Sachin Manohar Deshmukh vs Central Bank Of India

1. Mr. Sachin Manohar Deshmukh, Aged about 49 years, Occupation: Business, Residing at Man Sneh Bungalow, P.K. Road, Mulund West, Mumbai 400080 Email id: Sachin_d@neptunegroup.in Mobile No. 9320090322 ...Appellant Versus

1. Central Bank of India, Nariman Point Branch, Corporate Office at Chandra Mukhi, Building, Nariman Point, Mumbai- 400021. 2. Neptune Developers Ltd. A company incorporated under the Companies Act, 1956 having its registered office at 4th Floor, Neptune Magnet Mall, Near Mangatram Petrol Pump, L.B.S. Road, Bhandup (West), list Mumbai- 400078. Through its Insolvency Resolution Professional, Mr. Vijay Pitamber Lulla Registration No. IBBI/IPA-PA 001/ IP- P00323/2017-2018/20593 Residing at, 201, Sanchit Anand Building, Opp. Ram Mandir, Khar (West), Mumbai - 400052. ...Respondents Present:

For Appellant: Mr. P. Nagesh, Sr. Advocate with Mr. Anshuman -2-

Srivastava, Mr. S. Sahil Reddy and Mr. Ankit Yadav, Advocates.

For Respondents: Mr. Ravi Raghunath, Ms. Rathina Maravarman and Ms. Aakashi Lodha, Advocates for R-1. Mr. Chaitanya B. Nikte, Advocate for RP, R-2.

JUDGMENT

Dr. Ashok Kumar Mishra, Technical Member

The Present Appeal has been filed under Section 61 read with Section 7

of the IBC, 2016 against the order dated 16.07.2021 passed by the

Adjudicating Authority (National Company Law Tribunal, Mumbai Bench,

Mumbai) Court -III, in CP No. 3794/IBC/MB/2019.

2. The Appellant Mr. Sachin Manohar Deshmukh is the Ex-Director of M/s.

Neptune Developers Ltd./ R-2 and is aggrieved with the order passed by the

Adjudicating Authority holding that the Appellant had defaulted in paying the

R-1 i.e. Central Bank of India (CBI) under the loan documentation.

3. The aforesaid direction would cause grave prejudice to the Appellant the

same is fatal to the functioning of the Appellant. The fact of the case as stated

by the Ld. Sr. Counsel for the Appellant are as follows:

(a) The Respondent No. 1/CBI has claimed an amount of Rs.

185,35,24,319/- as amount due to them from Corporate Debtor/R-2

towards the loan advance by them. The R-1/CBI in support of its claim

has relied on the loan agreement and the application filed by it before

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DRT against the demand notice dated 29.09.2018 and 05.10.2018 from

the R-1/CBI.

(b) The Appellant vide its letter dated 12.10.2018 denied the

allegations made therein and thus raising a dispute.

(c) The Appellant approached the R-1 for a One Time Settlement (OTS)

and paid an amount of Rs. 10 Crores to the R-1. The said Settlement

Proposal was accepted by the R-1 vide its sanction letter dated

28.01.2019 and consequently R-1 withdraw the Company Petition on

31.01.2019.

(d) Respondent No. 1 once again filed Company Petition No. 3794 of

2019 before the Adjudicating Authority, (NCLT, Mumbai Bench) on

17.06.2019.

(e) The Respondent No. 1 was approached by the Appellant vide their

letter dated 24.01.2020 with a proposal for one time settlement at Rs. 40

Crore and deposited an amount of Rs. 4.00 Crore as upfront deposit. The

R-1/CBI vide their letter dated 13.03.2020 accepted the said proposal of

OTS & sanction the same vide the R-1 letter dated 13.03.2020.

(f) Thereafter, Global Pandemic Covid -19 emerged in India/world at

large from 24.03.2020, the entire country has been under a complete

lockdown and curfew was imposed. Even the banks started working on

minimal staff only to provide essential services to the public at large. All

this laid investors who were willing to invest in the Appellants Company

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were not able to pump in the money as they were completely stuck up.

The Appellant found mobilizing resources extremely difficult. The

Petitioner's representative were also not able to meet the Bank due to

lockdown.

