TMI Blog2024 (2) TMI 1315X X X X Extracts X X X X X X X X Extracts X X X X ..... of Mortgage created therein . On a careful consideration of respective contentions, this Tribunal , taking note of the facts and circumstances of the instant case in an encircling manner, and ongoing through the impugned order passed by the Adjudicating Authority/NCLT Kochi Bench, comes to a resultant conclusion that the conclusion arrived at by the Adjudicating Authority/Tribunal in admitting main petition holding that the debt has not been paid by the Corporate Guarantor is free from any legal flaws. Application dismissed. - ( Justice M. Venugopal ) Member ( Judicial ) And ( Naresh Salecha ) Member ( Technical ) For the Appellant : Mr. G. Rajagopalan , Sr. Advocate For Ms. Narmadha Sampath Mr. T. Jayasankar , Advocate For the Respondent : Mr. PH. Arvindh Pandian , Sr. Advocate For Mr. Varun Srinivasan , Advocate JUDGEMENT JUSTICE M. VENUGOPAL , MEMBER ( JUDICIAL ) Overview The Appellant /Promoter of Air Travel Enterprises India Ltd. / Corporate Debtor has preferred the instant Comp. App. (AT) (Ins.) No. 08 of 2024 before this Tribunal as an Aggrieved person, in respect of the impugned order dated 22.12.2023 passed by the Adjudicat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ditor may be admitted under Section 7 of the IBC, 2016 and CIRP initiated against the Corporate Guarantor. and finally admitted the main Company Petition for initiating CIRP against the Corporate Guarantor M/s. Air Travel Enterprises India Ltd., declared moratorium and appointed Mr. Raj Mohan R. as an Interim Resolution Professional. Appellant s Contention 3. Challenging the impugned order dated 22.12.2023 in CP (IBC)/33/KOB/2023 passed by the Adjudicating Authority/NCLT Kochi Bench, the Learned Counsel for the Appellant contends that the Adjudicating Authority/Tribunal had erroneously admitted the main company petition. 4. It is represented on behalf of the Appellant that the Respondent/Union Bank of India, Thiruvananthapuram had granted a term loan , of Rs. 24.86 crore to GGL for the purpose of setting up Resorts , by way of sanctioned Letter , dated 12.06.2010 thereafter it was revised on 05.01.014. As a matter of fact, this loan facility, was renewed on 29.09.2012, 24.02.2014, 12.01.2015 and 01.07.2016. The Corporate Debtor , in support of this project had executed a Corporate Guarantee on 02.07.2010, 29.09.2012, 24.02.2014 and on 12.01.2014 and later, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. 17.05 crores. No sooner did GGL pay Rs. 25,00,000/- in respect of the One Time Settlement , then the COVID effect set in and because of the pandemic situation, the investor backed out of the project, which ultimately failed GGL clearing the One Time Settlement . 10. The Learned Counsel for the Appellant brings to the notice of this Tribunal that the Respondent / Bank, simultaneously filed Section 7 petition filed under I B Code, 2016 vide (IBA/01/KOB/2020) before the Adjudicating Authority, NCLT, Kochi and that the Section 7 Petition was admitted on 15.10.2020. Against this order on 15.10.2020, an Appeal was filed before the Appellate Tribunal, explaining the Appellant s intentions to clear the dues by the One Time Settlement . The Appellate Tribunal on 09.09.2021 was pleased to pass orders disposing of the Appeal, by granting liberty to GGL to settle within six months from the date of the order, failing which the Respondent/Bank is at liberty to proceed against GGL . When the Respondent / Bank took up the matter before the Hon ble Supreme Court of India, it was dismissed as withdrawn on 29.11.2021 (vide Civil Appeal No. 6916/2021. 11. It is projected on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Account. 16. The Learned Counsel for the Appellant proceeds to take a plea that as soon as the OTS proposal earlier agreed was rejected on 29.11.2023, the parties on the directions of the Hon ble Bench, argued the case on 06.12.2023 and orders were reserved on the same day. On 22.12.2023, the Tribunal/Kochi Bank had pronounced the orders initiating CIRP against the Corporate Debtor. In fact, no time was left to the Appellant, either to revise the proposal or even to approach the Respondent/Bank, to avoid this rigmarole against the Corporate Debtor . 