9911796707
TMI Blog2025 (3) TMI 14X X X X Extracts X X X X X X X X Extracts X X X X ..... Evershine Wood Packaging Private Limited is carrying on business of timber and availed various credit facilities with M/s. Indian Bank from the year 2017. The Corporate Debtor signed the Demand Promissory Note, Letter of Continuity, Agreement of Guarantee etc. The Corporate Debtor also acknowledged the liability which is not in issue. It is admitted that the Corporate Debtor committed default in payment of loan/debt and hence, a Demand Notice was issued on 10.11.2021. The Accounts of the Corporate Debtor was declared as ''Non Profitable Asset'' [NPA] on 31.03.2021 with effect from 23.12.2020 as per RBI guidelines. It is also stated that the Corporate Debtor paid some amounts on irregular basis until 25.10.2021. However, the default continued thereafter. Hence, the financial creditor, namely, the Indian Bank, filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016 [in short 'IBC, 2016'] for initiating Corporate Insolvency Resolution Process [in short 'CIRP']. (4) It is also admitted that the Corporate Creditor issued a statutory notice under Section 13[2] of SARFAESI Act. Even though the Corporate Debtor had sent a revised OT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s and suspended Directors of the Corporate Debtor. It is not in dispute that the Corporate Debtor had taken a huge loan of Rs.61 Crores from the Indian Bank / 1st respondent for the business run by the Corporate Debtor. It is the case of the petitioners that the 1st respondent refused to restructure the loan facilities as the business was running concern. Referring to the fact that the 1st respondent has taken action because the account had slipped into NPA on 23.12.2020, it is contended by the learned Senior counsel that the default occurred during Covid period arbitrarily. (8) Though the petitioners admit that the OTS proposal submitted by the Corporate Debtor was rejected, the learned Senior counsel submitted that since the date of default is admittedly 23.12.2020, the application is not maintainable by virtue of Section 10-A of IBC, 2016. It is the case of petitioners that due to Covid 19, the entire situation turned against the Corporate Debtor. It is also stated by the petitioners that the business was affected like any other business throughout country which had faced recession. Except referring to Section 10-A of IBC, 2016, the learned Senior counsel has not addressed any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... default arising on or after 25.03.2020 for a period of six months. The proviso also indicates that no application can ever be filed for initiation of CIRP of a Corporate Debtor for the said default occurring during the said period, i.e., on or after 25.03.2020 for a period of six months or such further period not extending one year from such date. (16) In the instant case, though the default commenced after the period specified in Section 10-A, it is not in dispute that it continued even after the moratorium period. The intention of the legislature is to give relief by suspending initiation of CIRP. This Court, from the plain reading of Section 10-A is unable to agree with the learned Senior Counsel that even in a case where the default continued after the period of moratorium, no application can be filed. (17) Learned Senior counsel relied upon the judgment of Hon'ble Supreme Court in Ramesh Kymal [cited supra] reported in 2021 [3] SCC 224. Paragraphs No.27 to 32 of the said judgment are relevant and they are extracted below:- ''27. Adopting the construction which has been suggested by the appellant would defeat the object and intent underlying the insertion of Se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... demic. Parliament has stepped in legislatively because of the widespread distress caused by an unheralded public health crisis. It was cognizant of the fact that resolution applicants may not come forth to take up the process of the resolution of insolvencies (this as we have seen was referred to in the recitals to the Ordinance), which would lead to instances of the corporate debtors going under liquidation and no longer remaining a going concern. This would go against the very object of the IBC, as has been noted by a two-Judge Bench of this Court in its judgment in Swiss Ribbons (P) Ltd. v. Union of India [Swiss Ribbons (P) Ltd. v. Union of India, (2019) 4 SCC 17] . 31. Speaking through Rohinton F. Nariman, J. the Court in Swiss Ribbons (P) Ltd. [Swiss Ribbons (P) Ltd. v. Union of India, (2019) 4 SCC 17] held as follows: (SCC p. 55, para 27) "27. As is discernible, the Preamble gives an insight into what is sought to be achieved by the Code. The Code is first and foremost, a Code for reorganisation and insolvency resolution of corporate debtors. Unless such reorganisation is effected in a time-bound manner, the value of the assets of such persons will deplete. Therefore, max ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y Hon'ble Supreme Court. Therefore, the judgment of Hon'ble Supreme Court which is appropriate in the facts of the case, cannot be relied upon to any other case where the default continued even after the moratorium period and the petition by the Corporate Creditor was filed long after the moratorium period. (19) Learned Senior counsel then relied upon the order of NCLT at Chennai in a Company Petition arising out of the order passed by the Adjudicating Authority namely, NCLT, Hyderabad dated 08.08.2023 in CA.[AT][CH][Ins].No.124/2022 [Carissa Investments LLC, Mauritius Vs. Indu Techzone Pvt Ltd and Others]. The NCLT, in the said order, relying upon the judgment of Hon'ble Supreme Court in Ramesh Kymal case [cited supra], has held as follows:- ''15. The Hon'ble Apex Court concluded that the embargo in Section 10-A must receive a purposive construction which will 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.'' (20) The Tribuna ..... X X X X Extracts X X X X X X X X Extracts X X X X
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