AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2025 (12) TMI 1475
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....o.107/CB/2024 filed by the Financial Creditor - Respondent No.1 herein permitting amendment of date of default in Part IV of Form A of Section 7 application. Aggrieved by the order allowing the application, the Suspended Director has come up in this appeal. 2. Brief facts of the case necessary to be noticed for deciding this appeal are: (i) The Corporate Debtor - M/s Balasore Alloys Limited executed a Deed of Indemnity and Guarantee for Inter Corporate Deposit (ICD) on 14.12.2025 by which the Financial Creditor has granted a Short-Term Inter Corporate Deposit for a sum of Rs. 10 Crore for 15 days @15% per annum interest. The Deed of Indemnity and Guarantee further contemplated that if the Inter Corporate Deposit is not paid according to its tenor to the Lender, the Corporate Debtor shall pay interest @18% per annum by way of penalty from time to time from the due date till the date of payment. (ii) The Corporate Debtor acknowledged the receipt of Inter Corporate Deposit of Rs. 10 Crore having a maturity period of 15 days only with interest calculated @ 15% per annum by letter dated 14.12.2015. (iii) The Corporate Debtor did not pay the amount of Rs. 10....
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....d Shri Ratnanko Banerji, learned senior counsel for the Respondent. 4. Learned counsel for the Appellant submits that the date of default was mentioned by the Financial Creditor as 20.03.2020 in Part IV which date fell under the prohibited period under Section 10A. It is submitted that the Financial Creditor in the notice dated 28.07.2020 demanding the payment of Rs. 18,28,49,315/- itself requested the entire debt to be paid in 15 days of the receipt of the notice, in which notice it was mentioned that post-dated cheque dated 31.12.2019 was not honoured. Thus, according to own case of the Financial Creditor, the date of default was 20.03.2020. The application was clearly barred under Section 10A and the Financial Creditor could not be allowed to amend the date of default to get away from the bar under Section 10A of the I&B Code. It is true that the Financial Creditor can be permitted to amend his pleadings but the pleading cannot be amended in manner to take away the bar contained to Section 7 application. By permitting amendment of date of default, the entire foundation of Section 7 application is changed, which is not permissible in law. When the Financial Creditor itself cam....
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.... the present case is prior to 10A period, hence, there was no impermissibility in allowing the amendment application. Present is not a case of withdrawing any admission by the Financial Creditor rather all relevant notices were pleaded with all relevant documents in the Section 7 application. 6. Learned counsel for both the parties have placed reliance on various judgments of this Tribunal and Hon'ble Supreme Court which we shall refer to in detail while considering the submissions in detail. 7. Before we enter into the respective submissions of either of the parties, we need to capture the real nature of the transaction between the parties and sequence of events which have been captured in the Section 7 application filed by the Financial Creditor. It is admitted fact between the parties that Deed of Indemnity and Guarantee for Inter Corporate Deposit was executed by the Corporate Debtor on 14.12.2015 for a Short Term Inter Corporate Deposit of Rs. 10 Crore for a period of 15 days @15% per annum interest. The copy of the Deed of Indemnity and Guarantee was part of the Section 7 application, which was filed as Annexure 3 to the Application, as pleaded in Part IV of the Section....
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....said Inter corporate deposit, breach or non- performance or non-observance of the obligations on the part of the borrower of the said Inter corporate deposit (e) that if the said Inter corporate deposit is not paid accordingly to its tenor, to pay Lender interest at the rate of 18% p.a by way of penalty from time to time from the due date till the date of payment. (f) not to hold Lender responsible or liable for any loss or damage which borrower may suffer as a result of any act or omission or negligence on the part of any of the correspondents or agents appointed by Lender for the purpose of collection of the amounts of the said Inter corporate deposit or otherwise howsoever." 8. It is relevant to notice that in the Deed of Indemnity and Guarantee there was Annexure A, which included payment of interest. Total amount mentioned in Annexure A is Rs. 10,05,54,795/-. Thus ICD became payable after 15 days @15% p.a. interest on 29.12.2015. The letter issued by the Corporate Debtor on 14.12.2015 in the above reference has been pleaded and filed as Annexure 4 to the Part IV, which letter dated 14.12.2015 is as follows: "Date: 14th December, 2015 To ....
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.... of 18% per annum to be calculated from 7th October, 2020. The Financial Creditor in the said Demand Notice inter alta stated that, it was the Corporate Debtor's intention from the very outset to cheat the Financial Creditor and that the Corporate Debtor had made false and fraudulent representations to the Financial Creditor. The Corporate Debtor was also called upon to pay the entire amount due within the seven days of receipt of the said Demand Notice, failing which, the Financial Creditor would be bound to take legal action civil/ criminal proceedings and would be compelled to initiate proceedings in the National Company Law Tribunal ("NCLT") against the Corporate Debtor in accordance with law, as to its own risk and cost and consequences. The Financial Creditor also called upon the Corporate Debtor to resolve the matter amicably. A copy of the said Demand Notice dated 13th October, 2020 is annexed hereto as "Annexure XXXIII"." 11. The post-dated cheques issued from time to time have been pleaded in Part IV of the Section 7 application and the correspondence between the parties, which is supported by contemporaneous emails are also part of the Section 7 application. We ma....
