TaxTMI 
TaxTMI 
2024 (2) TMI 202
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.... Financial Creditor - Emami Reality Ltd. was admitted. 2. Brief facts of the case giving rise to the Appeal are : (i) The Corporate Debtor - Fort Projects Private Limited is a Company engaged in development of real estate projects. An Agreement dated 15.02.2016 was entered between the Corporate Debtor and the Financial Creditor and some other Group Companies of Kathotia Group. Under the Agreement Financial Creditor agreed to extend Rs.35 Crores to the Corporate Debtor. Further, under the Loan Agreement, the Financial Creditor had agreed to provide financial assistance of Rs.70 crores, out of which Rs.35 crores was to be given to the Corporate Debtor and Rs.35 Crores to one Gagan Dealcom Private Limited. In pursuance of the Agreement dated 15.02.2016, an amount of Rs.34.55 Crores was disbursed to the Corporate Debtor. (ii) The Financial Creditor sent several communications to the Corporate Debtor for repayment of the amount. On behalf of the Corporate Debtor several letters dated 25.08.2018, 27.08.2018, 12.09.2018 and 23.11.2018 was written confirming and assuring that payment will be made in short period of time. (iii) An Agreement dated 26.02.2020 was again entered into bet....
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....It is submitted that arguments on the basis of Section 10A was advanced before the Adjudicating Authority on behalf of the Corporate Debtor. 5. Shri Ratnanko Banerjee, learned Senior Counsel appearing for the Respondent, refuting the submissions of learned Counsel for the Appellant submits that Corporate Debtor in its reply to Section 7 Application had taken the stand that Agreement dated 26.02.2020 although was signed, but was never implemented. In view of the stand taken by the Corporate Debtor in the reply that Agreement was never implemented, no plea in respect of Section 10A was advanced before the Adjudicating Authority and even during oral submissions, no submission on Section 10A was advanced. It is submitted that Financial Creditor has filed written submissions, which indicates that no submission with regard to Section 10A was adverted to. It is submitted that the Corporate Debtor had taken financial facilities as per Agreement dated 15.02.2016 and an amount of Rs.34.55 Crores was disbursed, which inspite of several commitments and acknowledgement by the Corporate Debtor, was never repaid. An Agreement was entered between the parties on 26.02.2020, where the Corporate Deb....
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....oup.com> Subject: Loan Respected RS Uncle, Sadar Pranam With reference to the telephonic talk we had in the morning, I reiterate that the Principal Loan Amount of Fort Projects shall be cleared within 15th to 31st December, 2019. I acknowledge the Accommodation provided by you and shall remain ever obliged. By the grace of God please remain hale and hearty." 8. No payments were made by the Corporate Debtor inspite of acknowledgement. An agreement dated 26.02.2020 again entered between the parties, which included the Financial Creditor and the Corporate Debtor. In the Agreement there is an acknowledgment of sanction of advance of Rs.35 Crores and payable dues as on 19.02.2020 as Rs.64,04,90,697/-. In paragraphs (G) and (H), following are captured: "G) For the purpose of its business, the Kathotia Group had approached the Lender to lend and advance an aggregate sum of Rs.35,00,00,000/- (Rupees seventy crores) only and as on 19th February, 2020 a total sum of Rs.64,04,90,697/- (Rupees sixty four crore four lacs ninety thousand six hundred and ninety seven) only is due and payable by the borrower to the Lender (hereinafter referred to as the TOTAL INDEBTEDNES) H) ....
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....s made for payment of Rs.82,61,90,657/-. In Section 7 Application, date of default mentioned by the Financial Creditor is 15.12.2021. In Part-IV , due amount claimed to be in default and date on which default occurred has been mentioned. In Part-IV, Item No.2, following has been mentioned: "2 Amount claimed to be in default and the date on which the default occurred. (Attached the working for computation of amount and days of default in tabular Form) Total amount of debt due is Rs.91,74,27,304,00/- (Rupees Ninety One Crores Seventy Four Lacs Twenty Seven Thousand Three Hundred Four only). [Principal Rs.82,61,90,657.00 as on 15th December, 2021 + interest Rs.9,12,36,647.00 @ 15% p.a. calculated from 16th December, 2021 to 31st August, 2022] is in default and is due and payable. Financial Creditor is also entitled to a further interest @ 15% per annum till the date of repayment. A copy of Statement of Accounts of the financial creditor is annexed hereto and marked as Annexure "G" The date of default is 15th December, 2021." 12. In Part-IV, after referring to the Agreement dated 15.02.2016 between the parties, the Agreement dated 26.02.2020 was mentioned....
