E.M Najeeb Ellias Mohammed vs Union Bank Of India Limited

For Respondent: Mr. PH. Arvindh Pandian, Sr. Advocate For Mr. Varun Srinivasan, Advocate

COMPANY APPEAL (AT) (CH) (Ins.) No. 08 of 2024

1

JUSTICE M. VENUGOPAL, MEMBER (JUDICIAL)

Overview

The Appellant /Promoter of Air Travel Enterprises India Ltd.

/ Corporate Debtor has preferred the instant Comp. App. (AT)

(Ins.) No. 08 of 2024 before this Tribunal as an 'Aggrieved' person,

in respect of the impugned order dated 22.12.2023 passed by the

Adjudicating Authority/NCLT, Kochi Bench, Kochi in CP

(IBC)/33/KOB/2023.

2. Earlier, the Adjudicating Authority / NCLT, Kochi Bench

while passing the impugned order dated 22.12.2023 in CP

(IBC)/33/KOB/2023 among other things at paragraph No. 19 to

21, had observed the following:-

"19. As far as the issue before us, on perusal of the records,

we found that the IBA/01/KOB/2020 was initiated against the

Corporate Debtor/Principal Borrower on 15.10.2020 by this

Tribunal. Subsequently, the Corporate Debtor filed an appeal

Hon'ble NCLAT and as per the order dated 09.11.2021, the Hon'ble

COMPANY APPEAL (AT) (CH) (Ins.) No. 08 of 2024

2 NCLAT granted 6 months' time period for settling the entire liability

between the Financial Creditor and Corporate Debtor. It is also seen

that the Corporate Debtor filed OTS proposals admitting the liability

on 14.01.2022 and 19.03.2022 and sought time for settlement. But

the Corporate Debtor did not comply with the direction of the Hon'ble

NCLAT and due to the same reason, the Financial Creditor

approached this Tribunal by filing CP(IBC)/46/KOB/2022 which

was admitted by this Tribunal vide order dated 25.01.2023.

Therefore, there is a continuous cause of action and we could come

to a conclusion that the Company Petition has been filed within the

prescribed period of limitation. Hence the contention taken by the

Corporate Debtor regarding limitation has no force.

20. Issue No. iii . As there is a default in the payment of the

financial debt, which has been confirmed by them in the counter

affidavit that the Financial Creditor paid the money to the Corporate

Debtor, we are of the view that the present application filed by the

Financial Creditor satisfies all the definitions of "Financial Creditor",

"Default" and "Financial Debt" and qualifies for applying for

Insolvency and Bankruptcy Code. By mentioning various

procedural hurdles, the Corporate Debtor cannot wash off its hands

COMPANY APPEAL (AT) (CH) (Ins.) No. 08 of 2024

3 in repaying the amount borrowed, which is a financial debt owed by

them. Hence, there is a Creditor-Debtor relationship with them.

21. It is seen from the letters of guarantee dated 02.07.2010,

29.09.2012, 24.02.2014 and 12.01.2015 the application made by

the Financial Creditor is complete in all respects as required by law,

and it clearly shows that the debt has not been paid by the

Corporate Guarantor. So, we are of the considered opinion that the

present application of the Petitioner/Financial Creditor may be

admitted under Section 7 of the IBC, 2016 and CIRP initiated

against the Corporate Guarantor."

and finally admitted the main Company Petition for initiating CIRP

against the Corporate Guarantor M/s. Air Travel Enterprises India

Ltd., declared moratorium and appointed Mr. Raj Mohan R. as an

Interim Resolution Professional.

Appellant's Contention

3. Challenging the impugned order dated 22.12.2023 in CP

(IBC)/33/KOB/2023 passed by the Adjudicating Authority/NCLT

Kochi Bench, the Learned Counsel for the Appellant contends that

the Adjudicating Authority/Tribunal had erroneously admitted the

main company petition.

COMPANY APPEAL (AT) (CH) (Ins.) No. 08 of 2024

4

4. It is represented on behalf of the Appellant that the

Respondent/Union Bank of India, Thiruvananthapuram had

granted a 'term loan', of Rs. 24.86 crore to GGL for the purpose of

setting up 'Resorts', by way of 'sanctioned Letter', dated

12.06.2010 thereafter it was revised on 05.01.014. As a matter of

fact, this loan facility, was renewed on 29.09.2012, 24.02.2014,

12.01.2015 and 01.07.2016. The 'Corporate Debtor', in support of

this project had executed a 'Corporate Guarantee' on 02.07.2010,

29.09.2012, 24.02.2014 and on 12.01.2014 and later, the Account

was classified as NPA on 30.09.2015, as per the version of the

Bank.

5. According to the Appellant, the Appellant Group had

undergone hardship from one side bearing ongoing maintenance

of clearing weeds and grass on the sprawling 55 acre Leasehold

property taken from 'Bekel Resort Development Corporation Ltd.'

(BRDCL), Government of Kerala, bearing leasehold costs, and from

the other side, made an investment of Rs. 126.60 Crore on the

project of setting up Resorts on the Beach side, and paying interest

costs of Rs. 61.40 to the Banks alone.

COMPANY APPEAL (AT) (CH) (Ins.) No. 08 of 2024

5

6. It is represented on behalf of the Appellant that despite all

this hardship, the Appellant Group has never ceased their efforts

to maintain servicing of the loans taken from the State Bank of

India, Union Bank of India, (Financial Creditor Bank) and

Dhanlaxmi Bank. But, owing to the delay that had occurred

unfortunately, in completing the project, the group in the year

2015 had failed to service the Loan of Banks, which led 'GGL' into

this Financial Crisis.

7. The Learned Counsel for the Appellant points out that as

'GGL' still investing in the project without any returns, it could not

come out of the financial crisis and looking at this situation and

as per their procedures, the bankers(Union Bank of India) and

Dhanlaxmi Bank having authorized the State Bank of India to

proceed against 'GGL' for realizing the dues outstanding, the State

Bank of India had issued section 13(2) notice against 'GGL' and

the 'Guarantors', including this corporate director, to repay the

outstanding accrued to Rs. 96,04,97,895 (a) Rs. 53,01,79,190/-

for SBI (b) Rs. 26,85,08,554/- for UBI and (c) Rs. 16,85,08,554 for

Dhanlaxmi Bank as on 28.12.2017.

COMPANY APPEAL (AT) (CH) (Ins.) No. 08 of 2024

6

8. According to the Appellant, in the said notice dated

29.12.2017 the group of Banks, headed by State Bank of India had

categorically demanded not only 'GGL' to repay the due

outstanding in 60 days from the date of receipt of notice but also

demanded the 'Guarantors' to pay the due outstanding and

payable by 'GGL'. Furthermore, in the notice it is on record, that

the limitation against the 'Guarantors', must be reckoned from the

date of the notice dated 29.12.2017.

