TaxTMI 
TaxTMI 
2024 (10) TMI 510
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.... appeal) against the common order dated 31.07.2023 passed by National Company Law Tribunal, Cuttack Bench by which an application filed by Respondent No. 1 (State Bank of India). under Section 95 of the Insolvency and Bankruptcy Code, 2016 (in short 'Code) has been admitted. 2.In brief, 'Vandana Vidhyut Limited' secured loan from a consortium of six banks (including Respondent No.1) in which the PNB was the lead bank. The said loan was secured by present appellants in both the appeals along with others as guarantors by executing a deed of guarantee on 27.10.2010. 3.The principal borrower, namely, Vandana Vidhyut Limited was admitted into CIRP on 26.04.2021 by the National Company Law Tribunal, Mumbai on an application filed under Section 7 of the Code by the State Bank of India/Respondent No.1. It is an admitted fact that the principal borrower has already gone into liquidation. 4.The present proceedings were initiated at the instance of Respondent No. 1 by filing an application under Section 95 on 02.12.2021 in terms of provisions of the Code and Rule 7(1) of the Insolvency & Bankruptcy (Application to Adjudicating Authority for Insolvency Process of Personal Guarantors t....
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....ndent may file Reply within two weeks. Rejoinder be filed within two weeks thereafter. List this Appeal on 07.11.2023. In the meantime, the Resolution Professional may collate claims, however, no further steps shall be taken." 8.Both the respondents have filed the reply to the appeal and rejoinder has also been filed. 9.While attacking the findings recorded by Ld. Tribunal, on the issue of limitation, Counsel for the Appellant has vehemently argued that the Tribunal has committed a patent error in treating the notice dated 21.06.2021 as the notice invoking the Bank Guarantee which is otherwise a statutory notice issued under Rule 7 (1) of the Rules in consonance with Section 95 (4) (b) of the code. It is submitted that the said notice dated 21.06.2021 was mainly for the purpose of filing the application under Section 95 as the language of Section 95 (4) (b) itself suggests that the application under section 95 cannot be filed until unless the notice is issued. He further submits that Rule 3 (e) of the Rules provides the definition of the guarantor which says that "guarantor" means a debtor who is a personal guarantor to a corporate debtor and in respect of whom guara....
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....n the period of limitation had stopped running. He has further submitted that in so far as Rule 7 (1) is concerned, it is submitted that by issuing that notice, the appellants were asked to make the payment of the amount due within a period of 14 days. It is argued that the said Rule is akin to Rule 8 of the code which is for the purpose of filing of an application under Section 9. It is argued that an application under Section 9 has to be filed, notice under Section 8 has to be given enabling the corporate debtor to make the payment. 12.Mr. Bajaj, appearing on behalf of Respondent No. 2, has also submitted that guarantee deed is a continuing guarantee, therefore, it could have been invoked by virtue of notice issued under Rule 7 (1) of the rules. Otherwise, he has submitted that by the notice issued on 26.05.2016 the appellant have been categorically asked to discharge their liability as guarantors within the period of 60 days, therefore, that has to be treated as a notice issued for the purpose of invoking guarantee. 13.We have heard counsel for the parties and perused the record with their able assistance. 14.There is no dispute that the appellant extended their persona....
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....s or any of them serving the Guarantors with a notice requiring payment of the Loan and such notice be deemed to have been served on the Guarantors either by actually delivery thereof to the Guarantors or by despatch thereof by Registered Post or Certificate of Posting to the Guarantors addresses herein given or any other address in India to which the Guarantors may by written intimation have given to the Lenders. Any notice dispatched by the Lenders or any of them by Registered Post or Certificate of Posting to the address to which it is required to be dispatched under this Clause shall be deemed to have been duly served on the Guarantors four days after the date of posting thereof, and shall be sufficient if signed by any officer of any of the Lenders and in proving such service it shall be sufficient if it is established that the envelope containing such notice, communication or demand was property addressed and put into the post." 15.The notice issued on 26.05.2016 was at the instance of five banks including Respondent No. 1 and in that notice it has been categorically averred that: "Simultaneously you notices Nos. 2, 3, 4 & 5 are aware that you have by a guarantee ....
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....e company has exit from approved CDR package (C)Lenders have adjusted some FDRs against their outstanding liabilities without the consent of the Company. Management is condending for the same. The Company has not taken the effect of the same in books of accounts. Interest provision on the FDRs has not been done, the impact of the same will be given after settlement with the banks. Note-34:- (A)The Punjab National Bank (PNB) along with other consortium banks i.e. State Bank of India, Allahabad Bank, Bank of India and Central Bank of India, has issued a notice under Section 13 of SARFAESI Act, 2002 vide letter dated 22nd October 2016, regarding exercise of symbolic possession on account of non-payment of debts. (B)Punjab National Bank and other Consortium Banks had filed Original Applications against the Company before the Debt Recovery Tribunal, Jabalpur (DRT") under section 19 of the Recovery of Debts due to Banks and Financial Institution Act, 1993. In that respect the DRT has issued show cause notice to the company on dated 12.06.2017." NOTE-4 LONG-TERM BORROWINGS Secured loans Term loans From Banks* 13,03,51,39....
