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TMI Blog2021 (6) TMI 951X X X X Extracts X X X X X X X X Extracts X X X X ..... btor . Undoubtedly, the recovery bleeds the Corporate Debtor to Death . But the Resolution endeavours to keep the Corporate Debtor alive. Significantly, Satisfaction of the Adjudicating Authority is a condition precedent for the approval of a Resolution Plan. Section 12 of the Code provides that the CIRP shall be completed within the period of 180 days etc, from the date of admission of application and further that process is to be completed within 330 days provided in the statute. Initiation of CIRP - HELD THAT:- A Financial Creditor may initiate the CIRP under section 7 of the Code by filing application before the Adjudicating Authority as per the procedure prescribed, when the default had occurred. The occurrence of default is the pivotal point of commencement of CIRP. An application will be admitted when the Adjudicating Authority is satisfied that among other things the default had occurred and the application was complete. Admission Acknowledgement - HELD THAT:- As matter of fact, in the instant case when once the Company has/had defaulted and after the initiation of legal proceedings as available to the Lender on that date (Before the Debt Re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the Corporate Debtor did not dispute existence of debt and default, albeit it may differ dates of default and so on. Public money cannot be squandered away by the Corporate Debtor by finding loopholes. 15. From the record it is observed that the Corporate Debtor addressed letter dated 29.01.2020 (Annexure -I, Page 4 of Memo dated 07.02.2020 filed by the Corporate Debtor) to the Union Bank of India and also SBI agreeing, in principle, to repay the amount due to the Financial Creditors and requesting the Bank to support them during the financial crisis the Corporate Debtor is facing due to various reasons beyond their control. They also requested vide the above letter to waive off the penal interest levied. The Corporate Debtor has also requested the Financial Creditors for One Time Settlement (OTS). By addressing such letter to the Financial Creditors, the Corporate Debtor has acknowledged the debt and also the Corporate Debtor was seeking OTS from the Financial Creditors. There was a decree issued by the Debt Recovery Tribunal (DRT) in the instant case based on which the instant application was filed and acknowledgement of debt was not paid and finally admitted the Applicat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7; 35.75 crores and 2 LCs of ₹ 2.26 crores issued by IDBI in September 2011. Added further, NCC invoked the Bank Guarantees of ₹ 49.863 cores. These losses made the Appellant Company contributed to the liquidity crunch faced by the Appellant Company and at this stage, the Appellant Company s loans accounts were classified NPA during February 2011 March 2013. 6. The Learned Counsel for the Appellant brings to the notice of this Tribunal that the Demand Notice dated 16.08.2013 was issued by the Union Bank of India, Khairatabad under section 13(2) of the Securitisation and Reconstructions Financial Assets and Enforcement of Securities Interest Act, 2002 which clearly mentions that the loan accounts of the Appellant Company became NPA long back. Besides this, in the Joint Lenders Meeting dated 23.05.2013, the Corporate Debt Restructuring proposal was rejected by the Union Bank of India-Lead Banker. 7. The Learned Counsel for the Appellant points out that the Lenders filed joint original application No. 154 of 2014 (Re-numbered as 1563 of 2017) (OA I) before the Debt Recovery Tribunal, Hyderabad II, Original Application No. 1930 of 2014 (OA2) Before the Debt Rec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ective by the Adjudicating Authority who had relied upon the letter dated 29.01.2020 of the Managing Director of the Corporate Debtor addressed to the Assistant Manager, Union Bank of India in a suo moto manner. As matter of fact the said memo was filed for the purpose of adjournment of the matter before the Adjudicating Authority and in fact, the letter dated 29.01.2020 of the Managing Director of the Corporate Debtor cannot be treated as an acknowledgment of debt. 12. The Learned Counsel for the Appellant contends that the proceeding under the IB Code, 2016 cannot be pressed in to service to execute a Decree of the Recovery Tribunal and in fact, the Code is not a debt enforcement procedure . 13. The Learned Counsel for the Appellant submits that in the decision of the Hon ble Supreme Court in Dharani Sugars Chemicals Ltd V Union of India ors (2019 3 AWC 2581), the circular of RBI dated 12.02.2018 was held to be ultra virus of section 35AA of the Banking Regulation Act and the Hon ble Supreme Court had setaside all the proceedings initiated by the Banks and other Financial creditors being non est. 14. The Learned Counsel for the Appellant submits that the Ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a Nos. 15-38 16. As regards to the proposition of acknowledgement is to be within the period of limitation for it to extend limitation, the Appellant places reliance on the following decisions: Reliance Asset Reconstruction Company Limited V Hotel Poonja International Private Limited (2020) SCC OnLine NCLAT 920 Para Nos 30,34,41 C. Shiva Kumar Reddy V Dena Bank (2019) SCC OnLine NCLAT 907 Para Nos 6-11. Rajendra Kumar Tekriwal V Bank of Baroda- MANU/NL/.0299/2020 Para Nos 9-11 Kotak Mahindra Bank Limited V Indian Speciality Fats Limited (2021) SCC OnLine NCLAT 85 Para Nos 2-4 G. Eswara Rao V Stressed Assets Stabilsation Fund (2020) SCC OnLine NCLAT 416 Para Nos. 10,12,13. B. S. Krishnan V Stressed Asset Stabilization Fund (MANU/NL/0091/2021) Par Nos 12,15. C. R. Badrinath V eight Capital India (M) Limited anr (2020) SCc ONLine NCLAT 602 Para Nos 22-24. Bimal Kumar Manu Bhai Savalia V Bank of India (2020) SCC OnLine NCLAT 400 Para Nos- 5,9,13,14 Vijay Sitaram Dandnaik V Punjab National Bank MANU/NL/0066/2021 Para Nos. 5, 10-15 J C Budhraja V Chairman, Orissa Mining Corporation Limited (2018) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ara Nos 10. ❖ Kotak Mahindra Bank Limited V Indian Speciality Fats Limited (2021) SCC OnLine NCLAT 85 Para Nos 2-4 ❖ G. Eswara Rao V Stressed Assets Stabilsation Fund (2020) SCC OnLine NCLAT 416 Para Nos. 24-28. to fortify his contention that the I B Code, 2016 cannot be used as Recovery Mechanism. 19. For the contention that OTS proposal without prejudice or if not accepted is not an Acknowledgement , the Appellant relies on the judgment of this Tribunal, in Bimal Kumar Manubhai Savalia V Bank of India reported in 2020 SCC Online NCLAT 400 (vide paragraph no. 5, 7 9). 20. The Learned Counsel for the Appellant refers to the decision of the Hon ble Supreme Court Babulal Vardalal Ji Gurjar v Veer Gurjar Aluminum Industries P Ltd (2020 ) 15 SCC 1 (vide paragraphs No. 35, 34.1) for the contention that an acknowledgement has to be pleaded by the creditor before the Adjudicating Authority for it to be considered to extent the period of limitation. FIRST RESPONDENT/ BANK S CONTENTIONS: 21. Per contra it is the submission of the Learned Counsel for the First Respondent /Bank that the application filed under section 7 of the Code befo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... then the act constitutes continuing wrong. In this connection it is necessary to draw a distinction between the injury caused by the wrongful act and what may be described as the effect of the said injury. It is only in regard to acts which can be properly characterized as continuing wrongs that S. 23 can be invoked. Thus considered it is difficult to hold that the Trustees act in denying altogether the alleged rights of the Guravs as hereditary worshippers and in claiming and obtaining possession from them by their suit in 1922 was continuing wrong. The decree obtaining by the Trustees in the said litigation had injured effectively and completely the Apellants rights though the damage caused by the said decree subsequently continued . (at page 496) Following this judgment, it is clear that when the recovery certificate dated 24.12.2001 was issued, this certificate injured effectively and completely the Appellants rights as a result of which limitation would have begun ticking. 25., The Learned Counsel for the First Respondent/Bank contends that the section 7 petition was filed based on a recovery certificate within three years from such recovery certificates and ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... APPRAISAL: 30. At the outset, this Tribunal points out that the First Respondent/Bank in the application filed (Form 1) at Part II had inter-alia stated that the amount that was claimed by the Financial Creditors and its associate Banks in Original Application is ₹ 222, 91, 37, 610. 59 on 30.06.2017 in OA I an order was passed by the Tribunal directing the Corporate Debtor and other defendants to pay a sum of ₹ 864, 36, 71, 855.40 to all the applicant banks therein including the financial creditor and its associate banks. 31. On 17.10.2017 in RC 2615 of 2017, the DRT, Hyderabad had issued a Recovery Certificate (RC I) in the OA I in the favour of the Financial Creditors, and its association banks and other banks to recover an amount of ₹ 1408, 03, 14, 857. 40. Further, out of the aforesaid recovery amount, it was mentioned that the Financial Creditor and the associate banks were entitled to the recovery amounts mentioned as under: Amount ordered as Recovery Certificate 1. State Bank of India - ₹ 196,14,36,399.35 2. State Bank of Hyderabad - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (NPS since August 2012) in Sl No. 4, and in Sl No. 10 Syndicate Bank (NPA since March 2013) and if the Limitation is calculated from the year July 2012/March 2013 based on NPA, the application filed under section 7 of the Code by the First Respondent/Bank on 06.09.2019 is beyond the period of limitation and as such the application under section 7 of the Code filed before the Adjudicating Authority is not maintainable in the eye of Law. 36. It comes to be known that in OA 1653 of 2017 (New) (OA 154 of 2014- Old) (OA II) in the file of DRT II, Hyderabad, the State Bank of Hyderabad figured as applicant No. 4 and the same was filed against the Corporate Debtor and the Appellant in the present Appeal and his wife, wherein an order on 30.06.2017 was passed against the Corporate Debtor and the Appellant and another wherein the OA was allowed with costs by directing the defendants No. 1, 2, 3 jointly and severally to pay a sum of ₹ 864, 36, 71, 855. 