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Judgment
JUSTICE YOGESH KHANNA, MEMBER (JUDICIAL)
This appeal is filed against an impugned order dated 15.11.2022 passed by the Ld. National Company Law Tribunal, Kolkata Bench, Kolkata in CP(IB) No.2137/KB/2019 whereby the Ld. NCLT had dismissed the petition filed under Section 7 of the IB Code.
The appellant had sanctioned two terms loans of Rs.30,00,000/-(Rupees Thirty lakh only) each to the Respondent for a period of six months, repayable with interest @ 24% per annum compounded and payable monthly by two different loan agreements, both dated 11.10.2018.
In terms of these agreements the Respondent had also issued two Promissory Notes, both dated 11.10.2018 for Rs.30 lakh each; in favour of the appellant. The loan was also secured by two mortgage deeds, both dated 11.10.2018.
The appellant disbursed a sum of Rs.52,20,000/- through RTGS in favour of the Respondent in its account with Corporation Bank, Kharagpur Branch. A further sum of Rs.3,00,000/- was paid to Shri Chiranjeeb Biswas and Shri Subhasish Basu (i.e. Rs.1,50,000/- each) as per the directions of the Respondent. An advance interest for three months in the sum of Rs.3,60,000/- and Rs.1,20,000/- on account of processing charges were also adjusted out of the sanctioned loan amount. However, the Respondent did not pay any interest after initial adjustments of its interest of three months. The default in payment of monthly interest(s) commenced w.e.f. 01.02.2019. Now, in terms of Clause 7 of the loan agreements; the loan was fully repayable after a period of six months which period also expired on 26.04.2019. The appellant recalled its loan by issuing notice dated 12.11.2019 and sought repayment of the entire loan amount alongwith interest upto 30.11.2019 but the Respondent did not make any payment.
It is argued by the appellant by the impugned order, the Ld. NCLT though admitted there being a relation between the parties as of a Financial Creditor and a Corporate Debtor but in view of the Clauses 7 and 9 of the Agreements dated 1.10.2018, the default, if any, was to occur only after period of 30 months and thus the debt was never due and hence no default had occurred and thus the petition was premature and accordingly dismissed it.
The learned counsel for respondent, however, argued the loans were sanctioned for 30 months and the default could not occur prior to 30 months and could occur only upon happening of any contingencies under Clause 9. It was argued Clause 7 cannot be read in isolation. It was argued loan and unpaid interest was payable only after 30 months and even then 60 days were given to borrower to repay, hence there was no default. Heard.
For appreciating the arguments raised by both the learned counsels, it would be appropriate to first analyse the terms and conditions of the loan agreement(s). Both loan agreement(s) have identical clauses viz.-
Clause 1: The financial assistance was for a term of 30 months.
Clause 2: The said loan/credit facility has been advanced against a fixed rate of interest @ 24% per annum compounded monthly and payable monthly in advance on the 1st day of every English calendar month from the date of first payment. Interest shall be calculated for the no. of days in any English calendar month based on the rate of interest, i.e., 24% being for 6 months.
Clause 6: The Borrowers shall handover undated cheque beraing nos.______to________drawn on accounts No._________with______branch of___________Bank duly signed by the Borrowers, for the purpose of depositing the same towards payment of interest and principal as provided hereinabove, to the Lenders, who shall be entitled to deposit the same with their bank on due dates as provided in these presents.
Clause 7: The loan shall be fully payable after a period of 6(six) months.
Clause 8: The Borrowers shall be entitled to repay the loan prior to completion of 6(six) months and in that case, the Borrowers shall inform the same in writing to the Lenders.
Clause 9:In case the Borrowers are unable to repay the loan alongwith unpaid interest, if any, in its entirety on completion of a period of 30 months, the Lenders shall inform the Borrowers in writing that they intend to sell the mortgaged premises and that the maximum sale value at which sale could take effect. In case, the Lenders do not get repaid of the loan and interest in its entirety within a period of 60 days thereafter, Lenders would be at liberty to sell the Premises and get the same registered by the Attorney of the Borrowers and after adjusting their dues, pay the remaining sale proceeds to the Borrowers.
In addition to these two agreements, two promissory notes were also executed for a sum of Rs.30 lakhs. Both promissory notes are also identical and contained a clause viz. the said loan/credit facility has been advanced against fixed rate of interest @ 24% per annum, compounded monthly payable every English calendar month in advance from the date of first payment. Though both the promissory notes and the agreements referred to above refer to undated cheques to be given but no details of such cheques are mentioned in the promissory notes.
In view of the totality of facts. we disagree with the finding of the Ld. NCLT. Clause 2 of the agreement(s) clearly stipulate the interest was payable monthly in advance on the first day of each calendar month from the day of first payment. Further clause 7 and 8 of the agreement above makes the loan fully repayable after a period of 6 six months and Clause 9 says in case the Borrowers are unable to repay the loan alongwith unpaid interest on completion of period of 30 months then they shall have the right to sell the property. However, in any case the interest was payable monthly as is stated in both the agreements and also in both the promissory notes. Admittedly there has been a default in payment of the monthly interest after three months. Now the simple question that arose is if the respondent failed to make payment of monthly interest will then the appellant be bound to wait till completion of 30 months to seek payment of his principal. The answer would be emphatic NO. The simple interpretation of documents above reveals as soon as there is default in payment of interest by the Respondent, the default shall occur. Clause 9 only refers to the fact if unpaid interest alongwith principal is still not paid within 30 months then after 60 days the lenders/appellant shall get right to sell the mortgaged property.
A bare perusal of the statement of account/ledger filed by the appellant Annexure A-12, reveals the interest was never paid after March, 2019 and hence default notice dated 12.11.2019 was sent to the Respondent after a cheque of Rs.60 lakhs drawn on Corporation Bank, Kharagpur was dishonoured for reasons payment stopped by drawer. There is no ground to believe the dishonoured cheque was given in blank as security. Neither the agreement(s) nor the promissory note(s) makes a reference to the dishonoured cheques being handed over at the time of entering into the agreements. Nevertheless, admittedly the interest was never paid since March, 2019, thus even if the loan was sanctioned for a term of 30 months yet on default the lender had every right to cancel the agreement(s) and to demand the entire principal amount with interest. Hence there was no reason to dismiss the petition under Section 7 IBC as the agreement(s) notes the amounts were lent and were for time value of money. Admittedly there was failure on the part of Respondent to repay the loan (or interest after the notice; hence there existed a cause for the appellant to file a petition under Section 7 of IBC. On reasons aforesaid the appeal is admitted and the impugned order is hereby set aside. Petition under Section 7 of IBC thus stands admitted. Matter be now listed before the Ld. NCLT on 24-02-2025 for further proceedings.
Pending applications, if any, are all disposed of.