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2026 (5) TMI 69
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....nts at admission stage on 19.01.2024, after permitting the rectification of defects, this Tribunal has issued notices to the Respondent on the Condone Delay Application. There was an Office Report of 25.01.2024 that the Respondent had been served with the notices, but, none had appeared till date nor any Counter Affidavit has been filed. 3. Hence, in the light of the order passed by us on 19.07.2024, the matter was directed to be listed, awaiting appearance of the Respondent. Consequently, we had to pass an order to serve the Respondent by substitutive mode of service as per Part VII of NCLAT Rules, 2016, and in compliance thereto, an affidavit of service was filed by the Appellant informing thereof that the notices by way of publication as already been served and still the Respondent had not put an appearance. Hence, we directed the matter to proceed ex parte against the Respondent, in the light of the provisions contained under Rule 53 of the NCLAT Rules, 2016. 4. Even none appears for the Respondent today. Brief facts that engages consideration in the instant Company Appeal are that; The Appellant claiming itself to be the Financial Creditor of M/s. Vyjayanthi ....
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....proceedings to be barred by one day, the findings that has been recorded therein holding the proceedings to be barred from one day. Though, the Ld. Tribunal accepts the acknowledgement of 09.06.2016 while determining the aspect of limitation, but, it has failed to take into consideration that once the proceedings has been filed on 10.06.2019, the Ld. Tribunal was bound to extend the benefit of Section 4 as it was pleaded also before the Ld. Tribunal. The aspect was skipped to be considered, as no finding qua the effect of Section 4 of Limitation Act has been recorded. 8. Based upon the aforesaid short analysis and the points framed by the Ld. Tribunal, we could not divide our consideration from four major points which are enumerated hereunder:- (a) How would be the question of limitation would be determined after the interplay of Section 4 & 18 of the Limitation Act? (b) What would be the impact of the inference given by the Ld. Tribunal to the letter of 09.06.2016, by treating it to be "inadvertently" written? (c) How would be the aspect of debt and default was required to be determined by the Ld. Tribunal? (d) How the interpretation of Secti....
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.... of the Code and hence, filing of the same on 10.06.2019 would be absolutely justified and the proceedings itself would not be barred by limitation, in the light of the provisions of Section 4 of Limitation Act, which is extracted hereunder:- "4. Expiry of prescribed period when court is closed.-Where the prescribed period for any suit, appeal or application expires on a day when the court is closed, the suit, appeal or application may be instituted, preferred or made on the day when the court re-opens. Explanation.-A court shall be deemed to be closed on any day within the meaning of this section if during any part of its normal working hours it remains closed on that day" 12. Thus, in a nut shell, the Appellant argues that he would be entitled for the benefit of Section 18 which for the purposes of present case has to be read with Section 4 of the Limitation Act for the purposes of determination of the aspect of limitation, from the date of acknowledgement i.e. 09.06.2016. Hence, he pleads that the proceedings are well within time. 13. We make it clear at this juncture itself that, so far as the aspect of acknowledgement of debt is concerned i.e. 09.06.201....
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.... by the Tribunal for deciding the question of limitation against the Appellant was, based on the stand taken by the Respondent, that the acknowledgement was "inadvertently" made by them, regards the nature of loan, the amount due to be paid, and issuance of the letter of 09.06.2016, falling of the intervening holidays of Saturday and Sunday, prior to the filing of Section 7 of the Code are the facts admitted and never even attempted to be denied in the Appellate stage proceedings. 18. We are constrained to make an observation that, when a particular document is on record in any Court proceedings and which is when taken has to be the foundation of the proceedings, and particularly when the executor of the said document is not denying the contents of the same. The stand taken by the executor of the document relied by the Appellant i.e. an acknowledgement of 09.06.2016, cannot be refused to be read in evidence merely because of the fact that the Respondent has taken out a case that was "inadvertently" written, there will be two aspect of it. (a) In the instant case, the Respondent admits the execution of the letter of 09.06.2016, if the execution itself is admitted "inadve....
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.... Rhythm Media Works Private Limited 1,49,50,000/- 4. Rhythm Entertainments Private Limited 23,92,000/- 5. First Counsel Educonsultants 5,00,000/- 6. Emgee Media Integrated Service Private Limited 5,04,80,000/- 7. Aswini Dutt Group 73,25,002/- 8. Swapna Dutt and Associates 4,05,00,000/- Total 12,29,67,002/- The extracts as given herein above, Entry 6 itself shows an admission of the amount payable reflecting Rs. 5,04,80,000/-, which corresponds to the arguments extended by the Respondent in their written objection, while referring to the said amount in Para V of the written submissions. Nothing much is required be said about the balance amount due to be paid. 22. It's based upon the aforesaid backdrop of pleadings, the Appellant contends that, while submitting his response to the pleadings raised in the written submissions, the Appellant had rather pleaded that, there is a confirmation of an admission of liability, even as per the written submissions filed by the Respondent and a stand to the said effect was taken by the Appellant in his reply submitted to the written submissions particularly that as contained in Para (f....
