IN THE NATIONAL COMPANY LAW TRIBUNAL, NEW DELHI PRINCIPAL BENCH C.P. NO. (1B)-540(PB)/2017 IN THE MATTER OF: State Bank of India v. Su Kam Power Systems Limited . Financial Creditor ......Corporate Debtor SECTION: Under Section 7 of The Insolvency and Bankruptcy Code, 2016 Judgment delivered on 05.04.2018 Cor: CHIEF JUSTICE (RTD.) M.M. KUMAR Hon'ble President S.K. MOHAPATRA Hon’ble Member (T) PRESENTS: For the Petitioner: Mr. Arun Kathpalia, Senior Advocate with Ms. Misha, Mr. Siddhant Kaur, Mr. Ranjeev Khatana, Mr. Vaijayant Paliwal Advocates For the Respondent: Mr. Milan Singh Negi and Mrs. Kunal Godhwani, Advocates with Mr. Parmeshwar Prasad Singh, A/R KUMAR, PRESIDENT JUDGMENT The State Bank of India is a Bank established by the State Bank of India Act, 195: . It is a Parliamentary Legislation which was to transfer all the assets of imperial Bank of Indie. to it. The .(54075)/2027 State Bonk of nda. Su Kem Power Systems Utes age 3/37‘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-1). 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 ‘he Code}. ‘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 e— 2. Wo. a} 5a090)2017 Sate Bonk of ini Su Kom Power Systems Lined oye? 127persons and also to promote entrepreneurs! availability of credit and balancing the interests of, and in alteration, 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 Su Kam Power Systems Limited (for brevity ‘the Corporate Debtor) with a prayer to initiate Corporate Insolvency Resolution Process. The Financial Creditor has its registered office at State Bank Bhavan, Madame Cama Road, Nariman Point, Mumbai, Maharashtra-400021, India and acting through its Commercial Branch at 6% Floor, Palm Court, Near MDI, Gurgaon-122 001. 4, Mr. Sanjay Prasad, Chief Manager and Relationship Manager of a Financial Creditor-Bank has been empowered by the authorization dated 16.06.2017 issued by the Chairman of State Bank of India in accordance with Section 27 of the State Bank of India General Regulations, 1955 read with the Gazette notification dated 27.03.1987 issued by the State Bark of India Central Office, to sign and submit the petition. Copies of the said ym ve. (9 54099)/72017 ‘Stte Sok fn Su am Power Systems United Poge 3/37authorization dated 16.06.2017 along with proof of designation of the authorized person have been placed on record along with extracts of Section 27(1) of the State Bank of India Act, 1955 and Extracts of Regulation 76 and 77 of the State Bank of India General Regulations, 1955 (Annexure -2 & 3) 5. The Corporate Debtor-Su Kum Power Systems Limited is a company registered under the provisions of the Companies Act, 1956 and was incorporated on 14.10.1998, The identification number of the Corporate Debtor is U64201DL1998PLC096685 and its registered office is situated at WZ-12A, Bhagwandas Nagar Extension, East Punjabi Bagh, West Delhi, New Delhi ~ 110026. Its authorized share capital is Rs. 10,00,00,000/- (Rupees Ten Crave only) and the paid up share capital is Rs. 4,73,17,000/- (Rupees Four Crate Seventy Three Lakh and Seventeen Thousand only) as per the details given in master data. Copies of Memorandum of Association, Articles of Association and the master data have been placed on record [Annexure-4 (Colly) 6. The Financial Creditor has proposed Interim Resolution Professional with the name of Shri Rajiv Chakraborty, 12 Qt eri. seapaya017 Banko naa. Su Kom Power Systems ied pope 157Sukhdev Vihar, 1* Floor, New Delhi-110025, e mail id chakrabortyrajiv72@gmail.com. His registration number is IBBI/IPA-O01/1P-P00602/2017-2018/11053. A written communication dated 14.11.2017 in terms of Rule 9(1) of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 has also been placed on record [Annexure-5 (Colly]. 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. Rajiv Chakraborty as per the requirement of the IBBI Regulations. Accordingly, he satisfies the requirement of Section 7 (3) (b) of the Code. 7. 