AI Drafter 
TaxTMI 
TaxTMI 
2025 (4) TMI 517
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....to be noticed for deciding the appeal are: i. The corporate debtor, Geekay Colonizers and Builders Limited were sanctioned a project loan of Rs.94 Crore by Dewan Housing Finance Ltd. (DHFL) out of which Rs.69 Crore was disbursed. Appellant provided guarantee in the aforesaid loan. ii. Corporate debtor was unable to pay loan and amount was declared as NPA on 01.01.2016. iii. DHFL recalled the entire credit facility on 15.06.2016. Section 13(2) notice was issued on 21.10.2016. Corporate debtor on 13.03.2018 submitted a One-Time Settlement (OTS) proposal under which partial amount stood paid. iv. In the Corporate Insolvency Resolution Process (CIRP) of DHFL, Piramal Capital and Housing Finance Limited acquired DHFL with effect from 30.09.2021. v. A demand notice dated 13.07.2022, under Rule 7(1) of the Insolvency and Bankruptcy Board of India (Resolution Process for Personal Guarantor) Rules, 2019 was issued demanding amount of making a demand of defaulted amount. No payment having been made by the personal guarantor, Section 95 application was filed on 31.10.2022. vi. Piramal Capital & Housing Finance Ltd. assigned its financial d....
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....ed that period of 10 days provided in the statute for submission of the report is a mandatory. There is no provision for condonation of delay in submission of the report which is clear from the scheme of the IBC. It is submitted that there is no provision in the IBC empowering the RP to submit a second report/amended report. Timelines which are provided for the RP to submit a report is a mandatory. The expression "shall" has been used in Section 99 regarding submission of the report by the RP, which has to be given its due meaning and purpose. There is also no provision in Section 99 for filing application for condonation of delay in filing the report, thus report submitted beyond the period of 10 days cannot be taken on record. It is submitted that adjudicating authority committed error in relying on the reports of the RP and admitting Section 95 application. 5. Learned counsel for the appellant has also relying on the judgment of the Hon'ble Supreme Court in the matter of 'V. Nagarajan' Vs. 'SKS Ispat & Power Ltd. & Ors.' reported in (2022) 2 SCC 244, contend that IBC is a complete Code and law on limitation in IBC is settled and power to condone delay is tightly circumscribed....
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....copy of the application for insolvency resolution process. 10. Section 99 deals with the submission of report by the RP. Section 99(1) is as follows: "99: Submission of report by resolution professional.- (1) The resolution professional shall examine the application referred to in section 94 or section 95, as the case may be, within ten days of his appointment, and submit a report to the Adjudicating Authority recommending for approval or rejection of the application." 11. Section 99(1) requires the RP to examine the application referred to in Section 94 and Section 95 within 10 days of his appointment and submit a report. Sub-Section (4) of Section 99 empowers the RP to seek further information or explanation in connection with the application as may be required from the debtor or the creditor. Sub-Sections (4), (5), (6) & (7) of Section 99 are as follows: "99: Submission of report by resolution professional.- (4) For the purposes of examining an application, the resolution professional may seek such further information or explanation in connection with the application as may be required from the debtor or the creditor or any other person ....
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....r only directory depends on the scheme of the statute. 14. In this context, we may refer to the judgment of this Tribunal in Comp. App. (AT) (Ins.) No.583/2021 in the matter of 'Aditya Kumar Tibrewal' Vs. 'Om Prakash Pandey & Ors.'. In the above case, this Tribunal had occasion to consider the provisions of Regulation 35A of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons), Regulations, 2016 (for short the 'CIRP Regulations, 2016'). Regulation 35A was inserted in regulations by amendments made with effect from 03.07.2018. Regulation 35A provides as follows: "35A. Preferential and other transactions.- (1) On or before the seventy-fifth day of the insolvency commencement date, the resolution professional shall form an opinion whether the corporate debtor has been subjected to any transaction covered under sections 43, 45, 50 or 66. (2) Where the resolution professional is of the opinion that the corporate debtor has been subjected to any transactions covered under sections 43, 45, 50 or 66, he shall make a determination on or before the one hundred and fifte....
