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2024 (6) TMI 590 - HC - Insolvency and BankruptcyMaintainability of Section 95 IBC application - initiation of CIRP against personal guarantors - non-speaking, un-reasoned order - non-application of mind - time limitation - HELD THAT - The matter is remanded back to the NCLT, to consider the various objections raised by the petitioners on the aspect of limitation and maintainability of the Section 95 IBC application, filed by the respondent no.1 herein, before the NCLT. Rights and contentions of both the parties are left open, which shall be considered by the learned Adjudicating Authority of the NCLT, on its merits. The petition is disposed off.
Issues Involved:
1. Maintainability of Section 95 IBC application. 2. Limitation period applicability. 3. Availability of alternate efficacious remedy. Summary: 1. Maintainability of Section 95 IBC Application: The petitioners, personal guarantors to the Corporate Debtor, challenged the NCLT order dated 07th May 2024, which appointed a Resolution Professional (RP) u/s 95 of the Insolvency and Bankruptcy Code (IBC), 2016. The petitioners argued that the impugned order was non-speaking and unreasoned, passed without addressing their preliminary objections on the maintainability of the Section 95 IBC application, which they claimed was time-barred. 2. Limitation Period Applicability: The petitioners contended that the insolvency proceedings were barred by limitation as per Article 137 of the Limitation Act, 1963, since the date of default was 31st August 2014. They cited the High Court of Odisha's decision in Sandeep Jajodia Versus IDBI Bank, which set aside a similar order on the grounds of being time-barred. The petitioners also referenced the Supreme Court judgment in Gaurav Hargovindbhai Dave Versus Asset Reconstruction Company (India) Limited, asserting that Article 137 applies to IBC proceedings. They further argued that the Supreme Court's judgment in Dilip B. Jiwarika Versus Union of India did not preclude the Adjudicating Authority from considering the issue of limitation at the stage of appointing an RP. 3. Availability of Alternate Efficacious Remedy: The petitioners claimed no alternate efficacious remedy was available under the IBC, as Section 61, which provides for appeals, falls under Part II of the IBC, not applicable to personal guarantors. They argued that the High Court has the power to issue prerogative writs under Article 226 of the Constitution, even when an alternative remedy is available, citing the judgment in Godrej Sara Lee Ltd. Versus Excise and Taxation Officer-cum-Assessing Authority. Respondents' Arguments: The respondents argued that the proceedings were within limitation, citing the Revival Letter dated 30th October 2018, which extended the limitation period. They also referenced the Supreme Court's order in Suo Moto Writ Petition 3/2020, which excluded certain periods from the limitation period. The respondents contended that the petitioners had an efficacious remedy to file an appeal u/s 421 of the Companies Act, 2013 before the NCLAT. Court's Decision: The Court remanded the matter back to the NCLT to consider the objections raised by the petitioners regarding the limitation and maintainability of the Section 95 IBC application. The Court clarified that it had not made any observations on the merits of the submissions and that the proceedings before the NCLT would continue. The petitions were disposed of with these directions.
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