TaxTMI 
TaxTMI 
2025 (1) TMI 1099
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....filed under Section 94(1) of the Insolvency and Bankruptcy Code, 2016 (for short 'The Code' or 'The IBC') by the Personal Guarantor, Respondent herein, Adjudicating Authority passed an Order on 08.04.2021, declaring Interim Moratorium in terms of Section 96 of the IBC. By the same Order, the Appellant herein was appointed the Resolution Professional. ii. Appellant filed a Report under Section 99 of the IBC, which Report was considered by the Adjudicating Authority and by Order dated 30.04.2024, Section 94 Application filed by the Personal Guarantor was admitted and Personal Insolvency Resolution Process (PIRP) was initiated as per the Order dated 30.04.2024, fresh Moratorium in terms of Section 101 was to commence which was contemplated to cease to have effect at the end of period of 180 days. iii. Public announcement was made by RP on 03.05.2024. iv. Draft Repayment Plan was also submitted by the Personal Guarantor. v. RP recommended the convening of the Meeting of the Creditors in terms of Section 106(2)(c) of the IBC. vi. First Meeting of Creditors was rescheduled on 23.10.2024, when the Creditor discussed the Repayment Plan and reque....
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.... Moratorium proceeding under Personal Guarantor shall not yield any favourable results. 6. We have considered the submissions of the Counsel for the Parties and perused the record. 7. The PIRP against the Personal Guarantor was admitted by Order of the Adjudicating Authority dated 30.04.2024 and while admitting Section 94 Application filed by the Personal Guarantor, Adjudicating Authority directed for fresh Moratorium under Section 101. In Para 10 of the Order following has been directed: "10. A fresh moratorium in terms of Section 101 of the Code shall commence as applicable. RP is directed to take all further steps in accordance with Part III, Chapter III of the Code. During the moratorium period - a) any pending legal action or proceedings in respect of any debt qua the Respondent shall be deemed to have been stayed; b) the creditors shall not initiate any legal action or legal proceedings in respect of any debt qua the Respondent; and c) the Respondent shall not transfer, alienate, encumber, or dispose of any of the assets or his legal right or beneficiary interest therein. The moratorium shall cease to have effect at the end of the period of 180 days." 8. 180....
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....rves "However, we have not expressed any views on the moratorium"; b) Direct that a moratorium in terms of section 101 of IBC shall apply to the present PIRP during the extended period of PIRP i.e. 90 days w.e.f. 29.10.2024; c) pass any other order/direction in the facts and circumstances of the present appeal and in the interest of the Justice." 11. The prayer as noted above in the Appeal is to extend the Moratorium for 90 days with effect from 29.10.2024. The question which has come for consideration before this Tribunal in this Appeal is as to whether the period of Moratorium could have been extended by the Adjudicating Authority, although in the Impugned Order, Adjudicating Authority has not expressed any opinion regarding Moratorium while extending 90 days for PIRP, but Appellants having prayed for extension of Moratorium for 90 days, we need to consider provisions of Section 101 of the IBC and to consider as to whether extension of Moratorium which is statutory prescribed under Section 101 can be extended by the Adjudicating Authority or by this Appellate Tribunal. Section 101 deals with Moratorium. Section 101 provides as follows: "101. Moratori....
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....ation of the Moratorium, which is the statutory scheme as delineated by Section 101(1). 14. The submission which is advanced by the Appellant is that said period prescribed under Section 101(1) is only directory and can be extended by Adjudicating Authority in appropriate case. 15. The question which has arisen in the present Appeal is regarding statutory interpretation of the provision of Section 101(1). The principles for interpretation of statute are well settled. We may refer to the Constitution Bench Judgment of the Hon'ble Supreme Court in the matter of 'State of UP & Ors.' Vs. 'Babu Ram Upadhyay' reported in AIR 1961 SC 751. Constitution Bench held that for determining as to whether statute is mandatory or directory, the Court has to ascertain the real intention of the nature and the consequences which would follow from construing it from one way or other. In Paragraph 29 of the Judgment following was laid down: "29. The relevant rules of interpretation may be briefly stated thus : When a statute uses the word "shall", prima facie, it is mandatory, but the Court may ascertain the real intention of the legislature by carefully attending to the whole scope of th....
