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TMI Blog2024 (11) TMI 550X X X X Extracts X X X X X X X X Extracts X X X X ..... d. In any view of the matter, Section 7 Application having been founded on the basis of default committed after Consent Decree dated 29.08.2022 was passed, Default cannot be pegged on 10A period when Application under Section 7 is founded on the basis of Consent Decree dated 29.08.2022. The observation made by this Tribunal in Samrat Restaurant Vs. `Brewcrafts Micro Brewing Pvt. Ltd. [ 2024 (10) TMI 399 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI - LB ] was in facts of the said case and has no bearing in the fact of the present case where a Consent Decree was passed by the DRT. It is not the case of the Appellant that no default was committed by the Corporate Debtor in terms of the Consent Decree dated 29.08.2022. Thus, the Adjudicating Authority did not commit any error in admitting Section 7 Application filed by the Financial Creditor. The Section 7 Application was in no manner hit by Section 10A of the IBC. There is no merit in the Appeal - The Appeal is dismissed. - [Justice Ashok Bhushan] Chairperson, [Barun Mitra] Member (Technical) And [Arun Baroka] Member (Technical) For the Appellant : Mr. Krishnendu Dutta Mr. Abhijeet Sinha, Sr. Advocate with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of loan facility granted by Bank of India, Corporation Bank, as well as KKR Financial Services Limited. xiii. On 15.09.2020, Respondent No. 1 by a separate three Notices recalled the loan facilities granted by Bank of India, KKR Financial Services Limited and Corporation Bank. xiv. In the year 2021, Respondent No. 1 filed OA No. 201/2021 before the Debt Recovery Tribunal (DRT) for recovery of outstanding dues from the Corporate Debtor. xv. A Company Petition 1207/2021 was also filed before the Adjudicating Authority by the Financial Creditor on 16.10.2021. xvi. On 29.08.2022, Financial Creditor and Corporate Debtor arrived at amicable settlement and executed Consent Terms before the DRT. xvii. DRT by Decree issued a Consent Decree on 29.08.2022. xviii. On 10.10.2022, Adjudicating Authority disposed of the Company Petition 1207/2021 in accordance with the Consent Terms. xix. There being breach of Consent Terms by the Corporate Debtor, Financial Creditor filed Section 7 Application being C.P. (IB) No. 881(MB)/C III/2023, seeking initiation of Corporate Insolvency Resolution Process (CIRP) in respect of the Corporate Debtor, claiming default of total amount of ₹968,20,63,285/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iled before the DRT by the Parties, on basis of which Consent Decree was issued on 29.08.2022 by the DRT under the Consent Term, Corporate Debtor agreed to make repayment of amount in which the Corporate Debtor failed. In Section 7 Application filed by Financial Creditor, date of default was mentioned as 29.08.2022, which was a date of Consent Decree which was not honoured by the Corporate Debtor, which default admittedly was beyond 10A period Application under Section 7 cannot be held to be barred by 10A. It is submitted that initiation of Section 7 Application was based on default, on basis of Consent Decree 29.08.2022. It is submitted that default has been committed by the Corporate Debtor also before 10A period. Accounts were declared NPA by the Lenders in 2017 2018, hence, the default was clearly also before the 10A period. 6. We have considered the submissions of Counsel for the Parties and perused the record. 7. A copy of the Section 7 Application has been brought on the record by Appellant as Annexure 19 to the Appeal. Part IV, Column 2 of `Form-1 , which mentions the date of default is as follows: PART IV PARTICULARS OF FINANCIAL DEBT 2. AMOUNT CLAIMED TO BE IN DEFAULT AND ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is of the Recovery Certificate obtained by the DRT. Relevant paragraphs of the judgment are produced:- 130. We see no reason why the principles should not apply to an application under Section 7 of the IBC which enables financial creditor to file an application initiating the Corporate Insolvency Resolution Process against the Corporate Debtor before the Adjudicating Authority, when a default has occurred. As observed earlier in this judgment, on a conjoint reading of the provisions of the IBC quoted above, it is clear that a final judgment and/or decree of any Court or Tribunal or any Arbitral Award for payment of money, if not satisfied, would fall within the ambit of a financial debt, enabling the creditor to initiate proceedings under Section 7 of the IBC. ********************************* 136. A final judgement and order/ decree is binding on the judgement debtor. Once a claim fructifies into a final judgement and order/ decree, upon adjudication, and a certificate of Recovery is also issued authorizing the creditor to realize its decretal dues, a fresh right accrues to the creditor to recover the amount of the final judgment and/or order/decree and/or the amount specified in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sixty Six Lakhs Ninety Four Thousand and Eighty Nine and Paise Eighteen Only), with further interest thereon at the rate of 15.45% pa at monthly rests and penal interest at the rate of 2% p.a., from February 1, 2021 till the payment and/or realization in respect of debt assigned by BOI ( BOI Assigned Dues ); and (ii) A sum of Rs. 269,94,12,458.51 (Rupees Two Hundred and Sixty Nine Crores Ninety Four Lakhs Twelve Thousand Four Hundred and Fifty Eight and Paise Fifty One Only), with further interest thereon at the rate of 17% p.a. at monthly rests and penal interest at the rate of 2% p.a., from February 1, 2021 till the payment and/ or realization in respect of the debt assigned by KKR ( KKR Assigned Dues ); and (iii) A sum of Rs.36,53,33,398/- (Rupees Thirty Six Crores Fifty Three Lakhs Thirty Three Thousand Three Hundred and Ninety Eight Only), with further interest thereon at the rate of 18% p.a. at monthly rests and penal interest at the rate of 2% p.m., from 01.02.2021 till the payment and/or realization in respect of the RSF Facility ( RSP Dues ); and (iv) A sum of Ro.92,58, 13,640.48 (Rupees Ninety Two Crores Fifty Eight Lakhs Thirteen Thousand Six Hundred and Forty and Paise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under Section 7 of the IBC shall be liable to be admitted by this Hon ble Tribunal forthwith. 