Assistant Commissioner Of Commercial ... vs Right Engineers & Equipment India Pvt. ...

NATIONAL COMPANY LAW APPELLATE TRIBUNAL CHENNAI BENCH CHENNAI (APPELATE JURISDICTION) Company Appeal (AT)(CH( (Insolvency) No. 255 of 2021

[Arising out of Impugned Order dated 5th April, 2021 passed by the Adjudicating Authority/National Company Law Tribunal, Bengaluru Bench, in I.A. No. 106 of 2021 in C.P. (IB) No. 320/BB/2019]

IN THE MATTER OF: The Assistant Commissioner of Commercial Taxes (Audit) - 4.6, DGSTO-4, Bangalore Room No. 402, 4th Floor, Block - A VTK - 2, Rajendranagara, Near NGV Koramangala, Bangalore - 560047 Karnataka ... Appellant

V

1. Right Engineers & Equipment India Pvt. Ltd (in liquidation) Represented herein by its Liquidator, Mr. Addanki haresh No.25, D Cross, Bilekahalli industrial Area, Bannerghatta road, Bangalore - 560076, Karnataka ...Respondent No.1

2. Mr. Addanki Haresh Liquidator of right Engineers & Equipment India Pvt. Ltd. (in liquidation) No. 36/1, 2nd Floor, Munivenkatappa Complex, Bellary Main Road, Ganganagar, Bangalore - 560032, Karnataka ...Respondent No.2

Present: For Appellant : Mr. Sandeep Huilgol, Advocate

JUDGEMENT

(Virtual Mode) M. Venugopal, J:

Company Appeal (AT)(CH)(Insolvency) No. 255 of 2021 Page 1 of 9

According to the Learned Counsel for the Appellant/Applicant, instant

Company Appeal(AT)(CH) (Insolvency) No. 255 of 2021 is filed by the

Appellant/Applicant, being dissatisfied with the 'Impugned Order' dated 5th

April, 2021 passed in I.A. No. 106 of 2021 in CP(IB) No. 320/BB/2019 (filed

under Section 42 & 60 of the Insolvency & Bankruptcy Code, 2016 [ in short

'IBC'] read with Rule 11 of NCLT Rules, 2016) passed by the Adjudicating

Authority (National Company Law Tribunal, Bengaluru, dismissing the said

application.

2. The Learned Counsel for the Appellant/Applicant submits that I.A. No.

106 of 2021 in CP(IB) No. 320/BB/2019 was filed by the Appellant/Applicant

before the Adjudicating Authority (National Company Law Tribunal, Bengaluru,

seeking to set aside the order dated 17.03.2021 passed by the Respondent No.

2 in rejecting the Appellant's Statement of Claim based on the reason that it

was submitted belatedly delay of 52 days. Also that, the Appellant/Applicant

had prayed for the condonation of the said delay of 52 days for submission of

its Claim before the 2nd Respondent and prayed for consequential directions to

the 2nd Respondent to verify, admit and process the claim of the Appellant in

liquidation proceeding of the 1st Respondent.

3. It is represented by the Appellant that the Adjudicating Authority had

passed an order directing initiation of 'Liquidation Proceeding' against the

Respondent No. 1- Company on 02.12.2020 and further that the Public

Announcement was issued by the Respondent No. 2 on 11.12.2020 in Company Appeal (AT)(CH)(Insolvency) No. 255 of 2021 Page 2 of 9 announcing liquidation of Respondent No. 1 as per which the last date of

submission of claim was on 11.01.2021.

4. The Learned Counsel for the Appellant points out that on 03.03.2021, the

Appellant/Applicant passed 'Reassessment Order' in terms of Karnataka Value

Added Tax by which the Respondent No. 1/Company is liable to pay tax interest

and penalty amounting to Rs. 36,46,908/-. As a matter of fact, on 04.03.2021,

the Statement of Claim was filed by the Appellant/Applicant before the

Respondent No. 2 covering the dues payable by the Respondent No. 1 to the

Appellant/Applicant.

