Canara Bank vs Krishna Deo Singh

Comp. App. (AT) (Ins) No. 1649 of 2024 & I.A. No. 6011 of 2024

IN THE MATTER OF: Canara Bank ...Appellant Versus Uma Kumari Singh ...Respondent Present: For Appellant : Mr. Hitesh Sachar & Ms. Anju Jain, Advocates. For Respondent : Mr. Yamak Sharma, Mr. Brijesh Sharma & Mr. Utkarsh Joshi, Advocates.

With

Comp. App. (AT) (Ins) No. 1652 of 2024 & I.A. No. 6016 of 2024

IN THE MATTER OF: Canara Bank ...Appellant Versus Krishna Deo Singh ...Respondent Present: For Appellant : Mr. Hitesh Sachar & Ms. Anju Jain, Advocates. For Respondent : Mr. Yamak Sharma, Mr. Brijesh Sharma & Mr. Utkarsh Joshi, Advocates.

With

Comp. App. (AT) (Ins) No. 1653 of 2024 & I.A. No. 6017 of 2024

IN THE MATTER OF: Canara Bank ...Appellant Versus Chhatrasal Singh ...Respondent Present: For Appellant : Mr. Hitesh Sachar & Ms. Anju Jain, Advocates. For Respondent : Mr. Yamak Sharma, Mr. Brijesh Sharma & Mr. Utkarsh Joshi, Advocates.

1|Page ORDER

(Hybrid Mode)

[Per : Justice Rakesh Kumar Jain (Oral)]

12.09.2025 This order shall dispose of three appeals bearing

Company Appeal (AT) (Ins.) No. 1649 of 2024, Company Appeal (AT) (Ins.)

No. 1652 of 2024 & Company Appeal (AT) (Ins.) No. 1653 of 2024 as the

issue involved in all three appeals is common. However, for the sake of

convenience, the facts are being extracted from Company Appeal (AT) (Ins.)

No. 1649 of 2024.

2. In brief, the Canara Bank (in short 'Bank') advanced to M/s

Barmendra Agrotech Pvt. Ltd. a loan secured by the Respondents through

their personal guarantees.

3. The Bank filed an application under Section 7 of the Insolvency &

Bankruptcy Code, 2016 ('Code') against the Corporate Debtor which was

admitted on 14.10.2022.

4. Thereafter, the bank also filed application under Section 95 of the

Code for initiation of CIRP proceedings against the Personal Guarantor(s) of

the Corporate Debtor. The said application, on the first day of hearing, was

dismissed on the ground that it was barred by limitation.

5. Counsel for the Appellant has argued that as per the scheme of the

act much less Section 94 contained in Chapter III of the Code, the Tribunal

cannot perform its adjudicatory function till the RP is appointed in terms of

Section 95(7) of the Code.

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6. In this regard, he has relied upon a decision of the Hon'ble Supreme

Court rendered in the case of Dilip B Jiwrajka vs. Union of India & Ors.

passed in Writ Petition (Civil) No. 1281 of 2021 decided on 09.11.2023.

7. It is submitted that in the said judgment the Hon'ble Supreme Court

has held as under :-

"72. We are of the view that the submission that an adjudicatory role should be interposed at the stage of Section 97(5) cannot be accepted. The power which is conferred on the adjudicating authority at the stage of filing of an application is to appoint a resolution professional. The appointment of a resolution professional is for the purpose of a facilitative exercise which is contemplated by Section 99 which, as we have noted, eventually ends in a report either recommending the acceptance or rejection of the application. Bearing in mind the statutory scheme, it would be impermissible for this Court .to allow for the adjudicatory intervention of the adjudicating authority in adjudicating what is described as a jurisdictional question at the stage of Section 97(5).

73. Section 100(1) stipulates that the adjudicating authority must issue an order within fourteen days of receiving the report, either admitting or rejecting the application file under Sections 94 or 95, depending on the circumstances. Importantly, the adjudicating authority does not mechanically accept or reject applications based solely on the resolution professional's report. Instead, it must actively engage in a fair process, affording the debtor a fair opportunity to present their case. The adjudicating authority arrives at its determination by considering arguments supported by relevant material particulars. In essence, the adjudicating authority conducts an

3|Page independent assessment, not solely relying on the resolution professional's report, to decide the fate of applications under Section 94 or 95 of the IBC.

