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2021 (4) TMI 947 - Tri - Insolvency and BankruptcyMaintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - accounts classified as NPA - loan given by consortium of lenders - novation of contract - existence of debt and dispute or not - HELD THAT:- It is an admitted position that the consortium of lenders headed by the Applicant had given working capital loan. It is also an admitted position that lead member of such consortium has also given corporate term loan. It is also not in dispute that the Corporate Debtor has defaulted in payment thereof. On behalf of Corporate Debtor, various technical pleas as regard to the completeness and validity of application filed under Section 7 of Insolvency and Bankruptcy Code, 2016, have been made. However, we are not inclined to deal with the same at this stage though generally such issues are decided at the first instance before deciding the issues on merit. In this case, this is being an application filed under Section 7 of Insolvency and Bankruptcy Code, 2016, we have to see the main factor i.e. whether debt is due and payable. A plea was made that this debt was not due and payable on the date of classification of the account of the Corporate Debtor As NPA as mentioned in the Form-1 filed by the Financial Creditor. Further, it was claimed that there was a restructuring of the loan and new time schedule was prescribed which was acted upon by both sides, hence, any application filed under Section 7 of Insolvency and Bankruptcy Code, 2016 could be filed only on the basis of default which took place thereafter. Accordingly, focussed argument was made that in the present application, debt was not payable and pre-mature. In this regard, based on the subsequent documents executed by and between the financial lenders and the Corporate Debtor, it was claimed that it was an instance of novation of contract as per the provisions of Section 62 of Indian Contract Act, 1872. There is established fact situation of a novation of contract between parties whereby earlier arrangement/contract stood extinguished and parties are governed by the new contract/arrangement. This factual position is of substantial nature and goes to the root of the matter because if such subsequent contract is ignored, then the sanctity of contract gets lost - the proceedings initiated on the basis of any default committed by the Corporate Debtor prior in 09.04.2018 are not maintainable. Application dismissed.
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