TaxTMI 
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2021 (3) TMI 626
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.... Authority (National Company Law Tribunal, Cuttack Bench) in CA(IB) No.87/CTB/2019 in IA(IB)No.21/CTB/2019 in TP No.40/CTB/2019 arising out of CP(IB)No.24/KB/2018. 2. The 'Adjudicating Authority' (National Company Law Tribunal, Cuttack Bench), while passing the Impugned Order (First Order) dated 25.6.2019 in IA No.21/CTB/2019 in TP No.40/CTB/2019 [CP (IB) No.24/KB/2018] among other things at Paragraphs 15 to 19 observed as under : Para 15. "It is seen from the perusal of the Order of Hon'ble Orissa high Court dated 25.03.2019 that the Hon'ble High Court on the basis of contentions of the bank observed that, "Opposite party no.2(SBI) being public sector bank is obliged under law to adhere to the provisions and guidelines/policies claimed by opposite party no.1(RBI) from time to time. In reply to the averments made by the petitioner in Paragraph No.5 to the Writ Petitions, SBI has stated in its counter affidavit that RBI has issued directions as per annexure 2 of the Writ Petition and instructions of RBI are complied with". Para 16. Above evidence is enough to hold that this proceeding Under Section 7 of the Insolvency and Bankruptcy Code, is filed against Corporate Debtor by SB....
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....20". The suit shall be filed against company before 31.12.2017 which is also directed by RBI Circular dated 28.08.2017. All the representative of the other major lenders present in the meeting." Para 19. Above minutes make it abundantly clear that the SBI has initiated this proceeding under Insolvency and Bankruptcy code, against the corporate debtor on the basis of RBI directions dated 28.08.2017 Circular dated 28.08.2017 is also on record at Page 142. RBI has directed State Bank of India to initiate proceeding under Insolvency and Bankruptcy Code, against some of the defaulters including the Corporate Debtor. RBI now in view of the interpretation of Hon'ble Apex Court of Section 35-AA of Banking Regulation Act, 1949 in case of Dharani Sugar & Chemicals Limited, cannot issue such instructions without concurrence of the Central Government. It appears to me from evidence on record that this proceeding is initiated by the State Bank of India against the Corporate Debtor as per instructions of the RBI and, ultimately allowed the Interlocutory Application No.21/CTB/2019 filed by the 'Corporate Debtor' and dismissed the CP(IB)No.24/KB/2018(TP No.40/CTB/2019). 3. The Learned 'Adjudica....
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....'Adjudicating Authority' (National Company Law Tribunal) had failed to appreciate that the Central Government Notification dated 5.5.2017 had already authorised the 'Reserve Bank of India' to issue directions in regard to the 'specific defaults' and to pass specific directions in relation to such 'default'. 8. The Learned Counsel for the 'Appellant', forcefully comes out with an argument that the 'Adjudicating Authority' (National Company Law Tribunal) failed to appreciate that the constitutional validity of Sections 35- AA and 35-AB of the 'Banking Regulations Act, 1949' was considered and upheld in the decision of Hon'ble Supreme Court in 'Dharani Sugars' case and hence, actions of the 'Reserve Bank of India' taken thereunder stood valid except the 'Reserve Bank of India' Circular dated 12.2.2018 which was struck down. 9. It is the version of the 'Appellant' that the 'Adjudicating Authority' (National Company Law Tribunal) had acted beyond his jurisdiction and in violation of the Hon'ble Supreme Court's order dated 29.7.2019 in dismissing the 'Review Application' on the ground of 'Lack of Jurisdiction' without examining its merits, when the liberty to file 'Review Petition' was....
