9911796707
TMI Blog2020 (9) TMI 1194X X X X Extracts X X X X X X X X Extracts X X X X ..... tlement provided under the scheme or policy itself. For example we see, that cases of wilful default and fraud are normally excluded - a deserving borrower, who has deposited substantial amounts within the originally stipulated period of settlement, proved his bona fides and is willing to clear the remaining in a reasonable period, and compensate the creditor with interest for the period of delay, should be considered with some flexibility to achieve the ultimate aim of such settlements. It is with this perspective, that extensions can be considered to be granted to deserving cases. This issue in answered in AFFIRMATIVE and hold that this Court in exercise of its jurisdiction under Article 226 of the Constitution of India would have the jurisdiction to extend the period of settlement as originally provided for, in the OTS letter. Whether in the facts of the present case, the petitioners would be entitled for an extension in making payment of the balance settlement amount pursuant to One Time Settlement dated 29.01.2019? - HELD THAT:- In the present case, the petitioner has prayed for extension of settlement period pursuant to an OTS entered with respondent No. 2 and has pai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncerned. We are yet to notice a plea taken by an entity facing insolvency proceedings, to oppose the prayer of the petitioner which is proposing to make payment of its dues payable to respondent. In our opinion, the interpretation sought to be given by the respondent, is a self defeating argument and hence we express our inability to accept the same - this issue is answered in AFFIRMATIVE and it is held that in the peculiar facts and circumstances of the present petition, the petition would be maintainable. The petitioners would have to pay the remaining amount due pursuant to OTS dated 02.01.2019 (P-11) in two quarterly instalments, of which a sum of ₹ 25 lacs shall be payable on or before 31.12.2020 and the remaining amount by 31.03.2021. The petitioners shall also pay interest @ 9% p.a. simple on the delayed payments on reducing balance payable w.e.f. 01.06.2019 i.e. the closing date of the settlement/OTS. It shall be the responsibility of respondent No. 2 to calculate the amounts due on account of interest and inform the petitioners well in advance, so as to enable the petitioners to adhere to the time schedule of repayment - Petition allowed. - Civil Writ Petition N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on account of the delay in receiving the reimbursement under the aforesaid scheme from the State Government, it faced financial constraints, due to which they could not repay the instalments of the aforesaid loans on time, which led Respondent No. 2 to declaring both the loan accounts as Non Performing Asset (UPA) by 01.01.2018. 4. Consequently, on 14.03.2018, Respondent No. 2 issued notice under section 13 (2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, (hereinafter referred to as Securitisation Act, 2002 ) claiming an amount of ₹ 1,38,02,347/- in the first loan account (Principal. Sanctioned amount of ₹ 1.45 Crore) and ₹ 54,26,617/- (Principal Sanctioned of ₹ 58 lakhs) in the second loan account. Thereafter, on 28.07.2018, Respondent No. 2 issued possession notice under Section 13 (4) of the Securitisation Act, 2002 read with Rule 8(1) of Security Interest (Enforcement) Rules, 2002. 5. Initially, vide settlement letter dated 28.03.2018 (Annexure P-10), both the aforesaid accounts were settled for ₹ 1.60 Crores and a repayment schedule was stipulated therein, as per which the set ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me to complete the process of verification of claims, the payments were delayed which further adversely effected the competence of petitioner to complete the payment of the settlement with Respondent No. 2 on time. It is with this background, that vide letter dated 29.06.2019 (Annexure P-13) followed by a reminder dated 23.09.2019 (Annexure P-14), petitioners requested Respondent No. 2 for extension of time to make the balance payment arising out of the aforesaid OTS, but having received no response, have preferred the present petition, seeking extension to repay the balance OTS amount. 7. Vide order dated 28.02.2020, this court issued notice in the aforesaid petition, returnable on 14.05.2020 and in the meantime, stayed the operation of the notice under Section 13 (2) and 13 (4) of the Securitization Act, 2002 (Annexure P-7 to P-9) subject to petitioner depositing a sum of ₹ 15 Lakhs with Respondent No. 2 within four weeks. The said order reads as under:- Present: Mr. Aalok Jagga, Advocate, for the petitioners. Notice of motion, returnable on 14.5.2020. Till then there shall be stay of impugned notices dated 14.3.2018 (Annexures P-7 and P-8 and dated 28.7.2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It is further evident that the fresh schedule was favourably considered by the court, subject to payment of ₹ 15 lakhs before the next date fixed i.e. 22.09.2020, which duly stands complied with. 10. When the matter came up for hearing today, it was conceded by the learned counsel for respondent No. 2, that pursuant to the aforesaid order dated 07.09.2020 the petitioner has again deposited ₹ 15 Lakhs, apart from the one deposited pursuant to notice of motion order dated 28.02.2020. Thus, the petitioner deposited ₹ 83.80 lacs before filing of the petition and ₹ 30 lacs during the pendency of the present petition, sum totalling the entire deposit to be ₹ 113.80 Lacs, out of the total settled amount of ₹ 1.60 Crore. That apart, respondent No. 2 has filed a short reply, and sought to controvert the submissions made by the petitioner in the writ petition. Both the Ld. Counsels, have addressed their respective submissions. 11. Opening the argument, Sh. Aalok Jagga, learned counsel appearing for petitioners has submitted written as well as oral submissions. He contends that with the factum of there being a settlement dated 02.01.2019 (P-11), it is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dgments of Division Bench of this Court in Sat Kartar Ice and General Mills v. Punjab Financial Corporation 2008 (I) ISJ (Banking) 248; Lord Budha Society v. State Bank of Patiala 2013 (3) PLR 146: M/s. A-One Megamart Pvt. Ltd. v. HDFC Bank and Anr. 2013 (1) PLR 688 and M/s. Malhan Industries Pvt. Ltd. v. Punjab National Bank 2015 (67) RCR (Civil) 782 to contend that the High Court in exercise of its jurisdiction under Article 226 of the Constitution of India can direct extension of one time settlement, if the bonafide of the petitioner is up to the satisfaction of the Court. He further, emphasises that a sympathetic view may be taken, in view of the current situation, of having adversely affected by COVID-19 pandemic and hence has prayed for allowing the present petition. 13. On the other hand, Sh. Harsh Chopra, learned counsel appearing for contesting Respondent No. 2, while opposing the argument of the petitioner, argues that firstly the petitioner has availed credit facilities from two other financial institutions and have defaulted in the same, with pending litigation and hence the petitioner does not deserve the concession of extension of time to deposit the remaining OTS ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mits that Reserve Bank of India has initiated insolvency proceedings under the provisions of Insolvency and Bankruptcy Code (hereinafter referred to as Code, 2016 ) against respondent No. 2 by filing CP (IB)-4258/MB/2019 in terms of Rule 5 of the Insolvency and Bankruptcy (Insolvency and Liquidation Proceedings of Financial Service Provider and Application to Adjudicating Authority) Rules, 2019, wherein vide order dated 03.12.2019 (Annexure R-2/5) National Company Law Tribunal, Mumbai has admitted the petition and on account of commencement of moratorium under Section 14 of the Code, 2016, the present proceedings are not maintainable. He has thus prayed for dismissal of the present petition. 14. Having scrutinised the rival arguments as advanced by the respective counsels for the parties, and with their able assistance perused the record, we find the following issues would arise for determination:- 1. Whether this Court in exercise of its jurisdiction under Article 226 of the Constitution of India, has the jurisdiction to extend the period of One Time Settlement. 2. Whether in the facts of the present case, the petitioners would be entitled for an extension in making paym ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ne time settlement scheme, was extended to the petitioner and it was asked to deposit an amount of ₹ 5.20 lacs. 25% of the said amount was to be paid on or before 30.9.2001. The petitioner failed to make payment as per time schedule given to it. However, subsequent thereto, it paid the entire amount i.e. ₹ 7.70 lacs, though at a belated stage. Vide document Annexure P 16, the petitioner was intimated that only a sum of 150 remains due from the petitioner. The petitioner, vide receipt Annexure P17, cleared that amount an amount of ₹ 15 lacs on the ground that as the petitioner had failed to deposit the amount which was offered to it under one time settlement scheme, within time, as such, that offer failed and it is bound to make payment of amount demanded by the Corporation. It is apparent from the records that in the meantime, the petitioner had moved one application for condonation of delay in making the payment That application was rejected without assigning any reason. When this matter came up for hearing before this Court on 15.12.2006, following order was passed: During arguments, it has been noticed that the defaulted account of the petitioner was settled un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The petitioner therein had deposited the entire balance amount alongwith interest for the delayed period, and hence this Court extended the time to pay the balance settlement amount by condoning the delay. The relevant paras being Para no. 12 to 16 of the said judgment read as under:- 11. Mr. Gupta argued that since the petitioners have defaulted to comply with the terms and conditions as per the settlement dated 11.08.2011, therefore, the Bank has rightly revoked the settlement and is entitled to recover the entire due amount along with contractual rate of interest. 