TaxTMI 
TaxTMI 
2026 (2) TMI 848
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.... Section 7 of the Code. Submissions of Appellant: 2. Appellant who is the Suspended Director of the Corporate Debtor M/s. Panda Technologies India Private Limited - namely Rajendra Narayan Panda. had approached L&T Finance Limited to avail short term loan financing facility on a revolving basis for purchase of industrial products from L&T Valves Limited. 3. Section 7 was admitted on 21.01.2025 against the Corporate Debtor on its initiation by the Financial Creditor - Omkara Assets Reconstruction Private Limited the assignee of L&T Finance Limited. 4. The main ground for the Appeal is that the principal amount as in Form 1 Application under Section 7 of the Code was only Rs. 64,33,286/- and the interest was claimed to be Rs. 76,07,249/- aggregating to Rs. 1,40,40,535/- which is alleged to be incorrect and defective. 5. Appellant claims that as per the audited balance sheet of the Appellant company as on 31.03.2017 the balance outstanding was Rs. 48,01,648/-. As per the Audited Balance Sheet of Appellant Company at 31st March, 2017, the balance outstanding was Rs. 48,01,648.43; as at 31 March, 2018, the balance outstanding was Rs. 40,06,309.79; as at 31 March, 2019, th....
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....0,40,535/-(including principal of Rs. 64,33,286/- and interest of Rs. 76,07,249/-) suffers the following defects: • The table is based on "Compound Interest Calculation" which was never intended and contractually agreed between the parties and therefore the amount arrived at is incorrect; • The table shows "monthly compounding of interest" which is also not as per the contractual terms; • The table starts calculation for arriving at amount of alleged interest instead of Delayed Payment Charges with effect from 28th April, 2018 while the assignment had taken place on 24th September, 2019 and therefore the first 18 entries in the table are of a period prior to Deed of Assignment for which an alleged interest amount of Rs. 43,43,043.24 has been wrongly charged for arriving at the total amount of alleged interest of Rs. 76,07,428.85, and therefore the very basis of calculation of total alleged interest of Rs. 76,07,248.85, is wrong, being not as per the contractual terms; • The residual amount of the alleged interest of Rs. 32,64,205/-also suffers from several defects because it is calculated on monthly compounding basis, which is not....
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....The Corporate Debtor was irregular in repaying the amount in terms of the Facility Agreement. Accordingly, L&T Finance Limited issued a Demand Notice dated 19.04.2017 seeking repayment of Rs. 67,19,390/- (Sixty-Seven Lakhs Nineteen Thousand Three Hundred Ninety) along with further interest till the date of realisation. 13. On 24.09.2019, L&T Finance Limited executed an Assignment Agreement in favour of the present Answering Respondent i.e., Omkara Assets Reconstruction Private Limited and assigned its debt and all rights, title and interest in the Corporate Debtor to the Answering Respondent in its capacity as Trustee of PS 10/ 2019-20 Trust. 14. Post assignment, Respondent (Financial Creditor) being trustee of PS 10/2019-20 Trust, on 18.12.2021 issued a loan recall notice to the Appellant/Corporate Debtor seeking discharge of all liabilities by the Corporate Debtor. In view of the default committed by the Corporate Debtor, the Answering Respondent / Financial Creditor had preferred the petition under Section 7 of the Code seeking initiation of CIRP against the Corporate Debtor which was eventually allowed by the Ld. Adjudicating Authority by way of the Impugned Order. 15.....
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....tanding towards the loan was Rs. 85,59,134/- (Balance sheet of the Corporate Debtor annexed at Page 210 of the Appeal). The amount of Rs. 85,59,134/- outstanding as on 31.03.2016 is only towards principal as the Appellant in its reply before the NCLT has admitted that the interest amount has never been acknowledged by the Corporate Debtor. Thus, it is clear that the principal outstanding as on 31.03.2016 was Rs. 85,59,134/-. 19. It is matter of fact that the Corporate Debtor was in default as on 31.03.2016 as the Appellant has admitted that the account of Corporate Debtor was declared as NPA on 11.06.2016 (admitted by the Appellant in its written submissions filed before the NCLT, refer page 336 of the Appeal). It is RBI guideline to classify the account as NPA when the Principal or Interest remain overdue for 90 days or more. Thus, the Corporate Debtor started defaulting in the loan account from 11.03.2016 onwards and the Corporate Debtor has itself acknowledged in its balance sheet that the principal outstanding as on 31.03.2016 was Rs. 85,59,134/-. 20. Calculation of interest based on Corporate Debtor's balance sheet is as follows: S. No. Acknowledgment Amount....
