The Adjudicating Authority must provide detailed reasoning on debt and default issues to enable effective judicial review under the Insolvency and Bankruptcy Code, 2016.

ORDER

(Hybrid Mode)

Per: Justice Rakesh Kumar Jain: (Oral)

26.04.2024: This appeal is directed against the order dated 04.04.2024 passed by the Adjudicating Authority (National Company Law Tribunal, Indore Bench) by which an application filed under Section 7 of the Code by the Respondent/Bank of India (Financial Creditor) has been admitted. Moratorium has been imposed and Chaya Gupta has been appointed as the Interim Resolution Professional (in short ‘IRP’).

2. It is pertinent to mention that this is the second round of litigation. In the first round of litigation, this Court vide its order dated 14.11.2022 set aside the order of admission dated 05.03.2020 and remanded the case back to the Adjudicating Authority to record cogent reasons in respect of admission of the application filed under Section 7 of the Code.

3. In the impugned order, the Adjudicating Authority has reproduced the order passed by this Court and thereafter it has noticed the additional affidavit dated 17.05.2023 filed by the Financial Creditor which is in para 4 of the impugned order and is reproduced as under:-

“4. In the context, the Financial Creditor vide its additional affidavit filed on 17.05.2023 has given its submissions onto those objections raised by Corporate Debtor. The relevant part thereof are reproduced here as under: -

(i) That the main objection raised by the Corporate Debtor with regard to “classification of credit facility of Respondent being not in compliance of circular issued by Reserve Bank of India dated 07.02.2018 (Annexure R/3 Page 517) and therefore classification of credit facility of Corporate Debtor as NPA is not only bad in law, but also terming default based on wrong classification is also incorrect” is baseless and deserves to be rejected. It is pertinent to mention here that, the account of Corporate Debtor was declared NPA (on 30/09/2017) i.e. prior to issuance of RBI Circular and the account of Corporate Debtor was not eligible for restructuring and not viable technically and not proper, therefore the Financial Creditor rejected the restructuring, and the Corporate Debtor had duly defaulted, in fact and in law, at the time of institution of application before Hon’ble NCLT.

(ii) As demonstrated hereinafter the classification of credit facility of CD is also in compliance of Circular issued by Reserve Bank of India dated 07.02.2018. That condition (iv) of the said circular: -

“The amount from the borrower overdue as on September 1, 2017 and payments from the borrower due between September 1, 2017 and January 31, 2018 are paid not later than 180 days from their respective original due dates” is not fulfilled by the Corporate Debtor is not fulfilled by the creditor. That the Term Loan Account No. 881070210000008 of Rs. 192.68 Lacs was repayable as per the following table (page38)

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