National Company Law Appellate Tribunal
Sh. Abhisekh Soin vs State Bank Of India & Ors on 20 December, 2022
1
NATIONAL COMPANY LAW APPELLATE TRIBUNAL PRINCIPAL BENCH,
NEW DELHI
Company Appeal (AT) (Ins.) No. 1359 of 2019
IN THE MATTER OF:
SH. ABHISHEK SOIN
S/o Sh. Satish Kumar Soin
R/o 31 Garden Enclave, South City,
Ludhiana, Punjab - 141 020
Promoter/Authorized Signatory Saber Paper Ltd. ...Appellant
Versus
STATE BANK OF INDIA
Corporate Office At:
Madame Cama Road, Nariman Point,
Mumbai - 40021
One of its Branch At:
State Bank of India
Stressed Asset Management Branch,
Admin Office Building,
Fountain Chow, Ludhiana - 141 001
Through Sh. Kailash Chander, AGM
Email: [email protected] ...Respondent No. 1
SH. VIKRAM BAJAJ
Interim Resolution Professional,
Flat - 12, Vasudha Apartment,
Plot - 41, Sector-9, Rohini, Delhi - 110085
Email: [email protected] ... Respondent No. 2
SABER PAPER LIMITED
Registered Office
VPO Jugiana GT Road
Ludhiana Punjab India - 141420 ... Respondent No. 3
Company Appeal (AT) (Ins.) No. 1359 of 2019
2
Present:
For Appellant: Mr. Rajiv Bahl, Adv.
For Respondent: Mr. Baldev Singh Badhran, Adv. for R1
Mr. Abhishek Anand, Mr. Mohak Sharma, Adv. for
R2/Liquidator
JUDGMENT
Per: Justice Rakesh Kumar Jain:
This appeal is directed against the order dated 18.09.2019 passed by the Adjudicating Authority (National Company Law Tribunal, Chandigarh Bench, Chandigarh) by which an application filed under Section 7 of the Insolvency and Bankruptcy Code, 2016 (in short 'Code') by the State Bank of India (Financial Creditor) for initiation of Corporate Insolvency Resolution Process (in short 'CIRP') in respect of Saber Papers Limited (Corporate Debtor) has been admitted.
2. In brief, the Corporate Debtor availed various loan facilities from the State Bank of Hyderabad (SBH), State Bank of Bikaner and Jaipur (SBBJ), State Bank of Patiala (SBP) and State Bank of India (SBI) by executing loan security documents and mortgaging the immovable properties by way of deposit of title deeds. The loan accounts of the Corporate Debtor were declared NPA. Notice under Section 13(2) and 13(3) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act) were issued. The detail is given as under:-
Name of Recoverable as Date of NPA Date of
Bank claimed in the SARFAESI
notice Notice
State Bank of 57,66,88,371 31.10.2013 19.11.2014
Hyderabad
State Bank of 73,24,40,871 30.11.2012 21.11.2014
Company Appeal (AT) (Ins.) No. 1359 of 2019
3
India
State Bank 33,86,35,309 31.03.2012 05.11.2014
Of Bikaner &
Jaipur
State Bank of 184,95,54,505.59 31.05.2012 18.10.2014
Patiala
3. Since the Corporate Debtor failed to pay the outstanding loan, therefore, the authorised officer of SBP, the lead bank in the consortium and the other lending banks issued notice on 11.03.2015 for taking possession of the mortgaged property.
4. The four Banks mentioned hereinabove initiated their recovery process against the Corporate Debtor before the Debt Recovery Tribunal (DRT). The application filed by the SBI bearing O.A No. 1380 of 2017 (OA Old No. 1932 of 2015) titled as SBI Vs. Saber Papers Limited &Ors. was allowed by DRT-II, Chandigarh on 18.08.2017 declaring that the Corporate Debtor was liable to pay a total sum of Rs. 233,10,54,794.04 with costs and future interest on all accounts from 04.11.2015 till the date of realisation while other three recovery applications filed by remaining three aforesaid banks were still pending before the DRT-III, Chandigarh.
5. It is worthwhile to mention that while the application filed by the SBI before the DRT was pending, SBH, SBBJ and SBP were amalgamated with the SBI w.e.f. 01.04.2017 and thereafter the SBI filed the application under Section 7 of the Code on 27.09.2018 before the Adjudicating Authority at Chandigarh. In the application filed in Form-1, prescribed in Rule 4 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, Company Appeal (AT) (Ins.) No. 1359 of 2019 4 2016, it is averred in Part-IV that the total defaulted amount is Rs. 517,72,84,977.85/- and the last date of NPA is 31.10.2013.
6. The Appellant filed an application bearing CA No. 660 of 2019 before the Adjudicating Authority to declare the application, filed under Section 7 of the Code by the Financial Creditor, as hopelessly time barred in view of Article 137 of the Limitation Act, 1963 (in short 'Act, 1963'). Reply to the application was filed by the Financial Creditor submitting that the limitation for recovery in a case of mortgaged property is 12 years and thus the amount is still recoverable because of the recovery process initiated before the DRT. It is observed in the impugned order that the said application i.e. 660 of 2019 was disposed of on 30.09.2019 allowing the Corporate Debtor to raise the issue of limitation while advancing the arguments in the main petition.
