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TMI Blog2023 (8) TMI 486X X X X Extracts X X X X X X X X Extracts X X X X ..... r its residuary power contained in Section 60(5)(C) of I&B Code, entertain the plea of legality or otherwise of the assignment of debt in favour of the Petitioner? 2. Whether the documentary evidence furnished with application show that a debt is due and payable and has not been paid by the corporate debtor?" The Learned Adjudicating Authority while giving its finding in the first issue observed as follows: - "8. At the outset it may be stated that, this being a petition filed under Section 7 of IBC at the behest of the financial creditor for initiation of CIRP against the Respondent/Corporate Debtor herein, as regards scope of enquiry in this petition, we refer to the authoritative ruling of the Hon'ble Supreme Court of India, in re, Mobilox, where in it was held that, "On the other hand, as we have seen, in the case of a corporate debtor who commits a default of a financial debt, the adjudicating authority has merely to see the records of the information utility or other evidence produced by the financial creditor to satisfy itself that a default has occurred. It is of no matter that the debt is disputed so long as the debt is "due" i.e., payable unless interdicted by some ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... but had instead breached the Agreement. 3. Succinctly put, the facts in this case are that the Appellant, shareholder and the Corporate Debtor had executed a share subscription, share purchase and shareholders agreement with M/s. Indu Projects Ltd. on 02.10.2007. A Rupee Loan Agreement was executed between IDFC and the Corporate Debtor on 08.09.2008 for disbursement of loan of Rs.60 Crores and a sum of Rs.45 Crores was disbursed by IDFC on 11.09.2008. A Common Loan Agreement was executed between the Corporate Debtor, IDFC, IFCI, Andhra Bank and other Banks on 27.02.2009. A 'Lender Creditor Agreement' was also executed between the Corporate Debtor and IDFC, IFCI, Andhra Bank and others. On 13.10.2013, the loan account of the Corporate Debtor was declared as NPA which then transferred its right under the Loan Documents to EARC vide an Assignment Agreement dated 24.12.2013. 4. The Learned Senior Counsel for the Appellant submitted that since the date of default, being the same as the date of declaration of the loan account of the Corporate Debtor as NPA, was 13.10.2013, the alleged limitation to initiate any fresh proceeding to enforce the lenders' rights under the 'Loan Documents' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Company Law Appellate Tribunal and upheld by the Hon'ble Apex Court. It is further contended by the Learned Senior Counsel that the present proceedings are barred by limitation as the default goes back to the final date of declaration of NPA i.e. 13.10.2013 and that the three years period had expired on 13.10.2016 itself whereas this petition was filed only in June 2021. 7. The Learned Senior Counsel drew our attention to the findings given by the National Company Law Appellate Tribunal, Principal Bench in the prior CIRP proceedings vide its Judgment dated 22.05.2020, whereby and whereunder it was observed as follows:- "14. ...In the instant case, the date of default as mentioned in part IV of the Application is 15.10.2013. It is the Respondent's case that the date of default is to be taken at 30.06.2014 as observed by the Adjudicating Authority. 15. We observe from the letter dated 02.07.2014, that the date of default is 30.06.2014 though the date of default mentioned in Part IV of the Application, is 15.10.2013. In this case the 'right to sue' accrues on 30.06.2014 and 3 years limitation period ends on 29.06.2017, whereas the Application was filed on 08.11.2017. 16. There ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not prevent the initiation of CIRP against the Corporate Debtor in the event that the default continues even after the period of one year from 25.03.2020. It is further submitted that the limitation issues raised by the Appellant is a non-starter and a compromise memo was entered into on 03.05.2020 and the Section 7 Application was filed in June 2021 and therefore, the Section 7 Petition, is not barred by limitation. ASSESSMENT : - 11. It is seen from the Impugned Order that the earlier CIRP Proceedings initiated against the same Corporate Debtor, which was held to be barred by limitation and also upheld by the Hon'ble Apex Court in Civil Appeal bearing No. 3509 of 2020 vide order dated 25.01.2021, was not brought to the notice of the Adjudicating Authority. Factually, one of the lenders of the consortium, IFCI Limited filed Petition under Section 7 of the Code, bearing No. CP(IB)/26/7/HDB/2018 titled 'IFCI Ltd. versus Indu Tech Zone Pvt. Ltd.'. This Petition was admitted by the Adjudicating Authority on 08.11.2019. The National Company Law Appellate Tribunal, Principal Bench, had set aside this order dated 08.11.2019 holding that the debt was time barred, against which order a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A, the Hon'ble Apex Court has held as follows: - "8. The issue which falls for determination in this appeal is whether the provisions of Section 10A stand attracted to an application under Section 9 which was filed before 5 June 2020 (the date on which the provision came into force) in respect of a default which has occurred after 25 March 2020. Before proceeding to discuss the rival submissions, it is necessary to preface the discussion with reference to three significant dates which have a bearing on the present proceedings: * 30 April 2020 - date of default as set up in Form 3; * 11 May 2020 - date of institution of the application under Section 9; and 5 June 2020 - date on which Section 10A was inserted in the IBC. 9. The date of default is crystalized as 30 April 2020 in the demand notice issued by the appellant in Form 3, which is prescribed under Rule 5 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016. The statutory form provides for a disclosure of the particulars of the operational debt. The disclosure which has been made by the appellant includes the amount claimed in default and the date of default, as tabulated below: 2. A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the application for initiating the CIRP under Sections 7, 9 or 10, as the case may be, is admitted by the Adjudicating Authority. 20. The substantive part of Section 10A adverts to an application for the initiation of the CIRP. It stipulates that for any default arising on or after 25 March 2020, no WWW.LIVELAW.IN LL 2021 SC 72 12 application for initiating the CIRP of a corporate debtor shall be filed for a period of six months or such further period not exceeding one year "from such date" as may be notified in this behalf. The expression "from such date" is evidently intended to refer to 25 March 2020 so that for a period of six months (extendable to one year by notification) no application for the initiation of the CIRP can be filed. The submission of the appellant is that the expression "shall be filed" is indicative of a legislative intent to make the provision prospective so as to apply only to those applications which were filed after 5 June 2020 when the provision was inserted. Such a construction cannot be accepted. 21. xxx 22. The language of the provision is not always decisive to arrive at a determination whether the provision if applicable prospectively or retro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gislation was to suspend the operation of Sections 7, 9 and 10 in respect of defaults arising on or after March 25th 2020 when the lockdown was disrupting normal business operation. This Tribunal is of the considered view that the 'Explanation' removes any doubt by clarifying that the provisions of the Section shall not apply in respect of any default committed prior to 25.03.2020. 17. In the instant case, admittedly, the date of default is 31.03.2020 and the ratio of the Hon'ble Apex Court in 'Ramesh Kymal versus M/s. Siemens Gamesa Renewable Power Pvt. Ltd.' reported in Civil Appeal No.4050 of 2020 regarding Section 10-A of the Code the object of which was sought to be achieved by enacting the Provision, is squarely applicable to the facts of this case. 18. For the aforegoing reasons this 'Appeal' is allowed and the Impugned Order dated 07.02.2022 in CP (IB) No.207/7/HDB/20201 is set aside and consequently the admission of the Section 7 Petition is also set aside. The 3rd Respondent has filed the Status Report. The 'Adjudicating Authority' shall proceed in accordance with law. No order as to costs. All connected pending Interlocutory Applications, if any, shall stand 'closed'.< ..... X X X X Extracts X X X X X X X X Extracts X X X X
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