AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2024 (8) TMI 1708
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....21, as a consequence to which the application under Section 95 of I & B Code, 2016, stood admitted as against the Appellant, the personal guarantor. In the connected Company Appeal being CA (AT) (CH) (Ins) No.227/2024 too, the respective Appellant puts a challenge to the Impugned Order dated 18.04.2024, as it was passed in CP(IB) No.118/2021, whereby the Appellant, the personal guarantor has been admitted to the proceedings under Section 95 of the Insolvency and Bankruptcy Code of 2016. The facts of the case are the following: - The original borrower of the loan, was Splendid Metal Private Limited (SMPL) which later on was renamed as Thalaivar Steels Limited. It went into CIRP on 04.09.2019 on admission of Section 7 application by NCLT, Hyderabad Bench in CP(IB)666/7/HDB/2018. The borrower had obtained some funding from Respondent No.1 and other members of the consortium, from time to time. Consequently the Respondent No.1, who claims himself to the Financial Creditor, being a member of the consortium of the Financial Creditors, invoked the Guarantee executed by the personal guarantors / Appellants by making a demand vide Form B Demand Notice dated 24.12.2020 under Rule 7(....
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....d by Respondent's Counsel that they issued legal notice on 20.04.2018 on the Corporate Debtor and the Appellants to pay the dues and as no repayment was forth coming, after initiating CIRP proceedings against the Corporate Debtor, issued a Demand Notice dated 24.12.2020 in Form B against the Personal Guarantors / Appellants herein and subsequently on 19.04.2021 filed Company Petition for initiating Personal Insolvency Resolution Process against the Appellants. He has further contended that in light of the Judgment of Hon'ble Apex Court in the matter of Margaret Lalita Samuel Vs Indo Commercial Bank Limited (AIR 1979 SC 102) it is a settled position that the cause of action against guarantors who executed continuing Guarantee arises on the date of demand and the date of demand / cause of action in this Company Petition being 20.04.2018, it is clear that the Company Petition has been filed well within the limitation period and that the date of default mentioned in the demand notice, that is, 01.09.2012 is by oversight. It was contended by Respondent No.1 herein, who was one of the members of the consortium of Financial Creditors that on the basis of the report submitted by the Res....
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....e demand notice was by virtue of the mistake. This defense cannot be accepted for the reason being that proceedings drawn under Section 95, since has a vital bearing on the Appellant, and the laxity on the part of the Respondent for the purpose of determining the date of default to justify the initiation of proceeding under Section 95, cannot be permitted and that they cannot be permitted to take a stand that the date referred in Demand Notice was by virtue of a mistake. On the initiation of the Company Petition Proceedings before NCLT, Hyderabad, the Appellants were noticed and upon the service of notice, the Appellants had filed a detailed objection by way of Counter Affidavit in Company Petition dated 11.12.2021. The Appellant in the Counter Affidavit thus filed to the proceedings under Section 95 of I & B Code, had raised a preliminary objection to the following effect that: - (1) The Petition is liable to be dismissed as the petitioner has not followed the necessary rules which were mandatory for the initiation of the proceedings owing to the non-impleadment of the necessary party, thus the proceeding of the Company Petition suffered from the vices of the non-joind....
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....hat despite of the aforesaid facts, as it was shown to be pleaded by them in the Counter preferred, in the respective Company Petitions, the Learned Adjudicating Authority by virtue of the Impugned Judgment dated 18.04.2024, as respectively rendered in the two Company Petitions, has proceeded to allow the same and permitted to initiate the proceedings under Section 95 of I & B Code, by passing order Section 100(1) of the I & B Code. There are various grounds which are contended by the Learned Counsel for the parties. Particularly the Learned Counsel for the Appellants has submitted that if the Counter Affidavit preferred by the Appellants to the proceeding under Section 95, is taken in its entirety the basic issue which they had agitated and which goes to the root of the proceedings was its maintainability, which was not even touched or dealt with by the Learned Adjudicating Authority while rendering the Impugned Judgment of 18.04.2024, even though it had taken cognizance of the objection preferred by the Appellants by way of the Counter Affidavit as it finds reference in Para 15, 16 & 17 of the Impugned Judgment which is extracted hereunder: - "15. The petition is not ....
