TaxTMI 
TaxTMI 
2021 (5) TMI 1010
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....ncipal amount of debt disbursed under the Facility Agreements was Rs. 56.70 Crores. The total amount in default due to Financial Creditor by the Borrower with respect to the Financial Facility is Rs. 60,39,87,991.41/- as on June 01, 2019. Brief facts of the Petition: 3. The Petitioner had granted financial debt to the Great Indian Nautanki Company Private Limited (Borrower) under a term loan of Rs. 35 Crores, cash credit limit of Rs. 2 Crores, bank guarantee of Rs. 4 Crores vide Sanction Letter dated 24.06.2009. Subsequently, another Term Loan of Rs. 12 Crores was sanctioned and Bank Guarantee was reduced from Rs. 4 Crores to Rs. 1 Crore vide Sanction Letter dated 24.02.2010. Further, a loan cum Hypothecation Agreement dated 26.06.2009, 25.02.2010 and 03.01.2013 were executed between Borrower and Lender. The total Principal Amount of debt disbursed under Facility Agreement was of Rs. 56.70 Crores. The additional facility of Rs. 6.70 Crores (LC- Capax- Rs. 5 Crores sublimit of LC/TCBG) (5 Crores, LER-Rs. 1.70 Crores) was sanctioned vide Sanction Letter on 28.12.2012. Pursuant to this, the Petitioner disbursed a Term Loan of Rs. 47 Crores, Cash Credit of Rs. 2 Crores, Bank Guarante....
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.... secured assets is annexed as Annexure-13. Thereafter, the symbolic possession of the assets was taken over by IDBI on July 2, 2018 and the publication of the possession notice was made on July 7, 2018. 4) Letter dated August 25, 2017 by the Financial Creditor to the Corporate Debtor stating that if the payment under the Guarantees are not cleared then the Financial Creditor would be constrained to initiate steps under the Insolvency and Bankruptcy Code 2016 and the letter dated September 27, 2017 from the Corporate Debtor to the Financial Creditor requesting the Financial Creditor not to initiate any action under the Insolvency and Bankruptcy Code, 2016 and provide the Corporate Debtor an opportunity to present a plan that is acceptable to the Financial Creditor. True copies of the letters dated August 25, 1017 and September 27, 2017 is annexed hereto and marked as Annexure-14. 5) True copy of the stand alone Financial Statements for the Corporate Debtor for the period 01/04/2017 to 31/03/2018 is annexed hereto and marked as Annexure-15. 6) True copy of the Written Statement filed by the Corporate Debtor before the Debt Recovery Tribunal is annexed hereto and marked as Annex....
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....o the Financial Creditor requesting the Financial Creditor not to initiate any action under the Insolvency and Bankruptcy Code, 2016 and provide the Corporate Debtor and opportunity to present a plan that is acceptable to the Financial Creditor. x. Standalone Financial Statements for the period 01/04/2017 to 31/03/2018 of the Corporate Debtor. 7. The aggregate amount of default on the Facility Agreement as on 01.06.2019 is Rs. 60,39,87,991.41/-. The details of loan granted and disbursed to the Corporate Debtor guarantees furnishes and default committed, statement of dues as on 01.06.2019 with respect to loan granted to Corporate Debtor is as follows: 8. The Petitioner also produced the registered charge as created by the Corporate Debtor as on 03.01.2013 which entails the details of loan granted and details of charge registered with ROC. The Recall Notice dated 14.11.2014 is as follows: 9. The Guarantee Recall notice is as follows: 10. The Petitioner also issued Demand Notice u/s 13(2) of the SARFAESI Act. The Petitioner has taken symbolic position and has issued public possession notice as on July 7th, 2018. The Petitioner further issued an insolvency resolution notice on 25....
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....anction 2. Thereafter the corporate guarantee for Term Loan 2 for INR 8.64 Crores and cash credit facility for INR 2 Crores and LER facility of INR 1.70 Crores total aggregating to INR 12.34 Lakhs under Sanction No. 3. However, as per Sanction 3, the Petitioner is authorised to take only 34 lakhs from this Corporate Guarantor. Therefore, Corporate Debtor categorically stated that he is not liable to pay Rs. 16,34,87,991.41/-. 15. The Petitioner has agreed that a fresh tender/ bid in respect of Kinder of Dreams (hereinafter called as project ) which was sought to discharge the liability of the Borrower amounting to Rs. 61,81,49,269.83/- as on 13.06.2019. Upon the above project by Haryana Shahari Vikas Pradhikaran (HSVP) also known as Haryana Urban Development Authority was entered into by Petitioner/Borrower HSVP without any consent of Corporate Debtor. The Petitioner had given NOC on 02.07.2019 and thereby freeing the Borrower and making the new bidder responsible for discharge of said loan. 16. The Corporate Debtor relied upon Section 135 of Contract Act which clearly provide that the contract between the creditor and principle debtor by which creditor makes a composition with o....
