TaxTMI 
TaxTMI 
2021 (6) TMI 951
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....ph 14 and 15 had observed the following: 14." Apart from the technical issues raised, the Corporate Debtor did not dispute existence of debt and default, albeit it may differ dates of default and so on. Public money cannot be squandered away by the Corporate Debtor by finding loopholes. 15. From the record it is observed that the Corporate Debtor addressed letter dated 29.01.2020 (Annexure -I, Page 4 of Memo dated 07.02.2020 filed by the Corporate Debtor) to the Union Bank of India and also SBI agreeing, in principle, to repay the amount due to the Financial Creditors and requesting the Bank to support them during the financial crisis the Corporate Debtor is facing due to various reasons beyond their control. They also requested vide the above letter to waive off the penal interest levied. The Corporate Debtor has also requested the Financial Creditors for One Time Settlement (OTS). By addressing such letter to the Financial Creditors, the Corporate Debtor has acknowledged the debt and also the Corporate Debtor was seeking OTS from the Financial Creditors. There was a decree issued by the Debt Recovery Tribunal (DRT) in the instant case based on which the instant ....
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....uidity crunch faced by the Appellant Company and at this stage, the Appellant Company's loans accounts were classified NPA during February 2011 - March 2013. 6. The Learned Counsel for the Appellant brings to the notice of this Tribunal that the Demand Notice dated 16.08.2013 was issued by the Union Bank of India, Khairatabad under section 13(2) of the Securitisation and Reconstructions Financial Assets and Enforcement of Securities Interest Act, 2002 which clearly mentions that the loan accounts of the Appellant Company became NPA long back. Besides this, in the 'Joint Lenders Meeting' dated 23.05.2013, the Corporate Debt Restructuring proposal was rejected by the Union Bank of India-Lead Banker. 7. The Learned Counsel for the Appellant points out that the Lenders' filed joint original application No. 154 of 2014 (Re-numbered as 1563 of 2017) (OA I) before the Debt Recovery Tribunal, Hyderabad II, Original Application No. 1930 of 2014 (OA2) Before the Debt Recovery Tribunal, Bengaluru and Original Application No. 3 before the DRT Hyderabad against the Appellant and other Defendants. In fact, the original application No. 1 (Re-numbered as OA 1653 of 2017) resulted in a 'Decre....
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....tter of fact the said memo was filed for the purpose of adjournment of the matter before the Adjudicating Authority and in fact, the letter dated 29.01.2020 of the Managing Director of the Corporate Debtor cannot be treated as an acknowledgment of debt. 12. The Learned Counsel for the Appellant contends that the proceeding under the IB Code, 2016 cannot be pressed in to service to execute a 'Decree' of the Recovery Tribunal and in fact, the Code is not a 'debt enforcement procedure'. 13. The Learned Counsel for the Appellant submits that in the decision of the Hon'ble Supreme Court in Dharani Sugars & Chemicals Ltd V Union of India & ors (2019 3 AWC 2581), the circular of RBI dated 12.02.2018 was held to be ultra virus of section 35AA of the Banking Regulation Act and the Hon'ble Supreme Court had setaside all the proceedings initiated by the 'Banks and other Financial creditors' being non est. 14. The Learned Counsel for the 'Appellant' submits that the 'Adjudicating Authority' in the impugned order dated 12.0Rs. 1.2021 in CP No. (IB) No. 625/7/HDB/2019 at paragraph 12 had mentioned the two fold contentions raised by the Corporate Debtor ' (1) The petition is barred by li....
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....n the following decisions: * Reliance Asset Reconstruction Company Limited V Hotel Poonja International Private Limited (2020) SCC OnLine NCLAT 920 - Para Nos 30,34,41 * C. Shiva Kumar Reddy V Dena Bank (2019) SCC OnLine NCLAT 907 - Para Nos 6-11. * Rajendra Kumar Tekriwal V Bank of Baroda- MANU/NL/.0299/2020 - Para Nos 9-11 * Kotak Mahindra Bank Limited V Indian Speciality Fats Limited (2021) SCC OnLine NCLAT 85 - Para Nos 2-4 * G. Eswara Rao V Stressed Assets Stabilsation Fund (2020) SCC OnLine NCLAT 416 - Para Nos. 10,12,13. * B. S. Krishnan V Stressed Asset Stabilization Fund (MANU/NL/0091/2021) - Par Nos 12,15. * C. R. Badrinath V eight Capital India (M) Limited & anr (2020) SCc ONLine NCLAT 602 - Para Nos 22-24. * Bimal Kumar Manu Bhai Savalia V Bank of India (2020) SCC OnLine NCLAT 400 - Para Nos- 5,9,13,14 * Vijay Sitaram Dandnaik V Punjab National Bank MANU/NL/0066/2021 - Para Nos. 5, 10-15 * J C Budhraja V Chairman, Orissa Mining Corporation Limited (2018) 2 SCC 444 - Para Nos. 20-21 * Sampurn Singh V Niranjan Kaur (1999) 2 SCC 679 - Para No. 9 * Babulal Vardharji G....