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 Rue 4 of the Insolvency and Bankruptey (Application to Adjudicating Authority) Rules, 2016 the total amount of debt granted by the Financial Creditor (including the erstwhile associate banks) to eo Debtor towards fund based cash credit limit and (Wo. a} s3098)/72017 State Bonk of now Su Rom Power Stems Lined Page 157non-fund based limits like letters of credit is equivalent to Rs. 109,00,00,000/- (Rupees One Hundred and Nine Crores only). The working capital facilities were initially disbursed individually by State Bank of India and its erstwhile associate banks. These working capital facilities were subsumed into the working capital consortium agreement dated 19 April 2012 and supplemental working capital consortium agreement dated 25 March 2013. Further, the said working capital facilities were consolidated into the working capital consortium agreement dated 19 October 2014 entered into inter alia, between the Corporate Debtor and State Bank of India (including the associate banks) and other un banks for the purposes of providing working capital to the Corporate Debtor upto a total limit of Rs. 550 Crores (as modified from time to time vide sanction letters). 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 maintained with respect to the facilities provided to the Corporate Debtor and enclosed separately with this Application. wo Wo. (gh s800)72017 State Bonk of nw Su Kom Power Stems United Page 61378. In column 2 of part IV the amount claimed to be in default and the date on which the default occurred, have been stated in clear terms. According to the averments made by the Financial Creditor-State Bank of India the aforesaid facilities availed by the Corporate Debtor are overdue and total amount in default as on 20.11.2017 is Rs. Rs.69,21,64,938.70/- (Rupees Sixty Nine Crores Twenty One Lakhs Sixty Four Thousand Nine Hundred and Thirty Eight and seventy paise only). The details regarding the date, amount and the days of defaults with respect to the aforesaid facilities granted by the Financial Creditor to the Corporate Debtor have been placed on record (Annexure-7) 9. In order to avoid lapsing of loan on account of the period of limitation the Corporate Debtor has issued the revival letters constituting its acknowledgment of liabilities towards the Financial Creditor in relation to aforesaid facilities. The following is the list of letters acknowledging the financial debt outstanding towards the respondent: © [@ Revival Letter dated 17 July 2017 issued by the Corporate Debtor for rN ee! Stte Ben of nw Su Kam Power Stems United Poge 137the purpose of Limitation in favour of the IDBI Bank Limited (in its capacity as the lead bank of the working capital consortium). (b) Revival Letter dated 31 March 2015 issued by the Corporate Debtor for | the purpose of Limitation in favour of the Financial Creditor. (©) Revival Letter dated 31 March 2016 issued by the Corporate Debtor for the purpose of Limitatior in favour | of the Financial Creditor. Copies of the above revival ‘etters are annexed herein as Annexure 6 (colly). 10. 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:- la) Description of Security: First par passu charge CP. no 5) 54r0)/2007 Stte Bon of nia Sa Kom Power ystems United rages /37on the stock and raw material, semi-finished & finished goods, stores & spares, bills receivable, book debts and all the movables of the Corporate Debtor. Date_of ROC Registration: Updated and ‘modified on 18 November 2014. Estimated Value: Rs. 44,57,58,000 (Rupees Forty Four Crore Fifty Seven Lakh Fifty Bight ‘Thousand Only) (b) Description _of Security: Second pari passu charge on the Factory, land and building located at plot no. 7, Industrial Area, Katha, Baddi HP admeasuring 24277 sq. mtrs Date_of ROC Registration: Updated and modified on 11 December 2014 Estimated Value: As per the valuation report, the fair market value of the said property is Ks. 31,91,70,775 and the conservative value is Rs. 25,55,00,000. () Description of Security: Second parri passu charge on Factory, land and building located al oe Pn. (sh s0070)/72017 Sate Bok of ne Su Kom Power Stems United one 9157plot no. 54, Udyog Vihar, Phase-VI, Sector 37, Gurgaon admeasuring 1177 sq. mtrs. Date of ROC Registration: Updated and modified on 11 December 2014. Estimated Value: As per the valuation report, the fair market value of the said property is Rs. 7,88,00,000 and the conservative value is Rs. 6,31,00.000. (a) Description of Security: Second pari passu charge on Factory, land and building located at plot no.14, DIC, Industrial Area, Baddi, HP admeasuring 1950 sq. mtrs Date of ROC Registration: Updated and modified on 11 December 2014. Estimated Value: As per the valuation report, the fair market value of the said property is Rs, 2,58,03,750 and the conservative value is Rs, 2,06,00,000, (c] Description of Security: Second pari passu charge on Factory, land and building located at plot no. 71, DIC, Industrial Area, Baddi (HP) admeasuring 2117 sq. mtrs Po. (9 50000)/2017 State nt of ni Su