9. The Learned Counsel for the Appellant points out, the

Accounts having become NPAs, a financial Creditor, (UVI) on the

request of 'GGL' dated 20.12.2019 had sanctioned 'One Time

Settlement' on 27.11.2019 for Rs. 17.05 crores. No sooner did

'GGL' pay Rs. 25,00,000/- in respect of the 'One Time Settlement',

then the 'COVID' effect set in and because of the pandemic

situation, the investor backed out of the project, which ultimately

failed 'GGL' clearing the 'One Time Settlement'.

10. The Learned Counsel for the Appellant brings to the notice of

this Tribunal that the Respondent / Bank, simultaneously filed

Section 7 petition filed under I&B Code, 2016 vide

(IBA/01/KOB/2020) before the Adjudicating Authority, NCLT,

COMPANY APPEAL (AT) (CH) (Ins.) No. 08 of 2024

7 Kochi and that the Section 7 Petition was admitted on 15.10.2020.

Against this order on 15.10.2020, an Appeal was filed before the

Appellate Tribunal, explaining the Appellant's intentions to clear

the dues by the 'One Time Settlement'. The Appellate Tribunal on

09.09.2021 was pleased to pass orders disposing of the Appeal, by

granting liberty to 'GGL' to settle within six months from the date

of the order, failing which the Respondent/Bank is at liberty to

proceed against 'GGL'. When the Respondent / Bank took up the

matter before the Hon'ble Supreme Court of India, it was dismissed

as withdrawn on 29.11.2021 (vide Civil Appeal No. 6916/2021.

11. It is projected on the side of the Appellant that ever since,

'GGL' pushed hard to persuade the Respondent / Bank to sanction

'One Time Settlement', while this process was in progress, the

Respondent / Bank again on 06.08.2022 had filed CP

(IBC)/46/KOB/2022 (under Section 7 of the I&B Code, 2016

against GGL, claiming Rs. 39,78,12,079/- wherein the

Adjudicating Authority / Tribunal, Kochi on 25.01.2023 initiated

the 'Corporate Insolvency Resolution Process' by admitting the

Company Petition.

COMPANY APPEAL (AT) (CH) (Ins.) No. 08 of 2024

8

12. According to the Appellant, the Respondent/Bank filed a

petition u/s 7 of the I&B Code, 2016 against the Corporate

Debtor/Corporate Guarantor on 18.07.2023 claiming Rs.

42,87,27,148/- against the claim of Rs. 39,78,12,079/- admitted

against GGL. Although, the Respondent/Bank filed a case against

a 'GGL' as well as the Corporate Debtor, the Appellant's group

never gave up its endeavours in requesting the Respondent/Bank

to settle this claim.

13. The Learned Counsel for the Appellant points out that the

'GGL' as soon as this Authority gave directions to settle it within

six months the Appellant on 05.10.2021, 04.02.2022, 19.03.2022,

21.11.2022, 13.02.2023, 04.09.2023 and lastly on 18.09.2023

increased its 'One Time Settlement Proposal' to a sum of Rs. 11

crore.

14. According to the Appellant, the Respondent/Bank in line with

the correspondence dated 06.12.2021, 01.02.2022, 21.03.2022,

02.12.2022, 20.02.2023, 13.03.2023 and on 20.09.2023 the

Respondent / Bank wrote a letter mentioning that the regional

Head of the Respondent/Bank had forwarded the offer of Rs. 11

crores, for examination by the Competent Authority. Again on

COMPANY APPEAL (AT) (CH) (Ins.) No. 08 of 2024

9 03.10.2023 the Bank wrote a letter requesting the Appellant to

deposit an upfront sum equivalent to 10% of the offer amount and

within two days, on 05.10.2023 the Appellant had deposited Rs.

1.10 crore, being 10% of the proposal tentatively agreed by the

Bank. Also that, the Appellant had not asked for any extension of

time, to pay the remaining balance after 10% of Rs. 11 crore was

deposited.

15. Learned Counsel for the Appellant points out that the

Respondent /Bank had sent a letter by the Appellant on

29.11.2023 stating that 'no offer', below the Running Ledger,

Balance outstanding in the Account cane be considered for 'One

Time Settlement' in the Account of 'GGL' with a request to improve

the offer, atleast to a sum equal to the Running Ledger balance in

the Account.

16. The Learned Counsel for the Appellant proceeds to take a plea

that as soon as the 'OTS proposal' earlier agreed was rejected on

29.11.2023, the parties on the directions of the Hon'ble Bench,

argued the case on 06.12.2023 and orders were reserved on the

same day. On 22.12.2023, the Tribunal/Kochi Bank had

pronounced the orders initiating 'CIRP' against the Corporate

COMPANY APPEAL (AT) (CH) (Ins.) No. 08 of 2024

10 Debtor. In fact, no time was left to the Appellant, either to revise

the proposal or even to approach the Respondent/Bank, to avoid

this rigmarole against the 'Corporate Debtor'.

17. The Learned Counsel for the Appellant brings to the notice of

this Tribunal that in between, 'DRDCL', on 30.03.2022 had

terminated the 'Lease Agreement' giving 55 acres of Govt. Land on

lease Rs. 55 acres of govt. land, on lease, to the 'Principal

Borrower'. Later, when the Appellant had requested the Govt. to

reconsider its decision in regard to the termination of the 'Lease

Agreement', the Govt. of Kerala on 15.03.2023 stated that it would

not reinstate the Lease that was terminated because of the fact

that the project was built on the land leased out, once the land

was taken back, the value of the project has become almost zero.

Because of this reason, the Appellant could not make the OTS

proposal, as made, prior to the 'COVID Pandemic'.

18. It is brought to the notice of this Tribunal on behalf of the

Appellant that the Respondent / Bank had filed a case against

GGL, also State Bank of India filed a separate

CP(IB)/43/KOB/2021 before the same Bench against GGL as a

matter of fact, the Appellant Group had settled the account of State

COMPANY APPEAL (AT) (CH) (Ins.) No. 08 of 2024

11 Bank of India by paying Rs. 28 crore against the outstanding of

Rs. 56.29 crore and a no due certificate was issued by the State

Bank of India on 12.05.2022 stating that the Loan Account of GGL

was closed on receipt of the sum aforesaid as per compromise

settlement. Resultantly, two Company Petitions were filed against

GGL and its personal guarantor were withdrawn by State Bank of

India on 24.05.2022 and 30.05.2022.

19. According to the Appellant, he entered into a One Time

Settlement with Dhanlaxmi Bank for Rs. 11.88 crore out of the

OTS agreed, the Appellant Group made a part payment of Rs. 1.5

crore and for the payment of balance acknowledgement from the

Corporate Debtor after 29.12.2017, the claim against the Appellant

herein, is barred by Limitation.

20. It is projected on the side of the Appellant that the Appellant

had mentioned in the Reply to the Company Petition that the

impugned order, passed by NCLAT on 09.09.2021 against the

order of the Adjudicating Authority / Tribunal dated 15.10.2020

will not save the limitation against the Corporate Debtor unless,

the computation of period of limitation is covered by anyone of the

Sections of part III of the Limitation Act, 1963. In the order dated

COMPANY APPEAL (AT) (CH) (Ins.) No. 08 of 2024

12 09.09.2021, the Appellate Tribunal had not passed any order

which could save limitation against the Guarantors.

