9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2023 (1) TMI 997 - AT - Insolvency and BankruptcyMaintainability of application - Prohibitory period under Section 10A of the I B Code - principal submission pressed by the Appellant is that as per Annexure 3 to the Debenture Subscription Agreement, clause 6, the date of default for repayment occurs on 31.08.2020, which was during the prohibitory period under Section 10A of the I B Code - HELD THAT - The submission of the learned counsel for the Appellant that as per Annexure-3 clause 6, the date of repayment of instalment is 31.08.2020 only is not acceptable. There being clear admission on behalf of the Appellant in default in payment of interest for the quarters ending September 2019 and December 2019, Appellant cannot be permitted to contend that default was committed only on 31.08.2020. Insofar as application being barred by 10A, benefit under Section 10A can be claimed by the application only when there is clear default during the prohibited period. The said benefit cannot be claimed by the Appellant by ignoring the admission of default which was prior to 25.03.2020. There being clear admission in the present case, in letter dated September 9, 2021 where the Corporate Debtor itself has admitted that he has failed to pay interest for the quarters ending September 2019 and December 2019 thus acknowledging that it has defaulted in servicing its obligations under the DSA. The Adjudicating Authority has after considering all relevant facts and after finding debt and default has admitted the application. The fact that before this Tribunal, the Appellant has taken four adjournments for proposing OTS and get settle with the Bank itself indicate that debt and default is not disputed - Appeal dismissed.
Issues:
1. Maintainability of the application under Section 7 of the I&B Code due to default date during the prohibitory period under Section 10A. 2. Admissibility of the application by the Adjudicating Authority. Issue 1: Maintainability of the application under Section 7 of the I&B Code: The Appellant challenged the admission of the application under Section 7 by the Adjudicating Authority, contending that the default date for repayment occurred during the prohibitory period under Section 10A of the I&B Code. The Appellant argued that the application should have been rejected based on this ground. The Respondent, on the other hand, argued that the Corporate Debtor had admitted the debt and default both in writing and orally. The Corporate Debtor acknowledged the default in payment of interest for specific quarters due to COVID-related difficulties. The Adjudicating Authority observed that the default did not fall within the period prescribed under Section 10A as it occurred prior to the COVID-19 pandemic outbreak. The Authority considered the sequence of events and the Corporate Debtor's admission of default in its decision. Issue 2: Admissibility of the application by the Adjudicating Authority: The Adjudicating Authority, in its order, addressed the submissions of both parties regarding the application's admissibility. It noted that the Corporate Debtor had admitted default in payment of interest for specific quarters in a letter dated September 9, 2021. This admission indicated a failure to service obligations under the Debenture Subscription Agreement. The Authority emphasized that the Appellant's argument based on Annexure-3 clause 6, specifying the repayment date, was not acceptable in light of the clear admission of default by the Corporate Debtor. The Adjudicating Authority found that the debt and default were established, leading to the admission of the application. The Tribunal upheld the decision of the Adjudicating Authority, dismissing the Appeal due to the lack of merit, especially considering the Appellant's multiple adjournments seeking a One Time Settlement with the Financial Creditor. In conclusion, the judgment by the National Company Law Appellate Tribunal, Principal Bench, New Delhi, addressed the maintainability of the application under Section 7 of the I&B Code and the admissibility of the application by the Adjudicating Authority. The Tribunal upheld the decision of the Adjudicating Authority based on the Corporate Debtor's admission of default, rejecting the Appeal due to the lack of merit.
|
