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TMI Blog2025 (2) TMI 688X X X X Extracts X X X X X X X X Extracts X X X X ..... 2) SARFAESI Notice. There are merit in the arguments of the Appellant but in the facts of the case sufficient time was available to the Appellant to provide repayment plan. Even though there have been claims and counter claims with respect to the service of the Demand Notice and also Section 95 Application, it is found that it was the duty of the Appellant to have notified the current address to appropriate authorities, including banks and passport office when they had moved to Chennai. The RP was in touch with him later on even on WhatsApp and the Appellant had also filed his objections on the Report of the RP. In the circumstances of the case, there are no infirmity on the findings of the Adjudicating Authority on this count. Further, the purported non-service of Demand Notice under Rule 7(1) will not have any material impact on the main issue, which is being examined in subsequent paragraphs. Whether the Section 95 IBC Petition was barred by limitation or not? - HELD THAT:- The Appellant has been able to demonstrate that the said amount of Rs 315 crores as in Section 95 application is an approximate total of SBI's A/c No. 30451182299 [pg 535 APB] i.e. Rs 264 crores and A/c No. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - in full or in part amount - due to RC under SARFAESI Act 2002 and arrive at a conclusion.
Conclusion - i) Section 95 IBC Petition was time-barred, as it was filed beyond the three-year limitation period, even after excluding the COVID-19 period. ii) Section 95 application doesn't satisfy the requirements of 'details and documents relating to debts owed by the debtor to the creditor or creditors' as provided under Section 95 (4) of the Code.
The personal insolvency proceedings are remanded back to the Adjudicating Authority to determine afresh the limited question of whether on the basis of the materials on record the debt is barred by limitation or not and whether in full or in part amount and accordingly determine the issue of personal insolvency against the Appellant - Appeal allowed by way of remand. X X X X Extracts X X X X X X X X Extracts X X X X ..... ere also given liberty to file their written submissions. 13. 05.06.2024 SBI filed its written submissions. 14. 06.06.2024 Appellant filed its written submissions. 15. 13.06.2024 AA passed the Impugned Order under section 100 IBC. 16. 16.06.2024 Resolution Professional published a public announcement in two newspapers on 15.06.2024 and the said fact was communicated to the Appellant vide email. 3. In his Appeal the Appellant has raised the grounds with respect to the limitation period, service of Demand Notice at the wrong address, and also a difference in the amount sought in the Demand Notice r/w Rule 7(1)1 of Insolvency and Bankruptcy (Application to Adjudicating Authority for Insolvency Resolution Process Guarantors to Corporate Debtors) Rules, 2019, and the Section 95(1) Application r/w Rule 7(2) of the Financial Creditor/Applicant i.e. State Bank of India (SBI). No details of two loans were provided except for the account numbers. The Application under Section 95(1)2 was finally decided by the Adjudicating Authority on 13.06.2024, while overruling the objections of the PG, and Personal Insolvency Resolution Process (PIRP) was initiated against the Appellant. Sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecovery certificate of O.A. No.213/2014 dated 17.03.2018, which pertained to SBBJ to show that part of the debt, as demanded in the Demand Notice, crystallised by way of decree on 17.03.2018 and, thus, the part of the claim was within limitation. It is to be noted that this recovery certificate is for Rs 17.63 crores, along with interest, whereas, the amount demanded in the Demand Notice was Rs 264.61 crores and the amount demanded in the Application under Section 95(1) of IBC was Rs 315.30 crores. The perusal of the judgment dated 17.03.2018 shows that the said O.A. was filed on 03.07.2014 for recovery of Rs 17.61 cores along with interest. Further, the CD had approached SBBJ on 27.06.2007 for a loan of Rs 4.05 crores, and this account had become NPA on 28.01.2012. SARFAESI Notice was sent on 26.12.2012, demanding Rs 25.97 crores as on 25.12.2013. There is no reference to this in the Demand Notice, which has been issued on 28.06.2021, demanding Rs 264.61 crores. Current Demand Notice and the Application under Section 95(1) of IBC are vague, do not pertain to dues of SBBJ and, therefore, the recovery certificate dated 17.03.2018 will not help Respondent No.1-SBI to bring the allege ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l Company Law Appellate Tribunal. 2. The proceedings have been posted for hearing before the NCLAT on 2 September-2024. Hence, we are not exercising jurisdiction at this stage. 3. All the questions of law which have been raised by the appellant, may be addressed before and will be considered by NCLAT, when the proceedings will be taken up on 2 September 2024. 4. The Appeal is accordingly dismissed. 