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TMI Blog2022 (4) TMI 652X X X X Extracts X X X X X X X X Extracts X X X X ..... No. 1 and Petitioner Company No. 2 authorising Ms. Anita Patole to represent the financial creditors in the instant petition have been annexed with the petition at Page No. 18 and 26 respectively. 2. The Corporate Debtor namely M/s. Modern Syntex (India) Ltd. is a Company incorporated under the provisions of the Companies Act, 1956 on 12.11.1976 holding CIN No. L24302RJ1976PLC001780 with its registered office at A-4, Vijay Path, Tilak Nagar, Jaipur and falls within the territorial jurisdiction of this Adjudicating Authority. 3. The Authorized Share Capital of the Corporate Debtor is Rs. 1,60,00,00,000/- (Rupees One Hundred Sixty Crores) and Paid-Up Share Capital of the Company is Rs. 1,28,21,66,000/- (Rupees One Hundred Twenty-Eight Crores Twenty-One Lakhs Sixty-Six Thousand Only). 4. The facts of the case, as briefly stated in the application by the Financial Creditors are as follows: a. That the Corporate Debtor received finance from the Financial Creditors in the nature of Secured Redeemable Non-Convertible Debentures (NCD) of Rs. 5385 Lacs and Unsecured Transferable Notes (UTNs) of Rs. 700 Lacs vide sanction letters signed on various dates. The details of allotment of Secu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... whereby the body of Unit Trust of India was bifurcated into following entities: i. The Administrator of the Specified Undertaking of the Unit Trust of India (SUUTI), a Successor to the erstwhile Unit Trust of India (UTI), having its Office at UTI Tower, Gn Block, Bandra Kurla Complex, Bandra (East), Mumbai-400051 ii. UTI Trustee Company Pvt. Ltd., the Trustee Company of UTI Mutual Fund (UTIMF), a successor to the erstwhile Unit Trust of India, acting through UTI Asset Management Company Limited, having its registered office at UTI Tower, 'Gn' Block, Bandra Kurla Complex, Bandra (East), Mumbai-400051. g. Upon enactment of the Insolvency and Bankruptcy Code, 2016 (the Code) and in accordance with the provisions thereof, the last pending reference being Case No. 60/2010 in BIFR stood abated on 16.12.2016. Thus, there was a continuous default as on 16.12.2016. h. The Financial Creditors have submitted that the application has been filed within limitation considering the extension in limitation by virtue of pendency of proceedings in BIFR. Also, the pendency of proceedings in BIFR results firstly in creating a bar on initiation of legal proceedings and secondly in extend ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of the Code. b. As per sanction letter dated 09.09.1998, security was to be created within a period of 3 months from the date of sanction of restructuring failing which additional interest was to be charged @ 1.05% p.a. However, the Respondent did not create any security for converting restructured 17% debentures of Rs. 60.85 crores and has also not created security for restructured optionally secured fully convertible debentures of Rs. 28.31 Crores. As the Respondent/Corporate Debtor did not file any modification of the earlier charges return in Registrar of Companies ('ROC'), accordingly the Applicants/Financial Creditors are partly Secured Financial Creditors and partly Unsecured. It has also been submitted that the claim of the Applicants besides being extremely exorbitant is superfluous and therefore, non-maintainable under the law. c. In the year 2008, a one-time settlement ('OTS') was entered into with the Applicants for a total amount of Rs. 16 crores against the dues. The Respondent paid Rs. 2.4 Crores out of the settlement amount, however could not pay the remaining 13.6 crores due to pending reference and approval of Draft Rehabilitation Scheme bef ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed wrong dates with respect to allotment of 15% NCD amounting to Rs. 85 Lacs as on 24.09.1995 against the correct date being 24.09.1985. The same has been done deliberately to cross the bar of Limitation. h. The reply also states that the filing of the Application is barred by Limitation. The sanctioned/subscribed Redeemable NCDs of Rs. 5385 Lacs and UTNs of Rs. 700 Lacs in the year 1994 and 1995 were restructured on 09.09.1998 due to default in payments from 01.04.1996, being the date when right to sue arose for the first time. The applicants restructured its debts and accordingly on 01.01.1999 when the interest for the quarter ended the payment became due on 31.12.1998 and the same was not paid. Therefore, three years of limitation from 01.01.1999 expired in the year 2002. The alleged debt as claimed to be due and payable is time barred. Accordingly, the Application is beyond limitation. i. It has been submitted that the Hon'ble Apex Court in B.K. Educational Services Private Limited v. Parag Gupta and Associates (2018) 11 SCC 633 made it clear that the provision of the Limitation Act, 1963 will apply to the application made under Section 7 and 9 of IBC. The Hon'ble C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... R. Bhojwani Vs. Abhyudaya Co-operative Bank Ltd. & Anr. (Civil Appeal No. 11020 of 2018) ix. Sagar Sharma & Anr. Vs. Phoenic ARC Pvt. Ltd. & Anr. (Civil Appeal No. 7673 of 2019) x. Babulal Vardharji Gujar Vs. Veer Gurjar Aluminium Industries Pvt. Ltd. And Another (Civil Appeal No. 6347 of 2019) xi. V Hotels Limited Vs. Asset Reconstruction Company (India) Limited (Company Appeal (AT) (Insolvency) No. 525 of 2019) xii. M/s. Reliance Asset Reconstruction Company Ltd. Vs. M/s. Hotel Poonja International Private Limited (Company Appeal (AT)(INS) No. 1011 of 2019) xiii. A. Balakrishnan Vs. Kotak Mahindra Bank Limited (Company Appeal (AT) (Insolvency) No. 1406 of 2019) xiv. C. Shivakumar Reddy' Vs. Dena Bank & Anr. [Company Appeal (AT) (Insolvency) No. 407 of 2019] xv. Sumeet Maheshwari Vs. Navbharat Press (Bhopal) Private Limited & Anr. [Company Appeal (AT) (Insolvency) No. 197 of 2020] xvi. Bimalkumar Manubhai Savalia Vs. Bank of India (Company Appeal (AT) (Insolvency) No. 1166 of 2019) xvii. Bishal Jaiswal Vs. Asset Reconstruction Company (India) Ltd. & Anr. (Company Appeal (AT) (Insolvency) No. 385 of 2020) xviii. Rajesh Kumar Tekriwal Vs. Bank of Baroda (Comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de, hence the OTS was cancelled in August 2009. In December 2009, SUUTI, received Rs. 2.40 Crores from IFCI from the sale proceeds of two units of the Company sold under SARFAESI Act 2002 situated at Alwar, Rajasthan. After the repeal of Sick Industrial Companies (Special Provisions) Act, 1985, the reference to what transpired before BIFR is not relevant for the purpose of deciding this petition which is within four corners of the IBC Code. e. It has been submitted that as per Annexure C of the Application, the instalments under restructuring sanctioned in September 1998 were to commence from 01.04.2000. The Corporate Debtor's reference was registered with BIFR on 08.12.2000. On 16.12.2016, the reference stood abated and the petition is dated 04.01.2018. Considering the time gap of 8 months between April and December 2000 and 12 months subsequently between abating of reference and filing of petition, it is clear that the petition is within limitation considering the extension in limitation period by virtue of pending proceedings in BIFR. Secondly, the pendency of proceedings in BIFR results firstly in creating a bar on initiation of legal proceedings and secondly in extending ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entioned Authority Letter marked as Exhibit A, Ms. Anita Patole has been duly authorised to sign/execute/affirm and deliver the Vakalatnama, Affidavits, Reply Affidavits, Rejoinders in the matter of Modern Syntex (India) Ltd. for the benefit of the Administrator of SUUTI i.e. Applicant No. 1 herein by Shri B. Babu Rao, CEO SUUTI. It is also clear from the extracts of meeting of Board of Advisors of SUUTI held on 08.03.2003 that the responsibility for continuation of the existing Legal Actions (both Civil and Criminal) and power of institution and defending of Legal Actions was delegated to UTI Asset Management Company Private Limited (UTI AMC). Further the Petitioners submitted an affidavit vide Diary No. 602/2021 dated 05.03.2021 along with extracts of the meeting of Board of Advisors of Applicant No. 1 held on 05.11.2014. As per the same, Shri B. Babu Rao was designated as the CEO of SUUTI. Thereby, Ms. Anita Patole was duly authorised by Applicant No. 1. 13. With respect to Applicant No. 2, the deponent Ms. Anita Patole has been authorised vide Exhibit B dated 26.12.2017 by the Executive Vice President & Head of Dealing, UTI Assets Management Co. Ltd. to sign/execute/affirm and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t has also been contented that no proceedings could be taken due to BIFR Reference and as soon as the BIFR reference was abated, the legal bar ended and Financial Creditors filed the present petition enforcing their right. 15. We first take up the position in law regarding the applicability of the Limitation Act in IBC. To consider the same the following provisions of law are to be kept in mind: Section 238A of the Insolvency and Bankruptcy Code: "[Limitation-The provisions of the Limitation Act, 1963(36 of 1963) shall, as far as may be, apply 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, as the case may be]." Limitation Act: "18. Effect of acknowledgement in writing- (1) Where, before the expiration of the prescribed period for a suit or application in respect of any property or right, an acknowledgement of liability in respect of such property or right has been made in writing signed by the party against whom such property or right is claimed, or by any person through whom he derives his title or liability, a fresh period of limitation sha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 95. Thereafter, restructuring package was approved on 09.09.1998 as per which the overdue interest and simple interest as on 30.09.1998 i.e. Rs. 2831.82 Lacs was converted into 16% OFCDs redeemable in 32 quarterly instalments commencing from 01.04.2000 and the principal of all the UTNs (Rs. 700 Lacs) and NCDs (Rs. 5385 Lacs) was converted into 17% NCDs redeemable in 32 quarterly instalments commencing from 01.04.2001. Acceptance of the same was conveyed vide letter dated 14.09.1998 by the Corporate Debtor. The Statement of Accounts show that the Corporate Debtor during the period from 15.05.2000 to 25.10.2000 paid a sum of Rs. 112.56 Lacs. Thereafter, the matter came to be referred to BIFR on 08.12.2000. 19. As per Section 22 of SICA, the Corporate Debtor enjoyed protection/bar on legal proceedings from the time of reference till 01.12.2016 i.e. the date of abatement of the BIFR reference. The Hon'ble NCLAT in Gauri Prasad Goenka, Ex-Chairman of NCR Limited Vs. Punjab National Bank and Anr. has observed that as per Section 22(5) of SICA the legal proceedings attracted to the case of a Sick Industrial Unit are suspended. Section 22(5) states that in computing the period of limi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .2000 to 25.10.2000. Thereafter, the matter was referred to BIFR, the period of which, as stated above has been excluded for the purpose of computing limitation. 24. As per Section 18 and 19 of the Limitation Act, 1963, a fresh period of limitation will be computed from the date of acknowledgement of debt and payment on account of debt made before the expiration of the said period. The last payment was made by the Corporate Debtor on 25.10.2000 therefore, a fresh period of limitation shall be computed from that date of default. In addition to the same, a One Time Settlement as sanctioned by the Petitioner No. 1 in terms of its letter dated 23.10.2008 was cancelled in August 2009. Also, the Hon'ble High Court has vide order dated 20.07.2020 directed this Authority to consider the settlement at the time of deciding the main petition. It is a settled position of law that settlement amounts to acknowledgement of debt which in the present case has been done vide proposed One Time Settlement. Therefore, the present petition has been filed within the stipulated time as per the provisions of law. 25. Lastly, the Hon'ble High Court vide order dated 20.07.2020 directed that the pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll carry out CIRP strictly as per the timelines specified and as envisaged under the provisions of IBC, 2016 in relation to the Corporate Debtor. c. The said IRP shall act strictly with the provisions of IBC, 2016 and to defray his expenses to be incurred and fees on the account, the Applicant is directed to deposit a sum of Rs. 2,00,000/- (Two Lakhs Only) to the account of IRP within three days from the date of this order. The IRP shall duly file a status report apprising this Adjudicating Authority about the progress of CIRP, as it unfolds, concerning the Corporate Debtor. In terms of Section 17 & 19 of IBC, 2016 all personnel of the Corporate Debtor including promoters and Board of Directors, whose powers shall stand suspended, shall extend all cooperation to the IRP during his tenure as such and the management of the affairs of the Corporate Debtor shall vest with the IRP. d. In terms of Section 7 of IBC, 2016, this order shall be communicated at the earliest, not exceeding one week from today, to the Applicant, Corporate Debtor as well as the IRP appointed by this Adjudicating Authority to carry out the CIRP. A copy of this order shall also be communicated to IBBI for its ..... X X X X Extracts X X X X X X X X Extracts X X X X
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