Durga Prasad Agarwal & Anr vs Limtex Tea & Industries Ltd & Anr

(Arising out of order dated 21.11.2019 in CP (IB) No. 535/KB/2018 passed by National Company Law Tribunal, Kolkata Bench, Kolkata)

IN THE MATTER OF:

1 (a) Smt. Sangita Agarwal, Village- Kanduah, Post Office- Kanduah, Police Station -Sankrail, District- Howrah, Pin- 711302. 1 (b) Ankur Agarwal, Village- Kanduah, Post Office- Kanduah, Police Station -Sankrail, District- Howrah, Pin- 711302. 1 (c) Harsh Agarwal, Village- Kanduah, Post Office- Kanduah, Police Station -Sankrail, District- Howrah, Pin- 711302. 2. Biswanath Mondal 1 Hossain Lane P.S. Barabazar, P.O. Chinsurah Pin: 712101 ...Appellants (Corporate Debtor) Versus

1. Limtex Tea & Industries Limited & Anr. 5A, Shakespeare Sarani, 2nd Floor P.S.: Park Street, Kolkata-700017 2. Manish Jain, IRP C/o Manish Mahavir & Co. 2

Bajrang Bhawan 3rd Floor, Room No. 303 2B Grant Lane Kolkata-700012. ..... Respondents (Financial Creditor) Present: - For Appellant: Mr. Abhijeet Sinha, Ms. Suhita Mukhopadhyay and Mr. Avirup Chatterjee, Advocates. For Respondents: Mr. Rishab Kaushik and Mr. Shantanu Parashar, Advocates for Respondent No. 1. Mr. Abhishek Sharma, Advocate for Respondent No. 2 / IRP.

JUDGMENT

Justice Anant Bijay Singh,

This appeal has been initially preferred by 'Durga Prasad Agarwal and

Biswanath Mondal- Appellant /Corporate Debtor, aggrieved and dissatisfied

by the impugned order dated 21.11.2019 in CP (IB) No. 535/KB/2018

passed by National Company Law Tribunal, Kolkata Bench, Kolkata whereby

and where under, an application under Section 7 of the Insolvency and

Bankruptcy Code, 2016 (in short IBC) was filed by 'Limtex Tea & Industries

Limited' -Respondent No. 1 (Financial Creditor) was admitted for initiation of

'Corporate Insolvency Resolution Process' (in short CIRP) against the

Company (Appellant / Corporate Debtor).

2. From the perusal of the orders dated 15-12-2020 it appears that one

I.A. No. 2910 of 2020 preferred by Legal Heirs of the Late Durga Prasad

Agarwal (Appellant No. 1) intimating of this Appellate Tribunal that during the

pendency of this Appeal the Appellant No. 1 expired on 14.11.2020 and his

Company Appeal (AT) (Insolvency) No. 1496 of 2019 3

Legal Heirs namely Smt. Sangita Agarwal, Ankur Agarwal and Biswanath

Mondal were allowed to substitute and they have persue the Appeal.

3. The case of the Respondent No. 1 before the NCLT Kolkata Bench is

that a loan of Rs. 25,00,000/- (Rupees Twenty-Five Lacs Only) was given by

the Financial Creditor / Respondent No. 1 (herein) to the Corporate Debtor /

Appellants (herein) through Bank on 6th June, 2011 which was duly

acknowledged by the Corporate Debtor vide letter dated 6th June, 2011, i.e.

loan on interest for short time and the Corporate Debtor was paying interest

on the said loan.

4. The Financial Creditor / Respondent No. 1 (herein) being demanded,

the Corporate Debtor / Appellants (herein) had paid the said sum of Rs.

25,00,000/- to the Financial Creditor / Respondent No. 1 (herein) vide

account payee cheque bearing No. 930562 dated 27.04.2015 drawn on State

bank of India. When the said cheque was presented for payment, the same

was dishonoured and returned with the remarks ''Fund Insufficient''.

5. The Financial Creditor / Respondent No. 1 issued a demand notice

dated 29th June, 2015 intimating the Corporate Debtor / Appellants (herein)

regarding the dishonour of the aforesaid cheque and demanding the sum of

Rs. 25,00,000/- within 15 days from the receipt of the notice sent through

speed post which was received by Corporate Debtor / Appellants (herein) on

30th June, 2015.

6. The Corporate Debtor / Appellants (herein) has neglected to pay the

said sum, thereby compelling the Financial Creditor to file a case under

Company Appeal (AT) (Insolvency) No. 1496 of 2019 4 Section 138/141 of N.I. Act, against the Corporate Debtor / Appellants

(herein).

7. On 23rd February, 2018 the Financial Creditor / Respondent No. 1

(herein) again sent a letter requesting the Corporate Debtor / Appellants

(herein) to pay the aforesaid amount but they were no response and

Application under Section 7 of the 'IBC' was filed on 17th April, 2018 before

the NCLT, Kolkata Bench, Kolkata.