Kom Power Stems Lined age 10157,Date of ROC Registration: Updated and modified on 11 December 2014, Estimated Value: As per the valuation report, the fair market value of the said property is Rs 2,80,00,000 and the conservative value is Rs. 2,28,00,000. ( Description of Security: Second pari passu charge on Factory, land and building located at plot no. 196-B, Udyog Vihar, Sector 37, Gurgaon admeasuring 1017.50 sq.mtrs; Date_of ROC Registration: Updated and modified on 11 December 2014 Estimated Value: As per the valuation report, the fair market value of the said property is R.5,78,29,730 and the conservative value is Rs. 4,63,00,000 (s) Description of Security: Second pari passu charge on Factory, land and building located at plot no. 4, DIC, Industrial Area, Baddi, HP admeasuring 2000 sq. mtrs. qe of ROC Registration: Updated and Wo. (8. 59008)/2017 tote Son fn. Su Kam Power Sytem United ge 3127modified on Il December 2014 Estimated Value: As per the valuation report, the fair market value of the said property is Rs 2,46,98,000 and the conservative value is Rs 2,00,00,000. (hb) Deseription of Seeurity: Second pari passu charge on Factory, land and building located at plot no, 196-C, Udyog Vihar, Phase VI, Sector 37, Gurgaon admeasuring 1363.90 sq. mrs. Date of ROC Registration: Updated and modified on 11 December 2014 Estimated Value: As per the valuation report, the fair market value of the said property is Rs. 7,81,26,706 and the conservative value is Rs. 6,30,00,000. (i) Description of Security: First pari passu charge on Plot No. 64, Industrial Area, Baddi (HP) admeasuring 900 sq. mtrs Date of ROC Registration: Updated and modified on 11 December 2014. Estimated Value: As per the valuation :eport, the qt —§! PW. (954090)/2017 State Bonk of Su Kom Power Systems Lined Poge 2 [37fair market value of the said property is Rs. 1,84,00,000 and the consecutive value is Rs. 1,48,00,000. () Personal Guarantee executed by Sh. Kunwer Sachdev inter alia in favour of the Financial Creditor including erstwhile State Bank of Patiala) (%) Omnibus Counter Guarantee Agreement executed by the Corporate Debtor inter alia in favour of the Financial Creditor (including erstwhile State Bank of Patiala) with respect to the guarantee facilities. i) Demand Promissory Note executed by the Corporate Debtor. Copies of the certificate for registration of charges, as applicable issued by the Registrar of Companies for the creation of the above security along with the forms filed are being annexed herein as ANNEXURE-8 (COLLY). 11, The Financial Creditor also placed on record a list of all the financial facilities granted by the Financial Creditor (including Eire on stapavz07 Sate Bok of ni Su Kom Power tems United age 33 137the facilities granted by the erstwhile associate banks) to the Corporate Debtor along with the copies of the said Financial facilities. The details of the said financial facilities which have been described in Annexure-9 (Colly] are set out below: DETAILS OF FINANCIAL CONTRACTS S.No. PARTICULARS DATE x \” AGREEMENT OF LOAN FOR OVERALL LIMIT OF RS. 50] CRORE GRANTED BY STATE BANK OF INDIA issued by State Bank of India in favour of the Corporate Debtor for grant of working capital facilities for an amount of Rs. 50 Crores. | Stale Bank of India and the Corporate Debtor for | grant of working capital facilities for an amount of | Rs, 50 Crores, Sanction Letter bearing reference number MC:156 | 20 June 2000 [Agreement of oan Tor overall Timit execited by] 20 July 2005] B. ‘RENEWAL OF WORKING CAPITAL FACILITY OF RS. 50 GRANTED BY STATE BANK OF INDIA ‘CRORE al Sanction Letter bearing reference number | 22 CBGGN:AMTIESS issued by State Bank of India | 201 for renewal of working capital facilities granted pursuant to Agreement of loan for overall limit dated 20 July 2009, INDIA "WORKING CAPITAL FACILITIES OF RS. 860 CRORES GRANTED | BY CONSORTIUM OF LENDERS INCLUDING STATE BANK OF October [Sanction Letter Gearing relerence aumber|7 December “CP . (80995}/2017 ‘Store Bonk of na Su om Power Systems tinted age 14 [27CBGGNAMTUES298 issued by State Bank of] 2011 India in favour of the Corporate Debtor for renewal of working capital facilities granted pursuant to ‘Agreement of loan for overall limit dated 20 July 2009 and renewed/modified vide sanction letter dated 22 October 2010. Inter Se Agreement executed by and amongst, | 19 April 2012 inter alia, State Bank of India and other consortium lenders, | 3. | Working Capital Consortium Agreement entered | 19 April 2012 | into, inter alia, between State Bank of India and the Corporate Debtor in relation to grant of| working capital facilities of an amount of| s.360,00,00,000 (Rupees Three Hundred and Sixty Crores only) D. ENHANCEMENT OF WORKING CAPITAL FACILITIES TO RS, 440 CRORES GRANTED BY CONSORTIUM OF LENDERS INCLUDING STATE BANK OF INDIA 1 Sanction Letter bearing reference number] 24 January | CBGGN:AMT-I870 issued by State Bank of India | 2013 in favour of the Corporate Debtor for enhancement of working capital facilities granted pursuant to the Working Capital Consortium Agreement dated 19 April 2012. | Supplemental Working Capital Consortium [25 March ‘Agreement entered into, inter alia, between State | 2019 Bank of India and the Corporate Debtor for enhancement of the working capital facility limite granted pursuant to the Working Capital Consortium Agreement dated 19 April 2012. no. 8-50(06/2017, Store Bonk of nia Sa om Power ystems United Page 15137|E. ENHANCEMENT OF WORKING CAPITAL FACILITIES TO RS.550 | CRORES GRANTED BY CONSORTIUM OF LENDERS INCLUDING | STATE BANK OF INDIA (including the erstwhile associate banks amalgamated w.c.f. 1 April 2017 vide Gazette notification dated 22 February 2017) 1, [Sanction Tetter bearing reference number [14 March] CBGGN:AMT-I:1631 issued by State Bank of | 2014 Indi in favour of the Corporate Debtor for renewal of working capital facilities granted pursuant to the Supplemental Working Capital Consortium Agreement dated 25 March 2013, 2 Sanction Letter bearing reference number |26 March MCB/DEL/1193 issued by erstwhile State Bank of | 21 | Patiala in favour of the Corporate Debtor for grant | of working capital facilities of an amount of Rs. 45 crores, 3. [Agreement of loan for overall limited executed [19 cune 2014] between erstwhile State Bank of Patiala and the Corporate Debtor for grant of working capital facilities for an amount of Rs. 45 Crores. ‘Supplemental Working Capital Consortium/| 10 October ‘Agreement entered into, inter alia, between State | 2014 | Bank of India (including the erstwhile associate banks amalgamated wef 1 April 2017 vide Gazette notification dated 22 February 2017) and the Corporate Debtor in relation to enhancement of the working capital facilities granted pursuant 10 the Supplemental Working Capital Consortium Agreement dated 25 March 2013, ENHANCEMENT CUM RENEWAL OF WORKING CAPITAL eg (2. (85209982017 Sate Bonk of nia Sa am Power tems Lined Page 26/37FACILITIES 70 617.70 CRORES GRANTED BY CONSORTIUM OF LENDERS INCLUDING STATE BANK OF INDIA luding the erstwhile associate banks amalgamated wef. 1 April 2017 vide Gazette notification dated 22 February 2017) Sanction Letter bearing reference number CBOGN:AMT-IL30 issued by State Bank of India in favour of the Corporate Debtor for renewal of| working capital facilities granted pursuant to the Supplemental Working Capital Consortium ‘Agreement dated 10 October 2014. 27 March | 2015 G [Sanction Letter bearing reference number ‘SBP/MCB/KGM/2015-16/PK/208 issued by erstwhile State Bank of Patiala in favour of the | Corporate Debtor for renewal and enhancement of working capital facilities granted pursuant to the Supplemental Working Capital Consortium Agreement dated 10 October 2014, 3 August 2015 ENHANCEMENT CUM RENEWAL OF WORKII FACILITIES TO RS.625.36 CRORES GRANTED BY OF LENDERS INCLUDING STATE BANK OF INDIA Gazette notification dated 22 February 2017) erstwhile associate banks amalgamated w.e.f. 1 April 2017 vide ING CAPITAL consortium (including the Sanction Letter bearing reference number CBGGN:AMTIL47-A issued by State Bank of| India in favour of the Corporate Debtor for renewal | of working capital facilities of an amount of Rs. 70 Crores granted pursuant to the Supplemental ‘Working Capital Consortium Agreement dated 10 | October 2014 and renewed by the sanction letter [4 April 2016 dated 27 March 2015. we Wo. s40(75)/2017 Ste Bon of nia Su Kam Power tems United age 7157,(1, REDUCTION OF WORKING CAPITAL FACILITIES TO RS.576.94] CRORES GRANTED BY CONSORTIUM OF LENDERS INCLUDING STATE BANK OF INDIA (including the erstwhile associate banks amalgamated w.c.f. 1 April 2017 vide Gazette notification dated 22 February 2017) 1, [Sanction Letter bearing reference number |1 February | SBP/MCB/SPSL/2016-17/1443 issued by | 2017 erstwhile State Bank of Patiala in favour of the Corporate Debtor for renewal of working capital | facilities granted pursuant to the Supplemental Working Capital Consortium Agreement dated 10 October 2014 and renewed /modified vide sanction letter dated 8 August 2015, | 2. [Sanction Letter bearing reference number| 7 February CBGGN:AMT-IL3267-A issued by State Bank of| 2017 India in favour of the Corporate Debtor for reduction of working capital facilities granted pursuant to the Supplemental Working Capital Consortium Agreement dated 10 October 2014 and renewed/modified vide sanction letter dated 27 March 2015 and sanction letter dated 4 April 2016.8 August 2015. 