21. According to the Appellant in the Reply he had stated that

the OTS letters dated 27.11.2019 and 21.03.2022 given by GGL

will not save limitation against the Corporate Debtor because the

Respondent / Bank had invoked the Guarantee furnished by the

Corporate Debtor on 29.12.2017 itself and, therefore, the

Appellant sought for the dismissal of the Company Petition filed

against the Corporate Debtor.

22. The Learned Counsel for the Appellant points out that the

main plea of the Corporate Debtor before the Adjudicating

Authority/Tribunal was (i) the default date should be before the

account was declared as NPA, and since the notice u/s 13(2) of the

SARFAESI Act was given on 29.12.2017 demanding the

Guarantors to pay the due payable by GGL and there being no

acknowledgement of debt by the Corporate Debtor, thereafter GGL

subsequently submitted OTS proposal will not save limitation

against the Corporate Debtor.

23. The Learned Counsel for the Appellant contends that it is an

established proposition of law for the computation of the limitation

COMPANY APPEAL (AT) (CH) (Ins.) No. 08 of 2024

13 period a specific duty is showered upon the person filing the

petition to prove the date of default'. It is for any reason the person

fails to prove the date of default, the petition is liable to be

dismissed.

24. According to the Appellant computation of period is

peremptory to decide whether a claim or remedy is barred by

limitation. Further default will commence at a specific date and if

that date is not crystallised the period of limitation cannot be

computed and the Tribunal had failed to make this salient

exercise.

25. It is the stand of the Appellant this his contention was that

the Account being declared as NPA on 30.09.2015, the defaulting

date would be a NPA date. Since the petition was filed on

22.09.2023 the NPA date being shown as 30.09.2015 and unless

the Respondent/Bank has explained as to how the petition is

saved by limitation, the petition is liable to be dismissed. Also,

that when the Limitation Act, 1963 is made applicable to an

enactment, no discretion is left to the Court / Tribunal to allow the

petition, without answering the point of Limitation'.

COMPANY APPEAL (AT) (CH) (Ins.) No. 08 of 2024

14

26. According to the Appellant, the Adjudicating Authority/

Tribunal in Neelkant Township and Construction Ltd. V. Urban

Infrastructure Trustee Ltd. (Vide Comp. App. (AT) (Ins.) 44 of 2017)

had dealt with the Limitation point separately to say that the

Limitation Act, 1963 is inapplicable to the I&B Code, 2016 because

the 'Code' is not for Recovery of the 'Money Claim' and the

submissions of the Corporate Debtor were not accepted by the

Adjudicating Authority/Tribunal, in regard to the Limitation

aspect in filing Section 7 petition before the Adjudicating

Authority/ Tribunal. In fact, the Adjudicating Authority/ Tribunal

had made an erroneous observation without looking into the

amendment dated 06.06.2018, applying a Limitation Act to the

Code.

27. The Learned Counsel for the Appellant submits that the

Corporate Debtor had avoid a general term loan of Rs. 25 Crores

on 12.06.2010 from the Respondent/Financial Creditor, which

was later Renewed/Restructured and modified on various dates.

Also that the Respondent/ Bank had filed IBA/ 01/KOB/2020

before the Adjudicating Authority/ Tribunal which was admitted

on 15.10.2020. However, in Comp. App. (AT) (Ins.) 993 of 2020 the

COMPANY APPEAL (AT) (CH) (Ins.) No. 08 of 2024

15 proceedings of the Adjudicating Authority/ Tribunal in IBA/

01/KOB/2020 was challenged and ultimately the said Appeal was

disposed of with a direction that if the 'Corporate Debtor fails to

settle in 6 months time from the date of this Order, the Respondent

Bank is at liberty to take appropriate steps. Any observations made

in this Appeal shall not stand in the way of any further

proceedings, if initiated, Needless to add, the period spent in

pursuing this Appeal shall be excluded for the purpose of

limitation.'

28. It is represented on behalf of the Appellant that a fresh

application under Section 7 of the Code was filed by the Appellant

against the Corporate Debtor/ Air Travel Enterprises India Ltd.

before the Appellate Tribunal in Comp. App. (AT) (Ins.) 70/ 2023.

The Appellate Tribunal, finally, negatived the pleas of the

Corporate Debtor and the CIRP as against the Principal Borrower

was affirmed by this Appellate Tribunal.

29. The Learned Counsel for the Appellant points out the

Committee of Creditors, later, had unanimously resolved to

liquidate Principal Borrower/ M/s Green Gateway Leisure Ltd., an

application in I.A IBC/462/KOB/2023 in CP(IB) /46/KOB/2022

COMPANY APPEAL (AT) (CH) (Ins.) No. 08 of 2024

16 was filed by the Resolution Professional before Adjudicating

Authority/ Tribunal and an 'order of liquidation' against the

Principal Borrower was passed on 24.11.2023. In fact, the

Corporate Debtor viz. M/s Air Travel Enterprises India Ltd. and the

Appellant Mr. E.M. Najeeb Ellias Mohamed had questioned order

of liquidation in Comp. App. (AT) (Ins.) 464/2023 and ultimately

the 'Appeal' came to be dismissed and the order of liquidation was

affirmed.

30. The Learned counsel for the Appellant points out that the

'Corporate Debtor/ M/s Air Travel Enterprises India Ltd.' stood as

'Corporate Guarantor' for the Loans obtained by the 'Principal

Borrower' and a guarantee deed/agreement in support of the same

was/ were executed. The Respondent had initiated action by

preferring a Section 7 Application against the Corporate Debtor,

which was admitted on 24.11.2023 resulting in the 'impugned

order' under challenged by the appellant.

31. The Learned Counsel for the Appellant refers to the

Guarantee, executed by the Corporate Debtor (vide 66 onwards of

the Appeal Paper Book) and the same runs as follows:

COMPANY APPEAL (AT) (CH) (Ins.) No. 08 of 2024

17 "It is also agreed that any admission or acknowledgment

in writing by the Principal Debtor of the amount of

indebtedness of the Principal Debtor or otherwise as in

relation of the subject matter of this guarantor, shall be

binding on me/us and I/We accept the correctness of any

statement of account served on the Principal Debtor which

is duly certified by any Manager or Officer of the Bank and

the same shall be treated as my/our duly authorized agent

for purpose of Indian Limitation Act, 1963."

32. The Learned Counsel for the Appellant points out that the

Adjudicating Authority/ Tribunal had referred to a decision in

Manmohan Singh Jain V. M/s State Bank of India & Anr. (vide

Comp. App. (AT) (CH) (Ins.) 97 of 2021) to say that the non-

mentioning of the 'Date of Default' in Part-IV of the application in

Form-1 was 'not fatal', to an Application under Section 7 of the

Code wherein the Appellate Tribunal, relied upon the decision in

Surendra Trading Co. V. Juggilal Kamlapat Jute Mills Company Ltd.