17. The Learned Counsel for the Appellant brings to the notice of this Tribunal that in between, DRDCL , on 30.03.2022 had terminated the Lease Agreement giving 55 acres of Govt. Land on lease Rs. 55 acres of govt. land, on lease, to the Principal Borrower . Later, when the Appellant had requested the Govt. to reconsider its decision in regard to the termination of the Lease Agreement , the Govt. of Kerala on 15.03.2023 stated that it would not reinstate the Lease that was terminated because of the fact that the project was built on the land leased out, once the land was taken back, the value of the project has become al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e notice u/s 13(2) of the SARFAESI Act was given on 29.12.2017 demanding the Guarantors to pay the due payable by GGL and there being no acknowledgement of debt by the Corporate Debtor, thereafter GGL subsequently submitted OTS proposal will not save limitation against the Corporate Debtor. 23. The Learned Counsel for the Appellant contends that it is an established proposition of law for the computation of the limitation period a specific duty is showered upon the person filing the petition to prove the date of default . It is for any reason the person fails to prove the date of default, the petition is liable to be dismissed. 24. According to the Appellant computation of period is peremptory to decide whether a claim or remedy is barred by limitation. Further default will commence at a specific date and if that date is not crystallised the period of limitation cannot be computed and the Tribunal had failed to make this salient exercise. 25. It is the stand of the Appellant this his contention was that the Account being declared as NPA on 30.09.2015, the defaulting date would be a NPA date. Since the petition was filed on 22.09.2023 the NPA date being shown as 30.09.2015 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Principal Borrower was affirmed by this Appellate Tribunal. 29. The Learned Counsel for the Appellant points out the Committee of Creditors, later, had unanimously resolved to liquidate Principal Borrower/ M/s Green Gateway Leisure Ltd., an application in I.A IBC/462/KOB/2023 in CP(IB) /46/KOB/2022 was filed by the Resolution Professional before Adjudicating Authority/ Tribunal and an order of liquidation against the Principal Borrower was passed on 24.11.2023. In fact, the Corporate Debtor viz. M/s Air Travel Enterprises India Ltd. and the Appellant Mr. E.M. Najeeb Ellias Mohamed had questioned order of liquidation in Comp. App. (AT) (Ins.) 464/2023 and ultimately the Appeal came to be dismissed and the order of liquidation was affirmed. 30. The Learned counsel for the Appellant points out that the Corporate Debtor/ M/s Air Travel Enterprises India Ltd. stood as Corporate Guarantor for the Loans obtained by the Principal Borrower and a guarantee deed/agreement in support of the same was/ were executed. The Respondent had initiated action by preferring a Section 7 Application against the Corporate Debtor, which was admitted on 24.11.2023 resulting in the impugned o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y Petition. 35. Therefore, the Learned Counsel for the Appellant submits that the Hon ble Supreme Court therefore held that the Debt being guaranteed by the Corporate Debtor, Section 7 petition will lie against the Corporate Guarantor , irrespective of the fact, whether or not, the Principal Borrower is a Corporate person and the debt being acknowledged by the Corporate Guarantor within 3 years before filing the Company petition against the Corporate Guarantor and the claim against the Corporate Guarantor is within the period of Limitation on computation of the prescribed period from the date of last Acknowledgment. 36. According to the Learned Counsel for the Appellant, in the present case, a notice was served on the Corporate Debtor/ Guarantor on 29.12.2017, demanding payment from the Guarantor with explicit statement that the limitation against the Guarantor will be reckoned from the date of the notice dated 29.12.2017. 37. The Learned Counsel for the Appellant refers to the decision of the Hon ble Supreme Court in Syndicate Bank V. Chinnaveerappa Beleri Ors., reported in 2006 11 SCC 506 that the limitation in regard to the Guarantee will run from the date of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Loan amicably but the Respondent/ Bank had rejected the offer of the Appellant. Even when the Learned Senior Counsel had offered Rs. 14 crores during the hearing, the Respondent/ Bank Ld. Senior Counsel had rejected the same. Therefore, it is clear that the Respondent/ Bank is proceeding against the Corporate Guarantor with vengeance, although, the claim against the Corporate Guarantor is barred. 