12, There are then the balance confirmation letter dated 26.06.2017 by the Corporate Debtor in favour of Financial Creditor with regard to as many as nine different acccunts. It is pertinent to notice that said letter has been duly signed on behalf of the Corporate Debtor and a seal has also been put by the Corporate Debtor which reads as under:~ Pn. 9p ss0(ry/2017 Ste nk of nla Su Kam Power tems nied Page 18/37“I/We confirm that the balance of our loan accounts as on 31.03.2017 due by us to the Bank, as shown in your statement of account as on that date: ‘BRANCH CODE PACILHY | A/EO | ~ CURRENCY AMOUNT wT co) sora9aseaT0 TR SE5B5ESES.16 DR oa BRC | Ss0ssaa07aa The ‘00DR| 4075 PoRC | 3504388618 THR ‘00 DR 07s BEL |aser0s70650| Us O00 DR BILLS ono TRLAND | 2038664117 aR - TGODR] ieeiis Te} si0as25880 | TR ‘8G0DR mann OTe Te s6ens25039 | 05> 1570099 DR] import DaG7) | tos; seossaoae | TS" 768397 00 BR wo7s | Be STs TaarTS WR 125257244 00 DR] A copy of balance confirmation letter dated 26.06.2017 has been placed on record (at page No. 804), e— We. s40r9)/2017 ‘Stte Son of nda Su Rom Powe Stems United Poge 1912713. In addition to the amount confirmed above, the Corporate Debtor in the said letter has also admitted interest accrued/to be accrued on the outstanding from the date 01.04.2017. 14. It is also pertinent to mention that the Corporate Debtor in its audited balance sheet for the financial year 2016-17 has acknowledged the following amounts as borrowed from the Banks for Working Capital Loan in the shape of short term borrowings: “short term borrowings [ASaEST March 2087 | A at 31 March 2016] loan repayable on demand from ‘banks 19,380.48 20,882.06 ‘working caitalloanse a | a 15. As per the averments of the ‘Financial Creditor’, the account of the Corporate Debtor was declared as Non-Performing Asset (NPA) on 10.09.2017 in its books. In view of the repeated defaults on the part of the Corporate Debtor to comply with the repayment of the principal and interest dues, the Financial Creditor was P. no) s4(7a)/2007 Ste Bonk of nw Su Kom Powe Stes Lined Page 20127constrained to issue default notice on 08.11.2017 on its behalf and on behalf of erstwhile associate banks which have merged with it w.e.f, 01.04.2017 to the Corporate Debtor highl.ghting the details of the outstanding and overdue amounts (including interest) relating to various facilities availed by the Corporate Debtor which read as under:~ (Ast. tn Cores) [sates ia DP. Outsanding | no Sol [eSBOr [roar [reas creat] s0m0 [13200 TS ae ~—Y BPeTPERC/ WNL |ra.eF | BAT] BH] = (Sub Limit of cass ret 2 [ienieyrs aso | a088 65.00 BG (Sab Limit oF] GD BOOT | SOT 155 1 TOUTEBE (Bub | O.00)F BO. OH. | —— — Limit 0} | ea ab i oF azoy wa |= 1 > rrora 45.20 | Tos00-| 878 77 ge Wo. 540(98)/2017 tte don of nda Su om Power Systems United age 21137By the aforesaid default notice amount in defaul:/overdues including interest and penal interest aggregating to Rs. 71,69,00,000 (Rupees Seventy One Crores and Sixty Nine Lacs Only] was demanded, 16. The ‘financial creditor’ has placed on record an overwhelming evidence to prove the default. A record o° default is also available with the Central Repository of Information on Large Credits (CRILC) as per its asset classification report of the Corporate Debtor based on latest two quarters (Annextre - 10) in which the account of the Financial Creditor clearly mentions to be substandard. Likewise, entries in Bankers Book in accordance with the Bankers Books Evidence Act, 1891 have been placed on record which relate to the aforesaid accounts of the Corporate Debtor in which financial debt were transferred by the Financial Creditor certifying the statement of accounts of the Corporate Debtor consist of printouts of data stored in various forms (Annexure-11), 17. There are various documents placed on record establishing authority to file the application which include authorization oe (2. No. (8 54000)/2017 State Bont of nS Kom Power Stems Limited Poge 2/37dated 16.06.201 sted by the Chairman of the State Bank of India. It clearly