7. The Adjudicating Authority while deciding the issue of limitation has observed as under:-
"14. The learned counsel for the corporate debtor has referred to B.K. Educational Services Pvt. Ltd. Vs. Parag Gupta & Associates (Civil Appeal No.23988 of 2017) and has pleaded that the Hon'ble Supreme Court has clearly held that the provisions of Article 137 of the Limitation Act would be applicable to the proceedings under Code. It is stated that it has been alleged by the financial creditor that the default allegedly occurred in 2013 and the provisions of the Code cannot be triggered in 2018 for a claim which was time barred before the enactment of the Code.
15. The learned counsel for the financial creditor has pleaded that SBH, SBI, SBBJ and SBP issued notices under Section 13(2) read with Section 13(13) of the SARFAESI Act, 2002 in October/November, 2014 and that the authorized officer of the SBP lead bank and other lending banks i.e. SBP, SBI, SBH, SBBJ, Corporation Bank, Allahabad Bank, J&K Bank Ltd. issued possession notice for taking possession of the properties detailed Company Appeal (AT) (Ins.) No. 1359 of 2019 5 in the possession notice (page 914 of the paper book). It is further submitted that SBI, SBBJ, SBP and SBH initiated recovery process against the corporate debtor before the DRT and as discussed above, one OA No.1380 of 2017 (OA Old No.1932 of 2015) titled as SBI Vs. Saber Papers Ltd. &Ors, was decided/allowed by DRT III, Chandigarh on 18.08.2017 declaring that the defendants are liable to pay the applicant i.e. SBI a total sum of 5233,10,54,794.04 with costs and future interest on all accounts from 04.11.2015 till realisation (Diary No.4487 dated 02.09.2019) and the remaining three applications are still pending before DRT III, Chandigarh. It is therefore, submitted that the debt is not a dead dept and that proceeding for recovery were being taken by the respective bank. Reliance has also been placed on Babulal BardhajiGurjar Vs. Veer Gurjar Aluminium Industries Pvt. Ltd. & Anr. Company Appeal (AT)(Insolvency) No.549 of 2018. It is pleaded that the decision of Hon'ble Supreme Court in B K Educational Services Pvt. Ltd. vs. Parag Gupta & Associates supra was referred to in para No. 15 of the Hon'ble NCLAT order. It is stated that in para 29, the Hon'ble NCLAT has referred to Part V(First Division) of Limitation Act relating to 'Suits relating to Immoveable property to recover possession of the property mortgaged and afterwards transferred by the mortgagee for a valuable consideration and has stated that the period of limitation WIB12 years since the transfer becomes known to the plaintiff (Article 61(b)). The Hon'ble NCLAT held that in view of the aforesaid position of law, the property having mortgaged, the claim is not barred by limitation as a period of limitation is 12 years with regard to mortgaged property. The learned counsel for the financial creditor has stated that the Hon'ble NCLAT took into consideration the pendency before the DRT. As per list of dates and events (page 4 of the petition), the first credit facility by way of term loan to the corporate debtor was granted on 24.05.2008 and agreements for hypothecation of goods and assets as well as deposit of title deeds were made on various dates thereafter. Therefore, the present application filed on 27.09.2018 is within the period of 12 years. In view of the order of Hon'ble NCLAT in Babulal BardhajiGurjar Vs. Veer Gurjar Aluminium Industries Pvt. Ltd. & Anr. Company Appeal (AT)(Insolvency) No.549 of 2018 supra, the present petition is held to be not barred by limitation.
16. The learned counsel for the corporate debtor has argued that there is mis-joinder and non-joinder of the parties in as much as the joint funding and facilities were granted to the corporate debtor by various banks and institutions which is also evident from the Master Restructuring Agreement (MRA Agreement) dated Company Appeal (AT) (Ins.) No. 1359 of 2019 6 11.02.2013. It is stated that the consortium of banks included SBP, SBH, SBBJ, SBI (since merged into petitioner SBI), Allahabad Bank, J&K Bank Ltd. and Corporation Bank."
8. Aggrieved against the aforesaid decision of the Adjudicating Authority, the present appeal has been preferred solely on the ground that the Application filed under Section 7 of the Code was hopelessly barred by limitation and the period of 12 years could not have been applied. In this regard, a decision of the Hon'ble Supreme Court in the case of Gaurav Hargovindbhai Dave Vs. Asset Reconstruction Company (I) Ltd.& Anr. (2019) 10 SCC 573, has been referred to in which it has been held as under:-
"6) Having heard the learned counsel for both sides, what is apparent is that Article 62 is out of the way on the ground that it would only apply to suits. The present case being "an application"
which is filed under Section 7, would fall only within the residuary article 137. As rightly pointed out by learned counsel appearing on behalf of the appellant, time, therefore, begins to run on 21.07.2011, as a result of which the application filed under Section 7 would clearly be time-barred. So far as Mr. Banerjee's reliance on para 7 of B.K. Educational Services Private Limited (supra), suffice it to say that the Report of the Insolvency Law Committee itself stated that the intent of the Code could not have been to give a new lease of life to debts which are already time-barred.