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....ing to the grounds taken in the Counter Affidavit submitted before NCLT, Hyderabad may not at all be sustainable and secondly, he submits that even if it presumed that those grounds are prima facie valid grounds, they all still can be taken into consideration by the Appellate forum. He submits that since the Appellate forum being an extension of the principal forum, where the Company Petition was decided and being the court of fact and law, the documents which were required to be scrutinized in support of the aforesaid contentions raised by the Appellant in the Company Petition, could very well be scrutinized by this Tribunal too. He submits that since the Appellate forum being an extension of the principal proceedings of the Learned Adjudicating Authority, under the provisions contained under Order 41 Rule 31 of the CPC, the Appellant Court too can formulate the questions and deal with the issues, which allegedly were left unanswered by NCLT, while dealing with the propriety of the Impugned Judgment under challenge. This logic proposed by Learned Counsel for the Respondent in the context of the provisions contained under Order XLI Rule 31 of CPC, would not be acceptable for the re....
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....m any office; (e) issuing commissions for the examination of witnesses or documents; (f) dismissing a representation for default or deciding it ex parte; (g) setting aside any order of dismissal of any representation for default or any order passed by it ex parte; and (h) any other matter which may be prescribed. 216 (3) Any order made by the Tribunal or the Appellate Tribunal may be enforced by that Tribunal in the same manner as if it were a decree made by a court in a suit pending therein, and it shall be lawful for the Tribunal or the Appellate Tribunal to send for execution of its orders to the court within the local limits of whose jurisdiction,- (a) in the case of an order against a company, the registered office of the company is situate; or (b) in the case of an order against any other person, the person concerned voluntarily resides or carries on business or personally works for gain. (4) All proceedings before the Tribunal or the Appellate Tribunal shall be deemed to be judicial proceedings within the meaning of sections 193 and 228, and for the purposes of section 196 of the Indian Penal Code (45 of....
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.... not before the Appellate Tribunal and that, the appropriate forum for the purposes of scrutinising such documents for their impact on the present controversy would be the Learned Adjudicating Authority, because if scrutiny of the concerned documents which are to be taken as to be the basis for Adjudication, will result in affecting rights in rem it should be better scrutinized by the Learned Adjudicating Authority. Hence, he submits that owing to the aforesaid logic the appropriate recourse which should be resorted to this Tribunal is to remand the matter back to the NCLT, which would then scrutinize the concerned documents and record its findings while answering on the grounds put forth by the Appellants in their Counter Affidavit before it which are claimed to not answered by NCLT in the Impugned Judgment. On the contrary, the Learned Counsel for the Respondent has argued that the implications of Order XLI Rule 31 of CPC, can still be attracted and exercised by the Appellate forum since being a continuation of proceedings and that the Appellate court itself can scrutinize the documents in order to arrive at the conclusion in order to fill up the procedural lacuna committed by....
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.... of the Respondent Counsel, that the aforesaid ratio of the extension of the provision contained under Order XLI Rule 31 of CPC to be read with Order XLI Rule 33 of CPC to be read with Section 108 of the CPC, could be applied to for extension of the jurisdiction of the Appellate Tribunal, for appreciation of documents, which he contends thus that since it is an exclusive appreciation of documents which is required to be made by the Tribunal and no oral statements is to be recorded and therefore the same could still be exercised by the Appellate Jurisdiction which according to him will be a continuation of the proceedings. There cannot be any dispute so far as the preposition advocated by the Learned Counsel for the Respondent is concerned in the context of the powers vested with the Appellate Jurisdiction, to act in continuation to the powers of the Learned Trial Court, which in the instant case would mean the Learned Adjudicating Authority. But then we cannot be oblivious of the fact that the documents which have to be taken into consideration for answering the preliminary objections raised by the Respondent in the Counter Affidavit, was not even dealt by the Learned Adjudicati....