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TMI Blog2025 (4) TMI 517X X X X Extracts X X X X X X X X Extracts X X X X ..... i. The corporate debtor, Geekay Colonizers and Builders Limited were sanctioned a project loan of Rs.94 Crore by Dewan Housing Finance Ltd. (DHFL) out of which Rs.69 Crore was disbursed. Appellant provided guarantee in the aforesaid loan. ii. Corporate debtor was unable to pay loan and amount was declared as NPA on 01.01.2016. iii. DHFL recalled the entire credit facility on 15.06.2016. Section 13(2) notice was issued on 21.10.2016. Corporate debtor on 13.03.2018 submitted a One-Time Settlement (OTS) proposal under which partial amount stood paid. iv. In the Corporate Insolvency Resolution Process (CIRP) of DHFL, Piramal Capital and Housing Finance Limited acquired DHFL with effect from 30.09.2021. v. A demand notice dated 13.07.2022, under Rule 7(1) of the Insolvency and Bankruptcy Board of India (Resolution Process for Personal Guarantor) Rules, 2019 was issued demanding amount of making a demand of defaulted amount. No payment having been made by the personal guarantor, Section 95 application was filed on 31.10.2022. vi. Piramal Capital & Housing Finance Ltd. assigned its financial debt to the Omkara Asset Reconstruction Pvt. Ltd. on 10.01.2023, in consequence of whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of delay in submission of the report which is clear from the scheme of the IBC. It is submitted that there is no provision in the IBC empowering the RP to submit a second report/amended report. Timelines which are provided for the RP to submit a report is a mandatory. The expression "shall" has been used in Section 99 regarding submission of the report by the RP, which has to be given its due meaning and purpose. There is also no provision in Section 99 for filing application for condonation of delay in filing the report, thus report submitted beyond the period of 10 days cannot be taken on record. It is submitted that adjudicating authority committed error in relying on the reports of the RP and admitting Section 95 application. 5. Learned counsel for the appellant has also relying on the judgment of the Hon'ble Supreme Court in the matter of 'V. Nagarajan' Vs. 'SKS Ispat & Power Ltd. & Ors.' reported in (2022) 2 SCC 244, contend that IBC is a complete Code and law on limitation in IBC is settled and power to condone delay is tightly circumscribed and conditioned upon showing sufficient cause within the condonable period. Court is not empowered to condone the delay beyond statut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssion of report by resolution professional.- (1) The resolution professional shall examine the application referred to in section 94 or section 95, as the case may be, within ten days of his appointment, and submit a report to the Adjudicating Authority recommending for approval or rejection of the application." 11. Section 99(1) requires the RP to examine the application referred to in Section 94 and Section 95 within 10 days of his appointment and submit a report. Sub-Section (4) of Section 99 empowers the RP to seek further information or explanation in connection with the application as may be required from the debtor or the creditor. Sub-Sections (4), (5), (6) & (7) of Section 99 are as follows: "99: Submission of report by resolution professional.- (4) For the purposes of examining an application, the resolution professional may seek such further information or explanation in connection with the application as may be required from the debtor or the creditor or any other person who, in the opinion of the resolution professional, may provide such information. (5) The person from whom information or explanation is sought under sub-section (4) shall furnish such informat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In the above case, this Tribunal had occasion to consider the provisions of Regulation 35A of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons), Regulations, 2016 (for short the 'CIRP Regulations, 2016'). Regulation 35A was inserted in regulations by amendments made with effect from 03.07.2018. Regulation 35A provides as follows: "35A. Preferential and other transactions.- (1) On or before the seventy-fifth day of the insolvency commencement date, the resolution professional shall form an opinion whether the corporate debtor has been subjected to any transaction covered under sections 43, 45, 50 or 66. (2) Where the resolution professional is of the opinion that the corporate debtor has been subjected to any transactions covered under sections 43, 45, 50 or 66, he shall make a determination on or before the one hundred and fifteenth day of the insolvency commencement date. (3) Where the resolution professional makes a determination under sub-regulation (2), he shall apply to the Adjudicating Authority for appropriate relief on or before the one hundred and thirtieth day of the i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the outcome of the proceeding, would be invalid. On the other hand, it is not always correct to say that where the word "may" has been used, the statue is only permissive or directory in the sense that noncompliance with those provision will not render the proceeding invalid. In that connection, the following quotation from Crawford on 'Statutory Construction'- art. 261 at p. 516, is pertinent: "The question as to whether a statute is mandatory or directory depends upon the intent of the legislature and not upon the language in which the intent is clothed. The meaning and intention of the legislature must govern, and these are to be