Tax Management India. Com
                        Law and Practice: A Digital eBook ...

Category of Documents

TMI - Tax Management India. Com
Case Laws Acts Notifications Circulars Classification Forms Manuals SMS News Articles
Highlights
D. Forum
What's New

Share:      

        Home        
 

TMI Blog

Home List
← Previous Next →

2019 (3) TMI 1751

..... ith supported evidence ; debt and default established ; suggested a qualified resolution professional to appoint as interim resolution professional, etc.? - HELD THAT:- On perusal of the instant company petition along with material documents filed and the objections raised by the respondents as briefly stated supra, and the law as cited above, we are satisfied that the instant company petition is filed by Dena Bank (financial creditor), under section 7 of the IBC, 2016 strictly in accordance with law, with substantial evidence produced in support of debt and default as per the bank statement. This is a fit case to initiate CIRP as prayed for. Petition admitted - moratorium declared. - C. P. (I. B.) No. 244/BB/2018. - 21-3-2019 - Rajeswara Rao Vittanala Judicial Member And Dr. Ashok Kumar Mishra Technical Member For the Petitioner : T. P. Muthanna For the Respondent : Dr. Aditya Sondhi , Senior Counsel with Gowtham S. Bharadwaj ORDER RAJESWARA RAO VITTANALA (JUDICIAL MEMBER).- 1. C. P. (IB) No. 244/ BB/2018 is filed by Dena Bank (petitioner/financial creditor) under section 7 of the Insolvency and Bankruptcy Code, 2016 read with rule 4 of the Insolvency and Bankruptcy (Application t .....

X X X X X X X

Full Text of the Document

X X X X X X X

..... paid 2 months interest of ₹ 111 lakhs and the same was credited to the current account No. 02911023878 and was transferred to the loan account on March 27, 2014 to March 29, 2014. (6) The corporate debtor submitted a proposal for one time settlement of the term-loan account vide their letter dated March 3, 2017. While con firming the sanction of ₹ 45 crores term loan facility from Dena Bank, J. C. Road Branch, Bangalore, it is stated that they have been servicing the inter est from the beginning as per sanction and they have been making payments regularly till January, 2014. As there was enormous delay in collection of money, the account has become non-performing asset. During March 2014, the corporate debtor met the chairman of the bank and sought restructure of term-loan. During the meeting, the chairman requested the corporate debtor amongst others to pay two months interest of ₹ 111 lakhs to be serviced on or before March 31, 2014. An amount of ₹ 111 lakhs was credited to current account No. 02911023878 and the same was transferred to the loan account from March 27, 2014 to March 29, 2014. Further, the corporate debtor in the said letter has made an offe .....

X X X X X X X

Full Text of the Document

X X X X X X X

..... owed to the creditor amounts to an acknowledgment of liability. Section 19 of the Limitation Act requires that words used in the acknowledgment must indicate existence of jural relationship between the parties such as the debtor and creditor. The corporate debtor has made part payment of ₹ 111 lakhs from March 27, 2014 to March 29, 2014 as indicated in the statement of account is sufficient acknowledgment of liability so as to extend the period of limitation as per section 19 of the Limitation Act. In the communication sent by the corporate debtor on January 5, 2015 as reply to legal notice dated December 22, 2014 the corporate debtor, while admitting the sanction of the loan has requested the chairman of the bank to restructure the accounts so that they can start making the payments from 2016. In the letter dated March 5, 2017 the corporate debtor has made an offer for one time settlement of ₹ 5.50 crores towards full and final settlement of the dues and that they would make the payment of one time settlement before March 31, 2018, etc. In the letter dated June 19, 2017 it was also informed that the corporate debtor would explore the option of selling the equipment fu .....

X X X X X X X

Full Text of the Document

X X X X X X X

..... ntly maintainable and the fact remains the respond ents failed to pay the outstanding amount in question. And the instant petition is not appeal against any order of the Debts Recovery Tribunal or the hon'ble High court. Therefore, proceedings initiated by the petitioner before the Debts Recovery Tribunal and the orders passed by the hon'ble High court would only support the case. The non-disclosure of the above information in the application filed before the hon'ble National Company Law Tribunal was neither intentional nor deliberate but it is only due to the reasons explained above. (16) The petitioner/financial creditor has filed a complaint before CBI BS & FC at Bangalore on July 26, 2017 against the M/s. Kavveri Telecom Infrastructure Ltd., Sri Shivakumar Reddy, promoter director, Smt. R. H. Kasturi, promoter director and Smt. C. Uma Reddy, promoter director. CBI has registered a regular case under section 120B read with sections 420, 468, 471 of the IPC and section 13(2) read with section 13(1)(D) of the PC Act, 1988 and registered the case against the above accused and the matter is under investigation. (17) The petitioner further submit that the Debts Recove .....

