The Principal Bench of the National Company Law Appellate Tribunal(NCLAT) upheld the proceedings against Corporate Debtor under Section 7 of the Insolvency and Bankruptcy Code (IBC) as the debt and default were proven with corroborative evidence.
The appeal was filed by the Promoter of the Corporate Debtor – M/s Renaissance Indus Infra Pvt. Ltd. challenging the order dated 31.03.2023 passed by the Adjudicating Authority (National Company Law Tribunal), admitting Section 7 application filed by the Financial Creditor – Catalyst Trusteeship Ltd.
The Corporate Debtor and Altico entered and executed the term sheet for a loan amount of Rs.650,00,00,000/- on 11.06.2018. On 21.06.2018, Debenture Trustee Appointment Agreement was executed where Vistra ITCL was appointed as the Debenture Trustee. On 26.06.2018, a Debenture Trustee Document was executed between the Corporate Debtor, Promoters and Vistra ITCL under which 390 unlisted, secured, redeemable nonconvertible debentures of the aggregate value of Rs.390,00,00,000 were issued by the Corporate Debtor.
The debt and default were admitted position in the reply filed by the Corporate Debtor. The submission which is much pressed by learned counsel for the Appellant is that Respondent No.1 had no locus to issue Acceleration Notice dated 26.07.2022.
It is submitted that it was only the Debenture Trustee who could have taken action in the event of default, as per the Debenture Trustee Document. In the facts of the present case, there is no dispute that the event of default took place. Learned counsel for the Appellant relying on Clause 9.2 of the Debenture Trustee Document submits that in the event of the occurrence of default, it is the Debenture Trustee who is entitled to take action.
After the event of default as per the Debenture Trustee Document, a Notice of Demand dated 13.07.2022 was issued by the Debenture Trustee himself. Demand Notice having been issued by the Debenture Trustee on 13.07.2022, the Corporate Debtor become fully liable to comply with such notice. Admittedly, the notice was not replied to by the Corporate Debtor and thereafter Acceleration Notice was issued on 26.07.2022 by the Financial Creditor.
The notice dated 13.07.2022 had been issued by the Debenture Trustee on the instructions of the Financial Creditor regarding a default of approx. Rs.215 Crore, due to the above, the Corporate Debtor cannot have any grievance regarding locus standi of the Financial Creditor and the Acceleration and Enforcement Notice was also not replied to by the Corporate Debtor raising any grievance.
A two-member bench comprising Justice Ashok Bhushan, Chairperson and Barun Mitra, Member (Technical) upheld the initiating proceeding against the Corporate Debtor under Section 7 of the Insolvency and Bankruptcy Code as there being debt and default undisputed and proved by the fact. The Authority dismissed the appeal.
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