Jubin Kishore Thakkar vs Phoenix Arc Pvt. Ltd. & Anr

[Arising out of order dated 24.02.2023 passed by the Adjudicating Authority (National Company Law Tribunal), Mumbai Bench-IV in CP (IB) No. 40/MB- IV/2022 and IA (IB) 1190/MB-IV/2022]

IN THE MATTER OF:

Jubin Kishore Thakkar B-601, Elegant Business Park MIDC Road No.2, Andheri (East), Mumbai - 400059. ...Appellant

Vs.

1. Phoenix ARC Pvt. Ltd. Through Authorized Representative Dani Corporate Park, 5th Floor, 158 CST Road, Kalina, Santa Cruz (E), Mumbai - 400 098.

2. Colour Roof (India) Limited Through Resolution Professional B-1/1 Mayur Ma Krupta CHS Ltd, Off Gokhale School, Shimpoli Road, Borivali West, Mumbai - 400092. ...Respondents

Present:

For Appellant: Mr. Krishnendu Datta, Sr. Advocate with Mr. Kumar Anurag Singh, Mr. Zain A. Khan and Ms. Neha Aggarwal, Advocates. For Respondents: Mr. Arvind Nayyar, Sr. Advocate with Mr. Amit Mahaliyan and Mr. Akshay Joshi, Advocates for Respondent No.1. Mr. Aditya Gauri and Mr. Dhananjaya Sud, Advocates for Respondent No.2 (RP).

Cont'd.../ -2-

JUDGMENT

ASHOK BHUSHAN, J.

This Appeal has been filed against order dated 24.02.2023 passed by

the Adjudicating Authority (National Company Law Tribunal), Mumbai

Bench-IV by which order Section 7 application filed by the Respondent No.1

- Financial Creditor has been admitted. The Appellant, Suspended Director

of the Corporate Debtor aggrieved by the admission has come up in this

Appeal. Brief facts of the case necessary to be noticed for deciding this Appeal

are:

i. A consortium of Bank extended various financial facility to the

Corporate Debtor in the year 2002.

ii. The account of Corporate Debtor was declared NPA by Bank of

India on 31.03.2015.

iii. On 16.09.2016, Bank of India issued Recall Notice to the

Appellant recalling monies payable by the Corporate Debtor

under the various credit facilities.

iv. On 22.11.2018, Bank assigned the debt along with all underlying

security interest under the Deed of Assignment to the Respondent

No.1.

v. Letter of acceptance was issued on 24.04.2019 and an agreement

was entered under which the Corporate Debtor was to repay the

amounts payable to the Financial Creditor.

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vi. On 01.11.2021, Section 7 application was filed by the

Respondent No.1.

vii. On 26.09.2022, Consent Terms were entered between the

Corporate Debtor and the Financial Creditor in the proceedings

before Debts Recovery Tribunal.

viii. By order dated 24.02.2023, the Adjudicating Authority finding

debt and default admitted Section 7 application. Aggrieved by

which order this appeal has been filed.

2. We have heard Shri Krishnendu Datta, learned senior counsel

appearing for the Appellant and Shri Arvind Nayyar, learned senior counsel

appearing for Respondent No.1.

3. When the Appeal was taken on 03.03.2023, learned counsel for the

Appellant submitted that they have submitted proposal to Respondent No.1

for repayment of dues. Noticing the aforesaid, interim order was passed on

03.03.2023. Following order was passed on 03.03.2023:

"O R D E R

03.03.2023: Learned Counsel for the Appellant submits that a proposal has been submitted to Respondent on 01st March, 2023 for repayment of ARC Dues.

2. Learned Counsel for the Respondent submits that proposal has been received which is still under consideration.

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3. Learned Counsel for the Appellant prays that Appeal be taken after two weeks to enable the Respondent to consider the proposal.

As prayed, list this Appeal on 22nd March, 2023. In the meantime, in pursuance of the order impugned, Committee of Creditors shall not be constituted."

4. Matter was again adjourned on 22.02.2023 noticing that proposal

of the Appellant is under consideration. Appellant took further opportunity

on 19.04.2023 to make another endeavour to submit better offer.