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....lowing observations : "..Hence, the use of the word "shall" in a statute, though generally taken in a mandatory sense, does not necessarily mean that in every case it shall have that effect, that is to say, that unless the words of the statute are punctiliously followed, the proceeding, or the outcome of the proceeding, would be invalid. On the other hand, it is not always correct to say that where the word "may" has been used, the statue is only permissive or directory in the sense that noncompliance with those provision will not render the proceeding invalid. In that connection, the following quotation from Crawford on 'Statutory Construction'- art. 261 at p. 516, is pertinent: "The question as to whether a statute is mandatory or directory depends upon the intent of the legislature and not upon the language in which the intent is clothed. The meaning and intention of the legislature must govern, and these are to be ascertained, not only from the phraseology of the provisions but also by considering its nature, its design, and the consequences which would follow from construing it the one way or the other...."" vi. The I&B Code, 2016 contains timeline f....
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....any action taken by Resolution Professional beyond the time prescribed in Regulation 35A of the CIRP Regulations is prohibited, it shall cause serious general inconvenience or injustice to the Corporate Debtor. One of the objective of the Code is to maximise the assets of the Corporate Debtor. In event the actions taken by the Resolution Professional after the timeline prescribed in Regulation 35A of the CIRP Regulations are to be annulled, the undervalued and fraudulent transactions will go out of the reach of Resolution Process, reach of the Court and shall cause great inconvenience and injustice to Corporate Debtor. Hence, we are of the view that timeline prescribed in Regulation 35A of the CIRP Regulations is only directory and any action taken by the Resolution Professional beyond the time prescribed under Regulation 35A of the CIRP Regulations cannot be held to be non-est or void only on the ground that it is beyond the period prescribed under Regulation 35A of the CIRP Regulations. There may be genuine and valid reasons for Resolution Professional not to file application for avoiding the transactions within time prescribed which are question relating to each case and has to ....
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....tor and the corporate debtor, if- (a) the application made under sub- section (2) is incomplete; (b) there has been payment of the unpaid operational debt; (c) the creditor has not delivered the invoice or notice for payment to the corporate debtor: (d) notice of dispute has been received by the operational creditor or there is a record of dispute in the information utility; or (e) any disciplinary proceeding is pending against any proposed resolution professional; Provided that Adjudicating Authority, shall before rejecting an application under sub-clause (a) of clause (ii) give a notice to the applicant to rectify the defect in his application within seven days of the date of receipt of such notice from the adjudicating Authority." xii. The Hon'ble Supreme Court further noticed the view of this Tribunal that period of 7 days for rectification of defects as contained in Proviso Section 7(5) and Proviso Section 9(5) and Proviso Section 10(4) are mandatory. Following was noted in Paragraph 20 of the judgment. The view of the Tribunal holding 7 days period as mandatory was reversed by the Hon'ble Supreme Court and followi....
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....through a supplementary affidavit the RP had filed the amended report on 13.02.2024/14.02.2024. It is pertinent to mention that the RP had filed IA (IB) No.56/CB/2024 to take on record the Report u/s 99 which was not on board along with the main petition on 06.02.2024 as it was pending under scrutiny. It was listed for the first time on 05.03.2024 and in the intervening period between 06.02.2024 and 05.03.2024 the RP had filed the amended report in the form of a supplementary affidavit on 14.02.2024. It is a fact that no prior leave of this court was taken before filing the amended report. It is also fact that the first report was filed on 02.02.2024 and the amended report was filed on 14.02.2024 but both the reports were presented before this tribunal i.e. listed for order, together on 05.03.2024 and hence vide order dated 05.03.2024 both the original report and the amended report were taken on record together. Moreover, the amended report was treated as part of the original report and not as a substitute of the original report. So, it cannot be said that the amended report was filed after the original report was taken on record and that a completely new report was filed ....
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....is any provision for condonation of delay in filing the report also does not commend us. The application for filing condonation of delay as prescribed under Section 5 of the Limitation Act and other statutes are applicable is required to be made when an application is filed beyond the prescribed period. The period of 10 days provided for submission of the report is not a period providing for any limitation. Hence there is no question of applying Section 5 of the Limitation Act. Adjudicating authority before whom such reports are filed in event, the reports are unduly delayed, it is open for the adjudicating authority not to consider the reports. However, delay in submission of the report if properly explained, adjudicating authority is well within its jurisdiction to accept the report and rely on the same. 21. Insofar as the judgment of the Hon'ble Supreme Court in 'V. Nagarajan' (Supra), Hon'ble Supreme Court in the said case was considering the period of limitation prescribed under Section 61 for filing an appeal in the Appellate Tribunal and in the above context, it was observed that power to condone the delay is tightly circumscribed and conditional upon showing sufficient c....