Submissions on behalf of the Appellants

8. The Learned Counsel for the Appellants during the course of argument

and also their Reply Affidavit filed before the NCLT, Kolkata Bench, Kolkata

is that the Application under Section 7 of the IBC hit by limitation and denial

of taking loan of Rs. 25,00,000/- on interest for short time was given by the

Financial Creditor and the fact that the Appellants / Corporate Debtor have

issued a cheque dated 27.04.2015 drawn of State Bank of India in favour of

Respondent No. 1 is denied and plea has been taken that signature is forged.

9. The Learned Counsel for the Appellants while referred to page 206 of

the Appeal Paper Book shows that the petition filed by the Appellant before

the NCLT with a prayer that the Financial Creditor be directed to produce the

original cheque and the original cheque inspected by the Questioned

Document Investigation Department, CID, West Bengal for verification.

10. The Learned Counsel for the Appellants during the course of argument

and his Written Submissions submitted that at page 61 of the Appeal Paper

Book Part -IV (Particulars of Financial Debt) is as under:

Company Appeal (AT) (Insolvency) No. 1496 of 2019 5

11. The Learned Counsel for the Appellants relied on a judgment of Hon'ble

Supreme Court of India reported in 2020 SCC OnLine SC 647 'Babulal

Vardharji Gurjar V/s Veer Gurjar Aluminium Industries Pvt. Ltd. and Anr.'

Company Appeal (AT) (Insolvency) No. 1496 of 2019 6

wherein para 96 is as under:

"................

96. Therefore, on the admitted fact situation of the present case, where only the date of default as '08.07.2011' has been stated for the purpose of maintaining the application under Section 7 of the Code, and not even a foundation is laid in the application for suggesting any acknowledgement or any other date of default, in our view, the submissions sought to be developed on behalf of the respondent No. 2 at the later stage cannot be permitted. It remains trite that the question of limitation is essentially a mixed question of law and facts and when a party seeks application of any particular provision for extension or enlargement of the period of limitation, the relevant facts are required to be pleaded and requisite evidence is required to be adduced. Indisputably, in the present case, the respondent No. 2 never came out with any pleading other than stating the date of default as '08.07.2011' in the application. That being the position, no case for extension of period of limitation is available to be examined. In other words, even if Section 18 of the Limitation Act and principles thereof were applicable, the same would not apply to the application under consideration in the present case, looking to the very averment regarding default therein and for want of any other averment in regard to acknowledgement. In this view of the matter, reliance on the decision in Mahaveer Cold Storage Pvt. Ltd. does not advance the cause of the respondent No. 2."

........................

12. It is further submitted that in view of the fact that date of default

admittedly mentioned in the Application filed by the Respondent No. 1 before

the NCLT, Kolkata Bench, Kolkata is 1st April, 2014 and the Application under

Company Appeal (AT) (Insolvency) No. 1496 of 2019 7 Section 7 of the IBC was filed on 17th April 2018. The Ld. Adjudicating

Authority failed to consider that the Application is hit by limitation.

13. It is further submitted that the specific plea has been taken by the

Respondents that the cheque in question was forged document. The

acknowledge of debt was not stablished and no finding recorded by the Ld.

Adjudicating Authority is miss directed.

Submissions on behalf of the Respondent No. 1

14. The Learned Counsel for the Respondent No. 1 during the course of

argument and in his Written Submissions submitted that the Application

under Section 7 of the IBC filed within limitation. That the date of default was

22.06.2015 when the cheque was dishonoured insufficiency and the

Application under Section 7 of the IBC was filed on 17.04.2018 within three

years of date of limitation from the date of default, so the 'Babulal Vardharji

Gurjar' case is not applicable in the matter.

15. Learned Counsel for the Respondent No. 1 further relied on an order

dated 24.10.2019 passed by Ld. NCLT, Allahabad Bench in Company Petition

(IB) No. 353/ALD/2018 wherein paragraph Nos. 10 to 15 it was held that the

Corporate Debtor will not be allowed to take refuge under technicalities when

the pleadings otherwise disclose that the date of default within limitation.

16. The Learned counsel for the Respondent No. 1 submitted that the

Corporate Debtor/ Appellants has contested that the date of default

mentioned in the Form-I by the Financial Creditor/Respondent No. 1 is

01.04.2014, thus the Application filed under Section 7 of the IBC is time

Company Appeal (AT) (Insolvency) No. 1496 of 2019 8

barred. Aforesaid is nothing but an eye-wash as from a meaningful and

holistic reading of the pleadings filed on behalf of the Financial Creditor.

17. It is further submitted that the default occurred when the cheque

issued towards repayment of loan was dishonoured on 22.06.2015, which was

issued by the Corporate Debtor towards repayment of the entire principle

amount issued in pursuance of the understanding of the parties and the

Application under Section 7 of the IBC was filed on 17.04.2018.

FINDING

18. We have heard the argument of both the sides and closely scrutinised

the records as well as Written Submissions filed on behalf of the parties. On

the basis of the pleadings and during the course of arguments and his Written

Submissions, two issues emerge:

i) Whether the Application under Section 7 of the IBC filed by the

Respondent No. 1 is barred by limitation?

ii) Whether the cheque relied upon to establish acknowledgement of

debt was genuine?