Subsequently, again on 25.05.2023 it was noted that proposal is under

consideration, however, no settlement between the parties could take place.

Learned counsel for the Appellant addressed his submission on 22.11.2023.

5. Shri Krishnendu Datta, learned counsel for the Appellant submits

that application filed by the Financial Creditor was barred by time. Section 7

application itself mention 31.03.2015 as date of default and the

acknowledgement made on 30.01.2016 at best shall extend the limitation till

29.01.2019. It is submitted that the application filed by the Appellant on

01.11.2021 was clearly beyond three years. It is submitted that the Consent

Terms dated 26.09.2022 shall extend the limitation for three years which was

the reason recorded by the Adjudicating Authority for holding that the

application is within time, is erroneous. The Consent Terms cast a duty upon

the Financial Creditor to withdraw the Company Petition which was not

withdrawn.

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6. Learned counsel appearing for the Financial Creditor refuting the

submissions of learned counsel for the Appellant contends that application

was well within time. Learned counsel for the Respondent No.1 has referred

to the letter of acceptance dated 24.04.2019, where the Corporate Debtor has

acknowledged the debt and entered into fresh agreement, which was novation

of agreement and provide fresh cause of action. From 24.04.2019, the

application under Section 7 was well within time. The Consent Terms dated

22.09.2022 arrived before Debts Recovery Tribunal, Mumbai was not

honoured by the Corporate Debtor. The Corporate Debtor having not

honoured the Consent Terms, there was no occasion to withdraw the

Company Petition. The Adjudicating Authority has rightly held that Section

7 application was well within time. It is submitted that debt and default

having been proved the Adjudicating Authority has rightly admitted Section 7

application.

7. We have considered the submissions of learned counsel for the

parties and perused the record.

8. We may first notice the amount claimed and date of default as

contained in Part IV of the Section 7 application. In Part IV Item No. No.2

following has been stated:

2. AMOUNT CLAIMED TO Cash Credit Facility BE IN DEFAULT AND THE DATE ON WHICH 1. Outstanding Amount as on October THE DEFAULT 31, 2021 - Rs.43,18,11,891 OCCURRED (ATTACH (Rupees Forty Three Crores THE WORKINGS FOR Eighteen Lakhs Eleven Thousand COMPUTATION OF Eight Hundred Ninety One Only) AMOUNT AND DAYS

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OF DEFAULT IN 2. Date of Default - The account of the TABULAR FORM) Corporate Debtor was declared as (ANNEXED AS NPA on March 31, 2015.

ANNEUXRE-2) Star Sahayata Term Loan

1. Outstanding Amount as on October 31, 2021 - Rs.99,74,73,641/-

(Rupees Ninety Nine Crores Seventy Four Lakhs Seventy Three Thousand Six Hundred Forty One Only)

2. Date of Default - March 31, 2015, as evidenced from the Statement of Account of the Term Loan.

Inland Bill Purchase Account

1. Outstanding Amount as on October 31, 2021 - Rs.23,40,63,483 (Rupees Twenty Three Crores Forty Lakhs Sixty Three Thousand Four Hundred Eighty Three Only)

2. Date of Default - September 30, 2015.

Date of declaration of Corporate Debtor's Account as NPA - March 31, 2015

Date of Default under the LOA - March 31, 2019.

Apart from the aforesaid dates of default, the Corporate Debtor has acknowledged its liability in respect of the aforesaid financial facilities in various documents including (without limiting) in the LOA dated April 24, 2019 and the Corporate Debtor's Balance Sheets from time to time.

9. There is no doubt that date of default has been mentioned as

31.03.2015 on which date the account of Corporate Debtor was declared as

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NPA, however, the Letter of Acceptance dated 24.04.2019 has also been

pleaded in Part IV, as noticed above. The Adjudicating Authority in the

impugned order has noticed the DRT Consent Terms dated 26.09.2022 and

observed that fresh period of limitation shall start, hence the objection on the

ground of limitation have no merit. Para 13 of the impugned order is as

follows:

"13. In view of the Consent Terms and the Order of DRT Mumbai dated 26.09.2022, the fresh period of limitation will start and hence, the present application is not barred by limitation. Nonetheless, a sum of Rs.23,40,63,483/- is claimed to be outstanding under 'inland bill purchase account' facility and is stated to in default since 31.03.2019 as per Part-IV of the Petition. Also, the Corporate Debtor has acknowledged its liability in respect of all three Credit Facilities vide LOA dated 24.04.2019. In view of this also the objection on ground of limitation does not have any merit."

