Mahendra Trading Company & Ors vs Hindustan Controls And Equipment Pvt. ...

Mahendra Trading Company & Ors. ....Appellants

Vs.

Hindustan Controls and Equipment Pvt. Ltd. ....Respondent

Present:

For Appellants: Mr. Rudreshwar Singh, Mr. Anil Agarwalla, Mrs. Neha Sharma and Mr. Aditya Garodia, Advocates.

For Respondent: Mr. Abhijeet Sinha, Ms. Anusuya Sudha Sinha, Mr. Saikat Sarkar, Mr. Aditya Sukhla and Ms. Amrita Sharma, Advocates.

J U D G M E N T

SUDHANSU JYOTI MUKHOPADHAYA, J.

The Appellants- 'Mahendra Trading Company & Anr.' filed

application under Section 9 of the Insolvency and Bankruptcy Code,

2016 ("I&B Code" for short) for initiation of the 'Corporate Insolvency

Resolution Process' against 'Hindustan Controls & Equipment Private

Limited'- ('Corporate Debtor'). The Adjudicating Authority (National

Company Law Tribunal) Kolkata Bench, Kolkata by impugned order 2

dated 19th January, 2018 rejected the application on the ground of pre-

existence of dispute and other grounds.

2. Learned counsel appearing on behalf of the Appellants submitted

that there is no pre-existence of dispute and the so-called arbitration

proceeding is not an arbitral proceeding in terms of the Arbitration &

Conciliation Act, 1996.

3. The Respondent while opposed the prayer also questioned the

maintainability of the appeal on the ground it is barred by limitation.

Counsel for the Respondent also relied on the decision of the Hon'ble

Supreme Court in "Singh Enterprises v. Commissioner of Central

Excise, Jamshedpur and Others− (2008) 3 SCC 70", wherein the

Hon'ble Supreme Court taking into consideration the provisions of

Section 35 of the 'Central Excise Act, 1944' observed:

"6. At this juncture, it is relevant to take note of

Section 35 of the Act which reads as follows:

"35. Appeals to Commissioner (Appeals).--(1)

Any person aggrieved by any decision or

order passed under this Act by a Central

Excise Officer, lower in rank than a

Commissioner of Central Excise, may appeal

Company Appeal (AT) (Insolvency) No. 97 of 2018 3

to the Commissioner of Central Excise

(Appeals) [hereafter in this Chapter referred

to as the Commissioner (Appeals)] within

sixty days from the date of the

communication to him of such decision or

order:

Provided that the Commissioner (Appeals)

may, if he is satisfied that the appellant was

prevented by sufficient cause from presenting

the appeal within the aforesaid period of

sixty days, allow it to be presented within a

further period of thirty days.

(2) Every appeal under this section shall be

in the prescribed form and shall be verified in

the prescribed manner."

7. It is to be noted that the periods "sixty days" and

"thirty days" have been substituted for "within three

months" and "three months" by Act 14 of 2001, with

effect from 11-5-2001.

8. The Commissioner of Central Excise (Appeals) as

also the Tribunal being creatures of statute are not

Company Appeal (AT) (Insolvency) No. 97 of 2018 4

vested with jurisdiction to condone the delay beyond

the permissible period provided under the statute. The

period up to which the prayer for condonation can be

accepted is statutorily provided. It was submitted that

the logic of Section 5 of the Limitation Act, 1963 (in

short "the Limitation Act") can be availed for

condonation of delay. The first proviso to Section 35

makes the position clear that the appeal has to be

preferred within three months from the date of

communication to him of the decision or order.

However, if the Commissioner is satisfied that the

appellant was prevented by sufficient cause from

presenting the appeal within the aforesaid period of

60 days, he can allow it to be presented within a

further period of 30 days. In other words, this clearly

shows that the appeal has to be filed within 60 days

but in terms of the proviso further 30 days' time can

be granted by the appellate authority to entertain the

appeal. The proviso to sub-section (1) of Section 35

makes the position crystal clear that the appellate

authority has no power to allow the appeal to be

presented beyond the period of 30 days. The

Company Appeal (AT) (Insolvency) No. 97 of 2018 5

language used makes the position clear that the

legislature intended the appellate authority to

entertain the appeal by condoning delay only up to 30

days after the expiry of 60 days which is the normal

period for preferring appeal. Therefore, there is

complete exclusion of Section 5 of the Limitation Act.

The Commissioner and the High Court were therefore

justified in holding that there was no power to

condone the delay after the expiry of 30 days'

period."

4. Before deciding the issue on merit, it is desirable to find out

whether the appeal is barred by limitation or not.

5. Sub-section (1) of Section 61 of the 'I&B Code' empowers an

aggrieved person to prefer an appeal before the National Company Law

Appellate Tribunal against an order passed by the Adjudicating

Authority (National Company Law Tribunal). Sub-section (2) of Section

61 prescribes period of limitation and reads as follows:

"61. Appeals and Appellate Authority.─ (1)

Notwithstanding anything to the contrary contained

under the Companies Act 2013, any person

Company Appeal (AT) (Insolvency) No. 97 of 2018 6

aggrieved by the order of the Adjudicating Authority

under this part may prefer an appeal to the National

Company Law Appellate Tribunal.

(2) Every appeal under sub-section (1) shall be filed

within thirty days before the National Company Law

Appellate Tribunal:

Provided that the National Company Law

Appellate Tribunal may allow an appeal to be filed

after the expiry of the said period of thirty days if it

is satisfied that there was sufficient cause for not

filing the appeal but such period shall not exceed

fifteen days."

6. The aforesaid provision of Section 61(2) makes it clear that the

appeal has to be preferred within 30 days and the power of condonation

is only for 15 days' delay and not more than that.

7. In the present case, the question arises as to how the period of 30

days is to be counted.

8. Section 420 of the Companies Act, 2013 prescribes the manner in

which the National Company Law Tribunal (Adjudicating Authority) is to

pass order. Sub-section (3) of Section 420 mandates the Tribunal to

Company Appeal (AT) (Insolvency) No. 97 of 2018 7

send a copy of every order to all the parties concerned, which reads as

follows:

"420. Orders of Tribunal.-- (1) The Tribunal may,

after giving the parties to any proceeding before it, a

reasonable opportunity of being heard, pass such

orders thereon as it thinks fit.

(2) The Tribunal may, at any time within two years

from the date of the order, with a view to rectifying

any mistake apparent from the record, amend any

order passed by it, and shall make such

amendment, if the mistake is brought to its notice by

the parties:

Provided that no such amendment shall be

made in respect of any order against which an

appeal has been preferred under this Act.

(3) The Tribunal shall send a copy of every order

passed under this section to all the parties

concerned."

9. The National Company Law Tribunal Rules, 2016 also stipulates

supply of free copy of the order to the parties.

Company Appeal (AT) (Insolvency) No. 97 of 2018 8

10. The Appellant herein has been provided with free certified copy of

the order by the National Company Law Tribunal, Kolkata Bench vide

letter No. NCLT/CP(IB)-646/18/2468 dated 29th January, 2018, which

has been received by the Appellant subsequently. Even if we calculate

the date of 30 days from 29th January, 2018, 30 days will be completed

as on 27th February, 2018.

11. In the 'Central Excise Act, 1944', there is no mandate under the

Act to provide free certified copy to the aggrieved person nor such

provision has been made in the Rules framed thereunder. Therefore, the

decision in "Singh Enterprises v. Commissioner of Central Excise"

(Supra), as referred to by the counsel for the Respondent, cannot be

directly applicable in the present case for the purpose of counting the

period of limitation.

12. The appeal thereafter preferred on 5th March, 2018 and as such it

is to be held that the appeal has been filed after 6 days of completion of

30 days. Further, having noticed that the letter dated 29th January,

2018 was sent to the Appellant by speed-post, the envelop which has

been produced before us and received on 30th January, 2018, we hold

that there is a delay of only 4 days in preferring the appeal and as such

being satisfied, we condone the delay.

Company Appeal (AT) (Insolvency) No. 97 of 2018 9

13. We may observe that we have not taken into consideration the

decision of the Hon'ble Supreme Court in "Singh Enterprises v.

Commissioner of Central Excise" (Supra) as in the 'Central Excise

Act, 1944' there is no provision of communicating certified copy and

there is no mandate to provide free certified copy to the concerned

person and, therefore, we have noticed that the aforesaid decision is not

applicable in the present case.

14. So far as maintainability of Section 9 is concerned, we find that

the application under Section 9 was not maintainable for the reasons

mentioned hereunder.

15. A 'Memorandum of Understanding' was reached between 'M/s.

Hindustan Controls and Equipment Pvt. Ltd.'- ('Corporate Debtor') and

'M/s. Mahendra Trading Company'- (partnership firm- 1st Appellant).

'M/s. Hindustan Controls and Equipment Pvt. Ltd.' is engaged in

business of development, marketing, sales and manufacturing of

electrical control panel and execution of tumkey electrical projects.

16. With regard to payment of dues amounting to Rs.1,51,17,694/-

as claimed by 1st Appellant- 'M/s. Mahendra Trading Company' was not

cleared by 'M/s. Hindustan Controls and Equipment Pvt. Ltd.', the 1st

Appellant ('Operational Creditor') moved before the 'Calcutta Electric

Traders Association' of which 1st Appellant is a member alleging non-

Company Appeal (AT) (Insolvency) No. 97 of 2018 10

clearance of the amount by the 'Corporate Debtor'. On the request of

the 1st Appellant ('Operational Creditor'), the 'Calcutta Electric Traders

Association' by letter dated 31st August, 2017 intimated the Managing

Director of 'M/s. Hindustan Controls and Equipment Pvt. Ltd.'-

('Corporate Debtor') that the 1st Appellant has informed that the

'Corporate Debtor' is not clearing the amount and, therefore, requested

the 'Corporate Debtor' to assign reasons for non-payment of the amount

and to file reply so as to take further course of action. The letter dated

31st August, 2017 is extracted below:

Company Appeal (AT) (Insolvency) No. 97 of 2018 11

17. In the eye of law, there is no arbitration proceeding pending or

initiated under the Arbitration and Conciliation Act, 1996. However, the

aforesaid fact discloses that there was a dispute relating to payment of

the dues and the letter issued by the 'Calcutta Electric Traders

Association' suggests that there is pre-existence dispute. Therefore, we

are of the view that the Adjudicating Authority has rightly held that

there being pre-existence of dispute, the application was not

maintainable.

The appeal is dismissed with aforesaid observations. No costs.

[Justice S.J. Mukhopadhaya] Chairperson

[Justice Bansi Lal Bhat] Member (Judicial)

NEW DELHI 25th November, 2019

AR

Company Appeal (AT) (Insolvency) No. 97 of 2018