In the matter of KLM Holdings Pvt. Ltd.

National Company Law Tribunal6 December 2023

CitationIB)-510-ND-2023

Ratio decidendi

The rule this decision rests on

The Tribunal holds that, under Section 7 of the Insolvency and Bankruptcy Code, 2016, the admission of a financial creditor's application turns on two matters the Tribunal must be satisfied of: that a financial debt was disbursed to the corporate debtor and that the debt is in default. The Tribunal holds that the provisions of Section 7 do not make the date on which an account is classified as a non-performing asset a condition of admissibility, so that a financial creditor's application is not rendered not maintainable merely because the account had not been declared an NPA on the date of filing. The Tribunal holds that where the corporate debtor admits in its reply both the disbursement of the loan and its inability to repay on the due date, and does not dispute the date of default, the conditions for admission under Section 7 are satisfied, and the application is to be admitted, with commencement of the corporate insolvency resolution process and the consequent moratorium under Section 14 following by operation of Section 7(6).

Written by Miss Lucy from the judgment below, not taken from a headnote.

Judgment

As delivered

IN THE NATIONAL COMPANY LAW TRIBUNAL NEW DELHI BENCH (COURT – II) Item No. 202 (IB)-510/ND/2023 IN THE MATTER OF: BCL Interprises Ltd. … Applicant/Petitioner Versus KLM Holdings Pvt. Ltd. … Respondent Under Section: 7 of IBC, 2016 Order delivered on 06.12.2023 CORAM: SH. ASHOK KUMAR BHARDWAJ, SH. L. N. GUPTA, HON’BLE MEMBER (J) HON’BLE MEMBER (T) PRESENT: For the Applicant : Adv. Shaurya Bhatnagar For the Respondent : Adv. Srishti Aggarwal, Adv. Mridul Thakur, Adv. Ishann Dhingra Hearing Through: VC and Physical (Hybrid) Mode ORDER Heard the Ld. Counsels for the parties. The only defence espoused by the Ld. Counsel for the CD is that the original date of default was 04.06.2023, but the FC itself granted the opportunity to CD to repay the loan amount, thus, the date of default was shifted to 04.07.2023. According to her, the present proceedings could not be instituted till the declaration of the account of the CD as NPA, which in terms of the RBI guidelines could be declared only on expiry of three months from the date of default i.e., 04.10.2023 in the present matter. Indubitably, the FC disbursed the loan to the extent of an amount of Rs. 1,10,00,000/- (Rupees One Crore Ten Lakhs) to the CD. Ld. Counsel could draw our attention to the statement of bank accounts of the FC in this regard which is placed on record as Annexure (page Nos. 81-82) to the application. The relevant excerpt of the statement reads thus:

UPASANA

From the aforementioned bank statement, it is clear that there is a disbursement of a loan by the FC to the CD. As can be seen from part IV of the petition, the CD committed default in repaying the loan on 04.06.2023. The Part-IV of the petition reads thus:

UPASANA

Ld. Counsel appearing for the CD did not dispute the disbursement of the loan amount as also the date of default. These are two factors that we need to verify and satisfy us about while taking a decision regarding admission of a petition filed under Section 7 of the IBC, 2016. As has been noted above the only contention raised on behalf of the CD is that the date of default was originally 04.06.2023, but on account of the extension of the same by one month by the FC, it could shift to 04.07.2023 and before the expiry of three months, the account of the CD could not have been declared as NPA and when the account was not NPA till the date of filing of the present petition, the petition is not maintainable. As can be seen from Section 7 of the IBC, 2016, it does not take note of the date of NPA. What the Tribunal needs to satisfy itself about is that there was disbursement of loan and the same is defaulted to be paid by the CD. Two conditions are admittedly satisfied in the present case. In para 2 & 3 of the reply, the CD has categorically admitted the disbursement of the loan. The paras reads thus: “2.

That the Corporate Debtor had availed loan facility from the Financial Creditor to utilize the finds for investment purposes. The Corporate Debtor, through loan from dated 27.02.2023, applied for the loan and the Financial Creditor sanctioned Rs. 1,10,00,000/- (Rupees One Crore Ten Lakh Only) as loan to the corporate debtor. 3. That due to unforeseen circumstances, the investments on which the CD used the loan amount did not fructify and hence on 04.06.2023, the date when the loan repayment became due, the CD requested the FC to grant 1 month’s extension for repayment of the loan. The said request of the Corporate Debtor was accepted by the Financial Creditor.” In the wake of the above, we are left with no option but to admit the present petition and in view of the provisions of Section 7 (6) of IBC, 2016, the CIRP qua the CD stands commenced. Ordered accordingly. In the wake, moratorium as provided under Section 14 of IBC, 2016 is declared qua the CD and as a necessary consequence thereof the following prohibitions are imposed, which must be followed by all and sundry: (a) The institution of suits or continuation of pending suits or proceedings against the Respondent including execution of any judgment, decree, or order in any court of law, tribunal, arbitration panel or other authority;

UPASANA (b) Transferring, encumbering, alienating or disposing of by the Respondent any of its assets or any legal right or beneficial interest therein; (c) Any action to foreclose, recover or enforce any security interest created by the Respondent in respect of its property including any action under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002; (d) The recovery of any property by an owner or lessor, where such property is occupied by or in the possession of the Respondent. As proposed by the Petitioner, Mr. Kamal Ahuja, having Registration No. IBBI/IPA-002/IP-N01025/2020-2021/13389 (e-mail id: kamal.ahuja@corporateconsultant.in) Mobile No. 9811259140 is appointed as IRP, subject to the condition that no disciplinary proceeding is pending against him and disclosures as required under IBBI Regulations, 2016 are made by him within a period of one week from this Order. It is further ordered that Mr. Kamal Ahuja, IRP (Registration No. IBBI/IPA-002/IP-N01025/ 2020- 2021/13389) shall take charge of the CIRP of the Corporate Debtor with immediate effect and would take steps as mandated under the IBC specifically under Section 15, 17, 18, 20 and 21 of IBC, 2016 read with extend provisions of IBBI (Insolvency Resolution of Corporate Persons) Regulations, 2016. The Petitioner is directed to deposit Rs. 2,00,000/- only with the IRP to meet the immediate expenses. The amount, however, will be subject to adjustment by the Committee of Creditors as accounted for by Interim Resolution Professional and shall be paid back to the Financial Creditor. A copy of this Order shall immediately be communicated by the Registry/Court Officer of this Tribunal to the Petitioner /Financial Creditor, the Respondent/Corporate Debtor and the IRP mentioned above. In addition, a copy of this Order shall also be forwarded by the Registry/Court Officer of this Tribunal to the IBBI for their records. The Ld. Counsel for the parties categorically submitted that there is no relationship except that of the borrower and lender between them and the present petition is not a collusive petition. The petition stands disposed of.

Sd/- Sd/- (L. N. GUPTA) (ASHOK KUMAR BHARDWAJ) MEMBER (T) MEMBER (J)

UPASANA

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