10. In Para 13 of the Adjudicating Authority two documents have been

noticed; Consent Terms dated 26.09.2022 and Letter of Acceptance dated

24.04.2019. We are of the view that in so far as Consent Terms dated

26.09.2022 and fresh period of limitation thereafter, they have no relevance

in the present application which was filed in the year 2021. However, the

later part of the order where Letter of Acceptance dated 24.04.2019 has been

noted is relevant for the purpose of limitation. Letter of Acceptance dated

24.04.2019 issued by Respondent No.1, Financial Creditor has been filed at

page 493 of the appeal. The Letter of Acceptance has been signed by the

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Financial Creditor and the Directors of the Corporate Debtor including the

Appellant before us. The Letter of Acceptance is in the nature of agreement

which is signed by all parties and amounts to fresh agreement between the

parties. This fresh agreement acknowledges the debt of

Rs.106,97,76,398.83/- along with interest. The Letter of Acceptance further

provides that the Obligors shall jointly and/or severally to pay

Rs.43,89,46,000/- along with interest towards the settlement of assigned debt

due. The Letter of Acceptance which is an agreement between the parties

shall give a fresh period of limitation after 24.04.2019, which is within three

years of 01.11.2021, date on which Section 7 application was filed.

11. The Hon'ble Supreme Court in "Kotak Mahindra Bank Ltd. vs.

Kew Precision Parts (P) Ltd., (2022) 9 SCC 364" in Paras 30 and 31 has

laid down following:

"30. In this appeal, it is contended that the last offer of 20-12-2018 was followed by an agreement. Whether there was such agreement or not would have to be considered by the adjudicating authority. To invoke Section 25(3), the following conditions must be satisfied:

30.1. It must refer to a debt, which the creditor, but for the period of limitation, might have enforced.

30.2. There must be a distinct promise to pay such debt, fully or in part.

30.3. The promise must be in writing, and signed by the debtor or his duly appointed agent.

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31. Under Section 25(3), a debtor can enter into an agreement in writing, to pay the whole or part of a debt, which the creditor might have enforced, but for the limitation of a suit in law. A written promise to pay the barred debt is a valid contract. Such a promise constitutes novation and can form the basis of a suit independent of the original debt, for it is well settled that the debt is not extinguished, the remedy gets barred by passage of time as held by this Court in Bombay Dyeing & Mfg. Co. Ltd. v. State of Bombay [Bombay Dyeing & Mfg. Co. Ltd. v. State of Bombay, AIR 1958 SC 328]."

12. In view of the law laid down by the Hon'ble Supreme Court, there

shall be fresh period of limitation from 24.04.2019 and the application filed

by the Appellant within three years from the said date was well within

time. The Adjudicating Authority in Para 13 has also noticed the Letter of

Acceptance dated 24.04.2019 for holding that objection on ground of

limitation does not have any merit. We fully concur with the view of the

Adjudicating Authority that objection raised on the ground of limitation has

no merit.

13. In the present case, there is no dispute to the debt and default there

being acknowledgments by the Corporate Debtor. We have also noticed that

in this Appeal several opportunities were taken by the Appellant to settle the

debt which could not fructify.

14. We, thus, are of the view that application filed by the Financial

Creditor was not barred by time and the debt and default being proved, the

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Adjudicating Authority did not commit any error in admitting Section 7

application. There is no merit in the Appeal. Appeal is dismissed.

[Justice Ashok Bhushan] Chairperson

[Barun Mitra] Member (Technical)

NEW DELHI

22nd December, 2023

Archana

Company Appeal (AT) Insolvency No. 273 of 2023