asset Advisory Services India Pvt Ltd., (CIN U93000A02008PTCO59525) herein after called as
Petitioner/Financial Creditor, is a private limited Company incorporated under the provisions of the
Companies Act, 1956 and it is a "Financial Creditor" within the meaning of Sec 7 of the Code, which
reads as "Financial Creditor means any person to whom a financial debt is owed and includes a person to
whom such debt has been legally assigned or transferred to".
2) The Financial Creditor is engaged in the business of acting as financial advisors and consultants on all
matters relating to assets, finance, investments, insurance, money markets, capital markets, fund
arrangements etc., per its main object in the Memorandum of Association and Articles of Association.
1873
3) M/s V.S.S. Projects Pvt Ltd., ( herein after referred to as Respondent/Corporate Debtor ) is a private
limited Company incorporated under the provisions of the Companies Act, 1956, and it is a Corporate
Debtor as defined in sub section (8) of Section 3 of the code which reads as "Corporate Debtor" means a
corporate person who owes a debt to any person". The Corporate Debtoris a having its registered office at
Plot No. 74, Street No. 6, Umanagar, Begumpet, Hyderabad TG 500016 IN and is a "corporate person"
within the meaning of Sub Section (7) of Section 3 of the code.
4) The Financial Creditor had made available to the Corporate Debtor a Short Term Loan of Rs.
2,50,00,000/- (Rupees Two Crore Fifty Lakhs Only) for the repayment of OTS (One Time Settlement)
amount outstanding with M/s. DHFL (Dewan Housing Finance Limited) from whom the Corporate
Debtor had availed project finance. The Financial Creditor had disbursed the amount as follows:
Date Bank Pay Order Favoring Amount Rs.

No.
31-03-2016 Oriental Bank of 479913 D.H.F.L. 2,50,00,000
Commerce
5) The Corporate Debtor executed a Promissory Note and issued a duly signed receipt acknowledging the
receipt of the amount of Rs. 2,50,00,000/- and promising to repay the same on or before 30.06.2016
together with interest @ 24% P.A. payable in advance monthly installments. To secure the repayment of
the Loan amount together with the Interest thereon, the Corporate Debtor had submitted documents
pertaining to 20 Unsold Units and other properties.
6) The Corporate Debtor had sent an email on 8/7/2016 confirming receipt of Rs. 2,50,00,000/- (Rupees
Two Crore Fifty Lakhs Only) and the deposit of Original Title Deeds and promised to repay the loan
amount with Rs. 2/- simple interest and had requested to adjust the amount of Rs. 20,00,000/-(Rupees
Twenty Lakhs Only) remitted on 28/6/2016 towards interest and had reassured that the loan shall be
closed by the end of July, 2016. However, it failed to honor its commitment of repayment of the amounts
even after 30/06/2016.
7) Further, the Corporate Debtor had issued cheques bearing nos. 786493, 786494, 786495, 786496 dated.
14.11.2016 all drawn on Andhra bank, Mushirabad Branch, Hyderabad, in discharge of part of the debt.
However, the same were dishonored when presented as per the instructions of the Corporate Debtor for
the reasons "stop payment". The Financial Creditor, after following the due procedure as contemplated
U/s. 138 of the N.J. Act, has filed a complaint on the file of the Hon'ble XII Addl. Chief Metropolitan
Magistrate, Nampally Hyderabad and the same is pending.
1874
8) The Petitioner stated that the Corporate Debtor had alienated 3 Flats bearing Nos. 201, 203 and 712
illegally even though there is a charge in favor the Financial Creditor by virtue of an Equitable Mortgage
by deposit of title deeds of the property. The Financial Creditor had initiated criminal proceedings for
cheating and other offences against the Corporate Debtor for entering into such sale deed in utter violation
of the understanding with the CCS, Hyderabad and the same was registered as Crime No. 259/2016.
9) In the above circumstances, in order to restrain the Corporate Debtor from illegally alienating the
properties secured under the above arrangement, the Financial Creditor had approached the Hon'ble XIII
Addl District and Sessions Judge, R.R. District, Hyderabad by filing CO. S.No. 1 of 2017, and also
obtained status quo order in respect of schedule A to X properties vide order dated 6'1' January, 2017 in
IA No. 48 of 2017.
10) As on 30-04-2017, the amount in default works out to Rs. 2,95,00,000/- (Rupees Two Crore Ninety
Five Lakhs Only).
11) It is stated that there is a "Financial Debt" in existence within the meaning of Sec. 8 (a) of the Code;
M/s Asset Advisory Services Pvt Ltd., is a "Financial Creditor" within the meaning of Sec 7 of the Code;
M/s V.S.S. Projects Pvt Ltd., is a "Corporate Debtor" within in the meaning of Sec. 8;The "Corporate
Debtor" had committed default as per Sec 3, Sub-Section 12 of the Code for nonpayment of "financial
debt".
The respondent /Corporate Debtor has filed a reply date 25th July, 2017. The following are their main
contentions:
1) The petition is untenable and unsustainable, either in law or in facts. M/S VSS PROJECTS (PVT)
LTD., is sought to be depicted as Corporate Debtor, by Financial Creditor, with ulterior motives to grab
property of 20 Flats {Including three (3) Flats already sold} pertaining to Corporate Debtor. The present
state of affairs is exclusively due to illegal conduct and functioning of Financial Creditor. As on date,
Corporate Debtor is the absolute owner of 17 flats and 2 acres of land costing more 'than Rupees 10
crores. Each flat is costing around Rs. 40 lakhs as per latest market value Certificate.
2) By selling/ adjusting 6 flats, entire amount paid by Financial Creditor under OTS facility to DHFL can
be re-paid. Claim of Financial Creditor in COS No. 1 of 2017 is sought to be adjusted with 6 Flats, as
pleaded in written statement-cum-counter claim filed in COS 1 of 2017 pending adjudication, before I-
Ion'ble XIII Addl. Judge, R.R District.
1875
3) The Corporate Debtor is ready to execute six (6) sale deeds in favor of Financial Creditor OR
alternatively sell 6 Flats out of 17 un-sold flats and re-pay the entire amount of Rs.2.5 crores paid to
DHFL. But, Financial Creditor obtained Status-Quo orders, by misrepresenting to Hon'ble Court and
also by Page - 7 - of 21 suppressing
material facts and documents. The said Status Quo orders are sought to be vacated and case stands posted
to 28-7-2017.
4) Corporate Debtor is neither Bankrupt nor can be depicted or declared as an Insolvent, since Corporate
Debtor and its MD are owning properties worth more than Rupees 10 crores and amount payable to
Financial Creditor is only Rupees 2.5 crores.
5) Corporate Debtor filed Counter- claim for an amount of Rs. 1.02 Crores by paying court fee, against
Financial Creditor, on account of loss sustained by it due to illegal conduct and functioning of Financial
Creditor. Such functioning resulted in causing immense financial loss and also credibility of Corporate
Debtor. Corporate Debtor reserved its right in COS No. 1 of 2017, to make further claims against
Financial Creditor, owing to loss of its credibility due to paper publication, thus damaging prestige and
reputation of Corporate Debtor. Further claim would be made subsequent to adjudication of criminal
proceedings.
6) It is stated that Financial Creditor has volunteered to issue D.D for an amount of Rs. 2.5 Crores , in
favor of Deewan Housing and Finance Corporation Limited (D.H.F.L) towards OTS Payable by
Corporate Debtor to DHFL; after receiving: -
i. 5 undated cheques of Rs. 50 lakhs each, from Corporate Debtor on 31/03/2016.
ii. Stamped receipt for Rs. 2.5 Crores from Corporate Debtor, on 30/03/2016.
iii. Demand promissory note for an amount of Rs.2.5 Crores, in favor of Financial Creditor on
31/03/2016, and with
iv. An express condition and understanding between parties herein that the amount of Rs.2.5 Crores
shall be paid by Corporate Debtor to Financial Creditor, by selling some Flats out of 18 flats that were got
released from mortgage with DHFL.
7) DHFL returned Original Documents of properties mortgaged with DHFL on 12/04/2016 and later,
executed release deed on 27/04/2016 in favor of Corporate Debtor. After receiving original documents on
1876
12/4/2016, same were handed over to Financial Creditor for verification on 12 /4/216 itself. Whereas,
Financial Creditor did not return original documents on the pretext of busy schedule and lack of time to
verify and sent email dated 25/4/2016 enclosing MOU for 20 flats with a request to execute MOU and
create charge on 20 flats. Corporate Debtor did not agree to sign MOU, since the same would deprive
Corporate Debtor to pay back OTS amount to Financial Creditor, apart from depriving Corporate Debtor
to accommodate those persons, who helped M/S VSS PROJECTS (PVT) LTD., to complete its venture.
8) Later, on 09/05/2016, Financial Creditor handed over franked MOU and Agreement of Sale in respect
of 20 flats to Corporate Debtor for execution in its favor. Corporate Debtor refused to sign, since the same
was contrary to initial agreement and understanding, at the inception of Contract on 30-3-2016. Corporate
Debtor can never pay OTS amount to Financial Creditor if MOU and AOS are executed, without selling
some of the 17 Flats; apart from inviting litigation from three flat owners, to whom the flats were sold in
2016.
9) Later, Financial Creditor sent emails on 07/07/2016 with request to execute documents mentioned
therein by projecting false version.
10) It is stated that Financial Creditor has suppressed and concealed above facts and emails exchanged
between parties till 08/07/2016, particularly, those relating to MOU, Agreement of Sale confirms the
ulterior motives of Financial Creditor to grab all 20 Flats (though only 17 flats are unsold Flats)
pertaining to Corporate Debtor.
11) It is stated that it is highly improbable for Corporate Debtor to arrange for an amount of Rs. 2Crores
on 16/11/2016 within 1 week from date of demonetization on 8-11-2016 and issued four (4) cheques for
Rs. 2 crores, when the Corporate Debtor could pay only 20 lakhs from April 2016 to November 2016 to
Financial Creditor, by selling one flat, out of 18 Flats got released from DHFL, after OTS payment.
12) It is submitted that Tribunal may kindly take Judicial Notice/ Judicial cognizance of the impact of
Demonetization and subsequent Notification by RBI on the Real Estate Sector/Industry; thus resulting in
downward trend of Real Estate Market. Corporate Debtor is also one of the worst victims of: ---
 Demonetization impact, on 08/11/2016
 RBI Notification that no transactions beyond 2 Lakhs, &
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 Finally, the illegal conduct/ Functioning coupled with avarice of Financial
Creditor's Director whose conduct and functioning alone resulted in the present sad state
of affairs and speculative litigation resorted to by Financial Creditor, with ulterior
Motives.
13) It is stated that Since there is a dispute between parties herein and there are claims and rival claims
pending adjudication before the competent civil court, it is not open for Financial Creditor to project M/S
VSS PROJECTS (PVT) LTD., either as insolvent or bankrupt; more particularly, when the proposed
Corporate Debtor is capable of paying OTS amount by selling some of the 17 flats and also ready to sell 6
flats in favor of Financial Creditor, as submitted above and also as pleaded in WS-cum-Counter Claim.
14) It is stated that the petitioner has initiated criminal case vide FIR No. 259 /2016 in CCS by fabricating
false evidence, i.e. letter dated 1/11/2016, against Corporate Debtor, 3 flat owners who purchased 3 flats
and also SBH that extended loan facility, apart from initiating proceedings U/S 138 NI Act and filing
Commercial suit COS: 1/2017 before the commercial court; disentitled Financial Creditor for any relief
from this Hon'ble Tribunal.
15) It is further alleged that the petitioner having not satisfied with the above, has filed the present
petition with unclean hands by suppressing material facts and documents. The above events confirm that
Financial Creditor wants to indulge in speculative litigation and somehow secure some order of
appointment of insolvency professional to ensure distress sale of 17 unsold Flats, so that the flats would
not fetch the prevailing market value and can grab the entire property of Corporate Debtor to realize his
ultimate goal of swallowing all the properties of Corporate Debtor costing around 10 crores for a mere
debt of 2.5 crores.
16) It is stated that the functioning of Financial Creditor is detrimental to survival of Rule of Law and
may not be entertained by this Honorable Tribunal in the interest of Justice.
17) It is stated that the petition is hopelessly premature to construe the Corporate Debtor either as
insolvent or bankrupt and also to initiate above proceedings under Insolvency and Bankruptcy Code,
2016. The alleged default to repay even after the expiry request date of 3107-2016 was due to frustration
of contract by Financial Creditor and also failure to honor reciprocal promise by Financial Creditor, as
agreed on 31/03/2016; apart from changing stand / version to charge 50 % interest instead of agreed 24%;
while insisting to execute alleged MOU and AOS (which are concealed and suppressed before this
Hon'ble Tribunal). The alleged default when 4 cheques dated 14/11/2016 got bounced on 18/11/2016 is
1878
also the ingenious creation and invention of Financial Creditor to dwell in speculative litigation before
various forums with ulterior motives and evil intentions to grab 20 flats, though only 17 unsold flats are
available for sale.
18) It is stated that version of Financial Creditor to the effect that " There is a financial debt in existence
within the meaning of section 8 (a) of the code" is untenable since Financial Creditor did not comply with
the requirement of demand notice as envisaged in section 8 (1) as a consequence the Corporate Debtor
could not respond as specified in section 8(2)(a) However, viewed from any angle, the approach of
Financial Creditor before this Honorable Tribunal is premature apart from its failure to ensure compliance
of section 8(1) of the code, since Financial Creditor is relying upon section 8(a) of the code. It is further
contended that the Corporate Debtor has not committed any default as per section 3(12) of the code as is
evident from the above submission. M/s VSS Projects pvt. Ltd is not a Corporate Debtor within the
meaning of section 8. Even today, Corporate Debtor is prepared to deposit an amount of 2.5 crores before
Competent civil court, where the case COS:1/2017 is pending, in the event of allowing Corporate Debtor
to sell some of the 17 unsold flats; which could not be sold due to the Status Quo Order. The said I.A. is
pending adjudication before the Hon'ble XIII Addl District Judge, R.R. District Court. The Corporate
Debtor had also clearly pleaded about the mode of payment of principle loan and also the counter- claim
against Financial Creditor by paying court fee and the same is pending adjudication in COS No.1 of 2017
before XIII Addl Judge, R.R. District.
19) It is stated that the prayer of Financial Creditor is not only devoid of any merits whatsoever but it is
also riddled with several illegal acts of commission and omission by Financial Creditor to grab the
properties of Corporate Debtor by preventing him to sell the available 17 flats costing around 40 lakhs
each and repay a meagre amount of Rs. 2.5 Crores.
20) He has relied upon the following decisions in support of his case:
(a) AIR 2012 SUPREME COURT 2513-Head Note-B: Suppression material fact- Petition against
rejection of application for discharge-Fact that petition to quash charge sheet filed by petitioner was
dismissed-Not disclosed-SLP liable to be dismissed on this ground. (Para-6).
(b) AIR 2013 SC 3568-Ground raised by concealing fact that appellant and respondent had exchanged
communication about area to be handed over-Appellant having approached court by concealing facts
explanation given has to be held unsatisfactory-Prayer for condonation liable to be rejected.
1879
(c) 2016 (4) ALD — Page No. 291 Para-9)-Non Mention in Plaint about notices exchanged prior to suit-
And unexplained conduct in making claim for larger extent in Plaint than that mentioned by Plaintiff in
notice, in facts and circumstances of case, would disentitle Plaintiff to equitable relief of temporary inj
unction.
(d) AIR 1992 DELHI- Civil P.C. 0-39, Rules 1 & 2, S. 151 of CPC-Relief of Injunction-Suppression of
material Facts-Effect Suit liable to be dismissed without going into merits. (Paras-9, 10,11 & 12).
(e) AIR 1994 SC 853-CPV Sec.2 (2)-Evidence Act 544-Proceeding in Court- Fraud by Litigant-
Withholding vital document relevant to litigation-It is fraud on Court- Guilty party is liable to be thrown
out at any stage (Para-8).
(f) AIR 2002 DELHI 151- CPC Order39, Rules 1 &2- Discretionary Relief of Injunction- Grant of-Any
deliberate attempt on part of either party to suppress material fact would disentitle such party for granting
such relief- Plaintiff withholding vital documents vital to litigation in order to gain advantage on other
side- He would be guilty of playing fraud on court as well as on opposite party- Not entitled to
discretionary relief o injunction. (Paras-12,13,14 & 15)
21) The Learned counsel , therefore, submit that ratio as decided in the above cases, are squarely
applicable to the factual matrix of the instant case, wherein Corporate Debtor had deliberately withheld
and suppressed material facts and documents, particularly e-mails. He, therefore, prayed that the petition
is not only liable to be dismissed but it liable to be prosecuted for the offences of Cheating, Extortion, and
Breach of trust and Fabrication of false evidence.
4. I have heard Shri T, Surya Satish, learned Counsel for the Petitioner, and Shri S. Agasthya Sharma,
Learned Counsel for Respondent, and also perused the pleadings of both the parties along with material
papers filed in their support.
5. Both the learned counsels for parties, at the time of hearing of the case, have further reiterated their
contentions raised in their respective pleadings.
6. Shri T. Surya Satish, the Learned Counsel for the Petitioner has further submitted that it is not in
dispute that the Financial Creditor had made available to the Corporate Debtor a short term loan of Rs. 2
50 crores for the repayment of OTS (One Time settlement) amount outstanding with M/s DHFL.
Accordingly, the Corporate Debtor has also executed a Promissory Note and issued a duly signed receipt
acknowledging the receipt of the said amount and promising to repay the same on or before 30.06,2016
1880
together with interest @ 24% per annum, payable in advance monthly installments. He has further stated
that the Respondent / Corporate Debtor has illegally alienated 3 flats bearing Nos. 201, 203 and 712 even
though there is a charge created in its favour by the Corporate Debtor by way of equitable mortgage by
deposit of title deeds of the property. So he had initiated criminal proceedings for cheating and other
offences against the Corporate Debtor and case was registered under case No. 259/2016. He also filed
civil suit bearing CO Sl.No. 1/2017 and obtained status quo order.
He has further submitted that the application is complete in all respects as law, and thus it is to be
admitted, consequential moratorium has to be imposed and IRP to be appointed
7. Shri S. Agasthya Sarma, the Learned Counsel for the Respondent, on the other hand, submit that the
Petitioner/Financial Creditor is resorting to multiple litigation by filing civil suits, and criminal cases and
dragging the Respondent to various forums basing on false averments without making any bonafide
claim. The intention of the Petitioner is to grab all 20 flats including 3 fiats, which were sold to
Respondents and FIR No.259/2016 was also registered for the amount payable to the financial creditor
Rs.2.5 crores for which the Corporate Debtor has proposed several times to repay OTS amount by selling
fiats. The Respondent has expressed its willingness to deposit an amount of Rs. 2.5 crores before civil
court in case of CO.s No.112017 provided that it is permitted to sell 17 unsold flats. However, the
respondent is unable to pay its said debt due to status quo passed in the said case. As the petitioner fails to
co-operate with respondent to sell the flats in question, it has stopped payment of cheques issued to the
petitioner. Since the petitioner fails to perform its duties to sell the flats in question, the respondent has
not paid said amount but not due to inability to pay it. However, the Petitioner is not at interested to
resolve dispute but it is interested to raise frivolous and malicious litigation before various courts with a
malafide intension to tarnish the image of the Respondent.
8. After hearing of the parties and perusing the pleadings, the following issues arise for consideration by
the Tribunal.
1. Whether the present CP is maintainable since the

Petitioner has already resorted proceedings for recovery of the debt in question;
2. Whether the Petitioner fulfils the eligibility
criteria to file the present CP;
3. If so, what is the relief petitioner entitled for.
1881
9. It is not in dispute that the Financial Creditor extended short loan of Rs. 2.5 crores to the Corporate
Debtor, and in pursuant to that, a promissory note also was issued by the Corporate Debtor to repay on or
before 30.06.2016 together with @ 24% p.a. payable in advance monthly installments. However, so far as
mortgage of 20/17 flats in question, respondent is disputing the mortgage but only say they have
furnished title deeds of those flats to petitioner for verification and to return back to them after
verification. However, it is alleged the petitioner kept them illegally so as to prevent the respondent to
deal with flats and to repay loan amount. The contention of petitioner that mere furnishing of title deeds
amounts to duly registered mortgage is not tenable and the same is hereby rejected. The petitioner has
admitted that documents relating to 17 fiats are stated to be with them. When the respondent is resorting
to sell flats in question, the Petitioner has filed a civil suit bearing COS No. 1/2017 by questioning sale of
flats contrary to agreements and thus, obtained status-quo order in respect of scheduled properties. So the
respondent is unable to dispose of flats and pay the debt. It is to be mentioned here that the said short term
loan was extended to the respondent basing on flats in question, which are earlier mortgaged with DHFL.
Admittedly, the respondent has sold Flat No. 712,(which is not in alleged mortgage with petitioner)to
K.SivaJyothi (Defendant No. 10 in suit) and an amount of Rs. 20 lakhs was paid to the petitioner to show
the bonafide of the respondent to pay the debt. However, for the reasons best known to the petitioners, he
is not willing/interested to resolve the issue in question and thus resorted multiple litigation by filing a
case under NI Act on 15.12.2016, and also filed a FIR No. 259/2016 on 06.12.2016 and tiling suit bearing
CO.S.No. 01 of 2017 in January, 2017 before Civil Court. In addition, the petitioner also got issued a
public notice in Telugu News paper dated 2nd December, 2016 by warning the public not to deal any
transactions with properties of VSS Projects Ltd (respondent).
10. Insolvency Bankruptcy Code, 2016 is promulgated with the following objective(s)
a) "An Act to consolidate and amend the laws relating to reorganization and insolvency
resolution of c o r p o r a t e p e r s o n s , p a r t n e r s h i p f i r m s a n d i n d i v i d u a l s i n a t i m e
b o u n d m a n n e r f o r maximization of value of assets of such persons, to promote
entrepreneurship, availability of credit and balance the interests of all the stakeholders
including alteration in the order of priority of payment of Government dues and to
establish an Insolvency and Bankruptcy Board of India, and for matters connected therewith or
incidental thereto."
1882
b) The main object of the IBC is to provide a remedy to the insolvent to save him from
embarrassment, to save his assets from dismemberment and to provide an equitable distribution
of the assets of the insolvent. The Hon'ble Supreme Court in the case of Paramjeet Singh
Patheja v. ICDS Limited (2006 (11) SCALE 459, AIR 2007 SC 168; 2006 (4) Arb LIB 202 (SC)
held that The Presidency Towns Insolvency Act, 1909 is a statute weighed down with the grave
consequence of 'civil death' for a person sought to be adjudged an insolvent and therefore, t h e
A c t h a s t o b e c o n s t r u e d s t r i c t l y . S t r i c t interpretation, quite obviously, refers to
interpretation strictly against the insolvent.
In the instant case, it is not the case of petitioner that the respondent become bankrupt/insolvent to
repay the debt in question to the petitioner. As stated supra, the object of getting loan in question from the
petitioner is to get released mortgaged flats from the previous DHFL by way of one time settlement of
paying Rs. 2.5Ocorers. The business involved is to sell flats in question, and to repay debts, and it is no
body's case that the respondent became insolvent. The petitioner, not being satisfied with filing of above
cases, has again resorted to invoke provisions of IBC to misuse it further. The petitioner is not interested
to resolve the issue in question by extending co-operation as required in disposing of Flats in question, on
the contrary, preventing the respondent from selling Flats in question and making baseless allegations
against the respondent. Written statement-cum-counter claim filed by the Respondent in the said suit
clearly shows as how the petitioner wanted to become a litigant rather than resolving the issue. The
respondent have clearly stated that they are ready to execute sale deeds for six flats in favour of petitioner
or its nominees since market value of each flat, as on date, is about 40 laths, for balance amounts of Rs.
2,30 crores since Rs. 20 laths have already been paid.
12. The Petitioner has registered FIR No. 259/2016 on 6.12.2016 2016 under Sections 406, 420 of IPC
read with 120(B) of IPC wherein the Petitioner has alleged criminal breach of trust and cheating, criminal
misappropriation, dishonest intentions on the part of VSS Projects Limited (Respondents herein) and also
selling flats mortgaged with the Petitioner. In fact, this issue arise out of the mortgaged loans etc, arising
out of Company affairs. He has also initiated case under section 138 of NI Act before IX Additional Chief
Metropolitan Magistrate, Nampally Hyderabad, which is also pending. For one issue, the petitioner is
resorting to several proceedings, that too without fulfilling its obligations under the
agreements/understanding. The cheques in question were admittedly issued by the Respondents to the
Petitioner, subject to certain conditions as mentioned above. However, without complying the obligation
on the part of the Petitioner, it has invoked the provisions of NI Act, when the Petitioner admittedly
knows that payments of all the cheques were stopped due to failure on the part of the Respondents. As
stated supra, civil suit filed is also against same cause of action as raised herein.
1883
13. The Respondent also filed a criminal complaint vide FIR No, 106/2017 on 10.4.2017 with PS
Kachiguda under sections 384, 406, 420 IPC, 156(3) CrPC by making allegations against the Petitioner
with regard to the cheques in question and also not returning the original title deeds /link documents
received from DHFL which were furnished to the Petitioner for verification and also created false
complaint basing on fabricated documents etc.
14. In order to adjudicate a proceedings initiated under the provisions of the IBC, it is necessary to read
all relevant provisions of the Code together, in order to come to a conclusion whether debt /
default/insolvency arise in this the case. In this regard Section 65 is also relevant to consider in the light
of facts and circumstances of the case, as explained above. Section 65 (1) and (2) of IBC reads as under:-
"65(1).1.f, any person initiates the insolvency resolution process or liquidation proceedings
fraudulently or with malicious intent for any purpose other than for the resolution
of insolvency, of liquidation, as the case may be, the adjudicating authority may
impose upon such person a penalty which shall not be less than one Wit rupees,
but may extend to one crores rupees.
65(2) tf, any person initiates voluntary liquidation proceedings with the intent to
defraud any person, the adjudicating authority may impose upon such person a
penalty which shall not be less than one Lakh rupees but may extend to one crore
rupees."
The term fraudulent and malicious has been defined in the Black's Law Dictionary, 4`11 Edition to mean
as follows:-"Fraudulent: Based on fraud; proceeding from or characterized by fraud, tainted by fraud;
done made, or effected with a purpose or design to carry out a fraud.
"Malicious: In la legal sense, any act done willfully and purposely to the prejudice and injury of another,
which is unlawful, is, as against that person, "malicious".
Stephen's History of the Criminal Law of England, reads as --whenever the words 'fraud" or "intent to
defraud" or `fraudulently" occur in the definition of a crime two elements at least are essential to the
commission of the crime; namely, first, deceit or any intention to deceive or in some cases mere secrecy;
and secondly, either actual injury or possible injury or an intent to expose some person either to actual
injury or to a risk of possible injury by means of that deceit or secrecy ..."
Section 25 of the Indian Penal Code defines the term "fraudulently" as follows:-
"A person is said to do a thing fraudulently if he does that thing with intent to
defraud but not otherwise".
1884
5. By reading of the above provisions and the definitions of the words referred therein, it is necessary to
refer the facts as available in the present case so as to see whether the said provisions is applicable to the
present case or not. As per the above sections, a person, who initiates insolvency resolution process for
any other purpose other than resolution of insolvency,the Adjudicating Authority can impose suitably
penalty so as to prevent litigant from misusing provisions of IBC.
In the instant case, as stated detailed supra, it is not the case of the Petitioner that the Respondent is
unable to pay debt or it is insolvent for the same. While demanding to pay the loan in question, the
petitioner is filing cases as stated supra, to prevent the respondent to pay the debt, after selling flats in
question and, it is also not accepting the registration of Flats in its favour or it nominee. Admittedly, each
flat in question is worth Rs. 40 lakhs at market value and there is absolutely no difficulty for the
Respondents to pay the amount. However, the Petitioner for the reason best known to him is not
interested to get the money back but only interested to initiate malicious litigations by way of tiling civil
suit, criminal cases and also case under NI Act as mentioned above. There is no question of insolvency
involved in this case as mentioned above and thus, there cannot be any resolution of insolvency process.
The present petition is filed for purpose other than the resolution of insolvency as mentioned in Section
65. Therefore, the present proceedings must be held to be a maliciousone and it is liable to be dismissed
with cost.
17. It is to relevant to mention here that as per Section 63 of IBC,2016, no civil court or authority has
jurisdiction to entertain any suit or proceedings in respect of any matter on which NCLT or NCLAT has
jurisdiction under this Code. Knowing very well that IBC came to force, and only single cause of action
arise in the instant case, i.e. Payment of short term loan of Rs. 2.5 Crore, the petitioner has resorted to
civil and criminal course of action as stated supra.
18. In view of the above facts and circumstances of the case, I am of the considered opinion that the
instant Company petition is not maintainable and it is liable to be dismissed. Therefore, the Company
petition bearing CP (1B) No.96/711-IDB/2017 is hereby dismissed with a cost of Rs. 1,00,000/- (Rupees
One lakh Only) to be payable by the petitioner to respondent within a period 3 weeks from today.
1885
HYDERABAD BENCH
C.P. (I.B.) No. 220/7/NCLT/HDB/2017
Applicants: Tilak Raj Punjabi

Dhimant Shah
Vs.
Respondent: Syberplace E Solutions Private Limited
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. D. Narendar Naik, & Ms. Mytri Indukuru, Learned Advocate
ORDER
1. The present Company Petition bearing CP (IB)/220/7/HDB/2017, is filed by Mr. Tilak Raj
Panjabi and another (Petitioners/Financial Creditors) under Section 7 of Insolvency and Bankruptcy
Code, 2016 R/w Rule 4 of Insolvency Et Bankruptcy (Application to the Adjudicating Authority) Rules
2016, by seeking to initiate Corporate Insolvency Resolution Process (CIRP) in the matter of Syberplace
E Solutions Private Limited (Respondent / Corporate Debtor).
2. The brief facts, leading to filing of present CP, are as follows: -
(a) Syberplace E Solutions Private Limited (Corporate Debtor) approached Mr. Tilak Raj Panjabi Et
another (Financial Creditors) in the year 2014 and requested funds by way of unsecured loans from the
Financial Creditors with a promise to pay monthly interest ® 24% per annum on the said unsecured loans.
Accordingly, Financial Creditor No.1 has provided two unsecured loans of Rs. 5 lakhs each to the
Corporate Debtor on 16.04.2014 and 28.01.2016. The Financial Creditor No.2 also provided unsecured
loan of Rs. 10 lakhs on 22.02. 2014.
(b) In pursuant to the above two unsecured loans of Rs. 5 lakhs each made by the Financial Creditor
No.1, the Corporate Debtor made interest payable ® 24% only on the first loan of Rs. 5 lakhs up to the
1886
month of April, 2016. However, no interest was paid on the second loan of Rs. 5 lakhs till date. The
Corporate Debtor had even deducted tax at source and even issued the tax deduction certificates in Form
26AS to the Financial Creditor No.1.
(c) So far as the Loan made by the Financial Creditor No.2 is concerned, the Corporate Debtor made
interest payment @ 24% up to May, 2016. In this case also, the Corporate Debtor had deducted tax at
source and issued tax deducted certificates in Form No 26AS in the name of the wife of Financial
Creditor No.2
(d) Having failed to pay its debts, the Financial Creditor No.1 issued a letter dated 19.11.2016
demanding repayment of the Principal amount of Rs. 10 lakhs together with agreed interest. The
Financial creditor No.2 also issued another letter dated 12.06.2017 and an e-mail dated 13.06.2017
demanding repayment of the principal amount of Rs. 10 lakhs together with interest. The total outstanding
amount from the Corporate Debtor is Rs. 26,22,330/-including interest as on 31.07.2017.
(e) The Petitioner also issued a letter dated 19.11.2016 in this regard and when the Respondent failed
to pay the debt, the present petition is filed.
3. Heard Shri D. Narendar Naik, Learned Counsel for the 1/ Petitioner.
4. The case was listed for admission on various dates viz, 04.10.2017, 10.10.2017, 18.10.2017,
07.11.2017 and today and the case was adjourned at the request of the Learned Counsel for the Petitioner
to comply with the objections and seek instructions from this client.
5. The Learned Counsel for the Petitioner has filed a memo dated 10.11.2017 which is taken on
record, by stating as follows: -
"When we went to personally serve the notice on the Corporate Debtor at its registered
office address, we came to know that there is another company operating out of the
said premises and Syberplace E Solutions Private Limited has closed its operations
since a long time. The Directors are also not present in the addresses available with the
Financial Creditors.
Being left with no alternative, the Financial Creditors seek permission of this Hon'ble
Tribunal to withdraw the above Company Petition with liberty to approach this
1887
Hon'ble Tribunal by way of a fresh Company Petition when the Financial Creditors
are able to identify and locate the whereabouts of the Corporate Debtor.
It is also humbly prayed that this Hon'ble Tribunal may direct the Registrar of
Companies, Hyderabad to initiate appropriate proceedings against the Corporate
Debtor".
In view of the above, the Learned Counsel for the Petitioner therefore request to permit him to withdraw
the present Company Petition, with a liberty to file fresh Company Petition and also submit that he would
seek remedy from Registrar of Companies (RoC).
6. In view of the above facts and circumstances of the case, we disposed of the present Company
Petition bearing CP (IB) No. 220/7/2017 as withdrawn, by granting liberty to the Petitioner to approach
the Registrar of Companies for seeking appropriate remedy and also granted liberty to the Petitioner to
file a fresh Company Petition in accordance with law. No order as to costs.
1888

HYDERABAD BENCH
C.P. (I.B.) No. 191/7/NCLT/HDB/2017
Applicants: The Central Bank of India

Vs.
Respondent: M/s. ASR Engineering & Projects Limited
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. P. Ravi Charn, Mr. L. Venkateshwara Rao, Mr. S. Siva Sankaran
& Mr. Praveen Kumar Jain, Learned Advocates
For Respondents/Defendant: Mr. R. Raghunandan Rao, Mr. G. Bhupesh & Mr. S. Nagesh Reddy,
Learned Advocates
ORDER
1. The present Company Petition bearing C.P.(113).No.191/7/11DB/2017 is filed by Central Bank

of India u/s 7 of the Insolvency and Bankruptcy Code, 2016 R/W Rule 4 of the 1&B (Application to
Adjudicating Authority) Rules, 2016 by seeking to initiate Corporate Insolvency Resolution Process in
the matter of M/s.ASR Engineering & Projects Limited under IBC, 2016.
2. Heard, Mr. Praveen Kumar Jain, Learned Counsel for Petitioner. Mr.R.Raghunandan Rao,
Learned Senior Counsel for Respondent.
3. Mr. Praveen Kumar Jain, Learned Counsel for Petitioner submit that M/s.ASR Engineering &
Projects Limited is incorporated on 01.12.2005. The Corporate Debtor has availed debts in the form of
Working Capital (fund based and non-fund based) from Financial Creditor and other leaders viz Carrara
Bank, IDBI Bank Lrd, SBFI and Lakshmi Vilas Bank for an amount of Rs.470 Crores vide Working
Capital Consortium Agreement dated 15.02.2010. Subsequently, the working capital limits was increased
from Rs.470 Cr to Rs.750 Cr and from Rs.750 Cr to Rs.896 Cr dated 16.03.2012. Finally, the working
capital increased from 896 Crores to Rs.963.50 Crores dated 12.09.2014.
4. The amount of default of Corporate Debtor to the Financial Creditor as on 31.07.2017 is as under:
1889
Sl.No. Particulars Amount in Rs.
1 Working Capital Term Loan (WCTL-I) 8,88,15,418.00
Account No. 339322670
2 Working Capital Term Loan (WCTL-II) 96,78,49,870.00
3 Funded Interst Term Loan on WCTL-I 1,37,30,130.00
4 Funded Interest Term Loan on WCTL- 12,69,01,653.00
II Account No. 3393268957
5 Funded Interest Term Loan on Irregular 3,78,92,295.00
CC Limits Account No. 3393280179
6 Working Capital Facility (Fund Based) 43,08,55,527.00
C.C.Account No. 3063591373
7 Working Capital Facility (Non Fund 8,04,62,765.00
Based) BG Issued 3096416880
Total Default Amount 174,62,07,658.00
5. When the said amount was not paid, the Petitioner got issued Demand Notice dated
19.04.2017, under section 7 of IBC, 2016 R/W Rule 5 of 1&B (Application to Adjudicating Authority)
Rules, 2016 by demanding to pay the total amount of Rs. 172,48,82,315.12 (which represents the
principal plus interest due up to 19.04.2017). However, the Respondent is failed to pay the above
amount, thus filed the present Company Petition by seeking to initiate Corporate Insolvency Resolution
Process against the Respondent.
6. The case is listed on various dates viz 25.09.2017, 6.10.2017, 09.10.2017, 18.10.2017,
07.11.2017, 16.11.2017 and 17.11.2017. The case was adjourned on above dates on the submission of
the Learned Counsels of parties that the issue in question was likely to be resolved between the parties.
7. The Learned Counsel for Petitioner tiled Memo dated 17.11.2017, which reads as under:
a. The Corporate Debtor have made payment of Rs.13,68,00,000/- and further committed that it
will make the payment of reminder of balance approx. an amount of Rs.64,58,76,614/- on or before
15.03.2018 and make the account standard on or before 31.03.2018.
b. The Financial Creditor submits that after filing the above petition, the Corporate Debtor has
paid an LIMOL111L of Rs. 13,68,00,000/-. And the outstanding amounts and total overdoes out of the
1890
outstanding amount to be paid after deduction of the amounts of Rs. 13,68,00,000/- paid by Corporate
Debtor are as follows:
A/c Outstanding As on Overdues (up to

30.09.2017 September 2017 out of
outstanding amount)
TL-1-3393240385 964763007 434661930
3393226701 85669536 37109954
3393268957 119392516 75229868
3393252584 11560466 5287255
3393280179 36358632 19613374
3063591373 347282737 73974233
TOTAL 1564441265 645876614
c. The Financial Creditor submits that the total outstanding dues of the Corporate Debtor is
Rs.156,44,41,265/- out of which overdue amount upto September 2017 is Rs.64,58,76,614/-
(approximately). Upon making the payment of Rs 64,58,76,614/- to the Financial Creditor, the
accounts of Corporate Debtor will be eligible for upgradation to Standard Category.
d. The Financial Creditor has examined the proposal of the Corporate Debtor and is agreeable
subject to the following conditions:
i. Corporate Debtor to clear the overdues of Rs.64,58,76,614/- by 15.03.2018 by making payment

of Rs 10.00 crore from October 2017 to February 2018 and balance Rs.14,58,76,614/- by March 2018,
apart from making payment of regular interest and installment as per MRA
ii. Balance outstanding total Loan amount of Rs 91,85,64,651/- shall be paid in regular
installments as per MRA dated 20.08.2014 and 12.09.2014 along with the monthly interest.
e. In the light of above facts and circumstances, we pray the Hon'ble Tribunal to dispose the
above Company Petition in terms of the conditions as stated in clause 4 mentioned above giving liberty
to the Financial Creditor to file fresh petition in the event of defaults committed by Corporate Debtor in
compliance of the above conditions including initiation of contempt proceedings against the Corporate
Debtor in accordance with law.
1891
In the light of the facts, and circumstances of case, the Company Petition bearing
C.P.(1B).No.191/7/1-1DB/2017 is disposed of as withdrawn by granting liberty to the petitioner to tile
fresh Company Petition, in case, any default committed by the Corporate Debtor of the terms and
conditions mentioned in the Memo dated 17.11.2017. No order as to costs.
1892

HYDERABAD BENCH
C.P. (I.B.) No. 207/7/NCLT/HDB/2017
Applicants: The Central Bank of India

Vs.
Respondent: M/s. Rajvir Industries Limited,
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. P. Ravi Charn, Mr. L. Venkateshwara Rao, Mr. S. Siva Sankaran
& Mr. Praveen Kumar Jain, Learned Advocates
For Respondents/Defendant: Mr. S.Raja Gipal, Learned Advocates
ORDER
1. The present Company Petition bearing C.P.(113).No.207/7/HD13/2017 is filed by Central Bank

of India 1.1/s 7 of the Insolvency and Bankruptcy Code, 2016 R/W Rule 4 of the 18z.13 (Application to
Adjudicating Authority) Rules, 2016 by seeking to initiate Corporate Insolvency Resolution Process in
the matter of M/s.Rajvir Industries Limited under IBC, 2016.
2. Heard, Mr. Praveen Kumar Jain, Learned Counsel for Petitioner. Mr. S.Raja Gopal, Learned
Counsel for Respondent.
3. Mr. Praveen Kumar Jain, Learned Counsel for Petitioner submit that M/s.Rajvir Industries
Limited is incorporated on 01.09.2004. The Corporate Debtor has availed debts in the form of Working
Capital Term Loan under multiple banking arrangement from Financial Creditor and other leaders viz
SB1, Axis Bank, ICICI, IDBI, SB of Bikaner & Jaipur, SBI-1 and SB of Mysore.
4. The amount of default of Corporate Debtor to the Financial Creditor as on 31.07.2017 is as under:
SI.No. Particulars Amount in Rs.

1 Term Loan vide Account No. 5,74,08,570.00
1893
3049158732
2 Priority Debt vide Account No. 17,29,857.15
3442406870
3 Funded Interest Term Loan 58,22,000.00
vide Account No. 3442424299
Total Default Amount 6,49,60,427.15
5. When the said amount was not paid, the Petitioner got issued Demand Notice dated
02.05.2017 under section 7 of IBC, 2016 R/W Rule 5 of 18LB (Application to Adjudicating
Authority) Rules, 2016 by demanding to pay the total amount of Rs.6,97,03,593.66 (which
represents the principal plus interest due up to 19.04.2017). However, the Respondent failed to pay
the above amount, thus tiled the present Company Petition by seeking to initiate Corporate
Insolvency Resolution Process against the Respondent.
6. The case is listed on various dates viz 22.09.2017, 27.09.2017, 6.10.2017, 09.10.2017,
18.10.2017, 23.10.2017, 07.11.2017, 16.11.2017 and 17.11.2017. The case was adjourned on above
dates on the submission of the Learned Counsels of parties that the issue in question was likely to be
resolved between the parties.
7. The Learned Counsel for Petitioner filed Memo dated 17.11.2017, which reads as under:
a. The Corporate Debtor has submitted an undertaking on 18.10.2017 stating that they have
made payment of Rs.40,00,000/- and further committed that it will make the payment of reminder
of balance approx. an amount of Rs.55,00,000/- on or before 30.12.2017 and make the account
standard on or before 30.12.2017.
b. The Financial Creditor submits that after tiling the above petition, the Corporate Debtor has
paid an amount of Rs.40,00,000/-. And the outstanding amounts and total overdues out of the
outstanding amount to be paid after deduction of the amounts of Rs.40,00,000/- paid by Corporate
Debtor are as Follows:
A/c Outstanding amounts Overdues (upto Dec 2017)

upto Dec 2017 (Out of outstanding
amount)
TL 1-3049158732 5,61,25,602.00 77,03,602.00
TL 2-3442406870 10,42,778.00 4,64,278.00
TL 3-2442424299 54,13,643.00 8,34,143.00
1894
TOTAL 6,25,82,023.00 90,02,023.00
c. The Financial Creditor submits that the total outstanding dues of the Corporate Debtor is Rs
6,25,82,023/- out of which overdue amount upto December 2017 is Rs 90,02,023/- (approximately).
Upon making the payment of Rs.90,02,023/- to the Financial Creditor, the accounts of Corporate
Debtor will be eligible for upgradation to Standard Category.
d. The Financial Creditor has examined the proposal of the Corporate Debtor and is agreeable
subject to the following conditions:
i. Corporate Debtor to submit Post Dated Cheque for an amount of Rs 90,02,023/- on or

before 18.1 1.2017;
ii. Corporate Debtor to make payment of overdue amount of Rs.90,02,023/- on or before

15.12.2017;
iii. After upgrading the account to standard category (i.e. after payment of Rs.90,02,023/-),
Corporate Debtor shall pay the balance outstanding amount of Term Loans of Rs.5,35,80,000/- to
the Financial Creditor as per Master Restructuring Agreements dated 26.08.2014 and 18.10.2014
executed by Corporate Debtor with Financial Creditor and along with other lenders.
e. In the light of above facts and circumstances, we pray the Hon'ble Tribunal to dispose the
above Company Petition in terms of the conditions as stated in clause 4 mentioned above giving
liberty to the Financial Creditor to file fresh petition in the event of defaults committed by
Corporate Debtor in compliance of the above conditions including initiation of contempt
proceedings against the Corporate Debtor in accordance with law.
8. In the light of the facts, and circumstances of case, the Company Petition bearing
C.P.(113).No.207/7/11DB/2017 is disposed of as withdrawn by granting liberty to the Petitioner to
file fresh Company Petition, in case, any default committed by the Corporate Debtor of the terms
and conditions mentioned in the Memo dated 17.11.2017. No order as to costs.
1895
By Hon’ble NCLT Kolkata Bench
1896

KOLKATA BENCH
C.P. (I.B.) No. 16/7/NCLT/KB/2017
Applicant: SREI Equipment Finance Ltd.

Vs.
Respondent: SREE Metaliks Ltd.
Judges/Coram:
Hon'ble Sh. Vijai Pratap Singh, Member (J)
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Vinod Kumar Kothari and Ms. Neetu Poddar, Learned Advocate
ORDER
Ld, Pr. CS for the Petitioner is present. Nobody appeared on behalf of the Respondents.
Heard the Ld. Pr. CS for the petitioner. Reserved for order.
1897
KOLKATA BENCH
C.P. (I.B.) No. 16/7/NCLT/KB/2017
Applicant: Shree Equipment Finance Ltd.

Vs.
Respondent: Shree Metaliks Ltd. & Ors.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Ms. Neetu Poddar, Learned Advocate
ORDER
Ld. Pr. CS for the applicant mentioned the matter today.
The Pr. CS of the petitioner has given a copy of Hon'ble National Company Law Appellate Tribunal's
order in C.A. (AT) (Insolvency) No. 3 of 2017 wherein it was stated that respondents will provide another
name of IRP who will function during the rest of the period and as may be ordered by the NCLT. The Pr.
CS for the petitioner has stated that Committee of Creditors is desirous of appointing Interim Resolution
Professional in this case and have suggested the name of Sri S. M. Gupta, who is a registered IRP under
Registration No. IBBI/IPA-002/IP-00137/2016-17/1200 and he has given his consent in terms of
Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 and submitted Form 2 of
the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016.
In view of the urgency of the petitioner as the Committee of Creditors shall meet on 27/02/2017 Sri S.M.
Gupta is appointed as Interim Resolution Professional and he will act as an interim IRP for conducting the
meeting of the Committee of Creditors, i.e., scheduled to be held on 27/02/2017. He will be assisted by
the erstwhile IRP Shri Vinod Kr. Kothari who will make available all necessary documents to enable Shri
S. M. Gupta, Pr. CS, who will be chairman of the Committee of the Creditors which may also nominate
Resolution Professional for carrying out further proceedings under this petition.
Urgent photo copy of the order may be provided, if applied for, subject to compliance with all necessary
formalities.
1898

KOLKATA BENCH
C.P. (I.B.) No. 170/7/NCLT/KB/2017
Applicant: RBL Bank Ltd.

Vs.
Respondent: MBL Infrastructures Ltd & Ors.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Ms. Sushmita Banerjee and Mr. Narayan Debnath, Learned Advocates
For Respondents/Defendant: Mr. Abhijeet, Learned Advocate
ORDER
Ld. Counsels for the petitioner and the respondents are present.
Heard. Reserved for order.
1899
KOLKATA BENCH
C.P. (I.B.) No. 186/9/NCLT/KB/2017
Applicants: Naviplast Traders Pvt. Ltd. & Ors.

