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2022 (8) TMI 1110 - AT - Insolvency and BankruptcyInitiation of CIRP - NCLT admitted the application - Corporate Debtor failed to make repayment of its dues - Financial Creditors - event of default (for principal loan) has occurred in January, 2022 when the Financial Creditor filed Section 7 application, or not - HELD THAT - The Adjudicating Authority in the impugned order has after considering the submissions of the parties has returned finding that default was committed. The event of default had not occurred with Principal Loan, the event of default did occur for Additional Loan and Further Loan on 27.11.2021 giving right to the Financial Creditor to file Section 7 application in January, 2022. The Adjudicating Authority has rightly after finding debt and default admitted Section 7 application. We may further notice one more aspect of the present Appeal. On the very first day when this Appeal came for consideration before this Appellate Tribunal, learned counsel for the Appellant submitted that Appellant intends to settle the entire amount of Principal and interest within a period of three months. Further on 02.06.2022, Appellant undertook to make payment of entire amount of Rs.22,23,45,748/-. The submission of the Appellant that no event of default took place in loan cannot be accepted. Nor, Appellant can be permitted to submit that no default took place in the payment of loan - the Adjudicating Authority did not commit any error in admitting Section 7 application. Appeal dismissed.
Issues Involved:
1. Validity of the Default Date 2. Liability for Additional Loan 3. Admission of Section 7 Application Detailed Analysis: Validity of the Default Date: The appellant argued that the event of default had not occurred in January 2022 when the Financial Creditor filed the Section 7 application. The moratorium on repayment of interest ended on 27.11.2021, and the appellant contended that the default could only occur after the failure to pay interest for two consecutive quarters, i.e., after 28.05.2022. The respondent countered that the interest became due immediately after the moratorium ended on 27.11.2021, thus triggering the default. The tribunal found that the default date of 27.11.2021 was valid, as the interest for two consecutive quarters was due by then. Liability for Additional Loan: The appellant claimed that the Additional Loan of Rs.11 Crores was transferred to a sister concern, thus negating any liability. The respondent refuted this, stating that the amount was received in the corporate debtor's bank account and later transferred to personal accounts and another entity, M/s Bravo Builders Pvt. Ltd. The tribunal noted that the receipt of the Additional Loan was an admitted fact and that the interest on this loan became due on 27.11.2021, thus establishing a default. Admission of Section 7 Application: The tribunal examined the details provided in the Section 7 application, which included the Principal Loan, Additional Loan, and Further Loan, amounting to Rs.22,23,45,748/-. The tribunal found that the corporate debtor had committed a default in repayment, as outlined in the loan agreement and schedules. The adjudicating authority had correctly admitted the Section 7 application based on the established debt and default. Additional Observations: The tribunal also noted that the appellant had initially undertaken to settle the entire amount by the first week of July 2022 but failed to do so. This further substantiated the respondent's claim of default. The tribunal dismissed the appeal, affirming the adjudicating authority's decision to admit the Section 7 application. Conclusion: The tribunal concluded that the adjudicating authority had rightly admitted the Section 7 application, as the corporate debtor had defaulted on both the Principal and Additional Loans. The appeal was dismissed, and the tribunal upheld the findings of debt and default as established by the adjudicating authority.
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