TMI Blog2020 (11) TMI 801X X X X Extracts X X X X X X X X Extracts X X X X ..... order decline to register the reference. In the instant case the first reference was, after its receipt, registered and assigned case number 160/2001. It was placed before the Bench, which took up the reference on 25th June, 2002 for consideration so as to determine the status of company s sickness. However, the reference came to be dismissed as being time barred. It is therefore manifestly clear that the reference was registered and came to be dismissed on consideration. Therefore, Regulation 19(7) would not come into play and the period from filing of reference with BIFR under Section 15(1) of SICA on 2nd March, 2001 till its dismissal on 25th June, 2002 will have to be excluded within the purview of Section 22 of SICA providing for suspension of legal proceedings including institution of suits for recovery of money or for enforcement of security against the industrial company or any guarantee in respect of any loans or advances granted to the industrial company. Admittedly, the second reference case was filed on 21st February, 2003 before BIFR, therefore period from 25th June, 2002 till 21st February, 2003 (calculated at 241 days) has to be counted towards the limitation per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Verma, Advocates. For the Respondent : Mr. Ritin Rai, Senior Advocate with Mr. Sidhartha Barua, Advocate for R-1. Mr. Anand Verma, Mr. Abhishek Prasad and Mr. Ashok Tibrewala Advocates with Mr. Sandeep Khaitan, RP for Resolution Professional. JUDGMENT BANSI LAL BHAT , J. This appeal has been preferred by Mr. Piyush Periwal, Promoter/ Shareholder of National Plywood Industries Ltd. (NPIL), the Corporate Debtor, against impugned order dated 26th August, 2019 passed by the Adjudicating Authority (National Company Law Tribunal) Guwahati Bench, Guwahati by virtue whereof application of Respondent Stressed Assets Stabilization Fund (SASF) - Financial Creditor under Section 7 of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as I B Code ) came to be admitted with consequential directions declaring moratorium and appointment of Mr. Sandeep Khaitan as Interim Resolution Professional as a sequel to the order of admission. Aggrieved thereof, the Appellant has assailed the impugned order primarily on the ground that the application was time barred and also not maintainable under Section 7 of the I B Code. 2. For a better grasp of the issues rai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . No. Particulars Date Remarks 1. Date of Invocation of Corporate Guarantee which is the start date for the default 03.12.2001 a. Invocation letter (pages 58-60 of Appeal) b. SASF also admits this date as invocation date and beginning of cause of action in their petition (page 75 of Appeal and Rejoinder (page 99 of Appeal) c. From the Petition, it appears that the date of default has been taken as 03.12.2001 as interest has been calculated from 03.12.2001 (page 76 of Appeal) 2. Date of receipt of Second Reference by BIFR 21.02.2003 a. Page 61 of Appeal. No dispute with regard to this date. b. Question is whether this date has any relevance for effect of Section 22 of SICA 3. Date of registration of the Second Reference by BIFR under Section 16 of SICA 01.07.2003 a. Page 61 of Appeal. Again, no dispute with this date. b. According to Appellant, this is the triggering point as held by several Su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eding under Section 7 of I B Code as there is a nonobstinate clause in Section 238 of I B Code. Therefore, proceedings pending under SICA by reason of a reference would not aid SASF in exclusion of time period under Article 137 of Limitation Act for filing Section 7 application 18 years after the date of default. It is submitted that when a guarantee is invoked, there can be no question of a continuing cause of action, limitation will set in from the date of invocation of Corporate Guarantee. It is submitted that there is no acknowledgement of debt by Principal Borrower in respect of the claim made in the instant proceedings. Moreover an acknowledgement of liability by a Principal Borrower cannot be construed as acknowledgement of liability by a Guarantor who is the Corporate Debtor in the instant case. SASF invoked the Corporate Guarantee on 3rd December, 2001. The Guarantee agreement clearly provided that the question of limitation as against the Corporate Debtor will commence from the demand under the guarantee as against the Corporate Debtor. Thus, it is contended, the default in this case will start from 3rd December, 2001 when Corporate Guarantee was invoked. It is therefore ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (35 months and 12 days) It is submitted that the first reference case was finally disposed of by BIFR on 25th June, 2002, therefore, the period from 3rd December, 2001 till 25th June, 2002 (the dates relating to invocation of guarantee and disposal of first reference, respectively) was liable to be excluded from the period of limitation under Section 22 (1) of SICA, 1985. It is further submitted that the second reference came to be filed on 21st February, 2003 before BIFR. Thus, period from 25th June, 2002 till 21st February, 2003 (dates intervening disposal of first reference case and filing of second reference case) calculated at 241 days would be included in the limitation period. Pendency of second reference before BIFR from 21st February, 2003 till 1st December, 2016 was followed by repeal of SICA with enforcement of I B Code, 2016 on 1st December, 2016. Thus, the period of limitation for filing of application under Section 7 of I B Code would begin to run from 1st December, 2016 till filing of such application on 12th March, 2019, which comes to 1072 days i.e. 35 months and 12 days. It is submitted that the application was filed within 35 months and 12 days ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rescribed period of limitation. 