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TMI Blog2024 (5) TMI 678X X X X Extracts X X X X X X X X Extracts X X X X ..... t was committed by the Corporate Debtor prior to 10A period w.e.f. 08.08.2018, which was date of default mentioned in Section 7 application. When Section 7 application mentions date of default which default was committed prior to 10A period, application under Section 7 cannot be held to be barred by Section 10A. Further, although OTS was communicated by the Bank by letter dated 05.09.2020 but the OTS itself contemplates that parties shall jointly file an application before the DRT where original application filed by the Bank was pending and obtain the Consent Decree - The undertaking admittedly was issued on 11.05.2021. When the Joint Application was filed subsequent to 10A period and Consent Decree was obtained only on 26.04.2022, the submission of the Appellant that application under Section 7 was barred by 10A cannot be accepted. It is relevant to notice that the date of default was mentioned as 08.8.2018 and OTS proposals were given by the Corporate Debtor on 11.03.2020 and 05.05.2020. The application under Section 7 was filed by the Bank on 13.03.2023 i.e. well within three years from submission of OTS proposal. OTS proposal submitted by the Corporate Debtor was clearly acknow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tal Agreement of Loan for increase in overall limit was executed on 12.05.2016. (vii) To secure the amount granted under the Supplemental Agreement of Loan, Supplemental Deed of Guarantee was executed by Mr. John and Mr. Maneesh Kumar Singh. Second Supplemental Deed of Guarantee for enhanced overall limit was executed by the Asian Business Connections Pvt. Ltd. in favour of the Financial Creditor. A Deed of Guranteee for overall limited executed by Advantage Oils Pvt. Ltd. (viii) Corporate Debtor defaulted in serving the facilities. On 08.08.2018, the Bank declared the account of Corporate Debtor as NPA. (ix) On 07.01.2019, Bank issued a notice calling upon the Corporate Debtor to repay the amount of Rs.1388,87,36,968/- being the outstanding amount as on 30.11.2018 along with further interest. (x) On 30.01.2019, the State Bank of India filed an OA under Section 19 of the Debts Due to Banks and Financial Institutions Act, 1993 being OA No.107 of 2019 for recovery of Rs.1408,57,30,754/-. (xi) The Corporate Debtor on 11.03.2020 sent a letter to the Bank requesting for settlement of dues. The said request letter was again sent on 05.05.2020. (xii) On 05.09.2020, the Bank addressed a le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sale proceeds of I.T. Parks at Kochi and Trivandrum, which were mortgaged to erstwhile Syndicate Bank which sales were prohibited by DRT, hence, the I.T. Parks at Kochi and Trivandrum could not be sold and there was no source of fund for making the said payment. Learned counsel submitted that due to default committed in compliance of OTS terms dated 05.09.2020, there shall be fresh cause of action, which cause of action arose during 10A period, hence, the application was liable to be rejected. It is submitted that the Section 7 application filed by the State Bank of India is an attempt to execute the Consent Decree passed by the DRT dated 26.04.2022. Section 7 application cannot be filed for execution of a Consent Decree. Learned counsel for the Appellant has also referred to notice dated 02.01.2023 issued by the State Bank of India, which clearly indicate that default took place on 04.03.2021 i.e. within 10A period. The application filed by the Bank under Section 7 was barred by time since the date of alleged default is mentioned as 08.08.2018 from which date three years period came to end on 08.08.2021 and thereafter petition was not filed within the time allowed by Hon ble Supr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 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. 7. In the Section 7 application which was filed by the State Bank of India, date of default as mentioned in Part IV was 08.08.2018. Part IV of the Section 7 application with regard to total amount of debt and amount claimed to be in default and date of default states following: PART IV PARTICULARS OF FINANCIAL DEBT 1. TOTAL AMOUNT OF DEBT GRANTED DATE(S) OF DISBURSEMENT Rs. 2730,51,66,175.58 (Rupees Two ED Thousand Seven Hundred and Thirty Crores Fifty One Lakhs Sixty Six Thousand One Hundred and Seventy Five and Fifty Eight Paise Only) as on February 28, 2023 together with further interest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sale proceeds of I.T..parks at Kochi and Trivandrum, which are mortgaged to e-Syndicate Bank. 4 Within Three (03) years from the date of conveying of sanction of OTS. 203.00 Divestment of Carnival Films Pvt. Ltd. (Brand Name Carnival Cinemas) through sale of stake. 5 Within Three (03) years from the date of conveying of sanction of OTS. 24.34 Miscellaneous sources. Total Three (03) years 426.07 9. When we look into the OTS, Clause (e) clearly indicates that Consent Terms will be filed before Presiding Officer or DRT/Court for obtaining Consent Decree. Clause (j) of the Consent Terms provides as follows: j. If, for any reason, the compromise amount or any instalment, as agreed, is not received within the schedule period approved, the Bank reserves the right to cancel the compromise settlement and entire dues of the Bank, as claimed in DRT/ Court in the original application with interest and costs will become due for payment. 