TaxTMI 
TaxTMI 
2022 (7) TMI 985
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.... dated 31.01.2022 passed by National Company Law Tribunal, Kolkata Bench, Kolkata in C.P.(IB) No.572/KB/2020, by which order, the I.A.(IB) No.1069/KB/2021 filed by the Appellant seeking dismissal of C.P.(IB) No.572/KB/2020 has been rejected and the Application filed under Section 7 of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as the "IBC") by Respondent No.1 was admitted. 2. For appreciating the issues raised in this Appeal, the background facts and sequence of events need to be first noticed. (i) M/s. Gourepore Company Limited, Corporate Debtor (now in liquidation), (hereinafter referred to as the "Company") is a Company, which was manufacturing Jute goods. In the year 1988, the Corporate Debtor filed reference under Section 15 of Sick Industrial Companies (Special Provisions) Act, 1986. By order dated 12.09.1991, the Board of Industrial and Financial Reconstruction ("BIFR") declared the Company as Sick Industrial Company. The BIFR forwarded the opinion to the High Court at Calcutta that Company should be wound up. The Company filed an Appeal before the Appellate Authority for Industrial & Financial Reconstruction ("AAIFR"), which Appeal was ultimately d....
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....nt with Industrial Investment Bank of India on 09.01.2009 and paid the entire one-time settlement amount to IIBI, which had confirmed that it has no claim against the Company. (v) Respondent No.1 by aforesaid assignments, claimed to become Financial Creditor of the Company in place of earlier four Financial Creditors. A letter dated 16.01.2009, is claimed to have been written to the Official Liquidator on behalf of Respondent No.1 stating the Respondent No.1 has become the Secured Creditor of the Company and they have paramount charge over the assets and properties of the Company. (vi) The erstwhile Financial Creditors much before the assignments claimed by Respondent No.1 had initiated action for recovery of their dues against the Company. We may also note the details of proceedings initiated by them: (a) The Allahabad Bank filed a suit No.78 of 1993 against the Company, which was transferred to the Debts Recovery Tribunal, Calcutta being T.A. No.64 of 1994 and same was Decreed for an amount of Rs.26,20,41,281/-. The Recovery Certificate was issued on 04.07.1996. (b) The Indian Bank has filed a suit No.493 of 1993, which has been Decreed and transferred to the Debts Recove....
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....e allowed by Ld. Single Judge by order dated 05.12.2016 directing for convening a meeting of the Shareholders. (xi) Challenging the order dated 05.12.2016, an Appeal was filed before the Division Bench. Before the Division Bench, the Appellant before us Dolphin Vintrade Private Limited was also one of the Applicant. The Division Bench vide its order dated 09.08.2017, set aside the order dated 05.12.2016 and while allowing the Appeal, dismissed CA No.107 of 2016 with cost of Rs.1 lakh. The Division Bench had observed that Respondent No.1, a bystander or a passerby cannot be allowed to hijack the assets of the Company (in liquidation) by convening an illegal meeting. While dismissing the Application, the Division Bench further directed that the Applicant, that is, Respondent No.1 by itself or through any agent or otherwise, shall not obtain any orders similar to those sought in CA No.107 of 2016 without the order of the Division Bench being specifically brought to the notice of the Court or forum where such orders may be sought. Respondent No.1 filed a Special Leave Petition No.22997 of 2017, which SLP was dismissed by Hon'ble Supreme Court on 18.09.2017. On 19.12.2019, CP No.355 o....
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....017 was fatal, since Calcutta high Court while dismissing CA No.107 of 2016 filed by Ashray in the Company Petition has directed that Respondent No.1 shall not obtain any order similar to one stated in CA 107 of 2016 without order of the Division Bench being brought to the notice of the Court or forum. Respondent No.1 has conveniently not filed the Division Bench's order dated 09.08.2017, violating the direction of the Division Bench, which itself disentitle it to file any Application under Section 7. It is submitted that assignment of debts as claimed by Respondent No.1 from erstwhile Financial Creditors of the Corporate Debtor were all dubious and unreliable. The Calcutta High Court has already in its order dated 14.07.2014 has termed the assignment as dubious and not worthy of any credence and that all assignments were unregistered and without proper stamps. Respondent No.1 claimed assignment of debts of about Rs.50 crores for an amount of Rs.9 crores and Application under Section 7 filed by Respondent Nos.1 for astronomical amount, that is, an amount of Rs.2486,44,80,162.85/-, which is nothing but fraudulent and bogus claim raised by Respondent No.1. In spite of Appellant havin....
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....the Calcutta high Court in a Company Petition, which attempts were rejected by Calcutta High Court by making serious adverse remarks against Respondent No.1. Filing of Section 7 Application is another attempt by Respondent No.1 to somehow grab the assets of the Company, which are in possession and control of Official Liquidator appointed by Calcutta High Court for last 37 years. The Official Liquidator has issued notice for sale of the assets. It is further submitted that Respondent No.1 himself has filed Company Application No.58 of 2020 for transfer of Company Petition No.355 of 1997 along with all pending application to the NCLT, Kolkata, which Application is still pending. The Adjudicating Authority itself noticed in its proceedings dated 21.09.2021 regarding the pendency of the transfer in respect of CA No. 58 of 2020. But on the next date of hearing, without inquiring and without knowing the outcome of the said proceedings, proceeded to admit the Application. The present is a case where Application filed by Respondent under Section 7 deserves to be dismissed with heavy cost of not less than of an amount of Rs.1 crore. 6. Shri Abhinav Vasisht, learned Senior Counsel appearing....
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....ors and Corporate Debtor, who are parties and no intervenors can be allowed to intervene between the matter. M/s Carnations Distributors Pvt. Ltd. did not file any intervention application before the Adjudicating Authority, who is now trying to intervene at the stage of Appeal. The Appellant is holding Company of M/s Carnations Distributors Pvt. Ltd. The Company Petition No.355 of 1997 having been dismissed for non-prosecution on 19.12.2019, all orders passed therein came to an end. 7. The learned Counsel for Respondent No.2 supported the impugned order and submitted that he has already written to the Official Liquidator for handing over possession on 04.02.2022. The Official Liquidator on 30.03.2022 has requested Respondent No.2 to remain present at his office, but he did not turn up. The Application under Section 19, sub-section (2) is pending consideration. 8. An I.A. No.1082 of 2022 was filed by Carnation Distributor Pvt. Ltd. to intervene in the matter. It is submitted that Applicant has granted opportunity by the learned Company Judge to file affidavit in opposition to the Application CA No. 58 of 2020 filed by Respondent No.1. The Carnation Distributor Pvt. Ltd. had filed ....
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.... touches immovable property. It is strange how this assignment could be made without registration and without proper stamps. This assignment of debts in favour of Ashray by the four secured creditors is dubious in my opinion. No credence can be given to their support for Hilton." 12. The Calcutta High Court noticed that Secured Creditors seem to assign a debt of nearly Rs.50 crores owing to them to Ashray to a little over Rs.9 Crores. The Calcutta High Court observed the assignment of debts is dubious and held it unworthy of credence. 13. The next order which needs to be noticed is order passed by Division Bench in the Appeal filed against order dated 05.12.2016. The order dated 05.12.2016 was obtained by Respondent No.1 on his CA No.107 of 2016. The CA No.107 of 2016 was filed, where Respondent No.1 prayed for a direction for convening a meeting of all creditors of the Company for consideration of scheme, which was submitted as Annexure-F. The same was allowed by Ld. Single Judge by order dated 05.12.2016, against which an Appeal was filed before the Division Bench. The Division Bench allowed the Appeal. Respondent No.1 has been held to be bystander and a passerby, who was tryin....
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.... the Application filed under Section 7 by Respondent No.1 has been filed as Annexure A-2 to this Appeal. In the list of events, Respondent No.1 has referred to order dated 05.12.2016 at Sl. No.06, which was the order of Ld. Single Judge, allowing the Application filed by Respondent No.1. In the list of dates, Respondent No.1 did not disclose the next order dated 09.08.2017 of the Division Bench by which order, the order dated 05.12.2016 was set-aside. However, in the body of Application in Part-IV, there is mention about the order dated 09.08.2017, by which the order dated 05.12.2016 was set-aside. However, in Item No.8 of Part-V, which is list of documents attached to the Application, following are the only documents, which were attached: "8. List of other documents attached to this application in order to prove the existance of financial debt, the amount and date of default 1. Computation sheet showing amount in default in tabular format. 2. Copy of all deed of Assignments is annexed separately. 3. Copy of Hon'ble High Court, Calcutta order dated 05.12.2016. 4. Copy of Hon'ble High Court, Calcutta order dated 19.12.2019. 5. Copy of the DRT, Kolkata bench dated 4th July, 19....