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....ticee) fails to pay the Inter Corporate Deposit of Rs. 10, 00, 00, 000/- (Rupee Ten Crore Only) according to its tenor then the borrower (i.e. you the Noticee) will be liable to pay 18% interest per annum as a way of penalty to the Lender (i.e. Our Clients) till its realization. 6. Our Clients state that relying upon the promise made by you the Noticee, in good faith our Clients accepted your request and therefore, you the Noticee duly acknowledging the debt payable by you the Noticee to our Client issued fresh post-dated cheques (PDC) for the above debt and payment along with the interest as mentioned above. 7. Our Clients further state that you the Noticee, after acknowledging and promising to pay said amount wrongfully denied to pay the amount on due date when the cheques were due for presentation for its actual realization. Thereafter, you the Noticee, started making different excuses and again promised to pay said amount by issuing fresh post-dated cheques (PDC) in acknowledgement of the debt owed, outstanding and payable by you the Noticee to our Clients. Our Clients further state that you the Noticee, on every occasion of due date for realization of the che....
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....nt notice dated 13.10.2020 was also within 10A period. We have already noticed the details of the notice. The mere fact that total amount defaulted was demanded within 15 days cannot mean that default committed by the Corporate Debtor only for failure to deposit the amount within 15 days. The notice captures details of default made by the Corporate Debtor, reflecting demands from 14.12.2015 and the notice also calculated the total default which mentioned amount of Rs. 18,28,49,315/- which included interest and principal. In the above case, we need to refer to three judge bench judgment of this Tribunal in "Sandip Narendrakumar Patel (Promotor/ExDirector) Yours Ethnic Foods Pvt. Ltd. vs. Svakarma Finance Pvt. Ltd. & Anr., Company Appeal (AT) (Ins.) No.1419 of 2023 decided on 05.11.2024". Above was a case of loan payable with 14% interest. Loan was sanctioned on 18.07.2019 and agreement was executed on 25.07.2019. Loan was repayable within period of three years starting from 20.08.2019. In the above case also date of default was mentioned as 20.02.2020 in the Section 7 application and recall notice dated 06.11.2020 granted period of 15 days for depositing amount, issue was raised tha....
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....f default and it was a procedural step for recalling of the entire loan amount. In such circumstances, the argument raised by the Appellant has no legs to stand because the default had occurred in the month of Jan, 2020 partly when the amount of penal interest was not paid and fully when the entire amount was not paid in Feb, 2020. Section 10 A postulates that the CIRP cannot be initiated either under Section 7, 9 or 10 if the default occurs during the cut of period i.e. 25.03.2020 to 25.03.2021. In the present case, Section 10A would not apply because the date of default occurred much prior to 25.03.2020." 15. In the above judgment, this Tribunal held that the issuance of recall notice dated 06.11.2020 giving the Corporate Debtor 15 days' time to pay the amount does not mean that default has been occurred with issuance of default/recall notice. This Tribunal held that notice was confirmation of default and it was a procedural step for recalling of the entire loan amount. In view of the above judgment of this Tribunal, we are unable to accept the submission of the Appellant that default can only be treated to be first occurred when demand notice dated 28.07.2020 was issued by th....
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....present is a case where all relevant facts including the fact that ICD was only for 15 days and payable after 15 days with interest were pleaded in the Section 7 application. The Section 7 application clearly pleaded that the post-dated cheques were given from time to time by the Corporate Debtor acknowledging its liability, which post-dated cheques included payment of principal amount along with interest. Present is not a case where Financial Creditor for the first time has pleaded about default which took place in non-payment within 15 days of the ICD, as was the indemnity given by the Corporate Debtor. The Financial Creditor has given date of 20.03.2020 as date of default in the Part IV initially since on the said date the last replaced post-dated cheques were to be honoured and the Corporate Debtor failed to renew the post-dated cheques, which was being done earlier at every three months. The judgment of Hon'ble Supreme Court in "Ramesh Kymal v. Siemens Gamesa Renewable Power (P) Ltd., (2021) 3 SCC 224" has been relied and referred to where the Hon'ble Supreme Court had occasion to consider Section 10A of the I&B Code which clearly held that no application for initiation of CIR....
