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TMI Blog2020 (11) TMI 802X X X X Extracts X X X X X X X X Extracts X X X X ..... without justifiable reasons. Adjudicating Authority accepted individual Bank can maintain application beyond consortium and there is no bar to invoke provisions of Code but without even showing how the Orders in Writ Petition in which SIB was not even party, it should wait. In the Writ Petition filed against State Bank of India and the I.A. referred above, the Appellant or SIB were not made parties. State Bank of India initially purported to act for the consortium but after filing of the Writ Petition, withdrew the Notice dated 17th October, 2015 which was the basis to file Writ Petition 52886 52887 of 2015. The prayers in the Writ Petition were in context of such Notice and that Corporate Debtor should be heard regarding declaration of N.P.A. Subsequently, State Bank of India acted on its own when it raised demand vide Annexure A-13 on 9th March, 2017 and Possession Notice (Annexure A-14) on 19th August, 2017. Directions given were to the Authorized Officer of SBI and State Bank of India which were the Respondents in Writ Petition. Present the Corporate Debtor is aware that both the Orders were against SBI as portions reproduced from its Statement of Objections (Diary No.1870 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Appeal against Impugned Order dated 10th October, 2019 passed by the Adjudicating Authority (National Company Law Tribunal, Bengaluru Bench). The Appellant is assignee of South Indian Bank (SIB in short) and had filed CP(IB)No.144/BB/2017 under Section 7 of Insolvency and Bankruptcy Code, 2016 (IBC in short) before the Adjudicating Authority. In the Application filed under IBC, the Respondent Corporate Debtor filed I.A. 69 of 2019 under Rule 11, read with Rule 51 of National Company Law Tribunal Rules, 2016 (Rules in short), to dismiss the Company Petition. The Adjudicating Authority has allowed I.A. 69 of 2019 and dismissed the Company Petition CP(IB)No.144/BB/2017 reserving liberty to the Appellant Financial Creditor to file fresh Company Petition in accordance with law after High Court of Karnataka decides the issues pending before the High Court. Thus, the present Appeal. 2. The Appellant filed the Application on 23.11.2017 under Section 7 of IBC on assigning of the debt as per registered deed of assignment (Annexure A-11) dated 30.03.2016 by which deed South Indian Bank assigned its debt to the Appellant. We will refer to the South Indian Bank as SIB or, unle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ge 307) was filed on 23rd November, 2017 on the basis of amounts lent under both these arrangements and the debt on the basis of both these arrangements was claimed to be in default. 6. Now, keeping this broad outline before us, we are referring to the Chart of chronology of events in telegraphic language as appearing from the record. The same is as under:- Chart Sl. No. Date/ Annexure/ Page From Record Chronology of relevant Events in Telegraphic Language 1. 25.03.2009 Annexure A3 Page - 60 SBI South Indian Bank (SIB) entered into Term Loan Consortium Lending Agreement dated 25.03.2009 and sanctioned and granted financial facility to CD of ₹ 20 Crores and ₹ 15 Crores respectively. - Annexure A4 Later Supplementary Agreement dated 29.01.2011 entered into. 2. 30.01.2014 As per Appeal there was Default CD classified as NPA by Appellant/SIB. 3. 10.01.2014 SBI filed OS 88/14 in DRT Bengaluru under Section 19 of RDDB F ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No.2 SBI. - Respondent SBI restrained from further proceeding other than what has been impugned before DRT, by High Court Order dated 04.12.2015 (Annexure R-4 Page 22 of Statement of Objections Diary No.18701) 13. 22.03.2016 Annexure A-10 Page 172 DRT allowed OA 88/14 of SBI. Issued Recovery Certificate in favour of SBI, against CD, for ₹ 19,96,71,133. 14. 30.03.2016 Annexure A-11 Page 187 SIB assigned its debt to Appellant vide Registered Deed of Assignment. 15. 14.02.2017 Annexure A-12 Page 285 SBI withdrew its Annexure A-8 Notice dated 17.10.2015 and recovery actions initiated under Section 13(2) of SARFAESI Act reserving right to initiate legal proceedings deemed necessary under law. 16. 09.03.2017 Annexure A-13 Page - 289 SBI, in individual capacity (and not as Consortium) issued fresh Notice and demanded ₹ 20,05,05,013 to CD, under Section 13(2) of SARFAESI Act. The Notice limited itself to liabilities of SBI o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 12 of Writ Petition 52886 52887/2015 and OA 932/2014 by SIB in DRT. 24. 