TaxTMI 
TaxTMI 
2022 (4) TMI 652
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....e Authority Letters of Petitioner Company No. 1 and Petitioner Company No. 2 authorising Ms. Anita Patole to represent the financial creditors in the instant petition have been annexed with the petition at Page No. 18 and 26 respectively. 2. The Corporate Debtor namely M/s. Modern Syntex (India) Ltd. is a Company incorporated under the provisions of the Companies Act, 1956 on 12.11.1976 holding CIN No. L24302RJ1976PLC001780 with its registered office at A-4, Vijay Path, Tilak Nagar, Jaipur and falls within the territorial jurisdiction of this Adjudicating Authority. 3. The Authorized Share Capital of the Corporate Debtor is Rs. 1,60,00,00,000/- (Rupees One Hundred Sixty Crores) and Paid-Up Share Capital of the Company is Rs. 1,28,21,66,000/- (Rupees One Hundred Twenty-Eight Crores Twenty-One Lakhs Sixty-Six Thousand Only). 4. The facts of the case, as briefly stated in the application by the Financial Creditors are as follows: a. That the Corporate Debtor received finance from the Financial Creditors in the nature of Secured Redeemable Non-Convertible Debentures (NCD) of Rs. 5385 Lacs and Unsecured Transferable Notes (UTNs) of Rs. 700 Lacs vide sanction letters si....
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.... 2002, the Unit Trust of India (Transfer of Undertaking and Repeal) Act, 2002 was enacted whereby the body of Unit Trust of India was bifurcated into following entities: i. The Administrator of the Specified Undertaking of the Unit Trust of India (SUUTI), a Successor to the erstwhile Unit Trust of India (UTI), having its Office at UTI Tower, Gn Block, Bandra Kurla Complex, Bandra (East), Mumbai-400051 ii. UTI Trustee Company Pvt. Ltd., the Trustee Company of UTI Mutual Fund (UTIMF), a successor to the erstwhile Unit Trust of India, acting through UTI Asset Management Company Limited, having its registered office at UTI Tower, 'Gn' Block, Bandra Kurla Complex, Bandra (East), Mumbai-400051. g. Upon enactment of the Insolvency and Bankruptcy Code, 2016 (the Code) and in accordance with the provisions thereof, the last pending reference being Case No. 60/2010 in BIFR stood abated on 16.12.2016. Thus, there was a continuous default as on 16.12.2016. h. The Financial Creditors have submitted that the application has been filed within limitation considering the extension in limitation by virtue of pendency of proceedings in BIFR. Also, the pende....
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.... was subsequently registered as Case No. 399/2000. The said reference continued till 01.12.2016 and stood abated on the said date upon coming into operation of the Code. b. As per sanction letter dated 09.09.1998, security was to be created within a period of 3 months from the date of sanction of restructuring failing which additional interest was to be charged @ 1.05% p.a. However, the Respondent did not create any security for converting restructured 17% debentures of Rs. 60.85 crores and has also not created security for restructured optionally secured fully convertible debentures of Rs. 28.31 Crores. As the Respondent/Corporate Debtor did not file any modification of the earlier charges return in Registrar of Companies ('ROC'), accordingly the Applicants/Financial Creditors are partly Secured Financial Creditors and partly Unsecured. It has also been submitted that the claim of the Applicants besides being extremely exorbitant is superfluous and therefore, non-maintainable under the law. c. In the year 2008, a one-time settlement ('OTS') was entered into with the Applicants for a total amount of Rs. 16 crores against the dues. The Respondent pa....
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....oper authorisation. g. It has further been mentioned that the Application lacks the essential ingredients of Section 7 of the Code and in Part IV the Petitioners have deliberately mentioned wrong dates with respect to allotment of 15% NCD amounting to Rs. 85 Lacs as on 24.09.1995 against the correct date being 24.09.1985. The same has been done deliberately to cross the bar of Limitation. h. The reply also states that the filing of the Application is barred by Limitation. The sanctioned/subscribed Redeemable NCDs of Rs. 5385 Lacs and UTNs of Rs. 700 Lacs in the year 1994 and 1995 were restructured on 09.09.1998 due to default in payments from 01.04.1996, being the date when right to sue arose for the first time. The applicants restructured its debts and accordingly on 01.01.1999 when the interest for the quarter ended the payment became due on 31.12.1998 and the same was not paid. Therefore, three years of limitation from 01.01.1999 expired in the year 2002. The alleged debt as claimed to be due and payable is time barred. Accordingly, the Application is beyond limitation. i. It has been submitted that the Hon'ble Apex Court in B.K. Educational Servic....
