TMI Blog2023 (7) TMI 830X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 61 of the IBC. However, under sub-section (2) of Section 61, such appeal is required to be filed within thirty (30) days before NCLAT. As per the proviso, NCLAT has the discretion to allow an appeal to be filed after the expiry of the said period of thirty days if it is satisfied that there was sufficient cause for not filing the appeal but such period shall not exceed fifteen days. Thus, overall there is limitation of 45 days in filing appeal under Section 61. Petitioner did not file any such appeal. Long thereafter he filed an interlocutory application under Section 60(5)(c) of IBC for rejecting the application filed under Section 7 of IBC as being barred by limitation which we have seen above has been dismissed by NCLT vide the impugned order dated 30.03.2021. NCLT shall have jurisdiction to entertain or dispose of any application or proceeding by or against the corporate debtor or corporate person; any claim made by or against the corporate debtor or corporate person, including claims by or against any of its subsidiaries situated in India; and any question of priorities or any question of law or facts arising out of or in relation to the insolvency resolution or liquida ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecise on 29.10.2018, which ultimately led to the order dated 20.09.2019. Therefore, it cannot be said that the application under Section 7 of IBC is barred by limitation. The present writ petition is thoroughly misconceived and is liable to be dismissed - Petition dismissed. - Writ Petition No. 28161 of 2021 - - - Dated:- 13-4-2023 - THE HON'BLE THE CHIEF JUSTICE UJJAL BHUYAN And THE HON'BLE MRS JUSTICE SUREPALLI NANDA For the Petitioner : L. Ravichander, Learned Senior Counsel for Mayur Mundra For the Respondents : K. Raghavendra Rao and P. Vajra Lakshmi Subba Rao ORDER ( Per the Hon'ble the Chief Justice Ujjal Bhuyan ) Heard Mr. L.Ravichander, learned Senior Counsel appearing for Mr. Mayur Mundra, learned counsel for the petitioner; Mr. K.Raghavendra Rao, learned counsel for respondent No. 2; and Mr. P.Vajra Lakshmi Subba Rao, learned counsel for respondent No. 3. 2. By filing this petition under Article 226 of the Constitution of India petitioner has assailed legality and validity of the order dated 30.03.2021 passed by the National Company Law Tribunal, Hyderabad Bench-I, Hyderabad (for short, 'NCLT' hereinafter). 3. By ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isation application No. 259 of 2011. On orders of the DRT, corporate debtor deposited a sum of Rs. 1.27 crores with respondent No. 2 to enable re-scheduling of the loan. On 19.03.2012, proposal for re-scheduling the loan was considered and letter to that effect was issued. However, according to the petitioner, letter of re-scheduling of the loan was nothing but an eye wash as respondent No. 2 had increased the rate of interest besides refusing to provide the facility of working capital. 10. In addition to the remedy under the SARFAESI Act, respondent No. 2 also invoked the provisions of Recovery of Debts due to Banks and Financial Institutions Act, 1993 by filing O.A. No. 1316 of 2016 before DRT for issuance of recovery certificate. 11. Thus, respondent No. 2 had already invoked remedies under both the SARFAESI Act as well as under the Recovery of Debts due to Banks and Financial Institutions Act, 1993. 12. Upon promulgation of IBC in the year 2016 and on establishment of NCLT, respondent No. 2 filed an application under Section 7 of IBC before NCLT in the year 2018 seeking initiation of Corporate Insolvency Resolution Process (CIRP) of the corporate debtor. The same was r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at on request of the corporate debtor, respondent No. 2 had sanctioned credit facilities vide sanction letter dated 04.04.2007 whereafter financial assistance were provided. Because of persistent default in repayment of the loan amount, respondent No. 2 had declared the loan accounts of the corporate debtor as NPA on 31.05.2011 by following the guidelines of Reserve Bank of India. 20.1. Respondent No. 2 was compelled to adopt measures under the SARFAESI Act for recovery of the outstanding dues, whereafter, possession of the secured assets were taken over. S.A. No. 259 of 2011 was dismissed by DRT on merit. Respondent No. 2 issued letter dated 19.03.2012 to the corporate debtor conveying its agreement to the proposal for restructuring of the loan account. Even after restructuring of the loan account, corporate debtor failed to abide by the terms and conditions of the contract and again committed default. NCLT had appointed Interim Resolution Professional of the corporate debtor who after following the due process, sought for liquidation of the corporate debtor. Thereafter, corporate debtor was sold in auction to the successful bidder M/s. Mahashiv Shakti Trading Company. Successf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o it. Neither have these facts been pleaded in the writ petition nor M/s. Mahashiv Shakti Trading Company made a party to the writ proceeding. Therefore, the writ petition should be dismissed. 