9911796707
TMI Blog2025 (4) TMI 459X X X X Extracts X X X X X X X X Extracts X X X X ..... ocess ("CIRP") against CD. Aggrieved by which order this Appeal has been filed. 2. Brief facts of the case to be noticed for deciding the Appeal are : i. Indusland Bank sanctioned a Term Loan Facility of Rs.300 crores for financing the development of an IT-SEZ Project at Golf Course Extension Road, Gurgaon, Haryana to the CD - G.P. Realtors Pvt. Ltd. in the year 2016. Sanction Letter was issued on 29.06.2016. In continuance of the Sanction Letter, an Original Fee Letter dated 29.06.2016 was issued, capturing the interest rate. A Master General Terms Agreement and Multi-Facility Loan Agreement, laying down the terms and conditions were also executed on 04.08.2016. Various ancillary documents were executed along with the execution of the Facility Agreement and Master General Terms Agreement on 04.08.2016. As per the Sanction Letter, the repayment of the loan was to be made in one-shot bullet payment of Rs.300 crores at the end of 48 months. The interest was payable as per the negotiated rates. Default interest rate was provided as 18.75% per annum. The interest was payable monthly. ii. Addendum was issued by the Financial Creditor extending the availability period of the Credit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d Section 7 Application. The Adjudicating Authority held that interest/ default interest calculated from 26.03.2021 to 31.05.2021 is Rs.9,38,44,668/-, which is much beyond the threshold amount of Rs.1 crore, therefore, the petition deserve to be admitted. Order of admission was passed on 20.11.2024, against which this Appeal has been filed. 3. When the Appeal was heard, Learned Counsel for the Appellant offered to deposit the defaulted amount of interest without prejudice to any rights and contentions. This Tribunal recorded the above statement of the Appellant and passed an interim order on 06.12.2024, directing that no further steps shall taken in pursuance of the impugned order. Notices were issued on 06.12.2024, on which notice, the CD has appeared and filed the reply, to which rejoinder has also been filed. 4. We have heard Shri Abhijeet Sinha, learned Senior Counsel and Shri Abhishek Anand, Learned Counsel for the Appellant; Shri Arun Kathpalia, learned Senior Counsel appearing for the Financial Creditor. 5. Shri Abhijeet Sinha, learned Senior Counsel appearing for the Appellant submits that when default of payment of entire loan of Rs.300 crores fell on 11.02.2021, i.e. d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ial statements clearly record an outstanding liability that is payable in respect of the credit facility. There is no dispute that the threshold for filing of Section 7 Application has been met and Section 7 Application has rightly been admitted. The interest defaults after the expiry of the suspension period under Section 10A are independent and can be severed from default in principal. The interest default from 26.03.2021 to 31.05.2021 was Rs.9,38,44,668/-. It is submitted that the Appellant's assertion that there can only be one date of default and there can be no separate and distinct date of default for interest is contrary to the settled law. Each default in repayment of principal or interest, constitutes a separate event of default. The legislative intent behind Section 10A was not to grant permanent immunity to defaulting borrowers. The Adjudicating Authority has rightly come to the conclusion that interest default subsequent to 10A period was more than the threshold of Rs.1 crore. It is submitted that willingness of the Appellant to make payment of interest amount of Rs.9,38,44,668/- cannot be a reason to compel the Financial Creditor to settle with the Appellant. Total in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Marginal Cost of Funds based lending rate (MCLR) and shall comprise of MCLR plus margin. The MCLR shall be reviewed and reset from time to time as specified in Sanction Letter. 2.2 In default of payment of interest as stated above, the same shall be capitalised and added to the principal and shall be treated as an advance to the Borrower and the Bank shall be entitled to charge interest at the aforesaid rate/Interest Rate on the debit balance / outstanding capitalised as aforesaid 2.3 In the event of default on the part of the Borrower in making payment of the Outstanding Amounts as and when the same are due to be paid, the Borrower shall pay to the Bank additional interest at the additional interest rate (Additional Interest Rate) as mentioned in the Schedule to Annexure A-1. such additional interest to be payable on and from the date of default to and including the date on which such delay / default is rectified. The Bank's riht to claim such additional interest shall be without prejudice to the Bank's right to take any other action available to it under the terms of this Agreement or at law in respect of such event of default 2.4 All interest payable under this Te ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in