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..... Vandana Vidhyut Limited-Corporate Debtor under the Code. Madam/Sir, 1. This letter is a demand notice of unpaid debt in default due from M/s.Vandana Vidhyut Limited (Corporate Debtors) 2.Please find particulars of the unpaid debt in default below : PARTICULARS OF DEBT 1 Total outstanding debt (including any interest or penalties) Rs. 693,82,24,225,81/- (Rupees Six Hundred Ninety Three crore Eighty two Lakh, Twenty Four Thousand and Two Hundred Twenty five and Paisa Eighty One Only) as on 31.05.2021 (Account wise outstanding and interest in part-A of annexure-I) 2 Amount of debt in default Rs. 340,30,24,040,34/- (Rupees Three Hundred Forty crore, Thirty Lakh, Twenty Four Thousand and Forty and Paisa Thirty Four Only) as on 31.05.2021. (Account wise outstanding in Part-A of annexure-I). "The undersigned request you to unconditionally pay the unpaid debt in default in full within fourteen days from the receipt of this letter failing which insolvency resolution process, under the Code, shall be initiated against you." 18.Since the application has been filed under Section 95, th....
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....n and also the provisions which are invoked for the purposes of contesting the impugned order, the question which arises for consideration is as to whether the application filed under Section 95, at the instance of Respondent No. 1, is within the period of limitation if it is to be counted from the date when the notice under Section 13(2) was issued on 26.05.2016 and or on the basis of the acknowledgement in the balance sheet which was signed by both the appellants on 01.09.2017. 21.Counsel for the appellant has argued before us today that notice issued under Section 13(2) on 26.05.2016 cannot be equatedwith a notice which is required for the purpose of invoking personal guarantee in terms of the guarantee deed. Whereas while arguing this case before this Court on 26.09.2023 he had made the submission that the personal guarantee was invoked on 26.05.2016 while issuing the notice under Section 13(2). We are totally amazed with the diametrically opposite arguments raised by the appellants before the same court, firstly, when the stay order was obtained and then when the case was finally argued. If it was argued before this Tribunal on 26.09.2023 that the notice dated 26.05.2016 wa....
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....n paragraph 3 at Item No.6, following was reported by the RP: "6. Applicability of Limitation Act: The Notice dated 4th October, 2013 issued by Punjab and Sindh Bank (PSB) under SARFAESI Act, 2002. Thereafter, no other notice has been issued by PSB to the Personal Guarantor. A guarantor is liable to pay if the principal debtor defaults. The creditor has to enforce the guarantee within the limitation period stipulated under the limitation act. As per article 55 of limitation act 1963, the time-limit of 36 months would be reckoned from the date the guarantee contract is breached. The breach of contract occurs if the payment is not made or refused 'on demand'." 10.The RP came to the conclusion that the Bank has not invoked the guarantee. 11.In its reply, the Bank has submitted that although after sale of the mortgaged asset, part of the facility was realized, but no steps have been taken by the Bank against the Appellant for recovery of any dues. The notice, which is the basis of the Application, was issued on 04.10.2013. Nine years have been passed from issuance of the notice and no steps have been taken by the Bank so far for recovery of any amount from th....
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....d from the time when the acknowledgment was so signed. (2)Where the writing containing the acknowledgment is undated, oral evidence may be given of the time when it was signed; but subject to the provisions of the Indian Evidence Act, 1872 (1 of 1872), oral evidence of its contents shall not be received. Explanation.-For the purposes of this section,- (a)an acknowledgment may be sufficient though it omits to specify the exact nature of the property or right, or avers that the time for payment, delivery, performance or enjoyment has not yet come or is accompanied by a refusal to pay, deliver, perform or permit to enjoy, or is coupled with a claim to set-off, or is addressed to a person other than a person entitled to the property or right; (b)the word "signed" means signed either personally or by an agent duly authorised in this behalf; and (c)an application for the execution of a decree or order shall not be deemed to be an application in respect of any property or right. 28.Section 18 provides for acknowledgement in writing and the balance sheet indicating the liability is the acknowledgement in writing. 29.It is also pertinent to....
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....04,91,863 40,34,24,542 (iii) Cash and cash equivalents 11(a) 25,10,091 87,63,385 1,41,72,645 (iv) Bank balances other than (iii) above 11(b) 98,57,341 2,46,28,841 13,16,47,395 (v) Loans 7 1,23,40,000 1,11,70,000 1,21,25,233 (vi) Others Financial Assets 8 23,96,75,362 13,79,07,247 2,83,94,665 (d) Other current assets 12 18,51,62,938 17,65,62,963 19,00,62,660 Total 21,07,05,82,880 22,52,26,37,634 24,09,44,08,728 II.EQUITY AND LIABILITIES (1) Equity (a) Equity Share capital 13 1,52,96,66,020 1.52,96,66,020 1,52,96,66,020 (b) Other Equity (i) Reserve & Surplus 14 34,95,46,570 1,84,61,95,192 2,77,81,12,369 (2) Non-Current Liabilities (a) Financial Liabilities (i) Borrowings 15 15,51,06,04,710 16,22,39,59,995 17,20,55,29,412 (ii) Trade payables 16 . (iii) Other financial liabilities 17 14,02,16,250 14,02,16,250 14,02,16,250 (b) Provisions 18 31,55,716 26,60,518 40,79,276 (3)Current Liabilities (a) Financial Liabilities .. (i) Borrowings 15 2,91,81,78,311 2,11,63,50,482 1,65,46,96,299 (ii) Trade payables 16 3,32,32,503 2,50,67,293 5,44,50,556 (iii) Other financial liabilities 17 58,49,84,345 63,49,29,986 72,25,52,928 (....