74. The true adjudicatory function of the authority commences under Section 100 after the submission of the report. Another reason why we are not inclined to accept the submission is that what is described as a jurisdictional question by the petitioners may not be a simple matter to be decided as a question of law. The jurisdictional questions of the nature which have been suggested by the petitioners, namely, on whether there is a subsisting debt or whether the relationship of debtor and creditor subsists, would involve a decision on mixed questions of law and fact. The entire scheme of Sections 99 and 100 implicates time lines which have been laid down by Parliament. The entire process of implementing these time lines would be rendered nugatory if an adjudicatory role were to be read into the provisions of Section 97(5). The final reason which would militate against accepting the submission is that the provisions of Section 99 do not as such implicate any adverse civil consequences particularly if those provisions are read in the manner in which we now propose to elucidate.

86. We summarise the conclusion of this judgment below:

(i) No judicial adjudication is involved at the stages envisaged in Sections 95 to Section 99 of the IBC;

(ii) The resolution professional appointed under Section 97 serves a facilitative role of collating all the facts relevant to the examination of the application for the commencement of the insolvency resolution process which has been preferred under Section 94 or Section 95. The report to be submitted to the adjudicatory authority is recommendatory in nature on whether to accept or reject the application;

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(iii) The submission that a hearing should be conducted by the adjudicatory authority for the purpose of determining 'jurisdictional facts' at the stage when it appoints a resolution professional under Section 97(5) of the IBC is rejected. No such adjudicatory function is contemplated at that stage. To read in such a requirement at that stage would be to rewrite the statute which is impermissible in the exercise of judicial review;

(iv) The resolution professional may exercise the powers vested under Section 99(4) of the IBC for the purpose of examining the application for insolvency resolution and to seek information on matters relevant to the application in order to facilitate the submission of the report recommending the acceptance or rejection of the application;

(v) There is no violation of natural justice under Section 95 to Section 100 of the IBC as the debtor is not deprived of an opportunity to participate in the process of the examination of the application by the resolution professional;

(vi) No judicial determination takes place until the adjudicating authority decides under Section 100 whether to accept or reject the application. The report of the resolution professional is only recommendatory in nature and hence does not bind the adjudicatory authority when it exercises its jurisdiction under Section 100;

(vii) The adjudicatory authority must observe the principles of natural justice when it exercises jurisdiction under Section 100 for the purpose of determining· whether to accept or reject the application;

(viii) The purpose of the interim-moratorium under Section 96 is to protect the debtor from further legal proceedings;

and

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(ix) The provisions of Section 95 to Section 100 of the IBC are not unconstitutional as they do not violate Article 14 and Article 21 of the Constitution.

8. On the other hand, Counsel for the Personal Guarantor has

vehemently argued that there is no error in the Impugned Order because if

the application by itself is beyond the period of limitation, then the Tribunal

could have dismissed the same even on the first date of hearing.

9. We have heard Counsel for the Parties and after examining the record,

are of the considered opinion that there is an error committed by the

Learned Tribunal in dismissing the applications, in all the three cases, filed

by the Bank on the first the date of hearing, on the ground of limitation

because it has been concluded by the Hon'ble Supreme Court in the case of

Dilip B Jiwrajka (Supra) that no judicial adjudication is involved at the

stages in Section 95 and 99 of the Code.

10. Thus, in view of the aforesaid facts and circumstances, the present

appeals succeeds and the Impugned Order passed in all three appeals are

hereby set aside. The application filed under Section 95 are hereby restored

to its original number. The matter(s) are remanded back to the Learned

Tribunal to decide the same in accordance with law. The parties are directed

to appear before the Tribunal on 23.09.2025.

11. Before parting, we would also like to add that the Respondent shall

have a right to raise the issue of limitation when the Tribunal would exercise

its adjudicatory jurisdiction. It is also made it clear that if the issue of

6|Page limitation is raised thus the same shall be decided by the Tribunal in

accordance with law.

12. The parties shall bear their costs. I.A., if any, pending are hereby

closed.

[Justice Rakesh Kumar Jain] Member (Judicial)

[Justice Mohammad Faiz Alam Khan] Member (Judicial)

[Mr. Naresh Salecha] Member (Technical) Sim/RR

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