7) This being the case, we fail to see how this para could possibly help the case of the respondents. Further, it is not for us to interpret, commercially or otherwise, articles of the Limitation Act when it is clear that a particular article gets attracted. It is well settled that there is no equity about limitation - judgments have stated that often time periods provided by the Limitation Act can be arbitrary in nature."
9. On the other hand, Counsel for Respondent has submitted that there is no quarrel with the decision of the Hon'ble Supreme Court in the case of Gaurav Hargovindbhai Dave (Supra) but a fresh period of limitation became available to the Respondent with the issuance of recovery certificate dated Company Appeal (AT) (Ins.) No. 1359 of 2019 7 18.08.2017 which has been placed on record by way of an application and since the application under Section 7 has been filed on 27.09.2018, therefore, it is within the period of limitation calculated from 18.08.2017. In support of his submissions, Counsel for the Respondent has relied upon two decisions of the Hon'ble Supreme Court in the case of Dena Bank (Now Bank of Baroda) vs C. Shivakumar Reddy& Anr., 2021 10 SCC 330 and Kotak Mahindra Bank Ltd. vs A. Balakrishnan& Anr., 2022 SCC Online SC
706.
10. We have heard Counsel for the parties and perused the record with their able assistance.
11. In so far as the finding of the Adjudicating Authority, recorded in Para 14, 15 and 16 (reproduced hereinabove) are concerned wherein it has observed that the period of limitation is 12 years by applying Article 62 of the Act of 1963, the same is totally contrary to the decision rendered by the Hon'ble Supreme Court in the case of Gaurav Hargovindbhai Dave (Supra) because in the said case also Article 62 of the Act, 1963 was applied but it has been held by the Hon'ble Supreme Court that the said article would apply to the suits whereas it is an application filed under Section 7 to which only the residuary Article 137 would apply in which the period of limitation is prescribed of three years which would begin to run from the date when the right to apply accrues.
12. However, the issue before us is as to whether there would be afresh period of limitation available to the Respondent from the date when the recovery certificate was issued by the DRT.
Company Appeal (AT) (Ins.) No. 1359 of 2019 8
13. There is no doubt that in both the decisions, relied upon by the Respondent, namely, Dena Bank (Supra) and Kotak Mahindra Bank Ltd. (Supra) the Hon'ble Supreme Court has held that the limitation would start afresh from the date of issuance of recovery certificate but Counsel for the Appellant has submitted that the application under Section 7 of the Code should have been filed on the basis of the recovery certificate and merely placing on record of the said recovery certificate would not be suffice.
14. We have read both the decision of the Hon'ble Supreme Court relied upon by Counsel for the Respondent. The decision in the case of Dena Bank (Supra) has been followed in the case of Kotak Mahindra Bank Ltd. In the case of Dena Bank (Supra) the Corporate Debtor defaulted in repayment of its dues to the Bank and the loan account was declared NPA on 31.12.2013, O.A No. 16 of 2015 was filed by the Bank on or about 01.01.2015 under Section 19 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993, now known as the Recovery of Debts and Bankruptcy Act, 1993before the DRT at Bangalore. O.A was decreed on 27.03.2017. The Bank filed a petition under Section 7 of the Code before the Adjudicating Authority on 12.10.2018 and subsequently filed one application i.e.I.A. No. 27 of 2019 on 09.01.2019 for permission to place on record additional documents including final decision dated 27.03.2017 of the DRT in OA No. 16 of 2015 and the recovery certificate dated 25.05.2017.
15. It has been observed in the case of Dena Bank (Supra) at Para 133 which is under:
Company Appeal (AT) (Ins.) No. 1359 of 2019 9 "As observed above, the Appellant Bank filed the Petition under Section 7 of the IBC on 12th October 2018. Within three months, the Appellant Bank filed an application in the NCLT, for permission to place additional documents on record including the final judgment and order/decree dated 27.3.2017 in O.A. 16/2015 and the Recovery Certificate dated 25.5.2017, enabling the Appellant Bank to recover Rs.52 crores odd. The judgment and order/decree of the DRT and the Recovery Certificate gave a fresh cause of action to the Appellant Bank to initiate a petition under Section 7 of the IBC."
16. Thus, in view of the aforesaid facts and circumstances of the case, there is hardly any merit in the present appeal and the same is hereby dismissed. No costs.
[Justice Rakesh Kumar Jain] Member (Judicial) [Mr. Kanthi Narahari] Member (Technical) New Delhi 20th December, 2022 Sheetal Company Appeal (AT) (Ins.) No. 1359 of 2019