Calcutta High Court
Srei Equipment Finance Limited vs Trinity Alternative Investment … on 18 June, 2025
Author: Shampa Sarkar
Bench: Shampa Sarkar
2025:CHC-OS:87
IN THE HIGH COURT AT CALCUTTA
COMMERCIAL DIVISION
ORIGINAL SIDE
Present:-
Hon'ble Justice Shampa Sarkar.
AP-COM/1049/2024
IA GA-COM 1 of 2025
GA-COM 2 of 2025
SREI EQUIPMENT FINANCE LIMITED
VS
TRINITY ALTERNATIVE INVESTMENT MANAGERS LIMITED
For the petitioner : Mr. Ranjan Bachawat, Sr.Adv.
Mr. Debnath Ghosh, Sr.Adv.
Mr. Sushovit Dutt Majumder, Adv.
Ms. Pubali Sinha Chowdhury, Adv.
Ms. Rajeshwari Prasad, Adv.
For the respondents : Mr. Joy Saha, Sr.Adv.
Ms. Hashnuhana Chakraborty, Adv.
Ms. Soma Chatterjee, Adv.
Ms. Arpita Das, Adv.
Hearing concluded on : 19.05.2025
Judgment on : 18.06.2025.
Shampa Sarkar, J.
1. GA COM 2 of 2025 is an application for preponement of the date of
hearing this application.
2. AP COM No. 1049 of 2024 is an application under Section 9 of the
Arbitration and Conciliation Act, 1996 (hereinafter referred to as the said
Act). Prayers have been made for interim protections. Disputes had arisen
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between the parties out of the rupee loan agreement dated August 28, 2020,
and supplementary rupee loan agreement dated November 2, 2020
(hereinafter collectively referred to as the loan agreements).
3. Under the said loan agreements, a sum of Rs. 26,00,00,000/- (Rupees
Twenty Six Crores) was lent and advanced by the petitioner to the
respondent. The said loan was secured by two deeds of hypothecation, dated
August 28, 2020, and February 18, 2021.
4. In terms of the said loan agreement and deeds of hypothecation, the
repayment obligations of the respondent under the said loan agreement
were secured by a first charge on all investments (present, and future) on
pari-passu basis with the existing loan of the petitioner.
5. I.A. G.A. COM 1 of 2025 is an application for vacating and / or setting
aside and / or stay of the interim order dated December 19, 2024 passed by
this court in AP COM NO. 1049 of 2024. Relevant portion of the order is
quoted below:-
“The law is well settled. Parallel proceedings filed under the
SARFAESI Act and the Arbitration and Conciliation Act 1996 can
continue. The factum of extension of loan facility to the respondent is
not in dispute. The respondent admits that Rs.26 crores had been
lent by the petitioner. The reason why the respondent does not accept
the liability to pay back the loan is that a sister concern of the
petitioner company had expressed a desire not to take any coercive
measure against the respondent in respect of any loan that the
respondent may have been extended. Such understanding in my
prima facie view, is not available from the records. There is neither
any record of any promise nor any kind of assurance in respect of the
loan which had been extended by the petitioner. The investment is
worth Rs.12.41 crores as per the petitioner’s estimate. This appears
from a communication dated November 16, 2024. The petitioner has
made out a prima facie case that at present, more than Rs.53 crores is
due and payable on account of non-payment of the principal and the
interest. The submission of Mr. Wadehra that once a notice under
Section 13(2) of the SARFAESI Act had been issued, there is an
automatic injunction on the respondent from dealing with the
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assets/investments which were hypothecated to the petitioner, is
accepted.
However, the Panchnama and the inventory issued by the authorized
officer and the communication of the authorized officer with regard to
taking possession of the investments indicate that there was non-
cooperation and non-disclosure. Such conduct of the respondent,
prima facie, indicates that a protection is necessary to secure the dues
of the petitioner. The injunction which is already operative in terms of
the order passed under Section 13(4) of the SARFAESI remains. In
addition, this Court is of the, prima facie, view that a further
injunction should be issued restraining the respondent from operating
the bank account which is maintained with the ICICI Bank, R.N.
Mukherjee Road, Kolkata, 700001, without keeping a minimum
balance of Rs.40 crores in the said account. The bank shall ensure
compliance of this order on the basis of a server copy of the same.
Such interim injunction shall continue for a period of two months.
The respondent is directed to file an affidavit-in-opposition disclosing
its other assets, investments and bank accounts, both past and
current. Such affidavit-in-opposition be filed within 29th January,
2025. Let the matter appear in the monthly list of February, 2025. In
the meantime, the petitioner shall act and proceed in accordance with
the Arbitration and Conciliation Act, 1996.
