TMI Blog2022 (6) TMI 1328X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the Insolvency Resolution Process by submitting an application - in terms of the Section 96 of the IBC, 2016, when an application is filed under Section 94 95, an interim moratorium shall commence on the date of the application in relation to all the debts and shall cease to an effect on the date of admission of such application. Petition admitted - moratorium declared. - (IB) 111 (ND)/2022 - - - Dated:- 6-6-2022 - Mr. Abni Ranjan Kumar Sinha, Member (J) and Mr. Hemant Kumar Sarangi, Member (T) For the Appellant: Mr. Abhishek Anand, Mr. Prateek Kushwaha and Mr. Samriddh Bindal For the Respondent: Mr. Rishi Kapoor, Mr. Akhil Shankhwar ORDER Abni Ranjan Kumar Sinha, Member (J) 1. The present application is filed under Section 95 of the Insolvency Bankruptcy Code, 2016, (hereinafter referred to as the Code ), by State Bank of India ( Applicant/Creditor ) praying for initiation of Insolvency Resolution Process against Mr. Krishan Kumar Basia, who is the Guarantor of M/s. Gee Ispat Private Limited ( Corporate Debtor ). 2. That, on the hearing of this case on 21.02.2022, the Ld. Counsel for the Respondent/Guarantor has appeared and appraised th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m moratorium under Section 96, any legal action or proceeding in respect of any debt must be stayed. Hence, in view of the above, the Application filed by the Respondent under Section 94 is not maintainable and deserves to be dismissed. II. MORATORIUM IS INITIATED AS SOON AS AN APPLICATION UNDER SECTION 95 OF I B CODE IS 'FILED' 3. It is reiterated that since an application under Section 95 is already filed and the therefore interim moratorium under Section 96 is into force. At this juncture, it is imperative to note, Section 96 of the I D Code provides that an interim moratorium shall commence on the date of the application in relation to all the debts and shall cease to have effect on the date of admission of such application. It is further submitted that since the application was filed on 01.10.2021 the interim moratorium is initiated. 4. It is imperative to note the relevant Rules of the National Company Law Tribunal Rules, 2016, which are reproduced herein below: Rule 2(14): filed means filed in the office of the Registry of the Tribunal; Rule 23: Presentation of petition or appeal.-(1) Every petition, application, caveat, interlocutory applic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... menced without prejudice to the fact that defects have been removed or not. Therefore, the Application filed by the Respondent under Section 94 is admittedly filed after filing of Section 95 by the Applicant Bank and thus the application under Section 94 is not maintainable and is filed with mala fide intention only to derail the process initiated by the Applicant. III. LIMITATION IS CALCULATED FROM THE DATE OF 'FILING' AND NOT FROM THE DATE WHEN THE APPLICATION IS MARKED 'DEFECT FREE' OR 'LISTED' 8. That without prejudice to the above, it is hereby submitted that even the limitation period for any application/appeal/petition is calculated from the period of filing an Application or Petition before the appropriate forum. Therefore, in the instant case as well, the moratorium shall be instituted in terms of Section 96 of the Code in the present matter as soon as the Application is filed before Registry of this Tribunal within the meaning of Rule 2(14) of the NCLT Rules 2016. 9. Inference can also be drawn from the judgment of Hon'ble Supreme Court in the matter of U.K. Educational Services (P) Ltd. Vs. Parag Gupta Associates held that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... all the stakeholders since there are several other Rules that are necessary for adjudication of any proceeding, including but not limited to Part IV (General Procedure), Part X (Record of Proceedings), Part XIX (Disposal of Cases and Pronouncement of Orders). Rule 11 (Inherent Power of the NCLT), Rule 16(d) (Transfer of proceedings). 12. It is imperative to mention the judgment dated 29.11.2019 relied upon by the Personal Guarantor, passed by the Hon'ble High Court of Bombay in the matter of Kamal K. Singh vs. Union of India [Writ Petition (L) No. 3250 of 2019], wherein the Respondent had taken a similar plea as the Respondent herein mentioning Rule 10 of the Insolvency and Bankruptcy (Application to Adjudicating Authority for Insolvency Resolution Process for Personal Guarantors to Corporate Debtors) Rules, 2019, therefore other Rules will not be applicable in the instant case. However, the Hon'ble Bombay High Court found no merit in the argument of the Respondent therein. The relevant portion of Kamal K. Singh (Supra), is reproduced herein below: 65. A perusal of Rule 10 would show that the same pertains to the rules and procedure for conduct of proceedings under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that Rules 20 to 24 and 26 of the NCLT Rules, 2016 will have to be read solely is incorrect and contrary to the settled provision of law. It is submitted that as per the laws of statutory interpretation, the statute is interpreted as per 'internal aids'. The contention of the Respondent is against the judgment of Hon'ble Supreme Court in the matter of India City Properties Anr. vs. Municipal Commissioner of Greater Bombay Anr. (2005) 6 SCC 417, wherein the Hon'ble Court has held as under: 10. The body of the section however qualifies the definition with the words unless there be something repugnant in the subject or context . The phrase in Section 3 means precisely what it says, namely, that the definition will apply unless excluded expressly