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....vided that a notice of ten days will be sufficient in such cases." It is admitted that prior to 1981 the sentence "tenders not containing all the particulars shall be liable to be rejected" occurring in sub-rule (2) of Rule 206 was not there. It is for this reason that the earlier decision of the Assam High Court had come to the conclusion that the said Rule was not mandatory especially when it did not provide for the consequence in the event of the application not being filed in accordance with the prescribed form. Column 11 of the form of tender reads as follows: "11. Whether the tenderer will be capable of financing his business himself. Give details of source: cash in hand, bank balance, security, assets etc." In answer, Respondent 4 stated as under: "Yes, I am financially capable enough to run the business. I shall get financial assistance in this respect from my father and also from my sister and sister's husband." 17. In Paragraph 11, the Hon'ble Supreme Court held that the language of the rule is clear and unambiguous. It also stipulates the consequence of non-compliance, therefore, it is mandatory. Para 11 of the Judgment followin....
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....ngle Member of the Authority is indeed within the fold of Section 81 of the Act." 19. To the same effect is another Judgment of the Hon'ble Supreme Court in the matter of 'Kotak Mahindra Bank Ltd.' Vs. 'A. Balakrishnan & Anr.', reported in (2022) 9 SCC 186. Hon'ble Supreme Court in the above case had occasion to consider Section 238-A and Section 7 of the IBC. Hon'ble Supreme Court in the above Judgment has laid down when the language of the statutory provisions is plain and unambiguous it is not permissible for the Court to add or subtract words to statute or read something into it which is not there. In Paragraph 77 & 78, following was held: 77. It is more than well settled that when the language of a statutory provision is plain and unambiguous, it is not permissible for the Court to add or subtract words to a statute or read something into it which is not there. It cannot rewrite or recast legislation. At the cost of repetition, we observe that if the argument as advanced by Shri Viswanathan is to be accepted, it will completely change the texture of the fabric of sub-section (22-A) of Section 19 of the Debts Recovery Act. 78. Though there are umpteen numbe....
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....de in conformity with those requirements, were held by the Privy Council to be mandatory. The periods prescribed in the Schedule to the Indian Limitation Act, 1908, for bringing a legal proceeding are mandatory as the consequence of the expiry of the period of limitation is provided by section 3 of the Act in that the court is enjoined to dismiss a legal proceeding instituted after expiry of the prescribed period. Similar result will follow if the court or the forum is directed as in section 24A of the Consumer Protection Act, 1986 not to admit a complaint unless it is filed within the period prescribed. The question of limitation in such cases is a jurisdictional fact and has to be considered by the court or forum even if not raised by any party." 21. When we look into the statutory scheme of the IBC, it is clear that Interim Moratorium is kicked in as soon as Application is filed under Section 94 and Section 95 by virtue of statutory provision under Section 96 that Moratorium continues till an Order is passed under Section 100 for admission of rejection of the Application. Section 101 provides that when Application is admitted further Moratorium of 180 days shall comm....
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....r noticing the provisions of Section 54D, Section 54N relying on the Judgment of the Hon'ble Supreme Court in 'Surendra Trading Company' Vs. 'Jugilal Kamlapat Jute Mills Company Ltd. & Ors.' in (2017) 16 SCC 143 and Judgment of the Hon'ble Supreme Court in the matter of 'Committee of Creditors of Essar Steel India Limited' Vs. 'Satish Kumar Gupta & Ors.' reported in (2020) 8 SCC 531, came to the conclusion that the provisions of Section 54D does not contemplate any automatic termination of the PPIRP, hence the Court had discretion to extend the time in an appropriate case. In Paragraph 29 & 30 of the Judgment following was laid down: " 29. Shri Maninder Singh, learned Senior Counsel, appeared on behalf of the State of Gujarat and supported para 201 of Nclat judgment by which his client would be paid 60.26% of sales tax dues. 30. Shri Mukul Rohatgi, learned Senior Advocate appearing on behalf of Mr Prashant Ruia supported the findings of Nclat, insofar as Nclat held that the personal guarantees given by his client had become ineffective in view of the payment of the debt by way of resolution to the original lenders. Further, Shri Rohatgi also argued that the right ....