12. On basis of Consent Terms dated 29.08.2022, Consent Decree was also passed by the DRT on 29.08.2022, and the Recovery Certificate was issued by the DRT. From the pleadings of Section 7 Application which is part of the record, the Section 7 Application is founded on the default on the basis of Consent Term dated 29.08.2022, which date obviously is subsequent to 10A period. 13. Learned Counsel for the Appellant submits that nature of the default which has been committed by the Corporate Debtor during Consent Period with regard to which Notice of recall was issued on 15.09.2020 by the Financial Creditor during the Consent Period, the nature of default shall not be changed and default which was committed during 10A period cannot be treated to be any different default, hence 10A prohibited the Financial Creditor to file any Section 7 Application even thereafter. 14. While noticing the facts and the sequence of the case, we have already noticed that default was committed by the Corporate Debtor on 21.12.2017 29.06.2018, when accounts of the Corporate Debtor was declared by Lenders as NPA. As ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... referred to as IBC ) were initiated. 3. In the course of proceedings after due consultations by the Committee of Creditors, a resolution plan was presented to the adjudicating authority. In that plan, a distinction was made between homebuyers, who had opted or elected for other remedies such as i.e. applying before RERA and having secured orders in their favour, and those who did not do so. Homebuyers who did not approach authorities under the RERA Act were given the benefit of 50% better terms than that given to those who approached RERA or who were decree-holders. 4. The appellants felt aggrieved; their applications were rejected by the adjudicating authority. Their appeals too were unsuccessful. Consequently, they have approached this Court. 18. In the above case, Hon ble Supreme Court laid down following in Paragraph 12: 12. As held in Natwar Agrawal v. Ssakash Developers Builders (P) Ltd., 2023 SCC OnLine NCLT 682 by the Mumbai Bench of National Company Law Tribunal the underlying claim of an aggrieved party is crystallised in the form of a court order or decree. That does not alter or disturb the status of the party concerned in the present case of allottees as financial cre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndertaking was given by the corporate debtor on May 11, 2021, which undertaking has been brought on record by the appellant as annexure 37 to the appeal. The undertaking admittedly was issued on May 11, 2021. When the joint application was filed subsequent to section 10A period and consent decree was obtained only on April 26, 2022, we are unable to accept the submission of the appellant that application under section 7 was barred by section 10A. 21. In the above case, also the Application was filed under Section 7 on 13.03.2023. In Paragraph 22 of the Judgment following was held: 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 August 8, 2018 and onetime settlement proposals were given by the corporate debtor on March 11, 2020 and May 5, 2020. The application under section 7 was filed by the bank on March 13, 2023, i.e., well within three years from submission of the one-time settlement proposal. The one-time settlement proposal submitted by the corporate debtor was clearly an acknowledgment of debt and the benefit of section 18 of the Limitati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not dependent on the date of acknowledgement. The Appellant has relied upon the purported OTS letters dated 29.08.2021 and 10.03.2023, which attempt to change the date of default. In fact, the repayment is governed by L L agreement. OTS agreements and rent reductions due to Covid, only reflect a temporary modification of payment terms, but they do not extinguish the original default that occurred during the Section 10A period. The purpose of Section 10A was to prevent companies from being pushed into insolvency due to temporary financial distress caused by the COVID-19 pandemic. The Appellant s interpretation that subsequent agreements should nullify the protection offered by Section 10A would undermine the legislative intent and open the door for Creditors to circumvent the protections offered by law. The Tribunal cannot accept an interpretation that erodes the protection that Section 10A was specifically designed to offer. The argument of the Appellant that if a default is committed prior to the Section 10A period and continues into the Section 10A period, the initiation of proceedings is not barred and is applicable in the instant case. But the facts of the case as discussed in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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