Dharamshi K.Patel Vs Indian Bank (Madras High Court)
Madras High Court held that Section 10-A of the Insolvency and Bankruptcy Code, 2016 cannot be extended to cases where default continued beyond moratorium period. Hence, application under section 7 for initiation of CIRP acceptable.
Facts- The Company/Corporate Debtor, namely 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.
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]. 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 u/s. 7 of the Insolvency and Bankruptcy Code, 2016 for initiating Corporate Insolvency Resolution Process.
The Corporate Creditor issued a statutory notice u/s. 13[2] of SARFAESI Act. Even though the Corporate Debtor had sent a revised OTS proposal to the Bank on 04.03.2023, after rejection of the earlier OTS proposal, it is admitted that the Corporate Creditor did not accept the OTS offer. Though the account of the Corporate Debtor was declared NPA, the Corporate Debtor sought permission to operate the accounts on the premise that the Corporate Debtor being a MSME Unit, it can be permitted to operate the account. In all the OTS proposals, it appears that the Corporate Debtor has admitted the default. After referring to the statutory provisions and the admitted facts, the Tribunal admitted the Company Petition with a few directions. Aggrieved by the same, the above writ petition is filed even though a statutory appeal is also provided as against the order of the Tribunal.