43. According to the Appellant, the Principal Borrower had secured the Loan from State Bank of India and Dhanlaxmi Bank which was settled by the Promoter or Corporate Debtor through one time settlement and the same is depicted, in tabular form as under: Financial Creditor Outstanding Liability as on OTS proposal Settled through OTS Status (Amt in crores) State Bank of India 72.63 28.00 Settled given NOC Dhanalakshmi Bank 36.07 11.88 Settled given NOC 44. According to the Appellant the Respondent/ Bank cannot charge an interest arbitrarily ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted a Personal Guarantee in favour of the Respondent/ Financial Creditor, guaranteeing to re-pay the principal with interest, in the event of any default committed by the Principal Borrower. Apart from the Guarantees, there was also an execution of Demand Promissory Note , the hypothecation of movables of principal borrower / Green Gateway Leisure Ltd., in addition to creation of Equitable Mortgage security among others to secure the Loan. 49. According to the Respondent/Bank the principal borrower had failed to repay the loan sums inspite of repeated demands made by the Respondent bank and the account was classified as NPA as per RBI guidelines. Hence, a demand was made against the Corporate Debtor to make payment due to the Respondent/Bank. There was no response and the Respondent/Bank had filed IBA/ 01/KOB/2020 before the Adjudicating Authority NCLT, Kochi Bench and the same that was admitted on 15.10.2020. 50. The Ld. Sr. Counsel for the Bank points out that in Comp. App. (AT) (Ins.) 993 of 2020, the Appellate Tribunal on 09.09.2021 had ultimately opined that the object of the Code 2016 is not a recovery one and disposed of the Appeal with a direction that if the Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Guarantor is co extensive with the Principal Borrower and hence the Appellant cannot stake a claim that the Admission against a Corporate Debtor is an illegal one. 55. The Ld. Counsel for the Bank contends that the Guarantee is a continuing and an irrevocable one and the Corporate Debtor having executed the Guarantee in favour of the Debts due and payable by the Principal Borrower cannot wriggle out of its contractual obligations. As a matter of fact, there were many Acknowledgement of Debts made by the principal borrower with the Respondent/ Bank and some of the one time settlements attached provided by the Principal Borrower will clinch the case of the Respondent/ Bank that the Application filed by the Respondent under Section 7 of the Code, against the Corporate Debtor is well within time. 56. The Ld. Counsel for the Respondent/ Bank submits that the Principal Borrower had executed on 12.11.2019, a proposal for One Time Settlement, the Principal Borrower on 27.11.2019 had executed a revised letter of approval issued by the Bank to GGL, the Principal Borrower on 05.10.2021 had executed the One Time Settlement Proposal on 14.01.2022, the Principal Borrower had issued ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Respondent/ Bank points out that Section 7 petition filed by the Respondent/ Bank is not barred by Res judicata and the same is well within the period of limitation. Also that, even assuming that the date of default if 29.12.2017, as per the stand of the appellant, the date of default, due to the invocation of guarantee being made on the date the principal borrower as clearly acknowledged were admitted which, will bind the Appellant/ Corporate debtor/Guarantor as per decision of the Hon ble Supreme Court in Laxmipat Surana case (where in para 38 it is observed as under). 38. In the present case, the NCLT as well as the NCLAT have adverted to the acknowledgements by the principal borrower as well as the corporate guarantor corporate debtor after declaration of NPA from time to time and lastly on 08.12.2018. The fact that acknowledgement within the limitation period was only by the principal borrower and not the guarantor would not absolve the guarantor of its liability flowing from the letter of guarantee and memorandum mortgage. The liability of the guarantor being coextensive with the principal borrower under Section 128 of the Contract Act , it triggers the moment prin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yable as per decision in Free India Dry Accumulators Ltd. V. Union of India, 2012 AIR Civil Cases Page 3-5 (Delhi). No wonder an Acknowledgment as per Section 18 of the Limitation Act, 1963 only renews a debt and it does not make out a new right or a fresh cause of action. 