25.04.2019 Annexure A-21 Page 350 High Court Order dated 25.04.2019 which set aside Order dated 21.02.2019 of Adjudicating Authority and directed A.A. to decide IA 69/2019 by speaking Order with regard to the objections regarding maintainability. 25. 10.10.2019 Annexure A-1 Page - 44 Adjudicating Authority passed Impugned Order. IA 69/2019 allowed and CP IB/144/BB/17 dismissed. 7. Referring to the events as appearing from the above, it has been argued by the learned Counsel for Appellant that when the Adjudicating Authority passed Orders (Annexure A-19) dated 21st February, 2019, the Corporate Debtor instead of filing Appeal to this Tribunal, filed Writ Petition. It is argued that the Hon ble High Court of Karnataka at Bengaluru allowed the Petition and set aside the Order dated 21st February, 2019 directing the Adjudicating Authority to decide the Interim Application on maintainability. Subsequently, the Adjudicating Authority has by cryptic Order allowed the I.A. 6 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uary, 2014 and Corporate Debtor made repayment of ₹ 3,47,00,000/- to SIB on 28th November, 2014 as can be seen from Statement of Account (Annexure A-7 Page 148). Learned Counsel referred to Reply filed by the Corporate Debtor (Diary No.18701) where in Para 34, it is claimed that the Corporate Debtor was denying that subsequent to repayment of ₹ 3,47,00,000 to the Appellant on 28.11.2014, the Corporate Debtor did not pay a single penny. The learned Counsel referred to the Statement of Account (Annexure A-7) to submit that yet another amount of ₹ 53 Lakhs was repaid on 3rd December, 2014. It is argued that it is quite clear that under Section 19 of the Limitation Act, fresh period of limitation would run from the date of these repayments on 28th November, 2014 and 3rd December, 2014. The argument is that the Section 7 Application filed on 23.11.2017 was thus within limitation. Counsel submitted that apart from this, the Corporate Debtor had in the High Court in Writ Proceeding filed Certificate (Annexure R A/2 Rejoinder Diary No.18953) which clearly acknowledged outstanding dues of South Indian Bank to the tune of ₹ 8.60 Crores as on 15th November, 2015. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctober, 2015 (Annexure A-8) for itself and SIB. The Corporate Debtor challenged the same before High Court of Karnataka vide Writ Petition No.52886 of 2015. [Corporate Debtor in Reply - Diary No.18701, accepts that SBI had later on withdrawn the Demand Notice dated 17th October, 2015 as well as recovery action initiated under Section 13(2)]. Statement of Objections (Diary No.18701) in para 14 mentioned as under:- 14. By order dated 04.12.2015, the Hon ble High court was pleased to restrain SBI from taking any further proceedings. The operative part of the order is extracted hereunder: Since the Petitioner alleges action on the part of the respondents which are an overreach of their authority and the law it would be appropriate for this petition to be entertained notwithstanding the embargo imposed by the Supreme Court and the statute that the proceedings shall not lie before this Court. Accordingly, the respondents are restrained from taking any further proceedings other than what has been impugned before the Debts Recovery Tribunal. Emergent notice regarding rule. (emphasis supplied) True copy of the order of Hon ble High Court of Karnataka in W.P. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ave heard the parties and perused the record. The Impugned Order referred to the averments made in I.A. 69 of 2019 by the Corporate Debtor and the Statement of Objections filed to the I.A. by the Financial Creditor and in para 9 of the Impugned Order, referring to the Assignment Agreement in favour of the Appellant, observed that the Assignment Agreement dated 30th March, 2016 was filed in DRT only in October, 2016 for substitution and observed that unless proper Application is filed for substitution in cases and granted by the Court/Tribunal, it cannot be automatic. We find these observations irrelevant for what Adjudicating Authority had to decide. Adjudicating Authority then referred to the Assignment Agreement where reference is made to pending cases. Impugned Order then observed in para -11:- Apart from the above cases as referred to in the said Assignment Agreement, OA No.932 of 2014 filed by SIB is also pending. All