IFCI Limited v. Era Housing & Developers (India) Limited 

IN THE NATIONAL COMPANY LAW

TRIBUNAL, NEW DELHI
PRINCIPAL BENCH

(IB)-489(PB)/2017
IN THE MATTER OF:
IFCI Limited
v.
Era Housing & Developers (India) Limited 

SECTION: Under Section 7 of The Insolvency and Bankruptcy
Code, 2016

Judgment delivered on 08.02.2018

Coram:
CHIEF JUSTICE (RTD.) M.M. KUMAR
Hon’ble President

S. K. MOHAPATRA
HON’BLE MEMBER (TECHNICAL)

For the Financial Creditor:

Mr. Kush Chaturvedi & Mr. Path Singh
Chaudhari, Advocates

For the Respondent: Mr. Vijay K. Singh, Mr. Vineet Arora and Ms.
Ruchika Darira, Advocates

M.M. KUMAR, PRESIDENT

JUDGMENT
The ‘Financial Creditor’-IFCI Limited has filed the instant
application under Section 7 of the Insolvency and Bankruptcy
Code, 2016 (for brevity ‘the Code’) with a prayer to trigger the
Corporate Insolvency Resolution Process in the matter of Era
geome & Developers (India) Limited (for brevity ‘the Corporate

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Debtor’). It is appropriate to mention that the ‘financial creditor’
is a company incorporated under the Companies Act, 1956. The
‘financial creditor’? was incorporated on 21.05.1993 and was
assigned identification number L74899DL1993GOI053677. It
has its registered office at IFCI Tower, 61, Nehru Place, New Delhi-

110019.

2. Mr. Ehteshamuddin, Manager-Law has been authorized by
the Authority letter dated 21.09.2017 (Annexure A) to sign and

submit the petition.

. 3. The Corporate Debtor-Era Housing and Developers (India)
Limited was incorporated on 15.09.1995. The identification
number of the Corporate Debtor is U74899DL1995PLC072507
and its registered office is situated at 1107, Indraprasth Building,
21, Barakhamba Road, New Delhi-110001. Its authorised share
capital is Rs. 6,25,00,000/- (Rupees Six Crores Twenty Five Lakh
Only) and the paid up share capital is Rs. 2,89,70,700/- (Rupees
Two Crores Eighty Nine Lakh Seventy Thousands Seven Hundred

Only).

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4. The Financial Creditor has proposed the name of Shri
Vikram Kumar, Sector B-1/1748, Vasant Kunj, New Delhi –
110070, email id vikramau@gmail.com. His registration number
is IBBI/IPA-001/IPPO00082/2017-18/10178. A written
communication dated 23.09.2017 in terms of Rule 9(1) of the
Insolvency and Bankruptcy (Application to Adjudicating
Authority) Rules, 2016 has also been placed on record (from pg.
409-410). 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. Vikram Kumar as
per the requirement of the IBBI Regulations. Accordingly, he

satisfies the requirement of Section 7 (3) (b) of the Code.

5. 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 Rule 4 of the
Insolvency and Bankruptcy (Application to Adjudicating
Authority) Rules, 2016 the total amount of debt granted to the
Corporate Debtor is Rs. 180,00,00,000/- (Rupees One Hundred

Eighty Crores) by executing a term loan agreement dated
22.10.2009 for a sum of Rs. 80,00,00,000/- (Rupees Eighty
Crores) and a corporate loan agreement dated 15.10.2010 for a
sum of Rs. 100,00,00,000/- (Rupees One Hundred Crores).
Copies of the aforesaid both term loan and corporate loan

agreements have been annexed (Annexure-G & H) respectively.

6. 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’-

IFCI Limited have been given in Part V which are set out below:-

(i) Mortgage of Property at Palwal, Haryana
admeasuring 81.77 acres (Adel Green World

Project).

(ii) Mortgage of Property at Bahadurgarh, Distt:

Jhajjar, Haryana admeasuring 13.30 acres.

(i) Escrow of receivables from sale of Property at
Palwal, with 60% of the cash flow to be utilized

for repayment of IFCI’s loans.
Copy of the Certificates of Registration of Charge issued by
the Registrar of Companies have been placed on record

(Annexure-D.

7. The appraised value of the aforementioned property
situated at Palwal, Haryana admeasuring 81.77 acres (Adel Green
World Project) as per the valuation report of Goel & Associates
dated 01.05.2017 is Rs. 205,47,50,000/- and distress sale value
is Rs. 154,10,62,500/-. The appraised value of the other property
situated at Bahadurgarh, District Jhajjar, Haryana admeasuring
13.30 acres as per the valuation report of Goel & Associates dated
01.05.2017 is Rs. 29,93,06,250/- and distress sale value is Rs.
22,44,79,500/-. Copy of the valuation reports have been placed

on record (Annexure-C).