64. If an Acknowledgement is valid, the Liability can be enforced and the sum required from any realisable Assets whether acquired before or after the acknowledgement, as per decision in Mathew Joseph Ors. V. Dy. Tehsildar (RR) Changanassery Anr. reported in AIR 2006 (NOC 675 Kerala). 65. An Acknowledgement for liability itself is sufficient and it need not necessarily be accompanied by a promise to pay as per decision in Hetal Enterprises V. New India Assurance Company Ltd. 2012 (1CCC 458 Bom). Further, an Acknowledgement under Section 18 of the Limitation Act, 1963 can be with respect to not only the property or Right, but it can be even in regard to the Liability. 66. An Acknowledgement of a liability made by the Principal Borrower should be considered as an Acknowledgement of liability, on behalf of Guarantor. 67. A Revival Letter/ an Acknowledgement, executed by the Principal Borrower on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... classified as a Non-performing Asset as on 30.09.2015. Moreover, as per Section 13(2) the Corporate Debtor and the Guarantors under the SARFAESI Act, 2002 were given the notice to pay the amount with direction to repay the Loan immediately. 74. As a matter of fact, the said notice was received on 03.01.2018 and the Corporate Debtor gave a Reply on 27.02.2018 and despite the Reply, the amount was not repaid or liquidate the liability by the Corporate Debtor and Guarantors because of the Corporate Debtor not making the payment, the Respondent/Bank/Financial Creditor not making the payment, the Respondent/Bank had filed IBA/01/KOB/2020 which was admitted and a Resolution Professional was appointed. 75. The Corporate Debtor had approached this Appellate Tribunal in CA (AT) (Ins) No. 993 of 2020 being allowed by setting aside the order of admission granted by this Tribunal and the Corporate Debtor was directed to settle the entire loan liability, within a period of six months from 09.09.2021. Though in various communications the Corporate Debtor had admitted the liability and sought time to settle the liability there was no constructive effort to clear the outstanding liabilit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efore this Tribunal the Appellant has come out with a plea that so long as the Guarantee is not invoked against the Guarantor, the Liability will remain coextensive and the account will remain live against the Guarantor, along with the Principal Borrower and whatever action the Principal Borrower does for extension of limitation will automatically extends against the Guarantor. 81. According to the Appellant in the instant case, the creditor had invoked the Guarantee on 29.12.2017 by specifically mentioning that the Limitation would be reckoned from the date of receipt of Notice dated 29.12.2017 and the actions and acknowledgments between the Lender and Principal Borrower will not save the Limitation period already commenced against the Guarantor/ Corporate Debtor. 82. The plea of the Appellant is that the action as far as the Corporate Guarantor is concerned, the same is barred by Limitation and that Article 137 of Limitation Act 1963 applies. 83. The Learned Counsel for the Appellant points out the decision of the Hon ble Supreme Court in Syndicate Bank vs. Chinnaveerappa Beleri Ors. (2006) 11 SCC 506 and contends that the Limitation with respect to the gu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orporate Guarantor for the Loans secured by the Principal Borrower and duly executed Guarantee Agreements and the Respondent/Bank initiated action in filing a Section 7 application of the I B Code, 2016 against the Corporate Debtor which was admitted on 22.12.2023 culminating in the impugned order under challenged by the Appellant. 90. According to the Respondent/Bank the liability of a Guarantor is co-extensive with that of the Principal Borrower and the guarantee executed by the Corporate Debtor in and an unequivocal term reads as under: It is also agreed that any admission or acknowledgment in writing by the Principal Debtor of the amount of indebtedness of the Principal Debtor or otherwise as in relation of the subject matter of this guarantor, shall be binding on me/us and I/We accept the correctness of any statement of account served on the Principal Debtor which is duly certified by any Manager or Officer of the Bank and the same shall be treated as my/our duly authorized agent for purpose of Indian Limitation Act, 1953 . 91. The plea of the Respondent/Bank is that the Corporate Debtor having executed the Guarantee in favour of the debts due and payable by the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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