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2023 (7) TMI 263 - AT - Insolvency and BankruptcyInitiation of CIRP - Period of limitation - Date of default - breach of guarantee - Penalty on tax liability discharged under reverse charge on legal services - Application filed u/s 7 of IBC, debarred by law of limitation or not - liability of the ‘Corporate Debtor’ based on the tripartite agreement and Deed of continuing Guarantee. Time Limitation - HELD THAT:- It is seen from the tripartite agreement that certain warranties were given by the ‘Corporate Debtor’ and the same also contained general conditions of the contract. As per Sub-clause 5 of the tripartite agreement it is responsibility of the ‘Corporate Debtor’ for making payment in case of default by the farmer - It is therefore clear that the ‘Corporate Debtor’ was obliged for collection and deduction of principal and interest of the farmers loan and make payment to the ‘Respondent No. 1’. The Deed of Guarantee is continuing one and is to remain in force till such time the borrowers repay the loans. It is also observed that monthly MIS have been provided by the Respondent No. 1 to the ‘Corporate Debtor’ on regular basis relating to outstanding debts from the farmer – borrowers. Subsequently on the default by farmer- borrowers, the ‘Financial Creditors’ invoked the Deed of Guarantee dated 03.10.2013 for repayment of outstanding dues through legal notice dated 07.04.2021 which has been replied by the ‘Corporate Debtor’ on 16.04.2021 denying outstanding dues. The application under Section 7 was filed by the ‘Respondent No. 1’ on the basis of breach of guarantee and inability of the ‘Corporate Debtor’ to repay the outstanding dues and therefore breach of guarantee date becomes the cause of action as well as the date of default as indicated in Part IV of the Application under Section 7 was 15.04.2021, whereas the Respondent No. 1 filed the application under Section 7 on 24.04.2021 which is fully covered under Limitation Act, 1963. Hence, averments of the ‘Appellant’ that the application was barred by limitation does not succeed. Liability of the ‘Corporate Debtor’ is based on the tripartite agreement and Deed of continuing Guarantee, both documents signed on 03.10.2013 - HELD THAT:- In the present case, as required in the agreement, the Respondent No. 1, sent from time to time the list of outstanding debts from the farmer- borrowers to the Corporate Debtor’ in form of the monthly MIS. It is also undisputed fact that from time to time the Financial Creditor has received the payment of dues and only on the default, the legal notice was issued and based on the continuing Deed of Guarantee and the ‘Corporate Debtor’ was called upon to settle outstanding dues on account of farmer- borrowers loans within seven days and due to non-payment of such loans, amounting to Rs. 5,41,34,813/-, the date of default was treated as 15.04.2021. Thus, it is evident that there was clear liability on the part of the ‘Corporate Debtor’ to make the payment on demand on breach/ default by farmer- borrowers and hence, the ‘Adjudicating Authority’ has passed correctly the ‘impugned order’ treating outstanding money as a financial debt of more than Rs. 1 Crore for which default took place on 15.04.2021 and therefore, rightly approved initiation of the CIRP against the ‘Corporate Debtor’. The other issue raised by the Appellant regarding the applicability of Vidarbha Industries Power Limited [2022 (7) TMI 581 - SUPREME COURT] is not directly relevant, looking into the various facts and circumstances as brought out in the present appeal. Appeal dismissed.
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