2024 PLRonline 017 (NCLAT)
[ID 428700]
ibc S. 7, 10A – Under IBC Sections 7 and 10A, while no application can be filed for defaults occurring during the 10A period, the default dated 31.03.2021, cited in the Section 7 application, exceeded the threshold amount of ₹1 crore, justifying initiation of CIRP. Moreover, the borrower's default predates the 10A period, as evidenced by the acknowledgment letter dated 30.08.2019. The Section 7 application filed on 24.09.2022 reflected interest accrued from 31.03.2021, which alone surpassed the threshold amount, making the proceedings valid.
There can be no dispute to the proposition that no application can be filed under Section 7 for a default which has been committed by a borrower during 10A period. Thus, even if we exclude the default committed by CD during 10A period, default on 31.03.2021 which is taken as date of default in Section 7 application was more than threshold amount of Rs.1 Crore which was sufficient to initiate proceedings under Section 7 against the borrower. Further as noted above, default by the borrower was even before the 10A period which is clear from acknowledgment letter dated 30.08.2019, as extracted above. Section 7 application was filed on 24.09.2022 and the amount of interest calculated from 31.03.2021 till the date of filing of the application also even if principal amount is not included was much more than the threshold amount for initiating CIRP against the corporate debtor.
Facts , clearly indicate that the borrower is liable to undergo insolvency resolution process and the application under Section 7 filed by the Bank cannot be thrown out on the bar of Section 10A. There being default prior to Section 10A period and subsequent to 10A period, as noted above, order of the Adjudicating Authority admitting Section 7 application need no interference. We, however, observe that the Resolution Professional while computing the admitted claim of the bank has to necessarily exclude the amount which was defaulted during 10A period. It is well settled that at the time of admission of Section 7 application, Adjudicating Authority is not called upon to determine the amount of claim of the Financial Creditor who initiated Section 7 application, and those issues are to be left for Resolution Professional to be determined at the time of collation and admission of the claim. The amount of claim which has been admitted by the Resolution Professional is not in question before us in this Appeal. We, however, in view of the legal position that default during 10A period cannot be basis for any proceeding under Section 7 only observe that any amount defaulted during 10A period need not be included in the claim admitted of the Appellant. Subject to observations as made above, we dismiss the Appeal.
