TMI Blog2021 (12) TMI 9X X X X Extracts X X X X X X X X Extracts X X X X ..... nr. [ 2019 (9) TMI 1019 - SUPREME COURT ] held that the date on which the bank declared the account of Corporate Debtor NPA is the date of default. In the present case, the account of the Corporate Debtor was classified as NPA on 31.03.2019. The cause of action accrued on 31.03.2019, the date of NPA. In such circumstances, we are unable to convince with the argument of Ld. Sr. Counsel for the Appellant that there is misjoinder of cause of action in the Application under Section 7 of the IBC. Whether the debt is not payable in fact? - HELD THAT:- Section 3(12) of the IBC defines default means non-payment of debt when whole or any part or instalment of the amount of debt has become due and payable and is not paid by the debtor or the Corporate Debtor as the case may be . With the definition, it is clear that the two instalments i.e. dated 17.06.2020 and 17.12.2020 were not due and payable even though the earlier instalments were become due and payable and the Corporate Debtor had committed default. Therefore, it cannot be said that the Corporate Debtor has not committed any default in respect of the aforesaid loans and the debt is not payable in fact. Whether the debt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tor passed an order under Section 7(5) - In the present case, the Corporate Debtor committed default and the Application is complete and there is no disciplinary proceedings pending against the Resolution Professional. Therefore, the AdjudicatingAuthority has no option except to admit the Application under Section 7 and to initiate the CIRP. The Adjudicating Authority was not obliged to consider that restructuring outside the purview of IBC would be beneficial to the Financial Creditors. Whether Kotak Mahindra Bank can maintain the Appeal under Section 61(1) of the IBC? - HELD THAT:- The Appellant Kotak Mahindra Bank has no valid ground to challenge the impugned order and failed to point out any legal or factual flaw in the impugned order. The Appellant has no locus standi to file this Appeal. Thus, the Appellant is not come within the purview of aggrieved person . Hence, the Appellant Kotak Mahindra Bank cannot maintain the Appeal. It is also pointed out that the Appellantwas well aware of the proceedings under Section 7 before the Adjudicating Authority, however, the Appellant chose not to participate in the proceedings. Therefore, the Appeal at the instance of Kotak Mah ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (iv) The amount of default under facility II as on December, 31st 2019 is 14,50,75,502/- and the date of default is January 31, 2019. (v) The amount of default under the Working Capital Facility as on December 31, 2019 is ₹ 45,84,41,659.02 and the date of default is January 28, 2019. 4. The Corporate Debtor had executed various documents by way of securities in favour of the Financial Creditor against the aforesaid facilities granted to the Corporate Debtor. The Corporate Debtor has committed the default. Therefore, the Financial Creditor (ICICI Bank Limited) has filed an Application under Section 7 of the IBC for initiation of CIRP against the Corporate Debtor. A summarised computation of amount of default on the part of the Corporate Debtor and days of default are as under:- Sl. No. Facility Total Overdue at December 31, 2019 (Rs.) Date of Default No. Of days of default till Decembe r, 31, 2019. Principal Interest Total 1 Rupee Term Loan I 125,000,000.00 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ave to take a haircut. 7. Both the Appeals are resisted by the ICICI Bank Limited (Respondent No. 1) on variety of grounds. Submissions in CA (AT) (Ins) No. 147 of 2021. 8. Ld. Sr. Counsel for the Appellant representing Mr. Aseem Srivastav submitted that Section 7 Application was filed for alleged debts for different agreements and different dates of default (28th 31st January, 2019) cannot be clubbed together as the cause of action is being separate. For this purpose, he cited the Judgment of this Appellate Tribunal in the case of International Road Dynamics South Asia Pvt. Ltd. Vs. Reliance Infrastructure Limited CA (AT) (Ins) No. 72 of 2017. In which it is held that two different claim(s) arising out of different agreements or work order, having different amount and different dates of default, cannot be clubbed together for alleged default of debt, the cause of action is being separate. Therefore, the Section 7 Application is not maintainable and is liable to be dismissed. Ld. Adjudicating Authority has not dealt with the ground of misjoinder of cause of actions raised by the Appellant. 