national company law tribunal new delhi bench sept... · 2017-10-25 · national company law...

NATIONAL COMPANY LAW TRIBUNAL NEW DELHI BENCH

(IB) No. 244(ND) of 2017

In the matter of

Indian Bank Financial Creditor/ Petitioners

V/s

M/s Athena Demwe Power Ltd. ...Corporate Debtor/Respondents

SECTION: U/s 7 of the IBC Code, 2016

9r4cdeliverecj on 28.09 2017

Coram:

SMT. INA MALHOTRA, HON'BLE MEMBER (J)

SH. S. K. MOHAPATRA, HON'BLE MEMBER (T)

For the Petitioner (s) Mr. Sameer Rastogi, Advocate Ms. Pooja Singh, Advocate

For the Respondents (s): Mr.Tarun John, Advocate Mr. Ankit Saini, Advocate

ORDER

PER SMT INA MALHOTRA, MEMBER (J)

The Petitioner, being the Financial Creditor, has filed the

present petition under Section 7 of the Insolvency and Bankruptcy

Code, 2016, (hereinafter referred to as the Code) for initiating

(16) No. 244(ND) of 2017

Indian Bank V.M/s Athena Demwe Power Ltd. o ii

Corporate Insolvency Resolution Process against the Respondent who

has not been able to liquidate its dues towards the Applicant Bank.

2. As per the averments the Corporate Debtor, which is stated to

be a SPV(Special Purpose Vehicle) of a conglomeration of companies,

approached the Bank for financial assistance in the form of Term

loan and other financial assistance for setting up a Major Power

generating Project in the North East. Given the size of the project, the

Corporate Debtor had sought funding from several banks which

approved and sanctioned various limits. The disbursement by banks,

other than the Financial Creditor and another, was however to be

made upon implementation of the project and subject to other terms

and conditions. The project has yet to be set up as it is awaiting

several clearances from the different departments of the government.

The financial creditor initially sanctioned and disbursed a Short

Term Loan of 200 crores in 2011 and a further submit sub-limit of

Rs. 100 crores under the head FLC/ILC/BG/LOC The repayment

schedule which was initially for a term of 6 months has been

restructured several times. Since the Corporate Debtor failed to

regularise the account, the same was declared a Non- Performing

Asset on 31.05.2013. As per the statement of account maintained by

the Bank in their normal course of their business, a sum of

Rs.333.80 crores is due and payable to them by the Corporate

Debtor.

(IB) No. 244(ND) 012017 of 11

Indian Bank Vs.M/s Athena Demwe Power Ltd.

3. The aforesaid facility for grant of financial assistance been

extended from time to time. To enable the Corporate Debtor avail

thisfacility, a charge was created over its movable assets, both

present and future. Corporate guarantees of M/s AlP Private Limited,

Athena Energy Ventures Pvt. Ltd. and Athena Infraprojects Ltd. were

accepted by way of pledge of theirsharesas collateral security and all

terms and conditions of disbursement were duly accepted by the

Corporate Debtor. Various other agreements for extending the

financial assistance by way of Medium Term and Bridge loans were

executed. However, as the Corporate Debtor failed to adhere to any

financial discipline in regularising the account and/or reducing the

liabilities, its accounts were rendered and classified as non-

performing assets. Unable to wait any longer for realisation of the

dues, the Lender Bank has instituted the present petition seeking

resolution of the Corporate Debtor. This is notwithstanding the fact

that they have also initiated the recoveries under Section 19 of

Recovery of Debtbefore the Debt Recovery Tribunal-i.

4. The Financial Creditor has placed on record the audited

reports of the Corporate Debtor.

5. The Respondent on being served, has not disputed their

outstanding liability towards the Applicant Bank. It has only

submitted that for reasons beyond its control, on account of various

requirements by the different departments of the Government, the

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project has stagnated for such a long period and has failed to take

off. Despite the constant efforts made by all stake holders to

implement the project which is of national and strategic importance,

the project has been embroiled in various litigations and hurdles

created in getting clearances. After relentlessly pursuing for

clearances, including steps for acquisition of land, they finally hope

to get a green signal from the National Green Tribunal to cut the

trees over the land and get the project rolling.

6. The Corporate Debtorhad availed the financial assistance to

implement a 1750 MW power generating project in district Lohit,

Arunachal Pradesh, as a joint venture project of the Government of

Arunachal Pradesh which has 6% equity in the project. It is their

case that ever since thecontract for the project was awarded to them,

a constant endeavour has been made to set it up and they have now

achieved significant progress,having obtained requisite permits and

clearances, acquired the required private land, tying up finances for

the project including raising debt and equity, but for reasons beyond

their control, like prolonged litigation, economic slow-down, delay in

granting clearances by the Ministry of Environment and Forests, the

financial closure of the project could not be achieved. New promoters

and investors have been brought in with the consent of

theGovernment of Arunachal Pradesh and initiation of any resolution

(IB) No. 244(ND) of 2017 of 11 Indian Bank Vs.M/s Athena Demwe Power Ltd.

process shall adversely hit the interests of stake holders including

that of thefinancjai creditor whose repayment of debt is undertaken

to be liquidated or at least reduced. Ld. Counsel for the Corporate

Debtor has argued that various steps have been taken by the Reserve

Bank of India from time to time to revitalise suchlike distressed

assets in the economy, one of these being a unanimous decision

taken by the Joint Lenders Forum of Banks who have sanctioned

their loans and have a corrective action plan in place. It is submitted

that in view of the discussions and deliberations made amongst the

lenders of the project in the meetings held in October, 2015 and June

2016, the project was Supposed to achieve a timely financial closure

and repayment of the short-term loan to the financial creditor was to

be made from the first disbursement of the long term loan. The long-

term loans, though sanctioned, were to be disbursed only upon the

project being implemented Ld. Counsel for the Corporate Debtor

submits that the efforts are on-going with the other lenders, but in

view of non- revalidation of the sanctioned loan even after it was

agreed for by the financial creditor, the delay in financial closure of

the project is beyond their control.

