9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2022 (9) TMI 20 - AT - Insolvency and BankruptcyCIRP proceedings - Financial Creditors - Non performing assets - applicability of time limitation - guarantee given as Managing Director/ Director of CD shall be treated as personal guarantee or not - on failure of settlement agreement, the FC need to go to DRT or can directly approach Hon ble Adjudicating Authority for enforcing claims of FC against CD as well as personal guarantor - demand of interest. Whether, debt was due and default took placed? - HELD THAT - Various term loan and working capital facilities were given by SBT SBBJ which later merged into SBI (FC). This fact was never disputed by Appellant. It is also noted that subsequent to FC s claim under SARFAESI Act and later before Hon ble DRT, CD proposed compromise settlement which also clearly stipulated about existence and acceptance of debt in terms of both principal as well as interest. Therefore, there was clear financial debt which was due and not paid and Adjudicating Authority has, therefore, rightly admitted Application under Section 95(1) of the IBC. Whether the present application filed under Section 95(1) of the IBC is barred by law of limitation? - HELD THAT - The final order was passed by Hon ble DRT on 20.09.2019 and the last payment of Rs. 5 crore was made by CD on 31.12.2019, whereas, the Application under Section 95(1) filed before Hon ble Adjudicating Authority on 03.11.2021. Considering the Hon ble Supreme Court Suo Moto Writ Petition IN RE COGNIZANCE FOR EXTENSION OF LIMITATION 2021 (3) TMI 497 - SC ORDER excluding period of limitation from 15.03.2020 to 28.02.2022 the present application was filed within 74 days from the last payment of 31.12.2019. Thus, it is clear that the Application u/s 95(1) was filed within Limitation Period and we therefore, there are no error in the Judgment of Adjudicating Authority on this point. Whether guarantee given as Managing Director/ Director of CD shall be treated as personal guarantee or otherwise? - HELD THAT - Section 2 of IBC described the Applications of IBC Code. Section 2(e) of the IBC which case in force w.e.f. 01.12.2019 in so far as they relate to Personal Guarantor to Corporate Debtor. The new section 2(e) came vide notification dated 15.11.2019. The notification also enforced certain other provisions, namely, Section 78, 79 94 to 187 (Part III) which provide for Insolvency Bankruptcy of Individual and also Section 239 (Power to make rules), Section 240 (Power to make regulations) and Section 249 (Part V) in so far as they relate to PGCD - With these amendments through the amended Section 2(e) pertaining to PGCD, it was made possible to subject PGCD to Insolvency Proceedings before same Adjudication Authority (NCLT)/ Appellate Authority (NCLAT) who decides matter related to CD. Thus, if the CD s debt remains unpaid, the personal guarantor would not stand discharged but would himself be forced to face bankruptcy proceedings before the Adjudicating Authority - thus, there are no error in this regard. Whether, on failure of settlement agreement, the FC need to go to DRT or can directly approach Hon ble Adjudicating Authority for enforcing claims of FC against CD as well as personal guarantor? - HELD THAT - There was no requirement to approach the Hon ble DRT for getting Recovery Certificate before approaching the Adjudicating Authority - there are no merit in the contention of the Appellant on this issue. Whether, the provision of interest by Adjudicating Authority was incorrect and contrary to DRT final order? - HELD THAT - In any commercial loan, time value is very important. The definition of financial debt as provided in Section 5(8) of IBC mentioned herein above. It makes clear that Financial Debt along with interest against consideration for the time value of money is required. This Tribunal is of the considered view that no ground is made out for any interference by this Tribunal with the impugned order - Appeal dismissed.
