Sanjeev Mahajan vs. India Bank (Erstwhile Allahabad Bank) & Anr.

 

Sanjeev Mahajan vs. India Bank (Erstwhile Allahabad Bank) & Anr.

Company Appeal (AT) (Insolvency) No. 03 of 2022

Date- 4 July 2022

FACTS:

A compromise offers of Rs. 260 crores was accepted in the present case against the Nimitaya hotel and Resort limited, which is made up of the corporate debtor and three additional businesses. The earlier agreement failed since a sum of Rs. 154 Crores was paid by March 31, 2019, and of the balance outstanding, Rs. 102 Crores still needed to be paid. The Bank then requested bids for the sale of the Corporate Debtor's NPAs to Asset Reconstruction Companies (ARC), Non-Banking Financial Companies (NBFCs), and Financial Institutions (FIs) for a total of Rs. 81 Crores by filing a Section 7 Application. However, when the Appellant offered the same amount of Rs. 81 Crores with the same terms of repayment, the Bank rejected the offer. Being Aggrieved, the present Appeal was submitted.

ISSUE FOR CONSIDERATION:

Whether to grant the benefit or not under the OTS Scheme, having regard to the public interest involved?

RATIO & DECISION TAKEN BY TRIBUNAL:

The Hon’ble NCLAT relies on the judgment of the Hon’ble Supreme Court in the matter of ES Krishnamurthy & Ors. vs. M/s. Bharath Hi-Tech Builders Pvt. Ltd. and observed that:

“The primary object of IBC is to revive the Corporate Debtor and to ensure that it starts running and the settlements have to be encouraged because the ultimate purpose of the IBC is to facilitate the continuance and rehabilitation of a Corporate Debtor.”

Again, relying on the judgment of the Hon’ble Supreme Court in a matter of Bijnor Urban Cooperative Bank Limited, Bijnor and Ors. vs. Meenal Agarwal and Ors., held that:

“The law has been clearly laid down that although settlement has to be encouraged in the IBC no direction can be issued to the Financial Creditor to positively grant the benefit of OTS to a borrower. The debt and default having been found by the Adjudicating Authority by admitting Application which debt and default having not been questioned, there is no error in the order of the NCLT admitting Section 7 Application.” 

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