VS
Respondent: R. G. Shaw & Sons Pvt. Ltd.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Akhilesh Kuma, Mr.Aakash Sarma & Mr.Kanishk Kundan,
Learned Advocate
For Respondents/Defendant: Mrs. Manju, Mr. Sidharth Sharma, Ms. Meenakshi Manot & Ms. Namrata
Basu, Learned Advocate
ORDER
Heard the Counsels appearing for both the parties. Reserved for Orders.
1900

KOLKATA BENCH
C.P. (I.B.) No. 40/7/NCLT/KB/2017
Applicant: Bank of Maharasthra

VS
Respondent: West Bengal Essential Commodities Supply Corporation Ltd.
Judges/Coram:
Counsels:
ORDER
Ld. Counsel on behalf of the Petitioner, Union Bank of India and Respondent No. 1 are present.
Heard. Reserved for order.
1901
KOLKATA BENCH
C.P. (I.B.) No. 361/7/NCLT/KB/2017
Vs
Respondent: Electrosteel Steels Ltd.
Judges/Coram:
Hon'ble Sh. V.P. Singh, (Member (J)
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Ratnanko Banerji, Sr. Advocate, Anuj Singh, Urmila Chakraborty
and Ritoban Sarkar, Learned Advocate
For Respondents/Defendant: Mr. Aniruddha Roy, Mr. Anunoy Basu, Learned Advocates
ORDER
Hon'ble Sh. V.P. Singh Member (J)
Ld. Counsels for the petitioners and the respondents are present.
Order pronounced. Certified copy of the order may be issued, if applied for, upon compliance of all
requisite formalities.
1902

KOLKATA BENCH
C.P. (I.B.) No. 387/7/NCLT/KB/2017

Vs
Respondent: Adhunik Alloys & Power Ltd.
Judges/Coram:
Hon'ble Vijai Pratap Singh. (Member (J))
Counsels:
For Appellant/Petitioner/Plaintiff: Mrs. Manju Bhotoria, Mr. Niloy Sengupta, Mr. Sidhartha Sharma,
Ms. Namrata Basu, Learned Advocates
For Respondents/Defendant: Ms. Suhani, Ms. Prapa, Learned Advocates
ORDER
Hon'ble Vijai Pratap Singh, Member (J)
Ld. Counsels for the financial creditor and the corporate debtor are present.
Ld. Counsels for the financial creditor has filed two affidavits of service which may be taken on record.
Heard the arguments of both the parties, Reserved for order,
1903
KOLKATA BENCH
C.P. (I.B.) No. 397/7/NCLT/KB/2017
Applicant: M/s Edelweiss Asset Reconstruction Co Ltd.

Vs.
Respondent: Jalan Intercontinental Hotels (P) Ltd
Judges/Coram:
Counsels:
ORDER
Ld. IRP as well as Ld. Counsel for the financial creditor and the corporate debtor are present.
The Ld. Counsel for the financial creditor mentioned the matter that in the order dated 29/08/2017 there
are some typographical errors in the name of applicant and respondent.
It appears from the Order dated 29/08/2017 that at first page -
(1) 16th line, instead of "M/s. Jalan intercontinental Hotels Pvt. Ltd." it was written as "M/s. Jalan
International Hotels Pvt. Pvt. Ltd.";
(2) 21st line, instead of "Edelweiss Asset Reconstruction Company Ltd.- it was written as
"Edelweiss Reconstruction Company Ltd."; and
(3) 25th line, instead of "M/s. Jalan Intercontinental Hotels Pvt. Ltd." it was written as M/s. JaIan
intercontinental Hotels Ltd.
In view of the above we hereby rectify the order in terms of the power conferred upon the Tribunal
under Rule 154 of the NCLT Rules, 2016 as follows:
(1) In 16th line, it should be read as "M/s. Jalan Intercontinental Hotels Pvt. Ltd." instead of
"M/s. Jalan international Hotels Pvt. Ltd,";
1904
(2) In 21st line, it should be read as "Edelweiss Asset Reconstruction Company Ltd." instead of
"Edelweiss Reconstruction Company Ltd."; and
(3) In 25th line, it should be read as "M/s. Jalan Intercontinental Hotels Pvt. Ltd." instead of
"M/s. Jalan Intercontinental Hotels Ltd."
Accordingly, the order dated 29/08/2017 in the matter stands rectified as above and this order shall
form integral part of the order dated 29/08/2017.
Urgent photo copy of this order, if applied for, be supplied to the parties subject to compliance with all
requisite formalities.
1905
KOLKATA BENCH
C.P. (I.B.) No. 444/7/NCLT/KB/2017
Applicant: Shiv vani Projects Pvt. Ltd.

Vs.
Respondent: Aarti Highrise Pvt. Ltd.
Judges/Coram:
Hon'ble Ms. Manorarna Kumari, Member (J)
Counsels:
For Appellant/Petitioner/Plaintiff: Ms. Neha Somani, Learned Advocates
For Respondents/Defendant: Ms. Patita Paran Biswal, Learned Advocate and Yogesh Gupta, FCA
ORDER
Hon'ble Ms. Manorarna Kumari, Member (J)
Ld. P.C.S. on behalf of the Petitioner is present and the Ld. Lawyer as well as Ld. C.A. on behalf of the
Corporate Debtor is also present.
The Ld. P.C.S. appearing on behalf of the Financial Creditor fairly submitted that she is withdrawing to
the petition in view of the settlement between the Corporate Debtor and Financial Creditor. Corporate
Debtor appearing through his Ld. C.A. as well as Ld. P.C.S. appearing on behalf of the Petitioner has
conceded. Hence, the petition filed under Section 7 of I.B.C. is dismissed as withdrawn.
1906

KOLKATA BENCH
C.P. (I.B.) No. 223/7/NCLT/KB/2017
Applicant: Havells India Ltd.

Vs.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mrs. Mousumi Bhattacharya, Mr. Suvradal Choudhury and Mrs.
Priyanka Choudhury , Learned Advocates
For Respondents/Defendant: Mr. Rudraman Bhattacharya and Ms. Sanchari Chakraborty, Learned
Advocates
ORDER
1. Petitioner has filed this application under Sec.7 of the Insolvency and Bankruptcy Code, 2013
(from now on referred to 184 B Code, 2016) for initiating corproate insolvency process against the
corproate debtor Electrosteel Steels Ltd. Petitioner has stated that corporate debtor has committed
default in making payment of Rs.90,85,110/-.
2. It is pertinent to mention that corproate insolvency process has already been initiated against
the corporate debtor Electrosteel Steels Ltd. in case No. CP/361/KB/2017. Section 11 of the I & B
Code, 2016 provides that if a corporate debtor undergoing a corporate insolvency process, then he shall
not be entitled to make an application to initiate corporate insolvency resolution process. Moratorium
under Sec.14 of the I & B Code, 2016 provides an institution of any suit or continuation of pending suit
or proceedings against the corporate debtor including execution of any judgment, decree or order in any
court of law, tribunal, arbitration panel or other authority.
3. It is an undisputed fact that corporate debtor Electrosteel Steels Ltd. is undergoing corporate
insolvency resolution process and moratorium has been declared. Therefore, during pendency of
corporate insolvency resolution process no suit or proceedings can continue against the same corporate
debtor. Electrosteel Steels Ltd. is undergoing corporate insolvency resolution process in Case No.
1907
CP/361/KB/2017. As such, Sec.14 of the I & B Code, 2016 prohibits any suit or proceedings against
the same corporate debtor.
4. In the circumstances, the petition under Sec.7 of the I & B Code, 2016 cannot be admitted.
Petitioner, who is a financial creditor is at liberty to file his claim before the corporate resolution
professional. As such, the petition filed by the petitioner under Scc.7 of the I & B Code, 2016 is
rejected, as not maintainable.
1908

KOLKATA BENCH
C.P. (I.B.) No. 331/7/NCLT/KB/2017
Applicant: Reliance Commercial Finance Ltd

Vs.
Respondent: Laxmivinayak Rice Mills Ltd
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Arnab Babu, Learned Advocate
ORDER
Ld. Counsel for the petitioner is present.
Ld. Counsel has filed the specific power of attorney in compliance of the order dated 17/08/2017.
Ld. Counsel for the petitioner has also filed fresh Form 2, which may be taken on record.
Heard the arguments. Reserved for order.
1909
KOLKATA BENCH
C.P. (I.B.) No. 240/7/NCLT/KB/2017
Applicants: Bank of Mahashtra

Vs.
Respondent: West Bengal Essential Commodities Supply Corporation Ltd.
Judges/Coram:
Hon'ble Sh. Vijay Pratap Singh, Member (J)
Counsels:
ORDER
Ld. Resolution Professional (RP) along with his Counsel and the Ld. Counsel for the corporate
debtor are present.
C.A.(IB) No. 476/KB/2017 has been filed by the RP with a view to issue directions to the
officers of the respondent not to lodge FIR against the Resolution Professional and against the Bank
Branches.
Ld. Counsel appearing on behalf of the corporate debtor submitted that till date no FIR has
been lodged. It is expected that RP is working in accordance with the order passed by the National
Company Law Tribunal, Kolkata Bench and only if any party is aggrieved by that order they can take
appropriate action before this Court. There cannot be any interference by any other authority. Action of
the RP is protected under the Insolvency and Bankruptcy Code, 2016 if it is under the provisions of the
Code.
C.A.(IB) No. 476/KB/2017 is disposed of accordingly.
List on the date fixed, i.e., 08/11/2017.
Office is directed to communicate the order to Resolution Professional immediately.
1910

KOLKATA BENCH
C.P. (I.B.) No. 37/7/NCLT/KB/2017
Applicants: ICICI Bank Ltd.

Vs.
Respondent: Palogix Infrastructure Pvt. Ltd.
Judges/Coram:
Counsels:
ORDER
Ld. Resolution Professional (RP) and Ld. Counsel for the corporate debtor and the intervener
are present.
Heard. Admit.
Ld. RP has filed C.A. (IB) No. 475/KB/2017 under Section 12(2) of the Insolvency and
Bankruptcy Code, 2016 for extending the period of Corporate Insolvency Resolution Process (CIRP) of
Palogix Infrastructure Pvt. Ltd. by a period of 90 days beyond 11/11/2017.
Ld. RP has also annexed the copy of the minutes of the meeting of the Committee of Creditors
(CoC), which shows that CoC with 100% vote share has passed the resolution for seeking approval for
extension of time. CoC has approved one time extension of 90 days for CIRP in the matter of Pallogix
Infrastructure Ltd. beyond 180 days provided under the statute, which is expiring on 11/11/2017.
Ld. RP has also informed that Resolution Plan is pending, and she is hopeful that the
Resolution Plan will be finalized shortly. In the circumstances and on the recommendation of the CoC
we hereby allow the C.A. (IB) No. 475/KB/2017 and 90 days' time is further extended for submission
of Resolution Plan.
1911
RP is further directed to consider the Resolution Plan submitted by the operational creditor and
place the same before CoC for proper consideration.
Therefore, C.A. (IB) No. 475/KB/2017 is disposed of.
List the matter on 23/11/2017 instead of 07/11/2017 for further order.
Office is directed to communicate the order to Resolution Professional immediately for

compliance.
1912

KOLKATA BENCH
C.P. (I.B.) No. 331/7/NCLT/KB/2017
Applicants: Reliance Commercial Finance

Vs.
Respondent: Laxmivinayak Rice Mills Ltd.
Judges/Coram:
Counsels:
ORDER
Ld. RP and Ld. Counsel on behalf of the corporate debtor and Committee of Creditors are
present.
Ld. RP has filed an C.A. (IB) No. 462/KB/2017 with a prayer for necessary direction upon the
Directors and other appropriate authorized officers of the corporate debtor for providing access to the
applicant to all books of accounts and other statutory records of the company and to provide to the
applicant all the information as sought by him in vide letters dated 29/09/2017, 07/10/2017 and
20/10/2017 and further prayer has been made to allow the applicant to take custody of all of the assets
of the corporate debtor including the administrative building to enable the applicant to carry out his
duties and responsibilities as the Resolution Professional.
Ld. Counsel for the corporate debtor has submitted that Resolution Professional (RP) has
provided time upto 25/11/2017 for submissions of all the documents and she undertake to fully
cooperate with the RP and submit all the documents.
Keeping in view of the submissions of the Ld. Counsel of the corporate debtor it is expected
that corporate debtor may fully cooperate with the RP and submit the books and records as requested
by RP.
RP has filed Progress Report which may be taken on record. C.A (IB) No. 462/KB/2017 is
disposed of accordingly.
List on 01/12/2017.
1913
KOLKATA BENCH
C.P. (I.B.) No. 543/7/NCLT/KB/2017
Applicants: SBER Bank

Vs.
Respondent: Varrasana Ispat Ltd.
Judges/Coram:
Counsels:
ORDER
Ld. Counsels for the Applicant and Corporate Debtor are present.
Heard the matter from both sides at length. Order is reserved
1914

KOLKATA BENCH
C.P. (I.B.) No. 387/7/NCLT/KB/2017

Vs.
Respondent: Adhunik Alloys & Power Ltd.
Judges/Coram:
Counsels:
ORDER
Ld. Resolution Professional (RP) and the Ld. Counsel for the operational creditor are present
Ld. RP has moved C.A. (IB) No. 435/KB/2017 for rectification of certain typographical error at
page 1 in the order dated 23/08/2017 wherein the address of the corporate debtor has been inadvertently
mentioned as "Liok Road, Cuttack 753012, site office at Arjeepalli, via Chatrapur, Ganjam 761020".
On perusal of the order it appears that in the order address of the corporate debtor has been mentioned
as "Link Road, Cuttack 753012, site office at Arjeepalli, via Chatrapur, Ganjam 761020" which should
be read as "14, Netaji Subhas Road, Kolkata 700001, West Bengal, India".
The above rectification of order has been made in terms of power conferred upon the Tribunal
under Rule 154 of the NCLT Rules, 2016.
Accordingly, the order dated 23/08/2017 in the matter stands rectified as above and this order
shall form integral part of the order dated 23/08/2017.
C.A. (IB) No. 435/KB/2017 is disposed of accordingly.
Urgent photo copy of this order, if applied for, be supplied to the parties subject to compliance
with all requisite formalities.
1915
KOLKATA BENCH
C.P. (I.B.) No. 359/7/NCLT/KB/2017

Vs.
Respondent: Binani Cements Ltd.
Judges/Coram:
Counsels:
ORDER
Ld. Counsel for the Resolution Professional (RP) as well as the Ld. Counsel for the financial
creditors are present.
RP has filed an I.A.No. 506/KB/2017 and made a request that he may be permitted to
withdraw the I.A.No. 506/KB/2017. Prayer is allowed. I.A.No. 506/KB/2017 is dismissed as
withdrawn.
I.A.No. 505/KB/2017 has been filed by the RP with a prayer to clarify, declare and confirm
that the claims with respect to the corporate guarantees issued by the Corporate Debtor, including
those under which demands for payment have been made during the CIRP period, would be required
to be verified and admitted.
Ld. RP has sought certain clarification in respect of claim of the financial creditor wherein
corporate guarantee has not been invoked.
In view of the judgement delivered on 27/10/2017 by the Hon'ble Principal Bench, National
Company Law Tribunal, New Delhi in (IB)-102(PB)/2017 (Axis Bank Limited & Anr. -Versus- Edu
Smart Services Private Limited) wherein it has been held that in order to qualify as a 'debt' firstly
provisions of the corporate guarantee must be satisfied by raising a demand which is expressed by
invoking the corporate guarantee and the date of its invocation has it be earlier than the insolvency
commencement date. In the present case, the CIRP commenced on 27.06.2017 and the corporate
1916
guarantee was admittedly invoked on 21.07.2017, which is much after the insolvency commencement
date. Therefore, we find that the Resolution Professional would not be in a position to verify the claim
as it will not be reflected in the Books of Accounts which are supposed to be updated as on 27/06/2017
In the absence of any record to verify the claim, it will be impossible for the Resolution Professional to
accept any such claim which has become a debt after 2706.2017."
Keeping in view of the decision taken by the Principal Bench, NCLT, New Delhi it is clear that
corporate guarantee, which has not been invoked before commencement of insolvency process, cannot
be considered as debt if it was invoked after the commencement of insolvency process and
"moratorium" was issued. Therefore, RP is to be guided by the decision of the Hon'ble Principal Bench,
NCLT, New Delhi.
In the light of the above decision taken by the Hon'ble Principal Bench, I.A.No. 505/KB/2017
is disposed of accordingly.
RP is further directed to decide on the issue at the earliest the claim of the corporate debtor
after hearing both the parties within 10 days including the IDBI.
List on 12/12/2017 for filing the progress report.
1917
KOLKATA BENCH
C.P. (I.B.) No. 240/7/NCLT/KB/2017
Applicants: West Bengal Essential Commodities Supply Corporation Ltd.

Vs.
Respondent:
Judges/Coram:
Counsels:
ORDER
Ld. Resolution Professional (RP) as well as Ld. Counsel for the financial creditor and the
corporate debtor are present.
Ld. RP has filed Resolution Plan along with the minutes of the meeting of the Committee of
Creditors (CoC) dated 13/11/2017 wherein it is stated that on 23/10/2017 all financial creditors
received their settled amount from the corporate debtor. Subsequently, the financial creditors after
having received the amount through OTS have submitted a letter of satisfaction along with a no-dues
certificate to the corporate debtor and also have submitted the same to the Resolution Professional.
The resolution professional presented before the members of CoC a resolution plan which is
prepared by Board of Directors of the corporate debtor and received by the resolution professional for
examination and presentation before the members of CoC.
CoC resolved that resolution plan prepared and submitted by the corporate debtor and examined by the
resolution professional which is found as compliant to Section 30 of the Insolvency and Bankruptcy
Code, 2016 and also compliant to Regulations 37, 38 and 39 of the !BB! (Insolvency Resolution
Process for Corporate Persons) Regulations, 2016 as amended upto 07/11/2017 is approved under
section 30(4) of I & B Code without any modification. The resolution plan as approved by the CoC
with a certificate that the contents of the resolution plan met all requirements of the Code and
Regulation and that resolution plan has been approved by the committee of creditors.
1918
On the basis of the Resolution Professional's certificate that the contents of the resolution plan
met all the requirements of the Code and the Regulations as amended upto 07/11/2017 and that the
resolution plan has been approved unanimously by the committee of creditors, therefore, resolution
plan is approved by us.
Copy of this order be sent to the IBBI for information and necessary action.
C.P. (I.B.) No. 240/KB/2017 is disposed of accordingly.
Urgent certified copy of the order be issued, if applied for, upon compliance of all requisite
formalities.
1919
KOLKATA BENCH
C.P. (I.B.) No. 566/7/NCLT/KB/2017
Applicants: Inter Securities Pvt. Ltd.

Vs.
Respondent: Supreme Wood Products Pvt. Ltd.
Judges/Coram:
Counsels:
ORDER
Ld. Counsel for the financial creditor and the corporate debtor are present.
Ld. Counsel for the financial creditor sought leave of the Court to withdraw the petition.
Prayer is allowed. Petition is dismissed as withdrawn.
1920

KOLKATA BENCH
C.P. (I.B.) No. 16/7/NCLT/KB/2017
Applicants: Srei Equipment Finance Ltd.

Vs.
Respondent: Sree Metaliks Ltd.
Judges/Coram:
Counsels:
ORDER
Shri Ramesh Kumar Verma representing Mr. Kuldeep Verma, Resolution Professional and the
Ld. Counsel for the financial creditor and Shri Mahesh Kr. Agarwal are present.
Ld. Counsel for the financial creditor has made a request that certified copy of the Resolution
Plan may be issued on payment of requisite fees. Prayer is allowed. Office is directed to issue certified
copy of the Resolution Plan upon compliance of all requisite formalities on urgent basis.
Since Resolution Plan has been sanctioned record may be sent to Insolvency and Bankruptcy
Board of India and file may be consigned to Record Section.
1921
KOLKATA BENCH
C.P. (I.B.) No. 526/7/NCLT/KB/2017
Applicants: Reliance Commercial Finance Ltd.

Vs.
Respondent: Versus-Cygnus Equipments & Rentals
Judges/Coram:
Counsels:
ORDER
Ld. Counsel for the financial creditor and the corporate debtor are present.
Ld. Counsel for both the parties submitted that they have entered into a settlement.
Ld. Counsel for the petitioner made a prayer that he may be permitted to withdraw the petition in view
of the submissions of the parties.
Keeping in view of the submissions of the both the parties the prayer of the petitioner is allowed.
Petition is dismissed as withdrawn.
1922

KOLKATA BENCH
C.P. (I.B.) No. 456/7/NCLT/KB/2017
Applicants: Shyamal Kumar Chakraborty

Vs.
Respondent: Stesalit Limited
Judges/Coram:
Counsels:
ORDER
Ld. Counsel for the operational creditor and the corporate debtor are present.
Operational creditor has filed this petition u/s. 9 of the Insolvency and Bankruptcy Code, 2016 (I&B
Code) for initiation of corporate insolvency resolution process against M/s. Stesalit Limited.
It is pertinent to mention that in C.P. (IB No. 512/KB/2017 which is u/s. 9 has been admitted against
the same corporate debtor. Corporate debtor is already under insolvency process. As another insolvency
process against the same corporate debtor is not maintainable, hence, the petition is dismissed.
However, petitioner may file his claim before the Insolvency Resolution Professional.
1923
KOLKATA BENCH
C.P. (I.B.) No. 400/7/NCLT/KB/2017
Applicants: Smt. Srikanta Sarda

Vs.
Respondent: M/s. Tansway Marketing Pvt. Ltd.
Judges/Coram:
Hon'ble Sh. Vijay Pratap Singh, & Sh. Jinan K.R., Member (J)
Counsels:
For Appellant/Petitioner/Plaintiff: Ms. Rajarshi Dutta, Mr. P. Agarwal & Ms. Paromita Maity,
Learned Advocates
For Respondents/Defendant: Mr. S.E. Kundar & Mr. A.K. Rai, Learned Advocates
ORDER
Smt. Srikanta Sarda (Financial Creditor) filed this application under section 7 of the IBC, 2016
read with Rule 4 of the of the Insolvency and Bankruptcy (Application to Adjudicating Authority)
Rule, 2016 for corporate insolvency resolution process against the respondent M/s. TANSWAY
MARKETING PRIVATE LIMITED (Corporate Debtor). Brief facts as construed from the perusal of
the records are the following: -
2. The corporate debtor/respondent had availed a cash loan of Rs.5,00,000/- (Five Lakh Only)
from the (Financial Creditor) Smt. Srikanta Sarda/petitioner. The petitioner, Smt. Srikanta Sarda
alleged that she had sanctioned a cash loan of five lakh to the respondent as per a letter dated
17.08.2016 issued by the respondent duly signed by its director Mr Mukesh Kumar Singal. The above-
said letter allegedly is a promissory note. A copy of the said promissory note is produced, marked and
annexed as -Exhibit-B".
3. The petitioner further alleged that vide Exhibit-B the respondent promised to repay the above-
said amount after enjoying it for four months. According to the petitioner since the respondent
defaulted repayment of the amount as promised it is liable to pay the amount with interest @15% p.a
and that despite repeated demand notice respondent failed to repay the amount as per the terms agreed
in between them and as stipulated in the said agreement.
1924
4. The copies of written demand notice dated 28.01.2017 and 24.02.2017 send to the respondent
recalling the loan amount with interest are produced, marked and annexed as 'Exhibit-C and D'.
5. The petitioner further alleges that the consent of the Interim Resolution Professional Mr Ajay
Gaggar, (IP Reg. No: IBBI/IPA-001/IPP00030/2016-2017/10066) obtained by the petitioner and is
produced in the petition. The written communication of the same under Form-2 has been duly marked
and annexed in Page. 23.
6. Upon the above said contentions petitioner filed the instant petition for initiating corporate
insolvency resolution process as against the respondent under section 7 of I & B Code read with sub-
rule (1) of rule 4 in Form No 1 of Insolvency and Bankruptcy (Application to adjudication authority)
Rules, 2016.
7. The respondent, in this case, entered appearance through Adv. Mr Awadhesh Kumar Rai. The
Ld. Counsel for the respondent submits that this petition is not maintainable because the respondent
company was not in existence on the date of filing of this petition. According to him the respondent
company name was struck of from the Company Master Data and therefore he cannot file any reply and
submits that this petition is not maintainable as against a non-existing company and opted to choose not
to file any reply alleging nonexistence of the respondent. However, by producing a copy of Company
Master Data attempted to prove that the respondent company was is not in existence. The above-said
document is marked for convenience as Exhibit-R. It is dated 10,h November 2017.
8. We heard the Ld. Counsel for the petitioner at length and the Ld. Counsel for the respondent.
Upon hearing the argument and perusal of the records, the following questions arise for consideration: -
1). Whether the respondent company was in existence as on the date of filing this petition? If not,
whether this petition is maintainable as its name was struck off from the Company Master Data as
alleged?
2). Whether Exhibit-B is a promissory note as alleged? If so the debt claimed by the petitioner is a
financial debt comes under the purview of section 5(8) of I&B Code?
3). Whether the petitioner succeeded in establishing the existence of default as per Sec.7 (4) (2) of
I&B, Code as alleged?
4). Reliefs and cost?
Point No.1
9. Ld. Counsel for the respondent highlighting Exhibit-R submitted that the respondent company
is not in existence on the date of filing of the petition. Exhibit-R shows that it was downloaded from the
1925
website of Ministry of Company Affairs (in short MCA) on 10th November,2017. The date of removal
of the name of the company is not found a place in the above said Exhibit-R. This petition was filed on
1st August,2017.
10. Ld. Counsel for the petitioner at this juncture, brought to our notice Exhibit - A filed along with
the petition. Exhibit-A is a similar copy of Company Master Data downloaded on 16th june,2017. A
reference of Exhibit-A shows that as on 16/6/2017 the company of the respondent was active. However,
on a reference of Exhibit-R, dated 10/11/2017 the respondent company status is shown as Strike off.
When exactly the respondent company's name was removed from the Company Master Data
maintained by the MCA, is not certain. Even on a comparison of exhibit-R and A we cannot assume the
exact date of removal of the respondent's name from the Master Data.
11. A reference of Exhibit-A only shows that as on 16/6/2017 the Company status is recorded as
active. However, Ld. Counsel for the respondent when entered appearance on behalf of the respondent
produced a copy of resolution dated 20/10/2017 purported to be issued by the Board of Directors of the
respondent company authorizing Ld. Counsel for the respondent for appearing before this Tribunal for
and on behalf of the respondent Company.
12. A reference of the resolution submitted by the Ld. Counsel for the respondent shows that
respondent company was active when the Board of Directors convened meeting on 20/10/2017. It is in
that meeting the board of directors authorized the Ld. Counsel to appear before the Tribunal for and on
behalf of the respondent. This petition being filed on 01.08.2017 that is before the date of above
referred resolution, legitimate inference is that on the date of filing of the petition, the respondent
company was active and, therefore, the contention of the Ld. Counsel for the respondent that the
company was not active on the date of filing of the petition is found devoid of any merit. The
contention that this petition is not maintainable because the respondent name was removed from the
Company Master Data is therefore, found not at all sustainable. This point is answered accordingly.
Point No.2
13. This is a petition filed based on a document styled as a promissory note (Exhibit-B). The
original of the alleged promissory note not at all produced for the perusal of this Tribunal. A copy was
produce and marked as Exhibit-B along with the petition. To see whether it is a promissory note as
alleged it is good to read the recital in the document. It reads as follows: -
"Received a sum of Rs.5,00,000/- (Rupees Five Lacs only) from Smt. Kanta Devi Sharda for a
period of four months"
Niti Chaturthi
1926
Tansway Marketing Private Limited
Mukesh Kumar Singal (Signature)
Director
14. The above recital is on a letter pad printed in the name of the respondent company viz.
Tansway Marketing Pvt. Ltd. and signed by one Mukesh Kumar Singal allegedly a director of the
respondent company. On the left side of the Exhibit-B there is one another name is written as Niti
Chaturthi. Whether it is a signature, or a name of a person is not certain. No data is furnished as to
whether the said document was attested by Niti Chaturthi by putting his signature or written his name
as a witness or not.
15. According to the petitioner it is a promissory note. Regarding the characteristic of the said
document, there is inconsistency. In the Form No. I, Part IV, the petitioner stated that Rs.5 lakh was
sanctioned to the respondent as a cash loan as per the terms and conditions in the letter dated
17/8/2016. The above said letter is the very same Exhibit-B which is referred to as promissory note in
Part V of Form No. I of this petition. So, a question arose as to whether Exhibit-B is a promissory note
as alleged by the petitioner. A promissory note is defined under Sec.2 (22) of The Indian Stamp Act,
1899. It reads as follows: -
" Promissory note" means a promissory note as defined by the Negotiable

Instruments Act, 2882 (26 of 1881);
It also includes a note promising the payment of any such of money out of any
particular fund which may or may not be available, or upon any condition or
contingency which may or may not be performed or happen."
16. As per Rule 5 of West Bengal Stamp Rules,1994, a " promissory note or a bill of exchange
shall, except as provided by section 11 of The Indian Stamp Act, or by proviso to clause (a) of sub-rule
(1) of rule 4 or rules 13 and 17, be written on paper on which a stamp of the proper value, not bearing
the word " hundi", has been engraved or embossed' . As per section 11 of the Indian Stamp Act, a
promissory note may be stamped with adhesive stamps. What is required for constructing Exhibit-B as
a Promissory note is that it should contain written promise by one party to pay another party an advance
sum of money either on demand or at a specified future date and should be printed on paper on which a
stamp of the proper value is to be affixed? Exhibit-B is written on a paper, but no adhesive stamp is
affixed.
17. Here in the instant case name of the petitioner, as revealed from the petition, read as Smt.
Srikanta Sarda but in the Exhibit-B the maker of the alleged Promissory note is Mukesh Kumar Singal,
1927
and the payee is Smt. Kanta Devi Sarda. Whether the petitioner viz. Smt. Srikanta Sarda and the payee
in the alleged Promissory note are the very same person no date furnished on the side of the petitioner.
So, the genuineness of the execution of Exhibit-B itself is doubtful.
18. Then can it be styled as a receipt as defined under Sec.2 (23) of the Indian Stamp Act, 1899?
No doubt it is not a receipt because Indian Stamp Act makes it mandatory for affixing of stamp on any
receipt as defined therein if the consideration passed exceeds Rs.5000.00.
19. So, also a Promissory note comes under the purview of Sec.2 (22) of the Indian Stamp Act, is
liable to stamp duty as per Schedule I Article 49 of the Indian Stamp Act. The Exhibit B, therefore,
cannot be relied upon as a Promissory note or as a receipt and, therefore, the petitioner failed to
establish that based on Exhibit-B, there exists a legally enforceable debt. Exhibit-B is therefore cannot
be construed as a promissory note as alleged. Moreover, it is an unstamped document.
20. In Dewan Chand Barbar Vs. Jay Pee Finance Corp., the Hon'ble High court of Jammu and
Kashmir (MANU/JK/0037/1976) in considering admissibility of an unstamped promissory note, has
held:-
" We, therefore, confirm the finding of the learned single Judge on the issue of
admissibility of the promissory note and hold that the respondent is not entitled to any
relief based on the suit promissory note. We also confirm the finding of the learned
single Judge that the respondent has pleaded an alternative case for relief based on
original debt, but we transfer the case from the file of the learned single Judge of this
Court to the file of the Sub Judge (Chief Judicial Magistrate) Jammu for its trial. To
this extent the appeal is allowed, but in the circumstances of the case without any order
as to costs" .
21. In the above-said citation Hon' ble single Judge held " that suit promissory note being
insufficiently stamped was inadmissible in evidence, but Plaintiff/Respondent was entitled to get relief
and entitled to sue on original debt and adduce other evidence in support thereof' . When the above-said
order was challenged before the Hon'ble division bench, the Hon'ble bench has confirmed the above-
said judgment of single bench. Bear in mind the above-said proposition no doubt the relief based on
unstamped promissory note also cannot be entertained by this Tribunal.
22. The next contention of the petitioner is that she is a financial creditor and the debt claimed by
her is a financial debt. The financial creditor is defined under Sec.7 of the I & B Code. A financial
creditor means,
1928
" any person to whom a financial debt is owed and includes a person to whom
such debt has been legally assigned or transferred to."
To maintain a petition of this nature by a financial creditor, the debt claimed by the petitioner
could be a financial debt.
23. Thus, the question is whether the money allegedly liable to pay by the respondent is a financial
debt as per section 5 (8) of I&B Code. It is good to read the definition of financial debt. Sec.5 (8)
defines financial debt as follows: -
"financial debt' means a debt along with interest, if any, which is disbursed against the consideration for
the time value of money and includes-
(b) Any amount raised by acceptance under any acceptance credit facility
or its de-materialized equivalent;
(c) Any amount raised pursuant to any note purchase facility or the issue
of bonds, notes, debentures, loan stock or any similar instrument,.
(d) The amount of any liability in respect of any lease or hire purchase
Accounting Standards or such other accounting standards as may be
prescribed;
(e) Receivable sold or discounted other than any receivables sold or non-
recourse basis;
(f) Any amount raised under any other transaction, including any forward
(g) Any derivative transaction entered into about protection against or

benefit from fluctuation in any rate or price and for calculating the value of
any derivative transaction, only the market value of such transaction shall be
considered;
(h) Any counter indemnity obligation in respect of a guarantee, indemnity,

1929
(i) The amount of any liability in respect of any of the guarantee or
clause,, '
24. As per Sec.3 (11) of the I & B Code the debt means liability or obligation in respect of a claim
which is due from any person and includes a financial debt and operational debt.
25. The petitioner here in this case alleged that the respondent is liable to pay Rs.5 lakh received by
him as a cash loan with interest @ 15% p.a. The petitioner further alleges that as per the terms in
Exhibit-B the respondent is liable to repay the money borrowed with interest. As we stated earlier,
Exhibit-B does not stipulate any terms regarding the repayment of the amount allegedly received by the
respondent. It clearly shows that the respondent received a sum of Rs.5 lakh on 17/8/2016. It does not
stipulate any liability on the respondent to repay it after a period of four months with interest @15% as
alleged by the petitioner. To acquire the status of a financial debt as defined under Sec.5 (8) above
referred, a transaction should have consideration for time value of money, which is a substantive
ingredient for fulfilling requirement of the expression financial debt. As per Sec.5 (8)(a) money
borrowed would be against the payment of interest; No documents produced and relied upon by the
petitioner proves the contention of the petitioner that respondent is liable to pay back the money it
received with interest as claimed by the petitioner.
26. What is the nature of the transaction is known to both the lender and the borrower. Whether it
is a loan or gift is also not certain. Whether it is a bonafide commercial transaction is also not certain.
Truly a loan come with promissory notes. Usually a loan given on execution of promissory note, it
requires that interest be paid on lent money. When a payee lent money for getting back the same with
interest the lender is bound to make sure it spells out how much interest must be paid and sets out a
schedule for payments. In the given Exhibit-B, no such factors expressly or impliedly included.
27. In the case of Nikhil Mehta and Sons (HUF) v. AMR Infrastructures Ltd.1, [2017] 137 CLA
163 (NCLT) the Principal Bench of the National Company Law Tribunal ('NCLT') - New Delhi, has
interpreted the scope of the stipulations, i.e., Financial Creditor and Financial Debt as defined under
Section 5 (8) of the Code.
28. The fact in the above said case is truly different from the facts in the case in hand. In the said
case claim is for an assured amount of return which has been promised by a builder as per an agreement
and builder defaulted in paying the monthly assured return to the petitioner till the possession of the
property. The Hon'ble NCLT has held that "such a transaction would not acquire status of a "financial
debt," as the transaction does not have the consideration for the time and value of money, which is a
observed that "the consideration for time value of money under a Financial Transaction" as an essential
1930
element for determination of a Financial Debt. From the aforesaid observation it is certain that a money
transaction usually coupled with the interest or compensation for time value of money which imparts
the character of Financial Debt. That ingredient is quite absent in this case.
29. The Hon'ble NCALT vide its judgment in Company Appeal (AT) (Insolvency) No 07 of 2017
in the matter of above referred Nikhil Mehta & Sons v. AMR Infrastructures Ltd. set aside the above-
cited Judgment of Hon'ble Principal Bench holding that "the Adjudicating authority, while rightly
interpreted the provisions of law to understand the meaning of expression financial creditor, failed to
appreciate the nature of transactions in the present case and wrongly came to a conclusion that it is a
pure and simple agreement of sale and purchase of a piece of property and has not acquired the status of
a financial debt as the transaction does not have consideration for the time value of money" . However,
the proposition regarding the characteristic of a financial debt interpreted by the Hon'ble Principal
bench seems to have not altered.
30. Bearing in mind the above-referred proposition let us see Exhibit-B comes under the purview
of financial debt. Exhibit-B relied upon by the petitioner does not stipulate liability on the respondent to
pay interest as claimed. So, also there are no terms stipulated in it that he is liable to repay after
enjoying the amount for four months with interest. (enjoying is shown in bold letter to indicate the
word used by the petitioner in Ext.B). In view of the above said discussion, it appears to us that
Exhibit-B is neither a promissory note, nor a receipt as alleged in Form I and that Exhibit-B has not
acquired the status of a financial debt. So also, it does not have consideration for the time value of
money. Accordingly, we hold note, nor a receipt as alleged in Form 1 and that Exhibit-B has not
acquired the status of a financial debt. So also, it does not have consideration for the time value of
money. Accordingly, we hold that the debt claimed by the petitioner in the instant case is not a financial
debt and, therefore, the claim of the petitioner that the debt claimed by her is a financial debt is also
found devoid of any merit. This point is answered accordingly.
Point No.3 and 4
31. Both these points are taken together for convenience and for avoiding repetition of facts. This
is an application filed under Sec.7 for initiating insolvency resolution process against the respondent.
Petitioner alleged that the despite repeated demand respondent did not repay the money and produced
Exhibit-C dated 28/1/2017 and Exhibit-D dated 24/2/2017 for proving that the petitioner has made a
demand of money liable to pay by the respondent and despite receipt of the notice, respondent did not
repay the amount nor replied the notice and non-issuance of replay to the notice by the respondent
amount to admission of its liability. According to the Ld. Counsel for the petitioner non-issuance of
reply proves an admission of its liability to repay the borrowed amount with interest as claimed in the
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notice and further, it shows default of repayment and, therefore, the petition filed along with Exhibits
A, B, C and D is liable to be admitted.
32. The above submission of the Ld. Counsel for the petitioner also found devoid of any merit. It is
not correct to say that respondent did not oppose this petition. Ld. Counsel for the petitioner was heard
in the presence of Ld. Counsel for the respondent and Ld. Counsel for the respondent objected this
petition but showed his inability to file reply because according to him the respondent company is not
in existence. The existence of default is one among the ingredients to be proved on the side of the
petitioner for getting admission of a petition of this nature. Petitioner failed to prove the existence of a
default. The mere contention that there was no reply to the notice repeatedly served on the respondent
itself cannot be inferred as an admission of the liability by the respondent in the peculiar nature and
circumstances of the case in hand. To complete the petition filed under Sec.7 I & B Code, the petitioner
shall produce or shall furnish along with the petition the record of default, record of information utility
and such other record or evidence of default as may be specified. Truly, till date none specified as to the
nature of document proving the existence of default other than referred to in Sec.7(3) (a) shall be
produced in a case of this nature. Admittedly, the petitioner did not produce any information utility or
bank statement. The only document produced by the petitioner is the copy of demand notice allegedly
served on the respondent. In a case of this nature, production of the copy of demand notice and
evidence to the effect that there was no reply itself is not satisfactory to hold that the petitioner
succeeds in proving the existence of default in this case.
33. It is pertinent to note here that issuance of demand notice like the notice sent by the petitioner
is not at all a pre-requirement for initiation of corporate insolvency resolution process by a financial
creditor under Sec.7 (1) of I & B Code. Truly, if it is a petition filed under Sec.9, Sec.8 (1) requires
issuing demand notice before the filing of the application.
34. In the above-said background, it appears to us that it is not safe to rely upon the nil reply on a
demand notice issued to the respondent as the proof of the existence of default on the side of the
financial creditor and accordingly, we hold that the petitioner failed to prove the existence of default as
alleged.
35. Given the facts and circumstances discussed above, this petition is liable to be rejected. In the
result, the petition is rejected. However, no order as to costs.
The copy of the order shall communicate to the petitioner by the registry, as per Sec. 7 (7) (b)
of I&B, Code forthwith. So also issue urgent photostat certified copies of this Order, if applied for, be
supplied to parties upon compliance of all requisite formalities.
1932

KOLKATA BENCH
C.P. (I.B.) No. 495/7/NCLT/KB/2017
Applicants: IFCI Limited

Vs.
Respondent: Jai Balaji Industries Limited
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Siddhartha Datta & Ms. Prapa Ganguly, Learned Advocates
ORDER
Prayer is allowed. Petition is dismissed as withdrawn. All the pending I.As, if any, is also
dismissed accordingly.
1933
KOLKATA BENCH
C.P. (I.B.) No. 561/7/NCLT/KB/2017
Applicants: J.B. Marketing Pvt. Ltd.

