TaxTMI 
TaxTMI 
2023 (7) TMI 830
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....ed the interlocutory application filed by the petitioner under Section 60(5) of the Insolvency and Bankruptcy Code, 2016 (briefly, 'IBC' hereinafter) read with Rule 17 of the National Company Law Tribunal Rules, 2016 as well as under Section 420 of the Companies Act, 2013 seeking dismissal of the application filed under Section 7 of the IBC being C.P. (IB) No. 681/7/HDB/2018 as being barred by limitation and thereafter to declare all further proceedings based on the Corporate Insolvency Resolution Process as infructuous. 4. Petitioner is a suspended director of a company called M/s. Guruprabha Power Limited (referred to hereinafter as 'corporate debtor'). Corporate debtor is a limited company incorporated under the Companies Act, 1956 having its registered office at Hyderabad. Corporate debtor was established with the prime object of generating 10 MW bio-mass power at Jalgaon in the State of Maharashtra. 5. In the course of its business, corporate debtor had approached respondent No. 2 i.e., Punjab National Bank for availing financial assistance. Accordingly, respondent No. 2 extended financial assistance to the corporate debtor in the form of Rupee Term Loan-....
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....DB/2018. 13. After receiving notice on the aforesaid application filed by respondent No. 2, corporate debtor filed reply. However, NCLT admitted the application on 20.09.2019 and initiated Corporate Insolvency Resolution Process of the corporate debtor by declaring moratorium. NCLT appointed respondent No. 4 as the Interim Resolution Professional (IRP). 14. Thereafter, resolution applicant submitted resolution plan on 29.02.2020. Committee of Creditors (CoC) suggested for improvement of the accounts, following which another resolution plan was submitted on 06.03.2020 with increased offer price. A third plan was submitted on 12.03.2020 with still improved offer. 15. Respondent No. 4 and Committee of Creditors then filed an application for liquidation of the corporate debtor being I.A. No. 685 of 2020. NCLT vide the order dated 22.02.2021 passed in I.A. No. 685 of 2020 ordered liquidation of the corporate debtor. 16. Petitioner being the suspended director of the corporate debtor filed an interlocutory application before NCLT being I.A. No. 114 of 2021 for review of the order directing liquidation as well as the order initiating Corporate Insolvency Resolution Process. It....
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....unt, whereafter, sale certificate was issued on 13.09.2021 and possession was handed over to it. However, M/s. Mahashiv Shakti Trading Company has not been arrayed as a respondent in the present proceeding. 20.2. After selling the secured assets of the corporate debtor situated at Jalgaon, State of Maharashtra, the sale proceeds were distributed amongst the creditors of the corporate debtor. Thereafter, respondent No. 2 proceeded for sale of other secured properties situated at Bhimavaram on the basis of the recovery certificate issued by the recovery officer of DRT. It may be mentioned that DRT had passed an order on 26.10.2018 in O.A. No. 1316 of 2016 on the basis of which recovery certificate for an amount of Rs. 82,23,55,545.00 was issued. 20.3. Respondent No. 2 has contended that in the reply filed by the corporate debtor to the application filed under Section 7 of the IBC, no averments were made or no contentions were urged that the said application filed by respondent No. 2 was barred by limitation. Assuming that corporate debtor was aggrieved by order of NCLT initiating Corporate Insolvency Resolution Process, it had its remedy of appeal under Section 61(1) of the IBC....
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....9.2019 and appointed respondent No. 4 as Interim Resolution Professional to oversee the Corporate Insolvency Resolution Process of the corporate debtor. 21.2. Respondent No. 3 has referred to Section 61(1) of IBC and thereafter has contended that petitioner did not file appeal before the National Company Law Appellate Tribunal (NCLAT) against the order dated 20.09.2019 of NCLT. It may be mentioned that subsequently, respondent No. 4 was appointed as Resolution Professional. 21.3. In the meanwhile, the Committee of Creditors in its eighth meeting unanimously decided to liquidate the corporate debtor being not satisfied with the resolution plan. It was thereafter that G.Madhusudan Rao was appointed as the liquidator and vide the order dated 22.02.2021 NCLT directed the liquidator to liquidate the corporate debtor. 21.4. After following the due process, liquidator had issued sale notice for sale of the corporate debtor as a going concern by way of e-auction which was held on 03.09.2021. In the auction proceedings, corporate debtor was sold to the successful bidder M/s. Mahashiv Shakti Trading Company which subsequently paid the entire sale consideration. Following which, liqu....
