Idbi Bank Ltd Petitioner(S) v. Neueon Towers Ltd (S).

Orders passed in IA No. 70/2020, vide separate orders.

The Order of the Court was delivered by

Narender Kumar Bhola, Member (Technical):— This application is filed under Section 60(5) of the I&B Code, 2016 Read with Rule 11 of the NCLT Rules, 2016 praying the Tribunal to direct the Respondent i.e Resolution Professional to admit the claim submitted on 05.12.2019 filed in Form C by the Applicant.

2. Averments in the Application in brief:

a. The Applicant i.e Oriental Bank of Commerce, a body corporate, constituted under the Banking Companies (Acquisition & Transfer of Undertaking) Act No. 40 of 1980, having its Head Office at E-Block, Harsha Bhawan, Connaught Place, New Delhi-110 001.

b. The present application is filed by the Applicant for intervention and for seeking appropriate directions from this Tribunal to the RP to admit the claim dated 05.12.2019 filed in Form C by the Applicant.

c. The applicant avers that in the year 2012, M/s. Sujana Universal Industries Limited (Principal Borrower), availed credit facilities to an extent of Rs. 100.00 crores from the Applicant for its existing business of manufacturing and trading in bearing, automobile components and steel products. Considering the credibility of the Principal Borrower based on its excellent relations with the Bankers, the consortium of banks sanctioned loan facilities to the Principal Borrower, as such the applicant vide its sanction letter dated 03.01.2012 sanctioned a loan of Rs. 100.00 crores. The sanction letter is annexed as Annexure-A.1.

d. It is averred that the corporate debtor namely Sujana Towers Ltd now M/s. Neueon Towers Ltd, resolved to provide the guarantee as requested by the principal Borrower as is evidenced from its Board Resolution dated 09.01.2012. The Agreement of guarantee was executed by the corporate debtor/guarantor on 11.01.2012 as per the terms and conditions of the Bank, for securing repayment of loan to an extent of Rs. 100 crores availed by the Principal Borrower for its working capital facilities. The corporate debtor inter alia undertook to unconditionally and irrevocably guarantee for the repayment of loan to the lenders including the Applicant.

e. It is averred that on 18.10.2012, the corporate debtor/guarantor also signed the balance and security confirmation of the Principal Borrower. The applicant avers that the last instalment was paid by the Principal borrower on 31.03.2016 and thereafter failed to repay the loan advanced and continued to commit default. On account of the continuous default committed by the Principal Borrower in repayment of the loan availed, the loan account has been slipped into and has been classified as NPA (Non-Performing Asset) in accordance with Reserve Bank of India directives, on behalf of consortium of Banks including Bank of Baroda, Bank of India, Oriental Bank of Commerce (Applicant), Indian Overseas Bank, IDBI Bank Ltd, UCO Bank and Central Bank of India represented by their lenders Agents and Lead Bank M/s. Bank of Baroda issued a demand notice under Section 13(2) of the SARFAESI Act on 25.10.2018 calling upon the Principal Borrower and 11 others including the corporate debtor/guarantor to discharge the liability.

f. It is averred that one of the financial creditors i.e IDBI Bank being one of the lenders filed the petition CP(IB) No. 679/7/HDB/2018 under Section 7 of I&B Code against the corporate debtor/guarantor i.e Neueon Towers. The petition was admitted on 03.06.2019 and the Respondent was appointed as RP.

g. It is averred that the Bank was unware of the change of constitution of the corporate debtor. The Corporate debtor being a guarantor to the Bank ought to have notified the change in constitution of its Company to the Bank but failed to comply with the terms and conditions of the agreement of guarantee as executed.

h. It is averred that as soon the applicant came to know about the initiation of CIRP proceedings against corporate debtor the applicant filed its claim before the Resolution Professional (Respondent) on 05.12.2019, which was rejected by the Resolution professional stating that the Applicant's claim is beyond the claim period.

i. Applicant avers that Resolution Professional filed an application IA No. 1047/2019 dated 22.11.2019 for extension of CIRP for another 90 days with effect from 01.12.2019. In the light of above facts the applicant states that RP ought to have considered the claim of the applicant.

