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TMI Blog2022 (12) TMI 915X X X X Extracts X X X X X X X X Extracts X X X X ..... ating that the Application under Section 7 of I B Code, 2016 is barred by limitation on the ground that the occurrence of NPA dated 27.05.2015 and Section 7 Application filed on 17.05.2018 which is beyond 3 years and is not permissible under the law of limitation as held by the Hon ble Supreme Court. Further, the Appellant taken the stand before the Adjudicating Authority that the alleged amount claimed by the Bank is not due and payable. From the perusal of the documents, it establishes the existence of debt and a default occurred in non-payment of debt due to the Bank. Further, it is also evident from the recall notice dated 01.02.2016 that the Bank demanded the payment of Rs.174.61 crores which there is no denial or dispute with regard to existence of debt. The Adjudicating Authority clearly observed that there is a debt and default in repayment by the Corporate Debtor. The argument of the Appellant that the Bank has issued a recall notice dated 01.02.2016 thereby the MRA has been revoked is concerned, this Tribunal is of the view that there is ample evidence with regard to the debt and default from the documents filed by the Banks such as the entries in a Banker s Book in ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in C.P. (IB) No. 1807/MB/2018, whereby the Adjudicating Authority admitted the Application filed by the 1st Respondent herein. Brief Facts: Appellant s Submissions: 2. Sh. Nikhil Nayyar Learned Sr. Counsel appearing for the Appellant submitted that aggrieved by the aforesaid order, the Appellant being the Suspended Director of the Corporate Debtor preferred the present Appeal and narrated the facts as under. 3. It is submitted that the Respondent Bank along with the consortium landers granted various credit facilities to the Corporate Debtor from time to time and the credit facilities included term loans, working capital facilities, cash credits, letter of creditors etc. On 27.03.2015, the facilities granted to the Corporate Debtor by the 1st Respondent were restructured on the basis of the terms and conditions as set out in the sanction letter dated 27.03.2015. Subsequently, on 30.03.2015 MRA (Master Restructuring Arrangement) entered into between the Respondent and the Corporate Debtor wherein the parties agreed to restructure the debt payable to the Respondent Bank. On 14.05.2015, 1st supplemental working capital consortium agreement was entered between the R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing Authority under Section 7, the Respondent shown the above dates, which are contradictory. 8. The Learned Sr. Counsel submitted that whether there can be two dates of defaults in respect of the same debt one for the purpose of proceedings filed before the DRT and the other for the purpose of proceedings before the Adjudicating Authority. 9. It is submitted that the MRA was revoked by the Respondent Bank and the date of NPA shown as 27.03.2015 and the date of NPA should be taken as date of default. However, the impugned order is vague and unreasoned and has been passed on the basis of incorrect facts. The Learned Adjudicating Authority erred in not appreciating the fact that the application filed by the Respondent was barred by law of limitation as the same was filed beyond 3 years from the date of actual default i.e. the date when the account of the Corporate Debtor was declared as NPA i.e. 27.03.2015. The Application under Section 7 was filed on 17.05.2018 which is beyond 3 years from the date of NPA. 10. The Learned Sr. Counsel further submitted that the Adjudicating Authority in the impugned order wrongly recorded the fact that there is no record of termination of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 16. It is submitted that the classification of an account as a Non-Performing Asset (NPA) is irrelevant for the purpose of initiation of CIRP under the Code, whilst the period of limitation commences only from the date of default as required under the I B Code. The Corporate Debtor committed defaults under MRA dated 30.03.2015 and the Supplemental WC Agreement dated 14.05.2015 respectively. The total outstanding in relation the facilities claimed in Section 7 Application as on 30.04.2018 was Rs.218,14,20,222.95. 