TaxTMI 
TaxTMI 
2026 (8) TMI 1709
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....y") in CP No. IB 21/KB/2024. Small Industries Development Bank of India is the Respondent No.1 herein. Mr. Ajit Gyanchand Jain, who is the Interim Resolution Professional of AS Infracon Pvt. Ltd. is the Respondent No.2 herein. 2. The Appellant submitted that the Appellant is the suspended Director of AS Infracon Pvt. Ltd. ("Corporate Debtor"), which was incorporated on 17.08.1998. The Appellant stated that no business activities have been carried on from the registered office of the Corporate Debtor for more than five years, a fact that was well within the knowledge of Respondent No. 1. The Appellant contended that despite such knowledge, Respondent No. 1 deliberately failed to effect proper service of notices and proceeded against the Corporate Debtor in violation of the principles of natural justice. 3. The Appellant submitted that Respondent No. 1 had sanctioned financial assistance of Rs. 7,00,00,000/- under a Secured Business Loan to MSMEs in favour of Kosas Exports Ltd. vide Sanction Letter dated 24.02.2014 for meeting various business requirements, including capital expenditure, servicing new orders, renovation of assets, reimbursement of self-financed assets, fu....
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....s of Respondent No. 1 on several occasions, Respondent No. 1 deliberately refrained from serving the alleged notice of invocation of guarantee dated 27.07.2016 either upon the Directors of the Corporate Debtor or at the address of the Borrower. The Appellant stated that this deliberate omission clearly establishes the mala fide conduct of Respondent No. 1 in depriving the Corporate Debtor of an opportunity to contest the proceedings. 7. The Appellant further submitted that Respondent No. 1 thereafter instituted Company Petition No. 21 of 2024 before the Adjudicating Authority without ensuring service of the petition upon the Corporate Debtor. The Appellant contended that no notice of the insolvency petition was ever served either upon the Corporate Debtor or upon any of its Directors, and as reflected from the orders of the Adjudicating Authority itself, the entire proceedings were conducted ex parte. The Appellant stated that the complete absence of notice resulted in denial of any effective opportunity of hearing and constitutes a gross violation of the principles of natural justice. 8. The Appellant submitted that the Appellant remained completely unaware of the filing and....
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....sleading and without any substance. 14. The Respondent No. 2 submitted that CIRP Form-I was filed on 06.11.2024 and thereafter communications were sent through e-mails to statutory auditors, creditors, the Registrar of Companies and related parties informing them about the initiation of CIRP and inviting claims. The Respondent No. 2 stated that further communications dated 08.11.2024 and 22.11.2024 were issued requesting the Suspended Management to furnish all relevant records, books of account, financial statements and statutory documents necessary for carrying out the CIRP. It was further submitted that on 18.12.2024 a claim was received from Respondent No. 1, being the Financial Creditor, which was duly verified and admitted in accordance with law. 15. The Respondent No. 2 submitted that since the Suspended Management was not cooperating and had failed to provide crucial books, records and statutory documents necessary for conducting the CIRP, an application under Section 19(2) of the Code was filed on 19.12.2024 before the Adjudicating Authority against the Appellant, other members of the Suspended Management and the Statutory Auditor seeking appropriate directions for pr....
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.... Authority were conducted ex-parte, and that the Appellant learnt of the impugned order only on 12.11.2024, when Respondent No. 2 issued a communication in that regard. 23. We are unable to accept this contention, for the following reasons. A) (i) First, the record of proceedings before the Adjudicating Authority discloses a sustained and repeated effort, spanning more than seven months, to effect service upon the Corporate Debtor: (a) By order dated 07.02.2024, the Registry was directed to issue notice to the Corporate Debtor by speed post and e-mail; (b) By order dated 12.03.2024, it was recorded that the notice sent by the Registry had been returned with the endorsement "Item returned, Addressee cannot be located." Learned Counsel for the Financial Creditor thereupon sought, and was granted, one week's time to file fresh particulars of the Corporate Debtor with the Registry, and the Registry was directed to issue fresh notice thereafter; (c) By order dated 19.04.2024, it was recorded that fresh particulars had been furnished, and the Registry was directed to issue fresh notice to the Corporate Debtor on that basis, again by speed post a....