Vs.
Respondent: Sree Kamakhya Tea Co. Pvt. Ltd.
Judges/Coram:
Counsels:
ORDER
Prayer is allowed. On the basis of the submissions of the petitioner, the petition is dismissed as
withdrawn.
1934

KOLKATA BENCH
C.P. (I.B.) No. 552/7/NCLT/KB/2017

Vs.
Respondent: Vista Steel Private Limited
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Ms. Manju Bhuteria, Mr. Rajesh Gupta, Ms. Smita Mukherjee,
Learned Advocates
For Respondents/Defendant: Mr. Ratnanko Banerji, Mr. Avishek Guha, Learned Advocates
ORDER
The Applicant ICICI Bank has submitted an application under Section 7 of the Insolvency and
Bankruptcy Code, 2016 (from now on referred to as I & B Code, 2016) read with Rule 4 of the
Insolvency & Bankruptcy (Application to Adjudicating Authority) Rules, 2016 for initiation of
Corporate Insolvency Resolution Process against Vista Steel Pvt. Ltd., a debtor.
2. The brief facts of the case, as stated in the application, are that ICICI Bank is a corporate body
having its Registered Office at ICICI Tower, Old Padra Road, Vadodara, Gujrat, Identification No. is
L65190GJ1994PLCO21012. Shri Arghya Brata Mandal has filed this application on behalf of ICICI
Bank by authorisation letter dated 4/5/2017 annexed with the petition on page 24.
3. The Corporate Debtor Vista Steel Pvt. Ltd., Identification No. is U27100WB2009PTC161681.
The name and registration number of the proposed interim resolution professional are Mr Rajesh Jain;
Registration No. is IP/P-00179 of Janus Advisory Services, 1st Floor, Suite No.12, Shantiniketan, 8,
Camac Street, Kolkata - 700 017 email rkjain@fambizindia.com.
4. The applicant has stated that he has granted various credit facilities to Palogix Infrastructure
Pvt. Ltd. The debts were granted in domestic currency for Rupee Term Loan Facilities. The dates of
disbursement under each of the Rupee Term Loan Facilities have been annexed with the application at
page 61 marked as Exhibit D. Various corporate guarantees furnished by the corporate debtor in favour
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of the financial debtor on 16/11/2010, 22/8/2013 and 21/3/2016 which are collectively referred to as the
Vista Steel corporate guarantees at page 109 marked as Exhibit E.
5. The Financial Creditor recalled the RTL facilities vide Loan Recall Notice dated 5/10/2016.
The borrower has failed to repay the amounts due and outstanding to the financial creditor, the financial
creditor invoked the Vista Steel Corporate Guarantees vide invocation letter dated 14/10/2016.
6. It is the case of the applicant/petitioner that the borrower as on 31/8/2017 has failed to repay
the amount due to the financial creditor. As such the corporate debtor is liable to pay
Rs.354,009,796.06 in its capacity as the guarantor. The amount in default under the RTL facilities as on
31/8/2017 by the borrower was Rs.354,009,796.06, the details of which are given below:-
On 26/6/2016 in respect of Rupee Term Loan Facility I.
On 30/6/2016 in respect of Rupee Term Loan Facility II.
On 30/6/2016 in respect of Rupee Term Loan Facility III.
The details of computation of the amount of default and
days of default have been annexed with the application and marked as Exhibit F.
7. The petitioner, on account of the default above by the borrower, issued a letter of invocation
dated 14/10/2016 invoking Vista Corporate Guarantees furnished by the corporate debtor in favour of
the financial creditor. The corporate debtor thereby in its capacity as the guarantor is in default for a
total amount of Rs.354,009,796.06 as on 31/8/2017. The facilities availed by the borrower was secured
by hypothecation, mortgage and pledge.
8. The applicant further submits that this Tribunal vide order dated 16/5/2017 admitted the
application being CP No.37/2017 and initiated corporate insolvency resolution process for the
borrower. The applicant annexed along with the application a statement of account of the borrower as
on 31/8/2017 at page 383 to 490 as Exhibit J.
9. The applicant/financial creditor has issued demand notice dated 5/10/2016 to the borrower
corporate debtor for payment of the dues. The applicant has also issued a letter of invocation of the
Vista Steel Corporate Guarantees dated 14/10/2016.
10. The corporate debtor has filed objection mainly on the ground that the application is not
maintainable since the application has been submitted through a Power of Attorney holder. A Power of
Attorney Holder cannot submit a claim under Sec.7 of the I & B Code, 2016.
11. The corporate debtor further submits that the applicant/financial creditor granted various credit
facilities to Palogix Infrastructure Pvt. Ltd. The corporate debtor had given a corporate guarantee in
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respect of the credit facilities availed by Palogix and the applicant applied for initiation of corporate
insolvency resolution process against Palogix Infrastructure Pvt. Ltd., And the application is admitted
by this Tribunal.
12. The corporate debtor further submits that Palogix Infrastructure Pvt. Ltd. preferred an appeal
against the order of this Tribunal and the Hon'ble NCLAT by an order dated 20/9/2017 was pleased to
dismiss the appeal filed by Palogix Infrastructure Pvt. Ltd.
13. The corporate debtor further submits that the instant application has been filed by the
applicant/financial creditor against the corporate debtor who is the guarantor in respect of credit
facilities availed by Palogix Infrastructure Pvt. Ltd. The Palogix Infrastructure Pvt. Ltd. Is under the
process of corporate insolvency resolution process and the moratorium is declared, and meeting of the
committee of the creditor has been held from time to time, and the financial creditor has participated in
the meeting of the committee of creditors and filed its claim before the Resolution Professional. The
applicant/financial creditor cannot proceed against the corporate guarantor in respect of the same claim
which has lodged before the resolution professional and the same would be in violation of the
provisions of Sec.14(1)(b) of the I & B Code.
14. It is the case of the corporate debtor that during the corporate insolvency resolution process and
declaration of the moratorium against the principal borrower, if another insolvency proceeding is
permitted to proceed against the guarantor of the principal borrower for recovery of the debt to the
extent of the guarantee given, the security interest of the financial creditor shall get transferred to the
guarantor which will be in violation of Sec.14(1)(b) of the I & B Code.
15. In its rejoinder, the applicant/financial creditor has reiterated the fact which has been stated in
its application.
16. We have heard arguments of the Ld. Counsel for the parties and perused the record. The
financial creditor has filed this petition under Sec.7 of the I & B Code. Admittedly, the corporate debtor
is a personal guarantor of the corporate debtor Palogix Infrastructure Pvt. Ltd. By an order dated
16/5/2017 insolvency proceedings under Sec.7 has been admittedagainst the principal borrower,
i.e. Palogix
Infrastructure Pvt. Ltd. The present application has been filed by the financial creditor against the
corporate debtor, who is the guarantor in respect of the credit facilities availed by Palogix Infrastructure
Pvt. Ltd. It is also undisputed that Palogix Infrastructure Pvt. Ltd. Is under the corporate insolvency
resolution process in view of the order dated 16/5/2017 and moratorium are declared. Meeting of the
Committee of Creditors had been held from time to time, and the financial creditor has participated in
the meeting and filed its claim before the Resolution Professional.
1937
17. Ld. Counsel for the corporate guarantor, who happens to be corporate debtor in this case, has
alleged that since the insolvency proceedings are pending against the principal borrower and financial
creditor is participating in that processes before the R.P. and moratorium has also been declared in the
actions against the principal borrower, therefore, fresh proceedings against the corporate guarantor is
barred under Sec.14(1)(b) of the I & B Code.
18. Ld. Counsel for the corporate debtor has further alleged that if insolvency proceedings is
admitted against the financial creditor Palogix Infrastructure Pvt. Ltd. for recovery of debt to the extent
of guarantee given to the corporate guarantor, then the security interest, if any, of the financial creditor,
shall get transferred to the guarantor which will be in violation of Sec.14 (1)(b) of the I & B Code.
19. Ld. Counsel for the corporate debtor has further alleged that the liability has not been
crystalised either against the principal borrower M/S Palogix Infrastructure Pvt. Ltd. or the corporate
debtor, as such, the financial creditor cannot proceed against the guarantor. On the above ground the
corporate debtor has stated that the petition against the corporate debtor, in the circumstances said
above is not maintainable during moratorium order passed under Sec.14(1)(b) of the I & B
Code, which was passed in an insolvency case filed against the principal borrower i.e., Palogix
Infrastructure Pvt. Ltd. For ready reference Sec.14 is given below:-
Sec. 14 Moratorium.— (1) Subject to provisions of subsections (2) and (3), on the insolvency
commencement date, the Adjudicating Authority shall by order declare moratorium for prohibiting all
of the following, namely—
(2) The supply of essential goods or services to the corporate debtor as may be specified
shall not be terminated or suspended or interrupted during moratorium period.
1938
(3) The provisions of sub-section (1) shall not apply to such transactions as may be
(4) The order of moratorium shall have effect from the date of such order till the
completion of the corporate insolvency resolution process:
Provided that where at any time during the corporate insolvency resolution process period, if
the Adjudicating Authority approves the resolution plan under sub-section (1) of Section 31 or passes
an order for liquidation of corporate debtor under Section 33, the moratorium shall cease to have effect
from the date of such approval or liquidation order, as the case may be.
20. The above provision of law lays down the restriction on any action to foreclosure, recover or
enforce any security interest created by the corporate debtor in respect of its property including any
action under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security
Interest Act, 2002.
21. Thus, it is clear during the pendency of moratorium under Sec.14 of the I & B Code any action
to foreclosure, recovery or to enforce any security interest created by the corporate debtor is prohibited.
22. In the case in hand, moratorium order has been passed in an insolvency petition under Sec.7
against the principal borrower, i.e. Palogix Infrastructure Pvt. Ltd. The corporate debtor happens to be
the corporate guarantor of the corporate debtor M/S Palogix Infrastructure Pvt. Ltd. By implication of
Sec.14(1)(2) of the I & B Code security interest has been created by corporate debtor Vista Steel Pvt.
Ltd in favour of the financial creditor. Therefore order passed under Sec.14(1)(2) prohibits any action
to foreclosure, recovery of any such security interest created by the corporate debtor.
23. Thus, during the pendency of the moratorium order that is passed in a case filed against the
corporate debtor, i.e. Palogix Infrastructure Pvt. Ltd. It will directly affect the security interest, which is
not permissible in law. It is pertinent to mention that similar view has been taken by Hon'ble Allahabad
High Court in Writ Petition No.30285 of 2017, Sanjeev Shriya vs State Bank of India, vide order dated
6/9/2017. In the case mentioned above, Hon'ble Allahabad High Court has held that:
"This Court is of the considered opinion that in the aforementioned facts and
circumstances once the sufficient safeguards are provided in the IBC, 2016 and the
regulations framed thereunder to the bank, and even the liability has not framed
thereunder to the bank, and even the liability has not been crystalised either against
the principal debtor or guarantors/mortgagors at present, then the proceeding, which
is pending before the Debt Recovery Tribunal, Allahabad cannot go on and the same
stays till the finalisation of corporate insolvency resolution process or till the NCLT
1939
approves the resolution plan under sub section (1) of Section 31 or passes an order for
liquidation of corporate debtor under Section 33, as the case may be."
24. It is also important to mention that similar view has been taken by Hon'ble NCLT, Chennai
Bench in the case of IA No.5/2017 in CP No.510/IB/CB/2017 in the case of Mr V. Ramakrishnan vs
Vessons Energy Systems Pvt. Ltd. The Hon'ble Bench has taken a view that-
"It is clear that if the Financial Creditor during the Corporate Insolvency Resolution
Process and declaration of the moratorium is permitted to proceed against the
personal guarantor of the Corporate Debtor for recovery of the outstanding debt to the
extent of the personal guarantee given, then, the security interest, if any, of the
Financial Creditor shall get transferred to the guarantor which will be in violation of
Section 14 (1)(b) of the I & B Code, 2016."
25. Ld. Counsel for the financial creditor has relied on the judgment of this Bench passed in CP
(IB) No.251/KB/2017 in the case of Rural Electrification Corporation Ltd. Vs. Ferro Alloys
Corporation Ltd. Wherein it has been held that :
"It is admitted that the Financial Creditor initiated proceedings against the Principal
Borrower in Debts Recovery Tribunal which is pending for adjudication. It is also
admitted the fact that the Corporate Debtor is the Guarantor and is liable for the loan
amount and is co-extensive. In the case of Industrial Investment Bank of India Ltd. Vs.
Bis wan ath jhunjhunwala Hon'ble Supreme Court has laid down the law that the
liability of Sureties is co-extensive with that of the Principal Debtor unless it is
otherwise provided by the Contract. The Hon /We Supreme Court has relied on its
earlier judgment 3 SCC page 159 SBI vs Index Port Registered wherein it has held that
decree holder bank can execute the decree against t the guarantor without proceeding
against the principal borrower. The guarantor's liability is co-extensive with that of the
principal debtor. In the above-mentioned case, the Honible Supreme Court has further
held that
"........The liability of the Surety is coextensive with that of the principal debtor unless it
is otherwise provided by the contract."
26. In the case mentioned above, the petition has been admitted against the guarantor where the
financial creditor has initiated action against the corporate guarantor instead of the principal borrower.
The fact of this case is entirely different from the case mentioned above. It is true that guarantor's
liability is given co-extensive with that of principal borrower. But it does not mean that the insolvency
petition can be filed against the principal borrower and the corporate guarantor simultaneously.
1940
27. In this case, insolvency petition has already been admitted under Sec.7 against the principal
borrower. Therefore, another insolvency proceeding against the corporate guarantor is barred on
account of moratorium order passed under Sec.14(1)(a) of I & B Code against the principal borrower.
28. On the above basis, it is clear that the present petition filed against the corporate debtor who
happens to be a corporate guarantor of the principal borrower, i.e. Palogix Infrastructure Pvt. Ltd.
Which is barred by the provisions of the moratorium order passed under Sec.14(1)(c) of IBC 2016.
Therefore, we hold that at the moment the petition under Sec.7 is not maintainable until finalisation of
insolvency proceedings against the principal borrower, i.e. Palogix Infrastructure Pvt. Ltd.
29. In the circumstances, the petition filed under Sec.7 of the Insolvency & Bankruptcy Code, 2016
deserves to be dismissed.
ORDER
The petition is dismissed as not maintainable with liberty to file a fresh petition, when the moratorium
already in force is vacated.
1941
KOLKATA BENCH
C.P. (I.B.) No. 361/7/NCLT/KB/2017

Vs.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Ms. Sauvik Mazumdar and Mr.Arif Ali, Learned Advocates
For Respondents/Defendant: Mr. Siddhartha Datta, Ms. Prapa Ganguly and Ms. Arunima Dey,
Learned Advocates
ORDER
Ld. Counsel for the Resolution Professional (RP) and the Ld. Counsel for the financial creditor are
present.
CA (I B) No. 555/KB/2017 has been filed by the RP for extending the time period of Corporate
Insolvency Resolution Process (CIRP) for a period of 90 days w.e.f. 17/01/2018. RP has filed this
application on the basis of the recommendation at the meeting of Committee of Creditors (CoC) dated
06/12/2017. Copy of the minutes of the meeting shows that with the vote share of 99.82% CoC has
approved the resolution for extension of period for completion of CIRP by 90 days w.e.f. 17/01/2018.
In view of the recommendation of the CoC we hereby extend the moratorium period by 90 days for
submissions of resolution process.
CA (IB) No. 555/KB/2017 is disposed of accordingly.
Office is directed to issue certified copy of this Order to RP for information.
1942

KOLKATA BENCH
C.P. (I.B.) No. 251/7/NCLT/KB/2017
Applicants: Rural Electrification Corporation Ltd.

Vs.
Respondent: Ferro Alloys Corporation Ltd.
Judges/Coram:
Counsels:
ORDER
Ld. Counsel for RP as well as Ld. Counsel for the financial creditor and the corporate debtor is
present.
Ld. Advocate appearing on behalf of the RP has filed a Progress Report dated 06/12/2017. It
appears that in the CoC meeting Agenda Item No. 4(b) relating to consider timeline for completion of
insolvency resolution process as prescribed under I & B Code, 2016. The issue was deliberated during
the meeting and it was expressed that may not be possible to complete the entire corporate insolvency
resolution process by 2nd January, 2017 and therefore, CoC recommended for extension of 90 days for
which necessary application may be filed before NCLT, Kolkata before December, 21, 2107 for
approval.
In compliance of the above minutes Ld. RP has filed this CA (IB) No. 560/KB/2017 for
extending the period by 90 days from 02/01/2018 for submissions of the resolution Plan.
It also appears from the record that in para 12 of the application it is stated that CoC members present
and voting jointly hold a voting right percentage of 98.63%. In para 13 it is also stated that
recommendation for filing the present application for extension of time of 90 days for completion of the
Insolvency Resolution Process has been made by more than 75% of the voting share of the CoC.
In view of the recommendation of CoC for seeking further 90 days time, we hereby allow the
extension of time by 90 days w.e.f. 02/01/2018 for submitting resolution plan.
List it on 31/01/2018 for filing progress report.
1943
KOLKATA BENCH
C.P. (I.B.) No. 363/7/NCLT/KB/2017
Applicants: Punjab National Bank

Vs.
Respondent: Divyajyoti Sponge Iron Pvt Ltd
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Pramit Ray, Mr. Aniruddha Roy, Mr. Avishek Guha and Mr.
Wrishik Ganguly, Learned Advocates
ORDER
Ld. Counsel for the Resolution Professional (RP) financial creditor and the corporate debtor is
present. Ld. RP is also present in Court.
CA (IB) No. 570/KB/2017 has been filed by the RP with a prayer for passing necessary orders
upon the Superintendent of Police Bankura as also the concerned police personnel in charge of Mejia
PS and/or the concerned local district administration to render all necessary assistance and security to
the applicant/Resolution Professional to visit the factory premises on specified date and time to be fixed
by him upon prior notice along with the personnel to be accompanied by him to visit the factory
premises at Nandanpur, Block - Mejia, District - Bankura, West Bengal and to carry out his statutory
duties and obligations peacefully and without any hindrance or resistance whatsoever.
It appears from the record that promoter-Director was approached regarding the 3rd valuation
which was stated by the RP at page 257 of the application, which shows that the promoter-Director has
written a letter wherein it is stated that "despite my repeated requests to defer the site visit by the
proposed valuation team, it appears that the COC and everybody involved in Resolution Process is
determined to have the factory visit tomorrow only. We have categorically told you yesterday that any
decision in this regard shall be taken only after our application challenging the 3rd valuation is heard by
NCLT and order is received by us.
1944
Our stand is same even at this point of time and we shall not allow any person inside the
factory, if any person connected with valuation goes with you and other COC members. Before
proceeding to factory site, please intimate the names of the COC personnel with their designation so
that arrangements can be made for their entry.
Hope you will understand the situation and avoid any embarrassment to the company, its
directors, team of COC members and also the valuation team members".
From the date of appointment of IRP the management of the affairs of the corporate debtor
shall vest in the IRP. Therefore, after initiation of Corporate Insolvency Resolution Process promoter-
Director or any person has nothing to say during the period of moratorium. However, there is any
violation of regulation, promoter-Director can challenge the Resolution Plan after the same is
submitted.
Ld. Advocate appearing on behalf of the corporate debtor if process of valuation is again done
and if any untoward incidence occurred then corporate debtor would not be responsible for the same.
Keeping in view of the direct threatening by the corporate debtor it is hereby ordered that copy of this
order may be served on the Director General of Police, West Bengal, Superintendent of Police, Bankura
and In-charge of Mejia P.S. for making proper and effective assistance to the Resolution Professional in
valuation of the company. In discharge of his duty any interference in the work of the Resolution
Professional, action shall be initiated against the corporate debtor and it will be presumed that that
corporate debtor is not obeying the order of the Court. It is expected that corporate debtor should fully
cooperate with the Resolution Professional.
List it on 18/01/2018 for further order.
1945
By Hon’ble NCLT Mumbai Bench
1946

MUMBAI BENCH
C.P. (I.B.) No. 01/7/NCLT/MAH/2017

Vs.
Respondent: M/s. Innoventive Industries Limited
Judges/Coram:
Hon'ble Sh. B. S. V. Prakash Kumar, Member (J)
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Zal Andhyarujina, Mr. L. Viswanathan, Mr. Anush Mathkar, Mr.
Dhananjay and Mr. Animesh Bisht, Learned Advocate
For Respondents/Defendant: Mr. Ravi Kadam, Sr. Counsel, Mr. Chetan Kapadia, Mr. Rahul Sarda, Mr.
Sanjay Asher, Ms. Manik Joshi and Ms. Aditi Shukla, Learned Advocate
ORDER
The Applicant company namely ICICI Bank Ltd. mentioned this Company Petition on 22.12.2016 stating
that the Corporate Debtor namely Innoventive Industries Ltd. availed Rs. 40,74,57,388 as Term Loan
facility, Rs. 21,80,00,000 as Working Capital facility, and $7 million as External Commercial Borrowing
facility, but when the Respondent company later defaulted in making payments, this applicant says the
default occurred on 30.11.2016 for Rs. 12,22,10,737 towards RTL facility, Rs. 7,50,05,661 towards
Working Capital facility and Rs. 11,47,58,969 towards External Commercial Borrowing facility. Since
the aforesaid facilities have not been recalled, the total outstanding amount payable by this corporate
debtor is Rs. 1,019,177,034 as on November 30, 2016 and the Corporate Debtor is liable to pay the
outstanding amount together with interest cost, expenses and other moneys which shall accrue on the
contractual rate. For the Corporate Debtor has defaulted in making repayment as mentioned above, this
Applicant company initiated this Company Petition under Insolvency and Bankruptcy Code, 2016 for
realization of this money by initially seeking for an order of Moratorium as mentioned in the provisions
of aforesaid Code.
2. In which, the corporate debtor filed an Application in this Creditor Petition stating that as on the
date of filing this Creditor Petition, the debts said to have been existing against the Corporate Debtor have
1947
been suspended under Maharashtra Relief Undertaking (Special Provisions) Act on 18.7.2016 declaring
that the Industrial Undertaking called M/s. Innoventive Industries Ltd. (under the said it is referred as "the
said relief undertaking"), to which financial assistance of industrial promotion subsidy of Rs.
115,36,40,000 provided by the Government of Maharashtra under the Package Scheme of 2007 Incentive,
shall for a period one year commencing on 22.7.2016 and ending of 21.7.2017 be conducted to serve as a
measure of preventing unemployment and directs that in relation to such undertaking in respect of one
year period mentioned above, rights, privileges, obligations, or liability accrued or incurred before
22.7.2016 and any remedy for the enforcement thereof shall remain suspended and all proceedings
relating thereto pending before any Court, Tribunal, Officers or Authority shall be stayed.
3. The case of the Corporate Debtor in this interim application is, since Industry, Energy and Labour
Department of Maharashtra passed the above reliefs suspending the liabilities of the Corporate Debtor and
remedies against the debtor for one year from 22.7.2016, this financial Creditor could not have invoked
this relief on the ground default occurred in relation to the debt owed to the creditor ignoring the order
passed by the said Department declaring all liabilities and the reliefs thereof been suspended until 21st
July 2017.
4. To fortify his argument, the counsel of the Corporate Debtor submits that the Maharashtra Relief
Undertaking (Special Provisions) Act is armoured with non-obstante clause in section 4 with overriding
effect, which is as follows: -
4. (1) Notwithstanding any law, usage, custom, contract, instrument, decree, order, award,
submission, settlement, standing order or other provision whatsoever, the State Government may,
by notification in the official Gazette, direct that —
(a) in relation to any relief undertaking and in respect of the period for which the relief
undertaking continues as such under sub-section (2) of section 3—
(i) all or any of the laws in the Schedule to this Act or any provisions thereof shall not apply (and
such relief undertaking shall be exempt there from), or shall, if so directed by the State
Government, be applied with such modifications (which do not however affect the policy of the
said laws) as may be specified in the notification;
(ii) all or any of the agreements, settlements, awards or standing orders made under any of the laws in
the Schedule to this Act, which may be applicable to the undertaking immediately before it was
acquired or taken over by the State Government 31 or before any loan, guarantee or other
1948
financial assistance was provided to it by, or with the approval of, the State Government, for
being run as a relief undertaking, shall be suspended in operation or shall, if so directed by the
State Government, be applied with such modifications as may be specified in the notification;
(iii) rights, privileges, obligations and liabilities shall be determined and be enforceable in accordance
with clauses (i) and (ii) and the notification;
(iv) any right, privilege, obligation or liability accrued or incurred before the undertaking was
declared a relief undertaking and any remedy for the enforcement thereof shall be suspended
and all proceedings relative thereto pending before any court, tribunal, officer or authority
shall be stayed;
5. The counsel of the Corporate Debtor further submits that Non-Obstante clause in Section 238 of
Insolvency and Bankruptcy Code 2016 as against Non-Obstante Clause in MRU, both operate in different
fields, one for realisation of the credit facility availed by the Debtor and another for preventing
unemployment in the Industry, since the later object is more laudable cause protected by the state, the
same shall not be disturbed by invoking section 238 of Insolvency and Bankruptcy Code 2016.
6. Therefore, to propound this argument, the counsel relied upon Vishal N Kalsa v. Bank of
India and Others (2016) 3 SCC 762 (Para 113), to say " the non obstante clause contained in section
34 (1) of the DRT Act and Section 35 of the Securitisation Act give overriding effect to the
provisions of those Acts only if there is anything inconsistent contained in any other law. In other
words, if there is no provision in other enactments which are inconsistent with the Code, the
provisions contained in those Acts cannot override other legislations."
7. To which the Applicant Counsel submits that non obstante class in section 238 of IBC 2016 will
have overriding effect over the operation of MRU Act 1958, because the law envisaged in MRU Act is
inconsistent with section 238 of IBC 2016.
8. He also relied upon JM Financial Asset Reconstruction Company v/s. State of Maharashtra 2016
SCC online Bombay, 9099 and Madras Petrochem Ltd. and Ors. v/s. BIFR and Others 2016 (4) SCC 1
and further saying that the notification issued u/s.4 of MRU Act is limited to the enactments as specified
in the Schedule to MRU Act. He further submits that plain reading of section 4 of MRU makes it clear
that only the right, privilege, obligation or liability accrued or incurred before the undertaking was
declared a relief undertaking, in so far as the said right relates to availing of any remedy for enforcement
is suspended and not existence/continuation of debt or default itself, therefore suspension of indebtedness
or default has not been contemplated or provided under the MRU Act.
1949
9. He further submits, as per Section-7, only the fact of the event of default has to be ascertained,
and no other determination has been envisaged under the Code for admission of the application u/s 7 of
the Code and the Tribunal is only required the documents specified under the Code, if in the event of the
same are not sufficient or there is any defect in the application, the Tribunal has discretion to direct the
Applicant to rectify the same. In view of the same, the Applicant Counsel submits that the Notification
given by the Industry, Energy and Labour Department of Maharashtra, on 22.7.2016, will not have any
bearing on passing an order u/s.7 of the Code henceforth he prays this Bench to admit the Company
Petition with the direction mentioned u/s.13, 14, 15 & 16 of this Code.
10. On hearing the submissions of the Applicant counsel and Corporate Debtor Counsel, it is evident
that non obstante class is present in both MRU Act and IB Code, now the point to be decided is whether
an order could be passed u/s.7 of the Code or not.
11. It is evident on record that IB Code has come into existence subsequent to MRU Act therefore,
notwithstanding clause in section 238 of IBC prevails upon any other law for the time being in force,
hence it could not be said that Notification given under MRU Act will become a bar to passing this order
u/s. 7 of the IBC 2016.
12. Moreover, the objective under MRU Act, is to prevent unemployment of the existing employees
of an industry which is recognized as relief undertaking, but by passing an order u/s.7, it will not cause
any obstruction to their employment until next 180 days, even if the company goes into liquidation, then
also the rights of the employees are protected to the extent mentioned under IBC, therefore, the Corporate
Debtor Counsel cannot have an argument saying that passing an order u/s.7 of the Code will be against
the interest of the employees.
13. Here the subject matter is liability over the company, the liability of the company has been dealt
with by the MRU Act and also by IBC but with different objectives, in MRU Act, it is to protect the
interest of employees and in IBC, it is for protecting the creditors who have supplied fuel to the company
to make it run. Since the liability suspended under MRU Act being inconsistent with the default occurred
to the debt payable to the creditor, this order will not be against the ratio decided by Hon'ble Apex Court
in Vishal N Kalsa v. Bank of India and Others (2016) 3 SCC 762 (Para 113)
therefore, this Bench having not noticed any merit in the argument of the Corporate Debtor Counsel, the
Application filed by the Corporate Debtor is hereby dismissed.
1950
14. The corporate debtor filed another application saying notice has not been served to the debtor,
but this plea pales into insignificance because this Bench already heard the Corporate Debtor and his
application has already been dismissed, therefore this application also does not lie, hence the same is also
hereby dismissed.
15. As to the Petition filed by the Financial Creditor, this Bench, on perusal of this documents filed
by the Creditor, it is evident that the Corporate Debtor defaulted in making payments as mentioned above,
and he has placed the record of the default with Information Utility and he also placed the name of the
Insolvency Resolution Professional to act as interim resolution Professional, having this Bench noticed
that default has occurred and there is no disciplinary proceedings pending against the proposed resolution
professional, therefore the Application under sub-section (2) of section 7 is taken as complete,
accordingly this Bench hereby admits this Application declaring Moratorium with the directions as
mentioned below:
1) That this Bench hereby prohibits the institution of suits or continuation of pending suits or
proceedings against the corporate debtor including execution of any judgment, decree or order in
any court of law, tribunal, arbitration panel or other authority; transferring, encumbering,
alienating or disposing of by the corporate debtor any of its assets or any legal right or beneficial
interest therein; any action to foreclose, recover or enforce any security interest created by the
corporate debtor in respect of its property including any action under the Securitisation and
Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002; the recovery
of any property by an owner or lessor where such property is occupied by or in the possession of
2) That the supply of essential goods or services to the corporate debtor, if continuing, shall not be
3) That the provisions of sub-section (1) shall not apply to such transactions as may be notified by
4) That the order of moratorium shall have effect from 17.1.2017 till the completion of the corporate
insolvency resolution process or until this Bench approves the resolution plan under sub-section
(1) of section 31 or passes an order for liquidation of corporate debtor under section 33, as the
case may be.
5) That the public announcement of the corporate insolvency resolution process shall be made
immediately as specified under section 13 of the Code.
6) That this Bench hereby appoints Mr. Dhinal Shah, 9, Urmikunj Society, Nr. St. Xavier College
Corner, Navrangpura, Ahmedabad -389009, Gujrat, email: dhinal.shah@in.ey.com, Registration
No. IBBIJIPA-01/2016-17/015 as interim resolution professional to carry the functions as
mentioned under Insolvency & Bankruptcy Code.
16. Accordingly, this Application is disposed of.
1951
MUMBAI BENCH
C.P. (IB) No. 03/7/NCLT/MAH/2017
Applicant: M/s. VIP Finvest Consultancy Pvt. Ltd.

Vs.
Respondent: M/s. Bhupen Electrinic Ltd.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Arvinde Kumar Gupta
For Respondents/Defendant: Ms. Ami Jain
ORDER
1. This is an insolvency and bankruptcy application for initiation of insolvency resolution process by a
financial creditor M/s. VIP Finvest Consultancy Pvt. Ltd. against the corporate debtor Mis. Bhupan
Electronic Ltd. (formerly M/s. Parasarampuria Polymides Ltd.).
2. The said financial creditor is an assignee of the assets and liabilities of the corporate debtor for a
consideration of Rs. 15,00,000/- in terms of assignment agreement dated 23-09-14 with MIs. India SIDE
Asset Reconstruction Company Ltd.
3. Previously M/s. Industrial Investment Bank of India Ltd. (IIBI) has sanctioned a Term Loan of Rs.
4,60,00,000/- to the corporate debtor vide loan agreement dated 23-12-95 and the corporate debtor
executed a deed of hypothecation over the stock of materials and book debts, likewise the directors of the
corporate debtor have given their personal guarantees and the immovable assets of the company as
security to the loan.
4. M/s. IIBI Ltd. filed Original Application No. 529 of 2000 before DRT, Mumbai for issue of recovery
certificate for Rs.4,82,32181 together with interest against the corporate debtor.
5. Subsequently, on 23-03-13 M/s. IIBI Ltd. assigned financial assets of the corporate debtor in favour of
M/s. India SME Asset Reconstruction Company Ltd., who is the financial creditor herein.
6. The financial creditor has named one Mr. Manish Gupta flat no. 199 SFS flats, Haus Khasi New Delhi
110016. Email: manish.gupta@jhalani.co.in, registration no. IBBI/IPA-01/2016-14/67 as the proposed
1952
interim resolution professional and the said professional vide his letter dated 14-01-2017 agreed for his
appointment and also stated that no disciplinary proceedings pending against him.
7. The counsel appearing on behalf of the corporate debtor submits that they have no objection for
initiation of insolvency resolution process. Section 7 of the Insolvency and Bankruptcy Code provides as
below: -
"Section 7: Initiation of corporate insolvency resolution proves by financial creditor
1) A financial creditor either by itself or jointly with other financial creditors may file an application for
initiating corporate insolvency resolution process against a corporate debtor before the adjudicating
authority when a default has occurred.
Explanation: For the purposes of this sub-section, a default includes a default in respect of a financial debt
owed not only to the applicant financial creditor but to any other financial creditor of the corporate debtor.
2) The financial creditor shall make an application under subsection (1) in such form and manner and
3) The financial creditor shall along with the application furnish
4) The Adjudicating Authority shall within fourteen days of the receipt of the application under sub
other evidence furnished by the financial creditor under sub section (3).
5) Where the Adjudicating Authority is satisfied that-
(b) default has not occurred on the application under sub-section (2) is incomplete or any disciplinary
proceeding is pending against the proposed resolution professional, it may, by order, recject such
application.
6) The corporate insolvency resolution process shall commence from the date of admission of the
1953
7) The Adjudicating Authority shall communicate-
(a) the order under clause (a) of sub-section (5) to the financial creditor and the corporate debtor.
(b) the order under clause (b) of sub-section 5, to the financial creditor, within seven days of admission or
rejection of such application, as the case may be."
8. On looking at the recovery proceedings of DRT Mumbai, it is evident that the assignment of assets and
liabilities by IIBI Ltd. were assigned to M/s. India SIDE Asset Reconstruction Co. Ltd. and then Mis.
India SME Asset Reconstruction Co. Ltd. further assigned to this applicant M/s. VIP Finvest
Consultancy Pvt. Ltd., the financial creditor proving the existence of debt and also the default. Further the
Counsel appearing on behalf of the Corporate Debtor has also no objection for admission of this
application and in the circumstance there is a substantial compliance of provisions of section 7 of the
113C Code 2016. In view of the above, the application is admitted declaring moratorium with
consequential directions as below: -
(i) That this Bench hereby prohibits the institution of suits or continuation of pending suits or proceedings
recover or enforce any security interest created by the corporate debtor in respect of its property including
any action under the Securitization and Reconstruction of Financial Assets and Enforcement of Security
Interest Act, 2002; the recovery of any property by an owner or lessor where such property is occupied by
(ii) That the supply of essential goods or services to the corporate debtor, if continuing, shall not be
(iii) That the provisions of sub-section (1) shall not apply to such transactions as may be notified by the
(iv) That the order of moratorium shall have effect from 19.1.2017 till the completion of the corporate
section 31 or passes an order for liquidation of corporate debtor under section 33, as the case may be.
(v) That the public announcement of the corporate insolvency resolution process shall be made
(vi) That this Bench hereby appoints Mr. Manish Gupta flat no. 199 SFS flats, Haus Khas, New Delhi
110016. Email : manish.gupta@jhalani.co.in, the registration no. IBM/IPA-01/2016-14/67 as interim
resolution professional to carry the functions as mentioned under Insolvency & Bankruptcy Code.
(vii) Accordingly, this Application is disposed of.
1954

MUMBAI BENCH
C.P. (I.B.) No. 01/7/NCLT/MAH/2017

Vs.
Respondent: M/s. Innoventive Industries Limited
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Zal Andhyarujina, Mr. L. Viswanathan, Mr. Anush Mathkar, Mr.
Dhananjay and Mr. Animesh Bisht, Learned Advocate
For Respondents/Defendant: Mr. Ravi Kadam, Sr. Counsel, Mr. Chetan Kapadia, Mr. Rahul Sarda, Mr.
Sanjay Asher, Ms. Manik Joshi and Ms. Aditi Shukla, Learned Advocate
ORDER
On the mentioning made for clarification on two issues, one — on the another CA filed by the Corporate
Debtor and two — for putting the name of agency keeping the information, i.e. CIBIL, this Bench, by
invoking inherent powers conferred upon this Bench u/s 420 & 424 of the Companies Act 2013 r/w Rule
11 of NCLT Rules, ordered as follows.
2. The Corporate Debtor Counsel stated in the open court that the other IA 6/2017 filed by the
Corporate Debtor is in respect to non-service of notice upon the Debtor, this Bench, believing the
statement of the counsel appeared on the corporate debtor behalf, passed orders stating that the argument
of non-service of notice would pale into insignificance because this Bench heard on the other CA upon
which the corporate debtor vehemently argued. Though it normally does not happen, in rush of work, we
inadvertently decided that IA 6/2017 basing on the argument of the counsel of Corporate Debtor, because
that plea would not survive because hearing has already been given to the Corporate Debtor in the earlier
application. Delay has also occurred in passing this order owing to the application filed by the Corporate
Debtor. Indeed, this Code has nowhere given any explicit opportunity to the Corporate Debtor to exercise
the right of making submissions, but this Bench heard and passed orders in the earlier application on
17.1.2017.
1955
3. However, this issue having been brought to the notice of this Bench, it is hereby held that the
Corporate Debtor could have raised this plea of no default, which he raised in the above CA 6/2017 along
with the issue already raised in the earlier CA already adjudicated. Having not raised the said plea along
with other application, this Bench hereby held that this application is not entertainable for two reasons,
one — the corporate debtor cannot raise objection, because no audience has been given to the corporate
debtor in the Code, two — even if right is assumed as exercisable by the Corporate Debtor, since he has
not taken this relief in the earlier application, the corporate debtor is barred from raising such plea in
subsequent application.
4. Moreover, Creditor application shall be decided within 14 days from the date of filing creditor
petition by ascertaining as to whether petition is in compliance of Section 7 of the Insolvency &
Bankruptcy Code, therefore this Bench is under no obligation to hear the Corporate debtor, hence this CA
is hereby dismissed even without going into the merits of the application.
5. As to second correction, it is hereby corrected that the default has been taken into consideration
on the report given by CIBIL.
1956

MUMBAI BENCH
C.P. (I.B.) No. 12/7/NCLT/MAH/2017
Applicant: ICICI Bank Limited

Vs.
Respondent: Starlog Enterprises Limited
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Shyam Kapadia, Ms. Shreevandhini Parchure and Ms. Isha
Maniar, Learned Advocates
ORDER
The petitioner i.e., ICICI Bank, having failed to realize outstanding dues from the Corporate Debtor i.e.,
Starlog Enterprises Limited in respect to the loan facilities the petitioner granted, filed this petition u/s 7
of The Insolvency and Bankruptcy Code 2016(herein after referred as "Code"), seeking for admission of
this petition declaring moratorium on the Corporate Debtor Company, direction for public
announcement of initiation of corporate insolvency process and call for the submission of claims u/s 15
and appointment of interim resolution professional as prescribed under the Code and Rules thereon.
2. The Petitioner, Financial Creditor, granted Rs. 230rnillion Rupee Term Loan facility (RTL
Facility) on an agreement entered on October 19,2011, thereafter disbursed the same, apart from this,
this petitioner also granted Rs. 160 million Working Capital Term Loan Facility (WCTL Facility) on an
agreement dated March 2014 and disbursed the same on March 6, 2014.
3. Besides the above two facilities, this petitioner already granted Rs. 20.4 million Working Capital
Bank Guarantee facility (BG Facility) basing on facility agreement dated October 27, 2007 with
utilization date as February 02, 2017.
1957
4. The petitioner says since no amounts are due under BG Facility, the amount of BG Facility has
not been included in this petition by reserving its right to proceed later, as to WCTL facility, the defaults
first occurred in respect to RTL Facility on 31st March 2016 and in respect to WCTL facility on 1st
April 2016 respectively. For the Corporate Debtor having failed to repay the out-standings as agreed in
the Agreements mentioned above, in respect to RTL Facility, the amount, as on February 06, 2017,
defaulted has come to Rs. 9,99,01,103.62, and in respect to WCTL Facility, the amount, as on April 01,
2017, defaulted has come to Rs. 17,78, 27,162.00. therefore, these two amounts (principal + Interest +
Overdue) put together has come to Rs. 27,78,27,162.00 (Annexur-2).
5. The Petitioner filed Certificate dated issued by ICICI (the Petitioner, being a Bank, Account has
been maintained in the petitioner Bank itself) stating that copies of entries in accordance with the Bankers
Books Evidence Act, regarding the statement of accounts of Starlog Enterprises Ltd. bearing Term Loan
Account A115508001 for the period October 19, 2011 to February 07, 2017 and Term Loan Account No.
0000001101 for the of period March 06, 2014 to February 07, 2017, are annexed. And they are true and
correct extract of the Ledger and the entries therein made in ordinary and usual course of business and the
ledger is still in the custody of the petitioner Bank. To substantiate the certificate given by the petitioner
Bank, the petitioner filed statements of both the Loan Accounts reflecting default occurred in two Term
Loan accounts above mentioned for an amount of Rs. 17.77crores and Rs. 9.99 crores aggregating to
around Rs. 27.77crores.
6. Apart from the filings above mentioned, the Petitioner filed record of CIBIL Ltd. (Credit Rating
Agency) reflecting the aforesaid two term loan accounts maintained by corporate debtor with numbers
A115508001 and 0000001101 have become overdue and not paid even after 90 days past due, by which,
it is evident that the Corporate Debtor defaulted making payments and the default has remained in
existence till date. Though Information Utility Center has not yet come into existence so far, for there
being a proof from Credit Information Agency bearing out default occurred in respect to the Accounts the
company held with the petitioner Bank, this Bench hereby holds that the default above has been reflected
in the credit agency books.
7. To further substantiate that the corporate debtor has been reminded of the fact of occurrence of
default, the Petitioner has also filed the correspondence dated July 09, 2015, August 19, 2015, September
11, 2015, August 18,2016 and final notice dated February 06, 2017 demanding payment of dues, failing
which, the company would take recourse for remedial measures. To which, the Corporate Debtor, on
August 20, 2016 and on November 22, 2016, responded to the notices given before November 22, 2016
1958
confirming the correctness of their indebtedness seeking extension of time for taking legal action for
recovery. Thereafter, for the petitioner stated that the Corporate Debtor failed to discharge the liability till
the date of filing this petition, this Bench believes that the corporate debtor committed default and it has
remained in existence till date.
8. The petitioner filed proof of service showing that notice has been served upon the corporate
debtor before filing this petition i.e, on 08.02.2017.
9. Looking at the Petition filed by the Financial Creditor u/s 7 of I &B Code, for this Bench being
satisfied that the Corporate Debtor failed to discharge the liability mentioned in this Company Petition
resulting occurrence of default for an amount of around Rs. 27.77crores, this Bench admits this petition
u/s 7 of the Code declaring moratorium for the purposes referred to in section 14 of the Code with
following directions:
(i) That this Bench, subject to provisions of sub sections (2) & (3) of section 14 of the Code, hereby
prohibits the institution of suits or continuation of pending suits or proceedings against the
tribunal, arbitration panel or other authority; transferring, encumbering, alienating or disposing of
by the corporate debtor any of its assets or any legal right or beneficial interest therein; any action
to foreclose, recover or enforce any security interest created by the corporate debtor in respect of
its property including any action under the Securitisation and Reconstruction of Financial Assets
and Enforcement of Security Interest Act, 2002 and the recovery of any property by an owner or
lessor where such property is occupied by or in the possession of the corporate debtor.
(iii) That the provisions of sub-section (1) shall not apply to such transactions as may be notified by
(iv) That the order of moratorium shall have effect from 17.02.2017 till the completion of the
corporate insolvency resolution process as prescribed under section 12 of the Code.
(v) That this Bench hereby directs to cause public announcement of the corporate insolvency
resolution process immediately as specified under section 13 of the Code.
(vi) That this Bench hereby appoints Mr. Sashank Narendra Desai, Desai Saksena & Associates
(Charted Accountants) Laxmi Building Ist Floor, Sir P.M. Road, Fort, Mumbai - 400001, Email:
snd@dsaca.co.in with registration no. IBBI/IPA-01/IP-00072/2016-17/1082 as Interim
1959
Resolution Professional to carry the functions as mentioned under Insolvency & Bankruptcy
Code.
(vii) That this Bench hereby directs the Registry of NCLT, Mumbai to communicate this order
to the petitioner i.e., financial creditor and the corporate debtor.
Accordingly, this petition is admitted.
1960

MUMBAI BENCH
C.P. (I.B.) No.246/7/NCLT/MAH/2017
Applicants: 1. Culrross Opportunities SP.

2. Peter Beck and Partners
VS
Respondent: M/s. Sharon Bio-Medicine Limited
Judges/Coram:
Hon'ble Sh. BSV Prakash Kumar, Member (J)
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Sharan Jagtiani & Mr. Arjun Gupta, Learned Advocates
ORDER
1. This Company Petition is filed by M/s. Culrross Opportunities SP (hereinafter called as P1) and M/s.
Peter Beck and Partners (herein after called as P2) against the corporate debtor M/s. Sharon Bio-Medicine
Limited a Company incorporated under the Companies Act, 1956. This Petition is filed under Section 7 of
IB Code, 2016 for initiation of corporate insolvency resolution process.
2. The Petitioners submit that the Board of Directors of the Corporate debtor, on 15-2-2007, authorised
the issue of USD 1,50,00,000 zero percent convertible bonds subject to an overallotment option for up to
USD 4,50,00,000, which was approved by the shareholders of Corporate Debtor by a Resolution on 15-3-
2009. The Company circulated an offering circular which forms part of the prospectus for the bonds,
which contained the objections, risk factors, times of investment etc.
3. The petitioners are the registered holders of a certain portion of the USD 1,50,00,000 zero percent
convertible bonds issued by the corporate debtor. P1 holds 18.18 percent and P2 holds 67.88 percent of
the bonds as stated at para 184 of the petition. Pl's and P2's ownership of the bonds is evidenced by the
Trade confirmations submitted by the petitioners' counsel. The petitioners further submits that annexure
A-1 Trust-deed dated 27-72007 was executed between the corporate debtor and Deutsche Trustee
Company Ltd., (Trustee) constituting USD 1,50,00,000 zero percent unsecured foreign currency
1961
convertible bonds 2012 (subject to overallotment option up to USD 4,50,00,000 of bonds), convertible
into equity shares of the corporate debtor.
4. The petitioners further state that the corporate debtor came forward to execute a Supplemental Trust
deed for the Principal trust deed executed on 27-7-2007 and accordingly issued Annexure-A-2 notice to
the bond holders. A Supplemental Trust deed was executed on 5-2-14 between the corporate debtor and
the trustee. The said Supplemental Trust deed relates to principal trust deed dt.27-7-2007 in respect of
USD 1,65,00,000 zero convertible bonds due 2012 issued by the issuer is shown in the Annexure-F of the
written submissions.
5. The Supplemental Trust deed says that the bond holders by a written Resolution consented to amend
the Principal Trust deed and directed the Trustee to concur for such amendments and execute the
Supplemental Trust deed, in order to concur in and give effect to modifications and waivers. It further
says that the bondholders approved, assented and agreed irrevocably to subscribe to new bonds which will
be issued by the corporate debtor in lieu of the accrued interest amount on the outstanding bonds
constituted in terms of the Principal Trust deed.
6. Clause 2 of the Supplemental Trust deeds reads as below;
"2.2. The bonds shall bear interest from 1 December, 2013 (the "Interest Commencement Date") at the
rate of 5.35% per annum of the principal amount of the Bonds payable semi-annually in arrears on 1
June and 1 December in each year (each such date for the payment of interest, an "Interest Payment
Date"). The first Interest Payment Date will be 1 June 2014 and the first such interest payment will be in
respect of the period from and including the interest Commencement Date to but excluding the first
Interest Payment Date and the last such payment being made on the Maturity Date for the period of 1
June 2017 through and including the Maturity date.
7. According to the Supplemental Trust deed the first interest payment on the bonds fell due on 1-6-2014.
The Supplemental Trust deed clearly shows that it was executed in lieu of non-payment of interest on the
outstanding bonds constituted in terms of the Principal Trust deed. Subsequent to the execution of
Supplementary Trust deed also, the corporate debtor failed to pay interest to the bond holder which fell
due on 1-6-2014 as envisaged in the Supplemental Trust deed.
8. The Petitioners state that they constitute 86.06% of the holders of bonds and the bond holders passed a
written resolution on 11.08.2016 waving and / or discharging the trustee of the bonds of all obligations in
respect of initiating the winding up proceedings against the Company and accordingly they are entitled to
take this insolvency resolution process.
1962
9. The communications between the Reserve Bank of India and State Bank of India's Overseas Branch at
Cuffa Parade (Authorised dealer) enclosed to the petition clearly reveals that, Reserve Bank of India has
no objection for the extension of the maturity period of zero coupon FCCBs of USD 1,65,00,000 issued
by the corporate debtor, up to 4-12-2017.
10. The Financial creditors enclosed 27th annual report of the corporate debtor at annexure G of the
written submissions wherein the financial debt was shown as "other loans and advances-FCCB", under
the sub heading unsecured creditor, which was classified as long term borrowings. The Director's report
which form part of the annual report under the heading significant events during period ended 31-3-2016
reads as below;
"(ii) DEBT RESTRUCTURING: -
Company's Debt was restructured under the JLF Mechanism in 2014-15. Meetings and discussions with
banks took place during the period under review but no major changes were occurred.
(iii) FOREIGN CURRENCY CONVERTIBLE BONDS: -
The company had issued 165 Nos. of Zero Coupon Foreign Currency Convertible Bonds of US$ 1, 00,000
each aggregating to US$ 16.5 Million on 27, November 2007. These Bonds are convertible Bonds at the
option of bond holders into equity shares of Rs. 10/- each fully paid at the conversion price of Rs. 315/-
per share initially but now conversion price has been reset to Rs. 228.04/- per share, subject to the terms
of issue, with a fixed exchange rate of Rs. 39.15 equal to US$ 1.00 within 5 years and 7 days from the
date of issue. The bondholders have agreed to extend the bonds for the further period of 5 years.
Bondholders have agreed to extend the period between one year to five years and interest to be paid
between LIBOR + 3.50% - 5% per annum, as per the ECB guidelines. The bondholders have given their
consent as stated above and the company authorize dealer has submitted the documents to Reserve Bank
of India (RBI), accordingly. The Company is still in process of issue of new Bonds of US$ 8.046 Million
from 30, November 2013. However, application for this B series bonds have been filed to RBI. These
Bonds are convertible Bonds at the option of bond holders into equity share of Rs.21- each fully paid at
the conversion price of Rs.28.851- per share, subject to the term of Oissue within 3 years from the date of
issue".
11. The financial creditor says that the foreign currency convertible bonds is a financial debt, the
existence of which is proved by the Principal Trust deed dated 27-7-2007 along with the Supplemental
Trust deed executed on 5-7-14. Further the financial statement of the corporate debtors confirms the
existence of financial debt.
1963
12. The Supplementary Trust Deed executed on 5-7-14 provides that the first interest payment date is on
1-6-14 and since the said due is not paid to the bond holders till date, the Petitioners say that there is
default and hence the petitioners have filed this petition for Insolvency Resolution Process against the
corporate debtor.
13. The corporate debtor by a letter dated 29-4-14 addressed the Deutsche Trustee Company limited, the
trustees of the bond holder, referring to the payment advice dated 22nd for USD 30,00,000 as partial
payment on the bonds with accrued interest up to 30.04.14. The Corporate Debtor further acknowledge on
30.04.2014 that this payment is due on the Bonds on 30.04.2014 as per the revised terms and conditions
of the bonds. The letter further states that the said partial payment plus accrued interest can be paid on
31.07.14.
14. The counsel for the petitioners cited (i) Bajan singh Samra v. Wimpy International Ltd., 185(2011)
DLT 428, (ii) Shreeram Durgaprasad v. Sail Soap Stone Factory & Ors. 1982, MhLJ 912, (iii) J.G. Glass
Ltd. v. Indian Bank and Anr. 2002 (104(1)) Bom LR 234, and (iv) Bengal Silk Mills Co. v. Ismail Golam
Hossain Ariff, AIR 1962 Cal. 115, to say that the debt shown in the Balance Sheet of the corporate debtor
is an acknowledgement of liability. The counsel further cited (i) S.F.Mazda v. Durgaprasad AIR 1961 SC
1236 and (ii) Khan Bahadur Shapoor Freedom Mazda v. Durga Prasad Chamaria & Ors. (1962) 1 SCR
140, to say that the letter dated 29-4-14 written by the corporate debtor to the trustee amounts to an
acknowledgement of debt u/s 18 of the Limitation Act and the period of limitation should accordingly be
calculated afresh.
15. The Petitioners submit that the maturity date of Bonds was 30.11.2012, the Supplemental Trust Deed
was executed on 05.02.2014, before the limitation period of the bond is over, the first interest payment
fell due on 01.06.2014 and this Petition is filed on 31.03.2017, hence the debt is not barred by limitation.
16. The annexure A-9 legal notice dt.25-4-2016 issued by M/s Nishith Desai Associates on behalf of the
majority bond holders in which the petitioners are constituents demanding payment from the corporate
debtor, clearly shows that demand was made and the corporate debtor preferred not to make any payment
and also there was no reply from the corporate debtor to the said notice.
17. The petitioners served a copy of the petition to the respondent corporate debtor on 3-4-17. Two emails
were sent to the respondents. Further the petitioner has sent a letter to the corporate debtor stating that the
case will be mentioned on 7-4-17, however, the corporate debtor has not appeared before this Bench.
1964
18. The petitioner named Mr. Dinkar T. Venkatasubramanian, Ersnt & Young LLP, 6th Floor,
Worldmark-1 IGI Airport Hospitality District, Aerocity, New Delhi- 110037,
dinkar.venkatasubramanian@in.ey.com, Registration No. IBBI/IPA-001/IP-P00003/2016-17/10011, as
interim resolution professional who was given his written consent as required under Rule 9 of Insolvansy
and Bankrupy ( Application to Adjudicating Authority) Rules 2016.
19. On careful reading of the petition, this Bench is of the view that the petition is in compliance of
provisions of Sections 3(11), 3(12), 5(7), 5(8)(C) and 7 of TB Code 2016, and admits this petition
declaring moratorium with consequential reliefs as below:
any action under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security
(iii) That the provisions of sub-section (1) shall not apply to such transactions as may be notified by the
(iv) That the order of moratorium shall have effect from 11-04-2017 till the completion of the corporate
20. Accordingly, this Petition is admitted.
1965
MUMBAI BENCH
C.P. (I.B.) No.121/7/NCLT/MAH/2017
Applicant: M/s. Bharat Radiators
Judges/Coram:
Hon'ble Sh. M.K. Shrawat, Member (J)
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Faiza A. Dhanani, Learned Advocate
For Respondents/Defendant: Mr. Yuvraj K. Singh, Learned Advocate
ORDER
Petitioner Counsel says the matter is settled between the parties, hence requested for withdrawal of the
Petition, accordingly this Bench dismissed this Petition as withdrawn.
1966

MUMBAI BENCH
C.P. (I.B.) No.35/7/NCLT/MAH/2017
Applicant: M/s. Polyset Plastics Pvt. Ltd.
Judges/Coram:
Counsels:
ORDER
On the Consent Terms placed by the Petitioner Counsel, at request of the Petitioner Counsel, the Petition
is hereby dismissed as the matter is settled out of Court.
1967

MUMBAI BENCH
C.P. (I.B.) No.596/7/NCLT/MAH/2017

VS
Respondent: Hindustan Dorr-Oliver Limited
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Himanshu Vidhani and Ms. Sanika Gokhale, Learned Advocate
For Respondents/Defendant: Mr. Raj Menta, Learned Advocate
ORDER
1. This is an insolvency and bankruptcy Petition for initiation of insolvency resolution process by a
financial creditor, Bank of India, Bandra East, Mumbai-400 051 against the corporate debtor, Hindustan
Dorr-Oliver Limited, on the ground that the corporate debtor has defaulted in making payment of
Rs.856,52,57,199 as on 31-03-2017, for the various credit facilities sanctioned by the bank.
2. The financial creditor has stated that on 15-07-2014, it has sanctioned credit facilities to the extent of
Rs. 660.55 crores, the break up being working capital term loan Rs.152.87 crores, Funded Interest Term
Loan (FITL) on Working Capital Term Loan (WCTL) Rs.8.54 crores, cash credit 104 crores, and non-
fund based facilities such as LC, bill discounting, invoice discounting etc. to the extent of 396 crores. The
sanction letter provides for the repayment of working capital term loan in 24 quarterly instalments after
the Moratorium period of 12 months from cut-off date i.e. 12 months from 31-12-2012, the total tenure of
the loan is 7 years i.e. one year Moratorium and 6 years of repayment and accordingly the instalment
starts from the quarter March 2014 and ending in quarter December 2019. The repayment schedule for
FITL on WCTL is repayable in 10 equal quarterly instalments after Moratorium period of 12 months from
cut-off date i.e. 12 months from 31-12-2012, the total tenure of the loans shall be of 3.5 years, one year of
Moratorium and 2.5 years of repayment, thus commencing from quarter March 2014 and ending quarter
June 2016. The statement of accounts produced by the financial creditor in respect of the corporate debtor
reveals that the account of the corporate debtor was classified as non-performing asset on 30-09-2014.
1968
3. The financial creditor on 03-04-2017 sent a letter to the corporate debtor stating the position of the
account disclosing the sanctioned limit, principal outstanding as on 31-03-2017 and interest up to 31-12-
2014, uncharged interest from 01-01-2015 to 31-03-2017 and the total outstanding indicating that the
account default/cut off/NPA date as 10-01-2013. Further, it discloses various assets that were given as
principal security and collateral security in favour of the financial creditor. The said letter was
acknowledged and confirmed by the corporate debtor.
4. The counsel appearing on behalf of the corporate debtor states that his client concedes initiation of the
5. As to the Petition filed by the Financial Creditor, this Bench, on perusal of this documents filed by the
Financial Creditor, observed that the Corporate Debtor defaulted in making payment and Financial
Creditor placed the name of the Insolvency Resolution Professional to act as Interim Resolution
Professional, having this Bench noticed that default has occurred and there is no disciplinary proceedings
pending against the proposed resolution professional, therefore the Application under sub-section (2) of
section 7 is taken as complete, accordingly this Bench hereby admits this Application declaring
Moratorium with the directions as mentioned below:
(a) That this Bench hereby prohibits the institution of suits or continuation of pending suits or
disposing of by the corporate debtor any of its assets or any legal right or beneficial interest therein; any
action to foreclose, recover or enforce any security interest created by the corporate debtor in respect of
its property including any action under the Securitization and Reconstruction of Financial Assets and
Enforcement of Security Interest Act, 2002; the recovery of any property by an owner or lessor where
such property is occupied by or in the possession of the corporate debtor.
(b) That the supply of essential goods or services to the corporate debtor, if continuing, shall not be
(c) That the provisions of sub-section (1) of Section 14 shall not apply to such transactions as may be
(d) That the order of moratorium shall have effect from 21.04.2017 till the completion of the corporate
1969
(e) That the public announcement of the corporate insolvency resolution process shall be made
(f) That this Bench hereby appoints Mr. Amit Gupta, A/701, Gundecha Symphony, Veera Desai Road,
Andheri West, Mumbai — 400 053, email: caamith.gupta@gmail.com, Registration No. IBBI/IPA-
001/IPP00016/2016-17/10040 as interim resolution professional to carry the functions as mentioned
6. Accordingly, this Application is admitted.
7. The Registry is hereby directed to communicate this order to the Financial Creditor and the Corporate
Debtor.
1970

MUMBAI BENCH
C.P. (I.B.) No. 69/7/NCLT/MAH/2017
Applicant: Urban Infrastructure Trustee Ltd.