17. The Learned Sr. Counsel further submitted that the Respondent Bank had placed several documents before the Adjudicating Authority evidencing debt and default such as record of default under the report of the Central Repository of Information on Large Credits (CRILC) dated 01.09.2017 where the accounts of the Corporate Debtor have been classified as SMA-I and doubtful restructured. Further, the record of default under the report of the CIBIL dated 01.08.2017 has been summarised in the application wherein the concerned accounts have been classified as doubtful. Further, the statement of accounts of Respondent Bank (copies of Bankers book maintained in accordance wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) of the Corporate Debtor for the reason that the Corporate Debtor defaulted re-payment of Rs.218,14,20,222.95. From the perusal of Part-IV of the Application under Column-1, it is stated that the Financial Creditor had granted certain term loan and working capital facilities to the Corporate Debtor from time to time and restructured on the terms and conditions as per the sanctioned letter dated 25.03.2015 and the MRA dated 30.03.2015. Further it is stated that the detailed terms and conditions of enhanced working capital credit facilities incorporated in the first Supplemental Working Capital Consortium Agreement dated 14.05.2015. The details of term loan disbursed were also shown in Column-1. In Column-2, the occurrence of default under term loans have been specifically mentioned such as the date of defaults i.e. 30.01.2016, 30.01.2016, 30.09.2015, 30.11.2015, 29.10.2015 and 23.09.2015. Further in Part-V, the particulars of financial debt and the evidence of default have been mentioned. It is a specific case of the Respondent that the record of default as available with the Bank is (1) report of Trans Union CIBIL dated 01.08.2017 and (2) report of the Central Repository of Inform ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... claimed in the Application is not due and payable, the moment there is revocation of the MRA, the rights and liabilities of the parties falls back to the original facility agreements which were already declared NPA by the Applicant as has been demonstrated above upon the perusal of records. We have noticed that both the parties entered into MRA and there is no record of terminating MRA. Therefore, the Corporate Debtor s arguments are devoid of merits that the amount claimed is not due and payable under MRA. 39. Also, the reliance placed by the Corporate Debtor on judgement of Innoventive Industries is misplaced, even if we consider the situation that MRA was revoked and rights and liabilities of parties falls back the original facilities Agreements vide which Respondent was declared NPA way back in this situation also there was default on part of the Respondent. Hence now Respondent cannot shy away from the fact that there is debt and default in repayment was committed by the Respondent. The MRA was to facilitate restructuring of the Corporate Debtor and not to defraud the Creditor. Therefore, this Bench is of the considered opinion that the Corporate Debtor owes money to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6, makes it clear that the following are other sources which evidence a financial debt: (a) Particulars of security held, if any, the date of its creation, its estimated value as per the creditor; (b) Certificate of registration of charge issued by the Registrar of Companies (if the corporate debtor is a company); (c) Order of a court, tribunal or arbitral panel adjudicating on the default; (d) Record of default with information utility; (e) Details of succession certificate, or probate of a will, or letter of administration, or court decree (as may be applicable), under the Indian Succession Act, 1925; (f) The latest and complete copy of the financial contract reflecting all amendments and waivers to date; (g) A record if default as available with any credit information company; (h) Copies of entries in a bankers book in accordance with the Bankers Books Evidence Act, 1891. 25. The Hon ble Supreme Court (supra) clearly held that the other source of evidence can be taken into consideration for the purpose of existence of financial debt includes the copies of entries in a Bankers Book in accordance with the Bankers Book Evidence Act, 1891 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. actual non-payment of debt repayable by the Corporate Debtor when a debt has become due and payable and not the date of NPA. With regard to the aforesaid finding, a beneficial reference is drawn in the matter of Laxmipat Surana Vs. Union Bank of India (2021) SCC Online SC 267 para 42, 43, 49 whereby the Hon ble Supreme Court held that the date of default is to be reckoned for the purpose of Initiation of CIRP and not the date of NPA. 42. There is no reason to exclude the effect of Section 18 of the Limitation Act to the proceedings initiated under the Code. Section 18 of the Limitation Act reads thus: 43. 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 IBC. However, Section 7 comes into play when the corporate debtor commits default . Section 7, consciously uses the expression default - not the date of notifying the loan account of the corporate person as NPA. Further, the expression default has been defined in Section 3(12) to mean non payment of debt when whole or any part or instalment of the amount of debt has become due and payab ..... X X X X Extracts X X X X X X X X Extracts X X X X
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