Indian Overseas Bank vs Patel Woods Products Ltd
- CitationCompany Appeal (AT) (Insolvency) No. 54 of 2020
Ratio decidendi
The rule this decision rests on
The Adjudicating Authority's rejection of a Section 7 application as time-barred is sustained where the default occurred on 28 October 2010 and the application was filed long after the limitation period had run, the Corporate Debtor's acknowledgments of liability and the financial creditor's own steps under the SARFAESI Act and before the Debts Recovery Tribunal not being sufficient to save the claim on the facts before the Tribunal. A Section 7 application that is barred by limitation, and which seeks only recovery of the debt rather than resolution or liquidation of the Corporate Debtor, is not a proceeding the Insolvency and Bankruptcy Code is intended to entertain, and the appeal against its dismissal is therefore dismissed, without prejudice to the financial creditor's rights in the parallel SARFAESI and Debts Recovery Tribunal proceedings.
Written by Miss Lucy from the judgment below, not taken from a headnote.
Judgment
As delivered
Indian Overseas Bank ...Appellant
Vs
Patel Woods Products Ltd. ....Respondent
Present: For Appellant: Mr. Surendra Kumar, Advocate. For Respondent:
ORDER
13.01.2020: The Appellant - 'Indian Overseas Bank' filed application under
Section 7 of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to
as 'I&B Code') against 'M/s Patel Woods Products Ltd.' (Corporate Debtor).
The Adjudicating Authority (National Company Law Tribunal), New Delhi
Bench-V by impugned order dated 9th December, 2019 rejected the application
on the ground that the application under Section 7 was barred by limitation.
2. Learned counsel for the Appellant submits that the application under
Section 7 is not barred by limitation as the Respondent also made payment in
the year 2016.
3. The facts as pleaded by learned counsel for the Appellant are as follows:-
(i) The Respondent (Corporate Debtor) had taken credit facility on
27.04.2004 which was enhanced/ renewed from time to time by
the Financial Creditor by letter dated 08.08.2005, 11.09.2006,
22.01.2007, 05.02.2008, 06.08.2008, 22.10.2008 onwards upto
21.01.2011.
-2-
(ii) The Corporate Debtor accepted and acknowledged the liability
towards the Appellant on various dates by executing the Revival
Letters dated 22.01.2007, 12.05.2007, 31.03.2009, 27.01.2011
and 25.01.2014.
(iii) The Appellant declared the subject amount as Non-Performing
Asset (NPA) on 27th February, 2012 w.e.f 28th October, 2010.
4. The Adjudicating Authority noticed that the application under Section 7
is barred by limitation, the default having taken place on 28th October, 2010,
the subject amount having declared NPA on 27th February, 2012 w.e.f. 28th
October, 2010. From the record we find that the Appellant had taken action
under Section 13(2) of SARFAESI Act, 2002 and issued notice on 03.12.2012
and Guarantee Mortgage on 31.05.2013 and 04.06.2013 pursuant to which
symbolic possession has been taken by the Appellant of all mortgaged
properties as far back as in the year 2013. Securitization Application No.
243/2016 filed by the Appellant was disposed off by the Debts Recovery
Tribunal, New Delhi on 14th October, 2016. The Financial Creditor also filed
Original Application no. 224/2017 titled "Indian Overseas Bank Vs. M/s Patel
Woods Products Pvt. Ltd." under Section 19 of the Recovery of Debts Due to
Banks and Financial Institutions Act, 1993, which is pending before Debts
Recovery Tribunal - III, Delhi.
Company Appeal (AT) (Insolvency) No. 54 of 2020 -3-
5. The aforesaid facts suggest that the application under Section 7 is barred
by limitation, by date of default i.e. 28th October, 2010 (as NPA declared on
22nd February, 2012 w.e.f. 28th October, 2010). The Appellant has already
taken possession of the asset of the Corporate Debtor under the SARFAESI Act,
2002 and has also moved Original Application No. 224/20107 before Debts
Recovery Tribunal - III, Delhi, which is pending since 2017. Now it is only for
recovery of amount, that application under Section 7 was filed, though barred
by limitation, which is not intended for resolution or liquidation and covered by
Section 65 of the I&B Code.
6. We find no merit in this appeal. However, the order passed by the
Adjudicating Authority or this Appellate Tribunal will not stand against the
Appellant in the SARFAESI Proceedings and the Original Application pending
before the Debts Recovery Tribunal. The appeal is dismissed with aforesaid
observations. No costs.
[Justice S. J. Mukhopadhaya] Chairperson
[Justice Bansi Lal Bhat] Member (Judicial)
[Justice Venugopal M.] Member (Judicial) am/sk Company Appeal (AT) (Insolvency) No. 54 of 2020
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