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2021 (12) TMI 9 - 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 - debt payable or not - Applicability of bar created by the provisions of Section 10A - pendency of restructuring proposal - maintainability of Appeal under Section 61(1) of the IBC - Whether there is misjoinder of cause of actions? - HELD THAT - It is apparent that more than one Financial Creditor can file joint Application and the dates of default may be different. There is no such provision in Section 9 of the IBC. Therefore, the ratio of the Judgment in the case of International Road Dynamics South Asia 2017 (8) TMI 1369 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI is not applicable to the facts of present case - Hon ble Supreme Court in the Case of Gaurav Hargovind Bhai Dave Vs. Asset Reconstruction Company (India) Limited Anr. 2019 (9) TMI 1019 - SUPREME COURT held that the date on which the bank declared the account of Corporate Debtor NPA is the date of default. In the present case, the account of the Corporate Debtor was classified as NPA on 31.03.2019. The cause of action accrued on 31.03.2019, the date of NPA. In such circumstances, we are unable to convince with the argument of Ld. Sr. Counsel for the Appellant that there is misjoinder of cause of action in the Application under Section 7 of the IBC. Whether the debt is not payable in fact? - HELD THAT - Section 3(12) of the IBC defines default means non-payment of debt when whole or any part or instalment of the amount of debt has become due and payable and is not paid by the debtor or the Corporate Debtor as the case may be . With the definition, it is clear that the two instalments i.e. dated 17.06.2020 and 17.12.2020 were not due and payable even though the earlier instalments were become due and payable and the Corporate Debtor had committed default. Therefore, it cannot be said that the Corporate Debtor has not committed any default in respect of the aforesaid loans and the debt is not payable in fact. Whether the debt is barred by limitation? - HELD THAT - The Corporate Debtor has specifically acknowledged the debt. The Application under Section 7 of the IBC is filed on 09.01.2020. The Application is filed within three years from the date of acknowledgement - there are no force in the argument of Ld. Sr. Counsel for the Appellant that the debt is barred by limitation. Whether, the Application under Section 7 of the IBC is not maintainable as a bar has been created by the provisions of Section 10A? - HELD THAT - In the present case, the Corporate Debtor has committed default for Rupee Term Loan I, Rupee Term Loan II and cash credit on 31.01.2019, 31.01.2019 and 28.01.2019 respectively and the account of the Corporate Debtor was classified as NPA on 31.03.2019 i.e. prior to insertion of Section 10A. Therefore, provision of Section 10A is not attracted to the present Application under Section 7 of the IBC. Whether filing of an Application under Section 7 of the IBC despite opposition by all other creditors and during pendency of restructuring proposal is unsustainable in law? - HELD THAT - It is not convincing that during the pendency of restructuring proposal outside the purview of IBC, the Application under Section 7 of IBC is unsustainable in law. On the other hand, The Appellant has candidly admitted in Para 10 of Written Submission that none of the judgments passed by the Hon ble Judicial Forums have dealt with a situation like the present one, wherein the financial interest of other Financial Creditors have been damaged due to the isolated and unilateral action of one the Financial Creditor. Whether impugned order is against the very spirit of IBC as the Adjudicating Authority fails to consider that restructuring outside the purview of IBC would be beneficial to the Financial Creditors? - HELD THAT - There is no duty cast on the Adjudicating Authority that no sooner Adjudicating Authority gets information that outside the purview of IBC any restructuring proposal is under consideration before the consortium of lenders then he should defer the proceedings for initiation of CIRP. On the other hand, Section 7(4) of the IBC provides that the Adjudicating Authority shall within 14 days of receipt of the Application ascertain the existence of default from the records of an information utility or on the basis of other evidence furnished by the Financial Creditor passed an order under Section 7(5) - In the present case, the Corporate Debtor committed default and the Application is complete and there is no disciplinary proceedings pending against the Resolution Professional. Therefore, the AdjudicatingAuthority has no option except to admit the Application under Section 7 and to initiate the CIRP. The Adjudicating Authority was not obliged to consider that restructuring outside the purview of IBC would be beneficial to the Financial Creditors. Whether Kotak Mahindra Bank can maintain the Appeal under Section 61(1) of the IBC? - HELD THAT - The Appellant Kotak Mahindra Bank has no valid ground to challenge the impugned order and failed to point out any legal or factual flaw in the impugned order. The Appellant has no locus standi to file this Appeal. Thus, the Appellant is not come within the purview of aggrieved person . Hence, the Appellant Kotak Mahindra Bank cannot maintain the Appeal. It is also pointed out that the Appellantwas well aware of the proceedings under Section 7 before the Adjudicating Authority, however, the Appellant chose not to participate in the proceedings. Therefore, the Appeal at the instance of Kotak Mahindra Bank is not maintainable. Appeal dismissed.