8. A record of default is also available with the Credit
Information Companies like the status classification report of the
‘Corporate Debtor’ issued by the TransUnion CIBIL dated

10.10.2017 (Annexure J).

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9. As per the averments of the ‘Financial Creditor’, the account
of the Corporate Debtor was declared as Non-Performing Asset
(NPA) on 30.09.2013 in its books and is still continuing as such.
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 the recall
notice dated 17.01.2014 but inspite of the notice they failed to
clear the unpaid debt/liability. Thereafter the Financial Creditor
initiated recovery proceedings against the Corporate Debtor
under the provisions of the Recovery of Debts Due to Banks and
Financial Institutions Act, 1993 before the Learned Debt Recovery
Tribunal-I, Delhi by filing Original Application No. 321/2014. The
learned DRT-I, Delhi vide its order dated 26.10.2016 allowed the
application filed by the Financial Creditor with direction to issue
the recovery certificate and sent the same to the Recovery Officer,
DRT-I, Delhi. The operative portion of the said order dated

26.10.2016, which reads as under:-

“(Y Iallow this OA and direct the defendants No. 1 and
2 pay jointly and severally to the applicant FI, within a
period of 30 days, a sum of Rs. 92,04,38,768.00

(Rupees Ninety Two Crore, Four Lacs Thirty Eight
Thousand Seven Hundred Sixty Eight Only) together
pendent lite and future interest @ 16% simple p.a. from
the date of filing of this OA till its realization, failing
which the aforesaid amount shall be recovered from the
sale of mortgaged properties i.e. (i) Property situated at
Sector-8, Palwal, Tehsil & District Palwar, Haryana and
(i) Property situated at Village Khedka Musalman at
Tehsil Bahadurgarh, District Jhajjar, Haryana as
detailed in para 5.25 of OA, pledged shares and other
movable and immovable assets of these defendants.
Cost of the litigation be also borne by the defendants.
The applicant FI is also directed to file the revised
statement of account before the Ld. Recovery Officer of

this Tribunal.

(uw) The recovery certificate be issued forthwith and be

sent to the Recovery Officer, DRT-I, Delhi.”

A copy of the order dated 26.10.2016 passed by the Learned

DRT-I, Delhi in O.A. No. 321/2014 has been placed on record

(Annexure E).

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10. The Financial Creditor also issued notice dated 17.09.2014
under Section 13 (2) of the Securitization and Reconstruction of
Financial Assets and Enforcement of Security Interest Act, 2002
(for brevity ‘the Act, 2002) qua the Corporate Debtor. Thereafter
on 28.11.2014 possession notice under Section 13 (4) of the Act,
2002 was also issued. A copy of the notice under Section 13 (2)
and 13 (4) of the Act, 2002 have been placed on record (Annexure

-L & M).

11. The Financial Creditor also approached the Hon’ble High
Court of Delhi by filing winding up petition under the provisions
of Companies Act, 1956 and the same was registered as Company
Petition No. 573/2015. The Hon’ble High Court vide its interim
order dated 14.08.2015 restrained the Corporate Debtor from
disposing off or alienating or encumbering either directly or
indirectly, or otherwise part with possession of any assets of the
Company to the tune of Rs. 95,00,00,000/- except in the ordinary
course of business and for the payment of salaries and statutory
dues. A copy of the interim order dated 14.08.2015 has been

placed on record as (Annexure-F).

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12. As per the averments of the ‘Financial Creditor’, the amount
in default as on 10.10.2017 is claimed to be Rs. 151,08,1 1,345/-
(Rupees One Hundred Fifty One Crore Eight Lakh Eleven
Thousand Three Hundred Forty Five Only). A copy of computation
of amount of default and days of default has been placed on

record (Annexure B).

13. Learned counsel for the Corporate Debtor opposed the
admission and has argued that prior to approaching this Tribunal
the Financial Creditor has filed a winding up petition bearing C.P.
No. 573/2015, which is pending adjudication before the Hon’ble
High Court of Delhi. He further argued that the Financial Creditor
is involved in forum shopping as Original application bearing No.
321/2014 was also filed at their behest before the Debt Recovery
Tribunal-I, Delhi in which a final order dated 26.10.2016 was
passed of Rs. 92,04,38,768/- together with pendent lite and
future interest from the date of filing of the OA i.e. 31.10.2014 till
its realization and cost of Rs. 1,50,000/-. In addition, Learned
Debt Recovery Tribunal-I, Delhi also issued the Recovery
Certificate and in pursuance thereof, execution of the same is

pending adjudication. He further argued that the Financial

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Creditor has also invoked the jurisdiction under the
Securitization and Reconstruction of Financial Assets and
Enforcement of Security Interest Act, 2002 by issuing notice
under Section 13 (2) dated 17.09.2014 and further possession

notice dated 28.11.2014.

