Tribhuwan Singh vs State Bank Of India & Anr
- CitationComp. App. (AT) (Ins.) No. 1372 of 2022
Ratio decidendi
The rule this decision rests on
The appellate tribunal reasons on the following points, each resting on the terms of the judgment itself: Where the Adjudicating Authority has held that an application under Section 7 is not barred by limitation because the corporate debtor acknowledged the debt within the relevant period, and the date of default is clearly stated in the application, an appellate challenge that merely re-argues the date of default within the Section 10A window fails where the default occurred before the Section 10A period began; in such a case Section 10A has no application to the maintainability of the application. Where the financial creditor's Section 7 application is founded on a default that has occurred under the terms of the agreement between the financial creditor and the corporate debtor, the corporate debtor's expectation of receiving payment from a third party, such as government, does not prevent initiation of the corporate insolvency resolution process; non-payment in those circumstances is not a reason to decline admission. A alleged default by the financial creditor in disbursing the full sanctioned amount is irrelevant to the determination of a Section 7 application filed by that creditor for initiation of the corporate insolvency resolution process.
Written by Miss Lucy from the judgment below, not taken from a headnote.
Judgment
As delivered
Tribhuwan Singh ....Appellant Vs.
State Bank of India & Anr. ...Respondents For Appellant: Mr. Abhijeet Sinha, Mr. Utsav Mukherjee, Ms. Smriti Churiwal, Mr. Jaiveer Kant, Advocates. For Respondents: Mr. Krishnendu Datta, Sr. Advocate with Ms. Avni Sharma, Ms. Varsha Himatengka, Advocates for R1.
ORDER
24.11.2022: Heard Shri Abhijeet Sinha, Learned Counsel for the
Appellant.
2. This Appeal has been filed against the order dated 29.09.2022 passed
by the Adjudicating Authority (National Company Law Tribunal), Mumbai
Bench, Mumbai, by which Section 7 Application filed by the State Bank of
India has been admitted. Financial facility of Rs. 178 Crore was sanctioned by
the Financial Creditor out of which Rs.95 Crore was disbursed. On default
committed, the Financial Creditor filed Section 7 Application in which
Application the Corporate Debtor objected to the admission of the Application
raising various grounds including the ground of limitation, Section 10A and
also that the Corporate Debtor has been taking steps to settle the matter with
the Bank.
2
3. The Adjudicating Authority considered the submissions and admitted
the Application. It is held by the Adjudicating Authority that the Application
is not barred by limitation. Even if submission of the Corporate Debtor is
accepted that the default occurred in May, 2015, there has been
acknowledgment for the period 31.03.2014 to 31.03.2019 by the Corporate
Debtor. With regard to Section 10A, it was held that the date of default was
clearly mentioned and NeSL Report on 05.12.2019 which is also the date of
NPA as stated in Section 7 Application, hence, Section 10A does not in any
manner affect the maintainability of the Application.
4. Shri Abhijeet Sinha, Learned Counsel for the Appellant challenging the
order contends that even if the Application is held to be not barred by
limitation, Appellant can always raise issue with regard to date of default. It is
submitted that the notice was issued on 01.10.2020 and seven days were
required for payment, hence, the period of default occurred in between the
period under Section 10A. The said issue has been categorically dealt with by
the Adjudicating Authority in paragraph 14 (ii) with which we are in full
agreement. Default having been committed prior to 10A period, Section 10A
has no application.
5. Insofar as the submission of the Counsel for the Appellant that
Appellant has to receive payment from government which having not been
received, the Corporate Debtor could not make the payment and it is expected
that the amount shall be received soon so that non-payment is not reason to
send the Corporate Debtor to Insolvency. When the event of default has
occurred as per the Agreement between the Financial Creditor and the
Comp. App. (AT) (Ins.) No. 1372 of 2022 3
Corporate Debtor, we do not find any illegality in filing Section 7 Application
by the Financial Creditor for initiation of CIRP.
6. Learned Counsel for the Appellant lastly contended that there was also
default committed by the State Bank of India in not disbursing the full
amount. We are of the view that the said argument is wholly irrelevant for the
Section 7 Application filed by the Bank.
7. We are of the view that the Adjudicating Authority has not committed
any error in admitting Section 7 Application. There is not merit in the Appeal.
The Appeal is dismissed.
[Justice Ashok Bhushan] Chairperson
[Dr. Alok Srivastava] Member (Technical)
[Barun Mitra] Member (Technical) Anjali/nn
Comp. App. (AT) (Ins.) No. 1372 of 2022
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