(g) The Petitioner addressed various letters to the R-1 requesting for

extension of time to make balance payment of OTS amount. Initially R-

1/Bank extended the period for making the balance payment subject to

interest.

(h) The Appellant was in constant co-ordination with the R-1/Bank

and again submitted a OTS on 28.06.2021 before the commencement of

hearing and agree to make payment of balance amount of Rs. 36 Crores

to the R-1/Bank.

(i) The Appellant states that it may not be out of place of mention that

the R-2 Company has principally two major ongoing projects viz, (1)

Project Ramrajya and (2) Project Swarajya and around 2500 flats have

been sold to various homebuyer whose value of each flat ranges from Rs.

5 Lakhs to Rs. 7.5 Lakhs who have invested hard earned money or sold

their existing house or even borrowed money to own a home for

themselves. Further so far as "Project Swarajya" is concerned almost

90% of work has been completed including obtaining Occupation

Certificate (OC) barring some small internal work has remained. It is

humbly prayed that if a stay to Corporate Insolvency Resolution Process

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(CIRP) is not ordered the possession of these homebuyer who are from

lower spectrum of society will be delayed by at least 6-9 months for no

fault of theirs.

(j) Adjudicating Authority took up the hearing in the above matter by

virtual mode. The Appellant wanted to place the aforesaid material on

record and also the fact that they were willing to make payment of the

interest on the delayed period. However, the Hon'ble Bench refused to

hear the Appellant. Further due to certain technical snag, the Appellant

and their counsel were removed from the Virtual hearing. The Appellants

immediately called up the helpline available on the Virtual Hearing

portal, however, since there was no response, the Appellant were

compelled to place the aforesaid facts to the Registry of the Hon'ble

Tribunal and requested for re-entry into the hearing however were not

allowed to re-enter the same.

(k) It is relevant to mention herein that though the order was passed

on 16.07.2021, the Appellant was informed about the same on

22.07.2021 when it was uploaded on the website.

(l) The Appellants further state that the R-2 has subsidiary

companies which are completely relying on the business of the R-2 and

upon passing of the impugned order for CIRP of Corporate Debtor, these

subsidiary companies have come to an abrupt stand still thus affecting of

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the working of not only the Appellants but for all its subsidiary

companies.

4. The Crucial dates and events as presented by the Ld. Sr. Counsel for the

Appellant are stated below:

1. 13.08.2019 The Respondent no.1 Bank filed Application under Section 7 of the IBC for alleged default of Rs. 185,35,24,319/-. [Form 1 at Pg. 55]

2. 24.01.2020 The Appellant approached the Respondent Bank with a One Time Settlement (OTS) proposal. The proposal envisaged payment of Rs. 40 crores against the entire dues of the Bank.[pg. 573]

3. 13.03.2020 The Respondent Bank agreed to the OTS and to settle entire dues for a sum of Rs. 40 crores. The OTS further contemplated an upfront payment of Rs. 4 Crores which was admittedly paid by the Appellant.[pg. 578]

4. 15.03.2020 The entire world came to a standstill with the onslaught of the pandemic -Covid 19. Complete lockdown and several other restrictions were imposed by the Governments.

5. 30.03.2020 In the circumstances caused due to the pandemic, 16.05.2020 the Appellant sought further time for complying with the OTS. The Respondent Bank granted such extension upto 30.06.2020.[pg 580] 28.06.2020 The Appellant again sought extension for further period as the entire real estate industry had come to a standstill.[pg. 584]

6. 08.07.2020 The Respondent Bank cancelled the above OTS.[Pg.

581]

7. 08.07.2021 The Insolvency Application was taken up by the Ld. 16.07.2021 NCLT through virtual mode. During the course of hearing, the counsel for the Appellant got disconnected from the hearing and could not apprise the Ld. NCLT of the above mentioned developments qua the OTS.

The counsel for the Appellant immediately attempted to contact the registry of the Ld. NCLT to enable him to join the hearing again.