As the learned Advocate for the respondent is not in a position to
disclose any other movable or immovable assets over which an
injunction can be issued by this Court, this Court has no other option
but to injunct the respondent from operating the afore-mentioned
bank account without maintaining a minimum balance of Rs.40
crores in it.
The respondent is at liberty to pray for vacation, variation and
modification of the order.”
6. The court was, prima facie, satisfied that the factum of the extension
of the loan facility of Rs. 26,00,00,000/- (Rupees Twenty Six Crores) was not
in dispute. The reason why the respondent did not accept the liability to pay
back the loan was that a sister concern of the petitioner company had
expressed a desire not to take any coercive steps against the respondent,
but such contention of the respondent was not available from the record.
From the communication dated November 16, 2024, the investments over
which the petitioner had the first charge was found to be worth Rs. 12.41
crore. The panchnama and the inventory issued by the authorized officer
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and the communication of the authorized officer disclosed that, possession
of such investments could not be taken over. The respondent resisted the
authorized officer and did not hand over those documents. The authorized
officer complained of non-cooperation. The conduct of the respondent
persuaded the court to arrive at a, prima facie, finding that a protection with
regard to the security of the dues would be necessary. The petitioner was
entitled to secure the loan which had gone up to more than Rs. 50 crores
with interest. In addition to the injunction which was already operative
under Section 13(13) of the Securitisation and Reconstruction of Financial
Assets and Enforcement of Security Interest Act (hereinafter referred to as
the SARFAESI Act), this court had directed the respondent to keep a
minimum balance of Rs. 40 crores in its bank account maintained with the
ICICI Bank. Parties were permitted to exchange affidavits.
7. Thereafter, G.A. COM 1 of 2025 was filed for vacating of the above
interim order. On February 20, 2025, the court directed that the application
being G.A. COM 1 of 2025 be treated as the affidavit-in-opposition of the
respondent and the petitioner was allowed to file an opposition to the said
G.A., which would be treated as the affidavit in reply. The matter was heard
at length on several occasions and parties argued on the merits of the
application.
8. Mr. Ranjan Bachawat, learned senior Advocate submitted that
adjudication of the disputes and differences between the parties were to be
settled by arbitration. The application for injunction had been filed in aid of
the main relief. The current dues of more than Rs. 53 crores should be
secured. The respondent was already in contempt of the order of the court.
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It was urged that, this court had directed the respondent to disclose other
assets, investments, bank accounts both past and current, but such
direction had not been followed. The petitioner was entitled to secure its
claim as the loan was an agreed incident and the amount was not disputed.
Several communications made by the respondent were relied upon in
support the contention that the respondent had unequivocally accepted and
acknowledged its obligation to repay the loan. The claim of the petitioner
was a crystallized debt. The admission made by the respondent to that
effect, was relied upon.
9. According to Mr. Bachawat, in addition to the recovery proceedings
under the SARFAESI Act, reliefs and protections under Section 9 of the said
Act should be granted in the facts of the case. The law permitted protection
of the loan extended by the petitioner. The court could compel the defaulter
to secure the amount in some form or another.
10. Any protection or interim measure which would appear to the court to
be just and proper in the facts and the circumstances of the case should be
granted. This court, upon being satisfied with regard to the depletion of the
value of the investments which had been charged in favour of the petitioner,
had deemed it fit to injunct the respondent from operating the bank account
maintained with the ICICI Bank without keeping a continuous balance of an
amount of Rs. 40 crores. This was done in order to secure the amount
payable to the petitioner, by the respondent.
11. In the course of arguments, the respondent filed a supplementary
affidavit. The first supplementary affidavit dated March 18, 2025 was not in
proper form and did not disclose material particulars. The court had
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permitted the respondent to file another supplementary affidavit and the
same was filed on May 2, 2025.
12. Objecting to the contents of the supplementary affidavits, Mr.
Bachawat submitted that the net value of the securities or investments
which were disclosed in the supplementary affidavit had no legal sanctity.
There was no clarity as to whether those investments were held by the
respondent as their own assets or were investments made on behalf of third
parties/investors. It was further submitted that some of the investments
referred to in the first supplementary affidavit were not included in the
second supplementary affidavit and there were huge
escalations/enhancements in the valuation of some of those funds. Such
discrepancies indicated that the respondent was not following an honest
business practice and as such, interference of the court was required, by
continuing the injunction that was already passed in respect of the bank
account.
13. According to Mr. Bachawat, SEFL and SIFL were two separate and
distinct corporate entities, having separate registrations with the Registrar
of Companies and separate board of directors. Thus, the contention of the
respondent that SEFL and SIFL were alter egos of each other and as such
the loan was in effect an investment made in the respondent company by
one of its sister concerns, could not be a valid ground to vacate the order of
injunction on the bank account.
