Page 736 - IBC Orders us 7-CA Mukesh Mohan

Order Passed under Sec 7
By Hon’ble NCLT Mumbai Bench
contains Indenture of Mortgage dated 14th day of March 2001 between M/s. Shivkrupalspat Pvt.

Ltd. and the Petitioner or his Assignees. There is a Deed of further charge dated 24u1 day of
March 2005. Record of the case also consist terms and conditions for the "Term Loan".
(e) Consequent upon non-payment, the Petitioner knocked the doors of respected Debt Recovery

Tribunal and as per the "Original Application" it was explained that the said Application was
moved within the limitation prescribed under section 24 of the DRT. The Applicant Bank is a

multi-state Scheduled Cooperative Bank registered under the Multi-State Cooperative Societies
Act, 2002, hence carrying on banking business, interalia, accepting deposits and lending
loan/Cash Credit Facility. The Respondent Company had availed various trade facilities as

described supra, from the Bank. It has also been pointed out to us that the personal property of
one Mr. Jay Gupta had also been mortgaged. The Bank had also registered the Debt with the
Registrar of Companies.

(f) An extract of Resolution of the Debtor Company is also on record wherein it was informed that
for term loan of Rs. l87 lakhs and cash credit limit of Rs. 150 lakhs, the Company had applied to
the Bank.

3. FINDINGS:- Since the default of non-payment had continued and the Applicant being the only
secured Creditor, the Application under consideration was filed through which the Financial
Creditor has completed the formalities as prescribed under section 7 of The Code. The Petitioner

has demonstrated that there was an existence of "Financial Debt" as defined under section 5(8) of
The Code.

3.1. It has also been demonstrated that the "default" of non-payment of the outstanding Debt is evident
from the records and duly established as defined under section 3(12) of The Code. There is no evidence

on record to demonstrate that there was any "dispute" in respect of the debt in question, although not
necessary in case of "Financial Debt", Rather, the Debtor had acknowledged the amount of debt while the

impugned debt was restructured by granting of extension. Even the Petitioner has lodged its claim before
the Debt Recovery Tribunal, Mumbai. The Debtor, however, had failed to repay the Debt amount.

3.2 In general the Financial Debtor usually plead that due to recession in the Market the liability of
repayment could not be squared up. Although in this case there is no such defence either, but the fact of

the matter is that a liability does not get extinguished on the aforesaid ground of Market Recession. There
could be a situation of bad finances beyond the control of a Debtor, but in the eyes of law if the Debtor

had undertaken a legal responsibility by executing Debt-Agreement and failed to make the payment then
it is worth to mention that there is no escape route for the defaulter in respect of an unqualified liability

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