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.... 24. The liability of the Corporate Debtor under deed of guarantees is a financial debt under Section 5(8) of IBC. Section 5(8) includes the amount of any liability in respect of any guarantee. Hence, the contention that the Corporate Debtor has not taken any financial debt from the Petitioner is untenable. 25. The Principal borrower availed the financial facilities in terms of loan cum hypothecation agreement dated February 25, 2010. The payment obligation of principal borrower was guaranteed by the deed of guarantee dated January 14, 2014. There has been no violation of Sanction Letter. Further, the Corporate Debtor has admitted that he is liable to an extent of Rs. 12,34,00,000/- under the Corporate guarantee. With reference to the default committed by the principal borrower in paying the due ought to Haryana Shahari Vikas Pradhikaran (HSVP), it called for fresh dues for a new operator to manage the operator project, as the leasehold rights of project land was secured in favour of Financial Creditor. Hence the Financial Creditor furnished its NOC in respect of security and that such security would be realised on discharge of liabilities on principal borrower or any new bidder o....
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....ain defence of Corporate Debtor is that the Petition is barred by limitation as date of guarantee invocation was 08.12.2014 and the period of limitation expired on 08.12.2017. 30. The Petitioner stated that under the terms of guarantee it is specifically agreed to as that the guarantee is of continuing in nature, the right to sue accrues as and when the guarantee was invoked and the date when Corporate Debtor failed to perform obligation under the guarantee. 31. The Petitioner claimed that the period of limitation as envisaged under Article 137 of the Limitation Act, 1963 is applicable and further that the right to apply accrues from the date of default and that unless there are acknowledgments of terms of Section 18. Under Section 18 of the Limitation Act, 1963 the statute provides that well before expiration of prescribed period of limitation there is an acknowledgment of liability in respect of such property or right has been made in writing, a fresh period of limitation shall be computed from the time the acknowledgment so signed. Section 18 of the Limitation Act, 1963vis as follows: 18. Effect of acknowledgment in writing.-(1) Where, before the expiration of the pres....
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.... 34. The Petitioner has filed IA 163 of 2020 and the same was listed for arguments on 03.02.2021. The Petitioner vide IA has sought to file an additional documents/ letter dated 19.11.2016 which had been in an exclusive position and has not been filed by them along with the main CP. 35. The Corporate Debtor further specifically pleaded that the Insolvency proceedings are summary in nature and additional documents are sought to be filed after the matter is reserved for orders, cannot be allowed as the same is core intent of IBC. The Corporate Debtor further relied upon judgement of Hon'ble Supreme Court in Bagai Construction through its proprietor Lalit Bagaivs. Gupta Building Material Store reported in 2013 14 SCC Page 1 where this Hon'ble Supreme Court disallowed this Application under Section 144 of CPC for placing on record certain documents after adjournment of judgment. The Hon'ble Supreme Court considered the case on merit and observed that the document for which an application is moved has always been in exclusive position by plaintiff. But the plaintiff never bought it on record. 36. The Corporate Debtor further relied upon the judgment of Babulal Vardharji Gurjar vs Vee....
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....served that a suit for recovery, which is a separate and independent proceeding distinct from the remedy of winding up would, in no manner, impact the limitation within which the winding up proceeding is to be filed. It is difficult to read the observations in the aforesaid paragraph 21 of Jignesh Shah to mean that the ratio of B.K. Educational Services has, in any manner, been altered by this Court. As noticed, in B.K. Educational Services, it has clearly been held that the limitation period for application under Section 7 of the Code is three years as provided by Article 137 of the Limitation Act, which commences from the date of default and is extendable only by application of Section 5 of Limitation Act, if any case for What has been observed in relation to the proceeding for winding up, perforce, applies to the application seeking initiation of CIRP under IBC. 33. Apart from the above and even if it be assumed that the principles relating to acknowledgement as per Section 18 of the Limitation Act are applicable for extension of time for the purpose of the application under Section 7 of the Code, in our view, neither the said provision and principles come in operation in the ....
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....fault is 18.12.2014 and there is a delay of 4 years 5 months in filing the Petition. Section 7 application was filed in June, 2019. Submissions/Additional Written Submissions of Petitioner IDBI Bank: 39. The Petitioner filed additional written submission claiming that on the day of filing Section 7 Petition, there was subsisting liability on the Corporate Debtor due to acknowledgment of debt in writing. Though the guarantee was invoked on 14th December, 2014 its validity to extend from time to time by acknowledgment of debt in writing and a fresh period of limitation has commenced in terms of Section 18 of Limitation Act, 1963. Further, the right of the petitioner as entailed under Section 3(6)(A) wherein the claim is defined under the Code. The claim means a right to payment whether or not this right is fixed, disputed, undisputed, legal, equitable, secured or unsecured. Therefore, the Petitioner has a claim as a creditor as defined under the Act and the guaranteed document constitute a surety for payment of debt and the default of the Borrower in non-payment of dues has resulted in declaring a debt as NPA. Therefore, in view of all the above, the Petitioner claims that the debt....
