Mr. Hemant Babulal Prajapati vs Bank Of Baroda & Anr
- CitationCompany Appeal (AT) (Insolvency) No.85 of 2023
Ratio decidendi
The rule this decision rests on
The limitation period for a Section 7 application against a corporate guarantor is not run from the date of default by the borrower where the guarantor has, by its own written conduct, acknowledged the debt, and such acknowledgment in one-time settlement proposals made within the limitation period saves the application from being time-barred; the Adjudicating Authority's finding that the application was within limitation on that basis is therefore sustainable. A corporate guarantor that has, in writing, acknowledged its status as guarantor and sought concessions or a one-time settlement of the debt is taken to have acknowledged the debt itself, so that such acknowledgments may be relied upon to determine whether a Section 7 application is within limitation. Where the Adjudicating Authority has found that a Section 7 application is within limitation and the existence of default on the part of the borrower and the guarantor is not disputed, an appeal against admission will not succeed on the bare plea that the guarantor is solvent and would be prejudiced by the proceedings.
Written by Miss Lucy from the judgment below, not taken from a headnote.
Judgment
As delivered
Hemant Babulal Prajapati ...Appellant
Versus
Bank of Baroda & Anr. ...Respondents
Present: For Appellant: Mr. Vishnu Sankar, Mr. Pavan Godiawal and Mr. Joseph D. Tharayil, Advocates. For Respondents: Mr. Lovelash Kukreja, Mr. Arun Aggarwal, Advocates for R-1. Mr. Kinshuk Chatterjee, Advocate.
ORDER
08.02.2023: Heard learned counsel for the Appellant. This Appeal has
been filed against the order passed by the Adjudicating Authority dated
25.11.2022 by which Section 7 application filed by the Bank of Baroda has
been admitted. The Appellant before us is a guarantor to the financial benefits
extended to the Borrower - 'Sarthak Creation Pvt. Ltd.'. The proceedings
under Section 7 have already been initiated against the Borrower. An
application under Section 7 was filed by the Bank of Baroda for initiating
proceedings under Section 7 of the I&B Code which was opposed by the
Corporate Guarantor on the ground that application is barred by time.
2. The Adjudicating Authority framed specific issue whether the debt is
time barred and the Adjudicating Authority after considering the materials on
the record returned the finding that on account of three One Time Settlement
Cont'd.../ -2-
proposals, the application filed by the Bank on 11.09.2020 is within limitation.
It is useful to extract observations recorded at page 24 of the order (page 49 of
the paper book):
"The chronology of each document executed by the borrower and the corporate guarantor and taking into consideration three one-time settlement proposals submitted (1) by the borrower Sarthak Creation P. Ltd. dated 28.03.2016, (2) by guarantor M/s. Subi Chemicals P. Ltd. dated 11.09.2018 and; (3) by guarantor M/s. Subi Chemicals P. Ltd. dated 27.12.2018 which inter alia acknowledged not only their status as corporate guarantor but also pleading the applicant to allow, concession and accept the proposal for one-time settlement clearly depicts that the corporate guarantor has acknowledged the debt from time to time. Therefore, the application filed by the applicant on 11.09.2020 is within limitation."
3. Learned counsel for the Appellant challenging the order contends that
no default was committed by the Corporate Guarantor and Corporate
Guarantor is a solvent company and by initiation of Section 7 proceedings it
will also be put to great prejudice.
4. We have considered the submission of learned counsel for the Appellant
and perused the record.
5. The Adjudicating Authority having held that the application is within
time and default on the part of the Borrower and Guarantor is not even
Company Appeal (AT) (Insolvency) No. 85 of 2023 -3-
questioned, we see no error in the order admitting Section 7 application. We,
thus, are of the view that no grounds have been made to interfere with the
impugned order. Appeal is dismissed.
[Justice Ashok Bhushan] Chairperson
[Barun Mitra] Member (Technical) Archana/nn
Company Appeal (AT) (Insolvency) No. 85 of 2023
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