Vashdeo R Bhojwani Vs. Abhyudaya Co-Operative Bank Ltd & Anr - Default is not a continuing wrong, thus do not attract the provisions of S.23 of " The Limitation Act.

 Supreme Court of India.(02.09.2019) Vashdeo R Bhojwani Vs. Abhyudaya Co-Operative Bank Ltd & Anr (Civil Appeal No. 11020 Of 2018) held that;   

• “27. It is thus clear that since the Limitation Act is applicable to applications filed under Sections 7 and 9 of the Code from the inception of the Code, Article 137 of the Limitation Act gets attracted.

• “The right to sue”, therefore, accrues when a default occurs. If the default has occurred over three years prior to the date of filing of the application, the application would be barred under Article 137 of the Limitation Act, save and except in those cases where, in the facts of the case, Section 5 of the Limitation Act may be applied to condone the delay in filing such application.”

• In dealing with this argument it is necessary to bear in mind that s.23 refers not to a continuing right but to a continuing wrong. It is the very essence of a continuing wrong that it is an act which creates a continuing source of injury and renders the doer of the act responsible and liable for the continuance of the said injury. If the wrongful act causes an injury which is complete, there is no continuing wrong even though the damage resulting from the act may continue. 

• If, however, a wrongful act is of such a character that the injury caused by it itself continues then the act constitutes a continuing wrong. In this connection it is necessary to draw a distinction between the injury caused by the wrongful act and what may be described as the effect of the said injury. It is only in regard to acts which can be properly characterised as continuing wrongs that s.23 can be invoked.

 

Excerpts of the order;

# 1.  In the facts of the present case, at the relevant time, a default of Rs. 6.7 Crores was found as against the respondent No.2. The respondent No.2 had been declared a NPA by Abhyudaya Cooperative Bank Limited on 23.12.1999. Ultimately, a Recovery Certificate dated 24.12.2001 was issued for this amount. A Section 7 petition was filed by the Respondent No.1 on 21.07.2017 before the NCLT claiming that this amount together with interest, which kept ticking from 1998, was payable to the respondent as the loan granted to Respondent No.2 had originally been assigned, and, thanks to a merger with another Cooperative Bank in 2006, the respondent became a Financial Creditor to whom these moneys were owed. A petition under Section 7 was admitted on 05.03.2018 by the NCLT, stating that as the default continued, no period of limitation would attach and the petition would, therefore, have to be admitted.

 

# 2. An appeal filed to the NCLAT resulted in a dismissal on 05.09.2018, stating that since the cause of action in the present case was continuing no limitation period would attach. It was further held that the Recovery Certificate of 2001 plainly shows that there is a default and that there is no statable defence.

 

# 3. Having heard learned Counsel for both parties, we are of the view that this is a case covered by our recent judgment in B.K. Educational Services Private Limited vs. Parag Gupta and Associates, 2018 (14) Scale 482, para 27 of which reads as follows:-

• “27. It is thus clear that since the Limitation Act is applicable to applications filed under Sections 7 and 9 of the Code from the inception of the Code, Article 137 of the Limitation Act gets attracted.

• “The right to sue”, therefore, accrues when a default occurs. If the default has occurred over three years prior to the date of filing of the application, the application would be barred under Article 137 of the Limitation Act, save and except in those cases where, in the facts of the case, Section 5 of the Limitation Act may be applied to condone the delay in filing such application.”

 

# 4. In order to get out of the clutches of para 27, it is urged that Section 23 of the Limitation Act would apply as a result of which limitation would be saved in the present case. This contention is effectively answered by a judgment of three learned Judges of this Court in Balkrishna Savalram Pujari and Others vs. Shree Dnyaneshwar Maharaj Sansthan & Others, [1959] Supp. (2) S.C.R. 476. In this case, this Court held as follows:

• “… …. In dealing with this argument it is necessary to bear in mind that s.23 refers not to a continuing right but to a continuing wrong. It is the very essence of a continuing wrong that it is an act which creates a continuing source of injury and renders the doer of the act responsible and liable for the continuance of the said injury. If the wrongful act causes an injury which is complete, there is no continuing wrong even though the damage resulting from the act may continue. If, however, a wrongful act is of such a character that the injury caused by it itself continues then the act constitutes a continuing wrong. In this connection it is necessary to draw a distinction between the injury caused by the wrongful act and what may be described as the effect of the said injury. It is only in regard to acts which can be properly characterised as continuing wrongs that s.23 can be invoked. Thus considered it is difficult to hold that the trustees’ act in denying altogether the alleged rights of the Guravs as hereditary worshippers and in claiming and obtaining possession from them by their suit in 1922 was a continuing wrong. The decree obtained by the trustees in the said litigation had injured effectively and completely the appellants’ rights though the damage caused by the said decree subsequently continued…” (at page 496)

 

Following this judgment, it is clear that when the Recovery Certificate dated 24.12.2001 was issued, this Certificate injured effectively and completely the appellant’s rights as a result of which limitation would have begun ticking.

 

# 5.This being the case, and the claim in the present suit being time barred, there is no doubt that is due and payable in law. We allow the appeal and set aside the orders of the NCLT and NCLAT. There will be no order as to costs.

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Reliance Asset Reconstruction Company Ltd. Vs. Hotel Poonja International Pvt. Ltd. - In Vashdeo R. Bhojwani (supra), this Court rejected the contention that the default was a continuing wrong and Section 23 of the Limitation Act 1963 would apply, relying upon Balakrishna Savalram Pujari Waghmare v. Shree Dhyaneshwar Maharaj Sansthan reported in 1959 Supp (2) SCR 476.

 Supreme Court of India.(21.01.2021) in Reliance Asset Reconstruction Company Ltd. Vs. Hotel Poonja International Pvt. Ltd. (Civil Appeal No. 4221 of 2020) held that;   

• It is well settled by a catena of decisions of this Court, that Article 137 of the Limitation Act gets attracted to applications filed under Sections 7 and 9 of the IBC. The right to sue accrues when a default occurs, and if that default has occurred over three years prior to the date of filing of an application under Section 7 of the IBC, the application would be barred under Article 137 of the Limitation Act.

• As per Section 18 of Limitation Act, an acknowledgement of present subsisting liability, made in writing in respect of any right claimed by the opposite party and signed by the party against whom the right is claimed, has the effect of commencing a fresh period of limitation from the date on which the acknowledgement is signed. Such acknowledgement need not be accompanied by a promise to pay expressly or even by implication. However, the acknowledgement must be made before the relevant period of limitation has expired.

• “In a recent judgment of this Court in Mobilox Innovations Private Limted v. Kirusa Software Private Limited (2018) 1 SCC 353, this Court has categorically laid down that IBC is not intended to be substitute to a recovery forum. It is also laid down that whenever there is existence of real dispute, the IBC provisions cannot be invoked….”

 

Excerpts of the order;

This appeal under Section 62 of the Insolvency and Bankruptcy Code, 2016 hereinafter referred to as “IBC”, is against a judgment and order dated 5th February 2020 passed by the National Company Law Appellate Tribunal, New Delhi, hereinafter referred to as the “NCLAT”, dismissing the Company Appeal (AT) (Insolvency) No. 1011 of 2019 filed by the Appellant, whereby the Appellant had challenged an order dated 20th August 2019 passed by the Adjudicating Authority, i.e. the National Company Law Tribunal, Bengaluru Bench, hereinafter referred to as the “NCLT” rejecting an application being CP (IB) No.170/BB/2018 filed by the Appellant under Section 7 of the IBC.

 

# 11. By an order dated 20th August 2019, the NCLT, dismissed the said petition under Section 7 of the IBC, holding that it was the settled proposition of law that the provisions of the IBC could not be invoked for recovery of outstanding dues, but could only be invoked to initiate CIRP for just reasons.

