2022 (7) TMI 834 - AT - Insolvency and Bankruptcy

Filing Date Determined by Presentation at Registry: Tribunal Upholds Authority's Decision

The Tribunal upheld the Adjudicating Authority's decision that the application under Section 95 by SBI was filed on 01.10.2021, the date it was presented ... Relevant date for filing application by Personal Guarantor as well as Creditor - relevant time from which moratorium shall come into force - when shall the application be treated to be filed - whether the application can be treated to be filed only when it is numbered or not? - HELD THAT:- When as per Rule 10, sub-rule (2), when an electronic facility is available and an Application is filed in electronic form, the filing is complete as soon as it is registered electronically, we do not find any support from the statutory scheme to the submission of learned Counsel for the Appellant that petition would be treated as filed when it is numbered by the Registry. Numbering of an Application by Registry is a process, which is undertaken by the Registry as per the relevant rules and instructions. Several consequences ensue on filing of the Application in the Registry, if it is accepted that the filing shall be dependent on numbering of the Application by the Registry. It will lead to uncertainty regarding date of filing. When statutory consequences are provided, there has to be certainty regarding such consequences. We cannot accept any interpretation, which may lead to uncertainty regarding the date of filing, resulting in uncertainty, regarding enforcement of the Interim Moratorium - The statutory scheme, thus, does not in any manner support the submission of learned Counsel for the Appellant. Numbering of Application is essential for different purpose and cannot be equated with the filing as contemplated by the Rules. Hon’ble Supreme Court in M/S. SURENDRA TRADING COMPANY VERSUS M/S. JUGGILAL KAMLAPAT JUTE MILLS COMPANY LIMITED AND OTHERS [2017 (9) TMI 1566 - SUPREME COURT], which was a case where Hon’ble Supreme Court had occasion to consider various provisions of the Code, where it was held that first stage is the filing of the application and thereafter the stage of scrutinizing the application for finding out the defects. The second stage is when Registry is to scrutinize the defect, which cannot be treated as first stage. The submission of the learned Counsel for the Appellant that when there are defects in the Application, it cannot be said to be filed in accordance with the Rules and such filing is non-est, is not in accordance with the Rules. We have noticed Rule 23, sub-rule (1) above, which contemplates that if there are certain non-compliance, the Application can be refused to be entertained. But Rule 10, sub-rule (2) of 2019 Rules, which provides for filing in electronic form, clearly indicates that when Application is registered in the electronic form, the filing is complete, which is not dependent on any further scrutiny in the Registry. The Adjudicating Authority after due consideration has taken correct view of the matter in holding that filing of the Application under Section 95 by the State Bank of India is on a date when Application was filed and allotted number electronically and the submission of the Appellant that date of filing of the Application shall be the date when Application is numbered has rightly been rejected. There are no error in judgment of Adjudicating Authority rejecting the objection of the Appellant and appointing Resolution Professional for submitting a report - appeal dismissed. Issues Involved:1. Determination of the date of filing of an application under Sections 94 and 95 of the Insolvency and Bankruptcy Code, 2016 (IBC).2. Interpretation of the term 'filed' as per the National Company Law Tribunal (NCLT) Rules and the Insolvency and Bankruptcy (Application to Adjudicating Authority for Insolvency Resolution Process for Personal Guarantors to Corporate Debtors) Rules, 2019 (2019 Rules).3. The impact of defects in the application on the date of filing.4. The effect of interim moratorium under Section 96 of the IBC.Issue-Wise Detailed Analysis:1. Determination of the date of filing of an application under Sections 94 and 95 of the IBC:The core issue revolves around determining the correct date of filing for applications under Sections 94 and 95 of the IBC. The State Bank of India (SBI) filed an application under Section 95 on 01.10.2021, while the Personal Guarantor filed an application under Section 94 on 25.10.2021. The Guarantor's application was numbered earlier on 22.12.2021, while SBI's application was numbered later on 18.02.2022. The Guarantor argued that the application should be considered filed only when it is numbered by the Registry, thus giving precedence to his application.2. Interpretation of the term 'filed' as per NCLT Rules and 2019 Rules:The Tribunal examined the definition of 'filed' under Rule 2(14) of the NCLT Rules, which states that 'filed' means filed in the office of the Registry of the Tribunal. Rule 10 of the 2019 Rules and Rules 20-24 and 26 of the NCLT Rules were also considered. The Tribunal concluded that the act of filing is complete when the application is presented at the filing counter of the Registry, not when it is numbered. This interpretation aligns with the statutory scheme and avoids uncertainty regarding the date of filing, which is crucial for the enforcement of interim moratorium under Section 96 of the IBC.3. The impact of defects in the application on the date of filing:The Tribunal rejected the argument that an application marked as defective cannot be considered filed until it is numbered. It emphasized that the filing is complete when the application is presented at the filing counter, even if defects exist. This position was supported by the Supreme Court's judgment in Surendra Trading Company vs. Juggilal Kamlapat Jute Mills Company Ltd. and Ors., which delineated the stages of filing, scrutinizing, and curing defects. The Tribunal stressed that defects do not invalidate the filing date but must be cured subsequently.4. The effect of interim moratorium under Section 96 of the IBC:The Tribunal noted that the interim moratorium under Section 96 kicks in from the date of filing the application. Accepting the Guarantor's argument would lead to uncertainty and potential delays in the enforcement of the interim moratorium, undermining the statutory scheme. The Tribunal emphasized that the statutory consequences of filing must be clear and certain, and hence, the filing date is the date when the application is presented at the Registry, not when it is numbered.Conclusion:The Tribunal upheld the Adjudicating Authority's decision that the application under Section 95 by SBI was filed on 01.10.2021, the date it was presented at the Registry. The Tribunal dismissed the appeals, affirming that the filing date is determined by the presentation at the Registry, irrespective of subsequent numbering or defects. This interpretation ensures certainty and aligns with the statutory framework of the IBC and NCLT Rules.