9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2022 (5) TMI 993 - AT - Insolvency and BankruptcyMaintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not - HELD THAT - There being clear stipulation that on any of the default Bank reserve its right to cancel the compromise settlement and will be entitle to exercise against the borrowers/ guarantors all rights and remedies available prior to the compromise settlement as per applicable law. The Default Clause clothe the Financial Creditor the right to file Application under Section 7 which was done after 30.06.2020 when default was committed. The Appellant submitted that there was no cancellation of the compromise OTS dated 28.05.2020, hence, it cannot be said that there was any debt due on the Corporate Debtor - said submission cannot be accepted in view of the clear stipulation of Clause 6 'Default Clause', the Bank has every right to proceed and exercise all its rights when default is committed. It is not the case that no default was committed on 30.06.2020 nor there is any material on record to indicate that payment as was required to be paid on 30.06.2020 was paid - there are no error in the order of the Adjudicating Authority admitting Section 7 Application - appeal dismissed.
Issues:
Admission of Application under Section 7 of the Insolvency and Bankruptcy Code, 2016 based on an OTS dated 28.05.2020 between three companies. Analysis: The appeal was filed against the order passed by the Adjudicating Authority admitting the Application under Section 7 of the Insolvency and Bankruptcy Code, 2016, by the Financial Creditor. The Appellant challenged the order, arguing that an OTS dated 28.05.2020 was entered between three companies, including the Corporate Debtor, which meant there was no debt. The Respondent, Financial Creditor, acknowledged the OTS but highlighted that a scheduled payment was defaulted, allowing them to proceed under Section 7. The Tribunal examined the terms of the OTS, particularly the Default Clause, which allowed the Financial Creditor to cancel the settlement and exercise rights upon default. The Financial Creditor filed the Section 7 Application after the default on 30.06.2020, as per the terms of the OTS. The Tribunal reviewed the submissions and the record, noting the Default Clause in the OTS which empowered the Financial Creditor to take action upon default. The Default Clause explicitly stated that in case of default, the Financial Creditor could cancel the settlement and pursue remedies available under the law. The Tribunal emphasized that the Bank had the right to proceed under Section 7 after the default occurred on 30.06.2020, as per the terms of the OTS. The Appellant argued that since the compromise OTS was not canceled, there was no debt due, but the Tribunal rejected this argument, emphasizing the Bank's right to act upon default as per the agreement. The Tribunal found no merit in the appeal, upholding the Adjudicating Authority's decision to admit the Section 7 Application. The Tribunal concluded that the Bank was justified in proceeding under Section 7 due to the default, dismissing the appeal based on the clear terms of the Default Clause and the lack of evidence of payment on the scheduled date.
|