 

# 12. The NCLT, Bengaluru took note of the following relevant facts:

• “In the instant case, it is not in dispute that Vijaya Bank had sanctioned loan of 40 lakhs to Corporate Debtor on 20.05.1986 and it has defaulted in making payment of the loan as per the terms of the loan agreement. The account of the Corporate Debtor was classified as NPA on 1.04.1993. Vijaya Bank also filed original application OA No.547/1998 before DRT, Bangalore and DRT has decreed and issued a recovery certificate by issuing an order dated 9th April, 2001. Further, due to non-repayment of the amount as per the order dated 9th April, 2001, DRT, Bangalore issued another recovery certificate vide DCP no.2691 dated 27.03.2003 directing the Recovery Officer to recover the amount of debt as stated therein. Subsequently, Vijaya Bank assigned the loan disbursed in favour of the Corporate Debtor to the Petitioner/Financial Creditor herein vide Assignment Agreement dated 3rd May, 2011. Consequently, an amended recovery certificate dated 13th May, 2011 was issued by the DRT, Bangalore recognizing the assignment to the petitioner/Financial Creditor and vesting rights of recovery with it.”

 

# 13. Being aggrieved by the judgment and order of NCLT, Bengaluru dismissing the application of the Appellant under Section 7 of the IBC, the Appellant filed an appeal therefrom, being Company Appeal (AT) (INS.)1011 of 2019, before the NCLAT. The Appeal has been dismissed by the judgment and order impugned.

 

# 14. The NCLAT also found that the application filed by the Appellant under Section 7 of the IBC was barred by limitation. The NCLAT, however, made it clear that the dismissal of the application under Section 7 of the IBC, would not preclude the appellant from availing the appropriate remedy for redressal of its grievances, in accordance with law, before the competent forum.

 

# 19. It is well settled by a catena of decisions of this Court, that Article 137 of the Limitation Act gets attracted to applications filed under Sections 7 and 9 of the IBC. The right to sue accrues when a default occurs, and if that default has occurred over three years prior to the date of filing of an application under Section 7 of the IBC, the application would be barred under Article 137 of the Limitation Act. At the highest, limitation started ticking on 27th March 2003, when a Recovery Certificate was issued by the DRT. The appellant has not disclosed any material in its application under Section 7 of the IBC to demonstrate that the application is not barred by limitation.

 

# 20. In B. K. Educational Services Private Limited v. Parag Gupta and Associates reported in (2019) 11 SCC 633, this Court held:

• “42. It is thus clear that since the Limitation Act is applicable to applications filed under Sections 7 and 9 of the Code from the inception of the Code, Article 137 of the Limitation Act gets attracted. “The right to sue”, therefore, accrues when a default occurs. If the default has occurred over three years prior to the date of filing of the application, the application would be barred under Article 137 of the Limitation Act,..”

 

# 21. In Gaurav Hargovindbhai Dave v. Asset Reconstruction Company (India) Ltd. And Ors. reported in (2019) 10 SCC 572, where the account of the Corporate Debtor was declared NPA on 21.7.2011, this Court observed:

• “6. …The present case being “an application” which is filed under Section 7, would fall only within the residuary Article 137. As rightly pointed out by the learned counsel appearing on behalf of the appellant, time, therefore, begins to run on 21-7-2011, as a result of which the application filed under Section 7 would clearly be time-barred…”

 

# 22. In Radha Export (India) Private Limited v. K.P. Jayaram reported in (2020) 10 SCC 538, authored by one of us (Justice Indira Banerjee), this Court referred to B. K. Educational Services (P) Ltd. v. Parag Gupta & Associates (supra), and held:

• 35. It was for the applicant invoking the corporate insolvency resolution process, to prima facie show the existence in his favour, of a legally recoverable debt. In other words, the respondent had to show that the debt is not barred by limitation, which they failed to do.

 

# 23. In its application under Section 7 of the IBC, the Appellant has not shown that the debt due to the Appellant from the Corporate Debtor is not barred by limitation. The right to sue accrued on 1stApril 1993 when the amount of the Corporate Debtor with the Assignor Bank was declared NPA. In Part IV of its application under Section 7 of the IBC, the Appellant declared the date of default as 1st April, 1993. The claim is apparently barred by limitation. Even the judgment of the DRT in OA No.547/98 was dated 09.04.2001 and the Recovery Certificate was dated 27th March 2003. The Appellant’s own statement of accounts as on 18th July 2018 is not material to the question of limitation for making an application under Section 7 of the IBC, which is three years from the date of accrual of the right to sue.