10. It is not in dispute that Bank vide letter dated 02.01.2023 has communicated that OTS between the parties has failed. Further in Consent Terms Clause (k) with other terms at (k) (iii) provides as follows: k. (iii) The borrowers and the Bank jointly will file ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) Interest would be charged at MCLR (three years (7.30%) tenor) + 2%, i.e. present effective rate being 9.30% p.a. on the balance amount of compromise paid after four months and the same shall be charged from first day from the date of letter conveying approval of the compromise to the borrower. The interest to be charged will be compounded at monthly rests. No interest will be charged, if the entire OTS amount is paid within four months. (vii) That, if the defendants fail to make payment of the settled amount of Rs. 425 crores within the stipulated period with applicable rate of interest or fail to adhere to the terms of compromise as per the discretion of the Bank, the instant compromise settlement would stand cancelled and the entire dues of the applicant Bank as claimed in the aforesaid OA with interest and cost would immediately become due for payment and in such case Bank can proceed with the execution of the recovery certificate without any further reference to defendants. The defendants have agreed to abide by the decision of the Bank as regards to whether there is a failure to adherence to terms and conditions of the compromise settlement and same will be conclusive. In te ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed on 19th July, 2016. Learned Counsel for the Respondent has rightly referred to acknowledgement made by the Corporate Debtor in its balance sheets for the financial year 2018-19, 2019-20 and 2020-21 where the dues were clearly acknowledged. Thus, the present is the case where default was committed prior to commencement of Section 10A period. xxx xxx xxx 15. The submission that since default was also committed by the Corporate Debtor during the Section 10A period of the OTS amount which ultimately withdrawn on 25th January, 2021, the Application should be barred by Section 10A does not commend us. There being categorical default by the Corporate Debtor prior to Section 10A period, the Appellant was not clearly entitled for the benefit of Section 10A Period. 15. The above judgment clearly supports the submission of the Respondent. Learned counsel for the Appellant has placed reliance on judgment of Hon ble Supreme Court in Gimpex Private Limited vs. Manoj Goel, (2022) 11 SCC 705 . Reliance was placed on Para 41 of the judgement, which is as follows: 41. When a complainant party enters into a compromise agreement with the accused, it may be for a multitude of reasons higher compensa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eyance or order. This rule is applied to do equity, however, it must not be applied in a manner as to violate the principles of right and good conscience. (Vide: Nagubai Ammal Ors. v. B. Shama Rao Ors., AIR 1956 SC 593; C.I.T. Vs. MR. P. Firm Maur, AIR 1965 SC 1216; Maharashtra State Road Transport Corporation v. Balwant Regular Motor Service, Amravati Ors., AIR 1969 SC 329; P.R. Deshpande v. Maruti Balaram Haibatti, AIR 1998 SC 2979; Babu Ram v. Indrapal Singh, AIR 1998 SC 3021; Chairman and MD, NTPC Ltd. v. Reshmi Constructions, Builders Contractors, AIR 2004 SC 1330; Ramesh Chandra Sankla Ors. v. Vikram Cement Ors., AIR 2009 SC 713; and Pradeep Oil Corporation v. Municipal Corporation of Delhi Anr., (2011) 5 SCC 270) 18. The above judgment clearly lays down that where one knowingly accepts the benefits of a contract or an order, is estopped to deny the validity or binding effect on him of such contract or order. Present is a case where none of the parties have questioned the OTS dated 05.09.2020, as noted above. The OTS itself contemplate that in event amount under the OTS is not paid, the Bank shall be entitled to recover the entire outstanding amount together with interest, wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntors fail to adhere to the terms of compromise, the compromise settlement shall stand automatically cancelled and the Bank will be entitled to recover the entire outstanding amount together with interest at the contractual rate after adjusting the initial amount/ amount paid till then, if any. 21. Thus, the submission that Appellant was unable to sell the I.T. Parks at Kochi and Trivandrum cannot be ground for the Appellant to not make payment as agreed. 22. Coming to the submission of the Appellant that Section 7 application which was filed by the Bank was barred by time. It is relevant to notice that the date of default was mentioned as 08.8.2018 and OTS proposals were given by the Corporate Debtor on 11.03.2020 and 05.05.2020. The application under Section 7 was filed by the Bank on 13.03.2023 i.e. well within three years from submission of OTS proposal. OTS proposal submitted by the Corporate Debtor was clearly acknowledgement of debt and the benefit of Section 18 of the Limitation Act shall be available to the Financial Creditor. Further, admittedly Consent Decree was passed by Debts Recovery Tribunal on 26.04.2022 and from the date of decree of the DRT, there shall be furthe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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