The decision of the Joint Lenders Meeting held on 3rd June,

2016 to work forward has been relied upon by the Ld. Counsel for the

Corporate Debtor, which includes, inter-alia: -

(JB) No. 244(ND) of 2017

Indian Bank Vs.M/s Athena Demwe Power Ltd. of 11

LIP

The short-term loan may be repaid out of first

disbursement under long term loan facil ity subject to

(i) waiver of penal interest and netting of such penal

interest paid in past from current outstanding

interests dues,

(ii) Hold all the recovery proceedings till 31-Dec-20 16,

(iii) Indian Bank agrees to participate in its pro-rata

share in Senior Debt.

7. It is argued that in the Joint Lenders Forum of the

Banks,whjch also includes the Financial Creditor herein, it was

unanimously agreed not to proceed against the Corporate Debtor.It is

also submitted that the Financial Creditor is now retractingfrom

itsundertaking given before the Joint Lenders Forum wherein it was

decided that its loans would be liquidated as per the scheme

envisaged. The Ld. Counsel has further emphasized that as the

short-term loan was agreed to be liquidated out of the proceeds

granted under the long term financial assistance from the joint

lenders, the recall of the loan by the Financial Creditor is premature.

8. On behalf of the Corporate Debtor, Ld. Counsel further

submits that the last major hurdle in causing delayfor

implementation of the project is a stay order on the cutting of trees

by the Hon'ble National Green Tribunal, all other regulatory and

(JB) No. 244(ND) of 2017


statutory approvals having been received. They are optimistic in

obtaining the same shortly as the judgement/order is reseed. It is

pointed out that an investment of over several hundred crores has

already been made by them in the project and land has been

acquired for setting up the power generating system which is of

national importance and any resolution plan intended at this stage

would be to the detriment of the nation and the various stake

holders. It is also asserted that the decision of the applicant Bank to

initiate the present proceedings is in gross violation of the guidelines

set up by the Banking Regulator i.e. the RBI applicable to cases

involving delay on grounds of litigation and other extraneous reasons

like Govt. Approvals etc. All these factors which are beyond the

control of promoters and have resulted in delay in the project

implementation necessitate restructuring and rescheduling of the

loans by the Banks. Ld. Counsel for the Respondent Corporate

Debtor rests his arguments on grounds that there is no default as the

short term loan had to be liquidated from the disbursement of the

Long Term Loan, which has not been re-sanctioned/disbursed.

9. Per contra, Ld. Counsel for the Financial Creditor submits that

various opportunities have already been given to the Corporate

Debtor by way of extension and restructuring of the loan facility. It is

also submitted that apart from Corporation Bank, the petitioner is

(JB) No. 244(ND) of 2017 Page lofli Indian Bank Vs.M/s Athena Demwe Power Ltd.

the only bank to have granted financial assistance and therefore

there was no Joint Lenders' Forum, as none of the other Banks have

actually disbursed any financial assistance and have no stake in

recovery. The question of any decision taken by the alleged Joint

Lenders Forum was therefore Unsustainable and they are not bound

by the same. The other banks hadagreed to disburse financial

assistance only once the project was implemented. The Petitioner

Bank has waited for far too long and submits that the situation calls

for resolution of the Corporate Debtor either for a turn around and

proper implementation or to face liquidation.

10. Given the situation, we are of the opinion that any decision

made by the Joint Lenders Forum is not binding on the Financial

Creditor, as the members have not disbursed any financial

assistance. The Corporate Debtor therefore cannot seek to take

refuge under their resolutions in order to avoid an Insolvency

Resolution process, nor can they resist the Financial Creditor's

entitlement for recovery under the Code on the basis of some

underlying motive, Supposedly resulting in some economic detriment

or prejudice to national interests, as perceived by them. The correct

recognition of National Interest is adherence to the rule of law

impartially applicable without exceptions to one and all.

11. The factum of an Outstanding amount is admitted by the

(18) No. 244(ND) of 2017


F!

Corporate Debtor. Their inability to pay mandates Corporate

Insolvency Resolution Process. This petition is, therefore, Admitted.

The moratorium envisaged under Section 14 of the Code come into

immediate effect.

Section 14:

"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 judgement, decree

or order in any court of law, tribunal, arbitration

panel or other authority;

(b) transferring, encumbering, alienating or

disposing of by the corporate debtorany 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 Securitisat ion and Reconstruction of Financial

Assets and Enforcement of Security Interest Act,

2002;

(IB) No. 244(1'JD) of 2017 of 11 Indian Bank Vs.M/s Athena Dernwe Power Ltd.

I

(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."

12. The Financial Creditor has named Mr. Mukesh Mohan as the

IRP (Mr. Mukesh Mohan, Flat No. 504, Tower 6, Common Wealth

(IB) No. 244(ND) of 2017


Games Village, Delhi, Email Address: gyanshreeyahooco

Registration No. with IBBI: IBBI/IPA-OO 1 /IP-P000 18/2016-17/10042).

We confirm his appointment. He is directed to cause

publication in terms of Section 15 of the Code and take all such steps

as are statutorily required under Section 17,18 and 19. He shall file

his report with this Bench within the statutory period.

13. Copy of the order be communicated to both the parties.

(S. K. Mohapatra) (ma Maihotra) Member (T) ,

Member (J)

(IB) No. 244(ND) of 2017 of 11 Indian Bank Vs.M/s Athena Demwc Power Ltd.

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