TaxTMI 
TaxTMI 
2020 (8) TMI 535
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....aka viz. (i) W.P . 28437 of 2011, which has since been disposed off; (ii) W.P No. 3520 of 2018 which has granted an interim stay in respect of the DRT order dated 14.12.2017 and directed the repayment of rent to the Corporate Debtor and to that extent does not interfere with the order of the DRT in O.A 597 of 1988; (iii) W.P No. 39858 of 2018 filed by one Mr. Vinay Bhat in furtherance of DRT order O.A 547 of 1998 which has since been disposed off and the said order has not been submitted before us; and (iv) W.P No. 17390 of 2017 filed by the Corporate Debtor in respect of the DRT order dated 15.03.2017 which again deals with the rent payable vide DRT order in DCP 2691 of 2017 dated 15.03.2017 and the same stands currently adjourned. 7.It is a settled position of law that the provisions of Code cannot be invoked for recovery of outstanding amount but it can be invoked to initiate CIRP for justified reasons as per the Code. The Hon'ble Supreme Court in the case of Mobilox Innovations Private Limited Vs. Kirusa Software Private Limited, has inter alia held that IBC, 2016 is not intended to be substituted to a recovery forum. In another judgment rendered in Transmission Corporation ....
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....er the decretal amount from the Respondent because of the reason that Respondent/Corporate Debtor had failed to pay the settlement amount and filed the Application before the Debt Recovery Tribunal, Bengaluru for the recovery of decretal sum of Rs. 2,61,88,403.05 and a Recovery Certificate was already issued by the Tribunal. 8. Expatiating his submission, the Learned Counsel for the Appellant contends that the 'Assignment Agreement' dated 03.05.2011 was executed between the Vijaya Bank and the Appellant and the Substitution Application of the Appellant was allowed by the DRT, Bengaluru and a Recovery Certificate was amended. Resultantly, the Appellant continued the recovery proceedings against the Respondent. 9. The main plea taken on behalf of the Appellant is that inasmuch as the 'Recovery Certificate' was issued based on the 'Compromise Terms' and the said 'Recovery Certificate' became final and binding upon the Respondent. That apart, it is the case of the Appellant that the Respondent, inspite of numerous opportunities provided to it, had neglected and intentionally defaulted in repayment of its dues. Further, It is stand of the Appellant that the Respondent had acknowledged....
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....01.2019. 14. The counsel for the Appellant refers to the Para 14 of the Respondent's Reply filed before the then Adjudicating Authority and submits that the Respondent had averred due to certain unavoidable circumstances and instances beyond its control, the regularity of repayment of loan instalment was lost and the repayment became irregular and it made an endeavour to settle the matter. Further, it is pointed out that as on 31.03.1998 the Respondent had accrued and assessed loss of Rs. 1.8/- Crore. 15. In response, it is the submission of the Learned Counsel for the Appellant that in Form No.1 of the Application by the Financial Creditor to initiate Corporate Insolvency Resolution Process under the Code dated 27.07.2018 against the Respondent, in Part IV, mentions the particulars of the Financial Debt. However, the debt of default was not mentioned and the date of Loan as 'Nonperforming Asset' was mentioned as 01.04.1993. 16. The Learned Counsel for the Respondent cites the decision of Hon'ble Supreme Court in the case of B.K.Educational Services Private Limited V. Parag Gupta and Associates [2018 (14) SCALE 482],wherein it is laid down as under: " it is thus clear that sin....
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....onstruction Company (India) Ltd.', who is also Appellant in the present case. Para 15. In the aforesaid case, the same very 'Asset Reconstruction Company (India) Ltd.' Took plea that limitation begin running for the purpose of limitation only on and from 1st December, 2016 which is the date on which the Insolvency and Bankruptcy Code was brought into force. The National Company Law Tribunal had reached the conclusion that since the limitation period was 12 years from the date on which the money suit has become due, the aforesaid claim was filed within limitation. However, the Hon'ble Supreme Court taking into consideration the fact that the ' Corporate Debtor' was declared as NPA on 21st July, 2011 held that the application was not maintainable. The said judgment is quoted below as the present Appellant was also the Applicant under Section 7 of the aforesaid case: "In the present case, the Respondent No.2 was declared NPA on 21.07.2011. At that point of time, the State Bank of India filed two O.As in the Debt Recovery Tribunal in 2012 in order to recover a total debt of 50 Crores of rupees. In the meanwhile, by an assignment dated 28.03.2014, the State Bank of India assigned ....
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.... facts of this case. 6. Mr. Debal Banerjee, learned Senior Counsel appearing on behalf of the respondents, countered this by stressing, in particular, para 7 of the B.K.Educational Services Private Limited (Supra) and reiterated the finding of the NCLT that it would be Article 62 of the Limitation Act that would be attracted to the facts of this case. He further argued that, being a commercial Code, a commercial interpretation has to be given so as to make the Code workable. 7. Having heard the learned counsel for both sides, what is apparent is that Article 62 is out of the way on the ground that it would only apply to suits. The present case being "an application" which is filed under Section 7, would fall only within the residuary Article 137. As rightly pointed out by learned counsel appearing on behalf of the appellant, time, therefore, beings to run on 21.07.2011, as a result of which the application filed under Section 7 would clearly be time-barred. So far as Mr.Banarjee's reliance on para 7 of B.K Educational Services Private Limited (Supra), suffice it to say that the Report of the Insolvency Law Committee itself stated that the intent of the Code could not have bee....
