TaxTMI 
TaxTMI 
TaxTMI 
2023 (11) TMI 481
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....nkruptcy Code, 2016 (hereinafter referred to as the "Code") by Respondent - Piramal Capital & Housing Finance Limited in CP (IB) No.1029/MB-IV/2022 and CP (IB) No.1023/MB-IV/2022 respectively. The Suspended Director of the Corporate Debtor aggrieved by the order of admission of Section 7 Application has filed these Appeals. 2. Facts and issues raised in these two Appeals being common, it shall suffice to refer to the facts in Company Appeal (AT) (Insolvency) No.1198 of 2023 for deciding both the Appeals. 3. Dewan Housing Finance Corporation Limited ("DHFL"), the predecessor in interest of Piramal Capital & Housing Finance Limited had sanctioned a project term loan of Rs.60 crores to Rite Builtec Private Limited, the Corporate Debtor in No.CP (IB) No.1023/MB-IV/2022 - Rite Builtec Private Ltd. was Borrower and Rite Developers Pvt. Ltd. was Coborrower, who is the Corporate Debtor in CP (IB) No.1029/MB-IV/2022. The repayment of loan along with interest was to be made in 24 Equated Monthly Installments (EMIs) commencing after 36 months from the date of first disbursement. Sanctioned order, however, contemplate payment of interest from the date of first disbursement. The Loan Agreemen....
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....ny petition under the IBC Code for the debt, which is for default committed during 10A period. As per Clauses of the Loan Agreement, it was mandatory to issue notice in case of default, hence, it cannot be said that default on non-payment of interest would automatically lead to recall of the entire loan. The Financial Creditor cannot split the cause of action. The Financial Creditor could not have filed one consolidated petition for entire loan amount for two split causes of action. According to Respondent's own case, one cause of action arose until the default was only till the extent of interest, whereas, the second cause of action arose on 20.08.2020, when the loan recall notice was issued by the Financial Creditor. The Financial Creditor could not have filed petition for both interest component as well as the entire loan amount. There cannot be multiple date of defaults. Bar under limitation is different from statutory bar. 6. Shri Ramji Srinivasan, learned Senior Counsel appearing for the Financial Creditor submits that the default was committed by the Corporate Debtor in regard towards interest payment obligation, i.e. PEMI with respect to loan of Rs.60 crores availed by the....
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.... made by the 15th day of each month in advance for the respective month. It will be payable monthly from the date of first disbursement." 9. Clause 4.2 provided 'Additional interest in case of default'. Clause 8 deals with 'Event of default'. Clause 8.1, (a), (b) and (c) is as follows: "8.1(a) If there is a default in payment of any of interest or principal for two consecutive months; or b) If there is any breach or violation of any of the terms of sanction of the said Loan; or c) Any default in the performance of any covenants, conditions or agreements on the part of the Borrower under this agreement or any other agreement or document/ security documents executed/ to be executed between the Borrower/ Mortgagors and DHFL pursuant to this Agreement and such default shall have continued over a period of 30 days after notice thereof shall have been given to the Borrower by DHFL; or" 10. Clause 8.3, on which reliance has been placed by the Appellant, provides as follows: "8.3. If any event of default or any event which, after the notice or lapse of time or both would constitute an event of default shall have happened, the Borrower shall forthwith give to DHFL a notice the....
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....days or the balance period of limitation (after exclusion of the aforesaid period), whichever is greater, would be available from 1 March 2022." 12. The Adjudicating Authority in the impugned order has clearly noticed the dates of default committed by the Corporate Debtor, which is not refuted by the Appellant. Paragraph 1.3 of the impugned order passed by the Adjudicating Authority is as follows: "1.3 The date of Default is stated as "In terms of the loan agreement, the first instalment of the preequated monthly instalment interest was required to be paid by the Corporate Debtor on 30.06.2018. However, the Corporate Debtor and/or the Co- Borrower have failed to honour their obligations in respect of the instalment due on 30.06.2018. In the event of failure to make payment of pre-equated monthly instalments interest, a cure period of 10 days is provided under the loan agreement. Accordingly, the Corporate Debtor first defaulted in its payment of PEMI/interest on 11.07.2018." Thereafter, the Corporate Debtor has committed default of its payment obligations towards PEMI/interest under the Sanction Letter and the Loan Agreement on consecutive occasions, which default conti....
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....of default as mentioned in paragraph 1.3 of the impugned order, it is clear from the Table that till February 2020, admitted amount in default was Rs.10,51,94,998/-. The emphasis made by learned Counsel for the Appellant is on the notice dated 28.08.2020, which is loan recall notice. The submission of learned Counsel for the Appellant is that loan recall notice having been issued on 20.08.2020, the entire loan became due only consequent to loan recall notice, which loan recall notice having been issued on 20.08.2020, i.e., during 10A period, the application was clearly barred. Loan recall notice dated 28.08.2020 was addressed to Corporate Debtor as well as the Personal Guarantor. The contention advanced by the learned Counsel for the Financial Creditor to counter the above submission is on the basis of Clause 8.1 of the Loan Agreement. The Respondent's case is that on occurring of two consecutive defaults in the payment of interest, it will constitute an event of default and the whole of the loan shall become forthwith due and payable by the Borrower. The above Clause clearly contemplates that on occurring of event of default, the whole of the loan shall become forthwith due and pa....
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....rdinance No. 09/2020 was promulgated by the President of India on 05th June, 2020 by which Section 10A was inserted into the I&B Code, 2016. An Application was filed by the Corporate Debtor for dismissal of Section 9 Application, the Section 9 Application was dismissed on the ground of Section 10A. Challenging the order of the Adjudicating Authority as well as Appellate Tribunal, Appeal was filed in the Supreme Court. Argument which was advanced before the Hon'ble Supreme Court was that Section 10A having been inserted in the statute book with effect from 05th June, 2020, it shall not apply on the Applications filed prior to the said date, which argument was rejected by the Hon'ble Supreme Court and relevant observations have been made in Paragraphs 22,23 and 24 as has been noted above. The Hon'ble Supreme Court affirmed the Order of the Adjudicating Authority holding that default in Section 9 Application being on 30th April, 2020 it being covered by Section 10A, Application was rightly rejected. The above judgment of the Hon'ble Supreme Court has laid down that if the default is after 25th March, 2020, the Application is hit by Section 10A. The object as was indicated in the ordin....