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TMI Blog2022 (10) TMI 702X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 7(3) of the Code needs to be referred, which states that the Financial Creditor shall, along with the application, furnish the record of the default recorded with the information utility or such other record or evidence of default as may be specified. As such, the Financial Creditor has sufficiently established the existence of debt and its default on the basis of the CIBIL report, the acknowledgments of debt by the Corporate Debtor, and the OTS - the Corporate Debtor s contention that the OTS was valid till 31.03.2020 is also not maintainable since point 9 of the OTS proposal dated 27.11.2019 (attached as Annexure C to the Supplementary Affidavit) specifically mentions that in case of default of any installments as stipulated in the said sanction, the OTS shall get lapsed. The Corporate Debtor has on several instances, admitted to the existing Financial Debt and its default and the same is also reflected in the report issued by CIBIL. Further, the petition is within the period of limitation and above the pecuniary threshold for the relevant period of time i.e Rupees One Lakh. The present petition made by the Financial Creditor is complete in all respect as required ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (RDBFI Act) and also Securitization and Reconstruction of Financial Assets and Enforcement of Securities Interest Act, 2002 (SARFAESI Act) and the said proceedings are pending before the Learned Debt Recovery Tribunal, Kolkata (DRT). 5.3 The Financial Creditor has relied on various documents to support its claims, including: a. Statement of the account of the Corporate Debtor maintained with the Financial Creditor, being Annexure E ; b. Particulars of charges filed with Registrar of Charges, being Annexure G ; c. Sanction letter for Letter of Credit, minutes of board of meetings of Directors and request for sanction, being Annexure J ; d. Agreement for letter of Credit and Bank Guarantee, being Annexure K ; e. CIBIL Report of the Corporate Debtor, being Annexure S ; f. Acknowledgment of Debt by Corporate Debtor, being Annexure HH . 6 Submissions on behalf of the Corporate Debtor: 6.1 The Corporate Debtor has submitted that the instant petition is defective and not maintainable and deserves to be dismissed. The Corporate Debtor has submitted that there is no record of default maintained with any information utility. 6.2 Further, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tor is attempting to initiate CIRP against the Corporate Debtor is a default arising after 25.03.2020. The Financial Creditor sought to cancel the OTS which was subsisting until 06.11.2020. It is due to the OTS that CP (IB) No. 376/KB/2019 had been dismissed. Therefore, no application for initiation of CIRP for a default dated 06.11.2020 can be initiated or revived. As such, no cause of action survives in CP (IB) No. 376/KB/2019 due to the acceptance of the OTS. 8 Reply to the Supplementary Affidavit on behalf of the Financial Creditor: 8.1 It is submitted that within the period of 3 years from the date of declaration of the account as NPA, the Corporate Debtor, vide various letters including letters dated 31.03.2014, 01.04.2014, 06.08.2014, 12.08.2014 , 22.01.2015, 31.08.2017, 01.09.2017 and 17.02.2018 has acknowledged its liabilities to the Financial Creditor. As such, by though the account of the Corporate Debtor was declared NPA in 2012, the instant petition, in light of the said acknowledgments, is within the period of limiataion. 8.2 Further, according to the OTS approved between the parties, ₹39 Crores was to be paid on or before 31.12.2019 and ₹33 Crore ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fter, the Corporate Debtor, vide order dated 19.08.2021 in I.A. No. 1596 of 2021 of S.A.163/2018 before the DRT, was directed to approach the Financial Creditor within 7 days from the date of order with a proposal disclosing the probabilities for raising funds to meet the balance OTS amount. Further, the said order directed the Financial Creditor to consider such proposal, so as to recover their outstanding dues. 10.4 It is submitted that in spite if the order of the DRT, the Financial Creditor, vide letter dated 17.09.2021, unjustly rejected the Corporate Debtor s proposal letter dated 26.08.2021. 10.5 Thereafter, the Corporate Debtor sent another letter dated 05.10.2021 for payment of the balance OTS consideration. However, the Financial Creditor sent a reply dated 06.11.2021, rejecting both the Corporate Debtor s proposals dated 26.08.2021 and 05.10.2021, in complete contradiction to the directions of the DRT, vide order dated 19.08.2021. 10.6 Thereafter, the Corporate Debtor sent another letter dated 18.11.2021 to the Financial Creditor, highlighting the fact that a total amount of ₹11.07 Crores was already paid by the Financial Creditor and that it had all the i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etition under section 7 of IBC, 2016, an OTS proposal was given by the Corporate Debtor to the Financial Creditor on 08.08.2019 which is at page 9 of the Supplementary Affidavit filed by the Corporate Debtor. 