[see email at pg. 585]

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The Ld. NCLT pronounced the impugned order on 16.07.2021 whereby it erroneously admitted the Insolvency Application against the Corporate Debtor- R-2.[See page 40-45] N.B.: A bare perusal of the impugned order reveals that the same was passed without being apprised of the developments in the case which took place subsequent to the filing of the Section 7 Application.

8. 23.08.2021 The Appellant filed the present Appeal before this Tribunal. By order dated 23.08.2021, this Hon'ble Tribunal issued notice without granting stay.

9. 27.08.2021 The Appellant filed Civil Appeal No. 4982 of 2021 09.11.2021 before the Hon'ble Supreme Court which granted a 10.12.2021 stay of the CIRP for a period of 8 weeks. The said stay was extended from time to time.

10. 25.02.2022 By way of its final judgment, this Hon'ble Supreme Court was pleased to make the stay order absolute until the pendency of the present Appeal before this Hon'ble Court.

5. Reliance is placed on the celebrated case of "Swadeshi Cotton Mills vs

UOI (1981) 1 SCC 664" (paras 26-30). The Hon'ble Madras High Court has also

in "Shree Krishna Educational Trust vs Government of TN 2016 SCC" Online

Mad 2011 5 (para 6.12 to 6.17) succinctly laid down the components of a fair

hearing which have not been complied with in the present case. The principles

of natural justice are embedded in the Indian legal jurisprudence. In "Maneka

Gandhi vs. Union of India (1978) 1 SCC 248", the Hon'ble Supreme Court has

held

"... The court must make every effort to salvage this cardinal rule to the maximum extent permissible in a given case. It must not be forgotten that "natural justice is pragmatically flexible and is amenable to capsulation under the compulsive pressure of circumstances". The audi alteram partem rule is not cast in a rigid mould and judicial

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decisions establish that it may suffer situational modifications. The core of it must, however, remain, namely, that the person affected must have a reasonable opportunity of being heard and the hearing must be a genuine hearing and not an empty public relations exercise. That is why Tucher, L.J., emphasized in Russel v. Duke of Norfolk (1949) 1 All ER 109 that "whatever standard of natural justice is adopted, one essential is that the person concerned should have a reasonable opportunity of presenting his case".

6. Section 10A of the IBC, 2016 was inserted by an amendment specially to

cater to the situation created due to the spread of pandemic. Section 10A reads

as under:

10A. Suspension of initiation of Corporate Insolvency Resolution Process-

Notwithstanding anything contained in sections 7, 9 & 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 even be filed for initiation of corporate insolvency resolution process of a corporate debtor for the said default occurring during the said period.

... (emphasis supplied)

7. The above provision starts with a non-obstante clause. Further, the

provision clearly stipulates that "no application shall ever be filed" for the

initiation of the CIRP for the said default occurring during the said period. The

expression "shall ever be filed" is a clear indicator that the intent of the

legislature is to bar the institution of any application for the commencement of

the CIRP in respect of a default which has occurred on or after 25.03.2020.

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8. In the present case, the alleged outstanding amount had ceased to exist

as soon as the OTS was entered into between the parties. Admittedly, the

Respondent Bank agreed to settle the entire dues for a sum of Rs. 40 crores

and further accepted the upfront amount of Rs. 4 Crores. Further, the last date

of payment as per the revised OTS letter was 30.06.2020 and hence the default

was within the protected period stipulated in Section 10A.

9. The Respondent No. 1 Bank hold about 24.53% share of the overall

financial claim against the Corporate Debtor. As against its overall claim of Rs.

185 crores (approx.) the Respondent Bank had entered into the OTS dated

13.03.2020 for an amount of Rs. 40 Crores only. However, now the Respondent

Bank is receding to accept the OTS amount which will expose the other

financial creditors who would be condemned to huge losses.

10. However, the Adjudicating Authority vide its order dated 16.07.2021 in

CP No. 3794/IBC/MB/2019 has observed the followings:

"1. The Corporate Debtor, except putting up appearance through Shri Akshay Patil, advocate even did not chose to file any reply in the above matter. The above Company Petition is nothing but a second round of litigation. The earlier company petition bearing no. 4086 of 2018 was withdrawn by the applicant on account of OTS (One Time Settlement) sanctioned to the Corporate Debtor. Except paying upfront amount of 10 crores, the Corporate Debtor did not adhere to the compliance of the remaining terms of the OTS despite availing nearly two years' time.

