TaxTMI 
TaxTMI 
2022 (6) TMI 1328
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....an affidavit dated 26.02.2022 was filed by the Respondent/Guarantor submitting the aforementioned fact. 3. In response to the above, a counter affidavit dated 11.03.2022 was filed by the Applicant submitting that the present application u/s. 95 of the Code was filed on 01.10.2021 and in terms of Section 96(1) of the Code, interim moratorium commenced on the filing of the application i.e. on 01.10.2021 and subsequently, the Guarantor filed the Section 94 application in C.P.(IB)-788/2021 on 25.10.2021. 4. That the Applicant has filed written submissions and the scanned copy of which is reproduced below: SECTION 94 FILED BY THE RESPONDENT/PERSONAL GUARANTOR IS NOT MAINTAINABLE 1. It is a matter of record that the State Bank of India issued a statutory demand notice dated 29.06.2021 under Section 95(4)(b) of the Insolvency and Bankruptcy Code, 2016 ("Code") to the Respondent in FORM B as per Rule 7(1) of the IBBI (Personal Insolvency) Rules, 2019 calling upon the guarantor to pay Rs. 58,17,07,111/- due as on 02.11.2018. 2. Pursuant to filing the demand notice, the Respondent filed a reply dated 13.07.2021 whereby the Respondent admitted that he was in r....
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....presentative or by an advocate duly appointed in this behalf in the prescribed form with stipulated fee at the filing counter and non-compliance of this may constitute a valid ground to refuse to entertain the same. Rule 29: Registration of proceedings admitted. - On admission of appeal or petition or caveat or application, the same shall be numbered and registered in the appropriate register maintained in this behalf and its number shall be entered therein." 5. Pursuant to the above, and keeping in mind the definition of 'filing' as mentioned hereinabove, the Hon'ble NCLAT in the matter of Ravi Ajit Kulkarni vs. State Bank of India [Company Appeal (AT) (Insolvency) No. 316 of 2021], while clarifying the process of initiation of CIRP process for personal guarantors of the Corporate Debtor has held as follows: "25. Section 96 deals with interim-moratorium. As is clear from the section reproduced above, relevant is that when an application is "filed" under Section 95, the interim-moratorium will automatically kick in. Thus, the effect of interim-moratorium immediately starts when the application is "filed" No. adjudication is involved here....
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.... of the Code from the inception of the Code, Article 137 of the Limitation Act gets attracted. "The right to sue", therefore, accrues when a default occurs. If the default has occurred over three years prior to the date of filing of the application, the application would he barred under Article 137 of the Limitation Act, save and except in those cases where, in the facts of the case, Section 5 of the Limitation Act may be applied to condone the delay in filing such application. 10. It is hereby submitted that since the Limitation of default under the Code is also construed from the date of filing of the Application, therefore, in the instant case as well the interim moratorium under Section 96 kicked in on the date of filing of an application, and hence the Application under Section 94 could not have been filed and therefore deserves to be dismissed. Even otherwise in case, the Legislature intended that an interim moratorium would be passed or commence on the date of listing/numbering of an application, then the Legislature would have specifically mentioned the word Scrutinised/Numbered/written the same herein. It is humbly submitted that the Hon'ble Adjudicating....
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.... are yet not notified. Until then, the application made under sub-section (1) of section 7 and sub-section (1) of section 9 and section 10 of the IBC shall be filed before the adjudicating authority in accordance with Rules 20 to 26 of Part III of NCLT Rules, 2016. Mr. Kadam overlooks the fact that Rule 10 has been inserted so that there is no vacuum. It is only to facilitate the filing of the applications under the sub-section (1) of section 7 and sections9 and 10 that the rule makers have provided the procedure in that behalf in the NCLT Rules, 2016. Thus, only the procedure in relation to filing of application, which has been set out in the NCLT Rules, 2016, is applied until the rules of procedure for conduct of proceedings under the Code are notified. We cannot read sub-rule (1) of Rule 10 as suggested by Mr. Kadam. He would argue that Rules 20 to 26 of Part III of the NCLT Rules, 2016 shall apply and rest of the NCLT Rules, 2016 would not apply. This argument overlooks the fact that the rules of procedure for conduct of proceedings under the Code have yet to be notified, the framers of the rules and the legislature itself did not want a vacuum to be created. Otherwise, there w....