9. It is further submitted that the date of default specified in Section 7 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llant further submitted that date of default for Working Capital facility was 17.12.2015 which was more than three years prior to the date of filing of the Section 7 Application i.e. 08.01.2020. Thus, the Application under Section 7 of the IBC is time barred. For this proposition of law, he placed reliance on the Judgment of Hon ble Supreme Court in the case of Babulal Vardharaji Gurjar Vs. Veer Gurjar Aluminium Industries Pvt. Ltd. Civil Appeal No. 6347 of 2019 and B. K Educational Services Pvt. Ltd. Vs. Parag Gupta (2019) 11 SCC 633. 12. It is submitted that the letter dated 26.10.2018 will show that there is only an acknowledgement of debt which at best can be considered as a liability of the Corporate Debtor to pay. The Financial Creditor has also admitted that such acknowledgement was only in respect of debt and not in respect of default. An acknowledgement of debt cannot be understood as an acknowledgement of default for the purpose of IBC. He placed reliance on the decision of Hon ble Supreme court in Swiss Ribbons Pvt. Ltd. Vs. Union of India (2019) 4 SCC 17 (Para 64). Therefore, in the absence of specific acknowledgement of default, the period of limitation for an Appli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aving clubbed claims under separate and different contracts. Whereas the present the Application was filed under Section 7 of the IBC, the provisions of Section 7 of the IBC are so wide that a joint Application on behalf of the Financial Creditors can be filed under Section 7 of the IBC. Thus, the Application does not suffer from misjoinder of cause of actions. It is notable that no such objection has been raised by the Corporate Debtor before the Adjudicating Authority. Thus, the Appeal is liable to be dismissed. Submission in CA (AT) (Ins) No. 378 of 2021. 16. Ld. Counsel for the Appellant representing Kotak Mahindra Bank Limited submitted that the impugned order has resulted into causing great harm and prejudice, not only to the Appellant but also to other members of Lender s Consortium who are trying their level best to recover the maximum amount of their outstanding dues from the Corporate Debtor. The outstanding dues of Corporate Debtor amounting to ₹ 237,20,00,000/-. Whereas on 30.09.2019 the Liquidation value of the assets of the Corporate Debtor came to be only ₹ 72,11,51,000/- Therefore, under no circumstances lenders can recover the outstanding dues ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deration. The Appellant has not raised any challenge to the existence of debt, default and completeness of the Application filed by the ICICI(Financial Creditor). The CIRP is not adversarial to the interest of the Corporate Debtor or its creditors. On the other hand, IBC is a beneficial legislation for equal treatment to the creditors and to revive the Corporate Debtor. For this proposition placed reliance on the Judgment of Hon ble Supreme Court in the case of Dena Bank (Now Bank of Baroda) Vs. C. ShivaKumar Reddy and Anr.Civil Appeal No. 1650 of 2020 decided on 04.08.2021 Para 85 to 87. The decision taken by the ICICI (Financial Creditor) is evident from the minutes of the meeting dated 07.01.2021 (Annexure A- 18 Pg. 353 - 354 Vol. II) email dated 08.01.2021 (Annexure A-19 Pg. 355 Vol. II) and minutes of meeting dated 11.01.2021 (Annexure A-20 Pg. 356 Vol. II). It has unequivocally been stated in the aforesaid minutes of meeting and email that the purported resolution plan for the Corporate Debtor is not acceptable to ICICI (Pg. 357 - 358 of the Appeal Vol. II). ICICI had rejected the resolution plan by an investor namely Vishwa Group. The decision was duly communicated to all th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d different dates of default, therefore, it was held that different dates of default cannot be clubbed together in one Application under Section 9 of the IBC and such application is defective and is not maintainable. 23. In the present case, we are dealing the Application under Section 7 of the IBC. There is a difference between the claim under Section 7 under Section 9 of the IBC. Whether different dates of default can be clubbed together in an Application under Section 7 of the IBC. For this, we would like to refer the Section 7 of the IBC, which is as under:- 7. (1) A financial creditor either by itself or jointly with other financial creditors may file an application for initiating corporate insolvency resolution process against a corporate debtor before the Adjudicating Authority when a default has occurred. . . Explanation.-For the purposes of this sub-section, a default includes a default in respect of a financial debt owed not only to the applicant financial creditor but to any other financial creditor of the corporate debtor. 24. Section 7 provides that a Financial Creditor either by itself or jointly with other Financial Creditors o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2020 and 17.12.2020 were not due and payable even though the earlier instalments were become due and payable and the Corporate Debtor had committed default. Therefore, it cannot be said that the Corporate Debtor has not committed any default in respect of the aforesaid loans and the debt is not payable in fact. Issue No. (iii) Whether the debt is barred by limitation? 29. According to Ld. Sr. Counsel for the Appellant the date of default for a part of alleged debt amount outstanding towards the Working Capital facility was 17.12.2015, whereas, Application under Section 7 filed on 09.01.2020. Thus, the Application is filed after three years. Therefore, debt is barred by limitation. 30. In reply to the Appeal, the Financial Creditor has clarified that the Appellant has placed reliance on its letter dated 17.12.2015 (Annexure 15) to contend that date of default is 17.12.2015. Actually this letter is a balance confirmation which is issued by the Corporate Debtor to the Financial Creditor, similar letters acknowledging debt were issued from time to time, lastly on October, 26, 2018 to the Financial Creditor (Annexure R2 filed with reply to the Appeal). 31. We have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or the Appellant unable to convince us that during the pendency of restructuring proposal outside the purview of IBC, the Application under Section 7 of IBC is unsustainable in law. On the other hand, The Appellant has candidly admitted in Para 10 of Written Submission that none of the judgments passed by the Hon ble Judicial Forums have dealt with a situation like the present one, wherein the financial interest of other Financial Creditors have been damaged due to the isolated and unilateral action of one the Financial Creditor. Issue No. (vi) Whether impugned order is against the very spirit of IBC as the Adjudicating Authority fails to consider that restructuring outside the purview of IBC would be beneficial to the Financial Creditors. 36. It is submitted by the Appellant that all the members of lenders consortium were deliberating upon the restructuring proposal in the joint lenders meeting. The lenders (except ICICI) also opined that a deferment Application for proceedings of Section 7, be filed before the Adjudicating Authority, however, the same could not be filed. It is stated that restructuring proposal outside the purview of the IBC is under consideration, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... side the purview of IBC would be beneficial to the Financial Creditors. Issue No. (vii) Whether Kotak Mahindra Bank can maintain the Appeal under Section 61(1) of the IBC? 41. Ld. Counsel for the Respondent No. 1 representing Financial Creditor raised an objection that under Section 61(1) of the IBC any person aggrieved by the order of the Adjudicating Authority may prefer an Appeal. It means such Appeal can be filed only on valid grounds. The Appellant Kotak Mahindra Bank has no valid ground to challenge the impugned order and failed to point out any legal or factual flaw in the impugned order. The Appellant has no locus standi to file this Appeal. Thus, the Appellant is not come within the purview of aggrieved person . Hence, the Appellant Kotak Mahindra Bank cannot maintain the Appeal. It is also pointed out that the Appellantwas well aware of the proceedings under Section 7 before the Adjudicating Authority, however, the Appellant chose not to participate in the proceedings. Therefore, the Appeal at the instance of Kotak Mahindra Bank is not maintainable. 42. We are convinced with the argument of Ld. Sr. Counsel for the Respondent No. 1 and hold that the Appell ..... X X X X Extracts X X X X X X X X Extracts X X X X
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