TMI Blog2024 (1) TMI 459X X X X Extracts X X X X X X X X Extracts X X X X ..... without any charge or encumbrance which may be received by the Appellant for the purpose of settling the account and also agreed that in case it is found to be otherwise then it would be termed as an event of default and in the event of default the consequence would be the revival of all the financial contracts automatically. There is also no dispute to the fact that the SBI, lead consortium bank, vide letter dated 08.06.2017 informed that the Corporate Debtor had also created a charge/encumbrance on the receivables for the purpose of recovery of their dues. This fact triggered the clause of event of default and as a consequence, the financial contracts were automatically revived. The Adjudicating Authority rejected the application by its impugned order, inter alia, on the ground that rejection of the assignment agreement vide letter dated 15.06.2019 was not valid. Whereas it is also a fact that there is a categoric provision in the agreement itself that in the event of default, the existing financial agreements and all the obligation of the Corporate Debtor under the existing financial agreements shall automatically revive and become effective and the Appellant shall be entitle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore loan agreements executed between the parties i.e. Contract Nos. 92744 and 94261 on 22.09.2015 for sum of Rs. 20,00,00,000/- and 64,30,00,000/-. The loan disbursed to the Corporate Debtor showing the contract no., loan amount and date of contract is as under:- Contract No. Debt Granted (in Rs.) Date of Contract 50430 1,385,101,300 03.09.2013 92744 20,00,00,000 22.09.2015 94261 64,30,00,000 22.09.2015 Total 2,22,81,01,300 3. The Corporate Debtor executed two deeds of hypothecation for the agreements bearing Contract No. 92744 and 94261, two deeds of personal guarantee for the agreements bearing Contract No. 50430 and 92744 in favour of the Appellant. The Corporate Debtor also created relevant charge for the agreements bearing Contract No. 94261 and 92744 in favour of the Appellant and also submitted the relevant charge certificate to the Registrar of Companies, C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assignment dated 23.09.2027 and called upon the Corporate Debtor to make the payment of the outstanding dues as on 15.06.2019. The demand notice was sent on 15.07.2019 for repayment of entire outstanding dues which was ultimately tried to be brushed aside by issuing letters dated 11.07.2019, 06.08.2019 and 05.09.2019 which were duly replied by the Appellant on 20.08.2019. 5. It is pertinent to mention that vide order dated 08.10.2021, the Adjudicating Authority, Kolkata Bench, admitted the application filed under Section 227 of the Code by the Reserve bank of India bearing C.P. (IB) No. 294/KB/2021 against the Appellant and Rajneesh Sharma was appointed as the Administrator. It is also pertinent to mention that CIRP was also initiated of the Corporate Debtor vide order dated 30.11.2021 and Uday Narayan Mitra was appointed as Interim Resolution Professional (in short IRP ) who made a public announcement on 04.12.2021, calling upon the stakeholders, to submit their claims with proof. Pursuant thereto, the Appellant issued an email submitting its claim in Form C to the IRP. However, after some communication, the IRP through its email dated 28.01.2022 informed the Appellant that i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rate Debtor executed two deeds of Hypothecation dated 22.09.2015 executed in response to loan document No. 92744 and No. 94261, hypothecating the plants and machineries and other machineries, movables of corporate debtor. 4. In the normal circumstances, the amount involved in the first contract dated 03.09.2013 could have been recovered within a period of three years up to 03.09.2016 and the amount involved in the contract dated 22.09.2015 with the period of 22.09.2018, however, according to the Appellant, in so far as, the contract dated 03.09.2013 is concerned, before the period of three years could have expired for the purpose of recovery of said amount, the said amount was acknowledged in the 16th annual report of the year 2015-2016 as a loan from the NBFCs (Secured) as Rs.1,960,750,906. It is, thus, submitted that since aforesaid acknowledgment was on 31.03.2016 and it was prior to the expiry of period of limitation on 03.09.2016, therefore, the period of limitation further extended till 31.03.2019. It is further submitted that in so far as, the contract dated 22.09.2015 is concerned, the limitation was to expire on 22.09.2018 but in between on 29.03.2017 the Corporate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have to come physically to file such proceedings in respective Courts/Tribunals across the country including this Court, it is hereby ordered that a period of limitation in all such proceedings, irrespective of the limitation prescribed under the general law or Special Laws whether condonable or not shall stand extended w.e.f. 15th March 2020 till further order/s to be passed by this Court in present proceedings. We are exercising this power under Article 142 read with Article 141 of the Constitution of India and declare that this order is a binding order within the meaning of Article 141 on all courts/tribunals and authorities. This order may be brought to the notice of all High Courts for being communicated to all subordinate Courts/Tribunals within their respective jurisdiction. 