5. It transpires that on 17.03.2021, the Respondent No. 2 passed an order

rejecting the claim passed on the reason that it was filed belatedly. Moreover,

on 23.03.2021, I.A. No. 106 of 2021 in CP(IB) No. 320/BB/2019 was filed by

the Appellant/Applicant (under Section 42 & 60 of the IBC) before the

Adjudicating Authority seeking amongst other things, condonation of delay of

52 days for submission of claim before the Second Respondent.

6. The Learned Counsel for the Appellant takes a crystalline stand in the

instant Appeal that on 05.04.2021, the Adjudicating Authority had passed the

Impugned Order in dismissing I.A. No. 106 of 2021 in CP(IB) No. 320/BB/2019

based on the ground that the reasons mentioned for condonation of delay were

untenable.

Company Appeal (AT)(CH)(Insolvency) No. 255 of 2021 Page 3 of 9

7. Advancing his argument, the Learned Counsel for the Appellant contends

that a lenient view is to be taken in the matter of condonation of delay so as to

advance substantive justice and therefore prays for allowing the appeal in the

Interest of Justice.

8. To lend support to the contention that it is the duty of a 'Tribunal' to

exercise its discretion in condoning the delay in a judicious manner and

furthermore that the 'Rule of Limitation' are not meant to destroy the rights of

the Parties, he refers to the decision of the Judgment of Hon'ble Supreme Court

of India between "N. Balakrishnan Vs. M. Krishnamurthy" in Indian Kanoon.

9. The Learned Counsel for the Appellant refers to Section 42 of IBC which

reads as under:

..

"42. Appeal against the decision of liquidator - A creditor

may appeal to the Adjudicating Authority against the decision

of the liquidator [accepting or] rejecting the claims within

fourteen days of the receipt of such decision."

..

10. At this stage, this Tribunal points out the relevant following observations

made by the Adjudicating Authority at Paragraph-4 of the Impugned Order

dated 05.04.2021 in I.A. No. 106 of 2021 in CP(IB) No. 320/BB/2019 which

runs as under:

Company Appeal (AT)(CH)(Insolvency) No. 255 of 2021 Page 4 of 9

"4. ....... The reasons cited by the Applicant that it was

unaware of the CIRP/Liquidation of Corporate Debtor, the State

would lose its legitimate dues viz., the tax collected from public,

it is duty of Liquidator alone to verify its records etc., are not at

all tenable. While alleging that the Liquidator has failed to

discharge his duties, the Applicant has failed to take any action

at appropriate time to recover tax and they cannot wait for

proceeding to be initiated by others under provisions of the

Code. The Applicant has absolute independent right to initiate

appropriate action to recover the tax in question but they have

failed to discharge their duties. The reasons cited for delay in

approaching the Liquidator are not at all tenable. And

CIRP/Liquidation is time bound manner and it cannot be put on

hold on continuous basis on receiving belated claims and

considering them. We are convinced that the Respondent has

followed extant provisions of law in continuing proceedings

under the provisions of the Code, and the impugned order

cannot be interfered with. Therefore, the Application is liable to

be dismissed."

And ultimately, the said Application was dismissed without costs.

11. Be it noted, that Regulation 16(1) of Insolvency and Bankruptcy Board

of India (Liquidation Process) Regulations, 2016 provides as under:

Company Appeal (AT)(CH)(Insolvency) No. 255 of 2021 Page 5 of 9

..

16. Submission of claim- (1) A person, who claims to be a

stakeholder shall submit its claim, or update its claim

submitted during the corporate insolvency resolution process,

including interest, if any, on or before the last date mentioned

in the public announcement.

(2) A person shall prove its claim for debt or dues to him,

including interest, if any, as on the liquidation commencement

date."

...

