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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 ..... tion 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. Filing of Section 95 application before the Adjudicating Authority has to be as per Section 60(1) and 60(2). The Adjudicating Authority referred to in Section 95(1) is the Adjudicating Authority which has jurisdiction to entertain the application under Section 95. In the present case, the application filed by the L T Finance under Section 95, which was filed before NCLT, New Delhi was clearly not maintainable since as per Section 60(2) of the Code application under Section 95 by L T Finance ought to have been filed before the Adjudicating Authority where insolvency resolution process against the Corporate Debtor is pending - the submission of the Appellant is accepted that on application filed before the Adjudicating Authority 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. The submission of the Appellant is that in view of the interim moratorium kicked-in o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o 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 Section 13(2) to the Appellant for payment of outstanding dues payable by the Corporate Debtor. (vii) On 23.01.2020, Section 95 application was filed against the Appellant by L T Finance Ltd before the NCLT, New Delhi, in which notices were issued. (viii) State Bank of India issued Demand Notice under Section 95 to the Appellant on 19.08.2020 for payment of outstanding dues as per the guarantee given by the Appellant to the loan of the Corporate Debtor. (ix) On 21.10.2020, the State Bank of India filed Section 95 application before the Adjudicating Authority on which IB-1038(ND)2020 was registered. (x) On 23.11.20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 given by the Appellant in the debt of Castex Technologies Ltd. Learned counsel for the Respondent has referred to the application filed by the L T Finance Ltd. which is part of the Appeal at page 180. It is submitted that when Section 7 application was already pending before the NCLT, Chandigarh, Section 95 application against the Personal Guarantor could have been filed only before NCLT, Chandigarh as per Section 60(1) and Section 60(2). It is submitted that filing of the application by L T Finance under Section 95 with regard to another Corporate Debtor Castex Technologies Pvt. Ltd. at NCLT, New Delhi was without jurisdiction and on a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting 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 not initiate any legal action or proceedings in respect of any debt. The use of expression creditors of the debtor obviously refers to other creditors of the debtor apart from the creditor on whose application interim moratorium has commenced. In the present case, the date on which application was filed by the Central Bank of India under Section 95 is 12.04.2021 i.e. after the commencement of the interim moratorium, as noted in the order dated 21.06.2021. The interim moratorium under Section 96 (1)(b)(ii) creates a prohibition on the creditors of the debtor from initiating any legal action in respect of any debt. The use of expression any debt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 dated 20.12.2019 by L T Finance, Section 95 application was filed against the Appellant on 23.01.2020. In the List of Dates and Events , the Appellant has itself mentioned following against dates 20.12.2019 and 23.01.2020: 20.12.2019 L T issued a demand notice dated 20.12.2019 upon the Applicant for an alleged outstanding demand of INR 92,19,11,974 against the dues owed by Castex 23.01.2020 pursuant to the Demand Notice dated 20.12.2019, L T filed application being IB-499/ND/2020, under Section 95 of the Code before the Ld. Adjudicating Authority, New Delhi against the Appellant on 23.01.2020, thereby seeking initiation of Insolvency Proceedings against the Appel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 through a resolution professional for initiating an insolvency resolution process under this section by submitting an application to the Adjudicating Authority. Section 95(1) is as follows: 95. Application by creditor to initiate insolvency resolution process. (1) A creditor may apply either by himself, or jointly with other creditors, or through a resolution professional to the Adjudicating Authority for initiating an insolvency resolution process under this section by submitting an application. 12. Section 96(1) with regard to interim moratorium provides as follows: 96. Interim moratorium. (1) When an application is filed under section 94 or section 95 (a) an interim-moratorium ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ra 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. Meaning of 'jurisdiction'. By 'jurisdiction is meant the authority which a court has to decide matters that are litigated before it or to take cognisance of matters presented in a formal way for its decision. The limits of this authority are imposed by the statute, charter or commission under which the court is constituted, and may be extended or restricted by similar means. If no restriction or limit is imposed the jurisdiction is said to be unlimited. A limitation may be either as to the kind and nature of the claims and matters of which the particular court has cognisance, or as to the area over which the jurisdiction extends, or it may partake of both these characteristics. 46. In American Jurisprudenc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l 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. There is no dispute to the proposition of law laid down by the Hon ble Supreme Court in judgment relied by learned counsel for the parties that the order passed by the Court without jurisdiction is nullity. In the present case it is not the case of the Appellant that the NCLT, New Delhi has no jurisdiction to pass order on Section 95(1) or it lacks jurisdiction. The submission of the Appellant is that in view of the interim moratorium kicked-in on the basis of application filed by L T Finance, application was not maintainable. We have already noticed that application filed by L T Finance was filed without jurisdiction before NCLT, New Delhi. 17. Learned counsel for the Respondent has placed reliance on judgment of Hon ble Supreme Court in State Bank of Indi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uarantor 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 account of the Corporate Debtor was declared as NPA and the application was filed on 23.11.2020 after period of three years. Learned counsel for the Bank refuting the submission submits that the notice was issued against the Personal Guarantor only on 24.09.2018. Copy of the notice has been brought on record as Annexure A-11 to the Appeal. Demand Notice dated 19.08.2020 issued to the Appellant referring the Appellant as Personal Guarantor to the Corporate Debtor. Notice stated that amount of Rs.177,89,34,838/- is due as on 18.08.2020 payable by the Personal Guarantor. The Personal Guarantor was requested to pay the amount within 14 days from receipt of notice. It is thus clear that Personal Guarantee was invoked under the Deed of Guarantee by issuing notice on 18. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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