& Ors. (2017) 16 SCC 143 stating that the prescribed period of 7

days for curing the defect, as per Section 7(5) of the Code and 14

days specified for adjudication of an 'insolvency petition' as

mentioned in Section 10(4) of the I&B Code, 2016 are only

'directory' and not a 'mandatory' one.

COMPANY APPEAL (AT) (CH) (Ins.) No. 08 of 2024

18

33. According the Appellant, the Application under Section 7 of

the Code, initiated against the Appellant is a time barred one, from

the date of 'Non-Performing Asset' or the date of signing the Last

Guarantee Agreement dated 24.02.2014.

34. Furthermore, the Learned Counsel for the Appellant points

that the facts of the case in Laxmipat Surana's case are different

from the facts of the present case, that the 'Guarantor' took a stand

that when the 'Principal Borrower' is not a Corporate person,

under I&B Code, 2016 is 'inapplicable'' against the 'Corporate

Debtor' to 'initiate a proceedings', under Section 7 of I&B Code,

Section 7 petition of the Code, would not lie, against the

'Guarantor' and on this ground, 'no notice' was given and there

was no 'acknowledgement' from the 'Guarantor', at any point of

time, within 9 years before the filing of the Company Petition.

35. Therefore, the Learned Counsel for the Appellant submits

that the Hon'ble Supreme Court therefore held that the 'Debt'

being guaranteed by the Corporate Debtor, Section 7 petition will

lie against the 'Corporate Guarantor', irrespective of the fact,

whether or not, the 'Principal Borrower' is a Corporate person and

the debt being acknowledged by the Corporate Guarantor within 3

COMPANY APPEAL (AT) (CH) (Ins.) No. 08 of 2024

19 years before filing the Company petition against the Corporate

Guarantor and the claim against the Corporate Guarantor is

within the period of Limitation on computation of the prescribed

period from the date of last Acknowledgment.

36. According to the Learned Counsel for the Appellant, in the

present case, a notice was served on the Corporate Debtor/

Guarantor on 29.12.2017, demanding payment from the

Guarantor with explicit statement that the limitation against the

Guarantor will be reckoned from the date of the notice dated

29.12.2017.

37. The Learned Counsel for the Appellant refers to the decision

of the Hon'ble Supreme Court in Syndicate Bank V.

Chinnaveerappa Beleri & Ors., reported in 2006 11 SCC 506 that

the limitation in regard to the 'Guarantee' will run from the date of

the Creditor made a demand against the Guarantor. In fact, the

Agreement and the incidents from the 'Guarantee Agreement'

being distinct and intendent the limitation against the Guarantor

will start running once the Guarantee is invoked. Also that once

the "Limitation period' had commenced/ running, as mentioned in

Section 9 of the Limitation Act, 1963 it will not stop running,

COMPANY APPEAL (AT) (CH) (Ins.) No. 08 of 2024

20 unless a factual situation governed by the Limitation Act had

occurred.

38. According the Appellant in the present case, having the

creditor' invoked the Guarantee on 29.12.20217 by mentioning

that the Limitation will be reckoned from the date of receipt of the

notice dated 29.12.2017 the actions and acknowledgment between

the Lender and the Principal Borrower will not save the 'Limitation

period' already begun against the 'Guarantor/ Corporate Debtor'

and hence, the Limitation has begun from 29.12.2017 and hence,

the decision in Surana's case is inapplicable to the present Appeal.

39. The Learned Counsel for the Appellant, points out that the

'Demand' made against the Appellant on 29.12.2017, to 'pay the

dues' payable by the 'Principal Borrower', the Appellant, having not

paid either part payment or acknowledge the liability against it, at

any point of time after 29.12.2017, the Respondent/ Bank ought

to have explained how this 'default date' 09.03.2022 has come into

existence and the 'Bank' and the 'Tribunal' had not any endeavor

to deal with this default date not being supported by any factual

event.

COMPANY APPEAL (AT) (CH) (Ins.) No. 08 of 2024

21

40. The Learned Counsel for the Appellant contends that the

action against the Corporate Guarantor is barred by Limitation

and Article 137 of the Limitation Act, 1963 applies squarely and

adverts to the decision of the Hon'ble Supreme Court in the matter

of Assets Reconstruction Company (India) Ltd. V. Tulip Star Hotels

Ltd. Ors. (Vide Civil Appeal no. 84-85 of 2020 (2019) 10 SCC 572).

41. The Learned Counsel for the Appellant brings to the notice of

this Tribunal that the Corporate Guarantor/ Corporate Debtor had

made an effort to settle the sum with the Respondent/ Bank and

gave an offer to 'OTS' a sum of Rs. 13.5 Crores on 05.02.2024 with

an upfront demand draft of Rs. 1.25 Crores in favour of

Respondent/ Bank.

42. The Learned Counsel for the Appellant submits that the 'lives

of 250 workers' are at 'stake' and the Corporate Debtor have made

continuous efforts to settle the Loan amicably but the

Respondent/ Bank had rejected the offer of the Appellant. Even

when the Learned Senior Counsel had offered Rs. 14 crores during

the hearing, the Respondent/ Bank Ld. Senior Counsel had

rejected the same. Therefore, it is clear that the Respondent/ Bank

COMPANY APPEAL (AT) (CH) (Ins.) No. 08 of 2024

22 is proceeding against the Corporate Guarantor with vengeance,

although, the claim against the Corporate Guarantor is barred.

43. According to the Appellant, the Principal Borrower had

secured the Loan from State Bank of India and Dhanlaxmi Bank

which was settled by the Promoter or Corporate Debtor through

'one time settlement' and the same is depicted, in tabular form as

under:

Financial Outstanding Settled Status Creditor Liability as on through OTS (Amt in OTS proposal crores) State Bank of 72.63 28.00 Settled & India given NOC Dhanalakshmi 36.07 11.88 Settled & Bank given NOC

44. According to the Appellant the Respondent/ Bank cannot

charge an interest arbitrarily after the 'Non-Performing Asset' date,

but the Bank/ Respondent had charged interest at any exorbitant

rate and other charges, even after the NPA date, which is 'illegal'.

The Bank/ Respondent as claimed and demanded from the

Corporate Debtor as follows:

Union Bank of Principal Interest/ Other Total Due India Penal interest charges Default Amount 24,85,00,000 40,82,83,110 80,28,632 66,48,11,742 as on 04.07.2023 Less: 23,60,84,594 Recovery Total dues as on 04.07.2023 42,87,27,148

COMPANY APPEAL (AT) (CH) (Ins.) No. 08 of 2024

23

45. According to the Appellant, the Appellant had settled with a

Respondent/ Bank viz. Rs. 23,60,84,595/-, 95% of the principal

amount was already settled. The Appellant had now offered the

one-time settlement of Rs. 14 Crores and with this proposed

settlement the Corporate Debtor intends to settle the whole

principal amount, as well as significant portion of interest, being

beneficial to the respective parties.

46. The Learned Counsel for the Appellant points out that though

the intention of I&B Code, 2016 is Resolution, the

Respondent/Bank is rejecting all the OTS proposal with vengeance

and push the Corporate Debtor into Liquidation and ATE

(Corporate Guarantor) to Liquidation. In fact, the Corporate

Debtor had invested more than Rs. 185/- crores and when the

Company is pushed into Insolvency, all the amounts invested by

the promoters will go to drain.

47. According to the Appellant, the intention of the promoters, is

to settle the 'entire dues' and the dues of State Bank of India and

Dhanlaxmi Bank were settled and serious endeavors are made to

settle the Respondent/ Bank also and the Corporate Guarantor/

COMPANY APPEAL (AT) (CH) (Ins.) No. 08 of 2024

24 Appellant request this 'Appellate Tribunal' to grant six months

time to the Appellant to negotiate with the Bank and to settle the

dues with the Bank amicably and till the OTS settlement is

reached, the Corporate Guarantor CIRP process may be stayed

instead of pushing the company into 'CIRP'.

Respondent/Bank's pleas:

48. The Learned Sr. Counsel for the Respondent/ Bank contends

that the Appellant and the Corporate Debtor had executed a

Personal Guarantee in favour of the Respondent/ Financial

Creditor, guaranteeing to re-pay the principal with interest, in the

event of any default committed by the Principal Borrower. Apart

from the Guarantees, there was also an execution of 'Demand

Promissory Note', the hypothecation of movables of principal

borrower / Green Gateway Leisure Ltd., in addition to creation of

Equitable Mortgage security among others to secure the Loan.

49. According to the Respondent/Bank the principal borrower had

failed to repay the loan sums inspite of repeated demands made

by the Respondent bank and the account was classified as NPA

as per RBI guidelines. Hence, a demand was made against the

Corporate Debtor to make payment due to the Respondent/Bank.

COMPANY APPEAL (AT) (CH) (Ins.) No. 08 of 2024

25 There was no response and the Respondent/Bank had filed IBA/

01/KOB/2020 before the Adjudicating Authority NCLT, Kochi

Bench and the same that was admitted on 15.10.2020.

50. The Ld. Sr. Counsel for the Bank points out that in Comp.

App. (AT) (Ins.) 993 of 2020, the Appellate Tribunal on 09.09.2021

had ultimately opined that the object of the Code 2016 is not a

recovery one and disposed of the Appeal with a direction that 'if

the 'Corporate Debtor' fails to settle in 6 months time from the date

of this Order, the Respondent Bank is at liberty to take appropriate

steps. Any observations made in this Appeal shall not stand in the

way of any further proceedings, if initiated, Needless to add, the

period spent in pursuing this Appeal shall be excluded for the

purpose of limitation'.

51. The Learned Counsel for the Respondent/ Bank points out

that based on the Liberty being granted by this Appellate Tribunal

and because of the default committed by the Principal Borrower

and a fresh application was filed (Under Section 7 of the I&B Code,

2016) for the default committed which was admitted on

25.01.2023 by the Adjudicating Authority/ Tribunal. An Appeal

was preferred by the Appellant and the Corporate Debtor/Air

COMPANY APPEAL (AT) (CH) (Ins.) No. 08 of 2024

26 Travels Enterprises Pvt. Ltd. before the Appellate Tribunal which

was numbered as Comp App (AT) (Ins.) 70 of 2023 and on

29.03.2023, in Appeal an order was passed affirming the CIRP

against the Principal Borrower.

52. It is brought to the fore on behalf of the Respondent/Bank

that the Committee of Creditors had unanimously has resolved to

liquidate the Principal Borrower and IA IBC/462/KOB/2023 was

filed in CP (IB) 46/KOB/2022 by the Resolution Professional

before the Adjudicating Authority/ Tribunal and on 24.11.2023 a

liquidation order was passed against the Principal Borrower. The

Corporate Debtor/ M/s Air Travels Enterprises India Ltd. and the

Appellant E.M. Nazim Ellias Mohamed had assailed the order of

liquidation in Comp. App. AT (Ins.) 564/ 2023. The Appeal came

to be dismissed preferred by the Appellant and the order of

Liquidation was upheld. Therefore, on the basis of confirmation of

the order of CIRP and Liquidation it is proved beyond that the

Principal Borrowers commission of default was validated by the

Competent Authorities.

53. It is represented on behalf of the Respondent/Bank that M/s

Air Travel Enterprises India Ltd., stood as a Corporate Guarantor

COMPANY APPEAL (AT) (CH) (Ins.) No. 08 of 2024

27 in respect of the Loans availed by the Principal Borrower had duly

executed Guarantee Deed Agreements in support of the same the

Bank/Respondent/Financial Creditor had filed a Section 7

application under I&B Code against the Corporate Debtor, which

came to be admitted on 24.11.2023, culminating in the impugned

order under challenged, by the Appellant.

54. According to the Respondent/ Bank the 'Liability of the

Guarantor is co extensive' with the 'Principal Borrower' and hence

the Appellant cannot stake a claim that the Admission against a

Corporate Debtor is an illegal one.

55. The Ld. Counsel for the Bank contends that the Guarantee

is a continuing and an irrevocable one and the 'Corporate Debtor'

having executed the Guarantee in favour of the Debts due and

payable by the Principal Borrower cannot wriggle out of its

contractual obligations. As a matter of fact, there were many

Acknowledgement of Debts made by the principal borrower with

the Respondent/ Bank and some of the one time settlements

attached provided by the 'Principal Borrower' will clinch the case

of the Respondent/ Bank that the Application filed by the

COMPANY APPEAL (AT) (CH) (Ins.) No. 08 of 2024

28 Respondent under Section 7 of the Code, against the Corporate

Debtor is well within time.

56. The Ld. Counsel for the Respondent/ Bank submits that the

Principal Borrower had executed on 12.11.2019, a proposal for

One Time Settlement, the Principal Borrower on 27.11.2019 had

executed a revised letter of approval issued by the Bank to GGL,

the Principal Borrower on 05.10.2021 had executed the One Time

Settlement Proposal on 14.01.2022, the Principal Borrower had

issued a letter requesting for the sanction of One Time Settlement,

the Principal Borrower on 04.02.2022 had issued a letter stating

that the Borrower would mention the proposed sum along with an

upfront payment, during second half of February, 2022, the

Principal Borrower on 19.03.2022 had issued a letter giving the

One Time Settlement Proposal for Rs. 09 crores, on 21.11.2022 the

Principal Borrower had issued a letter requesting for the OTS at

Rs. 09 crores stating that already Rs. 23.06 crores were paid

against the Loan of Rs. 25.85/- crores, considering the impact of

COVID 19 Pandemic of Hospitality Sector.