14. It was submitted that a Corporate Insolvency Resolution Process
(CIRP) had been initiated against both the companies SEFL and SIFL before
the National Company Law Tribunal (NCLT), Kolkata. An Administrator was
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appointed over the affairs of both the companies.
The Administrator prayed before the NCLT for consolidation of the CIRP
process of both SEFL and SIFL. The learned Tribunal approved the same.
The Administrator called for resolution plans from prospective applicants.
National Asset Reconstruction Company Limited, NARCL was the successful
resolution applicant. NARCL was an independent entity and not connected
with the Kanoria family, which had originally promoted the two companies.
Thus, the right to recover the loan survived even if the CIRP proceedings
were consolidated.
15. What transpired between the SEFL and SIFL at the time when the
Kanoria family was involved in the management and operation of the
companies, was no longer relevant. It was immaterial whether the petitioner
was a 100% or 60% subsidiary of SIFL or whether SIFL had majority
shareholding in the respondent / company. SIFL could be a shareholder in
SEFL or a shareholder in the respondent, but such fact would not affect the
right of the petitioner to seek interim protections, pending adjudication of
the dispute by an appropriate forum. The petitioner had an independent
right to recover the dues from the respondent. Further, no assurance or
undertaking had ever been given to the respondent by the petitioner in any
proceeding before the NCLT. The petitioner was not a party to the
proceedings viz, CP No. 275 (KB) of 2021, SREI Infrastructure Finance Ltd.
v. Trinity Alternative Investment Managers Ltd. The specific contention of
Mr. Bachawat was that in spite of the order passed under the SARFAESI
Act, the respondent had parted with/ disposed of/transferred/redeemed
62,346.08 numbers of units held in the ICICI Prudential Money Market
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Fund Direct Plan Growth. It was also submitted by Mr. Bachawat that even
after the order of injunction was passed, the respondent had depleted and
disposed of further investments, particularly investments in infrastructure
resurrection funds, strategic opportunity funds, etc. Thus, the respondent
acted in violation of the order and such conduct raised a question of
bonafide of the respondent.
16. The contention of the respondent that there had been suppression of
material facts by the petitioner was also refuted by Mr. Bachawat and it was
submitted that in the order dated December 19, 2024, the connection
between SIFL and SEFL had been recorded. The respondent’s argument had
been dealt with by the court. The respondent could not have alleged any
suppression. Even after Payaash became 49% shareholder of the
respondent, the respondent had admitted the obligation to pay back the
loan to the petitioner. Therefore, there was no material suppression while
obtaining the order of ad-interim injunction on the first occasion. The
allegation that SIFL was preventing issue of rights which had been proposed
by the respondent in order to raise funds and pay back the loan, did not
have any bearing on the facts of the case. In the absence of any non-
disclosure of the assets, investments, bank accounts of the respondent, the
court must draw an adverse inference against the respondent.
17. It was further submitted that, the respondent proceeded with a
malafide intention to issue rights at a time when the Administrator had been
appointed over the assets of the petitioner and SIFL. Such intention of the
respondent was to merely reduce the shareholding of SIFL in the
respondent. SIFL would not be able to participate in such rights issue and
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the shareholding of SIFL would be reduced from 51% to 11%. On a
comparison of the Management Accounts as on December 31, 2024, which
were disclosed by the respondent earlier and the investments disclosed by
the respondent in the supplementary affidavits, it would appear that few of
the investments appearing in the Management Accounts dated December
31, 2024, i.e., 4,99,045 units of Infrastructure Resurrection Fund and
1,00,000 units of Strategic Opportunity Fund were not mentioned in the
latest disclosures. The values assigned to the investments were ex-facie
incorrect or inflated, particularly that of Bharat Nirman Fund. The value of
which, had drastically increased by twenty times, i.e., from Rs. 1.82 crores
to Rs. 36.96 crores. Such valuation could not be relied upon. The net asset
value per unit of Bharat Nirman Fund was unrealistic. Moreover, companies
in which the funds were invested by the respondent were highly indebted to
banks and other financial institutions. They were undergoing liquidation
proceedings. There was also a doubt with regard to the impartiality of the
valuers. There was nothing on record to show that the bank account which
was injuncted from being operated without maintaining a sum of Rs. 40
crores, was actually an account connected with the business transactions
between the respondent and third-party investors, who had engaged the
respondent to make investment on their behalf. Thus, Mr. Bachawat
submitted that, GA No. 1 of 2025 should be dismissed and the injunction
should be continued.
