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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 ..... nging the Order dated 26.09.2024 passed by the Learned Adjudicating Authority (National Company Law Tribunal, Mumbai Bench, Court - III), by which Order, Application under Section 7 filed by the Financial Creditor, Respondent herein has been admitted. 2. Brief facts of the case necessary to be noticed for deciding the Appeal are: i. Corporate Debtor, KLT Automotive and Tabular Products Limited availed various credit facilities from Bank of India between 2005-11. In 2011, Corporate Debtor availed financial facility from Corporation Bank (now Union Bank of India) which included working capital facilities, comprising of fund based limit and non-fund based limit aggregating to a sum of Rs.61 Crores. ii. On 24.08.2012, Corporate Debtor, availed additional credit facility from Bank of India to the tune of Rs.126 Crores. iii. Account of Corporate Debtor was declared as NPA by Bank of India on 31.03.2015. iv. On 28.09.2015, a Facility Agreement was executed between the Corporate Debtor and KKR Financial Services Limited for availing Term Loan Facility of INR 195 Crores. v. On 31.03.2016, Corporate Debtor issued acknowledgement of debt to Bank of India. vi. Corporation Bank (no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Corporate Debtor was admitted to Insolvency by the Order dated 26.09.2024. xxii. This Appeal has been filed challenging the Order dated 26.09.2024. 3. We have heard Learned Sr. Counsels, Mr. Krishnendu Datta and Mr. Abhijeet Sinha appearing for the Appellants and Learned Sr. Counsel, Mr. Amar Dave appearing for the Respondent. 4. Learned Counsel for the Appellant challenging the Order of the Adjudicating Authority submits that admittedly, the loan facilities were recalled by the Respondent No. 1 vide notice dated 15.09.2020, which was during 10A period. The OA No. 201/2021 was filed by the Respondent No. 1 before the DRT on account of default committed by the Corporate Debtor in which Consent Decree passed on 29.08.2022. It is contended that Consent Decree having been passed on 29.08.2022, which was based on default committed by the Corporate Debtor during the 10A period, the Application filed by the Financial Creditor on 03.06.2023, under Section 7 is barred by Section 10A. The default which has been committed by the Corporate Debtor under 10A period cannot be cured on the strength of Consent Decree dated 29.08.2022 obtained from DRT. The nature of default is the same, hence ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uance of the Recovery Certificate constitutes a fresh cause of action to file an Application under Section 7 of the IBC. Thus, the date of default in the present matter is August 29, 2022. Though the Corporate Debtor had agreed to amicably restructure the outstanding dues under a letter dated March 1, 2023, the Corporate Debtor defaulted on the same. Therefore, the Corporate Debtor continues to remain liable to pay the aforesaid amounts as per the Recovery Certificate No. 53 of 2023 (after adjusting the amounts paid after issuance of the said recovery certificate). The Petitioner submits that the date of default in respect of BOI Dues, KKR Dues, RSF Dues and CB Dues are set forth as above. The Petitioner submits that the Corporate Debtor has admitted to the debt as well as default in respect of the BOI Dues, KKR Dues, RSF Dues and CB Dues time and again, as detailed above." 8. Application under Section 7 was thus based on default, which was based on the Consent Decree dated 29.08.2022, which obviously is subsequent to the 10A period. 9. We have already noticed that an Application under Section 7 was earlier filed by the Financial Creditor against the Corporate Debtor on 16.10.20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mentioned case, it is ordered that the Applicant Certificate Holder Bank is entitled to recover a sum of Rs.664,72,53,586.17/- together with further interest from 01.02.2021. a. At the rate of 15.45% at monthly rests and penal interest at the rate of 2% p.a. on a sum of Rs.265,66,94,089.18/- until payment and/or realization; and b. At the rate of 17% at monthly rests and penal interest at the rate of 2% p.a. on a sum of Rs. 269,94,12,458.51/- until payment and/or realization; and c. At the rate of 18% at monthly rests and penal interest at the rate of 2% p.a., on a sum of Rs. 36,53,33,398/-until payment and/or realization; and d. At the rate of 14.30% at monthly rests and penal interest at the rate of 2% p.a. on a sum, of Rs. 27,92,24,323.08/- until payment and/or realization and at the rate of 15.25% at monthly rests and penal interest at the rate of 2% p.a. on a sum of Rs. 64,65,89,317.40/- until payment and/or realization in full from the Certificate Debtor No. 1,2(i) to (iii), 3 to 5 hereinafter referred to as: - 35. The Corporate debtor also contended that the present petition falls under Section 10A period as the date of default arises after failing to make pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hree and Fight Paise Only) in respect of the Cash Credit Facility; and (ii) 15.25% p.a. at monthly rests and penal interest at the rate of 2% p.a., on Rs. 64,65,89,317.40 (Rupees Sixty Four Crores Sixty Five Lakhs Eighty Nine Thousand Three Hundred and Seventeen and Forty Paise Only) in respect of all the other facilities, in respect of the debt assigned by CB ("CB Assigned Dues"). 