TaxTMI 
TaxTMI 
TaxTMI 
2022 (12) TMI 368
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....alf of the Appellant: * Learned Counsel for the Appellant submitted that Corporate Insolvency Resolution Process ('CIRP') in respect of the 'Corporate Debtor' was initiated under Section 9 of the Insolvency and Bankruptcy Code, 2016, (hereinafter referred to as 'The Code') vide Order dated 02.01.2018 and subsequently the Liquidation Order was passed on 12.10.2018 and Mr. R. Sada Sivan, the RP was appointed as a Liquidator. It is stated that the Liquidator issued a Demand Notice dated 14.05.2018 and a reminder Notice dated 14.11.2018 to the Appellant herein calling upon them to pay the outstanding amount to the 'Corporate Debtor', in response to which, the Appellant replied vide letter dated 07.12.2018 stating that the outstanding dues were duly settled by way of arrangement of inter-company transfer dated 08.01.2016, between the Appellant and one M/s. Thribovan Enterprises Ltd. ('Thribovan') and the 'Corporate Debtor'. * It is submitted that the Liquidator is seeking recovery of a sum of Rs.24.36Crs./- from the Appellant who is the third party alleging that their dues were payable to the 'Corporate Debtor' in the year 2015. Learned Counsel submitted that the Appellant had underta....
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.... institute suits or other legal proceedings against the Appellant. * There is no semblance between Section 60(5) of the Code and Section 446(2) of the Companies Act, 1956 as the latter Application is to be adjudicated as if it were a suit by following a procedure envisaged under the Code. * The last set of invoices is dated 25.05.2015, and the CIRP commenced on 02.01.2018 and the Liquidation on 12.10.2018 and this Application under Section 60(5) of the Code was filed only on 25.01.2019 after the period of three years Limitation from the date of the last invoice and hence the demand is completely 'barred by Limitation'. * Section 60(6) read with Section 14 shows that there is no embargo on the RP under Section 14 to institute Recovery Proceedings on behalf of the 'Corporate Debtor' under Section 25(2)(b) for the benefit of the 'Corporate Debtor'. Learned Counsel relies on the principle of reddendo singular singulis; under Section 60(6), the exclusion of period of Limitation for any suit or Application by or against a 'Corporate Debtor' is for which an Order of moratorium has been made under Section14 and not otherwise. The words 'by' or 'against a Corporate Debtor'....
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...., i.e., from the date on which the Application for winding-up is made, till the date on which the winding-up Order is made (both inclusive). * It is stated that such a claim could be filed by the Official Liquidator by taking the benefit of one year period, immediately following the date of the winding-up Order, as provided under Section 458A of the Act and the three years period provided under Article 137 of the Limitation Act, 1963 and hence in respect of a legally enforceable claim, which could have been made by the Company on the date on which the Application for winding-up is made, the Official Liquidator could file Claim within a period of four years from the date on which the winding-up Order is made. * It is submitted that Section 60(6) of the Code says that 'notwithstanding anything contained in the Limitation Act, 1963 or in any other law for the time being in force, in computing the period of Limitation specified 'for any suit or Application by or against a 'Corporate Debtor', for which an Order of Moratorium has been made under this part', the period during which such Moratorium is in place shall be excluded'. In other words, in respect of a legally enforceable claim,....
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....will, and not to those which they will not apply; that rule is beyond all controversy". * In this case, a 'Claim' against the Appellant is very much legally enforceable as on the date of CIRP as well as on the date of Liquidation by exclusion of Limitation as provided under Section 60(6) of the Code. * Rule 39 of the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016, clearly spells out that a Liquidator shall make an attempt to recover and realise all the assets and outstanding of a 'Corporate Debtor' in a time bound manner for the purpose of 'Maximisation of Value of the Stakeholders'. * It is submitted that Section 60(5) of the Code should be considered in two-fold viz., when the provisions of Section 60(5) five being invoked by the Resolution Professional during the CIRP and when the provisions of Section 60(5) being invoked by the Liquidator during the Liquidation Process since the role of Resolution Professional under CIRP and the role of Liquidator during the Liquidation process are entirely different. * It is submitted that Sections 33 (5) and 35 (k) of the Code confers powers on the Liquidator to Institute or defend any suit, prosecution, ....