 

# 24. Under Section 18 of the Limitation Act, 1963, the acknowledgement of liability in writing, signed by a party in respect of any right or property claimed by such party within the prescribed period of limitation to file a suit and/or application, leads to computation of the period of limitation afresh, from the time when the acknowledgement is so signed.

 

# 25. In this case, the Corporate Debtor has not signed any acknowledgement in writing after the settlement of 30thJune 2001, on the basis of which, a Recovery Certificate was issued by the DRT on 27th March 2003. An arrangement between the Assignor Bank and the Appellant and the consequential substitution of the Appellant as party to the Execution/Recovery proceedings in the DRT does not save limitation to initiate proceedings under Section 7 of IBC. In any case, even the amended Recovery Certificate, relied upon by the Appellant, is dated 13th December, 2012. The application under Section 7 of the IBC was filed almost 6 years after issuance of the amended Recovery Certificate.

 

# 26. In Vashdeo R. Bhojwani v. Abhyudaya Cooperative Bank Ltd. & Anr., reported in (2019) 9 SCC 158, this Court had set aside the orders of the NCLT and the NCLAT, holding that the application under Section 7 of the IBC was time barred, as the loan account had been declared Non Performing Asset on 23rd December 1999 and thereafter the Debt Recovery Tribunal had issued a Recovery Certificate dated 24th December 2001. Insolvency proceedings before the NCLT were admitted on 5th March 2018.

 

# 27. In Vashdeo R. Bhojwani (supra), this Court rejected the contention that the default was a continuing wrong and Section 23 of the Limitation Act 1963 would apply, relying upon Balakrishna Savalram Pujari Waghmare v. Shree Dhyaneshwar Maharaj Sansthan reported in 1959 Supp (2) SCR 476.

 

# 28. To quote B. Gajendragadkar, J in Balakrishna Savalram Pujari Wagmare (supra):-

• “ Section 23 refers not to a continuing right but to a continuing wrong. It is the very essence of a continuing wrong that it is an act which creates a continuing source of injury and renders the doer of the act responsible and liable for the continuance of the said injury. If the wrongful act causes an injury which is complete, there is no continuing wrong even though the damage resulting from the act may continue. If, however, a wrongful act is of such a character that the injury caused by it itself continues, then the act constitutes a continuing wrong. In this connection it is necessary to draw a distinction between the injury caused by the wrongful act and what may be described as the effect of the said injury. It is only in regard to acts which can be properly characterised as continuing wrongs that Section 23 can be invoked. ”

 

# 30. As per Section 18 of Limitation Act, an acknowledgement of present subsisting liability, made in writing in respect of any right claimed by the opposite party and signed by the party against whom the right is claimed, has the effect of commencing a fresh period of limitation from the date on which the acknowledgement is signed. Such acknowledgement need not be accompanied by a promise to pay expressly or even by implication. However, the acknowledgement must be made before the relevant period of limitation has expired.

 

# 35. The Balance Sheet of the Corporate Debtor dated 16thAugust, 2017 and the letter dated 23rd April, 2019, as observed above, do not constitute any acknowledgment of liability and were not even referred to by the Appellant in its application under IBC. It is, therefore, not necessary for this Court to delve into the question of whether Section 18 of the Limitation Act is attracted in the case of a petition under Section 7 of the IBC.

 

# 36. At the cost of repetition, it is reiterated that in its application under Section 7 of the IBC, the Appellant declared the date of default as 1st April, 1993. At the highest, limitation started running from 27thMarch, 2003, when the Recovery Certificate was issued by the DRT in favour of the Assignor. The NCLAT has rightly held that the application of the Appellant under Section 7 of the IBC barred by limitation.

 

# 37. In any case, there are pending proceedings in the DRT, in respect of the dues of the Corporate Debtor. The Appellant has been substituted in place of the Assignor Bank in the execution proceedings in the DRT. There is an amended Certificate issued by the DRT. Orders have, from time to time, been passed in the Execution Proceedings. The Appellant is not without remedy against the Corporate Debtor.

