Edelweiss Asset Reconstruction Company Limited vs OFFICIAL LIQUIDATOR OF S. KUMARS NATIONWIDE LIMITED on 15 March 2024

J U D G M E N T

1. The Original Application has been filed by the Applicant against the Defendant No. 1 & 2 before Ld. DRT-II, Mumbai, which stands transferred to this Tribunal as per the Govt. Notification dated 26/09/2016 and registered as TA No. 1473/2016. The OA has been filed by the Applicant against the Defendant 1 & 2 for recovery of following amount:

i. Rs. 65,41,64,733/- (Rupees Sixty Five Crore Forty One Lakh Sixty Four Thousand Seven Hundred Thirty Three Only) due and payable as on 15.06.2015 with further interest thereon at the contractual rate with monthly resets under the Rupee Term Loan Facility till the date of payment and or realisation. ii. Rs. 172,21,31,093/- (Rupees One Hundred Seventy Two Crore Twenty One Lakh Thirty One Thousand Ninety Three Only) due and payable as on 15.06.2015 with further interest thereon at the contractual rate with monthly resets under the Rupee Term Loan Facility till the date of payment and or realisation. Aggregating amount of Rs. 237,62,95,826/- (Rupees Two Hundred Thirty Seven Crore Sixty Two Lakh Ninety Five Thousand Eight Hundred Twenty Six Only) with interest mentioned herein above.

2. Facts as succinctly set out in the present OA is that a valid and subsisting assignment agreement dated 28.03.2014, EXIM Bank unconditionally and absolutely assigned to the Applicant, all its rights, title and interests, benefits in and to the debts, together with any incidental rights thereto including the assignment of benefits under the finical instruments.

3. It is stated that the Defendant No. 1 is a limited company registered under the provisions of companies act, 1956. India Debt Management Pvt. Ltd. has filed company petition before Hon’ble High Court, and by its order dated 15.09.2014 was pleased to wind up the affairs of the Defendant No. 1 company and appoint Official Liquidator as Liquidator of the Defendant No. 1. Thereafter, the Official Liquidator has been sued in capacity as a liquidator of the Defendant No. 1 Company. Defendant No. 2 is a personal guarantor for the facilities sanctioned disbursed to the Defendant No. 1. Defendant No. 3 to 8 are other term loan lenders of Defendant No. 1 who claim to have a charge on the assets of Defendant No. 1 and are thus necessary parties to the parties to the present Original Application.

4. It is stated that the Defendant No. 1 is at all material time seized and possessed of and or otherwise well and sufficiently entitled to the following properties: i. All that piece and parcel of land bearing Plot No. 825, adjoining Cart- Track area in Jhagadia Industrial Estate Area, consisting of Revenue Survey No. 17 to 21A, 59 to 61, 63 to 66 and 68 to 72 and Cart Track Land within the village limits of Dadeda, Taluka Jhagadia, District Bharuch admeasuring at about 282977.40 +2788.45 i.e. 285765.85 sq. mtrs or thereabout ii. All that piece and parcel of land in the village of Balgarh in Dewas Tehsil, in District Dewas in the state of Madhya Pradesh bearing Survey No. 182, 192/2, 183, 193, 194, 194/4, 259/1, 260/2, 261/1, 257/2, 156/2, 262, 263, 264/1, 243/2, 271/2, 272/1, 275/1, 265/1, admeasuring at about 99769.30 sq. mtrs. together with all building and structure standing thereon and all plant and machinery attached to and or permanently fastened to anything to the earth and or installed thereon and every part thereof. iii. All that piece and parcel of land in the village of Shankergarh in Dewas Tehsil, in District Dewas in the state of Madhya