On 13.02.2023, the Principal Borrower had executed a letter

dated 13.02.2023 in regard to the letters furnished by GGL to the

COMPANY APPEAL (AT) (CH) (Ins.) No. 08 of 2024

29 Respondent / Bank expressing their inability to improve the OTS

offer because the project was not operational and considerable

investment was required for completion of the project. On

10.08.2023, Principal Borrower had executed a letter revising the

proposal of OTS for Rs. 10 crores. On 18.09.2023 the Principal

Borrower had written a letter to the Respondent / Bank increasing

their offer to Rs. 11 crores. On 05.10.2023 a letter of the Principal

Borrower was addressed to the Respondent / Bank mentioning

that the Borrower had remitted Rs. 1.10 crore, 10% of the

settlement offer of Rs. 11 crores. The Principal Borrowers audited

Financials for the year ending 31.3.17, 31.3.18, 31.3.19, 31.3.20,

31.3.21,31.3.22 indicate that the acknowledgement of debts by the

Principal Borrower.

57. The Ld. Counsel for the Respondent/ Bank points out that

the acknowledgments will demonstrate that the application filed

by the Respondent/ Bank is within the period of limitation and the

Plea of the appellant that the claim being barred against the

Corporate Debtor is an incorrect one. The Learned Counsel for a

Respondent/ Bank refers to decision of Hon'ble Supreme Court in

COMPANY APPEAL (AT) (CH) (Ins.) No. 08 of 2024

30 Laxmipat Surana V. Union of India & Anr. Reported in (2021) 8

SCC 481, wherein at paragraph 38 it is observed as under:

.....

58. The Learned Counsel for the Respondent/ Bank relies upon

the judgment of this Tribunal in Vijay Kumar Aggarwal Vs. State

Bank of India (Vide Comp. App AT (Ins). No. 105 of 2022) where in

at para 20 it is observed as under:

...

59. The Learned Counsel for the Respondent/ Bank submits that

once it is clear that the default committed by the Principal

Borrower which was accepted by this Tribunal in Comp. App. (AT)

(Ins.) 70 of 2023 (dated 29.03.2023) and in Comp. App. (AT) (Ins.)

464 of 2023 (dated 24.01.2024), then there is no question of the

Corporate Debtor/ Guarantor taking a plea otherwise, in view of

the Liability of the Guarantor/Corporate Debtor in law is 'co-

extensive' with that of the Principal Borrower as per Section 128 of

the Indian Contract Act, 1872.

60. The Ld. Counsel for the Respondent/ Bank points out that

Section 7 petition filed by the Respondent/ Bank is not barred by

COMPANY APPEAL (AT) (CH) (Ins.) No. 08 of 2024

31 'Res judicata' and the same is well within the period of limitation.

Also that, even assuming that the date of default if 29.12.2017, as

per the stand of the appellant, the date of default, due to the

invocation of guarantee being made on the date the principal

borrower as clearly acknowledged were admitted which, will bind

the Appellant/ Corporate debtor/Guarantor as per decision of the

Hon'ble Supreme Court in Laxmipat Surana case (where in para

38 it is observed as under).

"38. In the present case, the NCLT as well as the NCLAT have

adverted to the acknowledgements by the principal borrower as well

as the corporate guarantor - corporate debtor after declaration of

NPA from time to time and lastly on 08.12.2018. The fact that

acknowledgement within the limitation period was only by the

principal borrower and not the guarantor would not absolve the

guarantor of its liability flowing from the letter of guarantee and

memorandum mortgage. The liability of the guarantor being

coextensive with the principal borrower under Section 128 of the

Contract Act , it triggers the moment principal borrower commits

default in paying the acknowledged debt. This is a legal fiction.

Such liability of the guarantor would flow from the guarantee deed

COMPANY APPEAL (AT) (CH) (Ins.) No. 08 of 2024

32 and memorandum of mortgage, unless it expressly provides to the

contrary.

61. The Ld. Counsel for the Respondent/ Bank refers to the

decision in Vijay Kumar Aggarwal V. State Bank of India in Comp.

App. (AT) (Ins.) 105 of 205 wherein in para 20 it is observed as

under:

"20........It is also well settled that limitation for filing

Application under Article 137, the provisions of Section 18 of the

Limitation Act are also attracted and in even the parties are able to

satisfy the Court that they are entitled for extension of limitation, the

Application under Section 7 even filed beyond three years from the

date of declaring of NPA, will be within limitation when

acknowledgement was made within the period of limitation. We

thus find no substance in the submission of Shri Joy Saha that by

filling the OA 493 of 2015 on 24th September, 2015, limitation shall

stop running for section 7 Application and section 7 Application even

filed beyond three years from the date of NPA is entertainable on

this ground."

Acknowledgement

COMPANY APPEAL (AT) (CH) (Ins.) No. 08 of 2024

33

62. An 'Acknowledgment' means an Admission for the truth of

one's liability. The necessary factor that is required is an

Admission of the existence of a Debt, liability for contribution in

case, a part of it is paid and such an Admission would enlarge the

Limitation period, in the considered opinion of this Tribunal.

63. The salient feature of an Acknowledgement are:

(a) The acknowledgement of the debt should be writing

(b) it should be made by a person against whom the liability is

claimed or by person through whom, he derives title or liability

(c) the acknowledgment should be made before the lapse of the

specified period for a suit, or an application

(d) it must indicate the intention to admit the jural relationship of

Creditor and Debtor as per decision of the Hon'ble Supreme Court

in S.F. Mazda V. Durga Prasad AIR 1961 SC 1236.

(e) must contain admission of an existing liability. Mere

admission of a first liability will not suffice as per decision of

Hon'ble Supreme Court in Velliamma V. Sivanathan, AIR 1979

SC 1937.

64. In Law an Acknowledgment as per Section 18 of the

Limitation Act, 1963 is to be within three years of the date on

which the sum becomes payable as per decision in Free India Dry COMPANY APPEAL (AT) (CH) (Ins.) No. 08 of 2024

34 Accumulators Ltd. V. Union of India, 2012 AIR Civil Cases Page 3-

5 (Delhi). No wonder an Acknowledgment as per Section 18 of the

Limitation Act, 1963 only renews a debt and it does not make out

a new right or a fresh cause of action.

65. If an Acknowledgement is valid, the Liability can be enforced

and the sum required from any realisable Assets whether acquired

before or after the acknowledgement, as per decision in Mathew

Joseph & Ors. V. Dy. Tehsildar (RR) Changanassery & Anr.

reported in AIR 2006 (NOC 675 Kerala).

66. An Acknowledgement for liability itself is sufficient and it

need not necessarily be accompanied by a promise to pay as per

decision in Hetal Enterprises V. New India Assurance Company

Ltd. 2012 (1CCC 458 Bom). Further, an Acknowledgement under

Section 18 of the Limitation Act, 1963 can be with respect to not

only the property or Right, but it can be even in regard to the

Liability.

67. An Acknowledgement of a liability made by the Principal

Borrower should be considered as an Acknowledgement of liability,

on behalf of Guarantor.

COMPANY APPEAL (AT) (CH) (Ins.) No. 08 of 2024

35

68. A Revival Letter/ an Acknowledgement, executed by the

Principal Borrower on the authorization binds the Guarantor.

69. At this stage, this Tribunal aptly points out that an

acknowledgment of debt by the Principal Borrower shall be binding

on the Guarantor also as per decision in Omprakash V. UCO Bank,

as per decision in 2005 (9) Current Civil Cases reported in AIR at

page 382.