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....n Corporation of Andhra Pradesh Limited v. Equipment Conductors and Cables Limited [C.A No. 9597/2018 dated 23.10.2018 (2018) 147 CLA 112 [SC], following its earlier judgment in Mobilox Innovations Private Limited v. Kirusa Software Private Limited [(2018) 1 SCC 353], had observed as under: "In a recent judgment of this Court in Mobilox Innovations Private Limited v. Kirusa Software Private Limited (2018) 1 SCC 353, this court has categorically laid down that IBC is not intended to be substitute to a recovery the forum. It is also laid down that whenever there is existence of real dispute, the IBC provisions cannot be invoked..." 23. Lastly, it is stand of the Respondent that the Adjudicating Authority had rightly dismissed the application filed by the Appellant which need not be interfered with by this Tribunal. 24. It is to be pointed out that as per Section 238 of the I&BC, the provisions of the Code shall have an overriding effect, notwithstanding anything inconsistent therewith contained in any other law for the time being enforce or any instrument having effect by virtue of any such law. 25. As per Section 60(4) of the I&BC, an Adjudicating Authority (NCLT) is vested wi....
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....s an option to point out that the 'Default' had not occurred (inclusive of a disputed 'claim' and the same is not due. An 'Adjudicating Authority' is to ascertain whether the record is complete or otherwise, whether there is a 'Debt' and 'Default' was committed by the 'Corporate Debtor'. It is an established fact that existence of an 'Undisputed Debt' is a condition precedent for commencement of 'Corporate Insolvency Resolution Process.' 30. Be it noted, that in the judgment of this Tribunal dated 11.12.2019 V.Hotels Limited V. Asset Reconstruction Company (India) Limited in Company Appeal (AT) (Insolvency) No. 525 of 2019 at para 23 and 24, it is observed as under: "Para 23. In the present case, 'Asset Reconstruction Company (India) Ltd.'- ('Financial Creditor') has failed to bring on record any acknowledgment in writing by the 'Corporate Debtor' or its authorized person acknowledging the liability in respect of debt. The Books of account cannot be treated as an acknowledgment of liability in respect of debt payable to the 'Asset Reconstruction Company (India) Ltd.' - ('Financial Creditor') signed by the 'Corporate Debtor' or its authorized signatory. 24. In "Sampuran Singh ....
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....r decision of Hon'ble Supreme Court Manimala V. Indubala reported AIR 1964 SC at Page 1295. 36. In the decision Prabhakaran and Others V. M.Azhagiri Pillai (Dead) by lrs. And Ors. (2006) 4 SCC at page 484 at special page 497 it is observed as follows: ".............In a mortgage, both the mortgagor and the mortgagee, have certain rights and obligations against each other. The rights/obligations of a mortgagor or a mortgagee co-exist, like the two sides of a coin. The mortgagor's right of redemption is coextensive with the mortgagee's right of sale or foreclosure (where such right is recognized in law). Any statement by either, admitting the jural relationship with the other, will extend the limitation for a suit by that other, against the person acknowledging. It follows that when a mortgagee makes a statement about his right to recover the mortgage amount, such statement impliedly acknowledges the corresponding right of redemption of the mortgagor. Further, a statement admitting jural relationship, need not refer to or reiterate the rights and obligations flowing therefrom. Where a party to the mortgage, by his statement, admits the existence of the mortgage or his righ....
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..... The outstanding Amount as on 18.07.2018 was of Rs. 145,44,46,651.32 (Principal outstanding amount of Rs. 40,00,000+ interest of Rs. 145,04,46,651.32). The date of 'Non-Performing Asset' is 01.04.1993. The Assignor Bank filed O.A No. 547 of 1998 before the DRT, Bengaluru for recovery of the dues aggregating to Rs. 2,61,88,403.05. While O.A No. 547 of 1998 was pending a 'Joint Compromise Term' was filed by the parties based on which an order dated 27.03.2003 came to be passed by the Tribunal. The decretal amount of Rs. 2,61,88,403.05 and a Recovery Certificate was already issued by the DRT, Bengaluru on 27.03.2003 and that the Recovery Certificate was amended on 13.12.2012, based on the Assignment Agreement executed dated 03.05.2011 between the Vijaya Bank and the Appellant. The 'Statement of Account' of Vijaya Bank, the trust name is mentioned as 'Reliance ARC - VB Pilve Trust' and the Respondent's is described as 'Borrower'. The 'Statement of Account' dated 18.07.2018 mentioned the amount due as Rs. 1,45,44,46,651.32 and that the 'Opening Balance' as per 'Recovery Certificate' dated 27.03.2003 was Rs. 2,61,88,403.05 etc. Although, the Appellant has placed reliance on 'Statement o....