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TMI Blog2019 (11) TMI 1679X X X X Extracts X X X X X X X X Extracts X X X X ..... mpany which is a part of Atlas Group of companies, registered under the Companies Act having its Registered Office in XI/305 H, Opp. CIAL, Vappalassery, Nedumbassery, Angamaly - 683 572. The Authorised and Paid-up Share Capital of the Corporate Debtor Company is Rs. 50,00,00,000.00 and Rs. 22,00,00,000.00 respectively (Hereinafter referred as ''Corporate Guarantor/ Corporate Debtor'). Applicant's Submission 3. The counsel for the Financial Creditor through his application stated that M/s. Atlas Jewellery Pvt. Ltd. (Hereinafter referred as 'Principal Borrower') had borrowed funds from them and the Corporate Debtor Company herein stood as a Corporate Guarantor to Principal borrower who is due to pay an amount of Rs. 241,24,15,790.97 as on 31.12.2015, to South Indian Bank, Thrissur Branch (Hereinafter referred as the 'Bank'). 4. The Principal borrower and the group entities including the corporate debtor stood as guarantors and had also mortgaged certain properties. The total loan amount sanctioned by the applicant bank to the principal borrower, was to the tune of Rs. 237 Crores as on 21.03.2013 and 21.10.2013. 5. The Bank had initiated recovery pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mplete' as mandated under Section 7(3) of I &B Code. 12. In the guarantee agreement entered between the parties the guarantor is liable to make the payment upon "demand". Therefore, the applicant bank had invoked guarantee vide letter dated 01.01.2016. Based on this letter the Financial Creditor called upon to pay the amount 'immediately'. However, by assuming that the guarantee invocation letter was served on 01.01.2016, i.e., the date of default would be 01.01.2016. that being the limitation got expired on 31.12.2018. as The Application was filed under Section 7 of the I & B Code in April 2019, it is therefore clearly time-barred. Thereby, prayed to dismiss the application on this ground alone. 13. The counsel for the Corporate Debtor relied upon the Supreme Court judgement dated 18.09.2019, Gauravindhbai Dave v. Asset Reconstruction Company India Ltd and another (Civil Appeal No. 4952 of 2019) stated that the present case being "an application" which is filed under section 7, would fall only within the residuary of Article 137 of the Limitation Act, which is as under: PART II Other applications Sl. No. Description of Suit Period of Limitation Time from which p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed that it is not left to the discretion of the applicants to bring any documents of their choice. Even assuming that a statement of accounts is acceptable for arguments sake, without admitting, here in this application there is no such bank statements produced by the applicant showing the outstanding as on the date of filing the application. 17. The corporate debtor further submitted that it is a basic principle of law that if a statute mandates a thing has to be done in a particular manner, that has to be done in that manner alone and not in any other way. The Corporate Debtor relies upon the judgement of Supreme Court in the case of following:- * Ramachandra Keshav Adke (Dead) by Lrs. And Ors. Vs. Govind Joti Chavare and Ors. Reported in AIR 1975 SC 915. * Shiv Kumar Chandha and Ors. Vs. Muncipal Corporation of Delhi and Ors. (1993) 3 SCC 161. * M. Shankara Reddy and Ors. Vs. Amara Ramakoteswara Rao and Ors. (AIR 2018 AP18). 18. The counsel claimed that the Bank itself admitted that they have sold all the securities which they were holding. There was no notice served on the Guarantor, before they have sold such securities. The notice referred by the counsel for the appli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is binding on the guarantor. It was further reaffirmed that the classification as Non-Performing Asset is a record of 'default' and pendency of DRT proceedings cannot, in any manner interdict an enquiry by this Hon'ble Tribunal. 22. The learned counsel for the corporate debtor rebutted that there is no acknowledgement of any sort of liability made by the principal borrower in the Writ petition. Under Section 18 of the Limitation Act, the acknowledgement has to be an 'acknowledgement of liability'. The said writ petition only narrates the facts which has led to the filing of the Writ Petition and nowhere it states that the principal borrower owes any debt to the Applicant Bank. He has also relied on Allahabad High Court judgement in the case of Gulam Murtaza v. Fasiunnissa Bibi (AIR 1935 ALL 129) "In order that a written acknowledgment may be of avail to a plaintiff under Section 19, Limitation Act, it is necessary that such acknowledgment must have been made before the expiration of the period prescribed for the suit. It is equally necessary that it must be a clear and unambiguous acknowledgment specifically admitting liability in respect of the debt sued up ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arantor vide an Agreement of Guarantee dated 23.03.2013 regarding the loans given to M/s. Atlas Jewellery Private Limited which was invoked on 01.01.2016. The notice of invocation of guarantee was issued by the Financial Creditor on 01.01.2016 to the Corporate Debtor. This application was considered under a question of Limitation as the application was placed before the Tribunal after 3 years on 10.04.2019. For the purpose, we relied on clause 6 of the Agreement of Guarantee, stated as: '6. The Guarantor(s) also agree that any admission or acknowledgement in writing by the Borrower of the amount of indebtedness of the Borrower or otherwise in relation of the subject matter of this guarantee, shall be binding on the guarantor(s) and the guarantor(s) accept the correctness of any statement of account served on the Borrower by the Bank and the same shall be binding and conclusive as against the guarantor(s) also and the guarantor(s) agree that in making an acknowledgement or making a payment the Borrower shall be treated as duly authorized agent of Guarantor(s) for the purpose of Section 18 and 19 of Indian Limitation Act, 1963.' In the light of the above clause, in the gu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rrower is binding on the guarantor. As such, this application is within limitation and binding on the guarantor who is the corporate debtor in the instant application. 27. A Financial Creditor falls under section 5(7) can file an application for Initiating Corporate Insolvency Resolution Process against a Corporate Debtor before this Adjudicating Authority when the default has occurred. No doubt the debt claimed is a financial debt as defined under section 5(8) of I & B Code. Herein this case Annexure I (3) is found a legally executed Agreement of Guarantee. Annexure I (3) proves that Financial Creditor is entitled to claim due amount of the principal borrower from their guarantor under the purview of section 5(8) (h) of I & B code. In State Bank of India v. M/s. Indexport Registered [1992 SCC (3) 159], the Apex Court held that the decree holder bank can execute the decree against the guarantor without proceeding against the principal borrower. Guarantor's liability is co- extensive with that of the principal debtor. 28. In an application of this nature, this Adjudicating Authority is bound firstly to consider as to whether there is existence of default from the records and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respect of its property including any action under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (54 of 2002); (d) the recovery of any property by an owner or lessor where such property is occupied by or in possession of the Corporate Debtor. (2) The supply of essential goods or services to the Corporate Debtor as may be specified shall not be terminated or suspended or interrupted during the moratorium period. (3) The provisions of sub-section (1) shall not apply to such transactions as may be notified by the Central Government in consultation with any financial sector regulator. (4) The order of moratorium shall affect the date of such order till the completion of the corporate insolvency resolution process. 32. Provided that where at any time during the corporate insolvency resolution process period, if the Adjudicating Authority approves the resolution plan under sub-section (1) of section 31 or passes an order for liquidation of Corporate Debtor under section 33, the moratorium shall cease to have effect from the date of such approval or liquidation order. 33. Mr. Shri Manivannan. J, having Registration No: I ..... X X X X Extracts X X X X X X X X Extracts X X X X
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