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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. Page 1 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 Page 2 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
(IB) No. 244(ND) of 2017 Page 3ofli Indian Bank VS-M/ Athena Deniwe Power Ltd.
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 Page 4 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. Page 5 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
Indian Bank Vs.M/s Athena Demwe Power Ltd. Page 6 of 11
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
Indian Bank Vs.M/s Athena Demwe Power Ltd. Page 8 of 11
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 Page 9 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
Indian Bank Vs.M/s Athena Demwe Power Ltd. Page 10 of 11
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 Page 11 of 11 Indian Bank Vs.M/s Athena Demwc Power Ltd.