TaxTMI 
TaxTMI 
2026 (3) TMI 1153
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....sistance which was granted by the Financial Creditor in form of working capital facility limit of INR. 312.99 lakhs, renewable annually, on 05.10.2015 and in relation thereto, a sanction letter was issued by the bank to the Appellant company sanctioning the aforesaid Cash Credit Agriculture Loan (CCAL). On account of the aforesaid sanction of the agricultural loan and to bind the terms of loan, the Appellant executed an Agreement of Hypothecation and a demand promissory note in favour of the Respondent Bank on 08.10.2015. Further, an earmarking agreement was executed on 09.10.2015 and Memorandum of Deposit of Title Deeds (MOTD) was executed on 13.10.2015 between Appellant, Corporate Debtor and the Respondent Financial Creditor. The Corporate Debtor continued to avail the said credit facilities and the Respondent/Financial Creditor renewed and sanctioned the same on 24.09.2018 and on 14.12.2020. 2. When the aforesaid Cash Credit Agricultural Loan (CCAL) facility was renewed on 24.09.2018 and thereafter it was renewed on 14.12.2020, the Corporate Debtor executed the necessary agreements in form of the Hypothecation Deed, and the corresponding Demand of Promissory Note for a sum of....
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.... Order on 25.01.2023, that, "till the issue of conversion of CCAL facility into the term loan, is not considered, the Respondents were restrained to enforce the notices issued under Section 13(2) of the SARFAESI Act". 6. It is contended by the Appellant that during the pendency of the Writ Petition and the operation of the said Interim Order, the Respondent bank has initiated a parallel proceedings under Section 7 of the I & B Code, 2016, by filing Section 7 Application before the NCLT, Kochi Bench. He has further contended that the Bank proceeded further with SARFAESI Proceedings and issued e-auction notice on 08.01.2024, by way of a general public advertisement, notifying the sale of the immovable commercial property of the Corporate Debtor, which was situated in the Church Street, Bengaluru, to be held on 13.02.2024 on "as is where is" "as is what is" and "whatever there is" basis at a reserve price of Rs. 26,61,67,000/-. 7. Further on 14.02.2024, the Respondent Bank issued the 2nd E-Auction Sale Notice, notifying that the sale of the said immovable property would be conducted on 05.03.2024 with a reduced reserve price of Rs. 23,96,00,000/-. It is an admitted case of the p....
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....and qualifies to be financial debt as defined under Section 5(8) of the Code, which is more than the threshold of Rs. 1 Crore and since there is default, which has been established to have been committed by the Corporate Debtor and accordingly directed the commencement of proceedings under Section 7 of the I & B Code, 2016, by passing the impugned order. 11. The Appellant has developed a case, that, the proceedings under Section 7 would be barred by Section 10A of the I & B Code, owing to the fact that the Loan (CCAL facility) was renewed on 14.12.2020, the default should have occurred on 14.03.2021 and if date of NPA is 31.05.2021 as per Financial Creditors own admission, date of default should be at least 90 days prior to it which will be 01.03.2021, both of which will fall within 10A period (25.03.2020-25.03.2021) and that the Respondent has deliberately fixed it to be 31.05.2021 to escape the implication of the provisions prescribed under Section 10A. He has further contended that Hon'ble High Court had given a status quo order in SARFAESI proceedings because the Financial Creditor sought to sell the agricultural land of the Corporate Debtor and in order to circumvent the sa....
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.... would be vexatious as he has executed a fresh loan security, on 14.12.2020, wherein after a fresh action has arisen. In relation to the argument extended pertaining to Section 10A of the I & B Code, he submits that the entire case of the Appellant is falsified as Section 10A pertains to a period which is not the case in the present context. Section 10A which is extracted hereunder: - "10-A. Suspension of initiation of corporate insolvency resolution process -Notwithstanding anything contained in Sections 7, 9 and 10, no application for initiation of corporate insolvency resolution process of a corporate debtor shall be filed, for any default arising on or after 25th March, 2020 for a period of six months or such further period, not exceeding one year from such date, as may be notified in this behalf: Provided that no application shall ever be filed for initiation of corporate insolvency resolution process of a corporate debtor for the said default occurring during the said period. Explanation.-For the removal of doubts, it is hereby clarified that the provisions of this section shall not apply to any default committed under the said sections before 25th ....
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.... and since the said loan account was irregular, it was classified as the NPA on 31.05.2021 in the normal course and this date, being outside of 10A period, will not be falling within the ambit of exemption as provided under Section 10A of I & B Code, 2016. 17. It is submitted by Learned Counsel for the Respondent that since the Financial Creditor, had initiated the SARFAESI proceedings in respect of the personal loan account of the Appellant and not in respect of the CCAL facility availed by the Corporate Debtor company, the pendency of the Writ Petition will have no bearing, for the reason being that, the Financial Creditor always has a right under doctrine of election either to elect for the SARFAESI proceedings or for drawing of the IBC proceedings, since the law does not prohibit the Financial Creditor from initiating the parallel proceedings, the Financial Creditor cannot be accused of contravention of any of the established covenants of law for initiation of the proceedings for drawing the CIRP proceedings against the Appellant. He further submitted that since Section 7 was filed as back as on 17.11.2023 and subsequent to it there was a proposal of settlement, the debt and....