AI Drafter 
TaxTMI 
TaxTMI 
2022 (12) TMI 979
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.... as 'The Code'), challenging the dismissal of the Section 7 Application preferred by them before the Adjudicating Authority. By the Impugned Order, the Adjudicating Authority has dismissed the Section 7 Application was 'barred by Limitation' and observed as follows: "29. Evidently, there has been restructuring of loan on 07.11.2014 and 30.06.2017, contrary to the terms and conditions of the restructuring package, the Petitioner has revoked the restructuring package on 01.06.2018. The said letter of revocation of restructuring immediately objected/rebutted by the Corporate Debtor. In strict interpretation of law of Contracts, it seems that there was no consensus ad idem and the unilateral revocation was strongly objected by the Corporate Debtor who pointed out that there is no default and payments will have to be made only from operational cash flows. It is relevant to refer to Section 3(12) of the Code, which defines default as follows: "Default means no-payment of debt when whole or any part or instalment of amount of debt has become due and payable and is not paid by the debtor or the corporate Debtor as the case may be". Therefore, this Bench finds it ....
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....nstrate the default on the part of the Corporate Debtor. 33. The factual matrix narrated in the aforesaid paras indicate that post filing of DRT proceedings by the Original Lender. The present Petitioner was substituted by virtue of deed of assignment from BI in March, 2014. The Petitioner granted First restructuring package on 7 November, 2014. which was revoked on 22.09.2016 and Second restructuring Package on 30.06.2017, thus at the time when Recovery certificate was granted on 22.11.2016. The Petitioner having contractually agreed to be bound by certain terms and conditions of the contract under the restructuring package, wherein a mechanism is prescribed for payment of outstanding dues. cannot now enforce its statutory rights when there is no default in payment by the Corporate Debtor. 34. The Corporate Debtor and its group are OEM suppliers having interdependent operations. The said OEM's include Companies like Cummins India Limited, Bajaj Auto Limited, Tata Motors Limited, Kirloskar Oil Engines Limited, Indian Railways etc. and that the Corporate debtor and its associates has 600 employees on its rolls and accreditations which may fall by initiation of ....
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....mbai and transferred Original Application No.560/2016. It is submitted by Learned Sr. Counsel that these Consent Terms amount to 'acknowledgement of liability'. It is submitted that the said Consent Terms are based on the approved second Restructuring Package only and they are signed by one Mr. Amrish Vijay Shah who was representing a 'Corporate Debtor' as a Director. Subsequently, the second Restructuring was cancelled on 01.06.2018 due to various 'defaults' by the 'Corporate Debtor'. Sale Notice by 'Edelweiss' was issued on 06.12.2019 and a reply was filed by the 'Corporate Debtor' on 31.01.2020. Subsequently, the Section 7 Application was filed on 07.08.2020 and, therefore, the Application is well within the period of Limitation. The Learned Sr. Counsel in support of his contention that the Adjudicating Authority has erroneously dismissed the Application as 'barred by Limitation' place reliance on the following Judgements in support of his case: 'Sesh Nath Singh & Anr.' Vs. 'Baidyabati Sheoraphuli Co-operative Bank Ltd. & Anr.' (2021) 7 SCC 313. 'Dena Bank (now Bank of Baroda)' Vs. 'C. Shivakumar Reddy & Anr.' (2021) 10 SCC 330. Learned Sr. Co....
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.... Restructuring Packages and the Recovery Certificates which are beyond three years of the date of NPA i.e., 2009. * Learned Counsel also contended that there is absolutely no 'default' and that the Appellant originally was acting as an intermediary in working out a proposal of OTS to be offered by SBI and hence was aware of the financial condition of the 'Corporate Debtor'. * Learned Counsel placed reliance on the Judgement of the Hon'ble Apex Court in the following cases: In 'Innoventive Industries Ltd.' Vs. 'ICIC Bank & Anr.' (2018) 1 SCC 407, wherein it was held by the Hon'ble Supreme Court that the default shall occur when debt is due and payable in fact and in law. In 'Indus Biotech Private Limited' Vs. 'Kotak India Venture (Offshore) Funds (earlier known as Kotak India Venture Limited & Ors.' Arbitration Petition (Civil) No. 48/2019 with Civil Appeal No. 1070/2021, wherein it has been held that there should be judicial determination of default within the meaning of Section 3(12) while considering an Application under Section 7 of the Code. In 'Reliance Asset Reconstruction Co. Ltd.' Vs. 'Hotel Pooja International (P) Ltd.' (2021) 7 SCC 352, wh....
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....edgment of debt. Such averments were duly incorporated by way of amendment, and the adjudicating authority rightly looked into the amended pleadings. 133. As observed above, the appellant Bank filed the petition under Section 7 IBC on 12-10-2018. Within three months, the appellant Bank filed an application in the NCLT, for permission to place additional documents on record including the final judgment and order/decree dated 27-3-2017 in OA No. 16 of 2015 and the recovery certificate dated 25-5-2017, enabling the appellant Bank to recover Rs 52 crores odd. The judgment and order/decree of the DRT and the recovery certificate gave a fresh cause of action to the appellant Bank to initiate a petition under Section 7 IBC." ........................................................................... "138. While it is true that default in payment of a debt triggers the right to initiate the corporate resolution process, and a petition under Section 7 or 9 IBC is required to be filed within the period of limitation prescribed by law, which in this case would be three years from the date of default by virtue of Section 238-A IBC read with Article 137 of the Schedule to the ....
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.... financial debtor, under the judgment and/or decree and/or in terms of the certificate of recovery, or any part thereof remained unpaid. 142. There is no bar in law to the amendment of pleadings in an application under Section 7 IBC, or to the filing of additional documents, apart from those initially filed along with application under Section 7 IBC in Form 1. In the absence of any express provision which either prohibits or sets a time-limit for filing of additional documents, it cannot be said that the adjudicating authority committed any illegality or error in permitting the appellant Bank to file additional documents. Needless however, to mention that depending on the facts and circumstances of the case, when there is inordinate delay, the adjudicating authority might, at its discretion, decline the request of an applicant to file additional pleadings and/or documents, and proceed to pass a final order. In our considered view, the decision of the adjudicating authority to entertain and/or to allow the request of the appellant Bank for the filing of additional documents with supporting pleadings, and to consider such documents and pleadings did not call for interference....
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....spect of which the financial creditor can initiate action under Section 7 IBC." (Emphasis Supplied) 7. In the aforenoted Judgement, the Hon'ble Apex Court has clearly laid down the principle that the 'date of default' does not mean a strict interpretation that it has to be the 'date of NPA' in fact, the 'date of default' defined under Section 3(12) of the Code is to mean 'non-payment of a date which has become 'due and payable' whether in whole or any part and is not paid by the Corporate Debtor'. It is an admitted fact in the instant case that there were some Consent Terms entered into between 'Edelweiss' and the 'Corporate Debtor' in Transfer Original Application No.560/2016 filed before the DRT-I, Mumbai, which is signed by Mr. Amrish Vijay Shah the Director of the 'Corporate Debtor'. It is clearly stated in this Consent Terms in the default Clause that in case of non-compliance of any of the Terms stated in the Restructuring Letter that all liabilities as per the Original Application No.560/2016 shall be restored. It is also an admitted fact that the second Restructuring was cancelled vide Letter dated 01.06.2018 and the Reply by the 'Corporate Debtor' dated 14.06.2....