IN THE NATIONAL COMPANY LAW TRIBUNAL, NEW DELHI PRINCIPAL BENCH (1B)-455(PB)/2017 IN THE MATTER OF: M/s. Indiabulls Housing Finance Limited .......Financial Creditor v. M/s. Forgings Private Limited Corporate Debtor/ Respondent SECTION: Under Section 7 of The Insolvency and Bankruptcy Code, 2016 Judgment delivered on 28.03.2018 Coram: CHIEF JUSTICE (RTD.) M.M. KUMAR Hon’ble President S.K. MOHAPATRA Hon’ble Member (T) For the Financial Creditor: Mr. Chetan Sharma, Senior Advocate with Mr. Abhishek Swaroop, Mr. Anupam K. Sinha and Ms. Abhilasha Vij, Advocates For the Respondent: Mr. Mohit Chaudhary, Ms. Garima Sharma, Mr. Divanshu Kishore Sharma and Mr. Kunal Sachdeva, Advocates M.M. KUMAR, PRESIDENT JUDGMENT The ‘Financial Creditor’-M/s. Indiabulls Housing Finance Limited has filed the instant application under Section 7 of the Insolvency and Bankruptcy Code, 201 AE Ri ‘the Code) Fo 80Y Cy with a prayer to trigger the Corre “- te Resolutiontt — Process in the matter of M/s. Forgings Private Limited (for brevity ‘the Corporate Debtor). It is appropriate to mention that the ‘financial creditor’ is a company incorporated on 10.05.2005 under the Companies Act, 1956. Its assigned identification number U65922DL2005PLC 136029. It has its registered office at M-62 & 63, First Floor, Connaught Place, New Delhi-110001. 2. Mr. Devbrat Mitra, Legal Manager has been authorized by the Board Resolution dated 07.07.2017 (Annexure-B) to sign and submit the petition. 3. The Corporate Debtor-M/s. Forgings Private Limited was incorporated on 18.04.1960. The identification number of the Corporate Debtor is U13209DL1960PTC003211 and its registered office is situated at F-1/9, Okhla Industrial Area, Phase-I, New Delhi-110020. Its authorised share capital is Rs, 25,00,00,00/- as per the memorandum of Association of the Corporate Debtor. A copy of the Memorandum of Association and the Articles of Association relating to Corporate Debtor has been placed on record (Annexure D & E).4. Brief facts of the case necessary for disposal of the controversy raised in this application are that the Corporate Debtor, approached the Financial Creditor for availing a loan for a sum of Rs. 25,80,99,593/- (Rupees Twenty Five Crore, Righty Lakhs, Ninety Nine Thousand Five Hundred Ninety Three) to meet the working capital requirements for business needs. As per the request of the Corporate Debtor, the Financial Creditor sanctioned the loan facility for the aforesaid amount vide sanction letter dated 30.03.2015 and consequent upon acceptance of the offer of the aforesaid loan, an agreement dated 30.03.2015 was executed between the parties. The Financial Creditor had disbursed entire loan amount of Rs. 25,80,99,593/- (Rupees Twenty Five Crore, Eighty Lakhs, Ninety Nine Thousand Five Hundred Ninety Three) on 31.03.2015. 5. As per the aforesaid loan agreement, loan facility was for tenure of 24 months and the interest was payable in monthly instalments. The principal was repayable in two instalments of Rs. 12,90,49,797/- (Rupees Twelve Crore Ninety Lakhs Forty Nine Thousand Seven Hundred and Ninety Seven), each payable = an on 12 and 24 month from the date of (igbii!Sal = sCopies of sanction letter and loan agreement have been placed on record (Annexure F & L). 6. As per the averments of the ‘Financial Creditor’, the Corporate Debtor committed breach of the loan agreement inter alia by making defaults in payment of the monthly instalment due and payable by the Corporate Debtor to the Financial Creditor on various dates which have been mentioned in column 2 of part IV of the application. These dates are as under:- * 04% April, 2016: Dishonour of Cheque amounting to Rs. 129,049,797/-; * 5% April, 2016: Dishonour of Cheque amounting to Rs. 3,484,345/-; * Sth May, 2016: Dishonour of Cheque amounting to Rs. 1,742,172/-; © 5% June, 2016: Dishonour of Cheque amounting to Rs. 1,742,172/-; © 5% July, 2016: Dishonour of Cheque amounting to Rs. 1,742,172/-; e St August, 2016: Dishonour of Cheque amounting to Rs, 1,742,172/- ctA copy of the loan agreement has been placed on record (Annexure L). 7. As per the averments of the Financial Creditor’, the total amount in default is Rs. 34,25,31,305.11/- (Rupees Thirty Four Crore, Twenty Five Lakhs, Thirty One Thousand, Three Hundred and Five and Eleven Paisa Only). A copy of computation of amount and days of default has been placed on record (Annexure 1). 