these cases are in the name of Lead Bank which includes SIB, the Assignor of Financial Creditor herein. Without settling/withdrawing the above cases, the instant case is filed by the Petitioner on the basis of Assignment Agreement in question, by conven ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uly following the extant provisions of Code, after the Hon ble High Court decides the issues pending before it. 15. In the result, the instant I.A. No.69 of 2019 in CP (IB) No.144/BB/2017 is hereby allowed. Consequently dismissed main Company Petition bearing C.P. (IB) No.144/BB/2017 by reserving liberty to the Petitioner/Financial Creditor to file fresh Company Petition, in accordance with law, after the Hon ble High Court decides the issues pending before it. No order as to costs. [Emphasis supplied] 14. Thus, these are the reasons recorded by the Adjudicating Authority for allowing the I.A. and dismissing the Application under Section 7. It is apparent that the Adjudicating Authority did not apply itself to the Orders which were being relied on by the Corporate Debtor and simply recorded that it is not empowered to pass any Order over jurisdiction of Hon ble High Court or to clarify interim orders passed by the Hon ble High Court. It appears to us that the Adjudicating Authority avoided to decide the issues raised and without going into the Record, it has thrown out the Application under Section 7 without justifiable reasons. Adjudicating Authority accepted ind ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t quashing of this Notice dated 17th October, 2015. It is admitted position that this Notice dated 17th October, 2015 was withdrawn on 14th February, 2017 by SBI vide Annexure A-12, along with recovery action. 17. Subsequently, when State Bank of India issued Demand Notice on 9th March, 2017 (Annexure A-13) it was in individual capacity and Possession Notice dated 19th August, 2017 (Annexure A-14) was pursuant to the Demand Notice dated 9th March, 2017, Corporate Debtor filed I.A. 1 of 2017 in the same Writ Petition 52886 52887 of 2015 and challenged these Notices. Annexure A- 15 (Page - 300) is the copy of the I.A. which was filed by the Corporate Debtor. Even in this I.A., only the Authorized Officer of State Bank of India and State Bank of India are the Respondents and not the SIB and the Order which was passed on 12th October, 2017 (Appeal Page 306) is as under:- In view of the statement of objections filed by the respondents, the petition would require consideration. In the meantime, since this court through the order dated 04-12-2015 had restrained the respondents from initiating further proceedings, the said order shall enure to the benefit of the petitione ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... all documents referred in the Application. If such document is kept in view, it is clear that the Financial Creditor has not merely relied on the amounts due and outstanding based on the Consortium Arrangement but also with regard to the separate overdraft facility granted by it to the Corporate Debtor. Thus even if with regard to the initial effort of State Bank of India to take action for the consortium, it was to be said that there were Orders passed against SBI with SIB indirectly beneficiary, the right of the Financial Creditor to proceed for dues outstanding based on separate overdraft facility could not be denied. For such reasons also, it appears to us that the Adjudicating Authority erred in not applying itself to the documents and record of the matter. 20. To summarize, it is clear from the above and perusal of the Chart recorded above that before State Bank of India issued first Demand Notice dated 27th October, 2014, SIB had already filed OA 932 of 2014 in DRT for dues based, on not only against Term Loan under Consortium but also against over draft facility which was outside the Consortium. State Bank of India withdrew the Notice dated 27th October, 2014 on 14th Se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 28th November, 2014, the Corporate Debtor paid ₹ 3,47,00,000/- to SIB and another ₹ 53 Lakhs on 3rd December, 2014. It is argued that under Section 19 of the Limitation Act, when such repayments were made, fresh limitation would start and thus the Application under Section 7 filed on 23rd November, 2017 was within limitation. The Counsel has further relied on Annexure RA/2 which was issued on 20th November, 2015 and in which it is mentioned that outstanding loan as on 15th November, 2015 of South Indian Bank was ₹ 8.60 Crores. It is argued, it is written acknowledgement of debt and thus the Application under Section 7 is within limitation. 23. Against this, the learned Counsel for the Respondent has argued that the letter dated 29th November, 2014 which is at Page 17 of Statement of Objections (Annexure R-1), was issued without prejudice to the rights of the Corporate Debtor and thus cannot be used against the Corporate Debtor. The Counsel further argued that under IBC, limitation is of three years as per Article 137 of the Limitation Act, 1963. Counsel referred to Judgement in the matter of B.K. Educational Services Pvt. Ltd. vs. Parag Gupta and Associates ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e application for suggesting any acknowledgement or any other date of default, in our view, the submissions sought to be developed on behalf of the Respondent No. 2 at the later stage cannot be permitted. It remains trite that the question of limitation is essentially a mixed question of law and facts and when a party seeks application of any particular provision for extension or enlargement of the period of limitation, the relevant facts are required to be pleaded and requisite evidence is required to be adduced. Indisputably, in the present case, the Respondent No. 2 never came out with any pleading other than stating the date of default as 08.07.2011 in the application. That being the position, no case for extension of period of limitation is available to be examined. In other words, even if Section 18 of the Limitation Act and principles thereof were applicable, the same would not apply to the application under consideration in the present case, looking to the very averment regarding default therein and for want of any other averment in regard to acknowledgement. In this view of the matter, reliance on the decision in Mahaveer Cold Storage Pvt. Ltd. does not advance the cause ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts referred in Part - V of the format. In the matter of Babulal Vardharji Gurjar , question of limitation was not an issue when matter was before the Adjudicating Authority. The issue appears to have been raised when matter was in Appeal and as it was not dealt with by this Tribunal, Hon ble Supreme Court had remanded the matter back to this Appellate Tribunal. After Judgment was again passed by this Tribunal it was again challenged. When the matter was again carried to the Hon ble Supreme Court, the above observations have been made. In the present matter if facts are considered, the matter was before the Adjudicating Authority and even before the Application under Section 7 of IBC was looked into so as to consider whether or not the same could be admitted, the Corporate Debtor filed I.A. 69 of 2019 challenging maintainability and the Adjudicating Authority, although it initially dismissed the I.A. on 21st February, 2019, was required by the Hon ble High Court in Writ Petition 14107 of 2019 on 25th April, 2019 to pass Speaking Order with regard to maintainability. The Adjudicating Authority has then passed the Impugned Order. We have already recorded that the reasons recorded by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imitation. In the Chart which we have recorded above, Entry - 19A shows that after the Application under Section 7 of IBC was filed in the present matter, Section 238A of IBC extending provisions of the Limitation Act was inserted in IBC with effect from 6th June, 2018. When this is so, in fairness, it would be appropriate to give opportunity to the Financial Creditor to rectify defect in the Application before the Adjudicating Authority. It is necessary for us under Rule 11 of National Company Law Appellate Tribunal Rules, 2016, to exercise inherent powers to do Justice to pass such Orders. 27. For the above reasons, we are not going into the disputes which are being raised with regard to limitation before us. The matter needs to be remanded back to the Adjudicating Authority so that the Appellant is given opportunity to rectify defects in the format, as indicated above. Appellant may amend Format and annex documents to show, how the debt is due and within limitation. The Adjudicating Authority will then take a decision, hearing both sides regarding admission. 28. For the above reasons, we set aside the Impugned Order. The I.A. 69 of 2019 filed by the Respondent is dismissed ..... X X X X Extracts X X X X X X X X Extracts X X X X
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