Date of Default cannot be shifted if a notice for payment is again issued because that would enable the Creditor to shift the Date of Default in every case by simply issuing a legal notice subsequent to the exclusion period having ended and the provisions of Section 10A of the IBC would become redundant and meaningless – Asset Reconstruction Company (India) Ltd. Vs. Manyata Developers Pvt. Ltd. – NCLT Bengaluru Bench

NCLT Bengaluru Bench held that:
(i) ‘Date of Default’ is a mandatory concept and mentioning Date of Default in Form No.1 / Form No. 5 filed with the application is a statutory requirement. It determines the limitation for filing of application u/s 7 or 9 under IBC. That’s why not mentioning the same in Form No.1 renders the Application to be incomplete and defective, attracting the provisions of Section 7(5)(b) of IBC.
(ii) It has been judicially held that the Applicant cannot be allowed to change the Date of Default, which is mentioned in the Application and the accompanying Form No.1 which is a mandatory requirement. If such a request is allowed, the concept of Limitation will become meaningless.
(iii) the Date of Default cannot be shifted if a notice for payment is again issued since the debt was continuing; because that would enable the Applicants to shift the Date of Default in every such case.
(iv) The ‘Date of NPA’ is inherently linked to the ‘Date of Default’; in accordance with the RBI Prudential Norms for Income Recognition and Asset Classification.
(v) Dismissed application filed u/s 7 of IBC.

Date of Default cannot be shifted if a notice for payment is again issued because that would enable the Creditor to shift the Date of Default in every case by simply issuing a legal notice subsequent to the exclusion period having ended and the provisions of Section 10A of the IBC would become redundant and meaningless – Asset Reconstruction Company (India) Ltd. Vs. Manyata Developers Pvt. Ltd. – NCLT Bengaluru Bench Read Post »