18. Mr. Joy Saha, learned Advocate for the respondent, submitted that,
SEFL was the 100% wholly-owned subsidiary of SIFL. At the time of grant of
such loan on August 28, 2020, Trinity was also a 100% owned subsidiary of
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SIFL. The purported loan was in effect, money transferred by the 100%
shareholders of Trinity in favour of Trinity i.e., SIFL to Trinity. The said
amount was in fact an investment by the promoter and 100% shareholder of
Trinity in Trinity itself and not a loan. Such investment had been made on
August 28, 2020. SIFL sold 49% shareholding in Trinity to Payaash, mush
later. Till date, SIFL was the majority shareholder, having 51% of the share
holding in Trinity. Proceedings were pending before the NCLT, Kolkata since
July 2022 with regard to the management and control of Trinity, between
Payaash vs. Trinity and ors, viz, CP NO. 230 of 2022. Certain orders were
passed. It was directed that SIFL could continue with the meetings, but the
result of such meetings would be subject to the final decision of the NCLT
Kolkata.
19. Trinity had intended to take out a Rights Issue to generate revenue for
repayment of the debt of SEFL. Such Rights Issue was opposed by SIFL.
Consequently, the Rights Issue had to be permanently deferred by Trinity.
This fact was also recorded by the NCLT in the order dated March 24, 2022.
There was already an injunction on the hypothecated assets. On July 25,
2024, the petitioner had issued a notice under section 13(2) of the
SARFAESI Act. Section 13(13) of the SARFAESI Act came into operation
immediately thereafter. As per law, no borrower could, after receiving a
notice under subsection (2) of Section 13, transfer by way of sale, lease, or
otherwise, (other than in the ordinary course of his business), any of its
secured assets referred to in the notice, without prior consent of the secured
creditor.
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20. In view of the automatic restraint on Trinity from effectively
transferring by way of sale, lease, or otherwise any of the secured assets, a
further order of injunction was not warranted. The petitioner was
automatically protected under the SARFAESI Act. It was further submitted
that the securities of SEFL were confined to past, present, and future books,
debts, and investments. The petitioner had no tangible securities in the form
of movable and immovable assets. In that sense, it was an unsecured
creditor. It was trite law that an unsecured creditor having a money claim,
could not be converted to a secured creditor. Reliance was placed on the
following decisions:-
(a) Sunil Kakrania & Ors. vs M/s Saltee Infrastructure Ltd. and
Anr.reported in AIR 2009 Cal 260,
(b) Raman tech & process Engg. Co. & Anr. vs Solanki Traders
reported in (2008) 2 SCC 302,
(c) Kohinoor Steel Private Limited vs Pravesh Chandra Kapoor
reported in 2010 SCC Online Cal 1856, and
(d) Sanghi Industries Limited Vs. Ravin Cables Ltd. and Anr.
reported in 2022 SCC Online SC 1329.
21. According to Mr. Saha, the petitioner was also attempting to obtain an
order of attachment before judgment. Order 38, Rule 5 of the Code of Civil
Procedure, could be invoked only when the court was satisfied that the
defendant in a suit, with the intention to delay or obstruct the execution of
any decree, was about to dispose of the whole or any part of the property or
was about to remove the whole or any part of the property from the local
limits of the jurisdiction of the court.
22. In the instant case, there has been no incident which would indicate
that Trinity was trying to sell any unit or deal with any of its assets. Thus,
the interim order should be vacated and the application for injunction
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should be dismissed. The injunction on the bank account had caused
serious hindrance in the business of the respondent and the money
belonging to third party investors which were lying in the bank accounts
were blocked.
23. Heard the learned advocates for the respective parties. The question is
whether the interim order already passed on December 19, 2024 should be
vacated or continued and what reliefs were available to the petitioner. The
fact that Rs. 26,00,00,000 crores was lent by the petitioner, is an admitted
position. The amount was reflected in the books of accounts. The
respondent claims to have intended to take out a Rights Issue, which SIFL
had objected to. The letter dated April 23, 2024 issued by the respondent is
quoted below.
” TRINITY
Trinity Alternative Investment Managers Limited
Dated : 23rd April 2024
To
M/s. Srei Equipment Finance Limited
Kolkata
Reg: Balance Confirmation as on 31″ March 2024
Dear Sir,
We hereby confirm the Outstanding as on 31s March 2024 as per our
books of accounts, payable to you :-
Principal Due – Rs.26,00,00,000/-
The above amount does not include any other charges or Interest
Dues as on the mentioned date.