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.... Article 137 would start from November 19, 2016 and hence, claim that the Limitation expires on November 19, 2019 and thus claim the Section 7 application filed by applicant Bank is within the limitation. Findings: 45. The legal questions that arise for consideration are as follows: 1) Whether the Limitation is extended by the letter of the Corporate Debtor dated 27.09.2017? 2) Whether Sec.18 of Limitation Act gets attracted to the facts of the present case? 46. The Petitioner Bank had granted term loan of Rs. 35 Crores, cash credit limit of Rs. 2 Crores and Bank guarantee of Rs. 4 Crores to the Great Indian Nautanki Pvt Ltd (Principal Borrower). The Company promoted by Corporate Debtor vide sanction letter dated 24.06.2009. subsequently a term loan of Rs. 12 Crores was sanctioned and the bank guarantee of Rs. 4 Crores was reduced to 1 Crore in 2010. The additional facility of Rs. 6.70 Crores was sanctioned in 2012. Loan cum Hypothecation Agreement dated 26.06.2009, 25.02.2010 and 14.01.2014 were executed between Borrower and Petitioner Bank. The financial facilities were secured by the Corporate Guarantee furnished by the Corporate Debtor. 47. The total principal amount of....
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.... Explanation.-For the purposes of this section,- (a) an acknowledgment may be sufficient though it omits to specify the exact nature of the property or right, or avers that the time for payment, delivery, performance or enjoyment has not yet come or is accompanied by a refusal to pay, deliver, perform or permit to enjoy, or is coupled with a claim to set off, or is addressed to a person other than a person entitled to the property or right, (b) the word signed means signed either personally or by an agent duly authorised in this behalf, and (c) an application for the execution of a decree or order shall not be deemed to be an application in respect of any property or right. 51. The Corporate Debtor has executed corporate guarantee dated 14.01.2014, 25.02.2010, 26.06.2009 wherein the Corporate debtor have agreed to undertake to pay on demand an amount of Rs. 56.70 Crores in case the borrower commits default under the facility agreement. The Principal borrower failed to repay the said amount as on 01.06.2019 amounting to Rs. 60,39,87,991.41/-. Hence, the Petitioner Company had invoked and had issued recall notice to the Principal borrower on November 14, 2014 and also invoke the pro....
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....963, this Code in Shapoor Freedom Mazda vs. Durgaprasan Sahmaria reported in 1961 SCC 12636 at para 6 and 7: 6... acknowledgment as prescribed by s. 19 merely renews debt; it does not create a new right of action. It is a mere acknowledgment of the liability in respect of the right in question; it need not be accompanied by a promise to pay either expressly or even by implication. The statement on which a plea of acknowledgment is based must relate to a present subsisting liability though the exact nature or the specific character of the said liability may not be indicated in words. Words used in the acknowledge judgment must, however, indicate the existence of jural relationship between the parties such as that of debtor and creditor, and it must appear that the statement is made with the intention to admit such jural relationship. Such intention can be inferred by implication from the nature of the admission, and need not be expressed in words. If the statement is fairly clear then the intention to admit jural relationship may be implied from it. The admission in question need not be express but must be made in circumstances and in words from which the court can reasonabl....
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....6 forming Annexure R-7 to the Reply affidavit (page 64), is binding on the Guarantor and he cannot wriggle out of its liability to discharge its obligations towards SASF. It goes without saying that in terms of Clause 11 of the Corporate Guarantee dated 16th July, 1997, the Corporate Guarantor is liable to be proceeded against by the lender or its assignee in the same manner as if it was the Principal Borrower/ Debtor. Para 11 the Hon'ble NCLAT Held as follows: 11. For the foregoing discussion, we are of the considered opinion that the application filed by the Respondent under Section 7 of I&B Code for triggering CIRP against Respondent - Corporate Guarantor on 12th March, 2019 was not barred by limitation. Contention raised by the Appellant as regards plea of limitation and other contention in regard to discharge of obligation of Appellant - Corporate Guarantor towards SASF are accordingly repelled. 58. It is pertinent to rely upon the judgment of Hon'ble Supreme Court in Jignesh shah vs. Union of India reported in 2019 13 SCC at page 61 at para 8 held that 8...To my mind, there is a fallacy in this argument because the test that is required to be applied for purposes of ascerta....
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....s the limitation periods u/s. 18 of Limitation Act, 1963 and thus all the ingredients of Section 7 of IBC are satisfied and the liability of Corporate Debtor being a Corporate Guarantor is established in view of the admission of liability by the Corporate Debtor vide its Letter 27.09.2017 and the Petition is within 3 years is filed and hence the Petition is admitted. 63. The Application IA 613 of 2020 in CP 3000 of 2019 is disposed off in view of the fact that no additional documents can be sought to be filed at the final stage. 64. Considering the above facts, we come to conclusion that the nature of debt is a Financial Debt as defined under Section 5(8) of the Code. It has also been established that there is a Default as defined under Section 3(12) of the Code on the part of the Debtor. The two essential qualifications, i.e., existence of debt' and default', for admission of a Petition under Section 7 of the I&B Code, have been met in this case. Besides, the Company Petition is well within the period of limitation. 65. As a consequence, keeping the aforesaid facts in mind, it is found that the Petitioner has not received the outstanding Debt from the Corporate Debtor and that ....