14. Learned counsel then submitted that taking possession of
the secured assets and proceeding further to sell the same would
itself show that there is no debt, even otherwise the value of the
assets secured by the Corporate Debtor is more than the amount
claimed in the present application. He also placed reliance in
Section 13 (10) of SARFAESI Act by arguing that it gives liberty to
the Financial Creditor to file an application in the form and
manner as may be prescribed to the Debt Recovery Tribunal for
recovery of balance amount from the borrower, therefore, it
cannot be inferred that a default has occurred for the purpose of
invoking the jurisdiction of the Code unless sale value realized

does not satisfy the claim.

15. Another argument raised by the learned counsel is that the

statement of account has not been computed on the basis of the

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aforesaid recovery certificate granted by the Learned DRT, Delhi
and the Financial Creditor has charged additional amount, which
does not correspond to the recovery certificate and therefore, for
the purpose of ascertaining the existence of default within the
meaning of Section 7 (4) of the Code, the statement of account
relied upon by the Financial Creditor, cannot be considered
keeping in view the fact that there exist recovery certificate
granted by the Ld. DRT, Delhi. In essence the argument of learned
counsel is that there is mismatch in the amount disclosed in the

statement of account and recovery certificate.

16. The aforesaid submission with respect to pendency of
winding up petitions or initiation of proceedings under SARFAESI
Act made by learned counsel is devoid of merit in view of the
judgment rendered by the Hon’ble Appellate Tribunal in the case
of M/s. Unigreen Global Private Limited v. Punjab National Bank
& Ors., Company Appeal (AT) (Insolvency) No. 81 of 2017 decided
on 01.12.2017 as well as in the case of Forech India Private
Limited v. Edelweiss Assets Reconstruction Company Ltd. & Anr.,
Company Appeal (AT) (Insolvency) No. 202 of 2017 decided on

23.11.2017; while taking a view that no application under Section

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7,9 & 10 of IBC, 2016 would be maintainable in case a liquidation
order has been passed in respect of the same Corporate Debtor in
winding up proceedings either by the High Court or by the
Tribunal. In that regard reliance has been placed on the
ineligibility clause in Section 11 (d) of the IBC and the meaning of
the word ‘winding up’ given in Section 2 (23) and 94A of the
Companies Act, 2013. In the present case it is an admitted fact
that till date liquidator in the winding up petition before the
Hon’ble High Court of Delhi, has not been appointed. In para 25
of the judgment rendered in M/s. Unigreen Global Private Limited
(supra), the Hon’ble Appellate Tribunal has held as under:-
“Similarly, if any action has been taken by a ‘Financial
Creditor’ under Section 13 (4) of the SARFAESI Act, 2002
against the Corporate Debtor or a suit is pending against
Corporate Debtor under Section 19 of DRT Act, 1993
before a Debt Recovery Tribunal or appeal pending
before the Debt Recovery Appellate Tribunal cannot be

a ground to reject an application……………

17. With regard to the other objection raised by the learned

counsel that there is mismatch of the defaulted amount as shown

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in the statement of account and recovery certificate. We are not
impressed with such kind of objection raised by the learned
counsel for the ‘Corporate Debtor’ for variety of reasons as we
have already discussed and rejected such like objections in the
case of Bank of India v. Tirupati Infraprojects Pvt. Ltd., IB-
104(PB)/2017. Firstly, as an Adjudicating Authority we are not
entrusted with any function to determine the amount of default.
Once the default has occurred involving rupees one lac or more
in terms of Section 4 of the Code one of the requirements is
satisfied and secondly any objection with regard to amount would
be maintainable before the Committee of Creditors. Once default
in terms of Rule 3 (12) of the Code is established and all other
requirements are fulfilled the Insolvency Resolution Process has

to be triggered.

18. Asasequel to the above discussion, this petition is admitted
and Mr. Vikram Kumar, Sector B-1/1748, Vasant Kunj, New
Delhi -110070, email id vikramau@gmail.com is appointed as an

Interim Resolution Professional.

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19. In pursuance of Section 13 (2) of the Code we direct that

public announcement shall be made by the Interim Resolution

Professional immediately (3 days as prescribed by Regulations)

with regard to admission of this application under Section 7 of

the Code.

20. 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

(b)

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;

transferring, encumbering, alienating or disposing of
by the corporate debtor any of its assets or any legal

right or beneficial interest therein;

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

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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 or in the

possession of the corporate debtor.”

21. Itis 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.

22. 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

(ty_Interim Resolution Professional as may be required by him in

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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 |
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, Rules and

Regulations.

23. The office is directed to communicate a copy of the order to
the Financial Creditor and the Corporate Debtor at the earliest

possible but not later than seven days from today.

(M.M. KUMAR)
PRESIDENT

(S. K. MOHAPATRA)
MEMBER (TECHNICAL)