11.5 The Ld. Counsel further has stated that in view of failure of the Corporate Debtor to meet the terms of the OTS, the said OTS was revoked. The details in this regard are mentioned in para-6 of this reply affidavit to the supplementary affidavit filed by the Financial Creditor. 11.6 Our attention has been drawn to letter dated 06.11.2020 which is IA 11/KB/2021. It is stated by the Ld. Counsel for the Corporate Debtor that as is apparent from this letter written by the Financial Creditor to the Corporate Debtor, the Corporate Debtor paid an amount of Rs.11.07 crores out of total sanctioned OTS amount of Rs.80 crores. Due to the prevalent covid-19 relaxation, the said OTS was valid up till 31.03.2020. Therefore, by virtue of Section 10A of IBC,2016, this application is not maintainable and is liable to be rejected on this score alone. 11.7 According to the Ld. Counsel for the Corporate Debtor during the period of Covid-19, there was a suspension of initiation of CIR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ents dated 31.03.2014, 01.04.2014, 06.08.2014, 12.08.2014, 22.01.2015, 31.08.2017, 01.09.2017 and 17.02.2018 on the part of the Corporate Debtor for its liability towards the Financial Creditor, section 18 of the Limitation Act, 1963 will come into play, thereby starting fresh limitation period from the date of each acknowledgment successively. Therefore, the limitation period would start afresh from the last date of acknowledgment being 17.02.2018 and end on 17.02.2021. 11.13 In this regard, we would further like to rely on the decision of the Hon ble Supreme Court in the matter of Rajendra Narottamdas Sheth and Another v. Chandra Prakash Jain and Another 2021 SCC OnLine SC 843 , wherein it was held that: 23. It is no more res integra that Section 18 of the Limitation Act is applicable to applications filed under Section 7 of the Code. In case the application under Section 7 is filed beyond the period of three years from the date of default and the financial creditor furnishes the required information relating to the acknowledgement of debt, in writing by the corporate debtor, before the Adjudicating Authority, with such acknowledgement having taken place within the initi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the general power of attorney given to Mr. Tusar Kanti Roy by the Financial Creditor and the same gives the power to the petitioner to grant letters of credit on behalf of the Financial Creditor as well as to file the instant legal proceedings. Since the power of attorney holder in this case, has to power to disburse a loan, it also has the power to recover it. As such, the general authorization given to an officer of the Financial Creditor will not disentitle such officer from filing the instant petition under section 7 of the Code. Thus the Corporate Debtor s contention that the petition is without proper authorization is untenable. 11.19 The Corporate Debtor has further contended that the Financial Creditor has been indulging in multiplicity of proceedings and that the recovery proceedings filed by the Financial Creditor are still pending before the DRT. In this regard, it is to be noted that the proceedings under the Code are not merely recovery proceedings, rather they aim at revival of the Corporate Debtor from insolvency. As such, the pendency of recovery proceedings under a different forum will not be a bar to the initiation of insolvency proceedings under the Code. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons from the Corporate Debtor regarding its liability towards the Financial Creditor. As such, this adjudicating authority is satisfied that I.A. No. 1022/KB/2022 is liable to be dismissed. 11.24 It is, accordingly, hereby ordered as follows:- a) The application bearing CP (IB) No. 376/KB/2019 filed by Central Bank of India (Financial Creditor), under section 7 of the Code read with rule 4(1) of the Insolvency Bankruptcy (Application to Adjudicating Authority) Rules, 2016 for initiating CIRP against Prakash Vanijya Private Limited, CIN: U36999WB2004PTC098870, the Corporate Debtor, is admitted. b) There shall be a moratorium under section 14 of the IBC. c) The moratorium shall have effect from the date of this order till the completion of the CIRP or until this Adjudicating Authority approves the resolution plan under sub-section (1) of section 31 of the IBC or passes an order for liquidation of Corporate Debtor under section 33 of the IBC, as the case may be. d) Public announcement of the CIRP shall be made immediately as specified under section 13 of the Code read with regulation 6 of the Insolvency Bankruptcy Board of India (Insolvency Resolution Process for Co ..... 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