TMI Blog2022 (8) TMI 880X X X X Extracts X X X X X X X X Extracts X X X X ..... ow Bank of Baroda) . The Hon ble Apex Court in Laxmi Pat Surana Vs. Union Bank of India Anr. , [ 2021 (3) TMI 1179 - SUPREME COURT ], has held that Section 7 comes into play when the Corporate Debtor commits default. Section 7, consciously used the expression Default not the date of notifying the loan amount of the Corporate Person as NPA. Further, the expression Default has been defined under Section 3(12) to mean non-payment of debt when whole or not 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 . Therefore, it is clear that what has to be seen is essentially not the date of NPA, but actually the date of default . Hence, the contention of the Learned Sr. Counsel for the Appellant that the date of NPA being 31.03.2013. The date of default ought to have been construed as 30.06.2013 (90 days later) and therefore Application is barred by Limitation , is unsustainable. Having regard to the ratio of the Hon ble Apex Court in Asset Reconstruction Company India Ltd. Vs. Tulip Star Hotels Ltd. and Ors. , [ 2022 (8) TMI 70 - SUPREME COURT ], wherein it has been sta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd payable by the Corporate Debtor to the Applicant as on 22.10.2016. The account of the Corporate Debtor was declared as Non-Performing Asset by the Financial Creditor w.e.f. 31.03.2013. The Applicant filed original Application on 30.09.2013 under section 19 of the Recovery of Debts Due to Banks and Financial Institution Act, 1993 for Recovery of Debts. The Decree passed by Debt Recovery Tribunal, Jabalpur is in favour of Applicant stating that, the Original Application is partly allowed and ordered as: i. The Defendant No.1 and 7 are liable to pay jointly and severally Rs.65,33,48,041.98 with pendentelite and future interest @12%p.a. from the date of filling of the original Application i.e., 30.09.2013, with costs till its realization. 11. It is pertinent to note that out of the above dues, decreed amount of UCO Bank is Rs.25,87,87,908.98 as on the date filling of the original Application with DRT and the amount of Rs.44,57,95,852.82 as on 07.10.2019 together with interest and other charges till date of realization of all the outstanding dues. It is further noted that the Applicant filed current Application within period of 3 years from the date of Decree passed by De ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efore the Adjudicating Authority. A conjoint reading of Sections 3(6), 3(10), 3(11) 3(12) of the Code does not state that the default accrues upon the date being crystallized by a Court or a Tribunal and therefore it is to be construed that the default occurred on 30.06.2013 which is 3 months (90 days) subsequent to the date of NPA i.e., 31.03.2013. In support of his contentions that the Section 7 Petition is barred by Limitation , Learned Sr. Counsel for the Appellant relied on the following Judgements: B.K. Educational Services Private Limited Vs. Parag Gupta and Associates , 2018 SCC OnLine SC 1921. Jignesh Shah and Another Vs. Union of India and Another , 2019 SCC OnLine SC 1254. Gaurav Hargovindbhai Dave Vs. Asset Reconstruction Company (India) Ltd. and Another , 2019 SCC OnLine SC 1239. Swiss Ribbons Private Limited and Another Vs. Union of India and Others , (2019) 4 SCC 17. Babulal Vardharji Gurjar Vs. Veer Gurjar Aluminium Industries Pvt. Ltd. , 2020 SCC OnLine SC 647. V. Padmakumar Vs. Stressed Assets Stabilisation Fund (SASF) Anr. , Comp. App. (AT) (Ins.) No. 57 of 2020. Sh. G Eswara Rao Vs. Stressed Assets Stabil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Company has not defaulted in repayment of dues to a Financial Institutions, Bank or Debenture Holders: Particulars Amount Principal Interest Indian Overseas Bank 308,954,152 54,799,736 UCO Bank 198,249,906 37,667,587 Punjab National Bank 198,019,222 45,423,072 Total 70,52,23,280 13,78,90,395 The Learned Sr. Counsel relied on the following Judgements in support of his case: M M Ramachandran Vs. South Indian Bank Ltd. Ors. , Company Appeal (AT) (Insolvency) No. 1509 of 2019. Laxmi Pat Surana Vs. Union Bank of India Anr. , (2021) 8 SCC 481. Sesh Nath Singh Anr. Vs. Baidyabati Sheoraphuli Co-Operative Bank Ltd. Anr. , (2021) 7 SCC 313. V. Padmakumar Vs. Stressed Assets Stabilisation Fund (SASF) Anr. , Comp. App. (AT) (Ins.) No. 57 of 2020. Asset Reconstruction Company (India) Limited Vs. Bishal Jaiswal Anr. , 2021 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gs under Section 7 of the Code. At this juncture, we find it apt to reproduce the relevant portions of the Judgement: 128. In the instant case, Rs.111 lakhs had been paid towards outstanding interest on 28th March, 2014 and the offer of One Time Settlement was within three years thereafter. In any case, NCLAT overlooked the fact that a Certificate of Recovery has been issued in favour of Appellant Bank on 25th May 2017. The Corporate Debtor did not pay dues in terms of the Certificate of Recovery. The Certificate of Recovery in itself gives a fresh case of action to the Appellant Bank to institute a petition under Section 7 of IBC. The petition under Section 7 IBC was well within three years from 28th March 2014 . ... 132. We see no reason why the principles should not apply to an application under Section 7 of the IBC which enables a financial creditor to file an application initiating the Corporate Insolvency Resolution Process against a Corporate Debtor before the Adjudicating Authority, when a default has occurred. As observed earlier in this judgment, on a conjoint reading of the provisions of the IBC quoted above, it is clear that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Supplied) 7. In the instant case, as can be seen from the dates, the decree passed by the DRT is on 22.10.2016 and the Section 7 Application was filed within three years on 17.12.2019. Keeping in view, the ratio of the Hon ble Apex Court in Dena Bank (now Bank of Baroda) (Supra) the contention of the Learned Sr. Counsel for the Appellant that a decree is not a Financial Debt as per Section 5(8) of the Code is untenable. The question here is not whether a decree is a Financial Debt . The issue here is whether a Recovery Certificate/decree can extend the period of Limitation which has already been answered by the Hon ble Apex Court in Dena Bank (now Bank of Baroda) (Supra). 8. The Hon ble Apex Court in Laxmi Pat Surana Vs. Union Bank of India Anr. , (2021) 8 SCC 481, has held that Section 7 comes into play when the Corporate Debtor commits default. Section 7, consciously used the expression Default -not the date of notifying the loan amount of the Corporate Person as NPA. Further, the expression Default has been defined under Section 3(12) to mean non-payment of debt when whole or not part or instalment of the amount of debt has become due and payable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... our opinion and according to the information and the explanation given to us, except as stated hereunder the Company has not defaulted in repayment of dues to a Financial Institutions, Bank or Debenture Holders: Particulars Amount Principal Interest Indian Overseas Bank 308,954,152 54,799,736 UCO Bank 198,249,906 37,667,587 Punjab National Bank 198,019,222 45,423,072 Total 70,52,23,280 13,78,90,395 11. Having regard to the ratio of the Hon ble Apex Court in Asset Reconstruction Company India Ltd. Vs. Tulip Star Hotels Ltd. and Ors. , Civil Appeal No. 84-84 of 2020, wherein it has been stated that acknowledgement in Balance Sheets further extends the period of Limitation and has observed as follows: 97. To sum up, in our considered opinion an application under Section 7 of the IBC would not be barred by limitation, on the ground that it had been f ..... X X X X Extracts X X X X X X X X Extracts X X X X
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