12. We have heard learned counsel for the parties and find that there is default on the part of the borrower to make the payment of the settlement amount. The Bank has sought deposit of entire settlement amount with interest for the delayed period without any further delay even after the expiry of stipulated period mentioned in the settlement. The said communication unequivocally leads to the inference that the time prescribed in the settlement was not the essence of the contract. In case of delay, the Bank is thus entitled to claim interest for the delayed period. 13. In view of the said fact, the Bank ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sit the amount within the stipulated time provided under the settlement, which came to be challenge by the petitioner before this Court. This Court recorded its satisfaction regarding the genuine difficulty of the petitioner, of not having been able to arrange the deposit of the amount within the stipulated time, as also the bona fide intention to pay, as the petitioner had deposited the amount during the pendency of the petition and sought condonation of delay. To balance the equities, the Court also compensated the bank for the period of delay. This Court noticed that since the petitioners suffered unfortunate exigencies, it is for such reasons that they could not honour the terms of settlement. In such circumstances rejection of settlement would be harsh and unjust. Finally, this Court condoned the delay while placing reliance upon the judgment of Hon'ble Supreme Court in State Bank of India v. Vijay Kumar (supra) and the earlier judgment of the Division Bench in Sat Kartar Ice and General Mills (supra). Para no. 29 of the said judgment reads as under:- 29. Now taking up the issues arising at Nos. (b) and (c), they can be adjudicated together. The petitioners had submit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ceipt of a certified copy of this order, the OTS shall be implemented. It is further directed that the drafts deposited in pursuance to the order of this Court dated 10.2.2012 shall be returned to the petitioners, who after getting them revalidated, shall deposit the same with the bank within the aforesaid period for getting the OTS implemented. [Emphasis supplied] 18. The aforesaid judgment was then considered and followed by a Division Bench of this Court in M/s. Malhan Industries v. Punjab National bank 2015 (67) RCR Civil 782, wherein the petitioner had earlier entered into a One Time Settlement with the bank on 03.08.2009 for ₹ 5.60 Crores, against which the petitioner therein could deposit only ₹ 2.55 Crores and failed to deposit the remaining amount within the stipulated period as per the settlement. Thereafter, keeping in view the request of the petitioner therein, the parties again entered into a settlement dated 08.01.2015 for ₹ 3,98,27,000/- The petitioners therein deposited ₹ 25 Lakhs but since the properties could not be sold, from where the petitioners intended to arrange the balance amount of settlement, they could not deposit the rema ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from the date(s) of deposit of these amounts till the expiry of the afore-stated period of four weeks, to the respondent bank within the afore- stated period of four weeks. It may be clarified that the amount of interest on the auction money shall be paid by the respondent bank to respondents No. 3 to 5 while refunding the auction money to them and it shall be over and above the interest earned by those amounts. Further, in the event of non- compliance of these directions by the petitioners, the writ petition shall be deemed to have been dismissed. [Emphasis supplied] It was thus held, that this Court in exercise of its jurisdiction under Article 226 of the Constitution of India can extend the time to pay the remaining settlement amount, especially after being satisfied with the bonafide of the petitioner. At the same time, it was also held that for the period of delay the respondents could be compensated by payment of interest. Thus, the Court condoned the delay in making payment of the balance settlement amount. 19. Not only the judgments of this Court, the issue has now been settled with recent the judgment of Hon'ble Supreme Court in P. Vijayakumari v. Indian B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unal (DRAT), as noted above, cannot be said to be so wholly unreasonable or unsustainable so as to justify interference by the High Court. If the agreed amount stood paid though with some delay, condonation of the delay is a possible course of action, if the grounds for delay justified a departure from what was also agreed upon, i.e., the right of a Bank to recover the entire dues. All would depend on the facts of each case. Having regard to the totality of the facts of the present case, we are of the view that the ends of justice would be met if for the delay that had occurred, the appellants are made liable to pay simple interest @ 24% p.a. on the amount of ₹ 34.5 lakhs (as agreed to in the Lok Adalat) for the period from the date of the Award of Lok Adalat, i.e., 10.09.2004 to the date of last payment, i.e., 29.10.2006. In addition, a further amount of ₹ 10 lakhs to be paid by the appellants to the respondent-Bank as compensation and costs. 10. The above amounts will be paid by the appellants to the respondent-Bank within a period of 45 days from today failing which the respondent-Bank may understand the present order to be recalled and the mortgaged property to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sions extended to the petitioners are no longer available. Therefore, the bank is entitled to recover the amount as per recovery certificate issued by the Debt Recovery Tribunal. It has been pointed out that a sum of ₹ 2.3 crores with interest calculated upto 2.9.2005 is outstanding against the petitioner. 