2021 (8) TMI 1279 - Tri - Insolvency and Bankruptcy

Tribunal dismisses Company Petition due to lack of locus standi

The Tribunal dismissed the Company Petition CP(IB)-1864/MB/2019 filed by Reliance Asset Reconstruction Ltd against Narendra Plastics Pvt. Ltd. due to lack ... Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not - petitioner issued notice under Section 13(2) of the SARFAESI Act, 2002 on 25.05.2015 and the Corporate Debtor also responded to these notices - time limitation - HELD THAT:- This Petition has been filed by Reliance Asset Reconstruction Ltd (Financial Creditor) against Narendra Plastics Pvt. Ltd (Respondent/ Corporate Debtor) u/s.7 of the IBC for working capital loan of ₹ 20 crore sanctioned by ING Vysya Bank Ltd. (original lender) on 03.09.2012. The sanctioned loan limit were subsequently reduced and revised by ING Vysya Bank Ltd (Original Lender) on 04.06.2013. It is on record before the bench that the Assignment Agreement was executed between the original lender ING Vysya Bank and the Financial Creditor i.e., Reliance Asset Reconstruction Company Ltd. on 19.09.2014. The cut-off date under the Assignment Agreement was 31.08.2014. Under this agreement all benefits pertaining to the loans availed by the Corporate Debtor including all realization and recoveries made on and after the cut-off date were to be for the benefit of the Financial Creditor i.e., Reliance Asset Reconstruction Company Ltd. The debt due from the Corporate Debtor to the original lender were assigned by the original lender to the Financial Creditor vide Assignment Agreement with effect from 31.08.2014. In such event the bench would construe that, any debt which may be due from the Corporate Debtor to the Financial Creditor ought to be reflected in the books of the Financial Creditor. However, a perusal of Exhibit ‘B’ and ‘C’ of Company Petition shows that the amount outstanding and payable by the Corporate Debtor as on 31.08.2014 is reflected in the ledger account of a completely third party i.e., Kotak Mahindra Bank about which, the bench notes, no reference has been made by the Financial Creditor in the Company Petition. It is very evident to this bench that this debt does not appear in the books of the Financial Creditor who has filed this Petition. The Bench also notes that the original lender i.e., ING Vysya Bank got merged with Kotak Mahindra Bank on 01.04.2015 i.e., much after the execution of the Assignment Agreement by which the debt stood transferred to the Financial Creditor. This bench notes that such merger between ING Vysya with Kotak would have no effect on the assignment of debt to the Financial Creditor and it ought to be reflected in the books of the Financial Creditor . However, as per the document in support produced in the Petition by the Petitioner i.e., Financial Creditor, the debt appears in the books of Kotak and not of the Financial Creditor. Before this bench no document has been produced by the Financial Creditor to indicate that this debt payable by the Corporate Debtor is due in the books of Financial Creditor - The reliance of the Financial Creditor on the ledger account appearing in the books of Kotak would only lead this Bench to believe that the assignment is not an effective assignment at all and therefore, the bench concludes that in the given situation the Financial Creditor has no locus to file this Company Petition as a Financial Creditor. This Company Petition has been filed by the Financial Creditor u/s.7 on 08.05.2019. In Part-IV of the Petition the Financial Creditor has put the date of NPA as 30.06.2014. Therefore, the issue relating to limitation arises in the Petition as the Petition prima facie has been filed after more than 5 years. In the Petition no pleadings relating to extension/ exclusion of time to compute the period of limitation has been made. The bench notes that subsequently also no amendments in the Petition relating to extension of limitation or exclusion to compute the period of limitation has been made. It is well settled that the plea of limitation must be specifically pleaded by the Petitioner in their pleadings. In the instant case, the Financial Creditor has not specifically pleaded in its Application that it is within limitation and/ or sought condonation of delay in any respect. The Company Petition which has been filed on 07.05.2019 mentions the date of NPA as 30.06.2014. Since there is no averment or seeking condonation of delay in the Company Petition, therefore, this bench is of the view that since there is no averment or pleading by the Petitioner explaining the issue of limitation seeking condonation of delay, this Petition is barred by limitation and the bench is inclined to “dismiss” it. Petition dismissed. Issues Involved:1. Initiation of Corporate Insolvency Resolution Process (CIRP) under Section 7 of the Insolvency and Bankruptcy Code, 2016.2. Validity of the debt assignment from ING Vysya Bank to Reliance Asset Reconstruction Company Ltd.3. Applicability of the Limitation Act, 1963 to the insolvency petition.4. Maintainability of the petition by Reliance Asset Reconstruction Company Ltd.Detailed Analysis:Issue 1: Initiation of Corporate Insolvency Resolution Process (CIRP) under Section 7 of the Insolvency and Bankruptcy Code, 2016.The application was filed by M/s. Reliance Asset Reconstruction Company Ltd to initiate CIRP against M/s. Narendra Plastics Pvt. Ltd. for a debt amount of Rs. 24,18,98,838.81 as on 28.02.2019. The original loan was sanctioned by M/s. ING Vysya Bank Ltd and was later assigned to Reliance Asset Reconstruction Ltd.Issue 2: Validity of the debt assignment from ING Vysya Bank to Reliance Asset Reconstruction Company Ltd.The debt was assigned by ING Vysya Bank to Reliance Asset Reconstruction Ltd via a Registered Deed of Assignment dated 19.09.2014. The Corporate Debtor argued that the debt should be reflected in the books of the Financial Creditor (Reliance Asset Reconstruction Ltd) and not in the books of Kotak Mahindra Bank, which ING Vysya Bank merged into on 01.04.2015. The Tribunal noted that the debt should appear in the books of the Financial Creditor and not Kotak Mahindra Bank. The Tribunal concluded that the assignment did not seem effective, and thus, Reliance Asset Reconstruction Ltd did not have the locus to file the petition.Issue 3: Applicability of the Limitation Act, 1963 to the insolvency petition.The Corporate Debtor argued that the limitation period should be considered from the date of default, which was 30.06.2014, making the petition filed on 07.05.2019 barred by limitation. The Tribunal noted that the Financial Creditor did not plead for the extension or exclusion of time to compute the period of limitation in the petition. Citing the Supreme Court's decision in BK Educational Services Private Limited v Parag Gupta & Associates, the Tribunal held that the plea of limitation must be specifically pleaded. Since the Financial Creditor did not do so, the petition was deemed barred by limitation.Issue 4: Maintainability of the petition by Reliance Asset Reconstruction Company Ltd.The Tribunal found that the debt was not reflected in the books of Reliance Asset Reconstruction Ltd but in Kotak Mahindra Bank's books. This discrepancy led the Tribunal to conclude that Reliance Asset Reconstruction Ltd did not have the locus to file the petition. Consequently, the Tribunal dismissed the petition on the grounds of maintainability and limitation.Conclusion:The Tribunal dismissed the Company Petition CP(IB)-1864/MB/2019 filed by Reliance Asset Reconstruction Ltd against Narendra Plastics Pvt. Ltd. due to lack of locus standi and being barred by limitation. Consequently, the Miscellaneous Application M.A. 537/2020 in CP 1864/2019 was also disposed of as infructuous.