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.... Bank of India' Letter dated 28.8.2017 was expressly mentioned in the judgement of the Hon'ble Supreme Court in 'Dharani Sugars', wherein at Paragraph 20, the specific accounts were mentioned in the said letter and that if the 'Banks' failed to finalise and implement viable 'Resolution Plan' by 13.12.2017, the 'Banks' would be required to file applications under the 'Insolvency & Bankruptcy Code', before 31.12.2017. 16. The Learned Counsel for the Appellant contends that the 'Impugned Order' dated 25.6.2019 (first order) of the 'Adjudicating Authority' proceeds on the incorrect assumption that no prior authorisation of the Central Government was taken for issuance of instructions to the Appellant by the 'Reserve Bank of India'. Continuing further, it is projected on the side of the Appellant that as per the 'Reserve Bank of India' Affidavit in Writ Appeal and as mentioned in Para 21 of the Hon'ble Supreme Court judgement in 'Dharani sugars' case, the Central Government Notification dated 5.5.2017 authorise 'Reserve Bank of India' to identify specific cases on default for 'Resolution' and if 'Resolution' fails for initiation of the proceedings under the 'Insolvency & Bankruptcy' Co....
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....isclosed by the 'Respondent'/Corporate Debtor' before the Learned 'Adjudicating Authority' in view of the 'Review Application' proceedings which amounts to suppression of material facts and playing fraud upon the Court. Also that, the 'Respondent'/'Corporate Debtor' had not disclosed the 'Adjudicating Authority' in regard to the hearing of 'Review Application' which took place on 5.11.2019, that on 4.11.2019, it had withdrawn the Writ Appeal in WA No.201 of 2019 which was filed against the order dated 25.3.2019. 22. It is the submission of the Learned Counsel for the Appellant that once the Writ Appeal, i.e. WA No.201 of2019 was withdrawn, the order dated 25.3.2019 becomes final and binding on the 'Adjudicating Authority' had no jurisdiction to disregard the judgement of the Hon'ble High Court of Orissa dated 25.3.2019. 23. The Learned Counsel for the Appellant contends that the 'Respondent'/'Corporate Debtor's position before the Hon'ble High Court was recorded to the effect 'however it is not disputed that the bank has jurisdiction to approach the 'Tribunal' under the 'Insolvency & Bankruptcy' Code, that in the order dated 25.3.2019 in WP No.2511 of 2018 on the file of Hon'ble ....
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....ent clearly clarified that 'as a result, all cases in which the Debtors have been proceeded against by Financial Creditor under section 7 of the 'Insolvency & Bankruptcy Code' 2016, only because of the operation of the 'Impugned Circular' will be proceedings which, being faulted at the very inception, are declared to be non-est." 28. The Learned Counsel for the Appellant points out that the 'Respondent'/'Corporate Debtor' had not disclosed before the 'Adjudicating Authority' that it was simultaneously pursuing to sanction the 'Scheme of Demerger' while the 'Proceedings' under Section 7 of the 'Insolvency & Bankruptcy Code' were pending. That apart, it is the stand of the Appellant that pendency of Section 7 proceeding of the 'Insolvency & Bankruptcy Code' were not disclosed in the proceedings for the demerger while obtaining the sanction order dated 8.7.2019 from the 'Tribunal' which was without notice to the Creditors of the 'Respondent' and it was stayed by the Hon'ble Supreme Court of India. 29. The Learned Counsel for the Appellant submits that when prejudice results from an order attributable to the 'mistake', 'error', or 'omission' of the 'Tribunal', then it is the duty of ....
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....Appellant is granted the benefit of exclusion of period for prosecuting prior proceeding, in terms of Section 14 of the 'Limitation Act' and in fact, the Appellant/Applicant has prayed for an exclusion of 193 days from the total period of 223 days from 26.6.2019 to 14.2.2020. 35. Appellant's Citations: (a) The Learned Counsel for the Appellant relies on the decision of Hon'ble Supreme Court in 'Dharani Sugars and Chemicals Ltd. Vs. Union of India and others reported in (2019) 5SCC 480 at Spl.Pg.502 to 504 wherein at Paragraph 19 to 21, it is observed as under: 19. "At this stage, as a first step, the Internal Advisory Committee ("IAC") decided to consider the stressed assets within the top 500 exposures of the banking system as on 31-3-2017. This set of 500 accounts was arrived at as per the statement generated from the Central Repository of Information on Large Credits ("CRILC") database. On the said top 500 exposures, it was noted that 71 accounts had been partly or wholly classified as NPAs while the other 429 were not classified as NPA by any bank. For the purpose of this first list, the following criteria were applied : (a) Accounts where the funded plus non-funded outst....
