TaxTMI 
TaxTMI 
2025 (6) TMI 196
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....ing Authority, in C.P.(IB)/268(AHM)2024, which dismissed the Appellant's application under Section 94(1) of the Code as not maintainable. The Appellant contended that the Adjudicating Authority passed the Impugned Order dated 04.09.2024 without considering arguments, facts, or circumstances, and asserts that the Impugned Order is a non-speaking order, legally unsustainable, and unsupported by the facts and merits of the case. 4. It is the case of the Appellant that the Corporate Debtor despite this recovery, the Appellant's application under Section 94(1) of the Code was dismissed by the Adjudicating Authority as "not maintainable" without addressing whether the Respondent's claims persisted post-auction or evaluating compliance with Code's procedural mandates for personal guarantor insolvency. The Appellant submitted that the order fails to consider the legal effect of recoveries made during the DRT proceedings on the limitation period and does not address the applicability of the Limitation Act and 238A of the Code. 5. The Appellant submitted that by virtue of the payments credited by the Corporate Debtor, the limitation period has been revived under Section 19 of the L....
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....arantee was effected through the said notice dated 06.08.2016, read in conjunction with the terms and conditions of the Guarantee Agreement executed by the Appellant. This invocation was consequent to the default by the Corporate Debtor in repayment of the sanctioned cash credit facilities guaranteed by the Appellant. 9. We note that in order to recover the outstanding dues from the Corporate Debtor, the Respondent filed Original Application No. 551/2016 before the Debt Recovery Tribunal-II, Ahmedabad, which was allowed by way of a decree/order dated 09.01.2017. Subsequently, Recovery Certificate No. 14/2017 was issued, now recorded as TRP No. 02/2023. In the said Recovery Proceedings, the DRT scheduled the auction of the mortgaged property on 30.01.2024, which was successfully conducted with the Respondent Bank receiving a highest bid of Rs. 22.42 Cr. for the property in question. Further, as per the Statement of Account filed by the Respondent Bank in TRP No. 02/2023, the highest bidder has deposited the entire sale consideration, thereby completing the auction process in accordance with the Recovery of Debts Due to Banks and Financial Institutions Act, 1993. 10. We note th....
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....ement signed by the Appellant despite any operation of law and other factors as discussed above. 15. The only point raised by the Appellant is regarding limitation based on which application was filed by the Appellant under Section 94 of the Code which had been dismissed by the Adjudicating Authority. In this connection, we note that the Respondent has invoked the guarantee of the Appellant vide notice dated 06.08.2016, therefore, the filing of appeal against the same should have been done by 05.08.2019 whereas the application was indeed filed under Section 94 of the Code by the Appellant before the Adjudicating Authority vide C.P.(IB)/268 (AHM) 2024 on 04.09.2024, which is apparently much beyond the limitation period. 16. The Appellant has made out the case that the Respondent has filed Original Application No. 551/2016 before the Debt Recovery Tribunal-II, Ahmedabad, which was allowed by way of a decree/ order dated 09.01.2017 and decree passed Recovery Certificate No. 14/2017 was issued, which is now recorded das TRP No. 02/2023. The Appellant submitted as per auction of the mortgaged property the Respondent Bank has received Rs. 22.42 Crores qua the property in question. ....
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....as under: "Effect of payment on account of debt or of interest on legacy.- [(1) Where payment on account of a debt or of interest on a legacy is made before the expiration of the prescribed period by the person liable to pay the debt or legacy, or by his duly authorised agent, a fresh period of limitation shall be computed from the time when the payment was made:] [Provided that * * * an acknowledgment of the payment appears in the handwriting of, or in a writing signed by, the person making the payment.] (2) Effect to receipt of procedure of mortgaged land. Where mortgaged land is in the possession of the mortgagee, the receipt of the rent or produce of such land shall be deemed to be a payment for the purpose of sub-section (1). Explanation.--Debt includes money payable under a decree or order of Court." (Emphasis Supplied) 21. Section 19 of the Limitation Act, 1963, and Section 20 of the Limitation Act, 1908, differ in scope, structure, and applicability. The 1963 Act's Section 19 specifically governs payments toward debt or interest on a legacy, resetting the limitation period if made by the debtor or their authorized agent, p....
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....ank due to auction of mortgaged property as a result of decree passed by Debt Recovery Tribunal-II, Ahmedabad. Thus, in terms of Explanation (b) of Section 19 of the Limitation Act,1963, this recovery would not considered as Debt and therefore does not impact/enhance limitation period as pleaded by the Appellant. In fact, this goes against the cause of the Appellant. 24. From above, it is noted that payment on account of debt is required to be made by the person liable to pay for getting fresh period of limitation which be computed from the time of the payment was made. In this connection, we observe that no payment was made by the Corporate Debtor or the personal guarantor for the outstanding loan of Rs. 201 Crores. It is only on the sale of the mortgaged property by the Respondent Bank based on the decree of the DRT in his favour which was done in January, 2024 which has nothing to do with the payment which should have been made by the Corporate Debtor or the personal guarantor to take the benefit of the Section 19 of the Code. 25. In this connection, we also note Section 238 A of the Code which reads as under :- "Section 238A: The provisions of the Limitation Act,....
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....y the Corporate Debtor and subsequently notice to Appellant invoking the bank guarantee are undisputed. We also note that the bank has issued guarantee which is in nature of continuing and unconditional guarantee which has been legally invoked by the Respondent Bank. We further observe that the DRT proceedings are under the Recovery of Debts and Bankruptcy Act, 1993. It is reiterated that the action based on to decree passed by the DRT was in respect of the mortgaged property held by the Respondent. Hence, it cannot be case of the Appellant that such recovery shall extend the limitation for personal guarantee given by the Appellant. The argument therefore submitted by the Appellant are not tenable. 29. In conclusion, we do not find any error in the Impugned Order. The Appeal devoid of any merit stand rejected. No cost. I.A., if any, are closed. ============= Document 1 BANELCE BARODA VADODARA 002817500 171 JAARS =0000100 28.9.2013 001.15 GUJARAT 561324 INDIA LDOC 33 (33) GENERAL FORM OF GUARANTEE Place : Barode Dato : 28.09.2013 Bank of Baroda, Corporate Financial Services, Baroda Branch In consideration of Bank of Baroda (hereinafter called....
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....d whether then payable forthwith or at some future time or times and also for and to all credits then established by the Bank for the Principal and for and to all credit facilities granted and to all cheques. drafts, bills, notes and negotiable Instruments drawn by or for the account of Principal on the Bank and dated or purporting to be dated on or before such date although presented to or paid by the Bank after such date and Pinkelking TRUE COPY Document 2 all guarantees signed by the Principal and delivered to the Bank on or before such date and that In the event of my or any of us dying or becoming under disability the liability of the executors, administrators or legal representative of such person so dying and of his estate shall continue until the expiration of three calendar months from the receipt by the Bank of a written notice given by such legal representative (or the survivors or survivor of me) to determine this guarantee. The Benk shall be at liberty on receipt of any such notice as contemplated In this clause at any time within the three calendar months to open a fresh account and/or to grant fresh facilities to the Principal and to appropriate thereto all....
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....uence of which may be to discharge the Principal debtor or which would, but for this present provision, be Inconsistent with my rights as surety or by the Bank's omitting to do any act, which but for this present provision it's duty to me would have required the Bank to do, I hereby consent to each and every of the acts mentioned above as the Bank may think fit. Moreover though as between the Principal debtor and me I am sureties only. I agree that as between the Bank and me, I am Principal debtor(s) jointly with him and accordingly i shall not be entitled to any of the rights conferred on sureties by Sections 133, 134, 135, 139 and 141 of the Indian Contract Act. And Uwe further expressly agree that the Bank shall also have discretionary power without my/our further assent of knowledge or without discharging or in any way affecting my/our liablilty under the Guarantee from time to time and at any time to agree to the variations of miniarena TRUE COPY Document 3 the terms and conditions of any Letter of Credit that has been and/or may be opened for the benefit of the Principal, to convert a documentary Letter of Credit into clean or open Letter of Credit and vice versa, t....
