National Company Law Appellate Tribunal
Omkara Assets Reconstruction Private ... vs Mr. Yadavalli Sai Karunakar on 16 December, 2024
NATIONAL COMPANY LAW APPELLATE TRIBUNAL
AT CHENNAI
(APPELLATE JURISDICTION)
IA No. 1012 / 2024
in
Company Appeal (AT) (CH) (Ins) No. 368 / 2024
(IA Nos. 1010 & 1011 / 2024)
In the matter of:
Omkara Assets Reconstruction Pvt. Ltd.
Rep. by its Authorized Representative
Aniket Joshi, having registered address at
No. 9, M.P. Nagar First Street,
Kongu Nagar Extension,
Coimbatore, Tirupur, ... Applicant/
Tamil Nadu - 641607 Appellant
V
Mr. Yadavalli Sai Karunakar,
Erstwhile Liquidator,
BS Limited,
Flat No. 205, B-Block, 2nd Floor,
Kushal Towers, D. No.6-2-975,
Khairatabad, Hyderabad - 500004 (TS) ... Respondent No.1
Bank of India
Oriental Building, Espanade Road,
Mumbai, Maharashtra, India - 400001 ... Respondent No. 2
Present :
For Applicant / : Mr. PH. Arvindh Pandian, Senior Advocate
Appellant For Ms. Lakshana Viravalli, Advocate
For Respondents : Mr. M. Anil Kumar, Advocate for R1
ORDER
(Hybrid Mode) Per : Justice Sharad Kumar Sharma, Member (Judicial):
IA No.1012/2024 in Comp. App. (AT) (CH) (INS) No. 368 / 2024 Page 1 of 91. The instant Appeal has been filed by the Appellant, being the Secured Financial Creditor, seeking to challenge the Impugned Order dated 29.07.2024, passed in IA No. 1378 / 2024 in CP No. 278 / 2018 by the learned NCLT, Hyderabad, by virtue of which, he has been directed to tender an amount of Rs.96.28 Crores (estimated surplus amount) to the Liquidation Account and to reimburse the costs amounting to Rs.90,70,048/- incurred for protection and preservation of the fixed assets belonging to the Liquidation Estate.
2. Brief facts of the case are given below:
The Corporate Debtor M/s. B.S. Limited was admitted into CIRP proceedings, on an application under Section 7 of I & B Code, 2016, moved by State Bank of India, by the Order dated 01.11.2018 of Learned NCLT, Hyderabad, and the Resolution Professional (RP) was appointed on 29.11.2018. Subsequently, the Learned NCLT had ordered Liquidation of the Corporate Debtor on 17.10.2019 and the Respondent No. 1 herein was appointed as Liquidator on 25.10.2019. IFCI, one of the Secured Financial Creditors, chose not to relinquish its rights over the charged assets. The concerned Secured Assets were handed over to IFCI on 27.09.2021 by the Liquidator for realization. The IFCI subsequently on 14.02.2023, assigned the debts of the Corporate Debtor along with the Secured Assets to the Appellant herein. The Liquidator, meanwhile proceeded to sell the Corporate Debtor as a going concern (excluding the Secured Assets already handed over) and distributed the proceeds among the Stakeholders.
Consequent to it, the Liquidator filed an Interlocutory Application being IA No. 1378 / 2024 under Section 60 (5) of I & B Code, 2016, to be read with Regulation 38 of IBBI (Liquidation Process) Regulations, 2016, before Learned NCLT, Hyderabad, submitting that the First Charge Holders have not sold the Secured Assets handed over to them, that the estimated surplus from sale of IA No.1012/2024 in Comp. App. (AT) (CH) (INS) No. 368 / 2024 Page 2 of 9 these assets is yet to be realized and that he may be permitted to distribute this estimated surplus amount among the Stakeholders, after the realization of the said unsold assets of the Corporate Debtor.
The said application stood allowed, by the learned NCLT, Hyderabad, by an Order dated 29.07.2024, with the following directions:
``In light of the above observations and discussion of the law, this Authority issues the following directions:
i. M/s. Omkara Assets Reconstruction Private Limited and Bank of India, as first charge holders, are directed to tender the surplus amount of Rs.96.28 crores to the Liquidation Account.
ii. The Liquidator is authorized to distribute the surplus amount among the secured financial creditors in proportion to their admitted claims, as detailed in paragraph 12 of the application.
iii. M/s. Omkara Assets Reconstruction Private Limited and Bank of India are directed to reimburse costs amounting to Rs.90,70,048/- incurred for the protection and preservation of the Fixed Assets to the Liquidation Estate.'' Aggrieved by this Order, the Appellant has proceeded to file the instant Appeal.
3. According to the report of the Registry, the Company Appeal was e-filed on 14.09.2024. The Registry has reported that there is a delay of 16 days in filing the instant Appeal.
4. The Appellant has filed a Condone Delay Application being IA No. 1012 / 2024, praying for condonation of 16 days of delay, which has chanced in filing the Appeal.IA No.1012/2024 in Comp. App. (AT) (CH) (INS) No. 368 / 2024 Page 3 of 9
5. The Appellant has contended that, the Impugned Judgment was rendered on 29.07.2024, that he got the knowledge of order only on 19.08.2024; and that immediately after getting the knowledge of the impugned order dated 29.07.2024, on 19.08.2024, he has taken action and has filed the appeal on 14.09.2024 i.e. well within the condonable period as contemplated under Section 61(1) of I & B Code, 2016.
6. He has submitted that for obtaining the Certified copy of the Impugned Judgment, he filed an application on 08.10.2024. but the same has not been made available. However, filing of an application for getting the Certified copy of the order, may not be of much relevance for the instant Condone Delay Application, because the Appellant has also filed an application i.e. IA No. 1010 / 2024, seeking exemption from filing the Certified copy of the impugned order.
7. The argument of the learned counsel for the Appellant is that, the Appellant is not a party to the proceedings of IA No. 1378/2024, and since he got the knowledge of the Judgment on 19.08.2024, the limitation period should be reckoned from such date only and as he has filed the Appeal on 14.09.2024 i.e. well within the outer limit of 45 days prescribed under Section 61(2) of the Code, the delay deserves to be condoned and merely because he has not applied for the Certified copy within the period of limitation may not be taken as to be a ground for rejecting his Condone Delay Application i.e. IA No. 1012 / 2024.
8. He submits that, as the scope is left wide open under Section 61, for any aggrieved party to initiate a proceedings under Section 61 by way of an Appeal and as exemption from production of Certified copy of the order is contemplated under Rule 31 of the NCLAT Rules, 2016, applying for the Certified copy within the prescribed period of limitation of 30 days from the date of the order is not to be strictly construed in relation to an Appellant, who is not a party to the proceedings. Hence, filing of an Application, for the IA No.1012/2024 in Comp. App. (AT) (CH) (INS) No. 368 / 2024 Page 4 of 9 Certified copy at a belated stage after the expiry of 30 days of period of limitation, should not be held against him, especially when such application for the Certified copy has been done within 30 days from the date of knowledge i.e. 19.08.2024. Further, since the Appeal has been filed on 14.09.2024 i.e. within 30 days from the date of knowledge being 19.08.2024, it has to be construed that the appeal has been filed within the upper limit of limitation prescribed under Section 61 of the I & B Code, 2016, and the delay of 16 days in filing the Appeal deserves to be condoned.
9. He further argues that, when law contemplates a grant of a complete exemption from filing the Certified copy of the Impugned Judgment under Rule 31, in that eventuality, applying for a Certified copy of the Judgment, within the prescribed period of limitation may not be strictly construed in relation to a person, who is not a party to the proceedings because the exemption in filing Certified copy, to file an Appeal, is complete in nature.
10. On the contrary, it is argued by the learned counsel for the Respondent that for the purposes of computing the limitation period for filing an Appeal under Section 61 of I & B Code, 2016, factum of knowledge may not be taken as to be the yardstick, when the Certified copy is not applied within the prescribed period of limitation to be computed from the date of the Judgment.
11. He submits that in the light of the Judgment of the Principal Bench as reported in 2024 SCC OnLine NCLAT 383 - Deepak Dahyalal V. Steel Resources & Anr., aforesaid proposition stands established. The factual backdrop in the aforesaid case is contained in Para 2, which is extracted hereunder:
``2. The Learned Counsel for the Appellant submitted that since the Adjudicating Authority had passed ex-parte order in the main company petition CP-IB/277(MB)/2023 on 27.06.2023, the Appellant had no knowledge of the proceedings. The Appellant became aware of the IA No.1012/2024 in Comp. App. (AT) (CH) (INS) No. 368 / 2024 Page 5 of 9 proceedings only when the interim resolution professional informed the Appellant on 06.12.2023 about the impugned order through email. It is the case of the Appellant that an appeal can be filed by an aggrieved person only when he becomes aware of the order and in the present circumstances when the Appellant became aware of the orders only on 06.12.2023, the limitation period should be counted from that date.
Further it was submitted that some time needs to be excluded while calculating the limitation period in the present case. Explaining further, it was pointed out that as the Appellate Tribunal was having Winter/Christmas holidays from 23.12.2023 till 01.01.2024, this holiday period of 9 days needs to be excluded. Basis this calculation, the period of 30 days for filing the appeal would have expired on 13.01.2024 which date being a Saturday and a nonworking day followed by Sunday being yet another holiday, the last date for the purpose of filing the appeal would be 15.01.2024. It was further submitted that during this period a close cousin of the Appellant had passed away which necessitated his presence for the related rituals for 13 days. That apart, the other reasons for delay were that the Appellant was suffering from chronic depression and illness and some delay was on account of logistical delay in sending relevant documents to the Advocate. Further taking into account 15 permissible days as the extended period of limitation in terms of proviso to Section 61(2) of the IBC, starting from 16.01.2024 the 15 days period ended on 31.01.2024 after factoring in one day of public holiday on account of 26th January. Admitting that the appeal was filed on 01.02.2024, it was claimed that it meant effectively only 16 days delay beyond the permitted 30 days limitation time. In sum it was pointed out that keeping in view the ill health of the Appellant and bereavement in the family coupled with intervening holiday/vacations, the delay deserves to be condoned.''
