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. 434 of 2021 & I.A. No. 1119, 1120 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:

Punjab National Bank (PNB) filed an application under Section

7 of the Code against M/s Walia Traders Limited (CD) for the

resolution of an amount of Rs. 158.83 Cr. (with interest up to

31.03.2018) and also bank guarantee of Rs. 0.65 Cr.

2. The appellant gave the following term loans to the Respondent

which read as under:-

Account Type Date of Sanction Amount in Rs. Cr.

Term Loan I 19.02.2007 65 Company Appeal (AT) (Ins.) No. 434 of 2021 2 Term Loan II 05.08.2011 35 Term Loan II 22.06.2009 11 Total 147

3. In addition to the above term loans, the CD availed a bank

guarantee of Rs. 2.20 Cr. and has also availed the overdraft limit

facility of Rs. 30 Cr. sanctioned vide letter dated 27.02.2014.

4. The Respondent contested the application on the ground that

it is barred by the limitation as prescribed under Article 137 of the

Limitation Act, 1963 (Act).

5. The case of the Respondent is that the last documents

executed by the CD was dated 1.03.2014 and the last balance

confirmation letter is dated 23.09.2014 and all the accounts of the

CD were declared as NPA on 31.03.2015. It is alleged before the

Tribunal that One time Settlement (OTS) proposal/letters

issued/amounts paid in respect of the said OTS proposals, all are

after the expiry of three years period of limitation w.e.f. 31.03.2015

i.e. on which date the accounts were declared NPA and cannot

extend the period of limitation.

Company Appeal (AT) (Ins.) No. 434 of 2021 3

6. The Tribunal while referring to the decision of the Hon'ble

Supreme Court in the case of Babu Lal Vardharji Gurjar Vs. Veer

Gurjar Aluminium Industries Pvt. ltd. &Ors. Manu/SC/0589/2020

has clearly laid down that the limitation computed in terms of

Article 137 of the Act would commence from the date of default and

in the event of account being declared as NPA, the date of default

would be the date when the account was declared as NPA.

7. It was also held by this Court that the case Manesh Agarwal

Vs. Bank of India & Anr., CA (AT) (Ins) No. 1182 of 2019 dated

28.02.2020 and Punjab National Bank Vs. J-Marks Exim (India)

Pvt. Ltd. are not applicable because the payment has been made by

the CD in the loan account after expiry of three years period from

the date of default / NPA.

8. As a result, the application bearing CP (IB) No.

217/CHD/2018 has been held to be barred by limitation and

accordingly dismissed.

9. Counsel for the Appellant has submitted that the Tribunal has

committed a patent error in not taking into consideration the entire

facts on record. In this regard, he has referred to averments made

in para 7(m) of the grounds of appeal which read as under:-

Company Appeal (AT) (Ins.) No. 434 of 2021 4

"m. That in the month of December 2016 the Respondent/Corporate Debtor deposited various amounts on various dates in its loan account totalling to Rs. 2,65,00,000/-. The said amounts were deposited by way of various demand drafts; the details whereof are given below:

S.No. Draft No. Date Amount

1. 013968 20.12.2016 50.00 lacs

2. 040227 20.12.2016 30.00 lacs

3. 557376 19.12.2016 50.00 lacs

4. 016325 19.12.2016 50.00 lacs

5. 059298 28.12.2016 40.00 lacs

6. 059308 22.12.2016 05.00 lacs

7. 059299 20.12.2016 40.00 lacs"

10. The copies of these drafts have also been shown to us, during

the course of hearing, from the records appended as Annexure A7.

11. There is no denial to this factual averments by the Respondent

which means that the amount of Rs. 2.65 Cr. were paid by the

Respondent to the Appellant between 19.12.2016 to 28.12.2016

whereas the account was declared as NPA on 31.03.2015. It is

submitted that since the payment has been made by the

Respondent in the loan account in the month of December, 2016,

during subsistence of the period of limitation, counted from

31.03.2015, then the limitation would again start for filing the

petition from 28.12.2016 and would come to an end 28.12.2019

Company Appeal (AT) (Ins.) No. 434 of 2021 5

whereas the application under Section 7 came to be filed much

earlier as notice in the main petition was issued on 27.08.2018.

Thus, it is argued that the application filed under Section 7 by the

Bank claiming Rs. 158.83 Cr. should not have been dismissed by

the Tribunal on the ground of limitation.

12. On the other hand, Counsel for the Respondent has reiterated

the stand taken before the Tribunal but he could not deny this fact

that the payments have been made by the Respondent of Rs. 2.65

Cr. in the loan account in the month of December, 2016, therefore,

the finding recorded by the Tribunal where it is held that "whereas

in the instant case the alleged letters of acknowledgement and

payments made by the CD were all after expiry of the three years

period from the date of default/NPA" is not correct.

13. We have heard Counsel for the parties and after examining the

record are of the considered opinion that the Tribunal has

committed a patent error in examining the issue of limitation in

respect of the petition filed under Section 7 by the Appellant. There

is no dispute that all the accounts of the Respondent were declared

NPA on 31.03.2015 and the application was filed by the Appellant

for the resolution of an amount of Rs. 158.83. It is also not in Company Appeal (AT) (Ins.) No. 434 of 2021 6

dispute, as it has emerged from the record, that a sum of Rs. 2.65

Cr. was paid by the CD in the month of December, 2016 in the loan

account which means that the Respondent had acknowledged its

liability in the month of December, 2016, in terms of Section 18 and

19 of the Act, hence, the limitation would start again from the date

of acknowledgement i.e. December, 2016 and will continue for three

years up to December, 2019.

