NCLAT dismisses the Appeal against Bank of India and Katare Spinning Mills Limited

NCLAT dismisses the Appeal against Bank of India and Katare Spinning Mills Limited

This Appeal was filed with the National Company Law Appellate Tribunal (NCLAT) by the Appellant Katare Spinning Mills Limited (Corporate Debtor) being aggrieved and dissatisfied by the impugned order passed by the Adjudicating Authority, National Company Law Tribunal, Mumbai Bench, whereby and where under the Ld. Adjudicating Authority had admitted the Application filed by Bank of India / Financial Creditor, under Section 7 of the Insolvency and Bankruptcy Code, 2016 (IBC).

The Respondent No. 1 / Financial Creditor preferred an Application under Section 7 of the IBC against the Respondent No. 2 / Corporate Debtor on 30.08.2018 alleging debt of INR 23.90 CR, and defaulted upon allegedly on 30.06.2015. The same was allowed by the Ld. Adjudicating Authority by way of the impugned order. The Bank of India / Financial Creditor sanctioned term loan facility of Rs. 9,00,00,000/- and a cash credit facility of Rs. 6,00,00,000/- to the Corporate Debtor vide a sanction letter dated 14.08.2013.

The Respondent No. 1 availed Rs. 25 Crores from Bank of India for modernization of Appellant's existing Units, Working Capital Requirements and for a Solar Project. The Appellant considering the scope of immediate return on investment implemented Solar Project and installed it within a record time of Six months but unfortunately the Government of Maharashtra had not declared grid connectivity policy for Sixteen months and hence the Appellant could not connect generation with the grid and the project stood idle for Sixteen months.

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The Account of the Corporate Debtor was declared NPA on 31.03.2015 and total amount of debt of Rs. 23 Cr. and 90 Lakhs including interest charges were calculated up to on 28.08.2018. The Bank of India / Financial Creditor filed Application under Section 7 of the IBC before the Ld. Adjudicating Authority, wherein the default was shown as 23,90,64,696.69/- including interest and other expenses, as on 28.08.2018. Till the date of realisation and further the date of default occurred shown NPA as 30.06.2015.

The Appellant submitted that the account in question was declared NPA on 31.03.2015 and the Application under Section 7 was filed on 30.08.2018. The petition was time barred on 30.06.2018 and therefore the petition filed belatedly could not be the basis of filing the Application under Section 7 of the IBC.

It was also stated on behalf of the Appellant that the impugned order relied upon a balance sheet for FY 2015-2016 for acknowledgement of debt, however it is no longer res integra that a balance sheet cannot be used for the renewing limitation under Section 18 of the Limitation Act.

The Appellate Tribunal noted that that in Section 7 of the IBC Application filed on behalf of the Respondent No. 1 that dues amount claimed in default had been shown as Rs. 23,90,64,696.69/- till 28.08.2018 plus further interest the date of default had been shown on 30.06.2015.

The Appellant had never raised question of Limitation before the Adjudicating Authority. The Appellant first time raised question of limitation before this Appellate Tribunal.

According to the Appellate Tribunal the letter written by Katare Spinning Mills Limited to the Bank of India, Main Branch, Solapur, caption OTS proposal and it was further mentioned that the company had paid Rs. 3.24 Cr. on account of interest and principal. The instant Appeal was filed on 07.08.2020 and the matter was taken up by this Appellate Tribunal on 17.08.2020 and notices were issued to Respondents. In the meanwhile, during the pendency of this Appeal the Appellant had written a letter without prejudice for OTS address to Chief Manager, Bank of India.

So in view of the aforesaid documents it was crystal clear that the Appellant had admitted their dues and ready to settle the matter by OTS proposal. The conduct of the Appellant in view of the letters for OTS and in the facts and circumstances was not covered by the Judgment of Hon'ble Supreme Court in Babulal Vardharji Gurjar Vs. Veer Gurjar Aluminium Industries Pvt. Ltd. &Anr.

According to the Appellate Tribunal, the Adjudicating Authority had rightly taken notes of the facts. There was no illegality in the impugned order. Hence, the impugned order was affirmed and the Appeal was dismissed.