TMI Blog2023 (8) TMI 486X X X X Extracts X X X X X X X X Extracts X X X X ..... ill advance the contention of the Learned Senior Counsel for Respondent No.2 that though the date of default is on 31.03.2020, Section 10-A will not be applicable is unsustainable in the light of the observations made by the Hon ble Apex Court in the aforenoted Judgment. In the instant case, admittedly, the date of default is 31.03.2020 and the ratio of the Hon ble Apex Court in Ramesh Kymal versus M/s. Siemens Gamesa Renewable Power Pvt. Ltd. regarding Section 10-A of the Code the object of which was sought to be achieved by enacting the Provision, is squarely applicable to the facts of this case. The Impugned Order is set aside and consequently the admission of the Section 7 Petition is also set aside Appeal allowed. - [Justice M. Venugopal] Member (Judicial) And [Shreesha Merla] Member (Technical) For the Appellant : Mr. E. Om Prakash, Senior Advocate For Ms. Ashwini Vaidialingam, Advocate For the Respondents : Mr. P.H. Arvindh Pandian, Advocate For Mr. Anirudh Krishnan, Advocate, For R2 JUDGMENT ( Physical Mode ) [ Per : Shreesha Merla , Member ( Technical ) ] 1. Challenge in this Company Appeal (AT) (Ins) No.124 of 2022 is to the i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ein for the recovery of Rs.49,12,33,998/- plus interest thereto. 10. It is further stated that, while the OA was pending before DRT, EARC and the corporate debtor Indu Tech Zone entered into a Settlement of Financial Assistance on 12.03.2018 vide Edel ARC/3875/2017-18 (settlement letter), wherein the Corporate Debtor was to pay Rs.15,00,12,830/- which includes outstanding debt of Rs.40,64,61,066/- plus applicable interest at 15.5% originally owed to IDFC, in three trenches as under:- (iv) First Instalment of R s.4,25,12,830/- and Rs.25,00,000/- by 27.03.2018. (v) Second instalment of Rs.50,00,000/- by April, 2018. (vi) Third instalment of Rs.7,40,18,345/- and Rs.2,59,81,655/- by 31.03.2020. 11. The settlement letter was filed with the DRT, and the same was record with the following clause. In the event of any default of payment of the amounts in accordance with the settlement letter, the settlement shall sand terminated automatically, without any further notice to Indu (Corporate Debtor) and EARC shall be entitled to recover the IDFC outstanding amount . Therefore, it is as clear as crystal, that the financial debt in this case stands admitted. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vate Ltd. v. M/s. IFCI Ltd. and the National Company Law Appellate Tribunal Principal Bench had set aside the order dated 08.11.2019 holding that the debt was time barred. A Civil Appeal No. 3509 of 2020 filed challenging the Judgment was also dismissed by the Hon ble Apex Court on 25.01.2021. 5. It is the case of the Appellant that EARC assigned its right vide Settlement Agreement to the 2nd Respondent i.e. M/s. Prudent ARC Ltd. by way of an Assignment Agreement on 04.09.2020 and on 23.12.2020, it had issued a letter to the Corporate Debtor to pay the amount defaulted under the Settlement Agreement. It was informed by the Corporate Debtor to M/s. Prudent ARC Ltd. on 18.01.2021, that as per the terms of ICA, a new lender was required to execute a Deed of Adherence as per clause 7.6 of the ICA. On 03.07.2021, Prudent ARC filed Section 7 Petition invoking the rights under the aforesaid Assignment Agreement and the underlying Loan Documents. It is the case of the Appellant that any default arising between 25.03.2020 to 25.03.2021 has been excluded from the purview of the Code through the introduction of Section 10-A. As per the Application filed by M/s. Prudent ARC Ltd., the all ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Lender Creditor Agreement dated 27.02.2009. It is submitted by the Learned Counsel that these Loan Agreements are distinct and separate and that the first assignment Agreement was executed between EARC and IDFC and that the Corporate Debtor had committed default of their payment obligations under this loan agreement. Vide Assignment Agreement dated 24.12.2013 IDFC had assigned its debt to EARC, together with all the incidental rights and therefore, EARC became the absolute legal owner to receive these payments. 9. It is submitted by the Learned Senior Counsel for the Respondent that on account of the NPA, the Creditor initiated proceedings before the Debts Recovery Tribunal, Hyderabad, and during the pendency of these proceedings, the Corporate Debtor entered into a Settlement Agreement vide letter dated 12.03.2018, whereby the Corporate Debtor was under obligation to pay the amounts in three tranches ending on 31.03.2020. 10. It is the case of the Respondent that the Settlement letter specified that in the event of default by the Corporate Debtor, EARC could unilaterally revoke the settlement. It is also submitted that the Corporate Debtor had cleared two tranches of payme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 7 Application shows the date of default as 31.03.2020. For ease of reference, Section 10(A) of the Code is reproduced as hereunder: - 10A. Suspension of initiation of corporate insolvency resolution process. 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 for a period of six months or such further period, not exceeding one year from such date, as may be notified in this behalf: Provided that no application shall ever be filed for initiation of corporate insolvency resolution process of a corporate debtor for the said default occurring during the said period. Explanation For the removal of doubts, it is hereby clarified that the provisions of this section shall not apply to any default committed under the said sections before 25th March, 2020. (Emphasis Supplied) In the instant case, it is an admitted fact and also recorded in the Impugned Order that as per the Settlement Agreement entered into between the Corporate Debtor and the Lenders, the third instalment of the payment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ter 25 March 2020; and (iii) for a period of six months or such further period not exceeding one year from such date as may be notified in this behalf. The proviso to Section 10A stipulates that no application shall ever be filed for the initiation of the CIRP of a corporate debtor for the said default occurring during the said period . The explanation which has been inserted for the removal of doubts clarifies that Section 10A shall not apply to any default which has been committed under Sections 7, 9 and 10 before 25 March 2020. 17. Section 10A makes a reference to the initiation of the CIRP. Clauses (11) and (12) of Section 5 of the IBC define two distinct concepts, namely: (i) the initiation date; and (ii) the insolvency commencement date. 18. The initiation date is defined in Section 5(11) in the following terms: 5(11) initiation date means the date on which a financial creditor, corporate applicant or operational creditor, as the case may be, makes an application to the Adjudicating Authority for initiating corporate insolvency resolution process; The expression insolvency commencement date is defined in Section 5(12) in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e operation of the Act. The words if a person has been convicted were construed to include anterior convictions. The words has made , has ceased , has failed and has become , may denote events happening before or after coming into force of the statute and all that is necessary is that the event must have taken place at the time when action on that account is taken under the statute And the word is though normally referring to the present often has a future meaning and may also have a past signification in the sense of has been. The real issue in each case is as to the dominant intention of the Legislature to be gathered from the language used, the object indicated, the nature of rights affected, and the circumstances under which the statute is passed. (emphasis supplied) 23. Adopting the construction which has been suggested by the appellant would defeat the object and intent underlying the insertion of Section 10A. The onset of the Covid-19 pandemic is a cataclysmic event which has serious repercussions on the financial health of corporate enterprises. The Ordinance and the Amending Act enacted by Parliament, adopt 25 March 2020 as the cut-off date. The provi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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