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....and if we go through the other co-related documents on record, which has to conjointly read for a rationale conclusion, the amount due to be paid was standing in the Books of Accounts of the Corporate Debtor that, would have been payable to the Appellant in accordance with the own document as filed by the Respondent. How the interpretation of Section 7 sub-section (3) of the Code would have bearing the on the present controversy? 26. The Ld. Tribunal had misconstrued the implication of sub-section (3) of Section 7 of the Code, regarding the responsibility casted upon the Applicant for the purposes of providing the records of the default as referred to under sub-section (a) (3) of Section 7 of the Code. Sub-section (3) of Section 7 of the Code has had to be interpreted in a manner as if it only calls upon the Applicant, the Financial Creditor that by way of an application preferred under Section 7 of the Code, it should prima facie disclose the existence of a liability or a debt to be paid by the Corporate Debtor. The records of the default and the information utility as contemplated therein, does not mean that it has had to be a strict proof in its precision for conside....
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....The necessity of Section 7 (3) of the Code is not a tool to be utilized to reject an application on a simpliciter determination made by the Ld. Tribunal, on its own violatory wisdom, particularly when in the instant case, when there has been no objection, as such raised by the Respondent qua the particulars prescribed by the Appellant in Part IV & V of the application. That in itself has to be read as an establishment of debt and default, which would be sufficient for the purposes to sustain the filing of the application under Section 7 of the Code. Further, we will have to take into consideration the other documents, which has been filed by the Appellant showing the establishment of a liability to pay towards the unsecured loan, which itself was the fact established by the Appellant and not denied by the Respondent in the proceedings before the Ld. Tribunal and hence, the manner in which Section 7(3) of the Code is being interpreted by the Ld. Tribunal for the purposes of rejecting of the Application under Section 7 of the Code is not acceptable by this Appellate Tribunal. Hence, the same is turned down. Effect of Written Submissions? 31. One of the question that would fa....
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....t taken whether at all in a subsequent written submissions filed, which is not part of the pleading or in other words which is not a pleading in itself can for the first time a question of limitation be raised by way of written submissions, which would obviously be an unrebutted pleadings. 34. In the written submission, which was filed by the Respondent, another remarkable feature, which is required to be noticed by us is that, the pleadings which has been raised by them in Para V of the written submission, wherein they have submitted as under: "V. Further the other part of the amount Rs. 5.04 crores is brought in by M/s. Emgee Media Integrated Services Pvt. Ltd. towards allotment of shares which is clearly mentioned under the notes of the Ledger account of the Applicant, in due course of time (Pg No.171 of 241 Application filed by the Petitioner). This amount was brought in by Mr. Mandala Srinivas the director of the Petitioner Company with his intention of taking over the CD by increasing the shareholding in the CD, but backed out of the same decision at the later stages. It was Mr. Madala Srinivas who had suggested the CD to convert the unsecured loans to Equity Shar....
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.... expiry of the period of limitation. 39. The Ld. Counsel for the Appellant in support of his contentions to overcome the embargo of delay in preference of the proceedings under Section 7 of the Code had made reference to a Judgment as reported in 2023 ibclaw.in 787 NCLAT in the matters of Vijay Kumar Singhania v. Bank of Baroda & Anr., and particularly, he has referred to Para 28 of the said Judgment which is extracted hereunder: "28. Regulation 20 of the IBBI (Information Utilities) Regulations, 2017 as amended w.e.f 14.06.2022 i.e. Regulation 20(1A) requires Financial Creditor before filing an application to initiate corporate insolvency resolution process under section 7 or 9, as the case may be, the creditor shall file the information of default, with the information utility and the information utility shall process the information for the purpose of issuing record of default in accordance with regulation 21. The submission is that after insertion of the above sub-regulation (1A) in Regulation 20, now no application can be filed under Sections 7 and 9 if it is not accompanied by record of default issued by Information utility as contemplated by Regulations 20 and 21....
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....(Insolvency Resolution Process for Corporate Persons) Regulations, 2016. Thus, CIRP Regulations 2016 are referred to in Rule 4 sub-rule (1), hence, the interpretation of Regulation 20(1A) as put by the Counsel for the Appellant shall also not be consistent with Rule 4. When Section 240 itself provides that regulations have to be consistent with provision of Code and Rules, no regulation can be implemented or enforced which is not in consonance with the Code and the Rules." 40. What the Ld. Counsel for the Appellant has intended to argue under the strength of Para 28 as extracted above is that, if the Regulations specifically does not contemplates a process that is required for satisfying the aspect of delay owing to the facts that when delay has been involved in a particular case that cannot be forced upon to be established which is not in consonance to the Code or which is not in consonance to the Rules framed thereunder. 41. It has laid down that the Scheme of the Code is frames only furnishing of the records of the default by the Financial Creditor as recorded with the information utility or such other records or evidence of default as may be specified. 42. The scrutiny....