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....'? (b) the second issue which arises for consideration is whether the amount is 'due and payable' as it is the case of the Appellant that the dues were settled by way of inter-company transfers pursuant to a Tripartite Agreement entered into between the 'Corporate Debtor', its Sister Concern and the Appellant. 5. At the outset, we address to the question of Limitation. It is the case of the Appellant that Section 60(6) cannot save Limitation in respect of a 'time barred' Claim and that the Moratorium under Section 14 does not create any embargo on the institution of suits and proceedings by/on behalf of the 'Corporate Debtor' during the CIRP. It is the further case of the Appellant that the Liquidator cannot convert the Adjudicating Authority into a Trial Court under Section 60(5) of the Code by filing an Application for recovery against alleged debt instead of instituting a Civil Suit under Section 35(1)(k) before the appropriate forum. 6. At this juncture, we find it relevant to reproduce Section 60(5) and Section 60(6) of the Code as hereunder: "60. Adjudicating authority for corporate persons. - (5) Notwithstanding anything to the contrary contained in any other law for t....
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....y Act, 1956, which deals with exclusion of certain Limitation period. Likewise, Section 60(6) of the Code says that 'notwithstanding anything contained in the Limitation Act, 1963 or in any other law for the time being in force in computing the period of Limitation specifies for any Suit or Application by or against a 'Corporate Debtor', for which an Order of Moratorium has been made under this part the period during which Moratorium is in place shall be excluded'. If the claim is legally enforceable, the period of Limitation will run from the date of commencement of CIRP till the date on which the winding-up Order is made i.e., Moratorium under Section 14 of the Code. A 'Claim' filed by the Liquidator under sub-Section (5) of Section 60 of the Code is governed by Article 137 of the Limitation Act, 1963, and the right to file a 'Claim' under the said sub-Section, in respect of a 'Claim' enforceable by law arises on the date on which the winding-up Order is passed. In the instant case, the last invoices for the supply of good by the 'Corporate Debtor' is dated 16.06.2015 and it is the case of the Appellant that the Recovery Proceedings, if any, ought to have been initiated within th....
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....of Value of the Stakeholders'. 13. Now we address to the contention of the Learned Counsel for the Appellant that the Liquidator ought to have instituted a Civil Suit under Section 35(1)(k) before the appropriate form and the Application filed by them was not maintainable before the Adjudicating Authority. We find force in the contention of the Learned Counsel for the Respondent that Section 33(5) and 35(k) of the Code are akin to the provisions of Section 457 of the Parent Companies Act, 1956 and therefore the real intent of the said Sections should be interpreted from the reading of the ratio of the Judgements of the Hon'ble Supreme Court made under Section 457 of the Companies Act, 1956. 14. To understand the purport and the exact intent of the said Sections, at this juncture, we place reliance on the Judgement of the Hon'ble Bombay High Court in the matter of the Official Liquidator Transpower Engineer Ltd. in Company Petition No.606/1998 wherein the Hon'ble Bombay High Court has observed as follows: "Section 457 confers power on him to institute or defend any suit, prosecution, or other legal proceeding, civil or criminal in the name and on behalf of the company. Power is ....
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....ifferentiated as there are no multiple Sundry Debtors, no dispute regarding quantity or the quality of the goods supplied requiring voluminous evidence and further the Appellant is already undergoing SARFAESI Proceedings and the code envisages that multiplicity of litigations be avoided. It is pertinent to mention that the Appellant has never denied the supply of goods nor raised any dispute regarding the quality or short supply. It is only their case that the outstanding dues were settled by way of inter-company transfers pursuant to Tripartite Agreements entered into between the 'Corporate Debtor', Thribovan, (the Sister Concern of the 'Corporate Debtor') and the Appellant herein. It is observed from the record that there is no such Tripartite Agreement which was filed along with the reply before the Adjudicating Authority showing that the amounts were paid to the Sister Concern of the 'Corporate Debtor'. We are conscious of the fact that this Tripartite Agreement was filed after 8 months. It is the case of the Appellant that the 8 months delay was because they were undergoing SARFAESI Proceedings and could not find the documents. When the amount payable is to a tune of Rs.24,36,....