5. Pending applications, if any, stand disposed of." 11. It is claimed that the Impugned Order dated 13.06.2024 does not deal with the objections as regards the issue of 'limitation'. However, the issue of 'limitation' was argued during the hearing dated 29.05.2024 in which even the Counsel for the Appellant stated no objection to the filing of the Order dated 17.03.2018 passed in O.A. No. 213/2013 which actually put the issue of 'limitation' to rest and nothing more was needed to be done. The relevant extract of the Order as follows: "IA-1592/2024 Pursuant to the order dated 28.05.2024, Mr. Harshit Khare, Ld. Counsel has appeared on behalf of State Bank of India and responded to the objections raised by the Ld. Counsel for the Personal Guarantor. Mr. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3.06.2012, where-after a Demand Notice dated 26.12.2013 under Section 13 (2) of the SARFAESI Act, 2002, was issued to the CD and the Appellant, calling upon them to make repayment of Rs 64,48,43,390.25/- (rupees sixty-four crores, forty-eight lakhs, forty-three thousand, three hundred and ninety and twenty-five paise only), within 60 days, followed by filing O.A. No. 133/2014 and O.A. No. 213/2014 ("erstwhile SBBJ") before the Debts Recovery Tribunal, New Delhi. O.A. No. 213/2014 was allowed by Order dated 17.03.2018 and the recovery certificate was issued on 17.03.2018, while the Section 95 IBC Petition was filed by the Respondent No. 1-SBI on 03.12.2022. After excluding the covid period between 15.03.2020 to 28.02.2022, from calculating the limitation period in view of the Order dated 10.01.2022 passed by the Hon'ble Supreme Court in Suo Motu Writ Petition (C) No. 3 of 2020 - the Section 95 IBC Petition, having been filed on 03.12.2022, is perfectly within the limitation period of three years. In calculating from 17.03.2018, the limitation would stop to run on 14.03.2020 and again start running from 01.03.2022, thus, would expire in March 2023 only, if at all. 16. The exclusion ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rule 7 (1) and the copy of the Section 95 IBC Petition twice. It has been recorded in the Impugned Order dated 13.06.2024 that the Respondent No.1- SBI served the Demand Notice at the address given in the passport of the PG and the KYC documents available with the bank and, therefore, it cannot be said that the Demand Notice was served at the wrong address. Further, the Respondent No. 1-SBI had shared the copy of the Demand Notice sent to the PG along with a copy of the outward dak register dated 30.06.2021 to the Respondent No. 2-RP through email dated 26.02.2024. The said Demand Notice, as sent on 30.06.2021, was never received back in the branch. 20. In view of the above, the objection of the Appellant that the Demand Notice under Rule 7 (1) was not served to the Appellant is out of place and ought to be rejected. 21. It is claimed that the purpose of the Demand Notice under Rule 7 (1) is to call upon the PG to make payment of the amount of debt in default within 14 days. Even if, assuming without admitting that the PG received the copy of the said Demand Notice dated 28.06.2021 after filing of the Section 95 IBC Petition - notwithstanding the fact that the Appellant was serv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y certificate dated 17.03.2018 passed in O.A. No. 213/2014, which even though was filed by the erstwhile SBBJ. However, on its merger with the SBI w.e.f. 01.04.2017, the said O.A. No. 213/2014 is also prosecuted by the Respondent No. 1-SBI only. The merger was also prior to the final Order dated 17.03.2018 in the O.A. No. 213/2014. Thus, the Appellant cannot deny the benefit of the said Order/recovery certificate dated 17.03.2018 to the Respondent No. 1-SBI. 24. On the issue that service of notice under Section 13(2) of SARFAESI Act cannot be treated as service of Demand Notice under Rule 7(1), submitted that the NCLT never said that in view of service of notice under Section 13(2) of SARFAES1 Act, service of Demand Notice under Rule 7 (1) is not required. This was never the purport of the Impugned Order dated 13.06.2024. After duly recording in the Impugned Order dated 13.06.2024 that the PG never* denied the execution of loan documents and sanction of credit facilities to the CD and also never denied the execution of the personal guarantee and that the PG never raised objection as to any violation of principles of natural justice and that the Demand Notice under Rule 7 (1) was s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 13(2) of SARFAESI Act, 2002 calling upon to repay Rs. 64,48,43,390.25/ - (Rupees Sixty Four Crores Forty Eight Lakhs Forty Three Thousand Three Hundred Ninety & Paise Twenty Five Only). 27. We have also noticed that the Respondent-Personal Guarantors have not raised any objection with regard to non-compliance of Principles of Natural Justice by the Resolution Professional while submitting the report in terms of Section 99 of the Code, 2016. 28. We are therefore of the considered view that non-service of demand notice as alleged by the Respondent-Corporate Debtor (sic. Personal guarantor) will not absolve the Respondent Personal Guarantor from discharging its liability under the Deed of Guarantee. Particularly, in view of the fact that the Personal Guarantor has not denied the execution of the Personal Guarantee and service of the notice under 13 (2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002." 