Mr. Maneesh Kumar Singh vs State Bank of India
Company Appeal (AT) (Insolvency) No.1484 of 2023
Facts:
1. The Corporate Debtor – Advantage Overseas Pvt. Ltd. was extended a financial facility by the State Bank of India. Initially a facility of Rs.10 Crores was granted on 15.03.2013. The Board of Directors of the Corporate Debtor resolved to avail the initial facility and to create an equitable mortgage over certain properties of the Corporate Debtor
2. A Guarantee Agreement was also executed in favour of State Bank of India by the Personal Guarantors – Mr. Jijo John and Mr. Maneesh Kumar Singh. Guarantee Agreement was executed on 23.03.2013. On a request made by the Corporate Debtor, facility was enhanced to an aggregate amount of Rs.51 Crore and Letter of Arrangement dated 17.12.2014 was issued. (v) On April, 2016, the Corporate debtor again approached the State Bank of India for renewal and an increase/ enhancement of the facility. By Letter of Arrangement dated 13.04.2016, extended facility of aggregating to Rs.6249.50 Crores was granted.
3. Corporate Debtor defaulted in serving the facilities. On 08.08.2018, the Bank declared the account of Corporate Debtor as NPA. On 07.01.2019, Bank issued a notice calling upon the Corporate Debtor to repay the amount of Rs.1388,87,36,968/- being the outstanding amount as on 30.11.2018 along with further interest. (x) On 30.01.2019, the State Bank of India filed an OA under Section 19 of the Debts Due to Banks and Financial Institutions Act, 1993 being OA No.107 of 2019 for recovery of Rs.1408,57,30,754.
4. On 05.09.2020, the Bank addressed a letter providing an One Time Settlement Offer, which offer was agreed and accepted by the Corporate Debtor as well as the Guarantors. (xiii) In compliance of the Terms of the OTS, Corporate Debtor issued undertaking on 11.05.2021. The parties arrived at amicable settlement and on 25.06.2021, parties jointly filed an application for Consent Decree before the Debts Recovery Tribunal (DRT). (xv) On 26.04.2022, DRT passed a Consent Decree. The judgment clearly stated that in the event defendants to the OA filed to adhere to the terms of the decree, the entire outstanding amount will be payable by them.
5. The Corporate Debtor failed to adhere to the terms of the OTS. (xvii) The State Bank of India by letter dated 02.01.2023 intimated the Corporate Debtor that OTS has failed. The State Bank of India filed an application under Section 7 on 13.03.2023 claiming an amount of Rs.2730,51,66,175.58/- as on 28.02.2023 with further interest. The Adjudicating Authority issued notice in the Section 7 application. Reply was filed by the Corporate Debtor. The Adjudicating Authority after hearing both the parties by impugned order dated 10.11.2023 admitted Section 7 application.
Issue: Whether the order passed is correct?
Arguments:
Appellant:
1. Counsel submitted that application filed by the State Bank of India under Section 7 was barred by Section 10A and the Adjudicating Authority committed error in admitting Section 7 application
2. As per er the OTS dated 05.09.2020 amount of Rs.165.96 Crore was to be paid within six months from the date of conveying sanction of OTS with regard to which payment default occurred on 04.03.2021 i.e. after six months, which was within 10A period, hence, the application being hit by Section 10A was liable to be rejected.
3. Counsel submitted that due to default committed in compliance of OTS terms dated 05.09.2020, there shall be fresh cause of action, which cause of action arose during 10A period, hence, the application was liable to be rejected Section 7 application cannot be filed for execution of a Consent Decree. Learned counsel for the Appellant has also referred to notice dated 02.01.2023 issued by the State Bank of India, which clearly indicate that default took place on 04.03.2021 i.e. within 10A period.
Respondent:
1. Counsel submitted that There is no question of application under Section 7 being barred by Section 10A when default is committed prior to 10A period and application cannot be held to be barred by Section 10A. It is submitted that on the basis of OTS dated 05.09.2020 both the parties agreed to obtain the Consent Decree from the DRT where original application filed by the Bank was pending. After the OTS dated 05.09.2020, the Corporate Debtor executed an undertaking on 11.05.2021 and thereafter on 05.06.2021 the Corporate Debtor and the Bank jointly filled an application for Consent Decree which decree was passed on 26.04.2022 by the DRT.
Decision: NCLAT upheld the order.
Rationale:
1. NCLAT held that present is a case where admittedly default was committed by the Corporate Debtor much prior to 10A period i.e. 08.08.2018 as was claimed by the State Bank of India in its application. When default was committed by the Corporate Debtor prior to 10A period, it is not open for the Appellant to claim that application deserve to be rejected on the ground of Section 10A. It is relevant to notice that the date of default was mentioned as 08.8.2018 and OTS proposals were given by the Corporate Debtor on 11.03.2020 and 05.05.2020. The application under Section 7 was filed by the Bank on 13.03.2023 i.e. well within three years from submission of OTS proposal