2. Thus, the debt and default are admitted in this case and the debt is also within limitation. The application is complete in all respects and the Financial Creditor also suggested the name of Mr. Vijay Pitamber Lulla as Interim Resolution Professional along with his consent letter in

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Form II. Thus, the present Company Petition satisfies all the necessary legal requirements for admission.

3. Under these circumstances, this tribunal is of the considered opinion that the above company petition is liable to be admitted and accordingly the same is admitted."

11. The Resolution Professional/R-2 has submitted the following:

(a) He made public announcement on 26.07.2021 under Regulation 6

of the Insolvency and Bankruptcy Board of India (Insolvency Resolution

Process for Corporate Persons) Regulations, 2016 in the following

newspaper i.e., Free Press Journal and Navakal for inviting claims from

creditors of Neptune Developers Ltd. And the last date for submission of

claim was 06.08.2021.

(b) That the IRP has filed its report certifying Constitution of

Committee of Creditors on 18.08.2021 and till that date the IRP received

claims from 350 Class of Creditors (Homebuyers), 3 claims from

Financial Creditor and 3 from unsecured Financial Creditor. A few

connected details from the copy of the IRP's report certifying Constitution

of Committee of Creditors is given hereunder:

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(c) That the IRP called its 1st Committee of Creditors meeting on

26.08.2021. During the meeting one of the Financial Creditor viz; Asset

Care & Reconstruction Enterprise Ltd. & Anr. (who holds 67.31%)

informed the IRP that an application has been filed with Hon'ble NCLT

with a contention that their projects/securities should be kept out of

CIRP proceedings and therefore requested for adjournment of 14 days

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and the same was agreed by other Financial Creditors. Thereafter the

meeting was adjourned to 09.09.2021.

(d) In the meantime, Mr. Sachin Manohar Deshmukh, Ex-Director of

Neptune Developers Ltd. filed an appeal before this Tribunal against the

order passed by Adjudicating Authority dated 16.07.2021 on various

contention and mainly on the grounds that initiation of CIRP was bad in

law and hence the CIRP order be recalled.

(e) The matter was first heard on 23.08.2021 by this Hon'ble Bench

and after hearing the arguments of the Counsels, two weeks was granted

for reply to be filed by all the Respondents, however, no interim orders

were passed by the Adjudicating Authority.

(f) That Mr. Sachin Manohar Deshmukh, erstwhile Director of

Neptune Developers Ltd. Being aggrieved by the order dated 23.08.2021

preferred an appeal before Hon'ble Supreme Court bearing Civil Appeal

No. 4982/2021.

(g) That the matter was heard by the Hon'ble Supreme Court on

27.08.2021, the Hon'ble Supreme Court of India by its order dated

27.08.2021 was pleased to stay on further proceedings in the CIRP for a

period of 8 weeks from the date of the order.

(h) That on learning of the order dated 27.08.2021, the IRP wrote an

email dated 28.08.2021 to the CoC members and informed them of the

said development and also to the erstwhile management. The erstwhile

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management vide its email dated 30.08.2021 contended that the IRP

cannot remain in control and management of the Corporate Debtor and

that he should hand over the management.

(i) Thereafter the R-2 vide its email dated 01.09.2021 replied that the

Hon'ble Supreme Court order dated 27.08.2021 clearly stated that there

shall be a stay of further proceedings for a period of 8 weeks from today,

which implies that no further steps to be taken in connection with the

CIR Process. The stage at which the CIRP has reached should remain the

same. At this stage the IRP has been appointed and CoC has been

constituted and the first CoC meeting was held and adjourned and

therefore no further steps will be taken in the CIRP. The IRP further

states that, based on the legal advice received and after considering the

same, the IRP will continue to manage the affairs of the corporate debtor

till further orders of the supreme court and the powers of the Board of

Directors shall remain suspended and their powers be exercised by the

IRP.

(j) In the meantime, Asset Care & Reconstruction Enterprise Ltd. &

Anr. ("ACRC") has preferred an IA bearing No. 1979/2021 before NCLT,

Mumbai for following reliefs:

(i) That the CIRP initiated applies only to the project known as

Neptune Swarajya, Ambivali, Kalyan, Thane and the creditors

thereof.

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(ii) That the CIRP initiated does not extend and apply to the

project known as Project Ramrajya being developed by the

Corporate Debtor at Ambivali, Kalyan, Thane and all securities

furnished in that regard and that the same shall stand excluded

from the CIRP of the Corporate Debtor and also to furnished the

same in the Information Memorandum to the CoC of the

Corporate Debtor.

(iii) Stay the preparation of the Information Memorandum of the

Corporate Debtor and further steps in the CIRP of the Corporate

Debtor in relation to the project Ramrajya and also to restrain

and prohibits in any manner taking over, exercising power, and

/or taking steps, against and/or in relation to the project

Ramrajya.

(k) Similarly, in the meantime, the flat holders of Project Ramrajya

have also filed an IA bearing No. 1980/2021 in NCLT for declaring that

the CIRP which has been initiated against the Corporate Debtor be

restricted to only Swarjya Projects of the Corporate Debtor and the

Project Ramrajya be excluded from CIRP.

(l) In the meantime, if has come to the knowledge of the IRP/R-2 that

the farmers were trying to encroach upon the Corporate Debtor's land at

Pune and therefore the IRP had to increase the security and has also

authorized the Corporate Debtor's officials to file police complaint and

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take such steps as may be required to safeguard the Corporate Debtor's

assets.

(m) Respondent No. 2 had conducted CIRP till the date the stay was

granted with all the sense of duties and responsibilities as per the

provisions of the I & BC, 2016 and thereafter as stated herein above has

been managing the affairs of the Corporate Debtor.

The Ld. Counsel for R-2 given the status as above.

12. The Ld. Counsel for R-1/CBI has also provided the list of relevant dates

for bringing the clarity of the Appeal:

S.No. Date Event

1. 18.02.2013 Term loan of 100 crores sanctioned by R1 bank to the CD [@pg. 57-58]

2. 31.03.2015 CD account was declared as NPA[pg. 507,Appeal Vol. 2]

3. 30.06.2017 CD acknowledged an amount or INR 95,27,86,406/-

was due to R1 Bank as of 30.06.2017 [pg 442, Appeal Vol. 2]

4. 28.01.2019 R1 Bank sanctioned 1st OTS and CD was required to pay Rs. 93.18 crores within 90 days. Further, it was agreed to inform the concerned authority who categorized the CD's account as fraud at RBI of the acceptance of the OTS [pg 53-54, Appeal Vol. 1]

5. 17.06.2019 R1 Bank rescinded the 1st OTS since except payment of upfront 10% amount, CD failed to pay balance 83.18 crores [pg. 517, Appeal Vol. 2]

6. 13.08.2019 Insolvency Application was filed by R1 Bank u/s 7 of the Code for default in payment of Rs.

185,53,24,319/- [pg. 55-64, Appeal Vol. 1]

7. 03.12.2019 Adjudicating Authority granted time to CD to file a reply [pg. 56, reply Vol.]

8. 24.01.2020 CD sent 2nd OTS offer to pay Rs. 40 crores on or before 31.03.2020[pg. 573, Appeal Vol.3]

9. 13.03.2020 R1 Bank sanctioned 2nd OTS and it was clearly stated therein the DRT/NCLT proceedings shall be

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withdrawn only on payment of entire settlement amount. Further, if the payment was not made as agreed, then the OTS would stand automatically cancelled and bank would be entitled for entire dues [pg 578-579, Appeal Vol. 3]

10. 30.03.2020 CD requested for extension of time to pay.

11. 16.05.2020 R1 Bank gave extension till 30.06.2020 only, to pay the balance sum along with simple interest @ 8% for delayed period [pg 580, Appeal vol.3]

12. 08.07.2020 R1 bank rescinded the 2nd OTS as CD once again failed to make payment [pg 581, Appeal Vol. 3]

13. 06.04.2021 Adjudicating Authority once again granted time to CD to file reply [pg. 57, reply vol.]

