9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2024 (7) TMI 559 - AT - Insolvency and BankruptcyMaintainability of appeal - initiation of CIRP - Respondent had defaulted in payment of the instalments of the loan - Existence of debt and default - Application hit by Section 10A of the IB Code basis the default date being 15.12.2020. Maintainability of the Appeal - HELD THAT - The fresh application complies with this directive, correcting earlier technical errors and accurately reflecting the default date. Therefore, there was no bar on the Appellant to file a fresh application before the Adjudicating Authority against same debt and against the same corporate debtor. And thus the Appeal is maintainable on at least this ground. Admission of Debt and Default by Respondent - HELD THAT - The Respondent has explicitly admitted to borrowing funds from the Appellant and defaulting on repayment post-September 2020. Additionally, the Respondent acknowledged that initiating the Corporate Insolvency Resolution Process (CIRP) would be beneficial, supporting the Appellant's case for insolvency proceedings. Changing of default date - Allowable or not? - HELD THAT - The Appellant, SIDBI, has clearly demonstrated that the Respondent, Sambandh Finserve Private Limited, has ongoing defaults on its loan repayments. Each missed installment constitutes a fresh default, as evidenced by the statement of accounts. This ongoing failure to meet repayment obligations justifies the initiation of insolvency proceedings - it is clear that each failure of the Respondent to pay an instalment in terms of the repayment plan could be treated as a fresh default in payment of the loan amount. Interpretation of Section 10A vis-a-vis Admissibility of Fresh Default - HELD THAT - In the present case, there is a clear case of debt and default, which has been admitted by the Respondent in its Counter Affidavit before the Adjudicating Authority - in the judgment of the Hon'ble Delhi High Court in KOTAK MAHINDRA BANK LTD. VERSUS ANUJ KUMAR TYAGI 2015 (12) TMI 1903 - DELHI HIGH COURT , it was held that the the fact that that the respondent failed to adhere to the schedule of repayment, would not deprive the right of the appellant to treat each breach as a fresh cause of action and that the right to sue would occur, each time when, there is a default in payment of an EMI on its due date. Therefore, it supports the case of the Appellant that each failure of the Respondent to pay an instalment in terms of the repayment plan could be treated as a fresh default in payment of the loan amount. The material on record (namely the Statement of Account) in the instant case clearly shows that apart from default in 10A period, it was also occurring beyond threshold independently after 25.03.2021 which is beyond the suspension period - each default of the Respondent in non-payment of instalment and interest thereon amounts to fresh cause of default and event of default as per the General Conditions of the Loan Agreement and it could be a sufficient ground to file fresh application. Therefore, in situations of fresh default as in the present case, wherein the default is occurring after the 10A period, insolvency proceedings under section 7 of the IBC are justified. This Tribunal is of the view that the Appellant, SIDBI, has established a clear case of continuous defaults by the Respondent, Sambandh Finserve Private Limited, post the suspension period of Section 10A of the IBC. The Respondent's admission of debt and default and the consistency of the default date of 10.07.2021 in the fresh application substantiate the Appellant s claim - The application under Section 7 of the IBC filed by SIDBI for Corporate Insolvency Resolution Process deserves to be admitted against the Respondent, Sambandh Finserve Private Limited - Appeal allowed.
Issues Involved:
1. Maintainability of the Appeal. 2. Admission of Debt and Default by Respondent. 3. Changing of Default Date - Allowable or Not? 4. Interpretation of Section 10A vis-a-vis Admissibility of Fresh Defaults. Issue-wise Detailed Analysis: 1. Maintainability of the Appeal: The Appellate Tribunal had previously granted the liberty to the Appellant to file a fresh application, correcting earlier technical errors and accurately reflecting the default date. The Tribunal noted that the previous dismissal should not impact the current petition as it was explicitly allowed to be refiled. The fresh application was found to be in compliance with this directive, making the appeal maintainable. 2. Admission of Debt and Default by Respondent: The Respondent explicitly admitted to borrowing funds from the Appellant and defaulting on repayment post-September 2020. The Respondent also acknowledged that initiating the Corporate Insolvency Resolution Process (CIRP) would be beneficial. This admission supports the Appellant's case for insolvency proceedings, as the debt and default were clearly established. 3. Changing of Default Date - Allowable or Not? The Appellant initially filed a petition with an incorrect default date due to human error. The second petition corrected this by specifying the default date as 10.07.2021, aligning with the Statement of Accounts. The Tribunal noted that each missed installment constitutes a fresh default, which justifies the initiation of CIRP. The Tribunal cited the case of Kotak Mahindra Bank Ltd. v. Anuj Kumar, which held that each breach of the repayment schedule could be treated as a fresh cause of action. The Tribunal also referred to the Supreme Court judgment in Dena Bank v. C. Shivakumar Reddy, which allows for the amendment of pleadings in an application under Section 7 of the IBC. 4. Interpretation of Section 10A vis-a-vis Admissibility of Fresh Defaults: The Tribunal emphasized that Section 10A bars the initiation of CIRP for defaults occurring between 25.03.2020 and 24.03.2021. However, defaults occurring after this period are admissible. The Tribunal cited the case of NuFuture Digital (India) Limited vs Axis Trustee Services Ltd., which was upheld by the Supreme Court, to support the view that fresh defaults post the 10A period justify the initiation of insolvency proceedings. The Tribunal concluded that the fresh defaults by the Respondent, occurring after the 10A period, meet the threshold for filing under the IBC. Conclusion: The Tribunal found that the Appellant, SIDBI, had established a clear case of continuous defaults by the Respondent, Sambandh Finserve Private Limited, post the suspension period of Section 10A of the IBC. The Respondent's admission of debt and default, along with the consistency of the default date of 10.07.2021 in the fresh application, substantiated the Appellant's claim. Order: The appeal was allowed, and the Impugned Order dated 08.05.2023 was set aside. The application under Section 7 of the IBC filed by SIDBI for Corporate Insolvency Resolution Process was admitted against the Respondent, Sambandh Finserve Private Limited. The Adjudicating Authority was directed to initiate CIRP proceedings within 10 days as per the IBC provisions. No order as to costs.
|