8. 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 has been mentioned in the schedule-Il of the document Annexure-J which starts with the caption ‘undertaking to give physical possession of the Mortgaged properties’ which is set out below:- 12/6, built on plot of land admeasuring 70 kanal 14 marla, comprised in Khasra Nos. 35/25 (5- 15), 36/21/1(3-07), 39/1(8-00), 39/2 (8-00), 39/3 (8-00), 39/4/1 (1-12), 39/7/2 (2-00), 39/8 (8-00), 39/9 (8-00), 39/10 (8-00), 40/5(5-05), 540/6 (4-15) SITUATED IN THE REVENUE ESTATE OF VILLAGE SARAI KHWAJA, MATHURA ROAD, TEHSIL & DIST. FARIDABAD, HARYANA. 9. The Corporate Debtor also issued Registration of Charge in favour of the financial Creditor in respect of the aforementioned security by filing an application before the Registrar of Companies and the same was duly issued by the RoC on 07.04.2015 pursuant to Section 77 (1) and Section 78 of the Companies Act, 2013 r/w sub-rule (1) of rule 6 of the Companies (Registration of Charges) Rules, 2014. Copy of the Registration of Charge has been placed on record as Annexure-K. 10. The Corporate Debtor as well as its signatories also executed the deed of guarantee and pledge/charge agreement in favour of the Financial Creditor. Copies of the deed of guarantee and pledge/charge agreement have been placed on record (Annexure -M & N), eo11. As per the averments of the ‘Financial Creditor’, the account of the Corporate Debtor was declared as Non-Performing Asset (NPA) on 21.08.2016 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 constrained to issue notice dated 22.08.2016 under Section 13(2) of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for brevity ‘the SARFAESI Act, 2002) and called upon the Corporate Debtor and its guarantor/pledgor to repay the outstanding amount of Rs. 28,37,58,344/- (Rupees Twenty Eight Crore Thirty Seven Lakh(s} Fifty Eight Thousand Three Hundred Forty Four only) till 21.08.2016 along with future interest @ 18% per annum w.e.f. 22.08.2016 along with pending TDS amounting to Rs. 43,22,280/- till actual payment but inspite of the notice they failed to clear the unpaid debt/liability. A copy of the recall notice has been placed on record (Annexure O). 12, It is also the pleaded case of the Financial Creditor that feeling aggrieved against the issuance of aforesaid notice Annexure-O th@\Gerporate Debtor as well as its signatories had oneeny ¢7 & “> filed Secu eo under Section 17 of the SARFAESI - 3 = |Act, 2002 before Debts Recovery Tribunal-Il, Delhi which was registered as S.A. No. 03/2017. The Learned DRT-II, Delhi vide its order dated 12.01.2017 disposed of the said application quashing the proceedings initiated by the Financial Creditor under Sections 13 (2) & 13(4) of the SARFAESI Act for auctioning the property under question with a liberty to the Financial Creditor to follow the mandatory provisions of Sections 13 (2) & 18(4) of the SARFAESI Act in letter and spirit and then proceed with the sale of the said property. Thereafter the Financial Creditor challenged the order dated 12.01.2017 passed by DRT- UL, Delhi by filing Appeal No. 25/2017 before the Debts Recovery Appellate Tribunal, Delhi. The Debts Recovery Appellate Tribunal, Delhi vide its order dated 07.02.2017 set aside the order dated 12.01.2017 passed by DRT-Il, Delhi and remitted the matter back to the Debts Recovery Tribunal, Delhi for fresh consideration and disposal in accordance with law after giving the parties full opportunity to adduce evidence as also to produce additional documents, if any. 13, The Debt Recovery Tribunal-II, Delhi even in the second »vide its order dated 28.06.2017 allowed the ecpmpany , iz CS i€ation filed by the Corporate Debtor holding a ) 8 ee }that the action initiated by the Financial Creditor under Section 13(4) of the SARFAESI Act is untenable and quashed the same. Aggrieved by the said order the Financial Creditor filed Review application bearing No. 06/2017 before the Debts Recovery Tribunal-II, Delhi but it met with similar fate vide order dated 11.09.2017. Feeling aggrieved against both aforesaid orders dated 28.06.2017 & 11.09.2017 the Financial Creditor again approached before the Debts Recovery Appellate Tribunal, Delhi by filing Appeal bearing No. 438/2017. It is pertinent to notice here that the facts relating to proceeding before the Debts Recovery Tribunal-II, Delhi and Debts Recovery Appellate Tribunal, Delhi emerges from the pleadings of the Financial Creditor as well as short reply of the Corporate Debtor. Copies of aforesaid orders have been placed on record (Annexure P, Q, R, R-1, R-2 & R-4). 