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....en discharged by the respondent. 11. The definition itself is in terms an inclusive one and is therefore to be widely erected by the use of whatever material, which may or may not he used by human beings since it specifies stables and tanks as buildings." LEGISLATURE HAVE NOT USED THE WORD "REGISTERED" 14. That a conjoint reading of NCLT Rules as mentioned above, it is evident that under Section 96 the words used are. When an application is filed under Section 94 or 95, an interim moratorium shall commence on date of the application. Admittedly, the date of application can only be construed as date of filing and that is the solitary reason that the Legislature have used the word filed and not registered/numbered. "Filed" as per Rule 2(14) of the NCLT Rules, 2016 means filed in the office of the Registry of the Tribunal. Admittedly in the instant case. Section 95 Application was filed in the Office of the Registry of this Tribunal on 01.10.2021 and therefore, any subsequent application filed by Personal Guarantor or even any other creditor would be hit by Interim Moratorium under Section 96 of the Code. 15. In light of the ....
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....Debt Recovery Tribunal (Procedure) Rules, 1993 made under section 36 of the Recovery of Debts and Bankruptcy Act, 1993 (51 of 1993) and regulations 3, 4, 5 and 11 of the Debt Recovery Tribunal Regulations, 2015 made under section 22 of the Recovery of Debts and Bankruptcy Act, 1993, as the case may be. (2) The application and accompanying documents shall be filed in electronic form, as and when such facility is made available and as directed by the Adjudicating Authority: Provided that till such facility is made available, the applicant may submit accompanying documents, and wherever they are bulky, in electronic form, in scanned, legible portable document format in a data storage device such as compact disc or a USB flash drive acceptable to the Adjudicating Authority. Therefore, for the purposes of seeing as to when an application under Section 94 or Section 95 of the IBC is considered to be "filed" within the meaning of Section 96, it is to be seen whether the same is filed in accordance with Rule 10 of the Rules, which in fact would mean that, an application which is filed in terms of Rule 20-24 and 26 of the NCLT Rules would be considered as "fili....
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....address for service.-The address for service of summons shall be filed with every appeal or petition or application or caveat on behalf of a party and shall as far as possible contain the following items namely:- (a) the name of the road, street, lane and Municipal Division or Ward, Municipal Door and other number of the house; (b) the name of the town or village; (c) the post office, postal district and PIN Code, and (d) any other particulars necessary to locate and identify the addressee such as fax number, mobile number, valid e-mail address, if any...." "....Rule 22. Initialing alteration:- Every interlineations, eraser or correction or deletion in any appeal or petition or application or document shall be initialled by the party or his authorised representative presenting it..." "......Rule 23. Presentation of Petition or appeal:- (1) Every petition, application, caveat, interlocutor)' application, documents and appeal shall be presented in triplicate by the appellant or applicant or petitioner or respondent, as the case may be, in person or by his duly a....
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....d g. Address of service as prescribed; and h. Initialing alteration as prescribed; and i. In triplicate as prescribed; and j. Certified true copies as prescribed; and k. Endorsement and verification as prescribed; and l. Other conditions as prescribed under Rule 20-24 and 26 of NCLT Rules and made applicable by way of Rule 10 of the Rules. Therefore, a Petition to be considered as "filed" has to comply with the Rule 20-24 and 26 of NCLT Rules and made applicable by way of Rule 10 of the Rules for any Petition under Section 94 and 95 of the IBC. Any Petition that is presented to the Registry and not complies with the aforesaid provisions is marked as "defective" Petition by the Registry and therefore, any Petition which is marked defective is evidence of it not being "filed". If the Petition is in the manner as provided under the said Rules, only then it would be considered as "filed" which is evidenced by the numbering of the Petition. The Registry is duty bound to number the Petition if it complies with the conditions of the aforesaid Rules. Therefore, whether the Petition is "filed"....
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.... That Therefore, as per the NCLAT judgment it is clear that after dealing with the relevant provisions of the Rules and the Code, the Hon'ble NCLAT has held that the "filing" of the Petition is to be treated as filed by numbering of Petition. The said judgment is binding as a precedent in the present case as the question does not remain res integra. That as per the NCLAT judgment in Rajeev R. Jain, Director (Suspended) versus Aasan Corporate Solution Private Limited, the principle of stare decisis is applicable to the NCLTs acting as Adjudicating Authorities and the judgments of NCLATs are binding upon the NCLTs. Therefore, the said judgment holding filing of the Petition for the purposes of Section 94, 95 and 96 to be "numbering of the Petition" is the law governing the present case as on date and it is humbly submitted that the same is to be followed in terms of stare decisis. Even looking from another angle, which was posed during the course of arguments, that Rule 2(14) of the NCLT Rules states that filed means filed with the Registry. In response to the same, it is submitted that firstly, act of filing in the present case is to be governed by Rule 10 of the R....
