9911796707
TMI Blog2024 (5) TMI 678X X X X Extracts X X X X X X X X Extracts X X X X ..... noticed for deciding this appeal are: (i) The Corporate Debtor - Advantage Overseas Pvt. Ltd. was extended a financial facility by the State Bank of India. Initially a facility of Rs.10 Crores was granted on 15.03.2013. The Board of Directors of the Corporate Debtor resolved to avail the initial facility and to create an equitable mortgage over certain properties of the Corporate Debtor. (ii) A Loan-cum-Hypothecation Agreement dated 23.03.2013 was executed between the State Bank of India and the Corporate Debtor. (iii) A Guarantee Agreement was also executed in favour of State Bank of India by the Personal Guarantors - Mr. Jijo John and Mr. Maneesh Kumar Singh. Guarantee Agreement was executed on 23.03.2013. (iv) On a request made by the Corporate Debtor, facility was enhanced to an aggregate amount of Rs.51 Crore and Letter of Arrangement dated 17.12.2014 was issued. (v) On April, 2016, the Corporate debtor again approached the State Bank of India for renewal and an increase/ enhancement of the facility. By Letter of Arrangement dated 13.04.2016, extended facility of aggregating to Rs.6249.50 Crores was granted. (vi) Supplemental Agreement of Loan for increase in overa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icating Authority after hearing both the parties by impugned order dated 10.11.2023 admitted Section 7 application. Appellant, the Suspended Director of the Corporate Debtor aggrieved by the admission order has filed this appeal. 2. We have heard Shri Abhijeet Sinha, learned senior counsel for the Appellant and Shri Arun Kathpalia, learned senior counsel appearing for the Respondent No.1 - State Bank of India. 3. Shri Abhijeet Sinha, learned counsel for the Appellant in support of the appeal submits that the Application filed by the State Bank of India under Section 7 was barred by Section 10A and the Adjudicating Authority committed error in admitting Section 7 application. It is submitted that as per the OTS dated 05.09.2020 amount of Rs.165.96 Crore was to be paid within six months from the date of conveying sanction of OTS with regard to which payment default occurred on 04.03.2021 i.e. after six months, which was within 10A period, hence, the application being hit by Section 10A was liable to be rejected. It is further submitted that the payment within six months of Rs.165.96 Crores was to be paid from the source of funds to come from the surplus available through sale proce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther submitted that the submission that payment of Rs.165.96 Crore was from sale of proceeds of I.T. Parks at Kochi and Trivandrum, which sale could not take place, cannot absolve the Corporate Debtor from making payment under the OTS. The OTS itself contemplates that in case of any shortfall from the source of funds indicated, the company promoters shall meet the same from other sources. It is submitted that the submission that application is barred by time is wholly erroneous and incorrect. There was acknowledgement by the Corporate Debtor in its Financial Accounts ending 31.03.2019 and 31.03.2020 and limitation shall clearly stand extended. The Bank had recalled entire loan by Recall Notice dated 02.01.2023. The Corporate Debtor is liable to pay the entire amount. 5. We have considered the submissions of learned counsel for the parties and perused the record. 6. The main thrust of the submission of learned counsel for the Appellant is based on Section 10A. Section 10A provides: "10A. Suspension of initiation of corporate insolvency resolution process. Notwithstanding anything contained in sections 7, 9 and 10, no application for initiation of corporate insolvency resolution ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... after). In any event, an explanation of the manner in which the present application falls within the limitation period is set out hereunder. 8. The date of default claimed in Section 7 application was 08.08.2018. Computation chart showing the workings for the computation of default was also Annexed with Section 7 application. The submission which was pressed by learned counsel for the Appellant was that per the OTS dated 05.09.2020 amount of Rs.165.96 Crore was to be paid within six months from the date of conveying sanction of OTS. He has referred to Clause (c) of the OTS dated 05.09.2020, which is as follows: "c. Balance amount of Rs.394.37 Crores is to be paid as per Schedule mentioned below Terms of Payment of Compromise Settlement: (Rs. in Crores) Sr. No. Repayment Schedule Amount Source of funds 1 Upfront on conveying sanction of OTS. 31.70 Already parked in No lien account at Stressed Assets Management Branch, Bhopal, which will be appropriated upon the acceptance of the Compromise offer. 2 Within One (01) month from the date of conveying of sanction of OTS. 1.07 Miscellaneous sources. 