ascertained, not only from the phraseology of the provisions but also by considering its nature, its design, and the consequences which would follow from construing it the one way or the other...."" vi. The I&B Code, 2016 contains timeline for different actions the time period prescribed under Regulation 35A of the CIRP Regulations is time period which casts a duty on the Resolution Professional to take measures as prescribed in Regulation 35A of the CIRP Regulations. The Privy Council in 'Montreal Street Railway Vs. Normandin' AIR 1917 PC 142 had l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ofessional after the timeline prescribed in Regulation 35A of the CIRP Regulations are to be annulled, the undervalued and fraudulent transactions will go out of the reach of Resolution Process, reach of the Court and shall cause great inconvenience and injustice to Corporate Debtor. Hence, we are of the view that timeline prescribed in Regulation 35A of the CIRP Regulations is only directory and any action taken by the Resolution Professional beyond the time prescribed under Regulation 35A of the CIRP Regulations cannot be held to be non-est or void only on the ground that it is beyond the period prescribed under Regulation 35A of the CIRP Regulations. There may be genuine and valid reasons for Resolution Professional not to file application for avoiding the transactions within time prescribed which are question relating to each case and has to be examined on case-to-case basis and if there are reasons due to which Resolution Professional could not file the Application within time the same has to be examined on merit. x. The view which we are taking with regard to the interpretation of Regulation 35A of the CIRP Regulations fully finds support from the Judgment of the Hon'ble Su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... linary proceeding is pending against any proposed resolution professional; Provided that Adjudicating Authority, shall before rejecting an application under sub-clause (a) of clause (ii) give a notice to the applicant to rectify the defect in his application within seven days of the date of receipt of such notice from the adjudicating Authority." xii. The Hon'ble Supreme Court further noticed the view of this Tribunal that period of 7 days for rectification of defects as contained in Proviso Section 7(5) and Proviso Section 9(5) and Proviso Section 10(4) are mandatory. Following was noted in Paragraph 20 of the judgment. The view of the Tribunal holding 7 days period as mandatory was reversed by the Hon'ble Supreme Court and following was laid down in Paragraph 24: "Further, we are of the view that the judgments cited by NCLAT and the principle contained therein applied while deciding that period of fourteen days within which the adjudicating authority has to pass the order is not mandatory but directory in nature would equally apply while interpreting the proviso to sub-section 5 of Section 7, Section 9 of sub-Section 4 of Section 10 as well. After all, the applicant does no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ary affidavit on 14.02.2024. It is a fact that no prior leave of this court was taken before filing the amended report. It is also fact that the first report was filed on 02.02.2024 and the amended report was filed on 14.02.2024 but both the reports were presented before this tribunal i.e. listed for order, together on 05.03.2024 and hence vide order dated 05.03.2024 both the original report and the amended report were taken on record together. Moreover, the amended report was treated as part of the original report and not as a substitute of the original report. So, it cannot be said that the amended report was filed after the original report was taken on record and that a completely new report was filed subsequent to the original report. 20. It is also inferred upon perusal of both the reports that the only substantial difference between the original report and the amended report is the incorporation of the responses provided by the petitioner to the RP and the responses of the petitioner as stated in the report, only strengthens the recommendation of the RP and does not dilute it." 17. The present is a case where necessity of submitting amended report arose because of receip ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hority before whom such reports are filed in event, the reports are unduly delayed, it is open for the adjudicating authority not to consider the reports. However, delay in submission of the report if properly explained, adjudicating authority is well within its jurisdiction to accept the report and rely on the same. 21. Insofar as the judgment of the Hon'ble Supreme Court in 'V. Nagarajan' (Supra), Hon'ble Supreme Court in the said case was considering the period of limitation prescribed under Section 61 for filing an appeal in the Appellate Tribunal and in the above context, it was observed that power to condone the delay is tightly circumscribed and conditional upon showing sufficient cause. The said observations of the Hon'ble Supreme Court were in different context and has no application in the facts of the present case. We have already observed above that period of 10 days under which RP is required to submit a report is only directory. 22. We, thus are of the view that the report dated 02.02.2024, as well as the amended report dated 14.02.2024 filed vide supplementary affidavit were rightly taken on record by the adjudicating authority and looked into. Adjudicating authori ..... X X X X Extracts X X X X X X X X Extracts X X X X
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