Thanks & Regards
For : Trinity Alternative Investment Managers Limited
Authorised Signatory ”
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24. The contention of Mr. Saha that the extension of loan was actually an
investment by SIFL in its erstwhile wholly owned company Trinity, shall be
decided by the learned Arbitrator. The question involves admissibility of the
claim. Further contention of Mr. Saha that an undertaking was given by
SIFL in a proceeding before the NCLT to the effect that it would not take any
coercive measures against the respondent, is again a matter of evidence
which has to be decided by the learned arbitrator. However, from the deeds
of hypothecation, this court finds that all investments (present and future)
were secured in favour of the petitioner. The schedule does not mention
exactly what those investments were. No specifications were provided, which
means that all existing investments held by the respondent at present or to
be made in future, in its own name, would remain charged in favour of the
petitioner. No other form of security had been provided in the deeds of
hypothecation. The schedule does not provide any further charge. What
would happen if the value of the investments depleted, had not been
provided for. The argument of Mr. Bachawat that, as the value of the
investments had depleted further security should be provided, is not
accepted. The court need not pass directions for securing the alleged sum
calculated by the petitioner at present. The petitioner is entitled to
protection of what was charged to the petitioner as per the deeds of
hypothecation. However, the letter quoted hereinabove mentions that as per
books of accounts Rs. 26,00,00,000 was payable. The petitioner did not
object to the quantum mentioned. Thus, in my prima facie view, the
petitioner’s claim that an amount of Rs. 53,61,39,447 was payable at
present, is not supported by any admission by the respondent. As per the
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petitioner’s estimation, the investments mentioned in the application was
worth Rs. 12.41 crores. Further investments have been disclosed in this
proceeding, which have been valued at Rs. 4104.08 lakhs. Although, those
disclosures have been stated to be unreliable, in my opinion the petitioner
has not been able to establish with proper calculations that such
investments which have been disclosed are not worth Rs. 26 crores. A
further deliberation and probe by this court would amount to a mini trial.
The value of the investments depends on market conditions. The charge on
investments was created consciously by the parties. The parties were both
commercial entities and well versed in the subject. There is nothing on
record to show that the alleged reduction in the value of the assets was
attributable to any malafide conduct of the respondent. The significant
factor before this court is that SEFL was a 100% fully owned subsidiary of
SIFL, on the date of grant of loan, i.e., August 28, 2020.
25. Trinity, was also a 100% fully owned subsidiary of SIFL. Thus, in
effect SIFL had lent the money to Trinity which was also owned by SIFL.
Thereafter, SIFL sold 49% shareholding in Trinity to Payaash. Till date,
SIFL is the majority shareholder, owning 51% of the shares in Trinity.
26. The loan was extended by the petitioner to a wholly owned subsidiary
of its parent company, which, in my prima facie view, creates a unique
situation. Subsequently, M/S Payaash Capital (Singapore) Pte Limited,
invested in the respondent company in the capacity of an overseas investor,
so as to expand the business of the company. Consequently, a tripartite
agreement was entered into between the existing shareholder, namely SIFL,
the respondent and Payaash on September 1, 2020, whereby 49% of the
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paid-up share capital of the company was acquired by Payaash. The balance
of 51% of the paid-up share capital was held by SIFL. On October 8, 2021,
the Reserve Bank of India filed an application for initiation of Corporate
Insolvency Resolution Process against the petitioner company and SIFL
under Section 227, read with clause (zk) of subsection 2 of Section 239, of
the Insolvency and Bankruptcy Code, 2016, read with Rules 5 and 6 of the
Insolvency and Bankruptcy (Insolvency and Liquidation Proceedings of
Financial Service Providers and Application to Adjudication Authority)
Rules, 2019 before the learned NCLT Kolkata.
27. The respondent decided to issue fresh equity shares on rights issue
basis, in the interest of the company and to improve its financial health.
SIFL resisted such Rights Issue. SEFL and SIFL were under a common
Administrator and at the behest of the Administrator, the CIRP of both
companies SEFL and SIFL were consolidated. Payaash preferred a petition
under Sections 241, 242 and 244 of the Companies Act before the NCLT,
seeking to raise issues of oppression and mismanagement in the respondent
company. The said application is pending. The respondent is a fully
functional entity. SIFL has 51% shareholding in Trinity. It is a fact that
NARCL manages, controls and administers both SIFL and SEFL. SIFL is a
majority shareholder in the respondent company. The resolution plan of
NARCL was approved by NCLT. The petitioner’s claim, as that of a financial
creditor, ought to have been included in the plan. The petitioner was
included in the Committee of Creditors, but being a related party to SIFL,
was not allowed to represent, participate or vote in the meeting of the
committee of creditors. The alleged debt which the respondent owed to the
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petitioner should have been factored in and included in the claims of the
financial creditors that had been admitted. However, parties have not
produced the plan which would have dealt with such aspect in more detail.
After the resolution plan was approved by NCLT on August 11, 2023, the
dues payable to the petitioner by the respondent, as per the books of
account was Rs. 26,00,00,000, which was communicated by a letter dated
August 23, 2024. The possibility that only Rs. 26,00,00,000 was admitted
in the resolution plan towards dues of SEFL cannot be ruled out.