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....he Act as two years, on an understanding of the situation as it then existed. At the same time, it conferred a power on the Rajpramukh to extend the life of the Ordinance beyond that period, if the state of affairs then should require it. When such extension is decided by the Rajpramukh and notified, the law that will operate is the law which was enacted by the legislative authority in respect of "place, person, laws, powers", and it is clearly conditional and not delegated legislation as laid down in R. v. Burah [R. v. Burah, 1878 SCC OnLine PC 17 : (1877-78) 5 IA 178], IA at pp. 180, 194, 195 and must, in consequence, be held to be valid. ... *** 13. (4) We shall next consider the contention that the provisions of the Ordinance are repugnant to Article 14 of the Constitution, and that it must therefore be held to have become void. In the argument before us, the attack was mainly directed against Sections 7(1) and 15 of the Ordinance. The contention with reference to Section 7(1) is that under that section landlords who had tenants on their lands on 1-4-1948, were subjected to various restrictions in the enjoyment of their rights as owners, while other landlords ....
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.... reliance on the judgment of this Tribunal in "Puneet P. Bhatia vs. ASREC (India) Ltd. & Anr., Company Appeal (AT) (Ins.) No.139 of 2024", where this Tribunal had occasion to consider challenge to an order passed under Section 7 of the I&B Code. In the Section 7 application the date of default was mentioned as 31.10.2020 and the date of default was subsequently permitted to be amended as 02.08.2019; Section 7 application was admitted, challenge to which was made in the appeal before this Tribunal. This Tribunal in the above case framed two issues which have been captured in Para 28, which are as follows: "28. There are two issues involved for the determination in the present appeal: - a) Whether the Date of Default can be changed after filing the petition under Section 7 of the Code? b) Whether in the present case the date of default has been correctly identified? We examine both these issues in detail in subsequent paras." 20. This Tribunal after considering submissions of the parties came to the conclusion that NCLT is empowered to allow the parties to amend the pleadings. In Para 45 following was laid down: "45. Section 10A of the ....
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....ocuments with supporting pleadings, and to consider such documents and pleadings did not call for interference in appeal." 22. The pleadings in the present case indicate that the Corporate Debtor has given post-dated cheques continuously from 29.12.2015 till last cheque issued on 31.12.2019, which cheques included amount of principal of Rs. 10 Crore plus interest. The issuance of post-dated cheques by the Corporate Debtor is clear acknowledgement of debt. We may refer to the judgment of Hon'ble Supreme Court in "Sampelly Satyanarayana Rao vs. Indian Renewable Energy Development Agency Limited, (2016) 10 SCC 458" where in Para 17 following was observed: "17. In Rangappa v. Sri Mohan, this Court held that once issuance of a cheque and signature thereon are admitted, presumption of a legally enforceable debt in favour of the holder of the cheque arises). ...." 23. Learned counsel for the Respondent has also relied on Division Bench judgment of Kerala High Court in "Dr. K. K. Ramakrishnan vs. Dr. K. K. Parthasaradhy & Anr., 2003 SCC OnLine Ker 420" where the Division Bench answered the two questions referred to the Division Bench in following manner: "In view of....
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.... Supreme Court itself has laid down that categorical admission cannot be resiled but in a given case, it may be explained or clarified. The present is not a case where any clarification or explanation is sought to be offered for date of default 05.09.2020 mentioned in Section 7 application. The date of default in itself is sought to be changed as 01.04.2021 without there being any reason or cause. As noted above, Appellant themselves has stated that after registration of society of the appellant on 04.09.2020, the corporate debtor was liable to refund the amount to the appellants which default took place on 05.09.2020. In the application as pleaded that they entered into informal talks with the corporate debtor which did not fructify. Appellant themselves has stated that in the formal talks proceeded to take time till financial year of the corporate debtor. Firstly, according to the case of the appellant, informal talk did not fructify, hence, there was no settlement with regard to date up to which amount has been paid. Date of default cannot be permitted to be changed. Appellants themselves cannot change the date of default by stating that they give more time to the corporate debt....
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.... own facts and thus, in above context this Tribunal observed that date of default cannot be changed. The present is a case where detailed pleading pertaining to default committed by the Corporate Debtor right from 29.12.2015 are already part of the Section 7 application with details of all issuance of post-dated cheques from time to time. Thus, in the present case, there are sufficient material to indicate that pleading of the case of the Financial Creditor that default was committed on 29.12.2015 but in the Section 7 application date of default mentioned is 20.032020 when the last post-dated cheque was not honoured. The judgment of this Tribunal upholding rejection of amendment application in Inakshi Sobti was on its own facts and cannot be applied in the facts of the present case. 28. There can be no dispute to the proposition that no application under Section 7 can be filed on the ground of default which has occurred during 10A period, however, whether the default is committed during 10A period or period prior to 10 A period can always be gone into and the Financial Creditor can be permitted to amend the date of default in event there are material to indicate that default has....