j. Applicant further submits that in case the principal borrower goes to liquidation the applicant will suffer a huge loss as it would lose the valuable contractual right, therefore its claim was required to be admitted in accordance with the terms of agreement of guarantee.

k. Applicant further submits that there was privity of contract between the applicant and the corporate debtor/guarantor and the applicant is authorized to demand payment from the corporate debtor/guarantor in the event of default committed by the Principal Borrower and also submits that it is not claiming any amount more than what is contractually owned by the principal borrower and guaranteed by the corporate debtor.

l. Thus the applicant seeks directions from the Tribunal to the Respondent to admit the claim.

3. Reply/counter filed by the Respondent/Resolution Professional:

a. Respondent/Resolution Professional denied the allegations made by the Applicant as the present application filed by the Applicant is wholly misconceived and is not maintainable in law nor on facts and the same is liable to be dismissed.

b. Respondent/Resolution Professional averred that, the applicant has made its claim by way of submitting Form C, dated 05.12.2019, through speed post which was received by the respondent on 07.12.2019 i.e after expiry of 90 days from the date of commencement of CIRP period as such the said claim was rejected by the Respondent/Resolution Professional as per Regulation 12(2) of the I&B Code, 2016.

c. It is averred that corporate debtor which stood as corporate guarantor signed the balance and security confirmation of the Principal borrower, which committed default etc. are not within the knowledge of the Respondent/Resolution Professional. The last date of payment of the installment/interest paid by the Principal borrower is on 31.03.2016 and thereafter failed to repay the loan amounts availed by the Principal borrower from the Applicant herein, which clearly shows that the claim is barred by limitation Act, as such the Application is liable to be dismissed.

d. It is averred that the corporate debtor M/s. Neueon Towers limited, formerly known as Sujana Towers Limited, a listed company on the rolls of Bombay Stock Exchange and the National Stock Exchange changed its name by passing a special resolution by the Members by postal ballot on 08.09.2016, by giving a due notice of Postal Ballot dated 03.08.2016, to all the shareholders, for passing the special resolution for change of name of the corporate debtor as per the provisions of the Companies Act, 2013. Subsequent to passing of the said special resolution necessary disclosures under SEBI(Listing obligations and Disclosures requirements) Regulations 2015 were submitted to the Stock Exchange on 04.10.2016 and the corporate debtor being a listed Company, complied with the passing of the Special Resolution by the members giving disclosures to the Stock Exchanges regarding the change of name corporate debtor and it also appeared in newspapers. Thus the allegation of the Applicant bank that it is unaware of the change of the name of the corporate debtor is absolutely false and baseless.

e. It is averred that IBC has not specified any provisions for extension of the period of 90 days for submitting their claims from any creditors of the corporate debtor. The applicant Bank has submitted its claim through speed post, contrary to the Rule position as envisaged under Regulation 8(1) of the IBBI, Regulations, 2016 that a person claiming to be a financial creditor of the corporate debtor shall submit proof of claim to the Respondent/Resolution Professional in electronic form in FORM C of the Schedule. Based on this ground also the claim of the applicant is rejected.

f. It is averred that the extension of CIRP for a further period of 90 days is envisaged in the Act so as to enable the Resolution Professional to complete the CIRP process after showing the progress of the CIRP Period and that extension does not mean that the claims from the lenders can be accepted beyond the 90 days from the date of commencement of CIRP and the Respondent/Resolution Professional to accept the same. No provisions is envisaged in IBC for receiving the claims from the lenders of the corporate debtor, beyond the 90 days period from the date of commencement of CIRP. Thus the claim of applicant is rejected as per the provisions of the IBC, 2016.

g. He averred that an application was filed by M/s. Minera Steel and Power Private Limited under Section 9 of I&B Code, 2016 against the principal borrower and the Tribunal was pleased to admit the petition on 20.06.2019. It is further submitted that the Applicant bank there in, in response to the public announcement of Form A, has submitted its claim on 10.07.2019 for an amount of Rs. 162,06,90,264/- as on 26.06.2019 which was admitted by the Resolution professional there in.

h. It is averred that the applicant bank herein made a claim before R.P of the principal borrower, has suppressed the fact of making its claim, in the present application under this counter affidavit. Thus the very attitude of the Applicant Bank herein goes to show that the applicant bank is intending to travel on two boats at the same time and is trying to get usurp with the amounts from both principal borrower and the corporate debtor guarantor at the same time, leaving the other lenders at their fate.

i. It is further averred that the applicant bank has not approached this Tribunal with clean hands, as such no relief can be granted in its favour.