VS
Respondent: Neelkanth Township and Construction Pvt. Ltd.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Arif Doctor, Ms. Nirali Chopra, Learned Advocates
For Respondents/Defendant: Ms. Chaitrika Patki, Learned Advocate
ORDER
1. This Bench having pronounced the order of admission in the open court after hearing this Application;
the reasons for passing such order are as follows.
2. The financial creditor filed this CP against the corporate debtor, viz. Neelkanth Township and
Construction Pvt. Ltd to initiate Corporate Insolvency Resolution Process u/s 7 of Insolvency and
Bankruptcy Code, 2016 (I&BC) stating that the corporate debtor defaulted in redeeming the debenture
certificates issued by the corporate debtor on 26.12.2007, 13.2.2008 and 30.3.2009 on the dates of
maturity mentioned in the debenture certificates issued by the corporate debtor.
3. It is pertinent to mention that this financial creditor had filed CP 21/I&BP/2017 seeking the relief as
sought now, but whereas this Bench, by looking at the variation between the claim amount and default
amount, dismissed that application with an observation that application was filed showing claim amount
as Rs. 226,16,79,437 basing on the record and information disclosing default for repayment of principal
amount of 251crores. While dismissing the above application, this Bench gave liberty to the financial
creditor to file fresh application restricting its claim to 251crores to which record is available showing the
corporate debtor defaulted in redeeming the debentures as agreed.
1971
4. In pursuance of the liberty given above, the financial creditor has now filed this Company Application
limiting its claim to Rs. 51crores as against the default showing in the records placed by the creditor. Now
the present Application is filed stating that corporate debtor, in consideration to the debt of Z51crores
given by the financial creditor, issued certificate dated 26.12.2007 comprising of 1,27,000 zero percent
optionally fully convertible debentures of Rs. 100 each of the aggregate value of Rs. 1,27,00,000;
certificate dated 15.2.2008 comprising of 1,24,000 zero percent optionally fully convertible debentures
(OFCDs) of Rs. 100 each of the aggregate value of Rs. 1,24,00,000; and another certificate dated
30.03.2009 comprising of 48,49,000 one percent optionally fully convertible debentures of 2100 each of
the aggregate value of Rs. 48,49,00,000, with terms and conditions in respect to rate of interest,
conversion, redemption, payment of debentures on the back of each of the certificates stating as regards
the debenture certificate for 1,27,000 debentures, they shall be redeemed within 60 months from the date
of allotment (maturity date would be 25.12.2012);as regards the debenture certificate for 1,24,000
debentures, they shall be redeemed within 60 months from the date from the date of allotment (maturity
date would be 14.02.2013); as regards the debenture certificate for 48,49,000 debentures, they shall be
redeemed on 30th April 2011 with a redemption premium on the date of maturity. Since the corporate
debtor has defaulted in repayment of the aggregate principal amount of Z51crorestowards OFCDs on the
respective dates of maturity, and for the same being acknowledged in the balance sheets of the corporate
debtor for the financial year ended 31.03.2012, 31.03.2013, 31.03.2014 and unaudited balance sheets of
financial year ended 31.03.2015 and 31.03.2016 showing that OFCDs has matured and the same are
overdue, the financial creditor filed this company Application for initiation of Insolvency Resolution
Process.
5. The financial creditor further submits that the corporate debtor company has only three shareholders,
i.e., the financial creditor, and two individual promoters, out of these three; it is this financial creditor,
who made 98% of the funding to the corporate debtor company through these OFCDs subscribed by the
financial creditor.
6. On the application moved by the financial creditor, the corporate debtor raised objections for admission
of this Application on the ground that there is no evidence of proof to show that the corporate debtor
committed default and no record has been placed to specify the default purported to have been committed.
The corporate debtor further submits that since sufficient stamp duty has not been paid over the debenture
certificates, they cannot be taken into consideration to pass any order as those certificates have been hit by
Section 35 of Indian Stamp Act, 1899. The corporate debtor has gone further saying that since three years
limitation for seeking remedy basing on debenture certificates is expired since the date of maturity, this
petition is liable to be dismissed. The Corporate Debtor counsel says that default showing in the Balance
1972
Sheets does not amount to acknowledgment of debt. The counsel appearing on behalf of the corporate
debtor further submits that since this claim has already been disputed under Section 21 of Arbitration and
Conciliation Act, 1996, no order could be passed simply by looking at the claim made in this application.
The last objection of the corporate debtor counsel is since this applicant has been in a dual capacity as a
shareholder of the debtor company and also as a financial creditor, this financial creditor cannot make any
claim against the debtor company wherein this applicant itself is continuing as a shareholder.
7. On hearing the submissions of either side, the points for consideration are as follows:
(i) Whether enough evidence as mandated u/s 7 of the Code has been placed by the applicant for
admission of this company Application or not.
(ii) Whetherdeficiency of stamp duty will invalidate the debenture certificates or not.
(iii) Whether the debt is time barred or not.
(iv) Whether the pendency of arbitration proceeding between the parties will have any bearing on
adjudication of this application or not.
(v) Whether the applicant herein can file this application as a financial creditor when the applicant is
continuing as one of the shareholders of the Company.
Point .1: -Whether enough evidence as mandated u/s 7 of the Code has been placed by the applicant
for admission of this company Application or not.
8. It is a fact that the applicant herein subscribed for issuing debenture certificates mentioned above, on
consideration, the corporate debtor issued debenture certificates on the dates mentioned above and the
same has not only been showing in the debenture certificates placed before this Bench but also in the
Balance Sheets of the debtor company for the years 2012 to 2016 reflecting that the amounts in respect to
the debenture certificates fell overdue. It is not the case of the corporate debtor company that the
debenture certificates have not been issued and the money against them has not come to the company, and
it is also not the case of the corporate debtor it is not reflecting in the balance sheets of the corporate
debtor company. In the earlier application dismissed with a liberty to the applicant to claim for the
principal amount, the corporate debtor did not raise any objection stating that record of default has not
been recorded with information utility and record of evidence of default is not as specified under the
Board Regulations governed by section 240 of this Code.
1973
9. However, the corporate debtor counsel has submitted that an application u/s 7 could be filed only when
the record of default is recorded with information utility or such other record or evidence of default as
may be specified. He says that section 240 sub section 2 (f) envisages that the other record or evidence of
default under clause (a), under any other information under clause (c), of sub section 3 of section 7 shall
be taken into consideration as mentioned in the Regulation-8 of I & B Board of India (Insolvency
Resolution Process for Corporate Persons) Regulations. In pursuance of the said provision, for there being
Regulation 8(2) saying existence of debt due to the financial creditor has to be proved on the basis of
either on the records available on the information utility or other relevant documents including (i) a
financial contract supported by financial statements as evidence of the debt, (ii) a record evidencing that
the amounts committed by the financial creditor to the corporate debtor under a facility has been drawn
by the corporate debtor; (iii) financial statements showing that the debt has not been repaid; or an order of
a court or tribunal that has adjudicated upon the non-payment of a debt, if any, satisfaction under any of
the heads is sufficient.
10. In conjunction to the same, the corporate debtor referred rule 4 of I&B (application to adjudicating
authority) Rule 2016 to say that the documents accompanied with Form-1 shall be as specified in the
Insolvency & Bankruptcy Board of India (Insolvency Resolution Process for Corporate persons)
Regulation 2016. He further submits the use of words "record or evidence of default" appearing in section
7(3)(a) cannot in any manner be read to mean any other document or any other evidence except as
specified in the Regulations, whereby the procedure laid under the Rules and Regulations cannot be
waived of in granting relief under this section.
11. When this proposition raised by the corporate debtor counsel placed as against the record of record
placed by financial creditor, it is very much evident that the financial creditor filed debenture certificates
issued by the corporate debtor on receipt of consideration of Rs. 51crores from the financial creditor and
also annual reports for F.Y. 2011-12, 2012-13, 2013-14 and also unaudited annual reports for the F.Y.
2014-15 and 2015-16 reflecting the corporate debtor company issuing debenture certificates to the money
received thereafter consistently showing the same in the annual report and also notes of the financial
statement stating that the company failed to make payment to the debenture holder despite the debentures
matured on the respective dates as mentioned above. Therefore, the corporate debtor counsel cannot now
say that record or evidence of default as specified under the regulation and rules has not been produced.
12. The Regulation 8 only says that the Financial Creditor has to place either the record available with an
information utility or relevant documents including a financial statement showing evidence of debt and
records showing that facility has been availed by the corporate debtor and also the record showing
1974
financial statement showing that the debt has not been repaid or order of court or tribunal that has been
adjudicated upon the non-payment of the debt. So there are three kinds of showing is required to prove
default, one is recording by the information utility, since the information utility has not come into
existence it can't be an argument of the corporate debtor that since information utility has not yet been
created, this Bench cannot pass an order. Second option is that this Bench can pass an order by looking at
the financial contract showing the claim as debt, a record evidencing the amounts committed by the
financial creditor to the corporate debtor under a facility has been drawn by the corporate debtor, if that
evidence is also not available then third option is the financial creditor can show any court order
adjudicating non-payment of a debt. Since these categories have been disjointed by using the word "or", if
the financial creditor is able to produce any of these three records showing default, then this Bench has
invariably to consider that default of payment of debt has been proved. Here in this case for the financial
creditor has produced the debenture certificate showing financial contract and thereafter financial
statement s of the company reflecting the payment above mentioned as remained over-due till date of
filing this company application.
13. In view of that evidence let in by the financial creditor, we believe that the record placed by the
financial creditor is sufficient enough to prove that the corporate debtor has defaulted in repayment of the
aggregate principal amount of Rs. 51 crores to which OCDs have been issued by the corporate debtor.
Point 2: Whether deficiency of stamp duty will invalidate the debenture certificate or not.
14. Whether argument advanced by the corporate debtor counsel is that the debenture certificates issued
by the Corporate Debtor are not duly stamped as required under the provisions of the Indian Stamp Act
1899 and/or the Maharashtra Stamp Act 1985 conferring it as security. To justify this argument, the
corporate debtor counsel relied upon Sahara India Real Estate Corporation Limited and Others v.
Securities and Exchange Board of India and Another (2013) Sec.1 to say that it is a hybrid security as the
same is convertible into equity because, according to the aforesaid case, OFCDs have been characteristics
of shares as well as debentures falling within the definition of securities section 2 (h) of the SCR Act,
which continue to remain debentures till they are converted. Because, thereby convertible debentures are
to be treated as securities marketable.
15. To this argument, the financial creditor counsel has submitted that debentures, being a marketable
security, they are governed by Indian Stamp Act 1899. It is true that debentures are marketable security
when such security is marketable in nature, but the corporate debtor being a private limited company,
these OCDs are not marketable security whereby they do not require to be stamped either under Article
27 of the Schedule I of the Indian Stamp Act or under Section 74 of Maharashtra Stamp Act.
1975
16. Since it is evident that the corporate debtor company is a private limited company, for these
debentures cannot be transferred like in a public limited company, these debentures cannot be called as
marketable security and since the corporate debtor company already defaulted in making repayment after
maturity date it can't in any way be considered as a security asking stamp duty. Hence this Bench has not
found any merit in the argument of the Corporate Debtor counsel on this point.
Point No.3: Whether the debt is time barred or not.
17. The corporate debtor counsel argued because this three debenture certificates were due for redemption
as far back as 2011, 2012 and 2013, since this application is filed in the year 2017, this claim is ex-facie
time barred, hence this Tribunal ought not entertain or proceed with or decide the same. He further
submits that the purported acknowledgment by the corporate debtor in the Annual Returns is subject to
the qualification contained in the Directors report, which clarified to the Notes on Account contained in
the auditor's report. Since the said acknowledgement being qualified by the Directors report, it can't be
treated as an admission for extension of limitation basing on section 18 of the Limitation act.
18. Looking at the argument of the corporate debtor counsel, it is clear that it is not his case that the
debenture certificates have not been issued. It is also not his case that admission of default is not present
in the financial statements. The only twist that is given to that admission is that it is a qualified admission
for it has been mentioned in the director's report that it is in dispute. As to this point it need not be newly
propound to say that the admission appearing gin the financial statement of the company is an
acknowledgement covered by section 18 of the limitation act, an acknowledgement need not be given to
the financial creditor stating that debt is owed to him. If such debt is shown as due in the financial
statements of the company which are rem in nature, it is to be construed as an acknowledgement of
default. Since there has been express admission that the company has defaulted in repayment of principal
toward the money received by issuing debenture certificates, this debt cannot be called as time barred
debt. Thereby this bench has not found any merit in the argument taken by the corporate debtor counsel.
Point No.4.Whether the pendency of arbitration proceeding between the parties will have any
bearing on adjudication of this application or not.
19. The corporate debtor counsel argues that section 21 of Arbitration and Conciliation Act 1996 in
relation to the same debentures pending before Hon'ble High court of Bombay; therefore, the financial
creditor cannot raise this dispute before this Bench on the same issue pending before the Hon'ble High
Court of Bombay.
1976
20. Before answering this point, we believe it is pertinent to mention what sections 63 and 231, 238 of the
Code are saying. On perusal of these three sections, it is evident that no civil court shall have jurisdiction
in respect of any matter in which the adjudicating authority is empowered by or under this court to pass
any order, thereby it is clear that pendency of any proceeding before any court will not have any bearing
on the proceedings initiated under this Code provided that dispute is covered under the respective section
of this Code. Since this case is covered u/s 7 of the Code, pendency of section 21 proceedings under
Arbitration Act will not have bearing on this case. Hence, we do not find any merit in the argument
advanced by the corporate debtor counsel.
Point No.5: Whether the applicant herein can file this application as a financial creditor when the
applicant is continuing as one of the shareholders of the Company.
21. Since this court has not said anywhere if the financial creditor happens to be shareholder as well, the
shareholder in the capacity of financial creditor cannot initiate insolvency resolution process, since it is
the case of the financial creditor that 90% of the funding arisen by the company is only through this
claim, this applicant claim cannot be shut on the ground the applicant continuing as shareholder. As there
is no legal bar against this applicant to make his claim as a financial creditor, this Bench cannot read into
such proposition to deprive the right of this applicant. Therefore, we do not find any merit in the argument
of the corporate debtor.
22. When a Company is unable to pay the debt or refuse to pay the debt, the financial creditor or the
operational creditor, as the case may be, can initiate insolvency proceedings since the corporate debtor
defaulted in repaying the debt admittedly showing in the financial statement of the debtor Company, this
application deserves admission.
23. In view of the reasons above, this Bench admitted this petition. The order for appointment of
Insolvency Resolution Professional and other consequential directions will follow within fourteen days
from the date of admission.
1977
MUMBAI BENCH
C.P. (I.B.) No. 246/7/NCLT/MAH/2017
Applicant: 1. Culrross Opportunities SP.

2. Peter Beck and Partners
VS
Respondent: M/s. Sharon Bio-Medicine Limited
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Sharan Jagtiani & Mr. Arjun Gupta, Learned Advocates
ORDER
The Insolvency and Bankruptcy Petition was admitted on 11.04.2017, wherein the IRP was not appointed
and direction regarding public announcement was also not given. In view of the above, the following
directions are given:
(i) That the public announcement of the corporate insolvency resolution process shall be made
(ii) That this Bench hereby appoints Mr. Dinkar T. Venkatasubramanian, Ersnt & Young LLP, 6th Floor,
Worldmark-1 IGI Airport Hospitality District, Aerocity, New Delhi-110037,
dinkar.venkatasubramanian@in.ey.com, Registration No. IBBI/IPA-001/IP-P00003/2016-17/10011, as
interim resolution professional to carry the functions as mentioned under Insolvency & Bankruptcy Code.
1978

MUMBAI BENCH
C.P. (I.B.) No.720/7/NCLT/MAH/2017

VS
Respondent: HDO Technologies Limited
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Himanshu Vidhani, Learned Advocate
For Respondents/Defendant: Mr. Raj Mehta, Learned Advocate
ORDER
financial creditor Bank of India, Andheri Large Corporate Branch, Mumbai - 51 against the corporate
debtor HDO Technologies Limited on the ground that the corporate debtor has defaulted in making
payment for the various credit facilities sanctioned by the bank to the extent of Rs.162,31,99,387 as on
31-03-2017.
2. The financial creditor has stated that on 06-08-2014 it has sanctioned credit facilities to the extent of
Rs.147.44 crores, the break up being working capital term loan Rs.41.56 crores, Funded Interest Term
Loan (FITL) on Working Capital Term Loan (WCTL) 2.08 crores, cash credit 30 crores, LC 24 crores
and bank guarantee 49.80 crores. The sanction letter indicates that the working capital term loan is
repayable in 24 quarterly instalments after the Moratorium period of 12 months from cut-off date i.e. 12
months from 31-122012. The total tenure of the loan is 7 years i.e. one year Moratorium and 6 years of
repayment and accordingly the instalment starts from the quarter March 2014 and ending in quarter
December 2019. It further provides that the FITL shall be repayable in 10 equal quarterly instalments
after moratorium period of 12 months from cut off date i.e. 12 months from 31-12-2012, thus
commencing from quarter March 2014 and ending quarter June 2016. The statement of account produced
by the financial creditor reveals that the account of corporate debtor was classified as non-performing
1979
asset on 31-122014. The financial creditor has sent a letter dated 11-04-2017 addressed to the corporate
debtor disclosing the position of account as on 31-03-2017 and sought for the acknowledgement of
balance wherein the corporate debtor has confirmed the position of account as on 31-03-2017.
3. The financial creditor on 03-04-2017 sent a letter to the corporate debtor stating the position of the
account as on 31-03-2017 disclosing the sanctioned limit, principal outstanding as on 31-03-2017 and
interest up to 31-12-2014, uncharged interest from 01-01-2015 to 31-03-2017 and the total outstanding
indicating that the account is classified as non-performing asset since 01-102013. Further, it discloses
various assets that were given as principal security and collateral security in favour of the financial
creditor. The said letter was acknowledged and confirmed by the corporate debtor.
4. The counsel appearing on behalf of the corporate debtor states that his client concedes initiation of the
5. As to the Petition filed by the Financial Creditor, this Bench, on perusal of this documents filed by the
Creditor, observed that the Corporate Debtor defaulted in making payments and the Financial Creditor
placed the name of the Insolvency Resolution Professional to act as Interim Resolution Professional,
having this Bench noticed that default has occurred and there is no disciplinary proceedings pending
against the proposed resolution professional, therefore the Application under sub-section (2) of section 7
is taken as complete, accordingly this Bench hereby admits this Application declaring Moratorium with
the directions as mentioned below:
1980
(f) That this Bench hereby appoints Mr. Amit Gupta, A/701, Gundecha Symphony, Veera Desai Road,
Andheri West, Mumbai — 400 053, email: caamith.gupta@gmail.com, Registration No. IBBI/IPA001/IP-
P00016/2016-17/10040 as interim resolution professional to carry the functions as mentioned under
Insolvency & Bankruptcy Code.
Debtor.
1981
MUMBAI BENCH
C.P. (I.B.) No. 69/7/NCLT/MAH/2017
Applicant: Neelkanth Township And Construction Pvt. Ltd.

VS
Judges/Coram:
Hon'ble Sh. B.S.V. Prakash Kumar, Member (J)
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Arif Doctor, Counsel a/w, Ms. Nirali Chopra, Advocate
For Respondent: Ms. Chaitrika Patki, Advocate
ORDER
On moratorium being declared today, i.e. 1.5.2017 along with order of public announcement and
appointment of Interim Resolution Professional, the corporate debtor filed an application under Rule 11
of NCLT Rules, 2016 seeking stay of the implementation of the order dated 1.5.2017 passed by this
Bench on the ground that the corporate debtor needs some time to file Appeal over the order dated
21.4.2017.
The financial creditor counsel raised objection for granting stay sought by the corporate debtor.
On hearing the submissions of the corporate debtor counsel stating that there will be far reaching effects
in the event Interim Resolution Professional takes charge of the affairs of the corporate debtor, this Bench
having given reasons to the order of admission only on 27.4.2017, we believe that the time must not have
been sufficient to the corporate debtor to challenge the order of admission granted by this Bench,
therefore, the order declaring moratorium, of appointment of resolution professional and for public
announcement are hereby stayed for seven days from hereof.
Accordingly, this application is hereby disposed of.
1982

MUMBAI BENCH
C.P. (I.B.) No. 723/7/NCLT/MAH/2017

VS
Respondent: DLS Industries Limited
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Vinit J. Mehta, Advocate
For Respondent: None
ORDER
Financial Creditor, Punjab National Bank, against the Corporate Debtor on the ground that the Corporate
Debtor has defaulted in making payment for the various credit facilities sanctioned by the Bank to the
extent of 24,41,43,273 as on 31-01-2017 with interest at the rate of 15% per annum plus 2% penal interest
from 1.2.2017 till the date of realization.
2. The financial creditor has stated that on 21.11.2009 the Bank has sanctioned 22.00 crores as Term
Loan, 21.50 crores as Working Capital Loan to the Corporate Debtor. Subsequently on 10.5.2011, the
Financial Creditor has enhanced the Term Loan to 26.55 crores and Working Capital Loan to 22.50
crores. The said facilities were primarily secured by hypothecation of stock in trade and the entire book
debts of the Corporate Debtor. The said facilities were collaterally secured by hypothecation/mortgage of
immovable properties belonging to the guarantors (1) Sh. D. L. Sawwalakhe, (2) Sh. Dhananjay Barokar,
(3) Mrs. Pranita D Sawwalakha and (4) M/s. Rice City Land Developers. The Corporate Debtor executed
the Term Loan Agreement on 4.5.2010, Supplementary Term Loan Agreement on 14.9.2012, Deed of
Hypothecation on 4.5.2010 and the Letter of Mortgage on 12.5.2010. One Mr. D. L. Sawwalakhe and Mr.
Jagdish H. Noukaria executed Guarantee Deed on 4.5.2010 in favour of the Financial Creditor guaranting
the facilities sanctioned by the Financial Creditor. The Corporate Debtor has confirmed the balance due to
1983
the Financial Creditor on 31.7.2012. On the request of the Corporate Debtor dated 31.7.2012, the Term
Loan was re-scheduled on 1.9.2012 and the Corporate Debtor was permitted to pay the balance
outstanding of 21,87,06,810 in 84 months commencing from March, 2013 onwards. Since the Corporate
Debtor has defaulted in making the payments, the Term Loan Account as well as the Cash Credit Account
were classified as non-performing assets on 30.6.2014. The Financial Creditor issued notice u/S 13(2) of
Securitisation and Reconstruction of Financial Asset and Enforcement of Security Interest Act, 2002
(SARFAESI), stating that a sum of 22,81,03,470 is the outstanding as on 30.6.2014. The Financial
Creditor has stated that they have filed a Recovery Suit in the Debt Recovery Tribunal and the same is
pending. The Financial Creditor on 14.2.2017 issued a notice to the Corporate Debtor demanding a sum
of 24,41,43,273 with further interest failing which Insolvency Resolution Proceedings will be initiated
against the Corporate Debtor. The Counsel for the Financial Creditor submitted that the business premises
of the Corporate Debtor was already closed and the Corporate Debtor is not filing any financial
statements with Registrar of Companies from 2014 onwards.
3. As to the Petition filed by the Financial Creditor, this Bench, on perusal of the documents filed by the
Creditor, observed that the Corporate Debtor defaulted in making payments and since the Financial
Creditor placed the name of the Insolvency Resolution Professional to act as Interim Resolution
Professional, having this Bench noticed that default has occurred and there is no disciplinary proceeding
pending against the proposed resolution professional, the Application under sub-section (2) of section 7 is
taken as complete, accordingly this Bench hereby admits this Application declaring Moratorium with the
directions as mentioned below:
proceedings against the corporate debtor including execution of any judgment, decree or order in
any court of law, tribunal, arbitration panel or other authority; transferring, encumbering,
alienating or disposing of by the corporate debtor any of its assets or any legal right or beneficial
interest therein; any action to foreclose, recover or enforce any security interest created by the
corporate debtor in respect of its property including any action under the Securitization and
Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002; the recovery
of any property by an owner or lessor where such property is occupied by or in the possession of
(b) That the supply of essential goods or services to the corporate debtor, if continuing, shall not
be terminated or suspended or interrupted during moratorium period.
1984
(c) That the provisions of sub-section (1) of Section 14 shall not apply to such transactions as
may be notified by the Central Government in consultation with any financial sector regulator.
(d) That the order of moratorium shall have effect from 3.5.2017 till the completion of the
corporate insolvency resolution process or until this Bench approves the resolution plan under
sub-section (1) of section 31 or passes an order for liquidation of corporate debtor under section
33, as the case may be.
(f) That this Bench hereby appoints Mr. Dushyant C. Dave, 1101, Dalamal Tower, Nariman
Point, Mumbai, email: dushyantcdave@gmail.com, Registration No. IBBI/IPA-003/IP-
00043/2016-17/1343 as interim resolution professional to carry the functions as mentioned under
Debtor.
1985
MUMBAI BENCH
C.P. (I.B.) No. 1043/7/NCLT/MAH/2017
Applicant: Indus Finance Ltd.

VS
Respondent: Quantum Ltd.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Vinu Jagtap, Advocate i/b, Ms. Neha Jagtap
For Respondent:
ORDER
1) This Petition is submitted before NCLT on 25th May,2017 on Form No.1 in the capacity of "Financial
Creditor", as defined under the insolvency & Bankruptcy Code 2016 ( hereinafter referred as The Code ) ,
with a prayer to initiate Corporate Insolvency Resolution Process. It is intimated that out of the debt
sanctioned of Rs. 10 Cr. by the Petitioner functioning as NBFC only a sum of Rs.2 Crore was disbursed
in favour of the Respondent i.e. the Corporate Debtor on 20th June, 2011 and 10th August, 2011 i.e. Rs.
one Crore on each date. It is also clarified that the debt amount was repaid however the interest payment
was defaulted. As per the Petition the amount in 'Default' is Rs.93,29,833/- which was treated as NPA as
on 31st March 2013 being a defaulter of payment of monthly interest. The Petitioner has stated that due to
non payment of monthly interest, pending since long, admitted factual position is that the Corporate
Debtor had committed "Default", as prescribed under The Code.
2) One more fact has been brought to the notice that one more creditor viz. J.M. Financial Asset
Reconstruction Company Private Ltd. had filed a Petition before the Debt Recovery Tribunal, Pune and
vide an order dated 5' May, 2014 an order was pronounced, relevant portion is extracted below:-
1. The Application is allowed ex parte against defendant No. 1 to 3. Issue Recovery Certificate in
favour of Applicant for Recovery of 14,58,46,527,00 (Rupees Fourteen Crores Fifty eight Lakhs
Forty six thousand Five Hundred Twenty seven only) together with simple interest at the rate of
1986
12% from the date of filing the application in the Tribunal i.e. 09.05.2013 till realization of the
amount along with the cost of the application from defendant Nos 1 to 3 jointly and severally.
2. Charge of the said amount is kept on the properties hypothecated and / mortgaged namely all
that piece and parcel of land lying and situated at Zone No. A, B, C 0, Pune Rajiv Gandhi, I, T8.
T. Park Plot No. 5A and 58 Phase II , admeasuring at about 8296.04 Sq, mtrs. situated at Village
Mann, Taluka Munshi, Dist Pune more particularly described in Annexure -"A" and also Flat No,
702 admeasuring about 700 Sq. ft. situated on 7' Floor in Building known as "Alan Towers" at 2-
Mount Mary Road, Sandra (W), Mumbai and 2,50,000 equity shares of Indowind Energy Ltd,
with face value of Rs.10/- each pledged in favour of the applicant. The applicant is at liberty to
sell the mortgaged properties after two months from the date of this order for recovery of the
dues."
3) Further it is brought to the notice that one more order was passed by DRT, Mumbai on 21st March,
2017 in IA No. 243 of 2017 wherein directed as under:-
"The counsel appearing for the Applicants addressed his arguments at length on the point of
fixing of low reserve price for the secured asset and also for confirming the bid in favour of the
alleged successful bidder fora low amount of Rs. 19. 26 Crores. The learned counsel appearing
for the Respondent Bank seriously
disputed the contention of the Applicants and after conclusion of arguments on both the sides,
Mr. Rishabh Shah, the learned counsel appearing for the Applicants on instruction from his
clients who was present in the open court finally submitted that the Applicants are ready and
willing to redeem the property for an amount of Rs. 19.26 Crores with interest from the date of
auction within a period of six months, however left the fixation of period of redemption to the
discretion of this Tribunal in order to protect the property. It appears the Respondent Bank also
obtained Recovery Certificate against the Applicant Company from DRT-Pune and total dues
payable by the Applicant under R.C. also appears to be around Rs.20 Crores or so. Since the
auction purchaser has not deposited the entire sale consideration, the Applicant have got every
right to redeem his property.
4)Under these circumstances, this Tribunal is inclined to grant stay of all further proceedings subject to
the condition that the Applicants shall deposit Rs.5 Crores within four weeks and the remaining amount
of Rs.14.26 Crores with interest at 12% per annum from the date of auction till the date of redemption
1987
within six weeks thereafter. If the Applicants fail to comply any of the conditions, the Respondent Bank
may move an appropriate Application for vacation of stay."
5) The Petitioner has also narrated the brief facts that Indus Finance Ltd. sanctioned Term Loan facility to
Quantum Ltd. vide its sanction letter No.IFCL/QL/007111-12 dated 15-06-2011. A sum of
Rs.1,00,00,000/- (Rupees One Crore only) was disbursed on 20.06.2011 and a further amount of
Rs.1,00,00,000/- (Rupees One Crore only) disbursed on 10.08.2011. The total amount disbursed to
Quantum Ltd. was Rs.2,00,00,000/- (Rupees Two Crore only). Interest on the said debt was regularly
serviced by Quantum Ltd. for the period 26.02.2011 to 31.03.2012. However, the payment of interest
from 01.04.2012 to 31.12.2012 was highly irregular and the account turned into NPA as on 31.03.2013.
The financial Creditor regularly pursued with the Corporate Debtor for recovery of its principal and
interest. The Corporate Debtor made the repayments thereafter intermittently by the account remained
irregular. Meanwhile, the credit facilities enjoyed by the Corporate Debtor with Corporation Bank also
turned into NPA and the said Bank sold this liability to J.M. Financial Asset Reconstruction Company
Pvt. Ltd., ARC. Hence this application is being filed before this Hon'ble Tribunal for the resolution of the
Corporate Insolvency Process in the matter of Quantum Ltd. ( Corporate Debtor). As per the Applicant
the present position is that vide order of the DRT dated 21st March ,2017 (supra) the Auction Purchaser
had not deposited the entire sale consideration hence it was held by the DRT that the Applicant i.e.
Quantum Ltd.(Corporate Debtor) got every right to redeem his property. The Respected DRT had granted
stay of further proceedings subjected to the direction that Quantum Ltd. (Corporate
Debtor) shall deposit Rs.5,00,00,000/- within four weeks and remaining Rs.14.26 Crore within 6 weeks.
According to this Petitioner if the Corporate Debtor feels to make the balance payment then the original
position of the auction may come and revive into operation.
6) According to the argument of the Ld. AR representing the Petitioner the period is expiring tomorrow
i.e. on 30th of May, 2017. A question has been raised by the Bench that in a situation when proceedings
are already in progress before the respected DRT then why a parallel proceedings be initiated before this
Tribunal i.e. NCLT ?. To answer this query it is pleaded that there is no overstepping in the jurisdiction of
the Hon'ble DRT due to the reason that as per the provisions of Section 14(1) (c) of I& B Code the NCLT
by an order can declare Moratorium, prohibiting any action to foreclose or recovery pertaining to a
Corporate Debtor including any action under Securitisation and Reconstruction of Financial Assets and
Enforcement of Security Interest Act, 2002 (54 of 2002). A statement at Bar has also been made that the
Petitioner i.e. Indus Finance Ltd. is ready to induct more funds so that the dispute with J.M. Finance of
1988
the Corporate Debtor should be resolved and the company may be revived by saving from winding up
proceedings. Ld. AR has also pleaded that as per the SRFAESI Act 2002 there was no provision for
joining a dispute of recovery by unsecured creditor hence the petitioner was prevented in not joining
dispute before DRT. The recovery proceedings initiated by J.M. Financial may adversely effect the right
of recovery of the Petitioner.
7) From the side of the Respondent (Corporate Debtor) W. AR along with one of the Director are present.
The Corporate Debtor has also expressed that with the help of certain Financial Institutions the existing
debts shall be squared up, so that the company may revive its business activity in near future.
8) Having heard the submissions of both the sides and on due considerations of the facts and
circumstances of the case, prima-facie it appears that the petition under consideration is legally
permissible to be Àdmitted'. A legal question has come up that weather two parallel proceedings, i.e. one
before the respected DRT, and another before the NCLT can run side by side?. Answer to this question is
that Section 14 itself has prescribed that while setting "Moratorium" in motion then the other proceedings
as defined therein shall be abated. For ready reference Section 14 of I & B Code 2016 is reproduced
below:-
"Moratorium.
14. (1) Subject to provisions of sub-sections (2) and (3), on the insolvency commencement date, the
Adjudicating Authority shall by order declare moratorium for prohibiting all of the following, namely:-
including execution of any judgement, decree or order in any court of law, tribunal, arbitration panel or
other authority;
Assets and Enforcement of Security Interest Act,2002 (54 of 2002);
(d) The recovery of any property by an owner or less or where such property is occupied by or in the
1989
(3) The provisions of sub-section (I) shall not apply to such transactions as may be notified by the Central
corporate insolvency resolution process."
8.1) On due analysis of this section it is unambiguous that the Adjudicating Authority ( NCLT ) shall by
an order declare Moratorium for prohibiting any action to recover or to enforce any security interest
created by a "Corporate Debtor" in respect of his property, including any action under SRFAESI Act.
Moreover, in my humble opinion, the life of the "Insolvency Resolution Process" under The Code is very
limited , stated to be 180 days. This period is not eclipsing the provisions of SRFAESI Act for an
unlimited period. The application of I & B Code is for a limited period, but in no way in contradiction to
the provisions of the SRFAESI Act. Under the said act a creditor can demand for recovery of his debt but
there is no provision in the said Act to involve other creditors. Therefore the import as also the
significance is that all the other creditors should also be provided an equitable option to assume and/or
undertake due legal recourse for redressal under some other Statute. In the wisdom of Hon'ble
Legislatures a new Act I Code is therefore needed to safeguard the interest of all the creditors , thus
resulted into enactment of Insolvency & Bankruptcy Code 2016. As a result it can be safely concluded
that the provisions of I & B Code 2016 are not in conflict with the provisions of SRFAESI Act.
8.2) Certain conditions precedent for 'Admission' of a petition under 183 Code, prima-facie, have been
presently completed , like the 'Default' of non-payment is established. Rather the Corporate Debtor being
present in the court has not objected for the impugned default in making the payment of the outstanding
dues as claimed by the Petitioner. As a result the provisions of Section 7 of The Code have come into
operation, which prescribes that a financial creditor may file an application for initiating Corporate
Insolvency Resolution Process against a Corporate Debtor when a default has occurred. It is required that
a Financial Creditor shall furnish the record of the default. When the Adjudicating Authority is satisfied
that a default has occurred and the application is complete and the proposed Insolvency Resolution
Professional is a qualified person, then by an order under Sub Section(5) of Section 7 can admit a petition.
Resultantly, the petition is hereby declared as Admitted.
8.3) The consequence of passing the order under Section 7(5) (a) of The Code is that the "Moratorium" as
prescribed under Section 14 of The Code shall come into operation. In the present case the consequence is
1990
that once the "Moratorium" is set in motion then the rights of the Petitioner shall get protected. As a
consequence, the assets of the Corporate Financial Debtor must not be liquidated until the Corporate
Insolvency Resolution Process is completed. The process of Moratorium shall be effective from today i.e.
29th May,2017 till the completion of the Corporate Insolvency Resolution Process or by any other order
of this bench, if deem fit.
8.4) The petitioner has proposed the name of Mr. Anil Goel, CA, E-10A, Kailash Colony, New Delhi
110048. E mail ID : anilgoel@akgindia.in. Reg. No. IBBUIPA-001 /IP. 00020/2016-17/1623 as Interim
Resolution Professional. His name is therefore approved and appointed to proceed as per the provisions to
finalise the Insolvency Resolution Process within the prescribed period. The Petitioner shall also act upon
under the provisions of Section 13 of The Code by making a public announcement to comply the
provisions of Section 15 of The Code.
9) The commencement of the Corporate Insolvency Resolution Process is hereby declared.
1991
MUMBAI BENCH
C.P. (I.B.) No. 1069/7/NCLT/MAH/2017
Applicant: Pine Forest Products and Investment Ltd.

VS
Respondent: Zenith Computers Ltd.
Judges/Coram:
Hon'ble Sh. B.S.V. Prakash Kumar Member (J)
Counsels:
For Appellant/Petitioner/Plaintiff: None
For Respondents/Defendant: Mr. Rishikesh Soni, Counsel a/w, Nikhil Patil i/b. P.N. Jadhav
ORDER
1. This Company Petition is filed by M/s. Pine Forest Products & Investment Ltd., 811-812,
Tulsiani Chambers, Nariman Point, Mumbai - 400 021 against the Corporate Debtor, M/s. Zenith
Computers Ltd., Plot No.: EL 117, 1st Floor, TTC Area, IVIIDC, Mahape, Navi Mumbai - 400 710,
alleging that the Corporate Debtor failed to pay the financial debt of Rs. 1,25,00,000/-with interest @
24% p.a. from 13.10.16 to 30.04.2017 amounting to Rs. 16,35,660/- and hence this Petition is filed under
Section 7 of Insolvency and Bankruptcy Code, 2016 ( hereinafter referred as "the Code") for initiation of
2. The Petitioner submits that its Board of Directors by a Resolution dated 14.02.2017 authorized
one of its Directors, Mr. Kamal Dujodwala, to initiate proceeding before NCLT Mumbai Bench against
3.The Financial Creditor discloses that the Corporate Debtor had approached it for a short term loan of
Rs. 2,00,00,00/- repayable within 30 days with 24% interest per annum. Accordingly, the Financial
Creditor sanctioned a sum of Rs. 1,25,00,000/- as short term loan and issued cheque No.: 786610 dtd.
13.10.2016 drawn on Jammu & Kashmir Bank, Fort Branch, for Rs. 1,25,00,000/-. The said loan is an
unsecured short term loan for a period of 30 days repayable with interest of 24% per annum. The
Corporate Debtor vide letter dated 14.10.2016 acknowledged the receipt of the cheque issued by the
1992
Financial Creditor. The Financial Creditor vide letter dated 17.11.2016 called upon the Corporate Debtor
to repay the said loan of Rs. 1,25,00,000/- along with interest @ 24% per annum from 13.10.2016 till the
date of payment, within 7 days from the receipt of the letter, failing which legal proceedings will be
taken. In reply to the said letter, the Corporate Debtor on 23.11.2016 requested the Financial Creditor to
extend the time for repayment by one month and stated that the principal and interest will be paid on or
before 12.12.2016. Since there was no repayment, the Financial Creditor sent another letter on 15.12.2016
seeking repayment of the loan, for which the Corporate Debtor on 19.12.2016 responded seeking another
6 months for start paying the loan in mutually agreed instalments. Then the Financial Creditor on
15.03.2017 issued notice under the Code with a request to repay the loan. The above facts clearly shows
that there is a financial debt payable by the Corporate Debtor and the same is on default from 17.11.2016.
4. The Counsel appearing on behalf of the Corporate Debtor submitted that his client requires three
years' time for repaying the loan which was rejected by the Counsel for the Financial Creditor.
5. The Financial Creditor has named Mr. Chetan T. Shah, No. 3, Wing A, Satyam Shopping Centre,
M.G. Road, Ghatkopar East, Mumbai — 400 077, email ID: chetanshah@hotrnail.com, Reg. No.:
IBBI/IPA-001/1P-P00026/2016- 17/10059 as the Interim Resolution Professional, who by letter dated
27.04.2017 given his acceptance and also certified that no disciplinary proceedings are pending against
him with. Insolvency & Bankruptcy Board of India or the Indian Institute of Insolvency Professional of
ICAI.
6. This Adjudicating Authority is of the view that the petition is in compliance of provisions of
Sections 3(11), 3(12), 5(7), 5(8)(C) and 7 of the Code and admits this petition declaring moratorium with
consequential reliefs as below:
1993
(iii) That the provisions of sub-section (1) of Section 14 shall not apply to such transactions as may be
(vi) That this Bench hereby appoints Mr. Chetan T. Shah, No. 3, Wing A, Satyam Shopping Centre, M.G.
Road, Ghatkopar East, Mumbai 400 077, email ID: chetanshah@hotmail.com, Reg. No.: 1BBI/IPA-
001/IPP00026/2016-17/10059, as interim resolution professional to carry the functions as mentioned
7.Accordingly, this Petition is admitted.
8. The Registry is hereby directed to communicate this order to the Financial Creditor and the
Corporate Debtor.
1994

MUMBAI BENCH
C.P. (I.B.) No. 1073/7/NCLT/MAH/2017
Applicant: M/s. Ashmita Multitrade Pvt. Ltd.

VS
Respondent: Mindtree Exports Pvt. Ltd.
Judges/Coram:
Hon'ble Sh. M.K. Shrawat Member (J)
Counsels:
For Appellant/Petitioner/Plaintiff: Ms. Sweta Valecha, Advocate
ORDER
Hon'ble Sh. M.K. Shrawat Member (J)
1. This Petition is submitted before the NCLT on 08-06-2017 by furnishing Form No.1 in the
capacity of "Financial Creditor" as defined under section 5(7) of The Code 2016, with a prayer to initiate
2. Facts in respect of the financial debt is that M/s. Ashmita Multitrade Pvt. Ltd. (Creditor No.1)
made an investment of Rs.84 lakhs. Further, M/s. Gehna Multitrade LLP (Creditor No.2) was invested
Rs.4,53,00,000/- in Mindtree Exports Pvt. Ltd. (Financial Debtor). The amount was advanced during the
period of 6th May 2016 to 3r":" June 2016. The debt amount was to be returned by 13.09.2016, as noted
in para-10 of the Petition. It is alleged that the Corporate Debtor started avoiding the Financial Creditors
although reminders were issued. The Corporate Debtor had promised to return back the amount but
according to the Creditor not a single penny was paid. There is one more allegation that the Directors of
Mindtree Exports viz. Mr. Ashok Kumar Gautam and Mr. Sulabh Sharma are actually the employees who
were made the dummy Directors. The Financial creditor has sent a notice on 15-02-2017 to the Corporate
Debtor demanding the said sum of Rs.5,37,00,000/-. The Creditors have annexed respective Bank
Statements to demonstrate that the payments were made to the Debtor through bank transaction. The
Learned Counsel of the Petitioner has also stated that the Debtors have accepted the impugned debt and
no objection has ever been made.
1995
In the absence of any dispute the Petition is to be admitted for further action.
3.During the course of hearing a question has been raised that whether two Financial Creditors can file a
single Petition jointly or two separate petitions were required to be filed. On perusal of Section 7 of IB
Code it is apparent that a Financial Creditor either by itself or jointly with other Financial Creditors may
file an application for initiating Corporate Insolvency Resolution process against a Corporate Financial
Debtor. Since a provision has been made for a joint Petition, hence the aforesaid Petition is hereby
"Admitted" for further action.
4.On due consideration of the totality of the circumstances it appears that this is a fit case to initiate the
Insolvency Process as prescribed under the Act, therefore, "Moratorium" under section 14 of the Code is
set into motion.
5.Certain conditions precedent for 'Admission' of a Petition under I&B Code, prima-facie, have been
presently completed, like the 'Default' of non-payment is established. As a result, the provisions of
Section 7 of The Code have come into operation, which prescribes that a financial creditor may file an
application for initiating Corporate Insolvency Resolution Process against a Corporate Debtor when a
default has occurred. It is required that a Financial Creditor shall furnish the record of the default. When
the Adjudicating Authority is satisfied that a default has occurred and the application is complete and the
proposed Insolvency Resolution Professional is a qualified person, then by an order initiate the
proceedings under Section 7 of the Code.
6.The consequence of passing the order under Section 7(5)(a) of The Code is that the "Moratorium" as
prescribed under Section 14 of The Code shall come into operation. In the present case the consequence is
that once the "Moratorium" is set in motion then the rights of the Petitioner shall get protected. As a
consequence, the assets of the Corporate Financial Debtor must not be liquidated until the Corporate
Insolvency Resolution Process is completed. The process of Moratorium shall be effective from today i.e.
13th June 2017 till the completion of the Corporate Insolvency Resolution Process or by any other order
of this bench, if deem fit.
7. The Petitioner has proposed the name of Mr. Subhas Ramchandra Hegde, G-18, Gokuldham
Shopping Centre, Gokuldham, Goregaon (E), IvIumbal-63, Email ID : hegje9820098555Pgrnail,com,
Reg. No. IBBI/IPA-001/IP-00426/2016-17/1351 as Interim Resolution Professional. His name is
therefore approved and appointed to proceed as per the provisions to finalise the Insolvency Resolution
Process within the prescribed period. The Petitioner shall also act upon under the provisions of Section 13
of The Code by making a public announcement to comply the provisions of Section 15 of The Code.
8. The Commencement of the Corporate Insolvency Resolution Process is hereby declared.
1996

MUMBAI BENCH
C.P. (I.B.) No. 247/7/NCLT/MAH/2017
Applicant: Indian Bank Ltd.

VS
Respondent: Varun Resources Ltd.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Ms. Rathina Maravarman.
For Respondents/Defendant: Mr. Sonu Kapadia.
ORDER
1. Indian Bank filed this Company Petition u/s 7 of The Insolvency and Bankruptcy Code, 2016
against a Corporate Debtor viz. Varun Resources Ltd. on the ground that this Corporate Debtor failed to
repay Z31,28,56,661 along with interest at the rate of 13% per annum and a monthly rest till the payment
of the dues, claiming default date as 1.5.2014. In view thereof, this financial creditor filed this Financial
Creditor application seeking initiation of Corporate Insolvency Resolution Process against the Corporate
Debtor company.
Brief facts of the case:
2. This applicant submits that Varun Shipping Company Ltd (herein after called Varun Shipping)
was primarily engaged in shipping business, in pursuance thereof, this company availed term loan of ?50
crores, vide sanction letter dated 30.6.2010 from the applicant Bank by agreeing that Varun Shipping
would repay the loan in 16 quarterly instalments of 23,12,50,000 commencing after a moratorium period
of 12 months. Apart from the document executed for sanctioning of this loan, Varun Shipping had also
executed a statutory mortgage of their vessel "Maharishi Mahatreya" creating a second charge on the said
vessel in favour of the applicant bank. And then Varun Shipping acknowledged its indebtedness as on
26.6.2013 to be of 228,99,63,706 towards the term loan of 250 crores, now it has become 231,28,56,661.
1997
Soon after Scheme of Arrangement of Amalgamation was approved by Hon'ble Bombay High Court vide
order dated 19.3.2015, Varun Resources Ltd i.e., debtor company took over the shipping business of
Varun Shipping as a resultant company and the former became the demerged company of such
amalgamation with effect from the date of appointment, by which, all the assets and liabilities of Varun
Shipping Company Ltd, including this liability, stood transferred to the Debtor Company. Since the
company started defaulting making repayment, this account was classified in the Books of the Financial
Creditor as NPA on 1.5.2014.
3. The applicant company further submits this Debtor Company, as per the data available on the
MCA Website, has availed huge facilities from various other lender banks with an exposure of
Z3866,74,90,000.When this debtor company failed to make repayments, a joint lenders' forum was
formed under the leadership of SBI with 12 banks as members, in the said consortium, when the lead
Bank SBI while restructuring loans announced that the Applicant Bank had to follow them by infusion of
another Z6 crores into the Debtor Company, but this applicant Bank, not being agreeable to this proposal
for further funding, since RBI had given an option to the member bank to exit provided a new lender or
any of the exiting lenders took over the Applicant Bank's component, to safeguard the interest of it, the
Bank tried to exit by transferring this loan to any of the consortium, when that effort also failed to work,
this Applicant has filed a suit of recovery before Debt Recovery Tribunal Mumbai under RRDBFI Act,
1993.
4. The applicant company further submits that this Debtor Company has repeatedly violated in
meeting its commitments to the Banks, it has become so horrible that a cheque for ?3.56 crores given by
the debtor in favour of Indian Bank was bounced, for which, a criminal action was also taken against the
directors of the Debtor Company under Negotiable Instruments Act, 1881. As this applicant is of the view
that restructuring under JLF is not workable solution especially when the debtor company mismanaging
its funds, it needs stronger restructuring plan under the Resolution Professional or needs to be wound up
if such revival is not feasible.
5. The applicant has also filed minutes of the meetings held from the year 2014 to 2017 b the
Financial Creditors under the leadership of State Bank of India, the minutes of the meetings clearly
establishes that the Debtor Company committed irregularities inter alia by not operating their transactions
through Trust Retention Account (TRA) as agreed upon in the document for restructuring. As per the
agreed terms and conditions of Restructured Plan envisaged, the Corporate Debtor company has to
operate their transactions only through TRA Account which would enable the Financial Creditors to
appropriate their outstanding as per the terms and conditions of the MRA, but whereas, since August,
1998
2016, the Debtor Company has stopped operating TRA Account and routing their transactions through
another account.
6. Looking at all those allegations against the debtor company by the Financial Creditor, the
Corporate Debtor raised the following objections against prayer for admission of this Petition, which are
as follows:
(i) The Corporate Debtor submits that a large number of shipping companies in India have been critically
affected, in the case of the Corporate Debtor, Financial Institutions comprising vast majority of the total
lending to the Corporate Debtor expressed their faith in the current management, the total exposure of the
lenders supporting the Corporate Debtor is 22300 crores, the Creditors have formed the Joint Lender
Forum and have approved the Corrective Action Plan (CAP) by signing the Masters' Restructuring
Agreement (MRA) dated 31.3.2015. Pursuant to this, the Creditors have already infused an additional
sum of Z425crores into the company, simultaneously the promoters also pumped in additional Z75crores
as well. This is evident that CAP is progressing, because a sum of approximately ?4-41crores has already
been repaid to the lenders under the CAP.
(ii) The Debtor submits that the Creditor's debt is less than 1% of the total debt, in a situation like this,
when an overwhelming majority of the Creditors further infusing funds to support restructuring through
MRA, it ought to weigh on this Tribunal's mind and militate towards dismissal of the application filed by
this minority creditor who stubbornly refuses to abide by the CAP despite having attended JLF meetings.
In support of this submission, the Debtor Company relied upon Madhusudan Govardhandas
vs. Madhu Woollen Industries Ltd (1971) 3 SCC 632and Tata Capital Finance Services vs. Unity Infra
Projects Ltd. (High Court, Bombay, Arbitration Petition 800 of 2014 dated 6 July 2015).
(iii) The Corporate Debtor Counsel further submits that since it has been stated in Section 7 (5) (a) that if
the adjudicating authority is satisfied that default has occurred then it may admit such application,
whereas under Section 9 (5) it has been categorically mentioned that the Petition shall be admitted
without any discretion to the Adjudicating Authority. When different yardsticks have been applied
between Section 7 and Section 9 in admitting the Company petition, then this Bench ought to be
cognisant of the variation in application of judicial discretion while admitting this Petition. The discretion
given to the Adjudicating Authority u/s 7 is thus a safeguard vested with the Tribunal so that it does not
have to mechanically admit all applications filed by the Financial Creditors. To say that whenever the
word "may" is used, it has to be taken as directory not as mandatory, he relied upon Bachandevis Nagar
Riga, Gorakhpur (AR 2008) SCC 1282 and Mahalaxmi Rice Mills vs. State of UP (1988) 6 SCC 590.
1999
(iv) The Debtor Counsel further submits that this Tribunal should also bear in mind that the provisions u/s
433 of the Companies Act, 1956 also used the term "may" in respect of the company being wound up on
inability to pay its debt leaving it open to the winding up court to apply its discretion while dealing with
winding up petitions. To support this argument, the Counsel relied upon Dewan Brothers vs. Central
Bank of India (1976) 3 SCC 800 and Sakai Deep Sahai Srivastava vs. Union of India (1974) 1 SCC 338.
(v) The Corporate Debtor Counsel further submits since this applicant has approached this Tribunal in
contravention to RBI Circulars, this application is liable to be dismissed. Since it has been mentioned in
RBI Circular dated 24.9.2015 that the dissenting lenders who do not want to participate in Corrective
Action loan for revival of the company, such Bank has an option to exit by selling its exposure to a new
or existing lenders within the prescribed timeline for implementation of the agreed CAP, if not such
financial creditor is not able to exit by arranging a buyer within the above prescribed time, as per RBI
Circular dated 25.2.2016, it has to necessarily adhere to the agreed CAP and provide additional finance if
the CAP so envisages for further funding. It has been further reiterated in a case in between IDBI Bank
vs. Ruchi Soya Industries Ltd. (2017 SCC On Line Born 153) holding that the circulars issued by RBI
under Section 21 and 35 of Banking Regulation Act are statutory in nature and are required to be
complied with by the Banks. To highlight the same point, he also referred Tata Capital Financial Services
Supra.
(vi) The Debtor Counsel further submits if this application is admitted, it would derail CAP and also
triggers financially disastrous consequences for the Corporate Debtor because this shipping industry is
characterised by long charter parties and long credit periods for payments in respect of supplies provided
to the vessels. The Counsel further submits that this applicant has already taken proceedings for
enforcement of its debts against its secured asset, i.e, the vessel Maharishi Mahatreya. Moreover, the
Debtor is liable to pay only Z3crores to the first charge holder of this vessel, since the vessel has been
valued for a sum of USD 4.4 million, this applicant can otherwise also realise its debt for its secured
vessel is almost free from the first charge and the value of the vessel is more than the claim of the
applicant herein.
7. In view of the objections raised above, the Corporate Debtor submits that this application is liable
to be dismissed.
8. By going through the objections raised by the Corporate Debtor Counsel, it is ascertainable that
this Corporate Debtor has not disputed on the debtor drawing down loan from the financial creditor, the
default committed in making repayment of the loan, on the top of it, the debtor company has not even
2000
disputed on any of the documents filed by the applicant except saying that the applicant failed to furnish
the requisite information required u/s 7 of the Code, Rules and Regulations thereto.
9. What all the debtor company says is that this financial creditor petition is liable to be dismissed
because JLF proceedings are already in progress after reconstruction of loans, this financial creditor loan
is only one percent out of total NPA, when majority is in agreement to proceed with Corrective Action
Plan to revive the company giving new life to it, the creditor having one percent should not have initiated
this proceeding flouting the mandate envisaged in RBI guidelines directing dissenting Bank to exit from
JLF by assigning its exposure to any of the Banks in Consortium or else to toe in the line of JLF set out
by the majority of Consortium Banks. When RBI Guidelines armoured by statutory force, the same being
reiterated in Ruchi Soya supra, this financial creditor has to either assign its exposure or to keep quiet and
follow the majority who already supporting the company and when RBI says something to be done, it has
statutory force, this Bank ought not to have proceeded before other forums transgressing the Laksmana
Rekha drawn by RBI, last but not least, another objection is, in the case of financial creditor petition, it is
not mandatory on this Adjudicating Authority to admit the petition just by seeing compliance made by the
applicant as stated under sub section 3 of section 7 of the Code, because the same direction when given in
the case of operational creditor, it is made compulsory by using the word "shall" under section of the
same Code, therefore when statute itself used different yardsticks in admitting the petitions Ws 7 and u/s
9, this Adjudicating Authority should not admit when other surrounding facts outside the scope of
subsection 3 of section 7, are supported by some other directions from other competent authority.
Looking at the scope of the objections of the corporate debtor, at least this adjudicating Authority is
relieved from deciding as to whether default in repayment is present or not, therefore existence of debt
and default is not in dispute.
10. As to the objection raised by the Corporate Debtor stating that the corrective action plan being in
force at the initiation by majority of the banks, this Financial Creditor, who has only 1% debt, should not
have filed this case to stall the progress of Corrective Action Plan, this Bench has noticed that it is true the
loan owed to the Financial Creditor is around 1% but the fact of the matter is the claim is more than
Z3Ocrores and it is also a fact that this Company is already burdened with a debt of Z2300crores, that
apart no bank has come forward to own the loan liability of this Financial Creditor so as to provide exit
from JLF. The Debtor Counsel has relied upon Madhusudan Govardhan Das vs. Madhu Wollen Industries
Ltd and IDBI Bank Vs. Ruchi Soya Industries Ltd. to say that every bank of the consortium banks is
bound by the JLF Agreement because JLF is supported by statutory force as stated in Ruchi Soya
henceforth this Financial Creditor should not have filed this Petition floating the ratio already laid down
2001
by the Hon'ble High Court of Bombay, As to the ratio laid down in Ruchi Soya, the Hon'ble NCLAT has
made it clear in para 82-84 of M/s. Innoventive Industries Ltd vs. ICICI Bank & Anr. as follows.
"82, As discussed in the previous paragraphs, for initiation of corporate resolution process by financial
Information Utility or on the 62 basis of other evidence furnished by the financial creditor under sub-
section (3). Under Section 5 of Section 7, the 'adjudicating authority' is required to satisfy - (a) Whether a
default has occurred; (13) Whether an application is complete; and (c) Whether any disciplinary
proceeding is against the proposed Insolvency Resolution Professional.
:83,Once it is satisfied it is required to admit the case but in case the application is incomplete
"84, Beyond the aforesaid practice, the 'adjudicating authority' is not required to look into any other
authority, including the JLF. Therefore, the contention of the petition that the Respondent has not
other members cannot be accepted and fit to be rejected."
11.In view of the ratio laid down above, this Bench is of the view that the Adjudicating Authority is not
required to look into any other scheme pending including RI to proceed with Insolvency Proceedings
therefore, the contention of the Corporate Debtor that this Financial Creditor has not obtained permission
or consent of JLF will not have any bearing in respect to these proceedings therefore, this Bench has not
found any force in the argument of the Corporate Debtor Counsel as to pendency of JLF in respect to the
other loans taken by this Corporate Debtor.
12. As to other objection raised by the Corporate Debtor saving that the Debtor is only liable to pay
Z3crores to the first charge holder of this vessel upon which second charge has been made in favour of
this Financial Creditor therefore this Financial Creditor is free to proceed against the vessel upon which
the charge has been made to realise the loan claim as the vessel value is more than the due outstanding
against the company, this argument cannot be taken as a criteria to decide this Petition because the
Financial Creditor u/s 7 is free to proceed against the company when the company is either unable to
make repayment of loan or refuse to make repayment of loan therefore, in a company like this, where it is
2002
already burdened with a debt of more than Z2300crores, it does not make any sense to dismiss this
petition on the ground the Financial Creditor can realise its debt by invoking security. Moreover, this
Bank already initiated proceedings before Debt Recovery Tribunal but so far there has been no progress
in the said proceedings for realisation of the debt outstanding. Had this Corporate Debtor been ready and
willing to clear the claim of this Bank, it would have done the same in the proceedings initiated before the
Debt Recovery Tribunal. Notwithstanding the point above discussed, neither the Financial Creditor is
under obligation to proceed invoking security before initiating this proceeding, nor is the Bench under
obligation to withhold adjudicating this claim just because the security available is more than the claim
made by the Financial Creditor therefore, this Bench does not find any merit in the argument of the
Corporate Debtor.
13. As to the argument of the Corporate Debtor counsel stating that admission of the Company
petition by this Bench is discretionary for the word "may" has been used while admitting the Company
petition unlike in Section 9 petition where admission is mandatory for the word "shall" is used, on reading
and comparing Section 7 and Section 9, merely by looking at replacement of the word "shall" with "may"
cannot be construed as leverage to this Bench to dismiss the Petition when all the elements required to
admit this petition have been complied with. Therefore, this Bench is of the view that discretion is to be
used to admit the Petition rather than to dismiss the petition especially when there is ample proof of
admission of availing loan and defaulting thereof. It is an established fact that this Company is already
reeling under debt burden of more than Z2300crores, therefore this Bench does not find any merit to
dismiss this petition by looking at the word "may" under in Sub Section 5 of Section 7 of the Insolvency
& Bankruptcy Code.
14. On perusal of the documents placed and the reasons given above, this Bench being satisfied that
the debtor company defaulted in repaying its debt to the financial creditor, this Bench hereby admits this
application prohibiting all of the following of item-I, namely: -
(I) (a) the institution of suits or continuation of pending suits or proceedings against the corporate debtor
other authority;
2003
Assets and Enforcement of Security Interest Act, 2002(SARFAESI Act);
(II) That supply of essential goods or services to the corporate debtor, if continuing, shall not be
(III) That the provisions of sub-section (1) Section 14 shall not apply to such transactions as may be
(IV) That the order of moratorium shall have effect from 13.06.2017 fill completion of the corporate
(V) That the public announcement of the corporate insolvency resolution process shall be made
(VI) That this Bench hereby appoints, Mr. Sanjeev Maheshwari, 3n1 Floor, Vastu Darshan, Azad Lane,
Andheri (East), Munibai — 400 069,Registration Number: IBBI/IPA-001/IP-00591/2016-17/2094, as an
Interim Resolution Professional to carry the functions as mentioned under Insolvency & Bankruptcy
Code.
15. Accordingly, this CP 247/I & BP/NCLT/MAH/2017 is admitted.
Corporate Debtor within seven days from the date order is made available.
2004

MUMBAI BENCH
C.P. (I.B.) No. 61/7/NCLT/MAH/2017
Applicant: Nisus Finance & Investment Managers LLP

VS
Respondent: Lokhandwala Kataria Constructions Pvt. Ltd.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Mustafa Kachwala, Solicitor a/w. Mr. Karl Saroff, a/w. Mr.
Anirudh Hariani
For Respondents/Defendant: Ms. Priyanka Desai, a/w, Mr. Parth Gohkale, and Ms. Sanika Gokhale, i/b.
Khaitan & Co.
ORDER
1. It's a Company Petition filed u/s 7 of The Insolvency & Bankruptcy Code, 2016 by this Financial
Creditor (namely Mis. Nisus Finance & Investment Managers LLP, since shown as facility agent in Trust
Deed dated 5.10.2015, herein after called as facility agent) against the Corporate Debtor (MIs.
Lokhandwala Kataria Constructions Pvt. Ltd. - it is one of the guarantor companies (obligor-5) agreed in
the Debenture Trust Deed (DTD) to redeem the debentures in the event principal debtor namely Vista
Homes Put. Ltd., (herein after called as Vista) — a Group Company of the Corporate Debtor, failed to
repay to the debenture holders as agreed in the Trust Deed) for Vista availed Z27,86,00,000 through the
Debenture Trust Deed dated 5.10.2015 by issuing debentures having face value of Z1,00,000 to the
Debenture Holders and thereafter failed to repay as agreed upon, to which, the Corporate Debtor having
stood as a Guarantor, since this facility agent is agreed upon to act on the debenture holders behalf, it has
filed this case to initiate Insolvency Resolution Process against the Corporate Debtor.
2. The business understanding in this case is — to set up a real estate project, funds required, to
which, Vista being a group company of Lokhandwala, raised funds through subscribing debentures, to
which Lokhandwala companies stood as guarantors to pay back to the debentures with interest in the
event of default, it appears, this financial creditor, who is termed as facility agent, pooled up this money
2005
from various persons, and caused it paid to Vista, in doing so, the rights and obligations in this case arose
out of the Debenture Trust Deed dated 5-10-2015, wherein this corporate debtor stood as guarantor, and
this financial creditor stood as facility agent acquiring rights to ensure returns are reached to the debenture
holders, to achieve this, this facility agent is allowed to act on behalf of the debenture holders, ultimately
when Vista failed to repay as agreed upon, this facility agent filed this case against this corporate debtor.
It appears this money indeed gone into the project of the corporate debtor. Though this corporate debtor is
labelled as guarantor, by looking at the DTD, it can be ascertained that this money has gone into the
coffers of the corporate debtor.
3. The Financial Creditor submits that Vista desired to acquire 10 units in a project from the
Corporate Debtor Company. They being group companies, Vista engaged in the business of Builders,
Developers and the Real Estate Agent whereas Corporate Debtor engaged in the business of Real Estate
Construction and development. Vista being desirous of buying and the Corporate Debtor being desirous
of selling the units forming part of the project, since finance was required for that purpose, Vista came out
to issue 3000 secured redeemable debentures of face value of 21,00,000, as the facility agent was ready
and willing to raise the same, a Debenture Trust was executed on 5.10.2015 among Vista, which issued
debentures, Axis Trustee Services Ltd. which stood as Debenture Trustee, Lokhandwala Infrastructure
Pvt. (Obligor 1), Mr. Moharnad Lokhandwala (Obligor 2), Mr. Alia Sagar Lokhandwala (Obligor 3), Mr.
Moiz Lokhandwala (Obligor 4), Lokhandwala Kataria Construction Pvt Ltd, (Corporate Debtor - Obligor
5) and the Facility Agent agreeing that Vista would repay the money coming into it through debentures on
the respective dates as mentioned in the Trust Deed, in the event, Vista failed to repay as agreed, the
Obligors, including the corporate debtor, gave unconditional and Corporate Guarantee in the same Trust
Deed to pay all the secured obligations on the redemption dates.
4. As per the repayment schedule, 27,25,39,000 was to be paid on 30.9.2016, 27,93,16,000 to be

paid on 31.3.2017, 213,02,09,000 to be paid on 30.9.2017, 214,23,17,000 to be paid on 30.3.2018.
According to the covenants in DTD, these debentures shall be redeemed at the minimum internal rate of
return (IRR) of 19.82%, this premium redemption shall be calculated daily on the Day Count Basis and
shall be payable in the manner set out in Part-III of second schedule and if the due outstanding is not paid
within one day from the due date, Vista shall have to pay additional interest @ 30% per annum payable
monthly, compounded quarterly on the defaulted amount will become payable. It is further clarified that
the default interest will be paid over and above the redemption premium. In addition to the above on the
occurrence of event of default, Vista shall have to pay default interest till such time the default is rectified.
On occurrence of default, the debenture trustee on the directions and instructions of the facility
agent/debenture holders for and on behalf of the secured parties shall exercise the rights as mentioned in
2006
the Debenture Trust Deed. By reading clause 23.1.1 of DTD, it appears that interest on redemption
premium could be collected 23% on total investment outstanding. The default clause triggers into action
immediately on the day Vista failed to make payment of 1st installment. That, Vista failed to make, and
the post dated cheque has been dishonoured. Nonetheless, as to financial creditor petitions, two points are
to be complied with, one - availing funds, two — default, since these two aspects are admittedly proved,
if at all any variance in respect to interest component, it is still open to the corporate debtor to raise this
issue before IRP and if not settled, then also, this corporate debtor can place grievance before this
adjudicating authority as set out in The Insolvency and Bankruptcy Code.
5. When Vista failed to redeem the debentures as agreed upon, a notice of default was issued on
4.10.2016 indicating that there was already an event of default therefore recalled the entire amount of
subscription amount with interest but there was no response despite notice was served upon the Vista and
the Obligors mentioned in the Debenture Trust Deed. This Financial Creditor, appointed as a Facility
Agent to act for the benefit of the Debenture Holders and powers being conferred with rights, powers and
duties as Debenture Holders to take legal action on behalf of the Debenture Holders, this facility agent is
empowered to file this Petition. Since all the Obligors, the Corporate Debtor, Debenture Trustee and the
Financial Creditor being privy to the Debenture Trust Deed, today this Corporate Debtor cannot back out
saying that this facility agent cannot act as financial creditor on behalf of or as
Debenture Holders to initiate these proceedings against the Corporate Debtor. Moreover some of the
debenture holders have even given independent authorisation to proceed against the corporate debtor.
6. As to particulars of the financial debt, the total amount disbursed towards the debentures is Rs.
27,86,00,000, this disbursement started on 6.10.2015 and ended on 14.09.2016. Since first installment
redemption was not done on agreed date i.e., on 30.9.2016, according to the Trust Deed, that date itself
has to be taken into record as occurrence of default. For the Financial Creditor is entitled to claim
repayment of entire amount in the event of default in making repayment of first installment, the Financial
Creditor claimed repayment of entire amount plus interest which comes to Rs. 42,65,55,267. The amount
Rs 1,60,82,485/- that has come to escrow account has been deducted from the claim amount. To prove
that there is an Agreement between the Financial Creditor and this Corporate Debtor, to repay the entire
claim in the event Vista defaulted to make repayment as agreed between them, the Financial Creditor
placed material showing that Vista and the Obligors mortgaging 10 units totally admeasuring a saleable
area 25,100 sq.ft. along with space for parking 20 cars forming part of 84 store tower having two wings
i.e. A and Al forming part of the residential project known as Minerva and a part of land of 8,021.29 sq.
mtr., situated at Lower Parel Division and J. R. Bharucha Marg, Office N. M. Joshi Marg, Mahalaxmi,
2007
Mumbai. Apart from this, Financial Creditor also placed postdated cheques issued by Obligor-5 for the
amounts agreed to be payable on the restrictive dates as mentioned above. To show due outstanding, the
Financial Creditor filed National Securities Depository Ltd statements disclosing issuance of Debentures
to the Debenture Holders with face value of ?1,00,000 each. When the post-dated cheques submitted to I
IDFC Bank, the said Bank issued cheque return memo dated 23.12.2016 to reflect that the post-dated
cheques given by the Vista have been bounced. Likewise the Financial Creditor filed copy of certificate
of the charge issued by the list of companies' form No. CH G 9 to prove that charge has been created to
the debentures issued by Vista.
7. In the above case, the Corporate Debtor has raised two objections, one is about locus of the
Facility Agent and another is about quantification of the financial debt.
8. The Corporate Debtor Counsel submits that the applicant cannot become a Financial Creditor to
file this petition, because no liability has been shown as owed to this applicant. It is a company merely
shown as facility agent in the Debenture Trust Deed dated 5th October 2015. Moreover, this applicant has
only shown 15 out of 69 debenture holders authorizing the applicant to proceed against the corporate
debtor, therefore authorization cannot be taken as 51% of the debenture holders authorizing the facility
agent to file this Company petition. Moreover, this applicant has not filed this petition as an authorized
agent/Power of Attorney holder but has purported to have filed in the capacity as a Facility Agent, which
is not permitted under law. As per the Trust Deed, either the Debenture Trustee or the debenture holders
can file this petition but not this applicant in the capacity as facility agent, therefore, the petition is liable
to be dismissed.
9. The corporate debtor further submits that this applicant has falsely claimed that 21,60,82,485 was
only deposited in the escrow account but whereas the escrow account statement and the bank account
statement of the corporate debtor reflects that an amount of two crores was deposited in the escrow
account. Though the original rate of return in the Trust Deed is shown as 19.82%, the applicant has
claimed interest of internal rate of return as 23%. The present petition is filed on the basis that an amount
of 2,78,60,000 is owed towards additional redemption premium calculated @10% after the total principal
outstanding. There is no provision in any of the documents relied upon by the Applicant to claim interest
by way of additional redemption premium, therefore, the calculation made by the Applicant is arbitrary.
The present petition is filed on the basis that an amount of 24,68,56,507 is owed towards default interest
g30% on a compounded basis i.e. principal and interest, since the claim for 30% is over and above the
interest/redemption premium @23% internal return rate claimed by this applicant, in total, the purported
claim of interest approximating to 44%, which is not permissible under law. To give justification to this
2008
argument, the Corporate Debtor Counsel relied upon Sanat Kumar Das& Others vis Indra Nath Barman &
others (AIR 1917 Calcutta 502) and Central Bank of India v/s Ravindra & Others ((2002) 1 SCC Page
No. 367. In view of these submissions, the Corporate Debtor Counsel sought for dismissal of this
Company petition.
10. On hearing of the submissions on either side, the points to be decided are as to whether this
Applicant has locus to file this Company Petition or not and as to whether the computation of the claim is
correctly reflected or not, if it is not correctly reflected whether this petition is maintainable or not.
11. Point 1 for consideration: - Whether the applicant has locus to file this Company Petition or not.
12. The document that has created jural relationship between the principal Debtor, the present
Corporate Debtor, the Debenture Trustee and this applicant is a Trust Deed executed by all the aforesaid
parties and also other parties shown as obligors 1 to 4 creating right for the principal debtor to arise funds
by issuing Debentures for an amount of 30,00,00,000 to issue 3000 debentures at the face value of
21,00,000 each and also to redeem those debentures on the dates mentioned in the Trust Deed, on the top
of it, the document has also set out the rate of interest in the event of default. It has also been recited in
the said Trust Deed that the Facility Agent (the Applicant) is specifically authorised (Clause 291) by the
debenture holders to be the duly constituted lawful Attorney of the debenture holders for all rights and
power granted to the debenture holders which is nothing but assignment of rights of the debenture holders
to the facilitating agent. When this Facility Agent was appointed for the benefit of debenture holders
under Clause 4 of the DTD, all actions of the Facility Agent are binding upon the debenture holders
(Clause 29). In terms of the corporate guarantee, the Corporate Debtor is bound and liable to make
payment to the debenture holders, which includes the Facility Agent in the event of default. For
repayment of the debenture redemption amount on due dates mentioned at the time of execution of DTD,
the post-dated cheques were issued to realise redemption amount on the respective dates as mentioned
above. In fact, these cheques were given by this Corporate Debtor. Under Clause 10.3, the vista was
obliged to redeem the debentures by routing payment through an escrow account, since Vista failed to do
so; it amounted to event of default. Upon the event of default, the entire outstanding amount was called
back calling upon Vista and also the corporate debtor indicating that there being already an event of
default, entire subscription amount with interest should be paid back, but there was no response to the
said notice.
13.In the backdrop of this factual situation, for one thing is clear that any liability in respect of any
guarantee or indemnity to any of the items referred to in sub-clauses (a) to (h) of definition Clause of
financial debt (Section - 5(clause-8)) will amount to financial debt. Taking of funds by issuing debentures
2009
being construed as financial debt under Clause (c) of the same clause, for this Corporate Debtor having
admittedly given guarantee to repay the entire liability in the event default committed by Vista in making
repayment, the liability fastened upon the Corporate Debtor to repay the entire financial debt as agreed
between the parties will amount to due outstanding against this Corporate
Debtor as well. It is an undisputed fact that Vista issued debentures on subscription of the aforementioned
money and also defaulted in redeeming the first traunch of debentures fell due on 30th September 2016.
14. Since this Corporate Debtor has not disputed its stand as guarantor to the above financial debt,
now the point left to this Bench to decide is as to whether this Applicant, in the capacity of Facility
Agent, can file this petition or not. On perusal of the document filed, the rights and duties for issuing
debentures and for collection of funds having arose out of Debenture Trust Deed; it is the foundational
document to find out what rights are accrued to this Facility Agent to file this Company Petition. Though
debentures were issued basing on this Trust Deed, these debenture holders were not directly made as
parties to the debenture Trust Deed. The person acted for the benefited of the debenture holder is this
facilitating agent only, and it is a party in DTD. The Corporate Debtor being a party to the same
document and having said that Facilitating Agent would act on behalf of the debenture holder, today it
cannot be said that this applicant cannot file an application as a Financial Creditor in respect to the claim
mentioned above. If we go through Sec. 7, Financial Creditor either by itself or jointly along with other
financial creditors can make a claim, unlike in the case of Operational Creditor. For there being an
exclusive authority given by this Corporate Debtor, Debenture trustee, and the principle debtor and other
obligors to the facilitating agent to proceed against any of them in the event of default, this Corporate
Debtor could not have said that this Facilitating Agent cannot file a petition on behalf of the Debenture
Trustees. Moreover, no debenture holder has come forward saying that this facilitating agent acting
against the interest of them or it is not given authority to file this case. Therefore, we are of the view that
this Facility Agent being a person authorised to act for the beneficial interest of the debenture holders, it
is competent enough to file this Company Petition as a Financial Creditor.
15. As to another point i.e. about computation of the debt, the interest rate has been set out in the
debenture Trust Deed, the Corporate Debtor and others agreed to pay internal rate of return of 23% as a
redemption premium and thereafter to pay penal rate to include redemption value, henceforth this levy of
interest being as agreed by the parties to the debenture trust deed, today the corporate debtor cannot go
back from the covenant stating that the interest is to be calculated basing on a ratio decided by Hon'ble
Supreme Court over a dispute in respect to awarding damages u/s. 73 & 74 of Indian Contract Act.
Awarding damages is not a contractual obligation; it is only an eventuality that crops up when right for
2010
claiming damage is accrued to the party. Here, there being an exclusive understanding between the parties
to pay interest as agreed upon in the event of default, this Bench has no discretion to compute the interest
ignoring the contractual arrangements entered between the parties.
16.In respect to these citations Sanat Kumar Das& Others 'cis Indra Nath Barman & others (AIR 1917
Calcutta 502) and Central Bank of India vis Ravindra & Others ((2002) I SCC Page No. 367), one is over
damages case decided in the year 1917 and another over interest pendent lite and post decree interest uis
34 of CPC, not on any contractual interest rates, therefore in our opinion, they will not have any bearing
with regard to the interest rates claimed as agreed upon till before filing this case.
17.It is very much evident on the record the first cheque issued for redemption of the part of the debenture
being dishonoured, it is evident that default has occurred and the Corporate Debtor is under obligation to
make repayment to the debenture holders, the same not being made, this application is fit for initiating
corporate Insolvency resolution process. Accordingly, this application is hereby admitted.
18. On perusal of the documents placed and the reasons given above, this Bench being satisfied that the
debtor company defaulted in repaying its debt to the financial creditor, this Bench hereby admits this
application prohibiting all of the following of item-I, namely: -
(I) (a) the institution of suits or continuation of pending suits or proceedings against the corporate debtor
other authority;
2011
(IV) That the order of moratorium shall have effect from 15.06.2017 till completion of the corporate
(V) That the public announcement of the corporate insolvency resolution process shall be made
(VI) That this Bench hereby appoints, Mr.Dushyant Dave, 1101, Dalamal Tower, Nariman Point,
Murnbai- 400 021, IBBITIPA-003/IP-00043/2016- 17/1343, as Interim Resolution Professional to carry
the functions as mentioned under Insolvency & Bankruptcy Code.
18.Accordingly, this CP 61/I & BP/NCLT/MAH/2017 is admitted.
2012

MUMBAI BENCH
C.P. (I.B.) No. 1024/7/NCLT/MAH/2017

VS
Respondent: Charbhuja Industries Pvt. Ltd.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Fraser Alexander, Advocates
For Respondents/Defendant: Ms. Chandni Tannaa/w. Ms. Bhakti Date, Advocates
ORDER
1. It is a Company Petition filed u/s 7 of the Insolvency and Bankruptcy Code, 2016, by the
Financial Creditor, viz. Punjab National Bank against the Corporate Debtor, viz. Charbhuja Industries
Pvt. Ltd., for initiation of Insolvency Resolution Process for the Corporate Debtor Company has failed to
repay the debt outstanding against the Corporate Debtor.
2. The case of the Petitioner is that at request of the Corporate Debtor, this Financial Creditor agreed
to provide loan facility to the Corporate Debtor, in pursuance of it, the applicant Bank entered into
Second Supplemental Joint Deed of Hypothecation on 27.1.2012 along with other Banks, viz. State Bank
of India Consortium, accordingly the facilities have been granted as follows:
Packing Credit/Packing Credit in Foreign Currency: Rs.15.00crores
Post Shipment/Post Shipment in Foreign Currency: Rs.7.00crores
(Sub limit within PC/PCFC)
Standby PC/PCFC Rs.2.50crores
2013
Thereafter, the above limits are reduced to as against the sanctioned letter dated 3.7.2013 for
entering into terms and conditions with the Corporate Debtor on 27.10.2013, which are as follows:
Fund Based Packing Credit/Packing Credit
Foreign Currency Rs.14.50crores
Fund Based Post Shipment Rs.7.00crores
(Sub limit within PC/PCFC)
3. The total amount disbursed to this Corporate Debtor has come to 14.50crores. When the debtor
Company failed to repay the loan as per the terms agreed, this debt has become NPA on 18.11.2015
thereby the outstanding to be paid by the Corporate Debtor as on 27.12.2016 is Rs.20,68,35,759 plus
interest from 27.12.2016 till the date of realization.
4. While providing this loan facility, this Corporate Debtor created charge on 27.1.2012, thereafter
modified on 14.2.2014 on introduction of SBM Bank (Mauritius) Ltd. in Consortium.
5. When the Corporate Debtor failed to repay the same, this Financial Creditor filed original
application with DIET-I, Mumbai on 27.12.2016 for the recovery of 220,68,35,759 plus interest thereof as
mentioned in the column set out to claim the default amount.
6. To prove that the loan has been disbursed to this Corporate Debtorand the Corporate Debtor
thereafter defaulted in making the repayment, this Financial Creditor filed Second Joint Loan Agreement
dated 27.1.2012, i.e. letter of Acceptance dated 2.1.2012, Second Supplemental Joint Deed of
Hypothecation on 27.1.2012, Second Supplemental Inter Se Agreement dated 27.1.2012, Second
Supplemental Working Capital Consortium Agreement dated 27.1.2012, Deed of Guarantee dated
27.1.2012, Letter of State Bank of India, dated 15.1.2012, ceding pari passu charge on all existing
securities.
7. Apart from this, the Financial Creditor also filed Third Supplemental Joint Deed of
Hypothecation dated 27.8.2013 along with the security documents dated 27.8.2013 which are as follows:
1. Third Supplemental Working Capital Consortium Agreement;
2. Inter se Agreement
3. Deed of Guarantee
4. Memorandum of Deposit for extension of Charge for Term Loan/Overall limit dated 24.2.2014.
2014
8. The Financial Creditor also filed Balance and Security Confirmation letters dated 21.8.2012,
31.7.2013, 21.7.2014, 11.8.2015, issued by the Corporate Debtor.
9. Besides these, the Financial Creditor also filed a copy of the CIBIL Report dated 20.1.2017 to
show that this loan has become NPA, apart from this, the Financial Creditor also filed a statement of
account showing Rs.21,74,78,715.53 debt outstanding as on 16.4.2017.
10. The amount shown in this statement of account is different from the default amount mentioned in
the Form because default amount was mentioned as on 27.12.2016, nonetheless it makes no difference to
initiate proceedings under Section 7 of the IB Code for it will again be verified by the Insolvency
Resolution Professional, at the time of claim verification. Moreover, there is no mandate in Section 7 for
crystallization of default amount, thereby this Bench is satisfied that the Financial Creditor has filed all
the requisite documents to satisfy this Bench that this Corporate Debtor availed loan thereafter defaulted
in making repayment.
11. The Counsel appearing on behalf of the Corporate Debtor has tried to show a letter dated
13.6.2017 given by the State Bank of India. SBI wrote a letter to the Corporate Debtor for submission of
the Resolution plan to resolve the NP A account of Charbhuia Industries Pvt. Ltd. latest by 25.6.2017.
Since this letter is written ior mere arrangement of meeting for resolution plan, that to by SBI, not by this
Financial Creditor, it is of no help to stall these proceedings.
12. Therefore, this Bench is of the view that this SBI letter will not have any bearing on the Petition
filed by Punjab National Bank. The criteria to be same for admitting the Petition under Section 7 of the IB
Code is as to whether the loan has been availed by the Corporate Debtor and thereafter, as to whether the
Corporate Debtor defaulted in making repayment or not, to which for there has been enough evidence
before this Bench to prove the Corporate Debtor defaulted in making repayment, a letter written by SBI
for submissions of resolution plan by Corporate Debtor will not make any sense to show it as a defence in
a case filed under. Section 7 of IB Code.
13. The Petitioner Counsel has admitted that in respect of hearing of this case, he has sent notice to
the Corporate Debtor before filing of this case and after filing this case as well. However, servicing notice
upon other side is insignificant as the Corporate Debtor side appeared effectively argued on the corporate
debtor behalf.
14. In view of the same, this Petition is hereby admitted with the reliefs as mentioned below:
2015
i. That this Bench hereby prohibits the institution of suits or continuation of pending suits or proceedings
ii. That the supply of essential goods or services to the corporate debtor, if continuing, shall not be
iii. That the provisions of sub-section (1) of Section 14 shall not apply to such transactions as may be
iv. That the order of moratorium shall have effect from 19.6.2017 till the completion of the corporate
insolvency resolution process or until this Bench approves the resolution plan under sub-section
(1) of section 31 or passes an order for liquidation of corporate debtor under section 33, as the case may
be.
v. That the public announcement of the corporate insolvency resolution process shall be made
vi. That this Bench hereby appoints Mr. Rahul S. Kavathekar, 104, Shree Ganesh, 32-F, Bhavani Shankar
Road, Near Kabutar Khana, Dadar (WestO, Mumbai - 400 028, Registration No. IBBI/IPA-01/2016-
2017/538 as interim resolution professional to carry the functions as mentioned under Insolvency Sz
Bankruptcy Code.
Corporate Debtor.
2016

MUMBAI BENCH
C.P. (I.B.) No. 856/7/NCLT/MAH/2017
Applicant: Peerles Financial Services Ltd.

