Punjab National Bank (International) Ltd. v. Gokul Super Speciality Hospital Private Limited (NCLT Bengaluru)
Case Overview
Case Title: Punjab National Bank (International) Ltd. v. Gokul Super Speciality Hospital Private Limited
Case No.: 156/BB/2020
Bench: NCLT Bengaluru Bench
Coram: Hon’ble Shri Ashok Kumar Borah (Judicial Member) & Hon’ble Shri Ashutosh Chandra (Technical Member)
The petition was filed by Punjab National Bank (International) Ltd. (hereinafter referred to as the petitioner) under Section 7 of the Insolvency and Bankruptcy Code (IBC), 2016, read with Rule 4 of the I&B (AAA) Rules, seeking initiation of CIRP against Gokul Super Speciality Hospital Pvt. Ltd. (the defendant) due to financial default.
Key Financial Details
- Loan Amount: USD 4.5 Million
- Default Amount (claimed): USD 3,586,397.05
- Invocation Notice: Issued on 17-09-2018
Defendant’s Arguments
- The defendant claimed it was not insolvent as it possessed mortgaged assets.
- Argued that the petition was an abuse of process and not maintainable.
- Contended that substantial repayment had been made and the bank had used an incorrect USD–INR conversion rate.
- Cited external factors like floods and sand shortage as reasons for delay.
- Stated willingness to settle but claimed the Bank's OTS terms were unreasonable.
Petitioner’s Claims
- Loan of USD 4.5 Mn was sanctioned on 4-12-2014/13-01-2015 for establishing a super speciality hospital in Udupi.
- The loan was secured through land, building, and medical equipment.
- Invocation notice issued on 17-09-2018 for personal guarantees.
- Petitioner sought CIRP admission for outstanding dues of Rs. 25,46,34,190.55 at a conversion rate of Rs. 71/USD.
Terms of One Time Settlement (OTS)
- OTS amount: USD 3,000,000 against total dues of USD 3,910,594.90 as of 10-09-2020.
- First installment of USD 1,000,000 was deferred from 31-10-2020 to 15-11-2020.
- Subsequent installments due on or before 30-11-2020 and 31-12-2020.
- OTS would be void if the borrower defaulted; bank reserved right to enforce legal remedies.
NCLT's Verdict
The tribunal acknowledged the economic difficulties caused by the COVID-19 pandemic and government protective policies. It emphasized that NCLT is not the forum to oversee repayment structures.
- Urged the bank to adopt a liberal and practical view regarding installment timelines.
- Since the petition had not been admitted and both parties had settled the matter, NCLT allowed the petitioner to withdraw the Section 7 petition.
- Petition disposed of as withdrawn.
- Liberty granted to revive the petition if the debtor fails to comply with the OTS terms.
Key Timeline of the Case
- 4-12-2014 / 13-01-2015: Loan of USD 4.50 Mn sanctioned.
- 17-09-2018: Invocation Notice issued for personal guarantees.
- 04-09-2020: Defendant filed objections to the Section 7 petition.
- 14-09-2020: Petitioner offered revised OTS.
- 17-09-2020: Petitioner filed rejoinder rebutting defendant’s reply.
- 25-09-2020: Defendant filed memo accepting OTS with modification to installment date.