UNION BANK OF INDIA Vs. PARAMSHAKTI STEELS LTD

JUDGEMENT

(1.) Union Bank of India, the Financial Creditor herein, filed this Company Petition against the Corporate Debtor, Paramshakti Steels Ltd., under Section 7 of the Insolvency and Bankruptcy Code, 2016 (the Code) read with Rule 4 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules 2016, on the ground that the Corporate Debtor defaulted on 26.07.2016 in repaying a sum of Rs. 35,88,82,988/- plus interest amounting to Rs. 4,55,68,672/- from 26.07.2016 to 31.03.2017.

(2.) The Financial Creditor vide letter dated 14.07.2014 addressed to the Corporate Debtor sanctioned Rs. 50,00,00,000/- as Letter of Credit facility and Rs. 25,00,00,000/- as Cash Credit facility, for a period of 12 months under consortium arrangement, on the security of pari passu charge on hypothecation of entire stock on book debts. The said credit facilities are collaterally secured by Land and Building, plant & machinery and FDR/Cash collateral belonging to the Corporate Debtor valued at Rs. 113.53 crores and also on the personal guarantee of Mr. Vinod Garg, Director of the Corporate Debtor. Subsequently, on the request of the Corporate Debtor the Financial Creditor by a modification letter dated 11.08.2014 modified certain conditions of earlier sanction and the same was accepted by the Corporate Debtor. The Board of Directors of the Corporate Debtor in its meeting held on 16.09.2014 discussed about the above facilities sanctioned by the financial Creditor and resolved to borrow, provide securities as required by the Bank by affixing common seal of the Company in all the security documents as required in the presence of Mr. Vinod Garg, Director of the Company.

(3.) Accordingly, the Corporate Debtor executed the following security documents in favour of the Financial Creditor on 17.09.2014: