2021 (2) TMI 1266 - Tri - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not - time limitation - HELD THAT - The procedure in relation to the Initiation of Corporate Insolvency Resolution Process by the Financial Creditor is delineated under Section 7 of the Code, wherein only Financial Creditor / Financial Creditors can file an application. As per Section 7(1) of the Code, an application could be maintained by a Financial Creditor either by itself or jointly with other Financial Creditors - the expressions Financial Creditor and Financial debt have been defined in Section 5(7) and 5(8) of the Code and precisely Financial debt is a debt along with interest, if any, which is disbursed against the consideration for time value of money. NPA was declared on 05.04.2008. Consequently, applicant bank has initiated action against the corporate debtor under the provisions of SARFAESI Act, 2002 as well as under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 on 19/10/2015 and case is registered as OA no. 461/2015 and on 02/07/2019 DRT passed the order and directed to pay the amount within 30 days from the date of order and on the basis of that petitioner claimed the date of default is on 02/08/2019 - action taken under SARFAESI Act cannot be counted for the period of exclusion u/s 14 of the limitation Act and since NPA was declared on 05/04/2008, therefore, the date of default is date of NPA. And if we shall calculate the period of limitation from 05/04/2008, i.e date of NPA then the present application is filed in the year 2019, much after the period of limitation prescribed under Article 137 of Limitation Act, i.e, three years when right to apply accrue. Hence the present petition is barred by limitation. Application is dismissed as barred by limitation.

Summary

Issues:
- Application under Section 7 of the Insolvency and Bankruptcy Code, 2016 for Corporate Insolvency Resolution Process.
- Jurisdiction of the Adjudicating Authority.
- Default in repayment of loan facilities by the Corporate Debtor.
- Appointment of Interim Resolution Professional.
- Outstanding dues and insolvency of the respondent company.
- Limitation period for filing the application under Section 7 of the Code.

Analysis:
1. The Syndicate Bank filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016, seeking the initiation of Corporate Insolvency Resolution Process against the respondent company, RS Builtwell Private Limited. The bank claimed a due amount of ?29,53,87,663.67 along with interest from the respondent company.

2. The Tribunal, having territorial jurisdiction over New Delhi, was the Adjudicating Authority for the application as the registered office of the respondent company was in New Delhi. The applicant bank, Syndicate Bank, had its Corporate Office in Manipal, Udupi, with a branch office in New Delhi.

3. The applicant bank detailed the default in repayment by the respondent company, leading to the account being classified as a Non-Performing Asset (NPA). Despite various notices and actions taken under SARFAESI Act and Recovery of Debts Due to Banks and Financial Institutions Act, the respondent failed to clear the outstanding dues.

4. The applicant proposed the appointment of Mr. Arun Gajwani as the Interim Resolution Professional, who agreed to take up the role and fulfilled the requirements under Section 7(3)(b) of the Code. The bank also submitted relevant statements of accounts and certificates under the Banker's Books of Evidence Act, 1891.

5. However, the Tribunal noted that the application was barred by limitation as per the decision of the Hon'ble NCLAT in a similar case. The NPA was declared on 05.04.2008, and the action initiated by the bank under SARFAESI Act in 2015 could not extend the limitation period. As the application was filed in 2019, beyond the limitation period prescribed under Article 137 of the Limitation Act, the Tribunal dismissed the application on the grounds of limitation.

6. The Tribunal emphasized that the date of default, in this case, was the date of declaration of NPA, and any subsequent actions taken could not alter the limitation period for filing the application under Section 7 of the Insolvency and Bankruptcy Code. Consequently, the application for Corporate Insolvency Resolution Process was dismissed as barred by limitation.