14. The finding recorded by the Tribunal that the payments have

been made by the Respondent to the Appellant all after expiry of

three years is patently erroneous and contrary to the record

because the averment made in this appeal in para 7(m), proved by

evidence attached at Annexure A7, categorically proves the payment

made by the Respondent which has not been denied by the

Respondent in the reply filed to the appeal.

15. In such circumstances, the Respondent having acknowledged

the debt in the month of December, 2016, during subsistence of

period of limitation, would start the period of limitation again from

Dec, 2016 and shall give a fresh period of three years to the

Appellant to count the limitation to file the application under

Section 7 i.e. from December, 2016 to December, 2019 whereas the Company Appeal (AT) (Ins.) No. 434 of 2021 7

application under Section 7 was filed in the year 2018 much before

the expiry of the period of limitation.

16. Counsel for the Respondent has also argued that the Appellant

(PNB) could not have maintained the second CP against the same

CD. It is submitted that the other CP (IB) No. 84/CHD/2019 was

though filed by the OBC but because of amalgamation of OBC with

the PNB it is deemed to have been filed by the PNB, therefore, the

present CP (IB) No. 217/CHD/2018 filed by the PNB in its own

name is not maintainable. This argument has been raised by the

Appellant not in this case but in CP (IB) No. 84/CHD/2019 which

has been rejected by the Tribunal by making following observations

in CP (IB) No. 84/CHD/2019 which is reproduced as under:-

"9. The respondent-corporate debtor in CP (IB) No. 84/Chd/CHD/2019 i.e. M/s Walia Traders Limited who is also the respondent in the instant IA No. 31 of 2021 filed a reply opposing the IA, inter alia, on the ground that the PNB who is the applicant in the instant IA No. 31 of 2021 has already filed CP (IB) No. 217/Chd/CHD/2018 in its own name and against the same CD i.e.Mis Walia Traders Limited alleging default in respect of a debt allegedly owed to it and hence, in terms of the provisions of the Code, it cannot maintain a second CP against the same corporate debtor, since if the instant IA is allowed, the instant CP would become the second CP by the same financial creditor against the same corporate debtor.

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10. A rejoinder has been filed stating that both the CPs i.e CP (IB) No. 217/Chd/CHD/2018 filed by the PNB in its own name and the instant CP (IB) No. 84/Chd/2019 in which the PNB is seeking substitution of its name in place of OBC, are filed in respect of a different debt and different cause of actions and in respect of different date of defaults and that the facts involved in both the CPs are completely different and distinct and accordingly, prays for allowing the IA.

11. Mr. Anand Chhibbar, the learned senior counsel appearing for the respondent-corporate debtor while drawing our attention to the various clauses of the Amalgamation of OBC into PNB Scheme, 2020 issued vide Gazette Notification dated 04.03.2020 (Annexure A-1) to the CA submits that on merger of OBC with PNB, it is deemed that both the CPs are filed by the same financial creditor i.e. PNB against the same corporate debtor i.e. M/s Walia Traders Limited and the provisions and the scheme of Code, 2016 does not permit a second CP by the same financial creditor against the same CD.

12. We are unable to accept the submissions made on behalf of the respondent-corporate debtor. Neither Section 7 of the I&B Code, 2016 nor any other provision of the Code bar the filing of a second petition by the same financial creditor against the same CD, if the debt and default in respect of second CP occurred in a different factual situation. Admittedly, the facts in both the CPs i.e. in CP (IB) No. 217/Chd/CHD/2018 and CP (IB) No. 84/Chd/2019 are completely different. The debt and date of default in both the CPs are different and arose in a different factual situation.

13. The other submissions of the Ld. Sr. Counsel appearing for the CD that as per order 2 Rule 2 of the Code of Civil Procedure, 1908, a suit shall include whole of Company Appeal (AT) (Ins.) No. 434 of 2021 9

the claim, hence if the petitioner is one and the same in both the CPs, it cannot maintain two separate petitions/applications under Section 7 of the Code. This submission is also rejected for the same reason that the facts, causes of action and dates of default are completely different and distinct in both the CPs. Moreover, the antecedent backdrop of the case is due to Govt. action. This surely cannot unfold into consequent non-suiting of the petitioner or erosion of the underlying cause that was impacted by a decision of the Govt.

14. In these circumstances and for the aforesaid reasons, we do not find any impediment in allowing the instant IA No. 31 of 2021 and accordingly, the same is allowed and that the name of the PNB is incorporated in place of OBC whereever it appears in the petitions, CAs, IAs and in all other pleadings in the case. The amended memo of parties filed alongwith the IA is accepted and taken into the record of the main CP i.e. CP (IB) No. 84/Chd/2019 and in all the pleadings of CP (IB) No. 84/Chd/2019.

17. These findings have not been challenged by the Respondent by

way of an appeal and has attained finality against the Respondent.

Even otherwise, we do not find any error in the aforesaid findings

recorded by the Tribunal.

18. In view of the aforesaid discussion, the present appeal is found

to be meritorious and the same succeeds. The impugned order is

hereby set aside. The matter is remanded back to the Tribunal by

restoring CP (IB) No. 217/CHD/2018. The parties are directed to

appear before the Tribunal on 22nd November, 2024. The Tribunal is Company Appeal (AT) (Ins.) No. 434 of 2021 10

directed to decide this lis as early as possible because the matter

pertains to the year 2018.

[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. 434 of 2021