NCLT Ahmedabad. (03.01.2020)in Bank of Baroda v/s. Pithampur Poly Products Pvt. Ltd. [C.P. (IB) No. 421/7/NCLT/AHM/2018] held that; OTS proposal is an Acknowledgement Of Debt.
Facts of the case;
In this case, an application was filed by the Applicant Bank, i.e., Bank of Baroda against default of amount of Rs. 287,87,58,545.91/- as was the liability of the Corporate Debtor on the loan granted by the Applicant Bank.
The repayment under the said loan and credit facilities became irregular and subsequently the account was declared NPA on 01.05.2000. On 03.06.2004 an Application was filed by the Bank under Section 19 (4) of RDDBFI Act, 1993 for recovery of Rs. 26,55,44,358/- before DRT, Jabalpur and subsequently on 27.07.2011 the DRT passed an order stating that the Applicant is entitled for the Recovery Certificate. Moreover, during the pendency of said proceedings the Applicant had also issued Section 13(2) Demand Notice under SARFAESI Act, 2002.
However, the Corporate Debtor even after passing of the decree by the DRT failed to repay the debt which was due and payable. The Applicant could not take any appropriate action for recovery of the dues as the Corporate Debtor had approached High Court of Madhya Pradesh by filing a Writ Petition and an Interim order was passed which barred the Applicant for taking any action for recovery of dues.
Therefore, the Applicant was left with no recourse for recovery of its dues from the Corporate Debtor. Thereafter, the High Court on 07.03.2018 vacated the stay thereby permitting the Applicant to take appropriate steps for recovery of the outstanding amount in accordance with law.
As soon as the stay was vacated, the Applicant approached the Hon'ble Tribunal under Section 7 of IBC at the earliest for initiation of CIRP against the Corporate Debtor.
Excerpts of the order;
# 17.2 . It is submitted that at this juncture it is very crucial to note that Hon'ble Apex Court in the case of M/s. Innoventive Industries Ltd vs. ICICI Bank & Ors.(2018) 1 SCC 407, has very categorically discussed and held that: "The scheme of the Code is to ensure that when a default takes place, in the sense that a debt becomes due and is not paid, the insolvency resolution process begins." Therefore, the moment stay was vacated by the Hon’ble High Court, the debt for which the Corporate debtor had earlier defaulted, now again became due and payable. The same not being paid again, there lies a fresh cause of action.
# 17.7 Offering repeated OTS to the Applicant by the Corporate Debtor clearly showed that the debt has been acknowledged by the Corporate Debtor and there has been a continuous cause of action which gives rise to the claim of debt by the Applicant against the Corporate Debtor.
# "21. Considering the material papers filed by the Petitioners bank and the facts mentioned in the Para no. 20, 20.1, 20.2, 20.3, 20.4, 20.5, 20.6, 20.7, 20.8 & 20.9 this adjudicating authority satisfied that,
(a) That the Corporate Debtor availed the loan / credit facility from the Financial Creditor.
(b) Existence of debt is Rupees One Lakh;
(c) Debt is due;
(d) Default has occurred on 01/05/2000;
(e) Petition has been filed within the limitation period as entire matter was entangled in the Court cases and clear cause of action arose only after vacation of the stay by the Honorable Court on 07/03/2018. Both the Corporate Debtor and the Guarantors are acknowledging the debt by offering repeated OTS proposals after the application is filed by the adjudicating authority on 21/08/2018. Charges filed in the ROC have not been satisfied.
(f) Copy of the application filed before the Tribunal has been sent to the Corporate Debtor and the application filed by the Petitioner Bank Under Section 7 of IBC is found to be complete for the purpose of initiation of Corporate Insolvency Resolution Process against the Corporate Debtor.
Hence, the present IB Petition is admitted with the following Directions/observations. The date of admission of this Petition is 03/01/2020."
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