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....hich the Bank Regulation (Amendment) Ordinance, 2017 introduced Sections 35-AA and 35-AB as amendments to the Banking Regulation Act. A Press Note of the Ministry of Finance of 5- 5-2017 explains the genesis of the Ordinance thus : "Press Information Bureau Government of India Ministry of Finance The promulgation of Bank Regulation (Amendment) 5-5-2017 Ordinance, 2017 will lead to effective resolution of stressed assets, particularly in consortium or multiple banking arrangements. The Ordinance enables the Union Government to authorise Reserve Bank of India (RBI) to direct banking companies to resolve specific stressed assets. The promulgation of the Baking Regulation (Amendment) Ordinance, 2017 inserting two new Sections (viz., 35-AA and 35-AB) after Section 35-A of the Banking Regulation Act, 1949 enables the Union Government to authorise Reserve Bank of India (RBI) to direct banking companies to resolve specific stress assets by initiating insolvency resolution process, where required RBI has been empowered to issue other directions for resolution, and appoint or approve for appointments, authorities or committees to advise banking companies for stressed asset resolu....
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....wer of the Tribunal necessary to discharge its functions effectively for the purpose of doing justice between the parties, were required to be complied with. 20. While the Judges' records are considered to be final, it is now a trite law that when certain questions are raised before the court of law or tribunal but not considered by its, and when it is brought to its notice, it is only appropriate authority to consider the question as to whether the said contentions are correct or not. For the aforementioned purpose, the provisions of limitation specified in Section 129-B(2) of the Customs Act would not be attracted. However, such an application cannot be filed at any time. If such an application is filed within a reasonable time and if the court or tribunal finds that the contention raised before it by the applicant is prima facie correct, in order to do justice, which is being above law, nothing fetters the Judges' hands from considering the matter on merit." Added further, in the aforesaid decision at P.366, it is observed as under : "In a matter of this nature the Tribunal was required to consider the application (for rectification) filed by the appellants which was filed ....
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....it has nothing to do with the concept of inherent power to review. In the present case, ITAT was justified in exercising its powers under Section 254(2) when it was pointed out to ITAT that the judgment of the coordinate Bench was placed before ITAT when the original order came to be passed but it had committed a mistake in not considering the material which was already on record. ITAT acknowledged its mistake, it accordingly rectified its order. The Court was not justified in interfering with the said order". d) The Learned Counsel for the Appellant adverts to the judgement of this 'Tribunal' in the matter of Santhosh Vasanth Walocar V Vijayakumar V. Iyer, Resolution Professional, Mumbai and Another in Company Appeal (AT)(Ins) No.871-872 of 2019 dated 24.1.2020 wherein at Para 30(iv) it is observed as under: "Whether the Adjudicating Authority has power to modify its own order? Section 420(2) of the Companies Act, 2013 provides as under: The Tribunal may, at any time within two years from the date of the order, with a view to rectifying any mistake apparent from the record, amend any order passed by it, and shall make such amendment, if the mistake is brought to its notice ....
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....money relief cannot be said to be a proceeding instituted in good claiming money relief cannot be said to be a proceeding instituted in good faith and secondly, dismissal of writ petition on the ground that it was not an appropriate remedy for seeking money relief cannot be said to be defect of jurisdiction or other cause of a like nature" within the meaning of Section 14 of the Limitation Act. It is true that the writ petition was not dismissed by the High Court on the ground of defect of jurisdiction. However, Section 14 of the Limitation Act is wide in its application, inasmuch as it is not confined in its applicability only to cases of defect of jurisdiction but it is applicable also to cases where the prior proceedings have failed on account of other causes of like nature. The expression "other cause of like nature" came up for the consideration of this Court in Roshanlal Kuthalia V. R. B. Mohan Singh Oberot(1975 4SCC 628) and it was held that Section 14 of the Limitation Act is wide enough to cover such cases where the defects are not merely jurisdictional strictly so called but others more or less neighbours to such deficiencies. Any circumstance, legal or factual, which inh....
