NPA declaration date served as valid “Date of Default” under IBC: NCLAT Delhi

Milind Kashiram Jadhav Vs State Bank of India (NCLAT Delhi)

The case of Milind Kashiram Jadhav Vs. State Bank of India revolves around an appeal filed under Section 61 of the Insolvency and Bankruptcy Code, 2016 (IBC) against an order passed by the National Company Law Tribunal (NCLT), New Delhi. The NCLT’s order admitted an application filed by State Bank of India (SBI) under Section 7 of the IBC against Jabalpur MSW Private Limited (Corporate Debtor), triggering the Corporate Insolvency Resolution Process (CIRP).

The appeal, filed by Mr. Milind Kashiram Jadhav, a suspended director of the Corporate Debtor, raises two primary issues for consideration:

1. Whether the Adjudicating Authority (NCLT) was correct in admitting SBI’s application for initiating CIRP against the Corporate Debtor.
2. Determining the “date of default” under the IBC, specifically whether it aligns with the date of Non-Performing Asset (NPA) declaration or the date of loan recall notice.

The Corporate Debtor owed Rs. 46.80 crores to SBI, though there were disputes regarding the accuracy of the Statement Of Account (SOA) provided by SBI. However, regardless of the exact amount owed, it was established that the debt exceeded the Rs. 1 crore threshold required for initiating insolvency proceedings. The Tribunal clarified that there’s no need to ascertain the exact amount of debt at the time of admission under Section 7 of the IBC, as long as it surpasses the prescribed threshold.