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....ode. Therefore it is the date of numbering of Petition that is the date of "filing" in terms of Section 94, 95 and 96 of the IBC. B. DATE OF FILING IN THE PRESENT CASE UNDER SECTION 94 AS AGAINST SECTION 95: The date of numbering of Petition under Section 94 and Petition details: Date of numbering Date of 1^st listing 22.12.2021 24.12.2021 The date of numbering of Petition under Section 95 and Petition details: Date of numbering Date of 1^st listing 18.02.2022 21.02.2022 Therefore, the present Petition having been filed in the year 2022 after the Petition filed by the Personal Guarantor under Section 94 in the year 2021 itself, is barred by res subjudice and is liable to be dismissed as non-maintainable. 6. In the course of hearing, the Respondent has raised the maintainability of the application on the ground that prior to filing of this application, which was numbered on 18/02/2022, the Respondent has already filed an application, numbered on 22/12/2021, which is prior to the number given to the application filed u/s. 95 of the IBC by the Applicant. 7. He further submitted that in terms of Rule....
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....ch party. (7) These numbers shall not be changed and in the event of the death of a party during the pendency of the appeal or petition or matter, his legal heirs or representative, as the case may be, if more than one shall be shown by sub-numbers. (8) Where fresh parties are brought in, they may be numbered consecutively in the particular category, in which they are brought in. (9) Every proceeding shall state immediately after the cause title the provision of law under which it is preferred. 21. Particulars to be set out in the address for service.-The address for service of summons shall be filed with every appeal or petition or application or caveat on behalf of a party and shall as far as possible contain the following items namely:- (a) the name of the road, street, lane and Municipal Division or Ward, Municipal Door and other number of the house; (b) the name of the town or village; (c) the post office, postal district and PIN Code, and (d) any other particulars necessary to locate and identify the addressee such as fax number, mobile number, valid e-mail ....
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....oint reading of the provisions referred to Supra show that Rule 10 of IBBI (application to Adjudicating Authority for Insolvency Resolution Process or Personal Guarantor to Corporate Debtor) Rules 2019, prescribed the procedure for filing of the application and documents under Chapter-III and Part-III of the application and as per the Rule 10 of the Adjudicating Authority Rules, the provisions of the NCLT Rules are applicable. The provisions referred to Rule 10 are relate to the presentation of the petition or appeal. Since the respondent claims that the Respondent has filed an application under Section 94 of the IBC, 2016 before the application filed by the Applicant, therefore, we would like to refer to the relevant provisions of Sections 94 & 95 of the IBC, 2016 the same are reproduced below: "94. Application by debtor to initiate insolvency resolution process.- (1) A debtor who commits a default may apply, either personally or through a resolution professional, to the Adjudicating Authority for initiating the insolvency resolution process, by submitting an application. (2) Where the debtor is a partner of a firm, such debtor shall no....
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....ithin a period of fourteen days of the service of the notice of demand; and (c) relevant evidence of such default or non-repayment of debt. (5) The creditor shall also provide a copy of the application made under sub-section (1) to the debtor. (6) The application referred to in sub-section (1) shall be in such form and manner and accompanied by such fee as may be prescribed. (7) The details and documents required to be submitted under sub-section (4) shall be such as may be specified..." 10. On conjoint reading of the provisions shows that neither in Section 94 nor in Section 95, the word filing is referred. Rather in both the Sections 94 & 95, the word submitting an application is mentioned. Now we read the Sections 94 & 95, in terms of the submissions made by the Respondent and we observe that the debtor or the creditor under Section 94 & 95 respectively may apply either personally or through Resolution Professional for initiating the Insolvency Resolution Process by submitting an application. 11. And in terms of the Section 96 of the IBC, 2016, when an application is filed under Section 94 & 95, an interim morator....
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....respondent. Hence the interim moratorium in terms of Section 96 of the IBC, 2016 shall commence on the date of the filing of application in terms of Rule 2(14) of the NCLT Rules and not on the date when the application was numbered or listed for hearing. Therefore, we are unable to accept the contention of the Respondent that his application u/s. 94 IBC is filed prior to the filing of the application by the applicant u/s. 95 of the IBC. 16. Hon'ble NCLAT in Company Appeal (AT) Insol. No. 316/2021 in para 25 held that as is clear from Section reproduced above, relevant is that when application is filed under Section 95, the interim moratorium will automatically. Thus, the effect of interim moratorium immediately starts when the application is filed. No adjudication is involved here. 17. In sequel to the above, we are of the considered view that since the moratorium shall commence on the date of filing of the application u/s. 95 of the IBC by the applicant SBI, therefore, any subsequent application filed by the debtor/respondent u/s. 94 of the IBC, 2016 is not maintainable in terms of the moratorium granted under Section 96 of the IBC, 2016. Accordingly, we have no option b....