 

# 38. As held by this Court in Mobilox Innovations Private Limited v. Kirusa Software Private Limited reported in (2018) 1 SCC 353, the IBC is not intended to be a substitute to a recovery forum. In Transmission Corporation of Andhra Pradesh Limited Equipment Conductors and Cables Limited reported in (2019) 12 SCC 697, this Court followed its earlier judgment in Mobilox Innovations Private Ltd. (supra) and observed as hereunder:-

• “In a recent judgment of this Court in Mobilox Innovations Private Limted v. Kirusa Software Private Limited (2018) 1 SCC 353, this Court has categorically laid down that IBC is not intended to be substitute to a recovery forum. It is also laid down that whenever there is existence of real dispute, the IBC provisions cannot be invoked….”

 

# 39. There is no infirmity in the judgment and order of the NCLAT under appeal that calls for interference of this Court. The appeal is therefore, dismissed.

 

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J.C. Flowers Asset Reconstruction Pvt. Ltd. vs. Carnival Films Entertainment Pvt. Ltd. - Therefore, only in this context the date of default has been mentioned in the NeSL as 30.10.2020, otherwise the entire loan was recalled vide letter dated 12.07.2021 and the Corporate Debtor was given seven days time to pay the entire loan by 19.07.2021. Since the repayment has not been made, therefore, the said date of default has been taken by the Appellant in the application filed under Section 7 in Part IV.

 NCLAT (2025.01.03) in J.C. Flowers Asset Reconstruction Pvt. Ltd. vs. Carnival Films Entertainment Pvt. Ltd. [Comp. App. (AT) (Ins) No. 1831 of 2024] held that;

• Therefore, only in this context the date of default has been mentioned in the NeSL as 30.10.2020, otherwise the entire loan was recalled vide letter dated 12.07.2021 and the Corporate Debtor was given seven days time to pay the entire loan by 19.07.2021. Since the repayment has not been made, therefore, the said date of default has been taken by the Appellant in the application filed under Section 7 in Part IV.

Excerpts of the order;

(Hybrid Mode) [Per : Justice Rakesh Kumar Jain (Oral)] 03.01.2025 This appeal is directed against the order dated 30.07.2024 passed by National Company Law Tribunal, Mumbai Bench, Court-IV ('Tribunal') by which an application filed under Section 7 of the Insolvency & Bankruptcy Code, 2016 ('Code') by the Appellant (Assignee) for the resolution of an amount of Rs. 71,00,44,358.66/- outstanding as on 30.11.2023 has been dismissed on the ground that the date of default has been mentioned in NeSL certificate as 30.10.2020 is hit by Section 10 A of the Code.

# 2. In brief, Yes Bank advanced a loan of Rs. 50 Crores to Carnival Films Entertainment Pvt. Ltd. ('Corporate Debtor') in the year 2017.

# 3. The bank wrote a letter on 07.09.2020 to the Corporate Debtor in which it aver as under

• "3. In the view of prevailing COVID-19 situation, the Borrower has availed the moratorium benefits in terms of RBI Circular and expressed its inability to make payment of the Accrued Interest Obligation on the due date and accordingly the Borrower has requested the Bank to provide additional time for repayment of the Accrued Interest Obligation to the bank. Accordingly, at the request of the Borrower, the Bank has agreed to provide additional time to the Borrower for the repayment of the Accrued Interest Obligation.

# 4. In consideration of the Bank agreeing to provide additional time for the repayment of the Accrued Interest Obligation, the Borrower has agreed to abide by certain additional term & condition stipulated by the Bank as contained in this binding letter ("Letter") including but not limited to payment of interest etc. on Accrued Interest Obligation for the additional time provided by the Bank for repayment of Accrued Interest Obligation.

# 5. Accordingly, the Borrower hereby absolutely, unconditionally and irrevocably agrees, undertakes and agrees as follows:

• a) From the date of this Letter, the expression "Facilities" used in the Agreements shall also. include the Accrued Interest Obligation and accordingly, all representations, warranties, covenants, events of defaults captured in the Agreements shall also apply to Accrued Interest' Obligation.

• b) The Accrued Interest Obligation shall carry interest at the rate of Applicable Rate of Interest as set out in Part - I of Annexure I attached hereto.

• c) Unless otherwise agreed between the Parties, the Borrower shall repay the Accrued Interest Obligation in the manner stated in Part - I] of Annexure I attached hereto.

