TMI Blog2021 (10) TMI 491X X X X Extracts X X X X X X X X Extracts X X X X ..... the date of default in Form-1 is 31.10.2020. Whether the provision for Section 10A attracted to an application filed u/s 7 on 30.12.2020 claiming the default occurred on 31.10.2020? - HELD THAT:- The initiation of CIRP against the Corporate Debtor where a default has occurred after 25.03.2020 cannot be initiated in view of the provision engrafted in Section 10A which clearly barred filing of such application by the Petitioner for initiation of CIRP for the default which has occurred on 31.10.2020. The object of legislature was to suspend the operation of Section 7, 9 and 10 in ambit of default arising on or after March, 2020, the date on which nationwide lock down was imposed which affected normal business operation and impacted global economy. The Petition is dismissed on the ground that there was specific plea in initiating CIRP against Corporate Debtor where the default has occurred during the period when there was specific bar enforced by the statute under Section 10A. - CP No. 115/(IB)-MB-V/2021 - - - Dated:- 5-10-2021 - Hon ble Smt. Suchitra Kanuparthi, Member (Judicial) And Hon ble Shri Chandra Bhan Singh, Member (Technical) For the Petitioner : Mr. Ajay Ku ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2008 and 16.12.2009. 4. The Corporate Debtor also availed a term loan facility of ₹ 3,18,00,000 crores (Rupees Three Crores and Eighteen Lakhs), approved by the Financial Creditor vide sanction letters dated 05.06.2010 and 22.09.2010. 5. The Corporate Debtor also availed a bank guarantee facility of ₹ 1,50,00,000 crores (Rupees One Crore and Fifty lakhs), approved by the Financial Creditor vide sanction letter dated 02.12.2012. 6. The Corporate Debtor, yet again approached the Financial Creditor for fresh credit and term loan facilities of ₹ 47,75,00,000 crores (Rupees Forty seven crores and Seventy Five Lakhs), which was approved vide sanction letter dated 26.07.2013. The same was reviewed and enhanced to ₹ 13,65,00,000 crores (Rupees thirteen Crores and Sixty Five lakhs) vide sanction letter dated 28.12.2015. The final review and renewal of all the credit facilities availed was approved by the Financial Creditor vide sanction letter dated 23.05.2017. 7. By virtue of all the aforesaid sanction letters vide inter alia credit facility agreements, the Financial Creditor was vested with several hypothecated rent receivables and a mortgage of the off ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ial Creditor for ₹ 23,87,00,000 (Rupees Twenty Three Crores Eighty Seven lakhs Only). 11. The securities provided by the Corporate Debtor in favour of the financial creditor for the grant of term loan to the extent of ₹ 3,18,00,000 (rupees three Crores Eighteen lakhs) vide sanction letters dated 05.06.2010 and 22.09.2010 are as follows: a. Deed of personal guarantee dated 29.09.2010 executed by Mr. Anubhav Aggarwal in favour of the Financial Creditor for ₹ 3,18,00,000 (Rupees three Crores Eighteen Lakhs only). b. Deed of Personal Guarantee dated 29.09.2010 executed by Mr. Anil Aggarwal in favour of the Financial Creditor for ₹ 3,18,00,000 (rupees Three Crores Eighteen lakhs only). 12. The securities provided by the Corporate Debtor in favour of the Financial Creditor for the grant of an extended term Loan facility of ₹ 3,25,00,000 (Rupees three Crores Twenty Five lakhs only) vide sanction letter dated 05.06.2010 are as follows: a. An equitable mortgage was created over the 8th Floor, at RNA Corporate Park, Bandra , Mumbai- 051 by the Corporate Debtor in favour of the Financial Creditor on 12.06.2010. A record of the same as captured in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sixty Crores Eighty Two Lakhs only) executed by Mr. Anubhav Aggarwal and Mr. Saranga Aggarwal in favour of Financial Creditor. Reply of the Corporate Debtor: 15. Corporate Debtor submitted that Ministry of law and Justice published in the Gazette of India on 05.06.2020 the Insolvency and Bankruptcy Code (Amendment) Ordinance, 2020 which stated that due to the COVID-19 Pandemic the business, financial Markets and economy had been impacted and had created uncertainty and stress beyond control, due to the Nationwide Lockdown imposed on 25.03.2020 to combat the spread of COVID-19, this had added to disruption of normal business operations and hence it was difficult to find adequate number of resolution applicants to rescue the Corporate person who may default in discharge of their debt obligations. Therefore, by way of this Ordinance, Section 7, 9 and 10 of the Insolvency and Bankruptcy Code, 2016 stood suspended. The Ordinance dated 05.06.2020 further inserted Section 10A in the Insolvency and Bankruptcy Code, 2016 which is reproduced hereunder: 10A of pension of initiation of Corporate insolvency resolution process. Notwithstanding anything contained in Section 7, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... filed during the suspension of the Section 7, 9 and 10 of the Insolvency and Bankruptcy Code, 2016. 