70. In the decision in Syndicate Bank V. UVK Prakash reported

in 2008 (1) CCC Page 142 (Madras), it is held that since the

Borrower had acknowledged his liability, the Acknowledgement

will be binding on the Guarantor as well.

71. At this stage, this Tribunal worth recalls and recollect the

decision in Punjab National Bank Vs. M/s Jain Wood House,

reported in 2014, AIR CC at page 1246 (Rajasthan) it is observed

that as per condition no.9 of the guarantee agreement, the

Principal Borrower was authorised by the Guarantor to sign the

documents in regard to the acknowledgement of validity for the

purpose of limitation also that the said acknowledgement is

binding on the Respondent/ Defendant No. 3.

COMPANY APPEAL (AT) (CH) (Ins.) No. 08 of 2024

36

72. Before the Adjudicating Authority/Tribunal the

Respondent/Bank in the Application (filed under Section 7 of the

I & B Code, 2016 read with Rule 4 of the Insolvency and

Bankruptcy (Application to Adjudicating Authority), Rules, 2016 in

Part -IV, under the caption particulars of Financial Debt, it is

mentioned that the Respondent/Bank/Financial Creditor had

granted a term Loan Facility of Rs. 25 Crores to the Corporate

Debtor by a sanction Letter dated 12.06.2010, which was

Renewed/Restructured/Modified on dates such as 29.09.2012,

24.02.2014, 12.01.2015 and 01.07.2016 by executing the loan

documents. Further, the disbursement on different dates, had

commenced from 31.07.2010 which is evident from the 'Statement

of Account'.

73. The total amount defaulted by the Appellant/Corporate

Debtor as on 04.07.2023 is Principal Sum Rs. 24,85,00,000/- and

the interest comes to Rs. 40,72,84,195/-, Additional/ penal

interest comes to Rs. 9,98,915/- and other charges Rs.

80,28,632/- and the amount comes to Rs. 66,48,11,742/-. The

recovered amount being Rs. 23,60,84,594/- and Rs.

42,87,27,148/- to be recoverable from the Corporate Debtor.

COMPANY APPEAL (AT) (CH) (Ins.) No. 08 of 2024

37

74. According to the Financial Creditor/Bank, the Corporate

Debtor had committed default in the repayment of the credit

facility in violation of the sanction stipulations, the loan

documents and the Accounts of the Corporate Debtor was

classified as a 'Non-performing Asset' as on 30.09.2015. Moreover,

as per Section 13(2) the Corporate Debtor and the Guarantors

under the SARFAESI Act, 2002 were given the notice to pay the

amount with direction to repay the Loan immediately.

75. As a matter of fact, the said notice was received on 03.01.2018

and the Corporate Debtor gave a Reply on 27.02.2018 and despite

the Reply, the amount was not repaid or liquidate the liability by

the Corporate Debtor and Guarantors because of the Corporate

Debtor not making the payment, the Respondent/Bank/Financial

Creditor not making the payment, the Respondent/Bank had filed

IBA/01/KOB/2020 which was admitted and a Resolution

Professional was appointed.

76. The Corporate Debtor had approached this Appellate

Tribunal in CA (AT) (Ins) No. 993 of 2020 being allowed by setting

aside the order of admission 'granted by this Tribunal and the

Corporate Debtor was directed to settle the entire loan liability,

COMPANY APPEAL (AT) (CH) (Ins.) No. 08 of 2024

38 within a period of six months from 09.09.2021. Though in various

communications the Corporate Debtor had admitted the liability

and sought time to settle the liability there was no constructive

effort to clear the outstanding liability of the Respondent/Financial

Creditor/Bank. Since, the Corporate Debtor had failed to adhere

to the terms and conditions of the Loan facility and fulfilment of

the liability, including the repayment, the Financial Creditor/Bank

had decided to proceed with the instant Application. The date on

which the default had occurred was mentioned as 09.03.2022.

77. In Form no. I Part-V of the Application it is mentioned that

Paripassu First charge of all movable and immovable assets of the

company both present and future along with other Lenders under

the MBA including mortgage of leasehold rights of 55.42 Acres of

land plus building in Keekan and Chittari Village situated as

Hosdurg Taluk, Kasargod District, Kerala standing in the name of

Green Gateway Leisure Ltd. The date of creation of charge was

mentioned as 02.07.2010 and 19.12.2011 and the property valued

is mentioned as Rs. 65 Crores by the Approved valuer and the

value as consultant, as on 28.11.2018.

COMPANY APPEAL (AT) (CH) (Ins.) No. 08 of 2024

39

78. It comes to be known that the Respondent/Bank/Financial

Creditor had issued a sanction letter dated 12.06.2010 in favour

of the Corporate Debtor, approving the term facility of Rs. 25

Crores subject to the terms and conditions thereof. As a matter of

fact, the Corporate Debtor had executed 'Demand Promissory

Notes' dated 02.07.2010, 29.09.2012, 24.02.2014, 12.01.2015 &

01.07.2016.

79. The Corporate Debtor had executed the term loan agreement

dated 02.07.2010, 29.09.2012, 24.02.2014 and 12.01.2015. Also

the Corporate Debtor had executed the Term Loan Agreement

(Hypothecation of Movables) dated 02.07.2010 and 29.09.2012.

Moreover, M/s. Air Travel Enterprises India Ltd. had executed a

corporate guarantee in favour of the Respondent/Bank/Financial

Creditor guaranteeing and simultaneously personal guarantee

also was executed with the same terms and conditions applicable

with respect to personal guarantee undertaking the Repayment of

the entire term Loan Amount and interest in the event of Default.

80. According, to the Respondent/Bank/Financial Creditor, the

Corporate Debtor had executed a written confirmation of Deposit

of title deed dated 20.12.2011, in favour of the Financial

COMPANY APPEAL (AT) (CH) (Ins.) No. 08 of 2024

40 Creditor/Bank and the Debit Balance confirmation Letters dated

29.09.2012, 31.03.2013 & 31.12.2013 were executed by the

Corporate Debtor in favour of the Respondent/Bank/Financial

Creditor.

81. In the instant case on hand before this Tribunal the Appellant

has come out with a plea that so long as the Guarantee is not

invoked against the Guarantor, the Liability will remain

coextensive and the account will remain live against the

Guarantor, along with the 'Principal Borrower' and whatever action

the 'Principal Borrower' does for extension of limitation will

automatically extends against the Guarantor.

82. According to the Appellant in the instant case, the creditor

had invoked the 'Guarantee' on 29.12.2017 by specifically

mentioning that the Limitation would be reckoned from the date of

receipt of Notice dated 29.12.2017 and the actions and

acknowledgments between the 'Lender' and Principal Borrower will

not save the Limitation period already commenced against the

Guarantor/ Corporate Debtor.

COMPANY APPEAL (AT) (CH) (Ins.) No. 08 of 2024

41

83. The plea of the Appellant is that the 'action' as far as the

Corporate Guarantor is concerned, the same is barred by

Limitation and that Article 137 of Limitation Act 1963 applies.