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....have a limitation period of 90 days from 01.03.2022. Thus, the present petition is within the limitation period i.e. 3 years from the date of default. 23. Adjudicating Authority at the time of admission of a Section 7 petition is only required to ascertain the existence of a debt and default. It is a settled law that debt and default are sine qua non and only condition for admitting an application under Section 7 of the Code. The Hon'ble Supreme Court in the matter of Innoventive Industries Ltd. v. ICICI Bank observed that for the initiation of the Corporate Resolution process by financial creditor under sub-section (4) of Section 7 of the Code, 2016, the Adjudicating Authority on receipt of Application under sub-section (2) is required to ascertain existence of default from the records of Information Utility or on the basis of other evidence furnished by the Financial Creditor under sub-section (3). 24. Under Section 7, the Adjudicating Authority is required to satisfy (a) Whether a default has occurred, (b) Whether an application is complete and (c) Whether any disciplinary proceedings against the proposed Insolvency Resolution Professional. Once satisfied, it is requir....
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....Company Law Tribunal ("NCLT"), Indore bench vide its order dated 21.01.2025 in Company Petition [CP(IB)/40 (MP) 2022] filed by Omkara Assets Reconstruction Private Limited, ordered commencement of Corporate Insolvency Resolution Process (CIRP) under the provisions of the Insolvency and Bankruptcy Code, 2016 ("IBC") of Panda Technologies Private Limited ("Corporate Debtor"). 28. The Interim Resolution Professional (IRP) Mr. Mangesh Vitthal Kekre made Public Announcement in Form A on 24.01.2025 in English newspaper - Free Press Journal (Bhopal Edition) and Hindi newspaper Dainik Agniban (Bhopal Edition) inviting claims from all the stakeholders in accordance with Section 13 of the Insolvency and Bankruptcy Code, 2016 and Regulation 6 of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016. The last date for submission of claim as per Public Announcement was 04.02.2025. 29. The Resolution Professional (RP) initially received a claim from only one financial creditor i.e. Omkara Assets Reconstruction Pvt. Ltd., within the prescribed due date for submission of claims and prior to the constitution of the Committee of Cr....
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....n relation to assets of the Corporate Debtor as well as other information relevant in the process. However, they have not responded to any of the intimations/request letters/emails. As also their contact details were initially not available with RP, RP made a preliminary enquiry with respect to the Corporate Debtor's present affairs, offices locations, Location of assets including factory location, directors/promoters, change in addresses, change in directorships, audited financial, ROC filings, bank borrowings, bank accounts etc. based on available information on MCA portal, local enquiries, telephonic discussions with the last statutory auditor, bankers etc. After collecting information and locations of the offices of the CD, he visited all such office addresses. At all such addresses, premises were found to be locked, and various notices of the Bank were found affixed outside those office addresses. In this process, RP had also sent letters along with a copy of CIRP order to the personal email as well as addresses of the directors which could be found in the records. However, despite successful delivery, they chose not to respond to the emails and also refused to receive let....
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....d and sought time to file a reply and the same was allowed. The matter was last listed on 17.11.2025, wherein the Respondent expressed its inability to file the reply due to certain difficulties. The Hon'ble Tribunal granted a final opportunity to file the same and directed that the matter be listed for further consideration on 16.12.2025. 33. As per Regulation 27 of IBBI (Insolvency Resolution Process of Corporate Persons) Regulations, 2016, RP has appointed 2 registered valuers each for asset class being Land & Building on 08.03.2025 to determine fair value and liquidation value of Land & Building of CD in accordance with regulation 35. Valuers for other asset classes, namely plant and machinery as well as securities and financial assets, have not been appointed due to the non-availability of necessary documents and information and ongoing non- cooperation from the suspended management. 34. In accordance with the provisions of Regulation 36 of the CIRP Regulations, the Information Memorandum (IM) is required to be issued to each member of the Committee of Creditors. The IM was issued to all CoC members on 10.10.2025, containing the details of the corporate debtor as pre....
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.... was due to expire on 18.10.2025, another application, IA/525(MP)/2025, was filed before the Hon'ble NCLT on 17.10.2025, seeking exclusion of 210 days-i.e., from 28.02.2025 (the date of the Hon'ble NCLAT's direction restraining issuance of Form G) to 26.09.2025 (the date of the last effective order continuing the interim relief already granted). Vide order dated 14.11.2025, Hon'ble Tribunal was pleased to allow the application and exclude the period of 210 days (28.02.2025 to 26.09.2025) from the computation of the CIRP timeline of the Corporate Debtor. Consequently, the CIRP timeline stands extended by 210 days. And now the CIRP closure date is 16.05.2026. Appraisal 38. We have heard the counsels of both sides and also perused the material placed on record. The issue which emerges is whether the claim filed under Section 7 of the code is below threshold or not and whether the application is barred by limitation or not. Issue of Threshold 39. With respect to threshold the Appellant claims that the principal amount as in Form 1 Application under Section 7 of the Code was only Rs. 64,33,286/- and the interest was claimed to be Rs. 76,07,249/- aggregating t....
