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TMI Blog2020 (5) TMI 6X X X X Extracts X X X X X X X X Extracts X X X X ..... , 45, 000/-to the Corporate Debtor, on the terms and conditions as laid down in the Sanction Letter dated 20-12-2006 for the Credit Facility and accordingly, the Corporate Debtor executed various loan and security documents for the said credit facilities. A formal Term Loan agreement was signed on 3-1-2007 between Corporate Debtor and Financial Creditor for a total amount of Loan of Rs. 12, 80, 45, 000/-which was repayable in 87 monthly instalment. That the terms and conditions for the repayment of loan was duly agreed in the agreement and the same was as follows:- Repayment Schedule: Entire Term Loan is repayable in 87 monthly instalments of Rs. 10, 84, 000.00 plus interest after 18 months of construction and gestation period or 6 months after startup of the project; whichever is earlier. Interest is to be serviced, on "as and when applied basis* for moratorium as well as repayment period. Further Sh. Ajay Kumar Choudhary, Sh. Kapil Choudhary and Sh. Mukund Choudhary .also offered their personal guarantee in their individual/personal capacities, in favour of the applicant/Financial Creditor. The Authorised Signatory of the sanctioned Credit facilities of an amount of Rs. 12, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the matter was remanded back to ld. DRT. The matter is still pending before ld. DRT, New Delhi. However, as the Corporate Debtor has failed to pay the outstanding amount of the loan and the interest accrued thereon, the Applicant/Financial Creditor has filed the present petition before the Hon'ble Tribunal. claiming Rs. 2, 83, 49, 880-36/-(Principal Amount: Rs. 1, 51, 03, 976.12/-and Interest Amount: Rs. 1, 32, 45, 904.24/-(Till 22-7-2019 @13.5% Per Annum as agreed between the parties). 3. The Respondent/Corporate Debtor has filed its reply and has asserted the following eon tendons: i. The petition is not maintainable/no case is prima facie made out under section 7 of the Code. The mandate of Sections 65 and 75 of the Code read with section 7 is that apart from 'default' and the application being 'complete', the Petitioner has to demonstrate and this Hon'ble Adjudicating Authority has to be 'satisfied' that the Company is insolvent in the long-term. Further, the Company is. also a net worth positive entity, therefore, both oh the principles of commercial viability and balance sheet test, the Company is not insolvent. ii. The Company and its pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rety) has allegedly occurred in the year 2014. (Refer: Judgment dated 18/09/2019 passed by the Hon'ble Supreme Court in the matter of Gaurav Hargovindbhai Dave v. Asset Reconstruction Company (India) Ltd. [2019] 109 taxmann.com 395/156 SCL 397 and Judgment dated 2-9-2019 in the matter of Vashdeo R Bhojwani v. Abhydaya Co-operative Bank Ltd. [2019] 109 taxmann.com 198/156 SCL 539 (SC) 4. The Petitioner/Financial Creditor has filed its rejoinder and has asserted the following contentions: i. That the default was continuing and it occurred again when the Applicant Bank initiated the Recovery Proceedings before DRT, Delhi and the Respondent failed to repay the outstanding amount. The Respondent approached the Applicant Bank in September, 2018 with an OTS proposal dated 15-9-2018 to settle in matter. It is respectfully-submitted that the amount was due and payable by the Respondent, therefore, the Respondent approached the Bank for settlement. However, the proposal was not satisfactory and therefore, the same was not accepted. The Respondent also made the revised OTS proposals on 05-10-2018 and 15-2-2019. However, none of the proposal was in accordance with the Bank Policy and th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onouncements, the present petition needs to be admitted. 5. We have gone through the application, reply and rejoinder and the documents filed by both the parties and heard the arguments and perused written submissions made by both the parties. 6. In course of arguments, Ld. Counsel appearing for the Financial Creditor submitted that by filing reply the Corporate Debtor admits this fact that the loan has been sanctioned and still it has not been repaid by the Corporate Debtor. The only contention of the Corporate Debtor is that he has filed the counter-claim proceeding which is pending before the DRT. He further submitted that such objection of the respondent was dismissed by the DRT against which, the Corporate Debtor filed an appeal before the DRAT and DRAT has also confirmed the order passed by the DRT and against that order the Corporate Debtor had filed a writ before the Hon'ble Delhi High Court being Writ No. WP (C) 13387/2018 and CM No/521136/2018 and the Hon'ble Delhi High Court by order dated 12-12-2018 remanded back the matter to the Hon'ble DRT and the application was again dismissed by the DRT vide order dated.10-4-2019 and now there is no counter-claim pen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndustries Ltd. (supra) He further submitted that if the Bank fails to fulfill its obligation, the insolvency proceeding is liable to be dismissed and in this regard, he placed reliance upon the decision reported in Gujarat State Financial Corporation (supra) and also on the judgment dated 2-1-2019 "passed by the Ld. Principal Bench, New Delhi in the case of Radha Kohli (supra) He further submitted that the petition filed by the Financial Creditor also suffers from the suppression of materials Tacts and therefore, the bank is liable to be prosecuted and the proceeding is barred under Section 65 of the Code and in this regard, he placed reliance, upon a decision Swiss Ribbons (P.) Ltd. (supra) He further submitted that in this regard, the company had recovered more than the amount financed by the company and the insolvency proceeding is not recovery petition, this is held by the Hon'ble Supreme Court in the case of Transmission Corporation of Andhra Pradesh Ltd. v. Equipment Conductors and Cables Ltd. [2018] 98 taxmann.com 375/150 SCL 447 The relevant para is quoted below: "15. In a recent judgment of this Court in Mobilox Innovations (P.) Ltd v. Kirusa Software (P.) Ltd. 1 thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t in Innoventive Industries Ltd. (supra) Therefore, we would like to refer these decisions and the relevant portion of the decision is quote below; "28. When it comes to a financial creditor triggering the process, Section 7 becomes relevant. Under the explanation to section. 