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....lature had used the words of general import and of widest amplitude If only pendency of a proceeding in a court would be deducted in computing the period of limitation, the time taken for issuing certified copies of the judgment which is essential to decide future course of action, has to be disregarded for the purpose of Section 14. It would certainly result in an anomaly. That time covered for taking steps absolutely necessary for initiating proceedings in a court should be included in calculating the period of limitation. The section does not make any distinction between the steps which a litigant has to take to initiate proceedings in a court and the actual pendency of those proceedings in the court. In other words, Section 14 of the Limitation Act excludes not only the period of pendency of infructuous proceedings in a court of law, but also the time occupied for taking indispensable and preparatory steps to institute further proceedings like obtaining certified copies of the judgments and orders. 17. In the instant case, the reliefs claimed in DROPS under Section 9 of Agricultural Debt Relief Act, 1970 and the reliefs claimed in the suits are the same. Parties are also same....
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....he inherent power under Section 151 to direct postponement of execution of the decree, the ends of justice did not require such postponement". RESPONDENT'S SUBMISSIONS (Comp App(AT) (INS) No.294 & 295/2020) 38. The Learned Counsel for the Respondents submit that section 35AA of the Banking Regulation Act, 1949 makes it clear that dehors the authorization of the Central Government, the Reserve Bank of India has no power to issue directions on its own unlike section 35 of the Act. 39. The Learned Counsel for the Respondent contends that the appellant/financial creditor had admitted that the proceedings were filed before the 'Adjudicating Authority' (National Company Law Tribunal, Cuttack Bench) because of the Reserve Bank of India circulars which among other things had granted time only upto 13.12.2017 to work out any resolution dehors the Insolvency and Bankruptcy Code' and filed proceedings before 31.12.2017 (vide corrigendum dated 13.06.2017 issued by Chief General Manager of Reserve Bank of India). 40. The Learned Counsel for the Respondent points out that the Appellant/Bank had acted as per the Reserve Bank of Letter dated 28.08.2017 whereby and where under, it was made clea....
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....949. 44. The Learned Counsel for the Respondent brings to the notice of this Tribunal that the demand notice prior to the filing of the proceedings before the 'Tribunal' was issued on the last date, i.e 13.12.2017, as per the direction of the Reserve Bank of India (vide Volume I of the Paper Book, Annexure A-12, pages 190-192) and that the proceedings was filed before the Tribunal in CP (IB) No.24/KB/2018 on 21 December 2017 keeping in tune with the RBI Circular/direction. 45. The primordial stand of the Respondent is that in view of the judgment of Hon'ble Supreme Court in Dharani Sugars and Chemicals case report in (2019) 5 SCC at page 480 the directions given by the Reserve Bank of India in its circular dated 13.06.2017 and the letter dated 28.08.2017 being general in character and admittedly without having any authorization from the Central Government is also ultra vires of the section 35AA of the Banking Regulation Act, 1949. 46. The Learned Counsel for the Respondent contends that the "IBC proceedings' being initiated by the Bank after 13.12.2017 and prior to 31.12.2017 in terms of the ingredients of the letter dated 28.08.2017 of the Reserve Bank of India is also resultan....