• d) The Borrower hereby agrees and confirms that the Securities, if any, created for the Facilities shall ensure as a security for the due and prompt repayment of Accrued Interest Obligation (the same being part of the Facilities) together with interest, additional interest default interest, costs, charges and expenses and all other monies whatsoever due and payable by the Borrower to the Bank under this Letter, the Agreements and/or Transaction Documents.

• e) The Borrower hereby agrees with the Bank(s) that it shall abide by the terms and conditions contained in the Facility Letters, Addendum Facility Letter, Agreements and this Letter as mentioned herein and further agrees to pay to the Bank its respective dues including interest, costs and expenses as agreed between the Bank and the Borrower.

• f) The Borrower hereby also declares, covenants and agrees with the Bank, that all terms and conditions, covenants and obligations of the Agreements, shall be continuing and binding obligations and further the same shall be read and construed together with Facility Letters, Addendum Facility Letter and this Letter in all respects, save and except as specified herein for Accrued Interest Obligation under the Facilities."

# 4. As per the aforesaid letter, the expression facility used in the agreement was to include the Accrued Interest Obligation and because of COVID- 19 situation the bank gave additional time to the Corporate Debtor for repayment of the Accrued Interest Obligation.

# 5. The aforesaid letter was having the repayment plan and the amount was to be repaid w.e.f. 31.10.2020 onwards in instalments. The chart of the repayment plan is also reproduced as under :-

Part - II (Repayment of Accrued Interest Obligation)

# 6. According to the bank, the Corporate Debtor did not make any payment but it still gave some time to the Corporate Debtor to make the payment and in this regard it wrote a letter to the Corporate Debtor on 12.07.2021. It was clarified that credit facility aggregating to Rs. 50 Crores shall also include the amount of interest i.e., Rs. 2,61,05,294.93 as Funded Interest Term Loan ('FITL'). The letter dated 12.07.2021 is reproduced as under :-

# 7. The aforesaid letter was replied by the Corporate Debtor on the next date itself i.e., 13.07.2021 in which the Corporate Debtor accepted the liability and the fact that the payment has not been made according to the repayment plan. The letter is also reproduced as under:-

# 8. The bank however, uploaded the name of the debtor with the date of default on the National E-Governance Service Limited ('NeSL') also referring to the FITL moratorium. However, the date of default has been mentioned as 31.10.2020. The NeSL record is also reproduced as under :-

FORM D RECORD OF DEFAULT (RoD) (Issued by Information utility under sub-regulation (4) of regulation 21 of the Insolvency and Bankruptcy Board of India (Information Utilities) Regulations, 2017) This Record of Default is issued to the Financial Creditor M/s YES BANK LIMITED in respect of the default of debt as per details given below :

         (a) Name of Submitter :       M/s YES BANK LIMITED

          (b) Schedule - 2 Bank                    Y

              (Y/N):

          (c) Name     of  Corporate    M/s CARNIVAL FILMS ENT

              Debtor :                  P LTD POOL A/C

          (d) Unique Debt Identifier    AAACY2068D

              Number :                  FITLMORTL11306867

          (e) Registered Address:       YES Bank House, Prabhat

                                        Nagar, Off Western Express,

                                        Highway, Santacruz- East,

                                        MUMBAI - 400065

          (f) Total      Outstanding    25535784.00

              Amount :

          (g) Default Amount :          25535784.00

          (h) Date of Default :         30-10-2020

          (i) Status of                 AUTHENTICATED

              Authentication of

              Default :

          Default Information

            Date of default             30-10-2020

            Total Outstanding           2,55,35,784.00

            Default amount              2,55,35,784.00

# 9. However, the bank assigned its debt to the present appellant, namely, J.C. Flowers Asset Reconstruction Pvt. Ltd. by assignment deed dated 16.12.2022. Pursuant thereto, the application under Section 7 came to be filed by the assignee in which the Appellant made a specific averment in Part-IV of the application that the date of default is 19.07.2021 because in the letter dated 12.07.2021 a period of seven days was granted to the Corporate Debtor to make the payment which expired on 19.07.2021, therefore, the date of default was chosen as 19.07.2021. The relevant extract of Part IV of the application is also reproduced as under :-

# 10. Counsel for the Appellant has submitted that when the application under Section 7 was filed, an order was passed by the Tribunal on 22.05.2024 that Counsel for the Appellant could not explain the date of default and had taken two weeks time to seek instructions. The said order is also reproduced as under :-

• "This matter is heard through Video Conference:

• 1. Ld. Counsel for the Financial Creditor present (VC).