21.1. It is stated that corporate debtor had availed various credit facilities from respondent No. 2 in connection with setting up of 10 MW bio-mass plant at Jalgaon in the State of Maharashtra. However, because of default in loan repayment, the loan accounts of the corporate debtor were classified as NPA by respondent No. 2, whereafter respondent No. 2 had invoked provisions of the SARFAESI Act, besides availing its remedy under the Recovery of Debts due to Banks and Financial Institutions Act, 1993 by filing O.A. No. 1316 of 2016 before DRT. Notice was issued by DRT on 14.06.2018 but still there was no repayment of the loan amount by the corporate debtor. Respondent No. 2 thereafter filed a company petition under Section 7 of the IBC being C.P. (IB) No. 681/7/HDB/2018 on 29.10.2018 to initiate Corporate Insolvency Resolution Process against the corporate debtor. Promoter and suspended Director of corporate debtor including the petitioner had filed reply. After due consideration, NCLT adm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Limitation Act, 1963 to applications for initiation of insolvency proceedings under the IBC. Respondent No. 3, therefore, seeks dismissal of the writ petition. 22. Mr. L.Ravichander, learned Senior Counsel for the petitioner at the outset submits that application filed under Section 7 of IBC by respondent No. 2 before the NCLT is clearly barred by limitation. He submits that it is now settled that provisions of the Limitation Act, 1963 are applicable to proceedings before NCLT including proceedings under the IBC. According to respondent No. 2 itself, the loan accounts of corporate debtor were classified as NPA on 31.05.2011. However, application under Section 7 of IBC was filed before NCLT in the year 2019 and NCLT had initiated Corporate Insolvency Resolution Process on 20.09.2019. Filing of the application under Section 7 of IBC and passing of the aforesaid order on such application are much beyond the limitation period of three years. He submits that limitation goes to the root of the matter. If a suit, appeal or application is barred by limitation, a court or an adjudicating authority would have no jurisdiction to entertain such suit, appeal or application; proceed wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itation. 23.1. In the writ affidavit, there is a clear suppression of the fact that the corporate debtor has been taken over by M/s. Mahashiv Shakti Trading Company through bidding process in auction conducted under orders of NCLT. There is not only suppression of material facts but also necessary party i.e., M/s. Mahashiv Shakti Trading Company has not been arrayed as a respondent. In the circumstances, it is submitted that NCLT was fully justified in rejecting the interlocutory application filed by the petitioner. 23.2. It is further submitted that after allowing the limitation period to expire, petitioner had filed the interlocutory application before NCLT and got it dismissed; thereafter the writ petition. This is not permissible. In support of such contention, reliance has been placed on the decision of the Supreme Court in Glaxo Smith Kline Consumer Health Care Limited (supra). 23.3. Insofar limitation is concerned, it is stated that liability in relation to the debt was acknowledged by the corporate debtor in their e-mail communications dated 22.12.2015 and 23.12.2015. In the said communications, corporate debtor had submitted one more proposal for settlement of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the applicant to rectify the defect within seven days of receipt of notice from the Adjudicating Authority. 3. The corporate debtor admitted that loans were disbursed and also admitted the default. The contention of the corporate debtor is that financial creditor failed to infuse required funds and failed to give financial support as and when required. The financial creditor filed voluminous documents along with the application to prove its claim. The corporate debtor admitted the default but contended that default occurred due to several reasons and also due to breach of terms of sanction letters by the financial creditor. At the request of the corporate debtor, the financial creditor sanctioned OTS. The corporate debtor failed to comply with the terms of OTS Scheme sanctioned by the financial creditor. The accounts of the corporate debtor were declared as NPA by the financial creditor. The financial creditor has been able to prove to debt and default. The present petition is well within the limitation. The petition is in order. The petition is complete and therefore deserves to be admitted. 4. The financial creditor has suggested the name of IRP who has given consent in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... agar Extension, Hyderabad-500 020. Accordingly, this petition is admitted. 25.2. While declaring moratorium with effect from 20.09.2019 during Corporate Insolvency Resolution Process or until approval of the resolution plan, NCLT appointed Mr. B.Naga Bhushan as the Interim Resolution Professional. 26. It appears that thereafter Mr. B.Naga Bhushan, who in the meanwhile was appointed as the Resolution Professional, filed an application under Section 33(2) of IBC before the NCLT seeking orders for liquidation of the corporate debtor. In the proceedings held on 22.02.2021, NCLT recorded as follows: 2. This Tribunal vide order dated 20.09.2019 admitted the petition bearing CP (IB) No. 681/7/HDB/2018 under Section 7 of the Code initiating Corporate Insolvency Resolution Process (CIRP) of the company and appointed the applicant herein as Interim Resolution Professional (IRP). The IRP constituted the Committee of Creditors (CoC) with Punjab National Bank as its sole member and its 1st meeting was conducted on 23.10.2019. The CoC in its 1st meeting appointed the IRP as the Resolution Professional (RP) of the Corporate Debtor Company. The CoC in its 2nd meeting on 07.12.2019. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 20 and accordingly CIRP period to end on 19.08.2020 and hence requested this Tribunal to condone the delay in filing the instant application. 