TMI Blog2021 (10) TMI 144X X X X Extracts X X X X X X X X Extracts X X X X ..... of all necessary applications in this regard. Such authorisation, having been granted by way of a power of attorney pursuant to a resolution passed by the Bank s board of directors on 06.12.2008, does not impair Mr. Gupta s authority to file an application under Section 7 of the Code. It is therefore clear that the application has been filed by an authorised person on behalf of the Financial Creditor and the objection of the Appellants on the maintainability of the application on this ground is untenable. Time Limitation - HELD THAT:- In the instant case, there is no dispute that the date of default is 30.09.2014 and the application under Section 7 of the Code was filed on 25.04.2019. According to the Financial Creditor, Section 18 of the Limitation Act is applicable in view of the Corporate Debtor acknowledging its debt by way of letters, written in and after 2018, giving details of amount repaid, acknowledging the amount outstanding and requesting consideration of one-time settlement proposal. There is no dispute that the date of default in this case is 30.09.2014, as mentioned by the financial creditor in its application under Section 7. A copy of the debit balance conf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... astava, AOR R-1 R-2 Mr. G. N. Reddy, AOR JUDGMENT L. NAGESWARA RAO, J. 1. Respondent No. 2 filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as the Code ) which was admitted by the National Company Law Tribunal, Ahmedabad bench (hereinafter referred to as the NCLT or Adjudicating Authority ) on 01.06.2020. The Appellants, who are the suspended directors of the board of R.K. Infratel Ltd. (hereinafter referred to as the Corporate Debtor ), filed an appeal which was rejected by the National Company Law Appellate Tribunal, Delhi (hereinafter referred to as the NCLAT ). Therefore, this Appeal. 2. The Corporate Debtor is in the business of setting up underground fiber network in the cities of Surat, Ahmedabad, Vapi, Silvasa, Ankleswar and in South Gujarat, and providing dedicated dark fiber, broadband, internet leased line, VPN, point-to-point, wi-fi and wiMAX connections and CCTV surveillance services to corporate entities, financial institutions and other organisations. Respondent No. 2, Union Bank of India (hereinafter referred to as the Bank or Financial Creditor ), sanctioned a loan of ₹ 4.5 cror ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he contention of the Corporate Debtor that the application filed by the power of attorney holder on behalf of the Financial Creditor was not maintainable. 4. The Corporate Debtor reiterated its stand that the application under Section 7 of the Code was barred by limitation before the NCLAT. According to the Corporate Debtor, the payments made by it to the Bank after its account was declared as NPA could not extend the period of limitation. It was further contended by the Corporate Debtor that the cut back offer cannot be taken into account for attracting Section 19 of the Limitation Act, 1963 (hereinafter referred to as the Limitation Act ). It was argued on behalf of the Corporate Debtor that Section 18 of the Limitation Act is also not applicable to the facts of this case. The further argument of the Corporate Debtor was that the power of attorney in favour of the individual who has signed the application under Section 7 of the Code had been granted prior to the Code coming into force without any specific authorisation to initiate proceedings under the Code, and therefore, the application was not maintainable. 5. The NCLAT examined the power of attorney given by the Bank ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation was filed by the authorised person. Mr. Alok Kumar, the learned Counsel appearing for the Financial Creditor, also relied upon the judgment in Palogix Infrastructure (supra) and argued that a person authorised by way of a power of attorney can file an application under Section 7 of the Code. 9. Initiation of the corporate insolvency resolution process by a financial creditor is dealt with under Section 7 of the Code. Section 7 (2) provides that the financial creditor shall make an application in such form and manner and accompanied with such fee as may be prescribed. As per Rule 4 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 (hereinafter, the 2016 Rules ), the financial creditor is required to make an application for initiating the corporate insolvency resolution process against the corporate debtor under Section 7 of the Code in Form 1, accompanied with documents and records required therein. Form 1 is in a tabular form and the financial creditor has to give particulars of the details sought. Further, the Form is required to be signed by the person authorised to act on behalf of the financial creditor . 