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..... A bare perusal of the sanction letter dated 17th July, 2013, (Page 108 of the Appeal) the sanctioned limit was Rs. 150 lacs, with tenure of 90 days from disbursement, on which accrued interest was payable at the end of every month in the first week of next month and delayed payment charges (emphasis supplied) for 91-120 days was @ 16% and 121 days onwards @ 22% p.a. for the period of delay. The sanction letter does not provide for payment of interest beyond 90 days and instead provides for payment of delayed payment charges and the sanction letter nowhere provides for compounding of interest as wrongly alleged in the application under Section-7. 5. Furthermore clause 1.5.7 of the Facility Agreement Page 112-116 of Appeal) provides that interest shall be calculated on a 365 day year basis, there is no mention about monthly compounding of alleged interest. 6. The Summary Schedule as per clause 1.5.2 of the Facility Agreement, (Page 126 of the Appeal) provides for interest @ 13.75% p.a. for 90 days, and interest accrued at the end of every month was payable on or before 10th day of next month. The summary schedule does not provide for payment of interest beyond 90 ....
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....nt of the alleged interest of Rs. 32,64,205/-also suffers from several defects because it is calculated on monthly compounding basis, which is not as per the contractual terms; since as per the contractual terms mentioned in the summary schedule at Page-126 of appeal, delayed payment charges @ 22% p.a. was payable and therefore the total amount of Delayed Payment Charges (Not the Interest) on the assigned principal amount of Rs. 40,06,310/- till the date of filing of application i.e. 4' April, 2022 comes out to Rs. 22,03,470/- only which has been worked out as under: Sr. No. Period INR 1. 24.09.20 19 to 3 1.12.20 19 2,20,347 2. 01.01.2020 to 31.12.2020 8,81,388 3. 01.01.2021 to 31.12.2021 8,81,388 4. 0 1.0 1.2022 to 3 1.03.2022 2,20,347 Total 22,03,470 9.5 As per the contractual terms, the aforesaid amount of delayed payment charges, starting from the date of Assignment (24th September, 2019) till the date of filing of the application (4th April, 2022) under Section 7 comes out to Rs. 22,03,470/-only, which if added with the outstanding principal of Rs. 40,06,310/-, comes out to Rs. 62,09,780/- only, which is....
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...., the contention of the Appellant that the Corporate Debtor has acknowledged a lesser amount in its balance sheets is devoid of any merit. The FC's calculations, as provided at the stage of arguments, are noted as follows: FY Acknowledgment (Date) Interest applied on Lowest Amount -Rs Period Interest Charges (22%) Total outstanding -Rs Repayment as per Corporate Debtor -Rs Balance outstanding -Rs 31.03.2016 to 31.03.2017 85,59,134 [31.03.2016] (amount acknowledged by CD @210 of APB) 48,01,648 01.04.2016 to 31.03.2017 10,56,363 96,15,479 [85,59,134 (Principal) + 10,56,363 (Interest)] 37,57,486 (85,59,134 - 48,01,648) 58,57,993 (as on 31.03.2017) (96,15,479 - 37,57,486) 48,01,648 [31.03.2017] (amount acknowledged by CD without interest in BS) 31.03.2017 to 31.03.2018 58,57,993 [31.03.2017] 40,06,648 01.04.2017 to 31.03.2018 8,81,463 67,39,456 [(58,57,993 (Principal) + 8,81,463 (Interest)] 7,95,338 (48,01,648 - 40,06,310) 59,44,118 (as on 31.03.2018) [58,57,993 (Principal) + 86,125 (Interest)] 40,06,310 [31.03.2018] (amount acknowledged by CD without interest in BS) 31.03.2018 to 31.03.2022 58,57....
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....orate Debtor for the period from 1st April, 2016 to 31st March, 2018, which completely matches with the balances in the Balance Sheets of the Appellant which is as follows as placed by the Appellant: Date Particulars Paid Credit Balance 01.04.2016 Opening Balance - - 85,59,134 06.04.2016 SBI Cash Credit SBINR52016040 3,00,000 - 82,59,134 19.05.2016 SBI Cash Credit SBINR52016070 5,00,000 - 77,59,134 05.07.2016 SBI Cash Credit SBINR52016070 30,00,000 - 47,59,134 17.10.2016 Interest - 42,514 48,01,648 Balance as on 31.03.17 48,01,648 05.12.2017 HDFC 52017120559550068 5,00,000 - 43,01,648 05.12.2017 HDFC 52017120559595665 3,00,000 - 40,01,648 07.12.2017 Legal Charges 4,662 40,06,310 Principal Balance 31.03.2018 Onwards 40,06,310 48. We observe that the above ledger has been relied upon by the Appellant and claims that the outstanding amount as per the Balance Sheets of the Appellant as on 31st March, 2017 till the end, other charges @ 22% have to be calculated as under: ....
