TMI Blog2023 (5) TMI 983X X X X Extracts X X X X X X X X Extracts X X X X ..... and it is discretion of the Financial Creditor to decide filing an Application under Section 7 as per the facts and his legal rights - the Financial Creditor do not initiate on many occasions the proceeding for CIRP against the Corporate Debtor on the first date of default itself although it is his legal right as provided in the Code and the law. From Schedule II of the Loan Account, it is seen that there has been moratorium on payment of principal amount and only on 19.09.2017 the principal amount became due and payable - the Appellant could have taken legal recourse under the Code either on 19.08.2018 or on subsequent defaults or when entire loan became due, payable and defaulted i.e. on 28.03.2022. It is noted that in the present case, the Appellant has chosen 28.03.2022 as date of default in the application filed under Section 7 of the Code before the Adjudicating Authority. The Corporate Debtor defaulted the payment of the instalment for the month of July 2018 which was due and payable on 19.08.2018 which could be treated as an event of default in terms of Clause 12.1.1 of the Loan Agreement i.e., non-payment according to which, if the borrower ( Corporate Debtor ) does ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l for Parties and perused the records made available including cited judgments. 3. Learned Counsel for the Appellant stated that the Appellant sanctioned one loan for Rs. 85 Crores on 05.02.2016 and entered into the loan agreement on 22.02.2016 which was fully disbursed on 09.05.2016. Learned Counsel for the Appellant brought out that the Corporate Debtor agreed to pay the entire loan amount along with interest in accordance with Repayment Clause i.e. Clause 3.1.1 of Loan Agreement. Learned Counsel for the Appellant further brought to the notice that in terms of Clause 3 of additional conditions stipulated under Schedule- I of the Loan Agreement, both the parties agreed for moratorium on repayment of principal amount, as laid down in Schedule- II of the Loan Agreement and hence, there was a moratorium on repayment of principal amount till 19.07.2017. 4. Learned Counsel for the Appellant submitted that the Corporate Debtor made various repayments through cheques/RTGs from 02.06.2016 to 24.01.2019 and in terms of the agreement between the parties, such credited amount were adjusted towards outstanding dues of the instalments payable till 19.07.2018. Learned Counsel for th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Petition No. 3 of 2020, in accordance to which the period from 15.03.2020 till 28.02.2022 was to be excluded for the purpose of limitation, as the application was filed under Section 7 of the Code by the Appellant on 04.04.2022 itself. 10. Learned Counsel for the Appellant therefore urged that in view of clear legal position his Application under Section 7 filed within limitation and therefore the impugned order need to be set aside. 11. Learned Counsel for the Respondent submitted that the impugned order was passed by the Adjudicating Authority on 23.05.2022 on the point of issuance of notice without any notice being issued to the Respondent/ Corporate Debtor . Learned Counsel for the Respondent submitted that the impugned order was perfectly legal and cannot be challenged by the Appellant . 12. Learned Counsel for the Respondent stated that alleged date of default of 28.03.2022 cannot be the date of default in terms of Clause 12.2 of Loan Agreement, when an event of default in terms of Clause 12.1 of the Loan Agreement is to be considered and as such the Adjudicating Authority pertinently and correctly held that 28.03.2022 cannot be taken as date of defaul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it is discretion of the Financial Creditor to decide filing an Application under Section 7 as per the facts and his legal rights. In fact, the intention of the Code is to keep the corporate entity as solvent and going concern entity rather than encouraging or contemplating for initiation of the CIRP against the Corporate Debtor on the drop of the hat i.e. on the first event of default itself. Normally, as commercially prudent mechanism, the financial creditor always tries to resolve the issue with the Corporate Debtor so that his financial interest is not adversely affected and to ensure the same, he sometimes give leeway to the Corporate Debtor to overcome the temporary financial stress of the Corporate Debtor to avoid defaults. It is only this background, the Financial Creditor do not initiate on many occasions the proceeding for CIRP against the Corporate Debtor on the first date of default itself although it is his legal right as provided in the Code and the law. 19. From Schedule II of the Loan Account, discussed earlier, it is seen that there has been moratorium on payment of principal amount and only on 19.09.2017 the principal amount became due and payab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... payable till 19.07.2018. The Corporate Debtor defaulted the payment of the instalment for the month of July 2018 which was due and payable on 19.08.2018 which could be treated as an event of default in terms of Clause 12.1.1 of the Loan Agreement i.e., non-payment according to which, if the borrower ( Corporate Debtor ) does not pay by the due date(s) the borrower s dues or part thereof and/ or any amount payable pursuant to loan document, the same will be treated as event of non- payment. Similarly, Clause 12.2 of the Loan Agreement describes consequence of an event of default . It is therefore, clear the date of default could have been taken as 19.08.2018 in terms of various clauses of Loan Agreement. We have already noted that the Appellant filed in Company Petition bearing No. CP (IB) 283 of 2022 under Section 7 of the Code on 04.04.2022 which was not barred by the limitation period of three years in terms of the order dated 10.01.2022 passed by the Hon ble Supreme Court of India in Suo Moto Writ Petition No. 03 of 2020, wherein the period from 15.03.2020 till 28.02.2022 was excluded for the purpose of Limitation and further giving respite of 90 days from 01.03.2022 for f ..... X X X X Extracts X X X X X X X X Extracts X X X X
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