TaxTMI 
TaxTMI 
2025 (6) TMI 772
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....ter referred to as 'Impugned Order') passed by the Adjudicating Authority (National Company Law Tribunal, Special Bench at Indore) in CP(IB) No. 18/MP/2024 and CP(IB) No.17/MP/2024. By the impugned orders, the Adjudicating Authority has admitted Section 7 of IBC filed by the Financial Creditor-Bank of Baroda bringing both the Corporate Debtors into the fold of Corporate Insolvency Resolution Process ("CIRP" in short). Aggrieved by the impugned orders, the present two Appeals have been preferred by the respective suspended management of the Corporate Debtor. 2. Though the factual matrix of both the appeals are not a mirror image of each other, the questions involved in both the cases from the perspective of facts and law are largely identical. It is therefore, proposed to deal with the facts of Company Appeal No. 615 of 2025 in the first place and apply the findings arrived at on the facts of the Company Appeal No. 616 of 2025. 3. Setting out the factual background, Shri Gaurav Mitra, the Ld. Counsel for the Appellant submitted that the Financial Creditor-Bank of Baroda had sanctioned to Extol Industries Ltd.-Corporate Debtor a term loan of Rs 12.72 Cr. bearing interest @15.75....
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....olution. 5. Refuting the contentions of the Appellant, it has been contended by the Shri Abhindra Maheshwari, Ld. Advocate for Respondent No.1-Financial Creditor that the plea of incorrect NPA classification is not sustainable. The objection raised by the Appellant, basis a communication of 16.01.2016, that the date of NPA is incorrect cannot become a valid ground for rejecting the Section 7 petition. It was emphatically asserted that for the purpose of considering a Section 7 application, the only requirement that needs to be seen by the Adjudicating Authority is the existence of debt and default. The Corporate Debtor did not dispute debt and default at any stage. The Adjudicating Authority has clearly noted debt and default at para 17-18 of the impugned order. Since the default was found to persist even after the account of the Corporate Debtor was declared NPA, the debt liability was a continuous and subsisting one. Attention was adverted to the decision of the Hon'ble Supreme Court in the matter of M. Suresh Kumar Reddy Vs Canara Bank & Ors. in Civil Appeal No. 7121 of 2022 wherein it has been held that all that is required to be seen in deciding a Section 7 application is w....
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....d since the Financial Creditor had issued a NDC to the Corporate Debtor 75 days before declaring the Corporate Debtor to be NPA. It is also contended that when the date of default is clearly incorrect, the Section 7 application could not have been admitted by the Adjudicating Authority basis a wrong date of default depicted in the Section 7 application. It was asserted that as laid down by the Hon'ble Supreme Court in the matter of Ramesh Kymal Vs Siemens Gamesa Renewable Power Pvt. Ltd. (2021) 3 SCC 224, the Bank cannot claim that the date of default can be changed. 8. Per contra, it is the contention of the Respondent-Financial Creditor that even after the restructuring of both the Term Loans and renewal of Cash Credit Limit on 26.06.2013, the Corporate Debtor failed to maintain financial discipline as per the terms and conditions of the loan agreement. This had led to the classification of the accounts of the Corporate Debtor as NPA on 31.03.2016. It was also stated that a notice was issued on 28.04.2016 by the Financial Creditor indicating not only the over-dues in respect of the various accounts of the Corporate Debtor but also the minimum repayment required towards dischar....
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.... into standard category, minimum repayment as per following details is required: A/c No. Name of the account Overdue as on date Approx amount of interest & instalment up to June 2016 Total amount to be deposited 12230500 000094 M/s Extol Ind. Ltd. Rs. 575701/- Rs. 5690000/- Rs. 6265701/- 12230600 001554 M/s Extol Ind. Rs. 195617/- Rs. 8390000/- Rs. 8585617/- 12230600 001910 M/s Extol Ind. Rs. 11162/- Rs. 730000/- Rs. 741162/- Total Rs. 15592480/- 12230600 001393 Shri G.K. Bhatnagar Others Rs. 541532/- Rs. 1081980/- Rs. 1623512/- 12230600 002068 Shri G.K. Bhatnagar others NIL Rs. 168717/- Rs. 168717/- TOTAL Rs. 1792229/- 12230600 002126 M/s Xyron Technologie s Ltd. NIL Rs. 1355401/- Rs. 1355401/- We, therefore request you to arrange to deposit the amount as mentioned above, at your earliest so that degraded accounts may be upgraded. Your Faithfully, Chief Manager (Emphasis supplied) 11. When we peruse the letter of 16.01.2016 which letter has been the primary basis for the App....
