TaxTMI 
TaxTMI 
2022 (6) TMI 170
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.... Company Law Tribunal, Court III, Mumbai Bench, Mumbai in CP (IB) 4108/MB/2018 wherein the Adjudicating Authority has admitted the Application filed under Section 7 of the Code, filed by the 'Financial Creditor'/The Cosmos Cooperative Bank Ltd. against Mirco Dynamics Pvt Ltd (hereinafter referred to as the 'Corporate Debtor'). 2. Brief Facts of the Case: * In the first round of Litigation, the Adjudicating Authority had admitted the Section 7 Application filed by M/s. Cosmos Co-Operative Bank Limited'- ('Financial Creditor') vide Order dated 23/09/2019 holding that the Petition was within limitation. * The Appellant challenged the Admission Order before this Tribunal on the ground that the Section 7 Application was 'barred by Limitation'. A three Member Bench of this Tribunal doubted the correctness of its earlier Judgment in 'Sesh Nath Singh Vs. Baidyabati Sheoraphuli Cooperative Bank Ltd and Ors.' and thus referred the Appeal to a larger Bench of five Judges to decide the issue. * A Larger Bench of this Tribunal departed from the view taken by the three Judge Bench and held that action taken by a financial institution under Section 13(4) of the SARFA....
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....thorised to file the Application. It is submitted that as on the date of the Interim Order i.e., 11.03.2019, notification of the MCA S.O.1091(E) was in existence and was applicable. Therefore, the correction ought to have effected as per the requirement of the said Notification. It is further submitted that if there is an inconsistency (regarding the issue of authorization), between two legislations, the provisions of the IBC 2016 would certainly override the provisions of MSCS Act, 2002 and hence the Application was not maintainable having been filed without proper authorization. * The Learned Counsel argued that the finding of the Adjudicating Authority that the Application was filed on 25.10.2018 and the Notification of the MCA S.O. 1091(E) is dated 27.02.2019 and, therefore, the Notification was not applicable retrospectively only strengthens the case of the Corporate Debtor. * The Learned Counsel argued that the Financial Creditor has never stated that in Form I, the authorisation as per provisions of the Act, 2002 was enclosed, but instead has stated under oath that the 'Board Resolution' is enclosed and hence in absence of the 'Board Resolution', the Applic....
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....on MA No.479/2019 filed by the Corporate Debtor raising this issue, remained undecided. * The Learned Counsel vehemently argued that the Application under Section 7 filed on 25.10.2018 is barred by limitation for the following reasons: The Adjudicating Authority has erroneously considered 31/03/2014 as the date of 'NPA' but the Statutory Inspection Report of RBI read with the account statement for the month of June, 2013 clearly indicates that the Date of Default is 15th June, 2013 based on the following observations:- a) 7.3 months EMIs were pending as on 31.03.2014 in the Loan account for March, 2014. b) 5.4 months EMIs were pending as on 1 December 2013 in the Loan Account No.0027521528. c) The account of the Corporate Debtor ought to have been classified as NPA before December, 2013. d) At least 90 days time gap is needed after the Date of Default to make the account liable to be classified as NPA as per the Prudential RBI Norms and Guidelines which means the Date of Default has to be at least 90 days prior to 30th September, 2013. e) Account statement for the month of June, 2013 shows that the 'default' occurred on....
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....cument' is dated 31/03/2014 and the Application is filed on 25/10/2018 and hence the same has no relevance. It is vehemently argued that there were no dues as on 20/09/2014 and also on 12/12/2014 and therefore the Application under Section 7 is not maintainable as the default was not in existence as on the date of filing of the Application. * To buttress his arguments, Learned Counsel for the Appellant placed reliance on the following Judgments: 'Chairman and MD, NTPC Ltd. Vs. Reshmi Constructions, Builders & Contractors, (2004) 2 SCC 663. 'Goodyear (India) Limited Vs. Commissioner of Income Tax, Delhi', (2020) 15 SCC 137. 'Sternberg Reed Solicitors Vs. Harrison', (2020) 2 WLR 176. 'M/s. Invent Asset Securitisation and Reconstruction Pvt. Ltd. Vs. M/s. Girnar Fibers Ltd.', Civil Appeal No. 3033 of 2022. 'Babulal Vardharji Gurjar Vs. Veer Gurjar Aluminum Industries Private Limited & Anr.', (2020) 15 SCC 1. 'Shanti Conductors Private Limited Vs. Assam State Electricity Board and Ors.', (2020) 2 SCC 677. 'Shri Raju Chappakal Pappu & Anr. Vs. Shri Arunava Sikdar & Anr.', Company Appeal (AT) (Insolvency) No. 681 of ....
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....18 of the Limitation Act, 1963. It is further contended that the letter dated 10/08/2016 is referred to by the Bank in their confirmation to the said offer and the same is reproduced as hereunder: Assessment: 5. The main issues which fall for consideration in this Appeal are: (a) Whether Limitation under Section 7 Application is triggered from 15/06/2013 the date of 'default' or from 31/03/2014 on which date the Bank has classified the Account of the 'Corporate Debtor' as 'NPA'. (b) Whether an OTS proposal given 'without Prejudice' construes 'Acknowledgement' as stipulated under Section 18 of the Limitation Act, 1963. (c) Whether the Adjudicating Authority was justified in admitting the Section 7 Application holding that the Application was not 'barred by Limitation'. 6. It is the case of the Appellant Counsel that the Date of NPA is not 30.03.2014 but 15.06.2013 and that, in fact, the Bank has never given any accurate date for classifying the account of the Corporate Debtor as an 'NPA'. It was strenuously argued that the account was 'standard' as per the CIBIL Report dated 12/12/2014 and also as per the Statement of account dated 21/09/2014 and ....
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....for deciding the issue of Limitation as held by the Hon'ble Supreme Court in a catena of Judgements together with the fact that the matter has been set at rest in a decision of a three Judge Bench of the Hon'ble Apex Court in 'Laxmi Pat Surana Vs. Union Bank of India & Anr.', (2021) 8 SCC 481 where it is held: "42. Notably, the provisions of the Limitation Act have been made applicable to the proceedings under the Code, as far as may be applicable. For, Section 238-A predicates that the provisions of the Limitation Act shall, as far as may be, apply to the proceedings or appeals before the adjudicating authority, NCLAT, the DRT or the Debt Recovery Appellate Tribunal, as the case may be. After enactment of Section 238-A IBC on 6-6-2018, validity whereof has been upheld by this Court, it is not open to contend that the limitation for filing Application under Section 7 IBC would be limited to Article 137 of the Limitation Act and extension of prescribed period in certain cases could be only under Section 5 of the Limitation Act. There is no reason to exclude the effect of Section 18 of the Limitation Act to the proceedings initiated under the Code. 43. Ordinarily, u....
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....atio of the Hon'ble Supreme Court in 'B.K. Educational Services Private Limited', (Supra) and 'Jignesh Shah (Supra) the period of limitation for making an Application under IBC is three years from the date of accrual of the 'right to sue' that is the 'date of default'. In the Judgement of 'Laxmi Pat Surana' (Supra) the Hon'ble Supreme Court has held that 'Section 7 comes into play when the 'Corporate Debtor' commits 'default'. Section 7 consciously uses the expression 'default' not the date of notifying the Loan Account of the 'Corporate Debtor' as NPA'. Later, in the same para 43 of the Judgement, the Hon'ble Apex Court speaks about the Application of Section 18 of the Limitation Act, 1963, under IBC. 'Section 18 of the Limitation Act, 1963 gets attracted the moment acknowledgment in writing signed by the party against whom such right to initiate Resolution Process under Section 7 of IBC ensures. Section 18 of the Limitation Act would come into play every time when the Principal Borrower and/or the Corporate Guarantor (Corporate Debtor), as the case may be, acknowledge their liability to pay the debt. Such acknowledgment, however, must be before the expiration of the prescribed pe....
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....10/08/2016, given 'without prejudice': 15. Now we address ourselves to the contention of the Learned Counsel for the Appellant that the Adjudicating Authority has erroneously placed reliance on the letter dated 10.08.2016 which specifically notes that it was given 'without prejudice' and therefore, could not have been taken as acknowledgement under Section 18 of the Limitation Act, 1963. 16. It remains trite that the question of Limitation is essentially a mixed question of fact and law and in this case a strong foundation has been laid in Part V of the Application. It is noteworthy to state that 'a document constituting an acknowledgment has to be construed in the context in which it is given. At this juncture, we find it relevant to quote, 'ITC Vs. Blue Coast Hotels Ltd. & Ors.', (2018) 15 SCC 99, in which the Hon'ble Supreme Court dealing with whether Section 3(A) of Section 13 of SARGAESI, was mandatory or directory, took note of the 'Notices' issued by the 'Financial Creditor' and the different proposals made by the Debtor including a 'Letter of Undertaking' saying that they were given 'without Prejudice' and held as follows: "Letter of Undertaking "Without Prej....
