NCLT Mumbai Dismisses Section 7 Petition Against Direct Media Distribution Ventures Limited
Udai Yashvir Singh
19 May 2023 12:30 PM GMT
The NCLT Mumbai bench comprising of Shri Kishore Vemulapalli (Judicial Member) and Shri Prabhat Kumar (Technical Member) has dismissed a petition under Section 7 of Insolvency and Bankruptcy Code, 2016 (“IBC, 2016”) against Direct Media Distribution Ventures Limited (“Direct Media”) and refused to initiate Corporate Insolvency Resolution Process (“CIRP”) against...
The NCLT Mumbai bench comprising of Shri Kishore Vemulapalli (Judicial Member) and Shri Prabhat Kumar (Technical Member) has dismissed a petition under Section 7 of Insolvency and Bankruptcy Code, 2016 (“IBC, 2016”) against Direct Media Distribution Ventures Limited (“Direct Media”) and refused to initiate Corporate Insolvency Resolution Process (“CIRP”) against it.
The Petition was filed by IDBI Trusteeship Services Limited (“Financial Creditor”) which claimed a total default of Rs. 599.05 crores. The Financial Creditor was a Debenture Trustee for the benefit of Franklin Templet on Asset Management (India) Private Limited (“Debenture Holder”) who had acquired 425 rated, unlisted, redeemable, non- convertible debentures in 2 Series, being the Series I debentures and Series II debentures with each debenture having a face value of Rs. 1 Crore each issued by Essel Infraprojects Limited (“Essel”)
Essel and the Financial Creditor entered into a Debenture Trust Deed (“DTD”) dated 22.05.2015. They further entered into a Share Pledge Agreement. Cyquator Media Services Private Limited and Direct Media (“Corporate Guarantors”) executed a Corporate Guarantee dated 22.05.2015 in favour of the Financial Creditor guaranteeing the obligation of Essel with respect to the Debentures and to make payments under the DTD
An amended DTD was signed between Essel and the Financial Creditor due to inability of Essel to fulfill its obligations under the DTD in light of a liquidity crisis. The 351 NCDs fell for redemption on 22.05.2020, but Essel defaulted in the payment of the principle amount of the NCD and the redemption premium on them. Multiple communications were made by the Financial Creditor to make payment of the balance defaulted amount in respect of the Debentures. A Demand Notice dated 09.05.2022 was issued by the Financial Creditor to Direct Media.
The Tribunal observed that the DTD specified that the liability of the guarantor arose only upon service of notice in the form given in schedule II of the guarantee agreement. The said notice was given on 12.06.2020 which made Direct Media liable to pay the amount of default within two business days. Since 13th and 14th May were a holiday, the date of default was 16.06.2020. Since the date of default fell within the period of Section 10A, the filing of application under Section 7 of IBC, 2016 is barred forever.
With the aforesaid observation, the Tribunal dismissed the petition.
Case:
IDBI Trusteeship Services Limited Vs Direct Media Distribution Ventures Private Limited
Case No.
CP (IB) No. 827/MB-IV/2022