Pradesh bearing Survey No. 300, 301, 314/2, 316, 255/2, 257, 260/2, 264, 266, 268, 339, 256/2, 258/2, 263/2, 265, 267, 269, 270/2, 285 to 288, 304, 305, 309, 321/2, and 335/1, admeasuring at about 141579.30 sq.mtrs. together with all building and structure standing thereon and all plant and machinery attached to and or permanently fastened to anything to the earth and or installed thereon and every part thereof. iv. All that piece and parcel of land in the village of Kasba Dewas in Dewas Tehsil, in District Dewas in the state of Madhya Pradesh bearing Survey No. 890, admeasuring at about 20601.44 sq.mtrs. together with all building and structure standing thereon and all plant and machinery attached to and or permanently fastened to anything to the earth and or installed thereon and every part thereof. v. All that piece and parcel of N.A. vacant land lying, being and situated at Dongergaon, bearing subdivision layout Plot No. 8, forming part of Gat No. 249, bearing Survey No. 120 of village Dongergaon, Taluka Maval, District Pune, Panchayat Samiti, Mawal, Group of Gram Panchayat Kusgaon Badrukh, admeasuring at about 414 sq.mtrs. together with all building and structure standing thereon and all plant and machinery attached to and or permanently fastened to anything to the earth and or installed thereon and every part thereof. vi. All that piece and parcel of leasehold land admeasuring at about 33997.40 sq. mtrs. in industrial area, A.B. Road No.2 in Dewas in the state of Madhya Pradesh bearing plot No. 3-B-1, admeasuring at about 4.2 Acres and Plot No. 3-B-1/1, 3-B-1/2,

3-B-1/3, 3-B-1/4, admeasuring at about 4250 sq.mtrs. together with all building and structure standing thereon and all plant and machinery attached to and or permanently fastened to anything to the earth and or installed thereon and every part thereof.

5. It is stated that in on about December, 2007, the Defendant No. 1 approached the EXIM Bank for being granted sanctioned a rupee term loan to part finance for its state of the art composite mill to undertake manufacture of High Value Fine Cotton Fabrics and Home Textiles Products with and installed capacity of 12.75 million mtrs. p.a. and 29.50 million mtrs. p.a. respectively. Pursuant to the said request, Applicant vide sanction letter dated 24.12.2007 sanctioned Rupee Term Loan facility of Rs. 50 Crore to Defendant No. 1. The said loan was to be repaid in 32 equal quarterly installments after moratorium period of 24 months from the date of commencement of commercial operation of the project i.e. 01.07.2008.

6. In consideration of the sanction of the aforesaid facility, Defendants executed following loaning and security documents on 05.02.2008; 21.06.2012 in favour of the EXIM Bank: i. Rupees Loan Agreement executed by Defendant No. 1. ii. Letter of Guarantee in his individual and personal capacity executed by Defendant No. 2. iii. Defendant No. 1 executed Deed of Hypothecation of movable assets. Defendant No. 1 created second pari passu charge in favour of the EXIM Bank on all movable, plant and machinery, equipment, appliances, furniture vehicles, stock of raw material, goods in process.

iv. Defendant No. 1 expected Deed of Hypothecation of “Belmont” brand, thereby creating a first pari passu charge in favour of the EXIM Bank.

7. It is stated that in or about October, 2008, the Defendant No. 1 approached the EXIM Bank for being granted sanctioned Rupee Term Loan to part finance its acquisition of Leggiuno Spa, Italy through overseas special purpose vehicle under the EXIM Bank Overseas Investment Finance Program. Pursuant to the said request, EXIM Bank vide its sanction letter dated 06.10.2008 sanctioned Rupee Term Loan facility of Rs. 165 Crore to the Defendant No. 1. The said loan was to be repaid in 24 equated quarterly installment after moratorium period of 24 months form the date of first disbursement.

8. In consideration of the sanction of the aforesaid facility, Defendants executed following loaning and security documents in favour of the EXIM Bank: i. First pari pasu charge on entire fixed assets including immovable properties of the Defendant No. 1 both present and future excluding the fixed assets pertaining to the High Value Fine Cotton and Home Textile Project at Jhagadia. ii. Pledge of shares of Leggiuno Spa, Italy iii. Pledge of shares of all other special purpose Vehicle Company Holding shares of Leggiuno Spa, Italy either directly or indirectly. iv. First charge on Debt Service Reserve Account (DSRA) to be open with bank acceptable to the EXIM Bank.

v. Receivables in the form of dividends from Leggiuno Spa, Italy and Personal Guarantee of the Defendant No. 2.

9. It is further stated that in terms of the said sanction, by Share pledge agreement dated 27.11.2008, Defendant No. 1 pledged in favour of the EXIM Bank its share holding in Leggiuno Spa, Italy to the amount of EUR 2,995,000.00.

10. In order to further secure the aforesaid facility, the Director of Defendant No. 1, attended the office of IDBI Trusteeship Services Ltd., and deposited the title deeds which were earlier deposited, to create security by way of mortgage by deposit of title deeds to secure due repayment of the facilities granted by other lenders of the Defendant No. 1 namely the Defendant No. 3 to 9.