• 2. Counsel for the Financial Creditor is unable to explain the date of default. He seeks two weeks' time to take instruction and explain the date of default in part-IV.

• 3. List this matter on 05.07.2024."

# 11. Counsel for the Appellant has submitted that on 30.07.2024 the Tribunal, while referring to the order dated 22.05.2024 dismissed the application filed under Section 7 of the Code only on the ground that since the date of default has been mentioned in NeSL record as 30.10.2020 which falls within the cut off period of 23.03.2020 and 25.03.2021, therefore it is hit by Section 10A of the Code and as such the application under Section 7 was not maintainable.

# 12. Notice in this appeal was issued. Reply has been filed. Counsel for the Respondent has supported the case of the Appellant contending that the date of default mentioned by the Appellant is correct in Part IV of the application filed under Section 7 of the Code.

# 13. Be that as it may, Counsel for the Appellant has submitted that though the date of default in the NeSL has been mentioned as 30.10.2020 but the said date is not sacrosanct because of continuing default on the part of the Corporate Debtor and as per letter dated 07.09.2020 the payment plan of the outstanding amount was specifically given to the Corporate Debtor in which the first date of repayment was 31.10.2020 which was not even adhered to by the Corporate Debtor.

# 14. Therefore, only in this context the date of default has been mentioned in the NeSL as 30.10.2020, otherwise the entire loan was recalled vide letter dated 12.07.2021 and the Corporate Debtor was given seven days time to pay the entire loan by 19.07.2021. Since the repayment has not been made, therefore, the said date of default has been taken by the Appellant in the application filed under Section 7 in Part IV.

# 15. It is submitted by the Appellant that no notice was issued in the application, therefore, the Respondent did not appear to admit or deny the date of default and the amount in question claimed in the application for the purpose of resolution.

# 16. It is submitted that all these documents were already on record but it could not be explained to the Learned Tribunal, therefore, the Impugned Order was passed against the Appellant, otherwise the date of default has rightly been placed before Tribunal in Part IV of application filed under Section 7 as 19.07.2021 which is beyond the period covered by Section 10A of the Code because that period expires on 25.03.2021 and the date of default has been chosen as 19.07.2021.

# 17. In support of his arguments Counsel for the Appellant has relied upon decision of this Court passed in Company Appeal (AT) (Insolvency) No. 784 of 2023 in the matter of Small Industries Development Bank of India Vs. Sambandh Finserve Private Limited decided on 05.07.2024.

# 18. We have heard Counsel for the Parties and after examining the aforesaid records, are of the considered opinion that though the date of default has been mentioned in NeSL as 30.10.2020 but that was mentioned in particular set of facts that the Corporate Debtor did not adhered to the repayment plan started from 31.10.2020.

# 19. Counsel for the Appellant has submitted that it appears that the date of default 30.10.2020 has wrongly been mentioned in the NeSL otherwise it should have been 31.10.2020.

# 20. The very fact that the NeSL record also reflect the reference of FITL a facility which has been given to the Corporate Debtor by virtue of the letter dated 07.09.2020 and there is a letter of recall dated 12.07.2021 in which the entire facility has been recalled by giving only a period of seven days to the Respondent and the application under Section 7 has been filed with date of default as 19.07.2021, we do not find any error on the part of the Appellant in mentioning the date of default as 19.07.2021 in the application filed under Section 7.

# 21. The Learned Tribunal has dismissed the application only because of the reason that the date of default could not have been explained properly by the Counsel appearing on behalf of the Appellant at that time, otherwise the Impugned Order could not have been passed only on the ground that the date of default as 30.10.2020 has been mentioned in the record of the NeSL.

# 22. In view of the aforesaid facts and circumstances the Impugned Order is hereby set aside, the C.P. (IB)/346(MB)2024 is restored to its original number and the matter is remanded back to the Tribunal to proceed with it in accordance with law.

# 23. The parties are directed to appear before the Tribunal on 16.01.2025.

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