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....ion of locus, learned Senior Counsel for the Appellant submits that Appellant has full locus to intervene before the Adjudicating Authority, since attempts were made by Respondent No.1 - Ashray to hijack the assets of the Corporate Debtor without disclosure of all relevant facts. The Appellant's case is that Appellant is an unsecured creditor of the Corporate Debtor. The Appellant also claims to have filed application in Company Petition No.355 of 1997, which Application was entertained and heard by High Court. In the order passed by Company Judge dated 14.07.2014 in CP No.355 of 1997, the Application filed by both Respondent No.1 and Appellant has been mentioned. In order dated 14.07.2014, while describing the Application filed by the Appellant before the Company Judge, following is the observation of the High Court: "5) Dolphin Vintrade Pvt. Ltd. and Rakhecha Trading Company (C.A. 453 of 2013) This application is made by Dolphin Vintrade Pvt. Ltd. and Rakhecha Trading Company as applicants. They want an order from this Court convening a meeting of unsecured creditors for the purpose of considering the scheme of arrangement/ compromise proposed by the applicants. It is ave....
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.... assignments for the consideration of Rs.9 crores and in the Application under Section 7, he is claiming a debt of Rs. 24,864,480,162.85/-, which itself indicate the greed of Respondent No.1 and mala-fide attempt to take the entire assets of the Corporate Debtor in the name of his being assignee of debts of creditors of the Company. 21. We may now proceed to consider the submission of the Appellant that there was no debt due to the Corporate Debtor, on the basis of which Section 7 Application could be filed by Respondent No.1. The limitation for filing an Application by Respondent No.1 has long expired and the Application ought to have been rejected as barred by time on which aspect, Adjudicating Authority failed to advert. 22. It is well settled by catena of judgments of Hon'ble Supreme Court that limitation for filing an Application under Section 7 of the IBC is three years, which is governed by the Article 137 of the Limitation Act, 1963. Article 137 of the Limitation Act provides as follows: Description of application Period of limitation When the right to apply accrues. 137. Any other application for which no period of limitation is provided elsewhere in this division T....
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.... of the Assignor, whereby the Company had hypothecated/ mortgaged its various assets lying at its factory situated at Post Office Gerifa & Police Station Naihati, District 24 parganos (North), (hereinafter referred toa s 'the said assets') more fully and particularly described in Schedule 'A' and 'B'. 4. Subsequently, the said Company defaulted in making payment and thereafter went into liquidation on 26.11.1997 by an order passed by the Hon'ble High Court at Calcutta in CP No.355 of 1997 and CA No.597 of 1997. 5. On or about 1993,, the Assignor filed a suit being No.78 of 1993 against M/s Gourepore Company Limited (In Liquidation) and guarantors for recovery of its dues together with interest thereon, which subsequently was transferred to the Debt Recovery Tribunal, 1, Kolkata being T.A. No. 64/1994 and the same has been decreed and necessary certificate of Rs.26,20,41,281.18p was issued and recovery proceedings being R.P. No.42/1996 was initiated." 26. Further, in Indenture dated 14.09.2015, which was got registered by Allahabad Bank, it has made the assignment in favour of Ashray, with effect from 06.11.2008, whereafter noticing the aforesaid Recovery Certificate, the Alla....
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....f in Section 7 Application, it is clear that claim of Respondent No.1 in respect of debt was highly time barred. There shall be default of debt, only when debt is due. Section 3, sub-section (xi) defines the debt in following manner: "3(11) "debt" means a liability or obligation in respect of a claim which is due from any person and includes a financial debt and operational debt; 30. There is no foundation laid down in the Section 7 Application as to how the debt has become due from the Corporate Debtor within three years from the date when Section 7 Application was filed, that is, 18.02.2020. We are thus, satisfied that Adjudicating Authority has committed error in admitting Section 7 Application without adverting to the question as to whether the debt as claimed was due when Section 7 Application was filed. The question of limitation of an Application has to be gone into by the Court, even though no defence has been taken by the Respondent. In the present case, the Corporate Debtor being into liquidation, it appears that no reply has been filed in Section 7 Application. But when the Appellant has brought all the necessary facts along with I.A. No.1069 of 2021, it was incumbent....
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....nd the goods it produces in the larger interest of the economy of the country. It is, thus, not possible to accede to the argument on behalf of the appellant that given Section 446 of the Companies Act, 1956/Section 279 of the Companies Act, 2013, once a winding-up petition is admitted, the winding-up petition should trump any subsequent attempt at revival of the company through a Section 7 or Section 9 petition filed under the IBC. While it is true that Sections 391 to 393 of the Companies Act, 1956 may, in a given factual circumstance, be availed of to pull the company out of the red, Section 230(1) of the Companies Act, 2013 is instructive and provides as follows: "230. Power to compromise or make arrangements with creditors and members.-(1) Where a compromise or arrangement is proposed- (a) between a company and its creditors or any class of them; or (b) between a company and its members or any class of them, the Tribunal may, on the application of the company or of any creditor or member of the company, or in the case of a company which is being wound up, of the liquidator, appointed under this Act or under the Insolvency and Bankruptcy Code, 2016, as the case may ....