states that in pursuance of powers conferred under Section 27 of the State Bank of India Act, 1955 the Chairman authorized all the officers on whom signing powers have been conferred vide 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 the Tribunal for or against the Bank under IBC. A reference has then been made to Regulation 76 & 7 of the State Bank of India (General Regulations, 1955). Regulation 77 deals with signing of pleadings. It 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 documerts for and on behalf of the State Bank. According to Regulation 76 the — Wo. 5908)/2017 ‘State Sok fn Su Kam Power ytems United age 22127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 Beard 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 52) authorising all officers in the Grade of Senior Management Grade Scale-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, A perusal of the authorization letter dated 22.11.2017 issued by Deputy General Manager it is patent that Mr. Sanjay Prasad, Chief Manager and Relationship Manager is an officer of Senior Management Grade Scale IV (SMGS-IV). Accordingly, the present petition has been signed by a competent officer who is an authorized person for filing the petition. Therefore, it is claimed that the petition has been filed by a person authorized in accordance with law. The affidavit and the vakalatname have also been signed by the aforesaid officer. a Po. (9 58090)72037 Stat Bonk of nw Su Kam Power Stems United age 28/3718. A rejoinder to the counter affidavit has been filed by the Financial Creditor reiterating the submissions made in the application and controverting the assertions in the counter affidavit, 19. Learned counsel for the Corporate Debtor opposed the admission and has argued that a Joint Lender’s Forum has been constituted in respect of the Corporate Debtor in terms of the guidelines issued by the Reserve Bank of India on 26.02.2014, which is still exploring the possibilities of revival of the company (Corporate Debtor), therefore, these proceedings initiated by the Financial Creditor are premature. The aforesaid argument has not impressed us because a similar kind of contention regarding an ongoing restructuring under the JLF mechanism raised by the Corporate Debtor was considered and rejected by this Tribunal in State Bank of India v. Bhushan Steel Limited, C.P. No. (1B)-202(PB)/2017. Tke relevant para 37 reads as under:~ “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, (CP. No 5) S4r0)/2017 ‘Stote Bonk of nas Su am Power Systems United Page 25/37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 alll 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 plar in a time bound disciplined manner under a Parliamentary Act which may be acceptable to all the stake holders.” (emphasis supplied) Even otherwise Joint Lender's Forum has finally rejected the proposal made by the Corporate Debtor on various grounds in its meeting held on 08.01.2018. tw (Pn. ap ss09)2017 Sete Bonk of nw Su Kom Power Stems Lined age 2615720. Another argument raised by learned counsel is that the Corporate Debtor is sanguine to the interests of its stakeholders and has taken steps towards stabilising its financial position inter alia including negotiation with a possible strategic investor, therefore, the admittance of the present application would undermine the same. Reliance has been placed by the Corporate Debtor on an expression of interest dated 04.12.2017 received from a strategic investor. ‘The aforesaid argument also does not need to detain us because the said letter merely expresses an intention of the ‘strategic investor’ to consider investing in the Corporate Debtor and the said intention is based on ifs and buts. A due diligence proposed to be conducted by the strategic investor and till date there is no concreate proposal in place. However, if the Corporate Debtor is confident about the investment from the strategic investor, the same could be examined as well by the Committee of Creditors of the Corporate Debtor along with Interim Resolution Professional after admission the present petition. 21. Another objection raised by the Corporate Debtor ‘s that the fe_serication fled by the Financial Creditor is incomplete on Wo. 554782017 ‘Stte Bon of nia Su Kam Powe tems Lined age 27137account of absence of necessary disclosures in terms of the Insolvency and Bankruptcy Board of India (Insolvency Profes jonal) Regulations, 2016 by the Interim Resolution Professional in form 2 annexed with the application. We are satisfied that the Interim Resolution Professional at pages No. 119-120 have made adequate declaration satisfying the requirement of the Rules/Regulations and therefore the objection raised by the Corporate Debtor in this regard is overruled. 