Punjab National Bank vs Walia Traders Ltd

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NATIONAL COMPANY LAW APPELLATE TRIBUNAL PRINCIPAL BENCH, NEW DELHI Company Appeal (AT) (Ins.) No. 426 of 2021 & I.A. No. 1092 of 2021 IN THE MATTER OF: Punjab National Bank ...Appellant Versus Walia Traders Ltd. ...Respondent Present: For Appellant: Mr. Paritosh Budhiraja & Ms. Divya Singh, Advocates. For Respondent: Mr. Anand Chibber, Sr. Advocate, Ms. Henna Singh, Advocate. JUDGMENT

Per: Justice Rakesh Kumar Jain:

The Oriental Bank of Commerce (OBC), filed an application

under Section 7 of the Insolvency and Bankruptcy Code, 2016 (in

short 'Code') to initiate Corporate Insolvency Resolution Process

(in short 'CIRP') against M/s Walia Traders Limited (Corporate

Debtor) before the National Company Law Tribunal, Chandigarh

Bench (in short 'Tribunal') bearing CP (IB) No.

84/Chd/Chd/2019.

2. The OBC disbursed two terms loan on the same date

i.e.26.03.2012 of an amount of Rs. 17.18 Cr. and 4.30 Cr. total

amounting to Rs. 21.48 Cr.

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3. The application under Section 7 was filed on the printed

proforma bearing Form No. 1 for the resolution of an amount of

Rs. 31,42,82,870/- as on 31.12.2018.

4. The OBC classified the account of the CD as NPA on

30.09.2014 and the amount which has been claimed on the basis

of date of default i.e. 30.06.2014 is as under:-

1. Account type Term Loan I

2. Account no. 06187021000050

3. Amount of disbursement Rs. 20 Cr.

4. Date of Default 30.06.2014

5. Rae of Interest 14.75% p.a.

6. Total outstanding as on Rs. 25,14,76,258.00

31.12.2018 including interest,

expenses and subjudice LCs

1. Account type Term Loan II

2. Account no. 06187021000067

3. Amount of disbursement Rs. 5 Cr.

4. Date of Default 30.06.2014

5. Rae of Interest 14.75% p.a.

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6. Total outstanding as on Rs. 6,28,06,612.00

31.12.2018 including interest,

expenses and subjudice LCs

5. During the pendency of the application, the Appellant (PNB)

filed an application bearing IA. No. 31 of 2021 under Section

60(5) of the Code for substituting the name of the appellant in

place of the OBC in the main petition wherever it was occurring

in the pleadings.

6. According to the Appellant, the OBC has been amalgamated

with the PNB in terms of the Section 9 of the Banking Companies

(Acquisition and Transfer of Undertakings) Act, 1980 and a

notification was issued in this regard by Govt. of India, Ministry

of Finance(Department of Financial Services) dated 04.03.2020

which has been made effective from the date 01.04.2020.

7. Although, the application bearing IA No. 31 of 2021 was

contested by the CD but the Tribunal allowed the application by

passing a detailed order.

8. Again during the pendency of the main petition, PNB filed

an application I.A. No. 24 of 2021 under Section 5 of the

Company Appeal (AT) (Ins.) No. 426 of 2021 4 Limitation Act, 1963 (in short 'Act') for condonation of delay of

493 days in filing of the CP under Section 7.

9. It was averred in the application that at the time of filing of

petition, no application for condonation of delay was filed as it is

alleged that the OBC at that time was under the bonafide

impression and belief that the CP was filed well within the period

of limitation.

10. The relevant averments made in I.A. No. 24 of 2021 at para

3 and 4 are reproduced as under:-

"3. That the above noted insolvency petition was filed by the petitioner financial creditor on 04.02.2019 vide Diary No. 544. At the time of filing the present company petition, no application for condonation of delay was filed before this Hon'ble Tribunal as at the time of filing the present company petition, an application u/s 19 Recovery of Debts and Bankruptcy Act, 1993 bearing OA No. 227.. of 2016 was pending before the Hon'ble Debt Recovery Tribunal-II, Chandigarh and the applicant had a bonafide belief that the pendency of the Original Application against the corporate debtor amounts to the continuous cause of action and as such the applicant can file the insolvency petition against the corporate debtor at any point oftime. However, later on there was a decision by the Hon'ble Apex Court which interpreted Section 22 ofthe LimitationAct, 1963 by contending that the pendency of recovery proceedings against the corporate debtor will not amount to a continuous cause ofaction.

