TaxTMI 
TaxTMI 
2026 (3) TMI 1321
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....s, against the impugned order dated 14.02.2024, that was passed in CP/10/07/HDB/2023 by Ld. NCLT Hyderabad. By virtue of the said order, NCLT had allowed the application filed under Section 7 of IBC by Canara Bank, the Financial Creditor, and directed commencement of CIRP against the Corporate Debtor, M/s/. Anand Bharathi Fertilisers India Pvt Ltd. 2. Brief facts of the case are that the Corporate Debtor was incorporated on 14.02.2011, for manufacturing of customised fertilisers and soil conditioners. On 24.03.2016, the Financial Creditor sanctioned and disbursed a term loan of Rs. 9 crore and working capital loan of Rs. 1.10 crore to the Corporate Debtor. However, the Corporate Debtor defaulted in the repayment of both the principal debt and interest payable on it as per the repayment schedule. The Financial Creditor classified the loan account of the company as a non-performing asset (NPA) on 03.06.2018. These loans were subsequently restructured in 2019 by creating FITL (Funded Interest Term Loan)-I and FITL-II by carving out the structure of interest and the penal charges that, had accrued on to that point, on the term loan. The total limits sanctioned and the amount outstan....
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.... filed by them before NCLT Hyderabad. They contend that this establishes the fact that the Financial Creditor was only interested in recovery of dues and not in resolving the insolvency of the Corporate Debtor, which is not permissible under IBC as per several judgments of Hon'ble NCLAT and Hon'ble Apex Court. He had referred to the judgment of Mobilox Innovations Private Limited vs. Kirusa Software Private Limited in Civil Appeal No.9405 of 2017 of Hon'ble Apex Court and Mr. Maulik Kirtibhai Shah vs United Telecoms Limited in Company Appeal (AT)(CH) (Ins) No.268 of 2023 of NCLAT to support their contention that IBC cannot be used as a recovery forum, by the Financial Creditors and that in case there is any default in payment of the dues, the same should be recovered by the lenders by recourse before an appropriate court of law and not before NCLT. 6. He has further stated that the application filed under Section 7 of IBC, does not mention the date of default, and the date of default as mentioned in para 30 of the impugned order, which is based on NeSL record should not be taken into consideration as the same has been conveniently chosen by the Financial Creditor to ....
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....hich the repayment was due on 31.03.2021, which was not paid and therefore the default will have to be taken to have been committed by the Corporate Debtor on the said date. He has stated that the provisions of Section 10A of IBC will not apply under the facts of this case because the said period ended on 25.03.2021, and therefore, it cannot be said that Section 7 application was in contravention of Section 10 A of IBC. Further, because the Corporate Debtor after 31.03.2021, has made several payments into the loan account, this has to be taken as the acknowledgement of the liability of the Corporate Debtor in terms of Section 18 of limitation act, 1963. He has further added that non- mentioning of the date of default in the Section 7 application will not be fatal in light of the judgment of NCLAT in Manmohan Singh Jain v. SBI in CA (AT)(Ins)97/2021. With regard to belated release of working capital loan, which the Appellant claims as the fundamental reason for the financial crunches of the Corporate Debtor, the Respondent has argued that the Ld. Adjudicating Authority cannot dismiss the application of the Financial Creditor on grounds of inadequate disbursement in light of the judg....
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....? Analysis and findings 12. Regarding point (a) as above, Ld. NCLT has considered the same in detail and concluded that the instant case is similar to the case decided by this Appellate Tribunal in the matter of State Bank of India v. N.S. Engineering in CA(AT)(Ins) No. 978/2022, where by its order dated 03.02.2023, NCLAT has held that rejection of a Section 7 application on the ground that for default committed by the Corporate Debtor, the Financial Creditors are also to be blamed, is against the spirit and objectives of insolvency resolution envisaged in I & B Code. The relevant paragraph is extracted below. "24. Under the Scheme of IBC, when a Corporate Debtor is unable to pay its debt, which becomes payable, it is a warning signal for Corporate Debtor and when an Application is filed by a Financial Creditor to initiate CIRP under Section 7 and there are ample material that Corporate Debtor is unable to pay its debt and has committed default, the Adjudicating Authority is not required to go into the reasons of default and ignore the real status of the Corporate Debtor and close its eyes to the fact that the Corporate Debtor needs insolvency resolution. Red signal ....