28. The relevant portions of the order of the NCLT dated August 11, 2023
with regard to the approval of the resolution plan are quoted below:-
“78. Now we proceed to consider the Resolution Plan which has been
filed before this Adjudicating Authority through I.A. (IB) No.
428/KB/2023 and I.A. (IB) No. 434/KB/2023 which are applications
filed under section 30(6) of the Insolvency and Bankruptcy Code,
2016, after approval of the resolution plan by the consolidated
Committee of Creditors (“CoC”) of SREI Equipment Finance Limited
and SREI Infrastructure Finance Limited.
79. These applications were filed by Mr. Rajneesh Sharma,
Administrator of SREI Equipment Finance Limited (“SEFL”) and SREI
Infrastructure Finance Limited (“SIFL”), by invoking the provisions of
section 30(6) of the Insolvency and Bankruptcy Code, 2016 (“the Code”
or “IBC”) read with regulation 39(4) of the Insolvency and Bankruptcy
Board of India (Insolvency Resolution Process for Corporate Persons)
Regulations, 2016 (CIRP Regulations) for approval of a Resolution Plan
in respect of SREI Equipment Finance Limited and SREI
Infrastructure Finance Limited.
80. The underlying Company Petitions in C.P. (IB) No. 294/KB/2021
and C.P. (IB) No. 295/KB/2021 were filed by the Reserve Bank of
India, the Appropriate Regulator, against SIFL and SEFL respectively,
under the Insolvency and Bankruptcy Code 2016 read with the
Insolvency and Bankruptcy (Insolvency and Liquidation Proceedings of
Financial Service Providers and Application to Adjudicating Authority)
Rules, 2019 (“FSP Rules”) which were admitted vide order dated 08
October 2021.
81. Mr. Rajneesh Sharma was appointed as the Administrator of SEFL
and SIFL. The Authorised Representative vide a press release dated 11
October 2021 advised that the Advisory Committee constituted on 04
October 2021 shall continue as the Advisory Committee constituted
under rule 5(c) of the FSP Rules. The Advisory Committee was
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reconstituted from time to time in accordance with the directions from
the Reserve Bank of India.
Constitution of CoC
82. The IRP made public announcement on 11 October 2021 in the
Times of India (English) (Kolkata Edition, Anadabazar Patrika (Bengali)
(Kolkata Edition) Maharashtra Times (Marathi) (Mumbai edition) and
Navbharat Times (Hindi) (Mumbai edition) newspapers regarding
initiation of Corporate Insolvency Resolution Process (CIRP) and called
proof of claims from the financial and operational creditors, workers
and employees of the corporate debtor in the specified forms till 22
October 2021.
83. The Administrator constituted the CoC for SEFL and SIFL. Two
I.A.s, i.e. I.A. (IB) No. 1100/KB/2021 in C.P. (IB) No. 295/KB/2021
and I.A. (IB) No. 1090/KB/2021 in C.P. (IB) No. 294/KB/2021 were
filed by the Administrator seeking consolidation of the CIRP and CoC
of SEFL and SIFL. This Adjudicating Authority vide order dated 14
February 202257 approved the said I.A.s and allowed the
consolidation of the CoC. The CoC of SIFL and SEFL were
consolidated on 16 March 2022 which consists of 43 Financial
Creditors which is given hereunder:
Sl. Members of the Consolidated
No. Committee of Creditors ("CoC")
1. Canara Bank
2. Union Bank of India
3. Punjab National Bank
4. State Bank of India
5. Bank of Baroda
5. Indian Bank
7. Punjab and Sind Bank
8. Central Bank of India
9. UCO Bank
10. Bank of India
11. Indian Overseas Bank
12. Bank of Maharashtra
13. IDBI Bank
14. Lakshmi Vilas Bank
15. Dhan Laxmi Bank
16. Axis Bank
17. South Indian Bank
18. Karur Vysya Bank
19. Karnataka Bank
20. ICICI Bank
21. HDFC Bank
22. SIDBI
23. NABARD
24. IFCI Ltd.
25. Bank of Ceylon
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26. People's Bank
27. Standard Chartered Bank
28. Aozora Bank Ltd.
29. ING Bank, a branch of ING-DiBa AG
30. DEG - Deutsche Inventions-und
Entwicklungsgesellschaft mbH ("DEG")
31. Sumitomo Mitsui Finance and Leasing
Co., Ltd.
32. Finnish Fund for Industrial Cooperation
Ltd. (FINNFUND)
33. Belgian Investment Company for
Developing Countries SA/NA-BIO
34. Societe de Promotion et de Participation
pour la Cooperation Economique S.A
("PROPARCO")
35. Export Import Bank of United States
(represented by International Advisors)
36. Global Climate Partnership Fund S.A.,
SICAV-SIF
37. Oesterreichische Entwicklungsbank AG
(ÖeEB")
38. SACE S.p.A. The Export credit Agency
of Italy ("SACE")
39. Axis Trustee Services Limited
40. Catalyst Trusteeship Limited
41. IDBI Trusteeship Services Limited
42. Nicco Engineering Services
43. SREI Equipment Finance Limited
*SEFL being a related party to SIFL, SEFL shall not have any right of
representation, participation or voting in a meeting of the committee of
creditors pursuant to section 21(2).