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..... The Learned Counsel for the Respondent to lend support to the contention that in the absence of specific statutory provision, an order of 'Review' cannot be passed refers to the decision of Hon'ble Supreme Court Kalabharathi Advertising Vs Hemanth Vimalnath Narichania reported in (2010) 9 Supreme Court Cases at Page 437 at special page 445 wherein at paragraphs 12 to 14 it is observed as under: "Para 12. It is settled legal proposition that unless the statute/rules so permit, the review application is not maintainable in case of judicial/quasi-judicial orders. In the absence of any provision in the Act granting an express power of review, it is manifest that a review could not be made and the order in review, if passed, is ultra vires illegal and without jurisdiction. (Vide Patel Chunibhai Dajibha V Narayanarao Kanderao Jambekar (AIR 1965 SC 1457) and Harbhajan Singh V Karam Singh (AIR 1966 SC 641). Para 13. In Patel Narshi Thakershi v Pradyuman Singhiji Aurnsinghji (AIR 1970 SC 1273(, Major Chandra Bhan Singh v Latagar Ullah Khan ((1979)1 SCC 321), Kuntesh Gupta (Dr) v Hindu Kanya Mahavidyalaya (AIR 1987 SC 2186), State of Orissa v Commr. Land Records and Settlement ((1998) ....
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.... is that as because the Supreme Court decided that matter on 29th November, 2011 directing to file the review application, therefore, there was delay on part of the applicants/petitioners in filing the same. However, no new question of fact or law is available before us." 54. The Learned Counsel for the Respondent points out the judgment of this Tribunal in Comp. App (AT) (Ins) No. 295/2017 dated 30.11.2017 in Amod Amladi Vs Sayali and others reported in MANU/NL/0189/2017 wherein at paragraph 6 it is observed as under: "6. In absence of any power of review or recall vested with the Adjudicating Authority, we hold that the Adjudicating Authority rightly refused to recall the order of admission dated 2nd May, 2017." 55. The Learned Counsel for the Respondent refers to the decisions (a) Bablu Ghosh Vs Amrit Fresh Private Limited reported in 2016 (3) CHN (Cal) 214 wherein at paragraph 21 and 22 it is observed as under: "21. The applicant respondent No. 1 filed a Special Leave Petition in the Supreme Court being SLP No. 22419 of 2014 challenging the judgment and order dated 18th February, 2014 of the Division Bench, of which review has been sought. It appear that on 15th September....
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....ation is beyond the legal competence of the Court who was in seisin of the suit and was exercising jurisdiction within strict parameters of section 8 of the said Act. " 58. The Learned Counsel for the Respondent refers to the decision of Hon'ble Supreme Court Manohar Shankar Nale and Others v. Jaipal Singh A/o.Shivlal Singh Rajput (2008) 1SCC Pg.520 at spl.Pg. 522 wherein , it is observed as under : ." it is one thing to say that the respondent was entitled to file an application for review in terms of Section 114 read with Order 47 Rule 1 CPC, but it is another thing to say that the decree passed in favour of the respondent merged with the order dismissing the review application etc." 59. The Learned Counsel refers to the order dated 10.7.2019 of this Tribunal in Company App.(AT)(Ins) No.702 of 2019 in Dinesh Goyal v.DCB Bank wherein at Paragraph 5, it was observed that "in the present case, as there is no mistake apparent from the record and in the absence of any typogrophical error it was not open to the Adjudicating Authority to take any recourse of sub-section (2) of Section 420 of the Companies Act, 2013." 60. The learned Counsel for the Respondent while rounding up subm....
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....on'ble Supreme of Court of India in Shabad Khan v Nisus Finance and Investment case is tagged with bunch of cases relating to the issues involved in Piramal's judgment. 64. The Respondent/Corporate Debtor had filed an IA/21/CTB/2019 in CP (IB) No.24/KB/2018 on the file of Adjudicating Authority (National Company Law Tribunal, Cuttack Bench) and prayed for the issuance of necessary direction in dismissing CP (IB) No. 24/KB/2018 (filed by the Appellant/Financial Creditor/Bank) as the same as become non-est etc. 65. The main plea of the Respondent/Corporate debtor before the Tribunal as petitioner was that the Hon'ble Supreme Court had interpreted the provisions of Section 35AA and 35 AB of the Banking Regulation Act, 1949 in the decision Dharani Sugars Chemicals Limited reported in (2019)5 SCC at page 480 at special page 533 wherein in paragraph 72 it is observed and held as under: "There is nothing to show that the provisions of Section 45-L(3) have been satisfied in issuing the impugned circular. The impugned circular nowhere says that RBI has had due regard to the conditions in which and the objects for which such institutions have been established, their statutory responsibil....
