TaxTMI 
TaxTMI 
2023 (4) TMI 1080
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.... 'Adjudicating Authority' ('National Company Law Tribunal', Division Bench - I, Chennai). 2. The 'Adjudicating Authority' ('National Company Law Tribunal', Division Bench - I, Chennai), while passing the 'impugned order' dated 19.04.2022 in CP (IB) / 279 (CHE) / 2021 (Filed by the '1st Respondent / Bank / Financial Creditor / Petitioner'), under Section 7 of the I & B Code, 2016, read with Rule 4 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016, wherein, at Paragraphs 12 to 16, had observed the following: 12. "Heard the submissions made by the Learned Counsel for the parties. From the averments made in the counter, it is clearly seen that the Corporate Debtor has admitted its liability based on the OTS 18.12.2021 and the same clearly proves the existence of a 'Financial Debt' which is due and payable to the Financial Creditor. Further, it is also seen that the 'default' which is arising in the present Application has happened much before the advent of COVID-19 and the Corporate Debtor also cannot seek shelter under Section 10A of IBC, 2016. 13. Further, on the aspect of limitation, it is seen that the Corporate Debtor has com....
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....of the receipt of the application. It is at the stage of Section 7(5), where the adjudicating authority is to be satisfied that a default has occurred, that the corporate debtor is entitled to point out that a default has not occurred in the sense that the "debt", which may also include a disputed claim, is not due. A debt may not be due if it is not payable in law or in fact. The moment the adjudicating authority is satisfied that a default has occurred, the application must be admitted unless it is incomplete, in which case it may give notice to the applicant to rectify the defect within 7 days of receipt of a notice from the adjudicating authority. Under sub-section (7), the adjudicating authority shall then communicate the order passed to the financial creditor and corporate debtor within 7 days of admission or rejection of such application, as the case may be. 30. On the other hand, as we have seen, in the case of a corporate debtor who commits a default of a financial debt, the adjudicating authority has merely to see the records of the information utility or other evidence produced by the financial creditor to satisfy itself that a default has occurred. It is of no ....
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....ion', the 'Financial Creditor / Bank', had stated that the last 'Renewal of Term Loan of Rs.100.64 Crores', and 'LG of Rs.2.77 Crores', and 'Miscellaneous Cash Credit' (MCC Limit of Rs.5 Crores), were vide 'Sanction Letter', dated 04.10.2017. 6. According to the Appellant, the main CP (IB) / 279 / IB / 2021, filed by the '1st Respondent / Bank', is 'barred by time', because the initiation date was only 18.11.2021. 7. The Learned PCS for the Appellant, takes a plea that the 'Term Loan', was mentioned in the 'Application', for 'Petition', as if, it is a 'Credit Facility', and if it is a 'Term Loan', 'Repayable in Instalments', over a period of time, the sum, said to be in 'Default', cannot be the whole amount. As such, the 1st Respondent / Bank / Financial Creditor, had failed to state the 'Actual Sum in Default', as well as the 'Actual Date of Default'. 8. The stand of the Appellant is that, the 'Term Loan', is repayable over 90 monthly instalments, beginning from April 2016 and entire 'Loan', will get 'Repaid', only in October 2023. Hence, on 01.06.2019, the Sum in 'Default', cannot not be Rs.107.48 Crores, at all. Even, as per the averment of the 1st Respondent / Bank / F....
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....to be only Rs.77.10 Crores, which was the Sum, remaining outstanding, on the 'Date of NPA', and it was 'Atrocious', to Claim Rs.107.48 Crores in 2021. 16. The Learned PCS for the Appellant points out that for every Credit, falling into the 'Account', in respect of the period from 01.01.2019 to 06.10.2021, 20% was cut back and retained by the 'Sole Financial Creditor', and the entire control over the Finances, was with the 'Sole Financial Creditor', and no cheque will pass, unless it was approved and unless there is a cutback, retained by the 'Sole Financial Creditor'. 17. According to the Appellant that the 1st Respondent / Bank, is fully secured by the 'Valuable Properties of the Company', as well as highly 'Valuable Personal Collateral Securities'. Furthermore, the 'Corporate Debtor', is operating with the 'Bank', one and only 'Bank Account', without any 'Diversion of Funds'. 18. On behalf of the Appellant, it is pointed out that when the 1st Respondent / Bank even now, had granted 'One Time Settlement', the only meaning is that, it does not deserve putting the Corporate Debtor into the gallows of the 'CIRP', because of the fact that the grant of 'OTS', and pursuing a 'S....
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....judicating Authority (NCLT) but to admit the petition under Section 7 of the IBC. Going by the scheme of IBC and the legislative intent, the Hon'ble Supreme Court has observed that the Adjudicating Authority would have to exercise its discretion to admit an application under Section 7 of the IBC of the IBC and initiate CIRP, unless there are good reasons not to admit the petition. The Hon'ble Apex Court has observed that if the facts and circumstances warrant exercise of discretion in a particular manner, such discretion would have to be exercised with the condition that such discretionary power cannot be exercised arbitrarily or without any proper reason." 24. The Learned PCS for the Appellant, cites the Judgment of this 'Tribunal' dated 09.09.2022 in Comp. App (AT) (INS.) 993 of 2020 in Air Travel Enterprises India Limited, Kerala v. Union Bank of India, Kerala and three Ors., wherein, at Paragraph 20, it is observed as under: 20. "Be that as it may, for all the aforenoted reasons and having regard to the Written Submissions that efforts would be made to settle the matter, in the interest of justice and taking into consideration the fact that in this pandemic, the tra....