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....t for the purpose of Section 18. The same view was taken by this Tribunal in 'Bank of India Multi ARC Coating and Strips Limited' 2020 SCC OnLine NCALT 914, keeping in view the aforenoted principles and the ratio of the Hon'ble Apex Court in 'ITC Ltd. Vs. Blues Coast Hotels Ltd. & Ors.' (Supra) viewed from any angle, merely, because the standard phrase 'without Prejudice' is written does not imply any denial of the 'debt' involved, we are of the considered view that it does not extinguish the 'right' as it does admit 'liability'. The Judgement of 'Chairman and MD NTPC Ltd. Vs. Reshmi' (Supra) relied upon by the Appellant refers to correspondence given 'without Prejudice' under 'undue influence and coercion' and is clearly distinguishable from the facts of this case as there is no such pleading of undue influence and coercion here. 'Goodyear (India) Ltd. Vs. CIT' (Supra) is also not applicable as it is not from the perspective of Section 18 of the Limitation Act, 1963. 18. The Appellant cannot blow hot and cold at the same time, firstly saying the letter dated was unsigned and never served on them and again in the same breadth saying that it was given 'without prejudice'. Having ....
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....as observed above, constitute acknowledgement of liability which extended the limitation by three years, apart from the fact that a Certificate of Recovery was issued in favour of the Appellant Bank in May, 2017. The NCLT rightly admitted the application by its order dated 21st March, 2019." (Emphasis Supplied) 24. The Hon'ble Apex Court in a recent Judgment in 'State Bank of India Vs. Krishidhan Seeds Pvt. Ltd.' Civil Appeal No. 910 of 2021 decided on 18/04/2022 specifically addresses to acknowledgement in a Balance Sheet under IBC Proceedings and observed as follows: "11. This principle also emerges from the decision in Asset Reconstruction Company (supra), which noted the decisions in Sesh Nath Singh (supra) and Laxmi Pat Surana (supra). This Court held: "35. A perusal of the aforesaid sections would show that there is no doubt that the filing of a balance sheet in accordance with the provisions of the Companies Act is mandatory, any transgression of the same being punishable by law. However, what is of importance is that notes that are annexed to or forming part of such financial statements are expressly recognised by Section 134(7). Equally, the a....
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....Judgements relied upon by the Counsel for the Appellant regarding 'Limitation', have been addressed to by the Hon'ble Supreme Court in the aforenoted Judgements, the same are not being reproduced here, for the sake of the brevity. In the instant case, the Balance Sheet for the Financial Year 2016-17 and the appended notes to the Financial Statements clearly specify the 'debt' owed to the 'Financial Creditor'. The material on record does not define any 'caveats' forming part of the Financial Statements to prove otherwise. Keeping in view the ratio of the aforenoted Judgements, this Tribunal is of the considered view that the acknowledgement in Balance Sheet for FY 2016-17, relied upon by the Financial Creditor, is unequivocal and crystallizes the issue of 'acknowledgement of debt' as defined under Section 18 of the Limitation Act, 1963. Conclusion: 26. The following few dates, settles the issue that the Section 7 Application cannot, viewed from any angle, be said to be 'barred by Limitation': * 15/06/2013 The date when the 'Corporate Debtor accepts ought to be the date of NPA. * 30/03/2014 The date of default specified in the RBI Inspection Report; and in the....
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....f every multi-State co-operative society to be appointed by the board and he shall be a full-time employee of such multi-State co-operative society. (2) The Chief Executive shall be a member of the board and of the Executive Committee and such other committees or subcommittees as may be constituted under sub-section (1) of section 53. (Emphasis Supplied) 29. This Section 51(1) of the MSCS Act, 2002 specifies "by whatever designation called" and therefore we hold that as the Bank does not have a designation of the 'Chief Executive' but only that of the 'Managing Director' the aforenoted Section 51(1) of the MSCS Act, 2002, is duly satisfied. Further, 'Managing Director' is a Member of the 'Board of Directors' as required under Section 51(2) of the MSCS Act, 2002 and it is evident from the nomenclature used. We are of the view that the Adjudicating Authority has rightly held that the circular dated 27/02/2019 could not have been applied retrospectively as the Section 7 Application was filed prior to this Circular. 30. As regarding the contention of the Learned Counsel for the Appellant that the 'Corporate Debtor' had initiated Proceedings under Section 14 of the SARFAE....