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....l Creditor-Bank of Baroda in its communication dated 23.11.2017 to the Corporate Debtor had sent a detailed response to the directions raised by the Appellant in compliance of the directions of the Hon'ble High Court of Madhya Pradesh. In their reply, it was clearly pointed out by the Financial Creditor that the Corporate Debtor had not paid the quarterly instalments on the due dates due to which the term loan accounts had become irregular and that this status had been duly communicated to the Appellant on 03.06.2015, 24.08.2015 and 02.03.2016. Inspite of these repeated communications, the Corporate Debtor had not taken remedial action. This communication also mentions that the Appellant had defaulted 24 times in Term Loan-I facility and 11 times in Term Loan-II facility besides pointing out that the Appellant had failed to ensure that the credit-turnover in their account remained more than the interest debited during each quarter leading to unsatisfactory operation of the loan account showing poor repayment capacity of the Corporate Debtor. This communication is placed at page 161-164 of APB. On 22.01.2018, the Respondent issued the final recall notice to the Appellant. When we se....
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....by the party against whom such property or right is claimed, or by any person through whom he derives his title or liability, a fresh period of limitation shall be computed from the time when the acknowledgment was so signed." On a plain reading of the above statutory provision, we have no quarrel with the proposition canvassed by the Appellant that if the default has occurred over 3 years prior to the date of filing of Section 7 application, then the Section 7 application would be barred under Article 137 of the Limitation Act. Be that as it may, we also notice that the language of Section 18 clearly suggests that limitation can well be extended subject to such acknowledgment of liability arising before the expiration of the period of limitation. 16. When we peruse the impugned order, we find that the Adjudicating Authority has noted at para 19 therein that the Financial Creditor has presented credible evidence that the outstanding debt of the Corporate Debtor is recorded in their balance sheets from FY 2015-16 until 2022-23. The Adjudicating Authority has also noted that these entries were not contested by the Corporate Debtor during the oral arguments and hence held these ....
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....nd expansions given to us, the Company has defaulted in repayment of loans alongwith interest taken from various banks. As stated by the company in its Contingent Liability also, the matter with Debt Recovery Tribunal and final amount will be paid only after the order in this regard. No further details as desired under paragraph 3(ix)(a) of the Order have been provided to us. The amounts outstanding as per the Balance Sheet are as under: Bank Amount (Rs.) Bank of Baroda A/c 01554 89623400.00 Bank of Baroda Term Loan-1 152457220.00 Bank of Baroda Term Loan-2 6011160.00 20. Thus, even though the balance sheets of FY 2015-16 onwards prior to FY 2022-23 do not specifically mention the name of the Financial Creditor, it is an undisputed fact that the name of Financial Creditor is specifically mentioned in the Balance sheet of 2022-23. This specific mention of the name of the Financial Creditor in the Balance sheet of the Corporate Debtor is sufficient to establish the jural relationship between them as of debtor and creditor. Moreover, the outstanding balance as shown in the balance sheet of FY 2022-23 is also reflected in the balance sheets of the previous ye....
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....icating Authority has correctly concluded that the Section 7 application fell well within limitation. We are therefore satisfied that the Adjudicating Authority has returned the correct finding that the debt having been acknowledged year over year from 2015-16 onwards until 2022-23, it was not barred by limitation. The debt having become due and payable and a default thereto having been committed, the Adjudicating Authority has correctly applied the ratio of the judgment of the Hon'ble Supreme Court in Innoventive Industries Ltd. Vs ICICI Bank in Civil Appeal No. 8337-38 of 2017 that in a Section 7 application, the Adjudicating Authority is to be only satisfied that there is a debt which is above the threshold limit which has become due and payable and if a default thereto has occurred, a Section 7 application ought to be admitted even if the debt is disputed. 24. We now come to the last issue raised by the Appellant that the Adjudicating Authority had passed the impugned order without giving the Appellant a right to reply. It is the contention of the Appellant that they could not appear before the Adjudicating Authority due to some genuine reasons including critical medical con....