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.... Bank may have been ultre vires and without being bound to enforce its claim against the Principal or any other person/s or other security held by the Bank. The Bank shall not be bound to inquire into powers of the Principal or his agents or partners, directors or officers purporting to act on behalf of the Principal and all moneys due or liabilities incurred shall be deemed to form part of the present guarantee notwithstanding that the Principal or his agents, partners, directors and officers may have exceeded his or their power of the arrangement with the Bank may have been ultra vires. 6. I waive in the Bank's favour all or any of my rights against the Bank of the Principal as may be necessary to give effect to any of the provisions of this guarantee. 7. I declare that I have not received any security from the Principal for the giving of this guarantee and T agree that I will not so long as any moneys remain owing by the Principal to the Bank or any liability Incurred by the Bank remains outstanding, take any security in respect of my Hlability hereunder without first obtaining the Bank's written consent and I agree that in the event of my taking any such security....
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.... your claim against the Principal has been satisfied. 10.A demand In writing shall be deemed to have been duly given to me or my heirs or assigns by leaving the same at my last known address: hereunder written and shall be effectual notwithstanding any change of address or notwithstanding notice thereof to the Bank, and such demand If sent by post shall be deemed to be received by me or my heirs, assigns 24 hours after posting thereof and shall be sufficient if signed by any! officer of the Bank and in proving such service it shall be sufficient to prove that the letter containing the demand was properly addressed and put into the Post. 11.In the event of this guarantee being determined either by notice by me or by demand in writing by the Bank, It shall be lawful for the Bank to continue them account of the Principal notwithstanding such determination and my liability for the moneys advanced or pald or agreed to be advanced or paid and liabilities or obligations incurred by the Bank atillthe date when the guarantee is so determined shall remain, norwithstanding any subsequent payment into or out of the cash credit account by or on behalf of the Principal, upto the limit afor....
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.... Soni Shankarol 57 53 Wife C-3 Indrapuri Hsg Housewife 22 Son Songem- Rupam Main Road, Hami, Vadodara Studying Mrs. Jyoubon Gopalbhai Son 53 Gopalbhai Son 59 Husband C-3 Indrapuri Cp. Itsg. Business Divyang Son 22 Son Sangam- Rupam Main Road, Harni, Vadodara Studying Names of Legal Hoirs C-3 Indrapuri Hsg Sangam- Rupam Main Road, Harni, Vadodara TRUE COPY TRUE COPY Document 6 Mr. Harshbhal | Gopalbhai Sani 34 Pinkal Sönï 32 wife Indrapuri Co. Hsg Housewird. Mrs. Pinkal Harshibhai Son Aursri Soni 9 Soc. Sangam- Rupam Studying Shrey Soni 12 Son Main Road, Vadodara Studying 32 Harsh Soni 34 Husband Indrapurl Có Business Aarsh Soni Son Soc., Sangam- Studying Shrey Sont 12 Sor Rupam Main Road, Harni, Vadodara Studying Mr. Divyang Gopalbhai Son NA C-3 Indrapuri Co. Hsq SOCH Sangam Rupam Main Road, Harni. Vadodara Studying Mr. Harshbhal | Gopalbhai Sani Mrs. Pinkal Harshibhai Son Soc. Sangam- Rupam Main Road, Vadodara I further agree, undertake and assure that I shall promptly inform you in writing of any change in the above particulars of my legal heirs that may be occasioned by bir....