NCLT Mumbai had jurisdiction over Section 7 application despite English law. Debt admitted, CIRP upheld amid Covid-19 stress.

The NCLT, Mumbai had jurisdiction to adjudicate the Section 7 application despite the Loan Facility Agreements being governed by English law. The recall notice and Section 7 application were timely. The corporate debtor admitted the debt and default but claimed financial stress due to Covid-19. Despite the debtor's arguments of temporary financial stress and a restructuring plan, the initiation of CIRP was upheld, and the appeal was dismissed. No costs were awarded in the case.

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Issues Involved:
1. Jurisdiction of NCLT, Mumbai to adjudicate the Section 7 application.
2. Validity of the recall notice and the timeline for filing the Section 7 application.
3. Admission of debt and default by the corporate debtor.
4. Appropriateness of initiating CIRP against a solvent company affected by Covid-19.

Summary:

Issue 1: Jurisdiction of NCLT, Mumbai
The Loan Facility Agreements stipulated that the agreements would be governed by English law and that the courts of England would have jurisdiction. However, Clause 35.1(c) allowed the lender to take proceedings in any other courts with jurisdiction. Sub-section (1) of Section 60 of the IBC provides that the NCLT, Mumbai has territorial jurisdiction over the corporate debtor's registered office located in Mumbai. Therefore, Punjab National Bank (International) Limited is fully entitled to take action under Section 7 of the IBC before the NCLT, Mumbai.

Issue 2: Validity of the Recall Notice and Timeline
The financial creditor sent a recall notice on 04.05.2021 demanding repayment of the outstanding loan amount. The Section 7 application was filed on 02.02.2022, within one year of the demand notice. The corporate debtor did not deny the receipt of the demand notice but claimed inability to repay due to financial stress caused by the Covid-19 pandemic.

Issue 3: Admission of Debt and Default
The corporate debtor admitted its liability regarding the loan amounts due and payable and did not dispute the debt or default in repayment. The impugned order noted that the corporate debtor acknowledged its inability to repay due to the pandemic but intended to repay once the business situation improved.

Issue 4: Appropriateness of Initiating CIRP
The corporate debtor argued that it was not insolvent but faced temporary financial stress due to the pandemic and sought more time for repayment. It also mentioned a loan restructuring plan extending repayment till 30.06.2028. However, the financial creditor argued that the corporate debtor defaulted even under the restructured plan and admitted to the debt and default.

Conclusion:
The NCLT, Mumbai has jurisdiction to adjudicate the Section 7 application. The recall notice and subsequent filing of the Section 7 application were within the limitation period. The corporate debtor admitted the debt and default. The appeal was dismissed, and the initiation of CIRP was upheld. No order as to costs was made.

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