TaxTMI 
TaxTMI 
2023 (9) TMI 1289
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....reinafter referred to as the "Code") was admitted. The Suspended Director of the Corporate Debtor aggrieved by the order has come up in this Appeal. 2. Brief facts of the case necessary to be noticed for deciding this Appeal are: (i) The Central Bank of India vide Sanction Letter dated 24.03.2015 sanctioned Term Loan of Rs.125 crores to Anjana Retail Infrastructure Pvt. Ltd. Vide Sanction letter dated 05.12.2016, Term Loan of Rs.187.50 crores was sanctioned to one RJ Texcot Private Limited. On 02.08.2018, Anjana Retail Infrastructure Pvt. Ltd. and RJ Texcot Private Limited merged with the Corporate Debtor vide order dated 02.08.2018 passed by the NCLT, Mumbai. Vide letter dated 23.09.2021, i.e. Term Loan-III, Rs.155/- crores were sanctioned. (ii) In view of the outbreak of Covid-19 pandemic, the Reserve Bank of India published Master Circular dated 06.08.2020 for Resolution Framework for Covid-19 related stress. (iii) Default was committed by the Corporate Debtor in regard to above three Term Loan on 30.09.2020 and the Corporate Debtor was ascertained as NPA on 29.12.2020. (iv) Under the Regulation Framework for Covid-19 dated 06.08.2020, One ....
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....ich the borrower had been classified as NPA before implementation of the Plan, whichever is earlier. It is submitted that admittedly, before implementation of the Plan, the Corporate Debtor was declared NPA on 29.12.2020, which date has to be referred to for default as per the Circular dated 06.08.2020. For Section 7 Application in the present case, date of default has to be treated as 30.09.2020 and date of NPA as 29.12.2020, which date is also mentioned in Section 7 Application. Both the dates being covered by Section 10A, Application was clearly barred by time. It is submitted that default under OTR Agreement relates back to the default prior to implementation of OTR Agreement. Hence, the Application filed under Section 7 is barred by Section 10A and the date of default is not 31.03.2022 as mentioned in the Application, but 30.09.2020 which date is covered under 10A period. 5. Shri Manoj Swarup, learned Senior Counsel for Central Bank of India refuting the submissions of the Appellant submits that Section 7 Application was filed on the default committed by the Corporate Debtor on 31.03.2022 under the OTR Agreement and the Application was not based on the default committed on ....
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....lity are given in the Annex." Under the heading "Post Implementation Performance" in paragraphs 46, 47 and 48, following have been stated: Company Appeal (AT) (Insolvency) No.837 of 2023 7 " Post Implementation Performance 46. For personal loans, after implementation of the resolution plan in terms of this facility, the subsequent asset classification will be governed by the criteria laid out in the Master Circular - Prudential norms on Income Recognition, Asset Classification and Provisioning pertaining to Advances dated July 1, 2015 or other relevant instructions as applicable to specific category of lending institutions. 47. In respect of exposures other than personal loans, any default by the borrower with any of the signatories to the ICA during the monitoring period shall trigger a Review Period of 30 days. Monitoring period, for this purpose, is defined as the period starting from the date of implementation of the resolution plan till the borrower pays 10 percent of the residual debt, subject to a minimum of one year from the commencement of the first payment of interest or principal (whichever is later) on the credit facility with long....
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....resh Funded Interest of the Term Loan of Rs.51.71 crore was sanctioned, which was disbursed to the Corporate Debtor from 21.05.2021 to 02.03.2022. Rupees 51.71 crores was to be repaid in 24 months equally installments from March 2022 to February 2024. 10. The OTR Agreement which was part of Section 7 Application is relevant to notice. The OTR Agreement was with regard to Term Loan-I, Term Loan-II and Term Loan-III issued by the Central Bank of India. In Clause-H, restructuring was granted to the outstanding original loans under Circular dated 06.08.2020. Clause-H of the Agreement is as follows: "H. Owing to the above stated conditions of Business due to COVID-19 pandemic, the Board of Directors of the Borrower vide their resolution dated _________ authorised the Borrower to seek restructuring of the below mentioned outstanding Original Loans aggregating INR 400.27 Crores ("Outstanding Loans") under Reserve Bank of India 'Resolution Framework for COVID 19 Related Stress' dated August 6, 2020 ("Resolution Framework"): Facility Outstanding Amount (Rs. in Crores) TL-1 64.00 TL-II 136.98 TL-III 150.69 Term Loan-BOB 48.60" 11. Clause-J, of the....
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....the provisions hereof to the extent specifically agreed between the Lender and the Borrower herein. For the avoidance of doubt, the provisions of the Existing Finance Documents, which are not inconsistent with the provisions of this Agreement, shall continue to be binding on the Borrower, Lender and the other parties to such Existing Finance Documents. d) The determination by the Lenders as to whether a provision of any Finance Document inconsistent with the term of this Agreement shall be final and binding on the Borrower. e) Subject to the aforesaid, on and from the Effective Date, this Agreement shall constitute the entire agreement between the Parties concerning the Outstanding Loans and FITL, and supersedes all previous proposals, agreements, understandings, negotiations and other written and oral communications in relation thereto. f) The disbursements already made in terms of the Original Loan Agreement shall be deemed to be part of the Loans and shall be governed by the terms and conditions of this Agreement. g) In case of any consistency between the terms of this Agreement and the terms of the Restructuring Sanction Letters of the Lender....