84. The Learned Counsel for the Appellant points out the decision

of the Hon'ble Supreme Court in 'Syndicate Bank vs.

Chinnaveerappa Beleri & Ors.' (2006) 11 SCC 506 and contends

that the Limitation with respect to the 'guarantee' will run from the

date, creditor had made a demand against the guarantor and

further the 'agreement' and 'incidents' from the 'guarantee

agreement' being distinct and independent, the limitation against

the 'guarantor' will start running once the guarantee is invoked.

85. The Learned Counsel for the Appellant points out that in the

instant case the creditor had invoked the 'Guarantee' on

29.12.2017 by mentioning that the Limitation will be reckoned

from the date of receipt of notice dated 29.12.2017 and further it

is not the case of the Corporate Debtor that it had not executed

the letters of guarantee, as aforementioned and this observation is

'inconsequential' for an admission of the Company Petition.

86. Before this Tribunal the Respondent/Bank had filed a 'Reply'

to the main CA (AT) (CH) (Ins) No. 8 of 2024 stating that the issue

COMPANY APPEAL (AT) (CH) (Ins.) No. 08 of 2024

42 of debt due and payable by the 'Principal Borrower' was based on

various acknowledgement and assurances made by the Principal

Borrower, by way of one time settlement offers among other

documents and it was solely due to the liberty granted by this

Appellate Tribunal that a period of six months was provided to the

Principal Borrower, failing which the Respondent/Bank will be at

liberty to take appropriate steps and that apart, the limitation

period was also excluded.

87. The Learned Counsel for the Respondent/Bank points out

that in view of the default committed by the Principal Borrower, a

fresh application under Section 7 was filed for the default

committed, which came to be admitted by way of an order dated

25.01.2023.

88. The CA (AT) (Ins) 70 of 2023 was filed by the Appellant and

the Corporate Debtor/Air Travel Enterprises India Ltd. before this

Tribunal and by an order dated 29.03.2023 the 'CIRP' against the

'Principal Borrower' was affirmed by this Tribunal.

89. Later, the Committee of Creditors had filed the IA

IBC/462/KOB/2023 in CP IB/46/KOB/2022 through Resolution

Professional before the Adjudicating Authority/Tribunal on

COMPANY APPEAL (AT) (CH) (Ins.) No. 08 of 2024

43 24.11.2023 had passed an order of liquidation against the

Principal Borrower. The Corporate debtor/ Air Travel Enterprises

India Ltd. had filed CA (AT) (Ins) 464 of 2023 before this Tribunal

and the same came to be dismissed wherein the order of

Liquidation was upheld.

90. According to the Respondent/Bank, the Corporate

Debtor/M/s Air Travel Enterprises India Ltd. stood as corporate

Guarantor for the Loans secured by the 'Principal Borrower' and

duly executed Guarantee Agreements and the Respondent/Bank

initiated action in filing a Section 7 application of the I&B Code,

2016 against the Corporate Debtor which was admitted on

22.12.2023 culminating in the impugned order under challenged

by the Appellant.

91. According to the Respondent/Bank the liability of a

Guarantor is co-extensive with that of the Principal Borrower and

the guarantee executed by the Corporate Debtor in and an

unequivocal term reads as under:

"It is also agreed that any admission or acknowledgment in writing by the Principal Debtor of the amount of indebtedness of the Principal Debtor or otherwise as in relation of the subject matter of this guarantor, shall be binding on me/us

COMPANY APPEAL (AT) (CH) (Ins.) No. 08 of 2024

44 and I/We accept the correctness of any statement of account served on the Principal Debtor which is duly certified by any Manager or Officer of the Bank and the same shall be treated as my/our duly authorized agent for purpose of Indian Limitation Act, 1953".

92. The plea of the Respondent/Bank is that the Corporate

Debtor having executed the Guarantee in favour of the debts due

and payable by the Principal Borrower, cannot wriggle out of its

contractual obligations.

93. Even, taking into account that the date of default is

29.12.2017 as adverted to by the Appellant, which is the default

date due to the invocation of guarantee being made on that date,

the Principal Borrower had clearly admitted/acknowledged its

liability, which squarely binds the Corporate Debtor/Guarantor in

the considered opinion of this Tribunal especially in the teeth of

the Hon'ble Supreme Court's decision decision in 'Laxmi Pat

Surana vs. Union of India & Anr. (2021) 8 SCC 481.

94. As per the decision of Hon'ble Supreme Court in Laxmi Pat

Surana's case as referred to supra, the liability of the Guarantor

being co-extensive with the Principal Borrower under Section 128

of the Indian Contract Act, 1872 it triggers the moment the

Principal Borrower commits default in paying the acknowledge

COMPANY APPEAL (AT) (CH) (Ins.) No. 08 of 2024

45 debt and this being a legal fiction and such a 'liability of the

guarantor will flow from the Guarantee Deed and Memorandum of

Mortgage created therein'.

95. The Learned Counsel for the Respondent/Bank points out

that the Corporate Debtor being 'Corporate Guarantor' for the

loans availed by the Principal Borrower, undoubtedly the 'cause of

action' against it is also equally alive, in view of its liability being

co-extensive with that of the 'Principal Borrower'.

96. The Learned Counsel for the Respondent/Bank points out

that an Application under Section 7 of the I & B Code, 2016 can be

filed both against the Principal Borrower and the Guarantor when

that be the case, it is not open to the Appellant to state as if the

Application filed by the Respondent/Bank is either barred by

limitation or that the Corporate Debtor is not liable to pay the

amounts due and payable by the Principal Borrower.

97. The Learned Counsel for the Respondent/Bank comes out

with a plea that taking note of the fact that Insolvency Proceedings

were initiated against the Appellant, which he had challenged in

CA (AT) (Ins) 71 of 2022, he does not have the Locus standi to

COMPANY APPEAL (AT) (CH) (Ins.) No. 08 of 2024

46 prosecute the instant 'Appeal', in terms of the requirements of

Section 61 of the I & B Code, 2016.

98. On a careful consideration of respective contentions, this

'Tribunal', taking note of the facts and circumstances of the instant

case in an encircling manner, and ongoing through the impugned

order dated 22.12.2023 in CP(IBC)/33/KOB/2023 passed by the

Adjudicating Authority/NCLT Kochi Bench, comes to a resultant

conclusion that the conclusion arrived at by the Adjudicating

Authority/Tribunal in admitting main CP (IBC)/33/KOB/2023 on

22.12.2023 holding that the debt has not been paid by the

'Corporate Guarantor' is free from any legal flaws. Accordingly, the

'Appeal' sans merit.

Conclusion

99. In fine, the instant CA (AT) (Ins) 8 of 2024 is dismissed. No

costs. The connected pending IA's if any are closed.

(Justice M. Venugopal) Member (Judicial)

(Naresh Salecha) Member (Technical)

Date: 26-02-2024

ss/sa/sr

COMPANY APPEAL (AT) (CH) (Ins.) No. 08 of 2024

47