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....a finding on merit. 22.1. On the question of alternative remedy, i.e., filing of an appeal under Section 61 of IBC, non-filing of which has been cited as a ground for dismissal of the writ petition, learned Senior Counsel for the petitioner has submitted a compilation of citations of this Court as well as of the Supreme Court contending that Article 226 of the Constitution of India is a constitutional provision, exercise of which cannot be fettered by any statute or law of limitation. Notwithstanding the availability of alternative remedy, a writ court would still exercise jurisdiction under Article 226 of the Constitution of India if it is satisfied that the order or proceeding assailed is in gross violation of the principles of natural justice or is an infringement of fundamental rights or is without any jurisdiction. A proceeding or an order passed beyond limitation would be without jurisdiction and in such a case, it would be perfectly legitimate for an aggrieved person to approach the writ court rather than subjecting himself to the remedy provided under the statute. He has also distinguished the decision of the Supreme Court in Assistant Commissioner v. Glaxo Smith Kline C....
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.... thereafter, that corporate debtor was called for a meeting by respondent No. 2 on 08.01.2016. In the meeting, corporate debtor laid emphasis on One Time Settlement (OTS) proposal and requested consideration of the same. Corporate debtor categorically admitted the debt vide letter dated 13.04.2016 and offered settlement for Rs. 17.00 crores on OTS basis. Respondent No. 2 agreed for such settlement vide the letter dated 22.04.2016. It is, therefore, not correct to say that that the point of limitation would commence on 31.05.2011 when the loan accounts were classified as NPA. In support of such contention, learned counsel for the respondents have placed reliance on the decision of the Supreme Court in Rajendra Narottamdas Sheth v. Chandra Prakash Jain (2022) 5 SCC 600. They, therefore, have prayed for dismissal of the writ petition. 24. Submissions made by learned counsel for the parties have received the due consideration of the Court. 25. Respondent No. 2 i.e., the financial creditor had filed C.P. (IB) No. 681/7/HDB/2018 before NCLT under Section 7 of IBC stating that corporate debtor had defaulted in repayment of a sum exceeding Rs. 123 crores. NCLT heard both the financia....
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.... is no disciplinary action pending against present IRP. The account of corporate debtor is treated as NPA and there are grounds to admit the petition. 25.1. Thereafter, NCLT as the adjudicating authority admitted the petition filed under Section 7 of IBC and declared moratorium for the purposes referred to in Section 14 of IBC by issuing certain directions. NCLT directed as follows: Hence, the Adjudicating Authority admits this petition under Section 7 of IBC, 2016 declaring moratorium for the purposes referred to in Section 14 of the IBC, 2016 with the following directions: a) The bench hereby prohibits the institution of suits or continuation of pending suits or proceedings against the corporate debtor including execution of any judgment, decree or order in any court of law, tribunal, arbitration panel or other authority; transferring, encumbering, alienating or disposing of by the corporate debtor any of its assets or any legal right or beneficial interest therein; any action to foreclose, recover or enforce any security interest created by the corporate debtor in respect of its property including any action under Securitisation and Reconstruction of Financi....
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....ting on 07.12.2019. approved the Expression of Interest (EoI) inviting Prospective Resolution Applicants (PRAs). In response to the second public announcement on 11.01.2020, the Resolution Professional had received six Expression of Interest (EoI). Pursuant to which, the applicant had issued Request for Resolution Plan (RFRP) and Evaluation Matrix on 20.01.2020. At the request of two Resolution Applicants, following the decision of CoC in its 4th meeting held on 18.02.2020 time for submission of Resolution Plans was extended upto 29.02.2020. 3. The Resolution Plan received from Resolution Applicant viz Sri Chandrakali Prasada Enterprises Private Limited, Bhimavaram was placed before the CoC at its 5th meeting held on 06.03.2020. After deliberations in the 6th CoC meeting held on 11.03.2020, the Resolution Applicant agreed to revise the officer from Rs. 850 lacs to Rs. 950 lacs to be paid over a period of 30 months and the CoC directed to revise the offer by 16.03.2020. In the meantime extension of CIRP by 30 days was also granted by the Adjudicating Authority vide order dated 18.03.2020 as 180th day of CIRP came to an end on 17.03.2020. The Resolution Professional on 03.06....