22. An application C.A. No. 136(PB)/2018 under Rule 32 of the National Company Law Tribunal Rules, 2016 has been filed on behalf of applicant-Reliance India Power Fund for impleadment in ‘the matter. In the aforesaid application it is submitted by the applicant-Reliance India Power Fund that it is an Investor and Venture Capital Fund Trust, having business interest in terms of investment and funding and is duly registered with SEBI. It is further averred that in the year 2006, the Corporate Debtor had approached the applicant-Reliance India Power Fund for financial assistance and funding of Rs. 45/- crores for future exoansion of its business. — 7. no. a s0p9}2017 Ste Bonk of nw Su Kam Power Stems Lined oge 28/3723. The applicant-Reliance India Power Fund being an investor agreed to invest a total amount of Rs. 45/- crores based on the warranties and representations made by the Corporate Debtor as per the agreement dated 31.03.2016 signed between the applicant-Reliance India Power Fund and the Corporate Debtor and the Promoters with an assured exit at a fixed IRR of Rs. 25%. A copy of the said agreement dated 31.03.2006 has been placed on record (Annexure-B). 24. In the aforesaid application it is asserted averred that by virtue of the agreement, the Corporate Debtor issued 9,07,545 fresh equity shares to the applicant towards the investment made by the applicant in the Corporate Debtor. Certain other requirements were also to be fulfilled by the Corporate Debtor and a dispute arose with regard to various compliances which were required to be made by the Corporate Debtor. The same has not been fulfilled by it, On account of non-compliance the applicant approached Hon'ble Bombay High Court by filing a petition under Section 9 of the Arbitration and Conciliation Act, 1996. The said petition was registered as Arbitration Petition (L) No. 976/2017. The Hon'ble Bombay High Court vide :ts interim PW. (9. 540(8)/2017 ‘State Son of na Su Kam Power ytems United Page 29 [37orders dated 29.11.2017, 14.12.2017 & 21.12.2017 granted stay in favour of the applicant restraining the Corporate Debtor for effecting any change in the shareholding of the Company. A copy of the orders dated 29.11.2017, 14.12.2017 & 21.12.2017 have been placed on record (Annexure E, E/1 & E/2). 25. Mr. Kathpalia, leamed Senior counsel for the petitioner has argued that all requirements of Section 7 for the ixitiation of Corporate Insolvency Resolution Process by a Financial Creditor stand fulfilled. In that regard, he has submitted that the application as prescribed by Rule 4 (1) of the Insolvency and Bankruptey (Application to Adjudicating Authority) Rules, 2016 read with Section 7 (2) of IBC has been filed. 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.ef, 01.04.2017 Leamed counsel further submitted that the details of the default along with the dates have been clearly stated in par: IV along with all the minute details. There is overwhelming evidence available in the shape of the default and name of the resolution Ye No. s4098)/2017 ‘Stte Bok of nda. Su Kam Power ytems Umited age 20127professional has also been proposed along with his written communication. 26. Having heard the learned counsel for the petitioner and having perused the paper book with his able assistance we may first examine the provisions of Section 7 (2) and ection 7 (5) of IBC which read as under:- “Initiation of corporate insolvency resolution process by financial creditor. 7) 72) 7) 7A) 75) ‘The financial creditor shall make an epplication under sub-section (1) in such form and manner and accompanied with such fee as may be prescribed, Where the Adjudicating Authority is satisfied that— (a) @ default has occurred and the application fX______under sub-section (2) is complete, and there Pn. 309912037 Sate Bonk of ni Su Kam Power Stems Lnited ge 2827is no disciplinary proceedings pending against the proposed resolution professional, it may, by order, admit such application; or Ge : 27. 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. 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. We are satisfied that a default has occurred and the application under sub section 2 of Section 7 is complete, It is also patent no disciplinary proceedings are pending against the proposed Interim Resolution Profe: mal. Thus, the application warrant admission. 