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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 ..... nd Criminal)'either by itself or through Lead Institutions etc. Therefore, it is clear that Ms. Anita Patole was duly authorised by the concerned authority to file the affidavit in support of Application under Section 7 of the Code on behalf of Applicant No. 2. Whether the present application has been filed within limitation? - HELD THAT:- The Respondent has also laid down three scenarios i.e. in case the default is considered from default of interest amount then the date of default is 31.12.1996, in case the default is considered from the default of principal amount then the date of default is 14.06.1996 and in case the date of default is considered as per the Restructuring Scheme then the date of default is 01.01.1999, therefore, the petition is time barred. The Financial Creditors have rebutted this contention of the Respondent/Corporate Debtor by contending that the Respondent has time and again defaulted in payment of the due amount therefore, there is a continuous default by the Corporate Debtor. It 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (The Code) by 'Administrator of Specified Undertaking of Unit Trust of India' and 'UTI Trustee Company Private Limited' (Financial Creditors/Petitioner Companies) through authorised signatory, Ms. Anita Patole, for initiation of Corporate Insolvency Resolution Process (CIRP) against 'M/s. Modern Syntex (India) Limited' (Corporate Debtor). The Authority Letters of Petitioner Company 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 ₹ 1,60,00,00,000/- (Rupees One Hundred Sixty Crores) and Paid-Up Share Capital of the Company is ₹ 1,28,21,66,000/- (Rupees One Hundred Twenty-Eight Crores Twenty-One Lakhs Sixty-Six ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... led subsequent references with BIFR from time to time. It has been further submitted that the date of Default was 31.01.1999 whereas during the period starting from 2000 till 16.12.2016, the Corporate Debtor enjoyed the protection/bar on legal proceedings as per Section 22 of The Sick Industrial Companies (Special Provisions) Act, 1985 (SICA). f. Meanwhile, in the year 2002, the Unit Trust of India (Transfer of Undertaking and Repeal) Act, 2002 was enacted 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 pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on. It is made clear that no further opportunity to file reply shall be extended to the Petitioner. 8. Subsequently, the Corporate Debtor filed reply to oppose the application filed by the Financial Creditors on the following grounds: a. The Respondent/Corporate Debtor became sick in the year 2000 and on 08.12.2000, the reference to BIFR was made which was subsequently registered as Case No. 399/2000. The said reference continued till 01.12.2016 and stood abated on the said date upon coming into operation 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 ₹ 60.85 crores and has also not created security for restructured optionally secured fully convertible debentures of ₹ 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 Financia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... foresaid letter. It is a settled position of law that any proceedings be it a suit/application/complaint under any provisions of law, in case of corporate body, should be filed exclusively by a person who has been duly authorised. Therefore, the very foundation of the application which is resting on the alleged defective authorisation cannot be considered as proper authorisation. g. It has further been mentioned that the Application lacks the essential ingredients of Section 7 of the Code and in Part IV the Petitioners have deliberately mentioned wrong dates with respect to allotment of 15% NCD amounting to ₹ 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 ₹ 5385 Lacs and UTNs of ₹ 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Suit No. 689 of 1999 and Application No. 3189 of 1999 decided on 29.10.2010) iv. State Bank of Travancore Vs. Kingston Computers (I) P. Ltd. Vs. Kingston Computers (I) P. Ltd. [Civil Appeal No. 2014 of 2011 (Arising our of SLP (C) No. 18179 of 2009) Decided on 22.02.2011] v. B.K. Educational Services Pvt. Ltd. v. Parag Gupta and Associates (2019) 19 SCC 633 vi. Jignesh Shah Anr. Vs. Union of India Anr. [Writ Petition (Civil) No. 455 of 2019] vii. Gaurav Hargovindbhai Dave Vs. Asset Reconstruction Company (India) Ltd. Anr. (Civil Appeal No. 4952 of 2019) viii. Vashdeo 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) xii ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r considered by the Petitioner since the OTS was cancelled vide petitioner's letter dated 12.08.2009 and all original liabilities were restored. Therefore, any consideration of settlement proposal of the Corporate Debtor would be only in the four corners of the Code and not on the basis of any legal or contractual rights available to the Corporate Debtor and no such legal right exists in favour of the Respondent/Corporate Debtor outside the framework under IBC Code. d. It was further mentioned in the rejoinder that as per the OTS sanctioned, the Corporate Debtor was required to make a payment of ₹ 16 Crores whereas no payment was made, hence the OTS was cancelled in August 2009. In December 2009, SUUTI, received ₹ 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on record. To decide the controversy, we take the affidavit dated 04.03.2021 on record. 11. The first issue for consideration is whether Ms. Anita Patole was duly authorised to depose on behalf of the applicants in the present application filed under Section 7 of the Code for initiation of CIRP against the Corporate Debtor. 12. The Affidavit in support of the Application for initiation of CIRP by Financial Creditors has been filed by Ms. Anita Patole which is annexed at Page 16 and 24 of the Application. Along with the Affidavit two authority letters have been filed which are marked as Exhibit A and Exhibit B at Page 18 and 26 respectively. Vide the aforementioned 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 p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Respondent has also laid down three scenarios i.e. in case the default is considered from default of interest amount then the date of default is 31.12.1996, in case the default is considered from the default of principal amount then the date of default is 14.06.1996 and in case the date of default is considered as per the Restructuring Scheme then the date of default is 01.01.1999, therefore, the petition is time barred. The Financial Creditors have rebutted this contention of the Respondent/Corporate Debtor by contending that the Respondent has time and again defaulted in payment of the due amount therefore, there is a continuous default by the Corporate Debtor. It 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hwantlal Thakkar Vs. Indian Overseas Bank Ors. (NCLAT Company Appeal (AT) (Insolvency) No. 236 of 2020) c. Laxmi Pat Surana v. Union Bank of India Anr. ( (2021) 8 SCC 481) The aforementioned judgments have been quoted to enunciate the applicability of the Limitation Act, 1963 under the Insolvency and Bankruptcy Code, 2016. 18. It is settled proposition of law that provisions of the Limitation Act, 1963 are applicable during computing limitation under the Insolvency and Bankruptcy Code, 2016. In the present petition it is observed that the Corporate Debtor received finance from the Financial Creditors in the nature of Secured Redeemable NCDs of ₹ 5385 Lacs and UTNs of ₹ 700 Lacs in the year 1995. 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. ₹ 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 (₹ 700 Lacs) and NCDs (₹ 5385 Lacs) was converted into 17% NCDs redeemable in 32 quarterly instalments commencing from 01.04.2001. Acceptance of the same was conveyed v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . From the factual matrix before us, we have examined the aforesaid scenarios and observed that there are multiple defaults in the present case. Firstly, the Corporate Debtor availed facilities from UTI which became irregular. Thereafter, admittedly the restructuring package was approved on 09.09.1998 as per which the quarterly instalments were commencing for 16% OFCDs and 17% NCDs from 01.04.2000 and 01.04.2001 respectively. It is clear from the same that the aforementioned Scenario No. 1 and Scenario No. 2 do not stand on firm ground because of the acceptance of the Restructuring Scheme by the Corporate Debtor vide letter dated 14.09.1998. Furthermore, the Statement of Accounts show that a sum of ₹ 112.56 Lacs was paid by the Corporate Debtor during 15.05.2000 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 Corpor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncement of CIRP shall be inter-alia as follows: a. The Insolvency Resolution Professional proposed by the Applicant Mr. Partha Sarathy Sarkar is hereby appointed as the IRP to take over the affairs of the Corporate Debtor and duties as required to be performed by him under the provisions of IBC, 2016 including the issue of the publication in widely circulated Newspapers as contemplated under the provisions of IBC, 2016 and calling for the claims from the creditors of Corporate Debtor and collation of the same shall be done. b. Further, as a sequel of admission, moratorium as envisaged under Section 14 of IBC, 2016 is invoked in relation to the Corporate Debtor which will be in vogue during the Corporate Insolvency Resolution Process of the Corporate Debtor. The IRP shall 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 ₹ 2,00,000/- (Two Lakhs Only) to the account of IRP within three days from ..... X X X X Extracts X X X X X X X X Extracts X X X X
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