84. The applicant states that a total 39 CoC meetings [three separate
CoC Meetings an 36 Consolidated CoC meetings] have been held
during CIRP period spreading over a period of 02 November 2021 to
15 February 2023.
Collation of claims
85. The amounts claimed and admitted are summarized below:-
Nature of creditor Amount Amount
claimed admitted
Financial Creditors 45,372.44 32,749.26
Operational 224.12 123.54
Creditor (Other
than Workmen and
Employee and
19
2025:CHC-OS:87
Statutory Dues)
Operational 190.23 0.07
Creditors
(Government Dues)
Operational 3.42 3.39
Creditor (Workmen
and Employee)
Other Creditors 150.98 150.05
Total 45,941.149 33,026.31
29. Whether the petitioner’s claim was included in the amount of Rs.
32,749.26 in the claims of financial creditors, is an issue which will be
decided by the learned Arbitrator. If the claim of the petitioner or part
thereof was not included and admitted in the resolution plan, the same
stood extinguished. Whether the intention of SIFL was to take over the
control from Payaash by using such coercive measures through SEFL, is
also a question which has to be decided by the learned arbitrator.
Proceedings are pending before the NCLT.
30. The relevant portion of the order of NCLT is quoted below:-
“118. With respect to the waivers with regard to extinguishment of
claims which arose Pre-CIRP and which have not been claimed are
granted in terms of Ghanashyam Mishra and Sons Pvt Ltd v
Edelweiss Asset Reconstruction Company Ltd,” wherein the Hon’ble
Supreme Court has held that once a resolution plan is duly
approved by the Adjudicating Authority under sub-section (1) of
section 31, the claims as provided in the resolution plan shall
stand frozen and will be binding on the Corporate Debtor and its
employees, members, creditors, including the Central Govt, any
State Govt or any local authority, guarantors and other
stakeholders. We place reliance on the recent judgement of Hon’ble
High Court of Rajasthan in the matter of EMC v. State of Rajasthan
wherein it has been inter-alia held that :
***
“Law is well-settled that with the finalization of insolvency
resolution plan and the approval thereof by the NCLT, all dues of
creditors, Corporate, Statutory and others stand extinguished and
no demand can be raised for the period prior to the specified date.”
***
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On the date of approval of resolution plan by the Adjudicating
Authority, all such claims, which are not a part of resolution plan,
shall stand extinguished and no person will be entitled to initiate
or continue any proceedings in respect to a claim, which is not part
of the resolution plan. The Hon’ble Supreme Court also held that
all the dues including the statutory dues owed to the Central Govt,
any State Govt or any local authority, if not part of the resolution
plan, shall stand extinguished and no proceedings in respect of
such dues for the period prior to the date on which the
Adjudicating Authority grants its approval under section 31 could
be continued.”
31. Interim protection is granted upon consideration of prima facie case,
balance of convenience and inconvenience and irreparable loss and injury to
be suffered by parties in case of grant or non-grant of the interim
protections. A, prima facie, case of the petitioner’s dues of Rs. 26,00,00,000
is available from the books of accounts of the respondent. This was admitted
in the letter dated April 23, 2024. However, the balance of convenience and
inconvenience and irreparable loss and injury tilt in not continuing with the
order of injunction that was passed, restraining the operation of the bank
account without keeping aside a sum of Rs.40 crores. The fact that SIFL and
SEFL are both controlled, managed and administered by NARCL indicate
that the NARCL has adequate control over the respondent. NARCL’s interest
is protected. The relevant portion of the order of NCLT is quoted below:-
“113. On hearing the submissions made by the Administrator, and
perusing the record, we find that the Resolution Plan filed by National
Asset Reconstruction Company Limited has been approved with
89.25% voting share. As per the CoC, the plan meets the requirement
of being viable and feasible for revival of the Corporate Debtor. It is
pertinent to note that NARCL along with India Debt Resolution
Company Limited have proposed to carry out the compliances
envisaged in the Resolution Plan filed by NARCL. By and large, all the
compliances have been done by the Administrator and the Resolution
Applicant for making the plan effective after approval by this Bench.
21
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***
115. We have perused the reliefs, waivers and concessions as sought
and as given in Section 10 at Pages 105-115 of the Resolution Plan.
