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of <h1>Petition dismissed under Section 10A due to barred period, highlighting legislative intent.</h1> <h3>Indiabulls Housing Finance Limited Versus Shipra Estate Limited</h3> Indiabulls Housing Finance Limited Versus Shipra Estate Limited - TMI Issues Involved:1. Maintainability of the petition under Section 10A of the Insolvency and Bankruptcy Code, 2016.2. Occurrence and implications of the 'Event of Default' under the loan agreement.3. Validity of the actions taken by the financial creditor post-default, including the issuance of cure and loan recall notices.4. Impact of the dishonor of post-dated cheques on the determination of the default date.5. Relevance of ongoing arbitration and writ proceedings on the insolvency proceedings.Issue-wise Detailed Analysis:1. Maintainability of the Petition under Section 10A of the Insolvency and Bankruptcy Code, 2016:The corporate debtor argued that the petition is not maintainable under Section 10A of the Code, which bars the initiation of Corporate Insolvency Resolution Process (CIRP) for defaults occurring between 25th March 2020 and 24th March 2021. The tribunal examined the legislative intent behind Section 10A, noting the provision's clear language that no application for CIRP shall ever be filed for defaults occurring within the specified period. The tribunal referred to the Supreme Court's interpretation in Ramesh Kymal v. Siemens Gamesa Renewable Power (P) Ltd. (2021) 3 SCC 224, which emphasized the extraordinary circumstances prompting the enactment of Section 10A. The tribunal concluded that the default date, being within the barred period, rendered the petition non-maintainable.2. Occurrence and Implications of the 'Event of Default' under the Loan Agreement:The applicant contended that the corporate debtor defaulted by failing to maintain adequate security cover, as required under the loan agreement. The tribunal reviewed the loan agreement clauses, particularly Clause 12.1.9(h) and Clause 12.2, which detailed the consequences of an event of default. The tribunal noted that the impairment of security, due to the revocation of mortgage permission by NOIDA authority, constituted an event of default. Despite the issuance of a cure notice on 20.10.2020, the corporate debtor did not rectify the default, leading to a loan recall notice on 15.12.2020.3. Validity of Actions Taken by the Financial Creditor Post-Default:The applicant issued a loan recall notice on 15.12.2020, demanding repayment within seven days. The tribunal found that the corporate debtor's failure to cure the default and repay the loan validated the actions taken by the financial creditor. The tribunal emphasized that the default date, seven days post-receipt of the loan recall notice, fell within the period barred by Section 10A.4. Impact of the Dishonor of Post-Dated Cheques on the Determination of the Default Date:The applicant argued that the dishonor of post-dated cheques on 05.04.2021 constituted the default date. However, the tribunal rejected this argument, stating that the default date was determined by the loan recall notice, not the cheque dishonor. The tribunal clarified that the default occurred when the corporate debtor failed to cure the impairment of security and repay the loan as demanded in the recall notice.5. Relevance of Ongoing Arbitration and Writ Proceedings:The corporate debtor highlighted ongoing arbitration and writ proceedings challenging the actions of NOIDA authority and the financial creditor. The tribunal acknowledged these proceedings but reiterated that they did not impact the determination of default under the insolvency proceedings. The tribunal cited precedents, including Indus Biotech (P) Ltd. vs. Kotak Ventures Offshore Limited (2021) 6 SCC 436, affirming that insolvency proceedings are independent of arbitration and other legal remedies.Conclusion:The tribunal concluded that the petition was not maintainable under Section 10A of the Insolvency and Bankruptcy Code, 2016, as the default occurred within the barred period. Consequently, the tribunal dismissed the petition without delving into the merits of the case, emphasizing the legislative intent to bar CIRP applications for defaults occurring between 25th March 2020 and 24th March 2021.
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