14. 08.07.2021 The Insolvency Application was listed as Sl. No. 4 [pg 52, reply Vol.] and Adjudicating Authority heard the parties and reserved orders [pg. 58, reply Vol.]

15. 16.07.2021 Adjudicating Authority admitted the Insolvency Application [pg 40-45, Appeal Vol.1]

16. 19.08.2021 CoC was constituted by the IRP

17. 23.08.2021 This Hon'ble Appellate Tribunal issued notice in the present Appeal and refused to stay the constitution of CoC

18. 27.08.2021 Appellant filed C.A. No. 4982 of 2021 against order dated 23.08.2021 and the Hon'ble Supreme Court by an ex-parte order granted stay of further proceedings in the CIRP

19. 25.02.2022 Hon'ble Supreme Court extended the interim order 27.08.2021 till the disposal of present of present Appeal and requested this Hon'ble Appellate Tribunal to dispose of the present Appeal as expeditiously as possible.

13. The Ld. Counsel for R-1 further submitted that there was a dispute with

respect to the claim of the Bank is baseless and contrary to the facts and law.

The Ld. Counsel for R-1 further submitted as follows:

(A) There was no violation of natural justice & suppression of material

facts as alleged by the Appellant.

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It was stated by the Ld. Counsel of R-1/CBI that the Appellant has erroneously contended that on 08.07.2021, the Counsel of the Appellant/CD was removed/logged out from the virtual hearing before the Adjudicating Authority and therefore had no opportunity to argue the case [averment @ pg. 27 (Ground D)]. This contention is false since:

i. The case was listed as Sl. No. 4 on 08.07.2021 before the Adjudicating Authority [pg. 51/52, reply Vol.]

ii. The Corporate Debtor's Counsel has admitted in the email dated 08.07.2021 that only after the hearing in Sl. No. 4 the counsel was removed [pg. 585, Appeal vol.3]

iii. The Adjudicating Authority's order dated 08.07.2021 records that the parties were heard [pg. 58, reply Vol.]

iv. the Appellant suppressed the cause list for 08.07.2021 and the order dated 08.07.2021 while filing the present appeal.

v. No application or sworn affidavit has been filed by the counsel for the Appellant/CD alongwith the present Appeal stating that he was removed from the hearing and was not given any opportunity to present the case.

vi. Assuming without admitting that the Appellant/CD's counsel was not heard by the Adjudicating Authority, then the Appellant may have immediately approached this Hon'ble Appellate Tribunal challenging the order dated 08.07.2021, but no such appeal was filed. Furthermore, no steps were by the Appellant to file any application for recall of the order dated 08.07.2021 or for re-opening the arguments before the Adjudicating Authority;

vii. Only after the Adjudicating Authority had passed a judgment dated 16.07.2021 admitting the Insolvency Application, the Appellant belatedly filed the present

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Company Appeal on 09.08.2021 challenging the order dated 16.07.2021.

(B) It was also stated by Ld. Counsel of R-1/CBI that Section 10-A of the

Code is inapplicable.

(a) The Appellant's contention based on Section 10-A of the Code was neither raised before the Adjudicating Authority, nor is there any pleading with respect to Section 10-A in the present Company Appeal.

(b) It is well settled law that no new plea can be raised at the Appellate stage. This Hon'ble Appellate Tribunal in M/s Power Finance Corporation Ltd. V. M/s. Shree Maheshwar Hydel Power Corporation Ltd., CA (AT) No. 237 of 2017, judgment dt.

12.03.2018 has held that the parties cannot raise grounds which were not raised before the Tribunal below, and that an appeal against an impugned order can be found fault with only on the basis of the grounds raised before the Tribunal below.

© Assuming without admitting that the Appellant can rely upon Section 10-A of the Code, it is submitted that Section 10- A is inapplicable since the default had occurred much prior i.e., NPA on 31.03.2015, the acknowledgment of debt was on 30.06.2017, the cancellation of 1st OTS was on 17.06.2019 due to failure to pay, the Insolvency Application was filed on 13.08.2019.