7(1), a default is in respect of a financial debt owed to any financial creditor of the corporate debtor -it need, not be a febt owed, to the applicant financial creditor. Section 7(2), an application is to be made, under sub-section (1) in such form and manner as is prescribed, which takes us to the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016. Under Rule 4, the application is made by a financial creditor in Form 1 accompanied by documents and records required, therein. Form 1 is a detailed form in 5 parts, which requires particulars of the applicant in Part I, particulars of the corporate debtor in Part III, particulars of the proposed interim, resolution professional in part III, particulars of the financial debt in part IV and documents, records and evidence of default in part V. Under Rule 4(3), the applicant is to dispatch a copy of the application filed with the adjudi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ayable unless interdicted by some law or has not yet become due in the sense that it is payable at some future date. It is only when this is proved to the satisfaction of the adjudicating authority that the adjudicating authority may reject an application and not otherwise". 12. Now, in the light of the aforesaid decisions, we shall consider the case in hand and we have again gone through the averments made on behalf of the parties in the petition, reply & rejoinder and the documents filed with the application and the contention of the parties-Since, the Corporate Debtor claims that the application is barred by limitation and there is no debt payable and on this fact, he placed reliance on a decision passed in Innovative Industries Ltd. (supra) Therefore, at this juncture, we would like to discuss the issue of limitation at first. ad. Counsels for both the parties had placed reliance 'upon the decisions on the point of limitation. The Corporate Debtor had placed reliance upon a judgment dated 18-9-2019 passed by the Hon'ble Supreme Court In the matter of Bravura Hargovindbhai Dave (supra) in the matter of Vashdeo R. Bhojwani (supra) the Financial Creditor placed reliance u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of a like nature, is unable to entertain it. (2) In computing the period of limitation for any application, the time during which the applicant has been prosecuting with due diligence another civil proceeding, whether in a court of first instance or of appeal or revision, against the same party for the same relief shall be excluded, where such proceeding is prosecuted in good faith in a court which, from defect of jurisdiction or other cause of a like nature, is unable to entertain it (3) Notwithstanding anything contained in rule 2 of Order XXIII of the Code of Civil Procedure, 1908 (5 of 1908), the provisions of sub-section (1) shall apply in relation to a fresh suit instituted on permission granted by the court under rule 1 of that Order, where such permission is granted on the ground that-the first suit must fail by reason of a defect in the jurisdiction of the court or other cause of a like nature. Explanation.-For the purposes of this section, - (a) in excluding the time during which a former civil proceeding was pending, the day on which that proceeding was instituted and the . day on which it ended shall both be counted; (b) a plaintiff or an applicant resisting an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Counsel for the Corporate Debtor is. concerned, since debt is barred by limitation, hence no debt is due, for the reasons discussed above, it is not liable to be accepted. At this juncture, we would also like to refer Para 30 of the decision passed in Innoventive Industries Ltd. (supra) and the same is quoted below: "30. On the other hand, as we have seen, in the case of a corporate debtor who commits a default of a financial debt, the adjudicating authority has merely to see the records of the information utility or other evidence produced by the financial creditor to satisfy itself that a default has occurred. It is of no matter that the debt is disputed so long as the debt is "due" i.e. payable unless interdicted by some law or has not yet become due in the sense that it is payable at some future date. It is only when this is proved to the satisfaction of the adjudicating authority that the adjudicating authority may reject an application and not otherwise". In view of the aforesaid decision, we are of the considered view that in order to trigger the proceeding under section 7 of IBC, we have to see only two things i.e. there is a financial debt and the debt is due. It is o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther authority; (b) transferring, encumbering, alienating or disposing of by the corporate debtor any of its assets or any legal right or beneficial interest therein; (c) any action to foreclose, recover or enforce any security interest created by the corporate debtor in respect of its property including any action under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002; (d) the recovery of any property by an owner or lessor where such property is occupied by or in the possession of the corporate debtor. Further: (2) The supply of essential goods or services to the corporate debtor as maybe specified shall not be terminated or suspended or interrupted during moratorium period. (3) The provisions of sub-section (J) shall not apply to such transactions as maybe notified by the Central Government in consultation with any financial sector regulator. (4) The order of moratorium shall have effect from the date of such order till 'the completion of the corporate insolvency resolution process: Provided that where at any time during the corporate insolvency resolution process period, if the Adjudicating Authority app ..... X X X X Extracts X X X X X X X X Extracts X X X X
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