6. The Hon ble Supreme Court in M.A No. 21 of 2022 in M.A No. 665 of 2021 in SMW(C) No. 3 of 2020 has passed another orders on 01.10.2022, which is reproduced as under:- 1. In March, 2020, this Court took Suo Motu cognizance of the difficulties that might be faced by the litigants in filing petitions/applications/ suits/ appeals/ all other quasi proceedings within the period of li ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2 shall stand excluded for the purposes of limitation as may be prescribed under any general or special laws in respect of all judicial or quasi judicial proceedings. II. Consequently, the balance period of limitation remaining as on 03.10.2021, if any, shall become available with effect from 01.03.2022. III. In cases where the limitation would have expired during the period between 15.03.2020 till 28.02.2022, notwit hstanding the actual balance period of limitation remaining, all persons shall have a limitation period of 90 days from 01.03.2022. In the event the actual balance period of limitation remaining, with effect from 01.03.2022 is greater than 90 days, that longer period shall apply. IV. It is further clarified that the period from 15.03.2020 till 28.02.2022 shall also stand excluded in computing the periods prescribed under Sections 23 (4) and 29A of the Arbitration and Conciliation Act, 1996, Section 12A of the Commercial Courts Act, 2015 and provisos (b) and (c) of Section 138 of the Negotiable Instruments Act, 1881 and any other laws, which prescribe period(s) of limitation for instituting proceedings, outer limits (within which the court or tribunal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Your Faithfully Deputy General Manager 9. It is further argued that after the aforesaid letter and the enquires made by the Appellant it terminated the assignment agreement vide its letter dated 15.06.2019: Ref/ARSS-110524/19-20 Date: 15-06-2019 To, ARSS INFRASTRUCTURE PROJECTS LIMITED PLOT NO 38, SECTOR-A, ZONE-D, MANCHESWAR INDUSTRIAL ESTATE BHUBANESWAR ODISHA PIN- 751010 Sub: Termination of Assignment Agreement dated 29th March, 2017 Dear Sir, Please refer to the duly registered Assignment Agreement dated 29th March, 2017 entered between SREI Equipment Finance Ltd. (SREI) and ARSS Infrastructure Projects Ltd. (ARSS) regarding the assignment of receivables of 13 nos. of claim of ARSS Infrastructure Projects Ltd as detailed under the Schedule - I hereunder. Though ARSS has specifically represented and undertaken under clause 5.2 of the said Assignment Agreement that the said receivables are free from all encumbrances and they have not created any rights on the said receivables in favour of any third party, but on the contrary it is evident from the letter received from SBI, claiming the assignment of receiva ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arties had become insignificant after the execution of assignment of agreement on 29.03.2017 and as a matter of fact the loan was discharged. It is further submitted that the assignment agreement is a novation of contract and had created a fresh relationship between the parties discharging the old loan of the Appellant given to the Corporate Debtor. It is also submitted that result of the said assignment is evident from the 17th Annual Report of the year 2016-17 in which the non-current portion of the long-term borrowings pertaining to the NBFCs (Secured) has been shown as nil. However, he has been candid enough to admit that the Corporate Debtor had created a charge over the receivables both in favour of the Banks for the purpose of obtaining loan from them and also in favour of the present appellant in order to discharge the liability of the loan taken by them. Counsel for Respondent has also argued that termination ipso-facto could not have taken place until and unless the Appellant had approached the proper forum for which the Corporate Debtor has invoked the arbitration. 12. We have heard Counsel for the parties and perused the record with their able assistance. 13 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Appellant to the meeting. It is urged that the Respondent did not give any favourable reply. The Appellant filed an application bearing I.A. No. 3615 of 2022 seeking clarification of the final order dated 30.08.2022 and similarly, on 10.10.2022, the Respondent also filed I.A. No. 3869 of 2022 for the same purpose. Both the applications were disposed of on 18.10.2022 with the following order:- This order shall dispose of two applications i.e. I.A. No. 3615 of 2022 filed by the Appellant and I.A. No. 3869 of 2022 filed by the RP. In brief, M/s ARSS Infrastructure Projects Ltd. (Corporate Debtor) was admitted to Corporate Insolvency Resolution Process (in short CIRP ) by the Adjudicating Authority on 30.11.2021 and Uday Narayan Mitra, was appointed as an Interim Resolution Professional (in short IRP ) and ultimately appointed as Resolution Professional ( RP ). The Appellant filed their claim in form-c of a sum of Rs. 919,78,94,038 as Financial Creditor of the Corporate Debtor but the said claim was rejected by the RP on 28.01.2022. The Appellant challenged the decision of the RP by way of an application filed under Section 60(5) of the Code before the AA which was rej ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l and the order ultimately passed by this Tribunal on 30.08.2022, the decision of the RP as well as the Adjudicating Authority was not found correct to the extent they had rejected the claim of the Appellant as a stale claim on the ground of being barred by limitation and ultimately the decision taken by the RP as well as Adjudicating Authority was set aside. As a consequence thereof, RP is obliged to accept the claim submitted by the Appellant but at the same time shall have a right to verify the claim on merits. However, the RP shall take a decision in regard to claim submitted by the Appellant on it merits on or before 31st October, 2022 without being influenced by his earlier view. However, till then the proceedings before the CoC regarding the consideration of Resolution Plan, if any, shall remain suspended. 