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....rs and Chemicals Limited case had set-aside the circular dated 12.02.2018 of the Reserve Bank of India stating that the same was not in accordance with section 35AA of the Banking Regulation Act, 1949 and the Hon'ble Supreme Court had not passed any orders on the circulars issued by the Reserve Bank of India prior to 12.02.2018. Furthermore, the Respondent/Appellant/Petitioner had initiated the 'CIRP proceedings' against the Corporate Debtor because of the default committed by it and further that the IA No 21 of 2019 filed by the Respondent/Petitioner/Corporate Debtor is to be dismissed because of the fact that the judgment of the Hon'ble Supreme Court in Dharani Sugars and Chemicals case has nothing to do with the CP (IB) No. 24/KB/2018 filed by the Financial Creditor. 70. It is to be pointed that the Ministry of Finance (Department of Financial Services) New Delhi on 05.05.2017 issued Gazette Notification which runs as under: "SO 1435 (E) - In exercise of the powers conferred by Section 35AA of the Banking Regulations Act, 1949 (10 of 1949), the Central Government hereby authorizes the Reserve Bank of India to issue such directions to any banking company or banking companies w....
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....rom filing such application in accordance with 'Law'. The trigger for initiating 'Insolvency Process' is the occurrence of 'default' by the 'Debtor'. 75. At this juncture it is worthwhile to recall and recollect the decision of the Hon'ble Supreme Court in Dharani Sugar and Chemicals Limited vs Union of India (2019) 5 SCC at special page 518 wherein it is observed and laid down as follows: 42. ... "If a specific provisions of the Banking Regulation Act makes it clear that RBI has a specific power to direct banks to move under the Insolvency Code against debtors in certain specified circumstances, it cannot be said that they would be acting outside of four corners of the statutes which govern them, namely, the RBI Act and the Banking Regulation Act." 76. In the case on hand resting upon the Gazette Notification of the Ministry of Finance dated 05.05.2017 whereby the Central Government had authorized the Reserve Bank of India to issue such directions to any banking company or banking companies which may be considered necessary to initiate insolvency resolution process in respect of default under the provisions of the Insolvency and Bankruptcy Code, 2016, the Reserve Bank of India....
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.... 79. Be it noted, that before the Hon'ble High Court, Orissa, Cuttack, in Miscellaneous case No. 2216 of 2018 in WP (C) No. 2511 of 2018 filed by the Respondent/ VISA Steel Limited (As petitioner) against the (1) Reserve Bank of India, Mumbai and the Appellant/State Bank of India, an order of stay of further proceeding of C. P (IB) 24/KB/2018 pending before the National Company Law Tribunal, Kolkata Bench was granted on 15.03.2018 till the next date of hearing . Moreover, on 02.05.2018 the Hon'ble High Court of Orissa, Cuttack in Miscellaneous Case No. 5353 of 2018 in WP (C) No. 2511 of 2018 had not extended the stay order passed on 15.03.2018 in Miscellaneous Case No. 2216 of 2018 and expressly recalled the order of the stay passed earlier. 80. It is brought to the fore that the Hon'ble Division Bench of Orissa High Court, Cuttack in WA No. 237 of 2018 filed by the Respondent/VISA Steel Limited (Appellant therein) on 27.06.2018 had directed that the interim order which was granted by the writ court on 15.03.2018 passed in the writ petition will continue to operate till next date of listing or final decision in the writ petition, whichever was earlier. 81. As a matter of fact th....