terms of the Financing Documents and the same continues to be in default till date. At this juncture, it would be pertinent to highlight for the purpose of filing the present application, keeping in view the provisions of Section 10A of the Code, while the amounts under the Credit Facility became due on 11 February 2021, the present application is being filed deeming 26 March 2021 as the date of default as the amounts under the Credit Facility have continued to remain in default. Accordingly, the default interest payable by the Corporate Debtor in terms of the Financing Documents has also been calculated deeming 26 March 2021 as the date of default and the amount of default interest due and payable by the Corporate Debtor to the Financial Creditor as on 31 May 2021 is Rs.9,38,44,668/- (Rupees Nine Crores Thirty-Eight Lakhs Forty Four Thousand Six Hundred Sixty Eight only). Whereas in view of Section 10A the default in interest between 11 February to 25 March 2021, has not been accounted for. It is Financial Creditor's respectful stand that the principal repayment being due as one bullet repayment in accordance with the terms or the Financial Documents, and the said default c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ode, 2016 is being filed without prejudice to the rights to the Financial Creditor as available under Sections 13 and 15 of the Insolvency and Bankruptcy Code, 2016 read with the underlying regulations." 12. From the above, it is clear that without prejudice to claim made in Part-IV, it was pleaded that the Corporate Debtor is in default of its obligation to the interest amount to the extent of Rs.9,38,44,668/- between 26.03.2021 to 31.05.2021, which default in excess of threshold amount of Rs.1 crore, which is sufficient to entitle Financial Creditor to present Section 7 Application. 13. There can be no dispute to the proposition that no Application under Section 7 can be entertained for any default which occurred during 10A period, which is law settled by Hon'ble Supreme Court in Ramesh Kymal vs. Siemens Gamesa Renewable Power Pvt. Ltd. - (2021) 3 SCC 224. In the impugned order, one of the question framed by the Adjudicating Authority for consideration was, "Whether CIRP can be initiated for default of interest component on the loan amount after the Section 10A period". The said issue was considered in paragraph 13 of the judgment and after noticing the Annexure-6 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to Respondent No. 2 overdue interest on 31st March, 2021 was Rs. 29,47,74,305/- and overdue interest on 30th June, 2021 was Rs. 42,01,93,862/-. The date of default in payment of interest after there are several date of default in payment of interest after Section 10A period which is captured in the tabular form filed as Exhibit K in Part-IV of the Application, Financial Creditors have also filed the working for computation of the amount and days of default in tabular form thus the date of default cannot be confined only to date 1st June, 2021 as mentioned in Part-IV. The date of default which is mentioned in the tabular form cannot be ignored it is clear that there was default of more than Rs. 1 Crore i.e. threshold period in payment of default by the Corporate Debtor after Section 10A period. 29. The above default is very much there even if we ignore the default on the basis of Facility Acceleration Notice dated 30th May, 2021/31st May, 2021. We thus are of the view that even after Section 10A period there being default in payment of interest which was more than threshold amount, the Application under Section 7 deserves to be admitted." 15. Learned Counsel for the Appellant s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Corporate Debtor is not extinguished is the law declared by the Hon'ble Supreme Court, but their being clear prohibition for filing an application under Section 7, 9 and 10, for default occurring in 10A period there is apparent case. The language of the statute provides that no application for initiation of Corporate Insolvency Resolution Process of a Corporate Debtor shall be filed for any default arising on or after 25.03.2020. The provision cannot be read to mean that after the period is over the application can be filed. If such interpretation is accepted, the whole purpose and object shall be defeated. The purpose and object of introduction of Section 10A was to give relief to the Corporate Debtor who committed default during the period which is covered by Section 10A. The debt is not wiped out is only for the purpose that other proceedings are not prohibited, but Sections 7, 8 and 10 applications are clearly barred. No application can be filed, even after expiry of the period under Section 10A for the default which occurred during the 10A period." 18. There can be no dispute to the proposition of law as noticed by this Tribunal in the above case. The present case, howev ..... X X X X Extracts X X X X X X X X Extracts X X X X
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