VS
Respondent: Rasoya Proteins Ltd.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Ms. Niketa Shah, Advocate
ORDER
1. The Applicant herein has filed a Petition for winding up under Sections 433(e), 434(1)(a) and
439(10) of the Companies Act, 1956 against the Corporate Debtor before the Hon'ble High Court of
Bombay and the same was numbered as Company Petition No. 769/2016. The said Company Petition was
transferred to this Tribunal for adjudication under section 7 of Insolvency and Bankruptcy Code, 2016
(the Code) and renumbered as TCP/856/2017.
2. The Financial Creditor namely, Peerless Financial Services Ltd. filed Form No. 1 as required
under Rule 4 of Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules 2016, on 27-
03-2017, stating that the Corporate Debtor namely Rasoya Proteins Ltd. has defaulted on 21.09.2015 in
making the repayment of the financial debt of Rs. 5,00,00,000/-granted on 22.09.2014 along with interest
and other dues to the extent of Rs. 70,15,749/- totalling Rs. 5,70,15,7491- as on 31.07.2016 and also
claimed further interest and expenses.
3. The financial creditor states that the Corporate Debtor on 19-09-2014 entered into a facility
agreement wherein the Corporate Debtor has requested the Financial Creditor to grant a loan of Rs.
5,00,00,000/- for the working capital requirement. Accordingly, the Financial Creditor
sanctioned the loan of Rs. 5,00,00,000/- repayable in 4 quarterly instalments of Rs. -1.25 crore each
2017
commencing from the end of 12th month, 15th month, 18th month and 21st month from the date of
disbursement. The loan carries an interest of 14% per annum, payable monthly on reducing balance basis.
The agreement provides for penal interest @ 2% per annum over and above applicable interest for the
period of default i.e. from due date of payment up to the date of actual payment. Further, the agreement
provides that penal interest will be compounded on monthly basis.
4. The Financial Creditor states that the term loan of Rs. 5,00,00,000/- was disbursed on 22.091014
by directly crediting the Corporate Debtors' bank account No. 50970621100001 maintained with Vijaya
Bank, Trimurthi Nagar Branch, Nagpu r by RTGS transfer. The Corporate Debtor has executed the
following security documents:
i. Facility Agreement dated 19th September 2014.
ii. Share Pledge Agreement dated 191h September 2014, executed b\ Mr. Anil N. Lonkar, the Promoter-
cum-Managing Director of the Company.
iii. Deed of Personal Guarantee dated 19th September 2014, executed by Mr. Anil N. Lonkar, Managing
Director of the Company, for securing repayment of the above loan.
iv. Irrevocable Power of Attorney dated 19th September 2014, executed by the pledger of shares.
v. Declaration-cum-Undertaking dated 19th September 2014, regarding non-encumbrance of security,

executed by the pledger of shares.
vi. Demand Promissory Note dated 191'1 September 2014.
vii. Continuing Security Letter dated 191h September 2014.
viii. Declaration dated 191-h September 2014 regarding no overdue/past dues with existing bankers /
lenders.
ix. PDC-Letter-cum-Undertaking dated 19th September 2014.
x. Undertaking-cum-Indemnity dated 19th September 2014, for repayment of differential stamp duty
applicable on all documents.
xi. Pledge of 62,61,200 equity shares of Rasoya Proteins Ltd. by Mr. Anil N. Lonkar, Managing Director
of the Company on 18th September 2014 to secure the above loan backed by the Board Resolution of the
Company dated 17th September 2014.
2018
5. The Financial Creditor says that the loan of Rs. 5,00,00,000/- was repayable in 4 equal quarterly
instalments of Rs. 1.25 crores each commencing from 21.09.2015 and ending on 21.06.2016 along with
interest of 14% per annum with monthly rests on reducing balance basis. The Corporate Debtor also
issued 25 post-dated cheques towards the payment of interest on monthly basis and 4 post-dated cheques
for payment of instalment of principal amount. All the post-dated cheques given for repayment of
instalments of the principal amount were dishonoured when presented for payment by the Financial
Creditor. Similarly, post-dated cheques given for payment of interest due w.e.f. 31-10-2015 were
dishonoured. The Financial Creditor has taken proceedings u/s 138 of the Negotiable Instrument Act,
1881 in the Metropolitan Magistrate Court at Calcutta.
6. The Financial Creditor after sending few reminders, sent loan recall notice on 16.06.2016 to the
company and its directors and there was no response for the same. The Financial Creditor sent a legal
notice on 27.06.2016 to the Corporate Debtor calling upon to pay-the outstanding of Rs. 5,55,17,994/-
plus further interest gi 24% per annum from 01.01.2016 till the payment, within 3 weeks from the date of
the said notice failing which legal proceedings will be taken against the Corporate Debtor.
7. The Financial Creditor has enclosed the CIBIL report order dated 17.05.2017 pertaining to the
Corporate Debtor wherein it is disclosed that the Financial Creditor has granted Rs. 5,00,00,000/- as loan
against shares/securities on 10.09.2014 to the Corporate Debtor. The Financial Creditor has named Mr.
Rajendra Karanmal Bhuta, 1207, Yogi Paradise, Yogi Nagar, Borivali - West, Mumbai - 400 092, e-mail
id: rkbhutaPgmail.com, registration No.: IP 00075.
8. This Company Petition was initially posted for hearing on 02.05.2017 and on the request of the
Counsel for the Petitioner it was posted for hearing on 12.06.2017. On 12.06.2017, the Practicing
Company Secretary appearing on behalf of the Corporate Debtor sought 2 days adjournment stating that
efforts are being taken to settle the dues and accordingly the case was posted on 14.06.2017 but nobody
appeared on behalf of the Corporate Debtor.
9. As to the Petition filed by the Financial Creditor, this Bench, on perusal of the documents filed by
the Creditor, it is evident that the Corporate Debtor defaulted in repaying the loan availed and also placed
the name of the Insolvency Resolution Professional to act as Interim Resolution Professional, having this
Bench noticed that default has occurred and there is no disciplinary proceedings pending against the
proposed resolution professional, therefore the Application under subsection (2) of section 7 is taken as
complete, accordingly this Bench hereby admits this Application declaring Moratorium with the
2019
(i). That this Bench hereby prohibits the institution of suits or continuation of pending suits or
its property including any action under the Securitisation and Reconstruction of Financial Assets and
(ii). That the supply of essential goods or services to the corporate debtor, if continuing, shall not be
section 31 or passes an order for liquidation of corporate debtor, under section 33, as the case may be.
(vi) That this Bench hereby appoints Mr. Rajendra Karanmal Bhuta, 1207, Yogi Paradise, Yogi Nagar,
Borivali - West, Mumbai - 400 092, e-mail id: rkbhuta@gmail.corn, registration No.: IP 00078, as interim
resolution professional to carry the functions as mentioned under Insolvency & Bankruptcy Code.
Corporate Debtor.
2020

MUMBAI BENCH
C.P. (I.B.) No. 1027/7/NCLT/MAH/2017

VS
Respondent: Charbhuja Industries Pvt. Ltd.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Mandar Soman a/w. Mr. Rajesh Vaidya, Advocates
For Respondents/Defendant: Mr. Chetan Kapadia a/w. Mr. Aninesh Bisht, Mr. Abhishek Mukherjee, Ms.
Megha Sharma, Mr. Anush Mathkar, Advocates Cyril Amarchand Mangaidas
ORDER
The Financial Creditor namely Edelweiss Asset Reconstruction Company Ltd. filed this
Company Petition on 3.5.2017 stating that the Corporate Debtor namely Kohinoor CTNL Infrastructure
Company Pvt. Ltd. has defaulted in making the repayment of the financial debt of Rs.50,96,72,863/-
which was assigned to it by the original lender Andhra Bank.
2. The Financial Creditor states that the Corporate Debtor and various Financial Institutions entered
into a common Loan Agreement on 1.6.2010 based on which the Corporate Debtor was granted certain
loan facilities. Andhra Bank , Special Corporate Finance Branch, 16 B, Earnest House, 194 NCPA Marg,
Narirnan Point, Mumbai is one of the lending agency, which has granted Rupee Term Loan of
Rs.93,75,00,000/- starting from 24.6.2010 which was disbursed in multiple tranches. The Financial
Creditor further states that the Corporate Debtor and various Financial Institutions entered into another
Common Loan Agreement dated 29.9.2014 for sanction certain credit facilities. The same Andhra Bank is
one of the lending agency, which has granted further credit facilities of Rs.23,12,04,580/- (out of the
sanctioned facility of Rs.31,00,00,000/-) starting from 29.11.2014 which was disbursed in multiple
tranches.
2021
3. The above said credit facilities sanctioned by the Andhra Bank including all rights, title, interest
and security in relation to the facilities extended by Andhra Bank were assigned to EARC Trust by
Andhra Bank vide a registered Assignment Agreement dated 31.3.2016 executed between Andhra Bank
and Edelweiss Asset Reconstruction Company Ltd. (EARC) acting in its capacity as Trustee of EARC
Trust. The said Assignment Agreement reveals that there is an outstanding due of Rs.74,35,90,726/-
payable b the Corporate Debtor to Andhra Bank as on the date of Assignment. The said Agreement also
discloses the security documents executed by the Corporate Debtor and also discloses the security created
by the Corporate Debtor in favour of Andhra Bank.
4. The Financial Creditor enclosed a certificate dated 6.4.2017 issued by Andhra Bank under
Section 2(A) (a) of the Bankers Books of Evidence Act, 1891 certifying that a statement of account
bearing nos. 112830100000584 from 24.6.2010 to 31.3.2016 and account no. 112830100002263 from
28.11.2014 to 31.3.2016 (M/s. Kohinoor CTNL Infrastructure Co. Pvt. Ltd.) at the Andhra Bank, SCF
Branch, Mumbai where the account of the said borrower is maintained in the books of bank in a written
form and consists of printouts of the data stored in a hard disk and is a print out of such entry/copy of
print out of such entry. The said certificate reveals that there is a debit balance of Rs.47,76,79,237/- in one
account and a sum of Rs.24,30,20,763/- in another account, This is a clear proof of the debt due to the
Financial Creditor who is the Assignee of the debt assigned to it by Andhra Bank.
5. The Financial Creditor further states that the total due is Rs. 50,96,72,863/- as on 26.4.2017 and
the default occurred on 31.12.2015. The financial creditor enclosed a letter dated 18.05.2015 issued by
Andhra Bank to the Corporate Debtor on 13.05.2015 stating that the term loan account of the Corporate
Debtor is overdue. The Corporate Debtor by a letter dated 06.03.2017 addressed to EARC Trust-SC212,
Edelweiss Asset Reconstruction Ltd. admitted and acknowledged the liability payable to the Financial
Creditor to the extent of Rs. 80,34,98,054/- as on 30.09.2016. The CIBIL report dated 25.04.2017 is also
annexed to the petition. The financial creditor has enclosed the financial statement of the Corporate
Debtor as on 31.03.2016, wherein in the note No. 34 forming part of the financial statement, it has been
stated as "there has been delay in achieving the project completion by over 2 years for reasons stated in
Note 24 above. The delay in project completion has led to increase in interest cost during construction
period and escalation in construction cost substantially. Further, the company has defaulted in repayment
of principal and interest on term loans from the banks since March 2015".
6. The Counsel appearing on behalf of the Corporate Debtor candidly, admitted that the debt is
owed by the Corporate Debtor as disclosed by the Financial Creditor in the Petition.
2022
by the Creditor, it is evident that the Corporate Debtor defaulted in making payments and also placed the
name of the Insolvency Resolution Professional to act as interim resolution Professional, having this
Bench noticed that default has occurred and there is no disciplinary proceedings pending against the
proposed resolution professional, therefore the Application under sub-section (2) of section 7 is taken as
complete, accordingly this Bench hereby admits this Application declaring Moratorium with the
1. That this Bench hereby prohibits the institution of suits or continuation of pending suits or proceedings
2. That the supply of essential goods or services to the corporate debtor, if continuing, shall not be
3. That the provisions of sub-section (1) of Section 14 shall not apply to such transactions as may be
notified b the Central Government in consultation with any financial sector regulator.
4. That the order of moratorium shall have effect from 16.6.2017 till the completion of the corporate
5. That the public announcement of the corporate insolvency resolution process shall be made
6. That this Bench hereby appoints Mr. Sripatham Venkatasubramainan Ramkumar, 303, Block 15, Hill
Springs, Gachibowli, Hyderabad - 500032 email: ramkurnar.sv@in.ey.corn, Registration No.
IBBI/IPA-001/1PP00015/2016-2017/10039 as interim resolution professional to carry the functions as
Corporate Debtor.
2023
MUMBAI BENCH
C.P. (I.B.) No. 1067/7/NCLT/MAH/2017
Applicant: Standard Chartered Bank

VS
Respondent: Prag Distillery (P) Ltd.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Ms. Jyoti Singh, Advocate
For Respondents/Defendant: Mr. Kunal Bhamage a/w, Mr. Akshay Pawar, Advocate
ORDER
1. The Financial Creditor, Standard Chartered Bank, a Banking Corporation incorporated in

England by the Royal Charter, 1853, having its principal office at 1, Basinghall Avenue, London, EC2V
5DD filed this Company petition against the Corporate Debtor Prag Distillery Pvt. Ltd, for initiation of
Corporate Insolvency Resolution Process under Section 7 of Insolvency and Bankruptcy Code, 2016 ("the
Code") read with Rule 4 of the Insolvency and Bankruptcy (Application to Adjudicating Authority)
Rules, 2016, alleging that the Corporate Debtor defaulted in repaying the debt of USD 2,183,915.71
(USD Two Million One Lakh Eighty Three Thousand Nine Hundred and Fifteen and Seventy One
Pennies).
2. The Company Petition was filed by Mr. Shailesh Agrawal, an employee of the Financial Creditor
who is authorised to file this Petition by a Power of Attorney executed by the Financial Creditor on
1.6.2017.
3. The Financial Creditor granted a term loan facility to the Corporate Debtor for an amount of USD
11,000,000 (USD Eleven Million) by way of External Commercial borrowing under Automatic Route. A
Facility Agreement was executed on 7.3.2011 between the Corporate Debtor, M/s. Tilaknagar Industries
Ltd., Tilak Nagar, Shrirampur, Ahmednagar413720 as Guarantor, the Financial Creditor as Lender and
2024
the Financial Creditor's commercial branch viz. Standard Chartered Bank, Hyderabad Branch as Security
Agent.
4. Further, as part of the conditions for grant of the said facility and in order to secure the due
repayment of the loan by the Financial Creditor, the following Agreements were executed by and between
the parties:
(a) Memorandum of Charge dated 08.03.2011 executed by borrower in favour of the Bank, inter-alia
created a first and exclusive charge in favour of security agent for the benefit of Bank on the following
assets:
i. Fixed Assets
ii. Debt Service Reserve Account (DSRA) and all monies lying thereunder.
iii. Fixed Deposits
iv. Collection Account and all monies lying thereunder.
(b) Debt Service Account Agreement dated 08.03.2011, which encapsulate that in case default occurs in
terms of facility agreement, any amount in DSRA shall be utilized towards repayment of facility to the
bank.
(c) Letter of Continuing Guarantee dated 28.032011 executed by the guarantor.
(d) Personal Guarantee dated 28.03.2011 executed by Mr. Amit Dahunukar, who is a director of the
Corporate Debtor.
(e) Memorandum of Entry dated 11.08.2011 read with memo of rectification dated 30.11.2011 executed
by the borrower in favour of the Bank and the Security Agent whereby the borrower acknowledged and
confirmed that the mortgage was created in favour of the Security Agent for the benefit of Bank by way
of deposit of title deeds in respect of all that piece and parcel of land situated at East Godavri District,
Biccavole Sub registry, Rangampet Mandal, Nallamilli Panchayat, Nallamili Village, Ziroit dry land ,
R.S. No. 199/1 and extant of Ac 4-00 cents, in R.S. No. 200/2 am extant pf Ac 4-44 cents and in R.S. No.
200/3 and extant of Ac 0-05 3/5 cents, total extant Ac 8/49 3/5 cents equivalent to 41, 120 sq. yards of
land and document no. 1-205, admeasuring approximately 41,120 sq. yards.
5. The Facility Agreement provides that the Facility may only be used by the Corporate Debtor for
financing capital expenditure for bottling capacity expansion in a principal amount not exceeding the total
2025
commitment of USD 11,000,000. Further the said Facility Agreement set out a repayment schedule
entirely the time period and the number of instalment of the loan to the Financial Creditor.
6. Subsequently, on 28.12.2012, an Amendment Agreement was executed between the Financial

Creditor, Corporate Debtor, Guarantor and the Security Agent, wherein it was stated that at the request of
the Corporate Debtor, the Financial Creditor requested to amend the definition of final maturity date and
accordingly the final maturity date was fixed as 8.3.2016. Likewise, the installment repayment was fixed
at USD 6,87,500 payable on 6.7.2012, 5.10.2012, 4.1.2013, 2.4.2013, 29.6.2013, 25.9.2013, 22.12.2013,
20.3.2014, 16.6.2014, 12.9.2014, 9.12.2014, 8.3.2015, 7.6.2015 and 7.9.2015.
7. Thereafter, on 23.5.2014, at the request of the Corporate Debtor the same parties entered into an
Amendment and Supplemental Agreement to the Facility Agreement, wherein certain terms of the
Facility Agreement were amended.
8. The Corporate Debtor by a letter dated 21.06.2016 addressed to the Financial Creditor stated that
a sum of USD 2.06 million is presently outstanding against the External Commercial Borrowing (ECB) of
USD 11.0 million and since the holding company is undergoing liquidity crunch at present, efforts are
being in process to revamp the operations. The letter further adds that since three ECB installments were
not paid, the same has resulted in cancellation of hedging contract, the ECB loan is presently unhedged
and open to INR/USD fluctuations, the high INWUSD fluctuations will affect the cash-flow and
profitability, therefore requested the Financial Creditor to covert the ECB to Rupee Term Loan.
9. The Financial Creditor on 02.12.2016 issued a statutory notice for winding up u/s 433(e) read
with sec 433 of the Companies Act for payment of outstanding amount of USD 2,062,500.00 (USD two
million sixty two thousand and five hundred only), inclusive of interest along with sum of USD 84,171.21
towards past due interest.
10. Subsequently, on 02.03.2017, the Financial Creditor issued a legal notice for payment of
outstanding amount of USD 2,062,500.00 inclusive of interest along with USD 112,342.65 towards past
due interest within 10 days of receipt of notice, failing which proceedings under Insolvency and
Bankruptcy Code, 2016 will be initiated against the Corporate Debtor. The Corporate Debtor in its reply
dated 23.03.2017, alleged that the statutory notice dated 02.03.2017, was received by it on 15.03.2017,
that it serviced 13 out of the 16 earmarked payments of USD 687,500.00 each along with interest as per
the terms of the facility, repaid USD 8.9375 million towards repayment of principal and also serviced
regular interest up to the date when the last installment was due. It further adds that being IMFL
manufacturer they are facing certain difficulties occasioned on account of certain unforeseen and also
2026
uncontrollable events such as certain States imposing prohibition of sale of liquor, etc. The Corporate
Debtor has also averred that they have noted discrepancy in the amount claimed by way of interest and
requested to provide the working which could be sorted out mutually across the table.
11. The Corporate Debtor by a letter dated 11.05.2017 addressed to the Financial Creditor stated that
it has paid 13 installments out of the 16 instalments of the ECB loan of USD 11 million and the present
outstanding is USD 2.06 million and requested the CEO of the Financial Creditor to give an opportunity
to meet him personally for settlement of the debt.
by the Creditor, it is evident that the Corporate Debtor defaulted in repaying the last 3 installments of loan
availed and also placed the name of the Insolvency Resolution Professional to act as Interim Resolution
Professional, having this Bench noticed that default has occurred and there is no disciplinary proceedings
pending against the proposed resolution professional, therefore the Application under sub-section (2) of
section 7 is taken as complete, accordingly this Bench hereby admits this Application declaring
Moratorium with the directions as mentioned below:
a. That this Bench hereby prohibits the institution of suits or continuation of pending suits or proceedings
b. That the supply of essential goods or services to the corporate debtor, if continuing, shall not be
c. That the provisions of sub-section (1) of Section 14 shall not apply to such transactions as may be
d. That the order of moratorium shall have effect from 20.06.2017 till the completion of the corporate
2027
e. That the public announcement of the corporate insolvency resolution process shall be made
f. That this Bench hereby appoints Ms. Dipti Mehta, 19, Sunshine Building, 785, Dr. A.B. Road, Worli,
Murnbai — 400 0178, Maharashtra, e-mail id: dipti@mehta-mehta.com, Registration No.: IBBIIPA-
002/1P-00038/2016-17/1733, as Interim Resolution Professional to carry the functions as mentioned
under insolvency & Bankruptcy Code.
Corporate Debtor.
2028

MUMBAI BENCH
C.P. (I.B.) No. 1076/7/NCLT/MAH/2017
Applicant: HDFC Bank Ltd.

VS
Respondent: Esskay Motors Pvt. Ltd.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Sankapl. A, Advocate
For Respondents/Defendant: Ms. Vrinda Daga, Advocate
ORDER
1. It is a Company Petition filed u/s 7 of The Insolvency and Bankruptcy Code by the Financial
Creditor namely HDFC Bank Ltd. against the Corporate Debtor namely Esskay Motors Pvt. Ltd. for
initiating of Insolvency Resolution Process (IRP) for this Corporate Debtor availed 3 crores facility
advance under Channel Finance Facility through an agreement dated 12.07.2014 and thereafter when this
Petitioner filed CP 34/2017, this Corporate Debtor entered into Consent Terms to pay due amount in
installments by tendering post-dated cheques to each of the installments agreed by this Corporate Debtor,
in pursuance thereof, that CP was also dismissed as withdrawn. Thereafter, when this Corporate Debtor
defaulted to make payment, this Petitioner was forced to file another CP 595/2017 before this Bench
under this same section of law for initiating of Insolvency Resolution Process, then again this Corporate
Debtor entered into another Consent Terms on 24.04.2017 repeating the same, this time agreeing to
provide demand drafts to each of the instalments as entered in the Consent Terms, basing on these consent
terms, second CP was also withdrawn. When second time also this Corporate Debtor failed to honor the
Consent Terms entered into, this Petitioner filed this third Company Petition against this Corporate
Debtor for initiating Insolvency Resolution Process for he failed to pay Rs. 1,32,27,784.63.
2.Looking at the documents filed by the Petitioner, it appears that this Corporate Debtor entered into Loan
Agreement on 12.07.2014 to avail revolving loan facility to pay ?3 crores as Inventory Funding for the
2029
purpose of purchasing vehicles and spare parts by the borrower from the manufacturer for sale of the
same during the course of its business. Since this Petitioner was doing Fiat Car Dealership business, he
entered into this agreement with the creditor bank solely to facilitate the manufacturer to get remittances
to the vehicle provided to the Corporate Debtor by filing invoices raised by the manufacturer. In relation
to this arrangement, in Clause No. 1.4, the borrower agreed and acknowledged that the receipt issued by
the manufacturer shall be deemed to be issued by the borrower and shall be an effectual receipt and to be
discharged by HDFC Bank Ltd. i,e., Financial Creditor herein.
3. Now the allegation of the Corporate Debtor is that since the manufacturer i.e. FCA India
Automobiles Pvt. Ltd. filed invoices for 21,54,17,448.95 on 19.07.2014 claiming to the cars delivered 21
days before the date of agreement and the applicant bank disbursed a sum of 21,54,17,448.95 in the
Channel Financing account of the Corporate Debtor, out of which, the applicant bank wrongly debited
with a sum of 279,71,166.16 from the Channel Financing account of the Corporate Debtor. The debtor
counsel further submits that since the invoices for the above said 21,54,17,448.95 raised by FCA India
Automobiles Pvt. Ltd. were dated between 21.04.2014 and 25.06.2014, that is prior to the date of loan
disbursement i.e., 19.07.2014 and by that time, cars under the invoices had already been delivered to the
Corporate Debtor by FCA India Automobiles Pvt. Ltd free of payment as part of compensation for losses
suffered. In the same submissions, the debtor further stated that when it was brought to the notice of FCA
India Automobiles Pvt. Ltd, the manufacture has in fact re-credited to this Channel Finance account.
Besides this, the Corporate Debtor, subsequent to this happening also, continued this facility and utilized
the services of this Bank until Fiat Dealership has been terminated i.e. up to September 2015. He
continued availing the facility until the entire facility has been exhausted.
4. After availing this facility, when time has come for repayment of this bank money, this Corporate
Debtor defaulted in making repayment of this facility in the month of September 2014 itself, whereby this
account has become Non-Performing Asset (NPA) on 16.12.2014. For this Corporate Creditor having
given even post-dated cheques to collect in the event of failure to pay, those cheques were also bounced
when it was presented by the Financial Creditor. When the cheques were bounced, this Corporate Debtor,
to the legal notice sent by the Financial Creditor, wrote a letter to HT FC Bank on 22.06.2016 stating that
the company was making arrangements to pay the total amount of 21,29,09,422 shortly to the Bank. In
view of the same, the debtor made a request not to initiate legal action u/s 138 of the Negotiable
Instrument Act. On 11th May 2016, this company made an assurance to the Financial Creditor to repay
the balance, to which it has been stated that it required to study debt statement from the Financial Creditor
to determine their exact liability, but whereas in the notice dated 22.02.2016, the debtor company itself
agreed that the total amount outstanding as on 20.02.2016 was 1,29,09,422. When nothing has worked out
2030
to realize the dues from this Corporate Debtor, within some days, the Petitioner initiated Debt Recovery
Proceedings with respect to this claim. Thereafter, the Creditor had initiated winding up proceedings
before the Hon'ble High Court of Bombay. After this case was transferred from the Hon'ble High Court of
Bombay to this Bench, when this matter came for hearing, the Corporate Debtor having agreed to repay
the outstanding amount to the Petitioner, the Petitioner and Corporate Debtor together filed Settlement
Agreement for withdrawal of CP 59.5/2017 agreeing that the Corporate Debtor would pay in four
installments, in furtherance of it the debtor gave post-dated cheques along with this agreement to assure
that the Petitioner herein could collect the money by presenting the cheques given by this Corporate
Debtor.
5. In view of the agreement entered in between the Petitioner and the Corporate Debtor, on request
of the Petitioner's Counsel, CP 595/2017 was dismissed as withdrawn. Soon after withdrawal of the CP,
when the first cheque presented by the Financial Creditor was dishonored, the Bank issued dishonored
memo dated 24.03.2017. For this agreement in CP 595/2017 had not been worked out, realizing the fact
that these cheques were of no use, this Petitioner again came to this NCLT with another CP34/2017. Then
another turn came to the Corporate Debtor to enter into another Consent Terms, this time agreeing to give
Demand Drafts instead of giving cheques. By looking at those Consent Terms, this Petitioner again
agreed to withdraw CP34/2017 hoping that this time, dues would be realized from the Corporate Debtor.
But, when the date for giving Demand Drafts came, this Corporate Debtor again failed to give the
Demand Drafts in pursuance of the Consent Terms arrived between them.
6. For this Corporate Debtor again and again defaulted in making repayment, this Petitioner has
third time come up with this Company Petition to initiate the Insolvency Resolution Process against this
Company.
7. Now when this matter has come for hearing, this Corporate Debtor in person has argued that
since the bank debited extra money of 279,71,166.16 to the manufacturer and since it has taken more than
6 months for re-crediting that amount, owing to the wrongful debit made to his account, this Corporate
Debtor has incurred loss, whereby he says this petition is liable to be dismissed.
8. Looking at the way this case progressed, it is evident that this Corporate Debtor availed this
Channel Finances facility until facility was fully exhausted, thereafter when cheque was bounced, this
debtor company wrote a letter on 22.06.2016 stating that company owed to pay 21,29,09,422 to the
Financial Creditor and would repay the same shortly. Then two successive company petitions one after
another were dismissed on the debtor side having entered into consent terms making the petitioner believe
the debtor would honor cheques given in the first case, in the second petition, on the assurance that the
2031
petitioner would be given demand drafts but none happened. That the Promoter of the company namely
Mr. Chandra K. Prakash had, right before this Bench, entered into Consent Agreements in the first
Company Petition and second company petitions. After having all this happened, this Debtor Company
could not now say that the debtor has counter claim before the Tribunal and account has not been settled
between them, When the claim has been crystallized by the letter sent by him and the agreement entered
between Petitioner and Corporate Debtor on 10.03.2017, thereafter in the Consent Term on 24.04.2017,
the argument such as the debtor sustained loss by debiting 279,71,166.17; pales into insignificance. It is
needless to say a person, entering into an agreement agreeing to repay certain sum subsequent to raising
an allegation, has been estopped from raising the old allegation ignoring the consent terms arrived, here
this debtor, not once, but twice entered into consent terms to pay the claim amount.
9. Since the Petitioner having placed loan agreement dated 12.07.2014, thereafter bank statement
reflecting the default committed by this Corporate Debtor and subsequently presentation of cheques and
thereafter this Corporate Debtor admitting liability many a times directly in front of this Court, the
evidence placed by the Petitioner is more than enough to admit this Company Petition.
10. On perusal of the documents filed by the Creditor, it is evident that the Corporate Debtor
defaulted in repaying the loan availed and the Petitioner has also placed the name of the Insolvency
Resolution Professional to act as Interim Resolution Professional. And having this Bench noticed that
default has occurred and there is no disciplinary proceedings pending against the proposed resolution
professional, the Application under sub-section (2) of section 7 is taken as complete, accordingly this
Bench hereby admits this Application declaring Moratorium with the directions as mentioned below:
2032
(f) That this Bench hereby appoints, Mr. Rajeev Mannadiar, 33, Kamer Building, 5th Floor, 38, Cawasji
Patel Street, Fort, Mumbai - 400 001, e-mail: rajeev@integroip.com, Registration No.: IBBI/IPA-01/IP-
00320/2016-17/1904, as Interim Resolution Professional to carry the functions as mentioned under
11.Accordingly, this Petition is admitted without cost.
12. The Registry is hereby directed to communicate a copy of this order to both parties.
2033
MUMBAI BENCH
C.P. (I.B.) No. 725/7/NCLT/MAH/2017
Applicant: The Mauritius Commercial Bank

VS
Respondent: Varun Corporation Ltd.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Fraser E. De'Vitre, Sr. Advocate
For Respondents/Defendant: Mr. Shyam Kapadia, Advocate
ORDER
1. It is a Company Petition filed u/s 7 of The Insolvency and Bankruptcy Code by a Mauritius
company, namely, The Mauritius Commercial Bank against the Corporate Debtor namely, Varun
Corporation Limited for this Debtor Company stood as Corporate Guarantor to the loan of USD 30
million borrowed by one of the debtor group companies, namely Real Point Mauritius Ltd (RPML) from
the Financial Creditor and then this Principal Borrower (RPML) having defaulted in repaying this loan
along with interest, this debt has been crystallised against this corporate debtor who stood as guarantor.
When this debtor also failed to discharge its obligation of repayment of due outstanding against the
principal debtor, this financial creditor, by filing this Petition, sought for initiation of Insolvency
Resolution process against this Corporate Debtor. The Applicant Bank claim against the corporate debtor
as on 31.01.2017 is USD 17,122,179, this computation has been shown in Exhibits 17 & 18 of the
Company Petition.
2. This principal borrower (RPML) has been incorporated in the year 2008 as wholly owned
subsidiary of this Corporate Debtor in Mauritius. At all points of time, the directors of its holding
company Le., Corporate Debtor, have remained as directors of this principal borrower. One Mr.
Yudishthir D. Khataw and Mr. Sumegh Mody remained as directors of this principal borrower and this
2034
corporate debtor as well; this fact has not been disputed by this corporate debtor. This principal borrower,
to acquire shares of its group Indian company namely Varun Shipping Company Limited (VSCL), availed
USD 30million loan from this Mauritius Bank situated in Mauritius Country by entering into Facility
Agreement dated 2.12.2008. This Corporate Debtor Company, being holding company of RPML,
executed corporate guarantee for the aforesaid amount of USD 30 million to secure repayment of the
outstanding dues in the event of default in repayment by the principal borrower, i.e. RPML. The aforesaid
Sumegh Mody, being common director of RPML and the Corporate Debtor, signed the Facility
Agreement on behalf of RPML and Corporate Guarantee Agreement on this Corporate Debtor as well.
Before execution of this Corporate Guarantee by this Debtor, it had passed a Board Resolution on
2.12.2008 agreeing to give corporate guarantee to the aforesaid loan taken by
RPML from the Financial Creditor (Board Resolution at Page 122 of CP). In furtherance of it, on
26.3.2009, the Debtor Company, through Mr. Sumegh Mody, executed an irrevocable and unconditional
corporate guarantee in favour of the Creditor for full repayment of all monies as agreed by RPML in the
event RPMI defaulted in making repayment of USD 30million availed through Facility Agreement.
3. This guarantee agreement executed in favour of a Foreign Bank located in Mauritius having
fallen within the ambit of FDI through automatic route, since the debtor company is under an obligation
to make post facto intimation of the same to RBI, this debtor company on 26.3.2009 forwarded the copy
of this corporate guarantee to its dealer Bank, namely Bank of Baroda along with k-)rm ODI to enable the
Bank to send it to RBI. This fact is also not denied by the corporate debtor. Interesting part is, even the
letter written to the Bank of Baroda is signed by the same Mr. Sumegh Mody as director of the Debtor
Company. To prove that FDI guidelines have been complied with, this Corporate Debtor, by its letter
dated 1.4.2009 sent the letter acknowledged by the Bank of Baroda, dealer Bank along with this guarantee
agreement to the creditor as well, this was done perhaps to impress upon the Creditor Bank that the
Corporate Debtor completed whatever formalities to be followed in availing facility for getting Foreign
Direct Investment. Somewhere in the 2012, when RPML defaulted in its payment obligations under
Facility Agreement after payment of instalments, this Facility Agreement was amended on 2.4.2012 and
the loan was restructured. Besides this, in the auditor's report of RPML as of 31q' March, 2009, it has
been reflected that this Bank loan of USD 30 million has been secured and has been guaranteed by the
Varun Corporate Limited (corporate debtor), the holding company. By looking at the Annual Report of
the Corporate Debtor for the period of 15 months ended 30th June 2009, it has been reflected under the
head of contingent liabilities as follows:
"Contingent Liabilities:
2035
Contingent liabilities are not provided for and are disclosed by way of notes.
(a) .................
(b) ................
(c) ................
(d) Since the net worth of subsidiary company (RPML) is eroded, the company has agreed to provide
financial support to the subsidiary to meet its debts and liabilities as to continue it as a going concern."
4. When RPML again defaulted in repayment of its outstanding dues to the creditor, the creditor
sent a demand notice dated 20.3.2015 to the RPML. On having RPML failed to honour its obligation in
discharging its liability, the creditor this time issued notice to the debtor company on 27.5.2016 setting
out that the debt has become crystallised against the guarantor/Corporate debtor for RPML defaulted in
repayment of the debt.
5. As RPML defaulted in making repayment, the creditor filed a suit against RPML on 19.11.2015
before the Supreme Court of Mauritius, Commercial Division for a sum of USD 14,904,587 dues arose
out of Facility Agreement, basing on that suit claim, the said Court, on 16.11.2016, decreed against
RPML to pay the creditor a sum of USD 14,904,587 together with accruing interest till date of final
payment with costs. As the amount payable to the creditor not being realized despite the suit was decreed
against RPML, this Creditor has, in the month of April 2017, filed recovery proceedings against the
Debtor Company on the same claim, because the Bank is entitled to proceed against the guarantor as well.
On such filing, the Corporate Debtor made a bald denial before Mauritius Supreme Court that the
Corporate Debtor did not execute the agreement, but this debtor has never denied the letter written to the
Bank of Baroda for sending the copy of this guarantee agreement to RBI and the covering letter dated
1.4.2009 sent to the creditor along with Agreement of Guarantee stating that dealer Bank has been
instructed to send the copy of the agreement to RBI for post facto approval. Of course, this debtor made
the same denial to the demand notice sent by the creditor Bank on 26.5.2016.
6. Since the efforts to realise its money with the help of one or other jurisdiction not being fructified,
the creditor filed this Company petition before this Bench u/s 7 of the Insolvency and Bankruptcy Code.
7. On receipt of notice in this case, the Corporate Debtor principally raised the following objections
to admit this Petition:
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i. Since this Corporate Debtor has not executed Corporate Guarantee to the creditor on RPML behalf, this
proceeding being summary in nature with narrow conspectus, this issue being denial of execution of the
bank document, the same cannot be tried before this forum, henceforth, this petition liable to be
dismissed.
ii. Assuming this Corporate Guarantee executed by the debtor, then also, this corporate guarantee
agreement purported to have been executed by the debtor is not an enforceable instrument because RBI
circular on Foreign Direct Investment does not permit an Indian party to make investment in Overseas
joint Venture 0 V)/Wholly Owned Subsidiary (WOS) exceeding 401V of the net worth of Indian
Company as on the date of the then last audited balance sheet. Admittedly, as on the date of the purported
guarantee, the net worth of the corporate debtor was approximately 15crores, therefore at the most, it
could give guarantee to around 60crores which is four times to the net worth of the company, but not for
USD 30 million (150 crores).
iii. Upon the inquires of the debtor, for it has been learnt that its Dealer Bank i.e., Bank of Baroda has not
forwarded the guarantee agreement copy to RBI as required under law, the approval for RBI not being
granted, this Corporate Guarantee for FDI without intimation to RBI is invalid and not enforceable in the
eye of law.
iv. The debtor says that this petitioner instead of electing a forum to proceed against this debtor, it had
first obtained decree against RPM1,, then a suit against this debtor on the same debt before Supreme
Court of Mauritius, while the said suit pending there, this Petitioner now finally landed up before this
forum, where consequences of its order are harsh with drastic implications.
v. The Debtor says since this guarantee agreement is unstamped, according to Section 3(b) of
Maharashtra Stamp Act (MSA), this instrument being chargeable, this court can't even look into this
document for any purpose whatsoever (section 35 of Stamp Act 1899/ section 34 of MSA) unless and
until it fulfils impounding as required under Section 33 of Maharashtra Stamp Act. To justify this
argument, the debtor counsel relied upon Avinash Kumar Chouhan v. Vijay Kumar Mishra (2009) 2 SCC
532, and Jupudi Kesava Rao vs. Pulavanthi Venkata Subba Rao & Ors (1971) 3 SCR 590.
8. By looking at the first objection of denial of execution of Corporate Guarantee, it appears to us

that it is a bare denial made by the Corporate Debtor because the very person who signed in the loan
agreement on RPML behalf is shown as signed upon Corporate Guarantee agreement. The man said to
have executed loan agreement has not denied execution of the loan agreement on RPML behalf. If we see
the loan agreement executed by the Principal Borrower, it is evident that loan agreement discloses that
2037
this Corporate Debtor would stand as guarantor to this loan, corroborating to this fact, the Corporate
Debtor company passed a resolution to stand as a guarantor to this loan taken by RMPL, thereafter in the
year 2009 Annual Report, the corporate debtor stated that it would meet the contingent liabilities of
RPML, in furtherance of it, the Corporate Debtor company itself forwarded a letter to the Bank of Baroda,
their dealer bank to send post facto intimation to the RBI stating that Corporate Loan Guarantee
Agreement has been executed by this Corporate Debtor to a company situated in Mauritius. Moreover, in
the respective year financial statements it has been showing that Corporate Guarantee has been given to
RMPL which is 100% subsidiary of this Corporate Debtor. This loan in fact has been taken to acquire
shares of one of the Corporate Debtor group companies. By analysing the totality of the situation, no
other inference could be drawn except saying that this Corporate Debtor stood as Guarantor to the loan
obtained by RPML from the Creditor Bank.
9. Likewise, there is ample material to prove that this debtor company has given Corporate
Guarantee on its subsidiary's behalf to the creditor, therefore the defence of the debtor company saying
that corporate guarantee has not been given by it does not infuse any belief in the mind of this Bench to
turn down the case of the applicant, therefore, this Bench hereby believes that the creditor placed enough
material proving that this Corporate Debtor executed Corporate Guarantee to the loan of USD 30 million
taken by RPML from the Creditor Bank. Usually, the loan procured by a subsidiary overseas is secured
by a guarantee provided by the Indian parent entity, the same is the thing happened here.
10. As to second objection that Corporate Guarantee is not valid for want of RBI approval is
concerned, the Corporate Debtor submits even by assuming this Agreement has been executed by the
Corporate Debtor, this agreement has to fail on two counts, one - no post facto approval in principle from
RBI is not present, two - the guarantee given by the Corporate Debtor is for 150 crores which is more
than 400% to the net worth of corporate debtor company as on the date of Corporate Guarantee given,
which is not permissible under RBI circular, because RBI Circular envisages that no Indian company
should give a guarantee to FDI investment exceeding four times to the net worth of the Guarantor
company. Since this Corporate Debtor net worth as on the date of execution of agreement, it was only 15
crores therefore, this company could not give guarantee for more than 60 crores, but here the guarantee
was given for a loan of USD 30 million equivalent to 150 crores in Indian Currency.
11. The basic thing that one should not get lost sight of the fact is that a wrong doer should not take
advantage of its own wrong, here this corporate Debtor is indeed under obligation to make post facto
intimation to RBI, not only this, it appears that this corporate debtor knowingly has given guarantee to the
loan obligation more than 400% of its net worth, fact of the matter is, this loan money has not been
2038
utilised for investing in its subsidiary RPML located in Mauritius, but clawed out to one of its group
company situated in India through the route of equity. After all these mischievous acts of the debtor, can
today this debtor back out from the promise of guarantee given to a loan availed by its wholly owned
subsidiary of it? Hundred percent subsidiary means what, the acts of subsidiary are nothing but acts based
on the wish of the holding company. Where this loan money has gone? It has gone to one of its group
companies. If at all this approval from RBI has to be obtained prior to obtaining loan or execution of
Corporate Guarantee, then it may be said that the guarantee dehors intimation is bad, in this case, it is
only a post facto intimation, not making such intimation will not vitiate or frustrate the agreement or
rights of the creditor. Why it has not gone to RBI, we can't make any guess work on it, but it is a fact that
this debtor sent a letter on 29.3.2009 to the creditor Bank stating that corporate debtor already sent post
facto intimation to the RBI by sending a letter addressed to Bank of Baroda to the creditor Bank to make
them believe that execution of guarantee agreement to this loan has been intimated to the RBI. May be the
debtor has not put its efforts to see it reached to the RBI because guarantee is more than its limits. Since
this duty is cast upon the Corporate Debtor to intimate to RIM about giving guarantee, the person, done
wrong by not ensuring intimation reached to the RBI, today cannot come out with a defence stating since
intimation has not reached to the RBI, the liability arising under this agreement is not enforceable against
the corporate debtor. Therefore, we have not found any merit saying that not sending intimation to RBI.
about execution of guarantee will make this transaction invalid. No law says a person made a gain out of a
transaction can vilify the same saying by so and so glitch in the law he has become free from the
obligation owed upon him. More so, even if any transaction is irregular in the teeth of any regulation,
mere irregularity per se will not make an act illegal.
12. Another objection raised by the Corporate Debtor is that since the applicant obtained decree
against the principal borrower and filed a civil suit against this Corporate Debtor before Mauritius
Supreme Court claiming recovery of the same debt for RI)ML failed to discharge its obligations, this
Applicant should not now elect to proceed before this Bench after having already tried its luck before
Mauritius Court against the principal borrower, thereafter against this Corporate Debtor.
13. As to this objection, if we look into Section 5 sub Section 8 of the Insolvency & Bankruptcy
Code, it is ascertainable that the clause (i) of Sub Section 8 says that the amount of any liability in respect
of the guarantee given for the credit facility availed by the principal borrower will fall within the
definition of Financial Debt, therefore, this applicant is entitled to proceed against the guarantor because
this Code mandated that the liability against the guarantee will also amount to financial debt. As to
proceedings u/s 7 of the Code, the dispute pending in relation to the claim amount before any other forum
will not become impediment or bar to initiate Insolvency Resolution Process u/s 7, therefore, obtaining a
2039
decree against RPML or pending of suit against this Corporate Debtor in relation to this claim cannot
invalidate the proceeding u/s 7. Moreover, it is not the case of the Corporate Debtor that the decree passed
against RPML has been satisfied by making payment either by RPML or by this Corporate Debtor;
thereby pendency of proceedings cannot become an objection for admission of this case.
14. The Corporate Debtor has also raised another objection that the guarantee agreement being unstamped
instrument, unless said instrument has been sent for impounding, this instrument cannot be looked into by
any court of law therefore unless the document is impounded, the petition cannot be admitted. To which,
by looking at the ratio placed by the petitioner and as well as the corporate debtor, it appears to us that
case basing on an unstamped or insufficiently stamped instrument could be simultaneously admitted by
ordering for impounding the instrument impugned herein. Since this Bench has already held that this
Court has not believed the defence of the Corporate Debtor saying that no Corporate Guarantee
Agreement has been executed in favour of the applicant, once such instrument has been sent for
impounding it will automatically get impounded provided requisite stamp has been paid,
moreover nothing is left to decide once this administrative act of impounding is done. It is a curable
defect; therefore it will not become an impediment to initiate Insolvency Resolution Process. This Bench
has not gone into as to whether a foreign instrument not chargeable in that respective country needs to be
stamped as envisaged under the Stamp Act, because both sides failed to assist this Bench on that
perspective. Another intriguing point is this instrument has come into existence to give corporate
guarantee in a foreign country.
To prove that the principal borrower availed loan facility and defaulted in making repayment, the
applicant has shown loan facility agreement dated 02.12.2008 executed by the principal borrower
(RPML), corporate agreement dated 26.03.2009 executed by the corporate debtor, then loan account of
the principal borrower maintained by the applicant Bank from 10.02.2009 to 31.08.2010 to reflect
disbursement of loan facility, copy of amended facility agreement, then demand notice dated 20.03.2015
to RPML informing the loan account has been in arrears from 30.8.2013, the total due outstanding as on
19th March 2015 was USD13, 730, 046.19 in principal and interests and to pay immediately or else legal
action would follow.
To prove that the corporate debtor has also failed to discharge its obligation to clear the debt outstanding
on default of repayment by the principal borrower, the applicant placed a notice dated 27.05.2016 to this
corporate debtor informing RPML having failed to comply with its payment obligations, this debtor,
2040
being a guarantor, is liable and indebted towards the financial creditor for an amount of USD15,686,146
outstanding, unless the above amount mentioned is paid within 30 days, the Creditor would have no
alternative than to initiate legal proceedings against this Corporate Debtor, then a decree against RPML
from Mauritius Court and pendency of suit against this Corporate debtor before Mauritius Court, and
other documents supporting execution of corporate guarantee and the consent letter from the Insolvency
Resolution Professional, by looking at this material, we are of the view that it is more than sufficient to
believe that the applicant proved existence of debt, crystallisation of debt against the corporate debtor on
default of repayment by the principal borrower, thereafter this corporate debtor also defaulting in paying
off the said debt. The applicant filed the original Corporate Guarantee Agreement; hence the argument
over presenting photo copy has no more relevance, accordingly that aspect has not been dealt with. It is
not the case of this debtor that the principal borrower has not availed loan and has not defaulted in
repayment, therefore nothing much have to say over availing loan and defaulting in repayment.
The applicant relied upon Aditya Birla Finance Ltd v. Coastal Projects Ltd (Arbitration Petition (L) No
1603/2013 dated 29.10.2013 — Bombay High Court) to say that guarantee deed in want of stamp duty
can be relied upon for seeking interim relief, if deficiency of duty is there, court can impound it at
evidence stage.
The applicant relied upon SRM Exploration Pvt. Ltd. v. N&S&N Consultants S.R.O (2012) 129 DR] 113
(Delhi HC) to say that there is no absolute bar to act upon basis of unstamped document and it cannot be
lost sight of the fact that the documents in the case supra i.e., Guarantee Declaration as well as
Promissory Note were executed outside India.
The applicant relied upon ICICI Bank Ltd. v. Classic Diamonds (India) Ltd (2015) SCC Online Born
6555 to say that in respect to winding up matters, it must be seen as to whether the company is unable to
pay debts or not, not otherwise. In the case supra, when an argument has been set out saying that the
corporate guarantee executed outside Maharashtra when comes to State of Maharashtra, the requisite
stamp duty shall be paid, on which, the Honourable High Court made an observation that when the
company court considers whether or not to wind up a company, it will not act on any particular document,
because the court u/s 434 of the Act 1956 essentially considers whether the company is unable to pay its
demands. Similar argument has been made relying on a case in between L & T Finance Limited v.
Damodar Bankar (Borrower) and Mr Barkelo Gaonicar (Guarantor) MANU/M11/2266/20 i 3 to say that
the objection over deficiency of stamp duty cannot be raised within three months from the date document
has come into the State, therefore the objection over want of stamp duty has been turned down.
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The applicant relied upon Hindustan Steel Ltd. v. DeJeep Construction Co. (1969) iSCC 597 to say that
The Stamp Act is a fiscal measure enacted to secure revenue for the State on certain classes of
instruments: it is not enacted to arm a litigant with a weapon of technicality to meet the case of the
opponent.
The applicant counsel differentiated the case in between Avinash Kumar Cizauhan v. Vijay Kumar
Mishra 2009 (2) SCC 532 saying that under section 33 of Maharashtra Stamp Act, court is required to
impound a bilateral document, here the corporate debtor is a sole executant, unilateral execution,
therefore even assuming this document requires to be stamped by the sole executant, i.e., the corporate
debtor, not the creditor.
If at all this Bench has not admitted this company petition, then there is every likelihood diminution of the
value of the corporate debtor company if initiation of Insolvency Resolution process is prevaricated.
Since it is a known fact that unless and until the moratorium is declared, the corporate debtor company is
at free to alienate the assets of the company or to dilute the assets of the company, since it is not in doubt
that the corporate debtor executed guarantee agreement, we don't believe the direction for impounding
will cause any impediment for admitting this petition.
Therefore, this Bench hereby d irects the creditor for impounding guarantee agreement as per law.
For the reasons above stated, this Bench being satisfied that the principal borrower drew down the loan
facility given by the petitioner thereafter defaulted in making repayment for the principal borrower having
defaulted the contingent liability against the guarantor has become crystallised into a definite liability
falling within a definition given for financial debt for this corporate debtor has also not paid, this Bench
hereby admit this Company Petition with the relief as follows:
any action under the Securitisation and Reconstruct-ion of Financial Assets and Enforcement of Security
That the supply of essential goods or services to the corporate debtor, if continuing, shall not be
2042
That the provisions of sub-section (1) of Section 14 shall not apply to such transactions as may be notified
That the order of moratorium shall have effect from 30.6.2017 till the completion of the corporate
That the public announcement of the corporate insolvency resolution process shall be made immediately
as specified under section 13 of the Code.
That this Bench hereby appoints Mr. Prakash Karunashankar Pandya, 16, Pt Floor, Star Trade Centre,
Sodawala Lane, Borivali West, Mumbai — 400 092, Registration No. IBBI/IPA-002/IP00127/2016-
17/1215as interim resolution professional to carry the functions as mentioned under Insolvency SE
Bankruptcy Code.
Debtor.
2043
MUMBAI BENCH
C.P. (I.B.) No. 727/7/NCLT/MAH/2017
Applicant: Union Bank of India,
Vs
Respondent: Paramshakti Steels Ltd.,
Judges/Coram:
Hon'ble Sh. B.S.V. Prakash Kumar (Member (J)
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Nirman Sharma, Ms. Ishita Advani, Learned Advocate
For Respondents/Defendant: Mr. Jay Choksi, Learned Advocate
ORDER
Union Bank of India, the Financial Creditor herein, filed this Company Petition against the
Corporate Debtor, Paramshakti Steels Ltd., under Section 7 of the Insolvency and Bankruptcy Code, 2016
(the Code) read with Rule 4 of the Insolvency and Bankruptcy (Application to Adjudicating Authority)
Rules 2016, on the ground that the Corporate Debtor defaulted on 26.07.2016 in repaying a sum of
Rs.35,88,82,988/- plus interest amounting to Rs.4,55,68,672/- from 26.07.2016 to 31.03.2017.
2. The Financial Creditor vide letter dated 14.07.2014 addressed to the Corporate Debtor sanctioned
Rs.50,00,00,000/- as Letter of Credit facility and Rs.25,00,00,000/- as Cash Credit facility, for a period of
12 months under consortium arrangement, on the security of pari passe charge on hypothecation of entire
stock on book debts. The said credit facilities are collaterally secured by Land and Building, plant &
machinery and FDR/Cash collateral belonging to the Corporate Debtor valued a t Rs.113.53 crores and
also on the personal guarantee of Mr. Vinod Garg, Director of the Corporate Debtor. Subsequently, on the
request of the Corporate Debtor the Financial Creditor by a modification letter dated 11.08.2014 modified
certain conditions of earlier sanction and the same was accepted by the Corporate Debtor. The Board of
Directors of the Corporate Debtor in its meeting held on 16.09.2014 discussed about the above facilities
sanctioned by the financial Creditor and resolved to borrow, provide securities as required by the Bank by
2044
affixing common seal of the Company in all the security documents as required in the presence of Mr.
Vinod Garg, Director of the Company.
3. Accordingly, the Corporate Debtor executed the following security documents in favour of the
Financial Creditor on 17.09.2014:
(a) Composite Hypothecation Deed.
(b) Promissory Notes, one for Rs. 25,00,000/- and another for Rs. 50,00,000/-.
(c) Letter of Personal Guarantee for Rs. 75,00,000/- executed by Mr. Vinod Garg, Director of the
Company.
(d) Letter of Lien (deposit).
(e) Agreement on rate of interest, wherein it was agreed and understood that applicable rate of interest
will be calculated as Bank's base rate plus the spread.
4. The Corporate Debtor by a letter dated 12.01.2016 addressed to the Financial Creditor referring
the ad-hoc limit of Rs. 50,00,00,000/- of Letter of Credit stated that they are expecting N.O.C. and pad
passe charge from the existing bankers within a period of 30 days and the Company will execute the
pending personal guarantee documents by Mr. Sumit Ahuja and Mr. Pankaj Ranga, who are the Promoter
Directors. The Corporate Debtor addressed another letter on 19.01.2016 agreeing to give upfront L.C.
margin by way of FDR for Rs. 5,00,00,000/- and undertakes to bring NOC from the existing bankers
within a period of 30 days failing which they will pay additional amount of Rs, 5,00,00,000/- by way of
FDR as additional LC margin. The Board of the Corporate Debtor company on 19.01.2016 resolved to
avail the ad-hoc limit of Rs. 50,00,00,000/-. On 21.01.2016 the Corporate Debtor executed a Promissory
Note for Rs. 50,00,00,000/-, Letter of Lien (deposits) and two directors of the company executed a
personal guarantee for Rs. 50,00,00,000/-. The Corporate Debtor on 25.01.2016 made an application to
the Financial Creditor requesting to issue a Letter of Credit for Rs. 40,00,00,000/- along with the requisite
application form for inland Letter of Credit. The Financial Creditor opened LC No.63040ILC000216,
dated 27.1.2016 for Rs.40 crores in favour of Mis. Ratnesh Ispat Securities Pvt. Ltd. who is the seller of
goods to the Corporate Debtor, and the LC period is 90 days which is due on 27.4.2016. On 9.5.2016, the
Corporate Debtor requested for the extension of the above said LC for 90 days., wherein he has assured
the Bank that the LC payment on next due date i.e. 26.07.2016 will be done on time. Accordingly, the
Financial Creditor made payment on 26.07.2016 to State Bank of India, Mid-Corporate Branch, Mumbai
for the benefit of M/s. Ratnesh Ispat Services Ltd. on the basis of two Bills of Exchange dated 27.04.2016
2045
drawn on the Corporate Debtor and a sum of Rs. 19,99,49,772/- and another sum of Rs. 19,99,96,080/-
was debited to Over Draft Inland LC Bills Loan account of the Corporate Debtor on 26.07.2016.
Subsequently, on 27.07.2016 the Financial Creditor informed the Corporate Debtor about the
devolvement of LC and requested to make a payment of Rs. 35,88,82,988/- after adjusting the LC margin
provided by the Corporate Debtor and also stated that the due date and devolvement of LC date is
26.07.2016. Thus, it is very clear that there is a debt which is on default from 26.07.2016. Even after
several reminders the Corporate Debtor has not settled the dues.
5. The Counsel for the Corporate Debtor vehemently argued the Petition canvassing the following
points:
(a) The Power of Attorney executed by the Bank in the year 2003 in favour of Mr. Dinesh Kumar Gupta,
who filed this application, does not contain the Registration number of Notary and the serial number of
document as required under Notaries Act,1952 and hence the Power of Attorney cannot be considered as
valid document. In support of his contention, he has quoted 3 decisions (I) l.R. Kamat vs. Divisional
Controller, Karnataka State Road Transport Corpn. & Others (AIR 1997 Kant 275), (ii) KBC Pictures vs.
A.R. Murgadoss & Ors. (2009 (111) Born LIZ 598), (iii) H.K. Taneja & Ors. Vs. Bipin Ganatra (2009 (3)
Born CR 363). In these cases cited, the facts are totally different and it cannot be applied for the case on
hand. In the Kamat case (supra) the Petition was filed by one person whereas the Vakalat and the
Affidavit verifying the writ petition was signed by another person, in KBC Pictures case (supra) the
defendant denied his signature on the agreement and the receipt and so the allegation is forgery and
fabrication, in H.K. Taneja case (supra) the applicant filed an application under order 40 Rule 1(2) of
CPC, saying that he was in possession of the suit property and he should not be removed from the
property , on the basis of an unregistered Leave and Licence agreement which was held as a bogus. Here
the case of the Respondent is not that he has not borrowed from the bank or the bank has produced any
bogus document. The Corporate Debtor utilized the funds for business and when the bank says that there
is a default due to non-payment within the specified time, the respondent cannot take refuge on flimsy
grounds. Another contention of the Corporate Debtor is that Board Resolution which is stated as annexed
in Annexure 1, is not annexed but the fact is that the Annexure 1 is the Power of Attorney. Since the
Power of Attorney executed by the bank is in operation from the 2003, this Bench, does not find any
rhyme or reason for disbelieving the same.
(b) It was contented that the amount was disbursed on 26.07.2016 for a credit period of 180 days for
making payment. However, it was wrongly mentioned that the date of disbursement was January 2016
and the date of default as 26.07.2016. Since wrong date of default was given the application has to be
2046
dismissed. The contention of the Respondent that the LC has a credit period of 180 days is a misnomer.
The Letter of Credit is a non-fund based facility and henceforth the beneficiary cannot actually enjoy it as
a loan as if a fund based facility is sanctioned. Normally, the purchaser of goods applies to the Bank for
opening of a Letter of Credit for payment I acceptance of beneficiaiy's invoice value payable at sight I a
specified number of days from the date of Transport documents drawn on the LC issuing bank on account
of the borrower. The borrower has to arrange funds for making payment to the seller by the LC issuing
Bank. However, if the borrower is not arranging the fund, the Bank which issued the LC will pay for the
commitment and debit the accounts of the borrower and the same becomes due on the date of payment.
The Bank issuing the LC will normally charge a commission from the date of issue till the date of
payment and subsequently, if the borrower is not paying the commitment made by the Bank, he has to
pay the applicable interest. This is the way in which the LC works. Hence, the contention of the Counsel
that he has a credit period of 180 days after the honour of LC by the issuing Bank is not palatable and the
letters dated 09/05/16 and 12/05/16 written by the Corporate Debtor to the bank says in no uncertain
terms that due date of payment is 26/07/16. It was also contended that the account was wrongly classified
as a Non-Performing Assets (NPA). This contention need not be given any regard in view of the facts that
the Insolvency Resolution Process is triggered on the occurrence of default of debt and not on the basis of
classification of an account as NPA.
(c) To support the contention that penal interest is not compoundable, the Corporate Debtor Counsel,
relied upon a decision of the Hon'ble Supreme Court in Punjab and Sind Bank vs. Allied Beverage Co.
Pvt. Ltd. & Others, 2010(10) 5CC 640. It appears to us that the Hon'ble Supreme Court has held that
granting interest @14% per annum in respect of the period pendente lite and future interest with effect
from the date on which the Bank filed application before DRT is reasonable but whereas in the given case
it is not in respect to interest pendente lite or future interest, therefore, the ratio is not applicable to the
interest calculated basing contractual arrangement before the filing of the case. In the case of an
application by a Financial Creditor, this Bench need not go into the claims/counter claims in respect of
penal interest charged and its compounding due to the fact that when the claim of the Financial Creditor is
processed by the Resolution Professional, he/she will decide the validity or otherwise of the penal interest
portion and if anybody is aggrieved for that they are statutorily entitled to file an appeal before this Bench
and hence that issue is not gone into at this stage.
(d) There is an allegation that the statement of account given in annexure 20 is a false and fabricated
document by the Bank, in view of the fact that the balance as on 30.09.2016 at page 191 is Rs.
37,12,47,558/- whereas the brought forward balance shown on page 193 on the same date is Rs.
36,57,48,176/-. A simple scrutiny of the statement of accounts reveals that the balance as on 30.09.2016 is
2047
Rs. 37,12,47,558/- on both the pages, whereas subsequent to the brought forward entry on 30.09.2016
there are two more interest debits on the same day for Rs. 48,52,927.84 and Rs. 6,46,454.16 and the
ultimate balance as on 30.09.2016 is Rs. 37,12,47,558/- only as reflected at page 191. Hence, the theory
of falsification and fabrication of accounts also fails.
(e) There is a contention that LC facility granted by the Bank was an ad-hoc facility for which there was
no hypothecation created. However, the sanction letter of the bank dated 14.07.2014 clearly stated that the
proposed LC facility of Rs, 50,00,00,000/- is secured b pari passe charge on hypothecation of stocks
procured under LC and book debts created out of it. Hence, the contention that the application of the
Financial Creditor is incorrect, unfounded and baseless.
6. This Bench, on perusal of this documents filed by the Creditor, itis evident that the Corporate
Debtor defaulted in making payment as mentioned above and he also placed the name of the Insolvency
Resolution Professional to act as Interim Resolution Professional, having this Bench noticed that default
has occurred and there is no disciplinary proceedings pending against the proposed resolution
mentioned below:
2048
(vi) That this Bench hereby appoints C.A. Rajendra K. Bhuta, 1207 Yogi Paradise, Yogi Nagar, Borivali
West, Mumbai 400 092, e-mail: rkbhuta@gmail.com, Registration No. IBBI/IPA-IP/00078/2016-
2017/1074 as interim resolution professional to carry the functions as mentioned under Insolvency &
Bankruptcy Code.
Corporate Debtor.
2049
MUMBAI BENCH
C.P. (I.B.) No. 1137/7/NCLT/MAH/2017
Applicant: State Bank of India,
Vs
Respondent: Jyoti Structures Ltd.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Dhananjay Kumar, Ms. Saloni Kapadia, Mr. Anush Matkar,
Learned Advocate
For Respondents/Defendant: Mr. Amit Vyas, Mr. Rohan Mathur, Learned Advocate
ORDER
It is a Company petition filed by State Bank of India u/s 7 of the Insolvency and Bankruptcy
Code, 2016 against the Corporate Debtor namely Jyoti Structures Ltd. for this Corporate Debtor availed
loan facility of 21,227.25 crores through fund based and non-fund based arrangements, thereafter this
Corporate Debtor defaulted in making repayment of the loans availed. When failed to clear the loan, a
Master Restructuring Agreement (MRA) dated September 29, 2014 was entered into for restructuring, but
when that was also failed, this applicant filed this application to initiate Insolvency Resolution Process
against this Corporate Debtor on the ground that, as on 20.06.2017, this Corporate Debtor failed to repay
the outstanding balance of 21,600.74 crores indebted to this creditor in relation to the loan facilities
availed not only from this creditor but also from the erstwhile Bank, State Bank of Hyderabad, hence this
Petition.
Brief facts of the Case:
2. On March 15, 2012, State Bank of India granted loan facility of 21,227.25 crores to this
Corporate Debtor on working capital consortium agreement dated March 15, 2012 executed by this
2050
Debtor. When Debtor failed t: repay the loan as per the consortium agreement, the loan was restructured
on September 29, 2014 in pursuance of Master Restructuring Agreement under the corporate restructuring
scheme of Reserve Bank of India along with certain additional facilities granted to the Corporate Debtor
under the said MRA, likewise erstwhile Bank S131-1 also granted loan facility to the debtor company.
3. The details of the facilities granted by State Bank of India and State Bank of Hyderabad to the
Corporate Debtor are set out below:
SBI Facilities Details of the facilities granted by 5131 ("SBI See Exhibit 4 (page 48-
Facilities") to the Corporate Debtor pursuant to the Vol-I) along with the
MRA are set out hereunder: MRA and recall notice
Fund Based (page 1008-Vol IV)
Working capital Term Loan to the tune of Rs.
309.52 Crores (as set out in part B(3) of Schedule
III to the MRA);
Funded Interest Term Loan to the tune of Rs. 31.62
Crores (as set out in Part B(8) of Schedule III of
the MRA); and
Cash Credit up to a limit of Rs. 124.48 Crores (as
set out in Part B(5) read with Part B(7) of Schedule
III to the MRA)
Non-Fund Based
Letter of credit facilities up to a limit of Rs. 273.53
Crores (as set out in Part B(6) of Schedule III to the
MRA); and
Bank Guarantees up to a limit of Rs. 715.26 Crores
(as set out in Part B(6) of Schedule III to the
MRA). A working capital term loan facility to the
limit of Rs. 365 Crores was made available to the
Corporate Debtor as a sub-limit to the bank
guarantee facility.
2051
SBH Facilities Details of the facilities granted by SBH ("SBH See exhibit 4 (page 48-
Facilities") to the Corporate Debtor pursuant to the Vol-I) along with the
MRA are set out hereunder: MRA and recall notice
(page 1008-Vol IV)
Fund Based
Working Capital Term Loan to the tune of Rs.