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....r more of the following rights:- a) direct the Lenders to declare the entire Facilities or part thereof and all amounts payable by the Borrower in respect of the Facilities and under the Transaction Documents to be due and payable immediately. b) the Security Interest shall become enforceable. c) enter upon and take possession of the assets/ properties charged/ hypothecated mortgaged pursuant to the Transaction Documents. d) transfer the assets of the Borrower in favour of the Lenders/ Lead Lender (acting for the benefit of Lenders) or its nominees and/ or assignees such other person or persons either by way of lease or leave & license, sale, transfer, assignment comprising the security. e) substitute themselves or any one of them or its nominees and its designee for the Borrower under any or all of the Project Document(s) and to pursue any other legal remedy or right provided under Applicable Law, including but not limited to, taking appropriate action under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 as may be amended/ modified from time to time. f) terminate the rig....
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.... Total 329,91,84, 600.84 51,71,00,00 0.00 38,51,05,43 9.49 420,13,90,04 0.33 #includes penal interest of Rs.4,78,20,334 @ 1.00%p.a. * The FITL principal amount of Rs.51,71,00,000.00 has been disbursed towards servicing of the Interest of the Original 3 Term Loan accounts of the Company during the moratorium period allowed from November 2020 to February 2022 as per the OTR sanction terms. * The Actual interest dues including penal interest towards all the three term loan accounts of the company as of 29.05.2022 would be Rs.90,22,05,439.49 if the said FITL of Rs.51,71,00,000.00 would not have been disbursed for servicing the interest of the three Term Loans during the moratorium period allowed from November 2020 to February 2022 as per the OTR sanction terms. Date of Default - 31.03.2022 (Under OTR) Date of NPA - 29.12.2020 NOTE:- The Corporate Debtor had requested for One Time Restructuring (OTR) under Resolution Framework for COVID-19 related Stress announced by RBI vide its circular dated 06.08.2020 and the same was sanctioned by the Financial Creditor. However, the Corporate De....
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....f default has been clearly mentioned as 31.03.2022 under the OTR Agreement. It is also to be noted that date of NPA has been mentioned as 29.12.2020 as per Clause 48 of the Circular of the RBI dated 06.08.2020. 20. After having noticed the relevant Clauses of the Circular dated 06.08.2020 issued by the RBI and restructuring sanction dated 21.05.2021 as well as Restructuring Agreement dated 21.05.2021, now we proceed to consider as to whether Application filed by the Central Bank of India was barred by Section 10A. Section 10A of the Code was inserted in Code to prevent the corporate persons, which are experiencing distress being pushed into insolvency proceedings under the Code for some time. Section 10A of the Code provides as follows: "10A. Suspension of initiation of corporate insolvency resolution process. Notwithstanding anything contained in sections 7, 9 and 10, no application for initiation of corporate insolvency resolution process of a corporate debtor shall be filed, for any default arising on or after 25th March, 2020 for a period of six months or such further period, not exceeding one year from such date, as may be notified in this behalf: ....
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....classified as NPA. Clause 48 thus is with regard to asset classification of the borrower and as per Clause 48, even if default is committed under the Post Implementation Performance under the One Time Restructuring Agreement, the asset classification has to be downgraded as NPA from the date of default, which was committed before implementation of the Plan. In the present case, there was default committed before implementation of the Plan, as NPA was declared on 29.12.2020. Hence, in the present case, asset classification of the borrower has to be treated to be downgraded with effect from 29.12.2020. Clause 48, is thus only to be read with regard to downgrading to NPA for the relevant date and this Clause 48 is not relevant to find out event of default, which occurred under the One Time Restructuring Agreement and which is foundation of Section 7 Application. 22. As noted above, the event of default under the One Time Restructuring Agreement, which contained in Clause 8.1 as extracted above and by virtue of Claude 8.2, which contains heading "Consequences in event of default", the lenders in its own discretion can exercise or pursue any other legal remedy or right provided in....
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.... 10 of the Insolvency and Bankruptcy Code, 2016 to prevent corporate persons which are experiencing distress on account of unprecedented situation, being pushed into insolvency proceedings under the said Code for some time; AND WHEREAS it is considered expedient to exclude the defaults arising on account of unprecedented situation for the purposes of insolvency proceeding under this Code;" (emphasis supplied) Further, in paragraph 18 and 19, following has been laid down: "18. Section 10-A is prefaced with a non obstante provision which has the effect of overriding Sections 7, 9 and 10. Section 10-A provides that: (i) no application for the initiation of the CIRP by a corporate debtor shall be filed; (ii) for any default arising on or after 25-3-2020; and (iii) for a period of six months or such further period not exceeding one year from such date as may be notified in this behalf. 19. The proviso to Section 10-A stipulates that "no application shall ever be filed" for the initiation of the CIRP of a corporate debtor "for the said default occurring during the said period". The Explanation which has been inserted for t....