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2024 (1) TMI 339 - AT - Insolvency and BankruptcyMaintainability of section 7 application - initiation of CIRP - impugned order passed by the Adjudicating Authority without considering the written submissions of the Corporate Debtor thus rendering the impugned order perverse - violation of principles of natural justice - failure to recognize that the Financial Creditor had failed to produce incontrovertible and unimpeachable evidence to prove the debt - OTS offers made on more than one occasion clearly constitute acknowledgment of debt and default or not - time limitation - Bar under Section 10A. Opportunity of hearing - HELD THAT:- The matter having been heard on 8 occasions and permission having been granted to file written submissions even after the matter was reserved for orders and this opportunity had also been availed by the Corporate Debtor, the contention of having been denied opportunity to be heard before the Adjudicating Authority lacks foundational basis. Contention that Adjudicating Authority had failed to recognize that the Financial Creditor had failed to produce incontrovertible and unimpeachable evidence to prove the debt - HELD THAT:- It was clearly indicated in the letter that the FDR amount of Rs. 50 lakh was required to be restored. This replenishment was however not done by the Corporate Debtor and therefore there is substance in the contention of the Financial Creditor that EMI appropriation from the FDR cannot be treated as automatic regularization of the loan account and that this was clear evidence of debt and default. Whether OTS offers made on more than one occasion clearly constitute acknowledgment of debt and default? - HELD THAT:- In the face of multiple communications wherein the Corporate Debtor has admitted debt and default, the Adjudicating Authority did not commit any error in holding that these OTS proposals constitute acknowledgement. Whether the Section 7 application was filed on time or whether it was barred by limitation? - HELD THAT:- Clearly the OTS proposals, which undisputedly fall within the three- year period from the date of default, clearly provided for a fresh period of limitation of three years - it is found that the Adjudicating Authority did not commit any error in holding that the OTS proposals dated 24.08.2020 and 11.11.2022 constitute acknowledgement under Section 18 of the Limitation Act, 1963 and hence the Section 7 application filed on 24.01.2023 was correctly held to be within the limitation period. Bar under Section 10A - HELD THAT:- A bare reading of Section 10A shows that what is barred is initiation of CIRP proceedings when the Corporate Debtor commits any default during the Section 10A period. However, if the default is committed prior to the Section 10A period and continues in the Section 10A period, this statutory provision does not put any bar on the initiation of CIRP proceedings. The present is a case where the default has been committed by the Corporate Debtor prior to commencement of Section 10A period. The default having been committed before the bar of Section 10A came into play, the Corporate Debtor was clearly not entitled to claim that the Section 7 application was not maintainable. Thus, no error has been committed by the Adjudicating Authority in allowing the Section 7 application and admitting the Corporate Debtor into the rigours of CIRP - appeal dismissed.
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