(d) The contention of the Appellant that allegedly after approval of the 2nd OTS the cause of action did not survive is false and misleading. The terms and conditions of 2nd OTS clearly states that the DRT/NCLT proceedings shall be withdrawn only on payment of entire settlement amount, and that if payment was not made as agreed, then the OTS will stand automatically cancelled and the bank will be entitled for entire dues [pg 578-579, Appeal Vol. 3]

(e) It is further submitted that there were no settlement/OTS existing between the parties when the matter was heard and reserved on 08.07.2021, and even when the judgment dated 16.07.2021 was passed by the Ld. Adjudicating Authority. In fact, the 2nd OTS was rescinded on 08.07.2020 itself, i.e.,

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almost a year before the Insolvency Application was heard and reserved for orders.

14.(1) We have carefully gone through the submissions made by the Ld. Sr.

Counsel/Counsels of the parties, the pleadings available on record and are

having the following observations:

(a) It is not in dispute that the Term Loan was not taken from

Respondent No.1/CBI by the Corporate Debtor.

(b) It is also not in dispute that Corporate Debtor's account was

declared as NPA on 31.03.2015.

(c) It is also not in dispute that Corporate Debtor has not

acknowledged the specified amount i.e. approximately Rs. 95 Crore due

to the Respondent No. 1/CBI as on 30.06.2017.

(d) The parties both the Financial Creditors/Respondent No. 1 and

Corporate Debtor/Appellant is not denying that an OTS was not

sanctioned on 28.01.2019 and the same was rescinded by the Bank on

17.06.2019. The Corporate Debtor failed to pay balance Rs. 83.18 Crore

out of OTS sanctioned of Rs. 93.18 Crore and hence only Rs. 10 Crore

was paid by the Corporate Debtor/ Appellant to the Bank.

(e) What it is observed that the Respondent No.1/Bank sanctioned 2nd

OTS on 13.03.2020 for an amount of Rs. 40 Crore and out of which only

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Rs. 4 crore was paid by the Corporate Debtor/Appellant to the

Respondent No.1/Bank.

(2) From the above it is very much clear that the debt is neither barred by the

limitation nor it is barred by the provision of Section 10(A) of the IBC, 2016 as

the bank has filed the petition on 13.08.2019.

(3) The record also revealed that the Respondent No.1/CBI/FC has filed the

Petition for initiation of CIRP originally on 22.10.2018 but before the admission

of the said application, the Corporate Debtor has approached the Respondent

No.1/Bank for settlement of their dues and accordingly, the compromise

proposal submitted by the Corporate Debtor/Appellant was accepted by the

Applicant Bank vide sanction letter dated 28.01.2019. As per Settlement

proposal, the Corporate Debtor has paid the upfront amount of Rs. 10 Crore to

the Respondent No.1/Bank/Financial Creditor. As settlement has been arrived

at the matter was withdrawn on 31.01.2019 (pg. 71 of the Appeal Paper Book).

Hence, this is 2nd round of litigation under IBC, 2016 by the Financial Creditor

perhaps who has reached at the conclusion that the Corporate

Debtor/Appellant is not in a position to run the organization or to pay their

dues. Repeated settlement/OTS is of no use to supplement the organization

running. Repeated failures to pay the balance amount of Settlement after

agreement is also unhealthy in financial terms.

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(4) The Hon'ble Apex Court has already settled the law that date of NPA/date of

default is not shifted.

(5) Be that as it may, OTS is a mechanism available with the banks for years

together to allow survival of Debtors and maintain cash flow for banks.

However, repeated failure reflects either the intention of the Corporate

Debtor/Appellant is not fair as in every OTS the settlement amount is going

down and thereby reflecting that delay in CIRP will make the organization

weaker and the object of the code for maximization of the value of assets of

such persons shall not happen.

Hence, we do not find any infirmity in the impugned order and the order

deserves to be sustained. The Appeal fails and is dismissed. IA, if any, stands

disposed of. No order as to costs.

[Justice M. Venugopal] Member (Judicial)

[Dr. Ashok Kumar Mishra] Member (Technical)

New Delhi 10.06.2022 sr

Company Appeal (AT) (Ins) No. 624 of 2021