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....ted V Indian Speciality Fats Limited (2021) SCC OnLine NCLAT 85 - Para Nos 2-4 ❖ G. Eswara Rao V Stressed Assets Stabilsation Fund (2020) SCC OnLine NCLAT 416 - Para Nos. 24-28. to fortify his contention that the I& B Code, 2016 cannot be used as Recovery Mechanism. 19. For the contention that 'OTS proposal' 'without prejudice' or if not accepted is not an 'Acknowledgement', the Appellant relies on the judgment of this Tribunal, in Bimal Kumar Manubhai Savalia V Bank of India reported in 2020 SCC Online NCLAT 400 (vide paragraph no. 5, 7& 9). 20. The Learned Counsel for the Appellant refers to the decision of the Hon'ble Supreme Court Babulal Vardalal Ji Gurjar v Veer Gurjar Aluminum Industries P Ltd (2020 ) 15 SCC 1 (vide paragraphs No. 35, 34.1) for the contention that an acknowledgement has to be pleaded by the creditor before the 'Adjudicating Authority' for it to be considered to extent the period of limitation. FIRST RESPONDENT/ BANK'S CONTENTIONS: 21. Per contra it is the submission of the Learned Counsel for the First Respondent /Bank that the application filed under section 7 of the Code before the Adjudicating Authority was based on Recovery....
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....wrong. In this connection it is necessary to draw a distinction between the injury caused by the wrongful act and what may be described as the effect of the said injury. It is only in regard to acts which can be properly characterized as continuing wrongs that S. 23 can be invoked. Thus considered it is difficult to hold that the Trustees' act in denying altogether the alleged rights of the Guravs as hereditary worshippers and in claiming and obtaining possession from them by their suit in 1922 was continuing wrong. The decree obtaining by the Trustees' in the said litigation had injured effectively and completely the Apellants' rights though the damage caused by the said decree subsequently continued.........." (at page 496) Following this judgment, it is clear that when the recovery certificate dated 24.12.2001 was issued, this certificate injured effectively and completely the Appellants' rights as a result of which limitation would have begun ticking. 25., The Learned Counsel for the First Respondent/Bank contends that the section 7 petition was filed based on a recovery certificate within three years from such recovery certificates and therefore, the section 7 petition i....
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....s 'Tribunal' points out that the First Respondent/Bank in the application filed (Form 1) at Part II had inter-alia stated that the amount that was claimed by the Financial Creditors and its associate Banks in Original Application is Rs. 222, 91, 37, 610. 59 on 30.06.2017 in OA I an order was passed by the Tribunal directing the Corporate Debtor and other defendants to pay a sum of Rs. 864, 36, 71, 855.40 to all the applicant banks therein including the financial creditor and its associate banks. 31. On 17.10.2017 in RC 2615 of 2017, the DRT, Hyderabad had issued a Recovery Certificate (RC I) in the OA I in the favour of the Financial Creditors, and its association banks and other banks to recover an amount of Rs. 1408, 03, 14, 857. 40. Further, out of the aforesaid recovery amount, it was mentioned that the Financial Creditor and the associate banks were entitled to the recovery amounts mentioned as under: Amount ordered as Recovery Certificate 1. State Bank of India - Rs. 196,14,36,399.35 2. State Bank of Hyderabad - Rs. 76, 85, 47, 437.24 3. State Bank of Mysore - Rs. 95, 22,29, 512/- Total - Rs. 368, 22, 13, 348.59 32. In respect of OA ....
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....d the period of limitation and as such the application under section 7 of the Code filed before the Adjudicating Authority is not maintainable in the eye of Law. 36. It comes to be known that in OA 1653 of 2017 (New) (OA 154 of 2014- Old) (OA II) in the file of DRT II, Hyderabad, the State Bank of Hyderabad figured as applicant No. 4 and the same was filed against the Corporate Debtor and the Appellant in the present Appeal and his wife, wherein an order on 30.06.2017 was passed against the Corporate Debtor and the Appellant and another wherein the OA was allowed with costs by directing the defendants No. 1, 2, 3 jointly and severally to pay a sum of Rs. 864, 36, 71, 855. 40. As a matter of fact the defendants no 2 and 3 in OA No. 1653 of 2017 were set ex-parte and although the 'Corporate Debtor' had filed a written statement, later their Learned Counsel reported no instructions in OA 1653 of 2017 and after closing their side evidence and hearing the arguments of the Applicant Bank's Learned Counsel an order was passed and 'Recovery Certificate' was directed to be issued. 37. It is brought to the fore that the Recovery Certificate dated 04.08.2017 in OA 1930/2014 (RC No. 1225....
