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TMI Blog2023 (8) TMI 748X X X X Extracts X X X X X X X X Extracts X X X X ..... Appellant is that the amount of debt became due and payable by the Respondent on 30.06.2020, therefore, it should have been the date of default whereas according to the Respondent, there is no concept of first date of default because the word first is not deliberately used by the legislature in Section 7 of the Code as a prefix with the word default and if the limitation of three years is counted from 30.06.2020 even then the application has been filed within the period of limitation. Next argument of Counsel for the Appellant is that since the notice of demand was issued on 01.10.2020, therefore, the date of default has to be treated as such, which could not have been 30.06.2021 as has been projected by the Respondent in order to wriggle out of the vigours of Section 10A of the Code - HELD THAT:- The submissions made by Counsel for the Appellant cannot be accepted because term loan I has been provided to the Corporate Debtor in which there is no bank guarantee which is there in term loan II and the notice dated 01.10.2020 has been issued both to the Corporate Debtor and the Guarantor making specific reference to term loan II, highlighting the amount, which was disbursed in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, 2016 (in short Rules ) by the Indusind Bank Limited (Financial Creditor) bearing CP No. 690/IBC/MB/2022 for the resolution of an unresolved financial debt of Rs. 1,48,82,90,236.22/- has been admitted, Corporate Insolvency Resolution Process (in short CIRP ) was initiated, moratorium was imposed and Rohit Mehra was appointed as an Interim Resolution Professional (in short IRP ). 2. In brief, the Corporate Debtor is a multi-system operator and provides television services across India. It availed Term Loan Facility-I of sanction limit of Rs. 250,00,00,000/- and Term Loan Facility-II of Rs. 150,00,00,000/- , total exposure of Rs. 400 Crores from the Financial Creditor vide sanction letter dated 29.06.2018. As per the repayment schedule, provided in the sanction letter dated 29.06.2018, the repayment under Facility-1 was on half yearly basis as per following schedule from the date of first disbursement. Repayment Schedule Facility 1: Principal repayment under facility on half yearly basis to be as per following schedule from date of first disbursement Timeline 31- Dec- 18 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and 24th March, 2021 (period of suspension). Therefore, the present petition under Section 7 of the Code is not maintainable against the Corporate Debtor since the purported debt squarely falls within the cut-off date as per Section 10A of the Code 7. It is pertinent to mention that other than challenge to term loan II being hit by Section 10A of the Code, the term Loan I was not challenged on the issue that it too is hit by Section 10A of the Code. In this regard, the Adjudicating Authority recorded its finding in Para 5 of the impugned order, which is reproduced as under:- 5. The next plea is with regard to Section 10A of the code. It is the contention of the Corporate Debtor that the default for term loan- 2 has occurred on 1st November 2020 during Covid period and therefore no Company Petition can be filed basing on such default as per law laid down by the Hon'ble Supreme Court in Ramesh Kaymal Vs. M/s Siemens Gamesa Renewable Power Pvt. Ltd. In this context it is appropriate to mention here that the present Company Petition is filed not only in respect of term loan-II but also in respect of term loan-I which default occurred on 30.06.2021. It is also appropriat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Repayment to be done as prorated to be disbursed amount vis- -vis the sanctioned repayment schedule as shown above 2.92 7.30 7.30 14.59 14.59 26.27 Cumulative repayment to be done 2.92 10.21 17.21 32.10 46.69 72.96 10. The case set up by the Appellant is that the amount of instalment of Rs. 14.59 Cr. was due on 30.06.2020 which was not paid by the Corporate Debtor, the amount of instalment dated 31.12.2020 of Rs. 14.59 Cr. was also not paid and similarly the amount of instalment dated 30.06.2021 of Rs. 26.27 Cr. was also not paid but the Respondent has taken the date of default from 30.06.2021 and not from 30.06.2020 when the right to file application under Section 7 of the Code first accrued. 11. On the other hand, Counsel for the Respondent has submitted that as per Section 3(12) of the Code, the term default means non-payment of debt as a whole or any part or instalment of the amount of debt whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ow question is as to when a Financial Creditor has not filed the Application on first default i.e. payment of interest whether he is precluded to file Application for subsequent defaults i.e. when default is committed for an instalment or for whole debt when it becomes due. 19. The Application under Section 7 of the Code can be filed when a default has occurred. Thus, Application could have been filed by Financial Creditor on default of payment of interest on 30th June, 2018 but the mere fact that Financial Creditor did not choose to file Section 7 Application on committing of default with interest whether the Financial Creditor is precluded to file an Application when first instalment was due or when whole amount was due is the question to be answered. In the present case, as noted above, the first instalment of repayment became due only on 30th November, 2015 and even before that on 24th November, 2015 the bank had written to Reserve Bank of India seeking permission to accelerate the facility which permission was given in the form of 'No Objection Certificate' issued by Reserve Bank of India on 07.12.2016. The Acceleration of Facility was done by letter dated 05.01. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Code because any default of amount committed before three years of filing of the Application Company Appeal (AT) (Insolvency) No. 911 of 2021 shall become time barred debt and cannot be said to be payable and due within the meaning of Section 3(11) and Section 3(12) of the Code. 12. He has further referred to a decision of this Tribunal rendered in the case of Indiabulls Housing Finance Limited Vs. Revital Realty Pvt. Ltd., 2023 SCC Online NCLAT 219 and referred to Paras 20 and 22, which are also reproduced as under;- 20. We also acknowledge that law of limitation is sacrosanct and cannot be allowed to be breached. As per the law, legal remedy is required to be taken within three years from the date when default takes place and any violation of the timeline will render such claims as time barred. The position has been upheld in catena of the judgments by the Hon ble Supreme Court of India as well as this Appellate Tribunal . This Appellate Tribunal had occasion to examine all such issues in the case of Koncentric Investments Ltd. Anr. Vs. Standard Chartered Bank Anr. (Company Appeal (AT) (Insolvency) No. 911 of 2021) and detailed judgment was rendered coverin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imitation. In this regard, the judgments relied upon by the Respondent both in the case of Koncentric Investments Ltd. Anr. (Supra) and Indiabulls Housing Finance Limited (Supra) covers the argument raised by him and hence the first argument raised by the Appellant on the basis of date of default dated 30.06.2020 is hereby rejected. 16. Next argument of Counsel for the Appellant is that since the notice of demand was issued on 01.10.2020, therefore, the date of default has to be treated as such, which could not have been 30.06.2021 as has been projected by the Respondent in order to wriggle out of the vigours of Section 10A of the Code. It is submitted that the reference to facility is pertaining to both term loans I and II, therefore, the notice of demand or recall notice is about term loan I whereas Counsel for the Respondent has submitted that the said notice was issued both to the Corporate Debtor and the Guarantor and was essentially pertaining to term loan -II regarding which a specific averment has also been made about the amount of Rs. 83,08,00,000/- which was disbursed by the Financial Creditor to the borrower (corporate debtor). It is submitted that though the san ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... process of a corporate debtor shall be filed, for any default arising on or after 25th March, 2020 for a period of six months or such further period, not exceeding one year from such date, as may be notified in this behalf: Provided that no application shall ever be filed for initiation of corporate insolvency resolution process of a corporate debtor for the said default occurring during the said period. Explanation. For the removal of doubts, it is hereby clarified that the provisions of this section shall not apply to any default committed under the said sections before 25th March, 2020.] 21. There is no dispute that if the date of NPA is taken as the date of default then it would definitely come within the aforesaid period during which no petition under Section 7 could have ever been filed. 22. Counsel for the Appellant in support of his arguments has relied upon a decision of the Hon ble Supreme Court in the case of Gaurav Hargovindbhai Dave Vs. Asset Reconstruction Company (I) Limited and Anr., (2019) 10 SCC 572 and contended that in this case the NPA was declared on 21.07.2011 and the same date was mentioned as a date of default in Part IV of Form 1. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment of account but the original bills have not been placed on record by the plaintiff till the date of filing of such application. It is further seen that during the entire trial, those documents have remained in exclusive possession of the plaintiff but for the reasons known to it, still the plaintiff has not placed these bills on record. In such circumstance, as rightly observed by the trial Court at this belated stage and that too after the conclusion of the evidence and final arguments and after reserving the matter for pronouncement of judgment, we are of the view that the plaintiff cannot be permitted to file such applications to fill the lacunae in its pleadings and evidence led by him. As rightly observed by the trial Court, there is no acceptable reason or cause which has been shown by the plaintiff as to why these documents were not placed on record by the plaintiff during the entire trial. Unfortunately, the High Court taking note of the words at any stage occurring in Order XVIII Rule 17 casually set aside the order of the trial Court, allowed those applications and permitted the plaintiff to place on record certain bills and also granted permission to recall PW-1 to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... art of the record. 26. Besides, this technical objection raised by the Respondent, he has submitted that the judgment relied upon by the Appellant, firstly, in the case of Gaurav Hargovindbhai Dave (Supra) is no more an available as a precedent in view of the fact that in Review Petition No. 800 of 2020, the judgment in the case of Gaurav Hargovindbhai Dave (Supra) has been recalled vide order dated 06.12.2022. Secondly, it is submitted that the judgment relied upon by the Appellant both in the case of Babulal Vardharji Gurjar (Supra) and Laxmi Pat Surana (Supra) are on their own facts and are not applicable to the facts of the present case because in the said cases the date of NPA was the date of default pleaded by the Financial Creditor which is not the present case. He has further submitted that the decision in the case of Babulal Vardhrji Gurjar (Supra) has been held to be a judgment rendered in the particular facts of that case in Dena Bank Vs. Shiva Kr. Reddy, Civil Appeal No.1650 Of 2020. He has rather relied upon a decision of this Tribunal in the case of Mr. Abhay Narendra Lodha Vs. Bank of Baroda, CA (AT) (Ins) No. 997 of 2022 and pressed Paras 27 to 29, which are repr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er, 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 payable and is not paid by the debtor or the corporate debtor, as the case may be. In cases where the corporate person had offered guarantee in respect of loan transaction, the right of the financial creditor to initiate action against such entity being a corporate debtor (corporate guarantor), would get triggered the moment the principal borrower commits default due to non payment of debt. Thus, when the principal borrower and/or the (corporate) guarantor admit and acknowledge their liability after declaration of NPA but before the expiration of three years therefrom including the fresh period of limitation due to (successive) acknowledgments, it is not possible to extricate them from the renewed limitation accruing due to the effect of Section 18 of the Limitation Act. Section 18 of the Limitation Act gets attracted the moment acknowledgment in writing signed by the party against whom such right to initiate resolution process under Section 7 of the Code enures. Section 18 of the Limitation Act would come into p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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