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TMI Blog2023 (11) TMI 481X X X X Extracts X X X X X X X X Extracts X X X X ..... otice. The submission of learned Counsel for the Appellant is that loan recall notice having been issued on 20.08.2020, the entire loan became due only consequent to loan recall notice, which loan recall notice having been issued on 20.08.2020, i.e., during 10A period, the application was clearly barred. Loan recall notice dated 28.08.2020 was addressed to Corporate Debtor as well as the Personal Guarantor. The contention advanced by the learned Counsel for the Financial Creditor to counter the above submission is on the basis of Clause 8.1 of the Loan Agreement - There is no dispute between the parties that there is admitted default in payment of interest for two consecutive months prior to 10A period, which is apparent from the Chart as extracted in paragraph 1.3 of the impugned order. Even if, no notice dated 28.08.2020 was issued by the Financial Creditor, the principal amount also became due on occurring of event of default as per Clause 8.1. The bar under Section 10A, does not apply when the default is committed prior to 10A period. The learned Counsel for the Respondent has rightly placed reliance on the judgment of this Tribunal in NARAYAN MANGAL VERSUS VATSALYA BUILDERS DE ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al Capital & Housing Finance Limited had sanctioned a project term loan of Rs.60 crores to Rite Builtec Private Limited, the Corporate Debtor in No.CP (IB) No.1023/MB-IV/2022 - Rite Builtec Private Ltd. was Borrower and Rite Developers Pvt. Ltd. was Coborrower, who is the Corporate Debtor in CP (IB) No.1029/MB-IV/2022. The repayment of loan along with interest was to be made in 24 Equated Monthly Installments (EMIs) commencing after 36 months from the date of first disbursement. Sanctioned order, however, contemplate payment of interest from the date of first disbursement. The Loan Agreement dated 06.05.2018 between Rite Builtec Pvt. Ltd.; Rite Developers Pvt. Ltd. and Dewan Housing Finance Corporation Ltd. was entered, providing Clauses for Repayment of loan, Rate of interest, Additional interest in case of default etc. etc. The Corporate Debtor defaulted in making payment of the interest from June 2018. There was default in payment of Pre-Equated Monthly Installments (PEMI). The default continued and till February 2020, the defaulted amount was approximately Rs.10,51,94,998/-. Even after February 2020 Corporate Debtor defaulted in making payment of PEMI. Out of the sanctioned loa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, whereas, the second cause of action arose on 20.08.2020, when the loan recall notice was issued by the Financial Creditor. The Financial Creditor could not have filed petition for both interest component as well as the entire loan amount. There cannot be multiple date of defaults. Bar under limitation is different from statutory bar. 6. Shri Ramji Srinivasan, learned Senior Counsel appearing for the Financial Creditor submits that the default was committed by the Corporate Debtor in regard towards interest payment obligation, i.e. PEMI with respect to loan of Rs.60 crores availed by the Corporate Debtor from the Financial Creditor. The loan was liable to be repaid jointly and severally Company Appeal (AT) (Insolvency) Nos.1198 & 1199 of 2023 6 by the Corporate Debtor and Co-borrower. The default before 10A period, i.e. up to February 2020 was Rs.10,51,94,998/- crores, which has been noted in paragraph 1.3 of the impugned order. Thus, default having been committed prior to 10A period, filing of the Application under Section 7 is not barred by Section 10A. It is further submitted that entire loan fell due on account of non-payment of PEMI for two consecutive months as per Clause ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this agreement or any other agreement or document/ security documents executed/ to be executed between the Borrower/ Mortgagors and DHFL pursuant to this Agreement and such default shall have continued over a period of 30 days after notice thereof shall have been given to the Borrower by DHFL; or" 10. Clause 8.3, on which reliance has been placed by the Appellant, provides as follows: "8.3. If any event of default or any event which, after the notice or lapse of time or both would constitute an event of default shall have happened, the Borrower shall forthwith give to DHFL a notice thereof in writing specifying such event of default or such event." 11. We may also notice Part-IV of the Application under Section 7. In Column 2 of Part-IV, which relate to 'Amount claimed to be in default and the date of default', following has been stated: "2. Amount claimed to be in default and the date on which the default occurred (Attach the workings for computation of amount and days of default in tabular form) Amount in Default: The outstanding amount under the Loan, payable by the Corporate Debtor to the Financial Creditor, being the total outstanding amount due in respect of Loan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8. However, the Corporate Debtor and/or the Co- Borrower have failed to honour their obligations in respect of the instalment due on 30.06.2018. In the event of failure to make payment of pre-equated monthly instalments interest, a cure period of 10 days is provided under the loan agreement. Accordingly, the Corporate Debtor first defaulted in its payment of PEMI/interest on 11.07.2018." Thereafter, the Corporate Debtor has committed default of its payment obligations towards PEMI/interest under the Sanction Letter and the Loan Agreement on consecutive occasions, which default continues as on date. The subsequent dates on which the Corporate Debtor has committed default are as follows : Month PEMI Interest PEMI Interest received/ Creditor Closing PEMI O/s July 2018 3,44,150 0 1 July 2018 2,37,625 0 58,20,775 August 2018 42,41,308 4241309 58,22,774 September 2018 29,48,324 0 87,69,098 October 2018 46,88,810 0 1,34,57,908 November 2018 48,12,188 5310 1,82,64,786 December 2018 48,56,438 23121224 0 January 2019 52,49,734 0 52,49,734 February 2019 57,34,438 -23121224 3,41,05,396 March 2019 57,34,438 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .08.2020 was addressed to Corporate Debtor as well as the Personal Guarantor. The contention advanced by the learned Counsel for the Financial Creditor to counter the above submission is on the basis of Clause 8.1 of the Loan Agreement. The Respondent's case is that on occurring of two consecutive defaults in the payment of interest, it will constitute an event of default and the whole of the loan shall become forthwith due and payable by the Borrower. The above Clause clearly contemplates that on occurring of event of default, the whole of the loan shall become forthwith due and payable, and even the principal amount of the loan shall become due when event of default occurs. There is no dispute between the parties that there is admitted default in payment of interest for two consecutive months prior to 10A period, which is apparent from the Chart as extracted in paragraph 1.3 of the impugned order. Even if, no notice dated 28.08.2020 was issued by the Financial Creditor, the principal amount also became due on occurring of event of default as per Clause 8.1. 15. The learned Counsel for the Appellant has relied on Clause 8.3 and submits that giving a notice was necessary, if any e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ations filed prior to the said date, which argument was rejected by the Hon'ble Supreme Court and relevant observations have been made in Paragraphs 22,23 and 24 as has been noted above. The Hon'ble Supreme Court affirmed the Order of the Adjudicating Authority holding that default in Section 9 Application being on 30th April, 2020 it being covered by Section 10A, Application was rightly rejected. The above judgment of the Hon'ble Supreme Court has laid down that if the default is after 25th March, 2020, the Application is hit by Section 10A. The object as was indicated in the ordinance for bringing Section 10A in the statute book is relevant to notice which is to the following effect: "AND WHEREAS a nationwide lockdown is in force since 25th March, 2020 to combat the spread of COVID-19 which has added to disruption of normal business operations: AND WHEREAS it is considered expedient to suspend under Sections 7, 9 and 10 of the Insolvency and Bankruptcy Code, 2016 to prevent corporate persons which are experiencing distress on account of unprecedented situation, being pushed into insolvency proceedings under the said Code for some time; AND WHEREAS it is considered expedient ..... X X X X Extracts X X X X X X X X Extracts X X X X
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