The National Company Law Tribunal (NCLT) at Mumbai has recently held that a creditor cannot rely on a later failure to repay after giving a company extra time when the original default occurred during the COVID-19 period.
A bench of Judicial Member Nilesh Sharma and Technical Member Sameer Kakar ruled that extending the repayment period does not erase or extinguish the original default.
“Moreover we are of the view that as according to proviso to Section 10A, no application shall ever be filed for initiation of Corporate Insolvency Resolution Process of Corporate Debtor for the default, which has occurred during the Section 10A period, by granting extension for making payment, the original default does not get erased or extinguished…