The National Company Law Tribunal Bench at Kochi has recently dismissed the Corporate Insolvency Resolution Process (CIRP) initiation petition by Phoenix Arc Private Limited, an asset reconstruction company partly sponsored by Kotak Mahindra Group.
The Application was filed by Phoenix ARC Private Limited (Trustee of Phoenix Trust FY 17-8), (Financial Creditor) on 10.10.2022 by invoking the provisions of Section 7 of the Insolvency and Bankruptcy Code (hereinafter called as Code) against M/s. Cherupushpam Films Private Limited (Corporate Debtor) in order to initiate Corporate Insolvency Resolution Process against the Corporate Debtor for the default amount of Rs 14.50 Crores.
“The Assignment Agreement dated 17.03.2017, produced by the Applicant, seems to be a document executed by South Indian Bank in favour of Phoenix ARC Pvt Ltd (“Phoenix ARC”) acting in its capacity as a trustee of Phoenix Trust FY 17-18 for the benefit of holders of the security receipt issued by the trustee”, the Corporate Debtor representative M/s. C.S. Ajith Prakash and Associates stated.
The CD representative submitted that “There is no trust deed produced as part of the pleadings when the Rules specifically mandate that every document relevant should be filed by the Financial Creditor to establish the credibility of the default by reason of which such creditor seeks to initiate CIRP against a corporate person.”
“The absence of production of the trust deed and a resolution of the beneficiaries of the trust authorizing the applicant to file the present petition lead to a concluding finding that the Applicant and the signatory for the applicant have no authority to file the present proceedings”, the representatives further argued.
“The Assignment Agreement or Deed does not provide any details as to whether there were any other borrowers’ debt has been assigned under the said agreement since the Applicant has produced a truncated document before this Tribunal”, the representatives of the CD, M/s. Cherupushpam Films Private Limited further contended.
In reply, the representative of the Financial Creditor, M/s. A.V. Thomas Associates submitted that “The Financial Creditor further stated that the acknowledgement of the debt by the Principal Borrower is binding on the Corporate Debtor as per Clause 6 of the Guarantee Agreements. The Corporate Debtor has also mentioned the debt in their Annual Financial Statements and treated the same as a contingent liability. The Corporate Debtor is liable for the default of the Principal Borrower as per the guarantee agreements.”
Upon hearing Joseph Kodianthara for the Financial Creditor and Mr. Pradeep Joy for the Corporate Debtor, the National Company Law Tribunal, Kochi Bench comprising Satya Ranjan Prasad [Member (Technical)] and Mohan Raj [Member (Judicial)] observed that “Rule 4(2) of the Adjudicating Authority Rules says in case of assignment of the debt, the assignee shall produce all relevant documents pertaining to the assignment or transfer.”
It was further observed in the light of facts of the case that, “Here the particulars of trustee alone are furnished but particulars of Trust is not furnished, the basic document Trust deed also not produced. Even after the plea raised in this regard on the corporate debtor side, the petitioner is not inclined to produce the Trust deed, it leads to filing of incomplete petition.”
“The petitioner has not proved its authority to institute this petition”, the tribunal bench held and dismissed the petition for want of relevant documents.
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