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....ade by the Corporate Debtor to the Financial Creditor. In such circumstances total amount of debt due is Rs.91,74,27,304.00/- (Rupees Ninety One Crores Seventy Four Lacs Twenty Seven Thousand Three Hundred Four only). [Principal Rs.82,61,90,675.00 as on 15th December, 2021 + Interest Rs.9,12,36,647.00 @ 15% p.a. calculated from 16th December, 2021 to 31st August, 2022] is in default and is due and payable. Financial Creditor is also entitled to a further interest @ 15% per annum till the date of repayment." 13. On behalf of Corporate Debtor, a detailed affidavit in reply, signed by the Appellant himself was filed before the Adjudicating Authority. It is useful to notice the pleadings in the said reply. Execution of the Agreement dated 26.02.2020 was not denied. However, it was pleaded that Agreement, although entered, but was never implemented between the parties. It is useful to notice pleadings of Corporate Debtor in paragraph 14, 19, 20 and 23, which are as follows: "14. It is denied and disputed that the agreement dated 26th February, 2020 was entered into in furtherance of the agreement dated 26th February, 2020 as wrongfully alleged or at all. The agreement dated ....
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....o 25.08.2020, hence, the default occurred on 25.08.2020, which is covered by Section 10A period, the Application under Section 7 was not maintainable. The learned Senior Counsel for the Appellant has relied on judgment of the Hon'ble Supreme Court in Ramesh Kymal vs. Siemens Gamesa Renewable Power Pvt. Ltd. - (2021) 3 SCC 224. The Hon'ble Supreme Court in the said judgment has held that in view of Section 10A, no Application shall ever be filed when default has occurred after 25th March, 2020. In paragraph 27 of the judgment, following has been held: "27. Adopting the construction which has been suggested by the appellant would defeat the object and intent underlying the insertion of Section 10-A. The onset of the Covid-19 Pandemic is a cataclysmic event which has serious repercussions on the financial health of corporate enterprises. The Ordinance and the Amending Act enacted by Parliament, adopt 25-3-2020 as the cut-off date. The proviso to Section 10-A stipulates that "no application shall ever be filed" for the initiation of the CIRP "for the said default occurring during the said period". The expression "shall ever be filed" is a clear indicator that the intent of the legisl....
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....er acted upon, he cannot rely on the date of default in the Agreement for the purpose of Section 10A. 17. Apart from above, there are two reasons due to which we are not persuaded to accept the submission of the Appellant that Application was barred by 10A. Firstly, the Agreement dated 15.02.2016 was executed between the parties, which is not disputed. Under the Agreement dated 15.02.2016 an amount of Rs.34.55 Crores was disbursed. The Adjudicating Authority has returned a finding, referring to the Bank statement that the said amount was disbursed. In paragraph 10.1, following finding has been returned by the Adjudicating Authority: "10.1 On perusal of documents submitted by the applicant and after hearing the Ld. Counsel for the applicant as well the respondents we find that pursuant to the Agreement made on 15/02/2016 a sum of Rs.34.55 Crore has been advanced and there can be no dispute on the fact of payment as otherwise there is no reason for agreement dated 26/02/2020. The Bank Statements attached to the application also demonstrate payment to the Corporate Debtor by the Financial though the respondents made an attempt to brush it aside as mere entries entered between Emami....
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....r about 15th February, 2016, a Loan Agreement was inter alia entered into between yourselves and ourselves and others, whereby and where under, we had lent and advanced from time to time an aggregate sum of Rs.34,55,00,000/- to you. The said loan was repayable within nine months with interest to be agreed upon. However you failed and neglected to repay the said sum lent and advanced to you and/ or part thereof and/or any interest thereon. In view of such default in repayment on your part, you by various correspondences requested for some time and acknowledged your liability to repay the said sum of Rs.34.55 crores with interest accrued thereon. It was also agreed that from the dated 17th February, 2016 to 31st March, 2018 interest would be charged @ 18% and from 1st April, 2018 until payment interest would be charged @15%. Since payment of our dues could not made by you, in or around early 2020 you agreed and acknowledged that the unpaid interest and unpaid principal sum aggregating to Rs.64,04,90,697/- shall be treated as the principal and to be considered as financial accommodation to finance the company. This is duly evidenced by the agreement dated 26th February, 2020 ent....
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....inancial Creditor. If the time was not extended upto 15.12.2021 by the Financial Creditor, it was but natural that Corporate Debtor would object to the letter dated 13.01.2022 stating that time has never been extended. The letter dated 13.01.2022 reflects the course of event as happened at the relevant time, when there was no proceedings between the parties. There has to be very strong circumstance to refute the course of event as noticed in the letter dated 13.01.2022. The fact that letter dated 13.01.2022 has not been brought on the record in the Appeal by the Corporate Debtor also supports the submission of the Financial Creditor that letter dated 13.01.2022, records the state of affairs as it existed at the relevant time. We, thus, are of the view that Adjudicating Authority did not commit any error in accepting the date of default as 15.12.2021 as pleaded in Section 7 Application. 21. We have also noticed that in the reply, which was filed by the Corporate Debtor in Section 7 Application, the Corporate Debtor even sought to contend that Agreement dated 15.02.2016 was not to be acted upon. It was further pleaded that Agreement dated 15.02.2016 was a joint venture Agreement. In....