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TMI Blog2024 (4) TMI 1146X X X X Extracts X X X X X X X X Extracts X X X X ..... ode. The Appellant - Personal Guarantor aggrieved by admission of Section 95 application has come up in this Appeal. Brief facts of the case necessary for deciding this appeal are: (i) The Appellant has given personal guarantee to the two Corporate Debtors namely Castex Technologies Pvt. Ltd. and Stride Auto Parts Ltd. (ii) The Appellant has given Deed of Guarantee on 24.09.2015 in favour of L&T Finance Ltd. to secure the debt of Castex Technologies Pvt. Ltd. (iii) On 13.01.2016 and 14.01.2016, the Appellant executed a Deed of Guarantee in favour of State Bank of India to secure the debt of Stride Auto Parts Ltd., the Corporate Debtor. (iv) An application under Section 7 was filed by the State Bank of India before the NCLT, Chandigarh praying initiation of CIRP against the Corporate Debtor- Castex Technologies Pvt. Ltd. NCLT vide order dated 20.12.2017 admitted Section 7 application filed by the State Bank of India. CIRP was initiated against Castex Technologies Pvt. Ltd. (v) On 08.01.2019, a Section 9 application filed against Corporate Debtor- Stride Auto Parts Ltd. has been admitted by the NCLT, New Delhi. (vi) On 24.09.2018, State Bank of India issued notice under S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under Section 95. The application filed by State Bank of India on 20.10.2020 before the NCLT, New Delhi is without jurisdiction which being hit by interim moratorium which commenced on filing of application by L&T Finance Ltd. It is further submitted that the application which was filed by the State Bank of India was barred by limitation. The Corporate Debtor had defaulted in repayment w.e.f. 29.12.2016 and the application has been filed on 20.10.2020 being after a period of 3 years is barred by time. 4. Shri Krishnendu Datta, learned senior counsel appearing for the State Bank of India refuting the submission of learned counsel for the Appellant submits that the Adjudicating Authority has rightly admitted Section 95 application filed by the State Bank of India. It is submitted that application filed by L&T Finance Ltd. under Section 95(1) before the NCLT, Delhi on 23.01.2020 was without jurisdiction. Proceeding under Section 7 has already been filed by the State Bank of India against Castex Technologies Pvt. Ltd. which application was admitted on 20.12.2017. The application filed by the L&T Finance Ltd., on which CP (IB) No.499/ND/2020 was registered was with regard to guarantee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ort of his submission has relied on judgment of this Tribunal in "Bhavesh Gandhi vs. Central Bank of India, Company Appeal (AT) (Ins.) No.923 of 2022" where this Tribunal noticing the fact that in Section 95 application filed by State Bank of India interim moratorium has commenced and thereafter an application was filed by Central Bank of India on which Resolution Professional was appointed and the order appointing the Resolution Professional in the application filed by Central Bank of India was challenged, this Tribunal took view that when interim moratorium has commenced, there shall be prohibition on the creditors of the debtor from initiating any legal action in respect of any debt. In Para 14 and 15 following has been laid down: "14. As noted above, by order dated 21.06.2021, interim moratorium was commenced from the date of application. Section 96(1)(a) provides that an interim-moratorium shall commence on the date of the application in relation to all the debts. Further, Section 96(1)(b) provides that during the moratorium period (i) any legal action or proceeding pending in respect of any debt shall be deemed to have been stayed; and (ii) the creditors of the debtor shall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by a creditor and appointment of Resolution Professional on an application by another creditor is unsustainable. The above submission of the Appellant with regard to legal position as contemplated by Section 95 and 96 is fully supported by the above judgment of this Tribunal. 8. Shri Krishnendu Datta, learned senior counsel to meet the above contention submits that filing of application by L&T before NCLT, New Delhi against the Appellant on 23.01.2020 was without jurisdiction. It is submitted that Section 7 application was filed by the State Bank of India against the Castex Technologies Pvt. Ltd. before NCLT, Chandigarh which application was admitted on 20.12.2017, which is an admitted fact. In the 'List of Dates and Events' given by the Appellant against date 20.12.2017 following has been mentioned : 20.12.2017 the Ld. Adjudicating Authority, Chandigarh Bench, vide its order dated 20.12.2017 was pleased to initiate the Corporate Insolvency Resolution Process (CIRP) of Castex in CP(IB) No. 116/Chd/Hry/2017. 