3 Within Six (06) months from the date of conveying sanction of OT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d as annexure J1 and shall form part of this Joint application. (i) That the defendant No.1 company would pay a total amount of Rs. 425.00 crores towards full and final settlement of the account. (ii) An upfront amount of Rs. 31.70 crores already paid by the defendant company and has been appropriated towards the aforesaid settlement amount. (iii) The defendant company has also paid an amount of Rs. 37.20 crores on 17 November 2020; and, Rs. 36.30 crores on 12 March 2021 which also have been appropriated towards aforesaid settlement. (iv) The balance amount of Rs. 319.80 crores would be paid as per the schedule mentioned below : - Sr. No. Repayment Schedule Amount (in crores) 1. Upfront on conveying sanction of OTS 31.70 2. 1st Part of 2nd Instalment - paid on 17 November 2020 37.20 3. 2nd Part of 2nd Instalment- paid on 12 March 2021 36.30 4. Within Six (06) months from the date of conveying sanction of OTS. 92.46 5. Within Three (03) years from the date of conveying of sanction of OTS 203.00 6. Within Three (03) years from the date of conveying of sanction of OTS 24.34 Total Three (03) years 425.00 v) That the applicant Bank would release i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and Consent Decree was passed on 26.04.2022. Joint Application was filed on 25.06.2021, six months' period from conveying sanction of OTS has already came to an end and the Joint Application also noted the two payments which were made by the Corporate Debtor on 17.11.2020 and 12.03.2021. 13. The present is a case where admittedly default was committed by the Corporate Debtor much prior to 10A period i.e. 08.08.2018 as was claimed by the State Bank of India in its application. When default was committed by the Corporate Debtor prior to 10A period, it is not open for the Appellant to claim that application deserve to be rejected on the ground of Section 10A. 14. Learned counsel for the Respondent has relied on judgment of this Tribunal in "Raghavendra Joshi vs. Axis Bank Limited and Another, 2023 SCC OnLine NCLAT 498" where this Tribunal while considering Section 10A has laid down that when default has been committed by the Corporate Debtor prior to 10A period and debt was acknowledged Section 10A cannot be pressed into service. In Para 10 and 15 of the judgment following has been held: "10. Section 10A never intended to cover the default which is continuing before Section 10A pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bservation made by the Court was that non-compliance of terms of settlement agreement or dishonor of cheques issued subsequent to it, would then give rise to a fresh cause of action. There can be no dispute to the proposition that dishonor of cheques gives fresh cause of action. The above judgment does not come to any aid of the Appellant in interpretation of Section 10A of the IBC which is subject matter of the issue. 17. Reliance has also been placed by leaned counsel for the Appellant on the judgment of Hon'ble Supreme Court in "Cauvery Coffee Traders, Mangalore vs. Hornor Resources (International) Company Ltd., (2011) 10 SCC 420". In Para 32 and 34 of the judgement following was laid down: "32. The transaction stood concluded between the parties, not on account of any unintentional error, but after extensive and exhaustive bilateral deliberations with a clear intention to bring about a quietus to the dispute. These negotiations, therefore, are self-explanatory steps of the intent and conduct of the parties to end the dispute and not to carry it further. xxx xxx xxx 34. A party cannot be permitted to "blow hot and cold", "fast and loose" or "approbate and reprobate". Wher ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oted above, an undertaking was given by the Corporate Debtor on 11.05.2021, which undertaking has been brought on record by the Appellant as Annexure - 37 to the Appeal. 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, we are unable to accept the submission of the Appellant that application under Section 7 was barred by 10A. 20. Learned counsel for the Appellant has placed much reliance on notice dated 02.01.2023 which was communication that OTS has failed and the Corporate Debtor to pay entire outstanding dues along with interest within 14 days from the date of letter. OTS terms itself contemplate clauses that in cause of nonpayment of dues, the Bank shall have liberty to treat the OTS as failed and proceed to recover entire outstanding dues. The next submission of the Appellant is that since the properties i.e. I.T. Parks at Kochi and Trivandrum could not be sold due to restraining order of the DRT, Corporate Debtor was not obliged to make payment as was contemplated in the OTS. Learned counsel for the Respondent has referred to Clause K(iii), which is as follows ..... X X X X Extracts X X X X X X X X Extracts X X X X
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