ELHPL PRIVATE LIMITED Vs. ICICI BANK LIMITED

JUDGEMENT

(1.) The instant petition has been preferred under section 10 of Insolvency and Bankruptcy Code 2016 (for brevity 'the Code') with a prayer to initiate Insolvency Resolution Process against the applicant company and for issuance of directions activating the moratorium under section 14 of the Code. The applicant has been incorporated under the provision of the Companies Act, 1956 initially in the year 2005 under its erstwhile name Threebrix E-Services Private Limited. Subsequently in the year 2009 its name was substituted with 'Educomp Learning Hour Private Limited and thereafter again it was realigned as ELHPL Private Limited in July, 2017. Prior to June 2016 ELHPL was a wholly owned subsidiary of Educomp Online Supplemental Services Ltd. (for brevity 'EOSSL') and step-down subsidiary of Educomp Solutions Limited (for brevity 'ESL'). The identification number of the applicant is CIN-U72200DL2005PTC142030 and its registered office is situated at Second Floor, Kamal Theatre Building, Safdarjung Enclave, New Delhi-110029. Its authorised share capital is Rs. 10,00,000/- and paid up share capital is Rs. 9,50,710/-. Mr. Raman Bajaj is the Director of the applicant company who has been authorized by the Board Resolution dated 20.10.2017 (Annexure-D) to sign and submit the petition.

(2.) The applicant was incorporated primarily with the object of providing coaching to IIT aspirants under the brand name of Vidyamandir Classes (for brevity VMCL') and for such purpose a franchisee agreement was executed between applicant and VMCL. In the year 2013-2014, ESL was under severe financial stress and thus availed a Working Capital Term Loan of Rs. 80 Crores from ICICI Bank Limited. Thereafter in July, 2013 ESL filed for Corporate Debt Restructuring (for brevity 'CDR'). It is alleged that in March, 2014 before the implementation of ESL CDR, ICICI Bank shifted (novated) its exposure in ESL for Rs. 80 Crore to the applicant without any benefit accruing to applicant or its business. As per the applicant this arrangement was a mechanism used by ICICI Bank to reduce its exposure in ESL and since the management of applicant was not independent it acceded to the financial institution's pressure tactics in doing the said dubious arrangement.

(3.) It is further alleged that ICICI was well aware that the applicant would not have enough resources to pay the interest on the aforesaid loan of Rs. 80 crores. Thus, along with the novation of Rs. 80 crores term loan, ICICI Bank also sanctioned further loan of Rs. 40 crores under a corporate loan agreement which was to be predominantly used to service the outstanding dues to ICICI Bank including principal repayment.