TaxTMI 
TaxTMI 
2024 (9) TMI 622
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....ing the order dated 06.12.2022 passed by National Company Law Tribunal, Mumbai Bench, Court-III in C.P. No. 4076/IBC/MB/2018 by which Section 7 application was allowed and Tarapur Textile Park Ltd-Corporate Debtor was admitted into Corporate Insolvency Resolution Process ('CIRP' in short). The present application has been filed in pursuance of order dated 06.05.2024 passed by the Hon'ble Supreme Court of India in Civil Appeal No. 5531 of 2024. 2. The chronological sequence of the events of the present case, put briefly, is that the Respondent No.1-Awaita Properties Pvt. Ltd had filed a Section 7 application against the Corporate Debtor for a default amount of Rs. 8,56,30,137/- only. The National Company Law Tribunal, Mumbai Bench-III admitted the Section 7 application vide its order dated 06.12.2022. Aggrieved by the above order of the Adjudicating Authority, an appeal was preferred by the ex-Director of the Corporate Debtor before this Tribunal vide CA(AT)(Insolvency) No. 121 of 2023. In exercise of its appellate jurisdiction, this Tribunal, on 02.04.2024, dismissed the appeal and affirmed the order of the Adjudicating Authority dated 06.12.2022. Aggrieved by the decision of th....
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....nt of the Hon'ble Supreme Court in Budhia Swain & Ors. Vs. Gopinath Deb & Ors. (1999) 4 SCC 396, it was asserted that in the given facts and circumstances, the application for recall is very much maintainable. It was pointed out that the disbursal of the alleged financial debt which had taken place on 01.01.2014 was repayable on demand. In terms of Article 21 of the Limitation Act, limitation period for money which is lent under an agreement which is payable on demand, the period of limitation begins from the time when the loan is made. In the present case, since the alleged amount was given on 01.01.2014, the period of limitation ended on 01.01.2017. Thus, as the notice under Section 7 was issued on 20.02.2018, the debt stood time-barred. It is an erroneous and misleading interpretation to the law on the part of Respondent No.1 to say that only Article 137 is applicable to Section 7 petition under IBC. Stating that such a timebarred debt could not be viewed as a debt in default, reliance was placed on the judgement of the Hon'ble Supreme Court in B.K. Educational Services Pvt. Ltd. Vs. Parag Gupta Associates (2019) 11 SCC 632 that an application filed under IBC, cannot suddenly re....
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....not available to the Appellant as it had not disputed the date of default i.e. 15.03.2016 before the Adjudicating Authority. It was further pointed out that the Adjudicating Authority had examined the aspect of limitation and given detailed reasoning in holding that Article 21 of the Limitation Act was inapplicable in the present case besides holding the Company Petition to be within limitation. It is the contention of the Respondent No.1 that the present application is only an attempt by the Appellant to frustrate, delay and protract the conclusion of the CIRP Process of the Corporate Debtor. 9. We have duly considered the arguments advanced by the Learned Counsel for both the parties and perused the records carefully. 10. The preliminary issue before our consideration is whether in view of the facts and circumstances of the case, there are sufficient and cogent grounds for recall of the order of this Tribunal of 02.04.2024 at a time when liberty was given by the Hon'ble Supreme Court to file a review of the said order limited to the grounds of limitation. 11. It is the case of the Appellant that Tribunals including this Tribunal has inherent powers to recall and set asid....
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....cessary part was not before the Tribunal when judgment was delivered adverse to a party. There may be other grounds for recall of a judgment. Well known ground on which a judgment can always be recalled by a court is ground of fraud played on the court in obtaining judgment from the court. We, for the purpose of answering the questions referred to us, need not further elaborate the circumstances where power of recall can be exercised. 26. In view of the law laid down by the Hon'ble Supreme Court which holds that the Tribunal has inherent power to recall its judgment on appropriate grounds, the three-member Bench judgment in Agarwal Coal Corporation P. Ltd. v. Sun Paper Mill Ltd. observing that the Tribunal does not have power to recall cannot be approved. The three-member Bench judgments of this Tribunal in so far as observation that this Tribunal has no power to review, no exception can be taken to that part of the judgment. We, however, hold that the judgment laying down that this Tribunal has no power to recall the judgment does not lay down correct law. ( Emphasis supplied ) 13. Thus, the law as it stands today, this Tribunal in exercise of its inh....
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.... proceedings are initiated beyond the period of limitation and are therefore unenforceable." 15. Inspite of this one sentence pleading made by the Appellant on the issue of limitation, the Adjudicating Authority in the impugned order at para 22 (b) inter alia framed the following question for adjudication: "b. Whether the Company Petition filed by the Financial Creditor is within the period of limitation?" 16. We now come to the findings of the Adjudicating Authority in this regard which is as extracted hereunder: "26. To answer the second question, we refer to the Judgement passed by the Hon'ble Supreme Court in the matter of B.K. Educational Services Pvt. Ltd. Vs. Parag Gupta (2019; 11 SCC 633). In para 42 of the said judgement it is held as: "42. It is thus clear that since the Limitation Act is applicable applications filed under Sections 7 and 9 of the Code from the inception the Code, Article 137 of the Limitation Act gets attracted. "The right 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 be barred under Article 137 of the ....
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....judicating Authority in holding that company petition was not barred by limitation. 18. When we look at the matter at hand, we find that it is an admitted fact that a sum of Rs.5 crore was disbursed by the present Respondent No.1 to the Corporate Debtor on 01.01.2014 which was admittedly payable on demand. It was the case of the Respondent No.1 that the Corporate Debtor had defaulted in repaying the said loan even after having assured that it would pay the entire loan along with interest @ 15% p.a. by 15.03.2016. The entire loan along with interest having become due and payable on 15.03.2016 and the Corporate Debtor having failed to make payment of the outstanding debt on such date, the present Respondent No.1 filed the company petition on 15.02.2018 which the Adjudicating Authority held to be well within the period of limitation prescribed under Article 137 of the Limitation Act. 19. This brings us to the question of date of default in the present case. We are well aware that in any proceeding initiated under Section 7 of the IBC, the application is required to be filed in a prescribed form along with relevant documents annexed therein. We therefore need to notice Column 2 o....
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....riod of limitation in terms of Article 137 of the Limitation Act. 21. On the correctness of the decision of the Adjudicating Authority on the applicability of Article 137 of the Limitation Act in respect of applications filed under Section 7 of the IBC, we find that the Hon'ble Supreme Court has consistently affirmed its findings in the B.K. Educational Services judgement supra. This ratio was reiterated by the Hon'ble Supreme Court in Sagar Sharma And Another Vs. Phoenix ARC Private Limited And Another (2019) 10 SCC 353. Similar view has been espoused again by the Hon'ble Supreme Court in Jignesh Shah Vs. Union of India' (2019) 10 SCC 750 wherein it held that the period of limitation for making an application under Section 7 or 9 of the IBC is three years from the date of accrual of the right to sue, that is, the date of default. This has been further validated by a decision of a three Judge Bench of the Hon'ble Supreme Court in Laxmi Pat Surana Vs. Union Bank of India & Anr. (2021) 8 SCC 481 where it held: "43. Ordinarily, upon declaration of the loan account/debt as NPA that date can be reckoned as the date of default to enable the financial creditor to initiate acti....