Tribunal dismisses appeal, upholds Section 7 application under Insolvency and Bankruptcy Code.

The appeal was dismissed as the Tribunal rejected the appellant's arguments on the applicability of Section 10A of the Insolvency and Bankruptcy Code, the correctness of the default date, and the relevance of the Non-Performing Asset (NPA) date. The application under Section 7 of the Code was deemed maintainable and filed within the limitation period.

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Issues Involved:
1. Applicability of Section 10A of the Insolvency and Bankruptcy Code, 2016.
2. Correctness of the date of default mentioned in the application.
3. Relevance of the Non-Performing Asset (NPA) date as the date of default.

Summary:

1. Applicability of Section 10A of the Insolvency and Bankruptcy Code, 2016:
The appellant contended that the default for Term Loan II occurred on 01.11.2020, which falls within the suspension period under Section 10A of the Code (25th March 2020 to 24th March 2021), thus making the application under Section 7 of the Code non-maintainable. However, the Adjudicating Authority noted that the default for Term Loan I occurred on 30.06.2021 and that there was an overdue amount towards interest for July and August 2019 in Term Loan II, which constituted a default from September 2019 onwards. Consequently, the plea regarding Section 10A was deemed legally unsustainable.

2. Correctness of the date of default mentioned in the application:
The appellant argued that the correct date of default for Term Loan I should be 30.06.2020, not 30.06.2021, as the first instalment was due and unpaid on 30.06.2020. The respondent countered that the term "first default" is not used in Section 7 of the Code, and subsequent defaults give fresh rights to file an application. The Tribunal upheld the respondent's argument, referencing the cases of 'Koncentric Investments Ltd. & Anr. Vs. Standard Chartered Bank' and 'Indiabulls Housing Finance Limited Vs. Revital Realty Pvt. Ltd.', which established that every default gives a fresh period of limitation, and it is not mandatory to file an application on the first default.

3. Relevance of the Non-Performing Asset (NPA) date as the date of default:
The appellant claimed that the date of NPA (28.12.2020) should be considered the date of default, which would fall within the suspension period under Section 10A. The respondent argued that the NPA date is not the default date for the purpose of initiating CIRP. The Tribunal agreed with the respondent, citing that the date of default is the actual non-payment date, not the NPA date, as per the judgments in 'Laxmipat Surana Vs. Union Bank of India' and 'Ramdas Dutta vs. IDBI Bank Limited'.

Conclusion:
The appeal was dismissed, with the Tribunal rejecting all contentions raised by the appellant regarding the applicability of Section 10A, the correctness of the default date, and the relevance of the NPA date. The application under Section 7 of the Code was found to be maintainable and filed within the period of limitation.

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