2024 (4) TMI 1146 - AT - Insolvency and Bankruptcy

Admission of Section 95 application for initiation of proceeding against the Personal Guarantor - Jurisdiction of NCLT, New Delhi - time limitation. Jurisdiction of NCLT - HELD THAT - Sub-section (2) of Section 60 clearly mandates, when CIRP proceeding of a corporate debtor is pending before a National Company Law Tribunal, an application relating to the insolvency resolution of a Corporate Guarantor or Personal Guarantor of such Corporate Debtor shall be filed before such National Company Law Tribunal. The application under Section 7 was filed before NCLT, Chandigarh by State Bank of India against Castex Technologies Pvt. Ltd. on 20.12.2017, hence, the application filed by L T Finance under Section 95 against the Personal Guarantor i.e. the Appellant had to mandatorily filed before NCLT, Chandigarh as per Section 60(2). This clearly indicate that application filed by L T Finance at NCLT, New Delhi was filed in jurisdiction of that NCLT which had no jurisdiction to entertain the application or pass an order. Filing of Section 95 application before the Adjudicating Authority has to be as per Section 60(1) and 60(2). The Adjudicating Authority referred to in Section 95(1) is the Adjudicating Authority which has jurisdiction to entertain the application under Section 95. In the present case, the application filed by the L T Finance under Section 95, which was filed before NCLT, New Delhi was clearly not maintainable since as per Section 60(2) of the Code application under Section 95 by L T Finance ought to have been filed before the Adjudicating Authority where insolvency resolution process against the Corporate Debtor is pending - the submission of the Appellant is accepted that on application filed before the Adjudicating Authority which has no jurisdiction to entertain the application against Personal Guarantor interim moratorium may kick-in that will be against the statutory scheme under the I B Code. The submission of the Appellant is that in view of the interim moratorium kicked-in on the basis of application filed by L T Finance, application was not maintainable. It is already noticed that application filed by L T Finance was filed without jurisdiction before NCLT, New Delhi. Time limitation - HELD THAT - Reference made to the notice issued under Section 13(2) of the SARFAESI Act, 2002, which was issued on 24.09.2018. Even if the, limitation is counted by date of issuance of notice under Section 13(2) of the SARFAESI Act, application filed in the year 2020 by State Bank of India under Section 95 was well within time. Thus, we do not find any substance in submission of the Appellant that the Application filed by State Bank of India was barred by time. There are no merit in the submissions raised by learned counsel for the Appellant challenging the order of admission passed by the Adjudicating Authority under Section 100 of the I B Code - there is no denial of debt and default by the Appellant - there are no merit in the appeal - appeal dismissed.

Summary

Issues Involved:
1. Jurisdiction of the NCLT, New Delhi in admitting the Section 95 application.
2. Impact of interim moratorium under Section 96 of the I&B Code.
3. Bar of limitation on the application filed by State Bank of India.

Detailed Analysis:

1. Jurisdiction of the NCLT, New Delhi:
The Appellant challenged the jurisdiction of the NCLT, New Delhi, arguing that an application under Section 95 could not be filed there due to an existing application by L&T Finance Ltd. against the Appellant. The Tribunal clarified that the application by L&T Finance was filed without jurisdiction because the Corporate Insolvency Resolution Process (CIRP) against Castex Technologies Pvt. Ltd. was already pending before NCLT, Chandigarh. As per Section 60(2) of the I&B Code, any application relating to the insolvency resolution of a personal guarantor of such a corporate debtor must be filed before the same NCLT where the CIRP is pending. The application by L&T Finance at NCLT, New Delhi, was thus not maintainable, and interim moratorium under Section 96 did not apply.

2. Impact of Interim Moratorium under Section 96:
The Appellant argued that the interim moratorium commenced with the filing of the L&T Finance application, prohibiting any other creditor from initiating proceedings. The Tribunal referred to the judgment in "Bhavesh Gandhi vs. Central Bank of India," which states that interim moratorium under Section 96 prevents other creditors from initiating any legal action in respect of any debt. However, since the application by L&T Finance was filed without jurisdiction, the interim moratorium did not apply. The Tribunal emphasized that an application filed before an adjudicating authority without jurisdiction does not trigger the interim moratorium, aligning with the statutory scheme under the I&B Code.

3. Bar of Limitation on the Application Filed by State Bank of India:
The Appellant contended that the application filed by State Bank of India was barred by limitation, as the default occurred on 29.12.2016, and the application was filed on 23.11.2020. The Tribunal noted that the limitation period should be considered from the date of the demand notice issued to the personal guarantor, which was on 24.09.2018. The application under Section 95 was filed within three years from this date, making it well within the limitation period. The Tribunal dismissed the argument that the application was time-barred.

Conclusion:
The Tribunal upheld the order of the NCLT, New Delhi, admitting the Section 95 application filed by State Bank of India. It found no merit in the Appellant's arguments regarding jurisdiction, the impact of interim moratorium, and the bar of limitation. The appeal was dismissed, affirming the validity of the proceedings initiated by the State Bank of India against the personal guarantor under the I&B Code.