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2023 (8) TMI 748 - AT - Insolvency and BankruptcyInitiation of CIRP - Period of limitation - Term Loan I challenged on the ground that the application filed under Section 7 of the Code could not ever have been filed - date of NPA to be taken as date of default or not - HELD THAT - No doubt that as per schedule of payment, provided in the sanction letter, the repayment was to be made in respect of term loan 1 on half yearly basis, as per schedule provided in the sanction letter on the basis of which, as per chart prepared by the Appellant, 4th instalment was to be paid on 30.06.2020 of an amount of Rs. 14.59 Cr. but the same was not paid. Similarly, 5th instalment was to be paid on 31.12.2020 again of an amount of Rs. 14.59 Cr. which was also not paid and lastly 6th instalment was to be paid on 30.06.2021 of Rs. 26.27 Cr. which too was not paid. The question that has been raised by the Appellant is that the amount of debt became due and payable by the Respondent on 30.06.2020, therefore, it should have been the date of default whereas according to the Respondent, there is no concept of first date of default because the word first is not deliberately used by the legislature in Section 7 of the Code as a prefix with the word default and if the limitation of three years is counted from 30.06.2020 even then the application has been filed within the period of limitation. Next argument of Counsel for the Appellant is that since the notice of demand was issued on 01.10.2020, therefore, the date of default has to be treated as such, which could not have been 30.06.2021 as has been projected by the Respondent in order to wriggle out of the vigours of Section 10A of the Code - HELD THAT - The submissions made by Counsel for the Appellant cannot be accepted because term loan I has been provided to the Corporate Debtor in which there is no bank guarantee which is there in term loan II and the notice dated 01.10.2020 has been issued both to the Corporate Debtor and the Guarantor making specific reference to term loan II, highlighting the amount, which was disbursed in that account. The last argument raised by the Appellant is about the date of NPA - HELD THAT - There is no dispute that if the date of NPA is taken as the date of default then it would definitely come within the aforesaid period during which no petition under Section 7 could have ever been filed - it is also submitted that even in this appeal, the Appellant has not filed any application, seeking permission from this Tribunal, to bring on record the additional documents much less the record of DRT alongwith certificate of NPA. Therefore, these documents cannot be looked into being not a part of the record - thus the contention raised by the Appellant, to take the date of NPA as the date of default, cannot be accepted. Thus, all the points raised by the Appellant, in order to bring the date of default within the ambit of Section 10A of the Code fails and as a result thereof, all the contentions of the Appellant are hereby rejected - Appeal dismissed.
Issues Involved:
1. Applicability of Section 10A of the Insolvency and Bankruptcy Code, 2016. 2. Correctness of the date of default mentioned in the application. 3. Relevance of the Non-Performing Asset (NPA) date as the date of default. Summary: 1. Applicability of Section 10A of the Insolvency and Bankruptcy Code, 2016: The appellant contended that the default for Term Loan II occurred on 01.11.2020, which falls within the suspension period under Section 10A of the Code (25th March 2020 to 24th March 2021), thus making the application under Section 7 of the Code non-maintainable. However, the Adjudicating Authority noted that the default for Term Loan I occurred on 30.06.2021 and that there was an overdue amount towards interest for July and August 2019 in Term Loan II, which constituted a default from September 2019 onwards. Consequently, the plea regarding Section 10A was deemed legally unsustainable. 2. Correctness of the date of default mentioned in the application: The appellant argued that the correct date of default for Term Loan I should be 30.06.2020, not 30.06.2021, as the first instalment was due and unpaid on 30.06.2020. The respondent countered that the term "first default" is not used in Section 7 of the Code, and subsequent defaults give fresh rights to file an application. The Tribunal upheld the respondent's argument, referencing the cases of 'Koncentric Investments Ltd. & Anr. Vs. Standard Chartered Bank' and 'Indiabulls Housing Finance Limited Vs. Revital Realty Pvt. Ltd.', which established that every default gives a fresh period of limitation, and it is not mandatory to file an application on the first default. 3. Relevance of the Non-Performing Asset (NPA) date as the date of default: The appellant claimed that the date of NPA (28.12.2020) should be considered the date of default, which would fall within the suspension period under Section 10A. The respondent argued that the NPA date is not the default date for the purpose of initiating CIRP. The Tribunal agreed with the respondent, citing that the date of default is the actual non-payment date, not the NPA date, as per the judgments in 'Laxmipat Surana Vs. Union Bank of India' and 'Ramdas Dutta vs. IDBI Bank Limited'. Conclusion: The appeal was dismissed, with the Tribunal rejecting all contentions raised by the appellant regarding the applicability of Section 10A, the correctness of the default date, and the relevance of the NPA date. The application under Section 7 of the Code was found to be maintainable and filed within the period of limitation.
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