Appeal Dismissed for Lack of Merit in I&B Code Section 7 Application

The National Company Law Appellate Tribunal upheld the decision of the Adjudicating Authority regarding the maintainability of the application under Section 7 of the I&B Code and the admissibility of the application. The Tribunal dismissed the appeal due to lack of merit, emphasizing the Corporate Debtor's admission of default in payment of interest and the established debt and default, despite the Appellant's arguments. The Tribunal also noted the Appellant's repeated adjournments seeking a One Time Settlement with the Financial Creditor.

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Issues:
1. Maintainability of the application under Section 7 of the I&B Code due to default date during the prohibitory period under Section 10A.
2. Admissibility of the application by the Adjudicating Authority.

Issue 1: Maintainability of the application under Section 7 of the I&B Code:
The Appellant challenged the admission of the application under Section 7 by the Adjudicating Authority, contending that the default date for repayment occurred during the prohibitory period under Section 10A of the I&B Code. The Appellant argued that the application should have been rejected based on this ground. The Respondent, on the other hand, argued that the Corporate Debtor had admitted the debt and default both in writing and orally. The Corporate Debtor acknowledged the default in payment of interest for specific quarters due to COVID-related difficulties. The Adjudicating Authority observed that the default did not fall within the period prescribed under Section 10A as it occurred prior to the COVID-19 pandemic outbreak. The Authority considered the sequence of events and the Corporate Debtor's admission of default in its decision.

Issue 2: Admissibility of the application by the Adjudicating Authority:
The Adjudicating Authority, in its order, addressed the submissions of both parties regarding the application's admissibility. It noted that the Corporate Debtor had admitted default in payment of interest for specific quarters in a letter dated September 9, 2021. This admission indicated a failure to service obligations under the Debenture Subscription Agreement. The Authority emphasized that the Appellant's argument based on Annexure-3 clause 6, specifying the repayment date, was not acceptable in light of the clear admission of default by the Corporate Debtor. The Adjudicating Authority found that the debt and default were established, leading to the admission of the application. The Tribunal upheld the decision of the Adjudicating Authority, dismissing the Appeal due to the lack of merit, especially considering the Appellant's multiple adjournments seeking a One Time Settlement with the Financial Creditor.

In conclusion, the judgment by the National Company Law Appellate Tribunal, Principal Bench, New Delhi, addressed the maintainability of the application under Section 7 of the I&B Code and the admissibility of the application by the Adjudicating Authority. The Tribunal upheld the decision of the Adjudicating Authority based on the Corporate Debtor's admission of default, rejecting the Appeal due to the lack of merit.

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