TaxTMI 
TaxTMI 
2026 (10) TMI 18
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....). Facts of the Case 2. Brief facts of the case are that, on 04.03.2013 the CD had executed a term loan agreement with 1st Respondent UCO bank (Financial Creditor), along with such other documents viz. Packing Credit Advance agreement, Demand Promissory Note, Letter of Continuity (Packing Credit), Waiver of Presentment, Hypothecation Agreement, Agreement for extension for charge by way of hypothecation and Permanent / Omnibus counter guarantee, in furtherance of the term loan agreement. Besides above, the CD had also executed a working capital consortium agreement with the 1st Respondent, i.e., UCO Bank, Canara Bank, and the Federal Bank, along with other necessary documents on 28.09.2013. On 30.06.2014, the 1st Respondent Bank approved a restructuring package for the CD, wherein it renewed and restructured the facilities granted to the CD, for which the Term loan agreement and various ancillary documents were executed by the CD. 3. On 31.12.2014 the account of the CD was classified as Non- Performing Asset (NPA). On 09.02.2016, notice was issued by the 1st Respondent under SARFAESI Act, calling upon the CD to repay the amount due and payable. The 1st Respondent Bank conti....
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....he case of Ramesh Kymal v. Siemens Gamesa Renewable Power Private Limited [(2021) 3 SCC 224], to contend that the date of default cannot be changed and that a creditor cannot retrospectively reschedule the date of the default to bypass the operation of Section 10A of the Code. However, in the instant case, the same has been allowed to be done even when in reality, the default in payment of the instalments under OTS fell right within the period contemplated under Section 10A of the Code. Accordingly, he submits that the plea of the Respondent that the date of issue of recovery certificate by Ld. DRT is the actual and determined date of default for the purpose of Section 7 application is untenable in law. He has also stated that the reliance of the Respondent on the judgement of Asset Reconstruction Company (India) Limited v. Bishal Jaiswal [Civil Appeal No. 323 of 2021] to support his contention that the date of issue of DRC certificate is actually the date of default is not correct because the date of default cannot be altered and modified by the FC as per his convenience, and the said ratio also does not permit the same. 7. Apart from the same, he has submitted that the applica....
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.... by the Appellant has already been settled by the Hon'ble Supreme Court and as well as by this Appellate Tribunal to the contrary, and therefore, the Appeal should be dismissed. 11. He has stated that contrary to the averment of the Appellant, the date of default will be the one when the account becomes NPA and/or the date on which the recovery certificate by Ld. DRT is granted, and it is only that date, which becomes relevant for fixing the date of default in Section 7 application. He has stated that the loans were granted to the CD on 28.09.2013, loans were restructured on 30.06.2014, the account of CD became NPA on 31.12.2014, the recovery certificate was issued by Ld. DRT on 06.03.2018 and the said debt has been acknowledged in writing by the CD four times between 20.02.2020 and 18.03.2021. Therefore, the date of default would be 06.03.2018 and the application under Section 7, which was filed on 02.04.2021, is well within limitation because it has been filed within 3 years of the date of default and because of the subsequent acknowledgement of the debt by the CD. He has further stated that though, the date of default in the Section 7 application was mentioned as 01.11.2020, ....
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....and that the view taken in case of Innoventive Industries that "the Adjudicating Authority must limit its inquiry strictly to whether default has occurred and whether the application is complete", still holds good. Accordingly, he has contended that the plea of the appellant to keep the CD out of CIRP because it is going concern and a viable entity should not be accepted. 13. Ld. Counsel for the Respondent has further stated that, this Appellate Tribunal, in the matter of Vishal Agarwal v. ICICI Prudential Real Estate AIF-I has held that benefit under Section 10A can be claimed by an Appellant only when there is a clear default during the prohibited period. In the instant case, because the default was much prior to commencement of the Section 10A period and the default continued during the Section 10A period and therefore, it cannot be argued that the date of default fell within Section 10A period, it has contended that the mere mention of the date of default as 01.11.2020 in Form-I by the Appellant cannot be taken as the final word on the date of default as information to be disclosed in Form-I are procedural requirements and the errors creeping into the said set of information....
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....n multiple opportunities to the CD on his request to settle the issue with the 1st Respondent, it had heard and passed orders on the IAs filed by the Appellant and had recorded the reasons in detail in the impugned order. 15. The interim resolution professional has stated in his status report that the CIRP process had commenced on 18.04.2023 and he had assumed the charge of IRP of the CD on that day itself. Subsequently, he got a public announcement published on 20.04.2023 regarding the commencement of CIRP process and invited claims from the stakeholders of the CD. Pursuant to the said public announcement, he had also intimated the statutory authorities such as EPFO, ESI, ROC and GST. Further, he had received a total claim of Rs. 557.35 crores from the financial creditors consisting of Rs. 249.44 crores pertaining to secured financial creditors and Rs. 307.90 crores from unsecured financial creditors. He has also constituted the COC and it has been taken on record by Ld. NCLT on 13.06.2023. He had also taken possession of the factory of the CD and the financial records and had scheduled to conduct the first meeting of COC on 18.05.2023. He has further submitted that the CIRP wa....
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....n not permissible. d) Ld. NCLT, while passing the impugned order ought to have taken into consideration the fact that the CD is a going concern having commercial viability, solvency and significant business potential and therefore it should have rejected Section 7 application following the ratio of Vidarbha Industries Power Limited. 18. It is to be noted that none of these grounds as dealt with above, except those relating to various defects had been pressed by the Appellant in the proceedings before Ld. NCLT and they were taken note of the same and permitted the financial creditor to rectify the same and to submit additional documents. The same is eminently permissible in view of the well-settled principle that procedure is a handmaid of justice and it should never be made a tool to substantially deny justice or to perpetrate injustice. Ld. Counsel for the Respondent cites the judgement of Hon'ble Supreme Court in the matter of Uday Shankar Triyar V. Ram Kalewar Prasad Singh & Anr. to stress this point and rightly so. Para. 17 of the said judgement in Civil Appeal No.6701 of 2005 dated 10.11.2025 is extracted hereunder: '17. Non-compliance with any procedural ....
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.... A. Balakrishnan. Accordingly, date of default will be 06.03.2018 and in that case, the Section 7 application will have to be considered to have been filed well within the limitation period, given that the debt has been acknowledged on four occasions between 20.02.2020 to 18.03.2021 by the CD. Further, the claim of the default falling within Section 10A period will automatically go out of consideration, once 06.03.2018 is established as the date of default. 20. Further the allegation that Ld. NCLT allowed the financial creditor to change the date of default in contravention of established legal position does not inspire confidence. Appellant cites the ratio of Ramesh Kymal. As rightly pointed out by the Respondent, in the case of Ramesh Kymal the operational creditor was trying to shift the date of default to a date that fell outside the Section 10A period in order to escape the restrictions of Section 10A. Then, originally the date of default was the date on which demand notice under Section 8 was issued which is the correct legal position. Hence, change of date of default was not allowed. The same cannot be said to apply for the present case where the actual date of default as....