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....Creditor contends that the 'Appellant', has admitted that the 'Corporate Debtor', could not make the payment during the period of April 2020 to March 2022, due to the pandemic situation, and further the Appellant in an unequivocal term had admitted in Paragraph No. (r) (vide Vol. I - Page 11 of the instant 'Appeal Paper Book - Diary No. 337 dated 26.04.2022), that on the 'Date of Non performing asset', the amount in 'Default', was shown as Rs.77.10 Crores. 27. The stand of the 1st Respondent / Bank / Financial Creditor is that, the 'Appellant', in his Affidavit at Page 369 of Vol. II of the instant Appeal Paper Book (vide Diary No. 337 dated 26.04.2022), at Paragraphs 4 to 6, had averred that the funds were organised through Foreign Institutional Lender and 10% Conditional Amount was remitted by them, to the Account of the Respondent with the Applicant Bank on 16.02.2022 and that the Copy of the Remittance Certificate was enclosed, and further, the Copy of the email sent by the Investor SP Asset Management BV dated 21.02.2022, confirming the remittance and their readiness to pay the full and final settlement amount, once the 'One Time Settlement', was approved by the 'Petitioner....
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....idelines'. Moreover, the 'Account' of the 'Corporate Debtor', went into 'Non Performing Asset', before the 'Pandemic', and therefore, the contra plea, taken on behalf of the Appellant, is unworthy of acceptance, by this 'Tribunal'. 34. The Learned Counsel for the 1st Respondent / Bank / Financial Creditor, proceeds to point out that on 19.06.2020, the Financial Creditor / Bank, had issued a 'Demand Notice', to the 'Corporate Debtor', for its failure to regularise the 'Loan Account' (as per 'Section 13 (2) of the SARFAESI Act, 2002') and 'Possession Notice', was also issued on 07.01.2021, but it proved futile. 35. On behalf of the 1st Respondent / Bank / Financial Creditor, it is brought to the fore, before this 'Tribunal', that the 'Corporate Guarantor' M/s. Shree Murugan Flour Mills (P) Ltd., had also individually, availed the 'Credit Facilities', from the 'Financial Creditor', and defaulted to repay the same and that the said 'Company', is also under the 'Corporate Insolvency and Resolution Process'. Status Report of the 2nd Respondent / RP : 36. The Learned Counsel for the 2nd Respondent / Resolution Professional of the 'Corporate Debtor', in his email dated 04.06.20....
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....is to be considered on its own merits, going by the available materials on 'Record'. Even though, the 'Debt', is controverted, if the 'Sum', is more than Rs.1 Lakh (before the Amendment), and after the Amendment (Rs. 1 Crore and above), to the I & B Code, 2016, then, the 'Application', is 'maintainable in Law'. 45. A 'Sum of Money', which is certainly and in all events, payable is a 'Debt', without regard to the fact, whether, it is payable immediately or at a 'future date'. The term 'Receivable', means 'any Sum', which a 'Person', is entitled to receive or received from 'another Person'. Discussions : 46. In the instant case on hand, it transpires, that the 'Corporate Debtor' / 'Company', had approached the '1st Respondent / Bank' ('Financial Creditor'), for its business operations and that the 'Bank', had extended the following 'Credit Facilities', which are depicted, are as follows: Date Nature of Facility Limit 30/12/2011 Term Loan with sublimit of LC Rs.108 Crores 04/10/2017 Renewal of Term Loan Rs.100.64 Crores 04/10/2017 LG Rs.2.77 Crore 04/10/2017 Miscellaneous Cash Credit Rs.5 Crore 47. On behalf of the 1st Responden....
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.... of stipulated terms and conditions, and further, it was mentioned that the entire amount, as per 'Procedure for Compromise Settlement', under Section 12A of IBC, should be deposited in 'No Lien Account', before filing 'Withdrawal Application', under Section 12A with the 'NCLT'. It was also made crystalline clear that the 'Sanction of Compromise Settlement', is subject to the 'Approval of National Company Law Tribunal'. 51. As far as the present case, is concerned, the very fact that the 'Corporate Debtor', had admitted its 'Liability', cementing on the 'One Time Settlement' dated 18.12.2021, the same unequivocally, points out the 'factum', of 'Financial Debt', (as per ingredients of 'Section 5 (8) of the I & B Code, 2016'), which is due and liable to be paid by it, to the '1st Respondent / Bank / Financial Creditor', (as per 'Section 5 (7) of the Code'). 52. The very fact that the Loan Account of the Corporate Debtor / Company, slipped into the category of 'Non Performing Asset', on 01.06.2019, in accordance with the guidelines of the Reserve Bank of India, the contra plea taken on behalf of the Appellant that the 'Default', took place before the Covid-19 Pandemic, is turned....