Issues Involved:
1. Misjoinder of cause of actions. 2. Debt not payable in fact. 3. Debt barred by limitation. 4. Applicability of Section 10A of IBC. 5. Filing of Section 7 Application despite opposition and pending restructuring proposal. 6. Impugned order against the spirit of IBC. 7. Locus standi of Kotak Mahindra Bank to file the appeal. Detailed Analysis: Issue No. (i): Misjoinder of Cause of Actions The appellant argued that the claims arising from different agreements with different default dates should not be clubbed together. However, the tribunal noted that Section 7 of the IBC allows a financial creditor to file an application either by itself or jointly with other financial creditors when a default has occurred. The tribunal referred to the Supreme Court's judgment in Gaurav Hargovind Bhai Dave Vs. Asset Reconstruction Company (India) Limited, which held that the date of NPA classification is the date of default. In this case, the account was classified as NPA on 31.03.2019, making the cause of action valid. Thus, the plea of misjoinder of cause of actions was dismissed. Issue No. (ii): Debt Not Payable in Fact The appellant contended that certain instalments were not due and payable at the time of the default date mentioned in the application. The tribunal clarified that as per Section 3(12) of the IBC, default means non-payment of debt when it becomes due and payable. Since earlier instalments were due and unpaid, the argument that the debt was not payable in fact was rejected. Issue No. (iii): Debt Barred by Limitation The appellant argued that the application was time-barred as the default date for the Working Capital facility was 17.12.2015, and the application was filed on 09.01.2020. The tribunal noted that the Corporate Debtor had acknowledged the debt in a letter dated 26.10.2018, making the application filed within three years from the date of acknowledgment. Hence, the debt was not barred by limitation. Issue No. (iv): Applicability of Section 10A of IBC The appellant claimed that the application was barred by Section 10A of the IBC, which prevents applications for defaults arising on or after 25.03.2020. The tribunal found that the defaults occurred on 28.01.2019 and 31.01.2019, and the account was classified as NPA on 31.03.2019, prior to the insertion of Section 10A. Therefore, Section 10A was not applicable. Issue No. (v): Filing of Section 7 Application Despite Opposition and Pending Restructuring Proposal The appellant argued that the ICICI Bank's unilateral action was against the interest of other lenders who were considering a restructuring proposal. The tribunal noted that ICICI Bank had rejected the restructuring proposal and communicated its decision to other lenders. The tribunal found no legal basis to claim that the application under Section 7 was unsustainable during the pendency of a restructuring proposal. Issue No. (vi): Impugned Order Against the Spirit of IBC The appellant contended that the adjudicating authority failed to consider the benefits of restructuring outside the IBC. The tribunal stated that the adjudicating authority is required to ascertain the existence of default and completeness of the application under Section 7(4) of the IBC. Since the application was complete and the default was established, the adjudicating authority had no option but to admit the application. Issue No. (vii): Locus Standi of Kotak Mahindra Bank to File the Appeal The respondent argued that Kotak Mahindra Bank had no locus standi to file the appeal as it was not an aggrieved person under Section 61(1) of the IBC. The tribunal agreed, noting that Kotak Mahindra Bank was aware of the proceedings but chose not to participate. Therefore, the appeal by Kotak Mahindra Bank was not maintainable. Conclusion: The tribunal found no merit in the appeals and dismissed them, upholding the order of the adjudicating authority to initiate CIRP against the Corporate Debtor. No costs were awarded.
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