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.... Gupta and Associates (2019) 19 SCC 633 vi. Jignesh Shah & Anr. Vs. Union of India & Anr. [Writ Petition (Civil) No. 455 of 2019] vii. Gaurav Hargovindbhai Dave Vs. Asset Reconstruction Company (India) Ltd. & Anr. (Civil Appeal No. 4952 of 2019) viii. Vashdeo R. Bhojwani Vs. Abhyudaya Co-operative Bank Ltd. & Anr. (Civil Appeal No. 11020 of 2018) ix. Sagar Sharma & Anr. Vs. Phoenic ARC Pvt. Ltd. & Anr. (Civil Appeal No. 7673 of 2019) x. Babulal Vardharji Gujar Vs. Veer Gurjar Aluminium Industries Pvt. Ltd. And Another (Civil Appeal No. 6347 of 2019) xi. V Hotels Limited Vs. Asset Reconstruction Company (India) Limited (Company Appeal (AT) (Insolvency) No. 525 of 2019) xii. M/s. Reliance Asset Reconstruction Company Ltd. Vs. M/s. Hotel Poonja International Private Limited (Company Appeal (AT)(INS) No. 1011 of 2019) xiii. A. Balakrishnan Vs. Kotak Mahindra Bank Limited (Company Appeal (AT) (Insolvency) No. 1406 of 2019) xiv. C. Shivakumar Reddy' Vs. Dena Bank & Anr. [Company Appeal (AT) (Insolvency) No. 407 of 2019] xv. Sumeet Maheshwari Vs. Navbharat Press (Bhopal) Private Limited & Anr. [C....
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.... the Code and not on the basis of any legal or contractual rights available to the Corporate Debtor and no such legal right exists in favour of the Respondent/Corporate Debtor outside the framework under IBC Code. d. It was further mentioned in the rejoinder that as per the OTS sanctioned, the Corporate Debtor was required to make a payment of Rs. 16 Crores whereas no payment was made, hence the OTS was cancelled in August 2009. In December 2009, SUUTI, received Rs. 2.40 Crores from IFCI from the sale proceeds of two units of the Company sold under SARFAESI Act 2002 situated at Alwar, Rajasthan. After the repeal of Sick Industrial Companies (Special Provisions) Act, 1985, the reference to what transpired before BIFR is not relevant for the purpose of deciding this petition which is within four corners of the IBC Code. e. It has been submitted that as per Annexure C of the Application, the instalments under restructuring sanctioned in September 1998 were to commence from 01.04.2000. The Corporate Debtor's reference was registered with BIFR on 08.12.2000. On 16.12.2016, the reference stood abated and the petition is dated 04.01.2018. Considering the time gap of ....
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.... of the Code for initiation of CIRP against the Corporate Debtor. 12. The Affidavit in support of the Application for initiation of CIRP by Financial Creditors has been filed by Ms. Anita Patole which is annexed at Page 16 and 24 of the Application. Along with the Affidavit two authority letters have been filed which are marked as Exhibit A and Exhibit B at Page 18 and 26 respectively. Vide the aforementioned Authority Letter marked as Exhibit A, Ms. Anita Patole has been duly authorised to sign/execute/affirm and deliver the Vakalatnama, Affidavits, Reply Affidavits, Rejoinders in the matter of Modern Syntex (India) Ltd. for the benefit of the Administrator of SUUTI i.e. Applicant No. 1 herein by Shri B. Babu Rao, CEO SUUTI. It is also clear from the extracts of meeting of Board of Advisors of SUUTI held on 08.03.2003 that the responsibility for continuation of the existing Legal Actions (both Civil and Criminal) and power of institution and defending of Legal Actions was delegated to UTI Asset Management Company Private Limited (UTI AMC). Further the Petitioners submitted an affidavit vide Diary No. 602/2021 dated 05.03.2021 along with extracts of the meeting of Board of Advis....
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....1996 and in case the date of default is considered as per the Restructuring Scheme then the date of default is 01.01.1999, therefore, the petition is time barred. The Financial Creditors have rebutted this contention of the Respondent/Corporate Debtor by contending that the Respondent has time and again defaulted in payment of the due amount therefore, there is a continuous default by the Corporate Debtor. It has also been contented that no proceedings could be taken due to BIFR Reference and as soon as the BIFR reference was abated, the legal bar ended and Financial Creditors filed the present petition enforcing their right. 15. We first take up the position in law regarding the applicability of the Limitation Act in IBC. To consider the same the following provisions of law are to be kept in mind: Section 238A of the Insolvency and Bankruptcy Code: "[Limitation-The provisions of the Limitation Act, 1963(36 of 1963) shall, as far as may be, apply to the proceedings or appeals before the Adjudicating Authority, the National Company Law Appellate Tribunal, the Debt Recovery Tribunal or the Debt Recovery Appellate Tribunal, as the case may be]." Limitatio....
