2022 (5) TMI 581 - AT - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - pendency of proceedings under SARFAESI ACT, DRT and before PBPT - existence of debt and dispute or not - Time limitation. Whether the pendency of proceedings under SARFAESI ACT, DRT and before PBPT, prohibits the Respondent/financial Creditor for initiation of Proceedings under IBC, 2016? - HELD THAT - The IBC, 2016 is a special enactment and is an act to consolidate and amend the laws relating to reorganisation and insolvency resolution of corporate persons, partnership firms and individual in a time bound manner for maximisation of value of assets of such persons, to promote entrepreneurship. The aim and object of the Code is not for recovery of debts but for Resolution of Corporate Persons - the financial Creditor/ Operational Creditor/Corporate Persons can file an application under Section 7 ,9 10 of the I B Code, 2016 before the respective Adjudicating Authorities even though in respect of same any proceeding pending before other forums on the ground that the provisions of I B Code, 2016 is overriding effect of other laws. In view of the aforesaid reasons the Appellant cannot take a stand that the proceedings are pending before DRT and PBPT and the application under Section 7 of the I B Code, 2016 cannot be maintained does not merit. The application under Section 7 filed by the financial Creditor before the Adjudicating Authority is very well maintained - Issue answered against the Appellant. Whether the debt and default is proved in respect of Corporate Debtor? - HELD THAT - Form-1 dated 09.03.2021 filed by the Respondents/financial Creditor at part -IV regarding particulars of financial debt shown as Rs. 5,20,00,000/- and the Appellant has in para 6 of the counter filed before the Adjudicating Authority admitted that the Appellant obtained three credit facility from the financial Creditor to a tune of Rs. 5,20,00,000/- on various dates by producing the subject property as collateral. In view of the reason the Appellant had admitted the debt and default. The Adjudicating Authority also took the stand that the existence of debt and default had been proved beyond reasonable doubt - issue answered against the Appellant. Whether the application is barred by limitation? - HELD THAT - The Respondent/financial Creditor in the application form-1 dated 09.03.2021 in part IV column -2 with regard to date of default it is mentioned that the date of default is 31.05.2018, however the fact remains that the application filed by the Respondent/financial Creditor before the Adjudicating Authority is on 18.03.2021 which is within the period of limitation i.e. 3 years from the date of default as per Section 137 of the limitation Act since the limitation act applicable to the proceedings under IBC. Therefore, the application filed before the Adjudicating Authority is within the period of limitation and accordingly the point is answered against the Appellant. Whether the order under challenge is reasoned order dealing with all issues as raised by the Appellant/Corporate Debtor? - HELD THAT - The order passed by the Adjudicating Authority in admitting the application filed by the 1st Respondent against the Corporate Debtor is a well reasoned order and there are no legal or factual infirmity in the order and no interference is called for. Appeal dismissed.

Summary

Issues:
1. Whether the pendency of proceedings under SARFAESI ACT, DRT, and before PBPT prohibits the initiation of Proceedings under IBC, 2016?
2. Whether the debt and default are proved in respect of the Corporate Debtor?
3. Whether the application is barred by limitation?
4. Whether the order under challenge is reasoned and addresses all issues raised by the Appellant/Corporate Debtor?

Issue 1:
The Appellant argued that the initiation of CIRP by the Adjudicating Authority was not valid due to pending proceedings under SARFAESI ACT, DRT, and PBPT, labeling it as forum shopping. However, the Tribunal clarified that the IBC, 2016 overrides other laws, allowing applications under Sections 7, 9, and 10 to proceed despite pending proceedings elsewhere, emphasizing the resolution of corporate persons over debt recovery. The Tribunal held that the application under Section 7 was valid, dismissing the Appellant's argument against it.

Issue 2:
Regarding the debt and default, the Appellant admitted to obtaining credit facilities from the financial Creditor and using the subject property as collateral, acknowledging the debt. The Adjudicating Authority found the debt and default to be proven beyond doubt, ruling against the Appellant on this point.

Issue 3:
The Respondent filed the application within the limitation period of 3 years from the date of default, as required by Section 137 of the Limitation Act applicable to IBC proceedings. The Tribunal concluded that the application was within the limitation period, rejecting the Appellant's argument on this ground.

Issue 4:
The Tribunal found the order passed by the Adjudicating Authority to be well-reasoned, without any legal or factual flaws, warranting no interference. Consequently, the Tribunal dismissed the Appeal, stating it lacked merit, and no costs were awarded.