TMI Blog2023 (11) TMI 481X X X X Extracts X X X X X X X X Extracts X X X X ..... e. The submission of learned Counsel for the Appellant is that loan recall notice having been issued on 20.08.2020, the entire loan became due only consequent to loan recall notice, which loan recall notice having been issued on 20.08.2020, i.e., during 10A period, the application was clearly barred. Loan recall notice dated 28.08.2020 was addressed to Corporate Debtor as well as the Personal Guarantor. The contention advanced by the learned Counsel for the Financial Creditor to counter the above submission is on the basis of Clause 8.1 of the Loan Agreement - There is no dispute between the parties that there is admitted default in payment of interest for two consecutive months prior to 10A period, which is apparent from the Chart as extracted in paragraph 1.3 of the impugned order. Even if, no notice dated 28.08.2020 was issued by the Financial Creditor, the principal amount also became due on occurring of event of default as per Clause 8.1. The bar under Section 10A, does not apply when the default is committed prior to 10A period. The learned Counsel for the Respondent has rightly placed reliance on the judgment of this Tribunal in NARAYAN MANGAL VERSUS VATSALYA BUILDERS D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the predecessor in interest of Piramal Capital Housing Finance Limited had sanctioned a project term loan of Rs.60 crores to Rite Builtec Private Limited, the Corporate Debtor in No.CP (IB) No.1023/MB-IV/2022 Rite Builtec Private Ltd. was Borrower and Rite Developers Pvt. Ltd. was Coborrower, who is the Corporate Debtor in CP (IB) No.1029/MB-IV/2022. The repayment of loan along with interest was to be made in 24 Equated Monthly Installments (EMIs) commencing after 36 months from the date of first disbursement. Sanctioned order, however, contemplate payment of interest from the date of first disbursement. The Loan Agreement dated 06.05.2018 between Rite Builtec Pvt. Ltd.; Rite Developers Pvt. Ltd. and Dewan Housing Finance Corporation Ltd. was entered, providing Clauses for Repayment of loan, Rate of interest, Additional interest in case of default etc. etc. The Corporate Debtor defaulted in making payment of the interest from June 2018. There was default in payment of Pre-Equated Monthly Installments (PEMI). The default continued and till February 2020, the defaulted amount was approximately Rs.10,51,94,998/-. Even after February 2020 Corporate Debtor defaulted in making paym ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efault was only till the extent of interest, whereas, the second cause of action arose on 20.08.2020, when the loan recall notice was issued by the Financial Creditor. The Financial Creditor could not have filed petition for both interest component as well as the entire loan amount. There cannot be multiple date of defaults. Bar under limitation is different from statutory bar. 6. Shri Ramji Srinivasan, learned Senior Counsel appearing for the Financial Creditor submits that the default was committed by the Corporate Debtor in regard towards interest payment obligation, i.e. PEMI with respect to loan of Rs.60 crores availed by the Corporate Debtor from the Financial Creditor. The loan was liable to be repaid jointly and severally Company Appeal (AT) (Insolvency) Nos.1198 1199 of 2023 6 by the Corporate Debtor and Co-borrower. The default before 10A period, i.e. up to February 2020 was Rs.10,51,94,998/- crores, which has been noted in paragraph 1.3 of the impugned order. Thus, default having been committed prior to 10A period, filing of the Application under Section 7 is not barred by Section 10A. It is further submitted that entire loan fell due on account of non-payment of PE ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ants, conditions or agreements on the part of the Borrower under this agreement or any other agreement or document/ security documents executed/ to be executed between the Borrower/ Mortgagors and DHFL pursuant to this Agreement and such default shall have continued over a period of 30 days after notice thereof shall have been given to the Borrower by DHFL; or 10. Clause 8.3, on which reliance has been placed by the Appellant, provides as follows: 8.3. If any event of default or any event which, after the notice or lapse of time or both would constitute an event of default shall have happened, the Borrower shall forthwith give to DHFL a notice thereof in writing specifying such event of default or such event. 11. We may also notice Part-IV of the Application under Section 7. In Column 2 of Part-IV, which relate to Amount claimed to be in default and the date of default , following has been stated: 2. Amount claimed to be in default and the date on which the default occurred (Attach the workings for computation of amount and days of default in tabular form) Amount in Default: The outstanding amount under the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d as In terms of the loan agreement, the first instalment of the preequated monthly instalment interest was required to be paid by the Corporate Debtor on 30.06.2018. However, the Corporate Debtor and/or the Co- Borrower have failed to honour their obligations in respect of the instalment due on 30.06.2018. In the event of failure to make payment of pre-equated monthly instalments interest, a cure period of 10 days is provided under the loan agreement. Accordingly, the Corporate Debtor first defaulted in its payment of PEMI/interest on 11.07.2018. Thereafter, the Corporate Debtor has committed default of its payment obligations towards PEMI/interest under the Sanction Letter and the Loan Agreement on consecutive occasions, which default continues as on date. The subsequent dates on which the Corporate Debtor has committed default are as follows : Month PEMI Interest PEMI Interest received/ Creditor Closing PEMI O/s July 2018 3,44,150 0 1 July 2018 2,37,625 0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... May 2020 58,86,833 0 12,28,55,497 June 2020 58,86,833 0 1,287,42,330 July 2020 58,86,833 0 13,46,29,163 August 2020 58,86,833 0 14,05,15,996 Total 163,96,56,425 13. The main contention raised by the learned Counsel for the Appellant is bar on account of Section 10A. Section 10A of the Code is as follows: 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... writing specifying such event of default or such event . Clause 8.3 of the Loan Agreement, thus, cannot be read to fasten any liability on the Financial Creditor to give notice of event of default. We thus, do not find any substance in the submission of the Appellant relying on Clause 8.3 of the Loan Agreement. 16. The bar under Section 10A, does not apply when the default is committed prior to 10A period. The learned Counsel for the Respondent has rightly placed reliance on the judgment of this Tribunal in Narayan Manga vs. Vatsalya Builders Developers Pvt. Ltd. Company Appeal (AT) (Ins.) No.294 of 2023 decided on 18.08.2023 where after noticing the Section 10A and the judgment of the Hon ble Supreme Court in Ramesh Kymal v. siemens Gamesa Renewable Civil Appeal No.4050 of 2020, following has been observed in paragraph 8, 9 and 10: 8. The object and purpose of Section 10A has been explained in the ordinance by which Section 10A was brought on record as well as the Hon ble Supreme Court in the Judgment of Ramesh Kymal vs. M/s Siemens Gamesa Renewable [Civil Appeal No. 4050 of 2020] . In the Judgment delivered today by this Tribunal on 18.08.2023 in Company Appeal (AT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ued during the Section 10A period whether the said interest amount is to be deducted while computing the threshold. Present is not a case where bar of Section 10 A has been pressed rather present is the case where submission is that the interest amount which is occurring during the Section 10 A period should be excluded from computation of threshold. 10. The Section 10 A provides that no application/proceedings under Section 7,9 10 is to be initiated for a default which is committed during Section 10A period. What is bar is initiation of proceedings when Corporate Debtor commits default in Section 10 A period. If the default is committed prior to Section 10A period and continues in the Section 10 A period the initiation of proceeding is not barred. 17. We, thus, are of the view that Application filed by the Financial Creditor under Section 7 was not hit by Section 10A. Furthermore, it is admitted case of the parties that prior to commencement of 10A period, the default upto February 2020 was approximately Rs.10,51,94,998/-, which is much beyond the threshold provided for Section 7 Application. We, thus, do not find any good ground to interfere with the impugned order ..... X X X X Extracts X X X X X X X X Extracts X X X X
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