10. The petitioners have not made payment in terms of one time settlement, the acceptance of which was communicated to the petitioners on 30.3.2001. The deposit of balance 75% is much after the time stipulated for such settlement. The said amount has been deposited after filing of the present writ petition. It will not confer any enforceable right in favour of the petitioners seeking directing to the bank to accept such deposit. However, it is open to the petitioners to seek settlement of its outstanding dues from the Bank in terms of the guidelines which may be in force or be issued by the Reserve Bank of India in future. 11. Keeping in view the circumstances of the case discussed above, we do not find that the conduct of the bank is either unfair or unreasonable which may warrant interference in exercise of extra-ordinary writ jurisdiction of this Court. 12 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has been held that condonation of delay while seeking extension in OTS is possible, no support can be drawn in favour of respondent on the basis of the aforesaid judgment. Thus, while dealing with the conspectus of the judgments on this issue, it is apparent that the consistent view has been that extension in OTS, is permissible in law. 21. We have been informed that many of the banks have already provided for an extension of One Time Settlement under their respective Settlement Schemes itself. Such self contained provision enables the respective banks itself to extend the period of settlement, as originally agreed for between the parties. For the purpose of illustration, we notice that Punjab National Bank formulated a One Time settlement scheme titled as Policy on Compromise/Negotiated Settlement/Write Off/Waiver of Legal Action/Appeal etc. , being Recovery Division Circular No. 05/2016, dated 20.02.2016, in which Clause 24 deals with the Payment Terms of OTS Amount and Clause 25 deals with Extension of Time Period for Payment of OTS Amount . The relevant extract of the said policy reads as under:- 24. PAYMENT TERMS OF OTS AMOUNT 24.1 As the name indicates One T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... time in making payment of settlement amount alongwith interest is 12 months w.e.f. the date of intimation of sanction to the borrower. If the sanction initially stipulates a repayment period less than 12 months, the same can be extended/condoned upto 12 months by the sanctioning authority. There can also be cases where there is delay in repayment of settlement amount with interest which was initially sanctioned upto 12 months but the same is paid/proposed to be paid within a total repayment period of more than 12 months but not exceeding 24 months. In such exceptional cases, after recording proper justification, an extension/condonation of delay can be considered as under, subject to charging interest at one year MCLR (as applicable at the time of settlement) PLUS 2.5% p.a. compounded monthly, on the defaulted amount for the period of delay, beyond 12 months period (during which the interest would be chargeable on simple basis). We have been informed that keeping in view the current situation where the entire country has been adversely effected by COVID-19 pandemic, even State Bank of India, granted extension to all its borrowers who had settled their accounts under One T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s can be extended to lead to an OTS. It is needless to mention that settlement takes place, only after the case of the borrower has been tested on the basis of criteria of eligibility for settlement provided under the scheme or policy itself. For example we see, that cases of wilful default and fraud are normally excluded. Once the borrower is found to be eligible and a settlement takes place, it is important to keep in mind, that during the period of settlement, minor differences inter alia extension to pay the remaining settled amount in deserving cases, are creased out, equities are balanced in terms of the policy itself by the bank officials so that the settlement achieves its final goal, aimed at the betterment of both the parties. An amicable settlement is drawn up to achieve a win-win situation for both the creditor and debtor. The former is able to recover the amounts, in a more simplified manner and then use the same in its commercial cycle to pump in more liquidity and resultant revenues. On the other hand, the latter is able to settle a long dispute so as to focus its attention to a more productive field, rather than being involved in a litigative sphere. In such a situa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rower has already paid substantial amounts, to the creditor under the OTS, and for some remaining amounts, is seeking a reasonable extension, such requests can be considered favourably. This shows, that the applicant had an intention to clear the settlement and the deposit of substantial amounts, is an indication in this regard. iii. Reasons which led to delay in payment - It is important to notice, the reasons, which led to the delay on the