62.17 Crores (as set out in part B(3) of Schedule III
to the MRA);
Funded Interest Term Loan to the tune of Rs.5.20

Crores (as set out in Part B(8) of Schedule III of
the MRA);
Cash Credit up to a limit of Rs.46.28 Crores (as set

out in Part B(5) read with Part B(7) of Schedule III
to the MRA).
Non-Fund Based
Letter of credit facilities up to a limit of Rs.49.05

Crores (as set out in Part B(6) of Schedule III to the
MRA); and
Bank Guarantees up to a limit of Rs.128.28 Crores

(as set out in Part B(6) of Schedule III to the
MRA).
SBI Facilities and SBH Facilities are collectively

referred to as 'Facilities'.
4. Since State Bank of Hyderabad has been merged with the State Bank of India with effect from
April 01, 2017, the resulting Bank i.e. State Bank of India has filed this Petition for initiation of
Insolvency Resolution Process on the ground that this debtor defaulted to repay Z1,745.39crores due
outstanding as on 20.06.2017.
2052
5. The Financial Creditor mentioned the details and the dates of disbursement under the facilities as
mentioned in 'Exhibit-4' to the application, which are as follows: -
Amount in default (SBI Facilities) Exhibit 5 (Page 51-Vol-1)
SBI Working Capital Term Loan-1-Rs.409.72 Specific pages from the bankers book (Vol III):
crores;
SBI Working Capital Term Loan -1
SBI Working Capital Term Loan-2-Rs.113.90;
Starting page - 594
SBI Funded Interest Term Loan-Rs.38.65
Default - 597
Crores;
(30/06/2015)
SBI Cash Credit Facility-Rs.710.34 Crores.
Closing balance - 600
Account in default (SBH Facilities)

SBI Working Capital Term Loan - 2
SBH Working Capital Term Loan-1-Rs.80.32
Crores; Starting page - 601
SBH Funded Interest Term Loan Rs.4.88 Default - 605

Crores;
(30/06/2015)
SBH Cash Credit Facility-Rs.242.93 Crores
The total amount in default as on June 20,

SBI Funded Interest Term Loan
2017 under the SBI Facilities and the SBH
Facilities collectively is Rs.1600.74 Crores.
Starting page - 610
Default - 615
(30/05/2015)
2053
SBI Cash Credit Facility
Page 620 and 932 (Please note that there are

two cash credit accounts under this facility.
They have been annexed at page 620 and 932,
respectively. A short enquiry report generated
from the system has been attached along with
to specify the amount outstanding and date of
default).
SBH Working Capital Term Loan - 1
Starting page - 959
Default - 961
(31/05/2015)
SBH Funded Interest Term Loan
Starting page - 965
Default - 970
(31/05/2015)
SBH Cash Credit Facility
Page 973. A short enquiry report generated

from the system has been attached along with
to specify the amount outstanding and date of
default.
2054
6. The financial creditor has given computation of the amount of default as on 20.06.21017 which is
as below:
Computation of amount of default, date of default and days of default:
Sr. Facility Total Overdue as on June 20, 2017 (In Rupees Date of Default Days of
No. (Crores) (this reflects the Default
Principal Interest Penal Total first date of till
Interest default
standing June
(Principal + under the
20,
Interest + Penal respective
facilities. 2017
Interest)
The outstanding
was recalled
vide notice dated
May
SBI Facilities
5131 332.08 63.76 13.88 409.72 01.07.2015 721
Working
Capital Term
Loan-1
2 SBI Working 91.32 18.72 3.86 113.90 01.07.2015 721
Capital Term
Loan-2
3 SBI 17.27 20.07 1.31 38.65 30.06.2015 722
Funded
Interest Term
SBI Cash 580 114.24 16.10 710.34 19.05.2015 764

Credit Facili
Total 1272.61
2055
SBH Facilities
1 SBH 61.54 18.78 0 80.32 01.06.2015 751
Working
Capital Term
Loan
2 SBH Funded 3.84 1.04 0 4.88 01.06.2015 751
Interest
Term
Loan
3 SBH Cash 188.81 48.20 5.92 242.93 31.052015 752

Credit
Facility
Total 328.13
Grand 1600.74
7. The financial Creditor has given particulars of various securities created in favour of it in
consideration to the facility provided to the Corporate Debtor under the head of securities as mentioned in
Exhibit-6 to 9 of the Company Petition.
8. To prove the factum of default, this Petitioner has filed the Status Classification Report of the
Corporate Debtor dated 22.06.2017 issued by the Central Repository of Information of Large Credits
(CRILC) for disclosing asset classification of the Corporate Debtor specifying it as 'doubtful debt'; to
corroborate further to the classification report, the Petitioner has filed certificate Ws 2A of Bankers Book
Evidence Act along with Statement of Account of the debtor company maintained by the petitioner, apart
from this, the petitioner annexed the notice dated May 17, 2017 to the Corporate Debtor and the various
personal guarantors for repayment of the amounts granted under the facilities aggregating to
1,538.36crores, the balance confirmation issued by the financial creditor on June 19.2017, pursuant to
which the outstanding balance amounts (under the SBI-1 facilities) as on March 31, 2017 were
acknowledged by the Authorised Signatory of the Corporate debtor, the balance confirmation issued by
the financial creditor on June 19.2017, pursuant to which the outstanding balance amounts (under the SBI
facilities) as on March 31, 2017, March 31,2016, were acknowledged by the Authorised Signatory of the
Corporate debtor, the letter issued by RBI dated June 15,2017 directing the Financial Creditor to initiate
insolvency Resolution process, singly or jointly with other lenders under the provisions of The Insolvency
and Bankruptcy Code, 2016 in respect of default committed by the Corporate Debtor, the Annual Report
2056
of the Corporate Debtor for the financial year 2015-2016, and the report of the auditor of financial
creditor classifying it as NPA with effect from July 05,2014.
9. The Petitioner has given particulars of the proposed Interim Resolution Professional mentioning
the name of professional as Ms. Vandana Garg, BDO India LLP, The Ruby - Level 9, NW Wing,
Senapati Bapat Marg, Dadar West, Mumbai 400 028, e-mail: vandanagarg@bdo.in, the Registration
number of the professional is: IBBI/1PA-001/IP-P00025/2016-17/10058. The Petitioner has mentioned
the default amount as 2.1,600.74 crores as on 20.06.2017 and for having the Petitioner furnished all the
details required evidencing the Corporate Debtor availing loan thereafter committing default in making
repayment, in support of record available, the Petitioner prays this Bench to initiate corporate Insolvency
Resolution Process against this Corporate Debtor.
10. Since Master Restructuring Agreement being entered into on September 29, 2014, and
indebtedness being confirmed by the corporate debtor company, it is hereby held that this claim has been
made within limitation.
11. In view of the submissions made by the Petitioner's Counsel, the Counsel appearing on behalf of
the Corporate Debtor, on admitting the claim made by the Petitioner, submits that there are prospective
investors to take over this company as going concern; in view of this fact, he therefore submits that the
debtor may be permitted to place this information before the Insolvency Resolution Professional (IRP).
12. It is needless to say that the Promoters are not prohibited from placing such information with IRP
and if at all any such information is placed before the IRP; the said IRP will submit the same before the
Committee of Creditors meeting.
13. On perusal of the documents placed and the reasons given above, this Bench being satisfied that
the debtor company defaulted in repaying its debt to the financial creditor, this Bench hereby admits this
application prohibiting all of the following of item-I, namely:-
I (a) the institution of suits or continuation of pending suits or proceedings against the corporate debtor
other authority;
2057
II That supply of essential goods or services to the corporate debtor, if continuing, shall not be
III That the provisions of sub-section (1) Section 14 shall not apply to such transactions as may be
IV That the order of moratorium shall have effect from 04.07.2017 till completion of the corporate
V That the public announcement of the corporate insolvency resolution process shall be made
VI That this Bench hereby appoints, Ms. Vandana Garg, BDO India LLP, The Ruby - Level 9, NW
Wing, Senapati Bapat Marg, Dadar, West, Mumbai - 400 028, e-rnail: vandartagarg@bdo.in, the
Registration number of the professional is: IBBVIPA-001/TP-P00025/2016-17/10058, as Interim
Resolution Professional to carry the functions as mentioned under Insolvency & Bankruptcy Code.
14. Accordingly, this CP 1137/I & BP/NCLT/MAH/2017 is admitted.
2058

MUMBAI BENCH
C.P. (I.B.) No. 1061/7/NCLT/MAH/2017
Applicant: Union Bank of India,
Vs
Respondent: Guruashish Construction Pvt. Ltd.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Nirman Sharma, Ms. Ishita Advani, Learned Advocate
For Respondents/Defendant: Mr. Arif Bookwala, Mr. Piyush Raheja, Mr. Sahil Gandhi, Learned
Advocate
ORDER
1. Union Bank of India (hereinafter called IUBI') has sought the Corporate Insolvency Resolution
Process of Guruashish Construction Pvt. Ltd. (hereinafter called the 'Corporate Debtor') on the ground,
that the Corporate Debtor committed default on 30.09.2014 in repayment of Rs. 254,53,85,278/- (INR
Two Hundred Fifty Four Crores Fifty Three Lakhs Eighty Five Thousands Two Hundred and Seventy
Eight only), under Section 7 of Insolvency and Bankruptcy Code, 2016 (hereafter called the 'Code') read
with Rule 4 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016.
2. UBI in its Petition stated that it had sanctioned a Term Loan facility to the Corporate Debtor for
Rs. 200 crores under General Term Loan Agreement dated 25.03.2011 which was amended vide
Supplementary Term Loan Agreement dated 30.08.2011. UBI has enclosed a copy of the Resolution of
the Board of Corporate Debtor wherein it was resolved to borrow a sum of Rs. 200 crores from UM, as
per sanction letter No.: BHR:HR:1111:10 dated 11.11.2010 and the Company also authorised its
Directors Mr. Rakesh Kumar Wadhawan and Mr. Waryam Singh to finalise the terms and conditions of
the bank. UBI has also enclosed a letter dated 11.11.2010 sanctioning the term loan of Rs. 200/- Crores.
2059
3. The following documents were enclosed by UBI
(a) Term loan agreement (Hypothecation of movables) dated 13.05.2011 for Rs. 200/- Crores.
(b) Simple Mortgage deed dated 20.12.2010 executed by M/s. Privilege Power and infrastructure Pvt. Ltd.
(Mortgagor) in favour of U131 as a security for the term loan of Rs. 200/- Crores sanctioned to the
Corporate Debtor.
(c) Supplementary Mortgage Deed dated 27.04.2011, executed by M/s. Privilege Power and infrastructure
Pvt. Ltd. (Mortgagor) in favour of UBI as a security for the term loan of Rs, 200/- Crores sanctioned to
(d) Escrow account agreement dated 19.05.2011 wherein the Corporate debtor agreed to deposit all the
receivables in the Escrow account.
(e) Copies of certificate of Registration of Charge created by Mis. Privilege Power and Infrastructure Pvt.
Ltd. in favour of UBI.
(f) General term loan agreement dated 25.03.2011 for Rs. 200/- Crores loan, repayable in 20 quarterly
instalments of Rs, 10/- Crores each payable over a period of five years excluding the moratorium period
of two years.
(g) Copy of CRILC report
(h) Certificate under section 2 A(a) of the Bankers Books of Evidence Act. 1891.
(i) Certificate under the Information Technology Act, 2000.
(j) Demand promissory note dated 25.03.2011 executed by the Corporate debtor for Rs. 200/- Crores.
(k) Letter of guarantees dated 24.11.2011 executed by M/s. Privilege Power and Infrastructure Pvt. Ltd.,
Mr. Sarang R. Wadhawan, Mr. Rakesh Kumar Wadhawan and Housing Development and Infrastructure
Ltd. in favour of UBI for Rs. 200 crores each.
4. The UBI has enclosed confirmation of balance by the Corporate Debtor on 16.02.2017 which
shows that a sum of Rs. 140,68,39,089/- is due as on 31.12.2016 excluding interest from 25.12.2014.
5. UBI has sent a letter dated 02.01.2015 to the Chairman and the Managing Director of the
Corporate Debtor informing that the term loan account was classified as non-performing asset as on
31.12.2014 and there is an outstanding balance of Rs. 219,30,87,0041- out of which a sum of Rs. 36/-
2060
Crores is overdue. U13I has sent another letter on 23.01.2015 informing the corporate Debtor that they
will be constrained to recall the entire loan amount if the over dues are not cleared within seven days.
Further UBI has issued a notice dated 27.01.2015 under Section 13(2) of the SARFAESI Act, 2002
demanding a sum of Rs. 219,30,87,004/-. The Corporate Debtor by a letter dated 19.09.2016 requested
the UBI not to take any legal action for the recovery of dues since the Corporate Debtor is in the process
of selling of its assets, the proceeds of which will be utilized for repaying the dues to UBI, Since no
payment was made within 60 days of SARFAESI notice, UBI issued notice on 22.02.2017 for taking
possession of the assets of the Corporate Debtor. The letter of the UBI dated 06.04.2017 reveals that the
Corporate Debtor tried for one-time settlement of the dues for Rs. 250 crores, which was declined by the
UBI.
6. This Adjudicating Authority, on perusal of the documents filed by the Creditor, it is evident that
the Corporate Debtor defaulted in repaying the loan availed and also placed the name of the Insolvency
mentioned below:
its property including any action under the Securitisation and Reconstruction of Financial Assets and
2061
(f) That this Bench hereby appoints, Mr. CA. Rajendra K. Bhuta, 1207, Yogi Paradise, Yogi Nagar,
Borivali West, Mumbai — 400 092, Ph.: 9820026893, e-n-tail:rkbhuta@gmaii.com, Reg. No.: IBM/IPA-
IP/00078/2016-20 i 7/1074, as interim resolution professional to carry the functions as mentioned under
2062

MUMBAI BENCH
C.P. (I.B.) No. 1139/7/NCLT/MAH/2017
Vs
Respondent: Monnet Ispat & Energy Limited
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Chetan Kapadia, Mr. Dhananjay Kumar, Mr. Spandan Biswal,
Ms. Saloni Kapadia, Mr. Anush Mathkar, Learned Advocate
For Respondents/Defendant: Mr. Zal Andhyajina, Ms. Deepa Mani, Ms. Ann Mathew, Learned Advocate
ORDER
It is a Company Petition filed by State Bank of India under Section 7 of the Insolvency and Bankruptcy
Code, 2016 against the Corporate Debtor, namely Monnett Ispat and Energy Ltd, for this Corporate
Debtor availed loan facility through fund based and non-fund based arrangements, thereafter this
Corporate Debtor defaulted in making repayments of the loan availed. When this Corporate Debtor
defaulted in making repayment, this applicant filed this application to initiate Insolvency Resolution
Process against this Corporate Debtor on the ground that as on 21.6.2017 this Corporate Debtor failed to
repay the outstanding balance of 21539,33,72,303.63 indebted to this creditor in relation to the loan
facilities from this creditor and erstwhile Banks, namely, State Bank of Patiala, State Bank of Mysore,
State Bank of Bikaner and Jaipur, State Bank of Hyderabad, State Bank of Travancore availed, hence this
petition.
1. The details of the facilities granted and disbursements made by the creditor and its erstwhile
associate banks to the Corporate Debtor are set out as below.
2063
PARTICULARS OF FINANCIAL DEBT
1. TOTAL AMOUNT OF DEBT The details of all the Financial Debt granted by the
GRANTED Applicant are set out below:
The Corporate Debtor was sanctioned rupee term

loans for an aggregate amount of INR 225 crores
(Rupees Two Hundred and Twenty Five Crores Only)
under the Common Loan Agreement dated October
25, 2005 ("Common Loan Agreement I") b State
Bank of Patiala, State Bank of Indore, State Bank of
Mysore, State Bank of Travancore, UCO Bank and
Syndicate Bank. Under the terms of the Common
Loan Agreement I, the following Associate Banks of
SBI had granted loans to the Corporate Debtor as
follows:
Name of the Rupees Disbursed Amount

Lender (Rupees in crores)
State Bank of Patiala

75
(erstwhile)
State Bank of
Travancore 40
(erstwhile)
Total 115
Copy of the Common Loan Agreement I has been

annexed herewith and marked as Exhibit 4.
The Corporate Debtor was sanctioned a rupee term

loan of INR 100 crores (Rupees One Hundred Crores
Only) by State Bank of Bikaner and Jaipur on the
terms and conditions as set out under the Agreement
of Loan for Overall Limit dated June 29, 2013
2064
("SBI3j Loan Agreement"). Under the SBBJ Loan

Agreement, the State Bank of Bikaner and Jaipur had
disbursed a sum of INR 100 crores (Rupees One
Hundred Crores Only) to the Corporate Debtor.
Copy of the SBBJ Loan Agreement dated June 29,

2013 has been annexed herewith and marked as
Exhibit 5.
The Corporate Debtor was sanctioned rupee term

loans for an aggregate amount of INR 400 crores
(Rupees Four Hundred Crores Only) under the
Common Loan Agreement dated June 28, 2014
("Common Loan Agreement II") by State Bank of
Bikaner and Jaipur, Oriental Bank of Commerce,
Dena Bank and Corporation Bank. Under the terms of
the Common Loan Agreement IL the State Bank of
Bikaner and Jaipur had disbursed a loan of INR
95,61,19,092.00 (Rupees Ninety Five Crores Sixty
one Lakhs Nineteen Thousand and Ninety Two Only)
to the Corporate Debtor.
Copy of the Common Loan Agreement dated June 28,

2014 has been annexed herewith and marked as
Exhibit 6.
The Corporate Debtor was granted working capital

facilities on the terms and conditions set out under the
Working Capital Consortium Agreement dated March
30, 2015 ("Working Capital Consortium Agreement")
by State Bank of Patiala, State Bank of Bikaner and
Jaipur, Punjab National Bank, State Bank of Mysore,
State Bank of India and IDBI Bank Limited. Under
the Working Capital Consortium Agreement, the
Corporate Debtor was granted working capital
2065
facilities by SBI and its Associate Banks the
outstanding disbursed amounts of which, as on June
21, 2017, are as follows:
Bank Disbursed Amount
State Bank of INR 5,05,92,49,785.22

Patiala(erstwhile)
State Bank of India INR 3,71,89,77,496.15

Mysore (erstwhile)

Bikaner & Jaipur
(erstwhile)
Total INR 11,90,15,52,944.67
Copy of the Working Capital Consortium Agreement

has been annexed herewith and marked as Exhibit 7.
In addition to the above, SBI alongwith the Associate

Banks have also issued, as of June 21, 2017, letters of
credit and bank guarantees for art aggregate amount
equal to INR 27,67,51,742 (Rupees Twenty Seven
Crores Sixty Seven Lakhs Fifty One Thousand Seven
Hundred and Forty Two Only) under the Working
Capital Consortium Agreement.
The Corporate Debtor was granted a rupee term loan /

corporate loan facility of INR 800 crores (Eight
Hundred Crores Only) on the terms and conditions set
out under the Facility Agreement dated 30 March
2015 ("Facility Agreement") by State Bank of Patiala,
State Bank of Mysore, State Bank of Bikaner and
Jaipur, State Bank of Hyderabad, Vijaya Bank, Indian
2066
Bank and Bank of Maharashtra. Under the Facility

Agreement, the Associate Banks granted loans to the
Corporate Debtor as follows:

(Rupees in crores)
State Bank of INR 30,00,00,000.00

Patiala (erstwhile)

Hyderabad
(erstwhile)

Bikaner and Jaipur
(erstwhile)

Mysore (erstwhile)
Total INR 1,11,08,25,000.00
Copy of the Facility Agreement along with the

Addendum Agreement dated April 10, 2015 has been
annexed herewith and marked as Exhibit 8.
The Corporate Debtor was sanctioned the facility

(comprising of refinance and part drawdown on
existing bilateral agreements) for an aggregate of INR
16,82,66,00,000 (Rupees One Thousand Six Hundred
and Eighty Two Crores and • Sixty Six Lakhs Only)
on the terms and condition set out under the Facility
Agreement dated June 22, 2015 ("Refinancing
Facility Agreement") by State Bank of Patiala, Bank
of India, Bank of Maharashtra, Corporation Bank,
Dena Bank, ID131 Bank Limited, Indian Bank,
2067
Indian Overseas Bank, L&T Infrastructure Finance
Company Limited, Oriental Bank of Commerce, State
Bank of Bikaner and Jaipur, State Bank of
Hyderabad, UCO Bank, United Bank of India, Vijaya
Bank. The details of the amounts disbursed by the
Associate Banks under the Refinancing Facility
Agreement has been listed below:
Bank Disbursed Amount of

ISP Refinance Facility

Patiala (erstwhile)

Bikaner and Jaipur
(erstwhile)

Hyderabad
The total sanctioned and
(erstwhile)
disbursed amount of INR
200,00,00,000 (Rupes
Two Hundred Crores
Only) provided by State
Bank of Hyderabad to
the Corporate Debtor
under the Agreement of
Loan for Overall Limit
dated December 29, 2010
was partly repaid and the
remaing outstanding of
INR 1,02,00,00,000
(Rupees One Hundred
and Two crores only)
was deemed to from part
2068
of the disbursements
under the Refinance
Facility Agreement dated
June 22, 2015.
Total INR 2,82,46,19,385
Copy of the Refinancing Facility Agreement has been

annexed herewith and marked as Exhibit 9. Copy of
the Agreement of Loan for Overall Limit dated
December 29, 2010 between the Corporate Debtor
and the State Bank of Hyderabad has been annexed
herewith as Exhibit 10.
The Corporate Debtor was sanctioned an Export

Performance Bank Guarantee Facility on the terms
and conditions set out under the Guarantee Facility
Agreement dated June 22, 2L115 to the extent of
USD 27,50,00,000 (United State Dollars Two
Hundred Seventy Five Million Only) which shall in
no event exceed its rupee equivalent of INR
15,91,00,00,000 (Rupees One Thousand Five
Hundred and Ninety One gores Only) ("Guarantee
Facility Agreement") by State Bank of Patiala, Indian
Overseas Bank, Union Bank of India, Punjab
National Bank, Oriental Bank of Commerce, State
Bank of Bikaner and Jaipur, IDBI Bank Limited,
State Bank of Mysore, Dena Bank, State Bank of
Hyderabad, Vijaya Bank, Bank of India and Indian
Bank. The details of the amounts disbursed as rupee
term loans by the Associate Banks upon invocation of
guarantee issued under the Guarantee Facility
Agreement are listed below:
2069

Patiala (erstwhile)

Hyderabad
(erstwhile)

Mysore (erstwhile)
Total INR 2,97,93,53,081
Copy of the Guarantee Facility Agreement dated June

22, 2015 has been annexed herewith as Exhibit 11.
State Bank of Hyderabad (erstwhile) and State Bank

of Patiala (erstwhile) have subscribed to secured
Redeemable Non-Convertible Debentures for an
aggregate principal value of INR 15,00,00,000
(Rupees Fifteen Crores Only), issued by Corporate
Debtor ("NCDs"), a certificate of outstandings in
respect of principal amount of which is attached as
Exhibit 12. Copies of the Disclosure Document dated
January 7, 2013 issued by the Corporate Debtor to
the holders of the NCDs ("Disclosure Document"),
the Debenture Trust Deed dated January 15, 2014
between the Corporate Debtor and IL&FS Trust
company Limited (as the Debenture Trustee)
("Debenture Trust Deed"), the termsheet for the
NCDs, and the list of holders of NCDs with their
dated of allotment are attached herewith and marked
as Exhibit 12A, Exhibit 12B, Exhibit 12C, and
Exhibit 12D respectively.
2070
2. Since State Bank of Patiala, State Bank of Mysore, State Bank of Bikaner and Jaipur, State Bank
of Hyderabad, State Bank of Travancore have been merged with State Bank of India, with effect from
1.4.2017, the resulting bank, i.e. State Bank of India has filed this Petition for initiation of Insolvency
Resolution Process on the ground that this Debtor defaulted to repay n539,33,72,303.63 was due
outstanding as on 21.6.2017.
3. The Financial Creditor mentioned the details and dates of disbursement which are as follows:
Sr. Facility Disbursed amount Date of

No. (Rs.) Disbursement
1. Common Loan
Agreement dated
25.10.2005
State Bank of Patiala 18,75,000.00 20.12.2005

Limit - INR
7,50,00,000.00 27.12.2005
75,00,00,000.00
7,00,000.00 9.1.2006
13,12,50,000.00 25.9.2006
13,12,50,000.00 21.11.2006
7,50,00,000.00 22.1.2007
18,75,00,000.00 2.3.2007
7,50,00,000.00 16.4.2007
7,50,00,000.00 28.09.2007
Total Drawn from State 75,00,00,000.00

Bank of Patiala
2071
State Bank of Travancore 4,00,00,000.00 6.7.2006
Limit - 7,00,00,000.00 20.11.2006

Rs.40,00,00,000.00
7,00,00,000.00 27.11.2006
4,00,00,000.00 5.2.2007
10,00,00,000.00 13.3.2007
4,00,00,000.00 10.5.2007
4,00,00,000.00 1.11.2007
Total drawn from State 40,00,00,000.00

Bank of Travancore
Total amount disbursed 1,15,00,00,00

under the Common Loan
Agreement dated
25.10.2005
2. Agreement of Loan for

Overall Limit dated
29.6.2013
State Bank of Bikaner & 100,00,00,000.00 29.6.2013

Jaipur
Limit -
Rs.100,00,00,000.00
2072
3. Common Loan
Agreement

Jaipur
22,75,00,000.00 28.1.2014
Limit - Rs.
5,95,,48,223.00 19.2.2014
100,00,00,000.00
4,63,11,016.00 22.2.2014
6,42,90,761.00 20.5.2014
13,92,19,,092.00 2.6.2014
6,25,00,000.00 11.09.2014
4,50,00,000.00 27.09.2014

Bank of Bikaner & Jaipur
4. Working capital Dated 30.03.2015

Consortium Agreement
State Bank of India The total disbursed 26.7.2016

amounts as on
Limit - Rs.
21.6.2017 is Rs.
312,00,00,000.00
371,89,77,496.15
Last Renewal Date
26.7.2016
State Bank of Patiala The Total disbursed 4.10.2016

amounts as on
Limit - Rs.
21.6.2017 is
490,00,00,000.00
Rs.505,92,49,785.22
Last Renewal Date
22.9.2016
2073
State Bank of Mysore The total disbursed -
amounts as on
Limit -
21.6.2017 is
Rs.84,78,00,000.00
Rs.129,92,31,192.92
Last Renewal date
19.12.2016
State Bank of Bikaner & The total disbursed -

Jaipur amounts as on
21.6.2017 is
Limit -
Rs.182,40,94,470.38
Rs.130,00,00,000.00
Last Renewal Date

30.11.2016
Total drawn amounts The total disbursed

under the Working amounts under the
Capital consortium dated Working Capital
March 30, 2015 as on Facility as in 21 June,
June 21, 2017 2017 is
Rs.1190,15,52,944.67
5. Facility Agreement dated

30.3.2015
State Bank of Patiala 30,00,00,000.00 31.12.2014
Limit -
Rs.30,00,00,000.00
State Bank of Hyderabad 34,00,00,000.00 12.2.2015
Limit -
Rs.34,00,00,000.00
State Bank of Mysore 19,00,00,000.00 30.1.2015
Limit -
2074
Rs.19,00,00,000.00

Jaipur
10,50,00,000.00 23.4.2015
Limit -
2,10,00,000.00 26.5.2015
Rs.34,00,00,000.00
86,25,000.00 29.5.2015
1,12,00,000.00 30.6.2015
5,00,00,000.00 26.11.2015

Total drawn under the 1,11,08,25,000.00

Facility Agreement dated
March 30, 2015
6. Guarantee Facility
Agreement dated
22.6.2015
Limit -
Rs.103,50,00,000.00
(USD 98.00 Crs.)
Limit -
Rs.90,00,00,000.00
(USD 85.00 Crs.)
2075
Limit -
Rs.105,70,43,823.00
Total drawn under the 2,97,93,53,081

Guarantee Facility
agreement dated June 22,
2015
7. Refinancing Facility
Agreement dated
22.6.2015
Limit -
Rs.42,00,00,000.00
Limit - 50,00,00,000.00 1.3.2011

Rs.200,00,00,000.00
40,00,00,000.00 6.4.2011
60,00,00,000.00 10.10.2011
The total sanctioned and
40,00,00,000.00 25.10.2012
disbursed amount of
Rs.200,00,00,000 5,00,00,000.00 17.12.2012
provided by State Bank of
Hyderabad to the 5,00,00,000.00 24.12.2012
Corporate Debtor under

the Agreement of Loan
for Overall Limit dated
December 29, 2010 was
partly repaid and the
reaming outstanding of
Rs.102,00,00,000 was
2076
deemed to form part of

the disbursements under
the Refinance Facility
Agreement dated
22.6.2015.