28. The Appellant is aggrieved that all his objections have not been adjudicated. 29. Basis the materials placed on record and the oral arguments, the main issues before us are as follows: i. Whether the Section 95 IB ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 95 and service of same after filing of Section 95 Application is not in accordance with law. 32. The Respondent-Bank contends that the Rule 7 Notice, along with Section 95 IBC Petition, was again served on the PG through official email ID ([email protected]) on 03.12.2022 and Rule 7 Notice, along with Section 95 Petition, was once again served by the SBI on the PG at his new Chennai address on 15.03.2024, as sent on 11.03.2024. The RP could deliver the intimation to the PG only on 08.02.2024 because the RP could not reach out to the PG on the three available addresses of Delhi NCR. Chennai address was not in the knowledge of anyone except PG. Despite repeated service of Rule 7 Demand Notice and Section 95 IBC Petition, the PG did not make any payment towards the liability, thus, no prejudice is caused to the PG to raise the allegation that Rule 7 Notice was not received by him earlier. It is also contended that the purpose of Rule 7 Demand Notice is to give 14 days' time to the PG to make payment or submit proof of payment. However, in the present case the PG got more than 2 years, yet did not submit any proof of payment. Hence, the Section 95 Petition was finally admitted o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nto the main issue whether the Section 95 IBC Petition was barred by limitation or not. On the question of limitation, we note that the Appellant had vehemently opposed it before the Adjudicating Authority. It is claimed that Personal Insolvency Resolution Process was initiated without considering the preliminary objection qua limitation, which goes into the root of the matter. 36. As a recap, Naftogaz India Private Limited went into liquidation - vide Order dated 08.12.2012 in Company Petition No. 128/2011- which was passed by Hon'ble High Court of Delhi on account of non-payment of the credit facilities which had been availed by the Company from SBI and SBBJ. SBI sent a Demand Notice dated 26.12.2013 under Section 13(2) of SARFAESI Act, calling upon the Official Liquidator - OL and the Appellant-PG to repay the amount of about Rs 64.48 crores (pg 513 APB), which was outstanding as on 25.12.2013. This amount related to credit facilities provided by SBI under account nos. (CC(SBI)-30451182299 and BG(SBI)-30449964100). Later on, in the year 2014, pursuant to the SARFAESI Act proceedings, SBI filed O.A. No.133/2014 before DRT, New Delhi, with the title of SBI vs Naftogaz India Priva ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CREDITOR TO INITIATE INSOLVENCY RESOLUTION PROCESS] "(Under Rule 7(2) of the Insolvency and Bankruptcy (Application to Adjudicating Authority for Insolvency Resolution Process for Personal Guarantors to Corporate Debtor) Rules, 2019 1. Total debt (including Rs.315,30,80,207.78/- any interest penalties) (Rupees Three Hundred Fifteen Crores Thirty Lakhs Eighty Thousand Two Hundred Seven & Paise seventy-Eight Only) 3. Amount in default Rs. 315,30,80,207.78/- as on 30.06.2022 payable by the Personal Guarantor i.e. Mr. Mahdoom Bava Bahrudeen, jointly and severally, together with future interest applicable including penal interest and charges on actual basis from 13.06.2012 when account was declared NPΑ. 4. Date on which default occurred 13.06.2012 Account of the Corporate Debtor stood classified as NPA. 17.04.2012 Letter was written by the Corporate Debtor admitting to liabilities to the bank. 26.12.2013 The Applicant bank issued a demand notice dated 26.12.2013 to the Corporate Debtor through the Official Liquidator. 26.12.2013 The Applicant Bank issued a notice under SARFAESI Act. 25.03.2014 The Applicant Bank filed an Original Application bearing no. OA No. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppellant has been able to demonstrate that the said amount of Rs 315 crores as in Section 95 application is an approximate total of SBI's A/c No. 30451182299 [pg 535 APB] i.e. Rs 264 crores and A/c No. 61029643854 [pg 539 APB at the bottom] i.e. Rs 51.23 crores totalling to Rs 315 crores. And the later account [A/c No. 61029643854] has nothing to do with SBBJ as the account numbers mentioned in the Demand Notice under Rule 7(1) for SBBJ are 61253087296 and 61074975160 [pg 542/5 APB]. Thus, we find that in both the Rule 7(1) Demand Notice and Section 95(1) of IBC Application, the Respondent No.1-SBI through RP has given a total claim without giving the details in the particulars. And the Appellant has been able to explain that this amount pertains to SBI only and rest amount pertains to some unrelated account of SBBJ. 41. In the above background we now calculate the period of limitation which would start running from the date of NPA of 13.06.2012. At best the limitation would start from Section 13(2) Notice dated 26.12.2013, when demand was made from the Appellant. Since Demand Notice under Rule 7(1) was issued on 28.06.2021, and the Application under Section 95 was filed on 03.12. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dent No.1-SBI only. The merger was also prior to the final Order dated 17.03.2018 in the O.A. No. 213/2013. It claims that the Appellant cannot deny the benefit of the said Order / recovery certificate dated 17.03.2018. It is also vehemently contended by the Respondent-Bank that once the debt and default is clearly admitted and no repayment plan is available from the PG, the only consequence is the Section 100 order. It claims that the Court may not go into the question of the exact amount in such a situation because after the claims are called out by the RP, the PG is within its rights to provide a repayment plan as per his calculations and ability, which the Committee of Creditors (CoC) may agree or reject. Thus, the veracity of the exact amounts or accounts may not be disputed at the stage of Section 100 since, admittedly, the PG has neither made any payment nor provided proof of repayment. The Respondent Bank claims that details of amounts as per different accounts are not relevant as long as it is more than Rs 1 crore. It contends that if mere technical objections are entertained then no resolution would ever be successful even when there is a clear debt and default on the par ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ement of accounts is about Rs 315 crores, which is the amount mentioned in the Section 95 Application under IBC. We find that the Application under Section 95 is incomplete as it doesn't fully comply with the legal provisions of the Code under Section 95 as it failed to provide "details and documents" relating to the debts owed by the debtor to the creditor. Perusal of Section 95 Application persuades us to agree with the contentions of the Appellant that in the Section 95 Application, the entire reference is to the correspondence pertaining to SBI and not SBBJ and the Respondent has tried to bring in the Order of the DRT to ensure that Application under Section 95 comes within limitation and for that purpose referred to O.A. 213/2014 by SBBJ [in which RC dated 17.03.2018 for Rs 17.63 crores was passed], which was not done at the time of filing of Section 95 Application which was filed on 03.12.2022 which is later than orders of RC on 17.03.2018. The argument of the Respondent that the question of limitation was waived by the Appellant, since the Appellant consented to take on record Order dated 17.03.2018 is also not tenable as the Appellant clearly distinguished the amount of Rs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of Notice under Rule 7. Thus, it doesn't satisfy the requirements of providing "details and documents" relating to the debts owed by the debtor to the creditor. 48. From the facts on record, we find that the Section 95 application doesn't satisfy the requirements of "details and documents relating to debts owed by the debtor to the creditor or creditors" as provided under Section 95 (4) of the Code. We also find that all objections relating to Section 95 proceedings have not been disposed of, particularly relating to sufficient details and documents with respect to individual accounts in default. The total amount of default as claimed in the Section 95 application has to be individually substantiated with the details of separate accounts, particularly in the facts of the case, where two separate Banks merged and when earlier separate accounts were being maintained in different Banks and separate recovery proceedings were being pursued by both SBI & SBBJ separately. Be that as it may, in the interests of natural justice we find it appropriate to remand this case back to the Adjudicating Authority to examine all the objections relating to the details of individual accounts and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under the applications as it thinks just. (4) An application under sub-section (1) shall be accompanied with details and documents relating to- (a) the debts owed by the debtor to the creditor or creditors submitting the application for insolvency resolution process as on the date of application; (b) the failure by the debtor to pay the debt within a period of fourteen days of the service of the notice of demand; and (c) relevant evidence of such default or non-repayment of debt. (5) The creditor shall also provide a copy of the application made under sub-section (1) to the debtor. (6) The application referred to in sub-section (1) shall be in such form and manner and accompanied by such fee as may be prescribed. (7) The details and documents required to be submitted under sub-section (4) shall be such as may be specified. 3 The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 [SARFAESI Act 2002] Section 13. Enforcement of security interest (1) Notwithstanding anything contained in section 69 or section 69A of the Transfer of Property Act, 1882 (4 of 1882), any security interest created in favour of any secured c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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