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2021 (5) TMI 180 - Tri - Insolvency and BankruptcyMaintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not - date of default - HELD THAT - The learned counsel for the respondent states that in the notice issued under SARFAESI, the date of default was mentioned as 27.11.2018. The learned counsel for the applicant states that there has been typographical error in the application and that the date of default is only 27.11.2018 - It appears that the said date 30.11.2019 is not the date of default but it is the date in which the said sum is due to the Financial Creditor. Except this description, date of default is not mentioned and some correction is seen to have made which has not been authenticated. Therefore, we hold that date of default is omitted from the relevant Column On a query, the learned counsel for the Financial Creditor has stated that the date of default is date of NPA i.e. 27.11.2018. The learned counsel for the Corporate Debtor, however maintained that the date of default is 12.11.2016. While reserving the order, this Adjudicating Authority had given opportunity for filing their respective written submissions in order to substantiate their arguments. In the above application, the date of default in the relevant column has not been deliberately typed by the applicant. Time Limitation - HELD THAT - It is pertinent to cite here para 86 to 92 of the Hon'ble Supreme Court (Civil Appellate Jurisdiction) judgement in SESH NATH SINGH ANR. VERSUS BAIDYABATI SHEORAPHULI CO-OPERATIVE BANK LTD AND ANR. 2021 (3) TMI 1183 - SUPREME COURT where it was held that If the period from the date of institution of the proceedings under the SARFAESI Act till the date of filing of the application under Section 7 of the IBC in the NCLT is excluded, the application in the NCLT is well within the limitation of three years. Even if the period between the date of the notice under Section 13(2) and date of the interim order of the High Court staying the proceedings under the SARFAESI Act, on the prima facie ground of want of jurisdiction is excluded, the proceedings under Section 7 of IBC are still within limitation of three years. Application admitted - moratorium declared.
Issues Involved:
1. Application under Section 7 of the Insolvency and Bankruptcy Code (IBC) 2. Default in repayment and declaration of Non-Performing Asset (NPA) 3. Limitation period under Section 137 of the Limitation Act, 1963 4. Date of default and its implications 5. Admission of debt and default by the Corporate Debtor 6. Appointment of Interim Resolution Professional (IRP) 7. Declaration of moratorium Detailed Analysis: 1. Application under Section 7 of the Insolvency and Bankruptcy Code (IBC): The application was filed by the Financial Creditor (State Bank of India) under Section 7 of the IBC, read with Rule 4 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016, to initiate the Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor (M/s. Kiran Global Chems Limited). The basis for this application was the default in repaying an amount of ?52,28,93,796 as on 30.11.2019, along with interest and further charges. 2. Default in Repayment and Declaration of Non-Performing Asset (NPA): The Financial Creditor extended various credit facilities to the Corporate Debtor, which were enhanced multiple times. The Corporate Debtor defaulted in repayment, leading to the account being declared as NPA on 28.11.2018. Despite legal notices and demands, the Corporate Debtor failed to regularize the account or repay the outstanding amount. 3. Limitation Period under Section 137 of the Limitation Act, 1963: The Corporate Debtor argued that the application under Section 7 of the IBC was barred by limitation. According to Section 137 of the Limitation Act, the limitation period for such applications is three years from the date of default. The Corporate Debtor contended that the actual date of default was 12.11.2016, and hence, the limitation period expired in November 2019, making the application filed on 19.12.2019 time-barred. 4. Date of Default and Its Implications: The Financial Creditor mentioned different dates for the NPA in the application (27.11.2018 and 28.11.2018). The Tribunal noted that the date of default was not explicitly mentioned in the relevant column of the application, which is a requirement under the NCLT Rules, 2016. Despite this omission, the Tribunal accepted the date of NPA as 27.11.2018 based on the pleadings and documents provided by the Financial Creditor. 5. Admission of Debt and Default by the Corporate Debtor: The Corporate Debtor admitted the debt and default but raised technical objections regarding the date of default and the limitation period. The Tribunal observed that the omission of the date of default in the application raised questions about the diligence of the Financial Creditor but ultimately decided to proceed with the application based on the admissions and documents provided. 6. Appointment of Interim Resolution Professional (IRP): The Tribunal appointed Mr. Tharuvai Ramachandran Ravichandran as the Interim Resolution Professional (IRP) to take charge of the Corporate Debtor's management and initiate the CIRP. The IRP was directed to make a public announcement and call for submissions of claims as prescribed under Section 15 of the IBC. 7. Declaration of Moratorium: The Tribunal declared a moratorium effective from the date of the order until the completion of the CIRP or the approval of a resolution plan or liquidation order. The moratorium prohibits the institution or continuation of suits, transferring or disposing of assets, and recovery actions against the Corporate Debtor. Essential goods and services to the Corporate Debtor were to continue without interruption during the moratorium period. Conclusion: The Tribunal admitted the application under Section 7 of the IBC, appointed an IRP, and declared a moratorium, despite the technical objections raised by the Corporate Debtor regarding the date of default and limitation period. The Tribunal emphasized the importance of adhering to procedural requirements but allowed the application based on the substantive admissions and evidence provided.
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