AA Duty Bound to Ascertain Facts of Debt and Default, Cannot allow Respondents to take Advantage of Mistakes of Applicants: NCLT Mumbai

The National Company Law Tribunal, Mumbai Bench, comprising Shri Kishore Vemulapalli (Judicial Member) and Shri Prabhat Kumar (Technical Member), while adjudicating an application under Section 60(5) of Insolvency and Bankruptcy Code, 2016 (“IBC”) by the Yatra Online Limited (“Corporate Debtor”) in Ezeego One Travel and Tours Limited vs Yatra Online Limited has held that the Adjudicating Authority is duty bound to ascertain the facts relating to debt and default correctly and it cannot allow Respondents to take advantage of mistakes of fact or law on part of the Applicant.Background Facts Ezeego One Travel and Tours Limited (“Operational Creditor”) was admitted into Corporate Insolvency Resolution Process (“CIRP”) on 09.03.2021. The Resolution Professional (“RP”) of the Operation Creditor filed an application under section 9 of IBC against the Corporate Debtor alleging that an amount of Rs. 3,15,47,313 is due and payable and the date of default is 30.10.2020 as per Part IV of the Application. A Demand Notice was issued by the Operational Creditor on 30.11.2021; however, the Corporate Debtor alleged that the date of default stated in the Demand Notice falls within the period barred by Section 10A of IBC (“Suspension Period”) for initiation of CIRP. The Corporate Debtor sought to rely on the judgment of the Supreme Court in Ramesh Khymal v. Siemens Ganesh Renewable Power Private Limited, (2021) 3 SCC 224 wherein it was held that Section 10A is prohibitory in nature and filing of insolvency proceedings under section 7,9 and 10 IBC is barred for the Suspension Period. It was contended that once the Operational Creditor has itself stated that the date of default occurs in the Suspension Period, the Section 10A bar will automatically apply. On the contrary, it was submitted by the RP of Operational Creditor that he had sent an Email dated 23.07.2021 to the Corporate Debtor, asking it to share the transactions between the Operational Creditor and Corporate Debtor and the balance due. The Corporate Debtor provided a ledger statement admitting a debt of Rs. 1,59,29,163 vide an email dated 15.11.2021. The ledger statement showed the balance to be outstanding since 01.04.2019. It was further submitted that the suspended directors of the Operational Creditors demanded the payment of outstanding dues amounting to Rs. 2,15,98,832 due as on 30.10.2020 vide an Email dated 30.10.2022. The RP of the Operational Creditor addressed the Demand Notice demanding repayment of outstanding dues in the absence of the erstwhile management, which was also not providing the exact details of the debt owed by the Corporate Debtor. It was submitted that the defaults started accruing from 01.04.2019 and the amount of Rs. 2,15,98,832 crystallized on 30.10.2020. Thus the date of default was much prior to 24.03.2020. Reliance was sought on the NCLAT judgment of Mr. Assem Srivastav v. ICICI Bank Limited & Anr., (company Appeal (AT) (Ins) N0. 147 of 2021 wherein it was held that where a debt has been acknowledged prior to the Suspension Period, the Operational Period is not affected by the said period. It was further contended that the NCLT has power to grant the opportunity to rectify the date of default in Part IV and the Tribunal is required to ascertain the correct date of default based on the material placed before it, irrespective of what may be stated in Part IV of the Application.Observations of the Tribunal The Tribunal observed that the Operational Creditor was under CIRP and the RP had limited information to find out the correct particulars of the debt. The ledger accounts of the Corporate Debtor note that the last date of transaction with the Operational Creditor was 23.06.2019. It was also admitted that the Agreement with the Corporate Debtor was terminated on 02.07.2019. The Tribunal thus held that any default with respect to the admitted amount of Rs. 1,59,29,163/-, could have occurred in 2019 only. The Tribunal further observed that the RP has stated that the mention of 30.10.2020 as the date of default was based on an E-mail Communication from a suspended director demanding payment and it happened because of limited information and knowledge in his possession. Further, the Tribunal is under an obligation to ascertain the existence of debt and default based on the Pleadings in the Application and the documents appended to it or filed in course of adjudication. The ascertainment of default also encompasses the ascertainment of its date. Thus the Adjudicating Authority is duty bound to ascertain the facts relating to debt and defaults correctly and cannot allow Respondents to take advantage of mistakes of fact or law on part of the Applicant. With the aforesaid observations, the Tribunal observed that the debt and default occurred in July 2019 and consequently dismissed the petition. Case: Ezeego One Travel and Tours Limited vs Yatra Online LimitedCase No.IA No. 1046/2022 in CP (IB) 180/2022,Counsels for the...

AA Duty Bound to Ascertain Facts of Debt and Default, Cannot allow Respondents to take Advantage of Mistakes of Applicants: NCLT Mumbai

Udai Yashvir Singh

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AA Duty Bound to Ascertain Facts of Debt and Default, Cannot allow Respondents to take Advantage of Mistakes of Applicants: NCLT Mumbai

Udai Yashvir Singh

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Udai Yashvir Singh

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