B.S.V. Prakash Kumar, Member - (1.) It is a Company Petition filed u/s. 7 of The Insolvency and Bankruptcy Code by a Mauritius company, namely, The Mauritius Commercial Bank against the Corporate Debtor namely, Varan Corporation Limited for this Debtor Company stood as Corporate Guarantor to the loan of USD 30 million borrowed by one of the debtor group companies, namely Real Point Mauritius Ltd. (RPML) from the Financial Creditor and then this Principal Borrower (RPML) having defaulted in repaying this loan along with interest, this debt has been crystallised against this corporate debtor who stood as guarantor. When this debtor also failed to discharge its obligation of repayment of due outstanding against the principal debtor, this financial creditor, by filing this Petition, sought for initiation of Insolvency Resolution process against this Corporate Debtor. The Applicant Bank claim against the corporate debtor as on 31.01.2017 is USD 17,122,179, this computation has been shown in Exhibits 17 & 18 of the Company Petition. Brief facts of the case:
(2.) This principal borrower (RPML) has been incorporated in the year 2008 as wholly owned subsidiary of this Corporate Debtor in Mauritius. At all points of time, the directors of its holding company i.e., Corporate Debtor, have remained as directors of this principal borrower. One Mr. Yudishthir D. Khataw and Mr. Sumegh Mody remained as directors of this principal borrower and this corporate debtor as well; this fact has not been disputed by this corporate debtor. This principal borrower, to acquire shares of its group Indian company namely Varun Shipping Company Limited (VSCL), availed USD 30 million loan from this Mauritius Bank situated in Mauritius Country by entering into Facility Agreement dated 2.12.2008. This Corporate Debtor Company, being holding company of RPML, executed corporate guarantee for the aforesaid amount of USD 30 million to secure repayment of the outstanding dues in the event of default in repayment by the principal borrower, i.e. RPML. The aforesaid Sumegh Mody, being common director of RPML and the Corporate Debtor, signed the Facility Agreement on behalf of RPML and Corporate Guarantee Agreement on this Corporate Debtor as well. Before execution of this Corporate Guarantee by this Debtor, it had passed a Board Resolution on 2.12.2008 agreeing to give corporate guarantee to the aforesaid loan taken by RPML from the Financial Creditor (Board Resolution at Page 122 of CP). In furtherance of it, on 26.3.2009, the Debtor Company, through Mr. Sumegh Mody, executed an irrevocable and unconditional corporate guarantee in favour of the Creditor for full repayment of all monies as agreed by RPML in the event RPML defaulted in making repayment of USD 30 million availed through Facility Agreement.
(3.) This guarantee agreement executed in favour of a Foreign Bank located in Mauritius having fallen within the ambit of FDI through automatic route, since the debtor company is under an obligation to make post facto intimation of the same to RBI, this debtor company on 26.3.2009 forwarded the copy of this corporate guarantee to its dealer Bank, namely Bank of Baroda along with Form ODI to enable the Bank to send it to RBI. This fact is also not denied by the corporate debtor. Interesting part is, even the letter written to the Bank of Baroda is signed by the same Mr. Sumegh Mody as director of the Debtor Company. To prove that FDI guidelines have been complied with, this Corporate Debtor, by its letter dated 1.4.2009 sent the letter acknowledged by the Bank of Baroda, dealer Bank along with this guarantee agreement to the creditor as well, this was done perhaps to impress upon the Creditor Bank that the Corporate Debtor completed whatever formalities to be followed in availing facility for getting Foreign Direct Investment. Somewhere in the 2012, when RPML defaulted in its payment obligations under Facility Agreement after payment of instalments, this Facility Agreement was amended on 2.4.2012 and the loan was restructured. Besides this, in the auditor's report of RPML as of 31st March, 2009, it has been reflected that this Bank loan of USD 30 million has been secured and has been guaranteed by the Varun Corporate Limited (corporate debtor), the holding company. By looking at the Annual Report of the Corporate Debtor for the period of 15 months ended 30th June 2009, it has been reflected under the head of contingent liabilities as follows: "Contingent Liabilities; Contingent liabilities are not provided for and are disclosed by way of notes. (a)................... (b)................... (c)................... (d) Since the net worth of subsidiary company (RPML) is eroded, the company has agreed to provide financial support to the subsidiary to meet its debts and liabilities as to continue it as a going concern.";