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2024 (5) TMI 13 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI - LBInitiation of CIRP - Relevant date of default - Delay in making payments towards interest - interest debited in the cash credit facilities which were serviced by the Respondent with delay - Period prior to period stipulated under Section 10A of IBC or not - COVID-19 pandemic Period - Respondent declared as NPA - HELD THAT:- Section 10 A of the Code was introduced by amendment Act of 2020 dated 05.06.2020 with the purpose to support the business and industry who were adversely affected due to covid 19 pandemic. Section 10 A of the Code provides temporary suspensions on initiation of CIRP, which was provided initially for six months with the provision to be extended from time to time as notified - proviso to Section 10 A clearly mentions that “no application shall ever be filed” for initiation of CIRP of “for the said default occurring during the said period”, which signifies that the Parliament clearly envisaged to bar initiation of any application for CIRP, in respect of default which has occurred on or after 25.03.2020 for a period as notified from time to time. Section 10 A of the Code, by nature, is preventive and prohibitory and begins with non obstante clause i.e., “notwithstanding anything contained in Section 7,9 and 10” and therefore, places complete embargo for initiation of CIRP under these Sections for the period beginning with 25.03.2020 till stipulated period. However, explanation clarify the position that Section 10 A is not meant to be applicable or embargo for initiation of CIRP for default occurred prior to 25.03.2020. The bar on the filing of application for the commencement of CIRP during stipulated period does not extinguish the debt owed by the Corporate Debtor and creditors/ lenders may continue to exercise their rights to pursue their legal remedies under Section 7,9 and 10. In the present appeal, the Appellant fairly stated that due occurred on the last date of February, 2020 but was payable on 01.03.2020. Hence, strictly speaking the date of default can not be 28.02.2020 as claimed by the Appellant in Part IV and at best could be as 01.03.2020 i.e., when it became payable - the mere fact of a ‘debt’ being due and payable is not adequate to justify the initiation of CIRP at the instance of the creditor, unless the ‘default’ on the part of the Debtor is established. The ‘Interest Dates’ is shown as ‘monthly’ but no’ particular date has been specified and the Appellant has pleaded that it become due on last date of month but payable on 1st of the following month - the “statement of stock” is to be submitted on monthly basis as part of the financial covenant, but no where it is indicated that submission of stock statement by the Respondent to the Appellant is condition precedent or breach of which result into default of debt. The default is required to take place with reference to debt which is outstanding and become payable. Normally a loan recall notice mentions all the details including reasons for default and is a formal communication from the lender requesting the borrower for repayment of outstanding loan balance - here, it is noted that the alleged date of default has bee mentioned as 28.02.20220 ( it should have been 29.02.2020 being leap year) as the Appellant mentioned that the instalment become due on the last date of the month and to be payable on 01.03.2020 and as per RBI Circular dated 27.03.2020, the moratorium started from 01.03.2020 for three months which was further extended for further three months. Thus the Respondent was covered under RBI guidelines and the default could not have been taken as 28.02.2020 or even on 01.03.2020 due to RBI Guidelines and subsequently due to Section 10 A of the Code w.e.f. 25.03.2020. The Appellant, therefore, was not entitled to initiate the CIRP in the given background of the facts as well as various RBI guidelines and the provisions of Section 10 A of the Code. Appeal dismissed.
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