Mere Rescheduling Of Payment Through New Agreement Does Not Change Repayment Obligations Under Original Agreement: NCLAT
The National Company Law Appellate Tribunal (NCLAT), New Delhi Bench of Justice Ashok Bhushan and Mr. Barun Mitra (Technical Member), has held that mere rescheduling of the payment date through an agreement does not alter the repayment obligations under the original Common Loan Agreement, nor does it result in novation. Therefore, an application under Section 7 of the IBC can be filed...
The National Company Law Appellate Tribunal (NCLAT), New Delhi Bench of Justice Ashok Bhushan and Mr. Barun Mitra (Technical Member), has held that mere rescheduling of the payment date through an agreement does not alter the repayment obligations under the original Common Loan Agreement, nor does it result in novation. Therefore, an application under Section 7 of the IBC can be filed based on the original agreement.
The present appeal has been filed under section 61 of the Insolvency and Bankruptcy Code, 2016 (IBC) against an order passed by the National Company Law Tribunal (NCLT) Chandigarh by which it admitted an application under section 7 of the IBC.
The Appellant submitted that the Common Loan Agreement having been novated, the SBI had no authority or jurisdiction to file Section 7 application which was premised on Common Loan Agreement. Under the Novated Agreement dated 09.11.2016, the repayment of facilities extended by NHAI has to take place first.
Per contra, the Respondent submitted that the Tripartite Agreement dated 09.11.2016 only provided a manner of repayment of loan both to NHAI and the lenders. Although the principal amount due to the lenders was to become payable from 2031, interest liability was continuing in which the corporate debtor defaulted.
It was further argued that the corporate debtor having time and again submitted OTS proposals, acknowledging the debt subsequent to Tripartite Agreement dated 09.11.2016, it is not open for appellant to even contend that the debt of the lender does not exist after Agreement dated 09.11.2016.
The Tribunal noted that the contention of the Appellant that the agreement dated 09.11.2016 has novated the common loan agreement dated 30.08.2016 is not supported by the terms of the Agreement. Clause 6(c) of the Agreement states that the waterfall mechanism shall override and Clause 6(h) further provides for the payment to the lenders as per the existing financing arrangement. This indicates that the liability of the corporate debtor to repay the amount under the Common Loan Agreement remains intact. The Agreement just reschedule the date of payment without changing the repayment obligations under the Common Loan Agreement. Furthermore, the Appellant continued to make One Time Settlement Proposal even after the execution of the Agreement indicating the subsistence of the debt and default.
It held that “the submission of the appellant that there is no debt and default in view of the Agreement dated 09.11.2016 towards the lender cannot be accepted. The obligation of the corporate debtor under the Loan Agreement continues and even according to Agreement dated 09.11.2016, even on the revised dates, default was committed.”
Accordingly, the present appeal was dismissed.
Case Title: Vikram Bhavanishankar Sharma, Member of the Suspended Board of Directors of Supreme Panvel Indapur Tollways Pvt. Ltd. Versus State Bank of India & Anr.
Case Number: Company Appeal (AT) (Insolvency) No. 1811 of 2024 & I.A. No. 6979 & 8862 of 2024
Judgment Date: 20/08/2025
For Appellant : Mr. Ishaan Duggal, Mr. Abhirup Dasgupta and Ms. Jayashree S. Dasgupta, Advocates.
For Respondents : Mr. Assem Chaturvedi and Mr. Siddhant Kumar, Advocates for R-1.