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....hat a party cannot be permitted to found a grievance of denial of natural justice on a default of its own making. Having admittedly allowed its registered office to remain non-functional for several years in breach of its statutory obligations, it is not open to the Corporate Debtor, through the Appellant, to contend that notice sent to that very address, the address recorded with the Registrar of Companies, and the address of record available to Respondent No. 1 and the Registry amounted to inadequate service. C) Third, we note that on each occasion notice was directed to be issued not merely by post but also by e-mail. The Appellant's pleadings are conspicuously silent on the e-mail mode of service: there is no averment, still less any material, to show that the e-mail address used was incorrect, that it was inaccessible to the Corporate Debtor or its directors, or that any e-mail notice failed to reach its destination. Service by e-mail, at the address furnished in the application, is a recognised and independent mode of service under Rule 38(1) of the National Company Law Tribunal Rules, 2016 ("NCLT Rules"). Where service has been attempted through more than one mo....
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....f notice, none appears" a finding of fact recorded upon the material before it, which this Appellate Tribunal has no reason to disturb in the absence of any material to the contrary placed by the Appellant. We note further that, upon commencement of CIRP, Respondent No. 2 was able to trace and address correspondence to a Director of the Corporate Debtor at a Surat residential address within a matter of days of the impugned order a circumstance which, if anything, suggests that the Directors' whereabouts were, with reasonable diligence, ascertainable, and that the difficulty in securing appearance before the Adjudicating Authority lay in the Corporate Debtor's own default in responding to repeated notice, rather than in any want of diligence on the part of Respondent No. 1 or the Registry. For the foregoing reasons, we find no violation of the principles of natural justice. Issue I is answered against the Appellant. ISSUE II: Whether the petition under Section 7 of the Code was barred by limitation; 25. It is not in dispute that: (a) SIDBI sanctioned a term loan of Rs. 7,00,00,000/- to the Principal Borrower vide sanction letter dated 24.02.2014; (....
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....Section 18 of the Limitation Act, 1963, provides that where an acknowledgment of liability, in writing signed by the party against whom the right is claimed (or its duly authorised agent), is made before expiry of the prescribed period, a fresh period of limitation is computed from the date of such acknowledgment. This principle has been held by the Supreme Court, in Laxmi Pat Surana v. Union Bank of India, [(2021) 8 SCC 481], to apply to applications under Section 7 of the Code, including as against a corporate guarantor, whose liability is coextensive with that of the principal borrower under Section 128 of the Indian Contract Act, 1872, by virtue of the definition of "corporate guarantor" under Section 5(5A) of the Code. 26. Applying these principles: (a) Even taking 27.07.2016 as the date from which limitation is to be computed (being the date of the notice alleged to invoke the guarantee), the prescribed period of three years under Article 137 of the Limitation Act, 1963, applicable to applications under Section 7 of the Code, as held in B.K. Educational Services (P) Ltd. v. Parag Gupta & Associates, (2019) 11 SCC 633 would ordinarily have expired on or about 27.07....
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....Corporate Debtor under Clause 22 of the Deed, unequivocally acknowledged a subsisting liability considerably in excess of the amount now sought to be recovered. A party cannot rely on documents evidencing a live and acknowledged debt for one purpose (to demonstrate bona fide settlement efforts) while disowning the same documents' legal consequence (extension of limitation) for another. 29. We accordingly find, in agreement with the Adjudicating Authority, that the application under Section 7 of the Code was not barred by limitation. Issue II is answered against the Appellant. ISSUE III: Whether the Appellant has disclosed any bona fide defence on the merits of debt and default? 30. It is well settled that an Adjudicating Authority, on an application under Section 7 of the Code, is required to satisfy itself only of the existence of a financial debt and a default in respect thereof; it is not a recovery forum, and disputed questions going beyond this limited inquiry do not, ordinarily, arise for consideration. We nonetheless record, that the Appeal does not deny: (a) the sanction and disbursement of the term loan of Rs. 7,00,00,000/- to the Principal Borrower; (b) the d....