Issues Involved:
1. Whether debt was due and default took place. 2. Whether the present application filed under Section 95(1) of the IBC is barred by the law of limitation. 3. Whether the guarantee given as Managing Director/Director of CD shall be treated as a personal guarantee or otherwise. 4. Whether, on failure of the settlement agreement, the FC needs to go to DRT or can directly approach the Adjudicating Authority for enforcing claims against CD and personal guarantor. 5. Whether the provision of interest by the Adjudicating Authority was incorrect and contrary to the DRT final order. Detailed Analysis: Issue 1: Whether debt was due and default took place. The Tribunal examined the definitions of "debt," "claim," and "default" under Sections 3(11), 3(6), and 3(12) of the IBC. The Tribunal noted that the financial creditor (FC) had produced a statement of account with a certificate issued under the Bankers Books Evidence Act, 1891, proving the debt, which was not disputed by the appellant. The total outstanding debt as of 31.07.2021 was Rs. 1,97,54,49,848.81. The Tribunal found that various term loans and working capital facilities were given by SBT & SBBJ, later merged into SBI (FC), and this fact was never disputed by the appellant. The compromise settlement between CD and FC also clearly stipulated the existence and acceptance of debt in terms of both principal and interest. Therefore, there was a clear financial debt due and not paid, and the Adjudicating Authority rightly admitted the application under Section 95(1) of the IBC. Issue 2: Whether the present application filed under Section 95(1) of the IBC is barred by the law of limitation. The Tribunal considered the timeline of events and noted that the final order was passed by the DRT on 20.09.2019, and the last payment of Rs. 5 crore was made by CD on 31.12.2019. The application under Section 95(1) was filed before the Adjudicating Authority on 03.11.2021. Considering the Hon'ble Supreme Court's Suo Moto Writ Petition No. 2020 excluding the period of limitation from 15.03.2020 to 28.02.2022, the application was filed within 74 days from the last payment of 31.12.2019. The Tribunal referred to judgments of the Hon'ble Supreme Court in the matters of Dena Bank vs. C. Shivakumar Reddy and Sesh Nath Singh vs. Baidyabati Sheoraphuli Co-operative Bank Ltd., which supported the view that the application was within the limitation period. Issue 3: Whether the guarantee given as Managing Director/Director of CD shall be treated as a personal guarantee or otherwise. The Tribunal referred to the judgment of the Hon'ble Supreme Court in Lalit Kumar Jain vs. Union of India, which dealt with personal guarantees given by directors, promoters, or managing directors. The Supreme Court had rejected the challenge by PGCD to the notification dated 15.11.2019, bringing PGCD within the same regime of IBC as the CD themselves. The Tribunal found that personal guarantees given by Mrs. Merin Jose and Mr. Jose M.M were enforceable, and the Adjudicating Authority had correctly taken decisions accordingly. Issue 4: Whether, on failure of the settlement agreement, the FC needs to go to DRT or can directly approach the Adjudicating Authority for enforcing claims against CD and personal guarantor. The Tribunal examined the final order of the DRT, Ernakulam, which stated that in case of failure of the compromise settlement, the entire amount as claimed in the OA along with interest and costs would become payable. The order also mentioned that the applicant would be entitled to apply for and obtain a Recovery Certificate but did not make it mandatory. The Tribunal referred to its judgment in Bimalkumar Manubhai Savalia vs. Bank of India, which stated that SARFAESI and DRT proceedings would not extend the period of limitation and that IBC has an overriding effect on other laws. Therefore, there was no requirement to approach the DRT before approaching the Adjudicating Authority. Issue 5: Whether the provision of interest by the Adjudicating Authority was incorrect and contrary to the DRT final order. The Tribunal noted that the final order of the DRT, Ernakulam, provided for the recovery of the full principal amount along with interest and costs in case of failure of the compromise settlement. The Tribunal also noted that the DRT's final order provided for future interest at 13.95%. The Tribunal found that the financial creditor had produced the statement of account proving the debt, which included the interest component. Therefore, the provision of interest by the Adjudicating Authority was not incorrect or contrary to the DRT's final order. Conclusion: The Tribunal found no ground for interference with the impugned order dated 24.02.2022 passed by the Adjudicating Authority, National Company Law Tribunal, Kochi Bench, Kerala, and dismissed the appeals. The connected pending interlocutory applications, if any, were also closed.
|