or by necessary implication. The onus is on the person alleging such exclusion. It is not the respondent's case that the items found to be permanent existing structures by the Commission of the High Court, would not fall within the general definition of building. The submission is that the word should be read in a more restrictive manner in the context of Section 299. The question then is -- has the onus been disc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ulations flamed for Adjudicating Authority, which in the present case is the Insolvency and Bankruptcy (Application to Adjudicating Authority for Insolvency Resolution Process for Personal Guarantors to Corporate Debtors) Rules, 2019 (the Rules ). Rule 2(a) defines the NCLT to be the Adjudicating Authority in the present case. Rule 10 is the relevant Rule that deals with the filing of the Application under Section 94 or 95 of the IB Code. As per Rule 10, for the purposes of application under Section 94 or 95, only Rule 20, 21, 22, 23, 24 and 26 of the NCLT Rules 2016 is made applicable. The relevant Rule 10 is as under: Rule 10 Filing of application and documents.-- (1) Till such time, rules of procedure for conduct of proceedings under the Code are notified, the applications under rules 6 and 7 shall be filed and dealt with by the Adjudicating Authority in accordance with-- (a) rules 20, 21, 22, 23, 24 and 26 of Part III of the National Company Law Tribunal Rules, 2016 made under section 469 of the Companies Act. 2013 (18 of 2013); or (b) rule 3 of the Debt Recovery Tribunal (Procedure) Rules, 1993 made under section 36 of the Recovery of Debts and Bankruptcy Act, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se a party sues or being sued in a representative character, shall also be set out at the beginning of the appeal or petition or application and need not be repeated in the subsequent proceedings in the same appeal or petition or application. (6) The names of parties shall be numbered consecutively and a separate line should be allotted to the name and description of each party. (7) These numbers shall not be changed and in the event of the death of a party during the pendency of the appeal or petition or matter, his legal heirs or representative, as the case may be, if more than one shall be shown by sub-numbers. (8) Where fresh parties are brought in, they may be numbered consecutively in the particular category, in which they are brought in. (9) Every proceeding shall state immediately after the cause title the provision of law under which it is preferred.... .....Rule 21. Particulars to be set out in the address for service.-The address for service of summons shall be filed with every appeal or petition or application or caveat on behalf of a party and shall as far as possible contain the following items namely:- (a) the name of the road, street, lane ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the authorised representative. (2) Every petition or appeal shall be signed and verified by the party concerned in the manner provided by these rules A bare perusal of the aforesaid rule would show that there are specific conditions that need to be fulfilled for filing of an application to called a filing in accordance with Rule 10 of the Rules. These are including but not limited to the following: a. Proper pagination; and b. Proper margin, proper spacing as prescribed; and c. English, legible and fair; and d. Numbering to be consecutive; and e. Provision of law as prescribed; and f. Description of parties as prescribed; and g. Address of service as prescribed; and h. Initialing alteration as prescribed; and i. In triplicate as prescribed; and j. Certified true copies as prescribed; and k. Endorsement and verification as prescribed; and l. Other conditions as prescribed under Rule 20-24 and 26 of NCLT Rules and made applicable by way of Rule 10 of the Rules. Therefore, a Petition to be considered as filed has to comply with the Rule 20-24 and 26 of NCLT Rules and made applicable by way of Rule 10 of the Rules for an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s to be set out in the address for service and presentation of petition or appeal, etc. Once the application has been fled and treated so by numbering the application by the Adjudicating Authority, the next stage contemplated for the Adjudicating Authority is to only appoint the Resolution Professional under the provisions of Section 97 and the Resolution Professional is to then examine the application as per requirements laid down in Section 99 where the Resolution Professional has to also give opportunity to the Debtor/Personal Guarantor and submit the report.... That Therefore, as per the NCLAT judgment it is clear that after dealing with the relevant provisions of the Rules and the Code, the Hon'ble NCLAT has held that the filing of the Petition is to be treated as filed by numbering of Petition. The said judgment is binding as a precedent in the present case as the question does not remain res integra. That as per the NCLAT judgment in Rajeev R. Jain, Director (Suspended) versus Aasan Corporate Solution Private Limited, the principle of stare decisis is applicable to the NCLTs acting as Adjudicating Authorities and the judgments of NCLATs are binding upon the NCL ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s taken to be the filing in terms of Section 96, then it would be misused by the Personal Guarantors themselves as the said Applicants shall file a bunch of papers with the Registry and keep the same in defects for years while using the benefits of interim moratorium in all their proceedings of recovery and Section 138 NI Acts, throughout