The CD defaulted on loan repayment from January 2020, failing to ...

Bank loan default before Covid triggers insolvency despite recall notice delays.

Case Laws     IBC

November 6, 2024

The CD defaulted on loan repayment from January 2020, failing to pay the monthly installment due on 20th January 2020. Though partial payment was made in February 2020, the entire amount including penal interest was not paid, constituting default. The FC issued a recall notice on 06.11.2020, giving 15 days to pay the defaulted amount. The CD cannot claim the recall notice date of 21.11.2020 as the default date to bring it within Section 10A of the IBC, as the default occurred much earlier in January/February 2020, prior to the cut-off period of 25.03.2020 to 25.03.2021. Issuance of the recall notice was a procedural consequence of the pre-existing default. Section 10A is inapplicable as the default predated the cut-off period. The appeal challenging the order admitting the insolvency petition u/s 7 is dismissed.

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