12. The Counsel for the Respondent submits that the inference drawn in Para 16 & 21 of the said Judgment has to be taken into consideration from the perspective that knowledge itself may not be taken as a reason for condonation of delay.
IA No.1012/2024 in Comp. App. (AT) (CH) (INS) No. 368 / 2024 Page 6 of 913. Having meticulously scrutinized the factual backdrop, it is seen that admittedly here, the knowledge of the Impugned Order was attributed on 19.08.2024 to the Appellant herein, who is not a party to the proceedings, that if the time taken to file the Appeal is contemplated to be determined from the date of knowledge, the Appeal filed by the Appellant, will be well within the proviso to Sub Section 2 of Section 61 of I & B Code, 2016, and that, since, he was not a party to the proceedings and has sought for a complete exemption from filing the Certified copy of the Impugned Judgment by filing an Exemption Application i.e. IA No. 1010 / 2024, the delay in filing the Appeal can be denied to be condoned merely because, he has not applied for the Certified copy within 30 days from the date of the Judgment and even the date of knowledge i.e. 19.08.2024 which was an issue dealt in the matters of V. Nagarajan V. SKS Ispat & Power Limited.
14. The aforesaid two Judgments on which the reliance has been made by the learned counsel for the Respondent, have not considered the controversy from the perspective, as to what would be the impact, when the Appellant concerned has not been a party to the proceedings and has sought a complete exemption under Rule 31 of the NCLAT Rules, 2016, from production of the Certified copy. Since the law provides the latitude for a complete exemption from supplying the Certified copy, failure to apply for the Certified copy within the prescribed period of limitation from the date of knowledge i.e. 19.08.2024, since applied only on 08.10.2024, may be fatal enough to deny condonation of delay and that too, in the circumstances of the instant case, where the Appeal has been preferred on 14.09.2024 i.e., it was beyond the upper 45 days of time period prescribed under the proviso to Sub Section 2 of Section 61 of the I & B Code, 2016, if computed from the date of pronouncement of the Judgment.
IA No.1012/2024 in Comp. App. (AT) (CH) (INS) No. 368 / 2024 Page 7 of 915. Apart from it, if the controversy is taken into consideration with regards to the perspective of knowledge, we had an occasion to deal with a similar situation, where the implication of knowledge was considered by this Tribunal in a Judgment rendered in IA No. 361 / 2021 in Company Appeal (AT) (CH) (INS) No. 177 / 2021 in the matters of Southern Power Distribution Company of Telangana Ltd. V. Kalvakolanu Murali Krishna Prasad, RP for Vaksh Steels Pvt. Ltd. & 2 Ors., on which the reliance has been placed by the learned counsel for the Appellant.
16. The aforesaid principle will not be applicable under the facts and circumstances of the instant case and the bar of limitation cannot be exempted to be applied for the reasons given hereunder:
(a) The Judgment was rendered on 29.07.2024, and was mostly likely uploaded on the same day as the Appellant did not furnish the date of uploading.
(b) 30 days period would be expiring on 28.08.2024;
(c) He is expected to file the Appeal on or before 28.08.2024, as per Section 61(2) of the I & B Code, 2016, but, he filed the Appeal on 14.09.2024, with a delay of 17 days.
(d) The Appellant claims to have got the knowledge of the Order on 19.08.2024, on basis of the email by the Liquidator. However, since the Judgment was rendered on 29.07.2024 and was in all likelihood uploaded on the same day in absence of any evidence to the contrary, preferred by the Appellant, date of knowledge will be presumed to be 29.07.2024.
(e) Further, the Certified copy of the order was applied for only on 09.10.2024. Therefore, he will not get any benefit of Section 12 of Limitation Act.IA No.1012/2024 in Comp. App. (AT) (CH) (INS) No. 368 / 2024 Page 8 of 9
17. In view of the above, the Appellant will not be falling within the proviso to Sub Section 2 of Section 61 of the I & B Code, 2016. Thus, the instant Appeal deserves rejection on the ground of limitation.
18. Thus, owing to the grounds taken by the Appellant in this Condone Delay Application coupled with the fact that the Appeal was filed beyond the upper period of limitation of 45 days from the date of pronouncement of the Judgment and that, application for the Certified copy, was made on 08.10.2024, well beyond the 30 days period of the date of Judgment, the delay of 17 days, which has chanced in preferring the Appeal, would be beyond the total 45 days. Accordingly, IA No. 1012 / 2024, would stand rejected. Accordingly, the Company Appeal (AT) (CH) (INS) No. 368 / 2024, would stand dismissed. The other connected pending Interlocutory Applications, if any, would stand closed.
[Justice Sharad Kumar Sharma] Member (Judicial) [Jatindranath Swain] Member (Technical) 12/12/2024 SR / TM / MS IA No.1012/2024 in Comp. App. (AT) (CH) (INS) No. 368 / 2024 Page 9 of 9