Appeals Dismissed: Section 7 IBC Application Timely; Second Application Valid; Rights Over Subsidiaries Limited.

The Appeals were dismissed, confirming that the application under Section 7 of IBC was filed within the limitation period. The second application against the Corporate Debtor is maintainable despite prior CIRP against the Corporate Guarantor. The Resolution Applicant cannot exercise rights over the subsidiaries of the Corporate Guarantor, and the SEZ business of the Corporate Debtor was not included in the resolution plan.

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Issues Involved:
1. Whether the Application under Section 7 of IBC is barred by limitationRs.
2. Whether the second Application under Section 7 of IBC is not maintainable against the Corporate Debtor as for the same debt and default, CIRP has already taken place against the Corporate Guarantor and the Financial Creditor has accepted the amount in full and final settlement of all its duesRs.
3. Whether the Resolution Applicant is entitled to exercise its right over the subsidiaries company of ACIL (Corporate Guarantor)Rs.
4. Whether the approved resolution plan has included the SEZ business of the Corporate DebtorRs.

Issue-wise Detailed Analysis:

Issue No. (i): Whether the Application under Section 7 of IBC is barred by limitationRs.
The appellant argued that Section 18 of the Limitation Act, 1963 is not applicable to IBC proceedings, citing several judgments. However, the Supreme Court in its judgment dated 15.04.2021 in the case of Bishal Jaiswal confirmed that Section 18 of the Limitation Act is applicable to IBC proceedings. The Financial Creditor's application under Section 7 of the IBC was filed within the extended period of limitation, making it timely. The acknowledgment of debt in the Debt Repayment and Settlement Agreement dated 24.03.2015 and its subsequent cancellation on 29.05.2017 extended the limitation period. Thus, the application was within the limitation period.

Issue No. (ii): Whether the second Application under Section 7 of IBC is not maintainable against the Corporate Debtor as for the same debt and default, CIRP has already taken place against the Corporate Guarantor and the Financial Creditor has accepted the amount in full and final settlement of all its duesRs.
The appellant contended that since CIRP had already been initiated against the Corporate Guarantor, a second application for the same debt and default against the Corporate Debtor is not maintainable. However, the Tribunal referred to the judgment in Athena Energy Ventures Pvt. Ltd., which held that CIRP can be initiated against both the Corporate Debtor and the Corporate Guarantor. The Financial Creditor's acceptance of the amount in the resolution plan does not constitute a full and final settlement of all its dues. The liability of the Corporate Debtor is co-extensive with that of the Corporate Guarantor, and the Financial Creditor can recover the remaining dues from the Corporate Debtor.

Issue No. (iii): Whether the Resolution Applicant is entitled to exercise its right over the subsidiaries company of ACIL (Corporate Guarantor)Rs.
The Tribunal examined the minutes of the CoC meetings and the legal opinion sought from M/S Khaitan & Co. It was concluded that the RP can only take care of investments in subsidiaries and not the assets of the subsidiaries. No forensic audit report was presented to prove fraudulent transactions by ACIL in its investments in subsidiaries. Therefore, the Resolution Applicant is not entitled to exercise its right over the assets of the subsidiaries.

Issue No. (iv): Whether the approved resolution plan has included the SEZ business of the Corporate DebtorRs.
The Tribunal scrutinized the resolution plan and found no mention of the SEZ business of the Corporate Debtor being included. The plan only stated that the financial obligations of the SEZ unit are on ACIL. The facts of the case differ from those in Facor Alloys Ltd., where the shares held by the Corporate Debtor in its subsidiaries were valued separately. Hence, the SEZ business of the Corporate Debtor is not included in the resolution plan.

Conclusion:
The Appeals were dismissed, affirming that the application under Section 7 of IBC was within the limitation period, the second application against the Corporate Debtor is maintainable, the Resolution Applicant cannot exercise rights over the subsidiaries, and the SEZ business of the Corporate Debtor was not included in the resolution plan.

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