Issue No. 1: From the perusal of record it appears that at page 53

Annexure A/2 of the Appeal Paper Book the Respondent No. 1

/Financial Creditor in Part-IV (supra) the total amount in default of Rs.

40,10,274/- Principal amount Rs. 25,00,000/- + Interest @ 15% (w.e.f.

01.04.2014 to 10.04.2018) of Rs. 15,10,274/-.

In view of the judgment of Hon'ble Supreme Court of India

reported in 2020 SCC OnLine SC 647 'Babulal Vardharji Gurjar V/s Veer

Company Appeal (AT) (Insolvency) No. 1496 of 2019 9

Gurjar Aluminium Industries Pvt. Ltd. and Anr.' wherein paragraph 96 is

as under:

"96. Therefore, on the admitted fact situation of the present case, where only the date of default as '08.07.2011' has been stated for the purpose of maintaining the application under Section 7 of the Code, and not even a foundation is laid in the application for suggesting any acknowledgement or any other date of default, in our view, the submissions sought to be developed on behalf of the respondent No. 2 at the later stage cannot be permitted. It remains trite that the question of limitation is essentially a mixed question of law and facts and when a party seeks application of any particular provision for extension or enlargement of the period of limitation, the relevant facts are required to be pleaded and requisite evidence is required to be adduced. Indisputably, in the present case, the respondent No. 2 never came out with any pleading other than stating the date of default as '08.07.2011' in the application. That being the position, no case for extension of period of limitation is available to be examined. In other words, even if Section 18 of the Limitation Act and principles thereof were applicable, the same would not apply to the application under consideration in the present case, looking to the very averment regarding default therein and for want of any other averment in regard to acknowledgement. In this view of the matter, reliance on the decision in Mahaveer Cold Storage Pvt. Ltd. does not advance the cause of the respondent No. 2."

Admittedly, from the perusal of the Part IV particulars of financial

debt on which default occurred on 01.04.2014 has agreed between the

parties.

Company Appeal (AT) (Insolvency) No. 1496 of 2019 10

So, in the light of the aforesaid judgment of the Hon'ble Supreme

Court of India (supra) the Application under Section 7 of the IBC filed

by the Respondent No. 1 is hit barred by limitation. The Issue No. 1

decided in favour of the Appellant and against the Respondent No. 1.

Issue No. 2: The Appellant has filed I.A. before the NCLT, Kolkata Bench

on 27th August, 2018 with a prayer to direct the Financial Creditor to

produce the original cheque so that it may be sent to the Questioned

Document Investigation Department, CID, West Bengal for verification,

but no order was passed by the Adjudicating Authority and no reliance

could be placed on the aforesaid document. As the Appellant disputed

the cheque in question as it is disputed document, did not decide this

issue and no order. So the Issue No. 2 is also decided in favour of the

Appellant and against the Respondent No. 1.

19. After going through the records and having heard the counsel for the

parties, we are of the considered view that the Ld. Adjudicating Authority have

failed to consider the facts that Application under Section 7 of the IBC is

barred by limitation and secondly, that so called cheque on which the

Respondent No. 1 disputed, no reliance could be placed on the aforesaid

document. The impugned order cannot be sustained in the eye of Law and in

view of the Judgment of the Hon'ble Supreme Court (Supra) and is hereby fit

to be set aside. The Appeal is allowed.

ORDER

 For the reason(s) aforesaid, we set-aside the impugned order dated

21.11.2019 in CP (IB) No. 535/KB/2018 passed by Ld. Adjudicating

Company Appeal (AT) (Insolvency) No. 1496 of 2019 11

Authority, National Company Law Tribunal, Kolkata Bench, Kolkata

and dismiss the Application under Section 7 of the IBC filed by the

'Limtex Tea & Industries Limited / Financial Creditor'.

 In the result, 'Corporate Debtor' is released from the rigor of the

'Corporate Insolvency Resolution Process'. All actions taken by the

'Interim Resolution Professional / Resolution Professional' and

'Committee of Creditors', if any, are declared illegal and set-aside. The

'Interim Resolution Professional / Resolution Professional' is directed to

handover the records and assets of the 'Corporate Debtor' to the Director

of the 'Corporate Debtor' immediately.

 The matter is remitted to the Ld. Adjudicating Authority to decide only

fees and costs of 'CIRP' payable to IRP/RP, which shall be borne by the

Financial Creditor / Respondent No. 1.

 The Appeal is allowed with the aforesaid observations and directions.

No costs.

 Let the Registry to communicate the Judgment to the Ld. Adjudicating

Authority, National Company Law Tribunal, Kolkata Bench, Kolkata.

[Justice Anant Bijay Singh] Member (Judicial)

[Ms. Shreesha Merla] Member (Technical)

NEW DELHI

RN

3rd March, 2021.

Company Appeal (AT) (Insolvency) No. 1496 of 2019