TaxTMI 
TaxTMI 
2022 (12) TMI 915
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....ity (National Company Law Tribunal, Mumbai Bench-I, Mumbai) in C.P. (IB) No. 1807/MB/2018, whereby the Adjudicating Authority admitted the Application filed by the 1st Respondent herein. Brief Facts: Appellant's Submissions: 2. Sh. Nikhil Nayyar Learned Sr. Counsel appearing for the Appellant submitted that aggrieved by the aforesaid order, the Appellant being the Suspended Director of the Corporate Debtor preferred the present Appeal and narrated the facts as under. 3. It is submitted that the Respondent Bank along with the consortium landers granted various credit facilities to the Corporate Debtor from time to time and the credit facilities included term loans, working capital facilities, cash credits, letter of creditors etc. On 27.03.2015, the facilities granted to the Corporate Debtor by the 1st Respondent were restructured on the basis of the terms and conditions as set out in the sanction letter dated 27.03.2015. Subsequently, on 30.03.2015 MRA (Master Restructuring Arrangement) entered into between the Respondent and the Corporate Debtor wherein the parties agreed to restructure the debt payable to the Respondent Bank. On 14.05.2015, 1st supplemental working capital co....
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....the date of NPA shown as 27.03.2015 and the date of NPA should be taken as date of default. However, the impugned order is vague and unreasoned and has been passed on the basis of incorrect facts. The Learned Adjudicating Authority erred in not appreciating the fact that the application filed by the Respondent was barred by law of limitation as the same was filed beyond 3 years from the date of actual default i.e. the date when the account of the Corporate Debtor was declared as NPA i.e. 27.03.2015. The Application under Section 7 was filed on 17.05.2018 which is beyond 3 years from the date of NPA. 10. The Learned Sr. Counsel further submitted that the Adjudicating Authority in the impugned order wrongly recorded the fact that there is no record of termination of the MRA dated 30.03.2015, as a matter of fact the MRA was revoked by the Respondent Bank by its letter dated 01.02.2016 and the Respondent Bank called upon the Corporate Debtor to pay an amount of Rs. 174.61 crores. Further, the dates of default taken by the Respondent Bank in the Application under Section 7 is without any basis and has conveniently been taken by the Respondent Bank so as to bring the application within ....
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....ities claimed in Section 7 Application as on 30.04.2018 was Rs.218,14,20,222.95. 17. The Learned Sr. Counsel further submitted that the Respondent Bank had placed several documents before the Adjudicating Authority evidencing debt and default such as record of default under the report of the Central Repository of Information on Large Credits (CRILC) dated 01.09.2017 where the accounts of the Corporate Debtor have been classified as SMA-I and doubtful restructured. Further, the record of default under the report of the CIBIL dated 01.08.2017 has been summarised in the application wherein the concerned accounts have been classified as doubtful. Further, the statement of accounts of Respondent Bank (copies of Bankers book maintained in accordance with Bankers Book Evidence Act, 1891) evidencing default on the part of the Corporate Debtor have been mentioned in the application filed before the Adjudicating Authority. 18. Further, the default committed by the Corporate Debtor in repayment of the facilities granted by the Bank have been clearly acknowledged in the annual report of the Corporate Debtor for FY 2015-16. Further, the standalone financial statements of the Corporate Debtor ....
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....ed that the detailed terms and conditions of enhanced working capital credit facilities incorporated in the first Supplemental Working Capital Consortium Agreement dated 14.05.2015. The details of term loan disbursed were also shown in Column-1. In Column-2, the occurrence of default under term loans have been specifically mentioned such as the date of defaults i.e. 30.01.2016, 30.01.2016, 30.09.2015, 30.11.2015, 29.10.2015 and 23.09.2015. Further in Part-V, the particulars of financial debt and the evidence of default have been mentioned. It is a specific case of the Respondent that the record of default as available with the Bank is (1) report of Trans Union CIBIL dated 01.08.2017 and (2) report of the Central Repository of Information on Large Credits dated 01.09.2017. Further, the Bank relied upon the copies of entries in a Bankers Book in accordance with the Bankers Books Evidence Act, 1891. Further, the Bank also relied upon the documents to prove the existence of financial debt, the amount and date of default i.e. (1) recall notice dated 01.02.2016 issued by the Financial Creditor to the Corporate Debtor demanding payment of Rs. 174.61 crores, (2) Annual Report for the Finan....
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....unt claimed is not due and payable under MRA. 39. Also, the reliance placed by the Corporate Debtor on judgement of Innoventive Industries is misplaced, even if we consider the situation that MRA was revoked and rights and liabilities of parties falls back the original facilities Agreements vide which Respondent was declared NPA way back in this situation also there was default on part of the Respondent. Hence now Respondent cannot shy away from the fact that there is debt and default in repayment was committed by the Respondent. The MRA was to facilitate restructuring of the Corporate Debtor and not to defraud the Creditor. Therefore, this Bench is of the considered opinion that the Corporate Debtor owes money to the Financial Creditor." 24. The contention of the Appellant is that the date of NPA i.e. 27.03.2015 is to be taken as date of default and the dates mentioned by the Bank in Part-IV of the application cannot be taken into consideration for the reason that the MRA dated 30.03.2015 has been revoked by the Bank by issuing a recall notice dated 01.02.2016. The Respondent taken a stand that the declaration of NPA cannot be taken as a date of default. For the purpose of fili....
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....n certificate, or probate of a will, or letter of administration, or court decree (as may be applicable), under the Indian Succession Act, 1925; (f) The latest and complete copy of the financial contract reflecting all amendments and waivers to date; (g) A record if default as available with any credit information company; (h) Copies of entries in a bankers book in accordance with the Bankers Books Evidence Act, 1891." 25. The Hon'ble Supreme Court (supra) clearly held that the other source of evidence can be taken into consideration for the purpose of existence of financial debt includes the copies of entries in a Bankers Book in accordance with the Bankers Book Evidence Act, 1891. The Bank has in its application clearly mentioned in Part-V, Column-7 regarding the reliance of copies of entries in Bankers Book. Further the Bank also relied upon the other documents such as recall notice dated 01.02.2016 and Annual Report for the Financial Year 2015-16. Sub-section (2) of Section 7, provides the form and manner an application under Sub-section (1) can be filed duly accompanied with such fee as may be prescribed. Further Sub-section (3) of Section 7 provides the Financial Credi....
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.... Act to the proceedings initiated under the Code. Section 18 of the Limitation Act reads thus: 43. Ordinarily, upon declaration of the loan account/debt as NPA that date can be reckoned as the date of default to enable the financial creditor to initiate action under Section 7 IBC. However, Section 7 comes into play when the corporate debtor commits "default". Section 7, consciously uses the expression "default" - not the date of notifying the loan account of the corporate person as NPA. Further, the expression "default" has been defined in Section 3(12) to mean non−payment of "debt" when whole or any part or instalment of the amount of debt has become due and payable and is not paid by the debtor or the corporate debtor, as the case may be. In cases where the corporate person had offered guarantee in respect of loan transaction, the right of the financial creditor to initiate action against such entity being a corporate debtor (corporate guarantor), would get triggered the moment the principal borrower commits default due to non− payment of debt. Thus, when the principal borrower and/or the (corporate) guarantor admit and acknowledge their liability after declaration ....