TMI Blog2023 (12) TMI 317X X X X Extracts X X X X X X X X Extracts X X X X ..... was brought into operation. What is essentially barred is initiation of CIRP proceedings when the Corporate Debtor commits any default during the Section 10A period. However, if the default is committed prior to the Section 10A period and continues in the Section 10A period, this statutory provision does not put any bar on the initiation of CIRP proceedings - the aim and objective of Section 10A was to protect a Corporate Debtor from the filing of any insolvency application against it for any default committed during the period when Covid-19 pandemic was prevailing. It was never intended to cover any default which occurred before Section 10A period and continuing thereafter. The present is a case where prima facie the default has been committed by the Corporate Debtor since 2018 which is prior to commencement of Section 10A period. Hence, this is a case where the default was undisputedly committed before the bar of Section 10A came into play. There being categorical default by the Respondent prior to Section 10A period, the Corporate Debtor was clearly not entitled to claim the benefit of Section 10A period. Since the liability to pay interest arose prior to Section 10A period s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mutually treated as unsecured loan and reflected accordingly in the books of the account of the Corporate Debtor/Respondent. Interest thereon was paid by the Respondent and TDS also deducted thereon for which confirmation of books of accounts was periodically sought from Vijay by the Respondent. Thus, it was contended that the Respondent by his own conduct changed the status of the Appellant from home-buyer to a financial creditor. 3. It was further submitted that the Respondent paid regular interest till FY 2015-16 until on 31.03.2017 on grounds of financial crunch he sought waiver of interest from Vijay which request was however declined. It is the contention of the Appellant that the Respondent thereafter defaulted in making interest payment since October 2017 and continued to default from FY 2017-18 until FY 2020-21 except for part repayment in 2018. It is further submitted that on the demise of Vijay on 21.10.2018, the loan amount was transferred in the name of the Appellant which stands confirmed from the confirmation of account for FY 2019-20 signed by the Respondent. On account of non-payment of debt, a letter dated 01.02.2021 was sent by the Appellant to the Respondent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l debt. 7. It has been further contended by the Learned Counsel for the Respondent that the company petition is not maintainable since the Appellant is not an allottee within the meaning of Section 2(d) of the Real Estate (Regulation and Development) Act, 2016. It has been further stated that even if the Appellant is considered to be an allottee, the present Section 7 application is liable to be dismissed since it does not fulfil the requirement of filing such an application jointly by not less than 100 of such creditors in the same class or not less than 10% of the total number of such creditors in the same class in terms of the proviso to Section 7 of IBC. 8. It has been argued that in the absence of any express/implied repayment schedule, the date of default as claimed by the Appellant/Financial Creditor cannot be acceded to and the Appellant cannot seek right to repayment as per his choice without justifiable explanation. Furthermore, since the sum advanced can at best be treated as a Loan on Demand and the demand for repayment was made by the Appellant vide their letter dated 01.02.2021, the date of default can only be February 2021 and not October 2017 as claimed by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ijay which was not acceded to by the latter. It is their case that the Respondent default in the payment of interest arose only thereafter. One fact that has been contested is that while the Appellant has contended that the Respondent started defaulting in the payment of interest since October 2017, the Respondent has claimed to have paid interest even in 2018. In support of their assertion, attention has been adverted to page 33 of APB which shows that interest was paid on 04.09.2018 by the Respondent. Be that as it may, the Appellant has vehemently contended that no claim has been made that the interest payments continued to be discharged by the Corporate Debtor after part payment was done in September 2018. Neither has any material been placed on record to show that the interest payments were remitted thereafter except for some part repayment in 2018. Prima facie, the Appellant has emphatically asserted that there is sufficient material on record which shows that default in repayment of debt arose in October 2017 and the defaults continued thereafter except for one tranche paid in September 2018. 13. It may be useful at this stage to notice how the impugned order has dealt wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng Amount claimed to be in default , the entry made by the Appellant is to the effect: The amount claimed to be in default is Rs.6,20,01,000/- (Rupees Six Crore Twenty Lakh One Thousand Only) with further interest thereon at the rate of 12% per annum on the principal amount from 1st January 2021 till payment and/or realisation. As against the column Date on which default occurred , the entry made by the Appellant is to the effect: The default occurred in the FY 2016-17, more particularly 1st October, 2017 . 16. It is, however, the case of the Learned Counsel for the Respondent that payment of interest has been made even after October 2017 on 04.09.2018. Therefore, it has been contended that the date of default as claimed by the Appellant to be October 2017 is whimsical and lacks basis. Mere insertion of any date in Form 1 at Part IV of the Section 7 application does not make that date of default valid and binding especially when there is no agreement between the two parties as to what shall constitute an event of default. In the absence of agreement specifying the events of default, the alleged date of default cannot be whimsically decided by the creditor and the creditor n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t a Corporate Debtor from the filing of any insolvency application against it for any default committed during the period when Covid-19 pandemic was prevailing. It was never intended to cover any default which occurred before Section 10A period and continuing thereafter. 19. The present is a case where prima facie the default has been committed by the Corporate Debtor since 2018 which is prior to commencement of Section 10A period. Hence, this is a case where the default was undisputedly committed before the bar of Section 10A came into play. There being categorical default by the Respondent prior to Section 10A period, the Corporate Debtor was clearly not entitled to claim the benefit of Section 10A period. Since the liability to pay interest arose prior to Section 10A period since the default was committed prior to Section 10A period, we are of the considered opinion that the view taken by the Adjudicating Authority that the Section 7 application being premised on a letter calling for loan repayment which was dated 01.02.2021 and this date falling during the prohibited period under Section 10A renders the petition non-maintainable is misconceived and untenable in the eyes of l ..... X X X X Extracts X X X X X X X X Extracts X X X X
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