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TMI Blog2021 (9) TMI 467X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 61 of the Insolvency and Bankruptcy Code (in short the 'IBC'). By the Impugned Order dated 15.10.2020, the Adjudicating Authority has observed as follows:- "14. Accordingly, the following points are considered to arrive at a decision in this application. (a) Whether the applicant granted financial assistance to the Corporate Debtor, the same was disbursed to the Corporate Debtor and there was a due from the Corporate Debtor to the Financial Creditor and that there was default in repayment of the said dues? (b) Whether the nature of debt is a "Financial Debt" as defined under Section 5 (8) of the Code? 15. It appears from the records that the Corporate Debtor nowhere denied the debt amount nor filed any documents to show that the claim is false, but in reply by way of counter the Corporate Debtor simply prayed to dismiss the application without showing any commendable and acceptable reasons. The contentions raised in the reply will not come in the way of the admission of the application in view of the categorical ruling of the Hon‟ble Supreme Court in the case "Innoventive Industries Ltd. (Supra), that the moment the adjudicating authority is satisfied that a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t and there was escalation on the project cost requiring an additional term loan to the tune of Rs. 24 Crores; an Agreement for granting an additional term loan to the tune of Rs. 24 Crores by the lenders was agreed upon, with a condition that the loan repayment would commence from 2014 and close by 2020. 3. It is stated that while promoters of the 'Corporate Debtor' had infused their part of the equity capital, lenders delayed the grant of additional term loan; SBI sanctioned Rs. 8 Crores on 28.05.2014 after a lapse of 1½ years with additional terms and conditions which were not acceptable to the Appellant; SBT sanctioned another sum of Rs. 8 Crores on 09.02.2015 but UBI was not ready to sanction the additional loan contrary to the Agreement dated 22.10.2013. 4. It is only on account of delay in sanctioning of the additional loan that the project cost got enhanced. Union Bank of India communicated their inability to grant the additional term loan after almost two years of the Agreement of 22.10.2013, thereby leading to severe hardships and losses. It is stated that an additional 61.40 Crores was incurred till May 2017 in addition to the interest, the total amount invested ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 17,05,00,000/-, which was accepted by the 'Corporate Debtor' vide a letter dated 26.11.2019 and an amount of Rs. 25 Lakhs was transferred to Union Bank of India as part of the settlement amount. Thereafter Dhanlaxmi Bank filed a Section 7 Application before NCLT Kochi, the Adjudicating Authority and the same was settled by the 'Corporate Debtor' on payment of Rs. 3.195 Crores and Dhanlaxmi Bank withdrew the Application and the same was disposed of on 06.01.2020. 6. Having agreed to the OTS, without giving sufficient time, Union Bank of India filed this Application under Section 7 causing grave miscarriage of justice, the project at this stage, if liquidated would result in huge economic loss as it is at the threshold stage and the first phase is ready to be rolled out. 7. Submissions on behalf of the Learned Counsel appearing for the Appellant: It is submitted that the Section 7 Application is barred by Limitation as the date of NPA is 30.09.2015, whereas the Application was filed on 27.12.2019. The period of 3 years specified under Article 137 of the Limitation Act, 1963 expired long before the date of initiation of the proceeding under Section 7, hence it is ex-facie time ba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Corporate Debtor'. 8. Submissions on behalf of Learned Counsel appearing for the Respondent: Briefly put, the Learned Counsel submitted that the Application is well within the period of limitation as the debt amount is a 'Term Loan' sanctioned for the purpose of construction of a Deluxe Resort, the repayment of which amount, was to begin from September, 2012 till the final repayment by September 2018. The same was never adhered to by the 'Corporate Debtor' and the Respondent Bank agreed to restructure the loan facility with a condition that the repayment would start from 2014 and would be completed by the year 2020. The loan was restructured once again as the 'Corporate Debtor' failed to adhere to the payment and the repayment date was extended to September 2022. On 01.07.2016, at the request of the 'Corporate Debtor', the Bank renewed the limits on certain terms but the same was not accepted by the 'Corporate Debtor' and as per the RBI norms, the account was classified as NPA on 30.09.2015. The date is not a default date but the date from which the Banks are prohibited to charge interest. Each unpaid instalments constitute a default whether it is the first instalment or the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id by 2019-20. c) the repayment schedule was once again revised by an Agreement dated 24.02.2014, according to which the last two quarterly instalments were to be paid by the year end 2021. d) the last Agreement entered into between the parties is dated 12.01.2015, whereby the last four instalments were to be paid by the year end 2022-23. 11. A perusal of the Minutes of the JLF Meeting held on 27.09.2017 attended by the 'Corporate Debtor' evidences that the Bankers brought to the notice of the 'Corporate Debtor' regarding the recorded Minutes in the Consortium Meeting held on 27.07.2015 and on 04.09.2015, wherein the promoters have assured the completion of the project by 30.09.2015. It is an admitted fact that the project was not complete and there was a cost overrun of Rs. 88.22/- Crores. It is seen from the Minutes of 27.09.2017, that the 'Corporate Debtor' was aware that the account had slipped to NPA in the books of UBI and SBI as on 30.06.2017 and 24.07.2017 respectively. 12. Notice dated 29.12.2017 was issued to the 'Corporate Debtor' under Section 13(2) of the SARFAESI Act, 2002 specifying the outstanding liability due and owing to all the three Banks is the sum of Rs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... igned; but subject to the provisions of the Indian Evidence Act, 1872 (1 of 1872), oral evidence of its contents shall not be received. Explanation.-For the purposes of this section,- (a) an acknowledgement may be sufficient though it omits to specify the exact nature of the property or right, or avers that the time for payment, delivery, performance or enjoyment has not yet come or is accompanied by refusal to pay, deliver, perform or permit to enjoy, or is coupled with a claim to set off, or is addressed to a person other than a person entitled to the property or right, (b) the word "signed" means signed either personally or by an agent duly authorised in this behalf, and (c) an application for the execution of a decree or order shall not be deemed to be an application in respect of any property or right." 15. The Hon'ble Supreme Court in 'Asset Reconstruction Company (India) Limited' (Supra) has observed as follows:- "37. Ordinarily, upon declaration of the loan account/debt as NPA that date can be reckoned as the date of default to enable the financial creditor to initiate action under Section 7 of the Code. However, Section 7 comes into play when the corporate d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dition from eminent counsel, a 13-Judge Bench of this Court upheld the vires of Article 31-A in unequivocal terms. That decision binds, on the simple score of stare decisis and the constitutional ground of Article 141. Every new discovery or argumentative novelty cannot undo or compel reconsideration of a binding precedent. In this view, other submissions sparkling with creative ingenuity and presented with high pressure advocacy, cannot persuade us to reopen what was laid down for the guidance of the nation as a solemn proposition by the epic Fundamental Rights case [(1973) 4 SCC 225 : 1973 Supp SCR 1]. From Kameshwar Singh [AIR 1952 SC 252 : 1952 SCR 889 : 1952 SCJ 354] (1952) and Golak Nath [I.C. Golak Nath v. State of Punjab, AIR 1967 SC 1643 : (1967) 2 SCR 762 : (1967) 2 SCJ 486] (1967) through Kesavananda [(1973) 4 SCC 225 : 1973 Supp SCR 1] (1973) and Kanan Devan [Kanan Devan Hills Produce Co. Ltd. v. State of Kerala, (1973) 1 SCR 356 : (1972) 2 SCC 218 : AIR 1972 SC 2301] (1972) to Gwalior Rayons [State of Kerala v. Gwalior Rayon Silk Mfg. (Wvg). Co. Ltd. (1973) 2 SCC 713 : (1974) 1 SCR 671] (1976) and after Article 31-A has stood judicial scrutiny although, as stated earli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... though the exact nature or the specific character of the said liability may not be indicated in words. Words used in the acknowledgement must, however, indicate the existence of jural relationship between the parties such as that of debtor and creditor, and it must appear that the statement is made with the intention to admit such jural relationship. Such intention can be inferred by implication from the nature of the admission, and need not be expressed in words. If the statement is fairly clear then the intention to admit jural relationship may be implied from it. The admission in question need not be express but must be made in circumstances and in words from which the court can reasonably infer that the person making the admission intended to refer to a subsisting liability as at the date of the statement. In construing words used in the statements made in writing on which a plea of acknowledgement rests oral evidence has been expressly excluded but surrounding circumstances can always be considered. Stated generally courts lean in favour of a liberal construction of such statements though it does not mean that where no admission is made one should be inferred, or where a state ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te that the period of limitation of three years as provided under Article 137 of the Limitation Act, 1963 is satisfied. 18. Now we address ourselves to the merits of the matter. The Hon'ble Supreme Court in 'Innoventive Industries Ltd.' Vs. 'ICICI Bank & Ors.', (2018) 1 SCC 407 observed as follows:- "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 debt owed to the applicant financial creditor. Under 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 II, particulars of the proposed interim resolution professional in Part III, particulars of the financial debt in Part ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the interest of justice, some time be given to the Appellant to settle the matter for the following reasons:- The amount of default involved in this case is of a 'Term Loan' 'restructured in 2015 and payable by 2022-23'. Meanwhile, admittedly an OTS Agreement was entered between the Respondent Bank and the 'Corporate Debtor' on 05.11.2019 and finally approved on 27.11.2019. At this juncture, it is relevant to reproduce the OTS letter dated 05.11.2019:- (Emphasis Supplied) As can be seen from the above terms and conditions, the promise of payment started ticking from 27.11.2019. The initial instalment to be paid as on that date was Rs. 86 Lakhs < Rs. 1 Crore. The Order of Admission is dated 15.10.2020. The second instalment was due after 30 days i.e. on 27.12.2019 and this Application was filed on 27.12.2019. It is the case of the Respondent that the Appellant has not paid the first two instalments of OTS and hence it is the 'Term Loan' amount which has to be paid. However, at this juncture, we note that there has been a conscious effort on behalf of the Appellant to settle the dues of the Banks. The OTS Agreements are detailed as hereunder:- The State Bank of India settled th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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