40. As a matter of fact the defendants no 2 and 3 in OA No. 1653 of 2017 were set ex-parte and although the Corporate Debtor had filed a written statement, later their Learned Counsel reported no instructions in OA 1653 of 2017 and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The Doctrine of Estoppel by matter of record means that the matter is Resjudicata . No wonder, Resjudicata is an Estoppel by Judgment . In this connection, it is pertinently point out it is the prime duty of the Tribunal/ An appellate Tribunal to check the endeavours of unsuccessful Stakeholders/Litigants to get over the defeat by devising a plea which was never set up, when it should have been taken at the appropriate time, before the competent forum. Aspect of NPA 43. Dealing with the plea of aspect of NPA since July 2012 (State Bank of India), NPA since June 2012 (State Bank of Mysore) and NPA since March 2013 (Syndicate Bank), projected on the side of the Appellant , it is to be pointed out that the Corporate Debtor s NPA accounts being 2012 and 2013, it is to be pointed out that in OA 1653 of 2017 on the file of DRT II, Hyderabad, the order dated 30.06.2017 shows that the Corporate Debtor/D1 filed written statement, his counsel Totem Infrastructure reported no instruction and their side evidence was closed and Defendant No.2 3 were set ex-parte. As such, the order dated 30.06.2017 in OA 1653 of 2017 against the Corporate Debtor and the Appellant etc has be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red and the application was complete. Admission Acknowledgement 46. In Law an admission is a piece of evidence and is a waiver of proof. However, an admission must be an unequivocal and comprehensive one. An acknowledgement, merely acknowledges a person s liability and the same is to be before the expiry of the specified period of limitation. The said acknowledgement of an individual, must be conscious of his liability and the commitment should be made towards that liability. 47. It cannot be gain said that a judgment in personam binds both the parties in a given legal proceedings when a person is a party to the judgment/order in a legal proceedings is estopped from pleading that the said judgment/order/Recovery Certificate did not bind him. Further, a person is precluded by way of his action or conduct in not agitating a particular matter before the higher forum. Even an Exparte Decree/order is binding for all purpose. It is well settled that in the absence of fraud or want of jurisdiction or any other irregularity, an Exparte order/Decree will bind the parties at any cost. 48. It is to be mentioned the right to apply under section 7 of the I B Code accrues ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ever, the judgement of the Hon ble Supreme Court in Dharani Sugars case was delivered on 02.04.2019. In fact the aforesaid recovery certificates were issued prior to the RBI circular 12.02.2018. In short, the principles laid down by the Hon ble Supreme Court s decision will not apply to the present facts and circumstances of the case which float on the surface. 52. It cannot be forgotten the letter of authority in favour of the signatory of the First Respondent/Bank was based on the Gazette Notification dated 26.09.1959, 26.08.1972 ands 02.05.1987. As regards the plea of the Appellant that the letter dated 29.01.2020 addressed by the Managing Director of the Corporate Debtor/Totem Ingratitude Limited addressed to Asst. General Manger, Union Bank of India, Hyderabad wherein a request for OTS with consortium banks was made, it is to be pointed out that in paragraph 2 of the said letter the corporate debtor among themselves had agreed to pay the amount due and at the bottom of the letter a request was made to consider this letter as OTS option and to permit them to repay the amount in atleast 4 to 6 instalments spread over to a period of one year and the contents of the letter are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the fact, that the duty to assign reasons introduces clarity and minimizes arbitrariness. Also, it will enable the superior authority to evaluate the order so passed on legal plane. However, this Tribunal being an Appellate Authority over the Adjudicating Authority in the present Appeal has dealt with the aspect of limitation concerning the section 7 application and the aspect of RBI circular dated 12.02.2018 and answered the same at the relevant of this Judgment. As such, the Appellant cannot be an aggrieved person in this regard, in the considered opinion of this Tribunal. 57. It is to be pointed out that in our Justice Delivery System , Law is to be decided with reasons which carry convictions within the Codes/Tribunals/Lawyers/Stakeholders and Litigants to make it, stable, predictable and consistent with a view to have certainty and clarity to the benefit of one and all. It cannot be gainsaid that the judgment/order of a Tribunal is to be written only after deep travail and positive vein. Also that, the procedure for developing the law has to be one of evolution. In this connection it is significant to point out that the exception to rule of Stare decisis is that a C ..... X X X X Extracts X X X X X X X X Extracts X X X X
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