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....ng share in favour of the liquidation of the company. This Authority has no reason before it to take a contrary view in terms of Section 33(1)(a) of the Code. Therefore, we have no option than to pass an order for liquidation of the company in the manner laid down in Chapter-III of the Code. ORDER 5. The application is accordingly allowed with the following directions: (a) The period of lockdown of 129 days (w.e.f. 25.03.2020 to 31.07.2020) stands excluded from the CIRP period; (b) The corporate debtor i.e., M/s.SRI GURUPRABHA POWER LIMITED shall be liquidated in the manner laid down in Chapter-III of the Code; (c) Shri G.Madhusudhan Rao, Insolvency Professional is appointed as Liquidator; (d) He shall issue public announcement stating that the corporate debtor is in liquidation; (e) The moratorium declared under Section 14 of the Code shall cease to operate here from; (f) Subject to Section 52 of the Code, no suit or other legal proceedings shall be instituted by or against the corporate debtor; (g) All powers of the Board of Directors, Key Managerial Personnel and partners of the corporate debtor sha....
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.... 3. We have heard the counsel for applicant. We have gone through the records submitted before us. The counsel for applicant would contend that the Company Petition CP (IB) No. 681/7/HDB/2018 filed under Section 7 of the Insolvency & Bankruptcy Code, 2016 was admitted by the Tribunal on 20.09.2019 and invoked the CIRP process. 4. The counsel for applicant would contend that during the CIRP process, the RP and CoC filed an application IA No. 685 of 2020 for liquidation of corporate debtor and this Hon'ble Tribunal issued an order dated 22.02.2021 for liquidation of the corporate debtor. 5. The counsel for applicant relied on the following decisions of the Hon'ble Supreme Court of India and Apex Court: i. Order issued by the Hon'ble Supreme Court of India in the matter of M/s. B.K.Educational Services Private Limited v. Paras Gupta and Association [ (2019) 11 SCC 633] held as shown in para 11, page 7 of the application; ii. Order dated 25.09.2019 issued by the Hon'ble Supreme Court of India in the matter of Jignesh Shah v. Union of India [ (2019) 10 SCC 750] held as shown in para 12, pages 7 & 8 of the application; i....
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....te debtor ran into liquidity crunch which resulted in default in payment of outstanding dues. Be that as it may, if the petitioner was aggrieved by the order dated 20.09.2019, he had his remedy of filing appeal under Section 61 of the IBC. However, under sub-section (2) of Section 61, such appeal is required to be filed within thirty (30) days before NCLAT. As per the proviso, NCLAT has the discretion to allow an appeal to be filed after the expiry of the said period of thirty days if it is satisfied that there was sufficient cause for not filing the appeal but such period shall not exceed fifteen days. Thus, overall there is limitation of 45 days in filing appeal under Section 61. Petitioner did not file any such appeal. Long thereafter he filed an interlocutory application under Section 60(5)(c) of IBC for rejecting the application filed under Section 7 of IBC as being barred by limitation which we have seen above has been dismissed by NCLT vide the impugned order dated 30.03.2021. 32. Before proceeding further, let us briefly dilate on Section 60 of IBC which provides for adjudicating authority for corporate persons. As per sub-section (1), the adjudicating authority in relat....
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.... that the date of declaration of loan account as NPA would be the starting point of limitation. Subsequent negotiations or offers would not extend limitation. Adverting to Section 18 of the Limitation Act, 1963, Supreme Court held that the said provision is applicable to applications filed under Section 7 of IBC. In case the application under Section 7 of IBC is filed beyond the period of limitation of three years from the date of default and the financial creditor furnishes the required information relating to acknowledgement of debt in writing by the corporate debtor before the adjudicating authority, with such acknowledgement having taken place within the initial period of three years from the date of default, a fresh period of limitation commences and the application can be entertained if filed within this extended period. Supreme Court held as follows: 25. In the instant case, there is no dispute that the date of default is 30-9-2014 and the application under Section 7 of the Code was filed on 25-4-2019. According to the financial creditor, Section 18 of the Limitation Act is applicable in view of the corporate debtor acknowledging its debt by way of letters, written ....
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....ithin the period of limitation. The said view was upheld [Rajendra Narottamdas Sheth v. Chandra Prakash Jain, 2020 SCC OnLine NCLAT 827] by NCLAT. 29. We have already held that the burden of prima facie proving occurrence of the default and that the application filed under Section 7 of the Code is within the period of limitation, is entirely on the financial creditor. While the decision to admit an application under Section 7 is typically made on the basis of material furnished by the financial creditor, the adjudicating authority is not barred from examining the material that is placed on record by the corporate debtor to determine that such application is not beyond the period of limitation. Undoubtedly, there is sufficient material in the present case to justify enlargement of the extension period in accordance with Section 18 of the Limitation Act and such material has also been considered by the adjudicating authority before admitting the application under Section 7 of the Code. The plea of Section 18 of the Limitation Act not having been raised by the financial creditor in the application filed under Section 7 cannot come to the rescue of the appellants in the facts ....