TaxTMI 
TaxTMI 
2026 (4) TMI 439
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....are being taken up together. 2. In Comp App (AT) (CH) (Ins) No.270/2021 the Appellant, M/s. Asset Reconstruction Company (India) Limited (ARCIL) is a financial company, having been incorporated as a financial company under the provisions of the Companies Act, 1956 and registered as a securitization and asset reconstruction company pursuant to section 3 of the SARFAESI Act. It claims to be the "Financial Creditor" as per the provisions contemplated under Section 5(7) of the I & B Code, by virtue of the assignment, done in its favour, of loans given to M/s Anandram Developers Pvt. Ltd., the Principal Borrower, by Indian Overseas Bank (IOB) and Oriental Bank of Commerce (OBC). M/s. Manoharamma Hotel Investments Pvt. Ltd., the Respondent herein, is the Corporate Debtor, which is falling within the definition of the Corporate Debtor as contained under Section 3(8) of the I & B Code, being a Corporate Guarantor to the Principal Borrower who failed to repay the loans taken from the aforesaid Banks. 3. In the connected Company Appeal, Comp App (AT) (CH) (Ins) No.271/2021, the Appellant remains the same, that is, ARCIL. However, the Respondent in this Company Appeal is M/s. Bharani Pr....
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....t the same 6 defendants, namely, Anandram Developers (Principal Borrower), the corporate guarantors being Manoharamma Hotel Investments & Bharani Properties and Developers and 3 others (personal guarantors) by filing OA no. 29/2016 on 06.11.2015 before DRT-I, Chennai under section 19(1) of RDDBFI Act, 1993 for recovery of a sum of Rs.56.50 crore 19.10.2015, together with interest @ 16% per annum till the date of realisation in full with costs, from the defendants jointly and severally, and also for sale of the schedule property mentioned in the schedule. The said application stood allowed on 13.03.2018, by virtue of which the appellant become entitled to recover a sum of Rs.56.50,00,00,000 together with future interest @ 16% per annum from 20.10.2015, till its realisation from the defendant, jointly and severally and also to recover the same by sale of the properties mentioned in the schedule to the OA in case of default. 6. Consequent to the final orders passed by Ld. DRT dated 31.10.2016 and 13.03.2018, ARCIL instituted the proceedings under Section 7 of the I & B Code as against the principal borrower, M/s. Anandram Developers Private Limited, by filing the Company Petition N....
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....he application under section 7 of the Code as against the present Respondents, who stood as the Corporate Guarantors to the credit facilities availed by the Principal Borrower, also relied on the same documents and satisfied all the prescribed conditions, that were contained and required to be satisfied in Form-I, as stipulated under Rule 4(1) of the I&B (Application to Adjudicating Authority), Rules, 2016. He has submitted that the Section 7 Applications in Form-I, as against the Respondents / corporate guarantors, were preferred on 07.12.2018 and they were carrying all the necessary facts as were required to be revealed in the said applications, including the description of the financial debt as detailed in its part IV. 10. The contents of part IV of the application that was preferred under Section 7 by the Appellant, would be a bone of contention in the instant Company Appeal for the purposes of determining whether the debt and default were barred by limitation, which has been taken as to be the basis by the Tribunal for rejecting the applications. Therefore, it becomes inevitable for us to precisely deal with the contents of the said section 7 applications in the context of ....
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....sued by the DRT, in D.R.C. No.684 of 2016. Annexures-12 & 13 are the Final order in the O.A and Recovery Certificate. Arcil has filed O.A. No.29 of 2016 on the file of DRT-I, Chennai, filed in respect of claims from the Corporate Debtor and the Guarantors, for a total sum of Rs.56,49,97,828/- as on 19.10.2015 with further interest at the rate of 16% per annum, monthly rest, which came to be allowed in and by a final order dated 13.03.2018. Annexure 14 is the Final order in the O.A. As per the above said orders/decree amount defaulted by the Corporate Debtor is Rs.88,83,26,278/- Crore as on 31.10.2018 with further interest and other charges, less recoveries if any towards OBC dues and Rs.37,80,63,403/- Crore as on 31.10.2018 with further interest and other charges, less recoveries if any towards IOB dues. Annexure-15 is the tabular form of calculation of entire dues. Annexure-15 is the tabular form of calculation of entire dues. 13. It is seen from the above that as per the Appellant, default has commenced from the date of issue of the final orders of DRT in the two proceedings before it, being OA/430/2014 and OA/29/2016. This would require consideratio....
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....ing Authority as above, the question that would arise will be that, when IOB (the assignor of the Appellant), had filed the OA/430/2014 on 04.06.2012, and the same was being contested by the Principal Borrower and the Respondents here in as well, as defendant 2 & 4 therein, and did not make any plea of "belated drawing of the proceedings", under Section 19(1) of RDDBFI Act, 1993, will the respondents be entitled to raise it before Ld. NCLT in section 7 proceedings. Further, the issue that would now be falling for consideration is that when the said issue of limitation was not raised by the principal borrower or the Respondents in their capacity as defendant 2 & 4, at the first available opportunity in the proceedings of OA No.430/2014, which was allowed on 31.10.2016 and a Recovery Certificate thereafter was issued on 03.12.2016, whether at all, the same Respondents here in can take a stand in a subsequent proceedings of CIRP based on the orders of DRT, that the debt was barred by limitation, after the liability has been fastened on them by a judicial order? The answer will be that they cannot, having not raised the same issue earlier, as per the settled principles of law. 17. I....
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....itor within the meaning of clause (7) of Section 5 IBC. As such, the holder of such certificate would be entitled to initiate CIRP, if initiated within a period of three years from the date of issuance of the recovery certificate." 18. Besides that, another issue which would be required to be considered is, as to when the principal borrower, based on same facts and circumstances, has already been determined to have defaulted on the same set of debt, in an independent Company Petition proceedings, being CP No.603/IB/2017, and has been first placed under CIRP and subsequently, put under liquidation proceedings, will it be different for the corporate guarantors, who, along with the Principal Borrower were jointly held responsible for the default by Ld. DRT? On a plain reading of the principles of law, it will be deemed that, when the principal borrower is facing the liquidation proceedings of whom the Respondent is the Corporate Guarantor, the existence of the debt and default has already been established beyond doubt and in that circumstances, the same set of debt and default sought to be pressed upon against the Corporate Guarantors by filing the application under Section 7 of th....
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....to the inference that Ld. NCLT has already determined that the debt is not time-barred because the debt and default was acknowledged and CIRP proceedings were commenced on 06.06.2018 at that time, the said question of the debt being barred by limitation was never raised by the Principal Borrower. Apart from it, the observations, that had been made by the Learned Tribunal that, there happens to be no document on record despite an opportunity having been provided to prove the debt and default, is absolutely contrary to the records, for the reason being that, the orders of Ld. DRT were there on record and as per the law settled by Hon'ble Apex Court in the matters of Kotak Mahindra Bank Ltd.' Vs. 'A. Balakrishnan' reported in [(2022) 9 SCC 186 (supra), these are sufficient to prove the debt and default. 23. The other observation of Ld. NCLT that in the section 7 application, the date of default was not mentioned, and therefore it will vitiate the entire proceedings is also not correct. In the column (2) of part IV of the application, the appellant has already referred to the two orders of learned DRT and had also specifically mentioned the date of such orders. As per the judgement ....