4. The parties hereto agree, admit, confirm and declare that the parties have arrived at an amicable settlement of the Debt Claim. Accordingly, the parties hereto (alongwith various other stakeholders) have duly executed and filed Consent Terms dated August 29, 2022 in Original Application No. 201 of 2021 before the Debts Recovery Tribunal - I, Mumbai (DRT Consent Terms). A copy of the DRT Consent Terms is hereto annexed as Annexure A. 5. The parties hereto agree, admit, confirm and declare that the parties are bound by the DRT Consent Terms." 11. In Paragraph 7 of the Consent Terms, the Corporate Debtor provided for repayment schedule towards full and final settlement of the dues. Paragraph 9 of the Consent Term clearly provided that Parties agreed that Section 7 Application which was fil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cation 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. 16. We have already extracted Part IV, Column 2 of the Section 7 Application, which clearly mention that default has been committed on 29.08.2022. The NeSL Certificate which was also attached along with the Section 7 Application, record of default with the information utility was attached with Section 7 Application, which is clear from Part V Item No. 3. Adjudicating Authority in the Impugned Order has also noted the default as reflected in NeSL Certificate. 17. Learned Counsel for the Appellant in support of his submission that Application under Section 7 is barred by 10A period has relied on certain Judgments of the Hon'ble Supreme Court and this Tribunal which also need to be noticed. Learned Counsel for the Appellant has relied on the Judgment of the Hon'ble Supreme Court in the matter of `Vishal Chelani & Ors.' Vs. `Debashis Nanda' reported in (2023) 10 SCC 395. In the above case, Hon'ble Supreme Court was considering the decision of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts to "hyper-classification" and falls afoul of Article 14. Such an interpretation cannot therefore, be countenanced." 19. The above Judgment was considering the status of Homebuyers and it held that those Allottees who had obtained decree from RERA are also Allottees and their nature of debt i.e., Financial Debt shall not be changed merely because of decree obtained by RERA. The above Judgment is clearly distinguishable and has no applicability in the facts of the present case. 20. Learned Counsel for the Appellant has also relied on the Judgment of this Tribunal in the matter of `Manish Kumar Singh' Vs. `State Bank of India & Ors.' reported in 2024 SCC OnLine NCLAT 614 which was a case where Section 7 Application was admitted, which Order was challenged by a Suspended Director of the Corporate Debtor. In the above case, bar of Section 10A was also pressed in service by the Suspended Director of the Corporate Debtor. In the above case also decree by the DRT could be passed on 26.04.2022. The argument that Application is barred by 10A was rejected by this Tribunal and in Paragraph 19 following has been laid down: "19. As observed above, there are two reasons for not accepting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing application which has been held by the hon'ble Supreme Court in Kotak Mahindra Bank Ltd. v. A. Balakrishnan [(2022) 19 Comp Cas-OL 230 (SC); (2022) 9 SCC 186; (2022) 4 SCC (Civ) 548.] ." 22. The above Judgment in no manner supports the submission of the Appellant rather clearly reject the argument of Section 10A which was relying on Settlement Letter dated 05.09.2020. 23. Another Judgment which has been relied by the Counsel for the Appellant is in the matter of `Samrat Restaurant' Vs. `Brewcrafts Micro Brewing Pvt. Ltd.' in Comp. App. (AT) Ins. No. 1409/2024 & I.A. No. 5117 of 2024, where this Tribunal had occasion to consider the argument on 10A. In the above case, Section 9 Application filed by the Appellant was dismissed, it was held that portion of a debt claimed by the Appellant fell within period protected under Section 10A and a remaining debt did not fulfil mandatory threshold of Rs.1 Crore. The above findings have been returned by this Tribunal in Paragraph 44, which is as follows: "44. In nutshell, this Appeal arises from the Order of the National Company Law Tribunal (NCLT), dated May 22, 2024, dismissing the Appellant's Application under Section 9 of t ..... 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