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TMI Blog2020 (8) TMI 496X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 13(2) notice was issued on 3rd September, 2014 as the Corporate Debtor (Defendant No.1) committed default in repayment of the said cash credit facilities after the said facility has been declared as NPA. The application under Section 7 has not been filed within three years from the date of default/ NPA having been declared before 3rd September, 2014, as pleaded before the Debt Recovery Tribunal, Ahmedabad in Original Application No. 239 of 2016. As the application under Section 7 being barred by limitation, the application was not maintainable and was fit to be dismissed. Application dismissed. - Company Appeal (AT) (Insolvency) No. 32 of 2020 - - - Dated:- 12-3-2020 - [Justice S.J. Mukhopadhaya] Chairperson And [Justice Bansi Lal Bhat] Member (Judicial) For the Appellant : Ms. Debolina Roy, Ms. Anshula Grover and Mr. Dhaval Mehrotra, Advocates For the Respondents : Mr. Arun Aggarwal and Mr. Anup Kumar Pandey, Advocates JUDGMENT SUDHANSU JYOTI MUKHOPADHAYA, J. Bank of Baroda (erstwhile Dena Bank)- ( Financial Creditor ) filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016 ( I B Code for short) for initiatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... strict Magistrate under the SARFAESI Act, 2002 and, therefore, preferred a Securitisation Appeal No. 155 of 2016 before the Debt Recovery Tribunal II Ahmedabad. 8. When the matter remained pending, the Bank moved application under Section 7 on 19th October, 2018 for initiation of the Corporate Insolvency Resolution Process against the Corporate Debtor , in which the impugned order has been passed. 9. In B.K. Educational Services Private Limited Vs. Parag Gupta and Associates─(2019) 11 Supreme Court Cases 633 , the Hon ble Supreme Court held that for the purpose of Section 7, the Limitation Act, 1963 is applied from the date of inception of the Code. The Hon ble Supreme Court noticed Section 238A, inserted by Insolvency and Bankruptcy Code (Second Amendment) Act, 2018, which relates to the proceedings or appeals before the Adjudicating Authority, the National Company Law Appellate Tribunal, the Debt Recovery Tribunal or the Debt Recovery Appellate Tribunal. However, as Section 238A does not deal with application under Sections 7, 9 or 10 of the I B Code , the decision of the Hon ble Supreme Court in B.K. Educational Services Private Limited Vs. Parag Gupta and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... claim in the year 1995, when the present petition was instituted. 14. Likewise, a Single Judge of the Patna High Court in Ferro Alloys Corpn. Ltd. v. Rajhans Steel Ltd. also held: 12. In my opinion, the contention lacks merit. Simply because a suit for realisation of the debt of the petitioner Company against Opposite Party 1 was instituted in the Calcutta High Court on its original side, such institution of the suit and the pendency thereof in that Court cannot ensure for the benefit of the present windingup proceeding. The debt having become timebarred when this petition was presented in this Court, the same could not be legally recoverable through this Court by resorting to winding-up proceedings because the same cannot legally be proved under Section 520 of the Act. It would have been altogether a different matter if the petitioner Company approached this Court for winding-up of Opposite Party 1 after obtaining a decree from the Calcutta High Court in Suit No. 1073 of 1987, and the decree remaining unsatisfied, as provided in clause (b) of subsection (1) of Section 434. Therefore, since the debt of the petitioner Company has become time-barred and cannot be leg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... debts. This again is a fixed date that can be proved on the facts of each case. Thus, Section 433(e) read with Section 434 of the Companies Act, 1956 would show that the trigger point for the purpose of limitation for filing of a winding-up petition under Section 433(e) would be the date of default in payment of the debt in any of the three situations mentioned in Section 434. 11. Similar issue fell for consideration before the Hon ble Supreme Court in Gaurav Hargovindbhai Dave vs. Asset Reconstructions Company (India) Limited and another (2019) 10 SCC 572 . In the said case, the Hon ble Supreme Court has noticed that the Respondent was declared NPA on 21st July, 2011. The Bank had filed two OAs before the Debts Recovery Tribunal in 2012 to recover the total debt. Taking into consideration the facts, the Supreme Court held that the default having taken place and as the account was declared NPA on 21st July, 2011, the application under Section 7 was barred by limitation. For proper appreciation, it is better to note the facts of the judgment as follows: - In the present case, Respondent 2 was declared NPA on 21-7-2011. At that point of time, State Bank of India file ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in 2014, the Section 7 application filed in 2017 is clearly out of time. He has also referred to our judgment in B.K. Educational Services (P) Ltd. v. Parag Gupta and Associates [B.K. Educational Services (P) Ltd. v. Parag Gupta and Associates, (2019) 11 SCC 633] in order to buttress his argument that it is Article 137 of the Limitation Act which will apply to the facts of this case. 5. Mr Debal Banerjee, learned Senior Counsel, appearing on behalf of the respondents, countered this by stressing, in particular, para 11 of B.K. Educational Services (P) Ltd. and reiterated the finding of the NCLT that it would be Article 62 of the Limitation Act that would be attracted to the facts of this case. He further argued that, being a commercial Code, a commercial interpretation has to be given so as to make the Code workable. 6. Having heard the learned counsel for both sides, what is apparent is that Article 62 is out of the way on the ground that it would only apply to suits. The present case being an application which is filed under Section 7, would fall only within the residuary Article 137. As rightly pointed out by the learned counsel appearing on behalf of the appellan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal No.II at Ahmedabad under Section 19 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993. Dena Bank was the Appellant therein. M/s. Sunrise Ginning Private Limited ( Corporate Debtor ) was the Defendant No.1. In paragraph 5 (5.l) therein, steps taken under Securitisation Act has been pleaded showing issuance of Notice under Section 13(2) on 3rd September, 2014 on declaration of NPA. The photocopy bears stamp of the Dena Bank , as extracted below: (5.l) STEPS TAKES UNDER SECURITISATION ACT That defendant no.1 has committed default in repayment of the aforesaid facilities of Cash Credit as a result whereof the said facility has been declared as non performing assets as per the Reserve Bank of India s guideline and direction. The applicant-Bank therefore constrained to issue notice under Section 13(2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as Securitisation Act ) on 3rd September 2014 and demanded the payment of ₹ 12,57,86,554/88 under the said facilities within 60 days from the receipt of the said notice by the defendants. Inspite of the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 7 has not been filed within three years from the date of default/ NPA having been declared before 3rd September, 2014, as pleaded before the Debt Recovery Tribunal, Ahmedabad in Original Application No. 239 of 2016. As the application under Section 7 being barred by limitation, we also hold that the application was not maintainable and was fit to be dismissed. 20. We, accordingly, set aside the impugned order dated 20th November, 2019 passed by the Adjudicating Authority, Ahmedabad Bench, Ahmedabad and dismiss the application under Section 7 filed by the Bank of Baroda. 21. In effect, order(s), passed by the Adjudicating Authority appointing Interim Resolution Professional , declaring moratorium, freezing of account, and all other order (s) passed by the Adjudicating Authority pursuant to impugned order and action, if any, taken by the Interim Resolution Professional , including the advertisement, if any, published in the newspaper calling for applications all such orders and actions are declared illegal and are set aside. The application preferred by Respondent under Section 7 of the I B Code is dismissed. Learned Adjudicating Authority will now close the proceedin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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