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TMI Blog2022 (9) TMI 1007X X X X Extracts X X X X X X X X Extracts X X X X ..... ring the said default and to submit fresh security was also given, but the same was also not complied with or cured on behalf of the respondent. Therefore, there was specific default on the part of the respondent for not providing the security against the loan facility availed. The said default cure notice was given on 20.10.2020, but the said impairment of security was not cured in due time. Thereafter, the recall notice dated 15.12.2020 was issued, calling upon the corporate debtor to repay the loan amount within 7 days of receipt of this notice. Thus, the default on the part of corporate debtor was not only committed on 20.10.2020, but also subsequently, after 7 days of the receipt of the loan recall notice dated 15.12.2020. On a conjoint reading and meticulous perusal of the clause 12.1 (Events of Default) and clause 12.2 (consequences of event of default) of loan agreement dated March 31, 2020, Cure Notice dated October 20, 2020, Loan Recall Notice dated December 15, 2020, Cheques Dishonored Communication from the bank and the Notice dated 08.04.2021 issued to the corporate debtor, the impairment of security comes within the preview of 'Event of Default', which was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... riod from December 2017 to March 2020, under which the applicant provided loan to corporate debtor for construction and/or development of housing/residential projects. The applicant further submits that a loan agreement dated 31.03.2020 for an amount of Rs. 184,00,00,000/- was sanctioned vide sanction letter dated 28.03.2020. The applicant adds that the loan facility was secured by way of mortgage, pledge of shares, personal guarantees and corporate guarantees issued by the corporate debtor and its group companies. b. The applicant submits that an amount of Rs. 183,45,17,265/- was disbursed by the applicant to the corporate debtor on 31.03.2020. The applicant further submits that NOIDA authority vide its letter dated September 4, 2020 revoked the permission given to Verve Construction LLP and Regalia Homes LLP to mortgage the land to the Financial Creditor, thereby impairing the security cover, resulting in occurrence of the contractual default in terms of Clause 12.1.9 (a) and (h) read with Clause 12.2 and 15 of the loan agreement(s). c. The applicant submits that the consequence of an 'Event of Default' is set out under Clause 12.2 (i) and (ii) of the Loan Agreement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t time on nonpayment of outstanding amount in relation to the Loan facility which was allegedly re-called on December 15th, 2020. To support the contention, the corporate debtor relied on the citations CP(IB)-418(ND)/2021(Interactive Communication Service (India) Private Limited v. Shipra Estate Limited) and CP(IB)-434(ND)/202I (Icon Project India Private Limited v. Shipra Estate Limited), NCLT, New Delhi judgments dated 20.06.2022 b. The corporate debtor submits that in order to shield and wriggle out of the aforesaid issue on maintainability, the applicant has very tactfully by virtue of the presentment of the dishonored cheques, made an oblique attempt to extend the event of default uptil April 2021. The corporate debtor further submits that the applicant was not authorized to present the said cheques as the said cheques were only provided as security cheques in terms of Clause 3.1.5 read with Entry 18 to the Schedule I, at the time of execution of the loan agreement. c. The corporate debtor submits that the applicant had not provided the statement of accounts for the purposes of repayment of the outstanding dues under the Loan Agreements in order to quantify the repaymen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orporate debtor as an acknowledgement of its future obligation to repay the amount under the Loan Agreement. The applicant further submits that on a conjoint reading of Clause 2.2, Clause 3.1.4, Clause 12.3, the applicant encashed the cheques of the Corporate Debtor to recover the outstanding dues under the Loan Recall Notices and the dishonoring of the cheques constitutes a 'default' of an acknowledged liability. c. The applicant submits that the applicant has a right of enforcement of the corporate debtor's securities on account of the Corporate Debtor committing an 'Event of Default' under the loan agreement and availing the independent remedies by the applicant enforcing the securities under loan agreement are not a bar to admission of CIRP under the Code, 2016. To support the contention, the applicant place reliance on Hon'ble NCLAT, Chennai Judgement dated 11.05.2022 in Amar Vora v. City Union Bank Ltd., Company Appeal (AT) (CH) (Ins) No. 130 of 2022. d. The applicant submits that it is a settled law that any pending proceeding challenging the contractual default has no bearing on the proceedings under Section 7 of the Code, 2016. The applicant f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der the Code, 2016. To support the contention, the applicant place reliance on Hon'ble NCLAT, Chennai Judgement dated 11.05.2022 in Amar Vora v. City Union Bank Ltd., Company Appeal (AT) (CH) (Ins) No. 130 of 2022. d. The applicant submits that it is a settled law that any pending proceeding challenging the contractual default has no bearing on the proceedings under Section 7 of the Code, 2016. The applicant further submits that no attempt was made by the corporate debtor to cure the defect in the security in terms of the Loan Agreement, consequent to which the applicant recalled its loans vide the Loan Recall Notice and the Respondent has failed to repay the outstanding debt. The applicant adds that no stay has been granted by the Hon'ble Allahabad High Court in this regard and therefore the contractual default subsists. e. The applicant submits that the Hon'ble Supreme Court of India has settled that proceedings under the Code and arbitration proceedings are independent remedies and the pendency of arbitration proceedings is not a bar to initiate CIRP under the Code. The applicant further submits that under Section 7 of the Code, the Adjudicating Authority has t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... during the period from 25.03.2020 to 24.03.2021. We further place our reliance in case Ramesh Kymal versus Siemens Gamesa Renewable Power Private Limited , reported in (2021) 3 SCC 224, wherein the Hon'ble Supreme Court of India held: The correct interpretation of Section 10A cannot be merely based on the language of the provision; rather it must take into account the object of the Ordinance and the extraordinary circumstances, in which it was promulgated. 9. At this juncture, it is necessary to refer the definition of the term 'default', which is defined under section 3(12) of the code, 2016. The same is reproduced below, for the sake of convenience:- 3. Definitions- (12) default means non-payment of debt when whole or any part or installment 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; 10. Further on a meticulous perusal of loan agreement dated March 31, 2020, cure notice dated October 20, 2020, Loan Recall Notice dated December 15, 2020, cheques dishonored communication from the bank and the notice dated 08.04.2021 issued to the corporate debtor. The relevant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fied hereinabove not limited to filing petitions under the provisions of the Insolvency and Bankruptcy Code, 2016. **** 11. It is being contended on behalf of the respondent that the security which was given by the respondent to the applicant for availing the loan facility was though revoked by Noida Authorities, but that said issue is under challenge and the writ petition has been filed apart from initiating arbitration proceedings. In this context, it is to be mentioned that once the security which has been revoked by Noida Authorities for non-payment of dues, certainly the same should be considered as a non-performance of the contract and therefore, it should be considered as a default in view of clause 12.1 (Events of Defaults) and clause 12.2 (Consequences of Events of Default). There is no dispute that even a notice for curing the said default and to submit fresh security was also given, but the same was also not complied with or cured on behalf of the respondent. Therefore, there was specific default on the part of the respondent for not providing the security against the loan facility availed. The said default cure notice was given on 20.10.2020, but the said impa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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