9. It is further relevant to notice that L&T Finance Ltd. has issued notice to the Appellant for debt owed by Castex Technologies Pvt. and in pursuance to Demand Notice dat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re a National Company Law Tribunal, an application relating to the insolvency resolution of a Corporate Guarantor or Personal Guarantor of such Corporate Debtor shall be filed before such National Company Law Tribunal. As noted above, the application under Section 7 was filed before NCLT, Chandigarh by State Bank of India against Castex Technologies Pvt. Ltd. on 20.12.2017, hence, the application filed by L&T Finance under Section 95 against the Personal Guarantor i.e. the Appellant had to mandatorily filed before NCLT, Chandigarh as per Section 60(2). This clearly indicate that application filed by L&T Finance at NCLT, New Delhi was filed in jurisdiction of that NCLT which had no jurisdiction to entertain the application or pass an order. It is further relevant to notice that application filed by L&T Finance was subsequently dismissed as withdrawn on 06.04.2022. Withdrawal of the application by order of the Court clearly indicate that the application could not have proceeded at NCLT, New Delhi, hence, the same has been withdrawn. The question to the considered is as to whether Section 95(1) empowers the creditor to apply either by himself, or jointly with other creditors, or throu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which has no jurisdiction to entertain the application against Personal Guarantor interim moratorium may kick-in that will be against the statutory scheme under the I&B Code. 14. Learned counsel for the Appellant in support of his submission that order passed by the Adjudicating Authority which has no jurisdiction is nullity has placed reliance on judgment of Hon'ble Supreme Court in "Kiran Singh vs. Chaman Paswan, AIR 1954 SC 340" and judgment of Hon'ble Supreme Court in "Foreshore Cooperative Housing Society Ltd. vs. Praveen D. Desai, AIR 2015 SC 2006". To support his submission that when Court has no jurisdiction it cannot confer upon it by consent or waiver of the parties, Appellant has relied on Para 45, 46 and 47 of the judgement, where following has been laid down: "45. The term "jurisdiction" is a term of art; it is an expression used in a variety of senses and draws colour from its context. Therefore, to confine the d term "jurisdiction" to its conventional and narrow meaning would be contrary to the well-settled interpretation of the term. The expression "jurisdiction", as stated in Halsbury's Laws of England, 4th Edn., Vol. 10, Para 715, is as follows: "715. Mea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aw cannot be overlooked or ignored. Where a court lacks inherent jurisdiction in passing a decree or making an order, a decree or order passed by such court would be without jurisdiction, non est and void ab initio. A defect of jurisdiction of the court goes to the root of the matter and strikes at the very authority of the court to pass a decree or make an order. Such defect has always been treated as basic and fundamental and a decree or order passed by a court or an authority having no jurisdiction is a nullity. Validity of such decree or order can be challenged at any stage, even in execution or collateral proceedings. 10. Five decades ago, in Kiran Singh v. Chaman Paswan this Court declared: (SCR p. 121) "It is a fundamental principle well established that a decree passed by a court without jurisdiction is a nullity, and that its invalidity could be set up whenever and wherever it is sought to be enforced or relied upon, d even at the stage of execution and even in collateral proceedings. A defect of jurisdiction, strikes at the very authority of the court to pass any decree, and such a defect cannot be cured even by consent of parties." ( emphasis supplied ) " 16. Ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rsonal guarantor of a corporate debtor, apply only for the limited purpose contained in Sections 60(2) and (3), as stated hereinabove. This is what is meant by strengthening the Corporate Insolvency Resolution Process in the Statement of Objects of the Amendment Act, 2018." 18. The above was the case where the proceeding was pending against the Corporate Debtor. It was held that the moment there is a proceeding against the corporate debtor pending, if any bankruptcy proceeding against the individual personal guarantor already initiated, same shall stood transferred. The ratio of said judgment will also clearly apply where the proceedings against the Corporate Debtor is pending before Adjudicating Authority, any application under Section 95 against the Personal Guarantor has to be filed in the same Adjudicating Authority. As noted above, application filed by L&T Finance subsequently on 06.04.2022 was dismissed as withdrawn. 19. The second submission which was pressed by learned counsel for the Appellant is that application filed by State Bank of India was barred by limitation. It is submitted that the Corporate Debtor defaulted in repayment of debt w.e.f. 29.12.2016 on which date ..... X X X X Extracts X X X X X X X X Extracts X X X X
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