10. The authorisation, i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h power will not take away the authority of such officer and for all purposes it is to be treated as an authorization by the Financial Creditor / 'Operational Creditor' / Corporate Applicant in favour of its officer, which can be delegated even by designation. In such case, officer delegated with power can claim to be the Authorized Representative for the purpose of filing any application under section 7 or Section 9 or Section 10 of I B Code . The NCLAT was of the opinion that general authorisation given to an officer of the financial creditor by means of a power of attorney, would not disentitle such officer to act as the authorised representative of the financial creditor while filing an application under Section 7 of the Code, merely because the authorisation was granted through a power of attorney. Moreover, the NCLAT in Palogix Infrastructure (supra) has held that if the officer was authorised to sanction loans and had done so, the application filed under Section 7 of the Code cannot be rejected on the ground that no separate specific authorisation letter has been issued by the financial creditor in favour of such officer. In such cases, the corporate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tor, submitted that no error was committed by the Adjudicating Authority in admitting the application filed under Section 7 of the Code, after perusing the documents filed by the Financial Creditor along with the application. It was further submitted that the material placed on record by the Corporate Debtor before the Adjudicating Authority clearly shows acknowledgement of the debt till the year 2019. Therefore, the application under Section 7 filed on 25.04.2019 cannot be said to be beyond the period of limitation in terms of Section 18 of the Limitation Act. 15. Section 7 (1) of the Code enables a financial creditor to file an application for initiating corporate insolvency resolution process against a corporate debtor before the adjudicating authority when a default has occurred. Subsection (2) thereof provides that the application shall be in the form and manner as prescribed. Sub-section (3) obligates the financial creditor to furnish the record of default recorded with the information utility or such other record or evidence of default as may be specified, along with the application. On the basis of records of an information utility or on the basis of other evidence furni ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d was with the limitation period. In the said fact situation, this Court in Babulal Vardharji Gurjar (supra) held that Section 18 of the Limitation Act and the principles thereof were not applicable. In Dena Bank v. C. Shivkumar Reddy Anr. 2021 SCC Online SC 543 , this Court had occasion to deal with the pleadings and the documents required to be filed at the time of making of an application under Section 7 of the Code. It was observed therein that the financial creditor can only fill in the particulars as mentioned in Form 1 and there is no scope for elaborate pleadings. This Court was of the view that an application under Section 7 cannot be compared with a plaint in a suit. It was further held in the said judgment that there is no bar for filing of documents as required under Section 7, until a final order either admitting or dismissing the application has been passed. While concluding, this Court had opined that in case of inordinate delay, the Adjudicating Authority, at its discretion, may allow or decline the request of the applicant to file additional pleadings and / or documents before passing the final order. 18. While examining the question of maintainability of an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such application is barred by limitation, even in the absence of any plea with respect to limitation. (See: Noharlal Verma v. District Cooperative Central Bank Limited, Jagdalpur (2008) 14 SCC 445 ) 20. There can be no doubt that it is the responsibility of the financial creditor to give all particulars relating to the debt due and the date of default, along with the requisite documents, at the time of filing of an application under Section 7 of the Code. A plain reading of Section 7, Rule 4 of the 2016 Rules and Form 1 makes it clear that the Adjudicating Authority may admit an application under Section 7 only if he is satisfied that a default has occurred. The definition of default under Section 3 (12) of the Code refers to non-payment of debts which are due and payable in law, meaning thereby that an application under Section 7 of the Code is maintainable only with respect to debts that are not time-barred. (See: B.K. Educational Services Private Limited v. Parag Gupta and Associates (2019) 11 SCC 633 ) The primary obligation of making out a prima facie case of default is on the financial creditor. There is no necessity for the corporate debtor to provide any informat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s no dispute that the date of default in this case is 30.09.2014, as mentioned by the financial creditor in its application under Section 7. A copy of the debit balance confirmation letter dated 07.04.2016 was filed along with the application. As the application was filed only on 25.04.2019, which is beyond a period of three years even after taking into account the debit balance confirmation letter dated 07.04.2016, the application was barred by limitation. However, the Corporate Debtor had, in its reply before the Adjudicating Authority, placed on record a letter dated 17.11.2018, which detailed the amount repaid till 30.09.2018 and acknowledged the amount outstanding as on 30.09.2018. On the basis of this letter and the record showing that the Corporate Debtor had executed various documents amounting to acknowledgement of the debt even in the financial year 2019-20, the NCLT was of the opinion that the application was filed within the period of limitation. The said view was upheld by the NCLAT. 23. We have already held that the burden of prima facie proving occurrence of the default and that the application filed under Section 7 of the Code is within the period of limitation, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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