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4. That moreover, the Insolvency and Bankruptcy Code, 2016 came into force w.e.f. 01.12.2016 and the present petition was filed by- the applicant financial creditor on

04.02.2019 with the bonafide belief that the period of limitation for filing the insolvency petition under the 1BC, 2016 will start fromthe date when IBC, 2016 came into force i.e. w.e.f.01.12.2016. However, later on the Hon'ble· Apex Court and the Hon'ble National Company Law Tribunal in its various judgments had clarified this point that the period of limitation willstart w.e.f. the date ofNPA in the case offinancial creditor which in the present case.is 30.09.2014.However, the present petition was filed on 04.02.2019 with a delay of 493 days."

11. The Respondent while contesting this application had

averred that the delay is not 493 but 585 days because the date

of default is 30.06.2014 and the period of three years as provided

under Article 137 of the Act came to an end on 29.06.2017

whereas the main petition is filed on 04.02.2019.

12. The Tribunal held that Section 5 of the Act shall apply to

the application filed under Section 7 or 9 of the Code but while

referring to a decision of the Hon'ble Supreme Court in the case

of B.K Educational Services Pvt. Ltd. Vs. Parag Gupta And

Associates, 2019 (11) SCC 633 held that "the right to sue,

therefore, accrues when a default occurs and that if the default

has occurred over three years prior to the date of filing of the

application, the application would be barred under Article 137 of

the Limitation Act, save and except in those cases where in the

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facts of the case Section 5 of the Act may be applied to condone

the delay in filing such an application"

13. It was also held that the plea of the Appellant after the

decision of the Supreme Court in the case of B.K Educational

(Supra) which was pronounced on 11.10.2018, pendency of OA

under SARFAESI Act, 2002 (Act, 2002) would not save the

limitation for filing the CP under the Code because the pendency

of the OA under the Act, 2002 would not amount to continuous

cause of action and that the application under Section 7 can be

filed at any point of time.

14. The Tribunal has also held that the Appellant cannot be

permitted to take the plea of bonafide belief that the limitation

for filing the application, filed under Section 7, would start from

01.12.2016 when the Code came into being and became

enforceable. The Tribunal has also discussed in its order about

the liberal approach of the Court in condoning the delay but it

was held that if mandatory provision is not complied with and

that delay is not sufficiently, satisfactorily and convincingly

explained then the delay cannot be condoned on equitable or

sympathetic grounds alone.

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15. Ultimately, I.A. No. 24 of 2021 was dismissed and as a

result thereof, the main CP was also dismissed as barred by

limitation.

16. Counsel for the Appellant has though vehemently argued to

challenge the impugned order but he has also raised the same

arguments before this court which were raised before the

Tribunal that the delay has been caused because OA No. 227 of

2016 was pending before the DRT, Chandigarh and the Appellant

was under bonafide belief that the pendency of the OA against

the CD amounts to continuous cause of action but it has also

been stated by the Appellant in the application itself that the

Hon'ble Supreme Court while interpreting Section 22 has held

that pendency of recovery proceedings against the CD will not

amount to continuous cause of action. Similarly, in regard to

second argument that the limitation of three years would start

from the date when the Code came into force w.e.f. 01.12.2016

and not from the date when the account of the CD was declared

as NPA, in the application itself, the Appellant has mentioned

that it has been held by the Hon'ble Supreme Court and by this

Court in various judgments that the period of limitation would

start from the date of NPA in the case of FC which in this case

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would start from 30.09.2014 and the application having been

filed on 04.02.2019 is delayed of 493 days.

17. As a matter of fact, the Appellant has not cited any

judgment either of this Court or the Hon'ble Supreme court

before this Court to support his contention in the appeal for its

success and to upset the order which has been passed by the

Tribunal while dismissing the application I.A. No. 24 of 2021.

18. Counsel for the Respondent has heavily relied upon the

finding recorded by the Tribunal in support of his submissions.

19. Thus, in view thereof, we hardly find any merit in the

present appeal for the purpose of interference and hence, the

same is hereby dismissed. No costs.

[Justice Rakesh Kumar Jain] Member (Judicial)

[Mr. Naresh Salecha] Member (Technical)

[Mr. Indevar Pandey] Member (Technical) New Delhi 05th November, 2024 Sheetal

Company Appeal (AT) (Ins.) No. 426 of 2021