Bank of Hyderabad

Jaipur
30,00,00,000.00 17.7.2015
Limit -
Rs.500,00,00,000.00

Total drawn under the 2,82,46,19,385.00

Refinancing Facility
Agreement dated
22.6.2015
8. Non-Convertible 15,00,00,000 2013

Debentures
Total 22,07,24,69,452.67
4. The amounts claimed to be in default and the dates of which the default occurred are as follows:
Name of the Bank Default Amount Date of Default
Common Loan Agreement I
State Bank of Travancore 4,37,37,086.67 31.7.2015
2077
State Bank of Bikaner and 66,89,41,228.60 30.11.2015
Jaipur
Common Loan Agreement 18,16,07,013.16 31.7.2015

II
Working Capital
Consortium Agreement
State Bank of India 4,25,42,41,232.15 21.4.2016
State Bank of Patiala 5,65,80,84,,124.00 31.7.2015

(erstwhile)
State Bank of Mysore 1,41,85,63,149.00 31.1.2016

(erstwhile)
State Bank of Bikaner and 2,16,42,24,724.00 31.8.2015

Jaipur (erstwhile)
Facility Agreement

(erstwhile)

(erstwhile)

Jaipur (erstwhile)
Guarantee Facility
Agreement

(erstwhile)
2078

(erstwhile)

(erstwhile)
Refinance Facility
Agreement

(erstwhile)

(erstwhile)

Jaipur (erstwhile)
Refinance Facility
Agreement

(erstwhile)

(erstwhile)
5. The Financial Creditors has given particulars of various securities created by it in relation to the
facility given to the Corporate Debtor as mentioned in Exhibit 15 to Exhibit 27A and the estimated value
on which security has been created are as follows:
(i) Current Assets - Rs.20,07,53,39,593
(ii) Immovable property and other movable assets - Rs.66,83,73,82,068
2079
6. To prove the factum of default, this Financial Creditor has filed the status classification report of
the Corporate Debtor issued by TransUnion CIBIL dated 22.6.2017 for disclosing asset classification of
the Corporate Debtor specifying it as doubtful debt; to collaborate further classification report, the
Financial Creditor has filed certificate under Section 2A of the Bankers Books Evidence Act alongwith
statement of account of the Debtor Company maintained by the Creditor, apart from this the Creditor
annexed notice of default dated 21.6.2017 issued by the Creditor to the Corporate Debtor advising the
Corporate Debtor to pay the amount in default/overdue aggregating to Rs.1536,77,46,690.77 immediately
because earlier initiated Corrective Action Plan (CAP) and Strategic Debt restructuring (SDR) have
already failed, therefore, the entire outstanding amount 2240,63,98,432.77 has also become due and
payable. It has been further stated that the company credit facilities with the creditor are classified as Non
performing and as per the extant RBI's instruction the accounts stand classified under 'Doubtful' category.
The Creditor also field copy of audited financial statement of the corporate Debtor for year ending
31.3.2016, disclosing the debt liability against the debtor. It has also filed copies of system generated
records as on 26.6.2017 disclosing irregularities and status of cash credit facilities availed by the
Corporate Debtor from SBI and its erstwhile associate banks in refernce to the account numbers
10277791525 (SBI), 55055198055 (erstwhile SBOP), 64144397358 (erstwhile SBM) and copy of system
generated record of 27.6.2017 disclosing irregularities and status of cash credit facilities availed by the
Corporate Debtor from SBI and its erstwhile associate banks in reference to following account number:
51025567915 (erstwhile SBBJ), to prove further, the creditor has filed a copy of notice dated 4.7.2017
issued by Vistra ITCL, Debenture Trustee for the Non Convertible Debentures (NCDs) to the Corporate
Debtor, notifying default and requiring immediate payments of all amounts outstanding in respect of
NCDs. The creditor has given the proposed Insolvency Resolution professional mentioning the name of
Mr. Sumit Binani and also written communication from IRP as set out in Form 2.
7. The Creditor further submits that a winding up company petition being COMP No.21/2015 was
filed by erstwhile State Bank of Travancore against the Corporate Debtor before the High Court of
Chhattisgarh, Bilaspur. The judgment dated March 9, 2017 passed by the High court of Chhattisgarh has
been annexed and marked as Exhibit 28 permitting the creditor to approach the court for winding up in
the event of failure of Strategic Debt Restructuring (SDR), in respect of the Corporate Debtor, having
subsequently the implementation of the SDR scheme in respect of the Corporate Debtor failed, the
creditor herein moved this application.
8. Since the Creditor has mentioned the default amount as Rs.1539,33,72,303.63 as on 21.6.2017,
and for having the creditor furnished all details required evidencing and the Corporate Debtor availing
loans and thereafter defaulted in making repayment, in support of the records available, the Creditor prays
2080
this Bench to initiate Corporate Insolvency Resolution process against this Corporate Debtor. For the
record showing amendment of facility Agreements dated 30.12.2014, 30.3.2015 and 22.6.2015 and as
amended from time to time the facility agreements entered into and thereafter, initiation of CAP and SDR
and within limitation, this bench hereby holds that the claim in default is within limitation.
9. On the submissions made by the counsel appearing on behalf of the Petitioner, the Corporate
Debtor Counsel, admitting the claim made by petitioner/Creditor, submits that since there is a prospective
investor to take over this debtor company as going concern, he submits that the debtor may be permitted
to place this information before the Insolvency Resolution professional(IRP).
10. In view of this submission, this Bench hereby holds that it is needless to say that the promoters
are not prohibited from placing such information with IRP and if at all this information is placed before
the IRP, the said IRP will submit the same before the Committee of Creditors (COC).
11. In view of the same, this Bench hereby admits this Petition Prohibiting all of the following of
item-I, namely:
I (a) the institution of suits or continuation of pending sits or proceedings against the corporate debtor
other authority;
Assets and Enforcement of Security Interest Act, 2002 (SAEFAESI ACT);
II That the supply of essential goods or services to the corporate debtor, if continuing, shall not be
III That the provisions of sub-section(1) of Section 14 shall not apply to such transactions as may be
2081
IV That the order of moratorium shall have effect from 18.7.2017 till the completion of the corporate
insolvency resolution process or untill this Bench approves the resolution plan under sub-section (1) of
V That the public announcement of the corporate insolvency resolution process shall be made
VI That this Bench hereby appoints Mr. Sumit Binani, Room No.6, 4th Floor 24, commerce House,
Ganesh Chandra Avenue, Kolkata 700013, Registration No. IBBI/IPA-001/IP-N00005/2016-2017/10025
as Interim Resolution Professional to carry the functions as mentioned under Insolvency & Bankruptcy
code.
12. Accordingly, this petition is admitted.
13. The Registry is hereby directed to communicate this order to both parties within seven days from
the date order is made available.
2082

MUMBAI BENCH
C.P. (I.B.) No. 716/7/NCLT/MAH/2017
Applicant: Ajitnath Steels Pvt. Ltd.
Vs
Respondent: Ellora Paper Mills Limited
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Sandeep Bajaj, Mr. Soayib Quresh, Learned Advocate
For Respondents/Defendant: Mr. Zal Andhyajina, Mr. Mr. Mayur Shetty, Mr. Archan Shah, Learned
Advocate
ORDER
1. The Petitioner, Ajitnath Steels Pvt Ltd., has filed this Insolvency and Bankruptcy Petition under
Section 7 of the insolvency and Bankruptcy Code, 2016 ("the Code") read with Rule 4 of Insolvency and
Bankruptcy (Application to Adjudicating Authority) Rules 2016 for initiating Insolvency Resolution
Process against the Corporate Debtor Ellora Paper Mills Limited.
2. The Petitioner states that on 8.9.2010, a Loan Agreement was entered into between the parties
herein wherein the Petitioner agrees to extend and grant financial assistance to the Respondent Corporate
Debtor upto a sum of Rs.3,42,70,000/- on fulfilment of conditions precedent mentioned in the Agreement.
The Agreement provides that the Petitioner shall disburse the loan either in single disbursement or in
tranches, the borrower shall arrange to create charge in favour of the lender by way of pledge of 2,98,000
nos, of equity shares of the Respondent Company aggregating to 14.9% of the fully paid equity capital of
the Respondent held by Mr. Sudhir Goenka NUR the loan carries an interest of 12% per annum, loan shall
be free of interest for a period of four months from the date of disbursement and thereafter, the interest
shall become due and payable on the last day of each month, and the loan shall be repaid to the lender
after four months, within 15 days of demand from the date of last disbursement. The Respondent executed
2083
a Promissory Note for Rs.3,42,70,000/- in favour of the Petitioner. The above said Mr. Sudhir Goenka,
the Pledger executed a Power of Attorney in favour of applicant appointing it as true and lawful attorney
to accomplish the purpose of the Agreement of Pledge with full authority in terms of agreement of pledge.
Further an Agreement of Pledge of Shares was executed on 15.9.2010 by Mr. Sudhir Goenka in favour of
applicant wherein the Corporate Debtor is also a party to the Agreement which states that the loan of
Rs,3,42,70,000/- granted to the Corporate Debtor is secured by a Pledge of 2,98,00(1 equity shares of the
Corporate Debtor aggregating to 14.90% of the equity share capital of the Corporate Debtor held by Mr.
Sudhir Goenka (HUF).
3. The Petitioner states that the loan of Rs.3,42,70,0001- was disbursed to the Corporate Debtor
from 9th September, 2010 to 11th November, 2010 and in proof of that the Petitioner has enclosed the
statement of account of the Corporate Debtor in its Books of Accounts which shows that a sum of
Rs.3,42,70,000/- was shown as debit balance. Further the audited Balance Sheets of the Corporate Debtor
for the years 2011-12, 2012-1.3, 2013-14 and 2014-15 were enclosed to show that the loan of Rs.
3,4100,000/- was shown as Short Term borrowings under the sub-head Current Liabilities.
4. The Petitioner by a notice dated 29.09.2016 through art advocate requested the Respondent to pay
the loan of Rs. 3,42,70,000/- along with interest within a period of 15 days. Further on 7th November
2016 the Petitioner through an advocate issued notice Ws 4,33 and 434(a) of the Companies Act 1956
demanding a sum of Rs. 3,42,70,000/- along with interest. The Respondent in a reply dated 22.12.2016
sent through an advocate denied the contents of the letter dated 29,09.2016 and disputed all the
allegations and demands made therein. It was further averred in the reply that there were certain
alternative arrangements between the promoters of the Respondent Company and the Petitioner, pursuant
to which the Respondent was released from its liability towards the Petitioner.
5. The Counsel for the Respondent contented that the present application is untenable, misconceived
and sheer abuse of law for the following reasons: a) The Application is barred by the law of Limitation;
a) The Application is barred by the law of Limitation;
b) The Applicant has suppressed material facts;
c) The Applicant cannot be termed as Financial Creditor as envisaged under Section 7 of the Code.
d) The Applicant have grossly erred in filing the Application.
2084
6. The loan agreement dated 08.09.2010 provides that the loan amount has to be repaid to the
Lender after 4 months, within 15 days of the demand from the date of last disbursement. The last
disbursement was made on 11,11.2010, hence the amount ought to have been repayable on 11.03.2011.
This application is filed on 19.04.2017 and hence the claim is time barred and the Application ought to be
dismissed on this ground. This is the contention of the Respondent. For this, the Counsel for the
Applicant states that the Respondent doesn't dispute the factual of disbursal of loan amount, contends that
Article 19 and 21 of the Limitation Act, 1963 which makes a distinction for the money payable for money
lent and money lent under an agreement that itself be payable on demand does not apply to this case,
however, Article 113, being a residuary section applies to this case since the loan is payable within 15
days from the date of demand, thus making the period of limitation run from 151h day from the date of
demand. Here the demand was made by recall notice dated 29.09.2016 which was never honoured by the
Resondents within 15 days time frame, therefore the breach occurred or right to sue accrued when the
payment was not made within 15 days from the date of demand, and hence the present application is well
within the period of limitation. In support of this argument the Counsel relied on Syndicate Bank V/s.
Channaverappa Beleri and Ors., (2006) 11 SCC 506. Further, the Counsel for the Petitioner puts forward
another point stating that the Balance Sheet of the Respondent signed by its Directors and have time and
again been uploaded and filed with the Bombay Stock Exchange and Ministry of Corporate Affairs, it is a
settled law that an acknowledgement of debt in the Balance Sheet filed by a party starts the period of
Limitation afresh as provided under section 18 of the Limitation Act, 1963. The Balance Sheet for the
year 2013-14 was signed by the Directors on 24.09.2014, thus at least till 24.09.2014 the Respondent
admitted the liability to the Petitioner. This Petition was filed on 19.04.2017 and hence the Petition is well
within the period of limitation. To support this contention the Petitioner Counsel relied on Arham
Enginees Pvt. Ltd. v/s. Cepham Prganics Ltd., 1993 (27) DR] and an unreported judgement of Delhi High
Court in the case of Shahi Export Pvt. Ltd. & Anr. V/s. CMD Buildtech Pvt. Ltd. CO.PET.468/2011. This
Bench accepting the well-established position that an entry made in Companies Balance sheet amountsto
an acknowledgement of debt and has effect of extending the period of limitation under Section 18 of
Limitation Act, 1963, holds that the Petition is filed within the limitation.
7. The second contention of the Respondent is that the Petitioner Company is one of the business
enterprise of Abhijeet Group of Companies, in the year 2010 Mr. Abhishek Jaiswal of Abhijeet Group
approached the Respondent showing interest in acquiring the Promoters stake in the Respondent company
to acquire control of the Respondent company, a mutual agreement was entered into between the
Promoters of Respondent company and Abhijeet Group on 04.08.2010, few months before the execution
of the mutual agreement there was a fire at the Respondent's plant which severely damaged the plant and
2085
machinery, Abhijeet Group which aontemplated taking over the Respondent offered funds towards repair
of plant & machinery which were to be adjusted towards the amount payable by Abhijeet Group towards
acquisition cost, loan agreement was entered into between the Applicant and Respondent on 04.08.2010,
there was an understanding between the parties that the loan amount was not to be repaid but was to be
adjusted against the acquisition cost payable be Abhijeet Group, therefore, the Applicant not even once
sought the repayment of the loan for several years after the due date of payment, with effect from 2010
the operations of the Respondent company were managed by executives of the Abhijeet Group pending
completion of acquisition formalities, during the period between September 2010 to August 2013
Abhijeet Group infused funds in the Respondent's plant through the Applicant, the Respondent company
suffered unsustainable operational losses under the Abhijeet Group's management, Abhijeet Group when
unable to run the operations of the Respondent's company in profitable manner informed the Respondent
that they are no longer interested in acquiring the stakes in the Respondent Company and wants to
handover the operations back to the Promoters of the Respondent, it was agreed while handing over the
operations back to the Respondent by the Abhijeet Group that Abhijeet Group shall not claim the amount
infused by them through the Applicant in the Respondent's Company, the Respondent shall not claim for
losses suffered during the period when operations of the plant were managed by Abhijeet Group. In view
of the above understanding the amount infused in the Respondent's Company was written hack as income
in the accounts of Respondent's company for the year 2012-13. Rut, however, the process of writing off
the loan of 3.42 crores remained pending as the Applicant was not able to return the share certificate and
transfer forms given during the time of pledge. Subsequently, the said loan amount of Rs. 3.42 crores was
credited to the account of the Director in the year 2013-14. Further, the Applicant also sought the
repayment of another loan of Rs. 14.75 acres infused by the Applicant. With the above averments, the
Respondent says that these above facts were suppressed by the Applicant. However, this Bench feels that
the Respondent have not produced any material to show that there is an agreement to acquire the
controlling interest by the Abhijeet Group. This loan of 3.42 crores is supported by a loan agreement and
pledge of shares as security. Even otherwise, the loan agreement is a sovereign document for which the
Respondent is liable to make the payment. Even if it is accepted for argument sake, that there is a
arrangement to take over the control of Respondent by Abhijeet Group, without any documentary proof
for the same and in the light of loan agreement entered into between the parties, the theory of acquisition
cannot be accepted and the advance of loan amount by the Financial Creditor cannot be termed as an
investment for acquiring the Corporate Debtor. Since this is an independent transaction and in the absence
of material supporting the takeover, the contention of supersession of material fact are in fact immaterial
and does not hold water.
2086
8. The third contention of the Corporate Debtor is that the Loan Agreement is merely a part of the
arrangement to facilitate takeover of the Promoters' stake in the Corporate Debtor company by the
Abhijeet Group, hence the Loan cannot be construed as Financial Debt. In view of the discussion in the
previous para, this contention also fails
9. The fourth contention of the Corporate Debtor is that part V of Form 1 filed along with the
application is not in accordance with Insolvency and Bankruptcy (Application to Adjudicating Authority)
Rules, 2016 since a copy of certificate from banker under Section 2A of the Bankers' Books Evidence Act
1891 is not enclosed. In this regard, it is to be noted that Section 7(3)(a) of the Code provides that the
Financial Creditor shall along with the Application furnishes record of the default recorded with the
information utility or such other record or evidence of default as may be specified. The Code nowhere
provides that certificate under Bankers' Books Evidence Act 1891 shall be compulsorily attached to the
Application. Since the Applicant substantially complied with the provisions of the Code by filing the loan
agreement, the statements of account of the Corporate Debtor and Balance Sheet of the Corporate Debtor
which clearly shows that amount is owed to the Financial Creditor, this objection of the Corporate Debtor
is unsustainable. Further it is not the case of the Corporate Debtor that they have not received the loan
amount, their contention is the amount received by them is not a loan but a investment for acquiring the
controlling interest of the Corporate Debtor by Abhijit group through the Financial Creditor. Hence, the
non-production of certificate from a banker under Bankers Books Evidence, Act. 1891 cannot be fatal to
this Application. However, the counsel for the Petitioner produced a certificate issued by Canara Bank,
Princep Street Branch, Kolkata, on 19.06.2017, confirming the issue of bank statement of the Petitioner,
wherein a sum of Rs. 3.42 Crores was paid to the Corporate Debtor in September, 2010 from the account
of the Financial Creditor. In view of this, the fourth contention of the Respondent also fails.
10. This Adjudicating Authority, on perusal of the documents filed by the Creditor, it is evident that
the Corporate Debtor defaulted in repaying the loan availed and also placed the name of the Insolvency
mentioned below:
2087
ii. That the supply of essential goods or services to the corporate debtor, if continuing, shall not be
iii. That the provisions of sub-section (1) of Section 14 shall not apply to such transactions as may be
iv. That the order of moratorium shall have effect from 19.07.2017 till the completion of the corporate
insolvency resolution process or until this. Bench approves the resolution plan under sub-section (1) of
section 31 or passes an order for liquidation of corporate debtor under section 33, as the case may be,
v. That the public announcement of the corporate insolvency resolution process shall be made
vi. That this Bench hereby appoints Mr. Mohan Ram Coenka, 46, B.B. Ganguly Street, 4th Floor. Room
No. 6, Kolkata - 700 012, e-mail: goenkamohanggmail.com, Reg. No.: IBBUIPA-0021IP-00051/2016-
17/1737, as Interim Resolution Professional (IRP) to carry the functions as mentioned under Insolvency
& Bankruptcy Code.
2088

MUMBAI BENCH
C.P. (I.B.) No. 1201/7/NCLT/MAH/2017
Applicant: Innoventive Industries Ltd.
Vs
Respondent: Kumar Motors Pvt. Ltd.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Amit Tamhankar, Learned Advocate
For Respondents/Defendant: Mr. Kersi Dastoor, Learned Advocate
ORDER
It is a Company Petition filed u/s. 7 of the Insolvency and Bankruptcy Code, 2016 against the Corporate
Debtor on the ground that this Corporate Debtor defaulted in making repayment of ` 24,06,52,849.50
along with interest, hence the Financial Creditor moved this application for initiation of Insolvency
Resolution Process against the Corporate Debtor.
2. The Corporate Debtor borrowed Rs. 8,70,03,374 on various dates Rs. 3.00 crores through RTGS
on 8.9.2011, Rs. 5.00 crores by way of cheque on 25.10.2011, ` 20.00 lakhs through RTGS on 7.4.2012,
Rs. 50 lakhs through a cheque bearing No. 558847 on 5.5.2012 and Rs. 3,374 through Bank transfer on
9.9.2012.
3. The Petitioner has claimed an amount of Rs. 24,06,52,849.50 as on 15.6.2017 for the Corporate
Debtor having defaulted in making payment on 1.5.2013 with a further additional point saying that the
Corporate Debtor defaulted on 4.8.2015 when the Company petition under Section 433-434 of the
Companies Act, 1956 was filed before Hon'ble High Court of Bombay.
2089
4. In pursuance of the application moved by the Financial Creditor, the Corporate Debtor raised
various objections saying,
(i) this Company Petition is liable to be dismissed for this Petitioner has already initiated winding-up
proceedings on the self same claim on 28.6.2013 and the same is still pending before Hon'ble High Court
of Bombay, therefore, this Petitioner shall be estopped from seeking Insolvency Resolution Process on
the very same cause of action,
(ii) that since last date of acknowledgement admittedly being 1.5.2013, the present claim is barred by
limitation,
(iii) that it is liable to dismissed because Insolvency Resolution Process has already been initiated against
this applicant in another insolvency case filed before this Bench itself, therefore, u/s. 11(a) of the Code
2016, this petitioner is barred from initiating Insolvency Resolution Process,
(iv) that since Arbitration proceeding is already pending, on this reason alone, this Company petition is
liable to be dismissed.
(v) The Corporate Debtor Counsel submits that jural relation between the Petitioner and the Debtor is not
that of Creditor and Debtor relationship, but of investor and the Company as per shareholder agreement
between them, whereby this Petitioner should not have invoked jurisdiction under the Insolvency and
Bankruptcy Code, 2016 however, the debtor Counsel, without prejudice to rights and contentions of the
debtor, submits that this claim of Rs. 8,70,03,374 along with interest has been exaggerated to Rs.
24,06,52,849.50, even if assuming it is calculated on compound interest basis, then also it will not come
to Rs. 24,06,52,849.50.
5. If you see these objections of the debtor, as to first objection is concerned, the applicant counsel
submits that since Section 238 of the Code has over riding effect upon other laws, the Petitioner is entitled
to initiate Insolvency Resolution Process against the Corporate Debtor notwithstanding the fact of
pendency of winding up proceedings before Hon'ble High Court of Bombay between the same parties on
the same subject matter.
6. Before going into overriding effect of Section 238 of this Code, it is relevant to look into section
255 of this Code and schedule thereto, thereafter notifications dated 7.12.2016 and 29.6.2017 issued by
the Ministry of Corporate Affairs, which are as follows:
"255. The Companies Act, 2013 shall be amended in the manner specified in the Eleventh
Schedule."
2090
"THE ELEVENTH SCHEDULE
(See section 255)
AMENDMENTS TO THE COMPANIES ACT, 2013
(18 OF 2013)
"434. (1) On such date as may be notified by the Central Government in this behalf,--
(a)....
(b)....
(c) all proceedings under the Companies Act, 1956, including proceedings relating to arbitration,
compromise, arrangements and reconstruction and winding up of companies, pending immediately before
such date before any District Court or High Court, shall stand transferred to the Tribunal and the Tribunal
may proceed to deal with such proceedings from the stage before their transfer:
Provided that only such proceedings relating to the winding up of companies shall be transferred to
the Tribunal that are at a stage as may be prescribed by the Central Government.
(2) The Central Government may make rules consistent with the provisions of this Act to ensure timely
transfer of all matters, proceedings or cases pending before the Company Law Board or the courts, to the
Tribunal under this section."
7. So, by reading section 255 of the Code and schedule thereto, it is evident that the source for
amendment for section 434 of Companies Act 2013 is from section 255 of this Code, therefore when it is
evident that Section 434 is amended in such a way that High Courts, as prescribed by Central
Government, can proceed with pending winding-up matters other than the winding-up matters transferred
to NCLT, it has to be construed that the source for saving winding up proceedings pending before High
Courts has come from section 255 of this Code.
8. Now let us see what notifications have come from the Ministry of Corporate Affairs in pursuance
of the power come from 11th Schedule to the Code. Two notifications have come - one on 29.12.2016
and another on 15.7.2017, the text to the extent relevant has been taken out, which is as follows:
2091
"MINISTRY OF CORPORATE AFFAIRS NOTIFICATION
New Delhi, the 7th December, 2016
G.S.R. 1119(E).-- In exercise of the powers conferred under sub-sections (1) and (2) of section 434 of the
Companies Act, 2013 (18 of 2013) read with sub-section (1) of section 239 of the Insolvency and
Bankruptcy Code, 2016 (31 of 2016) (hereinafter referred to as the Code), the Central Government
hereby makes the following rules, namely:--
1. Short title and Commencement. - (1) These rules may be called the Companies (Transfer of Pending
Proceedings) Rules, 2016.
(2) They shall come into force with effect from the 15th December, 2016, except rule 4, which shall come
into force from 1st April, 2017.
5. Transfer of pending proceedings of Winding up on the ground of inability to pay debts. --(1) All
petitions relating to winding up under clause (e) of section 433 of the Act on the ground of inability to
pay its debts pending before a High Court, and where the petition has not been served on the
respondent as required under rule 26 of the Companies (Court) Rules, 1959 shall be transferred to the
Bench of the Tribunal established under sub-section (4) of section 419 of the Act, exercising territorial
jurisdiction and such petitions shall be treated as applications under sections 7, 8 or 9 of the Code, as the
case may be, and dealt with in accordance with Part II of the Code:
Provided that the petitioner shall submit all information, other than information forming part of the
records transferred in accordance with Rule 7, required for admission of the petition under sections 7,8
or 9 of the Code, as the case may be, including details of the proposed insolvency professional to the
Tribunal within sixty days from date of this notification, failing which the petition shall abate.
(2)......
6.......
7. Transfer of Records. --Pursuant to the transfer of cases as per these rules the relevant records shall
also be transferred by the respective High Courts to the National Company Law Tribunal Benches having
jurisdiction forthwith over the cases so transferred.
8. Fees not to be paid. --......
2092
[F. No. 1/5/2016 - CL-V]
AMARDEEP SINGH BHATIA, Jt. Secy."
9. By these Rules, the winding up case where notice has not been served upon other side alone are
transferred to NCLT, remaining matters have been left to the jurisdiction of High Courts.
10. Soon thereafter, central government has issued another notification on 29th June 2017
substituting Rule 5 of the Companies (Transfer of Pending Proceedings) Rules, 2016, which is as follows:
"MINISTRY OF CORPORATE AFFAIRS NOTIFICATION
New Delhi the 29th June, 2017
G.S.R. 732(E). -- In exercise of the powers conferred under sub-sections (1) and (2) of section 434 of the
Companies Act, 2013 (18 of 2013) read with sub-section (1) of section 239 of the Insolvency and
Bankruptcy Code, 2016 (31 of 2016) (hereinafter referred to as the Code), the Central Government
hereby makes the following rules further to amend the Companies (Transfer of Pending Proceedings)
Rules, 2016, namely: --
1. Short title and Commencement.....
2. .......
3. In the principal rules, for rule 5, the following rule shall be substituted and shall be deemed to
have been substituted with effect from the 16th day of June, 2017, namely:-
"5. Transfer of Pending proceedings of Winding up on the ground of inability to pay debts.-(1) All
petitions relating to winding up of a company under clause (e) of Section 433 of the Act on the ground of
inability to pay its debts pending before a High Court, and where the petition has not been served on the
respondent under rule 26 of the Companies (Court) Rules, 1959 shall be transferred to the Bench of the
Tribunal established under sub-section (4) of Section 419 of the Companies Act, 2013 exercising
territorial jurisdiction to be dealt with in accordance with Part II of the Code:
2093
Provided that the petitioner shall submit all information, other than information forming part of the
records transferred in accordance with rule 7, required for admission of the petition under Sections 7, 8
or 9 of the Code, as the case may be, including details of the proposed insolvency professional to the
Tribunal upto 15th day of July, 2017, failing which the petition shall stand abated:
Provided further that any party or parties to the petitions shall, after the 15th day of July, 2017, be
eligible to file fresh applications under sections 7 or 8 or 9 of the Code, as the case may be, in
accordance with the provisions of the Code:
Provided also that where a petition relating to winding up of a company is not transferred to the Tribunal
under this rule and remains in the High Court and where there is another petition under clause (e) of
section 433 of the Act for winding up against the same company pending as on 15th December, 2016,
such other petition shall not be transferred to the Tribunal, even if the petition has not been served on the
respondent."
(F.No. 1/5/2016-CL-V)
AMARDEEP S. BHATIA Jt. Secy.
11. The essentials of this notification are:
1. - that all winding up cases pending before High Courts, where notice has not been served upon
the Respondent under Rule 26 of the Companies (Court) Rules, 1959 shall be transferred to NCLT,
wherein information required for admission 7, 8 or 9 of the Code has to be supplied on or before 15th day
of July, 2017, failing which petitions stand abated with liberty to proceed under I & B Code.
2. - that there is a third proviso in these substituted Rules stating that where a winding petition not
transferred from High Court to the Tribunal under this Rule and remains in the High Court and where
there is another petition under clause (e) of section 433 of the Act 1956 for winding up against the same
Company pending as on 15th December 2016, such other petition shall not be transferred to NCLT, even
if the petition has not been served on the Respondent.
12. The bottom line of entire literature is Section 255 of the Code, 11th schedule thereto and
consequent notifications dated 7.12.2016 and 29.6.2017 r/w. section 434 of the Companies Act 2013 and
sub-section (1) of Section 239 of The Insolvency and Bankruptcy Code have come into existence for
transfer of proceedings from other forums to NCLT, in respect to transfer of winding up cases, two points
have been clarified - one, the jurisdiction u/s. 433(e) of the Act 1956 in respect to the matters pending
2094
before High Courts is still in force, two, the source for saving the winding proceedings u/s. 433(e) and
434 of the Act 1956 has come from section 255 of the Code through 11th Schedule to the Code.
13. Now, it is also contextual to mention section 238 of the Code, which is as follows:
"238, The provisions of this Code shall have effect, notwithstanding anything inconsistent therewith
contained in any other law for the time being in force or any instrument having effect by virtue of any
such law."
14. On reading of Section 238 of the Insolvency and Bankruptcy Code, 2016, it appears that this
overriding effect will have upon other law only but not in respect to the law envisaged under Insolvency
and Bankruptcy Code, 2016 and that overriding effect will only trigger into action when the other law is
inconsistent with the provisions of Insolvency and Bankruptcy Code, 2016, otherwise not.
15. Since Section 255 of the Code through 11th Schedule has amended Section 434 of the Companies
Act 2013 for transfer of winding up proceedings as prescribed by Central Government, the Central
Government having notified Rules for transfer of winding up proceedings that where notice is given
under Rule 26 of the Companies (Court) Rules, 1959, those winding-up cases shall remain before High
Courts, thus today, by virtue of these transfer Rules, winding-up matters, where notice is given, have
remained before High Courts to be tried under Companies Act 1956. It can't be tried u/s. 271(1)(a)
(inability to pay debts) of Companies Act 2013, which is analogous to section 433(e) (inability to pay
debts) of the Companies Act 1956, because section 271(1)(a) of Companies Act 2013 has been deleted
from section 271 of the Act 2013 in the same 11th Schedule to the Code. For High Courts have not been
conferred with jurisdiction under I & B Code, those matters pending before High Courts will obviously be
tried under the old Companies Act 1956 only. Since all these changes and transfers have taken place by
virtue of amendment of Companies Act 2013 under section 255 of the Code, therefore it has to be
construed that the amendments and consequences thereto the 11th Schedule are part of section 255 of The
Insolvency and Bankruptcy Code. When a winding up proceedings before High Courts have remained
alive because of section 255 of the Code and incidental provisions such as mentioned above, it cannot be
said now that the winding-up proceedings pending before High Courts under 433(e) of the Act 1956 are
proceedings under any other law. Saving to the proceedings under 433(e) of the Act 1956 pending before
High Courts has come from Section 255 of the Code. When amendment to Companies Act 2013 under
11th Schedule of the Code is the scheme envisaged under this Code and "saving" as mentioned above is
consequent to this amendment, then cause and effect in respect to these changes are automatically parts of
this Code, not proceedings under any other law. That being so, the question of inconsistency, that triggers
overriding effect, will not arise because this inconsistency is applicable to other laws, but not to itself. We
2095
have already given constructive interpretation saying winding proceedings still pending before High
Courts have been saved by this Code. The reason, perhaps, for saving winding up proceedings before
High Courts is giving notice under 434 of the Act 1956 to the respondents will arise only when
Honourable High Court is of the view that the case is triable by it, if such conclusion is arrived at, the
matter will be, nothing but pari materia to second stage (liquidation) in I & B Code, and ultimate
conclusion under both statutes is liquidation, if case under IB Code is not resolved at first stage, that is
resolution stage. Therefore, we are of the view that Section 238 will not have any overriding effect over
Section 433(e) proceedings pending before the High Courts, where notice has already been served upon
16. When it has been held that Section 238 will not have any overriding effect on the winding-up
proceedings saved under the same Code, if any party comes before NCLT under Insolvency and
Bankruptcy Code, 2016 on the very same claim between the same parties already pending before the
Hon'ble High Court, it will become nothing but forum shopping devised to frustrate the winding-up
proceeding validly pending before other competent forum.
17. Since this petition has fallen on the first ground itself, we are of the view that this Bench is not
warranted to deal with other points such as the point on limitation, the point on section 11(a) of this Code,
the point on arbitration proceeding pending, the point on jural relationship between the petitioner and the
company. Therefore, we have not seen any merit in petitioner's endeavour to set this case against the
winding up proceeding already pending between this petitioner and the corporate debtor before the
Honourable High Court of Bombay.
18. Accordingly, this Company Petition is dismissed without costs.
2096

MUMBAI BENCH
C.P. (I.B.) No. 03/7/NCLT/MAH/2017
Applicant: VIP Finvest Consultancy Pvt. Ltd.
Vs
Respondent: Bhupen Electronic Ltd.
Judges/Coram:
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Ami Jain, Learned Advocate
ORDER
This Miscellaneous Application is filed by Insolvency Resolution Professional u/s 33(2) of

Insolvency & Bankruptcy Code 2016, for the Order requiring the Corporate Debtor to be liquidated as
mentioned u/s 33 of this Code, since the Committee of Creditors decided in the meeting held on
29.6.2017 recommending liquidation of the Company pursuant to section 33(2) of the I&B Code, the
Insolvency Resolution filed by this Application.
2. In this Company Petition, this Bench passed an Order of Moratorium on 19.1.2017, thereafter, a
Committee of Creditors (CoC) has been constituted by IRP appointed in this case on 22.2.2017;
consequent thereto, this Insolvency Resolution Professional filed the report of Committee of Creditors
before this Bench. In the first meeting held on 3.3.2017, this Interim Resolution Professional was
appointed as Insolvency Resolution Professional (IRP). He submits that since this company is non-
operational for decades, it does not have any employees, for this reason, no resolution plan has come from
any of the participants, henceforth no resolution plan was passed by the Committee. Finally, when CoC
meeting was held on 29.6.2017, they deliberated upon either to make an Application u/s.12(2) of the I&B
Code riw Regulation 40 of IBBI (CIRP) Regulations, 2016 to seek further extension of 90 days or to
2097
decide about liquidation of Corporate Debtor as per section 33(2) of the I&B Code, 2016. After due
deliberation, CoC had unanimously instructed IRP and asked to inform the Adjudicating Authority
pursuant to section 33(2) of I&B Code for liquidation of this Corporate Debtor. Accordingly, IRP has
filed this application for relief u/s 33(2) of this Code.
3. By going through the information given by IRP, we are of the view that this IRP has duly
complied with in giving Public Announcement in respect to the Moratorium granted, thereafter
constituted CoC and held CoC meetings from time to time, finally when no Resolution Plan has come
forward, CoC, looking at the condition of the Corporate Debtor Company, took unanimous decision
recommending to initiate liquidation of the Corporate Debtor. Since this Company is not a going concern,
the only thing that has remained in the company is a fixed asset i.e. Land and Building of the company. It
appears since no other valuable asset is present in the company, except the Land and Building; CoC might
have taken a decision that it would be prudent to go for liquidation instead of coming out with a
Resolution Plan.
4. In view of the factual aspects of this case, this Bench, having thought it fit to pass an order
requiring the Corporate Debtor to be liquidated, hereby orders for Liquidation of this Company with the
reliefs as follows:
(1) Issue a public announcement stating that the Corporate Debtor is in liquidation;
(2) IRP and the Registry of NCLT, Mumbai are hereby directed to intimate the Registrar of Companies
concerned that this Bench has passed an order for liquidation of this Corporate Debtor Company.
(3) It is hereby declared that subject to section 52 of the Code, no suit or other legal proceedings shall be
initiated by or against the Corporate Debtor except in relation to the transactions as may be notified by the
Central Government; provided that a suit and other legal proceedings may be instituted by the Liquidator
on Corporate Debtor behalf with prior approval of this Bench.
(4) The corporate debtor, not being a going concern, this Order of Liquidation is deemed to be intimation
to the Officers, employees and workmen of the Corporate Debtor that this order is a notice of discharge.
(5) It is hereby declared that, on the IRP not being replaced u/s 34 (4) of the Code, he is allowed to
continue as liquidator as stated u/s 34 (1) of the Code and all powers of the Board of Directors, Key
managerial personnel and the Partners of the Corporate Debtor, as the case may be, ceased to have effect
and all such powers shall be vested in the Liquidator.
2098
(6) The fee of the liquidator shall be proportionate to the liquidation estate assets as specified by the
Board and it shall be paid from the proceeds of the liquidation estate u/s 53 of the Code.
(7) It is hereby directed that the personnel of the Corporate Debtor shall extend all assistance and co-
operation to the Liquidator as may be required in managing the affairs of the company in discharging his
functions as specified under section 35 of the Code.
Accordingly, this Application is hereby allowed.
Order Pronounced on 28.7.2017 and delivered on 31.7.2017.
2099
MUMBAI BENCH
C.P. (I.B.) No. 644/7/NCLT/MB/2017
Applicant: Abhyudaya Co-Operative Bank Limited

Vs.
Respondent: Shivkripa Ispat Pvt. Ltd.
Judges/Coram:
Hon'ble M.K. Shrawat, (Member (J))
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. Madhur Rai Advocate
ORDER
Hon'ble M.K. Shrawat, Member (J)
1. The Petition under consideration was filed on 09th June, 2017 by invoking the provisions of
section 7 of the Insolvency and Bankruptcy Code (hereinafter The Code) with Rule 4 of the
Insolvency & Bankruptcy (Application to Adjudicating Authority) Rules 2016 by the Financial
Creditor. The Corporate Debtor is M/s. Shivkripralspat Private Limited, Chinch Bunder, Mumbai.
The Petition is filed with the purpose to initiate "Corporate Insolvency Resolution Process"
against the Financial Debtor.
2. Brief background:-
On perusal of the record it is revealed that the total loan granted by the "Financial Creditor" to the
"Corporate Debtor" was as under:-
Particulars of Financial Debt

1. Total amount of debt Total Amount - Rs. 1727 Lakhs
granted.
1. CFCC/220330 (CC-10555) for Rs. 1100 Lakhs.
2100
Last date of sanction (Last renewal on 28.09.2012)
2. CFSCLN/501439 (ESCLN-500251) for Rs. 90

Lakhs; Date of Sanction : 15.07.2011



Lakhs; Date of Sanction : 15.07.2011.
(a) The Petitioner has claimed the total amount of Debt along with interest Rs. 24,50,95,702 and the
bifurcation of this total debt has also been narrated in the Petition.
(b) To grant credit facility of Rs. 400 Lakhs a Registered Mortgage Deed dated 14.03.2001 was
executed in respect of a plot of land in District Nasik. Further, few declaration have also been
executed in the year 2003 and there was extension of Indenture of Mortgage through which
further charge was created in the year 2005. Later on, a second extension was granted and further
charge was created through a Mortgage Deed dated 13.03.2008 in respect of factory building and
plot of and at Village Janori, Nasik, together with Plant and Machinery. Third extension was also
granted by the Bank in the year 2009 and the terms of earlier Indenture of Mortgage were
extended. Likewise, fourth extension was also granted by executing an additional Mortgage of
properties dated 07.04.2012.
(c) Due to the non-payment of the outstanding debt, the Financial Creditor has filed Original
Application (O.A.) before the Debt Recovery Tribunal, Mumbai for recovery of Rs. 16,53,75,968,
with interest thereon. It is stated that the said O.A. is pending before the DRT. Further it is placed
in the Petition that vide Sanction Letter dated 29.02.2008 a Cash Credit Facility of Rs. 600 Lakhs
has also been sanctioned. The said Cash Credit Facility was renewed and enhanced on 07.04.2012
to Rs. 1100 Lakhs. Placed on record the WCTL Facility documents, acceptance letter, execution
of Loan documents, Guarantee documents etc to demonstrate the acceptance of the Debt.
(d) The Petitioner has also placed on record the "Demand Promissory Note" issued from time to time.
For the sake of brevity details of those Promissory Notes are not narrated here. The petition also
2101
contains Indenture of Mortgage dated 14th day of March 2001 between M/s. Shivkrupalspat Pvt.
Ltd. and the Petitioner or his Assignees. There is a Deed of further charge dated 24u1 day of
March 2005. Record of the case also consist terms and conditions for the "Term Loan".
(e) Consequent upon non-payment, the Petitioner knocked the doors of respected Debt Recovery
Tribunal and as per the "Original Application" it was explained that the said Application was
moved within the limitation prescribed under section 24 of the DRT. The Applicant Bank is a
multi-state Scheduled Cooperative Bank registered under the Multi-State Cooperative Societies
Act, 2002, hence carrying on banking business, interalia, accepting deposits and lending
loan/Cash Credit Facility. The Respondent Company had availed various trade facilities as
described supra, from the Bank. It has also been pointed out to us that the personal property of
one Mr. Jay Gupta had also been mortgaged. The Bank had also registered the Debt with the
Registrar of Companies.
(f) An extract of Resolution of the Debtor Company is also on record wherein it was informed that
for term loan of Rs. l87 lakhs and cash credit limit of Rs. 150 lakhs, the Company had applied to
the Bank.
3. FINDINGS:- Since the default of non-payment had continued and the Applicant being the only
secured Creditor, the Application under consideration was filed through which the Financial
Creditor has completed the formalities as prescribed under section 7 of The Code. The Petitioner
has demonstrated that there was an existence of "Financial Debt" as defined under section 5(8) of
The Code.
3.1. It has also been demonstrated that the "default" of non-payment of the outstanding Debt is evident
from the records and duly established as defined under section 3(12) of The Code. There is no evidence
on record to demonstrate that there was any "dispute" in respect of the debt in question, although not
necessary in case of "Financial Debt", Rather, the Debtor had acknowledged the amount of debt while the
impugned debt was restructured by granting of extension. Even the Petitioner has lodged its claim before
the Debt Recovery Tribunal, Mumbai. The Debtor, however, had failed to repay the Debt amount.
3.2 In general the Financial Debtor usually plead that due to recession in the Market the liability of
repayment could not be squared up. Although in this case there is no such defence either, but the fact of
the matter is that a liability does not get extinguished on the aforesaid ground of Market Recession. There
could be a situation of bad finances beyond the control of a Debtor, but in the eyes of law if the Debtor
had undertaken a legal responsibility by executing Debt-Agreement and failed to make the payment then
it is worth to mention that there is no escape route for the defaulter in respect of an unqualified liability
2102
undertaken by him. In the eyes of law if a financial debt is in existence, duly corroborated by evidences,
then whatsoever be the reason the "Financial Liability" cannot get extinguished. It can get extinguished
only subject to repayment.
4. Interalia, considering the totality of the facts and circumstances of the case we hereby direct that
the provisions of Section 14 of The Code shall apply. The "Moratorium" shall commence
henceforth prohibiting institution of any Suit before a Court of Law, transferring/encumbering
any of the assets of the Debtor etc. However, the supply of essential goods to the Debtor shall not
be terminated during Moratorium Period. It shall be effective till completion of the Insolvency
Resolution Process or till the approval of the Insolvency Resolution Plan under section 13 of The
Code.
5. The name of the IRP proposed by the Petitioner is hereby approved as under :-
Mr. R.K.Bhuta, Registration No. TP00078, Address : 1207,Yogi Paradise, Yogi Nagar, Borivali
(West), Mumbai-400 092. Contact 9820026893.
6. That the IRP shall perform the duties as assigned under section 18 of The Code and inform the
progress of the Resolution Plan as well as Compliance Report to this Bench within 30 days time.
7. The Petition is "Admitted". The commencement of the Corporate Insolvency Resolution Process
is pronounced and effective from the date of this Order.
2103
MUMBAI BENCH
C.P. (I.B.) No. 1140/7/NCLT/MB/2017
Applicant: Reliance Commercial Finance Limited

Vs.
Respondent: Maharashta Vidyut Nigam Pvt. Ltd.
Judges/Coram:
Hon'ble Sh. M.K. Shrawat, (Member (J))
Counsels:
ORDER
1. The Petitioner is a "Financial Creditor" hence submitted Form No.1 on 28th of June 2017 in
respect of an outstanding financial Debt of Rs. 10,50,00,000 and also claiming interest thereon.
As per the details available on the requisite Form the Financial Debtor is Maharashtra Vidyut
Nigam Pvt. Ltd., Temple Road, Civil Line, Nagpur.
2. There was a requirement of additional fund to be used as working capital for purchase of bio-fuel
in bulk for the power plant in Wardha by the Debtor. The Creditor had, therefore, issued a "Letter
of intent" dated 15th September 2014 for providing the working capital demand loan facility of
Rs. 10.50 crore.
2.1 A Working Capital Demand Loan Facility Agreement was executed on 29.09.2014. The Financial
Creditor had agreed to make available to the Corporate Financial Debtor a Working Capital Demand
Loan up to an aggregate amount of Rs. 10.50 crores. The disbursement details, date-wise, are as under:-
Date Disbursement Amount (Rs.)

30-Sept-14 9,62,25,000
1-Nov-14 14,60,000
1-Dec-14 13,85,000
31-Dec-14 14,55,000
2104
31-Jan-15 14,75,000
10-Feb-15 30,00,000
Total 10,50,00,000
2.2 As per the terms of the Agreement the tenure of the WCDL facility was 12 months from the date of
the first disbursement. It was agreed upon that irrespective of any demand raised by the Financial
Creditor, the Corporate Debtor was under obligation to repay the amount within the period as agreed
upon. It was also agreed upon that interest was payable on the first business day of each month. Records
of the case have demonstrated that the WCDL had fallen due on lst October 2015. It is informed that till
date the Debtor had failed to make the payment. According to the calculation annexed, the Corporate
Debtor was liable to make the payment as on 1st June 201.7 of an amount of Rs. 12,43,33,291. The
Corporate Debtor was stated to be also liable to pay default interest as agreed upon in the said Agreement.
According to the Petitioner, the default interest was Rs. 1,06,33,946.
2.3 There is a personal guarantor viz. Mr. Padmesh Gupta as per the execution of a personal guarantee
dated 29.09.2014. Due to the said admitted factual position the Financial Creditor has demanded
repayment of loan either jointly or severally by the Debtor or the Guarantor. A notice was issued under
section 433(1)(e) of Companies Act, 1956. In response, it was contested that the Financial Assistance was
granted to one Gupta Corporation Pvt. Ltd. and not to the Respondent.
3. FINDINGS:-
Prima facie the requirement of section 7 of the Code appears to have been fulfilled. The nature of the
Debt is undisputedly qualified as "Financial Debt" as defined under section 5(8)(a) of the Definitions
under I&B Code.
3.1 Records of the case have also established that there was a "Default" of nonpayment of Debt as
defined under section 3(12) of the Definitions under the Code.
3.2 The Creditor has also given sufficient opportunity by issuing notices and by demanding the
repayment as per the evidences on record such as Tracking Detail of the Consignment affirming the
delivery of the consignment. On 28.06.2017 by Speed Post a notice was issued and a copy of the Petition
was annexed which was delivered on 30.06.2017 as per the Tracking Record of the consignment issued
by the Postal Department. Even on service of notices and even on repeated reminders, as explained by
Learned Counsel, the Debt remained unpaid by the Financial Debtor.
2105
3.3 Considering the totality of the facts and circumstances inter alia this Petition now under
consideration deserves to be "Admitted".
3.4 The Petitioner has proposed the name of the Interim Resolution Professional Mr. Javadshah Vasa,
CA, M N J and Associates, Registration Number: IBBI/IPA001/1P-00570.2016-2017/1455, Tel:
9820777577 / 26189956 / 26189976, email: jkvasacoggmail.com. The appointed IRP shall perform the
duties as defined under section 18 of the Code. He shall also submit the resolution plan for approval as
prescribed under section 31 of the Code.
3.5 Since the Petition is Admitted, hence the Moratorium shall commence as prescribed under
section 14 of the I&B Code as under :-
I (a) the institution of suits or continuation of pending suits or proceedings against the corporate
(b) transferring, encumbering, alienating or disposing of by the corporate debtor any of its
(c) any action to foreclose, recover or enforce any security interest created by the corporate
of Financial Assets and Enforcement of Security Interest Act, 2002(SARFAESI Act);
(IV) That the order of Moratorium shall have effect from the date of this order till completion of the
(1) of section 31 or passes an order for liquidation of corporate debtor under section 33, as the case may
be.
2106
(V) That the public announcement of the corporate insolvency resolution process shall be acted upon
4. That this Bench hereby appoints, Mr. Javadshah Vasa, CA, M N J and Associates, Registration
Number: IBBI/IPA-001/IP-00570.2016-2017/1455, Tel: 9820777577 / 26189956 / 26189976,
email: jkvasaco@gmail.com as Interim Resolution Professional to carry out the functions as
5. Accordingly, this CP 1140/I & BP/NCLT/MAH/2017 stood admitted.
6. The Corporate Insolvency Resolution Process is commenced from the date of this order.
2107
MUMBAI BENCH
C.P. (I.B.) No. 1004/7/NCLT/MB/2017
Applicant: UCO Bank

Vs.
Respondent: IND Synergy Limited & Anr.
Judges/Coram:
Hon'ble M.K. Shrawat, (Member (J))
Counsels:
For Appellant/Petitioner/Plaintiff: Mr. B.K. Nair, Learned Advocate
JUDGMENT
Hon'ble M.K. Shrawat, Member (J)
The Learned Representative from the side of the Financial Creditor is present.
This is Transfer Petition from the Hon'ble High Court filed by the Financial Creditor UCO Bank
pertaining to the debt amount of Rs. 112,7

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ABOUT THE COMPILATION

IN THE SUPREME COURT OF INDIA

Decided On: 21.02.2017

Appellants: Bank of New York Mellon, London Branch

Hon’ble Sh. Ranjan Gogoi, J.

(e) maintain an updated list of claims;

(f) convene and attend all meetings of the committee of creditors;

(g) prepare the information memorandum in accordance with Section 29;

(k) such other actions as may be specified by the Board.

(1) In this Act, unless the context otherwise requires,--

12. Constitution of Benches of Board or Appellate Authority.--

13. Procedure of Board and Appellate Authority.--

(a) the procedure and conduct of the business;

14. Proceedings before Board or Appellate Authority to be judicial proceedings.--

15. Reference to Board.--

(i) in Form A in respect of an industrial company other than a Government Company;

(ii) in Form AA in respect of a Government Company,]

(i) in Form B in respect of an industrial company other than a Government Company;

(ii) in Form BB in respect of a Government Company,]

IN THE SUPREME COURT OF INDIA

Civil Appeal No. 16486/2017

Decided On: 05.06.2017

Appellants: Falcon Tyres Ltd.

For Respondents/Defendant: Mr. Rahul Jain, Learned Advocate

Hon’ble Justice Sh. A.S. Bopanna

IN THE SUPREME COURT OF INDIA

Civil Appeal No. 9279/2017

Decided On: 24.07.2017

Appellants: Lokhandwala Kataria Construction Private Limited

1) Heard the learned Senior Counsel appearing for the parties.

5) With this, the present appeal is disposed of.

Civil Appeal No. 9286/2017

Decided On: 28.07.2017

Appellants: Mothers Pride Dairy India Private Limited

Hon’ble Justice Sh. Dipak Misra & Sh. A.M. Khanwilkar

The appeal is disposed of accordingly. There shall be no order as to costs.

IN THE SUPREME COURT OF INDIA

Civil Appeal No. 9286/2017

Decided On: 28.07.2017

Appellants: Mothers Pride Dairy India Private Limited

For Respondents/Defendant: Mr. Archit Upadhyay, Learned Advocate

Hon’ble Justice Sh. Dipak Misra & Sh. A.M. Khanwilkar

The appeal is disposed of in terms of the signed order.

IN THE SUPREME COURT OF INDIA

Civil Appeal No. 10711/2017

Decided On: 23.08.2017

Appellants: Neelkanth Township And Construction Pvt. Ltd.

Heard the learned Senior Counsel appearing for the parties.

In view of this, we find no merit in the appeal.

IN THE SUPREME COURT OF INDIA

Civil Appeal No. 10711/2017

Decided On: 23.08.2017

Appellants: Neelkanth Township And Construction Pvt. Ltd.

IN THE SUPREME COURT OF INDIA

Civil Appeal Nos. 8337-8338 of 2017

Decided On: 31.08.2017

Appellants: Innoventive Industries Ltd.

Hon’ble Sh. Rohinton Fali Nariman, J.

STATEMENT OF OBJECTS AND REASONS

5. The Code seeks to achieve the above objectives.

xxx xxx xxx xxx

xxx xxx xxx xxx

The key economic question in the bankruptcy process