26.1. Thereafter, NCLT passed the following order on 22.02.2021: 5. We have heard the applicant in the matter. This application is filed seeking initiation of Liquidation proceedings of corporate debtor. The Hon'ble Apex Court in K.Sashidhar v. Indian Overseas Bank [ (2019) 148 LA 497 (SC)] inter alia held that: The Adjudicating Authority (NCLT) is not expected to do anything more; but is obliged to initiate liquidation process under Section 33(1) of I B Code. The legislature has not endowed the adjudicating authority (NCLT) with the jurisdiction or authority to analyse or evaluate the commercial decision of the CoC much less to enquire into the justness of the rejection of the resolution plan by the dissenting financial creditors. From the above, it would appear that despite all possible steps as required under the Code taken during the CIRP, the CoC did not approve any viable resolution plan/proposal for revival of the company. The CoC in its wisdom has resolved with 100% voting share in favour of the liquidation of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Regulations, 2016 for sale of the corporate debtor as a whole. In the e-auction, M/s. Mahashiv Shakti Trading Company was the successful bidder for Rs. 7,30,00,00000. Thereafter, Letter of Intent was issued to M/s. Mahashiv Shakti Trading Company on 03.09.2021. On payment of the entire amount, sale certificate was issued on 13.09.2021 by the liquidator of corporate debtor in favour of M/s. Mahashiv Shakti Trading Company. 28. These material facts have not been disclosed or stated in the writ affidavit. Had these facts been brought on record, perhaps this Court would not have passed the interim order dated 21.12.2021, which appears to be now wholly redundant because of the intervening events which took place. 29. Be that as it may, petitioner had filed an interlocutory application under Section 60(5) of IBC for dismissal of C.P. (IB) No. 681/7/HDB/2018 filed under Section 7 of IBC as being barred by limitation. The interlocutory application was registered as I.A. No. 114 of 2021. By order dated 30.03.2021 NCLT dismissed the said interlocutory application in the following manner: 3. We have heard the counsel for applicant. We have gone through the records submitted before u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the clock and the petitioner ought to have taken up this matter when the matter was admitted, before the Hon'ble National Company Law Appellate Tribunal (NCLAT), which is the Appellate Authority in the present situation. As such, we find no reason to entertain this IA and accordingly, IA is dismissed. 7. In the result, IA No. 114 of 2021 in CP (B) No. 681/7/HDB/2018 is dismissed. 30. There are a couple of aspects which we need to highlight in this matter. We have already noticed suppression of material facts by the petitioner and the resultant non-joinder of necessary party. On this ground itself, the writ petition is liable to be dismissed. 31. However, we find that NCLT had passed the initial order dated 20.09.2019 after hearing both the financial creditor as well as the corporate debtor. Petitioner had filed reply to the application filed under Section 7 of IBC but did not raise any issue of limitation. What was urged before the NCLT was that it was because of the methodology adopted by the financial creditor that the corporate debtor ran into liquidity crunch which resulted in default in payment of outstanding dues. Be that as it may, if the petitioner was aggri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... priorities or any question of law or facts arising out of or in relation to the insolvency resolution or liquidation proceedings of the corporate debtor or corporate person under IBC. It is under this provision that the related interlocutory application was filed by the petitioner. According to us, it has been rightly dismissed by the NCLT. 33. In Glaxo Smith Kline Consumer Health Care Limited (supra), Supreme Court has held that ordinarily High Court should not entertain a petition under Article 226of the Constitution of India after exhaustion of the limitation period provided by the statute for availing the remedy thereunder. 34. Insofar extension of limitation in proceedings under IBC is concerned, we may refer to the decision of the Supreme Court in Chandra Prakash Jain (supra). In that case, the corporate debtor had not raised any objection to the application filed under Section 7 of IBC contending that it was barred by limitation. However, the objection was raised in appeal before the NCLAT. It was contended that the date of declaration of loan account as NPA would be the starting point of limitation. Subsequent negotiations or offers would not extend limitation. Adver ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 28. There is no dispute that the date of default in this case is 30-9-2014, as mentioned by the financial creditor in its application under Section 7. A copy of the debit balance confirmation letter dated 7-4-2016 was filed along with the application. As the application was filed only on 25-4-2019, which is beyond a period of three years even after taking into account the debit balance confirmation letter dated 7-4-2016, 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 30-9-2018 and acknowledged the amount outstanding as on 30-9-2018. On the basis of this letter and the record showing that the corporate debtor had executed various documents amounting to acknowledgment of the debt even in the Financial Year 2019-20, NCLT was of the opinion [Union Bank of India v. R.K. Infratel Ltd., 2020 SCC OnLine NCLT 6064 ] that the application was filed within the period of limitation. The said view was upheld [Rajendra Narottamdas Sheth v. Chandra Prakash Jain, 2020 SCC OnLine NCLAT 827 ] by NCLAT. 29. We have already held that ..... X X X X Extracts X X X X X X X X Extracts X X X X
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