19. It is submitted that the Financial Creditor has filed the aforesaid Petition under Form 1 (Application by Financial Creditor(S) to initiate Corporate Insolvency Resolution Process Under Chapter II of part II/Under Chapter IV of Part II of the Code) under Rule 4 of the Insolvency and Bankruptcy (Application to Adjudicating Authority Rules) 2016. In the aforesaid Form 1 filed by the Financial Creditor, the amount of due and claimed from the Respondent as on 31.10.2020 was ₹ 55,75,27,571/- (Rupees fifty-Five Crores Seventy-Five Lakhs Twenty-Seven Thousand Five Hundred Seventy-One Only) which includes unapplied interest and penal interest for default in payment. 20. Admittedly, the Financial Creditor has submitted, in Part IV of Form-1, that 31.10.2020 was the date of default. It is submitted that Section 10A of the Code states that notwithstanding anything contained in sections 7, 9 and 10, no application for initiation of Corporate insolvency resolution process of a corporate debtor shall be filed, for any default arising on or after 25th March, 2020. As mentioned in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ess and Navshakti newspapers. 25. However, the Petitioner in Part-4 of Form-1 had claimed an amount of ₹ 41,30,79,385.14/- being the principal outstanding due as on 31.10.2020. The date of default declared in Form-1 is 31.10.2020. The Corporate Debtor filed its reply and contended that the said petition suffers material defect and hence his liable to be dismissed with cost. 26. The Corporate Debtor claimed that the ministry of law and justice published a gazette of India on 05.06.2020, the Insolvency and Bankruptcy Code (Amendment) Ordinance, 2020 which stated that due to COVID -19 pandemic the business, financial markets and economy had been impacted and had created uncertainty and stress beyond control, due to the Nationwide Lockdown imposed on 25.03.2020, this had added to disruption of normal business operations and hence, it is difficult to find adequate number of resolution applicants to rescue the Corporate person who may default in discharge of debt obligations. Therefore, by way of this ordinance, Section 7, 9 and 10 of the Code stood suspended. The ordinance dated 05.06.2020 further inserted Section 10A of Code which is as follows: 10A of pension of initi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 20. The Petition was filed on 30.12.2020. 30. It is pertinent to look at the intention of legislature that no application for initiation of CIRP against Corporate Debtor shall be filed, for any default arising on or after 25.03.2020 and during the extended period of suspension of Section 7, 9 and 10. 31. This Bench is of the considered opinion that the notification dated 06.06.2020 categorically declared that no application for initiation of Corporate Insolvency Resolution Process of Corporate Debtor shall be filed for any default arising on or after 25.03.2020. The notification also provided an explanation for removal of doubt that this Section shall not apply to any default committed before 25.03.2020. In the instant case, the Petitioner in Form-1 claimed that the date of default is as on 30.10.2020 and claimed an amount of ₹ 55,75,27,571/-. An attempt was made to set back the Date of default by filing an Additional Affidavit by the Petitioner. However, the same is untenable as the date of default in Form-1 is 31.10.2020. 32. It is relevant to refer to judgement of Hon ble Supreme Court in Ramesh Kymal vs. Simens Gamesa Renewal Power Private Limited (2021) 3 SCC on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot operate in respect of any default committed prior to 25th March, 2020. 27 We are in agreement with the view which has been taken by the NCLAT for the reasons which have been set out earlier in the course of this judgment. We affirm the conclusion of the NCLAT. The appeal is accordingly dismissed. There shall be no order as to costs. 28 Pending application(s), if any, stand disposed of. 33. The only issue fall for determination is whether the provision for Section 10A attracted to an application filed u/s. 7 on 30.12.2020 claiming the default occurred on 31.10.2020. 34. In the backdrop of the actual matric, it can be said that initiation of CIRP against the Corporate Debtor where a default has occurred after 25.03.2020 cannot be initiated in view of the provision engrafted in Section 10A which clearly barred filing of such application by the Petitioner for initiation of CIRP for the default which has occurred on 31.10.2020. The object of legislature was to suspend the operation of Section 7, 9 and 10 in ambit of default arising on or after March, 2020, the date on which nationwide lock down was imposed which affected normal business operation and impacted globa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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