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TMI Blog2020 (4) TMI 153X X X X Extracts X X X X X X X X Extracts X X X X ..... tition is liable to be rejected based on time-barred claimed/debts. - C.P. (IB) NO. 129/7/NCLT/AHM/2017 - - - Dated:- 1-1-2020 - Harihar Prakash Chaturvedi, Judicial Member And Prasanta Kumar Mohanty, Technical Member Raju Kothari and Anip Gandhi, Advocates for the Applicant. Navin Pahwa, Sr. Advocate and Ravi Pahwa, Advs. for the Respondent. ORDER Harihar Prakash Chaturvedi, 1. The present LB. Petition is preferred by the Petitioner/Financial-Creditor M/s. Punjab National Bank under section 7 of the Insolvency and Bankruptcy Code, 2016 (herein after referred to as a Code ), seeking for initiation of the Corporate-Insolvency-Resolution-Process ( CIRP in Short) in respect of the Corporate-Debtor-Company namely, M/s. Ionic Castings Pvt. Ltd. 2. The Petitioner, M/s. Punjab National Bank is a bank, constituted under the provisions of the Banking Companies (Acquisition Transfer of Undertakings) Act, 1970. It is having its registered address at: 7, Bhikhaji Cama Place, Africa Avenue, New Delhi - 110607. 3. As per the Petition, the Corporate-Debtor-Company, M/s. Ionic Castings Pvt. Ltd. was incorporated on 13-7-1998 with CIN: U27100GJ1998PTC034378. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or by way of Equitable Mortgage of its properties, which are described in the Resolution dated 26-8-2010. 9. That apart, the Directors of the Respondent Company also extended the guarantee in their personal capacity availing of the said facilities/loans by the Corporate Debtor. 10. The Corporate Debtor Company further passed necessary resolution to this effect that the charge created in favour of Bank of Baroda would be satisfied and the charge of Punjab National Bank be registered afresh with the Registrar of Companies and the Banking accounts for the said loan/facilities be operated upon the instructions concerning same be given by any one of the directors given the names in the Resolution. 11. It is further submitted in the petition that as per the resolution of the company, execution of the entire loan documents and the security documents which pertains to the hypothecation and other documents were made and equitable mortgage was extended by the Respondent/Corporate-Debtor on 23-3-2010 for the purpose of sanctioning of the loan. 12. As described in the present application/lB. Petition, following loan/facilities were sanctioned to the defendant in the year 2010: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... agreements/deed of hypothecation and other documents, signed letter of intents to create/extend equitable mortgage on the properties of the company. 16. The Petitioner submits that at the request of the Respondent Company, the Petitioner renewed/reviewed/reduced facilities and the Respondents signed and executed the documents :- (i) Hypothecation of Asset to secure Term Loans dated 24-11-2010 for an amount of ₹ 1,10,00,000/- (Rupees One Crore Ten lakh only). (ii) Agreement of Guarantee dated 24-11-2010 signed and delivered by all Respondent for an amount of ₹ 9,92,31,000/- (Rupees Nine Crore Ninety-Two lakh Thirty-One Thousand only). (iii) Supplementary Agreements dated 24-11-2011 for an amount of ₹ 4,95,00,000/- (Cash Credit) + ₹ 75,00,000/- (Term Loan) + ₹ 3,87,73,000/- (Term Loan). 17. The Petitioner submitted that as per the request of the Respondent Company, the existing loan/facilities were renewed/reviewed and the Petitioner/Financial-Creditor issued the restructured account letter dated 29-9-2011. 18. It is submitted that the Respondent Company signed and executed the Agreement for Cash Credit/Working Capital Term Loan - Exis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /Corporate Debtor had agreed to in all the terms and conditions mentioned in agreement dated 28-9-2011. 21. It is stated that the Respondent, again, signed and executed a Supplementary Agreement for Reschedulement of Term Loan dated 28-9-2011 for an amount of ₹ 75,00,000=00 (Rupees Seventy-Five Lakh only). The Respondent agreed to pay interest at the rate of BR+5% p.a. with monthly rates (15.75%). He also agreed to pay additional interest of 2% over and above agreed rates, in case any default in repayment/instalments occurs. The Respondent further agreed to hypothecate Factory Building - shed and mortgage of various properties and to repay as per the revised repayment schedule. The said Term Loan was repayable in 84 months after moratorium of 12 months. The Respondent/Corporate Debtor had agreed to in all the terms and conditions mentioned in agreement dated 28-9-2011. 22. It is further stated that the Respondent signed and executed a supplementary agreement for Reschedulement of Term Loan dated 28-9-2011 for an amount of ₹ 1,10,00,000=00 (Rupees One Crore Ten Lakh only). He further agreed to pay interest at BR+5% p.a. with monthly rests (15.75%) and additional 2% ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndent/Corporate Debtor had agreed to in all the terms and conditions mentioned in agreement dated 28-9-2011. 26. It is submitted that, (i) Meena Gajjar (ii) Ionic Metallics and (iii) Kamlesh Gajjar being Guarantors of the facility/Loan availed by them and executed the agreement dated 28-9-2011 for the aggregate amount of ₹ 9,95,43,000=00 (Rupees Nine Crore Ninety-Five Lakh Forty-Three Thousand only). The Respondents - (i) Meena Gajjar (ii) Ionic Metallics and (iii) Kamlesh Gajjar jointly and severally agreed to give their personal guarantee and continuing security for all the amounts advanced to the Borrower(s) and it shall be binding on all of them personally. The said guarantee remains operative and enforceable. The liabilities of this personal guarantor are coextensive. Therefore, being borrowers and guarantors the Ionic Metallics, Mrs. Meena Gajjar and Mr. Kamlesh Gajjar are jointly and severally liable for the repayment of the outstanding of the debts due to the Petitioners Bank. 27. It is stated that the Respondent/Corporate Debtor submitted the requisite form No. 8 and the charge on security furnished was created by the Corporate Debtor in favour of the Petitione ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Lender of the Corporate Debtor Company i.e. M/s. Fine Impex also filed a petition before the Hon'ble High Court of Gujarat, praying for winding up of the Corporate Debtor Company to be wound up. 30. Thus as per the Petitioner Bank's undisputed admitted position that, date of default in making payment of the loan occurred on 30-6-2012. The Petitioner in the present LB. Petition has also pleaded in the present LB. Petition that the date of default occurred is 30-6-2012 when the account of the Respondent/Corporate-Debtor was classified as a Non-Performing Asset . The Petitioner has also mentioned about the record of default with the Information Utility, stating inter alia that a notice under section 13(2) of SARFAESI Act was issued on 05-7-2012 admittedly the present petition is filed before this Bench on 15-9-2017, which is more than five (05) years from the date of default. 31. In response to the above petition, the Respondent Company in its reply, although, has stated that the Respondent Company was in 'financial crunch' hence, it was not in a position to clear the debt(s) as claimed by the Petitioner, but equally it opposed the filing of the present LB. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Limitation Act and would be applicable from the date of default, i.e. 30-6-2012. Hence, the present petition is filed well within the limitation. 35. In support of its contentions the Petitioner Bank has placed reliance on a judgment of Hon'ble NCLAT in the matter of Babulal Vardhaji Gurjar v. Veer Gurjar Aluminium Industries (P.) Ltd. [2019] 106 taxmann.com 279/154 SCL 44 and contended that the present debt cannot be treated as time-barred under the Limitation Act even the verdict of Hon'ble Supreme Court in the matter of B.K. Educational (P.) Ltd. (supra), Hon'ble NCLAT in its subsequent decision in the matter of Sagar Sharma v. Phoenix ARC (P.) Ltd. [2019] 110 taxmann.com 50/156 SCL 707 (SC) has distinguished the Hon'ble Supreme Court decision in B.K. Educational Services (P.) Ltd.'s case (supra) and reiterate its view since the code came into effect from 01-12-2016, the right to apply would accrue from 01-12-2016. Hence, the present LB. Petition under section 7 is not time-barred. 36. Notwithstanding the above, with due respect to the aforesaid judgment(s) of Hon'ble NCLAT, the legal position in this respect has now been well settled by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etition was dismissed on 25-3-2017. 3. An independent proceeding was then begun by Respondent No. 1 on 03-10-2017 being in the form of a Section 7 application filed under the Insolvency and Bankruptcy Code in order to recover the original debt together with interest which now amounted to about 124 crore of rupees. In the Form-I that has statutorily to be annexed to the Section 7 application in Column II which was the date on which default occurred, the date of the NPA i.e. 21-7-2011 was filled up. The NCLT applied Article 62 of the Limitation Act which reads as follows: Description of suit Period of limitation Time from which period begins to run To enforce payment of money secured by a mortgage or otherwise charged upon immovable property Twelve years When the money sued for becomes due Applying the aforesaid Article, the NCLT reached the conclusion that since the limitation period was 12 years from the date on which the money suit has become due, the aforesaid claim was filed within limitation and hence admitted the Section 7 application. The NCLAT vide the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is well settled that there is no equity about limitation-judgments have stated that often time periods provided by the Limitation Act can be arbitrary in nature. 8. This being the case, the appeal is allowed and the judgments of the NCLT and NCLAT are set aside. 38. The Hon'ble Supreme Court further in the matter of Vashdeo R. Bhojwani (supra) has pleased to hold that the limitation/cause of action start from the date of default by declaring NPA and not from the date of issue of a recovery certificate if issued by the DRT and in such case, only Article 137 would apply. Hence, the Hon'ble Supreme Court has pleased to dismiss the LB. Petition being time-barred. For the sake of convenience, we are reproducing the extract of judgment in the above stated decision of Vashdeo R. Bhojwani's case (supra). Rohinton Fali Nariman, J. 1. In the facts of the present case, at the relevant time, a default of ₹ 6.7 crore was found as against the Respondent No. 2. The Respondent No. 2 had been declared a NPA by Abhyudaya Cooperative Bank Limited on 23-12-1999. Ultimately, a Recovery Certificate dated 24-12-2001 was issued for this amount. A section 7 petition was fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... continuing source of injury and renders the doer of the act responsible and liable for the continuance of the said injury. If the wrongful act causes an injury which is complete, there is no continuing wrong even though the damage resulting from the act may continue. If however, a wrongful act is of such a character that the injury caused by it itself continues then the act constitutes a continuing wrong. In this connection it is necessary to draw a distinction between the injury caused by the wrongful act and what maybe described as the effect of the said injury. It is only in regard to acts which can be properly characterised as continuing wrongs that Section 23 can be invoked. Thus considered it is difficult to hold that the trustees' act in denying altogether the alleged rights of the Gaurav as hereditary worshippers and in claiming and obtaining possession from them by their suit in 1922 was a continuing wrong. The decree obtained by the trustees in the said litigation had injured effectively and completely the Appellants' rights though the damage caused by the said decree subsequently continued... (at page 496). Following this judgment, it is clear that when the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plications filed under the Code. Equally, since applications are petitions which are filed under the Code, it is Article 137 of the Limitation Act which will apply to such applications. 4. Accordingly, we set aside the judgment under appeal and direct that the matter be determined afresh. It will be open for both sides to argue the case on facts on the footing that Article 137 of the Limitation Act alone will apply. 5. The appeal is allowed in the aforesaid terms. 6. The NCLT order dated 29-1-2019 shall remain stayed until further orders from the NCLAT. 7. Mr. Rakesh Dwivedi, learned Senior Counsel, wishes to raise a plea based on Section 22 of the Limitation Act before the NCLAT. We record this statement. 40. By taking into above stated factual and legal position, it is undisputed fact that date of default in the present matter is 30-6-2012 being the date of NPA the limitation would commence from such date and as per the Article 137 of the Limitation Act which prescribe only three (3) years of time while the present LB. Petition was filed on 15-9-2017 before this Bench. Hence, it is clearly time-barred by the limitation. Hence, the same is liable to be dismissed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s Rederessal Commission at Delhi for recovery of insurance amount from Oriental Insurance Company. 12. Charge has been registered with RoC on 30-3-2010 and modified on 15-10-2011 for ₹ 9.95 crore, which is still kept open and not satisfied as per the Company MCA Master Data available and record submitted. The said charge was filed by Shri Kamlesh N. Gajjar, who is representing the Corporate Debtor now. 13. The Petitioner also relied upon the judgment of Babulal Vardhaji Gurjar's case (supra) by the Hon'ble National Company Law Appellate Tribunal and judgment of Edelweiss Assets Reconstruction Co. Ltd. v. Net 4 India Ltd. [2019] 104 taxmann.com 71/152 SCL 771 passed by the Hon'ble National Company Law Tribunal, New Delhi on 08-3-2019. 14. Further, as per the orders dtd: 30-1-2018, wherein this Adjudicating Authority observed that - In view of the decision of Hon'ble High Court of Bombay in Company Application No. 572/2017 in company petition No. 434/2015 dated 05-1-2018 and decision of Hon'ble NCLAT, New Delhi in Comp Appeal (AT) (INS) 7/2017 it appears this matter can be proceeded further on merits on all aspects including the pendency of winding ..... X X X X Extracts X X X X X X X X Extracts X X X X
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