5. We have been taken through the record and apart from, oral hearing, written submissions have been filed by learned counsels for the parties. Appeal against admission of application under Section 7 of I B Code in terms of the impugned order dated 26th August, 2019 initially filed as Company Appeal (AT) (Insolvency) No. 932 of 2019 by the present Appellant came to be disposed off by this Appellate Tribunal in terms of judgment rendered on 25th November, 2019. This Appellate Tribunal held that the application under Section 7 of the I B Code was well within the period of limitation. The appeal was accordingly dismissed. Appellant assailed the judgment of this Appellate Tribunal through the medium of Civil Appeal No. 9142 of 2019 before the Hon ble Apex Court which disposed off the appeal vide order dated 20th January, 2020 setting aside the judgment rendered by this Appellate Tribunal and remanded the matter for fresh consideration. The order passed by the Hon ble Apex Court is reproduced hereinbelow:- IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION CIVIL APPEAL No.9142 OF 2019 PIYUSH PERIWAL APPEL ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ma Anr. Vs. Phoenix ARC Private Limited Anr. , reported in (2019) 10 SCC 353. The Hon ble Apex Court observed that since application(s) under Section 7 of the I B Code are petition(s) which are filed under the Code, it is Article 137 of the Limitation Act which will apply to such applications. 7. Now adverting to the facts of instant case be it seen that the original lender - IDBI which had advanced Term Loan of ₹ 32 million to the Principal Borrower NBL in respect whereof NPIL had executed Corporate Guarantee dated 16th July, 1997, recalled the entire outstanding amount of the loan vide letter dated 9th November, 2001. This factual position emerges from the communication dated 3rd December, 2001 forming Annexure A-3 to the appeal paper book. The Financial Creditor invoked Personal Guarantees of Shri Madanlal Periwal and Shri Piyush Periwal (Appellant) vide letter dated 19th November, 2001 as the dues remained unpaid. The Financial Creditor also invoked Corporate Guarantee of NPIL vide letter dated 3rd December, 2001. This emerges from Part V of Form-1 (Application by Financial Creditor to initiate Corporate Insolvency Resolution Process under the I B Code) at pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is also empowered to commence enquiry upon its own knowledge as to the financial condition of the company. Regulation 19(7) of BIFR Regulation dealing with references under Section 15 of the SICA provides that a reference declined to be registered shall be deemed not to have been made. In this regard it would be apposite to refer to the judgment of the Hon ble Apex Court in Real Value Appliances Vs. Canara Bank and Ors. , reported in (1998) 5 SCC 554, wherein the Hon ble Apex Court after analyzing various provisions of SICA and taking note of views expressed by various High Courts held:- 30. .., once the reference is registered and when once it is mandatory simultaneously to call for information/documents form the informant and such a direction is given, then inquiry under Section 16 (1) must for the purposes of Section 22 be deemed to have commenced. Section 22 and the prohibitions contained in it shall immediately come into play The first reference was dismissed for being barred by limitation and BIFR expressed its inability to condone delay for want of jurisdiction. The question is whether dismissal of such reference in the given circumstances would attract ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e case before BIFR) has to be excluded in terms of section 22(1) of SICA while computing the period of limitation. Admittedly, the second reference case was filed on 21st February, 2003 before BIFR, therefore period from 25th June, 2002 till 21st February, 2003 (calculated at 241 days) has to be counted towards the limitation period. From 21st February, 2003 till 1st December, 2016 second reference case of the Corporate Debtor was pending consideration before BIFR and on 1st December, 2016, with enforcement of I B Code, the SICA, 1985 was repealed. Thus, the period of limitation for triggering of CIRP at the instance of Assignee SASF against the Corporate Debtor would commence from 1st December, 2016 till application under Section 7 was filed on 12th March, 2019. This is rightly calculated by Responded at 831 days. Thus, we find that the period counting for limitation will be 241 days + 831 days = 1072 days i.e. 35 months and 12 days. It is abundantly clear that the application under Section 7 at the instance of SASF against the Corporate Debtor came to be filed well within three years from the date of invocation of corporate guarantee on 3rd December, 2001. It is indisputable th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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