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TMI Blog2022 (12) TMI 368X X X X Extracts X X X X X X X X Extracts X X X X ..... ith exclusion of certain Limitation period. Likewise, Section 60(6) of the Code says that notwithstanding anything contained in the Limitation Act, 1963 or in any other law for the time being in force in computing the period of Limitation specifies for any Suit or Application by or against a Corporate Debtor, for which an Order of Moratorium has been made under this part the period during which Moratorium is in place shall be excluded. If the claim is legally enforceable, the period of Limitation will run from the date of commencement of CIRP till the date on which the winding-up Order is made i.e., Moratorium under Section 14 of the Code - In the instant case, the last invoices for the supply of good by the Corporate Debtor is dated 16.06.2015 and it is the case of the Appellant that the Recovery Proceedings, if any, ought to have been initiated within three years i.e., on or before 16.06.2018. In this case, the Moratorium was in effect from 02.01.2018 to 12.10.2018 and this period shall be excluded in computing the period of Limitation specified for any Suit or Application by or against the Corporate Debtor in accordance with the provisions of sub-Section (6) of Section 60 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - I), in MA/114/2019 in MA/453/2018 in TCP/95/2017, by which Order, the Learned Adjudicating Authority has allowed the Application preferred by the Liquidator for M/s. Surana Industries Ltd./the 'Corporate Debtor' in liquidation, seeking direction to the Respondent to pay the dues to the 'Corporate Debtor'. 2. Submissions of the Learned Counsel appearing on behalf of the Appellant: • Learned Counsel for the Appellant submitted that Corporate Insolvency Resolution Process ('CIRP') in respect of the 'Corporate Debtor' was initiated under Section 9 of the Insolvency and Bankruptcy Code, 2016, (hereinafter referred to as 'The Code') vide Order dated 02.01.2018 and subsequently the Liquidation Order was passed on 12.10.2018 and Mr. R. Sada Sivan, the RP was appointed as a Liquidator. It is stated that the Liquidator issued a Demand Notice dated 14.05.2018 and a reminder Notice dated 14.11.2018 to the Appellant herein calling upon them to pay the outstanding amount to the 'Corporate Debtor', in response to which, the Appellant replied vide letter dated 07.12.2018 stating that the outstanding dues were duly settled by way of arrangement of inter-company transfer dated 08.01.2016, b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rity on the Books of Accounts of the 'Corporate Debtor', without any discussion of the same, is erroneous. • When there are disputed questions of fact, the Adjudicating Authority cannot be converted into a Trial Court under the guise of Section 60(5) at best, the Adjudicating Authority ought to have granted the Official Liquidator permission under Section 33(5) read with Section 30(1)(k) to institute suits or other legal proceedings against the Appellant. • There is no semblance between Section 60(5) of the Code and Section 446(2) of the Companies Act, 1956 as the latter Application is to be adjudicated as if it were a suit by following a procedure envisaged under the Code. • The last set of invoices is dated 25.05.2015, and the CIRP commenced on 02.01.2018 and the Liquidation on 12.10.2018 and this Application under Section 60(5) of the Code was filed only on 25.01.2019 after the period of three years Limitation from the date of the last invoice and hence the demand is completely 'barred by Limitation'. • Section 60(6) read with Section 14 shows that there is no embargo on the RP under Section 14 to institute Recovery Proceedings on behalf of the 'Corporate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 58A of the Parent Companies Act, 1956, which deals with 'exclusion of certain Limitation period'; that the effect of Section 458A of the Parent Companies Act, 1956 is that, in respect of a legally enforceable claim, which could have been made by the Company on the date on which the Application for winding-up is made, the period of Limitation will not run against the Company from the date of commencement of the winding-up Proceedings, i.e., from the date on which the Application for winding-up is made, till the date on which the winding-up Order is made (both inclusive). • It is stated that such a claim could be filed by the Official Liquidator by taking the benefit of one year period, immediately following the date of the winding-up Order, as provided under Section 458A of the Act and the three years period provided under Article 137 of the Limitation Act, 1963 and hence in respect of a legally enforceable claim, which could have been made by the Company on the date on which the Application for winding-up is made, the Official Liquidator could file Claim within a period of four years from the date on which the winding-up Order is made. • It is submitted that Section 60( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erpretation by applying or assigning 'each to each'. This rule was formulated in an Irish case 'M. Neel' Vs. 'Crommelin' [1858] 9 Ir CLR 61, as follows: "Where there are general wards of description, following and enumeration of particular things such general words are to be construed distributively reddendo singule singulis; and if the general words will apply to some things and not to others, the general words are to be applied to those things to which they will, and not to those which they will not apply; that rule is beyond all controversy". • In this case, a 'Claim' against the Appellant is very much legally enforceable as on the date of CIRP as well as on the date of Liquidation by exclusion of Limitation as provided under Section 60(6) of the Code. • Rule 39 of the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016, clearly spells out that a Liquidator shall make an attempt to recover and realise all the assets and outstanding of a 'Corporate Debtor' in a time bound manner for the purpose of 'Maximisation of Value of the Stakeholders'. • It is submitted that Section 60(5) of the Code should be considered in two-fold viz., whe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... years and therefore this kind of frivolous Appeal will lead to the endless process of the Liquidation and thereby the very object of purpose of the Code will be defeated. Assessment : 4. The main issues which arise in this Appeal are: (a) whether the claim filed by Liquidator under sub-Section (5) of Section 60 of the Code is governed by Article 137 of the Limitation Act, 1963 and if the claim is enforceable by law as on the date of the Liquidation Order, or is it 'barred by Limitation'? (b) the second issue which arises for consideration is whether the amount is 'due and payable' as it is the case of the Appellant that the dues were settled by way of inter-company transfers pursuant to a Tripartite Agreement entered into between the 'Corporate Debtor', its Sister Concern and the Appellant. 5. At the outset, we address to the question of Limitation. It is the case of the Appellant that Section 60(6) cannot save Limitation in respect of a 'time barred' Claim and that the Moratorium under Section 14 does not create any embargo on the institution of suits and proceedings by/on behalf of the 'Corporate Debtor' during the CIRP. It is the further case of the Appellant that the L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this power is given by this section". "This section aims at safeguarding the assets of a company in winding-up against wasteful or expensive litigation as far as matters which could be expeditiously and cheaply decided by the company court are concerned. In granting leave under this section, the court always takes into consideration whether the company is likely to be exposed to unnecessary litigation and cost". 8. Section 60(6) of the Code is similar to Section 458A of the Parent Company Act, 1956, which deals with exclusion of certain Limitation period. Likewise, Section 60(6) of the Code says that 'notwithstanding anything contained in the Limitation Act, 1963 or in any other law for the time being in force in computing the period of Limitation specifies for any Suit or Application by or against a 'Corporate Debtor', for which an Order of Moratorium has been made under this part the period during which Moratorium is in place shall be excluded'. If the claim is legally enforceable, the period of Limitation will run from the date of commencement of CIRP till the date on which the winding-up Order is made i.e., Moratorium under Section 14 of the Code. A 'Claim' filed by the Liq ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isions of this Code shall have effect, notwithstanding anything inconsistent therewith contained in any other law for the time being in force or any instrument having effect by virtue of any such law." 12. Regulation 39 of the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016, clearly spells out that a Liquidator shall make all attempts to recover the assets and outstanding dues of the 'Corporate Debtor' in a time bound manner for the purpose of 'Maximisation of Value of the Stakeholders'. 13. Now we address to the contention of the Learned Counsel for the Appellant that the Liquidator ought to have instituted a Civil Suit under Section 35(1)(k) before the appropriate form and the Application filed by them was not maintainable before the Adjudicating Authority. We find force in the contention of the Learned Counsel for the Respondent that Section 33(5) and 35(k) of the Code are akin to the provisions of Section 457 of the Parent Companies Act, 1956 and therefore the real intent of the said Sections should be interpreted from the reading of the ratio of the Judgements of the Hon'ble Supreme Court made under Section 457 of the Companies Act, 1956. 14 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ective of time bound and the 'Maximisation of Assets of the Stakeholders' and also to avoid multiplicity of proceedings. 16. Learned Counsel for the Appellant submits that this matter is covered by 'Shri Ramchandra D. Choudhary' Vs. 'Bansal Trading Company' Comp. App. (AT) (Ins.) No. 810/2020, in which this Tribunal has held that claims of Sundry Debtors which are disputed and require voluminous evidence cannot be decided in summary Proceedings. The facts in the instant case can easily be differentiated as there are no multiple Sundry Debtors, no dispute regarding quantity or the quality of the goods supplied requiring voluminous evidence and further the Appellant is already undergoing SARFAESI Proceedings and the code envisages that multiplicity of litigations be avoided. It is pertinent to mention that the Appellant has never denied the supply of goods nor raised any dispute regarding the quality or short supply. It is only their case that the outstanding dues were settled by way of inter-company transfers pursuant to Tripartite Agreements entered into between the 'Corporate Debtor', Thribovan, (the Sister Concern of the 'Corporate Debtor') and the Appellant herein. It is observ ..... X X X X Extracts X X X X X X X X Extracts X X X X
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