TaxTMI 
TaxTMI 
TaxTMI 
2021 (6) TMI 951
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....part 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 application was filed and acknowledgement of debt was not paid ....
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....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 'Decree' and 'Recovery Certificate' was issued by the DRT on 17.10.2017. In respect of OA 1930 of 2014 (OA 2), th....
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.... 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 limitation and (2) The Petition has been initiated as per RBI circular dated 12.02.2018 which was held ultra virus of secti....
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....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 Gurjar V Veer Gurjar Aluminium Industries Private Limited (2020) 15 SCC 1 - Para Nos 34-36. 17. In regard to the plea of issuance of Recovery certificate or existence of proceedings before the Debt Recovery Tribunal or other legal proceedings will not extend the limitation period, the Appellant has placed th....
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....nal, 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 Certificate No1, Recovery Certificate No2, Recovery Certificate No.3 and the original application (No 1) Original Application No. 2 and Original Application No. 3 had attained finality and as against the orders passed in the three original applications, 'No appeal' was preferred. Further, as per the orders passed in the aforesaid original applications, the Appellant Debt' is due and payable in Law. 22. The Learned Counsel for the First Respondent/Ban....
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....rom 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 is not barred by limitation. Also, going by the section 7 of the I & B Code read with the definition 'debt' as per section 3(11) of the Code, the said section 7 petition is bound to be admitted if the same was filed within three years from any of the recovery certificates. 26. Yet another submission made on behalf of the First Respondent/Bank is that the 'Appellant' through letter dated 29.01.2020 had admitted the liability to repay the amount in atleast four to six in....
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....ociate 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 No. II (Original Application 930/2014(, the Tribunal on 08.09.2015 passed an order directing the Corporate Debtor and other defendants to pay a sum of Rs. 5, 22, 21, 750/-. A recovery certificate No. 12257 of 2017 (RC II) in OA II was issued in favour of the erstwhile State Bank of Bikaner and Jaipur for recovery of Rs. 5, 22, 21, 750/- along with 14.25% ROI from the date of OA till realization. 33. In respect of OA No. III (Original Application No. 221/2014) filed by the erstwhile State Bank of Hyder....
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.... 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. 12257/17) was for Rs. 5,22,21,750/- wherein the Applicant Bank/ Certificate Holder is mentioned as State Bank of Bikaner and Jaipur, Bangalore that the defendants/debtors are mentioned as Totem Infrastructure Limited (Corporate Debtor & 3 others). Also that, in Recovery Certificate dated 08.09.2017 in Case No. 221/2014 (OA III)wherein the Applicant Bank is State Bank of Hyderabad, Hyderabad and the M/s. Totem Infrastructure Limited, Hyderabad was shown as First Defendant and the present 'Appellant'/Salalith Tottempu....
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....le 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 have become final, and in short, in respect of three 'Original applications' the 'Recovery Certificates', were issued on 17.10.2017 (OA I), 04.08.2017 (OA II) and 08.09.2015 (OA III). DISCUSSIONS Scheme of I & B Code 44. In fact, the Code was enacted with the basic objective of consolidating Law pertaining to Insolvency and Bankruptcy and provide for a single legal frame work to determine all cases. It is to be remembered that the Code was enacted to consolidate and amend the laws related to reorganisation and Insolvency Resolu....
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.... 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 into by the 'Adjudicating Authority'. In short the shift is from 'inability to pay' to the existence of 'default'. In fact, Article 137 of the Limitation Act applies to applications for which no other articles provide for the period of limitation. The term 'dispute' is to be understood to be the 'dispute' between the parties under the I & B Code. 49. In respect of the plea taken on behalf of the Appellant that the petition filed under section 7 of the code by the First Respondent/Bank as per the directions and under the compulsion of the RBI Circular ....
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.... 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 29.01.2020 addressed by the Managing Director of the Corporate Debtor falls within the period of limitation from the dates of recovery certificates and as such, the contra plea taken on behalf of the Appellant is not acceded to by this Tribunal. 53. It is pertinent to make a mention that section 3 (6) of the I & B Code defines claim. Section 3(10) of the Code defines 'Creditors' meaning any person to whom to debt is owed and includes a financial creditor, operational creditor and secured creditor, an unsecured creditor and a decree holder. 54. Section 3(11) of....
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....d 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/Lender had obtained the order(s) in the 'Original Applications' and later recovery certificates were issued, and when the Original Applications filed before the Debt Recovery Tribunal(s) had attained finality, thereafter it is for the Lender/Financial Creditor/Decree Holder as matter of 'Election' to pursue the recovery mechanism for his/its personal benefits before a 'competent forum' or to initiate Insolvency Proceedings for the benefit of 'stakeholders' and 'one and all'. In the event of the Decree Holder/Lender/Financial Creditor has/had resorted to the initiation o....