then lives, without an resolution or effective hearing as contemplated with no checks on them. Therefore, such interpretation would render the entire PART III of the IB Code otiose and is against the object of the Code. Therefore it is the date of numbering of Petition that is the date of filing in terms of Section 94, 95 and 96 of the IBC. B. DATE OF FILING IN THE PRESENT CASE UNDER SECTION 94 AS AGAINST SECTION 95: The date of numbering of Petition under Section 94 and Petition details: Date of numbering Date of 1 st listing 22.12.2021 24.12.2021 The date of numbering of Petition under Section 95 and Petition details: Date of numbering Date of 1 st listing 18.02.2022 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eparate fact or allegation or point. (4) Where Saka or other dates are used, corresponding dates of Gregorian Calendar shall also be given (5) Full name, parentage, age, description of each party and address and in case a party sues or being sued in a representative character, shall also be set out at the beginning of the appeal or petition or application and need not be repeated in the subsequent proceedings in the same appeal or petition or application. (6) The names of parties shall be numbered consecutively and a separate line should be allotted to the name and description of each party. (7) These numbers shall not be changed and in the event of the death of a party during the pendency of the appeal or petition or matter, his legal heirs or representative, as the case may be, if more than one shall be shown by sub-numbers. (8) Where fresh parties are brought in, they may be numbered consecutively in the particular category, in which they are brought in. (9) Every proceeding shall state immediately after the cause title the provision of law under which it is preferred. 21. Particulars to be set out in the address for service.- The address for service ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y. 26. Endorsement and Verification.-( 1) At the foot of every petition or appeal or pleading there shall appear the name and signature of the authorised representative. (2) Every petition or appeal shall be signed and verified by the party concerned in the manner provided by these rules.... Rule 2(14) filed means filed in the office of the Registry of the Tribunal; 9. On the conjoint reading of the provisions referred to Supra show that Rule 10 of IBBI (application to Adjudicating Authority for Insolvency Resolution Process or Personal Guarantor to Corporate Debtor) Rules 2019, prescribed the procedure for filing of the application and documents under Chapter-III and Part-III of the application and as per the Rule 10 of the Adjudicating Authority Rules, the provisions of the NCLT Rules are applicable. The provisions referred to Rule 10 are relate to the presentation of the petition or appeal. Since the respondent claims that the Respondent has filed an application under Section 94 of the IBC, 2016 before the application filed by the Applicant, therefore, we would like to refer to the relevant provisions of Sections 94 95 of the IBC, 2016 the same are reproduce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the debtor to the creditor or creditors submitting the application for insolvency resolution process as on the date of application; (b) the failure by the debtor to pay the debt within a period of fourteen days of the service of the notice of demand; and (c) relevant evidence of such default or non-repayment of debt. (5) The creditor shall also provide a copy of the application made under sub-section (1) to the debtor. (6) The application referred to in sub-section (1) shall be in such form and manner and accompanied by such fee as may be prescribed. (7) The details and documents required to be submitted under sub-section (4) shall be such as may be specified... 10. On conjoint reading of the provisions shows that neither in Section 94 nor in Section 95, the word filing is referred. Rather in both the Sections 94 95, the word submitting an application is mentioned. Now we read the Sections 94 95, in terms of the submissions made by the Respondent and we observe that the debtor or the creditor under Section 94 95 respectively may apply either personally or through Resolution Professional for initiating the Insolvency Resolution Process by submitting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he case in hand, as we have already observed that the application filed by the Applicant was prior to the date of filing of the application by the respondent. Hence the interim moratorium in terms of Section 96 of the IBC, 2016 shall commence on the date of the filing of application in terms of Rule 2(14) of the NCLT Rules and not on the date when the application was numbered or listed for hearing. Therefore, we are unable to accept the contention of the Respondent that his application u/s. 94 IBC is filed prior to the filing of the application by the applicant u/s. 95 of the IBC. 16. Hon'ble NCLAT in Company Appeal (AT) Insol. No. 316/2021 in para 25 held that as is clear from Section reproduced above, relevant is that when application is filed under Section 95, the interim moratorium will automatically. Thus, the effect of interim moratorium immediately starts when the application is filed. No adjudication is involved here. 17. In sequel to the above, we are of the considered view that since the moratorium shall commence on the date of filing of the application u/s. 95 of the IBC by the applicant SBI, therefore, any subsequent application filed by the debtor/respondent ..... X X X X Extracts X X X X X X X X Extracts X X X X
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