part of the borrower. I f the borrower was prevented by certain reasons or circumstances beyond his control it could be a reason to consider an application for extension favourably. It would be imperative for the borrower to show, that he made his best efforts to ensure that the requisite amounts, are arranged within the specified time, but inspite of all his best efforts, he could not arrange for the same. iv. Payments having been accepted by the Bank/Financial Institution, after the stipulated date - If the bank or the Financial Institution has been accepting the payments from the borrower towards the settlement even after the stipulated period of time, it shows that the time was not the essence of contract. It would be apparent from su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otherwise, the intention would be to gain more time, without any actual intent to clear the settlement. In the facts and circumstances of each case, the Courts would therefore determine a reasonable period, to enable the borrower to clear the remaining settlement amount, subject of course, to payment of reasonable interest for the delayed period, to balance the equities. vii. Attending factors and circumstances - Attending factors and circumstances involved, while making an application for extension play an important role to identify eligible and deserving cases as also to determine the extent of extension to be granted. For example, the current situation where the entire country has been adversely effected on account of COVID-19 pandemic, the difficulties in arranging the amounts could be taken note of while determining the period of extension to be granted to an applicant. Further, accounts which have suffered losses and became NPA on account of having suffered natural calamities, unfortunate accidents, fire incidents, thefts, damage by floods, storms etc. and have come forward for an eventual settlement, can also be considered for extension of time. viii. Irreparable loss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y it, it would have no concern with what the petitioners are litigating with the other creditors. We therefore have no hesitation in rejecting this argument of the respondent. 27. The next argument of the learned counsel for respondent No. 2 is that in another case bearing CWP No. 3683 of 2018 and CWP No. 5907 of 2018 this Court had rejected the similar submission regarding non disbursement of the dues under the Post Matric Scholarship Scheme, as advanced by the petitioner therein. A perusal of the said order, relied upon by the respondent would reveal that the petition has not been dismissed on the merits, rather the petitioner therein, has been relegated to avail the alternative remedy under Section 17 of the Securitisation and Reconstruction of Financial Assets of Enforcement of Security Interest Act, 2002. Moreover, the petitioner therein had laid challenge to the validity of the demand and possession notice issued by the Respondent Financial Institution which is quite different from the issue involved in the present case, where the petitioner is praying for grant of extension to repay the settlement amount, and the pleading regarding non disbursement of the dues to it by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Government to release the funds, which was allowed vide order dated 22.03.2016, and then the petitioners contested the interim stay granted by the Division Bench in LPA No. 1819/2017 and 410/2017 preferred by the Government challenging the final order passed by the learned Single Judge. The petitioners who are stated to be the founder members of the said Institutes were dependant upon the income so generated by the said Institutes and due its financial constraints, they were directly effected as initially their accounts were declared NPA and thereafter it led to delay in clearing the settlement amounts. We have also noticed the current attending circumstances, of widespread of COVJD -19 pandemic, while considering to determine the extension of period to be granted to petitioners to clear the remaining dues. Further, the petitioners have also agreed to pay reasonable interest for the period of delay. Hence, we are unable to agree with the respondent and reject this argument as well. 29. Learned counsel for respondent has further argued that in the writ petition, the petitioners themselves have claimed time till 30.09.2020 to repay the settled amount and now the petitioners are cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respondent No. 2 has argued that Reserve Bank of India has initiated insolvency proceedings under the provisions of Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as Code, 2016 ) against respondent No. 2 by filing CP (IB)- 4258/MB/2019 in terms of Rule 5 of the Insolvency and Bankruptcy (Insolvency and Liquidation Proceedings of Financial Service Provider and Application to Adjudicating Authority) Rules, 2019, wherein an order dated 03.12.2019 (Annexure R-2/5) has been passed vide which, the aforesaid petition has been admitted and hence, on account of commencement of moratorium under Section 14 of the Code, 2016, the present writ petition would not be maintainable in view of Section 14(1)(a) of the Code, 2016. Before dealing with the argument, It would be advantageous to reproduce Section 14 of the Code, 2016 as