4. We have heard the counsel for applicant and also the counsel for RP. Learned counsel for applicant also filed written submissions on behalf of applicant.

5. The applicant is a financial creditor. The case of Applicant is that M/s. Sujana Universal Industries Limited, who is principal borrower, availed credit facilities to the extent of Rs. 100 cores from the applicant/financial creditor for its business. The consortium of banks sanctioned loan facilities to the principal borrower M/s. Sujana Universal Industries Limited herein after called as principal borrower.

6. The applicant/financial creditor sanctioned Rs. 100 crore. The respondent M/s. Neueon Towers Limited, who is corporate debtor stood as corporate guarantor along with three others for the loan availed by the principal borrower.

7. The corporate debtor herein was originally known as Sujana Towers Ltd. The name of the Company was changed to M/s. Neueon Towers Limited. This corporate debtor/Guarantor stood as guarantor for the loan sanctioned to principal borrower M/s. Sujana Universal Industries Limited. Thus the case of applicant is that corporate debtor herein stood as guarantor for the principal borrower against whom CIRP already started.

8. Learned counsel for applicant contended that the applicant/financial creditor filed claim before RP appointed for corporate guarantor. CIRP started against the corporate guarantor/debtor i.e M/s. Neueon Towers Limited in a case filed by IDBI Bank. There was some delay in filing the claim before RP and it was taken as a ground for rejecting the claim. So the claim of applicant was rejected solely on the ground it was filed before RP beyond 90 days from the date of commencement of CIRP. Therefore it was not admitted.

9. Learned counsel for applicant would contend that there is no bar for applicant to make a claim before RP appointed for corporate debtor who is guarantor for the loan sanctioned to principal borrower. Counsel contended even though applicant filed claim before RP appointed for principal borrower company yet applicant can make its claim before RP appointed for corporate guarantor company.

10. Learned counsel for applicant contended liability of corporate debtor is joint and several. The lender is entitled to proceed against either of them or against both. Thus learned counsel contended present petition is maintainable.

11. Already CIRP started against principal borrower M/s. Sujana Universal Industries Limited. Already Applicant filed its claim before RP appointed for principal borrower M/s. Sujana Universal Industries Limited when such is the case how applicant can file the same claim before RP appointed for the guarantor which is M/s. Neuon Towers Limited. Though liability of guarantor is joint and several, the applicant having filed its claim before RP appointed for Principal borrower can't make the same claim before RP appointed for corporate guarantor company.

12. Applciant can't maintain two claims of the same debt one before RP appointed for principal borrower and another before RP appointed for corporate guarantor.

13. The claim of applicant can't be admitted twice. The Applciant is entitled for admission of its claim only one time i.e. either before RP appointed for principal borrower or RP appointed for corporate guarantor.

14. After exhausting the remedy before RP appointed for principal borrower and if any balance remaining to be paid then applicant/financial creditor can make the claim for the balance if any before RP appointed for corporate guarantor, provided corporate guarantor services are subject to the result of CIRP started against guarantor.

15. Applicant can't make same claim before the RP appointed for principal borrower and also the RP appointed for corporate guarantor. The application is therefore liable to be dismissed giving liberty to the applicant to initiate appropriate action against corporate guarantor in respect of balance if any. Subject to the result of CIRP started against guarantor.

16. There is delay in filing the claim before RP for the corporate debtor company. The claim is made beyond 90 days from the commencement of CIRP. The claim can't be entertained when it is not filed within the 90 days from the date of commencement of CIRP. Thus application is not maintainable on this ground also.

17. In the result application is dismissed