Section 7 IBC Admission Valid Without Banker's Book Certificate If Filed Before Regulation 2A Amendment: NCLAT Delhi
Case Overview
Case Name: Pijush Banerjee Vs IL & FS Financial Services Limited (NCLAT Delhi)
Appeal Number: Company Appeal (AT) (Insolvency) No. 1383 of 2022
Date of Order: 15/12/2022
Forum: National Company Law Appellate Tribunal, Delhi
Background and Factual Matrix
The National Company Law Appellate Tribunal, Delhi, was called upon to adjudicate a challenge raised by the suspended director of E Village Kendra Limited (the Corporate Debtor) against the order dated 28.10.2022 passed by the Adjudicating Authority (National Company Law Tribunal), Kolkata Bench, Court-I, which had admitted a Section 7 application filed by IL & FS Financial Services Limited (the Financial Creditor).
Loan Facilities Sanctioned
The Financial Creditor had extended two separate Infrastructure Term Loan facilities to the Corporate Debtor:
First Facility: A loan of Rs. 90 Crores was sanctioned vide Sanction Letter dated 15.01.2018, followed by execution of a Loan Agreement dated 26.03.2018. The Corporate Debtor also executed a Deed of Undertaking dated 26.03.2018 in connection with this facility.
Second Facility: A loan of Rs. 280 Crores was sanctioned vide Sanction Letter dated 24.03.2018, with a Loan Agreement dated 29.03.2017. A corresponding Deed of Undertaking dated 29.03.2017 was executed by the Corporate Debtor for this facility as well.
Both loan amounts were disbursed to the Corporate Debtor in accordance with the respective facility letters and loan agreements.
Default and Demand Notices
The Corporate Debtor was obligated to service interest on both facilities. Upon its failure to make interest payments, the Financial Creditor issued a demand notice dated 22.11.2018 calling upon the Corporate Debtor to clear the overdue amounts. Subsequently, the Financial Creditor exercised its first remedial option under the Loan Agreements dated 26.03.2018 and 29.03.2017, issuing further notices dated 23.11.2018 and 27.11.2018 demanding full repayment of the disbursed amounts.
The Corporate Debtor having failed to make payment despite these demands, the Financial Creditor filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016 (IBC) before the NCLT, Kolkata Bench, in January 2020.
Proceedings Before the Adjudicating Authority
After the NCLT issued notice, the Corporate Debtor entered appearance and filed its reply dated 29.12.2020. A rejoinder was filed on behalf of the Financial Creditor. Upon hearing both sides, the Adjudicating Authority admitted the Section 7 application vide the impugned order dated 28.10.2022. The suspended director of the Corporate Debtor challenged this admission order before NCLAT Delhi.
Arguments Advanced
Contentions of the Appellant (Suspended Director)
The Appellant, represented by Shri Debal Banerjee, learned senior counsel, raised the following objections to the admission of the Section 7 application: