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TMI Blog2019 (9) TMI 1144X X X X Extracts X X X X X X X X Extracts X X X X ..... th December, 2018 having admitted the application, the Appellant-Director has challenged the order. 2. The case of the Appellant is that the State Bank of India granted credit facilities to the 'Corporate Debtor' since 2007. Subsequently, the Corporation Bank started granting credit facilities to the 'Corporate Debtor' since 14th August, 2009. On 31st January, 2010, the account of the 'Corporate Debtor' was classified as an 'Non Performing Asset' (for short the 'NPA') by State Bank of India. However, it was restructured on 17th February, 2010 and no notice of classification was given to the 'Corporate Debtor'. 3. The Punjab National Bank entered the consortium on 26th June, 2010 by sanctioning certain facilities to the 'Corporate Debtor'. The UCO Bank also sanctioned working capital cash credit and Letter of Credit Limit to the 'Corporate Debtor' on 11th April, 2012. 4. The 'Corporate Debtor's' financial rating was done on 2nd July, 2013 by credit rating agency, ICRA. The relevant portion of such report is reproduced below: - "The company has been regular in servicing all its principal and interest obligations in a timely manner and there has not been any delay or default (a m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... angalore Unit of the 'Corporate Debtor'. 10. The State Bank of India by letter dated 1st August, 2014 intimated the Sankaran and Krishnan, Chartered Accountants, appointing them as Concurrent Auditors for Bangalore Plant. The State Bank of India, thereafter, on 5th August, 2014 intimated the 'Corporate Debtor' that the State Bank of India had arranged for a Concurrent Auditor and Security Guards at Bangalore and Kunigal Factories w.e.f. 1st August, 2014. On the same day, the State Bank of India intimated the Director, Kashi Security and Consulting Pvt. Ltd. authorizing it to deploy Security Guards at Bangalore and Kunigal Plants of the 'Corporate Debtor'. It was objected by the 'Corporate Debtor' on 7th August, 2014. 11. The case of the Appellant is that the State Bank of India issued notice under Section 13(2) of The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as the 'SARAFAESI Act') on 12th August, 2014, calling upon the 'Corporate Debtor' to repay a sum of Rs. 71,27,47,889/-. The 'Corporate Debtor' was also declared to be a 'Non Performing Asset' by Corporation bank on 10th October, 2014. Notice ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion as Rs. 733,84,00,000/- to Rs. 282,02,71,568.08/-, which was allowed by the Adjudicating Authority on 11th July, 2018. In the FIR also charge-sheet was submitted, followed by the impugned order of admission passed on 14th December, 2018. 19. Learned Counsel for the Appellant submitted that as the application under Section 7 of the I&B Code filed by the Bank was barred by limitation, no debt is payable by the 'Corporate Debtor' in the eyes of law. 20. According to the learned Counsel for the Appellant, the Bank had been in critical position of the management of the Corporate Debtor since 2015. It had already taken steps under Section 13(4) for enforcement of security interest and also taken action under Section 15 to take over the Management of the Company under the SARFAESI Act. It was submitted that once, possession in terms of Section 13(4) is taken, the asset of the Company vests with the Bank as it is the owner of the asset. Reliance has been placed on judgment of the Hon'ble Supreme Court in "Transcore vs. Union of India" - (2008) 1 SCC 125. It was submitted that in fact, the Management of the Company was actually taken over. 21. We have heard learned Counsel for the App ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts to the units outside Bangalore Auditors to visit the units located outside Bangalore as per the advise of the Bank. VII. General a. The accounts maintained by the company at Bangalore, Kunigal and Himachal Pradesh should be monitored from Bangalore. b. The Auditors shall carry out the audit for minimum period of 3 working days in a week. c. Travelling, Conveyance, Boarding Expenses, if any incurred (applicable for unit visits outside Bangalore) would be payable as per the actual expanses over and above the monthly fees. d. a consolidated Audit Fee of Rs. 50,000 per month, inclusive of applicable Service Tax would be paid as remuneration, payable on or before 7th of the following month. e. We reserve our right to modify the terms of reference at any point in time. f. The services of the auditor may be terminated by the Bank by giving a notice 15 days in advance. 2. Please return the duplicates of this letter, enclosed, duly signed by you in token of your acceptance of the terms & conditions of appointment mentioned there. Yours faithfully, Sd/- Asst. General manager & RM-2." 23. It is followed by letter dated 5th August, 2014, issued by the State Bank of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted the State Bank of India that the 'Corporate Debtor' being the owner of the premises, the Bank has no right to appoint the Security, unless physical possession of the Unit is taken over along with secured asset under section 13(4) of the SARFAESI Act, 2002. 25. Records suggest that notice was issued to the 'Corporate Debtor' by State Bank of India on 12th August, 2014 under Section 13(2) of the SARFAESI Act, intimating them that the accounts have been classified as 'NPA' on 28th May, 2014. The 'Corporate Debtor' was asked to deposit the outstanding liability owing to the Bank amounting to Rs. 71,27,47,889/-. 26. The State Bank of India, subsequently, on 21st February, 2015 giving a reference to notices issued by the Consortium of Bank under Section 13(2) of the SARFAESI Act dated 12th August, 2014, 24th July, 2014 and 1st December, 2014, intimated the 'Corporate Debtor' that since the 'Corporate Debtor' failed to make payment , the possession of the properties mortgaged to the Consortium of Banks consisting of State Bank of India, Punjab National Bank, Corporation bank and UCO Bank as detailed in the schedule were taken over on 20th February, 2015 and the notice thereof was gi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... secured by a mortgage (Article 62), as quoted below: - "PART V - SUITS RELATING TO IMMOVABLE PROPERTIS Description of suit Period of limitation Time from which period being to run 61. By a mortgagor- (a) to redeem or recover possession of immovable property mortgaged. (b) to recover possession of immovable property mortgaged and afterwards transferred by the mortgagee for a valuable consideration (c) to recover surplus collection received by the mortgagee after the mortgage has been satisfied. Thirty years Twelve years Three years When the right to redeem or to recover possession accrues. When the transfer becomes known to the plaintiff When the mortgagor re-enters on the mortgaged property. 62. To enforce payment of money secured by a mortgage or otherwise charged upon immovable property. Twelve years When the money sued for becomes due." 33. Apart from the fact that the Bank had taken action under Section 13(4) of the SARAFAESI Act and the matter is pending before the DRT since 2015-16, there being 12 years of limitation prescribed for enforcement of payment of money secured by a mortgage, we hold that the claim of the none of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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