X X X X X X X

Full Text of the Document

X X X X X X X

..... 4. Heard Shri T. P. Muthanna, learned counsel for the petitioner and Dr. Aditya Sondhi, learned senior counsel for the respondent. We have carefully perused all the pleadings made by both the parties and also extant provisions of the Code. 5. Learned counsel for the petitioner while reiterating various averments made in the pleadings raised for the petitioner, has further submitted that the instant company petition is filed in accordance with law and the debt and default in question is not in dispute and the IRP suggested is qualified professional duly registered with IBBI. Therefore, it is urged the Tribunal to admit the instant company petition by initiating CIRP as prayed for. 6. Dr. Aditya Sondhi, learned senior counsel for the respondent has opposed the maintainability of the company petition by, inter alia, contending as follows : (1) It is submitted that petitioner has filed the instant application under section 7 of the Code, alleging that the respondent has failed to clear the certain financial debts in relation to terms loans. From the averments in the application filed by the petitioner, it is case of the petitioner that the alleged date of default by the respondent was .....

X X X X X X X

Full Text of the Document

X X X X X X X

..... h day, upon submissions made by the advocate for first respondent regarding main tainability of the above proceedings on the grounds of limitation based on the judgment passed by the hon'ble Supreme Court of India in B. K. Educational Services P. Ltd. v. Parag Gupta and Associates [2019] 212 Comp Cas 1 (SC) and order passed by the High Court on April 27, 2017 the petitioner advocate submitted that there are some other judgments. Hence, this the hon'ble Tribunal was pleased to direct the petitioner as under : "Therefore, learned counsel is directed to file the gist of the case for the cause of action in filling cases, etc., disclosures of the order passed by the hon'ble High Court of Karnataka, including non-disclosure to the hon'ble High Court of Karnataka . . ." (2) As such, what was expected by this hon'ble Tribunal from the petitioner was to file "Gist of the case" as per the pleadings already made in the above case in the petition and explain regarding non-disclosure of order passed by the hon'ble High Court. Per contra, in the guise of filling such gist, the petitioner served a memo along with certain documents to the advocate appear .....

X X X X X X X

Full Text of the Document

X X X X X X X

..... ity, the National Company Law Appellate Tribunal, the Debts Recovery Tribunal or the Debt Recovery Appellate Tribunal, as the case may be' . . . It is thus clear that since the Limitation Act is applicable to applications filed under sections 7 and 9 of the Code from the inception of the Code, article 137 of the Limitation Act gets attracted. 'The rights to sue', therefore, accrues when a default occurs. If the default has occurred over three years prior to the date of filing of the application, the application would be barred under article 137 of the Limitation Act, save and except in those cases where, in the facts of the case, section 5 of the Limitation Act may be applied to condone the delay in filing such application." In another judgment rendered in National Textile Corporation Ltd. v. Nareshkumar Bardrikumar Jagad, Civil Appeal No. 7448 of 2011, it is, inter alia, held that paragraphs 8 and 12 of the judgment is extracted herein below as follows : "8. Per contra, Shri Mukul Rohatgi, learned senior counsel appear ing for the respondents, submitted that it is not permissible for the court to travel beyond the pleadings. No evidence can beted on an issue .....

X X X X X X X

Full Text of the Document

X X X X X X X

..... inancial creditor of the corporate debtor. (2) The financial creditor shall make an application under sub-section (1) in such form and manner and accompanied with such fee as may be prescribed. (3) The financial creditor shall, along with the application furnish- (a) a record of the default recorded with the information utility or such other record or evidence of default as may be specified ; (b) the name of the resolution professional proposed to act as an interim resolution professional ; and (c) any other information as may be specified by the Board. (4) The Adjudicating Authority shall, within fourteen days of the receipt of the application under sub-section (2), ascertain the existence of a default from the records of an information utility or on the basis of other evidence furnished by the financial creditor under subsection (3). (5) Where the Adjudicating Authority is satisfied that- (a) a default has occurred and the application under sub-section (2) is complete, and there is no disciplinary proceedings pending against the proposed resolution professional, it may, by order, admit such application ; or (b) default has not occurred or the application under sub-section (2) is .....

X X X X X X X

Full Text of the Document

X X X X X X X

..... February 20, 2019 and the same is pending on the file of the hon'ble High Court. 12. So far as the issue of limitation is concerned, it was already raised before the Debts Recovery Tribunal by the financial creditor, and after considering the question of limitation, the Debts Recovery Tribunal has allowed O. A. No. 16 of 2015 by an order dated March 27, 2017. Moreover, the petitioner got issued legal notice dated December 22, 2014 to the respondent calling upon it to pay the outstanding amount. In pursuant to that legal notice, the corporate debtor has responded to legal notice vide reply dated January 5, 2015, by inter alia requesting not to precipitate the matter as any action other than restructuring would harm the interests of their company, which will directly affect their ability to make the payments of instalments and interests as per the restructuring plans agreed. 13. Subsequently, the respondent has addressed another letter No. KTIL/ 2016-2017/0055 dated March 3, 2017 by, inter alia, stating as follows : "We were servicing the interest from the beginning as per the sanction and we were also making the payment regularly till January, 2014, although our cash flow w .....

