Mr. Narendrabhai s/o Kantibhai Patel VS PNB Housing Finance Ltd & another
CA (AT) 1461 of 2023
Facts:
1.Corporate Debtor had availed loan from the Financial Creditor and mortgaged its immovable property for this purpose. The loan had been sanctioned for an amount of Rs.10.52 crore on 29.09.2018 which was for a tenure of 144 months with floating interest and repayable in EMI amounts of Rs.13,03,220. Loan account of the Corporate Debtor was classified as NonPerforming Asset (NPA) on 14.12.2019 by the Financial Creditor as according to them the Corporate Debtor had allegedly failed to regularize the loan account
2.Financial Creditor issued a notice under Section 13(2) of the SARFAESI Act, 2002 on 15.01.2020 and later on took possession of the mortgaged property of the Corporate Debtor on 16.09.2021. Section 7 application under the IBC was filed by the Financial Creditor seeking initiation of CIRP against the Corporate Debtor which was admitted by the NCLT on 13.10.2023.
3.Appeal is filed against the above order.
Issue: Whether the appeal is liable to be admitted?
Arguments:
Appellant:
1.Counsel denied that the Corporate Debtor had committed any default in the discharge of the purported financial debt as claimed by the Financial Creditor. It was contended that in terms of the loan sanction document, the EMIs for the month of July and August 2019 had already been paid.
2.Counsel further contended that Corporate Debtor had never defaulted in the payment of EMIs for 90 days at a stretch as mandated by the RBI for any account to be classified as NPA. Since, the Corporate Debtor was liable to pay only the EMI amount and not the entire purported loan advanced, it is misconceived to hold that any default had occurred on the date of NPA. Since the Financial Creditor filed the Section 7 application in January 2023 on the basis of classification of the account of the Corporate Debtor as NPA as on 14.12.2019, the application was barred by limitation.
3.Counsel submitted that the Corporate Debtor had also sent letters to the Financial Creditor for one-time restructuring and OTS proposals which also proves their bona-fide
Respondent:
1.Counsel submitted that loan account could not be regularized since in terms of the RBI framework, NPA account cannot be upgraded/regularized unless the entire amount comprising of arrears of interest and principal are paid by the borrower. Thus, it is clear that the account was never regularized/upgraded and the Corporate Debtor’s debt obligation was unequivocal and indisputable.
Decision: NCLAT dismissed the appeal.
Rationale:
1.NCLAT held that OTS proposals, which undisputedly fall within the three year period from the date of default, clearly provided for a fresh period of limitation of three years. We, therefore, find that the Adjudicating Authority did not commit any error in holding that the OTS proposals dated 24.08.2020 and 11.11.2022 constitute acknowledgement under Section 18 of the Limitation Act, 1963 and hence the Section 7 application filed on 24.01.2023 was correctly held to be within the limitation period.
2.It held that present is a case where the default has been committed by the Corporate Debtor prior to commencement of Section 10A period. The default having been committed before the bar of Section 10A came into play, the Corporate Debtor was clearly not entitled to claim that the Section 7 application was not maintainable.
Order:
