TMI Blog2020 (12) TMI 60X X X X Extracts X X X X X X X X Extracts X X X X ..... by the law of limitation? - HELD THAT:- The existence of debt and default is reasonably established by the Financial Creditor as a major constituent for admission of a petition under Section 7(4) of the I B Code.To get further clarity on this issue, this Tribunal had gone through Annexures A41, A44, A45 and found that the OA No. 407/2012 was filed before the DRT within a period of 3 years, after the accounts were classified as NPA on 31.12.2010, wherein the Corporate Debtor had admitted the financial facilities availed and the debt due. Before that, SARFAESI Demand Notice dated 08.11.2011 was issued to the Corporate Debtor, which resulted in filing SA No. 104/2012 before the Debts Recovery Tribunal by the Corporate Debtor - the claim is not barred by law of limitation as contended by the Corporate Debtor. Whether the Application is bad for non-joinder of necessary parties and hit by res judicata? - HELD THAT:- This Tribunal is not agreeable with the submissions made by the Corporate Debtor, that the Application is bad for non-joinder of necessary parties and that application is hit by res-judicata. Those contentions are made without any application of mind as those defences ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsel for the Financial Creditor has stated that the Corporation Bank is amalgamated with another entity namely Union Bank of India, having its Central Office at 239, Vidhan Bhawan Marg, Nariman Point, Mumbai 400 021 and, inter alia, a Branch at Edappally, Ernakulam with effect from 01.04.2020 under the Scheme of Amalgamation notified as per Government of India Gazette Notification namely General Statutory Rules (GSR) 154(E) dated 04.04.2020 published in the Gazette of India. The Corporate Debtor filed counter against the Application and stated that as per by Annexure A46 notification Union Bank of India is not permitted to continue in this Application and the Application itself barred by limitation. Subsequently heard the both parties and passed an order on 13.08.2020 as under: - On a perusal of the said Government Notification, it appears that by Extra Ordinary Gazette Notification dated 04.03.2020 under Section 9 of the Banking Companies Act, 1970 and Section 9 of the Banking Companies Act,1960, the Central Government after consultation with the Reserve Bank of India notified Amalgamation of Andhra Bank and Corporation Bank into the Union Bank of India, which came into for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... les, stocks, receivables of the Corporate Debtor and Corporate Guarantee of Public Limited Company M/s Malayalam Industries Ltd having its Registered Office at Mermaid Complex, Kaniampuzha Road, Vytilla, Ernakulam 682 019 and on the personal guarantee of the Directors of Corporate Guarantor namely Mr. Thomas George and Mrs. Asha Mary Thomas, who are also the Directors of Corporate Guarantor and on the equitable mortgage of the personal immovable properties belonged to the guarantors admeasuring 16.05 Ares in Re. Sy. No. 114/9, 114/10, 123/18 (Old Sy. No. 250/1, 250/2) of Maradu Village belonged to the Guarantors Mrs. Asha Mary Thomas and 17.02 Ares and the residential building situated therein comprised in Re. Sy. Nos. 114/9, 114/12, 114/17 (Old Sy. No. 250/1) of Maradu Village belonged to Mrs. Thomas George. 6. It is further stated that 92% equity shares of Corporate Guarantor are owned by Mr. John Mathew who is also a 50% shareholder in the Corporate Debtor Company. 7.75% of equity shares of Corporate Guarantors owned by Mr. Thomas George and Asha Mary Thomas who are the 50% equity shareholders of Corporate Debtor. Thomas George, who is having 50% shareholding in the Corporate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the facilities and the account was again classified as NPA on 28.09.2011 and interest charged for the month of June, July and August 2011 was reversed. The inspecting officials of the Reserve Bank of India during the course of Annual Financial Inspection (AFI) for the year ended 31.03.2012 have observed divergence in Asset Classification of the Account and on the direction of the Reserve Bank of India officials, classification based on repayment schedule as applicable to pre-re- structuring period is considered and NPA date is changed to 31.12.2010, and the interest charged in the account from October 2010 till May 2011 was reversed. 9. The Financial Creditor stated that, even after the said accounts were rescheduled, it remained in the NPA category since the instalment or interest were not serviced as per the terms and conditions of said sanction and also, in terms of Circulars and Guidelines issued by the Reserve Bank of India. The Corporate Debtor has repeatedly defaulted in making payments of instalments and has failed to adhere to the terms of the Loan as per Hypothecation and the Agreements and thus violated the terms and conditions. 10. The Financial Creditor further s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an be initiated even against the guarantor alone even before initiating action against the borrower. In this connection the Financial Creditor referred to the decision of the National Company Law Tribunal in Dr.Vishnukumar Agarwal Vs Piramal Enterprizes Ltd, (Company Appeal (AT) (Insolvency) No. 346 of 2018) in which it is stated that there is no bar under the statute for initiating two separate proceedings simultaneously against the borrower and the guarantor. 12. They have further refuted the contention of the Corporate Debtor that there was no demand made by the Financial Creditor before filing the application, and stated that before invoking Section 7 of IBC, a Demand Notice is required. Demand Notice required only when an application is filed under Section 9 by the Operational Creditor. 13. After substitution of Union Bank of India as Applicant, the Corporate Debtor has filed an additional counter/reply statement dated 26.08.2020, wherein it is stated that the application is barred by limitation. It is stated by the Financial Creditor that the plea of limitation is a mixed question of fact and law, which should have been raised/pleaded in the counter/ reply statement dat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2017, even according to the recent decisions of the Hon ble Apex Court, the present Application is filed within 3 years from the date of last acknowledgement of liability on 20.02.2017. Therefore, the present Application is not barred by law of limitation. 16. To fortify this argument the learned counsel for the Financial Creditor referred the following case laws of the Hon ble NCLAT:- ➢ Yogesh Kumar Vs Indian Overseas Bank (Company Appeal (AT) No. 236 of 2020) ➢ Bishal Jaiswal Vs Asset Reconstruction Company (India) Ltd (Company Appeal No. 385 of 2020) Submission by the Corporate Debtor 17. The Corporate Debtor filed a counter and submitted that the Application filed by the Corporation Bank, the original applicant before this Tribunal on 03.01.2020 was only against the Corporate Debtor Company. The person who verified, signed and presented the IBA is not authorized to file the Application. He has not produced any document to show that he is authorized and competent to verify, sign and present the Application before this Tribunal and the Financial Creditor had produced authorization letter stating that the signatory is authorized to file the above A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rtion of the date of NPA as 31.12.2010, 30.06.2011 and 28.09.2011 is clearly barred by limitation having been filed much later than the period of three years from the date of N. P. A as stated in the Application. Hence, the Application is liable to be dismissed in- limine for the reason that the above Application is barred by limitation. 20. The learned counsel for the Corporate Debtor argued that the Financial Creditor filed this Application only against the Company. The Guarantors and Corporate Guarantor are not made parties to this Application. Hence, proceedings under the provisions of IBC cannot be ordered against them. He has further argued that Corporate Debtor further submitted that Annexures A13 and A15 documents are documents by the then officers of Corporation Bank. It is stated that Mr. Thomas George deposited the original title deed No. 4691/2003 dated 27.11.2003 of Maradu S R O and title deed No. 3029/2003 dated 31.07.2003 of Maradu S R O on 23.09.2009 within the Corporation Bank, and that there is only one original for those documents. The originals of one document cannot be deposited by two persons on different dates. 21. His further argument is that during th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and another (1999 KHC 3548). ➢ V. Padmakumar Vs Stressed Assets Stabilization Fund and another Company Appeal (AT) (Insolvency) No. 385/2020. ➢ National Insurance Company Ltd Vs Pranay Sethi and Other 2017 (5) KHC. 350. ➢ Sandhya Educational Society and Another Vs Union of India and Others 2014 (7) SCC 701. 