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....ve been quoted to enunciate the applicability of the Limitation Act, 1963 under the Insolvency and Bankruptcy Code, 2016. 18. It is settled proposition of law that provisions of the Limitation Act, 1963 are applicable during computing limitation under the Insolvency and Bankruptcy Code, 2016. In the present petition it is observed that the Corporate Debtor received finance from the Financial Creditors in the nature of Secured Redeemable NCDs of Rs. 5385 Lacs and UTNs of Rs. 700 Lacs in the year 1995. Thereafter, restructuring package was approved on 09.09.1998 as per which the overdue interest and simple interest as on 30.09.1998 i.e. Rs. 2831.82 Lacs was converted into 16% OFCDs redeemable in 32 quarterly instalments commencing from 01.04.2000 and the principal of all the UTNs (Rs. 700 Lacs) and NCDs (Rs. 5385 Lacs) was converted into 17% NCDs redeemable in 32 quarterly instalments commencing from 01.04.2001. Acceptance of the same was conveyed vide letter dated 14.09.1998 by the Corporate Debtor. The Statement of Accounts show that the Corporate Debtor during the period from 15.05.2000 to 25.10.2000 paid a sum of Rs. 112.56 Lacs. Thereafter, the matter came to be referred to B....
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....restructuring package was approved on 09.09.1998 as per which the quarterly instalments were commencing for 16% OFCDs and 17% NCDs from 01.04.2000 and 01.04.2001 respectively. It is clear from the same that the aforementioned Scenario No. 1 and Scenario No. 2 do not stand on firm ground because of the acceptance of the Restructuring Scheme by the Corporate Debtor vide letter dated 14.09.1998. Furthermore, the Statement of Accounts show that a sum of Rs. 112.56 Lacs was paid by the Corporate Debtor during 15.05.2000 to 25.10.2000. Thereafter, the matter was referred to BIFR, the period of which, as stated above has been excluded for the purpose of computing limitation. 24. As per Section 18 and 19 of the Limitation Act, 1963, a fresh period of limitation will be computed from the date of acknowledgement of debt and payment on account of debt made before the expiration of the said period. The last payment was made by the Corporate Debtor on 25.10.2000 therefore, a fresh period of limitation shall be computed from that date of default. In addition to the same, a One Time Settlement as sanctioned by the Petitioner No. 1 in terms of its letter dated 23.10.2008 was cancelled in August....
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....e performed by him under the provisions of IBC, 2016 including the issue of the publication in widely circulated Newspapers as contemplated under the provisions of IBC, 2016 and calling for the claims from the creditors of Corporate Debtor and collation of the same shall be done. b. Further, as a sequel of admission, moratorium as envisaged under Section 14 of IBC, 2016 is invoked in relation to the Corporate Debtor which will be in vogue during the Corporate Insolvency Resolution Process of the Corporate Debtor. The IRP shall carry out CIRP strictly as per the timelines specified and as envisaged under the provisions of IBC, 2016 in relation to the Corporate Debtor. c. The said IRP shall act strictly with the provisions of IBC, 2016 and to defray his expenses to be incurred and fees on the account, the Applicant is directed to deposit a sum of Rs. 2,00,000/- (Two Lakhs Only) to the account of IRP within three days from the date of this order. The IRP shall duly file a status report apprising this Adjudicating Authority about the progress of CIRP, as it unfolds, concerning the Corporate Debtor. In terms of Section 17 & 19 of IBC, 2016 all personnel of the Corporat....
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....ettlement is not considered at the stage when the final order has been reserved in the main petition, the whole purpose and intent of the order passed by the Hon'ble High Court would be defeated and same would be great violation of natural justice and would also amount to flouting the directions passed by the High Court in its extraordinary jurisdiction of Article 226 of the Constitution of India. II. In our examination of the order of the Hon'ble High Court dated 20.07.2021 conceptually viewed with the recent judgment passed by the Hon'ble Supreme Court in E.S. Krishnamurthy & Ors Vs. Bharath Hi Tech Builders Pvt. Ltd. (Civil Appeal No. 3325 of 2020) dated 14.12.2021, the Interim Application IA No. 334/JPR/2020 filed by the Corporate Debtor is dismissed and accordingly stands disposed of. ============= Document 1 Sr. Date of Description Rs. in No. allotment of NCD lacs 1. 24-09-95 15% NCDs 85 2. 03-01-95 17% 400 Revised 16% NCDs 3. 30-09-95 17.5% NCDs 4400 4. 13-11-95 18% NCDs 500 Total 5385 Document 2 Part IV Particulars of Financial Debt Total amount of UTI had sanctioned/subscribed to Sec....