14. The Corporate Debtor filed short reply to the instant application by asserting that the Financial Creditor is guilty of gross suppression and concealment as it has not brought to the notice of this Tribunal entire facts relating to the proceedingsjudgment/order dated 28.06.2017 and 07.02.2017, while concealing the order dated 12.01.2017 1S. The Corporate Debtor further asserted that it is wrongly identified as the Corporate Debtor, while the Deed of Guarantee reflects the name of borrower as one of ‘Bindas Estates Private Limited’. It is further asserted that entire transaction is a sham and the Financial Creditor has fudged its books of accounts, No loan was taken by the Corporate Debtor for any ‘working capital requirement’, as alleged. Entire dispute, pertaining the present loan transaction, is pending before the DRAT, Delhi in Appeal bearing No. 4838/2017, where the status is alleged demand, set off, liabilities, etc. are to be determined. Hence, the present proceedings before this Tribunal cannot proceed, 16. The Corporate Debtor further asserted that in the present case, the background is very important as there were five loan accounts (see page 151) and there was a litigation before the Hon’ble High Court, factum of which is not disclosed. It is also not disclosed that the Corporate Debtor has not used the money ytaken back by the ga ConA pn Financial Creditor using the account th — 10was ever utilized by the Corporate Debtor and what has been claimed as principal was just a routing of entries, What happened in fact was that on 31% March 2018 money came in account of the Corporate Debtor and was transferred back to the Financial Creditor. Thus, the application is devoid of material Particulars, is incomplete and thus is liable to be dismissed, in terms of Section 7 of the Code, 2016. 17. A rejoinder to the short reply has been filed by the Financial Creditor reiterating the submissions made in the application and controverting the assertions in the short reply. Along with a rejoinder a copy of Deed of Guarantee containing the name of the Corporate Debtor and a copy of the Balance Sheet for the financial year 2015-16 of the Corporate Debtor has also been placed on record (Annexure U & V). 18. The objection with regard to suppression and concealment raised on behalf of the Corporate Debtor does not need to detain us because the concealment is required to be of material facts which may have bearing on the issue raised, In para 23, 24 & 25. Private Limited v. Punjab National a(AT) (Insolvency) No. 81 of 2017 decided on 01.12.2017 the Hon'ble Appellate Tribunal has taken the aforesaid view. The Financial Creditor in its application has narrated the Proceedings which was pending before the Debt Recovery Tribunal-Il, Delhi and Debts Recovery Appellate Tribunal, Delhi along with the order passed therein. If the order dated 12.01.2017 passed by the DRT-Il, Delhi is not filed by the Financial Creditor, it cannot be treated as a suppression ot concealment on the part of the Financial Creditor though in light of aforesaid judgment which neither relevant nor material in such type of proceedings. 19. With regard to the other objection raised by the learned counsel that it is wrongly identified as the Corporate Debtor, while the Deed of Guarantee reflects the name of borrower as one of ‘Bindas Estates Private Limited’. It is seen from the loan agreement (page 86 of the application) that the Corporate Debtor is the borrower under the loan facility. The loan agreement categorically, and in most unambiguous terms records the name of the borrower entity as ‘M/s. Forging Limite However, filing of the Deed of Guarantee containing thé Rt —— iindaas Estates 2ye octet Private Limited’ was an inadvertent and bonafide mistake on the part of the Financial Creditor as same has been admitted by the Financial Creditor itself in its rejoinder and the correct Deed of Guarantee containing the name of the Corporate Debtor has been Placed on record (Annexure U). The Financial Creditor by way of rejoinder has stated that said deed pertains to a separate transaction and is not related to the present proceedings. Thus, this objection of the Corporate Debtor is also devoid of merit and cannot be sustained. 