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....tion to initiate CIRP. For reasons cited in paras 28 & 29 of CA (AT) (Ins.) 373 of 2022, we find no merit in this Appeal and the same is dismissed accordingly. Company Appeal (AT) (Insolvency) No. 493 of 2022 34. Two Applications, MA 472/2019 and MA 479/2019 were filed regarding maintainability of the CP No. 4108/2018 on the ground that the date of NPA is not 31/03/2014 and that the debt was time barred. As the issue of limitation has already been addressed to in detail in CA (AT) (Ins.) 373 of 2022, we find no merit in this Appeal and the same is accordingly dismissed. ============= Document 1 MIRCO DYNAMICS PVT.LTD. Regd Office & UNIT 1: T-178, AND UNIT II: T-121-1/A, M.I.D.C., Bhosari, Pune-411026. EMAIL: [email protected]/[email protected] The Manager, The Cosmos Co-operative Bank Ltd Khadki Branch, Pune-411 003. Email: [email protected] Sir/Madam 1427A 20.04.2015 Subject: Regarding Various Loans: Interest / EMI/ Outstanding/Disbursement & FD3 Please refer to our earlier queries wherein we have asked for the details about the Loans/EMI Interest etc. Since we have not yet received the detailed working of the sam....
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....3 Dt 20.11.2013 Amount Sanctioned Rs 3,60,00,000/= (Rs 3:6 Cr) Tenure: 6 month Moratorium & 84 Months from 16.01.2013 to 16.07.2020 Interest as Per Sanction Terms & Condition 14% Various Disbursements between 16.01.2013 till 18.05.2013 totalling to Rs 2,56,52,690/= Amount Sanctioned but yet to be disbursed (reimbursement into CC account): Rs 1,03,47,310/= Proportionate Interest 14% till 15 July 2013 (Moratorium Period): 15,11,2197= EMI 14% Interest for 84 month tenure works to Rs 4,80,731.71/= EMIS due till 31.03.2015: 20 EMIS Amount to be paid by way of EM15: 20 X Rs 4,80,731.71 = Rs 96,14,634/= Total Amount including only Interest during Moratorium Period in this account to be paid from first disbursement on 16.01.2013 till 31.03.2015: Ps 15,14,249/= PLUS RS 06, 14,634/= ie. Rs 1,11,28,883/== Jovery Document 3 Amount Actually paid till 31.03.2015: Rs 1,03,14,78-1/ 1429 Difference Yet to be paid Rs 3,14,099/ which is equivalent to about 0.65 months CMI. 5. About CC Interest Payable & Paid, we are still working out and shall be shortly informing you of the calculation and in case any discrepancy is found either Plus Or even....
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....was finalized at Rs 10.5. Cr (Rs Ten Crore Fifty Lakhs Only). There shall not be any interest to be paid on this amount till 30th Sept 2016 and thereafter simple interest @ 13.5% PA to be paid on the outstanding amount. We proposed that we shall be giving a major part of one property on Lease and by discounting the Lease rental we shall pay and for balance we shall be suitably disposing of the other property. It was agreed that the Bank shall give NOC to MIDC for sub-lease and also conditional NOC to the Financial Institution discounting the lease rental l.e. condition being that amount to be paid to the Bank through Lease Rental Discount shall be 50% of the outstanding .e. at least Rs 5.25 Cr, which once received by the Bank the charge on the said property shall be released in favour of the said Financial Institution. 1779 For balance anisunt charg on the other property shall remain till full bxiance amcunpis paid, after which the charge shall be released. Bank shall co -operate in we selling disposing of the other property suitably. = The payment should be made by End: Dec 2016 as far as possible. (extendable by 3 month ie. up....
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....unt if any, will be taken at that time only depending on the payments actually effected till 31" Dec. 2016. Hence, Bank reserve its right on the same. Registered Office: 'Cosmos Towar', Plot No-6. ICS Colony. Universily Road, Ganeshkhind, Shivajinagar, Pune-411007 P-020-67086708 | [email protected] I www.cosmosbank.com I follow us on: (Emphasis Supplied) Document 6 683 DECALARATION/CONFIRMATION OF BALANCE Mr Ali Ishrat Shaukat AND ACKNOWLEDGEMENT OF DEBT Director of M's Mirco Dynamics Pvt Ltd do hereby states and declares as under- 1. I/We have inken the various credit facilities from The Cosmos Co-Op Bank Ltd., aggregating to the extent of Rs. 1665.00 Lacs (Rs. One Thousand Six Hundred Sixty Five lacks Only) Type of Lonn We have taken following Credit facilities from The Cosmos Co-Op. Bank Ltd. Purpose of Loan Sanction Date Date of Agreement Sanction Amount (In Lacs) 650.00 O/S Bal. as 00 31/03/16 In Lacs) 6.58.00 Cash-Credit Bills Purchase Packing Credit Working Capital Machinery Machinery Term Loan Term Loan Term Loan Plant & Mach Term Loan Mort....