While some of the reliefs, waivers and concessions sought by the
Resolution Applicant come within the purview of the Code while many
others fall under the power and jurisdiction of different government
authorities/departments. This Adjudicating Authority has power to
grant reliefs, waivers and concessions only in relation to the Code and
the Companies Act 2013 (within the powers of the NCLT) for achieving
the objective of the Code. No reliefs, waivers and concessions that fall
within the domain of other government department/authorities are
granted. The reliefs, waivers and concessions that pertain to other
governmental authorities/departments shall be dealt with the
respective competent authorities/forums/offices, Government or Semi
Government of the State or Central Government with regard to the
respective reliefs, waivers and concessions. The competent authorities
including the Appellate authorities may consider grant such reliefs,
waivers and concessions keeping in view the spirit of the Code.
***
***
123. Subject to the observations made in this Order, the Resolution
Plan dated 18 January 2023 along with an addendum dated 24
January 2023, is hereby APPROVED by this Adjudicating Authority.
The Resolution Plan shall form part of this Order and shall be read
along with this order for implementation. The Resolution Plan thus
approved shall be binding on the Corporate Debtor and other
stakeholders involved in terms of section 31 of the Code, so that
revival of the Debtor Company shall come into force with immediate
effect.
***
124. The Moratorium imposed under section 14 of the Code shall
cease to have effect from the date of this order.
125. The Administrator shall submit copies of the records collected
during the commencement of the proceedings to the Insolvency &
Bankruptcy Board of India for their record and also return to the
Resolution Applicant or New Promoters.
126. Liberty is hereby granted for moving any application if required
in connection with implementation of this Resolution Plan.
127. A copy of this Order is to be submitted to the Registrar of
Companies, West Bengal.
128. The Administrator shall stand discharged from his duties with
effect from the date of this Order, save and except the duties
envisaged in the Resolution Plan.
129. The Administrator is further directed to handover all records,
premises/factories/documents to the Resolution Applicant to finalise
the further line of action required for starting of the operation. The
Resolution Applicant shall have access to all the records and premises
222025:CHC-OS:87
of the corporate debtor through the Administrator to finalise the
further line of action required for starting of the operation.
130. In view of the approval of the Resolution Plan, I.A. (IB)
No.434/KB/2023 in C.P. (IB) No. 295/KB/2021 and I.A. (IB) No.
428/KB/2023 in C.P. (IB) No. 294/KB/2021 shall stand disposed of
accordingly.
131. In view of the approval of the Resolution Plan, I.A. (IB) No.
392/KB/2023, has been rendered infructuous and is disposed of
accordingly.
132. C.P. (IB) No. 294/KB/2021 and C.P. (IB) No. 295/KB/2021 shall
be listed on 06 September 2023 along with the pending connected
I.A.s.
133. The Registry is directed to send e-mail copies of the order
forthwith to all the parties for information and for taking necessary
steps.
134. Certified copy of this order may be issued, if applied for, upon
compliance of all requisite formalities.
32. The injunction under the SARFAESI Act over all the secured assets as
per the schedule is sufficient protection. The balance of convenience and
inconvenience is in favour of vacating the order of injunction on the bank
account in view of the above discussions. If the order of injunction is not
vacated, it would amount to interference with the day to day business of the
respondent. Thus, the interim order passed is modified to the extent that
there shall be an injunction on all the investments, which have been
disclosed by the respondent in the two supplementary affidavits and also on
those which may be made in future. The respondent shall be restrained
from disposing of, transferring or parting with or redeeming the shares or
units held in the investments and funds. This injunction will apply to all
future investments to be made. This order will continue until further orders
are passed by the learned Arbitrator. In addition to the above, the last
audited accounts of the respondent shall be handed over to the petitioner
within two weeks. The respondent shall be obliged to provide such
information to the petitioner as may be required from time to time with
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regard to the past, present and future investments. Financial statements for
the last 6 months shall be supplied to the petitioner within two weeks from
date. The order of injunction on the bank account is vacated, in view of the
above discussion and on finding that NARCL which manages both the
petitioner and the SIFL, has sufficient control in the respondent company.
33. The petitioner does not require any further protection. The petitioner
at this stage is entitled to the security as mentioned in the schedule of the
deeds of hypothecation agreement. The respondent is continuing its
business activity, and is fully functional. The pleadings do not indicate that
the respondent had tried to remove its assets or alienate its properties which
would give rise to an apprehension that even if an award is passed in favour
of the petitioner, the same will be a paper decree. The arbitration has
commenced and it is informed that the same has been fixed before the
learned arbitrator in the end of June. The petitioner is always at liberty to
pray for interim orders before the learned arbitrator. The observations made
herein are tentative.
34. Accordingly AP COM 1049 of 2024, I.A. G.A. COM 1 of 2025 and I.A.
G.A. COM 2 of 2025 are disposed of.
(Shampa Sarkar, J.)