X X X X X X X

Full Text of the Document

X X X X X X X

..... nd the undersigned was travelling. Then we met your zonal officers wherein they mentioned that we could submit a pro posal for one-time settlement. We informed them that the business is not in a position to generate the revenues to do one-time settlement and only way we could give proposal for one time settlement is by way of raising loans from our friends and relatives. Accordingly, we have taken some time to talk to our friends and relatives and gave a proposal for ₹ 5.50 crores as the one-time settlement as we could be able to only get assurances from our relatives and friends that they will be able to loan us only up to ₹ 5.50 crores. We have thus submitted our one-time settlement proposal to your zonal office on March 3, 2017. A copy of the said proposal is attached herewith for your ready reference. We have till today not received any official response to our request for one-time settlement submitted on March 3, 2017.' Therefore, the instant petition is not barred by laches and limitation as contended by learned counsel for the respondents." 14. So far as the allegation of suppression filing of writ petition before the hon'ble High Court of Karnataka .....

X X X X X X X

Full Text of the Document

X X X X X X X

..... 017 passed in Company Appeal (AT) (Insolvency) Nos. 1 and 2 of 2017-Innoventive Industries Ltd. v. ICICI Bank [2017] 205 Comp Cas 23 (NCLAT) wherein the hon'ble National Company Law Appellate Tribunal, New Delhi, has dealt the issue of admission of a case filed under section 7 of the Code, under paragraphs 55 to 58, which are extracted below (page 47) : "Process of initiation of the insolvency resolution process by a financial creditor is provided in section 7 of the I and B Code. As per sub-section (1) of section 7 of the I and B Code, the trigger for filing of an application by a financial creditor before the Adjudicating Authority is when a default in respect of any financial debt has occurred. Sub-section (2) of section 7 provides that the financial cre ditor shall make an application in prescribed form and manner and with prescribed documents, including : (i) 'record of the default' recorded with the information utility or such other record or evidence of default as may be specified ; (ii) the name of the resolution professional proposed to act as an interim resolution professional ; and (iii) any other information as may be specified by the Board. The procedu .....

X X X X X X X

Full Text of the Document

X X X X X X X

..... te debtor in Part II, particulars of the proposed interim resolution pro fessional in Part III, particulars of the financial debt in Part IV and documents, records and evidence of default in Part V. Under rule 4(3), the applicant is to dispatch a copy of the application filed with the adjudicating authority by registered post or speed post to the regis tered office of the corporate debtor. The speed, within which the adjudicating authority is to ascertain the existence of a default from the records of the information utility or on the basis of evidence fur nished by the financial creditor, is important. This it must do within 14 days of the receipt of the application. It is at the stage of section 7(5), where the adjudicating authority is to be satisfied that a default has occurred, that the corporate debtor is entitled to point out that a default has not occurred in the sense that the "debt", which may also include a disputed claim, is not due. A debt may not be due if it is not payable in law or in fact. The moment the adjudicating authority is satisfied that a default has occurred, the application must be admitted unless it is incomplete, in which case it may give noti .....

X X X X X X X

Full Text of the Document

X X X X X X X

..... s mentioned under the Insolvency and Bankruptcy Code, 2016 and the rules framed by the IBBI from time-to-time ; 3. The following moratorium is declared prohibiting all of the follow ing, namely : (a) the institution of suits or continuation of pending suits or pro ceedings against the corporate debtor including execution of any judgment, decree or order in any court of law, Tribunal, arbitration panel or other authority ; (b) transferring, encumbering, alienating or disposing of by the corporate debtor any of its assets or any legal right or beneficial interest therein ; (c) any action to foreclose, recover or enforce any security interest created by the corporate debtor in respect of its property including any action under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 ; (d) The recovery of any property by an owner or lessor where such property is occupied by or in the possession of the corporate debtor ; (e) The supply of essential goods or services to the corporate debtor as may be specified shall not be terminated or suspended or interrupted during moratorium period ; (f) The provisions of sub-section (1) shall not apply .....

X X X X X X X

Full Text of the Document

X X X X X X X

 

 

← Previous Next →

 

 

|| Home || About us || Feedback || Contact us || Disclaimer || Terms of Use || Privacy Policy || Database || Members || Refer Us ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.
|| Blog || Site Map - Recent || Site Map ||