25. The learned counsel for the Corporate Debtor argued that the Corporate Debtor produced the copies of Form 20B submitted before the Ministry of Corporate Affairs for the Financial Years ending on 31.03.2013, 31.03.2014 and 31.03.2015, and that the AGM convened and passed the Audit Report and which was submitted before the ROC on 09.12.2013 for the Financial Year ending on 31.03.2013. It is further stated that the AGM convened on 18.02.2017 passed the Audit Report and which was submitted to the ROC on 07.10.2017 for the Financial Year ending on 31.03.2014. Even if the same is admitted as acknowledgement for argument sake, it is after 3 years of signing the records of 31.03.2013, which is beyond the period of limitation. Hence, it is not a valid acknowledgement as per Section 18 of Limitation Act and that since the Financial Statements o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had admitted the financial facilities availed and the debt due. Before that, SARFAESI Demand Notice dated 08.11.2011 was issued to the Corporate Debtor, which resulted in filing SA No. 104/2012 before the Debts Recovery Tribunal by the Corporate Debtor. On Technical grounds the said SA was finally disposed of by the Debts Recovery Tribunal by judgment on technical grounds. Again, SARFAESI Demand Notice dated 12.04.2016 was issued to the Corporate Debtor which was challenged by the Managing Director of Corporate Debtor on technical grounds by filing SA No. 308/2016 before the Debt Recovery Tribunal and the said Demand Notice was withdrawn by the Financial Creditor with liberty to file fresh proceedings as per the order of the Debts Recovery Tribunal. Hence, the claim is not barred by law of limitation as contended by the Corporate Debtor. In this aspect, the relevant paragraph of the decision of the Hon ble Supreme Court in the case of Mobilox Innovations Private Ltd Vs Kirusa Software Private Ltd (Civil Appeal No. 9405 of 2017) is quoted below: - 29. It is, thus, clear that so far as an operational creditor is concerned, a demand notice of an unpaid operational debt or copy of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provisions of IBC and not by any other statute. As such invocation of res judicata seems only an ignorance of the provisions of law. Insolvency proceedings can be initiated even against the guarantor alone even before initiating action against the borrower. In this connection the decision of Hon ble NCLAT in the case of Dr.Vishnukumar Agarwal Vs Piramal Enterprizes Ltd,(Company Appeal (AT) (Insolvency) No. 346 of 2018), may be referred to. The relevant paragraph of the order reads as under: - 32. There is no bar in the I B Code for filing simultaneously two applications under Section 7 against the Principal Borrower as well as the Corporate Guarantor(s) or against both the Guarantors . However, once for same set of claim application under Section 7 filed by the Financial Creditor is admitted against one of the Corporate Debtor ( Principal Borrower or Corporate Guarantor(s) ), second application by the same Financial Creditor for same set of claim and default cannot be admitted against the other Corporate Debtor (the Corporate Guarantor(s) or the Principal Borrower ). Further, though there is a provision to file joint application under Section 7 by the Fina ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lution Professional to conduct the Insolvency Resolution Process. The Insolvency Resolution Professional is directed to submit the copy of AFA (Authorization for Assignment) issued by the Insolvency Professional Agency within 2 days from the date of receipt of this order. The fee payable to IRP or as the case may be to RP shall comply with such regulation/circular and direction as may be issue by the IBBI and the IRP shall carry out his duties as contemplated by Section 15, 17, 18, 19, 20 and 21 of the IBC. (III) Having admitted the Application, the provisions of Moratorium as prescribed under Section 14 of the Code shall be operative henceforth with effect from the date of order shall be applicable by prohibiting institution of any suit before a Court of Law, transferring/encumbering any of the assets of the Debtor etc. (IV) However, the supply of essential services to the Corporate Debtor shall not be terminated during the Moratorium period. It shall be effective till completion of the Insolvency Resolution Process or until the approval of the Resolution Plan prescribed under Section 31 of the Code or passes an order for liquidation of Corporate Debtor under Section 33, a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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