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....ers/Litigants to get over the defeat by devising a plea which was never set up, when it should have been taken at the appropriate time, before the competent forum. Aspect of NPA 43. Dealing with the plea of aspect of NPA since July 2012 (State Bank of India), NPA since June 2012 (State Bank of Mysore) and NPA since March 2013 (Syndicate Bank), projected on the side of the 'Appellant', it is to be pointed out that the Corporate Debtor's NPA accounts being 2012 and 2013, it is to be pointed out that in OA 1653 of 2017 on the file of DRT II, Hyderabad, the order dated 30.06.2017 shows that the Corporate Debtor/D1 filed written statement, his counsel Totem Infrastructure reported no instruction and their side evidence was closed and Defendant No.2 & 3 were set ex-parte. As such, the order dated 30.06.2017 in OA 1653 of 2017 against the Corporate Debtor and the Appellant etc has become final and it is binding between the parties inter se. Therefore, the plea of NPA of the Corporate Debtor accounts was of the year 2012 and 2013 cannot be raised in the Appeal before the Tribunal. Likewise, as against the Second and Third Original Application 'Orders' in OA 1930 /2014 and OA 221/2014....
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....ry of the specified period of limitation. The said acknowledgement of an individual, must be conscious of his liability and the commitment should be made towards that liability. 47. It cannot be gain said that a 'judgment in personam' binds both the parties in a given legal proceedings when a person is a party to the judgment/order in a legal proceedings is estopped from pleading that the said judgment/order/Recovery Certificate did not bind him. Further, a person is precluded by way of his action or conduct in not agitating a particular matter before the higher forum. Even an Exparte Decree/order is binding for all purpose. It is well settled that in the absence of fraud or want of jurisdiction or any other irregularity, an Exparte order/Decree will bind the parties at any cost. 48. It is to be mentioned the right to apply under section 7 of the I & B Code accrues to the Bank only when the code came in to force. An Application under Section 7 of the Code is to be considered by the 'Adjudicating Authority' on its merits taking into consideration available materials on record. The reason for the inability of 'Corporate Debtor' to pay its 'debt' is not required to be looked int....
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....tances of the case which float on the surface. 52. It cannot be forgotten the letter of authority in favour of the signatory of the First Respondent/Bank was based on the Gazette Notification dated 26.09.1959, 26.08.1972 ands 02.05.1987. As regards the plea of the Appellant that the letter dated 29.01.2020 addressed by the Managing Director of the Corporate Debtor/Totem Ingratitude Limited addressed to Asst. General Manger, Union Bank of India, Hyderabad wherein a request for OTS with consortium banks was made, it is to be pointed out that in paragraph 2 of the said letter the corporate debtor among themselves had agreed to pay the amount due and at the bottom of the letter a request was made to consider this letter as OTS option and to permit them to repay the amount in atleast 4 to 6 instalments spread over to a period of one year and the contents of the letter are unerringly amounts to an admission of acknowledgement because of the simple reason in the said letter a request was made to inform the 'Corporate Debtor' about exact outstanding amount payable to the banks as on the date of their account becoming NPA in the bank etc. It must be remembered that the letter dated 29.01....
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....of limitation concerning the section 7 application and the aspect of RBI circular dated 12.02.2018 and answered the same at the relevant of this Judgment. As such, the Appellant cannot be an aggrieved person in this regard, in the considered opinion of this Tribunal. 57. It is to be pointed out that in our 'Justice Delivery System', 'Law' is to be decided with reasons which carry convictions within the Codes/Tribunals/Lawyers/Stakeholders and Litigants to make it, stable, predictable and consistent with a view to have certainty and clarity to the benefit of one and all. It cannot be gainsaid that the judgment/order of a Tribunal is to be written only after deep travail and positive vein. Also that, the procedure for developing the law has to be one of evolution. In this connection it is significant to point out that the exception to rule of 'Stare decisis' is that a Court/Tribunal is not bound to follow the decision(s) reached 'per incuriam'. 58 As matter of fact, in the instant case when once the Company has/had defaulted and after the initiation of legal proceedings as available to the Lender on that date (Before the Debt Recovery Tribunal) and when the Financial Creditor/L....