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....claims that the Summary Schedule as per clause 1.5.2 of the Facility Agreement, provides for interest @ 13.75% p.a. for 90 days, and interest accrued at the end of every month was payable on or before 10th day of next month and also it does not provide for payment of interest beyond 90 days period and only provides for payment of Delayed Payment Charges for 91-120 days @ 16% p.a. and 120 days onwards @ 22% p.a. on the defaulting amount for the period of default. Therefore, the summary schedule, which is part of the facility agreement does not provide for compounding of interest, much less monthly compounding of interest beyond 90 days. Further, the term "Accrued" and "Compounding" are different phrases in the commercial parlance and cannot be equated or interchanged. But we observe that the sanction letter [facility agreement dated 17.07.2013] executed by the corporate debtor clearly provides for the delayed payment charges at the rate of 16% if the delay is beyond 90 days and if the delay is beyond 121 days at the rate of 22% per annum on such defaulted amount from the date of default till the date of payment. 51. Appellant has on his own interpretation basis "total outstanding....
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....as was in the reply. 53. R2-FC also places its reliance on: • Rajesh Kedia v. Phoenix ARC Private Limited in Company Appeal (AT) (Ins) No. 916/2021 wherein it was held that once the threshold is crossed, it is not for the Ld. Adjudicating Authority to decide the exact 'Quantum of Debt', but what has to be examined is whether there is a 'Debt' and 'Default'. • Mr. Vineet Khosla Vs. M/s Edelweiss Asset Reconstruction Company Ltd. & Ors., Company Appeal (AT) (Ins) No.441 of 2019 wherein this Appellate Tribunal made it clear that dispute over the quantum of debt cannot be a ground for rejection of insolvency petition. • Mr. Gouri Prasad Goenka Ex- Chairman of NRC Limited v. Punjab National Bank and Anr. Company Appeal (AT) (Insolvency) No. 28 of 2019 wherein it was held that the Adjudicating Authority is not concerned with the quantum of the payable debt at the stage of admission of the petition under Section 7 of the Code. All above judgements support the case of the financial creditor. 54. We also observe that at the time of admission of a Section 7 petition Adjudicating Authority is only required to ascertain the existence of a debt an....
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....was classified as NPA on 11th June, 2016 and thereafter the Demand Notice dated 19th April, 2017 was issued and the application under section 7 was filed on 4th April, 2022 and therefore, the application is barred by limitation. 58. We observe that the loan facility was sanctioned by L&T Finance Limited to the Corporate Debtor on 17.07.2013. The date of default of the Corporate Debtor is 24.04.2017. Accordingly, the period of limitation will run from the date of default i.e., 24.04.2017. It was the case of the Appellant that the repayment under the facility agreement was to be completed within a period of 90 days from the date of disbursement. The period of 90 days from the last disbursement on 09.09.2015 expired on 08.12.2015 and as such the Appellant claims that the correct date of default ought to be 08.12.2015 and limitation would expire on 07.12.2015. 59. However, we note that the Corporate Debtor itself in its Financial Statements of the year 2016-2017, 2017-2018, 2018-2019 and 2019-2020 had acknowledged the debt between the Corporate Debtor and the Financial Creditor. Therefore, in terms of Section 18 of the Limitation Act, the acknowledgment of liability in respect of....
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....te Debtor by way of substituted service. Accordingly, the Financial Creditor issued publication in two newspapers namely Raj Express Bhopal (Hindi) and Central Chronicle Bhopal (English) on 20.08.2022. Thereafter, the Corporate Debtor again failed to appear before the Adjudicating Authority and also failed to file a reply despite multiple opportunities being granted before the Adjudicating Authority. Subsequently, the Adjudicating Authority vide order dated 23.02.2023 set the Corporate Debtor ex-parte. The FC filed the balance sheets of the Corporate Debtor as well as the Record of Default filed with the Information Utility. Adjudicating Authority again sought some clarifications from the FC pursuant which were clarified on dated 18.11.2023. 63. Subsequently, the company petition was heard at length by the Adjudicating Authority and the matter was reserved for orders vide order dated 28.08.2024. After a delay of more than two years, an application bearing I.A. No. 381 of 2024 was filed by the Corporate Debtor seeking recall of the order dated 28.08.2024 as well as the order dated 23.02.2023 passed by the Adjudicating Authority, whereby the Corporate Debtor was set ex-parte. Subs....