TMI Blog2020 (8) TMI 537X X X X Extracts X X X X X X X X Extracts X X X X ..... TD. [ 2019 (2) TMI 316 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI ]. Appeal dismissed. - Company Appeal (AT) (Insolvency) No. 1504 of 2019 - - - Dated:- 7-2-2020 - [Justice S. J. Mukhopadhaya] Chairperson And [Shreesha Merla] Member (Technical) For the Appellant : Mr. Abhijeet Sinha, Mr. Mahesh Agarwal, Mr. Divyand Chandiramani, Mr. Syaishir Divatia and Mr. Rajeev Kumar, Advocates For the Respondent : Mr. Aditya Dewan, Mr. Somesh Dhawan,Mr. Jayant Mehta and Mr. Siddharth Chechani, Advocates for R-1. Mr. Sugam Seth, Advocate. Mr. Syed Sarfarar Karim, Advocate for IRP. JUDGMENT SUDHANSU JYOTI MUKHOPADHAYA, J. Bank of India moved an Application under Section 7 of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as the I B Code ), pursuant to which, by impugned order dated 26th November, 2019 the Adjudicating Authority (National Company Law Tribunal), Mumbai Bench initiated Corporate Insolvency Resolution Process against RNA Corp. Pvt. Ltd. ( Corporate Debtor ), who was the Guarantor. 2. The Appellant has challenged the impugned order on these grounds: - (i) The Application under Section 7 of the I B Code was barred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 963 has in fact been applied from the inception of the Code. 7. In Vashdeo R. Bhojwani vs. Abhyudaya Co-operative Bank Limited and another (2019) 9 SCC 158 , the Hon ble Supreme Court referring to B.K. Education (Supra) observed: - 3. Having heard the learned counsel for both parties, we are of the view that this is a case covered by our recent judgment in B.K. Educational Services (P) Ltd. v. Parag Gupta and Associates, para 42 of which reads as follows: 42. 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 right 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. Dealing with Section 23 of the Limitation Act, 1963, the Hon ble Supreme Court observed: xxx xxx xxx Fol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tuted. 14. Likewise, a Single Judge of the Patna High Court in Ferro Alloys Corpn. Ltd. v. Rajhans Steel Ltd. also held: 12. In my opinion, the contention lacks merit. Simply because a suit for realisation of the debt of the petitioner Company against Opposite Party 1 was instituted in the Calcutta High Court on its original side, such institution of the suit and the pendency thereof in that Court cannot ensure for the benefit of the present winding-up proceeding. The debt having become time-barred when this petition was presented in this Court, the same could not be legally recoverable through this Court by resorting to winding-up proceedings because the same cannot legally be proved under Section 520 of the Act. It would have been altogether a different matter if the petitioner Company approached this Court for winding-up of Opposite Party 1 after obtaining a decree from the Calcutta High Court in Suit No. 1073 of 1987, and the decree remaining unsatisfied, as provided in clause (b) of sub-section (1) of Section 434. Therefore, since the debt of the petitioner Company has become time-barred and cannot be legally proved in this Court in course of the present procee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be proved on the facts of each case. Thus, Section 433(e) read with Section 434 of the Companies Act, 1956 would show that the trigger point for the purpose of limitation for filing of a winding-up petition under Section 433(e) would be the date of default in payment of the debt in any of the three situations mentioned in Section 434. 9. Similar issue fell for consideration before the Hon ble Supreme Court in Gaurav Hargovindbhai Dave vs. Asset Reconstructions Company (India) Limited and another (2019) 10 SCC 572 . In the said case, the Hon ble Supreme Court has noticed that the Respondent was declared NPA on 21st July, 2011. The Bank had filed two OAs before the Debts Recovery Tribunal in 2012 to recover the total debt. Taking into consideration the facts, the Hon ble Supreme Court held that the default having taken place and as the account was declared NPA on 21st July, 2011, the Application under Section 7 was barred by limitation. For proper appreciation, it is better to note the facts of the judgment as follows: - In the present case, Respondent 2 was declared NPA on 21-7-2011. At that point of time, State Bank of India filed two OAs in the Debts Recovery Tri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cation filed in 2017 is clearly out of time. He has also referred to our judgment in B.K. Educational Services (P) Ltd. v. Parag Gupta and Associates [B.K. Educational Services (P) Ltd. v. Parag Gupta and Associates, (2019) 11 SCC 633] in order to buttress his argument that it is Article 137 of the Limitation Act which will apply to the facts of this case. 5. Mr Debal Banerjee, learned Senior Counsel, appearing on behalf of the respondents, countered this by stressing, in particular, para 11 of B.K. Educational Services (P) Ltd. and reiterated the finding of the NCLT that it would be Article 62 of the Limitation Act that would be attracted to the facts of this case. He further argued that, being a commercial Code, a commercial interpretation has to be given so as to make the Code workable. 6. Having heard the learned counsel for both sides, what is apparent is that Article 62 is out of the way on the ground that it would only apply to suits. The present case being an application which is filed under Section 7, would fall only within the residuary Article 137. As rightly pointed out by the learned counsel appearing on behalf of the appellant, time, therefore, begins to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the property or right; (b) the word signed means signed either personally or by an agent duly authorised in this behalf; and (c) an application for the execution of a decree or order shall not be deemed to be an application in respect of any property or right. 11. In the present case, the Corporate Debtor by its letter dated 18th March, 2016/ 20th March, 2016 has specifically stated that it will make an effort in reducing their outstanding dues and raise other funding to save their Bank account from getting NPA. The letter is quoted below: - 18th March 2016 Mr. Vivek Wahj Deputy General Manager Bank of India Andheri Large Corporate Branch Dear Sir, Your letter AnLCB/ARD/RK/2015-16/2181 dated 11-3- 2016 received on 15th March 2016 We are in receipt of your abovementioned letter and have to state as under: We are shocked and surprised at the contents of your said letter. At the outset, we would like to state that we are not willful defaulters and we have every intention to repay every paise borrowed from your bank. The reasons why we have not been able to make timely payments have been conveyed to you time ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing to revive the earlier proposal of taking over of the security as mentioned above. However, till date, our proposal was neither accepted nor declined. Please note that despite all the notices, we continued to make payments to you, with the last payments, being made in January 2016. This would surely reflect our intention, efforts and relationship with the bank. Thus, an effort which would have helped in reducing your outstanding and probably helped us too by able to make us raise other funding had your account be saved from getting NPA, went futile. We are sure that there can be no doubt on either our intentions and / or efforts in making payments to you, despite the challenging situation. Considering all this, there should be no reason for you to categorise us as a willful defaulters and take actions as such. Otherwise also, we understand that there are RBI and Supreme Court (through its various judgments) guidelines which needs to be followed before labelling a borrower as a willful defaulter. We would like place on record that we have a very good reputation and goodwill which we have managed to create after many years of hard work. It is this reputation and goodwill tha ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
