2022 (1) TMI 1136 - AT - Insolvency and Bankruptcy

Tribunal upholds appeal under Section 7 of Insolvency and Bankruptcy Code

Koncentric Investments Ltd., Prakash Khubchandani Versus Standard Chartered Bank, Mr. Anshuman Chaturvedi

Koncentric Investments Ltd., Prakash Khubchandani Versus Standard Chartered Bank, Mr. Anshuman Chaturvedi - TMI Issues Involved:1. Limitation for filing an application under Section 7 of the Insolvency and Bankruptcy Code (IBC).2. Admissibility of unstamped documents as evidence in proving financial debt.Detailed Analysis:1. Limitation for Filing an Application Under Section 7 of the IBC:The primary issue was whether the application filed under Section 7 of the IBC was barred by limitation. The appellant argued that the right to apply accrued when the first default occurred, which was the non-payment of interest on 30th June 2015. Since the application was filed on 28th November 2018, it was contended to be beyond the three-year limitation period.The tribunal noted that the Facility Agreement dated 22nd May 2013, and the Supplemental Agreement dated 19th August 2013, stipulated that the repayment of the loan would start 27 months from the first disbursement date, which was 30th August 2013. Thus, the first installment became due on 30th November 2015. The tribunal held that the application was filed within three years from the default on the first installment and the acceleration notice dated 5th January 2017, making the entire loan due.The tribunal emphasized that the IBC does not mandate that the application must be filed on the first default. A financial creditor can file an application for subsequent defaults as long as it is within three years from the date of default claimed in the application. The tribunal relied on the Supreme Court's judgment in 'B.K. Educational Services Pvt. Ltd. Vs. Parag Gupta & Associates' [(2019) 11 SCC 633], which held that the right to sue accrues when a default occurs, and an application filed beyond three years from the date of default would be barred by limitation.2. Admissibility of Unstamped Documents as Evidence:The appellant contended that the Facility Agreement and the Supplemental Agreement were insufficiently stamped and, therefore, inadmissible as evidence. The tribunal acknowledged that these documents were not duly stamped but noted that other substantial evidence was available to prove the financial debt.The tribunal referred to the Registered Mortgage Deed entered between the parties on 26th June 2013, which was duly stamped and registered, evidencing the financial facility. The tribunal also considered the correspondences between the parties and the No-Objection Certificate from the Reserve Bank of India, which supported the existence of the financial debt.The tribunal cited the Supreme Court's judgment in 'M/s. Innoventive Industries Ltd. Vs. ICICI Bank Ltd. and Anr.' [(2018) 1 SCC 407], which stated that in cases of financial debt default, the adjudicating authority must see the records and other evidence produced by the financial creditor to satisfy itself that a default has occurred. The tribunal concluded that there was sufficient material on record to prove the financial debt and default, even if the unstamped Facility Agreement and Supplemental Agreement were ignored.Conclusion:The tribunal dismissed the appeal, holding that the application under Section 7 of the IBC was filed within the limitation period and that sufficient evidence existed to prove the financial debt and default, notwithstanding the unstamped documents. The tribunal emphasized that the IBC aims for the resolution of insolvency and not merely for the recovery of debts, allowing financial creditors to file applications for subsequent defaults within the limitation period.