under:- 14. Moratorium. - (1) Subject to provisions of sub-sections (2) and (3), on the insolvency commencement date, the Adjudicating Authority shall by order declare moratorium for prohibiting all of the following, namely:- (a) the institution of suits or continuation of pending suits or proceedings against the corporate debtor including exe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... overy legislation for creditors. The interests of the corporate debtor have, therefore, been bifurcated and separated from that of its promoters/those who are in management. Thus, the resolution process is not adversarial to the corporate debtor but, in fact, protective of its interests. The moratorium imposed by Section 14 is in the interest of the corporate debtor itself, thereby preserving the assets of the corporate debtor during the resolution process. The timelines within which the resolution process is to take place again protects the corporate debtor's assets from further dilution, and also protects all its creditors and workers by seeing that the resolution process goes through as fast as possible so that another management can, through its entrepreneurial skills, resuscitate the corporate debtor to achieve all these ends. [Emphasis supplied] 32. Still further, Hon'ble Supreme Court in Rajendra K. Bhutta v. Maharashtra Housing and Area Development Authority, held as under:- 16. There is no doubt whatsoever that important functions relating to repairs and re-construction of dilapidated buildings are given to MHADA. Equally, there is no doubt that in a g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roceedings at the instance of the creditors (Financial/Operational). However, proceedings before the Adjudicating Authority i.e. the National Company Law Tribunal, in the present case, have been initiated against the Respondent/Financial Service Provider i.e. the creditor itself, at the instance of the Regulator i.e. Reserve Bank of India. Such proceedings against the Financial Service Provider are governed under the Code, 2016 by virtue of Insolvency and Bankruptcy (Insolvency and Liquidation Proceedings of Financial Service Provider and Application to Adjudicating Authority) Rules, 2019 (hereinafter referred to as Rules, 2019 ). Relevant portion of Rule 5 of the said Rules, 2019 read as under:- 5. Corporate Insolvency Resolution Process of financial service providers. - The provisions of the Code relating to the Corporate Insolvency Resolution Process of the corporate debtor shall, mutatis mutandis apply, to the insolvency resolution process of a financial service provider subject to the following modifications, namely:- (a) Initiation of Corporate Insolvency Resolution Process.- (i) no corporate insolvency resolution process shall be initiated against a financ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Adjudicating Authority i.e. National Company Law Tribunal is satisfied, that the Corporate Debtor is unable to meet its financial obligations and hence the petition is admitted and an independent person by the name of Resolution Professional or Administrator, as in this case, is appointed in place of management. After the admission order moratorium is imposed under Section 14 of the Code, 2016 to prevent institution or continuation of any proceedings against the interest of the Corporate Debtor or intending to enforce rights against the assets of the Corporate Debtor. On the contrary, the relief claimed in the present case, is to pay back to the Corporate Debtor with interest, an amount which was agreed to be settled by respondent No. 2 much prior to the passing of the admission order. Further, there is not even a remote allegation pleaded or argued by respondent No. 2 to contend, that the settlement in any way was an act contrary to the interest of respondent No. 2. It is, therefore, a commercial decision taken by an institution, agreeing to settle a debt of the borrower for the stipulated amount. It is this amount, which the petitioner is willing to pay and is seeking a direction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Code, 2016 was enacted with the primary object to provide for a time bound manner for maximisation of value of assets of such persons, to promote entrepreneurship, availability of credit and balance the interests of all the stakeholders including alteration in the order of priority of payment of Government dues. In our view, the relief as sought for by the petitioner, in no way runs contrary to the object of the Code, 2016 or the precise purpose for which Section 14 was provided for. It is precisely for this reason, that we believe that making such an argument by the respondent is a self defeating argument. On one hand, the respondent, is facing liquidity issues resulting into initiation of insolvency proceedings and surprisingly on other hand is opposing the prayer of a borrower who intends to make payment to the respondent, which should be the need of the hour, as far as the respondent is concerned. We are yet to notice a plea taken by an entity facing insolvency proceedings, to oppose the prayer of the petitioner which is proposing to make payment of its dues payable to respondent. In our opinion, the interpretation sought to be given by the respondent, is a self defeating argu ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