12. In fact, in I.A. No. 106 of 2021 in CP(IB) No. 320/BB/2019, the

Applicant/Operational Creditor at paragraphs 5 & 6 had averred the following:

"5. Thus, the total amount of tax, interest and penalty

payable by the 1st Respondent to the Applicant under the KVAT

Act and the CST Act for the AY 2016-17 pursuant to the above

orders is as follows:

Act Total Amount payable

CST INR 39,35,709/-

KVAT INR 36,46,908/-

Total INR 75,82,617/-

Company Appeal (AT)(CH)(Insolvency) No. 255 of 2021 Page 6 of 9

6. Thereafter, however, no payment came to be made by the

1st Respondent. While the position stood thus, the Applicant

contacted one of the Directors of the 1st respondent company

on 02.03.2021 to enquire about why the arrears due from the

1st Respondent were not being paid by it. It was then that the

Applicant was informed for the first time that the 1st

Respondent is undergoing liquidation process under the

provisions of the IBC. Later that day, the Applicant visited the

website of Insolvency and Bankruptcy Board of India of

thereby became aware, for the first time, that this Hon'ble

Tribunal had passed an order dated 02.12.2020 ordering

initiation of liquidation proceedings as against the 1st

Respondent as per the provisions of the IBC and also

appointing the 2nd Respondent as the liquidator of the 1st

Respondent. Further, the Applicant thereby became aware for

the first time, that the 2nd Respondent had issued on

11.12.2020 a Public Announcement under Regulation 12 of

Insolvency and Bankruptcy Board of India (Liquidation

Process) Regulations, 2016 ("the Regulations" in short),

announcing the liquidation of the 1st Respondent. True copies

of this Hon'ble Tribunal's order, dated 02.12.2020, and the

Public Announcement, dated 11.12.2020 are produced

herewith and marked as Annexures C and D respectively.

Company Appeal (AT)(CH)(Insolvency) No. 255 of 2021 Page 7 of 9 Significantly, the Applicant became aware for the first time on

02.03.2021 that, much to its utter shock and dismay, as per

the said Public Announcement, the last date of submission of

claims in the liquidation proceedings of the 1st Respondent was

11.01.2021."

13. Indisputably, in the present case on hand, 'Corporate Insolvency

Resolution Process' (In short 'CIRP') in respect of the Corporate Debtor was

initiated by the Adjudicating Authority as per the order dated 29.10.2019. At

the behest of M/s Sri Visveswaraya Co-operative Bank Ltd. the Public

Announcement was made on 20.11.2019 by inviting claims of the Creditors of

the Corporate Debtor in requisite form and the last date being 04.12.2019. In

reality, the estimated date of closure of CIRP was mentioned as 26.04.2020.

14. Besides the above, an extension of time was also granted by the

Adjudicating Authority and inasmuch as, the suitable Resolution Plan was not

received, the Corporate Debtor was placed under liquidation process on

12.12.2020.

15. When that be the ground realities/fact situation(s), the

Appellant/Applicant submitted the claim only on 04.03.2021 by responding to

the 'Public Announcement' given under 'Liquidation Process'.

16. It is an axiomatic principle in law that the 'Tribunal' is required to consider

the 'sufficiency of cause', whether the cause ascribed is reasonable looking to

Company Appeal (AT)(CH)(Insolvency) No. 255 of 2021 Page 8 of 9 all the facts of the matter. However, the aspect of an existence of 'sufficient

cause' is to be determined based on the facts and circumstances hovering

around particular case. Indeed, there ought not to be an 'inaction' or 'want of

bonafide' or no negligence attributable to a litigant/party, as the case may be.

17. It cannot be forgotten that the Liquidator by adverting to the Regulation

16(A) Regulations 2016 (Liquidation Process) had rejected the claim through his

letter on 17.03.2021 mentioning that the claims required to be furnished on or

before 11.01.2021. Unfortunately, the Appellant/Applicant had submitted its

claim only on 04.03.2021 and to come out with the reason that the

Appellant/Applicant was not aware of the CIRP and Liquidation Process of the

Corporate Debtor are unworthy of acceptance and in the considered opinion of

this Tribunal, the said reason was rightly rejected by the 'Adjudicating

Authority', which requires no interference in the hands of this 'Appellate

Tribunal'. Viewed in that perspective, the instant 'Appeal' is devoid of merits and

it fails.

18. In fine, Company Appeal (AT)(CH) (Insolvency) No. 255 of 2021 is

dismissed. No costs.

[Justice M. Venugopal] Member(Judicial)

(Kanthi Narahari) Member(Technical) 15th November, 2021

Akc

Company Appeal (AT)(CH)(Insolvency) No. 255 of 2021 Page 9 of 9