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2021 (11) TMI 794 - AT - Insolvency and BankruptcyMaintainability of application - initiation of CIRP - Corporate Debtor defaulted in repaying dues - Financial Creditors - non-performing assets - contention of Appellant is that the date of default has not been mentioned in the Form-1 filed before the Adjudicating Authority , therefore the application filed under Section 7 is defective - HELD THAT - It is seen that the respondent herein has enclosed fact sheet relating to details of debt granted and default made by the Corporate Debtor. The date of NPA is mentioned as 28.11.2018, however the Learned Counsel for the Respondent contended that there is a typographical error that instead of 27.11.2018 by mistake the date has been mentioned as 28.11.2018 and from many other documents, the date of default is shown as 27.11.2018 in support of the said date of default, there are other documents filed to establish the date of default is 27.11.2018. It is also evident from the SARFAESI Notice issued under Section 13(2) by the Financial Creditor dated 28.01.2019 to the Corporate Debtor in schedule A at Page 701 of Appeal Paper Books, Column I, the Financial Creditor Bank, the date of Non-Performing Assets (NPA) shown as 27.11.2018. Further the OA filed before the DRT-II at Chennai by the Consortium of Banks in the list of Non-Performing Assets (NPA) in respect of R1 it is shown as 27.11.2018. Therefore, it is evident that the date of default is 27.11.2018, though it did not mention in Part IV of Form-1 - it is evident that the date of default is 27.11.2018. Further in Column 8 of Part V in Form-1, the applicant is entitled to attach documents along with Form to prove the existence of Financial Debt, the amount and date of default. Therefore, it is presumed that the applicant, Financial Creditor complied with the procedure as prescribed in Form-1. In the present Appeal, though the first date of NPA is with respect to Axis Bank i.e. 10.02.2017. However, the RBI circulars/Directives provides filing of independent application by the Financial Creditor i.e. the SBI before the Adjudicating Authority (NCLT) under Section 7 of the IBC. Accordingly, the Applicant the 1st Respondent herein filed application under Section 7 of the IBC for initiating the CIRP against the Corporate Debtor independently taking into the date of NPA/default and the amount of debt and default. There is no dispute with regard to the existence of debt and default committed by the Corporate Debtor. However, there is only an objection raised with respect to omission to mention the date of default in Part IV of Form 1 filed before the Adjudicating Authority. It is evident from the records that the date of NPA of the SBI is 27.11.2018 and the application filed by the Financial Creditor on 19.12.2019 even if the 90 days period prior to NPA is taken into consideration for the purpose of deciding default - as per Col.8 of Part V in Form 1 regarding particulars of Financial Debt documents, records and evidence of default to be attached, the Financial Creditor has shown sufficient documentary evidence to establish the date of NPA i.e. 27.11.2018 and the Adjudicating Authority has taken note of the same and admitted the application. This Tribunal do not find any illegality in admitting the application. In view of the acknowledgement dated 16.08.2018 given by the Corporate Debtor the period of limitation also can be extended under Section 18 of the Limitation Act, 1963 and the Hon ble Supreme Court in Laxmi Pat Surana held that a subsequent acknowledgement to extend the limitation, being a fresh date of default of date. Even taking into consideration, the limitation period of three years from 16.08.2018, the application filed on 19.12.2019 is well within the period of limitation - the Respondent/Financial Creditor had stated the date of default in the pleadings and in other documents which the Corporate Debtor has received and acknowledged, therefore as held supra the non-mentioning of the date of default in Col. IV is not fatal to the application and on the sole ground, the application cannot be rejected mere taking a technical impediment as held by the Hon ble Supreme Court that it is only a directory . This Tribunal is of the firm opinion that the Appeal is devoid of merits and liable to be dismissed - Appeal dismissed.
Issues Involved:
1. Defective application under Section 7 of the Insolvency and Bankruptcy Code, 2016. 2. Date of default and its implications on the limitation period. 3. Non-compliance with procedural requirements. 4. Applicability of Section 18 of the Limitation Act, 1963 for extending the limitation period. Issue-wise Detailed Analysis: 1. Defective Application under Section 7 of the Insolvency and Bankruptcy Code, 2016: The Appellant argued that the application filed by the Respondent under Section 7 was defective as it did not mention the date of default in Form-1. The Adjudicating Authority noted that the date of default was omitted from the relevant column but observed that the date of default was mentioned in the pleadings and documents enclosed with the application. Despite this omission, the Authority allowed the application, emphasizing that the non-mentioning of the date of default in the specified column was not fatal to the application as long as the default was evident from the accompanying documents. 2. Date of Default and its Implications on the Limitation Period: The Appellant contended that the application was time-barred, arguing that the correct date of default was 12.11.2016, which was beyond the three-year limitation period prescribed under Article 137 of the Limitation Act, 1963. The Respondent, however, maintained that the date of default was 27.11.2018, which was within the limitation period. The Tribunal found that the date of default was indeed 27.11.2018, as evidenced by the SARFAESI notice and other documents, and thus the application was filed within the limitation period. 3. Non-compliance with Procedural Requirements: The Appellant argued that the application should have been rejected due to non-compliance with procedural requirements, specifically the omission of the date of default in Part IV of Form-1. The Tribunal referred to the Supreme Court's decision in Surendra Trading Co. v. Juggilalkamlapat Jute Mills Co., which held that the timelines under Section 7(5) are directory and not mandatory, and that defects in the application should be rectified. The Tribunal concluded that the omission was not fatal as the default was sufficiently evidenced by other documents. 4. Applicability of Section 18 of the Limitation Act, 1963 for Extending the Limitation Period: The Respondent argued that the limitation period was extended by an acknowledgment of debt dated 16.08.2018, which fell within the three-year limitation period. The Tribunal agreed, citing the Supreme Court's decision in Laxmi Pat Surana v. Union Bank of India, which held that a subsequent acknowledgment of debt can extend the limitation period. Thus, the application filed on 19.12.2019 was within the extended limitation period. Conclusion: The Tribunal dismissed the appeal, finding that the application under Section 7 was not defective despite the omission of the date of default in Part IV of Form-1, as the default was evidenced by accompanying documents. The application was filed within the limitation period, considering the acknowledgment of debt, and the procedural non-compliance was not fatal to the application. The Tribunal emphasized that the primary objective of the Insolvency and Bankruptcy Code is to resolve insolvency issues and not to dismiss applications on technical grounds.
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