11. It is stated that the Defendant by executing Balance Confirmation letter dated 12.04.2013 expressly admits and acknowledges its debts due and payable to the EXIM Bank.

12. However, after availing the aforesaid Rupee Term Loan facility, the Defendant No. 1 failed and neglected to adhere to the terms and conditions of the loan agreements, thus EXIM Bank classified the account of Defendant No. 1 as NPA.

13. It is stated that in view of default committed in repayment of the said dues to the said consortium including the Applicant herein, an Original Application has already been filed by the said lead banker and other members of the consortium including the Applicant herein before Debts Recovery Tribunal, Karnataka, Bangalore being Original Application No. 1145 of 2015.

14. Notices were issued to the Defendants. Defendants put their appearance through counsel on 08.06.2023 however, thereafter, none appeared for the Defendant No. 1 & 2 nor filed the WS. Defendant No. 6 has filed their WS.

15. In the written statement Defendant No. 6 has instructed that Defendant No. 6 has also filed an OA No. 95/2015 and it is stated that Defendant No.6 is entitled for payment of the dues through realisation of mortgaged and hypothecated securities and OA may be allowed subject to recording of charge of Defendant No. 6 in respect of secured assets.

16. The Applicant Bank has produced all the Original Loan documents and other relevant documents along with their Claim Affidavit filed through Authorised Signatory.

17. I have heard the Ld. Counsel for the Applicant Bank and perused the record.

18. During the pendency of the OA, at the instance of one of the Financial Creditor of Defendant No. 1 i.e. IDBI Bank Ltd, a Corporate Insolvency Resolution Process was initiated against Defendant No. 1. The said petition was admitted by National Company Law Tribunal, Mumbai bench by its order dated 24.04.2018 and impose a moratorium under the provision of Insolvency and Bankruptcy Code, 2016. Further, the Defendant No. 1 is now represented by Resolution Profession appointed as a liquidator in the process of Corporate Insolvency Resolution Process of Defendant No. 1.

19. The witness of the Applicant Bank has fully corroborated the averments made in the OA, even otherwise the whole case of the Applicant Bank is based on documents and the witness has duly proved all these documents as against the defendants. In my view there is no question of disbelieving the evidence led by the Applicant Bank and the Applicant Bank has proved its case beyond reasonable doubt against Defendant No. 2.

20. In the light of the abovesaid discussions, the Original Application filed by the Applicant Bank deserves to be allowed against the Defendant No. 2.

21. Since the moratorium has came into effect against Defendant No. 1 thus, the Applicant is hereby allowed to revive the present OA against Defendant No. 1 as and when required.

O R D E R

(i) I allow the present O.A. and direct the Defendant No. 2, to pay to the Applicant, jointly and severally, within a period of 60 days, a sum following amount:

a. Rs. 65,41,64,733/- (Rupees Sixty Five Crore Forty One Lakh Sixty Four Thousand Seven Hundred Thirty Three Only) due and payable as on 15.06.2015 with further interest thereon at the contractual rate with monthly resets under the Rupee Term Loan Facility till the date of payment and or realisation.

b. Rs. 172,21,31,093/- (Rupees One Hundred Seventy Two Crore Twenty One Lakh Thirty One Thousand Ninety Three Only) due and payable as on 15.06.2015 with further interest thereon at the contractual rate with monthly resets under the Rupee Term Loan Facility till the date of payment and or realisation. Aggregating amount of Rs. 237,62,95,826/- (Rupees Two Hundred Thirty Seven Crore Sixty Two Lakh Ninety Five Thousand Eight Hundred Twenty Six Only) with interest mentioned herein above.

(ii) Failing which the aforesaid amount shall be recovered from the sale of personal moveable and immoveable assets of the Defendant No. 2.

(iii) Defendant No. 2 are hereby directed not to deal with their properties till further direction of Ld. Recovery Officer.

(iv) Defendant No. 2 shall also pay the cost and expenses of the OA.

(v) Recovery Certificate be issued forthwith and be sent to the Recovery Officer of this Tribunal. Copy of this order be sent to the parties as per rules. File be consigned to record.

Place: Mumbai.

(Dr. Rekha G. Dhakar) Date : 15.03.2023

Presiding Officer, DRT-1, Mumbai.

Tjs/-