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2024 (2) TMI 1316 - AT - Insolvency and BankruptcyInitiation of CIRP - Personal Guarantors - Maintainability of Applications filed under Section 95 sub-section (1) of IBC - time limitation - It is submitted that Adjudicating Authority cannot be used as a Forum to recover a time barred debt - HELD THAT - In view of the judgment of the Hon ble Supreme Court in DILIP B JIWRAJKA VERSUS UNION OF INDIA ORS. 2024 (1) TMI 33 - SUPREME COURT , it is settled now that question of adjudication of issues between the parties arises only at the stage of Section 100 and the RP has only role of facilitator. The RP has to submit a Report, after examining the Application under Section 95 and after giving opportunity to Personal Guarantor. The role of RP has been elaborately examined by the Hon ble Supreme Court in the aforesaid case and it is held that RP does not perform any adjudicatory function, nor even can take an administrative decision. The role of RP has been held to be only facilitator. The judgment relied by learned Senior Counsel for the Appellant in SHANKARLAL AGGARWALA VERSUS SHANKARLAL PODDAR 1963 (1) TMI 40 - SUPREME COURT has no application in the facts of the present case. Insofar as the submission of the Appellant(s) that Adjudicating Authority failed to take into consideration that authorization was not filed by the RP, it is always open for the Appellant to take such or other pleas as permissible at the time of adjudication of issue, including any defect in the Application under Section 95 and the said question also does not require any consideration at the stage when RP is appointed. Of course, if there is any invalidity or shortcomings while appointing the RP, Section 98 is there for the debtor or creditor, which provides for replacement of the RP. There is no error in the impugned order passed by the Adjudicating Authority appointing the RP - There is no merit in these Appeal(s) - The Appeal(s) are dismissed.
Issues Involved:
1. Whether the Applications filed under Section 95, sub-section (1) of the Insolvency and Bankruptcy Code, 2016 (IBC) were barred by limitation. 2. Whether the Adjudicating Authority erred in appointing the Resolution Professional (RP) without considering the limitation issue. 3. Whether the RP is precluded from submitting a report on the limitation or jurisdictional facts. 4. Whether the absence of Authorization for Assignment (AFA) by the RP invalidates the appointment. Summary of Judgment: Issue 1: Limitation of Applications under Section 95(1) of IBC The Appellants contended that the Applications filed by the Bank of Maharashtra were barred by limitation since the debt was classified as a Non-Performing Asset (NPA) on 27.07.2016, and the Applications were only filed on 16.03.2023. The Appellants argued that the Adjudicating Authority should not entertain time-barred debts. Issue 2: Appointment of RP without Considering Limitation The Respondents argued that at the stage of appointing the RP, the Adjudicating Authority is not required to adjudicate on the Applications filed under Section 95. The adjudication of issues, including limitation, arises only after the RP submits a report under Section 99, and the Adjudicating Authority considers the Applications for admission or rejection under Section 100. The Supreme Court's judgment in Diliip B Jiwrjka vs. Union of India & Ors. was cited, which clarified that the adjudicatory function commences under Section 100 after the submission of the report by the RP. Issue 3: RP's Role in Submitting Report on Limitation or Jurisdictional Facts The Appellants argued that the RP is not supposed to submit any report regarding the limitation issue under Section 99. However, the court held that the RP's report, which recommends approval or rejection of the Application, must include reasons and can address whether the debt is time-barred. The RP is not precluded from giving recommendations based on the materials on record. The Supreme Court emphasized that the RP's role is that of a facilitator, not an adjudicator, and the debtor has the right to file objections to the RP's report. Issue 4: Absence of Authorization for Assignment (AFA) The Appellants raised the issue that the RP did not file the AFA, arguing it invalidates the appointment. The court held that such issues can be raised during the adjudication of the Application under Section 95, and if there is any invalidity or shortcoming, Section 98 provides for the replacement of the RP. Conclusion: The court dismissed the Appeals, holding that there was no error in the Adjudicating Authority's order appointing the RP. The issues raised by the Appellants regarding limitation and the RP's role are to be considered at the stage of adjudication under Section 100, not at the stage of appointing the RP. The Appeals were dismissed with no order as to costs.
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