7. Thereafter, the Respondent vide email dated 26.10.2022 raised various queries and sought clarification from the Appellant and the Appellant through its email dated 31.10.2022 sent clarification with respect to the queries raised in the email dated 26.10.2022 but on 01.11.2022, the Respondent rejected the claim of the Appellant. The Appellant filed Contempt P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Srei which shall be utilized towards settlement of the Finance Dues, 240.30 Crores (Rupees Two Hundred Forty Crore and Thirty Lakhs Only), being the amounts owed by ARSS to Srei. It is agreed by the parties that the receivables shall be utilized towards settlement of the dues of ARSS outstanding as set out herein before. x x x Receivables shall mean the amounts receivable by ARSS pursuant to the various contracts entered into by it with its customers, the details whereof are provided in Schedule II. Schedule II also provides details of the amount-realizable from each of the customer under such contracts. However, receivables shall also include any accretions thereto and any amounts paid by way of interest, damages, etc. and all sums awarded/paid/payable to ARSS whether pursuant to the contracts or Litigation or proceedings arising out of or negotiations or settlements arrived at in connection with the contracts set out in Schedule - II or otherwise, x x x 3. Settlement ARSS has represented to Srei that the Receivables are valid, legally enforceable, genuine and free from air Encumbrances/charge of any Third Party. The Receivables arise out of legally valid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x x 7.2 Consequences of Default 7.2.1 If one or more of the Events of Default specified in Clause 7.1 occur or are continuing, whether voluntarily or involuntarily,' then, without derogation from the rights mentioned in this Agreement and without prejudice to any, other right or action that Srei may be entitled to under law or this Agreement against ARSS even after allowance of 15 (fifteen) days remedial period towards- resolution of such event of default, Srei shall have the following rights: i) Srei may, at its sole discretion take such other legal remedial action as Srei may deem fit. including specifically enforcing any right under applicable Law and in equity. ii) the Existing Finance Agreements and all the obligations of ARSS under the Existing Finance Agreements shall automatically revive and become effective and Srei shall be entitled to exercise all the rights available to it against ARSS under the Existing Finance Agreements. 10. It is submitted that as per Clause 5.2.1, the Corporate Debtor represented that it has not created any security over the receivables as mentioned in Schedule II and the Receivables are free and clear of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e in respect of assignment deed which may be a subject matter of the arbitration. It is further submitted that even if there is a clause for arbitration in the agreement (assignment deed) yet no arbitrator was appointed, resorting to Section 11 of the Arbitration and Conciliation Act, 1996 (in short Act 1996 ), therefore, the arbitration proceedings are not pending. Whereas the Adjudicating Authority has rejected the application, firstly, on the issue as to whether the termination of assignment agreement vide letter dated 15.06.2019 was valid and secondly, the rejection of claim by the RP under the email dated 01.11.2022 is valid. It is submitted that the Adjudicating Authority has committed an error in holding that the termination of the agreement letter dated 15.06.2019 is not valid observing thus that the Appellant should have approached Civil Court for the purpose of rescission the contract. It is submitted that the Adjudicating Authority has failed to appreciate the fact that it was provided in the agreement itself that in the event of a failure, the financial contract would automatically revive and therefore, the letter dated 15.06.2019 was only a communication. It is furthe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d be the revival of all the financial contracts automatically. There is also no dispute to the fact that the SBI, lead consortium bank, vide letter dated 08.06.2017 informed that the Corporate Debtor had also created a charge/encumbrance on the receivables for the purpose of recovery of their dues. This fact triggered the clause of event of default and as a consequence, the financial contracts were automatically revived. The Corporate Debtor was pushed into CIRP vide order dated 30.11.2021 and in response to the publication made by the IRP of the Corporate Debtor, the Appellant submitted Form-C on 03.12.2021 claiming the amount in question which was initially rejected by the RP on the ground of limitation but the said decision was reversed by the order dated 30.08.2022 by this Appellate Tribunal and when the clarification was sought, a further order was passed on 18.10.2022 for collating the claims. The Appellant had to file a contempt petition because the previous orders were not followed in its letter and spirit but it ultimately filed the application bearing I.A. No. 11 of 2023 by which prayer was made for admitting the claim of Rs. 919,78,94,038/- which has been rejected. The A ..... X X X X Extracts X X X X X X X X Extracts X X X X
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