28. Asa sequel to the above discussion, this petition is admitted and Mr. Rajiv Chakraborty, 12 Sukhdev Vihar, Ist Floor, New Delhi-110025, email id _chakrabortyrajiv72@gmail.com is appointed as an Interim Resolution Professional. 6. (954000)/2007 ‘Stte Se of nia Sa om Power ystems United Page 32/3729. In pursuance of Section 13 (2) of IBC we direct that public announcement shall be immediately made by tke 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, The consequences of imposing the moratorium flows from the provisions of Section 14 (1) (a), (b), (c) & (d) and thus the following prohibitions are imposed which must be followed by all and sundry: (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 ary security interest created by the corporate debtor in respect of s property including any action uader the Wo. 1959018)/2017 ‘Stte Son fn. Su am ower ystems United Page 38197Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 200! (a) the recovery of any property by an owner or lessor where such property is occupied by or in the possession of the corporate debtor. 30. It is made clear that the provisions of moratorium shall not apply to transactions which might be notified by the Central Government. Additionally, the supply of the essential goods or services to the Corporate Debtor as has been specified are not to be terminated or suspended or interrupted during the moratorium period. These would include supply of water, electricity and similar other supplies of goods or services. 31. The Interim Resolution Professional shall perform all his functions religiously as are contemplated, interalia, by Sections 15, 17, 18, 19, 20 & 21 of the Code. He must follow best practices and principles of fairness which are to apply at various stages of Corporate Insolvency Resolution Process. His conduct should be above board & he must act independently; and he should work with utmost integrity and honesty. It is further Wo. t.54079)/2017 ‘tote Bonk of nia Su am Power ystems United Page 38137,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 by the ex-management or its ex- directors 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. 32. The office is directed to communicate a copy of the order to the Financial Creditor, the Corporate Debtor and the Interim Resolution Professional at the earliest but not later than seven days from today. Ye —_— (Pn. 08) s0(°8/2017, Ste nk of na Su Kam Power Systems United Page 35/3793. We have taken notice of the averments made in the intervener’s application and the order passed by Hon'ble Bombay High Court. At the outset it is pertinent to point ott that the order dated 14.12.2017 (Annexure E/1) shows that between the applicant-Reliance India Power Fund-intervener and the Corporate Debtor-Su-Kam Power Systems Limited along with others, arbitration clause was invoked and Hon'ble Bombay High Court has appointed the Arbitrator. It has further directed that application under Section 9 of the Arbitration and Conciliation Act, 1996 (for brevity ‘the Act) was to be treated as a petition under Section 17 of the Act and it was to be decided by the Learned Arbitrator. The pendency of the arbitration between the Corporate Debtor-Su-kam Power Systems Limited and others and ‘the applicant-Reliance India Power Fund-intervener would not cause any impediment with regard to initiation of Corporate Insolvency Resolution Process because under Section 7 of the Code the pendency of an arbitration is no bar to the admission of the petition and initiation of Corporate Insolvency Resolution Process unlike Section 8 & 9 of the Code. In accordance with the provisions of Section 8 and 9 of the Code if a dispute in a civil suit or a dispute in arbitration proceeding is pending then a bar 9. no. (rss0pay2037 Sate Bok of ni Su Kam Power Stems Lined Pope 26127has been created by Section 8 (2) (a) of the Code and it is deemed to be an existence of dispute therefore, no Corporate Insolvency Resolution Process could be triggered. ‘There is however no such provision in Section 7 of the Code. Accordingly, we proceed to entertain the petition and leave the applicant-Reliance India Power Fund-intervener to choose its remedy in accordance with law. 34. The Petition along with C.A, No. 136(PB)/2018 are disposed of in the above terms. (S.K. MOHAPATRA) MEMBER (TECHNICAL) 05.04.2018 Vineet PN, 06)-520(06/2017, Stte Bn of nia Sa om Power ystems United Page 37137