20. Another submission of the Corporate Debtor that the transaction is fudged and it is wrongly mentioned in the documents/books etc. by the Financial Creditor, is untenable and liable to be rejected in light of the fact that in the annual report and balance sheets of the Corporate Debtor pertaining to the financial year 2015-16, the Corporate Debtor has admitted its indebtedness to the extent of Rs. 25,80,99,593.00 which is patent from a perusal of the Balance sheet (Annexure V). 21. Under Section 7 (3) of the Insolvency and Bankruptcy Code, a YA\ i ihename of & ay hind saddled with the mandatory duty to furnié 2Bthe Resolution Professional to act as an Interim Resolution Professional. While dictating the order it was found that the Proposed name of the Resolution Professional suffers from serious illegalities. Accordingly, order was pronounced on 21.03.2018. We granted opportunity to the Financial Creditor to perform its statutory mandatory obligation by providing the name of the Resolution Professional to act as an Interim Resolution Professional in place of the earlier one. 22. In compliance of direction issued by this Tribunal, the Financial Creditor filed application C.A. No. 232(PB)/2018 along with affidavit by the Legal Manager of the Financial Creditor whereby request has been made to accept the appointment of replaced Interim Resolution Professional namely Mr. Sajeve Bhushan Deora. Mr. Deora has filed his written communication as per the requirement of Rule 9 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 (Annexure-W). He has declared that no disciplinary proceedings are pending against him in Insolvency and Bankruptcy Board of India. In addition, further necessary disclosure has been made by Mr. Deora as per the requirement of the IBBI Regulations. The i iy Age Banteruptcy Board of = Eh certificate issued by the InsolvencyIndia also shows that he is duly registered and is eligible to act as Interim Resolution Professional. 23. Notice of the aforesaid application to the Corporate Debtor was issued on 23.03.2018 by dasti process for 26.03.2018, On 26.03.2018 we allowed the application and passed the following order: “C.A. No. 232(PB)/2018 This is an application for substitution of earlier Interim Resolution Professional with the new one Mr. Sajeve Bhushan Deora. He fulfils all the requirements of the IBBI Regulations and therefore, the application is allowed. The arguments on merit have already been heard. Put up for order on 28.03.2018.” 24. As a sequel to the above discussion, this petition is admitted and Shri Sajeve Bhushan Deora is appointed as an Interim Resolution Professional. His registration number is IBBI/IPA- 001/IP-P00317/2017-18/10581. 25. In pursuance of Section 13 (2) of the Code we direct that geil War public announcement shall be made ig Gee terim Resolution . Professional immediately (3 days as 15 ulations)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) & (d). Thus, the following prohibitions are imposed: “(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 possession of the corporate debtor.” 1626. 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, are not to be terminated or suspended or interrupted during the moratorium period. 27. The Interim Resolution Professional shall perform all his functions contemplated, inter-alia, by 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 qe eee for passing an appropriate order. 1) 7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, Rules and Regulations. 28. The Petition is disposed of in the above terms. 29. 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. Sdl- (M.M. KUMAR) ~~ PRESIDENT — — Sdi— (S.K. MOHAPATRA) MEMBER(TECHNICAL) 28.03.2018 Vineet NIRMALA VINCENT Court Officer National Company Law Tribunal Govt. of India, New Delhi